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, 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, 2023
Item 1. Reports to Stockholders.
SEMI-ANNUAL REPORT
September 30, 2023
EQUITY
Weitz Large Cap Equity Fund
Weitz Multi Cap Equity Fund
Weitz Partners III Opportunity Fund
ALLOCATION
Weitz Conservative Allocation Fund
FIXED INCOME
Weitz Core Plus Income Fund
Weitz Nebraska Tax Free Income Fund
Weitz Short Duration Income Fund
Weitz Ultra Short Government Fund
2 2023 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 $4 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.
2023 Semi-Annual Report 3
TABLE OF CONTENTS
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.
| Value Matters | 4 |
| Fixed Income Insights | 6 |
| Performance Summary | 11 |
| Analyst Corner | 12 |
| Conservative Allocation Fund | 14 |
| Core Plus Income Fund | 16 |
| Large Cap Equity Fund | 20 |
| Multi Cap Equity Fund | 22 |
| Nebraska Tax Free Income Fund | 24 |
| Partners III Opportunity Fund | 26 |
| Short Duration Income Fund | 28 |
| Ultra Short Government Fund | 32 |
| Schedule of Investments | 34 |
| Financial Statements | 60 |
| Notes to Financial Statements | 68 |
| Actual and Hypothetical Expenses for | |
| Comparison Purposes | 77 |
| Other Information | 78 |
| Index Descriptions | 83 |
| Glossary of Terms | 84 |
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 2023 Semi-Annual Report
VALUE MATTERS: Perspective Over Predictions
September 30, 2023
Dear Clients and Fellow Shareholders,
In the third quarter, stocks gave back some of their first-half gains. The S&P 500 fell -3.3%, bringing its year-to-date gain to +13.1%. Our stock funds followed the same pattern, and after modest third-quarter declines, showed year-to-date gains ranging from +9.1% for our Multi Cap Equity Fund (formerly the Partners Value Fund) to +17.0% for our Large Cap Equity Fund (formerly the Value Fund). The table following this letter shows results for all of our funds over various time periods.
A handful of giant tech stocks continued to account for the lion’s share of this year’s index gains. Dubbed the “Magnificent Seven” (financial writers can’t help themselves), Microsoft, Meta Platforms (Facebook parent), Alphabet (Google parent), Amazon.com, Apple, Tesla and NVIDIA (maker of chips used in AI applications) collectively rose by over 90%, completely eclipsing more moderate gains among other index components.
These are amazing companies, and we are very happy to own several of them in our funds, but quite a few other very good, albeit less “magnificent,” businesses are quietly doing better than their stock prices might indicate. This augurs well for broader-based future returns.
All Eyes are on the Fed
In the meantime, investors and the financial media act as if the only important investment consideration is “How high will interest rates go?” and “How long will they remain high?” We think that it is a mistake to be stuck on this narrow focus.
Two years ago, the Fed acknowledged that higher inflation rates might not be “transitory.” They telegraphed a 180-degree change in policy and promised to push short-term interest rates up enough to get the inflation rate down to its 2% target and extinguish inflationary expectations. The relatively rapid increase in the federal funds rate from roughly zero to more than 5% was a shock to the economy and triggered last year’s bear market.
The domestic economy has been slowing, and most inflation metrics are moderating. The Fed’s campaign seems to be working, and there is general acknowledgement that few, if any, further rate increases will be needed. So far, so good.
But worries persist. Will tight money cause a recession, or will the economy have a “soft landing?” Are rate cuts necessary to launch a new bull market? What if the anti-inflation campaign fails and inflation flares up again? Anxieties are high.
Perspective Required
We have no short-term answers or trading ideas to offer. We try to invest in a way that does not require clairvoyance. We do have to have some working assumptions about the issues of the day and key economic variables. For clients who are curious, we offer these with humility and a reminder that our opinions can evolve quickly.
| • | | Fed Chair Powell has promised to keep rates high for long enough to be sure inflation is truly under control. He has suggested that this may take a long time – possibly years. The Fed may find success sooner than expected (or its definition of success may be adjusted), but we are assuming that rates will stay around current levels for a very long time. We are not counting on seeing rates near zero any time soon. Maybe ever. |
| • | | At current, more historically normal interest rate levels, bonds present much stiffer competition for investor capital than they have for over a decade. Stocks still offer significant advantages over fixed income securities, but their relative attractiveness declines as interest rates rise. Another way to say this is that price-to-earnings (P/E) ratios generally decline as rates rise. This process is well underway, but stock investors should get over blind hopes for a return to valuation (P/E) levels we enjoyed a few years ago. |
| • | | Over the past 20 years, rates stayed within a 0-5% range most of the time. A whole generation of investors and managers have never experienced higher rates. But some remember 1970-2000 when 5% was more like the floor for rates that ranged from 5-20%. The quick run up in rates last year caused some financial pain (new home buyers seeking mortgages and banks with too many long-term, fixed-rate loans and bonds), but 5% is not high by historical standards. Investors and companies have coped with higher rates in the past, and they are already adjusting to today’s levels. |
| • | | There are always plenty of things to worry about – as citizens, parents, and Earthlings, as well as investors. Plenty. But our assumption is that companies with competitive advantages, smart and flexible management teams, and solid finances will always find ways to move forward, build business value and earn higher stock prices). |
Outlook
Investors have been through a lot over the past five years. Some events have been unprecedented. Others represent the “changing changelessness” of human nature. Current preoccupation with Fed policy will pass and be replaced by other uncertainties. We believe that our collection of businesses is positioned to generate healthy returns for us over the next several years. Companies with temporary issues, or that hit the occasional pothole, will offer new opportunities.
Finally, a cause for optimism that deserves a paragraph of its own: Strong companies “make their own breaks.” Over the years, quite a few of our portfolio companies have made opportunistic acquisitions during recessions and other times of financial stress or crisis. Some of these have been transformational. We are not predicting or cheering for financial trouble or pain, but these companies’ businesses are worth a lot more today because of opportunities born of hard times.
So, we suggest investors look up from the financial news of the day and focus on the 3-5-year horizon.
Sincerely,
| | |
| Wally Weitz | Brad Hinton |
| wally@weitzinvestments.com | brad@weitzinvestments.com |
As of 09/30/2023, the following portfolio companies constituted a portion of the net assets of Conservative Allocation Fund, Large Cap Equity Fund, Multi Cap Equity Fund, and Partners III Opportunity Fund as follows:
2023 Semi-Annual Report 5
• Alphabet, Inc.: 1.8%, 7.4%, 6.9%, and 6.3%.
• Apple Inc.: 0.0%, 0.0%, 0.0%, and 0.0%.
• Amazon.com, Inc.: 0.0%, 3.7%, 0.0%, and 4.7%.
• NVIDIA Corp.: 0.0%, 0.0%, 0.0%, and 0.0%.
• Meta Platforms, Inc.: 0.0%, 4.0%, 3.9%, and 3.6%.
• Microsoft Corp.: 2.2%. 0.0%, 0.0%, and 3.0%.
• Tesla, Inc.: 0.0%, 0.0%, 0.0%, and 0.0%.
Portfolio composition is subject to change at any time. Current and future
portfolio holdings are subject to risk.
6 2023 Semi-Annual Report
FIXED INCOME INSIGHTS: Where are We Now?
September 30, 2023
With economic growth accelerating in the third quarter, it appears the consensus has finally abandoned recession island in favor of higher-for-longer island. This shift in narrative played out as expected, with U.S. Treasury yields rising (see chart below), particularly at the long end of the yield curve (10- and 30-year maturities). While cash/T-bills and other shorter-duration investments held up, the result was mostly negative returns for the broad fixed income markets. After dramatic bank collapses and tighter lending conditions failed to sufficiently weaken the economy, fixed income investors may be wondering, “where are we now?” One could think of the current economic landscape as a mighty tug-of-war: with the Fed and its aggressive monetary policy pulling on one side and a spendthrift federal government on the other, pulling hard in support of what is already a resilient U.S. economy. For now, the economy, with its fiscal support, seems to be pulling harder, driving continued labor market strength with rising incomes and strong consumer spending.
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. The lower duration profiles in our Short Duration Income and Core Plus Income Funds, our flexible approach, and our overall investment process allowed us to generate strong positive results in our Short Duration fund and index-beating performance in our Core Plus Fund, in what was a very challenging return environment. Our Ultra Short Government Fund also produced strong results as it benefited from the increased short-term rate environment. For details regarding individual fund performance and analysis, see our funds’ quarterly commentaries.
In July, the Federal Reserve delivered its eleventh increase to the federal funds rate since the cycle began in March 2022, resulting in a 5.25-5.50% target rate at quarter-end. Despite a well-telegraphed pause at the September meeting, the Federal Reserve’s message was clear: the inflation fight is not done. The Fed reinforced its higher for longer messaging by removing two interest rate cuts from its latest “dot plot” forecast of Fed rate policy (Fed officials now see a Fed Funds rate of 5.00-5.25% in 2024, as compared to 4.50-4.75% at the June Meeting), raising its economic growth forecast and lowering its year-end unemployment target to 3.7% from 3.9% in June.
This may suggest the Fed believes the economy is too strong for them to achieve their inflation objectives despite its expectation that core inflation will peak at 3.7% this year – lower than June’s projection of 3.9% – before cooling to 2.6% in 2024. Given that the Fed believes monetary policy works primarily through the “wealth effect” channel, the Fed may be trying to tighten financial conditions by engineering higher long-term interest rates and, therefore, higher borrowing costs for consumers and businesses. In a speech on September 28, following the Fed’s September policy meeting, Chairman Powell stated “one of our goals is to influence spending and investment decisions today and in the months ahead.” Why has the economy, in aggregate, not responded to the Fed’s aggressive hiking cycle? One reason is that large swaths of U.S. debt are unaffected by the Fed’s policy rate. The Fed’s massive quantitative easing (QE) program during COVID enabled consumers and businesses to lock in ultra-low, long-term, fixed-rate debt. For consumers, this resulted in the lowest debt service costs on mortgages and vehicle loans in a generation, which allows more income to be spent elsewhere in the economy. Corporations benefited much in the same way, locking in long-term, fixed-rate debt at record-low yields. To a large extent, the higher borrowing rates engineered by the Fed only impact new borrowers or those who need to refinance existing debt.
Another reason is the aforementioned tug-of-war between the Federal Reserve and the federal government. The chart below is a stark reminder of how far afield the U.S. deficit as a percentage of gross domestic product (GDP), and in relation to the unemployment rate, is from the historical norm. As legendary investor Stan Druckenmiller bluntly put it during a speech at the University of Southern California in May, “The fiscal recklessness of the last decade has been like watching a horror movie unfold.”
2023 Semi-Annual Report 7
The U.S. deficit has been negatively impacted by rising mandatory payments linked to inflation (i.e., social security and other entitlement spending); higher interest costs due to growing debt balances and rising interest rates; and increased fiscal spending driven by multi-year investments in green energy, manufacturing, and technology industries. A lot of this spending is “pick and shovel” ready, leading to significant employment growth in construction and manufacturing, in particular. In terms of the economic impact, by rule, government deficits must equal a private sector surplus. In other words, one person’s spending must equal another person’s income.
However, increased government deficits, all else equal, may result in higher U.S. interest rates as an increased supply of U.S. Treasuries is needed to fill the funding gap. The market is in the process of adjusting to this reality with the sell-off in longer-term Treasuries accelerating in the past few months, which has taken 10-year nominal and real yields back to their highest levels (yields) since 2007.
But it’s not only the change in the level of interest rates that matters. The speed with which they have risen is notable as well. The chart below, per Morgan Stanley, shows both the magnitude and speed of the rise in 10-year U.S. Treasuries going back to 1874. The key takeaway is that the only other occasion yields have spiked over 400 basis points in a three-year period was in 1979-1981. In this cycle, the 10-year yield hit a low of 0.51% on August 4, 2020, and hit a cycle peak on Friday, October 6, 2023, of 4.80%. Given the magnitude and speed of this move in longer-term interest rates, we could be nearing the point where they start to slow the economy.
Corporate credit spreads narrowed/declined modestly in the quarter, reflecting the continued strength of the U.S. economy. The table below reflects the changes during the quarter in credit spread (incremental return, reflected in basis points – investors require rates above those of comparable U.S. Treasuries as compensation for credit risk) for the broad investment grade corporate (ICE BofA US Corporate) and high yield bond (ICE BofA US High Yield) indexes. The table also shows the changes in effective yield for the indexes. While overall spread levels moved lower in the quarter, the effective yields increased due to the rise in U.S. Treasury rates.
With credit spreads narrow by historical measures and the “soft landing” theme spreading in popularity, we are reminded of the echoes of the past and Mark Twain’s reminder that “history never repeats itself, but it does often rhyme.” As illustrated in the chart below, this is not the first time the chorus cheered for a soft landing. Often with regularity, soft landing calls tend to peak before a downturn hits. From today’s vantage point, the type of conditions that would cause the Fed to ease significantly would also lead to earnings significantly disappointing the current growth expectations, which could then lead to much wider risk premiums down the road.
What’s the Upshot for Fixed Income Investors?
Rising interest rates across the yield curve pave the way for higher coupon income today and provide the potential for greater total returns in the future. For the first time in over 15 years, the return prospects of a diversified portfolio of higher quality U.S. fixed income securities may be highly competitive versus the historical returns on equities, which are likely much less uncertain, and have significantly less downside risk.
8 2023 Semi-Annual Report
We believe our ability to cast a wider net across the fixed income
landscape – particularly across securitized products that have
meaningful structural enhancements and where higher income
relative to bond indexes is available – is a meaningful advantage
in today’s environment. As we’ve mentioned before, caution is
and will remain our calling card, but we believe the setup for fixed
income is as good as it’s been in decades.
| 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. 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. Effective yield is the return on a bond that has its interest payments (or coupons) reinvested at the same rate by the bondholder. Effective yield is the total yield an investor receives, in contrast to the nominal yield—which is the stated interest rate of the bond's coupon. Option Adjusted Spread: A “spread” compares the interest rate on a particular bond against a “base line” bond (typically a U.S. Treasury bond). When a bond issuer (or bondholder) has the option to exercise a right (for example, if the issuer can call a bond before its stated maturity date), then the “Option Adjusted Spread” takes into account the possibility that this option might be exercised—so a bond's Option Adjusted Spread may be more (or less) than its regular spread.
2023 Semi-Annual Report 9
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10 2023 Semi-Annual Report
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 7/31/2024. 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 Conservative Allocation, Large Cap Equity and Multi Cap Equity 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 83 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, Multi Cap Equity 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.
2023 Semi-Annual Report 11
PERFORMANCE SUMMARY
Returns (%) as of 9/30/2023
| | | | ANNUALIZED | | | |
| | | | | | Since Fund Inception | Net | Gross |
| EQUITY | QTD | YTD | 1 YR | 5 YR | 10 YR | Inception* | Date | Expense | Expense |
| Large Cap Equity - Investor (WVALX) | (1.76) | 16.92 | 25.95 | 9.71 | 8.88 | 10.19 | 5/9/1986* | 1.04 | 1.04 |
| Large Cap Equity - Institutional (WVAIX) | (1.74) | 17.04 | 26.09 | 9.91 | 9.08 | 10.24 | 7/31/2014 | 0.89 | 0.89 |
| Russell 1000 Index | (3.15) | 13.01 | 21.19 | 9.62 | 11.62 | 10.39 | | | |
| S&P 500 Index | (3.27) | 13.07 | 21.62 | 9.91 | 11.91 | 10.42 | | | |
| Multi Cap Equity - Investor (WPVLX) | (2.08) | 9.03 | 18.18 | 5.04 | 5.34 | 10.87 | 6/1/1983* | 1.07 | 1.07 |
| Multi Cap Equity - Institutional (WPVIX) | (2.06) | 9.13 | 18.36 | 5.26 | 5.55 | 10.93 | 7/31/2014 | 0.89 | 0.89 |
| Russell 3000 Index | (3.25) | 12.39 | 20.46 | 9.14 | 11.27 | 10.73 | | | |
| S&P 500 Index | (3.27) | 13.07 | 21.62 | 9.91 | 11.91 | 11.01 | | | |
| Partners III Opportunity - Investor (WPOIX) | (0.79) | 10.14 | 15.86 | 3.97 | 3.96 | 11.08 | 8/1/2011 | 1.75 | 1.75 |
| Partners III Opportunity - Institutional (WPOPX) | (0.57) | 10.70 | 16.73 | 4.58 | 4.49 | 11.24 | 6/1/1983* | 1.19 | 1.19 |
| Russell 3000 Index | (3.25) | 12.39 | 20.46 | 9.14 | 11.27 | 10.73 | | | |
| S&P 500 Index | (3.27) | 13.07 | 21.62 | 9.91 | 11.91 | 11.01 | | | |
| | | | ANNUALIZED | | | |
| | | | | | Since Fund | Inception | Net | Gross |
| ALLOCATION | QTD | YTD | 1 YR | 5 YR | 10 YR | Inception* | Date | Expense | Expense |
| Conservative Allocation - Investor (WBALX) | (0.87) | 5.27 | 10.78 | 5.23 | 5.19 | 5.49 | 10/1/2003* | 0.85 | 0.99 |
| Conservative Allocation - Institutional (WBAIX) | (0.87) | 5.42 | 10.95 | 5.36 | 5.25 | 5.52 | 3/29/2019 | 0.70 | 0.79 |
| Morningstar Moderately Conservative Target Risk Index | (3.03) | 2.33 | 8.22 | 3.00 | 3.97 | 5.22 | | | |
| | | | 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) | (2.50) | 0.96 | 2.38 | 2.12 | N/A | 2.33 | 7/31/2014* | 0.55 | 0.82 |
| Core Plus Income - Institutional (WCPBX) | (2.35) | 1.15 | 2.59 | 2.26 | N/A | 2.50 | 7/31/2014* | 0.45 | 0.59 |
| Bloomberg U.S. Aggregate Bond Index | (3.23) | (1.21) | 0.64 | 0.10 | N/A | 0.85 | | | |
| Nebraska Tax Free Income (WNTFX) | (2.86) | (1.70) | 1.73 | 0.52 | 0.69 | 3.95 | 10/1/1985* | 0.46 | 0.96 |
| Bloomberg 5-Year Municipal Bond Index | (2.03) | (0.86) | 2.16 | 1.03 | 1.44 | N/A | | | |
| Short Duration Income - Investor (WSHNX) | 1.05 | 3.70 | 4.77 | 1.94 | 1.59 | 4.55 | 8/1/2011 | 0.55 | 0.86 |
| Short Duration Income - Institutional (WEFIX) | 1.07 | 3.74 | 4.92 | 2.05 | 1.76 | 4.61 | 12/23/1988* | 0.45 | 0.60 |
| Bloomberg 1-3 Year U.S. Aggregate Index | 0.74 | 1.89 | 2.80 | 1.16 | 1.01 | N/A | | | |
| Ultra Short Government (SAFEX) | 1.21 | 3.46 | 4.29 | 1.73 | 1.08 | 2.26 | 8/1/1991* | 0.33 | 0.64 |
| ICE BofA U.S. 6-Month Treasury Bill Index | 1.32 | 3.60 | 4.59 | 1.84 | 1.25 | 2.77 | | | |
* Denotes the Fund's inception date and the date from which Since Fund Inception performance is calculated.
12 2023 Semi-Annual Report
ANALYST CORNER
An Introduction to Vista By David Kratz
Vista Global Holding Limited (Vista) is a private aviation platform comprised of two established brands, VistaJet and XO. While headquartered in Dubai, 57% of flight revenue is generated in the U.S. and 23% is generated in Europe. The company has six operations hubs and over 20 offices worldwide.
VistaJet, founded in 2004, is a value-driven flying solution for corporate leaders and private individuals. VistaJet passengers have flown to over 1,900 airports in 187 countries, covering 96% of the world. VistaJet’s subscription model offers guaranteed availability with as little as 24 hours’ notice, globally, on a consistent branded fleet. The VistaJet Members’ fleet of over 360 aircraft is capable of continental trips on super-midsize and large-cabin aircraft, to long-range trips connecting continents, and even non-stop 17-hour flights with Vista’s stable of 18 Bombardier Global 7500s. Through a three-year contract, VistaJet offers three types of memberships which are largely dependent on the number of hours an individual or entity desires to fly at a transparent, fixed hourly rate. Variability in fuel prices is a non-issue for Vista as costs are passed through to its members.
XO, founded in 2018 as XOJET, offers whole aircraft private charter flights as well as seats on shared charters, seamlessly and instantly bookable through the XO mobile app. Members and clients can request flights on over 2,400 aircraft worldwide, including the 360+ aircraft in the Vista Members’ fleet and the safety-vetted XO alliance fleet of 2,100+ private aircraft covering all cabin classes.
Vista has a diversified client base across industry and geography. The top 20 clients contribute to less than 6% of the group’s revenues.
Prepared for Future Growth
We initiated our coverage of Vista in January 2020. Since then, Vista has transformed from a highly leveraged travel alternative trying to keep up with demand, to a company with improved fundamentals, scaled for future growth with no current need for further fleet investment.
Since our initiation, Vista’s revenues have doubled, secured debt as a percentage of total debt has decreased from 67% to a pro forma 49%, and net leverage has decreased from 8.2x to 4.5x. The member fleet has expanded from 115 to more than 360 aircraft. Participants in VistaJet’s Program membership (the company’s most comprehensive personal membership with a fixed hourly rate and guaranteed aircraft availability) have increased from 500 to 970. Pro forma liquidity is healthy at $280 million, including a fully available revolving credit facility of $145 million.
Vista spent 2022 preparing for future growth. The COVID-19 pandemic led to rapid growth and healthy demand, which encouraged significant expansion of Vista’s fleet. Vista added 115 new dedicated aircraft in 2022 through planned aircraft deliveries and acquisitions. Production shortfalls created challenges for Vista and other industry participants to acquire new aircraft, forcing Vista to turn to acquisition for fleet growth. Vista acquired Air Hamburg – the largest private jet operator in Europe by number of flights, and Jet Edge – a leading U.S. provider of large-cabin and super-midsize charter and aircraft management services. Combined, they considerably expanded Vista’s scale, offering flexibility and efficiency to their customers. Vista added 240 program members in 2022 and appears on pace for an additional 240 program members in 2023.
Today, Vista’s fleet is underutilized, as the company has added fleet faster than customers. Management desires 70% of revenues to be generated by their VistaJet members, but today that number is closer to 50%. In the meantime, XO members can access the VistaJet Members’ fleet which is higher margin for Vista than using the XO alliance fleet. In turn, this access to the VistaJet Members’ fleet may persuade those using the ad hoc XO mobile app to sign-up for a VistaJet membership. Future growth is expected to be largely driven by transitioning those that own or are contemplating buying an aircraft to instead purchase a VistaJet membership. VistaJet, like most private aviation companies, does not publish a specific price list. Its online comparison tool entices potential members by sharing how much they could save using the Program membership compared to owning a jet. For example, if you were to own a Bombardier 6000 and fly around 50 hours per year, you could expect to save over $150,000 per flight hour with a VistaJet membership based on depreciation and running costs. Even at today’s pace of VistaJet member adoption, Vista has years to reach full capacity. Historical retention of VistaJet members has been approximately 90%.
Vista says deleveraging is a top priority. For 2023, management anticipates $250 million of debt repayment through natural amortization as well as continued EBITDA (earnings before interest, taxes, depreciation, and amortization) growth. In addition, the company expects to generate $150 million per year in free cash flow which could be used for additional debt paydown as well. While management does not have a stated leverage target, they have mentioned that a net debt of 3x feels healthy. If we assume $250 million of naturally occurring amortization and $150 million of free cash flow towards debt, it is plausible that net debt could be reduced to 4.0x by the end of 2023; a far cry from the 8.2x in 2020.
Industry
While the pandemic hurt many industries, it actually helped private aviation. Demand increased due to a shift in corporations and high-net-worth individuals’ desire to travel safely. New flyers entered the market after the pandemic practically shut down commercial airliners in 2020. These newcomers are generally affluent passengers who would traditionally travel in first-class seats but never thought they needed to fly privately. After experiencing the perks of private aviation – the lack of disruption of canceled flights, crowded airports, and security checkpoints –many will likely be private aviation users for the long haul.
Forbes predicts private jet market growth will continue, and the overall private aviation market will emerge from the pandemic 5% to 10% larger than before. According to Latitude 33 Aviation, prior to the pandemic, only 10% of those who could afford to fly privately did so. Now, research estimates that 79% of people who can afford a private jet are inclined to fly privately. In addition, 53% of new private flyers say they plan to fly privately on a regular basis post-pandemic.
Industry pundits say those that own their own aircraft and fly fewer than 400 hours per year are underutilizing their aircraft. Per the private jet company NetJets, “most evaluations on the cost of a private jet do not account for depreciation, and the variable costs for maintaining and operating a private jet are considerable.” This sets the stage for why we believe demand at private aviation platforms such as Vista or the fractional ownership model at NetJets is likely to continue to prosper.
2023 Semi-Annual Report 13
A VistaJet contract and NetJets’ fractional aircraft ownership program are quite different. VistaJet is a five-page contract that basically states that Vista has an obligation to transport, and the client has an obligation to pay. Prices range from around $12,000 to $20,000 per hour depending on membership level and aircraft. NetJets has a roughly 150-to-200-page contract including a share-purchase agreement, operating agreement, and surcharge agreement. Fractional ownership requires significant investment and ongoing expenses, including monthly management fees and flight costs.
Currently, Vista has an approximately 2% market share in an estimated $67 billion fragmented market, along with significant whitespace for organic growth. NetJets is the market leader with approximately 10% market share.
Our History with Vista
At our initiation of coverage back in January 2020, Vista was rated: Caa1 by Moody’s and B+ by Fitch. As management executed its playbook, positive rating migration followed. Today, Vista is rated B3 by Moody’s and BB- by Fitch. As of June 30, 2023, we own Vista corporate bonds maturing in 2027 and 2030 in the Core Plus Income Fund. Our allocation to Vista in Fund is approximately 0.5% of assets and approximately 10% of the Fund’s total high-yield allocation. The Vista securities that mature in 2027 trade at approximately 400 bps (4%) wide to B-rated consumer discretionary names, and, if held to maturity, will generate a yield of 11.3%. We believe we are being compensated more than appropriately for the risk.
Looking Ahead
We believe Vista’s platform has been scaled to support the next 3-to-5 years of growth. Growth is expected to continue through Vista’s contractual, asset-lite offering which continues to demonstrate strong momentum. We believe incremental EBITDA growth can be achieved through fleetwide utilization of program sales and optimizing operations. Currently, management has announced no further M&A targets, no capital expenditure commitments, and no financing needs to bolster liquidity.
In our view, the contractual nature of the program sales combined with Vista’s historical retention rate of approximately 90%, ample whitespace for organic growth, lack of additional M&A/fleet needs, low capital commitments, annual free cash flow generation, and reasonable liquidity indicate that strong fundamentals are here to stay through the maturity of our allocation.
Continued deleveraging is expected via EBITDA growth, the natural amortization of fleet debt (which increases free cash flow), possible leverage-neutral unsecured issuances to unencumber the balance sheet and debt reduction via free cash flow. It is conceivable that further ratings upgrades are possible and spread compression warranted.
David Kratz, fixed income research analyst, joined Weitz Investment Management in 2004. He has held multiple roles with the firm, including client services representative, equity intern, internal wholesaler and product specialist. In 2017, he joined the fixed income team as a research associate. David has a bachelor's in finance, a master's in security analysis and portfolio management, and an MBA from Creighton University.
14 2023 Semi-Annual Report
CONSERVATIVE ALLOCATION FUND
Portfolio Managers: Brad Hinton, CFA & Nolan Anderson
Investment Style: Conservative Allocation
The Conservative Allocation Fund’s Institutional Class returned -0.87% for the third quarter compared to -3.03% for the Morningstar Moderately Conservative Target Risk Index. Year-to-date, the Fund’s Institutional Class has returned +5.42% compared to +2.33% for the index.
Financial markets took a breather in the third quarter. Despite signs of progress, the Federal Reserve stated clearly that its task of taming inflation was not yet done. Fed Chair Powell outlined a potential path of “higher for longer” interest rates, and bulls got spooked. September lived up to its billing as the cruelest month for equity owners, and the month was also unkind to bond holders. Investor sentiment for most assets continued to wobble as summer gave way to autumn.
Defense was the name of the game, and the Fund held up well in this more challenging environment. The Fund’s collection of shorter-maturity bonds generated mildly positive returns, despite higher interest rates across the yield curve. The Fund’s stocks also delivered solid relative results, declining less than the broad equity indices.
As we have said for some time, the Fed’s forceful actions to contain inflation are likely to have both intended and unintended consequences. The ultimate effects of rapid and steep monetary tightening remain to be seen, and the range of potential outcomes seems wide. In our view, the case for owning durable, resilient, adaptable businesses paired with high-quality bonds remains compelling.
We swapped the Fund’s Liberty Broadband Corp. (LBRDK) shares back to Charter Communications, Inc., (CHTR) (Charter is by far Liberty Broadband’s largest asset), and the combined position was the most notable quarterly contributor. Investor sentiment around broadband’s competitive position became less negative, and the stocks rebounded nicely from what we considered oversold levels. Alphabet, Inc., (GOOG) added to its exceptional year-to-date returns, while Markel Group, Inc., (MKL) and Comcast Corp. (CMCSA) also contributed to quarterly results.
Vulcan Materials Co. (VMC) and Martin Marietta Materials, Inc., (MLM) were among the Fund’s largest quarterly detractors, giving back some of their strong year-to-date gains. Analog Devices, Inc., (ADI), Oracle Corp. (ORCL), and Microsoft Corp. (MSFT) also detracted from results as technology stocks generally fell during the quarter. The underlying businesses are doing fine, and we continue to own all five companies.
Microsoft, Alphabet, Oracle, Berkshire Hathaway, Inc., (BRK/B), and Martin Marietta Materials were the Fund’s largest year-to-date contributors. The breadth of contributors continued to be notable, with 16 stocks posting double-digit, year-to-date returns across five different sectors. Charles Schwab Corporation (SCHW) (sold in the first quarter), Diageo plc (DEO US), Danaher Corp. (DHR), and Thermo Fisher Scientific, Inc., (TMO) were the Fund’s primary detractors year-to-date. We have continued to add to the latter three positions at what we think are increasingly attractive prices.
We added a new position in Microchip Technology, Inc., (MCHP) to the Fund during the quarter. Microchip is a leading provider of mixed signal microcontrollers and analog semiconductors to a broad range of industrial, data center, automotive, communication and consumer appliance customers. The company enjoys favorable product characteristics that help drive strong profitability, and it benefits from several long-wave demand tailwinds such as electronification, automation, and growth in data communications. While Microchip is not immune from semiconductor cycles, its cash flows have been durable through
cycles. The multi-year outlook is solid, and we think the company is poised to further boost per-share value growth through increasing share repurchases at discounted prices.
As principal payments continued to roll in from the Fund’s shorter-dated bonds, we have been able to reinvest at prevailing higher yields. We sprinkled in small individual positions in mortgage-backed and other asset-backed debt, with a heavy focus on sponsor quality, structural protection, and straightforward collateral. Late in the quarter as rates kept rising, we extended duration modestly by buying a heavier dose of three-to-five-year Treasuries. In line with our conservative approach, we were not active in corporate bonds at relatively tight spread levels during the quarter.
The Fund’s overall portfolio continues to evolve with market conditions. We own common equity stakes in 28 companies totaling 43.3% of net assets. High-yielding, hybrid securities account for another 1.3% of the Fund. The fixed income portfolio includes securitized debt (13.3%), investment-grade corporate bonds (0.8%), Treasury securities (39.0%), and cash equivalents/ other (2.3%). We have room to invest in new opportunities as our team uncovers them.
We think the investing landscape for allocation investors has materially improved. In our view, the Fund’s securities offer adequate long-term capital appreciation potential. Sustained, higher interest rates have enhanced the current income outlook. And sizeable holdings of short maturity Treasury securities and cash provide healthy ballast with respectable yields. 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.
2023 Semi-Annual Report 15
Returns
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | Annualized | | | | | | | |
| | | | | | | | | | | | | Since | | | | |
| | | | | | | | | | | | | Inception | | Net | | Gross |
| | QTD | | YTD | | 1 YR | | 3 YR | | 5 YR | 10 YR | | (10/1/03) | | Expense | | Expense |
| WBALX - Investor Class | (0.87)% | | 5.27% | | 10.78% | | 3.91% | | 5.23% | 5.19% | | 5.49% | | 0.85% | | 0.99% |
| WBAIX - Institutional Class | (0.87) | | 5.42 | | 10.95 | | 4.06 | | 5.36 | 5.25 | | 5.52 | | 0.70 | | 0.79 |
| Morningstar Moderately Conservative Target Risk Index | (3.03) | | 2.33 | | 8.22 | | 0.15 | | 3.00 | 3.97 | | 5.22 | | | | |
Top 10 Stock Holdings
| | | |
| | | % of Net Assets |
| Berkshire Hathaway, Inc. | | 2.8 |
| Danaher Corp. | | 2.4 |
| Microsoft Corp. | | 2.2 |
| Analog Devices, Inc. | | 2.1 |
| Aon plc | | 2.1 |
| Thermo Fisher Scientific, Inc. | | 2.0 |
| Mastercard, Inc. | | 1.9 |
| Vulcan Materials Co. | | 1.8 |
| Alphabet, Inc. | | 1.8 |
| Visa, Inc. | | 1.8 |
| | | 20.9 |
Top Stock Performers
| | | | |
| | | Average | |
| | Return | Weight | Contribution |
| Alphabet Inc., - Class C | 9.0% | 1.8% | 0.15% |
| Liberty Broadband Corp. – Class C | 13.5 | 0.6 | 0.14 |
| Markel Group, Inc. | 6.4 | 1.8 | 0.12 |
| Comcast Corp. – Class A | 7.4 | 1.3 | 0.08 |
| Berkshire Hathaway, Inc. – Class B | 2.7 | 2.8 | 0.07 |
Bottom Stock Performers
| | | | |
| | | Average | |
| | Return | Weight | Contribution |
| Analog Devices, Inc. | (9.7)% | 2.2% | (0.22)% |
| Martin Marietta Materials, Inc. | (10.9) | 1.9 | (0.22) |
| Vulcan Materials Co. | (10.8) | 2.0 | (0.21) |
| Oracle Corp. | (10.8) | 1.6 | (0.17) |
| Microsoft Corp. | (7.1) | 2.3 | (0.16) |
30-Day SEC Yield
| | | | |
| Share Class | | Subsidized | Unsubsidized |
| Investor | | 2.51% | 2.37% |
| Institutional | | 2.66 | 2.58 |
Industry Breakdown
| | | % of Net Assets |
| Financials | | 13.7 |
| Information Technology | | 10.7 |
| Health Care | | 5.9 |
| Materials | | 4.9 |
| Communication Services | | 4.0 |
| Industrials | | 3.1 |
| Consumer Staples | | 1.0 |
| U.S. Treasuries | | 39.0 |
| Asset-Backed Securities | | 7.5 |
| Mortgage-Backed Securities | | 2.9 |
| Commercial Mortgage-Backed Securities | | 2.9 |
| Corporate Convertible Bonds | | 0.9 |
| Corporate Bonds | | 0.8 |
| Non-Convertible Preferred Stocks | | 0.4 |
| Cash Equivalents/Other | | 2.3 |
| | | 100.0 |
Fixed Income Attributes
Credit Quality
| Portfolio Summary | |
| Average Maturity | 2.3 years |
| Average Effective Maturity | 2.8 years |
| Average Duration | 1.9 years |
| Average Effective Duration | 1.8 years |
| Average Coupon | 2.9% |
| | | |
| Underlying Securities | | % of Portfolio |
| U.S. Treasury | | 71.6 |
| U.S. Government Agency Mortgage Related | | |
| Securities | | 2.2 |
| AAA | | 17.9 |
| AA | | 2.0 |
| A | | 0.9 |
| BBB | | 2.0 |
| CCC | | 0.7 |
| Non-Rated | | 1.6 |
| Cash Equivalents | | 1.1 |
| | | 100.0 |
All data as of 9/30/2023 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 7/31/2024. 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 10 for additional performance disclosures. See page 83 for a description of all indices. See page 84 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
16 2023 Semi-Annual Report
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 -2.35% for the third quarter compared to a -3.23% return for the Bloomberg U.S. Aggregate Bond Index (Agg). Year-to-date, the Fund’s Institutional Class returned +1.15% compared to a -1.21% return for the index. Solid relative results this quarter and positive absolute returns year-to-date were driven by portfolio positioning (shorter average duration / average life) and overall security selection relative to the index. Longer-term results (3-, 5-, and 7-year), both absolute and relative, continue to outpace the index.
Overview
In July, the Federal Reserve delivered its eleventh increase to the federal funds rate since the cycle began in March 2022, resulting in a 5.25-5.50% target rate at quarter-end. Despite a well-telegraphed pause at the September meeting, the Federal Reserve’s message was clear: the inflation fight is not done. The Fed reinforced its higher for longer messaging by removing two interest rate cuts from its latest “dot plot” forecast of Fed rate policy (Fed officials now see a fed funds rate of 5.00-5.25% in 2024, as compared to 4.50-4.75% at the June Meeting), raising its economic growth forecast and lowering its year-end unemployment target to 3.7% from 3.9% in June.
This may suggest the Fed believes the economy is too strong for them to achieve their inflation objectives despite its expectation that core inflation will peak at 3.7% this year – lower than June’s projection of 3.9% – before cooling to 2.6% in 2024. Given that the Fed believes monetary policy works primarily through the “wealth effect” channel, the Fed may be trying to tighten financial conditions by engineering higher long-term interest rates and, therefore, higher borrowing costs for consumers and businesses. In a speech on September 28, following the Fed’s September policy meeting, Chairman Powell stated “one of our goals is to influence spending and investment decisions today and in the months ahead.”
Corporate credit spreads narrowed/declined modestly in the quarter, reflecting the continued strength of the U.S. economy. The table below reflects the changes during the quarter in credit spread (incremental return, reflected in basis points – investors require rates above those of comparable U.S. Treasuries as compensation for credit risk) for the broad investment grade corporate (ICE BofA US Corporate) and high yield bond (ICE BofA US High Yield) indexes. The table also shows the changes in effective yield for the indexes. While overall spread levels moved lower in the quarter, the effective yields increased due to the rise in U.S. Treasury rates.
| | 6/30/2023 | 9/30/2023 |
| Ice BofA US Corporate Index | | |
| Option-Adjusted Spread (bps) | 130 | 125 |
| Effective Yield (%) | 5.55% | 6.07% |
| Ice BofA US High Yield Index | | |
| Option-Adjusted Spread (bps) | 405 | 403 |
| Effective Yield (%) | 8.35% | 8.80% |
Over the past year, the Core Plus Income Fund’s yield-to-worst (YTW) has continued to increase. As a reminder, YTW has historically been a reasonable predictor of forward returns. The Fund’s YTW increased from 6.00% on September 30, 2022, to 6.40% on September 30, 2023 – comparing favorably to the index’s YTW of 5.39% as of September 30 (see table below), while we have narrowed the duration gap relative to the Agg.
| YTW / Duration Analysis | Weitz Core Plus Income Fund vs. Bloomberg U.S. Agg |
| |
| | 9/30/2022 | 9/30/2023 | Change | % |
| Yield to Worst (%): | | | | |
| Core Plus Income Fund | 6.00 | 6.40 | 0.40 | 6.67 |
| U.S. Agg Index | 4.81 | 5.39 | 0.58 | 12.06 |
| | 9/30/2022 | 9/30/2023 | Change | % |
| Average Duration (yrs): | | | | |
| Core Plus Income Fund | 5.4 | 5.7 | 0.52 | 5.6 |
| U.S. Agg Index | 6.2 | 6.1 | (0.03) | (1.6) |
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.
| | 9/30/2023 | 6/30/2023 | Qtr Over | 9/30/2022 | Yr Over |
| | Current | Previous | Qtr | Previous | Yr |
| Sector (% of Net Assets) | Quarter | Quarter | Change | Year | Change |
| Corporate Bonds | 14.3 | 14.9 | -0.6 | 21.5 | -7.2 |
| Corporate Convertible Bonds | 0.1 | 0.3 | -0.2 | 0.5 | -0.4 |
| Asset-Backed Securities | 26.7 | 27.6 | -0.9 | 29.4 | -2.7 |
| (ABS) | | | | | |
| Corporate Collateralized | 9.8 | 9.3 | 0.5 | 12.5 | -2.7 |
| Loan Obligations (CLOs)* | | | | | |
| Commercial Mortgage- | 5.9 | 6.1 | -0.2 | 10.3 | -4.4 |
| Backed Securities (CMBS) | | | | | |
| Agency Mortgage-Backed | 10.7 | 7.6 | 3.1 | 1.1 | 9.6 |
| (MBS) | | | | | |
| Non-Agency Mortgage | 2.3 | 2.3 | 0.0 | 0.4 | 1.9 |
| Backed (RMBS) | | | | | |
| Non-Convertible Preferred | 0.1 | 0.1 | 0.0 | 0.4 | -0.3 |
| Stock | | | | | |
| Taxable Municipal Bonds | 0.1 | 0.1 | 0.0 | 0.3 | -0.2 |
| U.S. Treasury | 38.6 | 37.4 | 1.2 | 34.5 | 4.1 |
| Common Stock | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Cash & Equivalents | 1.2 | 3.6 | -2.4 | 1.6 | -0.4 |
| Total (does not include | 100.0 | 100.0 | | 100.0 | |
| CLO line) | | | | | |
| High Yield** | 3.7 | 4.9 | -1.2 | 11.1 | -7.4 |
| |
| Average Effective Duration | 5.7 | 5.4 | 0.3 | 5.2 | 0.5 |
| (years) | | | | | |
| Average Effective Maturity | 9.4 | 8.6 | 0.8 | 8.3 | 1.1 |
| (years) | | | | | |
*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.
The largest change in sector allocation during the third quarter was an increase in mortgage-backed securities (MBS). The Fund had not had a meaningful investment in MBS in its nine-year life, but that all changed in 2023 – with most of the investments occurring over the past two quarters, where nearly 13% of Fund assets were deployed, primarily in agency (Fannie Mae and Freddie Mac) MBS but also in prime jumbo MBS (mortgages too large to be eligible for inclusion in agency MBS). What changed? Since the Great Financial Crisis, the Federal Reserve
2023 Semi-Annual Report 17
has been an active and large buyer of agency MBS via its various quantitative easing (QE) campaigns. From no exposure at the end of 2008, the Fed accumulated nearly $2.75 trillion of agency MBS. This action helped keep mortgage rates lower than they might otherwise have been – and led to, we believed, less attractive opportunities to invest in that part of the fixed income marketplace. Last year, the Fed stopped accumulating MBS and allowed its portfolio to shrink via quantitative tightening (QT), however modestly. And the early part of 2023 saw three of the largest bank failures in U.S. history which resulted in a meaningful reduction, if not exodus, by many banks (especially regional) from the MBS marketplace. With key MBS buyers no longer present and increased interest rate volatility, the market repriced MBS spreads meaningfully wider/higher than they had been, as measured by the difference between current production/coupon MBS and the average of 5- and 10-year Treasury bonds.
So, we believe spreads became more attractive (higher) – AND interest rates climbed meaningfully from where they had been stuck for so many years of zero interest-rate policy (ZIRP), presenting meaningful coupon income as a complement to the Fund’s Treasury bond exposure. In addition, the relative value of MBS versus investment-grade corporate bonds are at some of the widest yield/return differentials in a decade, allowing investors to improve yields and remain investment-grade.
In addition to MBS, we added Treasury securities, principally in the 7-10-year and 20-year maturities. We also added to our auto and consumer ABS holdings, primarily via the new issue market. In collateralized loan obligations (CLOs), we invested in new issue commercial real estate (CRE) CLOs from Argentic and two new middle-market CLO sponsors, Bain Capital and CIFC-LBC.
In terms of overall portfolio metrics, the Fund’s average effective maturity increased to 9.4 years as of September 30, 2023, from 8.6 years as of June 30, 2023, while our average effective duration increased to 5.7 years from 5.4 years over the same time period, compared to the Agg’s average effective duration of 6.1 years on September 30. These measures provide a guide to the Fund’s interest rate sensitivity. A higher average effective duration increases the Fund’s price sensitivity to changes in interest rates (either up or down).
As of September 30, our high-yield exposure as a percent of net assets was 3.7%, down from 4.9% on June 30, 2023. The Fund can invest up to 25% of net assets in high yield, therefore we have ample capacity to take advantage of valuation discrepancies/opportunities in the high yield area.
Top Quarterly Contributors
| • | | Collateralized Loan Obligations: Our CLO (both CRE CLOs and MM CLOs) portfolio was the largest positive contributor to returns during the third quarter. Our CLOs benefited from moderate price appreciation and rising coupon income. Our CLO portfolio consists of floating rate securities with coupon payments that reset on a monthly or quarterly basis, and closely track the fed funds rate. As of June 30, our CLO portfolio had a YTW of 8.2%. |
| • | | Asset Backed Securities: Our ABS portfolio contributed solid coupon income to the portfolio while market prices remained largely stable. |
Top Quarterly Detractors
| • | | Treasury Bonds: U.S. Treasuries were the primary detractor to performance. With a duration of approximately 11 years, our Treasury portfolio experienced unrealized mark-to-market losses as interest rates rose significantly during the quarter. |
Fund Strategy
Our approach consists primarily of investing in a diversified portfolio of high-quality bonds while maintaining an overall portfolio average duration of 3.5 to 7 years. We may seek to capture attractive coupon income and potential price appreciation by investing in longer-duration and lower-quality bonds when attractively priced. We may also invest up to 25% in fixed income securities that are not considered investment grade (such as high yield and convertible bonds as well as preferred and convertible preferred stock), and we do so when we perceive the risk/reward characteristics to be favorable.
We do not, and will not, try to mimic any particular index as we construct our portfolio. We believe our flexible mandate and high-conviction portfolio will benefit investors over the long term. We utilize a bottom-up, research-driven approach and select portfolio assets one security at a time based on our view of opportunities in the marketplace. Our fixed income research is not dependent on, but often benefits from, the due diligence work our equity teammates conduct on companies and industries.
Overall, we strive to be adequately compensated for the risks assumed in order to maximize investment (or reinvestment) yield and to avoid making interest rate bets, particularly those that depend on interest rates going down. We have often maintained a lower duration profile than the index, particularly in very low-yield environments. Our shorter duration profile has benefited shareholders in periods of rising interest rates.
Maintaining a diversified portfolio and liquidity reserves is a key element of our risk management approach. As a result, we have not held back from owning U.S. Treasury bonds and, at times like now, cash reserves. We believe this approach has served our clients well, particularly in extreme market environments like the pandemic brought upon us in March 2020.
The Benefit of Higher Rates
Rising interest rates across the yield curve pave the way for higher coupon income today and provide the potential for greater total returns in the future. For the first time in over 15 years, the return prospects of a diversified portfolio of higher quality U.S. fixed income securities may be highly competitive versus the historical returns on equities, which are likely much less uncertain and which have significantly less downside risk. Given the current interest rate environment, we continue to believe that now is a good time for investors to consider adding to their fixed income allocation.
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 loans. 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.
18 2023 Semi-Annual Report
Returns
| | | | | | | | | | Annualized | | | | | | |
| | | | | | | | | | | | | Since | | | | |
| | | | | | | | | | | | | Inception | | Net | | Gross |
| | | QTD | | YTD | | 1 YR | | 3 YR | | 5 YR | | (7/31/14) | | Expense | | Expense |
| WCPNX - Investor Class | | (2.50)% | | 0.96% | | 2.38% | | (1.79)% | | 2.12% | | 2.33% | | 0.55% | | 0.82% |
| WCPBX - Institutional Class | | (2.35) | | 1.15 | | 2.59 | | (1.67) | | 2.26 | | 2.50 | | 0.45 | | 0.59 |
| Bloomberg U.S. Aggregate Bond Index | | (3.23) | | (1.21) | | 0.64 | | (5.21) | | 0.10 | | 0.85 | | | | |
| Fixed Income Attributes | |
| Portfolio Summary | |
| Average Maturity | 9.0 years |
| Average Effective Maturity | 9.4 years |
| Average Duration | 6.3 years |
| Average Effective Duration | 5.7 years |
| Average Coupon | 4.94% |
| Maturity Distribution | | |
| Maturity | | % of Portfolio |
| Cash Equivalents | | (0.1) |
| Less than 1 year | | 11.4 |
| 1 - 3 Years | | 11.0 |
| 3 - 5 Years | | 11.1 |
| 5 - 7 Years | | 8.1 |
| 7 - 10 Years | | 24.5 |
| 10 Years or more | | 34.0 |
| Common Stocks | | 0.0 |
| | | 100.0 |
| Credit Quality | | |
| Underlying Securities | | % of Portfolio |
| U.S. Treasury | | 39.0 |
| U.S. Government Agency Mortgage | | |
| Related Securities | | 9.8 |
| AAA | | 8.9 |
| AA | | 10.2 |
| A | | 12.6 |
| BBB | | 15.6 |
| BB | | 2.1 |
| B | | 1.4 |
| CCC | | 0.1 |
| Non-Rated | | 0.4 |
| Cash Equivalents | | (0.1) |
| | | 100.0 |
| 30-Day SEC Yield | | | |
| Share Class | | Subsidized | | Unsubsidized |
| Investor | | 5.55% | | 5.30% |
| Institutional | | 5.64 | | 5.53 |
All data as of 9/30/2023 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 7/31/2024. 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 10 for additional performance disclosures. See page 83 for a description of all indices. See page 84 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
2023 Semi-Annual Report 19
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20 2023 Semi-Annual Report
LARGE CAP EQUITY FUND
Portfolio Manager: Brad Hinton, CFA
Investment Style: Large Cap
The Large Cap Equity Fund’s Institutional Class returned -1.74% for the third quarter compared to -3.15% for the Russell 1000. Year-to-date, the Fund’s Institutional Class has returned +17.04% compared to +13.01% for the Russell 1000.
After a roaring first half, the stock market took a breather in the third quarter. Despite signs of progress, the Federal Reserve stated clearly that its task of taming inflation was not yet done. Fed Chair Powell outlined a potential path of “higher for longer” interest rates, and bulls got spooked. September lived up to its billing as the cruelest month for equity owners, and investor sentiment continued to wobble as summer gave way to autumn.
The Fund held up well in this environment, posting solid relative results despite the modest quarterly decline. As we have said for some time, the Fed’s forceful actions to contain inflation are likely to have both intended and unintended consequences. The ultimate effects of rapid and steep monetary tightening remain to be seen, and the range of outcomes is wide. Our aim is to own companies that don’t depend on smooth sailing. Durable, resilient, adaptable businesses can often make their own breaks, and we own a collection of them.
The Fund’s Charter Communications, Inc., (CHTR) position, as well as Liberty Broadband Corp. (LBRDK) which owns 26% of Charter, were the most notable quarterly contributors. Investor sentiment around broadband’s competitive position became less negative, and the stocks rebounded nicely from what we considered oversold levels. As for other quarterly contributors, Alphabet, Inc., (GOOG) and Meta Platforms, Inc., (META) added to their exceptional year-to-date returns. After a series of moves to simplify its structure, Liberty SiriusXM (LSXMK) closed the quarter by proposing a combination with Sirius XM Holdings, Inc., (SIRI). We believe the transaction, if completed, should help unlock the trapped value we have long seen in LSXMK shares.
Quarterly detractors included CoStar Group, Inc., (CSGP), Vulcan Materials Co. (VMC), Analog Devices, Inc., (ADI), CarMax, Inc., (KMX), and Oracle Corp. (ORCL). None of the stock price moves were extreme, and the companies’ reported results have been within expected ranges. The near-term outlooks for CarMax and Analog Devices remain challenging, and we think their stock prices more than reflect it. In each case we have seen nothing to derail our investment thesis.
Meta Platforms and Alphabet were the true year-to-date standouts. After steep declines in 2022, both stocks rebounded sharply due to a combination of solid fundamentals, disciplined operational execution, and improved sentiment. Despite outsized gains and attention, we think both Alphabet and Meta remain undervalued. Other notable year-to-date contributors included Adobe, Inc., (ADBE), Salesforce, Inc., (CRM), and Oracle. Charles Schwab Corporation (SCHW) (sold in the first quarter), Fidelity National Information Services, Inc., (FIS), Thermo Fisher Scientific, Inc., (TMO), and Danaher Corp. (DHR) were the Fund’s largest detractors year-to-date.
We added new positions in Microchip Technology, Inc., (MCHP) and Equifax, Inc., (EFX) during the quarter. Both companies face near-term headwinds that mask the earnings power and compelling valuations that we see for patient investors. Brief capsules follow, but we’d nudge interested readers to listen to equity analyst Mo Spolan discussing Equifax on a recent episode of the Business Breakdowns podcast, and to stay tuned for an upcoming Analyst Corner feature on Microchip Technology from director of equity research Barton Hooper and junior equity analyst Andrew McClure.
Microchip is a leading provider of mixed signal microcontrollers and analog semiconductors to a broad range of industrial, data center, automotive, communication and consumer appliance customers. The company enjoys favorable product characteristics that help drive strong profitability, and it benefits from several long-wave demand tailwinds such as electronification, automation, and growth in data communications. While Microchip is not immune from semiconductor cycles, its cash flows have been durable through cycles. The multi-year outlook is sturdy, and we think the company is poised to further boost per-share value growth through increasing share repurchases at discounted prices.
Equifax is best known as one of three primary U.S. credit bureaus, but the company’s crown jewel is the Equifax Workforce Solutions (EWS) business. The core business of EWS is Verification Services, which is powered by The Work Number (TWN) database with income and employment data on 120 million Americans. TWN is used for mortgage origination, pre-employment background screening, and government benefit applications. The EWS business generally grows at a teens rate with high margins, a long unit expansion runway, and pricing power. We think Equifax is underearning today due to depressed mortgage volumes and weak gross hiring. As these end markets stabilize, our view is that revenue and cash flows can accelerate meaningfully.
We also received distributions of two new securities through corporate actions during the quarter. Laboratory Corp. of America Holdings (LH) spun out its clinical research organization (CRO) business to shareholders under the name Fortrea Holdings, Inc., (FTRE). We quickly exited this new position when the stock traded into the mid-$30s, above our business value estimate. Liberty Media Corp. again reattributed assets and created a new tracking stock called Liberty Live (LLYVK), which was distributed to owners of Liberty SiriusXM. We held onto the Fund’s new Liberty Live shares. We like the underlying Live Nation Entertainment, Inc., (LYV) businesses, and we think the tracking stock trades at a reasonable valuation.
We have a focused portfolio that is well-aligned with our vision for successful large-cap investing. The Fund has concentrated ownership stakes in 29 companies, with the top ten representing nearly half 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 low-80s, which we believe offers adequate return potential over a multi-year period.
2023 Semi-Annual Report 21
| | | | | | | | | | | | | | | | | | | | | |
| 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 | | (1.76)% | | 16.92% | | 25.95% | | 8.03% | | 9.71% | | 8.88% | | 7.47% | | 10.19% | | 1.04% | | 1.04% |
| WVAIX - Institutional Class | | (1.74) | | 17.04 | | 26.09 | | 8.20 | | 9.91 | | 9.08 | | 7.57 | | 10.24 | | 0.89 | | 0.89 |
| Russell 1000 Index | | (3.15) | | 13.01 | | 21.19 | | 9.53 | | 9.62 | | 11.62 | | 9.78 | | 10.39 | | | | |
| S&P 500 Index | | (3.27) | | 13.07 | | 21.62 | | 10.15 | | 9.91 | | 11.91 | | 9.71 | | 10.42 | | | | |
| Top 10 Stock Holdings | | |
| | | % of Net Assets |
| Alphabet, Inc. | | 7.4 |
| Berkshire Hathaway, Inc. | | 4.9 |
| Visa, Inc. | | 4.7 |
| Danaher Corp. | | 4.7 |
| Thermo Fisher Scientific, Inc. | | 4.6 |
| Mastercard, Inc. | | 4.6 |
| Analog Devices, Inc. | | 4.5 |
| Vulcan Materials Co. | | 4.2 |
| CoStar Group, Inc. | | 4.2 |
| Meta Platforms, Inc. | | 4.0 |
| | | 47.8 |
| | | |
| Industry Breakdown | | |
| | | % of Net Assets |
| Information Technology | | 26.6 |
| Financials | | 20.9 |
| Communication Services | | 19.5 |
| Health Care | | 11.7 |
| Materials | | 6.5 |
| Consumer Discretionary | | 6.0 |
| Real Estate | | 4.2 |
| Industrials | | 2.0 |
| Cash Equivalents/Other | | 2.6 |
| | | 100.0 |
| | | | |
| Top Stock Performers | | | |
| | | Average | |
| | Return | Weight | Contribution |
| Alphabet, Inc. – Class C | 9.0% | 7.3% | 0.58% |
| Liberty Broadband Corp. – Class C | 14.1 | 3.3 | 0.45 |
| Charter Communications, Inc. – Class A | 19.8 | 2.1 | 0.36 |
| Liberty Media Corp – Liberty SiriusXM | 6.7 | 2.2 | 0.25 |
| Meta Platforms, Inc. – Class A | 4.7 | 3.9 | 0.18 |
| | | | |
| Bottom Stock Performers | | | |
| | | Average | |
| | Return | Weight | Contribution |
| Costar Group, Inc. | (13.6)% | 4.5% | (0.60)% |
| Vulcan Materials | (10.2) | 4.4 | (0.46) |
| Analog | (9.7) | 4.5 | (0.44) |
| CarMax, Inc. | (15.5) | 2.5 | (0.41) |
| Oracle. | (10.8) | 0.4 | (0.37) |
All data as of 9/30/2023 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 7/31/2024. 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 10 for additional performance disclosures. See page 83 for a description of all indices. See page 84 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
22 2023 Semi-Annual Report
MULTI CAP EQUITY FUND
Portfolio Managers: Wally Weitz, CFA, Brad Hinton, CFA & Drew Weitz
Investment Style: Multi-Cap Value
The Multi Cap Equity Fund’s Institutional Class returned -2.06% for the third quarter compared to -3.25% for the Russell 3000. Year-to-date, the Fund’s Institutional Class has returned +9.13% compared to +12.39% for the Russell 3000.
After posting double-digit positive returns for the first half of 2023, stocks took a breather in the third quarter, as did bonds. The great debate over inflation and monetary policy rages on. Year-over-year price increases have slowed materially but remain stubbornly above the Fed’s 2% long-term objective. Whether or not the Fed will raise short-term rates again is anyone’s guess. But the third quarter’s lackluster returns, particularly in bond markets, suggest investors are coming to terms with the Fed’s “higher for longer” message.
Monetary policy is famously said to operate with “long and variable lags,” meaning the impact on consumers and the economy will only be fully known in hindsight. Some portions of the economy, like the labor market, have remained resilient thus far while more rate-sensitive corners already feel pain. Surging mortgage rates, for example, have significantly pressured consumers’ ability to purchase a new home. In their own words, the Fed is “navigating by the stars under cloudy skies” and investors are similarly looking out over a cloudy horizon. In our estimation, such conditions reinforce our desire to own a collection of high-quality, durable businesses led by talented management teams capable of navigating uncertain times and potentially coming out the other side even stronger.
Liberty Broadband Corp. (LBRDA) was a top contributor this quarter. Concerns regarding fiber overbuilding and wireless substitution from Charter’s core broadband offering have lessened, while the company’s footprint expansion has increased its addressable market. Liberty SiriusXM (LSXMK) successfully separated its holdings of satellite radio provider SiriusXM Holdings, Inc., (SIRI) and live entertainment / ticketing leader Live Nation Entertainment, Inc., (LYV) into distinct tracking stocks. Liberty management later proposed an outright combination with SiriusXM, whereby all shareholders would own shares directly in the newly combined entity. If such a deal is made, it would collapse the tracking stock structure which historically traded below its mark-to-market value. Shares of Black Knight, Inc., (BKI) rallied when the Federal Trade Commission withdrew its opposition to the company’s business combination with Intercontinental Exchange, Inc., (ICE). We sold our remaining shares as the price approached the proposed deal value.
On a year-to-date basis, Meta Platforms, Inc., (META) remains the Fund’s standout contributor on the back of a nearly 150% return. Meta’s “year of efficiency” (an initiative to cut costs and create a leaner organization) has bolstered profitability while operating results show renewed momentum. Liberty Broadband was also a top year-to-date contributor, and continued recoveries from prior year drawdowns landed Google parent Alphabet, Inc., (GOOG) and Guidewire Software, Inc., (GWRE) top spots as well. Martin Marietta Materials, Inc., (MLM) shares have taken “three steps forward, one step back” so far this year. Favorable pricing dynamics and healthy pipelines of infrastructure projects powered healthy gains for the material supplier through the first half of the year, before giving back some stock price appreciation in the third quarter. Despite the step back, Martin Marietta remains a top contributor for the year.
Like Martin Marietta, Costar Group, Inc., (CSGP) and CarMax, Inc., (KMX) generated negative returns in the third quarter, but are positive contributors to year-to-date performance. Perimeter Solutions SA (PRM), the leading provider of fire retardants and firefighting foam, experienced weakened quarterly results due to a decline in wildfire activity, particularly in its largest market, California. Acres burned this year have been significantly below average, diminishing cash flow and obscuring the company’s potential earnings power in a more typical year. Finally, investors appear to be taking a “wait and see” approach to LKQ Corp.’s (LKQ) acquisition of Canadian operation, Uni-Select, particularly as LKQ will pause its stock buyback program to reduce debt taken on to finance the deal. We remain constructive on the combined company’s prospects and ability to resume repurchases over the long term. Lastly, as we wrote last quarter, we realized losses early this year upon exiting our positions in First Republic Bank (FRCB) and Charles Schwab Corporation (SCHW) in the wake of regional bank stress. These companies no longer impact our forward-looking performance but are likely to remain on the top detractors list for the remainder of the year.
During the third quarter, we initiated a new position in Equifax, Inc., (EFX). Many will be familiar with Equifax as one of three consumer credit reporting bureaus and an indispensable partner for lenders in the extension and pricing of loans. Right now, surging borrowing costs are pressuring demand for mortgages and, therefore, banks’ demand for credit reports. Mortgages remain an important end market for Equifax, but we believe the current environment has overshadowed the opportunity within the faster-growing, higher-margin Equifax Workforce Services (EWS) business. EWS extends Equifax’s traditional credit reporting business with additional sources, most notably income and employment data sourced directly from employers’ payrolls or third-party payroll providers. This additional data increases the potential use cases for Equifax’s verification services into faster growth end-markets, for example employment background screening or qualification for government benefits programs.
Additionally, two portfolio companies spun-off subsidiaries to shareholders during the third quarter. We sold our shares of Laboratory Corp. of America Holdings (LH) clinical trial management business, Fortrea Holdings, Inc., (FTRE), shortly upon receipt as it initially traded above our base-case estimate of business value. LICT Corp. (LICT) also spun off a small Michigan broadband business, Machten, Inc. (MACT), though its small size makes it somewhat immaterial to overall Fund results. Other portfolio activity included trims of Costar Group, Inc., (CSGP), Liberty Latin America Ltd. (LILAK), Meta Platforms, and Martin Marietta Materials; and additions to ACI Worldwide, Inc., (ACIW) and Perimeter Solutions.
We believe that investing in businesses of all sizes, using our Quality at a Discount framework, is an enduring advantage of a multi-cap investing strategy. Valuation remains our North Star, and we think our stocks are priced at reasonable, attractive discounts to business value. Collectively, the portfolio trades at an estimated price-to-value ratio in the upper 70s, a level that suggests we can earn healthy, risk-adjusted returns.
2023 Semi-Annual Report 23
| | | | | | | | | | | | | | | | | | | | | |
| 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 | | (2.08)% | | 9.03% | | 18.18% | | 6.97% | | 5.04% | | 5.34% | | 6.54% | | 10.87% | | 1.07% | | 1.07% |
| WPVIX - Institutional Class | | (2.06) | | 9.13 | | 18.36 | | 7.16 | | 5.26 | | 5.55 | | 6.65 | | 10.93 | | 0.89 | | 0.89 |
| Russell 3000 Index | | (3.25) | | 12.39 | | 20.46 | | 9.38 | | 9.14 | | 11.27 | | 9.68 | | 10.73 | | | | |
| S&P 500 Index | | (3.27) | | 13.07 | | 21.62 | | 10.15 | | 9.91 | | 11.91 | | 9.71 | | 11.01 | | | | |
| Top 10 Stock Holdings | | |
| | | % of Net Assets |
| Alphabet, Inc. | | 6.9 |
| Berkshire Hathaway, Inc. | | 6.6 |
| Liberty Broadband Corp. | | 5.1 |
| CoStar Group, Inc. | | 4.7 |
| HEICO Corp. | | 4.4 |
| Visa, Inc. | | 4.0 |
| Vulcan Materials Co. | | 4.0 |
| Meta Platforms, Inc. | | 3.9 |
| Martin Marietta Materials, Inc. | | 3.9 |
| LKQ Corp. | | 3.8 |
| | | 47.3 |
| | | |
| Industry Breakdown | | |
| | | % of Net Assets |
| Communication Services | | 27.5 |
| Financials | | 21.0 |
| Information Technology | | 10.4 |
| Materials | | 9.6 |
| Industrials | | 8.3 |
| Consumer Discretionary | | 7.3 |
| Health Care | | 6.4 |
| Real Estate | | 4.7 |
| Warrants | | 0.0 |
| Cash Equivalents/Other | | 4.8 |
| | | 100.0 |
| Top Stock Performers | | | |
| | | Average | |
| | Return | Weight | Contribution |
| Black Knight, Inc. | 24.8% | 1.1% | 0.59% |
| Liberty Broadband Corp. | 14.0 | 4.8 | 0.59 |
| Guidewire Software, Inc. | 18.3 | 3.2 | 0.52 |
| Alphabet, Inc. – Class C | 9.0 | 6.5 | 0.51 |
| Liberty Media Corp. Liberty SiriusXM | 6.4 | 3.8 | 0.39 |
| | | | |
| Bottom Stock Performers | | | |
| | | Average | |
| | Return | Weight | Contribution |
| CarMax, Inc. | (16.9)% | 3.7% | (0.66)% |
| CoreCard Corp. | (21.1) | 2.6 | (0.61) |
| Perimeter Solutions SA | (26.2) | 2.0 | (0.59) |
| CoStar Group, Inc. | (13.7) | 2.9 | (0.41) |
| Texas Instruments, Inc. | (11.0) | 2.7 | (0.30) |
All data as of 9/30/2023 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 7/31/2024. 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 10 for additional performance disclosures. See page 83 for a description of all indices. See page 84 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
24 2023 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 -2.86% in the third quarter compared to a -2.03% return for the Bloomberg 5-Year Municipal Bond Index. Year-to-date, the Fund’s total return was -1.70% compared to a -0.86% return for the index. Underperformance has been primarily driven by the Fund’s nearly 30% exposure to investments maturing beyond seven years where the year-to-date increase in interest rates had the largest impact on valuations.
Overview
In July, the Federal Reserve delivered its eleventh increase to the federal funds rate since the cycle began in March 2022, resulting in a 5.25-5.50% target rate at quarter-end. Despite a well-telegraphed pause at the September meeting, the Federal Reserve’s message was clear: the inflation fight is not done. The Fed reinforced its “higher for longer” messaging by removing two interest rate cuts from its latest “dot plot” forecast of Fed rate policy (Fed officials now see a fed funds rate of 5.00-5.25% in 2024, as compared to 4.50-4.75% at the June Meeting), raising its economic growth forecast and lowering its year-end unemployment target to 3.7% from 3.9% in June.
This may suggest the Fed believes the economy is too strong for them to achieve their inflation objectives despite its expectation that core inflation will peak at 3.7% this year – lower than June’s projection of 3.9% – before cooling to 2.6% in 2024. Given that the Fed believes monetary policy works primarily through the “wealth effect” channel, the Fed may be trying to tighten financial conditions by engineering higher long-term interest rates and, therefore, higher borrowing costs for consumers and businesses. In a speech on September 28, following the Fed’s September policy meeting, Chairman Powell stated “one of our goals is to influence spending and investment decisions today and in the months ahead.”
Municipal bonds 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 (MT ratio), a metric we often use as a reasonable comparison to the makeup (average life and duration) of our Fund, increased from 63% on June 30, 2023, to 73% on September 30, 2023. This ratio, which is modestly below the 10-year monthly average, remains a reasonably useful tool in measuring the relative attractiveness of tax-free municipal bonds compared to U.S. Treasury bonds. All else equal, the higher the MT ratio, the more appealing municipal bonds become given their tax-advantaged status.
Top Quarterly Contributors
| • | | No segment generated positive results in the quarter |
Top Quarterly Detractors:
| • | | City general obligation bonds issued by Norfolk, Bellevue, Kearney, and Blair, Nebraska |
| • | | School district general obligation bonds issued by Wayne County, Nebraska, Winside School District; Dodge County, Nebraska, School District; Sarpy County, Nebraska, School District (Bellevue); and Papillion-La Vista, Nebraska, School District |
| • | | Tax-supported lease revenue bonds issued by Omaha, Nebraska, Public Facilities Corporation; Papillion, Nebraska, Municipal Facilities Corporation; and Sarpy County, Nebraska, certificates of participation |
| • | | Combined utility revenue bonds issued by Dawson, Columbus, and Grand Island, Nebraska |
| • | | County general obligation bonds issued by Seward County, Nebraska, and Bexar County, Texas |
| • | | General revenue bonds issued by Boys Town Village |
| • | | Hospital revenue bonds issued by Douglas County, Nebraska, Health Facilities (Nebraska Medicine) |
| • | | Single-family housing revenue bonds issued by Nebraska Investment Finance Authority |
Turning to portfolio metrics, the average effective duration of the Fund increased in the quarter to 3.9 years on September 30, 2023, from 3.5 years on June 30, 2023. During the same time period, average effective maturity increased to 5.1 years from 4.1 years. 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 unpleasant to report on this year’s Fund performance, we believe potential forward returns have improved dramatically as highlighted by the Fund’s improved yield-to-worst (YTW) (4.1% as of September 30, 2023). As a reminder, YTW has historically been a reasonable predictor of forward returns. In addition, the Fed’s higher-for-longer stance is feeding a sustained environment of elevated yields which, we believe, is providing one of the most attractive entry points for municipal investors in more than a decade.
The following page includes 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.
2023 Semi-Annual Report 25
| | | | | | | | | | | | | | | | | | | | | |
| Returns | | | | | | | | | | | | | | | | | | | | |
| |
| | | | | | | | | | | | Annualized | | | | | | | | |
| | | | | | | | | | | | | | | | | Since | | | | |
| | | | | | | | | | | | | | | | | Inception | | Net | | Gross |
| | | QTD | | YTD | | 1 YR | | 3 YR | | 5 YR | | 10 YR | | 20 YR | | (10/1/85) | | Expense | | Expense |
| WNTFX | | (2.86)% | | (1.70)% | | 1.73% | | (1.80)% | | 0.52% | | 0.69% | | 1.91% | | 3.95% | | 0.46% | | 0.96% |
| Bloomberg 5-Year Municipal Bond Index | (2.03) | | (0.86) | | 2.16 | | (1.71) | | 1.03 | | 1.44 | | 2.64 | | N/A | | | | |
| 30-Day SEC Yield | | | |
| Share Class | Subsidized | | Unsubsidized |
| | 2.88% | | 2.29% |
| | |
| Fixed Income Attributes | |
| Portfolio Summary | |
| Average Maturity | 6.3 years |
| Average Effective Maturity | 5.1 years |
| Average Duration | 4.3 years |
| Average Effective Duration | 3.9 years |
| Average Coupon | 3.6% |
| State Breakdown | | |
| | % of Net Assets |
| Nebraska | | 86.3 |
| Texas | | 3.2 |
| New Mexico | | 1.4 |
| Washington | | 1.1 |
| California | | 0.8 |
| Florida | | 0.7 |
| Utah | | 0.4 |
| Colorado | | 0.4 |
| Cash Equivalents/Other | | 5.7 |
| | | 100.0 |
| | | |
| Maturity Distribution | | |
| Maturity Type | | % of Portfolio |
| Cash Equivalents | | 4.5 |
| Less than 1 Year | | 3.5 |
| 1 -3 Years | | 32.6 |
| 3 - 5 Years | | 20.4 |
| 5 - 7 Years | | 9.9 |
| 7 - 10 Years | | 14.6 |
| 10 Years or more | | 14.5 |
| | | 100.0 |
| | | |
| Credit Quality | | |
| Underlying Securities | | % of Portfolio |
| AAA | | 9.0 |
| AA | | 57.5 |
| A | | 26.7 |
| BBB | | 0.5 |
| Non-Rated | | 1.8 |
| Cash Equivalents | | 4.5 |
| | | 100.0 |
| | |
| Sector Breakdown | |
| | % of Net Assets |
| Power | 16.5 |
| Hospital | 10.1 |
| General | 8.7 |
| Water/Sewer | 6.1 |
| Lease | 5.5 |
| Certificates of Participation | 4.3 |
| Airport/Transportation | 3.6 |
| Housing | 3.1 |
| Higher Education | 2.2 |
| Revenue | 60.1 |
| School District | 13.8 |
| City/Subdivision | 8.4 |
| County | 6.1 |
| State/Commonwealth | 0.8 |
| General Obligation | 29.1 |
| Escrow/Pre-Refunded | 5.1 |
| Cash Equivalents/Other | 5.7 |
| | 100.0 |
All data as of 9/30/2023 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 7/31/2024. 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 10 for additional performance disclosures. See page 83 for a description of all indices. See page 84 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
26 2023 Semi-Annual Report
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 -0.57% in the third quarter, compared to -3.25% for the Russell 3000. Year-to-date, the Fund’s Institutional Class has returned +10.70% compared to +12.39% for the Russell 3000.
After posting double-digit positive returns for the first half of 2023, stocks took a breather in the third quarter, as did bonds. The great debate over inflation and monetary policy rages on. Year-over-year price increases have slowed materially but remain stubbornly above the Fed’s 2% long-term objective. Whether or not the Fed will raise short-term rates again is anyone’s guess. But the third quarter’s lackluster returns, particularly in bond markets, suggest investors are coming to terms with the Fed’s “higher for longer” message.
Monetary policy is famously said to operate with “long and variable lags,” meaning the impact on consumers and the economy will only be fully known in hindsight. Some portions of the economy, like the labor market, have remained resilient thus far while more rate-sensitive corners already feel pain. Surging mortgage rates, for example, have significantly pressured consumers’ ability to purchase a new home. In their own words, the Fed is “navigating by the stars under cloudy skies” and investors are similarly looking out over a cloudy horizon. In our estimation, such conditions reinforce our desire to own a collection of high-quality, durable businesses led by talented management teams capable of navigating uncertain times and potentially coming out the other side even stronger.
Liberty Broadband Corp. (LBRDA) led the positive contribution pack this quarter. Concerns regarding fiber overbuilding and wireless substitution from Charter’s core broadband offering have lessened, while the company’s footprint expansion has increased its addressable market. Liberty SiriusXM (LSXMK) successfully separated its holdings of satellite radio provider Sirius XM Holdings, Inc., (SIRI) and live entertainment / ticketing leader Live Nation Entertainment, Inc., (LYV) into distinct tracking stocks. Liberty management later proposed an outright combination with SiriusXM, whereby all shareholders would own shares directly in the newly combined entity. If such a deal is made, it would collapse the tracking stock structure which historically traded below its mark-to-market value.
Meta Platforms, Inc., (META) has been the standout contributor this year on the back of a nearly +150% return. Meta’s “year of efficiency” (an initiative to cut costs and create a leaner organization) has bolstered profitability while operating results show renewed momentum. The spread of similar austerity measures to other technology companies have bolstered their returns, while companies perceived to benefit from advances in artificial intelligence have seen even stronger rallies. Within our portfolio, Google parent Alphabet, Inc., (GOOG), Amazon.com, Inc., (AMZN), and Microsoft Corp. (MSFT) have enjoyed returns greater than 30% this year. Finally, the Fund’s large weighting in Berkshire Hathaway, Inc., (BRK/B) magnified its market-like return into position as a top contributor. Alphabet and Berkshire Hathaway were both top contributors for the quarter as well.
On the negative side of the ledger, CoreCard Corp. (CCRD) and Perimeter Solutions SA (PR) were material detractors for both the quarter and year-to-date periods. CoreCard provides payment processing for Goldman Sachs Group, Inc.’s, (GS) credit card business, including the Apple Card. Press speculations suggest Goldman Sachs has considered moving the Apple relationship to a new provider, despite having recently signed a new, two-year contract with CoreCard. We are monitoring developments closely, and a range of potential outcomes are possible, including CoreCard retaining the processing function even if Goldman selects a new provider for other service elements. Perimeter Solutions, the leading provider of fire retardants and firefighting foam, experienced weakened quarterly results due to a decline in wildfire activity, particularly in its largest market, California. Acres burned this year have been significantly below average, diminishing cash flow and obscuring the company’s potential earnings power in a more typical year.
Qurate Retail, Inc., (QRTEP) continues to make full dividend payments on our preferred shares, but tangible signs of operating improvement remain elusive. In the coming quarters, management’s “Project Athens” plan (a multi-year turnaround plan designed to stabilize Qurate’s core business and expand its leadership in video streaming commerce) is projected to deliver cost savings and margin expansion opportunities that we will evaluate closely. CarMax, Inc., (KMX) and Costar Group, Inc., (CSGP) round out the quarterly detractors list, though we note both have delivered positive performance contributions year-to-date.
Despite positive returns in the third quarter, both Liberty SiriusXM and Fidelity National Information Services, Inc., (FIS) join Perimeter and CoreCard as top year-to-date detractors. Lastly, we decided to sell our shares of The Charles Schwab Corporation (SCHW) during the first quarter as the regional banking crisis unfolded. The decision effectively locked in Schwab’s negative impact on Fund performance but has no bearing on forward-looking returns. Nevertheless, it is likely Schwab will remain on our detractors list for the balance of 2023.
During the third quarter, Laboratory Corp. of America Holdings (LH) spun off shares of its clinical trial management business, Fortrea Holdings, Inc., (FTRE). We elected to sell our shares shortly upon receipt, as the initial stock price exceeded our base-case business value estimate. We also sold our remaining shares of Black Knight, Inc., (BKI) on the good news that the Federal Trade Commission had agreed to drop its objection to Black Knight’s business combination with Intercontinental Exchange, Inc., (ICE). We initiated a short position in shares of Live Nation, a (partial) pair trade alongside our newly received Liberty Live Nation shares. Like Liberty SiriusXM, Liberty Live (LLYVK) trades at a material discount to our estimated mark-to-market value. Shorting a portion of the tracker’s underlying asset is a way for us to monetize a portion of this discount ourselves. (We have executed the same trade in SiriusXM at various points as well.) Other notable portfolio activities include trims of Alphabet, Amazon.com, CarMax, Liberty Broadband, and Markel Group, Inc., (MKL), partially offset by additions to LabCorp and Thermo Fisher Scientific, Inc., (TMO). At quarter-end, our gross long position was 92%, mostly unchanged from 93% at the end of June. Our short position was roughly 5% of gross assets, resulting in a net long position of approximately 87%.
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).
2023 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 |
| WPOIX - Investor Class | | (0.79)% | | 10.14% | | 15.86% | | 1.11% | | 3.97% | | 3.96% | | 7.06% | | 11.08% | | 1.75% | | 1.75% |
| WPOPX - Institutional Class | | (0.57) | | 10.70 | | 16.73 | | 1.69 | | 4.58 | | 4.49 | | 7.35 | | 11.24 | | 1.19 | | 1.19 |
| Russell 3000 Index | | (3.25) | | 12.39 | | 20.46 | | 9.38 | | 9.14 | | 11.27 | | 9.68 | | 10.73 | | | | |
| S&P 500 Index | | (3.27) | | 13.07 | | 21.62 | | 10.15 | | 9.91 | | 11.91 | | 9.71 | | 11.01 | | | | |
| Top 10 Stock Holdings | | |
| | | % of Net Assets |
| Berkshire Hathaway, Inc. | | 10.4 |
| Alphabet, Inc. | | 6.3 |
| Liberty Broadband Corp. | | 5.2 |
| Mastercard, Inc. | | 5.2 |
| Visa, Inc. | | 4.9 |
| Thermo Fisher Scientific, Inc. | | 4.8 |
| Danaher Corp. | | 4.7 |
| Amazon.com, Inc. | | 4.7 |
| Roper Technologies, Inc. | | 4.6 |
| Markel Group, Inc. | | 4.6 |
| | | 55.4 |
| | | | |
| Top Stock Performers | | | |
| | | Average | |
| | Return | Weight | Contribution |
| Liberty Broadband Corp. | 14.0% | 5.5% | 0.74% |
| Alphabet, Inc. - Class C | 9.0 | 6.3 | 0.53 |
| Liberty Media Corp. Liberty SiriusXM | 9.3 | 3.8 | 0.41 |
| Markel Group, Inc. | 6.5 | 5.0 | 0.33 |
| Berkshire Hathaway, Inc. – Class B | 2.7 | 10.6 | 0.26 |
| | | | 100.0 |
| Bottom Stock Performers | | | |
| | | Average | |
| | Return | Weight | Contribution |
| CarMax, Inc. | (16.9)% | 3.7% | (0.66)% |
| CoreCard Corp. | (21.1) | 2.6 | (0.61) |
| Perimeter Solutions SA | (26.2) | 2.0 | (0.59) |
| CoStar Group, Inc. | (13.7) | 3.0 | (0.41) |
| Texas Instruments,Inc. | (11.0) | 2.7 | (0.30) |
| Industry Breakdown | | |
| | | % of Net Assets |
| Financials | | 28.8 |
| Communication Services | | 23.6 |
| Health Care | | 13.1 |
| Information Technology | | 12.7 |
| Consumer Discretionary | | 7.9 |
| Real Estate | | 2.9 |
| Materials | | 1.7 |
| Non-Convertible Preferred Stocks | | 1.4 |
| Short-Term Securities Held as Collateral for Securities on Loan | | 0.1 |
| Warrants | | 0.0 |
| Securities Sold Short | | (4.5) |
| Short Proceeds/Other | | 7.8 |
All data as of 9/30/2023 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 10 for additional performance disclosures. See page 83 for a description of all indices. See page 84 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
28 2023 Semi-Annual Report
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 +1.07% in the third quarter compared to a +0.74% return for the Bloomberg 1-3 Year U.S. Aggregate Index. Year-to-date, the Fund’s Institutional Class has returned +3.74% compared to a +1.89% return for the index. Positive absolute and solid relative results were driven by portfolio positioning (shorter average duration / average life) and overall security selection relative to the index. Longer-term results (3-, 5-, and 10-year), both absolute and relative, continue to outpace the index. We believe recent and longer-term results reinforce and highlight the value of our flexible mandate and ability to reinvest/recycle/redeploy capital from the approximately one quarter of Fund assets that typically pay down/mature annually.
Overview
In July, the Federal Reserve delivered its eleventh increase to the federal funds rate since the cycle began in March 2022, resulting in a 5.25-5.50% target rate at quarter-end. Despite a well-telegraphed pause at the September meeting, the Federal Reserve’s message was clear: the inflation fight is not done. The Fed reinforced its “higher for longer” messaging by removing two interest rate cuts from its latest “dot plot” forecast of Fed rate policy (Fed officials now see a fed funds rate of 5.00-5.25% in 2024, as compared to 4.50-4.75% at the June Meeting), raising its economic growth forecast and lowering its year-end unemployment target to 3.7% from 3.9% in June.
This may suggest the Fed believes the economy is too strong for them to achieve their inflation objectives despite its expectation that core inflation will peak at 3.7% this year – lower than June’s projection of 3.9% – before cooling to 2.6% in 2024. Given that the Fed believes monetary policy works primarily through the “wealth effect” channel, the Fed may be trying to tighten financial conditions by engineering higher long-term interest rates and, therefore, higher borrowing costs for consumers and businesses. In a speech on September 28, following the Fed’s September policy meeting, Chairman Powell stated “one of our goals is to influence spending and investment decisions today and in the months ahead.” Corporate credit spreads narrowed/declined modestly in the quarter, reflecting the continued strength of the U.S. economy. The table below reflects the changes during the quarter in credit spread (incremental return, reflected in basis points – investors require rates above those of comparable U.S. Treasuries as compensation for credit risk) for the broad investment grade corporate (ICE BofA US Corporate) and high yield bond (ICE BofA US High Yield) indexes. The table also shows the changes in effective yield for the indexes. While overall spread levels moved lower in the quarter, the effective yields increased due to the rise in U.S. Treasury rates.
| | 6/30/2023 | 9/30/2023 |
| Ice BofA US Corporate Index | | |
| Option-Adjusted Spread (bps) | 130 | 125 |
| Effective Yield (%) | 5.55% | 6.07% |
| Ice BofA US High Yield Index | | |
| Option-Adjusted Spread (bps) | 405 | 403 |
| Effective Yield (%) | 8.35% | 8.80% |
The Fund's yield-to-worst (YTW) metric, a reasonably good proxy for expected forward returns, decreased from 6.36% on June 30, 2023, to 6.23% on September 30, 2023 – but still exceeds the index’s YTW of 5.4% on September 30. The Fund’s YTW continues to exceed the index while the Fund’s interest rate risk (duration) remains lower (see table below).
YTW / Duration Analysis | Weitz Short Duration Income Fund vs. Bloomberg 1-3 Yr U.S. Agg
| | | | | |
| | 6/30/2023 | 9/30/2023 | Change | % |
| Yield to Worst (%): | | | | |
| Short Duration Income Fund | 6.36 | 6.23 | (0.13) | (2.0) |
| 1-3 Yr U.S. Agg Index | 5.20 | 5.40 | 0.20 | 3.9 |
| | 6/30/2023 | 9/30/2023 | Change | % |
| Average Duration (yrs): | | | | |
| Short Duration Income Fund | 1.35 | 1.43 | 0.08 | 5.9 |
| 1-3 Yr U.S. Agg Index | 1.79 | 1.78 | (0.01) | (0.6) |
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.
| | | | | | |
| | 9/30/2023 | 6/30/2023 | Qtr Over | 9/30/2022 | Yr Over |
| | Current | Previous | Qtr | Previous | Yr |
| Sector (% Net Assets) | Quarter | Quarter | Change | Year | Change |
| Corporate Bonds | 11.2 | 12.7 | -1.5 | 12.6 | -1.4 |
| Corporate Convertible Bonds | 1.1 | 1.1 | 0. | 2.3 | -1.2 |
| Asset-Backed Securities (ABS) | 38.5 | 41.9 | -3.4 | 36.1 | 2.4 |
| Corporate Collateralized | | | | | |
| Loan Obligations (CLO)* | 13.2 | 13.2 | 0.0 | 12.0 | 1.2 |
| Commercial Mortgage- | | | | | |
| Backed Securities (CMBS) | 8.8 | 9.3 | -0.5 | 11.0 | -2.2 |
| Agency Mortgage-Backed | | | | | |
| (MBS) | 3.6 | 3.3 | 0.3 | 4.0 | -0.4 |
| Non-Agency Mortgage- | | | | | |
| Backed (RMBS) | 5.9 | 5.4 | 0.5 | 5.9 | 0.0 |
| Taxable Municipal Bonds | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| U.S. Treasury | 29.2 | 24.5 | 4.7 | 25.3 | 3.9 |
| Common Stocks | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Cash & Equivalents | 1.7 | 1.8 | -0.1 | 2.8 | -1.1 |
| Total (does not include the | | | | | |
| CLO line) | 100.0 | 100.0 | | 100.0 | |
| High Yield** | 3.3 | 3.8 | -0.5 | 5.0 | -1.7 |
| Average Effective Duration | | | | | |
| (years) | 1.4 | 1.4 | 0.0 | 1.5 | -0.1 |
| Average Effective Maturity | | | | | |
| (years) | 3.6 | 2.8 | 0.8 | 3.1 | 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 9/30/2023) 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 $100 million of new investments for the Fund, exceeding the Fund’s monthly/quarterly paydowns and maturities of securities (approximately $70 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
2023 Semi-Annual Report 29
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 had been a headwind with rates at historic lows in recent years, it has provided meaningful return upside as interest rates, particularly short-term rates, moved higher when the Fed began to raise rates last year.
Noteworthy additions included:
| • | | Treasury securities – nearly half of new Fund investments in the quarter consisted of U.S. Treasury securities, principally in the 3-to-4-year area, with late quarter additions in 7-year Treasuries. We have been methodically adding duration as rates climbed (approximately 40 basis points (bps) in the 3- and 4-year area, and nearly 70 bps in 7 years). Overall Fund duration was unchanged in the quarter while effective maturity increased by nearly a year. Higher interest rates have had a meaningfully positive impact for incremental investments and future returns – but have made it mathematically harder to collectively move duration higher. |
| • | | Asset-backed securities (ABS) issued by Pagaya, Research-Drive Pagaya, Foundation Finance, and Marlette, which are backed by automobile receivables and consumer loans (both secured and unsecured). Like most of our other ABS investments, these third-quarter investments are short average life (less than 2.5 years), senior securities from recent securitizations. |
| • | | Agency and non-agency mortgage-backed securities (MBS)– increasing nominal interest rates and widening spreads on MBS presented opportunities to add 15-year agency MBS and front cash flow securities from well-structured non-agency MBS sponsors (JP Morgan, Goldman, and Sequoia). |
| • | | Commercial real estate collateralized loan obligations (CRE CLOs) and middle-market collateralized loan obligations (MM CLOs) issued by Argentic and CIFC-LBC. |
In terms of overall portfolio metrics, from June 30, 2023, to September 30, 2023, the Fund’s average effective maturity increased from 2.8 years to 3.6 years, and its average effective duration was unchanged at 1.4 years. These measures provide a guide to the Fund’s interest rate sensitivity. Another portfolio attribute to re-highlight is the Fund’s investments in floating-rate securities (mainly MM CLOs and CRE CLOs) – representing 22% of Fund assets as of September 30, 2023. These investments continue to experience 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.
Top Quarterly Contributors
| • | | CLOs (both CRE CLOs and MM CLOs) were the Fund’s top quarterly contributors due to stable valuations and rising coupon income from these adjustable-rate investments resulting from the ongoing increase of short-term interest rates by the Fed. ABS investments broadly, U.S. Treasury securities, and corporate bonds issued by Redwood Trust were also noteworthy contributors. |
Top Quarterly Detractors
| • | | One non-agency commercial mortgage-backed security (CMBS) investment, representing less than 0.2% of Fund assets, declined in the quarter. Mentioned in last quarter’s commentary, this investment, a single asset, single borrower (SASB) security, is backed by two very large convention center hotels in San Francisco and operated as part of the Hilton lodging brand. In June, the owner, Park Hotels and Resorts, ceased making payments on the CMBS loan secured by these two hotels. Interest payments continue to be made by the special servicer (Wells Fargo) whose role will be to work on behalf of CMBS investors to resolve this situation. We have been and will continue to be monitoring developments, which are minimal to date, and we will work toward the best outcome possible. A case study may be written at some point about how COVID-related shutdowns and state (California) governance, combined to meaningfully weaken the economic position of what had previously been a marquee convention center in California. |
Fund Strategy
Our approach consists primarily of investing in a diversified portfolio of high-quality bonds while maintaining an overall portfolio average effective duration of 1.0 to 3.5 years. We may invest up to 15% in fixed income securities that are not considered investment-grade (such as high-yield and convertible bonds), and we do so when we perceive the risk/reward characteristics to be favorable.
Overall, we strive to be adequately compensated for the risks assumed while seeking to maximize investment (or reinvestment) income and avoid making interest-rate bets, particularly ones that depend on interest rates going down.
Our goals remain the same. 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.
We believe our ability to cast a wider net across the fixed income landscape, particularly across securitized products that have meaningful structural enhancements, where higher income relative to indexes is available, is a meaningful advantage in today’s environment.
The Benefit of Higher Rates
A final note on higher rates. The last few years have been challenging for fixed-income returns given the possibility of three years of negative results for longer-term bonds as measured by the Bloomberg Aggregate Index. However, the higher rates climb, the less impact future rate increases can have on a portfolio of bonds. Using our Fund as an example and understanding that duration is a measure of interest rate sensitivity, every 1% move would (theoretically) impact our Fund results by 1.4% (duration times interest-rate change). But now that the Fund is generating coupon returns in excess of 6% (as measured by the Fund’s YTW), current interest rates would have to increase hundreds of basis points before the Fund’s 12-month total return would be negative. Overall, considering the ‘math’ of duration, the level of current interest rates relative to inflation, and the Fund’s ability to reinvest/recycle/redeploy capital from the approximately one quarter of Fund assets that typically pay down/matures annually, we continue to believe that now is a good time for investors to consider adding to their fixed income allocation.
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.
30 2023 Semi-Annual Report
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 | | 1.05% | | 3.70% | | 4.77% | | 0.84% | | 1.94% | | 1.59% | | 2.80% | | 4.55% | | 0.55% | | 0.86% |
| WEFIX - Institutional Class | | 1.07 | | 3.74 | | 4.92 | | 0.92 | | 2.05 | | 1.76 | | 2.91 | | 4.61 | | 0.45 | | 0.60 |
| |
| Bloomberg 1-3 Year U.S. Aggregate | | | | | | | | | | | | | | | | | | | | |
| Index | | 0.74 | | 1.89 | | 2.80 | | (0.73) | | 1.16 | | 1.01 | | 2.01 | | N/A | | | | |
| | |
| Fixed Income Attributes | |
| Portfolio Summary | |
| Average Maturity | 2.9 years |
| Average Effective Maturity | 3.6 years |
| Average Duration | 1.9 years |
| Average Effective Duration | 1.4 years |
| Average Coupon | 4.6% |
| | | |
| Maturity Distribution | | |
| Maturity | | % of Portfolio |
| Cash Equivalents | | 0.9 |
| Less than 1 year | | 25.7 |
| 1 - 3 Years | | 37.4 |
| 3 - 5 Years | | 11.0 |
| 5 - 7 Years | | 6.5 |
| 7 - 10 Years | | 8.3 |
| 10 Years or more | | 10.2 |
| | | 100.0 |
| | | |
| Credit Quality | | |
| Underlying Securities | | % of Portfolio |
| U.S. Treasury | | 29.4 |
| U.S. Government Agency Mortgage | | |
| Related Securities | | 3.7 |
| AAA | | 39.6 |
| AA | | 6.7 |
| A | | 6.0 |
| BBB | | 9.9 |
| BB | | 1.5 |
| B | | 0.8 |
| Non-Rated | | 1.5 |
| Cash Equivalents | | 0.9 |
| | | 100.0 |
| | | | | |
| 30-Day SEC Yield | | | |
| Share Class | | Subsidized | | Unsubsidized |
| Investor | | 5.16% | | 4.69% |
| Institutional | | 5.25 | | 5.12 |
All data as of 9/30/2023 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 7/31/2024. 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 10 for additional performance disclosures. See page 83 for a description of all indices. See page 84 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
2023 Semi-Annual Report 31
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32 2023 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 +1.21% in the third quarter compared to a +1.32% return for the ICE BofAML US 6-Month Treasury Bill Index (6-Month Treasury). Year-to-date, the Fund has returned +3.46% compared to a +3.60% return for the index.
Overview
In July, the Federal Reserve delivered its eleventh increase to the federal funds rate since the cycle began in March 2022, resulting in a 5.25-5.50% target rate at quarter-end. Despite a well-telegraphed pause at the September meeting, the Federal Reserve’s message was clear: the inflation fight is not done. The Fed reinforced its “higher for longer” messaging by removing two interest rate cuts from its latest “dot-plot” forecast of Fed rate policy (Fed officials now see a fed funds rate of 5.00-5.25% in 2024, as compared to 4.50-4.75% at the June Meeting), raising its economic growth forecast and lowering its year-end unemployment target to 3.7% from 3.9% in June.
This may suggest the Fed believes the economy is too strong for them to achieve their inflation objectives despite its expectation that core inflation will peak at 3.7% this year – lower than June’s projection of 3.9% – before cooling to 2.6% in 2024. Given the Fed believes monetary policy works primarily through the “wealth effect” channel, the Fed may be trying to tighten financial conditions through engineering higher long-term interest rates and therefore higher borrowing costs for consumers and businesses. In a speech on September 28, following the Fed’s September policy meeting, Chairman Powell noted that “one of our goals is to influence spending and investment decisions today, and in the months ahead.” 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, 94.7% of our portfolio was invested in U.S. Treasury notes, 1.3% in investment-grade asset-backed securities, and 4.0% in a high-quality money market fund. The average effective duration was increased in the quarter from 0.3 years as of June 30 to 0.5 years as of September 30. The Fund’s 30-day yield increased modestly in the quarter to 5.04% as of September 30.
Given that monetary policy impacts the economy with a lag, market participants continue to believe that the Fed is close to the end of its tightening cycle but have pushed out the timing of when the Fed may need to begin cutting/lowering interest rates. While we want to be aware of what the Fed and the market are saying at any given point, we understand that these projections/ predictions are about as useful as the meteorologist’s weather forecast. However, we would not be disappointed to have rates remain at/near current levels as reinvestment opportunities, as measured by historic 6-month Treasury bill rates, haven’t been this compelling in over 15 years. Given these multi-year highs in short-term interest rates, we have moved duration higher as mentioned above.
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.
2023 Semi-Annual Report 33
Returns
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Annualized | | | | | | | | |
| | | | | | | | | | | | | | | | | Since | | | | |
| | | | | | | | | | | | | | | | | Inception | | Net | | Gross |
| | | QTD | | YTD | | 1 YR | | 3 YR | | 5 YR | | 10 YR | | 20 YR | | (8/1/91) | | Expense | | Expense |
| SAFEX | | 1.21% | | 3.46% | | 4.29% | | 1.56% | | 1.73% | | 1.08% | | 1.28% | | 2.26% | | 0.33% | | 0.64% |
| ICE BofA U.S. 6-Month Treasury Bill Index | 1.32 | | 3.60 | | 4.59 | | 1.68 | | 1.84 | | 1.25 | | 1.62 | | 2.77 | | | | |
| | |
| Fixed Income Attributes | |
| Portfolio Summary | |
| Average Maturity | 0.5 years |
| Average Effective Maturity | 0.5 years |
| Average Duration | 0.5 years |
| Average Effective Duration | 0.5 years |
| Average Coupon | 2.6% |
| | | |
| Maturity Distribution | | |
| Maturity | | % of Portfolio |
| Cash Equivalents | | 3.5 |
| Less than 1 year | | 96.4 |
| 1 - 3 Years | | 0.1 |
| | | 100.0 |
| | | |
| Credit Quality | | |
| Underlying Securities | | % of Portfolio |
| U.S. Treasury | | 95.3 |
| AAA | | 0.9 |
| AA | | 0.1 |
| A | | 0.3 |
| Cash Equivalents | | 3.4 |
| | | 100.0 |
| | | | |
| 30-Day SEC Yield | | | |
| Share Class | Subsidized | | Unsubsidized |
| | 5.04% | | 4.82% |
All data as of 9/30/2023 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 07/31/2024. 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 10 for additional performance disclosures. See page 83 for a description of all indices. See page 84 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
34 2023 Semi-Annual Report
CONSERVATIVE ALLOCATION FUND
Schedule of Investments September 30, 2023 (Unaudited)
| | | | |
| Common Stocks - 43.3% | | | |
| | % of Net | | |
| Financials | Assets | Shares | $ Value |
| |
| Transaction & Payment Processing Services | 4.7 | | |
| Mastercard, Inc. - Class A | | 10,500 | 4,157,055 |
| Visa, Inc. - Class A | | 17,000 | 3,910,170 |
| Fidelity National Information Services, Inc. | | 40,000 | 2,210,800 |
| | | |
| Multi-Sector Holdings | 2.8 | | |
| Berkshire Hathaway, Inc. - Class B(a) | | 17,500 | 6,130,250 |
| | | |
| Insurance Brokers | 2.1 | | |
| Aon plc - Class A(b) | | 14,000 | 4,539,080 |
| | | |
| Property & Casualty Insurance | 1.5 | | |
| Markel Group, Inc.(a) | | 2,250 | 3,313,102 |
| | | |
| Diversified Banks | 1.3 | | |
| JPMorgan Chase & Co. | | 20,000 | 2,900,400 |
| | | |
| Financial Exchanges & Data | 1.3 | | |
| S&P Global, Inc. | | 7,500 | 2,740,575 |
| | | |
| | 13.7 | | 29,901,432 |
| Information Technology | | | |
| |
| |
| Semiconductors | 4.0 | | |
| Analog Devices, Inc. | | 26,000 | 4,552,340 |
| Microchip Technology, Inc. | | 30,000 | 2,341,500 |
| Texas Instruments, Inc. | | 11,301 | 1,796,972 |
| | | |
| Systems Software | 3.6 | | |
| Microsoft Corp. | | 15,000 | 4,736,250 |
| Oracle Corp. | | 30,000 | 3,177,600 |
| | | |
| IT Consulting & Other Services | 1.7 | | |
| Accenture plc - Class A(b) | | 12,000 | 3,685,320 |
| | | |
| Application Software | 1.4 | | |
| Roper Technologies, Inc. | | 6,200 | 3,002,536 |
| | | |
| | 10.7 | | 23,292,518 |
| Health Care | | | |
| |
| |
| Life Sciences Tools & Services | 4.4 | | |
| Danaher Corp. | | 21,000 | 5,210,100 |
| Thermo Fisher Scientific, Inc. | | 8,750 | 4,428,988 |
| | | |
| Health Care Services | 1.5 | | |
| Laboratory Corp. of America Holdings | | 16,000 | 3,216,800 |
| | | |
| | 5.9 | | 12,855,888 |
| Materials | | | |
| |
| |
| Construction Materials | 3.6 | | |
| Vulcan Materials Co. | | 20,000 | 4,040,400 |
| Martin Marietta Materials, Inc. | | 9,500 | 3,899,560 |
| | | |
| Industrial Gases | 1.3 | | |
| Linde plc | | 7,500 | 2,792,625 |
| | | |
| | 4.9 | | 10,732,585 |
| Communication Services | | | |
| |
| Cable & Satellite | 2.2 | | |
| Comcast Corp. - Class A | | 55,000 | 2,438,700 |
| Charter Communications, Inc. - Class A(a) | | 5,000 | 2,199,100 |
| | | |
| Interactive Media & Services | 1.8 | | |
| Alphabet, Inc. - Class C(a) | | 30,000 | 3,955,500 |
| | | | |
| | 4.0 | | 8,593,300 |
| Industrials | | | |
| |
| Industrial Machinery & Supplies & | | | |
| Components | 2.3 | | |
| Fortive Corp. | | 35,000 | 2,595,600 |
| IDEX Corp. | | 12,000 | 2,496,240 |
| | | |
| Industrial Conglomerates | 0.8 | | |
| Honeywell International, Inc. | | 9,500 | 1,755,030 |
| | | | |
| | 3.1 | | 6,846,870 |
| Consumer Staples | | | |
| |
| Distillers & Vintners | 1.0 | | |
| Diageo plc - ADR(b) | | 15,000 | 2,237,700 |
| | | | |
| Total Common Stocks (Cost $52,772,877) | | | 94,460,293 |
| |
| Non-Convertible Preferred Stocks - 0.4% | | | |
| |
| Qurate Retail, Inc. 8.00% 3/15/31 (Cost $3,038,411) | | 30,879 | 884,683 |
| |
| Corporate Bonds - 0.8% | | | |
| | | $ Principal | |
| | | Amount | $ Value |
| | | |
| AutoZone, Inc. | | | |
| 3.63% 4/15/25 | | 500,000 | 483,685 |
| Brown & Brown, Inc | | | |
| 4.2% 9/15/24 | | 390,000 | 383,074 |
| JPMorgan Chase & Co. | | | |
| 3.84% 6/14/25 Floating Rate (SOFR + 98) | | 200,000 | 196,508 |
| U.S. Bancorp | | | |
| 2.4% 7/30/24 | | 500,000 | 485,814 |
| Vulcan Materials Co. | | | |
| 5.8% 3/1/26 | | 250,000 | 248,876 |
| | | | |
| Total Corporate Bonds (Cost $1,834,922) | | | 1,797,957 |
| |
| Corporate Convertible Bonds - 0.9% | | | |
| | | | |
| | | |
| Redwood Trust, Inc. | | | |
| 5.63% 7/15/24 (Cost $1,961,514) | | 2,000,000 | 1,980,006 |
The accompanying notes form an integral part of these financial statements.
2023 Semi-Annual Report 35
| | | | |
| Asset-Backed Securities - 7.5% | | |
| | | $ Principal | |
| | | Amount | $ Value |
| | | |
| | Automobile | | |
| | AmeriCredit Automobile Receivables Trust (AMCAR) | | |
| | Series 2020-2 Class D –2.13% 3/18/26 | 595,000 | 569,065 |
| | ARI Fleet Lease Trust (ARIFL) | | |
| | Series 2022-A Class A2 –3.12% 1/15/31(c) | 51,180 | 50,521 |
| | BOF URSA VI Funding Trust I (BOF) | | |
| | Series 2023-CAR1 Class A2 –5.54% 10/27/31(c) | 116,920 | 115,337 |
| | Series 2023-CAR2 Class A2 –5.54% 10/27/31(c) | 271,998 | 268,314 |
| | CarMax Auto Owner Trust (CARMX) | | |
| | Series 2020-3 Class D –2.53% 1/15/27 | 360,000 | 347,974 |
| | Series 2021-3 Class C –1.25% 5/17/27 | 380,000 | 344,909 |
| | CFMT LLC (CFMT) | | |
| | Series 2021-AL1 Class B –1.39% 9/22/31(c) | 241,528 | 233,152 |
| | Chesapeake Funding II LLC (CFII) | | |
| | Series 2021-1A Class A1 –0.47% 4/15/33(c) | 165,639 | 161,240 |
| | Series 2023-1A Class A1 –5.65% 5/15/35(c) | 446,993 | 444,178 |
| | Series 2023-2A Class A1 –6.16% 10/15/35(c) | 150,000 | 149,945 |
| | Enterprise Fleet Financing LLC (EFF) | | |
| | Series 2023-1 Class A2 –5.51% 1/22/29(c) | 250,000 | 248,045 |
| | Series 2023-2 Class A2 –5.56% 4/22/30(c) | 400,000 | 397,145 |
| | Flagship Credit Auto Trust (FCAT) | | |
| | Series 2020-4 Class C –1.28% 2/16/27(c) | 284,779 | 277,065 |
| | Foursight Capital Automobile Receivables Trust (FCRT) | | |
| | Series 2022-2 Class A2 –4.49% 3/16/26(c) | 199,426 | 198,568 |
| | GLS Auto Receivables Issuer Trust (GCAR) | | |
| | Series 2021-1A Class C –1.2% 1/15/27(c) | 149,764 | 148,671 |
| | GM Financial Automobile Leasing Trust (GMALT) | | |
| | Series 2021-3 Class B –0.76% 7/21/25 | 490,000 | 478,064 |
| | JPMorgan Chase Auto Credit Linked Note (CACLN) | | |
| | Series 2020-2 Class A2 –0.84% 2/25/28(c) | 5,815 | 5,760 |
| | Series 2021-1 Class A2 –0.88% 9/25/28(c) | 125,295 | 122,259 |
| | Series 2021-2 Class A4 –0.89% 12/26/28(c) | 105,748 | 102,711 |
| | LAD Auto Receivables Trust (LADAR) | | |
| | Series 2021-1A Class A –1.3% 8/17/26(c) | 185,825 | 182,563 |
| | Series 2022-1A Class A –5.21% 6/15/27(c) | 357,521 | 354,893 |
| | Series 2023-1A Class A2 –5.68% 10/15/26(c) | 197,739 | 197,284 |
| | Series 2023-2A Class A2 –5.93% 6/15/27(c) | 365,477 | 364,603 |
| | OneMain Direct Auto Receivables Trust (ODART) | | |
| | Series 2021-1A Class A –0.87% 7/14/28(c) | 500,000 | 476,345 |
| | Series 2022-1A Class C –1.42% 7/14/28(c) | 447,000 | 402,276 |
| | Santander Drive Auto Receivables Trust (SDART) | | |
| | Series 2020-2 Class D –2.22% 9/15/26 | 210,617 | 207,562 |
| | Series 2022-6 Class A2 –4.37% 5/15/25 | 11,194 | 11,187 |
| | SFS Auto Receivables Securitization Trust (SFS) | | |
| | Series 2023-1A Class A2A –5.89% 3/22/27(c) | 100,000 | 99,883 |
| | Westlake Automobile Receivables Trust (WLAKE) | | |
| | Series 2021-2A Class B –0.62% 7/15/26(c) | 131,549 | 130,678 |
| | | | |
| | | | 7,090,197 |
| | | |
| | Collateralized Loan Obligations | | |
| | ABPCI Direct Lending Fund CLO X LP (ABPCI) | | |
| | Series 2020-10A Class A –7.54% 1/20/32 Floating Rate | | |
| | (TSFR3M + 221)(b) (c) (d) | 500,000 | 500,057 |
| | Audax Senior Debt CLO 6 LLC (AUDAX) | | |
| | Series 2021-6A Class A1 –7.09% 10/20/33 Floating Rate | | |
| | (TSFR3M + 176)(c) (d) | 500,000 | 489,778 |
| | BlackRock Rainier CLO VI Ltd. (BLKMM) | | |
| | Series 2021-6A Class A –7.29% 4/20/33 Floating Rate | | |
| | (TSFR3M + 196)(b) (c) (d) | 500,000 | 495,641 |
| | Capital Four US CLO II Ltd. (C4US) | | |
| | Series 2022-1A Class A1 –7.47% 10/20/30 Floating Rate | | |
| | (TSFR3M + 214)(b) (c) (d) | 466,518 | 466,704 |
| | Cerberus Loan Funding LP (CERB) | | |
| | Series 2020-1A Class A –7.42% 10/15/31 Floating Rate | | |
| | (TSFR3M + 211)(b) (c) (d) | 295,671 | 295,517 |
| | Series 2021-6A Class A –6.97% 11/22/33 Floating Rate | | |
| | (TSFR3M + 166)(b) (c) (d) | 51,655 | 51,545 |
| | Churchill Middle Market CLO III Ltd. (CHMML) | | |
| | Series 2021-1A Class A1 –7.11% 10/24/33 Floating Rate | | |
| | (TSFR3M + 176)(b) (c) (d) | 250,000 | 247,249 |
| | Fortress Credit Opportunities XV CLO Ltd. (FCO) | | |
| | Series 2021-15A Class A2 –7.16% 4/25/33 Floating Rate | | |
| | (TSFR3M + 181)(b) (c) (d) | 500,000 | 491,828 |
| | Golub Capital Partners CLO 54M LP (GOCAP) | | |
| | Series 2021-54A Class A2 –7.16% 8/5/33 Floating Rate | | |
| | (TSFR3M + 179)(b) (c) (d) | 500,000 | 496,425 |
| | Monroe Capital MML CLO XII Ltd. (MCMML) | | |
| | Series 2021-2A Class A1 –7.17% 9/14/33 Floating Rate | | |
| | (TSFR3M + 176)(b) (c) (d) | 500,000 | 492,798 |
| | Palmer Square Loan Funding Ltd. (PSTAT) | | |
| | Series 2021-1A Class A2 –6.84% 4/20/29 Floating Rate | | |
| | (TSFR3M + 151)(b) (c) (d) | 500,000 | 494,785 |
| | | | |
| | | | 4,522,327 |
| | | |
| | Consumer & Specialty Finance | | |
| | Foundation Finance Trust (FFIN) | | |
| | Series 2021-2A Class A –2.19% 1/15/42(c) | 133,937 | 119,400 |
| | Series 2023-2A Class A –6.53% 6/15/49(c) | 225,000 | 225,923 |
| | Lendingpoint Asset Securitization Trust (LDPT) | | |
| | Series 2022-C Class A –6.56% 2/15/30(c) | 175,964 | 175,740 |
| | Marlette Funding Trust (MFT) | | |
| | Series 2023-1A Class A –6.07% 4/15/33(c) | 151,638 | 151,380 |
| | Series 2023-3A Class A –6.49% 9/15/33(c) | 219,097 | 219,209 |
| | Octane Receivables Trust (OCTL) | | |
| | Series 2021-1A Class A5 –0.93% 3/22/27(c) | 25,518 | 24,991 |
| | Series 2021-2A Class A –1.21% 9/20/28(c) | 80,588 | 77,986 |
| | Series 2022-1A Class A2 –4.18% 3/20/28(c) | 148,927 | 146,751 |
| | Series 2022-2A Class A –5.11% 2/22/28(c) | 135,346 | 134,084 |
| | Upstart Securitization Trust (UPST) | | |
| | Series 2021-3 Class A –0.83% 7/20/31(c) | 3,397 | 3,385 |
| | Series 2021-5 Class A –1.31% 11/20/31(c) | 40,350 | 39,741 |
| | | | |
| | | | 1,318,590 |
| | | |
| | Equipment | | |
| | Amur Equipment Finance Receivables IX LLC (AXIS) | | |
| | Series 2021-1A Class A2 –0.75% 11/20/26(c) | 152,286 | 149,533 |
| | Amur Equipment Finance Receivables XI LLC (AXIS) | | |
| | Series 2022-2A Class A2 –5.3% 6/21/28(c) | 123,136 | 122,038 |
| | Amur Equipment Finance Receivables XII LLC (AXIS) | | |
| | Series 2023-1A Class A1 –5.63% 6/20/24(c) | 137,440 | 137,399 |
| | Series 2023-1A Class A2 –6.09% 12/20/29(c) | 250,000 | 250,329 |
| | Dell Equipment Finance Trust (DEFT) | | |
| | Series 2021-2 Class A2 –0.53% 12/22/26(c) | 355,498 | 350,839 |
| | Series 2022-1 Class A2 –2.11% 8/23/27(c) | 17,291 | 17,262 |
| | Series 2023-2 Class A2 –5.84% 1/22/29(c) | 200,000 | 199,855 |
| | GreatAmerica Leasing Receivables Funding LLC (GALC) | | |
| | Series 2021-1 Class B –0.72% 12/15/26(c) | 500,000 | 466,964 |
| | HPEFS Equipment Trust (HPEFS) | | |
| | Series 2023-1A Class A2 –5.43% 8/20/25(c) | 500,000 | 498,456 |
The accompanying notes form an integral part of these financial statements.
36 2023 Semi-Annual Report
CONSERVATIVE ALLOCATION FUND (CONTINUED)
Schedule of Investments September 30, 2023 (Unaudited)
| | | | |
| | | |
| | | $ Principal | |
| | | Amount | $ Value |
| | | |
| | MMAF Equipment Finance LLC (MMAF) | | |
| | Series 2022-A Class A2 –2.77% 2/13/25(c) | 150,316 | 149,079 |
| | Series 2022-B Class A2 –5.57% 9/9/25(c) | 218,430 | 217,503 |
| | Series 2022-B Class A3 –5.61% 7/10/28(c) | 250,000 | 248,854 |
| | Series 2023-A Class A2 –5.79% 11/13/26(c) | 175,000 | 174,670 |
| | SCF Equipment Leasing LLC (SCFET) | | |
| | Series 2022-2A Class A2 –6.24% 7/20/28(c) | 131,216 | 131,115 |
| | Series 2022-2A Class A3 –6.5% 10/21/30(c) | 250,000 | 251,199 |
| | | | 3,365,095 |
| | | | |
| | Total Asset-Backed Securities (Cost $16,417,781) | | 16,296,209 |
| |
| |
| Commercial Mortgage-Backed Securities - 2.9% | | |
| | | | |
| | | |
| | AREIT LLC (AREIT) | | |
| | Series 2023-CRE8 Class AS –8.2% 5/17/28 Floating | | |
| | Rate (TSFR1M + 287)(c) | 500,000 | 499,672 |
| | AREIT Trust (AREIT) | | |
| | Series 2021-CRE5 Class A –6.53% 11/17/38 Floating | | |
| | Rate (TSFR1M + 119)(c) | 332,204 | 328,154 |
| | BFLD Trust (BFLD) | | |
| | Series 2020-OBRK Class A –7.5% 11/15/28 Floating | | |
| | Rate (TSFR1M + 216)(c) | 125,000 | 124,789 |
| | CLNC Ltd. (CLNC) | | |
| | Series 2019-FL1 Class AS –6.99% 8/20/35 Floating | | |
| | Rate (TSFR1M + 166)(b) (c) | 500,000 | 489,924 |
| | FS Rialto Issuer LLC (FSRI) | | |
| | Series 2022-FL5 Class A –7.63% 6/19/37 Floating Rate | | |
| | (TSFR1M + 230)(b) (c) | 500,000 | 495,379 |
| | GPMT Ltd. (GPMT) | | |
| | Series 2021-FL3 Class A –6.7% 7/16/35 Floating Rate | | |
| | (TSFR1M + 136)(b) (c) | 282,486 | 279,230 |
| | HERA Commercial Mortgage Ltd. (HCM) | | |
| | Series 2021-FL1 Class A –6.5% 2/18/38 Floating Rate | | |
| | (TSFR1M + 116)(b) (c) | 431,375 | 419,711 |
| | HGI CRE CLO Ltd. (HGI) | | |
| | Series 2021-FL1 Class A4 –6.5% 6/16/36 Floating Rate | | |
| | (TSFR1M + 116)(b) (c) | 158,020 | 156,911 |
| | Series 2021-FL1 Class AS –6.85% 6/16/36 Floating Rate | | |
| | (TSFR1M + 151)(b) (c) | 500,000 | 489,941 |
| | Series 2021-FL2 Class A4 –6.45% 9/17/36 Floating Rate | | |
| | (TSFR1M + 111)(b) (c) | 168,214 | 164,680 |
| | KREF Ltd. (KREF) | | |
| | Series 2021-FL2 Class A4 –6.52% 2/15/39 Floating | | |
| | Rate (TSFR1M + 118)(b) (c) | 500,000 | 495,010 |
| | Series 2022-FL3 Class A –6.78% 2/17/39 Floating Rate | | |
| | (TSFR1M + 145)(b) (c) | 500,000 | 492,840 |
| | LoanCore Issuer Ltd. (LNCR) | | |
| | Series 2018-CRE1 Class D –8.4% 5/15/28 Floating Rate | | |
| | (US0001M + 295)(b) (c) | 400,000 | 388,040 |
| | Series 2021-CRE5 Class A –6.75% 7/15/36 Floating | | |
| | Rate (US0001M + 130)(b) (c) | 500,000 | 494,269 |
| | PFP Ltd. (PFP) | | |
| | Series 2022-9 Class A –7.61% 8/19/35 Floating Rate | | |
| | (TSFR1M + 227)(b) (c) | 250,000 | 250,329 |
| | STWD Ltd. (STWD) | | |
| | Series 2022-FL3 Class A –6.66% 11/15/38 Floating Rate | | |
| | (SOFR30A + 135)(b) (c) | 500,000 | 491,485 |
| | VMC Finance LLC (VMC) | | |
| | Series 2021-FL4 Class A –6.55% 6/16/36 Floating Rate | | |
| | (TSFR1M + 121)(c) | 230,799 | 227,246 |
| | | | |
| | Total Commercial Mortgage-Backed Securities (Cost $6,331,953) | 6,287,610 |
| |
| |
| Mortgage-Backed Securities - 2.9% | | |
| | | | |
| | | |
| | Federal Home Loan Mortgage Corporation | | |
| | Collateralized Mortgage Obligations | | |
| | Series 3649 Class A –4% 3/15/25 | 3,649 | 3,595 |
| | | |
| | Pass-Through Securities | | |
| | Pool# J14649 – 3.5% 4/1/26 | 10,389 | 10,159 |
| | Pool# E02948 – 3.5% 7/1/26 | 23,273 | 22,706 |
| | Pool# J16663 – 3.5% 9/1/26 | 14,646 | 14,269 |
| | Pool# ZS8692 – 2.5% 4/1/33 | 124,861 | 112,784 |
| | Pool# SB8257 – 5.5% 9/1/38 | 1,363,901 | 1,350,196 |
| | | | 1,513,709 |
| | | |
| | Federal National Mortgage Association | | |
| | Pass-Through Securities | | |
| | Pool# 995755 – 4.5% 5/1/24 | 394 | 382 |
| | Pool# AB1769 – 3% 11/1/25 | 8,421 | 8,208 |
| | Pool# AB3902 – 3% 11/1/26 | 25,104 | 24,282 |
| | Pool# AK3264 – 3% 2/1/27 | 20,917 | 20,192 |
| | Pool# AB6291 – 3% 9/1/27 | 122,165 | 117,469 |
| | Pool# MA3189 – 2.5% 11/1/27 | 101,776 | 96,834 |
| | Pool# MA3791 – 2.5% 9/1/29 | 245,297 | 223,401 |
| | Pool# BM5708 – 3% 12/1/29 | 115,303 | 110,585 |
| | Pool# AS7701 – 2.5% 8/1/31 | 639,698 | 578,027 |
| | Pool# MA3540 – 3.5% 12/1/33 | 72,701 | 68,354 |
| | | | 1,247,734 |
| | | |
| | Government National Mortgage Association | | |
| | Pass-Through Securities | | |
| | Pool# 5255 – 3% 12/20/26 | 24,460 | 23,653 |
| |
| | | |
| | Non-Government Agency | | |
| | Collateralized Mortgage Obligations | | |
| | Flagstar Mortgage Trust (FSMT) | | |
| | Series 2021-7 Class B –2.5% 8/25/51(c) (d) | 394,445 | 333,905 |
| | GS Mortgage-Backed Securities Trust (GSMBS) | | |
| | Series 2022-PJ1 Class AB –2.5% 5/28/52(c) (d) | 435,724 | 365,972 |
| | JPMorgan Mortgage Trust (JPMMT) | | |
| | Series 2014-5 Class B –2.76% 10/25/29(c) (d) | 43,704 | 41,265 |
| | Series 2016-3 Class A –2.97% 10/25/46(c) (d) | 133,549 | 121,595 |
| | Series 2017-3 Class A –2.5% 8/25/47(c) (d) | 167,333 | 140,741 |
| | Series 2020-7 Class A –3% 1/25/51(c) (d) | 27,424 | 26,656 |
| | Series 2020-8 Class A –3% 3/25/51(c) (d) | 68,352 | 64,614 |
| | Series 2021-6 Class B –2.5% 10/25/51(c) (d) | 509,775 | 434,374 |
| | Series 2021-8 Class B –2.5% 12/25/51(c) (d) | 376,010 | 319,766 |
| | Series 2022-2 Class A4A –2.5% 8/25/52(c) (d) | 302,884 | 253,082 |
| | Series 2023-6 Class A4A –5.5% 12/26/53(c) (d) | 716,729 | 694,305 |
| | JPMorgan Wealth Management (JPMWM) | | |
| | Series 2020-ATR1 Class A –3% 2/25/50(c) (d) | 24,939 | 24,427 |
The accompanying notes form an integral part of these financial statements.
2023 Semi-Annual Report 37
| | |
| | $ Principal | |
| | Amount | $ Value |
| | |
| RCKT Mortgage Trust (RCKT) | | |
| Series 2021-3 Class A5 –2.5% 7/25/51(c) (d) | 356,249 | 303,591 |
| Sequoia Mortgage Trust (SEMT) | | |
| Series 2019-CH2 Class A –4.5% 8/25/49(c) (d) | 23,391 | 22,930 |
| Series 2020-3 Class A –3% 4/25/50(c) (d) | 33,597 | 31,984 |
| Series 2023-3 Class A4 –6% 9/25/53(c) (d) | 483,327 | 476,129 |
| | | 3,655,336 |
| | | |
| Total Mortgage-Backed Securities (Cost $7,009,431) | | 6,440,432 |
| |
| |
| U.S. Treasuries - 39.0% | | |
| | | |
| | |
| U.S. Treasury Notes | | |
| 2.75% 2/15/24 | 2,000,000 | 1,980,036 |
| 2.13% 2/29/24 | 2,000,000 | 1,973,243 |
| 2% 4/30/24 | 2,000,000 | 1,960,680 |
| 2.5% 5/31/24 | 1,000,000 | 980,696 |
| 3% 6/30/24 | 2,000,000 | 1,963,665 |
| 1.25% 8/31/24 | 3,000,000 | 2,887,394 |
| 0.38% 9/15/24 | 2,000,000 | 1,905,948 |
| 4.25% 9/30/24 | 2,000,000 | 1,976,735 |
| 4.38% 10/31/24 | 2,000,000 | 1,977,852 |
| 2.25% 10/31/24 | 2,000,000 | 1,933,789 |
| 0.75% 11/15/24 | 2,000,000 | 1,900,000 |
| 1.13% 1/15/25 | 2,000,000 | 1,896,406 |
| 1.38% 1/31/25 | 2,000,000 | 1,899,375 |
| 2% 2/15/25 | 2,000,000 | 1,913,359 |
| 2.63% 3/31/25 | 2,000,000 | 1,925,000 |
| 0.38% 4/30/25 | 2,000,000 | 1,854,375 |
| 2.75% 5/15/25 | 3,000,000 | 2,886,445 |
| 0.25% 6/30/25 | 2,000,000 | 1,838,359 |
| 0.25% 7/31/25 | 2,000,000 | 1,831,484 |
| 3.13% 8/15/25 | 2,000,000 | 1,929,766 |
| 2.75% 8/31/25 | 2,000,000 | 1,914,922 |
| 3.5% 9/15/25 | 2,000,000 | 1,941,719 |
| 3% 10/31/25 | 2,000,000 | 1,920,781 |
| 2.25% 11/15/25 | 2,000,000 | 1,890,000 |
| 0.38% 11/30/25 | 2,000,000 | 1,812,422 |
| 0.38% 1/31/26 | 1,000,000 | 900,352 |
| 4% 2/15/26 | 1,000,000 | 978,945 |
| 0.5% 2/28/26 | 4,000,000 | 3,601,875 |
| 2.38% 4/30/26 | 2,000,000 | 1,879,531 |
| 0.75% 5/31/26 | 2,000,000 | 1,796,484 |
| 1.5% 8/15/26 | 2,000,000 | 1,823,359 |
| 4.63% 9/15/26 | 2,000,000 | 1,990,313 |
| 1.63% 10/31/26 | 4,000,000 | 3,640,313 |
| 2% 11/15/26 | 3,000,000 | 2,759,883 |
| 1.88% 2/28/27 | 2,000,000 | 1,820,625 |
| 2.38% 5/15/27 | 2,000,000 | 1,844,766 |
| 0.5% 8/31/27 | 2,000,000 | 1,702,656 |
| 4.13% 10/31/27 | 2,000,000 | 1,957,734 |
| 2.25% 11/15/27 | 2,000,000 | 1,819,297 |
| 3.5% 1/31/28 | 2,000,000 | 1,908,984 |
| 4% 2/29/28 | 2,000,000 | 1,948,516 |
| 3.5% 4/30/28 | 2,000,000 | 1,906,484 |
| 4.13% 7/31/28 | 2,000,000 | 1,957,031 |
| | | |
| Total U.S. Treasuries (Cost $88,837,584) | | 85,131,599 |
| | | |
| Cash Equivalents - 2.0% | | |
| | |
| U.S. Treasury Bill 5.1%(e) | 3,000,000 | 2,980,163 |
| JPMorgan U.S. Government Money Market | | |
| Fund - Institutional Class 5.09%(f) | 1,320,583 | 1,320,583 |
| | | |
| Total Cash Equivalents (Cost $4,300,362) | | 4,300,746 |
| Total Investments in Securities (Cost $182,504,835) | | 217,579,535 |
| Other Assets Less Other Liabilities - 0.3% | | 693,779 |
| Net Assets - 100% | | 218,273,314 |
| |
| Net Asset Value Per Share - Investor Class | | 16.01 |
| Net Asset Value Per Share - Institutional Class | | 16.04 |
(a) Non-income producing.
(b) Foreign domiciled entity.
(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) Interest rates presented represent the effective yield at September 30, 2023.
(f) Rate presented represents the 7 day average yield at September 30, 2023.
The accompanying notes form an integral part of these financial statements.
38 2023 Semi-Annual Report
CORE PLUS INCOME FUND
Schedule of Investments September 30, 2023 (Unaudited)
| | | | |
| Corporate Bonds - 14.3% | | | |
| | | $ Principal | |
| | | Amount | $ Value |
| |
| Abercrombie & Fitch Management Co. | | | |
| 8.75% 7/15/25(a) | | 1,428,000 | 1,453,317 |
| Ally Financial, Inc. | | | |
| 8% 11/1/31^ | | 2,000,000 | 2,020,999 |
| American Airlines Group, Inc. | | | |
| 3.75% 3/1/25(a) | | 1,000,000 | 948,390 |
| American Airlines, Inc./AAdvantage Loyalty IP Ltd. | | | |
| 5.5% 4/20/26(a) | | 3,025,000 | 2,957,097 |
| 5.75% 4/20/29(a) | | 1,000,000 | 930,875 |
| Antares Holdings, LP | | | |
| 7.95% 8/11/28(a) | | 3,000,000 | 2,985,205 |
| Ares Capital Corp. | | | |
| 2.88% 6/15/28 | | 1,000,000 | 837,272 |
| Ashtead Capital, Inc. | | | |
| 4.38% 8/15/27(a) | | 1,000,000 | 930,230 |
| 4% 5/1/28(a) | | 1,070,000 | 973,893 |
| 2.45% 8/12/31(a) | | 500,000 | 379,835 |
| 5.55% 5/30/33(a) | | 250,000 | 232,213 |
| 5.95% 10/15/33(a) | | 1,000,000 | 950,405 |
| AT&T, Inc. | | | |
| 6.8% 5/15/36 | | 713,000 | 703,370 |
| Axalta Coating Systems LLC | | | |
| 3.38% 2/15/29(a) | | 624,000 | 520,089 |
| Bath & Body Works, Inc. | | | |
| 6.95% 3/1/33 | | 3,675,000 | 3,292,479 |
| 6.88% 11/1/35 | | 301,000 | 269,164 |
| 6.75% 7/1/36 | | 2,756,000 | 2,417,862 |
| Berkshire Hathaway Finance Corp. | | | |
| 4.25% 1/15/49 | | 500,000 | 410,321 |
| Broadcom, Inc. | | | |
| 3.42% 4/15/33(a) | | 350,000 | 280,090 |
| 3.14% 11/15/35(a) | | 1,014,000 | 739,639 |
| Cantor Fitzgerald LP | | | |
| 4.5% 4/14/27(a) | | 1,500,000 | 1,399,122 |
| Carlisle Cos., Inc. | | | |
| 3.5% 12/1/24 | | 532,000 | 516,588 |
| 3.75% 12/1/27 | | 500,000 | 465,013 |
| CDW LLC / CDW Finance Corp. | | | |
| 4.25% 4/1/28 | | 4,000,000 | 3,650,640 |
| 3.28% 12/1/28 | | 1,000,000 | 863,677 |
| Charter Communications Operating LLC/Charter | | | |
| Communications Operating Capital | | | |
| 4.2% 3/15/28 | | 650,000 | 596,822 |
| Choice Hotels International, Inc. | | | |
| 3.7% 1/15/31 | | 250,000 | 208,405 |
| Cinemark USA, Inc. | | | |
| 5.88% 3/15/26(a) | | 500,000 | 480,620 |
| 5.25% 7/15/28^ (a) | | 3,000,000 | 2,666,490 |
| Compass Group Diversified Holdings LLC | | | |
| 5.25% 4/15/29(a) | | 2,581,000 | 2,259,132 |
| Concentrix Corp. | | | |
| 6.6% 8/2/28 | | 3,165,000 | 3,056,084 |
| 6.85% 8/2/33 | | 3,912,000 | 3,617,071 |
| CoStar Group, Inc. | | | |
| 2.8% 7/15/30(a) | | 5,846,000 | 4,715,260 |
| Delta Air Lines, Inc./SkyMiles IP Ltd. | | | |
| 4.5% 10/20/25(a) | | 418,000 | 406,164 |
| 4.75% 10/20/28(a) | | 1,100,000 | 1,045,784 |
| Devon Energy Corp. | | | |
| 5.25% 10/15/27 | | 325,000 | 316,772 |
| 4.5% 1/15/30 | | 920,000 | 836,495 |
| Diamondback Energy, Inc. | | | |
| 3.25% 12/1/26 | | 75,000 | 70,162 |
| 3.5% 12/1/29 | | 100,000 | 88,810 |
| Dick's Sporting Goods, Inc. | | | |
| 3.15% 1/15/32 | | 1,700,000 | 1,308,358 |
| Dow Chemical Co. (The) | | | |
| 4.25% 10/1/34 | | 1,052,000 | 915,545 |
| Drax Finco PLC | | | |
| 6.63% 11/1/25(a) (b) | | 1,000,000 | 957,735 |
| Element Fleet Management Corp. | | | |
| 3.85% 6/15/25(a) (b) | | 1,000,000 | 953,445 |
| Energy Transfer LP | | | |
| 2.9% 5/15/25 | | 500,000 | 475,225 |
| Enterprise Products Operating LLC | | | |
| 4.45% 2/15/43 | | 990,000 | 811,328 |
| EPR Properties (EPR) | | | |
| 4.75% 12/15/26 | | 1,250,000 | 1,143,545 |
| 4.5% 6/1/27 | | 3,330,000 | 2,983,268 |
| 4.95% 4/15/28 | | 3,830,000 | 3,397,211 |
| 3.6% 11/15/31 | | 350,000 | 259,769 |
| Essential Properties LP | | | |
| 2.95% 7/15/31 | | 8,081,000 | 5,899,796 |
| Expedia Group, Inc. | | | |
| 3.8% 2/15/28 | | 484,000 | 442,520 |
| 3.25% 2/15/30 | | 90,000 | 76,180 |
| Gap, Inc. (The) | | | |
| 3.88% 10/1/31(a) | | 106,000 | 74,602 |
| HEICO Corp. | | | |
| 5.25% 8/1/28 | | 3,000,000 | 2,928,803 |
| 5.35% 8/1/33 | | 1,000,000 | 947,829 |
| Hercules Capital, Inc. | | | |
| 2.63% 9/16/26 | | 1,000,000 | 869,166 |
| Highwoods Realty LP | | | |
| 3.88% 3/1/27 | | 750,000 | 684,055 |
| 3.05% 2/15/30 | | 1,600,000 | 1,231,771 |
| 2.6% 2/1/31 | | 500,000 | 359,555 |
| Host Hotels & Resorts LP | | | |
| Series H 3.38% 12/15/29 | | 612,000 | 514,659 |
| Indiana Bell Telephone Co., Inc. | | | |
| 7.3% 8/15/26 | | 535,000 | 551,365 |
| Ingersoll Rand, Inc. | | | |
| 5.4% 8/14/28 | | 1,000,000 | 983,918 |
| International Flavors & Fragrances, Inc. (IFF) | | | |
| 4.45% 9/26/28 | | 1,662,000 | 1,527,225 |
| 5% 9/26/48 | | 1,500,000 | 1,121,032 |
| Kilroy Realty, LP | | | |
| 2.65% 11/15/33 | | 280,000 | 189,213 |
| Kite Realty Group Trust (KRG) | | | |
| 4.75% 9/15/30 | | 695,000 | 619,342 |
| Lennar Corp. | | | |
| 4.75% 5/30/25 | | 622,000 | 608,711 |
| LKQ Corp. | | | |
| 6.25% 6/15/33(a) | | 5,000,000 | 4,840,256 |
| LXP Industrial Trust | | | |
| 2.7% 9/15/30 | | 500,000 | 387,667 |
| Markel Group Inc. | | | |
| 3.5% 11/1/27 | | 550,000 | 505,893 |
| Marriott International, Inc. | | | |
| Series HH 2.85% 4/15/31 | | 500,000 | 403,408 |
| Masonite International Corp. | | | |
| 5.38% 2/1/28(a) | | 646,000 | 601,626 |
The accompanying notes form an integral part of these financial statements.
2023 Semi-Annual Report 39
| | | |
| | | |
| | $ Principal | |
| | Amount | $ Value |
| |
| 3.5% 2/15/30(a) | 200,000 | 162,712 |
| MasTec, Inc. | | |
| 4.5% 8/15/28(a) | 2,941,000 | 2,647,327 |
| Micron Technology, Inc. | | |
| 4.19% 2/15/27 | 500,000 | 470,626 |
| Mileage Plus Holdings LLC/Mileage Plus Intellectual | | |
| Property Assets Ltd. | | |
| 6.5% 6/20/27(a) | 1,351,960 | 1,340,869 |
| MPLX LP | | |
| 4.88% 6/1/25 | 190,000 | 186,417 |
| 4% 3/15/28 | 85,000 | 78,679 |
| 4.8% 2/15/29 | 250,000 | 237,319 |
| 4.7% 4/15/48 | 551,000 | 418,195 |
| OneMain Finance Corp. | | |
| 3.88% 9/15/28 | 1,994,000 | 1,602,693 |
| 5.38% 11/15/29 | 3,303,000 | 2,770,226 |
| Oracle Corp. (N/A) | | |
| 4.13% 5/15/45 | 1,000,000 | 725,596 |
| 3.6% 4/1/50 | 470,000 | 304,294 |
| Owl Rock Core Income Corp. | | |
| 5.5% 3/21/25 | 6,807,000 | 6,586,161 |
| PDC Energy, Inc. | | |
| 5.75% 5/15/26 | 2,827,000 | 2,819,014 |
| Penske Truck Leasing Co. Lp / PTL Finance Corp. | | |
| 6.05% 8/1/28(a) | 2,000,000 | 1,976,391 |
| Phillips Edison Grocery Center Operating Partnership I LP | | |
| 2.63% 11/15/31 | 4,100,000 | 3,015,546 |
| Physicians Realty LP | | |
| 4.3% 3/15/27 | 1,271,000 | 1,195,608 |
| 2.63% 11/1/31 | 3,000,000 | 2,262,661 |
| Plains All American Pipeline LP/PAA Finance Corp. | | |
| 3.55% 12/15/29 | 798,000 | 686,460 |
| 4.3% 1/31/43 | 75,000 | 53,470 |
| Realty Income Corp. | | |
| 4.85% 3/15/30 | 1,000,000 | 943,196 |
| RELX Capital, Inc. | | |
| 4% 3/18/29 | 500,000 | 466,519 |
| 4.75% 5/20/32 | 250,000 | 233,640 |
| Retail Opportunity Investments Partnership LP | | |
| 6.75% 10/15/28 | 3,445,000 | 3,402,574 |
| Rocket Mortgage LLC / Rocket Mortgage Co-Issuer, Inc. | | |
| 3.88% 3/1/31(a) | 200,000 | 159,737 |
| 4% 10/15/33(a) | 1,450,000 | 1,096,995 |
| Spirit Realty LP | | |
| 4% 7/15/29 | 2,000,000 | 1,770,755 |
| STORE Capital Corp. | | |
| 4.5% 3/15/28 | 503,000 | 442,951 |
| 4.63% 3/15/29 | 500,000 | 428,043 |
| 2.7% 12/1/31 | 1,250,000 | 855,167 |
| Take-Two Interactive Software, Inc. | | |
| 3.7% 4/14/27 | 1,000,000 | 936,849 |
| Tempur Sealy International, Inc. | | |
| 4% 4/15/29(a) | 400,000 | 334,256 |
| 3.88% 10/15/31(a) | 1,500,000 | 1,159,023 |
| T-Mobile USA, Inc. | | |
| 2.63% 4/15/26 | 250,000 | 231,430 |
| 3.38% 4/15/29 | 4,000,000 | 3,521,818 |
| Twilio, Inc. | | |
| 3.88% 3/15/31 | 300,000 | 244,225 |
| United Wholesale Mortgage LLC | | |
| 5.75% 6/15/27(a) | 200,000 | 181,247 |
| 5.5% 4/15/29(a) | 700,000 | 592,368 |
| VICI Properties LP | | |
| 4.95% 2/15/30 | 500,000 | 458,134 |
| VICI Properties LP/VICI Note Co., Inc. | | |
| 4.13% 8/15/30(a) | 1,120,000 | 953,764 |
| VistaJet Malta Finance PLC / Vista Management Holding, | | |
| Inc. | | |
| 7.88% 5/1/27^ (a) (b) | 4,462,000 | 3,849,077 |
| 6.38% 2/1/30(a) (b) | 100,000 | 77,403 |
| Vontier Corp. | | |
| 2.95% 4/1/31 | 100,000 | 77,234 |
| | | |
| Total Corporate Bonds (Cost $152,371,547) | | 143,022,546 |
| |
| Corporate Convertible Bonds - 0.1% | | |
| | | |
| |
| Redwood Trust, Inc. | | |
| 5.63% 7/15/24 | 700,000 | 693,002 |
| 5.75% 10/1/25 | 500,000 | 465,180 |
| | | |
| Total Corporate Convertible Bonds (Cost $1,198,747) | | 1,158,182 |
| |
| Asset-Backed Securities - 26.7% | | |
| | | |
| |
| Automobile | | |
| ACM Auto Trust (ACM) | | |
| Series 2023-1A Class B –7.26% 1/22/30(a) | 2,550,000 | 2,541,130 |
| Series 2023-1A Class C –8.59% 1/22/30(a) | 2,500,000 | 2,494,670 |
| Series 2023-2A Class A –7.97% 6/20/30(a) | 6,229,864 | 6,236,430 |
| Series 2023-2A Class B –9.85% 6/20/30(a) | 7,000,000 | 7,017,774 |
| American Credit Acceptance Receivables Trust (ACAR) | | |
| Series 2020-4 Class D –1.77% 12/14/26(a) | 2,600,000 | 2,546,842 |
| AmeriCredit Automobile Receivables Trust (AMCAR) | | |
| Series 2020-3 Class D –1.49% 9/18/26 | 1,250,000 | 1,166,006 |
| Series 2022-1 Class C –2.98% 9/20/27 | 450,000 | 421,264 |
| Arivo Acceptance Auto Loan Receivables Trust (ARIVO) | | |
| Series 2021-1A Class A –1.19% 1/15/27(a) | 22,605 | 22,109 |
| Series 2022-2A Class C –9.84% 3/15/29(a) | 1,000,000 | 1,023,456 |
| Avid Automobile Receivables Trust (AVID) | | |
| Series 2023-1 Class A –6.63% 7/15/26(a) | 1,113,221 | 1,111,665 |
| Series 2023-1 Class B –7.12% 3/15/27(a) | 1,500,000 | 1,496,368 |
| BOF URSA VI Funding Trust I (BOF) | | |
| Series 2023-CAR1 Class A2 –5.54% 10/27/31(a) | 584,602 | 576,683 |
| Series 2023-CAR2 Class A2 –5.54% 10/27/31(a) | 1,359,991 | 1,341,571 |
| BOF VII AL Funding Trust I (BOF) | | |
| Series 2023-CAR3 Class A2 –6.29% 7/26/32(a) | 4,491,595 | 4,469,124 |
| CFMT LLC (CFMT) | | |
| Series 2021-AL1 Class B –1.39% 9/22/31(a) | 563,565 | 544,021 |
| Drive Auto Receivables Trust (DRIVE) | | |
| Series 2021-1 Class D –1.45% 1/16/29 | 610,000 | 577,494 |
| DT Auto Owner Trust (DTAOT) | | |
| Series 2019-3A Class D –2.96% 4/15/25(a) | 240,698 | 239,921 |
| Enterprise Fleet Financing LLC (EFF) | | |
| Series 2023-2 Class A2 –5.56% 4/22/30(a) | 2,000,000 | 1,985,724 |
| Exeter Automobile Receivables Trust (EART) | | |
| Series 2021-4A Class C –1.46% 10/15/27 | 1,145,000 | 1,107,903 |
| First Help Financial Trust (FHF) | | |
| Series 2023-1A Class A2 –6.57% 6/15/28(a) | 3,465,576 | 3,430,845 |
The accompanying notes form an integral part of these financial statements.
38 2023 Semi-Annual Report
CORE PLUS INCOME FUND (CONTINUED)
Schedule of Investments September 30, 2023 (Unaudited)
| | | | |
| | | | |
| | | $ Principal | |
| | | Amount | $ Value |
| |
| | First Investors Auto Owner Trust (FIAOT) | | |
| | Series 2022-1A Class A –2.03% 1/15/27(a) | 159,998 | 156,375 |
| | Series 2022-2A Class D –8.71% 10/16/28(a) | 1,000,000 | 1,028,533 |
| | Flagship Credit Auto Trust (FCAT) | | |
| | Series 2021-1 Class E –2.72% 4/17/28(a) | 1,500,000 | 1,376,845 |
| | Series 2021-2 Class C –1.27% 6/15/27(a) | 2,100,000 | 1,974,739 |
| | Series 2021-3 Class C –1.46% 9/15/27(a) | 255,000 | 235,791 |
| | Series 2021-4 Class D –2.26% 12/15/27(a) | 350,000 | 314,168 |
| | Foursight Capital Automobile Receivables Trust (FCRT) | | |
| | Series 2022-2 Class A2 –4.49% 3/16/26(a) | 199,426 | 198,568 |
| | GLS Auto Receivables Issuer Trust (GCAR) | | |
| | Series 2021-1A Class C –1.2% 1/15/27(a) | 157,646 | 156,496 |
| | Series 2021-2A Class D –1.42% 4/15/27(a) | 405,000 | 376,597 |
| | Series 2021-3A Class C –1.11% 9/15/26(a) | 800,000 | 771,987 |
| | Series 2021-4A Class D –2.48% 10/15/27(a) | 455,000 | 420,131 |
| | JPMorgan Chase Bank NA (CACLN) | | |
| | Series 2020-1 Class F –6.68% 1/25/28(a) | 1,464,535 | 1,463,653 |
| | Series 2021-2 Class E –2.28% 12/26/28(a) | 211,495 | 206,173 |
| | LAD Auto Receivables Trust (LADAR) | | |
| | Series 2021-1A Class A –1.3% 8/17/26(a) | 325,195 | 319,485 |
| | Series 2021-1A Class C –2.35% 4/15/27(a) | 6,500,000 | 6,120,944 |
| | Series 2021-1A Class D –3.99% 11/15/29(a) | 3,740,000 | 3,498,570 |
| | Series 2022-1A Class B –5.87% 9/15/27(a) | 1,720,000 | 1,700,275 |
| | Series 2022-1A Class C –6.85% 4/15/30(a) | 2,000,000 | 1,988,161 |
| | Series 2023-1A Class D –7.3% 6/17/30(a) | 3,000,000 | 3,009,062 |
| | Series 2023-2A Class A2 –5.93% 6/15/27(a) | 3,654,767 | 3,646,029 |
| | Lendbuzz Securitization Trust (LBST) | | |
| | Series 2023-1A Class A2 –6.92% 8/15/28(a) | 4,770,904 | 4,753,435 |
| | Series 2023-2A Class A1 –5.84% 5/15/24(a) | 1,432,386 | 1,432,368 |
| | Lobel Automobile Receivables Trust (LOBEL) | | |
| | Series 2023-1 Class A –6.97% 7/15/26(a) | 2,190,743 | 2,191,433 |
| | OneMain Direct Auto Receivables Trust (ODART) | | |
| | Series 2022-1A Class C –1.42% 7/14/28(a) | 4,000,000 | 3,599,783 |
| | Prestige Auto Receivables Trust (PART) | | |
| | Series 2022-1A Class C –7.09% 8/15/28(a) | 1,000,000 | 998,885 |
| | Research-Driven Pagaya Motor Asset Trust (RPM) | | |
| | Series 2023-3A Class A –7.13% 1/26/32(a) | 5,000,000 | 5,012,927 |
| | Santander Bank NA (SBCLN) | | |
| | Series 2021-1A Class C –3.27% 12/15/31(a) | 162,019 | 158,873 |
| | Tricolor Auto Securitization Trust (TCAST) | | |
| | Series 2023-1A Class A –6.48% 8/17/26(a) | 1,238,210 | 1,235,750 |
| | Series 2023-1A Class B –6.84% 11/16/26(a) | 1,480,000 | 1,473,392 |
| | United Auto Credit Securitization Trust (UACST) | | |
| | Series 2023-1 Class A –5.57% 7/10/25(a) | 341,625 | 341,133 |
| | Westlake Automobile Receivables Trust (WLAKE) | | |
| | Series 2021-1A Class C –0.95% 3/16/26(a) | 439,813 | 433,427 |
| | | | |
| | | | 90,944,988 |
| | | |
| | Collateralized Loan Obligations | | |
| | ABPCI Direct Lending Fund CLO X LP (ABPCI) | | |
| | Series 2020-10A Class B1 –7.94% 1/20/32 Floating Rate | | |
| | (TSFR3M + 261)(a) (b) (c) | 2,725,000 | 2,695,932 |
| | ABPCI Direct Lending Fund CLO XI LP (ABPCI) | | |
| | Series 2022-11A Class B1 –8.68% 10/27/34 Floating | | |
| | Rate (TSFR3M + 360)(a) (b) (c) | 1,500,000 | 1,505,091 |
| | ABPCI Direct Lending Fund CLO XII Ltd. (ABPCI) | | |
| | Series 2023-12A Class B –8.3% 4/29/35 Floating Rate | | |
| | (TSFR3M + 350)(a) (b) (c) | 2,000,000 | 2,005,304 |
| | Antares CLO Ltd. (ANTRS) | | |
| | Series 2017-2A Class DR –9.34% 10/20/33 Floating | | |
| | Rate (TSFR3M + 401)(a) (b) (c) | 2,000,000 | 1,864,047 |
| | Audax Senior Debt CLO 6 LLC (AUDAX) | | |
| | Series 2021-6A Class B –7.54% 10/20/33 Floating Rate | | |
| | (TSFR3M + 221)(a) (c) | 3,000,000 | 2,852,385 |
| | AUF Funding LLC (AUF) | | |
| | Series 2022-1A Class B1 –9.08% 1/20/31 Floating Rate | | |
| | (TSFR3M + 375)(a) (c) | 1,500,000 | 1,502,877 |
| | BBC Middle Market CLO (BCMM) | | |
| | Series 2023-1A Class B1 –9.22% 7/20/35 Floating Rate | | |
| | (TSFR3M + 380)(a) (c) | 3,750,000 | 3,757,909 |
| | BCRED MML CLO LLC (BXCMM) | | |
| | Series 2022-1A Class A1 –6.98% 4/20/35 Floating Rate | | |
| | (TSFR3M + 165)(a) (b) (c) | 1,000,000 | 987,197 |
| | BlackRock Elbert CLO V LLC (ELB) | | |
| | Series 5A Class AR –7.1% 6/15/34 Floating Rate | | |
| | (TSFR3M + 185)(a) (b) (c) | 1,040,000 | 1,031,140 |
| | BlackRock Rainier CLO VI Ltd. (BLKMM) | | |
| | Series 2021-6A Class B –7.64% 4/20/33 Floating Rate | | |
| | (TSFR3M + 231)(a) (b) (c) | 1,800,000 | 1,744,753 |
| | Brightwood Capital MM CLO Ltd. (BWCAP) | | |
| | Series 2020-1A Class A1R –8.11% 1/15/31 Floating Rate | | |
| | (TSFR3M + 280)(a) (b) (c) | 2,208,918 | 2,209,665 |
| | Capital Four US CLO II Ltd. (C4US) | | |
| | Series 2022-1A Class B –8.43% 10/20/30 Floating Rate | | |
| | (TSFR3M + 310)(a) (b) (c) | 1,000,000 | 1,006,326 |
| | Cerberus Loan Funding LP (CERB) | | |
| | Series 2020-1A Class B –8.12% 10/15/31 Floating Rate | | |
| | (TSFR3M + 281)(a) (b) (c) | 500,000 | 494,753 |
| | Series 2020-1A Class C –9.27% 10/15/31 Floating Rate | | |
| | (TSFR3M + 396)(a) (b) (c) | 500,000 | 493,116 |
| | Series 2020-2A Class A –7.47% 10/15/32 Floating Rate | | |
| | (TSFR3M + 216)(a) (b) (c) | 495,000 | 494,778 |
| | Series 2020-2A Class B –8.17% 10/15/32 Floating Rate | | |
| | (TSFR3M + 286)(a) (b) (c) | 500,000 | 496,317 |
| | Series 2021-2A Class B –7.47% 4/22/33 Floating Rate | | |
| | (TSFR3M + 216)(a) (b) (c) | 1,500,000 | 1,460,392 |
| | Series 2021-6A Class B –7.32% 11/22/33 Floating Rate | | |
| | (TSFR3M + 201)(a) (b) (c) | 1,650,000 | 1,639,214 |
| | Series 2022-1A Class A2 –4.02% 4/15/34(a) | 1,750,000 | 1,590,496 |
| | Cerberus Loan Funding XLII LLC (CERB) | | |
| | Series 2023-3A Class B –8.78% 9/13/35 Floating Rate | | |
| | (TSFR3M + 335)(a) (c) | 1,750,000 | 1,749,787 |
| | Churchill Middle Market CLO III Ltd. (CHMML) | | |
| | Series 2021-1A Class A1 –7.11% 10/24/33 Floating Rate | | |
| | (TSFR3M + 176)(a) (b) (c) | 1,000,000 | 988,994 |
| | CIFC-LBC Middle Market CLO (CLBC) | | |
| | Series 2023-1A Class B1 –8.99% 10/20/35 Floating | | |
| | Rate (TSFR3M + 355)(a) (c) | 4,500,000 | 4,499,424 |
| | Series 2023-1A Class C –9.74% 10/20/35 Floating Rate | | |
| | (TSFR3M + 430)(a) (c) | 5,000,000 | 4,999,255 |
| | Deerpath Capital CLO Ltd. (DPATH) | | |
| | Series 2021-2A Class A1 –7.17% 1/15/34 Floating Rate | | |
| | (TSFR3M + 186)(a) (b) (c) | 1,000,000 | 984,107 |
| | Series 2021-2A Class C –8.47% 1/15/34 Floating Rate | | |
| | (TSFR3M + 316)(a) (b) (c) | 2,300,000 | 2,203,179 |
| | Series 2022-1A Class A1 –7.26% 7/15/33 Floating Rate | | |
| | (TSFR3M + 195)(a) (b) (c) | 750,000 | 744,977 |
| | Series 2023-1A Class B1 –9.21% 4/15/35 Floating Rate | | |
| | (TSFR3M + 390)(a) (b) (c) | 2,500,000 | 2,505,930 |
| | Series 2023-1A Class C –10.56% 4/15/35 Floating Rate | | |
| | (TSFR3M + 525)(a) (b) (c) | 1,500,000 | 1,507,473 |
| | Fortress Credit Opportunities IX CLO Ltd. (FCO) | | |
| | Series 2017-9A Class A1TR –7.12% 10/15/33 Floating | | |
| | Rate (TSFR3M + 181)(a) (b) (c) | 1,500,000 | 1,470,491 |
The accompanying notes form an integral part of these financial statements.
2023 Semi-Annual Report 41
| | | | |
| | | | |
| | | $ Principal | |
| | | Amount | $ Value |
| |
| | Fortress Credit Opportunities XV CLO Ltd. (FCO) | | |
| | Series 2021-15A Class B –7.46% 4/25/33 Floating Rate | | |
| | (TSFR3M + 211)(a) (b) (c) | 1,500,000 | 1,434,729 |
| | Fortress Credit Opportunities XXI CLO LLC (FCO) | | |
| | Series 2023-21A Class AT –7.98% 1/21/35 Floating Rate | | |
| | (TSFR3M + 265)(a) (c) | 2,000,000 | 2,009,840 |
| | Series 2023-21A Class C –10.23% 1/21/35 Floating Rate | | |
| | (TSFR3M + 490)(a) (c) | 1,000,000 | 1,002,208 |
| | Golub Capital Partners ABS Funding (GOCAP) | | |
| | Series 2023-1A Class A –7.46% 7/25/33(a) | 5,000,000 | 4,926,060 |
| | Golub Capital Partners CLO 31M Ltd. (GOCAP) | | |
| | Series 2016-31A Class CR –8.53% 8/5/30 Floating Rate | | |
| | (TSFR3M + 316)(a) (b) (c) | 1,000,000 | 978,388 |
| | Golub Capital Partners CLO 54M LP (GOCAP) | | |
| | Series 2021-54A Class B –7.48% 8/5/33 Floating Rate | | |
| | (TSFR3M + 211)(a) (b) (c) | 500,000 | 479,553 |
| | Series 2021-54A Class C –8.28% 8/5/33 Floating Rate | | |
| | (TSFR3M + 291)(a) (b) (c) | 1,000,000 | 952,629 |
| | Golub Capital Partners Short Duration (GSHOR) | | |
| | Series 2022-1A Class B1 –8.85% 10/25/31 Floating Rate | | |
| | (TSFR3M + 350)(a) (c) | 1,000,000 | 1,005,887 |
| | Guggenheim MM CLO Ltd. (GUGG) | | |
| | Series 2021-4A Class B –7.82% 1/15/34 Floating Rate | | |
| | (TSFR3M + 251)(a) (b) (c) | 2,500,000 | 2,394,125 |
| | Ivy Hill Middle Market Credit Fund IX Ltd. (IVYH) | | |
| | Series 9A Class A1TR –6.97% 4/23/34 Floating Rate | | |
| | (TSFR3M + 162)(a) (b) (c) | 1,500,000 | 1,480,635 |
| | KKR Lending Partners III CLO LLC (KKRLP) | | |
| | Series 2021-1A Class B –7.49% 10/20/30 Floating Rate | | |
| | (TSFR3M + 216)(a) (c) | 3,000,000 | 2,921,034 |
| | KKR Static CLO I Ltd. (KKRS) | | |
| | Series 2022-1A Class B –7.93% 7/20/31 Floating Rate | | |
| | (TSFR3M + 260)(a) (b) (c) | 1,250,000 | 1,255,490 |
| | Maranon Loan Funding Ltd. (MRNON) | | |
| | Series 2021-2RA Class BR –7.62% 7/15/33 Floating | | |
| | Rate (TSFR3M + 231)(a) (b) (c) | 2,500,000 | 2,405,890 |
| | Monroe Capital Funding CLO X Ltd. (MCF) | | |
| | Series 2023-1A Class B –8.33% 4/15/35 Floating Rate | | |
| | (TSFR3M + 350)(a) (c) | 1,500,000 | 1,496,033 |
| | Monroe Capital MML CLO XII Ltd. (MCMML) | | |
| | Series 2021-2A Class C –8.32% 9/14/33 Floating Rate | | |
| | (TSFR3M + 291)(a) (b) (c) | 2,000,000 | 1,929,824 |
| | Monroe Capital MML CLO XV LLC (MCMML) | | |
| | Series 2023-1A Class A1 –7.93% 9/23/35 Floating Rate | | |
| | (TSFR3M + 250)(a) (c) | 3,000,000 | 2,999,613 |
| | Series 2023-1A Class B –8.88% 9/23/35 Floating Rate | | |
| | (TSFR3M + 345)(a) (c) | 3,000,000 | 2,999,472 |
| | NXT Capital CLO LLC (NXT) | | |
| | Series 2020-1A Class B –7.99% 1/20/31 Floating Rate | | |
| | (TSFR3M + 266)(a) (c) | 3,150,000 | 3,122,809 |
| | Series 2020-1A Class C –8.94% 1/20/31 Floating Rate | | |
| | (TSFR3M + 361)(a) (c) | 800,000 | 781,509 |
| | Owl Rock CLO IX LLC (OR) | | |
| | Series 2022-9A Class B –9.38% 11/20/34 Floating Rate | | |
| | (TSFR3M + 400)(a) (c) | 1,000,000 | 1,004,395 |
| | Owl Rock CLO VIII LLC (OR) | | |
| | Series 2022-8A Class AT –7.88% 11/20/34 Floating Rate | | |
| | (TSFR3M + 250)(a) (c) | 1,000,000 | 1,000,994 |
| | Owl Rock CLO XII LLC (OR) | | |
| | Series 2023-12A Class B –8.86% 7/20/34 Floating Rate | | |
| | (TSFR3M + 355)(a) (b) (c) | 1,000,000 | 999,670 |
| | Palmer Square Loan Funding Ltd. (PSTAT) | | |
| | Series 2021-1A Class A2 –6.84% 4/20/29 Floating Rate | | |
| | (TSFR3M + 151)(a) (b) (c) | 250,000 | 247,392 |
| | Series 2021-1A Class B –7.39% 4/20/29 Floating Rate | | |
| | (TSFR3M + 206)(a) (b) (c) | 1,000,000 | 991,034 |
| | PennantPark CLO VI LLC (PCLO) | | |
| | Series 2023-6A Class B1 –8.71% 4/22/35 Floating Rate | | |
| | (TSFR3M + 375)(a) (c) | 2,000,000 | 1,997,824 |
| | Twin Brook CLO (TWBRK) | | |
| | Series 2023-1A Class B –8.53% 4/20/35 Floating Rate | | |
| | (TSFR3M + 320)(a) (c) | 1,000,000 | 1,002,640 |
| | Series 2023-1A Class C –9.43% 4/20/35 Floating Rate | | |
| | (TSFR3M + 410)(a) (c) | 3,000,000 | 3,015,786 |
| | | | |
| | | | 98,320,772 |
| | | |
| | Consumer & Specialty Finance | | |
| | ACHV ABS Trust (ACHV) | | |
| | Series 2023-1PL Class B –6.8% 3/18/30(a) | 1,000,000 | 999,855 |
| | Affirm Asset Securitization Trust (AFFRM) | | |
| | Series 2022-Z1 Class A –4.55% 6/15/27(a) | 572,849 | 565,728 |
| | Bankers Healthcare Group Securitization Trust (BHG) | | |
| | Series 2020-A Class A –2.56% 9/17/31(a) | 91,184 | 89,777 |
| | Series 2021-A Class A –1.42% 11/17/33(a) | 202,092 | 188,588 |
| | Series 2022-B Class B –4.84% 6/18/35(a) | 1,498,342 | 1,444,335 |
| | Series 2023-A Class A –5.55% 4/17/36(a) | 906,543 | 893,693 |
| | Driven Brands Funding LLC (HONK) | | |
| | Series 2019-2A Class A2 –3.98% 10/20/49(a) | 481,250 | 440,504 |
| | Foundation Finance Trust (FFIN) | | |
| | Series 2019-1A Class A –3.86% 11/15/34(a) | 53,174 | 52,546 |
| | Series 2021-1A Class B –1.87% 5/15/41(a) | 3,421,000 | 3,040,056 |
| | FREED ABS Trust (FREED) | | |
| | Series 2022-1FP Class C –2.51% 3/19/29(a) | 2,530,000 | 2,477,477 |
| | Series 2022-3FP Class B –5.79% 8/20/29(a) | 958,958 | 957,365 |
| | Series 2022-4FP Class C –8.59% 12/18/29(a) | 2,000,000 | 2,036,105 |
| | Hilton Grand Vacations Trust (HGVT) | | |
| | Series 2020-AA Class B –4.22% 2/25/39(a) | 170,909 | 163,967 |
| | Lendingpoint Asset Securitization Trust (LDPT) | | |
| | Series 2022-C Class A –6.56% 2/15/30(a) | 879,822 | 878,698 |
| | LendingPoint Asset Securitization Trust (LDPT) | | |
| | Series 2020-REV1 Class A –2.73% 10/15/28(a) | 48,106 | 48,106 |
| | LP LMS Asset Securitization Trust (LPMS) | | |
| | Series 2023-1A Class A –8.18% 10/17/33(a) | 2,711,843 | 2,702,912 |
| | Marlette Funding Trust (MFT) | | |
| | Series 2021-2A Class B –1.06% 9/15/31(a) | 105,298 | 104,434 |
| | Series 2023-1A Class A –6.07% 4/15/33(a) | 1,061,464 | 1,059,664 |
| | Octane Receivables Trust (OCTL) | | |
| | Series 2020-1A Class B –1.98% 6/20/25(a) | 3,383,132 | 3,358,148 |
| | Series 2021-1A Class B –1.53% 4/20/27(a) | 700,000 | 660,328 |
| | Series 2022-1A Class A2 –4.18% 3/20/28(a) | 347,496 | 342,420 |
| | Pagaya AI Debt Selection Trust (PAID) | | |
| | Series 2021 Class B –1.82% 1/16/29(a) | 294,228 | 277,760 |
| | Pagaya AI Debt Trust (PAID) | | |
| | Series 2022-2 Class A –4.97% 1/15/30(a) | 614,574 | 608,170 |
| | Series 2022-3 Class A –6.06% 3/15/30(a) | 1,225,509 | 1,219,638 |
| | Series 2022-5 Class A –8.1% 6/17/30(a) | 932,372 | 940,791 |
| | Series 2023-1 Class A –7.56% 7/15/30(a) | 2,221,350 | 2,230,793 |
| | Series 2023-3 Class A –7.6% 12/16/30(a) | 4,243,787 | 4,265,412 |
| | Series 2023-5 Class B –7.63% 4/15/31(a) | 1,750,000 | 1,756,092 |
| | Series 2023-5 Class C –9.1% 4/15/31(a) | 3,000,000 | 3,044,286 |
| | Series 2023-5 Class D –9% 4/15/31(a) | 3,500,000 | 3,259,612 |
| | Prosper Marketplace Issuance Trust (PMIT) | | |
| | Series 2023-1A Class A –7.06% 7/16/29(a) | 850,000 | 850,719 |
| | Sierra Timeshare Receivables Funding LLC (SRFC) | | |
| | Series 2019-2A Class B –2.82% 5/20/36(a) | 101,167 | 98,098 |
The accompanying notes form an integral part of these financial statements.
42 2023 Semi-Annual Report
CORE PLUS INCOME FUND (CONTINUED)
Schedule of Investments September 30, 2023 (Unaudited)
| | | | |
| | | | |
| | | $ Principal | |
| | | Amount | $ Value |
| |
| | Theorem Funding Trust (THRM) | | |
| | Series 2021-1A Class B –2.21% 12/15/27(a) | 915,585 | 899,540 |
| | Series 2022-2A Class B –9.27% 12/15/28(a) | 1,000,000 | 1,032,928 |
| | Series 2022-3A Class A –7.6% 4/15/29(a) | 578,513 | 581,560 |
| | Upstart Securitization Trust (UPST) | | |
| | Series 2021-1 Class B –1.89% 3/20/31(a) | 14,195 | 14,153 |
| | Series 2021-1 Class C –4.06% 3/20/31(a) | 250,000 | 242,868 |
| | Series 2023-2 Class A –6.77% 6/20/33(a) | 5,359,006 | 5,353,413 |
| | | | |
| | | | 49,180,539 |
| | | |
| | Equipment | | |
| | Amur Equipment Finance Receivables IX LLC (AXIS) | | |
| | Series 2021-1A Class B –1.38% 2/22/27(a) | 1,035,000 | 991,128 |
| | Series 2021-1A Class D –2.3% 11/22/27(a) | 500,000 | 471,181 |
| | Amur Equipment Finance Receivables XII LLC (AXIS) | | |
| | Series 2023-1A Class A2 –6.09% 12/20/29(a) | 1,000,000 | 1,001,316 |
| | Dext ABS LLC (DEXT) | | |
| | Series 2020-1 Class B –1.92% 11/15/27(a) | 529,939 | 525,013 |
| | SCF Equipment Leasing LLC (SCFET) | | |
| | Series 2019-2A Class A2 –2.47% 4/20/26(a) | 6,912 | 6,891 |
| | | | |
| | | | 2,995,529 |
| | | |
| | Other | | |
| | Adams Outdoor Advertising, LP (ADMSO) | | |
| | Series 2023-1 Class A2 –6.97% 7/15/53(a) | 6,000,000 | 5,914,176 |
| | Frontier Issuer LLC (FYBR) | | |
| | Series 2023-1 Class A2 –6.6% 8/20/53(a) | 10,000,000 | 9,567,472 |
| | Jersey Mike's Funding (JMIKE) | | |
| | Series 2019-1A Class A2 –4.43% 2/15/50(a) | 992,500 | 914,297 |
| | Monroe Capital ABS Funding II Ltd. (MCF) | | |
| | Series 2023-1A Class D –10.2% 4/22/33(a) | 3,500,000 | 3,388,600 |
| | Oxford Finance Funding Trust (OXFIN) | | |
| | Series 2023-1A Class A2 –6.72% 2/15/31(a) | 5,000,000 | 4,914,494 |
| | Zaxby's Funding LLC (ZAXBY) | | |
| | Series 2021-1A Class A2 –3.24% 7/30/51(a) | 1,225,000 | 1,021,292 |
| | | | 25,720,331 |
| | | | |
| | Total Asset-Backed Securities (Cost $269,491,614) | | 267,162,159 |
| |
| |
| Commercial Mortgage-Backed Securities - 5.9% | | |
| | | | |
| |
| | AREIT LLC (AREIT) | | |
| | Series 2023-CRE8 Class B –8.65% 7/17/28 Floating | | |
| | Rate (TSFR1M + 332)(a) | 5,000,000 | 4,996,430 |
| | Series 2023-CRE8 Class C –9.35% 7/17/28 Floating | | |
| | Rate (TSFR1M + 402)(a) | 5,000,000 | 4,996,790 |
| | Series 2023-CRE8 Class D –10.7% 7/17/28 Floating | | |
| | Rate (TSFR1M + 537)(a) | 3,000,000 | 3,009,963 |
| | AREIT Trust (AREIT) | | |
| | Series 2021-CRE5 Class A –6.53% 11/17/38 Floating | | |
| | Rate (TSFR1M + 119)(a) | 664,407 | 656,307 |
| | BDS Ltd. (BDS) | | |
| | Series 2021-FL10 Class C –7.75% 12/16/36 Floating | | |
| | Rate (TSFR1M + 241)(a) (b) | 1,250,000 | 1,205,665 |
| | BFLD Trust (BFLD) | | |
| | Series 2020-OBRK Class A –7.5% 11/15/28 Floating | | |
| | Rate (TSFR1M + 216)(a) | 1,780,000 | 1,777,002 |
| | BPCRE Ltd. (BPCRE) | | |
| | Series 2022-FL2 Class C –9.83% 1/16/37 Floating Rate | | |
| | (TSFR1M + 450)(a) (b) | 2,500,000 | 2,486,990 |
| | BPR Trust (BPR) | | |
| | Series 2021-TY Class B –6.6% 9/15/38 Floating Rate | | |
| | (TSFR1M + 126)(a) | 3,250,000 | 3,071,090 |
| | BRSP Ltd. (BRSP) | | |
| | Series 2021-FL1 Class B –7.34% 8/19/38 Floating Rate | | |
| | (TSFR1M + 201)(a) (b) | 1,100,000 | 1,041,044 |
| | Series 2021-FL1 Class E –8.89% 8/19/38 Floating Rate | | |
| | (TSFR1M + 356)(a) (b) | 4,000,000 | 3,614,280 |
| | FS Rialto Issuer LLC (FSRI) | | |
| | Series 2022-FL7 Class A –8.23% 10/19/39 Floating | | |
| | Rate (TSFR1M + 290)(a) | 1,000,000 | 1,001,869 |
| | FS Rialto Issuer LTD (FSRIA) | | |
| | Series 2021-FL2 Class E –8.9% 5/16/38 Floating Rate | | |
| | (TSFR1M + 356)(a) | 1,000,000 | 891,817 |
| | GPMT Ltd. (GPMT) | | |
| | Series 2021-FL3 Class A –6.7% 7/16/35 Floating Rate | | |
| | (TSFR1M + 136)(a) (b) | 1,129,944 | 1,116,921 |
| | HERA Commercial Mortgage Ltd. (HCM) | | |
| | Series 2021-FL1 Class C –7.4% 2/18/38 Floating Rate | | |
| | (TSFR1M + 206)(a) (b) | 650,000 | 618,276 |
| | HGI CRE CLO Ltd. (HGI) | | |
| | Series 2021-FL1 Class A4 –6.5% 6/16/36 Floating Rate | | |
| | (TSFR1M + 116)(a) (b) | 579,133 | 575,066 |
| | Series 2021-FL1 Class AS –6.85% 6/16/36 Floating Rate | | |
| | (TSFR1M + 151)(a) (b) | 2,000,000 | 1,959,762 |
| | Series 2021-FL1 Class B –7.05% 6/16/36 Floating Rate | | |
| | (TSFR1M + 171)(a) (b) | 5,100,000 | 4,942,803 |
| | Series 2021-FL1 Class C –7.15% 6/16/36 Floating Rate | | |
| | (TSFR1M + 181)(a) (b) | 450,000 | 429,309 |
| | Series 2021-FL1 Class E –8.4% 6/16/36 Floating Rate | | |
| | (TSFR1M + 306)(a) (b) | 750,000 | 703,616 |
| | Series 2021-FL2 Class D –7.6% 9/17/36 Floating Rate | | |
| | (TSFR1M + 226)(a) (b) | 1,000,000 | 941,053 |
| | Hilton USA Trust (HILT) | | |
| | Series 2016-SFP Class E –5.52% 11/5/35(a) | 840,000 | 340,200 |
| | ILPT Commercial Mortgage Trust (ILPT) | | |
| | Series 2022-LPF2 Class B –8.08% 10/15/39 Floating | | |
| | Rate (TSFR1M + 274)(a) | 3,000,000 | 2,993,565 |
| | KREF Ltd. (KREF) | | |
| | Series 2021-FL2 Class B –7.1% 2/15/39 Floating Rate | | |
| | (TSFR1M + 176)(a) (b) | 2,500,000 | 2,365,623 |
| | LoanCore Issuer Ltd. (LNCR) | | |
| | Series 2018-CRE1 Class C –8% 5/15/28 Floating Rate | | |
| | (US0001M + 255)(a) (b) | 1,000,000 | 977,700 |
| | Series 2018-CRE1 Class D –8.4% 5/15/28 Floating Rate | | |
| | (US0001M + 295)(a) (b) | 1,000,000 | 970,100 |
| | Series 2021-CRE5 Class B –7.45% 7/15/36 Floating | | |
| | Rate (US0001M + 200)(a) (b) | 1,407,000 | 1,361,734 |
| | MF1 Multifamily Housing Mortgage Loan Trust (MFHM) | | |
| | Series 2021-FL5 Class AS –6.65% 7/15/36 Floating Rate | | |
| | (TSFR1M + 131)(a) (b) | 3,575,000 | 3,501,201 |
| | PFP Ltd. (PFP) | | |
| | Series 2021-8 Class E –7.95% 8/9/37 Floating Rate | | |
| | (TSFR1M + 261)(a) (b) | 750,000 | 648,965 |
| | Series 2022-9 Class A –7.61% 8/19/35 Floating Rate | | |
| | (TSFR1M + 227)(a) (b) | 750,000 | 750,988 |
| | STWD Ltd. (STWD) | | |
| | Series 2021-FL2 Class C –7.55% 4/18/38 Floating Rate | | |
| | (TSFR1M + 221)(a) (b) | 2,109,000 | 1,961,614 |
| | Series 2022-FL3 Class B –7.26% 11/15/38 Floating Rate | | |
| | (SOFR30A + 195)(a) (b) | 2,500,000 | 2,395,308 |
The accompanying notes form an integral part of these financial statements.
2023 Semi-Annual Report 43
| | | |
| | | |
| | $ Principal | |
| Amount | $ Value |
| |
| VMC Finance LLC (VMC) | | |
| Series 2021-FL4 Class A –6.55% 6/16/36 Floating Rate | | |
| (TSFR1M + 121)(a) | 923,196 | 908,982 |
| | | |
| Total Commercial Mortgage-Backed Securities (Cost $60,038,846) | 59,212,033 |
| |
| |
| Mortgage-Backed Securities - 13.0% | | |
| | | |
| |
| Federal Home Loan Mortgage Corporation | | |
| Collateralized Mortgage Obligations | | |
| Series 5026 Class DH –1.75% 9/25/43 | 433,754 | 383,621 |
| Series 4949 Class BC –2.25% 3/25/49 | 220,698 | 187,878 |
| | |
| Pass-Through Securities | | |
| Pool# C91945 – 3% 8/1/37 | 236,794 | 211,715 |
| Pool# SD8258 – Series 8258 5% 10/1/52 | 9,311,911 | 8,797,763 |
| Pool# SD8267 – Series 8267 5% 11/1/52 | 3,762,844 | 3,555,089 |
| Pool# SD8290 – 6% 1/1/53 | 4,420,320 | 4,371,632 |
| Pool# SD8323 – Series 8323 5% 5/1/53 | 6,807,596 | 6,429,369 |
| Pool# SD8324 – Series 8324 5.5% 5/1/53 | 8,648,295 | 8,364,928 |
| Pool# SD3386 – 5.5% 7/1/53 | 4,934,362 | 4,772,684 |
| Pool# SD8341 – Series 8341 5% 7/1/53 | 4,905,564 | 4,632,378 |
| Pool# SD8342 – Series 8342 5.5% 7/1/53 | 13,620,603 | 13,174,316 |
| Pool# SD8350 – 6% 8/1/53 | 8,820,254 | 8,711,640 |
| Pool# SD3857 – 6% 9/1/53 | 8,964,499 | 8,855,549 |
| Pool# MA5040 – 6% 6/1/53 | 1,932,375 | 1,908,580 |
| | | 74,357,142 |
| | |
| Federal National Mortgage Association | | |
| Collateralized Mortgage Obligations | | |
| Series 2013-130 Class CA –2.5% 6/25/43 | 101,160 | 91,293 |
| Series 2013-130 Class CD –3% 6/25/43 | 183,927 | 169,461 |
| | |
| Pass-Through Securities | | |
| Pool# 932836 – 3% 12/1/25 | 7,642 | 7,442 |
| Pool# 468516 – 5.17% 6/1/28 | 199,304 | 193,695 |
| Pool# MA3443 – 4% 8/1/48 | 97,593 | 88,447 |
| Pool# FM5733 – 2% 1/1/51 | 1,198,545 | 927,481 |
| Pool# MA4785 – Series 4785 5% 10/1/52 | 12,851,607 | 12,142,015 |
| Pool# MA4806 – Series 4806 5% 11/1/52 | 3,769,048 | 3,560,950 |
| Pool# MA4941 – 5.5% 3/1/53 | 7,540,615 | 7,293,542 |
| Pool# MA5038 – Series 5038 5% 6/1/53 | 3,373,503 | 3,185,550 |
| Pool# MA5166 – 6% 10/1/53 | 4,000,000 | 3,950,743 |
| | | 31,610,619 |
| | |
| Government National Mortgage Association | | |
| Collateralized Mortgage Obligations | | |
| Series 2021-29 Class CY –3% 9/20/50 | 1,000,000 | 757,330 |
| Series 2018-52 Class AE –2.75% 5/16/51 | 81,676 | 72,855 |
| | | 830,185 |
| | |
| Non-Government Agency | | |
| Collateralized Mortgage Obligations | | |
| Flagstar Mortgage Trust (FSMT) | | |
| Series 2017-1 Class 2A2 –3% 3/25/47(a) (c) | 40,291 | 35,975 |
| GS Mortgage-Backed Securities Trust (GSMBS) | | |
| Series 2023-PJ3 Class A3 –5% 10/27/53(a) (c) | 4,874,874 | 4,534,622 |
| JPMorgan Mortgage Trust (JPMMT) | | |
| Series 2016-3 Class A –2.97% 10/25/46(a) (c) | 53,420 | 48,638 |
| Series 2017-3 Class A –2.5% 8/25/47(a) (c) | 58,567 | 49,259 |
| Series 2018-6 Class 2A2 –3% 12/25/48(a) (c) | 21,013 | 19,284 |
| Series 2023-3 Class A3A –5% 10/25/53(a) (c) | 4,714,265 | 4,391,093 |
| Series 2023-4 Class 1A2 –6% 11/25/53(a) (c) | 2,862,149 | 2,788,933 |
| Morgan Stanley Residential Mortgage Loan Trust (MSRM) | | |
| Series 2023-1 Class A1 –4% 2/25/53(a) (c) | 5,867,672 | 5,021,591 |
| RCKT Mortgage Trust (RCKT) | | |
| Series 2021-3 Class A5 –2.5% 7/25/51(a) (c) | 1,424,997 | 1,214,362 |
| Sequoia Mortgage Trust (SEMT) | | |
| Series 2019-CH2 Class A –4.5% 8/25/49(a) (c) | 10,025 | 9,827 |
| Series 2023-3 Class A1 –6% 9/25/53(a) (c) | 4,874,953 | 4,750,248 |
| | |
| Pass-Through Securities | | |
| Greenpoint Mortgage Pass-Through Certificates (GMSI) | | |
| Series 2003-1 Class A1 –5.36% 10/25/33(c) | 30,991 | 29,055 |
| | | 22,892,887 |
| | | |
| Total Mortgage-Backed Securities (Cost $134,442,525) | | 129,690,833 |
| |
| Municipal Bonds - 0.1% | | |
| | | |
| |
| Detroit, MI City School District General Obligation SBLF, | | |
| 6.65% 5/1/29 | 460,000 | 482,781 |
| Village of Rosemont IL General Obligation BAM, 5.38% | | |
| 12/1/23 | 470,000 | 469,380 |
| | | |
| Total Municipal Bonds (Cost $1,032,140) | | 952,161 |
| |
| U.S. Treasuries - 38.6% | | |
| | | |
| |
| U.S. Treasury Bonds | | |
| 3.5% 2/15/39 | 2,100,000 | 1,815,762 |
| 1.88% 2/15/41 | 11,500,000 | 7,423,340 |
| 1.75% 8/15/41 | 4,000,000 | 2,492,656 |
| 2% 11/15/41 | 7,500,000 | 4,869,873 |
| 2.38% 2/15/42 | 28,000,000 | 19,363,203 |
| 3.25% 5/15/42 | 15,000,000 | 11,956,348 |
| 4% 11/15/42 | 12,500,000 | 11,096,680 |
| 3.88% 2/15/43 | 5,000,000 | 4,352,344 |
| 3.13% 2/15/43 | 15,000,000 | 11,615,918 |
| 3.88% 5/15/43 | 11,500,000 | 9,999,609 |
| 2.88% 5/15/43 | 2,000,000 | 1,482,461 |
| 4.38% 8/15/43 | 26,000,000 | 24,261,250 |
| 3.63% 8/15/43 | 12,000,000 | 10,016,016 |
| 3.75% 11/15/43 | 6,000,000 | 5,094,375 |
| 3.63% 2/15/44 | 10,500,000 | 8,734,072 |
| 3.38% 5/15/44 | 15,500,000 | 12,373,662 |
| 3.13% 8/15/44 | 27,500,000 | 21,020,312 |
| 3% 11/15/44 | 24,000,000 | 17,918,906 |
| 2.5% 2/15/45 | 21,000,000 | 14,266,465 |
| 3% 5/15/45 | 23,000,000 | 17,088,730 |
| 3% 11/15/45 | 9,500,000 | 7,030,186 |
| 2.5% 5/15/46 | 8,400,000 | 5,629,148 |
| 2.25% 8/15/46 | 2,500,000 | 1,585,938 |
| 3% 2/15/47 | 1,000,000 | 734,609 |
| U.S. Treasury Notes | | |
| 2.75% 11/15/23 | 11,000,000 | 10,963,985 |
The accompanying notes form an integral part of these financial statements.
44 2023 Semi-Annual Report
CORE PLUS INCOME FUND (CONTINUED)
Schedule of Investments September 30, 2023 (Unaudited)
| | | | |
| | | |
| | | $ Principal | |
| | | Amount | $ Value |
| |
| 2.88% 11/30/23 | | 2,000,000 | 1,991,612 |
| 2.75% 2/15/24 | | 13,000,000 | 12,870,234 |
| 2.25% 3/31/24 | | 6,000,000 | 5,906,158 |
| 2.25% 2/15/27 | | 3,500,000 | 3,230,459 |
| 2.38% 5/15/27 | | 3,000,000 | 2,767,148 |
| 2.25% 8/15/27 | | 3,000,000 | 2,742,070 |
| 1.13% 2/29/28 | | 6,500,000 | 5,593,555 |
| 1.25% 5/31/28 | | 8,000,000 | 6,871,406 |
| 1.25% 9/30/28 | | 7,000,000 | 5,950,137 |
| 1.5% 11/30/28 | | 3,000,000 | 2,571,211 |
| 1.88% 2/28/29 | | 3,500,000 | 3,040,078 |
| 4% 10/31/29 | | 10,000,000 | 9,656,641 |
| 1.75% 11/15/29 | | 3,000,000 | 2,552,344 |
| 1.5% 2/15/30 | | 5,250,000 | 4,352,988 |
| 4% 2/28/30 | | 20,000,000 | 19,290,625 |
| 0.88% 11/15/30 | | 8,000,000 | 6,225,625 |
| 1.13% 2/15/31 | | 4,500,000 | 3,550,430 |
| 1.38% 11/15/31 | | 5,500,000 | 4,311,914 |
| 1.88% 2/15/32 | | 1,000,000 | 812,461 |
| 4.13% 11/15/32 | | 40,000,000 | 38,584,375 |
| | | | |
| Total U.S. Treasuries (Cost $437,354,775) | | | 386,057,319 |
| |
| |
| Non-Convertible Preferred Stocks - 0.1% | | | |
| | | Shares | $ Value |
| |
| |
| Qurate Retail, Inc. 8.00% 3/15/31 (Cost $2,672,824) | | 27,800 | 796,470 |
| |
| Cash Equivalents - 2.0% | | | |
| | | $ Principal | |
| | | Amount | $ Value |
| | | |
| JPMorgan U.S. Government Money Market | | | |
| Fund - Institutional Class 5.09% (Cost | | | |
| $20,335,743)(d) | | 20,335,743 | 20,335,743 |
| | | | |
Short-Term Securities Held as Collateral for Securities on Loan - 0.2% | | | |
| | | | |
| | | Shares | $ Value |
| |
| Goldman Sachs Financial Square Government Fund | | | |
| Institutional Class – 5.24% | | 1,439,435 | 1,439,436 |
| Citibank N.A. DDCA | | | |
| 5.32% | | 159,937 | 159,937 |
| | | | |
| Total Short-Term Securities Held as Collateral for Securities on Loan | |
| (Cost $1,599,373) | | | 1,599,373 |
| Total Investments in Securities (Cost $1,080,538,134) | | 1,009,986,819 |
| Other Liabilities in Excess of Other Assets - (1.0%) | | | (10,053,874) |
| Net Assets - 100% | | | 999,932,945 |
| |
| Net Asset Value Per Share - Investor Class | | | 9.31 |
| Net Asset Value Per Share - Institutional Class | | | 9.32 |
| ^ | | This security or a partial position of this security was on loan as of September 30, 2023. The total value of securities on loan as of September 30, 2023 was $1,567,697. |
| (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 7 day average yield at September 30, 2023. |
The accompanying notes form an integral part of these financial statements.
2023 Semi-Annual Report 45
LARGE CAP EQUITY FUND
Schedule of Investments September 30, 2023 (Unaudited)
| | | | |
| Common Stocks - 97.4% | | | |
| | % of Net | | |
| Information Technology | Assets | Shares | $ Value |
| |
| |
| Application Software | 9.8 | | |
| Adobe, Inc.(a) | | 57,500 | 29,319,250 |
| Roper Technologies, Inc. | | 55,000 | 26,635,400 |
| Salesforce, Inc.(a) | | 125,000 | 25,347,500 |
| | | |
| IT Consulting & Other Services | 7.0 | | |
| Gartner, Inc.(a) | | 90,000 | 30,924,900 |
| Accenture plc - Class A(b) | | 88,000 | 27,025,680 |
| | | |
| Semiconductors | 6.6 | | |
| Analog Devices, Inc. | | 210,000 | 36,768,900 |
| Microchip Technology, Inc. | | 225,000 | 17,561,250 |
| | | |
| Systems Software | 3.2 | | |
| Oracle Corp. | | 250,000 | 26,480,000 |
| | | | |
| | 26.6 | | 220,062,880 |
| Financials | | | |
| |
| |
| Transaction & Payment Processing Services | 10.2 | | |
| Visa, Inc. - Class A | | 170,000 | 39,101,700 |
| Mastercard, Inc. - Class A | | 95,000 | 37,611,450 |
| Fidelity National Information Services, Inc. | | 135,715 | 7,500,968 |
| | | |
| Multi-Sector Holdings | 4.9 | | |
| Berkshire Hathaway, Inc. - Class B(a) | | 115,000 | 40,284,500 |
| | | |
| Insurance Brokers | 3.1 | | |
| Aon plc - Class A(b) | | 80,000 | 25,937,600 |
| | | |
| Financial Exchanges & Data | 2.7 | | |
| S&P Global, Inc. | | 62,500 | 22,838,125 |
| | | | |
| | 20.9 | | 173,274,343 |
| Communication Services | | | |
| |
| |
| Interactive Media & Services | 11.4 | | |
| Alphabet, Inc. - Class C(a) | | 467,500 | 61,639,875 |
| Meta Platforms, Inc. - Class A(a) | | 110,000 | 33,023,100 |
| | | |
| Cable & Satellite | 7.4 | | |
| Liberty Broadband Corp. - Class C(a) | | 260,000 | 23,743,200 |
| Charter Communications, Inc. - Class A(a) | | 45,000 | 19,791,900 |
| Liberty Media Corp.-Liberty SiriusXM(a) | | 700,000 | 17,822,000 |
| | | |
| Movies & Entertainment | 0.7 | | |
| Liberty Media Corp.-Liberty Live(a) | | 175,000 | 5,617,500 |
| | | | |
| | 19.5 | | 161,637,575 |
| Health Care | | | |
| |
| |
| Life Sciences Tools & Services | 9.3 | | |
| Danaher Corp. | | 157,500 | 39,075,750 |
| Thermo Fisher Scientific, Inc. | | 75,000 | 37,962,750 |
| | | |
| Health Care Services | 2.4 | | |
| Laboratory Corp. of America Holdings | | 100,000 | 20,105,000 |
| | | | |
| | 11.7 | | 97,143,500 |
| | | | |
| | | |
| | |
| Materials | | | |
| |
| |
| Construction Materials | 4.2 | | |
| Vulcan Materials Co. | | 172,500 | 34,848,450 |
| | | |
| Industrial Gases | 2.3 | | |
| Linde plc | | 50,000 | 18,617,500 |
| | | | |
| | 6.5 | | 53,465,950 |
| Consumer Discretionary | | | |
| |
| |
| Broadline Retail | 3.7 | | |
| Amazon.com, Inc.(a) | | 240,000 | 30,508,800 |
| | | |
| Automotive Retail | 2.3 | | |
| CarMax, Inc.(a) | | 265,000 | 18,743,450 |
| | | | |
| | 6.0 | | 49,252,250 |
| Real Estate | | | |
| |
| |
| Real Estate Management & Development | 4.2 | | |
| CoStar Group, Inc.(a) | | 450,000 | 34,600,500 |
| Industrials | | | |
| |
| |
| Research & Consulting Services | 2.0 | | |
| Equifax, Inc. | | 90,000 | 16,486,200 |
| | | | |
| Total Common Stocks (Cost $408,910,416) | | | 805,923,198 |
| |
| |
| Cash Equivalents - 3.6% | | | |
| | | $ Principal | |
| | | Amount | $ Value |
| | | |
| JPMorgan U.S. Government Money Market | | | |
| Fund - Institutional Class 5.09%(c) | | 17,794,354 | 17,794,354 |
| U.S. Treasury Bills, 5.10% to 5.33%, 11/16/23 | | | |
| to 2/15/24(d) | | 12,000,000 | 11,893,859 |
| | | | |
| Total Cash Equivalents (Cost $29,686,754) | | | 29,688,213 |
| Total Investments in Securities (Cost $438,597,170) | | 835,611,411 |
| |
| Other Liabilities in Excess of Other Assets - (1.0%) | | | (7,986,160) |
| Net Assets - 100% | | | 827,625,251 |
| |
| Net Asset Value Per Share - Investor Class | | | 49.06 |
| Net Asset Value Per Share - Institutional Class | | | 50.34 |
| (b) | | Foreign domiciled entity. |
| (c) | | Rate presented represents the 7 day average yield at September 30, 2023. |
| (d) | | Interest rates presented represent the effective yield at September 30, 2023. |
The accompanying notes form an integral part of these financial statements.
46 2023 Semi-Annual Report
MULTI CAP EQUITY FUND
Schedule of Investments September 30, 2023 (Unaudited)
| | | | |
| Common Stocks - 95.2% | | | |
| | % of Net | | |
| Communication Services | Assets | Shares | $ Value |
| |
| |
| Interactive Media & Services | 10.8 | | |
| Alphabet, Inc. - Class C(a) | | 276,000 | 36,390,600 |
| Meta Platforms, Inc. - Class A(a) | | 70,000 | 21,014,700 |
| | | |
| Cable & Satellite | 8.8 | | |
| Liberty Broadband Corp.(a) | | | |
| Class C | | 200,000 | 18,264,000 |
| Class A | | 100,000 | 9,091,000 |
| Liberty Media Corp.-Liberty SiriusXM(a) | | 765,000 | 19,475,000 |
| | | |
| Alternative Carriers | 4.3 | | |
| Liberty Global plc - Class C(a) (b) | | 695,000 | 12,899,200 |
| Liberty Latin America Ltd. - Class C(a) (b) | | 1,200,000 | 9,792,000 |
| | | |
| Movies & Entertainment | 2.1 | | |
| Liberty Media Corp.-Liberty Live(a) | | 193,500 | 6,202,800 |
| Live Nation Entertainment, Inc.(a) | | 60,000 | 4,982,400 |
| | | |
| Integrated Telecommunication Services | 1.5 | | |
| LICT Corp.(a) | | 446 | 7,359,000 |
| Machten, Inc.(a) | | 66,900 | 468,300 |
| | | | |
| | 27.5 | | 145,939,000 |
| Financials | | | |
| |
| |
| Transaction & Payment Processing Services | 7.8 | | |
| Visa, Inc. - Class A | | 92,500 | 21,275,925 |
| Mastercard, Inc. - Class A | | 50,000 | 19,795,500 |
| | | |
| Multi-Sector Holdings | 6.6 | | |
| Berkshire Hathaway, Inc. - Class B(a) | | 100,000 | 35,030,000 |
| | | |
| Property & Casualty Insurance | 3.7 | | |
| Markel Group, Inc.(a) | | 13,300 | 19,584,117 |
| | | |
| Insurance Brokers | 2.9 | | |
| Aon plc - Class A(b) | | 47,500 | 15,400,450 |
| | | | |
| | 21.0 | | 111,085,992 |
| Information Technology | | | |
| |
| |
| Application Software | 4.7 | | |
| Guidewire Software, Inc.(a) | | 212,000 | 19,080,000 |
| ACI Worldwide, Inc.(a) | | 257,819 | 5,816,396 |
| | | |
| IT Consulting & Other Services | 3.2 | | |
| Gartner, Inc.(a) | | 49,200 | 16,905,612 |
| | | |
| Semiconductors | 2.5 | | |
| Texas Instruments, Inc. | | 85,000 | 13,515,850 |
| | | | |
| | 10.4 | | 55,317,858 |
| Materials | | | |
| |
| |
| Construction Materials | 7.9 | | |
| Vulcan Materials Co. | | 105,000 | 21,212,100 |
| Martin Marietta Materials, Inc. | | 50,000 | 20,524,000 |
| | | |
| Specialty Chemicals | 1.7 | | |
| Perimeter Solutions SA(a) (b) | | 2,000,000 | 9,080,000 |
| | | | |
| | 9.6 | | 50,816,100 |
| Industrials | | | |
| |
| |
| Aerospace & Defense | 4.4 | | |
| HEICO Corp. - Class A | | 180,000 | 23,259,600 |
| | | |
| Industrial Machinery & Supplies & | | | |
| Components | 2.0 | | |
| IDEX Corp. | | 51,500 | 10,713,030 |
| | | |
| Research & Consulting Services | 1.9 | | |
| Equifax, Inc. | | 55,000 | 10,074,900 |
| | | | |
| | 8.3 | | 44,047,530 |
| Consumer Discretionary | | | |
| |
| |
| Distributors | 3.8 | | |
| LKQ Corp. | | 405,000 | 20,051,550 |
| | | |
| Automotive Retail | 3.5 | | |
| CarMax, Inc.(a) | | 260,000 | 18,389,800 |
| | | | |
| | 7.3 | | 38,441,350 |
| Health Care | | | |
| |
| |
| Health Care Services | 3.3 | | |
| Laboratory Corp. of America Holdings | | 88,000 | 17,692,400 |
| | | |
| Life Sciences Tools & Services | 3.1 | | |
| Danaher Corp. | | 65,000 | 16,126,500 |
| | | | |
| | 6.4 | | 33,818,900 |
| Real Estate | | | |
| |
| |
| Real Estate Management & Development | 4.7 | | |
| CoStar Group, Inc.(a) | | 325,000 | 24,989,250 |
| | | | |
| Total Common Stocks (Cost $254,771,531) | | | 504,455,980 |
| |
| |
| Warrants - 0.0% | | | |
| |
| Perimeter Solutions SA Expires 11/8/24 (Cost $5,000)(b) (c) | 500,000 | 0 |
| |
| Cash Equivalents - 5.0% | | | |
| | | $ Principal | |
| | | Amount | $ Value |
| | | |
| U.S. Treasury Bills, 5.10% to 5.33%, 11/16/23 | | | |
| to 2/15/24(d) | | 20,000,000 | 19,733,795 |
| JPMorgan U.S. Government Money Market | | | |
| Fund - Institutional Class 5.09%(e) | | 6,586,033 | 6,586,033 |
| | | | |
| Total Cash Equivalents (Cost $26,318,264) | | | 26,319,828 |
| Total Investments in Securities (Cost $281,094,795) | | 530,775,808 |
The accompanying notes form an integral part of these financial statements.
2023 Semi-Annual Report 47
| | | | |
| | | $ Principal | |
| | | Amount | $ Value |
| | | |
| | Other Liabilities in Excess of Other Assets - (0.2%) | | (827,515) |
| | Net Assets - 100% | | 529,948,293 |
| |
| | Net Asset Value Per Share - Investor Class | | 28.26 |
| | Net Asset Value Per Share - Institutional Class | | 29.05 |
| (b) | | Foreign domiciled entity. |
| (c) | | This security is classified as Level 3 within the fair value hierarchy. |
| (d) | | Interest rates presented represent the effective yield at September 30, 2023. |
| (e) | | Rate presented represents the 7 day average yield at September 30, 2023. |
The accompanying notes form an integral part of these financial statements.
48 2023 Semi-Annual Report
NEBRASKA TAX FREE INCOME FUND
| | | | |
| Schedule of Investments | | |
| September 30, 2023 (Unaudited) | |
| |
| |
| Municipal Bonds - 94.3% | | | |
| % of Net | $ Principal | |
| | Assets | Amount | $ Value |
| | | |
| California | 0.8 | | |
| San Diego County Regional Airport Authority Revenue | | |
| Series B 5% 7/1/25 | | 200,000 | 202,042 |
| |
| | | |
| Colorado | 0.4 | | |
| Colorado Bridge Enterprise Revenue 4% 12/31/23 | | 100,000 | 99,933 |
| |
| | | |
| Florida | 0.7 | | |
| State of Florida General Obligation 4% 6/1/36 | | 200,000 | 199,146 |
| |
| | | |
| Nebraska | 86.3 | | |
| Ashland-Greenwood Public Schools General Obligation | | |
| 3% 12/15/42 | | 100,000 | 73,015 |
| Cass County School District No. 22 General Obligation | | |
| 2.05% 12/15/25 | | 375,000 | 353,247 |
| 2.2% 12/15/26 | | 250,000 | 231,407 |
| City of Bellevue NE General Obligation Series A 3% | | |
| 9/15/32 | | 500,000 | 453,505 |
| City of Blair NE General Obligation 5% 6/15/34 | | 360,000 | 374,483 |
| City of Blair NE Water System Revenue | | | |
| AMT, | | | |
| 2.65% 12/15/24 | | 100,000 | 97,266 |
| 2.85% 12/15/25 | | 100,000 | 95,629 |
| 3% 12/15/26 | | 100,000 | 94,182 |
| 3.1% 12/15/27 | | 100,000 | 92,846 |
| 3.2% 12/15/28 | | 100,000 | 91,858 |
| City of Columbus NE Combined Utilities System Revenue | | |
| 4% 6/15/33 | | 200,000 | 198,765 |
| AGM, | | | |
| 4% 12/15/26 | | 100,000 | 100,959 |
| 4% 12/15/27 | | 100,000 | 100,552 |
| City of Columbus NE General Obligation | | | |
| 3% 12/15/29 | | 150,000 | 139,559 |
| 3% 12/15/30 | | 150,000 | 137,371 |
| City of Grand Island NE Combined Utility System Revenue | | |
| Series A AGM, | | | |
| 4% 8/15/35 | | 205,000 | 202,771 |
| 4% 8/15/36 | | 125,000 | 121,671 |
| City of Grand Island NE General Obligation | | | |
| 3% 11/15/27 | | 150,000 | 143,372 |
| 3% 11/15/30 | | 150,000 | 138,027 |
| City of Gretna NE Certificates of Participation 4% 12/15/25 | 500,000 | 497,925 |
| City of Kearney NE General Obligation 4% 5/15/34 | | 220,000 | 209,520 |
| City of Lincoln NE Electric System Revenue 3% 9/1/28 | 30,000 | 28,262 |
| City of Norfolk NE General Obligation 3.38% 5/15/34 | 500,000 | 452,023 |
| City of Omaha NE General Obligation | | | |
| Series A | | | |
| 3% 4/15/35 | | 100,000 | 86,149 |
| Series A Class A – | | | |
| 3% 4/15/34 | | 100,000 | 87,649 |
| City of Omaha NE Riverfront Redevelopment Special Tax | | |
| Revenue Series A 4% 1/15/33 | | 260,000 | 261,373 |
| City of Omaha NE Sewer Revenue | | | |
| 5% 4/1/26 | | 250,000 | 257,206 |
| 4% 4/1/31 | | 350,000 | 347,798 |
| Series A | | | |
| 4% 4/1/34 | | 100,000 | 100,400 |
| County of Saline NE Revenue 3% 2/15/31 | | 200,000 | 177,392 |
| County of Sarpy NE Certificates of Participation 1.75% | | |
| 6/15/26 | 500,000 | 461,304 |
| County of Seward NE General Obligation 3% 12/15/30 | 605,000 | 555,024 |
| Cozad City School District General Obligation 4% 6/15/26 | 250,000 | 250,398 |
| Dawson County Public Power District Revenue | | |
| Series A | | |
| 2% 6/15/26 | 170,000 | 159,334 |
| 2.1% 6/15/27 | 105,000 | 97,380 |
| Series B | | |
| 2.5% 6/15/28 | 135,000 | 126,445 |
| 3% 6/15/29 | 245,000 | 233,828 |
| 3% 6/15/30 | 355,000 | 336,974 |
| Dodge County School District No. 595 General Obligation | | |
| 1.9% 6/15/32 | 200,000 | 159,509 |
| Douglas County Hospital Authority No. 2 Revenue | | |
| 5% 5/15/26 | 500,000 | 490,613 |
| 5% 5/15/30 | 140,000 | 143,620 |
| 4% 5/15/32 | 700,000 | 674,620 |
| Douglas County Hospital Authority No. 3 Revenue 5% | | |
| 11/1/26 | 250,000 | 253,305 |
| Douglas County School District No. 59 NE General | | |
| Obligation 3% 12/15/32 | 100,000 | 86,709 |
| Kearney School District General Obligation 3% 12/15/24 | 250,000 | 245,556 |
| Lancaster County School District 001 General Obligation | | |
| 5% 1/15/24 | 50,000 | 50,147 |
| 4% 1/15/33 | 250,000 | 250,097 |
| Lincoln Airport Authority Revenue AMT, 5% 7/1/27 | 150,000 | 153,685 |
| Lincoln-Lancaster County Public Building Commission | | |
| Revenue 3% 12/1/25 | 500,000 | 486,494 |
| Madison County Hospital Authority No. 1 Revenue 5% | | |
| 7/1/35 | 140,000 | 140,835 |
| Metropolitan Utilities District of Omaha Gas System | | |
| Revenue 4% 12/1/27 | 450,000 | 451,283 |
| Municipal Energy Agency of Nebraska Revenue | | |
| 5% 4/1/27 | 350,000 | 361,442 |
| 5% 4/1/28 | 225,000 | 232,356 |
| Nebraska Cooperative Republican Platte Enhancement | | |
| Project Revenue Series A 2% 12/15/29 | 250,000 | 212,001 |
| Nebraska Educational Health Cultural & Social Services | | |
| Finance Authority Revenue 4% 1/1/34 | 110,000 | 107,444 |
| Nebraska Investment Finance Authority Revenue | | |
| 4.45% 9/1/43 | 180,000 | 166,540 |
| Series A | | |
| 2.05% 9/1/24 | 120,000 | 117,510 |
| Series B | | |
| 1.35% 9/1/26 | 200,000 | 183,434 |
| Series C | | |
| 2% 9/1/35 | 325,000 | 247,873 |
| Nebraska Public Power District Revenue | | |
| Series C | | |
| 5% 1/1/32 | 65,000 | 65,983 |
| 5% 1/1/35 | 480,000 | 485,005 |
| Nebraska State College Facilities Corp. Revenue AGM, | | |
| 4% 7/15/28 | 250,000 | 252,147 |
| Omaha Public Facilities Corp. Revenue | | |
| 4% 6/1/28 | 585,000 | 587,766 |
| Series A | | |
| 4% 6/1/31 | 155,000 | 155,636 |
| Series C | | |
| 4% 4/1/33 | 340,000 | 341,461 |
| 4% 4/1/39 | 500,000 | 460,472 |
The accompanying notes form an integral part of these financial statements.
2023 Semi-Annual Report 49
| | | | |
| | | | |
| | % of Net | $ Principal | |
| | Assets | Amount | $ Value |
| | | |
| Omaha Public Power District Revenue | | | |
| Series A | | | |
| 2.85% 2/1/27 | | 500,000 | 474,191 |
| Series C | | | |
| 5% 2/1/39 | | 150,000 | 150,851 |
| Omaha School District General Obligation | | | |
| 5% 12/15/28 | | 130,000 | 131,527 |
| 5% 12/15/29 | | 350,000 | 361,813 |
| 5% 12/15/31 | | 135,000 | 138,819 |
| Omaha-Douglas Public Building Commission General | | |
| Obligation Series B 5% 5/1/32 | | 550,000 | 581,975 |
| Papillion Municipal Facilities Corp. Revenue | | | |
| 2% 12/15/32 | | 100,000 | 79,924 |
| 2% 12/15/34 | | 200,000 | 153,550 |
| Papillion-La Vista School District No. 27 General | | | |
| Obligation | | | |
| Series A | | | |
| 2.05% 12/1/24 | | 150,000 | 145,505 |
| 2.2% 12/1/25 | | 150,000 | 142,976 |
| 2.3% 12/1/26 | | 275,000 | 259,255 |
| Series B | | | |
| 4% 12/1/35 | | 400,000 | 400,114 |
| Public Power Generation Agency Revenue | | | |
| 5% 1/1/28 | | 500,000 | 504,440 |
| 5% 1/1/32 | | 140,000 | 143,071 |
| Sarpy County School District No. 1 General Obligation 5% | | |
| 12/15/29 | | 550,000 | 579,494 |
| State of Nebraska Certificates of Participation | | | |
| 3% 2/1/26 | | 60,000 | 58,433 |
| Series A | | | |
| 2% 4/1/26 | | 150,000 | 139,900 |
| University of Nebraska Facilities Corp. (The) 5% 7/15/29 | 380,000 | 389,849 |
| University of Nebraska Revenue | | | |
| 3% 7/1/25 | | 100,000 | 98,623 |
| 2.5% 7/1/26 | | 210,000 | 203,363 |
| 3% 7/1/27 | | 100,000 | 97,909 |
| 5% 5/15/30 | | 100,000 | 105,442 |
| Upper Republican Natural Resource District Revenue | | |
| AGM, | | | |
| 4% 12/15/25 | | 245,000 | 245,030 |
| 4% 12/15/27 | | 395,000 | 395,092 |
| Village of Boys Town NE Revenue | | | |
| 3% 9/1/28 | | 700,000 | 665,102 |
| 3% 7/1/35 | | 325,000 | 279,515 |
| Winside Public Schools General Obligation 2% 6/15/31 | 350,000 | 281,739 |
| | | | |
| | | | 22,737,914 |
| | | |
| New Mexico | 1.4 | | |
| New Mexico Finance Authority Revenue Series C 4% | | |
| 6/1/34 | | 365,000 | 359,435 |
| |
| | | |
| Texas | 3.2 | | |
| City of Austin Tx Airport System Revenue Series B AMT, | | |
| 5% 11/15/26 | | 250,000 | 254,034 |
| City of Austin Tx Electric Utility Revenue Series A 5% | | |
| 11/15/35 | | 100,000 | 106,857 |
| County of Bexar TX General Obligation 4% 6/15/36 | 500,000 | 474,242 |
| | | | |
| | | | 835,133 |
| Utah | 0.4 | | |
| City of Salt Lake City UT Public Utilities Revenue 5% | | |
| 2/1/35 | | 100,000 | 106,494 |
| |
| | | |
| Washington | 1.1 | | |
| Pierce County School District No. 10 Tacoma General | | |
| Obligation Series B 4% 12/1/35 | | 100,000 | 98,890 |
| Port of Seattle WA Revenue Series C 5% 5/1/26 | | 200,000 | 203,135 |
| | | | |
| | | | 302,025 |
| | | | |
| Total Municipal Bonds (Cost $26,912,493) | | | 24,842,122 |
| |
| Cash Equivalents - 4.5% | | | |
| | | | |
| | | |
| JPMorgan U.S. Government Money Market | | | |
| Fund - Institutional Class 5.09% (Cost | | | |
| $1,188,745)(a) | | 1,188,745 | 1,188,745 |
| | | | |
| Total Investments in Securities (Cost $28,101,238) | | 26,030,867 |
| |
| Other Assets Less Other Liabilities - 1.2% | | | 315,775 |
| Net Assets - 100% | | | 26,346,642 |
| |
| Net Asset Value Per Share | | | 9.23 |
(a) Rate presented represents the 7 day average yield at September 30, 2023.
The accompanying notes form an integral part of these financial statements.
50 2023 Semi-Annual Report
PARTNERS III OPPORTUNITY FUND
Schedule of Investments September 30, 2023 (Unaudited)
| | | | |
| Common Stocks - 90.7% | | | |
| | % of Net | | |
| Financials | Assets | Shares | $ Value |
| |
| |
| Transaction & Payment Processing Services | 13.8 | | |
| Mastercard, Inc. - Class A | | 55,000 | 21,775,050 |
| Visa, Inc. - Class A | | 90,000 | 20,700,900 |
| Fidelity National Information Services, Inc. | | 280,000 | 15,475,600 |
| | | |
| Multi-Sector Holdings | 10.4 | | |
| Berkshire Hathaway, Inc. - Class B(a) (b) | | 125,000 | 43,787,500 |
| | | |
| Property & Casualty Insurance | 4.6 | | |
| Markel Group, Inc.(a) | | 13,000 | 19,142,370 |
| | | | |
| | 28.8 | | 120,881,420 |
| Communication Services | | | |
| |
| |
| Interactive Media & Services | 9.9 | | |
| Alphabet, Inc. - Class C(a) | | 200,000 | 26,370,000 |
| Meta Platforms, Inc. - Class A(a) | | 50,000 | 15,010,500 |
| | | |
| Cable & Satellite | 9.0 | | |
| Liberty Broadband Corp.(a) | | | |
| Class C | | 200,000 | 18,264,000 |
| Class A | | 40,000 | 3,636,400 |
| Liberty Media Corp.-Liberty SiriusXM(a) | | 620,000 | 15,784,000 |
| | | |
| Alternative Carriers | 3.2 | | |
| Liberty Global plc - Class C(a) (c) | | 730,000 | 13,548,800 |
| | | |
| Movies & Entertainment | 1.5 | | |
| Liberty Media Corp.-Liberty Live(a) | | 195,000 | 6,254,100 |
| | | | |
| | 23.6 | | 98,867,800 |
| Health Care | | | |
| |
| |
| Life Sciences Tools & Services | 9.5 | | |
| Thermo Fisher Scientific, Inc. | | 40,000 | 20,246,800 |
| Danaher Corp. | | 80,000 | 19,848,000 |
| | | |
| Health Care Services | 3.6 | | |
| Laboratory Corp. of America Holdings | | 75,000 | 15,078,750 |
| | | | |
| | 13.1 | | 55,173,550 |
| Information Technology | | | |
| |
| |
| Application Software | 7.0 | | |
| Roper Technologies, Inc. | | 40,000 | 19,371,200 |
| CoreCard Corp.† (a) | | 510,000 | 10,200,000 |
| | | |
| Systems Software | 3.0 | | |
| Microsoft Corp. | | 40,000 | 12,630,000 |
| | | |
| Semiconductors | 2.7 | | |
| Texas Instruments, Inc. | | 70,000 | 11,130,700 |
| | | | |
| | 12.7 | | 53,331,900 |
| Consumer Discretionary | | | |
| |
| |
| Broadline Retail | 4.7 | | |
| Amazon.com, Inc.(a) (b) | | 155,000 | 19,703,600 |
| | | | |
| Automotive Retail | 3.2 | | |
| CarMax, Inc.(a) | | 190,000 | 13,438,700 |
| | | | |
| | 7.9 | | 33,142,300 |
| Real Estate | | | |
| |
| |
| Real Estate Management & Development | 2.9 | | |
| CoStar Group, Inc.(a) | | 160,000 | 12,302,400 |
| Materials | | | |
| |
| |
| Specialty Chemicals | 1.7 | | |
| Perimeter Solutions SA(a) (c) | | 1,600,000 | 7,264,000 |
| | | | |
| Total Common Stocks (Cost $220,146,598) | | | 380,963,370 |
| |
| |
| Non-Convertible Preferred Stocks - 1.4% | | |
| |
| Qurate Retail, Inc. 8.00% 3/15/31 (Cost $17,921,852)^ | 200,000 | 5,730,000 |
| |
| Warrants - 0.0% | | | |
| |
| Perimeter Solutions SA Expires 11/8/24 (Cost $15,000)(c) (d) | 1,500,000 | 0 |
| |
| Cash Equivalents - 8.0% | | | |
| | | $ Principal | |
| | | Amount | $ Value |
| | | |
| U.S. Treasury Bills, 5.10% to 5.37%, 11/16/23 | | | |
| to 3/14/24(e) | | 26,000,000 | 25,580,518 |
| JPMorgan U.S. Government Money Market | | | |
| Fund - Institutional Class 5.09%(f) | | 6,678,803 | 6,678,803 |
| Northern U.S. Government Select Money | | | |
| Market Fund 5.04%(b) (f)1 | | 1,242,685 | 1,242,685 |
| | | | |
| Total Cash Equivalents (Cost $33,499,633) | | | 33,502,006 |
| |
| |
| Short-Term Securities Held as Collateral for Securities on Loan - 0.1% |
| | | | |
| | | |
| Goldman Sachs Financial Square Government Fund | | |
| Institutional Class –5.24% | | 324,000 | 324,000 |
| Citibank N.A. DDCA | | | |
| 5.32% | | 36,000 | 36,000 |
| | | | |
| Total Short-Term Securities Held as Collateral for Securities on Loan | |
| (Cost $360,000) | | | 360,000 |
| Total Investments in Securities (Cost $271,943,083) | | 420,555,376 |
| |
| Due from Broker - 4.6% | | | 19,254,850 |
| Securities Sold Short - (4.5)% | | | (19,175,200) |
| Other Assets Less Other Liabilities - (0.3%) | | | (776,307) |
| Net Assets - 100% | | | 419,858,719 |
| |
| Net Asset Value Per Share - Investor Class | | | 11.30 |
| Net Asset Value Per Share - Institutional Class | | | 12.31 |
The accompanying notes form an integral part of these financial statements.
2023 Semi-Annual Report 51
| | | |
| Securities Sold Short - (4.5)% | Shares | $ Value |
| | | |
| Live Nation Entertainment, Inc. | 25,000 | (2,076,000) |
| SPDR S&P 500 ETF Trust | 40,000 | (17,099,200) |
| |
| Total Securities Sold Short (proceeds $10,576,102) | | (19,175,200) |
† Non-controlled affiliate.
^ This security or a partial position of this security was on loan as of September 30, 2023. The total value of securities on loan as of September 30, 2023 was $347,880.
(a) Non-income producing.
(b) Fully or partially pledged as collateral on securities sold short.
(c) Foreign domiciled entity.
(d) This security is classified as Level 3 within the fair value hierarchy.
(e) Interest rates presented represent the effective yield at September 30, 2023.
(f) Rate presented represents the 7 day average yield at September 30, 2023.
The accompanying notes form an integral part of these financial statements.
52 2023 Semi-Annual Report
SHORT DURATION INCOME FUND
Schedule of Investments September 30, 2023 (Unaudited)
| | | | |
| Corporate Bonds - 11.2% | | | |
| | | $ Principal | |
| | | Amount | $ Value |
| | | |
| Abercrombie & Fitch Management Co. | | | |
| 8.75% 7/15/25(a) | | 5,525,000 | 5,622,953 |
| American Airlines Group, Inc. | | | |
| 3.75% 3/1/25(a) | | 750,000 | 711,293 |
| American Airlines, Inc./AAdvantage Loyalty IP Ltd. | | | |
| 5.5% 4/20/26(a) | | 1,902,083 | 1,859,387 |
| Ares Capital Corp. | | | |
| 4.2% 6/10/24 | | 3,000,000 | 2,946,323 |
| 7% 1/15/27 | | 1,000,000 | 1,000,569 |
| Ashtead Capital, Inc. | | | |
| 1.5% 8/12/26(a) | | 1,000,000 | 880,533 |
| 4.38% 8/15/27(a) | | 3,000,000 | 2,790,688 |
| Bath & Body Works, Inc. | | | |
| 9.38% 7/1/25(a) | | 1,000,000 | 1,041,045 |
| 6.69% 1/15/27 | | 945,000 | 917,359 |
| Boardwalk Pipelines LP | | | |
| 4.95% 12/15/24 | | 2,580,000 | 2,543,357 |
| Brunswick Corp. | | | |
| 0.85% 8/18/24 | | 500,000 | 476,985 |
| Cantor Fitzgerald LP | | | |
| 4.5% 4/14/27(a) | | 1,500,000 | 1,399,122 |
| Carlisle Cos., Inc. | | | |
| 3.5% 12/1/24 | | 500,000 | 485,515 |
| Cinemark USA, Inc. | | | |
| 5.88% 3/15/26^ (a) | | 2,199,000 | 2,113,769 |
| Concentrix Corp. | | | |
| 6.65% 8/2/26 | | 2,910,000 | 2,893,554 |
| Delta Air Lines, Inc./SkyMiles IP Ltd. | | | |
| 4.5% 10/20/25(a) | | 2,250,000 | 2,186,290 |
| Devon Energy Corp. | | | |
| 5.25% 10/15/27 | | 390,000 | 380,127 |
| Drax Finco PLC | | | |
| 6.63% 11/1/25(a) (b) | | 3,500,000 | 3,352,073 |
| Energy Transfer LP | | | |
| 3.9% 5/15/24 | | 1,852,000 | 1,827,743 |
| EPR Properties | | | |
| 4.75% 12/15/26 | | 4,869,000 | 4,454,337 |
| 4.5% 6/1/27 | | 1,000,000 | 895,876 |
| Expedia Group, Inc. | | | |
| 6.25% 5/1/25(a) | | 1,672,000 | 1,675,568 |
| Fidelity National Information Services, Inc. | | | |
| 4.5% 7/15/25 | | 2,000,000 | 1,951,740 |
| FS KKR Capital Corp. | | | |
| 1.65% 10/12/24 | | 6,000,000 | 5,702,967 |
| Hercules Capital, Inc. | | | |
| 2.63% 9/16/26 | | 1,500,000 | 1,303,749 |
| Highwoods Realty LP | | | |
| 3.88% 3/1/27 | | 750,000 | 684,055 |
| JPMorgan Chase & Co. | | | |
| 3.84% 6/14/25 Floating Rate (SOFR + 98) | | 800,000 | 786,034 |
| 0.77% 8/9/25 Floating Rate (SOFR + 49) | | 1,000,000 | 952,744 |
| Kite Realty Group Trust | | | |
| 4% 3/15/25 | | 2,083,000 | 1,995,727 |
| Lennar Corp. | | | |
| 4.88% 12/15/23 | | 1,951,000 | 1,944,501 |
| LXP Industrial Trust | | | |
| 4.4% 6/15/24 | | 2,000,000 | 1,963,647 |
| Masonite International Corp. | | | |
| 5.38% 2/1/28(a) | | 400,000 | 372,524 |
| Mileage Plus Holdings LLC/Mileage Plus Intellectual | | | |
| Property Assets Ltd. | | | |
| 6.5% 6/20/27(a) | | 1,712,982 | 1,698,929 |
| MPLX LP | | | |
| 4.88% 6/1/25 | | 1,961,000 | 1,924,020 |
| OneMain Finance Corp. | | | |
| 6.13% 3/15/24 | | 1,150,000 | 1,147,445 |
| PDC Energy, Inc. | | | |
| 5.75% 5/15/26 | | 3,000,000 | 2,991,525 |
| Retail Opportunity Investments Partnership LP | | | |
| 6.75% 10/15/28 | | 3,000,000 | 2,963,054 |
| Starwood Property Trust, Inc. | | | |
| 5.5% 11/1/23(a) | | 730,000 | 729,237 |
| 4.75% 3/15/25 | | 1,765,000 | 1,690,766 |
| Synchrony Bank | | | |
| 5.4% 8/22/25 | | 1,000,000 | 964,205 |
| Take-Two Interactive Software, Inc. | | | |
| 3.3% 3/28/24 | | 1,000,000 | 986,502 |
| U.S. Bancorp | | | |
| 2.4% 7/30/24 | | 500,000 | 485,814 |
| VICI Properties LP/VICI Note Co., Inc. | | | |
| 3.5% 2/15/25(a) | | 6,323,000 | 6,055,566 |
| Vontier Corp. | | | |
| 1.8% 4/1/26 | | 1,004,000 | 901,864 |
| Vulcan Materials Co. | | | |
| 5.8% 3/1/26 | | 2,750,000 | 2,737,641 |
| Walgreens Boots Alliance, Inc. | | | |
| 0.95% 11/17/23 | | 5,000,000 | 4,967,972 |
| | | | |
| Total Corporate Bonds (Cost $92,924,537) | | | 90,356,694 |
| |
| Corporate Convertible Bonds - 1.1% | | | |
| | | | |
| | | |
| Redwood Trust, Inc. | | | |
| 5.63% 7/15/24 | | 6,300,000 | 6,237,020 |
| 5.75% 10/1/25 | | 3,000,000 | 2,791,080 |
| | | | |
| Total Corporate Convertible Bonds (Cost $9,292,362) | | | 9,028,100 |
| |
| Asset-Backed Securities - 38.6% | | | |
| | | | |
| | | |
| Automobile | | | |
| ACM Auto Trust (ACM) | | | |
| Series 2023-1A Class A –6.61% 1/22/30(a) | | 1,665,092 | 1,663,587 |
| Series 2023-1A Class B –7.26% 1/22/30(a) | | 2,000,000 | 1,993,043 |
| Series 2023-2A Class A –7.97% 6/20/30(a) | | 6,229,864 | 6,236,430 |
| Series 2023-2A Class B –9.85% 6/20/30(a) | | 3,000,000 | 3,007,617 |
| American Credit Acceptance Receivables Trust (ACAR) | | | |
| Series 2020-4 Class D –1.77% 12/14/26(a) | | 1,000,000 | 979,555 |
| AmeriCredit Automobile Receivables Trust (AMCAR) | | | |
| Series 2020-2 Class D –2.13% 3/18/26 | | 1,320,000 | 1,262,463 |
| Series 2020-3 Class D –1.49% 9/18/26 | | 3,000,000 | 2,798,414 |
| ARI Fleet Lease Trust (ARIFL) | | | |
| Series 2022-A Class A2 –3.12% 1/15/31(a) | | 665,340 | 656,778 |
| Arivo Acceptance Auto Loan Receivables Trust (ARIVO) | | | |
| Series 2021-1A Class A –1.19% 1/15/27(a) | | 113,023 | 110,546 |
| Series 2022-1A Class A –4.01% 5/15/28(a) | | 2,623,502 | 2,566,919 |
| Avid Automobile Receivables Trust (AVID) | | | |
| Series 2023-1 Class A –6.63% 7/15/26(a) | | 1,669,832 | 1,667,497 |
The accompanying notes form an integral part of these financial statements.
2023 Semi-Annual Report 53
| | | |
| | | |
| | $ Principal | |
| | Amount | $ Value |
| | |
| BOF URSA VI Funding Trust I (BOF) | | |
| Series 2023-CAR1 Class A2 –5.54% 10/27/31(a) | 467,682 | 461,346 |
| Series 2023-CAR2 Class A2 –5.54% 10/27/31(a) | 1,087,992 | 1,073,257 |
| BOF VII AL Funding Trust I (BOF) | | |
| Series 2023-CAR3 Class A2 –6.29% 7/26/32(a) | 4,491,595 | 4,469,124 |
| CFMT LLC (CFMT) | | |
| Series 2021-AL1 Class B –1.39% 9/22/31(a) | 2,254,258 | 2,176,085 |
| Chesapeake Funding II LLC (CFII) | | |
| Series 2021-1A Class A1 –0.47% 4/15/33(a) | 828,194 | 806,200 |
| Series 2023-1A Class A1 –5.65% 5/15/35(a) | 2,234,965 | 2,220,890 |
| Series 2023-2A Class A1 –6.16% 10/15/35(a) | 1,350,000 | 1,349,509 |
| Enterprise Fleet Financing LLC (EFF) | | |
| Series 2023-1 Class A2 –5.51% 1/22/29(a) | 750,000 | 744,136 |
| Series 2023-2 Class A2 –5.56% 4/22/30(a) | 4,350,000 | 4,318,950 |
| Exeter Automobile Receivables Trust (EART) | | |
| Series 2020-1A Class D –2.73% 12/15/25(a) | 1,239,543 | 1,217,406 |
| Series 2020-3A Class D –2.63% 7/15/26 | 1,191,573 | 1,170,600 |
| Series 2021-1A Class D –1.08% 11/16/26 | 1,350,000 | 1,300,802 |
| First Help Financial Trust (FHF) | | |
| Series 2022-1A Class A –4.43% 1/18/28(a) | 2,534,994 | 2,484,938 |
| Series 2022-2A Class A –6.14% 12/15/27(a) | 622,917 | 616,543 |
| Series 2023-1A Class A2 –6.57% 6/15/28(a) | 1,980,329 | 1,960,483 |
| First Investors Auto Owner Trust (FIAOT) | | |
| Series 2022-1A Class A –2.03% 1/15/27(a) | 1,119,983 | 1,094,621 |
| Foursight Capital Automobile Receivables Trust (FCRT) | | |
| Series 2022-1 Class A2 –1.15% 9/15/25(a) | 64,935 | 64,795 |
| Series 2022-2 Class A2 –4.49% 3/16/26(a) | 2,393,116 | 2,382,821 |
| Series 2023-1 Class A2 –5.43% 10/15/26(a) | 2,452,069 | 2,440,290 |
| GLS Auto Receivables Issuer Trust (GCAR) | | |
| Series 2022-2A Class A2 –3.55% 1/15/26(a) | 1,170,009 | 1,162,158 |
| JPMorgan Chase Auto Credit Linked Note (CACLN) | | |
| Series 2020-2 Class A2 –0.84% 2/25/28(a) | 110,492 | 109,433 |
| Series 2021-1 Class A2 –0.88% 9/25/28(a) | 1,044,121 | 1,018,827 |
| Series 2021-2 Class A4 –0.89% 12/26/28(a) | 951,728 | 924,395 |
| LAD Auto Receivables Trust (LADAR) | | |
| Series 2021-1A Class A –1.3% 8/17/26(a) | 1,858,255 | 1,825,631 |
| Series 2022-1A Class A –5.21% 6/15/27(a) | 3,064,465 | 3,041,936 |
| Series 2023-1A Class A2 –5.68% 10/15/26(a) | 2,570,608 | 2,564,693 |
| Series 2023-1A Class B –5.59% 8/16/27(a) | 2,500,000 | 2,467,504 |
| Series 2023-2A Class A2 –5.93% 6/15/27(a) | 1,918,753 | 1,914,165 |
| Lendbuzz Securitization Trust (LBST) | | |
| Series 2023-1A Class A2 –6.92% 8/15/28(a) | 6,679,265 | 6,654,809 |
| OneMain Direct Auto Receivables Trust (ODART) | | |
| Series 2021-1A Class A –0.87% 7/14/28(a) | 2,500,000 | 2,381,727 |
| Series 2022-1A Class C –1.42% 7/14/28(a) | 4,100,000 | 3,689,777 |
| Prestige Auto Receivables Trust (PART) | | |
| Series 2022-1A Class B –6.55% 7/17/28(a) | 3,000,000 | 2,997,979 |
| Research-Driven Pagaya Motor Asset Trust (RPM) | | |
| Series 2023-3A Class A –7.13% 1/26/32(a) | 5,000,000 | 5,012,927 |
| Santander Bank NA (SBCLN) | | |
| Series 2021-1A Class B –1.83% 12/15/31(a) | 915,758 | 892,765 |
| Santander Drive Auto Receivables Trust (SDART) | | |
| Series 2020-2 Class D –2.22% 9/15/26 | 3,226,657 | 3,179,845 |
| Series 2022-6 Class A2 –4.37% 5/15/25 | 175,372 | 175,273 |
| SFS Auto Receivables Securitization Trust (SFS) | | |
| Series 2023-1A Class A2A –5.89% 3/22/27(a) | 1,900,000 | 1,897,774 |
| Tricolor Auto Securitization Trust (TCAST) | | |
| Series 2023-1A Class A –6.48% 8/17/26(a) | 1,857,315 | 1,853,624 |
| United Auto Credit Securitization Trust (UACST) | | |
| Series 2023-1 Class A –5.57% 7/10/25(a) | 341,625 | 341,133 |
| Westlake Automobile Receivables Trust (WLAKE) | | |
| Series 2020-3A Class D –1.65% 2/17/26(a) | 1,650,000 | 1,602,006 |
| Series 2021-1A Class C –0.95% 3/16/26(a) | 3,164,207 | 3,118,264 |
| | | |
| | | 104,122,290 |
| | |
| Collateralized Loan Obligations | | |
| ABPCI Direct Lending Fund CLO I LLC (ABPCI) | | |
| Series 2016-1A Class A1A2 –7.29% 7/20/33 Floating | | |
| Rate (TSFR3M + 196)(a) (b) (c) | 2,000,000 | 1,980,754 |
| ABPCI Direct Lending Fund CLO X LP (ABPCI) | | |
| Series 2020-10A Class A –7.54% 1/20/32 Floating Rate | | |
| (TSFR3M + 221)(a) (b) (c) | 6,500,000 | 6,500,741 |
| Audax Senior Debt CLO 6 LLC (AUDAX) | | |
| Series 2021-6A Class A1 –7.09% 10/20/33 Floating Rate | | |
| (TSFR3M + 176)(a) (c) | 6,000,000 | 5,877,336 |
| AUF Funding LLC (AUF) | | |
| Series 2022-1A Class B1 –9.08% 1/20/31 Floating Rate | | |
| (TSFR3M + 375)(a) (c) | 2,500,000 | 2,504,795 |
| BCRED MML CLO LLC (BXCMM) | | |
| Series 2022-1A Class A1 –6.98% 4/20/35 Floating Rate | | |
| (TSFR3M + 165)(a) (b) (c) | 3,000,000 | 2,961,591 |
| BlackRock Elbert CLO V LLC (ELB) | | |
| Series 5A Class AR –7.1% 6/15/34 Floating Rate | | |
| (TSFR3M + 185)(a) (b) (c) | 2,000,000 | 1,982,962 |
| BlackRock Rainier CLO VI Ltd. (BLKMM) | | |
| Series 2021-6A Class A –7.29% 4/20/33 Floating Rate | | |
| (TSFR3M + 196)(a) (b) (c) | 5,500,000 | 5,452,051 |
| Brightwood Capital MM CLO Ltd. (BWCAP) | | |
| Series 2020-1A Class A1R –8.11% 1/15/31 Floating Rate | | |
| (TSFR3M + 280)(a) (b) (c) | 2,208,918 | 2,209,665 |
| Capital Four US CLO II Ltd. (C4US) | | |
| Series 2022-1A Class A1 –7.47% 10/20/30 Floating Rate | | |
| (TSFR3M + 214)(a) (b) (c) | 6,064,732 | 6,067,146 |
| Cerberus Loan Funding LP (CERB) | | |
| Series 2020-1A Class A –7.42% 10/15/31 Floating Rate | | |
| (TSFR3M + 211)(a) (b) (c) | 3,252,384 | 3,250,690 |
| Series 2020-2A Class A –7.47% 10/15/32 Floating Rate | | |
| (TSFR3M + 216)(a) (b) (c) | 4,500,000 | 4,497,979 |
| Series 2021-2A Class A –7.19% 4/22/33 Floating Rate | | |
| (TSFR3M + 188)(a) (b) (c) | 3,000,000 | 2,983,866 |
| Series 2021-6A Class A –6.97% 11/22/33 Floating Rate | | |
| (TSFR3M + 166)(a) (b) (c) | 464,893 | 463,906 |
| Churchill Middle Market CLO III Ltd. (CHMML) | | |
| Series 2021-1A Class A1 –7.11% 10/24/33 Floating Rate | | |
| (TSFR3M + 176)(a) (b) (c) | 2,750,000 | 2,719,734 |
| CIFC-LBC Middle Market CLO (CLBC) | | |
| Series 2023-1A Class A1 –8.04% 10/20/35 Floating | | |
| Rate (TSFR3M + 260)(a) (c) | 5,000,000 | 4,999,490 |
| Deerpath Capital CLO Ltd. (DPATH) | | |
| Series 2021-2A Class A1 –7.17% 1/15/34 Floating Rate | | |
| (TSFR3M + 186)(a) (b) (c) | 4,000,000 | 3,936,428 |
| Series 2023-1A Class A1 –8.11% 4/15/35 Floating Rate | | |
| (TSFR3M + 280)(a) (b) (c) | 3,000,000 | 3,012,600 |
| Fortress Credit Opportunities IX CLO Ltd. (FCO) | | |
| Series 2017-9A Class A1TR –7.12% 10/15/33 Floating | | |
| Rate (TSFR3M + 181)(a) (b) (c) | 1,500,000 | 1,470,490 |
| Fortress Credit Opportunities XV CLO Ltd. (FCO) | | |
| Series 2021-15A Class A2 –7.16% 4/25/33 Floating Rate | | |
| (TSFR3M + 181)(a) (b) (c) | 3,500,000 | 3,442,796 |
| Golub Capital Partners CLO 31M Ltd. (GOCAP) | | |
| Series 2016-31A Class CR –8.53% 8/5/30 Floating Rate | | |
| (TSFR3M + 316)(a) (b) (c) | 1,000,000 | 978,388 |
The accompanying notes form an integral part of these financial statements.
54 2023 Semi-Annual Report
SHORT DURATION INCOME FUND (CONTINUED)
Schedule of Investments September 30, 2023 (Unaudited)
| | | |
| | | |
| | $ Principal | |
| | Amount | $ Value |
| | |
| Golub Capital Partners CLO 54M LP (GOCAP) | | |
| Series 2021-54A Class A2 –7.16% 8/5/33 Floating Rate | | |
| (TSFR3M + 179)(a) (b) (c) | 4,500,000 | 4,467,830 |
| Series 2021-54A Class B –7.48% 8/5/33 Floating Rate | | |
| (TSFR3M + 211)(a) (b) (c) | 2,500,000 | 2,397,762 |
| Golub Capital Partners Short Duration (GSHOR) | | |
| Series 2022-1A Class B1 –8.85% 10/25/31 Floating Rate | | |
| (TSFR3M + 350)(a) (c) | 1,000,000 | 1,005,887 |
| Ivy Hill Middle Market Credit Fund IX Ltd. (IVYH) | | |
| Series 9A Class A1TR –6.97% 4/23/34 Floating Rate | | |
| (TSFR3M + 162)(a) (b) (c) | 3,500,000 | 3,454,815 |
| KKR Lending Partners III CLO LLC (KKRLP) | | |
| Series 2021-1A Class B –7.49% 10/20/30 Floating Rate | | |
| (TSFR3M + 216)(a) (c) | 2,000,000 | 1,947,356 |
| KKR Static CLO I Ltd. (KKRS) | | |
| Series 2022-1A Class B –7.93% 7/20/31 Floating Rate | | |
| (TSFR3M + 260)(a) (b) (c) | 1,250,000 | 1,255,490 |
| Maranon Loan Funding Ltd. (MRNON) | | |
| Series 2021-2RA Class A1R –7.26% 7/15/33 Floating | | |
| Rate (TSFR3M + 195)(a) (b) (c) | 5,000,000 | 4,961,575 |
| Monroe Capital Funding CLO X Ltd. (MCF) | | |
| Series 2023-1A Class A –7.23% 4/15/35 Floating Rate | | |
| (TSFR3M + 240)(a) (c) | 3,000,000 | 3,011,862 |
| Monroe Capital MML CLO XII Ltd. (MCMML) | | |
| Series 2021-2A Class A1 –7.17% 9/14/33 Floating Rate | | |
| (TSFR3M + 176)(a) (b) (c) | 7,500,000 | 7,391,970 |
| Owl Rock CLO VIII LLC (OR) | | |
| Series 2022-8A Class AT –7.88% 11/20/34 Floating Rate | | |
| (TSFR3M + 250)(a) (c) | 2,000,000 | 2,001,988 |
| Palmer Square Loan Funding Ltd. (PSTAT) | | |
| Series 2021-1A Class A2 –6.84% 4/20/29 Floating Rate | | |
| (TSFR3M + 151)(a) (b) (c) | 3,000,000 | 2,968,707 |
| Twin Brook CLO (TWBRK) | | |
| Series 2021-1A Class A –7.12% 1/20/34 Floating Rate | | |
| (TSFR3M + 179)(a) (c) | 1,200,000 | 1,168,982 |
| Series 2023-1A Class B –8.53% 4/20/35 Floating Rate | | |
| (TSFR3M + 320)(a) (c) | 3,000,000 | 3,007,920 |
| | | |
| | | 106,335,552 |
| | |
| Consumer & Specialty Finance | | |
| ACHV ABS Trust (ACHV) | | |
| Series 2023-1PL Class A –6.42% 3/18/30(a) | 155,252 | 155,302 |
| Affirm Asset Securitization Trust (AFFRM) | | |
| Series 2022-Z1 Class A –4.55% 6/15/27(a) | 1,432,123 | 1,414,321 |
| Bankers Healthcare Group Securitization Trust (BHG) | | |
| Series 2020-A Class A –2.56% 9/17/31(a) | 790,260 | 778,069 |
| Series 2021-A Class A –1.42% 11/17/33(a) | 404,183 | 377,177 |
| Series 2022-B Class A –3.75% 6/18/35(a) | 467,137 | 463,325 |
| Series 2022-B Class B –4.84% 6/18/35(a) | 1,498,342 | 1,444,334 |
| Series 2022-C Class A –5.28% 10/17/35(a) | 1,099,464 | 1,091,742 |
| Series 2023-A Class A –5.55% 4/17/36(a) | 3,626,174 | 3,574,772 |
| Foundation Finance Trust (FFIN) | | |
| Series 2019-1A Class A –3.86% 11/15/34(a) | 326,642 | 322,781 |
| Series 2021-2A Class A –2.19% 1/15/42(a) | 1,473,302 | 1,313,404 |
| Series 2023-1A Class A –5.67% 12/15/43(a) | 1,809,585 | 1,764,929 |
| Series 2023-2A Class A –6.53% 6/15/49(a) | 4,275,000 | 4,292,536 |
| FREED ABS Trust (FREED) | | |
| Series 2022-1FP Class B –1.91% 3/19/29(a) | 787,652 | 783,820 |
| Series 2022-3FP Class B –5.79% 8/20/29(a) | 2,237,569 | 2,233,851 |
| Series 2022-4FP Class B –7.58% 12/18/29(a) | 1,734,151 | 1,742,020 |
| Hilton Grand Vacations Trust (HGVT) | | |
| Series 2020-AA Class A –2.74% 2/25/39(a) | 170,909 | 160,218 |
| Lendingpoint Asset Securitization Trust (LDPT) | | |
| Series 2022-B Class A –4.77% 10/15/29(a) | 337,790 | 333,744 |
| Series 2022-C Class A –6.56% 2/15/30(a) | 2,463,503 | 2,460,354 |
| LP LMS Asset Securitization Trust (LPMS) | | |
| Series 2023-1A Class A –8.18% 10/17/33(a) | 1,355,922 | 1,351,456 |
| Marlette Funding Trust (MFT) | | |
| Series 2021-2A Class B –1.06% 9/15/31(a) | 421,192 | 417,737 |
| Series 2022-3A Class A –5.18% 11/15/32(a) | 1,289,686 | 1,284,802 |
| Series 2023-1A Class A –6.07% 4/15/33(a) | 2,426,204 | 2,422,087 |
| Series 2023-3A Class A –6.49% 9/15/33(a) | 3,724,650 | 3,726,550 |
| Octane Receivables Trust (OCTL) | | |
| Series 2021-1A Class A5 –0.93% 3/22/27(a) | 352,999 | 345,710 |
| Series 2021-2A Class A –1.21% 9/20/28(a) | 886,470 | 857,849 |
| Series 2022-1A Class A2 –4.18% 3/20/28(a) | 2,482,114 | 2,445,855 |
| Series 2022-2A Class A –5.11% 2/22/28(a) | 1,218,114 | 1,206,750 |
| Series 2023-1A Class A –5.87% 5/21/29(a) | 1,023,808 | 1,020,274 |
| Series 2023-2A Class A2 –5.88% 6/20/31(a) | 5,600,000 | 5,581,916 |
| Pagaya AI Debt Selection Trust (PAID) | | |
| Series 2021-3 Class A –1.15% 5/15/29(a) | 74,453 | 74,178 |
| Series 2021-HG1 Class A –1.22% 1/16/29(a) | 1,470,813 | 1,416,602 |
| Pagaya AI Debt Trust (PAID) | | |
| Series 2022-2 Class A –4.97% 1/15/30(a) | 614,574 | 608,170 |
| Series 2022-3 Class A –6.06% 3/15/30(a) | 2,205,917 | 2,195,348 |
| Series 2022-5 Class A –8.1% 6/17/30(a) | 1,553,953 | 1,567,985 |
| Series 2023-1 Class A –7.56% 7/15/30(a) | 1,480,900 | 1,487,196 |
| Series 2023-3 Class A –7.6% 12/16/30(a) | 2,121,893 | 2,132,706 |
| Series 2023-5 Class A –7.18% 4/15/31(a) | 5,000,000 | 5,008,849 |
| Prosper Marketplace Issuance Trust (PMIT) | | |
| Series 2023-1A Class A –7.06% 7/16/29(a) | 850,000 | 850,719 |
| Sierra Timeshare Receivables Funding LLC (SRFC) | | |
| Series 2019-2A Class A –2.59% 5/20/36(a) | 269,778 | 261,797 |
| Series 2019-2A Class B –2.82% 5/20/36(a) | 33,722 | 32,699 |
| Series 2020-2A Class A –1.33% 7/20/37(a) | 439,666 | 412,084 |
| SoFi Consumer Loan Program Trust (SOFI) | | |
| Series 2023-1S Class A –5.81% 5/15/31(a) | 271,442 | 270,829 |
| Theorem Funding Trust (THRM) | | |
| Series 2022-3A Class A –7.6% 4/15/29(a) | 2,314,052 | 2,326,240 |
| Upstart Securitization Trust (UPST) | | |
| Series 2021-1 Class B –1.89% 3/20/31(a) | 113,563 | 113,224 |
| Series 2021-3 Class A –0.83% 7/20/31(a) | 27,172 | 27,082 |
| Series 2021-5 Class A –1.31% 11/20/31(a) | 443,853 | 437,148 |
| Series 2023-1 Class A –6.59% 2/20/33(a) | 780,198 | 778,820 |
| Series 2023-2 Class A –6.77% 6/20/33(a) | 3,572,671 | 3,568,942 |
| | | |
| | | 68,938,303 |
| | |
| Equipment | | |
| Amur Equipment Finance Receivables IX LLC (AXIS) | | |
| Series 2021-1A Class A2 –0.75% 11/20/26(a) | 862,955 | 847,352 |
| Series 2021-1A Class B –1.38% 2/22/27(a) | 1,000,000 | 957,612 |
| Amur Equipment Finance Receivables XI LLC (AXIS) | | |
| Series 2022-2A Class A2 –5.3% 6/21/28(a) | 1,723,900 | 1,708,536 |
| Amur Equipment Finance Receivables XII LLC (AXIS) | | |
| Series 2023-1A Class A2 –6.09% 12/20/29(a) | 3,500,000 | 3,504,607 |
| Dell Equipment Finance Trust (DEFT) | | |
| Series 2021-2 Class A2 –0.53% 12/22/26(a) | 355,498 | 350,839 |
| Series 2022-1 Class A2 –2.11% 8/23/27(a) | 190,201 | 189,889 |
| Series 2023-2 Class A2 –5.84% 1/22/29(a) | 1,800,000 | 1,798,694 |
| Dext ABS LLC (DEXT) | | |
| Series 2021-1 Class A –1.12% 2/15/28(a) | 1,489,496 | 1,439,070 |
The accompanying notes form an integral part of these financial statements.
2023 Semi-Annual Report 55
| | | |
| | |
| | $ Principal | |
| Amount | $ Value |
| | |
| HPEFS Equipment Trust (HPEFS) | | |
| Series 2023-1A Class A2 –5.43% 8/20/25(a) | 2,500,000 | 2,492,281 |
| MMAF Equipment Finance LLC (MMAF) | | |
| Series 2022-A Class A2 –2.77% 2/13/25(a) | 1,252,629 | 1,242,327 |
| Series 2022-B Class A2 –5.57% 9/9/25(a) | 2,402,726 | 2,392,536 |
| Series 2022-B Class A3 –5.61% 7/10/28(a) | 4,250,000 | 4,230,512 |
| Series 2023-A Class A2 –5.79% 11/13/26(a) | 2,325,000 | 2,320,609 |
| Pawnee Equipment Receivables Series LLC (PWNE) | | |
| Series 2021-1 Class A2 –1.1% 7/15/27(a) | 1,757,957 | 1,707,281 |
| Series 2022-1 Class A2 –5.05% 2/15/28(a) | 1,681,604 | 1,676,784 |
| SCF Equipment Leasing LLC (SCFET) | | |
| Series 2022-2A Class A2 –6.24% 7/20/28(a) | 1,443,378 | 1,442,264 |
| Series 2022-2A Class A3 –6.5% 10/21/30(a) | 2,750,000 | 2,763,190 |
| | | 31,064,383 |
| | | |
| Total Asset-Backed Securities (Cost $312,854,406) | | 310,460,528 |
| |
| Commercial Mortgage-Backed Securities - 8.8% | | |
| | | |
| | |
| AREIT LLC (AREIT) | | |
| Series 2023-CRE8 Class AS –8.2% 5/17/28 Floating | | |
| Rate (TSFR1M + 287)(a) | 5,000,000 | 4,996,720 |
| AREIT Trust (AREIT) | | |
| Series 2021-CRE5 Class A –6.53% 11/17/38 Floating | | |
| Rate (TSFR1M + 119)(a) | 3,986,443 | 3,937,845 |
| BFLD Trust (BFLD) | | |
| Series 2020-OBRK Class A –7.5% 11/15/28 Floating | | |
| Rate (TSFR1M + 216)(a) | 2,625,000 | 2,620,579 |
| BPR Trust (BPR) | | |
| Series 2021-KEN Class A –6.7% 2/15/29 Floating Rate | | |
| (TSFR1M + 136)(a) | 3,000,000 | 2,967,070 |
| BRSP Ltd. (BRSP) | | |
| Series 2021-FL1 Class A –6.59% 8/19/38 Floating Rate | | |
| (TSFR1M + 126)(a) (b) | 2,500,000 | 2,443,843 |
| CLNC Ltd. (CLNC) | | |
| Series 2019-FL1 Class AS –6.99% 8/20/35 Floating | | |
| Rate (TSFR1M + 166)(a) (b) | 4,694,000 | 4,599,402 |
| FS Rialto Issuer LLC (FSRI) | | |
| Series 2022-FL5 Class A –7.63% 6/19/37 Floating Rate | | |
| (TSFR1M + 230)(a) (b) | 4,500,000 | 4,458,411 |
| Series 2022-FL7 Class A –8.23% 10/19/39 Floating | | |
| Rate (TSFR1M + 290)(a) | 1,500,000 | 1,502,803 |
| GPMT Ltd. (GPMT) | | |
| Series 2021-FL3 Class A –6.7% 7/16/35 Floating Rate | | |
| (TSFR1M + 136)(a) (b) | 2,824,860 | 2,792,303 |
| HERA Commercial Mortgage Ltd. (HCM) | | |
| Series 2021-FL1 Class A –6.5% 2/18/38 Floating Rate | | |
| (TSFR1M + 116)(a) (b) | 3,882,375 | 3,777,403 |
| HGI CRE CLO Ltd. (HGI) | | |
| Series 2021-FL1 Class A4 –6.5% 6/16/36 Floating Rate | | |
| (TSFR1M + 116)(a) (b) | 3,002,389 | 2,981,306 |
| Series 2021-FL1 Class AS –6.85% 6/16/36 Floating Rate | | |
| (TSFR1M + 151)(a) (b) | 4,000,000 | 3,919,524 |
| Series 2021-FL2 Class A4 –6.45% 9/17/36 Floating Rate | | |
| (TSFR1M + 111)(a) (b) | 1,850,357 | 1,811,482 |
| Hilton USA Trust (HILT) | | |
| Series 2016-SFP Class E –5.52% 11/5/35(a) | 4,300,000 | 1,741,500 |
| ILPT Commercial Mortgage Trust (ILPT) | | |
| Series 2022-LPF2 Class A –7.58% 10/15/39 Floating | | |
| Rate (TSFR1M + 225)(a) | 1,000,000 | 999,500 |
| KREF Ltd. (KREF) | | |
| Series 2021-FL2 Class A4 –6.52% 2/15/39 Floating | | |
| Rate (TSFR1M + 118)(a) (b) | 4,500,000 | 4,455,090 |
| LoanCore Issuer Ltd. (LNCR) | | |
| Series 2018-CRE1 Class D –8.4% 5/15/28 Floating Rate | | |
| (US0001M + 295)(a) (b) | 3,350,000 | 3,249,835 |
| Series 2021-CRE5 Class A –6.75% 7/15/36 Floating | | |
| Rate (US0001M + 130)(a) (b) | 5,000,000 | 4,942,685 |
| PFP Ltd. (PFP) | | |
| Series 2021-7 Class AS –6.6% 4/14/38 Floating Rate | | |
| (TSFR1M + 126)(a) (b) | 3,681,696 | 3,657,938 |
| STWD Ltd. (STWD) | | |
| Series 2022-FL3 Class A –6.66% 11/15/38 Floating Rate | | |
| (SOFR30A + 135)(a) (b) | 6,500,000 | 6,389,311 |
| VMC Finance LLC (VMC) | | |
| Series 2021-FL4 Class A –6.55% 6/16/36 Floating Rate | | |
| (TSFR1M + 121)(a) | 2,307,989 | 2,272,455 |
| | | |
| Total Commercial Mortgage-Backed Securities (Cost $73,586,225) | 70,517,005 |
| |
| |
| Mortgage-Backed Securities - 9.5% | | |
| | | |
| | |
| Federal Home Loan Mortgage Corporation | | |
| Collateralized Mortgage Obligations | | |
| Series 3649 Class A –4% 3/15/25 | 93,777 | 92,406 |
| Series 4107 Class LW –1.75% 8/15/27 | 3,920,438 | 3,620,805 |
| Series 4281 Class AG –2.5% 12/15/28 | 46,933 | 46,188 |
| Series 3003 Class LD –5% 12/15/34 | 372,173 | 364,436 |
| Series 2952 Class PA –5% 2/15/35 | 121,763 | 118,920 |
| Series 3620 Class PA –4.5% 12/15/39 | 271,187 | 260,535 |
| Series 3842 Class PH –4% 4/15/41 | 384,148 | 362,952 |
| | |
| Pass-Through Securities | | |
| Pool# G18296 – 4.5% 2/1/24 | 5,484 | 5,331 |
| Pool# G18306 – 4.5% 4/1/24 | 13,992 | 13,602 |
| Pool# G18308 – 4% 5/1/24 | 27,017 | 26,676 |
| Pool# J13949 – 3.5% 12/1/25 | 359,199 | 352,108 |
| Pool# E02804 – 3% 12/1/25 | 266,164 | 259,323 |
| Pool# J14649 – 3.5% 4/1/26 | 286,449 | 280,091 |
| Pool# E02948 – 3.5% 7/1/26 | 907,635 | 885,521 |
| Pool# J16663 – 3.5% 9/1/26 | 879,476 | 856,801 |
| Pool# E03033 – 3% 2/1/27 | 558,932 | 540,561 |
| Pool# ZS8692 – 2.5% 4/1/33 | 624,306 | 563,922 |
| Pool# G01818 – 5% 5/1/35 | 461,785 | 453,391 |
| Pool# SB8257 – 5.5% 9/1/38 | 7,404,033 | 7,329,637 |
| | | 16,433,206 |
| | |
| Federal National Mortgage Association | | |
| Pass-Through Securities | | |
| Pool# 995960 – 5% 12/1/23 | 1 | 1 |
| Pool# AD0629 – 5% 2/1/24 | 0 | 0 |
| Pool# 930667 – 4.5% 3/1/24 | 8,778 | 8,522 |
| Pool# 995693 – 4.5% 4/1/24 | 1,616 | 1,567 |
| Pool# MA0043 – 4% 4/1/24 | 32,495 | 32,049 |
| Pool# 995755 – 4.5% 5/1/24 | 26,065 | 25,275 |
| Pool# 931739 – 4% 8/1/24 | 10,643 | 10,322 |
| Pool# AE0031 – 5% 6/1/25 | 3,014 | 2,945 |
| Pool# AD7073 – 4% 6/1/25 | 52,633 | 50,864 |
| Pool# AL0471 – 5.5% 7/1/25 | 17,904 | 17,812 |
| Pool# 310139 – 3.5% 11/1/25 | 471,213 | 460,709 |
The accompanying notes form an integral part of these financial statements.
56 2023 Semi-Annual Report
SHORT DURATION INCOME FUND (CONTINUED)
Schedule of Investments September 30, 2023 (Unaudited)
| | | | |
| | | | |
| | | $ Principal | |
| | | Amount | $ Value |
| | | |
| Pool# AB1769 – 3% 11/1/25 | | 193,690 | 188,771 |
| Pool# AH3429 – 3.5% 1/1/26 | | 1,085,014 | 1,061,442 |
| Pool# AB2251 – 3% 2/1/26 | | 296,954 | 288,939 |
| Pool# AB3902 – 3% 11/1/26 | | 256,441 | 248,044 |
| Pool# AB4482 – 3% 2/1/27 | | 1,364,555 | 1,317,237 |
| Pool# AL1366 – 2.5% 2/1/27 | | 510,793 | 488,674 |
| Pool# AB6291 – 3% 9/1/27 | | 288,372 | 277,287 |
| Pool# MA3189 – 2.5% 11/1/27 | | 479,800 | 456,502 |
| Pool# MA3791 – 2.5% 9/1/29 | | 1,210,848 | 1,102,764 |
| Pool# BM5708 – 3% 12/1/29 | | 807,123 | 774,097 |
| Pool# MA0587 – 4% 12/1/30 | | 1,156,202 | 1,074,275 |
| Pool# BA4767 – 2.5% 1/1/31 | | 647,082 | 590,317 |
| Pool# AS7701 – 2.5% 8/1/31 | | 2,014,816 | 1,820,583 |
| Pool# 555531 – 5.5% 6/1/33 | | 938,877 | 934,660 |
| Pool# MA3540 – 3.5% 12/1/33 | | 654,308 | 615,189 |
| Pool# 725232 – 5% 3/1/34 | | 86,740 | 85,044 |
| Pool# 995112 – 5.5% 7/1/36 | | 428,791 | 427,139 |
| | | | 12,361,030 |
| | | |
| Government National Mortgage Association | | | |
| Pass-Through Securities | | | |
| Pool# 5255 – 3% 12/20/26 | | 1,107,705 | 1,071,125 |
| |
| | | |
| Non-Government Agency | | | |
| Collateralized Mortgage Obligations | | | |
| Bunker Hill Loan Depositary Trust (BHLD) | | | |
| Series 2019-3A Class A1 –2.72% 11/25/59(a) (c) | | 528,098 | 507,481 |
| Citigroup Mortgage Loan Trust (CMLTI) | | | |
| Series 2014-A Class A –4% 1/25/35(a) (c) | | 330,599 | 308,160 |
| Flagstar Mortgage Trust (FSMT) | | | |
| Series 2017-1 Class 2A2 –3% 3/25/47(a) (c) | | 420,180 | 375,162 |
| Series 2021-7 Class B –2.5% 8/25/51(a) (c) | | 5,127,784 | 4,340,770 |
| Series 2021-10IN Class A6 –2.5% 10/25/51(a) (c) | | 4,732,054 | 3,996,686 |
| GS Mortgage-Backed Securities Trust (GSMBS) | | | |
| Series 2021-PJ9 Class A8 –2.5% 2/26/52(a) (c) | | 3,234,005 | 2,727,870 |
| Series 2022-PJ1 Class AB –2.5% 5/28/52(a) (c) | | 3,921,519 | 3,293,751 |
| Series 2022-PJ2 Class A24 –3% 6/25/52(a) (c) | | 2,535,030 | 2,189,116 |
| Series 2020-NQM1 Class A1 –1.38% 9/27/60(a) (c) | | 382,687 | 342,739 |
| JPMorgan Mortgage Trust (JPMMT) | | | |
| Series 2014-2 Class 2A2 –3.5% 6/25/29(a) (c) | | 481,252 | 460,819 |
| Series 2014-5 Class B –2.76% 10/25/29(a) (c) | | 1,267,404 | 1,196,696 |
| Series 2016-3 Class A –2.97% 10/25/46(a) (c) | | 1,047,828 | 954,035 |
| Series 2017-3 Class A –2.5% 8/25/47(a) (c) | | 2,284,093 | 1,921,108 |
| Series 2018-6 Class 2A2 –3% 12/25/48(a) (c) | | 329,197 | 302,122 |
| Series 2020-7 Class A –3% 1/25/51(a) (c) | | 82,272 | 79,969 |
| Series 2020-8 Class A –3% 3/25/51(a) (c) | | 205,055 | 193,842 |
| Series 2021-4 Class A4 –2.5% 8/25/51(a) (c) | | 2,072,001 | 1,770,712 |
| Series 2021-6 Class B –2.5% 10/25/51(a) (c) | | 4,587,977 | 3,909,361 |
| Series 2021-8 Class B –2.5% 12/25/51(a) (c) | | 1,504,041 | 1,279,063 |
| Series 2022-2 Class A4A –2.5% 8/25/52(a) (c) | | 1,860,578 | 1,554,648 |
| Series 2023-6 Class A4A –5.5% 12/26/53(a) (c) | | 3,105,827 | 3,008,655 |
| JPMorgan Wealth Management (JPMWM) | | | |
| Series 2020-ATR1 Class A –3% 2/25/50(a) (c) | | 307,575 | 301,263 |
| Rate Mortgage Trust (RATE) | | | |
| Series 2021-J3 Class A7 –2.5% 10/25/51(a) (c) | | 4,218,885 | 3,551,837 |
| RCKT Mortgage Trust (RCKT) | | | |
| Series 2021-3 Class A5 –2.5% 7/25/51(a) (c) | | 5,343,740 | 4,553,858 |
| Sequoia Mortgage Trust (SEMT) | | | |
| Series 2019-CH2 Class A –4.5% 8/25/49(a) (c) | | 143,687 | 140,853 |
| Series 2020-3 Class A –3% 4/25/50(a) (c) | | 302,368 | 287,855 |
| Series 2023-3 Class A4 –6% 9/25/53(a) (c) | | 3,383,290 | 3,332,904 |
| | | | 46,881,335 |
| | | | |
| Total Mortgage-Backed Securities (Cost $85,002,527) | | 76,746,696 |
| |
| |
| U.S. Treasuries - 29.2% | | | |
| | | | |
| | | |
| U.S. Treasury Notes | | | |
| 2% 5/31/24 | | 18,000,000 | 17,596,269 |
| 3% 6/30/24 | | 1,000,000 | 981,832 |
| 3.25% 8/31/24 | | 13,000,000 | 12,742,086 |
| 2.13% 11/30/24 | | 2,500,000 | 2,409,131 |
| 1.5% 11/30/24 | | 17,000,000 | 16,267,539 |
| 2.75% 2/28/25 | | 2,000,000 | 1,931,484 |
| 1.13% 2/28/25 | | 9,000,000 | 8,496,211 |
| 0.38% 4/30/25 | | 5,000,000 | 4,635,938 |
| 2.88% 6/15/25 | | 9,000,000 | 8,665,664 |
| 3.13% 8/15/25 | | 8,000,000 | 7,719,062 |
| 0.25% 8/31/25 | | 20,000,000 | 18,251,562 |
| 3.5% 9/15/25 | | 7,000,000 | 6,796,016 |
| 4.25% 10/15/25 | | 12,000,000 | 11,813,906 |
| 4% 2/15/26 | | 12,000,000 | 11,747,344 |
| 4.5% 7/15/26 | | 22,000,000 | 21,798,906 |
| 1.88% 7/31/26 | | 15,000,000 | 13,840,723 |
| 4.63% 9/15/26 | | 10,000,000 | 9,951,563 |
| 1.63% 10/31/26 | | 17,000,000 | 15,471,328 |
| 2.25% 2/15/27 | | 2,000,000 | 1,845,977 |
| 1.13% 2/28/27 | | 10,000,000 | 8,876,953 |
| 4.13% 9/30/27 | | 10,000,000 | 9,793,359 |
| 1.13% 2/29/28 | | 16,000,000 | 13,768,750 |
| 1.25% 3/31/28 | | 7,000,000 | 6,042,695 |
| 4.38% 8/31/28 | | 2,000,000 | 1,980,313 |
| 4.63% 9/30/28 | | 2,000,000 | 2,001,406 |
| | | | |
| Total U.S. Treasuries (Cost $248,115,786) | | | 235,426,017 |
| |
| Cash Equivalents - 1.4% | | | |
| | | | |
| | | |
| JPMorgan U.S. Government Money Market | | | |
| Fund - Institutional Class 5.09% (Cost | | | |
| $11,310,364)(d) | | 11,310,364 | 11,310,364 |
| | | | |
| Short-Term Securities Held as Collateral for Securities on Loan - 0.1% | | | |
| | | | |
| | | |
| Goldman Sachs Financial Square Government Fund | | | |
| Institutional Class –5.24% | | 974,264 | 974,264 |
| Citibank N.A. DDCA | | | |
| 5.32% | | 108,252 | 108,252 |
| | | | |
| Total Short-Term Securities Held as Collateral for Securities on Loan | |
| (Cost $1,082,516) | | | 1,082,516 |
| Total Investments in Securities (Cost $834,168,723) | | | 804,927,920 |
| |
| Other Assets Less Other Liabilities - 0.1% | | | 704,068 |
| Net Assets - 100% | | | 805,631,988 |
The accompanying notes form an integral part of these financial statements.
2023 Semi-Annual Report 57
| | |
| Net Asset Value Per Share - Investor Class | 11.69 |
| Net Asset Value Per Share - Institutional Class | 11.72 |
| ^ | | This security or a partial position of this security was on loan as of September 30, 2023. The total value of securities on loan as of September 30, 2023 was $1,056,425. |
| (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 7 day average yield at September 30, 2023. |
The accompanying notes form an integral part of these financial statements.
58 2023 Semi-Annual Report
ULTRA SHORT GOVERNMENT FUND
Schedule of Investments September 30, 2023 (Unaudited)
| | | | |
| Asset-Backed Securities - 1.3% | | | |
| | | $ Principal | |
| | | Amount | $ Value |
| | | |
| Automobile | | | |
| ACM Auto Trust (ACM) | | | |
| Series 2023-1A Class A –6.61% 1/22/30(a) | | 106,282 | 106,186 |
| Avid Automobile Receivables Trust (AVID) | | | |
| Series 2023-1 Class A –6.63% 7/15/26(a) | | 111,322 | 111,166 |
| CFMT LLC (CFMT) | | | |
| Series 2021-AL1 Class B –1.39% 9/22/31(a) | | 161,019 | 155,435 |
| LAD Auto Receivables Trust (LADAR) | | | |
| Series 2022-1A Class A –5.21% 6/15/27(a) | | 153,223 | 152,097 |
| | | | |
| | | | 524,884 |
| | | |
| Consumer & Specialty Finance | | | |
| LendingPoint Asset Securitization Trust (LDPT) | | | |
| Series 2020-REV1 Class A –2.73% 10/15/28(a) | | 24,053 | 24,053 |
| SoFi Consumer Loan Program Trust (SOFI) | | | |
| Series 2023-1S Class A –5.81% 5/15/31(a) | | 271,442 | 270,829 |
| Upstart Securitization Trust (UPST) | | | |
| Series 2021-1 Class B –1.89% 3/20/31(a) | | 14,763 | 14,719 |
| Series 2021-3 Class A –0.83% 7/20/31(a) | | 3,397 | 3,385 |
| Series 2021-5 Class A –1.31% 11/20/31(a) | | 219,506 | 216,190 |
| | | | |
| | | | 529,176 |
| | | |
| Equipment | | | |
| Amur Equipment Finance Receivables XII LLC (AXIS) | | | |
| Series 2023-1A Class A1 –5.63% 6/20/24(a) | | 412,320 | 412,198 |
| Pawnee Equipment Receivables Series LLC (PWNE) | | | |
| Series 2022-1 Class A2 –5.05% 2/15/28(a) | | 210,200 | 209,598 |
| | | | 621,796 |
| | | | |
| Total Asset-Backed Securities (Cost $1,685,050) | | | 1,675,856 |
| |
| |
| U.S. Treasuries - 94.7% | | | |
| | | | |
| | | |
| U.S. Treasury Notes | | | |
| 2.88% 10/31/23 | | 11,000,000 | 10,978,395 |
| 2.75% 11/15/23 | | 19,000,000 | 18,937,791 |
| 2.13% 11/30/23 | | 17,000,000 | 16,907,343 |
| 2.25% 1/31/24 | | 8,000,000 | 7,916,691 |
| 2.75% 2/15/24 | | 9,000,000 | 8,910,162 |
| 2.5% 4/30/24 | | 7,000,000 | 6,881,249 |
| 2.5% 5/15/24 | | 12,000,000 | 11,785,199 |
| 2.5% 5/31/24 | | 17,000,000 | 16,671,825 |
| 3% 7/31/24 | | 14,000,000 | 13,715,629 |
| 3.25% 8/31/24 | | 14,000,000 | 13,722,246 |
| | | | |
| Total U.S. Treasuries (Cost $126,489,219) | | | 126,426,530 |
| |
| |
| Cash Equivalents - 3.3% | | | |
| | | | |
| | | |
| JPMorgan U.S. Government Money Market | | | |
| Fund - Institutional Class 5.09% (Cost | | | |
| $4,455,896)(b) | | 4,455,896 | 4,455,896 |
| | | | |
| Total Investments in Securities (Cost $132,630,165) | | | 132,558,282 |
| |
| Other Assets Less Other Liabilities - 0.7% | | | 891,786 |
| Net Assets - 100% | | | 133,450,068 |
| | | |
| | Net Asset Value Per Share | 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 7 day average yield at September 30, 2023. |
The accompanying notes form an integral part of these financial statements.
2023 Semi-Annual Report 59
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60 2023 Semi-Annual Report
STATEMENTS OF ASSETS AND LIABILITIES
September 30, 2023 (Unaudited)
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | Short | | |
| | | Conservative | | Core Plus | | Large Cap | | Multi Cap | | Nebraska Tax | | Partners III | | Duration | | Ultra Short |
| (In U.S. dollars, except share data) | | Allocation | | Income | | Equity | | Equity | | Free Income | | Opportunity | | Income | | Government |
| Assets: | | | | | | | | | | | | | | | | |
| Investments in securities at value*#: | | | | | | | | | | | | | | | | |
| Unaffiliated issuers | | 217,579,535 | 1,009,986,819 | | 835,611,411 | | 530,775,808 | | 26,030,867 | | 410,355,376 | | 804,927,920 | | 132,558,282 |
| Non-controlled affiliates | | — | | — | | — | | — | | — | | 10,200,000 | | — | | — |
| | 217,579,535 | 1,009,986,819 | | 835,611,411 | 530,775,808 | | 26,030,867 | 420,555,376 | 804,927,920 | 132,558,282 |
| Accrued interest and dividends receivable | | 716,922 | | 8,556,744 | | 75,975 | | 26,087 | | 296,314 | | 127,794 | | 4,994,846 | | 983,686 |
| Due from broker | | — | | — | | — | | — | | — | | 19,254,850 | | — | | — |
| Receivable for securities sold | | — | | — | | 385,561 | | — | | — | | — | | 550,952 | | — |
| Receivable for fund shares sold | | 76,429 | | 2,659,721 | | 86,728 | | 1,180 | | 15,000 | | 6,109 | | 984,634 | | 34,167 |
| Reclaims receivable | | 15,415 | | — | | — | | — | | — | | — | | — | | — |
| Receivable from adviser | | — | | — | | — | | — | | 2,081 | | — | | — | | — |
| Prepaid expenses | | 31,920 | | 70,922 | | 56,310 | | 42,311 | | 2,707 | | 28,975 | | 72,667 | | 22,496 |
| Cash | | — | | 13,748 | | — | | 278 | | — | | 111 | | 2,371 | | — |
| Total assets | 218,420,221 | 1,021,287,954 | 836,215,985 | 530,845,664 | | 26,346,969 | 439,973,215 | 811,533,390 | 133,598,631 |
| Liabilities: | | | | | | | | | | | | | | | | |
| Distributions Payable | | — | | 219,346 | | — | | — | | — | | — | | — | | 38,505 |
| Dividends payable on securities sold short | | — | | — | | — | | — | | — | | 63,326 | | — | | — |
| Due to adviser | | 108,422 | | 195,765 | | 614,496 | | 384,883 | | — | | 374,822 | | 248,155 | | 5,383 |
| Payable for collateral received on loaned securities | | — | | 1,599,373 | | — | | — | | — | | 360,000 | | 1,082,516 | | — |
| Payable for securities purchased | | — | | 16,625,834 | | 7,560,126 | | 399,794 | | — | | — | | 2,906,710 | | — |
| Payable for fund shares redeemed | | 14,586 | | 2,669,015 | | 322,160 | | 52,344 | | — | | 88,262 | | 1,588,576 | | 93,882 |
| Securities sold short^ | | — | | — | | — | | — | | — | | 19,175,200 | | — | | — |
| Other | | 23,899 | | 45,676 | | 93,952 | | 60,350 | | 327 | | 52,886 | | 75,445 | | 10,793 |
| Total liabilities | | 146,907 | | 21,355,009 | | 8,590,734 | | 897,371 | | 327 | | 20,114,496 | | 5,901,402 | | 148,563 |
| Net assets | 218,273,314 | 999,932,945 | 827,625,251 | 529,948,293 | | 26,346,642 | | 419,858,719 | 805,631,988 | 133,450,068 |
| Composition of net assets: | | | | | | | | | | | | | | | | |
| Paid-in capital | | 181,056,812 | 1,075,066,204 | | 390,489,584 | | 274,535,686 | | 28,525,603 | | 253,153,220 | | 835,367,311 | | 133,543,427 |
| Total distributable earnings | | 37,216,502 | | (75,133,259) | | 437,135,667 | | 255,412,607 | | (2,178,961) | | 166,705,499 | | (29,735,323) | | (93,359) |
| Net assets | 218,273,314 | 999,932,945 | 827,625,251 | 529,948,293 | | 26,346,642 | | 419,858,719 | 805,631,988 | 133,450,068 |
| Net assets(a): | | | | | | | | | | | | | | | | |
| Investor Class | | 50,774,494 | | 176,854,017 | | 501,120,783 | | 220,867,059 | | 26,346,642 | | 5,539,499 | | 26,591,422 | | |
| Institutional Class | | 167,498,820 | | 823,078,928 | | 326,504,468 | | 309,081,234 | | | | 414,319,220 | | 779,040,566 | | 133,450,068 |
| Shares outstanding(a)(b): | | | | | | | | | | | | | | | | |
| Investor Class | | 3,171,551 | | 18,986,996 | | 10,214,490 | | 7,816,793 | | 2,855,867 | | 490,428 | | 2,274,380 | | |
| Institutional Class | | 10,442,844 | | 88,341,415 | | 6,485,533 | | 10,638,575 | | | | 33,668,603 | | 66,479,033 | | 13,369,279 |
| Net asset value, offering and redemption price(a): | | | | | | | | | | | | | | | | |
| Investor Class | | 16.01 | | 9.31 | | 49.06 | | 28.26 | | 9.23 | | 11.30 | | 11.69 | | |
| Institutional Class | | 16.04 | | 9.32 | | 50.34 | | 29.05 | | | | 12.31 | | 11.72 | | 9.98 |
| * Cost of investments in securities: | | | | | | | | | | | | | | | | |
| Unaffiliated Issuers | | 182,504,835 | 1,080,538,134 | | 438,597,170 | | 281,094,795 | | 28,101,238 | | 271,362,388 | | 834,168,723 | | 132,630,165 |
| Non-controlled affiliates | | — | | — | | — | | — | | — | | 580,695 | | — | | — |
| | 182,504,835 | 1,080,538,134 | | 438,597,170 | 281,094,795 | | 28,101,238 | 271,943,083 | | 834,168,723 | | 132,630,165 |
| ^ Proceeds from short sales | | — | | — | | — | | — | | — | | 10,576,102 | | — | | — |
# 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.
2023 Semi-Annual Report 61
STATEMENTS OF OPERATIONS
Period ended September 30, 2023 (Unaudited)
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Nebraska | | | | Short | | |
| | | Conservative | | Core Plus | | Large Cap | | Multi Cap | | Tax Free | | Partners III | | Duration | | Ultra Short |
| (In U.S. dollars) | | Allocation | | Income | | Equity | | Equity | | Income | Opportunity | | Income | | Government |
| Investment Income: | | | | | | | | | | | | | | | | |
| Dividends | | 693,438 | | 1,316,116 | | 2,538,401 | | 1,256,161 | | 50,758 | | 1,975,185 | | 384,804 | | 210,029 |
| Interest | | 1,960,276 | | 20,967,812 | | 517,624 | | 428,223 | | 292,900 | | 857,708 | | 17,408,403 | | 2,663,689 |
| Income from securities lending | | 19 | | 16,729 | | — | | — | | — | | 10 | | 15,263 | | — |
| Total investment income | | 2,653,733 | 22,300,657 | | 3,056,025 | | 1,684,384 | | 343,658 | | 2,832,903 | 17,808,470 | | 2,873,718 |
| Fees and expenses*: | | | | | | | | | | | | | | | | |
| Investment advisory services | | 640,333 | | 1,607,504 | | 3,100,042 | | 2,027,437 | | 56,306 | | 2,158,024 | | 1,549,523 | | 173,181 |
| Business administration services(1) | | 32,020 | | 120,571 | | 124,012 | | 81,104 | | 4,224 | | 64,746 | | 116,225 | | 17,319 |
| Administrative services:(2) | | | | | | | | | | | | | | | | |
| Investor Class | | 47,620 | | 147,761 | | 403,067 | | 204,460 | | 8,717 | | 6,893 | | 55,798 | | |
| Institutional Class | | 25,825 | | 161,318 | | 30,744 | | 26,047 | | | 39,999 | | 313,580 | | 12,786 |
| Transfer agent services: | | | | | | | | | | | | | | | | |
| Investor Class | | 12,512 | | 10,045 | | 42,136 | | 34,212 | | 13,360 | | 8,882 | | 9,035 | | |
| Institutional Class | | 7,877 | | 9,547 | | 11,164 | | 10,289 | | | 14,601 | | 15,279 | | 15,640 |
| Registration: | | | | | | | | | | | | | | | | |
| Investor Class | | 8,858 | | 10,899 | | 14,250 | | 10,480 | | 2,170 | | 5,899 | | 30,119 | | |
| Institutional Class | | 11,019 | | 36,094 | | 12,560 | | 10,349 | | | 15,491 | | 26,948 | | 23,972 |
| Custody and fund accounting | | 39,793 | | 69,416 | | 78,111 | | 62,829 | | 26,686 | | 60,331 | | 80,076 | | 30,500 |
| Auditing and legal | | 20,290 | | 41,999 | | 46,655 | | 34,700 | | 11,037 | | 30,007 | | 44,271 | | 14,609 |
| Trustees | | 13,361 | | 45,061 | | 52,169 | | 34,542 | | 1,699 | | 27,593 | | 49,265 | | 7,009 |
| Dividends on securities sold short | | — | | — | | — | | — | | — | | 128,861 | | — | | — |
| Printing | | 5,268 | | 15,024 | | 17,200 | | 11,735 | | 1,848 | | 9,409 | | 15,264 | | 3,543 |
| Other | | 10,721 | | 28,983 | | 43,223 | | 25,170 | | 1,941 | | 15,855 | | 46,913 | | 4,181 |
| | | 875,497 | | 2,304,222 | | 3,975,333 | | 2,573,354 | | 127,988 | | 2,586,591 | | 2,352,296 | | 302,740 |
| Less expenses waived/reimbursed by investment adviser | | (89,119) | (534,562) | | — | | — | | (64,675) | — | | (517,459) | | (160,799) |
| Net expenses | | 786,378 | | 1,769,660 | | 3,975,333 | | 2,573,354 | | 63,313 | | 2,586,591 | | 1,834,837 | | 141,941 |
| Net investment income (loss) | | 1,867,355 | 20,530,997 | | (919,308) | (888,970) | 280,345 | | 246,312 | 15,973,633 | | 2,731,777 |
| Realized and unrealized gain (loss) on investments: | | | | | | | | | | | | | | | | |
| Net realized gain (loss): | | | | | | | | | | | | | | | | |
| Unaffiliated issuers | | 1,623,499 | | (132,058) | | 20,003,341 | | 16,123,583 | | (15,095) | | 18,199,050 | | 86,678 | | (1,967) |
| Non-controlled affiliates | | — | | — | | — | | — | | — | | 127,267 | | — | | — |
| Net realized gain (loss) | | 1,623,499 | | (132,058) | | 20,003,341 | 16,123,583 | | (15,095) | 18,326,317 | | 86,678 | | (1,967) |
| Change in net unrealized appreciation (depreciation): | | | | | | | | | | | | | | | | |
| Unaffiliated issuers | | 2,287,519 | | (41,769,248) | | 59,930,928 | 20,823,069 | | (1,197,868) | 17,053,436 | | (2,483,172) | | (24,903) |
| Non-controlled affiliates | | — | | — | | — | | — | | — | | (5,242,845) | | — | | — |
| Securities sold short | | — | | — | | — | | — | | — | | 723,600 | | — | | — |
| Change in net unrealized appreciation (depreciation) | | 2,287,519 | | (41,769,248) | 59,930,928 | 20,823,069 | | (1,197,868) | | | 12,534,191 | | (2,483,172) | (24,903) |
| Net realized and unrealized gain (loss) on investments | | 3,911,018 | | (41,901,306) | | 79,934,269 | 36,946,652 | | (1,212,963) | 30,860,508 | | (2,396,494) | (26,870) |
| Net increase (decrease) in net assets resulting from operations | | 5,778,373 | | (21,370,309) | 79,014,961 | 36,057,682 | | (932,618) | 31,106,820 | | 13,577,139 | | 2,704,907 |
| * | | Additional information related to fees and expenses is included in the notes to the financial statements. |
| (1) | | The trust has business administration agreement with the Advisor 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 Trust's relationships with third-party services providers that may be retained from time to time by the Trust. |
| (2) | | 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 stakeholders. These services include, but are not limited to, providing shareholder statements, assisting with shareholder communications and sub-accounting services in connection with omnibus accounts. |
The accompanying notes form an integral part of these financial statements.
62 2023 Semi-Annual Report
STATEMENTS OF CHANGES IN NET ASSETS
| | | | | | | | | |
| | Conservative Allocation | Core Plus Income | Large Cap Equity | Multi Cap Equity |
| | Six months | | Six months | | Six months | | Six months | |
| | ended | | ended | | ended | | ended | |
| | Sept. 30, 2023 | Year ended | Sept. 30, 2023 | Year ended | Sept. 30, 2023 | Year ended | Sept. 30, 2023 | Year ended |
| (In U.S. dollars) | (Unaudited) | March 31, 2023 | (Unaudited) | March 31, 2023 | (Unaudited) | March 31, 2023 | (Unaudited) | March 31, 2023 |
| Increase (decrease) in net assets: | | | | | | | | |
| From operations: | | | | | | | | |
| Net investment income (loss) | 1,867,355 | 2,469,605 | 20,530,997 | 15,223,798 | (919,308) | (2,582,178) | (888,970) | (1,921,396) |
| Net realized gain (loss) | 1,623,499 | (609,191) | (132,058) | (4,565,044) | 20,003,341 | 21,566,621 | 16,123,583 | (4,146,912) |
| Change in net unrealized appreciation | | | | | | | | |
| (depreciation) | 2,287,519 | (10,344,953) | (41,769,248) | (18,278,886) | 59,930,928 | (124,445,011) | 20,823,069 | (47,955,180) |
| Net increase (decrease) in net assets | | | | | | | | |
| resulting from operations | 5,778,373 | (8,484,539) | (21,370,309) | (7,620,132) | 79,014,961 | (105,460,568) | 36,057,682 | (54,023,488) |
| Distributions to shareholders(a): | | | | | | | | |
| Investor Class | (374,933) | (1,102,354) | (3,925,699) | (2,389,390) | — | (61,432,310) | — | (11,638,108) |
| Institutional Class | (1,204,191) | (2,882,783) | (16,575,165) | (13,677,916) | — | (31,790,688) | — | (14,594,955) |
| Total distributions | (1,579,124) | (3,985,137) | (20,500,864) | (16,067,306) | — | (93,222,998) | — | (26,233,063) |
| Fund share transactions(a): | | | | | | | | |
| Investor Class | (3,543,026) | (7,526,786) | 60,051,016 | 74,048,055 | (49,439,855) | (1,716,929) | (23,329,962) | 48,175,789 |
| Institutional Class | 12,127,993 | 14,918,961 | 383,177,255 | 200,610,365 | 24,390,013 | 25,289,971 | (4,630,741) | 59,760,676 |
| Net increase (decrease) from fund share | | | | | | | | |
| transactions | 8,584,967 | 7,392,175 | 443,228,271 | 274,658,420 | (25,049,842) | 23,573,042 | (27,960,703) | 107,936,465 |
| Total increase (decrease) in net assets | 12,784,216 | (5,077,501) | 401,357,098 | 250,970,982 | 53,965,119 | (175,110,524) | 8,096,979 | 27,679,914 |
| Net assets: | | | | | | | | |
| Beginning of period | 205,489,098 | 210,566,599 | 598,575,847 | 347,604,865 | 773,660,132 | 948,770,656 | 521,851,314 | 494,171,400 |
| End of period | 218,273,314 | 205,489,098 | 999,932,945 | 598,575,847 | 827,625,251 | 773,660,132 | 529,948,293 | 521,851,314 |
(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.
2023 Semi-Annual Report 63
| Nebraska Tax Free Income | Partners III Opportunity | Short Duration Income | Ultra Short Government |
| Six months | | Six months | | Six months | | Six months | |
| ended | | ended | | ended | | ended | |
| Sept. 30, 2023 | Year ended | Sept. 30, 2023 | Year ended | Sept. 30, 2023 | Year ended | Sept. 30, 2023 | Year ended |
| (Unaudited) | March 31, 2023 | (Unaudited) | March 31, 2023 | (Unaudited) | March 31, 2023 | (Unaudited) | March 31, 2023 |
| |
| |
| |
| 280,345 | 511,825 | 246,312 | (1,460,825) | 15,973,633 | 21,721,628 | 2,731,777 | 1,640,006 |
| (15,095) | (19) | 18,326,317 | 8,170,975 | 86,678 | (532,364) | (1,967) | (635) |
| |
| (1,197,868) | (359,055) | 12,534,191 | (95,145,721) | (2,483,172) | (14,324,626) | (24,903) | (1,834) |
| |
| (932,618) | 152,751 | 31,106,820 | (88,435,571) | 13,577,139 | 6,864,638 | 2,704,907 | 1,637,537 |
| |
| (282,399) | (507,241) | — | (580,717) | (746,364) | (1,698,033) | | |
| | | — | (32,518,175) | (15,246,963) | (21,493,708) | (2,725,205) | (1,647,995) |
| (282,399) | (507,241) | — | (33,098,892) | (15,993,327) | (23,191,741) | (2,725,205) | (1,647,995) |
| |
| (1,336,987) | (3,626,893) | (1,642,122) | (4,865,350) | (14,374,551) | (17,400,461) | | |
| | | (22,383,770) | (34,202,509) | 51,438,572 | 22,670,328 | 46,805,369 | 24,101,270 |
| |
| (1,336,987) | (3,626,893) | (24,025,892) | (39,067,859) | 37,064,021 | 5,269,867 | 46,805,369 | 24,101,270 |
| (2,552,004) | (3,981,383) | 7,080,928 | (160,602,322) | 34,647,833 | (11,057,236) | 46,785,071 | 24,090,812 |
| |
| 28,898,646 | 32,880,029 | 412,777,791 | 573,380,113 | 770,984,155 | 782,041,391 | 86,664,997 | 62,574,185 |
| 26,346,642 | 28,898,646 | 419,858,719 | 412,777,791 | 805,631,988 | 770,984,155 | 133,450,068 | 86,664,997 |
The accompanying notes form an integral part of these financial statements.
64 2023 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 |
| Conservative Allocation - Investor Class | | | | | | | |
| Six months ended 9/30/2023 (Unaudited) | 15.69 | 0.13 (d) | 0.31 | 0.44 | (0.12) | — | (0.12) |
| 2023 | 16.68 | 0.17 (d) | (0.86) | (0.69) | (0.15) | (0.15) | (0.30) |
| 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 (d) | 0.66 | 0.80 | (0.13) | (1.11) | (1.24) |
| Conservative Allocation - Institutional Class | | | | | | | |
| Six months ended 9/30/2023 (Unaudited) | 15.71 | 0.14 (d) | 0.31 | 0.45 | (0.12) | — | (0.12) |
| 2023 | 16.70 | 0.20 (d) | (0.88) | (0.68) | (0.16) | (0.15) | (0.31) |
| 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 9/30/2023 (Unaudited) | 9.76 | 0.24 (d) | (0.45) | (0.21) | (0.24) | — | (0.24) |
| 2023 | 10.45 | 0.37 (d) | (0.70) | (0.33) | (0.35) | (0.01) | (0.36) |
| 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) |
| Core Plus Income - Institutional Class | | | | | | | |
| Six months ended 9/30/2023 (Unaudited) | 9.76 | 0.25 (d) | (0.45) | (0.20) | (0.24) | — | (0.24) |
| 2023 | 10.45 | 0.37 (d) | (0.69) | (0.32) | (0.36) | (0.01) | (0.37) |
| 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) |
| Large Cap Equity - Investor Class | | | | | | | |
| Six months ended 9/30/2023 (Unaudited) | 44.48 | (0.07)(d) | 4.65 | 4.58 | — | — | — |
| 2023 | 56.83 | (0.18)(d) | (6.23) | (6.41) | — | (5.94) | (5.94) |
| 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) |
| Large Cap Equity - Institutional Class | | | | | | | |
| Six months ended 9/30/2023 (Unaudited) | 45.61 | (0.03)(d) | 4.76 | 4.73 | — | — | — |
| 2023 | 58.02 | (0.11)(d) | (6.36) | (6.47) | — | (5.94) | (5.94) |
| 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) |
| Multi Cap Equity - Investor Class | | | | | | | |
| Six months ended 9/30/2023 (Unaudited) | 26.44 | (0.06)(d) | 1.88 | 1.82 | — | — | — |
| 2023 | 32.18 | (0.16)(d) | (3.68) | (3.84) | — | (1.90) | (1.90) |
| 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) |
| Multi Cap Equity - Institutional Class | | | | | | | |
| Six months ended 9/30/2023 (Unaudited) | 27.16 | (0.04)(d) | 1.93 | 1.89 | — | — | — |
| 2023 | 32.94 | (0.11)(d) | (3.77) | (3.88) | — | (1.90) | (1.90) |
| 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) |
(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.
(e) Initial offering of shares on March 29, 2019.
The accompanying notes form an integral part of these financial statements.
2023 Semi-Annual Report 65
| | | | | | | |
| | | | 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) |
| |
| 16.01 | 2.78 | 50,774 | 0.98 | 0.85 | 1.63 | 12 |
| 15.69 | (4.12) | 53,269 | 0.99 | 0.85 | 1.12 | 20 |
| 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 |
| |
| 16.04 | 2.87 | 167,499 | 0.77 | 0.70 | 1.79 | 12 |
| 15.71 | (4.01) | 152,221 | 0.79 | 0.70 | 1.29 | 20 |
| 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 |
| |
| 9.31 | (2.21) | 176,854 | 0.69 | 0.52 | 5.01 | 6 |
| 9.76 | (3.06) | 124,729 | 0.82 | 0.50 | 3.72 | 24 |
| 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 |
| |
| 9.32 | (2.05) | 823,079 | 0.54 | 0.42 | 5.12 | 6 |
| 9.76 | (2.98) | 473,847 | 0.59 | 0.40 | 3.76 | 24 |
| 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 |
| |
| 49.06 | 10.30 | 501,121 | 1.01 | 1.01 | (0.27) | 11 |
| 44.48 | (11.01) | 499,565 | 1.04 | 1.04 | (0.37) | 9 |
| 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 |
| |
| 50.34 | 10.37 | 326,504 | 0.87 | 0.87 | (0.14) | 11 |
| 45.61 | (10.88) | 274,095 | 0.89 | 0.89 | (0.23) | 9 |
| 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 |
| |
| 28.26 | 6.88 | 220,867 | 1.06 | 1.06 | (0.44) | 5 |
| 26.44 | (11.97) | 228,650 | 1.07 | 1.07 | (0.56) | 6 |
| 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 |
| |
| 29.05 | 6.96 | 309,081 | 0.87 | 0.87 | (0.25) | 5 |
| 27.16 | (11.81) | 293,201 | 0.89 | 0.89 | (0.38) | 6 |
| 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 |
The accompanying notes form an integral part of these financial statements.
66 2023 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 |
| Nebraska Tax Free Income | | | | | | | |
| Six months ended 9/30/2023 (Unaudited) | 9.65 | 0.10 (d) | (0.42) | (0.32) | (0.10) | — | (0.10) |
| 2023 | 9.73 | 0.17 (d) | (0.09) | 0.08 | (0.16) | — | (0.16) |
| 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) |
| Partners III Opportunity - Investor Class | | | | | | | |
| Six months ended 9/30/2023 (Unaudited) | 10.55 | (0.03)(d) | 0.78 | 0.75 | — | — | — |
| 2023 | 13.74 | (0.11)(d) | (2.14) | (2.25) | — | (0.94) | (0.94) |
| 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) |
| Partners III Opportunity - Institutional Class | | | | | | | |
| Six months ended 9/30/2023 (Unaudited) | 11.46 | 0.01 (d) | 0.84 | 0.85 | — | — | — |
| 2023 | 14.74 | (0.04)(d) | (2.30) | (2.34) | — | (0.94) | (0.94) |
| 2022 | 16.60 | (0.13)(d) | 0.11 | (0.02) | — | (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) |
| Short Duration Income - Investor Class | | | | | | | |
| Six months ended 9/30/2023 (Unaudited) | 11.73 | 0.24 (d) | (0.04) | 0.20 | (0.24) | — | (0.24) |
| 2023 | 11.98 | 0.32 (d) | (0.22) | 0.10 | (0.34) | (0.01) | (0.35) |
| 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) |
| Short Duration Income - Institutional Class | | | | | | | |
| Six months ended 9/30/2023 (Unaudited) | 11.76 | 0.24 (d) | (0.04) | 0.20 | (0.24) | — | (0.24) |
| 2023 | 12.00 | 0.33 (d) | (0.22) | 0.11 | (0.34) | (0.01) | (0.35) |
| 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) |
| Ultra Short Government | | | | | | | |
| Six months ended 9/30/2023 (Unaudited) | 9.99 | 0.24 (d) | (0.02) | 0.22 | (0.23) | — | (0.23) |
| 2023 | 9.99 | 0.25 (d) | (0.01) | 0.24 | (0.24) | — | (0.24) |
| 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) |
# 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.
2023 Semi-Annual Report 67
| | | | | | | |
| | | | 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) |
| |
| 9.23 | (3.48) | 26,347 | 0.91 | 0.45 | 1.99 | 5 |
| 9.65 | 0.91 | 28,899 | 0.95 | 0.45 | 1.73 | 5 |
| 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 |
| |
| 11.30 | 7.11 | 5,539 | 1.86 | 1.86 | (0.53) | 11 |
| 10.55 | (16.31) | 6,732 | 1.75 | 1.75 | (0.92) | 33 |
| 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 |
| |
| 12.31 | 7.42 | 414,319 | 1.19 | 1.19 | 0.12 | 11 |
| 11.46 | (15.80) | 406,046 | 1.19 | 1.19 | (0.30) | 33 |
| 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 |
| |
| 11.69 | 1.70 | 26,591 | 1.00 | 0.55 | 4.03 | 16 |
| 11.73 | 0.83 | 41,089 | 0.86 | 0.55 | 2.69 | 43 |
| 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 |
| |
| 11.72 | 1.73 | 779,041 | 0.59 | 0.47 | 4.13 | 16 |
| 11.76 | 0.98 | 729,895 | 0.60 | 0.48 | 2.82 | 43 |
| 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 |
| |
| 9.98 | 2.26 | 133,450 | 0.52 | 0.25 | 4.72 | 51 |
| 9.99 | 2.41 | 86,665 | 0.63 | 0.18 | 2.47 | 206 |
| 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 |
The accompanying notes form an integral part of these financial statements.
68 2023 Semi-Annual Report
NOTES TO FINANCIAL STATEMENTS
September 30, 2023 (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, 2023, the Trust had eight series in operation: Conservative Allocation Fund (formerly Balanced Fund), Core Plus Income Fund, Large Cap Equity Fund (formerly Value Fund), Multi Cap Equity Fund (formerly Partners Value Fund), Nebraska Tax Free Income Fund (formerly Nebraska Tax-Free Income Fund), Partners III Opportunity Fund, Short Duration Income Fund, and Ultra Short Government Fund (individually, a “Fund”, collectively, the “Funds”).
On March 29, 2019, the Conservative Allocation 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 Conservative Allocation, Core Plus Income, Large Cap Equity, Multi Cap Equity, Partners III Opportunity and Short Duration Income 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 Large Cap Equity, Multi Cap Equity and Partners III Opportunity Funds (the “Weitz Equity Funds”) is capital appreciation.
The investment objectives of the Conservative Allocation 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.
2023 Semi-Annual Report 69
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 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 $1,567,697, $347,880 and $1,056,424, respectively, accounted for as secured borrowings with cash collateral of overnight and continuous maturities in the amounts of $1,599,372, $360,000 and $1,082,516, respectively, as of September 30, 2023.
(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, 2023, 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 Nebraska Tax Free Income Fund pays income dividends on a quarterly basis. The Core Plus Income, Short Duration Income and Ultra Short Government Funds declares dividends daily and pay 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.
70 2023 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, 2023, 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, 2023 | Year ended March 31, 2023 |
| | Shares | $ Amount | Shares | $ Amount |
| Conservative Allocation - Investor Class | | | | |
| Sales | 288,156 | 4,636,638 | 996,577 | 15,618,109 |
| Redemptions | (534,613) | (8,547,012) | (1,551,226) | (24,218,332) |
| Reinvestment of distributions | 23,046 | 367,348 | 69,272 | 1,073,437 |
| Net increase (decrease) | (223,411) | (3,543,026) | (485,397) | (7,526,786) |
| |
| Conservative Allocation - Institutional Class | | | | |
| Sales | 933,848 | 15,003,909 | 1,622,884 | 25,338,132 |
| Redemptions | (254,070) | (4,078,017) | (854,585) | (13,296,514) |
| Reinvestment of distributions | 75,320 | 1,202,101 | 185,428 | 2,877,343 |
| Net increase (decrease) | 755,098 | 12,127,993 | 953,727 | 14,918,961 |
| |
| Core Plus Income - Investor Class | | | | |
| Sales | 8,244,130 | 79,539,009 | 10,533,840 | 102,761,529 |
| Redemptions | (2,449,670) | (23,433,454) | (3,191,279) | (31,089,651) |
| Reinvestment of distributions | 411,452 | 3,945,461 | 243,617 | 2,376,177 |
| Net increase (decrease) | 6,205,912 | 60,051,016 | 7,586,178 | 74,048,055 |
| |
| Core Plus Income - Institutional Class | | | | |
| Sales | 45,715,586 | 439,602,628 | 34,560,868 | 339,016,312 |
| Redemptions | (7,444,230) | (71,071,093) | (15,161,910) | (148,893,247) |
| Reinvestment of distributions | 1,528,937 | 14,645,720 | 1,075,271 | 10,487,300 |
| Net increase (decrease) | 39,800,293 | 383,177,255 | 20,474,229 | 200,610,365 |
| |
| Large Cap Value - Investor Class | | | | |
| Sales | 51,287 | 2,510,083 | 203,020 | 9,836,977 |
| Redemptions | (1,067,965) | (51,949,938) | (1,472,255) | (70,298,944) |
| Reinvestment of distributions | — | — | 1,356,072 | 58,745,038 |
| Net increase (decrease) | (1,016,678) | (49,439,855) | 86,837 | (1,716,929) |
| |
| Large Cap Value - Institutional Class | | | | |
| Sales | 766,424 | 38,562,841 | 457,705 | 22,698,491 |
| Redemptions | (290,280) | (14,172,828) | (551,487) | (27,034,362) |
| Reinvestment of distributions | — | — | 667,098 | 29,625,842 |
| Net increase (decrease) | 476,144 | 24,390,013 | 573,316 | 25,289,971 |
| |
| Multi Cap Value - Investor Class | | | | |
| Sales | 20,569 | 576,289 | 79,024 | 2,194,054 |
| Sales from merger | — | — | 5,553,349 | 141,480,608 |
| Redemptions | (852,917) | (23,906,251) | (4,070,823) | (106,292,966) |
| Reinvestment of distributions | — | — | 406,251 | 10,794,093 |
| Net increase (decrease) | (832,348) | (23,329,962) | 1,967,801 | 48,175,789 |
| |
| Multi Cap Value - Institutional Class | | | | |
| Sales | 338,582 | 9,780,024 | 3,077,986 | 81,254,730 |
| Redemptions | (496,596) | (14,410,765) | (1,141,780) | (31,996,603) |
| Reinvestment of distributions | — | — | 384,850 | 10,502,549 |
| Net increase (decrease) | (158,014) | (4,630,741) | 2,321,056 | 59,760,676 |
| |
| Nebraska Tax Free Income | | | | |
| Sales | 117,290 | 1,125,696 | 215,612 | 2,060,603 |
| Redemptions | (286,419) | (2,736,673) | (649,131) | (6,178,394) |
| Reinvestment of distributions | 28,945 | 273,990 | 51,592 | 490,898 |
| Net increase (decrease) | (140,184) | (1,336,987) | (381,927) | (3,626,893) |
| |
| Partners III Opportunity - Investor Class | | | | |
| Sales | 28,562 | 312,111 | 58,225 | 691,615 |
| Redemptions | (176,116) | (1,954,233) | (504,950) | (6,135,167) |
| Reinvestment of distributions | — | — | 55,172 | 578,202 |
| Net increase (decrease) | (147,554) | (1,642,122) | (391,553) | (4,865,350) |
2023 Semi-Annual Report 71
| | | | | |
| | Six months ended September 30, 2023 | Year ended March 31, 2023 |
| | Shares | $ Amount | Shares | $ Amount |
| Partners III Opportunity - Institutional Class | | | | |
| Sales | 321,756 | 3,899,728 | 2,009,294 | 25,605,721 |
| Redemptions | (2,093,141) | (26,283,498) | (6,964,731) | (87,569,827) |
| Reinvestment of distributions | — | — | 2,443,803 | 27,761,597 |
| Net increase (decrease) | (1,771,385) | (22,383,770) | (2,511,634) | (34,202,509) |
| |
| Short Duration Income - Investor Class | | | | |
| Sales | 619,173 | 7,256,552 | 4,149,241 | 48,750,149 |
| Redemptions | (1,910,426) | (22,372,765) | (5,802,374) | (67,838,104) |
| Reinvestment of distributions | 63,317 | 741,662 | 144,421 | 1,687,494 |
| Net increase (decrease) | (1,227,936) | (14,374,551) | (1,508,712) | (17,400,461) |
| |
| Short Duration Income - Institutional Class | | | | |
| Sales | 13,561,313 | 159,096,830 | 25,444,854 | 299,556,193 |
| Redemptions | (10,439,088) | (122,643,676) | (25,314,319) | (297,864,602) |
| Reinvestment of distributions | 1,276,429 | 14,985,418 | 1,790,820 | 20,978,737 |
| Net increase (decrease) | 4,398,654 | 51,438,572 | 1,921,355 | 22,670,328 |
| |
| Ultra Short Government | | | | |
| Sales | 5,778,470 | 57,669,774 | 6,274,037 | 62,640,557 |
| Redemptions | (1,331,947) | (13,293,602) | (4,009,913) | (40,030,354) |
| Reinvestment of distributions | 243,405 | 2,429,197 | 149,366 | 1,491,067 |
| Net increase (decrease) | 4,689,928 | 46,805,369 | 2,413,490 | 24,101,270 |
(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 (%) |
| Conservative Allocation | 0 | | 0.60 |
| Core Plus Income | 0 | | 0.40 |
| Large Cap Equity | 0 | 5,000,000,000 | 0.75 |
| | 5,000,000,000 | | 0.70 |
| Multi Cap Equity | 0 | 5,000,000,000 | 0.75 |
| | 5,000,000,000 | | 0.70 |
| 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 |
| Short Duration Income | 0 | | 0.40 |
| Ultra Short Government | 0 | | 0.30 |
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.
72 2023 Semi-Annual Report
Through July 31, 2024, 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 period ended September 30, 2023, are as follows:
| | | | | | | | |
| | | Annual Operating Expense Ratio Cap* | |
| | Conservative | Core Plus | Large Cap | Multi Cap | Nebraska Tax | Short Duration | Ultra Short |
| | Allocation | Income# | Equity | Equity | Free Income | Income^ | Government+† |
| Annual Operating Expense Cap: | | | | | | | |
| Investor Class | 0.85% | 0.55% | 1.09% | 1.09% | 0.45% | 0.55% | |
| Institutional Class | 0.70 | 0.45 | 0.89 | 0.89 | | 0.45 | 0.32 |
| Expenses Reimbursed by the Adviser: | | | | | | | |
| Investor Class | $33,448 | $137,395 | $— | $— | $64,675 | $84,092 | |
| Institutional Class | 55,671 | 397,167 | — | — | | 433,367 | 160,799 |
| * | | 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. |
| # | | Prior to July 31, 2023, the annual operating expense ratio cap was 0.50% and 0.40% for the Investor Class and Institutional Class, respectively. |
| ^ | | Prior to July 31, 2023, the annual operating expense ratio cap was 0.48% for the Institutional Class. |
| + | | Prior to July 31, 2023, the annual operating expense ratio cap was 0.20%. |
As of September 30, 2023, the controlling shareholder of the Adviser held shares totaling approximately 2%, 3%, 2% and 6% of the Core Plus Income, Multi Cap Equity, Partners III Opportunity and Ultra Short Government 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):
| | | | | | | | | |
| | Conservative Allocation | Core Plus Income | Large Cap Equity | Multi Cap Equity |
| | Year Ended March 31, | Year Ended March 31, | Year Ended March 31, | Year Ended March 31, |
| Distributions paid from: | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
| Ordinary income | 2,020,621 | 936,116 | 15,602,351 | 6,081,897 | – | 393,177 | – | – |
| Long-term capital gains | 1,964,516 | 5,115,973 | 464,955 | 449,010 | 93,222,998 | 37,602,369 | 26,233,063 | 34,723,397 |
| Total distributions | 3,985,137 | 6,052,089 | 16,067,306 | 6,530,907 | 93,222,998 | 37,995,546 | 26,233,063 | 34,723,397 |
| | | | | | | | | | | | |
| | Nebraska Tax Free Income | Partners III Opportunity | 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: | 2023 | 2022 | 2023 | 2022 | 2023 | | 2022 | 2023 | | 2022 |
| Ordinary income | 55,647 | 852 | – | | – | 22,619,297 | 12,055,029 | 1,647,995 | | 75,091 |
| Tax-exempt income | 451,594 | 474,894 | – | | – | – | | – | – | | – |
| Long-term capital gains | – | – | 33,098,892 | 66,689,998 | 572,444 | | 1,100,771 | – | | – |
| Total distributions | 507,241 | 475,746 | 33,098,892 | 66,689,998 | 23,191,741 | 13,155,800 | 1,647,995 | | 75,091 |
As of the tax year ended March 31, 2023, the components of net assets on a tax basis were as follows (in U.S. dollars):
| | | | | | |
| | Conservative | | | | Nebraska Tax |
| | Allocation | Core Plus Income | Large Cap Equity | Multi Cap Equity | Free Income |
| Cost of investments | 172,238,772 | 627,625,943 | 440,128,027 | 294,117,482 | 30,005,095 |
| Gross unrealized appreciation | 40,904,684 | 2,625,772 | 348,998,633 | 238,219,173 | 16,956 |
| Gross unrealized depreciation | (8,117,638) | (31,434,585) | (11,915,321) | (9,361,229) | (889,458) |
| Net unrealized appreciation (depreciation) | 32,787,046 | (28,808,813) | 337,083,312 | 228,857,944 | (872,502) |
| Undistributed ordinary income | 865,943 | 157,248 | — | — | — |
| Qualified late year ordinary loss deferral | — | — | (529,220) | (541,704) | — |
| Undistributed tax-exempt income | — | — | — | — | 35,622 |
| Undistributed long-term gains | — | — | 21,566,614 | — | — |
| Capital loss carryforwards | (635,736) | (4,610,521) | — | (8,961,315) | (127,064) |
| Paid-in capital | 172,471,845 | 631,837,933 | 415,539,426 | 302,496,389 | 29,862,590 |
| Net assets | 205,489,098 | 598,575,847 | 773,660,132 | 521,851,314 | 28,898,646 |
| | Partners III | Short Duration | Ultra Short |
| | Opportunity | Income | Government |
| Cost of investments | 270,185,744 | 798,184,560 | 92,259,290 |
| Gross unrealized appreciation | 171,051,664 | 1,366,741 | 4,343 |
| Gross unrealized depreciation | (43,572,660) | (28,124,998) | (51,324) |
| Net unrealized appreciation (depreciation) | 127,479,004 | (26,758,257) | (46,981) |
| Undistributed ordinary income | | — | 228,374 | 288,599 |
| Qualified late year ordinary loss deferral | (51,274) | — | — |
| Undistributed long-term gains | 8,170,949 | — | — |
| Capital loss carryforwards | | — | (789,252) | (15,870) |
| Dividend Payable | | — | — | (298,809) |
| Paid-in capital | 277,179,112 | 798,303,290 | 86,738,058 |
| Net assets | 412,777,791 | 770,984,155 | 86,664,997 |
2023 Semi-Annual Report 73
The Large Cap Equity, Multi Cap Equity and Partners III Opportunity Funds elected to defer ordinary losses arising after December 31, 2022. Such losses are treated for tax purposes as arising on April 1, 2023.
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, 2023, the Funds did not utilize any capital loss carryforwards to offset realized capital gains. The character and utilization of the carryforwards are as follows (in U.S. Dollars):
| | | | | | | |
| | Conservative | Core Plus | Multi Cap | Nebraska Tax | Short Duration | Ultra Short |
| | Allocation | Income | Equity* | Free Income | Income | Government |
| Short term (no expirations) | 612,909 | 729,043 | 1,735,946 | — | 149,851 | 11,968 |
| Long term (no expirations) | 22,827 | 3,881,478 | 2,489,980 | 127,064 | 639,401 | 3,902 |
* Excludes portion limited as a result of changes in ownership in connection with merger reorganizations. These amounts will be available in future years. The total capital loss carryforwards can be found in the components of net assets table above.
(6) Securities Transactions
Purchases and proceeds from maturities or sales of investment securities of the Funds for the six months ended September 30, 2023, excluding fund merger transactions, in-kind transactions, short-term securities and U.S. government obligations, are summarized as follows (in U.S. dollars):
| | | | | | | | | |
| | Conservative | Core Plus | Large Cap | Multi Cap | Nebraska Tax | Partners III | Short Duration | Ultra Short |
| | Allocation | Income | Equity | Equity | Free Income | Opportunity | Income | Government |
| Purchases | 35,755,389 | 532,354,022 | 89,816,704 | 23,793,449 | 1,288,859 | 43,408,546 | 154,858,448 | 12,705,508 |
| Proceeds | 24,048,265 | 44,200,062 | 104,546,504 | 52,226,417 | 1,280,850 | 68,394,861 | 123,164,074 | 4,103,788 |
(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/ | Value | Shares as of | Dividend |
| | 3/31/2023 | Cost | Sales | Gain(Loss) | Depreciation | 9/30/2023 | 9/30/2023 | Income |
| Partners III Opportunity | | | | | | | | |
| CoreCard Corp. | $15,215,650 | $230,695 | $(130,767) | $127,267 | $(5,242,845) | $10,200,000 | 510,000 | $ - |
(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, Northern Trust Securities, Inc., under which the Fund may borrow against the value of its securities, subject to regulatory limitations. Interest accrues at the National Finance Base Lending Rate (“NFBLR”) plus a minimum of 0.75% to a maximum of 2.25% depending on the average balance. The NFBLR was 10.00% at September 30 2023. Interest is accrued daily and paid monthly. The Partners III Opportunity Fund held a cash balance of $19,254,580 with the broker at September 30, 2023. Prior to May 1, 2023, the prime broker was Bank of America Merrill Lynch.
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 86.3% of the Nebraska Tax Free Income Fund’s 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.
(12) Fair Value Measurements
Various inputs are used in determining the value of the Funds’ 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, |
74 2023 Semi-Annual Report
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, 2023, 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 period ended September 30, 2023, there were no transfers into or out of Level 3.
| | | | | |
| Conservative Allocation |
| |
| | Level 1 | Level 2 | Level 3 | Total |
| Assets: | | | | |
| Investments in Securities: | | | | |
| Common Stocks | 94,460,293 | — | — | 94,460,293 |
| Non-Convertible Preferred Stocks | 884,683 | — | — | 884,683 |
| Corporate Bonds | — | 1,797,957 | — | 1,797,957 |
| Corporate Convertible Bonds | — | 1,980,006 | — | 1,980,006 |
| Asset-Backed Securities | — | 16,296,209 | — | 16,296,209 |
| Commercial Mortgage-Backed | | | | |
| Securities | — | 6,287,610 | — | 6,287,610 |
| Mortgage-Backed Securities | — | 6,440,432 | — | 6,440,432 |
| U.S. Treasuries | — | 85,131,599 | — | 85,131,599 |
| Cash Equivalents | 1,320,583 | 2,980,163 | — | 4,300,746 |
| Total Investments in Securities | 96,665,559 | 120,913,976 | — | 217,579,535 |
| | | | | |
| Core Plus Income |
| |
| | Level 1 | Level 2 | Level 3 | Total |
| Assets: | | | | |
| Investments in Securities: | | | | |
| Corporate Bonds | — | 143,022,546 | — | 143,022,546 |
| Corporate Convertible Bonds | — | 1,158,182 | — | 1,158,182 |
| Asset-Backed Securities | — | 267,162,159 | — | 267,162,159 |
| Commercial Mortgage-Backed | | | | |
| Securities | — | 59,212,033 | — | 59,212,033 |
| Mortgage-Backed Securities | — | 129,690,833 | — | 129,690,833 |
| Municipal Bonds | — | 952,161 | — | 952,161 |
| U.S. Treasuries | — | 386,057,319 | — | 386,057,319 |
| Non-Convertible Preferred Stocks | 796,470 | — | — | 796,470 |
| Cash Equivalents | 20,335,743 | — | — | 20,335,743 |
| Short-Term Securities Held as | | | | |
| Collateral for Securities on | | | | |
| Loan | 1,599,373 | — | — | 1,599,373 |
| Total Investments in Securities | 22,731,586 | 987,255,233 | — 1,009,986,819 |
| | | | | |
| Large Cap Value |
| |
| | Level 1 | Level 2 | Level 3 | Total |
| Assets: | | | | |
| Investments in Securities: | | | | |
| Common Stocks | 805,923,198 | — | — | 805,923,198 |
| Cash Equivalents | 17,794,354 | 11,893,859 | — | 29,688,213 |
| Total Investments in Securities | 823,717,552 | 11,893,859 | — | 835,611,411 |
| | | | | |
| Multi Cap Value |
| |
| | Level 1 | Level 2 | Level 3 | Total |
| Assets: | | | | |
| Investments in Securities: | | | | |
| Common Stocks | 496,628,680 | 7,827,300 | — | 504,455,980 |
| Warrants | — | — | —# | — |
| Cash Equivalents | 6,586,033 | 19,733,795 | — | 26,319,828 |
| Total Investments in Securities | 503,214,713 | 27,561,095 | — | 530,775,808 |
| | | | | |
| Nebraska Tax Free Income |
| |
| | Level 1 | Level 2 | Level 3 | Total |
| Assets: | | | | |
| Investments in Securities: | | | | |
| Municipal Bonds | — | 24,842,122 | — | 24,842,122 |
| Cash Equivalents | 1,188,745 | — | — | 1,188,745 |
| Total Investments in Securities | 1,188,745 | 24,842,122 | — | 26,030,867 |
2023 Semi-Annual Report 75
| | | | | |
| Partners III Opportunity |
| |
| | Level 1 | Level 2 | Level 3 | Total |
| Assets: | | | | |
| Investments in Securities: | | | | |
| Common Stocks | 380,963,370 | — | — | 380,963,370 |
| Non-Convertible Preferred Stocks | 5,730,000 | — | — | 5,730,000 |
| Warrants | — | — | —# | — |
| Cash Equivalents | 7,921,488 | 25,580,518 | — | 33,502,006 |
| Short-Term Securities Held as | | | | |
| Collateral for Securities on | | | | |
| Loan | 360,000 | — | — | 360,000 |
| Total Investments in Securities | 394,974,858 | 25,580,518 | — | 420,555,376 |
| Liabilities: | | | | |
| Securities Sold Short | (19,175,200) | — | — | (19,175,200) |
| | | | | |
| Short Duration Income |
| |
| | Level 1 | Level 2 | Level 3 | Total |
| Assets: | | | | |
| Investments in Securities: | | | | |
| Corporate Bonds | — | 90,356,694 | — | 90,356,694 |
| Corporate Convertible Bonds | — | 9,028,100 | — | 9,028,100 |
| Asset-Backed Securities | — | 310,460,528 | — | 310,460,528 |
| Commercial Mortgage-Backed | | | | |
| Securities | — | 70,517,005 | — | 70,517,005 |
| Mortgage-Backed Securities | — | 76,746,696 | — | 76,746,696 |
| U.S. Treasuries | — | 235,426,017 | — | 235,426,017 |
| Cash Equivalents | 11,310,364 | — | — | 11,310,364 |
| Short-Term Securities Held as | | | | |
| Collateral for Securities on | | | | |
| Loan | 1,082,516 | — | — | 1,082,516 |
| Total Investments in Securities | 12,392,880 | 792,535,040 | — | 804,927,920 |
| | | | | |
| Ultra Short Government |
| |
| | Level 1 | Level 2 | Level 3 | Total |
| Assets: | | | | |
| Investments in Securities: | | | | |
| Asset-Backed Securities | — | 1,675,856 | — | 1,675,856 |
| U.S. Treasuries | — | 126,426,530 | — | 126,426,530 |
| Cash Equivalents | 4,455,896 | — | — | 4,455,896 |
| Total Investments in Securities | 4,455,896 | 128,102,386 | — | 132,558,282 |
# Represents securities that were deemed to have a value of zero at September 30, 2023.
(13) Acquisition of Fund
Effective as of the close of business March 24, 2023, the Multi Cap Equity Fund acquired all of the assets and liabilities of the Hickory Fund (“Acquired Fund”), a series of the Trust, an open-end registered management investment company, pursuant to a Board-approved plan of reorganization dated January 11, 2023 (the “Plan)”.
The acquisition was accomplished by a tax-free exchange of 5,553,349 Investor Class shares of the Multi Cap Equity Fund, valued at $141,480,608 for 3,660,913 Investor Class shares of the Acquired Fund outstanding as of close of business March 24, 2023.
Pursuant to the Plan, all of the assets and liabilities of the Acquired Fund were transferred to the Multi Cap Equity Fund. At the close of business March 24, 2023, the Acquired Fund's investments in securities had a fair value of $141,652,732 and identified cost of $97,277,091. For financial reporting purposes, assets received and shares issued by the Multi Cap Equity Fund were recorded at fair value; however, the cost basis of the investments received from the Acquired Fund was carried forward to align ongoing reporting of the Multi Cap Equity
Fund's realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes.
(14) Recent Regulatory Announcements
Effective January 24, 2023 the SEC adopted rule and form amendments that require open-end management investment companies to transmit concise and visually engaging annual and semi-annual reports to shareholders that highlight key information. Other information, including financial statements, will no longer appear in a tailored shareholder report but must be available online, delivered free of charge upon request, and filed on a semi-annual basis on Form N-CSR. The rule and form amendments have a compliance date of July 24, 2024. Management is currently evaluating the effect of these amendments on the shareholder reports for the Funds.
(15) Subsequent Events
Management have evaluated the impact of all subsequent events on the Funds through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
76 2023 Semi-Annual Report
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2023 Semi-Annual Report 77
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, 2023 through September 30, 2023.
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 4/01/23 – 9/30/23” 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 4/01/23 | Value 9/30/23 | Expense Ratio | 4/01/23-9/30/23(1) |
| Conservative Allocation - Investor Class | Actual | $1,000.00 | $1,027.80 | 0.85% | $4.31 |
| | Hypothetical(2) | 1,000.00 | 1,020.75 | 0.85 | 4.29 |
| Conservative Allocation - Institutional Class | Actual | 1,000.00 | 1,028.70 | 0.70 | 3.55 |
| | Hypothetical(2) | 1,000.00 | 1,021.50 | 0.70 | 3.54 |
| Core Plus Income - Investor Class | Actual | 1,000.00 | 977.90 | 0.52 | 2.57 |
| | Hypothetical(2) | 1,000.00 | 1,022.40 | 0.52 | 2.63 |
| Core Plus Income - Institutional Class | Actual | 1,000.00 | 979.50 | 0.42 | 2.08 |
| | Hypothetical(2) | 1,000.00 | 1,022.90 | 0.42 | 2.12 |
| Large Cap Equity - Investor Class | Actual | 1,000.00 | 1,103.00 | 1.01 | 5.31 |
| | Hypothetical(2) | 1,000.00 | 1,019.95 | 1.01 | 5.10 |
| Large Cap Equity - Institutional Class | Actual | 1,000.00 | 1,103.70 | 0.87 | 4.58 |
| | Hypothetical(2) | 1,000.00 | 1,020.65 | 0.87 | 4.39 |
| Multi Cap Equity - Investor Class | Actual | 1,000.00 | 1,068.80 | 1.06 | 5.48 |
| | Hypothetical(2) | 1,000.00 | 1,019.70 | 1.06 | 5.35 |
| Multi Cap Equity - Institutional Class | Actual | 1,000.00 | 1,069.60 | 0.87 | 4.50 |
| | Hypothetical(2) | 1,000.00 | 1,020.65 | 0.87 | 4.39 |
| Nebraska Tax Free Income | Actual | 1,000.00 | 965.20 | 0.45 | 2.21 |
| | Hypothetical(2) | 1,000.00 | 1,022.75 | 0.45 | 2.28 |
| Partners III Opportunity - Investor Class | Actual | 1,000.00 | 1,071.10 | 1.86 | 9.63 |
| | Hypothetical(2) | 1,000.00 | 1,015.70 | 1.86 | 9.37 |
| Partners III Opportunity - Institutional Class | Actual | 1,000.00 | 1,074.20 | 1.19 | 6.17 |
| | Hypothetical(2) | 1,000.00 | 1,019.05 | 1.19 | 6.01 |
| Short Duration Income - Investor Class | Actual | 1,000.00 | 1,017.00 | 0.55 | 2.77 |
| | Hypothetical(2) | 1,000.00 | 1,022.25 | 0.55 | 2.78 |
| Short Duration Income - Institutional Class | Actual | 1,000.00 | 1,017.30 | 0.47 | 2.37 |
| | Hypothetical(2) | 1,000.00 | 1,022.65 | 0.47 | 2.38 |
| Ultra Short Government | Actual | 1,000.00 | 1,022.60 | 0.25 | 1.26 |
| | Hypothetical(2) | 1,000.00 | 1,023.75 | 0.25 | 1.26 |
| (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. |
78 2023 Semi-Annual Report
OTHER INFORMATION
Proxy Voting Policy
A description of the Funds’ proxy voting policies and procedures is available without charge, upon request by (i) calling 800-304-9745, (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 the Approval of the Continuation of the 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 25, 2023. 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 Large Cap Equity Fund (formerly Value Fund), Multi Cap Equity Fund (formerly Partners Value Fund) and Partners III Opportunity 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 its peer group on a long-term basis and over shorter time periods. The Board discussed with the representatives of management the fact that the Adviser 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 their view of the markets at any particular time, the Adviser may take a more conservative investment approach. It was also noted 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 the Adviser has generally been out of favor, which has negatively impacted the performance of the Equity Funds. The Trustees took into consideration 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 Trustees acknowledged that the Adviser 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 the Large Cap Equity Fund (after 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 the Multi Cap Equity Fund (after fee waivers) are above industry averages for operating expenses of other funds of similar size and investment objective, and (iii) the total expenses for the Institutional Class shares of the 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. In considering the investment advisory fees applicable to each Equity Fund, the Board discussed with the Adviser representatives their reasons for assessing the applicable fees in connection with each Equity
2023 Semi-Annual Report 79
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 Large Cap Equity Fund and the Multi Cap Equity Fund and Weitz Inc., and it was noted that Weitz Inc. was proposing to extend the terms 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 Conservative Allocation Fund. Management reviewed with the Board the fact that the Conservative Allocation Fund utilizes an investment style that combines equity investments and fixed income investments. The Board reviewed the investment advisory fee for the Conservative Allocation Fund, as well as performance information for the Conservative Allocation Fund. The Board discussed with the representatives of Weitz Inc. the currently effective investment advisory fee for the Conservative Allocation 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 Conservative Allocation 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 Conservative Allocation 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 Conservative Allocation Fund as compared to the expenses of its peer group, noting that the net expenses for the Institutional Class of shares of the Conservative Allocation 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) the Core Plus Income Fund had commenced operations on July 31, 2014 and (ii) the Ultra Short Government Fund 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 the 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 net expenses (after fee waivers) of the Core Plus Income Fund, Ultra Short Government Fund and Nebraska Tax Free Funds each are below industry averages for other funds of similar size and investment objective, while the 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: (i) to continue through July 31, 2024 the Expense Limitation Agreement that is currently in effect for the Nebraska Tax Free Income Fund which is set at a limit on the Nebraska Tax Free Income Fund’s total annual operating expenses of 0.45%; (ii) revise the Expense Limitation Agreement that is currently in effect for the Core Plus Income Fund from 0.40% to 0.45% for the Institutional Class and from 0.50% to 0.55% for the Investor Class through July 31, 2024, (iii) revise the limits on the Short Duration Income Fund’s total annual operating expenses from 0.48% to 0.45% for the Institutional Class and maintain at 0.55% for the Investor Class; and (iii) revise the limit on the Ultra Short Government Fund’s total annual operating expenses from 0.20% to 0.32% (in each case, of average daily net assets and excluding brokerage costs, interest, taxes and dividend expenses, acquired fund fees and expenses and extraordinary expenses).
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 the Adviser to foster the growth and development of the Funds since the inception of each Fund. They 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. They also took note of the fact that: (i) Weitz Inc. pays all the distribution expenses of the Funds from its own resources, including third-party intermediary expenses that are deemed to be distribution related, and the Funds do not pay for any such expenses, and (ii) the Adviser pays for all marketing efforts for the Funds from its own resources and the Funds do not pay for any such efforts 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 that are payable by the Funds to Weitz Inc. under the terms
80 2023 Semi-Annual Report
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 seven 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, 2023, 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. Conservative Allocation. 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, 2023. The Board also noted that the
2023 Semi-Annual Report 81
Institutional Class shares of the Fund had outperformed its peer group median for the one-, two-, three and four- year periods ended March 31, 2023.
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, 2023. 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, 2023.
3. Large Cap Equity. The Board noted that the Investor and Institutional Class shares of the Fund had underperformed its primary comparative index, the Russell 1000 Index, for the one-, five- and ten-year periods ended March 31, 2023. 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, 2023. 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. In addition, the Trustees took into consideration the Adviser’s assessment of its investment process and the steps being taken to improve performance.
4. Multi Cap Equity. The Board noted that the Investor and Institutional Class shares of the Fund had underperformed its primary comparative index, the Russell 3000 Index, for the one-, five- and ten-year periods ended March 31, 2023. 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, 2023. 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. In addition, the Trustees took into consideration the Adviser’s assessment of its investment process and its focus and commitment on improving performance.
5. 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-, five-, and ten-year periods ended March 31, 2023. The Board also noted that the Fund had outperformed its peer group median for the one-, two-, three- and four-year periods ended March 31, 2023, and had underperformed its peer group median for the five- and ten-year periods ended March 31, 2023. 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 III Opportunity. The Board noted that the Investor and Institutional Class shares of the Fund had underperformed its primary comparative index, the Russell 3000 Index, for the one-, five- and ten-year periods ended March 31, 2023. 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 ten-year periods ended March 31, 2023, and had outperformed its peer group median for the five-year period ended March 31, 2023. 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.
7. Short Duration Income. The Board noted that Investor and Institutional Class shares of the Fund had outperformed its primary comparative index, the Bloomberg Barclays U.S. Aggregate 1-3 Year Index, for the one-, five- and ten-year periods ended March 31, 2023. The Board noted that Institutional Class shares of the Fund had outperformed its peer group median for the one-, two-, four-, five- and ten-year periods ended March 31, 2023, and had underperformed its peer group median for the three-year period ended March 31, 2023.
8. Ultra Short Government. The Board noted that the Fund had underperformed its primary comparative index, the ICE Bank of America Merrill Lynch U.S. 6-Month Treasury Bill Index, for the one-, five- and ten-year periods ended March 31, 2023. The Board also noted that the Fund had outperformed its peer group median for the two-year period ended March 31, 2023, had matched its peer group median for the four-year period ended March 31, 2023, and had underperformed its peer group median for the one-, three-, five- and ten-year periods ended March 31, 2023. In connection with the Board’s review of the performance results presented for Ultra Short, the Trustees took into consideration the fact that, prior to December 16, 2016, Ultra Short 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.
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. Conservative Allocation. 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. Large Cap Equity. 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.
4. Multi Cap Equity. 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.
5. 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
82 2023 Semi-Annual Report
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.
6. 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 1.13%, which is lower 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 above 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 0.18%, which is lower than 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 Conservative Allocation Fund 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, and the appropriateness of the investment advisory fees payable to the Adviser with respect to the Income Funds and the Conservative Allocation 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 Weitz Inc. 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 are in 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 seven 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.
2023 Semi-Annual Report 83
INDEX DESCRIPTIONS
Index performance is hypothetical and is shown for illustrative purposes only. You cannot invest directly in an index.
| | |
| Bloomberg 1-3 Year U.S. | The Bloomberg 1-3 Year U.S. Aggregate Index is generally representative of the |
| Aggregate Index | market for investment grade, U.S. dollar denominated, fixed-rate taxable bonds |
| | with maturities from one to three years. |
| |
| Bloomberg 5-Year Municipal | The Bloomberg 5-Year Municipal Bond Index is a capitalization weighted bond |
| Bond Index | index generally representative of major municipal bonds of all quality ratings with |
| | an average maturity of approximately five years. |
| |
| Bloomberg U.S. Aggregate | The Bloomberg U.S. Aggregate Bond Index is a broad-based benchmark that |
| Bond Index | measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond |
| | market. |
| |
| ICE BofA U.S. 6-Month | The ICE BofA U.S. 6-Month Treasury Bill Index is generally representative of the |
| Treasury Bill Index | market for U.S. Treasury Bills. |
| |
| Morningstar Moderately | The Morningstar Moderately Conservative Target Risk Index is an asset allocation |
| Conservative Target | index comprised of constituent Morningstar indices and reflects global equity |
| Risk Index | 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. |
| |
| Russell 3000® 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. |
| |
| 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. |
84 2023 Semi-Annual Report
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 | CRE CLOs are a type of asset-backed security backed by a pool of commercial |
| Collateralized Loan | loans. |
| Obligations | |
| |
| 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). |
| |
| Effective Net | 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. |
2023 Semi-Annual Report 85
| | |
| 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. |
| |
| Yield to 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. |
86 2023 Semi-Annual Report
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2023 Semi-Annual Report 87
Board of Trustees
Lorraine Chang
Steven M. Hill
Alison M. Maloy
Elizabeth L. Sylvester
Dana E. Washington
Andrew (Drew) S. Weitz
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:
Conservative Allocation Fund
Investor Class - WBALX
Institutional Class - WBAIX
Core Plus Income Fund
Investor Class - WCPNX
Institutional Class - WCPBX
Large Cap Equity Fund
Investor Class - WVALX
Institutional Class - WVAIX
Multi Cap Equity Fund
Investor Class - WPVLX
Institutional Class - WPVIX
Nebraska Tax Free Income Fund - WNTFX
Partners III Opportunity Fund
Investor Class - WPOIX
Institutional Class - WPOPX
Short Duration Income Fund
Investor Class - WSHNX
Institutional Class - WEFIX
Ultra Short Government Fund - SAFEX
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.
11/29/2023
SAR 09.30.23
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 11/29/2023
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 11/29/2023
By (Signature and Title) /s/ James J. Boyne
James J. Boyne, Principle Financial Officer
Date 11/29/2023
