As filed with the U.S. Securities and Exchange Commission on March 3, 2021
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 811-08352
LKCM Funds
(Exact name of registrant as specified in charter)
c/o Luther King Capital Management Corporation
301 Commerce Street, Suite 1600
Fort Worth, TX 76102
(Address of principal executive offices) (Zip code)
K&L Gates LLP
1601 K Street, NW
Washington, DC 20006
(Name and address of agent for service)
1-800-688-LKCM and 1-800-423-6369
Registrant’s telephone number, including area code
Date of fiscal year end: December 31
Date of reporting period: December 31, 2020
Item 1. Reports to Stockholders.
(a) Include a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Act (17 CFR 270.30e-1).
LKCM
FUNDS
LKCM Small Cap Equity Fund
LKCM Small-Mid Cap Equity Fund
LKCM Equity Fund
LKCM Balanced Fund
LKCM Fixed Income Fund
LKCM International Equity Fund
Annual Report
December 31, 2020
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the LKCM Funds’ shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the LKCM Funds (if you hold your Fund shares directly with the LKCM Funds) or from your financial intermediary, such as a broker-dealer or bank (if you hold your Fund shares through a financial intermediary). Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. If you hold your Fund shares directly with the LKCM Funds, you may elect to receive shareholder reports and other communications electronically from the LKCM Funds by calling 1-800-688-LKCM or, if you hold your Fund shares through a financial intermediary, by contacting your financial intermediary.
You may elect to receive all future reports on paper free of charge. If you hold your Fund shares directly with the LKCM Funds, you can inform the LKCM Funds that you wish to continue receiving paper copies of your shareholder reports by calling 1-800-688-LKCM or, if you hold your Fund shares through a financial intermediary, contacting your financial intermediary. Your election to receive reports in paper will apply to all of the LKCM Funds you hold directly with LKCM Funds or all of the funds you hold through your financial intermediary, as applicable.
Dear Fellow Shareholders:
We report the following performance information for the LKCM Funds for indicated periods ended December 31, 2020:
Funds | Inception Date | NAV @ 12/31/2020 | Net Expense Ratio*, ** | Gross Expense Ratio** | One Year Total Return Ended 12/31/2020 | Five Year Average Annualized Return Ended 12/31/2020 | Ten Year Average Annualized Return Ended 12/31/2020 | Avg. Annual Total Return Since Incept. | ||||||||||||||||||||||||||||||||
LKCM Small Cap Equity Fund | 07/14/1994 | $ | 21.77 | 1.01% | 1.08% | 34.79% | 14.81% | 10.95% | 11.08% | |||||||||||||||||||||||||||||||
Russell 2000® Index(1) | 19.96% | 13.26% | 11.20% | 9.67% | ||||||||||||||||||||||||||||||||||||
LKCM Small-Mid Cap Equity Fund | 05/02/2011 | $ | 11.15 | 1.01% | 1.96% | 30.66% | 14.40% | N/A | 9.45% | |||||||||||||||||||||||||||||||
Russell 2500® Index(2) | 19.99% | 13.64% | N/A | 11.10% | ||||||||||||||||||||||||||||||||||||
LKCM Equity Fund | 01/03/1996 | $ | 33.74 | 0.80% | 0.99% | 22.83% | 15.95% | 12.89% | 9.45% | |||||||||||||||||||||||||||||||
S&P 500® Index(3) | 18.40% | 15.22% | 13.88% | 9.52% | ||||||||||||||||||||||||||||||||||||
LKCM Balanced Fund | 12/30/1997 | $ | 26.76 | 0.80% | 1.00% | 15.28% | 11.22% | 10.01% | 7.23% | |||||||||||||||||||||||||||||||
S&P 500® Index(3) | 18.40% | 15.22% | 13.88% | 8.08% | ||||||||||||||||||||||||||||||||||||
Bloomberg Barclays U.S. Intermediate | ||||||||||||||||||||||||||||||||||||||||
Government/Credit Bond Index(4) | 6.43% | 3.64% | 3.11% | 4.56% | ||||||||||||||||||||||||||||||||||||
LKCM Fixed Income Fund | 12/30/1997 | $ | 11.19 | 0.50% | 0.79% | 4.29% | 3.42% | 2.82% | 4.26% | |||||||||||||||||||||||||||||||
Bloomberg Barclays U.S. Intermediate | ||||||||||||||||||||||||||||||||||||||||
Government/Credit Bond Index(4) | 6.43% | 3.64% | 3.11% | 4.56% | ||||||||||||||||||||||||||||||||||||
LKCM International Equity Fund | 05/01/2019 | $ | 12.44 | 1.02% | 4.11% | 14.45% | N/A | N/A | 14.15% | |||||||||||||||||||||||||||||||
MSCI/EAFE® Index(5) | 8.28% | N/A | N/A | 9.82% |
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Current performance of the Funds may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-800-688-LKCM. The Funds impose a 1.00% redemption fee on shares held less than 30 days. If reflected, the fee would reduce performance shown.
* | Luther King Capital Management Corporation, the Funds’ investment adviser, has contractually agreed to waive all or a portion of its management fee and/or reimburse expenses of each Fund to maintain the expense ratios designated in the Funds’ prospectus through May 1, 2021. This expense limitation excludes interest, taxes, brokerage commissions, indirect fees and expenses related to investments in other investment companies, including money market funds, and extraordinary expenses. Investment performance, which is based on the net expense ratio, reflects fee waivers, if any, in effect during the relevant period. In the absence of such waivers, total return would be reduced. Investment performance is based upon the net expense ratio. LKCM waived management fees and/or reimbursed expenses for each Fund during the fiscal year ended December 31, 2020. |
** | Expense ratios above are as reported in the Funds’ current prospectus dated May 1, 2020. Expense ratios reported for other periods in the financial highlights of this report may differ. |
(1) | The Russell 2000® Index is an unmanaged index which measures the performance of the 2,000 smallest companies in the Russell 3000® Index. |
(2) | The Russell 2500® Index is an unmanaged index which measures the performance of the 2,500 smallest companies in the Russell 3000® Index. |
(3) | The S&P 500® Index is an unmanaged capitalization-weighted index of 500 selected stocks that is generally considered representative of the performance of large capitalization companies in the U.S. stock market. |
(4) | The Bloomberg Barclays U.S. Intermediate Government/Credit Bond Index is an unmanaged market value weighted index measuring both the principal price changes of, and income provided by, the underlying universe of securities that comprise the index. Securities included in the index must meet the following criteria: fixed as opposed to variable rate; remaining maturity of one to ten years; minimum outstanding par value of $250 million; rated investment grade or higher by Moody’s Investors Service or equivalent; must be dollar denominated and non-convertible; and must be publicly issued. |
(5) | The Morgan Stanley Capital International Europe, Australia, Far East Index (“MSCI/EAFE® Index”) is an unmanaged index composed of large-cap and mid-cap securities across 21 European and Pacific Basin countries. The MSCI/EAFE® Index is a recognized international index and is weighted by market capitalization. |
Note: The indices defined above are not available for direct investment and the index performance therefore does not include fees, expenses or taxes.
2020 Review
Twelve months ago, we were still in the longest economic expansion in U.S. history, with unemployment sitting near historic lows, wages and income continuing to strengthen, and inflation remaining stable. Then, the novel coronavirus pandemic (“COVID-19” or “COVID”) gained a foothold in the United States. The human impact has been harrowing, with the United States on pace to lose more citizens to the pandemic than the 405,000 American souls lost in World War II. The public health response to the pandemic, imploring social distancing and mandating partial or complete lockdowns, worked initially to drive down infections and “flatten the curve.” However, these steps precipitated a severe economic crisis analogous to a natural disaster, as supply, demand, and financial shocks struck in unison. Individuals have lost livelihoods and businesses, and we believe the burden has fallen most harshly on those least able to bear the losses.
Unlike the beginnings of many recessions when it is initially unclear whether or not the economy has entered a downturn, the emergence of the pandemic and the subsequent response of public health policy made the immediacy of the economic downturn painfully clear. Policymakers rightly heeded this warning and acted swiftly with record amounts of fiscal and monetary stimulus. On the monetary side,
2
the Federal Reserve Board moved in March 2020 to reduce its key policy interest rate by 1.50% to near zero percent. The Federal Reserve also resumed asset purchases and launched a series of emergency lending facilities, both designed to reassure financial markets and support commerce. These actions by the Federal Reserve contributed to lower borrowing costs for households, businesses, and state and local governments. Moreover, these measures boosted interest rate-sensitive sectors of the economy such as housing and autos, which have rebounded sharply over the past six months.
Just as vital, Congress injected fiscal stimulus into the economy by sending over one-half of U.S. taxpayers a significant stimulus check. In addition, unemployment insurance payments were augmented by $600 per week for a defined period. This relief enabled many households to remain current on their debt service, reducing the potential strain on the banking system. Congress also targeted small businesses, which represent the bulk of U.S. payrolls. The Paycheck Protection Program (“PPP”) allowed small businesses to apply for low-interest loans administered by the Small Business Administration, many of which are expected to be eligible for forgiveness. The PPP was designed as an effort to enable small businesses to retain as much of their payroll as possible on the presumption that the economic contraction, while sharp, would be relatively short lived. Thus, the premise underlying these loans was that if employers and employees could weather the pandemic storm in place, the economy would seemingly be easier to reboot thereafter.
The equity market, as measured by the S&P 500® Index, rose 18.4% in 2020, while corporate earnings declined by nearly the same amount under the strain of the economic recession. We believe that historically low interest rates and the prospects of a sharp economic recovery in 2021 underpinned the significant increase in the multiple of earnings investors were willing to pay for equity securities. Despite the headline strength of various market indices in 2020, the market appreciation has been extremely narrow in our view. Three stocks—Apple, Amazon, and Microsoft – accounted for approximately 47.6% return of the S&P 500® Index in 2020 due to the capitalization weighted nature of the index and significant price appreciation of these three companies.
As we turn the calendar, we believe a clear economic recovery has taken hold, analysts have begun to revise corporate earnings estimates higher, and consumer and business confidence levels appear to be increasing. We believe that the massive fiscal and monetary policy stimulus have helped blunt the recessionary damage to the economy. Human ingenuity in terms of behavioral adaption as well as vaccine and therapeutic developments have been remarkable and impressive in our view. We believe the monetary and fiscal policy prescription to combat the 2020 recession has created a backdrop that encourages higher stock and bond valuations, providing support to consumer net worth. Exogenous shocks can still disrupt the nascent economic recovery, but as we look ahead into 2021, we are optimistic.
2021 Outlook
As we enter 2021, the economic backdrop remains constructive for equities in our view. We believe that corporate earnings should rise slightly less than 20%, employment should continue to improve as the economy reopens, and the Federal Reserve is likely to maintain an easy monetary stance. In our view, consumers continue to save a remarkably high portion of their disposable income, which represents considerable pent-up purchasing power. Housing has been very strong, driven by record low mortgage rates and low home inventory and the “Working From Home” adaption, and we believe this strength should continue in 2021.
We expect this positive backdrop for corporate earnings and consumer spending to drive above-trend U.S. Gross Domestic Product (“GDP”) growth in 2021. We believe the equity market should perform well in this environment, although we would not be surprised if equity market returns are lower than the forecasted growth in corporate profits, as the multiple of earnings investors are willing to pay is likely to decline as investors begin to anticipate higher inflation and interest rates in response to robust economic expansion.
We believe four primary tailwinds should support the sharp rebound in corporate earnings in 2021. First, many companies have been able to retain pricing power. Second, housing data remain robust, which has a multiplier effect on demand for consumer durable goods, such as appliances and furniture. Third, the consumer appears well positioned with excess savings, rising real incomes, and higher household net worth. Finally, record low interest rates have prompted companies to raise debt capital to fortify balance sheets and ensure liquidity, which could signal the resumption of broader share repurchases by companies in 2021.
We believe one of the notable and unusual developments of the COVID economic downturn has been an extraordinary rise in the personal savings rate. The CARES Act approved by Congress authorized significant payments to consumers. Between March 2020 and August 2020, at least $712 billion flowed into personal income as a result of COVID-related stimulus measures including direct payments, supplemental unemployment insurance, and PPP loans to small businesses. Historically, consumers draw down their savings in an economic downturn. However, the portion of disposable personal income that consumers saved, known as the savings rate, soared from approximately 8.3% in February of 2020 to approximately 33.6% in April 2020 before settling most recently to approximately 12.9% at of the end of November 2020. We believe restricted spending on services such as dining out, getting a haircut, or having elective surgery supported this savings rate. We believe these savings equate to an incremental $1.2 trillion in people’s pockets at a time when the economic outlook appears to be brightening, and vaccines begin to roll out.
The extraordinary events of 2020 likely position 2021 to be a year of transition in our view, with spending shifting back to services from goods, to private from public, and to in-person from virtual. We believe the impact of COVID cases, the effectiveness of vaccines, and the eventual fading of fiscal stimulus will influence the trajectory of the economic recovery moving forward. In our view, it is important to recognize that the stimulus provided by lower interest rates inevitably wears off and the purpose of reducing interest rates is to pull consumption forward. Consumer purchases of homes, appliances, and autos bring future economic activity into the present. But when the
3
future inevitably arrives, that economic activity is often missing. We believe that the economic bite of the pandemic would have been far worse in the absence of significant monetary and fiscal stimulus. However, we must appreciate the degree to which the current economic uplift is being driven by record stimulus.
Considering the combination of the recently approved $900 billion fiscal stimulus package, the prospect of households unleashing substantial pent-up demand in 2021, and the higher likelihood of even more stimulus due to the change in control of the U.S. Senate, we believe the setup for inflation to increase is more favorable than it has been for many years. Historically, elevated inflation readings have often spurred a tightening of monetary policy. However, the Federal Reserve has stated that it is willing to allow prices to run a little “hotter” than in past cycles. We believe that at some point in 2021 reports will likely indicate the rate of inflation is rising above the Federal Reserve’s 2% target. In a recent press conference Federal Reserve Chairman Jerome Powell took care to communicate that if inflation does rise as the economy reopens, this move will likely prove temporary. However, investors have historically been conditioned to anticipate a tightening of monetary policy in response to rising inflation. We believe that rising bond yields, which we expect to be a feature of 2021, reflect increased expectations for higher inflation.
We do not anticipate an inflationary overheating of the U.S. economy, because the output gap – the difference between where the U.S. economy is and where it should be—was likely around 5% of GDP in the fourth quarter of 2020, likely signaling significant excess capacity in the economy. We believe the most constructive outcome that could emerge is a kind of “Goldilocks scenario” in which prices rise, but not at an alarming pace. One possible risk to this outcome would be that the U.S. economy recovers much faster than policymakers and investors anticipate.
A key risk to our outlook for 2021 is a sharp rise in bond yields, which has the potential to send ripples through the capital markets and economy in at least one of three important ways. First, a dramatic move in this cost of capital tends to reveal weaker portions of the capital market that are reliant on cheap liquidity. Second, higher yields typically pressure interest rate sensitive sectors in the economy such as housing and autos. Finally, higher yields can weigh on the valuation of assets, including equities, particularly if those valuations are elevated. The ability of higher interest rates to exert downward pressure on earnings multiples is particularly of interest today in our view. Following two years in which the equity market rose in excess of corporate earnings growth, we would not be surprised to see a reversal of this trend in 2021, as corporate earnings growth exceeds the returns provided by the equity market.
LKCM Small Cap Equity Fund
The LKCM Small Cap Equity Fund returned 34.79% for the year ended December 31, 2020, as compared to the 19.96% return for the Russell 2000® Index, the Fund’s benchmark. The Fund’s relative performance benefited from sector allocation decisions, particularly being overweight the Healthcare sector and being underweight the Utilities and Real Estate sectors. Stock selection decisions in the Information Technology, Financials, Consumer Discretionary, Industrials and Consumer Staples sectors benefited the Fund’s relative performance, which was partially offset by stock selection decisions in the Materials sector. The Fund also benefited during the year from one portfolio company being acquired and six portfolio companies graduating out of our small cap investment strategy due to market appreciation. The Fund benefited from our investment strategy that focuses on companies that we believe are high quality as well as our tilt towards growth-oriented companies. We have continued to add to the Fund’s holdings of value-oriented companies in anticipation of the U.S. economy reopening during 2021. We believe our investment strategy has the Fund well-positioned for 2021.
LKCM Small-Mid Cap Equity Fund
The LKCM Small-Mid Cap Equity Fund outperformed the Russell 2500® Index, the Fund’s benchmark, for the year ended December 31, 2020, returning 30.66% as compared to the 19.99% return for the benchmark. The Fund’s relative performance benefited from sector allocation decisions, particularly being overweight the Healthcare and Information Technology sectors and being underweight the Financials and Real Estate sectors. Stock selection decisions in the Industrials, Healthcare, Consumer Staples and Real Estate sectors benefited the Fund’s relative performance, which was partially offset by stock selection decisions in the Information Technology sector. The Fund benefited from our investment strategy that focuses on companies that we believe are high quality as well as our tilt towards growth-oriented companies. We have continued to add to the Fund’s holdings of value-oriented companies in anticipation of the U.S. economy reopening during 2021. We believe our investment strategy has the Fund well-positioned for 2021.
LKCM Equity Fund
The LKCM Equity Fund returned 22.83% for the year ended December 31, 2020, as compared to the 18.40% return for the S&P 500® Index, the Fund’s benchmark. The Fund’s relative performance benefited from stock selection decisions, particularly in the Industrials, Healthcare and Information Technology sectors, which was partially offset by stock selection decisions in the Financials sector. The Fund’s underweight position in the Information Technology sector detracted from the Fund’s relative performance, which was partially offset by the Fund’s underweight position in the Financials sector. The Fund also benefited from an announcement in December 2020 that one its portfolio companies would be acquired for a significant premium. We remain confident in our investment strategy for the Fund that focuses on investments in companies that we believe are high quality, and we believe the Fund is well-positioned for 2021.
4
LKCM Balanced Fund
The LKCM Balanced Fund gained 15.28% for the year ended December 31, 2020 versus the 18.40% return for the S&P 500® Index and the 6.43% return for the Bloomberg Barclays U.S. Intermediate Government/Credit Bond Index. The Fund’s equity portfolio posted solid returns during 2020 and benefited from strong stock selection in the Healthcare and Communication Services sectors relative to the benchmark, which was partially offset by stock selection in the economically sensitive Industrials sector. The Fund’s equity portfolio also benefited from an announcement in December 2020 that one its portfolio companies would be acquired for a significant premium. The Fund’s fixed income portfolio remained focused on high quality intermediate corporate bonds, which seeks to serve the dual purpose of generating income and moderating overall risk in the Fund’s portfolio. We believe that Fund is well-positioned to meet both the challenges and the opportunities anticipated during 2021.
LKCM Fixed Income Fund
The LKCM Fixed Income Fund advanced 4.29% for the year ended December 31, 2020 compared to its benchmark, the Bloomberg Barclays U.S. Intermediate Government/Credit Bond Index, which advanced 6.43% for the year ended December 31, 2020. During the year, yields declined substantially and the yield curve steepened as the Federal Reserve cut the Federal Funds Rate dramatically during March 2020, sharply increased its balance sheet, and backstopped the financial markets in response to the U.S. government-mandated shutdown to combat the COVID pandemic. In this environment, where longer-duration securities markedly outperformed their shorter-duration counterparts, the Fund’s duration of approximately 3.3 years detracted from performance relative to the duration of approximately 4.1 years for the benchmark. After widening sharply during the peak of the pandemic-related uncertainty in March 2020, credit spreads ended 2020 essentially where they began the year, tightening substantially after the aggressive monetary and fiscal policy intervention by the Federal Reserve and Congress. During the year, the Fund’s weighting in the Energy sector detracted from relative performance, which was partially offset by the Fund’s weightings in the Communications Services and Information Technology sectors. The Fund remains largely focused on short-to-intermediate investment grade corporate bonds with strong underlying credit fundamentals in an effort to mitigate both interest rate risk and credit risk as we anticipate the U.S. economy will continue to recover and inflation expectations will rise.
LKCM International Equity Fund
The LKCM International Equity Fund returned 14.45% for the year ended December 31, 2020, as compared to the 8.28% return for the MSCI/EAFE® Index, the Fund’s benchmark. During this period, the Fund’s relative performance benefited from an underweight position in the Financials sector and an overweight position in the Information Technology sector, which was partially offset by allocation decisions in other sectors. The Fund’s relative performance also benefited from strong stock selection decisions in the Healthcare, Industrials, Communication Services, Information Technology and Consumer Staples sectors. The Fund benefited from our bias towards companies that we believe are high quality with prospects for secular growth, as we believe these companies will continue to perform better than the broader market through market cycles. The expansionary stimulus from monetary and fiscal policy during 2020 benefited growth over cyclical exposure, though we believe there will be a better operating environment for cyclical companies during 2021. We have reduced the Fund’s underweight position in the Financials sector and increased the Fund’s overweight position in the Energy sector in an effort to increase the Fund’s exposure to value-oriented companies and cyclical companies. Although the global economic outlook remains uncertain, we believe that the extraordinary monetary and fiscal stimulus, strength in the consumer, and inventory cycles should support a positive bias as we hope to move past the COVID pandemic later in 2021.
J. Luther King, Jr., CFA, CIC
February 1, 2021
5
The information provided herein represents the opinion of J. Luther King, Jr., CFA, CIC and is not intended to be a forecast of future events, a guarantee of future results, nor investment advice.
Please refer to the Schedule of Investments found on pages 15-29 of the report for more information on Fund holdings. Fund holdings and sector allocations are subject to change and are not recommendations to buy or sell any securities.
Mutual fund investing involves risk. Principal loss is possible. Past performance is not a guarantee of future results. Investments in equity securities are subject to market risks and significant fluctuations in value. Small and medium capitalization funds typically carry additional risks, since smaller companies generally have a higher risk of failure, and, historically, their stocks have experienced a greater degree of market volatility than stocks on average. Investments in debt securities typically decrease in value when interest rates rise. This risk is greater for longer-term debt securities. Investments in mortgage backed securities include additional risks that investors should be aware of such as credit risk, prepayment risk, possible illiquidity and default, as well as increased susceptibility to adverse economic developments. These risks are discussed in the Funds’ summary and statutory prospectuses.
Earnings growth is not a measure of future performance.
Duration is a measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates. Securities with a longer duration generally have more volatile prices than securities of comparable quality with a shorter duration.
Spread is the percentage point difference between yields of various classes of bonds compared to treasury bonds.
Yield curve is a line that plots yields (interest rates) of bonds having equal credit quality but differing maturity dates. The slope of the yield curve gives an idea of future interest rate changes and economic activity.
Bond ratings are grades given to bonds that indicate their credit quality as determined by a private independent rating service such as S&P Global. The firm evaluates a bond issuer’s financial strength, or its ability to pay a bond’s principal and interest in a timely fashion. Ratings are expressed as letters ranging from ‘AAA’, which is the highest grade, to ‘D’, which is the lowest grade. In limited situations when the rating agency has not issued a formal rating, the rating agency will classify the security as nonrated.
Cash flow is the net amount of cash and cash-equivalents being transferred into and out of a business.
Investors should consider the investment objective, risks and charges and expenses of a Fund carefully before investing. Each Fund’s summary prospectus and the prospectus contain this and other information about the Fund. Investors can obtain a summary prospectus or the prospectus by calling 1-800-688-LKCM. The summary prospectus and the prospectus should be read carefully before investing in a Fund.
Quasar Distributors, LLC, distributor.
6
PERFORMANCE:
The following information illustrates the historical performance of the LKCM Small Cap Equity Fund as of December 31, 2020 compared to the Fund’s representative benchmark and peer group indices.
Performance data quoted represents past performance; past performance does not guarantee future results. The graph and table reflect the reinvestment of dividends and other distributions, if any, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-800-688-LKCM. Returns would have been lower if LKCM had not waived a portion of its management fee and/or reimbursed certain expenses of the Fund. Please see Note B to the Notes to the Financial Statements for specific information regarding management fee waiver and/or expense reimbursement arrangements for the Fund.
An index is an unmanaged portfolio and does not trade or incur any expenses. The Lipper Small-Cap Core Funds Index, however, does reflect the fees and expenses borne by the funds included in that index. One can not invest in an unmanaged index.
AVERAGE ANNUAL TOTAL RETURN (Periods Ended December 31, 2020)
Past 1 Year | Past 5 Years(1) | Past 10 Years(1) | Since Inception(1)(2) | |||||||||||||||||
LKCM Small Cap Equity Fund | 34.79% | 14.81% | 10.95% | 11.08% | ||||||||||||||||
Russell 2000® Index | 19.96% | 13.26% | 11.20% | 9.67% | ||||||||||||||||
Lipper Small-Cap Core Funds Index | 10.69% | 11.37% | 10.00% | 9.96% |
(1) | Annualized |
(2) | July 14, 1994 |
A HYPOTHETICAL $10,000 INVESTMENT IN LKCM SMALL CAP EQUITY FUND
(for the ten years ended December 31, 2020)
The Russell 2000® Index is an unmanaged index consisting of the 2,000 smallest companies in the Russell 3000® Index.
The Lipper Small-Cap Core Funds Index is an unmanaged index generally considered representative of small cap core mutual funds tracked by Lipper, Inc.
7
PERFORMANCE:
The following information illustrates the historical performance of the LKCM Small-Mid Cap Equity Fund as of December 31, 2020 compared to the Fund’s representative benchmark and peer group indices.
Performance data quoted represents past performance; past performance does not guarantee future results. The graph and table reflect the reinvestment of dividends and other distributions, if any, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-800-688-LKCM. Returns would have been lower if LKCM had not waived a portion of its management fee and/or reimbursed certain expenses of the Fund. Please see Note B to the Notes to the Financial Statements for specific information regarding management fee waiver and/or expense reimbursement arrangements for the Fund.
An index is an unmanaged portfolio and does not trade or incur any expenses. The Lipper Small-Cap Core Funds Index, however, does reflect the fees and expenses borne by the funds included in that index. One can not invest in an unmanaged index.
AVERAGE ANNUAL TOTAL RETURN (Periods Ended December 31, 2020)
Past 1 Year | Past 5 Years(1) | Since Inception(1)(2) | ||||||||||||||||||
LKCM Small-Mid Cap Equity Fund | 30.66% | 14.40% | 9.45% | |||||||||||||||||
Russell 2500® Index | 19.99% | 13.64% | 11.10% | |||||||||||||||||
Lipper Small-Cap Core Funds Index | 10.69% | 11.37% | 9.24% |
(1) | Annualized |
(2) | May 2, 2011 |
A HYPOTHETICAL $10,000 INVESTMENT IN LKCM SMALL-MID CAP EQUITY FUND
(for the period from May 2, 2011 (inception date) to December 31, 2020)
The Russell 2500® Index is an unmanaged index consisting of the 2,500 smallest companies in the Russell 3000® Index.
The Lipper Small-Cap Core Funds Index is an unmanaged index generally considered representative of small cap core mutual funds tracked by Lipper, Inc.
8
PERFORMANCE:
The following information illustrates the historical performance of the LKCM Equity Fund as of December 31, 2020 compared to the Fund’s representative benchmark and peer group indices.
Performance data quoted represents past performance; past performance does not guarantee future results. The graph and table reflect the reinvestment of dividends and other distributions, if any, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-800-688-LKCM. Returns would have been lower if LKCM had not waived a portion of its management fee and/or reimbursed certain expenses of the Fund. Please see Note B to the Notes to the Financial Statements for specific information regarding management fee waiver and/or expense reimbursement arrangements for the Fund.
An index is an unmanaged portfolio and does not trade or incur any expenses. The Lipper Large-Cap Core Funds Index, however, does reflect the fees and expenses borne by the funds included in that index. One can not invest in an unmanaged index.
AVERAGE ANNUAL TOTAL RETURN (Periods Ended December 31, 2020)
Past 1 Year | Past 5 Years(1) | Past 10 Years(1) | Since Inception(1)(2) | |||||||||||||||||
LKCM Equity Fund | 22.83% | 15.95% | 12.89% | 9.45% | ||||||||||||||||
S&P 500® Index | 18.40% | 15.22% | 13.88% | 9.52% | ||||||||||||||||
Lipper Large-Cap Core Funds Index | 16.10% | 14.04% | 12.49% | 8.43% |
(1) | Annualized |
(2) | January 3, 1996 |
A HYPOTHETICAL $10,000 INVESTMENT IN LKCM EQUITY FUND
(for the ten years ended December 31, 2020)
The S&P 500® Index is an unmanaged capitalization-weighted index of 500 selected stocks that is generally considered representative of the performance of large capitalization companies in the U.S. stock market.
The Lipper Large-Cap Core Funds Index is an unmanaged index generally considered representative of large cap core mutual funds tracked by Lipper, Inc.
9
PERFORMANCE:
The following information illustrates the historical performance of the LKCM Balanced Fund as of December 31, 2020 compared to the Fund’s representative benchmark and peer group indices.
Performance data quoted represents past performance; past performance does not guarantee future results. The graph and table reflect the reinvestment of dividends and other distributions, if any, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-800-688-LKCM. Returns would have been lower if LKCM had not waived a portion of its management fee and/or reimbursed certain expenses of the Fund. Please see Note B to the Notes to the Financial Statements for specific information regarding management fee waiver and/or expense reimbursement arrangements for the Fund.
An index is an unmanaged portfolio and does not trade or incur any expenses. The Lipper Mixed-Asset Target Allocation Growth Funds Index, however, does reflect the fees and expenses borne by the funds included in that index. One can not invest in an unmanaged index.
AVERAGE ANNUAL TOTAL RETURN (Periods Ended December 31, 2020)
Past 1 Year | Past 5 Years(1) | Past 10 Years(1) | Since Inception(1)(2) | |||||||||||||||||
LKCM Balanced Fund | 15.28% | 11.22% | 10.01% | 7.23% | ||||||||||||||||
S&P 500® Index | 18.40% | 15.22% | 13.88% | 8.08% | ||||||||||||||||
Bloomberg Barclays U.S. Intermediate Government/Credit Bond Index | 6.43% | 3.64% | 3.11% | 4.56% | ||||||||||||||||
Lipper Mixed-Asset Target Allocation Growth Funds Index | 16.58% | 10.71% | 9.19% | 6.88% |
(1) | Annualized |
(2) | December 30, 1997 |
A HYPOTHETICAL $10,000 INVESTMENT IN LKCM BALANCED FUND
(for the ten years ended December 31, 2020)
The S&P 500® Index is an unmanaged capitalization-weighted index of 500 selected stocks that is generally considered representative of the performance of large capitalization companies in the U.S. stock market.
The Bloomberg Barclays U.S. Intermediate Government/Credit Bond Index is an unmanaged market value weighted index measuring both the principal price changes of, and income provided by, the underlying universe of securities that comprise the index. Securities included in the index must meet the following criteria; fixed as opposed to variable rate; remaining maturity of one to ten years; minimum outstanding par value of $250 million; rated investment grade or higher by Moody’s Investors Service or equivalent; must be dollar denominated and non-convertible; and must be publicly issued.
The Lipper Mixed-Asset Target Allocation Growth Funds Index is an unmanaged index generally considered representative of mutual funds tracked by Lipper, Inc. that, by portfolio practice, maintain a mix of between 60%-80% equity securities, with the remainder invested in bonds, cash and cash equivalents.
10
PERFORMANCE:
The following information illustrates the historical performance of the LKCM Fixed Income Fund as of December 31, 2020 compared to the Fund’s representative benchmark and peer group indices.
Performance data quoted represents past performance; past performance does not guarantee future results. The graph and table reflect the reinvestment of dividends and other distributions, if any, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-800-688-LKCM. Returns would have been lower if LKCM had not waived a portion of its management fee and/or reimbursed certain expenses of the Fund. Please see Note B to the Notes to the Financial Statements for specific information regarding management fee waiver and/or expense reimbursement arrangements for the Fund.
An index is an unmanaged portfolio and does not trade or incur any expenses. The Lipper Short Intermediate Investment-Grade Debt Funds Index, however, does reflect the fees and expenses borne by the funds included in that index. One can not invest in an unmanaged index.
AVERAGE ANNUAL TOTAL RETURN (Periods Ended December 31, 2020)
Past 1 Year | Past 5 Years(1) | Past 10 Years(1) | Since Inception(1)(2) | |||||||||||||||||
LKCM Fixed Income Fund | 4.29% | 3.42% | 2.82% | 4.26% | ||||||||||||||||
Bloomberg Barclays U.S. Intermediate Government/Credit Bond Index | 6.43% | 3.64% | 3.11% | 4.56% | ||||||||||||||||
Lipper Short Intermediate Investment-Grade Debt Funds Index | 5.86% | 3.43% | 2.82% | 3.99% |
(1) | Annualized |
(2) | December 30, 1997 |
A HYPOTHETICAL $10,000 INVESTMENT IN LKCM FIXED INCOME FUND
(for the ten years ended December 31, 2020)
The Bloomberg Barclays U.S. Intermediate Government/Credit Bond Index is an unmanaged market value weighted index measuring both the principal price changes of, and income provided by, the underlying universe of securities that comprise the index. Securities included in the index must meet the following criteria: fixed as opposed to variable rate; remaining maturity of one to ten years; minimum outstanding par value of $250 million; rated investment grade or higher by Moody’s Investors Service or equivalent; must be dollar denominated and non-convertible; and must be publicly issued.
The Lipper Short Intermediate Investment-Grade Debt Funds Index is an unmanaged index generally considered representative of short intermediate investment grade mutual funds tracked by Lipper, Inc.
11
PERFORMANCE:
The following information illustrates the historical performance of the LKCM International Equity Fund as of December 31, 2020 compared to the Fund’s representative benchmark and peer group indices.
Performance data quoted represents past performance; past performance does not guarantee future results. The graph and table reflect the reinvestment of dividends and other distributions, if any, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-800-688-LKCM. Returns would have been lower if LKCM had not waived a portion of its management fee and/or reimbursed certain expenses of the Fund. Please see Note B to the Notes to the Financial Statements for specific information regarding management fee waiver and/or expense reimbursement arrangements for the Fund.
An index is an unmanaged portfolio and does not trade or incur any expenses. The Lipper International Large-Cap Core Funds Index, however, does reflect the fees and expenses borne by the funds included in that index. One can not invest in an unmanaged index.
AVERAGE ANNUAL TOTAL RETURN (Periods Ended December 31, 2020)
Past 1 Year | Since Inception(1)(2) | |||||||||||||||||||
LKCM International Equity Fund | 14.45% | 14.15% | ||||||||||||||||||
MSCI/EAFE® Index | 8.28% | 9.82% | ||||||||||||||||||
Lipper International Large-Cap Core Funds Index | 5.04% | 7.35% |
(1) | Annualized |
(2) | May 1, 2019 |
A HYPOTHETICAL $10,000 INVESTMENT IN LKCM INTERNATIONAL EQUITY FUND
(for the period from May 1, 2019 (inception date) to December 31, 2020)
The Morgan Stanley Capital International Europe, Australia, Far East Index (“MSCI/EAFE® Index”) is an unmanaged index composed of large-cap and mid-cap securities across 21 European and Pacific Basin countries. The MSCI/EAFE® Index is a recognized international index and is weighted by market capitalization.
The Lipper International Large-Cap Core Funds Index is an unmanaged index generally considered representative of large cap core mutual funds tracked by Lipper Inc.
12
LKCM Funds Expense Example — December 31, 2020
As a shareholder of the Funds, you incur two types of costs: (1) transaction costs, including redemption fees; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) 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 (07/01/2020-12/31/2020).
ACTUAL EXPENSES
The third and fourth columns of the table below provide information about actual account values and actual expenses. You may use the information in these columns, 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 $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the fourth column under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. Although the Funds charge no sales load, you will be assessed fees for outgoing wire transfers, returned checks and stop payment orders at prevailing rates charged by U.S. Bancorp Fund Services, LLC (doing business as U.S. Bank Global Fund Services), the Funds’ transfer agent. If you request that a redemption be made by wire transfer, currently a $15.00 fee is charged by the Funds’ transfer agent. You will be charged a redemption fee equal to 1.00% of the net amount of the redemption if you redeem your shares of the LKCM Small Cap Equity, Small-Mid Cap Equity, Equity, Balanced, Fixed Income, and International Equity Funds within 30 days of purchase, unless otherwise determined by the Funds in their discretion. To the extent the Funds invest in shares of other investment companies as part of their investment strategies, you will indirectly bear your proportionate share of any fees and expenses charged by the underlying funds in which the Funds invest in addition to the expenses of the Funds. Actual expenses of the underlying funds are expected to vary among the various underlying funds. These expenses are not included in the example below. The example below includes management fees, registration fees and other expenses. However, the example below does not include portfolio trading commissions and related expenses and other extraordinary expenses as determined under generally accepted accounting principles.
HYPOTHETICAL EXAMPLES FOR COMPARISON PURPOSES
The fifth and sixth columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratios and an assumed rate of return of 5% per year before expenses, which are not the Funds’ actual returns. 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 the Funds and 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, such as redemption fees. Therefore, the fifth and sixth columns of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactions costs were included, your costs would have been higher.
Actual | Hypothetical (5% return before expenses) | |||||||||||||||||||||||||||||
Fund’s Annualized Expense Ratio(1) | Beginning Account Value 07/01/2020 | Ending Account Value 12/31/2020 | Expenses Paid During Period(1) | Ending Account Value 12/31/2020 | Expenses Paid During Period(1) | |||||||||||||||||||||||||
LKCM Small Cap Equity Fund | 1.00 | % | $ | 1,000.00 | $ | 1,420.70 | $ | 6.08 | $ | 1,020.11 | $ | 5.08 | ||||||||||||||||||
LKCM Small-Mid Cap Equity Fund | 1.00 | % | $ | 1,000.00 | $ | 1,321.10 | $ | 5.83 | $ | 1,020.11 | $ | 5.08 | ||||||||||||||||||
LKCM Equity Fund | 0.80 | % | $ | 1,000.00 | $ | 1,227.40 | $ | 4.48 | $ | 1,021.11 | $ | 4.06 | ||||||||||||||||||
LKCM Balanced Fund | 0.80 | % | $ | 1,000.00 | $ | 1,165.30 | $ | 4.35 | $ | 1,021.11 | $ | 4.06 | ||||||||||||||||||
LKCM Fixed Income Fund | 0.50 | % | $ | 1,000.00 | $ | 1,011.70 | $ | 2.53 | $ | 1,022.62 | $ | 2.54 | ||||||||||||||||||
LKCM International Equity Fund | 1.00 | % | $ | 1,000.00 | $ | 1,238.90 | $ | 5.63 | $ | 1,020.11 | $ | 5.08 |
(1) | Expenses are equal to the annualized net expense ratio for the fund, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period). |
13
ALLOCATION OF PORTFOLIO HOLDINGS — LKCM Funds — December 31, 2020
Percentages represent market value as a percentage of total investments.
LKCM Small Cap Equity Fund
LKCM Equity Fund
LKCM Fixed Income Fund
LKCM Small-Mid Cap Equity Fund
LKCM Balanced Fund
LKCM International Equity Fund
14
LKCM SMALL CAP EQUITY FUND |
SCHEDULEOF INVESTMENTS |
December 31, 2020 |
COMMON STOCKS - 95.9% | Shares | Value | ||||||||
Aerospace & Defense - 0.8% | ||||||||||
Mercury Systems, Inc. (a) | 19,120 | $ | 1,683,707 | |||||||
|
| |||||||||
Auto Components - 0.9% | ||||||||||
Fox Factory Holding Corp. (a) | 16,290 | 1,722,016 | ||||||||
|
| |||||||||
Banks - 5.7% | ||||||||||
BancorpSouth Bank | 64,564 | 1,771,636 | ||||||||
Comerica, Inc. | 33,485 | 1,870,472 | ||||||||
Cullen/Frost Bankers, Inc. | 21,375 | 1,864,541 | ||||||||
Glacier Bancorp, Inc. | 43,655 | 2,008,567 | ||||||||
Pinnacle Financial Partners, Inc. | 35,705 | 2,299,402 | ||||||||
Seacoast Banking Corp. of Florida (a) | 60,000 | 1,767,000 | ||||||||
|
| |||||||||
11,581,618 | ||||||||||
|
| |||||||||
Beverages - 0.9% | ||||||||||
Celsius Holdings, Inc. (a) | 35,240 | 1,772,924 | ||||||||
|
| |||||||||
Biotechnology - 6.6% | ||||||||||
CareDx, Inc. (a) | 32,945 | 2,386,865 | ||||||||
Castle Biosciences, Inc. (a) | 34,275 | 2,301,566 | ||||||||
Emergent BioSolutions, Inc. (a) | 23,330 | 2,090,368 | ||||||||
Iovance Biotherapeutics, Inc. (a) | 35,095 | 1,628,408 | ||||||||
Karyopharm Therapeutics, Inc. (a) | 60,000 | 928,800 | ||||||||
Natera, Inc. (a) | 29,085 | 2,894,539 | ||||||||
Neogen Corp. (a) | 14,415 | 1,143,110 | ||||||||
|
| |||||||||
13,373,656 | ||||||||||
|
| |||||||||
Building Products - 4.9% | ||||||||||
Builders FirstSource, Inc. (a) | 75,210 | 3,069,320 | ||||||||
CSW Industrials, Inc. | 24,550 | 2,747,391 | ||||||||
PGT Innovations, Inc. (a) | 112,771 | 2,293,762 | ||||||||
Trex Co., Inc. (a) | 22,000 | 1,841,840 | ||||||||
|
| |||||||||
9,952,313 | ||||||||||
|
| |||||||||
Chemicals - 2.7% | ||||||||||
Compass Minerals International, Inc. | 31,740 | 1,958,993 | ||||||||
Ferroglobe Representation & Warranty Insurance Trust (a)(c) | 302,970 | — | ||||||||
PQ Group Holdings, Inc. | 102,190 | 1,457,230 | ||||||||
Quaker Chemical Corp. | 8,280 | 2,098,069 | ||||||||
|
| |||||||||
5,514,292 | ||||||||||
|
| |||||||||
Construction & Engineering - 0.9% | ||||||||||
NV5 Global, Inc. (a) | 23,342 | 1,838,883 | ||||||||
|
| |||||||||
Construction Materials - 0.9% | ||||||||||
Eagle Materials, Inc. | 18,500 | 1,874,975 | ||||||||
|
| |||||||||
Electronic Equipment & Instruments - 1.0% | ||||||||||
Novanta, Inc. (a)(b) | 16,290 | 1,925,804 | ||||||||
|
| |||||||||
Food Products - 1.9% | ||||||||||
Freshpet, Inc. (a) | 27,590 | 3,917,504 | ||||||||
|
| |||||||||
Health Care Equipment & Supplies - 7.0% | ||||||||||
Cantel Medical Corp. | 32,395 | 2,554,670 | ||||||||
Mesa Laboratories, Inc. | 4,815 | 1,380,172 | ||||||||
NeoGenomics, Inc. (a) | 73,675 | 3,966,662 | ||||||||
SmileDirectClub, Inc. (a) | 71,860 | 858,008 | ||||||||
STAAR Surgical Co. (a) | 52,525 | 4,161,030 |
COMMON STOCKS | Shares | Value | ||||||||
Health Care Equipment & Supplies - 7.0%, Continued | ||||||||||
ViewRay, Inc. (a) | 276,205 | $ | 1,055,103 | |||||||
Zynex, Inc. (a) | 10,000 | 134,600 | ||||||||
|
| |||||||||
14,110,245 | ||||||||||
|
| |||||||||
Health Care Providers & Services - 7.5% | ||||||||||
HealthEquity, Inc. (a) | 24,350 | 1,697,439 | ||||||||
Medpace Holdings, Inc. (a) | 23,765 | 3,308,088 | ||||||||
Omnicell, Inc. (a) | 18,320 | 2,198,766 | ||||||||
Progyny, Inc. (a) | 53,370 | 2,262,354 | ||||||||
R1 RCM, Inc. (a) | 156,665 | 3,763,093 | ||||||||
U.S. Physical Therapy, Inc. | 16,015 | 1,925,804 | ||||||||
|
| |||||||||
15,155,544 | ||||||||||
|
| |||||||||
Health Care Technology - 0.6% | ||||||||||
Inovalon Holdings, Inc. - Class A (a) | 69,190 | 1,257,182 | ||||||||
|
| |||||||||
Hotels, Restaurants & Leisure - 3.7% | ||||||||||
Everi Holdings, Inc. (a) | 197,622 | 2,729,160 | ||||||||
Red Rock Resorts, Inc. - Class A | 95,550 | 2,392,572 | ||||||||
Wingstop, Inc. | 17,860 | 2,367,343 | ||||||||
|
| |||||||||
7,489,075 | ||||||||||
|
| |||||||||
Household Durables - 0.6% | ||||||||||
Century Communities, Inc. (a) | 28,040 | 1,227,591 | ||||||||
|
| |||||||||
Insurance - 4.7% | ||||||||||
Argo Group International Holdings, Ltd. (b) | 30,400 | 1,328,480 | ||||||||
Goosehead Insurance, Inc. - Class A | 16,595 | 2,070,392 | ||||||||
Kinsale Capital Group, Inc. | 14,330 | 2,867,863 | ||||||||
Palomar Holdings, Inc. (a) | 35,920 | 3,191,133 | ||||||||
|
| |||||||||
9,457,868 | ||||||||||
|
| |||||||||
Internet & Catalog Retail - 3.5% | ||||||||||
Magnite, Inc. (a) | 229,625 | 7,051,784 | ||||||||
|
| |||||||||
IT Consulting & Services - 3.2% | ||||||||||
LiveRamp Holdings, Inc. (a) | 38,026 | 2,783,123 | ||||||||
Perficient Inc. (a) | 46,145 | 2,198,810 | ||||||||
Repay Holdings Corp. (a) | 58,085 | 1,582,816 | ||||||||
|
| |||||||||
6,564,749 | ||||||||||
|
| |||||||||
Leisure Equipment & Products - 2.3% | ||||||||||
Callaway Golf Company | 95,715 | 2,298,117 | ||||||||
YETI Holdings, Inc. (a) | 35,570 | 2,435,478 | ||||||||
|
| |||||||||
4,733,595 | ||||||||||
|
| |||||||||
Machinery - 6.2% | ||||||||||
Alamo Group, Inc. | 10,360 | 1,429,162 | ||||||||
Colfax Corp. (a) | 53,260 | 2,036,662 | ||||||||
Evoqua Water Technologies Corp. (a) | 65,570 | 1,769,079 | ||||||||
Helios Technologies, Inc. | 35,295 | 1,880,870 | ||||||||
ITT, Inc. | 16,730 | 1,288,545 | ||||||||
Rexnord Corp. | 60,995 | 2,408,693 | ||||||||
Watts Water Technologies, Inc. - Class A | 13,865 | 1,687,370 | ||||||||
|
| |||||||||
12,500,381 | ||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
15
LKCM SMALL CAP EQUITY FUND |
SCHEDULEOF INVESTMENTS, CONTINUED |
December 31, 2020 |
COMMON STOCKS | Shares | Value | ||||||||
Marine - 0.2% | ||||||||||
Kirby Corp. (a) | 8,620 | $ | 446,775 | |||||||
|
| |||||||||
Media & Entertainment - 1.6% | ||||||||||
Nexstar Media Group, Inc. - Class A | 22,925 | 2,503,181 | ||||||||
Sinclair Broadcast Group, Inc. - Class A | 24,555 | 782,077 | ||||||||
|
| |||||||||
3,285,258 | ||||||||||
|
| |||||||||
Multiline Retail - 2.0% | ||||||||||
Five Below, Inc. (a) | 13,950 | 2,440,971 | ||||||||
Ollie’s Bargain Outlet Holdings, Inc. (a) | 20,790 | 1,699,998 | ||||||||
|
| |||||||||
4,140,969 | ||||||||||
|
| |||||||||
Oil, Gas & Consumable Fuels - 0.4% | ||||||||||
HollyFrontier Corp. | 33,835 | 874,635 | ||||||||
|
| |||||||||
Personal Products - 0.8% | ||||||||||
BellRing Brands, Inc. - Class A (a) | 62,620 | 1,522,292 | ||||||||
|
| |||||||||
Pharmaceuticals - 0.8% | ||||||||||
Reata Pharmaceuticals, Inc. - Class A (a) | 13,160 | 1,626,839 | ||||||||
|
| |||||||||
Professional Services - 2.1% | ||||||||||
Upwork, Inc. (a) | 125,760 | 4,341,235 | ||||||||
|
| |||||||||
Real Estate Development - 1.8% | ||||||||||
FirstService Corp. (b) | 9,995 | 1,366,916 | ||||||||
Newmark Group, Inc. - Class A | 298,143 | 2,173,463 | ||||||||
|
| |||||||||
3,540,379 | ||||||||||
|
| |||||||||
Real Estate Investment Trusts - 1.7% | ||||||||||
First Industrial Realty Trust, Inc. | 33,470 | 1,410,091 | ||||||||
PotlatchDeltic Corp. | 41,675 | 2,084,584 | ||||||||
|
| |||||||||
3,494,675 | ||||||||||
|
| |||||||||
Software - 11.7% | ||||||||||
ACI Worldwide, Inc. (a) | 52,105 | 2,002,395 | ||||||||
Altair Engineering, Inc. - Class A (a) | 36,190 | 2,105,534 | ||||||||
Appian Corp. (a) | 12,855 | 2,083,667 | ||||||||
Cloudera, Inc. (a) | 154,980 | 2,155,772 | ||||||||
LivePerson, Inc. (a) | 41,745 | 2,597,791 | ||||||||
Medallia, Inc. (a) | 68,155 | 2,264,109 | ||||||||
Mimecast Ltd. (a)(b) | 33,270 | 1,891,067 | ||||||||
Model N, Inc. (a) | 42,110 | 1,502,485 | ||||||||
OneSpan Inc. (a) | 92,375 | 1,910,315 | ||||||||
Q2 Holdings, Inc. (a) | 14,515 | 1,836,583 | ||||||||
RealPage, Inc. (a) | 19,030 | 1,660,177 | ||||||||
Workiva Inc. (a) | 19,285 | 1,766,892 | ||||||||
|
| |||||||||
23,776,787 | ||||||||||
|
| |||||||||
Software & Services - 2.0% | ||||||||||
Alarm.com Holdings, Inc. (a) | 22,430 | 2,320,384 | ||||||||
Envestnet, Inc. (a) | 19,936 | 1,640,533 | ||||||||
|
| |||||||||
3,960,917 | ||||||||||
|
| |||||||||
Thrifts & Mortgage Finance - 1.8% | ||||||||||
Essent Group Ltd. (b) | 33,920 | 1,465,344 | ||||||||
Home BancShares, Inc. | 106,661 | 2,077,756 | ||||||||
|
| |||||||||
3,543,100 | ||||||||||
|
|
COMMON STOCKS | Shares | Value | ||||||||
Trading Companies & Distributors - 2.5% | ||||||||||
Systemax, Inc. | 71,915 | $ | 2,581,029 | |||||||
Textainer Group Holdings Ltd. (a)(b) | 130,328 | 2,499,691 | ||||||||
|
| |||||||||
5,080,720 | ||||||||||
|
| |||||||||
TOTAL COMMON STOCKS (Cost $103,994,585) | 194,340,287 | |||||||||
|
| |||||||||
SHORT-TERM INVESTMENTS - 4.2% | ||||||||||
Money Market Funds - 4.2% | ||||||||||
Invesco Short-Term Investments Trust -Government & Agency Portfolio -Institutional Shares, 0.03% (d) | 5,866,000 | 5,866,000 | ||||||||
Morgan Stanley Institutional Liquidity Funds - Government Portfolio -Institutional Shares, 0.03% (d) | 2,633,145 | 2,633,145 | ||||||||
|
| |||||||||
8,499,145 | ||||||||||
|
| |||||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $8,499,145) | 8,499,145 | |||||||||
|
| |||||||||
Total Investments - 100.1% (Cost $112,493,730) | 202,839,432 | |||||||||
Liabilities in Excess of Other Assets - (0.1)% |
| (161,018 | ) | |||||||
|
| |||||||||
TOTAL NET ASSETS - 100.0% | $ | 202,678,414 | ||||||||
|
|
(a) | Non-income producing security. |
(b) | Security issued by non-U.S. incorporated company. |
(c) | Securities for which market quotations are not readily available. These securities have been valued at their fair value under procedures approved by the Fund’s Board of Trustees. Level 3 security. (see Note A.1). |
(d) | The rate quoted is the annualized seven-day yield of the fund at period end. |
Investments are classified by industry pursuant to the Global Industry Classification Standard (GICS®), which was developed by and/or is the exclusive property of Morgan Stanley Capital International, Inc. (“MSCI”) and Standard & Poor’s Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC.
The accompanying notes are an integral part of these financial statements.
16
LKCM SMALL-MID CAP EQUITY FUND |
SCHEDULEOF INVESTMENTS |
December 31, 2020 |
COMMON STOCKS - 99.8% | Shares | Value | ||||||||
Aerospace & Defense - 4.1% | ||||||||||
Axon Enterprise, Inc. (a) | 3,045 | $ | 373,104 | |||||||
Mercury Systems, Inc. (a) | 2,870 | 252,732 | ||||||||
|
| |||||||||
625,836 | ||||||||||
|
| |||||||||
Banks - 5.9% | ||||||||||
Comerica, Inc. | 5,355 | 299,130 | ||||||||
Cullen/Frost Bankers, Inc. | 3,280 | 286,114 | ||||||||
Zions Bancorp N.A. | 7,145 | 310,379 | ||||||||
|
| |||||||||
895,623 | ||||||||||
|
| |||||||||
Biotechnology - 9.5% | ||||||||||
Charles River Laboratories International, Inc. (a) | 1,545 | 386,034 | ||||||||
Emergent BioSolutions, Inc. (a) | 1,930 | 172,928 | ||||||||
Exact Sciences Corp. (a) | 2,145 | 284,191 | ||||||||
Iovance Biotherapeutics, Inc. (a) | 3,930 | 182,352 | ||||||||
Natera, Inc. (a) | 2,470 | 245,814 | ||||||||
Neogen Corp. (a) | 2,055 | 162,962 | ||||||||
|
| |||||||||
1,434,281 | ||||||||||
|
| |||||||||
Building Products - 4.6% | ||||||||||
Builders FirstSource, Inc. (a) | 7,475 | 305,055 | ||||||||
Trex Co., Inc. (a) | 4,560 | 381,763 | ||||||||
|
| |||||||||
686,818 | ||||||||||
|
| |||||||||
Capital Markets - 2.1% | ||||||||||
LPL Financial Holdings, Inc. | 2,980 | 310,576 | ||||||||
|
| |||||||||
Chemicals - 2.4% | ||||||||||
Compass Minerals International, Inc. | 3,815 | 235,462 | ||||||||
FMC Corp. | 1,150 | 132,169 | ||||||||
|
| |||||||||
367,631 | ||||||||||
|
| |||||||||
Diversified Consumer Services - 1.8% | ||||||||||
Chegg, Inc. (a) | 2,980 | 269,183 | ||||||||
|
| |||||||||
Electronic Equipment & Instruments - 2.1% | ||||||||||
Trimble, Inc. (a) | 4,810 | 321,164 | ||||||||
|
| |||||||||
Food Products - 3.4% | ||||||||||
Freshpet, Inc. (a) | 3,625 | 514,714 | ||||||||
|
| |||||||||
Health Care Equipment & Supplies - 5.0% | ||||||||||
NeoGenomics, Inc. (a) | 6,405 | 344,845 | ||||||||
STAAR Surgical Co. (a) | 5,155 | 408,379 | ||||||||
|
| |||||||||
753,224 | ||||||||||
|
| |||||||||
Health Care Providers & Services - 3.2% | ||||||||||
Medpace Holdings, Inc. (a) | 1,955 | 272,136 | ||||||||
Omnicell, Inc. (a) | 1,785 | 214,236 | ||||||||
|
| |||||||||
486,372 | ||||||||||
|
| |||||||||
Hotels, Restaurants & Leisure - 3.3% | ||||||||||
Churchill Downs, Inc. | 1,215 | 236,670 | ||||||||
Wingstop, Inc. | 1,970 | 261,123 | ||||||||
|
| |||||||||
497,793 | ||||||||||
|
|
COMMON STOCKS | Shares | Value | ||||||||
Insurance - 3.6% | ||||||||||
Kinsale Capital Group, Inc. | 1,495 | $ | 299,194 | |||||||
Palomar Holdings, Inc. (a) | 2,690 | 238,980 | ||||||||
|
| |||||||||
538,174 | ||||||||||
|
| |||||||||
IT Consulting & Services - 1.5% | ||||||||||
LiveRamp Holdings, Inc. (a) | 3,085 | 225,791 | ||||||||
|
| |||||||||
Leisure Equipment & Products - 3.7% | ||||||||||
Brunswick Corporation | 3,175 | 242,062 | ||||||||
Pool Corp. | 865 | 322,212 | ||||||||
|
| |||||||||
564,274 | ||||||||||
|
| |||||||||
Machinery - 5.6% | ||||||||||
Colfax Corp. (a) | 6,385 | 244,162 | ||||||||
IDEX Corp. | 885 | 176,292 | ||||||||
ITT, Inc. | 2,075 | 159,817 | ||||||||
Rexnord Corp. | 6,845 | 270,309 | ||||||||
|
| |||||||||
850,580 | ||||||||||
|
| |||||||||
Media & Entertainment - 1.9% | ||||||||||
Nexstar Media Group, Inc. - Class A | 2,635 | 287,716 | ||||||||
|
| |||||||||
Metals & Mining - 2.5% | ||||||||||
Royal Gold, Inc. | 550 | 58,498 | ||||||||
Teck Resources Ltd. (b) | 17,535 | 318,260 | ||||||||
|
| |||||||||
376,758 | ||||||||||
|
| |||||||||
Multiline Retail - 3.3% | ||||||||||
Five Below, Inc. (a) | 1,790 | 313,214 | ||||||||
Ollie’s Bargain Outlet Holdings, Inc. (a) | 2,310 | 188,889 | ||||||||
|
| |||||||||
502,103 | ||||||||||
|
| |||||||||
Oil, Gas & Consumable Fuels - 0.9% | ||||||||||
HollyFrontier Corp. | 5,505 | 142,304 | ||||||||
|
| |||||||||
Pharmaceuticals - 2.9% | ||||||||||
Horizon Therapeutics PLC (a)(b) | 3,580 | 261,877 | ||||||||
Reata Pharmaceuticals, Inc. - Class A (a) | 1,385 | 171,214 | ||||||||
|
| |||||||||
433,091 | ||||||||||
|
| |||||||||
Professional Services - 3.1% | ||||||||||
Upwork, Inc. (a) | 13,485 | 465,502 | ||||||||
|
| |||||||||
Real Estate Development - 1.1% | ||||||||||
FirstService Corp. (b) | 1,235 | 168,899 | ||||||||
|
| |||||||||
Real Estate Investment Trusts - 2.4% | ||||||||||
First Industrial Realty Trust, Inc. | 3,415 | 143,874 | ||||||||
PotlatchDeltic Corp. | 4,390 | 219,588 | ||||||||
|
| |||||||||
363,462 | ||||||||||
|
| |||||||||
Software - 15.8% | ||||||||||
Appian Corp. (a) | 2,395 | 388,206 | ||||||||
Cloudera, Inc. (a) | 18,000 | 250,380 | ||||||||
Fair Isaac Corp. (a) | 575 | 293,848 | ||||||||
Five9, Inc. (a) | 2,235 | 389,784 | ||||||||
Medallia, Inc. (a) | 7,560 | 251,143 | ||||||||
Mimecast Ltd. (a)(b) | 3,425 | 194,677 | ||||||||
OneSpan Inc. (a) | 7,240 | 149,723 |
The accompanying notes are an integral part of these financial statements.
17
LKCM SMALL-MID CAP EQUITY FUND |
SCHEDULEOF INVESTMENTS, CONTINUED |
December 31, 2020 |
COMMON STOCKS | Shares | Value | ||||||||
Software - 15.8%, Continued | ||||||||||
Q2 Holdings, Inc. (a) | 2,070 | $ | 261,917 | |||||||
RealPage, Inc. (a) | 2,370 | 206,759 | ||||||||
|
| |||||||||
2,386,437 | ||||||||||
|
| |||||||||
Software & Services - 1.4% | ||||||||||
Envestnet, Inc. (a) | 2,565 | 211,074 | ||||||||
|
| |||||||||
Thrifts & Mortgage Finance - 1.5% | ||||||||||
Essent Group Ltd. (b) | 5,045 | 217,944 | ||||||||
|
| |||||||||
Trading Companies & Distributors - 1.2% | ||||||||||
Watsco, Inc. | 795 | 180,107 | ||||||||
|
| |||||||||
TOTAL COMMON STOCKS (Cost $9,106,638) | 15,077,431 | |||||||||
|
| |||||||||
SHORT-TERM INVESTMENT - 0.3% | ||||||||||
Money Market Fund - 0.3% | ||||||||||
Invesco Short-Term Investments Trust - Government & Agency Portfolio - Institutional Shares, 0.03% (c) | 46,722 | 46,722 | ||||||||
|
| |||||||||
TOTAL SHORT-TERM INVESTMENT (Cost $46,722) | 46,722 | |||||||||
|
| |||||||||
Total Investments - 100.1% (Cost $9,153,360) | 15,124,153 | |||||||||
Liabilities in Excess of Other Assets - (0.1)% |
| (15,798 | ) | |||||||
|
| |||||||||
TOTAL NET ASSETS - 100.0% | $ | 15,108,355 | ||||||||
|
|
(a) | Non-income producing security. |
(b) | Security issued by non-U.S. incorporated company. |
(c) | The rate quoted is the annualized seven-day yield of the fund at period end. |
Investments are classified by industry pursuant to the Global Industry Classification Standard (GICS®), which was developed by and/or is the exclusive property of Morgan Stanley Capital International, Inc. (“MSCI”) and Standard & Poor’s Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC.
The accompanying notes are an integral part of these financial statements.
18
LKCM EQUITY FUND |
SCHEDULEOF INVESTMENTS |
December 31, 2020 |
COMMON STOCKS - 94.8% | Shares | Value | ||||||||
Aerospace & Defense - 2.4% | ||||||||||
Honeywell International, Inc. | 50,000 | $ | 10,635,000 | |||||||
|
| |||||||||
Banks - 4.2% | ||||||||||
Bank of America Corp. | 160,000 | 4,849,600 | ||||||||
Comerica, Inc. | 100,000 | 5,586,000 | ||||||||
Cullen/Frost Bankers, Inc. | 65,000 | 5,669,950 | ||||||||
Glacier Bancorp, Inc. | 60,000 | 2,760,600 | ||||||||
|
| |||||||||
18,866,150 | ||||||||||
|
| |||||||||
Beverages - 3.4% | ||||||||||
The Coca-Cola Co. | 95,000 | 5,209,800 | ||||||||
Keurig Dr Pepper, Inc. | 100,000 | 3,200,000 | ||||||||
PepsiCo, Inc. | 45,000 | 6,673,500 | ||||||||
|
| |||||||||
15,083,300 | ||||||||||
|
| |||||||||
Biotechnology - 1.4% | ||||||||||
Amgen, Inc. | 28,000 | 6,437,760 | ||||||||
|
| |||||||||
Chemicals - 6.3% | ||||||||||
Air Products & Chemicals, Inc. | 30,200 | 8,251,244 | ||||||||
Ecolab, Inc. | 45,000 | 9,736,200 | ||||||||
FMC Corp. | 90,000 | 10,343,700 | ||||||||
|
| |||||||||
28,331,144 | ||||||||||
|
| |||||||||
Commercial Services & Supplies - 3.5% | ||||||||||
Cintas Corp. | 16,000 | 5,655,360 | ||||||||
Waste Connections, Inc. (b) | 97,500 | 10,000,575 | ||||||||
|
| |||||||||
15,655,935 | ||||||||||
|
| |||||||||
Computers & Peripherals - 3.5% | ||||||||||
Apple, Inc. | 120,000 | 15,922,800 | ||||||||
|
| |||||||||
Construction Materials - 1.1% | ||||||||||
Martin Marietta Materials, Inc. | 18,000 | 5,111,460 | ||||||||
|
| |||||||||
Diversified Financials - 1.9% | ||||||||||
JPMorgan Chase & Co. | �� | 68,000 | 8,640,760 | |||||||
|
| |||||||||
Electrical Equipment & Instruments - 4.9% | ||||||||||
Franklin Electric Co., Inc. | 85,000 | 5,882,850 | ||||||||
Rockwell Automation, Inc. | 25,000 | 6,270,250 | ||||||||
Roper Technologies, Inc. | 23,000 | 9,915,070 | ||||||||
|
| |||||||||
22,068,170 | ||||||||||
|
| |||||||||
Electronic Equipment & Instruments - 2.8% | ||||||||||
National Instruments Corp. | 55,000 | 2,416,700 | ||||||||
Trimble, Inc. (a) | 150,000 | 10,015,500 | ||||||||
|
| |||||||||
12,432,200 | ||||||||||
|
| |||||||||
Food Products - 0.7% | ||||||||||
Mondelez International, Inc. - Class A | 54,000 | 3,157,380 | ||||||||
|
| |||||||||
Health Care Equipment & Supplies - 9.6% | ||||||||||
Alcon, Inc. (a)(b) | 60,000 | 3,958,800 | ||||||||
Danaher Corp. | 50,000 | 11,107,000 | ||||||||
PerkinElmer, Inc. | 90,000 | 12,915,000 | ||||||||
Stryker Corp. | 20,000 | 4,900,800 | ||||||||
Thermo Fisher Scientific, Inc. | 22,000 | 10,247,160 | ||||||||
|
| |||||||||
43,128,760 | ||||||||||
|
|
COMMON STOCKS | Shares | Value | ||||||||
Household Products - 2.4% | ||||||||||
Kimberly-Clark Corp. | 50,000 | $ | 6,741,500 | |||||||
The Procter & Gamble Co. | 30,000 | 4,174,200 | ||||||||
|
| |||||||||
10,915,700 | ||||||||||
|
| |||||||||
Internet & Catalog Retail - 3.6% | ||||||||||
Amazon.com, Inc. (a) | 5,000 | 16,284,650 | ||||||||
|
| |||||||||
IT Consulting & Services - 3.1% | ||||||||||
PayPal Holdings, Inc. (a) | 60,000 | 14,052,000 | ||||||||
|
| |||||||||
Machinery - 8.1% | ||||||||||
Generac Holdings, Inc. (a) | 50,000 | 11,370,500 | ||||||||
IDEX Corp. | 20,000 | 3,984,000 | ||||||||
The Toro Co. | 74,000 | 7,018,160 | ||||||||
Valmont Industries, Inc. | 45,000 | 7,871,850 | ||||||||
Xylem, Inc. | 60,000 | 6,107,400 | ||||||||
|
| |||||||||
36,351,910 | ||||||||||
|
| |||||||||
Media & Entertainment - 3.7% | ||||||||||
Alphabet, Inc. - Class A (a) | 5,500 | 9,639,520 | ||||||||
Facebook, Inc. - Class A (a) | 25,000 | 6,829,000 | ||||||||
|
| |||||||||
16,468,520 | ||||||||||
|
| |||||||||
Metals & Mining - 1.7% | ||||||||||
Newmont Goldcorp Corp. | 130,000 | 7,785,700 | ||||||||
|
| |||||||||
Oil & Gas & Consumable Fuels - 2.3% | ||||||||||
Cabot Oil & Gas Corp. | 260,000 | 4,232,800 | ||||||||
Chevron Corp. | 31,500 | 2,660,175 | ||||||||
ConocoPhillips | 87,000 | 3,479,130 | ||||||||
|
| |||||||||
10,372,105 | ||||||||||
|
| |||||||||
Personal Products - 1.5% | ||||||||||
The Estee Lauder Cos., Inc. - Class A | 25,000 | 6,654,750 | ||||||||
|
| |||||||||
Pharmaceuticals - 4.4% | ||||||||||
Merck & Co., Inc. | 80,000 | 6,544,000 | ||||||||
Pfizer, Inc. | 115,000 | 4,233,150 | ||||||||
Zoetis, Inc. | 53,500 | 8,854,250 | ||||||||
|
| |||||||||
19,631,400 | ||||||||||
|
| |||||||||
Road & Rail - 2.9% | ||||||||||
Kansas City Southern | 40,000 | 8,165,200 | ||||||||
Union Pacific Corp. | 24,000 | 4,997,280 | ||||||||
|
| |||||||||
13,162,480 | ||||||||||
|
| |||||||||
Software - 9.6% | ||||||||||
Adobe, Inc. (a) | 28,000 | 14,003,360 | ||||||||
Microsoft Corp. | 80,000 | 17,793,600 | ||||||||
Oracle Corp. | 90,000 | 5,822,100 | ||||||||
RealPage, Inc. (a) | 35,000 | 3,053,400 | ||||||||
Sprout Social, Inc. - Class A (a) | 55,000 | 2,497,550 | ||||||||
|
| |||||||||
43,170,010 | ||||||||||
|
| |||||||||
Software & Services - 2.1% | ||||||||||
Akamai Technologies, Inc. (a) | 90,000 | 9,449,100 | ||||||||
|
| |||||||||
Specialty Retail - 1.8% | ||||||||||
The Home Depot, Inc. | 30,000 | 7,968,600 | ||||||||
|
|
The accompanying notes are an integral part of these financial statements.
19
LKCM EQUITY FUND |
SCHEDULEOF INVESTMENTS, CONTINUED |
December 31, 2020 |
COMMON STOCKS | Shares | Value | ||||||||
Textiles, Apparel & Luxury Goods - 1.9% | ||||||||||
VF Corp. | 100,000 | $ | 8,541,000 | |||||||
|
| |||||||||
TOTAL COMMON STOCKS (Cost $184,730,986) | 426,278,744 | |||||||||
|
| |||||||||
U.S. GOVERNMENT ISSUE - 1.0% | Principal Amount | |||||||||
U.S. Treasury Note - 1.0% | ||||||||||
2.125%, 05/31/2021 | $ | 4,300,000 | 4,335,113 | |||||||
|
| |||||||||
TOTAL U.S. GOVERNMENT ISSUE | 4,335,113 | |||||||||
|
| |||||||||
SHORT-TERM INVESTMENTS - 4.2% | Shares | |||||||||
Money Market Funds - 4.2% | ||||||||||
Invesco Short-Term Investments Trust - Government & Agency Portfolio - Institutional Shares, 0.03% (c) | 13,381,000 | 13,381,000 | ||||||||
Morgan Stanley Institutional Liquidity Funds - Government Portfolio - Institutional Shares, 0.03% (c) | 5,652,904 | 5,652,904 | ||||||||
|
| |||||||||
19,033,904 | ||||||||||
|
| |||||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $19,033,904) | 19,033,904 | |||||||||
|
| |||||||||
Total Investments - 100.0% (Cost $208,096,697) | 449,647,761 | |||||||||
Other Assets in Excess of Liabilities - 0.0% |
| 5,173 | ||||||||
|
| |||||||||
TOTAL NET ASSETS - 100.0% | $ | 449,652,934 | ||||||||
|
|
(a) | Non-income producing security. |
(b) | Security issued by non-U.S. incorporated company. |
(c) | The rate quoted is the annualized seven-day yield of the fund at period end. |
Investments are classified by industry pursuant to the Global Industry Classification Standard (GICS®), which was developed by and/or is the exclusive property of Morgan Stanley Capital International, Inc. (“MSCI”) and Standard & Poor’s Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC.
The accompanying notes are an integral part of these financial statements.
20
LKCM BALANCED FUND |
SCHEDULEOF INVESTMENTS |
December 31, 2020 |
COMMON STOCKS - 69.4% | Shares | Value | ||||||||
Aerospace & Defense - 2.0% | ||||||||||
Honeywell International, Inc. | 6,100 | $ | 1,297,470 | |||||||
L3Harris Technologies, Inc. | 6,300 | 1,190,826 | ||||||||
|
| |||||||||
2,488,296 | ||||||||||
|
| |||||||||
Banks - 3.0% | ||||||||||
Bank of America Corp. | 55,000 | 1,667,050 | ||||||||
Cullen/Frost Bankers, Inc. | 11,900 | 1,038,037 | ||||||||
Zions Bancorp N.A. | 23,500 | 1,020,840 | ||||||||
|
| |||||||||
3,725,927 | ||||||||||
|
| |||||||||
Beverages - 2.0% | ||||||||||
The Coca-Cola Co. | 28,100 | 1,541,004 | ||||||||
PepsiCo, Inc. | 6,700 | 993,610 | ||||||||
|
| |||||||||
2,534,614 | ||||||||||
|
| |||||||||
Biotechnology - 1.1% | ||||||||||
Charles River Laboratories International, Inc. (a) | 5,700 | 1,424,202 | ||||||||
|
| |||||||||
Chemicals - 5.5% | ||||||||||
Air Products and Chemicals, Inc. | 5,000 | 1,366,100 | ||||||||
Corteva, Inc. | 20,358 | 788,262 | ||||||||
DuPont de Nemours, Inc. | 8,158 | 580,115 | ||||||||
Ecolab, Inc. | 5,900 | 1,276,524 | ||||||||
FMC Corp. | 12,600 | 1,448,118 | ||||||||
Linde PLC (b) | 5,500 | 1,449,305 | ||||||||
|
| |||||||||
6,908,424 | ||||||||||
|
| |||||||||
Commercial Services & Supplies - 2.8% | ||||||||||
Cintas Corp. | 4,000 | 1,413,840 | ||||||||
Waste Connections, Inc. (b) | 9,500 | 974,415 | ||||||||
Waste Management, Inc. | 10,000 | 1,179,300 | ||||||||
|
| |||||||||
3,567,555 | ||||||||||
|
| |||||||||
Communications Equipment - 1.9% | ||||||||||
QUALCOMM, Inc. | 15,300 | 2,330,802 | ||||||||
|
| |||||||||
Computers & Peripherals - 2.0% | ||||||||||
Apple, Inc. | 19,200 | 2,547,648 | ||||||||
|
| |||||||||
Construction Materials - 0.9% | ||||||||||
Martin Marietta Materials, Inc. | 4,100 | 1,164,277 | ||||||||
|
| |||||||||
Diversified Financials - 2.0% | ||||||||||
JPMorgan Chase & Co. | 11,500 | 1,461,305 | ||||||||
Moody’s Corp. | 3,800 | 1,102,912 | ||||||||
|
| |||||||||
2,564,217 | ||||||||||
|
| |||||||||
Diversified Telecommunication Services - 1.5% | ||||||||||
AT&T, Inc. | 32,189 | 925,755 | ||||||||
Verizon Communications, Inc. | 15,841 | 930,659 | ||||||||
|
| |||||||||
1,856,414 | ||||||||||
|
| |||||||||
Electrical Equipment & Instruments - 1.8% | ||||||||||
Emerson Electric Co. | 13,400 | 1,076,958 | ||||||||
Rockwell Automation, Inc. | 4,500 | 1,128,645 | ||||||||
|
| |||||||||
2,205,603 | ||||||||||
|
|
COMMON STOCKS | Shares | Value | ||||||||
Electronic Equipment & Instruments - 1.5% | ||||||||||
FLIR Systems, Inc. | 2,500 | $ | 109,575 | |||||||
National Instruments Corp. | 12,800 | 562,432 | ||||||||
Trimble, Inc. (a) | 18,100 | 1,208,537 | ||||||||
|
| |||||||||
1,880,544 | ||||||||||
|
| |||||||||
Food & Drug Retailing - 0.9% | ||||||||||
Walmart, Inc. | 7,900 | 1,138,785 | ||||||||
|
| |||||||||
Food Products - 0.6% | ||||||||||
Mondelez International, Inc. - Class A | 12,400 | 725,028 | ||||||||
|
| |||||||||
Health Care Equipment & Supplies - 4.5% | ||||||||||
Alcon, Inc. (a)(b) | 20,800 | 1,372,384 | ||||||||
Becton, Dickinson & Co. | 1,600 | 400,352 | ||||||||
Danaher Corp. | 6,000 | 1,332,840 | ||||||||
PerkinElmer, Inc. | 10,100 | 1,449,350 | ||||||||
Thermo Fisher Scientific, Inc. | 2,400 | 1,117,872 | ||||||||
|
| |||||||||
5,672,798 | ||||||||||
|
| |||||||||
Household Products - 1.8% | ||||||||||
Colgate-Palmolive Co. | 11,900 | 1,017,569 | ||||||||
Kimberly-Clark Corp. | 6,000 | 808,980 | ||||||||
The Procter & Gamble Co. | 3,500 | 486,990 | ||||||||
|
| |||||||||
2,313,539 | ||||||||||
|
| |||||||||
Internet & Catalog Retail - 1.2% | ||||||||||
Amazon.com, Inc. (a) | 450 | 1,465,619 | ||||||||
|
| |||||||||
IT Consulting & Services - 4.8% | ||||||||||
Black Knight, Inc. (a) | 18,400 | 1,625,640 | ||||||||
Broadridge Financial Solutions, Inc. | 10,200 | 1,562,640 | ||||||||
PayPal Holdings, Inc. (a) | 6,600 | 1,545,720 | ||||||||
Visa, Inc. - Class A | 6,100 | 1,334,253 | ||||||||
|
| |||||||||
6,068,253 | ||||||||||
|
| |||||||||
Machinery - 1.5% | ||||||||||
Fortive Corp. | 10,100 | 715,282 | ||||||||
Xylem, Inc. | 11,000 | 1,119,690 | ||||||||
|
| |||||||||
1,834,972 | ||||||||||
|
| |||||||||
Media & Entertainment - 5.4% | ||||||||||
Alphabet, Inc. - Class C (a) | 875 | 1,532,895 | ||||||||
Facebook, Inc. - Class A (a) | 4,700 | 1,283,852 | ||||||||
Pinterest, Inc. - Class A (a) | 34,450 | 2,270,255 | ||||||||
The Walt Disney Co. (a) | 9,500 | 1,721,210 | ||||||||
|
| |||||||||
6,808,212 | ||||||||||
|
| |||||||||
Metals & Mining - 0.7% | ||||||||||
Newmont Goldcorp Corp. | 15,000 | 898,350 | ||||||||
|
| |||||||||
Oil & Gas & Consumable Fuels - 2.5% | ||||||||||
Cabot Oil & Gas Corp. | 25,900 | 421,652 | ||||||||
Chevron Corp. | 11,295 | 953,863 | ||||||||
ConocoPhillips | 17,900 | 715,821 | ||||||||
EOG Resources, Inc. | 5,800 | 289,246 | ||||||||
Pioneer Natural Resources Co. | 6,100 | 694,729 | ||||||||
|
| |||||||||
3,075,311 | ||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
21
LKCM BALANCED FUND |
SCHEDULEOF INVESTMENTS, CONTINUED |
December 31, 2020 |
COMMON STOCKS | Shares | Value | ||||||||
Personal Products - 0.8% | ||||||||||
The Estee Lauder Cos., Inc. - Class A | 4,000 | $ | 1,064,760 | |||||||
|
| |||||||||
Pharmaceuticals - 3.7% | ||||||||||
Abbott Laboratories | 10,800 | 1,182,492 | ||||||||
Merck & Co., Inc. | 16,400 | 1,341,520 | ||||||||
Pfizer, Inc. | 18,100 | 666,261 | ||||||||
Zoetis, Inc. | 8,626 | 1,427,603 | ||||||||
|
| |||||||||
4,617,876 | ||||||||||
|
| |||||||||
Real Estate Investment Trusts - 1.1% | ||||||||||
American Tower Corp. | 5,900 | 1,324,314 | ||||||||
|
| |||||||||
Road & Rail - 0.8% | ||||||||||
Union Pacific Corp. | 5,100 | 1,061,922 | ||||||||
|
| |||||||||
Software - 6.4% | ||||||||||
Adobe, Inc. (a) | 2,500 | 1,250,300 | ||||||||
Microsoft Corp. | 9,800 | 2,179,716 | ||||||||
Oracle Corp. | 17,800 | 1,151,482 | ||||||||
RealPage, Inc. (a) | 20,900 | 1,823,316 | ||||||||
salesforce.com, Inc. (a) | 7,400 | 1,646,722 | ||||||||
|
| |||||||||
8,051,536 | ||||||||||
|
| |||||||||
Software & Services - 1.2% | ||||||||||
Akamai Technologies, Inc. (a) | 13,800 | 1,448,862 | ||||||||
|
| |||||||||
Specialty Retail - 1.1% | ||||||||||
The Home Depot, Inc. | 5,300 | 1,407,786 | ||||||||
|
| |||||||||
Textiles, Apparel & Luxury Goods - 2.4% | ||||||||||
NIKE, Inc. - Class B | 10,800 | 1,527,876 | ||||||||
VF Corp. | 16,700 | 1,426,347 | ||||||||
|
| |||||||||
2,954,223 | ||||||||||
|
| |||||||||
TOTAL COMMON STOCKS | 87,130,669 | |||||||||
|
| |||||||||
CORPORATE BONDS - 28.9% | Principal Amount | |||||||||
Aerospace & Defense - 0.8% | ||||||||||
Honeywell International, Inc. | ||||||||||
1.350%, 06/01/2025 | ||||||||||
Callable 05/01/2025 | $ | 750,000 | 777,392 | |||||||
Raytheon Technologies Corp. | ||||||||||
3.700%, 12/15/2023 | ||||||||||
Callable 09/15/2023 | 250,000 | 272,021 | ||||||||
|
| |||||||||
1,049,413 | ||||||||||
|
| |||||||||
Air Freight & Logistics - 0.5% | ||||||||||
United Parcel Service, Inc. | ||||||||||
2.450%, 10/01/2022 | 600,000 | 622,730 | ||||||||
|
| |||||||||
Banks - 2.2% | ||||||||||
Bank of America Corp. | 500,000 | 530,261 | ||||||||
Comerica Bank | 300,000 | 319,356 |
CORPORATE BONDS | Principal Amount | Value | ||||||||
Banks - 2.2%, Continued | ||||||||||
Comerica, Inc. | ||||||||||
3.700%, 07/31/2023 | ||||||||||
Callable 06/30/2023 | $ | 475,000 | $ | 512,943 | ||||||
The Bank of New York Mellon Corp. | ||||||||||
2.200%, 08/16/2023 | ||||||||||
Callable 06/16/2023 | 200,000 | 209,608 | ||||||||
Truist Bank: | ||||||||||
3.200%, 04/01/2024 | ||||||||||
Callable 03/01/2024 | 250,000 | 271,489 | ||||||||
4.050%, 11/03/2025 | ||||||||||
Callable 09/03/2025 | 385,000 | 444,557 | ||||||||
3.300%, 05/15/2026 | ||||||||||
Callable 04/15/2026 | 400,000 | 447,924 | ||||||||
|
| |||||||||
2,736,138 | ||||||||||
|
| |||||||||
Beverages - 0.7% | ||||||||||
PepsiCo, Inc.: | ||||||||||
3.000%, 08/25/2021 | 415,000 | 422,690 | ||||||||
2.375%, 10/06/2026 | ||||||||||
Callable 07/06/2026 | 435,000 | 474,834 | ||||||||
|
| |||||||||
897,524 | ||||||||||
|
| |||||||||
Biotechnology - 1.4% | ||||||||||
AbbVie, Inc.: | ||||||||||
2.850%, 05/14/2023 | ||||||||||
Callable 03/14/2023 | 250,000 | 262,941 | ||||||||
3.200%, 05/14/2026 | ||||||||||
Callable 02/14/2026 | 600,000 | 665,208 | ||||||||
Amgen, Inc.: | ||||||||||
2.700%, 05/01/2022 | ||||||||||
Callable 03/01/2022 | 325,000 | 334,462 | ||||||||
3.625%, 05/22/2024 | ||||||||||
Callable 02/22/2024 | 250,000 | 274,539 | ||||||||
2.600%, 08/19/2026 | ||||||||||
Callable 05/19/2026 | 200,000 | 218,509 | ||||||||
|
| |||||||||
1,755,659 | ||||||||||
|
| |||||||||
Chemicals - 1.0% | ||||||||||
Air Products and Chemicals, Inc. | ||||||||||
1.850%, 05/15/2027 | ||||||||||
Callable 03/15/2027 | 675,000 | 715,122 | ||||||||
Ecolab, Inc. | ||||||||||
3.250%, 01/14/2023 | ||||||||||
Callable 11/14/2022 | 500,000 | 526,538 | ||||||||
|
| |||||||||
1,241,660 | ||||||||||
|
| |||||||||
Communications Equipment - 1.1% | ||||||||||
Cisco Systems, Inc. | ||||||||||
2.200%, 09/20/2023 | ||||||||||
Callable 07/20/2023 | 750,000 | 785,573 | ||||||||
QUALCOMM, Inc. | ||||||||||
2.900%, 05/20/2024 | ||||||||||
Callable 03/20/2024 | 600,000 | 646,445 | ||||||||
|
| |||||||||
1,432,018 | ||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
22
LKCM BALANCED FUND |
SCHEDULEOF INVESTMENTS, CONTINUED |
December 31, 2020 |
CORPORATE BONDS | Principal Amount | Value | ||||||||
Computers & Peripherals - 0.7% | ||||||||||
Apple, Inc.: | ||||||||||
2.850%, 05/06/2021 | $ | 500,000 | $ | 504,081 | ||||||
2.500%, 02/09/2025 | 250,000 | 270,073 | ||||||||
3.200%, 05/13/2025 | 55,000 | 61,386 | ||||||||
|
| |||||||||
835,540 | ||||||||||
|
| |||||||||
Consumer Finance - 0.7% | ||||||||||
American Express Co.: | ||||||||||
3.400%, 02/27/2023 | ||||||||||
Callable 01/27/2023 | 125,000 | 132,985 | ||||||||
3.700%, 08/03/2023 | ||||||||||
Callable 07/03/2023 | 300,000 | 325,023 | ||||||||
3.000%, 10/30/2024 | ||||||||||
Callable 09/29/2024 | 350,000 | 382,473 | ||||||||
|
| |||||||||
840,481 | ||||||||||
|
| |||||||||
Diversified Financials - 0.7% | ||||||||||
JPMorgan Chase & Co.: | ||||||||||
3.250%, 09/23/2022 | 100,000 | 105,207 | ||||||||
3.375%, 05/01/2023 | 225,000 | 240,561 | ||||||||
3.875%, 02/01/2024 | 275,000 | 302,930 | ||||||||
3.200%, 06/15/2026 | ||||||||||
Callable 03/15/2026 | 200,000 | 223,835 | ||||||||
|
| |||||||||
872,533 | ||||||||||
|
| |||||||||
Diversified Telecommunication Services - 1.3% | ||||||||||
AT&T, Inc. | ||||||||||
3.400%, 05/15/2025 | ||||||||||
Callable 02/15/2025 | 750,000 | 833,912 | ||||||||
Verizon Communications, Inc.: | ||||||||||
2.450%, 11/01/2022 | ||||||||||
Callable 08/01/2022 | 500,000 | 516,879 | ||||||||
3.500%, 11/01/2024 | ||||||||||
Callable 08/01/2024 | 250,000 | 276,271 | ||||||||
|
| |||||||||
1,627,062 | ||||||||||
|
| |||||||||
Electrical Equipment & Instruments - 1.2% | ||||||||||
Emerson Electric Co.: | ||||||||||
2.625%, 02/15/2023 | ||||||||||
Callable 11/15/2022 | 400,000 | 417,380 | ||||||||
3.150%, 06/01/2025 | ||||||||||
Callable 03/01/2025 | 200,000 | 221,357 | ||||||||
Roper Technologies, Inc.: | ||||||||||
2.800%, 12/15/2021 | ||||||||||
Callable 11/15/2021 | 600,000 | 612,898 | ||||||||
1.000%, 09/15/2025 | ||||||||||
Callable 08/15/2025 | �� | 250,000 | 253,188 | |||||||
|
| |||||||||
1,504,823 | ||||||||||
|
| |||||||||
Electronic Equipment & Instruments - 0.4% | ||||||||||
Trimble, Inc. | ||||||||||
4.150%, 06/15/2023 | ||||||||||
Callable 05/15/2023 | 500,000 | 541,982 | ||||||||
|
|
CORPORATE BONDS | Principal Amount | Value | ||||||||
Food & Drug Retailing - 0.6% | ||||||||||
Walmart, Inc. | ||||||||||
3.550%, 06/26/2025 | ||||||||||
Callable 04/26/2025 | $ | 700,000 | $ | 792,969 | ||||||
|
| |||||||||
Food & Staples Retailing - 0.6% | ||||||||||
Costco Wholesale Corp. | ||||||||||
1.375%, 06/20/2027 | ||||||||||
Callable 04/20/2027 | 690,000 | 711,757 | ||||||||
|
| |||||||||
Health Care Equipment & Supplies - 0.8% | ||||||||||
Danaher Corp. | ||||||||||
3.350%, 09/15/2025 | ||||||||||
Callable 06/15/2025 | 250,000 | 280,061 | ||||||||
Thermo Fisher Scientific, Inc. | ||||||||||
3.000%, 04/15/2023 | ||||||||||
Callable 02/15/2023 | 705,000 | 744,278 | ||||||||
|
| |||||||||
1,024,339 | ||||||||||
|
| |||||||||
Hotels, Restaurants & Leisure - 0.5% | ||||||||||
McDonald’s Corp.: | ||||||||||
3.625%, 05/20/2021 | 100,000 | 101,257 | ||||||||
1.450%, 09/01/2025 | ||||||||||
Callable 08/01/2025 | 500,000 | 518,963 | ||||||||
|
| |||||||||
620,220 | ||||||||||
|
| |||||||||
Internet & Catalog Retail - 0.8% | ||||||||||
Amazon.com, Inc.: | ||||||||||
3.300%, 12/05/2021 | ||||||||||
Callable 10/05/2021 | 695,000 | 711,096 | ||||||||
1.200%, 06/03/2027 | ||||||||||
Callable 04/03/2027 | 260,000 | 265,556 | ||||||||
|
| |||||||||
976,652 | ||||||||||
|
| |||||||||
Machinery - 0.6% | ||||||||||
Illinois Tool Works, Inc. | ||||||||||
3.500%, 03/01/2024 | ||||||||||
Callable 12/01/2023 | 715,000 | 778,292 | ||||||||
|
| |||||||||
Media & Entertainment - 1.2% | ||||||||||
Alphabet, Inc.: | ||||||||||
3.375%, 02/25/2024 | 600,000 | 657,073 | ||||||||
1.998%, 08/15/2026 | ||||||||||
Callable 05/15/2026 | 200,000 | 214,609 | ||||||||
The Walt Disney Co. | ||||||||||
1.750%, 08/30/2024 | ||||||||||
Callable 07/30/2024 | 665,000 | 693,874 | ||||||||
|
| |||||||||
1,565,556 | ||||||||||
|
| |||||||||
Oil & Gas & Consumable Fuels - 3.7% | ||||||||||
Chevron Corp.: | ||||||||||
2.411%, 03/03/2022 | ||||||||||
Callable 01/03/2022 | 500,000 | 510,975 | ||||||||
1.995%, 05/11/2027 | ||||||||||
Callable 03/11/2027 | 400,000 | 424,567 | ||||||||
ConocoPhillips | ||||||||||
2.400%, 12/15/2022 | ||||||||||
Callable 09/15/2022 | 490,000 | 507,093 |
The accompanying notes are an integral part of these financial statements.
23
LKCM BALANCED FUND |
SCHEDULEOF INVESTMENTS, CONTINUED |
December 31, 2020 |
CORPORATE BONDS | Principal Amount | Value | ||||||||
Oil & Gas & Consumable Fuels - 3.7%, Continued | ||||||||||
Enterprise Products Operating, LLC | ||||||||||
3.750%, 02/15/2025 | ||||||||||
Callable 11/15/2024 | $ | 300,000 | $ | 336,266 | ||||||
EOG Resources, Inc. | ||||||||||
2.625%, 03/15/2023 | ||||||||||
Callable 12/15/2022 | 600,000 | 626,498 | ||||||||
Exxon Mobil Corp.: | ||||||||||
2.709%, 03/06/2025 | ||||||||||
Callable 12/06/2024 | 255,000 | 275,470 | ||||||||
3.043%, 03/01/2026 | ||||||||||
Callable 12/01/2025 | 400,000 | 443,497 | ||||||||
Kinder Morgan Energy Partners, L.P. | ||||||||||
3.950%, 09/01/2022 | ||||||||||
Callable 06/01/2022 | 400,000 | 419,948 | ||||||||
Kinder Morgan, Inc. | ||||||||||
3.150%, 01/15/2023 | ||||||||||
Callable 12/15/2022 | 500,000 | 526,005 | ||||||||
Schlumberger Investment SA (b) | ||||||||||
3.650%, 12/01/2023 | ||||||||||
Callable 09/01/2023 | 500,000 | 543,096 | ||||||||
|
| |||||||||
4,613,415 | ||||||||||
|
| |||||||||
Personal Products - 0.7% | ||||||||||
The Estee Lauder Cos., Inc. | ||||||||||
2.000%, 12/01/2024 | ||||||||||
Callable 11/01/2024 | 805,000 | 851,377 | ||||||||
|
| |||||||||
Pharmaceuticals - 2.6% | ||||||||||
Abbott Laboratories: | ||||||||||
3.400%, 11/30/2023 | ||||||||||
Callable 09/30/2023 | 480,000 | 520,731 | ||||||||
3.875%, 09/15/2025 | ||||||||||
Callable 06/15/2025 | 255,000 | 292,357 | ||||||||
Bristol-Myers Squibb Co. | ||||||||||
3.625%, 05/15/2024 | ||||||||||
Callable 02/15/2024 | 250,000 | 274,201 | ||||||||
Johnson & Johnson | ||||||||||
0.550%, 09/01/2025 | ||||||||||
Callable 08/01/2025 | 735,000 | 738,683 | ||||||||
Merck & Co., Inc. | ||||||||||
2.350%, 02/10/2022 | 650,000 | 664,999 | ||||||||
Pfizer, Inc. | ||||||||||
0.800%, 05/28/2025 | ||||||||||
Callable 04/28/2025 | 800,000 | 814,805 | ||||||||
|
| |||||||||
3,305,776 | ||||||||||
|
| |||||||||
Real Estate Investment Trusts - 0.8% | ||||||||||
American Tower Corp.: | ||||||||||
2.400%, 03/15/2025 | ||||||||||
Callable 02/15/2025 | 300,000 | 319,076 | ||||||||
3.375%, 10/15/2026 | ||||||||||
Callable 07/15/2026 | 635,000 | 713,874 | ||||||||
|
| |||||||||
1,032,950 | ||||||||||
|
| |||||||||
Road & Rail - 0.7% | ||||||||||
Burlington Northern Santa Fe, LLC | ||||||||||
3.000%, 03/15/2023 | ||||||||||
Callable 12/15/2022 | 600,000 | 630,490 |
CORPORATE BONDS | Principal Amount | Value | ||||||||
Road & Rail - 0.7%, Continued | ||||||||||
Union Pacific Corp. | ||||||||||
3.750%, 07/15/2025 | ||||||||||
Callable 05/15/2025 | $ | 200,000 | $ | 227,173 | ||||||
|
| |||||||||
857,663 | ||||||||||
|
| |||||||||
Semiconductor Equipment & Products - 0.5% | ||||||||||
Intel Corp. | ||||||||||
3.700%, 07/29/2025 | ||||||||||
Callable 04/29/2025 | 500,000 | 566,108 | ||||||||
|
| |||||||||
Software - 1.4% | ||||||||||
Adobe, Inc. | ||||||||||
1.900%, 02/01/2025 | ||||||||||
Callable 01/01/2025 | 700,000 | 740,675 | ||||||||
Microsoft Corp.: | ||||||||||
2.375%, 02/12/2022 | ||||||||||
Callable 01/12/2022 | 400,000 | 408,996 | ||||||||
3.125%, 11/03/2025 | ||||||||||
Callable 08/03/2025 | 230,000 | 257,291 | ||||||||
Oracle Corp. | ||||||||||
2.500%, 04/01/2025 | ||||||||||
Callable 03/01/2025 | 300,000 | 322,683 | ||||||||
|
| |||||||||
1,729,645 | ||||||||||
|
| |||||||||
Specialty Retail - 0.7% | ||||||||||
The Home Depot, Inc.: | ||||||||||
2.625%, 06/01/2022 | ||||||||||
Callable 05/01/2022 | 290,000 | 299,113 | ||||||||
2.800%, 09/14/2027 | ||||||||||
Callable 06/14/2027 | 500,000 | 557,194 | ||||||||
|
| |||||||||
856,307 | ||||||||||
|
| |||||||||
TOTAL CORPORATE BONDS | 36,240,589 | |||||||||
|
| |||||||||
SHORT-TERM INVESTMENT - 1.7% | Shares | |||||||||
Money Market Fund - 1.7% | ||||||||||
Invesco Short-Term Investments Trust - Government & Agency Portfolio -Institutional Shares, 0.03% (c) | 2,198,409 | 2,198,409 | ||||||||
|
| |||||||||
TOTAL SHORT-TERM INVESTMENT |
| 2,198,409 | ||||||||
|
| |||||||||
Total Investments - 100.0% | 125,569,667 | |||||||||
Liabilities in Excess of Other Assets - 0.0% |
| (62,669 | ) | |||||||
|
| |||||||||
TOTAL NET ASSETS - 100.0% | $ | 125,506,998 | ||||||||
|
|
(a) | Non-income producing security. |
(b) | Security issued by non-U.S. incorporated company. |
(c) | The rate quoted is the annualized seven-day yield of the fund at period end. |
Investments are classified by industry pursuant to the Global Industry Classification Standard (GICS®), which was developed by and/or is the exclusive property of Morgan Stanley Capital International, Inc. (“MSCI”) and Standard & Poor’s Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC.
The accompanying notes are an integral part of these financial statements.
24
LKCM FIXED INCOME FUND |
SCHEDULEOF INVESTMENTS |
December 31, 2020 |
CORPORATE BONDS - 78.3% | Principal Amount | Value | ||||||||
Aerospace & Defense - 1.9% | ||||||||||
Honeywell International, Inc.: | ||||||||||
2.300%, 08/15/2024 | ||||||||||
Callable 07/15/2024 | $ | 400,000 | $ | 426,687 | ||||||
1.350%, 06/01/2025 | ||||||||||
Callable 05/01/2025 | 3,000,000 | 3,109,569 | ||||||||
Raytheon Technologies Corp. | ||||||||||
3.700%, 12/15/2023 | ||||||||||
Callable 09/15/2023 | 1,750,000 | 1,904,147 | ||||||||
|
| |||||||||
5,440,403 | ||||||||||
|
| |||||||||
Air Freight & Logistics - 1.1% | ||||||||||
United Parcel Service, Inc. | ||||||||||
2.450%, 10/01/2022 | 3,000,000 | 3,113,648 | ||||||||
|
| |||||||||
Banks - 6.9% | ||||||||||
Bank of America Corp.: | ||||||||||
2.625%, 04/19/2021 | 1,704,000 | 1,715,964 | ||||||||
4.450%, 03/03/2026 | 2,000,000 | 2,332,192 | ||||||||
Comerica, Inc. | ||||||||||
3.700%, 07/31/2023 | ||||||||||
Callable 06/30/2023 | 2,000,000 | 2,159,759 | ||||||||
The Bank of New York Mellon Corp. | ||||||||||
2.800%, 05/04/2026 | ||||||||||
Callable 02/04/2026 | 300,000 | 331,067 | ||||||||
Truist Bank: | ||||||||||
2.625%, 01/15/2022 | ||||||||||
Callable 12/15/2021 | 3,700,000 | 3,783,763 | ||||||||
3.200%, 04/01/2024 | ||||||||||
Callable 03/01/2024 | 2,500,000 | 2,714,891 | ||||||||
3.300%, 05/15/2026 | ||||||||||
Callable 04/15/2026 | 4,333,000 | 4,852,131 | ||||||||
Wells Fargo & Co. | ||||||||||
4.125%, 08/15/2023 | 2,000,000 | 2,186,019 | ||||||||
|
| |||||||||
20,075,786 | ||||||||||
|
| |||||||||
Biotechnology - 2.2% | ||||||||||
Amgen, Inc.: | ||||||||||
2.600%, 08/19/2026 | ||||||||||
Callable 05/19/2026 | 1,000,000 | 1,092,543 | ||||||||
2.200%, 02/21/2027 | ||||||||||
Callable 12/21/2026 | 5,000,000 | 5,363,069 | ||||||||
|
| |||||||||
6,455,612 | ||||||||||
|
| |||||||||
Chemicals - 2.1% | ||||||||||
Air Products and Chemicals, Inc. | ||||||||||
1.850%, 05/15/2027 | ||||||||||
Callable 03/15/2027 | 4,000,000 | 4,237,760 | ||||||||
Ecolab, Inc. | ||||||||||
2.375%, 08/10/2022 | ||||||||||
Callable 07/10/2022 | 1,925,000 | 1,985,227 | ||||||||
|
| |||||||||
6,222,987 | ||||||||||
|
|
CORPORATE BONDS | Principal Amount | Value | ||||||||
Communications Equipment - 1.5% | ||||||||||
QUALCOMM, Inc. | ||||||||||
2.900%, 05/20/2024 | ||||||||||
Callable 03/20/2024 | $ | 4,000,000 | $ | 4,309,631 | ||||||
|
| |||||||||
4,309,631 | ||||||||||
|
| |||||||||
Computers & Peripherals - 2.1% | ||||||||||
Apple, Inc.: | ||||||||||
2.400%, 05/03/2023 | 3,250,000 | 3,410,297 | ||||||||
2.500%, 02/09/2025 | 2,515,000 | 2,716,935 | ||||||||
|
| |||||||||
6,127,232 | ||||||||||
|
| |||||||||
Consumer Finance - 1.6% | ||||||||||
American Express Co.: | ||||||||||
3.000%, 10/30/2024 | ||||||||||
Callable 09/29/2024 | 2,000,000 | 2,185,562 | ||||||||
4.200%, 11/06/2025 | ||||||||||
Callable 10/06/2025 | 2,000,000 | 2,324,664 | ||||||||
|
| |||||||||
4,510,226 | ||||||||||
|
| |||||||||
Containers & Packaging - 2.4% | ||||||||||
Ball Corp.: | ||||||||||
5.000%, 03/15/2022 | 2,000,000 | 2,096,950 | ||||||||
5.250%, 07/01/2025 | 4,252,000 | 4,860,483 | ||||||||
|
| |||||||||
6,957,433 | ||||||||||
|
| |||||||||
Diversified Financials - 4.3% | ||||||||||
JPMorgan Chase & Co.: | ||||||||||
3.375%, 05/01/2023 | 3,788,000 | 4,049,984 | ||||||||
2.700%, 05/18/2023 | ||||||||||
Callable 03/18/2023 | 1,855,000 | 1,950,665 | ||||||||
3.875%, 02/01/2024 | 1,750,000 | 1,927,736 | ||||||||
3.300%, 04/01/2026 | ||||||||||
Callable 01/01/2026 | 3,500,000 | 3,919,997 | ||||||||
3.200%, 06/15/2026 | ||||||||||
Callable 03/15/2026 | 636,000 | 711,795 | ||||||||
|
| |||||||||
12,560,177 | ||||||||||
|
| |||||||||
Diversified Telecommunication Services - 7.6% | ||||||||||
AT&T, Inc.: | ||||||||||
3.800%, 02/15/2027 | ||||||||||
Callable 11/15/2026 | 2,000,000 | 2,303,695 | ||||||||
4.250%, 03/01/2027 | ||||||||||
Callable 12/01/2026 | 4,000,000 | 4,681,417 | ||||||||
2.300%, 06/01/2027 | ||||||||||
Callable 04/01/2027 | 3,000,000 | 3,203,346 | ||||||||
4.100%, 02/15/2028 | ||||||||||
Callable 11/15/2027 | 2,000,000 | 2,353,472 | ||||||||
Verizon Communications, Inc.: | ||||||||||
2.450%, 11/01/2022 | ||||||||||
Callable 08/01/2022 | 1,750,000 | 1,809,078 | ||||||||
3.500%, 11/01/2024 | ||||||||||
Callable 08/01/2024 | 1,750,000 | 1,933,895 | ||||||||
2.625%, 08/15/2026 | 3,000,000 | 3,289,898 | ||||||||
4.125%, 03/16/2027 | 2,000,000 | 2,358,692 | ||||||||
|
| |||||||||
21,933,493 | ||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
25
LKCM FIXED INCOME FUND |
SCHEDULEOF INVESTMENTS, CONTINUED |
December 31, 2020 |
CORPORATE BONDS | Principal Amount | Value | ||||||||
Electrical Equipment & Instruments - 2.8% | ||||||||||
Emerson Electric Co.: | ||||||||||
2.625%, 12/01/2021 | ||||||||||
Callable 11/01/2021 | $ | 950,000 | $ | 968,394 | ||||||
3.150%, 06/01/2025 | ||||||||||
Callable 03/01/2025 | 5,000,000 | 5,533,916 | ||||||||
Rockwell Automation, Inc. | ||||||||||
2.875%, 03/01/2025 | ||||||||||
Callable 12/01/2024 | 1,440,000 | 1,562,720 | ||||||||
|
| |||||||||
8,065,030 | ||||||||||
|
| |||||||||
Electronic Equipment & Instruments - 1.7% | ||||||||||
Trimble, Inc. | ||||||||||
4.150%, 06/15/2023 | ||||||||||
Callable 05/15/2023 | 4,500,000 | 4,877,841 | ||||||||
|
| |||||||||
Health Care Equipment & Supplies - 6.3% | ||||||||||
Danaher Corp. | ||||||||||
3.350%, 09/15/2025 | ||||||||||
Callable 06/15/2025 | 5,500,000 | 6,161,337 | ||||||||
Thermo Fisher Scientific, Inc.: | ||||||||||
3.000%, 04/15/2023 | ||||||||||
Callable 02/15/2023 | 2,475,000 | 2,612,890 | ||||||||
4.150%, 02/01/2024 | ||||||||||
Callable 11/01/2023 | 4,500,000 | 4,966,537 | ||||||||
2.950%, 09/19/2026 | ||||||||||
Callable 06/19/2026 | 4,000,000 | 4,462,487 | ||||||||
|
| |||||||||
18,203,251 | ||||||||||
|
| |||||||||
Health Care Providers & Services - 0.7% | ||||||||||
CVS Health Corp. | ||||||||||
4.125%, 05/15/2021 | ||||||||||
Callable 02/15/2021 | 2,000,000 | 2,004,102 | ||||||||
|
| |||||||||
Household Products - 0.3% | ||||||||||
The Procter & Gamble Co. | ||||||||||
8.000%, 09/01/2024 | 775,000 | 979,689 | ||||||||
|
| |||||||||
Internet & Catalog Retail - 2.9% | ||||||||||
Amazon.com, Inc.: | ||||||||||
2.500%, 11/29/2022 | ||||||||||
Callable 08/29/2022 | 5,000,000 | 5,193,842 | ||||||||
1.200%, 06/03/2027 | ||||||||||
Callable 04/03/2027 | 3,030,000 | 3,094,745 | ||||||||
|
| |||||||||
8,288,587 | ||||||||||
|
| |||||||||
Media & Entertainment - 2.1% | ||||||||||
Alphabet, Inc.: | ||||||||||
3.375%, 02/25/2024 | 4,000,000 | 4,380,491 | ||||||||
1.998%, 08/15/2026 | ||||||||||
Callable 05/15/2026 | 1,725,000 | 1,851,002 | ||||||||
|
| |||||||||
6,231,493 | ||||||||||
|
| |||||||||
Multiline Retail - 1.6% | ||||||||||
Family Dollar Stores, Inc. | ||||||||||
5.000%, 02/01/2021 | 4,500,000 | 4,513,602 | ||||||||
|
|
CORPORATE BONDS | Principal Amount | Value | ||||||||
Oil & Gas & Consumable Fuels - 5.4% | ||||||||||
Chevron Corp.: | ||||||||||
2.411%, 03/03/2022 | ||||||||||
Callable 01/03/2022 | $ | 1,450,000 | $ | 1,481,828 | ||||||
2.355%, 12/05/2022 | ||||||||||
Callable 09/05/2022 | 1,000,000 | 1,036,152 | ||||||||
2.954%, 05/16/2026 | ||||||||||
Callable 02/16/2026 | 1,870,000 | 2,075,706 | ||||||||
Enterprise Products Operating, LLC: | ||||||||||
2.800%, 02/15/2021 | 2,000,000 | 2,005,669 | ||||||||
2.850%, 04/15/2021 | ||||||||||
Callable 03/15/2021 | 2,500,000 | 2,512,304 | ||||||||
3.750%, 02/15/2025 | ||||||||||
Callable 11/15/2024 | 2,963,000 | 3,321,183 | ||||||||
Kinder Morgan Energy Partners, L.P. | ||||||||||
4.250%, 09/01/2024 | ||||||||||
Callable 06/01/2024 | 3,000,000 | 3,353,697 | ||||||||
|
| |||||||||
15,786,539 | ||||||||||
|
| |||||||||
Personal Products - 0.1% | ||||||||||
The Estee Lauder Cos., Inc. | ||||||||||
2.000%, 12/01/2024 | ||||||||||
Callable 11/01/2024 | 321,000 | 339,493 | ||||||||
|
| |||||||||
Pharmaceuticals - 4.5% | ||||||||||
Abbott Laboratories: | ||||||||||
3.400%, 11/30/2023 | ||||||||||
Callable 09/30/2023 | 1,750,000 | 1,898,499 | ||||||||
2.950%, 03/15/2025 | ||||||||||
Callable 12/15/2024 | 3,925,000 | 4,309,022 | ||||||||
Bristol-Myers Squibb Co. | ||||||||||
3.625%, 05/15/2024 | ||||||||||
Callable 02/15/2024 | 4,750,000 | 5,209,821 | ||||||||
Zoetis, Inc. | ||||||||||
3.250%, 02/01/2023 | ||||||||||
Callable 11/01/2022 | 1,664,000 | 1,751,432 | ||||||||
|
| |||||||||
13,168,774 | ||||||||||
|
| |||||||||
Real Estate Investment Trusts - 3.8% | ||||||||||
American Tower Corp.: | ||||||||||
3.500%, 01/31/2023 | 3,500,000 | 3,712,831 | ||||||||
5.000%, 02/15/2024 | 2,500,000 | 2,830,710 | ||||||||
3.375%, 10/15/2026 | ||||||||||
Callable 07/15/2026 | 4,030,000 | 4,530,567 | ||||||||
|
| |||||||||
11,074,108 | ||||||||||
|
| |||||||||
Road & Rail - 4.3% | ||||||||||
Burlington Northern Santa Fe, LLC: | ||||||||||
3.000%, 03/15/2023 | ||||||||||
Callable 12/15/2022 | 4,695,000 | 4,933,588 | ||||||||
3.000%, 04/01/2025 | ||||||||||
Callable 01/01/2025 | 2,250,000 | 2,468,242 | ||||||||
Union Pacific Corp.: | ||||||||||
3.250%, 01/15/2025 | ||||||||||
Callable 10/15/2024 | 1,500,000 | 1,640,396 |
The accompanying notes are an integral part of these financial statements.
26
LKCM FIXED INCOME FUND |
SCHEDULEOF INVESTMENTS, CONTINUED |
December 31, 2020 |
CORPORATE BONDS | Principal Amount | Value | ||||||||
Road & Rail - 4.3%, Continued | ||||||||||
3.750%, 07/15/2025 | ||||||||||
Callable 05/15/2025 | $ | 3,025,000 | $ | 3,435,990 | ||||||
|
| |||||||||
12,478,216 | ||||||||||
|
| |||||||||
Semiconductor Equipment & Products - 0.9% | ||||||||||
Intel Corp. | ||||||||||
3.700%, 07/29/2025 | ||||||||||
Callable 04/29/2025 | 2,250,000 | 2,547,487 | ||||||||
|
| |||||||||
Software - 5.2% | ||||||||||
Adobe, Inc. | ||||||||||
1.900%, 02/01/2025 | ||||||||||
Callable 01/01/2025 | 4,280,000 | 4,528,700 | ||||||||
Oracle Corp.: | ||||||||||
2.500%, 10/15/2022 | 3,000,000 | 3,119,394 | ||||||||
2.650%, 07/15/2026 | ||||||||||
Callable 04/15/2026 | 2,000,000 | 2,200,602 | ||||||||
3.250%, 11/15/2027 | ||||||||||
Callable 08/15/2027 | 4,500,000 | 5,138,004 | ||||||||
|
| |||||||||
14,986,700 | ||||||||||
|
| |||||||||
Specialty Retail - 2.0% | ||||||||||
The Home Depot, Inc.: | ||||||||||
2.700%, 04/01/2023 | ||||||||||
Callable 01/01/2023 | 2,750,000 | 2,885,116 | ||||||||
2.950%, 06/15/2029 | ||||||||||
Callable 03/15/2029 | 2,500,000 | 2,843,808 | ||||||||
|
| |||||||||
5,728,924 | ||||||||||
|
| |||||||||
TOTAL CORPORATE BONDS | 226,980,464 | |||||||||
|
| |||||||||
U.S. GOVERNMENT ISSUES - 12.0% | ||||||||||
U.S. Treasury Inflation Indexed Bonds - 1.4% | ||||||||||
0.625%, 01/15/2024 | 3,905,860 | 4,193,104 | ||||||||
|
| |||||||||
U.S. Treasury Notes - 10.6% | ||||||||||
1.500%, 10/31/2021 | 1,000,000 | 1,011,489 | ||||||||
1.500%, 11/30/2021 | 4,000,000 | 4,050,365 | ||||||||
1.125%, 02/28/2022 | 4,000,000 | 4,047,500 | ||||||||
1.750%, 07/15/2022 | 2,000,000 | 2,050,273 | ||||||||
1.375%, 02/15/2023 | 2,000,000 | 2,053,008 | ||||||||
2.000%, 02/15/2023 | 2,000,000 | 2,079,375 | ||||||||
2.000%, 02/15/2025 | 2,000,000 | 2,141,953 | ||||||||
2.000%, 08/15/2025 | 1,000,000 | 1,077,422 | ||||||||
1.625%, 02/15/2026 | 2,000,000 | 2,127,656 | ||||||||
2.375%, 05/15/2027 | 2,000,000 | 2,231,367 | ||||||||
3.125%, 11/15/2028 | 3,000,000 | 3,552,539 | ||||||||
1.500%, 02/15/2030 | 4,000,000 | 4,232,344 | ||||||||
|
| |||||||||
30,655,291 | ||||||||||
|
| |||||||||
TOTAL U.S. GOVERNMENT ISSUES |
| 34,848,395 | ||||||||
|
|
U.S. GOVERNMENT SPONSORED ENTITIES - 6.1% | Principal Amount | Value | ||||||||
Fannie Mae - 0.7% | ||||||||||
0.500%, 06/17/2025 | $ | 1,852,000 | $ | 1,862,644 | ||||||
|
| |||||||||
Federal Home Loan Bank - 3.5% | ||||||||||
1.780%, 01/22/2024 | ||||||||||
Callable 01/22/2021 | 2,230,000 | 2,231,237 | ||||||||
2.375%, 03/13/2026 | 3,575,000 | 3,930,648 | ||||||||
2.820%, 06/27/2029 | ||||||||||
Callable 06/27/2022 | 4,000,000 | 4,093,150 | ||||||||
|
| |||||||||
10,255,035 | ||||||||||
|
| |||||||||
Freddie Mac - 1.9% | ||||||||||
2.375%, 01/13/2022 | 2,000,000 | 2,046,448 | ||||||||
0.750%, 05/28/2025 | ||||||||||
Callable 05/28/2021 | 3,500,000 | 3,504,045 | ||||||||
|
| |||||||||
5,550,493 | ||||||||||
|
| |||||||||
TOTAL U.S. GOVERNMENT SPONSORED ENTITIES | 17,668,172 | |||||||||
|
| |||||||||
SHORT-TERM INVESTMENTS - 2.8% | ||||||||||
Corporate Bonds - 1.3% | ||||||||||
AbbVie, Inc. | ||||||||||
2.300%, 05/14/2021 | ||||||||||
Callable 04/14/2021 | 2,500,000 | 2,513,902 | ||||||||
Cisco Systems, Inc. | ||||||||||
2.200%, 02/28/2021 | 1,225,000 | 1,228,828 | ||||||||
|
| |||||||||
3,742,730 | ||||||||||
|
| |||||||||
Shares | ||||||||||
Money Market Fund - 1.5% | ||||||||||
Invesco Short-Term Investments Trust - Government & Agency Portfolio - Institutional Shares, 0.03% (a) | 4,312,464 | 4,312,464 | ||||||||
|
| |||||||||
TOTAL SHORT-TERM INVESTMENTS |
| 8,055,194 | ||||||||
|
| |||||||||
Total Investments - 99.2% | 287,552,225 | |||||||||
Other Assets in Excess of Liabilities - 0.8% |
| 2,304,362 | ||||||||
|
| |||||||||
TOTAL NET ASSETS - 100.0% | $ | 289,856,587 | ||||||||
|
|
(a) | The rate quoted is the annualized seven-day yield of the fund at period end. |
The accompanying notes are an integral part of these financial statements.
27
LKCM INTERNATIONAL EQUITY FUND |
SCHEDULEOF INVESTMENTS |
December 31, 2020 |
COMMON STOCKS - 92.8% | Shares | Value | ||||||||
AUSTRALIA - 2.4% | ||||||||||
Pharmaceuticals - 2.4% | ||||||||||
CSL Ltd. | 3,575 | $ | 781,111 | |||||||
|
| |||||||||
Total Australia | 781,111 | |||||||||
|
| |||||||||
FINLAND - 1.8% | ||||||||||
Banks - 1.8% | ||||||||||
Nordea Bank Abp (a) | 71,250 | 583,922 | ||||||||
|
| |||||||||
Total Finland | 583,922 | |||||||||
|
| |||||||||
FRANCE - 12.2% | ||||||||||
Chemicals - 2.5% | ||||||||||
Air Liquide SA | 4,900 | 803,335 | ||||||||
|
| |||||||||
Electrical Equipment & Instruments - 3.0% | ||||||||||
Schneider Electric SA | 6,585 | 951,706 | ||||||||
|
| |||||||||
IT Consulting & Services - 2.5% | ||||||||||
Cap Gemini | 5,165 | 803,423 | ||||||||
|
| |||||||||
Oil & Gas & Consumable Fuels - 1.4% | ||||||||||
TOTAL SA | 10,715 | 462,481 | ||||||||
|
| |||||||||
Specialty Retail - 2.8% | ||||||||||
LVMH Moet Hennessy Louis Vuitton SE | 1,470 | 920,217 | ||||||||
|
| |||||||||
Total France | 3,941,162 | |||||||||
|
| |||||||||
GERMANY - 10.9% | ||||||||||
Insurance - 2.0% | ||||||||||
Allianz SE | 2,585 | 635,061 | ||||||||
|
| |||||||||
Machinery - 2.2% | ||||||||||
KION Group AG | 8,215 | 712,418 | ||||||||
|
| |||||||||
Semiconductor Equipment & Products - 2.4% | ||||||||||
Infineon Technologies AG | 20,800 | 794,318 | ||||||||
|
| |||||||||
Software - 2.2% | ||||||||||
SAP SE | 5,500 | 712,349 | ||||||||
|
| |||||||||
Textiles, Apparel & Luxury Goods - 2.1% | ||||||||||
Adidas AG (a) | 1,825 | 663,940 | ||||||||
|
| |||||||||
Total Germany | 3,518,086 | |||||||||
|
| |||||||||
IRELAND - 2.5% | ||||||||||
Construction Materials - 2.5% | ||||||||||
CRH PLC | 18,875 | 802,684 | ||||||||
|
| |||||||||
Total Ireland | 802,684 | |||||||||
|
| |||||||||
ITALY - 2.7% | ||||||||||
Banks - 1.0% | ||||||||||
UniCredit SpA (a) | 36,000 | 337,296 | ||||||||
|
| |||||||||
Textiles, Apparel & Luxury Goods - 1.7% | ||||||||||
Moncler SpA (a) | 8,590 | 528,116 | ||||||||
|
| |||||||||
Total Italy | 865,412 | |||||||||
|
| |||||||||
JAPAN - 9.3% | ||||||||||
Computers & Peripherals - 2.7% | ||||||||||
Nidec Corp. | 6,840 | 865,314 | ||||||||
|
|
COMMON STOCKS | Shares | Value | ||||||||
Food & Drug Retailing - 1.9% | ||||||||||
Tsuruha Holdings, Inc. | 4,315 | $ | 613,609 | |||||||
|
| |||||||||
Media & Entertainment - 3.3% | ||||||||||
Nintendo Co., Ltd. | 1,660 | 1,065,624 | ||||||||
|
| |||||||||
Personal Products - 1.4% | ||||||||||
Shiseido Co., Ltd. | 6,600 | 456,880 | ||||||||
|
| |||||||||
Total Japan | 3,001,427 | |||||||||
|
| |||||||||
JERSEY - 3.1% | ||||||||||
Trading Companies & Distributors - 3.1% | ||||||||||
Ferguson PLC | 8,350 | 1,014,530 | ||||||||
|
| |||||||||
Total Jersey | 1,014,530 | |||||||||
|
| |||||||||
NETHERLANDS - 6.4% | ||||||||||
Banks - 1.2% | ||||||||||
ING Groep NV (a) | 41,000 | 381,209 | ||||||||
|
| |||||||||
Professional Services - 1.9% | ||||||||||
Wolters Kluwer NV | 7,225 | 608,887 | ||||||||
|
| |||||||||
Semiconductor Equipment & Products - 3.3% | ||||||||||
ASML Holding NV | 2,200 | 1,065,184 | ||||||||
|
| |||||||||
Total Netherlands | 2,055,280 | |||||||||
|
| |||||||||
SPAIN - 4.5% | ||||||||||
Banks - 1.4% | ||||||||||
CaixaBank SA | 168,000 | 431,804 | ||||||||
|
| |||||||||
Machinery - 3.1% | ||||||||||
Fluidra SA | 39,000 | 1,001,184 | ||||||||
|
| |||||||||
Total Spain | 1,432,988 | |||||||||
|
| |||||||||
SWEDEN - 1.3% | ||||||||||
Oil & Gas & Consumable Fuels - 1.3% | ||||||||||
Lundin Petroleum AB | 15,800 | 428,222 | ||||||||
|
| |||||||||
Total Sweden | 428,222 | |||||||||
|
| |||||||||
SWITZERLAND - 14.3% | ||||||||||
Banks - 2.3% | ||||||||||
Julius Baer Group Ltd. | 12,615 | 726,769 | ||||||||
|
| |||||||||
Electrical Equipment & Instruments - 2.4% | ||||||||||
ABB Ltd. | 27,233 | 763,864 | ||||||||
|
| |||||||||
Health Care Equipment & Supplies - 2.1% | ||||||||||
Alcon, Inc. (a) | 10,080 | 669,273 | ||||||||
|
| |||||||||
Pharmaceuticals - 5.4% | ||||||||||
Lonza Group AG | 1,400 | 901,834 | ||||||||
Roche Holding AG | 2,550 | 888,161 | ||||||||
|
| |||||||||
1,789,995 | ||||||||||
|
| |||||||||
Software - 2.1% | ||||||||||
Temenos AG | 4,765 | 663,906 | ||||||||
|
| |||||||||
Total Switzerland | 4,613,807 | |||||||||
|
| |||||||||
UNITED KINGDOM - 21.4% | ||||||||||
Banks - 3.3% | ||||||||||
Barclays PLC (a) | 282,715 | 567,153 | ||||||||
Lloyds Banking Group PLC (a) | 997,100 | 497,113 | ||||||||
|
| |||||||||
1,064,266 | ||||||||||
|
|
The accompanying notes are an integral part of these financial statements.
28
LKCM INTERNATIONAL EQUITY FUND |
SCHEDULEOF INVESTMENTS, CONTINUED |
December 31, 2020 |
COMMON STOCKS | Shares | Value | ||||||||
Beverages - 1.9% | ||||||||||
Diageo PLC | 15,850 | $ | 627,166 | |||||||
|
| |||||||||
Commercial Services & Supplies - 2.5% | ||||||||||
Rentokil Initial Plc (a) | 114,125 | 795,701 | ||||||||
|
| |||||||||
Hotels, Restaurants & Leisure - 3.2% | ||||||||||
Compass Group PLC | 21,785 | 406,321 | ||||||||
InterContinental Hotels Group PLC (a) | 9,460 | 613,151 | ||||||||
|
| |||||||||
1,019,472 | ||||||||||
|
| |||||||||
Household Products - 1.2% | ||||||||||
Reckitt Benckiser Group PLC | 4,265 | 380,670 | ||||||||
|
| |||||||||
Insurance - 1.9% | ||||||||||
Prudential PLC | 34,000 | 625,192 | ||||||||
|
| |||||||||
Oil & Gas & Consumable Fuels - 1.3% | ||||||||||
Royal Dutch Shell PLC - A Shares | 23,500 | 412,106 | ||||||||
|
| |||||||||
Personal Products - 2.0% | ||||||||||
Unilever PLC | 11,000 | 659,712 | ||||||||
|
| |||||||||
Specialty Retail - 1.2% | ||||||||||
Burberry Group PLC (a) | 16,340 | 399,025 | ||||||||
|
| |||||||||
Trading Companies & Distributors - 2.9% | ||||||||||
Ashtead Group PLC | 19,734 | 929,493 | ||||||||
|
| |||||||||
Total United Kingdom | 6,912,803 | |||||||||
|
| |||||||||
TOTAL COMMON STOCKS (Cost $25,283,705) | 29,951,434 | |||||||||
|
| |||||||||
PREFERRED STOCK - 2.6% | ||||||||||
GERMANY - 2.6% | ||||||||||
Health Care Equipment & Supplies - 2.6% | ||||||||||
Sartorius AG | 2,025 | 852,884 | ||||||||
|
| |||||||||
TOTAL PREFERRED STOCK (Cost $502,666) | 852,884 | |||||||||
|
| |||||||||
SHORT-TERM INVESTMENTS - 5.8% | ||||||||||
Money Market Funds - 5.8% | ||||||||||
Invesco Short-Term Investments Trust - Government & Agency Portfolio - Institutional Shares, 0.03% (b) | 975,000 | 975,000 | ||||||||
Morgan Stanley Institutional Liquidity Funds - Government Portfolio - Institutional Shares, 0.03% (b) | 887,156 | 887,156 | ||||||||
|
| |||||||||
1,862,156 | ||||||||||
|
| |||||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $1,862,156) | 1,862,156 | |||||||||
|
| |||||||||
Total Investments - 101.2% (Cost $27,648,527) | 32,666,474 | |||||||||
Liabilities in Excess of Other Assets - (1.2)% |
| (371,793 | ) | |||||||
|
| |||||||||
TOTAL NET ASSETS - 100.0% | $ | 32,294,681 | ||||||||
|
|
(a) | Non-income producing security. |
(b) | The rate quoted is the annualized seven-day yield of the fund at period end. |
Investments are classified by industry pursuant to the Global Industry Classification Standard (GICS®), which was developed by and/or is the exclusive property of Morgan Stanley Capital International, Inc. (“MSCI”) and Standard & Poor’s Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC.
The accompanying notes are an integral part of these financial statements.
29
STATEMENTOF ASSETSAND LIABILITIES |
December 31, 2020 |
LKCM Small Cap Equity Fund | LKCM Small-Mid Cap Equity Fund | LKCM Equity Fund | LKCM Balanced Fund | LKCM Fixed Income Fund | LKCM International Equity Fund | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, at value* | $ | 202,839,432 | $ | 15,124,153 | $ | 449,647,761 | $ | 125,569,667 | $ | 287,552,225 | $ | 32,666,474 | ||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency, at value** | — | 517 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends and interest receivable | 45,395 | 6,141 | 441,367 | 284,159 | 2,073,612 | 25,597 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivable for investment advisory fees (Note B) | — | 4,326 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivable for Fund shares sold | 165,583 | — | 300,105 | 162 | 484,985 | 49,985 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Prepaid expenses and other assets | 18,937 | 6,151 | 32,523 | 12,804 | 25,131 | 6,314 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | 203,069,347 | 15,141,288 | 450,421,756 | 125,866,792 | 290,135,953 | 32,748,370 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency due to custodian, at value** | — | — | — | — | — | 390,141 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payable for investment advisory fees (Note B) | 297,829 | — | 547,620 | 136,790 | 126,233 | 15,201 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payable for administrative fees | 35,105 | 10,783 | 90,105 | 26,540 | 65,107 | 10,688 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payable for accounting and | 25,872 | 14,641 | 46,777 | 23,117 | 39,122 | 15,410 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payable for professional fees | 23,094 | 6,056 | 46,317 | 16,493 | 35,065 | 15,179 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payable for custody fees and expenses | 3,563 | 937 | 6,983 | 2,167 | 4,780 | 6,061 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payable for reports to shareholders | 2,733 | 287 | 4,537 | 1,823 | 3,228 | 350 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payable for trustees’ fees and officer compensation (Note B) | 2,737 | 229 | 7,483 | 2,190 | 5,831 | 659 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payable for Fund shares redeemed | — | — | 19,000 | 150,674 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities | 390,933 | 32,933 | 768,822 | 359,794 | 279,366 | 453,689 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
Net assets | $ | 202,678,414 | $ | 15,108,355 | $ | 449,652,934 | $ | 125,506,998 | $ | 289,856,587 | $ | 32,294,681 | ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
Net assets consist of: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Paid-in capital | $ | 108,724,313 | $ | 8,743,800 | $ | 208,100,994 | $ | 87,566,413 | $ | 276,638,698 | $ | 27,857,106 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total distributable earnings | 93,954,101 | 6,364,555 | 241,551,940 | 37,940,585 | 13,217,889 | 4,437,575 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
Net assets | $ | 202,678,414 | $ | 15,108,355 | $ | 449,652,934 | $ | 125,506,998 | $ | 289,856,587 | $ | 32,294,681 | ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
Shares of beneficial interest outstanding | 9,311,600 | 1,355,106 | 13,326,626 | 4,689,886 | 25,905,356 | 2,595,050 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value per share | $ | 21.77 | $ | 11.15 | $ | 33.74 | $ | 26.76 | $ | 11.19 | $ | 12.44 | ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
* Cost of Investments | $ | 112,493,730 | $ | 9,153,360 | $ | 208,096,697 | $ | 87,629,082 | $ | 272,993,377 | $ | 27,648,527 | ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
** Cost of Foreign Currency | $ | — | $ | 515 | $ | — | $ | — | $ | — | $ | (388,916 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
30
STATEMENTOF OPERATIONS |
Year Ended December 31, 2020 |
LKCM Small Cap Equity Fund | LKCM Small-Mid Cap Equity Fund | LKCM Equity Fund | LKCM Balanced Fund | LKCM Fixed Income Fund | LKCM International Equity Fund | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Income: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends* | $ | 1,332,403 | $ | 88,872 | $ | 5,103,964 | $ | 1,196,828 | $ | — | $ | 229,681 | ||||||||||||||||||||||||||||||||||||||||||||||||
Interest | 10,509 | 894 | 99,980 | 751,363 | 6,455,531 | 4,507 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
Total income | 1,342,912 | 89,766 | 5,203,944 | 1,948,191 | 6,455,531 | 234,188 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
Expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment advisory fees (Note B) | 1,153,365 | 91,438 | 2,703,007 | 714,724 | 1,434,849 | 158,810 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Administrative fees | 134,192 | 42,374 | 335,876 | 99,434 | 259,423 | 42,786 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting and transfer agent fees and expenses | 125,727 | 61,525 | 248,165 | 112,099 | 190,477 | 63,530 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Professional fees | 66,432 | 9,233 | 158,026 | 47,514 | 119,430 | 2,661 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trustees’ fees and officer compensation (Note B) | 92,640 | 6,928 | 214,128 | 60,709 | 166,539 | 7,966 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Federal and state registration | 32,488 | 23,050 | 52,147 | 25,712 | 34,176 | 16,584 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Custody fees and expenses | 21,460 | 6,012 | 39,011 | 11,852 | 29,279 | 36,078 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reports to shareholders | 12,986 | 945 | 26,169 | 9,032 | 20,484 | 931 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Offering costs | — | — | — | — | — | 1,936 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | 5,934 | 441 | 13,920 | 4,074 | 11,741 | 412 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
Total expenses | 1,645,224 | 241,946 | 3,790,449 | 1,085,150 | 2,266,398 | 331,694 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less, expense waiver and/or | (113,433 | ) | (120,028 | ) | (701,299 | ) | (205,490 | ) | (831,549 | ) | (155,239 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
Net expenses | 1,531,791 | 121,918 | 3,089,150 | 879,660 | 1,434,849 | 176,455 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | (188,879 | ) | (32,152 | ) | 2,114,794 | 1,068,531 | 5,020,682 | 57,733 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
Realized and Unrealized Gain (Loss): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized gain (loss) on: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | 11,511,516 | 1,174,753 | 22,432,961 | 4,042,398 | (872,810 | ) | (578,145 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation | — | — | — | — | — | (1,654 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net change in unrealized appreciation on: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | 37,360,816 | 2,453,930 | 58,658,948 | 11,490,886 | 7,939,510 | 4,041,463 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation | — | 2 | — | — | — | 180 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
Net Realized and Unrealized Gain | 48,872,332 | 3,628,685 | 81,091,909 | 15,533,284 | 7,066,700 | 3,461,844 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
Net Increase in Net Assets Resulting | $ | 48,683,453 | $ | 3,596,533 | $ | 83,206,703 | $ | 16,601,815 | $ | 12,087,382 | $ | 3,519,577 | ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||
* Net of foreign taxes withheld and/or issuance fees | $ | 1,242 | $ | 271 | $ | 11,115 | $ | 819 | $ | — | $ | 26,394 | ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
31
STATEMENTSOF CHANGESIN NET ASSETS |
LKCM Small Cap Equity Fund | LKCM Small-Mid Cap Equity Fund | |||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2020 | Year Ended December 31, 2019 | Year Ended December 31, 2020 | Year Ended December 31, 2019 | |||||||||||||||||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||||||||||||
Net investment loss | $ | (188,879 | ) | $ | (230,410 | ) | $ | (32,152 | ) | $ | (31,999 | ) | ||||||||||||||||||||||||||||
Net realized gain | 11,511,516 | 11,529,290 | 1,174,753 | 1,956,095 | ||||||||||||||||||||||||||||||||||||
Net change in unrealized appreciation | 37,360,816 | 24,618,234 | 2,453,932 | 1,606,994 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net increase in net assets resulting from operations | 48,683,453 | 35,917,114 | 3,596,533 | 3,531,090 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net Dividends and Distributions to Shareholders | (7,270,969 | ) | (9,039,350 | ) | (936,700 | ) | (1,611,139 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net decrease in net assets from | (19,416,505 | ) | (6,517,452 | ) | (141,824 | ) | (1,491,820 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total increase in net assets | 21,995,979 | 20,360,312 | 2,518,009 | 428,131 | ||||||||||||||||||||||||||||||||||||
Net Assets: | ||||||||||||||||||||||||||||||||||||||||
Beginning of period | 180,682,435 | 160,322,123 | 12,590,346 | 12,162,215 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
End of period | $ | 202,678,414 | $ | 180,682,435 | $ | 15,108,355 | $ | 12,590,346 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
32
STATEMENTSOF CHANGESIN NET ASSETS |
LKCM Equity Fund | LKCM Balanced Fund | |||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2020 | Year Ended December 31, 2019 | Year Ended December 31, 2020 | Year Ended December 31, 2019 | |||||||||||||||||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||||||||||||
Net investment income | $ | 2,114,794 | $ | 2,838,578 | $ | 1,068,531 | $ | 1,118,625 | ||||||||||||||||||||||||||||||||
Net realized gain | 22,432,961 | 14,638,054 | 4,042,398 | 4,822,626 | ||||||||||||||||||||||||||||||||||||
Net change in unrealized appreciation | 58,658,948 | 73,450,559 | 11,490,886 | 12,832,158 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net increase in net assets resulting from operations | 83,206,703 | 90,927,191 | 16,601,815 | 18,773,409 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net Dividends and Distributions to Shareholders | (23,899,115 | ) | (16,259,802 | ) | (5,072,763 | ) | (5,861,135 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net increase (decrease) in net assets resulting from | 9,038,373 | (2,026,981 | ) | 10,153,339 | 5,005,673 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total increase in net assets | 68,345,961 | 72,640,408 | 21,682,391 | 17,917,947 | ||||||||||||||||||||||||||||||||||||
Net Assets: | ||||||||||||||||||||||||||||||||||||||||
Beginning of period | 381,306,973 | 308,666,565 | 103,824,607 | 85,906,660 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
End of period | $ | 449,652,934 | $ | 381,306,973 | $ | 125,506,998 | $ | 103,824,607 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
33
STATEMENTSOF CHANGESIN NET ASSETS |
LKCM Fixed Income Fund | LKCM International Equity Fund | |||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2020 | Year Ended December 31, 2019 | Year Ended December 31, 2020 | May 1, 2019(1) through December 31, 2019 | |||||||||||||||||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||||||||||||
Net investment income | $ | 5,020,682 | $ | 6,144,233 | $ | 57,733 | $ | 16,910 | ||||||||||||||||||||||||||||||||
Net realized loss | (872,810 | ) | (133,875 | ) | (579,799 | ) | (13,531 | ) | ||||||||||||||||||||||||||||||||
Net change in unrealized appreciation | 7,939,510 | 10,887,483 | 4,041,643 | 976,583 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net increase in net assets resulting from operations | 12,087,382 | 16,897,841 | 3,519,577 | 979,962 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net Dividends and Distributions to Shareholders: | ||||||||||||||||||||||||||||||||||||||||
Net investment income | (5,026,453 | ) | (6,149,434 | ) | (55,491 | ) | (6,697 | ) | ||||||||||||||||||||||||||||||||
Return of capital | — | — | (6,140 | ) | — | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total Net Dividends and Distributions to Shareholders | (5,026,453 | ) | (6,149,434 | ) | (61,631 | ) | (6,697 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net increase in net assets from | 6,878,886 | 15,882,035 | 18,191,405 | 9,672,065 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total increase in net assets | 13,939,815 | 26,630,442 | 21,649,351 | 10,645,330 | ||||||||||||||||||||||||||||||||||||
Net Assets: | ||||||||||||||||||||||||||||||||||||||||
Beginning of period | 275,916,772 | 249,286,330 | 10,645,330 | — | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
End of period | $ | 289,856,587 | $ | 275,916,772 | $ | 32,294,681 | $ | 10,645,330 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
(1) | Commencement of operations. |
The accompanying notes are an integral part of these financial statements.
34
FINANCIAL HIGHLIGHTS |
SELECTED DATAFOR EACH SHAREOF CAPITAL STOCK OUTSTANDING |
LKCM Small Cap Equity Fund | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2020 | Year Ended December 31, 2019 | Year Ended December 31, 2018 | Year Ended December 31, 2017 | Year Ended December 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value – Beginning of Period | $ | 16.78 | $ | 14.39 | $ | 18.44 | $ | 18.82 | $ | 19.86 | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.02 | )(1) | (0.02 | )(1) | (0.03 | )(2) | (0.04 | )(1) | (0.03 | )(1) | ||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 5.85 | 3.29 | (1.05 | ) | 3.27 | 1.88 | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 5.83 | 3.27 | (1.08 | ) | 3.23 | 1.85 | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Distributions from net realized gains | (0.84 | ) | (0.88 | ) | (2.97 | ) | (3.61 | ) | (2.89 | ) | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Total dividends and distributions | (0.84 | ) | (0.88 | ) | (2.97 | ) | (3.61 | ) | (2.89 | ) | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Net Asset Value – End of Period | $ | 21.77 | $ | 16.78 | $ | 14.39 | $ | 18.44 | $ | 18.82 | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Total Return | 34.79% | 22.70% | -5.70% | 17.04% | 9.27% | |||||||||||||||||||||||||||||||||||||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (thousands) | $ | 202,678 | $ | 180,682 | $ | 160,322 | $ | 201,139 | $ | 281,790 | ||||||||||||||||||||||||||||||||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Before expense waiver and/or reimbursement | 1.07% | 1.07% | 1.08% | 1.10% | 1.05% | |||||||||||||||||||||||||||||||||||||||||||||
After expense waiver and/or reimbursement | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | |||||||||||||||||||||||||||||||||||||||||||||
Ratio of net investment loss to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Before expense waiver and/or reimbursement | (0.20)% | (0.20)% | (0.25)% | (0.28)% | (0.18)% | |||||||||||||||||||||||||||||||||||||||||||||
After expense waiver and/or reimbursement | (0.13)% | (0.13)% | (0.17)% | (0.18)% | (0.13)% | |||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover rate | 60% | 63% | 45% | 42% | 50% |
(1) | Net investment loss per share represents net investment loss divided by the average shares outstanding throughout the period. |
(2) | Net investment loss per share is calculated using the ending balance of undistributed net investment loss prior to considerations of adjustments for permanent book and tax differences. |
LKCM Small-Mid Cap Equity Fund | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2020 | Year Ended December 31, 2019 | Year Ended December 31, 2018 | Year Ended December 31, 2017 | Year Ended December 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value – Beginning of Period | $ | 9.09 | $ | 7.92 | $ | 10.60 | $ | 9.56 | $ | 11.15 | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Net investment loss | (0.02 | )(1) | (0.02 | )(1) | (0.03 | )(2) | (0.01 | )(1) | (0.05 | )(1) | ||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 2.80 | 2.48 | (0.93 | ) | 2.32 | 0.19 | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 2.78 | 2.46 | (0.96 | ) | 2.31 | 0.14 | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Distributions from net realized gains | (0.72 | ) | (1.29 | ) | (1.72 | ) | (1.27 | ) | (1.73 | ) | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Net Asset Value – End of Period | $ | 11.15 | $ | 9.09 | $ | 7.92 | $ | 10.60 | $ | 9.56 | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Total Return | 30.66% | 31.05% | -8.89% | 24.13% | 1.17% | |||||||||||||||||||||||||||||||||||||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (thousands) | $ | 15,108 | $ | 12,590 | $ | 12,162 | $ | 19,378 | $ | 20,419 | ||||||||||||||||||||||||||||||||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Before expense waiver and/or reimbursement | 1.98% | 1.95% | 1.75% | 1.76% | 1.23% | |||||||||||||||||||||||||||||||||||||||||||||
After expense waiver and/or reimbursement | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | |||||||||||||||||||||||||||||||||||||||||||||
Ratio of net investment loss to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Before expense waiver and/or reimbursement | (1.25)% | (1.20)% | (1.05)% | (0.94)% | (0.68)% | |||||||||||||||||||||||||||||||||||||||||||||
After expense waiver and/or reimbursement | (0.27)% | (0.25)% | (0.30)% | (0.18)% | (0.45)% | |||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover rate | 76% | 68% | 56% | 63% | 80% |
(1) | Net investment loss per share represents net investment loss divided by the average shares outstanding throughout the period. |
(2) | Net investment loss per share is calculated using the ending balance of undistributed net investment loss prior to considerations of adjustments for permanent book and tax differences. |
The accompanying notes are an integral part of these financial statements.
35
FINANCIAL HIGHLIGHTS |
SELECTED DATAFOR EACH SHAREOF CAPITAL STOCK OUTSTANDING |
LKCM Equity Fund | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2020 | Year Ended December 31, 2019 | Year Ended December 31, 2018 | Year Ended December 31, 2017 | Year Ended December 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value – Beginning of Period | $ | 29.02 | $ | 23.34 | $ | 26.02 | $ | 22.42 | $ | 21.40 | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.17 | (1) | 0.22 | (1) | 0.21 | 0.17 | 0.19 | (1) | ||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 6.44 | 6.75 | (1.08 | ) | 4.69 | 2.32 | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 6.61 | 6.97 | (0.87 | ) | 4.86 | 2.51 | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.17 | ) | (0.23 | ) | (0.21 | ) | (0.17 | ) | (0.20 | ) | ||||||||||||||||||||||||||||||||||||||||
Distributions from net realized gains | (1.72 | ) | (1.06 | ) | (1.60 | ) | (1.09 | ) | (1.29 | ) | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Total dividends and distributions | (1.89 | ) | (1.29 | ) | (1.81 | ) | (1.26 | ) | (1.49 | ) | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Net Asset Value – End of Period | $ | 33.74 | $ | 29.02 | $ | 23.34 | $ | 26.02 | $ | 22.42 | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Total Return | 22.83% | 29.85% | -3.28% | 21.69% | 11.66% | |||||||||||||||||||||||||||||||||||||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (thousands) | $ | 449,653 | $ | 381,307 | $ | 308,667 | $ | 340,601 | $ | 286,508 | ||||||||||||||||||||||||||||||||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Before expense waiver and/or reimbursement | 0.98% | 0.99% | 0.98% | 0.99% | 0.98% | |||||||||||||||||||||||||||||||||||||||||||||
After expense waiver and/or reimbursement | 0.80% | 0.80% | 0.80% | 0.80% | 0.80% | |||||||||||||||||||||||||||||||||||||||||||||
Ratio of net investment income to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Before expense waiver and/or reimbursement | 0.37% | 0.61% | 0.56% | 0.50% | 0.69% | |||||||||||||||||||||||||||||||||||||||||||||
After expense waiver and/or reimbursement | 0.55% | 0.80% | 0.74% | 0.69% | 0.87% | |||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover rate | 10% | 9% | 16% | 11% | 16% |
(1) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the period. |
LKCM Balanced Fund | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2020 | Year Ended December 31, 2019 | Year Ended December 31, 2018 | Year Ended December 31, 2017 | Year Ended December 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value – Beginning of Period | $ | 24.22 | $ | 21.07 | $ | 22.18 | $ | 20.46 | $ | 19.60 | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.24 | (1) | 0.27 | (1) | 0.23 | 0.20 | 0.20 | (1) | ||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 3.42 | 4.32 | (0.70 | ) | 2.43 | 1.69 | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 3.66 | 4.59 | (0.47 | ) | 2.63 | 1.89 | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.24 | ) | (0.27 | ) | (0.23 | ) | (0.20 | ) | (0.18 | ) | ||||||||||||||||||||||||||||||||||||||||
Distributions from net realized gains | (0.88 | ) | (1.17 | ) | (0.41 | ) | (0.71 | ) | (0.85 | ) | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Total dividends and distributions | (1.12 | ) | (1.44 | ) | (0.64 | ) | (0.91 | ) | (1.03 | ) | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Net Asset Value – End of Period | $ | 26.76 | $ | 24.22 | $ | 21.07 | $ | 22.18 | $ | 20.46 | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Total Return | 15.28% | 21.85% | -2.15% | 12.88% | 9.70% | |||||||||||||||||||||||||||||||||||||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (thousands) | $ | 125,507 | $ | 103,825 | $ | 85,907 | $ | 83,430 | $ | 63,192 | ||||||||||||||||||||||||||||||||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Before expense waiver and/or reimbursement | 0.99% | 1.00% | 1.00% | 1.02% | 1.03% | |||||||||||||||||||||||||||||||||||||||||||||
After expense waiver and/or reimbursement | 0.80% | 0.80% | 0.80% | 0.80% | 0.80% | |||||||||||||||||||||||||||||||||||||||||||||
Ratio of net investment income to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Before expense waiver and/or reimbursement | 0.78% | 0.95% | 0.83% | 0.73% | 0.73% | |||||||||||||||||||||||||||||||||||||||||||||
After expense waiver and/or reimbursement | 0.97% | 1.15% | 1.03% | 0.95% | 0.96% | |||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover rate | 18% | 17% | 17% | 15% | 16% |
(1) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the period. |
The accompanying notes are an integral part of these financial statements.
36
FINANCIAL HIGHLIGHTS |
SELECTED DATAFOR EACH SHAREOF CAPITAL STOCK OUTSTANDING |
LKCM Fixed Income Fund | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2020 | Year Ended December 31, 2019 | Year Ended December 31, 2018 | Year Ended December 31, 2017 | Year Ended December 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value – Beginning of Period | $ | 10.92 | $ | 10.47 | $ | 10.68 | $ | 10.67 | $ | 10.50 | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.19 | (1) | 0.25 | (1) | 0.24 | 0.21 | 0.23 | |||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.27 | 0.45 | (0.21 | ) | 0.02 | 0.17 | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 0.46 | 0.70 | 0.03 | 0.23 | 0.40 | |||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.19 | ) | (0.25 | ) | (0.24 | ) | (0.21 | ) | (0.23 | ) | ||||||||||||||||||||||||||||||||||||||||
Distributions from net realized gains | — | — | — | (0.01 | ) | (0.00 | )(2) | |||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Total dividends and distributions | (0.19 | ) | (0.25 | ) | (0.24 | ) | (0.22 | ) | (0.23 | ) | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Net Asset Value – End of Period | $ | 11.19 | $ | 10.92 | $ | 10.47 | $ | 10.68 | $ | 10.67 | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Total Return | 4.29% | 6.70% | 0.26% | 2.15% | 3.83% | |||||||||||||||||||||||||||||||||||||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (thousands) | $ | 289,857 | $ | 275,917 | $ | 249,286 | $ | 248,976 | $ | 226,862 | ||||||||||||||||||||||||||||||||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Before expense waiver and/or reimbursement | 0.79% | 0.79% | 0.78% | 0.80% | 0.78% | |||||||||||||||||||||||||||||||||||||||||||||
After expense waiver and/or reimbursement | 0.50% | 0.50% | 0.50% | 0.50% | 0.50% | |||||||||||||||||||||||||||||||||||||||||||||
Ratio of net investment income to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Before expense waiver and/or reimbursement | 1.46% | 2.02% | 1.96% | 1.66% | 1.86% | |||||||||||||||||||||||||||||||||||||||||||||
After expense waiver and/or reimbursement | 1.75% | 2.31% | 2.24% | 1.96% | 2.14% | |||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover rate | 46% | 37% | 23% | 28% | 59% |
(1) | Net investment income per share represents net investment income divided by the average shares outstanding during the period. |
(2) | Less than $(0.005). |
LKCM International Equity Fund | ||||||||||||||||||||
Year Ended December 31, 2020 | May 1, 2019(1) through December 31, 2019 | |||||||||||||||||||
Net Asset Value – Beginning of Period | $ | 10.89 | $ | 10.00 | ||||||||||||||||
|
|
|
| |||||||||||||||||
Net investment income | 0.03 | (2) | 0.02 | (2) | ||||||||||||||||
Net realized and unrealized gain on investments | 1.54 | 0.88 | ||||||||||||||||||
|
|
|
| |||||||||||||||||
Total from investment operations | 1.57 | 0.90 | ||||||||||||||||||
|
|
|
| |||||||||||||||||
Dividends from net investment income | (0.02 | ) | (0.01 | ) | ||||||||||||||||
Distributions from return of capital | (0.00 | )(3) | — | |||||||||||||||||
Distributions from net realized gains | — | (0.00 | )(3) | |||||||||||||||||
|
|
|
| |||||||||||||||||
Total dividends and distributions | (0.02 | ) | (0.01 | ) | ||||||||||||||||
|
|
|
| |||||||||||||||||
Net Asset Value – End of Period | $ | 12.44 | $ | 10.89 | ||||||||||||||||
|
|
|
| |||||||||||||||||
Total Return | 14.45% | 8.97% | (4) | |||||||||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (thousands) | $ | 32,295 | $ | 10,645 | ||||||||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
Before expense waiver and/or reimbursement | 1.88% | 4.09% | (5) | |||||||||||||||||
After expense waiver and/or reimbursement | 1.00% | 1.00% | (5) | |||||||||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
Before expense waiver and/or reimbursement | (0.55)% | (2.76)% | (5) | |||||||||||||||||
After expense waiver and/or reimbursement | 0.33% | 0.33% | (5) | |||||||||||||||||
Portfolio turnover rate | 6% | 2% | (4) |
(1) | Commencement of operations. |
(2) | Net investment income per share represents net investment income divided by the average shares outstanding during the period. |
(3) | Less than $(0.005). |
(4) | Not annualized. |
(5) | Annualized. |
The accompanying notes are an integral part of these financial statements.
37
LKCM FUNDS |
NOTESTOTHE FINANCIAL STATEMENTS |
A. Organization and Significant Accounting Policies: LKCM Funds (the “Trust”) is registered under the Investment Company Act of 1940 (“1940 Act”) as an open-end, management investment company. The Trust was organized as a Delaware statutory trust on February 10, 1994 and consists of seven diversified series as of December 31, 2020, six of which are presented herein and include the LKCM Small Cap Equity Fund, LKCM Small-Mid Cap Equity Fund, LKCM Equity Fund, LKCM Balanced Fund, LKCM Fixed Income Fund and LKCM International Equity Fund (collectively, the “Funds”). The assets of the Funds are invested in separate, independently managed portfolios. Investment operations of the Funds began on July 14, 1994 (LKCM Small Cap Equity Fund), January 3, 1996 (LKCM Equity Fund), December 30, 1997 (LKCM Balanced Fund and LKCM Fixed Income Fund), May 2, 2011 (LKCM Small-Mid Cap Equity Fund) and May 1, 2019 (LKCM International Equity Fund). The LKCM Small Cap Equity Fund, LKCM Small-Mid Cap Equity Fund and LKCM Equity Fund previously had two share classes—Institutional Class shares and Adviser Class shares. The Board of Trustees of the Trust approved the (i) liquidation and termination of Adviser Class shares of the LKCM Small Cap Equity Fund, which took place on October 31, 2018, and (ii) termination of Adviser Class shares of the LKCM Equity Fund and LKCM Small-Mid Cap Equity Fund, which had not commenced operations and had no assets or shareholders, on September 24, 2018. Each Fund charges a 1% redemption fee for redemptions of Fund shares held for less than 30 days, unless otherwise determined by a Fund in its discretion.
The LKCM Small Cap Equity Fund seeks to maximize long-term capital appreciation by investing under normal circumstances at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of smaller companies (those with market capitalizations at the time of investment between $600 million and $5 billion) which Luther King Capital Management Corporation (the “Adviser”) believes are likely to have above-average growth in revenue and/or earnings and potential for above-average capital appreciation. The LKCM Small-Mid Cap Equity Fund seeks to maximize long-term capital appreciation by investing under normal circumstances at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of small-mid capitalization companies (those with market capitalizations at the time of investment between $1.25 billion and $12 billion) which the Adviser believes are likely to have above-average growth in revenue and/or earnings and potential for above-average capital appreciation. The LKCM Equity Fund seeks to maximize long-term capital appreciation by investing under normal circumstances at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of companies which the Adviser believes are likely to have above-average growth in revenue and/or earnings, above-average returns on shareholders’ equity, potential for above-average capital appreciation and/or companies that the Adviser believes have attractive relative valuations. The LKCM Balanced Fund seeks current income and long-term capital appreciation by investing primarily in a portfolio of equity and fixed income securities with at least 25% of the Fund’s total assets invested in fixed income securities under normal circumstances. The LKCM Fixed Income Fund seeks current income by investing under normal circumstances at least 80% of its net assets (plus any borrowings for investment purposes) in a portfolio of investment grade corporate and U.S. Government fixed income securities. The LKCM International Equity Fund seeks to maximize long-term capital appreciation by investing primarily in equity securities of non-U.S. companies and invests under normal circumstances at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities.
The following is a summary of significant accounting policies followed by the Funds in preparation of the financial statements. The Funds are investment companies and, accordingly, follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standards Codification Topic 946, Investment Companies.
1. Security Valuation: Equity securities listed or traded on a U.S. securities exchange for which market quotations are readily available are valued at the last quoted sale price on the exchange on which the security is primarily traded. Nasdaq Global Market securities are valued at the Nasdaq Official Closing Price (“NOCP”). Unlisted U.S. equity securities and listed U.S. equity securities not traded on a particular valuation date are valued at the mean of the most recent quoted bid and ask price on the relevant exchanges or markets. Equity securities listed on a foreign exchange for which market quotations are readily available are valued at the last quoted sales price on the exchange on which the security is primarily traded. Debt securities are normally valued at the mean of the closing bid and ask price and/or by using a combination of broker quotations or evaluated prices provided by an independent pricing service. Futures and options on futures are valued at the settlement prices established each day on the principal exchange on which they are traded. Forward contracts are valued based on the forward rate using information provided by an independent pricing service. Other assets and securities for which no market or broker quotations or evaluated prices are readily available are valued in good faith at fair value using guidelines approved by the Board of Trustees. The Board of Trustees has established policies and procedures that authorize the Adviser to fair value a security in good faith under certain circumstances. The Funds may use prices provided by independent pricing services to assist in the fair valuation of the Funds’ portfolio securities. For foreign securities held by the LKCM International Equity Fund, such fair value prices generally will be based on such independent pricing services’ proprietary multi-factor models that measure movements in relevant indices, market indicators or other factors between the time the relevant foreign markets have closed and the time the Fund calculates its net asset value, and therefore may differ from quoted or official closing prices for such foreign securities in such foreign markets.
The Trust has adopted accounting standards which establish an authoritative definition of fair value and set out a hierarchy for measuring fair value. These standards require additional disclosures about the various inputs and valuation techniques used to develop the measurements of fair value and a discussion of changes in valuation techniques and related inputs during the period. These standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly
38
transaction between market participants at the measurement date. The fair value hierarchy is organized into three levels based upon the assumptions (referred to as “inputs”) used in pricing the asset or liability. These standards state that “observable inputs” reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from independent sources and “unobservable inputs” reflect an entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability. These inputs are summarized in the three broad levels listed below.
Level 1 | – | Quoted unadjusted prices for identical instruments in active markets to which the Trust has access at the date of measurement. | ||
Level 2 | – | Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists or instances where prices vary substantially over time or among brokered market makers. | ||
Level 3 | – | Model derived valuations in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are those inputs that reflect the Trust’s own assumptions that market participants would use to price the asset or liability based on the best available information. |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. As of December 31, 2020, the Funds’ assets carried at fair value were classified as follows:
LKCM Small Cap Equity Fund | ||||||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Common Stocks | $ | 194,340,287 | $ | — | $ | 0 | (1) | $ | 194,340,287 | |||||||||||
Short-Term Investments | 8,499,145 | — | — | 8,499,145 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total Investments* | $ | 202,839,432 | $ | — | $ | 0 | $ | 202,839,432 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
LKCM Small-Mid Cap Equity Fund | ||||||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Common Stocks | $ | 15,077,431 | $ | — | $ | — | $ | 15,077,431 | ||||||||||||
Short-Term Investment | 46,722 | — | — | 46,722 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total Investments* | $ | 15,124,153 | $ | — | $ | — | $ | 15,124,153 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
LKCM Equity Fund | ||||||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Common Stocks | $ | 426,278,744 | $ | — | $ | — | $ | 426,278,744 | ||||||||||||
U.S. Government Issue | — | 4,335,113 | — | 4,335,113 | ||||||||||||||||
Short-Term Investments | 19,033,904 | — | — | 19,033,904 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total Investments* | $ | 445,312,648 | $ | 4,335,113 | $ | — | $ | 449,647,761 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
LKCM Balanced Fund | ||||||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Common Stocks | $ | 87,130,669 | $ | — | $ | — | $ | 87,130,669 | ||||||||||||
Corporate Bonds | — | 36,240,589 | — | 36,240,589 | ||||||||||||||||
Short-Term Investment | 2,198,409 | — | — | 2,198,409 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total Investments* | $ | 89,329,078 | $ | 36,240,589 | $ | — | $ | 125,569,667 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
LKCM Fixed Income Fund | ||||||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Corporate Bonds | $ | — | $ | 226,980,464 | $ | — | $ | 226,980,464 | ||||||||||||
U.S. Government Issues | — | 34,848,395 | — | 34,848,395 | ||||||||||||||||
U.S. Government Sponsored Entities | — | 17,668,172 | — | 17,668,172 | ||||||||||||||||
Short-Term Investments | 4,312,464 | 3,742,730 | — | 8,055,194 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total Investments* | $ | 4,312,464 | $ | 283,239,761 | $ | — | $ | 287,552,225 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
LKCM International Equity Fund | ||||||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Common Stocks | $ | — | $ | 29,951,434 | $ | — | $ | 29,951,434 | ||||||||||||
Preferred Stock | — | 852,884 | — | 852,884 | ||||||||||||||||
Short-Term Investments | 1,862,156 | — | — | 1,862,156 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total Investments* | $ | 1,862,156 | $ | 30,804,318 | $ | — | $ | 32,666,474 | ||||||||||||
|
|
|
|
|
|
|
|
(1) | Level 3 security valued at $0. |
* | Additional information regarding the industry classifications of these investments is disclosed in the Schedule of Investments. |
39
Below is a reconciliation of Level 3 assets held by the LKCM Small Cap Equity Fund for which significant observable inputs were used to determine fair value.
Level 3 | |||||
Description | Common Stocks | ||||
Balance as of December 31, 2019 | $ | 0 | |||
Purchases | — | ||||
Sales proceeds | — | ||||
Realized gain (loss) | — | ||||
Change in unrealized appreciation/depreciation | — | ||||
Transfers into/(out of) Level 3 | — | ||||
|
| ||||
Balance as of December 31, 2020 | $ | 0 | |||
|
| ||||
Change in unrealized appreciation/depreciation during the period for Level 3 investments held at December 31, 2020 | $ | — | |||
|
|
2. Federal Income Taxes: The Funds have elected to be treated as “regulated investment companies” under Subchapter M of the Internal Revenue Code and each Fund intends to distribute all of its investment company net taxable income and net capital gains to shareholders. Therefore, no federal income tax provision is recorded.
3. Distributions to Shareholders: The LKCM Small Cap Equity Fund, LKCM Small-Mid Cap Equity Fund, LKCM Equity Fund and LKCM International Equity Fund generally intend to declare and pay income dividends and distribute net capital gains, if any, at least on an annual basis. The LKCM Balanced Fund and LKCM Fixed Income Fund generally intend to declare and pay income dividends on a quarterly basis and distribute net capital, if any, at least on an annual basis.
4. Foreign Securities: Investing in securities of foreign companies and foreign governments involves special risks and considerations not typically associated with investing in securities of U.S. issuers. These risks include devaluation of currencies and future adverse political and economic developments. Moreover, securities of many foreign companies and foreign governments and their markets may be less liquid and their prices more volatile than those of securities of comparable U.S. companies and securities of the U.S. government.
5. Expense Allocation: Expenses incurred by the Funds are allocated among the Funds based upon (i) relative average net assets, (ii) a specific identification basis as incurred, or (iii) evenly among the Funds, depending on the nature of the expense.
6. Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.
7. Guarantees and Indemnifications: In the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims against the Funds that have not yet occurred. Based on experience, the Funds expect the risk of loss to be remote.
8. Security Transactions and Investment Income: Security and shareholder transactions are recorded on the trade date. Realized gains and losses on sales of investments are calculated on the identified cost basis. Dividend income and dividends and distributions to shareholders are recorded on the ex-dividend date. Withholding taxes on foreign dividends have been provided for in accordance with the Funds’ understanding of the applicable jurisdiction’s tax rules and rates. Interest income is recognized on the accrual basis. All discounts and premiums are amortized based on the effective interest method for tax and financial reporting purposes. The Funds may hold the securities of real estate investment trusts (“REITs”). Distributions from such investments may include income, capital gains and return of capital.
9. Other: Distributions from net investment income and realized capital gains are determined in accordance with income tax regulations, which may differ from U.S. GAAP. Certain capital accounts in the consolidated financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These permanent differences are primarily due to the varying treatment of income and gain/loss on portfolio securities held by the Fund and have no impact on net assets or NAV per share.
Accordingly, at December 31, 2020, reclassifications were recorded as follows:
LKCM Small Cap Equity Fund | LKCM Small-Mid Cap Equity Fund | LKCM Equity Fund | LKCM Balanced Fund | LKCM Fixed Income Fund | LKCM International Equity Fund | |||||||||||||||||||||||||
Paid-in capital | $958,735 | $1,510 | $577,465 | $64,196 | $(5,771 | ) | $(5,536 | ) | ||||||||||||||||||||||
Total distributable earnings | (958,735 | ) | (1,510 | ) | (577,465 | ) | (64,196 | ) | 5,771 | 5,536 |
40
10. Restricted and Illiquid Securities: The Funds are permitted to invest in securities that are subject to legal or contractual restrictions on resale including investments considered by the Funds to be illiquid. Restricted securities generally may be resold in transactions exempt from registration. Illiquid investments are investments that the Funds reasonably expect cannot be sold or disposed of in current market conditions within seven calendar days or less in the ordinary course of business without the sale or disposition significantly changing the market value of the investment. A security may be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at the current valuation may be difficult.
B. Investment Advisory and Other Agreements: The Adviser serves as the investment adviser to the Funds under an Investment Advisory Agreement (the “Agreement”). The Adviser receives a fee, computed daily and payable quarterly, at the annual rates presented below as applied to each Fund’s average daily net assets. The Adviser has contractually agreed to waive all or a portion of its management fee and/or reimburse expenses of the Funds through May 1, 2021 in order to limit each Fund’s operating expenses to the annual cap rates presented below. This expense limitation excludes interest, taxes, brokerage commissions, indirect fees and expenses relating to investments in other investment companies, including money market funds, and extraordinary expenses.
For the fiscal year ended December 31, 2020, the Adviser waived the following management fees and/or reimbursed expenses to meet its expense cap obligations:
LKCM Small Cap Equity Fund | LKCM Small-Mid Cap Equity Fund | LKCM Equity Fund | LKCM Balanced Fund | LKCM Fixed Income Fund | LKCM International Equity Fund | |||||||||||||||||||||||||
Annual Management Fee Rate | 0.75% | 0.75% | 0.70% | 0.65% | 0.50% | 0.90% | ||||||||||||||||||||||||
Annual Cap on Expenses | 1.00% | 1.00% | 0.80% | 0.80% | 0.50% | 1.00% | ||||||||||||||||||||||||
Fees Waived and/or Expenses Reimbursed in 2020 | $113,433 | $120,028 | $701,299 | $205,490 | $831,549 | $155,239 |
The Trust reimburses the Adviser for a portion of compensation paid to the Trust’s Chief Compliance Officer. This compensation is reported as part of the “Trustees’ fees and officer compensation” expense on the Statement of Operations.
U.S. Bancorp Fund Services, LLC (“U.S. Bancorp”), doing business as U.S. Bank Global Fund Services, serves as transfer agent and administrator for the Trust and serves as accounting services agent for the Trust. U.S. Bank, N.A. serves as custodian for the Funds.
Distribution services are performed pursuant to a distribution contract with Quasar Distributors, LLC (“Quasar”), the Trust’s principal underwriter.
Effective March 31, 2020, Foreside Financial Group, LLC (“Foreside”) acquired Quasar, the Funds’ distributor, from U.S. Bancorp. As a result of the acquisition, Quasar became a wholly-owned broker-dealer subsidiary of Foreside and is no longer affiliated with U.S. Bancorp. The Board of Trustees of the Funds has approved a new Distribution Agreement to enable Quasar to continue serving as the Funds’ distributor.
The Funds have adopted a Distribution Plan, under which each Fund may pay an annualized fee of up to 0.75% of its average daily net assets for distribution and other services. Currently, the Board of Trustees has not authorized payments under this plan and, as a result, the Funds currently neither accrue nor pay any fees under the plan.
C. Fund Shares: At December 31, 2020, there was an unlimited number of shares of beneficial interest, no par value, authorized, for each Fund. The following table summarizes the activity in shares of each Fund:
LKCM Small Cap Equity Fund | ||||||||||||||||||||
Year Ended December 31, 2020 | Year Ended December 31, 2019 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 762,251 | $ | 14,229,157 | 553,209 | $ | 9,022,479 | ||||||||||||||
Shares issued to shareholders in reinvestment of distributions | 318,189 | 6,876,068 | 473,251 | 7,960,077 | ||||||||||||||||
Shares redeemed | (2,536,430 | ) | (40,521,730 | ) | (1,397,843 | ) | (23,500,008 | ) | ||||||||||||
Redemption fee | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net decrease | (1,455,990 | ) | $ | (19,416,505 | ) | (371,383 | ) | $ | (6,517,452 | ) | ||||||||||
|
|
|
| |||||||||||||||||
Shares Outstanding: | ||||||||||||||||||||
Beginning of period | 10,767,590 | 11,138,973 | ||||||||||||||||||
|
|
|
| |||||||||||||||||
End of period | 9,311,600 | 10,767,590 | ||||||||||||||||||
|
|
|
|
41
LKCM Small-Mid Cap Equity Fund | ||||||||||||||||||||
Year Ended December 31, 2020 | Year Ended December 31, 2019 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 3,152 | $ | 29,921 | 8,594 | $ | 79,975 | ||||||||||||||
Shares issued to shareholders in reinvestment of distributions | 71,406 | 791,182 | 145,840 | 1,330,062 | ||||||||||||||||
Shares redeemed | (104,924) | (965,072 | ) | (304,984 | ) | (2,901,857 | ) | |||||||||||||
Redemption fee | — | — | ||||||||||||||||||
Other | 2,145 | (1) | — | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net decrease | (30,366) | $ | (141,824 | ) | (150,550 | ) | $ | (1,491,820 | ) | |||||||||||
|
|
|
| |||||||||||||||||
Shares Outstanding: | ||||||||||||||||||||
Beginning of period | 1,385,472 | 1,536,022 | ||||||||||||||||||
|
|
|
| |||||||||||||||||
End of period | 1,355,106 | 1,385,472 | ||||||||||||||||||
|
|
|
|
(1) | Reimbursement from U.S. Bancorp Fund Services, LLC to correct shareholder transaction. |
LKCM Equity Fund | ||||||||||||||||||||
Year Ended December 31, 2020 | Year Ended December 31, 2019 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 842,802 | $ | 24,542,333 | 751,273 | $ | 20,128,808 | ||||||||||||||
Shares issued to shareholders in reinvestment of distributions | 681,511 | 22,830,617 | 531,455 | 15,454,725 | ||||||||||||||||
Shares redeemed | (1,336,997 | ) | (38,335,179 | ) | (1,367,658 | ) | (37,611,783 | ) | ||||||||||||
Redemption fee | 602 | 1,269 | ||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net increase (decrease) | 187,316 | $ | 9,038,373 | (84,930 | ) | $ | (2,026,981 | ) | ||||||||||||
|
|
|
| |||||||||||||||||
Shares Outstanding: | ||||||||||||||||||||
Beginning of period | 13,139,310 | 13,224,240 | ||||||||||||||||||
|
|
|
| |||||||||||||||||
End of period | 13,326,626 | 13,139,310 | ||||||||||||||||||
|
|
|
| |||||||||||||||||
LKCM Balanced Fund | ||||||||||||||||||||
Year Ended December 31, 2020 | Year Ended December 31, 2019 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 940,460 | $ | 22,052,533 | 472,852 | $ | 11,074,342 | ||||||||||||||
Shares issued to shareholders in reinvestment of distributions | 190,194 | 4,942,296 | 235,149 | 5,686,783 | ||||||||||||||||
Shares redeemed | (727,140 | ) | (16,842,672 | ) | (499,010 | ) | (11,756,977 | ) | ||||||||||||
Redemption fee | 1,182 | 1,525 | ||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net increase | 403,514 | $ | 10,153,339 | 208,991 | $ | 5,005,673 | ||||||||||||||
|
|
|
| |||||||||||||||||
Shares Outstanding: | ||||||||||||||||||||
Beginning of period | 4,286,372 | 4,077,381 | ||||||||||||||||||
|
|
|
| |||||||||||||||||
End of period | 4,689,886 | 4,286,372 | ||||||||||||||||||
|
|
|
| |||||||||||||||||
LKCM Fixed Income Fund | ||||||||||||||||||||
Year Ended December 31, 2020 | Year Ended December 31, 2019 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 3,423,810 | $ | 38,000,779 | 2,945,477 | $ | 31,817,012 | ||||||||||||||
Shares issued to shareholders in reinvestment of distributions | 402,793 | 4,445,623 | 498,493 | 5,410,572 | ||||||||||||||||
Shares redeemed | (3,198,954 | ) | (35,567,807 | ) | (1,969,721 | ) | (21,345,747 | ) | ||||||||||||
Redemption fee | 291 | 198 | ||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net increase | 627,649 | $ | 6,878,886 | 1,474,249 | $ | 15,882,035 | ||||||||||||||
|
|
|
| |||||||||||||||||
Shares Outstanding: | ||||||||||||||||||||
Beginning of period | 25,277,707 | 23,803,458 | ||||||||||||||||||
|
|
|
| |||||||||||||||||
End of period | 25,905,356 | 25,277,707 | ||||||||||||||||||
|
|
|
|
42
LKCM International Equity Fund | ||||||||||||||||||||
Year Ended December 31, 2020 | May 1, 2019(1) through December 31, 2019 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Shares sold | 1,640,644 | $ | 18,432,932 | 977,320 | $ | 9,668,170 | ||||||||||||||
Shares issued to shareholders in reinvestment of distributions | 3,036 | 37,889 | 360 | 3,927 | ||||||||||||||||
Shares redeemed | (26,307 | ) | (279,416 | ) | (3 | ) | (32 | ) | ||||||||||||
Redemption fee | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net increase | 1,617,373 | $ | 18,191,405 | 977,677 | $ | 9,672,065 | ||||||||||||||
|
|
|
| |||||||||||||||||
Shares Outstanding: | ||||||||||||||||||||
Beginning of period | 977,677 | — | ||||||||||||||||||
|
|
|
| |||||||||||||||||
End of period | 2,595,050 | 977,677 | ||||||||||||||||||
|
|
|
|
(1) | Commencement of operations. |
D. Security Transactions: Purchases and sales of investment securities, other than short-term investments, for the year ended December 31, 2020 were as follows:
Purchases | Sales | |||||||||||||||||||
U.S. Government | Other | U.S. Government | Other | |||||||||||||||||
LKCM Small Cap Equity Fund | $ | — | $ | 92,313,371 | $ | — | $ | 125,240,089 | ||||||||||||
LKCM Small-Mid Cap Equity Fund | — | 9,070,369 | — | 10,207,695 | ||||||||||||||||
LKCM Equity Fund | 4,392,887 | 34,400,502 | — | 50,686,238 | ||||||||||||||||
LKCM Balanced Fund | — | 25,265,940 | — | 19,623,891 | ||||||||||||||||
LKCM Fixed Income Fund | 18,347,344 | 113,125,196 | 12,894,658 | 115,656,149 | ||||||||||||||||
LKCM International Equity Fund | — | 18,367,488 | — | 956,000 |
E. Tax Information: At December 31, 2020, the components of accumulated earnings (losses) on a tax basis were as follows:
LKCM Small Cap Equity Fund | LKCM Small-Mid Cap Equity Fund | LKCM Equity Fund | LKCM Balanced Fund | LKCM Fixed Income Fund | LKCM International Equity Fund | |||||||||||||||||||||||||
Tax cost | $ | 112,583,596 | $ | 9,153,360 | $ | 208,096,697 | $ | 87,629,082 | $ | 272,993,377 | $ | 27,648,527 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Gross unrealized appreciation | $ | 90,597,375 | $ | 5,989,952 | $ | 244,361,423 | $ | 38,857,872 | $ | 14,678,119 | $ | 5,749,783 | ||||||||||||||||||
Gross unrealized depreciation | (341,539 | ) | (19,157 | ) | (2,810,359 | ) | (917,287 | ) | (119,271 | ) | (731,557 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net unrealized appreciation | $ | 90,255,836 | $ | 5,970,795 | $ | 241,551,064 | $ | 37,940,585 | $ | 14,558,848 | $ | 5,018,226 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Undistributed ordinary income | — | — | 876 | — | — | — | ||||||||||||||||||||||||
Undistributed long-term capital gain | 3,698,265 | 393,760 | — | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Distributable earnings | $ | 3,698,265 | $ | 393,760 | $ | 876 | $ | — | $ | — | $ | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Other accumulated losses | — | — | — | — | (1,340,959 | ) | (580,651 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total distributable earnings | $ | 93,954,101 | $ | 6,364,555 | $ | 241,551,940 | $ | 37,940,585 | $ | 13,217,889 | $ | 4,437,575 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
The difference between book cost of investments and tax cost of investments is attributable primarily to the tax deferral of losses on wash sales.
Net investment income and realized gains and losses for federal income tax purposes may differ from that reported on the financial statements because of permanent book-to-tax differences. GAAP requires that permanent differences between financial reporting and tax reporting be reclassified between various components of net assets. These differences are primarily due to net operating losses, swap contract adjustments, dividend reclasses, and dividends on redemption adjustments with differing book and tax methods.
To the extent the Funds realize future net capital gains, taxable distributions will be reduced by any unused capital loss carryforwards as permitted by the Internal Revenue Code. At December 31, 2020, the capital loss carryforwards were as follows:
Short-Term | Long-Term | |||||||||
LKCM Fixed Income Fund | $ | — | $ | 1,340,959 | ||||||
LKCM International Equity Fund | 543,515 | 16,437 |
43
At December 31, 2020, the following Fund deferred, on a tax basis, late-year ordinary losses of:
LKCM International Equity Fund | $ | 20,699 |
The tax components of dividends paid during the periods shown below were as follows:
Year Ended December 31, 2020 | Year Ended December 31,��2019 | ||||||||||||||||||||||||
Ordinary Income | Return of Capital | Long-Term Capital Gains | Ordinary Income | Long-Term Capital Gains | |||||||||||||||||||||
LKCM Small Cap Equity Fund | $ | — | $ | — | $ | 7,270,969 | $ | — | $ | 9,039,350 | |||||||||||||||
LKCM Small-Mid Cap Equity Fund | — | — | 936,700 | — | 1,611,139 | ||||||||||||||||||||
LKCM Equity Fund | 2,114,875 | — | 21,784,240 | 2,849,089 | 13,410,713 | ||||||||||||||||||||
LKCM Balanced Fund | 1,068,531 | — | 4,004,232 | 1,122,363 | 4,738,772 | ||||||||||||||||||||
LKCM Fixed Income Fund | 5,026,453 | — | — | 6,149,434 | — | ||||||||||||||||||||
LKCM International Equity Fund | 55,491 | 6,140 | — | 6,697 | (1) | — | (1) |
(1) | Period from May 1, 2019 (commencement of operations) through December 31, 2019. |
The Funds designated earnings and profits distributed to shareholders upon the redemption of shares during 2020 and 2019 in determining undistributed net capital gains as of December 31, 2020 and 2019.
The Trust has adopted financial reporting rules regarding recognition and measurement of tax positions taken or expected to be taken on a tax return. The Trust has reviewed all open tax years and major jurisdictions and concluded that there is no impact on the Funds’ financial position or results of operations. Tax years that remain open to examination by major tax jurisdictions include tax years ended December 31, 2017 through December 31, 2020 (LKCM Small Cap Equity Fund, LKCM Small-Mid Cap Equity Fund, LKCM Equity Fund, LKCM Balanced Fund and LKCM Fixed Income Fund) and December 31, 2019 through December 31, 2020 (LKCM International Equity Fund). There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on tax returns as of December 31, 2020. The Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. If applicable, the Funds would recognize interest accrued related to unrecognized tax benefits in “interest expense” and penalties in “other expense” on the statement of operations.
F. Other Matters: The global outbreak of COVID-19 and the ensuing pandemic has adversely impacted global economic and commercial activity and has contributed to significant volatility and uncertainty in global financial markets. The global impact of the COVID-19 pandemic continues to rapidly evolve and its long-term implications for economies, markets, sectors, industries and issuers remains uncertain. The financial and operational performance of the issuers of securities in which the Funds invest depends upon future developments with respect to the COVID-19 pandemic, including, without limitation, the scope, duration and spread of COVID-19 as well as the development, efficacy and administration of COVID-19 vaccines, and such future developments and uncertainties with respect thereto may adversely affect, among other things, the value and liquidity of the Funds’ investment, the Funds’ ability to satisfy redemption requests, and Funds’ financial and operational performance.
G. Subsequent Events: In preparing these financial statements, management has evaluated the Funds’ related events and transactions that occurred subsequent to December 31, 2020 through the date the financial statements were issued and has determined that there were no significant subsequent events requiring recognition or disclosure in the financial statements.
44
REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
To the shareholders and Board of Trustees of LKCM Funds
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statements of assets and liabilities of LKCM Funds (the “Funds”) comprising the LKCM Small Cap Equity Fund, LKCM Equity Fund, LKCM Balanced Fund, LKCM Fixed Income Fund, LKCM Small-Mid Cap Equity Fund, and LKCM International Equity Fund including the schedules of investments, as of December 31, 2020; the related statements of operations, changes in net assets, and the financial highlights for the periods indicated in the table below; and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of each of the portfolios constituting the Funds as of December 31, 2020, and the results of their operations, the changes in their net assets, and the financial highlights for the periods listed in the table below, in conformity with accounting principles generally accepted in the United States of America.
Individual Fund Comprising the LKCM Funds | Statement of Operations | Statements of Changes in Net Assets | Financial Highlights | |||
LKCM Small Cap Equity Fund, LKCM Equity Fund, LKCM Balanced Fund, LKCM Fixed Income Fund, and LKCM Small-Mid Cap Equity Fund | For the year ended December 31, 2020 | For the years ended December 31, 2020 and 2019 | For the years ended December 31, 2020, 2019, 2018, 2017 and 2016 | |||
LKCM International Equity Fund | For the year ended December 31, 2020 | For the year ended December 31, 2020 and the period from May 1, 2019 (commencement of operations) through December 31, 2019 | For the year ended December 31, 2020 and the period from May 1, 2019 (commencement of operations) through December 31, 2019 |
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2020, by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
Milwaukee, Wisconsin
February 24, 2021
We have served as the auditor of one or more LKCM Funds since 2007.
45
LKCM FUNDS |
ADDITIONAL INFORMATION |
December 31, 2020 (Unaudited) |
Tax Information: For the fiscal year ended December 31, 2020, certain dividends paid by the Funds may be subject to a maximum tax rate of 23.8%, as provided for by the Jobs & Growth Tax Relief Reconciliation Act of 2003. The percentage of dividends declared from ordinary income designated as qualified dividend income was as follows:
LKCM Equity Fund | 100.00 | % | |||
LKCM Balanced Fund | 100.00 | % | |||
LKCM International Equity Fund | 100.00 | % |
For corporate shareholders, the percentage of ordinary income distributions qualifying for the corporate dividends received deduction for the fiscal year ended December 31, 2020 was as follows:
LKCM Equity Fund | 100.00 | % | |||
LKCM Balanced Fund | 100.00 | % |
The Funds hereby designate the following percentages of their ordinary income distributions for the fiscal year ended December 31, 2020 as interest-related dividends under Internal Revenue Code Section 871(k)(1)(C).
LKCM Balanced Fund | 38.38 | % | |||
LKCM Fixed Income Fund | 98.93 | % |
The percentage of taxable ordinary income distributions that are designated as short-term capital gain distributions under Internal Revenue Code Section 871(k)(2)(C) for the fiscal year ended December 31, 2020 was as follows:
LKCM Equity Fund | 0.04 | % |
Availability of Proxy Voting Information: A description of the policies and procedures that the Funds use to determine how to vote proxies relating to their portfolio securities, as well as information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, is available without charge, upon request, by calling toll-free 1-800-688-LKCM or on the SEC website at http://www.sec.gov.
The actual voting records relating to portfolio securities during the twelve month period ended June 30 (as filed with the SEC on Form N-PX) are available without charge, upon request, by calling the Funds toll free at 1-800-688-LKCM or by accessing the SEC’s website at www.sec.gov.
Availability of Quarterly Portfolio Schedule: The Funds file a complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (the “SEC”) for the first and third quarters of each fiscal year on Part F of Form N-PORT. The Funds’ Part F of Form N-PORT are available on the SEC’s website at www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-732-0330. The Funds’ Form Part F of Form N-PORT may also be obtained by calling toll-free 1-800-688-LKCM.
46
Information about the Fund’s Trustees and Officers:
The business and affairs of the Fund are managed under the direction of the Fund’s Board of Trustees. Information pertaining to the Trustees of the Fund is set forth below. The Statement of Additional Information includes additional information about the Fund’s Trustees and officers and is available, without charge, upon request by calling 1-800-688-LKCM.
Name, Address and Age | Position(s) Held with the Trust | Term of Office & Length of Time Served(1) | Principal Occupation During Past Five Years | Number of by Trustee | Other Directorships Held by Trustee | |||||
Independent Trustees | ||||||||||
Richard J. Howell 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1942 | Trustee Chairman of the Audit and Compliance Committee | Since 2005 Since 2008 | CPA; Adjunct Faculty at SMU Cox School of Business from 2004 to 2009; Consulting Services, since 2002; Audit Partner, Arthur Andersen LLP from 1974 to 2002. | 7 | None | |||||
Larry J. Lockwood 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1953 | Chairman of the Board of Trustees Trustee | Since 2021 Since 2013 | C.R. Williams Professor of Finance, Stan Block Endowed Chair in Finance, Department of Finance, Neeley School of Business, Texas Christian University since 1994. | 7 | None | |||||
Mauricio Rodriguez 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1966 | Trustee | Since 2021 | Chair, Department of Finance, Neeley School of Business; Texas Christian University since 2002. | 7 | None | |||||
Interested Trustees | ||||||||||
J. Luther King, Jr.(2) 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1940 | Trustee, President and Chief Executive Officer | Since 1994 | Chairman, President and Director, Luther King Capital Management Corporation since 1979. | 7 | Tyler Technologies, Inc. | |||||
Steven R. Purvis(2) 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1964 | Trustee Vice President | Since 2013 Since 2000 | Principal, Luther King Capital Management Corporation since 2004, Vice President and Portfolio Manager, Luther King Capital Management Corporation since 1996. | 7 | AZZ Incorporated |
(1) | Each Trustee holds office during the lifetime of the Trust until that individual resigns, retires or is otherwise removed or replaced. |
(2) | Messrs. King and Purvis are each considered an “interested person” of the Trust (as defined in the 1940 Act) because of their affiliation with the Adviser. |
47
Information about the Fund’s Trustees and Officers, Continued
Name, Address and Age | Position(s) Held with the Trust | Term of Office & Length of Time Served(1) | Principal Occupation During Past Five Years | |||
Principal Officers of the Trust | ||||||
J. Luther King, Jr.(2) 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1940 | Trustee, President and Chief Executive Officer | Since 1994 | Chairman, President and Director, Luther King Capital Management Corporation since 1979. | |||
Steven R. Purvis(2) 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1964 | Trustee Vice President | Since 2013 Since 2000 | Principal, Luther King Capital Management Corporation since 2004, Vice President and Portfolio Manager, Luther King Capital Management Corporation since 1996. | |||
Paul W. Greenwell 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1950 | Vice President | Since 1996 | Principal, Luther King Capital Management Corporation since 1986, Vice President and Portfolio Manager, Luther King Capital Management Corporation since 1983. | |||
Richard Lenart 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1966 | Secretary and Treasurer | Since 2006 | Luther King Capital Management Corporation since 2005. | |||
Jacob D. Smith 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1974 | Chief Financial Officer | Since 2010 | General Counsel and Chief Compliance Officer, Luther King Capital Management Corporation since 2006; Principal, Luther King Capital Management Corporation since 2013. | |||
Chief Compliance Officer | Since 2006 |
(1) | Each officer holds office during the lifetime of the Trust until that individual resigns, retires or is otherwise removed or replaced. |
(2) | Messrs. King and Purvis are each considered an “interested person” of the Trust (as defined in the 1940 Act) because of their affiliation with the Adviser. |
48
LKCM FUNDS
PRIVACY NOTICE
Our Commitment to Your Privacy
At LKCM Funds, we are committed to safeguarding the confidentiality and privacy of nonpublic personal information about our current and former shareholders. This privacy notice describes the types of nonpublic personal information we collect about you and the sources through which we obtain this information, the purposes for which we obtain and use your nonpublic information, and the policies and procedures we have implemented to protect the privacy of your nonpublic personal information.
How We Protect Your Nonpublic Personal Information
Protecting your nonpublic personal information is an important priority at LKCM Funds. Accordingly, we have implemented policies and procedures designed to safeguard your nonpublic personal information, such as your tax identification number, account and investment history, account numbers, account balances and nonpublic contact information, from unauthorized access or use. Pursuant to these policies and procedures, we maintain various physical, technological, and administrative safeguards to protect the security and confidentiality of your nonpublic personal information, and we adapt these safeguards to respond to evolving technological and other standards.
We do not disclose nonpublic personal information about you to non-affiliated firms, organizations or individuals except as authorized by you or your representatives or as required or permitted by law. We may disclose nonpublic personal information about you to nonaffiliated third parties, such as custodians, brokers, auditors, accountants, and systems and administrative service providers, in connection with the services we provide to you or on your behalf. When we provide nonpublic personal information about you to nonaffiliated third parties for these purposes, we expect them to safeguard your nonpublic personal information, use your nonpublic personal information only for the intended purposes and otherwise abide by applicable law.
How We Obtain Your Nonpublic Personal Information
We collect nonpublic personal information about you from various sources, including documents, new account applications and other information that you or your representatives, custodians, attorneys, accountants or similar parties provide to us, communications that we have with you or your representatives, custodians, attorneys, accountants or similar parties, and documents and other information related to your accounts or investment experience with us.
Please do not hesitate to contact Jacob D. Smith, our Chief Compliance Officer, if you have any questions regarding the measures we have implemented to protect the privacy of your nonpublic personal information.
49
U.S. Bancorp Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701
LKCM FUNDS
P.O. Box 701
Milwaukee, WI 53201-0701
Officers and Trustees | ||||
J. Luther King, Jr., CFA, CIC Trustee, President and Chief Executive Officer | Richard J. Howell Trustee | Richard Lenart Secretary & Treasurer | ||
Paul W. Greenwell Vice President | Larry J. Lockwood Chairman of the Board of Trustees | Jacob D. Smith Chief Financial Officer Chief Compliance Officer | ||
Steven R. Purvis, CFA Trustee, Vice President | Mauricio Rodriguez Trustee |
Investment Adviser |
Luther King Capital Management Corporation 301 Commerce Street, Suite 1600 Fort Worth, TX 76102 |
Administrator, Transfer Agent, Dividend Paying Agent & Shareholder Servicing Agent |
U.S. Bancorp Fund Services, LLC P.O. Box 701 Milwaukee, WI 53201-0701 |
Custodian |
U.S. Bank, N.A. 1555 N. River Center Drive, Suite 302 Milwaukee, WI 53212 |
Independent Registered Public Accounting Firm |
Deloitte & Touche LLP 555 E. Wells St., Suite 1400 Milwaukee, WI 53202 |
Distributor |
Quasar Distributors, LLC 111 East Kilbourn Avenue, Suite 2200 Milwaukee, WI 53202 |
LKCM Aquinas Catholic Equity Fund
Annual Report
December 31, 2020
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the LKCM Funds’ shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the LKCM Funds (if you hold your Fund shares directly with the LKCM Funds) or from your financial intermediary, such as a broker-dealer or bank (if you hold your Fund shares through a financial intermediary). Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. If you hold your Fund shares directly with the LKCM Funds, you may elect to receive shareholder reports and other communications electronically from the LKCM Funds by calling 1-800-423-6369 or, if you hold your Fund shares through a financial intermediary, by contacting your financial intermediary.
You may elect to receive all future reports on paper free of charge. If you hold your Fund shares directly with the LKCM Funds, you can inform the LKCM Funds that you wish to continue receiving paper copies of your shareholder reports by calling 1-800-423-6369 or, if you hold your Fund shares through a financial intermediary, contacting your financial intermediary. Your election to receive reports in paper will apply to all of the LKCM Funds you hold directly with LKCM Funds or all of the funds you hold through your financial intermediary, as applicable.
Dear Fellow Shareholders:
We report the following performance information for the LKCM Aquinas Catholic Equity Fund for indicated periods ended December 31, 2020:
Fund | Inception Date | NAV @ 12/31/2020 | Net Expense Ratio*, ** | Gross Expense Ratio** | One Year Total Return Ended 12/31/2020 | Five Year Average Annualized Return Ended 12/31/2020 | Ten Year Average Annualized Return Ended 12/31/2020 | Avg. Annual Total Return Since Incept.*** | ||||||||||||||||||||||||||||||||
LKCM Aquinas Catholic Equity | 07/11/2005 | $ | 17.53 | 1.00 | % | | 1.51 | % | 24.28 | % | 14.69 | % | 11.48 | % | 8.89 | % | ||||||||||||||||||||||||
S&P 500® Index(2) | 18.40 | % | 15.22 | % | 13.88 | % | 9.83 | % |
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-800-423-6369. The Fund imposes a 1.00% redemption fee on shares held less than 30 days. If reflected, the fee would reduce performance shown.
* | Luther King Capital Management Corporation, the Fund’s investment adviser, has contractually agreed to waive all or a portion of its management fee and/or reimburse expenses of the Fund to maintain an expense ratio of 1.00% per annum through May 1, 2021. This expense limitation excludes interest, taxes, brokerage commissions, indirect fees and expenses related to investments in other investment companies, including money market funds, and extraordinary expenses. Investment performance, which is based on the net expense ratio, reflects fee waivers, if any, in effect during the relevant period. In the absence of such waivers, total return would be reduced. Investment performance is based upon the net expense ratio. LKCM waived management fees and/or reimbursed expenses for the Fund during the fiscal year ended December 31, 2020. |
** | Expense ratios above are as reported in the Fund’s current prospectus dated May 1, 2020. Expense ratios reported for other periods in the financial highlights of this report may differ. |
*** | The assets of the Aquinas Value Fund, Aquinas Growth Fund and Aquinas Small-Cap Fund were acquired by the LKCM Aquinas Value Fund, LKCM Aquinas Growth Fund and LKCM Aquinas Small Cap Fund, respectively, on July 11, 2005. Due to the change in adviser and investment technique, performance is being quoted for the period after the merger. The LKCM Aquinas Small Cap Fund and LKCM Aquinas Growth Fund were reorganized into the LKCM Aquinas Value Fund effective upon the close of business on July 29, 2016, after which the LKCM Aquinas Value Fund’s name, investment strategies and expenses changed to those of the LKCM Aquinas Catholic Equity Fund. The performance shown prior to August 1, 2016 is that of the LKCM Aquinas Value Fund. |
(1) | Effective upon the close of business on July 29, 2016, the LKCM Aquinas Small Cap Fund and the LKCM Aquinas Growth Fund reorganized into the LKCM Aquinas Value Fund (the “Reorganizations”). Immediately after the Reorganizations were completed, the LKCM Aquinas Value Fund changed its name to the LKCM Aquinas Catholic Equity Fund and its investment strategies and expenses, including the expense limitation agreement, changed to the investment strategies and expenses, including the expense limitation agreement, of the LKCM Aquinas Catholic Equity Fund. The Fund’s performance prior to August 1, 2016 reflects the Fund’s prior investment strategies. |
(2) | The S&P 500® Index is an unmanaged capitalization-weighted index of 500 selected stocks that is generally considered representative of the performance of large capitalization companies in the U.S. stock market. |
Note: The indices defined above are not available for direct investment and the index performance therefore does not include fees, expenses or taxes.
2020 Review
Twelve months ago, we were still in the longest economic expansion in U.S. history, with unemployment sitting near historic lows, wages and income continuing to strengthen, and inflation remaining stable. Then, the novel coronavirus pandemic (“COVID-19” or “COVID”) gained a foothold in the United States. The human impact has been harrowing, with the United States on pace to lose more citizens to the pandemic than the 405,000 American souls lost in World War II. The public health response to the pandemic, imploring social distancing and mandating partial or complete lockdowns, worked initially to drive down infections and “flatten the curve.” However, these steps precipitated a severe economic crisis analogous to a natural disaster, as supply, demand, and financial shocks struck in unison. Individuals have lost livelihoods and businesses, and we believe the burden has fallen most harshly on those least able to bear the losses.
Unlike the beginnings of many recessions when it is initially unclear whether or not the economy has entered a downturn, the emergence of the pandemic and the subsequent response of public health policy made the immediacy of the economic downturn painfully clear. Policymakers rightly heeded this warning and acted swiftly with record amounts of fiscal and monetary stimulus. On the monetary side, the Federal Reserve Board moved in March 2020 to reduce its key policy interest rate by 1.50% to near zero percent. The Federal Reserve also resumed asset purchases and launched a series of emergency lending facilities, both designed to reassure financial markets and support commerce. These actions by the Federal Reserve contributed to lower borrowing costs for households, businesses, and state and local governments. Moreover, these measures boosted interest rate-sensitive sectors of the economy such as housing and autos, which have rebounded sharply over the past six months.
Just as vital, Congress injected fiscal stimulus into the economy by sending over one-half of U.S. taxpayers a significant stimulus check. In addition, unemployment insurance payments were augmented by $600 per week for a defined period. This relief enabled many households to remain current on their debt service, reducing the potential strain on the banking system. Congress also targeted small businesses, which represent the bulk of U.S. payrolls. The Paycheck Protection Program (“PPP”) allowed small businesses to apply for low-interest loans administered by the Small Business Administration, many of which are expected to be eligible for forgiveness. The
2
PPP was designed as an effort to enable small businesses to retain as much of their payroll as possible on the presumption that the economic contraction, while sharp, would be relatively short lived. Thus, the premise underlying these loans was that if employers and employees could weather the pandemic storm in place, the economy would seemingly be easier to reboot thereafter.
The equity market, as measured by the S&P 500® Index, rose 18.4% in 2020, while corporate earnings declined by nearly the same amount under the strain of the economic recession. We believe that historically low interest rates and the prospects of a sharp economic recovery in 2021 underpinned the significant increase in the multiple of earnings investors were willing to pay for equity securities. Despite the headline strength of various market indices in 2020, the market appreciation has been extremely narrow in our view. Three stocks—Apple, Amazon, and Microsoft – accounted for approximately 47.6% return of the S&P 500® Index in 2020 due to the capitalization weighted nature of the index and significant price appreciation of these three companies.
As we turn the calendar, we believe a clear economic recovery has taken hold, analysts have begun to revise corporate earnings estimates higher, and consumer and business confidence levels appear to be increasing. We believe that the massive fiscal and monetary policy stimulus have helped blunt the recessionary damage to the economy. Human ingenuity in terms of behavioral adaption as well as vaccine and therapeutic developments have been remarkable and impressive in our view. We believe the monetary and fiscal policy prescription to combat the 2020 recession has created a backdrop that encourages higher stock and bond valuations, providing support to consumer net worth. Exogenous shocks can still disrupt the nascent economic recovery, but as we look ahead into 2021, we are optimistic.
2021 Outlook
As we enter 2021, the economic backdrop remains constructive for equities in our view. We believe that corporate earnings should rise slightly less than 20%, employment should continue to improve as the economy reopens, and the Federal Reserve is likely to maintain an easy monetary stance. In our view, consumers continue to save a remarkably high portion of their disposable income, which represents considerable pent-up purchasing power. Housing has been very strong, driven by record low mortgage rates and low home inventory and the “Working From Home” adaption, and we believe this strength should continue in 2021.
We expect this positive backdrop for corporate earnings and consumer spending to drive above-trend U.S. Gross Domestic Product (“GDP”) growth in 2021. We believe the equity market should perform well in this environment, although we would not be surprised if equity market returns are lower than the forecasted growth in corporate profits, as the multiple of earnings investors are willing to pay is likely to decline as investors begin to anticipate higher inflation and interest rates in response to robust economic expansion.
We believe four primary tailwinds should support the sharp rebound in corporate earnings in 2021. First, many companies have been able to retain pricing power. Second, housing data remain robust, which has a multiplier effect on demand for consumer durable goods, such as appliances and furniture. Third, the consumer appears well positioned with excess savings, rising real incomes, and higher household net worth. Finally, record low interest rates have prompted companies to raise debt capital to fortify balance sheets and ensure liquidity, which could signal the resumption of broader share repurchases by companies in 2021.
We believe one of the notable and unusual developments of the COVID economic downturn has been an extraordinary rise in the personal savings rate. The CARES Act approved by Congress authorized significant payments to consumers. Between March 2020 and August 2020, at least $712 billion flowed into personal income as a result of COVID-related stimulus measures including direct payments, supplemental unemployment insurance, and PPP loans to small businesses. Historically, consumers draw down their savings in an economic downturn. However, the portion of disposable personal income that consumers saved, known as the savings rate, soared from approximately 8.3% in February of 2020 to approximately 33.6% in April 2020 before settling most recently to approximately 12.9% at of the end of November 2020. We believe restricted spending on services such as dining out, getting a haircut, or having elective surgery supported this savings rate. We believe these savings equate to an incremental $1.2 trillion in people’s pockets at a time when the economic outlook appears to be brightening, and vaccines begin to roll out.
The extraordinary events of 2020 likely position 2021 to be a year of transition in our view, with spending shifting back to services from goods, to private from public, and to in-person from virtual. We believe the impact of COVID cases, the effectiveness of vaccines, and the eventual fading of fiscal stimulus will influence the trajectory of the economic recovery moving forward. In our view, it is important to recognize that the stimulus provided by lower interest rates inevitably wears off and the purpose of reducing interest rates is to pull consumption forward. Consumer purchases of homes, appliances, and autos bring future economic activity into the present. But when the future inevitably arrives, that economic activity is often missing. We believe that the economic bite of the pandemic would have been far worse in the absence of significant monetary and fiscal stimulus. However, we must appreciate the degree to which the current economic uplift is being driven by record stimulus.
Considering the combination of the recently approved $900 billion fiscal stimulus package, the prospect of households unleashing substantial pent-up demand in 2021, and the higher likelihood of even more stimulus due to the change in control of the U.S. Senate, we believe the setup for inflation to increase is more favorable than it has been for many years. Historically, elevated inflation readings have often spurred a tightening of monetary policy. However, the Federal Reserve has stated that it is willing to allow prices to run a little “hotter” than in past cycles. We believe that at some point in 2021 reports will likely indicate the rate of inflation is rising above the Federal Reserve’s 2% target. In a recent press conference Federal Reserve Chairman Jerome Powell took care to communicate that if inflation does rise as the economy reopens, this move will likely prove temporary. However, investors have historically been conditioned
3
to anticipate a tightening of monetary policy in response to rising inflation. We believe that rising bond yields, which we expect to be a feature of 2021, reflect increased expectations for higher inflation.
We do not anticipate an inflationary overheating of the U.S. economy, because the output gap – the difference between where the U.S. economy is and where it should be—was likely around 5% of GDP in the fourth quarter of 2020, likely signaling significant excess capacity in the economy. We believe the most constructive outcome that could emerge is a kind of “Goldilocks scenario” in which prices rise, but not at an alarming pace. One possible risk to this outcome would be that the U.S. economy recovers much faster than policymakers and investors anticipate.
A key risk to our outlook for 2021 is a sharp rise in bond yields, which has the potential to send ripples through the capital markets and economy in at least one of three important ways. First, a dramatic move in this cost of capital tends to reveal weaker portions of the capital market that are reliant on cheap liquidity. Second, higher yields typically pressure interest rate sensitive sectors in the economy such as housing and autos. Finally, higher yields can weigh on the valuation of assets, including equities, particularly if those valuations are elevated. The ability of higher interest rates to exert downward pressure on earnings multiples is particularly of interest today in our view. Following two years in which the equity market rose in excess of corporate earnings growth, we would not be surprised to see a reversal of this trend in 2021, as corporate earnings growth exceeds the returns provided by the equity market.
LKCM Aquinas Catholic Equity Fund
During the year ended December 31, 2020, the LKCM Aquinas Catholic Equity Fund returned 24.28% against the 18.40% return for the Fund’s benchmark, the S&P 500® Index. During the year the Fund’s relative performance benefited from both sector allocation decisions and stock selection decisions. The Fund’s relative performance benefited from being overweight the Information Technology and Materials sectors and being underweight the Financials, Real Estate, Utilities and Healthcare sectors. The Fund also benefited from stock selection in the Communication Services, Industrials, Information Technology and Healthcare sectors relative to the benchmark, which was partially offset by stock selection in the Financials and Consumer Discretionary sectors.
As we enter 2021, we anticipate that the Fund’s holdings of more cyclical or valued-oriented companies will broaden given our belief that the U.S. economic recovery will continue as the year progresses due to broader vaccine availability and corresponding reductions in social distancing. We believe the companies held by the Fund are well-positioned financially. While many of the Fund’s companies lowered or suspended dividend payouts and repurchase programs with the onset of the pandemic, by the end of 2020 most of those companies had restored previous dividend payout levels and their management teams had indicated intentions to reinstate repurchase programs during 2021. Our investment strategy for the Fund focuses on companies with the potential for significant free cash generation, which we believe allows those companies to reinvest those cash flows back into their businesses as well as potentially increase returns for their shareholders in the form of dividend payout increases and share repurchases. Additionally, many of the Fund’s companies have meaningful operations overseas, which we believe should benefit from anticipated recoveries in foreign economies.
J. Luther King, Jr., CFA, CIC
February 1, 2021
4
The information provided herein represents the opinion of J. Luther King, Jr., CFA, CIC and is not intended to be a forecast of future events, a guarantee of future results, nor investment advice.
Please refer to the Schedule of Investments found on page 9 of the report for more information on Fund holdings. Fund holdings and sector allocations are subject to change and are not recommendations to buy or sell any securities.
Mutual fund investing involves risk. Principal loss is possible. Past performance is not a guarantee of future results. Investments in equity securities are subject to market risks and significant fluctuations in value. Small and medium capitalization funds typically carry additional risks, since smaller companies generally have a higher risk of failure, and, historically, their stocks have experienced a greater degree of market volatility than stocks on average. These risks are discussed in the Fund’s summary and statutory prospectuses. Since the Fund practices socially responsible investing within the framework provided by the United States Conference of Catholic Bishop’s Socially Responsible Investing Guidelines, the Fund may forego a profitable investment opportunity or sell a security when it may be disadvantageous to do so.
Earnings growth is not a measure of future performance.
Yield curve is a line that plots yields (interest rates) of bonds having equal credit quality but differing maturity dates. The slope of the yield curve gives an idea of future interest rate changes and economic activity.
The Bloomberg Barclays U.S. Intermediate Government/Credit Bond Index is an unmanaged market value weighted index measuring both the principal price changes of, and income provided by, the underlying universe of securities that comprise the index. Securities included in the index must meet the following criteria: fixed as opposed to variable rate; remaining maturity of one to ten years; minimum outstanding par value of $250 million; rated investment grade or higher by Moody’s Investors Service or equivalent; must be dollar denominated and non-convertible; and must be publicly issued.
Price-earnings ratio is the ratio of a company’s share price to the company’s earnings per share.
Duration is a measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates.
Cash flow is the net amount of cash and cash-equivalents being transferred into and out of a business.
Investors should consider the investment objective, risks and charges and expenses of the Fund carefully before investing. The Fund’s summary prospectus and prospectus contain this and other information about the Fund. Investors can obtain the summary prospectus and the prospectus by calling 1-800-423-6369. The summary prospectus and prospectus should be read carefully before investing in the Fund.
Quasar Distributors, LLC, distributor.
5
PERFORMANCE:
The following information illustrates the historical performance of the LKCM Aquinas Catholic Equity Fund as of December 31, 2020 compared to the Fund’s representative benchmark and peer group indices.
Performance data quoted represents past performance; past performance does not guarantee future results. The graph and table reflect the reinvestment of dividends and other distributions, if any, but do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 1-800-423-6369. Returns would have been lower if LKCM had not waived a portion of its management fee and/or reimbursed certain expenses of the Fund. Please see Note B to the Notes to the Financial Statements for specific information regarding management fee waiver and/or expense reimbursement arrangements for the Fund.
An index is an unmanaged portfolio and does not trade or incur any expenses. The Lipper Large-Cap Core Funds Index, however, does reflect the fees and expenses borne by the funds included in that index. One can not invest in an unmanaged index.
AVERAGE ANNUAL TOTAL RETURN (Periods Ended December 31, 2020)(1)
Past 1 Year | Past 5 Years(2) | Past 10 Years(2) | Since Inception(2)(3) | |||||||||||||||||
LKCM Aquinas Catholic Equity Fund | 24.28% | 14.69% | 11.48% | 8.89% | ||||||||||||||||
S&P 500® Index | 18.40% | 15.22% | 13.88% | 9.83% | ||||||||||||||||
Lipper Large-Cap Core Funds Index | 16.10% | 14.04% | 12.49% | 8.91% |
(1) | Effective upon the close of business on July 29, 2016, the LKCM Aquinas Small Cap Fund and the LKCM Aquinas Growth Fund reorganized into the LKCM Aquinas Value Fund (the “Reorganizations”). At the time the Reorganizations were completed, the LKCM Aquinas Value Fund changed its name to the LKCM Aquinas Catholic Equity Fund (“Fund”) and its investment strategies and expenses, including the expense limitation agreement, changed to the investment strategies and expenses, including the expense limitation agreement, of the Fund. The Fund’s performance prior to August 1, 2016 reflects the Fund’s prior investment strategies. |
(2) | Annualized. |
(3) | The assets of the Aquinas Value Fund, Aquinas Growth Fund and Aquinas Small-Cap Fund were acquired by the LKCM Aquinas Value Fund, LKCM Aquinas Growth Fund and LKCM Aquinas Small Cap Fund, respectively, on July 11, 2005. At the time of the reorganization, the Adviser also changed from Aquinas Investment Advisers, Inc. to Luther King Capital Management Corporation. Due to the change in adviser and investment technique, performance is being quoted for the period after the merger. As stated above, the LKCM Aquinas Growth Fund and LKCM Aquinas Small-Cap Fund were reorganized into the LKCM Aquinas Value Fund effective upon the close of business on July 29, 2016, after which the LKCM Aquinas Value Fund’s name, investment strategies and expenses changed to those of the Fund. The performance shown prior to August 1, 2016, is that of the LKCM Aquinas Value Fund. |
A HYPOTHETICAL $10,000 INVESTMENT IN LKCM AQUINAS CATHOLIC EQUITY FUND
(for the ten years ended December 31, 2020)
The S&P 500® Index is an unmanaged capitalization-weighted index of 500 selected stocks that is generally considered representative of the performance of large capitalization companies in the U.S. stock market.
The Lipper Large-Cap Core Funds Index is an unmanaged index generally considered representative of large cap core mutual funds tracked by Lipper, Inc.
6
LKCM Aquinas Catholic Equity Fund Expense Example — December 31, 2020
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund 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 (07/01/2020-12/31/2020).
ACTUAL EXPENSES
The third and fourth columns of the table below provide information about actual account values and actual expenses. You may use the information in these columns, 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 $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the fourth column under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. Although the Fund charges no sales load, you will be assessed fees for outgoing wire transfers, returned checks and stop payment orders at prevailing rates charged by U.S. Bancorp Fund Services, LLC (doing business as U.S. Bank Global Fund Services) the Fund’s transfer agent. If you request that a redemption be made by wire transfer, currently a $15 fee is charged by the Fund’s transfer agent. You will be charged a redemption fee equal to 1.00% of the net amount of the redemption if you redeem your shares of the Fund within 30 days of purchase, unless otherwise determined by the Fund in its discretion. To the extent the Fund invests in shares of other investment companies as part of its investment strategy, you will indirectly bear your proportionate share of any fees and expenses charged by the underlying funds in which the Fund invests in addition to the expenses of the Fund. Actual expenses of the underlying funds are expected to vary among the various underlying funds. These expenses are not included in the example below. The example below includes management fees, registration fees and other expenses. However, the example below does not include portfolio trading commissions and related expenses and other extraordinary expenses as determined under generally accepted accounting principles.
HYPOTHETICAL EXAMPLES FOR COMPARISON PURPOSES
The fifth and sixth columns of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. 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 the Fund and 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, such as redemption fees. Therefore, the fifth and sixth columns of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactions costs were included, your costs would have been higher.
Actual | Hypothetical (5% return before expenses) | |||||||||||||||||||||||||||||
Fund’s Annualized Expense Ratio(1) | Beginning Account Value 07/01/2020 | Ending Account Value 12/31/2020 | Expenses Paid During Period(1) | Ending Account Value 12/31/2020 | Expenses Paid During Period(1) | |||||||||||||||||||||||||
LKCM Aquinas Catholic Equity Fund | 1.00 | % | $ | 1,000.00 | $ | 1,249.40 | $ | 5.65 | $ | 1,020.11 | $ | 5.08 |
(1) | Expenses are equal to the annualized net expense ratio for the fund, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period). |
7
ALLOCATION OF PORTFOLIO HOLDINGS — LKCM Aquinas Catholic Equity Fund — December 31, 2020
Percentages represent market value as a percentage of total investments.
LKCM Aquinas Catholic Equity Fund
8
LKCM AQUINAS CATHOLIC EQUITY FUND |
SCHEDULEOF INVESTMENTS |
December 31, 2020 |
COMMON STOCKS - 99.3% | Shares | Value | ||||||||
Aerospace & Defense - 2.8% | ||||||||||
Honeywell International, Inc. | 7,000 | $ | 1,488,900 | |||||||
|
| |||||||||
Banks - 7.9% | ||||||||||
Comerica, Inc. | 15,000 | 837,900 | ||||||||
Cullen/Frost Bankers, Inc. | 5,000 | 436,150 | ||||||||
Truist Financial Corp. | 32,375 | 1,551,734 | ||||||||
Zions Bancorp N.A. | 32,500 | 1,411,800 | ||||||||
|
| |||||||||
4,237,584 | ||||||||||
|
| |||||||||
Beverages - 5.6% | ||||||||||
The Coca-Cola Co. | 12,500 | 685,500 | ||||||||
Keurig Dr Pepper, Inc. | 22,500 | 720,000 | ||||||||
PepsiCo, Inc. | 11,000 | 1,631,300 | ||||||||
|
| |||||||||
3,036,800 | ||||||||||
|
| |||||||||
Chemicals - 7.2% | ||||||||||
Air Products & Chemicals, Inc. | 3,000 | 819,660 | ||||||||
Corteva, Inc. | 22,500 | 871,200 | ||||||||
DuPont de Nemours, Inc. | 8,700 | 618,657 | ||||||||
Ecolab, Inc. | 5,000 | 1,081,800 | ||||||||
The Sherwin-Williams Co. | 700 | 514,437 | ||||||||
|
| |||||||||
3,905,754 | ||||||||||
|
| |||||||||
Computers & Peripherals - 4.7% | ||||||||||
Apple, Inc. | 19,000 | 2,521,110 | ||||||||
|
| |||||||||
Construction Materials - 1.0% | ||||||||||
Martin Marietta Materials, Inc. | 2,000 | 567,940 | ||||||||
|
| |||||||||
Electrical Equipment & Instruments - 3.2% | ||||||||||
Roper Technologies, Inc. | 4,000 | 1,724,360 | ||||||||
|
| |||||||||
Electronic Equipment & Instruments - 5.3% | ||||||||||
FLIR Systems, Inc. | 24,500 | 1,073,835 | ||||||||
Trimble, Inc. (a) | 27,000 | 1,802,790 | ||||||||
|
| |||||||||
2,876,625 | ||||||||||
|
| |||||||||
Food Products - 0.9% | ||||||||||
Mondelez International, Inc. - Class A | 8,500 | 496,995 | ||||||||
|
| |||||||||
Health Care Equipment & Supplies - 1.2% | ||||||||||
Stryker Corp. | 2,600 | 637,104 | ||||||||
|
| |||||||||
Internet & Catalog Retail - 3.6% | ||||||||||
Amazon.com, Inc. (a) | 600 | 1,954,158 | ||||||||
|
| |||||||||
IT Consulting & Services - 5.9% | ||||||||||
Broadridge Financial Solutions, Inc. | 5,500 | 842,600 | ||||||||
PayPal Holdings, Inc. (a) | 10,000 | 2,342,000 | ||||||||
|
| |||||||||
3,184,600 | ||||||||||
|
| |||||||||
Machinery - 2.4% | ||||||||||
Xylem, Inc. | 12,500 | 1,272,375 | ||||||||
|
| |||||||||
Media & Entertainment - 8.5% | ||||||||||
Alphabet, Inc. - Class A (a) | 1,400 | 2,453,696 | ||||||||
Pinterest, Inc. - Class A (a) | 22,500 | 1,482,750 | ||||||||
The Walt Disney Co. (a) | 3,600 | 652,248 | ||||||||
|
| |||||||||
4,588,694 | ||||||||||
|
|
COMMON STOCKS | Shares | Value | ||||||||
Multiline Retail - 2.0% | ||||||||||
Dollar Tree, Inc. (a) | 10,000 | $ | 1,080,400 | |||||||
|
| |||||||||
Oil & Gas & Consumable Fuels - 2.9% | ||||||||||
Pioneer Natural Resources Co. | 7,500 | 854,175 | ||||||||
WPX Energy, Inc. (a) | 85,000 | 692,750 | ||||||||
|
| |||||||||
1,546,925 | ||||||||||
|
| |||||||||
Pharmaceuticals - 7.9% | ||||||||||
Abbott Laboratories | 17,500 | 1,916,075 | ||||||||
Zoetis, Inc. | 14,000 | 2,317,000 | ||||||||
|
| |||||||||
4,233,075 | ||||||||||
|
| |||||||||
Professional Services - 3.1% | ||||||||||
Verisk Analytics, Inc. | 8,000 | 1,660,720 | ||||||||
|
| |||||||||
Software - 16.0% | ||||||||||
Adobe, Inc. (a) | 4,000 | 2,000,480 | ||||||||
Microsoft Corp. | 9,000 | 2,001,780 | ||||||||
Oracle Corp. | 27,500 | 1,778,975 | ||||||||
RealPage, Inc. (a) | 25,000 | 2,181,000 | ||||||||
Sprout Social, Inc. - Class A (a) | 14,000 | 635,740 | ||||||||
|
| |||||||||
8,597,975 | ||||||||||
|
| |||||||||
Software & Services - 3.1% | ||||||||||
Akamai Technologies, Inc. (a) | 16,000 | 1,679,840 | ||||||||
|
| |||||||||
Specialty Retail - 2.5% | ||||||||||
The Home Depot, Inc. | 5,000 | 1,328,100 | ||||||||
|
| |||||||||
Textiles, Apparel & Luxury Goods - 1.6% | ||||||||||
VF Corp. | 10,000 | 854,100 | ||||||||
|
| |||||||||
TOTAL COMMON STOCKS | ||||||||||
(Cost $23,297,597) | 53,474,134 | |||||||||
|
| |||||||||
SHORT-TERM INVESTMENT - 0.9% | ||||||||||
Money Market Fund - 0.9% | ||||||||||
Invesco Short-Term Investments Trust - Government & Agency Portfolio - Institutional Shares, 0.03% (b) | 474,538 | 474,538 | ||||||||
|
| |||||||||
TOTAL SHORT-TERM INVESTMENT | 474,538 | |||||||||
|
| |||||||||
Total Investments - 100.2% | ||||||||||
(Cost $23,772,135) | 53,948,672 | |||||||||
Liabilities in Excess of Other Assets - (0.2)% | (86,783 | ) | ||||||||
|
| |||||||||
TOTAL NET ASSETS - 100.0% | $ | 53,861,889 | ||||||||
|
|
(a) | Non-income producing security. |
(b) | The rate quoted is the annualized seven-day yield of the fund at period end. |
Investments are classified by industry pursuant to the Global Industry Classification Standard (GICS®), which was developed by and/or is the exclusive property of Morgan Stanley Capital International, Inc. (“MSCI”) and Standard & Poor’s Financial Services LLC (“S&P”). GICS is a service mark of MSCI and S&P and has been licensed for use by U.S. Bancorp Fund Services, LLC.
The accompanying notes are an integral part of these financial statements.
9
STATEMENTOF ASSETSAND LIABILITIES |
December 31, 2020 |
LKCM Aquinas Catholic Equity Fund | ||||||||||
Assets: | ||||||||||
Investments, at value* | $ | 53,948,672 | ||||||||
Dividends and interest receivable | 39,480 | |||||||||
Receivable for Fund shares sold | 719 | |||||||||
Prepaid expenses and other assets | 7,507 | |||||||||
|
| |||||||||
Total assets | 53,996,378 | |||||||||
|
| |||||||||
Liabilities: | ||||||||||
Payable for investment advisory fees (Note B) | 58,365 | |||||||||
Payable for distribution expense (Note B) | 28,296 | |||||||||
Payable for accounting and transfer agent fees and expenses | 17,932 | |||||||||
Payable for administrative fees | 11,187 | |||||||||
Payable for professional fees | 9,708 | |||||||||
Payable for reports to shareholders | 7,315 | |||||||||
Payable for trustees’ fees and officer compensation (Note B) | 886 | |||||||||
Payable for custody fees and expenses | 800 | |||||||||
|
| |||||||||
Total liabilities | 134,489 | |||||||||
|
| |||||||||
Net Assets | $ | 53,861,889 | ||||||||
|
| |||||||||
Net Assets Consist of: | ||||||||||
Paid-in capital | $ | 22,597,361 | ||||||||
Total distributable earnings | 31,264,528 | |||||||||
|
| |||||||||
Net Assets | $ | 53,861,889 | ||||||||
|
| |||||||||
Shares of beneficial interest outstanding | 3,071,731 | |||||||||
Net asset value per share | $ | 17.53 | ||||||||
|
| |||||||||
* Cost of Investments | $ | 23,772,135 | ||||||||
|
|
The accompanying notes are an integral part of these financial statements.
10
STATEMENTOF OPERATIONS |
Year Ended December 31, 2020 |
LKCM Aquinas Catholic Equity Fund | ||||||||||
Investment Income: | ||||||||||
Dividends | $ | 628,598 | ||||||||
Interest | 3,205 | |||||||||
|
| |||||||||
Total income | 631,803 | |||||||||
|
| |||||||||
Expenses: | ||||||||||
Investment advisory fees (Note B) | 416,531 | |||||||||
Accounting and transfer agent fees and expenses | 75,847 | |||||||||
Distribution expense (Note B) | 46,281 | |||||||||
Administrative fees | 44,677 | |||||||||
Federal and state registration | 27,497 | |||||||||
Trustees’ fees and officer compensation (Note B) | 26,669 | |||||||||
Professional fees | 21,807 | |||||||||
Reports to shareholders | 19,195 | |||||||||
Custody fees and expenses | 5,254 | |||||||||
Other | 1,765 | |||||||||
|
| |||||||||
Total expenses | 685,523 | |||||||||
Less, expense waiver and/or reimbursement (Note B) | (222,711 | ) | ||||||||
|
| |||||||||
Net expenses | 462,812 | |||||||||
|
| |||||||||
Net investment income | 168,991 | |||||||||
|
| |||||||||
Realized and Unrealized Gain: | ||||||||||
Net realized gain on investments | 4,536,968 | |||||||||
Net change in unrealized appreciation on investments | 5,819,393 | |||||||||
|
| |||||||||
Net Realized and Unrealized Gain | 10,356,361 | |||||||||
|
| |||||||||
Net Increase in Net Assets Resulting from Operations | $ | 10,525,352 | ||||||||
|
|
The accompanying notes are an integral part of these financial statements.
11
STATEMENTSOF CHANGESIN NET ASSETS |
LKCM Aquinas Catholic Equity Fund | ||||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||||
2020 | 2019 | |||||||||||||||||||||
Operations: | ||||||||||||||||||||||
Net investment income | $ | 168,991 | $ | 216,703 | ||||||||||||||||||
Net realized gain on investments | 4,536,968 | 5,320,117 | ||||||||||||||||||||
Net change in unrealized | 5,819,393 | 7,504,825 | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||
Net increase in net assets resulting from operations | 10,525,352 | 13,041,645 | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||
Net Dividends and Distributions to Shareholders | (3,408,224 | ) | (4,929,412 | ) | ||||||||||||||||||
|
|
|
| |||||||||||||||||||
Net decrease in net assets resulting from fund share transactions (Note C) | (663,370 | ) | (6,036,287 | ) | ||||||||||||||||||
|
|
|
| |||||||||||||||||||
Total increase in net assets | 6,453,758 | 2,075,946 | ||||||||||||||||||||
Net Assets: | ||||||||||||||||||||||
Beginning of period | 47,408,131 | 45,332,185 | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||
End of period | $ | 53,861,889 | $ | 47,408,131 | ||||||||||||||||||
|
|
|
|
The accompanying notes are an integral part of these financial statements.
12
FINANCIAL HIGHLIGHTS |
SELECTED DATAFOR EACH SHAREOF CAPITAL STOCK OUTSTANDING |
LKCM Aquinas Catholic Equity Fund | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2017 | 2016 (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value – Beginning of Period | $ | 15.06 | $ | 12.80 | $ | 17.19 | $ | 15.40 | $ | 15.17 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.06 | (2) | 0.07 | (2) | 0.06 | (2) | 0.05 | 0.04 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 3.59 | 3.92 | (1.46 | ) | 3.16 | 1.41 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total from investment operations | 3.65 | 3.99 | (1.40 | ) | 3.21 | 1.45 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.06 | ) | (0.08 | ) | (0.07 | ) | (0.05 | ) | (0.04 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions from net realized gains | (1.12 | ) | (1.65 | ) | (2.92 | ) | (1.37 | ) | (1.18 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total dividends and distributions | (1.18 | ) | (1.73 | ) | (2.99 | ) | (1.42 | ) | (1.22 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value – End of Period | $ | 17.53 | $ | 15.06 | $ | 12.80 | $ | 17.19 | $ | 15.40 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Return | 24.28% | 31.16% | -7.96% | 20.79% | 9.52% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratios and Supplemental Data: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period (thousands) | $ | 53,862 | $ | 47,408 | $ | 45,332 | $ | 71,058 | $ | 62,997 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before expense waiver and/or reimbursement | 1.48% | 1.51% | 1.44% | 1.43% | 1.66% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
After expense waiver and/or reimbursement(3) | 1.00% | 1.00% | 1.00% | 1.00% | 1.23% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Before expense waiver and/or reimbursement | (0.12)% | (0.05)% | (0.12)% | (0.14)% | (0.15)% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
After expense waiver and/or reimbursement(3) | 0.36% | 0.46% | 0.32% | 0.29% | 0.28% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Portfolio turnover rate | 17% | 12% | 14% | 18% | 18% |
(1) | Effective upon the close of business on July 29, 2016, the LKCM Aquinas Growth Fund and the LKCM Aquinas Small Cap Fund were reorganized into the LKCM Aquinas Value Fund and the Fund was renamed the LKCM Aquinas Catholic Equity Fund. Activity after July 29, 2016 reflects the Funds’ combined operations. |
(2) | Net investment income per share represents net investment income divided by the average shares outstanding throughout the period. |
(3) | Effective August 1, 2016, the Fund’s investment adviser contractually agreed to lower the expense cap for the Fund from 1.50% to 1.00% of the Fund’s average daily net assets and the fees charged under the Fund’s Rule 12b-1 plan changed from 0.25% per annum to 0.10% per annum as of August 1, 2016. |
The accompanying notes are an integral part of these financial statements.
13
LKCM FUNDS |
NOTESTOTHE FINANCIAL STATEMENTS |
December 31, 2020 |
A. Organization and Significant Accounting Policies: LKCM Funds (the “Trust”) is registered under the Investment Company Act of 1940 (“1940 Act”) as an open-end, management investment company. The Trust was organized as a Delaware statutory trust on February 10, 1994 and consists of seven diversified series as of December 31, 2020, one of which is presented herein: the LKCM Aquinas Catholic Equity Fund (the “Fund”). On July 11, 2005, the LKCM Aquinas Funds acquired the assets and assumed the liabilities of the Aquinas Funds. Effective upon the close of business on July 29, 2016, the LKCM Aquinas Small Cap Fund and the LKCM Aquinas Growth Fund reorganized into the LKCM Aquinas Value Fund, which changed its name immediately thereafter to the LKCM Aquinas Catholic Equity Fund and its investment strategies and expenses, including the expense limitation agreement, changed to the investment strategies and expenses, including the expense limitation agreement, of the LKCM Aquinas Catholic Equity Fund. The Fund is subject to expenses pursuant to the Rule 12b-1 plan described in Note B. The Fund charges a 1% redemption fee for redemptions of Fund shares held for less than 30 days, unless otherwise determined by the Fund in its discretion.
The LKCM Aquinas Catholic Equity Fund seeks to maximize long-term capital appreciation, while incorporating Catholic values investing principles in the investment process. The LKCM Aquinas Catholic Equity Fund seeks to achieve its investment objective by investing under normal circumstances at least 80% of its net assets (plus any borrowings for investment purposes) in equity securities of companies that Luther King Capital Management Corporation (the “Adviser”) believes are likely to have above-average growth in revenue and/or earnings, above-average returns on shareholders’ equity, potential for above-average capital appreciation, and/or companies the Adviser believes have attractive relative valuations.
The Fund practices socially responsible investing within the framework provided by the United States Conference of Catholic Bishops’ Socially Responsible Investment Guidelines (the “Guidelines”). The Fund’s investment approach incorporates the Guidelines through a combination of screening portfolio companies based on criteria set forth in the Guidelines, dialogue with companies whose policies and practices may conflict with the Guidelines, and/or potentially excluding from the Fund’s portfolio the securities of those companies that are unwilling to alter their policies and practices over a reasonable period of time. The Adviser monitors companies selected for the Fund for policies on various issues contemplated by the Guidelines. If the Fund invests in a company whose policies and practices are inconsistent with the Guidelines, the Adviser may attempt to influence the company, sell the company’s securities or otherwise exclude future investments in such company.
The following is a summary of significant accounting policies followed by the Fund in preparation of the financial statements. The Fund is an investment company and, accordingly, follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standards Codification Topic 946, Investment Companies.
1. Security Valuation: Equity securities listed or traded on a U.S. securities exchange for which market quotations are readily available are valued at the last quoted sale price on the exchange on which the security is primarily traded. Nasdaq Global Market securities are valued at the Nasdaq Official Closing Price (“NOCP”). Unlisted U.S. equity securities and listed U.S. equity securities not traded on a particular valuation date are valued at the mean of the most recent quoted bid and ask price on the relevant exchanges or markets. Equity securities listed on a foreign exchange for which market quotations are readily available are valued at the last quoted sales price on the exchange on which the security is primarily traded. Debt securities are normally valued at the mean of the closing bid and ask price and/or by using a combination of broker quotations or evaluated prices provided by an independent pricing service. Futures and options on futures are valued at the settlement prices established each day on the principal exchange on which they are traded. Forward contracts are valued based on the forward rate using information provided by an independent pricing service. Other assets and securities for which no market or broker quotations or evaluated prices are readily available are valued in good faith at fair value using guidelines approved by the Board of Trustees. The Board of Trustees has established policies and procedures that authorize the Adviser to fair value a security in good faith under certain circumstances. The Fund may use prices provided by independent pricing services to assist in the fair valuation of the Fund’s portfolio securities.
The Trust has adopted accounting standards which establish an authoritative definition of fair value and set out a hierarchy for measuring fair value. These standards require additional disclosures about the various inputs and valuation techniques used to develop the measurements of fair value and a discussion of changes in valuation techniques and related inputs during the period. These standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy is organized into three levels based upon the assumptions (referred to as “inputs”) used in pricing the asset or liability. These standards state that “observable inputs” reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from independent sources and “unobservable inputs” reflect an entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability. These inputs are summarized in the three broad levels listed below.
Level 1 | – | Quoted unadjusted prices for identical instruments in active markets to which the Trust has access at the date of measurement. |
14
Level 2 | – | Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists or instances where prices vary substantially over time or among brokered market makers. | ||
Level 3 | – | Model derived valuations in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are those inputs that reflect the Trust’s own assumptions that market participants would use to price the asset or liability based on the best available information. |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. As of December 31, 2020, the Fund’s assets carried at fair value were classified as follows:
LKCM Aquinas Catholic Equity Fund | ||||||||||||||||||||
Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Common Stocks | $ | 53,474,134 | $ | — | $ | — | $ | 53,474,134 | ||||||||||||
Short-Term Investment | 474,538 | — | — | 474,538 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total Investments* | $ | 53,948,672 | $ | — | $ | — | $ | 53,948,672 | ||||||||||||
|
|
|
|
|
|
|
|
* | Additional information regarding the industry classifications of these investments is disclosed in the Schedule of Investments. |
2. Federal Income Taxes: The Fund has elected to be treated as a “regulated investment company” under Subchapter M of the Internal Revenue Code and the Fund intends to distribute all of its investment company net taxable income and net capital gains to shareholders. Therefore, no federal income tax provision is recorded.
3. Distributions to Shareholders: The Fund generally intends to declare and pay income dividends and distribute net capital gain, if any, at least on an annual basis.
4. Foreign Securities: Investing in securities of foreign companies and foreign governments involves special risks and considerations not typically associated with investing in securities of U.S. issuers. These risks include devaluation of currencies and future adverse political and economic developments. Moreover, securities of many foreign companies and foreign governments and their markets may be less liquid and their prices more volatile than those of securities of comparable U.S. companies and securities of the U.S. government.
5. Expense Allocation: Expenses incurred by the Funds in the Trust are allocated among the Funds based upon (i) relative average net assets, (ii) a specific identification basis as incurred, or (iii) evenly among the Funds, depending on the nature of the expense.
6. Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.
7. Guarantees and Indemnifications: In the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims against the Fund that have not yet occurred. Based on experience, the Fund expects the risk of loss to be remote.
8. Security Transactions and Investment Income: Security and shareholder transactions are recorded on the trade date. Realized gains and losses on sales of investments are calculated on the identified cost basis. Dividend income and dividends and distributions to shareholders are recorded on the ex-dividend date. Withholding taxes on foreign dividends have been provided for in accordance with the Fund’s understanding of the applicable jurisdiction’s tax rules and rates. Interest income is recognized on the accrual basis. All discounts and premiums are amortized based on the effective interest method for tax and financial reporting purposes. The Fund may hold the securities of real estate investment trusts (“REITs”). Distributions from such investments may include income, capital gains and return of capital.
9. Other: Distributions from net investment income and realized capital gains are determined in accordance with income tax regulations, which may differ from U.S. GAAP. Certain capital accounts in the consolidated financial statements are periodically adjusted for permanent differences in order to reflect their tax character. These permanent differences are primarily due to the varying treatment of income and gain/loss on portfolio securities held by the Fund and have no impact on net assets or NAV per share.
Accordingly, at December 31, 2020, reclassifications were recorded as follows for the Fund:
Paid-in capital | $ | 339,222 | |||
Total distributable earnings | (339,222 | ) |
10. Restricted and Illiquid Securities: The Fund is permitted to invest in securities that are subject to legal or contractual restrictions on resale including investments considered by the Fund to be illiquid. Restricted securities generally may be resold in transactions exempt from registration. Illiquid investments are investments that the Fund reasonably expects cannot be sold or
15
disposed of in current market conditions within seven calendar days or less in the ordinary course of business without the sale or disposition significantly changing the market value of the investment. A security may be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at the current valuation may be difficult.
B. Investment Advisory and Other Agreements: The Adviser serves as the investment adviser to the Fund under an Investment Advisory Agreement (the “Agreement”). The Adviser receives a fee, computed daily and payable quarterly, at the annual rate presented below as applied to the Fund’s average daily net assets. The Adviser has contractually agreed to waive all or a portion of its management fee and/or reimburse expenses of the Fund through May 1, 2021 in order to limit the Fund’s operating expenses to the annual cap rate identified below. This expense limitation excludes interest, taxes, brokerage commissions, indirect fees and expenses relating to investments in other investment companies, including money market funds, and extraordinary expenses. For the fiscal year ended December 31, 2020, the Adviser waived the following management fees and/or reimbursed expenses to meet its expense cap obligations:
Annual Management Fee Rate | 0.90% | ||||
Annual Cap on Expenses | 1.00% | ||||
Fees Waived and/or Expenses Reimbursed in 2020 | $ | 222,711 |
The Trust reimburses the Adviser for a portion of compensation paid to the Trust’s Chief Compliance Officer. This compensation is reported as part of the “Trustees fees and officer compensation” expense on the Statement of Operations.
U.S. Bancorp Fund Services, LLC (“U.S. Bancorp”), doing business as U.S. Bank Global Fund Services, serves as transfer agent and administrator for the Fund and serves as accounting services agent for the Fund. U.S. Bank, N.A. serves as custodian for the Fund.
Distribution services are performed pursuant to a distribution contract with Quasar Distributors, LLC (“Quasar”), the Trust’s principal underwriter.
Effective March 31, 2020, Foreside Financial Group, LLC (“Foreside”) acquired Quasar, the Fund’s distributor, from U.S. Bancorp. As a result of the acquisition, Quasar became a wholly-owned broker-dealer subsidiary of Foreside and is no longer affiliated with U.S. Bancorp. The Board of Trustees of the Fund has approved a new Distribution Agreement to enable Quasar to continue serving as the Fund’s distributor.
The Trust has adopted a Rule 12b-1 plan for the Fund, under which the Fund may pay an annualized fee of up to 1.00% of its average daily net assets for distribution and other services. However, the Board of Trustees has currently only authorized an annual fee of 0.10% of the average daily net assets for the Fund. Prior to August 1, 2016, the Fund assessed an annual Rule 12b-1 fee of 0.25% of the average daily net assets for the Fund. For the year ended December 31, 2020, fees incurred by the Fund pursuant to the 12b-1 Plan were $46,281.
C. Fund Shares: At December 31, 2020, there was an unlimited number of shares of beneficial interest, no par value, authorized for the Fund. The following table summarizes the activity in shares of the Fund:
Year Ended December 31, 2020 | Year Ended December 31, 2019 | ||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||
Shares sold | 131,291 | $ | 2,112,948 | 148,983 | $ | 2,264,439 | |||||||||||||||||
Shares issued to shareholders in | 188,041 | 3,279,433 | 316,326 | 4,767,041 | |||||||||||||||||||
Shares redeemed | (396,131 | ) | (6,055,975 | ) | (858,817 | ) | (13,067,846 | ) | |||||||||||||||
Redemption fee | 224 | 79 | |||||||||||||||||||||
|
|
|
|
|
|
|
| ||||||||||||||||
Net decrease | (76,799 | ) | $ | (663,370 | ) | (393,508 | ) | $ | (6,036,287 | ) | |||||||||||||
|
|
|
| ||||||||||||||||||||
Shares Outstanding: | |||||||||||||||||||||||
Beginning of period | 3,148,530 | 3,542,038 | |||||||||||||||||||||
|
|
|
| ||||||||||||||||||||
End of period | 3,071,731 | 3,148,530 | |||||||||||||||||||||
|
|
|
|
D. Security Transactions: Purchases and sales of investment securities, other than short-term investments, for the Fund for the year ended December 31, 2020 were as follows:
Purchases | Sales | |||||||||||||||
U.S. Government | Other | U.S. Government | Other | |||||||||||||
$ | — | $ | 7,715,350 | $ | — | $ | 11,499,294 |
16
E. Tax Information: At December 31, 2020, the components of accumulated earnings (losses) on a tax basis for the Fund were as follows:
Tax cost | $ | 23,772,135 | ||
|
| |||
Gross unrealized appreciation | $ | 30,176,537 | ||
Gross unrealized depreciation | — | |||
|
| |||
Net unrealized appreciation | $ | 30,176,537 | ||
|
| |||
Undistributed ordinary income | $ | 5,437 | ||
Undistributed long-term capital gain | 1,082,554 | |||
|
| |||
Distributable earnings | $ | 1,087,991 | ||
|
| |||
Other accumulated losses | $ | — | ||
|
| |||
Total distributable earnings | $ | 31,264,528 | ||
|
|
To the extent the Fund realizes future net capital gains, taxable distributions will be reduced by any unused capital loss carryforwards as permitted by the Internal Revenue Code. At December 31, 2020, the Fund had no capital loss carryforwards.
The tax components of dividends paid during the periods shown below for the Fund were as follows:
Year Ended December 31, 2020 | Year Ended December 31, 2019 | |||||||||||||||
Ordinary Income | Long-Term Capital Gains | Ordinary Income | Long-Term Capital Gains | |||||||||||||
$ | 169,007 | $ | 3,239,217 | $ | 216,623 | $ | 4,712,789 |
The Fund designated earnings and profits distributed to shareholders upon the redemption of shares during 2020 and 2019 in determining undistributed net capital gains as of December 31, 2020 and 2019.
The Trust has adopted financial reporting rules regarding recognition and measurement of tax positions taken or expected to be taken on a tax return. The Trust has reviewed all open tax years and major jurisdictions and concluded that there is no impact on the Fund’s financial position or results of operations. Tax years that remain open to examination by major tax jurisdictions include tax years ended December 31, 2017 through December 31, 2020. There is no tax liability resulting from unrecognized tax benefits relating to uncertain income tax positions taken or expected to be taken on tax returns as of December 31, 2020. The Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. If applicable, the Fund would recognize interest accrued related to unrecognized tax benefits in “interest expense” and penalties in “other expense” on the statement of operations.
F. Other Matters: The global outbreak of COVID-19 and the ensuing pandemic has adversely impacted global economic and commercial activity and has contributed to significant volatility and uncertainty in global financial markets. The global impact of the COVID-19 pandemic continues to rapidly evolve and its long-term implications for economies, markets, sectors, industries and issuers remains uncertain. The financial and operational performance of the issuers of securities in which the Fund invests depends upon future developments with respect to the COVID-19 pandemic, including, without limitation, the scope, duration and spread of COVID-19 as well as the development, efficacy and administration of COVID-19 vaccines, and such future developments and uncertainties with respect thereto may adversely affect, among other things, the value and liquidity of the Fund’s investment, the Fund’s ability to satisfy redemption requests, and Fund’s financial and operational performance.
G. Subsequent Events: In preparing these financial statements, management has evaluated the Fund’s related events and transactions that occurred subsequent to December 31, 2020 through the date the financial statements were issued and has determined that there were no significant subsequent events requiring recognition or disclosure in the financial statements.
17
REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
To the shareholders and Board of Trustees of LKCM Funds
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments of LKCM Aquinas Catholic Equity Fund, one of the series constituting the LKCM Funds (the “Fund”), as of December 31, 2020, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2020, by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
Milwaukee, Wisconsin
February 24, 2021
We have served as the auditor of one or more LKCM Funds since 2007.
18
LKCM AQUINAS CATHOLIC EQUITY FUND |
ADDITIONAL INFORMATION |
December 31, 2020 |
Tax Information: For the fiscal year ended December 31, 2020, certain dividends paid by the Fund may be subject to a maximum tax rate of 23.8%, as provided for by the Jobs & Growth Tax Relief Reconciliation Act of 2003. The percentage of dividends declared from ordinary income designated as qualified dividend income was 100.00%.
For corporate shareholders, the percentage of ordinary income distributions qualifying for the corporate dividends received deduction for the fiscal year ended December 31, 2020 was 100.00%.
Availability of Proxy Voting Information: A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to its portfolio securities, as well as information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, is available without charge, upon request, by calling toll-free 1-800-423-6369 or on the SEC website at http://www.sec.gov.
The actual voting records relating to portfolio securities during the twelve month period ended June 30 (as filed with the SEC on Form N-PX) are available without charge, upon request, by calling the Fund toll free at 1-800-423-6369 or by accessing the SEC’s website at www.sec.gov.
Availability of Quarterly Portfolio Schedule: The Fund files a complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (the “SEC”) for the first and third quarters of each fiscal year on Part F of Form N-PORT. The Fund’s Part F of Form N-PORT is available on the SEC’s website at www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-732-0330. The Fund’s Part F of Form N-PORT may also be obtained by calling toll-free 1-800-423-6369.
19
Information about the Fund’s Trustees and Officers:
The business and affairs of the Fund are managed under the direction of the Fund’s Board of Trustees. Information pertaining to the Trustees of the Fund is set forth below. The Statement of Additional Information includes additional information about the Fund’s Trustees and officers and is available, without charge, upon request by calling 1-800-423-6369.
Name, Address and Age | Position(s) Held with the Trust | Term of Office & Length of Time Served(1) | Principal Occupation During Past Five Years | Number of Portfolios in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee | |||||
Independent Trustees | ||||||||||
Richard J. Howell 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1942 | Trustee Chairman of the Audit and Compliance Committee | Since 2005 Since 2008 | CPA; Adjunct Faculty at SMU Cox School of Business from 2004 to 2009; Consulting Services, since 2002; Audit Partner, Arthur Andersen LLP from 1974 to 2002. | 7 | None | |||||
Larry J. Lockwood 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1953 | Chairman of the Board of Trustees Trustee | Since 2021
Since 2013 | C.R. Williams Professor of Finance, Stan Block Endowed Chair in Finance, Department of Finance, Neeley School of Business, Texas Christian University since 1994. | 7 | None | |||||
Mauricio Rodriguez 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1966 | Trustee | Since 2021 | Chair, Department of Finance, Neeley School of Business; Texas Christian University since 2002. | 7 | None | |||||
Interested Trustees | ||||||||||
J. Luther King, Jr.(2) 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1940 | Trustee, President and Chief Executive Officer | Since 1994 | Chairman, President and Director, Luther King Capital Management Corporation since 1979. | 7 | Tyler Technologies, Inc. | |||||
Steven R. Purvis(2) 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1964 | Trustee Vice President | Since 2013 Since 2000 | Principal, Luther King Capital Management Corporation since 2004, Vice President and Portfolio Manager, Luther King Capital Management Corporation since 1996. | 7 | AZZ Incorporated |
(1) | Each Trustee holds office during the lifetime of the Trust until that individual resigns, retires or is otherwise removed or replaced. |
(2) | Messrs. King and Purvis are each considered an “interested person” of the Trust (as defined in the 1940 Act) because of their affiliation with the Adviser. |
20
Information about the Fund’s Trustees and Officers, Continued
| ||||||
Name, Address and Age | Position(s) Held with the Trust | Term of Office & Length of Time Served(1) | Principal Occupation During Past Five Years | |||
Principal Officers of the Trust | ||||||
J. Luther King, Jr.(2) 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1940 | Trustee, President and Chief Executive Officer | Since 1994 | Chairman, President and Director, Luther King Capital Management Corporation since 1979. | |||
Steven R. Purvis(2) 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1964 | Trustee Vice President | Since 2013 Since 2000 | Principal, Luther King Capital Management Corporation since 2004, Vice President and Portfolio Manager, Luther King Capital Management Corporation since 1996. | |||
Paul W. Greenwell 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1950 | Vice President | Since 1996 | Principal, Luther King Capital Management Corporation since 1986, Vice President and Portfolio Manager, Luther King Capital Management Corporation since 1983. | |||
Richard Lenart 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1966 | Secretary and Treasurer | Since 2006 | Luther King Capital Management Corporation since 2005. | |||
Jacob D. Smith 301 Commerce Street Suite 1600 Fort Worth, TX 76102 Year of Birth: 1974 | Chief Financial Officer Chief Compliance Officer | Since 2010
Since 2006 | General Counsel and Chief Compliance Officer, Luther King Capital Management Corporation since 2006; Principal, Luther King Capital Management Corporation since 2013. |
(1) | Each officer holds office during the lifetime of the Trust until that individual resigns, retires or is otherwise removed or replaced. |
(2) | Messrs. King and Purvis are each considered an “interested person” of the Trust (as defined in the 1940 Act) because of their affiliation with the Adviser. |
21
LKCM FUNDS
PRIVACY NOTICE
Our Commitment to Your Privacy
At LKCM Funds, we are committed to safeguarding the confidentiality and privacy of nonpublic personal information about our current and former shareholders. This privacy notice describes the types of nonpublic personal information we collect about you and the sources through which we obtain this information, the purposes for which we obtain and use your nonpublic information, and the policies and procedures we have implemented to protect the privacy of your nonpublic personal information.
How We Protect Your Nonpublic Personal Information
Protecting your nonpublic personal information is an important priority at LKCM Funds. Accordingly, we have implemented policies and procedures designed to safeguard your nonpublic personal information, such as your tax identification number, account and investment history, account numbers, account balances and nonpublic contact information, from unauthorized access or use. Pursuant to these policies and procedures, we maintain various physical, technological, and administrative safeguards to protect the security and confidentiality of your nonpublic personal information, and we adapt these safeguards to respond to evolving technological and other standards.
We do not disclose nonpublic personal information about you to non-affiliated firms, organizations or individuals except as authorized by you or your representatives or as required or permitted by law. We may disclose nonpublic personal information about you to nonaffiliated third parties, such as custodians, brokers, auditors, accountants, and systems and administrative service providers, in connection with the services we provide to you or on your behalf. When we provide nonpublic personal information about you to nonaffiliated third parties for these purposes, we expect them to safeguard your nonpublic personal information, use your nonpublic personal information only for the intended purposes and otherwise abide by applicable law.
How We Obtain Your Nonpublic Personal Information
We collect nonpublic personal information about you from various sources, including documents, new account applications and other information that you or your representatives, custodians, attorneys, accountants or similar parties provide to us, communications that we have with you or your representatives, custodians, attorneys, accountants or similar parties, and documents and other information related to your accounts or investment experience with us.
Please do not hesitate to contact Jacob D. Smith, our Chief Compliance Officer, if you have any questions regarding this privacy notice or the measures we have implemented to protect the privacy of your nonpublic personal information.
U.S. Bancorp Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701
LKCM FUNDS
P.O. Box 701
Milwaukee, WI 53201-0701
Officers and Trustees | ||||
J. Luther King, Jr., CFA, CIC Trustee, President and Chief Executive Officer | Richard J. Howell Trustee | Richard Lenart Secretary & Treasurer | ||
Paul W. Greenwell Vice President | Larry J. Lockwood Chairman of the Board of Trustees | Jacob D. Smith Chief Financial Officer Chief Compliance Officer | ||
Steven R. Purvis, CFA Trustee, Vice President | Mauricio Rodriguez Trustee |
Investment Adviser |
Luther King Capital Management Corporation 301 Commerce Street, Suite 1600 Fort Worth, TX 76102 |
Administrator, Transfer Agent, Dividend Paying Agent & Shareholder Servicing Agent |
U.S. Bancorp Fund Services, LLC P.O. Box 701 Milwaukee, WI 53201-0701 |
Custodian |
U.S. Bank, N.A. 1555 N. River Center Drive, Suite 302 Milwaukee, WI 53212 |
Independent Registered Public Accounting Firm |
Deloitte & Touche LLP 555 E. Wells St., Suite 1400 Milwaukee, WI 53202 |
Distributor |
Quasar Distributors, LLC 111 East Kilbourn Avenue, Suite 2200 Milwaukee, WI 53202 |
(b) Not applicable.
Item 2. Code of Ethics.
The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer and principal financial officer. The registrant has not made any substantive amendments to its code of ethics during the period covered by this report. The registrant has not granted any waivers from any provisions of the code of ethics during the period covered by this report.
A copy of the registrant’s Code of Ethics is filed herewith.
Item 3. Audit Committee Financial Expert.
The registrant’s board of trustees has determined that there is at least one audit committee financial expert serving on its audit committee. Richard J. Howell is the “audit committee financial expert” and is considered to be “independent” as each term is defined in Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
The registrant has engaged its principal accountant to perform audit services, audit-related services, tax services and other services during the past two fiscal years. “Audit services” refer to performing an audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. “Audit-related services” refer to the assurance and related services by the principal accountant that are reasonably related to the performance of the audit. “Tax services” refer to professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. The following table details the aggregate fees billed or expected to be billed for each of the last two fiscal years for audit fees, audit-related fees, tax fees and other fees by the principal accountant.
FYE 12/31/2020 | FYE 12/31/2019 | |||||||
Audit Fees | $ | 152,000 | $ | 152,000 | ||||
Audit-Related Fees | — | — | ||||||
Tax Fees | 33,320 | 33,320 | ||||||
All Other Fees | — | — |
The audit committee has adopted pre-approval policies and procedures that require the audit committee to pre-approve all audit and non-audit services of the registrant, including services provided to any entity affiliated with the registrant.
1
The percentage of fees billed by Deloitte & Touche LLP applicable to non-audit services pursuant to waiver of pre-approval requirement were as follows:
FYE 12/31/2020 | FYE 12/31/2019 | |||||||
Audit-Related Fees | 0 | % | 0 | % | ||||
Tax Fees | 0 | % | 0 | % | ||||
All Other Fees | 0 | % | 0 | % |
All of the principal accountant’s hours spent on auditing the registrant’s financial statements were attributed to work performed by full-time permanent employees of the principal accountant. The following table indicates the non-audit fees billed or expected to be billed by the registrant’s accountant for services to the registrant and to the registrant’s investment adviser (and any other controlling entity, etc.—not sub-adviser) for the last two years. The audit committee of the board of trustees has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser is compatible with maintaining the principal accountant’s independence and has concluded that the provision of such non-audit services by the accountant has not compromised the accountant’s independence.
Non-Audit Related Fees | FYE 12/31/2020 | FYE 12/31/2019 | ||||||
Registrant | $ | 33,320 | $ | 33,320 | ||||
Registrant’s Investment Adviser | — | — |
Item 5. Audit Committee of Listed Registrants.
Not applicable to registrants who are not listed issuers (as defined in Rule 10A-3 under the Securities Exchange Act of 1934).
Item 6. Investments.
(a) Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable to open-end investment companies.
2
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of trustees.
Item 11. Controls and Procedures.
(a) The registrant’s Chief Executive Officer and Chief Financial Officer have reviewed the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as of a date within 90 days of the filing of this report, as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d 15(b) under the Securities Exchange Act of 1934. Based on their review, such officers have concluded that the disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed in this report is recorded, processed, summarized and reported within the required time periods and that information required to be disclosed by the registrant in reports that it files or submits on Form N-CSR is accumulated and communicated to the registrant’s management, including its principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.
(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of 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 to open-end investment companies.
Item 13. Exhibits.
(a) | (1) Any code of ethics or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy Item 2 requirements through filing an exhibit. Filed herewith. | |
(2) A separate certification for each principal executive officer and principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. | ||
(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable to open-end investment companies. | ||
(1) | Change in the registrant’s independent public accountant. There was no change in the registrant’s independent public accountant for the period covered by this report. | |
(b) | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith. |
3
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) LKCM Funds | ||
By (Signature and Title) /s/ J. Luther King, Jr. | ||
J. Luther King, Jr., President | ||
Date 03/01/2021 |
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/ J. Luther King, Jr. | ||
J. Luther King, Jr., President | ||
Date 03/01/2021 | ||
By (Signature and Title) /s/ Jacob D. Smith | ||
Jacob D. Smith, Chief Financial Officer | ||
Date 03/01/2021 |
4