UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21410
The Weitz Funds
(Exact name of registrant as specified in charter)
1125 South 103 Street, Suite 200 Omaha, NE 68124-1071
(Address of principal executive offices) (Zip code)
Weitz Investment Management, Inc., 1125 South 103 Street, Suite 200, Omaha, NE 68124-1071
(Name and address of agent for service)
Registrant’s telephone number, including area code: (402) 391-1980
Date of fiscal year end: March 31
Date of reporting period: March 31, 2023
Item 1. Reports to Stockholders.
ANNUAL REPORT
March 31, 2023
EQUITY
Weitz Partners III Opportunity Fund
Weitz Partners Value Fund
Weitz Value Fund
ALLOCATION
Weitz Balanced Fund
FIXED INCOME
Weitz Core Plus Income Fund
Weitz Nebraska Tax-Free Income Fund
Weitz Short Duration Income Fund
Weitz Ultra Short Government Fund
2 2023 Annual Report
THE WEITZ PHILOSOPHY
Finding quality at a discount
There are no shortcuts in value investing. At Weitz, we dig for opportunities using a robust quality scoring process. We analyze hundreds of ideas to find strong, well-managed but undervalued companies that offer reasonable risk-adjusted returns. It’s simple – but it’s not easy. We do the due diligence, analyze, ask tough questions and push for answers. We wait for the right opportunities. Then, and only then, do we invest your money.
Fundamental Research-Driven Process
Our research-driven investment approach means deeply understanding our investable universe so we can capitalize on opportunities that arise out of market inefficiencies. Each of our analysts focuses on finding opportunities in specific industries, ensuring deep, ongoing research within their own areas of expertise. We also encourage a generalist mentality where all investment team members vet new ideas. All investment decisions are backed by thorough analysis, logical strategies, extensive debate and our team’s commitment to long-term growth.
Bottom-Up Focus
Our focus is on finding well-run companies with strong fundamentals and outstanding long-term prospects. Valuation is our North Star. When a security is selling at a significant discount to its intrinsic value, that’s when we buy. And when it’s not selling at a discount, we have the discipline and patience to wait for the price to come our way.
High-Conviction Investing
We believe there are a limited number of great investment ideas and that intrinsic value doesn’t change with the daily ebbs and flows of the market. Our high-conviction approach means we know what we own inside and out, allowing our funds to be highly concentrated.
Today we are responsible for approximately $4 billion in investments for our shareholders – individuals, corporations, pension plans, foundations and endowments. And our commitment remains the same: to put your goals first. Always. We do so through our expertise, our flexibility, and our drive to uncover investments that can help you preserve and grow wealth.
We’re right beside you
Weitz employees have a strong commitment of investing their own assets in our mutual funds. By aligning our goals with yours, you can have confidence that we’re treating your money as if it were our own.
2023 Annual Report 3
TABLE OF CONTENTS
Beginning 2021, paper copies of the Fund’s shareholder reports are no longer sent by mail unless specifically requested. Reports will be made available at weitzinvestments. com and you will be notified by mail each time a report is posted. You will continue to receive other Fund regulatory documents (such as prospectuses or supplements) in paper unless you have elected to receive all Fund documents electronically.
If you would like to receive the Fund’s future shareholder reports in paper free of charge, you may make that request (1) by contacting your financial intermediary; or (2) if you invest directly with the Fund, by calling 888-859-0698.
| Value Matters | 4 |
| Fixed Income Insights | 6 |
| Performance Summary | 9 |
| Analyst Corner | 10 |
| Balanced Fund | 12 |
| Core Plus Income Fund | 14 |
| Nebraska Tax-Free Income Fund | 18 |
| Partners III Opportunity Fund | 22 |
| Partners Value Fund | 24 |
| Short Duration Income Fund | 26 |
| Ultra Short Government Fund | 30 |
| Value Fund | 32 |
| Schedule of Investments | 34 |
| Financial Statements | 58 |
| Notes to Financial Statements | 66 |
| Report of Independent Registered Public | |
| Accounting Firm | 74 |
| Actual and Hypothetical Expenses for | |
| Comparison Purposes | 75 |
| Other Information | 76 |
| Information About the Trustees and | |
| Officers | 77 |
| Index Descriptions | 79 |
| Glossary of Terms | 80 |
The management of Weitz Funds has chosen paper for the 84 page report from a paper manufacturer certified under the Sustainable Forestry Initiative ® standard.
Portfolio composition is subject to change at any time and references to specific securities, industries, and sectors referenced in this report are not recommendations to purchase or sell any particular security. Current and future portfolio holdings are subject to risk. See the Schedules of Investments included in this report for the percent of assets in each of the Funds invested in particular industries or sectors.
4 2023 Annual Report
VALUE MATTERS: Staying Focused Through Changing Times
March 31, 2023
During the first quarter of 2023, the Federal Reserve continued to raise short-term interest rates in its quest to tame inflation. In response, the economy slowed, corporate earnings softened and a number of inflation measures moved in the right direction – lower.
Investors, having been conditioned over the past 20 years to expect relief from the Fed at the first sign of market weakness, appear to be positioned for a near-term policy “pivot.” Fed Chair Jerome Powell, on the other hand, has cautioned that rate cuts are not in the cards for 2023. Our guess is that while rates may not be raised much higher, the Fed is likely to keep them high for longer than many expect, to be sure their mission of taming inflation is accomplished.
Meanwhile, after a relatively stable January and February, Silicon Valley Bank (SVB) experienced a severe “run on the bank.” Regulators stepped in quickly to guarantee all SVB deposits in order to reassure depositors in all banks, but it was too late to save SVB. These developments both exacerbated fears of recession and raised hopes that the Fed would relent and lower rates.
Confusion and angst reigned as the quarter came to a close. To preview our working assumptions, we believe that the banking industry is sound and that good companies will cope successfully with the economic slowdown. We do not have predictions to offer, but we will try to answer some questions that our investors are likely asking.
Bank Failures – How Serious a Problem for Investors?
SVB has a colorful history, and the story of its failure is still being written. It was very different from most banks because of its concentration on the venture capital (VC) and technology startup industries. Deposits for all banks have risen sharply in recent years, reflecting stimulative fiscal and monetary policies, and SVB served an industry that was attracting lots of capital. A very large percentage of its deposits came from individuals and companies related to the VC world. Nearly all were held in accounts larger than the $250,000 FDIC limit and thus were uninsured.
The red-hot market for tech stocks had cooled some time ago, but ironically, the trigger for the bank run was SVB’s government bond portfolio. The bank had invested a large portion of its deposits in fixed-rate government bonds. As interest rates rose, the market value of those bonds declined. When it was disclosed that SVB’s unrealized losses were very large relative to its required regulatory capital, doubts arose about the safety of the uninsured deposits. In this closeknit community, connected by social media and influenced by a handful of VC decisionmakers, fear spread rapidly, and demands for withdrawals overwhelmed the bank. The FDIC moved quickly to guarantee its deposits, but it was too late to save SVB. Silvergate Bank and Signature Bank (SBNY) faced similar runs and were also seized by the FDIC.
The regulatory fix for the banking industry was to provide liquidity to all banks that experienced serious deposit outflows. By the nature of “fractional reserve banking,” all banks hold deposits and loans equal to many times their equity capital, so no bank can withstand a “run” on its deposits. But if depositors know their money is safe, there is no need for a run. The post-Great Financial Crisis (GFC) regulatory changes and disclosure requirements, especially for the largest banks, have made the banking system much sounder. It is all about confidence in the system.
A separate question for investors is the outlook for bank earnings. Rising interest rates impact the value of loan and bond portfolios and raise the cost of deposits as alternative investments (e.g., money market funds) provide stiffer competition for savings. A slower economy increases the risk of loan defaults, and post-Covid changes in shopping and office use threaten to have a serious impact on commercial real estate lending. Further, every financial “crisis” seems to bring with it new rules and regulatory costs.
Bank earnings may face headwinds for a while, but interest rate and credit cycles are a normal part of banking life. Each bank is different, and generalizing is dangerous. Investors will need to reassess the outlook for earnings growth on a case-by-case basis, but the stocks of sound banks, at the right price, can still make very attractive investments. Our only bank stock holding as of 3.31.2023 is JPMorgan Chase & Co. in the Balanced Fund. This will be, as they say, a “developing” story.
Will There Be a Recession in the U.S.?
We believe this question is a bit of a red herring. Whether the National Bureau of Economic Research labels this period a “recession” is not nearly as important as how our individual businesses perform. Interest rate sensitive industries, like housing, may already be in recession. Others that are less cyclical, or that are beneficiaries of a slowdown, are still doing well and may continue to grow despite a recession.
Our take is that the Fed does not know how hard it will be to bring inflation down to its 2% target. Ten-plus years of artificially suppressed interest rates, a pandemic that shut the country down for over a year, government spending of unprecedented scale, and three bear markets (20% drawdowns in the S&P 500) in five years (2018, 2020, and 2022) make references to financial history tenuous at best.
The Fed is taking action because it believes the economy is too strong and the labor market too tight. Its efforts to slow down activity and lessen wage and price pressures are designed to weaken the economy. Whether they “over-achieve” and cause a recession or get lucky with a “soft landing,” our working assumption is that the companies we own will emerge from this period with their business value and future prospects intact.
In fact, while it is hard to cheer for a recession, we believe that many great companies owe a measure of their success to opportunities that arose during tough economic times. Companies with cash at the right time can acquire great assets at good prices when sellers face financial distress. And they can buy back their own shares at attractive prices, which in turn increases the value per share for the remaining shareholders. Arguably, Berkshire Hathaway (BRK) would not have been able to acquire its largest subsidiary, BNSF Railway, in 2009 if not for the Great Financial Crisis.
Recessions are merely temporary interruptions in the very long-term trend of GDP and corporate earnings growth. BRK chairman and CEO Warren Buffett describes this in his company’s 2022
2023 Annual Report 5
annual report as the “American Tailwind.” The financial media wins by creating anxiety among its audience. This increases “engagement” and sells more advertising. Investors lose by trying to anticipate and respond to near-term price movements. As we advised in another letter years ago, turn off CNBC and turn on the History Channel. (Or Ted Lasso.)
Our Game Plan – Focus on Long Term Business Value Growth
In some ways, there is nothing new under the (investing) sun. Human nature doesn’t change, and emotions continue to drive asset price swings above and below “fair value” in recurring cycles. On the other hand, the last ten years have been quite extraordinary for financial markets and disorienting for investors. We are always working to understand what the “new normal” will be for office work, shopping, travel, hospitality, media, digital advertising, artificial intelligence, etc.
Over the course of 62 years of investing, we’ve learned to take grand pronouncements about change with grains of salt. Absolute terms like “never again” and “always” have a way of looking silly within a short period. Then again, extrapolating the recent past is also dangerous. The trick for investors is to stay calm and patient, remain curious about, and alert to, change, use common sense, and be realistic and intellectually honest with themselves.
It is disconcerting to face a murky near-term outlook for the economy, but really, “uncertainty” is a permanent condition. We are watching carefully as industries and companies evolve and government policymakers do their best to keep us safe and prosperous. Individuals and company managements are endlessly resourceful. Recessions, financial crises – and even pandemics – come and go. We are still firm believers that stock prices always find their way back toward underlying business value. As long as this is true, our version of “value investing” ought to serve us well.
For full portfolio results and information on individual companies’ contributions, we would refer you to the portfolio managers’ commentaries. We would also encourage you to read Tom and Nolan’s “Fixed Income Insights.” They have done a remarkable job of preserving shareholder capital in the midst of a severe bear market for bonds.
Sincerely,
| Wally Weitz | Brad Hinton |
| wally@weitzinvestments.com | brad@weitzinvestments.com |
As of 03/31/2023, the following portfolio companies constituted a portion of the net assets of Balanced Fund, Partners III Opportunity Fund, Partners Value Fund, and Value Fund as follows:
• Berkshire Hathaway, Inc: 2.6%, 10.1%, 5.9%, and 4.6%.
• JPMorgan Chase & Co: 1.3%, 0.0%, 0.0%, and 0.0%.
• SVB Financial Group: 0.0%, 0.0%, 0.0%, and 0.0%.
• Silvergate Capital Corp: 0.0%, 0.0%, 0.0%, and 0.0%.
• Signature Bank: 0.0%, 0.0%, 0.0%, and 0.0%.
Portfolio composition is subject to change at any time. Current and future portfolio holdings are subject to risk.
6 2023 Annual Report
FIXED INCOME INSIGHTS: With Uncertainty Now the Norm, Bonds Remain Attractive
March 31, 2023
The first quarter was a rollercoaster ride. Bond and equity markets enjoyed a steep climb in January, only to fall in February on renewed inflation concerns and Federal Reserve hawkishness. March brought sudden fears of a banking crisis and, counterintuitively, ended with a strong rally in risk assets. While bank failures like Silicon Valley Bank (SVB) and Signature Bank are very unlikely to result in systemic risks, they create uncertainty around bank lending/credit availability and potential implications for the broader economy.
Stepping back, loan standards at banks have been tightening since last fall and tightened further in January. This was largely driven by slower repayments on existing loans due to rapidly rising interest rates. When interest rates increase rapidly, there is little incentive for refinance activity, and the lack of loan repayments, all else equal, reduces the availability of capital to make new loans.
Anecdotal evidence suggests loan standards are tightening even more briskly after recent bank failures prompted increased deposit risk. This makes sense. When banks face higher funding costs (and now the risk of tighter regulation and higher capital requirements), loans will become more expensive and harder to get. It remains to be seen how slower bank loan growth will impact the real economy, but at a minimum, it may add additional pressure on consumer and business spending already impacted by high inflation.
Zooming in on U.S. fixed income markets, the table below provides return data for select Bloomberg U.S. bond indexes for the first quarter. Longer duration and credit-sensitive indexes led the way as interest rates declined and credit performed well. Despite our lower duration profiles, we are pleased with the relative results that our investment process and flexible approach have yielded. For details regarding individual fund performance and analysis, see our funds’ quarterly commentaries.
After calmer conditions to start the year, interest rate volatility, as measured by the ICE BofA MOVE Index, reached its highest level since the Great Financial Crisis in October 2008. This played out with extreme movement in the shape of the yield curve. The table below highlights movements in U.S. Treasury yields over a broad spectrum of maturities. While the 2-year Treasury ended the first quarter down 40 bps, it fell 100 bps over three days following the SVB failure, the biggest move since 1982. Overall, yields across the maturity spectrum shifted down and flattened during the first quarter.
Interest rate volatility has also led to rapidly evolving views on the forward path of the Fed’s interest rate policy. The chart below highlights the pre-SVB expected path of Fed Funds (red line) and the current (as of March 20th) expected path (maroon line), which equates to an approximately 200 bps shift down in the Fed funds rate.
As a result, a great divide has emerged between market expectations and the Fed, which expects short-term interest rates to remain elevated for some time. We believe it is unlikely that a deeply inverted yield curve, along with expectations of significant Fed cuts, herald an environment of lower, yet sturdy economic growth and inflation returning to a long-run rate of 2%.
The amount of Fed easing that investors expect also matters. History would suggest that it is ill-advised to place risky bets on expectations of significant interest rate cuts. According to Morgan Stanley, since 1980 there have been six Fed easing cycles of 150 bps or more. Five of those six easing cycles were associated with recessions, or 83% of the time.
U.S. economic resiliency largely lies at the feet of the strong labor market and consumer spending. With the March 2023 unemployment rate near an all-time low of 3.5%, all eyes will remain on the jobs market. Since 1949, every time the unemployment rate has risen by 1% or more over a 12-month period, a recession has always happened.
2023 Annual Report 7
Rate volatility aside, credit markets broadly are not signaling
much in the way of potentially hazardous conditions down the
road. After a brief spike up to 164 bps in early March, broad
investment grade credit spreads finished the first quarter at 145
bps, up from 138 bps at year-end. However, dispersion in credit
spreads by sector and issuer has increased, which may present
compelling opportunities. The high yield market faired even
better. After rising to 522 bps (up from 481 bps at year-end), high
yield spreads finished the first quarter at 458 bps.
Outlook
We expect the path forward will be bumpy and the range of
outcomes will remain wide. However, we continue to add
attractive investments to our portfolios across a diverse array of
sectors within corporate credit and securitized products. We also
maintain sizable Treasury holdings to provide ballast and enable
us to take advantage of opportunities brought on by market
turbulence. We remain highly focused on the credit performance
of our underlying investments and, overall, we remain pleased
with the quality and performance of our portfolios. Coupling our
differentiated investment approach with the potential for forward
returns that haven't been this good in many, many years leaves
us very encouraged by future return possibilities.
| Tom Carney | Nolan Anderson |
| tom@weitzinvestments.com | nolan@weitzinvestments.com |
Portfolio composition is subject to change at any time. Current
and future portfolio
holdings are subject to risk.
Definitions: Investment-Grade Bonds are those securities rated at least BBB- by
one or more credit ratings agencies. Non-Investment Grade Bonds are those
securities (commonly referred to as “high yield” or “junk” bonds) rated BB+ and
below by one or more credit ratings agencies.
8 2023 Annual Report
DISCLOSURES
Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. All investments involve risks, including possible loss of principal. Please visit weitzinvestments.com for the most recent month-end performance.
Investment results reflect applicable fees and expenses and assume all distributions are reinvested but do not reflect the deduction of taxes an investor would pay on distributions or share redemptions. Certain Funds have entered into fee waiver and/or expense reimbursement arrangements with the Investment Advisor by which the Advisor has contractually agreed to waive a portion of the Advisor’s fee and reimburse certain expenses (excluding taxes, interest, brokerage costs, acquired fund fees and expenses and extraordinary expenses) to limit the total annual fund operating expenses of the Fund’s average daily net assets through Contractual Expiration Date of 07/31/2023. If this arrangement had not been in place, the performance results would have been lower.
The net expense ratio reflects the total annual fund operating expenses of the Fund after taking into account any such fee waiver and/or expense reimbursement. Net and gross expense ratios are as of the Fund’s most recent prospectus.
Performance quoted for the Balanced, Partners Value and Value Funds’ Institutional Class shares before their inception is derived from the historical performance of the Investor Class shares, which have not been adjusted for the expenses of the Institutional Class shares, had they, returns would have been different.
Performance quoted for the Partners III Opportunity and Short Duration Income Funds’ Investor Class shares before their inception is derived from the historical performance of the Institutional Class shares, which have not been adjusted for the expenses of the Investor Class shares, had they, returns would have been different.
Index performance is hypothetical and is shown for illustrative purposes only. You cannot invest directly in an index. See page 79 for a description of all indices. All indices Since Inception return are since the Fund’s inception. The inception date of the Bloomberg 1-3 Year U.S. Aggregate Index and the Bloomberg 5-Year Municipal Bond Index was 12/31/1992 and 1/29/1988, respectively.
On 12/29/2006, the Nebraska Tax-Free Income Fund succeeded to substantially all of the assets of Weitz Income Partners Limited Partnership. On 12/31/1993, Partners Value Fund succeeded to substantially all of the assets of Weitz Partners II Limited Partnership. On 12/30/2005, Partners III Opportunity Fund succeeded to substantially all of the assets of Weitz Partners III Limited Partnership. The investment objectives, policies and restrictions of the Funds are materially equivalent to those of the Partnerships, and the Partnerships were managed at all times with full investment authority by the Investment Adviser. The performance information includes performance for the Partnerships. The Partnerships were not registered under the Investment Company Act of 1940 and, therefore, were not subject to certain investment or other restrictions or requirements imposed by the 1940 Act or the Internal Revenue Code. If the Partnerships had been registered under the 1940 Act, the Partnerships’ performance might have been adversely affected.
Effective 12/16/2016, the Ultra Short Government Fund revised its principal investment strategies. Prior to that date, the Fund operated as a “government money market fund” and maintained a stable net asset value of $1.00 per share. Performance prior to 12/16/2016 reflects the Fund’s prior principal investment strategies and may not be indicative of future performance results.
Effective 12/16/2016, the Short Duration Income Fund revised its principal investment strategies. Since that time the Fund has generally maintained an average effective duration between one to three and a half years. Prior to that date, the Fund maintained a dollar–weighted average maturity of between two to five years. Performance prior to 12/16/2016 reflects the Fund’s prior principal investment strategies and may not be indicative of future performance results.
2023 Annual Report 9
PERFORMANCE SUMMARY
Returns (%) as of 3/31/2023
| ANNUALIZED | ||||||||||
| Since Fund | Inception | Net | Gross | |||||||
| EQUITY | QTD | YTD | 1 YR | 5 YR | 10 YR | Inception* | Date | Expense | Expense | |
| Partners III Opportunity - Investor (WPOIX) | 2.83 | 2.83 | (16.31) | 3.62 | 4.23 | 11.04 | 8/1/2011 | 1.86 | 1.86 | |
| Partners III Opportunity - Institutional (WPOPX) | 3.06 | 3.06 | (15.80) | 4.22 | 4.73 | 11.18 | 6/1/1983* | 1.43 | 1.43 | |
| S&P 500 Index | 7.50 | 7.50 | (7.73) | 11.18 | 12.23 | 11.02 | ||||
| Russell 3000 Index | 7.18 | 7.18 | (8.58) | 10.44 | 11.73 | 10.74 | ||||
| Partners Value - Investor (WPVLX) | 2.01 | 2.01 | (11.97) | 4.83 | 5.51 | 10.83 | 6/1/1983* | 1.09 | 1.09 | |
| Partners Value - Institutional (WPVIX) | 2.03 | 2.03 | (11.81) | 5.06 | 5.71 | 10.88 | 7/31/2014 | 0.89 | 0.91 | |
| S&P 500 Index | 7.50 | 7.50 | (7.73) | 11.18 | 12.23 | 11.02 | ||||
| Russell 3000 Index | 7.18 | 7.18 | (8.58) | 10.44 | 11.73 | 10.74 | ||||
| Value - Investor (WVALX) | 6.01 | 6.01 | (11.01) | 9.29 | 8.53 | 10.04 | 5/9/1986* | 1.04 | 1.04 | |
| Value - Institutional (WVAIX) | 6.05 | 6.05 | (10.88) | 9.50 | 8.72 | 10.09 | 7/31/2014 | 0.89 | 0.90 | |
| S&P 500 Index | 7.50 | 7.50 | (7.73) | 11.18 | 12.23 | 10.42 | ||||
| Russell 1000 Index | 7.46 | 7.46 | (8.39) | 10.86 | 12.01 | 10.39 | ||||
| ANNUALIZED | ||||||||||
| Since Fund | Inception | Net | Gross | |||||||
| ALLOCATION | QTD | YTD | 1 YR | 5 YR | 10 YR | Inception* | Date | Expense | Expense | |
| Balanced - Investor (WBALX) | 2.42 | 2.42 | (4.12) | 5.48 | 5.33 | 5.48 | 10/1/2003* | 0.85 | 1.01 | |
| Balanced - Institutional (WBAIX) | 2.48 | 2.48 | (4.01) | 5.59 | 5.38 | 5.51 | 3/29/2019 | 0.70 | 0.82 | |
| Morningstar Moderately Conservative Target Risk Index | 3.90 | 3.90 | (5.44) | 3.77 | 4.36 | 5.44 | ||||
| ANNUALIZED | ||||||||||
| Since Fund | Inception | Net | Gross | |||||||
| FIXED INCOME | QTD | YTD | 1 YR | 5 YR | 10 YR | Inception* | Date | Expense | Expense | |
| Core Plus Income - Investor (WCPNX) | 3.25 | 3.25 | (3.06) | 2.69 | N/A | 2.74 | 7/31/2014* | 0.50 | 0.89 | |
| Core Plus Income - Institutional (WCPBX) | 3.27 | 3.27 | (2.98) | 2.81 | N/A | 2.90 | 7/31/2014* | 0.40 | 0.62 | |
| Bloomberg U.S. Aggregate Bond Index | 2.96 | 2.96 | (4.78) | 0.90 | N/A | 1.38 | ||||
| Nebraska Tax-Free Income - Investor (WNTFX) | 1.84 | 1.84 | 0.91 | 1.27 | 0.94 | 4.10 | 10/1/1985* | 0.45 | 1.02 | |
| Bloomberg 5-Year Municipal Bond Index | 1.93 | 1.93 | 1.75 | 1.73 | 1.64 | N/A | ||||
| Short Duration Income - Investor (WSHNX) | 1.96 | 1.96 | 0.83 | 1.74 | 1.38 | 4.56 | 8/1/2011 | 0.55 | 0.90 | |
| Short Duration Income - Institutional (WEFIX) | 1.97 | 1.97 | 0.98 | 1.87 | 1.56 | 4.62 | 12/23/1988* | 0.48 | 0.62 | |
| Bloomberg 1-3 Year U.S. Aggregate Index | 1.51 | 1.51 | 0.24 | 1.21 | 0.99 | N/A | ||||
| Ultra Short Government - Institutional (SAFEX) | 1.17 | 1.17 | 2.41 | 1.46 | 0.85 | 2.22 | 8/1/1991* | 0.20 | 0.68 | |
| ICE BofA U.S. 6-Month Treasury Bill Index | 1.17 | 1.17 | 2.61 | 1.56 | 1.02 | 2.74 | ||||
* Denotes the Fund's inception date and the date from which Since Fund Inception performance is calculated.
10 2023 Annual Report
ANALYST CORNER
A Reintroduction to CarMax By Jon Baker, CFA
We first wrote about CarMax back in 2019, about a year after our initial purchases of shares priced in the low $60s. CarMax was then (and remains today) the largest used car dealer in the U.S. At the time, we described CarMax as authentically customer-focused, but aware that online competitors like Carvana had advanced the consumer experience ball well down the field. CarMax had responded with its first omnichannel ‘bricks & clicks’ market in Atlanta and was prepping a broader rollout of hybrid online and offline capabilities to its nationwide store base.
In 2019, both CarMax and Carvana already had difficult paths ahead. CarMax entered the year with an established brand and a huge volume lead but had to rebuild the digital workings of its entire business without impairing customer service. Carvana needed to manage enormous growth in the hopes of scaling before legacy retailers like CarMax could mimic its clean, purpose-built offering. In its sprint from behind, Carvana has endured years of heavy losses, plugging sustained cash flow shortfalls with debt and equity raises along the way. Then, along came COVID, asking still more difficult questions of both organizations.
In some ways, the pandemic may have helped CarMax’s digital transition. If the organization lacked true unanimity around the need for a seamless digital offering coming into this period, COVID’s forced store closures and occupancy restrictions focused efforts to digitize into a white-hot pinpoint. Within weeks of COVID’s initial waves, CarMax’s formerly in-person wholesale auctions – local sales of customer trade-ins not fit for CarMax’s own lots – went 100% virtual. The already-in-motion push of omnichannel capabilities across the chain’s 200+ stores accelerated.
Early 2020 brought curbside pick-up and home delivery to most buyers. In the back half of the year, CarMax enabled online car buying in all their markets and launched online instant appraisals for vehicles consumers wanted to sell. In 2021, CarMax introduced its “Love Your Car Guarantee,” including new 24-hour at-home test drives and a 30-day money-back option. More recently, CarMax debuted its finance-based shopping engine, allowing consumers to filter using accurate, real-time payment data.
Consumers responded positively to this evolved offering and in 2021 rewarded CarMax with its largest single-year increase in market share ever. However, in late 2021, cracks in the used vehicle market began to appear. CarMax’s shares peaked that November in the $150s and since then have underperformed the S&P 500 by about 35%.
Things were going so well, what happened?
In the several years prior to COVID, sales of new passenger cars and lightweight trucks in the U.S. averaged around seventeen million units per year. Used unit transactions averaged more than double that number over the same period. At COVID’s outset, new vehicle purchases plunged below a nine million unit annual run rate, and manufacturers scrambled to cancel supply orders, including commitments for semiconductor capacity – capacity that was quickly taken up for other uses. Soon, the combination of stimulus payments and constrained spending (on things like travel and dining) resulted in a particularly flush consumer. Despite very strong demand for new vehicles, semiconductor supply constraints began throttling production volumes by mid-2021. Manufacturers have managed only about 80% of ‘normal’ production levels since. That unfulfilled new vehicle demand inevitably leapt its banks, flowing unabated into the used market. Used vehicle prices went parabolic throughout 2021, topping out some 70% above pre-COVID levels.
Into this already noxious brew, we have more recently poured the highest auto loan interest rates since the Great Recession, making already expensive used vehicles even less affordable. Too few vehicles costing too much money at too high financing rates have combined to crater used vehicle transactions. In the most recently reported quarter, CarMax’s same-store retail unit volumes were down more than 20% from the prior year. Apart from the abrupt first quarter of COVID and the Great Recession, that is the worst volume growth quarter in our CarMax data stretching back to the year 2000.
CarMax’s stock price has been volatile for several months, and the company’s results in 2023 will almost certainly be terrible. Expecting sustained demand and a more normal supply environment, management got well out over their skis spending on investment initiatives. Having printed nearly $7 in earnings per share (EPS) a little over a year ago, it’s not too difficult to imagine EPS in the coming year beginning with a $2 – or even $1 – handle. To be frank, we would be surprised if the stock rerated meaningfully higher before the used vehicle market begins to normalize. Currently, nearly 15% of CarMax’s shares are sold short. In the very near term, we can understand the desire to bet against the stock.
So why own the stock?
The high-minded answer to that question is that we like CarMax’s people, its business model, and its culture. CarMax behaves in a way that cultivates long-term, balanced relationships with its stakeholders (customers, employees, lenders, investors), and we tend to believe that kind of behavior gets rewarded. As difficult as this omnichannel transition has been for CarMax, we think it puts them in the best position to serve the most used vehicle buyers in the country. We know we want exposure to these things for a long time to come, no matter the chasm the industry currently negotiates.
The baser response to that question – Why own the stock? – is that we are eager to capture the returns we believe are in store. Today, a CarMax shareholder would need to be asleep at the switch to lack appreciation for the likely damage to near-term earnings. To our minds, 2023 is effectively baked, and our gaze has turned toward the future. With earnings in a repaired used vehicle selling environment likely significantly higher than we expect near term, whether 2023 produces EPS of $3 or even $0 has little bearing upon our ultimate outcome.
If we love a business – and if we believe several years of high returns are in store – we are highly unlikely to sell shares in the hopes of sidestepping some temporary hit that may or may not ever come. If the share price of that business falls substantially and our expectations for future returns from that lower price level consequently grow, our more likely response would be to buy more. The gravitational pull of our largely unimpacted future business value grows stronger with each passing day – with each downtick of share price.
Now, this all presumes a business that is actually worthy of love –a business that will not be taken from us nor forced to dilute our ownership share. In that regard, the debt for which CarMax itself is responsible looks entirely reasonable relative to the value of its inventory. That borrowing will likely – and reasonably – evolve along with inventories as the volume of CarMax’s business itself
2023 Annual Report 11
evolves. And we are hard-pressed to think of a company more
capable of managing used vehicle inventories than CarMax.
The more we can grant CarMax a balance sheet positioned to
withstand great agitation, the less our expected future reward
seems a matter of “if” but rather “when.”
As
of 03/31/2023, CarMax, Inc. constituted a portion of the net assets of
Balanced Fund, Partners III Opportunity Fund, Partners Value Fund, and
Value Fund as follows: 0.0%, 4.1%, 3.2%, and 2.2%.
Holdings are subject to change and may not be representative of the
Fund's current or future investments.
Jon Baker, CFA, joined Weitz Investment Management in 1997. Prior to joining the firm, he audited equity funds (including the Weitz Funds) as a certified public accountant at McGladrey & Pullen. Jon has a bachelor's in accounting and computer applications from the University of Notre Dame.
12 2023 Annual Report
BALANCED FUND
Portfolio Managers: Brad Hinton, CFA & Nolan Anderson
Investment Style: Conservative Allocation
The Balanced Fund’s Institutional Class returned +2.48% for the first quarter compared to +3.90% for the Morningstar Moderately Conservative Target Risk Index. For the fiscal year ended March 31, 2023, the Fund’s Institutional Class returned -4.01% compared to -5.44% for the index.
Over a 10-year period, the Fund’s Institutional Class has returned +5.38% annualized compared to +4.36% for the index. With that longer-term lens, total returns well above inflation (10-year average rate of 2.4%) have helped our investors retain and build wealth.
The first quarter seemed reminiscent of Disney’s Space Mountain rollercoaster. Equity markets soared in January, dipped in February, endured abrupt twists and turns through a few harrowing “bank watch” weekends in March, and closed with a gentle glide higher into quarter-end. Through it all, investors may have felt like they too were on a thrill ride in the dark.
On balance, it was an acceptable quarter for the Fund. Solid absolute returns were welcome after a tough year. Risk taking was broadly rewarded, with aggressive growth stocks, longer duration bonds, and credit-sensitive securities leading the way. Our steady “pontoon boat” approach often does not keep pace in racier “speedboat” conditions, and we are comfortable with that trade-off over full market cycles.
Despite widespread positive returns, conditions – as mentioned – seemed like a rollercoaster ride. The March failures of Silicon Valley Bank and Signature Bank set off a wave of concern across financial markets. While swift action by the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and Treasury Department ensured that depositors of those institutions would not lose money, confidence was shaken in all but the largest financial institutions. Please see this quarter’s “Value Matters” for our take on how the bank failures fit into the bigger picture.
At a minimum, the Fed’s inflation-fighting formula just became more complicated – as banks repair their balance sheets, financial conditions will further tighten. Fearful of recession and chastened by 2022’s market declines, Wall Street has become even more adamant that the Fed should pause rate hikes now and move to cut interest rates later this year. This widely held consensus view is squarely at odds with the Fed’s stated intentions, setting up a showdown that will keep things interesting for the foreseeable future. In our view, the case for owning durable, resilient, and adaptable businesses and high-quality bonds has never been stronger.
Analog Devices, Microsoft, Alphabet, and Oracle were the Fund’s largest quarterly equity contributors. Business results ranged from “better than feared” to “quite good,” fueling double-digit stock returns. The financial and health care sectors lagged during the quarter as banking concerns flared and investors chased stocks with more octane. Charles Schwab was the Fund’s largest quarterly detractor, followed by Fidelity National Information Services (FIS), Danaher, and Honeywell.
We sold the Fund’s Schwab position in March. Our concerns were primarily related to the depth and length of a potential earnings valley. As the Fed pushed up short-term interest rates, money market funds and Treasury bills provided savers with clear alternatives to banks’ ultra-low yielding deposits. Schwab’s near-term cost of funding seemed likely to rise materially, one way or the other. Some earnings erosion is reflected in the stock price, but we sold as our view of the risk/reward framework shifted considerably. While our final exit price was well below the highs, Schwab was an exceptional contributor to Fund returns over the past three years.
Analog Devices, IDEX, Oracle, Fortive, and Linde were the Fund’s largest contributors for the fiscal year. The Fund’s industrial stocks held up better than the broader market as the economy remained resilient despite mounting pressures. Liberty Broadband, Alphabet, FIS, and Schwab were the Fund’s largest equity detractors for the fiscal year; however, the Qurate 8% preferred security was the Fund’s worst performer overall for this period. Qurate’s turnaround plan is off to a bumpy start, and we are monitoring developments closely.
We added to the Fund’s positions in Accenture, Berkshire Hathaway, Diageo, JPMorgan Chase, and FIS during the quarter. Our focus on more prosaic and well-entrenched businesses was intentional given the crosscurrents in the economy and financial markets. We sold the Fund’s Redwood Trust equity position after the stock rallied sharply early in the quarter. We still own the company’s convertible bonds that mature next year, which in our view offer reasonable value.
As principal payments continued to roll in from the Fund’s shorter-dated bonds, we have been able to reinvest at prevailing higher yields. We purchased more 3-year Treasuries, though we arguably were too tentative in adding duration. We also sprinkled in small individual positions in asset-backed debt, with a heavy focus on sponsor quality, structural protection, and straightforward collateral. Other than a modest purchase of bonds issued by Vulcan Materials, we were not active in corporate credit markets during the quarter.
The Fund’s fixed income portfolio now yields approximately 5%, with a duration under two years. This profile represents a remarkable improvement from a year ago, and for that matter, an improvement from most of the last decade. These yields are available with high average credit quality (more than 97% investment-grade), offering savers real and welcome alternatives.
The Fund’s overall portfolio continues to evolve with market conditions. We own common equity stakes in 27 companies totaling 42.9% of net assets. High-yielding, hybrid securities represent another 1.4% of the Fund. The fixed income portfolio includes investment-grade corporate bonds (1.1%), securitized debt (14.2%), Treasury securities (36.4%), and cash equivalents/ other (4.0%). We have plenty of capacity to lean into new opportunities as our team uncovers them.
We think the investing landscape for allocation investors has materially improved. In our view, the Fund is well positioned to deliver long-term capital appreciation. Sustained, higher interest rates have enhanced the current income outlook. And sizeable holdings of short maturity Treasury securities and cash provide healthy ballast with decent yields. As always, we encourage investors to evaluate the strategy on a total-return basis over longer time horizons.
Definitions: Investment Grade Bonds are those securities rated at least BBB- by one or more credit ratings agencies.
2023 Annual Report 13
Returns
| Annualized | |||||||||
| Since | |||||||||
| Inception | Net | Gross | |||||||
| QTD | YTD | 1 YR | 3 YR | 5 YR | 10 YR | (10/1/03) | Expense | Expense | |
| WBALX - Investor Class | 2.42% | 2.42% | (4.12)% | 7.01% | 5.48% | 5.33% | 5.48% | 0.85% | 1.01% |
| WBAIX - Institutional Class | 2.48 | 2.48 | (4.01) | 7.16 | 5.59 | 5.38 | 5.51 | 0.70 | 0.82 |
| Morningstar Moderately Conservative Target Risk Index | 3.90 | 3.90 | (5.44) | 5.06 | 3.77 | 4.36 | 5.44 | ||
| Top 10 Stock Holdings | ||
| % of Net Assets | ||
| Berkshire Hathaway, Inc. | 2.6 | |
| Analog Devices, Inc. | 2.5 | |
| Microsoft Corp. | 2.4 | |
| Aon plc | 2.1 | |
| Danaher Corp. | 2.0 | |
| Thermo Fisher Scientific, Inc. | 1.9 | |
| Vulcan Materials Co. | 1.9 | |
| Visa, Inc. | 1.9 | |
| Mastercard, Inc. | 1.8 | |
| Laboratory Corp. of America Holdings | 1.8 | |
| 20.9 |
| Top Stock Performers | |||
| Average | |||
| Return | Weight | Contribution | |
| Analog Devices, Inc. | 20.8% | 2.3% | 0.43% |
| Microsoft Corp. | 20.5 | 2.2 | 0.42 |
| Alphabet, Inc - Class C | 17.2 | 1.6 | 0.26 |
| Oracle Corp. | 14.1 | 1.3 | 0.17 |
| Accenture plc - Class A | 7.5 | 1.2 | 0.15 |
| Bottom Stock Performers | ||||
| Average | ||||
| Return | Weight | Contribution | ||
| Charles Schwab | (34.8)% | 1.1% | (0.52)% | |
| Fidelity National Information Services | (18.9) | 0.9 | (0.15) | |
| Danaher Corp. | (4.9) | 2.1 | (0.11) | |
| Honeywell International, Inc. | (10.3) | 0.9 | (0.10) | |
| Markel Corp. | (3.0) | 1.9 | (0.06) |
| 30-Day SEC Yield | ||||
| Share Class | Subsidized | Unsubsidized | ||
| Investor | 2.09% | 1.83% | ||
| Institutional | 2.22 | 2.17 |
| Industry Breakdown | ||
| % of Net Assets | ||
| Financials | 13.9 | |
| Information Technology | 10.3 | |
| Health Care | 5.7 | |
| Materials | 4.9 | |
| Communication Services | 3.6 | |
| Industrials | 3.4 | |
| Consumer Staples | 1.1 | |
| Total Common Stocks | 42.9 | |
| U.S. Treasuries | 36.4 | |
| Asset-Backed Securities | 9.2 | |
| Commercial Mortgage-Backed Securities | 2.8 | |
| Mortgage-Backed Securities | 2.2 | |
| Corporate Bonds | 1.1 | |
| Corporate Convertible Bonds | 0.9 | |
| Non-Convertible Preferred Stocks | 0.5 | |
| Cash Equivalents/Other | 4.0 | |
| Total Bonds & Cash Equivalents | 57.1 | |
| 100.0 |
| Fixed Income Attributes | |
| Portfolio Summary | |
| Average Maturity | 2.2 years |
| Average Effective Maturity | 2.4 years |
| Average Duration | 1.8 years |
| Average Effective Duration | 1.6 years |
| Average Coupon | 2.4% |
| Credit Quality | ||
| Underlying Securities | % of Bond Portfolio | |
| U.S. Treasury | 67.5 | |
| U.S. Government Agency Mortgage Related Securities | 1.5 | |
| AAA | 17.8 | |
| AA | 3.9 | |
| A | 1.2 | |
| BBB | 2.5 | |
| CCC | 0.8 | |
| Non-Rated | 1.6 | |
| Cash Equivalents | 3.2 | |
| 100.0 | ||
All data as of 3/31/2023 unless otherwise indicated. Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. All investments involve risks, including possible loss of principal. Please visit weitzinvestments.com for the most recent month-end performance.
Investment results reflect applicable fees and expenses and assume all distributions are reinvested but do not reflect the deduction of taxes an investor would pay on distributions or share redemptions. The Fund has entered into fee waiver and/or expense reimbursement arrangements with the Investment Advisor by which the Advisor has contractually agreed to waive a portion of the Advisor’s fee and reimburse certain expenses (excluding taxes, interest, brokerage costs, acquired fund fees and expenses and extraordinary expenses) to limit the total annual fund operating expenses of the Fund’s average daily net assets through 07/31/2023. If this arrangement had not been in place, the performance results would have been lower. The net expense ratio reflects the total annual fund operating expenses of the Fund after taking into account any such fee waiver and/or expense reimbursement. Net and gross expense ratios are as of the Fund’s most recent prospectus.
See page 8 for additional performance disclosures. See page 79 for a description of all indices. See page 80 for a Glossary of Terms.
Credit ratings are assigned to underlying securities utilizing ratings from a Nationally Recognized Statistical Rating Organization (NRSRO) such as Moody’s and Fitch, or other rating agencies and applying the following hierarchy: security is determined to be Investment Grade if it has been rated at least BBB- by one credit rating agency; once determined to be Investment Grade (BBB- and above) or Non-Investment Grade (BB+ and below) where multiple ratings are available, then the lowest rating is assigned. Mortgage-related securities issued and guaranteed by government-sponsored agencies such as Fannie Mae and Freddie Mac are generally not rated by rating agencies. Securities that are not rated do not necessarily indicate low quality. Ratings are shown in the Fitch scale (e.g., AAA). Ratings and portfolio credit quality may change over time. The Fund itself has not been rated by a credit rating agency.
Contributions to performance are based on actual daily holdings. Returns shown are the actual quarterly returns of the security.
Source (Fixed Income Attributes, Credit Quality, and Maturity Distribution): Bloomberg Analytics
Source (Top Performers, Bottom Performers): Statpro
14 2023 Annual Report
CORE PLUS INCOME FUND
Portfolio Managers: Tom Carney, CFA & Nolan Anderson
Investment Style: Intermediate-Term Core Plus Bond
The Core Plus Income Fund’s Institutional Class returned +3.27% for the first quarter compared to a +2.96% return for the Bloomberg U.S. Aggregate Bond Index (Agg). For the fiscal year ended March 31, 2023, the Fund’s Institutional Class returned -2.98% compared to a -4.78% return for the index. Given the investment challenges of the past year, we are pleased to report positive absolute results for the quarter and good relative results for the fiscal year.
Despite the dizzying ups and downs of an extremely volatile first quarter, fixed income investors generally posted solid gains (our Fund included), riding the strong performance of U.S. Treasury bonds (as they often do). Price gains for bonds in January resulting from weak economic data fueled speculation of a Fed pivot, or at least a pause, in its year-long pursuit of higher short-term interest rates to slow inflation. February brought a ‘blowout’ jobs report that undermined any thoughts of a slowdown and resulted in a violent reversal of January’s interest rate rally (as rates decrease, bond prices increase). By early March, the yield curve had reached its deepest inversion (the difference between 2-year and 10-year U.S. Treasury rates) in over 40 years.
Recession fears eased and pundits began to believe the economy could grow despite the Fed’s efforts to tame inflation. Then came the collapse of Silicon Valley Bank (and others) and overall turmoil in the banking industry. Rates plummeted during the final stretch of the first quarter in a classic flight to safety amid growing worries about tightening lending conditions and the attendant effects on future economic growth. ‘Pause’ or ‘pivot’ has been replaced by market expectations of rate cuts later this year. Overall, the first quarter of 2023 had echoes of 2022. Instead of calm after a tumultuous year, investors have received more volatility and choppy markets. However, overall forward returns in fixed income (tax-free and taxable) are where the echoes/comparisons end. For the first time in seemingly forever, forward (coupon) returns compensate for this year’s volatile/ choppy markets where the higher overall yield environment presents a much wider range of attractive investment opportunities for fixed-income investors.
Whether the Fed does pause or pivot in its battle against inflation, we have been active in improving the forward return prospects for the Core Plus Income Fund. Part of this improvement can be seen in the Fund’s improved yield-to-worst (YTW) metric. As a reminder, YTW has historically been a reasonable predictor of forward returns. The Fund’s YTW increased from 3.32% on March 31, 2022, to 5.47% on March 31, 2023 – comparing favorably to the index’s YTW of 4.40% as of March 31 (see table below). As important, or perhaps more so, the difference of percentage change between the Fund’s and the index’s YTW has widened over the past year, while our duration has increased relative to the Agg.
| YTW / Duration Analysis | Weitz Core Plus Income Fund vs. Bloomberg U.S. Agg | ||||
| 3/31/2022 | 3/31/2023 | |||
| Yield to Worst (%): | Change | % | ||
| Core Plus Income Fund | 3.32 | 5.47 | 2.15 | 64.8 |
| U.S. Agg. Index | 2.90 | 4.40 | 1.50 | 51.7 |
| 3/31/2022 | 3/31/2023 | |||
| Average Duration (yrs): | Change | % | ||
| Core Plus Income Fund | 4.8 | 5.2 | 0.4 | 8.3 |
| U.S. Agg. Index | 6.5 | 6.3 | (0.2) | (3.1) |
The chart below provides a longer-term view (since inception) of the Core Plus Income Fund’s forward return prospects, or yield-to-worst (YTW). Until the first quarter of 2020 (right-hand side of the bar chart below), the Fund’s YTW had never breached 4%. It has now exceeded 5.4% for three consecutive quarters. Given the average since September 30, 2014, of 3.3% of the time series below, today’s forward return prospects as measured by a YTW of 5.47% on March 31, 2023, reinforce comments we made in the 2022 year-end Fixed Income Insights (Bonds’ ‘Great Reset’ and the Return of Income), that we remain particularly optimistic about the role fixed-income has in an overall asset allocation framework.
Portfolio Positioning
The table below shows the change in allocation to various sectors, from the prior quarter and from the prior year. This summary provides a view over time of how we have allocated capital. Since our goal is to invest in sectors that we believe offer the best risk-adjusted returns, our allocations may change significantly over time.
| 3/31/2023 | 12/31/2022 | Qtr Over | 3/31/2022 | Yr Over | |
| Current | Previous | Qtr | Previous | Yr | |
| Sector (% of Net Assets) | Quarter | Quarter | Change | Year | Change |
| Corporate Bonds | 15.6 | 16.9 | -1.3 | 22.9 | -7.3 |
| Corporate Convertible Bonds | 0.3 | 0.4 | -0.1 | 0.6 | -0.3 |
| Asset-Backed Securities | 28.9 | 26.0 | 2.9 | 21.3 | 7.6 |
| (ABS) | |||||
| Corporate Collateralized | 10.9 | 10.8 | 0.1 | 10.4 | 0.5 |
| Loan Obligations (CLOs)* | |||||
| Commercial Mortgage- | 7.0 | 9.2 | -2.2 | 10.9 | -3.9 |
| Backed Securities (CMBS) | |||||
| Agency Mortgage-Backed | 0.6 | 0.8 | -0.2 | 1.2 | -0.6 |
| (MBS) | |||||
| Non-Agency Mortgage | 0.2 | 0.3 | -0.1 | 0.6 | -0.4 |
| Backed (RMBS) | |||||
| Non-Convertible Preferred | 0.1 | 0.2 | -0.1 | 0.7 | -0.6 |
| Stock | |||||
| Taxable Municipal Bonds | 0.2 | 0.2 | 0.0 | 0.6 | -0.4 |
| U.S. Treasury | 39.7 | 40.7 | -1.0 | 37.0 | 2.7 |
| Common Stock | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Cash & Equivalents | 7.4 | 5.3 | 2.1 | 4.2 | 3.2 |
| Total (does not include | 100.0 | 100.0 | 100.0 | ||
| CLO line) | |||||
| High Yield** | 6.6 | 8.4 | -1.8 | 12.9 | -6.3 |
| Average Effective Duration | 5.2 | 5.0 | 0.2 | 4.8 | 0.4 |
| (years) | |||||
| Average Effective Maturity | 7.9 | 8.2 | -0.3 | 7.3 | 0.6 |
| (years) | |||||
2023 Annual Report 15
*Corporate CLOs are included in the ABS segment in the Fund’s schedule of investments but are additionally called out separately for the purposes of the discussion.
**For the current period, high-yield exposure consists of investments in the Corporate, Corporate Convertible, ABS, and CMBS sectors.
Totals may be greater or less than 100 due to rounding.
The largest change in sector allocation during the first quarter was an increase in asset-backed securities (ABS). We added new-issue automobile and consumer ABS, as well as middle-market collateralized loan obligations (CLOs). We continue to view the risk/reward in ABS as attractive despite the continued macro volatility. These new-issue transactions include collateral pools consisting of primarily newly originated loans that incorporate tighter underwriting standards and higher pricing.
We also reduced our exposure to commercial mortgage-backed securities (CMBS) as our ongoing surveillance work suggests that financial pressures continue to build across all commercial property types due to rising interest rates, despite generally strong operating performance. Should weakening fundamentals provide better entry points over the next several quarters, we have ample capacity to add CMBS exposure.
In terms of overall portfolio metrics, the Fund’s average effective maturity decreased to 7.9 years as of, March 31, 2023, from 8.2 years as of December 31, 2022, while our average effective duration increased to 5.2 years from 5.0 years over the same time period. These measures provide a guide to the Fund’s interest rate sensitivity. A higher average effective duration increases the Fund’s price sensitivity to changes in interest rates (either up or down). As of March 31, 2023, the average effective duration of the Agg was 6.3 years.
As of March 31, our high-yield exposure as a percent of net assets was 6.6%, down from 8.4% on December 31, 2022. Given that the Fund can invest up to 25% of net assets in high yield, we have ample capacity to take advantage of valuation discrepancies/ opportunities in the high yield area.
A key differentiator for the Fund relative to the Agg is our approximately 18% exposure to floating rate securities (versus no exposure for the Agg). Our floating rate securities primarily consist of A-rated to AAA-rated CLOs. Our CLOs consist of diversified pools of floating rate commercial real estate loans (7%), middle market corporate loans (10%), and large corporate loans (1%). Eighteen distinct real estate sponsors manage our commercial real estate loans. The underlying real estate is most concentrated in multifamily and – to a lesser extent – industrial, retail, office, and hospitality. Our corporate CLOs primarily consist of diversified portfolios of middle-market corporate loans, each originated by a private credit sponsor. Our corporate middle-market CLO investments are diversified across twenty distinct private credit managers, giving us exposure to a broad range of obligors categorized by size, industry, and geography. These investments provide attractive coupon income and diversification benefits that are not broadly accessible in bond indexes or passive, index-tracking ETFs.
Top Quarterly Contributors
| • | Treasury Bonds: U.S. Treasuries were the largest positive contributor to performance. With a duration of approximately 10 years, our Treasury book benefited most from the decline in interest rates during the quarter. |
| • | Corporate Bonds: Investments in a wide variety of corporate bonds were the second-largest contributor to performance in the first quarter. High yield and longer maturity segments of our corporate bond portfolio outperformed the most. |
| • | Asset Backed Securities: Our ABS portfolio contributed solid coupon income to the portfolio and modest increases in market value. |
Top Quarterly Detractors
| • | No segment detracted from results in the quarter. |
Fiscal Year Contributors
| • | Asset Backed Securities: Our ABS portfolio contributed strong coupon income to the portfolio and modest increases in market value. |
| • | CLOs: Our CLO portfolio provided positive returns due to strong coupon income which more than offset market value declines. |
Fiscal Year Detractors
| • | Treasury Bonds: U.S. Treasuries were the largest detractor to performance for the fiscal year. With a duration of approximately 10 years, our Treasury book suffered market value declines due to rising interest rates. |
| • | Corporate Bonds: Investments in a wide variety of corporate bonds were the second-largest detractor to performance as rising interest rates detracted from performance. |
Before revisiting our Fund strategy, we thought it would be timely to include a portion of the Fund’s inaugural shareholder letter from the third quarter of 2014. While we have increased the Fund’s duration which has brought us more in line with the Agg, we believe more compelling times lie ahead, particularly in longer-duration corporate bonds, for us to utilize longer-duration corporates more fully.
Core Plus Income Fund-Why Now? (Q3 2014)
“Frequent readers of either Wally’s quarterly shareholder letters or management discussions in our other bond-oriented Funds (Balanced or Short Duration Income Fund) would know we are not making any market timing, particularly bullish, call about the direction of interest rates in launching our new Core Plus Income Fund at this time. If anything, our recent commentaries have pointed out how challenging the fixed-income landscape has become since the peak of the credit crisis (i.e. low credit spreads on top of arguably suppressed ‘risk-free’, base rates). However, we do believe there will come a time when opportunities will present themselves to invest longer-term with the broader tool kit our Core Plus Income Fund possesses. In the meantime, your management team will invest within the Fund’s flexible mandate and patiently await more favorable investment circumstances.”
Fund Strategy
Our approach consists primarily of investing in a diversified portfolio of high-quality bonds while maintaining an overall portfolio average duration of 3.5 to 7 years. We may seek to capture attractive coupon income and potential price appreciation by investing in longer-duration and lower-quality bonds when attractively priced. We may also invest up to 25% in fixed-income securities that are not considered investment grade (such as high yield and convertible bonds as well as preferred and convertible preferred stock), and we do so when we perceive the risk/reward characteristics to be favorable.
16 2023 Annual Report
We do
not, and will not, try to mimic any particular index as we
construct our portfolio. We believe our flexible mandate and high-
conviction portfolio will benefit investors over the long term. We
utilize a bottom-up, research-driven approach and select portfolio
assets one security at a time based on our view of opportunities
in the marketplace. Our fixed income research is not dependent
on, but often benefits from, the due diligence work our equity
teammates conduct on companies and industries.
Overall, we strive to be adequately compensated for the risks
assumed in order to maximize investment (or reinvestment) yield
and to avoid making interest rate bets, particularly those that
depend on interest rates going down. We have often maintained
a lower duration profile than the index, particularly in very low-
yield environments. Our shorter duration profile has benefited
shareholders in periods of rising interest rates.
Maintaining a diversified portfolio and liquidity reserves is a key
element of our risk management approach. As a result, we have
not held back from owning U.S. Treasury bonds and, at times like
now, ample cash reserves. We believe this approach has served
our clients well, particularly in extreme market environments like
the pandemic brought upon us in March 2020.
Definitions: Average effective duration provides a measure
of a fund’s
interest-rate sensitivity. The longer a fund’s duration, the more sensitive
the fund is to shifts in interest rates. Average effective maturity is the
weighted average of the maturities of a fund’s underlying bonds. CRE
CLOs refer to commercial real estate collateralized loan obligations
backed by a pool of commercial loads. Investment Grade Bonds
are those securities rated at least BBB- by one or more credit rating
agencies. Middle market CLOs refer to collateralized loan obligations
backed by loans made to smaller companies, which companies generally
have earnings before interest, taxes, and amortization of less than $75
million. Non-Investment Grade Bonds are those securities (commonly
referred to as “high yield” or “junk” bonds) rated BB+ and below by
one or more credit rating agencies. Yield to worst (YTW) is the lowest
potential yield that can be received on a bond portfolio without the
underlying issuers defaulting.
2023 Annual Report 17
Returns
| Annualized | ||||||||||||
| Since | ||||||||||||
| Inception | Net | Gross | ||||||||||
| QTD | YTD | 1 YR | 3 YR | 5 YR | (7/31/14) | Expense | Expense | |||||
| WCPNX - Investor Class | 3.25% | 3.25% | (3.06)% | 2.44% | 2.69% | 2.74% | 0.50% | 0.89% | ||||
| WCPBX - Institutional Class | 3.27 | 3.27 | (2.98) | 2.50 | 2.81 | 2.90 | 0.40 | 0.62 | ||||
| Bloomberg U.S. Aggregate Bond Index | 2.96 | 2.96 | (4.78) | (2.77) | 0.90 | 1.38 | ||||||
| Fixed Income Attributes | ||
| Portfolio Summary | ||
| Average Maturity | 7.9 years | |
| Average Effective Maturity | 7.9 years | |
| Average Duration | 5.7 years | |
| Average Effective Duration | 5.2 years | |
| Average Coupon | 4.00% | |
| Maturity Distribution | ||
| Maturity | % of Portfolio | |
| Cash Equivalents | 6.5 | |
| Less than 1 year | 17.0 | |
| 1 - 3 Years | 12.9 | |
| 3 - 5 Years | 12.9 | |
| 5 - 7 Years | 14.5 | |
| 7 - 10 Years | 6.6 | |
| 10 Years or more | 29.6 | |
| Common Stocks | 0.0 | |
| 100.0 | ||
| Credit Quality | ||
| Underlying Securities | % of Portfolio | |
| U.S. Treasury |
40.0 | |
| U.S. Government Agency Mortgage | ||
| Related Securities | 0.6 | |
| AAA | 7.3 | |
| AA | 11.8 | |
| A | 13.1 | |
| BBB | 13.9 | |
| BB | 4.3 | |
| B | 1.8 | |
| CCC | 0.4 | |
| Non-Rated | 0.3 | |
| Common Stocks | 0.0 | |
| Cash Equivalents | 6.5 | |
| 100.0 |
30-Day SEC Yield
| Share Class | Subsidized | Unsubsidized | ||
| Investor | 4.95% | 4.50% | ||
| Institutional | 5.05 | 4.80 |
All data as of 3/31/2023 unless otherwise indicated. Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. All investments involve risks, including possible loss of principal. Please visit weitzinvestments.com for the most recent month-end performance.
Investment results reflect applicable fees and expenses and assume all distributions are reinvested but do not reflect the deduction of taxes an investor would pay on distributions or share redemptions. The Fund has entered into fee waiver and/or expense reimbursement arrangements with the Investment Advisor by which the Advisor has contractually agreed to waive a portion of the Advisor’s fee and reimburse certain expenses (excluding taxes, interest, brokerage costs, acquired fund fees and expenses and extraordinary expenses) to limit the total annual fund operating expenses of the Fund’s average daily net assets through 07/31/2023. If this arrangement had not been in place, the performance results would have been lower. The net expense ratio reflects the total annual fund operating expenses of the Fund after taking into account any such fee waiver and/or expense reimbursement. Net and gross expenses ratios are as of the Fund’s most recent Prospectus.
See page 8 for additional performance disclosures. See page 79 for a description of all indices. See page 80 for a Glossary of Terms.
Credit ratings are assigned to underlying securities utilizing ratings from a Nationally Recognized Statistical Rating Organization (NRSRO) such as Moody’s and Fitch, or other rating agencies and applying the following hierarchy: security is determined to be Investment Grade if it has been rated at least BBB- by one credit rating agency; once determined to be Investment Grade (BBB- and above) or Non-Investment Grade (BB+ and below) where multiple ratings are available, then the lowest rating is assigned. Mortgage-related securities issued and guaranteed by government-sponsored agencies such as Fannie Mae and Freddie Mac are generally not rated by rating agencies. Securities that are not rated do not necessarily indicate low quality. Ratings are shown in the Fitch scale (e.g., AAA). Ratings and portfolio credit quality may change over time. The Fund itself has not been rated by a credit rating agency.
Source (Fixed Income Attributes, Credit Quality, and Maturity Distribution): Bloomberg Analytics
18 2023 Annual Report
NEBRASKA TAX-FREE INCOME FUND
Portfolio Manager: Tom Carney, CFA
Investment Style: Municipal-State Bond
The Nebraska Tax-Free Income Fund returned +1.84% in the first quarter compared to a +1.93% return for the Bloomberg 5-Year Municipal Bond Index. For the fiscal year ended March 31, 2023, the Fund’s total return was +0.91% compared to a +1.75% return for the index.
Overview
Municipal bonds posted solid gains in the first quarter, riding (as they often do) the strong, but extremely volatile, performance of U.S. Treasury bonds. Price gains in January resulting from weak economic data fueled speculation of a Fed pivot, or at least a pause, in its year-long pursuit of higher short-term interest rates to slow inflation. February brought a ‘blowout’ jobs report that undermined any thoughts of a slowdown and resulted in a violent reversal of January’s interest rate rally (as rates decrease, bond prices increase). By early March, the yield curve had reached its deepest inversion (the difference between 2-year and 10-year U.S. Treasury rates) in over 40 years. Recession fears eased and pundits began to believe the economy could grow despite the Fed’s efforts to tame inflation. Then came the collapse of Silicon Valley Bank (and others) and overall turmoil in the banking industry. Rates plummeted during the final stretch of the first quarter in a classic flight to safety amid growing worries about tightening lending conditions and the attendant effects on future economic growth. ‘Pause’ or ‘pivot’ has been replaced by market expectations of rate cuts later this year. Overall, the first quarter of 2023 had echoes of 2022. Instead of calm after a tumultuous year, investors have received more volatility and choppy markets. However, overall forward returns in fixed income (tax-free and taxable) are where the echoes/comparisons end. For the first time in seemingly forever, forward (coupon) returns compensate for this year’s volatile/choppy markets where the higher overall yield environment presents a much wider range of attractive investment opportunities for fixed income investors.
During the first quarter of 2023, municipal bonds modestly outperformed their U.S. Treasury counterparts as the ratio of the 5-year AAA-rated municipal bond to the 5-year Treasury (the ‘tenor’ or maturity profile that most resembles the Nebraska Tax-Free Income Fund) declined from 64% on December 31, 2022, to 62% on March 31, 2023. The Municipal/Treasury ratio (M/T ratio) measures the relative attractiveness of tax-free municipal bonds. All else equal, the higher the ratio, the more appealing municipal bonds become, given their tax-advantaged status.
The chart below is a histogram of the 5-year municipal/Treasury ratio going back 30 years. The current ratio is noted on the chart, providing a visual of how the current level compares to the M/T ratio over a span of three decades.
Overall, today’s M/T ratio would suggest that municipal bonds are less appealing to their taxable counterparts than they have been over the past 30 years. However, the increased nominal yield environment, improved fiscal position of many municipal bond issuers, and lower overall supply help to explain some/much of today’s lower M/T ratio. The Fed’s most aggressive tightening campaign in history (bringing its policy rate from near-zero to 5%) has effectively ended the long yield drought in the bond market. Consequently, we’d reiterate the comments we made in the 2022 year-end Fixed Income Insights (Bonds’ ‘Great Reset’ and the Return of Income), that we remain optimistic about the role fixed income has in an overall asset allocation framework.
Top Quarterly Contributors
(Every segment contributed to results in the quarter. Below are some notable examples.)
| • | School district general obligation bonds issued by Papillion-La Vista, Nebraska; Sarpy County Bellevue, Nebraska; Douglas County, Nebraska; and Lancaster County, Nebraska. |
| • | Tax-supported lease revenue bonds issued by Omaha, Nebraska; Public Facilities Corporation; and Sarpy County, Nebraska, certificates of participation. |
| • | Combined utility revenue bonds issued by Municipal Energy Agency of Nebraska, Grand Island, Nebraska, and Columbus, Nebraska. |
| • | General revenue bonds issued by Boys Town Village. |
| • | City general obligation bonds issued by Bellevue, Nebraska; Omaha, Nebraska; and Columbus, Nebraska. |
| • | Higher education revenue bonds issued by Nebraska State College Facilities Corporation, Saline, County, Nebraska (Doane University); and University of Nebraska Facilities Corporation (Health Center and College of Nursing Projects). |
| • | Hospital revenue bonds issued by Douglas County, Nebraska (Nebraska Medicine). |
| • | Water and sewer revenue bonds issued by Omaha, Nebraska; Salt Lake City, Utah, public utility; and Blair, Nebraska. |
Top Quarterly Detractors:
| • | No segment generated negative results in the quarter. |
Fiscal Year Performance
For the fiscal year, all segments contributed to positive Fund results. The largest contribution segments included combined utilities revenue bonds, city general obligation bonds, higher education revenue bonds, miscellaneous tax revenue bonds, school district general obligation bonds, water and sewer revenue bonds, general revenue bonds, and electricity and public power bonds.
2023 Annual Report 19
Portfolio
Metrics
Turning to portfolio metrics, the average effective duration of the
Fund declined from 3.6 years on December 31, 2022, to 3.4 years
on March 31, 2023. Average effective maturity also declined from
4.0 years to 3.5 years over the same timeframe. Overall asset
quality remains high, with approximately 89% rated A or better
by one or more of the nationally recognized statistical rating
organizations.
Following are additional details regarding the breakdown of our
holdings. Our investments are broad, and they are all backed by
a consistent philosophy: we strive to own only those investments
we believe compensate us for the incremental credit risk.
Our overall goal is to invest in a portfolio of bonds of varying
maturities that we believe offer attractive risk-adjusted returns,
taking into consideration the general level of interest rates and
the credit quality of each investment.
Definitions: Average effective duration provides a measure
of a fund’s
interest-rate sensitivity. The longer a fund’s duration, the more sensitive
the fund is to shifts in interest rates. Average effective maturity is the
weighted average of the maturities of a fund’s underlying bonds. Yield to
worst (YTW) is the lowest potential yield that can be received on a bond
portfolio without the underlying issuers defaulting.
20 2023 Annual Report
Returns
| Annualized | |||||||||||||
| Since | |||||||||||||
| Inception | Net | Gross | |||||||||||
| QTD | YTD | 1 YR | 3 YR | 5 YR | 10 YR | 20 YR | (10/1/85) | Expense | Expense | ||||
| WNTFX | 1.84% | 1.84% | 0.91% | 0.14% | 1.27% | 0.94% | 2.19% | 4.10% | 0.45% | 1.02% | |||
| Bloomberg 5-Year Municipal Bond Index | 1.93 | 1.93 | 1.75 | 0.70 | 1.73 | 1.64 | 2.92 | N/A | |||||
30-Day SEC Yield
| Share Class | Subsidized | Unsubsidized | ||
| 2.62% | 2.36% |
| Fixed Income Attributes | |
| Portfolio Summary | |
| Average Maturity | 6.2 years |
| Average Effective Maturity | 3.5 years |
| Average Duration | 3.2 years |
| Average Effective Duration | 3.4 years |
| Average Coupon | 3.4% |
| State Breakdown | ||
| % of Net Assets | ||
| Nebraska | 83.3 | |
| Texas | 3.0 | |
| New Mexico | 1.3 | |
| Washington | 1.1 | |
| California | 0.7 | |
| Florida | 0.7 | |
| Utah | 0.4 | |
| Colorado | 0.3 | |
| Cash Equivalents/Other | 9.2 | |
| 110.0 | ||
| Maturity Distribution | ||
| Maturity Type | % of Portfolio | |
| Cash Equivalents | 8.1 | |
| Less than 1 Year | 8.1 | |
| 1 -3 Years | 25.2 | |
| 3 - 5 Years | 36.5 | |
| 5 - 7 Years | 10.3 | |
| 7 - 10 Years | 8.2 | |
| 10 Years or more | 3.6 | |
| 100.0 |
| Credit Quality | ||
| Underlying Securities | % of Portfolio | |
| AAA | 6.4 | |
| AA | 61.5 | |
| A | 20.9 | |
| BBB | 1.4 | |
| Non-Rated | 1.7 | |
| Cash Equivalents | 8.1 | |
| 100.0 |
| Sector Breakdown | |
| % of Net Assets | |
| Power | 15.0 |
| Hospital | 9.7 |
| Lease | 8.4 |
| Water/Sewer | 5.9 |
| General | 4.3 |
| Certificates of Participation | 4.2 |
| Airport/Transportation | 3.2 |
| Housing | 2.4 |
| Higher Education | 2.1 |
| Revenue | 55.2 |
| School District | 13.4 |
| City/Subdivision | 8.2 |
| County | 6.7 |
| State/Commonwealth | 0.7 |
| General Obligation | 29.0 |
| Escrow/Pre-Refunded | 6.6 |
| Cash Equivalents/Other | 9.2 |
| 100.0 |
All data as of 3/31/2023 unless otherwise indicated. Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. All investments involve risks, including possible loss of principal. Please visit weitzinvestments.com for the most recent month-end performance.
Investment results reflect applicable fees and expenses and assume all distributions are reinvested but do not reflect the deduction of taxes an investor would pay on distributions or share redemptions. The Fund has entered into fee waiver and/or expense reimbursement arrangements with the Investment Advisor by which the Advisor has contractually agreed to waive a portion of the Advisor’s fee and reimburse certain expenses (excluding taxes, interest, brokerage costs, acquired fund fees and expenses and extraordinary expenses) to limit the total annual fund operating expenses of the Fund’s average daily net assets through 07/31/2023. If this arrangement had not been in place, the performance results would have been lower. The net expense ratio reflects the total annual fund operating expenses of the Fund after taking into account any such fee waiver and/or expense reimbursement. Net and gross expense ratios are as of the Fund’s most recent prospectus.
See 8 for additional performance disclosures. See page 79 for a description of all indices. See page 80 for a Glossary of Terms.
Credit ratings are assigned to underlying securities utilizing ratings from a Nationally Recognized Statistical Rating Organization (NRSRO) such as Moody’s and Fitch, or other rating agencies and applying the following hierarchy: security is determined to be Investment Grade if it has been rated at least BBB- by one credit rating agency; once determined to be Investment Grade (BBB- and above) or Non-Investment Grade (BB+ and below) where multiple ratings are available, then the lowest rating is assigned. Ratings are shown in the Fitch scale (e.g., AAA). Ratings and portfolio credit quality may change over time. The Fund itself has not been rated by a credit rating agency.
Income from municipal securities is generally free from federal taxes and state taxes for residents of the issuing state. While the interest income is tax-free, capital gains, if any, will be subject to taxes. Income for some investors may be subject to the federal Alternative Minimum Tax (AMT).
Source (Fixed Income Attributes, Credit Quality, and Maturity Distribution): Bloomberg Analytics
2023 Annual Report 21
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22 2023 Annual Report
PARTNERS III OPPORTUNITY FUND
Portfolio Managers: Wally Weitz, CFA & Drew Weitz
Investment Style: Multi-Cap Alternative
The Partners III Opportunity Fund’s Institutional Class returned +3.06% in the first quarter of 2023 compared to +7.18% for the Russell 3000. For the fiscal year ended March 31, 2023, the Fund’s Institutional Class returned -15.80% compared to -8.58% for the Russell 3000.
The March failure of Silicon Valley Bank and two additional financial institutions touched off a wave of concern across financial markets. Swift action by the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and Treasury Department guaranteed that depositors of those institutions would not lose money, but confidence was and remains shaken in all but the largest financial institutions. These challenges introduce yet another variable to the Fed’s inflation fighting formula; as banks repair their balance sheets, financial conditions will further tighten. Fearful of recession and having endured last year’s market declines, Wall Street has become even more adamant that the Fed should not only pause rate hikes now but move to cut them later this year. This widely held market consensus is squarely at odds with the Fed’s stated intentions, setting up a showdown for the foreseeable future. Regardless of who is right or wrong, what ultimately matters is how the businesses we own operate and adapt.
The portfolio holdings most directly impacted by the bank failures of the first quarter were Charles Schwab and Fidelity National Information Services (FIS), both top detractors for the quarter. Schwab is likely best known for its leading market trading platform, but over the years its consumer banking operations have grown into the tenth largest bank in the U.S. We believe both the trading and banking franchises remain strong, however, the current interest rate environment (particularly the availability of highly attractive yields in money market funds versus traditional deposits) has diminished the earnings power of the bank, at least in the short term. Given this uncertainty, we elected to move to the sidelines for now and free up capital for higher-conviction investment alternatives. Banking software provider FIS’s shares were also collateral damage as investors looked to shed any exposure to the small and regional banks that FIS serves. This, after several quarters of underwhelming operating results, lands FIS as our top detractor for the fiscal year period as well. Our FIS experience has been disappointing to be sure. But having re-underwritten our investment thesis and lowered our business value estimate, we believe investors have exacted too steep a penalty on FIS shares. From this lowered price, we are optimistic that new management can reestablish credibility with investors and unlock value through the planned separation of the banking software and merchant services businesses.
Beyond our financial holdings, Liberty SiriusXM’s quarterly declines were significant enough to land it on our quarterly detractors list. The company also joins Liberty Broadband on the detractors list for the fiscal year. Liberty Chairman John Malone and CEO Greg Maffei have a long, successful track record of pairing businesses with predictable and growing cash flow streams with prudent use of debt to enhance equity returns via share buybacks. SiriusXM and Charter Communications, the two primary operating entities of the Liberty holding companies, are two such examples. Lately, necessary operating investments (new satellites and streaming technology for Sirius, fiber-competitive speed upgrades and network expansions at Charter) have reduced the amount of capital available for repurchases. Investment cycles are not unusual, and both businesses will be better positioned afterward. We believe the long-term equity return potential remains intact. In the short term, we believe Liberty SiriusXM will also benefit from management’s decision to separate Liberty SiriusXM into two distinct tracking stocks to individually highlight the value of its ownership stakes of SiriusXM and Live Nation – currently both attributed to Liberty SiriusXM shares. This move will facilitate greater transparency for shareholders and potentially help reduce the shares’ discount to the market value of their underlying assets.
Although the first quarter saw some respite from 2022’s declines, the Fund’s short positions against market indices remained the top contributors to fiscal year. Meta Platforms’ “Year of Efficiency” (an initiative to restructure and improve financial performance) delivered a dramatic turnaround in its share price, recouping nearly all the losses from 2022. Delivering improved profitability in the near term is crucial, but we are encouraged for the long term by improving engagement trends and improved capabilities for advertisers in the aftermath of Apple’s iOS changes that damaged some of Meta’s ad targeting capabilities. Technology companies broadly delivered outsized gains in the quarter, including our holdings of Google parent Alphabet, Amazon. com, and Microsoft, each a top contributor to first quarter results. Notably, Microsoft’s timely addition to the portfolio during the fourth quarter was sufficient to drive a top result for the fiscal year.
We were net sellers during the first quarter. Schwab was the only holding to exit, and there were no new companies added to the portfolio. During the quarter, we covered the rest of our small short position in the shares of SiriusXM at a profit, while our short holdings of S&P 500 Index ETF remained unchanged. At quarter end, our gross long position declined to 92% from 98% of gross assets at the end of 2022, while our short position remained unchanged at 4% of gross assets. The Fund’s effective net long position declined from 94% to 88%.
Definitions: Effective net is the effective long (the sum of the portfolio’s long positions, such as common stocks, or derivatives where the price increases when an index or position rises) minus the effective short (the sum of the portfolio’s short positions, such as derivatives where the price increases when an index or position falls).
2023 Annual Report 23
Returns
| Annualized | ||||||||||||||
| Since | ||||||||||||||
| Inception | Net | Gross | ||||||||||||
| QTD | YTD | 1 YR | 3 YR | 5 YR | 10 YR | 20 YR | (6/1/83) | Expense | Expense | |||||
| WPOIX - Investor Class | 2.83% | 2.83% | (16.31)% | 4.87% | 3.62% | 4.23% | 8.04% | 11.04% | 1.86% | 1.86% | ||||
| WPOPX - Institutional Class | 3.06 | 3.06 | (15.80) | 5.47 | 4.22 | 4.73 | 8.33 | 11.18 | 1.43 | 1.43 | ||||
| S&P 500 Index | 7.50 | 7.50 | (7.73) | 18.60 | 11.18 | 12.23 | 10.36 | 11.02 | ||||||
| Russell 3000 Index | 7.18 | 7.18 | (8.58) | 18.48 | 10.44 | 11.73 | 10.43 | 10.74 | ||||||
| Top 10 Stock Holdings | ||
| % of Net Assets | ||
| Berkshire Hathaway, Inc. | 10.1 | |
| Alphabet, Inc. | 7.1 | |
| Meta Platforms, Inc. | 5.6 | |
| Liberty Broadband Corp. | 5.4 | |
| Amazon.com, Inc. | 5.0 | |
| Markel Corp. | 5.0 | |
| Visa, Inc. | 4.9 | |
| Mastercard, Inc. | 4.9 | |
| Liberty Media Corp-Liberty SiriusXM | 4.2 | |
| CarMax, Inc. | 4.1 | |
| 56.3 |
| Industry Breakdown | ||
| % of Net Assets | ||
| Financials | 28.2 | |
| Communication Services | 26.2 | |
| Information Technology | 15.2 | |
| Consumer Discretionary | 9.1 | |
| Health Care | 6.1 | |
| Industrials | 3.0 | |
| Materials | 3.0 | |
| Non-Convertible Preferred Stocks | 1.4 | |
| Securities Sold Short | (4.0) | |
| Short Proceeds/Other | 11.8 | |
| 100.0 |
| Top Stock Performers | |||
| Average | |||
| Return | Weight | Contribution | |
| Meta Platforms, Inc. - Class A | 76.9% | 5.7% | 3.28% |
| Alphabet, Inc. - Class C | 17.2 | 6.4 | 1.08 |
| Amazon.com, Inc. | 23.0 | 4.5 | 0.96 |
| Microsoft Corp. | 20.8 | 3.0 | 0.64 |
| Texas Instruments, Inc. | 13.4 | 3.1 | 0.43 |
| Bottom Stock Performers | |||
| Average | |||
| Return | Weight | Contribution | |
| Charles Schwab | (34.8)% | 3.1% | (1.41)% |
| Liberty Media Corp – SiriusXM | (28.5) | 4.4 | (1.38) |
| Fidelity National Information Services | (19.2) | 4.5 | (0.84) |
| Perimeter Solutions SA | (11.6) | 3.1 | (0.36) |
| CoStar Group, Inc. | (11.0) | 3.0 | (0.33) |
All data as of 3/31/2023 unless otherwise indicated. Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. All investments involve risks, including possible loss of principal. Please visit weitzinvestments.com for the most recent month-end performance.
Investment results reflect applicable fees and expenses and assume all distributions are reinvested but do not reflect the deduction of taxes an investor would pay on distributions or share redemptions. Net and gross expense ratios are as of the Fund’s most recent prospectus.
See page 8 for additional performance disclosures. See page 79 for a description of all indices. See page 80 for a Glossary of Terms.
Contributions to performance are based on actual daily holdings. Returns shown are the actual quarterly returns of the security.
Source (Top Performers, Bottom Performers): Statpro
Source (Capitalization): Bloomberg Analytics
24 2023 Annual Report
PARTNERS VALUE FUND
Portfolio Managers: Wally Weitz, CFA, Brad Hinton, CFA & Drew Weitz
Investment Style: Multi-Cap Value
The Partners Value Fund’s Institutional Class returned +2.03% for the first quarter compared to +7.18% for the Russell 3000. For the fiscal year ended March 31, 2023, the Fund’s Institutional Class returned -11.81% compared to -8.58% for the Russell 3000.
The first quarter was generally a good one for stocks and other risk assets, though conditions were far from placid. The March failures of Silicon Valley Bank and Signature Bank set off a wave of concern across financial markets. While swift action by the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and Treasury Department ensured that depositors of those institutions would not lose money, confidence was shaken in all but the largest financial institutions. Please see this quarter’s “Value Matters” for our take on how the bank failures fit into the bigger picture.
At a minimum, the Fed’s inflation-fighting formula just became more complicated – as banks repair their balance sheets, financial conditions will further tighten. Fearful of recession and chastened by 2022’s market declines, Wall Street has become even more adamant that the Fed should pause rate hikes now and move to cut interest rates later this year. This widely held consensus view is squarely at odds with the Fed’s stated intentions, setting up a showdown that will keep things interesting for the foreseeable future. In our view, the case for owning durable, resilient, and adaptable businesses has never been stronger.
Meta Platforms, Alphabet, Guidewire Software, and Heico were the Fund’s largest quarterly contributors. Meta was the standout as the company’s “Year of Efficiency” (an initiative to restructure and improve financial performance) drove a dramatic stock price rebound from depressed levels. Meta continued to adapt to Apple’s iOS changes that had impaired its ad targeting capabilities. We are encouraged by the combination of solid engagement trends, enhanced tools for advertisers, and prudent expense management. First Republic Bank, Liberty SiriusXM, Charles Schwab, and CoStar Group were the Fund’s largest quarterly detractors. Financial stocks were particularly impacted as banking concerns flared.
LKQ, CoStar Group, Axalta Coating Systems, and IDEX were the Fund’s largest contributors for the fiscal year. The Fund’s industrial stocks held up much better than the broader market as the economy remained resilient despite mounting pressures. First Republic Bank, Liberty SiriusXM, Alphabet, and Liberty Broadband were the Fund’s most significant detractors for the fiscal year.
Necessary capital investment cycles at Liberty Sirius XM (new satellites and streaming technology) and Liberty Broadband (fiber-competitive speed upgrades and network expansions at Charter Communications) disappointed investors looking for quick wins. The spending will no doubt crowd out some share repurchases in the short run. Still, we think these investments are prudent and should bolster the businesses’ competitive positions with acceptable returns, and we remain confident in the long-term potential of both stocks.
We sold the Fund’s First Republic position at a substantial loss. Our team rightly had questions about some of First Republic’s recent balance sheet choices, but we also thought the company’s relationship banking model would help shelter its historically sticky deposit base. We simply were not imaginative enough about the possibility of a bank run, sparked and fueled by severe problems at a different bank. As confidence eroded and deposits fled, the company quickly lost control of its destiny. We sold the stock in the high $30s, which was suboptimal but kept a bad outcome from becoming even worse.
We also exited the Fund’s Charles Schwab position, for different reasons. Our concerns were primarily related to the depth and length of a potential earnings valley. As the Fed pushed up short-term interest rates, money market funds and Treasury bills provided savers with clear alternatives to banks’ ultra-low yielding deposits. Schwab’s near-term cost of funding seemed likely to rise materially, one way or the other. Some earnings erosion is reflected in the stock price, but we sold as our view of the risk/ reward framework shifted considerably. Unlike First Republic, Schwab was an exceptional contributor to Fund returns over the past three years.
With the reorganization of the Hickory Fund into Partners Value in late March, we welcomed several new companies – and shareholders – to the Fund. New portfolio holdings included ACI Worldwide (payments software), Dolby Laboratories (audio signal processing), Ingersoll-Rand (flow control equipment), LICT Corporation (rural telecom), Live Nation (concerts & ticketing), and Perimeter Solutions (fire retardants). This diverse collection of businesses adds breadth to the portfolio, increases the Fund’s exposure to mid-cap stocks, and offers differentiated return potential.
After a disappointing fiscal year where much of the economic pain was front-loaded, we are optimistic about the prospects for the next several years. We see outsized return potential from a handful of beaten-down stocks like Liberty SiriusXM, CarMax, and Liberty Broadband, along with some other companies whose valuations have reset to discounted levels, especially in the mid-cap area. We think the Fund’s companies will continue to adapt and find ways to grow business value over the 2023 to 2025 timeframe. Over time, we believe value growth will ultimately outweigh any short-term trading noise for patient investors.
We believe that investing in businesses of all sizes, using our Quality at a Discount framework, is an enduring advantage of a multi-cap strategy. Valuation remains our North Star, and we think our stocks are priced at healthy discounts to business value. Our current estimate is that the portfolio trades at a price-to-value in the mid 70s – a level that suggests ample long-term return potential from both our mid- and large-cap holdings.
2023 Annual Report 25
| Returns | ||||||||||
| Annualized | ||||||||||
| Since | ||||||||||
| Inception | Net | Gross | ||||||||
| QTD | YTD | 1 YR | 3 YR | 5 YR | 10 YR | 20 YR | (6/1/83) | Expense | Expense | |
| WPVLX - Investor Class | 2.01% | 2.01% | (11.97)% | 13.18% | 4.83% | 5.51% | 7.09% | 10.83% | 1.09% | 1.09% |
| WPVIX - Institutional Class | 2.03 | 2.03 | (11.81) | 13.39 | 5.06 | 5.71 | 7.19 | 10.88 | 0.89 | 0.91 |
| S&P 500 Index | 7.50 | 7.50 | (7.73) | 18.60 | 11.18 | 12.23 | 10.36 | 11.02 | ||
| Russell 3000 Index | 7.18 | 7.18 | (8.58) | 18.48 | 10.44 | 11.73 | 10.43 | 10.74 | ||
| Top 10 Stock Holdings | ||
| % of Net Assets | ||
| Berkshire Hathaway, Inc. | 5.9 | |
| Alphabet, Inc. | 5.5 | |
| CoStar Group, Inc. | 5.3 | |
| Liberty Broadband Corp. | 4.7 | |
| HEICO Corp. | 4.7 | |
| LKQ Corp. | 4.4 | |
| Liberty Media Corp-Liberty SiriusXM | 4.1 | |
| Visa, Inc. | 4.0 | |
| Laboratory Corp. of America Holdings | 3.9 | |
| Martin Marietta Materials, Inc. | 3.7 | |
| 46.2 |
| Industry Breakdown | ||
| % of Net Assets | ||
| Communication Services | 25.1 | |
| Financials | 19.5 | |
| Information Technology | 14.2 | |
| Industrials | 13.2 | |
| Materials | 9.0 | |
| Consumer Discretionary | 7.6 | |
| Health Care | 6.7 | |
| Warrants | 0.0 | |
| Cash Equivalents/Other | 4.7 | |
| 100.0 |
| Top Stock Performers | |||
| Average | |||
| Return | Weight | Contribution | |
| Meta Platforms, Inc – Class A | 76.1% | 3.6% | 1.95% |
| Alphabet, Inc – Class C | 17.2 | 6.8 | 1.19 |
| Guidewire Software, Inc. | 30.5 | 2.5 | 0.71 |
| HEICO Corp– Class A | 14.2 | 4.1 | 0.49 |
| Texas Instruments, Inc | 13.4 | 3.8 | 0.46 |
| Bottom Stock Performers | |||
| Average | |||
| Return | Weight | Contribution | |
| First Republic Bank | (69.1)% | 2.0% | (1.77)% |
| Liberty Media Corp – SiriusXM | (28.5) | 4.5 | (1.43) |
| Charles Schwab | (30.5) | 2.7 | (1.03) |
| CoStar Group, Inc. | (10.5) | 5.2 | (0.55) |
| Black Knight, Inc. | (6.8) | 2.5 | (0.19) |
All data as of 3/31/2023 unless otherwise indicated. Data
quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results.
Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than
their original cost. All investments involve risks, including possible loss of principal. Please visit weitzinvestments.com for the most
recent
month-end performance.
Investment results reflect applicable fees and expenses and assume all distributions are reinvested but do not reflect the deduction of taxes an investor would pay on distributions or share redemptions. The Fund has entered into fee waiver and/or expense reimbursement arrangements with the Investment Advisor by which the Advisor has contractually agreed to waive a portion of the Advisor’s fee and reimburse certain expenses (excluding taxes, interest, brokerage costs, acquired fund fees and expenses and extraordinary expenses)to limit the total annual fund operating expenses of the Fund’s average daily net assets through 07/31/2023. If this arrangement had not been in place, the performance results would have been lower. The net expense ratio reflects the total annual fund operating expenses of the Fund after taking into account any such fee waiver and/or expense reimbursement. Net and gross expense ratios are as of the Fund’s most recent prospectus.
See page 8 for additional performance disclosures.
See page 79 for a description of all indices.
See page 80 for a Glossary of Terms. Contributions to performance are based on actual daily
holdings. Returns shown are the actual quarterly returns of the security.
Source (Top Performers, Bottom Performers): Statpro
Source (Capitalization): Bloomberg Analytics
26 2023 Annual Report
SHORT DURATION INCOME FUND
Portfolio Managers: Tom Carney, CFA & Nolan Anderson
Investment Style: Short-Term Bond
The Short Duration Income Fund’s Institutional Class returned +1.97% in the first quarter compared to a +1.51% return for the Bloomberg U.S. Aggregate 1-3 Year Index. For the fiscal year ended March 31, 2023, the Fund’s Institutional Class returned +0.98% compared to a +0.24% return for the index. Given the investment challenges of the past year, we are pleased to report positive absolute results for the quarter and fiscal year – and good relative results.
Despite the dizzying ups and downs of an extremely volatile first quarter, fixed income investors generally posted solid gains (our Fund included), riding the strong performance of U.S. Treasury bonds (as they often do). Price gains for bonds in January resulting from weak economic data fueled speculation of a Fed pivot, or at least a pause, in its year-long pursuit of higher short-term interest rates to slow inflation. February brought a ‘blowout’ jobs report that undermined any thoughts of a slowdown and resulted in a violent reversal of January’s interest rate rally (as rates decrease, bond prices increase). By early March, the yield curve had reached its deepest inversion (the difference between 2-year and 10-year U.S. Treasury rates) in over 40 years.
Recession fears eased and pundits began to believe the economy could grow despite the Fed’s efforts to tame inflation. Then came the collapse of Silicon Valley Bank (and others) and overall turmoil in the banking industry. Rates plummeted during the final stretch of the first quarter in a classic flight to safety amid growing worries about tightening lending conditions and the attendant effects on future economic growth. ‘Pause’ or ‘pivot’ has been replaced by market expectations of rate cuts later this year. Overall, the first quarter of 2023 had echoes of 2022. Instead of calm after a tumultuous year, investors have received more volatility and choppy markets. However, overall forward returns in fixed income (tax-free and taxable) are where the echoes/comparisons end. For the first time in seemingly forever, forward (coupon) returns compensate for this year’s volatile/ choppy markets where the higher overall yield environment presents a much wider range of attractive investment opportunities for fixed-income investors.
Whether the Fed does pause or pivot in its battle against inflation, we have been active in improving the forward return prospects for the Short Duration Fund. By design, the Fund has the distinct feature of having about a quarter of its holdings paydown or mature in any given year. This allows us to reinvest proceeds into today’s improved forward-return environment. Part of this improvement can be seen in the Fund’s improved yield-to-worst (YTW) metric. As a reminder, YTW has historically been a reasonable predictor of forward returns. The Fund’s YTW increased from 2.72% on March 31, 2022, to 5.86% on March 31, 2023 – comparing favorably to the index’s YTW of 4.46% as of March 31 (see table below). As important, or perhaps more so, the difference of percentage change between the Fund’s and the index’s YTW has widened over the past year, principally due to asset/security selection and the ability to reinvest maturities/ paydowns mentioned above into a rising rate environment.
| YTW / Duration Analysis | Weitz Short Duration Income Fund vs. Bloomberg 1-3 Yr U.S. Agg | ||||
| 3/31/2022 | 3/31/2023 | |||
| Yield to Worst (%): | Change | % | ||
| Short Duration Income Fund | 2.72 | 5.86 | 3.14 | 115 |
| 1-3 Yr U.S. Agg Index | 2.40 | 4.46 | 2.06 | 86 |
| 3/31/2022 | 3/31/2023 | |||
| Average Duration (yrs): | Change | % | ||
| Short Duration Income Fund | 1.58 | 1.46 | (0.12) | (7.59) |
| 1-3 Yr U.S. Agg Index | 1.85 | 1.80 | (0.05) | (2.70) |
The chart below provides a longer-term view (10-year) of the Short Duration Income Fund’s forward return prospects, or yield-to-worst (YTW). Until the first quarter of 2022 (right-hand side of the bar chart below), the Fund’s YTW had never breached 4%. It has now exceeded 5.5% for three consecutive quarters. Given the 10-year average of 2.3% of the time series below, today’s forward return prospects as measured by a YTW of 5.86% on March 31, 2023, reinforce comments we made in the 2022 year-end Fixed Income Insights (Bonds’ ‘Great Reset’ and the Return of Income), that we remain particularly optimistic about the role fixed-income has in an overall asset allocation framework.
Portfolio Positioning
The table below shows the change in allocation to various sectors, from the prior quarter and from the prior year. This summary provides a view over time of how we have allocated capital. Since our goal is to invest in sectors that we believe offer the best risk-adjusted returns, our allocations may change significantly over time.
| 3/31/2023 | 12/31/2022 | Qtr Over | 3/31/2022 | Yr Over | |
| Current | Current | Qtr | Previous | Yr | |
| Sector (% Net Assets) | Quarter | Quarter | Change | Year | Change |
| Corporate Bonds | 13.0 | 13.2 | -0.2 | 12.6 | 0.4 |
| Corporate Convertible Bonds | 1.1 | 1.8 | -0.7 | 2.5 | -1.4 |
| Asset-Backed Securities (ABS) | 41.1 | 38.7 | 2.4 | 32.8 | 8.3 |
| Corporate Collateralized | |||||
| Loan Obligations (CLO)* | 13.2 | 13.0 | 0.2 | 11.4 | 1.8 |
| Commercial Mortgage- | |||||
| Backed Securities (CMBS) | 9.4 | 12.0 | -2.6 | 12.5 | -3.1 |
| Agency Mortgage-Backed | |||||
| (MBS) | 3.6 | 3.9 | -0.3 | 5.2 | -1.6 |
| Non-Agency Mortgage- | |||||
| Backed (RMBS) | 5.7 | 6.2 | -0.5 | 7.3 | -1.6 |
| Taxable Municipal Bonds | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| U.S. Treasury | 25.0 | 23.9 | 1.1 | 23.2 | 1.8 |
| Common Stocks | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Cash & Equivalents | 1.1 | 0.3 | 0.8 | 3.9 | -2.8 |
| Total (does not include the | |||||
| CLO line) | 100.0 | 100.0 | 100.0 | ||
| High Yield** | 3.8 | 4.4 | -0.6 | 4.8 | -1.0 |
*Corporate CLOs are included in the ABS segment in the Fund’s schedule of investments but are additionally called out separately for the purposes of the discussion.
**High-Yield exposure (as of 3/31/2023) consists of investments in the Corporate, Corporate Convertible, ABS and CMBS sectors.
Totals may be greater or less than 100 due to rounding.
2023 Annual Report 27
| 3/31/2023 | 12/31/2022 | Qtr Over | 3/31/2022 | Yr Over | |
| Current | Current | Qtr | Previous | Yr | |
| Quarter | Quarter | Change | Year | Change | |
| Average Effective Duration | |||||
| (years) | 1.5 | 1.5 | 0.0 | 1.6 | -0.1 |
| Average Effective Maturity | |||||
| (years) | 2.9 | 3.6 | -0.7 | 3.1 | -0.2 |
Investment activity remained strong in the first quarter as we sourced a little more than $90 million in new investments for the Fund. This helped offset the typical (and by-design) feature of monthly/quarterly paydowns and maturities of securities (approximately $80 million in the first quarter). As mentioned, about a quarter of the Fund’s holdings paydown or mature in any given year allowing us to frequently reinvest investor capital into areas of the fixed-income market that we believe provide the best current relative value opportunities. While this continuous reinvestment has been an occasional headwind as rates fell to near-historic lows in recent years, we believe it has and will continue to provide return upside from the rapid increase in interest rates over the past year.
Noteworthy additions in the first quarter included:
| • | U.S. Treasury securities in the 2-3-year maturity range. |
| • | Asset-backed securities (ABS) issued by Lendbuzz, America’s Car-Mart, and Lithia Motors, backed by auto receivables. We also participated in the senior-most securities of unsecured consumer loans issued by Marlette and Bankers Healthcare Group. Lendbuzz and America’s Car-Mart are new investees to the Fund lineup. Lendbuzz was founded in 2015 with the goal of expanding access to credit for those who lack credit history for a variety of reasons. The company uses proprietary technology in its underwriting to analyze borrower data and create a personal credit risk profile. America’s Car-Mart is an Arkansas-based public company that sells and finances the sale of used automobiles and trucks. The company operates dealerships primarily in small cities and rural locations throughout the South-Central United States and provides financing for substantially all of its customers. Like most of our other ABS investments, our Lendbuzz and Car-Mart investments consist of senior-most securities (first to be repaid and last to receive any possible future loss) that have a short average life (less than 2.0 years). |
| • | Middle-market collateralized loan obligations (CLOs) issued by Deerpath, Twin Brook, and Apogem (formerly Madison Capital). We continued to expand our comfort and coverage in the middle-market private lending space with Twin Brook and Apogem being the newest investees to the Fund lineup. The decline in the number of U.S. public companies by a third over the last 25 years has meaningfully expanded the market for private lenders like Deerpath, Twin Brook, Apogem, and our other middle-market investee sponsors. The U.S. middle market consists of roughly 200,000 companies, accounts for approximately one-third of private sector U.S. jobs, 33% of private sector GDP, and represents companies across all industry segments and geographies with $10 million to $1 billion in annual revenues. Twin Brook is a Chicago-based provider of cash-flow-based financing for the middle-market private equity community. Backed by the broader Angelo Gordon platform, Twin Brook has the scale and industry expertise to provide tailored finance solutions that fit its sponsors’ and borrowers’ needs. Apogem, a wholly owned subsidiary of New York Life, is an alternatives investor that has decades of experience investing in the middle market. Twin Brook and Apogem, like the vast majority of the Fund’s other middle-market CLO investments, are floating-rate, senior securities. |
| • | Commercial real estate CLOs (CRE CLOs) issued by Arbor Realty. |
Noteworthy reductions (sales) in the first quarter:
| • | We proactively took advantage of favorable valuations and, in hindsight, good timing (before the Silicon Valley Bank collapse) to reduce our exposure to CRE CLOs by selling a little over $20 million of Fund investments across five sponsor investees. This represented the largest reduction in Fund segment/sector exposure during the quarter and fiscal year. The CRE CLO sales were backed primarily by multi-family loans. We will likely partner with and lend to these sponsors in the future – but we deemed it appropriate to reduce our exposure given the valuations presented to us at the time of sale. |
In terms of overall portfolio metrics, from December 31, 2022, to March 31, 2023, average effective maturity decreased from 3.6 to 2.9 years, and average effective duration stayed steady at 1.5 years. These measures provide a guide to the Fund’s interest rate sensitivity. A higher average effective maturity and longer average effective duration increase the Fund’s price sensitivity to changes in interest rates (either up or down). Another portfolio attribute to highlight is the Fund’s investments in floating-rate securities (mainly middle-market CLOs and CRE CLOs). As of March 31, 2023, more than 22% of Fund assets were represented by floating-rate securities. We don’t invest based on any wager that the Fed will raise short-term interest rates – as each investment is vetted based on its individual merits (relative risk/ reward) and the expected future nominal return contributions each can make to the Fund. However, we believe the Fund’s exposure to floating rate investments has provided coupon income upside as the Fed has moved away from its near-decade-long zero-interest-rate policy (ZIRP).
Top Quarterly Contributors
| • | U.S. Treasury; agency and non-agency residential mortgage-backed securities (RMBS); and a broad segment of asset-backed securities (ABS) were the main contributors to Fund performance in the quarter. |
Top Quarterly Detractors
| • | No segment detracted from Fund performance in the quarter. |
Fiscal year results
Fiscal year results were aided by the Fund’s CLO (both middle-market and commercial real estate), ABS, and select corporate bond investments in the retail segment. Noteworthy fiscal year detractors included non-agency mortgage-backed securities and U.S. Treasury securities.
Fund Strategy
Our approach consists primarily of investing in a diversified portfolio of high-quality bonds while maintaining an overall portfolio average effective duration of 1.0 to 3.5 years. We may invest up to 15% in fixed income securities that are not considered investment grade (such as high yield and convertible bonds), and we do so when we perceive the risk/reward characteristics to be favorable.
We do not, and will not, try to mimic any index as we construct our portfolio. We believe our flexible mandate is a differentiator that allows us to navigate any environment. The last few years have reinforced our conviction about the strength of our flexible mandate. We utilize a bottom-up, research-driven approach and select portfolio assets one security at a time based on our view of opportunities in the marketplace. Our fixed income research is not dependent on, but often benefits from, the due diligence efforts our equity teammates conduct on companies and industries.
28 2023 Annual Report
Overall,
we strive to be adequately compensated for the risks
assumed while seeking to maximize investment (or reinvestment)
income and avoid making interest-rate bets, particularly ones that
depend on interest rates going down.
Our goal is to (a) preserve capital, (b) maintain a strong liquidity
position, (c) understand evolving risks and opportunities,
(d) conduct consistent/thorough credit surveillance, and (e)
selectively take advantage of favorable risk/reward opportunities.
We remain ready to take advantage of any further valuation
disparities that may develop and will strive to continue to earn
your trust.
Definitions: Average effective duration provides a measure of a fund’s
interest-rate sensitivity. The longer a fund’s duration, the more sensitive
the fund is to shifts in interest rates. Average effective maturity is
the weighted average of the maturities of a fund’s underlying bonds.
Investment Grade Bonds are those securities rated at least BBB-. Non-
Investment Grade Bonds are those securities (commonly referred to as
“high yield” or “junk” bonds) rated BB+ and below. Middle market refers
to smaller companies, generally with earnings before interest, taxes,
and amortization of generally less than $75 million. Yield to worst (YTW)
is the lowest potential yield that can be received on a bond portfolio
without the underlying issuers defaulting.
2023 Annual Report 29
Returns
| Annualized | ||||||||||||
| Since | ||||||||||||
| Inception | Net | Gross | ||||||||||
| QTD | YTD | 1 YR | 3 YR | 5 YR | 10 YR | 20 YR | (12/23/88) | Expense | Expense | |||
| WSHNX - Investor Class | 1.96% | 1.96% | 0.83% | 1.84% | 1.74% | 1.38% | 2.88% | 4.56% | 0.55% | 0.90% | ||
| WEFIX - Institutional Class | 1.97 | 1.97 | 0.98 | 1.92 | 1.87 | 1.56 | 2.99 | 4.62 | 0.48 | 0.62 | ||
| Bloomberg 1-3 Year U.S. Aggregate | ||||||||||||
| Index | 1.51 | 1.51 | 0.24 | (0.51) | 1.21 | 0.99 | 2.05 | N/A | ||||
| Fixed Income Attributes | |
| Portfolio Summary | |
| Average Maturity | 2.9 years |
| Average Effective Maturity | 2.9 years |
| Average Duration | 1.9 years |
| Average Effective Duration | 1.5 years |
| Average Coupon | 4.0% |
| Maturity Distribution | ||
| Maturity | % of Portfolio | |
| Cash Equivalents | 0.5 | |
| Less than 1 year | 26.4 | |
| 1 - 3 Years | 41.7 | |
| 3 - 5 Years | 17.8 | |
| 5 - 7 Years | 6.7 | |
| 7 - 10 Years | 1.4 | |
| 10 Years or more | 5.5 | |
| 100.0 |
| Credit Quality | ||
| Underlying Securities | % of Portfolio | |
| U.S. Treasury | 25.1 | |
| U.S. Government Agency Mortgage | ||
| Related Securities | 3.5 | |
| AAA | 38.5 | |
| AA | 10.1 | |
| A | 6.8 | |
| BBB | 11.5 | |
| BB | 2.3 | |
| B | 0.5 | |
| CCC | 0.1 | |
| Non-Rated | 1.2 | |
| Cash Equivalents | 0.5 | |
| 100.0 |
| 30-Day SEC Yield | ||||
| Share Class | Subsidized | Unsubsidized | ||
| Investor | 4.46% | 3.57% | ||
| Institutional | 4.52 | 4.26 | ||
All data as of 3/31/2023 unless otherwise indicated. Data
quoted is past
performance and current performance may be lower or higher. Past
performance is no guarantee of future results. Investment return and principal
value of an investment will fluctuate, and shares, when redeemed, may be
worth more or less than their original cost. All investments involve risks, including
possible loss of principal. Please visit weitzinvestments.com for the most recent
month-end performance.
Investment results reflect applicable fees and expenses and assume all
distributions are reinvested but do not reflect the deduction of taxes an investor
would pay on distributions or share redemptions. The Fund has entered into
fee waiver and/or expense reimbursement arrangements with the Investment
Advisor by which the Advisor has contractually agreed to waive a portion of
the Advisor’s fee and reimburse certain expenses (excluding taxes, interest,
brokerage costs, acquired fund fees and expenses and extraordinary expenses)
to limit the total annual fund operating expenses of the Fund’s average daily
net assets through 07/31/2023. If this arrangement had not been in place, the
performance results would have been lower. The net expense ratio reflects the
total annual fund operating expenses of the Fund after taking into account any
such fee waiver and/or expense reimbursement. Net and gross expense ratios
are as of the Fund’s most recent prospectus.
See page 8 for additional performance disclosures. See page 79 for a
description of all indices. See page 80 for a Glossary of Terms.
Credit ratings are assigned to underlying securities utilizing
ratings from a
Nationally Recognized Statistical Rating Organization (NRSRO) such as Moody’s
and Fitch, or other rating agencies and applying the following hierarchy: security
is determined to be Investment Grade if it has been rated at least BBB- by
one credit rating agency; once determined to be Investment Grade (BBB- and
above) or Non-Investment Grade (BB+ and below) where multiple ratings are
available, then the lowest rating is assigned. Mortgage-related securities issued
and guaranteed by government-sponsored agencies such as Fannie Mae and
Freddie Mac are generally not rated by rating agencies. Securities that are not
rated do not necessarily indicate low quality. Ratings are shown in the Fitch scale
(e.g., AAA). Ratings and portfolio credit quality may change over time. The Fund
itself has not been rated by a credit rating agency.
Source (Fixed Income Attributes, Credit Quality, and Maturity Distribution):
Bloomberg Analytics
30 2023 Annual Report
ULTRA SHORT GOVERNMENT FUND
Portfolio Managers: Tom Carney, CFA & Nolan Anderson
Investment Style: Ultra-Short-Term Bond
The Ultra Short Government Fund returned +1.17% in the first quarter, equaling the return for the ICE BofAML US 6-Month Treasury Bill Index (6-Month Treasury). For the fiscal year ended March 31, 2023, the Fund returned +2.41% compared to a +2.61% return for the index.
Overview
Short-term investors (our Fund included) experienced solid returns in the first quarter as the Fed’s year-long mission to slow inflation by hiking short-term interest rates has left nominal returns meaningfully higher. A year ago, short-term investors were still suffering a return drought brought about by nearly 10 years of the Fed’s zero-interest-rate policy (ZIRP). Three-month Treasury bills, for example, returned just 0.5% on March 31, 2022. Fast forward to March 31, 2023, and three-month Treasury bills yielded (had a forward return) of nearly 5%.
The Fed continued to tighten (increase) short-term interest rates in the first quarter at its meetings in February and March. The pace of rate increases at each meeting slowed to 0.25% and brought the federal funds rate to a range of 4.75% (lower bound) to 5% (upper bound). The collapse of Silicon Valley Bank (and others) and overall turmoil in the banking industry resulted in increased worries about tightening lending conditions and its attendant effects on future economic growth. Speculation of a ‘pause’ by the Fed in its interest rate hiking campaign has been replaced by market expectations of rate cuts later this year. Overall, the first quarter of 2023 had echoes of 2022. Instead of calm after a tumultuous 2022, investors have received more volatility and choppy markets. However, overall forward returns in fixed income are where the echoes/comparisons end. For the first time in seemingly forever, forward (coupon) returns mentioned above compensate for this year’s volatile/choppy markets.
The Federal Reserve’s monetary policy decisions (e.g., changes in short-term interest rates) will continue to affect all investments within our opportunity set. As a result, our yield and return will invariably follow the path dictated by the Fed’s monetary policy, as we frequently reinvest maturities with holdings that mature in a short period of time. As of March 31, 2023, 72.7% of our portfolio was invested in U.S. Treasury notes, 6.2% in investment-grade asset-backed securities, and 21.1% in cash and cash equivalents. The average effective duration was unchanged from December 31, 2022, to March 31, 2023, at 0.3 years. The Fund’s 30-day yield increased approximately 39 basis points during the quarter to 4.38% as of March 31.
Under normal market conditions, the Fund will invest at least 80% of its net assets in obligations issued or guaranteed by the U.S. government and its government-related entities. The balance of Fund assets may be invested in U.S. investment-grade debt securities. Given the bank tumult of the first quarter, it’s reasonable to assert that current market conditions are not normal. Consequently, at this time we intend to have an even higher percentage weighting in U.S. Treasury-related securities to increase already strong liquidity and quality measures. As securities mature, and as new investors join the Fund, we may concentrate incremental investments in U.S. Treasury-related securities. This abundance of caution is currently warranted but will change once we believe that stress levels in the banking system have eased.
Additionally, the Fund will maintain an average effective duration of one year or less. Duration is a measure of how sensitive the portfolio may be to changes in interest rates. All else being equal, a lower-duration bond portfolio is less sensitive to changes in interest rates than a bond portfolio with a higher duration. Over time, this shorter-term focus (duration of less than one year) is intended to generate higher total returns than cash or money market funds, while also taking less interest rate risk than a bond portfolio with a higher duration.
Definitions: 30-Day SEC Yield represents net investment income earned by a fund over a 30-day period, expressed as an annual percentage rate based on the Fund’s share price at the end of the 30-day period. Subsidized yield reflects fee waivers and/or expense reimbursements during the period. Without such fee waivers and/or expense reimbursements, if any; yields would have been lower. Unsubsidized yield does not adjust for any fee waivers and/or expense reimbursement in effect. Average effective duration provides a measure of a fund’s interest-rate sensitivity. The longer a fund’s duration, the more sensitive the fund is to shifts in interest rates. Investment Grade Bonds are those securities rated at least BBB- by one or more credit ratings agencies. Non-Investment Grade Bonds are those securities (commonly referred to as “high yield” or “junk” bonds) rated BB+ and below by one or more credit ratings agencies.
2023 Annual Report 31
Returns
| Annualized | |||||||||||
| Since | |||||||||||
| Inception | Net | Gross | |||||||||
| QTD | YTD | 1 YR | 3 YR | 5 YR | 10 YR | 20 YR | (8/1/91) | Expense | Expense | ||
| SAFEX | 1.17% | 1.17% | 2.41% | 0.90% | 1.46% | 0.85% | 1.18% | 2.22% | 0.20% | 0.68% | |
| ICE BofA U.S. 6-Month Treasury Bill Index | 1.17 | 1.17 | 2.61 | 0.90 | 1.56 | 1.02 | 1.53 | 2.74 |
| Fixed Income Attributes | |
| Portfolio Summary | |
| Average Maturity | 0.3 years |
| Average Effective Maturity | 0.3 years |
| Average Duration | 0.3 years |
| Average Effective Duration | 0.3 years |
| Average Coupon | 2.1% |
| Maturity Distribution | ||
| Maturity | % of Portfolio | |
| Cash Equivalents | 13.7 | |
| Less than 1 year | 85.8 | |
| 1 - 3 Years | 0.5 | |
| 100.0 |
| Credit Quality | ||
| Underlying Securities | % of Portfolio | |
| U.S. Treasury | 80.1 | |
| AAA | 4.1 | |
| AA | 0.8 | |
| A | 1.3 | |
| Cash Equivalents | 13.7 | |
| 100.0 |
| 30-Day Yield | ||
| Share Class | Subsidized | Unsubsidized |
| 4.38% | 4.00% |
All data as of 3/31/2023 unless otherwise indicated. Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. All investments involve risks, including possible loss of principal. Please visit weitzinvestments.com for the most recent month-end performance.
Investment results reflect applicable fees and expenses and assume all distributions are reinvested but do not reflect the deduction of taxes an investor would pay on distributions or share redemptions. The Fund has entered into fee waiver and/or expense reimbursement arrangements with the Investment Advisor by which the Advisor has contractually agreed to waive a portion of the Advisor’s fee and reimburse certain expenses (excluding taxes, interest, brokerage costs, acquired fund fees and expenses and extraordinary expenses) to limit the total annual fund operating expenses of the Fund’s average daily net assets through 07/31/2023. If this arrangement had not been in place, the performance result would have been lower. The net expense ratio reflects the total annual fund operating expenses of the Fund after taking into account any such fee waiver and/or expense reimbursement. Net and gross expense ratios are as of the Fund’s most recent prospectus.
See page 8 for additional performance disclosures. See page 79 for a description of all indices. See page 80 for a Glossary of Terms.
Credit ratings are assigned to underlying securities utilizing ratings from a Nationally Recognized Statistical Rating Organization (NRSRO) such as Moody’s and Fitch, or other rating agencies and applying the following hierarchy: security is determined to be Investment Grade if it has been rated at least BBB- by one credit rating agency; once determined to be Investment Grade (BBB- and above) or Non-Investment Grade (BB+ and below) where multiple ratings are available, then the lowest rating is assigned. Ratings are shown in the Fitch scale (e.g., AAA). Ratings and portfolio credit quality may change over time. The Fund itself has not been rated by a credit rating agency.
Source (Fixed Income Attributes, Credit Quality, and Maturity Distribution): Bloomberg Analytics
32 2023 Annual Report
VALUE FUND
Portfolio Manager: Brad Hinton, CFA
Investment Style: Large-Cap Value
The Value Fund’s Institutional Class returned +6.05% for the first quarter compared to +7.46% for the Russell 1000. For the fiscal year ended March 31, 2023, the Fund’s Institutional Class returned -10.88% compared to -8.39% for the Russell 1000.
On balance, it was a reasonable quarter for the Fund. Solid absolute returns were welcome after a tough year. Several stocks that had been laggards in 2022 rebounded nicely. A few new issues cropped up along the way, which we addressed head-on. Relative results were not yet back to our standards, as more aggressive growth stocks not held in the Fund drove the broader indexes.
Despite widespread positive returns, conditions were far from placid. The March failures of Silicon Valley Bank and Signature Bank set off a wave of concern across financial markets. While swift action by the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and Treasury Department ensured that depositors of those institutions would not lose money, confidence was shaken in all but the largest financial institutions. Please see this quarter’s “Value Matters” for our take on how the bank failures fit into the bigger picture.
At a minimum, the Fed’s inflation-fighting formula just became more complicated – as banks repair their balance sheets, financial conditions will further tighten. Fearful of recession and chastened by 2022’s market declines, Wall Street has become even more adamant that the Fed should pause rate hikes now and move to cut interest rates later this year. This widely held consensus view is squarely at odds with the Fed’s stated intentions, setting up a showdown that will keep things interesting for the foreseeable future. In our view, the case for owning durable, resilient, and adaptable businesses has never been stronger.
The Fund’s technology-related stocks were the largest quarterly contributors, with Meta Platforms, Salesforce, Alphabet, and Analog Devices pacing the gains. Meta was the standout as the company’s “Year of Efficiency” (an initiative to restructure and improve financial performance) drove a dramatic stock price rebound from depressed levels. Meta continued to adapt to Apple’s iOS changes that had impaired its ad targeting capabilities. We are encouraged by the combination of solid engagement trends, enhanced tools for advertisers, and prudent expense management. Charles Schwab, Liberty SiriusXM, Fidelity National Information Services (FIS), and CoStar Group were the Fund’s largest quarterly detractors.
We sold the Fund’s Schwab position in March. Our concerns were primarily related to the depth and length of a potential earnings valley. As the Fed pushed up short-term interest rates, money market funds and Treasury bills provided savers with clear alternatives to banks’ ultra-low yielding deposits. Schwab’s near-term cost of funding seemed likely to rise materially, one way or the other. Some earnings erosion is reflected in the stock price, but we sold as our view of the risk/reward framework shifted considerably. While our final exit price was well below the highs, Schwab was an exceptional contributor to Fund returns over the past three years.
Analog Devices, Oracle, CoStar Group, and Meta Platforms were the Fund’s largest contributors for the fiscal year. Analog Devices and Oracle delivered strong business results with few surprises, while timely buying and selling helped boost CoStar and Meta onto the leaderboard. Liberty Broadband, Alphabet, FIS, and Liberty SiriusXM were the largest detractors for the Fund’s fiscal year.
Necessary capital investment cycles at Liberty Sirius XM (new satellites and streaming technology) and Liberty Broadband (fiber-competitive speed upgrades and network expansions at Charter Communications) disappointed investors looking for quick wins. The spending will no doubt crowd out some share repurchases in the short run. Still, we think these investments are prudent and should bolster the businesses’ competitive positions with acceptable returns, and we remain confident in the long-term potential of both stocks.
We sold over half of the Fund’s FIS position after the company announced the planned spin-off of the merchant business. These sales generated a capital loss, which will help offset realized gains elsewhere. Our original investment thesis has changed, triggering another deep review of the company and stock. Our plan is to either rebuild a core position size or exit the stock entirely after we clear the 30-day “wash sale” period. We also added to the Fund’s holdings of Accenture and Liberty SiriusXM in March at attractive price levels.
The portfolio is focused and well-aligned with our vision for successful large-cap investing. We have concentrated ownership stakes in 25 companies, with the top ten representing over half of the portfolio. Each position is significant enough to matter, yet none can individually make or break our results. Our current estimate is that the portfolio trades at a price-to-value in the mid 70s, though these estimates remain more fluid than usual. We believe that many holdings have a chance for healthy gains over a multi-year period. Others are priced for adequate return potential primarily from expected growth in per-share business value.
2023 Annual Report 33
Returns
| Annualized | ||||||||||
| Since | ||||||||||
| Inception | Net | Gross | ||||||||
| QTD | YTD | 1 YR | 3 YR | 5 YR | 10 YR | 20 YR | (5/9/86) | Expense | Expense | |
| WVALX - Investor Class | 6.01% | 6.01% | (11.01)% | 14.91% | 9.29% | 8.53% | 7.94% | 10.04% | 1.04% | 1.04% |
| WVAIX - Institutional Class | 6.05 | 6.05 | (10.88) | 15.10 | 9.50 | 8.72 | 8.03 | 10.09 | 0.89 | 0.90 |
| S&P 500 Index | 7.50 | 7.50 | (7.73) | 18.60 | 11.18 | 12.23 | 10.36 | 10.42 | ||
| Russell 1000 Index | 7.46 | 7.46 | (8.39) | 18.55 | 10.86 | 12.01 | 10.47 | 10.39 |
| Top 10 Stock Holdings | ||
| % of Net Assets | ||
| Alphabet, Inc. | 7.2 | |
| Meta Platforms, Inc. | 6.2 | |
| Analog Devices, Inc. | 5.4 | |
| Visa, Inc. | 5.0 | |
| Oracle Corp. | 4.8 | |
| Berkshire Hathaway, Inc. | 4.6 | |
| Thermo Fisher Scientific, Inc. | 4.5 | |
| Mastercard, Inc. | 4.5 | |
| CoStar Group, Inc. | 4.5 | |
| Vulcan Materials Co. | 4.4 | |
| 51.1 |
| Industry Breakdown | ||
| % of Net Assets | ||
| Information Technology | 27.2 | |
| Financials | 21.2 | |
| Communication Services | 19.7 | |
| Health Care | 11.8 | |
| Materials | 6.7 | |
| Consumer Discretionary | 4.9 | |
| Industrials | 4.5 | |
| Cash Equivalents/Other | 4.0 | |
| 100.0 |
| Top Stock Performers | |||
| Average | |||
| Return | Weight | Contribution | |
| Meta Platforms, Inc – Class A | 76.0% | 5.1% | 2.81% |
| Salesforce, Inc | 50.7 | 3.0 | 1.28 |
| Alphabet, Inc – Class C | 17.2 | 6.7 | 1.16 |
| Analog Devices, Inc. | 20.8 | 4.9 | 0.92 |
| Oracle Corp. | 14.1 | 4.5 | 0.63 |
| Bottom Stock Performers | |||
| Average | |||
| Return | Weight | Contribution | |
| Charles Schwab | (31.3)% | 2.6% | (1.05)% |
| Liberty Media Corp- SiriusXM | (28.5) | 2.7 | (0.84) |
| Fidelity National Information Services | (19.9) | 2.9 | (0.64) |
| Costar Group, Inc. | (10.9) | 4.8 | (0.56) |
| Danaher Corp. | (4.9) | 4.5 | (0.22) |
All data as of 3/31/2023 unless otherwise indicated. Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. All investments involve risks, including possible loss of principal. Please visit weitzinvestments.com for the most recent month-end performance.
Investment results reflect applicable fees and expenses and
assume all distributions are reinvested but do not reflect the deduction of taxes an investor would pay on distributions or share
redemptions. The Fund has entered into fee waiver and/or expense reimbursement arrangements with the Investment Advisor by
which the Advisor has contractually agreed to waive a portion of the Advisor’s fee and reimburse certain expenses (excluding
taxes, interest, brokerage costs, acquired fund fees and expenses and extraordinary expenses) to limit the total annual fund
operating expenses of the Fund’s average daily net assets through 07/31/2023. If this arrangement had not been in place,
the performance results would have been lower. The net expense ratio reflects the total annual fund operating expenses of the
Fund after taking into account any such fee waiver and/or expense reimbursement. Net and gross expense ratios
are as of the
Fund’s most recent prospectus.
See page 8 for additional performance disclosures. See page 79 for a description of all indices. See page 80 for a Glossary of Terms.
Contributions to performance are based on actual daily holdings. Returns shown are the actual quarterly returns of the security.
Source (Top Performers, Bottom Performers): Statpro
Source (Capitalization): Bloomberg Analytics
34
2023 Annual Report
BALANCED FUND
Schedule of Investments
March 31, 2023
| Common Stocks - 42.9% | |||
| % of Net | |||
| Financials | Assets | Shares | $ Value |
| Data Processing & Outsourced Services | 4.8 | ||
| Visa, Inc. - Class A | 17,000 | 3,832,820 | |
| Mastercard, Inc. - Class A | 10,500 | 3,815,805 | |
| Fidelity National Information Services, Inc. | 40,000 | 2,173,200 | |
| Multi-Sector Holdings | 2.6 | ||
| Berkshire Hathaway, Inc. - Class B(a) | 17,500 | 5,403,475 | |
| Insurance Brokers | 2.1 | ||
| Aon plc - Class A(b) | 14,000 | 4,414,060 | |
| Property & Casualty Insurance | 1.8 | ||
| Markel Corp.(a) | 2,850 | 3,640,618 | |
| Diversified Banks | 1.3 | ||
| JPMorgan Chase & Co. | 20,000 | 2,606,200 | |
| Financial Exchanges & Data | 1.3 | ||
| S&P Global, Inc. | 7,500 | 2,585,775 | |
| 13.9 | 28,471,953 | ||
| Information Technology | |||
| Systems Software | 3.8 | ||
| Microsoft Corp. | 17,500 | 5,045,250 | |
| Oracle Corp. | 30,000 | 2,787,600 | |
| Semiconductors | 3.5 | ||
| Analog Devices, Inc. | 26,000 | 5,127,720 | |
| Texas Instruments, Inc. | 11,301 | 2,102,099 | |
| IT Consulting & Other Services | 1.7 | ||
| Accenture plc - Class A(b) | 12,000 | 3,429,720 | |
| Application Software | 1.3 | ||
| Roper Technologies, Inc. | 6,200 | 2,732,278 | |
| 10.3 | 21,224,667 | ||
| Health Care | |||
| Health Care Equipment | 2.0 | ||
| Danaher Corp. | 16,500 | 4,158,660 | |
| Life Sciences Tools & Services | 1.9 | ||
| Thermo Fisher Scientific, Inc. | 6,850 | 3,948,135 | |
| Health Care Services | 1.8 | ||
| Laboratory Corp. of America Holdings | 16,000 | 3,670,720 | |
| 5.7 | 11,777,515 | ||
| Materials | |||
| Construction Materials | 3.6 | ||
| Vulcan Materials Co. | 23,000 | 3,945,880 | |
| Martin Marietta Materials, Inc. | 9,500 | 3,373,070 | |
| 1.3 | |||
| Linde PLC | 7,500 | 2,665,800 | |
| 4.9 | 9,984,750 | ||
| % of Net | |||
| Communication Services | Assets | Shares | $ Value |
| Cable & Satellite | 1.9 | ||
| Comcast Corp. - Class A | 55,000 | 2,085,050 | |
| Charter Communications, Inc. - Class A(a) | 5,000 | 1,788,050 | |
| Interactive Media & Services | 1.7 | ||
| Alphabet, Inc. - Class C(a) | 34,360 | 3,573,440 | |
| 3.6 | 7,446,540 | ||
| Industrials | |||
| Industrial Machinery | 2.5 | ||
| IDEX Corp. | 12,000 | 2,772,360 | |
| Fortive Corp. | 35,000 | 2,385,950 | |
| Industrial Conglomerates | 0.9 | ||
| Honeywell International, Inc. | 9,500 | 1,815,640 | |
| 3.4 | 6,973,950 | ||
| Consumer Staples | |||
| Distillers & Vintners | 1.1 | ||
| Diageo plc - ADR(b) | 12,500 | 2,264,750 | |
| Total Common Stocks (Cost $49,459,695) | 88,144,125 | ||
| Non-Convertible Preferred Stocks - 0.5% | |||
| Qurate Retail, Inc. 8.00% 3/15/31 (Cost $3,038,411) | 30,879 | 905,063 | |
| Corporate Bonds - 1.1% | |||
| $ Principal | |||
| Amount | $ Value | ||
| AutoZone, Inc. | |||
| 3.63% 4/15/25 | 500,000 | 487,521 | |
| Brown & Brown, Inc (BRO) | |||
| 4.2% 9/15/24 | 390,000 | 383,074 | |
| JPMorgan Chase & Co. | |||
| 3.38% 5/1/23 | 500,000 | 499,019 | |
| 3.85% 6/14/25 Floating Rate (SOFR + 98) | 200,000 | 196,224 | |
| U.S. Bancorp | |||
| 2.4% 7/30/24 | 500,000 | 480,930 | |
| Vulcan Materials Co. (VMC) | |||
| 5.8% 3/1/26 | 250,000 | 252,412 | |
| Total Corporate Bonds (Cost $2,332,747) | 2,299,180 | ||
| Corporate Convertible Bonds - 0.9% | |||
| Redwood Trust, Inc. | |||
| 5.63% 7/15/24 (Cost $1,938,238) | 2,000,000 | 1,901,556 | |
The accompanying notes form an integral part of these financial statements.
2023 Annual Report 35
| Asset-Backed Securities - 9.2% | ||
| $ Principal | ||
| Amount | $ Value | |
| Automobile | ||
| AmeriCredit Automobile Receivables Trust (AMCAR) | ||
| Series 2020-2 Class D – 2.13% 3/18/26 | 595,000 | 560,236 |
| ARI Fleet Lease Trust (ARIFL) | ||
| Series 2022-A Class A2 – 3.12% 1/15/31(c) | 86,692 | 85,305 |
| CarMax Auto Owner Trust (CARMX) | ||
| Series 2012-2 Class C – 3.16% 2/18/25 | 500,000 | 497,797 |
| Series 2020-3 Class D – 2.53% 1/15/27 | 360,000 | 345,367 |
| Series 2021-3 Class C – 1.25% 5/17/27 | 380,000 | 346,672 |
| CFMT LLC (CFMT) | ||
| Series 2021-AL1 Class B – 1.39% 9/22/31(c) | 335,894 | 322,693 |
| Chesapeake Funding II LLC (CFII) | ||
| Series 2021-1A Class A1 – 0.47% 4/15/33(c) | 238,460 | 233,453 |
| Enterprise Fleet Financing LLC (EFF) | ||
| Series 2020-1 Class A – 1.78% 12/22/25(c) | 23,683 | 23,608 |
| Series 2023-1 Class A2 – 5.51% 1/22/29(c) | 250,000 | 250,672 |
| Flagship Credit Auto Trust (FCAT) | ||
| Series 2020-4 Class C – 1.28% 2/16/27(c) | 300,000 | 287,523 |
| Series 2023-1 Class A1 – 4.92% 2/15/24(c) | 414,027 | 413,873 |
| Foursight Capital Automobile Receivables Trust (FCRT) | ||
| Series 2022-2 Class A2 – 4.49% 3/16/26(c) | 445,504 | 442,089 |
| Series 2023-1 Class A1 – 4.97% 2/15/24(c) | 500,000 | 499,702 |
| GLS Auto Receivables Issuer Trust (GCAR) | ||
| Series 2021-1A Class C – 1.2% 1/15/27(c) | 393,933 | 388,051 |
| Series 2021-4A Class A – 0.84% 7/15/25(c) | 107,641 | 106,413 |
| GM Financial Automobile Leasing Trust (GMALT) | ||
| Series 2021-3 Class B – 0.76% 7/21/25 | 490,000 | 467,844 |
| JPMorgan Chase Auto Credit Linked Note (CACLN) | ||
| Series 2020-1 Class A5 – 0.99% 1/25/28(c) | 68,415 | 67,678 |
| Series 2020-2 Class A2 – 0.84% 2/25/28(c) | 17,219 | 16,876 |
| Series 2021-1 Class A2 – 0.88% 9/25/28(c) | 220,721 | 213,780 |
| Series 2021-2 Class A4 – 0.89% 12/26/28(c) | 176,393 | 170,076 |
| LAD Auto Receivables Trust (LADAR) | ||
| Series 2021-1A Class A – 1.3% 8/17/26(c) | 327,610 | 318,012 |
| Series 2022-1A Class A – 5.21% 6/15/27(c) | 490,531 | 487,823 |
| Series 2023-1A Class A1 – 4.93% 2/15/24(c) | 307,429 | 307,346 |
| Series 2023-1A Class A2 – 5.68% 10/15/26(c) | 250,000 | 249,691 |
| OneMain Direct Auto Receivables Trust (ODART) | ||
| Series 2021-1A Class A – 0.87% 7/14/28(c) | 500,000 | 469,562 |
| Series 2022-1A Class C – 1.42% 7/14/28(c) | 447,000 | 399,825 |
| Santander Drive Auto Receivables Trust (SDART) | ||
| Series 2020-2 Class D – 2.22% 9/15/26 | 375,000 | 366,757 |
| Series 2020-3 Class C – 1.12% 1/15/26 | 41,570 | 41,378 |
| Series 2020-4 Class C – 1.01% 1/15/26 | 73,201 | 72,614 |
| Series 2022-6 Class A2 – 4.37% 5/15/25 | 113,082 | 112,788 |
| Securitized Term Auto Loan Receivables Trust (SSTRT) | ||
| Series 2019-CRTA Class B – 2.45% 3/25/26(b) (c) | 26,362 | 26,275 |
| Westlake Automobile Receivables Trust (WLAKE) | ||
| Series 2021-2A Class B – 0.62% 7/15/26(c) | 256,000 | 249,527 |
| Series 2022-1A Class A2A – 1.97% 12/16/24(c) | 100,399 | 99,654 |
| Wheels SPV 2 LLC (WHLS) | ||
| Series 2020-1A Class A2 – 0.51% 8/20/29(c) | 158,173 | 157,109 |
| 9,098,069 | ||
| Collateralized Loan Obligations | ||
| ABPCI Direct Lending Fund CLO LP (ABPCI) | ||
| Series 2020-10A Class A – 6.76% 1/20/32 Floating Rate | ||
| (Qtrly LIBOR + 195)(b) (c) (d) | 500,000 | 495,662 |
| Audax Senior Debt CLO LLC (AUDAX) | ||
| Series 2021-6A Class A1 – 6.31% 10/20/33 Floating | ||
| Rate (Qtrly LIBOR + 150)(c) (d) | 500,000 | 483,102 |
| Blackrock Rainier CLO VI Ltd. (BLKMM) | ||
| Series 2021-6A Class A – 6.51% 4/20/33 Floating Rate | ||
| (Qtrly LIBOR + 170)(b) (c) (d) | 500,000 | 485,375 |
| Capital Four US CLO II Ltd. (C4US) | ||
| Series 2022-1A Class A1 – 5.81% 10/20/30 Floating | ||
| Rate (TSFR3M + 214)(b) (c) (d) | 500,000 | 499,419 |
| Cerberus Loan Funding LP (CERB) | ||
| Series 2020-1A Class A – 6.64% 10/15/31 Floating Rate | ||
| (Qtrly LIBOR + 185)(b) (c) (d) | 381,197 | 379,244 |
| Series 2021-6A Class A – 6.19% 11/22/33 Floating Rate | ||
| (Qtrly LIBOR + 140)(b) (c) (d) | 85,942 | 85,487 |
| Churchill Middle Market CLO Ltd. (CHMML) | ||
| Series 2021-1A Class A1 – 6.32% 10/24/33 Floating | ||
| Rate (Qtrly LIBOR + 150)(b) (c) (d) | 250,000 | 242,192 |
| Fortress Credit Opportunities CLO Ltd. (FCO) | ||
| Series 2021-15A Class A2 – 6.37% 4/25/33 Floating | ||
| Rate (Qtrly LIBOR + 155)(b) (c) (d) | 500,000 | 486,006 |
| Golub Capital Partners CLO Ltd. (GOCAP) | ||
| Series 2021-54A Class A2 – 6.34% 8/5/33 Floating | ||
| Rate (Qtrly LIBOR + 153)(b) (c) (d) | 500,000 | 486,524 |
| Monroe Capital MML CLO XII Ltd. (MCMML) | ||
| Series 2021-2A Class A1 – 6.64% 9/14/33 Floating Rate | ||
| (Qtrly LIBOR + 150)(b) (c) (d) | 500,000 | 483,857 |
| Palmer Square Loan Funding Ltd. (PSTAT) | ||
| Series 2021-1A Class A2 – 6.06% 4/20/29 Floating Rate | ||
| (Qtrly LIBOR + 125)(b) (c) (d) | 500,000 | 490,309 |
| 4,617,177 | ||
| Consumer & Specialty Finance | ||
| Foundation Finance Trust (FFIN) | ||
| Series 2021-2A Class A – 2.19% 1/15/42(c) | 157,682 | 145,185 |
| Lendingpoint Asset Securitization Trust (LDPT) | ||
| Series 2022-C Class A – 6.56% 2/15/30(c) | 341,151 | 340,104 |
| Marlette Funding Trust (MFT) | ||
| Series 2023-1A Class A – 6.07% 4/15/33(c) | 250,000 | 249,943 |
| Series 2022-1A Class A – 1.36% 4/15/32(c) | 59,709 | 59,050 |
| Octane Receivables Trust (OCTL) | ||
| Series 2020-1A Class A2 – 1.71% 2/20/25(c) | 41,712 | 41,399 |
| Series 2021-1A Class A5 – 0.93% 3/22/27(c) | 43,912 | 42,493 |
| Series 2021-2A Class A – 1.21% 9/20/28(c) | 117,081 | 112,457 |
| Series 2022-1A Class A2 – 4.18% 3/20/28(c) | 211,303 | 207,779 |
| Series 2022-2A Class A – 5.11% 2/22/28(c) | 184,372 | 182,934 |
| Upstart Securitization Trust (UPST) | ||
| Series 2021-3 Class A – 0.83% 7/20/31(c) | 46,401 | 45,655 |
| Series 2021-5 Class A – 1.31% 11/20/31(c) | 87,189 | 84,886 |
| 1,511,885 | ||
| Equipment | ||
| Amur Equipment Finance Receivables LLC (AXIS) | ||
| Series 2021-1A Class A2 – 0.75% 11/20/26(c) | 287,536 | 279,230 |
| Amur Equipment Finance Receivables XI LLC (AXIS) | ||
| Series 2022-2A Class A2 – 5.3% 6/21/28(c) | 150,000 | 149,451 |
| Dell Equipment Finance Trust (DEFT) | ||
| Series 2021-2 Class A2 – 0.53% 12/22/26(c) | 625,000 | 606,238 |
| Series 2022-1 Class A2 – 2.11% 8/23/27(c) | 131,460 | 130,238 |
| DLLST LLC (DLLST) | ||
| Series 2022-1A Class A2 – 2.79% 1/22/24(c) | 320,271 | 318,356 |
The accompanying notes form an integral part of these financial statements.
36 2023 Annual Report
BALANCED FUND (CONTINUED)
Schedule of Investments
March 31, 2023
| $ Principal | ||
| Amount | $ Value | |
| Greatamerica Leasing Receivables Funding LLC (GALC) | ||
| Series 2021-1 Class B – 0.72% 12/15/26(c) | 500,000 | 461,155 |
| HPEFS Equipment Trust (HPEFS) | ||
| Series 2023-1A Class A2 – 5.43% 8/20/25(c) | 500,000 | 499,944 |
| MMAF Equipment Finance LLC (MMAF) | ||
| Series 2022-A Class A2 – 2.77% 2/13/25(c) | 333,689 | 328,621 |
| Series 2022-B Class A2 – 5.57% 9/9/25(c) | 250,000 | 250,134 |
| Series 2022-B Class A3 – 5.61% 7/10/28(c) | 250,000 | 254,416 |
| SCF Equipment Leasing LLC (SCFET) | ||
| Series 2022-2A Class A2 – 6.24% 7/20/28(c) | 217,712 | 217,535 |
| Series 2022-2A Class A3 – 6.5% 10/21/30(c) | 250,000 | 257,730 |
| 3,753,048 | ||
| Total Asset-Backed Securities (Cost $19,194,351) | 18,980,179 | |
| Commercial Mortgage-Backed Securities - 2.8% | ||
| AREIT Trust (AREIT) | ||
| Series 2021-CRE5 Class A – 5.79% 11/17/38 Floating | ||
| Rate (Mthly LIBOR + 108)(c) | 356,662 | 349,615 |
| BDS Ltd. (BDS) | ||
| Series 2020-FL6 Class C – 6.92% 9/15/35 Floating | ||
| Rate (SOFR30A + 236)(b) (c) | 253,077 | 242,347 |
| BFLD Trust (BFLD) | ||
| Series 2020-OBRK Class A – 6.99% 11/15/28 Floating | ||
| Rate (Mthly LIBOR + 205)(c) | 125,000 | 123,903 |
| FS Rialto Issuer LLC (FSRI) | ||
| Series 2022-FL5 Class A – 6.99% 6/19/37 Floating Rate | ||
| (TSFR1M + 230)(b) (c) | 500,000 | 495,782 |
| GPMT Ltd. (GPMT) | ||
| Series 2021-FL3 Class A – 6.01% 7/16/35 Floating Rate | ||
| (Mthly LIBOR + 125)(b) (c) | 329,705 | 326,786 |
| HERA Commercial Mortgage, Ltd. (HCM) | ||
| Series 2021-FL1 Class A – 5.81% 2/18/38 Floating Rate | ||
| (US0001M + 105)(b) (c) | 432,569 | 411,614 |
| HGI CRE CLO Ltd. (HGI) | ||
| Series 2021-FL1 Class A4 – 5.78% 6/16/36 Floating | ||
| Rate (Mthly LIBOR + 105)(b) (c) | 196,859 | 190,982 |
| Series 2021-FL1 Class AS – 6.13% 6/16/36 Floating Rate | ||
| (Mthly LIBOR + 140)(b) (c) | 500,000 | 483,202 |
| Series 2021-FL2 Class A4 – 5.73% 9/17/36 Floating | ||
| Rate (Mthly LIBOR + 100)(b) (c) | 227,735 | 223,474 |
| KREF Ltd. (KREF) | ||
| Series 2021-FL2 Class A4 – 5.78% 2/17/39 Floating | ||
| Rate (Mthly LIBOR + 107)(b) (c) | 500,000 | 486,819 |
| Series 2022-FL3 Class A – 6.21% 2/15/39 Floating Rate | ||
| (Mthly SOFR + 145)(b) (c) | 500,000 | 493,056 |
| LoanCore Issuer Ltd. (LNCR) | ||
| Series 2018-CRE1 Class D – 7.63% 5/15/28 Floating | ||
| Rate (US0001M + 295)(b) (c) | 400,000 | 402,449 |
| Series 2021-CRE5 Class A – 5.98% 7/15/36 Floating | ||
| Rate (Mthly LIBOR + 130)(b) (c) | 500,000 | 489,974 |
| PFP Ltd. (PFP) | ||
| Series 2022-9 Class A – 6.93% 8/19/35 Floating Rate | ||
| (TSFR1M + 218)(b) (c) | 250,000 | 248,543 |
| STWD Ltd. (STWD) | ||
| Series 2022-FL3 Class A – 5.91% 11/15/38 Floating Rate | ||
| (SOFR 30 Day Avg + 135)(b) (c) | 500,000 | 490,569 |
| VMC Finance LLC (VMC) | ||
| Series 2021-FL4 Class A – 5.86% 6/16/36 Floating Rate | ||
| (Mthly LIBOR + 110)(c) | 247,372 | 239,525 |
| Total Commercial Mortgage-Backed Securities (Cost $5,767,784) | 5,698,640 | |
| Mortgage-Backed Securities - 2.2% | ||
| Federal Home Loan Mortgage Corporation | ||
| Collateralized Mortgage Obligations | ||
| Series 3649 Class A – 4% 3/15/25 | 5,850 | 5,779 |
| Pass-Through Securities | ||
| Pool# J14649 – 3.5% 4/1/26 | 14,879 | 14,633 |
| Pool# E02948 – 3.5% 7/1/26 | 31,288 | 30,750 |
| Pool# J16663 – 3.5% 9/1/26 | 17,501 | 17,195 |
| Pool# ZS8692 – 2.5% 4/1/33 | 135,799 | 127,522 |
| 195,879 | ||
| Federal National Mortgage Association | ||
| Pass-Through Securities | ||
| Pool# MA1502 – 2.5% 7/1/23 | 1,245 | 1,240 |
| Pool# 995755 – 4.5% 5/1/24 | 934 | 936 |
| Pool# AB1769 – 3% 11/1/25 | 11,655 | 11,403 |
| Pool# AB3902 – 3% 11/1/26 | 32,079 | 31,259 |
| Pool# AK3264 – 3% 2/1/27 | 25,825 | 25,150 |
| Pool# AB6291 – 3% 9/1/27 | 147,083 | 142,991 |
| Pool# MA3189 – 2.5% 11/1/27 | 124,954 | 120,521 |
| Pool# MA3791 – 2.5% 9/1/29 | 276,397 | 262,361 |
| Pool# BM5708 – 3% 12/1/29 | 140,705 | 136,727 |
| Pool# AS7701 – 2.5% 8/1/31 | 712,969 | 673,120 |
| Pool# MA3540 – 3.5% 12/1/33 | 79,362 | 77,362 |
| 1,483,070 | ||
| Government National Mortgage Association | ||
| Pass-Through Securities | ||
| Pool# 5255 – 3% 12/20/26 | 31,037 | 30,226 |
| Non-Government Agency | ||
| Collateralized Mortgage Obligations | ||
| Flagstar Mortgage Trust (FSMT) | ||
| Series 2021-7 Class B – 2.5% 8/25/51(c) (d) | 411,156 | 356,638 |
| GS Mortgage-Backed Securities Trust (GSMBS) | ||
| Series 2022-PJ1 Class AB – 2.5% 5/28/52(c) (d) | 451,419 | 391,561 |
| JPMorgan Mortgage Trust (JPMMT) | ||
| Series 2014-5 Class B – 2.78% 10/25/29(c) (d) | 50,875 | 48,128 |
| Series 2016-3 Class A – 2.98% 10/25/46(c) (d) | 148,283 | 137,718 |
| Series 2017-3 Class A – 2.5% 8/25/47(c) (d) | 186,476 | 162,261 |
| Series 2020-7 Class A – 3% 1/25/51(c) (d) | 35,123 | 34,086 |
| Series 2020-8 Class A – 3% 3/25/51(c) (d) | 80,763 | 76,681 |
| Series 2021-6 Class B – 2.5% 10/25/51(c) (d) | 531,456 | 466,917 |
| Series 2021-8 Class B – 2.5% 12/25/51(c) (d) | 395,185 | 348,413 |
| Series 2022-2 Class A4A – 2.5% 8/25/52(c) (d) | 316,535 | 274,563 |
| JPMorgan Wealth Management (JPMWM) | ||
| Series 2020-ATR1 Class A – 3% 2/25/50(c) (d) | 38,164 | 37,167 |
| RCKT Mortgage Trust (RCKT) | ||
| Series 2021-3 Class A5 – 2.5% 7/25/51(c) (d) | 377,387 | 327,347 |
The accompanying notes form an integral part of these financial statements.
2023 Annual Report 37
| $ Principal | ||
| Amount | $ Value | |
| Sequoia Mortgage Trust (SEMT) | ||
| Series 2019-CH2 Class A – 4.5% 8/25/49(c) (d) | 32,493 | 31,987 |
| Series 2020-3 Class A – 3% 4/25/50(c) (d) | 38,119 | 36,480 |
| 2,729,947 | ||
| Total Mortgage-Backed Securities (Cost $4,914,485) | 4,439,122 | |
| U.S. Treasuries - 36.4% | ||
| U.S. Treasury Notes | ||
| 1.63% 5/31/23 | 2,000,000 | 1,990,097 |
| 2.5% 8/15/23 | 2,000,000 | 1,982,692 |
| 2.88% 10/31/23 | 1,000,000 | 989,793 |
| 1.63% 10/31/23 | 2,000,000 | 1,964,743 |
| 2.13% 11/30/23 | 2,000,000 | 1,966,469 |
| 2.75% 2/15/24 | 2,000,000 | 1,966,568 |
| 2.13% 2/29/24 | 2,000,000 | 1,954,149 |
| 2% 4/30/24 | 2,000,000 | 1,945,180 |
| 2.5% 5/31/24 | 1,000,000 | 977,891 |
| 3% 6/30/24 | 2,000,000 | 1,964,805 |
| 1.25% 8/31/24 | 3,000,000 | 2,873,496 |
| 0.38% 9/15/24 | 2,000,000 | 1,890,156 |
| 4.38% 10/31/24 | 2,000,000 | 2,002,695 |
| 2.25% 10/31/24 | 2,000,000 | 1,938,789 |
| 0.75% 11/15/24 | 2,000,000 | 1,891,250 |
| 1.13% 1/15/25 | 2,000,000 | 1,895,937 |
| 1.38% 1/31/25 | 2,000,000 | 1,903,945 |
| 2% 2/15/25 | 2,000,000 | 1,923,516 |
| 2.63% 3/31/25 | 2,000,000 | 1,946,680 |
| 0.38% 4/30/25 | 2,000,000 | 1,855,547 |
| 2.75% 5/15/25 | 3,000,000 | 2,922,129 |
| 0.25% 6/30/25 | 2,000,000 | 1,843,945 |
| 0.25% 7/31/25 | 2,000,000 | 1,837,305 |
| 3.13% 8/15/25 | 2,000,000 | 1,963,008 |
| 2.75% 8/31/25 | 2,000,000 | 1,945,586 |
| 3.5% 9/15/25 | 1,000,000 | 990,644 |
| 3% 10/31/25 | 2,000,000 | 1,956,601 |
| 0.38% 11/30/25 | 2,000,000 | 1,824,961 |
| 0.38% 1/31/26 | 1,000,000 | 908,047 |
| 4% 2/15/26 | 1,000,000 | 1,004,258 |
| 0.5% 2/28/26 | 4,000,000 | 3,636,641 |
| 2.38% 4/30/26 | 2,000,000 | 1,918,828 |
| 0.75% 5/31/26 | 2,000,000 | 1,819,766 |
| 1.5% 8/15/26 | 2,000,000 | 1,856,992 |
| 1.63% 10/31/26 | 4,000,000 | 3,717,109 |
| 2% 11/15/26 | 1,500,000 | 1,411,289 |
| 1.88% 2/28/27 | 2,000,000 | 1,866,680 |
| 0.5% 8/31/27 | 2,000,000 | 1,743,828 |
| 2.25% 11/15/27 | 2,000,000 | 1,881,914 |
| Total U.S. Treasuries (Cost $77,810,184) | 74,873,929 | |
| Cash Equivalents - 3.8% | ||
| U.S. Treasury Bills, 4.07% to 4.98%, 4/25/23 | ||
| to 7/25/23(e) | 4,000,000 | 3,953,301 |
| JPMorgan U.S. Government Money Market | ||
| Fund - Institutional Class 4.45%(f) | 3,830,723 | 3,830,723 |
| Total Cash Equivalents (Cost $7,782,743) | 7,784,024 | |
| Total Investments in Securities (Cost $172,238,638) | 205,025,818 | |
| Other Assets Less Other Liabilities - 0.2% | 463,280 | |
| Net Assets - 100% | 205,489,098 | |
| Net Asset Value Per Share - Investor Class | 15.69 | |
| Net Asset Value Per Share - Institutional Class | 15.71 | |
| (a) | Non-income producing. |
| (b) | Foreign domiciled entity. |
| (c) | Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. |
| (d) | The interest rate resets periodically based on the weighted average coupons of the underlying mortgage-related or asset-backed obligations. |
| (e) | Interest rates presented represent the effective yield at March 31, 2023. |
| (f) | Rate presented represents the 30 day average yield at March 31, 2023. |
The accompanying notes form an integral part of these financial statements.
38 2023 Annual Report
CORE PLUS INCOME FUND
Schedule of Investments
March 31, 2023
| Corporate Bonds - 15.5% | |||
| $ Principal | |||
| Amount | $ Value | ||
| Abercrombie & Fitch Management Co. | |||
| 8.75% 7/15/25^ (a) | 1,428,000 | 1,440,322 | |
| Ally Financial, Inc. | |||
| 8% 11/1/31 | 2,000,000 | 2,101,722 | |
| American Airlines Group, Inc. | |||
| 3.75% 3/1/25^ (a) | 1,000,000 | 918,579 | |
| American Airlines, Inc./AAdvantage Loyalty IP Ltd. | |||
| 5.5% 4/20/26(a) | 3,300,000 | 3,251,628 | |
| 5.75% 4/20/29(a) | 1,000,000 | 960,301 | |
| Ares Capital Corp. | |||
| 2.88% 6/15/28 | 1,000,000 | 823,288 | |
| Ashtead Capital, Inc. | |||
| 4.38% 8/15/27(a) | 1,000,000 | 958,932 | |
| 4% 5/1/28(a) | 1,070,000 | 994,990 | |
| 2.45% 8/12/31(a) | 500,000 | 394,338 | |
| 5.55% 5/30/33(a) | 250,000 | 247,269 | |
| AT&T, Inc. | |||
| 6.8% 5/15/36 | 713,000 | 771,885 | |
| Axalta Coating Systems LLC | |||
| 3.38% 2/15/29(a) | 624,000 | 535,419 | |
| Bath & Body Works, Inc. | |||
| 6.95% 3/1/33 | 3,675,000 | 3,254,580 | |
| 6.88% 11/1/35 | 301,000 | 271,619 | |
| 6.75% 7/1/36 | 2,756,000 | 2,466,041 | |
| Berkshire Hathaway Finance Corp. | |||
| 4.25% 1/15/49 | 500,000 | 461,920 | |
| Broadcom, Inc. | |||
| 3.42% 4/15/33(a) | 350,000 | 293,097 | |
| 3.14% 11/15/35(a) | 1,014,000 | 780,615 | |
| Cantor Fitzgerald LP | |||
| 4.5% 4/14/27(a) | 1,500,000 | 1,401,041 | |
| Carlisle Cos., Inc. | |||
| 3.5% 12/1/24 | 532,000 | 520,359 | |
| 3.75% 12/1/27 | 500,000 | 475,739 | |
| CDW LLC / CDW Finance Corp. | |||
| 4.25% 4/1/28 | 4,000,000 | 3,731,203 | |
| 3.28% 12/1/28 | 1,000,000 | 882,775 | |
| Charter Communications Operating LLC/Charter | |||
| Communications Operating Capital | |||
| 4.2% 3/15/28 | 650,000 | 615,580 | |
| Choice Hotels International, Inc. | |||
| 3.7% 1/15/31 | 250,000 | 221,957 | |
| Cinemark USA, Inc. | |||
| 5.88% 3/15/26^ (a) | 500,000 | 472,165 | |
| 5.25% 7/15/28^ (a) | 3,000,000 | 2,598,450 | |
| Compass Group Diversified Holdings LLC | |||
| 5.25% 4/15/29(a) | 2,081,000 | 1,834,849 | |
| Cox Communications, Inc. | |||
| 3.5% 8/15/27(a) | 842,000 | 796,861 | |
| Delta Air Lines, Inc./SkyMiles IP Ltd. | |||
| 4.5% 10/20/25(a) | 512,000 | 503,725 | |
| 4.75% 10/20/28(a) | 1,100,000 | 1,062,433 | |
| Devon Energy Corp. | |||
| 5.25% 10/15/27 | 325,000 | 325,213 | |
| 4.5% 1/15/30 | 920,000 | 879,517 | |
| Diamondback Energy, Inc. | |||
| 3.25% 12/1/26 | 75,000 | 71,110 | |
| 3.5% 12/1/29 | 100,000 | 91,492 | |
| Dick's Sporting Goods, Inc. | |||
| 3.15% 1/15/32 | 1,700,000 | 1,398,232 | |
| Dow Chemical Co. (The) | |||
| 4.25% 10/1/34 | 1,052,000 | 979,464 | |
| Drax Finco PLC | |||
| 6.63% 11/1/25(a) (b) | 1,000,000 | 985,340 | |
| Element Fleet Management Corp. | |||
| 3.85% 6/15/25(a) (b) | 1,000,000 | 955,519 | |
| Energy Transfer LP | |||
| 2.9% 5/15/25 | 500,000 | 476,750 | |
| Enterprise Products Operating LLC | |||
| 4.45% 2/15/43 | 990,000 | 882,294 | |
| EPR Properties (EPR) | |||
| 4.75% 12/15/26 | 1,250,000 | 1,090,616 | |
| 4.5% 6/1/27 | 1,330,000 | 1,103,695 | |
| 4.95% 4/15/28 | 830,000 | 693,905 | |
| 3.6% 11/15/31 | 350,000 | 262,362 | |
| Essential Properties LP | |||
| 2.95% 7/15/31 | 3,650,000 | 2,684,407 | |
| Expedia Group, Inc. | |||
| 3.8% 2/15/28 | 484,000 | 458,903 | |
| 3.25% 2/15/30 | 90,000 | 78,099 | |
| Gap, Inc. (The) | |||
| 3.88% 10/1/31(a) | 106,000 | 73,646 | |
| Hercules Capital, Inc. | |||
| 2.63% 9/16/26 | 1,000,000 | 847,451 | |
| Highwoods Realty LP | |||
| 3.88% 3/1/27 | 750,000 | 680,262 | |
| 3.05% 2/15/30 | 1,600,000 | 1,263,535 | |
| 2.6% 2/1/31 | 500,000 | 336,732 | |
| Host Hotels & Resorts LP | |||
| Series H 3.38% 12/15/29 | 612,000 | 518,384 | |
| Indiana Bell Telephone Co., Inc. | |||
| 7.3% 8/15/26 | 535,000 | 564,744 | |
| International Flavors & Fragrances, Inc. (IFF) | |||
| 4.45% 9/26/28 | 1,662,000 | 1,582,283 | |
| 5% 9/26/48 | 1,500,000 | 1,282,157 | |
| JPMorgan Chase & Co. | |||
| 0.65% 9/16/24 Floating Rate (Qtrly SOFR + 60) | 1,000,000 | 977,800 | |
| Kilroy Realty, LP | |||
| 2.65% 11/15/33 | 280,000 | 174,223 | |
| Kite Realty Group Trust (KRG) | |||
| 4.75% 9/15/30 | 695,000 | 629,131 | |
| Lennar Corp. | |||
| 4.75% 5/30/25 | 622,000 | 613,176 | |
| Lexington Realty Trust | |||
| 2.7% 9/15/30 | 500,000 | 406,755 | |
| Lumen Technologies, Inc. | |||
| 4% 2/15/27(a) | 3,200,000 | 2,114,928 | |
| Markel Corp. | |||
| 3.5% 11/1/27 | 550,000 | 523,718 | |
| Marriott International, Inc. | |||
| Series HH 2.85% 4/15/31 | 500,000 | 426,254 | |
| Masonite International Corp. | |||
| 5.38% 2/1/28(a) | 646,000 | 617,847 | |
| 3.5% 2/15/30(a) | 200,000 | 166,087 | |
| MasTec, Inc. | |||
| 4.5% 8/15/28(a) | 1,500,000 | 1,387,797 | |
| Micron Technology, Inc. | |||
| 4.19% 2/15/27 | 500,000 | 484,155 | |
| Mileage Plus Holdings LLC/Mileage Plus Intellectual | |||
| Property Assets Ltd. | |||
| 6.5% 6/20/27(a) | 1,534,233 | 1,530,804 |
The accompanying notes form an integral part of these financial statements.
2023 Annual Report 39
| $ Principal | ||
| Amount | $ Value | |
| MPLX LP | ||
| 4.88% 6/1/25 | 190,000 | 188,712 |
| 4% 3/15/28 | 85,000 | 81,406 |
| 4.8% 2/15/29 | 250,000 | 247,903 |
| 4.7% 4/15/48 | 551,000 | 463,558 |
| OneMain Finance Corp. | ||
| 3.88% 9/15/28 | 1,994,000 | 1,582,987 |
| 5.38% 11/15/29 | 3,303,000 | 2,782,117 |
| Oracle Corp. | ||
| 4.13% 5/15/45 | 1,000,000 | 786,717 |
| 3.6% 4/1/50 | 470,000 | 333,849 |
| PDC Energy, Inc. | ||
| 6.13% 9/15/24 | 407,000 | 405,779 |
| 5.75% 5/15/26 | 2,827,000 | 2,755,830 |
| Phillips Edison Grocery Center Operating Partnership I LP | ||
| 2.63% 11/15/31 | 1,100,000 | 826,135 |
| Physicians Realty LP | ||
| 4.3% 3/15/27 | 1,271,000 | 1,228,162 |
| Plains All American Pipeline LP/PAA Finance Corp. | ||
| 3.55% 12/15/29 | 798,000 | 714,342 |
| 4.3% 1/31/43 | 75,000 | 56,088 |
| Realty Income Corp. | ||
| 4.85% 3/15/30 | 1,000,000 | 986,153 |
| RELX Capital, Inc. | ||
| 4% 3/18/29 | 500,000 | 482,423 |
| 4.75% 5/20/32 | 250,000 | 247,679 |
| Rocket Mortgage LLC / Rocket Mortgage Co-Issuer, Inc. | ||
| 3.88% 3/1/31(a) | 200,000 | 166,027 |
| 4% 10/15/33(a) | 1,450,000 | 1,152,714 |
| STORE Capital Corp. | ||
| 4.5% 3/15/28 | 503,000 | 451,016 |
| 4.63% 3/15/29 | 500,000 | 444,425 |
| 2.7% 12/1/31 | 1,250,000 | 902,619 |
| Take Two Interactive Software, Inc. | ||
| 3.7% 4/14/27 | 1,000,000 | 967,826 |
| Tempur Sealy International, Inc. | ||
| 4% 4/15/29(a) | 400,000 | 352,456 |
| 3.88% 10/15/31(a) | 1,500,000 | 1,254,045 |
| T-Mobile USA, Inc. | ||
| 2.63% 4/15/26 | 250,000 | 233,573 |
| 3.38% 4/15/29 | 4,000,000 | 3,650,350 |
| Twilio, Inc. | ||
| 3.88% 3/15/31 | 300,000 | 254,841 |
| United Wholesale Mortgage LLC | ||
| 5.75% 6/15/27(a) | 200,000 | 178,188 |
| VICI Properties LP | ||
| 4.95% 2/15/30 | 500,000 | 469,688 |
| VICI Properties LP/VICI Note Co., Inc. | ||
| 4.13% 8/15/30(a) | 1,120,000 | 990,289 |
| VistaJet Malta Finance PLC/XO Management Holding, Inc. | ||
| 7.88% 5/1/27(a) (b) | 600,000 | 580,779 |
| 6.38% 2/1/30(a) (b) | 100,000 | 89,225 |
| Vontier Corp. | ||
| 2.95% 4/1/31 | 100,000 | 80,139 |
| Total Corporate Bonds (Cost $99,600,789) | 93,050,509 | |
| Corporate Convertible Bonds - 0.3% | ||
| Redwood Trust, Inc. | ||
| 4.75% 8/15/23 | 850,000 | 835,125 |
| 5.63% 7/15/24 | 700,000 | 665,545 |
| 5.75% 10/1/25 | 500,000 | 453,739 |
| Total Corporate Convertible Bonds (Cost $2,006,700) | 1,954,409 | |
| Asset-Backed Securities - 28.9% | ||
| Automobile | ||
| ACC Auto Trust (AUTOC) | ||
| Series 2021-A Class A – 1.08% 4/15/27(a) | 76,189 | 75,599 |
| ACM Auto Trust (ACM) | ||
| Series 2023-1A Class B – 7.26% 1/22/30(a) | 2,550,000 | 2,540,371 |
| Series 2023-1A Class C – 8.59% 1/22/30(a) | 2,500,000 | 2,494,048 |
| American Credit Acceptance Receivables Trust (ACAR) | ||
| Series 2020-4 Class D – 1.77% 12/14/26(a) | 2,600,000 | 2,501,960 |
| AmeriCredit Automobile Receivables Trust (AMCAR) | ||
| Series 2020-3 Class D – 1.49% 9/18/26 | 1,250,000 | 1,149,149 |
| Series 2022-1 Class C – 2.98% 9/20/27 | 450,000 | 421,890 |
| Arivo Acceptance Auto Loan Receivables Trust (ARIVO) | ||
| Series 2021-1A Class A – 1.19% 1/15/27(a) | 39,717 | 38,501 |
| Series 2022-2A Class C – 9.84% 3/15/29(a) | 1,000,000 | 1,035,830 |
| Avid Automobile Receivables Trust (AVID) | ||
| Series 2023-1 Class A – 6.63% 7/15/26(a) | 1,917,071 | 1,915,194 |
| Series 2023-1 Class B – 7.12% 3/15/27(a) | 1,500,000 | 1,498,788 |
| CFMT LLC (CFMT) | ||
| Series 2021-AL1 Class B – 1.39% 9/22/31(a) | 783,753 | 752,951 |
| Drive Auto Receivables Trust (DART) | ||
| Series 2021-1 Class D – 1.45% 1/16/29 | 610,000 | 573,995 |
| DT Auto Owner Trust (DTAOT) | ||
| Series 2019-3A Class D – 2.96% 4/15/25(a) | 591,233 | 585,618 |
| Exeter Automobile Receivables Trust (EART) | ||
| Series 2021-4A Class C – 1.46% 10/15/27 | 1,145,000 | 1,091,347 |
| First Investors Auto Owner Trust (FIAOT) | ||
| Series 2022-1A Class A – 2.03% 1/15/27(a) | 240,066 | 233,355 |
| Series 2022-2A Class D – 8.71% 10/16/28(a) | 1,000,000 | 1,054,228 |
| Flagship Credit Auto Trust (FCAT) | ||
| Series 2021-1 Class E – 2.72% 4/17/28(a) | 1,500,000 | 1,328,792 |
| Series 2021-2 Class C – 1.27% 6/15/27(a) | 2,100,000 | 1,961,276 |
| Series 2021-3 Class C – 1.46% 9/15/27(a) | 255,000 | 235,491 |
| Series 2021-4 Class D – 2.26% 12/15/27(a) | 350,000 | 311,321 |
| Foursight Capital Automobile Receivables Trust (FCRT) | ||
| Series 2022-2 Class A2 – 4.49% 3/16/26(a) | 445,504 | 442,089 |
| GLS Auto Receivables Issuer Trust (GCAR) | ||
| Series 2020-2A Class B – 3.16% 6/16/25(a) | 233,724 | 233,049 |
| Series 2021-1A Class C – 1.2% 1/15/27(a) | 414,666 | 408,475 |
| Series 2021-2A Class D – 1.42% 4/15/27(a) | 405,000 | 374,213 |
| Series 2021-3A Class C – 1.11% 9/15/26(a) | 800,000 | 758,204 |
| Series 2021-4A Class D – 2.48% 10/15/27(a) | 455,000 | 416,077 |
| JPMorgan Chase Bank NA (CACLN) | ||
| Series 2020-1 Class D – 1.89% 1/25/28(a) | 68,415 | 67,734 |
| Series 2020-1 Class F – 6.68% 1/25/28(a) | 1,967,000 | 1,960,404 |
| Series 2021-2 Class E – 2.28% 12/26/28(a) | 352,786 | 339,424 |
| LAD Auto Receivables Trust (LADAR) | ||
| Series 2021-1A Class A – 1.3% 8/17/26(a) | 573,317 | 556,521 |
| Series 2021-1A Class D – 3.99% 11/15/29(a) | 3,740,000 | 3,344,376 |
| Series 2022-1A Class B – 5.87% 9/15/27(a) | 1,720,000 | 1,710,185 |
| Series 2022-1A Class C – 6.85% 4/15/30(a) | 2,000,000 | 1,982,854 |
| Series 2023-1A Class D – 7.3% 6/17/30(a) | 3,000,000 | 3,019,052 |
The accompanying notes form an integral part of these financial statements.
40 2023 Annual Report
CORE PLUS INCOME FUND (CONTINUED)
Schedule of Investments
March 31, 2023
| $ Principal | ||
| Amount | $ Value | |
| Lendbuzz Securitization Trust (LBST) | ||
| Series 2023-1A Class A2 – 6.92% 8/15/28(a) | 5,000,000 | 5,008,633 |
| OneMain Direct Auto Receivables Trust (ODART) | ||
| Series 2022-1A Class C – 1.42% 7/14/28(a) | 4,000,000 | 3,577,852 |
| Prestige Auto Receivables Trust (PART) | ||
| Series 2022-1A Class C – 7.09% 8/15/28(a) | 1,000,000 | 1,015,744 |
| Santander Bank NA (SBCLN) | ||
| Series 2021-1A Class C – 3.27% 12/15/31(a) | 254,520 | 244,637 |
| Securitized Term Auto Loan Receivables Trust (SSTRT) | ||
| Series 2019-CRTA Class C – 2.85% 3/25/26(a) (b) | 105,446 | 104,750 |
| Tricolor Auto Securitization Trust (TCAST) | ||
| Series 2023-1A Class A – 6.48% 8/17/26(a) | 1,940,252 | 1,939,989 |
| Series 2023-1A Class B – 6.84% 11/16/26(a) | 1,480,000 | 1,481,726 |
| United Auto Credit Securitization Trust (UACST) | ||
| Series 2023-1 Class A – 5.57% 7/10/25(a) | 819,800 | 819,048 |
| Westlake Automobile Receivables Trust (WLAKE) | ||
| Series 2021-1A Class C – 0.95% 3/16/26(a) | 540,000 | 521,667 |
| 52,126,407 | ||
| Collateralized Loan Obligations | ||
| ABPCI Direct Lending Fund CLO X LP (ABPCI) | ||
| Series 2020-10A Class B1 – 7.16% 1/20/32 Floating Rate | ||
| (Qtrly LIBOR + 235)(a) (b) (c) | 1,000,000 | 974,223 |
| ABPCI Direct Lending Fund CLO XI LP (ABPCI) | ||
| Series 2022-11A Class B1 – 7.66% 10/27/34 Floating | ||
| Rate (TSFR3M + 360)(a) (b) (c) | 1,500,000 | 1,487,667 |
| ABPCI Direct Lending Fund CLO XII Ltd. (ABPCI) | ||
| Series 2023-12A Class B – 8.3% 4/29/35 Floating Rate | ||
| (TSFR3M + 350)(a) (b) (c) | 2,000,000 | 1,994,372 |
| Audax Senior Debt CLO LLC (AUDAX) | ||
| Series 2021-6A Class B – 6.76% 10/20/33 Floating Rate | ||
| (Qtrly LIBOR + 195)(a) (c) | 3,000,000 | 2,781,162 |
| AUF Funding LLC (AUF) | ||
| Series 2022-1A Class B1 – 8.31% 1/20/31 Floating Rate | ||
| (TSFR3M + 375)(a) (c) | 1,500,000 | 1,494,723 |
| BCRED MML CLO LLC (BXCMM) | ||
| Series 2022-1A Class A1 – 6.29% 4/20/35 Floating Rate | ||
| (Qtrly SOFR + 165)(a) (b) (c) | 1,000,000 | 966,699 |
| BlackRock Elbert CLO V LLC (ELB) | ||
| Series 5A Class AR – 6.88% 6/15/34 Floating Rate | ||
| (TSFR3M + 185)(a) (b) (c) | 1,023,417 | 1,001,801 |
| Blackrock Rainier CLO VI Ltd. (BLKMM) | ||
| Series 2021-6A Class B – 6.86% 4/20/33 Floating Rate | ||
| (Qtrly LIBOR + 205)(a) (b) (c) | 1,800,000 | 1,687,635 |
| Brightwood Capital MM CLO Ltd. (BWCAP) | ||
| Series 2020-1A Class A1R – 7.12% 1/15/31 Floating Rate | ||
| (TSFR3M + 280)(a) (b) (c) | 2,500,000 | 2,496,375 |
| Capital Four US CLO II Ltd. (C4US) | ||
| Series 2022-1A Class B – 6.77% 10/20/30 Floating Rate | ||
| (TSFR3M + 310)(a) (b) (c) | 1,000,000 | 994,453 |
| Cerberus Loan Funding LP (CERB) | ||
| Series 2020-1A Class B – 7.34% 10/15/31 Floating Rate | ||
| (Qtrly LIBOR + 255)(a) (b) (c) | 500,000 | 489,587 |
| Series 2020-1A Class C – 8.49% 10/15/31 Floating Rate | ||
| (Qtrly LIBOR + 370)(a) (b) (c) | 500,000 | 487,179 |
| Series 2020-2A Class A – 6.69% 10/15/32 Floating Rate | ||
| (Qtrly LIBOR + 190)(a) (b) (c) | 495,000 | 490,009 |
| Series 2020-2A Class B – 7.39% 10/15/32 Floating Rate | ||
| (Qtrly LIBOR + 260)(a) (b) (c) | 500,000 | 488,096 |
| Series 2021-2A Class B – 6.69% 4/22/33 Floating Rate | ||
| (Qtrly LIBOR + 190)(a) (b) (c) | 1,500,000 | 1,416,015 |
| Series 2021-6A Class B – 6.54% 11/22/33 Floating Rate | ||
| (Qtrly LIBOR + 175)(a) (b) (c) | 1,650,000 | 1,633,513 |
| Series 2022-1A Class A2 – 4.02% 4/15/34(a) | 1,750,000 | 1,612,167 |
| Churchill Middle Market CLO Ltd. (CHMML) | ||
| Series 2021-1A Class A1 – 6.32% 10/24/33 Floating | ||
| Rate (Qtrly LIBOR + 150)(a) (b) (c) | 1,000,000 | 968,768 |
| Deerpath Capital CLO Ltd. (DPATH) | ||
| Series 2021-2A Class A1 – 6.39% 1/15/34 Floating Rate | ||
| (Qtrly LIBOR + 160)(a) (b) (c) | 1,000,000 | 971,591 |
| Series 2021-2A Class C – 7.69% 1/15/34 Floating Rate | ||
| (Qtrly LIBOR + 290)(a) (b) (c) | 2,300,000 | 2,144,973 |
| Series 2022-1A Class A1 – 6.61% 7/15/33 Floating Rate | ||
| (TSFR3M + 195)(a) (b) (c) | 750,000 | 737,393 |
| Series 2023-1A Class B1 – 8.64% 4/15/35 Floating Rate | ||
| (TSFR3M + 390)(a) (b) (c) | 2,500,000 | 2,492,220 |
| Series 2023-1A Class C – 9.99% 4/15/35 Floating Rate | ||
| (TSFR3M + 525)(a) (b) (c) | 1,500,000 | 1,483,008 |
| Fortress Credit Opportunities CLO Ltd. (FCO) | ||
| Series 2017-9A Class A1TR – 6.34% 10/15/33 Floating | ||
| Rate (Qtrly LIBOR + 155)(a) (b) (c) | 1,500,000 | 1,452,116 |
| Series 2021-15A Class B – 6.67% 4/25/33 Floating Rate | ||
| (Qtrly LIBOR + 185)(a) (b) (c) | 1,500,000 | 1,404,574 |
| Series 2023-21A Class AT – 7.32% 1/21/35 Floating Rate | ||
| (TSFR3M + 265)(a) (c) | 2,000,000 | 1,978,542 |
| Series 2023-21A Class C – 9.57% 1/21/35 Floating Rate | ||
| (TSFR3M + 490)(a) (c) | 1,000,000 | 979,429 |
| Golub Capital Partners CLO Ltd. (GOCAP) | ||
| Series 2016-31A Class CR – 7.71% 8/5/30 Floating Rate | ||
| (Qtrly LIBOR + 290)(a) (b) (c) | 1,000,000 | 963,811 |
| Series 2021-54A Class B – 6.66% 8/5/33 Floating Rate | ||
| (Qtrly LIBOR + 185)(a) (b) (c) | 500,000 | 468,379 |
| Series 2021-54A Class C – 7.46% 8/5/33 Floating Rate | ||
| (Qtrly LIBOR + 265)(a) (b) (c) | 1,000,000 | 927,078 |
| Golub Capital Partners Short Duration (GSHOR) | ||
| Series 2022-1A Class B1 – 8.16% 10/25/31 Floating Rate | ||
| (TSFR3M + 350)(a) (c) | 1,000,000 | 998,693 |
| Guggenheim MM CLO Ltd. (GUGG) | ||
| Series 2021-4A Class B – 7.04% 1/15/34 Floating Rate | ||
| (Qtrly LIBOR + 225)(a) (b) (c) | 2,500,000 | 2,337,378 |
| Ivy Hill Middle Market Credit Fund IX Ltd. (IVYH) | ||
| Series 9A Class A1TR – 6.27% 4/23/34 Floating Rate | ||
| (Qtrly SOFR + 162)(a) (b) (c) | 1,500,000 | 1,446,995 |
| KKR Lending Partners III CLO LLC (KKRLP) | ||
| Series 2021-1A Class B – 6.71% 10/20/30 Floating Rate | ||
| (Qtrly LIBOR + 190)(a) (c) | 3,000,000 | 2,880,669 |
| KKR Static CLO I Ltd. (KKRS) | ||
| Series 2022-1A Class B – 7.24% 7/20/31 Floating Rate | ||
| (TSFR3M + 260)(a) (b) (c) | 1,250,000 | 1,245,299 |
| Maranon Loan Funding Ltd. (MRNON) | ||
| Series 2021-2RA Class BR – 6.84% 7/15/33 Floating | ||
| Rate (Qtrly LIBOR + 205)(a) (b) (c) | 2,500,000 | 2,397,260 |
| Monroe Capital Funding CLO Ltd. (MCF) | ||
| Series 2023-1A Class B – 8.33% 4/15/35 Floating Rate | ||
| (TSFR3M + 350)(a) (c) | 1,500,000 | 1,495,281 |
| Monroe Capital MML CLO XII Ltd. (MCMML) | ||
| Series 2021-2A Class C – 7.79% 9/14/33 Floating Rate | ||
| (Qtrly LIBOR + 265)(a) (b) (c) | 2,000,000 | 1,881,928 |
| NXT Capital CLO LLC (NXT) | ||
| Series 2020-1A Class B – 7.21% 1/20/31 Floating Rate | ||
| (US0003M + 240)(a) (c) | 1,400,000 | 1,346,568 |
| Owl Rock CLO IX LLC (OR) | ||
| Series 2022-9A Class B – 8.68% 11/20/34 Floating Rate | ||
| (TSFR3M + 400)(a) (c) | 1,000,000 | 992,289 |
The accompanying notes form an integral part of these financial statements.
2023 Annual Report 41
| $ Principal | ||
| Amount | $ Value | |
| Owl Rock CLO VIII LLC (OR) | ||
| Series 2022-8A Class AT – 6.63% 11/20/34 Floating | ||
| Rate (TSFR3M + 250)(a) (c) | 1,000,000 | 991,586 |
| Palmer Square Loan Funding Ltd. (PSTAT) | ||
| Series 2021-1A Class A2 – 6.06% 4/20/29 Floating Rate | ||
| (Qtrly LIBOR + 125)(a) (b) (c) | 250,000 | 245,155 |
| Series 2021-1A Class B – 6.61% 4/20/29 Floating Rate | ||
| (Qtrly LIBOR + 180)(a) (b) (c) | 1,000,000 | 969,886 |
| Pennantpark CLO VI LLC (PCLO) | ||
| Series 2023-6A Class B1 4/22/35 Floating Rate | ||
| (TSFR3M + 375)(a) (c) | 2,000,000 | 1,993,280 |
| Twin Brook CLO (TWBRK) | ||
| Series 2023-1A Class B – 7.99% 4/20/35 Floating Rate | ||
| (TSFR3M + 320)(a) (c) | 1,000,000 | 997,228 |
| Series 2023-1A Class C – 8.89% 4/20/35 Floating Rate | ||
| (TSFR3M + 410)(a) (c) | 3,000,000 | 2,980,605 |
| 64,667,658 | ||
| Consumer & Specialty Finance | ||
| ACHV ABS Trust (ACHV) | ||
| Series 2023-1PL Class B – 6.8% 3/18/30(a) | 1,000,000 | 999,415 |
| Affirm Asset Securitization Trust (AFFRM) | ||
| Series 2021-B Class A – 1.03% 8/17/26(a) | 1,250,000 | 1,195,486 |
| Series 2022-Z1 Class A – 4.55% 6/15/27(a) | 941,123 | 927,227 |
| Bankers Healthcare Group Securitization Trust (BHG) | ||
| Series 2023-A Class A – 5.55% 4/17/36(a) | 1,000,000 | 992,808 |
| Series 2020-A Class A – 2.56% 9/17/31(a) | 168,987 | 165,362 |
| Series 2021-A Class A – 1.42% 11/17/33(a) | 246,087 | 230,414 |
| Series 2022-B Class B – 4.84% 6/18/35(a) | 1,498,342 | 1,444,680 |
| Conn's Receivables Funding LLC (CONN) | ||
| Series 2021-A Class B – 2.87% 5/15/26(a) | 1,357,990 | 1,344,977 |
| Series 2022-A Class A – 5.87% 12/15/26(a) | 261,240 | 261,072 |
| Driven Brands Funding LLC (HONK) | ||
| Series 2019-2A Class A2 – 3.98% 10/20/49(a) | 483,750 | 441,649 |
| Foundation Finance Trust (FFIN) | ||
| Series 2019-1A Class A – 3.86% 11/15/34(a) | 94,931 | 93,235 |
| Series 2021-1A Class B – 1.87% 5/15/41(a) | 3,421,000 | 2,959,017 |
| FREED ABS Trust (FREED) | ||
| Series 2022-1FP Class C – 2.51% 3/19/29(a) | 2,530,000 | 2,397,940 |
| Series 2022-3FP Class B – 5.79% 8/20/29(a) | 1,500,000 | 1,490,476 |
| Series 2022-4FP Class C – 8.59% 12/18/29(a) | 2,000,000 | 2,021,179 |
| Hilton Grand Vacations Trust (HGVT) | ||
| Series 2020-AA Class B – 4.22% 2/25/39(a) | 203,290 | 195,923 |
| Jersey Mike's Funding (JMIKE) | ||
| Series 2019-1A Class A2 – 4.43% 2/15/50(a) | 992,500 | 925,113 |
| Lendingpoint Asset Securitization Trust (LDPT) | ||
| Series 2022-C Class A – 6.56% 2/15/30(a) | 1,705,756 | 1,700,520 |
| LendingPoint Asset Securitization Trust (LDPT) | ||
| Series 2020-REV1 Class A – 2.73% 10/15/28(a) | 950,763 | 940,972 |
| LP LMS Asset Securitization Trust (LPMS) | ||
| Series 2023-1A Class A – 8.18% 10/17/33(a) | 4,000,000 | 3,990,156 |
| Marlette Funding Trust (MFT) | ||
| Series 2023-1A Class A – 6.07% 4/15/33(a) | 1,750,000 | 1,749,605 |
| Series 2021-2A Class B – 1.06% 9/15/31(a) | 367,615 | 360,111 |
| Series 2022-1A Class A – 1.36% 4/15/32(a) | 238,835 | 236,199 |
| Octane Receivables Trust (OCTL) | ||
| Series 2020-1A Class B – 1.98% 6/20/25(a) | 4,190,000 | 4,075,362 |
| Series 2021-1A Class B – 1.53% 4/20/27(a) | 700,000 | 650,397 |
| Series 2022-1A Class A2 – 4.18% 3/20/28(a) | 493,040 | 484,818 |
| Pagaya AI Debt Selection Trust (PAID) | ||
| Series 2021 Class B – 1.82% 1/16/29(a) | 440,388 | 408,398 |
| Series 2021-1 Class A – 1.18% 11/15/27(a) | 170,353 | 168,976 |
| Pagaya AI Debt Trust (PAID) | ||
| Series 2022-2 Class A – 4.97% 1/15/30(a) | 974,790 | 960,913 |
| Series 2022-3 Class A – 6.06% 3/15/30(a) | 1,877,066 | 1,865,988 |
| Series 2022-5 Class A – 8.1% 6/17/30(a) | 1,378,604 | 1,392,977 |
| Series 2023-1 Class A – 7.56% 7/15/30(a) | 3,000,000 | 3,002,394 |
| Sierra Timeshare Receivables Funding LLC (SRFC) | ||
| Series 2019-2A Class B – 2.82% 5/20/36(a) | 129,241 | 123,920 |
| Theorem Funding Trust (THRM) | ||
| Series 2021-1A Class A – 1.21% 12/15/27(a) | 281,287 | 277,928 |
| Series 2021-1A Class B – 1.84% 12/15/27(a) | 1,000,000 | 947,319 |
| Series 2022-2A Class B – 9.27% 12/15/28(a) | 1,000,000 | 1,022,442 |
| Series 2022-3A Class A – 7.6% 4/15/29(a) | 814,814 | 821,416 |
| Upstart Securitization Trust (UPST) | ||
| Series 2021-1 Class B – 1.89% 3/20/31(a) | 189,381 | 187,007 |
| Series 2021-1 Class C – 4.06% 3/20/31(a) | 250,000 | 233,697 |
| Series 2021-2 Class A – 0.91% 6/20/31(a) | 24,558 | 24,341 |
| Zaxby's Funding LLC (ZAXBY) | ||
| Series 2021-1A Class A2 – 3.24% 7/30/51(a) | 1,231,250 | 1,036,012 |
| 44,747,841 | ||
| Equipment | ||
| Amur Equipment Finance Receivables IX LLC (AXIS) | ||
| Series 2021-1A Class B – 1.38% 2/22/27(a) | 1,035,000 | 977,265 |
| Series 2021-1A Class D – 2.3% 11/22/27(a) | 500,000 | 462,311 |
| CCG Receivables Trust (CCG) | ||
| Series 2019-2 Class B – 2.55% 3/15/27(a) | 250,822 | 249,915 |
| Dext ABS LLC (DEXT) | ||
| Series 2020-1 Class B – 1.92% 11/15/27(a) | 800,000 | 776,092 |
| Pawnee Equipment Receivables Series LLC (PWNE) | ||
| Series 2019-1 Class D – 2.86% 10/15/24(a) | 500,000 | 496,528 |
| SCF Equipment Leasing LLC (SCFET) | ||
| Series 2019-2A Class A2 – 2.47% 4/20/26(a) | 68,209 | 67,552 |
| 3,029,663 | ||
| Other | ||
| Monroe Capital ABS Funding II Ltd. (MCF) | ||
| Series 2023-1A Class D – 10.2% 4/22/33(a) | 3,500,000 | 3,437,527 |
| Oxford Finance Funding Trust (OFFT) | ||
| Series 2023-1A Class A2 – 6.72% 2/15/31(a) | 5,000,000 | 5,002,879 |
| 8,440,406 | ||
| Total Asset-Backed Securities (Cost $176,451,276) | 173,011,975 | |
| Commercial Mortgage-Backed Securities - 7.0% | ||
| Arbor Realty Commercial Real Estate Notes Ltd. (ARCLO) | ||
| Series 2019-FL2 Class B – 6.69% 9/15/34 Floating Rate | ||
| (TSFR1M + 186)(a) (b) | 2,340,000 | 2,317,725 |
| Series 2019-FL2 Class C – 7.09% 9/15/34 Floating Rate | ||
| (TSFR1M + 226)(a) (b) | 4,721,333 | 4,612,516 |
| AREIT Trust (AREIT) | ||
| Series 2021-CRE5 Class A – 5.79% 11/17/38 Floating | ||
| Rate (Mthly LIBOR + 108)(a) | 713,325 | 699,229 |
| BDS Ltd. (BDS) | ||
| Series 2020-FL6 Class C – 6.92% 9/15/35 Floating | ||
| Rate (SOFR30A + 236)(a) (b) | 335,074 | 320,867 |
| Series 2021-FL10 Class C – 7.06% 12/16/36 Floating | ||
| Rate (Mthly LIBOR + 230)(a) (b) | 1,250,000 | 1,185,783 |
The accompanying notes form an integral part of these financial statements.
42 2023 Annual Report
CORE PLUS INCOME FUND (CONTINUED)
Schedule of Investments
March 31, 2023
| $ Principal | ||
| Amount | $ Value | |
| BFLD Trust (BFLD) | ||
| Series 2020-OBRK Class A – 6.99% 11/15/28 Floating | ||
| Rate (Mthly LIBOR + 205)(a) | 940,000 | 931,752 |
| BPCRE Ltd. (BPCRE) | ||
| Series 2022-FL2 Class C – 9.19% 1/16/37 Floating Rate | ||
| (TSFR1M + 450)(a) (b) | 2,500,000 | 2,473,535 |
| BPR Trust (BPR) | ||
| Series 2021-TY Class B – 5.83% 9/15/38 Floating Rate | ||
| (US0001M + 115)(a) | 3,250,000 | 3,052,133 |
| BRSP, Ltd. (BRSP) | ||
| Series 2021-FL1 Class B – 6.66% 8/19/38 Floating Rate | ||
| (US0001M + 190)(a) (b) | 1,100,000 | 1,051,541 |
| FS Rialto Issuer LLC (FSRI) | ||
| Series 2022-FL7 Class A – 7.59% 10/19/39 Floating | ||
| Rate (TSFR1M + 290)(a) | 1,000,000 | 996,392 |
| GPMT Ltd. (GPMT) | ||
| Series 2021-FL3 Class A – 6.01% 7/16/35 Floating Rate | ||
| (Mthly LIBOR + 125)(a) (b) | 1,318,821 | 1,307,146 |
| HERA Commercial Mortgage, Ltd. (HCM) | ||
| Series 2021-FL1 Class C – 6.71% 2/18/38 Floating Rate | ||
| (US0001M + 195)(a) (b) | 650,000 | 604,154 |
| HGI CRE CLO Ltd. (HGI) | ||
| Series 2021-FL1 Class A4 – 5.78% 6/16/36 Floating | ||
| Rate (Mthly LIBOR + 105)(a) (b) | 721,474 | 699,933 |
| Series 2021-FL1 Class AS – 6.13% 6/16/36 Floating Rate | ||
| (Mthly LIBOR + 140)(a) (b) | 2,000,000 | 1,932,808 |
| Series 2021-FL1 Class B – 6.33% 6/16/36 Floating Rate | ||
| (Mthly LIBOR + 160)(a) (b) | 5,100,000 | 4,903,716 |
| Series 2021-FL1 Class C – 6.43% 6/16/36 Floating Rate | ||
| (US0001M + 170)(a) (b) | 450,000 | 422,324 |
| Series 2021-FL2 Class D – 6.88% 9/17/36 Floating Rate | ||
| (Mthly LIBOR + 215)(a) (b) | 1,000,000 | 927,895 |
| Hilton USA Trust (HILT) | ||
| Series 2016-SFP Class E – 5.52% 11/5/35(a) | 840,000 | 754,818 |
| ILPT Commercial Mortgage Trust (ILPT) | ||
| Series 2022-LPF2 Class B – 7.57% 10/15/39 Floating | ||
| Rate (TSFR1M + 274)(a) | 1,000,000 | 982,275 |
| KREF Ltd. (KREF) | ||
| Series 2021-FL2 Class B – 6.36% 2/15/39 Floating Rate | ||
| (Mthly LIBOR + 165)(a) (b) | 2,500,000 | 2,333,512 |
| LoanCore Issuer Ltd. (LNCR) | ||
| Series 2018-CRE1 Class C – 7.23% 5/15/28 Floating | ||
| Rate (Mthly LIBOR + 255)(a) (b) | 1,000,000 | 1,006,192 |
| Series 2018-CRE1 Class D – 7.63% 5/15/28 Floating | ||
| Rate (US0001M + 295)(a) (b) | 1,000,000 | 1,006,123 |
| MF1 Multifamily Housing Mortgage Loan Trust (MFHM) | ||
| Series 2021-FL5 Class AS – 5.97% 7/15/36 Floating | ||
| Rate (TSFR1M + 131)(a) (b) | 3,575,000 | 3,465,348 |
| PFP Ltd. (PFP) | ||
| Series 2022-9 Class A – 6.93% 8/19/35 Floating Rate | ||
| (TSFR1M + 218)(a) (b) | 750,000 | 745,628 |
| STWD Ltd. (STWD) | ||
| Series 2022-FL3 Class B – 6.51% 11/15/38 Floating Rate | ||
| (SOFR 30 Day Avg. + 195)(a) (b) | 2,500,000 | 2,399,725 |
| VMC Finance LLC (VMC) | ||
| Series 2021-FL4 Class A – 5.86% 6/16/36 Floating Rate | ||
| (Mthly LIBOR + 110)(a) | 989,487 | 958,101 |
| Total Commercial Mortgage-Backed Securities (Cost $42,843,696) | 42,091,171 | |
| Mortgage-Backed Securities - 0.8% | ||
| Federal Home Loan Mortgage Corporation | ||
| Collateralized Mortgage Obligations | ||
| Series 5026 Class DH – 1.75% 9/25/43 | 459,865 | 417,755 |
| Series 4949 Class BC – 2.25% 3/25/49 | 251,273 | 225,264 |
| Pass-Through Securities | ||
| Pool# C91945 – 3% 8/1/37 | 253,487 | 238,090 |
| 881,109 | ||
| Federal National Mortgage Association | ||
| Collateralized Mortgage Obligations | ||
| Series 2013-130 Class CA – 2.5% 6/25/43 | 108,356 | 101,119 |
| Series 2013-130 Class CD – 3% 6/25/43 | 197,012 | 187,733 |
| Pass-Through Securities | ||
| Pool# 932836 – 3% 12/1/25 | 10,669 | 10,434 |
| Pool# 468516 – 5.17% 6/1/28 | 202,210 | 204,804 |
| Pool# MA3443 – 4% 8/1/48 | 103,589 | 100,437 |
| Pool# FM5733 – 2% 1/1/51 | 1,244,446 | 1,043,152 |
| 1,647,679 | ||
| Government National Mortgage Association | ||
| Collateralized Mortgage Obligations | ||
| Series 2021-29 Class CY – 3% 9/20/50 | 1,000,000 | 844,515 |
| Series 2018-52 Class AE – 2.75% 5/16/51 | 83,061 | 77,339 |
| 921,854 | ||
| Non-Government Agency | ||
| Collateralized Mortgage Obligations | ||
| Flagstar Mortgage Trust (FSMT) | ||
| Series 2017-1 Class 2A2 – 3% 3/25/47(a) (c) | 44,068 | 40,630 |
| JPMorgan Mortgage Trust (JPMMT) | ||
| Series 2016-3 Class A – 2.98% 10/25/46(a) (c) | 59,313 | 55,087 |
| Series 2017-3 Class A – 2.5% 8/25/47(a) (c) | 65,267 | 56,791 |
| Series 2018-6 Class 2A2 – 3% 12/25/48(a) (c) | 23,454 | 21,960 |
| RCKT Mortgage Trust (RCKT) | ||
| Series 2021-3 Class A5 – 2.5% 7/25/51(a) (c) | 1,509,549 | 1,309,386 |
| Sequoia Mortgage Trust (SEMT) | ||
| Series 2019-CH2 Class A – 4.5% 8/25/49(a) (c) | 13,926 | 13,709 |
| Pass-Through Securities | ||
| Greenpoint Mortgage Pass-Through Certificates (GMSI) | ||
| Series 2003-1 Class A1 – 4.36% 10/25/33(c) | 32,282 | 29,783 |
| 1,527,346 | ||
| Total Mortgage-Backed Securities (Cost $5,762,130) | 4,977,988 | |
| Municipal Bonds - 0.2% | ||
| Detroit, MI City School District General Obligation SBLF, | ||
| 6.65% 5/1/29 | 460,000 | 509,488 |
| Village of Rosemont IL General Obligation BAM, 5.38% | ||
| 12/1/23 | 470,000 | 470,243 |
| Total Municipal Bonds (Cost $1,044,450) | 979,731 | |
The accompanying notes form an integral part of these financial statements.
2023 Annual Report 43
| U.S. Treasuries - 39.7% | ||
| $ Principal | ||
| Amount | $ Value | |
| U.S. Treasury Bonds | ||
| 3.5% 2/15/39 | 2,100,000 | 2,076,990 |
| 1.88% 2/15/41 | 11,500,000 | 8,610,850 |
| 1.75% 8/15/41 | 4,000,000 | 2,899,375 |
| 2% 11/15/41 | 7,500,000 | 5,666,455 |
| 2.38% 2/15/42 | 12,000,000 | 9,656,484 |
| 3.25% 5/15/42 | 15,000,000 | 13,848,047 |
| 4% 11/15/42 | 10,500,000 | 10,788,750 |
| 3.88% 2/15/43 | 1,000,000 | 1,009,141 |
| 3.13% 2/15/43 | 15,000,000 | 13,499,708 |
| 3.63% 8/15/43 | 4,000,000 | 3,885,938 |
| 3.63% 2/15/44 | 8,500,000 | 8,229,394 |
| 3.38% 5/15/44 | 13,500,000 | 12,566,602 |
| 3.13% 8/15/44 | 18,500,000 | 16,520,644 |
| 3% 11/15/44 | 13,000,000 | 11,349,609 |
| 2.5% 2/15/45 | 8,000,000 | 6,389,844 |
| 2.5% 5/15/46 | 8,400,000 | 6,676,687 |
| 2.25% 8/15/46 | 2,500,000 | 1,888,672 |
| 3% 2/15/47 | 1,000,000 | 870,977 |
| U.S. Treasury Notes | ||
| 2.5% 8/15/23 | 2,500,000 | 2,478,366 |
| 2.75% 8/31/23 | 5,000,000 | 4,960,451 |
| 2.88% 10/31/23 | 5,000,000 | 4,948,967 |
| 2.75% 11/15/23 | 11,000,000 | 10,862,397 |
| 2.88% 11/30/23 | 2,000,000 | 1,976,079 |
| 2.75% 2/15/24 | 13,000,000 | 12,782,689 |
| 2.25% 3/31/24 | 6,000,000 | 5,861,767 |
| 2.25% 2/15/27 | 3,500,000 | 3,317,002 |
| 2.38% 5/15/27 | 3,000,000 | 2,850,527 |
| 2.25% 8/15/27 | 3,000,000 | 2,831,074 |
| 1.13% 2/29/28 | 6,500,000 | 5,774,463 |
| 1.25% 5/31/28 | 8,000,000 | 7,116,094 |
| 1.25% 9/30/28 | 7,000,000 | 6,178,730 |
| 1.5% 11/30/28 | 3,000,000 | 2,676,855 |
| 1.88% 2/28/29 | 3,500,000 | 3,180,693 |
| 1.75% 11/15/29 | 3,000,000 | 2,695,137 |
| 1.5% 2/15/30 | 5,250,000 | 4,604,004 |
| 0.88% 11/15/30 | 8,000,000 | 6,625,156 |
| 1.13% 2/15/31 | 4,500,000 | 3,790,811 |
| 1.38% 11/15/31 | 5,500,000 | 4,643,848 |
| 1.88% 2/15/32 | 1,000,000 | 877,930 |
| Total U.S. Treasuries (Cost $252,748,012) | 237,467,207 | |
| Non-Convertible Preferred Stocks - 0.1% | ||
| Shares | $ Value | |
| Qurate Retail, Inc. 8.00% 3/15/31 (Cost $2,672,824) | 27,800 | 814,818 |
| Cash Equivalents - 7.0% | ||
| $ Principal | ||
| Amount | $ Value | |
| JPMorgan U.S. Government Money Market | ||
| Fund - Institutional Class 4.45% (Cost | ||
| $41,710,247) (d) | 41,710,247 | 41,710,247 |
| Short-Term Securities Held as Collateral for Securities on Loan - 0.5% | ||
| Shares | $ Value | |
| Citibank N.A. DDCA | ||
| 4.82% | 275,908 | 275,908 |
| Goldman Sachs Financial Square Government Fund | ||
| Institutional Class – 4.72% | 2,483,168 | 2,483,167 |
| Total Short-Term Securities Held as Collateral for Securities on Loan | ||
| (Cost $2,759,075) | 2,759,075 | |
| Total Investments in Securities (Cost $627,599,199) | 598,817,130 | |
| Cash due to Custodian - 0.0% | (98) | |
| Other Liabilities in Excess of Other Assets - 0.0% | (241,185) | |
| Net Assets - 100% | 598,575,847 | |
| Net Asset Value Per Share - Investor Class | 9.76 | |
| Net Asset Value Per Share - Institutional Class | 9.76 | |
| ^ | This security or a partial position of this security was on loan as of March 31, 2023. The total value of securities on loan as of March 31, 2023 was $2,702,152. |
| (a) | Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. |
| (b) | Foreign domiciled entity. |
| (c) | The interest rate resets periodically based on the weighted average coupons of the underlying mortgage-related or asset-backed obligations. |
| (d) | Rate presented represents the 30 day average yield at March 31, 2023. |
The accompanying notes form an integral part of these financial statements.
44 2023 Annual Report
NEBRASKA TAX-FREE INCOME FUND
Schedule of Investments
March 31, 2023
| Municipal Bonds - 90.8% | |||
| % of Net | $ Principal | ||
| Assets | Amount | $ Value | |
| California | 0.7 | ||
| San Diego County Regional Airport Authority Revenue | |||
| Series B 5% 7/1/25 | 200,000 | 207,426 | |
| Colorado | 0.3 | ||
| Colorado Bridge Enterprise Revenue 4% 12/31/23 | 100,000 | 100,886 | |
| Florida | 0.7 | ||
| State of Florida General Obligation 4% 6/1/36 | 200,000 | 203,741 | |
| Nebraska | 83.3 | ||
| Ashland-Greenwood Public Schools General Obligation | |||
| 3% 12/15/42 | 100,000 | 81,555 | |
| Cass County School District No. 22 General Obligation | |||
| 2.05% 12/15/25 | 375,000 | 366,938 | |
| 2.2% 12/15/26 | 250,000 | 244,471 | |
| City of Bellevue NE General Obligation Series A 3% | |||
| 9/15/32 | 500,000 | 501,411 | |
| City of Blair NE Water System Revenue | |||
| AMT, | |||
| 2.65% 12/15/24 | 100,000 | 98,193 | |
| 2.85% 12/15/25 | 100,000 | 97,977 | |
| 3% 12/15/26 | 100,000 | 97,585 | |
| 3.1% 12/15/27 | 100,000 | 96,975 | |
| 3.2% 12/15/28 | 100,000 | 96,914 | |
| City of Columbus NE Combined Utilities System Revenue | |||
| 4% 6/15/33 | 200,000 | 214,134 | |
| AGM, | |||
| 4% 12/15/26 | 100,000 | 105,572 | |
| 4% 12/15/27 | 100,000 | 104,993 | |
| City of Columbus NE General Obligation | |||
| 3% 12/15/29 | 150,000 | 151,294 | |
| 3% 12/15/30 | 150,000 | 150,784 | |
| City of Grand Island NE Combined Utility System Revenue | |||
| Series A AGM, | |||
| 4% 8/15/35 | 205,000 | 215,559 | |
| 4% 8/15/36 | 125,000 | 129,443 | |
| City of Grand Island NE General Obligation | |||
| 3% 11/15/27 | 150,000 | 151,501 | |
| 3% 11/15/30 | 150,000 | 150,850 | |
| City of Gretna NE Certificates of Participation 4% | |||
| 12/15/25 | 500,000 | 509,325 | |
| City of Lincoln NE Electric System Revenue 3% 9/1/28 | 30,000 | 30,312 | |
| City of Lincoln NE General Obligation 5% 5/15/23 | 135,000 | 135,359 | |
| City of Norfolk NE General Obligation 3.38% 5/15/34 | 500,000 | 502,230 | |
| City of Omaha NE General Obligation | |||
| Series A | |||
| 4% 4/15/23 | 185,000 | 185,079 | |
| 4% 1/15/33 | 260,000 | 276,889 | |
| 3% 4/15/35 | 100,000 | 97,805 | |
| Series A Class A – | |||
| 3% 4/15/34 | 100,000 | 99,079 | |
| City of Omaha NE Sewer Revenue | |||
| 5% 4/1/26 | 250,000 | 268,911 | |
| 4% 4/1/31 | 350,000 | 361,937 | |
| Series A | |||
| 4% 4/1/34 | 100,000 | 106,416 | |
| County of Kearney NE General Obligation 4% 6/1/23 | 200,000 | 200,341 | |
| County of Saline NE Revenue 3% 2/15/31 | 200,000 | 193,560 | |
| County of Sarpy NE Certificates of Participation 1.75% | |||
| 6/15/26 | 500,000 | 482,939 | |
| County of Seward NE General Obligation 3% 12/15/30 | 605,000 | 610,053 | |
| Cozad City School District General Obligation 4% 6/15/26 | 250,000 | 260,276 | |
| Dawson County Public Power District Revenue | |||
| Series A | |||
| 2% 6/15/26 | 170,000 | 167,272 | |
| 2.1% 6/15/27 | 105,000 | 104,091 | |
| Series B | |||
| 2.5% 6/15/28 | 135,000 | 135,012 | |
| 3% 6/15/29 | 245,000 | 245,089 | |
| 3% 6/15/30 | 355,000 | 355,133 | |
| Dodge County School District No. 595 General Obligation | |||
| 1.9% 6/15/32 | 200,000 | 179,032 | |
| Douglas County Hospital Authority No. 2 Revenue | |||
| 5% 5/15/26 | 500,000 | 505,806 | |
| 5% 5/15/30 | 140,000 | 150,210 | |
| 4% 5/15/32 | 700,000 | 716,198 | |
| Douglas County School District No. 59 NE General | |||
| Obligation 3% 12/15/32 | 100,000 | 96,716 | |
| Kearney School District General Obligation 3% 12/15/24 | 250,000 | 251,013 | |
| Lancaster County School District 001 General Obligation | |||
| 5% 1/15/24 | 50,000 | 50,927 | |
| 4% 1/15/33 | 250,000 | 261,651 | |
| Lincoln Airport Authority Revenue AMT, 5% 7/1/27 | 150,000 | 160,459 | |
| Lincoln-Lancaster County Public Building Commission | |||
| Revenue 3% 12/1/25 | 500,000 | 505,488 | |
| Madison County Hospital Authority No. 1 Revenue | |||
| 5% 7/1/23 | 250,000 | 250,853 | |
| 5% 7/1/35 | 140,000 | 143,841 | |
| Metropolitan Utilities District of Omaha Gas System | |||
| Revenue 4% 12/1/27 | 450,000 | 460,778 | |
| Municipal Energy Agency of Nebraska Revenue 5% | |||
| 4/1/27 | 350,000 | 378,675 | |
| Nebraska Cooperative Republican Platte Enhancement | |||
| Project Revenue Series A 2% 12/15/29 | 250,000 | 235,818 | |
| Nebraska Educational Health Cultural & Social Services | |||
| Finance Authority Revenue 4% 1/1/34 | 110,000 | 114,131 | |
| Nebraska Investment Finance Authority Revenue | |||
| Series A | |||
| 2.05% 9/1/24 | 120,000 | 118,216 | |
| Series B | |||
| 1.35% 9/1/26 | 200,000 | 188,778 | |
| Series C | |||
| 2% 9/1/35 | 325,000 | 269,736 | |
| Nebraska Public Power District Revenue | |||
| Series C | |||
| 5% 1/1/32 | 65,000 | 68,524 | |
| 5% 1/1/35 | 480,000 | 502,535 | |
| Nebraska State College Facilities Corp. Revenue AGM, | |||
| 4% 7/15/28 | 750,000 | 786,536 | |
| Omaha Public Facilities Corp. Revenue | |||
| 4% 6/1/28 | 585,000 | 609,626 | |
| Series A | |||
| 4% 6/1/31 | 155,000 | 167,733 | |
| Series C | |||
| 4% 4/1/33 | 340,000 | 362,697 | |
| 4% 4/1/39 | 500,000 | 502,754 | |
| Omaha Public Power District Revenue | |||
| Series A | |||
| 2.85% 2/1/27 | 500,000 | 501,748 | |
The accompanying notes form an integral part of these financial statements.
2023 Annual Report 45
| % of Net | $ Principal | ||
| Assets | Amount | $ Value | |
| Series C | |||
| 5% 2/1/39 | 150,000 | 154,570 | |
| Omaha School District General Obligation | |||
| 5% 12/15/28 | 130,000 | 134,907 | |
| 5% 12/15/29 | 350,000 | 378,977 | |
| 5% 12/15/31 | 135,000 | 145,387 | |
| Omaha-Douglas Public Building Commission General | |||
| Obligation Series B 5% 5/1/32 | 550,000 | 622,377 | |
| Papillion Municipal Facilities Corp. Revenue | |||
| 2% 12/15/32 | 100,000 | 90,039 | |
| 2% 12/15/34 | 200,000 | 173,312 | |
| Papillion-La Vista School District No. 27 General | |||
| Obligation | |||
| Series A | |||
| 2.05% 12/1/24 | 150,000 | 148,149 | |
| 2.2% 12/1/25 | 150,000 | 148,762 | |
| 2.3% 12/1/26 | 275,000 | 274,652 | |
| Series B | |||
| 4% 12/1/35 | 400,000 | 424,125 | |
| Public Power Generation Agency Revenue | |||
| 5% 1/1/28 | 500,000 | 515,426 | |
| 5% 1/1/32 | 140,000 | 149,409 | |
| Sarpy County School District No. 1 General Obligation 5% | |||
| 12/15/29 | 550,000 | 614,458 | |
| State of Nebraska Certificates of Participation | |||
| 3% 2/1/26 | 60,000 | 60,766 | |
| Series A | |||
| 2% 4/1/26 | 150,000 | 146,428 | |
| University of Nebraska Facilities Corp. Revenue 5% | |||
| 7/15/29 | 380,000 | 407,954 | |
| University of Nebraska Revenue | |||
| 3% 7/1/25 | 100,000 | 101,263 | |
| 2.5% 7/1/26 | 210,000 | 211,336 | |
| 3% 7/1/27 | 100,000 | 102,989 | |
| 5% 5/15/30 | 100,000 | 111,982 | |
| Upper Republican Natural Resource District Revenue | |||
| AGM, | |||
| 4% 12/15/25 | 245,000 | 245,272 | |
| 4% 12/15/27 | 395,000 | 395,457 | |
| Village of Boys Town NE Revenue | |||
| 3% 9/1/28 | 700,000 | 713,334 | |
| 3% 7/1/35 | 325,000 | 318,436 | |
| Winside Public Schools General Obligation 2% 6/15/31 | 350,000 | 312,728 | |
| 24,026,231 | |||
| New Mexico | 1.3 | ||
| New Mexico Finance Authority Revenue Series C 4% | |||
| 6/1/34 | 365,000 | 376,306 | |
| Texas | 3.0 | ||
| City of Austin Tx Airport System Revenue Series B AMT, | |||
| 5% 11/15/26 | 250,000 | 264,990 | |
| City of Austin Tx Electric Utility Revenue Series A 5% | |||
| 11/15/35 | 100,000 | 114,895 | |
| County of Bexar TX General Obligation 4% 6/15/36 | 500,000 | 505,047 | |
| 884,932 | |||
| Utah | 0.4 | ||
| City of Salt Lake City UT Public Utilities Revenue 5% | |||
| 2/1/35 | 100,000 | 112,919 | |
| Washington | 1.1 | ||
| Pierce County School District No. 10 Tacoma General | |||
| Obligation Series B 4% 12/1/35 | 100,000 | 105,334 | |
| Port of Seattle WA Revenue Series C 5% 5/1/26 | 200,000 | 212,495 | |
| 317,829 | |||
| Total Municipal Bonds (Cost $27,102,772) | 26,230,270 | ||
| Cash Equivalents - 10.0% | |||
| JPMorgan U.S. Government Money Market | |||
| Fund - Institutional Class 4.45% (Cost | |||
| $2,902,323) (a) | 2,902,323 | 2,902,323 | |
| Total Investments in Securities (Cost $30,005,095) | 29,132,593 | ||
| Other Liabilities in Excess of Other Assets - (0.8%) | (233,947) | ||
| Net Assets - 100% | 28,898,646 | ||
| Net Asset Value Per Share - Investor Class | 9.65 | ||
(a) Rate presented represents the 30 day average yield at March 31, 2023.
The accompanying notes form an integral part of these financial statements.
46 2023 Annual Report
PARTNERS III OPPORTUNITY FUND
Schedule of Investments
March 31, 2023
| Common Stocks - 90.8% | |||
| % of Net | |||
| Financials | Assets | Shares | $ Value |
| Data Processing & Outsourced Services | 13.2 | ||
| Visa, Inc. - Class A | 90,000 | 20,291,400 | |
| Mastercard, Inc. - Class A | 55,000 | 19,987,550 | |
| Fidelity National Information Services, Inc. | 260,000 | 14,125,800 | |
| Multi-Sector Holdings | 10.1 | ||
| Berkshire Hathaway, Inc. - Class B(a) | 135,000 | 41,683,950 | |
| Property & Casualty Insurance | 4.9 | ||
| Markel Corp.(a) | 16,000 | 20,438,560 | |
| 28.2 | 116,527,260 | ||
| Communication Services | |||
| Interactive Media & Services | 12.7 | ||
| Alphabet, Inc. - Class C(a) (b) | 280,000 | 29,120,000 | |
| Meta Platforms, Inc. - Class A(a) | 110,000 | 23,313,400 | |
| Cable & Satellite | 9.6 | ||
| Liberty Broadband Corp.(a) (b) | |||
| Class C | 180,000 | 14,706,000 | |
| Class A | 90,000 | 7,390,800 | |
| Liberty Media Corp-Liberty SiriusXM(a) | |||
| Class C(b) | 500,000 | 13,995,000 | |
| Class A | 120,000 | 3,370,800 | |
| Alternative Carriers | 3.9 | ||
| Liberty Global PLC - Class C(a) (c) | 800,000 | 16,304,000 | |
| 26.2 | 108,200,000 | ||
| Information Technology | |||
| Application Software | 6.9 | ||
| CoreCard Corp.† (a) | 505,000 | 15,215,650 | |
| Roper Technologies, Inc. | 30,000 | 13,220,700 | |
| Systems Software | 3.8 | ||
| Microsoft Corp. | 55,000 | 15,856,500 | |
| Semiconductors | 3.4 | ||
| Texas Instruments, Inc. (b) | 75,000 | 13,950,750 | |
| Data Processing & Outsourced Services | 1.1 | ||
| Black Knight, Inc.(a) | 80,000 | 4,604,800 | |
| 15.2 | 62,848,400 | ||
| Consumer Discretionary | |||
| Internet & Direct Marketing Retail | 5.0 | ||
| Amazon.com, Inc.(a) (b) | 200,000 | 20,658,000 | |
| Automotive Retail | 4.1 | ||
| CarMax, Inc.(a) | 260,000 | 16,712,800 | |
| 9.1 | 37,370,800 | ||
| Health Care | |||
| Health Care Services | 3.3 | ||
| Laboratory Corp. of America Holdings | 60,000 | 13,765,200 | |
| Health Care Equipment | 2.8 | ||
| Danaher Corp. | 45,000 | 11,341,800 | |
| 6.1 | 25,107,000 | ||
| Industrials | |||
| Research & Consulting Services | 3.0 | ||
| CoStar Group, Inc.(a) | 180,000 | 12,393,000 | |
| Materials | |||
| Specialty Chemicals | 3.0 | ||
| Perimeter Solutions SA(a) (c) | 1,500,000 | 12,120,000 | |
| Total Common Stocks (Cost $227,057,346) | 374,566,460 | ||
| Non-Convertible Preferred Stocks - 1.4% | |||
| Qurate Retail, Inc. 8.00% 3/15/31 (Cost $17,921,852) (b) | 200,000 | 5,862,000 | |
| Warrants - 0.0% | |||
| Perimeter Solutions SA Expires 11/8/24 (Cost $15,000) (c) (d) | 1,500,000 | 0 | |
| Cash Equivalents - 8.1% | |||
| $ Principal | |||
| Amount | $ Value | ||
| U.S. Treasury Bills, 4.07% to 4.98%, 4/25/23 | |||
| to 7/25/23(e) | 24,000,000 | 23,755,472 | |
| JPMorgan U.S. Government Money Market | |||
| Fund - Institutional Class 4.45%(f) | 9,856,416 | 9,856,416 | |
| Total Cash Equivalents (Cost $33,604,126) | 33,611,888 | ||
| Total Investments in Securities (Cost $278,598,324) | 414,040,348 | ||
| Due from Broker - 3.7% | 15,458,409 | ||
| Securities Sold Short - (4.0)% | (16,375,600) | ||
| Other Assets Less Other Liabilities - (0.0%) | (345,366) | ||
| Net Assets - 100% | 412,777,791 | ||
| Net Asset Value Per Share - Investor Class | 10.55 | ||
| Net Asset Value Per Share - Institutional Class | 11.46 | ||
| Securities Sold Short - (4.0)% | Shares | $ Value | |
| SPDR S&P 500 ETF Trust | 40,000 | (16,375,600) | |
| Total Securities Sold Short (proceeds $8,412,580) | (16,375,600) | ||
| † | Non-controlled affiliate. |
| (a) | Non-income producing. |
| (b) | Fully or partially pledged as collateral on securities sold short. |
| (c) | Foreign domiciled entity. |
| (d) | This security is classified as Level 3 within the fair value hierarchy. |
| (e) | Interest rates presented represent the effective yield at March 31, 2023. |
| (f) | Rate presented represents the 30 day average yield at March 31, 2023. |
The accompanying notes form an integral part of these financial statements.
2023 Annual Report 47
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48 2023 Annual Report
PARTNERS VALUE FUND
Schedule of Investments
March 31, 2023
| Common Stocks - 95.3% | |||
| % of Net | |||
| Communication Services | Assets | Shares | $ Value |
| Cable & Satellite | 11.1 | ||
| Liberty Broadband Corp.(a) | |||
| Class C | 200,000 | 16,340,000 | |
| Class A | 100,000 | 8,212,000 | |
| Liberty Media Corp-Liberty SiriusXM(a) | |||
| Class C | 575,000 | 16,094,250 | |
| Class A | 190,000 | 5,337,100 | |
| Liberty Latin America Ltd. - Class C(a) (b) | 1,425,000 | 11,770,500 | |
| Interactive Media & Services | 8.9 | ||
| Alphabet, Inc. - Class C(a) | 276,000 | 28,704,000 | |
| Meta Platforms, Inc. - Class A(a) | 85,000 | 18,014,900 | |
| Alternative Carriers | 2.7 | ||
| Liberty Global PLC - Class C(a) (b) | 695,000 | 14,164,100 | |
| Integrated Telecommunication Services | 1.6 | ||
| LICT Corp.(a) | 446 | 8,384,800 | |
| Movies & Entertainment | 0.8 | ||
| Live Nation Entertainment, Inc.(a) | 60,000 | 4,200,000 | |
| 25.1 | 131,221,650 | ||
| Financials | |||
| Data Processing & Outsourced Services | 7.5 | ||
| Visa, Inc. - Class A | 92,500 | 20,855,050 | |
| Mastercard, Inc. - Class A | 50,000 | 18,170,500 | |
| Multi-Sector Holdings | 5.9 | ||
| Berkshire Hathaway, Inc. - Class B(a) | 100,000 | 30,877,000 | |
| Property & Casualty Insurance | 3.2 | ||
| Markel Corp.(a) | 13,300 | 16,989,553 | |
| Insurance Brokers | 2.9 | ||
| Aon plc - Class A(b) | 47,500 | 14,976,275 | |
| 19.5 | 101,868,378 | ||
| Information Technology | |||
| Application Software | 4.3 | ||
| Guidewire Software, Inc.(a) | 212,000 | 17,394,600 | |
| ACI Worldwide, Inc.(a) | 181,306 | 4,891,636 | |
| IT Consulting & Other Services | 3.1 | ||
| Gartner, Inc.(a) | 49,200 | 16,027,884 | |
| Semiconductors | 3.0 | ||
| Texas Instruments, Inc. | 85,000 | 15,810,850 | |
| Data Processing & Outsourced Services | 2.5 | ||
| Black Knight, Inc.(a) | 227,500 | 13,094,900 | |
| Electronic Components | 1.3 | ||
| Dolby Laboratories, Inc. - Class A | 79,500 | 6,790,890 | |
| 14.2 | 74,010,760 | ||
| Industrials | |||
| Research & Consulting Services | 5.3 | ||
| CoStar Group, Inc.(a) | 405,000 | 27,884,250 | |
| Aerospace & Defense | 4.7 | ||
| HEICO Corp. - Class A | 180,000 | 24,462,000 | |
| Industrial Machinery | 3.2 | ||
| IDEX Corp. | 51,500 | 11,898,045 | |
| Ingersoll Rand, Inc. | 80,000 | 4,654,400 | |
| 13.2 | 68,898,695 | ||
| Materials | |||
| Construction Materials | 7.1 | ||
| Martin Marietta Materials, Inc. | 54,000 | 19,173,240 | |
| Vulcan Materials Co. | 105,000 | 18,013,800 | |
| Specialty Chemicals | 1.9 | ||
| Axalta Coating Systems Ltd.(a) (b) | 159,715 | 4,837,767 | |
| Perimeter Solutions SA(a) (b) | 585,739 | 4,732,771 | |
| 9.0 | 46,757,578 | ||
| Consumer Discretionary | |||
| Distributors | 4.4 | ||
| LKQ Corp. | 405,000 | 22,987,800 | |
| Automotive Retail | 3.2 | ||
| CarMax, Inc.(a) | 260,000 | 16,712,800 | |
| 7.6 | 39,700,600 | ||
| Health Care | |||
| Health Care Services | 3.9 | ||
| Laboratory Corp. of America Holdings | 88,000 | 20,188,960 | |
| Health Care Equipment | 2.8 | ||
| Danaher Corp. | 57,500 | 14,492,300 | |
| 6.7 | 34,681,260 | ||
| Total Common Stocks (Cost $268,279,749) | 497,138,921 | ||
| Warrants - 0.0% | |||
| Perimeter Solutions SA Expires 11/8/24 (Cost $5,000) (b) (c) | 500,000 | 0 | |
| Cash Equivalents - 4.9% | |||
| $ Principal | |||
| Amount | $ Value | ||
| U.S. Treasury Bills 4.98% 7/25/23 (d) | 12,000,000 | 11,824,238 | |
| JPMorgan U.S. Government Money Market | |||
| Fund - Institutional Class 4.45%(e) | 14,012,267 | 14,012,267 | |
| Total Cash Equivalents (Cost $25,832,733) | 25,836,505 | ||
| Total Investments in Securities (Cost $294,117,482) | 522,975,426 | ||
The accompanying notes form an integral part of these financial statements.
2023 Annual Report 49
| $ Principal | |||
| Amount | $ Value | ||
| Cash - 0.0% | 24,822 | ||
| Other Liabilities in Excess of Other Assets - (0.2%) | (1,148,934) | ||
| Net Assets - 100% | 521,851,314 | ||
| Net Asset Value Per Share - Investor Class | 26.44 | ||
| Net Asset Value Per Share - Institutional Class | 27.16 | ||
| (a) | Non-income producing. |
| (b) | Foreign domiciled entity. |
| (c) | This security is classified as Level 3 within the fair value hierarchy. |
| (d) | Interest rates presented represent the effective yield at March 31, 2023. |
| (e) | Rate presented represents the 30 day average yield at March 31, 2023. |
The accompanying notes form an integral part of these financial statements.
50 2023 Annual Report
SHORT DURATION INCOME FUND
Schedule of Investments
March 31, 2023
| Corporate Bonds - 13.0% | |||
| $ Principal | |||
| Amount | $ Value | ||
| Abercrombie & Fitch Management Co. | |||
| 8.75% 7/15/25^ (a) | 5,525,000 | 5,572,673 | |
| American Airlines Group, Inc. | |||
| 3.75% 3/1/25^ (a) | 750,000 | 688,935 | |
| American Airlines, Inc./AAdvantage Loyalty IP Ltd. | |||
| 5.5% 4/20/26(a) | 2,075,000 | 2,044,584 | |
| Ares Capital Corp. (ARES) | |||
| 4.2% 6/10/24 | 3,000,000 | 2,901,040 | |
| Ashtead Capital, Inc. | |||
| 1.5% 8/12/26(a) | 1,000,000 | 877,579 | |
| 4.38% 8/15/27(a) | 3,000,000 | 2,876,795 | |
| Bath & Body Works, Inc. | |||
| 9.38% 7/1/25^ (a) | 1,000,000 | 1,069,331 | |
| Boardwalk Pipelines LP | |||
| 4.95% 12/15/24 | 2,580,000 | 2,565,586 | |
| Boeing Co. (The) | |||
| 4.51% 5/1/23 | 1,000,000 | 999,667 | |
| Boston Properties LP | |||
| 3.13% 9/1/23 | 9,560,000 | 9,401,876 | |
| Brunswick Corp. | |||
| 0.85% 8/18/24 | 500,000 | 467,229 | |
| Cantor Fitzgerald LP | |||
| 4.5% 4/14/27(a) | 1,500,000 | 1,401,041 | |
| Carlisle Cos., Inc. | |||
| 0.55% 9/1/23 | 2,000,000 | 1,956,618 | |
| 3.5% 12/1/24 | 500,000 | 489,060 | |
| Cinemark USA, Inc. | |||
| 5.88% 3/15/26^ (a) | 2,199,000 | 2,076,582 | |
| Delta Air Lines, Inc./SkyMiles IP Ltd. | |||
| 4.5% 10/20/25(a) | 2,750,000 | 2,705,556 | |
| Devon Energy Corp. | |||
| 5.25% 10/15/27 | 390,000 | 390,255 | |
| Drax Finco PLC | |||
| 6.63% 11/1/25(a) (b) | 3,500,000 | 3,448,690 | |
| Energy Transfer LP | |||
| 3.9% 5/15/24 | 1,852,000 | 1,813,689 | |
| EPR Properties (EPR) | |||
| 4.75% 12/15/26 | 4,869,000 | 4,248,169 | |
| Expedia Group, Inc. (EXPE) | |||
| 6.25% 5/1/25(a) | 1,672,000 | 1,693,928 | |
| Fidelity National Information Services, Inc. (FIS) | |||
| 4.5% 7/15/25 | 2,000,000 | 1,978,865 | |
| FS KKR Capital Corp. | |||
| 1.65% 10/12/24 | 6,000,000 | 5,522,255 | |
| Hercules Capital, Inc. | |||
| 2.63% 9/16/26 | 1,500,000 | 1,271,176 | |
| Highwoods Realty LP | |||
| 3.88% 3/1/27 | 750,000 | 680,262 | |
| JPMorgan Chase & Co. | |||
| 3.38% 5/1/23 | 2,456,000 | 2,451,181 | |
| 3.85% 6/14/25 Floating Rate (SOFR + 98) | 800,000 | 784,897 | |
| 0.77% 8/9/25 Floating Rate (SOFR + 49) | 1,000,000 | 939,503 | |
| Kite Realty Group Trust (KRG) | |||
| 4% 3/15/25 | 2,083,000 | 1,982,151 | |
| L Brands, Inc. | |||
| 6.69% 1/15/27 | 945,000 | 943,573 | |
| Lennar Corp. | |||
| 4.88% 12/15/23 | 1,951,000 | 1,940,321 | |
| LXP Industrial Trust (LXP) | |||
| 4.4% 6/15/24 | 2,000,000 | 1,958,351 | |
| Masonite International Corp. | |||
| 5.38% 2/1/28(a) | 400,000 | 382,568 | |
| Mileage Plus Holdings LLC/Mileage Plus Intellectual | |||
| Property Assets Ltd. | |||
| 6.5% 6/20/27(a) | 1,943,929 | 1,939,584 | |
| MPLX LP | |||
| 4.88% 6/1/25 | 1,961,000 | 1,947,703 | |
| Onemain Finance Corp. | |||
| 6.13% 3/15/24 | 2,298,000 | 2,240,757 | |
| PDC Energy, Inc. | |||
| 6.13% 9/15/24 | 1,463,000 | 1,458,611 | |
| 5.75% 5/15/26 | 3,000,000 | 2,924,475 | |
| Starwood Property Trust, Inc. | |||
| 5.5% 11/1/23(a) | 730,000 | 732,172 | |
| 4.75% 3/15/25 | 1,765,000 | 1,662,118 | |
| Synchrony Bank (SYF) | |||
| 5.4% 8/22/25 | 1,000,000 | 938,804 | |
| Take Two Interactive Software, Inc. | |||
| 3.3% 3/28/24 | 1,000,000 | 978,400 | |
| U.S. Bancorp | |||
| 2.4% 7/30/24 | 500,000 | 480,930 | |
| VICI Properties LP/VICI Note Co., Inc. | |||
| 3.5% 2/15/25(a) | 6,323,000 | 6,000,297 | |
| Vontier Corp. (VON) | |||
| 1.8% 4/1/26 | 1,004,000 | 889,971 | |
| Vulcan Materials Co. (VMC) | |||
| 5.8% 3/1/26 | 2,750,000 | 2,776,527 | |
| Walgreens Boots Alliance, Inc. | |||
| 0.95% 11/17/23 | 5,000,000 | 4,866,389 | |
| Total Corporate Bonds (Cost $103,636,326) | 100,360,724 | ||
| Corporate Convertible Bonds - 1.2% | |||
| Redwood Trust, Inc. | |||
| 5.63% 7/15/24 | 6,300,000 | 5,989,902 | |
| 5.75% 10/1/25 | 3,000,000 | 2,722,435 | |
| Total Corporate Convertible Bonds (Cost $9,287,676) | 8,712,337 | ||
| Asset-Backed Securities - 41.1% | |||
| Automobile | |||
| ACC Auto Trust (AUTOC) | |||
| Series 2021-A Class A – 1.08% 4/15/27(a) | 457,135 | 453,592 | |
| ACM Auto Trust (ACM) | |||
| Series 2023-1A Class A – 6.61% 1/22/30(a) | 3,955,172 | 3,950,725 | |
| Series 2023-1A Class B – 7.26% 1/22/30(a) | 2,000,000 | 1,992,448 | |
| American Credit Acceptance Receivables Trust (ACAR) | |||
| Series 2020-4 Class D – 1.77% 12/14/26(a) | 1,000,000 | 962,292 | |
| AmeriCredit Automobile Receivables Trust (AMCAR) | |||
| Series 2020-2 Class D – 2.13% 3/18/26 | 1,320,000 | 1,242,876 | |
| Series 2020-3 Class D – 1.49% 9/18/26 | 3,000,000 | 2,757,958 | |
| ARI Fleet Lease Trust (ARIFL) | |||
| Series 2022-A Class A2 – 3.12% 1/15/31(a) | 1,126,990 | 1,108,964 | |
| Arivo Acceptance Auto Loan Receivables Trust (ARIVO) | |||
| Series 2021-1A Class A – 1.19% 1/15/27(a) | 198,584 | 192,505 | |
| Series 2022-1A Class A – 3.93% 5/15/28(a) | 3,603,416 | 3,506,686 | |
The accompanying notes form an integral part of these financial statements.
2023 Annual Report 51
| $ Principal | ||
| Amount | $ Value | |
| Avid Automobile Receivables Trust (AVID) | ||
| Series 2023-1 Class A – 6.63% 7/15/26(a) | 2,875,606 | 2,872,792 |
| CFMT LLC (CFMT) | ||
| Series 2021-AL1 Class B – 1.39% 9/22/31(a) | 3,135,012 | 3,011,804 |
| Chesapeake Funding II LLC (CFII) | ||
| Series 2021-1A Class A1 – 0.47% 4/15/33(a) | 1,192,300 | 1,167,264 |
| Enterprise Fleet Financing LLC (EFF) | ||
| Series 2020-1 Class A – 1.78% 12/22/25(a) | 165,783 | 165,256 |
| Series 2023-1 Class A2 – 5.51% 1/22/29(a) | 750,000 | 752,015 |
| Exeter Automobile Receivables Trust (EART) | ||
| Series 2020-1A Class D – 2.73% 12/15/25(a) | 1,960,544 | 1,921,721 |
| Series 2020-3A Class D – 1.73% 7/15/26 | 1,440,000 | 1,398,965 |
| Series 2021-1A Class D – 1.08% 11/16/26 | 1,350,000 | 1,282,798 |
| First Help Financial Trust (FHF) | ||
| Series 2022-1A Class A – 4.43% 1/18/28(a) | 3,372,517 | 3,294,039 |
| Series 2022-2A Class A – 6.14% 12/15/27(a) | 822,760 | 814,692 |
| First Investors Auto Owner Trust (FIAOT) | ||
| Series 2019-1A Class D – 3.55% 4/15/25(a) | 564,324 | 563,575 |
| Series 2022-1A Class A – 2.03% 1/15/27(a) | 1,680,464 | 1,633,485 |
| Flagship Credit Auto Trust (FCAT) | ||
| Series 2023-1 Class A1 – 4.92% 2/15/24(a) | 828,055 | 827,745 |
| Foursight Capital Automobile Receivables Trust (FCRT) | ||
| Series 2022-1 Class A2 – 1.15% 9/15/25(a) | 711,669 | 702,467 |
| Series 2022-2 Class A2 – 4.49% 3/16/26(a) | 5,346,052 | 5,305,064 |
| Series 2023-1 Class A2 – 5.43% 10/15/26(a) | 3,000,000 | 2,987,447 |
| GLS Auto Receivables Issuer Trust (GCAR) | ||
| Series 2020-2A Class B – 3.16% 6/16/25(a) | 77,908 | 77,683 |
| Series 2021-4A Class A – 0.84% 7/15/25(a) | 1,506,976 | 1,489,784 |
| Series 2022-2A Class A2 – 3.55% 1/15/26(a) | 2,455,046 | 2,429,377 |
| JPMorgan Chase Auto Credit Linked Note (CACLN) | ||
| Series 2020-1 Class A5 – 0.99% 1/25/28(a) | 205,245 | 203,035 |
| Series 2020-2 Class A2 – 0.84% 2/25/28(a) | 327,154 | 320,640 |
| Series 2021-1 Class A2 – 0.88% 9/25/28(a) | 1,839,339 | 1,781,499 |
| Series 2021-2 Class A4 – 0.89% 12/26/28(a) | 1,587,537 | 1,530,682 |
| LAD Auto Receivables Trust (LADAR) | ||
| Series 2021-1A Class A – 1.3% 8/17/26(a) | 3,276,098 | 3,180,120 |
| Series 2022-1A Class A – 5.21% 6/15/27(a) | 4,204,551 | 4,181,338 |
| Series 2023-1A Class A1 – 4.93% 2/15/24(a) | 922,287 | 922,039 |
| Series 2023-1A Class A2 – 5.68% 10/15/26(a) | 3,250,000 | 3,245,979 |
| Series 2023-1A Class B – 5.59% 8/16/27(a) | 2,500,000 | 2,498,994 |
| Lendbuzz Securitization Trust (LBST) | ||
| Series 2023-1A Class A2 – 6.92% 8/15/28(a) | 7,000,000 | 7,012,086 |
| OneMain Direct Auto Receivables Trust (ODART) | ||
| Series 2021-1A Class A – 0.87% 7/14/28(a) | 2,500,000 | 2,347,811 |
| Series 2022-1A Class C – 1.42% 7/14/28(a) | 4,100,000 | 3,667,298 |
| Prestige Auto Receivables Trust (PART) | ||
| Series 2022-1A Class A1 – 3.99% 10/16/23(a) | 28,745 | 28,730 |
| Series 2022-1A Class B – 6.55% 7/17/28(a) | 3,000,000 | 3,044,080 |
| Santander Bank NA (SBCLN) | ||
| Series 2021-1A Class B – 1.83% 12/15/31(a) | 1,438,593 | 1,381,450 |
| Santander Drive Auto Receivables Trust (SDART) | ||
| Series 2020-2 Class D – 2.22% 9/15/26 | 5,745,000 | 5,618,717 |
| Series 2020-3 Class C – 1.12% 1/15/26 | 187,064 | 186,200 |
| Series 2020-4 Class C – 1.01% 1/15/26 | 375,391 | 372,380 |
| Series 2022-6 Class A2 – 4.37% 5/15/25 | 1,771,616 | 1,767,008 |
| Securitized Term Auto Loan Receivables Trust (SSTRT) | ||
| Series 2019-CRTA Class B – 2.45% 3/25/26(a) (b) | 210,892 | 210,200 |
| Series 2019-CRTA Class C – 2.85% 3/25/26(a) (b) | 158,169 | 157,124 |
| Tricolor Auto Securitization Trust (TCAST) | ||
| Series 2023-1A Class A – 6.48% 8/17/26(a) | 2,910,378 | 2,909,984 |
| United Auto Credit Securitization Trust (UACST) | ||
| Series 2023-1 Class A – 5.57% 7/10/25(a) | 819,800 | 819,048 |
| Westlake Automobile Receivables Trust (WLAKE) | ||
| Series 2020-3A Class D – 1.65% 2/17/26(a) | 1,650,000 | 1,570,597 |
| Series 2021-1A Class C – 0.95% 3/16/26(a) | 3,885,000 | 3,753,107 |
| Series 2022-1A Class A2A – 1.97% 12/16/24(a) | 2,610,363 | 2,591,007 |
| 104,167,172 | ||
| Collateralized Loan Obligations | ||
| ABPCI Direct Lending Fund CLO LP (ABPCI) | ||
| Series 2016-1A Class A1A2 – 6.51% 7/20/33 Floating | ||
| Rate (Qtrly LIBOR + 170)(a) (b) (c) | 2,000,000 | 1,949,714 |
| Series 2020-10A Class A – 6.76% 1/20/32 Floating Rate | ||
| (Qtrly LIBOR + 195)(a) (b) (c) | 6,500,000 | 6,443,606 |
| Audax Senior Debt CLO LLC (AUDAX) | ||
| Series 2021-6A Class A1 – 6.31% 10/20/33 Floating | ||
| Rate (Qtrly LIBOR + 150)(a) (c) | 6,000,000 | 5,797,224 |
| AUF Funding LLC (AUF) | ||
| Series 2022-1A Class B1 – 8.31% 1/20/31 Floating Rate | ||
| (TSFR3M + 375)(a) (c) | 2,500,000 | 2,491,205 |
| BCRED MML CLO LLC (BXCMM) | ||
| Series 2022-1A Class A1 – 6.29% 4/20/35 Floating Rate | ||
| (Qtrly SOFR + 165)(a) (b) (c) | 3,000,000 | 2,900,097 |
| BlackRock Elbert CLO V LLC (ELB) | ||
| Series 5A Class AR – 6.88% 6/15/34 Floating Rate | ||
| (TSFR3M + 185)(a) (b) (c) | 1,977,592 | 1,935,821 |
| Blackrock Rainier CLO VI Ltd. (BLKMM) | ||
| Series 2021-6A Class A – 6.51% 4/20/33 Floating Rate | ||
| (Qtrly LIBOR + 170)(a) (b) (c) | 5,500,000 | 5,339,131 |
| Brightwood Capital MM CLO Ltd. (BWCAP) | ||
| Series 2020-1A Class A1R – 7.12% 1/15/31 Floating Rate | ||
| (TSFR3M + 280)(a) (b) (c) | 2,500,000 | 2,496,375 |
| Capital Four US CLO II Ltd. (C4US) | ||
| Series 2022-1A Class A1 – 5.81% 10/20/30 Floating | ||
| Rate (TSFR3M + 214)(a) (b) (c) | 6,500,000 | 6,492,447 |
| Cerberus Loan Funding LP (CERB) | ||
| Series 2020-1A Class A – 6.64% 10/15/31 Floating Rate | ||
| (Qtrly LIBOR + 185)(a) (b) (c) | 4,193,172 | 4,171,682 |
| Series 2020-2A Class A – 6.69% 10/15/32 Floating Rate | ||
| (Qtrly LIBOR + 190)(a) (b) (c) | 4,500,000 | 4,454,626 |
| Series 2021-2A Class A – 6.41% 4/22/33 Floating Rate | ||
| (Qtrly LIBOR + 162)(a) (b) (c) | 3,000,000 | 2,933,181 |
| Series 2021-6A Class A – 6.19% 11/22/33 Floating Rate | ||
| (Qtrly LIBOR + 140)(a) (b) (c) | 773,475 | 769,381 |
| Churchill Middle Market CLO Ltd. (CHMML) | ||
| Series 2021-1A Class A1 – 6.32% 10/24/33 Floating | ||
| Rate (Qtrly LIBOR + 150)(a) (b) (c) | 2,750,000 | 2,664,112 |
| Deerpath Capital CLO Ltd. (DPATH) | ||
| Series 2021-2A Class A1 – 6.39% 1/15/34 Floating Rate | ||
| (Qtrly LIBOR + 160)(a) (b) (c) | 4,000,000 | 3,886,364 |
| Series 2023-1A Class A1 – 7.54% 4/15/35 Floating Rate | ||
| (TSFR3M + 280)(a) (b) (c) | 3,000,000 | 2,993,481 |
| Fortress Credit Opportunities CLO Ltd. (FCO) | ||
| Series 2017-9A Class A1TR – 6.34% 10/15/33 Floating | ||
| Rate (Qtrly LIBOR + 155)(a) (b) (c) | 1,500,000 | 1,452,115 |
| Series 2021-15A Class A2 – 6.37% 4/25/33 Floating | ||
| Rate (Qtrly LIBOR + 155)(a) (b) (c) | 3,500,000 | 3,402,042 |
| Golub Capital Partners CLO Ltd. (GOCAP) | ||
| Series 2016-31A Class CR – 7.71% 8/5/30 Floating Rate | ||
| (Qtrly LIBOR + 290)(a) (b) (c) | 1,000,000 | 963,811 |
| Series 2021-54A Class A2 – 6.34% 8/5/33 Floating | ||
| Rate (Qtrly LIBOR + 153)(a) (b) (c) | 4,500,000 | 4,378,712 |
The accompanying notes form an integral part of these financial statements.
52 2023 Annual Report
SHORT DURATION INCOME FUND (CONTINUED)
Schedule of Investments
March 31, 2023
| $ Principal | ||
| Amount | $ Value | |
| Series 2021-54A Class B – 6.66% 8/5/33 Floating Rate | ||
| (Qtrly LIBOR + 185)(a) (b) (c) | 2,500,000 | 2,341,892 |
| Golub Capital Partners Short Duration (GSHOR) | ||
| Series 2022-1A Class B1 – 8.16% 10/25/31 Floating Rate | ||
| (TSFR3M + 350)(a) (c) | 1,000,000 | 998,693 |
| Ivy Hill Middle Market Credit Fund IX Ltd. (IVYH) | ||
| Series 9A Class A1TR – 6.27% 4/23/34 Floating Rate | ||
| (Qtrly SOFR + 162)(a) (b) (c) | 3,500,000 | 3,376,321 |
| KKR Lending Partners III CLO LLC (KKRLP) | ||
| Series 2021-1A Class B – 6.71% 10/20/30 Floating Rate | ||
| (Qtrly LIBOR + 190)(a) (c) | 2,000,000 | 1,920,446 |
| KKR Static CLO I Ltd. (KKRS) | ||
| Series 2022-1A Class B – 7.24% 7/20/31 Floating Rate | ||
| (TSFR3M + 260)(a) (b) (c) | 1,250,000 | 1,245,299 |
| Maranon Loan Funding Ltd. (MRNON) | ||
| Series 2021-2RA Class A1R – 6.48% 7/15/33 Floating | ||
| Rate (Qtrly LIBOR + 169)(a) (b) (c) | 5,000,000 | 4,907,940 |
| Monroe Capital Funding CLO Ltd. (MCF) | ||
| Series 2023-1A Class A – 7.23% 4/15/35 Floating Rate | ||
| (TSFR3M + 240)(a) (c) | 3,000,000 | 2,993,739 |
| Monroe Capital MML CLO XII Ltd. (MCMML) | ||
| Series 2021-2A Class A1 – 6.64% 9/14/33 Floating Rate | ||
| (Qtrly LIBOR + 150)(a) (b) (c) | 7,500,000 | 7,257,863 |
| Owl Rock CLO VIII LLC (OR) | ||
| Series 2022-8A Class AT – 6.63% 11/20/34 Floating | ||
| Rate (TSFR3M + 250)(a) (c) | 2,000,000 | 1,983,172 |
| Palmer Square Loan Funding Ltd. (PSTAT) | ||
| Series 2021-1A Class A2 – 6.06% 4/20/29 Floating Rate | ||
| (Qtrly LIBOR + 125)(a) (b) (c) | 3,000,000 | 2,941,854 |
| Twin Brook CLO (TWBRK) | ||
| Series 2021-1A Class A – 6.34% 1/20/34 Floating Rate | ||
| (US0003M + 153)(a) (c) | 1,200,000 | 1,150,475 |
| Series 2023-1A Class B – 7.99% 4/20/35 Floating Rate | ||
| (TSFR3M + 320)(a) (c) | 3,000,000 | 2,991,684 |
| 102,024,505 | ||
| Consumer & Specialty Finance | ||
| ACHV ABS Trust (ACHV) | ||
| Series 2023-1PL Class A – 6.42% 3/18/30(a) | 1,196,902 | 1,195,829 |
| Affirm Asset Securitization Trust (AFFRM) | ||
| Series 2021-B Class A – 1.03% 8/17/26(a) | 2,000,000 | 1,912,777 |
| Series 2022-Z1 Class A – 4.55% 6/15/27(a) | 2,352,807 | 2,318,068 |
| Bankers Healthcare Group Securitization Trust (BHG) | ||
| Series 2023-A Class A – 5.55% 4/17/36(a) | 4,000,000 | 3,971,232 |
| Series 2020-A Class A – 2.56% 9/17/31(a) | 1,464,553 | 1,433,138 |
| Series 2021-A Class A – 1.42% 11/17/33(a) | 492,173 | 460,828 |
| Series 2022-B Class A – 3.75% 6/18/35(a) | 879,047 | 864,873 |
| Series 2022-B Class B – 4.84% 6/18/35(a) | 1,498,342 | 1,444,680 |
| Series 2022-C Class A – 5.32% 10/17/35(a) | 1,590,248 | 1,577,324 |
| Conn's Receivables Funding LLC (CONN) | ||
| Series 2022-A Class A – 5.87% 12/15/26(a) | 914,340 | 913,751 |
| Foundation Finance Trust (FFIN) | ||
| Series 2019-1A Class A – 3.86% 11/15/34(a) | 583,145 | 572,729 |
| Series 2021-2A Class A – 2.19% 1/15/42(a) | 1,734,497 | 1,597,032 |
| FREED ABS Trust (FREED) | ||
| Series 2022-1FP Class B – 1.91% 3/19/29(a) | 3,091,968 | 3,038,081 |
| Series 2022-3FP Class B – 5.79% 8/20/29(a) | 3,500,000 | 3,477,777 |
| Series 2022-4FP Class B – 7.58% 12/18/29(a) | 2,000,000 | 2,004,135 |
| Hilton Grand Vacations Trust (HGVT) | ||
| Series 2020-AA Class A – 2.74% 2/25/39(a) | 203,290 | 191,828 |
| Lendingpoint Asset Securitization Trust (LPST) | ||
| Series 2022-B Class A – 4.77% 10/15/29(a) | 569,788 | 559,333 |
| Series 2022-C Class A – 6.56% 2/15/30(a) | 4,776,118 | 4,761,457 |
| LP LMS Asset Securitization Trust (LPMS) | ||
| Series 2023-1A Class A – 8.18% 10/17/33(a) | 2,000,000 | 1,995,078 |
| Marlette Funding Trust (MFT) | ||
| Series 2023-1A Class A – 6.07% 4/15/33(a) | 4,000,000 | 3,999,098 |
| Series 2021-2A Class B – 1.06% 9/15/31(a) | 1,470,462 | 1,440,444 |
| Series 2021-3A Class A – 0.65% 12/15/31(a) | 228,895 | 227,134 |
| Series 2022-1A Class A – 1.36% 4/15/32(a) | 1,492,718 | 1,476,244 |
| Series 2022-3A Class A – 5.18% 11/15/32(a) | 2,341,595 | 2,324,770 |
| Octane Receivables Trust (OCTL) | ||
| Series 2020-1A Class A2 – 1.71% 2/20/25(a) | 625,674 | 620,987 |
| Series 2021-1A Class A5 – 0.93% 3/22/27(a) | 607,455 | 587,822 |
| Series 2021-2A Class A – 1.21% 9/20/28(a) | 1,287,892 | 1,237,021 |
| Series 2022-1A Class A2 – 4.18% 3/20/28(a) | 3,521,712 | 3,462,987 |
| Series 2022-2A Class A – 5.11% 2/22/28(a) | 1,659,351 | 1,646,402 |
| Series 2023-1A Class A – 5.87% 5/21/29(a) | 1,347,970 | 1,351,718 |
| Pagaya AI Debt Selection Trust (PAID) | ||
| Series 2021-1 Class A – 1.18% 11/15/27(a) | 738,196 | 732,231 |
| Series 2021-3 Class A – 1.15% 5/15/29(a) | 374,214 | 367,593 |
| Series 2021-HG1 Class A – 1.22% 1/16/29(a) | 2,204,993 | 2,091,553 |
| Pagaya AI Debt Trust (PAID) | ||
| Series 2022-2 Class A – 4.97% 1/15/30(a) | 974,790 | 960,913 |
| Series 2022-3 Class A – 6.06% 3/15/30(a) | 3,378,718 | 3,358,779 |
| Series 2022-5 Class A – 8.1% 6/17/30(a) | 2,297,673 | 2,321,628 |
| Series 2023-1 Class A – 7.56% 7/15/30(a) | 2,000,000 | 2,001,596 |
| Sierra Timeshare Receivables Funding LLC (SRFC) | ||
| Series 2019-2A Class A – 2.59% 5/20/36(a) | 344,642 | 332,408 |
| Series 2019-2A Class B – 2.82% 5/20/36(a) | 43,080 | 41,307 |
| Series 2020-2A Class A – 1.33% 7/20/37(a) | 551,996 | 513,810 |
| SoFi Consumer Loan Program Trust (SOFI) | ||
| Series 2023-1S Class A – 5.81% 5/15/31(a) | 500,000 | 500,549 |
| Theorem Funding Trust (THRM) | ||
| Series 2021-1A Class A – 1.21% 12/15/27(a) | 787,604 | 778,198 |
| Series 2022-3A Class A – 7.6% 4/15/29(a) | 3,259,257 | 3,285,663 |
| Upstart Securitization Trust (UPST) | ||
| Series 2020-3 Class B – 3.01% 11/20/30(a) | 497,596 | 495,809 |
| Series 2021-1 Class B – 1.89% 3/20/31(a) | 1,515,050 | 1,496,053 |
| Series 2021-2 Class A – 0.91% 6/20/31(a) | 171,905 | 170,389 |
| Series 2021-3 Class A – 0.83% 7/20/31(a) | 371,208 | 365,242 |
| Series 2021-5 Class A – 1.31% 11/20/31(a) | 959,075 | 933,748 |
| Series 2023-1 Class A – 6.59% 2/20/33(a) | 1,250,000 | 1,245,515 |
| 74,657,561 | ||
| Equipment | ||
| Amur Equipment Finance Receivables IX LLC (AXIS) | ||
| Series 2021-1A Class B – 1.38% 2/22/27(a) | 1,000,000 | 944,218 |
| Amur Equipment Finance Receivables LLC (AXIS) | ||
| Series 2021-1A Class A2 – 0.75% 11/20/26(a) | 1,629,368 | 1,582,304 |
| Amur Equipment Finance Receivables XI LLC (AXIS) | ||
| Series 2022-2A Class A2 – 5.3% 6/21/28(a) | 2,100,000 | 2,092,317 |
| Dell Equipment Finance Trust (DEFT) | ||
| Series 2021-2 Class A2 – 0.53% 12/22/26(a) | 625,000 | 606,238 |
| Series 2022-1 Class A2 – 2.11% 8/23/27(a) | 1,446,063 | 1,432,617 |
| Dext ABS LLC (DEXT) | ||
| Series 2020-1 Class A – 1.46% 2/16/27(a) | 394,610 | 390,858 |
| Series 2021-1 Class A – 1.12% 2/15/28(a) | 2,125,084 | 2,044,423 |
| DLLST LLC (DLLST) | ||
| Series 2022-1A Class A2 – 2.79% 1/22/24(a) | 2,882,442 | 2,865,204 |
| HPEFS Equipment Trust (HPEFS) | ||
| Series 2023-1A Class A2 – 5.43% 8/20/25(a) | 2,500,000 | 2,499,718 |
The accompanying notes form an integral part of these financial statements.
2023 Annual Report 53
| $ Principal | ||
| Amount | $ Value | |
| MMAF Equipment Finance LLC (MMAF) | ||
| Series 2022-A Class A2 – 2.77% 2/13/25(a) | 2,780,743 | 2,738,511 |
| Series 2022-B Class A2 – 5.57% 9/9/25(a) | 2,750,000 | 2,751,470 |
| Series 2022-B Class A3 – 5.61% 7/10/28(a) | 4,250,000 | 4,325,081 |
| Pawnee Equipment Receivables Series LLC (PWNE) | ||
| Series 2020-1 Class A – 1.37% 11/17/25(a) | 239,894 | 238,003 |
| Series 2021-1 Class A2 – 1.1% 7/15/27(a) | 2,710,448 | 2,605,224 |
| Series 2022-1 Class A2 – 4.84% 2/15/28(a) | 3,626,242 | 3,607,522 |
| SCF Equipment Leasing LLC (SCFET) | ||
| Series 2022-2A Class A2 – 6.24% 7/20/28(a) | 2,394,834 | 2,392,888 |
| Series 2022-2A Class A3 – 6.5% 10/21/30(a) | 2,750,000 | 2,835,026 |
| 35,951,622 | ||
| Total Asset-Backed Securities (Cost $321,276,440) | 316,800,860 | |
| Commercial Mortgage-Backed Securities - 9.4% | ||
| Arbor Realty Commercial Real Estate Notes Ltd. (ARCLO) | ||
| Series 2019-FL2 Class AS – 6.39% 9/15/34 Floating | ||
| Rate (TSFR1M + 156)(a) (b) | 1,894,617 | 1,885,180 |
| Series 2019-FL2 Class C – 7.09% 9/15/34 Floating Rate | ||
| (TSFR1M + 226)(a) (b) | 3,000,000 | 2,930,856 |
| AREIT Trust (AREIT) | ||
| Series 2021-CRE5 Class A – 5.79% 11/17/38 Floating | ||
| Rate (Mthly LIBOR + 108)(a) | 4,279,948 | 4,195,376 |
| BDS Ltd. (BDS) | ||
| Series 2020-FL6 Class C – 6.92% 9/15/35 Floating | ||
| Rate (SOFR30A + 236)(a) (b) | 253,077 | 242,347 |
| BFLD Trust (BFLD) | ||
| Series 2020-OBRK Class A – 6.99% 11/15/28 Floating | ||
| Rate (Mthly LIBOR + 205)(a) | 2,625,000 | 2,601,966 |
| BPR Trust (BPR) | ||
| Series 2021-KEN Class A – 6.19% 2/15/29 Floating Rate | ||
| (Mthly LIBOR + 125)(a) | 3,000,000 | 2,932,290 |
| BRSP, Ltd. (BRSP) | ||
| Series 2021-FL1 Class A – 5.91% 8/19/38 Floating Rate | ||
| (US0001M + 115)(a) (b) | 2,500,000 | 2,422,340 |
| FS Rialto Issuer LLC (FSRI) | ||
| Series 2022-FL5 Class A – 6.99% 6/19/37 Floating Rate | ||
| (TSFR1M + 230)(a) (b) | 4,500,000 | 4,462,038 |
| Series 2022-FL7 Class A – 7.59% 10/19/39 Floating | ||
| Rate (TSFR1M + 290)(a) | 1,500,000 | 1,494,588 |
| GPMT Ltd. (GPMT) | ||
| Series 2021-FL3 Class A – 6.01% 7/16/35 Floating Rate | ||
| (Mthly LIBOR + 125)(a) (b) | 3,297,054 | 3,267,865 |
| HERA Commercial Mortgage, Ltd. (HCM) | ||
| Series 2021-FL1 Class A – 5.81% 2/18/38 Floating Rate | ||
| (US0001M + 105)(a) (b) | 3,893,120 | 3,704,530 |
| HGI CRE CLO Ltd. (HGI) | ||
| Series 2021-FL1 Class A4 – 5.78% 6/16/36 Floating | ||
| Rate (Mthly LIBOR + 105)(a) (b) | 3,740,323 | 3,628,652 |
| Series 2021-FL1 Class AS – 6.13% 6/16/36 Floating Rate | ||
| (Mthly LIBOR + 140)(a) (b) | 4,000,000 | 3,865,616 |
| Series 2021-FL2 Class A4 – 5.73% 9/17/36 Floating | ||
| Rate (Mthly LIBOR + 100)(a) (b) | 2,505,081 | 2,458,213 |
| Hilton USA Trust (HILT) | ||
| Series 2016-SFP Class E – 5.52% 11/5/35(a) | 4,300,000 | 3,863,948 |
| ILPT Commercial Mortgage Trust (ILPT) | ||
| Series 2022-LPF2 Class A – 7.07% 10/15/39 Floating | ||
| Rate (TSFR1M + 225)(a) | 1,000,000 | 999,694 |
| KREF Ltd. (KREF) | ||
| Series 2021-FL2 Class A4 – 5.78% 2/17/39 Floating | ||
| Rate (Mthly LIBOR + 107)(a) (b) | 4,500,000 | 4,381,366 |
| LoanCore Issuer Ltd. (LNCR) | ||
| Series 2018-CRE1 Class D – 7.63% 5/15/28 Floating | ||
| Rate (US0001M + 295)(a) (b) | 3,350,000 | 3,370,512 |
| Series 2021-CRE5 Class A – 5.98% 7/15/36 Floating | ||
| Rate (Mthly LIBOR + 130)(a) (b) | 5,000,000 | 4,899,740 |
| PFP Ltd. (PFP) | ||
| Series 2021-7 Class AS – 5.83% 4/14/38 Floating Rate | ||
| (Mthly LIBOR + 115)(a) (b) | 4,499,775 | 4,389,531 |
| Ready Capital Mortgage Financing LLC (RCMT) | ||
| Series 2020-FL4 Class A – 7% 2/25/35 Floating Rate | ||
| (Mthly LIBOR + 215)(a) | 1,581,443 | 1,576,817 |
| STWD Ltd. (STWD) | ||
| Series 2022-FL3 Class A – 5.91% 11/15/38 Floating Rate | ||
| (SOFR 30 Day Avg + 135)(a) (b) | 6,500,000 | 6,377,397 |
| VMC Finance LLC (VMC) | ||
| Series 2021-FL4 Class A – 5.86% 6/16/36 Floating Rate | ||
| (Mthly LIBOR + 110)(a) | 2,473,717 | 2,395,253 |
| Total Commercial Mortgage-Backed Securities (Cost $73,654,920) | 72,346,115 | |
| Mortgage-Backed Securities - 9.3% | ||
| Federal Home Loan Mortgage Corporation | ||
| Collateralized Mortgage Obligations | ||
| Series 3649 Class A – 4% 3/15/25 | 150,332 | 148,507 |
| Series 4107 Class LW – 1.75% 8/15/27 | 3,920,449 | 3,653,139 |
| Series 4281 Class AG – 2.5% 12/15/28 | 91,825 | 90,084 |
| Series 3003 Class LD – 5% 12/15/34 | 404,019 | 409,290 |
| Series 2952 Class PA – 5% 2/15/35 | 146,245 | 145,505 |
| Series 3620 Class PA – 4.5% 12/15/39 | 309,887 | 306,049 |
| Series 3842 Class PH – 4% 4/15/41 | 419,397 | 407,632 |
| Pass-Through Securities | ||
| Pool# G13300 – 4.5% 5/1/23 | 140 | 140 |
| Pool# G18296 – 4.5% 2/1/24 | 15,228 | 15,295 |
| Pool# G18306 – 4.5% 4/1/24 | 33,069 | 33,199 |
| Pool# G18308 – 4% 5/1/24 | 60,349 | 60,456 |
| Pool# J13949 – 3.5% 12/1/25 | 528,548 | 520,377 |
| Pool# E02804 – 3% 12/1/25 | 368,559 | 360,665 |
| Pool# J14649 – 3.5% 4/1/26 | 410,220 | 403,465 |
| Pool# E02948 – 3.5% 7/1/26 | 1,220,235 | 1,199,253 |
| Pool# J16663 – 3.5% 9/1/26 | 1,050,896 | 1,032,503 |
| Pool# E03033 – 3% 2/1/27 | 697,674 | 680,203 |
| Pool# ZS8692 – 2.5% 4/1/33 | 678,996 | 637,610 |
| Pool# G01818 – 5% 5/1/35 | 499,779 | 511,421 |
| 10,614,793 | ||
| Federal National Mortgage Association | ||
| Collateralized Mortgage Obligations | ||
| Series 2010-54 Class WA – 3.75% 6/25/25 | 4,045 | 4,025 |
| Pass-Through Securities | ||
| Pool# MA1502 – 2.5% 7/1/23 | 36,106 | 35,950 |
| Pool# 995960 – 5% 12/1/23 | 79 | 80 |
| Pool# AD0629 – 5% 2/1/24 | 61 | 62 |
| Pool# 930667 – 4.5% 3/1/24 | 24,461 | 24,514 |
| Pool# 995693 – 4.5% 4/1/24 | 6,318 | 6,327 |
The accompanying notes form an integral part of these financial statements.
54 2023 Annual Report
SHORT DURATION INCOME FUND (CONTINUED)
Schedule of Investments
March 31, 2023
| $ Principal | |||
| Amount | $ Value | ||
| Pool# MA0043 – 4% 4/1/24 | 85,653 | 85,700 | |
| Pool# 995692 – 4.5% 5/1/24 | 63,595 | 63,759 | |
| Pool# 931739 – 4% 8/1/24 | 19,550 | 19,563 | |
| Pool# AE0031 – 5% 6/1/25 | 10,530 | 10,612 | |
| Pool# AD7073 – 4% 6/1/25 | 77,764 | 77,371 | |
| Pool# AL0471 – 5.5% 7/1/25 | 44,089 | 44,013 | |
| Pool# 310139 – 3.5% 11/1/25 | 642,966 | 632,330 | |
| Pool# AB1769 – 3% 11/1/25 | 268,073 | 262,277 | |
| Pool# AH3429 – 3.5% 1/1/26 | 1,509,468 | 1,484,096 | |
| Pool# AB2251 – 3% 2/1/26 | 414,918 | 405,423 | |
| Pool# AB3902 – 3% 11/1/26 | 327,693 | 319,319 | |
| Pool# AB4482 – 3% 2/1/27 | 1,691,472 | 1,647,023 | |
| Pool# AL1366 – 2.5% 2/1/27 | 628,372 | 606,799 | |
| Pool# AB6291 – 3% 9/1/27 | 347,191 | 337,531 | |
| Pool# MA3189 – 2.5% 11/1/27 | 589,070 | 568,169 | |
| Pool# MA3791 – 2.5% 9/1/29 | 1,364,366 | 1,295,082 | |
| Pool# BM5708 – 3% 12/1/29 | 984,938 | 957,089 | |
| Pool# MA0587 – 4% 12/1/30 | 1,295,718 | 1,266,293 | |
| Pool# BA4767 – 2.5% 1/1/31 | 731,668 | 692,566 | |
| Pool# AS7701 – 2.5% 8/1/31 | 2,258,238 | 2,132,081 | |
| Pool# 555531 – 5.5% 6/1/33 | 1,025,506 | 1,059,233 | |
| Pool# MA3540 – 3.5% 12/1/33 | 714,260 | 696,255 | |
| Pool# 725232 – 5% 3/1/34 | 94,983 | 97,087 | |
| Pool# 995112 – 5.5% 7/1/36 | 466,587 | 481,955 | |
| 15,312,584 | |||
| Government National Mortgage Association | |||
| Pass-Through Securities | |||
| Pool# 5255 – 3% 12/20/26 | 1,405,511 | 1,368,783 | |
| Non-Government Agency | |||
| Collateralized Mortgage Obligations | |||
| Bunker Hill Loan Depositary Trust (BHLD) | |||
| Series 2019-3A Class A1 – 2.72% 11/25/59(a) (c) | 712,395 | 689,388 | |
| Citigroup Mortgage Loan Trust, Inc. (CMLTI) | |||
| Series 2014-A Class A – 4% 1/25/35(a) (c) | 364,213 | 347,100 | |
| Flagstar Mortgage Trust (FSMT) | |||
| Series 2017-1 Class 2A2 – 3% 3/25/47(a) (c) | 459,567 | 423,715 | |
| Series 2021-7 Class B – 2.5% 8/25/51(a) (c) | 5,345,030 | 4,636,290 | |
| Series 2021-10IN Class A6 – 2.5% 10/25/51(a) (c) | 5,009,829 | 4,345,536 | |
| GS Mortgage-Backed Securities Trust (GSMBS) | |||
| Series 2021-PJ9 Class A8 – 2.5% 2/26/52(a) (c) | 3,383,727 | 2,935,052 | |
| Series 2022-PJ1 Class AB – 2.5% 5/28/52(a) (c) | 4,062,767 | 3,524,053 | |
| Series 2022-PJ2 Class A24 – 3% 6/25/52(a) (c) | 2,664,345 | 2,364,966 | |
| Series 2020-NQM1 Class A1 – 1.38% 9/27/60(a) (c) | 436,083 | 398,666 | |
| JPMorgan Mortgage Trust (JPMMT) | |||
| Series 2014-2 Class 2A2 – 3.5% 6/25/29(a) (c) | 689,228 | 664,836 | |
| Series 2014-5 Class B – 2.78% 10/25/29(a) (c) | 1,475,387 | 1,395,721 | |
| Series 2016-3 Class A – 2.98% 10/25/46(a) (c) | 1,163,425 | 1,080,530 | |
| Series 2017-3 Class A – 2.5% 8/25/47(a) (c) | 2,545,393 | 2,214,854 | |
| Series 2018-6 Class 2A2 – 3% 12/25/48(a) (c) | 367,444 | 344,033 | |
| Series 2020-7 Class A – 3% 1/25/51(a) (c) | 105,368 | 102,258 | |
| Series 2020-8 Class A – 3% 3/25/51(a) (c) | 242,289 | 230,044 | |
| Series 2021-4 Class A4 – 2.5% 8/25/51(a) (c) | 2,161,358 | 1,898,886 | |
| Series 2021-6 Class B – 2.5% 10/25/51(a) (c) | 4,783,105 | 4,202,252 | |
| Series 2021-8 Class B – 2.5% 12/25/51(a) (c) | 1,580,739 | 1,393,653 | |
| Series 2022-2 Class A4A – 2.5% 8/25/52(a) (c) | 1,944,429 | 1,686,602 | |
| JPMorgan Wealth Management (JPMWM) | |||
| Series 2020-ATR1 Class A – 3% 2/25/50(a) (c) | 470,682 | 458,396 | |
| Rate Mortgage Trust (RATE) | |||
| Series 2021-J3 Class A7 – 2.5% 10/25/51(a) (c) | 4,378,225 | 3,797,682 | |
| RCKT Mortgage Trust (RCKT) | |||
| Series 2021-3 Class A5 – 2.5% 7/25/51(a) (c) | 5,660,809 | 4,910,197 | |
| Sequoia Mortgage Trust (SEMT) | |||
| Series 2019-CH2 Class A – 4.5% 8/25/49(a) (c) | 199,598 | 196,494 | |
| Series 2020-3 Class A – 3% 4/25/50(a) (c) | 343,071 | 328,319 | |
| 44,569,523 | |||
| Total Mortgage-Backed Securities (Cost $79,068,960) | 71,865,683 | ||
| U.S. Treasuries - 25.0% | |||
| U.S. Treasury Notes | |||
| 2% 5/31/24 | 18,000,000 | 17,501,483 | |
| 3% 6/30/24 | 1,000,000 | 982,402 | |
| 3.25% 8/31/24 | 13,000,000 | 12,805,508 | |
| 2.13% 11/30/24 | 2,500,000 | 2,416,992 | |
| 1.5% 11/30/24 | 17,000,000 | 16,263,887 | |
| 2.75% 2/28/25 | 2,000,000 | 1,951,289 | |
| 1.13% 2/28/25 | 9,000,000 | 8,512,383 | |
| 0.38% 4/30/25 | 5,000,000 | 4,638,867 | |
| 2.88% 6/15/25 | 9,000,000 | 8,789,765 | |
| 3.13% 8/15/25 | 8,000,000 | 7,852,031 | |
| 0.25% 8/31/25 | 20,000,000 | 18,327,345 | |
| 3.5% 9/15/25 | 7,000,000 | 6,934,512 | |
| 4.25% 10/15/25 | 12,000,000 | 12,095,156 | |
| 4% 2/15/26 | 12,000,000 | 12,051,094 | |
| 1.88% 7/31/26 | 15,000,000 | 14,116,406 | |
| 1.63% 10/31/26 | 17,000,000 | 15,797,715 | |
| 2.25% 2/15/27 | 2,000,000 | 1,895,430 | |
| 1.13% 2/28/27 | 10,000,000 | 9,078,516 | |
| 1.13% 2/29/28 | 16,000,000 | 14,214,062 | |
| 1.25% 3/31/28 | 7,000,000 | 6,245,723 | |
| Total U.S. Treasuries (Cost $202,389,594) | 192,470,566 | ||
| Cash Equivalents - 0.6% | |||
| JPMorgan U.S. Government Money Market | |||
| Fund - Institutional Class 4.45% (Cost | |||
| $4,774,735) (d) | 4,774,735 | 4,774,735 | |
Short-Term Securities Held as Collateral for Securities on Loan - 0.5%
| Citibank N.A. DDCA | |||
| 4.82% | 409,528 | 409,528 | |
| Goldman Sachs Financial Square Government Fund | |||
| Institutional Class – 4.72% | 3,685,754 | 3,685,755 | |
| Total Short-Term Securities Held as Collateral for Securities on Loan | |||
| (Cost $4,095,283) | 4,095,283 | ||
| Total Investments in Securities (Cost $798,183,934) | 771,426,303 | ||
The accompanying notes form an integral part of these financial statements.
2023 Annual Report 55
| $ Principal | |||
| Amount | |||
| Cash due to Custodian - 0.0% | (521) | ||
| Other Liabilities in Excess of Other Assets - (0.1%) | (441,627) | ||
| Net Assets - 100% | 770,984,155 | ||
| Net Asset Value Per Share - Investor Class | 11.73 | ||
| Net Asset Value Per Share - Institutional Class | 11.76 | ||
| ^ | This security or a partial position of this security was on loan as of March 31, 2023. The total value of securities on loan as of March 31, 2023 was $4,007,868. |
| (a) | Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. |
| (b) | Foreign domiciled entity. |
| (c) | The interest rate resets periodically based on the weighted average coupons of the underlying mortgage-related or asset-backed obligations. |
| (d) | Rate presented represents the 30 day average yield at March 31, 2023. |
The accompanying notes form an integral part of these financial statements.
56 2023 Annual Report
ULTRA SHORT GOVERNMENT FUND
Schedule of Investments
March 31, 2023
| Asset-Backed Securities - 6.2% | |||
| $ Principal | |||
| Amount | $ Value | ||
| Automobile | |||
| ACC Auto Trust (AUTOC) | |||
| Series 2021-A Class A – 1.08% 4/15/27(a) | 25,396 | 25,200 | |
| ACM Auto Trust (ACM) | |||
| Series 2023-1A Class A – 6.61% 1/22/30(a) | 252,458 | 252,174 | |
| Avid Automobile Receivables Trust (AVID) | |||
| Series 2023-1 Class A – 6.63% 7/15/26(a) | 191,707 | 191,519 | |
| CFMT LLC (CFMT) | |||
| Series 2021-AL1 Class B – 1.39% 9/22/31(a) | 223,929 | 215,129 | |
| First Investors Auto Owner Trust (FIAOT) | |||
| Series 2019-1A Class D – 3.55% 4/15/25(a) | 395,027 | 394,503 | |
| Flagship Credit Auto Trust (FCAT) | |||
| Series 2023-1 Class A1 – 4.92% 2/15/24(a) | 414,027 | 413,873 | |
| Foursight Capital Automobile Receivables Trust (FCRT) | |||
| Series 2023-1 Class A1 – 4.97% 2/15/24(a) | 500,000 | 499,702 | |
| GLS Auto Receivables Issuer Trust (GCAR) | |||
| Series 2021-4A Class A – 0.84% 7/15/25(a) | 107,641 | 106,413 | |
| LAD Auto Receivables Trust (LADAR) | |||
| Series 2022-1A Class A – 5.21% 6/15/27(a) | 210,228 | 209,067 | |
| Series 2023-1A Class A1 – 4.93% 2/15/24(a) | 307,429 | 307,346 | |
| Prestige Auto Receivables Trust (PART) | |||
| Series 2022-1A Class A1 – 3.99% 10/16/23(a) | 28,745 | 28,730 | |
| Westlake Automobile Receivables Trust (WLAKE) | |||
| Series 2022-1A Class A2A – 1.97% 12/16/24(a) | 100,399 | 99,654 | |
| Wheels SPV 2 LLC (WHLS) | |||
| Series 2020-1A Class A2 – 0.51% 8/20/29(a) | 51,299 | 50,954 | |
| 2,794,264 | |||
| Consumer & Specialty Finance | |||
| LendingPoint Asset Securitization Trust (LDPT) | |||
| Series 2020-REV1 Class A – 2.73% 10/15/28(a) | 475,382 | 470,486 | |
| SoFi Consumer Loan Program Trust (SOFI) | |||
| Series 2023-1S Class A – 5.81% 5/15/31(a) | 500,000 | 500,549 | |
| Theorem Funding Trust (THRM) | |||
| Series 2021-1A Class A – 1.21% 12/15/27(a) | 56,257 | 55,585 | |
| Upstart Securitization Trust (UPST) | |||
| Series 2020-3 Class B – 3.01% 11/20/30(a) | 124,399 | 123,952 | |
| Series 2021-1 Class B – 1.89% 3/20/31(a) | 196,957 | 194,487 | |
| Series 2021-3 Class A – 0.83% 7/20/31(a) | 46,401 | 45,655 | |
| Series 2021-5 Class A – 1.31% 11/20/31(a) | 474,306 | 461,781 | |
| 1,852,495 | |||
| Equipment | |||
| MMAF Equipment Finance LLC (MMAF) | |||
| Series 2022-B Class A1 – 4.92% 12/1/23(a) | 243,728 | 243,575 | |
| Pawnee Equipment Receivables Series LLC (PWNE) | |||
| Series 2022-1 Class A2 – 4.84% 2/15/28(a) | 453,280 | 450,940 | |
| 694,515 | |||
| Total Asset-Backed Securities (Cost $5,360,341) | 5,341,274 | ||
| U.S. Treasuries - 72.7% | |||
| U S Treasury Notes | |||
| 2.63% 6/30/23 | 2,000,000 | 1,990,089 | |
| 1.38% 6/30/23 | 3,000,000 | 2,976,227 | |
| 2.75% 7/31/23 | 15,000,000 | 14,901,219 | |
| U.S. Treasury Notes | |||
| 0.25% 4/15/23 | 2,000,000 | 1,997,118 | |
| 1.75% 5/15/23 | 5,000,000 | 4,982,627 | |
| 2.75% 5/31/23 | 9,000,000 | 8,971,189 | |
| 2.5% 8/15/23 | 14,000,000 | 13,878,847 | |
| 2.88% 10/31/23 | 4,500,000 | 4,454,070 | |
| 2.75% 11/15/23 | 9,000,000 | 8,887,416 | |
| Total U.S. Treasuries (Cost $63,066,220) | 63,038,802 | ||
| Cash Equivalents - 27.5% | |||
| JPMorgan U.S. Government Money Market | |||
| Fund - Institutional Class 4.45%(b) | 17,927,333 | 17,927,333 | |
| U.S. Treasury Bill 8/1/23 (c) | 6,000,000 | 5,904,900 | |
| Total Cash Equivalents (Cost $23,832,729) | 23,832,233 | ||
| Total Investments in Securities (Cost $92,259,290) | 92,212,309 | ||
| Cash due to Custodian - 0.0% | (48) | ||
| Other Liabilities in Excess of Other Assets - (6.4%) | (5,547,264) | ||
| Net Assets - 100% | 86,664,997 | ||
| Net Asset Value Per Share - Institutional Class | 9.99 | ||
| (a) | Security is exempt from registration under Rule 144A of the Securities Act of 1933. This security may be resold in transactions that are exempt from registration, normally to qualified institutional buyers. |
| (b) | Rate presented represents the 30 day average yield at March 31, 2023. |
| (c) | Interest rates presented represent the effective yield at March 31, 2023. |
The accompanying notes form an integral part of these financial statements.
2023 Annual Report 57
VALUE FUND
Schedule of Investments
March 31, 2023
| Common Stocks - 96.0% | |||
| % of Net | |||
| Information Technology | Assets | Shares | $ Value |
| Application Software | 10.0 | ||
| Salesforce, Inc.(a) | 140,000 | 27,969,200 | |
| Adobe, Inc.(a) | 65,000 | 25,049,050 | |
| Roper Technologies, Inc. | 55,000 | 24,237,950 | |
| IT Consulting & Other Services | 7.0 | ||
| Gartner, Inc.(a) | 90,000 | 29,319,300 | |
| Accenture plc - Class A(b) | 88,000 | 25,151,280 | |
| Semiconductors | 5.4 | ||
| Analog Devices, Inc. | 210,000 | 41,416,200 | |
| Systems Software | 4.8 | ||
| Oracle Corp. | 400,000 | 37,168,000 | |
| 27.2 | 210,310,980 | ||
| Financials | |||
| Data Processing & Outsourced Services | 10.5 | ||
| Visa, Inc. - Class A | 170,000 | 38,328,200 | |
| Mastercard, Inc. - Class A | 95,000 | 34,523,950 | |
| Fidelity National Information Services, Inc. | 150,000 | 8,149,500 | |
| Multi-Sector Holdings | 4.6 | ||
| Berkshire Hathaway, Inc. - Class B(a) | 115,000 | 35,508,550 | |
| Insurance Brokers | 3.2 | ||
| Aon plc - Class A(b) | 80,000 | 25,223,200 | |
| Financial Exchanges & Data | 2.9 | ||
| S&P Global, Inc. | 65,000 | 22,410,050 | |
| 21.2 | 164,143,450 | ||
| Communication Services | |||
| Interactive Media & Services | 13.4 | ||
| Alphabet, Inc. - Class C(a) | 535,000 | 55,640,000 | |
| Meta Platforms, Inc. - Class A(a) | 225,000 | 47,686,500 | |
| Cable & Satellite | 6.3 | ||
| Liberty Broadband Corp. - Class C(a) | 360,000 | 29,412,000 | |
| Liberty Media Corp-Liberty SiriusXM - Class C(a) | 700,000 | 19,593,000 | |
| 19.7 | 152,331,500 | ||
| Health Care | |||
| Life Sciences Tools & Services | 4.5 | ||
| Thermo Fisher Scientific, Inc. | 60,000 | 34,582,200 | |
| Health Care Equipment | 4.4 | ||
| Danaher Corp. | 135,000 | 34,025,400 | |
| Health Care Services | 2.9 | ||
| Laboratory Corp. of America Holdings | 100,000 | 22,942,000 | |
| 11.8 | 91,549,600 | ||
| Materials | |||
| Construction Materials | 4.4 | ||
| Vulcan Materials Co. | 200,000 | 34,312,000 | |
| 2.3 | |||
| Linde PLC | 50,000 | 17,772,000 | |
| 6.7 | 52,084,000 | ||
| Consumer Discretionary | |||
| Internet & Direct Marketing Retail | 2.7 | ||
| Amazon.com, Inc.(a) | 200,000 | 20,658,000 | |
| Automotive Retail | 2.2 | ||
| CarMax, Inc.(a) | 270,497 | 17,387,547 | |
| 4.9 | 38,045,547 | ||
| Industrials | |||
| Research & Consulting Services | 4.5 | ||
| CoStar Group, Inc.(a) | 500,000 | 34,425,000 | |
| Total Common Stocks (Cost $405,811,480) | 742,890,077 | ||
| Cash Equivalents - 4.5% | |||
| $ Principal | |||
| Amount | $ Value | ||
| U.S. Treasury Bills 4.98% 7/25/23 (c) | 15,000,000 | 14,780,297 | |
| JPMorgan U.S. Government Money Market | |||
| Fund - Institutional Class 4.45%(d) | 19,540,965 | 19,540,965 | |
| Total Cash Equivalents (Cost $34,316,547) | 34,321,262 | ||
| Total Investments in Securities (Cost $440,128,027) | 777,211,339 | ||
| Other Liabilities in Excess of Other Assets - (0.5%) | (3,551,207) | ||
| Net Assets - 100% | 773,660,132 | ||
| Net Asset Value Per Share - Investor Class | 44.48 | ||
| Net Asset Value Per Share - Institutional Class | 45.61 | ||
(a) Non-income producing.
(b) Foreign domiciled entity.
(c) Interest rates presented represent the effective yield at March 31, 2023.
(d) Rate presented represents the 30 day average yield at March 31, 2023.
The accompanying notes form an integral part of these financial statements.
58 2023 Annual Report
STATEMENTS OF ASSETS AND LIABILITIES
March 31, 2023
| Nebraska | Short | |||||||
| Core Plus | Tax-Free | Partners III | Partners | Duration | Ultra Short | |||
| (In U.S. dollars, except share data) | Balanced | Income | Income | Opportunity | Value | Income | Government | Value |
| Assets: | ||||||||
| Investments in securities at value*#: | ||||||||
| Unaffiliated issuers | 205,025,818 | 598,817,130 | 29,132,593 | 398,824,698 | 522,975,426 | 771,426,303 | 92,212,309 | 777,211,339 |
| Non-controlled affiliates | — | — | — | 15,215,650 | — | — | — | — |
| 205,025,818 | 598,817,130 | 29,132,593 | 414,040,348 | 522,975,426 | 771,426,303 | 92,212,309 | 777,211,339 | |
| Accrued interest and dividends receivable | 548,766 | 4,198,384 | 298,480 | 115,654 | 105,012 | 4,166,138 | 442,832 | 107,286 |
| Due from broker | — | — | — | 15,458,409 | — | — | — | — |
| Receivable for securities sold | 53 | 17,213 | — | — | — | — | — | — |
| Receivable for fund shares sold | 26,350 | 2,192,283 | 2,931 | 4,142 | 102,505 | 1,255,887 | — | 612,546 |
| Reclaims receivable | 15,415 | — | — | — | — | — | — | — |
| Receivable from adviser | — | — | — | — | — | — | 2,047 | — |
| Prepaid expenses | 20,000 | 33,548 | 3,314 | 23,999 | 21,903 | 60,044 | 29,485 | 30,458 |
| Cash | — | — | — | — | 24,822 | — | — | — |
| Total assets | 205,636,402 | 605,258,558 | 29,437,318 | 429,642,552 | 523,229,668 | 776,908,372 | 92,686,673 | 777,961,629 |
| Liabilities: | ||||||||
| Bank Overdraft | — | 98 | — | — | — | 521 | 48 | — |
| Dividends payable on securities sold short | — | — | — | 60,248 | — | — | — | — |
| Distributions Payable | — | 350,621 | — | — | — | 61,767 | 53,354 | — |
| Due to adviser | 101,773 | 107,798 | 5,909 | 363,394 | 405,434 | 153,679 | — | 567,156 |
| Payable for collateral received on loaned securities | — | 2,759,075 | — | — | — | 4,095,283 | — | — |
| Payable for securities purchased | — | 2,628,029 | 504,389 | 828 | — | — | 5,905,395 | 2,725,600 |
| Payable for fund shares redeemed | 11,293 | 769,063 | 13,156 | 11,984 | 904,369 | 1,524,321 | 42,659 | 916,052 |
| Securities sold short^ | — | — | — | 16,375,600 | — | — | — | — |
| Other | 34,238 | 68,027 | 15,218 | 52,707 | 68,551 | 88,646 | 20,220 | 92,689 |
| Total liabilities | 147,304 | 6,682,711 | 538,672 | 16,864,761 | 1,378,354 | 5,924,217 | 6,021,676 | 4,301,497 |
| Net assets | 205,489,098 | 598,575,847 | 28,898,646 | 412,777,791 | 521,851,314 | 770,984,155 | 86,664,997 | 773,660,132 |
| Composition of net assets: | ||||||||
| Paid-in capital | 172,471,845 | 631,837,933 | 29,862,590 | 277,179,112 | 302,496,389 | 798,303,290 | 86,738,058 | 415,539,426 |
| Total distributable earnings | 33,017,253 | (33,262,086) | (963,944) | 135,598,679 | 219,354,925 | (27,319,135) | (73,061) | 358,120,706 |
| Net assets | 205,489,098 | 598,575,847 | 28,898,646 | 412,777,791 | 521,851,314 | 770,984,155 | 86,664,997 | 773,660,132 |
| Net assets(a): | ||||||||
| Investor Class | 53,268,597 | 124,729,188 | 28,898,646 | 6,731,824 | 228,650,159 | 41,089,286 | 499,565,204 | |
| Institutional Class | 152,220,501 | 473,846,659 | 406,045,967 | 293,201,155 | 729,894,869 | 86,664,997 | 274,094,928 | |
| Shares outstanding(a)(b): | ||||||||
| Investor Class | 3,394,962 | 12,781,084 | 2,996,051 | 637,982 | 8,649,141 | 3,502,316 | 11,231,168 | |
| Institutional Class | 9,687,746 | 48,541,122 | 35,439,988 | 10,796,589 | 62,080,379 | 8,679,351 | 6,009,389 | |
| Net asset value, offering and redemption price(a): | ||||||||
| Investor Class | 15.69 | 9.76 | 9.65 | 10.55 | 26.44 | 11.73 | 44.48 | |
| Institutional Class | 15.71 | 9.76 | 11.46 | 27.16 | 11.76 | 9.99 | 45.61 | |
| * Cost of investments in securities: | ||||||||
| Unaffiliated Issuers | 172,238,638 | 627,599,199 | 30,005,095 | 278,244,824 | 294,117,482 | 798,183,934 | 92,259,290 | 440,128,027 |
| Non-controlled affiliates | — | — | — | 353,500 | — | — | — | — |
| 172,238,638 | 627,599,199 | 30,005,095 | 278,598,324 | 294,117,482 | 798,183,934 | 92,259,290 | 440,128,027 | |
| ^ Proceeds from short sales | — | — | — | 8,412,580 | — | — | — | — |
| # | Includes securities on loan as shown in the Schedule of Investments. |
| (a) | Funds with a single share class are shown with the Investor Class, except for the Ultra Short Government Fund which has been designated Institutional Class. |
| (b) | Indefinite number of no par value shares authorized. |
The accompanying notes form an integral part of these financial statements.
2023 Annual Report 59
STATEMENTS OF OPERATIONS
Period ended March 31, 2023
| Nebraska | Short | ||||||||
| Core Plus | Tax-Free | Partners III | Partners | Duration | Ultra Short | ||||
| (In U.S. dollars) | Balanced | Income | Income | Opportunity | Value | Income | Government | Value | |
| Investment Income: | |||||||||
| Dividends | 1,330,210 | 814,341 | 59,713 | 3,626,744 | 2,062,163 | 423,641 | 180,554 | 5,113,945 | |
| Interest | 2,621,943 | 16,059,504 | 584,509 | 508,094 | 54,329 | 25,007,215 | 1,578,536 | 161,728 | |
| Income from securities lending | 152 | 35,246 | — | 15,402 | — | 43,590 | — | — | |
| Total investment income | 3,952,305 | 16,909,091 | 644,222 | 4,150,240 | 2,116,492 | 25,474,446 | 1,759,090 | 5,275,673 | |
| Fees and expenses*: | |||||||||
| Investment advisory services | 1,197,566 | 1,621,057 | 118,828 | 4,681,158 | 3,131,389 | 3,095,023 | 199,971 | 5,990,859 | |
| Business administration services(1) | 59,892 | 121,575 | 8,912 | 140,426 | 125,188 | 232,178 | 19,925 | 239,456 | |
| Administrative services:(2) | |||||||||
| Investor Class | 103,010 | 153,736 | 17,931 | 21,288 | 326,023 | 163,930 | 853,609 | ||
| Institutional Class | 43,461 | 199,363 | 101,200 | 50,647 | 558,755 | 9,637 | 55,341 | ||
| Transfer agent services: | |||||||||
| Investor Class | 24,808 | 15,374 | 18,230 | 18,013 | 57,361 | 20,823 | 102,882 | ||
| Institutional Class | 18,942 | 28,834 | 42,318 | 26,481 | 55,224 | 24,500 | 31,207 | ||
| Registration: | |||||||||
| Investor Class | 21,049 | 22,686 | 7,424 | 15,906 | 19,308 | 28,957 | 26,292 | ||
| Institutional Class | 25,648 | 37,683 | 23,314 | 20,034 | 51,152 | 38,327 | 26,259 | ||
| Custody and fund accounting | 78,160 | 107,923 | 67,021 | 89,434 | 86,370 | 152,595 | 65,543 | 134,863 | |
| Auditing and legal | 48,086 | 82,271 | 24,702 | 67,886 | 67,171 | 118,197 | 30,073 | 115,332 | |
| Trustees | 26,566 | 51,500 | 4,119 | 53,737 | 46,267 | 102,567 | 8,748 | 102,463 | |
| Dividends on securities sold short | — | — | — | 263,274 | — | — | — | — | |
| Interest | — | — | — | — | — | — | — | — | |
| Printing | 25,543 | 45,272 | 5,674 | 47,762 | 39,460 | 102,030 | 9,245 | 82,259 | |
| Other | 23,579 | 41,137 | 6,493 | 45,349 | 42,189 | 90,993 | 9,760 | 97,029 | |
| 1,696,310 | 2,528,411 | 279,334 | 5,611,065 | 4,037,888 | 4,772,424 | 415,729 | 7,857,851 | ||
| Less expenses waived/reimbursed by investment adviser | (213,610) | (843,118) | (146,937) | — | — | (1,019,606) | (296,645) | — | |
| Net expenses | 1,482,700 | 1,685,293 | 132,397 | 5,611,065 | 4,037,888 | 3,752,818 | 119,084 | 7,857,851 | |
| Net investment income (loss) | 2,469,605 | 15,223,798 | 511,825 | (1,460,825) | (1,921,396) | 21,721,628 | 1,640,006 | (2,582,178) | |
| Realized and unrealized gain (loss) on investments: | |||||||||
| Net realized gain (loss): | |||||||||
| Unaffiliated issuers | (609,191) | (4,565,044) | (19) | 27,254,849 | (4,146,912) | (532,364) | (635) | 21,566,621 | |
| Non-controlled affiliates | — | — | — | 3,377,219 | — | — | — | — | |
| Securities sold short | — | — | — | (22,461,093) | — | — | — | — | |
| Net realized gain (loss) | (609,191) (4,565,044) | (19) | 8,170,975 | (4,146,912) | (532,364) | (635) 21,566,621 | |||
| Change in net unrealized appreciation (depreciation): | |||||||||
| Unaffiliated issuers | (10,344,953) | (18,278,886) | (359,055) | (143,695,568) | (47,955,180) | (14,324,626) | (1,834) (124,445,011) | ||
| Non-controlled affiliates | — | — | — | (1,424,850) | — | — | — | — | |
| Securities sold short | — | — | — | 49,974,697 | — | — | — | — | |
| Change in net unrealized appreciation (depreciation) | (10,344,953) | (18,278,886) | (359,055) | (95,145,721) | (47,955,180)( | 14,324,626) | (1,834) (124,445,011) | ||
| Net realized and unrealized gain (loss) on investments | (10,954,144) | (22,843,930) | (359,074) | (86,974,746) | (52,102,092) (14,856,990) | (2,469) | (102,878,390) | ||
| Net increase (decrease) in net assets resulting from operations | (8,484,539) | (7,620,132) | 152,751 | (88,435,571) (54,023,488) | 6,864,638 | 1,637,537 | (105,460,568) | ||
| * | Additional information related to fees and expenses is included in the notes to the financial statements. |
| (1) | The trust has business administration agreement with the Advisor under which the Trust compensates the Adviser for providing business administration services for all share classes of the funds. Services encompass supervising all aspects of the management and operations of the Trust, Including monitoring Trust's relationships with third-party services providers that may be retained from time to time by the Trust. |
| (2) | The trust has administrative services plans under which the Trust compensates the Adviser for administrative services provided to all share classes of the Funds. Administrative services are provided by the Adviser or by certain financial intermediaries with respect to non-distribution services to fund stakeholders. These services include, but are not limited to, providing shareholder statements, assisting with shareholder communications and sub-accounting services in connection with omnibus accounts. |
The accompanying notes form an integral part of these financial statements.
60 2023 Annual Report
STATEMENTS OF CHANGES IN NET ASSETS
| Balanced | Core Plus Income | Nebraska Tax-Free Income | Partners III Opportunity | |||||
| Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | |
| (In U.S. dollars) | March
31, 2023 |
March 31, 2022 | March 31, 2023 | March 31, 2022 | March 31, 2023 | March 31, 2022 | March 31, 2023 | March 31, 2022 |
| Increase (decrease) in net assets: | ||||||||
| From operations: | ||||||||
| Net investment income (loss) | 2,469,605 | 896,217 | 15,223,798 | 6,008,215 | 511,825 | 493,620 | (1,460,825) | (5,098,263) |
| Net realized (loss) gain | (609,191) | 11,608,385 | (4,565,044) | 1,032,129 | (19) | — | 8,170,975 | 55,260,512 |
| Change in net unrealized appreciation | ||||||||
| (depreciation) | (10,344,953) | (1,762,959) | (18,278,886) | (16,889,866) | (359,055) | (1,527,846) | (95,145,721) | (52,199,570) |
| Net increase (decrease) in net assets | ||||||||
| resulting from operations | (8,484,539) | 10,741,643 | (7,620,132) | (9,849,522) | 152,751 | (1,034,226) | (88,435,571) | (2,037,321) |
| Distributions to shareholders(a): | ||||||||
| Investor Class | (1,102,354) | (1,623,752) | (2,389,390) | (1,272,805) | (507,241) | (475,746) | (580,717) | (1,669,312) |
| Institutional Class | (2,882,783) | (4,428,337) | (13,677,916) | (5,258,102) | (32,518,175) | (65,020,686) | ||
| Total distributions | (3,985,137) | (6,052,089) | (16,067,306) | (6,530,907) | (507,241) | (475,746) | (33,098,892) | (66,689,998) |
| Fund share transactions(a): | ||||||||
| Investor Class | (7,526,786) | (1,387,426) | 74,048,055 | 2,329,621 | (3,626,893) | (1,248,038) | (4,865,350) | (7,191,989) |
| Institutional Class | 14,918,961 | 1,251,435 | 200,610,365 | 197,408,290 | (34,202,509) | 34,037,949 | ||
| Net increase (decrease) from fund share | ||||||||
| transactions | 7,392,175 | (135,991) | 274,658,420 | 199,737,911 | (3,626,893) | (1,248,038) | (39,067,859) | 26,845,960 |
| Total increase (decrease) in net assets | (5,077,501) | 4,553,563 | 250,970,982 | 183,357,482 | (3,981,383) | (2,758,010) | (160,602,322) | (41,881,359) |
| Net assets: | ||||||||
| Beginning of period | 210,566,599 | 206,013,036 | 347,604,865 | 164,247,383 | 32,880,029 | 35,638,039 | 573,380,113 | 615,261,472 |
| End of period | 205,489,098 | 210,566,599 | 598,575,847 | 347,604,865 | 28,898,646 | 32,880,029 | 412,777,791 | 573,380,113 |
| (a) | Funds with a single share class are shown with the Investor Class, except for the Ultra Short Government Fund which has been designated Institutional Class. |
The accompanying notes form an integral part of these financial statements.
2023 Annual Report 61
| Partners Value | Short Duration Income | Ultra Short Government | Value | ||||
| Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | Year ended | Year ended |
| March 31, 2023 | March 31, 2022 | March 31, 2023 | March 31, 2022 | March 31, 2023 | March 31, 2022 | March 31, 2023 | March 31, 2022 |
| (1,921,396) | (3,600,447) | 21,721,628 | 12,033,522 | 1,640,006 | 51,115 | (2,582,178) | (4,804,522) |
| (4,146,912) | 40,163,742 | (532,364) | 2,083,229 | (635) | 667 | 21,566,621 | 97,528,680 |
| (47,955,180) | (13,015,753) | (14,324,626) | (25,453,053) | (1,834) | (84,838) | (124,445,011) | (10,595,896) |
| (54,023,488) | 23,547,542 | 6,864,638 | (11,336,302) | 1,637,537 | (33,056) | (105,460,568) | 82,128,262 |
| (11,638,108) | (15,385,870) | (1,698,033) | (712,242) | (61,432,310) | (25,521,469) | ||
| (14,594,955) | (19,337,527) | (21,493,708) | (12,443,558) | (1,647,995) | (75,091) | (31,790,688) | (12,474,077) |
| (26,233,063) | (34,723,397) | (23,191,741) | (13,155,800) | (1,647,995) | (75,091) | (93,222,998) | (37,995,546) |
| 48,175,789 | (12,084,272) | (17,400,461) | 24,514,927 | (1,716,929) | (12,162,742) | ||
| 59,760,676 | 8,817,261 | 22,670,328 | 86,945,227 | 24,101,270 | (17,255,150) | 25,289,971 | (10,837,617) |
| 107,936,465 | (3,267,011) | 5,269,867 | 111,460,154 | 24,101,270 | (17,255,150) | 23,573,042 | (23,000,359) |
| 27,679,914 | (14,442,866) | (11,057,236) | 86,968,052 | 24,090,812 | (17,363,297) | (175,110,524) | 21,132,357 |
| 494,171,400 | 508,614,266 | 782,041,391 | 695,073,339 | 62,574,185 | 79,937,482 | 948,770,656 | 927,638,299 |
| 521,851,314 | 494,171,400 | 770,984,155 | 782,041,391 | 86,664,997 | 62,574,185 | 773,660,132 | 948,770,656 |
The accompanying notes form an integral part of these financial statements.
62 2023 Annual Report
FINANCIAL HIGHLIGHTS
The following financial information provides selected data, in U.S. dollars, for a share outstanding throughout the periods indicated.
| Income (loss) from Investment Operations | Distributions | |||||||
| Net gain (loss) | Dividends | |||||||
| Net asset | Net | on securities | Total from | from net | Distributions | |||
| Years ended March 31, | value, | investment | (realized and | investment | investment | from | Total | |
| unless otherwise noted | beginning of period | income (loss) | unrealized) | operations | income | realized gains | distributions | |
| Balanced - Investor Class | ||||||||
| 2023 | 16.68 | 0.17 (d) | (0.86) | (0.69) | (0.15) | (0.15) | (0.30) | |
| 2022 | 16.30 | 0.05 (d) | 0.78 | 0.83 | (0.04) | (0.41) | (0.45) | |
| 2021 | 13.54 | 0.07 (d) | 2.86 | 2.93 | (0.08) | (0.09) | (0.17) | |
| 2020 | 13.76 | 0.13 (d) | (0.07) | 0.06 | (0.15) | (0.13) | (0.28) | |
| 2019 | 14.20 | 0.14 | 0.66 | 0.80 | (0.13) | (1.11) | (1.24) | |
| Balanced - Institutional Class | ||||||||
| 2023 | 16.70 | 0.20 (d) | (0.88) | (0.68) | (0.16) | (0.15) | (0.31) | |
| 2022 | 16.31 | 0.08 (d) | 0.77 | 0.85 | (0.05) | (0.41) | (0.46) | |
| 2021 | 13.55 | 0.09 (d) | 2.87 | 2.96 | (0.11) | (0.09) | (0.20) | |
| 2020(e) | 13.75 | 0.16 (d) | (0.08) | 0.08 | (0.15) | (0.13) | (0.28) | |
| Core Plus Income - Investor Class | ||||||||
| 2023 | 10.45 | 0.37 (d) | (0.70) | (0.33) | (0.35) | (0.01) | (0.36) | |
| 2022 | 10.86 | 0.23 (d) | (0.40) | (0.17) | (0.21) | (0.03) | (0.24) | |
| 2021 | 10.14 | 0.37 (d) | 0.91 | 1.28 | (0.37) | (0.19) | (0.56) | |
| 2020 | 10.31 | 0.30 (d) | (0.16) | 0.14 | (0.29) | (0.02) | (0.31) | |
| 2019 | 10.09 | 0.27 (d) | 0.21 | 0.48 | (0.26) | — | (0.26) | |
| Core Plus Income - Institutional Class | ||||||||
| 2023 | 10.45 | 0.37 (d) | (0.69) | (0.32) | (0.36) | (0.01) | (0.37) | |
| 2022 | 10.87 | 0.24 (d) | (0.41) | (0.17) | (0.22) | (0.03) | (0.25) | |
| 2021 | 10.15 | 0.38 (d) | 0.91 | 1.29 | (0.38) | (0.19) | (0.57) | |
| 2020 | 10.32 | 0.32 (d) | (0.16) | 0.16 | (0.31) | (0.02) | (0.33) | |
| 2019 | 10.10 | 0.29 (d) | 0.21 | 0.50 | (0.28) | — | (0.28) | |
| Nebraska Tax-Free Income | ||||||||
| 2023 | 9.73 | 0.17 (d) | (0.09) | 0.08 | (0.16) | — | (0.16) | |
| 2022 | 10.18 | 0.14 (d) | (0.45) | (0.31) | (0.14) | — | (0.14) | |
| 2021 | 10.07 | 0.16 | 0.11 | 0.27 | (0.16) | — | (0.16) | |
| 2020 | 9.95 | 0.13 | 0.12 | 0.25 | (0.13) | — | (0.13) | |
| 2019 | 9.76 | 0.14 | 0.19 | 0.33 | (0.14) | — | (0.14) | |
| Partners III Opportunity - Investor Class | ||||||||
| 2023 | 13.74 | (0.11)(d) | (2.14) | (2.25) | — | (0.94) | (0.94) | |
| 2022 | 15.67 | (0.20)(d) | 0.11 | (0.09) | — | (1.84) | (1.84) | |
| 2021 | 12.84 | (0.16)(d) | 4.92 | 4.76 | — | (1.93) | (1.93) | |
| 2020 | 14.67 | (0.20)(d) | (0.59) | (0.79) | — | (1.04) | (1.04) | |
| 2019 | 14.28 | (0.17)(d) | 1.58 | 1.41 | — | (1.02) | (1.02) | |
| Partners III Opportunity - Institutional Class | ||||||||
| 2023 | 14.74 | (0.04)(d) | (2.30) | (2.34) | — | (0.94) | (0.94) | |
| 2022 | 16.60 | (0.13)(d) | 0.11 | (0.02) | — | (1.84) | (1.84) | |
| 2021 | 13.43 | (0.07)(d) | 5.17 | 5.10 | — | (1.93) | (1.93) | |
| 2020 | 15.21 | (0.11)(d) | (0.63) | (0.74) | — | (1.04) | (1.04) | |
| 2019 | 14.69 | (0.09)(d) | 1.63 | 1.54 | — | (1.02) | (1.02) | |
| (a) | Not Annualized for periods less than one year. |
| (b) | Annualized for periods less than one year. |
| (c) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares. |
| (d) | Per share net investment income (loss) has been calculated using the average daily shares method. |
| (e) | Initial offering of shares on March 29, 2019. |
The accompanying notes form an integral part of these financial statements.
2023 Annual Report 63
| Ratios/Supplemental Data | ||||||
| Ratio of expenses | ||||||
| to average net assets | ||||||
| Ratio of net | ||||||
| investment income | Portfolio | |||||
| Net asset value, | Net assets, end of | Prior to fee | Net of fee | (loss) to average | turnover | |
| end of period | Total return (%)(a) | period ($000) | waivers (%)(b) | waivers (%)(b) | net assets (%)(b) | rate (%)(a)(c) |
| 15.69 | (4.12) | 53,269 | 0.99 | 0.85 | 1.12 | 20 |
| 16.68 | 4.98 | 64,732 | 1.01 | 0.85 | 0.31 | 26 |
| 16.30 | 21.74 | 64,736 | 1.14 | 0.85 | 0.44 | 29 |
| 13.54 | 0.35 | 47,591 | 1.20 | 0.85 | 0.94 | 32 |
| 13.76 | 6.18 | 124,431 | 1.00 | 0.88 | 0.98 | 33 |
| 15.71 | (4.01) | 152,221 | 0.79 | 0.70 | 1.29 | 20 |
| 16.70 | 5.15 | 145,835 | 0.82 | 0.70 | 0.46 | 26 |
| 16.31 | 21.93 | 141,277 | 0.89 | 0.70 | 0.58 | 29 |
| 13.55 | 0.45 | 84,682 | 1.00 | 0.70 | 1.09 | 32 |
| 9.76 | (3.06) | 124,729 | 0.82 | 0.50 | 3.72 | 24 |
| 10.45 | (1.67) | 54,279 | 0.89 | 0.50 | 2.07 | 46 |
| 10.86 | 12.79 | 53,944 | 1.09 | 0.50 | 3.42 | 38 |
| 10.14 | 1.38 | 25,921 | 1.18 | 0.57 | 2.85 | 51 |
| 10.31 | 4.78 | 18,840 | 1.42 | 0.60 | 2.76 | 33 |
| 9.76 | (2.98) | 473,847 | 0.59 | 0.40 | 3.76 | 24 |
| 10.45 | (1.67) | 293,326 | 0.62 | 0.40 | 2.16 | 46 |
| 10.87 | 12.88 | 110,303 | 0.80 | 0.40 | 3.54 | 38 |
| 10.15 | 1.56 | 78,128 | 0.80 | 0.40 | 3.02 | 51 |
| 10.32 | 5.07 | 59,687 | 0.96 | 0.40 | 2.93 | 33 |
| 9.65 | 0.91 | 28,899 | 0.95 | 0.45 | 1.73 | 5 |
| 9.73 | (3.08) | 32,880 | 1.02 | 0.45 | 1.42 | 9 |
| 10.18 | 2.67 | 35,638 | 1.09 | 0.45 | 1.54 | 13 |
| 10.07 | 2.55 | 31,465 | 1.10 | 0.94 | 1.29 | 7 |
| 9.95 | 3.46 | 38,048 | 0.89 | 0.89 | 1.39 | 9 |
| 10.55 | (16.31) | 6,732 | 1.75 | 1.75 | (0.92) | 33 |
| 13.74 | (1.02) | 14,147 | 1.86 | 1.86 | (1.25) | 26 |
| 15.67 | 39.25 | 22,791 | 2.09 | 2.09 | (1.08) | 23 |
| 12.84 | (6.40) | 19,287 | 2.04 | 2.04 | (1.29) | 32 |
| 14.67 | 10.63 | 21,881 | 2.13 | 2.13 | (1.23) | 38 |
| 11.46 | (15.80) | 406,046 | 1.19 | 1.19 | (0.30) | 33 |
| 14.74 | (0.53) | 559,234 | 1.43 | 1.43 | (0.81) | 26 |
| 16.60 | 40.11 | 592,471 | 1.46 | 1.46 | (0.46) | 23 |
| 13.43 | (5.83) | 541,433 | 1.44 | 1.44 | (0.69) | 32 |
| 15.21 | 11.25 | 616,621 | 1.56 | 1.56 | (0.66) | 38 |
The accompanying notes form an integral part of these financial statements.
64 2023 Annual Report
FINANCIAL HIGHLIGHTS (CONTINUED)
The following financial information provides selected data, in U.S. dollars, for a share outstanding throughout the periods indicated.
| Income (loss) from Investment Operations | Distributions | |||||||
| Net gain (loss) | Dividends | |||||||
| on securities | Total from | from net | Distributions | |||||
| Years ended March 31, | Net asset value, | Net investment | (realized | investment | investment | from | Total | |
| unless otherwise noted | beginning of period | income (loss) | and unrealized) | operations | income | realized gains | distributions | |
| Partners Value - Investor Class | ||||||||
| 2023 | 32.18 | (0.16)(d) | (3.68) | (3.84) | — | (1.90) | (1.90) | |
| 2022 | 33.01 | (0.27)(d) | 1.81 | 1.54 | — | (2.37) | (2.37) | |
| 2021 | 23.32 | (0.28)(d) | 13.30 | 13.02 | — | (3.33) | (3.33) | |
| 2020 | 29.45 | (0.09)(d) | (3.80) | (3.89) | — | (2.24) | (2.24) | |
| 2019 | 31.31 | (0.12)(d) | 0.63 | 0.51 | — | (2.37) | (2.37) | |
| Partners Value - Institutional Class | ||||||||
| 2023 | 32.94 | (0.11)(d) | (3.77) | (3.88) | — | (1.90) | (1.90) | |
| 2022 | 33.67 | (0.21)(d) | 1.85 | 1.64 | — | (2.37) | (2.37) | |
| 2021 | 23.70 | (0.23)(d) | 13.53 | 13.30 | — | (3.33) | (3.33) | |
| 2020 | 29.82 | (0.01)(d) | (3.87) | (3.88) | — | (2.24) | (2.24) | |
| 2019 | 31.59 | (0.04)(d) | 0.64 | 0.60 | — | (2.37) | (2.37) | |
| Short Duration Income - Investor Class | ||||||||
| 2023 | 11.98 | 0.32 (d) | (0.22) | 0.10 | (0.34) | (0.01) | (0.35) | |
| 2022 | 12.37 | 0.19 (d) | (0.37) | (0.18) | (0.19) | (0.02) | (0.21) | |
| 2021 | 11.93 | 0.27 (d) | 0.48 | 0.75 | (0.29) | (0.02) | (0.31) | |
| 2020 | 12.17 | 0.27 (d) | (0.23) | 0.04 | (0.28) | — | (0.28) | |
| 2019 | 12.09 | 0.26 (d) | 0.09 | 0.35 | (0.27) | — | (0.27) | |
| Short Duration Income - Institutional Class | ||||||||
| 2023 | 12.00 | 0.33 (d) | (0.22) | 0.11 | (0.34) | (0.01) | (0.35) | |
| 2022 | 12.39 | 0.20 (d) | (0.37) | (0.17) | (0.20) | (0.02) | (0.22) | |
| 2021 | 11.95 | 0.28 (d) | 0.47 | 0.75 | (0.29) | (0.02) | (0.31) | |
| 2020 | 12.19 | 0.29 (d) | (0.23) | 0.06 | (0.30) | — | (0.30) | |
| 2019 | 12.11 | 0.29 (d) | 0.09 | 0.38 | (0.30) | — | (0.30) | |
| Ultra Short Government | ||||||||
| 2023 | 9.99 | 0.25 (d) | (0.01) | 0.24 | (0.24) | — | (0.24) | |
| 2022 | 10.00 | 0.01 (d) | (0.01) | —# | (0.01) | — | (0.01) | |
| 2021 | 10.03 | 0.06 | (0.03) | 0.03 | (0.06) | — | (0.06) | |
| 2020 | 10.01 | 0.21 | 0.03 | 0.24 | (0.21) | (0.01) | (0.22) | |
| 2019 | 10.00 | 0.20 | 0.01 | 0.21 | (0.20) | — | (0.20) | |
| Value - Investor Class | ||||||||
| 2023 | 56.83 | (0.18)(d) | (6.23) | (6.41) | — | (5.94) | (5.94) | |
| 2022 | 54.30 | (0.32)(d) | 5.18 | 4.86 | — | (2.33) | (2.33) | |
| 2021 | 37.98 | (0.21)(d) | 21.14 | 20.93 | — | (4.61) | (4.61) | |
| 2020 | 42.31 | (0.15)(d) | (1.98) | (2.13) | — | (2.20) | (2.20) | |
| 2019 | 42.92 | (0.19)(d) | 3.60 | 3.41 | — | (4.02) | (4.02) | |
| Value - Institutional Class | ||||||||
| 2023 | 58.02 | (0.11)(d) | (6.36) | (6.47) | — | (5.94) | (5.94) | |
| 2022 | 55.31 | (0.23)(d) | 5.27 | 5.04 | — | (2.33) | (2.33) | |
| 2021 | 38.55 | (0.11)(d) | 21.48 | 21.37 | — | (4.61) | (4.61) | |
| 2020 | 42.82 | (0.05)(d) | (2.02) | (2.07) | — | (2.20) | (2.20) | |
| 2019 | 43.29 | (0.09)(d) | 3.64 | 3.55 | — | (4.02) | (4.02) | |
| # | Amount less than $0.01. |
| (a) | Not Annualized for periods less than one year. |
| (b) | Annualized for periods less than one year. |
| (c) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares. |
| (d) | Per share net investment income (loss) has been calculated using the average daily shares method. |
The accompanying notes form an integral part of these financial statements.
2023 Annual Report 65
| Ratios/Supplemental Data | ||||||
| Ratio of expenses | ||||||
| to average net assets | ||||||
| Ratio of net | ||||||
| investment income | Portfolio | |||||
| Net asset value, | Net assets, end of | Prior to fee | Net of fee | (loss) to average | turnover | |
| end of period | Total return (%)(a) | period ($000) | waivers (%)(b) | waivers (%)(b) | net assets (%)(b) | rate (%)(a)(c) |
| 26.44 | (11.97) | 228,650 | 1.07 | 1.07 | (0.56) | 6 |
| 32.18 | 4.13 | 214,991 | 1.09 | 1.09 | (0.78) | 8 |
| 33.01 | 58.17 | 231,482 | 1.18 | 1.09 | (0.97) | 7 |
| 23.32 | (14.82) | 183,718 | 1.29 | 1.24 | (0.31) | 26 |
| 29.45 | 2.50 | 265,250 | 1.27 | 1.27 | (0.39) | 38 |
| 27.16 | (11.81) | 293,201 | 0.89 | 0.89 | (0.38) | 6 |
| 32.94 | 4.35 | 279,181 | 0.91 | 0.89 | (0.59) | 8 |
| 33.67 | 58.43 | 277,133 | 0.99 | 0.89 | (0.77) | 7 |
| 23.70 | (14.59) | 216,400 | 1.08 | 0.97 | (0.04) | 26 |
| 29.82 | 2.78 | 322,558 | 1.07 | 0.99 | (0.12) | 38 |
| 11.73 | 0.83 | 41,089 | 0.86 | 0.55 | 2.69 | 43 |
| 11.98 | (1.46) | 60,017 | 0.90 | 0.55 | 1.55 | 51 |
| 12.37 | 6.29 | 36,857 | 1.02 | 0.55 | 2.23 | 45 |
| 11.93 | 0.26 | 60,845 | 0.95 | 0.65 | 2.20 | 51 |
| 12.17 | 2.95 | 71,002 | 0.92 | 0.68 | 2.17 | 23 |
| 11.76 | 0.98 | 729,895 | 0.60 | 0.48 | 2.82 | 43 |
| 12.00 | (1.41) | 722,024 | 0.62 | 0.48 | 1.65 | 51 |
| 12.39 | 6.32 | 658,216 | 0.65 | 0.48 | 2.27 | 45 |
| 11.95 | 0.44 | 675,245 | 0.64 | 0.48 | 2.37 | 51 |
| 12.19 | 3.18 | 828,697 | 0.63 | 0.48 | 2.37 | 23 |
| 9.99 | 2.41 | 86,665 | 0.63 | 0.18 | 2.47 | 206 |
| 9.99 | 0.01 | 62,574 | 0.68 | 0.09 | 0.08 | 84 |
| 10.00 | 0.29 | 79,937 | 0.69 | 0.17 | 0.53 | 138 |
| 10.03 | 2.44 | 72,102 | 0.71 | 0.20 | 2.18 | 46 |
| 10.01 | 2.17 | 97,444 | 0.61 | 0.20 | 2.05 | 148 |
| 44.48 | (11.01) | 499,565 | 1.04 | 1.04 | (0.37) | 9 |
| 56.83 | 8.63 | 633,358 | 1.04 | 1.04 | (0.53) | 15 |
| 54.30 | 56.97 | 616,462 | 1.11 | 1.09 | (0.43) | 14 |
| 37.98 | (5.77) | 448,259 | 1.24 | 1.20 | (0.33) | 16 |
| 42.31 | 9.04 | 541,168 | 1.23 | 1.23 | (0.46) | 32 |
| 45.61 | (10.88) | 274,095 | 0.89 | 0.89 | (0.23) | 9 |
| 58.02 | 8.80 | 315,413 | 0.90 | 0.89 | (0.37) | 15 |
| 55.31 | 57.28 | 311,177 | 0.97 | 0.89 | (0.23) | 14 |
| 38.55 | (5.55) | 210,729 | 1.09 | 0.97 | (0.10) | 16 |
| 42.82 | 9.32 | 227,580 | 1.08 | 0.99 | (0.22) | 32 |
The accompanying notes form an integral part of these financial statements.
66 2023 Annual Report
NOTES TO FINANCIAL STATEMENTS
March 31, 2023
(1) Organization
The Weitz Funds (the “Trust”) is registered under the Investment Company Act of 1940 (the “’40 Act”) as an open-end management investment company issuing shares in series, each series representing a distinct portfolio with its own investment objectives and policies. At March 31, 2023, the Trust had eight series in operation: Balanced Fund, Core Plus Income Fund, Nebraska Tax-Free Income Fund, Partners III Opportunity Fund, Partners Value Fund, Short Duration Income Fund, Ultra Short Government Fund and Value Fund (individually, a “Fund”, collectively, the “Funds”).
On March 29, 2019, the Balanced Fund divided their outstanding shares whereby the shares held in accounts with balances exceeding $1.0 million were designated Institutional Class shares. All remaining shares, that were not designated as new Institutional Class shares, were renamed Investor Class shares.
Currently, the Balanced, Core Plus Income, Partners III Opportunity, Partners Value, Short Duration Income and Value Funds each offer two classes of shares: Institutional Class and Investor Class shares. Each class of shares has identical rights and privileges, except with respect to certain class specific expenses such as business administration and administrative servicing fees, voting rights on matters affecting a single class of shares and exchange privileges. All other Funds offer one class of shares.
The investment objective of the Partners III Opportunity, Partners Value and Value Funds (the “Weitz Equity Funds”) is capital appreciation.
The investment objectives of the Balanced Fund are long-term capital appreciation, capital preservation and current income.
The investment objectives of the Core Plus Income Fund are current income and capital preservation.
The investment objective of the Nebraska Tax-Free Income Fund is current income that is exempt from both federal and Nebraska personal income taxes, consistent with the preservation of capital.
The investment objective of the Short Duration Income Fund is current income consistent with the preservation of capital.
The investment objective of the Ultra Short Government Fund is current income consistent with the preservation of capital and maintenance of liquidity.
Investment strategies and risk factors of each Fund are discussed in the Funds’ Prospectus.
(2) Significant Accounting Policies
The Funds are investment companies and apply the accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 Financial Services – Investment Companies. The following accounting policies are in accordance with accounting principles generally accepted in the United States.
(a) Valuation of Investments
Investments are carried at fair value determined using the following valuation methods:
| • | Securities traded on a national or regional securities exchange are valued at the last sales price; if there were no sales on that day, securities are valued at the mean between the latest available and representative bid and ask prices; securities listed on the NASDAQ exchange are valued using the NASDAQ Official Closing Price (“NOCP”). Generally, the NOCP will be the last sales price unless the reported trade for the security is outside the range of the bid/ask price. In such cases, the NOCP will be normalized to the nearer of the bid or ask price. |
| • | Short sales traded on a national or regional securities exchange are valued at the last sales price; if there were no sales on that day, short sales are valued at the mean between the latest available and representative bid and ask prices. |
| • | Securities not listed on an exchange are valued at the mean between the latest available and representative bid and ask prices, if available. |
| • | The value of certain debt securities for which market quotations are not readily available may be based upon current market prices of securities that are comparable in coupon, rating and maturity or an appropriate matrix utilizing similar factors. |
| • | The value of a traded option is the last sales price at which such option is traded or, in the absence of a sale on or about the close of the exchange, the mean of the closing bid and ask prices. |
| • | Money market funds are valued at the quoted net asset value. |
| • | The value of securities for which market quotations are not readily available or are deemed unreliable, including restricted and not readily marketable securities, is determined in good faith in accordance with procedures approved by the Trust’s Board of Trustees. Such valuation procedures and methods for valuing securities may include, but are not limited to: multiple of earnings, multiple of book value, discount from value of a similar freely-traded security, purchase price, private transaction in the security or related securities, the nature and duration of restrictions on disposition of the security and a combination of these and other factors. |
The Board of Trustees has adopted a Valuation Policy with regard to the Trust's valuation of portfolio investments. The Valuation Policy notes that the Board of Trustees has (i) designated Weitz Investment Management, Inc. (the "Adviser") as the valuation designee to perform fair valuation determinations for the Funds for all Fund investments and (ii) established a Valuation Committee (composed of Independent Trustees) to oversee the Adviser's activities as valuation designee. The Adviser has contracted with Citi Fund Services Ohio, Inc. to perform portfolio accounting services for the Funds, which services include valuation services for portfolio securities. The Adviser has established a Pricing Committee (composed of certain employees) to assist the Adviser, as valuation designee, with pricing and valuation matters. The Adviser has adopted Procedures for Valuation of Portfolio Securities to govern the Adviser and the Pricing Committee in carrying out their valuation responsibilities for the Funds.
(b) Option Transactions
The Funds, except for the Ultra Short Government Fund, may purchase put or call options. When a Fund purchases an option, an amount equal to the premium paid is recorded as an asset and is subsequently marked-to-market daily. Premiums paid for purchasing options that expire unexercised are recognized on the expiration date as realized losses. If an option is exercised, the premium paid is subtracted from the proceeds of the sale or added to the cost of the purchase to determine whether a Fund has realized a gain or loss on the related investment transaction. When a Fund enters into a closing transaction, a Fund realizes a gain or loss depending upon whether the amount from the closing transaction is greater or less than the premium paid.
The Funds, except for the Ultra Short Government Fund, may write put or call options. When a Fund writes an option, an amount equal to the premium received is recorded as a liability and is subsequently marked-to-market daily. Premiums received for writing options that expire unexercised are recognized on the expiration date as realized gains. If an option is exercised, the
2023 Annual Report 67
premium received is subtracted from the cost of the purchase or added to the proceeds of the sale to determine whether a Fund has realized a gain or loss on the related investment transaction. When a Fund enters into a closing transaction, a Fund realizes a gain or loss depending upon whether the amount from the closing transaction is greater or less than the premium received.
The Funds attempt to limit market risk and enhance their income by writing (selling) covered call options. The risk in writing a covered call option is that a Fund gives up the opportunity of profit if the market price of the financial instrument increases.
A Fund also has the additional risk of not being able to enter into a closing transaction if a liquid secondary market does not exist. The risk in writing a put option is that a Fund is obligated to purchase the financial instrument underlying the option at prices which may be significantly different than the current market price.
(c) Securities Sold Short
The Funds, except for the Ultra Short Government Fund, may engage in selling securities short, which obligates a Fund to replace a security borrowed by purchasing the same security at the current market value. A Fund incurs a loss if the price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. A Fund realizes a gain if the price of the security declines between those dates.
(d) Securities Lending
For the purpose of generating income, the Funds, other than Ultra Short Government Fund, may lend portfolio securities, provided (1) the loan is secured continuously by collateral consisting of cash and/or U.S. Government securities maintained on a daily mark-to-market basis in an amount at least equal to the current market value of the securities loaned, (2) a Fund may at any time call the loan and obtain the return of securities loaned, (3) a Fund will receive any interest or dividends received on the loaned securities, and (4) the aggregate value of the securities loaned will not at any time exceed one-third of the total assets of the lending Fund. Gain or loss in the value of securities loaned that may occur during the term of the loan will be for the account of the Funds.
Cash collateral received in connection with securities lending is invested by Citibank, NA (the “Securities Lending Agent”) on behalf of the Funds in demand deposit accounts and money market funds. Such investments are subject to risk of payment delays or default on the part of the issuer or counterparty or otherwise may not generate sufficient interest to support the costs associated with securities lending. The Funds could also experience delays in recovering their securities and possible loss of income or value if the borrower fails to return the borrowed securities, although the Funds are indemnified from this risk by contract with the Securities Lending Agent. The Funds pay the Securities Lending Agent a portion of the investment income (net of rebates) on cash collateral delivered. Such fees are netted against “Income from securities lending” on the Statements of Operations. The Core Plus Income Fund and Short Duration Income Fund had securities on loan of $2,702,152 and $4,007,868, respectively, accounted for as secured borrowings with cash collateral of overnight and continuous maturities in the amounts of $2,759,075 and $4,095,283, respectively, as of March 31, 2023.
(e) Federal Income Taxes
It is the policy of each Fund to comply with all sections of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to shareholders; therefore, no provision for income or excise taxes is required.
Net investment income and net realized gains may differ for financial statement and tax purposes. The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the year that the income or realized gains were recorded by the Funds.
The Funds have reviewed their tax positions taken on federal income tax returns, for each of the three open tax years and as of March 31, 2023, and have determined that no provisions for income taxes are required in the Funds’ financial statements.
The following permanent differences between net asset components for financial reporting and tax purposes were reclassified at the end of the fiscal year (in U.S. dollars):
| Partners III | |||
| Opportunity | Partners Value | Value | |
| Paid-in capital | (2,630,142) | 2,639,007 | (2,551,808) |
| Total distributable earnings | 2,630,142 | (2,639,007) | 2,551,808 |
The differences are primarily due to net operating losses. These reclassifications have no impact on the net asset value of the Funds.
(f) Securities Transactions
Securities transactions are accounted for on the date the securities are purchased or sold (trade date). Realized gains or losses are determined by specifically identifying the security sold.
Income dividends less foreign tax withholding (if any), dividends on short positions and distributions to shareholders are recorded on the ex-dividend date. Interest, including amortization of discount or premium, is accrued as earned.
(g) Dividend Policy
The Funds declare and distribute income dividends and capital gains distributions as may be required to qualify as a regulated investment company under the Internal Revenue Code.
Generally, the Nebraska Tax-Free Income fund pays income dividends on a quarterly basis. The Core Plus Income, Short Duration Income and Ultra Short Government Funds declares dividends daily and pay dividends monthly. All dividends and distributions are reinvested automatically, unless the shareholder elects otherwise.
(h) Other
Expenses that are directly related to a Fund are charged directly to that Fund. Other operating expenses of the Trust are prorated to each Fund on the basis of relative net assets or another appropriate basis. Income, realized and unrealized gains and losses and expenses (other than class specific expenses) are allocated to each class of shares based on its relative net assets, except that each class separately bears expenses related specifically to that class, such as business administration, administrative servicing fees, transfer agent fees and registration fees.
(i) Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increase and decrease in net assets from operations during the period. Actual results could differ from those estimates.
68 2023 Annual Report
(j) In-Kind Redemptions
The Funds may meet redemption requests through an in-kind distribution of portfolio securities and cash. For financial reporting purposes, in-kind transactions are treated as a sale of securities. The resulting gains and losses are recognized based on the market value of the securities on the date of the redemption. For the year ended March 31, 2023, there was no in-kind redemption activity. The net realized gain (loss) from in-kind transactions, if any, can be found on the Statements of Operations. For tax purposes, no gains or losses were recognized.
(3) Fund Share Transactions
| Year ended March 31, 2023 | Year ended March 31, 2022 | |||
| Shares | $ Amount | Shares | $ Amount | |
| Balanced - Investor Class | ||||
| Sales | 996,557 | 15,618,109 | 1,391,859 | 23,783,588 |
| Redemptions | (1,551,226) | (24,218,332) | (1,574,271) | (26,751,264) |
| Reinvestment of distributions | 69,272 | 1,073,437 | 91,734 | 1,580,250 |
| Net increase (decrease) | (485,397) | (7,526,786) | (90,678) | (1,387,426) |
| Balanced - Institutional Class | ||||
| Sales | 1,622,884 | 25,338,132 | 1,584,912 | 27,189,209 |
| Redemptions | (854,585) | (13,296,514) | (1,770,022) | (30,366,110) |
| Reinvestment of distributions | 185,428 | 2,877,343 | 256,971 | 4,428,336 |
| Net increase (decrease) | 953,727 | 14,918,961 | 71,861 | 1,251,435 |
| Core Plus Income - Investor Class | ||||
| Sales | 10,533,840 | 102,761,529 | 3,457,972 | 37,975,389 |
| Redemptions | (3,191,279) | (31,089,651) | (3,345,400) | (36,911,521) |
| Reinvestment of distributions | 243,617 | 2,376,177 | 116,107 | 1,265,753 |
| Net increase (decrease) | 7,586,178 | 74,048,055 | 228,679 | 2,329,621 |
| Core Plus Income - Institutional Class | ||||
| Sales | 34,560,868 | 339,016,312 | 15,053,019 | 164,991,513 |
| Sales from merger | — | — | 7,478,409 | 83,160,265 |
| Redemptions | (15,161,910) | (148,893,247) | (4,981,892) | (54,728,351) |
| Reinvestment of distributions | 1,075,271 | 10,487,300 | 366,216 | 3,984,863 |
| Net increase (decrease) | 20,474,229 | 200,610,365 | 17,915,752 | 197,408,290 |
| Nebraska Tax-Free Income | ||||
| Sales | 215,612 | 2,060,603 | 179,706 | 1,814,285 |
| Redemptions | (649,131) | (6,178,394) | (347,259) | (3,523,265) |
| Reinvestment of distributions | 51,592 | 490,898 | 45,892 | 460,942 |
| Net increase (decrease) | (381,927) | (3,626,893) | (121,661) | (1,248,038) |
| Partners III Opportunity - Investor Class | ||||
| Sales | 58,225 | 691,615 | 377,282 | 5,791,590 |
| Redemptions | (504,950) | (6,135,167) | (918,180) | (14,642,432) |
| Reinvestment of distributions | 55,172 | 578,202 | 116,004 | 1,658,853 |
| Net increase (decrease) | (391,553) | (4,865,350) | (424,894) | (7,191,989) |
| Partners III Opportunity - Institutional Class | ||||
| Sales | 2,009,294 | 25,605,721 | 2,630,454 | 43,331,400 |
| Redemptions | (6,964,731) | (87,569,827) | (3,995,385) | (64,854,274) |
| Reinvestment of distributions | 2,443,803 | 27,761,597 | 3,624,320 | 55,560,823 |
| Net increase (decrease) | (2,511,634) | (34,202,509) | 2,259,389 | 34,037,949 |
| Partners Value - Investor Class | ||||
| Sales | 79,024 | 2,194,054 | 193,536 | 6,806,988 |
| Sales from Merger | 5,553,349 | 141,480,608 | — | — |
| Redemptions | (4,070,823) | (106,292,966) | (939,362) | (33,285,975) |
| Reinvestment of distributions | 406,251 | 10,794,093 | 414,117 | 14,394,715 |
| Net increase (decrease) | 1,967,801 | 48,175,789 | (331,709) | (12,084,272) |
| Partners Value - Institutional Class | ||||
| Sales | 3,077,986 | 81,254,730 | 242,503 | 8,881,462 |
| Redemptions | (1,141,780) | (31,996,603) | (370,318) | (13,353,619) |
| Reinvestment of distributions | 384,850 | 10,502,549 | 373,718 | 13,289,418 |
| Net increase (decrease) | 2,321,056 | 59,760,676 | 245,903 | 8,817,261 |
| Short Duration Income - Investor Class | ||||
| Sales | 4,149,241 | 48,750,149 | 3,502,010 | 42,618,825 |
| Redemptions | (5,802,374) | (67,838,104) | (1,528,181) | (18,809,604) |
| Reinvestment of distributions | 144,421 | 1,687,494 | 57,834 | 705,706 |
| Net increase (decrease) | (1,508,712) | (17,400,461) | 2,031,663 | 24,514,927 |
2023 Annual Report 69
| Year ended March 31, 2023 | Year ended March 31, 2022 | |||
| Shares | $ Amount | Shares | $ Amount | |
| Short Duration Income - Institutional Class | ||||
| Sales | 25,444,854 | 299,556,193 | 20,273,774 | 249,823,438 |
| Redemptions | (25,314,319) | (297,864,602) | (14,199,264) | (174,893,978) |
| Reinvestment of distributions | 1,790,820 | 20,978,737 | 979,811 | 12,015,767 |
| Net increase (decrease) | 1,921,355 | 22,670,328 | 7,054,321 | 86,945,227 |
| Ultra Short Government | ||||
| Sales | 6,274,037 | 62,640,557 | 3,341,139 | 33,392,430 |
| Redemptions | (4,009,913) | (40,030,354) | (5,073,603) | (50,720,590) |
| Reinvestment of distributions | 149,366 | 1,491,067 | 7,304 | 73,010 |
| Net increase (decrease) | 2,413,490 | 24,101,270 | (1,725,160) | (17,255,150) |
| Value - Investor Class | ||||
| Sales | 203,020 | 9,836,977 | 432,863 | 25,649,566 |
| Redemptions | (1,472,255) | (70,298,944) | (1,041,767) | (62,319,086) |
| Reinvestment of distributions | 1,356,072 | 58,745,038 | 399,589 | 24,506,778 |
| Net increase (decrease) | 86,837 | (1,716,929) | (209,315) | (12,162,742) |
| Value - Institutional Class | ||||
| Sales | 457,705 | 22,698,491 | 326,905 | 20,318,947 |
| Redemptions | (551,487) | (27,034,362) | (706,274) | (42,987,464) |
| Reinvestment of distributions | 667,098 | 29,625,842 | 189,052 | 11,830,900 |
| Net increase (decrease) | 573,316 | 25,289,971 | (190,317) | (10,837,617) |
(4) Related Party Transactions
Each Fund has retained Weitz Investment Management, Inc. as its investment adviser. In addition, the Trust has an agreement with Weitz Securities, Inc. (the “Distributor”), a company under common control with the Adviser, to act as distributor for shares of the Trust. Certain officers of the Trust are also officers and directors of the Adviser and the Distributor.
Under the terms of management and investment advisory agreements, the Adviser is paid a monthly fee based on average daily net assets. The annual investment advisory fee schedule for each of the Funds is as follows:
| Greater Than ($) | Less Than or Equal To ($) | Rate (%) | |
| Balanced | 0 | 0.60 | |
| Core Plus Income | 0 | 0.40 | |
| Nebraska Tax-Free Income | 0 | 0.40 | |
| Partners III Opportunity | 0 | 1,000,000,000 | 1.00 |
| 1,000,000,000 | 2,000,000,000 | 0.95 | |
| 2,000,000,000 | 3,000,000,000 | 0.90 | |
| 3,000,000,000 | 5,000,000,000 | 0.85 | |
| 5,000,000,000 | 0.80 | ||
| Partners Value | 0 | 5,000,000,000 | 0.75 |
| 5,000,000,000 | 0.70 | ||
| Short Duration Income | 0 | 0.40 | |
| Ultra Short Government | 0 | 0.30 | |
| Value | 0 | 5,000,000,000 | 0.75 |
| 5,000,000,000 | 0.70 |
Business administration services: The Trust has a business administration agreement with the Adviser under which the Trust compensates the Adviser for providing business administration services for all share classes of the Funds. Services encompass supervising all aspects of the management and operations of the Trust, including monitoring the Trust’s relationships with third-party service providers that may be retained from time to time by the Trust.
Administrative services: The Trust has administrative services plans under which the Trust compensates the Adviser for administrative services provided to all share classes of the Funds. Administrative services are provided by the Adviser or by certain financial intermediaries with respect to non-distribution services to fund shareholders. These services include, but are not limited to, providing shareholder statements, assisting with shareholder communications and sub-accounting services in connection with omnibus accounts.
Under the terms of a services agreement between the Adviser and Citi Fund Services Ohio, Inc. (“CFSO”), CFSO provides certain accounting and administrative services to the Funds. These services include, among other things, arranging for the payment of direct operating expenses of the Funds from the accounts of the Funds.
70 2023 Annual Report
Through July 31, 2023, the Adviser has agreed in writing to reimburse or to pay directly a portion of the Funds’ expenses to limit the net annual operating expense ratio (excluding taxes, interest, brokerage costs, acquired fund fees and expenses and extraordinary expenses). The amount listed under “Due to Adviser” is net of any expenses waived/reimbursed by the Adviser. The current expense caps and dollar amount of expenses reimbursed during the year ended March 31, 2023, are as follows:
| Annual Operating Expense Ratio Cap* | |||||||
| Core Plus | Nebraska Tax- | Partners | Short Duration | Ultra Short | |||
| Balanced | Income | Free Income | Value | Income | Government† | Value | |
| Annual Operating Expense Cap: | |||||||
| Investor Class | 0.85% | 0.50% | 0.45% | 1.09% | 0.55% | 1.09% | |
| Institutional Class | 0.70 | 0.40 | 0.89 | 0.48 | 0.20% | 0.89 | |
| Expenses Reimbursed by the Adviser: | |||||||
| Investor Class | $83,237 | $199,309 | $146,937 | $— | $185,117 | $— | |
| Institutional Class | 130,373 | 643,809 | — | 834,489 | $296,645 | — | |
| * | Funds with a single share class are shown with the Investor Class, except for the Ultra Short Government Fund which has been designated Institutional Class. |
| † | Effective January 24, 2022 through May 24, 2022, the Adviser voluntarily lowered the Ultra Short Government's expense cap to 0.05% |
As of March 31, 2023, the controlling shareholder of the Adviser held shares totaling approximately 28%, 5%, 58%, 44%, 14%, 11%, and 5% of the Balanced, Core Plus Income, Nebraska Tax-Free Income, Partners III Opportunity, Partners Value, Ultra Short Government and Value Funds, respectively.
(5) Distributions to Shareholders and Distributable Earnings
The tax character of distributions paid by the Funds for the past two tax years are summarized as follows (in U.S. dollars):
| Balanced | Core Plus Income | Nebraska Tax-Free Income | Partners III Opportunity | |||||
| Year Ended March 31, | Year Ended March 31, | Year Ended March 31, | Year Ended March 31, | |||||
| Distributions paid from: | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
| Ordinary income | 2,020,621 | 936,116 | 15,602,351 | 6,081,897 | 55,647 | 852 | – | – |
| Tax-exempt income | – | – | – | – | 451,594 | 474,894 | – | – |
| Long-term capital gains | 1,964,516 | 5,115,973 | 464,955 | 449,010 | – | – | 33,098,892 | 66,689,998 |
| Total distributions | 3,985,137 | 6,052,089 | 16,067,306 | 6,530,907 | 507,241 | 475,746 | 33,098,892 | 66,689,998 |
| Partners Value | Short Duration Income | Ultra Short Government | Value | |||||
| Year Ended March 31, | Year Ended March 31, | Year Ended March 31, | Year Ended March 31, | |||||
| Distributions paid from: | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
| Ordinary income | – | – | 22,619,297 | 12,055,029 | 1,647,995 | 75,091 | – | 393,177 |
| Long-term capital gains | 26,233,063 | 34,723,397 | 572,444 | 1,100,771 | – | – | 93,222,998 | 37,602,369 |
| Total distributions | 26,233,063 | 34,723,397 | 23,191,741 | 13,155,800 | 1,647,995 | 75,091 | 93,222,998 | 37,995,546 |
As of the tax year ended March 31, 2023, the components of net assets on a tax basis were as follows (in U.S. dollars):
| Nebraska Tax- | Partners III | ||||
| Balanced | Core Plus Income | Free Income | Opportunity | Partners Value | |
| Cost of investments | 172,238,772 | 627,625,943 | 30,005,095 | 270,185,744 | 294,117,482 |
| Gross unrealized appreciation | 40,904,684 | 2,625,772 | 16,956 | 171,051,664 | 238,219,173 |
| Gross unrealized depreciation | (8,117,638) | (31,434,585) | (889,458) | (43,572,660) | (9,361,229) |
| Net unrealized appreciation (depreciation) | 32,787,046 | (28,808,813) | (872,502) | 127,479,004 | 228,857,944 |
| Undistributed ordinary income | 865,943 | 157,248 | — | — | — |
| Qualified late year ordinary loss deferral | — | — | — | (51,274) | (541,704) |
| Undistributed tax-exempt income | — | — | 35,622 | — | — |
| Undistributed long-term gains | — | — | — | 8,170,949 | — |
| Capital loss carryforwards | (635,736) | (4,610,521) | (127,064) | — | (8,961,315) |
| Paid-in capital | 172,471,845 | 631,837,933 | 29,862,590 | 277,179,112 | 302,496,389 |
| Net assets | 205,489,098 | 598,575,847 | 28,898,646 | 412,777,791 | 521,851,314 |
| Short Duration | Ultra Short | ||||
| Income | Government | Value | |||
| Cost of investments | 798,184,560 | 92,259,290 | 440,128,027 | ||
| Gross unrealized appreciation | 1,366,741 | 4,343 | 348,998,633 | ||
| Gross unrealized depreciation | (28,124,998) | (51,324) | (11,915,321) | ||
| Net unrealized appreciation (depreciation) | (26,758,257) | (46,981) | 337,083,312 | ||
| Undistributed ordinary income | 228,374 | 288,599 | — | ||
| Qualified late year ordinary loss deferral | — | — | (529,220) | ||
| Undistributed long-term gains | — | — | 21,566,614 | ||
| Capital loss carryforwards | (789,252) | (15,870) | — | ||
| Dividend Payable | — | (298,809) | — | ||
| Paid-in capital | 798,303,290 | 86,738,058 | 415,539,426 | ||
| Net assets | 770,984,155 | 86,664,997 | 773,660,132 | ||
2023 Annual Report 71
The Partners III Opportunity, Partners Value and Value Funds elected to defer ordinary losses arising after December 31, 2022. Such losses are treated for tax purposes as arising on April 1, 2023.
Capital loss carryforwards represent tax basis capital losses that may be carried over to offset future realized capital gains, if any. To the extent that carryforwards are used, no capital gains distributions will be made. During the tax year ended March 31, 2023, the Funds did not utilize any capital loss carryforwards to offset realized capital gains. The character and utilization of the carryforwards are as follows (in U.S. Dollars):
| Nebraska Tax-Free | Short Duration | Ultra Short | ||||
| Balanced | Core Plus Income | Income | Partners Value* | Income | Government | |
| Short term (no expirations) | 612,909 | 729,043 | — | 1,735,946 | 149,851 | 11,968 |
| Long term (no expirations) | 22,827 | 3,881,478 | 127,064 | 2,489,980 | 639,401 | 3,902 |
* Excludes portion limited as a result of changes in ownership in connection with merger reorganizations. These amounts will be available in future years. The total capital loss carryforwards can be found in the components of net assets table above.
(6) Securities Transactions
Purchases and proceeds from maturities or sales of investment securities of the Funds for the year ended March 31, 2023 excluding fund merger transactions, in-kind transactions, short-term securities and U.S. government obligations, are summarized as follows (in U.S. dollars):
| Core Plus | Nebraska Tax- | Partners III | Short Duration | Ultra Short | ||||
| Balanced | Income | Free Income | Opportunity | Partners Value | Income | Government | Value | |
| Purchases | 53,213,334 | 308,951,962 | 1,363,885 | 141,636,609 | 26,491,872 | 350,891,034 | 9,495,641 | 66,663,470 |
| Proceeds | 37,592,970 | 91,431,341 | 5,370,000 | 146,276,620 | 84,153,601 | 324,939,802 | 8,308,122 | 150,975,439 |
(7) Affiliated Issuers
Affiliated issuers, as defined under the Investment Company Act of 1940, are those in which a Fund’s holdings of an issuer represent 5% or more of the outstanding voting securities of the issuer. A summary of each Fund’s holdings in the securities of such issuers is set forth below:
| Net Change | ||||||||
| in Unrealized | ||||||||
| Value | Purchases at | Proceeds from | Net Realized | Appreciation/ | Shares as of | Dividend | ||
| 3/31/2022 | Cost | Sales | Gain(Loss) | Depreciation | Value 3/31/2023 | 3/31/2023 | Income | |
| Partners III Opportunity | ||||||||
| CoreCard Corp. | $16,714,000 | $471,875 | $(3,922,594) | $3,377,219 | $(1,424,850) | $15,215,650 | 505,000 | $ - |
(8) Contingencies
Each Fund indemnifies the Trust’s officers and trustees for certain liabilities that might arise from their performance of their duties to each of the Funds. Additionally, in the normal course of business the Funds enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote.
(9) Financial Instruments With Off-Balance Sheet Risks
Option contracts written and securities sold short result in off-balance sheet risk as the Funds’ ultimate obligation to satisfy the terms of the contract or the sale of securities sold short may exceed the amount recognized in the Statements of Assets and Liabilities.
The Funds are required to maintain collateral in a segregated account to provide adequate margin as determined by the broker.
(10) Margin Borrowing Agreement
The Partners III Opportunity Fund has a margin account with its prime broker, Bank of America Merrill Lynch, under which the Fund may borrow against the value of its securities, subject to regulatory limitations. Interest accrues at the federal funds rate plus 0.625% (5.445% at March 31, 2023). Interest is accrued daily and paid monthly. The Partners III Opportunity Fund held a cash balance of $15,458,409 with the broker at March 31, 2023.
The Partners III Opportunity Fund is exposed to credit risk from its prime broker who effects transactions and extends credit pursuant to a prime brokerage agreement. The Adviser attempts to minimize the credit risk by monitoring credit exposure and the creditworthiness of the prime broker.
(11) Concentration of Credit Risk
Approximately 83.3% of the Nebraska Tax-Free Income Funds’ net assets are in obligations of political subdivisions of the State of Nebraska, which are subject to the credit risk associated with the non-performance of such issuers.
(12) Fair Value Measurements
Various inputs are used in determining the value of the Fund’s investments. These inputs are used in determining the value of the Funds’ investments and are summarized in the following fair value hierarchy:
| • | Level 1 – quoted prices in active markets for identical securities; |
| • | Level 2 – other significant observable inputs (including quoted prices for similar securities); |
| • | Level 3 – significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of investments). |
The inputs or methodology used for valuing securities are not an indication of the risk associated with investing in those securities.
A description of the valuation techniques applied to the Funds’ major categories of assets and liabilities measured at fair value on a recurring basis follows.
| • | Equity securities and Exchange-traded funds. Securities traded on a national securities exchange (or reported on the NASDAQ national market) are stated at the last reported sales price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, |
72 2023 Annual Report
they are categorized in Level 1 of the fair value hierarchy. Preferred stock and other equities traded on inactive markets or valued by reference to similar instruments are categorized in Level 2.
| • | Corporate and Municipal bonds. The fair values of corporate and municipal bonds are estimated using various techniques, which may consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads and fundamental data relating to the issuer. Although most corporate and municipal bonds are categorized in Level 2 of the fair value hierarchy, in instances where lower relative weight is placed on transaction prices, quotations, or similar observable inputs, they are categorized in Level 3. |
| • | Asset-backed securities. The fair values of asset-backed securities (including non-government agency mortgage-backed securities and interest-only securities) are generally estimated based on models that consider the estimated cash flows of each tranche of the entity, a benchmark yield and an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche. Certain securities are valued principally using dealer quotations. To the extent the inputs are observable and timely, the values are categorized in Level 2 of the fair value hierarchy; otherwise they are categorized as Level 3. |
| • | U.S. Government securities. U.S. Government securities are normally valued using a model that incorporates market observable data such as reported sales of similar securities, broker quotes, yields, bids, offers and reference data. Certain securities are valued principally using dealer quotations. U.S. Government securities are categorized in Level 1 or Level 2 of the fair value hierarchy depending on the inputs used and market activity levels for specific securities. |
| • | U.S. agency securities. U.S. agency securities are comprised of two main categories consisting of agency issued debt and mortgage-backed securities. Agency issued debt securities are generally valued in a manner similar to U.S. Government securities. Mortgage-backed securities include collateralized mortgage obligations, to-be-announced (TBA) securities and mortgage pass-through certificates. Mortgage-backed securities are generally valued using dealer quotations. Depending on market activity levels and whether quotations or other data are used, these securities are typically categorized in Level 2 of the fair value hierarchy. |
| • | Restricted and/or illiquid securities. Restricted and/or illiquid securities for which quotations are not readily available are valued in accordance with procedures approved by the Trust’s Board of Trustees. Restricted securities issued by publicly traded companies are generally valued at a discount to similar publicly traded securities. Restricted or illiquid securities issued by nonpublic entities are valued by reference to comparable public entities or fundamental data relating to the issuer or both. Depending on the relative significance of valuation inputs, these instruments are classified in either Level 2 or Level 3 of the fair value hierarchy. |
| • | Derivative instruments. Listed derivatives, such as the Funds’ equity option contracts and warrants, that are valued based on closing prices from the exchange or the mean of the closing bid and ask prices are generally categorized in Level 1 or Level 2 of the fair value hierarchy depending on the market activity levels. |
The following is a summary of inputs used, in U.S. dollars, as of March 31, 2023, in valuing the Funds’ assets and liabilities carried at fair value. The Schedule of Investments for each Fund provides a detailed breakdown of each category. For the year ended March 31, 2023, there were no transfers into or out of Level 3.
| Balanced | ||||
| Level 1 | Level 2 | Level 3 | Total | |
| Assets: | ||||
| Investments in Securities: | ||||
| Common Stocks | 88,144,125 | — | — | 88,144,125 |
| Non-Convertible Preferred Stocks | 905,063 | — | — | 905,063 |
| Corporate Bonds | — | 2,299,180 | — | 2,299,180 |
| Corporate Convertible Bonds | — | 1,901,556 | — | 1,901,556 |
| Asset-Backed Securities | — | 18,980,179 | — | 18,980,179 |
| Commercial Mortgage-Backed | ||||
| Securities | — | 5,698,640 | — | 5,698,640 |
| Mortgage-Backed Securities | — | 4,439,122 | — | 4,439,122 |
| U.S. Treasuries | — | 74,873,929 | — | 74,873,929 |
| Cash Equivalents | 3,830,723 | 3,953,301 | — | 7,784,024 |
| Total Investments in Securities | 92,879,911 | 112,145,907 | — | 205,025,818 |
| Core Plus Income | ||||
| Level 1 | Level 2 | Level 3 | Total | |
| Assets: | ||||
| Investments in Securities: | ||||
| Corporate Bonds | — | 93,050,509 | — | 93,050,509 |
| Corporate Convertible Bonds | — | 1,954,409 | — | 1,954,409 |
| Asset-Backed Securities | — | 173,011,975 | — | 173,011,975 |
| Commercial Mortgage-Backed | ||||
| Securities | — | 42,091,171 | — | 42,091,171 |
| Mortgage-Backed Securities | — | 4,977,988 | — | 4,977,988 |
| Municipal Bonds | — | 979,731 | — | 979,731 |
| U.S. Treasuries | — | 237,467,207 | — | 237,467,207 |
| Non-Convertible Preferred Stocks | 814,818 | — | — | 814,818 |
| Cash Equivalents | 41,710,247 | — | — | 41,710,247 |
| Short-Term Securities Held as | ||||
| Collateral for Securities on | ||||
| Loan | 2,759,075 | — | — | 2,759,075 |
| Total Investments in Securities | 45,284,140 | 553,532,990 | — | 598,817,130 |
| Nebraska Tax-Free Income | ||||
| Level 1 | Level 2 | Level 3 | Total | |
| Assets: | ||||
| Investments in Securities: | ||||
| Municipal Bonds | — | 26,230,270 | — | 26,230,270 |
| Cash Equivalents | 2,902,323 | — | — | 2,902,323 |
| Total Investments in Securities | 2,902,323 | 26,230,270 | — | 29,132,593 |
| Partners III Opportunity | ||||
| Level 1 | Level 2 | Level 3 | Total | |
| Assets: | ||||
| Investments in Securities: | ||||
| Common Stocks | 374,566,460 | — | — | 374,566,460 |
| Non-Convertible Preferred Stocks | 5,862,000 | — | — | 5,862,000 |
| Warrants | — | — | —# | — |
| Cash Equivalents | 9,856,416 | 23,755,472 | — | 33,611,888 |
| Total Investments in Securities | 390,284,876 | 23,755,472 | — | 414,040,348 |
| Liabilities: | ||||
| Securities Sold Short | (16,375,600) | — | — | (16,375,600) |
2023 Annual Report 73
| Partners Value | ||||
| Level 1 | Level 2 | Level 3 | Total | |
| Assets: | ||||
| Investments in Securities: | ||||
| Common Stocks | 488,754,121 | 8,384,800 | — | 497,138,921 |
| Warrants | — | — | —# | — |
| Cash Equivalents | 14,012,267 | 11,824,238 | — | 25,836,505 |
| Total Investments in Securities | 502,766,388 | 20,209,038 | — | 522,975,426 |
| Short Duration Income | ||||
| Level 1 | Level 2 | Level 3 | Total | |
| Assets: | ||||
| Investments in Securities: | ||||
| Corporate Bonds | — | 100,360,724 | — | 100,360,724 |
| Corporate Convertible Bonds | — | 8,712,337 | — | 8,712,337 |
| Asset-Backed Securities | — | 316,800,860 | — | 316,800,860 |
| Commercial Mortgage-Backed | ||||
| Securities | — | 72,346,115 | — | 72,346,115 |
| Mortgage-Backed Securities | — | 71,865,683 | — | 71,865,683 |
| U.S. Treasuries | — | 192,470,566 | — | 192,470,566 |
| Cash Equivalents | 4,774,735 | — | — | 4,774,735 |
| Short-Term Securities Held as | ||||
| Collateral for Securities on | ||||
| Loan | 4,095,283 | — | — | 4,095,283 |
| Total Investments in Securities | 8,870,018 | 762,556,285 | — | 771,426,303 |
| Ultra Short Government | ||||
| Level 1 | Level 2 | Level 3 | Total | |
| Assets: | ||||
| Investments in Securities: | ||||
| Asset-Backed Securities | — | 5,341,274 | — | 5,341,274 |
| U.S. Treasuries | — | 63,038,802 | — | 63,038,802 |
| Cash Equivalents | 17,927,333 | 5,904,900 | — | 23,832,233 |
| Total Investments in Securities | 17,927,333 | 74,284,976 | — | 92,212,309 |
| Value | ||||
| Level 1 | Level 2 | Level 3 | Total | |
| Assets: | ||||
| Investments in Securities: | ||||
| Common Stocks | 742,890,077 | — | — | 742,890,077 |
| Cash Equivalents | 19,540,965 | 14,780,297 | — | 34,321,262 |
| Total Investments in Securities | 762,431,042 | 14,780,297 | — | 777,211,339 |
# Represents securities that were deemed to have a value of zero at March 31, 2023.
(13) Acquisition of Fund
Effective as of the close of business March 24, 2023, the Partners Value Fund acquired all of the assets and liabilities of the Hickory Fund (“Acquired Fund”), a series of the Trust, an open-end registered management investment company, pursuant to a Board-approved plan of reorganization dated January 11, 2023 (the “Plan)”.
The acquisition was accomplished by a tax-free exchange of 5,553,349 Investor Class shares of the Partners Value Fund, valued at $141,480,608 for 3,660,913 Investor Class shares of the Acquired Fund outstanding as of close of business March 24, 2023.
Pursuant to the Plan, all of the assets and liabilities of the Acquired Fund were transferred to the Partners Value Fund. At the close of business March 24, 2023, the Acquired Fund's investments in securities had a fair value of $141,652,732 and identified cost of $97,277,091. For financial reporting purposes, assets received and shares issued by the Partners Value Fund were recorded at fair value; however, the cost basis of the investments received from the Acquired Fund was carried forward to align ongoing reporting of the Partners Value Fund's realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes.
Fees and expenses incurred by the Acquired Fund and the Partners Value Fund directly in connection with the Plan were borne by the Adviser, as provided by the Plan.
The acquisition did not result in a material change to the Acquired Fund’s investment portfolio due to the investment restrictions of the Partners Value Fund. Additionally, there are no material differences in accounting policies of the Acquired Fund as compared to those of the Partners Value Fund.
Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of the Acquired Fund that have been included in the Partners Value Fund's Statement of Operations since March 24, 2023. Partners Value Fund did not purchase or sell securities following the acquisition for purposes of realigning its investment portfolio. Accordingly, the acquisition of the Acquired Fund did not affect Partners Value Fund's portfolio turnover ratio for the year ended March 31, 2023.
(14) Subsequent Events
Management has evaluated the impact of all subsequent events on the Funds through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
(15) Recent Accounting Pronouncements
In December 2022, the FASB issued Accounting Standards Update ("ASU") 2022-06 “Reference Rate Reform (Topic 848)”. ASU 2022-06 updates and clarifies ASU No. 2020-04, which provides optional, temporary relief with respect to the financial reporting of contracts subject to certain types of modifications due to the planned discontinuation of LIBOR and other interbank-offered reference rates. The temporary relief provided by ASU No. 2022-06 is effective immediately for certain reference rate-related contract modifications that occur through December 31, 2024. Management does not expect ASU No. 2022-06 to have a material impact on the financial statements.
74 2023 Annual Report
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Trustees of The Weitz Funds
Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities of The Weitz Funds (the “Trust”) (comprising the Balanced Fund, Core Plus Income Fund, Nebraska Tax-Free Income Fund, Partners III Opportunity Fund, Partners Value Fund, Short Duration Income Fund, Ultra Short Government Fund and Value Fund (collectively referred to as the “Funds”)), including the schedules of investments, as of March 31, 2023, and the related statements 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 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds comprising The Weitz Funds at March 31, 2023, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended and their financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on each of the Funds’ financial statements 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 Trust 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 are free of material misstatement, whether due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s 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 Trust’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, 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. Our procedures included confirmation of securities owned as of March 31, 2023, by correspondence with the custodian and brokers. 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. We believe that our audits provide a reasonable basis for our opinion.
We have
served as the auditor of one or more of The Weitz Funds investment companies since 2004.
Minneapolis, MN
May 23, 2023
2023 Annual Report 75
ACTUAL AND HYPOTHETICAL EXPENSES FOR
COMPARISON PURPOSES
(Unaudited)
Example
As a shareholder of one or more of the Funds, you incur two types of costs: (1) transaction costs, including any transaction fees that you may be charged if you purchase or redeem your Fund shares through certain financial institutions; and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from October 1, 2022 through March 31, 2023.
Actual Expenses
The first line for each Fund in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an account value of $8,600 divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid from 10/01/22 – 3/31/23” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each Fund in the table below provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each Fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of the Fund. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in a specific Weitz Fund to other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs charged by certain financial institutions. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if you incurred transactional fees, your costs would have been higher. Actual and hypothetical expenses for each Fund are provided in this table.
| Beginning Account | Ending Account | Annualized | Expenses Paid from | ||
| Value 10/01/22 | Value 3/31/23 | Expense Ratio | 10/01/22-3/31/23(1) | ||
| Balanced - Investor Class | Actual | $1,000.00 | $1,077.80 | 0.85% | $4.40 |
| Hypothetical(2) | 1,000.00 | 1,020.69 | 0.85 | 4.28 | |
| Balanced - Institutional Class | Actual | 1,000.00 | 1,078.50 | 0.70 | 3.63 |
| Hypothetical(2) | 1,000.00 | 1,021.44 | 0.70 | 3.53 | |
| Core Plus Income - Investor Class | Actual | 1,000.00 | 1,047.20 | 0.50 | 2.55 |
| Hypothetical(2) | 1,000.00 | 1,022.44 | 0.50 | 2.52 | |
| Core Plus Income - Institutional Class | Actual | 1,000.00 | 1,047.60 | 0.40 | 2.04 |
| Hypothetical(2) | 1,000.00 | 1,022.94 | 0.40 | 2.02 | |
| Nebraska Tax-Free Income | Actual | 1,000.00 | 1,053.90 | 0.45 | 2.30 |
| Hypothetical(2) | 1,000.00 | 1,022.69 | 0.45 | 2.27 | |
| Partners III Opportunity - Investor Class | Actual | 1,000.00 | 1,081.70 | 1.94 | 10.07 |
| Hypothetical(2) | 1,000.00 | 1,015.26 | 1.94 | 9.75 | |
| Partners III Opportunity - Institutional Class | Actual | 1,000.00 | 1,086.70 | 1.17 | 6.09 |
| Hypothetical(2) | 1,000.00 | 1,019.10 | 1.17 | 5.89 | |
| Partners Value - Investor Class | Actual | 1,000.00 | 1,105.70 | 1.07 | 5.62 |
| Hypothetical(2) | 1,000.00 | 1,019.60 | 1.07 | 5.39 | |
| Partners Value - Institutional Class | Actual | 1,000.00 | 1,106.60 | 0.91 | 4.78 |
| Hypothetical(2) | 1,000.00 | 1,020.39 | 0.91 | 4.58 | |
| Short Duration Income - Investor Class | Actual | 1,000.00 | 1,030.20 | 0.55 | 2.78 |
| Hypothetical(2) | 1,000.00 | 1,022.19 | 0.55 | 2.77 | |
| Short Duration Income - Institutional Class | Actual | 1,000.00 | 1,031.40 | 0.48 | 2.43 |
| Hypothetical(2) | 1,000.00 | 1,022.54 | 0.48 | 2.42 | |
| Ultra Short Government | Actual | 1,000.00 | 1,019.90 | 0.20 | 1.01 |
| Hypothetical(2) | 1,000.00 | 1,023.93 | 0.20 | 1.01 | |
| Value - Investor Class | Actual | 1,000.00 | 1,141.90 | 1.02 | 5.45 |
| Hypothetical(2) | 1,000.00 | 1,019.85 | 1.02 | 5.14 | |
| Value - Institutional Class | Actual | 1,000.00 | 1,142.40 | 0.92 | 4.91 |
| Hypothetical(2) | 1,000.00 | 1,020.34 | 0.92 | 4.63 |
| (1) | Expenses are equal to the annualized expense ratio for the Fund, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half year (182/365). |
| (2) | Assumes 5% total return before expenses. |
76 2023 Annual Report
OTHER INFORMATION
Proxy
Voting Policy
A
description of the Funds’ proxy voting policies and procedures is available without charge, upon request by (i) calling
800-304- 9745, (ii) on the Funds’ website at weitzinvestments.com; and (iii) on the SEC’s website at sec.gov.
Information on how each of the Funds voted proxies relating to portfolio securities during each twelve month period ended June 30 is
available: (i) on the Funds’ website at weitzinvestments.com and (ii) on the SEC’s website at sec.gov.
Form
N-PORT
The
Funds file complete schedules of investments with the Securities and Exchange Commission as of June 30 and December 31 of each year on
Form N-PORT. The Funds’ Form N-PORT can be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. or
on the SEC’s website at sec.gov.
Liquidity
Risk Management Program
The
Funds have adopted and implemented a Liquidity Risk Management Policy (the “Policy”) in accordance with Rule 22e-4 under
the Investment Company Act of 1940, as amended. The Policy seeks to assess and manage each Fund’s liquidity risk, which is the
risk that a Fund could not meet requests to redeem Fund shares without significant dilution of the remaining investors’ interests
in the Fund. The Funds’ Board of Trustees (“Board”) has appointed Weitz Investment Management, Inc., the Funds’
investment adviser (“Weitz”), to administer the Policy. Weitz has delegated certain day-to-day administration responsibilities
to the Liquidity Risk Management Committee (“Committee”), which consists of certain Weitz portfolio management, compliance,
and accounting personnel. Weitz also may engage one or more third parties to perform certain functions under the Policy.
The Board met
on February 21, 2023 and received a report (the “Liquidity Report”) from Weitz addressing the operation of the Policy and
assessing the adequacy and effectiveness of its implementation, including the operation of each Fund’s highly liquid investment
minimum (“HLIM”). The Liquidity Report discussed key components of the Policy, including the assessment of the Funds’
liquidity risk, classification of each Fund’s portfolio investments into one of four liquidity categories, 15% limit on the Funds’
holdings of illiquid investments, and HLIM requirements. As reflected in the Liquidity Report, Weitz considers the Policy to be reasonably
designed to assess and manage the Funds’ liquidity risk and believes it has been adequately and effectively implemented.
Tax Information
Of the distributions paid during the fiscal year, the amounts that may
be considered qualified dividend income and for corporate shareholders, the amounts that may qualify for the corporate dividends received
deduction, are summarized as follows (in U.S. dollars):
| Core Plus | ||
| Balanced | Income | |
| Qualified dividend income | 958,813 | 207,400 |
| Corporate dividends received deduction | 1,096,766 | 207,400 |
The information and distributions reported herein may differ from the information and distributions reported to shareholders for the calendar year ended December 31, 2022, which was reported in conjunction with your 2022 Form 1099-DIV.
2023 Annual Report 77
INFORMATION ABOUT THE TRUSTEES AND OFFICERS
The individuals listed below serve as Trustees or Officers of the Trust. Each Trustee of the Weitz Funds serves until a successor is elected and qualified or until resignation. Each Officer of the Weitz Funds is elected annually by the Trustees.
The address of all Trustees and Officers is 1125 South 103rd Street, Suite 200, Omaha, Nebraska 68124.
Independent
Trustees
Lorraine Chang (Age: 72)
Position(s) Held with Trust: Trustee; Chair, Board of Trustees
Length of Service (Beginning Date): 1997
Principal Occupation(s) During Past 5 Years: Retired (2020
to Present); Independent Management Consultant (2009 to
2020)
Number of Portfolios Overseen in Fund Complex: 8
Other Directorships During Past 5 Years: N/A
Steven M. Hill (Age: 58)
Position(s) Held with Trust: Trustee
Length of Service (Beginning Date): October 2022
Principal Occupation(s) During Past 5 Years: Director,
Catholic Cemeteries of the Archdiocese of Omaha (2021
to Present); Finance Director, St. Patrick Catholic Church
(2019 to 2021); Principal Accounting and Financial Officer,
Investment Pools, and Head of Global ETF Administration,
Invesco Capital Management LLC (2011 to 2018)
Number of Portfolios Overseen in Fund Complex: 8
Other Directorships During Past 5 Years: N/A
Alison M. Maloy (Age: 44)
Position(s) Held with Trust: Trustee
Length of Service (Beginning Date): October 2022
Principal Occupation(s) During Past 5 Years: Accounting
Instructor, Creighton University (2018 to Present); Director
of Client Accounting Services, Bland & Associates, a public
accounting firm (2016 to 2018)
Number of Portfolios Overseen in Fund Complex: 8
Other Directorships During Past 5 Years: N/A
Elizabeth L. Sylvester (Age: 39)
Positions(s) Held with Trust: Trustee
Length of Service (Beginning Date): October 2022
Principal Occupation(s) During Past 5 Years: Managing
Director (2022 to Present), Director (2019 to 2022),
Castlelake, a private equity firm (2019 to present); Vice
President, Envoi LLC, a private wealth management firm
(2017 to 2019)
Number of Portfolios Overseen in Fund Complex: 8
Other Directorships During Past 5 Years: N/A
Dana E. Washington (Age: 50)
Position(s) Held with Trust: Trustee
Length of Service (Beginning Date): 2022
Principal Occupation(s) During Past 5 Years: Executive Vice
President and General Counsel, Father Flanagan’s Boys’
Home, a youth care and health care services organization
Number of Portfolios Overseen in Fund Complex: 8
Other Directorships During Past 5 Years: N/A
Justin
B. Wender (Age: 53)
Position(s) Held with Trust: Trustee
Length of Service (Beginning Date): 2009
Principal Occupation(s) During Past 5 Years: Managing
Partner, Stella Point Capital, LP, a private equity firm
Number of Portfolios Overseen in Fund Complex: 8
Other Directorships During Past 5 Years: International
Money Express, Inc., an international money transfer
company (2018 to Present)
Wallace R. Weitz (Age: 73)*†
Position(s) Held with Trust: President; Portfolio
Manager; Trustee
Length of Service (Beginning Date): 1986
Principal Occupation(s) During Past 5 Years: President,
Weitz Funds; Co-Chairman of Board (February 2023 -
Present), Co-Chief Investment Officer, and Portfolio Manager,
Weitz Investment Management, Inc.
Number of Portfolios Overseen in Fund Complex: 8
Other Directorships During Past 5 Years: Berkshire
Hathaway, Inc., a holding company owning subsidiaries
engaged in numerous diverse business activities; Cable
One, Inc., a cable television, internet and telephone services
company
Andrew “Drew” S. Weitz (Age: 43) **†
Position(s) Held with Trust: Vice President; Portfolio
Manager; Trustee
Length of Service (Beginning Date): October 2022
Principal Occupation(s) During Past 5 Years: Vice President,
Weitz Funds; Co-Chairman of the Board and Senior Vice
President (February 2023 to Present), Portfolio Manager,
Vice President (2017 to February 2023), and Director
of Equity Research (2017 to 2020), Weitz Investment
Management, Inc.
Number of Portfolios Overseen in Fund Complex: 8
Other Directorships During Past 5 Years: N/A
| * | Mr. Wallace Weitz is the father of Mr. Drew Weitz, who serves as a Trustee and Vice-President of the Trust and who also serves as a Director and Vice President of the Adviser. |
| ** | Mr. Drew Weitz is the son of Mr. Wallace Weitz, who serves as a Trustee and President of the Trust and who also serves as Chairman of the Adviser. |
| † | Each of Mr. Wallace Weitz and Mr. Drew Weitz is a Director and Officer of Weitz Investment Management, Inc., investment adviser to the Weitz Funds, and as such is considered an “interested person” of the Trust, as that term is defined in the Investment Company Act of 1940 (an “Interested Trustee”). |
78 2023 Annual Report
Officers
Shar M. Bennett (Age: 48)
Position(s) Held with Trust:
Vice President and Assistant Treasurer
Length of Service (Beginning Date): 2018
Principal Occupation(s) During Past 5 Years: Vice President
(2021 to Present), Assistant Treasurer, Weitz Funds; Senior Vice President (February 2023 to Present), Director of Finance & Operations
(2021 to Present), Vice President (2021 to February 2023), Director of Fund Administration (2018 to 2021), Weitz Investment Management,
Inc.
James J. Boyne (Age: 56)
Position(s) Held with Trust: Vice President and Treasurer
Length of Service (Beginning Date): 2018
Principal Occupation(s) During Past 5 Years: Vice President, Treasurer, Weitz Funds;
President and
Treasurer, Weitz Investment Management, Inc.
Thomas D. Carney (Age: 59)
Position(s) Held with Trust: Vice President
Length of Service (Beginning Date): 2015
Principal Occupation(s) During Past 5 Years: Vice President, Weitz Funds; Co-Head of Fixed
Income (November 2022 to
Present), Portfolio Manager. Head of Fixed Income (1997 to November 2022),
Weitz Investment Management, Inc.
John
R. Detisch (Age: 58)
Position(s) Held with Trust: Vice President, General Counsel, Secretary and Chief Compliance Officer
Length of Service (Beginning Date):2011
Principal Occupation(s) During Past 5 Years: Vice President, General Counsel, Secretary and Chief
Compliance Officer,
Weitz Funds; Vice President, General Counsel, Secretary and Chief Compliance
Officer, Weitz Investment Management, Inc.
Bradley P. Hinton (Age: 55)
Position(s) Held with Trust: Vice President Length of
Service (Beginning Date): 2006
Principal Occupation(s) During Past 5 Years: Vice President,
Weitz Funds; Co-Chief Investment Officer, Portfolio
Manager, Executive Vice President (February 2023 to Present), and Vice President (2006
to February 2023),
Weitz Investment Management, Inc.
The Statement of Additional Information for the Weitz Funds, which can be obtained without charge by calling 800-304-9745, includes additional information about the Trustees and Officers of the Weitz Funds.
2023 Annual Report 79
INDEX DESCRIPTIONS
Index performance is hypothetical and is shown for illustrative purposes only. You cannot invest directly in an index.
| Bloomberg 1-3 Year U.S. | The Bloomberg 1-3 Year U.S. Aggregate Index is generally representative of the |
| Aggregate Index | market for investment grade, U.S. dollar denominated, fixed-rate taxable bonds |
| with maturities from one to three years. | |
| Bloomberg 5-Year Municipal | The Bloomberg 5-Year Municipal Bond Index is a capitalization weighted bond |
| Bond Index | index generally representative of major municipal bonds of all quality ratings with |
| an average maturity of approximately five years. | |
| Bloomberg U.S. Aggregate | The Bloomberg U.S. Aggregate Bond Index is a broad-based benchmark that |
| Bond Index | measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond |
| market. | |
| ICE BofA U.S. 6-Month | The ICE BofA U.S. 6-Month Treasury Bill Index is generally representative of the |
| Treasury Bill Index | market for U.S. Treasury Bills. |
| Morningstar Moderately | The Morningstar Moderately Conservative Target Risk Index is an asset allocation |
| Conservative Target | index comprised of constituent Morningstar indices and reflects global equity |
| Risk Index | market exposure of 40% based on an asset allocation methodology derived by |
| Ibbotson Associates, a Morningstar company. | |
| Russell 1000® Index | The Russell 1000 Index measures the performance of the large-cap segment of |
| the U.S. equity universe. It is a subset of the Russell 3000 Index and includes | |
| approximately 1,000 of the largest securities based on a combination of their | |
| market cap and current index membership. | |
| Russell 3000® Index | The Russell 3000 Index measures the performance of the largest 3,000 U.S. |
| companies representing approximately 98% of the investable U.S. equity market. | |
| S&P 500® Index | The S&P 500 Index is an unmanaged index consisting of 500 companies |
| generally representative of the market for the stocks of large-size U.S. companies. | |
80 2023 Annual Report
GLOSSARY OF TERMS
| 30-Day SEC Yield | 30-Day SEC Yield represents net investment income earned by a fund over a 30- |
| day period, expressed as an annual percentage rate based on the Fund’s share | |
| price at the end of the 30-day period. Subsidized yield reflects fee waivers and/ | |
| or expense reimbursements during the period. Without such fee waivers and/ | |
| or expense reimbursements, if any; yields would have been lower. Unsubsidized | |
| yield does not adjust for any fee waivers and/or expense reimbursement in effect. | |
| Average Coupon | Average coupon is the weighted average coupon rate of each bond in the |
| portfolio. | |
| Average Effective Duration | Average effective duration provides a measure of a fund's interest-rate sensitivity. |
| The longer a fund's duration, the more sensitive the fund is to shifts in interest | |
| rates. | |
| Average Effective Maturity | Average effective maturity is the weighted average of the maturities of a fund’s |
| underlying bonds. | |
| Commercial Real Estate | CRE CLOs are a type of asset-backed security backed by a pool of commercial |
| Collateralized Loan | loans. |
| Obligations | |
| Effective Long | Effective Long is the sum of the portfolio’s long positions (such as common stocks, |
| or derivatives where the price increases when an index or position rises). | |
| Effective Short | Effective Short is the sum of the portfolio’s short positions (such as, derivatives |
| where the price increases when an index or position falls). | |
| Effective Net | Effective Net is the Effective Long minus the Effective Short. |
| Gross Expense Ratio | The gross expense ratio reflects the total annual operating expenses of a mutual |
| fund, before any fee waivers or reimbursements. | |
| Net Expense Ratio | The net expense ratio reflects the total annual operating expenses of a mutual |
| fund after taking into account any fee waiver and/or expense reimbursement. The | |
| net expense ratio represents what investors are ultimately charged to be invested | |
| in a mutual fund. | |
| Investment Grade Bonds | Investment Grade Bonds are those securities rated at least BBB- by one or more |
| credit ratings agencies. | |
| Non-Investment Grade | Non-Investment Grade Bonds are those securities (commonly referred to as |
| Bonds | “high yield” or “junk” bonds) rated BB+ and below by one or more credit ratings |
| agencies. | |
| Market Capitalization | The market capitalization of a company represents the current stock-market value |
| of a company's equity. It is calculated as the current share price times the number | |
| of shares outstanding as of the most recent quarter. | |
| Middle Market CLOs | Middle Market CLOs refer to collateralized loan obligations backed by loans made |
| to smaller companies, which companies generally have earnings before interest, | |
| taxes, and amortization of less than $75 million. | |
2023 Annual Report 81
| Portfolio Turnover | Portfolio turnover is a measure of how much buying and selling of securities a |
| portfolio does during a particular period. A turnover of 100 percent means the | |
| portfolio has sold the equivalent of every security in its portfolio and replaced it | |
| with something else over a set period. | |
| Yield to Maturity (YTM) | Yield to Maturity (YTM) is the total return anticipated on a bond portfolio if the |
| bonds are held to maturity. | |
| Yield to Worst (YTW) | Yield to Worst (YTW) is the lowest potential yield that can be received on a bond |
| portfolio without the issuers actually defaulting. | |
82 2023 Annual Report
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2023 Annual Report 83
Board
of Trustees
Lorraine Chang
Steven M. Hill
Alison M. Maloy
Elizabeth L. Sylvester
Dana E. Washington
Andrew (Drew) S. Weitz
Wallace R. Weitz
Justin B. Wender
Investment Adviser
Weitz Investment Management, Inc.
1125 South 103rd Street, Suite 200
Omaha, NE 68124-1071
(800) 304-9745
Custodian
Citibank, N.A.
Officers
Wallace R. Weitz, President
Shar M. Bennett, Vice President & Assistant
Treasurer
James J. Boyne, Vice President & Treasurer
Thomas D. Carney, Vice President
John R. Detisch, Vice President, Secretary &
Chief Compliance Officer
Bradley P. Hinton, Vice President
Andrew S. Weitz, Vice President
Distributor
Weitz Securities, Inc.
Transfer Agent and Dividend Paying Agent
Ultimus Fund Solutions, LLC
NASDAQ symbols:
Balanced Fund
Investor Class - WBALX
Institutional Class - WBAIX
Core Plus Income Fund
Investor Class - WCPNX
Institutional Class - WCPBX
Nebraska Tax-Free Income Fund - WNTFX
Partners III Opportunity Fund
Investor Class - WPOIX
Institutional Class - WPOPX
Partners Value Fund
Investor Class - WPVLX
Institutional Class - WPVIX
Short Duration Income Fund
Investor Class - WSHNX
Institutional Class - WEFIX
Ultra Short Government Fund - SAFEX
Value Fund
Investor Class - WVALX
Institutional Class - WVAIX
Investors should consider carefully the investment objectives, risks, and charges and expenses of a fund before investing. This and other important information is contained in the prospectus and summary prospectus, which may be obtained at weitzinvestments.com or from a financial advisor. Please read the prospectus carefully before investing.
5/30/2023
Item 2. Code of Ethics.
As of the end of the period covered by this report, the Registrant has adopted a code of ethics that applies to the Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Registrant or a third party (the “Code of Ethics”). During the period covered by this report, there were no amendments, nor did the Registrant grant any waivers, including any implicit waivers, from any provision of the Code of Ethics. The Code of Ethics is attached hereto as Exhibit 12(a)(1).
Item 3. Audit Committee Financial Expert.
The Registrant’s board of trustees has determined that the Registrant has at least one “audit committee financial expert” (as defined in Item 3 of Form N-CSR) serving on its audit committee. Alison Maloy is an “audit committee financial expert” and is “independent” (as each term is defined in Item 3 of Form N-CSR).
Item 4. Principal Accountant Fees and Services.
| (a) | Audit Fees. Fees for audit services provided to the Registrant were $269,500 and $265,870 for the fiscal years ended March 31, 2023 and 2022, respectively. |
| (b) | Audit Related Fees. The aggregate fees billed in each of the last two fiscal years for audit related-services by the principal accountant that are reasonably related to the performance of the audit of the Registrant’s financial statements and are not reported under paragraph (a) of this item were $10,000 and $7,700 for the fiscal years ended March 31, 2023 and 2022, respectively. The fees, paid by Weitz Investment Management, Inc., the Registrant’s investment adviser and transfer agent, were payment for the principal accountant performing work relating to plan of reorganization transactions. |
| (c) | Tax Fees. Fees for tax services, which consisted of income and excise tax compliance services, were $50,320 and $46,592 for the fiscal years ended March 31, 2023 and 2022, respectively. |
| (d) | All Other Fees. Fees for all other services totaled $0 and $0 for the fiscal years ended March 31, 2023 and 2022, respectively. |
| (e) | (1) The Registrant’s Audit Committee has adopted Pre-Approval Policies and Procedures. The Audit Committee must pre-approve all audit services and non-audit services that the principal accountant provides to the Registrant. The Audit Committee must also pre-approve any engagement of the principal accountant to provide non-audit services to the Registrant’s investment adviser, or any affiliate of the adviser that provides ongoing services to the Registrant, if such non-audit services directly impact the Registrant’s operations and financial reporting. |
(2) No services described in items (b) were pre-approved by the Audit Committee pursuant to Rule 2-01(c)(7)(i)(c) of Regulation S-X.
| (f) | All of the work in connection with the audit of the Registrant during the years ended March 31, 2023 and 2022 was performed by full-time employees of the Registrant’s principal accountant. |
| (g) | The aggregate fees billed by the principal accountant for non-audit services to the Registrant, the Registrant’s investment adviser and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the Registrant were $144,820 and $121,162 for the years ended March 31, 2023 and 2022, respectively. |
| (h) | The Registrant’s Audit Committee has considered whether the provision of non-audit services that were rendered to the Registrant’s investment adviser, and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the Registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal auditor’s independence. |
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
The Schedule of Investments in Securities of unaffiliated issuers is included as part of the Report to Shareholders filed under Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures.
| (a) | The Registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the Registrant’s disclosure controls and procedures as conducted within 90 days of the filing date of this report, that those disclosure controls and procedures provide reasonable assurance that material information required to be disclosed by the Registrant on this report is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. |
| (b) | There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17CFR 270.30a-3(d)) that occurred during the period covered by this report that have materially affected or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13. Exhibits.
| (a)(1) | The Code of Ethics is attached hereto. |
| (a)(2) | The certifications required by Rule 30a-2(a) of the Investment Company Act of 1940 are attached hereto. |
| (a)(3) | Not applicable. |
| (b) | The certifications required by Rule 30a-2(b) of the Investment Company Act of 1940 and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant)__Weitz Funds_______________________________
By (Signature and Title) ______/s/ Wallace R. Weitz____________________________________
Wallace R. Weitz, Principal Executive Officer
Date 5/24/23
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By (Signature and Title) _______/s/ Wallace R. Weitz_________________________________
Wallace R. Weitz, Principal Executive Officer
Date 5/24/23
By (Signature and Title) _______/s/ James J. Boyne_________________________________
James J. Boyne, Principal Financial Officer
Date 5/24/23