ck0000918942-20231231
LKCM SMALL CAP EQUITY
FUND (LKSCX)
LKCM SMALL-MID CAP EQUITY
FUND (LKSMX)
LKCM EQUITY
FUND (LKEQX)
LKCM BALANCED
FUND (LKBAX)
LKCM FIXED INCOME
FUND (LKFIX)
LKCM INTERNATIONAL EQUITY
FUND (LKINX)
www.lkcmfunds.com
This
Prospectus contains information you should consider before you invest in the
LKCM Funds. Please read it carefully and keep it for future reference.
Neither
the Securities and Exchange Commission (the “SEC”) nor any state securities
commission has approved or disapproved of the securities offered by this
Prospectus, nor has the SEC or any state securities commission passed upon the
adequacy of this Prospectus. Any representation to the contrary is a criminal
offense.
TABLE
OF CONTENTS
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LKCM
SMALL CAP EQUITY FUND |
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LKCM
SMALL-MID CAP EQUITY FUND |
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SUMMARY
SECTION
LKCM
SMALL CAP EQUITY FUND
Investment
Objective: The
Fund seeks to maximize long-term capital
appreciation.
Fees and Expenses of the
Fund: The
following table describes the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples
below. The Fund does not impose any sales charges in connection with
purchases and sales of Fund shares.
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Shareholder
Fees |
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(fees
paid directly from your investment) |
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Redemption
Fee (as a percentage of the amount redeemed on shares held for less than
30 days) |
1.00% |
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Annual Fund
Operating Expenses |
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(expenses
that you pay each year as a percentage of the value of your
investment) |
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Management
Fees |
0.75% |
Distribution
and Service (12b-1) Fees |
0.00% |
Other
Expenses |
0.32% |
Acquired
Fund Fees and Expenses(1) |
0.01% |
Total
Annual Fund Operating Expenses |
1.08% |
Fee
Waiver and/or Expense Reimbursement(2) |
-0.07% |
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement(2) |
1.01% |
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(1) Acquired Fund Fees and
Expenses are indirect fees and expenses that funds incur from investing in the
shares of other investment companies, including money market funds. The Total
Annual Fund Operating Expenses and Total Annual Fund Operating Expenses After
Fee Waiver and/or Expense Reimbursement for the Fund differ from the Ratio of
Expenses to Average Net Assets before and after expense waiver and/or
reimbursement found within the “Financial Highlights” section of the Prospectus
because the audited information in the “Financial Highlights” reflects the
operating expenses of the Fund and does not include indirect expenses such as
Acquired Fund Fees and Expenses.
(2) Luther
King Capital Management Corporation (“Adviser”), the Fund’s investment adviser,
has contractually agreed to waive all or a portion of its management fee and/or
reimburse the Fund through May 1,
2025 in order to limit the Fund’s Total Annual Fund Operating
Expenses After Fee Waiver and/or Expense Reimbursement to 1.00% per annum
(excluding any interest, taxes, brokerage commissions, indirect fees and
expenses relating to investments in other investment companies, including money
market funds (“Acquired Fund Fees and Expenses”), and extraordinary expenses).
The fee waiver and expense reimbursement agreement may be terminated or changed
only with the consent of the Board of Trustees.
Example
The following example is intended to help you compare the costs of
investing in the Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same (except that the example reflects the
fee waiver/expense reimbursement arrangement through May 1,
2025). Although your actual costs may be higher
or lower, based on these assumptions, whether or not you redeem your shares,
your costs would be as follows:
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1 Year |
3 Years |
5 Years |
10 Years |
$103 |
$337 |
$589 |
$1,311 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover
rate may indicate higher transaction costs and may result in higher taxes when
Fund shares are held in a taxable account. These costs, which are not reflected
in annual fund operating expenses or in the example, affect the Fund’s
performance. During the most recent fiscal year, the Fund’s portfolio turnover
rate was 28% of the average value of its
portfolio.
Principal Investment
Strategies:
The Fund seeks to achieve its
investment objective by investing under normal circumstances at least 80% of its
net assets (plus any borrowings for investment purposes) in equity securities of
smaller companies. The Fund primarily chooses investments that the Adviser
believes are likely to have above-average growth in revenue and/or earnings and
potential for above-average capital appreciation. Smaller companies are those
with market capitalizations at the time of investment between $0.8 billion and
$7 billion. The Fund is not required to sell equity securities whose market
values appreciate or depreciate outside this market capitalization range. From
time to time, in pursuing its investment strategies, the Fund may hold a
significant percentage of its investments in specific sectors of the economy,
such as the industrials sector. However, as the sector composition of the Fund’s
portfolio changes over time, the Fund’s exposure to the industrials sector may
be lower at a future date, and the Fund’s exposure to other market sectors may
be higher.
The Fund seeks to invest in the equity securities of high quality
companies, as determined by the Adviser, that typically exhibit certain
characteristics, including high profitability levels, strong balance sheet
quality, competitive advantages, ability to generate excess cash flows,
meaningful management ownership stakes, attractive reinvestment opportunities,
strong market share positions, and/or attractive relative valuation. These
equity securities primarily consist of common stocks, American Depositary
Receipts (“ADRs”), and real estate investment trusts
(“REITs”).
Principal
Risks: The greatest
risk of investing in the Fund is that you could lose money.
There is no assurance that the Fund will achieve its investment objective. The
principal risks of investing in the Fund listed below are presented in
alphabetical order and not in order of importance or potential exposure. Among
other matters, this presentation is intended to facilitate your ability to find
particular risks and make comparisons with those of other funds. Each risk
summarized below is considered a “principal risk” of investing in the Fund,
regardless of the order in which it appears.
• Cybersecurity
Risk – Operational risks arising from, among other things,
human or processing errors, systems and technology disruptions or failures, or
cybersecurity incidents may negatively impact the Fund, its service providers,
and third-party fund distribution platforms, as well as the ability of
shareholders to transact with the Fund, and result in financial losses.
Cybersecurity incidents may allow unauthorized parties to gain access to or
misappropriate Fund assets, shareholder data, or confidential or proprietary
information, or cause the Fund or its service providers, as well as securities
trading venues and their service providers, to suffer data corruption or lose
operational functionality. In addition, authorized persons could inadvertently
release Fund shareholder data or confidential or proprietary information stored
on the Fund’s systems. Cybersecurity incidents can result from deliberate
attacks or unintentional events. It is not possible for the Fund or its service
providers to identify all of the operational risks that may affect the Fund or
to develop processes and controls to completely eliminate or mitigate their
occurrence or effects. Portfolio companies in which the Fund invests are also
exposed to various risks related to cybersecurity incidents, and the value of
the Fund’s investments in such portfolio companies could be adversely impacted
in the event any such cybersecurity incidents occur. The Fund cannot control the
cybersecurity plans and systems of its service providers, its counterparties or
the issuers of securities in which the Fund invests.
• Equity
Securities Risk – The
Fund invests in equity securities and therefore is subject to investment risk,
issuer risk, market risks and significant fluctuations in value in response to
changes in a company’s financial condition as well as general market, economic
and political conditions, and other factors. The Fund may experience a
significant or complete loss on its investment in an equity security. In
addition, stock prices may be sensitive to rising interest rates, which increase
borrowing costs and the costs of capital for the issuer. Equity securities are
generally subordinate to an issuer’s debt in the event of liquidation or
bankruptcy. The Fund’s investments in equity securities primarily consist of
ADRs, common stocks, and REITs.
ADRs – Investments in ADRs are subject to certain of the risks
associated with investing directly in foreign securities, such as currency
fluctuations, political and economic instability, capital restrictions, less
government regulation, less publicly available information, less liquidity,
increased price volatility, and differences in financial reporting standards.
ADRs may not accurately track the prices of the underlying foreign securities
and their value may change materially at times when the U.S. markets are not
open for trading. Investing in such securities may expose the Fund to additional
risk.
Common
Stock – The value of an issuing company’s common stock may rise
or fall as a result of factors affecting the issuing company, other companies in
the same industry or sector, or the financial markets overall. Common stock
generally is subordinate to preferred stock upon the liquidation or bankruptcy
of the issuing company.
REITs – Investments in REITs are subject to
the risks associated with investing in the real estate industry, adverse
governmental actions, regulatory limitations on rents and operating expenses,
declines in property and real estate values, risks related to general and local
economic conditions, increases in property taxes and operating expenses,
overbuilding, changes in interest rates, liabilities resulting from
environmental problems, and the potential failure of a REIT to qualify for
federal income-tax-free “pass-through” of net income and net realized gains that
are distributed to shareholders and exemption from registration as an investment
company. REITs are dependent upon specialized management skills and may invest
in relatively few properties, and may not be diversified geographically or by
property or tenant type. As a result, investments in REITs may be volatile.
REITs are pooled investment vehicles with their own fees and expenses and the
Fund will indirectly bear a proportionate share of those fees and expenses when
investing in REITs.
• Inflation
Risk – Higher actual or anticipated inflation may have an
adverse effect on corporate profits or consumer spending or the financial
markets overall and result in lower values for securities held by the Fund. If
Fund investments do not keep pace with inflation, the present value of Fund
assets and the value of Fund distributions could decline.
• Investment
Risk – An investment in the Fund is not a deposit with a bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. When you sell your shares of the Fund, they could
be worth less than what you paid for them. Therefore, you may lose money by
investing in the Fund.
• Market
Risk
– The Fund is subject to the risk that the securities markets will move down,
sometimes rapidly and unpredictably, based on overall economic conditions and
other factors, which may negatively affect the Fund’s performance. Factors that
affect markets in general, including geopolitical, regulatory, market and
economic developments and other developments that impact specific economic
sectors, industries, companies and segments of the market, could adversely
impact the Fund’s investments and lead to a decline in the value of your
investment in the Fund. Geopolitical and other events, including tensions, war,
and open conflict between nations, such as between Russia and Ukraine, in the
Middle East and in eastern Asia, could affect the economies of many countries
including the United States. Trade disputes, pandemics, public health crises,
natural disasters and related events have led, and in the future may continue to
lead, to instability in world economies and markets generally and reduced
liquidity in equity, credit and fixed income markets, which may disrupt
economies and markets and adversely affect the value of your investment. In
addition, policy changes by the U.S. government, the U.S. Federal Reserve and/or
foreign governments and political and economic events within the U.S. and
abroad, such as changes in the U.S. presidential administration and Congress,
the U.S. government’s inability at times to agree on a long-term budget and
deficit reduction plan, the threat of a federal government shutdown, threats not
to increase the federal government’s debt limit which could result in a default
on the government’s obligations, and the shutdown of certain financial
institutions, may cause increased volatility in financial markets, affect
investor and consumer confidence and adversely impact the broader financial
markets and economy, perhaps suddenly and to a significant degree. In 2022 the
Federal Reserve and certain foreign central banks began to increase interest
rates to address rising inflation. It is difficult to accurately predict the
pace at which interest rates might increase or start decreasing, the timing,
frequency or
magnitude
of any such changes in interest rates, or when such changes might stop or
reverse course. Unexpected changes in interest rates could lead to significant
market volatility or reduced liquidity in certain sectors of the market. Market
disruptions have caused, and may continue to cause, broad changes in market
value, negative public perceptions concerning these developments, and adverse
investor sentiment or publicity. Changes in value may be temporary or may last
for extended periods. Regulators have proposed and recently adopted a number of
changes to regulations affecting markets and issuers. The full effect of newly
adopted regulations is not currently known.
• Redemption
Risk – The Fund may experience periods of significant
redemptions that could cause the Fund to sell assets at inopportune times or at
a loss or depressed value. Redemption risk is heightened during periods of
declining or illiquid markets. Significant redemptions could hurt the Fund’s
performance. The sale of assets to meet redemption requests may require the Fund
to realize net capital gains, which could require the Fund to make substantial
capital gains distributions to shareholders.
• Sector
Weighting Risk – The
Fund may focus its investments in particular sectors of the economy. To the
extent the Fund emphasizes investments in particular sectors of the economy, the
Fund will be subject to a greater degree of risks particular to those sectors.
Market conditions, interest rates, and economic, regulatory, financial or
geopolitical developments could significantly affect securities in particular
sectors. Depending on the weightings of the Fund’s investments in particular
sectors, the Fund may have increased exposure to price movements of securities
in those sectors.
Industrials
Sector Risk –
The industrials sector includes companies engaged in the construction,
engineering, machinery, energy services, transportation, professional services,
and aerospace and defense industries. Companies in the industrials sector may be
adversely affected by changes in government regulation, world events and
economic conditions. In addition, companies in the industrials sector may be
adversely affected by environmental damage, product and environmental liability
claims, changes in commodity prices and exchange rates, changes in the supply
and demand for their products and services, and for industrials sector products
generally, and product obsolescence, among other
factors.
• Security
Selection Risk – Securities selected by the Fund may not perform as
anticipated due to a number of factors impacting the company that issued the
securities or its particular industry or sector, such as poor operating or
management performance, weak demand for the company’s products or services, the
company’s failure to meet earnings or other operating performance expectations,
financial leverage or credit deterioration, litigation or regulatory issues, or
a decline in the value of the issuer’s business and assets.
• Small
Cap Companies Risk – The Fund invests in small capitalization companies that
may not have the size, resources and other assets of mid or large capitalization
companies. Small capitalization companies may also have narrower commercial
markets and more limited operating histories, product lines, and managerial and
financial resources than larger, more established companies. Small
capitalization companies may be more sensitive to changes in interest rates,
borrowing costs and earnings. As a result, the securities of small
capitalization companies held by the Fund may be less liquid and subject to
greater market risks and fluctuations in value than mid or large capitalization
companies or may not correspond to changes in the stock market in
general.
Performance: The bar chart
and table that follow illustrate annual Fund returns for periods ended December
31. This information is intended to give you some indication of
the risks of investing in the Fund by showing changes in the Fund’s performance
from year to year and how the Fund’s average annual returns over time compare
with those of a market index and an index of funds with similar investment
objectives. The Fund’s past performance
(before and after taxes) is not necessarily an indication of how the Fund will
perform in the future. Updated performance information is
available on the Fund’s website at www.lkcmfunds.com
or by calling the Fund toll-free at 1-800-688-LKCM.
Calendar Year Returns as of
12/31
During
the period shown on the bar chart, the Fund’s best and worst quarters are shown
below:
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Best and Worst Quarterly Returns |
37.01% |
2nd
quarter, 2020 |
-30.75% |
1st
quarter,
2020 |
Average Annual Total
Returns for Periods Ended December 31, 2023
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1 Year |
5 Years |
10 Years |
Return Before
Taxes |
22.57% |
12.57% |
7.15% |
Return After
Taxes on Distributions |
21.79% |
11.10% |
4.61% |
Return After
Taxes on Distributions and Sale of Fund
Shares |
13.93% |
9.99% |
5.05% |
Russell
2000®
Index (reflects no deduction for
fees, expenses or taxes) |
16.93% |
9.97% |
7.16% |
Lipper
Small-Cap Core Funds Index (reflects no deduction for
taxes) |
16.15% |
11.30% |
7.76% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates, and do not reflect the impact of state and local
taxes. The return after taxes on
distributions and sale of Fund shares may exceed the return before taxes due to
an assumed tax benefit from any losses on a sale of Fund shares at the end of
the measurement period. Actual after-tax returns depend on your
tax situation and may differ from those shown. In addition,
the after-tax returns shown are not relevant to investors who hold their Fund
shares through tax-deferred arrangements such as 401(k) plans and individual
retirement accounts.
Investment
Adviser: Luther
King Capital Management Corporation.
Portfolio
Managers:
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Name |
Title |
Experience
with the Fund |
Mason D. King, CFA |
Principal,
Vice President, Portfolio Manager and Analyst |
Since
2017 |
J. Luther King, Jr., CFA, CIC |
Principal,
President and Portfolio Manager |
Since
Inception in 1994 |
Mark L. Johnson, CFA, CIC |
Principal,
Vice President and Portfolio Manager |
Since
2021 |
Purchase
and Sale of Fund Shares: Investors
may purchase, exchange or redeem Fund shares by mail (LKCM Funds, c/o
U.S. Bank Global Fund Services, 615 East Michigan Street,
3rd Floor,
Milwaukee, WI 53202), or by telephone at 1-800-688-LKCM. Redemptions by
telephone are only permitted upon previously receiving appropriate
authorization. Transactions normally will only occur on days the New York
Stock Exchange is scheduled to be open. Investors who wish to purchase or
redeem Fund shares through a financial intermediary should contact the financial
intermediary directly for information relative to the purchase or sale of Fund
shares. The minimum initial amount of investment in the Fund and exchanges
into the Fund from another fund in the LKCM Funds is $2,000. Subsequent
investments in the Fund for all types of accounts may be made with a minimum
investment of $500.
Tax
Information: The
Fund’s distributions are taxable to you and will be taxed as ordinary income or
capital gains, unless you are investing through a tax-deferred arrangement, such
as a 401(k) plan or an individual retirement account, in which case the
withdrawal of your investment from the tax-deferred arrangement may be taxable.
Payments
to Broker-Dealers and Other Financial Intermediaries: If
you purchase Fund shares through a broker-dealer or other financial intermediary
(such as a financial adviser), the Fund and its related companies may pay the
intermediary for the sale of Fund
shares
and/or other services. If made, these payments may create a conflict of interest
by influencing the broker-dealer or other intermediary and your salesperson to
recommend the Fund over another investment. Ask your salesperson or visit your
financial intermediary’s website for more information.
LKCM
SMALL-MID CAP EQUITY FUND
Investment
Objective: The
Fund seeks to maximize long-term capital appreciation.
Fees and Expenses of the
Fund: The
following table describes the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples
below. The Fund does not impose any sales charges in connection with
purchases and sales of Fund shares.
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Shareholder
Fees |
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(fees
paid directly from your investment) |
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Redemption
Fee (as a percentage of the amount redeemed on shares held for less than
30 days) |
1.00% |
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Annual Fund
Operating Expenses |
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(expenses
that you pay each year as a percentage of the value of your
investment) |
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Management
Fees |
0.75% |
Distribution
and Service (12b-1) Fees |
0.00% |
Other
Expenses |
0.99% |
Acquired
Fund Fees and Expenses(1) |
0.01% |
Total
Annual Fund Operating Expenses |
1.75% |
Fee
Waiver and/or Expense Reimbursement(2) |
-0.74% |
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement(2) |
1.01% |
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(1) Acquired Fund Fees and
Expenses are indirect fees and expenses that funds incur from investing in the
shares of other investment companies, including money market funds. The Total
Annual Fund Operating Expenses and Total Annual Fund Operating Expenses After
Fee Waiver and/or Expense Reimbursement for the Fund differ from the Ratio of
Expenses to Average Net Assets before and after expense waiver and/or
reimbursement found within the “Financial Highlights” section of the Prospectus
because the audited information in the “Financial Highlights” reflects the
operating expenses of the Fund and does not include indirect expenses such as
Acquired Fund Fees and Expenses.
(2) Luther
King Capital Management Corporation (“Adviser”), the Fund’s investment adviser,
has contractually agreed to waive all or a portion of its management fee and/or
reimburse the Fund through May 1,
2025 in order to limit the Fund’s Total Annual Fund Operating
Expenses After Fee Waiver and/or Expense Reimbursement to 1.00% per annum
(excluding any interest, taxes, brokerage commissions, indirect fees and
expenses relating to investments in other investment companies, including money
market funds (“Acquired Fund Fees and Expenses”), and extraordinary expenses).
The fee waiver and expense reimbursement agreement may be terminated or changed
only with the consent of the Board of Trustees.
Example
The following example is intended to help you compare the costs of
investing in the Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same (except that the example reflects the
fee waiver/expense reimbursement arrangement through May 1,
2025). Although your actual costs may be higher
or lower, based on these assumptions, whether or not you redeem your shares,
your costs would be as follows:
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1 Year |
3 Years |
5 Years |
10 Years |
$103 |
$479 |
$880 |
$2,001 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover rate may
indicate higher transaction costs and may result in higher taxes when Fund
shares are held in a taxable account. These costs, which are not reflected in
annual fund operating expenses or in the example, affect the Fund’s performance.
During the most recent fiscal year, the Fund’s portfolio turnover rate was
32% of the average
value of its portfolio.
Principal Investment
Strategies:
The Fund seeks to achieve its
investment objective by investing under normal circumstances at least 80% of its
net assets (plus any borrowings for investment purposes) in equity securities of
small-mid capitalization companies. The Fund primarily chooses investments that
the Adviser believes are likely to have above-average growth in revenue and/or
earnings and potential for above-average capital appreciation. Small-mid
capitalization companies are those with market capitalizations at the time of
investment between $2 billion and $20 billion. The Fund is not required to sell
equity securities whose market values appreciate or depreciate outside this
market capitalization range. From time to time, in pursuing its investment
strategies, the Fund may hold a significant percentage of its investments in
specific sectors of the economy, such as the industrials sector. However, as the
sector composition of the Fund’s portfolio changes over time, the Fund’s
exposure to the industrials sector may be lower at a future date, and the Fund’s
exposure to other market sectors may be higher.
The Fund seeks to invest in the equity securities of high quality
companies, as determined by the Adviser, that typically exhibit certain
characteristics, including high profitability levels, strong balance sheet
quality, competitive advantages, ability to generate excess cash flows,
meaningful management ownership stakes, attractive reinvestment opportunities,
strong market share positions, and/or attractive relative valuation. These
equity securities primarily consist of common stocks, American Depositary
Receipts (“ADRs”), and real estate investment trusts
(“REITs”).
Principal
Risks: The greatest
risk of investing in the Fund is that you could lose money.
There is no assurance that the Fund will achieve its investment objective. The
principal risks of investing in the Fund listed below are presented in
alphabetical order and not in order of importance or potential exposure. Among
other matters, this presentation is intended to facilitate your ability to find
particular risks and make comparisons with those of other funds. Each risk
summarized below is considered a “principal risk” of investing in the Fund,
regardless of the order in which it appears.
• Cybersecurity
Risk – Operational risks arising from, among other things,
human or processing errors, systems and technology disruptions or failures, or
cybersecurity incidents may negatively impact the Fund, its service providers,
and third-party fund distribution platforms, as well as the ability of
shareholders to transact with the Fund, and result in financial losses.
Cybersecurity incidents may allow unauthorized parties to gain access to or
misappropriate Fund assets, shareholder data, or confidential or proprietary
information, or cause the Fund or its service providers, as well as securities
trading venues and their service providers, to suffer data corruption or lose
operational functionality. In addition, authorized persons could inadvertently
release Fund shareholder data or confidential or proprietary information stored
on the Fund’s systems. Cybersecurity incidents can result from deliberate
attacks or unintentional events. It is not possible for the Fund or its service
providers to identify all of the operational risks that may affect the Fund or
to develop processes and controls to completely eliminate or mitigate their
occurrence or effects. Portfolio companies in which the Fund invests are also
exposed to various risks related to cybersecurity incidents, and the value of
the Fund’s investments in such portfolio companies could be adversely impacted
in the event any such cybersecurity incidents occur. The Fund cannot control the
cybersecurity plans and systems of its service providers, its counterparties or
the issuers of securities in which the Fund invests.
• Equity
Securities Risk – The
Fund invests in equity securities and therefore is subject to investment risk,
issuer risk, market risks and significant fluctuations in value in response to
changes in a company’s financial condition as well as general market, economic
and political conditions, and other factors. The Fund may experience a
significant or complete loss on its investment in an equity security. In
addition, stock prices may be sensitive to rising interest rates, which increase
borrowing costs and the costs of capital for the issuer. Equity securities are
generally subordinate to an issuer’s debt in the event of liquidation or
bankruptcy. The Fund’s investments in equity securities primarily consist of
ADRs, common stocks, and REITs.
ADRs – Investments in ADRs are subject to certain of the risks
associated with investing directly in foreign securities, such as currency
fluctuations, political and economic instability, capital restrictions, less
government regulation, less publicly available information, less liquidity,
increased price volatility, and differences in financial reporting standards.
ADRs may not accurately track the prices of the underlying foreign securities
and their value may change materially at times when the U.S. markets are not
open for trading. Investing in such securities may expose the Fund to additional
risk.
Common
Stock – The value of an issuing company’s common stock may rise
or fall as a result of factors affecting the issuing company, other companies in
the same industry or sector, or the financial markets overall. Common stock
generally is subordinate to preferred stock upon the liquidation or bankruptcy
of the issuing company.
REITs – Investments in REITs are subject to
the risks associated with investing in the real estate industry, adverse
governmental actions, regulatory limitations on rents and operating expenses,
declines in property and real estate values, risks related to general and local
economic conditions, increases in property taxes and operating expenses,
overbuilding, changes in interest rates, liabilities resulting from
environmental problems, and the potential failure of a REIT to qualify for
federal income-tax-free “pass-through” of net income and net realized gains that
are distributed to shareholders and exemption from registration as an investment
company. REITs are dependent upon specialized management skills and may invest
in relatively few properties, and may not be diversified geographically or by
property or tenant type. As a result, investments in REITs may be volatile.
REITs are pooled investment vehicles with their own fees and expenses and the
Fund will indirectly bear a proportionate share of those fees and expenses when
investing in REITs.
• Inflation
Risk – Higher actual or anticipated inflation may have an
adverse effect on corporate profits or consumer spending or the financial
markets overall and result in lower values for securities held by the Fund. If
Fund investments do not keep pace with inflation, the present value of Fund
assets and the value of Fund distributions could decline.
• Investment
Risk – An investment in the Fund is not a deposit with a bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. When you sell your shares of the Fund, they could
be worth less than what you paid for them. Therefore, you may lose money by
investing in the Fund.
• Market
Risk
– The Fund is subject to the risk that the securities markets will move down,
sometimes rapidly and unpredictably, based on overall economic conditions and
other factors, which may negatively affect the Fund’s performance. Factors that
affect markets in general, including geopolitical, regulatory, market and
economic developments and other developments that impact specific economic
sectors, industries, companies and segments of the market, could adversely
impact the Fund’s investments and lead to a decline in the value of your
investment in the Fund. Geopolitical and other events, including tensions, war,
and open conflict between nations, such as between Russia and Ukraine, in the
Middle East and in eastern Asia, could affect the economies of many countries
including the United States. Trade disputes, pandemics, public health crises,
natural disasters and related events have led, and in the future may continue to
lead, to instability in world economies and markets generally and reduced
liquidity in equity, credit and fixed income markets, which may disrupt
economies and markets and adversely affect the value of your investment. In
addition, policy changes by the U.S. government, the U.S. Federal Reserve and/or
foreign governments and political and economic events within the U.S. and
abroad, such as changes in the U.S. presidential administration and Congress,
the U.S. government’s inability at times to agree on a long-term budget and
deficit reduction plan, the threat of a federal government shutdown, threats not
to increase the federal government’s debt limit which could result in a default
on the government’s obligations, and the shutdown of certain financial
institutions, may cause increased volatility in financial markets, affect
investor and consumer confidence and adversely impact the broader financial
markets and economy, perhaps suddenly and to a significant degree. In 2022 the
Federal Reserve and certain foreign central banks began to increase interest
rates to address rising inflation. It is
difficult
to accurately predict the pace at which interest rates might increase or start
decreasing, the timing, frequency or magnitude of any such changes in interest
rates, or when such changes might stop or reverse course. Unexpected changes in
interest rates could lead to significant market volatility or reduced liquidity
in certain sectors of the market. Market disruptions have caused, and may
continue to cause, broad changes in market value, negative public perceptions
concerning these developments, and adverse investor sentiment or publicity.
Changes in value may be temporary or may last for extended periods. Regulators
have proposed and recently adopted a number of changes to regulations affecting
markets and issuers. The full effect of newly adopted regulations is not
currently known.
• Redemption
Risk – The Fund may experience periods of significant
redemptions that could cause the Fund to sell assets at inopportune times or at
a loss or depressed value. Redemption risk is heightened during periods of
declining or illiquid markets. Significant redemptions could hurt the Fund’s
performance. The sale of assets to meet redemption requests may require the Fund
to realize net capital gains, which could require the Fund to make substantial
capital gains distributions to shareholders.
• Sector
Weighting Risk – The
Fund may focus its investments in particular sectors of the economy. To the
extent the Fund emphasizes investments in particular sectors of the economy, the
Fund will be subject to a greater degree of risks particular to those sectors.
Market conditions, interest rates, and economic, regulatory, financial or
geopolitical developments could significantly affect securities in particular
sectors. Depending on the weightings of the Fund’s investments in particular
sectors, the Fund may have increased exposure to price movements of securities
in those sectors.
Industrials
Sector Risk –
The industrials sector includes companies engaged in the construction,
engineering, machinery, energy services, transportation, professional services,
and aerospace and defense industries. Companies in the industrials sector may be
adversely affected by changes in government regulation, world events and
economic conditions. In addition, companies in the industrials sector may be
adversely affected by environmental damage, product and environmental liability
claims, changes in commodity prices and exchange rates, changes in the supply
and demand for their products and services, and for industrials sector products
generally, and product obsolescence, among other
factors.
• Security
Selection Risk – Securities selected by the Fund may not perform as
anticipated due to a number of factors impacting the company that issued the
securities or its particular industry or sector, such as poor operating or
management performance, weak demand for the company’s products or services, the
company’s failure to meet earnings or other operating performance expectations,
financial leverage or credit deterioration, litigation or regulatory issues, or
a decline in the value of the issuer’s business and assets.
• Small
and Mid Cap Companies Risk – The Fund invests in small and mid capitalization
companies that may not have the size, resources and other assets of large
capitalization companies. Small and mid capitalization companies may also have
narrower commercial markets and more limited operating histories, product lines,
and managerial and financial resources than larger, more established companies.
Small and mid capitalization companies may be more sensitive to changes in
interest rates, borrowing costs and earnings. As a result, the securities of
small and mid capitalization companies held by the Fund may be less liquid and
subject to greater market risks and fluctuations in value than large
capitalization companies or may not correspond to changes in the stock market in
general. In general, these risks are greater for small capitalization companies
than for mid capitalization companies.
Performance: The bar chart
and table that follow illustrate annual Fund returns for periods ended December
31. This information is intended to give you some indication of
the risks of investing in the Fund by showing changes in the Fund’s performance
from year to year and how the Fund’s average annual returns over time compare
with those of a market index and an index of funds with similar investment
objectives. The Fund’s past
performance (before and after taxes) is not necessarily an indication of how the
Fund will perform in the future. Updated performance information
is available on the Fund’s website at www.lkcmfunds.com
or by calling the Fund toll-free at 1-800-688-LKCM.
Calendar Year Returns as of
12/31
During
the period shown on the bar chart, the Fund’s best and worst quarters are shown
below:
|
|
|
|
| |
Best and Worst Quarterly Returns |
34.18% |
2nd
quarter,
2020 |
-26.29% |
1st
quarter,
2020 |
Average Annual Total
Returns for Periods Ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
| |
|
1 Year |
5 Years |
10
Years |
Return Before
Taxes |
25.76% |
14.11% |
7.63% |
Return After
Taxes on Distributions |
25.76% |
11.87% |
5.22% |
Return After
Taxes on Distributions and Sale of Fund
Shares |
15.25% |
11.08% |
5.53% |
Russell
2500®
Index (reflects no deduction for
fees, expenses or taxes) |
17.42% |
11.67% |
8.36% |
Lipper
Small-Cap Core Funds Index (reflects no deduction for
taxes) |
16.15% |
11.30% |
7.76% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates, and do not reflect the impact of state and local
taxes. The return after taxes on
distributions and sale of Fund shares may exceed the return before taxes due to
an assumed tax benefit from any losses on a sale of Fund shares at the end of
the measurement period. Actual after-tax returns depend on your
tax situation and may differ from those shown. In addition,
the after-tax returns shown are not relevant to investors who hold their Fund
shares through tax-deferred arrangements such as 401(k) plans and individual
retirement accounts.
Investment
Adviser: Luther
King Capital Management Corporation.
Portfolio
Managers:
|
|
|
|
|
|
|
| |
Name |
Title |
Experience
with the Fund |
Daniel C. Downes, CFA, CPA |
Principal,
Vice President, Portfolio Manager and Analyst |
Since
2021 |
J. Luther King, Jr., CFA, CIC |
Principal,
President and Portfolio Manager |
Since
Inception in 2011 |
Mason
D. King, CFA |
Principal,
Vice President, Portfolio Manager and Analyst |
Since
2017 |
Purchase
and Sale of Fund Shares: Investors
may purchase, exchange or redeem Fund shares by mail (LKCM Funds, c/o
U.S. Bank Global Fund Services, 615 East Michigan Street,
3rd Floor,
Milwaukee, WI 53202), or by telephone at 1-800-688-LKCM. Redemptions by
telephone are only permitted upon previously receiving appropriate
authorization. Transactions normally will only occur on days the New York
Stock Exchange is scheduled to be open. Investors who wish to purchase or
redeem Fund shares through a financial intermediary should contact the financial
intermediary directly for information relative to the purchase or sale of Fund
shares. The minimum initial amount of investment in the Fund and exchanges
into the Fund from another fund in the LKCM Funds is $2,000. Subsequent
investments in the Fund for all types of accounts may be made with a minimum
investment of $500.
Tax
Information: The
Fund’s distributions are taxable to you and will be taxed as ordinary income or
capital gains, unless you are investing through a tax-deferred arrangement, such
as a 401(k) plan or an individual retirement account, in which case the
withdrawal of your investment from the tax-deferred arrangement may be taxable.
Payments
to Broker-Dealers and Other Financial Intermediaries: If
you purchase Fund shares through a broker-dealer or other financial intermediary
(such as a financial adviser), the Fund and its related companies may pay the
intermediary for the sale of Fund shares and/or other services. If made, these
payments may create a conflict of interest by influencing the broker-dealer or
other intermediary and your salesperson to recommend the Fund over another
investment. Ask your salesperson or visit your financial intermediary’s website
for more information.
LKCM
EQUITY FUND
Investment
Objective: The
Fund seeks to maximize long-term capital appreciation.
Fees and Expenses of the
Fund: The
following table describes the fees and expenses that you may pay if you buy,
hold and sell shares of the Fund. You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples below.
The Fund does not impose any sales charges in connection with
purchases and sales of Fund shares.
|
|
|
|
| |
Shareholder
Fees |
|
(fees
paid directly from your investment) |
|
Redemption
Fee (as a percentage of the amount redeemed on shares held for less than
30 days) |
1.00% |
|
|
Annual Fund
Operating Expenses |
|
(expenses
that you pay each year as a percentage of the value of your
investment) |
|
Management
Fees |
0.70% |
Distribution
and Service (12b-1) Fees |
0.00% |
Other
Expenses |
0.30% |
Acquired
Fund Fees and Expenses(1) |
0.01% |
Total
Annual Fund Operating Expenses |
1.01% |
Fee
Waiver and/or Expense Reimbursement(2) |
-0.20% |
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement(2) |
0.81% |
|
|
(1) Acquired Fund Fees and
Expenses are indirect fees and expenses that funds incur from investing in the
shares of other investment companies, including money market funds. The Total
Annual Fund Operating Expenses and Total Annual Fund Operating Expenses After
Fee Waiver and/or Expense Reimbursement for the Fund differ from the Ratio of
Expenses to Average Net Assets before and after expense waiver and/or
reimbursement found within the “Financial Highlights” section of the Prospectus
because the audited information in the “Financial Highlights” reflects the
operating expenses of the Fund and does not include indirect expenses such as
Acquired Fund Fees and Expenses.
(2) Luther
King Capital Management Corporation (“Adviser”), the Fund’s investment adviser,
has contractually agreed to waive all or a portion of its management fee and/or
reimburse the Fund through May 1,
2025 in order to limit the Fund’s Total Annual Fund Operating
Expenses After Fee Waiver and/or Expense Reimbursement to 0.80% per annum
(excluding any interest, taxes, brokerage commissions, indirect fees and
expenses relating to investments in other investment companies, including money
market funds (“Acquired Fund Fees and Expenses”), and extraordinary expenses).
The fee waiver and expense reimbursement agreement may be terminated or changed
only with the consent of the Board of Trustees.
Example
The following example is intended to help you compare the costs of
investing in the Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same (except that the example reflects the
fee waiver/expense reimbursement arrangement through May 1,
2025). Although your actual costs may be higher
or lower, based on these assumptions, whether or not you redeem your shares,
your costs would be as follows:
|
|
|
|
|
|
|
|
|
|
| |
1
Year |
3
Years |
5 Years |
10 Years |
$83 |
$302 |
$538 |
$1,218 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover
rate may indicate higher transaction costs and may result in higher taxes when
Fund shares are held in a taxable account. These costs, which are not
reflected in annual fund operating expenses or in the example, affect the Fund’s
performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate was 10% of the average value of its
portfolio.
Principal Investment
Strategies:
The Fund seeks to achieve its
investment objective by investing under normal circumstances at least 80% of its
net assets (plus any borrowings for investment purposes) in equity securities.
The Fund primarily invests in companies that the Adviser believes are likely to
have above-average growth in revenue and/or earnings, above-average returns on
shareholders’ equity, potential for above-average capital appreciation, and/or
companies that the Adviser believes have attractive relative valuations. The
Fund may invest in equity securities of small, mid and large capitalization
companies, including dividend paying securities. From time to time, in pursuing
its investment strategies, the Fund may hold a significant percentage of its
investments in specific sectors of the economy, such as the information
technology sector. However, as the sector composition of the Fund’s portfolio
changes over time, the Fund’s exposure to the information technology sector may
be lower at a future date, and the Fund’s exposure to other market sectors may
be higher.
The
Fund seeks to invest in the equity securities of high quality companies, as
determined by the Adviser, that typically exhibit certain characteristics,
including high profitability levels, strong balance sheet quality, competitive
advantages, ability to generate excess cash flows, meaningful management
ownership stakes, attractive reinvestment opportunities and/or strong market
share positions. These equity securities primarily consist of common stocks,
American Depositary Receipts (“ADRs”), and real estate investment trusts
(“REITs”).
Principal
Risks: The greatest
risk of investing in the Fund is that you could lose money.
There is no assurance that the Fund will achieve its investment objective. The
principal risks of investing in the Fund listed below are presented in
alphabetical order and not in order of importance or potential exposure. Among
other matters, this presentation is intended to facilitate your ability to find
particular
risks
and make comparisons with those of other funds. Each risk summarized below is
considered a “principal risk” of investing in the Fund, regardless of the order
in which it appears.
• Cybersecurity
Risk – Operational risks arising from, among other things,
human or processing errors, systems and technology disruptions or failures, or
cybersecurity incidents may negatively impact the Fund, its service providers,
and third-party fund distribution platforms, as well as the ability of
shareholders to transact with the Fund, and result in financial losses.
Cybersecurity incidents may allow unauthorized parties to gain access to or
misappropriate Fund assets, shareholder data, or confidential or proprietary
information, or cause the Fund or its service providers, as well as securities
trading venues and their service providers, to suffer data corruption or lose
operational functionality. In addition, authorized persons could inadvertently
release Fund shareholder data or confidential or proprietary information stored
on the Fund’s systems. Cybersecurity incidents can result from deliberate
attacks or unintentional events. It is not possible for the Fund or its service
providers to identify all of the operational risks that may affect the Fund or
to develop processes and controls to completely eliminate or mitigate their
occurrence or effects. Portfolio companies in which the Fund invests are also
exposed to various risks related to cybersecurity incidents, and the value of
the Fund’s investments in such portfolio companies could be adversely impacted
in the event any such cybersecurity incidents occur. The Fund cannot control the
cybersecurity plans and systems of its service providers, its counterparties or
the issuers of securities in which the Fund invests.
• Dividend
Paying Securities Risk – Securities that pay higher dividends as a group can fall
out of favor with the market, causing these companies to underperform companies
that do not pay high or any dividends. Also, changes in the dividend policies of
companies owned by the Fund and the capital resources available for these
companies’ dividend payments may reduce the level of dividend payments and
adversely affect the Fund. Dividend paying securities might not experience the
same level of earnings growth or capital appreciation as non-dividend paying
securities. Securities that pay dividends may be sensitive to changes in
interest rates, and as interest rates rise or fall, the prices of such
securities may fluctuate.
• Equity
Securities Risk – The
Fund invests in equity securities and therefore is subject to investment risk,
issuer risk, market risks and significant fluctuations in value in response to
changes in a company’s financial condition as well as general market, economic
and political conditions, and other factors. The Fund may experience a
significant or complete loss on its investment in an equity security. In
addition, stock prices may be sensitive to rising interest rates, which increase
borrowing costs and the costs of capital for the issuer. Equity securities are
generally subordinate to an issuer’s debt in the event of liquidation or
bankruptcy. The Fund’s investments in equity securities primarily consist of
ADRs, common stocks, and REITs.
ADRs – Investments in ADRs are subject to certain of the risks
associated with investing directly in foreign securities, such as currency
fluctuations, political and economic instability, capital restrictions, less
government regulation, less publicly available information, less liquidity,
increased price volatility, and differences in financial reporting standards.
ADRs may not accurately track the prices of the underlying foreign securities
and their value may change materially at times when the U.S. markets are not
open for trading. Investing in such securities may expose the Fund to additional
risk.
Common
Stock – The value of an issuing company’s common stock may rise
or fall as a result of factors affecting the issuing company, other companies in
the same industry or sector, or the financial markets overall. Common stock
generally is subordinate to preferred stock upon the liquidation or bankruptcy
of the issuing company.
REITs – Investments in REITs are subject to
the risks associated with investing in the real estate industry, adverse
governmental actions, regulatory limitations on rents and operating expenses,
declines in property and real estate values, risks related to general and local
economic conditions, increases in property taxes and operating expenses,
overbuilding, changes in interest rates, liabilities resulting from
environmental problems, and the potential failure of a REIT to qualify for
federal income-tax-free “pass-through” of net income and net realized gains that
are distributed to shareholders and exemption from registration as an investment
company. REITs are dependent upon specialized management skills and may invest
in relatively few properties, and may not be diversified geographically or by
property or tenant type. As a result, investments in REITs may be volatile.
REITs are pooled investment vehicles with their own fees and expenses and the
Fund will indirectly bear a proportionate share of those fees and expenses when
investing in REITs.
• Foreign
Securities Risk – Non-U.S. investments carry potential risks not
associated with domestic investments. Such risks include, but are not limited
to: currency exchange rate fluctuations, political and financial instability,
less liquidity and greater volatility of foreign investments, lack of uniform
accounting, auditing and financing reporting standards, different government
regulation and supervision of foreign banks, stock exchanges, brokers and listed
companies, and significant limitations in transaction settlements in some
foreign markets. The unavailability and/or unreliability of public information
may impede the Fund’s ability to accurate evaluate foreign securities. It also
may be difficult to enforce contractual obligations or invoke judicial or
arbitration processes against non-U.S. companies and non-U.S. persons in foreign
jurisdictions. There may be very limited oversight of certain foreign banks or
securities depositories that hold foreign securities and currencies and the laws
of certain countries may limit the ability to recover such assets if a foreign
bank or depositary or their agents goes bankrupt.
• Inflation
Risk – Higher actual or anticipated inflation may have an
adverse effect on corporate profits or consumer spending or the financial
markets overall and result in lower values for securities held by the Fund. If
Fund investments do not keep pace with inflation, the present value of Fund
assets and the value of Fund distributions could decline.
• Investment
Risk – An investment in the Fund is not a deposit with a bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. When you sell your shares of the Fund, they could
be worth less than what you paid for them. Therefore, you may lose money by
investing in the Fund.
• Large
Cap Companies Risk – The securities of large market capitalization companies
may underperform other segments of the market because such companies may be less
responsive to competitive challenges and opportunities and may be unable to
attain or maintain high growth rates during periods of economic
expansion.
• Market
Risk
– The Fund is subject to the risk that the securities markets will move down,
sometimes rapidly and unpredictably, based on overall economic conditions and
other factors, which may negatively affect the Fund’s performance. Factors that
affect markets in general, including geopolitical, regulatory, market and
economic developments and other developments that impact specific economic
sectors, industries, companies and segments of the market, could adversely
impact the Fund’s investments and lead to a decline in the value of your
investment in the Fund. Geopolitical and other events, including tensions, war,
and open conflict between nations, such as between Russia and Ukraine, in the
Middle East and in eastern Asia, could affect the economies of many countries
including the United States. Trade disputes, pandemics, public health crises,
natural disasters and related events have led, and in the future may continue to
lead, to instability in world economies and markets generally and reduced
liquidity in equity, credit and fixed income markets, which may disrupt
economies and markets and adversely affect the value of your investment. In
addition, policy changes by the U.S. government, the U.S. Federal Reserve and/or
foreign governments and political and economic events within the U.S. and
abroad, such as changes in the U.S. presidential administration and Congress,
the U.S. government’s inability at times to agree on a long-term budget and
deficit reduction plan, the threat of a federal government shutdown, threats not
to increase the federal government’s debt limit which could result in a default
on the government’s obligations, and the shutdown of certain financial
institutions, may cause increased volatility in financial markets, affect
investor and consumer confidence and adversely impact the broader financial
markets and economy, perhaps suddenly and to a significant degree. In 2022 the
Federal Reserve and certain foreign central banks began to increase interest
rates to address rising inflation. It is difficult to accurately predict the
pace at which interest rates might increase or start decreasing, the timing,
frequency or magnitude of any such changes in interest rates, or when such
changes might stop or reverse course. Unexpected changes in interest rates could
lead to significant market volatility or reduced liquidity in certain sectors of
the market. Market disruptions have caused, and may continue to cause, broad
changes in market value, negative public perceptions concerning these
developments, and adverse investor sentiment or publicity. Changes in value may
be temporary or may last for extended periods. Regulators have proposed and
recently adopted a number of changes to regulations affecting markets and
issuers. The full effect of newly adopted regulations is not currently
known.
• Redemption
Risk – The Fund may experience periods of significant
redemptions that could cause the Fund to sell assets at inopportune times or at
a loss or depressed value. Redemption risk is heightened during periods of
declining or illiquid markets. Significant redemptions could hurt the Fund’s
performance. The sale of assets to meet redemption requests may require the Fund
to realize net capital gains, which could require the Fund to make substantial
capital gains distributions to shareholders.
• Sector
Weighting Risk – The
Fund may focus its investments in particular sectors of the economy. To the
extent the Fund emphasizes investments in particular sectors of the economy, the
Fund will be subject to a greater degree of risks particular to those sectors.
Market conditions, interest rates, and economic, regulatory, financial or
geopolitical developments could significantly affect securities in particular
sectors. Depending on the weightings of the Fund’s investments in particular
sectors, the Fund may have increased exposure to price movements of securities
in those sectors.
Information
Technology Sector Risk –
The information technology sector includes companies engaged in internet
software and services, technology hardware and storage peripherals, electronic
equipment and components, and semiconductors and semiconductor equipment. The
market prices of information technology-related securities tend to exhibit a
greater degree of market risk and sharp price fluctuations than other types of
securities. These securities may fall out of favor with investors rapidly, which
may cause sudden selling and dramatically lower market prices. Information
technology companies face intense competition, both domestically and
internationally, which may have an adverse effect on profit margins. Information
technology companies may have limited product lines, markets, financial
resources or personnel. The products of information technology companies may
face rapid product obsolescence due to technological developments and frequent
new product introduction, unpredictable changes in growth rates and competition
for the services of qualified
personnel.
• Security
Selection Risk – Securities selected by the Fund may not perform as
anticipated due to a number of factors impacting the company that issued the
securities or its particular industry or sector, such as poor operating or
management performance, weak demand for the company’s products or services, the
company’s failure to meet earnings or other operating performance expectations,
financial leverage or credit deterioration, litigation or regulatory issues, or
a decline in the value of the issuer’s business and assets.
• Small
and Mid Cap Companies Risk – The Fund invests in small and mid capitalization
companies that may not have the size, resources and other assets of large
capitalization companies. Small and mid capitalization companies may also have
narrower commercial markets and more limited operating histories, product lines,
and managerial and financial resources than larger, more established companies.
Small and mid capitalization companies may be more sensitive to changes in
interest rates, borrowing costs and earnings. As a result, the securities of
small and mid capitalization companies held by the Fund may be less liquid and
subject to greater market risks and fluctuations in value than large
capitalization companies or may not correspond to changes in the stock market in
general. In general, these risks are greater for small capitalization companies
than for mid capitalization companies.
Performance: The bar chart
and table that follow illustrate annual Fund returns for periods ended
December 31. This information is intended to give you some
indication of the risks of investing in the Fund by showing changes in the
Fund’s performance from year to year and how the Fund’s average annual returns
over time compare with those of a market index and an index of funds with
similar investment objectives. The Fund’s past performance
(before and after taxes) is not necessarily an indication of how the Fund will
perform in the future. Updated performance information is
available on the Fund’s website at www.lkcmfunds.com
or by calling the Fund toll-free at 1-800-688-LKCM.
Calendar Year Returns as of
12/31
During
the period shown on the bar chart, the Fund’s best and worst quarters are shown
below:
|
|
|
|
| |
Best and Worst Quarterly Returns |
21.66% |
2nd
quarter, 2020 |
-17.75% |
1st
quarter,
2020 |
Average Annual Total
Returns for Periods Ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
| |
|
1
Year |
5 Years |
10 Years |
Return Before
Taxes |
12.65% |
13.22% |
9.64% |
Return After
Taxes on Distributions |
12.26% |
12.00% |
8.39% |
Return After
Taxes on Distributions and Sale of Fund
Shares |
7.76% |
10.51% |
7.61% |
S&P
500®
Index (reflects no deduction for
fees, expenses or taxes) |
26.29% |
15.69% |
12.03% |
Lipper
Large-Cap Core Funds Index (reflects no deduction for
taxes) |
24.65% |
14.32% |
10.77% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates, and do not reflect the impact of state and local taxes.
The return after taxes on
distributions and sale of Fund shares may exceed the return before taxes due to
an assumed tax benefit from any losses on a sale of Fund shares at the end of
the measurement period. Actual after-tax returns depend on your
tax situation and may differ from those shown. In addition,
the after-tax returns shown are not relevant to investors who hold their Fund
shares through tax-deferred arrangements such as 401(k) plans and individual
retirement accounts.
Investment
Adviser: Luther
King Capital Management Corporation.
Portfolio
Managers:
|
|
|
|
|
|
|
| |
Name |
Title |
Experience
with the Fund |
J. Luther King, Jr., CFA, CIC |
Principal,
President and Portfolio Manager |
Since
Inception in 1996 |
Scot C. Hollmann, CFA, CIC |
Principal,
Vice President and Portfolio Manager |
Since
2010 |
Mason
D. King, CFA |
Principal,
Vice President, Portfolio Manager and Analyst |
Since
2010 |
Purchase
and Sale of Fund Shares: Investors
may purchase, exchange or redeem Fund shares by mail (LKCM Funds, c/o
U.S. Bank Global Fund Services, 615 East Michigan Street,
3rd Floor,
Milwaukee, WI 53202), or by telephone at 1-800-688-LKCM. Redemptions by
telephone are only permitted upon previously receiving appropriate
authorization. Transactions normally will only occur on days the New York
Stock Exchange is scheduled to be open. Investors who wish to purchase or
redeem Fund shares through a financial intermediary should contact the financial
intermediary directly for information relative to the purchase or sale of Fund
shares. The minimum initial amount of investment in the Fund and exchanges
into the Fund from another fund in the LKCM Funds is $2,000. Subsequent
investments in the Fund for all types of accounts may be made with a minimum
investment of $500.
Tax
Information: The
Fund’s distributions are taxable to you and will be taxed as ordinary income or
capital gains, unless you are investing through a tax-deferred arrangement, such
as a 401(k) plan or an individual retirement account, in which case the
withdrawal of your investment from the tax-deferred arrangement may be taxable.
Payments
to Broker-Dealers and Other Financial Intermediaries: If
you purchase Fund shares through a broker-dealer or other financial intermediary
(such as a financial adviser), the Fund and its related companies may pay the
intermediary for the sale of Fund
shares
and/or other services. If made, these payments may create a conflict of interest
by influencing the broker-dealer or other intermediary and your salesperson to
recommend the Fund over another investment. Ask your salesperson or visit your
financial intermediary’s website for more information.
LKCM
BALANCED FUND
Investment
Objective: The
Fund seeks current income and long-term capital appreciation.
Fees and Expenses of the
Fund: The following table describes the fees and expenses that
you may pay if you buy, hold and sell shares of the Fund.
You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples below.
The Fund does not impose any sales charges in connection with
purchases and sales of Fund shares.
|
|
|
|
| |
Shareholder
Fees |
|
(fees
paid directly from your investment) |
|
Redemption
Fee (as a percentage of the amount redeemed on shares held for less than
30 days) |
1.00% |
|
|
Annual Fund
Operating Expenses |
|
(expenses
that you pay each year as a percentage of the value of your
investment) |
|
Management
Fees |
0.65% |
Distribution
and Service (12b-1) Fees |
0.00% |
Other
Expenses |
0.39% |
Total
Annual Fund Operating Expenses |
1.04% |
Fee
Waiver and/or Expense Reimbursement(1) |
-0.24% |
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement(1) |
0.80% |
|
|
(1) Luther
King Capital Management Corporation (“Adviser”), the Fund’s investment adviser,
has contractually agreed to waive all or a portion of its management fee and/or
reimburse the Fund through May 1,
2025 in order to limit the Fund’s Total Annual Fund Operating
Expenses After Fee Waiver and/or Expense Reimbursement to 0.80% per annum
(excluding any interest, taxes, brokerage commissions, indirect fees and
expenses relating to investments in other investment companies, including money
market funds (“Acquired Fund Fees and Expenses”), and extraordinary expenses).
The fee waiver and expense reimbursement agreement may be terminated or changed
only with the consent of the Board of Trustees.
Example
The following example is intended to help you compare the costs of
investing in the Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same (except that the example reflects the
fee waiver/expense reimbursement arrangement through May 1,
2025). Although your actual costs may be higher
or lower, based on these assumptions, whether or not you redeem your shares,
your costs would be as follows:
|
|
|
|
|
|
|
|
|
|
| |
1
Year |
3
Years |
5
Years |
10
Years |
$82 |
$307 |
$551 |
$1,249 |
Portfolio
Turnover
The
Fund pays transaction costs, such as commissions, when it buys and sells
securities (or “turns over” its portfolio). A higher portfolio turnover
rate may indicate higher transaction costs and may result in higher taxes when
Fund shares are held in a taxable account. These costs, which are not
reflected in annual fund operating expenses or in the example, affect the Fund’s
performance. During the most recent fiscal year, the Fund’s portfolio
turnover rate was 11% of the average value of its
portfolio.
Principal Investment
Strategies: The Fund seeks to
achieve its investment objective by investing primarily in a portfolio of equity
and fixed income securities. The Fund may invest in securities of small, mid and
large capitalization companies, including dividend paying securities. The Fund
seeks to invest in the equity securities of high quality companies, as
determined by the Adviser, that typically exhibit certain characteristics,
including high profitability levels, strong balance sheet quality, competitive
advantages, ability to generate excess cash flows, meaningful management
ownership stakes, attractive reinvestment opportunities, strong market share
positions, and/or attractive relative valuation. These equity securities
primarily consist of common stocks, American Depositary Receipts (“ADRs”), and
real estate investment trusts (“REITs”). The Fund does not presently intend to
invest more than 20% of its total assets in equity securities that do not pay
dividends.
The Fund’s investments in fixed income securities consist primarily
of investment grade corporate fixed income securities and fixed income
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. The Fund may also invest in variable and floating rate bonds.
The Fund typically invests in fixed income securities with short- to
intermediate-term maturities from one to ten years. Under normal circumstances,
25% or more of the Fund’s total assets consist of fixed income securities.
Investment grade debt securities are considered to be those rated within the
four highest rating categories by a nationally recognized statistical ratings
organization, such as Moody’s Investors Service, Inc., Fitch Ratings, Inc. or
S&P Global Ratings, or of equivalent quality as determined by the
Adviser.
In determining whether or not to invest in a particular debt
security, the Adviser considers factors such as the price, coupon, yield to
maturity, the credit quality of the issuer, the issuer’s cash flow and related
coverage ratios, the property, if any, securing the obligation and the terms of
the security, including subordination, default, sinking fund and early
redemption provisions. If securities held by the Fund are downgraded below
investment grade, the Adviser will consider whether to continue to hold the
securities. From time to time, in pursuing its investment strategies, the Fund
may hold a significant percentage of its investments in specific sectors of the
economy.
Principal
Risks: The greatest
risk of investing in the Fund is that you could lose money.
There is no assurance that the Fund will achieve its investment objective. The
principal risks of investing in the Fund listed below are presented in
alphabetical order and not in order of importance or potential exposure. Among
other matters, this presentation is intended to facilitate your ability to find
particular
risks
and make comparisons with those of other funds. Each risk summarized below is
considered a “principal risk” of investing in the Fund, regardless of the order
in which it appears.
• Call
Risk – During periods of falling interest rates, an issuer of a
callable bond held by the Fund may “call” or repay the security before its
stated maturity, and the Fund would lose the income that would have been earned
to maturity on that security. In the event of a call, the Fund may have to
reinvest the proceeds in securities paying lower coupon rates.
• Credit
Risk – The Fund is subject to the risk that the issuer or
guarantor of a fixed income security becomes unable or unwilling, or is
perceived as unable or unwilling, to make timely interest or principal payments
or otherwise honor its obligations, which may cause the Fund’s holdings to lose
value. A decline in the credit rating of an individual security held by the Fund
may have an adverse impact on its price. The credit quality of a security can
deteriorate suddenly and rapidly. Lower credit quality also may lead to greater
volatility in the price of a security and may negatively affect a security’s
liquidity. Credit risk is typically greater for securities with ratings that are
downgraded below investment grade. Generally, the longer the maturity of a
security, the more sensitive it is to credit risk.
• Cybersecurity
Risk – Operational risks arising from, among other things,
human or processing errors, systems and technology disruptions or failures, or
cybersecurity incidents may negatively impact the Fund, its service providers,
and third-party fund distribution platforms, as well as the ability of
shareholders to transact with the Fund, and result in financial losses.
Cybersecurity incidents may allow unauthorized parties to gain access to or
misappropriate Fund assets, shareholder data, or confidential or proprietary
information, or cause the Fund or its service providers, as well as securities
trading venues and their service providers, to suffer data corruption or lose
operational functionality. In addition, authorized persons could inadvertently
release Fund shareholder data or confidential or proprietary information stored
on the Fund’s systems. Cybersecurity incidents can result from deliberate
attacks or unintentional events. It is not possible for the Fund or its service
providers to identify all of the operational risks that may affect the Fund or
to develop processes and controls to completely eliminate or mitigate their
occurrence or effects. Portfolio companies in which the Fund invests are also
exposed to various risks related to cybersecurity incidents, and the value of
the Fund’s investments in such portfolio companies could be adversely impacted
in the event any such cybersecurity incidents occur. The Fund cannot control the
cybersecurity plans and systems of its service providers, its counterparties or
the issuers of securities in which the Fund invests.
• Dividend
Paying Securities Risk – Securities that pay higher dividends as a group can fall
out of favor with the market, causing these companies to underperform companies
that do not pay high or any dividends. Also, changes in the dividend policies of
companies owned by the Fund and the capital resources available for these
companies’ dividend payments may reduce the level of dividend payments and
adversely affect the Fund. Dividend paying securities might not experience the
same level of earnings growth or capital appreciation as non-dividend paying
securities. Securities that pay dividends may be sensitive to changes in
interest rates, and as interest rates rise or fall, the prices of such
securities may fluctuate.
• Equity
Securities Risk – The
Fund invests in equity securities and therefore is subject to investment risk,
issuer risk, market risks and significant fluctuations in value in response to
changes in a company’s financial condition as well as general market, economic
and political conditions, and other factors. The Fund may experience a
significant or complete loss on its investment in an equity security. In
addition, stock prices may be sensitive to rising interest rates, which increase
borrowing costs and the costs of capital for the issuer. Equity securities are
generally subordinate to an issuer’s debt in the event of liquidation or
bankruptcy. The Fund’s investments in equity securities primarily consist of
ADRs, common stocks, and REITs.
ADRs – Investments in ADRs are subject to certain of the risks
associated with investing directly in foreign securities, such as currency
fluctuations, political and economic instability, capital restrictions, less
government regulation, less publicly available information, less liquidity,
increased price volatility, and differences in financial reporting standards.
ADRs may not accurately track the prices of the underlying foreign securities
and their value may change materially at times when the U.S. markets are not
open for trading. Investing in such securities may expose the Fund to additional
risk.
Common
Stock – The value of an issuing company’s common stock may rise
or fall as a result of factors affecting the issuing company, other companies in
the same industry or sector, or the financial markets overall. Common stock
generally is subordinate to preferred stock upon the liquidation or bankruptcy
of the issuing company.
REITs – Investments in REITs are subject to
the risks associated with investing in the real estate industry, adverse
governmental actions, regulatory limitations on rents and operating expenses,
declines in property and real estate values, risks related to general and local
economic conditions, increases in property taxes and operating expenses,
overbuilding, changes in interest rates, liabilities resulting from
environmental problems, and the potential failure of a REIT to qualify for
federal income-tax-free “pass-through” of net income and net realized gains that
are distributed to shareholders and exemption from registration as an investment
company. REITs are dependent upon specialized management skills and may invest
in relatively few properties, and may not be diversified geographically or by
property or tenant type. As a result, investments in REITs may be volatile.
REITs are pooled investment vehicles with their own fees and expenses and the
Fund will indirectly bear a proportionate share of those fees and expenses when
investing in REITs.
• Fixed
Income Securities Risk – The Fund invests in fixed income securities and is
therefore subject to the risk that the prices of, and the income generated by,
fixed income securities held by the Fund may decline significantly and/or
rapidly in response to adverse issuer, geopolitical, regulatory, general
economic and market conditions, or other developments, such as regional or
global economic instability (including war, terrorism, pandemic and related
geopolitical risks), interest rate fluctuations, and those events directly
involving the issuers that may cause broad changes in market value, public
perceptions concerning these developments, and adverse investor
sentiment.
• Foreign
Securities Risk – Non-U.S.
investments carry potential risks not associated with domestic investments. Such
risks include, but are not limited to: currency exchange rate fluctuations,
political and financial instability, less liquidity and greater volatility of
foreign investments, lack of uniform accounting, auditing and financing
reporting standards, different
government regulation and supervision of foreign banks, stock
exchanges, brokers and listed companies, and significant limitations in
transaction settlements in some foreign markets. The unavailability and/or
unreliability of public information may impede the Fund’s ability to accurate
evaluate foreign securities. It also may be difficult to enforce contractual
obligations or invoke judicial or arbitration processes against non-U.S.
companies and non-U.S. persons in foreign jurisdictions. There may be very
limited oversight of certain foreign banks or securities depositories that hold
foreign securities and currencies and the laws of certain countries may limit
the ability to recover such assets if a foreign bank or depositary or their
agents goes bankrupt.
• Inflation
Risk – Higher actual or anticipated inflation may have an
adverse effect on corporate profits or consumer spending or the financial
markets overall and result in lower values for securities held by the Fund. If
Fund investments do not keep pace with inflation, the present value of Fund
assets and the value of Fund distributions could decline.
• Interest
Rate Risk – Changes in interest rates may affect the yield,
liquidity and value of investments in income producing or debt securities.
Market values of fixed income securities generally are inversely related to
actual changes in interest rates – generally, when interest rates rise, the
value of the Fund’s debt securities declines and when interest rates decline,
the value of the Fund’s debt securities rises. Factors including central bank
monetary policy, rising inflation rates, and changes in general economic
conditions may cause interest rates to rise, which could cause the value of the
Fund’s investments to decline. Interest rates may rise, perhaps significantly
and/or rapidly, potentially resulting in heightened volatility in the fixed
income markets and adversely affecting the liquidity of certain fixed income
investments, any of which may result in substantial losses to the Fund. Interest
rate changes may have a more pronounced effect on the market value of fixed-rate
instruments than on floating-rate instruments. The value of floating rate and
variable rate securities may decline if their interest rates do not rise as
quickly, or as much, as general interest rates. The prices of fixed-income
securities are also affected by their durations. Typically, the longer the
maturity or duration of a debt security, the greater the effect a change in
interest rates could have on the security’s price. Generally, a bond with a
longer maturity or duration will entail greater interest rate risk. For example,
if a bond has a duration of ten years, a 1% increase in interest rates could be
expected to result in a 10% decrease in the value of the bond. Conversely, a
bond with a shorter maturity or duration will generally entail less interest
rate risk.
• Investment
Risk – An investment in the Fund is not a deposit with a bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. When you sell your shares of the Fund, they could
be worth less than what you paid for them. Therefore, you may lose money by
investing in the Fund.
• Large
Cap Companies Risk – The securities of large market capitalization companies
may underperform other segments of the market because such companies may be less
responsive to competitive challenges and opportunities and may be unable to
attain or maintain high growth rates during periods of economic
expansion.
• LIBOR
Transition Risk
– The Fund may invest in securities that used the London Interbank Offered Rate
(“LIBOR” or “ICE LIBOR”) as a benchmark or reference rate for interest rate
calculations. LIBOR was phased out effective June 30, 2023. The Secured
Overnight Financing Rate (“SOFR”) was selected by a committee established by the
Board of Governors of the Federal Reserve System and the Federal Reserve Bank of
New York to replace LIBOR as a reference rate in the United States, and U.S. law
required that contracts without a practicable LIBOR alternative default to SOFR
plus a set spread beginning in mid-2023. Other countries have undertaken similar
initiatives to identify replacement reference rates in their respective markets.
The transition process, or the failure of issuers to transition, could lead to
increased volatility and illiquidity in markets for instruments that have yet to
rely on a substitute reference rate to determine their next coupon rates and a
reduction in the values of those investments, all of which could impact the
Fund. In addition, the alternative reference or benchmark rate may be an
ineffective substitute, potentially resulting in prolonged adverse market
conditions for the Fund.
• Liquidity
Risk – The Fund is susceptible to the risk that certain
investments held by the Fund may be difficult or impossible to purchase or sell
at favorable times or prices or become less liquid in response to market
developments or adverse credit events that may affect issuers or guarantors of a
security. When there is little or no active trading market for specific types of
securities, it can become more difficult for the Fund to sell securities at
favorable times or prices. As a result, the Fund may have to lower the price on
certain securities that it is trying to sell, sell other securities instead or
forego an investment opportunity, any of which could have a negative effect on
the Fund. Market developments may cause the Fund’s investments to become less
liquid or illiquid and subject to erratic price movements. Certain investments
that were liquid when purchased may become illiquid, sometimes abruptly,
particularly in times of overall economic distress or adverse investor
perception.
• Market
Risk
– The Fund is subject to the risk that the securities markets will move down,
sometimes rapidly and unpredictably, based on overall economic conditions and
other factors, which may negatively affect the Fund’s performance. Factors that
affect markets in general, including geopolitical, regulatory, market and
economic developments and other developments that impact specific economic
sectors, industries, companies and segments of the market, could adversely
impact the Fund’s investments and lead to a decline in the value of your
investment in the Fund. Geopolitical and other events, including tensions, war,
and open conflict between nations, such as between Russia and Ukraine, in the
Middle East and in eastern Asia, could affect the economies of many countries
including the United States. Trade
disputes, pandemics, public health crises, natural disasters and related events
have led, and in the future may continue to lead, to instability in world
economies and markets generally and reduced liquidity in equity, credit and
fixed income markets, which may disrupt economies and markets and adversely
affect the value of your investment. In addition, policy changes by the U.S.
government, the U.S. Federal Reserve and/or foreign governments and political
and economic events within the U.S. and abroad, such as changes in the U.S.
presidential administration and Congress, the U.S. government’s inability at
times to agree on a long-term budget and deficit reduction plan, the threat of a
federal government shutdown, threats not to increase the federal government’s
debt limit which could result in a default on the government’s obligations, and
the shutdown of certain financial institutions, may cause increased volatility
in financial markets, affect investor and consumer confidence and adversely
impact the broader financial markets and economy, perhaps suddenly and to a
significant degree.
In
2022 the Federal Reserve and certain foreign central banks began to increase
interest rates to address rising inflation. It is difficult to accurately
predict the pace at which interest rates might increase or start decreasing, the
timing, frequency or magnitude of any such changes in interest rates, or when
such changes might stop or reverse course. Unexpected changes in interest rates
could lead to significant market volatility or reduced liquidity in certain
sectors of the market. Market disruptions have caused, and may continue to
cause, broad changes in market value, negative public perceptions concerning
these developments, and adverse investor sentiment or publicity. Changes in
value may be temporary or may last for extended periods. Regulators
have proposed and recently adopted a number of changes to regulations affecting
markets and issuers.
The
full effect of newly adopted regulations is not currently
known.
• Redemption
Risk – The Fund may experience periods of significant
redemptions that could cause the Fund to sell assets at inopportune times or at
a loss or depressed value. Redemption risk is heightened during periods of
declining or illiquid markets. Significant redemptions could hurt the Fund’s
performance. The sale of assets to meet redemption requests may require the Fund
to realize net capital gains, which could require the Fund to make substantial
capital gains distributions to shareholders.
• Sector
Weighting Risk – The Fund may focus its investments in particular sectors
of the economy. To the extent the Fund emphasizes investments in particular
sectors of the economy, the Fund will be subject to a greater degree of risks
particular to those sectors. Market conditions, interest rates, and economic,
regulatory, financial or geopolitical developments could significantly affect
securities in particular sectors. Depending on the weightings of the Fund’s
investments in particular sectors, the Fund may have increased exposure to price
movements of securities in those sectors.
• Security
Selection Risk – Securities selected by the Fund may not perform as
anticipated due to a number of factors impacting the company that issued the
securities or its particular industry or sector, such as poor operating or
management performance, weak demand for the company’s products or services, the
company’s failure to meet earnings or other operating performance expectations,
financial leverage or credit deterioration, litigation or regulatory issues, or
a decline in the value of the issuer’s business and assets.
• Small
and Mid Cap Companies Risk – The Fund invests in small and mid capitalization
companies that may not have the size, resources and other assets of large
capitalization companies. Small and mid capitalization companies may also have
narrower commercial markets and more limited operating histories, product lines,
and managerial and financial resources than larger, more established companies.
Small and mid capitalization companies may be more sensitive to changes in
interest rates, borrowing costs and earnings. As a result, the securities of
small and mid capitalization companies held by the Fund may be less liquid and
subject to greater market risks and fluctuations in value than large
capitalization companies or may not correspond to changes in the stock market in
general. In general, these risks are greater for small capitalization companies
than for mid capitalization companies.
• U.S.
Government Securities Risk – A security backed by the U.S. Treasury or the full faith and
credit of the United States is guaranteed only by the applicable entity as to
the stated interest rate and face value at maturity, not its current market
price. Notwithstanding that a security may be backed by the full faith and
credit of the U.S. Government, circumstances could arise that would prevent the
payment of interest or principal. Any guarantee by the U.S. government or its
agencies or instrumentalities of a security the Fund holds does not apply to the
market value of the security or the shares of the Fund. Like all fixed income
securities, U.S. Government fixed income securities are also subject to market
risk, credit risk and interest rate risk.
•Variable
and Floating Rate Securities Risk – The interest rates payable on variable and floating rate bonds are
not fixed and may fluctuate based upon changes in market rates. A variable rate
obligation has an interest rate which is adjusted at predesignated periods in
response to changes in the market rate of interest on which the interest rate is
based. The interest rate on a floating rate bond is a variable rate which is
tied to another interest rate, such as a money-market index or Treasury bill
rate. Variable and floating rate bonds are subject to market risk, interest rate
risk and credit risk.
Performance: The bar chart
and table that follow illustrate annual Fund returns for periods ended December
31. This information is intended to give you some indication of
the risks of investing in the Fund by showing changes in the Fund’s performance
from year to year and how the Fund’s average annual returns over time compare
with those of market indexes and an index of funds with similar investment
objectives. The Fund’s past performance
(before and after taxes) is not necessarily an indication of how the Fund will
perform in the future. Updated performance information is
available on the Fund’s website at www.lkcmfunds.com
or by calling the Fund toll-free at 1-800-688-LKCM.
Calendar Year Returns as of
12/31
During
the period shown on the bar chart, the Fund’s best and worst quarters are shown
below:
|
|
|
|
| |
Best and
Worst Quarterly
Returns |
16.20% |
2nd
quarter, 2020 |
-14.86% |
1st
quarter,
2020 |
Average Annual Total
Returns for Periods Ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
| |
|
1
Year |
5
Years |
10
Years |
Return Before
Taxes |
10.84% |
8.87% |
7.08% |
Return After
Taxes on Distributions |
9.93% |
7.78% |
6.07% |
Return After
Taxes on Distributions and Sale of Fund
Shares |
7.05% |
6.93% |
5.54% |
S&P
500®
Index (reflects no deduction for
fees, expenses or taxes) |
26.29% |
15.69% |
12.03% |
Bloomberg
U.S. Intermediate Government/Credit Bond Index (reflects
no deduction for fees, expenses or
taxes) |
5.24% |
1.59% |
1.72% |
Lipper
Mixed-Asset Target Allocation Growth Funds Index (reflects
no deduction for taxes) |
16.54% |
9.75% |
7.16% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates, and do not reflect the impact of state and local
taxes. The return after taxes on
distributions and sale of Fund shares may exceed the return before taxes due to
an assumed tax benefit from any losses on a sale of Fund shares at the end of
the measurement period. Actual after-tax returns depend on your
tax situation and may differ from those shown. In addition,
the after-tax returns shown are not relevant to investors who hold their Fund
shares through tax-deferred arrangements such as 401(k) plans and individual
retirement accounts.
Investment
Adviser: Luther
King Capital Management Corporation.
Portfolio
Managers:
|
|
|
|
|
|
|
| |
Name |
Title |
Experience
with the Fund |
Scot
C. Hollmann, CFA, CIC |
Principal,
Vice President and Portfolio Manager |
Since
Inception in 1997 |
J.
Luther King, Jr., CFA, CIC |
Principal,
President and Portfolio Manager |
Since
Inception in 1997 |
Mark
L. Johnson, CFA, CIC |
Principal,
Vice President and Portfolio Manager |
Since
2010 |
Purchase
and Sale of Fund Shares: Investors
may purchase, exchange or redeem Fund shares by mail (LKCM Funds, c/o
U.S. Bank Global Fund Services, 615 East Michigan Street,
3rd Floor,
Milwaukee, WI 53202), or by telephone at 1-800-688-LKCM. Redemptions by
telephone are only permitted upon previously receiving appropriate
authorization. Transactions normally will only occur on days the New York Stock
Exchange is scheduled to be open. Investors who wish to purchase or redeem Fund
shares through a financial intermediary should contact the financial
intermediary directly for information relative to the purchase or sale of Fund
shares. The minimum initial amount of investment in the Fund and exchanges into
the Fund from another fund in the LKCM Funds is $2,000. Subsequent investments
in the Fund for all types of accounts may be made with a minimum investment of
$500.
Tax
Information: The
Fund’s distributions are taxable to you and will be taxed as ordinary income or
capital gains, unless you are investing through a tax-deferred arrangement, such
as a 401(k) plan or an individual retirement account, in which case the
withdrawal of your investment from the tax-deferred arrangement may be taxable.
Payments
to Broker-Dealers and Other Financial Intermediaries: If
you purchase Fund shares through a broker-dealer or other financial intermediary
(such as a financial adviser), the Fund and its related companies may pay the
intermediary for the sale of Fund shares and/or other services. If made, these
payments may create a conflict of interest by influencing the broker-dealer or
other intermediary and your salesperson to recommend the Fund over another
investment. Ask your salesperson or visit your financial intermediary’s website
for more information.
LKCM
FIXED INCOME FUND
Investment
Objective: The
Fund seeks current income.
Fees and Expenses of the
Fund: The following table describes the fees and expenses that
you may pay if you buy, hold and sell shares of the Fund.
You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples
below. The Fund does not impose any sales charges in connection with
purchases and sales of Fund shares.
|
|
|
|
| |
Shareholder
Fees
(fees
paid directly from your investment) |
|
Redemption
Fee (as a percentage of the amount redeemed on shares held for less than
30 days) |
1.00% |
|
|
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment) |
|
Management
Fees |
0.50% |
Distribution
and Service (12b-1) Fees |
0.00% |
Other
Expenses |
0.31% |
Total
Annual Fund Operating Expenses |
0.81% |
Fee
Waiver and/or Expense Reimbursement(1) |
-0.31% |
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement(1) |
0.50% |
|
|
(1) Luther
King Capital Management Corporation (“Adviser”), the Fund’s investment adviser,
has contractually agreed to waive all or a portion of its management fee and/or
reimburse the Fund through May 1,
2025 in order to limit the Fund’s Total Annual Fund Operating
Expenses After Fee Waiver and/or Expense Reimbursement to 0.50% per annum
(excluding any interest, taxes, brokerage commissions, indirect fees and
expenses relating to investments in other investment companies, including money
market funds (“Acquired Fund Fees and Expenses”), and extraordinary expenses).
The fee waiver and expense reimbursement agreement may be terminated or changed
only with the consent of the Board of Trustees.
Example
The following example is intended to help you compare the costs of
investing in the Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same (except that the example reflects the
fee waiver/expense reimbursement arrangement through May 1,
2025). Although your actual costs may be higher
or lower, based on these assumptions, whether or not you redeem your shares,
your costs would be as follows:
|
|
|
|
|
|
|
|
|
|
| |
1
Year |
3
Years |
5
Years |
10
Years |
$51 |
$228 |
$419 |
$973 |
Portfolio
Turnover
The Fund pays transaction costs, such as commissions, when it buys
and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs and may result in higher
taxes when Fund shares are held in a taxable account. These costs, which
are not reflected in annual fund operating expenses or in the example, affect
the Fund’s performance. During the most recent fiscal year, the Fund’s
portfolio turnover rate was 23% of the average value of its
portfolio.
Principal Investment
Strategies: The Fund seeks to achieve its
investment objective by investing under normal circumstances at least 80% of its
net assets (plus any borrowings for investment purposes) in a portfolio of
investment grade corporate and U.S. Government fixed income securities. The
Fund’s investments in fixed income securities consist primarily of investment
grade corporate fixed income securities and fixed income securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities. The Fund
typically invests in fixed income securities with short- to intermediate-term
maturities from one to ten years. Investment grade debt securities are
considered to be those rated within the four highest rating categories assigned
by a nationally recognized statistical ratings organization, such as Moody’s
Investors Service, Inc., Fitch Ratings, Inc., or S&P Global Ratings, or of
equivalent quality as determined by the Adviser.
The
Fund seeks to maintain an average effective maturity of its portfolio between
three and ten years under normal market and economic conditions. The effective
maturity of securities with sinking fund or other early redemption features will
be estimated by the Adviser, based upon prevailing interest rate trends and the
issuer’s financial position. The average effective maturity of the Fund’s
portfolio may be less than three years if the Adviser believes a defensive
posture is appropriate.
The
Fund may invest in all types of domestic or U.S. dollar-denominated foreign
fixed income securities in any proportion, including bonds, notes, convertible
bonds, mortgage pass-through securities, government and government agency
securities, variable and floating rate bonds, preferred stock and short-term
obligations such as commercial paper and notes, and other financial obligations.
In determining whether or not to invest in a particular debt security, the
Adviser considers factors such as the price, coupon, yield to maturity, the
credit quality of the issuer, the issuer’s cash flow and related coverage
ratios, the property, if any, securing the obligation and the terms of the
security, including subordination, default, sinking fund and early redemption
provisions. If securities held by the
Fund are downgraded below investment grade, the Adviser will consider
whether to continue to hold the securities. From time to time, in pursuing its
investment strategies, the Fund may hold a significant percentage of its
investments in specific sectors of the economy.
Principal
Risks: The greatest
risk of investing in the Fund is that you could lose money.
There is no assurance that the Fund will achieve its investment objective. The
principal risks of investing in the Fund listed below are presented in
alphabetical order and not in order of importance or potential exposure. Among
other matters, this presentation is intended to facilitate your ability to find
particular risks and make comparisons with those of other funds. Each risk
summarized below is considered a “principal risk” of investing in the Fund,
regardless of the order in which it appears.
• Call
Risk – During periods of falling interest rates, an issuer of a
callable bond held by the Fund may “call” or repay the security before its
stated maturity, and the Fund would lose the income that would have been earned
to maturity on that security. In the event of a call, the Fund may have to
reinvest the proceeds in securities paying lower coupon rates.
• Convertible
Debt Securities Risk – A convertible security is a form of hybrid security;
that is, a security with both debt and equity characteristics. The value of a
convertible security is based on its yield and fluctuates in relation to changes
in interest rates and the credit quality of the issuer and in relation to
changes in the price of the underlying common stock. A convertible security may
be subject to redemption at the option of the issuer at a price established in
the convertible security’s governing instrument, which may be less than the
current market price of the security. Convertible securities are subject to
market risk, credit risk and interest rate risk as well as the same types of
market and issuer-specific risks that apply to the underlying common
stock.
• Credit
Risk – The Fund is subject to the risk that the issuer or
guarantor of a fixed income security becomes unable or unwilling, or is
perceived as unable or unwilling, to make timely interest or principal payments
or otherwise honor its obligations, which may cause the Fund’s holdings to lose
value. A decline in the credit rating of an individual security held by the Fund
may have an adverse impact on its price. The credit quality of a security can
deteriorate suddenly and rapidly. Lower credit quality also may lead to greater
volatility in the price of a security and may negatively affect a security’s
liquidity. Credit risk is typically greater for securities with ratings that are
downgraded below investment grade. Generally, the longer the maturity of a
security, the more sensitive it is to credit risk.
• Cybersecurity
Risk – Operational risks arising from, among other things,
human or processing errors, systems and technology disruptions or failures, or
cybersecurity incidents may negatively impact the Fund, its service providers,
and third-party fund distribution platforms, as well as the ability of
shareholders to transact with the Fund, and result in financial losses.
Cybersecurity incidents may allow unauthorized parties to gain access to or
misappropriate Fund assets, shareholder data, or confidential or proprietary
information, or cause the Fund or its service providers, as well as securities
trading venues and their service providers, to suffer data corruption or lose
operational functionality. In addition, authorized persons could inadvertently
release Fund shareholder data or confidential or proprietary information stored
on the Fund’s systems. Cybersecurity incidents can result from deliberate
attacks or unintentional events. It is not possible for the Fund or its service
providers to identify all of the operational risks that may affect the Fund or
to develop processes and controls to completely eliminate or mitigate their
occurrence or effects. Portfolio companies in which the Fund invests are also
exposed to various risks related to cybersecurity incidents, and the value of
the Fund’s investments in such portfolio companies could be adversely impacted
in the event any such cybersecurity incidents occur. The Fund cannot control the
cybersecurity plans and systems of its service providers, its counterparties or
the issuers of securities in which the Fund invests.
• Fixed
Income Securities Risk – The Fund invests in fixed income securities and is
therefore subject to the risk that the prices of, and the income generated by,
fixed income securities held by the Fund may decline significantly and/or
rapidly in response to adverse issuer, geopolitical, regulatory, general
economic and market conditions, or other developments, such as regional or
global economic instability (including war, terrorism, pandemic and related
geopolitical risks), interest rate fluctuations, and those events directly
involving the issuers that may cause broad changes in market value, public
perceptions concerning these developments, and adverse investor
sentiment.
• Foreign
Securities Risk – Non-U.S. investments carry potential risks not
associated with domestic investments. Such risks include, but are not limited
to: currency exchange rate fluctuations, political and financial instability,
less liquidity and greater volatility of foreign investments, lack of uniform
accounting, auditing and financing reporting standards, different government
regulation and supervision of foreign banks, stock exchanges, brokers and listed
companies, and significant limitations in transaction settlements in some
foreign markets. The unavailability and/or unreliability of public information
may impede the Fund’s ability to accurate evaluate foreign securities. It also
may be difficult to enforce contractual obligations or invoke judicial or
arbitration processes against non-U.S. companies and non-U.S. persons in foreign
jurisdictions. There may be very limited oversight of certain foreign banks or
securities depositories that hold foreign securities and currencies and the laws
of certain countries may limit the ability to recover such assets if a foreign
bank or depositary or their agents goes bankrupt.
• Government-Sponsored
Enterprises Risk – Securities
held by the Fund that are issued by government-sponsored enterprises, such as
the Federal Home Loan Bank, Federal National Mortgage Association, the Federal
Home Loan Mortgage Corporation, Federal Farm Credit Banks, and the Tennessee
Valley Authority are not guaranteed by the U.S. Treasury and are not backed by
the full faith and credit of the U.S. Government. There is no assurance that the
U.S. Government will provide financial support if these organizations do not
have the funds to meet future payment obligations. They are also subject to
market risk, credit risk and interest rate risk. In addition, mortgage
pass-through securities issued by government-sponsored enterprises are subject
to prepayment risk and extension risk, discussed below. It is possible that the
U.S. Government and government-sponsored enterprises will not have the funds to
meet their payment obligations in the future.
• Inflation
Risk – Higher actual or anticipated inflation may have an
adverse effect on corporate profits or consumer spending or the financial
markets overall and result in lower values for securities held by the Fund. If
Fund investments do not keep pace with inflation, the present value of Fund
assets and the value of Fund distributions could decline.
• Interest
Rate Risk – Changes
in interest rates may affect the yield, liquidity and value of investments in
income producing or debt securities. Market values of fixed income securities
generally are inversely related to actual changes in interest rates
– generally, when interest rates rise, the value of the Fund’s debt
securities declines and when interest rates decline, the value of the Fund’s
debt securities rises. Factors including central bank monetary policy, rising
inflation rates, and changes in general economic conditions may cause interest
rates to rise, which could cause the value of the Fund’s investments to decline.
Interest rates may rise, perhaps significantly and/or rapidly, potentially
resulting in heightened volatility in the fixed-income markets and adversely
affecting the liquidity of certain fixed-income investments, any of which may
result in substantial losses to the Fund. Interest rate changes may have a more
pronounced effect on the market value of fixed-rate instruments than on
floating-rate instruments. The value of floating rate and variable rate
securities may decline if their interest rates do not rise as quickly, or as
much, as general interest rates. The prices of fixed-income securities are also
affected by their durations. Typically, the longer the maturity or duration of a
debt security, the greater the effect a change in interest rates could have on
the security’s price. Generally, a bond with a longer maturity or duration will
entail greater interest rate risk. For example, if a bond has a duration of ten
years, a 1% increase in interest rates could be expected to result in a 10%
decrease in the value of the bond. Conversely, a bond with a shorter maturity or
duration will generally entail less interest rate risk.
• Investment
Risk – An investment in the Fund is not a deposit with a bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. When you sell your shares of the Fund, they could
be worth less than what you paid for them. Therefore, you may lose money by
investing in the Fund.
• LIBOR
Transition Risk
– The Fund may invest in securities that used the London Interbank Offered Rate
(“LIBOR” or “ICE LIBOR”) as a benchmark or reference rate for interest rate
calculations. LIBOR was phased out effective June 30, 2023. The Secured
Overnight Financing Rate (“SOFR”) was selected by a committee established by the
Board of Governors of the Federal Reserve System and the Federal Reserve Bank of
New York to replace LIBOR as a reference rate in the United States, and U.S. law
required that contracts without a practicable LIBOR alternative default to SOFR
plus a set spread beginning in mid-2023. Other countries have undertaken similar
initiatives to identify replacement reference rates in their respective markets.
The transition process, or the failure of issuers to transition, could lead to
increased volatility and illiquidity in markets for instruments that have yet to
rely on a substitute reference rate to determine their next coupon rates and a
reduction in the values of those investments, all of which could impact the
Fund. In addition, the alternative reference or benchmark rate may be an
ineffective substitute, potentially resulting in prolonged adverse market
conditions for the Fund.
• Liquidity
Risk – The Fund is susceptible to the risk that certain
investments held by the Fund may be difficult or impossible to purchase or sell
at favorable times or prices or become less liquid in response to market
developments or adverse credit events that may affect issuers or guarantors of a
security. When there is little or no active trading market for specific types of
securities, it can become more difficult for the Fund to sell securities at
favorable times or prices. As a result, the Fund may have to lower the price on
certain securities that it is trying to sell, sell other securities instead or
forego an investment opportunity, any of which could have a negative effect on
the Fund. Market developments may cause the Fund’s investments to become less
liquid or illiquid and subject to erratic price movements. Certain investments
that were liquid when purchased may become illiquid, sometimes abruptly,
particularly in times of overall economic distress or adverse investor
perception.
• Market
Risk
– The Fund is subject to the risk that the securities markets will move down,
sometimes rapidly and unpredictably, based on overall economic conditions and
other factors, which may negatively affect the Fund’s performance. Factors that
affect markets in general, including geopolitical, regulatory, market and
economic developments and other developments that impact specific economic
sectors, industries, companies and segments of the market, could adversely
impact the Fund’s investments and lead to a decline in the value of your
investment in the Fund. Geopolitical and other events, including tensions, war,
and open conflict between nations, such as between Russia and Ukraine, in the
Middle East and in eastern Asia, could affect the economies of many countries
including the United States. Trade disputes, pandemics, public health crises,
natural disasters and related events have led, and in the future may continue to
lead, to instability in world economies and markets generally and reduced
liquidity in equity, credit and fixed income markets, which may disrupt
economies and markets and adversely affect the value of your investment. In
addition, policy changes by the U.S. government, the U.S. Federal Reserve and/or
foreign governments and political and economic events within the U.S. and
abroad, such as changes in the U.S. presidential administration and Congress,
the U.S. government’s inability at times to agree on a long-term budget and
deficit reduction plan, the threat of a federal government shutdown, threats not
to increase the federal government’s debt limit which could result in a default
on the government’s obligations, and the shutdown of certain financial
institutions, may cause increased volatility in financial markets, affect
investor and consumer confidence and adversely impact the broader financial
markets and economy, perhaps suddenly and to a significant degree. In 2022 the
Federal Reserve and certain foreign central banks began to increase interest
rates to address rising inflation. It is difficult to accurately predict the
pace at which interest rates might increase or start decreasing, the timing,
frequency or magnitude of any such changes in interest rates, or when such
changes might stop or reverse course. Unexpected changes in interest rates could
lead to significant market volatility or reduced liquidity in certain sectors of
the market. Market disruptions have caused, and may continue to cause, broad
changes in market value, negative public perceptions concerning these
developments, and adverse investor sentiment or publicity. Changes in value may
be temporary or may last for extended periods. Regulators have proposed and
recently adopted a number of changes to regulations affecting markets and
issuers. The full effect of newly adopted regulations is not currently
known.
• Mortgage
Pass-Through Securities Risk –
Investments in mortgage pass-through securities, including pass-through
securities issued by a U.S. Government sponsored enterprise, are subject to
fixed income securities risks which include, but are not limited to, interest
rate risk and credit risk. Mortgage pass-through securities are sensitive to
interest rate changes, and small movements in interest rates, both increases and
decreases, may quickly and significantly affect the value of certain mortgage
pass-through securities. Although the value of a mortgage pass-through security
may decline when interest rates rise, the converse is not necessarily true,
since in periods of declining interest rates the mortgages underlying the
security are more likely to be prepaid, therefore causing the Fund to purchase
new securities at prevailing market rates, which usually will be lower. Mortgage
pass-through securities are also subject to prepayment risk and extension risk.
Prepayment risk is the risk that borrowers will prepay their mortgages and cause
a decline in the Fund’s income and share
price. Extension risk is the risk that mortgage payments will decline
during times of rising interest rates and extend the duration of these
securities, making them more sensitive to interest rate
changes.
• Preferred
Stocks Risk – Preferred stocks are sensitive to movement in interest
rates. Preferred stocks may be less liquid than common stocks and, unlike common
stocks, participation in the growth of an issuer may be limited. Distributions
on preferred stocks generally are payable at the discretion of an issuer and
after required payments to bond holders. In certain situations, an issuer may
call or redeem its preferred stock or convert it to common stock. The market
prices of preferred stocks are generally more sensitive to actual or perceived
changes in the issuer’s financial condition or prospects than are the prices of
debt securities.
• Redemption
Risk – The Fund may experience periods of significant
redemptions that could cause the Fund to sell assets at inopportune times or at
a loss or depressed value. Redemption risk is heightened during periods of
declining or illiquid markets. Significant redemptions could hurt the Fund’s
performance. The sale of assets to meet redemption requests may require the Fund
to realize net capital gains, which could require the Fund to make substantial
capital gains distributions to shareholders.
• Sector
Weighting Risk – The Fund may focus its investments in particular sectors
of the economy. To the extent the Fund emphasizes investments in particular
sectors of the economy, the Fund will be subject to a greater degree of risks
particular to those sectors. Market conditions, interest rates, and economic,
regulatory, financial or geopolitical developments could significantly affect
securities in particular sectors. Depending on the weightings of the Fund’s
investments in particular sectors, the Fund may have increased exposure to price
movements of securities in those sectors.
• Security
Selection Risk – Securities selected by the Fund may not perform as
anticipated due to a number of factors impacting the company that issued the
securities or its particular industry or sector, such as poor operating or
management performance, weak demand for the company’s products or services, the
company’s failure to meet earnings or other operating performance expectations,
financial leverage or credit deterioration, litigation or regulatory issues, or
a decline in the value of the issuer’s business and assets.
• U.S.
Government Securities Risk – A security backed by the U.S. Treasury or the full faith and
credit of the United States is guaranteed only by the applicable entity as to
the stated interest rate and face value at maturity, not its current market
price. Notwithstanding that a security may be backed by the full faith and
credit of the U.S. Government, circumstances could arise that would prevent the
payment of interest or principal. Any guarantee by the U.S. government or its
agencies or instrumentalities of a security the Fund holds does not apply to the
market value of the security or the shares of the Fund. Like all fixed income
securities, U.S. Government fixed income securities are also subject to market
risk, credit risk and interest rate risk.
• Variable
and Floating Rate Securities Risk – The interest rates payable on variable and floating rate
bonds are not fixed and may fluctuate based upon changes in market rates. A
variable rate obligation has an interest rate which is adjusted at predesignated
periods in response to changes in the market rate of interest on which the
interest rate is based. The interest rate on a floating rate bond is a variable
rate which is tied to another interest rate, such as a money-market index or
Treasury bill rate. Variable and floating rate bonds are subject to market risk,
interest rate risk and credit risk.
Performance: The bar chart
and table that follow illustrate annual Fund returns for periods ended December
31. This information is intended to give you some indication of
the risks of investing in the Fund by showing changes in the Fund’s performance
from year to year and how the Fund’s average annual returns over time compare
with those of a market index and an index of funds with similar investment
objectives. The Fund’s past performance
(before and after taxes) is not necessarily an indication of how the Fund will
perform in the future. Updated performance information is
available on the Fund’s website at www.lkcmfunds.com
or by calling the Fund toll-free at 1-800-688-LKCM.
Calendar Year Returns as of
12/31
During
the period shown on the bar chart, the Fund’s best and worst quarters are shown
below:
|
|
|
|
| |
Best and
Worst Quarterly
Returns |
4.05% |
4th quarter, 2023 |
-3.27% |
1st quarter, 2022 |
Average Annual
Total Returns for Periods Ended December 31, 2023
|
|
|
|
|
|
|
|
|
|
| |
|
1
Year |
5
Years |
10
Years |
Return
Before Taxes |
4.98% |
1.65% |
1.59% |
Return
After Taxes on Distributions |
3.99% |
0.94% |
0.75% |
Return
After Taxes on Distributions and Sale of Fund
Shares |
2.93% |
1.00% |
0.87% |
Bloomberg
U.S. Intermediate Government/Credit Bond Index (reflects no deduction for
fees, expenses or taxes) |
5.24% |
1.59% |
1.72% |
Lipper
Short Intermediate Investment-Grade Debt Funds Index (reflects no deduction for
taxes) |
5.56% |
2.01% |
1.81% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates, and do not reflect the impact of state and local
taxes. The return after taxes on
distributions and sale of Fund shares may exceed the return before taxes due to
an assumed tax benefit from any losses on a sale of Fund shares at the end of
the measurement period. Actual after-tax returns depend on your
tax situation and may differ from those shown. In
addition, the after-tax returns shown are not relevant to investors who hold
their Fund shares through tax-deferred arrangements such as 401(k) plans and
individual retirement accounts.
Investment
Adviser: Luther
King Capital Management Corporation.
Portfolio
Managers:
|
|
|
|
|
|
|
| |
Name |
Title |
Experience
with the Fund |
Joan
M. Maynard |
Principal,
Vice President and Portfolio Manager |
Since
Inception in 1997 |
Scot
C. Hollmann, CFA, CIC |
Principal,
Vice President and Portfolio Manager |
Since
2010 |
Mark
L. Johnson, CFA, CIC |
Principal,
Vice President and Portfolio Manager |
Since
2010 |
Purchase
and Sale of Fund Shares: Investors
may purchase, exchange or redeem Fund shares by mail (LKCM Funds, c/o
U.S. Bank Global Fund Services, 615 East Michigan Street,
3rd Floor,
Milwaukee, WI 53202), or by telephone at 1-800-688-LKCM. Redemptions by
telephone are only permitted upon previously receiving appropriate
authorization. Transactions normally will only occur on days the New York Stock
Exchange is scheduled to be open. Investors who wish to purchase or redeem
Fund shares through a financial intermediary should contact the financial
intermediary directly for information relative to the purchase or sale of Fund
shares. The minimum initial amount of investment in the Fund and exchanges
into the Fund from another fund in the LKCM Funds is $2,000. Subsequent
investments in the Fund for all types of accounts may be made with a minimum
investment of $500.
Tax
Information: The
Fund’s distributions are taxable to you and will be taxed as ordinary income or
capital gains, unless you are investing through a tax-deferred arrangement, such
as a 401(k) plan or an individual retirement account, in which case the
withdrawal of your investment from the tax-deferred arrangement may be taxable.
Payments
to Broker-Dealers and Other Financial Intermediaries: If
you purchase Fund shares through a broker-dealer or other financial intermediary
(such as a financial adviser), the Fund and its related companies may pay the
intermediary for the sale of Fund
shares
and/or other services. If made, these payments may create a conflict of interest
by influencing the broker-dealer or other intermediary and your salesperson to
recommend the Fund over another investment. Ask your salesperson or visit your
financial intermediary’s website for more information.
LKCM
INTERNATIONAL EQUITY FUND
Investment
Objective: The
Fund seeks to maximize long-term capital appreciation.
Fees and Expenses of the
Fund: The following table describes the fees and expenses that
you may pay if you buy, hold and sell shares of the Fund.
You
may pay other fees, such as brokerage commissions and other fees to financial
intermediaries, which are not reflected in the tables and examples
below. The Fund does not impose any sales charges in connection with
purchases and sales of Fund shares.
|
|
|
|
| |
| |
Shareholder
Fees
(fees
paid directly from your investment) |
|
Redemption
Fee (as a percentage of the amount redeemed on shares held for less than
30 days) |
1.00% |
|
|
Annual
Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your
investment) |
|
Management
Fees |
0.90% |
Distribution
and Service (12b-1) Fees |
0.00% |
Other
Expenses |
0.51% |
Acquired
Fund Fees and Expenses(1) |
0.01% |
Total
Annual Fund Operating Expenses |
1.42% |
Fee
Waiver and/or Expense Reimbursement(2) |
-0.41% |
Total
Annual Fund Operating Expenses After Fee Waiver and/or Expense
Reimbursement(2) |
1.01% |
|
|
(1) Acquired Fund Fees and
Expenses are indirect fees and expenses that funds incur from investing in the
shares of other investment companies, including money market funds. The Total
Annual Fund Operating Expenses and Total Annual Fund Operating Expenses After
Fee Waiver and/or Expense Reimbursement for the Fund differ from the Ratio of
Expenses to Average Net Assets before and after expense waiver and/or
reimbursement found within the “Financial Highlights” section of the Prospectus
because the audited information in the “Financial Highlights” reflects the
operating expenses of the Fund and does not include indirect expenses such as
Acquired Fund Fees and Expenses.
(2) Luther
King Capital Management Corporation (“Adviser”), the Fund’s investment adviser,
has contractually agreed to waive all or a portion of its management fee and/or
reimburse the Fund through May 1,
2025 in order to limit the Fund’s Total Annual Fund Operating
Expenses After Fee Waiver and/or Expense Reimbursement to 1.00% per annum
(excluding any interest, taxes, brokerage commissions, indirect fees and
expenses relating to investments in other investment companies, including money
market funds (“Acquired Fund Fees and Expenses”), and extraordinary expenses).
The fee waiver and expense reimbursement agreement may be terminated or changed
only with the consent of the Board of Trustees.
Example
The following example is intended to help you compare the costs of
investing in the Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund’s operating expenses remain the same (except that the example reflects the
fee waiver/expense reimbursement arrangement through May 1,
2025). Although your actual costs may be higher
or lower, based on these assumptions, whether or not you redeem your shares,
your costs would be as follows:
|
|
|
|
|
|
|
|
|
|
| |
1 Year |
3 Years
|
5 Years
|
10 Years
|
$103 |
$409 |
$737 |
$1,667 |
Portfolio
Turnover
The Fund pays transaction costs, such as commissions, when it buys
and sells securities (or “turns over” its portfolio). A higher portfolio
turnover rate may indicate higher transaction costs and may result in higher
taxes when Fund shares are held in a taxable account. These costs, which are not
reflected in annual fund operating expenses or in the example, affect the Fund’s
performance. During the most recent fiscal year, the Fund’s portfolio turnover
rate was 11% of the average value of its
portfolio.
Principal Investment
Strategies: The Fund seeks to achieve its
investment objective by investing primarily in equity securities of non-U.S.
companies. The Fund invests under normal circumstances at least 80% of its net
assets (plus any borrowings for investment purposes) in equity securities. These
equity securities primarily consist of common stocks, preferred stocks, American
Depositary Receipts (“ADRs”), and real estate investment trusts (“REITs”). In
determining the origin of a company, the Fund primarily relies on the country
where the company is incorporated, headquartered or has its principal place of
business. The Fund may consider a company to be from a particular country even
if it is not incorporated or headquartered in, or does not have its principal
place of business in, that country if a majority of its assets are located in,
or it derives a majority of its total revenues or profits from, goods or
services produced or sales made in that country. The Fund generally invests in
companies from developed markets, though it may invest to a lesser extent in
companies from emerging markets. The Fund may focus its investments in companies
located in or economically tied to particular countries or geographic regions.
The Fund focuses its investments in issuers that are incorporated in,
headquartered in, or have their principal place of business in, European
countries, including the United Kingdom.
To
a limited degree, the Fund may also invest in companies based in the U.S. The
Fund may also purchase or sell futures contracts and options on futures
contracts for foreign or U.S. equity securities, indices or currencies, may
purchase foreign currency forward
contracts,
for hedging purposes, and may hold foreign currencies. From time to time, in
pursuing its investment strategies, the Fund may hold a significant percentage
of its investments in specific sectors of the economy.
The Fund seeks to invest in the equity securities of high quality
companies, as determined by the Adviser, that typically exhibit certain
characteristics, including high profitability levels, strong balance sheet
quality, competitive advantages, ability to generate excess cash flows,
meaningful management ownership stakes, attractive reinvestment opportunities,
strong market share positions, and/or attractive relative valuation. The Fund
may invest in equity securities of small, mid and large capitalization
companies, including dividend paying securities.
Principal
Risks: The greatest
risk of investing in the Fund is that you could lose money.
There is no assurance that the Fund will achieve its investment objective. The
principal risks of investing in the Fund listed below are presented in
alphabetical order and not in order of importance or potential exposure. Among
other matters, this presentation is intended to facilitate your ability to find
particular risks and make comparisons with those of other funds. Each risk
summarized below is considered a “principal risk” of investing in the Fund,
regardless of the order in which it appears.
• Currency
Risk – The Fund may have exposure to foreign currencies by
making direct investments in securities denominated in non-U.S. currencies,
purchasing or selling futures contracts and options on futures contracts for
foreign or U.S. equity securities, indices or currencies, purchasing foreign
currency forward contracts, and/or holding foreign currencies. Foreign
currencies will fluctuate, and may decline, in value relative to the U.S. dollar
and other currencies and thereby negatively affect the Fund’s holdings of
foreign (non-U.S.) currencies or securities that trade in, and receive revenues
in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies.
Foreign currencies may be affected unpredictably by intervention, or by the
failure to intervene, by the U.S. or foreign governments or central
banks.
• Cybersecurity
Risk – Operational risks arising from, among other things,
human or processing errors, systems and technology disruptions or failures, or
cybersecurity incidents may negatively impact the Fund, its service providers,
and third-party fund distribution platforms, as well as the ability of
shareholders to transact with the Fund, and result in financial losses.
Cybersecurity incidents may allow unauthorized parties to gain access to or
misappropriate Fund assets, shareholder data, or confidential or proprietary
information, or cause the Fund or its service providers, as well as securities
trading venues and their service providers, to suffer data corruption or lose
operational functionality. In addition, authorized persons could inadvertently
release Fund shareholder data or confidential or proprietary information stored
on the Fund’s systems. Cybersecurity incidents can result from deliberate
attacks or unintentional events. It is not possible for the Fund or its service
providers to identify all of the operational risks that may affect the Fund or
to develop processes and controls to completely eliminate or mitigate their
occurrence or effects. Portfolio companies in which the Fund invests are also
exposed to various risks related to cybersecurity incidents, and the value of
the Fund’s investments in such portfolio companies could be adversely impacted
in the event any such cybersecurity incidents occur. The Fund cannot control the
cybersecurity plans and systems of its service providers, its counterparties or
the issuers of securities in which the Fund invests.
• Derivatives
Risk – Derivatives
are instruments, such as futures, foreign currency forward contracts and
options, whose value is derived from that of other assets, rates, indices, or
currencies. The use of derivatives may be considered to carry more risk than
other types of investments and may expose the Fund to additional risks that it
would not be subject to if it invested directly in the securities or other
instruments underlying those derivatives. If the Fund uses derivatives, the Fund
will be directly exposed to the risks of those derivatives. Derivative
instruments are subject to a number of additional risks including counterparty,
liquidity, interest rate, market, credit and management risks, and the risk of
improper valuation. As a result, the Fund may obtain no recovery of its
investment or may only obtain a limited recovery, and any recovery may be
delayed. Not all derivative transactions require a counterparty to post
collateral, which may expose the Fund to greater losses in the event that a
counterparty is or becomes unwilling or unable to satisfy its obligation to make
timely principal, interest or settlement payments or to otherwise honor its
obligations to the Fund. The Fund’s use of derivatives also may create financial
leverage, which may result in losses that exceed the amount originally invested
and accelerate the rate of losses. When the Fund uses derivatives, it may be
required to provide margin or collateral. These practices are intended to
satisfy contractual undertakings and regulatory requirements and will not
prevent the Fund from incurring losses on derivatives. However, the need to
provide margin or collateral could limit the Fund’s ability to pursue other
opportunities as they arise. Ongoing changes to regulation of the derivatives
markets and potential changes in the regulation of funds using derivative
instruments could limit the Fund’s ability to pursue its investment strategies.
Changes in the value of a derivative may not correlate perfectly with the
underlying instrument, and the Fund could lose more than the principal amount
invested. In addition, the Fund’s investments in derivatives are subject to the
following risks:
Foreign
Currency Forward Contracts – Foreign currency forward contracts, including
non-deliverable forwards, are derivative instruments pursuant to a contract with
a counterparty to buy or sell an agreed amount of a specific currency at a fixed
price at a future date. The use of foreign currency forward contracts may expose
the Fund to the risks associated with fluctuations in currency and additional
risks, including credit risk, liquidity risk and counterparty risk, that it
would not be subject to if it invested directly in the securities or currencies
underlying the foreign currency forward contract.
Futures
Contracts – Futures contracts are derivative instruments where the
parties agree to a fixed price for an agreed amount of securities or other
underlying assets at an agreed date or to buy or sell a specific currency at a
future date at a price set at the time of the contract. Futures contracts may
increase the volatility of the Fund and may involve a small investment of cash
relative to the magnitude of the risk assumed. In addition: (i) there may
not be a liquid secondary market for futures contracts, and the Fund may be
unable to close a futures contract when desired; (ii) the Adviser may not
be able to predict correctly the direction of securities prices, currency
exchange rates and other economic factors; and (iii) transaction costs
associated with investments in futures contracts may be significant. Equity
index futures contracts expose the Fund to volatility in an underlying
securities index.
Options – For
the purchase of a call option to be profitable to the purchaser, the market
price of the underlying instrument must rise sufficiently above the call option
exercise price to cover the premium and transaction costs, which will reduce any
profit that might otherwise have been realized if the purchaser bought the
underlying
instrument instead of the call option.
The Fund will receive a premium from writing call options, but it may not offset
any losses sustained from exercised options if the underlying asset has
increased in value when the call option is exercised. For the purchase of a put
option to be profitable to the purchaser, the market price of the underlying
security or instrument must decline sufficiently below the put option’s exercise
price to cover the premium and transaction costs, which will reduce any profit
the purchaser might have realized. The Fund will receive a premium from writing
put options, but it may not offset any losses sustained from exercised options
if the Fund is required to buy the underlying asset at a disadvantageous price.
Options on futures contracts may be subject to additional risks, including risks
associated with the underlying futures
contract.
• Dividend
Paying Securities Risk – Securities that pay higher dividends as a group can fall
out of favor with the market, causing these companies to underperform companies
that do not pay high or any dividends. Also, changes in the dividend policies of
companies owned by the Fund and the capital resources available for these
companies’ dividend payments may reduce the level of dividend payments and
adversely affect the Fund. Dividend paying securities might not experience the
same level of earnings growth or capital appreciation as non-dividend paying
securities. Securities that pay dividends may be sensitive to changes in
interest rates, and as interest rates rise or fall, the prices of such
securities may fluctuate.
• Emerging
Markets Risk – When investing in emerging markets, the risks of
investing in foreign securities discussed below generally are heightened. Stock
markets in many emerging market countries are relatively small, less developed,
less liquid, more volatile, more expensive to trade in, and generally have
higher risks than those in developed markets. Securities in emerging markets
also may be less liquid than those in developed markets and foreigners are often
limited in their ability to invest in, and withdraw assets from, these markets.
Additional restrictions may be imposed under other conditions. The governments
of emerging market countries may also be more unstable and more likely to impose
capital controls, nationalize a company or industry, place restrictions on
securities ownership, or intervene in the financial markets. Numerous emerging
market countries have a history of, and continue to experience serious, and
potentially continuing, economic and political challenges. There are also risks
of: greater political uncertainties; an economy’s dependence on revenues from
particular commodities or on international aid or development assistance;
currency transfer restrictions; a limited number of potential buyers for such
securities resulting in increased volatility and limited liquidity for emerging
market securities; trading suspensions; delays and disruptions in securities
settlement procedures; and significant limitations on investor rights and
recourse. In addition, there may be less information publicly available, or less
reliable information available, to make investment decisions and accurately
evaluate securities of issuers in emerging markets than would be available about
issuers in more developed capital markets, and such issuers may not be subject
to accounting, auditing, financial reporting and recordkeeping standards and
requirements comparable to those to which U.S. companies are subject. It may be
difficult to obtain or enforce legal judgments against non-U.S. companies and
non-U.S. persons in foreign jurisdictions, either through the foreign judicial
system or through a private arbitration process. These matters have the
potential to impact the Fund’s investment objectives and
performance.
• Equity
Securities Risk – The
Fund invests in equity securities and therefore is subject to investment risk,
issuer risk, market risks and significant fluctuations in value in response to
changes in a company’s financial condition as well as general market, economic
and political conditions, and other factors. The Fund may experience a
significant or complete loss on its investment in an equity security. In
addition, stock prices may be sensitive to rising interest rates, which increase
borrowing costs and the costs of capital for the issuer. Equity securities are
generally subordinate to an issuer’s debt in the event of liquidation or
bankruptcy. The Fund’s investments in equity securities primarily consist of
ADRs, common stocks, preferred stocks and REITs.
ADRs – Investments in ADRs are subject to certain of the risks
associated with investing directly in foreign securities, such as currency
fluctuations, political and economic instability, capital restrictions, less
government regulation, less publicly available information, less liquidity,
increased price volatility, and differences in financial reporting standards.
ADRs may not accurately track the prices of the underlying foreign securities
and their value may change materially at times when the U.S. markets are not
open for trading. Investing in such securities may expose the Fund to additional
risk.
Common
Stock – The value of an issuing company’s common stock may rise
or fall as a result of factors affecting the issuing company, other companies in
the same industry or sector, or the financial markets overall. Common stock
generally is subordinate to preferred stock upon the liquidation or bankruptcy
of the issuing company.
Preferred
Stock – Preferred stocks are sensitive to movement in interest
rates. Preferred stocks may be less liquid than common stocks and, unlike common
stocks, participation in the growth of an issuer may be limited. Distributions
on preferred stocks generally are payable at the discretion of an issuer and
after required payments to bond holders. In certain situations, an issuer may
call or redeem its preferred stock or convert it to common stock. The market
prices of preferred stocks are generally more sensitive to actual or perceived
changes in the issuer’s financial condition or prospects than are the prices of
debt securities.
REITs – Investments in REITs are subject to
the risks associated with investing in the real estate industry, adverse
governmental actions, regulatory limitations on rents and operating expenses,
declines in property and real estate values, risks related to general and local
economic conditions, increases in property taxes and operating expenses,
overbuilding, changes in interest rates, liabilities resulting from
environmental problems, and the potential failure of a REIT to qualify for
federal income-tax-free “pass-through” of net income and net realized gains that
are distributed to shareholders and exemption from registration as an investment
company. REITs are dependent upon specialized management skills and may invest
in relatively few properties, and may not be diversified geographically or by
property or tenant type. As a result, investments in REITs may be volatile.
REITs are pooled investment vehicles with their own fees and expenses and the
Fund will indirectly bear a proportionate share of those fees and expenses when
investing in REITs.
• Foreign
Securities Risk – Non-U.S.
investments carry potential risks not associated with domestic investments. Such
risks include, but are not limited to: currency exchange rate fluctuations,
political and financial instability, less liquidity and
greater volatility of foreign investments, lack of uniform
accounting, auditing and financing reporting standards, different government
regulation and supervision of foreign banks, stock exchanges, brokers and listed
companies, and significant limitations in transaction settlements in some
foreign markets. The unavailability and/or unreliability of public information
may impede the Fund’s ability to accurate evaluate foreign securities. It also
may be difficult to enforce contractual obligations or invoke judicial or
arbitration processes against non-U.S. companies and non-U.S. persons in foreign
jurisdictions. There may be very limited oversight of certain foreign banks or
securities depositories that hold foreign securities and currencies and the laws
of certain countries may limit the ability to recover such assets if a foreign
bank or depositary or their agents goes bankrupt. To the extent the Fund invests
a significant portion of its assets in securities of a single country or
geographic region at any one time, it is more likely to be affected by events or
conditions in that country or region. As a result, it may be more volatile than
a more geographically diversified fund.
• Geographic
Concentration Risk – The
Fund may focus its investments in companies located in or economically tied to
particular countries or geographic regions. This could increase the risk that
economic, market, political, business, regulatory, diplomatic, social and
environmental conditions in that particular country or geographic region may
have a significant impact on the Fund’s performance. Investing in such a manner
could cause the Fund’s performance to be more volatile than the performance of
more geographically diverse funds. A decline in the economies or financial
markets of one country or region may adversely affect the economies or financial
markets of another. In addition, the risks associated with investing in a
narrowly defined geographic area are generally more pronounced with respect to
investments in emerging market countries.
European
Securities Risk – To the extent the Fund invests significantly in the securities of
European companies, the Fund’s performance may be influenced by social,
political and economic conditions in Europe. The economies of European Union
(“EU”) member countries and their trading partners, as well as the broader
global economy, may be adversely affected by changes in the euro’s exchange
rate, changes in EU or governmental relations on trade, and the threat of
default or an actual default by an EU member country on its sovereign debt,
which could negatively impact the Fund’s investments and cause it to lose money.
Responses to financial problems in European governments, central banks, and
others, including austerity measures and other reforms, may not work, may result
in social unrest and may limit future growth and economic recovery or have other
unintended consequences. The economies and markets of European countries are
often closely connected and interdependent, and events in one country in Europe
can have an adverse impact on other European countries. The United Kingdom’s
withdrawal from the EU could be an indication that one or more other countries
may withdraw from the EU and/or abandon the euro. If one or more other countries
were to exit the EU, or if any eurozone country abandoned the use of the euro as
its currency, the value of investments tied to those countries could decline
significantly and unexpectedly. The impact of these actions, especially if they
occur in a disorderly fashion, could be significant and far reaching. Russia’s
war with Ukraine has negatively impacted European economic activity. The effects
on the economies of European countries of the Russia/Ukraine war and Russia’s
response to sanctions imposed by the U.S. and other countries have been and
could continue to be significant.
United
Kingdom Securities Risk – The Fund’s exposure to issuers located
in, or with economic ties to, the United Kingdom could expose the Fund to risks
associated with investments in the United Kingdom to a greater extent than more
geographically diverse funds. Investments in United Kingdom issuers may subject
the Fund to regulatory, political, currency, security, and economic risks
specific to the United Kingdom. The United Kingdom has one of the largest
economies in Europe, and the United States and other European countries are
substantial trading partners of the United Kingdom. As a result, the United
Kingdom economy may be impacted by changes to the economic condition of the
United States and other European countries. Increasing commodity prices and
rising inflation levels caused or exacerbated by the war between Russia and
Ukraine prompted the United Kingdom government and other relevant authorities to
implement significant policy changes. The effect of these policy changes may
have a material, potentially negative, impact on the United Kingdom economy that
could affect the performance of the Fund’s investments. Additionally, the
transitional period following the United Kingdom’s departure from the European
Union, commonly known as “Brexit,” ended on December 31, 2020 and European Union
law ceased to have effect in the United Kingdom except to the extent retained by
the United Kingdom by unilateral act. The United Kingdom and the European Union
then reached a trade agreement that was ratified by all applicable United
Kingdom and European Union governmental bodies. The economic effects of Brexit,
including certain negative impacts on the ability of the United Kingdom to trade
seamlessly with the European Union, are becoming clearer but some political,
regulatory and commercial uncertainty in relation to the longer term impacts
nevertheless remains to be resolved. Accordingly, there remains a risk that the
aftermath of Brexit, including its ongoing effect on the United Kingdom’s
relationships with other countries, including the United States, and the
European Union, may negatively impact the value of investments held by the
Fund.
• Hedging
Risk – If the Fund uses a hedging instrument at the wrong time
or judges the market conditions incorrectly, or the hedged instrument does not
correlate to the risk sought to be hedged, the hedge might be unsuccessful,
reduce the Fund’s return, or create a loss. In addition, hedges, even when
successful in mitigating risk, may not prevent the Fund from experiencing losses
on its investments, and therefore the use of hedging strategies may reduce the
Fund’s return, or create a loss.
• Inflation
Risk – Higher actual or anticipated inflation may have an
adverse effect on corporate profits or consumer spending or the financial
markets overall and result in lower values for securities held by the Fund. If
Fund investments do not keep pace with inflation, the present value of Fund
assets and the value of Fund distributions could decline.
• Investment
Risk – An investment in the Fund is not a deposit with a bank
and is not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. When you sell your shares of the Fund, they could
be worth less than what you paid for them. Therefore, you may lose money by
investing in the Fund.
• Large
Cap Companies Risk – The securities of large market capitalization companies
may underperform other segments of the market because such companies may be less
responsive to competitive challenges and opportunities and may be unable to
attain or maintain high growth rates during periods of economic
expansion.
• Liquidity
Risk – When there is little or no active trading market for
specific types of securities, it can become more difficult for the Fund to sell
securities at favorable times or prices. As a result, the Fund may have to lower
the price on certain securities that it is trying to sell, sell other securities
instead or forego an investment opportunity, any of which could have a negative
effect on the Fund. Market developments may cause the Fund’s investments to
become less liquid or illiquid and subject to erratic price movements. Liquidity
risk is particularly acute in the case of foreign investments that are traded in
smaller, less-developed or emerging markets and securities issued by issuers
with smaller market capitalizations. Certain investments that were liquid when
purchased may become illiquid, sometimes abruptly, particularly in times of
overall economic distress or adverse investor perception.
• Market
Risk – The Fund is subject to the risk that the securities markets will
move down, sometimes rapidly and unpredictably, based on overall economic
conditions and other factors, which may negatively affect the Fund’s
performance. Factors that affect markets in general, including geopolitical,
regulatory, market and economic developments and other developments that impact
specific economic sectors, industries, companies and segments of the market,
could adversely impact the Fund’s investments and lead to a decline in the value
of your investment in the Fund. Geopolitical and other events, including
tensions, war, and open conflict between nations, such as between Russia and
Ukraine, in the Middle East and in eastern Asia, could affect the economies of
many countries including the United States. Trade disputes, pandemics, public
health crises, natural disasters and related events have led, and in the future
may continue to lead, to instability in world economies and markets generally
and reduced liquidity in equity, credit and fixed income markets, which may
disrupt economies and markets and adversely affect the value of your investment.
In addition, policy changes by the U.S. government, the U.S. Federal Reserve
and/or foreign governments and political and economic events within the U.S. and
abroad, such as changes in the U.S. presidential administration and Congress,
the U.S. government’s inability at times to agree on a long-term budget and
deficit reduction plan, the threat of a federal government shutdown, threats not
to increase the federal government’s debt limit which could result in a default
on the government’s obligations, and the shutdown of certain financial
institutions, may cause increased volatility in financial markets, affect
investor and consumer confidence and adversely impact the broader financial
markets and economy, perhaps suddenly and to a significant degree. In 2022 the
Federal Reserve and certain foreign central banks began to increase interest
rates to address rising inflation. It is difficult to accurately predict the
pace at which interest rates might increase or start decreasing, the timing,
frequency or magnitude of any such changes in interest rates, or when such
changes might stop or reverse course. Unexpected changes in interest rates could
lead to significant market volatility or reduced liquidity in certain sectors of
the market. Market disruptions have caused, and may continue to cause, broad
changes in market value, negative public perceptions concerning these
developments, and adverse investor sentiment or publicity. Changes in value may
be temporary or may last for extended periods. Regulators have proposed and
recently adopted a number of changes to regulations affecting markets and
issuers. The full effect of newly adopted regulations is not currently
known.
• Redemption
Risk – The Fund may experience periods of significant
redemptions that could cause the Fund to sell assets at inopportune times or at
a loss or depressed value. Redemption risk is heightened during periods of
declining or illiquid markets. Significant redemptions could hurt the Fund’s
performance. The sale of assets to meet redemption requests may require the Fund
to realize net capital gains, which could require the Fund to make substantial
capital gains distributions to shareholders.
• Sector
Weighting Risk – The Fund may focus its investments in particular sectors
of the economy. To the extent the Fund emphasizes investments in particular
sectors of the economy, the Fund will be subject to a greater degree of risks
particular to those sectors. Market conditions, interest rates, and economic,
regulatory, financial or geopolitical developments could significantly affect
securities in particular sectors. Depending on the weightings of the Fund’s
investments in particular sectors, the Fund may have increased exposure to price
movements of securities in those sectors.
• Security
Selection Risk – Securities selected by the Fund may not perform as
anticipated due to a number of factors impacting the company that issued the
securities or its particular industry or sector, such as poor operating or
management performance, weak demand for the company’s products or services, the
company’s failure to meet earnings or other operating performance expectations,
financial leverage or credit deterioration, litigation or regulatory issues, or
a decline in the value of the issuer’s business and assets.
• Small
and Mid Cap Companies Risk – The Fund invests in small and mid capitalization
companies that may not have the size, resources and other assets of large
capitalization companies. Small and mid capitalization companies may also have
narrower commercial markets and more limited operating histories, product lines,
and managerial and financial resources than larger, more established companies.
Small and mid capitalization companies may be more sensitive to changes in
interest rates, borrowing costs and earnings. As a result, the securities of
small and mid capitalization companies held by the Fund may be less liquid and
subject to greater market risks and fluctuations in value than large
capitalization companies or may not correspond to changes in the stock market in
general. In general, these risks are greater for small capitalization companies
than for mid capitalization companies.
• Valuation
Risk – The Fund may value certain securities at a price
different from the price at which they can be sold. This risk may be especially
pronounced for investments, such as certain derivatives and foreign investments,
which may be illiquid or which may become illiquid.
Performance: The bar chart
and table that follow illustrate annual Fund returns for periods ended December
31. This information is intended to give you some indication of
the risks of investing in the Fund by showing changes in the Fund’s performance
from year to year and how the Fund’s average annual returns over time compare
with those of a market index and an index of funds with similar investment
objectives. The Fund’s past performance
(before and after taxes) is not necessarily an indication of how the Fund will
perform in the future. Updated performance information is
available on the Fund’s website at www.lkcmfunds.com
or by calling the Fund toll-free at 1-800-688-LKCM.
Calendar Year Returns as of
12/31
During
the period shown on the bar chart, the Fund’s best and worst quarters are shown
below:
|
|
|
|
|
|
|
| |
Best and
Worst Quarterly
Returns |
19.19% |
2nd
quarter,
2020 |
-22.50% |
1st
quarter,
2020 |
Average Annual
Total Returns for Periods Ended December 31,
2023
|
|
|
|
|
|
|
| |
|
1
Year |
Since Inception
(May 1,
2019) |
Return
Before Taxes |
16.09% |
6.77% |
Return
After Taxes on Distributions |
15.98% |
6.57% |
Return
After Taxes on Distributions and Sale of Fund
Shares |
10.09% |
5.45% |
MSCI/EAFE®
Index (reflects no deduction for
fees, expenses or taxes) |
18.85% |
6.40% |
Lipper
International Large-Cap Core Funds Index (reflects no deduction for
taxes) |
16.82% |
5.37% |
After-tax returns are
calculated using the historical highest individual federal marginal income tax
rates, and do not reflect the impact of state and local taxes.
The return after taxes on
distributions and sale of Fund shares may exceed the return before taxes due to
an assumed tax benefit from any losses on a sale of Fund shares at the end of
the measurement period. Actual after-tax returns depend on your
tax situation and may differ from those shown. In
addition, the after-tax returns shown are not relevant to investors who hold
their Fund shares through tax-deferred arrangements such as 401(k) plans and
individual retirement accounts.
Investment
Adviser: Luther
King Capital Management Corporation.
Portfolio
Managers:
|
|
|
|
|
|
|
| |
|
| |
Name |
Title |
Experience
with the Fund |
Mason
D. King, CFA |
Principal,
Vice President, Portfolio Manager and Analyst |
Since
Inception in 2019 |
J.
Luther King, Jr., CFA, CIC |
Principal,
President and Portfolio Manager |
Since
Inception in 2019 |
Brittny
G. Allred, CFA |
Principal,
Vice President, Portfolio Manager and Analyst |
Since
2021 |
Purchase
and Sale of Fund Shares: Investors
may purchase, exchange or redeem Fund shares by mail (LKCM Funds, c/o
U.S. Bank Global Fund Services, 615 East Michigan Street,
3rd Floor,
Milwaukee, WI 53202), or by telephone at 1-800-688-LKCM. Redemptions by
telephone are only permitted upon previously receiving appropriate
authorization. Transactions normally will only occur on days the New York
Stock Exchange is scheduled to be open. Investors who wish to purchase or
redeem Fund shares through a financial intermediary should contact the financial
intermediary directly for information relative to the purchase or sale of Fund
shares. The minimum initial amount of investment in the Fund and exchanges
into the Fund from another fund in the LKCM Funds is $2,000. Subsequent
investments in the Fund for all types of accounts may be made with a minimum
investment of $500.
Tax
Information: The
Fund’s distributions are taxable to you and will be taxed as ordinary income or
capital gains, unless you are investing through a tax-deferred arrangement, such
as a 401(k) plan or an individual retirement account, in which case the
withdrawal of your investment from the tax-deferred arrangement may be taxable.
Payments
to Broker-Dealers and Other Financial Intermediaries: If
you purchase Fund shares through a broker-dealer or other financial intermediary
(such as a financial adviser), the Fund and its related companies may pay the
intermediary for the sale of Fund shares and/or other services. If made, these
payments may create a conflict of interest by influencing the broker-dealer or
other intermediary and your salesperson to recommend the Fund over another
investment. Ask your salesperson or visit your financial intermediary’s website
for more information.
ADDITIONAL
INFORMATION REGARDING THE INVESTMENT OBJECTIVES
AND
PRINCIPAL INVESTMENT STRATEGIES OF THE FUNDS
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Small
Cap Equity Fund |
The
Fund seeks to maximize long-term capital appreciation.
The
Fund seeks to achieve its investment objective by primarily choosing
investments that Luther King Capital Management Corporation (“Adviser”)
believes are likely to have above-average growth in revenue and/or
earnings and potential for above-average capital appreciation. The Fund
invests under normal circumstances at least 80% of its net assets (plus
any borrowings for investment purposes) in equity securities of smaller
companies. Smaller companies are those with market capitalizations at the
time of investment between $0.8 billion and $7 billion. The Fund
is not required to sell equity securities whose market values appreciate
or depreciate outside this market capitalization range. The equity
securities in which the Fund invests primarily consist of common stocks,
American Depositary Receipts (“ADRs”), and real estate investment trusts
(“REITs”). From time to time, in pursuing its investment strategies, the
Fund may hold a significant percentage of its investments in specific
sectors of the economy, such as the industrials sector. However, as the
sector composition of the Fund’s portfolio changes over time, the Fund’s
exposure to the industrials sector may be lower at a future date, and the
Fund’s exposure to other market sectors may be higher.
The
Adviser’s primary strategy in managing the Fund is to identify high
quality companies, as determined by the Adviser, that typically exhibit
certain characteristics, including high profitability levels, strong
balance sheet quality, competitive advantages, ability to generate excess
cash flows, meaningful management ownership stakes, attractive
reinvestment opportunities, strong market share positions, and/or
attractive relative valuation. |
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Small-Mid
Cap Equity Fund |
The
Fund seeks to maximize long-term capital appreciation.
The
Fund seeks to achieve its investment objective by primarily choosing
investments that the Adviser believes are likely to have above-average
growth in revenue and/or earnings and potential for above-average capital
appreciation. The Fund invests under normal circumstances at least 80% of
its net assets (plus any borrowings for investment purposes) in equity
securities of small-mid capitalization companies. Small-mid capitalization
companies are those with market capitalizations at the time of investment
between $2 billion and $20 billion. The Fund is not required to
sell equity securities whose market values appreciate or depreciate
outside this market capitalization range. The equity securities in which
the Fund invests primarily consist of common stocks, ADRs, and REITs. From
time to time, in pursuing its investment strategies, the Fund may hold a
significant percentage of its investments in specific sectors of the
economy, such as the industrials sector. However, as the sector
composition of the Fund’s portfolio changes over time, the Fund’s exposure
to the industrials sector may be lower at a future date, and the Fund’s
exposure to other market sectors may be higher.
The
Adviser’s primary strategy in managing the Fund is to identify high
quality companies, as determined by the Adviser, that typically exhibit
certain characteristics, including high profitability levels, strong
balance sheet quality, competitive advantages, ability to generate excess
cash flows, meaningful management ownership stakes, attractive
reinvestment opportunities, strong market share positions, and/or
attractive relative valuation. |
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Equity
Fund |
The
Fund seeks to maximize long-term capital appreciation.
The
Fund seeks to achieve its investment objective by primarily choosing
investments that the Adviser believes are likely to have above-average
growth in revenue and/or earnings, above-average returns on shareholders’
equity, potential for above-average capital appreciation, and/or companies
that the Adviser believes have attractive relative valuations. The Fund
invests under normal circumstances at least 80% of its net assets (plus
any borrowings for investment purposes) in equity securities. The equity
securities in which the Fund invests primarily consist of common stocks,
ADRs, and REITs. The Fund may invest in equity securities of small, mid
and large capitalization companies, including dividend paying securities.
From time to time, in pursuing its investment strategies, the Fund may
hold a significant percentage of its investments in specific sectors of
the economy, such as the information technology sector. However, as the
sector composition of the Fund’s portfolio changes over time, the Fund’s
exposure to the information technology sector may be lower at a future
date, and the Fund’s exposure to other market sectors may be
higher.
The
Adviser’s primary strategy in managing the Fund is to identify high
quality companies, as determined by the Adviser, that typically exhibit
certain characteristics, including high profitability levels, strong
balance sheet quality, competitive advantages, ability to generate excess
cash flows, meaningful management ownership stakes, attractive
reinvestment opportunities and/or strong market share positions.
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Balanced
Fund |
The
Fund seeks current income and long-term capital appreciation.
The
Fund seeks to achieve its investment objective by investing primarily in a
portfolio of equity and fixed income securities. The Fund’s investments in
equity securities primarily consist of common stocks, ADRs, and REITs.
Under normal circumstances, 25% or more of the Fund’s total assets will
consist of fixed income securities. The Fund’s investments in fixed income
securities consist primarily of investment grade corporate fixed income
securities and fixed income securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. The Fund may also invest in
variable and floating rate bonds. The Fund typically invests in fixed
income securities with short-to intermediate-term maturities from one to
ten years. Investment grade debt securities are considered to be those
rated within the four highest rating categories by a nationally recognized
statistical ratings organization, such as Moody’s Investors Service, Inc.,
Fitch Ratings, Inc. or S&P Global Ratings, or of equivalent quality as
determined by the Adviser. The Fund does not presently intend to invest
more than 20% of its total assets in equity securities that do not pay
dividends. From time to time, in pursuing its investment strategies, the
Fund may hold a significant percentage of its investments in specific
sectors of the economy.
The
Adviser’s primary strategy in managing the Fund’s equity investments is to
identify high quality companies, as determined by the Adviser, that
typically exhibit certain characteristics, including high profitability
levels, strong balance sheet quality, competitive advantages, ability to
generate excess cash flows, meaningful management ownership stakes,
attractive reinvestment opportunities, strong market share positions,
and/or attractive relative valuation. The Fund may invest in securities of
small, mid and large capitalization companies, including dividend paying
securities.
The
Adviser’s primary strategy in managing the Fund’s fixed income investments
is to select debt securities based on factors such as price coupon, yield
to maturity, the credit quality of the issuer, the issuer’s cash flow and
related coverage ratios, the property, if any, securing the obligation and
the terms of the security, including subordination, default, sinking fund
and early redemption provisions. If securities held by the Fund are
downgraded below investment grade, the Adviser will consider whether or
not to continue to hold such securities. |
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Fixed
Income Fund |
The
Fund seeks current income.
The
Fund invests under normal circumstances at least 80% of its net assets
(plus any borrowings for investment purposes) in a portfolio of investment
grade corporate and U.S. Government fixed income securities. The Fund’s
investments in fixed income securities consist primarily of investment
grade corporate fixed income securities and fixed income securities issued
or guaranteed by the U.S. Government, its agencies or
instrumentalities. The Fund typically invests in fixed income securities
with short- to intermediate-term maturities from one to ten years.
Investment grade debt securities are considered to be those rated within
the four highest rating categories assigned by a nationally recognized
statistical ratings organization, such as Moody’s Investors Service, Inc.,
Fitch Ratings, Inc. or S&P Global Ratings, or of equivalent quality as
determined by the Adviser. The Fund may invest in all types of domestic or
U.S. dollar-denominated foreign fixed income securities in any proportion,
including bonds, notes, convertible bonds, mortgage pass-through
securities, government and government agency securities, variable and
floating rate bonds, preferred stock and short-term obligations such as
commercial paper and notes and other financial obligations.
The
Fund seeks to maintain an average effective maturity of its portfolio
between three and ten years under normal market and economic conditions.
The effective maturity of securities with sinking fund or other early
redemption features will be estimated by the Adviser, based upon
prevailing interest rate trends and the issuer’s financial position. The
average effective maturity of the Fund’s portfolio may be less than three
years if the Adviser believes a defensive posture is appropriate. From
time to time, in pursuing its investment strategies, the Fund may hold a
significant percentage of its investments in specific sectors of the
economy.
The
Adviser’s primary strategy in managing the Fund is to select debt
securities based on factors such as price coupon, yield to maturity, the
credit quality of the issuer, the issuer’s cash flow and related coverage
ratios, the property, if any, securing the obligation and the terms of the
security, including subordination, default, sinking fund and early
redemption provisions. If securities held by the Fund are downgraded below
investment grade, the Adviser will consider whether or not to continue to
hold such securities. |
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International
Equity Fund |
The
Fund seeks to maximize long-term capital appreciation.
The
Fund seeks to achieve its investment objective by investing primarily in
equity securities of non-U.S. companies. The Fund invests under normal
circumstances at least 80% of its net assets (plus any borrowings for
investment purposes) in equity securities. These equity securities
primarily consist of common stocks, preferred stocks, ADRs, and REITs. In
determining the origin of a company, the Fund primarily relies on the
country where the company is incorporated, headquartered or has its
principal place of business. The Fund may consider a company to be from a
particular country even if it is not incorporated or headquartered in, or
does not have its principal place of business in, that country if a
majority of its assets are located in, or it derives a majority of its
total revenues or profits from, goods or services produced or sales made
in that country. The Fund generally invests in companies from developed
markets, though it may invest to a lesser extent in companies from
emerging markets. The Fund may focus its investments in companies located
in or economically tied to particular countries or geographic regions. The
Fund focuses its investments in issuers that are incorporated in,
headquartered in, or have their principal place of business in, European
countries, including the United Kingdom. To a limited degree, the Fund may
also invest in companies based in the U.S. The Fund may also purchase or
sell futures contracts and options on futures contracts for foreign or
U.S. equity securities, indices or currencies, and may purchase foreign
currency forward contracts, for hedging purposes, and may hold foreign
currencies. From time to time, in pursuing its investment strategies, the
Fund may hold a significant percentage of its investments in specific
sectors of the economy.
The
Adviser’s primary strategy in managing the Fund is to identify high
quality companies, as determined by the Adviser, that typically exhibit
certain characteristics, including high profitability levels, strong
balance sheet quality, competitive advantages, ability to generate excess
cash flows, meaningful management ownership stakes, attractive
reinvestment opportunities, strong market share positions, and/or
attractive relative valuation. The Fund may invest in equity securities of
small, mid and large capitalization companies, including dividend paying
securities. |
Each
Fund (except for the Balanced Fund, which does not have an 80% investment
policy) has adopted a non-fundamental policy to notify its shareholders at least
60 days before it changes its 80% investment policy described above. Each Fund’s
investment objective is non-fundamental, which means that it may be changed by
action of the Board of Trustees of the Trust without shareholder approval.
DISCUSSION
OF INVESTMENT APPROACH
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Small
Cap Equity, Small-Mid Cap Equity, Equity, Balanced (Equity Portfolio) and
International Equity Funds |
The
Adviser follows an equity investment approach grounded in the fundamental
analysis of individual companies. The Adviser seeks to identify high
quality companies, as determined by the Adviser, based on various
quantitative and qualitative financial and fundamental criteria. Companies
meeting these criteria will typically exhibit a number of the following
characteristics: |
| • High
profitability levels; • Strong balance sheet
quality; • Competitive advantages;
• Strong market share positions;
• Attractive reinvestment opportunities;
• Ability to generate excess cash flow after
capital expenditures; • Management with a
meaningful ownership stake in the company; and/or
• Attractive relative valuation. |
Balanced
(Fixed Income Portfolio) and Fixed Income Funds |
The
Adviser’s fixed income investment approach concentrates primarily on
investment grade corporate fixed income securities and fixed income
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities with short- to intermediate-term maturities from one to
ten years. The Adviser’s security selection process is heavily
credit-driven and focuses on the issuer’s earnings and cash flow trends,
its competitive positioning, and the dynamics of its industry. The
Adviser’s fixed income philosophy typically combines noncallable bonds for
their offensive characteristics with callable bonds for their defensive
characteristics in an attempt to enhance returns while controlling the
level of risk.
The
Adviser’s fixed income approach also seeks to identify securities with a
combination of attractive coupons and various early redemption features.
These defensive issues can offer higher levels of current income with
relatively limited price volatility due to the possibility that they will
be retired by the issuer much sooner than the final maturity. Callable
bonds are typically used as alternatives to traditional short-term
noncallable securities. Maturity decisions are primarily a function of the
Adviser’s macroeconomic analysis and are typically implemented utilizing
short to intermediate maturity, noncallable securities. Finally, the
credit analysis performed by the Adviser on individual companies, as well
as industries, is enhanced by the Adviser’s experience in the equity
markets and the quantitative and qualitative financial and fundamental
criteria incorporated into the Adviser’s equity investment approach. The
analytical effort typically concentrates on market leading, profitable,
well-financed debt issuers. |
To
respond to adverse market, economic, political or other conditions, each Fund
may adopt a temporary defensive position, during which the Fund may invest in
cash, time deposits, commercial paper, certificates of deposit, short term
corporate and government obligations, repurchase agreements and bankers’
acceptances. To the extent that a Fund engages in a temporary, defensive
strategy, the
Fund
may not achieve its investment objective. A defensive position, taken at the
wrong time, such as when the markets unexpectedly rise rather than decline, may
have an adverse impact on a Fund’s performance.
ADDITIONAL
INFORMATION REGARDING THE
PRINCIPAL RISKS OF INVESTING IN THE FUNDS
An
investment in any of the Funds entails risks. You should be aware that you may
lose money by investing in the Funds, and the Funds’ performance could trail
that of other investment alternatives. There is no assurance that a Fund will
meet its investment objectives. The table below provides additional principal
risks of investing in the Funds. Following the table, each risk is explained.
The principal risks of investing in each Fund listed below are presented in
alphabetical order and not in order of importance or potential exposure. Among
other matters, this presentation is intended to facilitate your ability to find
particular risks and make comparisons with those of other funds. Each risk
summarized below is considered a “principal risk” of investing in a Fund,
regardless of the order in which it appears.
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Small Cap
Equity Fund |
Small-
Mid Cap
Equity Fund |
Equity
Fund |
Balanced
Fund |
Fixed Income
Fund |
International
Equity
Fund |
Call
Risk |
|
|
| X |
X |
|
Convertible
Debt Securities Risk |
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| X |
|
Credit
Risk |
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|
| X |
X |
|
Currency
Risk |
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| X |
Cybersecurity
Risk |
X |
X |
X |
X |
X |
X |
Derivatives
Risk |
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| X |
Dividend
Paying Securities Risk |
|
| X |
X |
| X |
Emerging
Markets Risk |
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|
| X |
Equity
Securities Risk |
X |
X |
X |
X |
| X |
Fixed
Income Securities Risk |
|
|
| X |
X |
|
Foreign
Securities Risk |
|
| X |
X |
X |
X |
Geographic
Concentration Risk |
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| X |
Government-Sponsored Enterprises Risk |
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| X |
|
Hedging
Risk |
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| X |
Inflation
Risk |
X |
X |
X |
X |
X |
X |
Interest
Rate Risk |
|
|
| X |
X |
|
Investment
Risk |
X |
X |
X |
X |
X |
X |
Large
Cap Companies Risk |
|
| X |
X |
| X |
LIBOR
Transition Risk |
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| X |
X |
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Liquidity
Risk |
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| X |
X |
X |
Market
Risk |
X |
X |
X |
X |
X |
X |
Mortgage
Pass-Through Securities Risk |
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| X |
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Preferred
Stocks Risk |
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| X |
X |
Redemption
Risk |
X |
X |
X |
X |
X |
X |
Sector
Weighting Risk |
X |
X |
X |
X |
X |
X |
Security
Selection Risk |
X |
X |
X |
X |
X |
X |
Small
Cap Companies Risk |
X |
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Small
and Mid Cap Companies Risk |
| X |
X |
X |
| X |
U.S.
Government Securities Risk |
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| X |
X |
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Valuation
Risk |
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| X |
Variable and Floating Rate Securities Risk |
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| X |
X |
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Call
Risk: |
During
periods of falling interest rates, an issuer of a callable bond held by a
Fund may “call” or repay the security before its stated maturity. A Fund
would then lose any price appreciation above the bond’s call price and the
income that would have been earned to maturity on the security. In the
event of a call, the Fund may have to reinvest the proceeds at lower
interest rates, also resulting in a decline in the Fund’s income. In
addition, the market value of a callable security may decrease if it is
perceived by the market as likely to be called, which could have a
negative impact on a Fund’s total return. |
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Convertible
Debt Securities Risk: |
A
convertible security is a form of hybrid security; that is, a security
with both debt and equity characteristics. The value of a convertible
security is based on its yield and fluctuates in relation to changes in
interest rates and the credit quality of the issuer and in relation to
changes in the price of the underlying common stock. A convertible
security tends to perform more like common stock when the underlying
common stock price is high relative to the conversion price of the
convertible security and more like a fixed income security when the
underlying common stock price is low relative to the conversion price of
the convertible security. A convertible security may be subject to
redemption at the option of the issuer at a price established in the
convertible security’s governing instrument, which may be less than the
current market price of the security. Convertible securities are subject
to market risk, credit risk and interest rate risk as well as the same
types of market and issuer-specific risks that apply to the underlying
common stock. Convertible securities are normally “junior” securities,
which means an issuer usually must pay interest on its non-convertible
debt securities before it can make payments on its convertible securities.
If an issuer stops making interest or principal payments, these securities
may become worthless and a Fund could lose its entire investment in such
securities. In the event of a liquidation of the issuing company, holders
of convertible securities may be paid before the company’s common
stockholders but after holders of any senior debt obligations of the
company. |
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Credit
Risk: |
A
Fund is subject to the risk that the issuer or guarantor of a fixed income
security becomes unable or unwilling, or is perceived (whether by market
participants, ratings agencies, pricing services or otherwise) as unable
or unwilling, to make timely interest or principal payments or otherwise
honor its obligations, which may cause the Fund’s holdings to lose value.
The extent of this risk varies based on the terms of the particular
security and the financial condition of the issuer, guarantor or
counterparty. A security’s degree of credit risk is often reflected in its
credit rating, with higher ratings corresponding to lower perceived credit
risk. A downgrade in an issuer’s credit rating, factors affecting an
issuer directly, factors affecting the industry in which a particular
issuer operates, and changes in general social, economic or political
conditions can increase the risk of default by an issuer or reduce the
market value of that issuer’s securities. The credit quality of a security
can deteriorate suddenly and rapidly. Lower credit quality also may lead
to greater volatility in the price of a security and may negatively affect
a security’s liquidity. In addition, credit ratings agencies may fail to
make timely changes to credit ratings in response to subsequent events and
a credit rating may fail to reflect changes in an issuer’s financial
condition. Credit ratings reflect a rating agency’s opinion regarding a
security’s quality but are not a guarantee of quality and do not protect
against a decline in a security’s value. The ratings assigned to
securities by rating agencies do not purport to fully reflect the true
risks of an investment, and rating agencies may not always change their
credit rating on an issuer or security in a timely manner to reflect
events that could affect the issuer’s ability to make timely payments on
its obligations. Changes in the actual or perceived creditworthiness of an
issuer, or a downgrade or default affecting any of a Fund’s securities,
could affect a Fund’s performance. Credit risk is typically greater for
securities with ratings that are downgraded below investment grade.
Generally, the longer the maturity of a security, the more sensitive it is
to credit risk. |
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Currency
Risk: |
A
Fund may have exposure to foreign currencies by making direct investments
in securities denominated in non-U.S. currencies, purchasing or selling
futures contracts and options on futures contracts for foreign or U.S.
equity securities, indices or currencies, purchasing foreign currency
forward contracts, and/or holding foreign currencies. Foreign currencies
may decline in value relative to the U.S. dollar, or, in the case of
hedging positions, the U.S. dollar may decline in value relative to the
currency being hedged, and thereby negatively affect a Fund’s holdings of
foreign (non-U.S.) currencies or securities that trade in, and receive
revenues in, or in derivatives that provide exposure to, foreign
(non-U.S.) currencies. As a result, a Fund’s exposure to foreign
currencies may reduce the returns of a Fund. Currency exchange rates may
fluctuate significantly over short periods of time for a number of
reasons, including changes in interest rates, intervention (or the failure
to intervene) by U.S. or foreign governments, central banks or
supranational entities such as the International Monetary Fund, or by the
imposition of currency controls or other political developments in the
U.S. or abroad. As a result, a Fund’s investments in foreign currency
denominated securities may reduce the returns of such Fund. Currency
futures, forwards or options may not always work as intended, and in
specific cases a Fund may be more negatively impacted than if it had not
used such instrument(s). There may not always be suitable hedging
instruments available. Even where suitable hedging instruments are
available, a Fund may not hedge its currency
risks. |
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Cybersecurity
Risk: |
Operational
risks arising from, among other things, human or processing errors,
systems and technology disruptions or failures, or cybersecurity incidents
may negatively impact a Fund, its service providers, and third-party fund
distribution platforms, as well as the ability of shareholders to transact
with a Fund, and result in financial losses. Cybersecurity incidents may
allow unauthorized parties to gain access to or misappropriate a Fund’s
assets, shareholder data, or confidential or proprietary information, or
cause a Fund or its service providers, as well as securities trading
venues and their service providers, to suffer data corruption or lose
operational functionality, including the inability to process Fund
transactions, interference with a Fund’s ability to calculate its net
asset value, physical damage to a computer or network system or
remediation costs associated with system repairs. In addition, authorized
persons could inadvertently release Fund shareholder data or confidential
or proprietary information stored on the Fund’s systems. The occurrence of
any of these problems could result in a loss of information, violations of
applicable privacy and other laws, regulatory scrutiny, penalties, fines,
reputational damage, additional compliance requirements and other
consequences, any of which may have a material effect on a Fund or its
shareholders. It is not possible for a Fund or its service providers to
identify all of the operational risks that may affect a Fund or to develop
processes and controls to completely eliminate or mitigate their
occurrence or effects. Recent geopolitical tensions may increase the scale
and sophistication of deliberate attacks, particularly those from
nation-states or from entities with nation-state backing. A Fund cannot
control the cybersecurity plans and systems of its service providers, its
counterparties or the issuers or securities in which the Fund invests.
Portfolio companies in which a Fund invests are also exposed to various
risks related to cybersecurity incidents, and the value of a Fund’s
investments in such portfolio companies could be adversely impacted in the
event any such cybersecurity incidents occur. A Fund may incur substantial
costs to prevent or address cybersecurity
incidents. |
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Derivatives
Risk: |
Derivatives
are instruments, such as futures, foreign currency forward contracts and
options, whose value is derived from that of other assets, rates, indices,
or currencies. A Fund may use derivatives to hedge against fluctuations in
currency exchange rates, to manage certain investment risks or as a
substitute for the purchase or sale of the underlying currencies or
securities. A Fund may also hold derivative instruments to obtain economic
exposure to an issuer without directly holding its
securities.
The
use of derivatives may be considered to carry more risk than other types
of investments and may expose a Fund to additional risks that it would not
be subject to if it invested directly in the securities or other
instruments underlying those derivatives. If a Fund uses derivatives, such
Fund will be directly exposed to the risks of those derivatives.
Derivatives can be highly complex and their use within an investment
strategy can require specialized skills. There can be no assurance that
any strategy used will succeed. There may also be material and prolonged
deviations between the theoretical value and realizable value of a
derivative. In addition, leverage embedded in a derivative instrument can
expose a Fund to greater risk and increase its costs. Gains or losses in
the value of a derivative instrument may be magnified and be much greater
than the original amount invested (generally the initial margin deposit).
Some derivatives have the potential for unlimited loss, regardless of the
size of a Fund’s initial investment, for example, where a Fund may be
called upon to deliver a security it does not own. Derivatives may be
illiquid and may be more volatile than other types of investments. A Fund
may not be able to close out or sell a derivative position at a particular
time or at an anticipated price. A Fund may buy or sell derivatives not
traded on an exchange or contract market and which may be subject to
heightened liquidity and valuation risk. Derivative instruments are
subject to a number of other risks including counterparty, interest rate,
market, credit and management risks. As a result, a Fund may obtain no
recovery of its investment or may only obtain a limited recovery, and any
recovery may be delayed. Not all derivative transactions require a
counterparty to post collateral, which may expose a Fund to greater losses
in the event that a counterparty is or becomes unwilling or unable to
satisfy its obligation to make timely principal, interest or settlement
payments or to otherwise honor its obligations to such
Fund. |
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Certain
derivatives, including futures and written options, require a Fund to post
margin to secure its future obligation, and if such Fund has insufficient
cash, it may have to sell investments from its portfolio to meet daily
variation margin requirements at a time when it may be disadvantageous to
do so. Because the markets for certain derivative instruments (including
markets located in foreign countries) are relatively new and still
developing, suitable derivatives transactions may not be available in all
circumstances for risk management or other purposes, and there can be no
assurance that a Fund will use derivatives to reduce exposure to other
risks when that might have been beneficial. Changes in the value of a
derivative may not correlate perfectly with the underlying asset, rate,
index or currency, and an abrupt change in the price of the reference
instrument could render a derivative worthless. A Fund’s use of
derivatives also may create financial leverage, which may result in losses
that exceed the amount originally invested and accelerate the rate of
losses. When a Fund uses derivatives, it may be required to provide margin
or collateral. These practices will not prevent a Fund from incurring
losses on derivatives. However, the need to provide margin or collateral
could limit a Fund’s ability to pursue other opportunities as they
arise.
Upon
the expiration of a particular contract, the Adviser may wish to retain a
Fund’s position in the derivative instrument by entering into a similar
contract, but may be unable to do so if the counterparty to the original
contract is unwilling to enter into the new contract and no other suitable
counterparty can be found. A Fund’s ability to use derivatives may also be
limited by certain regulatory and tax considerations. For example, the
Commodity Futures Trading Commission (“CFTC”) and the designated contract
markets have established position limits for futures and option contracts
that may restrict the ability of a Fund, or the Adviser entering trades on
such Fund’s behalf, to make certain trading decisions.
Ongoing
changes to regulation of the derivatives markets and potential changes in
the regulation of funds using derivative instruments could limit a Fund’s
ability to pursue its investment strategies. The extent and impact of the
regulation is not yet fully known and may not be for some time. New
regulation may make derivatives more costly, may limit their availability,
may disrupt markets, or may otherwise adversely affect their value or
performance. In addition to other changes, these rules provide for central
clearing of derivatives that in the past were traded exclusively
over-the-counter and may increase costs and margin requirements, but are
expected to reduce certain counterparty risks. Rule 18f-4 places limits on
the use of derivatives by registered investment companies, such as a Fund.
A Fund that relies on Rule 18f-4 is required to comply with limits on the
amount of leverage-related risk that the fund may obtain, and may also be
required to adopt and implement a derivatives risk management program and
designate a derivatives risk manager or adopt policies and procedures
designed to manage a fund’s derivatives risks. |
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of the other risks to which a Fund might be exposed due to its use of
derivatives include the following: |
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•Foreign
Currency Forward Contracts.
Foreign currency forward contracts, including non-deliverable forwards
(“NDFs”), are derivative instruments pursuant to a contract with a
counterparty to buy or sell a specific currency at a future date at a
price set at the time of the contract. The use of foreign currency forward
contracts may expose a Fund to additional risks, such as credit risk,
liquidity risk and counterparty risk, that it would not be subject to if
it invested directly in the securities or currencies underlying the
foreign currency forward contract. Foreign currency forward transactions
include risks associated with fluctuations in foreign currency. There are
no limitations on daily price movements of forward contracts. There may at
times be an imperfect correlation between the price of a forward contract
and the underlying security, index or currency which will increase the
volatility of a Fund. Not all forward contracts, including NDFs, require a
counterparty to post collateral, which may expose a Fund to greater losses
in the event of a default by a counterparty. If such a default occurs, a
Fund will have contractual remedies pursuant to the forward contract, but
such remedies may be subject to bankruptcy and insolvency laws which could
affect such Fund’s rights as a creditor. Forward currency transactions
include risks associated with fluctuations in foreign currency.
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•Futures
Contracts. Futures
contracts are derivative instruments where the parties agree to a fixed
price for an agreed amount of securities or other underlying assets at an
agreed date or to buy or sell a specific currency at a future date at a
price set at the time of the contract. There may at times be an imperfect
correlation between the movement in the prices of futures contracts and
the value of their underlying instruments or indexes. Futures contracts
may experience dramatic price changes (losses) and imperfect correlations
between the price of the contract and the underlying security, index or
currency which will increase the volatility of a Fund. An abrupt change in
the price of an underlying security could render the underlying futures
contract worthless. Futures contracts may involve a small investment of
cash (the amount of initial and variation margin) relative to the
magnitude of the risk assumed (the potential increase or decrease in the
price of the futures contract). When a Fund purchases or sells a futures
contract, it is subject to daily variation margin calls that could be
substantial. If a Fund has insufficient cash to meet daily variation
margin requirements, it might need to sell securities at a time when such
sales are disadvantageous. There may not be a liquid secondary market for
the futures contract. A Fund’s use of futures contracts also depends on an
investment manager’s ability to predict correctly the direction of
securities prices, currency exchange rates and other economic factors.
Transaction costs associated with futures contracts may be significant,
which could cause or increase losses or reduce gains. Equity index futures
contracts expose a Fund to volatility in an underlying securities index.
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•Options. A
call option gives the purchaser the right to buy an underlying asset or
other reference item at a specified price, regardless of the instrument’s
market price at the time. In order for the purchase of a call option to be
profitable to the purchaser, the market price of the underlying security
or instrument must rise sufficiently above the call option exercise price
to cover the premium and transaction costs. These costs will reduce any
profit that might otherwise have been realized had the purchaser bought
the underlying instrument instead of the call option. A Fund will receive
a premium from writing call options, but the premium received may not be
sufficient to offset any losses sustained from exercised options. If a
Fund sells a call option on an underlying asset and the underlying asset
has increased in value when the call option is exercised, such Fund will
be required to sell the underlying asset at the call price and will not be
able to realize any of the underlying asset’s value above the call price.
Furthermore, the asset could still decline in value. |
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A
put option gives the purchaser the right to sell an underlying asset or
other reference instrument at a specified price, regardless of the
instrument’s market price at the time. For the purchase of a put option to
be profitable to the purchaser, the market price of the underlying
security or instrument must decline sufficiently below the put option’s
exercise price to cover the premium and transaction costs. By using put
options in this manner, the purchaser will reduce any profit it might
otherwise have realized from having shorted the declining underlying
security by the premium paid for the put option and by transaction costs.
A Fund will receive a premium from writing put options, but the premium
received may not be sufficient to offset any losses sustained from
exercised options. If a Fund sells a put option, there is a risk that such
Fund may be required to buy the underlying asset at a disadvantageous
price. Options on futures contracts may be subject to additional risks,
including risks associated with the underlying futures contract.
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an option that a Fund has purchased expires unexercised, such Fund will
experience a loss in the amount of the premium it paid.
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Dividend
Paying Securities Risk: |
A
Fund’s investments in dividend paying securities could cause a Fund to
underperform funds that invest without consideration of a company’s track
record of paying dividends. Securities that pay higher dividends as a
group can fall out of favor with the market, causing these companies to
underperform companies that do not pay high or any dividends. An issuer of
stock held by a Fund may choose not to declare a dividend or the dividend
rate might not remain at current levels. Changes in the dividend policies
of companies owned by a Fund and the capital resources available for these
companies’ dividend payments may reduce the level of dividend payments and
adversely affect the Fund. Dividend paying securities also may not
experience the same level of earnings growth or capital appreciation as
non-dividend paying securities, and a sharp rise in interest rates or an
economic downturn could cause a company to unexpectedly reduce or
eliminate its dividend. Securities that pay dividends may be sensitive to
changes in interest rates, and as interest rates rise or fall, the prices
of such securities may fluctuate. The income received by a Fund will
fluctuate due to the amount of dividends that companies elect to
pay. |
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Emerging
Markets Risk: |
When
investing in emerging markets, the risks of investing in foreign
securities generally are heightened. The economies and political
environments of emerging market countries tend to be more unstable than
those of developed countries, resulting in more volatile rates of return
than the developed markets and substantially greater risk to investors.
Emerging markets have unique risks that are greater than, or in addition
to, investing in developed markets because emerging markets are generally
smaller, less developed, less liquid and more volatile than the securities
markets of the U.S. and other developed markets. Stock markets in many
emerging market countries are relatively small, expensive to trade in and
generally have higher risks than those in developed markets. Securities in
emerging markets also may be less liquid than those in developed markets
and foreigners are often limited in their ability to invest in, and
withdraw assets from, these markets. Additional restrictions may be
imposed under other conditions. The governments of emerging market
countries may also be more unstable and more likely to impose capital
controls, nationalize a company or industry, place restrictions on foreign
ownership and on withdrawing sale proceeds of securities from the country,
intervene in the financial markets, and/or impose burdensome taxes that
could adversely affect security prices. Numerous emerging market countries
have a history of, and continue to experience serious, and potentially
continuing, economic and political challenges. There are also risks of:
greater political and economic uncertainties; an economy’s dependence on
revenues from particular commodities or on international aid or
development assistance; currency transfer restrictions; a limited number
of potential buyers for such securities, resulting in increased volatility
and limited liquidity for emerging market securities; trading suspensions
and other restrictions on investment; delays and disruptions in securities
clearing and settlement procedures; market manipulation; and significant
limitations on investor rights and recourse. Emerging market countries
often have less uniformity in accounting, auditing, financial reporting
and recordkeeping requirements and less reliable clearance and settlement,
registration and custodial procedures. In addition, there may be less
information publicly available, or less reliable information available, to
make investment decisions and accurately evaluate securities of issuers in
emerging markets than would be available about issuers in more developed
capital markets, which can impede the Adviser’s ability to accurately
evaluate foreign securities. Such issuers may not be subject to
accounting, auditing, financial reporting and recordkeeping standards and
requirements comparable to those to which U.S. companies are subject.
Certain foreign jurisdictions may not provide the Public Company
Accounting Oversight Board (PCAOB) with sufficient access to inspect audit
workpapers and practices, or otherwise do not cooperate with U.S.
regulators, potentially exposing investors to significant risks. In
certain emerging market countries, fraud and corruption may be more
prevalent than in developed market countries, and investor protections may
be more limited than those in other countries. It may be difficult to
obtain or enforce legal judgments against non-U.S. companies and non-U.S.
persons in foreign jurisdictions, either through the foreign judicial
system or through a private arbitration process. These matters have the
potential to impact a Fund’s investment objectives and
performance. |
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Equity
Securities Risk: |
Funds
that invest in equity securities are subject to investment risk, issuer
risk, market risks and significant fluctuations in price in response to
changes in a company’s financial condition as well as general market,
economic and political conditions, and other factors. The Fund may
experience a significant or complete loss on its investment in an equity
security. In addition, stock prices may be sensitive to rising interest
rates, which increase borrowing costs and the costs of capital for the
issuer. Equity securities generally are subordinate to an issuer’s debt in
the event of liquidation or bankruptcy. A Fund’s investments in equity
securities primarily consist of ADRs, common stocks, and REITs. Investing
in such securities may expose the Funds to additional risks. |
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•ADRs. ADRs
are receipts issued by domestic banks or trust companies that represent
the deposit of a security of a foreign issuer and are publicly traded in
the United States. Investments in ADRs are subject to certain of the risks
associated with investing directly in foreign securities, including, but
not limited to, currency fluctuations, capital restrictions, less
liquidity, less government regulation, less publicly available
information, increased price volatility, and political, economic and
financial instability in the home country of an issuer of the underlying
ADR. In addition, foreign companies may use different accounting and
financial standards. Such events could negatively affect the value of a
Fund’s shares. The securities underlying ADRs trade on foreign exchanges
at times when the U.S. markets are not open for trading. As a result, the
value of ADRs may not track the price of the underlying securities and may
change materially at times when the U.S. markets are not open for trading.
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•Common
Stock. The
value of a company’s common stock may fall as a result of factors directly
relating to that company, such as decisions made by its management or
decreased demand for the company’s products or services. A common stock’s
value may also decline because of factors affecting not just the company,
but also companies in the same industry or sector. The price of a
company’s common stock may also be affected by changes in financial
markets that are relatively unrelated to the company, such as changes in
interest rates, exchange rates or industry regulation. Companies that pay
dividends on their common stock generally only do so after they invest in
their own business and make required payments to bondholders and on other
debt and preferred stock. Therefore, the value of a company’s common stock
will usually be more volatile than its bonds, other debt and preferred
stock. Common stock generally is subordinate to the issuing company’s debt
securities and preferred stock upon the dissolution or bankruptcy of the
issuing company. In the event of an issuer’s bankruptcy, there is a
substantial risk that there will be nothing left to pay common
stockholders after payments, if any, to bondholders and preferred
stockholders have been made. |
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•REITs.
Investments in REITs are subject to the risks associated with investing in
the real estate industry, adverse governmental actions, regulatory
limitations on rents and operating expenses, declines in property and real
estate values, risks related to general and local economic conditions,
increases in property taxes and operating expenses, overbuilding, changes
in interest rates, and liabilities resulting from environmental problems.
Any domestic REIT could be adversely affected by the failure of a REIT to
qualify for federal income-tax-free “pass-through” of net income and net
realized gains that are distributed to shareholders and exemption from
registration as an investment company. The failure of a company to qualify
for treatment as a REIT under the federal tax law likely would have an
adverse impact on a Fund’s after-tax performance. REITs also are subject
to heavy cash flow dependency, defaults by borrowers and self-liquidation.
In the event of a default by a borrower or lessee, a REIT may experience
delays in enforcing its rights as a mortgagee or lessor and may incur
substantial costs to protect its investments. REITs are dependent upon
specialized management skills and may invest in relatively few properties,
and may not be diversified geographically or by property or tenant type.
Investments in REITs may be volatile. REITs are pooled investment vehicles
with their own fees and expenses, and a Fund will indirectly bear a
proportionate share of those fees and expenses when investing in REITs.
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Fixed
Income Securities Risk: |
Fixed
income securities risk is the risk that the prices of, and the income
generated by, fixed income securities held by a Fund may decline
significantly and/or rapidly in response to adverse issuer, political,
regulatory, general economic and market conditions, or other developments,
such as regional or global economic instability (including war, terrorism,
pandemic and related geopolitical risks), interest rate fluctuations, and
those events directly involving the issuers that may cause broad changes
in market value, public perceptions concerning these developments, and
adverse investor sentiment. These events may lead to periods of
volatility, which may be exacerbated by changes in bond market size and
structure. A Fund’s fixed income investments may, in some cases, be
subject to unusual liquidity issues, credit downgrades and increased
likelihood of default. |
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Foreign
Securities Risk: |
Non-U.S.
investments carry potential risks not associated with domestic
investments. Such risks include, but are not limited to: currency exchange
rate fluctuations, political and financial instability, less liquidity and
greater price volatility, lack of uniform accounting, auditing and
financial reporting standards, different government regulation and
supervision of foreign banks, stock exchanges, brokers and listed
companies, and delays in transaction settlements in some foreign markets.
There may be very limited oversight of certain foreign banks or securities
depositories that hold foreign securities and currencies and the laws of
certain countries may limit the ability to recover such assets if a
foreign bank, depository or their agents goes bankrupt. Additionally, in
certain markets, a Fund may not receive timely payment for securities or
other instruments it has delivered or receive delivery of securities paid
for and may be subject to increased risk that the counterparty will fail
to make payments or delivery when due or default completely. To the extent
a Fund invests a significant portion of its assets in securities of a
single country or geographic region at any one time, it is more likely to
be affected by events or conditions in that country or region. A Fund’s
investment in a foreign issuer may subject the Fund to regulatory,
political, currency, security, economic and other risks associated with
that country. In addition, as a result of increasingly interconnected
global economies and financial markets, the value and liquidity of a
Fund’s investments may be negatively affected by events impacting a
country or region, regardless of whether the Fund invests in issuers
located in or with significant exposure to such country or region. There
may be restrictions on the flow of international capital, including the
possible seizure or nationalization of the securities issued by non-U.S.
issuers held by a Fund. In addition, the repatriation of investment
income, capital or the proceeds of sales of securities from certain of the
countries may require advance government notification or authority, and if
a deterioration occurs in a country’s balance of payments, the country
could impose temporary restrictions on foreign capital remittances. A Fund
also could be adversely affected by delays in, or a refusal to grant, any
required governmental approval for repatriation, as well as by the
application to it of other restrictions on investment. Investments in
foreign securities subject a Fund to the risk of market timing activities
by shareholders. Some investors may engage in frequent short-term trading
in a Fund to take advantage of any price differentials that may be
reflected in the NAV of a Fund’s shares. Global economic and financial
markets have become increasingly interconnected and conditions (including
recent volatility, terrorism, war and political instability) and events
(including natural disasters) in one country, region or financial market
may adversely impact issuers in a different country, region or financial
market. In addition, securities of issuers traded on foreign exchanges may
be suspended, either by the issuers themselves, by an exchange or by
governmental authorities. Trading suspensions may be applied from time to
time to the securities of individual issuers for reasons specific to that
issuer, or may be applied broadly by exchanges or governmental authorities
in response to market events. In the event that a Fund holds material
positions in such suspended securities, a Fund’s ability to liquidate its
positions or provide liquidity to investors may be compromised and the
Fund could incur significant losses. |
Geographic
Concentration Risk: |
A
Fund may focus its investments in companies located in or economically
tied to particular countries or geographic regions. This could increase
the risk that economic, political, business, regulatory, diplomatic,
social and environmental conditions in that particular country or
geographic region may have a significant impact on a Fund’s performance.
Investing in such a manner could cause a Fund’s performance to be more
volatile than the performance of more geographically diverse funds. The
economies and financial markets of certain countries or regions can be
highly interdependent. Therefore, a decline in the economies or financial
markets of one country or region may adversely affect the economies or
financial markets of another. Periods of unusually high financial market
volatility and restrictive credit conditions, at times limited to a
particular geographic area, have occurred in the past and may be expected
to recur in the future. In addition, the risks associated with investing
in a narrowly defined geographic area are generally more pronounced with
respect to investments in emerging market
countries.
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•European
Securities Risk
– To the extent a Fund invests significantly in the securities of European
companies, the Fund’s performance may be influenced by social, political
and economic conditions in Europe, such as growth of economic output (the
gross national product of the countries in the region), the rate of
inflation, the rate at which capital is reinvested into European
economies, the success of governmental actions to reduce budget deficits,
the resource self-sufficiency of European countries, interest rates in
European countries, monetary exchange rates between European countries,
and conflict between European countries. The economies of European Union
(“EU”) member countries and their trading partners, as well as the broader
global economy, may be adversely affected by changes in the exchange rate
of the euro, the common currency of the EU, decreasing imports or exports,
changes in EU or governmental regulations on trade, the threat of default
or an actual default by an EU member country on its sovereign debt, and/or
an economic recession in one or more EU member countries, which could
negatively impact a Fund’s investments and cause it to lose money. The
EU’s Economic and Monetary Union requires member countries to comply with
restrictions on interest rates, deficits, debt levels, inflation rates,
fiscal and monetary controls, and other factors, each of which may
significantly impact European countries and their economic partners.
In
recent years, the European financial markets have experienced and may
continue to experience volatility and adverse trends due to concerns
relating to economic downturns, rising government debt levels and national
unemployment, the possible default of governmental debt in several
European countries, public health crises; political unrest; economic
sanctions; inflation; energy crises; the future of the euro as a common
currency; and, war and military conflict, such as the Russian invasion of
Ukraine. Russia’s response to sanctions imposed by the U.S. and other
countries are impossible to predict but have been and could continue to be
significant and have a severe adverse impact on the region, including
significant impacts on the regional, European, and global economies and
the markets for certain securities and commodities, such as oil and
natural gas. The Russia/Ukraine war has adversely affected European
economic activity and the exchange rate of the euro and may continue to
significantly affect European countries. Responses to financial problems
by European governments, central banks, and others, including austerity
measures, interest rate increases and other reforms, may not produce the
desired results, may result in social unrest and may limit future growth
and economic recovery or may have unintended consequences. A European
country’s default or debt restructuring would adversely affect the holders
of the country’s debt and sellers of instruments linked to the country’s
creditworthiness and could negatively impact global markets more
generally. In addition, uncertainties regarding the viability of the EU
have impacted and may continue to impact markets around the world. The
United Kingdom has withdrawn from the EU, and if one or more other
countries were to exit the EU, or if any eurozone country were to abandon
the use of the euro as its currency, or if the possibility of such
withdrawals, or the dissolution of the EU, increased, the value of
investments tied to relevant countries could decline significantly and
unexpectedly. |
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•United
Kingdom Securities Risk
– A Fund’s exposure to issuers located in, or with economic ties to, the
United Kingdom, could expose a Fund to risks associated with investments
in the United Kingdom to a greater extent than more geographically diverse
funds. Investments in United Kingdom issuers may subject a Fund to
regulatory, political, currency, and economic risks specific to the United
Kingdom. Increasing commodity prices and rising inflation levels caused or
exacerbated by the war between Russia and Ukraine prompted the United
Kingdom government and other relevant authorities to implement significant
policy changes. It is difficult to predict what effects any such policies
(or the suggestion of such policies) may have and the duration of those
effects, which may last for extended periods. These effects may have a
material, potentially negative, impact on the United Kingdom economy that
could affect the performance of a Fund’s investments. Additionally, the
transitional period following the United Kingdom’s departure from the
European Union (commonly referred to as “Brexit”) ended on December 31,
2020 and European Union law ceased to have effect in the United Kingdom
except to the extent retained by the United Kingdom by unilateral act. The
United Kingdom and European Union then reached a trade agreement that was
ratified by all applicable United Kingdom and European Union governmental
bodies. The economic effects of Brexit, including certain negative impacts
on the ability of the United Kingdom to trade seamlessly with the European
Union, are becoming clearer but some political, regulatory and commercial
uncertainty in relation to the longer term impacts nevertheless remains to
be resolved. Accordingly, there remains a risk that the aftermath of
Brexit, including its ongoing effect on the United Kingdom’s relationships
with other countries, including the United States and the European Union,
may negatively impact the United Kingdom, the broader global economy, or
the value of the British pound sterling, any of which may impact the value
of investments held by a Fund.
Throughout
2023, the Bank of England lifted interest rates, aiming to reduce demand,
and lower the rate of inflation. The United Kingdom economy is
experiencing a period of limited or no economic growth, but also lower
inflation. In the last quarter of 2023, the United Kingdom officially
entered into a shallow recession. The likely economic effects of the
recession and high interest rates include, in the short term, higher
unemployment and reduced investment, but the economy is now forecast by
some experts to grow modestly in 2024 following modest GDP growth in
January 2024. This growth rate will have an impact on the Fund’s
investments. Additionally, a general election will be held in the United
Kingdom by January 28, 2025. There is therefore uncertainty as to the
political direction of the United Kingdom after the relevant date, and a
new government may introduce materially different policies to those in
place currently, which may affect the performance of the Fund’s
investments.
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Government-Sponsored
Enterprises Risk: |
Investments
in U.S. Government-sponsored enterprises are debt obligations issued by
agencies and instrumentalities of the U.S. Government. These obligations
vary in the level of support they receive from the U.S. Government. They
may be: (i) supported by the full faith and credit of the U.S.
Treasury, such as those of the Government National Mortgage Association;
(ii) supported by the right of the issuer to borrow from the U.S.
Treasury, such as those of the Federal Home Loan Bank and the Federal Farm
Credit Banks; (iii) supported by the discretionary authority of the
U.S. Government to purchase the agency obligations, such as those of the
Federal National Mortgage Association and the Federal Home Loan Mortgage
Corporation; or (iv) supported only by the credit of the issuer, such
as those of the Federal Farm Credit Bureau. The U.S. Government may choose
not to provide financial support to U.S. Government-sponsored enterprises
if it is not legally obligated to do so, in which case an issuer may not
have the funds to meet its payment obligations. If the issuer defaulted, a
Fund holding securities of such issuer might not be able to recover its
investment from the U.S. Government. Like all bonds, U.S.
Government-sponsored enterprise bonds are also subject to market risk,
credit risk and interest rate risk. The rising U.S. national debt may lead
to adverse impacts on the value of U.S. government securities due to
potentially higher costs for the U.S. government to obtain new financing.
The maximum potential liabilities of the issuers of some securities issued
by the U.S. Government or government-sponsored enterprises that are held
by a Fund may greatly exceed their current resources, including any legal
right to support from the U.S. Treasury, and it is possible that these
issuers may not have the funds to meet their payment obligations in the
future. |
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Hedging
Risk: |
Gains
or losses from positions in hedging instruments may be much greater than
the instrument’s original cost. The counterparty may be unable to honor
its financial obligation to a Fund. In addition, the Adviser may be unable
to close the transaction at a desired time or at the price it believes the
security is currently worth. If a Fund uses a hedging instrument at the
wrong time or judges the market conditions incorrectly, or the hedged
instrument does not correlate to the risk sought to be hedged, the
hedge might be unsuccessful, reduce such Fund’s return, or create a loss.
A Fund is not required to hedge and may not do
so. |
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Inflation
Risk: |
Stocks,
bonds and other securities may fall in value due to higher actual or
anticipated inflation. Further, a rapid increase in prices for goods and
services may have an adverse effect on corporate profits and consumer
spending, which also may result in lower values for stocks, bonds and
other securities. If a Fund’s investments do not keep pace with inflation,
the present value of the Fund’s assets and the value of the Fund’s
distributions could decline. |
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Interest
Rate Risk: |
Changes
in interest rates may affect the yield, liquidity and value of investments
in income producing or debt securities. The market values of fixed income
securities are generally inversely related to actual changes in interest
rates. Generally, when interest rates rise, the market value of a Fund’s
fixed income securities generally will decrease, and when interest rates
decline the value of a Fund’s fixed income securities generally will
increase. Interest rates may rise, perhaps significantly and/or rapidly,
potentially resulting in heightened volatility in the fixed-income markets
and adversely affecting the liquidity of certain fixed-income investments,
any of which may result in substantial losses to a Fund. Interest rate
changes can be sudden and unpredictable, and are influenced by a number of
factors, including government policy, central bank monetary policy,
inflation expectations, perceptions of risk, and supply and demand of debt
securities. Changes in government monetary policy may substantially impact
interest rates, but there can be no guarantee that any particular policy
will be continued, discontinued or changed, or that it will have the
desired effect on interest rates. Short-term and long-term interest rates,
and interest rates in different countries, do not necessarily move in the
same direction or by the same amount. The yields received by a Fund on its
fixed income investments will generally decline as interest rates decline.
Additionally, the value of the income-oriented equity securities that pay
dividends may decline when interest rates rise, as rising interest rates
can reduce companies’ profitability and their ability to pay dividends.
Typically, the longer the maturity or duration of a debt security, the
greater the effect a change in interest rates could have on the security’s
price. Duration is a measurement of a debt security’s sensitivity to
changes in interest rates. For every 1% change in interest rates, a debt
security’s price generally changes approximately 1% in the opposite
direction for each year of duration. For example, if a portfolio of fixed
income securities has an average weighted duration of ten years, its value
can be expected to fall about 10% if interest rates rise by 1%.
Conversely, the portfolio’s value can be expected to rise approximately
10% if interest rates fall by 1%. Interest rate changes may have a more
pronounced effect on the market value of fixed-rate instruments than on
floating-rate instruments. In addition, decreases in fixed-income dealer
market-making capacity may lead to lower trading volume, heightened
volatility, wider bid-ask spreads, and less transparent pricing in certain
fixed-income markets. A Fund may not be able to hedge against changes in
interest rates or may choose not to do so for cost or other reasons. In
addition, any hedges may not work as intended. |
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Investment
Risk: |
An
investment in a Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. The share price of a Fund fluctuates, which means that
when you sell your shares of a Fund, they could be worth less than what
you paid for them. Therefore, you may lose money by investing in a
Fund. |
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Large
Cap Companies Risk: |
The
securities of large market capitalization companies may underperform other
segments of the market because such companies may be less responsive to
competitive challenges and opportunities, such as changes in technology
and consumer tastes. Large market capitalization companies may be unable
to attain or maintain the high growth rate of successful smaller
companies, especially during extended periods of economic
expansion. |
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LIBOR
Transition Risk: |
Certain
of the instruments identified in a Fund’s principal investment strategies
had coupon rates, or provided exposure to underlying investments with
coupon rates, that were based on LIBOR, which was a reference rate
generally intended to represent the rate at which contributing banks could
obtain short-term borrowings within certain financial markets. LIBOR was
produced daily by averaging the rates reported by a number of banks and
may have been a significant factor in determining a Fund’s payment
obligations under a derivative instrument, the cost of financing to a
Fund, or an investment’s value or return to a Fund, and may have been used
in other ways that affected a Fund’s performance. LIBOR was phased out
effective June 30, 2023.
The
Secured Overnight Financing Rate (“SOFR”) was selected by a committee
established by the Board of Governors of the Federal Reserve System and
the Federal Reserve Bank of New York to replace LIBOR as a reference rate
in the United States, and U.S. law required that contracts without a
practicable LIBOR alternative default to SOFR plus a set spread beginning
in mid-2023. Other countries have undertaken similar initiatives to
identify replacement reference rates for LIBOR in their respective
markets. Certain issuers may have encountered obstacles to converting
their securities and transactions to a new reference rate, and there may
be risks associated with using a new reference rate with respect to new
investments and transactions. Market participants may have transitioned
reference rates through contractual amendments, legislation, marketwide
protocols, fallback contractual provisions, bespoke negotiations or
otherwise. Nonetheless, the transition from LIBOR could impact a Fund and
the financial markets generally, and the termination of certain reference
rates presents risks to a Fund. The transition process, or the failure of
an issuer to transition, could lead to increased volatility and
illiquidity in markets for instruments that have yet to rely on a
substitute to determine their next coupon rates and a reduction in the
values of those investments, all of which could impact a Fund. Various
complexities brought about by significant changes to operational processes
and IT systems may not be complete, and coordination with other market
participants may be severely impacted, which may negatively impact a Fund.
In addition, the alternative reference or benchmark rate may be an
ineffective substitute, potentially resulting in prolonged adverse market
conditions for a Fund. Any changes or reforms to the determination or
supervision of reference rates could have an adverse impact on the market
for or value of any securities or payments linked to those reference rates
and other financial obligations held by a Fund or on its overall financial
condition or results of operations. Any pricing adjustments resulting from
the transition to a substitute reference rate may adversely affect a
Fund’s performance and/or NAV. |
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Liquidity
Risk: |
A
Fund is susceptible to the risk that certain investments held by the Fund
may be difficult or impossible to purchase or sell at favorable times or
prices or become less liquid in response to market developments or adverse
credit events that may affect issuers or guarantors of a security. When
there is little or no active trading market for specific types of
securities, it can become more difficult for a Fund to sell the securities
at or near their perceived value. During such periods, certain investments
held by a Fund may be difficult to sell at favorable times or prices. As a
result, a Fund may have to lower the price on certain securities that it
is trying to sell, sell other securities instead or forego an investment
opportunity, and of which could have a negative effect on the Fund. Market
developments may cause a Fund’s investments to become less liquid or
illiquid and subject to erratic price movements. Investments that are
illiquid or that trade in lower volumes may be more difficult to value. A
Fund also may not receive proceeds from the sale of certain investments
for an extended period of time. Certain investments that were liquid when
purchased may become illiquid, sometimes abruptly, particularly in times
of overall economic distress or adverse investor perception. An inability
to sell a portfolio position can adversely affect a Fund’s value or
prevent the Fund from being able to take advantage of other investment
opportunities.
Redemptions
by a few large investors in a Fund at such times may have a significant
adverse effect on a Fund’s net asset value and remaining Fund
shareholders. A Fund may lose money or face difficulty in meeting
shareholder redemptions if it is forced to sell certain investments to
meet redemption requests or other cash needs. Liquidity risk is
particularly acute in the case of foreign investments that are traded in
smaller, less-developed or emerging markets and securities issued by
issuers with smaller market
capitalizations. |
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Market
Risk: |
A
Fund is subject to the risk that the securities markets will move down,
sometimes rapidly and unpredictably, based on overall economic conditions
and other factors, which may negatively affect a Fund’s performance.
Equity securities generally have greater price volatility than
fixed-income securities, although under certain market conditions
fixed-income securities may have comparable or greater price volatility.
Markets may at times be volatile and the value of a Fund’s investments may
decline in price, sometimes significantly and/or rapidly, because of
changes in prices of its holdings or a broad decline in the financial
markets. The value of a security may decline due to adverse
issuer-specific conditions or general market conditions which are not
specifically related to a particular company, such as real or perceived
adverse geopolitical, regulatory, market, economic or other developments
that may cause broad changes in market value, changes in the general
outlook for corporate earnings, changes in interest, currency or inflation
rates, lack of liquidity in the markets, public perceptions concerning
these developments or adverse market sentiment generally. Changes in the
financial condition of a single issuer or market segment also can impact
the market as a whole. The value of a security may also decline due to
factors that affect a particular industry or industries, such as tariffs,
labor shortages or increased production costs and competitive conditions
within an industry. During a general downturn in the securities markets,
multiple asset classes may decline in value simultaneously.
Geopolitical
and other events, including terrorism, economic uncertainty, regional or
global economic instability, trade disputes, pandemics, public health
crises, natural disasters and related events have led, and in the future
may continue to lead, to instability in world economies and markets
generally and reduced liquidity, which may adversely affect the value of
your investment. Such market disruptions have caused, and may continue to
cause, broad changes in market value, negative public perceptions
concerning these developments, a reduction in the willingness and ability
of some lenders to extend credit, difficulty for some borrowers in
obtaining financing on attractive terms, and adverse investor sentiment or
publicity. Changes in value may be temporary or may last for extended
periods. Adverse market events may also lead to increased shareholder
redemptions, which could cause a Fund to sell investments at an
inopportune time to meet redemption requests by shareholders and may
increase a Fund’s portfolio turnover, which could increase the costs that
a Fund incurs and lower a Fund’s performance. Even when securities markets
perform well, there is no assurance that the investments held by a Fund
will increase in value along with the broader market.
Policy
changes by the U.S. government and/or Federal Reserve and political events
within the U.S. and abroad, such as changes in the U.S. presidential
administration and Congress, the U.S. government’s inability at times to
agree on a long-term budget and deficit reduction plan, the threat or
occurrence of a federal government shutdown or the occurrence of a failure
to increase the federal government’s debt limit, which could result in a
default on the government’s obligations, may affect investor and consumer
confidence and may adversely impact financial markets and the broader
economy, perhaps suddenly and to a significant degree. The severity or
duration of adverse economic conditions may also be affected by policy
changes made by governments or quasi-governmental organizations. Global
economies and financial markets are becoming increasingly interconnected,
which increases the possibility of many markets being affected by events
in a single country or events affecting a single or small number of
issuers.
Both
U.S. and international markets have experienced significant volatility in
recent years. As a result of such volatility, investment returns may
fluctuate significantly, and the risks discussed herein associated with an
investment in a Fund may be increased. Deteriorating economic fundamentals
may increase the risk of default or insolvency of particular issuers,
negatively impact market value, increase market volatility, cause credit
spreads to widen, reduce bank balance sheets and cause unexpected changes
in interest rates. Any of these could cause an increase in market
volatility, reduce liquidity across various sectors or markets or decrease
confidence in the markets. Historical patterns of correlation among asset
classes may break down in unanticipated ways during times of high
volatility, disrupting investment programs and potentially causing
losses.
Although
interest rates were unusually low in recent years in the U.S. and abroad,
in 2022, the U.S. Federal Reserve and certain foreign central banks began
to raise interest rates as part of their efforts to address rising
inflation. It is difficult to accurately predict the pace at which
interest rates might increase or start decreasing, the timing, frequency
or magnitude of any such changes in interest rates, or when such changes
might stop or reverse course. Unexpected changes in interest rates could
lead to significant market volatility or reduce liquidity in certain
sectors of the market. Over the longer term, rising interest rates may
present a greater risk than has historically been the case due to the
prior period of relatively low rates and the effect of government fiscal
and monetary policy initiatives and potential market reaction to those
initiatives, or their alteration or cessation. It is difficult to predict
the impact on various markets of significant rate changes or other
significant policy changes. |
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Markets
and market participants are increasingly reliant upon both publicly
available and proprietary information data systems. Data imprecision,
software or other technology malfunctions, programming inaccuracies,
unauthorized use or access, the execution of ransomware and other
cyberattacks, and similar circumstances may impair the performance of
these systems and may have an adverse impact upon a single issuer, a group
of issuers, or the market at large. In certain cases, an exchange or
market may close or issue trading halts on either specific securities or
even the entire market, which may result in a Fund being, among other
things, unable to buy or sell certain securities or financial instruments
or accurately price its investments. These fluctuations in securities
prices could be a sustained trend or a drastic movement. The financial
markets generally move in cycles, with periods of rising prices followed
by periods of declining prices. The value of your investment may reflect
these fluctuations.
Some
countries, including the U.S., have in recent years adopted more
protectionist trade policies. Slowing global economic growth; the rise in
protectionist trade policies; changes to international trade agreements;
risks associated with the aftermath of the United Kingdom’s departure from
the European Union and the trade agreement between the United Kingdom and
the European Union; the risks associated with ongoing trade negotiations
with China; the possibility of changes to some international trade
agreements; tensions, war, or open conflict between nations, such as
between Russia and Ukraine or in eastern Asia; political or economic
dysfunction within some nations, including major producers of oil; and
dramatic changes in commodity and currency prices could have adverse
effects that cannot be foreseen at the present time. Tensions, war or open
conflict between nations, such as between Russia and Ukraine, in the
Middle East or in eastern Asia could affect the economies of many nations,
including the United States. The duration of ongoing hostilities and any
sanctions and related events cannot be predicted. Those events present
material uncertainty and risk with respect to markets globally and the
performance of a Fund and its investments or operations could be
negatively impacted.
Regulators
in the U.S. have proposed and recently adopted a number of changes to
regulations involving the markets and issuers, some of which apply to a
Fund. The full effect of various newly-adopted regulations is not
currently known. Additionally, it is not clear whether the proposed
regulations will be adopted. However, due to the broad scope of the new
and proposed regulations, certain changes could limit a Fund’s ability to
pursue its investment strategies or make certain investments, or may make
it more costly for a Fund to operate, which may impact performance.
Further, advancements in technology may also adversely impact market
movements and liquidity and may affect the overall performance of a Fund.
For example, the advanced development and increased regulation of
artificial intelligence may impact the economy and the performance of a
Fund. As artificial intelligence is used more widely, the value of a
Fund’s holdings may be impacted, which could impact the overall
performance of a Fund.
High
public debt in the U.S. and other countries creates ongoing systemic and
market risks and policymaking uncertainty. There is no assurance that the
U.S. Congress will act to raise the nation’s debt ceiling; a failure to do
so could cause market turmoil and substantial investment risks that cannot
now be fully predicted. Unexpected political, regulatory and diplomatic
events within the U.S. and abroad may affect investor and consumer
confidence and may adversely impact financial markets and the broader
economy.
Certain
illnesses spread rapidly and have the potential to significantly and
adversely affect the global economy. The impact of epidemics and/or
pandemics that may arise in the future could negatively affect the
economies of many nations, individual companies and the global securities
and commodities markets, including their liquidity, in ways that cannot
necessarily be foreseen at the present time and could last for an extended
period of time. China’s economy, which has been sustained through
debt-financed spending on housing and infrastructure, appears to be
experiencing a significant slowdown and growing at a lower rate than prior
years. Due to the size of China’s economy, such a slowdown could impact
financial markets and the broader economy.
In
March 2023, the shutdown of certain financial institutions in the U.S. and
questions regarding the viability of other financial institutions raised
economic concerns over disruption in the U.S. and global banking systems.
There can be no certainty that the actions taken by the U.S. or foreign
governments to strengthen public confidence in the U.S. and global banking
systems will be effective in mitigating the effects of financial
institution failures on the economy and restoring public confidence in the
U.S. and global banking system. |
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| Economists
and others have expressed increasing concern about the potential effects
of global climate change on property and security values. Impacts from
climate change may include significant risks to global financial assets
and economic growth. A rise in sea levels, an increase in powerful
windstorms and/or a climate-driven increase in sea levels or flooding
could cause coastal properties to lose value or become unmarketable
altogether. Certain issuers, industries and regions may be adversely
affected by the impacts of climate change, including on the demand for and
the development of goods and services and related production costs, and
the impacts of legislation, regulation and international accords related
to climate change, as well as any indirect consequences of regulation or
business trends driven by climate change. Regulatory changes and
divestment movements tied to concerns about climate change could adversely
affect the value of certain land and the viability of industries whose
activities or products are seen as accelerating climate change. These
losses could adversely affect, among others, corporate issuers and
mortgage lenders, the value of mortgage-backed securities, the bonds of
municipalities that depend on tax or other revenues and tourist dollars
generated by affected properties, and insurers of the property and/or of
corporate, municipal or mortgage-backed
securities. |
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Mortgage
Pass-Through Securities Risk: |
Investments
in mortgage pass-through securities are subject to market risks for fixed
income securities which include, but are not limited to, market risk,
interest rate risk and credit risk. Mortgage-backed securities tend to
increase in value less than other debt securities when interest rates
decline, but are subject to similar or greater risk of decline in market
value during periods of rising interest rates. Additionally, although the
value of a mortgage-pass through security may decline when interest rates
rise, the converse is not necessarily true, since in periods of declining
interest rates the mortgages underlying the security are more likely to be
prepaid, causing the Fund to purchase new securities at market rates,
which usually will be lower. Mortgage pass-through securities also are
subject to prepayment risk and extension risk. When interest rates
decline, borrowers tend to repay their mortgages more quickly, such as by
refinancing them. When this occurs, the mortgages that back these
securities suffer a higher rate of prepayment. When mortgages are prepaid,
a Fund may have to reinvest in securities with a lower yield or fail to
recover premiums paid for securities with higher interest rates. This
could cause a decrease in a Fund’s income and net asset value. Extension
risk is the flip side of prepayment risk. When interest rates rise,
mortgage payments may decline and principal may be paid later than
expected, extending the duration of these securities and a Fund may
exhibit additional volatility. These securities are subject to the risk of
default on the underlying mortgages, and such risk is heightened during
periods of economic downturn. |
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Preferred
Stocks Risk: |
If
interest rates rise, the dividend on preferred stocks may be less
attractive, causing the price of preferred stocks to decline. Preferred
stocks may have mandatory sinking fund provisions, as well as provisions
for their call or redemption prior to maturity which can have a negative
effect on their prices when interest rates decline. The market prices of
preferred stocks generally are more sensitive to actual or perceived
changes in the issuer’s financial condition or prospects than are prices
of debt securities. Issuers may threaten preferred stockholders with the
cancellation of all dividends and liquidation preference rights in an
attempt to force their conversion to less secure common stock. In certain
situations, an issuer may call or redeem its preferred stock or convert is
to common stock. Certain preferred stocks are equity securities because
they do not constitute a liability of the issuer and therefore do not
offer the same degree of protection of capital or continuation of income
as debt securities. The rights of preferred stock on distribution of a
corporation’s assets in the event of its liquidation are generally
subordinated to the rights associated with a corporation’s debt
securities. Therefore, in the event of an issuer’s bankruptcy, there is a
substantial risk that there will be nothing left to pay preferred
stockholders after payments, if any, to bondholders have been made.
Preferred stocks may also be subject to credit
risk. |
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Redemption
Risk: |
A
Fund may experience periods of significant redemptions that could cause a
Fund to sell assets at inopportune times or at a loss or depressed value.
Redemption risk is greater to the extent that one or more investors or
intermediaries control a large percentage of investments in a Fund, have
shorter investment horizons, or have unpredictable cash flow needs.
Redemption risk is heightened during periods of rising interest rates and
declining or illiquid markets, which may cause investors to move out of
fixed income, and potentially other, securities on a large scale.
Significant redemptions, whether by a few large investors or many smaller
investors, could hurt a Fund’s performance. This risk may be heightened if
a Fund invests in less liquid securities. The sale of assets to meet
redemption requests may require a Fund to realize net capital gains, which
could require a Fund to make substantial capital gains distributions to
its shareholders. |
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Sector
Weighting Risk: |
A
Fund may focus its investments in particular sectors of the economy. To
the extent a Fund emphasizes investments in particular sectors of the
economy, a Fund will be subject to a greater degree of risks particular to
those sectors. Market conditions, interest rates, and economic,
regulatory, financial or geopolitical developments could significantly
affect securities in particular sectors. Depending on the weightings of a
Fund’s investments in particular sectors, the Fund may have increased
exposure to price movements of securities in those sectors. A Fund’s
sector weightings could have an adverse impact on the Fund and lead to a
decline in the Fund’s net asset value. |
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•Industrials
Sector Risk
– The industrials sector includes companies engaged in the construction,
engineering, machinery, energy services, transportation, professional
services, and aerospace and defense industries. Companies in the
industrials sector may be adversely affected by: changes in government
regulation; world events; economic conditions; environmental damage;
product and environmental liability claims; changes in exchange rates;
changes in the supply and demand for their products and services, and for
industrials sector products generally; product obsolescence; and changes
or trends in commodity prices, among other factors. Companies in the
aerospace and defense industry can be significantly affected by government
spending policies because they rely, to a significant extent, on
government demand for their products and services. Thus, the financial
condition of, and investor interest in, aerospace and defense companies
are heavily influenced by governmental defense spending policies, which
are typically under pressure from efforts to control government budgets.
Transportation stocks, a component of the industrials sector, are cyclical
and can be significantly affected by economic changes, fuel prices, labor
relations and insurance costs. Transportation companies in certain
countries may also be subject to significant government regulation and
oversight, which may adversely affect their businesses. |
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•Information
Technology Sector Risk –
The information technology sector includes companies engaged in internet
software and services, technology hardware and storage peripherals,
electronic equipment, instruments and components, and semiconductors and
semiconductor equipment. The market prices of information
technology-related securities tend to exhibit a greater degree of market
risk and sharp price fluctuations than other types of securities. These
securities may fall out of favor with investors rapidly, which may cause
sudden selling and dramatically lower market prices. The information
technology sector is subject to intense competition, both domestically and
internationally, which may have an adverse effect on their profit margins,
and government regulation. Like other technology companies, information
technology companies may have limited product lines, markets, financial
resources or personnel. The products of information technology companies
may face rapid product obsolescence due to technological developments,
frequent new product introduction, unpredictable changes in growth rates
and competition for the services of qualified personnel. Failure to
introduce new products, develop and maintain a loyal customer base or
achieve general market acceptance for their products could have a material
adverse effect on a company’s business. Companies in the information
technology sector are heavily dependent on intellectual property rights
and the loss of patent, copyright and trademark protections may adversely
affect the profitability of these
companies. |
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Security
Selection Risk: |
Securities
selected by the Adviser may perform differently than the overall market or
may not meet the Adviser’s expectations. This may be a result of specific
factors relating to the issuer’s financial condition or operations or
changes in the economy, governmental actions or inactions, factors
affecting a security’s industry, poor operating performance, weak demand
for an issuer’s products or services, an issuer’s failure to meet earnings
or other operating performance expectations, financial leverage or credit
deterioration, litigation or regulatory issues, a decline in the value of
an issuer’s business and assets, or changes in investor perceptions
regarding the issuer. This could result in a Fund’s underperformance
compared to other funds with similar investment
objectives. |
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Small
Cap Companies Risk: |
Investments
in small capitalization companies generally involve greater risks and the
possibility of greater price volatility than investments in larger, more
established companies. Small capitalization companies often have narrower
commercial markets and more limited operating histories, product lines,
and managerial and financial resources than larger, more established
companies. As a result, performance can be more volatile and they face
greater risk of business failure, which could increase the volatility of a
Fund’s portfolio. Additionally, small capitalization companies may have
less market liquidity than larger capitalization companies, and they can
be sensitive to changes in interest rates, borrowing costs and earnings.
Generally, the smaller the company size, the greater these
risks. |
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Small
and Mid Cap Companies Risk: |
Investments
in small and mid capitalization companies generally involve greater risks
and the possibility of greater price volatility than investments in
larger, more established companies. Small and mid capitalization companies
often have narrower commercial markets and more limited operating
histories, product lines, and managerial and financial resources than
larger, more established companies. As a result, performance can be more
volatile and they face greater risk of business failure, which could
increase the volatility of a Fund’s portfolio. Additionally, small and mid
capitalization companies may have less market liquidity than larger
capitalization companies, and they can be sensitive to changes in interest
rates, borrowing costs and earnings. Generally, the smaller the company
size, the greater these risks. |
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U.S.
Government Securities Risk: |
The
securities of U.S. Government agencies and instrumentalities in which a
Fund may invest may not be backed by the full faith and credit of the U.S.
Government. A security backed by the U.S. Treasury or the full faith and
credit of the United States is only guaranteed by the applicable entity as
to the stated interest rate and face value at maturity, not its current
market price. Notwithstanding that a security may be backed by the full
faith and credit of the U.S. Government, circumstances could arise that
could prevent the payment of interest or principal, which would result in
losses to a Fund. The market prices for such securities are not guaranteed
and will fluctuate with changing interest rates and the credit rating of
the U.S. Government. In addition, because many types of U.S. Government
securities trade actively outside the United States, their prices may rise
and fall as changes in global economic conditions affect the demand for
these securities. Any guarantee by the U.S. government or its agencies or
instrumentalities of a security a Fund holds does not apply to the market
value of the security or the shares of the Fund. It is possible that the
U.S. Government will not have the funds to meet its payment obligations in
the future. Like all fixed income securities, U.S. Government fixed income
securities are also subject to market risk, credit risk and interest rate
risk. |
Valuation
Risk: |
A
Fund is exposed to the risk that it has valued a security at a price
different from the price at which the security can be sold. This risk may
be especially pronounced for investments, such as derivatives and foreign
investments, which may be illiquid or which may become illiquid, and for
securities that trade in relatively thin markets and/or markets that
experience extreme volatility. If market conditions make it difficult to
value certain investments, SEC rules and applicable accounting protocols
may require a Fund to value these investments using more subjective
methods, such as fair-value methodologies. Investors who purchase or
redeem a Fund’s shares on days when such Fund is holding fair-valued
securities may receive fewer or more shares, or lower or higher redemption
proceeds, than they would have received if such Fund had not fair-valued
the securities or had used a different valuation methodology. The value of
foreign securities, certain fixed income securities and currencies, as
applicable, may be materially affected by events after the close of the
markets on which they are traded, but before such Fund determines its NAV.
A Fund’s ability to value its investments in an accurate and timely manner
may be impacted by technological issues and/or errors by third party
service providers, such as pricing services or accounting
agents. |
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Variable
and Floating Rate Securities Risk: |
The
interest rates payable on certain fixed income securities in which a Fund
may invest are not fixed and may fluctuate based upon changes in market
rates. A variable rate obligation has an interest rate which is adjusted
at predesignated periods in response to changes in the market rate of
interest on which the interest rate is based. The interest rate on a
floating rate bond is a variable rate which is tied to another interest
rate, such as a money-market index or Treasury bill rate. Additionally,
such obligations are subject to interest rate risk and may fluctuate in
value in response to interest rate changes if there is a delay between
changes in market interest rates and the interest reset date for the
obligation, or for other reasons. Variable and floating rate bonds are
less effective at locking in a particular yield and are subject to market
risk, interest rate risk and credit risk. Nevertheless, such bonds may
fluctuate in value in response to interest rate changes if there is a
delay between changes in market interest rates and the interest reset date
for the bond, or for other reasons. |
PORTFOLIO
HOLDINGS INFORMATION
The
Funds make available their top ten and complete portfolio holdings on their
website (www.lkcmfunds.com) on a quarterly basis. The top ten and complete
portfolio holdings information is generally available no earlier than 10 and 30
days after the end of the calendar quarter, respectively, and will remain
available through at least the end of the current quarter. Monthly portfolio
disclosures are filed quarterly with the SEC on Form N-PORT, with quarter-end
disclosures being made public 60 days after the end of each fiscal quarter. A
description of the Funds’ policies and procedures with respect to the disclosure
of the Funds’ portfolio securities is available in the Funds’ Statement of
Additional Information. The Statement of Additional Information is available by
contacting the Funds at 1-800-688-LKCM or at www.lkcmfunds.com.
MANAGEMENT
INVESTMENT
ADVISER
Luther
King Capital Management Corporation (the “Adviser”), 301 Commerce Street, Suite
1600, Fort Worth, Texas 76102, serves as the investment adviser to the Funds.
The Adviser was founded in 1979 and provides investment management services to
investment
companies, employee benefit plans, endowment funds, foundations, estates,
trusts, high net-worth individuals, and private investment funds. As of
December 31, 2023, the Adviser had approximately $26.3 billion in
assets under management.
Under
an Investment Advisory Agreement with the Funds, each Fund pays the Adviser an
advisory fee, calculated daily and payable quarterly, equal to the annual rate
set forth under “Contractual Advisory Fee” in the table below based on the
Fund’s average daily net assets for the quarter. The Adviser has contractually
agreed to waive its advisory fees and/or reimburse expenses through May 1,
2025 to the extent necessary to keep the total operating expenses for the Funds
from exceeding the respective caps shown in the table below as a percentage of
average daily net assets. This expense limitation excludes interest, taxes,
brokerage commissions, indirect fees and expenses relating to investments in
other investment companies, including money market funds (Acquired Fund Fees and
Expenses), and extraordinary expenses. The fee waiver and expense reimbursement
agreement may be terminated only with the consent of the Board of Trustees.
The
contractual advisory fees, actual advisory fees paid by the Funds net of
waivers, and contractual expense caps for the Funds for the fiscal year ended
December 31, 2023 were as follows:
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Contractual
Advisory Fee |
Net Advisory
Fee
Paid |
Expense Cap |
Small Cap Equity Fund |
0.75% |
0.68% |
1.00% |
Small-Mid Cap Equity Fund |
0.75% |
0.01% |
1.00% |
Equity
Fund |
0.70% |
0.50% |
0.80% |
Balanced
Fund |
0.65% |
0.41% |
0.80% |
Fixed
Income Fund |
0.50% |
0.19% |
0.50% |
International
Equity Fund |
0.90% |
0.49% |
1.00% |
Any
fee waiver or reimbursements will have the effect of lowering the overall
expense ratio for the applicable Fund and increasing its overall return to
investors at the time any such amounts were waived and/or reimbursed.
A
discussion regarding the basis on which the Board of Trustees approved the
investment advisory agreement for each Fund, is available in the most recent
semi-annual report to shareholders for the period ended June 30.
The
Adviser has filed a notice claiming the CFTC Regulation 4.5 exclusion from
registration as a commodity pool operator on behalf of the LKCM International
Equity Fund, which is the only Fund that may invest in derivatives.
PORTFOLIO
MANAGERS
J.
Luther King, Jr., CFA, CIC, is
the lead portfolio manager of the LKCM Equity Fund (since inception in 1996).
Mr. King is primarily responsible for the day-to-day management of, and
oversees the investment team responsible for, the LKCM Equity Fund.
Mr. King is also a member of the investment teams responsible for the LKCM
Small Cap Equity Fund (since inception in 1994), LKCM Small-Mid Cap Equity Fund
(since inception in 2011), LKCM Balanced Fund (since inception in 1997) and LKCM
International Equity Fund (since inception in 2019). Mr. King has been
President, Principal and Portfolio Manager of the Adviser since 1979, and has
been a Trustee of the Funds since 1994. Mr. King graduated with a Bachelor
of Science and a Master of Business Administration from Texas Christian
University.
Scot
C. Hollmann, CFA, CIC, is
the lead portfolio manager of the LKCM Balanced Fund (since inception in 1997).
Mr. Hollmann is primarily responsible for the day-to-day management of, and
oversees the investment team responsible for, the LKCM Balanced Fund.
Mr. Hollmann is also a member of the investment teams responsible for the
LKCM Equity Fund (since 2010), LKCM Fixed Income Fund (since 2010) and LKCM
Aquinas Catholic Equity Fund (since 2017). Mr. Hollmann joined the Adviser
in 1983 and has served as Principal (since 1986) and Vice President and
Portfolio Manager (since 1983). Mr. Hollmann graduated with a Bachelor of
Business Administration and a Master of Business Administration from Texas
Christian University.
Joan
M. Maynard
is the lead portfolio manager of the LKCM Fixed Income Fund (since inception in
1997). Ms. Maynard is primarily responsible for the day-to-day management
of, and oversees the investment team responsible for, the LKCM Fixed Income
Fund. Ms. Maynard joined the Adviser in 1986 and has served as Principal
(since 2015) and Vice President and Portfolio Manager (since 1986).
Ms. Maynard graduated with a Bachelor of Business Administration from the
University of Texas at San Antonio and a Master of Business Administration from
Texas Christian University.
Mark
L. Johnson, CFA, CIC,
is a member of the investment teams responsible for the LKCM Balanced Fund
(since 2010), the LKCM Fixed Income Fund (since 2010), and the LKCM Small Cap
Equity Fund (since 2021). Mr. Johnson joined the Adviser in 2002 and has
served as Principal (since 2013) and Vice President and Portfolio Manager (since
2002). Mr. Johnson graduated with a Bachelor of Arts from Duke University.
Mason
D. King, CFA,
is the lead portfolio manager of the LKCM International Equity Fund (since
inception in 2019) and the LKCM Small Cap Equity Fund (since 2021).
Mr. King is primarily responsible for the day-to-day management of, and
oversees the investment team responsible for, the LKCM International Equity Fund
and the LKCM Small Cap Equity Fund. Mr. King is also a member of the
investment teams responsible for the LKCM Equity Fund (since 2010) and the LKCM
Small-Mid Cap Equity Fund (since 2017), and he has served as a member of the
investment team responsible for the LKCM Small Cap Equity Fund from 2017 to
2021. Mr. King joined the Adviser in 2004 and has served as Principal
(since 2013) and Vice President, Portfolio Manager and Analyst (since 2004).
Mr. King graduated with a Bachelor of Arts from Princeton University and a
Master of Business Administration from the University of Texas.
Brittny
G. Allred,
CFA,
is a member of the investment team responsible for the LKCM International Equity
Fund (since 2021). Ms. Allred joined the Adviser in 2013 and has been a
Vice President and Portfolio Manager of the Adviser since 2019 and Principal
since 2020. Ms. Allred graduated with a Bachelor of Business Administration
in Finance and Bachelor of Science in Economics from Southern Methodist
University and a Masters of Business Administration from the University of Texas
at Austin.
Daniel
C. Downes, CFA, CPA,
is the lead portfolio manager of the LKCM Small-Mid Cap Equity Fund (since
2021). Mr. Downes is primarily responsible for the day-to-day management
of, and oversees the investment team responsible for, the LKCM Small-Mid Cap
Equity Fund. Mr. Downes joined the Adviser in 2014 and has been a Vice
President and Analyst since 2014 and Principal and Portfolio Manager since 2021.
Mr. Downes graduated with a Bachelor of Science in Finance from Miami
University and a Master of Business Administration from the University of
Pennsylvania’s Wharton School of Business.
The
Statement of Additional Information provides additional information about the
portfolio managers’ compensation, other accounts managed, and ownership of
shares of the Funds that they manage.
DISTRIBUTION
OF FUND SHARES
DISTRIBUTOR
Quasar
Distributors, LLC, Three Canal Plaza, Suite 100, Portland, ME 04101, a
registered broker-dealer and member of the Financial Industry Regulatory
Authority, distributes the Funds’ shares.
DISTRIBUTION
PLAN
The
Funds have adopted a distribution plan under Rule 12b-1 of the Investment
Company Act of 1940, as amended (the “Investment Company Act”), (the
“Distribution Plan”) that allows the Funds to pay distribution and service fees
for the sale and distribution of their shares and for services provided to
shareholders. The Distribution Plan allows the Funds to finance with Fund assets
activities that promote the sale and retention of the Funds’ shares such as
printing prospectuses and reports and preparing and distributing advertising
material and sales literature and providing services to shareholders. The
Distribution Plan authorizes each Fund to annually pay up to 0.75% of average
daily net assets for distribution and other services.
Currently,
the Board of Trustees has not authorized payments under the Distribution Plan
and, as a result, the Funds neither accrue nor pay any fees under the
Distribution Plan. If the Funds were using the Distribution Plan, because fees
would be paid out of a Fund’s assets on an ongoing basis, over time these fees
would increase the cost of your investment and may cost you more than paying
other types of sales charges.
PURCHASE
OF SHARES
You
may purchase shares of each Fund at the net asset value (“NAV”) per share next
determined after receipt of the purchase order. Each Fund normally determines
NAV as of the scheduled close of normal trading of the New York Stock Exchange
(“NYSE”) (generally 4:00 P.M. Eastern Time) each day that the NYSE is scheduled
to be open for business.
INITIAL
INVESTMENTS
The
Funds are offered for purchase directly from LKCM Funds, through financial
intermediaries who have entered into agreements with the Funds’ distributor, and
from certain other distribution channels. The policies that apply to the
purchase of Fund shares directly through the Funds’ transfer agent, U.S. Bancorp
Fund Services, LLC, doing business as U.S. Bank Global Fund Services (the
“Transfer Agent”), are discussed below. If you establish an account with a
broker-dealer or other financial intermediary, ask them for information on how
to purchase, sell and exchange Fund shares. Your broker-dealer or other
financial intermediary also may charge fees that are in addition to those
described in this Prospectus. Each Fund’s minimum initial investment is $2,000,
but financial intermediaries may impose different initial investment minimums
for a Fund. Please contact your financial intermediary for information regarding
how to purchase, exchange and redeem shares and applicable fees.
Through
Your Financial Adviser. You
may invest in shares of a Fund by contacting your financial adviser. Your
financial adviser can help you open a new account and help you review your
financial needs and formulate long-term investment goals and objectives.
Investors may be charged a fee if they effect transactions in Fund shares
through a broker or agent.
The
Funds have authorized certain broker-dealers and other financial intermediaries
to receive on their behalf purchase and redemption orders of Fund shares. These
broker-dealers may also designate intermediaries to receive Fund orders on their
behalf. The Funds are deemed to have received purchase and redemption orders for
Fund shares when an authorized broker-dealer or its designee or financial
intermediary receives such orders. All such orders are executed at the next NAV
calculated after the order is received by an authorized broker-dealer or its
designee or financial intermediary. Your broker-dealer or other financial
intermediary is responsible for transmitting orders to be received by the Funds
in proper form and in a timely manner. The Funds are not responsible for the
failure of a broker-dealer or financial intermediary to transmit a purchase or
redemption order in proper form and in a timely manner.
By
Mail. You
may open an account directly with the Transfer Agent by completing and signing a
New Account Application, and mailing it, together with a check ($2,000 minimum
initial investment) payable to LKCM Funds. Your order will not be accepted until
the completed New Account Application is received by the Funds or the Transfer
Agent.
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By
regular mail to:
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By
express, registered or certified mail to:
|
LKCM
Funds – [Fund name]
c/o
U.S. Bank Global Fund Services
P.O.
Box 701
Milwaukee,
WI 53201-0701 |
LKCM
Funds – [Fund name]
c/o
U.S. Bank Global Fund Services
615
East Michigan Street, 3rd Floor
Milwaukee,
WI 53202 |
The
Funds do not consider the U.S. Postal Service or other independent delivery
services to be their agents. Therefore, deposit in the mail or with such
services, or receipt at the U.S. Bank Global Fund Services post office box of
purchase orders or redemption requests does not constitute receipt by the
Transfer Agent. Receipt of purchase orders or redemption requests is based on
when the
order
is received at the Transfer Agent’s offices. The Funds are deemed to have
received purchase and redemption orders for Fund shares when an authorized
broker-dealer or its designee or financial intermediary receives such orders.
Once
a Fund receives and accepts your New Account Application in the mail, your
payment for shares will be credited to your account at the NAV per share of a
Fund next determined after receipt. If you purchase shares using a check or
electronic funds transfer through the Automated Clearing House (“ACH”) network
and soon after make a redemption request, the Funds will honor the redemption
request at the next determined NAV, but will not send you the proceeds until
your payment for purchase has cleared (within 7 business days). The Funds will
not accept payment in cash or money orders. To prevent check fraud, the Funds
will not accept third party checks, U.S. Treasury checks, credit card checks,
traveler’s checks or starter checks for the purchase of shares. The Funds are
unable to accept postdated checks or any conditional order or payment. Payment
should be made by check in U.S. Dollars drawn on a U.S. bank or credit union. If
your bank does not honor your check, you could be liable for any loss sustained
by the Funds, as well as a service charge imposed by the Transfer Agent in the
amount of $25.
In
compliance with the USA PATRIOT Act of 2001, when you open an account directly
with the Funds, please note that the Transfer Agent will verify certain
information on your New Account Application as part of the Funds’ Anti-Money
Laundering Program. As requested on the New Account Application, you must supply
your full name, date of birth, social security number and permanent street
address. If you are opening the account in the name of a legal entity
(e.g.,
partnership, limited liability company, business trust, corporation, etc.), you
must also supply the identity of the beneficial owners. Broker-dealers and other
financial intermediaries also are required to comply with the USA PATRIOT Act
and, as a result, may request similar information when you open an account.
Mailing addresses containing only a P.O. Box will not be accepted. Please
contact the Transfer Agent at 1-800-688-LKCM if you need additional assistance
when completing your New Account Application.
If
the Funds do not have a reasonable basis for determining your identity, your
account will be rejected or you will not be allowed to perform a transaction on
the account until the necessary information to confirm your identity is
received. If the Transfer Agent is unable to verify your identity, the Fund
reserves the right to redeem your account at the current day’s net asset value.
By
Wire. You
may purchase shares of a Fund by wiring federal funds ($2,000 minimum). If you
are making your first investment in the Funds, before you wire funds, the
Transfer Agent must have received and processed a completed New Account
Application from you. You can mail or overnight deliver your New Account
Application to the Transfer Agent. Upon receipt of your completed New Account
Application, the Transfer Agent will establish an account for you. The account
number assigned will be required as part of the instruction that should be given
to your bank to send the wire. The wire must be received by the time as of which
the NAV is calculated in order to receive the same day’s NAV. Your bank must
include both the name of the Fund you are purchasing, your name and account
number so that monies can be correctly applied. Your bank should transmit funds
by wire to:
U.S.
Bank, N.A.
777
East Wisconsin Avenue
Milwaukee,
WI 53202
ABA
#075000022
For
credit to U.S. Bancorp Fund Services, LLC
Account
#112-952-137
For
further credit to LKCM Funds
[Name
of Fund]
[Shareholder
account number]
Federal
fund purchases will be accepted only on a day on which the Funds and the
custodian are open for business. The Funds and U.S. Bank, N.A. are not
responsible for the consequences of delays resulting from the banking or Federal
Reserve wire system, or from incomplete wiring instructions.
SUBSEQUENT
INVESTMENTS
By
Mail or Wire. To
make additional investments once you have opened your account (minimum
subsequent investment $500), write your account number on a check made payable
to LKCM Funds and send it together with the Invest by Mail form from your most
recent confirmation statement received from the Transfer Agent to the address
noted in the section entitled “Initial Investments – By Mail.” If you do not
have the Invest by Mail form, include the Fund name, your name, address, and
account number on a separate piece of paper along with your check. Additional
investments may also be made by wire. Before sending your wire, please contact
the Transfer Agent at 1-800-688-LKCM to advise them of your intent to wire
funds. This will ensure prompt and accurate credit upon receipt of your wire.
Instruct your bank to wire monies as outlined above.
By
Telephone. To
make additional investments by telephone, you must check the appropriate box on
your New Account Application authorizing telephone purchases. If you have given
authorization for telephone transactions and your account has been open for at
least 7 business days, you may call the Funds toll free at 1-800-688-LKCM to
move money, in the amount of $500 or more, from your bank account to your Fund
account upon request. Only bank accounts held at U.S. institutions that are ACH
members may be used for telephone transactions. For security reasons, requests
by telephone may be recorded. Shares of the Funds will be purchased in your
account at the NAV next determined after your order is placed. Telephone trades
must be received by or prior to market close. During periods of high market
activity, shareholders may encounter higher than usual call waits. Please allow
sufficient time to place your telephone transaction.
If
you purchased shares of a Fund through a financial intermediary, you must
contact your financial intermediary for information concerning how to effect
subsequent investments in the Fund’s shares.
AUTOMATIC
INVESTMENT PROGRAM
The
Automatic Investment Program (the “Program”) permits investors that own shares
of a Fund with a value of $2,000 or more to purchase shares (minimum of $100 per
transaction) at regular intervals selected by the investor. This Program
provides a convenient method to have monies deducted from your checking or
savings account, for investment into a Fund, on a monthly or quarterly basis.
Only
bank accounts held at domestic institutions that are ACH members may be used for
this option. If you wish to change the amount of your investment or to terminate
the Program, please contact the Transfer Agent five days prior to the effective
date. Additionally, the Transfer Agent will charge a $25 fee for any payment
returned. To establish the Program, an investor must complete the appropriate
sections of the New Account Application. For additional information on the
Program, please call 1-800-688-LKCM.
RETIREMENT
PLANS AND ACCOUNTS
The
Funds make available individual retirement accounts (“IRAs”), including
Simplified Employee Pension Plans, traditional IRAs, Roth IRAs and IRA “Rollover
Accounts,” offered by U.S. Bank Global Fund Services. Detailed information on
these plans and accounts is available by calling the Funds at 1-800-688-LKCM.
The Transfer Agent charges an annual fee of $15 for maintaining each plan and
account up to a maximum of $30 per Social Security number, which is in addition
to other fees and expenses payable to the Funds or Transfer Agent as described
herein. Investors should consult with their own tax advisers before establishing
a retirement plan or account.
OTHER
PURCHASE INFORMATION
Each
Fund reserves the right, in its sole discretion, to suspend the offering of its
shares, to reject any purchase order, or to waive any minimum investment
requirements.
Purchases
of each Fund’s shares will be made in full and fractional shares of the Fund
calculated to three decimal places.
POLICY
ON PROHIBITION OF FOREIGN SHAREHOLDERS
Shares
of the Funds have not been registered for sale outside of the United States.
Accordingly, the Funds generally require that shareholders must be U.S. persons
with a valid U.S. taxpayer identification number to open an account with the
Funds. Each Fund may sell shares to investors residing outside the United
States in its discretion. The Funds reserve the right to close an account
(generally within 30 days) if clarifying information/documentation is not
received by the Funds from any such investors.
UNCLAIMED
PROPERTY
It
is important that the Funds maintain a correct address for each shareholder. An
incorrect address may cause a shareholder’s account statements and other
mailings to be returned to the Funds. Based upon statutory requirements for
returned mail, a Fund will attempt to locate the shareholder or rightful owner
of the account. If the Fund is unable to locate the shareholder, then it will
determine whether the shareholder’s account can legally be considered abandoned.
Your mutual fund account may be transferred to the state government of your
state of residence if no activity occurs within your account during the
“inactivity period” specified in your state’s abandoned property laws. The Funds
are legally obligated to escheat (or transfer) abandoned property to the
appropriate state’s unclaimed property administrator in accordance with
statutory requirements. The shareholder’s last known address of record
determines which state has jurisdiction. Please proactively contact the Transfer
Agent at 1-800-688-LKCM at least annually to ensure your account remains in
active status.
If
you are a resident of the state of Texas, you may designate a representative to
receive notifications that, due to inactivity, your mutual fund account assets
may be delivered to the Texas Comptroller. Please contact the Transfer Agent if
you wish to complete a Texas Designation of Representative form.
HOUSEHOLDING
In
an effort to decrease costs, the Funds may reduce the number of duplicate
prospectuses, supplements, and certain other shareholder documents you receive
by sending only one copy of each to those addresses shared by two or more
accounts and to shareholders the Funds reasonably believe are from the same
family or household. If implemented, and if you would like to discontinue
householding for your accounts, please call toll-free at 1-800-688-LKCM to
request individual copies of documents. Once a Fund receives notice to stop
householding, it will begin sending individual copies thirty days after
receiving your request. This policy does not apply to account statements.
If
you hold your Fund shares through a financial intermediary, your financial
intermediary’s document policies will apply. Please contact your financial
intermediary for further information.
MARKET
TIMING POLICY
“Market
timing” typically refers to the practice of frequent trading in the shares of
mutual funds in order to exploit inefficiencies in fund pricing. Market timing
transactions include trades in mutual fund shares that occur when the fund’s NAV
may not fully reflect the value of the fund’s holdings – for example, when the
fund has in its portfolio particular holdings, such as foreign or thinly traded
securities, that are valued on a basis that does not include the most updated
information possible. Market timing can have a dilutive effect on the value of
the investments of long-term fund shareholders and can increase the transaction
costs of a fund, which will be borne by all fund shareholders.
The
Funds are typically intended for long-term investing. Market timing by Fund
shareholders may adversely affect the Funds by interfering with portfolio
management and increasing portfolio transaction and administrative costs. The
Board of Trustees of the Funds has adopted policies and procedures to detect and
prevent market timing activities in the Funds. To discourage market timing, each
Fund charges a 1.00% redemption fee on shares exchanged or redeemed within 30
days of purchase, except on shares held in separately managed accounts of the
Adviser. The redemption fee may be waived with the approval of the Board of
Trustees. The redemption fee also may be waived by the Adviser or an officer of
the Funds, provided such waivers are reported to the Board of Trustees. In
addition, a Fund may temporarily suspend or terminate future purchase and
exchange orders by investors or groups of investors who the Funds believe have
engaged in market timing practices and which may have an adverse impact on the
Funds. The Funds will also terminate, without notice, the exchange privilege of
any investor who, in the opinion of the Funds, uses the exchange privilege
excessively.
The
Funds and/or the Adviser monitor for market timers and attempt to detect abusive
trading practices. The criteria and techniques may change from time to time as
determined by the Funds or the Adviser. The Transfer Agent may reject any
purchase or
exchange
order, in whole or in part, including trading that the Funds or the Adviser
believe may be excessive in frequency and/or amount or otherwise potentially
disruptive to the affected Funds. Although these efforts are designed to
discourage abusive trading practices, these tools cannot eliminate the
possibility that such activity will occur.
Furthermore,
due to the complexity involved in identifying abusive trading activity and the
volume of shareholder transactions the Funds handle, there can be no assurance
that the efforts of the Funds or the Adviser will identify all trades or trading
practices that may be considered abusive. In addition, the ability of the Funds
or the Adviser to monitor trades that are placed by individual shareholders
within omnibus and retirement accounts maintained by financial intermediaries
may be limited. However, the Funds and the Adviser attempt to monitor aggregate
trades placed in omnibus accounts and seek to work with financial intermediaries
to discourage shareholders from engaging in abusive trading practices and to
impose restrictions on excessive trades. In this regard, the Funds have entered
into agreements with certain financial intermediaries that generally require
them to provide the Funds with information concerning those individual
shareholders involved in any such aggregated trades. For those financial
intermediaries with whom
the Funds have not entered into such agreements, the Funds treat such
intermediaries as individual shareholders for purposes of their market timing
and redemption fee policies. However, there can be no assurance that the Funds
or the Adviser will be able to detect and prevent abusive trading in accounts
maintained by financial intermediaries through the foregoing measures or
otherwise.
EXCHANGING
SHARES
Exchanges
of all or a portion of your investment from a Fund to an identically registered
account in another LKCM Fund may be made. Any new account established through an
exchange will be subject to the minimum investment requirements described above.
Exchanges will be executed on the basis of the relative NAV of the shares
exchanged after your request for an exchange is received. An exchange is
considered to be a sale of shares of the Fund from which you are exchanging for
federal income tax purposes, on which you may realize a taxable gain or loss. In
addition, exchanges of shares held for fewer than 30 days will be subject to a
1.00% redemption fee, except shares held in separately managed accounts of the
Adviser or as otherwise determined by a Fund in its discretion. The Transfer
Agent charges a $5 fee for each exchange via telephone. Call the Funds to learn
more about exchanges. If you purchased shares of a Fund through your financial
intermediary, please contact your financial intermediary to determine if you may
take advantage of the exchange policies described in this section and for its
policies to effect an exchange.
The
Funds are intended as long-term investment vehicles and not to provide a means
of speculating on short-term market movements. In addition, excessive trading
can hurt the Funds’ performance and shareholders. Therefore, each Fund may
terminate, without notice, the exchange privilege of any investor who uses the
exchange privilege excessively. The Funds may change or temporarily suspend the
exchange privilege during unusual market conditions.
REDEMPTION
OF SHARES
You
may redeem shares of the Funds by contacting your financial adviser, by mail or,
if authorized, by telephone or wire. The Funds do not charge a fee for making
redemptions, except that each Fund charges a 1.00% redemption fee on shares
exchanged or redeemed within 30 days of purchase unless such shares are held in
separately managed accounts of the Adviser. The redemption fee may be waived
with the approval of the Board of Trustees. The redemption fee also may be
waived by the Adviser or an officer of the Funds, provided such waivers are
reported to the Board of Trustees. If you purchased your shares through a
broker-dealer or other financial intermediary, please contact your broker-dealer
or financial intermediary for information regarding how to sell your shares.
By
Mail. You
may redeem your shares by mailing a written request to:
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By
regular mail to:
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By
express, registered or certified mail to:
|
LKCM
Funds – [Fund name]
c/o
U.S. Bank Global Fund Services
P.O.
Box 701
Milwaukee,
WI 53201-0701 |
LKCM
Funds – [Fund name]
c/o
U.S. Bank Global Fund Services
615
East Michigan Street, 3rd Floor
Milwaukee,
WI 53202 |
The
Funds do not consider the U.S. Postal Service or other independent delivery
services to be their agents. Therefore, deposit in the mail or with such
services, or receipt at the U.S. Bank Global Fund Services post office box of
purchase orders or redemption requests does not constitute receipt by the
Transfer Agent. Receipt of purchase orders or redemption requests is based on
when the order is received at the Transfer Agent’s offices. The Funds are deemed
to have received purchase and redemption orders for Fund shares when an
authorized broker-dealer or its designee or financial intermediary receives such
orders. The Funds are not responsible for the failure of a broker-dealer or
financial intermediary to transmit a purchase or redemption order in proper form
and in a timely manner.
After
your request is in “good order” the Fund will redeem your shares at the next
NAV. To be in “good order,” redemption requests must include the following
documentation:
(a) The
share certificates, if issued;
(b) A
letter of instruction, if required, or a stock assignment specifying the number
of shares or dollar amount to be redeemed, signed by all registered owners of
the shares in the exact names in which they are registered;
(c) Any
required signature guarantees; and
(d) Other
supporting legal documents, if required, in the case of estates, trusts,
guardianships, custodianships, corporations, pension and profit sharing plans,
and other organizations.
Signature
Guarantees. To
protect your account, the Funds and U.S. Bank Global Fund Services from fraud,
signature guarantees are required to enable the Funds to verify the identity of
the person that has authorized a redemption from an account. Signature
guarantees, from either a Medallion program member or a non-Medallion program
member, are required for (1) redemptions
where
the proceeds are payable or sent to any person, address or bank account not on
record, (2) share transfer requests, and (3) any redemption request if
a change of address request has been received by the Transfer Agent within the
last 15 calendar days. In addition to the situations described above, the Funds
and /or the Transfer Agent reserve the right to require a signature guarantee in
other instances based on the circumstances relative to the particular situation.
The Funds reserve the right to waive any signature guarantee requirement at
their discretion.
Non-financial
transactions including establishing or modifying certain services on an account
may require a signature guarantee, signature verification from a Signature
Validation Program member, or other acceptable form of authentication from a
financial institution source.
Signature
guarantees will generally be accepted from domestic banks, brokers, dealers,
credit unions, national securities exchanges, registered securities
associations, clearing agencies and savings associations, as well as from
participants in the New York Stock Exchange Medallion Signature Program and the
Securities Transfer Agents Medallion Program (“STAMP”). A notary public is not
an acceptable signature guarantor. Please contact the Funds at 1-800-688-LKCM
for further details.
By
Telephone. If
you indicated on your New Account Application, or have subsequently arranged in
writing to do so, you may redeem shares by calling the Funds. You may have the
redemption proceeds mailed by check to the primary registration address or wired
directly to your bank. You may also have your proceeds sent via electronic funds
transfer through the ACH network to your predetermined bank account. Other
redemption fees may be applicable. See the section titled “Other Redemption
Information” below. The Transfer Agent imposes a $15 fee for each wire
redemption. There is no charge for an electronic funds transfer, however the
funds may not be available for 2-3 days. The redemption proceeds will be paid to
the same bank and account as designated on the New Account Application or in
written instructions subsequently received by the Funds. No telephone
redemptions may be made within 15 days of any address change.
If
you would like to arrange for redemption by wire or telephone or change the bank
or account designated to receive redemption proceeds, you must send a written
request to the Funds at the address listed in the section entitled “Redemption
of Shares – By Mail.” The investor must sign such requests. Further documents
and signature verifications may be required.
The
Funds reserve the right to refuse a wire or telephone redemption. Procedures for
redeeming shares by wire or telephone may be modified or terminated at any time.
The Funds and the Transfer Agent will not be liable for any loss, liability,
cost or expense for acting upon telephone instructions that are reasonably
believed to be genuine. Before executing an instruction received by telephone,
the Transfer Agent will use reasonable procedures to confirm that the telephone
instructions are genuine. The telephone call may be recorded and the caller may
be asked to verify or provide certain personal identification information. If an
account has more than one owner or authorized person, the Fund will accept
telephone instructions from any one owner or authorized person. If the Funds or
their agents follow these procedures, they cannot be held liable for any loss,
expense or cost arising out of any telephone redemption request that is
reasonably believed to be genuine. This includes fraudulent or unauthorized
requests. Once you place a telephone transaction request, it cannot be canceled
or modified after the close of regular trading on the NYSE (generally, 4:00
p.m., Eastern Time). Telephone trades must be received by or prior to market
close. During periods of high market activity, shareholders may encounter higher
than usual call waits. Please allow sufficient time to place your telephone
transaction.
Shareholders
who have an IRA or other retirement plan must indicate on their written
redemption request whether to withhold federal income tax. Redemption requests
failing to elect not to withhold tax will generally be subject to 10%
withholding.
Shares
held in IRA or other retirement plan accounts may be redeemed by telephone at
1-800-688-LKCM. Investors will be asked whether to withhold taxes from any
distribution.
30-Day
Redemption Fee. If
you redeem or exchange shares held for less than 30 days after the date of
purchase, you will be subject to a 1.00% redemption fee. This fee will be
deducted from the proceeds of your redemption. For purposes of applying the fee,
the first day of the holding period is trade date plus one. The holding period
will be determined on a “first-in, first-out” basis, meaning the Fund shares
purchased first will be redeemed first. The redemption fee will not apply to
shares of the Funds held in accounts separately managed by the Adviser. The
redemption fee may be waived with the approval of the Board of Trustees. The
redemption fee also may be waived by the Adviser or an officer of the Funds,
provided such waivers are reported to the Board of Trustees. Transactions in
shares of the Funds by financial intermediaries with whom the Funds do not have
information sharing agreements in place may be subject to the redemption fee.
The redemption fee will be retained by a Fund for the benefit of its
shareholders. Redemption fees will not apply to shares acquired through the
reinvestment of dividends, or to shares purchased through the Automatic
Investment Program.
Other
Redemption Information. Payment
of the redemption proceeds will normally be made within seven calendar days
after receipt of a redemption request in “good order.” Redemption proceeds for
shares of the Funds purchased by check or electronic funds transfer through the
ACH network may not be distributed until payment for the purchase has been
collected, which may take up to seven business days. Shareholders can avoid this
delay by utilizing the wire purchase option.
Due
to the relatively high cost of maintaining small accounts, the Funds reserve the
right to redeem shares in any account for their then-current value (which will
be promptly paid to the investor) if at any time, due to redemption by the
investor, the shares in the account do not have a value of at least $1,000. You
will receive advance notice of a mandatory redemption and will be given at least
30 days to bring the value of the account up to at least $1,000.
Normally,
redemption proceeds paid via check will be sent via mail within two business
days following the business day a Fund receives the redemption order (assuming
the order is received in good order prior to the time as of which the day’s NAV
is calculated), while redemption proceeds paid via ACH and electronic fund
transfers will generally be sent to your bank account within two business days
following the business day we receive the redemption order (assuming the order
is received in good order prior to the time as of which the day’s NAV is
calculated). However, payment of redemption proceeds may take up to 7
calendar days. In addition, the Funds may suspend the right of redemption
or postpone redemptions when the NYSE is closed (other than customary weekend
and holiday closings) or under any other emergency circumstances permitted by
the SEC.
If
you are redeeming shares which you recently purchased by check or electronic
funds transfer, payment may be delayed to verify that your check or electronic
funds transfer has cleared (which may take up to seven business days from the
date of purchase). If your account is held through an intermediary, redemption
proceeds will generally be paid to the intermediary within two business days
following the business day we receive the redemption order (assuming the order
is received in good order prior to the time as of which that day’s NAV is
calculated).
The
Funds typically expect to meet redemption requests by paying out proceeds from
cash or cash equivalent portfolio holdings, or by selling portfolio holdings. In
stressed market conditions, redemption methods may include redeeming in kind.
The Funds have reserved the right to redeem in kind (i.e.,
in securities) any redemption request during any 90-day period in excess of the
lesser of: (i) $250,000 or (ii) 1% of a Fund’s NAV being redeemed. If
your shares are redeemed in kind, then you will incur transaction costs when you
subsequently sell the securities distributed to you.
TRANSFER
OF REGISTRATION
The
registration of Fund shares may be transferred by writing to LKCM Funds, c/o
U.S. Bank Global Fund Services, P.O. Box 701, Milwaukee, Wisconsin, 53201. As in
the case of redemptions, the written request with signature(s) guaranteed must
be received in “good order.”
PAYMENTS
TO FINANCIAL INTERMEDIARIES
The
Funds and the Adviser make payments to certain financial intermediaries in
connection with the promotion and sale of shares of the Funds and as
compensation for shareholder-related services, including administrative,
sub-transfer agency, recordkeeping and shareholder communications services. The
Funds and the Adviser also pay such compensation to make shares of the Funds
available to investors through certain fund platforms, supermarkets or similar
programs or for services provided in connection with such platforms,
supermarkets and programs. These payments generally benefit the Funds and may
provide applicable financial intermediaries with an incentive to recommend sales
of shares of the Funds over other potential investments.
The
Funds and the Adviser compensate financial intermediaries differently depending
upon the level and type of services provided by such financial intermediaries.
The compensation paid to a financial intermediary may be based on a variety of
factors, including average net assets of the applicable Fund distributed and/or
serviced by the financial intermediary and/or the number of accounts serviced by
the financial intermediary that invest in the Funds. Compensation paid by a Fund
for distribution-related expenses are made from the Fund’s Rule 12b-1 fees.
Compensation paid by the Adviser or its affiliates includes amounts from the
Adviser’s or its affiliates’ own resources and constitute what is sometimes
referred to as “revenue sharing.”
Any
compensation received by a financial intermediary, whether from the Funds or the
Adviser, and the prospect of receiving such compensation may provide the
financial intermediary with an incentive to recommend shares of the Funds over
other potential investments. You should ask your financial intermediary for
details about any such payments it receives from the Funds or the Adviser, or
any other fees, expenses, or commissions your financial intermediary may charge
you in addition to those disclosed in this Prospectus.
A
Fund’s shares may be available for purchase and sale on brokerage and other
financial intermediary platforms of firms that have agreements with the Funds’
distributor to offer such shares solely when acting as an agent for the
investor. The Funds do not charge any front-end load, deferred sales charge or
other asset-based fee for sales or distribution of their shares. However,
investors that purchase and/or sell shares of a Fund through brokers or other
financial intermediaries may be required to pay commissions and/or other types
of compensation to such brokers or other financial intermediaries in connection
with such purchases or sales in an amount determined and separately disclosed to
you by the broker or other financial intermediary. Please contact your broker or
other financial intermediary for further detail. Because the Funds are not
parties to any such commission arrangement between you and your broker or
financial intermediary, any purchases and redemptions of a Fund’s shares will be
made at the applicable net asset value (before imposition of the commission).
Any such commissions charged by a broker or financial intermediary are not
reflected in the fees and expenses listed in the “Fees and Expenses of the Fund”
section of the Summary Section for each Fund nor are they reflected in the
performance information shown in the prospectus for the Funds because they are
not charged by the Funds.
VALUATION
OF SHARES
Calculation
of NAV. The
NAV per share is computed by dividing the total value of the investments and
other assets of a Fund, less any liabilities, by the total outstanding shares of
the Fund. The NAV per share normally is determined as of the scheduled close of
normal trading on the NYSE (generally 4:00 p.m. Eastern Time) on each day that
the NYSE is scheduled to be open for business. The NAV normally is not
determined on days the NYSE is scheduled to be closed. The NYSE is scheduled to
be closed on weekends and most national holidays. The price at which a purchase
order or redemption request is effected is based on the next calculation of NAV
after the order is received by the Fund. A Fund’s NAV may not be calculated on
days during which the Fund receives no orders to purchase shares and no shares
are tendered for redemption. In determining NAV, expenses are accrued and
applied daily and investments for which market values are readily available are
valued at market value.
Equity
securities listed or traded on a U.S. securities exchange for which market
quotations are readily available are valued at the last quoted sale price on the
exchange on which the security is primarily traded. Nasdaq Global Market
securities are valued at the Nasdaq Official Closing Price. Unlisted U.S. equity
securities and listed U.S. equity securities not traded on a particular
valuation date are valued at the mean of the most recent quoted bid and ask
price on the relevant exchanges or markets. Equity securities listed on a
foreign exchange for which market quotations are readily available are valued at
the last quoted sales price on the exchange on which the security is primarily
traded. Debt securities are normally valued at the mean of the closing bid and
ask price and/or by using a combination of broker quotations or evaluated prices
provided by an independent pricing service. Futures contracts and options on
futures contracts are valued at the settlement prices established each day on
the principal exchange on which they are traded. Forward contracts are valued
based on the forward rate using information provided by an independent pricing
service. Other assets and securities for which no market or broker quotations or
evaluated prices are readily available are valued by the Adviser in good faith
at fair value.
Fair
Value Procedures for the Funds. Rule
2a-5 under the Investment Company Act (the “Valuation Rule”) establishes
requirements for determining fair value in good faith for purposes of the
Investment Company Act, including related oversight and reporting requirements.
The Valuation Rule also defines when market quotations are “readily available”
for purposes of the Investment Company Act, the threshold for determining
whether a security must be fair valued. In many cases, fixed-income and foreign
securities are not considered to have a “readily available market quotation”
under the Valuation Rule. Accordingly, such securities typically are
fair-valued.
The
Valuation Rule permits a Fund’s board to designate the Fund’s investment adviser
as “valuation designee” to perform the Fund’s fair value determinations subject
to board oversight and certain reporting and other requirements intended to
ensure that the registered investment company’s board receives the information
it needs to oversee the investment adviser’s fair value determinations. The
Board has designated the Adviser as valuation designee under the Valuation Rule
to perform fair value functions in accordance with the requirements of the
Valuation Rule. The Adviser may value securities at fair value in good faith
pursuant to the Adviser’s and the Funds’ procedures. The Adviser may use prices
provided by independent pricing services to assist in the fair valuation of the
Fund’s portfolio securities.
The
policies and procedures adopted by the Fund and the Adviser authorize the
Adviser to fair value a security in good faith if, among other things, the
Adviser determines that (i) closing prices of foreign securities do not
reflect their fair market value due to events that occur between the closing of
foreign markets and the time at which a Fund calculates its NAV,
(ii) trading in a security is halted and does not resume prior to the
closing of the exchange or other market on which such security normally trades,
or (iii) the price for such security provided by independent pricing
services appears invalid, is not readily available, or otherwise provides a
valuation that in the judgment of the Adviser does not represent the fair market
value of such security. Prices provided by independent pricing services may be
used to assist in the fair valuation of the Funds’ portfolio securities. For
foreign securities held by the International Equity Fund, such prices generally
will be based on such independent pricing services’ proprietary multi-factor
models that measure movements in relevant indices, market indicators and other
factors between the time the relevant foreign markets have closed and the time a
Fund calculates its NAV, and therefore may differ from quoted or official
closing prices for such foreign securities in such foreign markets.
The
trading hours for most foreign securities end prior to the scheduled close of
the NYSE, which is, generally the time as of which the Funds’ NAVs are
calculated. Securities listed on a foreign exchange for which market quotations
are readily available are valued at the last quoted sales price, unless events
materially affecting the value of foreign securities occur. The occurrence of
certain events after the close of foreign markets, but prior to the close of the
U.S. market (such as a significant surge or decline in the U.S. market and/or
movements in relevant indices or other appropriate market indicators) often will
result in an adjustment to the trading prices of foreign securities when foreign
markets open on the following business day. If such events occur, the foreign
securities may be valued at fair value, taking into account such events and
other factors, when the Funds calculate their NAVs. Consequently, fair valuation
of portfolio securities may occur on a daily basis. In such cases, use of fair
valuation can reduce an investor’s ability to seek to profit by estimating a
Fund’s NAV in advance of the time as of which NAV is calculated. Because some
foreign markets are open on days when the Funds do not price their shares, the
value of a Fund’s holdings (and correspondingly, the Fund’s NAV) could change at
a time when you are not able to buy or sell Fund shares. If fair value pricing
is utilized, the fair values assigned to such Fund’s foreign investments may not
be the quoted or published prices of the investments on their primary markets or
exchanges.
There
can be no assurance that the Funds could purchase or sell a portfolio security
at the price used to calculate the Funds’ NAVs. In the case of fair valued
portfolio securities, lack of information and uncertainty as to the significance
of information may lead to a conclusion that a prior valuation is the best
indication of a portfolio security’s present value. Fair valuations may remain
unchanged until new information becomes available. Consequently, changes in the
fair valuation of portfolio securities may be less frequent and of greater
magnitude than changes in the price of portfolio securities valued by an
independent pricing service, or based on market quotations. Valuing securities
at fair value involves greater reliance on judgment than valuation of securities
based on readily available market quotations. There can be no assurance that a
Fund can obtain the fair value assigned to a security if it were to sell the
security at approximately the time at which the Fund determines its NAV.
DIVIDENDS,
OTHER DISTRIBUTIONS AND TAXES
DIVIDENDS
AND OTHER DISTRIBUTIONS
Each
of the Small Cap Equity, Small-Mid Cap Equity, Equity and International Equity
Funds intends to declare and pay income dividends at least on an annual basis.
Each of the Balanced and Fixed Income Funds intends to declare and pay income
dividends on a quarterly basis. Each Fund intends to distribute net capital
gains, if any, on an annual basis. A Fund may make additional distributions if
necessary to avoid federal income or excise taxes or as otherwise approved by
the Board of Trustees.
A
Fund’s dividends and other distributions, if any, will automatically be paid in
additional shares of the Fund unless the shareholder elects otherwise. Such
election must be made in writing or by calling the Funds at least five days
prior to the record date of the distribution. If a shareholder elects to receive
distributions in cash and the U.S. Postal Service cannot deliver the
shareholder’s check, or if a check remains uncashed for six months, the Funds
reserve the right to reinvest the amount of the distribution check in the
shareholder’s account at the distributing Fund’s then-current NAV per share and
to reinvest all subsequent distributions.
TAXES
Dividends,
whether paid in cash or reinvested in additional shares, from a Fund’s net
investment income, the excess of its net short-term capital gain over its net
long-term capital loss and its net gains from certain foreign currency
transactions, if any, will be taxable to its shareholders as ordinary income
(unless a shareholder is exempt from income tax or entitled to a tax deferral),
except as noted in the following sentence. A Fund’s dividends attributable to
its “qualified dividend income” (i.e.,
dividends it receives on stock of most U.S. and certain foreign corporations
with respect to which it satisfies certain holding period and other
restrictions) generally will be subject to federal income tax for individual and
certain other non-corporate shareholders (each, a “non-corporate shareholder”)
who satisfy those restrictions with respect to the shares on which the Fund
dividends were paid at the lower rates for long-term capital gains - - a maximum
of 15% for a single shareholder with taxable income not exceeding $518,900
($583,750 for married shareholders filing jointly) and 20% for non-corporate
shareholders with taxable income exceeding those respective amounts (which apply
for 2024
and
will be adjusted for inflation annually thereafter). A portion of a Fund’s
dividends–not exceeding the aggregate dividends it receives from domestic
corporations only– also may be eligible for the dividends-received deduction
allowed to corporations (“DRD”), subject to similar holding period and other
restrictions. There can be no assurance as to what portion, if any, of a Fund’s
distributions will constitute qualified dividend income or be eligible for the
DRD.
Distributions
to non-corporate shareholders of net capital gain (that is, the excess of net
long-term capital gain over net short-term capital loss), whether paid in cash
or reinvested in additional shares (or, if a Fund makes a certain election, any
net capital gain that is retained by the Fund), will be taxable as long-term
capital gain, at the 15% and 20% maximum rates mentioned above; capital gain
distributions to corporate shareholders will be subject to federal income tax at
the same rate as ordinary income, 21%. The classification of a Fund’s capital
gain distribution or retained net capital gain (and, consequently, the
applicable tax rate) is determined by the length of time that the Fund has held
the securities that generated the gain and not the length of time you have held
shares in the Fund. Shareholders will be notified annually as to the federal tax
status of dividends and other distributions paid by a Fund.
Any
dividends and other distributions a Fund declares in the months of October,
November or December to shareholders of record on a date in such a month will be
deemed to have been paid by the Fund and received by those shareholders on
December 31 if the distributions are paid before February 1 of the
following year. If you purchase shares of a Fund shortly before a distribution,
you will be subject to income tax on the distribution, even though the value of
your investment (plus cash received, if any) remains the same.
When
a shareholder redeems shares of a Fund, the redemption may result in a taxable
gain or loss, depending on whether the redemption proceeds are more or less than
the shareholder’s adjusted basis in the shares. Any capital gain a non-corporate
shareholder recognizes on a redemption of Fund shares that have been held for
more than one year will qualify for the 15% and 20% maximum rates mentioned
above. In addition, if shares of a Fund are bought within 30 days before or
after redeeming at a loss other shares of that Fund (regardless of class), all
or part of that loss will not be deductible and instead will increase the basis
in the newly purchased shares.
Each
Fund is required by federal law to withhold and remit to the U.S. Treasury 24%
of dividends, capital gain distributions and redemption proceeds, (regardless of
the extent to which gain or loss may be realized) otherwise payable to
non-corporate shareholders who fail to certify that the taxpayer identification
number furnished to the Fund is correct or who furnish an incorrect number
(together with the withholding described in the next sentence, “backup
withholding”). Withholding at that rate also is required from each Fund’s
dividends and capital gain distributions otherwise payable to a non-corporate
shareholder who (1) is subject to backup withholding for failure to report
the receipt of interest or dividend income properly or (2) fails to certify
to the Fund that he or she is not subject to backup withholding or that it is a
corporation or other exempt recipient. Backup withholding is not an additional
tax, and any amounts so withheld may be credited against a shareholder’s federal
income tax liability or refunded.
An
individual is required to pay a 3.8% federal tax on the lesser of (1) the
individual’s “net investment income,” which generally includes dividends,
interest, and net gains from the disposition of investment property (including
dividends and capital gain distributions a Fund pays and net gains realized on
the redemption or exchange of Fund shares), or (2) the excess of the
individual’s “modified adjusted gross income” over a threshold amount ($250,000
for married persons filing jointly and $200,000 for single taxpayers). This tax
is in addition to any other taxes due on that income. A similar tax applies to
estates and trusts. Shareholders should consult their own tax advisers regarding
the effect, if any, this provision may have on their investment in Fund shares.
A
shareholder’s basis in shares of a Fund that he or she acquired or acquires
after December 31, 2011 (“Covered Shares”), will be determined in
accordance with the Funds’ default method, which is average basis, unless the
shareholder affirmatively elects in writing, which may be electronic, to use a
different acceptable basis determination method, such as a specific
identification method. Each Fund, or its administrative agent, must report to
the Internal Revenue Service (“IRS”) and furnish to its shareholders the basis
information for Covered Shares. See “Taxation” in the Statement of Additional
Information for a description of the rules regarding that election and each
Fund’s reporting obligation. Fund shareholders should consult with their tax
advisers to determine the best IRS-accepted basis determination method for their
tax situation and to obtain more information about how the basis reporting law
applies to them.
Dividends
and other distributions each Fund declares, as well as redemption proceeds, may
also be subject to state and local taxes.
The
foregoing summarizes some of the important federal income tax considerations
generally affecting each Fund and its shareholders. Potential investors in a
Fund should see the Statement of Additional Information for further information
regarding the tax consequences of investing in the Fund and consult their tax
advisers with specific reference to their own tax situation.
INDEX
DESCRIPTIONS
The
Bloomberg U.S. Intermediate Government/Credit Bond Index is an unmanaged market
value weighted index measuring both the principal price changes of, and income
provided by, the underlying universe of securities that comprise the index.
Securities included in the index must meet the following criteria: fixed as
opposed to variable rate; remaining maturity of one to ten years; minimum
outstanding par value of $250 million; rated investment grade or higher by
Moody’s Investors Service or equivalent; must be dollar denominated and
non-convertible; and must be publicly issued. A direct investment in an index is
not possible.
The
Lipper International Large-Cap Core Funds Index is an unmanaged index generally
considered representative of international large-cap core mutual funds tracked
by Lipper, Inc. A direct investment in an index is not possible.
The
Lipper Large-Cap Core Funds Index is an unmanaged index generally considered
representative of large cap core mutual funds tracked by Lipper, Inc. A direct
investment in an index is not possible.
The
Lipper Mixed-Asset Target Allocation Growth Funds Index is an unmanaged index
generally considered representative of mutual funds tracked by Lipper, Inc.
that, by portfolio practice, maintain a mix of between 60%-80% equity
securities, with the remainder invested in bonds, cash and cash equivalents. A
direct investment in an index is not possible.
The
Lipper Short Intermediate Investment-Grade Debt Funds Index is an unmanaged
index generally considered representative of short intermediate investment grade
mutual funds tracked by Lipper, Inc. A direct investment in an index is not
possible.
The
Lipper Small-Cap Core Funds Index is an unmanaged index generally considered
representative of small cap core mutual funds tracked by Lipper, Inc. A direct
investment in an index is not possible.
The
Russell 2000®
Index is an unmanaged index which measures the performance of the 2,000 smallest
companies in the Russell 3000®
Index. The Russell 3000®
Index is an unmanaged index that measures the performance of the 3,000 largest
U.S. companies, based on total market capitalization. A direct investment in an
index is not possible.
The
Russell 2500®
Index is an unmanaged index which measures the performance of the 2,500 smallest
companies in the Russell 3000®
Index. The Russell 3000®
Index is an unmanaged index that measures the performance of the 3,000 largest
U.S. companies, based on total market capitalization. A direct investment in an
index is not possible.
The
S&P 500®
Index is an unmanaged capitalization-weighted index of 500 selected stocks that
is generally considered representative of the performance of large
capitalization companies in the U.S. stock market. A direct investment in an
index is not possible.
The
MSCI/EAFE®
Index is an unmanaged index composed of large-cap and mid-cap securities across
21 developed markets, including countries in Europe, Australasia and the Far
East. The MSCI/EAFE®
Index is a recognized international index and is weighted by market
capitalization. A direct investment in an index is not possible.
ADDITIONAL
INFORMATION
The
LKCM Funds (the “Trust”) enters into contractual arrangements with various
parties, including among others, the Funds’ investment adviser, principal
underwriter, custodian and transfer agent who provide services to the Funds.
Shareholders are not parties to any such contractual arrangements or intended
beneficiaries of those contractual arrangements, and those contractual
arrangements are not intended to create in any shareholder any right to enforce
them against the service providers or to seek any remedy under them against the
service providers, either directly or on behalf of the Trust.
This
Prospectus provides information concerning the Funds that you should consider in
determining whether to purchase Fund shares. Neither this Prospectus nor the
Statement of Additional Information is intended, or should be read, to be or
give rise to an agreement or contract between the Trust, the Trustees or any
Fund and any investor, or to give rise to any rights in any shareholder or other
person other than any rights under federal or state law that may not be waived.
Nothing in this Prospectus, the Statement of Additional Information or the
Funds’ reports to shareholders is intended to provide investment advice and
should not be construed as investment advice.
FINANCIAL
HIGHLIGHTS
The
financial highlights tables set forth below are intended to help you understand
each Fund’s financial performance for the past five years, or if shorter, the
period of each Fund’s operations. Certain information reflects financial results
for a single Fund share. The total returns in the tables represent the rates
that an investor would have earned (or lost) on an investment in a Fund
(assuming reinvestment of all dividends and other distributions). This
information has been derived from the Funds’ financial statements and financial
highlights which have been audited by Deloitte & Touche LLP, whose
report, along with the Funds’ financial statements and financial highlights, is
incorporated by reference in the Statement of Additional Information and
included in the Funds’ Annual
Report
for the year ended December 31, 2023, which is available free of
charge upon request.
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LKCM
SMALL CAP EQUITY FUND
|
|
Year
Ended December 31, 2023
|
Year
Ended December 31, 2022
|
Year
Ended December 31, 2021
|
Year
Ended December 31, 2020
|
Year
Ended December 31, 2019
|
Net
Asset Value – Beginning of Period |
$16.37 |
$21.54 |
$21.77 |
$16.78 |
$14.39 |
Net
investment loss |
(0.01)(1) |
(0.04)(1) |
(0.08)(1) |
(0.02)(1) |
(0.02)(1) |
Net
realized and unrealized gain (loss) on investments |
3.71 |
(4.73) |
3.23 |
5.85 |
3.29 |
Total
from investment operations |
3.70 |
(4.77) |
3.15 |
5.83 |
3.27 |
Less
distributions: |
|
|
|
| |
Distributions
from net realized gains |
(0.54) |
(0.40) |
(3.38) |
(0.84) |
(0.88) |
Total
dividends and distributions |
(0.54) |
(0.40) |
(3.38) |
(0.84) |
(0.88) |
Net
Asset Value – End of Period |
$19.53 |
$16.37 |
$21.54 |
$21.77 |
$16.78 |
Total
Return |
22.57% |
-22.11% |
14.49% |
34.79% |
22.70% |
Ratios
and Supplemental Data: |
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Net
assets, end of period (thousands) |
$231,550 |
$170,039 |
$229,199 |
$202,678 |
$180,682 |
Ratio
of expenses to average net assets: |
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Before
expense waiver and/or reimbursement |
1.07% |
1.07% |
1.03% |
1.07% |
1.07% |
After
expense waiver and/or reimbursement |
1.00% |
1.00% |
1.00% |
1.00% |
1.00% |
Ratio
of net investment loss to average net assets: |
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Before
expense waiver and/or reimbursement |
(0.15)% |
(0.30)% |
(0.35)% |
(0.20)% |
(0.20)% |
After
expense waiver and/or reimbursement |
(0.08)% |
(0.23)% |
(0.32)% |
(0.13)% |
(0.13)% |
Portfolio
turnover rate |
28% |
42% |
42% |
60% |
63% |
(1)
Net investment loss per share represents net investment loss divided by the
average shares outstanding throughout the period.
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LKCM
SMALL-MID CAP EQUITY FUND
|
|
Year
Ended December 31, 2023
|
Year
Ended December 31, 2022
|
Year
Ended December 31, 2021
|
Year
Ended December 31, 2020
|
Year
Ended December 31, 2019
|
Net
Asset Value – Beginning of Period |
$7.88 |
$10.97 |
$11.15 |
$9.09 |
$7.92 |
Net
investment loss |
(0.01)(1) |
(0.01)(1) |
(0.06)(1) |
(0.02)(1) |
(0.02)(1) |
Net
realized and unrealized gain (loss) on investments |
2.03 |
(2.43) |
1.77 |
2.80 |
2.48 |
Total
from investment operations |
2.03 |
(2.44) |
1.71 |
2.78 |
2.46 |
Less
distributions: |
|
|
|
| |
Distributions
from net realized gains |
— |
(0.65) |
(1.89) |
(0.72) |
(1.29) |
Total
dividends and distributions |
— |
(0.65) |
(1.89) |
(0.72) |
(1.29) |
Redemption
fees |
0.00(2) |
— |
— |
— |
— |
Net
Asset Value – End of Period |
$9.91 |
$7.88 |
$10.97 |
$11.15 |
$9.09 |
Total
Return |
25.76% |
-22.12% |
15.37% |
30.66% |
31.05% |
Ratios
and Supplemental Data: |
|
|
|
|
|
Net
assets, end of period (thousands) |
$28,494 |
$15,234 |
$14,355 |
$15,108 |
$12,590 |
Ratio
of expenses to average net assets: |
|
|
|
|
|
Before
expense waiver and/or reimbursement |
1.74% |
1.80% |
1.74% |
1.98% |
1.95% |
After
expense waiver and/or reimbursement |
1.00% |
1.00% |
1.00% |
1.00% |
1.00% |
Ratio
of net investment loss to average net assets: |
|
|
|
|
|
Before
expense waiver and/or reimbursement |
(0.77)% |
(0.92)% |
(1.23)% |
(1.25)% |
(1.20)% |
After
expense waiver and/or reimbursement |
(0.03)% |
(0.11)% |
(0.49)% |
(0.27)% |
(0.25)% |
Portfolio
turnover rate |
32% |
50% |
50% |
76% |
68% |
(1)
Net investment loss per share represents net investment loss divided by the
average shares outstanding throughout the period.
(2)
Less
than $(0.005) per share.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
LKCM
EQUITY FUND
|
|
Year
Ended December 31, 2023
|
Year
Ended December 31, 2022
|
Year
Ended December 31, 2021
|
Year
Ended December 31, 2020
|
Year
Ended December 31, 2019
|
Net
Asset Value – Beginning of Period |
$30.99 |
$38.69 |
$33.74 |
$29.02 |
$23.34 |
Net
investment loss |
0.30(
1) |
0.31(
1) |
0.16(
1) |
0.17(
1) |
0.22(1) |
Net
realized and unrealized gain (loss) on investments |
3.62 |
(6.31) |
7.43 |
6.44 |
6.75 |
Total
from investment operations |
3.92 |
(6.00) |
7.59 |
6.61 |
6.97 |
Less
distributions: |
|
|
|
|
|
Dividends
from net investment income |
(0.31) |
(0.30) |
(0.17) |
(0.17) |
(0.23) |
Distributions
from net realized gains |
(0.19) |
(1.40) |
(2.47) |
(1.72) |
(1.06) |
Total
dividends and distributions |
(0.50) |
(1.70) |
(2.64) |
(1.89) |
(1.29) |
Redemption
fees |
— |
0.00(2) |
— |
— |
— |
Net
Asset Value – End of Period |
$34.41 |
$30.99 |
$38.69 |
$33.74 |
$29.02 |
Total
Return |
12.65% |
-15.44% |
22.48% |
22.83% |
29.85% |
Ratios
and Supplemental Data: |
|
|
|
|
|
Net
assets, end of period (thousands) |
$494,677 |
$460,642 |
$542,696 |
$449,653 |
$381,307 |
Ratio
of expenses to average net assets: |
|
|
|
|
|
Before
expense waiver and/or reimbursement |
1.00% |
0.97% |
0.96% |
0.98% |
0.99% |
After
expense waiver and/or reimbursement |
0.80% |
0.80% |
0.80% |
0.80% |
0.80% |
Ratio
of net investment loss to average net assets: |
|
|
|
|
|
Before
expense waiver and/or reimbursement |
0.73% |
0.74% |
0.27% |
0.37% |
0.61% |
After
expense waiver and/or reimbursement |
0.93% |
0.91% |
0.43% |
0.55% |
0.80% |
Portfolio
turnover rate |
10% |
11% |
11% |
10% |
9% |
(1)
Net investment loss per share represents net investment loss divided by the
average shares outstanding throughout the period.
(2)
Less than $(0.005) per share.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
LKCM
BALANCED FUND
|
|
Year
Ended December 31, 2023
|
Year
Ended December 31, 2022
|
Year
Ended December 31, 2021
|
Year
Ended December 31, 2020
|
Year
Ended December 31, 2019
|
Net
Asset Value – Beginning of Period |
$24.29 |
$29.21 |
$26.76 |
$24.22 |
$21.07 |
Net
investment income |
0.28
(1) |
0.26(1) |
0.20(1) |
0.24(1) |
0.27(1) |
Net
realized and unrealized gain (loss) on investments |
2.34 |
(4.30) |
3.54 |
3.42 |
4.32 |
Total
from investment operations |
2.62 |
(4.04) |
3.74 |
3.66 |
4.59 |
Less
distributions: |
|
|
|
| |
Dividends
from net investment income |
(0.29) |
(0.27) |
(0.20) |
(0.24) |
(0.27) |
Distributions
from net realized gains |
(0.62) |
(0.61) |
(1.09) |
(0.88) |
(1.17) |
Total
dividends and distributions |
(0.91) |
(0.88) |
(1.29) |
(1.12) |
(1.44) |
Redemption
fees |
0.00(2) |
0.00(2) |
— |
— |
— |
Net
Asset Value – End of Period |
$26.00 |
$24.29 |
$29.21 |
$26.76 |
$24.22 |
Total
Return |
10.84% |
-13.84% |
14.01% |
15.28% |
21.85% |
Ratios
and Supplemental Data: |
|
|
|
|
|
Net
assets, end of period (thousands) |
$113,667 |
$108,746 |
$144,901 |
$125,507 |
$103,825 |
Ratio
of expenses to average net assets: |
|
|
|
|
|
Before
expense waiver and/or reimbursement |
1.04% |
0.99% |
0.96% |
0.99% |
1.00% |
After
expense waiver and/or reimbursement |
0.80% |
0.80% |
0.80% |
0.80% |
0.80% |
Ratio
of net investment income to average net assets: |
|
|
|
|
|
Before
expense waiver and/or reimbursement |
0.87% |
0.82% |
0.53% |
0.78% |
0.95% |
After
expense waiver and/or reimbursement |
1.11% |
1.01% |
0.69% |
0.97% |
1.15% |
Portfolio
turnover rate |
11% |
13% |
11% |
18% |
17% |
(1)
Net investment income per share represents net investment income divided by the
average shares outstanding throughout the period.
(2)
Less than $(0.005) per share.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
LKCM
FIXED INCOME FUND
|
|
Year
Ended December 31, 2023
|
Year
Ended December 31, 2022
|
Year
Ended December 31, 2021
|
Year
Ended December 31, 2020
|
Year
Ended December 31, 2019
|
Net
Asset Value – Beginning of Period |
$10.10 |
$10.87 |
$11.19 |
$10.92 |
$10.47 |
Net
investment income |
0.24
(1) |
0.16(1) |
0.15(1) |
0.19(1) |
0.25(1) |
Net
realized and unrealized gain (loss) on investments |
0.26 |
(0.77) |
(0.32) |
0.27 |
0.45 |
Total
from investment operations |
0.50 |
(0.61) |
(0.17) |
0.46 |
0.70 |
Less
distributions: |
|
|
|
| |
Dividends
from net investment income |
(0.24) |
(0.15) |
(0.15) |
(0.19) |
(0.25) |
Distributions
from net realized gains |
— |
(0.01) |
(0.00)(2) |
— |
— |
Total
dividends and distributions |
(0.24) |
(0.16) |
(0.15) |
(0.19) |
(0.25) |
Redemption
fees |
0.00(2) |
— |
— |
— |
— |
Net
Asset Value – End of Period |
$10.36 |
$10.10 |
$10.87 |
$11.19 |
$10.92 |
Total
Return |
4.98% |
-5.63% |
-1.54% |
4.29% |
6.70% |
Ratios
and Supplemental Data: |
|
|
|
| |
Net
assets, end of period (thousands) |
$286,492 |
$275,387 |
$295,745 |
$289,857 |
$275,917 |
Ratio
of expenses to average net assets: |
|
|
|
|
|
Before
expense waiver and/or reimbursement |
0.81% |
0.79% |
0.78% |
0.79% |
0.79% |
After
expense waiver and/or reimbursement |
0.50% |
0.50% |
0.50% |
0.50% |
0.50% |
Ratio
of net investment income to average net assets: |
|
|
|
|
|
Before
expense waiver and/or reimbursement |
2.02% |
1.25% |
1.05% |
1.46% |
2.02% |
After
expense waiver and/or reimbursement |
2.33% |
1.54% |
1.33% |
1.75% |
2.31% |
Portfolio
turnover rate |
23% |
21% |
31% |
46% |
37% |
(1) Net
investment income per share represents net investment income divided by the
average shares outstanding during the period.
(2) Less
than $(0.005) per share.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
LKCM
INTERNATIONAL EQUITY FUND |
|
Year
Ended December 31, 2023
|
Year
Ended December 31, 2022
|
Year
Ended December 31, 2021
|
Year
Ended December 31, 2020
|
May 1, 2019(1) through December 31, 2019
|
Net
Asset Value, Beginning of Period |
$11.08 |
$14.50 |
$12.44 |
$10.89 |
$10.00 |
Net
investment income |
0.19(2) |
0.45(2) |
0.10(2) |
0.03(2) |
0.02(2) |
Net
realized and unrealized gain on investments |
1.59 |
(3.42) |
2.14 |
1.54 |
0.88 |
Total
from investment operations |
1.78 |
(2.97) |
2.24 |
1.57 |
0.90 |
Less
distributions: |
|
|
|
|
|
Dividends
from net investment income |
(0.18) |
(0.30) |
(0.08) |
(0.02) |
(0.01) |
Distributions
from return of capital |
— |
— |
— |
(0.00)(3) |
— |
Distributions
from net realized gains |
— |
(0.15) |
(0.10) |
— |
(0.00)(3) |
Total
dividends and distributions |
(0.18) |
(0.45) |
(0.18) |
(0.02) |
(0.01) |
Net
Asset Value, End of Period |
$12.68 |
$11.08 |
$14.50 |
$12.44 |
$10.89 |
Total
return |
16.09% |
-20.51% |
18.00% |
14.45% |
8.97%(4) |
Ratios
and Supplemental Data: |
|
|
|
|
|
Net
assets, end of period (thousands) |
$60,245 |
$45,009 |
$55,504 |
$32,295 |
$10,645 |
Ratio
of expenses to average net assets: |
|
|
|
|
|
Before
expense waiver and/or reimbursement |
1.41% |
1.45% |
1.40% |
1.88% |
4.09%(5) |
After
expense waiver and/or reimbursement |
1.00% |
1.00% |
1.00% |
1.00% |
1.00%(5) |
Ratio
of net investment income (loss) to average net assets: |
|
|
|
|
|
Before
expense waiver and/or reimbursement |
1.17% |
3.35% |
0.29% |
(0.55)% |
(2.76)%(5) |
After
expense waiver and/or reimbursement |
1.58% |
3.80% |
0.69% |
0.33% |
0.33%(5) |
Portfolio
turnover rate |
11% |
26% |
15% |
6% |
2%(4) |
(1) Commencement
of operations.
(2) Net
investment income per share represents net investment income divided by the
average shares outstanding during the period.
(3) Less
than $(0.005) per share.
(4) Not
annualized.
(5) Annualized.
LKCM
Funds
FOR
MORE INFORMATION
You
may obtain the following and other information on the LKCM Funds free of charge:
Annual
and Semi-Annual Reports to Shareholders
The
financial statements included in the Funds’ annual report are incorporated
herein by reference.
The annual and semi-annual reports and Form N-CSR provide the Funds’ most recent
financial reports and portfolio listings. The annual report contains a
discussion of the market conditions and investment strategies that affected the
Funds’ performance during the last fiscal year.
Statement
of Additional Information (SAI) dated May 1, 2024, as it may be
supplemented from time to time
The
SAI is incorporated into this Prospectus by reference (i.e.,
legally
made a part of this Prospectus). The SAI provides more details about the Funds’
policies and management.
TO
RECEIVE ANY OF THESE DOCUMENTS FREE OF CHARGE OR MAKE INQUIRIES TO THE FUNDS:
By
Telephone:
1-800-688-LKCM
By
Mail:
LKCM
Funds
c/o
U.S. Bank Global Fund Services
P.O.
Box 701
Milwaukee,
Wisconsin 53201-0701
From
the Funds’ Website:
You
can access the Funds’ SAI, Annual Report and Semi-Annual Reports on the Funds’
website at: www.lkcmfunds.com.
On
the Internet:
Electronic
versions of Fund documents can be viewed online or downloaded free from the
EDGAR database on the SEC’s Internet site at: www.sec.gov.
From
the SEC:
You
may write to the SEC Public Reference Room at the regular mailing address or the
e-mail address below and ask them to mail you information about the Funds,
including the SAI. They will charge you a fee for this duplicating service.
Public
Reference Section
Securities
and Exchange Commission
Washington,
D.C. 20549-1520
Investment
Company Act File # 811-08352