company’s significant investment in content in recent years will
likely result in higher cash flow growth going forward.
Our Real Estate holdings were a source of relative strength during
the quarter, outperforming the benchmark’s sector return by 0.6%.
An overweight position in CBRE Group was the primary contributor,
with shares rising 13.6% during the quarter. CBRE is the world’s
largest commercial real estate advisory and leasing company,
operating in more than 100 countries. While leasing activity is
slowly increasing, CBRE’s advisory business has experienced robust
growth.
Our Consumer Discretionary holdings declined 1.8% during the
quarter, trailing the benchmark’s return. The portfolio was
impacted by cyclical holdings such as V.F. Corporation, an apparel
manufacturer, and BorgWarner, an auto parts maker, as the Delta
variant of COVID-19 raised concerns about economic growth. An
underweight position in Tesla also weighed on relative performance.
The company’s electric vehicle and battery products continue to
resonate with investors, despite the stock’s extraordinary
valuation. We remain comfortable with our position despite the
recent strength.
The Consumer Staples sector was also a relative detractor as the
return on our sector holdings trailed the benchmark’s by 1.4%. Most
of this weakness was caused by Lamb Weston Holdings, one of the
world’s largest producers of french fries. While demand began to
rebound as economic activity increased, cost pressures have
significantly dampened the margin outlook for the foreseeable
future.
For the nine months ended September 30, 2021, the total return on
the Fund’s net asset value (“NAV”) per share (with dividends and
capital gains reinvested) was 14.9%. This compares to a 15.9% total
return for the S&P 500 and a 14.9% total return for the Lipper
Large-Cap Core Funds Average over the same time period. The total
return on the market price of the Fund’s shares for the period was
15.4%.
For the twelve months ended September 30, 2021, the Fund’s total
return on NAV was 28.2%. Comparable figures for the S&P 500 and
Lipper Large-Cap Core Funds Average were 30.0% and 28.6%,
respectively. The Fund’s total return on market price for the
period was 29.4%.
During the first nine months of this year, the Fund paid
distributions to shareholders in the amount of $16.7 million, or
$.15 per share, consisting of $.02 net investment income and $.02
long-term capital gain, realized in 2020, and $.11 of net
investment income realized in 2021, all taxable in 2021. These
constitute the first three payments toward our annual 6.0% minimum
distribution rate commitment.
