Kirr Marbach Partners Value Fund (KMVAX) N-CSRSCertified semi-annual shareholder report (management investment company)

May 16, 2024

Dear Fellow Shareholders:

U.S. stocks posted exceptionally strong performance in the first calendar quarter of 2024, building on the significant gains from the fourth quarter of 2023 and capping a 12-month period that saw the S&P 500 Index generate a total return of 29.8%. Corporate earnings remain healthy, the economy has apparently dodged a long-feared deep recession (the Conference Board’s Leading Economic Index (LEI), a composite index comprised of 10 economic indicators designed to predict the future health of the economy turned positive in February, ending a streak of 23 straight months of declines dating back to March 2022), employment is solid and the Federal Reserve remains poised to reduce interest rates, albeit the start will likely be later and number of cuts smaller than originally hoped. The S&P 500 Index posted a total return of 10.6% in the first quarter, which Wall Street research firm CFRA said was the 11th best first calendar quarter showing since 1945. Further, the S&P 500 set 22 new all-time highs, the sixth-greatest Q1 count since WWII.

Even better, the market’s advance in the first calendar quarter of 2024 was more broad-based than it was in 2023, when the “Magnificent Seven” stocks accounted for a massively disproportionate share of S&P 500 performance, meaning Value Fund experienced good absolute and relative performance. Further, the gains have come with very low volatility. According to Bespoke Investment Group, the S&P 500 has gone over 100 trading days without a 2% decline, only the eighth time since 1952 the S&P 500 has gone that long or longer without a pullback of that magnitude.

Putting it all together, the stock market over the past several months has been a high-return, low-volatility unicorn. While this type of blissful environment is certainly enjoyable, it will come to an end next week, next month or even later. It would be wise to keep overconfidence and cockiness in check, as “the market” has a way of punishing those who fly too close to the sun. The last time investors savored a similar high-return, low-volatility treat was 2021. Financial markets are impossible to forecast and we’re not predicting ensuing indigestion like 2022, but realize we’re heading into a political storm, our nation’s spending and level of debt remain out of control (and will only get worse in an election year), inflation and interest rates are still too high and geopolitical turmoil abounds around the world.

Now that a November rematch between President Joe Biden and former President Donald Trump is a fait accompli, it’s time for investors to prepare themselves mentally for the impending political storm. We never make predictions, particularly in writing, but it’s a sure bet the vitriol and partisan political assault we’re all going to be bombarded with over the next seven months will make 2020 seem like a songfest around the campfire.

Both Biden and Trump (and their supporters) predict doom if the other is elected. Information is filtered through the lens of confirmation bias, our tendency to give too much weight to findings that support our existing beliefs. Unfortunately, it’s increasingly rare for folks (including us) to listen openly to opposing views, let alone seek out alternate perspectives and attempt to understand.

Unfortunately, as our country has become even more politically polarized, people tend to seek comfort in print, TV and social media “echo chambers.” As Simon & Garfunkel sang in The Boxer, “a man hears what he wants to hear and disregards the rest.”

As the partisan storm increases in intensity over the coming months, you may be tempted to make changes to your portfolio because of how you believe a short-term event like an election will impact the financial markets. Don’t. Making an anxiety-based change because of your political beliefs will be harmful to the long-term health of your portfolio.

The president is only one of many factors that influence the market. Others, including corporate profitability, interest rates and inflation may have more impact than who resides in the White House.

Sam Stovall, Chief Investment Strategist for CFRA, dissected price changes for the S&P 500 going back to 1945 based on election results.

Republican administrations are generally viewed as “pro-business” and conventional wisdom is stocks do better with a Republican in the White House. There has, indeed, been a huge difference in returns during Democratic vs. Republican administrations. However, as is often the case, conventional wisdom is wrong. Past performance is no guarantee of future results, but Stovall calculated from Harry Truman’s inauguration on April 12, 1945 through March 15, 2024, the average annual return for the S&P 500 was 44% higher with Democrats in the White House (9.5% vs. 6.6% during Republican administrations).

Further, according to Invesco and Haver Analytics, hypothetically speaking, the best-performing portfolio from 1900 to 2023 was the “bi-partisan” one that stayed fully-invested in the Dow Jones Industrial Average (a price-weighted index (cannot be invested in directly) of the 30 largest, most widely held stocks traded on the New York Stock Exchange) during both Democratic and Republican administrations. Again, past performance is no guarantee of future results, but starting with an initial $10,000 investment, this portfolio grew to almost $9.9 million.

Conversely, a “partisan” portfolio, invested only during Democratic or Republican administrations underperformed by millions of dollars. The same initial $10,000 invested only during Democratic administrations grew to about $528,000. Invested only during Republican administrations, the initial $10,000 investment grew to a bit less than $181,000.

As you can see, there can be a huge cost to letting a partisan political storm crash your portfolio. Develop an investment plan based on your long-term goals and stick to it. Your financial future will depend far more on how much you save and invest, not who wins the election.

The 15th Anniversary of the Global Financial Crisis (GFC) bear market low came and went with little fanfare or even notice. The S&P 500 went from 1565.25 on October 9, 2007 to 676.53 on March 9, 2009, a brutal 17-month decline of almost 57%. The GFC was the greatest economic crisis since the Great Depression. Economic activity was crushed, millions of jobs were lost and retirement savings decimated. Fear and despair ruled the day, as you can see in the online post from The Wall Street Journal after the market close on March 9, 2009.

The GFC was the most severe test of investor fortitude since the Great Depression. In times of extreme stress our basic survival instinct kicks in, so it’s not surprising many well-intentioned investors sold on the way down. As you can tell from the article, there was absolutely nothing to suggest the stock market had reached a bottom on March 9, 2009. That’s how it always is. The Dow Jones Industrial Average reached 39,807.37 at the end of the first quarter of 2024 (up 508% since March 9, 2009), the S&P 500 5254.35 (up 677%) and Nasdaq Composite 16,379.46 (up 1191%).

The rub is only those with the fortitude to hold reaped the rewards. As our friend Jay Mooreland, CFP of the Behavioral Finance Network says, “selling during scary and uncertain times usually is referred to as ‘getting to safety.’ While getting to safety provides an immediate psychological benefit, it often results in a very real financial cost. Next time you feel the need to ‘get to safety’ perhaps it can be re-framed as ‘reducing my future return.’ Because no one sells and gets back in at the bottom. The only way to participate in all the gains of the market is to ride out all the temporary losses that come along the way.”

“When markets are scary, uncertain and the outlook is dire, the natural reaction is to sell,” Moreland continued. Our fortitude has been tested many times since March 9, 2009. We can assure you it will be tested many more times in the months and years ahead. Realize as investors this volatility is a normal part of our journey and what we’ve all signed-up for. Holding through the inevitable and occasional difficult periods so we can let the “Miracle of Compound Interest” work its magic is hard, but that’s why you have us in your corner!

Fund holdings and sector allocations are subject to change and are not recommendations to buy or sell any security.

Regards,

The Dow Jones Industrial Average is an unmanaged, price-weighted index of the 30 largest, most widely held stocks traded on the New York Stock Exchange. This index cannot be invested in directly.

The Nasdaq Composite Index is an unmanaged, capitalization-weighted index that measures the performance of more than 3,000 securities that are all listed on the Nasdaq stock market. This index cannot be invested in directly.

The Conference Board Leading Economic Index^® (LEI) for the U.S. is one of the key elements in an analytic system designed to signal peaks and troughs in the business cycle. The leading, coincident, and lagging economic indexes are essentially composite averages of several individual leading, coincident, or lagging indicators. They are constructed to summarize and reveal common turning point patterns in economic data in a clearer and more convincing manner than any individual component – primarily because they smooth out some of the volatility of individual components. The ten components of Leading Economic Index for the U.S. include:

Please refer to the Schedule of Investments for complete fund holdings information.

The information provided herein represents the opinion of Value Fund’s investment adviser and is not intended to be a forecast of future events, a guarantee of future results, nor investment advice.

This material must be preceded or accompanied by a current Prospectus.

Quasar Distributors, LLC is the Distributor for Value Fund.

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (October 1, 2023 – March 31, 2024).

The first line of the table below provides information about actual account values and actual expenses. Although the Fund charges no sales load or transaction fees, you will be assessed fees for outgoing wire transfers, returned checks and stop payment orders at prevailing rates charged by U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services, the Fund’s transfer agent. If you request that a redemption be made by wire transfer, currently a $15.00 fee is charged by the Fund’s transfer agent. You will be charged a transaction fee equal to 1.00% of the net amount of the redemption if you redeem your shares within 30 days of purchase. IRA accounts will be charged a $15.00 annual maintenance fee. To the extent the Fund invests in shares of other investment companies as part of its investment strategy, you will indirectly bear your proportionate share of any fees and expenses charged by the underlying funds in which the Fund invests in addition to the expenses of the Fund. Actual expenses of the underlying funds are expected to vary among the various underlying funds. These expenses are not included in the example below. The example below includes, but is not limited to, management fees, shareholder servicing fees, fund accounting, custody and transfer agent fees. However, the example below does not include portfolio trading commissions and related expenses, interest expense and other extraordinary expenses as determined under generally accepted accounting principles. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

Kirr, Marbach Partners Funds, Inc. (the “Corporation”) was organized as a Maryland corporation on September 23, 1998 and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end diversified management investment company issuing its shares in series, each series representing a distinct portfolio with its own investment objective and policies. The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 “Financial Services-Investment Companies.” The one series presently authorized is Kirr, Marbach Partners Value Fund (the “Fund”). The investment objective of the Fund is to seek long-term capital growth. The Fund commenced operations on December 31, 1998.

The following is a summary of significant accounting policies consistently followed by the Fund. These policies are in conformity with generally accepted accounting principles in the United States of America (“GAAP”).

The aggregate purchases and sales of securities, excluding short-term investments, by the Fund for the period ended March 31, 2024, were as follows:

At September 30, 2023, the Fund’s most recently completed fiscal year end, the components of distributable earnings on a tax basis were as follows:

As of September 30, 2023, the Fund’s most recently completed fiscal year end, the Fund did not have any capital loss carryovers. A regulated investment company may elect for any taxable year to treat any portion of any qualified late year loss as arising on the first day of the next taxable year. Qualified late year losses are certain capital, and ordinary losses which occur during the portion of the Fund’s taxable year subsequent to October 31. For the taxable year ended September 30, 2023, the Fund deferred $134,518 in qualified late year losses.

The tax character of distributions paid during the period ended March 31, 2024, were as follows:

The tax character of distributions paid during the year ended September 30, 2023, were as follows:

The Fund has entered into an Investment Advisory Agreement with Kirr, Marbach & Company, LLC (the “Investment Adviser”). Pursuant to its advisory agreement with the Fund, the Investment Adviser is entitled to receive a fee, calculated daily and payable monthly, at the annual rate of 1.00% as applied to the Fund’s daily net assets.

The Investment Adviser has contractually agreed to waive its management fee and/or reimburse the Fund’s other expenses to the extent necessary to ensure that the Fund’s total annual operating expenses (excluding acquired fund fees and expenses, interest, taxes, brokerage commissions and extraordinary expenses) do not exceed 1.45% of its average daily net assets until February 28, 2025. The Investment Adviser may decide to continue the agreement, or revise the total annual operating expense limitations after February 28, 2025. Any waiver or reimbursement is subject to later adjustment to allow the Investment Adviser to recoup amounts waived or reimbursed to the extent actual fees and expenses for a period are less than the expense limitation cap of 1.45%, provided, however, that the Investment Adviser shall only be entitled to recoup such amounts for a period of thirty-six months following the date on which such fee waiver or expense reimbursement was made. Waived/reimbursed fees and expenses subject to potential recovery by month of expiration are as follows:

As of March 31, 2024, it was possible, but not probable, those amounts would be recovered by the Investment Adviser. At the end of each fiscal year in the future, the Fund will continue to assess the potential recovery of waived/reimbursed fees and expenses for financial reporting purposes.

Quasar Distributors, LLC, (the “Distributor”), a wholly-owned broker-dealer subsidiary of Foreside serves as principal underwriter of the shares of the Fund and is not affiliated with U.S. Bancorp. The Fund’s shares are sold on a no-load basis and, therefore, the Distributor receives no sales commission or sales load for providing services to the Fund. The Corporation has adopted a plan pursuant to Rule 12b-1 under the 1940 Act (the “12b-1 Plan”), which authorizes the Corporation to pay the Distributor and certain financial intermediaries who assist in distributing the Fund shares or who provided shareholder services to Fund shareholders a distribution and shareholder servicing fee of up to 0.25% of the Fund’s average daily net assets (computed on an annual basis). All or a portion of the fee may be used by the Fund or the Distributor to pay its distribution fee and costs of printing reports and prospectuses for potential investors and the costs of other distribution and shareholder servicing expenses. During the period ended March 31, 2024, the Fund incurred expenses of $29,510 pursuant to the 12b-1 Plan.

U.S Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (the “Administrator”), serves as transfer agent, administrator and accounting services agent for the Fund. U.S. Bank, N.A. serves as custodian for the Fund.

The Fund imposes a 1.00% redemption fee on shares held 30 days or less. For the period ended March 31, 2024 and the year ended September 30, 2023, the Fund did not collect any redemption fees.

On November 21, 2023, at an in-person meeting of the Board of Directors of the Kirr, Marbach Partners Fund, Inc. (the “Corporation”), the directors, including a majority of the disinterested directors, approved the continuation of the investment advisory agreement dated June 10, 2005 (the “Advisory Agreement”) between the Corporation and Kirr, Marbach & Company, LLC (the “Adviser”). It was noted that, as described in the Adviser’s memorandum, the Adviser has significant experience providing investment advice and is qualified to provide investment advisory services to the Fund. In addition, it was noted that the Adviser promoted a culture of compliance. The directors noted the Fund had improving returns versus its benchmark especially for the one-year and three-year periods ending September 30, 2023. The directors considered the Adviser’s explanation for the Fund’s overall performance, as well as the Adviser’s value-based philosophy and long-term history of rebounding from periods of underperformance. The directors also noted that a significant percentage of the Fund is owned by Adviser insiders and therefore the directors feel that the Adviser’s interests are aligned with other Fund shareholders. The directors considered information relating to the Fund’s fees, costs and expense ratios and compared such fees, costs and expense ratios to competitive industry fee structures and expense ratios. Specifically, the directors reviewed charts prepared by the administrator based on data compiled by a nationally recognized third-party comparative data provider. In connection with this, the directors also considered the control of the Fund’s operating expenses through the expense cap agreement and noted that the current expense cap agreement maintains an overall reasonable total expense level as evidenced by the comparative data presented at the meeting. In addition, the Board noted that the Adviser is providing substantially similar investment advisory services to the Fund and its other separate account clients and, with the current expense cap arrangement in place, is providing such services to the Fund at substantially similar rates to those charged to the Adviser’s other clients. The directors considered whether the Adviser would receive any fall-out benefits through its relationship with the Fund, and it was noted that because none of the other service providers to the Fund are affiliated with the Adviser, there are no identifiable material fall-out benefits accruing to the Adviser. The directors considered the Adviser’s cost of providing services to the Fund and the profitability of its relationship to the Fund. It was noted that the Adviser’s profitability was in line with its profitability for providing investment advice to its separate account clients given the current expense cap agreement, and the directors noted that the Adviser’s profit in connection with its services to the Fund appeared reasonable. The directors considered whether economies of scale were being realized that could justify reduced expenses for the Fund. It was noted that current asset levels decreased from the prior year. During the deliberations, the disinterested directors did not identify any single consideration or particular piece of information that was all important or controlling in determining whether to approve the Advisory Agreement. The disinterested directors evaluated all information presented to them and determined that the compensation paid to the Adviser under the Advisory Agreement was fair and reasonable in light of the services to be performed.

Kirr Marbach & Company, LLC, as liquidity risk management program administrator and Adviser to the Fund provided an annual report to the Board on the adequacy of the Adviser’s Liquidity Risk Management Program (LRMP) and the effectiveness of its implementation at the Board’s Quarterly meeting on November 21, 2023. At that Meeting, the Adviser discussed with the Board its annual review and assessment of the Fund’s liquidity risk in accordance with, and taking into account the factors identified in the LRMP, and confirmed to the Board the following information related to the LRMP.

The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Part F of Form N-PORT, which is available on the SEC’s website at www.sec.gov. The Fund’s Part F of Form N-PORT may be reviewed and copied at the SEC’s Public Reference Room in Washington D.C. For information on the Public Reference Room call 1-800-SEC-0330.

Both a description of the Fund’s Proxy Voting Policies and Procedures and information about the Fund’s proxy voting record will be available (1) without charge, upon request, by calling 1-800-870-8039, and (2) on the SEC’s website at www.sec.gov.