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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File number: 811-06136
HOMESTEAD FUNDS, INC.
(Exact name of registrant as specified in charter) |
4301 Wilson Boulevard
Arlington, VA 22203
(Address of principal executive office – Zip code)
Kelly Bowers Whetstone, Esq.
Homestead Funds, Inc.
4301 Wilson Boulevard
Arlington, VA 22203
(Name and address of agent for service)
Copies to:
Bibb L. Strench, Esq.
Seward & Kissel LLP
901 K Street, NW
Washington, DC 20001
(Name and addresses of agent for service)
Registrant’s telephone number, including area code: (703) 907-5953
Date of fiscal year end: December 31
Date of reporting period: June 30, 2013
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Item 1. Reports to Stockholders.
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4301 WILSON BOULEVARD
ARLINGTON, VA 22203-1860
1-800-258-3030
www.homesteadfunds.com
July 15, 2013
Dear Shareholders:
The six months ending June 30, 2013, were set against a backdrop of muted inflation, improvement in labor market conditions (although the unemployment rate remains elevated) and signs of stronger economic growth in the U.S. The outlook for growth in Europe was less positive, and, in China, industrial production and export growth slowed.
Long-term, patient investors were rewarded in the first half of the year, with most broad market indexes posting strong positive returns. May brought the seventh straight month of advances for the unmanaged Standard & Poor’s 500® Index, before the index reversed course in June. All five Homestead equity funds posted positive returns for the six-month period; all three of our domestic equity funds posted positive double-digit returns.
The Federal Reserve (the Fed) continued its highly accommodative monetary policy; however interest rates began to move higher late in the second quarter as investors focused on the likelihood of reduced stimulus. The Fed has said that it expects to keep rates at low levels through 2015 and continues to aggressively buy bonds as part of its quantitative easing (QE) campaign.
How the Fed will eventually wind down its bond-buying program has been at the forefront of investors’ concerns, and, in June, Chairman Ben Bernanke suggested that purchases might begin to taper off later in 2013. This glimpse of an end to QE triggered an immediate jump in bond yields and corresponding decline in prices. Equity markets also retreated in June but remained positive for the quarter and year-to-date.
Interest rates have been at extremely low levels for a protracted period of time and will eventually normalize. We expect normalization will be a multi-stage process, not an immediate surge to an above-average rate environment. The policy statement from the last Federal Open Market Committee meeting clarifies that the Committee anticipates that keeping rates at very low levels will be appropriate “for a considerable time after the asset purchase program ends and the economic recovery strengthens.” The current target for the federal funds rate is a very low 0 to .25%.
Still, with nowhere to go but up, interest rates must eventually trend higher and bond prices will decline. The degree of interest rate sensitivity (potential for gain or loss) varies. Prices of short-term bonds will decline less in response to a rise in rates than those of longer term bonds. Also, at the short-term end of the maturity spectrum, investors’ capital is returned sooner. In a rising rate environment, that provides an opportunity to reinvest in higher yielding securities.
To widen the lens beyond the point of view of the bond owner, we have had very low rates for an extended period of time and a return to normal levels is not all bad news. It suggests confidence in the strength of the economy and provides some reward for savers—both positive for rebuilding household wealth and providing a solid footing for future financial market performance.
We appreciate your investment in Homestead Funds and welcome the opportunity to talk with you about your portfolio. Please contact a Client Service Associate at 1-800-258-3030.
Sincerely,
Peter R. Morris
President and CEO
Must be preceded or accompanied by a prospectus. RE Investment Corporation, Distributor: 7/2013
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Daily Income Fund (HDIXX)
Short-Term Government Securities Fund (HOSGX)
Short-Term Bond Fund (HOSBX)
Stock Index Fund (HSTIX)
Value Fund (HOVLX)
Growth Fund (HNASX)
Small-Company Stock Fund (HSCSX)
International Value Fund (HISIX)
semi-annual report
JUNE 30,
2013
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PERFORMANCE EVALUATION | ||||
2 | ||||
Short-Term Government Securities Fund and Short-Term Bond Fund | 4 | |||
8 | ||||
10 | ||||
12 | ||||
14 | ||||
16 | ||||
18 | ||||
20 | ||||
PORTFOLIO OF INVESTMENTS | ||||
21 | ||||
23 | ||||
27 | ||||
37 | ||||
38 | ||||
39 | ||||
41 | ||||
43 | ||||
46 | ||||
48 | ||||
50 | ||||
FINANCIAL HIGHLIGHTS | ||||
52 | ||||
53 | ||||
54 | ||||
55 | ||||
56 | ||||
57 | ||||
58 | ||||
59 | ||||
60 | ||||
65 | ||||
66 |
The investment commentaries on the following pages were prepared for each fund by its portfolio manager. The views expressed are those of the portfolio manager for each fund as of June 30, 2013, and may have changed since that date. The opinions stated may contain forward-looking
statements and may discuss the impact of domestic and foreign markets, industry and economic trends and governmental regulations of the funds and their holdings. Such statements are subject to uncertainty, and the impact on the funds might be materially different from what is described here.
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PERFORMANCE EVALUATION
MARKET CONDITIONS
So far in 2013, the Federal Reserve (the Fed) has continued its policy of maintaining historically low short-term interest rates; a policy initially established in December 2008 with the goal of stimulating economic activity. While economic conditions have improved over the past four years, growth remains subdued. Therefore, into the fifth calendar year, the Fed continues to hold the target rate for the federal funds rate at between 0.0% and 0.25%.
The Fed bases its policies on measures of economic growth. Economic growth, as measured by GDP, was 1.8% in the first quarter, an improvement from 0.4% in the fourth quarter of 2012, but far below potential. The unemployment rate fell marginally from 7.8% at the end of 2012 to 7.6% in June, reflecting very modest improvement in the labor markets. Based on this data, at its most recent meeting the Fed reaffirmed its intention to keep short-term interest rates at a low level through 2015.
Corporate cash balances continued to remain high, which reduced the need for issuance of short-term debt of the type in which the Daily Income Fund invests. Limited supply also worked to keep a lid on yields. With investors competing for limited issuance, prices were driven higher and yields lower.
FUND PERFORMANCE
The Daily Income Fund earned an annualized return of 0.01% for the first half of 2013. The seven-day effective annualized yield was 0.01% at June 30, 2013,
unchanged from the end of 2012. Interest income for the Fund is netted against operating expenses. With interest income at historic lows, the Fund’s investment adviser RE Advisers voluntarily continues to waive fees and/or reimburse expenses to assist the Fund in maintaining a positive yield. As long as the Federal Reserve continues to maintain a federal funds rate close to zero, the Daily Income Fund will continue to earn very little interest income.
At mid-year 2013, the Fund’s exposure to commercial paper was closer to its historical range and above its position at year-end 2012. This was a function of supply conditions normalizing after year-end positioning by borrowers. Companies issuing commercial paper—short-term notes used to finance accounts payable, inventories and other immediate obligations—adjust their issuance in response to changing cash flow needs and fluctuations in yields on comparable securities.
OUTLOOK
With the Fed essentially maintaining a wait-and-see attitude regarding short-term interest rates, investors in the Daily Income Fund can anticipate a stable share price but little investment return until economic activity surprises to the upside, credit demand increases, the unemployment rate dips below 6.5% and the Federal Reserve shifts from an accommodative policy to a neutral policy.
We appreciate your investment with Homestead Funds.
2 | Performance Evaluation |
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Daily Income Fund
AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Year | 10 Year | |||||||||
periods ended 06/30/13 | ||||||||||||
Daily Income Fund | 0.01% | 0.23% | 1.47% | |||||||||
The returns quoted in the above table represent past performance, which is no guarantee of future results. Current performance may be higher or lower than that shown above. Returns and the principal value of your investment may be worth more or less than its original cost. An investment in the Daily Income Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. While the Daily Income Fund seeks to maintain a constant $1.00 per share price, it is possible to lose money investing in the Fund. The Daily Income Fund's average annual total returns are net of any fee waivers and reimbursements. Returns do not reflect taxes that the shareholder may pay on Fund distributions or the redemption of Fund shares. |
YIELD | ||||||||||
Annualized 7-day effective yield quoted 06/30/13 | 0.01% | |||||||||
SECURITY DIVERSIFICATION | on 12/31/12 | on 06/30/13 | ||||||||
(% of total investments) | ||||||||||
Commercial paper | 59.3% | 75.6% | ||||||||
U.S. Government obligations | 21.0% | 15.5% | ||||||||
Corporate bonds | 10.1% | 1.4% | ||||||||
Short-term and other assets | 9.6% | 7.5% | ||||||||
Total | 100.0% | 100.0% | ||||||||
MATURITY | on 12/31/12 | on 06/30/13 | ||||||||
Average Weighted Maturity | 46 days | 44 days |
Performance Evaluation | 3 |
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PERFORMANCE EVALUATION
Short-Term Government Securities and
Short-Term Bond Funds
MARKET CONDITIONS
The bond market started off the year in a rather directionless fashion as the Federal Reserve’s zero interest rate policy and bond buying programs (QE3) continued to anchor market expectations that interest rates would remain low for the foreseeable future. While the primary beneficiaries of low interest rates—housing and autos—continued to rebound throughout the first half, other factors weighed on investors’ minds to more than offset any fears of a strong economy. Such factors included sequestration, Europe’s recession, Japanese monetary stimulus, China’s crackdown on its shadow banking system and low inflation. Treasury yields had declined to their 2013 lows in early May when the release of the April 30 – May 1 Federal Open Market Committee (FOMC) minutes suggested that the Fed’s bond buying program could be raised or lowered depending on the outlook for employment or inflation. The market assumed less bond buying was more likely and yields started to climb. Further damage was done on June 19 during Fed Chairman Ben Bernanke’s post-FOMC meeting press conference when he discussed the timetable for ending QE3 by reducing bond purchases later this year and concluding the program by the middle of 2014. While Bernanke stressed that the program’s wind-down was still data dependent, the market had heard enough and rates again moved higher over the next few days. While various Fed “talking heads” tried to explain Bernanke’s comments and soothe the market’s nerves, this was met with only limited success as June came to a close.
GDP continues to expand but rather modestly at a 1.6% rate for the year ended March 31, 2013, as compared to 2.4% for the year earlier period. While this growth has generated an average of 202,000 job gains per month this year, as compared to 185,000 in the year earlier period, this still leaves employment roughly 2.2 million below the January 2008 peak. The unemployment rate declined modestly to 7.6% in June from December’s 7.8%, while the broader U-6 unemployment rate fell
slightly to 14.3% from 14.4% at year end. (The U-6 rate includes those who have given up looking for work and those working part-time in lieu of full-time.) The Consumer Price Index (CPI) rose at a 1.4% rate for the year ended May 2013 as compared to 1.7% for calendar year 2012, while the core CPI (excluding the volatile food and energy sectors) rose 1.7% and 1.9%, respectively, for the same time periods.
The ISM Manufacturing Index averaged 51.5 for the first half of 2013, a modest decline from the same period last year when the index averaged 52.6. While still in expansion territory, the index is well off of its recovery peak of 59.6 seen in February 2011. In spite of the appearance of moderating economic activity, U.S. auto sales averaged a strong 15.3 million rate in the first half of 2013 as compared to 14.1 million during 2012’s first half. Existing home sales have averaged a respectable 5.00 million annual rate as compared to 4.52 million annual rate in the year ago period. While easier financing has undoubtedly played a role in the continuing auto and housing recovery, rising consumer confidence may be as important. The University of Michigan consumer sentiment index averaged 79.2 for the first half of 2013, as compared to 75.9 in last year’s first half.
The FOMC continues to maintain its federal funds rate target—the one interest rate it can absolutely control—in a range of 0.00% to 0.25%. The June 18-19, 2013, FOMC meeting minutes reaffirm the Fed’s pledge to keep the fed funds rate within the current range as long as the unemployment rate remains above 6.5% and inflation over the next two years is projected to be no more than 50 basis points above the FOMC’s 2.0% goal.
FUND PERFORMANCE
The Short-Term Government Securities Fund returned -0.65% for the first half of 2013 compared to the benchmark’s return of -0.54%. While the asset-backed, mortgage and government agency sectors exceeded the benchmark return, the municipals and corporate sectors
4 | Performance Evaluation |
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underperformed, with the corporate sector providing the largest drag due to the concentration of export-import bank guaranteed aircraft financing vehicles within the sector’s securities.
The Short-Term Bond Fund returned 0.89% for the first half compared to the benchmark’s return of -0.50%. While the municipal and government-agency sectors were a relative drag on performance compared to the benchmark, the asset-backed and particularly the mortgage sectors had strong positive returns for the first half of the year. While there was some modest credit spread widening in 2013’s first half, which hurt returns slightly, the continued demand for higher yielding securities rather than “risk-free” securities benefited the Fund’s results on an overall basis.
OUTLOOK
While our economy continues to grow modestly and generate employment gains, the question of when this expansion will reach the point of not needing extraordinary monetary stimulus still seems not to have a definitive answer. On July 9, the International Monetary Fund (IMF) downgraded its global growth forecast to 3.1% from its April call of 3.3%. The IMF trimmed its U.S. GDP forecast to 1.7% from 1.9% in April and lowered its 2014 outlook to 2.7% from 3.0%. The IMF believes that downside risks to global growth still dominate as China’s economy levels off and Europe’s recession deepens. As a reminder of Europe’s continued weakness, on July 9, 2013, Standard & Poor’s downgraded Italy’s credit rating to BBB from BBB+ and kept it on negative outlook.
The FOMC’s most recent economic forecast has U.S. GDP growing at 2.45% in 2013 and 3.25% in 2014 while forecasting unemployment to reach 6.00% by the end of 2015 and core inflation at 1.85%. Since the FOMC’s
forecasts have tended to be overly optimistic and the removal of extraordinary monetary stimulus is very much data dependent, this implies that short-term rates may not be raised in the middle of 2015, as the FOMC now anticipates.
The May 2013 bond sell-off started as the market came to believe that the Fed might soon reduce its monthly purchase of $85 billion of Treasury and mortgage securities (a winding down of QE3) and that would be rapidly followed upon its conclusion by hikes in short-term rates. While Chairman Bernanke had earlier voiced his opinion about the likelihood of reducing the monthly bond purchases, the minutes make it clear that there is no consensus on the FOMC for the actual timing or amount of tapering. While several members of the FOMC believe bond purchases should be reduced this year, other members feel that the labor market needs to strengthen further before tapering begins. What is most clear is that the FOMC has been horrified by the market’s reaction to tapering talk, and most Fed speakers have gone out of their way to stress repeatedly that tapering is not tightening and that hiking short-term rates is a long way off.
While the market has still not fully priced in the onset of tapering, a significant percent of the near-term market damage may be behind us. Interest rates will only rise so far with short rates anchored at zero, so it is likely that other forces, including slow economic growth, declining inflation and investors’ need for income will somewhat limit yield increases for the balance of the year. The market is clearly on edge as we move into the second half of 2013, but at this point the only true change from the end of 2012 is a change in market psychology. Normal interest rate levels still seem to be far off in the future, and in the meantime returns seem likely to continue to be extremely modest.
Performance Evaluation | 5 |
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Short-Term Government Securities Fund
AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Year | 10 Year | |||||||||
periods ended 06/30/13 | ||||||||||||
Short-Term Government Securities Fund | 0.19% | 2.42% | 2.55% | |||||||||
BofA Merrill Lynch 1-5 Year U.S. Treasury Index | -0.03% | 2.77% | 3.08% | |||||||||
SECURITY DIVERSIFICATION | on 12/31/12 | on 06/30/13 | ||||||||||
(% of total investments) | ||||||||||||
Government-guaranteed agencies | 57.7% | 60.4% | ||||||||||
Corporate bonds | 11.6% | 12.2% | ||||||||||
Municipal bonds | 2.8% | 5.6% | ||||||||||
U.S. Treasuries | 9.2% | 5.1% | ||||||||||
Mortgage-backed securities | 3.8% | 3.8% | ||||||||||
Asset-backed securities | 1.2% | 0.6% | ||||||||||
Short-term and other assets | 13.7% | 12.3% | ||||||||||
Total | 100.0% | 100.0% | ||||||||||
MATURITY | on 12/31/12 | on 06/30/13 | ||||||||||
Average Weighted Maturity | 2.85 years | 2.93 years | ||||||||||
PERFORMANCE COMPARISON |
Comparison of the change in value of a $10,000 investment in the Fund and the BofA Merrill Lynch 1-5 Year U.S. Treasury Index made on December 31, 2002.
The returns quoted in the above table and chart represent past performance, which is no guarantee of future results. Current performance may be higher or lower than that shown above. Returns and the principal value of your investment will fluctuate such that shares, when redeemed, may be worth more or less than their original cost. The Short-Term Government Securities Fund's average annual total returns are net of any fee waivers and reimbursements. Returns do not reflect taxes that the shareholder may pay on Fund distributions or the redemption of Fund shares.
6 | Performance Evaluation |
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Short-Term Bond Fund
AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Year | 10 Year | |||||||||
periods ended 06/30/13 | ||||||||||||
Short-Term Bond Fund | 3.25% | 5.00% | 3.80% | |||||||||
BofA Merrill Lynch 1-5 Year Corp./Gov. Index | 0.72% | 3.38% | 3.38% | |||||||||
SECURITY DIVERSIFICATION | on 12/31/12 | on 06/30/13 | ||||||||||
(% of total investments) | ||||||||||||
Corporate bonds | 22.0% | 19.5% | ||||||||||
Municipal bonds | 17.9% | 19.2% | ||||||||||
Asset-backed securities | 14.7% | 16.7% | ||||||||||
Yankee bonds | 17.9% | 13.7% | ||||||||||
Mortgage-backed securities | 7.2% | 5.9% | ||||||||||
U.S. Government obligations | 3.3% | 5.1% | ||||||||||
Short-term and other assets | 17.0% | 19.9% | ||||||||||
Total | 100.0% | 100.0% | ||||||||||
MATURITY | on 12/31/12 | on 06/30/13 | ||||||||||
Average Weighted Maturity | 2.86 years | 2.94 years | ||||||||||
PERFORMANCE COMPARISON |
Comparison of the change in value of a $10,000 investment in the Fund and the BofA Merrill Lynch 1-5 Year Corp./Gov. Index made on December 31, 2002.
The returns quoted in the above table and chart represent past performance, which is no guarantee of future results. Current performance may be higher or lower than that shown above. Returns and the principal value of your investment will fluctuate such that shares, when redeemed, may be worth more or less than their original cost. The Short-Term Bond Fund's average annual total returns are net of any fee waivers and reimbursements. Returns do not reflect taxes that the shareholder may pay on Fund distributions or the redemption of Fund shares.
Performance Evaluation | 7 |
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PERFORMANCE EVALUATION
MARKET CONDITIONS
Risk markets globally began 2013 with a powerful relief rally after the United States averted the worst of its fiscal cliff situation with a last minute tax deal struck on New Year’s Day. The rally stalled in February, however, as economic momentum slowed and investors weighed the global impact of the inevitable U.S. government spending cuts. Later in the first quarter, financial markets were rattled by a stalemate presidential election in Italy and a severe banking crisis in Cyprus, reminding investors that Europe was still quite vulnerable to political instability and its debt and banking problems were far from resolved.
U.S. stocks persevered through these flare-ups in the eurozone as investors’ risk appetite was largely supported by the continuation of accommodative monetary policy from the U.S. Federal Reserve. Equities broadly advanced as increased global liquidity kept interest rates low and investors turned to riskier asset classes in search of yield. As the year progressed, the markets became increasingly dominated by speculation around the future direction of monetary policy. Sluggish global growth, ironically, was conducive to positive equity market performance. Although disappointing economic reports caused financial market volatility to rise, the weak data also afforded investors some comfort that the central bank would continue to maintain their accommodative stance.
However, after peaking in late May, U.S. stock markets recoiled in response to comments from the U.S. Federal Reserve, hinting that a change in its policy stance was on the horizon. Volatility picked up considerably and equities broadly declined through the remainder of the period due to concerns about the potential impact tighter monetary policy would have on financial markets and economic growth.
While rhetoric from the U.S. Federal Reserve about tapering its bond-buying stimulus program was the catalyst for the sell-off in equity markets, indicators that global growth was continuing to slow (with the exception of Japan) was another source of investor anxiety. The U.S. recovery showed signs of weakening and European countries already mired in recession saw economic conditions worsen. Slowing growth in emerging markets, particularly China and Brazil, dimmed the outlook for the entire global economy.
INDEX AND FUND PERFORMANCE
For the six months ended June 30, 2013, the U.S. large cap market metric and the Fund’s benchmark, the Standard & Poor’s (S&P) 500® Index, advanced 13.82%, compared to the Fund’s return of 13.53%. The S&P 500® Index is a market capitalization-weighted index composed of 500 common stocks issued by large-capitalization companies in a wide range of industries. The stocks included in the index collectively represent a substantial portion of all common stocks publicly traded in the U.S.
From a sector perspective, health care (+20.27%), consumer discretionary (+19.79%) and financials (+19.49%) were the stronger performers for the six-month period. Consumer staples stocks also posted significant gains (+15.15%), as did industrials (+13.78%), telecommunication services (+10.55%), utilities (+9.93%), energy (+9.77%) and information technology (+6.35%). The materials sector generated more modest gains (+2.90%) in the challenging global growth environment.
During the six-month period, as changes were made to the composition of the S&P 500® Index, the Master Portfolio in which the Fund invests purchased and sold securities to maintain its objective of replicating the risks and return of the benchmark index.
8 | Performance Evaluation |
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Stock Index Fund
AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Year | 10 Year | |||||||||
periods ended 06/30/13 | ||||||||||||
Stock Index Fund | 19.96% | 6.42% | 6.65% | |||||||||
Standard & Poor's 500 Stock Index | 20.60% | 7.01% | 7.30% |
INDUSTRY DIVERSIFICATION | % of Total Long-Term Investments at 06/30/13* | % of Total Long-Term Investments at 06/30/13* | ||||||||
Information technology | 17.8% | Consumer staples | 10.5% | |||||||
Financials | 16.6% | Industrials | 10.2% | |||||||
Health care | 12.7% | Materials | 3.3% | |||||||
Consumer discretionary | 12.3% | Utilities | 3.3% | |||||||
Energy | 10.5% | Telecommunication services | 2.8% | |||||||
Total | 100.0% | |||||||||
TOP TEN EQUITY HOLDINGS | % of Total Long-Term Investments at 06/30/13* | % of Total Long-Term Investments at 06/30/13* | ||||||||
Exxon Mobil Corp. | 2.8% | Google, Inc., Class A | 1.7% | |||||||
Apple, Inc. | 2.6% | Chevron Corp. | 1.6% | |||||||
Microsoft Corp. | 1.8% | The Procter & Gamble Co. | 1.5% | |||||||
Johnson & Johnson | 1.7% | Berkshire Hathaway Inc., Class B | 1.4% | |||||||
General Electric Co. | 1.7% | Wells Fargo & Co. | 1.4% | |||||||
PERFORMANCE COMPARISON |
Comparison of the change in value of a $10,000 investment in the Fund and the Standard & Poor's 500 Stock Index made on December 31, 2002.
The returns quoted in the above table and chart represent past performance, which is no guarantee of future results. Current performance may be higher or lower than that shown above. Returns and the principal value of your investment will fluctuate such that shares, when redeemed, may be worth more or less than their original cost. The Stock Index Fund's average annual total returns are net of any fee waivers and reimbursements. Returns do not reflect taxes that the shareholder may pay on Fund distributions or the redemption of Fund shares.
*Holdings information is for the S&P 500 Stock Master Portfolio, managed by BlackRock Fund Advisors, the Portfolio in which the Stock Index Fund invests all of its investable assets. Please refer to the Appendix for the complete semi-annual report of the S&P 500 Stock Master Portfolio.
Performance Evaluation | 9 |
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PERFORMANCE EVALUATION
MARKET CONDITIONS
The major equity market indexes rose during the course of the first half of 2013, reaching a peak in June. Since then, stock prices have retreated slightly, perhaps as investors contemplated the consequences associated with the eventual end of the Federal Reserve Board’s stimulus program. In addition to keeping target interest rates at very low levels, the Federal Reserve (the Fed) has been buying $85 billion in Treasury and mortgage-backed securities monthly as part of its policy of quantitative easing.
The U.S. labor market has shown improvement on the margin and the U.S. economy continues its slow and dogged expansion. As some economies around the world have slowed, commodity prices have remained constrained, or declined, giving relief to others in the form of lower input prices and dampening expectations for inflation in the foreseeable future. Businesses remain cautious, but managements seem inclined to lean more toward optimism.
FUND PERFORMANCE
The Value Fund increased 18.23% for the first half of 2013 and its benchmark index, the unmanaged Standard & Poor’s (S&P) 500® Index, increased 13.82%. The Fund’s greater-than-index results were due primarily to the performance of its information technology, industrials and health care sector holdings. The Fund’s positions in Bristol-Myers Squibb Co., Hewlett-Packard Co. and Genuine Parts Co. had a positive effect on the results for the first half of 2013. The Fund’s positions in the consumer discretionary and financial sectors did well but did not appreciate as fully as the Index’s sector positions; and the fact that the Fund was underweighted in these positive performing sectors was a further drag on performance. QEP Resources Inc. and Dillard’s Inc. stock price movements detracted from the Fund’s results for the first half.
OUTLOOK
The general outlook for the economy is for U.S. GDP growth of about 2% for the rest of 2013 and into 2014. At that rate of growth, it is difficult for businesses to grow profit, and in turn induce managements to substantially increase capital commitments and hire aggressively. Cautious optimism is still the nature of the outlook. Housing is recovering and employment has improved. However, uncertainty surrounding tax and spending policies, immigration reform, implementation of the Dodd-Frank Act and the looming and unknown impact of the Affordable Care Act are among investors’ considerations.
Released in June, the statement summarizing the Federal Open Market Committee’s May meeting and subsequent comments by Fed Chairman Ben Bernanke described how the Fed would look to “taper” its bond buying program once economic conditions warranted. This information resulted in higher interest rates, but the Committee’s remarks did not prompt a diminution in the market’s economic outlook. That should be construed as positive and a sign for confidence in the overall economy.
The uncertain economic and fiscal environment has led to careful allocation of capital. On the margin it has resulted in capital being returned to shareholders via stock repurchases and dividend initiations and/or increases. This behavior is likely to continue and may have a bearing on why the markets have held their ground.
In this environment, as in all, we continue to search for companies with attractive growth prospects, strong financials and reasonable valuations. Thank you for your confidence in Homestead Funds.
10 | Performance Evaluation |
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Value Fund
AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Year | 10 Year | |||||||||
periods ended 06/30/13 | ||||||||||||
Value Fund | 25.89% | 7.40% | 8.31% | |||||||||
Standard & Poor's 500 Stock Index | 20.60% | 7.01% | 7.30% |
INDUSTRY DIVERSIFICATION | % of Total Investment at 06/30/13 | % of Total Investment at 06/30/13 | ||||||||
Health care | 21.5% | Consumer discretionary | 7.7% | |||||||
Industrials | 18.4% | Materials | 5.7% | |||||||
Information technology | 15.8% | Consumer staples | 4.6% | |||||||
Energy | 14.6% | Short-term and other assets | 2.3% | |||||||
Financials | 9.4% | |||||||||
Total | 100.00% | |||||||||
TOP TEN EQUITY HOLDINGS | % of Total Investment at 06/30/13 | % of Total Investment at 06/30/13 | ||||||||
Bristol-Myers Squibb Co. | 5.0% | Chevron Corp. | 3.4% | |||||||
Pfizer Inc. | 4.4% | Parker-Hannifin Corp. | 3.3% | |||||||
Intel Corp. | 3.9% | JPMorgan Chase & Co. | 3.3% | |||||||
Cisco Systems, Inc. | 3.5% | General Electric Co. | 3.3% | |||||||
Genuine Parts Co. | 3.5% | Dow Chemical Co. (The) | 3.3% | |||||||
PERFORMANCE COMPARISON |
Comparison of the change in value of a $10,000 investment in the Fund and the Standard & Poor's 500 Stock Index made on December 31, 2002.
The returns quoted in the above table and chart represent past performance, which is no guarantee of future results. Current performance may be higher or lower than that shown above. Returns and the principal value of your investment will fluctuate such that shares, when redeemed, may be worth more or less than their original cost. The Value Fund's average annual total returns are net of any fee waivers and reimbursements. Returns do not reflect taxes that the shareholder may pay on Fund distributions or the redemption of Fund shares.
Performance Evaluation | 11 |
Table of Contents
PERFORMANCE EVALUATION
MARKET ENVIRONMENT
U.S. stocks rose in the second quarter of 2013, adding to strong first-quarter gains. Several major indexes climbed to multiyear or all-time highs by the end of May. Equities backpedaled in late May as Federal Reserve Chairman Ben Bernanke indicated that the central bank may curtail asset purchases if the economy evolves as projected. As measured by various Russell indexes, large-cap stocks underperformed small- and mid-cap stocks, and value stocks surpassed growth stocks in the large-cap universe.
PERFORMANCE AND PORTFOLIO REVIEW
The portfolio had a double-digit gain of 12.78% for the six months ended June 30 and outperformed the Russell 1000 Growth Index which increased 11.80%. Stock selection drove results versus the index, especially in the industrials and business services, financials and health care sectors.
The portfolio outperformed the index in the industrials and business services sector, helped by Boeing. Shares of Boeing rallied after the National Transportation Safety Board approved the proposed solution for the 787 Dreamliner’s problematic lithium batteries, which had slowed the company’s ability to fulfill orders.
In the financials sector, the portfolio benefited from online securities broker TD Ameritrade holding. The company’s share price rose in the period, due to better expense management combined with an increase in brokerage trading activity.
Gilead Sciences drove outperformance of the index in the health care sector. The biotechnology company specializes in the treatment of HIV, AIDS, the hepatitis B and C viruses and various respiratory conditions. In
March, the company reported positive clinical results in patients receiving its hepatitis C treatment.
The portfolio underperformed the index in the telecommunication services sector. The wireless infrastructure company Crown Castle International was a notable detractor. News that the IRS may re-evaluate the process for companies to convert to a real estate investment trust (REIT) was a negative for tower companies, including Crown Castle International, which is preparing for a REIT conversion.
An overweight to information technology, the worst-performing sector in the index, detracted from relative performance during the period. The sector was hampered by slowing growth in mobile device sales combined with an absence of innovative product releases.
OUTLOOK
The U.S. economy continues to expand more strongly than most of the developed world, while emerging markets grapple with lower growth and renewed political turbulence in some countries. We believe a transition from a stimulus-driven to a market-driven U.S. economic environment is underway as the Federal Reserve begins to ratchet down its asset purchase program and eventually starts to raise interest rates. This change should prove healthy over the long run, since stocks will be influenced more by fundamental factors than by monetary easing. While we don’t expect the second half of the year to be as robust as the first half, most investors have been underexposed to equities. A shift from fixed income to stocks in the coming months, should that occur, will serve to underpin equity prices down the road. We believe that any further rise in interest rates would not derail stocks, as long as the increases are gradual.
12 | Performance Evaluation |
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Growth Fund
AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Year | 10 Year | |||||||||
periods ended 06/30/13 | ||||||||||||
Growth Fund* | 19.06% | 8.88% | 8.16% | |||||||||
Russell 1000 Growth Index | 17.07% | 7.47% | 7.40% | |||||||||
Standard & Poor's 500 Stock Index | 20.60% | 7.01% | 7.30% |
INDUSTRY DIVERSIFICATION | % of Total Investment at 06/30/13 | % of Total Investment at 06/30/13 | ||||||||
Information technology | 26.2% | Consumer staples | 4.3% | |||||||
Consumer discretionary | 24.4% | Energy | 4.1% | |||||||
Health care | 14.4% | Materials | 3.6% | |||||||
Industrials | 14.0% | Telecommunication services | 2.9% | |||||||
Financials | 4.9% | Short-term and other assets | 1.2% | |||||||
Total | 100.0% | |||||||||
TOP TEN EQUITY HOLDINGS | % of Total Investment at 06/30/13 | % of Total Investment at 06/30/13 | ||||||||
Google Inc. (Class A) | 5.7% | Danaher Corp. | 2.8% | |||||||
Amazon.com, Inc. | 4.5% | Boeing Co. (The) | 2.7% | |||||||
Gilead Sciences, Inc. | 3.6% | Precision Castparts Corp. | 2.4% | |||||||
Crown Castle International Corp. | 2.9% | MasterCard Inc. | 2.4% | |||||||
priceline.com, Inc. | 2.8% | Juniper Networks, Inc. | 2.2% | |||||||
PERFORMANCE COMPARISON |
Comparison of the change in value of a $10,000 investment in the Fund and its benchmark indices made on December 31, 2002.
The returns quoted in the above table and chart represent past performance, which is no guarantee of future results. Current performance may be higher or lower than that shown above. Returns and the principal value of your investment will fluctuate such that shares, when redeemed, may be worth more or less than their original cost. The Growth Fund's average annual total returns are net of any fee waivers and reimbursements. Returns do not reflect taxes that the shareholder may pay on Fund distributions or the redemption of Fund shares.
*Performance information for the Growth Fund (formerly the Nasdaq-100 Index Tracking StockSM Fund) reflects its previous investment strategy from inception through December 5, 2008, of matching, as closely as possible, before expenses, the performance of the Nasdaq-100 Stock Index.
Performance Evaluation | 13 |
Table of Contents
PERFORMANCE EVALUATION
MARKET CONDITIONS
The small-capitalization indexes made solid progress in the first half of 2013, increasing between 15% and 17%. Small-capitalization companies in aggregate maintained healthy operating profit margins and at levels that were consistent with those of the past two years. While the rate of growth for the overall economy was tepid, profitability held steady and present expectations are for similar profit margin results for small-capitalization stocks in the second half of 2013.
FUND PERFORMANCE
The Fund increased 15.79% in the first half of 2013 while its benchmark index the Russell 2000 increased 15.86%. The Fund’s results were aided by larger-than-index positions in consumer discretionary and materials, and, within these sectors, the Fund’s stock selections did better than the sectors overall and the benchmark index. Appreciation in the stock prices of Cracker Barrel Old Country Store, UMB Financial Corporation and the exchange traded fund positions also contributed to the Fund’s return. These positive factors were partially offset by the performance of holdings in the information technology and health care industries and the cash position. Polypore International Inc. and Cardinal Financial were among the few names that declined during 2013’s first half.
New names added to the Fund during the first half of the year included: Texas Capital Bancshares, Inc. and True Religion Apparel, Inc. Texas Capital Bancshares, Inc. is the holding company for Texas Capital Bank. With over $10 billion in total assets, this Dallas-based bank pro-
vides an array of banking products to its mostly commer- cial clientele with an emphasis on customer service. True Religion Apparel, Inc. designs, manufactures and sells denim apparel through third-party retailers and the company’s own retail outlets. It was announced in May that True Religion will be acquired by TowerBrook Capital Partners L.P.
OUTLOOK
As the second half of 2013 commences, the outlook for the economy remains mixed, as it has for several years. Some indicators point toward improvement – recent employment statistics are encouraging – but the capital expenditure figures remain flat.
The Federal Open Market Committee signaled in June that the Federal Reserve would begin to taper its bond buying programs as economic conditions warrant, and as a result, interest rates have increased. However, the economy appears to be digesting the rate increase—forecasts for growth are unchanged—and this level of confidence is a positive sign. There are still issues for businesses to contend with, including the implementation of the Dodd-Frank financial reform legislation (much of which remains unfinished), fiscal policy issues and uncertainties associated with the implementation of the Affordable Care Act. Though the cross currents of economic figures are mixed and businesses remain cautious in hiring and capital commitment, there seems to be a bit more optimism than during the previous two summers.
We appreciate your continued trust and investment.
14 | Performance Evaluation |
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Small-Company Stock Fund
AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Year | 10 Year | |||||||||
periods ended 06/30/13 | ||||||||||||
Small-Company Stock Fund | 26.93% | 14.27% | 12.17% | |||||||||
Russell 2000 Index | 24.21% | 8.77% | 9.53% |
INDUSTRY DIVERSIFICATION | % of Total Investment at 06/30/13 | % of Total Investment at 06/30/13 | ||||||||
Industrials | 26.6% | Materials | 8.0% | |||||||
Consumer discretionary | 13.5% | Health care | 2.5% | |||||||
Consumer staples | 11.9% | Energy | 1.8% | |||||||
Financials | 11.8% | Short-term and other assets | 14.7% | |||||||
Information technology | 9.2% | |||||||||
Total | 100.0% | |||||||||
TOP TEN EQUITY HOLDINGS | % of Total Investment at 06/30/13 | % of Total Investment at 06/30/13 | ||||||||
iShares Russell 2000 Value Index | 4.9% | Olin Corp. | 3.2% | |||||||
iShares S&P SmallCap 600 Value Index | 4.9% | ManTech International Corp. | 3.2% | |||||||
Cracker Barrel Old Country Store, Inc. | 3.5% | Fred's Inc. | 3.1% | |||||||
UMB Financial Corp. | 3.3% | Harris Teeter Supermarkets, Inc. | 3.1% | |||||||
Applied Industrial Technologies, Inc. | 3.3% | Rofin-Sinar Technologies Inc. | 3.1% | |||||||
PERFORMANCE COMPARISON |
Comparison of the change in value of a $10,000 investment in the Fund and the Russell 2000 Index made on December 31, 2002.
The returns quoted in the above table and chart represent past performance, which is no guarantee of future results. Current performance may be higher or lower than that shown above. Returns and the principal value of your investment will fluctuate such that shares, when redeemed, may be worth more or less than their original cost. The Small-Company Stock Fund's average annual total returns are net of any fee waivers and reimbursements. Returns do not reflect taxes that the shareholder may pay on Fund distributions or the redemption of Fund shares.
Performance Evaluation | 15 |
Table of Contents
PERFORMANCE EVALUATION
MARKET CONDITIONS
The multi-decade bond market rally may finally have ended. Global bond yields rose abruptly during the second quarter of 2013 in response to a reduction in the U.S. budget deficit estimate for this year and Federal Reserve comments regarding a gradual tapering of its quantitative easing program. These events sparked volatility in currency and equity markets around the world. Capital markets in countries with significant current account deficits were particularly vulnerable to the sell-off.
Following nearly five years of unprecedented monetary stimulus, we are seeing the first signs of normalization of interest rates. Yield curves are moving closer to where they would have been without the impact of quantitative easing. The portfolio has been positioned for some time for a more normalized environment, and we are encouraged to see it materializing.
FUND PERFORMANCE
For the six-month period ending June 30, 2013, the Fund returned 3.13% versus MSCI® EAFE® Index, which returned 4.10%.
The best performing sectors over the six-month period were financials, materials and information technology. Japan was among the best performing markets, and the Fund’s financial holdings Daiwa Securities, Sumitomo Mitsui Trust and MS & AD Insurance were top contributors to performance for the period. Among the worst performing sectors were telecoms, consumer discretionary and energy. Holdings in Portugal and Italy, including Banco Espirito Santo and Telecom Italia, detracted from returns over this period.
OUTLOOK
While recent interest rate volatility has been negative for equity markets, as yields stabilize to a new normal level it should be positive for stocks, as it indicates the economy is on improved footing and less reliant on monetary stimulus for growth.
Japan is also pursuing its own version of quantitative easing along with fiscal stimulus, and we are starting to see signs that these initiatives are having a positive
impact on the economy. The yen, which has weakened significantly in the last year, depreciated another 5% versus the U.S. dollar during the second quarter and seems to be stabilizing. The Fund’s Japanese exposure is mainly to financials and exporting companies which we expect will benefit as the impact of “Abenomics” (the economic policies of the current Prime Minister Shinzo Abe) filters through to the real economy.
Challenges remain in Europe, but we believe it is past the worst of the crisis period. We are seeing encouraging economic data from peripheral markets. Current account deficits have also narrowed significantly. This economic data, combined with the discounted equity valuations relative to the rest of the developed markets, continues to give us confidence in our overweight exposure to Europe.
China is experiencing growing pains as it tries to rebalance the economy toward more sustainable growth. The new Chinese leadership is attempting to address some of the inefficiencies caused by the massive stimulus program in 2009. Addressing these issues is positive for the Chinese economy in the long term, but economic growth could be impacted in the short run, indicated by the weak economic data recently released.
Emerging equity markets significantly underperformed the developed markets during the second quarter, and many emerging market currencies weakened versus the dollar. As global interest rates find a new level and the U.S. dollar continues to strengthen, we anticipate volatility in emerging markets to continue in the short term. Valuations are now at a discount to developed markets despite many with superior growth profiles. The current volatility may provide attractive investment opportunities.
We are encouraged by the initial signs of normalization in equity and fixed-income markets. This is one of the first periods in several years where we have seen the market differentiating companies and securities with more focus on fundamentals than macro-themed drivers. This environment is supportive of our fundamental value investment style, and we remain optimistic about the portfolio’s future relative prospects.
16 | Performance Evaluation |
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International Value Fund
AVERAGE ANNUAL TOTAL RETURNS | 1 Year | 5 Year | 10 Year | |||||||||
periods ended 06/30/13 | ||||||||||||
International Value Fund* | 19.29% | -0.35% | 7.17% | |||||||||
MSCI® EAFE® Index | 18.62% | -0.63% | 7.67% |
COUNTRY DIVERSIFICATION | % of Total Investment at 06/30/13 | % of Total Investment at 06/30/13 | ||||||||
Japan | 18.4% | Spain | 2.6% | |||||||
France | 11.9% | Denmark | 2.0% | |||||||
Switzerland | 11.8% | Canada | 1.9% | |||||||
Britain | 10.8% | Israel | 1.3% | |||||||
Germany | 6.1% | Singapore | 1.3% | |||||||
Netherlands | 5.7% | Finland | 1.2% | |||||||
Italy | 5.3% | Brazil | 1.2% | |||||||
Thailand | 5.0% | Portugal | 1.1% | |||||||
Republic of South Korea | 3.9% | China | 1.0% | |||||||
Hong Kong | 3.3% | Short-term and other assets | 4.2% | |||||||
Total | 100.0% | |||||||||
TOP TEN EQUITY HOLDINGS | % of Total Investment at 06/30/13 | % of Total Investment at 06/30/13 | ||||||||
AEGON NV | 3.3% | Sumitomo Corp. | 2.5% | |||||||
MS & AD Insurance Group Holdings, Inc. | 3.2% | DSM NV | 2.5% | |||||||
WPP Group PLC | 2.7% | BAE Systems PLC | 2.5% | |||||||
Bridgestone Corp. | 2.6% | Sumitomo Mitsui Trust Holdings, Inc. | 2.4% | |||||||
Intesa Sanpaolo SpA | 2.6% | Daimler AG REG | 2.4% | |||||||
PERFORMANCE COMPARISON |
Comparison of the change in value of a $10,000 investment in the Fund and the MSCI® EAFE® Index made on December 31, 2002.
The returns quoted in the above table and chart represent past performance, which is no guarantee of future results. Current performance may be higher or lower than that shown above. Returns and the principal value of your investment will fluctuate such that shares, when redeemed, may be worth more or less than their original cost. The International Value Fund's average annual total returns are net of any fee waivers and reimbursements. Returns do not reflect taxes that the shareholder may pay on Fund distributions or the redemption of Fund shares.
*The performance information for the International Value Fund (formerly the International Stock Index Fund) reflects its investment experience in the State Street MSCI® EAFE® Index Portfolio from inception through October 16, 2005, and in the Vanguard Developed Markets Index Fund from October 17, 2005 to June 9, 2006. Mercator Asset Management, L.P.'s role as subadvisor began June 12, 2006.
Performance Evaluation | 17 |
Table of Contents
As a shareholder, you incur two types of costs: (1) transaction costs; and (2) ongoing costs, including management fees, service fees, and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in each of the Homestead Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at January 1, 2013 and held through June 30, 2013.
ACTUAL EXPENSES
The first line for each Fund in the table on the following page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $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 the Period” to estimate the expenses you paid on your account during this period. Although the Funds do not charge sales loads or transaction fees, for redemptions made prior to May 1, 2013, the Funds (except for the Daily Income Fund, Short-Term Government Securities Fund and Short-Term Bond Fund) would charge a fee equal to 2.00% of the net amount of shares redeemed or exchanged to another Fund less than 30 calendar days after purchase. This redemption fee was eliminated for all Funds as of May 1, 2013.
Individual Retirement Arrangements (IRAs) and Educational Savings Accounts (ESAs) are charged a $15.00 annual custodial fee. The charge is automatically deducted from your account in the fourth quarter of each year or, if you close your account, at the time of
redemption. A fee is collected for each IRA or ESA account, as distinguished by account type (Traditional IRA, Roth IRA, or ESA) and Social Security Number. For example, if you have both a Traditional IRA and a Roth IRA account, each would be charged a fee. But only one fee would be collected for each account type, regardless of the number of Funds held by each account type. These fees are not included in the example below. If included, the costs shown would be higher.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line for each Fund in the table on the following page 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 Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as the redemption fee charged on sales of shares held less than 30 days prior to May 1, 2013, or the custodial account fee. Therefore, the hypothetical information in the example is useful in comparing your 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.
18 | Expense Example |
Table of Contents
Beginning Account Value January 1, 2013 | Ending Account Value June 30, 2013 | Expenses Paid During the Perioda | Annualized Expense Ratio for the Six June 30, 2013 | |||||||||||||
DAILY INCOME FUND | ||||||||||||||||
Actual Return | $ | 1,000.00 | $ | 1,000.05 | $ | 0.64 | 0.13% | |||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,024.40 | $ | 0.65 | 0.13% | |||||||||
SHORT-TERM GOVERNMENT SECURITIES FUND | ||||||||||||||||
Actual Return | $ | 1,000.00 | $ | 993.52 | $ | 3.41 | 0.69% | |||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,021.56 | $ | 3.46 | 0.69% | |||||||||
SHORT-TERM BOND FUND | ||||||||||||||||
Actual Return | $ | 1,000.00 | $ | 1,008.93 | $ | 3.76 | 0.75% | |||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,021.24 | $ | 3.78 | 0.75% | |||||||||
STOCK INDEX FUNDb | ||||||||||||||||
Actual Return | $ | 1,000.00 | $ | 1,143.16 | $ | 3.13 | 0.59% | |||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,022.07 | $ | 2.96 | 0.59% | |||||||||
VALUE FUND | ||||||||||||||||
Actual Return | $ | 1,000.00 | $ | 1,196.72 | $ | 3.65 | 0.67% | |||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,021.66 | $ | 3.37 | 0.67% | |||||||||
GROWTH FUND | ||||||||||||||||
Actual Return | $ | 1,000.00 | $ | 1,134.80 | $ | 5.02 | 0.95% | |||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.26 | $ | 4.75 | 0.95% | |||||||||
SMALL-COMPANY STOCK FUND | ||||||||||||||||
Actual Return | $ | 1,000.00 | $ | 1,168.66 | $ | 5.22 | 0.97% | |||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.14 | $ | 4.87 | 0.97% | |||||||||
INTERNATIONAL VALUE FUND | ||||||||||||||||
Actual Return | $ | 1,000.00 | $ | 1,031.71 | $ | 4.98 | 0.99% | |||||||||
Hypothetical (5% return before expenses) | $ | 1,000.00 | $ | 1,020.06 | $ | 4.95 | 0.99% |
a. | The dollar amounts shown as “Expenses Paid During the Period” are equal to each Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by 181, then divided by 365. |
b. | The Stock Index Fund is a feeder fund that invests substantially all of its assets in a Master Portfolio. The example reflects the expenses of both the feeder fund and the Master Portfolio. |
Expense Example | 19 |
Table of Contents
Regulatory and Shareholder Matters
PROXY VOTING POLICIES AND PROCEDURES
The policies and procedures used to determine how to vote proxies relating to the Funds’ portfolio securities are available online at www.homesteadfunds.com and, without charge, upon request by calling 1-800-258-3030. This information is also available on the Securities and Exchange Commission’s website at www.sec.gov.
PROXY VOTING RECORD
For the most recent twelve-month period ended June 30, information regarding how proxies relating to portfolio securities were voted on behalf of each of the Funds is available, without charge, upon request by calling 1-800-258-3030, online at www.homesteadfunds.com, and on the Securities and Exchange Commission’s website at www.sec.gov.
QUARTERLY DISCLOSURE OF PORTFOLIO HOLDINGS
The Funds file complete schedules of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. Portfolio holdings for the second and fourth quarters of each fiscal year are filed as part of the Funds’ semi-annual and annual reports. The Funds’ Form N-Q, semi-annual and annual reports are available on the Commission’s website at www.sec.gov, and may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The most recent quarterly portfolio holdings and semi-annual and annual report also can be accessed on the Funds’ website at www.homesteadfunds.com.
20 | Regulatory and Shareholder Matters |
Table of Contents
PORTFOLIO OF INVESTMENTS: Daily Income Fund
June 30, 2013 (Unaudited)
CORPORATE BONDS | Interest Rate/Yield | Maturity Date | Face Amount | Value | ||||||||||||
(1.4% of portfolio) | ||||||||||||||||
General Electric Capital Corp. | 1.88 | % | 09/16/13 | $ | 750,000 | $ | 752,597 | |||||||||
John Deere Capital Corp. | 4.90 | 09/09/13 | 2,050,000 | 2,075,138 | ||||||||||||
Total Corporate Bonds (Cost $2,827,735) | 2,827,735 | |||||||||||||||
COMMERCIAL PAPER | ||||||||||||||||
(75.6% of portfolio) | ||||||||||||||||
Air Liquide US LLC (a) | 0.14 | 07/23/13 | 4,000,000 | 3,999,658 | ||||||||||||
Air Liquide US LLC (a) | 0.15 | 07/26/13 | 5,000,000 | 4,999,479 | ||||||||||||
American Honda Finance Corp. | 0.15 | 07/08/13 | 3,000,000 | 2,999,913 | ||||||||||||
American Honda Finance Corp. | 0.10 | 08/22/13 | 1,700,000 | 1,699,754 | ||||||||||||
American Honda Finance Corp. | 0.09 | 08/28/13 | 5,000,000 | 4,999,275 | ||||||||||||
BMW US Capital LLC (a) | 0.09 | 08/06/13 | 630,000 | 629,943 | ||||||||||||
BMW US Capital LLC (a) | 0.12 | 08/19/13 | 1,500,000 | 1,499,755 | ||||||||||||
BMW US Capital LLC (a) | 0.11 | 09/06/13 | 3,000,000 | 2,999,386 | ||||||||||||
BMW US Capital LLC (a) | 0.12 | 09/12/13 | 3,750,000 | 3,749,087 | ||||||||||||
Chevron Corp. (a) | 0.06 | 07/15/13 | 5,152,000 | 5,151,880 | ||||||||||||
Chevron Corp. (a) | 0.07 | 07/22/13 | 3,000,000 | 2,999,877 | ||||||||||||
Coca-Cola Co. (a) | 0.14 | 08/14/13 | 1,000,000 | 999,829 | ||||||||||||
Coca-Cola Co. (a) | 0.10 | 08/22/13 | 2,900,000 | 2,899,581 | ||||||||||||
Coca-Cola Co. (a) | 0.17 | 08/23/13 | 1,000,000 | 999,750 | ||||||||||||
Coca-Cola Co. (a) | 0.17 | 09/10/13 | 1,000,000 | 999,665 | ||||||||||||
Coca-Cola Co. (a) | 0.10 | 09/11/13 | 1,500,000 | 1,499,700 | ||||||||||||
Coca-Cola Co. (a) | 0.13 | 09/11/13 | 2,500,000 | 2,499,350 | ||||||||||||
Conocophillips Qatar Funding Ltd. (a) | 0.12 | 07/18/13 | 1,250,000 | 1,249,929 | ||||||||||||
Conocophillips Qatar Funding Ltd. (a) | 0.16 | 07/18/13 | 1,500,000 | 1,499,887 | ||||||||||||
Conocophillips Qatar Funding Ltd. (a) | 0.16 | 08/08/13 | 1,150,000 | 1,149,806 | ||||||||||||
Conocophillips Qatar Funding Ltd. (a) | 0.11 | 08/19/13 | 3,000,000 | 2,999,551 | ||||||||||||
Conocophillips Qatar Funding Ltd. (a) | 0.13 | 09/18/13 | 3,000,000 | 2,999,144 | ||||||||||||
General Electric Capital Corp. | 0.15 | 07/11/13 | 2,000,000 | 1,999,917 | ||||||||||||
General Electric Capital Corp. | 0.18 | 08/06/13 | 2,500,000 | 2,499,550 | ||||||||||||
General Electric Capital Corp. | 0.13 | 08/21/13 | 2,000,000 | 1,999,632 | ||||||||||||
General Electric Capital Corp. | 0.15 | 09/05/13 | 2,000,000 | 1,999,450 | ||||||||||||
Google Inc. (a) | 0.12 | 08/20/13 | 700,000 | 699,883 | ||||||||||||
Google Inc. (a) | 0.08 | 09/04/13 | 5,000,000 | 4,999,278 | ||||||||||||
John Deere Bank SA (a) | 0.10 | 07/26/13 | 3,000,000 | 2,999,792 | ||||||||||||
Metlife Funding Inc. | 0.10 | 07/16/13 | 4,000,000 | 3,999,833 | ||||||||||||
Metlife Funding Inc. | 0.09 | 08/20/13 | 5,000,000 | 4,999,375 | ||||||||||||
Nestle Capital Corp. (a) | 0.13 | 07/16/13 | 3,000,000 | 2,999,838 | ||||||||||||
Nestle Capital Corp. (a) | 0.11 | 08/26/13 | 3,250,000 | 3,249,444 | ||||||||||||
Nestle Capital Corp. (a) | 0.17 | 08/27/13 | 1,000,000 | 999,731 | ||||||||||||
Nestle Capital Corp. (a) | 0.10 | 09/13/13 | 1,900,000 | 1,899,609 | ||||||||||||
PACCAR Financial Corp. | 0.15 | 07/05/13 | 5,000,000 | 4,999,917 | ||||||||||||
PACCAR Financial Corp. | 0.08 | 07/24/13 | 1,000,000 | 999,949 | ||||||||||||
PACCAR Financial Corp. | 0.12 | 09/11/13 | 4,000,000 | 3,999,040 | ||||||||||||
Parker Hannifin Corp. (a) | 0.15 | 07/02/13 | 6,000,000 | 5,999,975 | ||||||||||||
Parker Hannifin Corp. (a) | 0.12 | 07/31/13 | 2,500,000 | 2,499,750 | ||||||||||||
Parker Hannifin Corp. (a) | 0.12 | 08/13/13 | 1,500,000 | 1,499,785 | ||||||||||||
PepsiCo, Inc. (a) | 0.07 | 07/10/13 | 1,200,000 | 1,199,979 | ||||||||||||
Proctor & Gamble Co. (a) | 0.13 | 07/03/13 | 3,000,000 | 2,999,978 | ||||||||||||
Proctor & Gamble Co. (a) | 0.07 | 07/31/13 | 3,000,000 | 2,999,825 | ||||||||||||
Proctor & Gamble Co. (a) | 0.11 | 10/15/13 | 2,000,000 | 1,999,352 | ||||||||||||
Total Capital Canada, Ltd. (a) | 0.08 | 07/10/13 | 2,500,000 | 2,499,950 | ||||||||||||
Toyota Motor Credit Corp. | 0.15 | 07/03/13 | 4,000,000 | 3,999,967 | ||||||||||||
Toyota Motor Credit Corp. | 0.16 | 07/09/13 | 2,000,000 | 1,999,929 | ||||||||||||
Toyota Motor Credit Corp. | 0.15 | 08/13/13 | 4,000,000 | 3,999,283 | ||||||||||||
Unilever Capital Corp. (a) | 0.17 | 07/02/13 | 4,000,000 | 3,999,981 | ||||||||||||
Unilever Capital Corp. (a) | 0.11 | 08/06/13 | 2,000,000 | 1,999,780 |
The accompanying notes are an integral part of these financial statements. | Portfolio of Investments | 21 |
Table of Contents
PORTFOLIO OF INVESTMENTS: Daily Income Fund (continued)
June 30, 2013 (Unaudited)
Interest Rate/Yield | Maturity Date | Face Amount | Value | |||||||||||||
(Commercial Paper continued) | ||||||||||||||||
Unilever Capital Corp. (a) | 0.10 | % | 08/12/13 | $ | 3,000,000 | $ | 2,999,650 | |||||||||
Wal-Mart Stores, Inc. (a) | 0.10 | 07/29/13 | 5,000,000 | 4,999,611 | ||||||||||||
Wal-Mart Stores, Inc. (a) | 0.10 | 07/29/13 | 3,650,000 | 3,649,716 | ||||||||||||
Wal-Mart Stores, Inc. (a) | 0.09 | 09/10/13 | 1,200,000 | 1,199,787 | ||||||||||||
Total Commercial Paper (Cost $151,414,735) | 151,414,735 | |||||||||||||||
U.S. GOVERNMENT OBLIGATIONS | ||||||||||||||||
(15.5% of portfolio) | ||||||||||||||||
U.S. Treasury Bill | 0.07 | 10/10/13 | 5,000,000 | 4,999,074 | ||||||||||||
U.S. Treasury Note | 0.38 | 07/31/13 | 4,000,000 | 4,000,883 | ||||||||||||
U.S. Treasury Note | 4.25 | 08/15/13 | 5,000,000 | 5,025,975 | ||||||||||||
U.S. Treasury Note | 0.75 | 09/15/13 | 4,000,000 | 4,005,785 | ||||||||||||
U.S. Treasury Note | 3.13 | 09/30/13 | 5,000,000 | 5,037,787 | ||||||||||||
U.S. Treasury Note | 0.50 | 10/15/13 | 3,000,000 | 3,003,695 | ||||||||||||
U.S. Treasury Note | 2.75 | 10/31/13 | 5,000,000 | 5,044,161 | ||||||||||||
Total U.S. Government Obligations (Cost $31,117,360) | 31,117,360 | |||||||||||||||
MONEY MARKET ACCOUNT | Shares | |||||||||||||||
(7.5% of portfolio) | ||||||||||||||||
State Street Institutional Liquid Reserves Fund | 0.09 | (b) | 14,938,091 | 14,938,091 | ||||||||||||
Total Money Market Account (Cost $14,938,091) | 14,938,091 | |||||||||||||||
TOTAL INVESTMENTS IN SECURITIES (Cost $200,297,921)—100% | $ | 200,297,921 |
(a) | Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration only to qualified institutional buyers. The security has been determined to be liquid under criteria established by the Fund’s Board of Directors. The total of such securities at period-end amounts to $104,219,951 and represents 52.0% of total investments. |
(b) | 7-day yield at June 30, 2013. |
22 | Portfolio of Investments | The accompanying notes are an integral part of these financial statements. |
Table of Contents
PORTFOLIO OF INVESTMENTS: Short-Term Government Securities Fund
June 30, 2013 (Unaudited)
ASSET BACKED SECURITIES | Interest Rate | Maturity Date | Face Amount | Value | ||||||||||||
(0.6% of portfolio) | ||||||||||||||||
Small Business Administration 93-20J | 5.90 | % | 10/01/13 | $ | 2,490 | $ | 2,524 | |||||||||
Small Business Administration 98-20D | 6.15 | 04/01/18 | 11,660 | 12,526 | ||||||||||||
Small Business Administration 98-20E | 6.30 | 05/01/18 | 15,328 | 16,689 | ||||||||||||
Small Business Administration 98-20H | 6.15 | 08/01/18 | 6,173 | 6,669 | ||||||||||||
Small Business Administration 99-20D | 6.15 | 04/01/19 | 21,275 | 23,125 | ||||||||||||
Small Business Administration 04-20B | 4.72 | 02/01/24 | 57,346 | 61,808 | ||||||||||||
Small Business Administration 04-20C | 4.34 | 03/01/24 | 88,801 | 95,821 | ||||||||||||
Small Business Administration 05-10E | 4.54 | 09/01/15 | 10,881 | 11,143 | ||||||||||||
Small Business Administration Pool # 100075 | 3.50 | 05/25/19 | 26,832 | 26,741 | ||||||||||||
Small Business Administration Pool # 500724 | 4.00 | (a) | 12/25/13 | 1,255 | 1,255 | |||||||||||
Small Business Administration Pool # 502261 | 1.38 | (a) | 10/25/17 | 10,104 | 10,106 | |||||||||||
Small Business Administration Pool # 502684 | 1.25 | (a) | 07/25/19 | 2,530 | 2,573 | |||||||||||
Small Business Administration Pool # 503278 | 0.88 | (a) | 02/25/21 | 25,557 | 25,702 | |||||||||||
Small Business Administration Pool # 503463 | 1.13 | (a) | 09/25/21 | 4,602 | 4,626 | |||||||||||
Small Business Administration Pool # 504305 | 0.88 | (a) | 10/25/23 | 4,694 | 4,689 | |||||||||||
Small Business Investment Companies 02-20K | 5.08 | 11/01/22 | 20,015 | 21,841 | ||||||||||||
Small Business Investment Companies 03-P10B | 5.14 | 08/10/13 | 4,013 | 4,035 | ||||||||||||
Small Business Investment Companies 04-10A | 4.12 | 03/10/14 | 21,949 | 22,315 | ||||||||||||
Small Business Investment Companies 04-10B | 4.68 | 09/10/14 | 42,789 | 44,318 | ||||||||||||
Small Business Investment Companies 04-P10A | 4.50 | 02/10/14 | 11,848 | 12,052 | ||||||||||||
Small Business Investment Companies 05-10B | 4.94 | 09/10/15 | 111,563 | 117,139 | ||||||||||||
Small Business Investment Companies 05-P10A | 4.64 | 02/10/15 | 21,280 | 22,307 | ||||||||||||
Small Business Investment Companies 07-10A | 5.38 | 03/10/17 | 41,090 | 44,589 | ||||||||||||
Total Asset Backed Securities (Cost $550,981) | 594,593 | |||||||||||||||
MORTGAGE BACKED SECURITIES | ||||||||||||||||
(3.8% of portfolio) | ||||||||||||||||
FDIC Structured Sale Guaranteed Notes 2010-S3 (b) | 2.74 | 12/03/20 | 512,995 | 526,136 | ||||||||||||
GNMA #2602 | 6.00 | 06/20/28 | 37,564 | 41,777 | ||||||||||||
GNMA #2707 | 5.50 | 01/20/14 | 614 | 618 | ||||||||||||
GNMA #8004 | 1.75 | (a) | 07/20/22 | 19,439 | 20,301 | |||||||||||
GNMA #8006 | 1.75 | (a) | 07/20/22 | 18,773 | 19,605 | |||||||||||
GNMA #8038 | 1.75 | (a) | 08/20/22 | 11,490 | 11,999 | |||||||||||
GNMA #8040 | 2.00 | (a) | 08/20/22 | 30,149 | 31,441 | |||||||||||
GNMA #8054 | 1.63 | (a) | 10/20/22 | 7,424 | 7,678 | |||||||||||
GNMA #8076 | 1.63 | (a) | 11/20/22 | 11,879 | 12,386 | |||||||||||
GNMA #8102 | 4.00 | (a) | 02/20/16 | 1,592 | 1,677 | |||||||||||
GNMA #8103 | 4.00 | (a) | 02/20/16 | 7,756 | 8,177 | |||||||||||
GNMA #8157 | 1.63 | (a) | 03/20/23 | 18,337 | 19,142 | |||||||||||
GNMA #8191 | 1.75 | (a) | 05/20/23 | 34,605 | 36,091 | |||||||||||
GNMA #8215 | 2.00 | (a) | 04/20/17 | 2,016 | 2,094 | |||||||||||
GNMA #8259 | 1.75 | (a) | 08/20/23 | 9,918 | 10,358 | |||||||||||
GNMA #8297 | 4.00 | (a) | 12/20/17 | 6,881 | 7,220 | |||||||||||
GNMA #8332 | 3.50 | (a) | 03/20/18 | 3,815 | 4,003 | |||||||||||
GNMA #8344 | 3.50 | (a) | 04/20/18 | 13,492 | 14,148 | |||||||||||
GNMA #8384 | 1.63 | (a) | 03/20/24 | 5,134 | 5,360 | |||||||||||
GNMA #8393 | 4.00 | (a) | 08/20/18 | 5,475 | 5,739 | |||||||||||
GNMA #8400 | 2.00 | (a) | 08/20/18 | 7,598 | 7,921 | |||||||||||
GNMA #8405 | 4.00 | (a) | 09/20/18 | 7,518 | 7,883 | |||||||||||
GNMA #8423 | 1.75 | (a) | 05/20/24 | 6,327 | 6,599 | |||||||||||
GNMA #8429 | 4.00 | (a) | 11/20/18 | 9,048 | 9,498 | |||||||||||
GNMA #8459 | 1.75 | (a) | 07/20/24 | 9,954 | 10,396 | |||||||||||
GNMA #8499 | 3.00 | (a) | 05/20/19 | 6,542 | 6,827 | |||||||||||
GNMA #8518 | 1.63 | (a) | 10/20/24 | 9,856 | 10,277 | |||||||||||
GNMA #8532 | 2.50 | (a) | 10/20/24 | 13,137 | 13,733 | |||||||||||
GNMA #8591 | 1.63 | (a) | 02/20/25 | 27,744 | 28,964 | |||||||||||
GNMA #8638 | 1.75 | (a) | 06/20/25 | 11,674 | 12,177 |
The accompanying notes are an integral part of these financial statements. | Portfolio of Investments | 23 |
Table of Contents
PORTFOLIO OF INVESTMENTS: Short-Term Government Securities Fund (continued)
June 30, 2013 (Unaudited)
Interest Rate | Maturity Date | Face Amount | Value | |||||||||||||
(Mortgage Backed Securities continued) | ||||||||||||||||
GNMA #8648 | 1.75 | %(a) | 07/20/25 | $ | 19,792 | $ | 20,671 | |||||||||
GNMA #8663 | 2.00 | (a) | 07/20/25 | 14,666 | 15,294 | |||||||||||
GNMA #8680 | 3.50 | (a) | 08/20/20 | 12,653 | 13,303 | |||||||||||
GNMA #8687 | 2.50 | (a) | 08/20/25 | 3,840 | 4,012 | |||||||||||
GNMA #8702 | 3.00 | (a) | 10/20/20 | 5,120 | 5,336 | |||||||||||
GNMA #8747 | 1.63 | (a) | 11/20/25 | 9,478 | 9,883 | |||||||||||
GNMA #8807 | 1.75 | (a) | 07/20/21 | 11,215 | 11,711 | |||||||||||
GNMA #8836 | 1.75 | (a) | 09/20/21 | 10,895 | 11,377 | |||||||||||
GNMA #8847 | 1.75 | (a) | 04/20/26 | 12,275 | 12,801 | |||||||||||
GNMA #8869 | 1.63 | (a) | 11/20/21 | 34,220 | 35,678 | |||||||||||
GNMA #8873 | 2.50 | (a) | 11/20/21 | 16,642 | 17,221 | |||||||||||
GNMA #8877 | 1.75 | (a) | 05/20/26 | 3,081 | 3,213 | |||||||||||
GNMA #8883 | 1.63 | (a) | 12/20/21 | 12,063 | 12,577 | |||||||||||
GNMA #8915 | 1.63 | (a) | 02/20/22 | 11,564 | 12,072 | |||||||||||
GNMA #8934 | 1.63 | (a) | 03/20/22 | 20,615 | 21,519 | |||||||||||
GNMA #8978 | 1.75 | (a) | 05/20/22 | 50,257 | 52,415 | |||||||||||
GNMA #80053 | 1.63 | (a) | 03/20/27 | 2,646 | 2,762 | |||||||||||
GNMA #80058 | 1.75 | (a) | 04/20/27 | 2,714 | 2,831 | |||||||||||
GNMA #80185 | 1.75 | (a) | 04/20/28 | 25,938 | 27,051 | |||||||||||
GNMA #80264 | 1.63 | (a) | 03/20/29 | 20,285 | 21,179 | |||||||||||
GNMA #80283 | 1.75 | (a) | 05/20/29 | 18,246 | 19,028 | |||||||||||
GNMA #80300 | 1.75 | (a) | 07/20/29 | 15,812 | 16,511 | |||||||||||
GNMA #80309 | 1.75 | (a) | 08/20/29 | 6,867 | 7,173 | |||||||||||
GNMA #80363 | 1.63 | (a) | 01/20/30 | 54,254 | 56,638 | |||||||||||
GNMA #80426 | 1.75 | (a) | 07/20/30 | 2,251 | 2,352 | |||||||||||
GNMA #80452 | 1.75 | (a) | 09/20/30 | 15,512 | 16,203 | |||||||||||
GNMA #80475 | 1.63 | (a) | 12/20/30 | 26,292 | 27,419 | |||||||||||
GNMA #80577 | 1.63 | (a) | 02/20/32 | 3,838 | 3,983 | |||||||||||
GNMA #80684 | 1.75 | (a) | 04/20/33 | 13,890 | 14,489 | |||||||||||
GNMA #81129 | 2.13 | (a) | 10/20/34 | 216,429 | 226,145 | |||||||||||
GNMA #510280 | 6.00 | 08/15/14 | 1,744 | 1,794 | ||||||||||||
GNMA #583189 | 4.50 | 02/20/17 | 22,752 | 24,461 | ||||||||||||
GNMA #607494 | 5.00 | 04/15/19 | 16,927 | 18,202 | ||||||||||||
GNMA #616274 | 5.00 | 02/15/19 | 18,966 | 20,477 | ||||||||||||
GNMA 1996-4 | 7.00 | 04/16/26 | 3,207 | 3,585 | ||||||||||||
GNMA 2001-53 | 5.50 | 10/20/31 | 12,774 | 13,146 | ||||||||||||
GNMA 2001-53 | 0.54 | (a) | 10/20/31 | 2,356 | 2,363 | |||||||||||
GNMA 2002-15 | 5.50 | 11/20/31 | 23,895 | 25,283 | ||||||||||||
GNMA 2002-20 | 4.50 | 03/20/32 | 18,830 | 20,676 | ||||||||||||
GNMA 2003-11 | 4.00 | 10/17/29 | 29,486 | 31,430 | ||||||||||||
GNMA 2003-12 | 4.50 | 02/20/32 | 11,745 | 12,110 | ||||||||||||
GNMA 2003-26 | 0.64 | (a) | 04/16/33 | 8,850 | 8,928 | |||||||||||
GNMA 2003-97 | 4.50 | 03/20/33 | 34,583 | 36,454 | ||||||||||||
GNMA 2004-102 | 5.50 | 04/20/34 | 57,437 | 63,880 | ||||||||||||
GNMA 2004-17 | 4.50 | 12/20/33 | 84,621 | 91,080 | ||||||||||||
GNMA 2010-113 | 2.50 | 02/16/40 | 521,676 | 529,145 | ||||||||||||
GNMA #MA0668 | 2.00 | 12/20/27 | 242,313 | 240,185 | ||||||||||||
NCUA Guaranteed Notes 2010-C1 | 1.60 | 10/29/20 | 695,612 | 704,457 | ||||||||||||
Total Mortgage Backed Securities (Cost $3,340,876) | 3,450,728 | |||||||||||||||
MUNICIPAL BONDS | ||||||||||||||||
(5.6% of portfolio) | ||||||||||||||||
Carmel, Indiana Redevelopment District | 7.80 | 01/15/29 | 500,000 | 600,330 | ||||||||||||
Cook County, Illinois Community Consolidated School District | 0.00 | (c) | 12/01/15 | 1,050,000 | 1,028,748 | |||||||||||
DuPage & Cook County Illinois Community School District | 5.25 | 01/01/26 | 110,000 | 121,921 | ||||||||||||
Hamilton Township, New Jersey Board of Education | 5.53 | 08/15/24 | 700,000 | 738,591 | ||||||||||||
Illinois Housing Development Authority, Illinois | 4.13 | 10/20/16 | 685,000 | 716,955 |
24 | Portfolio of Investments | The accompanying notes are an integral part of these financial statements. |
Table of Contents
PORTFOLIO OF INVESTMENTS: Short-Term Government Securities Fund (continued)
June 30, 2013 (Unaudited)
Interest Rate/Yield | Maturity Date | Face Amount | Value | |||||||||||||
(Municipal Bonds continued) | ||||||||||||||||
Jefferson County Colorado | 0.00 | %(c) | 03/01/16 | $ | 200,000 | $ | 195,018 | |||||||||
Miami-Dade County, Florida Educational Facilities Authority | 4.70 | 04/01/14 | 560,000 | 576,598 | ||||||||||||
Rio Rancho, New Mexico New Event Center | 5.00 | 06/01/20 | 1,000,000 | 1,079,490 | ||||||||||||
Total Municipal Bonds (Cost $5,043,843) | 5,057,651 | |||||||||||||||
CORPORATE BONDS | ||||||||||||||||
(12.2% of portfolio) | ||||||||||||||||
American Express Centurion Bank | 1.40 | 10/06/14 | 250,000 | 252,397 | ||||||||||||
Bank of China NY | 0.95 | 12/31/14 | 250,000 | 250,550 | ||||||||||||
Barclays Bank Delaware | 0.00 | (c) | 05/27/15 | 175,000 | 168,228 | |||||||||||
CIT Bank | 1.10 | 11/25/13 | 250,000 | 250,576 | ||||||||||||
Compass Bank | 0.95 | 06/23/14 | 250,000 | 250,642 | ||||||||||||
Discover Bank | 1.35 | 06/16/14 | 250,000 | 251,859 | ||||||||||||
GE Money Bank | 1.75 | 07/23/13 | 250,000 | 250,171 | ||||||||||||
Goldman Sachs Bank USA | 1.50 | 11/24/14 | 250,000 | 252,486 | ||||||||||||
Lulwa Ltd. | 1.83 | 03/26/25 | 981,357 | 943,078 | ||||||||||||
Petroleos Mexicanos | 2.00 | 12/20/22 | 950,000 | 944,404 | ||||||||||||
Safina LTD | 2.00 | 12/30/23 | 1,883,313 | 1,853,282 | ||||||||||||
SallieMae Bank | 1.00 | 07/25/14 | 250,000 | 250,752 | ||||||||||||
Sayarra LTD | 2.77 | 10/29/21 | 39,713 | 41,129 | ||||||||||||
Southern Community Bank & Trust | 0.77 | (a) | 02/18/14 | 250,000 | 249,971 | |||||||||||
State Bank of India NY | 1.10 | 09/23/13 | 250,000 | 250,336 | ||||||||||||
SunTrust Bank | 0.77 | (a) | 08/29/14 | 250,000 | 244,412 | |||||||||||
Tagua Leasing LLC | 1.90 | 07/12/24 | 943,941 | 920,117 | ||||||||||||
Tagua Leasing LLC | 1.73 | 09/18/24 | 943,778 | 907,732 | ||||||||||||
Union 11 Leasing LLC | 2.41 | 01/23/24 | 908,503 | 910,293 | ||||||||||||
Union 16 Leasing LLC | 1.86 | 01/22/25 | 981,232 | 948,678 | ||||||||||||
VRG Linhas Aéreas SA | 0.85 | 09/27/14 | 627,339 | 628,803 | ||||||||||||
Total Corporate Bonds (Cost $11,180,461) | 11,019,896 | |||||||||||||||
U. S. GOVERNMENT AND AGENCY OBLIGATIONS | ||||||||||||||||
(65.5% of portfolio) | ||||||||||||||||
Government Trust Certificate (Israel Trust) | 0.00 | (c) | 04/01/15 | 2,750,000 | 2,691,524 | |||||||||||
National Archives Facility Trust | 8.50 | 09/01/19 | 35,407 | 43,440 | ||||||||||||
Overseas Private Investment Corp. | 1.45 | (d) | 09/20/13 | 1,000,000 | 1,258,230 | |||||||||||
Overseas Private Investment Corp. | 1.45 | (d) | 09/20/13 | 3,015,000 | 3,145,610 | |||||||||||
Overseas Private Investment Corp. | 3.46 | (d) | 07/12/14 | 1,000,000 | 1,148,250 | |||||||||||
Overseas Private Investment Corp. | 1.84 | (d) | 07/12/14 | 1,500,000 | 1,601,025 | |||||||||||
Overseas Private Investment Corp. | 0.61 | (e) | 12/22/15 | 1,500,000 | 1,502,370 | |||||||||||
Overseas Private Investment Corp. | 3.50 | (e) | 05/02/16 | 1,000,000 | 1,171,550 | |||||||||||
Overseas Private Investment Corp. | 4.87 | (e) | 09/07/16 | 390,671 | 502,247 | |||||||||||
Overseas Private Investment Corp. | 4.87 | (e) | 09/07/16 | 1,000,000 | 1,285,600 | |||||||||||
Overseas Private Investment Corp. | 1.05 | (e) | 12/09/16 | 2,000,000 | 2,038,358 | |||||||||||
Overseas Private Investment Corp. | 0.53 | (e) | 12/09/16 | 1,000,000 | 1,002,780 | |||||||||||
Overseas Private Investment Corp. | 3.56 | (d) | 04/23/17 | 3,000,000 | 3,583,913 | |||||||||||
Overseas Private Investment Corp. | 1.50 | (e) | 11/17/17 | 1,000,000 | 1,011,012 | |||||||||||
Overseas Private Investment Corp. | 1.01 | (e) | 12/10/17 | 2,500,000 | 2,545,748 | |||||||||||
Overseas Private Investment Corp. | 1.32 | (d) | 02/19/18 | 2,000,000 | 1,977,520 | |||||||||||
Overseas Private Investment Corp. | 1.55 | (e) | 03/15/18 | 3,600,000 | 3,752,435 | |||||||||||
Overseas Private Investment Corp. | 0.68 | (e) | 04/30/18 | 2,000,000 | 2,009,020 | |||||||||||
Overseas Private Investment Corp. | 1.84 | (e) | 06/10/18 | 1,000,000 | 1,074,820 | |||||||||||
Overseas Private Investment Corp. | 5.66 | (e) | 06/10/18 | 900,000 | 1,308,606 | |||||||||||
Overseas Private Investment Corp. | 1.14 | (e) | 06/10/18 | 4,000,000 | 4,047,880 | |||||||||||
Overseas Private Investment Corp. | 0.78 | (e) | 07/07/18 | 1,000,000 | 1,007,818 | |||||||||||
Overseas Private Investment Corp. | 2.53 | (e) | 07/07/19 | 1,000,000 | 1,117,270 |
The accompanying notes are an integral part of these financial statements. | Portfolio of Investments | 25 |
Table of Contents
PORTFOLIO OF INVESTMENTS: Short-Term Government Securities Fund (continued)
June 30, 2013 (Unaudited)
Interest Rate/Yield | Maturity Date | Face Amount | Value | |||||||||||||
(U. S. Government And Agency Obligations continued) | ||||||||||||||||
Overseas Private Investment Corp. | 0.83 | %(e) | 11/08/19 | $ | 2,000,000 | $ | 1,998,244 | |||||||||
Overseas Private Investment Corp. | 1.34 | (e) | 11/20/19 | 2,000,000 | 2,064,934 | |||||||||||
Overseas Private Investment Corp. | 1.50 | (e) | 11/15/20 | 1,000,000 | 981,940 | |||||||||||
Overseas Private Investment Corp. | 3.37 | 05/15/21 | 885,567 | 961,089 | ||||||||||||
Overseas Private Investment Corp. | 2.07 | 05/15/21 | 930,200 | 938,435 | ||||||||||||
Philippine Power Trust I (b) | 5.40 | 09/26/18 | 327,381 | 356,862 | ||||||||||||
Private Export Funding Corp. | 4.97 | 08/15/13 | 1,100,000 | 1,106,494 | ||||||||||||
Private Export Funding Corp. | 2.13 | 07/15/16 | 500,000 | 520,086 | ||||||||||||
The Financing Corp. | 0.00 | (c) | 10/06/17 | 500,000 | 468,231 | |||||||||||
The Financing Corp. | 0.00 | (c) | 02/08/18 | 500,000 | 465,648 | |||||||||||
U.S. Department of Housing and Urban Development | 6.93 | 08/01/13 | 10,000 | 10,024 | ||||||||||||
U.S. Department of Housing and Urban Development | 6.33 | 08/01/13 | 89,000 | 89,459 | ||||||||||||
U.S. Department of Housing and Urban Development | 7.72 | 08/01/13 | 50,000 | 50,092 | ||||||||||||
U.S. Department of Housing and Urban Development | 7.63 | 08/01/14 | 20,000 | 20,006 | ||||||||||||
U.S. Department of Housing and Urban Development | 7.91 | 08/01/17 | 37,000 | 37,216 | ||||||||||||
U.S. Department of Housing and Urban Development | 5.77 | 08/01/17 | 830,000 | 828,753 | ||||||||||||
U.S. Department of Housing and Urban Development | 2.91 | 08/01/17 | 1,000,000 | 1,062,300 | ||||||||||||
U.S. Department of Housing and Urban Development | 7.93 | 08/01/18 | 80,000 | 80,453 | ||||||||||||
U.S. Department of Housing and Urban Development | 6.07 | 08/01/21 | 445,000 | 447,074 | ||||||||||||
U.S. Department of Housing and Urban Development | 6.12 | 08/01/22 | 884,000 | 883,599 | ||||||||||||
U.S. Department of Housing and Urban Development | 5.77 | 08/01/26 | 500,000 | 551,651 | ||||||||||||
United States Treasury Note | 2.38 | 02/28/15 | 1,500,000 | 1,551,855 | ||||||||||||
United States Treasury Note | 1.50 | 06/30/16 | 1,000,000 | 1,024,141 | ||||||||||||
United States Treasury Note | 1.00 | 08/31/16 | 1,000,000 | 1,007,734 | ||||||||||||
United States Treasury Note | 1.38 | 09/30/18 | 1,000,000 | 995,625 | ||||||||||||
Total U.S. Government and Agency Obligations (Cost $58,739,739) |
| 59,328,971 | ||||||||||||||
COMMERCIAL PAPER | ||||||||||||||||
(12.1% of portfolio) | ||||||||||||||||
Consolidated Edison Inc. (b) | 0.30 | 07/01/13 | 2,000,000 | 2,000,000 | ||||||||||||
Northwestern Corp. (b) | 0.25 | 07/01/13 | 4,500,000 | 4,500,000 | ||||||||||||
TransCanada Pipeline (b) | 0.29 | 07/02/13 | 4,500,000 | 4,499,964 | ||||||||||||
Total Commercial Paper (Cost $10,999,964) | 10,999,964 | |||||||||||||||
MONEY MARKET ACCOUNT | Shares | |||||||||||||||
(0.2% of portfolio) | ||||||||||||||||
State Street Institutional Liquid Reserves Fund | 0.09 | (f) | 174,780 | 174,780 | ||||||||||||
Total Money Market Account (Cost $174,780) | 174,780 | |||||||||||||||
TOTAL INVESTMENTS IN SECURITIES (Cost $90,030,644)—100% | $ | 90,626,583 |
(a) | Variable coupon rate as of June 30, 2013. |
(b) | 144A security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. The security has been determined to be liquid under criteria established by the Fund’s Board of Directors. The total of such securities at period-end amounts to $11,882,962 and represents 13.1% of total investments. |
(c) | Zero coupon rate. |
(d) | Interest is paid at maturity. |
(e) | Interest is paid at put date. |
(f) | 7-day yield at June 30, 2013. |
26 | Portfolio of Investments | The accompanying notes are an integral part of these financial statements. |
Table of Contents
PORTFOLIO OF INVESTMENTS: Short-Term Bond Fund
June 30, 2013 (Unaudited)
CORPORATE BONDS | Interest Rate | Maturity Date | Face Amount | Value | ||||||||||||
(19.5% of portfolio) | ||||||||||||||||
BASIC INDUSTRIES—2.0% | ||||||||||||||||
Danaher Corp. | 1.30 | % | 06/23/14 | $ | 525,000 | $ | 528,648 | |||||||||
Dun & Bradstreet Corp. | 2.88 | 11/15/15 | 990,000 | 1,016,113 | ||||||||||||
Eaton Corp. | 0.60 | (a) | 06/16/14 | 1,025,000 | 1,025,524 | |||||||||||
General Dynamics Corp. | 1.38 | 01/15/15 | 775,000 | 783,413 | ||||||||||||
General Electric Co. | 0.85 | 10/09/15 | 550,000 | 549,480 | ||||||||||||
General Electric Co. | 5.25 | 12/06/17 | 3,900,000 | 4,403,673 | ||||||||||||
Ingersoll-Rand Global Holding Co. Ltd. | 9.50 | 04/15/14 | 350,000 | 373,543 | ||||||||||||
United Technologies Corp. | 0.54 | (a) | 12/02/13 | 800,000 | 800,861 | |||||||||||
Total Basic Industries | 9,481,255 | |||||||||||||||
CONSUMER STAPLES—0.3% | ||||||||||||||||
Beverages | ||||||||||||||||
Pepsico Inc. | 0.70 | 02/26/16 | 525,000 | 520,972 | ||||||||||||
Pepsico Inc. | 0.48 | (a) | 02/26/16 | 525,000 | 525,827 | |||||||||||
Personal Products | ||||||||||||||||
Colgate-Palmolive Co. | 0.90 | 05/01/18 | 550,000 | 529,124 | ||||||||||||
Total Consumer Staples | 1,575,923 | |||||||||||||||
CONSUMER DISCRETIONARY—0.1% | ||||||||||||||||
Textiles, Apparel, & Luxury Goods | ||||||||||||||||
VF Corp. | 1.02 | (a) | 08/23/13 | 540,000 | 540,612 | |||||||||||
Total Consumer Discretionary | 540,612 | |||||||||||||||
ENERGY—0.7% | ||||||||||||||||
Oil, Gas, & Consumable Fuels | ||||||||||||||||
Chevron Corp. | 0.89 | 06/24/16 | 2,075,000 | 2,077,718 | ||||||||||||
Chevron Corp. | 1.10 | 12/05/17 | 475,000 | 464,128 | ||||||||||||
Chevron Corp. | 1.72 | 06/24/18 | 975,000 | 966,033 | ||||||||||||
Total Energy | 3,507,879 | |||||||||||||||
FINANCE—7.6% | ||||||||||||||||
Commercial Banks | ||||||||||||||||
Bank of America NA | 0.55 | (a) | 06/15/16 | 2,025,000 | 1,952,463 | |||||||||||
Bank of America NA | 0.57 | (a) | 06/15/17 | 1,550,000 | 1,484,403 | |||||||||||
Citigroup Inc. | 6.00 | 12/13/13 | 975,000 | 997,649 | ||||||||||||
Dexia Crédit Local New York | 1.70 | 09/06/13 | 975,000 | 974,449 | ||||||||||||
JP Morgan Chase Bank NA | 0.60 | (a) | 06/13/16 | 12,625,000 | 12,402,724 | |||||||||||
Key Bank NA | 7.41 | 10/15/27 | 1,050,000 | 1,159,185 | ||||||||||||
Landesbank Baden-Wuerttemberg NY | 5.05 | 12/30/15 | 100,000 | 108,670 | ||||||||||||
Union Bank NA | 5.95 | 05/11/16 | 525,000 | 588,418 | ||||||||||||
WestLB AG, NY | 4.80 | 07/15/15 | 275,000 | 294,026 | ||||||||||||
Consumer Finance | ||||||||||||||||
American Express Credit Corp. | 7.30 | 08/20/13 | 525,000 | 529,794 | ||||||||||||
General Electric Capital Corp. | 0.34 | (a) | 12/20/13 | 700,000 | 699,835 | |||||||||||
General Electric Capital Corp. | 0.42 | (a) | 09/15/14 | 2,350,000 | 2,348,691 | |||||||||||
General Electric Capital Corp. | 0.00 | (a) | 09/30/37 | 1,350,000 | 1,343,250 | |||||||||||
HSBC Finance Corp. | 0.53 | (a) | 01/15/14 | 1,650,000 | 1,648,423 | |||||||||||
Insurance | ||||||||||||||||
American International Group, Inc. | 3.65 | 01/15/14 | 275,000 | 278,973 | ||||||||||||
Berkshire Hathaway Finance Corp. | 1.50 | 01/10/14 | 625,000 | 628,772 | ||||||||||||
Genworth Global Funding | 0.47 | (a) | 04/15/14 | 4,675,000 | 4,663,747 | |||||||||||
Capital Markets | ||||||||||||||||
Morgan Stanley | 0.58 | (a) | 01/09/14 | 1,775,000 | 1,770,254 | |||||||||||
Morgan Stanley | 4.10 | 01/26/15 | 700,000 | 730,216 |
The accompanying notes are an integral part of these financial statements. | Portfolio of Investments | 27 |
Table of Contents
PORTFOLIO OF INVESTMENTS: Short-Term Bond Fund (continued)
June 30, 2013 (Unaudited)
Interest Rate | Maturity Date | Face Amount | Value | |||||||||||||
(Corporate Bonds continued) | ||||||||||||||||
Vesey Street Investment Trust I | 4.40 | % | 09/01/16 | $ | 2,275,000 | $ | 2,422,634 | |||||||||
Total Finance | 37,026,576 | |||||||||||||||
HEALTH CARE —1.6% | ||||||||||||||||
Health Care Equipment & Supplies | ||||||||||||||||
Baxter International Inc. | 0.45 | (a) | 12/11/14 | 825,000 | 824,757 | |||||||||||
Baxter International Inc. | 0.95 | 06/01/16 | 825,000 | 821,127 | ||||||||||||
Baxter International Inc. | 1.85 | 01/15/17 | 2,250,000 | 2,263,631 | ||||||||||||
Johnson & Johnson | 1.20 | 05/15/14 | 1,375,000 | 1,385,436 | ||||||||||||
Thermo Fisher Scientific Inc. | 2.05 | 02/21/14 | 750,000 | 755,707 | ||||||||||||
Health Care Providers & Services | ||||||||||||||||
UnitedHealth Group Inc. | 0.85 | 10/15/15 | 550,000 | 550,717 | ||||||||||||
Pharmaceuticals | ||||||||||||||||
Eli Lilly and Co. | 6.57 | 01/01/16 | 1,025,000 | 1,155,153 | ||||||||||||
Total Health Care | 7,756,528 | |||||||||||||||
INFORMATION TECHNOLOGY—3.6% | ||||||||||||||||
Computers & Peripherals | ||||||||||||||||
Dell Inc. | 1.40 | 09/10/13 | 1,025,000 | 1,025,405 | ||||||||||||
Dell Inc. | 2.10 | 04/01/14 | 5,000,000 | 5,019,775 | ||||||||||||
Intel Corp. | 1.35 | 12/15/17 | 950,000 | 929,690 | ||||||||||||
Apple Inc. | 1.00 | 05/03/18 | 5,775,000 | 5,545,721 | ||||||||||||
IT Services | ||||||||||||||||
Hewlett Packard Co. | 1.82 | (a) | 09/19/14 | 3,700,000 | 3,735,564 | |||||||||||
Software | ||||||||||||||||
Microsoft Corp. | 0.88 | 11/15/17 | 250,000 | 242,770 | ||||||||||||
Microsoft Corp. | 1.00 | 05/01/18 | 900,000 | 870,398 | ||||||||||||
Total Information Technology | 17,369,323 | |||||||||||||||
TRANSPORTATION—1.2% | ||||||||||||||||
Airlines | ||||||||||||||||
Southwest Airlines Inc. | 7.22 | 07/01/13 | 10,227 | 10,227 | ||||||||||||
Road & Rail | ||||||||||||||||
Burlington Northern & Santa Fe Railway Co. | 4.58 | 01/15/21 | 750,297 | 802,818 | ||||||||||||
Burlington Northern & Santa Fe Railway Co. | 4.83 | 01/15/23 | 119,786 | 129,681 | ||||||||||||
Consolidated Rail Corp. | 6.76 | 05/25/15 | 23,795 | 24,876 | ||||||||||||
CSX Transportation Inc. | 8.38 | 10/15/14 | 199,286 | 217,170 | ||||||||||||
CSX Transportation Inc. | 9.00 | 05/15/15 | 575,000 | 653,015 | ||||||||||||
GATX Corp. | 9.00 | 11/15/13 | 116,179 | 119,640 | ||||||||||||
GATX Corp. | 8.75 | 05/15/14 | 125,000 | 133,322 | ||||||||||||
Skyway Concession Co. LLC (b) | 0.56 | (a) | 06/30/17 | 3,825,000 | 3,442,500 | |||||||||||
Union Pacific Railroad Co. | 6.85 | 01/02/19 | 48,288 | 53,808 | ||||||||||||
Total Transportation | 5,587,057 | |||||||||||||||
UTILITIES—2.4% | ||||||||||||||||
Electric & Gas | ||||||||||||||||
Atlantic City Electric Co. | 6.63 | 08/01/13 | 550,000 | 552,286 | ||||||||||||
Delmarva Power & Light Co. | 6.40 | 12/01/13 | 340,000 | 347,983 | ||||||||||||
Entergy Louisiana LLC | 1.88 | 12/15/14 | 1,800,000 | 1,823,861 | ||||||||||||
Georgia Power Co. | 0.59 | (a) | 03/15/16 | 850,000 | 850,465 | |||||||||||
Michigan Consolidated Gas Co. | 8.25 | 05/01/14 | 1,370,000 | 1,449,563 | ||||||||||||
NSTAR Electric Co. | 4.88 | 04/15/14 | 600,000 | 620,367 | ||||||||||||
Telephone | ||||||||||||||||
Ameritech Capital Funding Corp. | 6.45 | 01/15/18 | 1,200,000 | 1,368,091 | ||||||||||||
AT&T Inc. | 0.88 | 02/13/15 | 1,350,000 | 1,350,706 | ||||||||||||
AT&T Inc. | 0.80 | 12/01/15 | 675,000 | 671,917 |
28 | Portfolio of Investments | The accompanying notes are an integral part of these financial statements. |
Table of Contents
PORTFOLIO OF INVESTMENTS: Short-Term Bond Fund (continued)
June 30, 2013 (Unaudited)
Interest Rate | Maturity Date | Face Amount | Value | |||||||||||||
(Corporate Bonds continued) | ||||||||||||||||
AT&T Inc. | 0.90 | % | 02/12/16 | $ | 1,350,000 | $ | 1,339,824 | |||||||||
Southwestern Bell Telephone Co. | 7.00 | 07/01/15 | 525,000 | 582,713 | ||||||||||||
Verizon Communications, Inc. | 1.95 | 03/28/14 | 500,000 | 505,033 | ||||||||||||
Total Utilities | 11,462,809 | |||||||||||||||
Total Corporate Bonds (Cost $93,295,306) | 94,307,962 | |||||||||||||||
YANKEE BONDS | ||||||||||||||||
(13.7% of portfolio) | ||||||||||||||||
Abbey National Treasury Services PLC | 2.88 | 04/25/14 | 750,000 | 759,176 | ||||||||||||
African Development Bank | 6.88 | 10/15/15 | 825,000 | 919,215 | ||||||||||||
BAA Funding Ltd. (b) | 2.50 | 06/25/17 | 275,000 | 279,378 | ||||||||||||
Canadian National Railway Co. | 7.20 | 01/02/16 | 96,544 | 106,985 | ||||||||||||
CNOOC Finance (2013) Ltd. | 1.13 | 05/09/16 | 575,000 | 565,685 | ||||||||||||
Coca-Cola HBC Finance BV | 5.13 | 09/17/13 | 825,000 | 832,402 | ||||||||||||
Commonwealth Bank of Australia (b) | 1.53 | (a) | 03/31/17 | 800,000 | 802,910 | |||||||||||
Compagnie de Financement Foncier (b) | 2.25 | 03/07/14 | 700,000 | 707,823 | ||||||||||||
Compagnie de Financement Foncier | 0.23 | (a) | 03/22/17 | 2,100,000 | 2,030,553 | |||||||||||
Daimler Finance NA LLC (b) | 0.88 | (a) | 01/09/15 | 400,000 | 401,267 | |||||||||||
Daimler Finance NA LLC (b) | 1.25 | 01/11/16 | 1,175,000 | 1,167,343 | ||||||||||||
DEPFA ACS Bank (b) | 4.88 | 10/28/15 | 500,000 | 522,411 | ||||||||||||
Dexia Crédit Local (b) | 2.75 | 01/10/14 | 925,000 | 934,855 | ||||||||||||
Dexia Crédit Local (b) | 2.75 | 04/29/14 | 5,175,000 | 5,261,888 | ||||||||||||
Dexia Crédit Local (b) | 0.76 | (a) | 04/29/14 | 375,000 | 375,615 | |||||||||||
Dexia Municipal Agency | 0.19 | (a) | 06/20/14 | 900,000 | 898,755 | |||||||||||
Dexia Municipal Agency | 5.25 | 02/16/17 | 1,100,000 | 1,226,602 | ||||||||||||
Diageo Capital PLC | 0.63 | 04/29/16 | 1,375,000 | 1,362,039 | ||||||||||||
Eni Coordination Center SA | 4.80 | 08/10/15 | 1,775,000 | 1,895,578 | ||||||||||||
France Telecom | 4.38 | 07/08/14 | 6,200,000 | 6,385,287 | ||||||||||||
France Telecom | 2.13 | 09/16/15 | 825,000 | 837,164 | ||||||||||||
GlaxoSmithKline Capital Corp. | 0.70 | 03/18/16 | 925,000 | 916,515 | ||||||||||||
Hydro-Quebec | 6.27 | 01/03/26 | 80,000 | 99,172 | ||||||||||||
Hypo Pfandbrief Bank International SA | 0.20 | (a) | 12/20/13 | 1,400,000 | 1,389,987 | |||||||||||
Hypothekenbank Frankfurt International SA | 0.45 | (a) | 03/24/14 | 1,300,000 | 1,290,741 | |||||||||||
Hypothekenbank Frankfurt International SA | 0.22 | (a) | 07/12/16 | 930,000 | 861,148 | |||||||||||
Iberdrola Finance Ireland Ltd. (b) | 3.80 | 09/11/14 | 775,000 | 795,018 | ||||||||||||
ING Bank NV (b) | 2.00 | 09/25/15 | 2,625,000 | 2,647,260 | ||||||||||||
International Bank for Reconstruction and Development | 0.00 | (d) | 08/15/13 | 210,000 | 209,848 | |||||||||||
International Bank for Reconstruction and Development | 0.00 | (d) | 02/15/15 | 820,000 | 809,147 | |||||||||||
Korea Development Bank | 8.00 | 01/23/14 | 500,000 | 519,073 | ||||||||||||
Mitsubishi Corp. | 2.75 | 09/16/15 | 300,000 | 309,639 | ||||||||||||
Norsk Hydro ASA | 9.13 | 07/15/14 | 2,125,000 | 2,308,942 | ||||||||||||
OEBB Infrastruktur AG | 4.75 | 10/28/13 | 1,250,000 | 1,267,200 | ||||||||||||
OEBB Infrastruktur AG | 4.63 | 11/21/13 | 1,275,000 | 1,295,311 | ||||||||||||
RIO Tinto Finance USA Plc | 0.82 | (a) | 06/19/15 | 1,975,000 | 1,974,982 | |||||||||||
Sanofi-Aventis | 1.63 | 03/28/14 | 500,000 | 504,396 | ||||||||||||
Santander US Debt SA Unipersonal (b) | 2.99 | 10/07/13 | 1,300,000 | 1,307,413 | ||||||||||||
Santander US Debt SA Unipersonal (b) | 3.72 | 01/20/15 | 900,000 | 908,424 | ||||||||||||
Scottish Power Ltd. | 5.38 | 03/15/15 | 4,675,000 | 4,945,991 | ||||||||||||
Société Générale SCF | 1.69 | (a) | 03/19/14 | 1,400,000 | 1,411,340 | |||||||||||
Société Générale SCF | 1.74 | (a) | 06/19/14 | 1,400,000 | 1,412,181 | |||||||||||
Total Capital | 3.00 | 06/24/15 | 900,000 | 940,491 | ||||||||||||
Total Capital Canada Ltd. | 1.63 | 01/28/14 | 5,075,000 | 5,108,957 | ||||||||||||
Total Capital Canada Ltd. | 0.66 | (a) | 01/15/16 | 1,175,000 | 1,181,521 | |||||||||||
Trans-Canada Pipelines Ltd. | 0.88 | 03/02/15 | 1,000,000 | 1,000,870 | ||||||||||||
Vodafone Group PLC | 0.90 | 02/19/16 | 850,000 | 835,948 | ||||||||||||
Vodafone Group PLC | 0.66 | (a) | 02/19/16 | 850,000 | 850,575 |
The accompanying notes are an integral part of these financial statements. | Portfolio of Investments | 29 |
Table of Contents
PORTFOLIO OF INVESTMENTS: Short-Term Bond Fund (continued)
June 30, 2013 (Unaudited)
Interest Rate | Maturity Date | Face Amount | Value | |||||||||||||
(Yankee Bonds continued) | ||||||||||||||||
Volkswagen International Finance NV (b) | 1.15 | % | 11/20/15 | $ | 650,000 | $ | 651,521 | |||||||||
Total Yankee Bonds (Cost $65,312,845) | 66,026,542 | |||||||||||||||
ASSET BACKED SECURITIES | ||||||||||||||||
(16.7% of portfolio) | ||||||||||||||||
Access Group Inc. 01 | 0.63 | (a) | 05/25/29 | 1,627,364 | 1,469,295 | |||||||||||
Access Group Inc. 04-A | 0.54 | (a) | 04/25/29 | 1,044,875 | 1,015,119 | |||||||||||
Access Group Inc. 05-B | 0.51 | (a) | 07/25/22 | 626,004 | 614,438 | |||||||||||
AEP Texas Central Transition Funding 06-A | 4.98 | 07/01/15 | 8,380 | 8,384 | ||||||||||||
Ally Master Owner Trust 12-1 | 0.99 | (a) | 02/15/17 | 2,175,000 | 2,182,188 | |||||||||||
Ally Master Owner Trust 13-1 | 0.64 | (a) | 02/15/18 | 925,000 | 920,840 | |||||||||||
Ally Master Owner Trust 13-2 | 1.00 | 02/15/18 | 925,000 | 916,621 | ||||||||||||
American Credit Acceptance Receivable 13-1 (b) | 1.45 | 04/16/18 | 991,029 | 989,046 | ||||||||||||
Axis Equipment Finance Receivables LLC 12-1A (b) | 1.25 | 03/20/15 | 252,307 | 252,140 | ||||||||||||
Bush Truck Leasing LLC II-A (b) | 5.00 | 09/25/18 | 293,001 | 291,688 | ||||||||||||
CCR Inc. MT-100 Payment Rights Master Trust 12-C (b) | 4.75 | 08/10/22 | 1,750,000 | 1,749,388 | ||||||||||||
CIT Marine Trust 99-A | 6.25 | 11/15/19 | 89,579 | 90,989 | ||||||||||||
Community Reinvestment Revenue Notes 19 (b) | 4.68 | 08/01/35 | 513,536 | 499,455 | ||||||||||||
CPS Auto Trust 11-A (b) | 2.82 | 04/16/18 | 448,103 | 453,499 | ||||||||||||
CPS Auto Trust 11-B (b) | 3.68 | 09/17/18 | 253,423 | 259,807 | ||||||||||||
CPS Auto Trust 11-C (b) | 4.21 | 03/15/19 | 424,863 | 439,728 | ||||||||||||
CPS Auto Trust 12-A (b) | 2.78 | 06/17/19 | 361,684 | 367,529 | ||||||||||||
CPS Auto Trust 13-A (b) | 1.31 | 06/15/20 | 1,370,727 | 1,365,181 | ||||||||||||
CPS Auto Trust 13-B (b) | 1.82 | 09/15/20 | 2,250,000 | 2,243,419 | ||||||||||||
Credit Acceptance Auto Loan Trust 12-2 (b) | 2.21 | 09/15/20 | 550,000 | 551,453 | ||||||||||||
Edlinc Student Loan Funding Trust 12-A (b) | 3.26 | (a) | 10/01/25 | 4,913,211 | 4,929,327 | |||||||||||
First Financial Credit Card Master Note Trust II 10-C (b) | 5.19 | 09/17/18 | 450,000 | 451,539 | ||||||||||||
First Financial Credit Card Master Note Trust II 10-D (b) | 3.72 | 06/17/19 | 1,725,000 | 1,742,190 | ||||||||||||
First Investors Auto Owner Trust 12-1A (b) | 1.96 | 11/15/17 | 239,647 | 241,053 | ||||||||||||
FRS I LLC 13-1 (b) | 1.80 | 04/15/43 | 365,863 | 361,251 | ||||||||||||
HLSS Servicer Advance Receivable 12-T2 (b) | 1.34 | 10/15/43 | 1,475,000 | 1,474,410 | ||||||||||||
KeyCorp Student Loan Trust 99-B | 0.70 | (a) | 08/25/27 | 12,532 | 12,508 | |||||||||||
KeyCorp Student Loan Trust 00-A | 0.59 | (a) | 05/25/29 | 1,483,196 | 1,356,192 | |||||||||||
KeyCorp Student Loan Trust 00-B | 0.59 | (a) | 07/25/29 | 1,402,437 | 1,158,434 | |||||||||||
KeyCorp Student Loan Trust 01-A | 0.55 | (a) | 06/27/31 | 759,392 | 670,744 | |||||||||||
KeyCorp Student Loan Trust 04-A | 0.58 | (a) | 10/28/41 | 2,101,098 | 2,061,602 | |||||||||||
KeyCorp Student Loan Trust 04-A | 0.71 | (a) | 01/27/43 | 796,356 | 691,520 | |||||||||||
KeyCorp Student Loan Trust 05-A | 0.51 | (a) | 09/28/26 | 724,106 | 715,164 | |||||||||||
KeyCorp Student Loan Trust 05-A | 0.68 | (a) | 09/27/40 | 677,421 | 579,394 | |||||||||||
KeyCorp Student Loan Trust 06-A | 0.47 | (a) | 06/27/29 | 3,697,290 | 3,634,025 | |||||||||||
LAI Vehicle Lease Securitization Trust 10-A (b) | 2.55 | 09/15/16 | 112,721 | 112,699 | ||||||||||||
LEAF II Receivables Funding LLC 10-3 (b) | 5.00 | 02/20/22 | 1,393,766 | 1,393,766 | ||||||||||||
Marriott Vacation Club Owners Trust 08-1A (b) | 7.20 | 05/20/30 | 199,758 | 215,516 | ||||||||||||
National Collegiate Student Loan Trust 04-1 | 0.53 | (a) | 06/25/27 | 2,922,731 | 2,851,542 | |||||||||||
National Collegiate Student Loan Trust 05-1 | 0.33 | (a) | 10/26/26 | 227,956 | 225,632 | |||||||||||
National Collegiate Student Loan Trust 05-3 | 0.43 | (a) | 07/25/28 | 471,227 | 457,304 | |||||||||||
National Collegiate Student Loan Trust 06-1 | 0.38 | (a) | 05/25/26 | 529,119 | 515,650 | |||||||||||
Nationstar Mortgage Advance Receivables Trust 13-T2 (b) | 1.68 | 06/20/46 | 1,750,000 | 1,748,126 | ||||||||||||
Santander Drive Auto Receivables Trust 11-2 | 2.66 | 01/15/16 | 2,000,000 | 2,019,694 | ||||||||||||
Santander Drive Auto Receivables Trust 12-1 | 1.25 | 04/15/15 | 389,037 | 389,652 | ||||||||||||
SLC Student Loan Trust 06-A | 0.58 | (a) | 07/15/36 | 3,275,000 | 2,968,647 | |||||||||||
SLC Student Loan Trust 06-A | 0.73 | (a) | 07/15/36 | 5,300,000 | 4,277,095 | |||||||||||
SLM Student Loan Trust 03-B | 0.67 | (a) | 03/15/22 | 7,297,004 | �� | 7,153,012 | ||||||||||
SLM Student Loan Trust 04-A | 0.47 | (a) | 03/16/20 | 868,495 | 856,727 | |||||||||||
SLM Student Loan Trust 04-B | 0.60 | (a) | 03/15/24 | 5,275,000 | 4,509,898 | |||||||||||
SLM Student Loan Trust 05-A | 0.41 | (a) | 12/15/20 | 97,361 | 96,653 | |||||||||||
SLM Student Loan Trust 05-A | 0.47 | (a) | 06/15/23 | 3,550,000 | 3,290,754 |
30 | Portfolio of Investments | The accompanying notes are an integral part of these financial statements. |
Table of Contents
PORTFOLIO OF INVESTMENTS: Short-Term Bond Fund (continued)
June 30, 2013 (Unaudited)
Interest Rate | Maturity Date | Face Amount | Value | |||||||||||||
(Asset Backed Securities continued) | ||||||||||||||||
SLM Student Loan Trust 06-A | 0.41 | %(a) | 06/15/22 | $ | 1,507,442 | $ | 1,497,529 | |||||||||
SLM Student Loan Trust 06-A | 0.46 | (a) | 12/15/23 | 2,050,000 | 1,930,132 | |||||||||||
SLM Student Loan Trust 06-C | 0.40 | (a) | 06/15/21 | 827,372 | 820,846 | |||||||||||
SLM Student Loan Trust 07-A | 0.39 | (a) | 09/15/25 | 2,740,279 | 2,607,137 | |||||||||||
Small Business Administration 02-20K | 5.08 | 11/01/22 | 70,051 | 76,445 | ||||||||||||
Small Business Administration 03-P10B | 5.14 | 08/10/13 | 4,815 | 4,843 | ||||||||||||
Small Business Administration 05-10E | 4.54 | 09/01/15 | 27,203 | 27,857 | ||||||||||||
SNAAC Auto Receivables Trust 13-1 (b) | 1.14 | 07/16/18 | 1,275,261 | 1,273,117 | ||||||||||||
Tidewater Auto Receivable Trust 12-A (b) | 1.21 | 08/15/15 | 470,558 | 470,347 | ||||||||||||
World Financial Network Credit Card Trust 13-B | 0.91 | 03/16/20 | 2,075,000 | 2,059,280 | ||||||||||||
Total Asset Backed Securities (Cost $78,158,946) | 80,609,460 | |||||||||||||||
MORTGAGE BACKED SECURITIES | ||||||||||||||||
(5.9% of portfolio) | ||||||||||||||||
ABN Amro Mortgage Corp. 03-9 | 4.52 | 08/25/18 | 298,638 | 294,906 | ||||||||||||
Accredited Mortgage Loan Trust 03-1 | 4.33 | (a) | 06/25/33 | 166,737 | 143,341 | |||||||||||
ACE Securities Corp. 06-ASL1 | 0.47 | (a) | 02/25/36 | 522,711 | 161,129 | |||||||||||
ACE Securities Corp. 06-GP1 | 0.45 | (a) | 02/25/31 | 103,967 | 94,293 | |||||||||||
ACE Securities Corp. 06-SL1 | 0.51 | (a) | 09/25/35 | 173,130 | 133,995 | |||||||||||
Adjustable Rate Mortgage Trust 05-10 | 2.81 | (a) | 01/25/36 | 121,927 | 96,161 | |||||||||||
American Business Financial Services 02-1 | 7.01 | 12/15/32 | 77,748 | 64,746 | ||||||||||||
American Home Mortgage Investment Trust 05-01 | 2.41 | (a) | 06/25/45 | 205,547 | 195,792 | |||||||||||
American Home Mortgage Investment Trust 05-03 | 4.97 | 09/25/35 | 34,914 | 34,856 | ||||||||||||
Amresco Residential Securities 98-1 | 7.57 | 10/25/27 | 70,314 | 72,491 | ||||||||||||
Banc of America Alternative Loan Trust Inc. 07-2 | 5.75 | 06/25/37 | 189,775 | 141,699 | ||||||||||||
Banc of America Funding Corp. 04-A | 5.72 | (a) | 09/20/34 | 28,535 | 28,785 | |||||||||||
Banc of America Funding Corp. 05-G | 5.18 | (a) | 10/20/35 | 611,792 | 586,336 | |||||||||||
Banc of America Funding Corp. 07-5 | 6.50 | 07/25/37 | 93,658 | 96,734 | ||||||||||||
Banc of America Mortgage Securities Inc. 02-J | 3.79 | (a) | 09/25/32 | 3,475 | 3,427 | |||||||||||
Banc of America Mortgage Securities Inc. 05-1 | 5.00 | 02/25/20 | 29,328 | 30,289 | ||||||||||||
Banc of America Mortgage Securities Inc. 05-C | 2.93 | (a) | 04/25/35 | 58,471 | 49,729 | |||||||||||
Bayview Financial Acquisition Trust 06-D | 5.93 | 12/28/36 | 4,450,000 | 4,270,932 | ||||||||||||
Bayview Financial Asset Trust 07-SR1A (b) | 0.64 | (a) | 03/25/37 | 244,726 | 176,163 | |||||||||||
Bear Stearns Adjustable Rate Mortgage Trust 04-10 | 2.94 | (a) | 01/25/35 | 374,806 | 358,703 | |||||||||||
Bear Stearns Adjustable Rate Mortgage Trust 05-12 | 5.38 | (a) | 02/25/36 | 67,616 | 63,105 | |||||||||||
Bear Stearns ALT-A Trust 04-11 | 3.07 | (a) | 11/25/34 | 21,575 | 18,341 | |||||||||||
Bear Stearns ALT-A Trust 05-4 | 2.71 | (a) | 05/25/35 | 139,687 | 127,618 | |||||||||||
Bear Stearns ALT-A Trust 05-9 | 5.12 | (a) | 11/25/35 | 76,981 | 57,533 | |||||||||||
Bear Stearns ALT-A Trust 06-6 | 2.80 | (a) | 11/25/36 | 212,722 | 144,338 | |||||||||||
Bear Stearns Asset Backed Securities Trust 03-3 | 0.78 | (a) | 06/25/43 | 65,849 | 65,175 | |||||||||||
Bear Stearns Asset Backed Securities Trust 04-HE5 | 2.07 | (a) | 07/25/34 | 309,693 | 254,192 | |||||||||||
Bear Stearns Structured Products Inc., 00-1 | 5.53 | (a) | 08/28/33 | 5,770 | 5,107 | |||||||||||
CDC Mortgage Capital Trust 02-HE1 | 0.81 | (a) | 01/25/33 | 439,132 | 419,153 | |||||||||||
Chase Mortgage Finance Corp. 05-A1 | 5.08 | (a) | 12/25/35 | 26,213 | 25,047 | |||||||||||
Chaseflex Trust 05-2 | 6.00 | 06/25/35 | 138,683 | 124,316 | ||||||||||||
CITICORP Mortgage Securities, Inc. 07-1 | 5.50 | 01/25/22 | 40,844 | 41,046 | ||||||||||||
CITICORP Mortgage Securities, Inc. 07-1 | 5.89 | (c) | 03/25/37 | 333,615 | 328,264 | |||||||||||
Citigroup Mortgage Loan Trust, Inc. 05-7 | 2.48 | (a) | 09/25/35 | 323,698 | 233,531 | |||||||||||
Cityscape Home Equity Loan Trust 96-2 | 8.10 | 08/25/26 | 87,336 | 88,188 | ||||||||||||
CMO Trust 17 | 7.25 | 04/20/18 | 267 | 275 | ||||||||||||
Conseco Finance Securitizations Corp. 01-2 | 6.60 | 02/01/33 | 189,604 | 196,691 | ||||||||||||
Contimortgage Home Equity Loan Trust 95-2 | 8.10 | 08/15/25 | 34,482 | 34,285 | ||||||||||||
Countrywide Alternative Loan Trust 04-24CB | 6.00 | 11/25/34 | 74,996 | 75,196 | ||||||||||||
Countrywide Alternative Loan Trust 05-11CB | 5.50 | 06/25/35 | 170,548 | 151,764 | ||||||||||||
Countrywide Alternative Loan Trust 05-43 | 5.09 | (a) | 10/25/35 | 53,680 | 44,443 | |||||||||||
Countrywide Asset Backed Certificate 02-S2 | 5.98 | 01/25/17 | 174,590 | 175,444 | ||||||||||||
Countrywide Asset Backed Certificate 02-S4 | 5.22 | (a) | 10/25/17 | 269,315 | 261,305 |
The accompanying notes are an integral part of these financial statements. | Portfolio of Investments | 31 |
Table of Contents
PORTFOLIO OF INVESTMENTS: Short-Term Bond Fund (continued)
June 30, 2013 (Unaudited)
Interest Rate | Maturity Date | Face Amount | Value | |||||||||||||
(Mortgage Backed Securities continued) | ||||||||||||||||
Countrywide Asset Backed Certificate 04-S1 | 5.12 | % | 02/25/35 | $ | 72,438 | $ | 74,043 | |||||||||
Countrywide Asset Backed Certificate 06-S7 | 5.71 | (a) | 11/25/35 | 147,185 | 137,837 | |||||||||||
Countrywide Asset Backed Certificate 07-S1 | 5.69 | 11/25/36 | 157,467 | 149,258 | ||||||||||||
Countrywide Home Loans 03-49 | 4.47 | (a) | 12/19/33 | 51,296 | 50,407 | |||||||||||
Countrywide Home Loans 03-J13 | 5.25 | 01/25/24 | 137,569 | 134,545 | ||||||||||||
Countrywide Home Loans 05-HYB8 | 4.55 | (a) | 12/20/35 | 170,918 | 140,132 | |||||||||||
Countrywide Home Loans 06-HYB5 | 2.65 | (a) | 09/20/36 | 83,313 | 54,587 | |||||||||||
Credit Suisse First Boston Mortgage 03-21 | 4.75 | 08/25/18 | 54,185 | 55,453 | ||||||||||||
Credit Suisse First Boston Mortgage 03-AR24 | 2.63 | (a) | 10/25/33 | 296,346 | 289,473 | |||||||||||
Credit Suisse First Boston Mortgage 03-FFA | 6.60 | (a) | 02/25/33 | 151,162 | 139,020 | |||||||||||
Credit Suisse First Boston Mortgage 04-AR3 | 2.65 | (a) | 04/25/34 | 85,698 | 87,376 | |||||||||||
Credit Suisse First Boston Mortgage 05-10 | 5.25 | 11/25/20 | 116,169 | 119,417 | ||||||||||||
Credit Suisse First Boston Mortgage 06-2 | 5.91 | (a) | 07/25/36 | 1,120,000 | 99,977 | |||||||||||
DLJ Mortgage Acceptance Corp. 91-3 | 1.98 | (a) | 01/25/21 | 16,957 | 17,013 | |||||||||||
Encore Credit Receivables Trust 05-3 | 0.68 | (a) | 10/25/35 | 675,000 | 633,028 | |||||||||||
FHLMC 2419 | 5.50 | 03/15/17 | 3,564 | 3,833 | ||||||||||||
FHLMC 2586 | 3.50 | 12/15/32 | 14,403 | 14,460 | ||||||||||||
FHLMC 2649 | 4.50 | 07/15/18 | 190,130 | 201,412 | ||||||||||||
FHLMC 780754 | 4.66 | (a) | 08/01/33 | 6,872 | 7,181 | |||||||||||
First Alliance Mortgage Loan Trust 94-1 | 5.85 | 04/25/25 | 19,055 | 19,137 | ||||||||||||
First Alliance Mortgage Loan Trust 94-2 | 7.63 | 07/25/25 | 14,947 | 15,440 | ||||||||||||
First Horizon Mortgage Alternative Mortgage Securities 04-AA3 | 2.30 | (a) | 09/25/34 | 37,379 | 36,651 | |||||||||||
First Horizon Mortgage Pass-Through Trust 05-AR2 | 2.61 | (a) | 05/25/35 | 183,107 | 155,174 | |||||||||||
FNMA 03-05 | 4.25 | 08/25/22 | 4,191 | 4,209 | ||||||||||||
FNMA 03-38 | 5.00 | 03/25/23 | 30,890 | 32,616 | ||||||||||||
FNMA 03-86 | 4.50 | 09/25/18 | 172,191 | 184,237 | ||||||||||||
FNMA 813842 | 1.96 | (a) | 01/01/35 | 26,297 | 27,616 | |||||||||||
GMAC Mortgage Corp. Loan Trust 06-HE3 | 5.75 | 10/25/36 | 64,374 | 60,747 | ||||||||||||
GMAC Mortgage Corp. Loan Trust 07-HE1 | 5.95 | 08/25/37 | 1,100,000 | 919,435 | ||||||||||||
GNMA 02-15 | 5.50 | 11/20/31 | 17,682 | 18,710 | ||||||||||||
GNMA 03-11 | 4.00 | 10/17/29 | 153,099 | 163,195 | ||||||||||||
GNMA 03-12 | 4.50 | 02/20/32 | 23,490 | 24,220 | ||||||||||||
GNMA 03-26 | 0.64 | (a) | 04/16/33 | 19,912 | 20,089 | |||||||||||
GNMA 04-17 | 4.50 | 12/20/33 | 35,452 | 38,158 | ||||||||||||
GNMA 583189 | 4.50 | 02/20/17 | 13,651 | 14,677 | ||||||||||||
Green Tree Financial Corp. 98-5 | 6.22 | 03/01/30 | 144,989 | 157,468 | ||||||||||||
GS Mortgage Loan Trust 03-10 | 3.82 | (a) | 10/25/33 | 140,899 | 136,325 | |||||||||||
GS Mortgage Loan Trust 05-8F | 5.50 | 10/25/20 | 67,264 | 69,352 | ||||||||||||
GS Mortgage Loan Trust 05-AR3 | 2.82 | (a) | 05/25/35 | 103,963 | 92,871 | |||||||||||
GS Mortgage Loan Trust 05-AR6 | 2.65 | (a) | 09/25/35 | 76,505 | 74,072 | |||||||||||
Home Equity Mortgage Trust 06-1 | 5.30 | (a) | 05/25/36 | 1,337,180 | 1,157,093 | |||||||||||
Home Savings of America 9 | 3.80 | (a) | 11/25/17 | 85,472 | 86,322 | |||||||||||
Home Savings of America 11 | 4.83 | (a) | 01/25/18 | 99,095 | 100,007 | |||||||||||
Household Home Equity Loan Trust 06-2 | 0.34 | (a) | 03/20/36 | 967,771 | 958,897 | |||||||||||
IMPAC Secured Assets Corp. 03-3 | 4.20 | 08/25/33 | 199,447 | 204,054 | ||||||||||||
Indymac Indx Mortgage Loan Trust 04-AR6 | 2.61 | (a) | 10/25/34 | 11,887 | 10,919 | |||||||||||
Indymac Indx Mortgage Loan Trust 05-AR15 | 4.69 | (a) | 09/25/35 | 48,933 | 42,293 | |||||||||||
Indymac Indx Mortgage Loan Trust 05-L1 | 0.59 | (a) | 07/25/13 | 273,688 | 128,880 | |||||||||||
JP Morgan Mortgage Trust 05-A2 | 5.05 | (a) | 04/25/35 | 323,921 | 319,234 | |||||||||||
Lehman ABS Manufactured Housing Contract 01-B | 4.35 | 04/15/40 | 94,583 | 99,103 | ||||||||||||
Long Beach Mortgage Loan Trust 05-3 | 0.47 | (a) | 08/25/45 | 43,954 | 43,722 | |||||||||||
Master Adjustable Rate Mortgages Trust 04-13 | 2.67 | (a) | 04/21/34 | 36,089 | 36,523 | |||||||||||
Master Adjustable Rate Mortgages Trust 05-1 | 5.28 | (a) | 01/25/35 | 38,669 | 37,497 | |||||||||||
Master Alternative Loans Trust 03-5 | 6.00 | 08/25/33 | 70,091 | 74,551 | ||||||||||||
Master Asset Backed Securities Trust 07-NCW (b) | 0.49 | (a) | 05/25/37 | 604,754 | 521,619 | |||||||||||
Master Asset Securitization Trust 03-6 | 5.00 | 07/25/18 | 13,455 | 14,069 | ||||||||||||
Master Asset Securitization Trust 07-1 | 6.00 | 10/25/22 | 46,172 | 45,341 | ||||||||||||
Merrill Lynch Mortgage Investors Trust 03-A2 | 1.92 | (a) | 02/25/33 | 47,634 | 46,852 | |||||||||||
Merrill Lynch Mortgage Investors Trust 06-SL1 | 0.55 | (a) | 09/25/36 | 364,607 | 260,213 |
32 | Portfolio of Investments | The accompanying notes are an integral part of these financial statements. |
Table of Contents
PORTFOLIO OF INVESTMENTS: Short-Term Bond Fund (continued)
June 30, 2013 (Unaudited)
Interest Rate | Maturity Date | Face Amount | Value | |||||||||||||
(Mortgage Backed Securities continued) | ||||||||||||||||
Morgan Stanley Capital Inc. 04-1 | 5.00 | % | 11/25/18 | $ | 124,852 | $ | 126,796 | |||||||||
Morgan Stanley Mortgage Loan Trust 05-5AR | 5.26 | 09/25/35 | 52,123 | 39,811 | ||||||||||||
Morgan Stanley Mortgage Loan Trust 06-1AR | 3.00 | 02/25/36 | 141,537 | 105,317 | ||||||||||||
Morgan Stanley Mortgage Loan Trust 07-10XS | 6.00 | 07/25/47 | 611,578 | 262,065 | ||||||||||||
New Century Home Equity Loan Trust 97-NC5 | 7.20 | 10/25/28 | 57 | 57 | ||||||||||||
Nomura Asset Acceptance Corporation 06-AF2 | 0.29 | (a) | 08/25/36 | 191,197 | 60,752 | |||||||||||
Nomura Asset Acceptance Corporation 07-1 | 5.96 | 03/25/47 | 251,284 | 251,313 | ||||||||||||
Oakwood Mortgage Investors, Inc. 99-D | 7.84 | 11/15/29 | 319,844 | 313,888 | ||||||||||||
Oakwood Mortgage Investors, Inc. 02-A | 0.44 | (a) | 09/15/14 | 170,258 | 146,254 | |||||||||||
Option One Mortgage Loan Trust 07-FXD1 | 5.60 | 01/25/37 | 361,224 | 362,665 | ||||||||||||
Option One Mortgage Loan Trust 07-FXD2 | 5.90 | 03/25/37 | 30,108 | 30,493 | ||||||||||||
Ownit Mortgage Loan Asset Backed Certificate 05-5 | 0.48 | (a) | 10/25/36 | 325,072 | 308,082 | |||||||||||
Prime Mortgage Trust 05-2 | 5.00 | 07/25/20 | 60,995 | 61,420 | ||||||||||||
Residential Accredit Loans, Inc. 02-QS9 | 0.79 | (a) | 07/25/32 | 5,346 | 5,025 | |||||||||||
Residential Accredit Loans, Inc. 05-QS5 | 5.70 | 04/25/35 | 47,999 | 43,914 | ||||||||||||
Residential Accredit Loans, Inc. 06-QS4 | 6.00 | 04/25/36 | 394,488 | 321,309 | ||||||||||||
Residential Asset Mortgage Products Inc. 02-RS5 | 4.75 | 09/25/32 | 202,842 | 190,488 | ||||||||||||
Residential Asset Mortgage Products Inc. 03-RZ3 | 4.62 | 06/25/33 | 108,373 | 99,826 | ||||||||||||
Residential Asset Securitization Trust 04-A3 | 5.25 | 06/25/34 | 69,823 | 70,068 | ||||||||||||
Residential Asset Securitization Trust 05-A14 | 5.50 | 12/25/35 | 194,950 | 162,394 | ||||||||||||
Residential Funding Mortgage Securities 00-HI5 | 7.98 | 12/25/25 | 406,331 | 372,652 | ||||||||||||
Residential Funding Mortgage Securities 03-HS2 | 3.88 | 07/25/33 | 29,445 | 28,647 | ||||||||||||
Residential Funding Mortgage Securities I 03-S15 | 4.50 | 08/25/18 | 37,842 | 38,807 | ||||||||||||
Residential Funding Mortgage Securities I 05-SA2 | 2.83 | (a) | 06/25/35 | 40,268 | 31,453 | |||||||||||
Residential Funding Mortgage Securities I 06-SA1 | 4.00 | (a) | 02/25/36 | 42,226 | 34,779 | |||||||||||
Ryland Acceptance Corp. 64 E | 3.50 | (a) | 04/01/18 | 29,407 | 29,585 | |||||||||||
SACO I Trust 05-6 | 0.77 | (a) | 09/25/35 | 342,172 | 186,607 | |||||||||||
Salomon Brothers Mortgage Securities 97-LB6 | 6.82 | 12/25/27 | 14 | 14 | ||||||||||||
Structured Adjustable Rate Mortgage Loan Trust 04-3AC | 2.47 | (a) | 03/25/34 | 25,414 | 24,936 | |||||||||||
Structured Adjustable Rate Mortgage Loan Trust 04-4 | 4.87 | (a) | 04/25/34 | 1,040,227 | 1,023,311 | |||||||||||
Structured Adjustable Rate Mortgage Loan Trust 04-11 | 2.58 | (a) | 08/25/34 | 50,998 | 49,596 | |||||||||||
Structured Adjustable Rate Mortgage Loan Trust 04-18 | 2.59 | (a) | 12/25/34 | 93,936 | 52,976 | |||||||||||
Structured Adjustable Rate Mortgage Loan Trust 05-11 | 2.51 | (a) | 05/25/35 | 403,362 | 369,049 | |||||||||||
Structured Adjustable Rate Mortgage Loan Trust 06-1 | 2.77 | (a) | 02/25/36 | 35,505 | 30,055 | |||||||||||
Structured Adjustable Rate Mortgage Loan Trust 06-1 | 5.29 | (a) | 02/25/36 | 8,219 | 8,193 | |||||||||||
Structured Adjustable Rate Mortgage Loan Trust 06-4 | 4.98 | (a) | 05/25/36 | 114,371 | 85,910 | |||||||||||
Structured Adjustable Rate Mortgage Loan Trust 06-4 | 5.09 | (a) | 05/25/36 | 112,929 | 91,709 | |||||||||||
Structured Asset Mortgage Investments 04-AR5 | 2.27 | (a) | 10/19/34 | 34,284 | 32,936 | |||||||||||
Structured Asset Securities Corp. 98-RF1 (b) | 7.38 | (a) | 04/15/27 | 37,814 | 38,660 | |||||||||||
Structured Asset Securities Corp. 03-8 | 5.00 | 04/25/33 | 51,147 | 51,490 | ||||||||||||
Structured Asset Securities Corp. 03-37A | 2.57 | (a) | 12/25/33 | 242,301 | 237,450 | |||||||||||
Structured Asset Securities Corp. 04-3 | 5.40 | (a) | 03/25/24 | 178,715 | 185,335 | |||||||||||
Terwin Mortgage Trust 04-5HE | 1.08 | (a) | 06/25/35 | 471,910 | 433,239 | |||||||||||
Vanderbilt Mortgage & Finance 03-A | 0.84 | (a) | 05/07/26 | 276,555 | 265,803 | |||||||||||
Vericrest Opportunity Loan Trust 12-NL2A (b) | 2.49 | 02/26/52 | 805,731 | 807,245 | ||||||||||||
Vericrest Opportunity Loan Trust 13-3 (b) | 3.22 | 05/27/53 | 834,723 | 835,461 | ||||||||||||
Wachovia Mortgage Loan Trust 06-A | 2.67 | (a) | 05/20/36 | 172,772 | 166,195 | |||||||||||
Washington Mutual Mortgage Securities Corp. 04-AR3 | 2.46 | (a) | 06/25/34 | 68,459 | 68,139 | |||||||||||
Washington Mutual Mortgage Securities Corp. 04-AR14 | 2.43 | (a) | 01/25/35 | 125,316 | 125,556 | |||||||||||
Washington Mutual Mortgage Securities Corp. 05-AR12 | 2.44 | (a) | 10/25/35 | 1,144 | 1,145 | |||||||||||
Washington Mutual MSC Mortgage Pass-Through Certificates 03-MS2 | 5.00 | 03/25/18 | 39,007 | 39,780 | ||||||||||||
Wells Fargo Mortgage Backed Securities Trust 04-B | 4.96 | (a) | 02/25/34 | 21,110 | 21,011 | |||||||||||
Wells Fargo Mortgage Backed Securities Trust 04-BB | 2.62 | (a) | 01/25/35 | 8,306 | 8,351 | |||||||||||
Wells Fargo Mortgage Backed Securities Trust 04-E | 4.88 | (a) | 05/25/34 | 31,644 | 31,883 | |||||||||||
Wells Fargo Mortgage Backed Securities Trust 04-EE | 2.88 | (a) | 12/25/34 | 25,117 | 24,983 | |||||||||||
Wells Fargo Mortgage Backed Securities Trust 04-F | 4.73 | (a) | 06/25/34 | 124,669 | 126,021 | |||||||||||
Wells Fargo Mortgage Backed Securities Trust 04-I | 2.76 | (a) | 07/25/34 | 5,657 | 5,638 | |||||||||||
Wells Fargo Mortgage Backed Securities Trust 04-K | 2.62 | (a) | 07/25/34 | 113,298 | 111,800 |
The accompanying notes are an integral part of these financial statements. | Portfolio of Investments | 33 |
Table of Contents
PORTFOLIO OF INVESTMENTS: Short-Term Bond Fund (continued)
June 30, 2013 (Unaudited)
Interest Rate | Maturity Date | Face Amount | Value | |||||||||||||
(Mortgage Backed Securities continued) | ||||||||||||||||
Wells Fargo Mortgage Backed Securities Trust 04-K | 4.73 | %(a) | 07/25/34 | $ | 53,807 | $ | 54,299 | |||||||||
Wells Fargo Mortgage Backed Securities Trust 04-K | 4.73 | (a) | 07/25/34 | 99,463 | 99,257 | |||||||||||
Wells Fargo Mortgage Backed Securities Trust 04-R | 2.62 | (a) | 09/25/34 | 70,749 | 70,406 | |||||||||||
Wells Fargo Mortgage Backed Securities Trust 05-AR14 | 5.33 | (a) | 08/25/35 | 35,606 | 35,051 | |||||||||||
Wells Fargo Mortgage Backed Securities Trust 05-AR15 | 2.62 | (a) | 09/25/35 | 256,234 | 251,048 | |||||||||||
Wells Fargo Mortgage Backed Securities Trust 05-AR16 | 5.17 | (a) | 10/25/35 | 59,844 | 58,240 | |||||||||||
Wells Fargo Mortgage Backed Securities Trust 06-AR4 | 5.59 | (a) | 04/25/36 | 50,988 | 48,473 | |||||||||||
Wells Fargo Mortgage Backed Securities Trust 06-AR19 | 5.40 | (a) | 12/25/36 | 31,474 | 30,356 | |||||||||||
Total Mortgage Backed Securities (Cost $30,130,273) | 28,514,371 | |||||||||||||||
MUNICIPAL BONDS | ||||||||||||||||
(19.2% of portfolio) | ||||||||||||||||
Alaska Housing Finance Corp. | 2.80 | 12/01/26 | 595,000 | 596,363 | ||||||||||||
Alaska Housing Finance Corp. | 0.99 | (a) | 06/01/43 | 5,150,000 | 5,130,739 | |||||||||||
Alaska Student Loan Corp. | 0.69 | (a) | 08/25/31 | 1,471,516 | 1,457,728 | |||||||||||
Art Institute of Chicago | 1.34 | 03/01/15 | 125,000 | 124,962 | ||||||||||||
Atlantic City NJ | 4.00 | 11/01/16 | 400,000 | 425,356 | ||||||||||||
California, State of | 1.05 | 02/01/16 | 925,000 | 923,594 | ||||||||||||
Casino Reinvestment Development Authority NJ | 5.14 | 06/01/15 | 725,000 | 736,861 | ||||||||||||
Cuyahoga County Ohio Economic Development | 3.22 | 12/01/14 | 1,725,000 | 1,783,443 | ||||||||||||
Desert Sands California Unified School District | 2.28 | 06/01/19 | 375,000 | 360,210 | ||||||||||||
Downtown Smyrna Development Authority GA | 3.21 | 02/01/15 | 100,000 | 102,877 | ||||||||||||
Energy Northwest, WA | 1.06 | 07/01/15 | 350,000 | 351,404 | ||||||||||||
Energy Northwest, WA | 2.15 | 07/01/18 | 850,000 | 846,235 | ||||||||||||
Florida Hurricane Catastrophe Fund Finance Corp. | 1.30 | 07/01/16 | 1,750,000 | 1,732,588 | ||||||||||||
Illinois Housing Development Authority | 5.50 | 12/01/14 | 145,000 | 147,074 | ||||||||||||
Illinois Housing Development Authority | 1.14 | 01/01/16 | 375,000 | 371,505 | ||||||||||||
Illinois Municipal Electric Agency | 3.20 | 02/01/14 | 890,000 | 896,622 | ||||||||||||
Illinois, State of | 4.01 | 07/01/13 | 975,000 | 975,000 | ||||||||||||
Illinois, State of | 2.00 | 01/01/14 | 3,025,000 | 3,034,045 | ||||||||||||
Illinois, State of | 4.03 | 03/01/14 | 825,000 | 839,528 | ||||||||||||
Illinois, State of | 1.10 | 04/01/14 | 2,650,000 | 2,646,847 | ||||||||||||
Illinois, State of | 4.51 | 03/01/15 | 1,645,000 | 1,725,375 | ||||||||||||
Illinois, State of Sales Tax Revenue | 1.36 | 06/15/16 | 2,200,000 | 2,203,806 | ||||||||||||
Indiana Bond Bank | 1.48 | 01/15/17 | 1,285,000 | 1,266,727 | ||||||||||||
Indiana Bond Bank | 2.08 | 01/15/19 | 300,000 | 291,843 | ||||||||||||
Indianapolis, Indiana Local Public Improvement Bond Bank | 1.19 | 06/01/15 | 325,000 | 325,140 | ||||||||||||
Indianapolis, Indiana Local Public Improvement Bond Bank | 1.58 | 06/01/16 | 600,000 | 598,026 | ||||||||||||
Irvine Ranch Water District California Joint Powers Agency | 2.61 | 03/15/14 | 500,000 | 507,165 | ||||||||||||
Jackson Tennessee Energy Authority | 1.15 | 04/01/16 | 400,000 | 395,928 | ||||||||||||
Jersey City, NJ | 1.51 | 09/01/16 | 950,000 | 941,820 | ||||||||||||
Jobsohio Beverage System, OH | 1.57 | 01/01/17 | 925,000 | 912,873 | ||||||||||||
Kentucky Asset/Liability Commission | 2.94 | 04/01/14 | 955,000 | 967,759 | ||||||||||||
Louisa Virginia Industrial Development Authority | 2.50 | (a) | 09/01/30 | 2,635,000 | 2,665,803 | |||||||||||
Louisiana State Gas & Fuels Tax | 3.00 | (a) | 05/01/43 | 550,000 | 551,215 | |||||||||||
Louisiana State Local Government Environmental Facilities & Community Development Authority | 1.11 | 02/01/16 | 288,848 | 289,289 | ||||||||||||
Luzerne County Pennsylvania | 5.20 | 11/15/13 | 220,000 | 221,771 | ||||||||||||
Mashantucket Western Pequot Tribe Connecticut (b) | 6.57 | 09/01/13 | 185,000 | 184,900 | ||||||||||||
Massachusetts Housing Finance Agency | 1.17 | 12/01/15 | 425,000 | 424,265 | ||||||||||||
Massachusetts Housing Finance Agency | 1.31 | 06/01/16 | 275,000 | 272,553 | ||||||||||||
Massachusetts Municipal Wholesale Electric Company | 0.16 | (a) | 07/01/14 | 100,000 | 97,993 | |||||||||||
Metropolitan Nashville, Tennessee Airport Authority | 3.17 | 07/01/13 | 125,000 | 125,000 | ||||||||||||
Miami Dade County Florida Educational Facilities Authority | 1.29 | 04/01/15 | 325,000 | 324,178 | ||||||||||||
Monroe County Michigan Economic Development Corp. | 2.35 | (a) | 10/01/24 | 1,000,000 | 1,010,430 | |||||||||||
Mount Holly Township, NJ | 1.50 | 11/21/13 | 1,975,000 | 1,978,990 | ||||||||||||
New Jersey Economic Development Authority | 3.61 | 09/01/14 | 650,000 | 669,546 |
34 | Portfolio of Investments | The accompanying notes are an integral part of these financial statements. |
Table of Contents
PORTFOLIO OF INVESTMENTS: Short-Term Bond Fund (continued)
June 30, 2013 (Unaudited)
Interest Rate/Yield | Maturity Date | Face Amount | Value | |||||||||||||
(Municipal Bonds continued) | ||||||||||||||||
New Jersey Economic Development Authority | 0.00 | %(d) | 02/15/16 | $ | 1,550,000 | $ | 1,461,852 | |||||||||
New Jersey Economic Development Authority | 1.06 | 03/01/16 | 1,400,000 | 1,389,374 | ||||||||||||
New Jersey Economic Development Authority | 0.00 | (d) | 02/15/20 | 10,450,000 | 8,215,267 | |||||||||||
New Orleans Louisiana | 2.12 | 09/01/17 | 825,000 | 813,227 | ||||||||||||
New Orleans Louisiana | 2.80 | 09/01/19 | 1,725,000 | 1,689,655 | ||||||||||||
New York City, NY Transitional Finance Authority | 1.80 | 08/01/18 | 1,475,000 | 1,438,361 | ||||||||||||
New York City, NY Transitional Finance Authority | 1.85 | 05/01/19 | 2,025,000 | 1,934,928 | ||||||||||||
North Carolina Housing Finance Agency | 4.00 | 01/01/30 | 2,160,000 | 2,176,826 | ||||||||||||
North Carolina State Education Assistance Authority | 0.99 | (a) | 07/25/39 | 1,227,184 | 1,232,424 | |||||||||||
Oakland California Redevelopment Agency | 6.50 | 09/01/13 | 225,000 | 225,967 | ||||||||||||
Oakland California Redevelopment Agency | 5.34 | 09/01/13 | 1,075,000 | 1,077,193 | ||||||||||||
Oakland California Redevelopment Agency | 7.25 | 09/01/15 | 400,000 | 424,156 | ||||||||||||
Oklahoma Student Loan Authority | 0.69 | (a) | 02/25/32 | 1,418,060 | 1,408,147 | |||||||||||
Oregon School Boards Association | 0.00 | 06/30/15 | 4,050,000 | 3,956,971 | ||||||||||||
Orleans Parish School Board, Louisiana | 1.85 | 02/01/14 | 750,000 | 751,717 | ||||||||||||
Pasadena California Pension Obligation | 1.76 | (a) | 05/15/41 | 800,000 | 805,832 | |||||||||||
Pennsylvania Higher Education Assistance Agency (b) | 0.74 | (a) | 05/25/27 | 544,983 | 538,662 | |||||||||||
Philadelphia Pennsylvania Authority for Industrial Development | 0.00 | (d) | 04/15/14 | 785,000 | 771,302 | |||||||||||
Philadelphia Pennsylvania Authority for Industrial Development | 0.00 | (d) | 04/15/15 | 4,075,000 | 3,944,763 | |||||||||||
Richmond California Joint Powers Financing Authority | 6.30 | 07/01/13 | 800,000 | 800,000 | ||||||||||||
San Antonio Texas Airport System | 3.20 | 07/01/14 | 550,000 | 561,484 | ||||||||||||
South Carolina Student Loan Corp. | 0.40 | (a) | 12/01/20 | 775,000 | 767,692 | |||||||||||
Stockton California Pension Obligation | 5.14 | 09/01/17 | 1,680,000 | 1,659,638 | ||||||||||||
Utah Infrastructure Agency | 3.20 | 10/15/16 | 665,000 | 694,107 | ||||||||||||
Vermont Student Assistance Corp. | 0.90 | (a) | 07/28/34 | 1,703,642 | 1,697,985 | |||||||||||
Village of Rosemont Illinois | 2.14 | 12/01/16 | 1,375,000 | 1,359,737 | ||||||||||||
Village of Rosemont Illinois | 2.77 | 12/01/18 | 1,375,000 | 1,335,166 | ||||||||||||
Virginia Housing Development Authority | 1.11 | 10/01/16 | 550,000 | 544,593 | ||||||||||||
Washington Economic Development Finance Authority | 2.90 | 10/01/14 | 1,850,000 | 1,861,007 | ||||||||||||
Washington Economic Development Finance Authority | 3.20 | 10/01/15 | 2,350,000 | 2,366,685 | ||||||||||||
Wayne County Michigan Building Authority | 6.22 | 12/01/14 | 665,000 | 676,977 | ||||||||||||
Wayne County Michigan Building Authority | 6.82 | 12/01/15 | 730,000 | 756,762 | ||||||||||||
Wayne County Michigan Building Authority | 7.33 | 12/01/16 | 740,000 | 777,703 | ||||||||||||
Total Municipal Bonds (Cost $92,212,412) | 92,551,536 | |||||||||||||||
U.S. GOVERNMENT AND AGENCY OBLIGATIONS | ||||||||||||||||
(5.1% of portfolio) | ||||||||||||||||
Farmer Mac | 1.25 | 12/06/13 | 1,250,000 | 1,255,468 | ||||||||||||
Overseas Private Investment Corp. | 1.45 | (e) | 09/20/13 | 1,275,000 | 1,604,243 | |||||||||||
Overseas Private Investment Corp. | 3.50 | (f) | 05/02/16 | 1,000,000 | 1,148,728 | |||||||||||
Overseas Private Investment Corp. | 4.87 | (f) | 09/07/16 | 613,912 | 789,245 | |||||||||||
Overseas Private Investment Corp. | 1.05 | (f) | 12/09/16 | 1,000,000 | 1,019,179 | |||||||||||
Overseas Private Investment Corp. | 3.56 | (e) | 04/23/17 | 1,000,000 | 1,194,638 | |||||||||||
Overseas Private Investment Corp. | 1.50 | (f) | 11/17/17 | 1,100,000 | 1,112,113 | |||||||||||
Overseas Private Investment Corp. | 1.01 | (f) | 12/10/17 | 875,000 | 891,012 | |||||||||||
Overseas Private Investment Corp. | 1.55 | (f) | 03/15/18 | 1,120,000 | 1,167,424 | |||||||||||
Overseas Private Investment Corp. | 0.83 | (f) | 11/08/19 | 1,375,000 | 1,373,793 | |||||||||||
Overseas Private Investment Corp. | 1.34 | (f) | 11/20/19 | 1,000,000 | 1,032,467 | |||||||||||
Overseas Private Investment Corp. | 1.50 | (f) | 11/15/20 | 1,075,000 | 1,055,586 | |||||||||||
U.S. Department of Housing & Urban Development | 6.07 | 08/01/21 | 103,000 | 103,480 | ||||||||||||
U.S. Department of Housing & Urban Development | 6.12 | 08/01/22 | 597,000 | 596,729 | ||||||||||||
U.S. Treasury Notes | 2.00 | 04/30/16 | 10,000,000 | 10,384,380 | ||||||||||||
Total U.S. Government and Agency Obligations (Cost $24,701,010) |
| 24,728,485 |
The accompanying notes are an integral part of these financial statements. | Portfolio of Investments | 35 |
Table of Contents
PORTFOLIO OF INVESTMENTS: Short-Term Bond Fund (continued)
June 30, 2013 (Unaudited)
COMMERCIAL PAPER | Interest Rate/Yield | Maturity Date | Face Amount | Value | ||||||||||||
(19.9% of portfolio) | ||||||||||||||||
AGC Capital Inc. (b) | 0.31 | % | 07/03/13 | $ | 10,000,000 | $ | 9,999,828 | |||||||||
AGC Capital Inc. (b) | 0.31 | 07/24/13 | 4,750,000 | 4,749,059 | ||||||||||||
Apache Corp. (b) | 0.31 | 07/03/13 | 5,000,000 | 4,999,914 | ||||||||||||
Eni Finance USA Inc. (b) | 0.33 | 07/05/13 | 3,000,000 | 2,999,890 | ||||||||||||
Eni Finance USA Inc. (b) | 0.35 | 07/11/13 | 8,500,000 | 8,499,173 | ||||||||||||
Eni Finance USA Inc. (b) | 0.39 | 07/23/13 | 10,000,000 | 9,997,617 | ||||||||||||
Hitachi America Capital, Ltd. (b) | 0.30 | 07/08/13 | 14,250,000 | 14,249,169 | ||||||||||||
South Jersey Gas Co. (b) | 0.30 | 07/16/13 | 3,000,000 | 2,999,625 | ||||||||||||
TransCanada Pipeline USA Ltd. (b) | 0.29 | 07/02/13 | 13,500,000 | 13,499,891 | ||||||||||||
Westar Energy, Inc. (b) | 0.30 | 07/01/13 | 14,500,000 | 14,500,000 | ||||||||||||
Westar Energy, Inc. (b) | 0.32 | 07/24/13 | 5,000,000 | 4,998,978 | ||||||||||||
Westar Energy, Inc. (b) | 0.32 | 07/25/13 | 3,000,000 | 2,999,360 | ||||||||||||
Westar Energy, Inc. (b) | 0.32 | 07/29/13 | 1,500,000 | 1,499,627 | ||||||||||||
Total Commercial Paper (Cost $95,992,131) | 95,992,131 | |||||||||||||||
MONEY MARKET ACCOUNT | Shares | |||||||||||||||
(less than 0.01% of portfolio) | ||||||||||||||||
State Street Institutional Liquid Reserves Fund | 0.09 | 104,747 | 104,747 | |||||||||||||
Total Money Market Account (Cost $104,747) | 104,747 | |||||||||||||||
TOTAL INVESTMENTS IN SECURITIES (Cost $479,907,670)—100% |
| $ | 482,835,234 |
(a) | Variable coupon rate as of June 30, 2013. |
(b) | 144A security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be resold in transactions exempt from registration, normally to qualified institutional buyers. The securities have been determined to be liquid under criteria established by the Fund’s Board of Directors. The total of such securities at period-end amounts to $143,176,141 and represents 29.7% of total investments. |
(c) | Step coupon security, the current rate may be adjusted upwards before maturity date. |
(d) | Zero coupon security, purchased at a discount. |
(e) | Interest is paid at maturity. |
(f) | Interest is paid at put date. |
(g) | 7-day yield at June 30, 2013. |
36 | Portfolio of Investments | The accompanying notes are an integral part of these financial statements. |
Table of Contents
PORTFOLIO OF INVESTMENTS: Stock Index Fund
June 30, 2013 (Unaudited)
Cost | Value | |||||||
Investment in S&P 500 Stock Master Portfolio | $ | 45,173,809 | $ | 86,183,571 |
Substantially all the assets of the Stock Index Fund are invested in the S&P 500 Stock Master Portfolio managed by BlackRock Fund Advisors. As of June 30, 2013, the Stock Index Fund’s ownership interest in the S&P 500 Stock Master Portfolio was 1.85%. See the Appendix for the S&P 500 Stock Master Portfolio for holdings information.
The accompanying notes are an integral part of these financial statements. | Portfolio of Investments | 37 |
Table of Contents
PORTFOLIO OF INVESTMENTS: Value Fund
June 30, 2013 (Unaudited)
COMMON STOCKS | Shares | Value | ||||||
(97.7% of portfolio) | ||||||||
CONSUMER DISCRETIONARY—7.7% |
| |||||||
Auto Components | ||||||||
Cooper Tire & Rubber Co. | 440,000 | $ | 14,594,800 | |||||
Distributors | ||||||||
Genuine Parts Co. | 315,400 | 24,623,278 | ||||||
Multiline Retail | ||||||||
Dillard’s, Inc. (Class A) | 182,700 | 14,975,919 | ||||||
Total Consumer Discretionary |
| 54,193,997 | ||||||
CONSUMER STAPLES—4.6% |
| |||||||
Food Products | ||||||||
Dean Foods Co. (a) | 859,800 | 8,615,196 | ||||||
J.M. Smucker Co. (The) | 148,853 | 15,354,187 | ||||||
WhiteWave Foods Co. (The) (a) | 219,631 | 3,569,004 | ||||||
WhiteWave Foods Co. (The), | 312,796 | 4,754,499 | ||||||
Total Consumer Staples |
| 32,292,886 | ||||||
ENERGY—14.6% |
| |||||||
Energy Equipment & Services | ||||||||
Baker Hughes Inc. | 187,000 | 8,626,310 | ||||||
Oil, Gas, & Consumable Fuels | ||||||||
Chevron Corp. | 205,000 | 24,259,700 | ||||||
ConocoPhillips | 277,000 | 16,758,500 | ||||||
Marathon Oil Corp. | 461,000 | 15,941,380 | ||||||
Marathon Petroleum Corp. | 189,000 | 13,430,340 | ||||||
Phillips 66 | 159,500 | 9,396,145 | ||||||
QEP Resources, Inc. | 367,400 | 10,206,372 | ||||||
Questar Corp. | 169,814 | 4,050,064 | ||||||
Total Energy |
| 102,668,811 | ||||||
FINANCIALS—9.4% |
| |||||||
Commercial Banks | ||||||||
Commerce Bancshares, Inc. | 31,473 | 1,370,964 | ||||||
Wells Fargo & Co. | 191,000 | 7,882,570 | ||||||
Diversified Financial Services | ||||||||
Bank of America Corp. | 475,200 | 6,111,072 | ||||||
JPMorgan Chase & Co. | 442,600 | 23,364,854 | ||||||
Insurance | ||||||||
Allstate Corp. (The) | 369,000 | 17,756,280 | ||||||
Chubb Corp. (The) | 122,000 | 10,327,300 | ||||||
Total Financials |
| 66,813,040 | ||||||
HEALTH CARE—21.5% |
| |||||||
Health Care Equipment & Supplies | ||||||||
Covidien PLC | 207,600 | 13,045,584 | ||||||
Pharmaceuticals | ||||||||
Abbott Laboratories | 399,000 | 13,917,120 | ||||||
AbbVie Inc. | 399,000 | 16,494,660 | ||||||
Bristol-Myers Squibb Co. | 794,700 | 35,515,143 | ||||||
GlaxoSmithKline plc ADR | 354,000 | 17,689,380 | ||||||
Hospira, Inc. (a) | 379,400 | 14,534,814 | ||||||
Merck & Co., Inc. | 193,194 | 8,973,861 | ||||||
Pfizer Inc. | 1,107,000 | 31,007,070 | ||||||
Total Health Care |
| 151,177,632 |
Shares | Value | |||||||
INDUSTRIALS—18.4% |
| |||||||
Airlines | ||||||||
Southwest Airlines Co. | 844,100 | $ | 10,880,449 | |||||
Commercial Services & Supplies | ||||||||
Avery Dennison Corp. | 520,000 | 22,235,200 | ||||||
Industrial Conglomerates | ||||||||
General Electric Co. | 999,000 | 23,166,810 | ||||||
Honeywell International Inc. | 281,100 | 22,302,474 | ||||||
Tyco International Ltd. | 164,850 | 5,431,807 | ||||||
Machinery | ||||||||
Flowserve Corp. | 285,900 | 15,441,459 | ||||||
Parker-Hannifin Corp. | 246,400 | 23,506,560 | ||||||
Distributors | ||||||||
Applied Industrial Technologies, Inc. | 130,500 | 6,307,065 | ||||||
Total Industrials |
| 129,271,824 | ||||||
INFORMATION TECHNOLOGY—15.8% |
| |||||||
Communications Equipment | ||||||||
Cisco Systems, Inc. | 1,018,500 | 24,759,735 | ||||||
Computers & Peripherals | ||||||||
Dell Inc. | 1,282,000 | 17,114,700 | ||||||
Hewlett-Packard Co. | 876,900 | 21,747,120 | ||||||
Electronic Equipment, Instruments & Components | ||||||||
TE Connectivity Ltd. | 262,850 | 11,970,189 | ||||||
IT Services | ||||||||
SAIC, Inc. | 603,000 | 8,399,790 | ||||||
Semiconductors & Semiconductor Equipment | ||||||||
Intel Corp. | 1,135,000 | 27,489,700 | ||||||
Total Information Technology |
| 111,481,234 | ||||||
MATERIALS—5.7% |
| |||||||
Chemicals | ||||||||
Dow Chemical Co. (The) | 711,900 | 22,901,823 | ||||||
Containers & Packaging | ||||||||
Bemis Co., Inc. | 433,600 | 16,971,104 | ||||||
Total Materials |
| 39,872,927 | ||||||
Total Common Stocks |
| 687,772,351 | ||||||
MONEY MARKET ACCOUNT | ||||||||
(2.3% of portfolio) | ||||||||
State Street Institutional Liquid Reserves Fund, 0.09% (b) | 16,116,649 | 16,116,649 | ||||||
Total Money Market Account |
| 16,116,649 | ||||||
TOTAL INVESTMENTS IN SECURITIES |
| $ | 703,889,000 |
(a) | Non-income producing. |
(b) | 7-day yield at June 30, 2013. |
ADR—American | Depositary Receipt |
38 | Portfolio of Investments | The accompanying notes are an integral part of these financial statements. |
Table of Contents
PORTFOLIO OF INVESTMENTS: Growth Fund
June 30, 2013 (Unaudited)
COMMON STOCKS | Shares | Value | ||||||
(98.8% of portfolio) | ||||||||
CONSUMER DISCRETIONARY—24.4% |
| |||||||
Automobiles | ||||||||
Tesla Motors, Inc. (a) | 3,500 | $ | 376,005 | |||||
Hotels, Restaurants & Leisure | ||||||||
Carnival Corp. | 15,200 | 521,208 | ||||||
Chipotle Mexican Grill Inc. (a) | 1,600 | 582,960 | ||||||
Las Vegas Sands Corp. | 17,200 | 910,396 | ||||||
Starbucks Corp. | 14,100 | 923,409 | ||||||
Starwood Hotels & Resorts Worldwide, Inc. | 10,600 | 669,814 | ||||||
Household Durables | ||||||||
D.R. Horton, Inc. | 20,100 | 427,728 | ||||||
Internet & Catalog Retail | ||||||||
Amazon.com, Inc. (a) | 8,400 | 2,332,596 | ||||||
Netflix, Inc. (a) | 2,200 | 464,398 | ||||||
priceline.com Inc. (a) | 1,750 | 1,447,478 | ||||||
Media | ||||||||
Discovery Communications, Inc. (a) | 5,500 | 383,130 | ||||||
Twenty-First Century Fox, Inc. | 2,700 | 78,273 | ||||||
News Corp., Class A | 14,000 | 456,400 | ||||||
Multiline Retail | ||||||||
Dollar Tree, Inc. (a) | 8,200 | 416,888 | ||||||
Specialty Retail | ||||||||
Fossil, Inc. (a) | 4,350 | 449,399 | ||||||
Lowe’s Cos., Inc. | 19,700 | 805,730 | ||||||
lululemon athletica Inc. (a) | 4,900 | 321,048 | ||||||
Ralph Lauren Corp. | 2,200 | 382,228 | ||||||
Tractor Supply Co. | 4,800 | 564,528 | ||||||
Total Consumer Discretionary |
| 12,513,616 | ||||||
CONSUMER STAPLES—4.3% |
| |||||||
Beverages | ||||||||
Green Mountain Coffee Roasters, Inc. (a) | 5,800 | 435,348 | ||||||
Monster Beverage Corp. (a) | 4,500 | 273,465 | ||||||
PepsiCo, Inc. | 5,600 | 458,024 | ||||||
Food & Staples Retailing | ||||||||
Whole Foods Market, Inc. | 8,400 | 432,432 | ||||||
Household Products | ||||||||
Procter & Gamble Co. (The) | 8,200 | 631,318 | ||||||
Total Consumer Staples |
| 2,230,587 | ||||||
ENERGY—4.1% |
| |||||||
Oil, Gas,& Consumable Fuels | ||||||||
Cimarex Energy Co. | 7,600 | 493,924 | ||||||
Pioneer Natural Resources Co. | 5,200 | 752,700 | ||||||
Range Resources Corp. | 11,000 | 850,520 | ||||||
Total Energy |
| 2,097,144 | ||||||
FINANCIALS—4.9% |
| |||||||
Capital Markets | ||||||||
Franklin Resources Inc. | 3,200 | 435,264 | ||||||
Morgan Stanley | 29,100 | 710,913 | ||||||
State Street Corp. | 10,800 | 704,268 | ||||||
TD Ameritrade Holding Corp. | 28,300 | 687,407 | ||||||
Total Financials |
| 2,537,852 |
Shares | Value | |||||||
HEALTH CARE —14.4% |
| |||||||
Biotechnology | ||||||||
Alexion Pharmaceuticals Inc. (a) | 4,800 | $ | 442,752 | |||||
Biogen Idec Inc. (a) | 3,690 | 794,088 | ||||||
Celgene Corp. (a) | 6,150 | 718,996 | ||||||
Gilead Sciences, Inc. (a) | 36,300 | 1,858,923 | ||||||
Regeneron Pharmaceuticals, Inc. (a) | 1,200 | 269,856 | ||||||
Health Care Providers & Services | ||||||||
McKesson Corp. | 9,600 | 1,099,200 | ||||||
Unitedhealth Group Inc. | 12,500 | 818,500 | ||||||
Health Care Technology | ||||||||
Catamaran Corp. (a) | 7,756 | 377,872 | ||||||
Edwards Lifesciences Corp. (a) | 5,400 | 362,880 | ||||||
Pharmaceuticals | ||||||||
Valeant Pharmaceuticals International, Inc. (a) | 7,700 | 662,816 | ||||||
Total Health Care |
| 7,405,883 | ||||||
INDUSTRIALS—14.0% |
| |||||||
Aerospace & Defense | ||||||||
Boeing Co. (The) | 13,700 | 1,403,428 | ||||||
Precision Castparts Corp. | 5,400 | 1,220,454 | ||||||
United Technologies Corp. | 3,200 | 297,408 | ||||||
Airlines | ||||||||
United Continental Holdings Inc. (a) | 23,100 | 722,799 | ||||||
Air Freight & Logistics | ||||||||
FedEx Corp. | 5,500 | 542,190 | ||||||
Machinery | ||||||||
Danaher Corp. | 22,700 | 1,436,910 | ||||||
Road & Rail | ||||||||
Union Pacific Corp. | 4,500 | 694,260 | ||||||
Wabtec Corp. | 4,900 | 261,807 | ||||||
Trading Companies & Distributors | ||||||||
Fastenal Co. | 13,600 | 623,560 | ||||||
Total Industrials |
| 7,202,816 | ||||||
INFORMATION TECHNOLOGY—26.2% |
| |||||||
Communications Equipment | ||||||||
Juniper Networks, Inc. (a) | 59,400 | 1,147,014 | ||||||
QUALCOMM, Inc. | 11,800 | 720,744 | ||||||
Computers & Peripherals | ||||||||
Apple Inc. | 985 | 390,139 | ||||||
SanDisk Corp. (a) | 11,800 | 720,980 | ||||||
Internet Software & Services | ||||||||
Akamai Technologies, Inc. (a) | 10,100 | 429,755 | ||||||
Baidu, Inc. ADR (a) | 4,100 | 387,573 | ||||||
eBay Inc. (a) | 18,200 | 941,304 | ||||||
Facebook, Inc. (a) | 17,400 | 432,564 | ||||||
Google Inc. (Class A) (a) | 3,335 | 2,936,034 | ||||||
LinkedIn Corp. (a) | 1,900 | 338,770 | ||||||
IT Services | ||||||||
Cognizant Technology Solutions Corp., (Class A) (a) | 10,900 | 682,449 | ||||||
MasterCard Inc. | 2,115 | 1,215,067 | ||||||
Visa Inc., Class A | 3,500 | 639,625 |
The accompanying notes are an integral part of these financial statements. | Portfolio of Investments | 39 |
Table of Contents
PORTFOLIO OF INVESTMENTS: Growth Fund (continued)
June 30, 2013 (Unaudited)
Shares | Value | |||||||
(Common Stocks continued) | ||||||||
Semiconductors & Semiconductor Equipment | ||||||||
Atmel Corp. (a) | 26,600 | $ | 195,510 | |||||
Broadcom Corp. (Class A) | 15,800 | 533,408 | ||||||
Software | ||||||||
NetSuite Inc. (a) | 1,800 | 165,132 | ||||||
Red Hat, Inc. (a) | 12,200 | 583,404 | ||||||
salesforce.com, Inc. (a) | 15,700 | 599,426 | ||||||
Tibco Software Inc. (a) | 7,500 | 160,500 | ||||||
Workday, Inc. (a) | 3,300 | 211,497 | ||||||
Total Information Technology |
| 13,430,895 | ||||||
MATERIALS—3.6% |
| |||||||
Chemicals | ||||||||
Ecolab Inc. | 5,300 | 451,507 | ||||||
Praxair Inc. | 6,330 | 728,963 | ||||||
Sherwin-Williams Co. | 3,750 | 662,250 | ||||||
Total Materials |
| 1,842,720 | ||||||
TELECOMMUNICATION SERVICES—2.9% |
| |||||||
Wireless Telecommunication Services | ||||||||
Crown Castle International Corp. (a) | 20,400 | 1,476,756 | ||||||
Total Telecommunication Services |
| 1,476,756 | ||||||
Total Common Stocks |
| 50,738,269 |
MONEY MARKET ACCOUNT | Shares | Value | ||||||
(1.2% of portfolio) | ||||||||
State Street Institutional Liquid | 615,542 | $ | 615,542 | |||||
Total Money Market Account | 615,542 | |||||||
TOTAL INVESTMENTS IN SECURITIES |
| $ | 51,353,811 |
(a) | Non-income producing. |
(b) | 7-day yield at June 30, 2013. |
ADR—American Depositary Receipt
40 | Portfolio of Investments | The accompanying notes are an integral part of these financial statements. |
Table of Contents
PORTFOLIO OF INVESTMENTS: Small-Company Stock Fund
June 30, 2013 (Unaudited)
COMMON STOCKS | Shares | Value | ||||||
(85.3% of portfolio) | ||||||||
CONSUMER DISCRETIONARY—13.5% |
| |||||||
Auto Components | ||||||||
Cooper Tire & Rubber Co. | 449,000 | $ | 14,893,330 | |||||
Diversified Consumer Services | ||||||||
Matthews International Corp. (Class A) | 264,342 | 9,965,693 | ||||||
Multiline Retail | ||||||||
Nordstrom, Inc. | 90,000 | 5,394,600 | ||||||
Restaurants | ||||||||
Brinker International, Inc. | 200,000 | 7,886,000 | ||||||
Cracker Barrel Old Country Store, Inc. | 210,209 | 19,898,384 | ||||||
Wendy’s Co. (The) | 2,040,260 | 11,894,716 | ||||||
Specialty Retail | ||||||||
Sally Beauty Holdings, Inc. (a) | 114,000 | 3,545,400 | ||||||
True Religion Apparel, Inc. | 147,293 | 4,663,296 | ||||||
Total Consumer Discretionary | 78,141,419 | |||||||
CONSUMER STAPLES—11.9% |
| |||||||
Food Distribution | ||||||||
Core-Mark Holding Company, Inc. | 118,099 | 7,499,287 | ||||||
United Natural Foods, Inc. (a) | 159,600 | 8,616,804 | ||||||
Food Products | ||||||||
Dean Foods Co. (a) | 650,000 | 6,513,000 | ||||||
J.M. Smucker Co. (The) | 40,868 | 4,215,534 | ||||||
WhiteWave Foods Co. (The) (a) | 166,038 | 2,698,118 | ||||||
WhiteWave Foods Co. (The), (Class B) (a) | 236,471 | 3,594,359 | ||||||
Food & Staples Retailing | ||||||||
Fred’s, Inc. | 1,149,112 | 17,799,745 | ||||||
Harris Teeter Supermarkets, Inc. | 379,152 | 17,767,063 | ||||||
Total Consumer Staples | 68,703,910 | |||||||
ENERGY—1.8% |
| |||||||
Energy Equipment & Services | ||||||||
Helmerich & Payne, Inc. | 35,000 | 2,185,750 | ||||||
Oil, Gas, & Consumable Fuels | ||||||||
Cimarex Energy Co. | 59,400 | 3,860,406 | ||||||
QEP Resources, Inc. | 26,600 | 738,948 | ||||||
Questar Corp. | 26,600 | 634,410 | ||||||
SM Energy Co. | 49,000 | 2,939,020 | ||||||
Total Energy | 10,358,534 | |||||||
FINANCIALS—11.8% |
| |||||||
Commercial Banks | ||||||||
Cardinal Financial Corp. | 697,761 | 10,215,221 | ||||||
Middleburg Financial Corp. | 97,700 | 1,866,070 | ||||||
National Bankshares, Inc. (Virginia) | 182,302 | 6,477,190 | ||||||
Southcoast Financial Corp. (a) | 74,730 | 392,335 | ||||||
Texas Capital Bancshares, Inc. (a) | 147,398 | 6,538,575 | ||||||
Valley National Bancorp | 1,125,799 | 10,661,317 | ||||||
Consumer Finance | ||||||||
Encore Capital Group, Inc. (a) | 386,066 | 12,782,645 | ||||||
Diversified Financial Services | ||||||||
UMB Financial Corp. | 343,244 | 19,108,393 | ||||||
Total Financials | 68,041,746 |
Shares | Value | |||||||
HEALTH CARE—2.5% |
| |||||||
Health Care Equipment & Supplies | ||||||||
STERIS Corp. | 342,112 | $ | 14,669,763 | |||||
Total Health Care | 14,669,763 | |||||||
INDUSTRIALS—26.6% |
| |||||||
Aerospace & Defense | ||||||||
Huntington Ingalls Industries, Inc. | 157,208 | 8,879,108 | ||||||
Triumph Group, Inc. | 136,800 | 10,827,720 | ||||||
Construction & Engineering | ||||||||
Dycom Industries, Inc. (a) | 693,242 | 16,041,620 | ||||||
Orion Marine Group, Inc. (a) | 88,500 | 1,069,965 | ||||||
Distributors | ||||||||
Applied Industrial Technologies, Inc. | 392,578 | 18,973,295 | ||||||
Electrical Equipment | ||||||||
Rofin-Sinar Technologies Inc. (a) | 708,555 | 17,671,362 | ||||||
Industrial Conglomerates | ||||||||
Carlisle Companies Inc. | 125,600 | 7,826,136 | ||||||
CLARCOR Inc. | 87,100 | 4,547,491 | ||||||
Standex International Corp. | 19,500 | 1,028,625 | ||||||
Machinery | ||||||||
Flowserve Corp. | 43,500 | 2,349,435 | ||||||
Gorman-Rupp Co. (The) | 427,162 | 13,600,838 | ||||||
Manitowoc Co., Inc. (The) | 759,400 | 13,600,854 | ||||||
Regal Beloit Corp. | 58,500 | 3,793,140 | ||||||
Road & Rail | ||||||||
Knight Transportation, Inc. | 963,953 | 16,213,689 | ||||||
Werner Enterprises, Inc. | 700,114 | 16,921,755 | ||||||
Total Industrials | 153,345,033 | |||||||
INFORMATION TECHNOLOGY—9.2% |
| |||||||
Communications Equipment | ||||||||
Belden Inc. | 292,585 | 14,608,769 | ||||||
Computers & Peripherals | ||||||||
Western Digital Corp. | 70,000 | 4,346,300 | ||||||
IT Services | ||||||||
Cass Information Systems, Inc. | 96,377 | 4,442,980 | ||||||
Computer Services, Inc. | 374,946 | 11,248,380 | ||||||
ManTech International Corp. | 702,054 | 18,337,650 | ||||||
Total Information Technology | 52,984,079 | |||||||
MATERIALS—8.0% |
| |||||||
Chemicals | ||||||||
Olin Corp. | 781,999 | 18,705,416 | ||||||
PolyOne Corp. | 514,106 | 12,739,547 | ||||||
Polypore International, Inc. (a) | 84,800 | 3,417,440 | ||||||
Westlake Chemical Corp. | 115,700 | 11,154,637 | ||||||
Total Materials | 46,017,040 | |||||||
Total Common Stocks | 492,261,524 |
The accompanying notes are an integral part of these financial statements. | Portfolio of Investments | 41 |
Table of Contents
PORTFOLIO OF INVESTMENTS: Small-Company Stock Fund (continued)
June 30, 2013 (Unaudited)
EXCHANGE TRADED FUNDS | Shares | Value | ||||||
(9.8% of portfolio) | ||||||||
iShares Russell 2000 Value | 331,000 | $ | 28,432,900 | |||||
iShares Core S&P Small-Cap 600 Value | 311,000 | 28,080,190 | ||||||
Total Exchange Traded Funds | 56,513,090 |
MONEY MARKET ACCOUNT | Shares | Value | ||||||
(4.9% of portfolio) |
| |||||||
State Street Institutional Liquid Reserves Fund, 0.09% (b) | 28,306,430 | $ | 28,306,430 | |||||
Total Money Market Account | 28,306,430 | |||||||
TOTAL INVESTMENTS IN SECURITIES (Cost $425,225,828)—100% |
| $ | 577,081,044 |
(a) | Non-income producing. |
(b) | 7-day yield at June 30, 2013. |
42 | Portfolio of Investments | The accompanying notes are an integral part of these financial statements. |
Table of Contents
PORTFOLIO OF INVESTMENTS: International Value Fund
June 30, 2013 (Unaudited)
COMMON STOCKS | Shares | Value | ||||||
(95.8% of portfolio) | ||||||||
BRAZIL—1.2% |
| |||||||
Petroleo Brasileiro SA—ADR | 102,200 | $ | 1,371,524 | |||||
Rossi Residencial SA | 525,134 | 687,203 | ||||||
Total Brazil | 2,058,727 | |||||||
BRITAIN—10.8% |
| |||||||
BAE Systems PLC | 760,050 | 4,426,138 | ||||||
HSBC Holdings PLC—ADR | 68,650 | 3,562,935 | ||||||
Tesco PLC | 704,100 | 3,545,717 | ||||||
Vodafone Group PLC | 1,048,724 | 3,005,302 | ||||||
WPP Group PLC | 284,250 | 4,858,633 | ||||||
Total Britain | 19,398,725 | |||||||
CANADA—1.9% |
| |||||||
Encana Corp. | 202,550 | 3,431,197 | ||||||
Total Canada | 3,431,197 | |||||||
CHINA—1.0% |
| |||||||
Guangzhou Automobile Group Co., Ltd. | 1,829,150 | 1,716,485 | ||||||
Total China | 1,716,485 | |||||||
DENMARK—2.0% |
| |||||||
Danske Bank Group | 207,850 | 3,545,700 | ||||||
Total Denmark | 3,545,700 | |||||||
FINLAND—1.2% |
| |||||||
Neste Oil OYJ | 153,000 | 2,232,637 | ||||||
Total Finland | 2,232,637 | |||||||
FRANCE—11.9% |
| |||||||
AXA SA | 204,300 | 4,027,306 | ||||||
Cap Gemini SA | 78,650 | 3,819,383 | ||||||
Compagnie de Saint-Gobain SA | 96,178 | 3,897,175 | ||||||
GDF SUEZ SA | 166,050 | 3,257,042 | ||||||
Total SA | 66,750 | 3,260,281 | ||||||
Vivendi SA | 157,350 | 2,982,036 | ||||||
Total France | 21,243,223 | |||||||
GERMANY—6.1% |
| |||||||
Daimler AG REG | 71,300 | 4,304,299 | ||||||
Deutsche Böerse AG | 57,200 | 3,761,372 | ||||||
ThyssenKrupp AG | 143,650 | 2,815,868 | ||||||
Total Germany | 10,881,539 | |||||||
HONG KONG—3.3% |
| |||||||
Hutchison Whampoa Ltd. | 369,325 | 3,863,972 | ||||||
New World Development Co. Ltd. | 1,428,275 | 1,958,196 | ||||||
NW Hotel Investments | 17,853 | — | ||||||
Total Hong Kong | 5,822,168 | |||||||
ITALY—5.3% |
| |||||||
Eni SpA | 158,250 | 3,247,918 | ||||||
Intesa Sanpaolo SpA | 2,868,050 | 4,590,427 | ||||||
Telecom Italia SpA | 3,049,200 | 1,699,954 | ||||||
Total Italy | 9,538,299 |
Shares | Value | |||||||
ISRAEL—1.3% |
| |||||||
Teva Pharmaceutical Industries Ltd.—ADR | 59,100 | $ | 2,316,720 | |||||
Total Israel | 2,316,720 | |||||||
JAPAN—18.4% |
| |||||||
Bridgestone Corp. | 135,400 | 4,617,168 | ||||||
Daiwa Securities Group Inc. | 491,535 | 4,116,565 | ||||||
Mori Seiki Co., Ltd. | 192,750 | 2,173,917 | ||||||
MS & AD Insurance Group Holdings, Inc. | 223,055 | 5,650,024 | ||||||
Nikon Corp. | 106,350 | 2,484,759 | ||||||
Nippon Sheet Glass Co. Ltd. | 1,473,350 | 1,378,017 | ||||||
Nissan Motor Co., Ltd. | 374,600 | 3,754,470 | ||||||
Sumitomo Corp. | 359,700 | 4,483,154 | ||||||
Sumitomo Mitsui Trust Holdings, Inc. | 926,900 | 4,324,783 | ||||||
Total Japan | 32,982,857 | |||||||
NETHERLANDS—5.7% |
| |||||||
AEGON NV | 868,150 | 5,824,468 | ||||||
DSM NV | 68,100 | 4,439,667 | ||||||
Total Netherlands | 10,264,135 | |||||||
PORTUGAL—1.1% |
| |||||||
Banco Espirito Santo SA | 2,471,800 | 1,981,633 | ||||||
Total Portugal | 1,981,633 | |||||||
REPUBLIC OF SOUTH KOREA—3.9% |
| |||||||
Posco | 13,475 | 3,512,342 | ||||||
SK Telecom Co., Ltd. | 9,032 | 1,661,034 | ||||||
SK Telecom Co., Ltd.—ADR | 92,617 | 1,882,904 | ||||||
Total Republic of South Korea | 7,056,280 | |||||||
SINGAPORE—1.3% |
| |||||||
Keppel Corp. Ltd. | 276,160 | 2,258,806 | ||||||
Total Singapore | 2,258,806 | |||||||
SPAIN—2.6% |
| |||||||
Banco Popular Espanol SA | 115,250 | 352,822 | ||||||
IBERDROLA SA | 806,257 | 4,260,746 | ||||||
Total Spain | 4,613,568 | |||||||
SWITZERLAND—11.8% |
| |||||||
Adecco SA REG | 61,650 | 3,511,086 | ||||||
Credit Suisse Group AG | 155,795 | 4,124,528 | ||||||
Givaudan SA REG | 2,382 | 3,069,384 | ||||||
Holcim Ltd. | 50,536 | 3,517,623 | ||||||
Novartis AG REG | 48,950 | 3,467,155 | ||||||
Roche Holding AG | 14,150 | 3,511,989 | ||||||
Total Switzerland | 21,201,765 |
The accompanying notes are an integral part of these financial statements. | Portfolio of Investments | 43 |
Table of Contents
PORTFOLIO OF INVESTMENTS: International Value Fund (continued)
June 30, 2013 (Unaudited)
Shares | Value | |||||||
(Common Stocks continued) | ||||||||
THAILAND—5.0% |
| |||||||
Bangkok Bank Public Company Ltd. | 275,100 | $ | 1,832,250 | |||||
Krung Thai Bank Public Company, Ltd. | 5,391,300 | 3,503,633 | ||||||
PTT Public Company Ltd. | 337,800 | 3,632,624 | ||||||
Total Thailand | 8,968,507 | |||||||
Total Common Stocks | 171,512,971 |
MONEY MARKET ACCOUNT | Shares | Value | ||||||
(4.2% of portfolio) | ||||||||
State Street Institutional Liquid Reserves Fund, 0.09% (a) | 7,612,627 | $ | 7,612,627 | |||||
Total Money Market Account | 7,612,627 | |||||||
TOTAL INVESTMENTS IN SECURITIES |
| $ | 179,125,598 |
(a) | 7-day yield at June 30, 2013. |
ADR—American Depositary Receipt
SA—Sociedad Anónima or Société Anonyme
PLC—Public Limited Company
OYJ—Julkinen Osakeyhtiö
AG—Aktiengesellschaft
REG—Registered shares
SpA—Società per Azioni
NV—Naamloze Vennottschap
44 | Portfolio of Investments | The accompanying notes are an integral part of these financial statements. |
Table of Contents
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Table of Contents
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 2013 (Unaudited)
ASSETS | Daily Income Fund | Short-Term Government Securities Fund | Short-Term Bond Fund | |||||||||
Investments in securities, at value (cost: $200,297,921; $90,030,644; $479,907,670; $45,173,809; $437,468,554; $41,720,685; $425,225,828; $173,207,642) | $ | 200,297,921 | $ | 90,626,583 | $ | 482,835,234 | ||||||
Cash | 2,000,000 | — | — | |||||||||
Foreign Currency (cost $66,947) | — | — | — | |||||||||
Receivables | ||||||||||||
Investment securities sold | — | — | — | |||||||||
Dividends, interest, and tax reclaims | 201,105 | 245,632 | 1,830,877 | |||||||||
Capital shares sold | 479,548 | 10,951 | 348,885 | |||||||||
Prepaid expenses | 25,059 | 15,115 | 35,472 | |||||||||
Total assets | 203,003,633 | 90,898,281 | 485,050,468 | |||||||||
LIABILITIES | ||||||||||||
Payables | ||||||||||||
Investment securities purchased | — | — | 58,615 | |||||||||
Accrued expenses | 37,774 | 21,962 | 72,356 | |||||||||
Due to Board Members | 38,987 | 15,449 | 66,632 | |||||||||
Due to RE Advisers | 1,286 | 38,686 | 251,651 | |||||||||
Capital shares redeemed | 138,256 | 67,232 | 670,126 | |||||||||
Dividends | 16 | 1,867 | 16,780 | |||||||||
Total liabilities | 216,319 | 145,196 | 1,136,160 | |||||||||
NET ASSETS | $ | 202,787,314 | $ | 90,753,085 | $ | 483,914,308 | ||||||
NET ASSETS CONSIST OF: | ||||||||||||
Unrealized appreciation of investments | $ | — | $ | 595,939 | $ | 2,927,564 | ||||||
Undistributed (over distributed) net investment income | (38,988 | ) | (16,060 | ) | (69,026 | ) | ||||||
Undistributed net realized gain (loss) from investments and futures transactions | — | 19,375 | (468,322 | ) | ||||||||
Paid-in-capital applicable to outstanding shares of 202,826,262 of Daily Income Fund, 17,378,968 of Short-Term Government Securities Fund, 92,633,835 of Short-Term Bond Fund, 7,171,053 of Stock Index Fund, 17,641,459 of Value Fund, 7,958,909 of Growth Fund, 18,611,193 of Small-Company Stock Fund, and 26,244,373 of International Value Fund | 202,826,302 | 90,153,831 | 481,524,092 | |||||||||
NET ASSETS | $ | 202,787,314 | $ | 90,753,085 | $ | 483,914,308 | ||||||
NET ASSET VALUE PER SHARE | $ | 1.00 | $ | 5.22 | $ | 5.22 |
46 | Statements of Assets and Liabilities | The accompanying notes are an integral part of these financial statements. |
Table of Contents
Stock Index Fund | Value Fund | Growth Fund | Small-Company Stock Fund | International Value Fund | ||||||||||||||
$ | 86,183,571 | $ | 703,889,000 | $ | 51,353,811 | $ | 577,081,044 | $ | 179,125,598 | |||||||||
— | — | — | — | — | ||||||||||||||
— | — | — | — | 66,830 | ||||||||||||||
— | — | 262,071 | — | 116,181 | ||||||||||||||
— | 1,291,323 | 13,356 | 514,827 | 861,377 | ||||||||||||||
37,942 | 673,547 | 15,040 | 8,523,553 | 1,348,522 | ||||||||||||||
13,331 | 45,618 | 9,881 | 42,549 | 18,957 | ||||||||||||||
86,234,844 | 705,899,488 | 51,654,159 | 586,161,973 | 181,537,465 | ||||||||||||||
— | — | 283,130 | 1,337,906 | 81,915 | ||||||||||||||
34,205 | 154,512 | 18,894 | 123,185 | 48,443 | ||||||||||||||
12,466 | 113,064 | 5,954 | 38,402 | 28,874 | ||||||||||||||
23,823 | 327,723 | 30,685 | 394,870 | 120,259 | ||||||||||||||
97,248 | 425,988 | 31,068 | 253,370 | 33,117 | ||||||||||||||
13 | 375,301 | — | — | — | ||||||||||||||
167,755 | 1,396,588 | 369,731 | 2,147,733 | 312,608 | ||||||||||||||
$ | 86,067,089 | $ | 704,502,900 | $ | 51,284,428 | $ | 584,014,240 | $ | 181,224,857 | |||||||||
$ | 41,009,782 | $ | 266,420,446 | $ | 9,633,126 | $ | 151,855,216 | $ | 5,904,274 | |||||||||
620,418 | (115,625 | ) | (79,992 | ) | 926,506 | 2,873,579 | ||||||||||||
(7,425,470 | ) | 3,731,845 | 1,283,282 | (621,818 | ) | (29,006,678 | ) | |||||||||||
51,862,359 | 434,466,234 | 40,448,012 | 431,854,336 | 201,453,682 | ||||||||||||||
$ | 86,067,089 | $ | 704,502,900 | $ | 51,284,428 | $ | 584,014,240 | $ | 181,224,857 | |||||||||
$ | 12.00 | $ | 39.93 | $ | 6.44 | $ | 31.38 | $ | 6.91 |
The accompanying notes are an integral part of these financial statements. | Statements of Assets and Liabilities | 47 |
Table of Contents
For the Six Months Ended June 30, 2013 (Unaudited)
INVESTMENT INCOME | Daily Income Fund | Short-Term Government Securities Fund | Short-Term Bond Fund | |||||||||
Interest | $ | 137,366 | $ | 780,316 | $ | 5,636,411 | ||||||
Dividends | — | — | — | |||||||||
Allocated from Master Portfolio | ||||||||||||
Income | — | — | — | |||||||||
Expense | — | — | — | |||||||||
Total investment income | 137,366 | 780,316 | 5,636,411 | |||||||||
EXPENSES | ||||||||||||
Management fees | 513,310 | 209,433 | 1,338,120 | |||||||||
Shareholder servicing fees | 65,946 | 33,163 | 82,036 | |||||||||
Director and Board meeting expenses | 33,519 | 14,450 | 70,966 | |||||||||
Custodian and accounting fees | 20,846 | 30,133 | 86,953 | |||||||||
Legal and audit fees | 16,557 | 7,614 | 33,912 | |||||||||
Printing | 11,142 | 6,188 | 19,150 | |||||||||
Registration fees | 20,316 | 11,788 | 19,777 | |||||||||
Insurance | 6,378 | 2,723 | 12,785 | |||||||||
Communication | 2,966 | 1,606 | 5,012 | |||||||||
Other expenses | 4,844 | 4,157 | 14,105 | |||||||||
Administration fees | — | — | — | |||||||||
Total expenses | 695,824 | 321,255 | 1,682,816 | |||||||||
Less fees waived and expenses reimbursed by RE Advisers | (562,798 | ) | — | — | ||||||||
Net expenses | 133,026 | 321,255 | 1,682,816 | |||||||||
NET INVESTMENT INCOME (LOSS) | 4,340 | 459,061 | 3,953,595 | |||||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||||||||||
Net realized gain (loss) on investments | — | 21,137 | 46,393 | |||||||||
Net change in unrealized appreciation (depreciation) | — | (983,367 | ) | (45,496 | ) | |||||||
NET GAIN (LOSS) ON INVESTMENTS | — | (962,230 | ) | 897 | ||||||||
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS | $ | 4,340 | $ | (503,169 | ) | $ | 3,954,492 |
(a) | Represents realized and unrealized gain on investments allocated from the Master Portfolio. |
(b) | Includes foreign tax withholding expense of $432,732. |
48 | Statements of Operations | The accompanying notes are an integral part of these financial statements. |
Table of Contents
Stock Index Fund | Value Fund | Growth Fund | Small-Company Stock Fund | International Value Fund | ||||||||||||||
$ | — | $ | 8,403 | $ | 562 | $ | 18,441 | $ | 3,329 | |||||||||
— | 8,794,401 | 145,988 | 3,341,525 | 3,830,248 | (b) | |||||||||||||
835,269 | — | — | — | — | ||||||||||||||
(20,013 | ) | — | — | — | — | |||||||||||||
815,256 | 8,802,804 | 146,550 | 3,359,966 | 3,833,577 | ||||||||||||||
— | 1,690,143 | 152,013 | 1,955,809 | 669,474 | ||||||||||||||
56,812 | 202,962 | 45,792 | 155,181 | 55,114 | ||||||||||||||
11,095 | 112,849 | 8,367 | 90,280 | 29,684 | ||||||||||||||
6,741 | 59,155 | 17,606 | 50,004 | 74,723 | ||||||||||||||
8,836 | 53,177 | 4,494 | 42,043 | 16,396 | ||||||||||||||
13,867 | 59,572 | 9,651 | 45,584 | 11,324 | ||||||||||||||
11,114 | 21,164 | 10,425 | 31,277 | 13,819 | ||||||||||||||
2,264 | 18,950 | 209 | 12,950 | 5,210 | ||||||||||||||
1,463 | 16,675 | 2,421 | 12,675 | 3,171 | ||||||||||||||
4,169 | 19,974 | 1,223 | 11,294 | 3,666 | ||||||||||||||
100,226 | — | — | — | — | ||||||||||||||
216,587 | 2,254,621 | 252,201 | 2,407,097 | 882,581 | ||||||||||||||
— | — | (30,335 | ) | — | — | |||||||||||||
216,587 | 2,254,621 | 221,866 | 2,407,097 | 882,581 | ||||||||||||||
598,669 | 6,548,183 | (75,316 | ) | 952,869 | 2,950,996 | |||||||||||||
|
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|
|
|
|
|
|
| |||||||||
322,288 | (a) | 6,311,145 | 1,648,599 | (621,257 | ) | (982,290 | ) | |||||||||||
8,871,986 | (a) | 96,263,788 | 3,970,875 | 69,257,604 | 3,259,565 | |||||||||||||
9,194,274 | 102,574,933 | 5,619,474 | 68,636,347 | 2,277,275 | ||||||||||||||
$ | 9,792,943 | $ | 109,123,116 | $ | 5,544,158 | $ | 69,589,216 | $ | 5,228,271 |
The accompanying notes are an integral part of these financial statements. | Statements of Operations | 49 |
Table of Contents
STATEMENTS OF CHANGES IN NET ASSETS
Daily Income Fund | ||||||||
INCREASE (DECREASE) IN NET ASSETS | Six Months Ended June 30, 2013 (Unaudited) | Year Ended December 31, 2012 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 4,340 | $ | 9,263 | ||||
Net realized gain (loss) on investments | — | — | ||||||
Net change in unrealized appreciation (depreciation) | — | — | ||||||
Increase (decrease) in net assets from operations | 4,340 | 9,263 | ||||||
Distributions to Shareholders | ||||||||
Net investment income | (10,104 | ) | (19,966 | ) | ||||
Net realized gain on investments | — | — | ||||||
Return of capital | — | — | ||||||
Total distributions to shareholders | (10,104 | ) | (19,966 | ) | ||||
Capital Share Transactions | ||||||||
Net capital share transactions (See Note 6) | (5,734,093 | ) | 13,365,180 | |||||
Redemption fees received (See Note 5) | — | — | ||||||
Total increase (decrease) in net assets from capital transactions | (5,734,093 | ) | 13,365,180 | |||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | (5,739,857 | ) | 13,354,477 | |||||
NET ASSETS | ||||||||
Beginning of period | 208,527,171 | 195,172,694 | ||||||
End of period | $ | 202,787,314 | $ | 208,527,171 | ||||
Undistributed (over distributed) net investment income | (38,988 | ) | (33,224 | ) | ||||
Value Fund | ||||||||
INCREASE (DECREASE) IN NET ASSETS | Six Months Ended June 30, 2013 (Unaudited) | Year Ended December 31, 2012 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 6,548,183 | $ | 12,447,468 | ||||
Net realized gain (loss) on investments | 6,311,145 | 10,450,324 | ||||||
Net change in unrealized appreciation (depreciation) | 96,263,788 | 49,125,410 | ||||||
Increase (decrease) in net assets from operations | 109,123,116 | 72,023,202 | ||||||
Distributions to Shareholders | ||||||||
Net investment income | (6,567,875 | ) | (12,479,522 | ) | ||||
Net realized gain on investments | — | — | ||||||
Return of capital | — | — | ||||||
Total distributions to shareholders | (6,567,875 | ) | (12,479,522 | ) | ||||
Capital Share Transactions | ||||||||
Net capital share transactions (See Note 6) | 1,402,312 | 210,510 | ||||||
Redemption fees received (See Note 5) | 1,502 | 17,281 | ||||||
Total increase (decrease) in net assets from capital transactions | 1,403,814 | 227,791 | ||||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | 103,959,055 | 59,771,471 | ||||||
NET ASSETS | ||||||||
Beginning of period | 600,543,845 | 540,772,374 | ||||||
End of period | $ | 704,502,900 | $ | 600,543,845 | ||||
Undistributed (over distributed) net investment income | (115,625 | ) | (95,933 | ) |
50 | Statements of Changes in Net Assets | The accompanying notes are an integral part of these financial statements. |
Table of Contents
Short-Term Government Securities Fund | Short-Term Bond Fund | Stock Index Fund | ||||||||||||||||||||
Six Months Ended June 30, 2013 (Unaudited) | Year Ended December 31, 2012 | Six Months Ended June 30, 2013 (Unaudited) | Year Ended December 31, 2012 | Six Months Ended June 30, 2013 (Unaudited) | Year Ended December 31, 2012 | |||||||||||||||||
$ | 459,061 | $ | 1,065,045 | $ | 3,953,595 | $ | 10,194,968 | $ | 598,669 | $ | 1,195,211 | |||||||||||
21,137 | 93,344 | 46,393 | 184,328 | 322,288 | 646,146 | |||||||||||||||||
(983,367 | ) | 133,261 | (45,496 | ) | 7,179,644 | 8,871,986 | 7,712,581 | |||||||||||||||
(503,169 | ) | 1,291,650 | 3,954,492 | 17,558,940 | 9,792,943 | 9,553,938 | ||||||||||||||||
(462,290 | ) | (1,069,833 | ) | (3,968,166 | ) | (10,216,896 | ) | (1,435 | ) | (1,173,069 | ) | |||||||||||
— | (94,554 | ) | — | — | — | — | ||||||||||||||||
— | — | — | — | — | — | |||||||||||||||||
(462,290 | ) | (1,164,387 | ) | (3,968,166 | ) | (10,216,896 | ) | (1,435 | ) | (1,173,069 | ) | |||||||||||
(2,411,196 | ) | 9,443,024 | 57,446,850 | 44,581,757 | 4,761,876 | 1,288,367 | ||||||||||||||||
— | — | — | — | — | — | |||||||||||||||||
(2,411,196 | ) | 9,443,024 | 57,446,850 | 44,581,757 | 4,761,876 | 1,288,367 | ||||||||||||||||
(3,376,655 | ) | 9,570,287 | 57,433,176 | 51,923,801 | 14,553,384 | 9,669,236 | ||||||||||||||||
94,129,740 | 84,559,453 | 426,481,132 | 374,557,331 | 71,513,705 | 61,844,469 | |||||||||||||||||
$ | 90,753,085 | $ | 94,129,740 | $ | 483,914,308 | $ | 426,481,132 | $ | 86,067,089 | $ | 71,513,705 | |||||||||||
(16,060 | ) | (12,831 | ) | (69,026 | ) | (54,455 | ) | 620,418 | 23,184 | |||||||||||||
Growth Fund | Small-Company Stock Fund | International Value Fund | ||||||||||||||||||||
Six Months Ended June 30, 2013 (Unaudited) | Year Ended December 31, 2012 | Six Months Ended June 30, 2013 (Unaudited) | Year Ended December 31, 2012 | Six Months Ended June 30, 2013 (Unaudited) | Year Ended December 31, 2012 | |||||||||||||||||
$ | (75,316 | ) | $ | 243 | $ | 952,869 | $ | 3,077,614 | $ | 2,950,996 | $ | 3,824,335 | ||||||||||
1,648,599 | 2,216,195 | (621,257 | ) | 1,030,085 | (982,290 | ) | (3,753,490 | ) | ||||||||||||||
3,970,875 | 3,643,151 | 69,257,604 | 46,077,160 | 3,259,565 | 26,147,534 | |||||||||||||||||
5,544,158 | 5,859,589 | 69,589,216 | 50,184,859 | 5,228,271 | 26,218,379 | |||||||||||||||||
— | (2,732 | ) | — | (3,091,883 | ) | — | (3,774,702 | ) | ||||||||||||||
— | (2,511,235 | ) | — | (927,135 | ) | — | — | |||||||||||||||
— | — | — | — | — | (3,223,967 | ) | ||||||||||||||||
— | (2,513,967 | ) | — | (4,019,018 | ) | — | (6,998,669 | ) | ||||||||||||||
3,903,773 | 6,054,051 | 124,042,167 | 153,753,607 | 6,614,371 | 5,741,615 | |||||||||||||||||
106 | 2,225 | 9,902 | 27,777 | 147 | 117 | |||||||||||||||||
3,903,879 | 6,056,276 | 124,052,069 | 153,781,384 | 6,614,518 | 5,741,732 | |||||||||||||||||
9,448,037 | 9,401,898 | 193,641,285 | 199,947,225 | 11,842,789 | 24,961,442 | |||||||||||||||||
41,836,391 | 32,434,493 | 390,372,955 | 190,425,730 | 169,382,068 | 144,420,626 | |||||||||||||||||
$ | 51,284,428 | $ | 41,836,391 | $ | 584,014,240 | $ | 390,372,955 | $ | 181,224,857 | $ | 169,382,068 | |||||||||||
(79,992 | ) | (4,676 | ) | 926,506 | (26,363 | ) | 2,873,579 | (77,417 | ) |
The accompanying notes are an integral part of these financial statements. | Statements of Changes in Net Assets | 51 |
Table of Contents
FINANCIAL HIGHLIGHTS: Daily Income Fund
For a Share Outstanding Throughout Each Period
Six Months Ended June 30, 2013, | Year Ended December 31, | |||||||||||||||||||||||
(Unaudited) | 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||||||
NET ASSET VALUE, BEGINNING OF PERIOD | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | ||||||||||||||||||
Income from investment operations | ||||||||||||||||||||||||
Net investment income | — | (a,b,c) | — | (a,b,c) | — | (a,b,c) | — | (a,b,c) | — | (a,b,c) | 0.02 | |||||||||||||
Net realized and unrealized gain (loss) on investments | — | — | — | — | — | — | ||||||||||||||||||
Total from investment operations | — | — | — | — | — | 0.02 | ||||||||||||||||||
Distributions | ||||||||||||||||||||||||
Net investment income | — | (b) | — | (b) | — | (b) | — | (b) | — | (b) | (0.02 | ) | ||||||||||||
Net realized gain | — | — | — | — | — | — | ||||||||||||||||||
Total distributions | — | — | — | — | — | (0.02 | ) | |||||||||||||||||
Redemption fee (d) | — | — | — | — | — | — | ||||||||||||||||||
NET ASSET VALUE, END OF PERIOD | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | $1.00 | ||||||||||||||||||
TOTAL RETURN | 0.00 | %(e,f) | 0.01 | % | 0.01 | % | 0.01 | % | 0.31 | % | 2.14 | % | ||||||||||||
RATIOS/SUPPLEMENTAL DATA | ||||||||||||||||||||||||
Net assets, end of period (thousands) | $202,787 | $208,527 | $195,173 | $187,089 | $191,492 | $182,011 | ||||||||||||||||||
Ratio of gross expenses before voluntary expense limitation to average net assets | 0.68 | %(g) | 0.67 | % | 0.68 | % | 0.69 | % | 0.73 | % | 0.69 | % | ||||||||||||
Ratio of net investment income to average net assets | 0.00 | %(a,c,e,g) | 0.00 | %(a,c,e) | 0.01 | %(a,c) | 0.01 | %(a,c) | 0.30 | %(a,c) | 2.08 | % | ||||||||||||
Ratio of expenses to average net assets | 0.13 | %(a,c,g) | 0.15 | %(a,c) | 0.14 | %(a,c) | 0.24 | %(a,c) | 0.47 | %(a,c) | 0.69 | % |
(a) | Excludes excess investment management fees and other expenses voluntarily waived and reimbursed by RE Advisers. |
(b) | Less than $0.01 per share. |
(c) | On January 27, 2009, RE Advisers voluntarily and temporarily reduced the amount of the expense limitation from 0.80% to 0.50%. Additionally, effective August 14, 2009, RE Advisers agreed to further waive fees or reimburse expenses to the extent necessary to assist the Fund in attempting to maintain a positive yield. The temporary waiver continued throughout 2010, 2011, 2012, and through the date of this report. |
(d) | The Daily Income Fund does not charge a redemption fee. |
(e) | Less than 0.01%. |
(f) | Aggregate total return for the period. |
(g) | Annualized. |
52 | Financial Highlights | The accompanying notes are an integral part of these financial statements. |
Table of Contents
FINANCIAL HIGHLIGHTS: Short-Term Government Securities Fund
For a Share Outstanding Throughout Each Period
Six Months Ended June 30, 2013, | Year Ended December 31, | |||||||||||||||||||||||
(Unaudited) | 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||||||
NET ASSET VALUE, BEGINNING OF PERIOD | $5.28 | $5.27 | $5.26 | $5.25 | $5.26 | $5.17 | ||||||||||||||||||
Income from investment operations | ||||||||||||||||||||||||
Net investment income | 0.03 | 0.06 | 0.09 | 0.12 | 0.14 | (a) | 0.16 | (a) | ||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.06 | ) | 0.02 | 0.01 | 0.01 | — | (b) | 0.10 | ||||||||||||||||
Total from investment operations | (0.03 | ) | 0.08 | 0.10 | 0.13 | 0.14 | 0.26 | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
Net investment income | (0.03 | ) | (0.06 | ) | (0.09 | ) | (0.12 | ) | (0.14 | ) | (0.16 | ) | ||||||||||||
Net realized gain | — | (0.01 | ) | — | (b) | — | (b) | (0.01 | ) | (0.01 | ) | |||||||||||||
Total distributions | (0.03 | ) | (0.07 | ) | (0.09 | ) | (0.12 | ) | (0.15 | ) | (0.17 | ) | ||||||||||||
Redemption fee (c) | — | — | — | — | — | — | ||||||||||||||||||
NET ASSET VALUE, END OF PERIOD | $5.22 | $5.28 | $5.27 | $5.26 | $5.25 | $5.26 | ||||||||||||||||||
TOTAL RETURN | -0.65 | %(d) | 1.50 | % | 2.03 | % | 2.57 | % | 2.85 | % | 5.16 | % | ||||||||||||
RATIOS/SUPPLEMENTAL DATA | ||||||||||||||||||||||||
Net assets, end of period (thousands) | $90,753 | $94,130 | $84,559 | $76,137 | $65,682 | $55,354 | ||||||||||||||||||
Ratio of gross expenses before expense limitation to average net assets | 0.69 | %(e) | 0.69 | % | 0.71 | % | 0.75 | % | 0.78 | % | 0.82 | % | ||||||||||||
Ratio of net investment income to average net assets | 0.99 | %(e) | 1.19 | % | 1.76 | % | 2.27 | % | 2.73 | %(a) | 3.06 | %(a) | ||||||||||||
Ratio of expenses to average net assets | 0.69 | %(e) | 0.69 | % | 0.71 | % | 0.75 | % | 0.75 | %(a) | 0.75 | %(a) | ||||||||||||
Portfolio turnover rate | 12 | % | 36 | % | 32 | % | 26 | % | 28 | % | 50 | % |
(a) | Excludes excess investment management fees and other expenses in accordance with the Expense Limitation Agreement with RE Advisers. |
(b) | Less than $0.01 per share. |
(c) | The Short-Term Government Securities Fund does not charge a redemption fee. |
(d) | Aggregate total return for the period. |
(e) | Annualized. |
The accompanying notes are an integral part of these financial statements. | Financial Highlights | 53 |
Table of Contents
FINANCIAL HIGHLIGHTS: Short-Term Bond Fund
For a Share Outstanding Throughout Each Period
Six Months Ended June 30, 2013, | Year Ended December 31, | |||||||||||||||||||||||
(Unaudited) | 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||||||
NET ASSET VALUE, BEGINNING OF PERIOD | $5.22 | $5.12 | $5.19 | $5.13 | $4.72 | $5.17 | ||||||||||||||||||
Income from investment operations | ||||||||||||||||||||||||
Net investment income | 0.05 | 0.13 | 0.17 | 0.23 | 0.33 | (a) | 0.27 | (a) | ||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.00 | 0.10 | (0.07 | ) | 0.06 | 0.42 | (0.45 | ) | ||||||||||||||||
Total from investment operations | 0.05 | 0.23 | 0.10 | 0.29 | 0.75 | (0.18 | ) | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
Net investment income | (0.05 | ) | (0.13 | ) | (0.17 | ) | (0.23 | ) | (0.33 | ) | (0.27 | ) | ||||||||||||
Net realized gain | — | — | — | — | (0.01 | ) | — | |||||||||||||||||
Total distributions | (0.05 | ) | (0.13 | ) | (0.17 | ) | (0.23 | ) | (0.34 | ) | (0.27 | ) | ||||||||||||
Redemption fee (b) | — | — | — | — | — | — | ||||||||||||||||||
NET ASSET VALUE, END OF PERIOD | $5.22 | $5.22 | $5.12 | $5.19 | $5.13 | $4.72 | ||||||||||||||||||
TOTAL RETURN | 0.89 | %(c) | 4.58 | % | 1.90 | % | 5.73 | % | 16.38 | % | (3.52 | )% | ||||||||||||
RATIOS/SUPPLEMENTAL DATA | ||||||||||||||||||||||||
Net assets, end of period (thousands) | $483,914 | $426,481 | $374,557 | $309,006 | $246,420 | $204,332 | ||||||||||||||||||
Ratio of gross expenses before expense limitation to average net assets | 0.75 | %(d) | 0.76 | % | 0.77 | % | 0.80 | % | 0.83 | % | 0.81 | % | ||||||||||||
Ratio of net investment income to average net assets | 1.77 | %(d) | 2.53 | % | 3.22 | % | 4.38 | % | 6.62 | %(a) | 5.49 | %(a) | ||||||||||||
Ratio of expenses to average net assets | 0.75 | %(d) | 0.76 | % | 0.77 | % | 0.80 | % | 0.80 | %(a) | 0.80 | %(a) | ||||||||||||
Portfolio turnover rate | 21 | % | 44 | % | 31 | % | 38 | % | 52 | % | 56 | % |
(a) | Excludes excess investment management fees and other expenses in accordance with the Expense Limitation Agreement with RE Advisers. |
(b) | The Short-Term Bond Fund does not charge a redemption fee. |
(c) | Aggregate total return for the period. |
(d) | Annualized. |
54 | Financial Highlights | The accompanying notes are an integral part of these financial statements. |
Table of Contents
FINANCIAL HIGHLIGHTS: Stock Index Fund
For a Share Outstanding Throughout Each Period
Six Months Ended June 30, 2013, | Year Ended December 31, | |||||||||||||||||||||||
(Unaudited) | 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||||||
NET ASSET VALUE, BEGINNING OF PERIOD | $10.57 | $9.32 | $9.31 | $8.24 | $6.64 | $10.94 | ||||||||||||||||||
Income from investment operations | ||||||||||||||||||||||||
Net investment income | 0.08 | 0.18 | 0.14 | 0.12 | 0.11 | 0.17 | ||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.35 | 1.25 | 0.01 | 1.07 | 1.60 | (4.25 | ) | |||||||||||||||||
Total from investment operations | 1.43 | 1.43 | 0.15 | 1.19 | 1.71 | (4.08 | ) | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
Net investment income | — | (a) | (0.18 | ) | (0.14 | ) | (0.12 | ) | (0.11 | ) | (0.22 | ) | ||||||||||||
Net realized gain | — | — | — | — | — | — | ||||||||||||||||||
Total distributions | — | (0.18 | ) | (0.14 | ) | (0.12 | ) | (0.11 | ) | (0.22 | ) | |||||||||||||
Redemption fee | — | — | — | (a) | — | (a) | — | (a) | — | (a) | ||||||||||||||
NET ASSET VALUE, END OF PERIOD | $12.00 | $10.57 | $9.32 | $9.31 | $8.24 | $6.64 | ||||||||||||||||||
TOTAL RETURN | 13.53 | %(c) | 15.30 | % | 1.65 | % | 14.47 | % | 25.83 | % | (37.41 | )% | ||||||||||||
RATIOS/SUPPLEMENTAL DATA | ||||||||||||||||||||||||
Net assets, end of period (thousands) | $86,067 | $71,514 | $61,844 | $60,624 | $51,847 | $39,786 | ||||||||||||||||||
Ratio of net investment income to average net assets | 1.49 | %(d) | 1.74 | % | 1.52 | % | 1.45 | % | 1.66 | % | 1.82 | % | ||||||||||||
Ratio of expenses to average net assets | 0.59 | %(d) | 0.60 | % | 0.61 | % | 0.62 | % | 0.75 | % | 0.59 | % | ||||||||||||
Portfolio turnover rate (b) | N/A | N/A | N/A | N/A | N/A | N/A |
(a) | Less than $0.01 per share. |
(b) | See Appendix for the portfolio turnover of the S&P 500 Stock Master Portfolio. |
(c) | Aggregate total return for the period. |
(d) | Annualized. |
The accompanying notes are an integral part of these financial statements. | Financial Highlights | 55 |
Table of Contents
FINANCIAL HIGHLIGHTS: Value Fund
For a Share Outstanding Throughout Each Period
Six Months Ended June 30, 2013, | Year Ended December 31, | |||||||||||||||||||||||
(Unaudited) | 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||||||
NET ASSET VALUE, BEGINNING OF PERIOD | $34.09 | $30.71 | $30.70 | $27.52 | $22.03 | $35.48 | ||||||||||||||||||
Income from investment operations | ||||||||||||||||||||||||
Net investment income | 0.38 | 0.71 | 0.50 | 0.38 | 0.40 | 0.59 | ||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 5.84 | 3.38 | — | (a) | 3.18 | 5.49 | (13.45 | ) | ||||||||||||||||
Total from investment operations | 6.22 | 4.09 | 0.50 | 3.56 | 5.89 | (12.86 | ) | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
Net investment income | (0.38 | ) | (0.71 | ) | (0.49 | ) | (0.38 | ) | (0.40 | ) | (0.59 | ) | ||||||||||||
Net realized gain | — | — | — | — | — | — | ||||||||||||||||||
Total distributions | (0.38 | ) | (0.71 | ) | (0.49 | ) | (0.38 | ) | (0.40 | ) | (0.59 | ) | ||||||||||||
Redemption fee | — | (a) | — | (a) | — | (a) | — | (a) | — | (a) | — | (a) | ||||||||||||
NET ASSET VALUE, END OF PERIOD | $39.93 | $34.09 | $30.71 | $30.70 | $27.52 | $22.03 | ||||||||||||||||||
TOTAL RETURN | 18.23 | %(b) | 13.38 | % | 1.60 | % | 13.05 | % | 26.98 | % | (36.43 | )% | ||||||||||||
RATIOS/SUPPLEMENTAL DATA | ||||||||||||||||||||||||
Net assets, end of period (thousands) | $704,503 | $600,544 | $540,772 | $547,616 | $497,076 | $422,740 | ||||||||||||||||||
Ratio of net investment income to average net assets | 1.95 | %(c) | 2.13 | % | 1.59 | % | 1.32 | % | 1.71 | % | 1.96 | % | ||||||||||||
Ratio of expenses to average net assets | 0.67 | %(c) | 0.68 | % | 0.70 | % | 0.73 | % | 0.80 | % | 0.70 | % | ||||||||||||
Portfolio turnover rate | 1 | % | 2 | % | 6 | % | 4 | % | 3 | % | 6 | % |
(a) | Less than $0.01 per share. |
(b) | Aggregate total return for the period. |
(c) | Annualized. |
56 | Financial Highlights | The accompanying notes are an integral part of these financial statements. |
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FINANCIAL HIGHLIGHTS: Growth Fund
For a Share Outstanding Throughout Each Period
Six Months Ended June 30, 2013, | Year Ended December 31, | |||||||||||||||||||||||
(Unaudited) | 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||||||
NET ASSET VALUE, BEGINNING OF PERIOD | $5.71 | $5.17 | $5.80 | $5.02 | $3.31 | $5.87 | ||||||||||||||||||
Income from investment operations | ||||||||||||||||||||||||
Net investment loss | (0.01 | ) | — | (a) | (0.01 | ) | (0.01 | ) | — | (a) | (0.03 | ) | ||||||||||||
Net realized and unrealized gain (loss) on investments | 0.74 | 0.91 | (0.11 | ) | 0.79 | 1.71 | (2.37 | ) | ||||||||||||||||
Total from investment operations | 0.73 | 0.91 | (0.12 | ) | 0.78 | 1.71 | (2.40 | ) | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
Net investment income | — | — | (a) | — | — | — | — | |||||||||||||||||
Net realized gain | — | (0.37 | ) | (0.51 | ) | — | — | (0.16 | ) | |||||||||||||||
Total distributions | — | (0.37 | ) | (0.51 | ) | — | — | (0.16 | ) | |||||||||||||||
Redemption fee | — | (a) | — | (a) | — | (a) | — | (a) | — | (a) | — | (a) | ||||||||||||
NET ASSET VALUE, END OF PERIOD | $6.44 | $5.71 | $5.17 | $5.80 | $5.02 | $3.31 | ||||||||||||||||||
TOTAL RETURN | 12.78 | %(b) | 17.57 | % | (2.09 | )% | 15.54 | % | 51.66 | % | (40.93 | )% | ||||||||||||
RATIOS/SUPPLEMENTAL DATA | ||||||||||||||||||||||||
Net assets, end of period (thousands) | $51,284 | $41,836 | $32,434 | $29,051 | $19,059 | $6,707 | ||||||||||||||||||
Ratio of gross expenses before expense limitation to average net assets | 1.08 | %(c) | 1.11 | % | 1.14 | % | 1.23 | % | 1.74 | % | 1.30 | % | ||||||||||||
Ratio of net investment income (loss) to average net assets | (0.32 | )%(c,d) | 0.00 | %(d) | (0.19 | )%(d) | (0.17 | )%(d) | (0.09 | )%(d) | (0.61 | )%(d) | ||||||||||||
Ratio of expenses to average net assets | 0.95 | %(c,d) | 0.95 | %(d) | 0.95 | %(d) | 0.95 | %(d) | 0.95 | %(d) | 0.93 | %(d) | ||||||||||||
Expense ratio of underlying exchange traded fund | N/A | N/A | N/A | N/A | N/A | 0.18 | %(e) | |||||||||||||||||
Effective expense ratio | 0.95 | %(c,d) | 0.95 | %(d) | 0.95 | %(d) | 0.95 | %(d) | 0.95 | %(d) | 1.11 | %(d) | ||||||||||||
Portfolio turnover rate | 24 | % | 51 | % | 67 | % | 67 | % | 66 | % | 96 | %(f) |
(a) | Less than $0.01 per share. |
(b) | Aggregate total return for the period. |
(c) | Annualized. |
(d) | Excludes excess investment management fees and other expenses in accordance with the Expense Limitation Agreement with RE Advisers. On April 29, 2008 the expense limitation agreement was revised from 1.50% to 0.75%. Further, on December 5, 2008 the expense limitation agreement was revised from 0.75% to 0.95%. |
(e) | On December 5, 2008, the Nasdaq-100 Index Tracking Stock Fund changed its name, investment strategies and objective. At that time the Fund sold its entire position in PowerShares QQQ, the underlying exchange traded fund. The expense ratio of the underlying exchange traded fund is prorated for January 1, 2008 to December 4, 2008. |
(f) | The 2008 portfolio turnover is unusually high because on December 5, 2008, the Nasdaq-100 Index Tracking Stock Fund sold its entire position in the PowerShares QQQ and invested the entire portfolio in individual securities with a new investment strategy and objective. |
The accompanying notes are an integral part of these financial statements. | Financial Highlights | 57 |
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FINANCIAL HIGHLIGHTS: Small-Company Stock Fund
For a Share Outstanding Throughout Each Period
Six Months Ended June 30, 2013, | Year Ended December 31, | |||||||||||||||||||||||
(Unaudited) | 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||||||
NET ASSET VALUE, BEGINNING OF PERIOD | 27.10 | $22.89 | $22.79 | $17.04 | $11.81 | $18.16 | ||||||||||||||||||
Income from investment operations | ||||||||||||||||||||||||
Net investment income (loss) | 0.05 | 0.22 | 0.03 | 0.03 | 0.10 | 0.11 | ||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 4.23 | 4.27 | 0.10 | 5.75 | 5.23 | (6.35 | ) | |||||||||||||||||
Total from investment operations | 4.28 | 4.49 | 0.13 | 5.78 | 5.33 | (6.24 | ) | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
Net investment income | — | (0.22 | ) | (0.03 | ) | (0.03 | ) | (0.10 | ) | (0.11 | ) | |||||||||||||
Net realized gain | — | (0.06 | ) | — | — | — | — | |||||||||||||||||
Total distributions | — | (0.28 | ) | (0.03 | ) | (0.03 | ) | (0.10 | ) | (0.11 | ) | |||||||||||||
Redemption fee | — | (a) | — | (a) | — | (a) | — | (a) | — | (a) | — | (a) | ||||||||||||
NET ASSET VALUE, END OF PERIOD | 31.38 | 27.10 | $22.89 | $22.79 | $17.04 | $11.81 | ||||||||||||||||||
TOTAL RETURN | 15.79 | %(b) | 19.63 | % | 0.58 | % | 33.94 | % | 45.10 | % | (34.33 | )% | ||||||||||||
RATIOS/SUPPLEMENTAL DATA | ||||||||||||||||||||||||
Net assets, end of period (thousands) | $584,014 | $390,373 | $190,426 | $114,159 | $65,833 | $45,041 | ||||||||||||||||||
Ratio of net investment income (loss) to average net assets | 0.38 | %(c) | 1.05 | % | 0.17 | % | 0.20 | % | 0.71 | % | 0.73 | % | ||||||||||||
Ratio of expenses to average net assets | 0.97 | %(c) | 1.00 | % | 1.06 | % | 1.17 | % | 1.23 | % | 1.25 | % | ||||||||||||
Portfolio turnover rate | 0 | %(d) | 1 | % | 2 | % | 4 | % | 9 | % | 26 | % |
(a) | Less than $0.01 per share. |
(b) | Aggregate total return for the period. |
(c) | Annualized. |
(d) | Less than 1%. |
58 | Financial Highlights | The accompanying notes are an integral part of these financial statements. |
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FINANCIAL HIGHLIGHTS: International Value Fund
For a Share Outstanding Throughout Each Period
Six Months Ended June 30, 2013, | Year Ended December 31, | |||||||||||||||||||||||
(Unaudited) | 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||||||
NET ASSET VALUE, BEGINNING OF PERIOD | $6.70 | $5.96 | $7.57 | $7.27 | $5.90 | $9.84 | ||||||||||||||||||
Income from investment operations | ||||||||||||||||||||||||
Net investment income | 0.11 | 0.16 | 0.16 | (a) | 0.14 | (a) | 0.18 | (a) | 0.23 | (a) | ||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.10 | 0.87 | (1.40 | ) | 0.27 | 1.35 | (3.68 | ) | ||||||||||||||||
Total from investment operations | 0.21 | 1.03 | (1.24 | ) | 0.41 | 1.53 | (3.45 | ) | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
Net investment income | — | (0.16 | ) | (0.27 | )(e) | (0.11 | ) | (0.13 | )(e) | (0.24 | )(e) | |||||||||||||
Net realized gain | — | — | — | — | — | (0.08 | )(e) | |||||||||||||||||
Return of Capital | — | (0.13 | ) | (0.10 | )(e) | — | (0.03 | )(e) | (0.17 | )(e) | ||||||||||||||
Total distributions | — | (0.29 | ) | (0.37 | ) | (0.11 | ) | (0.16 | ) | (0.49 | ) | |||||||||||||
Redemption fee | — | (b) | — | (b) | — | (b) | — | (b) | — | (b) | — | (b) | ||||||||||||
NET ASSET VALUE, END OF PERIOD | $6.91 | $6.70 | $5.96 | $7.57 | $7.27 | $5.90 | ||||||||||||||||||
TOTAL RETURN | 3.13 | %(c) | 17.41 | % | (16.55 | )% | 5.73 | % | 25.93 | % | (35.43 | )% | ||||||||||||
RATIOS/SUPPLEMENTAL DATA | ||||||||||||||||||||||||
Net assets, end of period (thousands) | $181,225 | $169,382 | $144,421 | $135,455 | $122,920 | $92,716 | ||||||||||||||||||
Ratio of gross expenses before voluntary expense limitation to average net assets | 0.99 | %(d) | 0.99 | % | 1.00 | % | 1.02 | % | 1.06 | % | 1.01 | % | ||||||||||||
Ratio of net investment income to average net assets | 3.31 | %(d) | 2.47 | % | 2.44 | %(a) | 2.08 | %(a) | 2.23 | %(a) | 2.73 | %(a) | ||||||||||||
Ratio of expenses to average net assets | 0.99 | %(d) | 0.99 | % | 0.99 | %(a) | 0.99 | %(a) | 0.99 | %(a) | 0.98 | %(a) | ||||||||||||
Portfolio turnover rate | 8 | % | 23 | % | 34 | % | 44 | % | 47 | % | 25 | % |
(a) | Excludes excess investment management fees and other expenses in accordance with the Expense Limitation Agreement with RE Advisers. |
(b) | Less than $0.01 per share. |
(c) | Aggregate total return for the period. |
(d) | Annualized. |
(e) | Revised to reflect distributions from return of capital per share which were previously reported as distributions from net investment income per share or net realized gain on investments per share. Previously reported amounts were distributions from net investment income per share of $0.37, $0.16, and $0.37 in 2011, 2009, and 2008 respectively and distributions from net realized gain of investments per share of $0.12 in 2008. These revisions did not impact net assets, total distributions or total return. Refer to Note 2 of the Financial Statements for further details. |
The accompanying notes are an integral part of these financial statements. | Financial Highlights | 59 |
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1. ORGANIZATION
Homestead Funds, Inc. (“Homestead Funds”) is a Maryland corporation registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended (“the Act”), as an open-end management investment company. Homestead Funds currently consists of eight funds: Daily Income Fund, Short-Term Government Securities Fund, Short-Term Bond Fund, Stock Index Fund, Value Fund, Growth Fund, Small-Company Stock Fund, and International Value Fund (the “Funds”).
Each Fund is a separate investment portfolio with distinct investment objectives, investment programs, policies and restrictions. The investment objectives of the Funds, as well as the nature and risks of the investment activities of each Fund, are set forth more fully in Homestead Funds’ Prospectus and Statement of Additional Information.
The Stock Index Fund seeks to achieve its investment objective by investing substantially all of its investable assets in one or more securities that are designed to track the performance of the S&P 500 Index. At June 30, 2013, the Stock Index Fund was operating as a feeder fund, whereby substantially all of its assets are invested in the S&P 500 Stock Master Portfolio (“Master Portfolio”), an open-end investment company managed by BlackRock Fund Advisors. At June 30, 2013, the Stock Index Fund’s investment constituted 1.85% of the Master Portfolio. The financial statements of the Master Portfolio are contained in the Appendix of this report and should be read in conjunction with the financial statements for the Stock Index Fund.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Security Valuation: Each Fund’s net asset value per share is determined as of the close of the New York Stock Exchange (NYSE) (usually 4:00 p.m. ET), each day that the NYSE is open for business. The Funds use independent pricing services approved by the Funds’ Board of Directors (“Board”) to value the investments. In the event a pricing service is unable to provide a price for a particular security or the price is deemed unreliable, the security is priced at fair value by the Funds’ Advisers, as determined in good faith in accordance with policies approved by the Board.
The Board has adopted Portfolio Securities Valuation Policies and Procedures (“Valuation Procedures”) to determine the fair value of securities for which the market prices are not readily available or if the price is deemed unreliable. The Board has delegated the day-to-day responsibility for determining the fair value of securities to the Adviser and the Funds’ sub-advisors. RE Advisers has chartered an internal Valuation Committee to oversee the implementation of the Valuation Procedures, oversee the fair valuation decisions of the sub-advisors, monitor the valuation process, and provide quarterly reports to the Board. The Valuation Committee reports all instances of fair valuation to the Board at each quarterly Board meeting, as applicable.
Generally Accepted Accounting Principles (GAAP) establish a disclosure hierarchy that categorizes the inputs used to value assets and liabilities at measurement date. These inputs are summarized into three broad levels as follows:
Ÿ | Level 1 – quoted prices in active markets for identical investments; |
Ÿ | Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.); and |
Ÿ | Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair valuation of investments). |
The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities. Changes in valuation techniques may result in transfers in or out of an investment’s assigned level within the hierarchy during the period.
The Funds use the following valuation techniques to value securities by major category as follows:
Registered investment companies are valued at the net asset value determined by the registered investment company after the close of the NYSE. The Funds invest in regulated investment companies that seek to maintain a share price of $1.00 and are categorized as Level 1 in the hierarchy.
Domestic equity securities and exchange traded funds for which market quotations are readily available are valued at the closing price as reported by an independent pricing service from the primary market in which the securities trade and are categorized as Level 1.
Foreign equity securities are valued based on the closing price from the principal market in which such securities are normally traded. An independent pricing service is utilized to fair value foreign equity securities based on the impact of market events between the close of the foreign exchange and the time the net asset value is calculated. Foreign equity securities that are fair valued are categorized as Level 2 in the hierarchy and foreign equity securities not fair valued are categorized as Level 1.
The valuations for fixed income securities, including corporate, government, municipal, mortgage-backed and asset-backed are typically the prices provided by independent third party pricing services, which may use market prices, broker/dealer quotations or a variety of valuation techniques and methodologies, such as benchmark yields, monthly payment information and issuer spreads.
Fixed income securities utilizing these methods are generally categorized as Level 2. Fixed income securities that are valued using only a broker quote, are categorized as Level 3, absent corroborating market data to support the valuation.
Fixed income securities and commercial paper held in the Daily Income Fund are valued at amortized cost and are categorized as Level 2 in the hierarchy. Short-term fixed income securities held in portfolios other than the Daily Income Fund and that mature in 60 days or less at time of purchase are valued at amortized cost, unless it is determined that using this method would not reflect the security’s fair value and are categorized as Level 2 in the hierarchy. Under the amortized cost method, discounts and premiums on securities purchased are amortized over the lives of the respective securities.
60 | Notes to Financial Statements |
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In the event an independent pricing service is unable to provide a security price, RE Advisers values the fixed income security, using a matrix, model or other available market information. Pricing methodologies include, but are not limited to: estimates of securities fair values by independent parties, book value or a multiple thereof, multiple of earnings, yield to maturity, ratings, analytical data relating to the security, and the nature and duration of restrictions on disposition of the security. RE Advisers also will consider factors it deems relevant and appropriate in light of the facts and circumstances. Examples of possible factors include, but are not limited to: the type of security, issuer’s financial statements, cost at purchase, information regarding recent transactions with respect to the security, the nature and duration of restrictions on disposition of the security, the existence of merger proposals affecting the security, the price of public trading in similar securities of the issuer or comparable companies, news events, analyst reports or government actions, corporate action, and the forces that influence the market in which the security is traded. These securities are generally categorized as Level 2 or Level 3 in the hierarchy, depending on the observability of market inputs.
If a market value cannot be determined for a security using the methodologies described above, or if, in the good faith opinion of the Adviser, the market value does not constitute a readily available market quotation, or if a significant event has occurred that would impact a securities fair valuation, the security will be fair valued as determined in good faith by the Adviser based on the Valuation Procedures. Examples of additional considerations for a significant event include: nature and duration of the event and the forces influencing the operation of the financial markets; factors that preceded the event; whether the event is likely to reoccur; and whether the event affects the entire market, region or country. As fair valuation determinations involve a significant amount of judgment, there is a degree of subjectivity inherent in such pricing decisions.
The Stock Index Fund records its investment in the Master Portfolio at the market value of its proportionate interest in the net assets of the Master Portfolio. The Board of Trustees of the Master Portfolio has adopted valuation policies and procedures. The policies and procedures are discussed in the notes to the Master Portfolio’s financial statements, included in the Appendix of this report.
The following table summarizes the Fund’s investments, based on the inputs used to determine their values on June 30, 2013 (other than Stock Index Fund). The level classifications of the Master Portfolio as of June 30, 2013 are included in the Appendix.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Daily Income Fund | ||||||||||||||||
Commercial Paper | $ | — | $ | 151,414,735 | $ | — | $ | 151,414,735 | ||||||||
U.S. Government Obligations | $ | — | $ | 31,117,360 | $ | — | $ | 31,117,360 | ||||||||
Corporate Bonds | $ | — | $ | 2,827,735 | $ | — | $ | 2,827,735 | ||||||||
Cash Equivalents | $ | 14,938,091 | $ | — | $ | — | $ | 14,938,091 | ||||||||
$ | 14,938,091 | $ | 185,359,830 | $ | — | $ | 200,297,921 | |||||||||
Short-Term Government Securities Fund | ||||||||||||||||
U.S. Government Obligations | $ | — | $ | 59,328,971 | $ | — | $ | 59,328,971 | ||||||||
Corporate Bonds | $ | — | $ | 11,019,896 | $ | — | $ | 11,019,896 | ||||||||
Commercial Paper | $ | — | $ | 10,999,964 | $ | — | $ | 10,999,964 | ||||||||
Municipal Bonds | $ | — | $ | 5,057,651 | $ | — | $ | 5,057,651 | ||||||||
Mortgage Backed Securities | $ | — | $ | 3,450,728 | $ | — | $ | 3,450,728 | ||||||||
Asset Backed Securities | $ | — | $ | 594,593 | $ | — | $ | 594,593 | ||||||||
Cash Equivalents | $ | 174,780 | $ | — | $ | — | $ | 174,780 | ||||||||
$ | 174,780 | $ | 90,451,803 | $ | — | $ | 90,626,583 |
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Short-Term Bond Fund | ||||||||||||||||
Commercial Paper | $ | — | $ | 95,992,131 | $ | — | $ | 95,992,131 | ||||||||
Corporate Bonds | $ | — | $ | 94,307,962 | $ | — | $ | 94,307,962 | ||||||||
Municipal Bonds | $ | — | $ | 92,551,536 | $ | — | $ | 92,551,536 | ||||||||
Asset Backed Securities | $ | — | $ | 78,360,617 | $ | 2,248,843 | $ | 80,609,460 | ||||||||
Yankee Bonds | $ | — | $ | 66,026,542 | $ | — | $ | 66,026,542 | ||||||||
Mortgage Backed Securities | $ | — | $ | 27,707,126 | $ | 807,245 | $ | 28,514,371 | ||||||||
U.S. Government Obligations | $ | — | $ | 24,728,485 | $ | — | $ | 24,728,485 | ||||||||
Cash Equivalents | $ | 104,747 | $ | — | $ | — | $ | 104,747 | ||||||||
$ | 104,747 | $ | 479,674,399 | $ | 3,056,088 | $ | 482,835,234 | |||||||||
Value Fund | ||||||||||||||||
Common Stocks | $ | 687,772,351 | $ | — | $ | — | $ | 687,772,351 | ||||||||
Cash Equivalents | $ | 16,116,649 | $ | — | $ | — | $ | 16,116,649 | ||||||||
$ | 703,889,000 | $ | — | $ | — | $ | 703,889,000 | |||||||||
Growth Fund | ||||||||||||||||
Common Stocks | $ | 50,738,269 | $ | — | $ | — | $ | 50,738,269 | ||||||||
Cash Equivalents | $ | 615,542 | $ | — | $ | — | $ | 615,542 | ||||||||
$ | 51,353,811 | $ | — | $ | — | $ | 51,353,811 | |||||||||
Small-Company Stock Fund | ||||||||||||||||
Common Stocks | $ | 492,261,524 | $ | — | $ | — | $ | 492,261,524 | ||||||||
Exchange Traded Funds | $ | 56,513,090 | $ | — | $ | — | $ | 56,513,090 | ||||||||
Cash Equivalents | $ | 28,306,430 | $ | — | $ | — | $ | 28,306,430 | ||||||||
$ | 577,081,044 | $ | — | $ | — | $ | 577,081,044 | |||||||||
International Value Fund | ||||||||||||||||
Common Stocks | ||||||||||||||||
Foreign Equities | $ | — | $ | 158,260,488 | $ | — | $ | 158,260,488 | ||||||||
Foreign Equities - not fair valued | $ | 4,118,400 | $ | — | $ | — | $ | 4,118,400 | ||||||||
American Depository Receipts | $ | 9,134,083 | $ | — | $ | — | $ | 9,134,083 | ||||||||
Cash Equivalents | $ | 7,612,627 | $ | — | $ | — | $ | 7,612,627 | ||||||||
$ | 20,865,110 | $ | 158,260,488 | $ | — | $ | 179,125,598 |
Short Term Bond Fund — Level 3 | | Asset Backed Securities | | | Mortgage Backed Securities | | | U.S. Government Obligations | | Total | ||||||
Balance as of December | $ | 2,339,375 | $ | — | $ | 1,126,335 | $ | 3,465,710 | ||||||||
Net purchase/(sale) at cost | (981,234 | ) | — | — | (981,234 | ) | ||||||||||
Realized gain/(loss) | 29,667 | — | — | 29,667 | ||||||||||||
Change in unrealized appreciation/(depreciation) | 2,965 | — | 8,168 | 11,133 | ||||||||||||
Accretion/(amortization) | 2,993 | — | 14,226 | 17,219 | ||||||||||||
Transfer into Level 3 | 2,248,843 | 807,245 | — | 3,056,088 | ||||||||||||
Transfer out of Level 3 | (1,393,766 | ) | — | (1,148,729 | ) | (2,542,495 | ) | |||||||||
Balance as of June 30, 2013 | $ | 2,248,843 | $ | 807,245 | $ | — | $ | 3,056,088 |
Transfers from Level 2 to Level 3 are due to a decrease in observable market activity, while transfers from Level 3 to Level 2 are due to an increase in observable market activity. There were no transfers between Level 1 and Level 2. Transfers are recognized at the end of each reporting period.
At June 30, 2013, the Fund held securities with a fair value of $3,056,088 classified as Level 3 in the fair value hierarchy. Securities with a market value of $2,556,633 were priced by brokers and observable inputs were not available. Asset-backed securities valued at $499,455 were valued by the Adviser using a discounted cash flow model. The unobservable input is the Adviser’s assumptions applied to the cash flow model to discount for the potential that the principal payment stream of the bond extends beyond the current model’s
Notes to Financial Statements | 61 |
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assumption. The yield spread is modeled at 750 to account for the uncertainty of the potential outcome. A significant or reasonable increase or decrease in the potential that the principal payment stream of the bond varies beyond the current model’s assumption could result in a significant increase or decrease in the fair value measurement.
Foreign currency: The International Value Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contract’s terms. Foreign-denominated assets, including investment securities and liabilities are translated into U.S. dollars at the exchange rate at the end of the period. Purchases and sales of investment securities and income and dividends received are translated into U.S. dollars at the exchange rate in effect on the transaction date. Currency gains and losses and the effects of exchange rate fluctuations on investments are included with the realized and unrealized gain (loss) on investment securities.
Revisions: The tax character of certain distributions from the International Value Fund for the fiscal years 2011, 2009 and 2008 was revised to correct the allocation between net investment income, net realized gain on investments, and return of capital for each of the years noted. For 2011 and 2009, distributions from return of capital increased and distributions from net investment income decreased by $2,295,839 and $493,496, respectively. For 2008, distributions from return of capital increased by $2,484,005, distributions from net realized gain on investments decreased by $520,401 and distributions from net investment income decreased by $1,963,604. These revisions impacted the Statements of Changes in Net Assets, Financial Highlights and Note 3 of the Financial Statements. These revisions did not impact net assets, total distributions or total return. Management does not believe these revisions are material to the financial statements for any period.
Distributions to shareholders: Dividends to shareholders are recorded on the ex-dividend date. Income dividends for the Daily Income, Short-Term Government Securities and Short-Term Bond Funds are declared daily and paid monthly. Income dividends for Value Fund are declared and paid semi-annually. Income dividends for the Stock Index, Growth, Small-Company Stock and International Value Funds are declared and paid annually. Capital gains dividends, if any, are declared and paid at the end of each fiscal year, or more frequently, if necessary.
Use of estimates in the preparation of financial statements: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Other: Dividend income is recorded on the ex-dividend date. Interest income, including amortization of premiums and accretion of discount, and expenses are recorded on the accrual basis. Investment transactions are recorded as of the trade date. Realized gains and losses from investment transactions are reported on the identified cost basis.
The Stock Index Fund records a pro rata share of the Master Portfolio’s income, expenses, and realized and unrealized gains and losses in addition to the Fund’s own expenses which are accrued daily.
In the normal course of business, the Funds enter into contracts that provide general indemnifications. The Funds’ maximum exposure
under these arrangements is dependent on claims that may be made against the Funds in the future and therefore cannot be estimated; however, based on experience, the risk of material loss from claims is considered remote.
Management considered events occurring between the date of this report, June 30, 2013, and the date of issuance of this report in determining adjustments to the financial statements or necessary disclosures in this report.
3. FEDERAL INCOME TAX INFORMATION
The Funds intend to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and will distribute all net investment income to its shareholders. Therefore, no provision for Federal income taxes is required.
Management has analyzed the Funds’ tax positions and has concluded that no provision for income tax is required in the Funds’ financial statements. The Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. However, management’s conclusions may be subject to review and adjustment at a later date based on factors including, but not limited to new tax laws, regulations and administrative interpretations.
Each Fund files U.S. federal, state, and local tax returns as required. Each Fund’s tax returns are subject to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally three years after filing of the tax return but could be longer in certain circumstances.
Income and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences are primarily due to differing treatments for futures and options transactions, foreign currency transactions, losses deferred due to wash sales, losses deferred due to post-October losses, partnership investments, deferred compensation payable and REIT transactions.
At June 30, 2013, the cost of securities for federal income tax purposes, the aggregate gross unrealized gain for all securities for which there was an excess of value over tax cost and the aggregate gross unrealized loss for all securities for which there was an excess of tax cost over value was as follows:
Tax Cost | Tax Unrealized Gain | Tax Unrealized (Loss) | Net Unrealized Gain (Loss) | |||||||||||||
Daily Income Fund | $ | 200,297,921 | $ | — | $ | — | $ | — | ||||||||
Short-Term Government Securities Fund | $ | 90,030,644 | $ | 952,626 | $ | (356,687 | ) | $ | 595,939 | |||||||
Short-Term Bond Fund | $ | 479,907,670 | $ | 7,715,693 | $ | (4,788,129 | ) | $ | 2,927,564 | |||||||
Value Fund | $ | 437,468,554 | $ | 284,547,647 | $ | (18,127,201 | ) | $ | 266,420,446 | |||||||
Growth Fund | $ | 42,025,067 | $ | 10,181,145 | $ | (852,401 | ) | $ | 9,328,744 | |||||||
Small-Company Stock Fund | $ | 425,225,828 | $ | 155,984,571 | $ | (4,129,355 | ) | $ | 151,855,216 | |||||||
International Value Fund | $ | 173,892,916 | $ | 20,242,159 | $ | (15,009,477 | ) | $ | 5,232,682 |
Net unrealized appreciation/(depreciation) of Stock Index Fund in the Master Portfolio consists of an allocated portion of the portfolio’s unrealized appreciation/(depreciation). For information pertaining to the unrealized appreciation/(depreciation) for the Master Portfolio, please refer to the Appendix of this report.
62 | Notes to Financial Statements |
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4. INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of securities, other than short-term and U.S. Government securities, for the period ended June 30, 2013, were as follows:
Purchases | Proceeds from Sale | |||||||
Short-Term Government Securities Fund | 6,208,587 | 3,658,396 | ||||||
Short-Term Bond Fund | 96,883,016 | 73,834,577 | ||||||
Value Fund | 4,569,209 | 11,190,165 | ||||||
Growth Fund | 15,216,019 | 10,930,882 | ||||||
Small-Company Stock Fund | 118,265,570 | 2,200,117 | ||||||
International Value Fund | 14,774,921 | 13,650,185 |
Purchases and proceeds from sales of long-term U.S. Government securities, for the period ended June 30, 2013, were as follows:
Purchases | Proceeds from Sale | |||||||
Short-Term Government Securities Fund | 3,039,380 | 6,500,541 | ||||||
Short-Term Bond Fund | 11,789,063 | 2,055,034 |
For information related to investment transactions for the Master Portfolio, please refer to the Appendix of this report.
5. RELATED PARTIES
The investment management agreements between Homestead Funds, with respect to each Fund (other than the Stock Index Fund), and RE Advisers Corporation (“RE Advisers”), an indirect, wholly-owned subsidiary of National Rural Electric Cooperative Association (“NRECA”), provide for an annual investment management fee, that also provides for certain administrative services to the Funds, which is computed daily and paid monthly, based on each Fund’s average daily net assets. The annualized management fee rates for the Funds are 0.50% of average daily net assets for Daily Income Fund; 0.45% of average daily net assets for Short-Term Government Securities Fund; 0.60% of average daily net assets for Short-Term Bond Fund; 0.65% of average daily net assets up to $200 million, 0.50% of average daily net assets up to the next $200 million, 0.40% of average daily net assets in excess of $400 million for Value Fund; 0.65% of average daily net assets up to $250 million and 0.60% of average daily net assets in excess of $250 million for the Growth Fund; 0.85% of average daily net assets up to $200 million and 0.75% of average daily net assets in excess of $200 million for Small-Company Stock Fund; and 0.75% of average daily net assets up to $300 million, 0.65% of average daily net assets up to the next $100 million, 0.55% of average daily net assets up to the next $100 million, and 0.50% of average daily net assets in excess of $500 million for International Value Fund.
T. Rowe Price Associates, Inc. (“T. Rowe”) is the Subadvisor for the Growth Fund and Mercator Asset Management, L.P. (“Mercator”) is the Subadvisor for the International Value Fund. The Subadvisors select, buy, and sell securities under the oversight of RE Advisers and the Board of Directors. RE Advisers pays the Subadvisors from the fees it receives from the Funds.
With respect to the Stock Index Fund, an Administrative Service Agreement with RE Advisers has been contracted, under which RE Advisers provides certain administrative services to the Fund. Pursuant to this agreement, RE Advisers receives a fee of 0.25% of
the Fund’s average daily net assets. In addition, the Stock Index Fund is allocated a management fee from the Master Portfolio, calculated daily at an annual rate of 0.05% of its average daily net assets. This fee includes advisory, custody, and administrative fees provided by the Master Portfolio on behalf of its investors. The financial information for the Master Portfolio is included in the Appendix.
RE Advisers has agreed, as part of the Expense Limitation Agreement entered into with Homestead Funds, with respect to each Fund, to waive its management fee and/or reimburse for all Fund operating expenses, excluding certain non-recurring expenses, which in any year exceed 0.80% of the average daily net assets of the Daily Income Fund and Short-Term Bond Fund, 0.75% of the average daily net assets of the Short-Term Government Securities Fund and Stock Index Fund, 1.25% of the average daily net assets of Value Fund, 0.95% of the average daily net assets of Growth Fund, 1.50% of the average daily net assets of Small-Company Stock Fund and 0.99% of the average daily net assets of the International Value Fund.
On August 14, 2009, RE Adviser agreed to waive fees and/or reimburse expenses, if necessary, in order to assist the Daily Income Fund in maintaining a minimum yield. The temporary waiver continued throughout 2010, 2011, 2012 and through the date of issuance of this report.
Pursuant to the Expense Limitation Agreement, management fees waived for the six months ended June 30, 2013, amounted to $513,309 for Daily Income Fund and $30,335 for Growth Fund. Additionally, RE Advisers paid the Daily Income Fund, $49,489 during the period, for expense reimbursements.
Through April 30, 2013, the Stock Index, Value, Growth, Small-Company Stock, and International Value Funds each received a 2% redemption fee on shares sold within 30 days of purchase. Effective May 1, 2013, a fee will not be imposed on the redemption of the shares of any Fund.
Under a Deferred Compensation Plan (the “Plan”), independent Directors of the Funds may elect to defer receipt of all or a specified portion of their compensation. Deferred amounts are credited with the earnings and losses equal to those made as if the deferred amounts were invested in one or more of the Funds, as designated by the Board of Directors. Deferred amounts remain in the Fund until distributed in accordance with the Plan.
The Funds’ shares are sold through channels including broker-dealer intermediaries that may establish a single, omnibus account with the beneficial owners being individual accounts within the broker-dealer intermediary. As of June 30, 2013, there are three such accounts in the Small-Company Stock Fund accounting for 22%, 14% and 11% of the outstanding shares. Additionally, 73% of the outstanding shares of the International Value Fund are held in a retirement plan account for the benefit of their participants.
Notes to Financial Statements | 63 |
Table of Contents
6. CAPITAL SHARE TRANSACTIONS
As of June 30, 2013, 500 million shares of $.01 par value capital shares are authorized for Daily Income Fund, 200 million shares for Short-Term Bond Fund, and 100 million shares for Short-Term Government Securities Fund, Stock Index Fund, Value Fund, Growth Fund, Small-Company Stock Fund, and International Value Fund. Transactions in capital shares were as follows:
Shares Sold | Shares Issued In Reinvestment of Dividends | Total Shares Issued | Total Shares Redeemed | Net Increase (Decrease) | ||||||||||||||||
Period Ended June 30, 2013 | ||||||||||||||||||||
In Dollars | ||||||||||||||||||||
Daily Income Fund | $ | 63,911,066 | $ | 9,909 | $ | 63,920,975 | $ | (69,655,068 | ) | $ | (5,734,093 | ) | ||||||||
Short-Term Government Securities Fund | $ | 9,919,698 | $ | 447,109 | $ | 10,366,807 | $ | (12,778,003 | ) | $ | (2,411,196 | ) | ||||||||
Short-Term Bond Fund | $ | 95,118,179 | $ | 3,864,339 | $ | 98,982,518 | $ | (41,535,668 | ) | $ | 57,446,850 | |||||||||
Stock Index Fund | $ | 10,900,150 | $ | 1,687 | $ | 10,901,837 | $ | (6,139,961 | ) | $ | 4,761,876 | |||||||||
Value Fund | $ | 50,324,448 | $ | 6,192,291 | $ | 56,516,739 | $ | (55,114,427 | ) | $ | 1,402,312 | |||||||||
Growth Fund | $ | 9,456,278 | $ | — | $ | 9,456,278 | $ | (5,552,505 | ) | $ | 3,903,773 | |||||||||
Small-Company Stock Fund | $ | 167,647,246 | $ | — | $ | 167,647,246 | $ | (43,605,079 | ) | $ | 124,042,167 | |||||||||
International Value Fund | $ | 17,898,179 | $ | — | $ | 17,898,179 | $ | (11,283,808 | ) | $ | 6,614,371 | |||||||||
In Shares | ||||||||||||||||||||
Daily Income Fund | 63,911,066 | 9,909 | 63,920,975 | (69,655,068 | ) | (5,734,093 | ) | |||||||||||||
Short-Term Government Securities Fund | 1,885,041 | 85,030 | 1,970,071 | (2,430,092 | ) | (460,021 | ) | |||||||||||||
Short-Term Bond Fund | 18,136,346 | 737,049 | 18,873,395 | (7,924,292 | ) | 10,949,103 | ||||||||||||||
Stock Index Fund | 936,419 | 143 | 936,562 | (529,115 | ) | 407,447 | ||||||||||||||
Value Fund | 1,300,072 | 155,078 | 1,455,150 | (1,430,545 | ) | 24,605 | ||||||||||||||
Growth Fund | 1,528,826 | — | 1,528,826 | (902,105 | ) | 626,721 | ||||||||||||||
Small-Company Stock Fund | 5,668,095 | — | 5,668,095 | (1,464,195 | ) | 4,203,900 | ||||||||||||||
International Value Fund | 2,565,029 | — | 2,565,029 | (1,603,141 | ) | 961,888 | ||||||||||||||
Year Ended December 31, 2012 | ||||||||||||||||||||
In Dollars | ||||||||||||||||||||
Daily Income Fund | $ | 115,149,422 | $ | 19,655 | $ | 115,169,077 | $ | (101,803,897 | ) | $ | 13,365,180 | |||||||||
Short-Term Government Securities Fund | $ | 24,267,697 | $ | 1,130,656 | $ | 25,398,353 | $ | (15,955,329 | ) | $ | 9,443,024 | |||||||||
Short-Term Bond Fund | $ | 107,305,483 | $ | 9,932,205 | $ | 117,237,688 | $ | (72,655,931 | ) | $ | 44,581,757 | |||||||||
Stock Index Fund | $ | 10,044,306 | $ | 1,167,828 | $ | 11,212,134 | $ | (9,923,767 | ) | $ | 1,288,367 | |||||||||
Value Fund | $ | 77,570,759 | $ | 11,883,046 | $ | 89,453,805 | $ | (89,243,295 | ) | $ | 210,510 | |||||||||
Growth Fund | $ | 15,535,165 | $ | 2,505,652 | $ | 18,040,817 | $ | (11,986,766 | ) | $ | 6,054,051 | |||||||||
Small-Company Stock Fund | $ | 215,404,441 | $ | 3,546,846 | $ | 218,951,287 | $ | (65,197,680 | ) | $ | 153,753,607 | |||||||||
International Value Fund | $ | 33,032,382 | $ | 6,965,182 | $ | 39,997,564 | $ | (34,255,949 | ) | $ | 5,741,615 | |||||||||
In Shares | ||||||||||||||||||||
Daily Income Fund | 115,149,422 | 19,655 | 115,169,077 | (101,803,897 | ) | 13,365,180 | ||||||||||||||
Short-Term Government Securities Fund | 4,601,465 | 214,244 | 4,815,709 | (3,024,456 | ) | 1,791,253 | ||||||||||||||
Short-Term Bond Fund | 20,706,257 | 1,916,154 | 22,622,411 | (14,022,677 | ) | 8,599,734 | ||||||||||||||
Stock Index Fund | 977,397 | 110,516 | 1,087,913 | (962,047 | ) | 125,866 | ||||||||||||||
Value Fund | 2,348,226 | 356,365 | 2,704,591 | (2,694,873 | ) | 9,718 | ||||||||||||||
Growth Fund | 2,664,126 | 438,803 | 3,102,929 | (2,048,175 | ) | 1,054,754 | ||||||||||||||
Small-Company Stock Fund | 8,513,982 | 130,881 | 8,644,863 | (2,557,606 | ) | 6,087,257 | ||||||||||||||
International Value Fund | 5,266,567 | 1,064,954 | 6,331,521 | (5,265,214 | ) | 1,066,307 |
64 | Notes to Financial Statements |
Table of Contents
James F. Perna, Director and Chairman of the Board
Peter R. Morris, Director, President and Chief Executive Officer
Douglas W. Johnson, Director and Chairman of the Audit Committee
Kenneth R. Meyer, Director and Chairman of the Compensation Committee
Anthony M. Marinello, Director
Sheldon C. Petersen, Director
Mark Rose, Director
Peter J. Tonetti, Director
Anthony C. Williams, Director
Cynthia L. Dove, Vice President and Chief Operations Officer
Amy M. DiMauro, Treasurer
Danielle C. Sieverling, Chief Compliance Officer
Kelly Bowers Whetstone, Secretary
Directors and Officers | 65 |
Table of Contents
PORTFOLIO OF INVESTMENTS: S&P 500 Stock Master Portfolio
June 30, 2013 (Unaudited)
COMMON STOCKS | Shares | Value | ||||||
(99.2% of net assets) | ||||||||
Aerospace & Defense—2.5% |
| |||||||
The Boeing Co. | 220,395 | $ | 22,577,264 | |||||
General Dynamics Corp. | 107,160 | 8,393,843 | ||||||
Honeywell International, Inc. | 253,955 | 20,148,790 | ||||||
L-3 Communications Holdings, Inc. | 29,048 | 2,490,575 | ||||||
Lockheed Martin Corp. | 85,838 | 9,309,989 | ||||||
Northrop Grumman Corp. | 75,907 | 6,285,100 | ||||||
Precision Castparts Corp. | 47,233 | 10,675,130 | ||||||
Raytheon Co. | 104,765 | 6,927,062 | ||||||
Rockwell Collins, Inc. | 43,792 | 2,776,851 | ||||||
Textron, Inc. | 89,685 | 2,336,294 | ||||||
United Technologies Corp. | 272,990 | 25,371,691 | ||||||
Total Aerospace & Defense |
| 117,292,589 | ||||||
Air Freight & Logistics—0.7% |
| |||||||
C.H. Robinson Worldwide, Inc. | 51,864 | 2,920,462 | ||||||
Expeditors International of Washington, Inc. | 66,689 | 2,534,849 | ||||||
FedEx Corp. | 95,118 | 9,376,732 | ||||||
United Parcel Service, Inc., Class B | 229,334 | 19,832,804 | ||||||
Total Air Freight & Logistics |
| 34,664,847 | ||||||
Airlines—0.1% |
| |||||||
Southwest Airlines Co. | 233,142 | 3,005,200 | ||||||
Total Airlines |
| 3,005,200 | ||||||
Auto Components—0.4% |
| |||||||
BorgWarner, Inc. (a) | 37,299 | 3,213,309 | ||||||
Delphi Automotive Plc | 93,851 | 4,757,307 | ||||||
The Goodyear Tire & Rubber Co. (a) | 79,128 | 1,209,867 | ||||||
Johnson Controls, Inc. | 221,100 | 7,913,169 | ||||||
Total Auto Components | 17,093,652 | |||||||
Automobiles—0.7% |
| |||||||
Ford Motor Co. | 1,268,897 | 19,629,837 | ||||||
General Motors Co. (a)(b) | 248,480 | 8,276,869 | ||||||
Harley-Davidson, Inc. | 72,347 | 3,966,062 | ||||||
Total Automobiles |
| 31,872,768 | ||||||
Beverages—2.4% |
| |||||||
Beam, Inc. | 51,931 | 3,277,365 | ||||||
Brown-Forman Corp., Class B | 48,954 | 3,306,843 | ||||||
The Coca-Cola Co. | 1,236,305 | 49,588,194 | ||||||
Coca-Cola Enterprises, Inc. | 83,148 | 2,923,484 | ||||||
Constellation Brands, Inc., Class A (a) | 49,742 | 2,592,553 | ||||||
Dr. Pepper Snapple Group, Inc. | 65,864 | 3,025,133 | ||||||
Molson Coors Brewing Co., Class B | 50,689 | 2,425,975 | ||||||
Monster Beverage Corp. (a) | 46,605 | 2,832,186 | ||||||
PepsiCo, Inc. | 499,145 | 40,825,070 | ||||||
Total Beverages |
| 110,796,803 | ||||||
Biotechnology—2.0% |
| |||||||
Alexion Pharmaceuticals, Inc. (a) | 62,989 | 5,810,105 | ||||||
Amgen, Inc. | 242,074 | 23,883,021 | ||||||
Biogen Idec, Inc. (a) | 76,619 | 16,488,409 | ||||||
Celgene Corp. (a) | 134,638 | 15,740,529 |
COMMON STOCKS | Shares | Value | ||||||
Gilead Sciences, Inc. (a)(b) | 492,348 | $ | 25,213,141 | |||||
Regeneron Pharmaceuticals, Inc. (a) | 24,655 | 5,544,416 | ||||||
Total Biotechnology |
| 92,679,621 | ||||||
Building Products—0.0% |
| |||||||
Masco Corp. | 115,188 | 2,245,014 | ||||||
Total Building Products |
| 2,245,014 | ||||||
Capital Markets—2.1% |
| |||||||
Ameriprise Financial, Inc. | 65,049 | 5,261,163 | ||||||
The Bank of New York Mellon Corp. | 374,638 | 10,508,596 | ||||||
BlackRock, Inc. (c) | 40,296 | 10,350,027 | ||||||
The Charles Schwab Corp. | 355,305 | 7,543,125 | ||||||
E*Trade Financial Corp. (a) | 92,583 | 1,172,101 | ||||||
Franklin Resources, Inc. | 44,607 | 6,067,444 | ||||||
The Goldman Sachs Group, Inc. | 139,115 | 21,041,144 | ||||||
Invesco Ltd. | 143,521 | 4,563,968 | ||||||
Legg Mason, Inc. | 35,987 | 1,115,957 | ||||||
Morgan Stanley | 442,874 | 10,819,412 | ||||||
Northern Trust Corp. | 70,271 | 4,068,691 | ||||||
State Street Corp. | 147,209 | 9,599,499 | ||||||
T. Rowe Price Group, Inc. | 83,708 | 6,123,240 | ||||||
Total Capital Markets |
| 98,234,367 | ||||||
Chemicals—2.4% |
| |||||||
Air Products & Chemicals, Inc. | 67,244 | 6,157,533 | ||||||
Airgas, Inc. | 21,273 | 2,030,721 | ||||||
CF Industries Holdings, Inc. | 19,137 | 3,281,996 | ||||||
The Dow Chemical Co. | 390,426 | 12,560,004 | ||||||
E.I. du Pont de Nemours & Co. | 297,105 | 15,598,012 | ||||||
Eastman Chemical Co. | 50,036 | 3,503,020 | ||||||
Ecolab, Inc. | 85,991 | 7,325,573 | ||||||
FMC Corp. | 43,940 | 2,682,976 | ||||||
International Flavors & Fragrances, Inc. | 26,288 | 1,975,806 | ||||||
LyondellBasell Industries NV, Class A | 122,601 | 8,123,542 | ||||||
Monsanto Co. | 172,311 | 17,024,327 | ||||||
The Mosaic Co. | 89,325 | 4,806,578 | ||||||
PPG Industries, Inc. | 46,043 | 6,741,156 | ||||||
Praxair, Inc. | 95,461 | 10,993,289 | ||||||
The Sherwin-Williams Co. | 27,636 | 4,880,518 | ||||||
Sigma-Aldrich Corp. | 38,849 | 3,121,906 | ||||||
Total Chemicals |
| 110,806,957 | ||||||
Commercial Banks—2.9% |
| |||||||
BB&T Corp. | 226,489 | 7,673,447 | ||||||
Comerica, Inc. | 60,245 | 2,399,558 | ||||||
Fifth Third Bancorp | 282,314 | 5,095,768 | ||||||
Huntington Bancshares, Inc. | 270,499 | 2,131,532 | ||||||
KeyCorp | 297,027 | 3,279,178 | ||||||
M&T Bank Corp. | 39,559 | 4,420,718 | ||||||
The PNC Financial Services Group, Inc. (c) | 170,885 | 12,460,934 | ||||||
Regions Financial Corp. | 456,204 | 4,347,624 | ||||||
SunTrust Banks, Inc. | 173,963 | 5,492,012 | ||||||
US Bancorp | 597,020 | 21,582,273 | ||||||
Wells Fargo & Co. | 1,589,877 | 65,614,224 | ||||||
Zions Bancorporation | 59,322 | 1,713,220 | ||||||
Total Commercial Banks | 136,210,488 |
66 | Appendix | The accompanying notes are an integral part of these financial statements. |
Table of Contents
PORTFOLIO OF INVESTMENTS: S&P 500 Stock Master Portfolio (continued)
June 30, 2013 (Unaudited)
Shares | Value | |||||||
(Common Stocks continued) | ||||||||
Commercial Services & Supplies—0.5% |
| |||||||
The ADT Corp. | 70,620 | $ | 2,814,207 | |||||
Avery Dennison Corp. | 32,105 | 1,372,810 | ||||||
Cintas Corp. | 33,615 | 1,530,827 | ||||||
Iron Mountain, Inc. | 54,157 | 1,441,118 | ||||||
Pitney Bowes, Inc. | 64,860 | 952,145 | ||||||
Republic Services, Inc. | 95,748 | 3,249,687 | ||||||
Stericycle, Inc. (a)(b) | 27,849 | 3,075,365 | ||||||
Tyco International Ltd. | 149,769 | 4,934,888 | ||||||
Waste Management, Inc. | 141,700 | 5,714,761 | ||||||
Total Commercial Services & Supplies |
| 25,085,808 | ||||||
Communications Equipment—1.9% |
| |||||||
Cisco Systems, Inc. | 1,725,022 | 41,935,285 | ||||||
F5 Networks, Inc. (a)(b) | 25,434 | 1,749,859 | ||||||
Harris Corp. | 35,371 | 1,742,022 | ||||||
JDS Uniphase Corp. (a)(b) | 76,347 | 1,097,870 | ||||||
Juniper Networks, Inc. (a)(b) | 163,408 | 3,155,408 | ||||||
Motorola Solutions, Inc. | 87,685 | 5,062,055 | ||||||
QUALCOMM, Inc. | 557,703 | 34,064,499 | ||||||
Total Communications Equipment |
| 88,806,998 | ||||||
Computers & Peripherals—3.8% |
| |||||||
Apple, Inc. | 302,974 | 120,001,942 | ||||||
Dell, Inc. | 473,726 | 6,324,242 | ||||||
EMC Corp. | 678,100 | 16,016,722 | ||||||
Hewlett-Packard Co. | 622,491 | 15,437,777 | ||||||
NetApp, Inc. (a) | 116,341 | 4,395,363 | ||||||
SanDisk Corp. (a) | 78,541 | 4,798,855 | ||||||
Seagate Technology Plc | 103,001 | 4,617,535 | ||||||
Western Digital Corp. | 68,669 | 4,263,658 | ||||||
Total Computers & Peripherals |
| 175,856,094 | ||||||
Construction & Engineering—0.2% |
| |||||||
Fluor Corp. | 52,571 | 3,117,986 | ||||||
Jacobs Engineering Group, Inc. (a) | 42,218 | 2,327,478 | ||||||
Quanta Services, Inc. (a) | 68,675 | 1,817,141 | ||||||
Total Construction & Engineering |
| 7,262,605 | ||||||
Construction Materials—0.0% |
| |||||||
Vulcan Materials Co. | 41,945 | 2,030,557 | ||||||
Total Construction Materials |
| 2,030,557 | ||||||
Consumer Finance—1.0% |
| |||||||
American Express Co. | 308,515 | 23,064,581 | ||||||
Capital One Financial Corp. | 188,554 | 11,843,077 | ||||||
Discover Financial Services | 158,298 | 7,541,317 | ||||||
SLM Corp. | 143,382 | 3,277,712 | ||||||
Total Consumer Finance |
| 45,726,687 | ||||||
Containers & Packaging—0.1% |
| |||||||
Ball Corp. | 48,010 | 1,994,335 | ||||||
Bemis Co. | 33,268 | 1,302,110 | ||||||
Owens-Illinois, Inc. (a) | 53,095 | 1,475,510 | ||||||
Sealed Air Corp. | 63,212 | 1,513,927 | ||||||
Total Containers & Packaging |
| 6,285,882 | ||||||
Distributors—0.1% |
| |||||||
Genuine Parts Co. | 50,019 | 3,904,983 | ||||||
Total Distributors |
| 3,904,983 |
Shares | Value | |||||||
Diversified Consumer Services—0.1% |
| |||||||
H&R Block, Inc. | 87,898 | $ | 2,439,170 | |||||
Total Diversified Consumer Services |
| 2,439,170 | ||||||
Diversified Financial Services—3.8% |
| |||||||
Bank of America Corp. | 3,479,646 | 44,748,248 | ||||||
Citigroup, Inc. | 982,169 | 47,114,647 | ||||||
CME Group, Inc. | 99,150 | 7,533,417 | ||||||
IntercontinentalExchange, Inc. (a)(b) | 23,489 | 4,175,405 | ||||||
JPMorgan Chase & Co. | 1,219,988 | 64,403,166 | ||||||
Leucadia National Corp. | 95,233 | 2,497,009 | ||||||
Moody’s Corp. | 62,594 | 3,813,852 | ||||||
The NASDAQ OMX Group, Inc. | 38,043 | 1,247,430 | ||||||
NYSE Euronext | 78,434 | 3,247,168 | ||||||
Total Diversified Financial Services |
| 178,780,342 | ||||||
Diversified Telecommunication Services—2.5% |
| |||||||
AT&T, Inc. | 1,736,534 | 61,473,304 | ||||||
CenturyLink, Inc. | 196,586 | 6,949,315 | ||||||
Frontier Communications Corp. | 321,531 | 1,302,200 | ||||||
Verizon Communications, Inc. | 923,499 | 46,488,940 | ||||||
Windstream Corp. | 191,329 | 1,475,146 | ||||||
Total Diversified Telecommunication Services |
| 117,688,905 | ||||||
Electric Utilities—1.9% |
| |||||||
American Electric Power Co., Inc. | 156,883 | 7,025,221 | ||||||
Duke Energy Corp. | 227,795 | 15,376,163 | ||||||
Edison International | 105,164 | 5,064,698 | ||||||
Entergy Corp. | 57,514 | 4,007,576 | ||||||
Exelon Corp. | 276,247 | 8,530,507 | ||||||
FirstEnergy Corp. | 134,990 | 5,040,527 | ||||||
NextEra Energy, Inc. | 137,063 | 11,167,893 | ||||||
Northeast Utilities, Inc. | 101,552 | 4,267,215 | ||||||
Pepco Holdings, Inc. | 80,236 | 1,617,558 | ||||||
Pinnacle West Capital Corp. | 35,488 | 1,968,519 | ||||||
PPL Corp. | 191,193 | 5,785,500 | ||||||
The Southern Co. | 280,941 | 12,397,926 | ||||||
Xcel Energy, Inc. | 160,497 | 4,548,485 | ||||||
Total Electric Utilities | 86,797,788 | |||||||
Electrical Equipment—0.6% |
| |||||||
Eaton Corp. Plc | 152,705 | 10,049,516 | ||||||
Emerson Electric Co. | 232,032 | 12,655,025 | ||||||
Rockwell Automation, Inc. | 45,078 | 3,747,785 | ||||||
Roper Industries, Inc. | 31,961 | 3,970,196 | ||||||
Total Electrical Equipment | 30,422,522 | |||||||
Electronic Equipment, Instruments & Components—0.4% |
| |||||||
Amphenol Corp., Class A | 51,587 | 4,020,691 | ||||||
Corning, Inc. | 476,123 | 6,775,230 | ||||||
Flir Systems, Inc. | 45,798 | 1,235,172 | ||||||
Jabil Circuit, Inc. | 59,521 | 1,213,038 | ||||||
Molex, Inc. | 44,738 | 1,312,613 | ||||||
TE Connectivity Ltd. | 134,090 | 6,106,459 | ||||||
Total Electronic Equipment, Instruments & Components | 20,663,203 |
The accompanying notes are an integral part of these financial statements. | Appendix | 67 |
Table of Contents
PORTFOLIO OF INVESTMENTS: S&P 500 Stock Master Portfolio (continued)
June 30, 2013 (Unaudited)
Shares | Value | |||||||
(Common Stocks continued) | ||||||||
Energy Equipment & Services—1.8% |
| |||||||
Baker Hughes, Inc. | 142,611 | $ | 6,578,645 | |||||
Cameron International Corp. (a) | 80,063 | 4,896,653 | ||||||
Diamond Offshore Drilling, Inc. | 22,449 | 1,544,267 | ||||||
Ensco Plc, Class A | 75,196 | 4,370,392 | ||||||
FMC Technologies, Inc. (a) | 76,552 | 4,262,415 | ||||||
Halliburton Co. | 300,839 | 12,551,003 | ||||||
Helmerich & Payne, Inc. | 34,348 | 2,145,033 | ||||||
Nabors Industries Ltd. (b) | 95,096 | 1,455,920 | ||||||
National Oilwell Varco, Inc. | 137,916 | 9,502,412 | ||||||
Noble Corp. | 81,751 | 3,072,203 | ||||||
Rowan Cos. Plc, Class A (a)(b) | 40,019 | 1,363,447 | ||||||
Schlumberger Ltd. | 429,114 | 30,750,309 | ||||||
Total Energy Equipment & Services |
| 82,492,699 | ||||||
Food & Staples Retailing—2.4% |
| |||||||
Costco Wholesale Corp. | 140,951 | 15,584,952 | ||||||
CVS Caremark Corp. | 395,205 | 22,597,822 | ||||||
The Kroger Co. | 167,864 | 5,798,022 | ||||||
Safeway, Inc. | 77,821 | 1,841,245 | ||||||
Sysco Corp. | 191,563 | 6,543,792 | ||||||
Wal-Mart Stores, Inc. | 528,816 | 39,391,504 | ||||||
Walgreen Co. | 278,301 | 12,300,904 | ||||||
Whole Foods Market, Inc. | 111,335 | 5,731,526 | ||||||
Total Food & Staples Retailing |
| 109,789,767 | ||||||
Food Products—1.7% |
| |||||||
Archer-Daniels-Midland Co. | 212,719 | 7,213,301 | ||||||
Campbell Soup Co. | 57,603 | 2,580,039 | ||||||
ConAgra Foods, Inc. | 134,535 | 4,699,308 | ||||||
General Mills, Inc. | 208,081 | 10,098,171 | ||||||
The Hershey Co. | 48,404 | 4,321,509 | ||||||
Hormel Foods Corp. | 43,597 | 1,681,972 | ||||||
The J.M. Smucker Co. | 34,620 | 3,571,053 | ||||||
Kellogg Co. | 81,909 | 5,261,015 | ||||||
Kraft Foods Group, Inc. | 191,881 | 10,720,392 | ||||||
McCormick & Co., Inc. | 42,576 | 2,995,647 | ||||||
Mead Johnson Nutrition Co. | 65,354 | 5,177,998 | ||||||
Mondelez International, Inc., Class A | 575,978 | 16,432,652 | ||||||
Tyson Foods, Inc., Class A | 91,627 | 2,352,981 | ||||||
Total Food Products |
| 77,106,038 | ||||||
Gas Utilities—0.1% | ||||||||
AGL Resources, Inc. | 38,146 | 1,634,938 | ||||||
ONEOK, Inc. | 66,526 | 2,748,189 | ||||||
Total Gas Utilities |
| 4,383,127 | ||||||
Health Care Equipment & Supplies—1.7% |
| |||||||
Baxter International, Inc. | 174,929 | 12,117,332 | ||||||
Becton Dickinson & Co. | 62,699 | 6,196,542 | ||||||
Boston Scientific Corp. (a) | 435,457 | 4,036,686 | ||||||
C.R. Bard, Inc. | 24,160 | 2,625,709 | ||||||
CareFusion Corp. (a) | 70,950 | 2,614,507 | ||||||
Covidien Plc | 151,858 | 9,542,757 | ||||||
DENTSPLY International, Inc. | 46,248 | 1,894,318 | ||||||
Edwards Lifesciences Corp. (a) | 36,462 | 2,450,246 | ||||||
Intuitive Surgical, Inc. (a) | 12,963 | 6,566,797 | ||||||
Medtronic, Inc. | 326,442 | 16,801,970 | ||||||
St. Jude Medical, Inc. | 91,463 | 4,173,457 |
Shares | Value | |||||||
Stryker Corp. | 92,741 | $ | 5,998,488 | |||||
Varian Medical Systems, | 34,998 | 2,360,615 | ||||||
Zimmer Holdings, Inc. | 54,344 | 4,072,539 | ||||||
Total Health Care Equipment & Supplies |
| 81,451,963 | ||||||
Health Care Providers & Services—2.0% |
| |||||||
Aetna, Inc. | 122,089 | 7,757,535 | ||||||
AmerisourceBergen Corp. | 74,531 | 4,161,066 | ||||||
Cardinal Health, Inc. | 110,332 | 5,207,670 | ||||||
Cigna Corp. | 92,079 | 6,674,807 | ||||||
DaVita HealthCare Partners, Inc. (a)(b) | 27,320 | 3,300,256 | ||||||
Express Scripts Holding | 263,468 | 16,253,341 | ||||||
Humana, Inc. | 50,838 | 4,289,710 | ||||||
Laboratory Corp. of America Holdings (a)(b) | 30,031 | 3,006,103 | ||||||
McKesson Corp. | 73,145 | 8,375,103 | ||||||
Patterson Cos., Inc. | 26,945 | 1,013,132 | ||||||
Quest Diagnostics, Inc. | 51,031 | 3,094,010 | ||||||
Tenet Healthcare Corp. (a) | 33,408 | 1,540,109 | ||||||
UnitedHealth Group, Inc. | 329,234 | 21,558,242 | ||||||
WellPoint, Inc. | 96,950 | 7,934,388 | ||||||
Total Health Care Providers & Services |
| 94,165,472 | ||||||
Health Care Technology—0.1% |
| |||||||
Cerner Corp. (a)(b) | 47,135 | 4,529,202 | ||||||
Total Health Care Technology |
| 4,529,202 | ||||||
Hotels, Restaurants & Leisure—1.8% |
| |||||||
Carnival Corp. | 143,314 | 4,914,237 | ||||||
Chipotle Mexican Grill, Inc. (a) | 9,978 | 3,635,484 | ||||||
Darden Restaurants, Inc. | 41,900 | 2,115,112 | ||||||
International Game Technology | 84,053 | 1,404,526 | ||||||
Marriott International, Inc., Class A | 77,325 | 3,121,610 | ||||||
McDonald’s Corp. | 323,598 | 32,036,202 | ||||||
Starbucks Corp. | 241,662 | 15,826,445 | ||||||
Starwood Hotels & Resorts Worldwide, Inc. | 62,800 | 3,968,332 | ||||||
Wyndham Worldwide Corp. | 43,857 | 2,509,936 | ||||||
Wynn Resorts Ltd. | 25,756 | 3,296,768 | ||||||
Yum! Brands, Inc. | 145,203 | 10,068,376 | ||||||
Total Hotels, Restaurants & Leisure |
| 82,897,028 | ||||||
Household Durables—0.3% |
| |||||||
D.R. Horton, Inc. | 90,494 | 1,925,712 | ||||||
Garmin Ltd. | 35,280 | 1,275,725 | ||||||
Harman International Industries, Inc. | 21,934 | 1,188,823 | ||||||
Leggett & Platt, Inc. | 46,139 | 1,434,462 | ||||||
Lennar Corp., Class A | 53,404 | 1,924,680 | ||||||
Newell Rubbermaid, Inc. | 93,121 | 2,444,426 | ||||||
PulteGroup, Inc. (a)(b) | 110,069 | 2,088,009 | ||||||
Whirlpool Corp. | 25,553 | 2,922,241 | ||||||
Total Household Durables |
| 15,204,078 | ||||||
Household Products—2.1% |
| |||||||
The Clorox Co. | 42,498 | 3,533,284 | ||||||
Colgate-Palmolive Co. | 283,002 | 16,213,184 | ||||||
Kimberly-Clark Corp. | 124,141 | 12,059,057 | ||||||
The Procter & Gamble Co. | 884,655 | 68,109,588 | ||||||
Total Household Products |
| 99,915,113 |
68 | Appendix | The accompanying notes are an integral part of these financial statements. |
Table of Contents
PORTFOLIO OF INVESTMENTS: S&P 500 Stock Master Portfolio (continued)
June 30, 2013 (Unaudited)
Shares | Value | |||||||
(Common Stocks continued) | ||||||||
Independent Power Producers & Energy Traders—0.1% |
| |||||||
The AES Corp. | 200,001 | $ | 2,398,012 | |||||
NRG Energy, Inc. | 104,070 | 2,778,669 | ||||||
Total Independent Power Producers & Energy Traders |
| 5,176,681 | ||||||
Industrial Conglomerates—2.4% |
| |||||||
3M Co. | 204,956 | 22,411,939 | ||||||
Danaher Corp. | 187,815 | 11,888,689 | ||||||
General Electric Co. | 3,337,541 | 77,397,576 | ||||||
Total Industrial Conglomerates |
| 111,698,204 | ||||||
Insurance—4.4% |
| |||||||
ACE Ltd. | 109,800 | 9,824,904 | ||||||
Aflac, Inc. | 150,487 | 8,746,304 | ||||||
The Allstate Corp. | 151,268 | 7,279,016 | ||||||
American International Group, Inc. (a) | 476,528 | 21,300,802 | ||||||
Aon Plc | 99,779 | 6,420,779 | ||||||
Assurant, Inc. | 24,851 | 1,265,164 | ||||||
Berkshire Hathaway, Inc., Class B (a) | 588,827 | 65,901,518 | ||||||
The Chubb Corp. | 83,655 | 7,081,396 | ||||||
Cincinnati Financial Corp. | 47,436 | 2,177,312 | ||||||
Genworth Financial, Inc., Class A (a) | 159,158 | 1,815,993 | ||||||
Hartford Financial Services Group, Inc. (a) | 147,150 | 4,549,878 | ||||||
Lincoln National Corp. | 86,654 | 3,160,271 | ||||||
Loews Corp. | 99,184 | 4,403,770 | ||||||
Marsh & McLennan Cos., Inc. | 177,670 | 7,092,586 | ||||||
MetLife, Inc. | 353,443 | 16,173,552 | ||||||
Principal Financial Group, Inc. | 89,026 | 3,334,024 | ||||||
The Progressive Corp. | 178,913 | 4,547,969 | ||||||
Prudential Financial, Inc. | 150,413 | 10,984,661 | ||||||
Torchmark Corp. | 29,853 | 1,944,624 | ||||||
The Travelers Cos., Inc. | 121,499 | 9,710,200 | ||||||
Unum Group | 86,159 | 2,530,490 | ||||||
XL Group Plc | 93,510 | 2,835,223 | ||||||
Total Insurance |
| 203,080,436 | ||||||
Internet & Catalog Retail—1.2% |
| |||||||
Amazon.com, Inc. (a) | 117,554 | 32,643,570 | ||||||
Expedia, Inc. (b) | 30,087 | 1,809,733 | ||||||
Netflix, Inc. (a)(b) | 18,122 | 3,825,373 | ||||||
priceline.com, Inc. (a) | 16,649 | 13,770,887 | ||||||
TripAdvisor, Inc. (a)(b) | 35,633 | 2,168,981 | ||||||
Total Internet & Catalog Retail |
| 54,218,544 | ||||||
Internet Software & Services—2.3% |
| |||||||
Akamai Technologies, Inc. (a) | 57,402 | 2,442,455 | ||||||
eBay, Inc. (a) | 377,005 | 19,498,698 | ||||||
Google, Inc., Class A (a) | 86,740 | 76,363,294 | ||||||
VeriSign, Inc. (a)(b) | 48,657 | 2,173,022 | ||||||
Yahoo!, Inc. (a) | 307,516 | 7,721,727 | ||||||
Total Internet Software & Services |
| 108,199,196 | ||||||
IT Services—3.6% |
| |||||||
Accenture Plc, Class A | 209,829 | 15,099,295 | ||||||
Automatic Data Processing, Inc. | 156,618 | 10,784,715 |
Shares | Value | |||||||
Cognizant Technology Solutions Corp., Class A (a) | 97,354 | $ | 6,095,334 | |||||
Computer Sciences Corp. | 48,491 | 2,122,451 | ||||||
Fidelity National Information Services, Inc. | 94,609 | 4,053,050 | ||||||
Fiserv, Inc. (a)(b) | 42,991 | 3,757,843 | ||||||
International Business Machines Corp. | 336,419 | 64,293,035 | ||||||
MasterCard, Inc., Class A | 33,746 | 19,387,077 | ||||||
Paychex, Inc. | 104,537 | 3,817,691 | ||||||
SAIC, Inc. | 91,767 | 1,278,314 | ||||||
Teradata Corp. (a) | 52,742 | 2,649,231 | ||||||
Total System Services, Inc. | 51,973 | 1,272,299 | ||||||
Visa, Inc., Class A | 163,585 | 29,895,159 | ||||||
The Western Union Co. | 179,824 | 3,076,789 | ||||||
Total IT Services |
| 167,582,283 | ||||||
Leisure Equipment & Products—0.1% |
| |||||||
Hasbro, Inc. | 37,165 | 1,666,107 | ||||||
Mattel, Inc. | 111,486 | 5,051,431 | ||||||
Total Leisure Equipment & Products |
| 6,717,538 | ||||||
Life Sciences Tools & Services—0.5% |
| |||||||
Agilent Technologies, Inc. | 111,189 | 4,754,442 | ||||||
Life Technologies Corp. (a) | 55,614 | 4,115,992 | ||||||
PerkinElmer, Inc. | 36,132 | 1,174,290 | ||||||
Thermo Fisher Scientific, Inc. | 115,853 | 9,804,639 | ||||||
Waters Corp. (a) | 27,659 | 2,767,283 | ||||||
Total Life Sciences Tools & Services |
| 22,616,646 | ||||||
Machinery—1.7% |
| |||||||
Caterpillar, Inc. | 212,220 | 17,506,028 | ||||||
Cummins, Inc. | 56,957 | 6,177,556 | ||||||
Deere & Co. | 125,252 | 10,176,725 | ||||||
Dover Corp. | 55,228 | 4,289,007 | ||||||
Flowserve Corp. | 46,491 | 2,510,979 | ||||||
Illinois Tool Works, Inc. | 133,732 | 9,250,242 | ||||||
Ingersoll-Rand Plc | 89,722 | 4,981,365 | ||||||
Joy Global, Inc. | 34,299 | 1,664,530 | ||||||
PACCAR, Inc. | 114,172 | 6,126,470 | ||||||
Pall Corp. | 36,013 | 2,392,344 | ||||||
Parker Hannifin Corp. | 48,175 | 4,595,895 | ||||||
Pentair Ltd., Registered Shares | 65,945 | 3,804,367 | ||||||
Snap-On, Inc. | 18,822 | 1,682,310 | ||||||
Stanley Black & Decker, Inc. | 52,263 | 4,039,930 | ||||||
Xylem, Inc. | 59,772 | 1,610,258 | ||||||
Total Machinery | 80,808,006 | |||||||
Media—3.8% |
| |||||||
Cablevision Systems Corp., Class A | 69,828 | 1,174,507 | ||||||
CBS Corp., Class B | 184,189 | 9,001,316 | ||||||
Comcast Corp., Class A | 850,005 | 35,598,209 | ||||||
DIRECTV (a) | 180,287 | 11,109,285 | ||||||
Discovery Communications, Inc., Class A (a)(b) | 78,973 | 6,097,505 | ||||||
Gannett Co., Inc. | 73,804 | 1,805,246 | ||||||
The Interpublic Group of Cos., Inc. | 138,276 | 2,011,916 | ||||||
McGraw Hill Financial, Inc. | 88,473 | 4,705,879 | ||||||
Omnicom Group, Inc. | 83,465 | 5,247,444 | ||||||
Scripps Networks Interactive, Class A | 27,444 | 1,832,161 |
The accompanying notes are an integral part of these financial statements. | Appendix | 69 |
Table of Contents
PORTFOLIO OF INVESTMENTS: S&P 500 Stock Master Portfolio (continued)
June 30, 2013 (Unaudited)
Shares | Value | |||||||
(Common Stocks continued) | ||||||||
Time Warner Cable, Inc. | 93,916 | $ | 10,563,672 | |||||
Time Warner, Inc. | 300,884 | 17,397,113 | ||||||
Twenty-First Century Fox, Inc. | 642,488 | 20,945,109 | ||||||
Viacom, Inc., Class B | 143,998 | 9,799,064 | ||||||
The Walt Disney Co. | 581,325 | 36,710,674 | ||||||
The Washington Post Co., Class B (b) | 1,466 | 709,207 | ||||||
Total Media |
| 174,708,307 | ||||||
Metals & Mining—0.5% |
| |||||||
Alcoa, Inc. | 345,175 | 2,699,269 | ||||||
Allegheny Technologies, Inc. | 34,845 | 916,772 | ||||||
Cliffs Natural Resources, Inc. (b) | 49,415 | 802,994 | ||||||
Freeport-McMoRan Copper & Gold, Inc. | 335,109 | 9,252,359 | ||||||
Newmont Mining Corp. | 160,488 | 4,806,616 | ||||||
Nucor Corp. | 102,573 | 4,443,462 | ||||||
United States Steel Corp. (b) | 46,480 | 814,794 | ||||||
Total Metals & Mining |
| 23,736,266 | ||||||
Multi-Utilities—1.2% |
| |||||||
Ameren Corp. | 78,317 | 2,697,238 | ||||||
CenterPoint Energy, Inc. | 138,319 | 3,249,113 | ||||||
CMS Energy Corp. | 85,773 | 2,330,452 | ||||||
Consolidated Edison, Inc. | 94,539 | 5,512,569 | ||||||
Dominion Resources, Inc. | 186,460 | 10,594,657 | ||||||
DTE Energy Co. | 56,147 | 3,762,410 | ||||||
Integrys Energy Group, Inc. | 25,541 | 1,494,915 | ||||||
NiSource, Inc. | 100,718 | 2,884,564 | ||||||
PG&E Corp. | 142,723 | 6,526,723 | ||||||
Public Service Enterprise Group, Inc. | 163,314 | 5,333,835 | ||||||
SCANA Corp. | 45,026 | 2,210,777 | ||||||
Sempra Energy | 72,755 | 5,948,449 | ||||||
TECO Energy, Inc. | 66,073 | 1,135,795 | ||||||
Wisconsin Energy Corp. | 73,870 | 3,027,931 | ||||||
Total Multi-Utilities |
| 56,709,428 | ||||||
Multiline Retail—0.8% |
| |||||||
Dollar General Corp. (a) | 97,222 | 4,902,906 | ||||||
Dollar Tree, Inc. (a) | 72,249 | 3,673,139 | ||||||
Family Dollar Stores, Inc. | 30,797 | 1,918,961 | ||||||
JC Penney Co., Inc. (a)(b) | 46,219 | 789,421 | ||||||
Kohl’s Corp. | 65,767 | 3,321,891 | ||||||
Macy’s, Inc. | 123,835 | 5,944,080 | ||||||
Nordstrom, Inc. | 48,000 | 2,877,120 | ||||||
Target Corp. | 207,127 | 14,262,765 | ||||||
Total Multiline Retail |
| 37,690,283 | ||||||
Office Electronics—0.1% |
| |||||||
Xerox Corp. | 396,337 | 3,594,777 | ||||||
Total Office Electronics |
| 3,594,777 | ||||||
Oil, Gas & Consumable Fuels—8.7% |
| |||||||
Anadarko Petroleum Corp. | 161,864 | 13,908,974 | ||||||
Apache Corp. | 126,482 | 10,602,986 | ||||||
Cabot Oil & Gas Corp. | 68,025 | 4,831,136 | ||||||
Chesapeake Energy Corp. | 167,438 | 3,412,386 | ||||||
Chevron Corp. | 625,855 | 74,063,681 | ||||||
ConocoPhillips | 394,645 | 23,876,022 |
Shares | Value | |||||||
CONSOL Energy, Inc. | 73,796 | $ | 1,999,872 | |||||
Denbury Resources, Inc. (a) | 120,548 | 2,087,891 | ||||||
Devon Energy Corp. | 121,874 | 6,322,823 | ||||||
EOG Resources, Inc. | 87,821 | 11,564,269 | ||||||
EQT Corp. | 48,557 | 3,853,969 | ||||||
Exxon Mobil Corp. | 1,435,182 | 129,668,694 | ||||||
Hess Corp. | 96,403 | 6,409,835 | ||||||
Kinder Morgan, Inc. | 203,932 | 7,780,006 | ||||||
Marathon Oil Corp. | 228,789 | 7,911,524 | ||||||
Marathon Petroleum Corp. | 104,834 | 7,449,504 | ||||||
Murphy Oil Corp. | 58,560 | 3,565,718 | ||||||
Newfield Exploration Co. (a) | 43,762 | 1,045,474 | ||||||
Noble Energy, Inc. | 115,924 | 6,960,077 | ||||||
Occidental Petroleum Corp. | 260,042 | 23,203,548 | ||||||
Peabody Energy Corp. | 87,142 | 1,275,759 | ||||||
Phillips 66 | 199,874 | 11,774,577 | ||||||
Pioneer Natural Resources Co. | 44,085 | 6,381,304 | ||||||
QEP Resources, Inc. | 57,862 | 1,607,406 | ||||||
Range Resources Corp. | 52,636 | 4,069,816 | ||||||
Southwestern Energy Co. (a)(b) | 113,461 | 4,144,730 | ||||||
Spectra Energy Corp. | 216,000 | 7,443,360 | ||||||
Tesoro Corp. | 43,838 | 2,293,604 | ||||||
Valero Energy Corp. | 176,032 | 6,120,633 | ||||||
The Williams Cos., Inc. | 220,357 | 7,154,992 | ||||||
WPX Energy, Inc. (a)(b) | 64,714 | 1,225,683 | ||||||
Total Oil, Gas & Consumable Fuels |
| 404,010,253 | ||||||
Paper & Forest Products—0.2% |
| |||||||
International Paper Co. | 143,586 | 6,362,296 | ||||||
MeadWestvaco Corp. | 57,117 | 1,948,261 | ||||||
Total Paper & Forest Products |
| 8,310,557 | ||||||
Personal Products—0.2% |
| |||||||
Avon Products, Inc. | 139,796 | 2,939,910 | ||||||
The Estée Lauder Cos., Inc., Class A | 77,620 | 5,105,067 | ||||||
Total Personal Products |
| 8,044,977 | ||||||
Pharmaceuticals—6.3% |
| |||||||
Abbott Laboratories | 503,165 | 17,550,395 | ||||||
AbbVie, Inc. | 511,189 | 21,132,553 | ||||||
Actavis, Inc. (a) | 41,234 | 5,204,556 | ||||||
Allergan, Inc. | 95,671 | 8,059,325 | ||||||
Bristol-Myers Squibb Co. | 530,176 | 23,693,566 | ||||||
Eli Lilly & Co. | 319,992 | 15,718,007 | ||||||
Forest Laboratories, Inc. (a) | 75,746 | 3,105,586 | ||||||
Hospira, Inc. (a)(b) | 53,417 | 2,046,405 | ||||||
Johnson & Johnson | 906,640 | 77,844,110 | ||||||
Merck & Co., Inc. | 974,657 | 45,272,818 | ||||||
Mylan, Inc. (a)(b) | 123,008 | 3,816,938 | ||||||
Perrigo Co. | 28,533 | 3,452,493 | ||||||
Pfizer, Inc. | 2,200,617 | 61,639,282 | ||||||
Zoetis, Inc. | 114,149 | 3,526,063 | ||||||
Total Pharmaceuticals | 292,062,097 | |||||||
Professional Services—0.1% |
| |||||||
The Dun & Bradstreet Corp. | 12,894 | 1,256,520 | ||||||
Equifax, Inc. | 38,930 | 2,294,145 | ||||||
Robert Half International, Inc. | 45,094 | 1,498,474 | ||||||
Total Professional Services | 5,049,139 |
70 | Appendix | The accompanying notes are an integral part of these financial statements. |
Table of Contents
PORTFOLIO OF INVESTMENTS: S&P 500 Stock Master Portfolio (continued)
June 30, 2013 (Unaudited)
Shares | Value | |||||||
(Common Stocks continued) | ||||||||
Real Estate Investment Trusts (REITs)—2.1% |
| |||||||
American Tower Corp. | 127,653 | $ | 9,340,370 | |||||
Apartment Investment & Management Co., Class A | 47,143 | 1,416,176 | ||||||
AvalonBay Communities, Inc. (b) | 39,256 | 5,296,027 | ||||||
Boston Properties, Inc. (b) | 48,979 | 5,165,815 | ||||||
Equity Residential (b) | 103,462 | 6,007,004 | ||||||
HCP, Inc. | 146,697 | 6,665,912 | ||||||
Health Care REIT, Inc. (b) | 91,808 | 6,153,890 | ||||||
Host Hotels & Resorts, Inc. (b) | 240,379 | 4,055,194 | ||||||
Kimco Realty Corp. (b) | 131,936 | 2,827,388 | ||||||
The Macerich Co. (b) | 44,381 | 2,705,910 | ||||||
Plum Creek Timber Co., Inc. | 52,561 | 2,453,022 | ||||||
ProLogis, Inc. | 160,814 | 6,065,904 | ||||||
Public Storage | 46,597 | 7,144,718 | ||||||
Simon Property Group, Inc. | 100,332 | 15,844,429 | ||||||
Ventas, Inc. (b) | 94,627 | 6,572,791 | ||||||
Vornado Realty Trust | 54,908 | 4,549,128 | ||||||
Weyerhaeuser Co. | 186,170 | 5,303,983 | ||||||
Total Real Estate Investment Trusts (REITs) |
| 97,567,661 | ||||||
Real Estate Management & Development—0.0% |
| |||||||
CBRE Group, Inc., Class A (a) | 97,966 | 2,288,486 | ||||||
Total Real Estate Management & Development |
| 2,288,486 | ||||||
Road & Rail—0.9% |
| |||||||
CSX Corp. | 329,864 | 7,649,546 | ||||||
Kansas City Southern | 35,565 | 3,768,467 | ||||||
Norfolk Southern Corp. | 101,703 | 7,388,723 | ||||||
Ryder System, Inc. | 16,759 | 1,018,780 | ||||||
Union Pacific Corp. | 150,666 | 23,244,751 | ||||||
Total Road & Rail |
| 43,070,267 | ||||||
Semiconductors & Semiconductor Equipment—2.1% |
| |||||||
Advanced Micro Devices | 196,025 | 799,782 | ||||||
Altera Corp. | 103,333 | 3,408,956 | ||||||
Analog Devices, Inc. | 99,468 | 4,482,028 | ||||||
Applied Materials, Inc. | 387,847 | 5,782,799 | ||||||
Broadcom Corp., Class A | 169,560 | 5,724,345 | ||||||
First Solar, Inc. (a)(b) | 21,446 | 959,279 | ||||||
Intel Corp. | 1,604,518 | 38,861,426 | ||||||
KLA-Tencor Corp. | 53,504 | 2,981,778 | ||||||
Lam Research Corp. (a) | 52,521 | 2,328,781 | ||||||
Linear Technology Corp. | 75,289 | 2,773,647 | ||||||
LSI Corp. (a) | 177,069 | 1,264,273 | ||||||
Microchip Technology, Inc. | 63,632 | 2,370,292 | ||||||
Micron Technology, Inc. (a) | 332,493 | 4,764,625 | ||||||
NVIDIA Corp. | 186,537 | 2,617,114 | ||||||
Teradyne, Inc. (a)(b) | 61,590 | 1,082,136 | ||||||
Texas Instruments, Inc. | 358,008 | 12,483,739 | ||||||
Xilinx, Inc. | 85,169 | 3,373,544 | ||||||
Total Semiconductors & Semiconductor Equipment |
| 96,058,544 | ||||||
Software—3.5% |
| |||||||
Adobe Systems, Inc. (a) | 162,013 | 7,381,312 | ||||||
Autodesk, Inc. (a) | 72,560 | 2,462,686 | ||||||
BMC Software, Inc. (a) | 42,753 | 1,929,870 |
Shares | Value | |||||||
CA, Inc. | 106,913 | $ | 3,060,919 | |||||
Citrix Systems, Inc. (a) | 60,399 | 3,643,872 | ||||||
Electronic Arts, Inc. (a) | 97,683 | 2,243,779 | ||||||
Intuit, Inc. | 90,090 | 5,498,193 | ||||||
Microsoft Corp. | 2,425,982 | 83,769,158 | ||||||
Oracle Corp. | 1,185,980 | 36,433,306 | ||||||
Red Hat, Inc. (a) | 61,199 | 2,926,536 | ||||||
Salesforce.com, | 175,183 | 6,688,487 | ||||||
Symantec Corp. | 224,857 | 5,052,537 | ||||||
Total Software |
| 161,090,655 | ||||||
Specialty Retail—2.3% |
| |||||||
Abercrombie & Fitch Co., Class A | 25,289 | 1,144,327 | ||||||
AutoNation, Inc. (a)(b) | 12,511 | 542,852 | ||||||
AutoZone, Inc. (a)(b) | 11,727 | 4,968,613 | ||||||
Bed Bath & Beyond, Inc. (a)(b) | 70,555 | 5,002,349 | ||||||
Best Buy Co., Inc. | 86,658 | 2,368,363 | ||||||
CarMax, Inc. (a) | 72,483 | 3,345,815 | ||||||
GameStop Corp., Class A | 38,411 | 1,614,414 | ||||||
The Gap, Inc. | 93,592 | 3,905,594 | ||||||
The Home Depot, Inc. | 471,510 | 36,527,880 | ||||||
L Brands, Inc. | 77,527 | 3,818,205 | ||||||
Lowe’s Cos., Inc. | 346,151 | 14,157,576 | ||||||
O’Reilly Automotive, Inc. (a)(b) | 35,658 | 4,015,804 | ||||||
PetSmart, Inc. | 33,348 | 2,233,983 | ||||||
Ross Stores, Inc. | 70,949 | 4,598,205 | ||||||
Staples, Inc. | 214,297 | 3,398,750 | ||||||
Tiffany & Co. | 38,709 | 2,819,564 | ||||||
TJX Cos., Inc. | 232,326 | 11,630,240 | ||||||
Urban Outfitters, Inc. (a) | 35,570 | 1,430,625 | ||||||
Total Specialty Retail |
| 107,523,159 | ||||||
Textiles, Apparel & Luxury Goods—0.7% |
| |||||||
Coach, Inc. | 90,697 | 5,177,892 | ||||||
Fossil Group, Inc. (a) | 17,044 | 1,760,815 | ||||||
NIKE, Inc., Class B | 233,613 | 14,876,476 | ||||||
PVH Corp. | 26,160 | 3,271,308 | ||||||
Ralph Lauren Corp. | 19,658 | 3,415,381 | ||||||
VF Corp. | 28,282 | 5,460,123 | ||||||
Total Textiles, Apparel & Luxury Goods |
| 33,961,995 | ||||||
Thrifts & Mortgage Finance—0.1% |
| |||||||
Hudson City Bancorp, Inc. | 153,705 | 1,407,938 | ||||||
People’s United Financial, Inc. | 109,432 | 1,630,537 | ||||||
Total Thrifts & Mortgage Finance |
| 3,038,475 | ||||||
Tobacco—1.7% |
| |||||||
Altria Group, Inc. | 648,347 | 22,685,662 | ||||||
Lorillard, Inc. | 121,930 | 5,325,902 | ||||||
Philip Morris International, Inc. | 527,902 | 45,726,871 | ||||||
Reynolds American, Inc. | 102,760 | 4,970,501 | ||||||
Total Tobacco |
| 78,708,936 | ||||||
Trading Companies & Distributors—0.2% |
| |||||||
Fastenal Co. | 87,138 | 3,995,277 | ||||||
W.W. Grainger, Inc. | 19,305 | 4,868,335 | ||||||
Total Trading Companies & Distributors |
| 8,863,612 |
The accompanying notes are an integral part of these financial statements. | Appendix | 71 |
Table of Contents
PORTFOLIO OF INVESTMENTS: S&P 500 Stock Master Portfolio (continued)
June 30, 2013 (Unaudited)
Shares | Value | |||||||
(Common Stocks continued) | ||||||||
Wireless Telecommunication Services—0.3% |
| |||||||
Crown Castle International Corp. (a) | 94,626 | $ | 6,849,976 | |||||
Sprint Nextel Corp. (a) | 974,136 | 6,838,435 | ||||||
Total Wireless Telecommunication Services |
| 13,688,411 | ||||||
Total Long-Term Investments (Cost—$3,150,941,151) |
| 4,618,462,156 | ||||||
SHORT-TERM SECURITIES | ||||||||
(3.1% of net assets) | ||||||||
MONEY MARKET FUNDS—2.9% |
| |||||||
BlackRock Cash Funds: | ||||||||
Institutional, SL Agency Shares, | 122,176,359 | 122,176,359 | ||||||
Prime, SL Agency Shares, | 14,452,133 | 14,452,133 | ||||||
Total Money Market Funds |
| 136,628,492 | ||||||
Par (000) | ||||||||
U.S. TREASURY OBLIGATIONS—0.2% |
| |||||||
U.S. Treasury Bill, | $ | 6,805 | 6,804,380 | |||||
Total U.S. Treasury Obligations |
| 6,804,380 | ||||||
Total Short-Term Securities (Cost $143,432,872) |
| 143,432,872 | ||||||
TOTAL INVESTMENTS BEFORE INVESTMENTS SOLD SHORT (Cost $3,294,374,023*)—102.3% |
| 4,761,895,028 |
INVESTMENTS SOLD SHORT | Shares | Value | ||||||
(0.0% of net assets) (h) | ||||||||
Pharmaceuticals—0.0% | ||||||||
Mallinckrodt Plc | 18,982 | $ | (864,250 | ) | ||||
(Proceeds—$862,290) | (864,250 | ) | ||||||
TOTAL INVESTMENTS, NET OF INVESTMENTS SOLD SHORT—102.3% |
| 4,761,030,778 | ||||||
LIABILITIES IN EXCESS OF OTHER ASSETS—(2.3)% |
| (107,146,305 | ) | |||||
NET ASSETS—100% |
| $ | 4,653,884,473 |
* | As of June 30, 2013, gross unrealized appreciation and gross unrealized depreciation based on cost for federal income tax purposes were as follows: |
Tax cost | $ | 3,347,899,526 | ||
|
| |||
Gross unrealized appreciation | 1,602,170,663 | |||
Gross unrealized depreciation | (188,175,161 | ) | ||
|
| |||
Net unrealized appreciation | $ | 1,413,995,502 | ||
|
|
(a) | Non-income producing security. |
(b) | Security, or a portion of security, is on loan. |
(c) | Investments in issuers considered to be an affiliate of the Master Portfolio during the six months ended June 30, 2013, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows: |
Affiliate | Shares Held at December 31, 2012 | Shares Purchased | Shares Sold | Shares Held at June 30, 2013 | Value at June 30, 2013 | Income | Realized Gain | |||||||||||||||||||||
BlackRock Inc. | 16,465 | 24,288 | (457 | ) | 40,296 | $ | 10,350,027 | $ | 95,698 | $ | 31,121 | |||||||||||||||||
BlackRock Cash Funds: Institutional, SL Agency Shares | 132,083,169 | — | (9,906,810 | )1 | 122,176,359 | $ | 122,176,359 | $ | 191,877 | $ | — | |||||||||||||||||
BlackRock Cash Funds: Prime, SL Agency Shares | 22,497,136 | — | (8,045,003 | )1 | 14,452,133 | $ | 14,452,133 | $ | 22,021 | $ | — | |||||||||||||||||
The PNC Financial Services Group, Inc. | 69,347 | 102,698 | (1,160 | ) | 170,885 | $ | 12,460,934 | $ | 103,117 | $ | 9,313 |
1 | Represents net shares sold. |
(d) | Represents the current yield as of report date. |
(e) | All or a portion of security was purchased with the cash collateral from loaned securities. |
(f) | All or a portion of security has been pledged in connection with open financial futures contracts. |
(g) | Rates shown are discount rates or a range of discount rates paid at the time of purchase. |
(h) | In order to track the performance of its benchmark index, the Master Portfolio sold non-index securities that it subsequently received in corporate actions occurring on the opening of market trading on the following business day. |
Ÿ | For Portfolio compliance purposes, the Portfolio’s sector and industry classifications refer to any one or more of the sector and industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by Portfolio management. These definitions may not apply for purposes of this report, which may combine such sector and industry sub-classifications for reporting ease. |
Ÿ | Financial futures contracts as of June 30, 2013 were as follows: |
Contracts Purchased | Issue | Exchange | Expiration | Notional Value | Unrealized Appreciation | |||||
608 | S&P 500 E-Mini | Chicago Mercantile | September 2013 | $ 48,618,720 | $ (450,962) |
72 | Appendix | The accompanying notes are an integral part of these financial statements. |
Table of Contents
PORTFOLIO OF INVESTMENTS: S&P 500 Stock Master Portfolio (continued)
June 30, 2013 (Unaudited)
Ÿ | Fair Value Measurements — Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a disclosure hierarchy consisting of three broad levels for financial statement purposes as follows: |
Ÿ | Level 1 – unadjusted price quotations in active markets/exchanges for identical assets or liabilities that the Master Portfolio has the ability to access |
Ÿ | Level 2 – other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs) |
Ÿ | Level 3 – unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Master Portfolio’s own assumptions used in determining the fair value of investments and derivative financial instruments) |
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. In accordance with the Master Portfolio’s policy, transfers between different levels of the fair value disclosure hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investment and derivative financial instrument and is not necessarily an indication of the risks associated with investing in those securities. For information about the Master Portfolio’s policy regarding valuation of investments and derivative financial instruments, please refer to Note 2 of the Note to Financial Statements.
The following tables summarize the Master Portfolio’s investments and derivative financial instruments categorized in the disclosure hierarchy as of June 30, 2013:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Investments: | ||||||||||||||||
Long-Term Investments: | ||||||||||||||||
Common Stocks1 | $ | 4,618,462,156 | — | — | $ | 4,618,462,156 | ||||||||||
Short-Term Securities: | ||||||||||||||||
Money Market Funds | 136,628,492 | — | — | 136,628,492 | ||||||||||||
U.S. Treasury Obligations | — | $ | 6,804,380 | — | 6,804,380 | |||||||||||
Liabilities: | ||||||||||||||||
Investments: | ||||||||||||||||
Investment sold short | (864,250 | ) | — | — | (864,250 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 4,754,226,398 | $ | 6,804,380 | — | $ | 4,761,030,778 | |||||||||
|
|
|
|
|
|
|
|
1 | See above Schedule of Investments for values in each industry. |
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Derivative Financial Instruments2 | ||||||||||||||||
Liabilities: | ||||||||||||||||
Equity contracts | $ | (450,962 | ) | — | — | $ | (450,962 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | (450,962 | ) | — | — | $ | (450,962 | ) | ||||||||
|
|
|
|
|
|
|
|
2 | Derivative financial instruments are financial futures contracts, which are valued at the unrealized appreciation/depreciation on the instrument. |
Certain of the Master Portfolio’s liabilities are held at carrying amount, which approximates fair value for financial statement purposes. As of June 30, 2013, collateral on securities loaned at value of $99,643,557 are categorized as Level 2 within the disclosure hierarchy.
There were no transfers between levels during the period ended June 30, 2013.
The accompanying notes are an integral part of these financial statements. | Appendix | 73 |
Table of Contents
STATEMENT OF ASSETS AND LIABILITIES: S&P 500 Stock Master Portfolio
June 30, 2013 (Unaudited)
ASSETS | ||||
Investments at value—unaffiliated (including securities loaned of $97,082,537) (cost—$3,141,275,116) | $ | 4,602,455,574 | ||
Investments at value—affiliated (cost—$153,098,907) | 159,439,454 | |||
Dividends receivable | 5,713,831 | |||
Investments sold receivable | 1,435,813 | |||
Securities lending income receivable—affiliated | 12,481 | |||
Total assets | 4,769,057,153 | |||
LIABILITIES | ||||
Collateral on securities loaned at value | 99,643,557 | |||
Withdrawals payable to investors | 13,884,895 | |||
Investments sold short at value (proceeds—$862,290) | 864,250 | |||
Investments purchased payable | 267,716 | |||
Variation margin payable | 217,449 | |||
Investment advisory fees payable | 196,229 | |||
Professional fees payable | 23,524 | |||
Trustees’ fees payable | 8,868 | |||
Other accrued expenses payable | 66,192 | |||
Total liabilities | 115,172,680 | |||
NET ASSETS | $ | 4,653,884,473 | ||
NET ASSETS CONSIST OF | ||||
Investors’ capital | 3,186,816,390 | |||
Net unrealized appreciation/depreciation | 1,467,068,083 | |||
NET ASSETS | $ | 4,653,884,473 |
STATEMENT OF OPERATIONS: S&P 500 Stock Master Portfolio
Six Months Ended June 30, 2013 (Unaudited)
INVESTMENT INCOME | ||||
Dividends—unaffiliated | $ | 31,606,647 | ||
Dividends—affiliated | 198,815 | |||
Securities lending—affiliated—net | 151,826 | |||
Income—affiliated | 62,072 | |||
Interest | 1,146 | |||
Foreign taxes withheld | (14,537 | ) | ||
Total income | 32,005,969 | |||
EXPENSES | ||||
Investment advisory | 747,477 | |||
Trustees | 26,908 | |||
Professional | 19,496 | |||
Total expenses | 793,881 | |||
Less fees reimbursed by Manager | (46,404 | ) | ||
Total expenses after fees waived | 747,477 | |||
NET INVESTMENT INCOME | 31,258,492 | |||
REALIZED AND UNREALIZED GAIN (LOSS) | ||||
Net realized gain (loss) from: | ||||
Investments—unaffiliated | (3,424,591 | ) | ||
Investments—affiliated | 40,434 | |||
Financial futures contracts | 11,345,478 | |||
Net realized gain | 7,961,321 | |||
Net change in unrealized appreciation/depreciation on: | ||||
Investments | 298,398,608 | |||
Short sale | (1,960 | ) | ||
Financial futures contracts | (842,600 | ) | ||
Net change in unrealized appreciation/depreciation | 297,554,048 | |||
TOTAL REALIZED AND UNREALIZED GAIN | 305,515,369 | |||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 336,773,861 |
74 | Appendix | The accompanying notes are an integral part of these financial statements. |
Table of Contents
STATEMENTS OF CHANGES IN NET ASSETS: S&P 500 Stock Master Portfolio
INCREASE (DECREASE) IN NET ASSETS | Six Months Ended June 30, 2013 (Unaudited) | Year Ended December 31, 2012 | ||||||
Operations | ||||||||
Net investment income | $ | 31,258,492 | $ | 42,606,880 | ||||
Net realized gain | 7,961,321 | 213,322,470 | ||||||
Net change in unrealized appreciation/depreciation | 297,554,048 | 27,276,473 | ||||||
Net increase in net assets resulting from operations | 336,773,861 | 283,205,823 | ||||||
Capital Transactions | ||||||||
Proceeds from contributions | 2,930,262,663 | 392,443,684 | ||||||
Value of withdrawals | (331,084,272 | ) | (1,066,033,494 | ) | ||||
Net increase (decrease) in net assets derived from capital transactions | 2,599,178,391 | (673,589,810 | ) | |||||
NET ASSETS | ||||||||
Total increase (decrease) in net assets | 2,935,952,252 | (390,383,987 | ) | |||||
Beginning of period | 1,717,932,221 | 2,108,316,208 | ||||||
End of period | $ | 4,653,884,473 | $ | 1,717,932,221 |
FINANCIAL HIGHLIGHTS: S&P 500 Stock Master Portfolio
Six Months Ended June 30, 2013 | For Year Ended December 31, | |||||||||||||||||||||||
(Unaudited) | 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||||||
TOTAL INVESTMENT RETURN | 13.81 | %1 | 15.98 | % | 2.13 | % | 15.06 | % | 26.63 | % | (36.86 | )% | ||||||||||||
Ratios to Average Net Assets |
| |||||||||||||||||||||||
Total expenses | 0.05 | %2 | 0.06 | % | 0.06 | % | 0.05 | % | 0.05 | % | 0.05 | % | ||||||||||||
Total expenses after fees waived | 0.05 | %2 | 0.05 | % | 0.05 | % | 0.05 | % | 0.05 | % | 0.05 | % | ||||||||||||
Net investment income | 2.09 | %2 | 2.22 | % | 2.08 | % | 2.01 | % | 2.35 | % | 2.32 | % | ||||||||||||
SUPPLEMENTAL DATA | ||||||||||||||||||||||||
Net assets, end of period (000) | $ | 4,653,884 | $ | 1,717,932 | $ | 2,108,316 | $ | 2,158,717 | $ | 2,049,062 | $ | 1,690,980 | ||||||||||||
Portfolio turnover | 2 | % | 10 | % | 5 | % | 9 | % | 5 | % | 8 | % |
1 | Aggregate total investment return. |
2 | Annualized. |
The accompanying notes are an integral part of these financial statements. | Appendix | 75 |
Table of Contents
NOTES TO FINANCIAL STATEMENTS: S&P 500 Stock Master Portfolio
(Unaudited)
1. ORGANIZATION
S&P 500 Stock Master Portfolio (the “Master Portfolio”), a series of Master Investment Portfolio (“MIP”), is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a diversified, open-end management investment company. MIP is organized as a Delaware statutory trust.
Reorganization: The Board of Trustees of MIP (the “Board”), and the Board of Master S&P 500 Index Series, a series of Quantitative Master Series LLC (the “Target Master Portfolio”), approved the reorganization of the Target Master Portfolio into the Master Portfolio pursuant to which the Master Portfolio acquired substantially all of the assets and assumed substantially all of the liabilities of the Target Master Portfolio in exchange for beneficial interests of the Master Portfolio (the “Master Reorganization”). The Master Reorganization was approved by the shareholders of each feeder fund that invests its assets in the Target Master Portfolio.
The Target Master Portfolio’s net assets and composition of net assets on April 19, 2013, the valuation date of the reorganization, were as follows:
Net assets | $ | 2,515,780,312 | ||
Investors’ capital | $ | 1,708,282,188 | ||
Net unrealized appreciation (depreciation) | $ | 807,498,124 |
For financial reporting purposes, assets received by the Master Portfolio were recorded at fair value. However, the cost basis of the investments being received from the Target Master Portfolio were carried forward to align ongoing reporting of the Master Portfolio’s realized and unrealized gains and losses for tax purposes.
The net assets of the Master Portfolio before the acquisition were $2,116,282,511. The aggregate net assets of the Master Portfolio immediately after the acquisition amounted to $4,632,062,823. The Target Master Portfolio’s fair value and cost of investments prior to the reorganization were as follows:
Fair Value of Investments | Cost of Investments | |||||||
Target Master Portfolio | $ | 2,451,677,239 | $ | 1,644,179,115 |
The purpose of this transaction was to combine two portfolios managed by BlackRock Fund Advisors (“BFA”) with the same or substantially similar (but not identical) investment objectives, investment policies, strategies, risks and restrictions. The reorganization was a tax-free event and was effective on April 22, 2013.
Assuming the acquisition had been completed on January 1, 2013, the beginning of the fiscal reporting period of the Master Portfolio, the pro forma results of operations for the six months ended June 30, 2013, are as follows:
Ÿ | Net investment loss: $(8,783,633) |
Ÿ | Net realized and change in unrealized gain/loss on investments: $585,586,411 |
Ÿ | Net increase/decrease in net assets resulting from operations: $576,802,778 |
Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of the Target Master Portfolio that have been included in the Master Portfolio’s Statement of Operations since April 22, 2013.
Reorganization costs incurred in connection with the reorganization were expensed by the Master Portfolio and reimbursed by BFA.
2. SIGNIFICANT ACCOUNTING POLICIES
The Master Portfolio’s financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results may differ from those estimates. The following is a summary of the significant accounting policies followed by the Master Portfolio:
Valuation: US GAAP defines fair value as the price the Master Portfolio would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Master Portfolio determines the fair values of its financial instruments at market value using independent dealers or pricing services under policies approved by the Board of Trustees of MIP (the “Board”). The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to provide oversight of the pricing function for the Master Portfolio for all financial instruments.
Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System (“NASDAQ”) are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. For equity investments traded on more than one exchange, the last reported sale price on the exchange where the stock is primarily traded is used. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last available bid (long positions) or ask (short positions) price. If no bid or ask price is available, the prior day’s price will be used, unless it is determined that such prior day’s price no longer reflects the fair value of the security. Financial futures contracts traded on exchanges are valued at their last sale price. Investments in open-end registered investment companies are valued at NAV each business day. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value.
In the event that application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment or if a price is not available, the investment will be valued by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the Global Valuation Committee, or its delegate, seeks to determine the price that the Master Portfolio might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available
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factors that the Global Valuation Committee, or its delegate, deem relevant consistent with the principles of fair value measurement which include the market approach, income approach and/or in the case of recent investments, the cost approach, as appropriate. The market approach generally consists of using comparable market transactions. The income approach generally is used to discount future cash flows to present value and adjust for liquidity as appropriate. These factors include but are not limited to: (i) attributes specific to the investment or asset; (ii) the principal market for the investment or asset; (iii) the customary participants in the principal market for the investment or asset; (iv) data assumptions by market participants for the investment or asset, if reasonably available; (v) quoted prices for similar investments or assets in active markets; and (vi) other factors, such as future cash flows, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, recovery rates, liquidation amounts and/or default rates. Due to the inherent uncertainty of valuations of such investments, the fair values may differ from the values that would have been used had an active market existed. The Global Valuation Committee, or its delegate, employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Master Portfolio’s pricing vendors, a regular review of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values and reviews of any market related activity. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof on a quarterly basis.
Segregation and Collateralization: In cases in which the 1940 Act and the interpretive positions of the Securities and Exchange Commission (“SEC”) require that the Master Portfolio either deliver collateral or segregate assets in connection with certain investments (e.g., financial futures contracts), the Master Portfolio will, consistent with SEC rules and/or certain interpretive letters issued by the SEC, segregate collateral or designate on its books and records cash or liquid securities having a market value at least equal to the amount that would otherwise be required to be physically segregated. Furthermore, based on requirements and agreements with certain exchanges and third party broker-dealers, the Master Portfolio engaging in such transactions may have requirements to deliver/deposit securities to/with an exchange or broker-dealer as collateral for certain investments.
Investment Transactions and Investment Income: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the trade dates). Realized gains and losses on investment transactions are determined on the identified cost basis. Dividend income is recorded on the ex-dividend dates. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Master Portfolio is informed of the ex-dividend date. Under the applicable foreign tax laws, a withholding tax at various rates may be imposed on capital gains, dividends and interest. Upon notification from issuers, some of the dividend income received from a real estate investment trust may be redesignated as a reduction of cost of the related investment and/or realized gain. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized on the accrual basis.
Income Taxes: The Master Portfolio is classified as a partnership for federal income tax purposes. As such, each investor in the Master
Portfolio is treated as the owner of its proportionate share of net assets, income, expenses and realized and unrealized gains and losses of the Master Portfolio. Therefore, no federal income tax provision is required. It is intended that the Master Portfolio’s assets will be managed so an investor in the Master Portfolio can satisfy the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended.
The Master Portfolio files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Master Portfolio’s US federal tax returns remains open for each of the four years ended December 31, 2012. The statutes of limitations on the Master Portfolio’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. Management does not believe there are any uncertain tax positions that require recognition of a tax liability.
Other: Expenses directly related to the Master Portfolio are charged to the Master Portfolio. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods.
3. SECURITIES AND OTHER INVESTMENTS
Preferred Stock: The Master Portfolio may invest in preferred stock. Preferred stock has a preference over common stock in liquidation (and generally in receiving dividends as well) but is subordinated to the liabilities of the issuer in all respects. As a general rule, the market value of preferred stock with a fixed dividend rate and no conversion element varies inversely with interest rates and perceived credit risk, while the market price of convertible preferred stock generally also reflects some element of conversion value. Because preferred stock is junior to debt securities and other obligations of the issuer, deterioration in the credit quality of the issuer will cause greater changes in the value of a preferred stock than in a more senior debt security with similar stated yield characteristics. Unlike interest payments on debt securities, preferred stock dividends are payable only if declared by the issuer’s board of directors. Preferred stock also may be subject to optional or mandatory redemption provisions.
Short Sales: The Master Portfolio may enter into short sale transactions in which the Master Portfolio sells a security it does not hold in anticipation of a decline in the market price of that security. When the Master Portfolio makes a short sale, it will borrow the security sold short and deliver the security to the counterparty to which it sold the security short. An amount equal to the proceeds received by the Master Portfolio is reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the market value of the short sale. The Master Portfolio is required to repay the counterparty any dividends received on the security sold short, which is shown as dividend expense in the Statement of Operations. The Master Portfolio may pay a fee on the assets borrowed from the counterparty, which is shown as stock loan fees in the Statement of Operations. The Master Portfolio maintains a segregated account of securities or deposits cash with the broker-dealer as collateral for the short sales. The Master Portfolio may receive interest on the cash collateral deposited with the broker-dealer. The Master Portfolio is exposed to market risk based on the amount, if any, that the market value of the security increases beyond the market value at which the position was sold. Thus, a short sale of a security involves the risk that instead of declining, the price of the security sold
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short will rise. The short sale of securities involves the possibility of a theoretically unlimited loss since there is a theoretically unlimited potential for the market price of the security sold short to increase. A gain, limited to the price at which the Master Portfolio sold the security short, or a loss, unlimited as to the dollar amount, will be recognized upon the termination of a short sale if the market price is either less than or greater than the proceeds originally received. There is no assurance the Master Portfolio will be able to close out a short position at a particular time or at an acceptable price.
Securities Lending: The Master Portfolio may lend securities to approved borrowers, such as banks, brokers and other financial institutions. The borrower pledges cash, securities issued or guaranteed by the US government or irrevocable letters of credit issued by a bank as collateral. The initial collateral received by the Master Portfolio has a value of at least 102% of the current value of the loaned securities for securities traded on US exchanges and a value of at least 105% for all other securities. The collateral is maintained thereafter in an amount equal to at least 100% of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Master Portfolio and any additional required collateral is delivered to the Master Portfolio on the next business day. Securities lending income, as disclosed in the Statement of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to the securities lending agent. During the term of the loan, the Master Portfolio earns dividend or interest income on the securities loaned but does not receive interest income on the securities received as collateral. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions.
The market value of securities on loan and the value of the related collateral are shown separately in the Statement of Assets and Liabilities as a component of investments at value, and collateral on securities loaned at value, respectively. The cash collateral invested by the securities lending agent, BlackRock Institutional Trust Company, N.A. (“BTC”), is disclosed in the Schedule of Investments.
Master Securities Lending Agreements (“MSLA”) provide the right, in the event of default (including bankruptcy or insolvency) for the non-defaulting party to liquidate the collateral and calculate a net exposure to the defaulting party or request additional collateral. In the event that a borrower defaults, the Master Portfolio, as lender, would offset the market value of the collateral received against the market value of the securities loaned. The value of the collateral is typically greater than that of the market value of the securities loaned, leaving the lender with a net amount payable to the defaulting party. Under the MSLA, the Master Portfolio can reinvest cash collateral, or upon an event of default, resell or repledge the collateral, and the borrower can resell or repledge the loaned securities.
The following table is a summary of the Master Portfolio’s open securities lending agreements by counterparty which are subject to offset under MSLA as of June 30, 2013:
Counterparty | Securities Loaned at Value | Fair Value of Non-cash Collateral Received1 | Cash Collateral Received1 | Net Amount | ||||||||||||
Barclays Capital, Inc. | $ | 2,624,917 | — | $ | (2,624,917 | ) | — | |||||||||
BNP Paribas Prime Brokerage, Inc. | 184,745 | — | (184,745 | ) | — | |||||||||||
Citigroup Global Markets, Inc. | 6,772,737 | — | (6,772,737 | ) | — | |||||||||||
Credit Suisse Securities (USA) LLC | 347,255 | — | (347,255 | ) | — | |||||||||||
Deutsche Bank Securities | 3,031,119 | — | (3,031,119 | ) | — | |||||||||||
Goldman Sachs & Co. | 30,016,904 | — | (30,016,904 | ) | — | |||||||||||
Jefferies LLC | 2,406,332 | — | (2,406,332 | ) | — | |||||||||||
JP Morgan Clearing Corp. | 10,248,556 | — | (10,248,556 | ) | — | |||||||||||
Merrill Lynch, Pierce, Fenner & Smith Inc. | 19,457,855 | — | (19,457,855 | ) | — | |||||||||||
Morgan Stanley & Co. LLC | 1,249,885 | — | (1,249,885 | ) | — | |||||||||||
National Financial Services LLC | 3,944,360 | — | (3,944,360 | ) | — | |||||||||||
State Street Corp. | 5,122,864 | — | (5,122,864 | ) | — | |||||||||||
Timber Hill LLC | 1,854,873 | — | (1,854,873 | ) | — | |||||||||||
UBS Securities LLC | 9,820,135 | — | (9,820,135 | ) | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 97,082,537 | — | $ | (97,082,537 | ) | — | |||||||||
|
|
|
|
|
|
|
|
1 | Excess of collateral received from the individual counterparty is not shown for financial reporting purposes. Collateral with a value of $99,643,557 has been received in connection with securities lending transactions. |
The risks of securities lending also include the risk that the borrower may not provide additional collateral when required or may not return the securities when due. To mitigate this risk, the Master Portfolio benefits from a borrower default indemnity provided by BlackRock, Inc. (“BlackRock”). BlackRock’s indemnity allows for full replacement of securities lent. The Master Portfolio also could suffer a loss if the value of an investment purchased with cash collateral falls below the market value of loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received. During the six months ended June 30, 2013, any securities on loan were collateralized by cash.
4. DERIVATIVE FINANCIAL INSTRUMENTS
The Master Portfolio engages in various portfolio investment strategies using derivative contracts both to increase the return of the Master Portfolio and/or to economically hedge, or protect, its exposure to certain risks such as equity risks. These contracts may be transacted on an exchange.
Financial Futures Contracts: The Master Portfolio purchases or sells financial futures contracts and options on financial futures contracts to gain exposure to, or economically hedge against, changes in the value of equity securities (equity risk). Financial futures contracts are agreements between the Master Portfolio and counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and at a specified date. Depending on the terms of the particular contract, financial futures contracts are settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash settlement amount on the settlement date. Upon entering into a financial futures contract, the Master Portfolio is required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on a contract’s size and
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risk profile. The initial margin deposit must then be maintained at an established level over the life of the contract. Securities deposited as initial margin are designated on the Schedule of Investments and cash deposited is recorded on the Statement of Assets and Liabilities as cash pledged for financial futures contracts. Pursuant to the contract, the Master Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as variation margin and are recorded by the Master Portfolio as unrealized appreciation or depreciation. When the contract is closed, the Master Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The use of financial futures contracts involves the risk of an imperfect correlation in the movements in the price of financial futures contracts, interest or foreign currency exchange rates and the underlying assets.
The following is a summary of the Master Portfolio’s derivative financial instruments categorized by risk exposure:
Fair Values of Derivative Financial Instruments as of June 30, 2013 | ||||||
Derivative Liabilities | ||||||
Statement of Assets and Liabilities Location | Value | |||||
Equity contracts | Net unrealized appreciation/ depreciation1 | $ | 450,962 |
1 | Includes cumulative appreciation/depreciation on financial futures contracts as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
The Effect of Derivative Financial Instruments in the Statement of Operations Six Months Ended June 30, 2013 | ||||
Net Realized Gain (Loss) From | ||||
Equity contracts: | ||||
Financial futures contracts | $ | 11,345,478 | ||
Net Change in Unrealized Appreciation/Depreciation on | ||||
Equity contracts: | ||||
Financial futures contracts | $ | (842,600 | ) |
For the six months ended June 30, 2013, the average quarterly balances of outstanding derivative financial instruments were as follows:
Financial futures contracts: | ||||
Average number of contracts purchased | 404 | |||
Average notional value of contracts purchased | $ | 31,566,540 |
Counterparty Credit Risk: A derivative contract may suffer a mark to market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.
With futures, there is less counterparty credit risk to the Master Portfolio since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, the
credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, the Master Portfolio does not have a contractual right to offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency) of the clearing broker or clearinghouse. Additionally, credit risk exists in exchange traded futures with respect to initial variation margin that is held in a broker’s customer accounts. While brokers are required to segregate customer margin from their own assets, in the event that a broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the broker for all its clients, typically the shortfall will be allocated on a pro rata basis across all the broker’s customers, potentially resulting in losses to the Master Portfolio.
5. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
The PNC Financial Services Group, Inc. (“PNC”) is the largest stockholder and an affiliate, for 1940 Act purposes, of BlackRock, Inc. (“BlackRock”).
MIP, on behalf of the Master Portfolio, entered into an Investment Advisory Agreement (the “Investment Advisory Agreement”) with BFA, the Master Portfolio’s investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory services. BFA is responsible for the management of the Master Portfolio’s investments and provides the necessary personnel, facilities, equipment and certain other services necessary to the operations of the Master Portfolio. For such services, the Master Portfolio pays BFA a monthly fee based on a percentage of the Master Portfolio’s average daily net assets at an annual rate of 0.05%.
MIP entered into an Administration Agreement with BlackRock Advisors, LLC (“BAL”), which has agreed to provide general administration services (other than investment advice and related portfolio activities). BAL may delegate certain of its administration duties to sub-administrators. BAL, in consideration thereof, has agreed to bear all of the Master Portfolio’s and MIP’s ordinary operating expenses excluding, generally, investment advisory fees, distribution fees, brokerage and other expenses related to the execution of portfolio transactions, extraordinary expenses and certain other expenses which are borne by the Master Portfolio.
BAL is not entitled to compensation for providing administration services to the Master Portfolio, for so long as BAL is entitled to compensation for providing administration services to corresponding feeder funds that invest substantially all of their assets in the Master Portfolio, or BAL (or an affiliate) receives investment advisory fees from the Master Portfolio.
The fees and expenses of MIP’s trustees who are not “interested persons” of MIP, as defined in the 1940 Act (“Independent Trustees”), counsel to the Independent Trustees and MIP’s independent registered public accounting firm (together, the “independent expenses”) are paid directly by the Master Portfolio. BFA has contractually agreed to cap the expenses of the Master Portfolio at the rate at which the Master Portfolio pays an advisory fee to BFA by providing an offsetting credit against the investment advisory fees paid by the Master Portfolio in an amount equal to the independent expenses. This contractual waiver is effective through April 30, 2014. The amount of the waiver, if any, is shown as fees waived in the Statement of Operations.
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MIP, on behalf of the Master Portfolio, received an exemptive order from the SEC permitting it, among other things, to pay an affiliated securities lending agent a fee based on a share of the income derived from the securities lending activities and has retained BTC, an affiliate of BFA as the securities lending agent. BTC may, on behalf of the Master Portfolio, invest cash collateral received by the Master Portfolio for such loans, in a private investment company managed by the BFA or in registered money market funds advised by the Manager or its affiliates. The market value of securities on loan and the value of the related collateral, if applicable, is shown in the Statement of Assets and Liabilities as securities loaned at value and collateral on securities loaned at value, respectively. The cash collateral invested by BTC, if any, is disclosed in the Schedule of Investments. Securities lending income is equal to the total of income earned from the reinvestment of cash collateral, net of rebates paid to, or fees paid by, borrowers of securities. The Master Portfolio retains 65% of securities lending income and pays a fee to BTC equal to 35% of such income. The Master Portfolio benefits from a borrower default indemnity provided by BlackRock. As securities lending agent, BTC bears all operational costs directly related to securities lending as well as the cost of borrower default indemnification. BTC does not receive any fees for managing the cash collateral. The share of income earned by the Master Portfolio is shown as securities lending — affiliated — net in the Statement of Operations. For the six months ended June 30, 2013, BTC received $82,762 in securities lending agent fees related to securities lending activities for the Master Portfolio.
Certain officers and/or trustees of MIP are officers and/or directors of BlackRock or its affiliates.
The Master Portfolio may purchase securities from, or sell securities to, an affiliated fund provided the affiliation is due solely to having a common investment adviser, common officers, or common trustees. For the six months ended June 30, 2013, the purchase and sale transactions from an affiliated fund in compliance with Rule 17a-7 of the 1940 Act were as follows:
Purchases | $ | 18,872,215 | ||
Sales | $ | 3,526,900 |
6. PURCHASES AND SALES
Purchases and sales of investments, excluding short-term securities, for the six months ended June 30, 2013, were $267,138,826 and $68,431,854, respectively.
7. BANK BORROWINGS
The Master Portfolio, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a 364-day, $800 million credit agreement with a group of lenders, under
which the Master Portfolio may borrow to fund shareholder redemptions. The agreement expires in April 2014. Excluding commitments designated for a certain individual fund, other Participating Funds, including the Master Portfolio, can borrow up to an aggregate commitment amount of $500 million, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.065% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) the one-month LIBOR plus 0.80% per annum or (b) the Fed Funds rate plus 0.80% per annum on amounts borrowed. Participating Funds paid administration and arrangement fees, which, along with commitment fees, were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. The Master Portfolio did not borrow under the credit agreement during the six months ended June 30, 2013.
8. MARKET AND CREDIT RISK
In the normal course of business, the Master Portfolio invests in securities and enters into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Master Portfolio may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Master Portfolio; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Master Portfolio may be exposed to counterparty credit risk, or the risk that an entity with which the Master Portfolio has unsettled or open transactions may fail to or be unable to perform on its commitments. The Master Portfolio manages counterparty credit risk by entering into transactions only with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Master Portfolio to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Master Portfolio’s exposure to market, issuer and counterparty credit risks with respect to these financial assets is generally approximated by their value recorded in the Statement of Assets and Liabilities, less any collateral held by the Master Portfolio.
9. SUBSEQUENT EVENTS
Management has evaluated the impact of all subsequent events on the Master Portfolio through the date the financial statements were issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.
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S&P 500 Stock Master Portfolio
Disclosure of Investment Advisory Agreement
The Board of Trustees of Master Investment Portfolio (the “Master Fund”) met in person on April 11, 2013 (the “April Meeting”) and May 21-22, 2013 (the “May Meeting”) to consider the approval of the Master Fund’s investment advisory agreement (the “Agreement”) with BlackRock Fund Advisors (“BlackRock”), the Master Fund’s investment advisor, on behalf of S&P 500 Stock Master Portfolio (the “Master Portfolio”), a series of the Master Fund. BlackRock S&P 500 Stock Fund (the “Portfolio”), a series of BlackRock Funds III (the “Fund”), is a “feeder” fund that invests all of its investable assets in the Master Portfolio. Accordingly, the Board of Trustees of the Fund also considered the approval of the Agreement with respect to the Master Portfolio. For simplicity, (a) the Board of Trustees of the Master Fund and the Board of Trustees of the Fund are referred to herein collectively as the “Board,” and the members are referred to as “Board Members,” and (b) the shareholders of the Portfolio and the interest holders of the Master Portfolio are referred to as “shareholders.”
Activities and Composition of the Board: The Board consists of fourteen individuals, twelve of whom are not “interested persons” of the Master Fund or the Fund as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Board Members”). The Board Members are responsible for the oversight of the operations of the Master Fund or the Fund, as pertinent, and perform the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Board Members have retained independent legal counsel to assist them in connection with their duties. The Co-Chairs of the Board are each Independent Board Members. The Board has established five standing committees: an Audit Committee, a Governance and Nominating Committee, a Compliance Committee, a Performance Oversight and Contract Committee and an Executive Committee, each of which is chaired by an Independent Board Member and composed of Independent Board Members (except for the Executive Committee, which also has one interested Board Member).
The Agreement: Pursuant to the 1940 Act, the Board is required to consider the continuation of the Agreement on an annual basis. The Board has four quarterly meetings per year, each extending over two days, and a fifth one-day meeting to consider specific information surrounding the consideration of renewing the Agreement. In connection with this process, the Board assessed, among other things, the nature, scope and quality of the services provided to the Master Portfolio and the Portfolio by BlackRock, its personnel and its affiliates, including investment management, administrative and shareholder services, oversight of fund accounting and custody, marketing services, risk oversight, compliance and assistance in meeting applicable legal and regulatory requirements.
The Board, acting directly and through its committees, considers at each of its meetings, and from time to time as appropriate, factors that are relevant to its annual consideration of the renewal of the Agreement, including the services and support provided by BlackRock to the Master Portfolio, the Portfolio and their shareholders. Among the matters the Board considered were: (a) investment performance for one-year, three-year, five-year and/or since inception periods, as applicable, against peer funds, and applicable benchmarks, if any, as well as senior management’s and portfolio managers’ analysis of the reasons for any over performance or underperformance against its peers and/or benchmark, as applicable; (b) fees, including advisory, administration, if applicable, and other amounts paid to BlackRock and
its affiliates by the Master Portfolio and/or the Portfolio for services, such as marketing and distribution, call center and fund accounting; (c) the Master Portfolio’s and/or the Portfolio’s operating expenses and how BlackRock allocates expenses to the Master Portfolio and the Portfolio; (d) the resources devoted to, risk oversight of, and compliance reports relating to, implementation of the Master Portfolio’s and the Portfolio’s investment objective, policies and restrictions; (e) the Master Fund’s and the Fund’s compliance with its respective Code of Ethics and other compliance policies and procedures; (f) the nature, cost and character of noninvestment management services provided by BlackRock and its affiliates; (g) BlackRock’s and other service providers’ internal controls and risk and compliance oversight mechanisms; (h) BlackRock’s implementation of the proxy voting policies approved by the Board; (i) the use of brokerage commissions and execution quality of portfolio transactions; (j) BlackRock’s implementation of the Master Fund’s and/or the Fund’s valuation and liquidity procedures; (k) an analysis of management fees for products with similar investment objectives across the open-end fund, exchange-traded fund (“ETF”), closed-end fund and institutional account product channels, as applicable; (l) BlackRock’s compensation methodology for its investment professionals and the incentives it creates; and (m) periodic updates on BlackRock’s business.
The Board has engaged in an ongoing strategic review with BlackRock of opportunities to consolidate funds and of BlackRock’s commitment to investment performance. In addition, the Board requested and BlackRock provided an analysis of fair valuation and stale pricing policies. BlackRock also furnished information to the Board in response to specific questions. These questions covered issues such as BlackRock’s profitability, investment performance and management fee levels. The Board further considered the importance of: (i) organizational and structural variables to investment performance; (ii) rates of portfolio turnover; (iii) BlackRock’s performance accountability for portfolio managers; (iv) marketing support for the funds; (v) services provided to the Master Portfolio and the Portfolio by BlackRock affiliates; and (vi) BlackRock’s oversight of relationships with third party service providers.
BOARD CONSIDERATIONS IN APPROVING THE AGREEMENT
The Approval Process: Prior to the April Meeting, the Board requested and received materials specifically relating to the Agreement. The Board is engaged in a process with its independent legal counsel and BlackRock to review the nature and scope of the information provided to better assist its deliberations. The materials provided in connection with the April Meeting included (a) information independently compiled and prepared by Lipper, Inc. (“Lipper”) on fees and expenses of the Master Portfolio and the Portfolio, as applicable, as compared with a peer group of funds as determined by Lipper (“Expense Peers”) and the investment performance of the Portfolio as compared with a peer group of funds as determined by Lipper1 as well as the gross investment performance of the Portfolio as compared with its benchmark; (b) information on the profits realized by BlackRock and its affiliates pursuant to the Agreement and a discussion of fall-out benefits to BlackRock and its affiliates; (c) a general analysis provided by BlackRock concerning investment management fees charged to other clients, such as institutional clients, ETFs and closed-end funds, under similar investment mandates, as well as the performance of such
1 | Lipper ranks funds in quartiles, ranging from first to fourth, where first is the most desirable quartile position and fourth is the least desirable. |
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S&P 500 Stock Master Portfolio
Disclosure of Investment Advisory Agreement (continued)
other clients, as applicable; (d) review of non-management fees; (e) the existence, impact and sharing of potential economies of scale; (f) a summary of aggregate amounts paid by the Master Portfolio and/or the Portfolio to BlackRock; (g) sales and redemption data regarding the Portfolio’s shares; and (h) if applicable, a comparison of management fees to similar BlackRock open-end funds, as classified by Lipper.
At the April Meeting, the Board reviewed materials relating to its consideration of the Agreement. As a result of the discussions that occurred during the April Meeting, and as a culmination of the Board’s year-long deliberative process, the Board presented BlackRock with questions and requests for additional information. BlackRock responded to these requests with additional written information in advance of the May Meeting.
At the May Meeting, the Board of the Master Fund, including the Independent Board Members, unanimously approved the continuation of the Agreement between BlackRock and the Master Fund with respect to the Master Portfolio for a one-year term ending June 30, 2014. The Board of the Fund, including the Independent Board Members, also considered the continuation of the Agreement with respect to the Master Portfolio and found the Agreement to be satisfactory. In approving the continuation of the Agreement, the Board of the Master Fund considered: (a) the nature, extent and quality of the services provided by BlackRock; (b) the investment performance of the Master Portfolio, the Portfolio and BlackRock; (c) the advisory fee and the cost of the services and profits to be realized by BlackRock and its affiliates from their relationship with the Master Portfolio and the Portfolio; (d) the Fund’s costs to investors compared to the costs of Expense Peers and performance compared to the relevant performance comparison as previously discussed; (e) economies of scale; (f) fall-out benefits to BlackRock as a result of its relationship with the Master Portfolio and the Portfolio; and (g) other factors deemed relevant by the Board Members.
The Board also considered other matters it deemed important to the approval process, such as payments made to BlackRock or its affiliates relating to the distribution of Portfolio shares and securities lending, services related to the valuation and pricing of portfolio holdings of the Master Portfolio, direct and indirect benefits to BlackRock and its affiliates from their relationship with the Master Portfolio and the Portfolio and advice from independent legal counsel with respect to the review process and materials submitted for the Board’s review. The Board noted the willingness of BlackRock personnel to engage in open, candid discussions with the Board. The Board did not identify any particular information as determinative, and each Board Member may have attributed different weights to the various items considered.
A. Nature, Extent and Quality of the Services Provided by BlackRock: The Board, including the Independent Board Members, reviewed the nature, extent and quality of services provided by BlackRock, including the investment advisory services and the resulting performance of the Portfolio. Throughout the year, the Board compared the Portfolio’s performance to the performance of a comparable group of mutual funds and/or the performance of a relevant benchmark, if any. The Board met with BlackRock’s senior management personnel responsible for investment operations, including the senior investment
officers. The Board also reviewed the materials provided by the Master
Portfolio’s portfolio management team discussing the Master Portfolio’s performance and the Master Portfolio’s investment objective, strategies and outlook.
The Board considered, among other factors, with respect to BlackRock: the number, education and experience of investment personnel generally and the Master Portfolio’s portfolio management team; investments by portfolio managers in the funds they manage; portfolio trading capabilities; use of technology; commitment to compliance; credit analysis capabilities; risk analysis and oversight capabilities; and the approach to training and retaining portfolio managers and other research, advisory and management personnel. The Board engaged in a review of BlackRock’s compensation structure with respect to the Master Portfolio’s portfolio management team and BlackRock’s ability to attract and retain high-quality talent and create performance incentives.
In addition to advisory services, the Board considered the quality of the administrative and other non-investment advisory services provided to the Master Portfolio and the Portfolio. BlackRock and its affiliates provide the Master Portfolio and the Portfolio with certain administrative, shareholder and other services (in addition to any such services provided to the Master Portfolio and the Portfolio by third parties) and officers and other personnel as are necessary for the operations of the Master Portfolio and the Portfolio. In particular, BlackRock and its affiliates provide the Master Portfolio and the Portfolio with the following administrative services, including, among others: (i) preparing disclosure documents, such as the prospectus, the summary prospectus (as applicable), the statement of additional information and periodic shareholder reports; (ii) assisting with daily accounting and pricing; (iii) overseeing and coordinating the activities of other service providers; (iv) organizing Board meetings and preparing the materials for such Board meetings; (v) providing legal and compliance support; (vi) furnishing analytical and other support to assist the Board in its consideration of strategic issues such as the merger or consolidation of certain open-end funds; and (vii) performing other administrative functions necessary for the operation of the Master Portfolio and the Portfolio, such as tax reporting, fulfilling regulatory filing requirements and call center services. The Board reviewed the structure and duties of BlackRock’s fund administration, shareholder services, legal and compliance departments and considered BlackRock’s policies and procedures for assuring compliance with applicable laws and regulations.
B. The Investment Performance of the Master Portfolio, the Portfolio and BlackRock: The Board, including the Independent Board Members, also reviewed and considered the performance history of the Master Portfolio and the Portfolio, as applicable. The Board noted that the Portfolio’s investment results correspond directly to the investment results of the Master Portfolio. In preparation for the April Meeting, the Board worked with its independent legal counsel, BlackRock and Lipper to develop a template for, and was provided with, reports independently prepared by Lipper, which included a comprehensive analysis of the Portfolio’s performance. The Board also reviewed a narrative and statistical analysis of the Lipper data that was prepared by BlackRock, which analyzed various factors that affect Lipper’s rankings. In connection with its review, the Board received and reviewed information regarding the investment performance of the Portfolio as compared to other funds in its applicable Lipper category
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S&P 500 Stock Master Portfolio
Disclosure of Investment Advisory Agreement (continued)
and the gross investment performance of the Portfolio as compared with its benchmark. The Board was provided with a description of the methodology used by Lipper to select peer funds and periodically meets with Lipper representatives to review its methodology. The Board and its Performance Oversight and Contract Committee regularly review, and meet with Master Portfolio management to discuss, the performance of the Master Portfolio and the Portfolio, as applicable, throughout the year.
The Board noted that the Portfolio’s gross performance (before expenses and fees), as agreed upon by the Board, was within tolerance of its benchmark during the one- and three-year periods reported, but was out of tolerance of its benchmark during the five-year period reported. BlackRock believes that gross performance relative to the benchmark is an appropriate performance metric for the Portfolio. The Board noted that BlackRock has recently made, and continues to make, changes to the organization of BlackRock’s overall portfolio management structure designed to result in strengthened leadership teams.
C. Consideration of the Advisory/Management Fees and the Cost of the Services and Profits to be Realized by BlackRock and its Affiliates from their Relationship with the Master Portfolio and the Portfolio: The Board, including the Independent Board Members, reviewed the Master Portfolio’s contractual advisory fee rate compared with the other funds in the Portfolio’s Lipper category. The contractual advisory fee rate is shown before taking into account any reimbursements or fee waivers. The Board also compared the Portfolio’s total net operating expense ratio, as well as the Master Portfolio’s actual advisory fee rate, to those of other funds in the Portfolio’s Lipper category. The total net operating expense ratio and actual management fee rate both give effect to any expense reimbursements or fee waivers that benefit the funds. The Board considered the services provided and the fees charged by BlackRock to other types of clients with similar investment mandates, including institutional accounts.
The Board received and reviewed statements relating to BlackRock’s financial condition. The Board was also provided with a profitability analysis that detailed the revenues earned and the expenses incurred by BlackRock for services provided to the Master Portfolio and the Portfolio. The Board reviewed BlackRock’s profitability with respect to the Master Portfolio and the Portfolio, as applicable, and other funds the Board currently oversees for the year ended December 31, 2012 compared to available aggregate profitability data provided for the two prior years. The Board reviewed BlackRock’s profitability with respect to certain other fund complexes managed by BlackRock and/or its affiliates. The Board reviewed BlackRock’s assumptions and methodology of allocating expenses in the profitability analysis, noting the inherent limitations in allocating costs among various advisory products. The Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers and expense reimbursements by BlackRock, the types of funds managed, precision of expense allocations and business mix. As a result, comparing profitability is difficult.
The Board noted that, in general, individual fund or product line profitability of other advisors is not publicly available. The Board reviewed BlackRock’s overall operating margin, in general, compared to that of certain other publicly-traded asset management firms. The Board considered the differences between BlackRock and these other firms, including the contribution of technology at BlackRock, BlackRock’s expense management and the relative product mix.
In addition, the Board considered the cost of the services provided to the Master Portfolio and the Portfolio by BlackRock, and BlackRock’s and its affiliates’ profits relating to the management and distribution of the Master Portfolio and the Portfolio and the other funds advised by BlackRock and its affiliates. As part of its analysis, the Board reviewed BlackRock’s methodology in allocating its costs to the management of the Master Portfolio and the Portfolio. The Board also considered whether BlackRock has the financial resources necessary to attract and retain high quality investment management personnel to perform its obligations under the Agreement and to continue to provide the high quality of services that is expected by the Board.
The Board noted that the Master Portfolio’s contractual advisory fee rate ranked in the first quartile relative to the Portfolio’s Expense Peers. The Board noted that BlackRock and its affiliates have contractually agreed to reimburse or otherwise compensate the Master Portfolio/Portfolio for the fees and expenses of the Independent Board Members, counsel to the Independent Board Members and the Master Portfolio’s/Portfolio’s independent registered public accounting firm.
D. Economies of Scale: The Board, including the Independent Board Members, considered the extent to which economies of scale might be realized as the assets of the Master Portfolio and the Portfolio increase, as well as the existence of expense caps, as applicable. The Board also considered the extent to which the Master Portfolio and the Portfolio benefit from such economies and whether there should be changes in the advisory fee rate or breakpoint structure in order to enable the Master Portfolio and the Portfolio to participate in these economies of scale, for example through the use of breakpoints in the advisory fee based upon the asset level of the Master Portfolio. In its consideration, the Board took into account the existence of any expense caps and further considered the continuation and/or implementation, as applicable, of such caps.
E. Other Factors Deemed Relevant by the Board Members: The Board, including the Independent Board Members, also took into account other ancillary or “fall-out” benefits that BlackRock or its affiliates may derive from their respective relationships with the Master Portfolio and the Portfolio, both tangible and intangible, such as BlackRock’s ability to leverage its investment professionals who manage other portfolios and risk management personnel, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates as service providers to the Master Portfolio and the Portfolio, including for administrative, distribution, securities lending and cash management services. The Board also considered BlackRock’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations. The Board also noted that BlackRock may use and benefit from third party research obtained by soft dollars generated by certain registered fund transactions to assist in managing all or a number of its other client accounts. The Board further noted that it had considered the investment by BlackRock’s funds in ETFs without any offset against the management fees payable by the funds to BlackRock.
In connection with its consideration of the Agreement, the Board also received information regarding BlackRock’s brokerage and soft dollar practices. The Board received reports from BlackRock which included information on brokerage commissions and trade execution practices throughout the year.
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S&P 500 Stock Master Portfolio
Disclosure of Investment Advisory Agreement (continued)
The Board noted the competitive nature of the open-end fund marketplace, and that shareholders are able to redeem their Portfolio shares if they believe that the Portfolio’s and/or the Master Portfolio’s fees and expenses are too high or if they are dissatisfied with the performance of the Portfolio.
CONCLUSION
The Board of the Master Fund, including the Independent Board Members, unanimously approved the continuation of the Agreement between BlackRock and the Master Fund with respect to the Master Portfolio for a one-year term ending June 30, 2014. Based upon its evaluation of all of the aforementioned factors in their totality, the Board of the Master Fund, including the Independent Board Members, was satisfied that the terms of the Agreement were fair and reasonable and in the best interest of the Master Portfolio and its shareholders. The Board of the Fund, including the Independent Board Members, also considered the continuation of the Agreement with respect to the Master Portfolio and found the Agreement to be satisfactory. In arriving at its decision to approve the Agreement, the Board of the Master Fund did not identify any single factor or group of factors as all-important or controlling, but considered all factors together, and different Board Members may have attributed different weights to the various factors considered. The Independent Board Members were also assisted by the advice of independent legal counsel in making this determination. The contractual fee arrangements for the Master Portfolio reflect the results of several years of review by the Board Members and predecessor Board Members, and discussions between such Board Members (and predecessor Board Members) and BlackRock. As a result, the Board Members’ conclusions may be based in part on their consideration of these arrangements in prior years.
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S&P 500 Stock Master Portfolio
Officers and Trustees
Ronald W. Forbes, Co-Chairman of the Board and Trustee
Rodney D. Johnson, Co-Chairman of the Board and Trustee
Paul L. Audet, Trustee
David O. Beim, Trustee
Henry Gabbay, Trustee
Dr. Matina S. Horner, Trustee
Herbert I. London, Trustee
Ian A. MacKinnon, Trustee
Cynthia A. Montgomery, Trustee
Joseph P. Platt, Trustee
Robert C. Robb, Jr., Trustee
Toby Rosenblatt, Trustee
Kenneth L. Urish, Trustee
Frederick W. Winter, Trustee
John M. Perlowski, President and Chief Executive Officer
Richard Hoerner, CFA, Vice President
Brendan Kyne, Vice President
Christopher Stavrakos, CFA, Vice President
Neal Andrews, Chief Financial Officer
Jay Fife, Treasurer
Brian Kindelan, Chief Compliance Officer and Anti-Money Laundering Officer
Benjamin Archibald, Secretary
Appendix | 85 |
Table of Contents
Homestead Funds
4301 Wilson Blvd.
Arlington, VA 22203
1-800-258-3030
www.homesteadfunds.com
This report is authorized for distribution to
shareholders and others who have received
a copy of the prospectus.
Distributor: RE Investment Corporation.
Table of Contents
Item 2. Code of Ethics.
Not required in this filing.
Item 3. Audit Committee Financial Expert.
Not required in this filing.
Item 4. Principal Accountant Fees and Services.
Not required in this filing.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
(a) | The registrant’s schedule of investments in unaffiliated issuers is included in the report to shareholders under Item 1 of this Form N-CSR. |
(b) | Not applicable. |
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures.
(a) | Disclosure Controls and Procedures. The registrant’s principal executive officer and principal financial officer concluded that the registrant’s Disclosure Controls and Procedures are effective based on their evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report. |
(b) | Internal Control. There were no changes in registrant’s internal control over financial reporting that occurred during the registrant’s second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
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Item 12. Exhibits.
(a)(1) | Not required with this filing. |
(a)(2) | A separate certification for the principal executive officer and principal financial officer of the registrant, as required by Rule 30a-2(a) under the Investment Company Act of 1940, is filed herewith. |
(a)(3) | Not applicable. |
(b) | A certification by the registrant’s principal executive officer and principal financial officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(b) under the Investment Company Act of 1940, is attached hereto. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
HOMESTEAD FUNDS, INC.
| ||
By: | /s/ Peter R. Morris | |
Peter R. Morris President, Chief Executive Officer and Director |
Date: September 5, 2013
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Peter R. Morris | |
Peter R. Morris President, Chief Executive Officer and Director |
Date September 5, 2013
By: | /s/ Amy M. DiMauro | |
Amy M. DiMauro Treasurer |
Date: September 5, 2013