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 811-07254
Johnson Mutual Funds Trust
(Exact name of registrant as specified in charter)
3777 West Fork Road, Cincinnati, Ohio 45247
(Address of principal executive offices) (Zip code)
Marc E. Figgins, CFO, 3777 West Fork Road, Cincinnati, Ohio 45247
(Name and address of agent for service)
Registrant's telephone number, including area code (513) 661-3100
Date of fiscal year end:12/31
Date of reporting period:6/30/16
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
Semi-Annual
Report
June 30, 2016
(Unaudited)
t | Johnson Equity Income Fund |
t | Johnson Growth Fund |
t | Johnson Opportunity Fund |
t | Johnson Realty Fund |
t | Johnson International Fund |
t | Johnson Fixed Income Fund |
t | Johnson Municipal Income Fund |
Johnson Mutual Funds Trust
3777 West Fork Road | Cincinnati, OH | 45247
(513) 661-3100 (800) 541-0170 fax (513) 661-4901
www.johnsonmutualfunds.com
Table of Contents
August 2016
We are pleased to present you with the Johnson Mutual Funds’ June 30, 2016 Semi-Annual Report. On the following pages, we have provided commentary on the performance of each of the Funds for the first half of 2016 as well as the relative performance compared to an appropriate index. The remainder of the report provides the holdings of each Johnson Mutual Fund as well as other financial data and notes.
Britain’s vote to leave the European Union shocked the world in late June, but the stock market declines that resulted were short-lived. Stocks rebounded around the world as investors judged the initial response to the vote to be an overreaction. The S&P 500 Index, NASDAQ Composite, and the Dow Jones Industrial Average all have reached record highs this year. Bonds have also enjoyed a strong year thus far. Economic data, currency movements, investor interest in safer assets, and central bank activity have all placed downward pressure on interest rates both in the U.S. and overseas. Incredibly, roughly one-third of developed country government bonds now trade at negative yields, representing approximately $11 trillion worth of debt.
These astounding figures are evidence of the efforts of central banks to stimulate a weak global economy. In addition to low-interest-rate policies, central banks are also involved in quantitative easing, which has now become commonplace. In Japan and Europe, some are even advocating the implementation of “helicopter money.” This term was popularized by former Federal Reserve (Fed) chairman Ben Bernanke and refers to an aggressive method of stimulus in which the central bank “drops money from the sky.” More specifically, central banks would directly provide the government with money that the government could spend on infrastructure or use to fill the budget gap resulting from tax cuts. A potential shift is on the horizon in the U.S., however, as the Fed is expected to begin to tighten policy. The Fed has indicated it might raise rates in 2016, but the market places a low probability on that occurring. Still, it’s clear that the U.S. economy is in better shape than much of the rest of the world.
The preliminary 2nd quarter GDP number was a weak 1.2%, but economists generally expect U.S. GDP growth to remain in the 2-3% range. Meanwhile, GDP growth remains close to zero in both Europe and Japan. The U.S. has benefitted from ultra-low interest rates, which have boosted consumer spending and housing markets. Energy prices have remained lower, and wages have continued to rise along with household net worth. The economy is nearing full employment, and record-highs in the stock market have also boosted confidence.
Despite these positives, international (and some domestic) developments have instilled some doubts. Weak growth abroad, the Brexit vote, elections in various countries, populist backlash against globalization and trade, terrorism, a strong dollar, high debt levels, and the prospect of Fed tightening have all contributed to these doubts.
In the U.S., the two major political parties’ presidential candidates have been officially confirmed, but the twists and turns of this bizarre campaign continue. We are often asked about the impact of the election on the markets. Election season always stirs up fears, doubts, uncertainty, and hopes in the minds of the people, leading many to wonder how it will affect their investments. Politics can influence the markets in the short run, but in the long run the economy and corporate earnings are what drive returns. One of the strengths of the American system is the limits that have been placed on government power. These checks and balances have allowed our economy to operate with much more autonomy than most others around the world and throughout history. In addition, markets have often benefited from periods of “divided government” when one party controls the White House and the other controls Congress. There is heated debate about whether the government should be more involved or less involved than it is now, but the fact remains that this system has allowed for incredible economic progress for more than two centuries.
Adding to the uncertainty created by election season, investors are confronted with frequent news of terrorism, violence, military coups, and war. The human suffering around the world is tragic and heartbreaking to watch. Understandably, these events are unsettling for many of us. The significance of these tragedies is much greater than the effect on the financial markets. That being said, the discouraging news that we see on a daily basis can cause some to take an overly pessimistic view when it comes to investing. But just as with election season, successful investing requires a focus on what ultimately drives returns over the long run. Sadly, violence and turmoil of this kind is nothing new, and these events are a reality that investors will confront long into the future. So while we hope for better days, it is critical to stay focused on the disciplines that have led to investing success over time, amid all kinds of turmoil.
1
Recent market behavior is a reminder that volatility is a normal part of investing, and times like these test investors’ discipline. On average, stocks experience three drops of 5% and one 10% drop every 12 months. These create opportunities for patient and disciplined investors and serve as a reminder of the value of diversification.
We want you to know how much we appreciate the confidence you have placed in us for your investment needs. As always, please feel free to call us at (513) 661-3100 or (800) 541-0170 with your comments or questions. Thank you.
Sincerely,
Jason Jackman, President
2
For the year through June 30, 2016, the Johnson Equity Income Fund gained 5.87%. The Fund outperformed the Standard & Poors 500 Index (S&P 500) return of 3.84%.
Sector allocations and stock selection both made positive contributions to relative performance during the first half of the year with stock selection accounting for over three-quarters of the outperformance. The Fund’s stocks that outperformed the S&P 500 was near sixty-percent. Stock selection made the largest positive contributions in the Financials and Health Care sectors. Zimmer Biomet and Medtronic were notable positive contributors within the Health Care sector while Marsh McLennan and Chubb were both notable strong performers YTD within Financials.
The Telecommunications and Utilities sectors, two sectors with defensive and higher yield characteristics, were the top two performing sectors in the period and the Fund had underweights in both due to unattractive valuations. Our only holding in these two sectors is AT&T, which was the Fund’s top performing holding during the period. Although the dividend yield factor has helped the Fund in the first half of the year, we have largely avoided the highest yielding stocks as investors have bid up valuations in these names to what we believe are unsustainable levels. These stocks have largely traded based on what direction Treasury yields are moving. With Treasury yields at historic lows, and high dividend yielding stocks trading inversely with the direction of Treasury yields, we find the potential return versus the downside risk in these stocks to be extremely unattractive.
During the first half of the year, new additions to the portfolio included medical device maker Medtronic, technology consulting and services provider Cognizant Technology Solutions, American Express, and Parker Hannifin in the Industrials sector. The Fund sold its positions in J.M. Smucker and Hershey as valuation targets were exceeded after strong performance. We also sold positions in Qualcomm, Emerson Electric, and ConocoPhillips as these stocks have encountered more challenging fundamentals and exceeded our reduced price targets.
It continues to be a difficult environment to find high quality companies with attractive valuations and above average dividend yields. New purchases have tended to have lower absolute dividend yields, but higher dividend growth potential. We have also continued to maintain our valuation discipline, which has resulted in higher cash levels than normal.
Average Annual Total Returns as of June 30, 2016 | ||||||||
Equity Income Fund | S&P 500 Index | |||||||
Six Months | 5.87 | % | 3.84 | % | ||||
One Year | 1.05 | % | 3.99 | % | ||||
Three Years | 7.72 | % | 11.66 | % | ||||
Five Years | 9.43 | % | 12.10 | % | ||||
Ten Years | 7.04 | % | 7.42 | % |
Above average dividend income and long-term capital growth is the objective of the Johnson Equity Income Fund, and the primary assets are stocks of large-sized U.S. companies. The data on this page is unaudited. The data on this page represents past performance and is not a guarantee of future results. Investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Six month returns are not annualized. The average annual total return numbers include changes in the Fund’s or Index’s share price, plus reinvestment of any dividends and capital gains. The Fund’s performance is after all fees and expenses, whereas the Index does not incur fees or expenses. A shareholder cannot invest directly in the S&P 500 Index. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The S&P 500 Index is the established benchmark. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month end, please call 1-800-541-0170.
3
For the six months ending June 30, 2016, the Johnson Growth Fund Fund returned 0.37%, which trailed the return of 3.84% for the Standard & Poors 500 Index (S&P 500).
Growth investing has not been in favor so far in 2016. Record low interest rates continue to benefit stocks that pay higher dividends. Stocks with a yield of 3.5% or greater returned 17.5% in the first half of the year. Stocks with yields less than 1.6% had negative returns for the period. Many of these higher yielding stocks are in sectors-such as utilities and telecommunications are generally not owned in the Fund. In addition, stocks with earnings growth higher than 10% generally had flat to negative returns so far this year. Stocks with earnings growth less than 5% have returned 16.2% during the same period.
The Fund owns stocks in seven of the ten sectors within the S&P 500. For the first half of the year, the Fund outperformed in three of those sectors. Stocks in the industrial sector performed the best relative to the market. Union Pacific, 3M and Danaher were the best performers in the sector. Outperformance in Energy was driven by gains in EOG Resources, Schlumberger and Chevron as oil prices rose dramatically from the lows seen in February. Technology also added to performance-driven by gains in Salesforce.com, Oracle and Broadcom. Salesforce.com was the best performing stock for the period with a gain of 29%.
The worst performing sector relative to the S&P 500 was Healthcare. Biogen was hurt by the political and pricing concerns surrounding biotechnology. Allergan performed poorly as a result of the cancellation of the merger with Pfizer. Consumer Staples also lagged-primarily as a result of the relatively flat performance turned in by CVS. Financials were also laggards due to continued low interest rates being a drag on bank profitability.
The Fund has its largest overweight positions in the Technology and Consumer Discretionary sectors. Technology provides solid, sustainable growth opportunities and we would expect to remain overweight the sector. Consumer Discretionary stocks should continue to benefit from higher employment and rising wages. The business models of many traditional retailers have been damaged by the popularity of Amazon and other secular trends that are hampering profitability. We prefer to own names that focus on experiences or have such “niche” markets that they can remain profitable as competition intensifies. The largest underweight position is in the Healthcare sector, as valuations remain somewhat stretched outside of the biotech industry. The Fund has no weight in the Telecommunications, Materials and Utility sectors.
New stocks purchased in the first half of the year included General Electric, Pepsico, Starbucks, Berkshire Hathaway, Wells Fargo, Celgene, Gilead Sciences, Johnson and Johnson, Lowes, JP Morgan, Nike, American Express and Parker Hannifin. Positions eliminated during the period were Axys Capital, Treehouse Foods, Western Alliance Bancorp, Everbank, Qualcom, Fluor, Analogic, Ruckus Wireless, Polaris and Costco.
Average Annual Total Returns As of June 30, 2016 | ||||||||
Growth Fund | S&P 500 Index | |||||||
Six Months | 0.37 | % | 3.84 | % | ||||
One Year | -5.15 | % | 3.99 | % | ||||
Three Years | 8.58 | % | 11.66 | % | ||||
Five Years | 7.91 | % | 12.10 | % | ||||
Ten Years | 5.04 | % | 7.42 | % |
Long-term capital growth is the objective of the Johnson Growth Fund, and the primary assets are stocks of larger-sized U.S. companies. The data on this page is unaudited. The data on this page represents past performance and is not a guarantee of future results. Investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Six month returns are not annualized. The average annual total return numbers include changes in the Fund��s or Index’s share price, plus reinvestment of any dividends and capital gains. The Fund’s performance is after all fees and expenses, whereas the Index does not incur fees or expenses. A shareholder cannot invest directly in the Standard & Poors 500 Index. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The S&P 500 Index is the established benchmark. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month end, please call 1-800-541-0170.
4
The Johnson Opportunity Fund had a net total return of +4.05% in the first half of 2016, slightly outperforming the Russell 2500 Index’s +3.98% return.
In some ways, the market’s performance during the first six months of the year was a reversal of 2015’s. Energy & Materials stocks made a sizable recovery as oil prices jumped 30% and most commodity prices rose. Health Care, last year’s leading sector, was the only sector to have negative returns in the first half of 2016 as the biotech sector corrected sharply at the beginning of the year and investor interest shifted from Growth to Value. The Fund’s underweight positioning in the high yielding Utilities and REIT industries was a detriment, and overall sector allocation was a minor negative relative to the Index. Nevertheless, effective security selection pushed results above the Index return.
The Fund outperformed in eight of the ten sectors, rewarded for its emphasis on investing in quality stocks at attractive valuations. A style shift from Growth to Value favored the Fund’s investment approach as investors became less enamored with paying high valuations for more speculative growth (e.g. biotech and internet stocks).
While global economic growth remains sluggish, there are many parts of the U.S. economy that are doing well. In the Industrials sector, domestically-focused Industrials with limited exposure to the weak oil market cycle did well for the Fund, including Alamo Group, HNI Corporation, and Deluxe Corporation. Certain consumer-related stocks also delivered good results including Energizer Holdings Inc., WD-40 Company, Ingredion Inc, and Thor Industries. The Fund’s high dividend-yielding stocks did well too, including UGI Corp., a Pennsylvania-based utility company, and real estate investment trusts, Realty Income Corp. and Lexington Properties.
The Health Care sector accounted for the portfolio’s three largest negative contributors: United Therapeutics Corp., Integer Holdings Corp. (formerly Greatbatch Inc.), and Natus Medical, Inc. The future trajectory of earnings growth is being challenged, but the Fund maintains a more optimistic view about growth potential and valuation. PRA Group Inc., the Fund’s biggest return detractor in 2015, continued to underperform through the first half of 2016. Tough business conditions exist for its credit card receivables purchasing business, but the business is on solid ground and valuation should give the stock support until the cycle improves.
Interest rates have remained stubbornly low for much of this cycle. As a result, investors have pushed into higher-yielding equities in an attempt to find bond substitutes, typically seeking the more liquid large cap stocks. Now, smaller cap stocks have become unusually cheap compared to larger cap stocks. While a recession could always bring on a bear market in smaller cap stocks, the risk-reward balance seems to favor a tilt in favor of small-cap while maintaining an emphasis on buying quality companies.
Average Annual Total Returns as of June 30, 2016 | ||||||||
Opportunity Fund | Russell 2500 Index | |||||||
Six Months | 4.05 | % | 3.98 | % | ||||
One Year | -1.90 | % | -3.67 | % | ||||
Three Year | 8.60 | % | 8.61 | % | ||||
Five Years | 7.91 | % | 9.48 | % | ||||
Ten Years | 6.26 | % | 7.32 | % |
Long-term capital growth is the objective of the Johnson Opportunity Fund, and the primary assets are equity securities of medium sized companies. The data on this page is unaudited. The data on this page represents past performance and is not a guarantee of future results. Investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The average annual total return numbers include changes in the Fund’s or Index’s share price, plus reinvestment of any dividends and capital gains. Six month returns are not annualized. The Fund’s performance is after all fees and expenses, whereas the Index does not incur fees or expenses. A shareholder cannot invest directly in the Russell 2500 Index. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The Russell Midcap Index is the established benchmark. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month end, please call 1-800-541-0170.
5
The Johnson Realty Fund returned 11.77% for the period ending June 30, 2016 compared to a return of 13.29% for the S&P US REIT Index (S&P US REIT).
The market was exposed to the first of what then was expected to be multiple Federal Reserve (Fed) rate hikes. Higher interest rates impact the REIT marketplace in a couple different ways. The first is it increases the cost of their borrowing, which reduces their overall cash flow. Higher rates are also a way to moderate economic activity to avoid inflationary pressures. An attempt to slow down economic activity is a negative for market participants. Finally, as yield reached all-time lows, investors reached into other more risky areas of the market to obtain yield. REITs have been a beneficiary of this phenomenon. As soon as the market seemed to adjust to the fact that he Fed was on a course to normalize rates, worldwide economic data slowed and the Fed signaled that they would pause that process. The result was a very strong March, up 10.45% for the S&P US REIT index, after negative returns in the first two months of the year. June also had similar undertones as BREXIT occurred and interest rates reached those all-time lows, propelling REIT investments up nearly 7%. REITs significantly outperformed the broader equity market, as defined by the S&P 500, which was up 3.84%.
The interest environment was volatile in the first half of 2016, with rates at first going higher then reversing course and rallying significantly after the BREXIT vote. The market is once again building expectations that yields will start to move higher as the Fed resumes it course to normalize interest rate policy. REITs historically perform best in flat to declining interest rate environments, which is the one we have seen over the past many years. Rising interest rates provide near term headwind for REITs.
The Johnson Realty fund underperformed the S&P US REIT index by 1.52%. Our modest holding of cash in the period provided a headwind in addition to our property type allocation. Our slight overweight in Residential & Timber combined with underweights in Retail, Data Centers and Infrastructures were the main drivers of the property type underperformance.
Security selection was also negative. The Fund owned securities that performed much worse than the overall market. CBL & Associates (-20.7%), Equity Residential (-4.4%) and HealthCare Properties (-4.4%) contributed to that underperformance. Several names not owned also caused some relative performance issues, notably Communication Sales & Leasing (+62.3%), CoreSite (+58.5%),Iron Mountain (+51.8%) and CyrusOne (+51.1%).
REITs continue to possess lower correlation relative to other asset classes, which provides portfolio diversification benefits. We would expect as interest rates rise, yield oriented investors may exit the asset class. This may take several years as the market is coming off of historically low interest rate levels. The fund’s philosophy is to remain fully invested. We believe that the Realty Fund’s quality focus and diversified approach to the real estate market will provide investors with asset class like returns.
Average Annual Total Returns as of June 30, 2016 | ||||||||
Realty Fund | S&P US REIT Index | |||||||
Six Months | 11.77 | % | 13.29 | % | ||||
One Year | 22.57 | % | 23.71 | % | ||||
Three Years | 12.72 | % | 13.34 | % | ||||
Five Years | 11.23 | % | 12.45 | % | ||||
Ten Years | 5.78 | % | 7.27 | % |
Long-term capital growth and above average dividend income are the objectives of the Johnson Realty Fund, and the primary assets are real estate related equity securities. The data on this page is unaudited. The data on this page represents past performance and is not a guarantee of future results. Investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Six month returns are not annualized. The average annual total return numbers include changes in the Fund’s or Index’s share price, plus reinvestment of any dividends and capital gains. The Fund’s performance is after all fees and expenses, whereas the Index does not incur fees or expenses. A shareholder cannot invest directly in the S&P US REIT Index. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The S&P US REIT Index is the primary benchmark. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month end, please call 1-800-541-0170.
6
The Johnson International Fund had a total net return of -0.73% in the first half of 2016, outperforming the MSCI ACWI ex-US Index’s -1.02% return.
The biggest news event in international markets so far this year was the surprise outcome of a U.K. referendum vote in June, where a majority of British voters elected for their country to exit the European Union. This widely unexpected decision brought a lot of turbulence to global markets as investors quickly tried to assess the implications for economies, capital flows, currency shifts, global politics, and securities markets. The Fund’s allocation to U.K and European stocks represented nearly half of the portfolio, but its relative weight compared to the Index was fairly neutral, therefore the events in June did not contribute to any large shift in relative performance.
Emerging markets recovered well during the first six months of the year after a difficult 2015, especially in South America. The Fund had big recoveries in Brazilian bank holdings Banco Bradesco, up 81%, and Itau Unibanco Holding, up 50%, as the outlook for earnings stabilized amid a weak local economy. An oil price recovery also contributed to improved performance in energy sector holdings such as Lukoil PJSC, Statoil ASA, CNOOC Ltd, and Royal Dutch Shell PLC. Sector positioning overall was a positive contributor to relative performance, and the overweight position in the Energy sector accounted for more than half of that allocation benefit. Other big winners during the first half of 2016 for the Fund included Newcrest Mining Ltd, a gold mining stock that rose 83% as gold prices rallied, and adidas AG, a German shoe and apparel manufacturer with improving earnings growth.
Developed market declines were not just limited to Europe, as Japanese stocks were weak also amid less than successful efforts by their government to stimulate growth and prevent the yen from appreciating. Japan is the Fund’s largest country exposure and the Index’s largest country weight. Holdings in Japanese banks were among the portfolio’s worst performers, including Mitsubishi UFJ Financial, Mizuho Financial Group, and Sumitomo Mitsui Financial, which all fell more than 20% in US dollar terms. Other large negative performance contributors included Sky PLC, a large British broadcaster, and Lenovo Group Ltd., a Hong Kong computer manufacturer.
After a quick two-day drop following the “Brexit” vote, global markets quickly recovered those losses. It is premature to draw many definitive short-term or long-term conclusions, but regardless of the form any U.K. separation takes, trade agreements and capital flows are likely to change. In addition, it seems likely that global GDP growth will be negatively impacted by the uncertainty if not the reality of these coming changes. Yet, despite the higher level of uncertainty brought on by such geopolitical crosswinds, the Fund’s focus will remain on keeping a diversified portfolio of stocks and seeking companies with the proper mix of fundamentals and valuation that offers the potential to reward long-term investors who seek exposure to foreign markets.
Average Annual Total Returns as of June 30, 2016 | ||||||||
International Fund | MSCI ACWI ex US Index | |||||||
Six Months | -0.73 | % | -1.02 | % | ||||
One Year | -10.92 | % | -10.25 | % | ||||
Three Years | 1.67 | % | 1.16 | % | ||||
Five Years | 0.52 | % | 0.10 | % | ||||
Since Inception* | 7.38 | % | 7.62 | % |
Asset Allocation by Country as of June 30, 2016 | ||||||||||||
United Kingdom | 15.55 | % | Belgium | 3.73 | % | |||||||
Switzerland | 12.57 | % | China | 3.53 | % | |||||||
Canada | 11.03 | % | India | 3.02 | % | |||||||
Germany | 9.67 | % | Denmark | 2.76 | % | |||||||
Japan | 6.31 | % | Brazil | 2.55 | % | |||||||
France | 6.31 | % | Mexico | 2.10 | % | |||||||
Netherlands | 5.42 | % | Other* | 2.07 | % | |||||||
Israel | 4.96 | % | Singapore | 1.90 | % | |||||||
Australia | 4.81 | % | Ireland | 1.73 | % |
* | Countries in “Other” category include: Indonesia, Hong Kong |
* | Fund Inception was December 8, 2008. |
Long-term capital growth is the objective of the Johnson International Fund, and the primary assets are equity securities of foreign companies traded on U.S. exchanges and ADRs (American Depository Receipts). The data on this page is unaudited. The data on this page represents past performance and is not a guarantee of future results. Investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Six month returns are not annualized. The average annual total return numbers include changes in the Fund’s or Index’s share price, plus reinvestment of any dividends and capital gains. The Fund’s performance is after all fees and expenses, whereas neither Index incurs fees nor expenses. A shareholder cannot invest directly in the MSCI ACWI ex US Index. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The MSCI ACWI ex US Index is the primary benchmark. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month end, please call 1-800-541-0170.
7
The Johnson Fixed Income Fund provided a total return of 5.49% during the first half of 2016, compared to a 5.31% return for the Barclay’s Capital Aggregate Index. Global economic uncertainty pushed interest rates lower across the globe, despite the Fed’s insistence that it will continue to tighten its benchmark policy rate.
Bond yields began the year at somewhat low levels, and the Fund maintained a modestly shorter duration than the benchmark as a result. The short end of the yield curve remained anchored by the Fed’s policy action last year, while longer rates fell rapidly as a result of global economic uncertainty and strong flows into domestic bond markets. The Fund’s positioning was constructed to benefit from such a curve flattening and aided the funds relative performance versus its benchmark.
Meanwhile, credit spreads began the year at relatively wide levels, as fear of energy related defaults spread throughout the credit market. Spreads continued to widen earlier this year, peaking out in mid-February. As the price of oil stabilized, however, credit spreads tightened rapidly, leading to positive excess returns for credit year to date. Sector performance was uneven though, with financials tightening less than industrials and utilities as energy related industrial credits recovered most of their prior losses. The Fund’s overweight to corporate bonds was a significant driver of performance relative to the Fund’s benchmark during the year, while its focus on high quality credits with lower spread volatility tempered returns. More than half of the Fund’s bond allocation is to investment-grade rated corporate securities which is greater than the Fund’s benchmark index and a key reason why the yield is higher in the Fund. Over time, this yield advantage is critical to the Fund’s ability to outperform its benchmark. It can also be a helpful strategy to protect against rising interest rates.
Looking forward into the second half of 2016, we expect the Fed will likely continue to tighten monetary policy, although likely at a historically slow pace. Growth in the U.S. has been stable, but pockets of weakness remain. A strong U.S. Dollar and global economic uncertainty have held back manufacturing, but the consumer continues to maintain solid momentum. Steadily rising wages and solid employment gains should support this trend. Continued improvement in global economic growth as well as powerful global Central Bank stimulus may lead to a continued tightening of credit spreads and the Fund’s overweight to corporate bonds should benefit as a result. The Fund’s duration is slightly short to that of its benchmark and the addition of securities such as floating rate and step-up coupon bonds will help serve as a cushion to higher rates.
The Fund maintained a position in Treasury Inflation Protected Securities, which will benefit from rising inflation. Finally, we anticipate upward pressure on intermediate bond yields in the near term, and have positioned the Fund defensively to defend against such a move.
Average Annual Total Returns as of June 30, 2016 | ||||||||
Fixed Income Fund | Barclays Capital Aggregate Index | |||||||
Six Months | 5.49 | % | 5.31 | % | ||||
One Year | 5.80 | % | 6.00 | % | ||||
Three Years | 4.07 | % | 4.06 | % | ||||
Five Years | 3.76 | % | 3.76 | % | ||||
Ten Years | 5.01 | % | 5.13 | % |
A high level of income over the long term consistent with preservation of capital is the objective of the Johnson Fixed Income Fund, and the primary assets are investment-grade fixed income securities. The data on this page is unaudited. The data on this page represents past performance and is not a guarantee of future results. Investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Six month returns are not annualized. The average annual total return numbers include changes in the Fund’s or Index’s share price, plus reinvestment of any income and capital gains. The Fund’s performance is after all fees and expenses, whereas the Index does not incur fees or expenses. A shareholder cannot invest directly in the Barclays Capital Aggregate Index. The Barclays Capital Aggregate Index is the benchmark. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month end, please call 1-800-541-0170.
8
The Johnson Municipal Income Fund provided a total return of +2.77% during the first half of 2016 compared to +2.21% for the Barclays Capital 5-Year General Obligation Municipal Index. Global economic uncertainty pushed interest rates lower across the globe, despite the Fed’s insistence that it will continue to tighten its benchmark policy rate.
Municipal bond yields fell during the first half of the year, particularly among longer maturity securities, resulting in a flattening of the yield curve and leading to the Fund’s positive total return. The Fund’s emphasis on higher yielding and longer duration securities was additive to performance. In addition, the Fund’s laddered maturity structure aided performance overall as the municipal yield curve flattened with yields on the longest maturity bonds falling the most. While the benchmark is comprised solely of 4-6 year maturity securities, the Fund is constructed with a more diverse laddered maturity profile of bonds primarily due within 1 to 15 years.
New issue supply of municipal securities was strong during the first half of 2016 as issuers took advantage of low interest rates to refinance outstanding debt obligations and undertake new projects. Demand for municipal securities remained very strong as well, as investors sought tax-free income as well as safety and stability. Defaults in the municipal sector remained low on an absolute basis despite headlines surrounding fiscal challenges in Chicago and Puerto Rico. Tax revenues for many municipalities continue to show improvement, with the majority of states and local governments reporting increased revenue from income, sales, and property tax collections. However, we continue to expect lower quality issuers, primarily in a handful of states such as New Jersey, Illinois and particularly the territory of Puerto Rico, to face financial pressure. The Fund avoids such securities maintaining a strict focus on high quality municipal issuers. Approximately 63% of the Fund is rated AA or higher. Furthermore, the Fund is diversified by issuer, sector and state with approximately 29% of its assets in states other than Ohio.
Looking forward into the second half of 2016, we expect the Fed will likely continue to tighten monetary policy, although likely at a historically slow pace. Growth in the US has been stable, but pockets of weakness remain. A strong US Dollar and global economic uncertainty have held back manufacturing, but the consumer continues to maintain solid momentum. Steadily rising wages and solid employment gains should support this trend, which should continue to benefit municipal budget outlooks in the form of increased income and sales tax collections. Finally, we anticipate upward pressure on municipal bond yields in the near term, leading to a muted total return outlook. However, higher marginal tax rates should keep the municipal interest exemption in demand, and, while interest rates are poised to increase, municipals have historically outperformed other bond market alternatives during similar periods.
Average Annual Total Returns as of June 30, 2016 | ||||||||
Municipal Income Fund | Barclays Five Year G.O. Municipal Index | |||||||
Six Months | 2.77 | % | 2.21 | % | ||||
One Year | 5.00 | % | 4.09 | % | ||||
Three Years | 3.77 | % | 3.05 | % | ||||
Five Years | 3.35 | % | 2.76 | % | ||||
Ten Years | 3.99 | % | 4.19 | % |
As rated by either Standard & Poor’s or Moody’s Rating Agencies.
A high level of federally tax-free income over the long term consistent with preservation of capital is the objective of the Johnson Municipal Income Fund, and the primary assets are intermediate term Ohio municipal bonds. The data on this page is unaudited. The data on this page represents past performance and is not a guarantee of future results. Investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Six month returns are not annualized. The average annual total return numbers include changes in the Fund’s or Index’s share price, plus reinvestment of any income and capital gains. The Fund’s performance is after all fees and expenses, whereas the Index does not incur fees or expenses. A shareholder cannot invest directly in the Barclays Capital Five Year General Obligation Municipal Bond Index. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month end, please call 1-800-541-0170.
9
Common Stocks | Shares | Fair Value | ||||||
Comcast Corp. | 81,500 | $ | 5,312,985 | |||||
Nordstrom Inc. | 48,850 | 1,858,743 | ||||||
TJX Companies | 38,300 | 2,957,909 | ||||||
VF Corp. | 44,100 | 2,711,709 | ||||||
9.1% – Total For Consumer Discretionary | $ | 12,841,346 | ||||||
Coca Cola Co. | 62,620 | 2,838,565 | ||||||
CVS Health Corp. | 59,105 | 5,658,713 | ||||||
Hershey Foods Corp. | 28,550 | 3,240,139 | ||||||
Nestle SA – ADR | 72,100 | 5,574,051 | ||||||
Procter & Gamble Co. | 33,990 | 2,877,933 | ||||||
Unilever PLC | 63,800 | 3,056,658 | ||||||
16.5% – Total For Consumer Staples | $ | 23,246,059 | ||||||
Chevron Corp. | 39,935 | 4,186,386 | ||||||
Royal Dutch Shell PLC, Class B ADR | 77,500 | 4,340,000 | ||||||
Schlumberger Ltd. | 35,150 | 2,779,662 | ||||||
8.1% – Total For Energy | $ | 11,306,048 | ||||||
American Express Co. | 43,000 | 2,612,680 | ||||||
Chubb Ltd. | 36,725 | 4,800,325 | ||||||
Everbank Financial Corp. | 141,100 | 2,096,746 | ||||||
Iberiabank Corp. | 72,500 | 4,330,425 | ||||||
Invesco Ltd. | 173,035 | 4,419,314 | ||||||
Marsh & McLennan Companies Inc. | 42,000 | 2,875,320 | ||||||
RenaissanceRE Holdings Ltd. | 23,900 | 2,806,816 | ||||||
17.0% – Total For Financial Services | $ | 23,941,626 | ||||||
Abbott Laboratories | 108,600 | 4,269,066 | ||||||
Medtronic PLC | 37,000 | 3,210,490 | ||||||
Owens & Minor Inc. Holding Co. | 112,500 | 4,205,250 | ||||||
Zimmer Biomet Holdings | 41,100 | 4,947,618 | ||||||
11.8% – Total For Health Care | $ | 16,632,424 | ||||||
Danaher Corp. | 36,900 | 3,726,900 | ||||||
Norfolk Southern Corp. | 34,200 | 2,911,446 | ||||||
Parker Hannifin Corp. | 26,600 | 2,874,130 | ||||||
Union Pacific Corp. | 32,250 | 2,813,812 | ||||||
W.W. Grainger Inc. | 12,800 | 2,908,800 | ||||||
10.8% – Total For Industrials | $ | 15,235,088 |
Common Stocks | Shares | Fair Value | ||||||
Accenture PLC | 12,120 | $ | 1,373,075 | |||||
Apple Inc. | 58,110 | 5,555,316 | ||||||
Cisco Systems Inc. | 151,200 | 4,337,928 | ||||||
Cognizant Technology Solutions Corp.* | 47,000 | 2,690,280 | ||||||
Linear Technology Corp. | 62,850 | 2,924,410 | ||||||
Microsoft Corp. | 56,275 | 2,879,592 | ||||||
Oracle Corp. | 67,500 | 2,762,775 | ||||||
SAP SE ADR | 35,700 | 2,678,214 | ||||||
Western Digital Corp. | 31,850 | 1,505,231 | ||||||
19.0% – Total For Information Technology | $ | 26,706,821 | ||||||
AT&T Inc. | 63,640 | 2,749,884 | ||||||
2.0% – Total For Telecommunication Services | $ | 2,749,884 | ||||||
Total Common Stocks 94.3% | $ | 132,659,296 | ||||||
(Identified Cost $115,789,460) | ||||||||
Cash Equivalents | ||||||||
First American Government Obligation Fund, Class Z** | 7,542,951 | 7,542,951 | ||||||
Total Cash Equivalents 5.4% | $ | 7,542,951 | ||||||
(Identified Cost $7,542,951) | ||||||||
Total Portfolio Value 99.7% | $ | 140,202,247 | ||||||
(Identified Cost $123,332,411) | ||||||||
Other Assets in Excess of Liabilities 0.3% | $ | 369,663 | ||||||
Total Net Assets 100.0% | $ | 140,571,910 |
* | Non-income producing security. |
** | Variable Rate Security; as of June 30, 2016, the 7 day yield was 0.01%. |
ADR – American Depositary Receipt
PLC – Public Liability Company
The accompanying notes are an integral part of these financial statements.
10
Common Stocks | Shares | Fair Value | ||||||
Lowe’s Co. Inc. | 12,310 | $ | 974,583 | |||||
Nike Inc. Class B | 8,200 | 452,640 | ||||||
Nordstrom Inc. | 17,200 | 654,460 | ||||||
Priceline.com Inc.* | 700 | 873,887 | ||||||
Starbucks Corp. | 15,560 | 888,787 | ||||||
TJX Companies | 12,700 | 980,821 | ||||||
Walt Disney Co. | 13,800 | 1,349,916 | ||||||
13.8% – Total For Consumer Discretionary | $ | 6,175,094 | ||||||
Costco Wholesale Corp. | 2,880 | 452,275 | ||||||
CVS Health Corp. | 13,770 | 1,318,340 | ||||||
Nestle SA – ADR | 12,440 | 961,736 | ||||||
Pepsico Inc. | 9,040 | 957,698 | ||||||
Procter & Gamble Co. | 10,680 | 904,276 | ||||||
10.3% – Total For Consumer Staples | $ | 4,594,325 | ||||||
Chevron Corp. | 8,980 | 941,373 | ||||||
EOG Resources Inc. | 15,980 | 1,333,052 | ||||||
Schlumberger Ltd. | 17,405 | 1,376,387 | ||||||
8.2% – Total For Energy | $ | 3,650,812 | ||||||
American Express Co. | 7,230 | 439,295 | ||||||
Berkshire Hathaway Inc. Class B* | 6,800 | 984,572 | ||||||
Chubb Ltd. | 9,800 | 1,280,958 | ||||||
Iberiabank Corp. | 15,810 | 944,331 | ||||||
Invesco Ltd. | 27,500 | 702,350 | ||||||
JP Morgan Chase & Co. | 7,350 | 456,729 | ||||||
PRA Group Inc.* | 20,835 | 502,957 | ||||||
Wells Fargo & Co. | 8,790 | 416,031 | ||||||
12.9% – Total For Financial Services | $ | 5,727,223 | ||||||
Allergan PLC* | 3,100 | 716,379 | ||||||
Biogen Inc.* | 4,760 | 1,151,063 | ||||||
Celgene Corp.* | 8,830 | 870,903 | ||||||
Gilead Sciences Inc. | 4,800 | 400,416 | ||||||
Johnson & Johnson | 8,175 | 991,628 | ||||||
Mednax Inc.* | 12,200 | 883,646 | ||||||
11.3% – Total For Health Care | $ | 5,014,035 | ||||||
3M Co. | 5,140 | 900,117 | ||||||
Danaher Corp. | 13,900 | 1,403,900 | ||||||
General Electric Co. | 30,440 | 958,251 | ||||||
Parker Hannifin Corp. | 7,920 | 855,756 | ||||||
Proto Labs Inc.* | 5,920 | 340,755 | ||||||
Union Pacific Corp. | 16,260 | 1,418,685 | ||||||
13.2% – Total For Industrials | $ | 5,877,464 |
Common Stocks | Shares | Fair Value | ||||||
Alphabet Inc. – Class A* | 565 | $ | 397,494 | |||||
Alphabet Inc. – Class C* | 1,129 | 781,381 | ||||||
Apple Inc. | 20,860 | 1,994,216 | ||||||
Broadcom Ltd. | 6,815 | 1,059,051 | ||||||
Cognizant Technology Solutions Corp.* | 15,620 | 894,089 | ||||||
EMC Corp. | 34,550 | 938,724 | ||||||
Facebook Inc.* | 7,700 | 879,956 | ||||||
Fortinet Inc.* | 13,270 | 419,199 | ||||||
IPG Photonics Corp.* | 4,610 | 368,800 | ||||||
Oracle Corp. | 34,000 | 1,391,620 | ||||||
Red Hat Inc.* | 17,120 | 1,242,912 | ||||||
Salesforce.com Inc.* | 13,930 | 1,106,181 | ||||||
SAP SE ADR | 11,800 | 885,236 | ||||||
Ultimate Software Group Inc.* | 4,935 | 1,037,781 | ||||||
30.1% – Total For Information Technology | $ | 13,396,640 | ||||||
Total Common Stocks 99.8% | $ | 44,435,593 | ||||||
(Identified Cost $36,997,225) | ||||||||
Total Portfolio Value 99.8% | $ | 44,435,593 | ||||||
(Identified Cost $36,997,225) | ||||||||
Other Assets in Excess of Liabilities 0.2% | $ | 108,756 | ||||||
Total Net Assets 100.0% | $ | 44,544,349 |
* | Non-income producing security. |
ADR – American Depositary Receipt
PLC – Public Liability Company
The accompanying notes are an integral part of these financial statements.
11
Common Stocks | Shares | Fair Value | ||||||
Advance Auto Parts Inc. | 2,800 | $ | 452,564 | |||||
AMC Networks Inc.* | 7,600 | 459,192 | ||||||
Culp Inc. | 15,000 | 414,450 | ||||||
Foot Locker Inc. | 6,000 | 329,160 | ||||||
Gentex Corp. | 33,600 | 519,120 | ||||||
Hasbro Inc. | 7,400 | 621,526 | ||||||
LKQ* | 19,500 | 618,150 | ||||||
Steven Madden Ltd.* | 10,000 | 341,800 | ||||||
Texas Roadhouse Inc. | 11,300 | 515,280 | ||||||
Thor Industries Inc. | 10,700 | 692,718 | ||||||
Winmark Corp. | 5,600 | 558,152 | ||||||
14.2% – Total For Consumer Discretionary | $ | 5,522,112 | ||||||
Casey’s General Stores Inc. | 5,000 | 657,550 | ||||||
Church & Dwight Co. Inc. | 4,000 | 411,560 | ||||||
Energizer Holdings Inc. | 8,500 | 437,665 | ||||||
Ingredion Inc. | 3,600 | 465,876 | ||||||
WD-40 Co. | 6,400 | 751,680 | ||||||
7.0% – Total For Consumer Staples | $ | 2,724,331 | ||||||
Helmerich & Payne Inc. | 7,800 | 523,614 | ||||||
Oceaneering International | 4,400 | 131,384 | ||||||
1.7% – Total For Energy | $ | 654,998 | ||||||
Argo Group International Holdings Ltd. | 10,164 | 527,512 | ||||||
Assurant Inc. | 6,000 | 517,860 | ||||||
Axis Capital Holdings Ltd. | 10,100 | 555,500 | ||||||
Berkshire Hills Bancorp Inc. | 22,000 | 592,240 | ||||||
Everest RE Group LTD | 3,200 | 584,544 | ||||||
Extra Storage Space Inc. | 4,500 | 416,430 | ||||||
First Interstate Bancsystem Inc. | 18,000 | 505,800 | ||||||
German America Bancorp Inc. | 20,000 | 639,400 | ||||||
Home Bancshares Inc. | 22,000 | 435,380 | ||||||
Iberiabank Corp. | 9,500 | 567,435 | ||||||
Invesco Ltd. | 19,900 | 508,246 | ||||||
Lakeland Bancorp Inc. | 50,000 | 569,000 | ||||||
Morningstar Inc. | 6,500 | 531,570 | ||||||
PRA Group Inc.* | 10,000 | 241,400 | ||||||
Reinsurance Group of America | 4,500 | 436,455 | ||||||
RenaissanceRE Holdings Ltd. | 6,000 | 704,640 | ||||||
Westwood Holdings Group Inc. | 10,800 | 559,440 | ||||||
22.8% – Total For Financial Services | $ | 8,892,852 |
Common Stocks | Shares | Fair Value | ||||||
Align Technology Inc.* | 6,300 | $ | 507,465 | |||||
Analogic Corp. | 6,700 | 532,248 | ||||||
Greatbatch Inc.* | 10,000 | 309,300 | ||||||
Mednax Inc.* | 5,500 | 398,365 | ||||||
Natus Medical Inc.* | 13,000 | 491,400 | ||||||
Nuvectra Corp.* | 3,333 | 24,664 | ||||||
Owens & Minor Inc. Holding Co. | 17,800 | 665,364 | ||||||
United Therapeutics Corp.* | 5,300 | 561,376 | ||||||
Universal Health Services Inc. | 4,000 | 536,400 | ||||||
VCA Inc.* | 7,300 | 493,553 | ||||||
11.6% – Total For Health Care | $ | 4,520,135 | ||||||
Alamo Group Inc. | 12,000 | 791,640 | ||||||
American Woodmark Corp.* | 4,000 | 265,520 | ||||||
Cubic Corp. | 7,000 | 281,120 | ||||||
Deluxe Corp. | 9,200 | 610,604 | ||||||
Dover Corp. | 8,000 | 554,560 | ||||||
Essendant Inc. | 12,400 | 378,944 | ||||||
Fluor Corp. | 14,000 | 689,920 | ||||||
Generac Holdings Inc.* | 7,000 | 244,720 | ||||||
Hillenbrand Inc. | 14,000 | 420,560 | ||||||
HNI Corp. | 14,900 | 692,701 | ||||||
Lincoln Electric Holdings Inc. | 7,800 | 460,824 | ||||||
Old Dominion Freight Line* | 6,300 | 379,953 | ||||||
Proto Labs Inc.* | 6,500 | 374,140 | ||||||
Quanta Services Inc.* | 13,000 | 300,560 | ||||||
Snap-On Tools Corp. | 3,100 | 489,242 | ||||||
W.W. Grainger Inc. | 2,000 | 454,500 | ||||||
Watsco Inc. | 2,900 | 408,001 | ||||||
20.0% – Total For Industrials | $ | 7,797,509 | ||||||
Amdocs Ltd. | 7,300 | 421,356 | ||||||
Brocade Communications Systems Inc. | 59,300 | 544,374 | ||||||
Flir Systems Inc. | 9,800 | 303,310 | ||||||
IPG Photonics Corp.* | 7,000 | 560,000 | ||||||
Neustar Inc.* | 14,600 | 343,246 | ||||||
PC Connection Inc.* | 27,000 | 642,600 | ||||||
Perficient Inc.* | 14,000 | 284,340 | ||||||
Red Hat Inc.* | 8,400 | 609,840 | ||||||
Ultimate Software Group Inc.* | 1,700 | 357,493 | ||||||
10.4% – Total For Information Technology | $ | 4,066,559 |
The accompanying notes are an integral part of these financial statements.
12
Common Stocks | Shares | Fair Value | ||||||
Aptargroup Inc. | 8,500 | $ | 672,605 | |||||
Avery Dennison Corp. | 7,000 | 523,250 | ||||||
Boise Cascade Corp.* | 18,000 | 413,100 | ||||||
Packaging Corp. of America | 10,100 | 675,993 | ||||||
Scotts Miracle-Gro Co. | 6,800 | 475,388 | ||||||
Westlake Chemical Corp. | 8,500 | 364,820 | ||||||
8.0% – Total For Materials | $ | 3,125,156 | ||||||
UGI Corp. | 10,800 | 488,700 | ||||||
1.3% – Total For Utilities | $ | 488,700 | ||||||
Total Common Stocks 97.0% | $ | 37,792,352 | ||||||
(Identified Cost $32,748,669) | ||||||||
Real Estate Investment Trusts (REITs) | ||||||||
Apartment Investment & Mangement Co. | 14,000 | 618,240 | ||||||
Total REITs 1.6% | $ | 618,240 | ||||||
(Identified Cost $509,383) | ||||||||
Cash Equivalents | ||||||||
First American Government Obligation Fund, Class Z** | 117,335 | 117,335 | ||||||
Total Cash Equivalents 0.3% | $ | 117,335 | ||||||
(Identified Cost $117,335) | ||||||||
Total Portfolio Value 98.9% | $ | 38,527,927 | ||||||
(Identified Cost $33,375,387) | ||||||||
Other Assets in Excess of Liabilities 1.1% | $ | 431,946 | ||||||
Total Net Assets 100.0% | $ | 38,959,873 |
* | Non-income producing security. |
** | Variable Rate Security; as of June 30, 2016, the 7 day yield was 0.01%. |
ADR – American Depositary Receipt
PLC – Public Liability Company
The accompanying notes are an integral part of these financial statements.
13
Real Estate Investment Trusts (REITs) | Shares | Fair Value | ||||||
American Campus Communities Inc. | 1,600 | $ | 84,592 | |||||
Apartment Investment & Management Co. | 2,624 | 115,876 | ||||||
Avalonbay Communities Inc. | 1,809 | 326,326 | ||||||
Camden Property Trust | 1,200 | 106,104 | ||||||
Equity LifeStyle Properties Inc. | 1,500 | 120,075 | ||||||
Equity Residential Properties Trust | 5,000 | 344,400 | ||||||
Essex Property Trust Inc. | 865 | 197,298 | ||||||
Mid-America Apartment Communities Inc. | 1,630 | 173,432 | ||||||
Post Properties Inc. | 850 | 51,893 | ||||||
Senior Housing Properties Trust | 3,500 | 72,905 | ||||||
Sun Communities Inc. | 650 | 49,816 | ||||||
UDR Inc. | 3,807 | 140,554 | ||||||
16.0% – Total For Residential | $ | 1,783,271 | ||||||
American Tower Corp. | 5,839 | 663,369 | ||||||
Brandywine Realty Trust | 3,000 | 50,400 | ||||||
Cousins Properties Inc. | 3,500 | 36,400 | ||||||
Douglas Emmett Inc. | 2,500 | 88,800 | ||||||
Lexington Realty Trust | 3,500 | 35,385 | ||||||
National Retail Properties Inc. | 2,250 | 116,370 | ||||||
PS Business Parks Inc. | 500 | 53,040 | ||||||
Public Storage Inc. | 2,400 | 613,416 | ||||||
Retail Properties of America | 3,500 | 59,150 | ||||||
Urban Edge Properties | 1,530 | 45,686 | ||||||
Vornado Realty Trust | 2,561 | 256,407 | ||||||
18.1% – Total For Diversified | $ | 2,018,423 | ||||||
Care Capital Properties Inc. | 1,100 | 28,831 | ||||||
HCP Inc. | 6,500 | 229,970 | ||||||
Healthcare Realty Trust Inc. | 1,500 | 52,485 | ||||||
LTC Properties Inc. | 650 | 33,624 | ||||||
Medical Properties Trust Inc. | 2,800 | 42,588 | ||||||
Omega Healthcare Investors Inc. | 2,500 | 84,875 | ||||||
Universal Health Realty Income Trust | 300 | 17,154 | ||||||
Ventas Inc. | 4,700 | 342,254 | ||||||
Welltower Inc. | 4,750 | 361,808 | ||||||
10.7% – Total For Health Care Facilities | $ | 1,193,589 | ||||||
Diamondrock Hospitality Co. | 4,000 | 36,120 | ||||||
Host Hotels & Resorts Inc. | 10,354 | 167,838 | ||||||
LaSalle Hotel Properties | 1,500 | 35,370 | ||||||
Pebblebrook Hotel Trust | 1,200 | 31,500 |
Real Estate Investment Trusts (REITs) | Shares | Fair Value | ||||||
RL Lodging Trust | 2,500 | $ | 53,625 | |||||
Ryman Hospitality Properties | 1,000 | 50,650 | ||||||
Sunstone Hotel Investors Inc. | 3,121 | 37,670 | ||||||
3.7% – Total For Hotels/Motels | $ | 412,773 | ||||||
Alexandria Real Estate Equities Inc. | 1,000 | 103,520 | ||||||
Boston Properties Inc. | 2,020 | 266,438 | ||||||
CoreSite Realty Corp. | 500 | 44,345 | ||||||
Corporate Office Properties Trust | 2,000 | 59,140 | ||||||
Digital Realty Trust, Inc. | 2,300 | 250,677 | ||||||
Duke Realty Corp. | 5,000 | 133,300 | ||||||
Equity Commonwealth* | 1,700 | 49,521 | ||||||
Highwoods Properties Inc. | 1,700 | 89,760 | ||||||
Kilroy Realty Corp. | 1,545 | 102,418 | ||||||
Liberty Property Trust | 2,661 | 105,695 | ||||||
Mack-Cali Realty Corp. | 1,500 | 40,500 | ||||||
Piedmont Office Realty Trust Inc. | 3,500 | 75,390 | ||||||
11.8% – Total For Office | $ | 1,320,704 | ||||||
CubeSmart | 2,500 | 77,200 | ||||||
DCT Industrial Trust Inc. | 1,375 | 66,055 | ||||||
Eastgroup Properties | 600 | 41,352 | ||||||
Extra Space Storage Inc. | 1,750 | 161,945 | ||||||
First Industrial Realty Trust Inc. | 1,675 | 46,599 | ||||||
Prologis Inc. | 7,306 | 358,286 | ||||||
Sovran Self Storage Inc. | 450 | 47,214 | ||||||
7.2% – Total For Industrial | $ | 798,651 | ||||||
Acadia Realty Trust | 1,000 | 35,520 | ||||||
Alexander’s Inc. | 100 | 40,923 | ||||||
CBL & Associates Properties Inc. | 2,394 | 22,288 | ||||||
DDR Corp. | 7,055 | 127,978 | ||||||
Dupont Fabros Technology Inc. | 1,800 | 85,572 | ||||||
EPR Properties | 1,000 | 80,680 | ||||||
Equity One Inc. | 1,600 | 51,488 | ||||||
Federal Realty Investment Trust | 1,000 | 165,550 | ||||||
General Growth Properties Inc. | 12,200 | 363,804 | ||||||
Hospitality Properties Trust | 2,100 | 60,480 | ||||||
Kimco Realty Corp. | 5,667 | 177,830 | ||||||
Macerich Co. | 2,192 | 187,175 | ||||||
Realty Income Corp. | 3,569 | 247,546 | ||||||
Regency Centers Corp. | 1,375 | 115,129 | ||||||
Simon Property Group Inc. | 4,279 | 928,115 | ||||||
SL Green Realty Corp. | 1,500 | 159,705 | ||||||
Tanger Factory Outlet Centers Inc. | 2,000 | 80,360 |
The accompanying notes are an integral part of these financial statements.
14
Real Estate Investment Trusts (REITs) | Shares | Fair Value | ||||||
Taubman Centers Inc. | 800 | $ | 59,360 | |||||
Washington Real Estate Investment Trust | 1,500 | 47,190 | ||||||
Weingarten Realty Investors | 2,500 | 102,050 | ||||||
WP Glimcher Inc. | 3,353 | 37,520 | ||||||
28.4% – Total For Retail | $ | 3,176,263 | ||||||
Rayonier Inc. | 2,000 | 52,480 | ||||||
Weyerhaeuser Co. | 10,700 | 318,539 | ||||||
3.3% – Total For Timber | $ | 371,019 | ||||||
Total REITs 99.2% | $ | 11,074,693 | ||||||
(Identified Cost $5,400,715) | ||||||||
Cash Equivalents | ||||||||
First American Government Obligation Fund, Class Z** | 69,508 | 69,508 | ||||||
Total Cash Equivalents 0.6% | $ | 69,508 | ||||||
(Identified Cost $69,508) | ||||||||
Total Portfolio Value 99.8% | $ | 11,144,201 | ||||||
(Identified Cost $5,470,223) | ||||||||
Other Assets in Excess of Liabilities 0.2% | $ | 22,884 | ||||||
Total Net Assets 100.0% | $ | 11,167,085 |
* | Non-income producing security. |
** | Variable Rate Security; as of June 30, 2016, the 7 day yield was 0.01%. |
The accompanying notes are an integral part of these financial statements.
15
Common Stocks | Shares | Fair Value | ||||||
Adidas AG ADR | 2,000 | $ | 143,380 | |||||
Daimler AG | 600 | 36,000 | ||||||
Honda Motor Co. Ltd. ADR | 1,940 | 49,140 | ||||||
Magna International Inc. | 2,000 | 70,140 | ||||||
Marks & Spencer Group PLC | 5,000 | 42,600 | ||||||
Publicis Groupe ADR | 7,800 | 131,430 | ||||||
RTL Group SA ADR | 15,000 | 122,100 | ||||||
Sky PLC ADR | 3,500 | 160,335 | ||||||
Sony Corp. ADR | 2,700 | 79,245 | ||||||
Tata Motors Ltd. ADR* | 3,425 | 118,745 | ||||||
Toyota Motor Corp. ADR | 1,800 | 179,982 | ||||||
WPP PLC ADR | 1,300 | 135,876 | ||||||
9.7% – Total For Consumer Discretionary | $ | 1,268,973 | ||||||
Coca-Cola Amatil Ltd. ADR | 10,860 | 66,518 | ||||||
Danone ADR | 6,184 | 87,627 | ||||||
L’Oreal ADR | 2,800 | 107,548 | ||||||
Nestle SA ADR | 2,400 | 185,544 | ||||||
Reckitt Benckiser Group PLC | 5,900 | 119,888 | ||||||
Unilever NV | 2,500 | 117,350 | ||||||
Unilever PLC | 4,000 | 191,640 | ||||||
Wal-Mart De Mexico SA ADR | 6,300 | 151,483 | ||||||
7.9% – Total For Consumer Staples | $ | 1,027,598 | ||||||
BP PLC ADR | 2,298 | 81,602 | ||||||
Cnooc Ltd. | 780 | 97,235 | ||||||
Lukoil Corp. ADR | 3,900 | 162,747 | ||||||
Petrochina Co. Ltd. ADR | 300 | 20,376 | ||||||
Royal Dutch Shell PLC – Class B | 1,400 | 78,400 | ||||||
Sasol Ltd. ADR | 2,800 | 75,936 | ||||||
Statoil ASA | 6,264 | 108,431 | ||||||
Suncor Energy Inc. | 3,200 | 88,736 | ||||||
Technip SA ADR | 6,200 | 83,979 | ||||||
Total SA ADR | 2,327 | 111,929 | ||||||
Woodside Petroleum ADR | 5,200 | 103,740 | ||||||
7.7% – Total For Energy | $ | 1,013,111 | ||||||
Allianz ADR | 7,900 | 113,760 | ||||||
Australia and New Zealand Banking Group Ltd. | 3,200 | 57,888 | ||||||
Banco Bradesco ADR | 12,100 | 94,501 | ||||||
Banco Santander SA | 17,770 | 69,658 | ||||||
Bank of Montreal | 1,240 | 78,604 | ||||||
Barclays PLC ADR | 6,568 | 49,917 | ||||||
BNP Paribas ADR | 4,000 | 90,320 | ||||||
China Construction Bank ADR | 5,300 | 69,801 |
Common Stocks | Shares | Fair Value | ||||||
CK Hutchison Holdings LTD | 8,000 | $ | 87,760 | |||||
Credit Suisse Group ADR | 3,777 | 40,414 | ||||||
Deutsche Boerse AG | 7,000 | 57,190 | ||||||
HSBC Holdings PLC ADR | 3,524 | 110,336 | ||||||
ICICI Bank Ltd. ADR | 8,800 | 63,184 | ||||||
Industrial and Commercial Bank Of China Ltd. | 16,000 | 176,000 | ||||||
Itau Unibanco Holding SA ADR | 11,440 | 107,994 | ||||||
KB Financial Group Inc. ADR | 2,400 | 68,304 | ||||||
Manulife Financial Corp. | 4,420 | 60,421 | ||||||
Mitsubishi UFJ Financial Group Inc. ADR | 35,200 | 155,936 | ||||||
Mizuho Financial Group ADR | 41,400 | 117,990 | ||||||
Orix Corp. ADR | 1,750 | 111,842 | ||||||
Royal Bank of Canada | 1,600 | 94,544 | ||||||
Sumitomo Mitsui Financial Group Inc. | 31,500 | 180,180 | ||||||
Sun Hung Kai Properties Ltd. ADR | 5,450 | 65,782 | ||||||
Swiss Re Ltd. | 4,400 | 96,580 | ||||||
Tokio Marine Holdings Inc. ADR | 6,000 | 197,340 | ||||||
Toronto Dominion Bank | 1,400 | 60,102 | ||||||
UBS Group AG | 4,800 | 62,208 | ||||||
United Overseas Bank Ltd. ADR | 1,900 | 52,098 | ||||||
Westpac Banking Corp. Ltd. ADR | 4,650 | 102,719 | ||||||
Zurich Insurance Group ADR | 3,240 | 80,125 | ||||||
21.2% – Total For Financial Services | $ | 2,773,498 | ||||||
Astellas Pharma Inc. ADR | 16,400 | 255,512 | ||||||
Astrazeneca PLC ADR | 1,600 | 48,304 | ||||||
Bayer AG ADR | 1,300 | 130,845 | ||||||
Dr. Reddy’s Laboratories Ltd. | 3,340 | 171,108 | ||||||
Novartis AG ADR | 2,480 | 204,625 | ||||||
Novo Nordisk AS ADR | 2,800 | 150,584 | ||||||
Roche Holdings Ltd. ADR | 7,100 | 233,945 | ||||||
Shire PLC ADR | 600 | 110,448 | ||||||
Taro Pharmaceuticals Ltd.* | 800 | 116,480 | ||||||
Teva Pharmaceuticals ADR | 2,400 | 120,552 | ||||||
11.8% – Total For Health Care | $ | 1,542,403 | ||||||
ABB Ltd. | 2,900 | 57,507 | ||||||
Atlas Copco AB ADR | 3,000 | 77,700 | ||||||
BAE Systems PLC ADR | 1,600 | 45,296 | ||||||
Bunzl PLC ADR | 4,000 | 122,660 | ||||||
Canadian National Railway Co. | 1,400 | 82,684 | ||||||
Fanuc Corp. ADR | 4,300 | 116,014 |
The accompanying notes are an integral part of these financial statements.
16
Common Stocks | Shares | Fair Value | ||||||
Itochu Corp. ADR | 5,200 | $ | 125,736 | |||||
Keppel Corp. Ltd. ADR | 7,900 | 64,464 | ||||||
Komatsu Ltd. ADR | 6,900 | 118,887 | ||||||
Mitsui & Co., Ltd. ADR | 300 | 71,031 | ||||||
Schneider Electric SA ADR | 10,000 | 118,100 | ||||||
Sensata Technologies Holding NV* | 3,200 | 111,648 | ||||||
Siemens AG | 900 | 92,331 | ||||||
9.2% – Total For Industrials | $ | 1,204,058 | ||||||
Baidu.com* | 400 | 66,060 | ||||||
CGI Group Inc.* | 5,100 | 217,821 | ||||||
Lenovo Group Ltd. | 8,000 | 96,640 | ||||||
Open Text Corp. | 1,600 | 94,656 | ||||||
SAP SE ADR | 3,100 | 232,562 | ||||||
Siliconware Precision Industries Co. ADR | 4,267 | 32,685 | ||||||
SoftBank Corp. ADR | 1,800 | 50,580 | ||||||
Taiwan Semiconductor Manufacturing Co. Ltd. ADR | 10,000 | 262,300 | ||||||
Telefonaktiebolaget LM Ericsson ADR | 5,000 | 38,400 | ||||||
Tencent Holdings Ltd. ADR | 6,500 | 149,305 | ||||||
United Microelectronics ADR | 44,930 | 89,411 | ||||||
10.2% – Total For Information Technology | $ | 1,330,420 | ||||||
Air Liquide SA ADR | 3,777 | 79,430 | ||||||
BASF SE ADR | 1,850 | 141,895 | ||||||
BHP Billiton Ltd. ADR | 2,550 | 72,828 | ||||||
Newcrest Mining Ltd. ADR* | 12,000 | 207,960 | ||||||
Nitto Denko Corp. ADR | 5,600 | 176,680 | ||||||
Posco ADR | 1,400 | 62,300 | ||||||
Rio Tinto PLC ADR | 1,570 | 49,141 | ||||||
Syngenta AG ADR | 1,100 | 84,469 | ||||||
6.7% – Total For Materials | $ | 874,703 | ||||||
America Movil ADR Series L | 4,460 | 54,680 | ||||||
BT Group PLC | 2,000 | 55,700 | ||||||
China Mobile (Hong Kong) Ltd. | 2,700 | 156,330 | ||||||
Deutsche Telekom AG | 4,000 | 67,920 | ||||||
KDDI Corp. | 12,700 | 192,278 | ||||||
MTN Group Ltd. ADR | 5,600 | 54,544 | ||||||
Nippon Telegraph and Telephone Corp. ADR | 2,000 | 94,160 | ||||||
Orange SA ADR | 9,296 | 152,640 | ||||||
Philippine Long Distance Telephone Co. ADR | 1,800 | 80,226 | ||||||
SK Telecom Co. Ltd. | 3,400 | 71,128 |
Common Stocks | Shares | Fair Value | ||||||
Telefonica SA ADR | 4,991 | $ | 47,315 | |||||
Telenor ASA ADR | 6,900 | 114,264 | ||||||
Vodafone Group PLC ADR | 2,727 | 84,237 | ||||||
9.4% – Total For Telecommunication Services | $ | 1,225,422 | ||||||
Centrica PLC | 7,000 | 84,490 | ||||||
Enel SPA ADR | 21,100 | 92,629 | ||||||
Enersis Chile SA ADR | 7,400 | 43,142 | ||||||
Enersis Américas SA ADR | 7,400 | 63,492 | ||||||
Iberdrola SA ADR | 3,578 | 96,964 | ||||||
Korea Electric Power Corp. | 7,800 | 202,254 | ||||||
National Grid PLC ADR | 2,800 | 208,124 | ||||||
6.0% – Total For Utilities | $ | 791,095 | ||||||
Total Common Stocks 99.8% | $ | 13,051,281 | ||||||
(Identified Cost $12,284,172) | ||||||||
Total Portfolio Value 99.8% | $ | 13,051,281 | ||||||
(Identified Cost $12,284,172) | ||||||||
Other Assets in Excess of Liabilities 0.2% | $ | 12,430 | ||||||
Total Net Assets 100.0% | $ | 13,063,711 |
* | Non-income producing security. |
ADR – American Depositary Receipt
PLC – Public Liability Company
The accompanying notes are an integral part of these financial statements.
17
Fixed Income Securities – Bonds | Face Value | Fair Value | ||||||
Corporate Bonds: | ||||||||
Ace INA Holdings Senior Unsecured Notes, 2.875% Due 11/03/2022 | 2,375,000 | $ | 2,484,350 | |||||
American Express Co. Subordinated Notes, 3.6250% Due 12/05/2024 | 3,000,000 | 3,076,833 | ||||||
AON PLC Senior Unsecured Notes, 3.500% Due 06/14/2024 | 455,000 | 468,301 | ||||||
AON PLC Senior Unsecured Notes, 4.000% Due 11/27/2023 | 3,285,000 | 3,509,464 | ||||||
BB&T Corp. Subordinated Notes, 3.950% Due 03/22/2022 | 1,784,000 | 1,913,652 | ||||||
BB&T Corp. Subordinated Notes, 5.250% Due 11/01/2019 | 2,117,000 | 2,345,786 | ||||||
ERP Operating LP Senior Unsecured Notes, 5.750% Due 06/15/2017 | 1,270,000 | 1,322,019 | ||||||
ERP Operating LP Senior Unsecured Notes, 7.125% Due 10/15/2017 | 885,000 | 950,328 | ||||||
Fifth Third Bancorp Subordinated Notes, 4.300% Due 01/16/2024 | 3,600,000 | 3,834,234 | ||||||
Huntington Bancshares Senior Unsecured Notes, 2.600% Due 08/02/2018 | 4,000,000 | 4,076,636 | ||||||
JPMorgan Chase & Co. Subordinated Notes, 3.875% Due 09/10/2024 | 4,000,000 | 4,141,348 | ||||||
Key Bank NA Subordinated Notes, 4.625% Due 06/15/2018 | 746,000 | 779,536 | ||||||
Keycorp Senior Unsecured Notes, 5.100% Due 03/24/2021 | 3,000,000 | 3,374,769 | ||||||
Marsh & McLennan Companies Inc. Senior Unsecured Notes, 2.300% Due 04/01/2017 | 1,000,000 | 1,008,838 | ||||||
Marsh & McLennan Companies Inc. Senior Unsecured Notes, 4.800% Due 07/15/2021 | 3,155,000 | 3,498,579 | ||||||
Morgan Stanley Senior Unsecured Notes, 2.125% Due 04/25/2018 | 4,000,000 | 4,041,863 | ||||||
MUFG Americas Holdings Corp. Senior Unsecured Notes, 2.250% Due 02/10/2020 | 2,000,000 | 2,014,442 | ||||||
National City Corp. Subordinated Notes, 6.875% Due 05/15/2019 | 1,849,000 | 2,084,108 | ||||||
PNC Funding Corp. Bank Guarantee Notes, 5.625% Due 02/01/2017 | 870,000 | 891,490 | ||||||
Prudential Financial Inc. Senior Unsecured Notes, 4.500% Due 11/15/2020 | 3,135,000 | 3,459,752 |
Fixed Income Securities – Bonds | Face Value | Fair Value | ||||||
Prudential Financial Inc. Senior Unsecured Notes, 5.375% Due 06/21/2020 | 105,000 | $ | 118,374 | |||||
Suntrust Banks Inc. Senior Unsecured Notes, 2.900% Due 03/03/2021 | 3,000,000 | 3,106,140 | ||||||
US Bancorp Subordinated Notes, 3.600% Due 09/11/2024 | 4,980,000 | 5,364,322 | ||||||
Wells Fargo & Company Subordinated Notes, 5.606% Due 01/15/2044 | 4,500,000 | 5,383,120 | ||||||
23.4% – Total For Corporate Bonds: Bank and Finance | $ | 63,248,284 | ||||||
AT&T Inc. Senior Unsecured Notes, 3.000% Due 02/15/2022 | 407,000 | 415,063 | ||||||
AT&T Inc. Senior Unsecured Notes, 5.000% Due 03/01/2021 | 2,828,000 | 3,166,653 | ||||||
Becton Dickinson Senior Unsecured Notes, 3.125% Due 11/08/2021 | 3,230,000 | 3,389,023 | ||||||
Burlington Northern Santa Fe Senior Unsecured Notes, 3.450% Due 09/15/2021 | 2,780,000 | 3,012,700 | ||||||
Burlington Northern Santa Fe Senior Unsecured Notes, 3.600% Due 09/01/2020 | 865,000 | 929,448 | ||||||
Chevron Corp. Senior Unsecured Notes, 2.335% Due 12/05/2022 | 5,000,000 | 5,075,170 | ||||||
CR Bard Inc. Senior Unsecured Notes, 4.400% Due 01/15/2021 | 2,110,000 | 2,328,210 | ||||||
CVS Health Corp. Senior Unsecured Notes, 3.500% Due 07/20/2022 | 2,505,000 | 2,697,106 | ||||||
Eaton Corp. Senior Unsecured Notes, 2.750% Due 11/02/2022 | 3,166,000 | 3,245,695 | ||||||
General Electric Capital Corp. Senior Unsecured Floating Rate Notes, 1.428% Due 04/15/2020** | 3,898,000 | 3,937,744 | ||||||
General Electric Capital Corp. Senior Unsecured Floating Rate Notes, 1.653% Due 03/15/2023** | 1,435,000 | 1,426,066 | ||||||
Johnson Controls Inc. Senior Unsecured Notes, 5.000% Due 03/30/2020 | 3,495,000 | 3,824,198 | ||||||
Kroger Co. Senior Unsecured Notes, 2.200% Due 01/15/2017 | 92,000 | 92,569 | ||||||
Kroger Co. Senior Unsecured Notes, 3.400% Due 04/15/2022 | 1,600,000 | 1,711,541 | ||||||
Kroger Co. Senior Unsecured Notes, 7.000% Due 05/01/2018 | 1,500,000 | 1,642,738 | ||||||
McDonalds Corp. Senior Unsecured Notes, 6.300% Due 03/01/2038 | 3,500,000 | 4,630,447 |
The accompanying notes are an integral part of these financial statements.
18
Fixed Income Securities – Bonds | Face Value | Fair Value | ||||||
Norfolk Southern Corp. Senior Unsecured Notes, 5.900% Due 06/15/2019 | 1,728,000 | $ | 1,941,892 | |||||
Procter & Gamble Co. Senior Unsecured Notes, 8.000% Due 10/26/2029 | 2,165,000 | 3,265,307 | ||||||
Shell International Finance Senior Unsecured Notes, 2.125% Due 05/11/2020 | 5,000,000 | 5,103,130 | ||||||
Union Pacific Corp. Senior Unsecured Notes, 7.875% Due 01/15/2019 | 500,000 | 576,144 | ||||||
United Technologies Corp. Senior Unsecured Notes, 4.875% Due 03/01/2020 | 1,025,000 | 1,133,711 | ||||||
United Technologies Junior Subordinated Notes, 1.788% Due 05/04/2018** | 6,000,000 | 6,053,904 | ||||||
Verizon Communications Senior Unsecured Notes, 4.672% Due 03/13/2055 | 4,392,000 | 4,442,244 | ||||||
23.6% – Total For Corporate Bonds: Industrial | $ | 64,040,703 | ||||||
Berkshire Hathaway Energy Company Senior Unsecured Notes, 5.750% Due 04/01/2018 | 3,000,000 | 3,232,455 | ||||||
Enterprise Products Senior Unsecured Notes, 3.350% Due 03/15/2023 | 910,000 | 934,815 | ||||||
Enterprise Products Senior Unsecured Notes, 4.050% Due 02/15/2022 | 2,500,000 | 2,697,697 | ||||||
Eversource Energy Senior Unsecured Notes, 1.450% Due 05/01/2018 | 625,000 | 625,871 | ||||||
Eversource Energy Senior Unsecured Notes, 4.500% Due 11/15/2019 | 2,941,000 | 3,223,277 | ||||||
Gulf Power Co. Senior Unsecured Notes, 5.300% Due 12/01/2016 | 1,195,000 | 1,214,962 | ||||||
Interstate Power & Light Senior Unsecured Notes, 3.250% Due 12/01/2024 | 725,000 | 775,311 | ||||||
National Rural Utilities Collateral Trust, 10.375% Due 11/01/2018 | 1,005,000 | 1,214,344 | ||||||
Williams Partners Senior Unsecured Notes, 4.875% Due 05/15/2023 | 4,000,000 | 3,866,220 | ||||||
Xcel Energy Inc. Senior Unsecured Notes, 4.700% Due 05/15/2020 | 2,636,000 | 2,913,410 | ||||||
Xcel Energy Inc. Senior Unsecured Notes, 5.613% Due 04/01/2017 | 1,037,000 | 1,071,897 | ||||||
8.0% – Total For Corporate Bonds: Utilities | $ | 21,770,259 |
Fixed Income Securities – Bonds | Face Value | Fair Value | |||||||
United States Government Treasury Obligations | |||||||||
United States Treasury Notes, 2.750% Due 08/15/2042 | 9,000,000 | $ | 9,916,173 | ||||||
United States Treasury Notes, 2.750% Due 11/15/2042 | 10,000,000 | 11,000,780 | |||||||
Treasury Inflation Protected Security, 0.625% Due 02/15/2043 | 4,188,013 | 4,076,276 | |||||||
United States Treasury Notes, 3.000% Due 02/28/2017 | 2,500,000 | 2,541,408 | |||||||
United States Treasury Notes, 4.625% Due 02/15/2017 | 2,500,000 | 2,565,043 | |||||||
United States Treasury Floating Rate Notes, 0.532% Due 01/31/2018** | 8,000,000 | 8,015,144 | |||||||
United States Treasury Floating Rate Notes, 0.450% Due 04/30/2018** | 7,000,000 | 7,000,777 | |||||||
16.7% – Total For United States Government Treasury Obligations | $ | 45,115,601 | |||||||
Government Agency Obligations | |||||||||
FHLMC Step-up Coupon Notes, 1.000% Due 05/25/2021** | 4,185,000 | 4,184,870 | |||||||
FHLMC Step-up Coupon Notes, 1.100% Due 06/21/2021** | 4,000,000 | 4,002,764 | |||||||
FHLMC Step-up Coupon Notes, 1.100% Due 06/07/2021** | 7,950,000 | 7,955,215 | |||||||
FHLMC Step-up Coupon Notes, 1.150% Due 07/12/2021** | 5,000,000 | 4,998,665 | |||||||
7.8% – Total For United States Government Agency Obligations | $ | 21,141,514 | |||||||
Government Agency Obligations – Mortgage Backed Securities | |||||||||
FHLMC 10/1 Hybrid Adjustable Rate Mortgage, 3.251% Due 04/01/2042** | 3,071,062 | 3,216,706 | |||||||
FHLMC Gold Partner Certificate Pool G06616, 4.500% Due 12/01/2035 | 891,791 | 974,931 | |||||||
FHLMC Gold Partner Certificate Pool G13596, 4.000% Due 07/01/2024 | 1,989,173 | 2,115,653 | |||||||
FHLMC Gold Partner Certificate Pool G08068, 5.500% Due 07/01/2035 | 1,898,242 | 2,142,433 | |||||||
FHLMC Gold Partner Certificate Pool C01005, 8.000% Due 06/01/2030 | 1,935 | 2,467 | |||||||
FHLMC Partner Certificate Pool 780439, 2.473% Due 04/01/2033** | 137,978 | 145,999 |
The accompanying notes are an integral part of these financial statements.
19
Fixed Income Securities – Bonds | Face Value | Fair Value | ||||||
FNMA CMO Series 2013-21 Class VA, 3.000% Due 07/25/2028 | 4,254,329 | $ | 4,498,731 | |||||
FNMA CMO Series 2014-28 Class PA, 3.500% Due 02/25/2043 | 661,449 | 708,723 | ||||||
FNMA Partner Certificate Pool 253300, 7.500% Due 05/01/2020 | 656 | 667 | ||||||
FHLMC CMO Series 3946 Class LN, 3.500% Due 04/15/2041 | 628,847 | 675,192 | ||||||
FHLMC CMO Series 3969 Class MP, 4.500% Due 04/15/2039 | 638,078 | 650,382 | ||||||
FHLMC CMO Series 4017 Class MA, 3.000% Due 03/01/2042 | 1,432,125 | 1,481,014 | ||||||
FHLMC CMO Series 4287 Class AB, 2.000% Due 12/15/2026 | 2,327,866 | 2,375,582 | ||||||
FNMA CMO Series 2003-79 Class NJ, 5.000% Due 08/25/2023 | 1,112,372 | 1,209,375 | ||||||
FHLMC CMO Series 2877 Class AL, 5.000% Due 10/15/2024 | 510,221 | 554,991 | ||||||
FHLMC CMO Series 2985 Class GE, 5.500% Due 06/15/2025 | 267,943 | 296,530 | ||||||
FHLMC CMO Series 3109 Class ZN, 5.500% Due 02/15/2036 | 2,681,504 | 3,035,695 | ||||||
FHLMC CMO Series 3499 Class PA, 4.500% Due 08/15/2036 | 73,709 | 74,208 | ||||||
FNMA Partner Certificate Pool 725027, 5.000% Due 11/01/2033 | 628,225 | 701,334 | ||||||
FNMA Partner Certificate Pool 725704, 6.000% Due 08/01/2034 | 236,854 | 274,320 | ||||||
FNMA Partner Certificate Pool 888223, 5.500% Due 01/01/2036 | 893,527 | 1,013,480 | ||||||
FNMA Partner Certificate Pool 889185, 5.000% Due 12/01/2019 | 95,972 | 99,329 | ||||||
FNMA Partner Certificate Pool 995112, 5.500% Due 07/01/2036 | 615,734 | 699,367 | ||||||
FNMA Partner Certificate Pool AA4392, 4.000% Due 04/01/2039 | 1,855,576 | 1,994,055 | ||||||
GNMA II Pool 2658, 6.500% Due 10/20/2028 | 27,197 | 32,134 |
Fixed Income Securities – Bonds | Face Value | Fair Value | ||||||
GNMA II Pool 2945, 7.500% Due 07/20/2030 | 5,399 | $ | 6,110 | |||||
GNMA II Pool 4187, 5.500% Due 07/20/2038 | 18,275 | 19,339 | ||||||
GNMA II Pool 4847, 4.000% Due 11/20/2025 | 509,764 | 540,277 | ||||||
GNMA Pool 780400, 7.000% Due 12/15/2025 | 3,277 | 3,884 | ||||||
GNMA Pool 780420, 7.500% Due 08/15/2026 | 1,983 | 2,358 | ||||||
GNMA Pool 781397, 5.500% Due 02/15/2017 | 2,369 | 2,384 | ||||||
GNMA CMO Series 2009-124 Class L, 4.000% Due 11/20/2038 | 331,533 | 343,178 | ||||||
11.0% – Total For Government Agency Obligations – Mortgage Backed Securities | $ | 29,890,828 | ||||||
Taxable Municipal Bonds | ||||||||
Columbus – Franklin County Ohio Finance Authority Revenue Bond – Ohio Capital Fund, 1.557% Due 08/15/2016 | 640,000 | 640,640 | ||||||
Florida Atlantic University Capital Improvement Revenue – Build America Bonds, 6.249% Due 07/01/2020 | 1,000,000 | 1,164,100 | ||||||
Florida Atlantic University Capital Improvement Revenue – Build America Bonds, 7.439% Due 07/01/2030 | 2,125,000 | 2,558,457 | ||||||
Florida Atlantic University Capital Improvement Revenue – Build America Bonds, 7.589% Due 07/01/2037 | 2,500,000 | 2,963,125 | ||||||
Miami University Ohio General Receipts Revenue – Build America Bonds, 4.807% Due 09/01/2017 | 1,250,000 | 1,304,500 | ||||||
State of Ohio Major New Infrastructure Revenue – Build America Bonds, 4.844% Due 12/15/2019 | 2,450,000 | 2,730,696 | ||||||
University of Cincinnati Ohio General Receipts Revenue – Build America Bonds, 4.325% Due 06/01/2017 | 1,375,000 | 1,417,969 | ||||||
University of Cincinnati Ohio General Receipts Revenue – Build America Bonds, 5.616% Due 06/01/2025 | 930,000 | 1,075,843 |
The accompanying notes are an integral part of these financial statements.
20
Fixed Income Securities – Bonds | Face Value | Fair Value | ||||||
University of Washington Revenue – Build America Bonds, 5.400% Due 06/01/2036 | 3,000,000 | $ | 3,860,520 | |||||
6.5% – Total For Taxable Municipal Bonds | $ | 17,715,850 | ||||||
Total Fixed Income Securities – Bonds 97.0% | $ | 262,923,039 | ||||||
(Identified Cost $250,359,513) |
Preferred Stocks | Shares | |||||||
Allstate Corp. Subordinated Debentures, 5.100% Due 01/15/2053 | 154,977 | 4,173,531 | ||||||
Total Preferred Stocks 1.5% | $ | 4,173,531 | ||||||
(Identified Cost $3,888,768) | ||||||||
Cash Equivalents | ||||||||
First American Government Obligation Fund, Class Z, 0.01%** | 7,151,593 | 7,151,593 | ||||||
Total Cash Equivalents 2.6% | $ | 7,151,593 | ||||||
(Identified Cost $7,151,593) | ||||||||
Total Portfolio Value 101.1% | $ | 274,248,163 | ||||||
(Identified Cost $261,399,874) | ||||||||
Liabilities in Excess of Other Assets -1.1% | $ | (3,104,040 | ) | |||||
Total Net Assets 100% | $ | 271,144,123 |
** | Variable Rate Security; the rate shown is as of March 31, 2016. |
CMO – Collateralized Mortgage Obligation
FDIC – Federal Deposit Insurance Corp.
FFCB – Federal Farm Credit Bank
FHLB – Federal Home Loan Bank
FHLMC – Federal Home Loan Mortgage Corp.
FNMA – Federal National Mortgage Association
GNMA – Government National Mortgage Association
The accompanying notes are an integral part of these financial statements.
21
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Akron Ohio GO Limited, 5.000% Due 12/01/2024 | 400,000 | $ | 504,732 | |||||
Cincinnati Ohio GO Unlimited, 5.250% Due 12/01/2029 | 200,000 | 257,662 | ||||||
Green Ohio GO Unlimited Bond Anticipation Notes, 2.000% Due 06/09/2017 | 725,000 | 732,960 | ||||||
Groveport Ohio GO Limited (AMBAC Insured), 3.500% Due 12/01/2023 | 185,000 | 204,173 | ||||||
Lakewood Ohio GO Limited, 4.000% Due 12/01/2029 | 300,000 | 346,941 | ||||||
Licking County Ohio GO Limited Bond Anticipation Notes, 2.000% Due 05/24/2017 | 700,000 | 708,358 | ||||||
Lorain County Ohio GO Limited Bond Anticipation Notes, 1.750% Due 07/06/2016 | 680,000 | 680,109 | ||||||
Lorain County Ohio GO Limited Bond Anticipation Notes, 2.250% Due 11/10/2016 | 195,000 | 196,113 | ||||||
Mason Ohio GO Limited, 4.000% Due 12/01/2020 | 375,000 | 399,086 | ||||||
Newport Kentucky GO Unlimited, 3.000% Due 05/01/2023 | 205,000 | 225,131 | ||||||
Pembroke Pines Florida GO Unlimited, 5.000% Due 09/01/2024 | 200,000 | 256,174 | ||||||
Sandusky Ohio GO Limited, 3.000% Due 12/01/2017 | 300,000 | 310,083 | ||||||
Springboro Ohio GO Limited, 3.000% Due 12/01/2017 | 150,000 | 155,020 | ||||||
Tiffin Ohio GO Unlimited, 3.000% Due 12/01/2018 | 420,000 | 440,454 | ||||||
Tiffin Ohio GO Unlimited, 3.000% Due 12/01/2020 | 225,000 | 242,953 | ||||||
Westerville Ohio GO Limited (AMBAC Insured), 5.000% Due 12/01/2024 | 40,000 | 42,478 | ||||||
Xenia Ohio GO Limited, 2.000% Due 12/01/2017 | 200,000 | 203,934 | ||||||
7.9% – Total For General Obligation – City | $ | 5,906,361 | ||||||
Campbell County Kentucky GO Unlimited (XLCA Insured), 4.000% Due 12/01/2016 | 250,000 | 250,605 | ||||||
Butler County Ohio General Obligation Limited, 5.000% Due 12/01/2024 | 160,000 | 203,042 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Cuyahoga County Ohio Capital Improvement GO Limited, 5.000% Due 12/01/2016 | 325,000 | $ | 330,928 | |||||
Greene County Ohio GO Limited (AMBAC Insured), 4.000% Due 12/01/2017 | 450,000 | 471,663 | ||||||
Hamilton County Ohio Various Purpose GO Limited, 4.000% Due 12/01/2018 | 160,000 | 171,802 | ||||||
Portage County Ohio GO Limited, 3.000% Due 12/01/2021 | 270,000 | 280,951 | ||||||
Rowan County Kentucky GO Unlimited (AGM Insured), 4.000% Due 06/01/2024 | 390,000 | 450,450 | ||||||
Summit County Ohio GO Limited, 4.000% Due 12/01/2023 | 300,000 | 352,359 | ||||||
3.4% – Total For General Obligation – County | $ | 2,511,800 | ||||||
Ohio GO Unlimited, 4.000% Due 05/01/2017 | 100,000 | 102,841 | ||||||
Ohio GO Unlimited Common Schools, 5.000% Due 09/15/2016 | 200,000 | 201,826 | ||||||
Ohio GO Unlimited Common Schools – Series C, 4.250% Due 09/15/2022 | 845,000 | 1,001,105 | ||||||
Ohio GO Unlimited Higher Education – Series C, 5.000% Due 08/01/2016 | 370,000 | 371,402 | ||||||
Ohio Infrastructure Improvement GO Unlimited, 5.000% Due 08/01/2022 | 500,000 | 612,865 | ||||||
3.1% – Total For General Obligation – State | $ | 2,290,039 | ||||||
Arizona Board of Regents Revenue Arizona State University, 5.000% Due 08/01/2028 | 815,000 | 997,715 | ||||||
Arizona Board of Regents Revenue Arizona State University, 5.750% Due 07/01/2023* | 300,000 | 329,766 | ||||||
Arizona Board of Regents Revenue University of Arizona, 5.000% Due 06/01/2029 | 125,000 | 156,957 | ||||||
Colorado Board of Governors University Enterprise System Revenue, 5.000% Due 03/01/2027 | 225,000 | 294,253 | ||||||
Colorado Higher Education Lease Financing Program Certificate of Participation, 5.000% Due 11/01/2025 | 290,000 | 375,045 |
The accompanying notes are an integral part of these financial statements.
22
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Florida Atlantic University Finance Corp. Capital Improvement Revenue, 5.000% Due 07/01/2016 | 250,000 | $ | 250,000 | |||||
Florida State Board of Governors Florida Atlantic University Parking Revenue, 3.000% Due 07/01/2016 | 300,000 | 300,000 | ||||||
Florida State Board of Governors Florida State University Mandatory Student Fee Revenue Series A, 4.000% Due 07/01/2018 | 600,000 | 639,228 | ||||||
Kent State University Ohio General Receipt Revenue Series B (Assured Guaranty Insured), 5.000% Due 05/01/2017 | 830,000 | 860,079 | ||||||
Lake County Ohio Community College District GO Unlimited, 2.000% Due 12/01/2018 | 155,000 | 158,745 | ||||||
Lorain County Ohio Community College District General Receipts Revenue Bond, 3.000% Due 06/01/2020 | 190,000 | 202,700 | ||||||
Miami University Ohio General Receipts Revenue, 4.000% Due 09/01/2023 | 1,040,000 | 1,170,094 | ||||||
Miami University Ohio General Receipts Revenue, 5.000% Due 09/01/2020 | 100,000 | 115,699 | ||||||
Miami University Ohio Revenue (AMBAC Insured), 5.250% Due 09/01/2017 | 150,000 | 157,857 | ||||||
Miami University Ohio Revenue, 4.000% Due 09/01/2027 | 300,000 | 337,899 | ||||||
Northern Kentucky University General Receipts Revenue, 3.000% Due 09/01/2021 | 210,000 | 226,972 | ||||||
Ohio Higher Education Facilities Revenue Case Western Reserve – Series C, 5.000% Due 12/01/2020 | 155,000 | 164,309 | ||||||
Ohio Higher Education Facilities Revenue University of Dayton, 5.500% Due 12/01/2024 | 250,000 | 277,083 | ||||||
Ohio State Higher Educational Facilities Revenue – University of Dayton, 4.000% Due 12/01/2017 | 165,000 | 172,491 | ||||||
Ohio State Higher Educational Facilities Revenue – University of Dayton, 5.000% Due 12/01/2018 | 155,000 | 169,410 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Ohio University General Receipts Revenue Bond, 5.000% Due 12/01/2019 | 135,000 | $ | 152,535 | |||||
Ohio University General Receipts Revenue Bond, 5.000% Due 12/01/2022 | 110,000 | 133,643 | ||||||
Purdue Indiana University Certificates of Participation, 5.250% Due 07/01/2017 | 300,000 | 313,635 | ||||||
University of Akron Ohio General Receipts Revenue (AGM Insured), 5.000% Due 01/01/2022 | 350,000 | 396,046 | ||||||
University of Akron Ohio General Receipts Revenue, 5.000% Due 01/01/2028 | 410,000 | 503,410 | ||||||
University of Akron Ohio General Receipts Revenue, 5.000% Due 01/01/2029 | 650,000 | 787,462 | ||||||
University of Akron Ohio General Receipts Revenue, 5.000% Due 01/01/2029 | 335,000 | 420,046 | ||||||
University of Cincinnati General Receipts Revenue Series G, 5.000% Due 06/01/2017 | 280,000 | 291,152 | ||||||
University of Cincinnati General Receipts Revenue, 5.000% Due 06/01/2020 | 300,000 | 346,563 | ||||||
University of Cincinnati General Receipts Revenue, 5.000% Due 06/01/2020* | 250,000 | 265,378 | ||||||
University of Cincinnati General Receipts Revenue, 5.000% Due 06/01/2026 | 470,000 | 558,821 | ||||||
University of Toledo General Receipts Revenue, 5.000% Due 06/01/2017 | 205,000 | 212,483 | ||||||
University of Toledo Revenue, 5.000% Due 06/01/2021 | 300,000 | 350,376 | ||||||
University of Toledo Revenue, 5.000% Due 06/01/2026 | 885,000 | 1,069,319 | ||||||
17.5% – Total For Higher Education | $ | 13,157,171 | ||||||
Allegheny County Pennsylvania Hospital Development Authority Revenue – University of Pittsburgh Medical Center, 5.000% Due 09/01/2017 | 125,000 | 131,234 | ||||||
Allegheny County Pennsylvania Hospital Development Authority Revenue – University of Pittsburgh Medical Center, 5.000% Due 10/15/2024 | 100,000 | 117,907 |
The accompanying notes are an integral part of these financial statements.
23
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Allegheny County Pennsylvania Hospital Development Authority Revenue – University of Pittsburgh Medical Center, 6.000% Due 07/01/2027 | 250,000 | $ | 343,735 | |||||
Butler County Ohio Hospital Facilities Revenue – Cincinnati Children’s Hospital (National RE Insured), 5.000% Due 05/15/2031 | 400,000 | 401,652 | ||||||
Franklin County Ohio Hospital Revenue Nationwide Childrens – Series A, 4.500% Due 11/01/2021 | 335,000 | 363,991 | ||||||
Hamilton County Ohio Health Care Facilities Revenue – The Christ Hospital Obligated Group, 5.250% Due 06/01/2027 | 420,000 | 494,101 | ||||||
Hamilton County Ohio Health Care Facilities Revenue – The Christ Hospital, 5.250% Due 06/01/2025 | 950,000 | 1,130,985 | ||||||
Hamilton County Ohio Hospital Facilities Revenue Cincinnati Children’s Hospital, 5.000% Due 05/15/2027 | 100,000 | 124,760 | ||||||
Kentucky Economic Development Finance Authority Hospital Facilities Revenue – St. Elizabeth Medical Center, 5.000% Due 05/01/2024 | 500,000 | 558,720 | ||||||
Monroeville Pennsylvania Finance Authority Revenue – University of Pittsburgh Medical Center, 5.000% Due 02/15/2027 | 300,000 | 386,631 | ||||||
Ohio Hospital Facilities Revenue – Cleveland Clinic, 5.000% Due 01/01/2020 | 170,000 | 193,868 | ||||||
Ohio Hospital Facilities Revenue – Cleveland Clinic, 5.000% Due 01/01/2025 | 430,000 | 475,829 | ||||||
Ohio Hospital Facilities Revenue – Cleveland Clinic, 5.000% Due 01/01/2018 | 100,000 | 106,531 | ||||||
Pennsylvania Economic Development Financing Authority – University of Pittsburgh Medical Center Revenue, 5.000% Due 02/01/2025 | 450,000 | 563,454 | ||||||
Nashville and Davidson County Tennessee Vanderbilt University Medical Center, 5.000% Due 07/01/2031 | 150,000 | 186,405 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Pennsylvania Economic Development Financeing Authority – University of Pittsburgh Medical Center Revenue, 5.000% Due 02/01/2029 | 250,000 | $ | 306,048 | |||||
Pennsylvania State Higher Education Facility Bond – University of Pennsylvania Health System, 5.250% Due 08/15/2026 | 500,000 | 604,455 | ||||||
8.6% – Total For Hospital/Health Bonds | $ | 6,490,306 | ||||||
Franklin County Ohio Convention Facilities Authority Revenue, 5.000% Due 12/01/2022 | 500,000 | 611,235 | ||||||
Hopkins County Kentucky Public Properties Corp. Judicial Center Project First Mortgage Revenue, 3.000% Due 06/01/2019 | 300,000 | 316,503 | ||||||
Kentucky Association of Counties Financing Corp. Revenue, 4.250% Due 02/01/2023 | 200,000 | 223,310 | ||||||
Mason Ohio Certificate of Participation – Community Center Project, 3.625% Due 12/01/2018 | 150,000 | 159,030 | ||||||
Mason Ohio Certificate of Participation, 5.000% Due 12/01/2023 | 750,000 | 875,017 | ||||||
Newport Kentucky First Mortgage Court Facilities Project Revenue, 4.000% Due 10/01/2025 | 500,000 | 542,305 | ||||||
Newport Kentucky First Mortgage Court Facilities Project Revenue, 4.000% Due 10/01/2026 | 100,000 | 108,196 | ||||||
Ohio Capital Facilities Lease Appropriation – Parks & Recreational Improvement Revenue, 1.500% Due 08/01/2018 | 100,000 | 101,454 | ||||||
Ohio Capital Facilities Lease Appropriation – Parks & Recreational Improvement Revenue, 2.000% Due 08/01/2016 | 200,000 | 200,252 | ||||||
Ohio Capital Facilities Lease Appropriation Revenue, 4.000% Due 04/01/2026 | 150,000 | 167,371 | ||||||
Ohio Capital Facilities Lease Appropriation Revenue, 5.000% Due 04/01/2024 | 275,000 | 321,723 | ||||||
4.8% – Total For Revenue Bonds – Facility | $ | 3,626,396 |
The accompanying notes are an integral part of these financial statements.
24
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Akron Ohio Sewer System Revenue (AMBAC Insured), 5.000% Due 12/01/2016 | 250,000 | $ | 254,365 | |||||
Akron Ohio Sewer System Revenue (AMBAC Insured), 5.000% Due 12/01/2017 | 400,000 | 421,420 | ||||||
Butler County Ohio Water and Sewer GO Limited, 3.500% Due 12/01/2017 | 400,000 | 416,408 | ||||||
Central Ohio Solid Waste Authority GO Limited, 5.000% Due 12/01/2023 | 120,000 | 146,752 | ||||||
Central Ohio Solid Waste Authority GO Limited, 5.000% Due 12/01/2023* | 10,000 | 12,255 | ||||||
Clermont County Ohio Sewer System Revenue, 2.000% Due 08/01/2018 | 300,000 | 306,129 | ||||||
Evansville Indiana Waterworks District Revenue, 5.000% Due 01/01/2022 | 300,000 | 357,189 | ||||||
Lima Ohio Sanitary Sewer Revenue, 3.000% Due 12/01/2016 | 280,000 | 282,699 | ||||||
Lima Ohio Sanitary Sewer Revenue, 5.000% Due 12/01/2024 | 200,000 | 241,494 | ||||||
Mt. Vernon Ohio Waterworks Revenue, 3.750% Due 12/01/2018 | 225,000 | 240,318 | ||||||
Ohio Water Development Authority Revenue, 5.000% Due 12/01/2022 | 275,000 | 340,555 | ||||||
Springboro Ohio Sewer System Revenue, 4.000% Due 06/01/2022 | 245,000 | 280,518 | ||||||
Toledo Ohio Water System Revenue, 5.000% Due 11/15/2025 | 255,000 | 323,205 | ||||||
Toledo Ohio Waterworks Revenue, 4.000% Due 11/15/2022 | 365,000 | 419,659 | ||||||
Washington County Oregon Clean Water Services Sewer Revenue Senior Lien Series A, 5.250% Due 10/01/2025 | 290,000 | 331,142 | ||||||
5.8% – Total For Revenue Bonds – Water & Sewer | $ | 4,374,108 | ||||||
Humboldt County Nevada Polution Control Revenue (Sierra Pacific Power Co.), 1.250% Due 06/03/2019 | 300,000 | 300,768 | ||||||
Akron Ohio Income Tax Revenue Commnuity Learning Centers, 5.000% Due 12/01/2028 | 380,000 | 458,196 | ||||||
Aurora Colorado Certificates of Participation, 3.500% Due 12/01/2018 | 280,000 | 296,988 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Cincinnati Ohio Economic Development Revenue, 4.200% Due 11/01/2019 | 150,000 | $ | 162,129 | |||||
Cincinnati Ohio Economic Development Revenue (Baldwin 300 Project), 2.000% Due 11/01/2016 | 220,000 | 221,052 | ||||||
Cincinnati Ohio Economic Development Revenue (Baldwin 300 Project), 4.750% Due 11/01/2030 | 500,000 | 607,110 | ||||||
Cincinnati Ohio Economic Development Revenue (Baldwin 300 Project), 5.000% Due 11/01/2032 | 390,000 | 482,071 | ||||||
Cincinnati Ohio Economic Development Revenue U-Square-the-Loop Project, 3.500% Due 11/01/2024 | 110,000 | 119,444 | ||||||
Clermont County Ohio Transportation District Roadway Improvement Revenue Bond, 2.000% Due 12/01/2017 | 240,000 | 244,822 | ||||||
Escambia County Florida Pollution Control Revenue, 2.100% Due 4/11/2019 | 170,000 | 174,192 | ||||||
Escambia County Florida Solid Waste Disposal Revenue, 1.400% Due 12/01/2017 | 555,000 | 558,158 | ||||||
Florida Board of Education Lottery Revenue, 4.000% Due 07/01/2022 | 105,000 | 116,237 | ||||||
Hamilton County Ohio Economic Development King Highland Community Urban Redevelopment Corp. Revenue, 5.000% Due 06/01/2030 | 655,000 | 802,532 | ||||||
Louisa Virginia Industrial Development Authority (Virginia Electric & Power Co.), 2.150% Due 09/01/2020 | 650,000 | 673,329 | ||||||
Mobile Alabama Industrial Development Board Pollution Control Revenue, 1.625% Due 10/02/2018 | 400,000 | 404,540 | ||||||
Ohio Major New Infrastructure Revenue, 5.500% Due 06/15/2020* | 600,000 | 656,052 | ||||||
Ohio Major New State Infrastructure Project Revenue, 5.000% Due 12/15/2022 | 250,000 | 301,612 | ||||||
Ohio Major New State Infrastructure Project Revenue, 5.000% Due 12/15/2023 | 500,000 | 624,780 |
The accompanying notes are an integral part of these financial statements.
25
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Ohio Major New State Infrastructure Project Revenue, 6.000% Due 06/15/2017 | 300,000 | $ | 315,363 | |||||
Ohio Revitalization Project Revenue, 3.000% Due 10/01/2016* | 100,000 | 100,586 | ||||||
Ohio Transportation Project Revenue, 2.000% Due 05/15/2018 | 155,000 | 158,424 | ||||||
10.4% – Total For Other Revenue Bonds | $ | 7,778,385 | ||||||
Boone County Kentucky SD Finance Corp. Revenue Bond, 2.500% Due 05/01/2019 | 500,000 | 518,950 | ||||||
Breckinridge County Kentucky SD Finance Corp., 5.000% Due 04/01/2025 | 265,000 | 327,707 | ||||||
Brookville Ohio LSD GO Limited (FSA Insured), 4.000% Due 12/01/2019 | 120,000 | 124,915 | ||||||
Bullitt County Kentucky SD Finance Corp. School Building Revenue Bond, 2.500% Due 07/01/2018 | 315,000 | 324,204 | ||||||
Chillicothe Ohio CSD GO (FGIC Insured), 4.000% Due 12/01/2018 | 300,000 | 304,194 | ||||||
Clark County Kentucky SD Finance Corp. Revenue Bond, 3.000% Due 08/01/2022 | 115,000 | 124,138 | ||||||
Columbus Ohio CSD GO Limited, 2.000% Due 12/01/2016 | 125,000 | 125,743 | ||||||
Columbus Ohio CSD GO Unlimited, 4.000% Due 12/01/2029 | 400,000 | 468,016 | ||||||
Columbus Ohio CSD School Facilities Construction and Improvement GO, 4.000% Due 12/01/2023 | 175,000 | 190,823 | ||||||
Danville Indiana School Building Corp. First Mortgage Revenue, 4.000% Due 07/15/2017 | 225,000 | 232,405 | ||||||
Dublin Ohio CSD GO Unlimited, 5.000% Due 12/01/2026 | 500,000 | 616,925 | ||||||
Fairfield Ohio CSD GO Unlimited, 5.000% Due 12/01/2020 | 420,000 | 487,847 | ||||||
Fairlawn Ohio LSD GO Unlimited (School District Credit Program), 3.000% Due 12/01/2018 | 170,000 | 177,720 | ||||||
Fort Mill South Carolina School Facilities Corp. Installment Purchase Revenue, 5.000% Due 12/01/2024 | 300,000 | 375,342 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Franklin Indiana Community Middle School Building Corp., 2.000% Due 07/15/2016 | 150,000 | $ | 150,093 | |||||
Franklin Indiana Community Multi-School Building Corp., 5.000% Due 01/15/2023 | 200,000 | 243,494 | ||||||
Green County Kentucky SD Finance Corp. School Building Revenue (State Seek Insured), 2.750% Due 04/01/2017 | 370,000 | 375,010 | ||||||
Greenville Ohio CSD GO Unlimited (SD Credit Program Insured), 4.000% Due 01/01/2021 | 110,000 | 122,090 | ||||||
Hamilton Ohio CSD GO Unlimited (School District Credit Program), 5.000% Due 12/01/2019 | 300,000 | 340,044 | ||||||
Hardin County Kentucky SD Finance Corp. Revenue, 2.500% Due 06/01/2021 | 100,000 | 104,951 | ||||||
Hardin County Kentucky SD Finance Corp. Revenue, 5.000% Due 05/01/2024 | 500,000 | 610,900 | ||||||
Harper Creek Michigan CSD GO Unlimited, 4.000% Due 05/01/2017 | 220,000 | 225,810 | ||||||
Harrison Hills Ohio CSD GO Unlimited (School District Credit Program), 4.000% Due 11/01/2017 | 215,000 | 224,185 | ||||||
Highland Ohio LSD GO Unlimited, 2.000% Due 12/01/2016 | 120,000 | 120,698 | ||||||
Hillsborough County Florida School Board Certificates of Participation, 5.000% Due 07/01/2025 | 200,000 | 255,358 | ||||||
Keller Texas ISD GO Unlimited, 4.500% Due 02/15/2020 | 5,000 | 5,484 | ||||||
Kenston Ohio LSD Improvement GO Unlimited, 5.000% Due 12/01/2019 | 150,000 | 170,617 | ||||||
Kenton County Kentucky SD Finance Corp. School Building Revenue, 4.500% Due 02/01/2025 | 300,000 | 328,896 | ||||||
Lake County Ohio GO Limited Bond Anticipation Notes, 1.000% Due 3/22/2017 | 1,000,000 | 1,002,880 | ||||||
Kettering Ohio CSD GO Unlimited, 4.750% Due 12/01/2018 | 250,000 | 259,210 | ||||||
Lake Ohio LSD of Stark County GO Unlimited, 2.000% Due 12/01/2016 | 150,000 | 150,873 |
The accompanying notes are an integral part of these financial statements.
26
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Lake Ohio LSD of Stark County GO Unlimited, 4.000% Due 12/01/2023 | 400,000 | $ | 461,884 | |||||
Lakota Ohio LSD GO Unlimited, 4.000% Due 12/01/2027 | 125,000 | 143,164 | ||||||
Lakota Ohio LSD GO Unlimited, 5.000% Due 12/01/2021 | 350,000 | 419,170 | ||||||
Lakota Ohio LSD GO, 5.250% Due 12/01/2025 | 205,000 | 267,574 | ||||||
Licking Valley Ohio LSD GO Unlimited, 2.000% Due 12/01/2017 | 200,000 | 203,876 | ||||||
Mahoning County Ohio Career and Technical Center Board of Education Certificates of Participation, 3.500% Due 12/01/2018 | 100,000 | 103,502 | ||||||
Mansfield Texas ISD GO Unlimited, 1.750% Due 08/1/2017 | 400,000 | 404,380 | ||||||
Mariemont Ohio CSD School Facilities Project Certificate of Participation, 1.500% Due 12/01/2017 | 115,000 | 115,903 | ||||||
Marysville Michigan PSD GO Unlimited, 5.000% Due 05/01/2021 | 250,000 | 293,840 | ||||||
Marysville Ohio Exempted Village SD GO Unlimited, 4.000% Due 12/01/2023 | 165,000 | 193,723 | ||||||
Meade County Kentucky SD Finance Corp. School Building Revenue (Natl-RE Seek Insured), 4.000% Due 09/01/2020 | 155,000 | 155,835 | ||||||
Miamisburg Ohio CSD Certificates of Participation, 1.000% Due 12/01/2016 | 100,000 | 100,004 | ||||||
Miamisburg Ohio CSD Certificates of Participation, 2.000% Due 12/01/2018 | 160,000 | 162,794 | ||||||
Milford Ohio Exempt Village SD GO Unlimited (AGM Insured), 5.500% Due 12/01/2030 | 950,000 | 1,280,334 | ||||||
Mt. Healthy Ohio CSD GO Unlimited (School District Credit Program), 5.000% Due 12/01/2018 | 250,000 | 273,493 | ||||||
Newark Ohio CSD GO Unlimited, (School District Credit Program), 4.000% Due 12/01/2026 | 235,000 | 277,354 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Northwest Ohio LSD Hamilton & Butler Counties Certificates of Participation, 2.500% Due 12/01/2019 | 150,000 | $ | 156,379 | |||||
Northwest Ohio LSD Hamilton & Butler Counties GO Unlimited, 2.000% Due 12/01/2016 | 340,000 | 342,020 | ||||||
Northwest Ohio LSD Hamilton & Butler Counties GO Unlimited, 5.000% Due 12/01/2028 | 100,000 | 124,118 | ||||||
Northwest Ohio LSD Hamilton & Butler Counties GO Unlimited, 5.000% Due 12/01/2029 | 150,000 | 185,586 | ||||||
Parchment Michigan SD GO Unlimited, 4.000% Due 05/01/2018 | 275,000 | 290,757 | ||||||
Pickerington Ohio LSD GO (National RE Insured), 4.500% Due 12/01/2023 | 500,000 | 508,280 | ||||||
Princeton Ohio CSD Certificates of Participation, 3.500% Due 12/01/2026 | 275,000 | 293,257 | ||||||
Reynoldsburg Ohio CSD GO, 4.375% Due 12/01/2018 | 200,000 | 214,262 | ||||||
Reynoldsburg Ohio CSD GO, 5.000% Due 12/01/2020* | 200,000 | 216,624 | ||||||
Scott County Kentucky SD Finance Corp. Revenue Bond, 2.500% Due 02/01/2018 | 100,000 | 102,409 | ||||||
South Range Ohio LSD GO Unlimited, 2.000% Due 12/01/2018 | 125,000 | 127,660 | ||||||
Springboro Ohio CSD GO (AGM Insured), 5.250% Due 12/01/2018 | 310,000 | 340,733 | ||||||
Switzerland Ohio LSD GO Unlimited (SDCEP Insured), 4.000% Due 12/01/2026 | 415,000 | 469,975 | ||||||
Sycamore Ohio CSD GO, 4.375% Due 12/01/2018 | 400,000 | 406,672 | ||||||
Talawanda Ohio SD GO Limited, 3.000% Due 12/01/2016 | 120,000 | 121,220 | ||||||
Toledo Ohio CSD GO Unlimited, 5.000% Due 12/01/2029 | 660,000 | 825,726 | ||||||
Vermillion Ohio LSD Certificates of Participation, 5.000% Due 12/01/2023 | 230,000 | 266,832 | ||||||
Washington County Kentucky SD Finance Corp. Revenue Bond, 3.000% Due 08/01/2019 | 185,000 | 195,464 |
The accompanying notes are an integral part of these financial statements.
27
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Wayne Trace Ohio LSD GO (SDCEP Insured), 3.000% Due 12/01/2020 | 320,000 | $ | 327,670 | |||||
West Clermont Ohio LSD GO Unlimited (School District Credit Program), 4.000% Due 12/01/2017 | 300,000 | 313,620 | ||||||
Western Reserve Ohio LSD GO (SDCEP Insured), 4.000% Due 12/01/2022 | 240,000 | 266,808 | ||||||
Wyoming Ohio CSD GO Unlimited, 5.000% Due 12/01/2023 | 200,000 | 248,870 | ||||||
Wyoming Ohio CSD GO Unlimited, 5.750% Due 12/01/2017 | 460,000 | 492,973 | ||||||
Wyoming Ohio CSD School Improvement GO Unlimited, 3.000% Due 12/01/2018 | 160,000 | 167,656 | ||||||
Zanesville Ohio CSD GO Unlimited (SDCEP Insured), 4.500% Due 12/01/2019 | 200,000 | 221,798 | ||||||
28.2% – Total For School District | $ | 21,173,721 | ||||||
Kentucky Asset and Liability Commission Revenue, 5.250% Due 09/1/2023 | 965,000 | 1,197,719 | ||||||
Kentucky Property and Buildings Commission Revenue, 5.000% Due 08/01/2025 | 600,000 | 734,124 | ||||||
Kentucky Property and Buildings Commission Revenue, 5.000% Due 08/01/2029 | 600,000 | 736,332 | ||||||
Kentucky Property and Buildings Commission Revenue, 5.000% Due 10/01/2023 | 350,000 | 426,192 | ||||||
Ohio Building Authority (FGIC Insured), 5.000% Due 10/01/2017 | 420,000 | 442,991 | ||||||
Ohio Building Authority Revenue (National Re Insured), 5.000% Due 10/01/2016 | 100,000 | 101,069 | ||||||
Ohio Building Authority Revenue, 5.000% Due 10/01/2020 | 215,000 | 242,389 | ||||||
Ohio Building Authority State Facilities Administrative Building Fund Project B, 5.250% Due 10/01/2017 | 180,000 | 190,406 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Ohio Department of Administration Certificate of Participation – Multi-Agency Radio Communication Project, 4.000% Due 09/01/2027 | 145,000 | $ | 162,983 | |||||
Ohio Department of Administration Certificate of Participation – Multi-Agency Radio Communication Project, 5.000% Due 09/01/2020 | 350,000 | 406,805 | ||||||
Ohio Department of Administration Certificate of Participation, 5.000% Due 03/01/2024 | 300,000 | 360,846 | ||||||
Ohio Department of Administration Certificates of Participation, 5.000% Due 03/01/2017 | 200,000 | 205,710 | ||||||
6.9% – Total For State Agency | $ | 5,207,566 | ||||||
Missouri State Housing Development Commission Single Family Mortgage Revenue (GNMA/FNMA/FHLMC Insured), 3.550% Due 05/01/2023 | 275,000 | 292,790 | ||||||
Missouri State Housing Development Commission Single Family Mortgage Revenue Series C (GNMA/FNMA/FHLMC Insured), 4.650% Due 09/01/2024 | 50,000 | 52,547 | ||||||
Ohio Housing Finance Agency Residential Mortgage Revenue 2009 Series A, 5.550% Due 09/01/2028 | 155,000 | 160,687 | ||||||
Ohio Housing Finance Agency Residential Mortgage Revenue Series F (FNMA/GNMA/FHLMC Insured), 4.500% Due 09/01/2024 | 220,000 | 229,607 | ||||||
Ohio Housing Finance Agency Revenue, 5.900% Due 09/01/2023 | 110,000 | 113,226 | ||||||
1.1% – Total For Housing | $ | 848,857 | ||||||
Total Municipal Income Securities – Bonds 97.7% | $ | 73,364,710 | ||||||
(Identified Cost $69,657,826) |
The accompanying notes are an integral part of these financial statements.
28
Cash Equivalents | Shares | Fair Value | ||||||
Federated Ohio Municipal Cash Trust Money Market Fund** | 2,322,335 | $ | 2,322,335 | |||||
Total Cash Equivalents 3.1% | $ | 2,322,335 | ||||||
(Identified Cost $2,322,335) | ||||||||
Total Portfolio Value 100.8% | $ | 75,687,045 | ||||||
(Identified Cost $71,980,161) | ||||||||
Liabilities in Excess of Other Assets -0.8% | $ | (579,183 | ) | |||||
Total Net Assets 100.0% | $ | 75,107,862 |
* | Pre-refunded/Escrowed-to-Maturity Bonds; as of June 30, 2016, these bonds represented 2.10% of total assets. |
** | Variable Rate Security; as of June 30, 2016, the 7 day yield was 0.01%. |
AGM – Assured Guaranty Municipal Mortgage Association
AMBAC – American Municipal Bond Assurance Corp.
CSD – City School District
FGIC – Financial Guaranty Insurance Co.
FHLMC – Federal Home Loan Mortgage Corp.
FNMA – Federal National Mortgage Association
FSA – Financial Security Assurance
GNMA – Government National Mortgage Association
GO – General Obligation
LSD – Local School District
MBIA – Municipal Bond Insurance Association
PSD – Public School District
SD – School District
SDCEP – Ohio School District Credit Enhancement Program
The accompanying notes are an integral part of these financial statements.
29
Statements of Assets and Liabilities
Equity Income Fund | Growth Fund | Opportunity Fund | ||||||||||
Assets: | ||||||||||||
Investment Securities at Fair Value* | $ | 140,202,247 | $ | 44,435,593 | $ | 38,527,927 | ||||||
Due to Custodian | — | (121,941 | ) | — | ||||||||
Dividends and Interest Receivable | 135,161 | 37,608 | 40,094 | |||||||||
Securities Sold Receivable | 2,936,044 | 236,080 | 619,782 | |||||||||
Fund Shares Sold Receivable | 10,300 | 400 | 1,929 | |||||||||
Total Assets | $ | 143,283,752 | $ | 44,587,740 | $ | 39,189,732 | ||||||
Liabilities: | ||||||||||||
Accrued Management Fees | $ | 113,842 | $ | 36,908 | $ | 31,920 | ||||||
Securities Purchased Payable | 2,539,828 | — | 185,444 | |||||||||
Fund Shares Redeemed Payable | 58,172 | 6,483 | 12,495 | |||||||||
Total Liabilities | $ | 2,711,842 | $ | 43,391 | $ | 229,859 | ||||||
Net Assets | $ | 140,571,910 | $ | 44,544,349 | $ | 38,959,873 | ||||||
Net Assets Consist of: | ||||||||||||
Paid in Capital | $ | 120,165,367 | $ | 36,997,094 | $ | 33,062,709 | ||||||
Accumulated Undistributed Net Investment Income | 1,138,342 | 154,196 | 113,645 | |||||||||
Accumulated Net Realized Gain (Loss) from Security Transactions | 2,398,365 | (45,309 | ) | 630,979 | ||||||||
Net Unrealized Gain on Investments | 16,869,836 | 7,438,368 | 5,152,540 | |||||||||
Net Assets | $ | 140,571,910 | $ | 44,544,349 | $ | 38,959,873 | ||||||
Shares Outstanding (Unlimited Amount Authorized) | 6,665,596 | 1,630,956 | 1,067,328 | |||||||||
Offering, Redemption and Net Asset Value Per Share | $ | 21.09 | $ | 27.31 | $ | 36.50 | ||||||
*Identified Cost of Investment Securities | $ | 123,332,411 | $ | 36,997,225 | $ | 33,375,387 |
The accompanying notes are an integral part of these financial statements.
30
Statements of Assets and Liabilities – continued
Realty Fund | International Fund | Fixed Income Fund | Municipal Income Fund | |||||||||||||
Assets: | ||||||||||||||||
Investment Securities at Fair Value* | $ | 11,144,201 | $ | 13,051,281 | $ | 274,248,163 | $ | 75,687,045 | ||||||||
Due to Custodian | — | (59,081 | ) | — | — | |||||||||||
Dividends and Interest Receivable | 31,631 | 82,421 | 2,070,197 | 562,398 | ||||||||||||
Securities Sold Receivable | — | 654 | 8,210 | — | ||||||||||||
Fund Shares Sold Receivable | 25 | 3,076 | 74,718 | — | ||||||||||||
Total Assets | $ | 11,175,857 | $ | 13,078,351 | $ | 276,401,288 | $ | 76,249,443 | ||||||||
Liabilities: | ||||||||||||||||
Accrued Management Fees | $ | 8,772 | $ | 10,917 | $ | 187,837 | $ | 39,903 | ||||||||
Securities Purchased Payable | — | — | 5,000,461 | 1,101,678 | ||||||||||||
Fund Shares Redeemed Payable | — | 3,723 | 68,867 | — | ||||||||||||
Total Liabilities | $ | 8,772 | $ | 14,640 | $ | 5,257,165 | $ | 1,141,581 | ||||||||
Net Assets | $ | 11,167,085 | $ | 13,063,711 | $ | 271,144,123 | $ | 75,107,862 | ||||||||
Net Assets Consist of: | ||||||||||||||||
Paid in Capital | $ | 5,362,545 | $ | 12,454,321 | $ | 256,619,846 | $ | 71,394,620 | ||||||||
Accumulated Undistributed Net Investment Income (Loss) | 14,080 | 68,346 | (89,293 | ) | 4,400 | |||||||||||
Accumulated Net Realized (Loss) from Security Transactions | 116,482 | (226,065 | ) | 1,765,281 | 1,958 | |||||||||||
Net Unrealized Gain on Investments | 5,673,978 | 767,109 | 12,848,289 | 3,706,884 | ||||||||||||
Net Assets | $ | 11,167,085 | $ | 13,063,711 | $ | 271,144,123 | $ | 75,107,862 | ||||||||
Shares Outstanding (Unlimited Amount Authorized) | 673,027 | 597,993 | 15,623,252 | 4,247,239 | ||||||||||||
Offering, Redemption and Net Asset Value Per Share | $ | 16.59 | $ | 21.85 | $ | 17.36 | $ | 17.68 | ||||||||
*Identified Cost of Investment Securities | $ | 5,470,223 | $ | 12,284,172 | $ | 261,399,874 | $ | 71,980,161 |
The accompanying notes are an integral part of these financial statements.
31
Statements of Operations
Equity Income Fund | Growth Fund | Opportunity Fund | ||||||||||
Period Ended 6/30/2016 | Period Ended 6/30/2016 | Period Ended 6/30/2016 | ||||||||||
Investment Income: | ||||||||||||
Interest | $ | 5,908 | $ | 1,825 | $ | 870 | ||||||
Dividends | 1,867,853 | 331,804 | 299,867 | |||||||||
Foreign withholding taxes on Dividends | (70,828 | ) | (14,162 | ) | — | |||||||
Total Investment Income | $ | 1,802,933 | $ | 319,467 | $ | 300,737 | ||||||
Expenses: | ||||||||||||
Management Fee | $ | 664,591 | $ | 223,854 | $ | 187,093 | ||||||
Net Expenses | $ | 664,591 | $ | 223,854 | $ | 187,093 | ||||||
Net Investment Income | $ | 1,138,342 | $ | 95,613 | $ | 113,644 | ||||||
Realized and Unrealized Gains/(Losses): | ||||||||||||
Net Realized Gain from Security Transactions | $ | 2,523,813 | $ | 519,531 | $ | 503,708 | ||||||
Net Change in Unrealized Gain/(Loss) on Investments | 4,123,669 | (451,262 | ) | 916,533 | ||||||||
Net Gain/(Loss) on Investments | $ | 6,647,482 | $ | 68,269 | $ | 1,420,241 | ||||||
Net Change in Net Assets from Operations | $ | 7,785,824 | $ | 163,882 | $ | 1,533,885 |
The accompanying notes are an integral part of these financial statements.
32
Statements of Operations – continued
Realty Fund | International Fund | Fixed Income Fund | Municipal Income Fund | |||||||||||||
Period Ended 6/30/2016 | Period Ended 6/30/2016 | Period Ended 6/30/2016 | Period Ended 6/30/2016 | |||||||||||||
Investment Income: | ||||||||||||||||
Interest | $ | 156 | $ | 268 | $ | 3,347,518 | $ | 897,364 | ||||||||
Dividends | 185,960 | 277,849 | 104,680 | 124 | ||||||||||||
Foreign withholding taxes on Dividends | — | (37,104 | ) | — | — | |||||||||||
Total Investment Income | $ | 186,116 | $ | 241,013 | $ | 3,452,198 | $ | 897,488 | ||||||||
Expenses: | ||||||||||||||||
Management Fee | 50,898 | $ | 63,790 | $ | 1,085,577 | $ | 228,042 | |||||||||
Net Expenses | $ | 50,898 | $ | 63,790 | $ | 1,085,577 | $ | 228,042 | ||||||||
Net Investment Income | $ | 135,218 | $ | 177,223 | $ | 2,366,621 | $ | 669,446 | ||||||||
Realized and Unrealized Gains/(Losses): | ||||||||||||||||
Net Realized Gain (Loss) from Security Transactions | $ | 120,470 | $ | (78,650 | ) | $ | 1,856,731 | $ | 1,958 | |||||||
Net Change in Unrealized Gain (Loss) on Investments | 933,630 | (205,840 | ) | 9,420,702 | 1,291,788 | |||||||||||
Net Gain/(Loss) on Investments | $ | 1,054,100 | $ | (284,490 | ) | $ | 11,277,433 | $ | 1,293,746 | |||||||
Net Change in Net Assets from Operations | $ | 1,189,318 | $ | (107,267 | ) | $ | 13,644,054 | $ | 1,963,192 |
The accompanying notes are an integral part of these financial statements.
33
Statements of Changes in Net Assets
Equity Income Fund | Growth Fund | Opportunity Fund | ||||||||||||||||||||||
Period Ended 6/30/2016* | Year Ended 12/31/2015 | Period Ended 6/30/2016* | Year Ended 12/31/2015 | Period Ended 6/30/2016* | Year Ended 12/31/2015 | |||||||||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income | $ | 1,138,342 | $ | 2,372,421 | $ | 95,613 | $ | 231,140 | $ | 113,644 | $ | 174,824 | ||||||||||||
Net Realized Gain (Loss) from Security Transactions | 2,523,813 | 3,960,667 | 519,531 | 3,363,484 | 503,708 | 3,279,753 | ||||||||||||||||||
Net Change in Unrealized Gain (Loss) on Investments | 4,123,669 | (16,007,013 | ) | (451,262 | ) | (6,411,672 | ) | 916,533 | (4,354,527 | ) | ||||||||||||||
Net Change in Net Assets from Operations | $ | 7,785,824 | $ | (9,673,925 | ) | $ | 163,882 | $ | (2,817,048 | ) | $ | 1,533,885 | $ | (899,950 | ) | |||||||||
Distributions to Shareholders: | ||||||||||||||||||||||||
Net Investment Income | $ | — | $ | (2,377,158 | ) | $ | — | $ | (172,557 | ) | $ | — | $ | (197,466 | ) | |||||||||
Net Realized Gain from Security Transactions | 0 | (7,125,688 | ) | — | (2,794,295 | ) | — | (3,129,840 | ) | |||||||||||||||
Net Change in Net Assets from Distributions | $ | — | $ | (9,502,846 | ) | $ | — | $ | (2,966,852 | ) | $ | — | $ | (3,327,306 | ) | |||||||||
Capital Share Transactions: | ||||||||||||||||||||||||
Proceeds From Sale of Shares | $ | 8,267,221 | $ | 12,518,846 | $ | 1,193,884 | $ | 3,972,082 | $ | 1,616,548 | $ | 1,857,598 | ||||||||||||
Shares Issued on Reinvestment of Distributions | — | 9,320,514 | — | 2,961,925 | — | 3,312,682 | ||||||||||||||||||
Cost of Shares Redeemed | (7,675,601 | ) | (20,599,274 | ) | (3,487,888 | ) | (7,817,408 | ) | (1,965,367 | ) | (8,048,976 | ) | ||||||||||||
Net Change in Net Assets from Capital Share Transactions | $ | 591,620 | $ | 1,240,086 | $ | (2,294,004 | ) | $ | (883,401 | ) | $ | (348,819 | ) | $ | (2,878,696 | ) | ||||||||
Net Change in Net Assets | $ | 8,377,444 | $ | (17,936,685 | ) | $ | (2,130,122 | ) | $ | (6,667,301 | ) | $ | 1,185,066 | $ | (7,105,952 | ) | ||||||||
Net Assets at Beginning of Year | $ | 132,194,466 | $ | 150,131,151 | $ | 46,674,471 | $ | 53,341,772 | $ | 37,774,807 | $ | 44,880,759 | ||||||||||||
Net Assets at End of Year | $ | 140,571,910 | $ | 132,194,466 | $ | 44,544,349 | $ | 46,674,471 | $ | 38,959,873 | $ | 37,774,807 | ||||||||||||
Including accumulated net investment income (loss) of | $ | 1,138,342 | $ | — | $ | 154,196 | $ | 58,583 | $ | 113,645 | $ | — |
* | Unaudited |
The accompanying notes are an integral part of these financial statements.
34
Statements of Changes in Net Assets – continued
Realty Fund | International Fund | Fixed Income Fund | Municipal Income Fund | |||||||||||||||||||||||||||||
Period Ended 6/30/2016* | Year Ended 12/31/2015 | Period Ended 6/30/2016* | Year Ended 12/31/2015 | Period Ended 6/30/2016* | Year Ended 12/31/2015 | Period Ended 6/30/2016* | Year Ended 12/31/2015 | |||||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||||
Net Investment Income | $ | 135,218 | $ | 157,525 | $ | 177,223 | $ | 351,532 | $ | 2,366,621 | $ | 4,420,480 | $ | 669,446 | $ | 1,249,855 | ||||||||||||||||
Net Realized Gain (Loss) from Security Transactions | 120,470 | 598,065 | (78,650 | ) | 165,310 | 1,856,731 | 2,375,247 | 1,958 | 77,983 | |||||||||||||||||||||||
Net Change in Unrealized Gain (Loss) on Investments | 933,630 | (490,068 | ) | (205,840 | ) | (1,752,796 | ) | 9,420,702 | (6,008,112 | ) | 1,291,788 | 177,782 | ||||||||||||||||||||
Net Change in Net Assets from Operations | $ | 1,189,318 | $ | 265,522 | $ | (107,267 | ) | $ | (1,235,954 | ) | $ | 13,644,054 | $ | 787,615 | $ | 1,963,192 | $ | 1,505,620 | ||||||||||||||
Distributions to Shareholders: | ||||||||||||||||||||||||||||||||
Net Investment Income | $ | (134,801 | ) | $ | (241,860 | ) | $ | — | $ | (398,118 | ) | $ | (2,455,914 | ) | $ | (4,888,116 | ) | $ | (665,046 | ) | $ | (1,249,855 | ) | |||||||||
Return of Capital | — | — | — | — | — | — | $ | — | (9,347 | ) | ||||||||||||||||||||||
Net Realized Gain from Security Transactions | — | (504,166 | ) | — | — | — | (1,763,820 | ) | — | (81,196 | ) | |||||||||||||||||||||
Net Change in Net Assets from Distributions | $ | (134,801 | ) | $ | (746,026 | ) | $ | — | $ | (398,118 | ) | $ | (2,455,914 | ) | $ | (6,651,936 | ) | $ | (665,046 | ) | $ | (1,340,398 | ) | |||||||||
Capital Share Transactions: | ||||||||||||||||||||||||||||||||
Proceeds From Sale of Shares | $ | 97,099 | $ | 460,068 | $ | 862,987 | $ | 2,402,454 | $ | 26,799,637 | $ | 45,224,292 | $ | 10,882,446 | $ | 12,961,285 | ||||||||||||||||
Shares Issued on Reinvestment of Distributions | 134,510 | 665,030 | — | 393,097 | 2,396,978 | 4,360,311 | 642,014 | 636,679 | ||||||||||||||||||||||||
Cost of Shares Redeemed | (226,029 | ) | (1,622,116 | ) | (783,181 | ) | (6,298,143 | ) | (13,483,844 | ) | (25,617,310 | ) | (4,229,276 | ) | (6,224,838 | ) | ||||||||||||||||
Net Change in Net Assets from Capital Share Transactions | $ | 5,580 | $ | (497,018 | ) | $ | 79,806 | $ | (3,502,592 | ) | $ | 15,712,771 | $ | 23,967,293 | $ | 7,295,184 | $ | 7,373,126 | ||||||||||||||
Net Change in Net Assets | $ | 1,060,097 | $ | (977,522 | ) | $ | (27,461 | ) | $ | (5,136,664 | ) | $ | 26,900,911 | $ | 18,102,972 | $ | 8,593,330 | $ | 7,538,348 | |||||||||||||
Net Assets at Beginning of Year | $ | 10,106,988 | $ | 11,084,510 | $ | 13,091,172 | $ | 18,227,836 | $ | 244,243,212 | $ | 226,140,240 | $ | 66,514,532 | $ | 58,976,184 | ||||||||||||||||
Net Assets at End of Year | $ | 11,167,085 | $ | 10,106,988 | $ | 13,063,711 | $ | 13,091,172 | $ | 271,144,123 | $ | 244,243,212 | $ | 75,107,862 | $ | 66,514,532 | ||||||||||||||||
Including accumulated net investment income (loss) of | $ | 14,080 | $ | 13,662 | $ | 68,346 | $ | (108,877 | ) | $ | (89,293 | ) | $ | — | $ | 4,400 | $ | — |
* | Unaudited |
The accompanying notes are an integral part of these financial statements.
35
Selected Data for a Share Outstanding Throughout each Period:
Six Months Ended 6/30/2016* | Year Ended December 31 | |||||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||||||
Net Asset Value Beginning of Period | $ | 19.92 | $ | 22.93 | $ | 23.11 | $ | 19.00 | $ | 17.33 | $ | 17.14 | ||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income | 0.17 | 0.38 | 0.30 | 0.27 | 0.29 | 0.25 | ||||||||||||||||||
Net Gains (Losses) on Securities (Realized & Unrealized) | 1.00 | (1.87 | ) | 1.51 | 5.63 | 2.38 | 0.19 | |||||||||||||||||
Total Operations | $ | 1.17 | $ | (1.49 | ) | $ | 1.81 | $ | 5.90 | $ | 2.67 | $ | 0.44 | |||||||||||
Distributions: | ||||||||||||||||||||||||
Net Investment Income | — | (0.38 | ) | (0.30 | ) | (0.27 | ) | (0.30 | ) | (0.25 | ) | |||||||||||||
Net Realized Capital Gains | — | (1.14 | ) | (1.69 | ) | $ | (1.52 | ) | (0.70 | ) | — | |||||||||||||
Total Distributions | $ | — | $ | (1.52 | ) | $ | (1.99 | ) | $ | (1.79 | ) | $ | (1.00 | ) | $ | (0.25 | ) | |||||||
Net Asset Value End of Period | $ | 21.09 | $ | 19.92 | $ | 22.93 | $ | 23.11 | $ | 19.00 | $ | 17.33 | ||||||||||||
Total Return(a) | 5.87 | %(b) | (6.56 | )% | 7.73 | % | 31.09 | % | 15.48 | % | 2.59 | % | ||||||||||||
Net Assets, End of Period (Millions) | $ | 140.57 | $ | 132.19 | $ | 150.13 | $ | 131.14 | $ | 90.12 | $ | 69.50 | ||||||||||||
Ratios(c) | ||||||||||||||||||||||||
Ratio of Expenses to | ||||||||||||||||||||||||
Average Net Assets | 1.00 | %(c) | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||||||||
Ratio of Net Investment Income to | ||||||||||||||||||||||||
Average Net Assets | 1.72 | %(c) | 1.62 | % | 1.28 | % | 1.27 | % | 1.61 | % | 1.58 | % | ||||||||||||
Portfolio Turnover Rate | 12.74 | %(b) | 39.41 | % | 27.89 | % | 34.31 | % | 35.15 | % | 53.70 | % |
* | Unaudited |
(a) | Total Return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund, assuming reinvestment of dividends. |
(b) | Not annualized. |
(c) | Annualized. |
The accompanying notes are an integral part of these financial statements.
36
Selected Data for a Share Outstanding Throughout each Period:
Six Months Ended 6/30/2016* | Year Ended December 31 | |||||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||||||
Net Asset Value Beginning of Period | $ | 27.21 | $ | 30.77 | $ | 30.66 | $ | 24.43 | $ | 21.70 | $ | 22.51 | ||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income | 0.06 | 0.14 | 0.07 | 0.16 | 0.16 | 0.12 | ||||||||||||||||||
Net Gains (Losses) on Securities (Realized & Unrealized) | 0.04 | (1.86 | ) | 3.56 | 7.53 | 2.73 | (0.79 | ) | ||||||||||||||||
Total Operations | $ | 0.10 | $ | (1.72 | ) | $ | 3.63 | $ | 7.69 | $ | 2.89 | $ | (0.67 | ) | ||||||||||
Distributions: | ||||||||||||||||||||||||
Net Investment Income | — | (0.11 | ) | (0.07 | ) | (0.16 | ) | (0.16 | ) | (0.14 | ) | |||||||||||||
Net Realized Capital Gains | — | (1.73 | ) | (3.45 | ) | (1.30 | ) | — | — | |||||||||||||||
Total Distributions | $ | — | $ | (1.84 | ) | $ | (3.52 | ) | $ | (1.46 | ) | $ | (0.16 | ) | $ | (0.14 | ) | |||||||
Net Asset Value End of Period | $ | 27.31 | $ | 27.21 | $ | 30.77 | $ | 30.66 | $ | 24.43 | $ | 21.70 | ||||||||||||
Total Return(a) | 0.37 | %(b) | (5.65 | )% | 11.75 | % | 31.50 | % | 13.33 | % | (2.97 | )% | ||||||||||||
Net Assets, End of Period (Millions) | $ | 44.54 | $ | 46.67 | $ | 53.34 | $ | 53.25 | $ | 45.02 | $ | 51.13 | ||||||||||||
Ratios | ||||||||||||||||||||||||
Ratio of Expenses to Ratio of Expenses to | ||||||||||||||||||||||||
Average Net Assets | 1.00 | %(c) | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||||||||
Ratio of Net Investment Income to | ||||||||||||||||||||||||
Average Net Assets | 0.43 | %(c) | 0.45 | % | 0.20 | % | 0.52 | % | 0.58 | % | 0.73 | % | ||||||||||||
Portfolio Turnover Rate | 27.79 | %(b) | 31.83 | % | 31.74 | % | 41.17 | % | 49.03 | % | 68.21 | % |
* | Unaudited |
(a) | Total Return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund, assuming reinvestment of dividends. |
(b) | Not annualized. |
(c) | Annualized. |
The accompanying notes are an integral part of these financial statements.
37
Selected Data for a Share Outstanding Throughout each Period:
Six Months Ended 6/30/2016* | Year Ended December 31 | |||||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||||||
Net Asset Value Beginning of Period | $ | 35.08 | $ | 39.35 | $ | 42.14 | $ | 31.69 | $ | 27.64 | $ | 30.74 | ||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income | 0.11 | 0.18 | 0.08 | 0.12 | 0.48 | — | ||||||||||||||||||
Net Gains (Losses) on Securities (Realized & Unrealized) | 1.31 | (1.08 | ) | 1.80 | 13.33 | 4.08 | (3.08 | ) | ||||||||||||||||
Total Operations | $ | 1.42 | $ | (0.90 | ) | $ | 1.88 | $ | 13.45 | $ | 4.56 | $ | (3.08 | ) | ||||||||||
Distributions: | ||||||||||||||||||||||||
Net Investment Income | — | (0.20 | ) | (0.11 | ) | (0.17 | ) | (0.51 | ) | — | ||||||||||||||
Return of Capital | — | — | — | — | — | (0.02 | ) | |||||||||||||||||
Net Realized Capital Gains | — | (3.17 | ) | (4.56 | ) | (2.83 | ) | — | — | |||||||||||||||
Total Distributions | $ | — | $ | (3.37 | ) | $ | (4.67 | ) | $ | (3.00 | ) | $ | (0.51 | ) | $ | (0.02 | ) | |||||||
Net Asset Value End of Period | $ | 36.50 | $ | 35.08 | $ | 39.35 | $ | 42.14 | $ | 31.69 | $ | 27.64 | ||||||||||||
Total Return(a) | 4.05 | %(b) | (2.39 | )% | 4.37 | % | 42.51 | % | 16.54 | % | (10.03 | )% | ||||||||||||
Net Assets, End of Period (Millions) | $ | 38.96 | $ | 37.77 | $ | 44.88 | $ | 44.38 | $ | 32.61 | $ | 32.94 | ||||||||||||
Ratios | ||||||||||||||||||||||||
Ratio of Expenses to | ||||||||||||||||||||||||
Average Net Assets | 1.00 | %(c) | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||||||||
Ratio of Net Investment Income to | ||||||||||||||||||||||||
Average Net Assets | 0.61 | %(c) | 0.40 | % | 0.19 | % | 0.30 | % | 1.49 | % | 0.01 | % | ||||||||||||
Portfolio Turnover Rate | 19.66 | %(b) | 35.17 | % | 38.37 | % | 72.36 | % | 97.80 | % | 94.32 | % |
* | Unaudited |
(a) | Total Return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund, assuming reinvestment of dividends. |
(b) | Not annualized. |
(c) | Annualized. |
The accompanying notes are an integral part of these financial statements.
38
Selected Data for a Share Outstanding Throughout each Period:
Six Months Ended 6/30/2016* | Year Ended December 31 | |||||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||||||
Net Asset Value Beginning of Period | $ | 15.03 | $ | 15.76 | $ | 13.20 | $ | 14.05 | $ | 13.32 | $ | 12.54 | ||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income | 0.20 | 0.21 | 0.26 | 0.29 | 0.21 | 0.32 | ||||||||||||||||||
Net Gains (Losses) on Securities (Realized & Unrealized)** | 1.56 | 0.21 | 3.54 | (0.11 | ) | 1.81 | 0.71 | |||||||||||||||||
Total Operations | $ | 1.76 | $ | 0.42 | $ | 3.80 | $ | 0.18 | $ | 2.02 | $ | 1.03 | ||||||||||||
Distributions: | ||||||||||||||||||||||||
Net Investment Income | (0.20 | ) | (0.36 | ) | (0.39 | ) | (0.29 | ) | (0.24 | ) | (0.25 | ) | ||||||||||||
Net Realized Capital Gains | — | (0.79 | ) | (0.85 | ) | (0.74 | ) | (1.05 | ) | — | ||||||||||||||
Total Distributions | $ | (0.20 | ) | $ | (1.15 | ) | $ | (1.24 | ) | $ | (1.03 | ) | $ | (1.29 | ) | $ | (0.25 | ) | ||||||
Net Asset Value End of Period | $ | 16.59 | $ | 15.03 | $ | 15.76 | $ | 13.20 | $ | 14.05 | $ | 13.32 | ||||||||||||
Total Return(a) | 11.77 | %(b) | 2.75 | % | 28.92 | % | 1.19 | % | 15.28 | % | 8.25 | % | ||||||||||||
Net Assets, End of Period (Millions) | $ | 11.17 | $ | 10.11 | $ | 11.08 | $ | 10.14 | $ | 11.04 | $ | 9.59 | ||||||||||||
Ratios | ||||||||||||||||||||||||
Ratio of Expenses to | ||||||||||||||||||||||||
Average Net Assets | 1.00 | %(c) | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||||||||
Ratio of Net Investment Income to | ||||||||||||||||||||||||
Average Net Assets | 2.66 | %(c) | 1.51 | % | 1.57 | % | 1.43 | % | 1.34 | % | 1.10 | % | ||||||||||||
Portfolio Turnover Rate | 3.04 | %(b) | 2.28 | % | 1.04 | % | 9.97 | % | 25.78 | % | 3.19 | % |
* | Unaudited |
** | Realized and unrealized gains and losses per share in the caption are balancing amounts necessary to reconcile the change in net asset value per share for the period, and may not reconcile with aggregate gains and losses in the Statement of Operations due to share transactions for the period. |
(a) | Total Return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund, assuming reinvestment of dividends. |
(b) | Not annualized. |
(c) | Annualized. |
The accompanying notes are an integral part of these financial statements.
39
Selected Data for a Share Outstanding Throughout each Period:
Six Months Ended 6/30/2016* | Year Ended December 31 | |||||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||||||
Net Asset Value Beginning of Period | $ | 22.01 | $ | 24.23 | $ | 25.07 | $ | 22.23 | $ | 19.44 | $ | 23.50 | ||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income (Loss) | 0.30 | 0.57 | 0.54 | 0.39 | 0.44 | 0.46 | ||||||||||||||||||
Net Gains (Losses) on Securities (Realized & Unrealized) | (0.46 | ) | (2.11 | ) | (0.83 | ) | 2.90 | 2.82 | (3.90 | ) | ||||||||||||||
Total Operations | $ | (0.16 | ) | $ | (1.54 | ) | $ | (0.29 | ) | $ | 3.29 | $ | 3.26 | $ | (3.44 | ) | ||||||||
Distributions: | ||||||||||||||||||||||||
Net Investment Income | — | (0.68 | ) | (0.55 | ) | (0.45 | ) | (0.47 | ) | (0.44 | ) | |||||||||||||
Return of Capital | — | — | — | — | — | (0.01 | ) | |||||||||||||||||
Net Realized Capital Gains | — | — | — | — | — | (0.17 | ) | |||||||||||||||||
Total Distributions | $ | — | $ | (0.68 | ) | $ | (0.55 | ) | $ | (0.45 | ) | $ | (0.47 | ) | $ | (0.62 | ) | |||||||
Net Asset Value End of Period | $ | 21.85 | $ | 22.01 | $ | 24.23 | $ | 25.07 | $ | 22.23 | $ | 19.44 | ||||||||||||
Total Return(a) | (0.73 | )%(b) | (6.38 | )% | (1.16 | )% | 14.81 | % | 16.80 | % | (14.61 | )% | ||||||||||||
Net Assets, End of Period (Millions) | $ | 13.06 | $ | 13.09 | $ | 18.23 | $ | 16.74 | $ | 13.83 | $ | 11.09 | ||||||||||||
Ratios(c) | ||||||||||||||||||||||||
Ratio of Expenses to | ||||||||||||||||||||||||
Average Net Assets before Waiver | 1.00 | %(d) | 1.00 | % | 1.00 | % | 1.19 | % | 1.40 | % | 1.40 | % | ||||||||||||
Average Net Assets after Waiver | 1.00 | %(d) | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to | ||||||||||||||||||||||||
Average Net Assets before Waiver | 2.79 | %(d) | 1.85 | % | 2.20 | % | 1.51 | % | 1.77 | % | 1.67 | % | ||||||||||||
Average Net Assets after Waiver | 2.79 | %(d) | 1.85 | % | 2.20 | % | 1.70 | % | 2.17 | % | 2.07 | % | ||||||||||||
Portfolio Turnover Rate | 1.64 | %(b) | 20.49 | % | 10.25 | % | 5.23 | % | 7.15 | % | 24.16 | % |
* | Unaudited |
(a) | Total Return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund, assuming reinvestment of dividends. |
(b) | Not annualized. |
(c) | The Adviser waived a portion of the 1.40% management fee to sustain a fee of 1.00%. Effective May 1, 2013, the Adviser removed the fee waiver, and reduced the management fee to 1.00%. (See Note #4.) |
(d) | Annualized. |
The accompanying notes are an integral part of these financial statements.
40
Selected Data for a Share Outstanding Throughout each Period:
Six Months Ended 6/30/2016* | Year Ended December 31 | |||||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||||||
Net Asset Value Beginning of Period | $ | 16.61 | $ | 17.03 | $ | 16.47 | $ | 17.37 | $ | 17.34 | $ | 16.89 | ||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income | 0.15 | 0.32 | 0.35 | 0.35 | 0.43 | 0.55 | ||||||||||||||||||
Net Gains on Securities (Realized & Unrealized) | 0.76 | (0.27 | ) | 0.71 | (0.76 | ) | 0.32 | 0.64 | ||||||||||||||||
Total Operations | $ | 0.91 | $ | 0.05 | $ | 1.06 | $ | (0.41 | ) | $ | 0.75 | $ | 1.19 | |||||||||||
Distributions: | ||||||||||||||||||||||||
Net Investment Income | (0.16 | ) | (0.35 | ) | (0.39 | ) | (0.41 | ) | (0.48 | ) | (0.56 | ) | ||||||||||||
Return of Capital | — | — | — | — | — | 0.00 | (a) | |||||||||||||||||
Net Realized Capital Gains | — | (0.12 | ) | (0.11 | ) | (0.08 | ) | (0.24 | ) | (0.18 | ) | |||||||||||||
Total Distributions | $ | (0.16 | ) | $ | (0.47 | ) | $ | (0.50 | ) | $ | (0.49 | ) | $ | (0.72 | ) | $ | (0.74 | ) | ||||||
Net Asset Value End of Period | $ | 17.36 | $ | 16.61 | $ | 17.03 | $ | 16.47 | $ | 17.37 | $ | 17.34 | ||||||||||||
Total Return(b) | 5.49 | %(c) | 0.32 | % | 6.48 | % | (2.36 | )% | 4.37 | % | 7.12 | % | ||||||||||||
Net Assets, End of Period (Millions) | $ | 271.14 | $ | 244.24 | $ | 226.14 | $ | 224.67 | $ | 205.14 | $ | 192.47 | ||||||||||||
Ratios(d) | ||||||||||||||||||||||||
Ratio of Expenses to | ||||||||||||||||||||||||
Average Net Assets before Waiver | 0.85 | %(e) | 0.85 | % | 0.85 | % | 0.92 | % | 1.00 | % | 1.00 | % | ||||||||||||
Average Net Assets after Waiver | 0.85 | %(e) | 0.85 | % | 0.85 | % | 0.85 | % | 0.85 | % | 0.85 | % | ||||||||||||
Ratio of Net Investment Income to | ||||||||||||||||||||||||
Average Net Assets before Waiver | 1.86 | %(e) | 1.90 | % | 2.08 | % | 2.00 | % | 2.30 | % | 3.03 | % | ||||||||||||
Average Net Assets after Waiver | 1.86 | %(e) | 1.90 | % | 2.08 | % | 2.07 | % | 2.45 | % | 3.18 | % | ||||||||||||
Portfolio Turnover Rate | 29.66 | %(c) | 37.09 | % | 27.79 | % | 48.53 | % | 36.11 | % | 34.41 | % |
* | Unaudited |
(a) | Return of Capital is less than $0.005 per share. |
(b) | Total Return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund, assuming reinvestment of dividends. |
(c) | Not annualized. |
(d) | The Adviser waived a portion of the 1.00% management fee to sustain a fee of 0.85%. Effective May 1, 2013, the Adviser removed the fee waiver, and reduced the management fee to 0.85%. (See Note #4.) |
(e) | Annualized. |
The accompanying notes are an integral part of these financial statements.
41
Selected Data for a Share Outstanding Throughout each Period:
Six Months Ended 6/30/2016* | Year Ended December 31 | |||||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||||||
Net Asset Value Beginning of Period | $ | 17.36 | $ | 17.32 | $ | 16.83 | $ | 17.49 | $ | 17.35 | $ | 16.56 | ||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income | 0.16 | 0.34 | 0.37 | 0.38 | 0.45 | 0.45 | ||||||||||||||||||
Net Gains (Losses) on Securities (Realized & Unrealized) | 0.32 | 0.06 | 0.53 | (0.64 | ) | 0.18 | 0.80 | |||||||||||||||||
Total Operations | $ | 0.48 | $ | 0.40 | $ | 0.90 | $ | (0.26 | ) | $ | 0.63 | $ | 1.25 | |||||||||||
Distributions: | ||||||||||||||||||||||||
Net Investment Income | (0.16 | ) | (0.34 | ) | (0.38 | ) | (0.38 | ) | (0.45 | ) | (0.46 | ) | ||||||||||||
Return of Capital | — | 0.00 | (a) | — | — | — | 0.00 | (a) | ||||||||||||||||
Net Realized Capital Gains | — | (0.02 | ) | (0.03 | ) | (0.02 | ) | (0.04 | ) | — | ||||||||||||||
Total Distributions | $ | (0.16 | ) | $ | (0.36 | ) | $ | (0.41 | ) | $ | (0.40 | ) | $ | (0.49 | ) | $ | (0.46 | ) | ||||||
Net Asset Value End of Period | $ | 17.68 | $ | 17.36 | $ | 17.32 | $ | 16.83 | $ | 17.49 | $ | 17.35 | ||||||||||||
Total Return(b) | 2.77 | %(c) | 2.34 | % | 5.41 | % | (1.52 | )% | 3.67 | % | 7.62 | % | ||||||||||||
Net Assets, End of Period (Millions) | $ | 75.11 | $ | 66.51 | $ | 58.98 | $ | 56.29 | $ | 43.79 | $ | 39.06 | ||||||||||||
Ratios(d) | ||||||||||||||||||||||||
Ratio of Expenses to | ||||||||||||||||||||||||
Average Net Assets before Waiver | 0.65 | %(e) | 0.65 | % | 0.65 | % | 0.81 | % | 1.00 | % | 1.00 | % | ||||||||||||
Average Net Assets after Waiver | 0.65 | %(e) | 0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | ||||||||||||
Ratio of Net Investment Income to | ||||||||||||||||||||||||
Average Net Assets before Waiver | 1.91 | %(e) | 1.98 | % | 2.19 | % | 2.10 | % | 2.23 | % | 2.35 | % | ||||||||||||
Average Net Assets after Waiver | 1.91 | %(e) | 1.98 | % | 2.19 | % | 2.26 | % | 2.58 | % | 2.70 | % | ||||||||||||
Portfolio Turnover Rate | 3.26 | %(c) | 13.31 | % | 18.24 | % | 8.96 | % | 13.79 | % | 5.49 | % |
* | Unaudited |
(a) | Return of Capital is less than $0.005 per share. |
(b) | Total Return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund, assuming reinvestment of dividends. |
(c) | Not annualized. |
(d) | The Adviser waived a portion of the 1.00% management fee to sustain a fee of 0.65%. Effective May 1, 2013, the Adviser removed the fee waiver, and reduced the management fee to 0.65%. (See Note #4.) |
(e) | Annualized. |
The accompanying notes are an integral part of these financial statements.
42
1) Organization
The Johnson Equity Income Fund, Johnson Growth Fund, Johnson Opportunity Fund, Johnson Realty Fund, Johnson International Fund, Johnson Fixed Income Fund, and Johnson Municipal Income Fund (each individually a “Fund” and collectively the “Funds”) are each a series of the Johnson Mutual Funds Trust (the “Trust”), and are registered under the Investment Company Act of 1940, as amended, as no-load, open-end investment companies. The Johnson Mutual Funds Trust was established as an Ohio business trust under an Agreement and Declaration of Trust dated September 30, 1992. The Growth Fund and Fixed Income Fund began offering their shares publicly on January 4, 1993. The Opportunity Fund and Municipal Income Fund began offering their shares publicly on May 16, 1994. The Realty Fund began offering its shares publicly on January 2, 1998. The Equity Income Fund began offering its shares publicly on December 30, 2005. The International Fund began offering its shares publicly on December 8, 2008. All the Funds are managed by Johnson Investment Counsel, Inc. (the “Adviser”).
The investment objectives of the Funds are as follows:
Equity Income Fund | Above average dividend income and long-term capital growth | |
Growth Fund | Long-term capital growth | |
Opportunity Fund | Long-term capital growth | |
Realty Fund | Above average dividend income and long-term capital growth | |
International Fund | Long-term capital growth | |
Fixed Income Fund | A high level of income over the long-term consistent with preservation of capital | |
Municipal Income Fund | A high level of federally tax-free income over the long-term consistent with preservation of capital |
The Equity Income Fund, Growth Fund, Opportunity Fund, Realty Fund, International Fund, and Fixed Income Fund are diversified. The Municipal Income Fund is non-diversified and invests primarily in debt instruments of municipal issuers whose ability to meet their obligations may be affected by economic and political developments in the state of Ohio.
2) Significant Accounting Policies
Basis of Accounting:
The financial statements are prepared in accordance with accounting principles generally accepted in the United State of America (GAAP). The Funds are investment companies and accordingly follow the investment company guidance of Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.
Investment Income and Realized Capital Gains and Losses on Investment Securities:
Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis. Dividend and interest income are recorded net of foreign taxes. Withholding taxes on foreign dividends have been provided for in accordance with the Funds’ understanding of the applicable country’s tax rules and rates. Gains and losses on sales of investments are calculated using the specific identification method. Discounts and premiums on securities purchased are amortized over the lives of the respective securities, using the interest method. Distributions received from investments in securities that represent a return of capital or capital gains are recorded as a reduction of the cost of investment or as a realized gain, respectively. The calendar year-end amounts of ordinary income, capital gains, and return of capital included in distributions received from the Funds’ investments in real estate investment trusts (“REITs”) are reported to the Funds after the end of the calendar year; accordingly, the Funds estimate these amounts for accounting purposes until the characterization of REIT distributions is reported. Estimates are based on the most recent REIT distributions information available. Gains and losses on paydowns of mortgage-backed securities are reflected in interest income on the Statements of Operations. The ability of issuers of debt securities held by the Funds to meet their obligations may be affected by economic and political developments in a specific country or region.
Income Taxes:
It is the Funds’ policy to distribute annually, prior to the end of the calendar year, dividends sufficient to satisfy excise tax requirements of the Internal Revenue Service. This Internal Revenue Service requirement may cause an excess of distributions over the book year-end accumulated income. In addition, it is the Funds’ policy to distribute annually, after the end of the calendar year, any remaining taxable income to comply with the special
43
2) Significant Accounting Policies, continued
provisions of the Internal Revenue Code (the “Code”) available to registered investment companies (“RICs”). Each year the Funds intend to continue to qualify as RICs under Subchapter M of the Code by making distributions as noted above, and complying with the other requirements applicable to RICs. As a result, no provision for income taxes is required.
Accounting for Uncertainty in Income Taxes:
As of and during the six month period ended June 30, 2016, the Funds did not have a liability for any unrecognized tax benefits. The Funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statements of Operations. During the year, the Funds did not incur any interest or penalties.
Distributions:
Distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. The Realty Fund, Fixed Income Fund and Municipal Income Fund intend to distribute net investment income on a calendar quarter basis. The Equity Income, Growth, Opportunity and International Funds intend to distribute net investment income, if any, at least once a year. The Funds intend to distribute their net realized long-term capital gains and their net realized short-term capital gains, if any, at least once a year. The treatment for financial reporting purposes of distributions made to shareholders during the year from net investment income or net realized capital gains may differ from their ultimate treatment for federal income tax purposes. These differences are caused primarily by differences in the timing of the recognition of certain components of income, expense or realized capital gain for federal income tax purposes. Where such differences are permanent in nature, they are reclassified in the components of net assets based on their ultimate characterization for federal income tax purposes. Any such reclassifications will have no effect on net assets, results of operations, or net asset values per share of the Funds.
3) Security Valuation and Transactions
The Funds utilize various methods to measure the fair value of their investments on a recurring basis.
Securities for which representative market quotations are not readily available or are considered unreliable by the Investment Adviser are valued as determined in good faith by, or under the direction of, the Board of Trustees. Various inputs may be reviewed in order to make a good faith determination of a security’s fair value. These inputs include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions. Fair valuations and valuations of investments that are not actively trading involve judgment and may differ materially from valuations of investments that would have been used had greater market activity occurred.
Accounting Principles Generally Accepted in the United States of America (“GAAP”) establish a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:
¨ | Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities that the Funds have the ability to access. |
¨ | Level 2 — Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
¨ | Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
44
3) Security Valuation and Transactions, continued
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
Fair Value Measurements:
A description of the valuation techniques applied to the Funds’ major categories of assets and liabilities measured at fair value on a recurring basis follows:
Equity Securities (Common Stock, Real Estate Investment Trusts). Securities traded on a national securities exchange (or reported on the NASDAQ national market) are stated at the last reported sales price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized in Level 1 of the fair value hierarchy.
Corporate Bonds. The fair value of corporate bonds is estimated using quotations from pricing vendors, which may consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations for similar securities (where observable), bond spreads, fundamental data relating to the issuer, and credit default swap spreads adjusted for any basis difference between cash and derivative instruments. While most corporate bonds are categorized in Level 2 of the fair value hierarchy, in instances where lower relative weight is placed on transaction prices, quotations, or similar observable inputs, they would be categorized in Level 3.
Municipal Bonds. Municipal Bonds are normally valued using quotations from pricing vendors that incorporate observable market data such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued principally using dealer quotations. Municipal Bonds are categorized in Level 2 of the fair value hierarchy.
U.S. Government Securities. U.S. government securities including U.S. Treasury Obligations are normally valued using market approach valuation techniques that incorporate observable market data such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued principally using dealer quotations. U.S. government securities are categorized in Level 2 of the fair value hierarchy.
U.S. Agency Securities. U.S. agency securities are comprised of two main categories consisting of agency issued debt and mortgage-backed securities. Agency issued debt securities are generally valued in a manner similar to U.S. government securities. Mortgage-backed securities are generally valued based on models that consider the estimated cash flows of each tranche of the entity, establishes a benchmark yield, and develops an estimated tranche-specific spread to the benchmark yield based on the unique attributes of the tranche. Depending on market activity levels and whether quotations or other data are used, these securities are typically categorized in Level 2 of the fair value hierarchy.
Certificates of Deposit. Certificates of Deposit which are traded on the open market are normally valued using a market approach valuation technique that incorporates observable market data such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued principally using dealer quotations. Certificates of Deposit are categorized in Level 2 of the fair value hierarchy.
Preferred Stocks. Securities traded on a national securities exchange (or reported on the NASDAQ national market) are stated at the last reported sales price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized in Level 1 of the fair value hierarchy.
Money Market. Investments in mutual funds, including money market mutual funds (notated throughout these financials as cash equivalents), are generally priced at the ending net asset value (“NAV”) provided by the service agent of the funds. These securities will be categorized as Level 1 securities.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used to value each Fund’s net assets as of June 30, 2016:
Equity Income Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks* | $ | 132,659,296 | $ | — | $ | — | $ | 132,659,296 | ||||||||
Money Market Fund | 7,542,951 | — | — | 7,542,951 | ||||||||||||
Total | $ | 140,202,247 | $ | — | $ | — | $ | 140,202,247 |
45
3) Security Valuation and Transactions, continued
Growth Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks* | $ | 44,435,593 | $ | — | $ | — | $ | 44,435,593 | ||||||||
Total | $ | 44,435,593 | $ | — | $ | — | $ | 44,435,593 |
Opportunity Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks* | $ | 37,792,352 | $ | — | $ | — | $ | 37,792,352 | ||||||||
Real Estate Investment Trusts | 618,240 | — | — | 618,240 | ||||||||||||
Money Market Fund | 117,335 | — | — | 117,335 | ||||||||||||
Total | $ | 38,527,927 | $ | — | $ | — | $ | 38,527,927 |
Realty Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Real Estate Investment Trusts* | $ | 11,074,693 | $ | — | $ | — | $ | 11,074,693 | ||||||||
Money Market Fund | 69,508 | — | — | 69,508 | ||||||||||||
Total | $ | 11,144,201 | $ | — | $ | — | $ | 11,144,201 |
International Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks* | $ | 13,051,281 | $ | — | $ | — | $ | 13,051,281 | ||||||||
Total | $ | 13,051,281 | $ | — | $ | — | $ | 13,051,281 |
Fixed Income Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Corporate Bonds* | $ | — | $ | 149,059,246 | $ | — | $ | 149,059,246 | ||||||||
U.S. Government Treasury Obligations | — | 45,115,601 | — | 45,115,601 | ||||||||||||
U.S. Government Agency Obligations | — | 21,141,514 | — | 21,141,514 | ||||||||||||
U.S. Government Agency Obligations – Mortgage-Backed | — | 29,890,828 | — | 29,890,828 | ||||||||||||
Taxable Municipal Bonds | — | 17,715,850 | — | 17,715,850 | ||||||||||||
Preferred Stocks | 4,173,531 | — | — | 4,173,531 | ||||||||||||
Money Market Fund | 7,151,593 | — | — | 7,151,593 | ||||||||||||
Total | $ | 11,325,124 | $ | 262,923,039 | $ | — | $ | 274,248,163 |
Municipal Income Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Municipal Bonds* | $ | — | $ | 73,364,710 | $ | — | $ | 73,364,710 | ||||||||
Money Market Fund | 2,322,335 | — | — | 2,322,335 | ||||||||||||
Total | $ | 2,322,335 | $ | 73,364,710 | $ | — | $ | 75,687,045 |
* | See Schedule of Investments for industry classification. |
The Funds did not hold any investments at any time during the reporting period in which unobservable inputs were used in determining fair value. Therefore, no reconciliation of Level 3 Securities is included for this reporting period. As of and during the six month period ended June 30, 2016, no securities were transferred into or out of Level 1 or Level 2. If any transfers between levels would occur, they would be reflected as of the end of the period.
In accordance with GAAP, the Funds are required to enhance the disclosures relating to transactions in derivatives and hedging activities, including how such activities are accounted for and their effect on the Funds’ financial position, performance, and cash flows. The Funds did not engage in any derivative transactions as of or during six month period ended June 30, 2016.
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4) Investment Advisory Agreements
The investment advisory agreements provide that the Adviser will pay all of the Funds’ operating expenses, excluding brokerage fees and commissions, borrowing costs (such as (a) interest and (b) dividend expenses on securities sold short), any 12b-1 fees, and extraordinary expenses.
The Adviser received management fees for the six month period ended June 30, 2016, as indicated below.
Fund | Fee | Management Fee | Payable as of June 30, 2016 | |||||||||
Equity Income Fund | 1.00 | % | $ | 664,591 | $ | 113,842 | ||||||
Growth Fund | 1.00 | % | 223,854 | 36,908 | ||||||||
Opportunity Fund | 1.00 | % | 187,093 | 31,920 | ||||||||
Realty Fund | 1.00 | % | 50,898 | 8,772 | ||||||||
International Fund | 1.00 | % | 63,790 | 10,917 | ||||||||
Fixed Income Fund | 0.85 | % | 1,085,577 | 187,837 | ||||||||
Municipal Income Fund | 0.65 | % | 228,042 | 39,903 |
5) Related Party Transactions
All officers and one trustee of the Trust are employees of the Adviser. Total compensation for the independent Trustees as a group was $40,000 for the year ended December 31, 2015, and as a group they received no additional compensation from the Trust. Compensation of the Trustees was paid by the Adviser. The Trust consists of eleven Funds: Johnson Equity Income Fund, Johnson Growth Fund, Johnson Opportunity Fund, Johnson Realty Fund, Johnson International Fund, Johnson Fixed Income Fund, Johnson Municipal Income Fund, Johnson Institutional Short Duration Bond Fund, Johnson Institutional Intermediate Bond Fund, Johnson Institutional Core Bond Fund, and Johnson Enhanced Return Fund. The Adviser is not a registered broker-dealer of securities and thus does not receive commissions on trades made on behalf of the Funds.
The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a Fund creates a presumption of control of the Fund, under Section 2(a)(9) of the Investment Company Act of 1940. At June 30, 2016, client accounts managed by the Adviser with full advisory discretion, held in aggregate the following:
Equity Income Fund | 61.60 | % | International Fund | 30.99 | % | |||||||
Growth Fund | 29.69 | % | Fixed Income Fund | 84.10 | % | |||||||
Opportunity Fund | 60.57 | % | Municipal Income Fund | 94.87 | % | |||||||
Realty Fund | 73.12 | % |
Johnson Financial, Inc. is a wholly-owned subsidiary of the Adviser. Johnson Financial, Inc. provides transfer agency, fund accounting, and administration services to the Funds. Fund accounting services are provided by Ultimus Fund Solutions, Cincinnati, Ohio. These services are paid for by the Adviser.
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6) Purchases and Sales of Securities
From January 1, 2016 through June 30, 2016, purchases and sales of investment securities aggregated:
Investment Securities Other Than Short Term Investments and U.S. Government Obligations | U.S. Government Obligations | |||||||||||||||
Fund | Purchases | Sales | Purchases | Sales | ||||||||||||
Johnson Equity Income Fund | $ | 16,453,951 | $ | 22,048,544 | $ | — | $ | — | ||||||||
Johnson Growth Fund | 12,153,786 | 13,386,751 | — | — | ||||||||||||
Johnson Opportunity Fund | 7,297,636 | 7,893,802 | — | — | ||||||||||||
Johnson Realty Fund | 477,847 | 308,192 | — | — | ||||||||||||
Johnson International Fund | 538,184 | 208,160 | — | — | ||||||||||||
Johnson Fixed Income Fund | 67,860,983 | 51,202,576 | 21,662,281 | 23,052,012 | ||||||||||||
Johnson Municipal Income Fund | 7,692,860 | 2,140,000 | — | — |
7) Capital Share Transactions
As of June 30, 2016, there were an unlimited number of shares of beneficial interest authorized for each Fund. Each Fund records purchases of its capital shares at the daily net asset value determined after receipt of a shareholder’s order in proper form. Redemptions are recorded at the net asset value determined following receipt of a shareholder’s written or telephone request in proper form.
Shares Sold to Investors | Shares Issued on Reinvestment of Dividends | Subtotal | Shares Redeemed | Net Change | Shares Outstanding: | |||||||||||||||||||||||
Beginning of Period | End of Period | |||||||||||||||||||||||||||
Equity Income Fund | ||||||||||||||||||||||||||||
1/1/16 to 6/30/16 | 408,361 | — | 408,361 | (377,431 | ) | 30,930 | 6,634,666 | 6,665,596 | ||||||||||||||||||||
1/1/15 to 12/31/15 | 558,144 | 463,266 | 1,021,410 | (934,006 | ) | 87,404 | 6,547,262 | 6,634,666 | ||||||||||||||||||||
Growth Fund | ||||||||||||||||||||||||||||
1/1/16 to 6/30/16 | 45,106 | — | 45,106 | (129,441 | ) | (84,335 | ) | 1,715,291 | 1,630,956 | |||||||||||||||||||
1/1/15 to 12/31/15 | 130,872 | 107,800 | 238,672 | (256,868 | ) | (18,196 | ) | 1,733,487 | 1,715,291 | |||||||||||||||||||
Opportunity Fund | ||||||||||||||||||||||||||||
1/1/16 to 6/30/16 | 45,717 | — | 45,717 | (55,243 | ) | (9,526 | ) | 1,076,854 | 1,067,328 | |||||||||||||||||||
1/1/15 to 12/31/15 | 46,475 | 93,315 | 139,790 | (203,517 | ) | (63,727 | ) | 1,140,581 | 1,076,854 | |||||||||||||||||||
Realty Fund | ||||||||||||||||||||||||||||
1/1/16 to 6/30/16 | 6,406 | 8,453 | 14,859 | (14,353 | ) | 506 | 672,521 | 673,027 | ||||||||||||||||||||
1/1/15 to 12/31/15 | 28,976 | 43,960 | 72,936 | (103,874 | ) | (30,938 | ) | 703,459 | 672,521 | |||||||||||||||||||
International Fund | ||||||||||||||||||||||||||||
1/1/16 to 6/30/16 | 40,529 | — | 40,529 | (37,351 | ) | 3,178 | 594,815 | 597,993 | ||||||||||||||||||||
1/1/15 to 12/31/15 | 99,392 | 17,723 | 117,115 | (274,627 | ) | (157,512 | ) | 752,327 | 594,815 | |||||||||||||||||||
Fixed Income Fund | ||||||||||||||||||||||||||||
1/1/16 to 6/30/16 | 1,573,711 | 139,459 | 1,713,170 | (790,846 | ) | 922,324 | 14,700,928 | 15,623,252 | ||||||||||||||||||||
1/1/15 to 12/31/15 | 2,666,913 | 261,306 | 2,928,219 | (1,507,719 | ) | 1,420,500 | 13,280,428 | 14,700,928 | ||||||||||||||||||||
Municipal Income Fund | ||||||||||||||||||||||||||||
1/1/16 to 6/30/16 | 619,413 | 36,508 | 655,921 | (240,802 | ) | 415,119 | 3,832,120 | 4,247,239 | ||||||||||||||||||||
1/1/15 to 12/31/15 | 748,400 | 36,727 | 785,127 | (358,858 | ) | 426,269 | 3,405,851 | 3,832,120 |
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8) Security Transactions
As of June 30, 2016, the composition of unrealized appreciation (the excess of fair value over tax cost) and depreciation (the excess of tax cost over fair value) was as follows:
Fund | Cost of Securities | Appreciation | Depreciation | Net Appreciation | ||||||||||||
Johnson Equity Income Fund | $ | 123,332,411 | $ | 23,355,382 | $ | (6,485,546 | ) | $ | 16,869,836 | |||||||
Johnson Growth Fund | 36,997,225 | 9,522,761 | (2,084,393 | ) | 7,438,368 | |||||||||||
Johnson Opportunity Fund | 33,375,387 | 6,869,861 | (1,717,321 | ) | 5,152,540 | |||||||||||
Johnson Realty Fund | 5,470,223 | 5,776,233 | (102,255 | ) | 5,673,978 | |||||||||||
Johnson International Fund | 12,284,172 | 2,381,812 | (1,614,703 | ) | 767,109 | |||||||||||
Johnson Fixed Income Fund | 261,399,874 | 12,906,389 | (58,100 | ) | 12,848,289 | |||||||||||
Johnson Municipal Income Fund | 71,980,161 | 3,725,724 | (18,840 | ) | 3,706,884 |
The difference between book value and tax value unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales and post-October losses, as well as the mark-to-market on passive Foreign Investment Companies.
9) Estimates
The preparation of financial statements in conformity with GAAP 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.
10) Distributions to Shareholders
The tax character of the distributions paid is as follows:
Tax year | Ordinary Income | Net Realized Long-Term Capital Gain | Net Realized Short-Term Capital Gain* | Return of Capital | Total Distributions Paid | |||||||||||||||||||
Johnson Equity Income Fund | 2015 | 2,377,158 | 7,117,769 | 7,919 | — | 9,502,846 | ||||||||||||||||||
2016 | — | — | — | — | — | |||||||||||||||||||
Johnson Growth Fund | 2015 | 172,557 | 2,794,295 | — | — | 2,966,852 | ||||||||||||||||||
2016 | — | — | — | — | — | |||||||||||||||||||
Johnson Opportunity Fund | 2015 | 197,466 | 3,129,840 | — | — | 3,327,306 | ||||||||||||||||||
2016 | — | — | — | — | — | |||||||||||||||||||
Johnson Realty Fund | 2015 | 146,957 | 599,069 | — | — | 746,026 | ||||||||||||||||||
2016 | 134,801 | — | — | — | 134,801 | |||||||||||||||||||
Johnson International Fund | 2015 | 398,118 | — | — | — | 398,118 | ||||||||||||||||||
2016 | — | — | — | — | — | |||||||||||||||||||
Johnson Fixed Income Fund | 2015 | 4,888,116 | 1,741,116 | 22,704 | — | 6,651,936 | ||||||||||||||||||
2016 | 2,455,914 | — | — | — | 2,455,914 | |||||||||||||||||||
Johnson Municipal Income Fund | 2015 | 1,257,015 | ** | 80,170 | 3,213 | — | 1,340,398 | |||||||||||||||||
2016 | 665,046 | ** | — | — | — | 665,046 |
* | Short-Term Capital Gains can be combined with Ordinary Income, and are taxed at the Ordinary Income tax rate. |
** | Tax Exempt Income |
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10) Distributions to Shareholders, continued
As of December 31, 2015, the following Funds had capital loss carryovers which will reduce each Fund’s taxable income arising from future net realized gain on investments, if any, to the extent permitted by the Code and thus will reduce the amount of distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income tax. The capital loss carryovers will expire as follows:
To Expire in 2016 | Indefinite Long-Term | Indefinite Short-Term | Total Capital Loss Carryover | |||||||||||||
Johnson Growth Fund | $ | 566,469 | * | $ | 566,469 | |||||||||||
Johnson International Fund | 147,131 | 147,131 |
* | Due to IRC Section 382 limitations, utilization of these carryforwards is limited to a maximum of $566,469 per year. |
As of December 31, 2015, the Johnson Growth Fund utilized prior year capital loss carryovers of $566,469.
As of December 31, 2015, the International Fund deferred late year net investment losses in the amount of $9,091, and the Equity Income Fund deferred $49,282 of post-October capital losses.
Under the recently enacted Regulated Investment Company Modernization Act of 2010, Funds will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years. As a result of this, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.
As of December 31, 2015, the components of distributable earnings on a tax basis were as follows:
Undistributed Ordinary Income | Capital Loss Carryover | Undistributed Long-Term Capital Gain | Unrealized Appreciation | Total Distributable Earnings on a tax basis | Post-October/ Late Year Net Investment Losses | |||||||||||||||||||
Johnson Equity Income Fund | $ | — | $ | — | $ | 33,870 | $ | 12,636,131 | $ | 12,620,719 | $ | (49,282 | ) | |||||||||||
Johnson Growth Fund | 58,583 | (566,469 | ) | 28,799 | 7,862,460 | 7,383,373 | ||||||||||||||||||
Johnson Opportunity Fund | — | — | 127,271 | 4,236,008 | 4,369,279 | |||||||||||||||||||
Johnson Realty Fund | 13,662 | — | — | 4,736,360 | 4,750,022 | |||||||||||||||||||
Johnson International Fund | — | (147,137 | ) | — | 872,885 | 716,657 | (9,091 | ) | ||||||||||||||||
Johnson Fixed Income Fund | 87,928 | — | — | 3,248,209 | 3,336,137 | |||||||||||||||||||
Johnson Municipal Income Fund | — | — | — | 2,415,095 | 2,415,095 |
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Shareholders of the Funds incur ongoing operating expenses consisting solely of management fees. The following example is intended to help you understand your ongoing expenses of investing in the Funds and to compare these expenses with similar costs of investing in other mutual funds. The example is based on an investment of $1,000 invested in the Funds on December 31, 2015 and held through June 30, 2016.
The first line of the table below provides information about actual account values and actual expenses. In order to estimate the expenses a shareholder paid during the period covered by this report, shareholders can divide their account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6) and then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Period.”
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses paid by a shareholder for the period. Shareholders may use this information to compare the ongoing expenses of investing in the Funds and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in other funds’ shareholder reports.
Beginning Account Value December 31, 2015 | Ending Account Value June 30, 2016 | Expenses Paid During Period* January 1, 2016 – June 30, 2016 | ||||||||||
Johnson Equity Income Fund | ||||||||||||
Actual Fund Return | $1,000.00 | $1,058.70 | $5.10 | |||||||||
Hypothetical Return | $1,000.00 | $1,019.84 | $5.01 | |||||||||
Johnson Growth Fund | ||||||||||||
Actual Fund Return | $1,000.00 | $1,003.70 | $4.97 | |||||||||
Hypothetical Return | $1,000.00 | $1,019.84 | $5.01 | |||||||||
Johnson Opportunity Fund | ||||||||||||
Actual Fund Return | $1,000.00 | $1,040.50 | $5.06 | |||||||||
Hypothetical Return | $1,000.00 | $1019.84 | $5.01 | |||||||||
Johnson Realty Fund | ||||||||||||
Actual Fund Return | $1,000.00 | $1,117.70 | $5.25 | |||||||||
Hypothetical Return | $1,000.00 | $1,019.84 | $5.01 | |||||||||
Johnson International Fund | ||||||||||||
Actual Fund Return | $1,000.00 | $992.70 | $4.94 | |||||||||
Hypothetical Return | $1,000.00 | $1,019.84 | $5.01 | |||||||||
Johnson Fixed Income Fund | ||||||||||||
Actual Fund Return | $1,000.00 | $1,054.90 | $4.33 | |||||||||
Hypothetical Return | $1,000.00 | $1,020.58 | $4.26 | |||||||||
Johnson Municipal Income Fund | ||||||||||||
Actual Fund Return | $1,000.00 | $1,013.85 | $3.27 | |||||||||
Hypothetical Return | $1,000.00 | $1,021.57 | $3.26 |
* | Expenses are equal to the Fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). For the Equity Income, Growth, Opportunity, Realty and International Funds, the expense ratio is 1.00%, for the Fixed Income Fund, the expense ratio is 0.85% and for the Municipal Income Fund, the expense ratio is 0.65%. |
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At a regular board meeting of the Johnson Mutual Funds Trust, on May 18, 2016, the Trustees, including the Trustees who are not “interested persons” of the Trust (the “Independent Trustees”), considered the renewal of the Management Agreements between the Trust and the Adviser. The Trustees were assisted by experienced independent legal counsel throughout the contract review process. The Independent Trustees discussed the proposed continuance in executive session with such counsel at which no representatives of the Adviser were present. The Independent Trustees relied upon the advice of independent legal counsel and their own business judgment in determining the material factors to be considered in evaluating the Management Agreements and the weight to be given to each such factor. Among other factors, the Trustees considered (i) the investment performance of each Fund and the Adviser; (ii) the nature, extent and quality of the services provided by the Adviser; (iii) the cost of services provided and the profits to be realized by the Adviser and its affiliates from the relationship with the Funds; and (iv) economies of scale. The conclusions reached by the Independent Trustees were based on a comprehensive evaluation of all of the information provided and were not the result of any one factor, Moreover, each Independent Trustee may have afforded different weight to the various factors in reaching his or her conclusions with respect to the Management Agreements.
The Trustees reviewed information prepared by the Adviser, discussing, among other things, the Adviser’s business, its personnel and operations, services provided to the Funds, the compensation received for management services, information regarding brokerage commissions paid to unaffiliated brokers, performance for various periods ended March 31, 2016, profitability of the Funds to the Adviser and economies of scale.
As to the performance of the Funds, the Trustees considered performance data presented by the Adviser showing the relevant Fund’s performance over various periods ending March 31, 2016. Information regarding each Fund’s performance was compared to the performance of the Fund and its Morningstar category (the “Peer Group”) and the Fund’s benchmark index. The Trustees considered the percentile ranking by Morningstar category for each of the Funds. The Trustees also considered charts comparing each Fund’s 1-year and 3-year returns to those of its Peer Group over rolling 1- and 3-year periods, as well as charts comparing each Fund’s 1-year and 3-year total returns and standard deviations to those of its Peer Group. They also discussed, with representatives of the Adviser, the Adviser’s expectations as to each Fund’s “risk,” measured by standard deviation as opposed to its benchmark.
As to the nature, extent and quality of services provided by the Adviser, the Trustees reviewed the information provided in the memorandum that described the Adviser’s business and personnel and analyzed the Adviser’s experience and capabilities. The Board noted that the Adviser has been providing services to the Trust since 1992 and presently services the 11 no-load funds, which includes four institutional funds. The Board materials also included a review of the firm personnel who serve as portfolio managers to the various Funds. The Trustees noted that they are satisfied with the portfolio management and other services being provided to the Funds by the Adviser and its responsiveness to Board requests. They noted that the fund performance watchlist was helpful in tracking the performance of the Funds, especially those that may be underperforming. The Trustees next discussed the professionalism and experience of the Adviser’s personnel, in particular those dedicated to portfolio management and fund matters. They noted the many years of experience for much of the Adviser’s professional staff as well as the Adviser’s ability to attract and retain talented portfolio managers. With respect to compliance, the Trustees discussed the Adviser’s compliance program, the resources allocated to compliance and the responsiveness of the Adviser to issues raised by the Trust’s Chief Compliance Officer. Additionally, the Trustees considered the absence of any litigations or regulatory investigations related to the Adviser. A representative of the Adviser provided an overview of the Adviser’s financial status and discussed the Adviser’s resources in providing services to the Funds. The Trustees, including the Independent Trustees, concluded that the nature and extent of services provided by the Adviser was consistent with the Board’s expectations, and that the overall quality of services was excellent. The Trustees also concluded that the Adviser has the appropriate resources to continue to provide quality advisory services to the Funds.
The Trustees recognized that the Equity Income Fund had underperformed the S&P 500 Index for the 1-year period and 3-year periods but had recently significantly outperformed the Index for the first quarter of 2016. The Trustees considered that the Growth Fund had modestly underperformed against its benchmark, the S&P 500 Index, and its Peer Group average for the 1-year and 3-year periods. With respect to the Opportunity Fund, the Trustees considered that the Fund had outperformed the Russell 2500 Index for the year to date, 1-year and 3-year periods, and underperformed the benchmark for the 5-year period. The Board next discussed the performance of the Realty Fund, noting that it had outperformed its benchmark for the 1-year period and slightly underperformed its Peer Group average and benchmark for the 3-year and 5-year periods. The Trustees noted the International Fund slightly underperformed its benchmark for each of the periods except for the 3-year period where it had outperformed. Next, the Trustees discussed the performance of the Fixed Income Fund, noting that the Fund had slightly underperformed its benchmark 1, 3 and 5-year periods but that it had recently performed well in 2016. The Trustees recognized that the Municipal Income Fund had outperformed the Barclays 5-year GO Index for the year to date 2016 and 3-year and 5-year periods. After discussion, the Trustees indicated that it was consensus that none of the Funds had unreasonable performance.
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The Trustees then reviewed each of the Institutional Funds individually. They noted that the Short Duration Bond Fund had outperformed its benchmark, the Bank of America Merrill Lynch 1 to 3 year U.S. Corporate and Government Index for the year to date 2016 period as well as for the 1, 3 and 5-year periods. Next, the Trustees discussed the performance of the Intermediate Bond Fund. They reviewed its performance for each of the periods, noting that it had outperformed the Barclays Intermediate U.S. Government Credit Index for the year to date period and for the 3 and 5 year periods but had underperformed slightly for the 1 year period. With respect to the Core Bond Fund, the Board noted that the Fund had significantly outperformed the Barclays U.S. Aggregate Index for the year to date 2016 period, and for the 1, 3, 5 and 10-year periods. The Board also noted the Core Bond Fund’s overall 5 star rating from Morningstar. The Trustees next discussed the performance for the Enhanced Return Fund. The Board reviewed its performance, noting that the Enhanced Return Fund outperformed its benchmark, the S&P 500 Index, and its Peer Group average for the year to date 2016, 1, 3 and 5-year periods and that it also maintained an overall 5-star rating from Morningstar. After discussion, the Trustees indicated that it was their consensus all four of these Funds had satisfactory performance given their respective investment objectives and strategies.
As to the cost of the services provided and the profits realized by the Adviser from the relationship with the Funds, the Trustees reviewed the fees paid to the Adviser for the fiscal year ended December 31, 2015 by the Funds. The Trustees also reviewed a report that includes a percentile ranking of the expense ratio of each Fund compared to the expense ratios of all funds in the applicable Morningstar category. The Board agreed that the expense ratio was a more meaningful comparison than the actual advisory fee because the Management Agreements have a unitary fee structure where the Adviser pays substantially all of the expenses of each Fund and is compensated with a higher fee (noting that most of the funds in the Peer Group comparisons do not share this structure). The expense ratio for each Fund was well below the mean, except that the Fixed Income Fund’s expense ratio was just above the mean. The Trustees noted the contractual fee waivers which were in effect during the period for the Short Duration Bond Fund, the Intermediate Bond Fund and the Core Bond Fund as well as the overall fees paid to the Adviser by each Fund for the period. The Trustees also discussed with the representatives of the Adviser the benefits to the Adviser of the “soft dollar” research it receives as a result of the Funds’ brokerage activity. The Trustees also discussed the profitability of each of the Funds to the Adviser, and a representative of the Adviser reported on the Adviser’s financial condition and current business environment. The Trustees, including the Independent Trustees, concluded that the Management Fee payable to each Fund and that the Adviser’s level of profitability from its relationship with the Funds is not excessive.
The Trustees next considered economies of scale. The Trustees considered that because the Funds’ expense ratios were reasonable, and given the size of the Funds and other data, that there were no excessive profits being derived from any of the Funds by the Adviser as a result of its management of the Funds. The Board also noted that the Adviser had agreed to extend its contractual fee waiver with respect to the Core Bond, Short Duration and Intermediate Bond Funds. The Trustees and representatives from the Adviser again agreed to explore the possibility of fee breakpoints in the future. After a discussion, the Trustees concluded that no breakpoints or additional fee reductions are necessary at this time. After a discussion, the Trustees concluded and agreed, including all Independent Trustees, that renewal of each Management Agreement was in the best interests of the each Fund and its shareholders. Accordingly, the Board renewed the Management Agreements for an additional year.
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Proxy Disclosure
A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities and information regarding how the Funds voted those proxies during the most recent 12-month period ended June 30 are available without charge: (1) upon request by calling the Funds at 513-661-3100 or toll free at 1-800-541-0170; or (2) from the Fund’s documents filed with the Securities and Exchange Commission (“SEC”) on the SEC’s website at www.sec.gov.
Availability of Schedules of Portfolio Investments:
The Funds file their complete schedules of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available, without charge, (1) upon request by calling the Funds at 513-661-3100 or toll free at 1-800-541-0170; or (2) from the Fund’s documents filed with the Securities and Exchange Commission (“SEC”) on the SEC’s website at www.sec.gov.
Code of Ethics
The Trust's Code of Ethics is available on request without charge; please call for your copy at 513-661-3100 or 1-800-541-0170 or write us at:
Johnson Mutual Funds
3777 West Fork Road
Cincinnati OH 45247
54
Information pertaining to the Trustees and Officers of the Funds is provided below. Trustees who are not deemed to be interested persons of the Funds, as defined in the Investment Company Act of 1940, are referred to as Independent Trustees. Trustees who are deemed to be “interested persons” of the Funds are referred to as Interested Trustees. The Statement of Additional Information includes additional information about the Funds’ Trustees and may be obtained without charge by calling (513) 661-3100 or (800) 541-0170.
Name, Address And Age | Current Position Held With Trust | Year Service Commenced | Principal Occupation During Past Five Years | Number Of Portfolios Overseen | Other Directorships Held During The Past Five Years | |||||
Interested Trustee | ||||||||||
Timothy E. Johnson (74) 3777 West Fork Road Cincinnati, Ohio 45247 | Trustee | Since 1992 | Chairman of Johnson Investment Counsel, Inc., the Trust’s Adviser, and Professor of Finance at the University of Cincinnati; previously President of the Adviser until October 2013. | 11 | Director, Kendle International, Inc. (2002 – 2011) | |||||
Independent Trustees | ||||||||||
Ronald H. McSwain (73) 3777 West Fork Road Cincinnati, Ohio 45247 | Chairman and Trustee | Since 1992 | President of McSwain Carpets, Inc. until 2001; partner of P&R Realty, a real estate development partnership since 1984. | 11 | None | |||||
John R. Green (73) 3777 West Fork Rd. Cincinnati, Ohio 45247 | Trustee | Since 2006 | Retired from The Procter & Gamble Company. | 11 | None | |||||
James J. Berrens (50) 3777 West Fork Rd Cincinnati, Ohio 45247 | Trustee | Since 2006 | Chief Executive Officer since May 2015, Chief Financial Officer September 2010 to May 2015 for Christian Community Health Services. | 11 | None | |||||
Dr. Jeri B. Ricketts (58) 3777 West Fork Rd. Cincinnati, Ohio 45247 | Trustee | Since 2013 | Director of Carl H. Lindner Honors-PLUS Program, University of Cincinnati, since 2002; Associate Professor in Accounting, University of Cincinnati since 1986. | 11 | None |
55
Name, Address And Age | Current Position Held With Trust | Year Service Commenced | Principal Occupation During Past Five Years | Number Of Portfolios Overseen | Other Directorships Held During The Past Five Years | |||||
Officers | ||||||||||
Jason O. Jackman (45) 3777 West Fork Rd. Cincinnati, Ohio 45247 | President | Since 2013 | President and Chief Investment Officer of the Adviser since October 2013; Director of Fixed Income and Institutional Management March 2004 to October 2013. | N/A | N/A | |||||
Dale H. Coates (57) 3777 West Fork Road Cincinnati, Ohio 45247 | Vice President | Since 1992 | Portfolio Manager of the Trust’s Adviser. | N/A | N/A | |||||
Marc E. Figgins (52) 3777 West Fork Road Cincinnati, Ohio 45247 | Chief Financial Officer and Treasurer | Since 2002 | Mutual Funds Manager for Johnson Financial, Inc. | NA | NA | |||||
Scott J. Bischoff (50) 3777 West Fork Road Cincinnati, Ohio 45247 | Chief Compliance Officer | Since 2005 | Director of Operations of the Trust’s Adviser; Chief Compliance Officer of the Adviser. | NA | NA | |||||
Jennifer J. Kelhoffer (44) 3777 West Fork Road Cincinnati, Ohio 45247 | Secretary | Since 2007 | Client Service and Compliance Associate for the Adviser since March 2006. | NA | NA |
56
Trustees and Officers
Ronald H. McSwain | Independent Trustee, Chairman | |||
Timothy E. Johnson | Interested Trustee | |||
James J. Berrens | Independent Trustee | |||
John R. Green | Independent Trustee | |||
Jeri B. Ricketts | Independent Trustee | |||
Jason Jackman | President | |||
Dale H. Coates | Vice President | |||
Scott J. Bischoff | Chief Compliance Officer | |||
Marc E. Figgins | Chief Financial Officer, Treasurer | |||
Jennifer J. Kelhoffer | Secretary |
Transfer Agent and Fund Accountant
Johnson Financial, Inc.
3777 West Fork Road
Cincinnati, Ohio 45247
(513) 661-3100 (800) 541-0170
Custodian
US Bank
425 Walnut Street
Cincinnati, OH 45202
Independent Registered Public Accounting Firm
Cohen Fund Audit Services, Ltd.
1350 Euclid Avenue, Suite 800
Cleveland, Ohio 44115
Legal Counsel
Thompson Hine LLP
312 Walnut Street, 14th Floor
Cincinnati, Ohio 45202
This report is authorized for distribution to prospective investors only when accompanied or preceded
by the Funds' prospectus, which illustrates each Fund's objectives, policies, management fees,
and other information that may be helpful in making an investment decision.
Investment Company Act #811-7254
Semi-Annual
Report
June 30, 2016
(Unaudited)
t | Johnson Institutional Short Duration Bond Fund |
t | Johnson Institutional Intermediate Bond Fund |
t | Johnson Institutional Core Bond Fund |
t | Johnson Enhanced Return Fund |
Johnson Mutual Funds Trust
3777 West Fork Road | Cincinnati, OH | 45247
(513) 661-3100 (800) 541-0170 fax (513) 661-4901
www.johnsonmutualfunds.com
Table of Contents
Dear Shareholder:
We are pleased to present you with the Johnson Mutual Funds’ June 30, 2016 Semi-Annual Report. On the following pages, we have provided commentary on the performance of each of the Funds for the first half of 2016 as well as the relative performance compared to an appropriate index. The remainder of the report provides the holdings of each Johnson Mutual Fund as well as other financial data and notes.
Britain’s vote to leave the European Union shocked the world in late June, but the stock market declines that resulted were short-lived. Stocks rebounded around the world as investors judged the initial response to the vote to be an overreaction. The S&P 500 Index, NASDAQ Composite, and the Dow Jones Industrial Average all have reached record highs this year. Bonds have also enjoyed a strong year thus far. Economic data, currency movements, investor interest in safer assets, and central bank activity have all placed downward pressure on interest rates both in the U.S. and overseas. Incredibly, roughly one-third of developed country government bonds now trade at negative yields, representing approximately $11 trillion worth of debt.
These astounding figures are evidence of the efforts of central banks to stimulate a weak global economy. In addition to low-interest-rate policies, central banks are also involved in quantitative easing, which has now become commonplace. In Japan and Europe, some are even advocating the implementation of “helicopter money.” This term was popularized by former Federal Reserve (Fed) chairman Ben Bernanke and refers to an aggressive method of stimulus in which the central bank “drops money from the sky.” More specifically, central banks would directly provide the government with money that the government could spend on infrastructure or use to fill the budget gap resulting from tax cuts. A potential shift is on the horizon in the U.S., however, as the Fed is expected to begin to tighten policy. The Fed has indicated it might raise rates in 2016, but the market places a low probability on that occurring. Still, it’s clear that the U.S. economy is in better shape than much of the rest of the world.
The preliminary 2nd quarter GDP number was a weak 1.2%, but economists generally expect U.S. GDP growth to remain in the 2-3% range. Meanwhile, GDP growth remains close to zero in both Europe and Japan. The U.S. has benefitted from ultra-low interest rates, which have boosted consumer spending and housing markets. Energy prices have remained lower, and wages have continued to rise along with household net worth. The economy is nearing full employment, and record-highs in the stock market have also boosted confidence.
Despite these positives, international (and some domestic) developments have instilled some doubts. Weak growth abroad, the Brexit vote, elections in various countries, populist backlash against globalization and trade, terrorism, a strong dollar, high debt levels, and the prospect of Fed tightening have all contributed to these doubts.
In the U.S., the two major political parties’ presidential candidates have been officially confirmed, but the twists and turns of this bizarre campaign continue. We are often asked about the impact of the election on the markets. Election season always stirs up fears, doubts, uncertainty, and hopes in the minds of the people, leading many to wonder how it will affect their investments. Politics can influence the markets in the short run, but in the long run the economy and corporate earnings are what drive returns. One of the strengths of the American system is the limits that have been placed on government power. These checks and balances have allowed our economy to operate with much more autonomy than most others around the world and throughout history. In addition, markets have often benefited from periods of “divided government” when one party controls the White House and the other controls Congress. There is heated debate about whether the government should be more involved or less involved than it is now, but the fact remains that this system has allowed for incredible economic progress for more than two centuries.
Adding to the uncertainty created by election season, investors are confronted with frequent news of terrorism, violence, military coups, and war. The human suffering around the world is tragic and heartbreaking to watch. Understandably, these events are unsettling for many of us. The significance of these tragedies is much greater than the effect on the financial markets. That being said, the discouraging news that we see on a daily basis can cause some to take an overly pessimistic view when it comes to investing. But just as with election season, successful investing requires a focus on what ultimately drives returns over the long run. Sadly, violence and turmoil of this kind is nothing new, and these events are a reality that investors will confront long into the future. So while we hope for better days, it is critical to stay focused on the disciplines that have led to investing success over time, amid all kinds of turmoil.
1
Recent market behavior is a reminder that volatility is a normal part of investing, and times like these test investors’ discipline. On average, stocks experience three drops of 5% and one 10% drop every 12 months. These create opportunities for patient and disciplined investors and serve as a reminder of the value of diversification.
We want you to know how much we appreciate the confidence you have placed in us for your investment needs. As always, please feel free to call us at (513) 661-3100 or (800) 541-0170 with your comments or questions. Thank you.
Sincerely,
Jason Jackman, President
2
The Johnson Institutional Short Duration Bond Fund provided a total return of 1.96% during the first half of 2016, compared to a 1.65% return for the Bank of America/Merrill Lynch 1–3 Year US Corporate & Government Index. Global economic uncertainty pushed interest rates lower across the globe, despite the Fed’s insistence that it will continue to tighten its benchmark policy rate.
Bond yields fell during the first half of the year, particularly among longer maturity securities, resulting in a flattening of the yield curve and leading to the Fund’s positive total return. The Fund’s maturity composition aided performance relative to the benchmark as yields on the Fund’s longer-dated holdings fell the most as the curve flattened. While the benchmark is comprised solely of 1–3 year maturities, the Fund is constructed with a more diverse maturity profile, including maturities beyond 3 years.
Credit spreads began the year at relatively wide levels, as fear of energy-related defaults spread throughout the credit market. Spreads continued to widen early in the year, peaking in mid-February. As the price of oil stabilized, however, credit spreads tightened rapidly, leading to positive excess returns for credit year-to-date. Sector performance was uneven, with financials tightening less than industrials and utilities and energy-related industrial credits recovering most of their prior losses. Throughout the first half of the year, low-quality credits outperformed high quality credits. The Fund’s overweight to corporate bonds was a significant driver of performance relative to the Fund’s benchmark during the year, while its focus on high-quality credits with lower spread volatility tempered returns. More than 60% of the Fund’s bond allocation is to investment-grade rated corporate securities and an additional 2% is invested in municipal bonds. This combined allocation is greater than the Fund’s benchmark index and a key reason why the yield is higher in the Fund. Over time, this yield advantage is critical to the Fund’s ability to outperform its benchmark. It can also be a helpful strategy to protect against rising interest rates.
Looking forward into the second half of 2016, we expect the Fed will likely continue to tighten monetary policy, although likely at a historically slow pace. Growth in the U.S. has been stable, but pockets of weakness remain. A strong U.S. Dollar and global economic uncertainty have held back manufacturing, but the consumer continues to maintain solid momentum. Steadily rising wages and solid employment gains should support this trend. Continued improvement of global economic growth as well as powerful global Central Bank stimulus may lead to a continued tightening of credit spreads and the Fund’s overweight to corporate bonds should benefit as a result. The Fund’s duration is slightly short to that of its benchmark and has added securities such as floating rate and step-up coupon bonds which will help serve as a cushion to higher rates. With inflation expectations extremely low due to the decline in oil, the Fund has maintained a position in Treasury Inflation Protected Securities, which will benefit from oil stabilization along with reflationary global Central Bank policies. Finally, we anticipate upward pressure on short duration bond yields in the near term, leading to a muted total return outlook. However, the potential move upward should provide an opportunity to enhance the Fund’s yield over time.
Average Annual Total Returns as of June 30, 2016 | ||||||||
Short Duration Bond Fund | Merrill Lynch 1–3 Year Gov’t/Corp Index | |||||||
Six Month | 1.96 | % | 1.65 | % | ||||
One Year | 1.98 | % | 1.58 | % | ||||
Five Years | 1.52 | % | 1.15 | % | ||||
Ten Years | 3.30 | % | 2.80 | % |
A high level of income over the long term consistent with capital preservation is the objective of the Johnson Institutional Short Duration Bond Fund. The data on this page is unaudited. The data on this page represents past performance and is not a guarantee of future results. Investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The average annual total return numbers include changes in the Fund’s or Index’s share price, plus reinvestment of any income and capital gains. Six month returns are not annualized. The Fund’s performance is after all fees, whereas the Index does not incur fees. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The Merrill Lynch 1–3 Year Government/Corporate Index is the established benchmark. A shareholder cannot invest directly in the Merrill Lynch 1–3 Year Government/Corporate Index. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month end, please call 1-800-541-0170.
3
The JIC Institutional Intermediate Bond Fund provided a total return of 4.47% during the first half of 2016, compared to a 4.07% return for the Barclay’s Capital Intermediate Government Credit Index. Global economic uncertainty pushed interest rates lower across the globe, despite the Fed’s insistence that it will continue to tighten its benchmark policy rate.
Bond yields began the year at somewhat low levels, and the Fund maintained a modestly shorter duration than the benchmark as a result. The short end of the yield curve remained anchored by the Fed’s policy action last year, while longer rates fell rapidly as a result of global economic uncertainty and strong flows into domestic bond markets. The Fund’s positioning was constructed to benefit from such a curve flattening and aided the funds relative performance versus its benchmark.
Meanwhile, credit spreads began the year at relatively wide levels, as fear of energy related defaults spread throughout the credit market. Spreads continued to widen earlier this year, peaking out in mid-February. As the price of oil stabilized, however, credit spreads tightened rapidly, leading to positive excess returns for credit year to date. Sector performance was uneven though, with financials tightening less than industrials and utilities as energy related industrial credits recovered most of their prior losses. The Fund’s overweight to corporate bonds was a significant driver of performance relative to the Fund’s benchmark during the year, while its focus on high quality credits with lower spread volatility tempered returns. More than half of the Fund’s bond allocation is to investment-grade rated corporate securities which is greater than the Fund’s benchmark index and a key reason why the yield is higher in the Fund. Over time, this yield advantage is critical to the Fund’s ability to outperform its benchmark. It can also be a helpful strategy to protect against rising interest rates.
Looking forward into the second half of 2016, we expect the Fed will likely continue to tighten monetary policy, although likely at a historically slow pace. Growth in the U.S. has been stable, but pockets of weakness remain. A strong U.S. Dollar and global economic uncertainty have held back manufacturing, but the consumer continues to maintain solid momentum. Steadily rising wages and solid employment gains should support this trend. Continued improvement in global economic growth as well as powerful global Central Bank stimulus may lead to a continued tightening of credit spreads and the Fund’s overweight to corporate bonds should benefit as a result. The Fund’s duration is slightly short to that of its benchmark and the addition of securities such as floating rate and step-up coupon bonds will help serve as a cushion to higher rates. With inflation expectations extremely low due to the decline in oil, the Fund has maintained a position in Treasury Inflation Protected Securities, which will benefit from oil stabilization along with reflationary global Central Bank policies. Finally, we anticipate upward pressure on intermediate bond yields in the near term, leading to a muted total return outlook. However, the potential move upward should provide an opportunity to enhance the Fund’s yield over time.
Average Annual Total Returns as of June 30, 2016 | ||||||||
Intermediate Bond Fund | Barclays Intermediate Government Credit Index | |||||||
Six Month | 4.47 | % | 4.07 | % | ||||
One Year | 4.83 | % | 4.33 | % | ||||
Five Years | 3.30 | % | 2.90 | % | ||||
Ten Years | 4.96 | % | 4.48 | % |
A high level of income over the long term consistent with capital preservation is the objective of the Johnson Institutional Intermediate Bond Fund. The data on this page is unaudited. The data on this page represents past performance and is not a guarantee of future results. Investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The average annual total return numbers include changes in the Fund’s or Index’s share price, plus reinvestment of any income and capital gains. Six month returns are not annualized. The Fund’s performance is after all fees, whereas the Index does not incur fees. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The Barclays Intermediate Government Credit Index is the established benchmark. A shareholder cannot invest directly in the Index. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month end, please call 1-800-541-0170.
4
The Johnson Institutional Core Bond Fund provided a total return of 5.88% during the first half of 2016, compared to a 5.31% return for the Barclay’s Capital Aggregate Index. Global economic uncertainty pushed interest rates lower across the globe, despite the Fed’s insistence that it will continue to tighten its benchmark policy rate.
Bond yields began the year at somewhat low levels, and the Fund maintained a modestly shorter duration than the benchmark as a result. The short end of the yield curve remained anchored by the Fed’s policy action last year, while longer rates fell rapidly as a result of global economic uncertainty and strong flows into domestic bond markets. The Fund’s positioning was constructed to benefit from such a curve flattening and aided the funds relative performance versus its benchmark.
Meanwhile, credit spreads began the year at relatively wide levels, as fear of energy related defaults spread throughout the credit market. Spreads continued to widen earlier this year, peaking out in mid-February. As the price of oil stabilized, however, credit spreads tightened rapidly, leading to positive excess returns for credit year to date. Sector performance was uneven though, with financials tightening less than industrials and utilities as energy related industrial credits recovered most of their prior losses. The Fund’s overweight to corporate bonds was a significant driver of performance relative to the Fund’s benchmark during the year, while its focus on high quality credits with lower spread volatility tempered returns. More than half of the Fund’s bond allocation is to investment-grade rated corporate securities which is greater than the Fund’s benchmark index and a key reason why the yield is higher in the Fund. Over time, this yield advantage is critical to the Fund’s ability to outperform its benchmark. It can also be a helpful strategy to protect against rising interest rates.
Looking forward into the second half of 2016, we expect the Fed will likely continue to tighten monetary policy, although likely at a historically slow pace. Growth in the U.S. has been stable, but pockets of weakness remain. A strong U.S. Dollar and global economic uncertainty have held back manufacturing, but the consumer continues to maintain solid momentum. Steadily rising wages and solid employment gains should support this trend. Continued improvement in global economic growth as well as powerful global Central Bank stimulus may lead to a continued tightening of credit spreads and the Fund’s overweight to corporate bonds should benefit as a result. The Fund’s duration is slightly short to that of its benchmark and the addition of securities such as floating rate and step-up coupon bonds will help serve as a cushion to higher rates. With inflation expectations extremely low due to the decline in oil, the Fund has maintained a position in Treasury Inflation Protected Securities, which will benefit from oil stabilization along with reflationary global Central Bank policies. Finally, we anticipate upward pressure on intermediate bond yields in the near term, leading to a muted total return outlook. However, the potential move upward should provide an opportunity to enhance the Fund’s yield over time.
Average Annual Total Returns as of June 30, 2016 | ||||||||
Core Bond Fund | Barclays Capital Aggregate Index | |||||||
Six Month | 5.88 | % | 5.31 | % | ||||
One Year | 6.49 | % | 6.00 | % | ||||
Five Years | 4.45 | % | 3.76 | % | ||||
Ten Years | 5.97 | % | 5.13 | % |
A high level of income over the long term consistent with capital preservation is the objective of the Johnson Institutional Core Bond Fund and the primary assets are investment-grade government and corporate bonds. The data on this page is unaudited. The data on this page represents past performance and is not a guarantee of future results. Investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The average annual total return numbers include changes in the Fund’s or Index’s share price, plus reinvestment of any income and capital gains. Six month returns are not annualized. The Fund’s performance is after all fees, whereas the Index does not incur fees. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The Barclays Capital Aggregate Index is the established benchmark. A shareholder cannot invest directly in the Index. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month end, please call 1-800-541-0170.
5
The total return for the Johnson Enhanced Return Fund for the first six months of 2016 was 5.26% compared to 3.84% for the Standard & Poors 500 Index (S&P 500). The outperformance continues to be driven by effective management of the bond portion of the portfolio compared to the cost of carry in the futures contracts.
Stocks have been volatile during 2016, experiencing a correction of more than 10% in January before rallying to more than recover those declines. A surprising vote by the British electorate to exit the European Union (EU) caused a sharp pullback in late June, but it proved to be short-lived as monetary authorities around the globe continue with their aggressive policies. Brexit is causing a good deal of uncertainty about its potential impact on growth and investment and whether it will lead to a domino effect of other countries questioning their EU membership. But, uncertainty always leads to volatility, and often to opportunity. Such market shocks can often lead to higher equity prices, not lower, with an average return of 13.4% one year after the event. Whether that happens here is yet to be determined, but it will clearly lead to further monetary easing around the globe, including yet another deferment of Fed rate hikes.
Bond yields were as volatile as stocks during the first half of the year, but ended the period well below beginning of the year levels as the Fed continues to keep a lid on rates. Yields on securities longer than 10 years in maturity are again near their historic lows. Short term rates that have a direct impact on the performance of the Fund fell to their lowest levels in more than a year. Credit spreads have also been volatile, rising sharply early in the year on worries about economic growth and falling dramatically throughout most of the rest of the first half. Both the decline in bond yields and narrowing in credit spreads helped the Fund to outperform the benchmark index. The bond portion of the Fund emphasizes quality short duration corporate bonds which continue to provide a yield advantage over the cost of carry in equity futures contracts. All securities are investment-grade rated with an average maturity of approximately two years. Good relative performance from this bond portfolio is what drove the Fund’s outperformance through mid-year.
As the second half of the year begins, global economic uncertainty, the unknown impact of Brexit, and the upcoming US election cycle are all on the minds of investors. However, investors remain confident in monetary policy staying highly accommodative and most expect interest rates could remain quite low. The Fund is postured to benefit from such an environment. Still, we remain vigilant to the possibility that interest rates may rise later this year or into the first half of 2017. The bond portfolio within the Fund maintains a short duration bias as a result. With credit yield spreads still relatively attractive we are still able to provide more yield than the cost of futures contracts.
Average Annual Total Returns as of June 30, 2016 | ||||||||
Enhanced Return Fund | S&P 500 Index | |||||||
Six Month | 5.26 | % | 3.84 | % | ||||
One Year | 5.18 | % | 3.99 | % | ||||
Five Years | 12.86 | % | 12.104 | % | ||||
Ten Years | 8.60 | % | 7.42 | % |
Outperforming the Fund’s benchmark, the S&P 500 Index, over a full market cycle is the objective of the Johnson Enhanced Return Fund and the primary assets are stock index futures contracts and short-term investment-grade fixed income securities. The data on this page is unaudited. The data on this page represents past performance and is not a guarantee of future results. Investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The average annual total return numbers include changes in the Fund’s or Index’s share price, plus reinvestment of any income and capital gains. Six month returns are not annualized. The Fund’s performance is after all fees, whereas the Index does not incur fees. The returns shown do not reflect deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. A shareholder cannot invest directly in the S&P 500 Index. Current performance may be lower or higher than the performance data quoted. To obtain performance data current to the most recent month end, please call 1-800-541-0170.
6
Fixed Income Securities | Face Value | Fair Value | ||||||
Corporate Bonds: | ||||||||
Finance | ||||||||
American Express Senior Unsecured Notes, 6.000% Due 09/13/2017 | 1,255,000 | $ | 1,322,146 | |||||
American Express Senior Unsecured Notes, 6.150% Due 08/28/2017 | 1,000,000 | 1,055,306 | ||||||
AON Corp. Senior Unsecured Notes, 5.000% Due 09/30/2020 | 1,000,000 | 1,116,891 | ||||||
BB&T Corp. Subordinated Notes, 5.250% Due 11/01/2019 | 2,100,000 | 2,326,949 | ||||||
Fifth Third Bancorp Subordinated Notes, 4.500% Due 06/01/2018 | 819,000 | 862,029 | ||||||
Fifth Third Bancorp Subordinated Notes, 5.450% Due 01/15/2017 | 1,090,000 | 1,114,269 | ||||||
Huntington Bancshares Senior Unsecured Notes, 2.600% Due 08/02/2018 | 1,900,000 | 1,936,402 | ||||||
JPMorgan Chase & Co. Senior Unsecured Notes, 2.750% Due 06/23/2020 | 1,500,000 | 1,545,648 | ||||||
JPMorgan Chase & Co. Subordinated Notes, 6.000% Due 10/01/2017 | 770,000 | 813,282 | ||||||
Key Bank NA Senior Unsecured Notes, 1.700% Due 06/01/2018 | 1,000,000 | 1,004,760 | ||||||
Keycorp Senior Unsecured Notes, 5.100% Due 03/24/2021 | 1,100,000 | 1,237,415 | ||||||
Manufacturers and Traders Trust Co. Subordinated Notes, 6.625% Due 12/04/2017 | 530,000 | 565,529 | ||||||
Marsh & McLennan Companies Inc. Senior Unsecured Notes, 2.300% Due 04/01/2017 | 1,700,000 | 1,715,025 | ||||||
Morgan Stanley Senior Unsecured Notes, 2.125% Due 04/25/2018 | 2,300,000 | 2,324,072 | ||||||
MUFG Americas Holdings Corp. Senior Unsecured Notes, 2.250% Due 02/10/2020 | 1,000,000 | 1,007,221 | ||||||
National City Corp. Subordinated Notes, 6.875% Due 05/15/2019 | 750,000 | 845,366 | ||||||
PNC Bank NA Subordinated Notes, 4.875% Due 09/21/2017 | 1,250,000 | 1,298,939 | ||||||
Prudential Financial Inc. Senior Unsecured Notes, 5.375% Due 06/21/2020 | 750,000 | 845,531 | ||||||
Suntrust Banks Inc. Senior Unsecured Notes, 3.500% Due 01/20/2017 | 1,100,000 | 1,112,249 |
Fixed Income Securities | Face Value | Fair Value | ||||||
Suntrust Banks Inc. Senior Unsecured Notes, 6.000% Due 09/11/2017 | 1,235,000 | $ | 1,301,286 | |||||
Wachovia Bank NA Subordinated Notes, 6.000% Due 11/15/2017 | 2,105,000 | 2,239,777 | ||||||
23.6% – Total Finance | $ | 27,590,092 | ||||||
Industrial | ||||||||
AT&T Inc. Senior Unsecured Notes, 4.600% Due 02/15/2021 | 543,000 | 594,197 | ||||||
AT&T Inc. Senior Unsecured Notes, 5.500% Due 02/01/2018 | 1,845,000 | 1,963,746 | ||||||
Becton Dickinson Senior Unsecured Notes, 2.675% Due 12/15/2019 | 80,000 | 82,283 | ||||||
Becton Dickinson Senior Unsecured Notes, 6.375% Due 08/01/2019 | 2,000,000 | 2,277,938 | ||||||
Burlington Northern Santa Fe Senior Unsecured Notes, 4.700% Due 10/01/2019 | 500,000 | 552,864 | ||||||
Chevron Corp. Senior Unsecured Note, 2.427% Due 06/24/2020 | 1,945,000 | 2,007,026 | ||||||
CR Bard Inc. Senior Unsecured Notes, 1.375% Due 01/15/2018 | 2,170,000 | 2,178,563 | ||||||
Eaton Electric Holdings Senior Unsecured Notes, 3.875% Due 12/15/2020 | 1,500,000 | 1,611,032 | ||||||
General Electric Capital Corp. Senior Unsecured Notes, 1.428% Due 04/15/2020** | 1,380,000 | 1,394,070 | ||||||
General Electric Capital Corp. Senior Unsecured Notes, 1.653% Due 03/15/2023** | 2,000,000 | 1,987,548 | ||||||
Kroger Co. Senior Unsecured Notes, 6.800% Due 12/15/2018 | 1,150,000 | 1,294,084 | ||||||
Norfolk Southern Corp. Senior Unsecured Notes, 5.750% Due 04/01/2018 | 1,000,000 | 1,076,929 | ||||||
Shell International Senior Unsecured Notes, 4.375% Due 03/25/2020 | 2,100,000 | 2,308,034 | ||||||
Schlumberger Investment Senior Unsecured Notes, 1.950% Due 09/14/2016* | 1,379,000 | 1,382,101 | ||||||
Schulmberger Norge AS Senior Unsecured Notes, 1.250% Due 08/01/2017* | 1,000,000 | 999,497 | ||||||
Union Pacific Corp. Senior Unsecured Notes, 5.650% Due 05/01/2017 | 1,575,000 | 1,636,275 |
The accompanying notes are an integral part of these financial statements.
7
Fixed Income Securities | Face Value | Fair Value | ||||||
United Technologies Junior Subordinated Notes, 1.778% Due 05/04/2018** | 3,000,000 | $ | 3,026,952 | |||||
Verizon Communications Senior Unsecured Notes, 4.500% Due 09/15/2020 | 2,000,000 | 2,219,912 | ||||||
24.5% – Total Industrial | $ | 28,593,051 | ||||||
Utilities | ||||||||
Berkshire Hathaway Energy Senior Unsecured Notes, 5.750% Due 04/01/2018 | 890,000 | 958,962 | ||||||
Duke Energy Corp. Senior Unsecured Notes, 5.050% Due 09/15/2019 | 2,194,000 | 2,418,462 | ||||||
Enterprise Products Senior Unsecured Notes, 6.500% Due 01/31/2019 | 2,000,000 | 2,239,682 | ||||||
Eversource Energy Senior Unsecured Notes, 1.450% Due 05/01/2018 | 1,600,000 | 1,602,230 | ||||||
Eversource Energy Senior Unsecured Notes, 4.500% Due 11/15/2019 | 600,000 | 657,588 | ||||||
Georgia Power Co. Senior Unsecured Notes, 4.250% Due 12/01/2019 | 835,000 | 908,838 | ||||||
Georgia Power Co. Senior Unsecured Notes, 5.700% Due 06/01/2017 | 1,000,000 | 1,040,356 | ||||||
Gulf Power Co. Senior Notes, 5.300% Due 12/01/2016 | 450,000 | 457,517 | ||||||
Interstate Power & Light Senior Unsecured Notes, 3.650% Due 09/01/2020 | 600,000 | 640,265 | ||||||
National Rural Utilities Corp. Collateral Trust Notes, 5.450% Due 02/01/2018 | 1,000,000 | 1,066,809 | ||||||
National Rural Utilites Corp. Collateral Trust Notes, 5.450% Due 04/10/2017 | 1,150,000 | 1,188,085 | ||||||
Northern Natural Gas Senior Unsecured Notes, 5.750% Due 07/15/2018* | 1,280,000 | 1,392,118 | ||||||
Williams Partners LP Senior Unsecured Notes, 7.250% Due 02/01/2017 | 1,205,000 | 1,241,044 | ||||||
Xcel Energy Inc. Senior Unsecured Notes, 5.613% Due 04/01/2017 | 2,023,000 | 2,091,078 | ||||||
15.3% – Total Utilities | $ | 17,903,034 |
Fixed Income Securities | Face Value | Fair Value | ||||||
United States Government Treasury Obligations | ||||||||
Treasury Inflation Protected Security, 0.125% Due 04/15/2018 | 4,139,520 | $ | 4,200,967 | |||||
United States Treasury Floating Rate Notes, 0.532% Due 01/31/2018** | 3,600,000 | 3,606,815 | ||||||
United States Treasury Floating Rate Notes, 0.450% Due 04/30/2018** | 1,500,000 | 1,500,167 | ||||||
United States Treasury Floating Rate Note, 0.377% Due 7/31/2017** | 2,000,000 | 2,000,076 | ||||||
9.7% – Total United States Government Treasury Obligations | $ | 11,308,025 | ||||||
United States Government Agency Obligations | ||||||||
FHLMC Step-up Coupon Notes, 1.000% Due 05/25/2021** | 2,500,000 | 2,499,923 | ||||||
FHLMC Step-up Coupon Notes, 1.100% Due 06/21/2021** | 2,000,000 | 2,001,382 | ||||||
FHLMC Step-up Coupon Notes, 1.100% Due 06/07/2021** | 1,380,000 | 1,380,905 | ||||||
FHLMC Step-up Coupon Notes, 1.000% Due 07/12/2021** | 3,000,000 | 3,001,629 | ||||||
FNMA Step-up Coupon Notes, 1.100% Due 02/12/2021** | 4,000,000 | 4,000,732 | ||||||
11.0% – Total United States Government Agency Obligations | $ | 12,884,571 | ||||||
United States Government Agency Obligations – Mortgage-Backed Securities | ||||||||
FHLMC 10/1 Hybrid Adjustable Rate Mortgage, 3.251% Due 04/01/2042** | 675,530 | 707,566 | ||||||
FHLMC CMO Series 2989 Class TG, 5.500% Due 06/15/2025 | 850,344 | 933,735 | ||||||
FHLMC CMO Series 3925 Class VA, 4.000% Due 11/15/2022 | 942,135 | 965,527 | ||||||
FHLMC CMO Series 4017 Class MA, 3.000% Due 03/01/2042 | 701,741 | 725,697 | ||||||
FNMA 7/1 Hybrid ARM, 2.775% Due 02/01/2046** | 1,183,155 | 1,229,352 | ||||||
FNMA 7/1 Hybrid ARM, 2.794% Due 12/01/2044** | 1,000,626 | 1,042,826 | ||||||
FNMA CMO Series 2003-79 Class NJ, 5.000% Due 08/25/2023 | 606,243 | 659,109 |
The accompanying notes are an integral part of these financial statements.
8
Fixed Income Securities | Face Value | Fair Value | ||||||
FNMA CMO Series 2010-13 Class EV, 5.000% Due 01/25/2022 | 360,195 | $ | 361,240 | |||||
GNMA CMO Pool 2004-95 Class QA, 4.500% Due 03/20/2034 | 70,007 | 73,688 | ||||||
GNMA Pool 726475, 4.000% Due 11/15/2024 | 340,149 | 359,245 | ||||||
6.0% – Total United States Government Agency Obligations – Mortgage-Backed Securities | $ | 7,057,985 | ||||||
Taxable Municipal Bonds | ||||||||
Ohio Higher Education Facilities – Cleveland Clinic Health Systems, 2.731% Due 01/01/2017 | 1,110,000 | 1,120,823 | ||||||
West Virginia University Board of Governors Revenue, 1.262% Due 10/01/2016 | 1,430,000 | 1,432,259 | ||||||
2.2% – Total Taxable Municipal Bonds | $ | 2,553,082 | ||||||
Total Fixed Income Securities 92.3% | $ | 107,889,840 | ||||||
(Identified Cost $107,147,953) |
Cash Equivalents | Shares | |||||||
First American Government Obligation Fund, Class Z, 0.01%** | 8,841,170 | 8,841,170 | ||||||
Total Cash Equivalents 7.6% | $ | 8,841,170 | ||||||
(Identified Cost $8,841,170) | ||||||||
Total Portfolio Value 99.9% | $ | 116,731,010 | ||||||
(Identified Cost $115,989,123) | ||||||||
Other Assets in Excess of Liabilities 0.1% | $ | 194,245 | ||||||
Total Net Assets 100.0% | $ | 116,925,255 |
* | 144A Restricted Security. The total fair value of such securities as of June 30, 2016 was $2,779,198 and represented 2.61% of net assets. |
- | Schlumberger Norge Bond, Lot 1, purchased on June 23, 2016, for $999,810; price on June 30, 2016 was $99.950. |
- | Schlumberger Investment Bond, Lot 1, purchased on August 16, 2012, for $698,318; price on June 30, 2016 was $100.225. |
- | Schlumberger Investment Bond, Lot 2, purchased on October 10, 2012, for $725,389; price on June 30, 2016 was $100.225. |
- | Northern Natural Gas Co. Bond, Lot 1, was purchased on October 12, 2012, for $1,223,180; price on June 30, 2016 was $108.759. |
- | Northern Natural Gas Co. Bond, Lot 2, was purchased on January 15, 2013, for $72,412.80; price on June 30, 2016 was $108.759. |
- | Northern Natural Gas Co. Bond, Lot 3, was purchased on November 26, 2014, for $249,766; price on June 30, 2016 was $108.759. |
** | Variable Rate Security; the rate shown is as of June 30, 2016. |
CMO – Collateralized Mortgage Obligation
FDIC – Federal Deposit Insurance Corporation
FHLB – Federal Home Loan Bank
FHLMC – Federal Home Loan Mortgage Corporation
FNMA – Federal National Mortgage Association
GNMA – Government National Mortgage Association
The accompanying notes are an integral part of these financial statements.
9
Fixed Income Securities | Face Value | Fair Value | ||||||
Corporate Bonds: | ||||||||
Finance | ||||||||
Ace INA Holdings Senior Unsecured Notes, 2.875% Due 11/03/2022 | 2,000,000 | $ | 2,092,084 | |||||
American Express Co. Subordinated Notes, 3.6250% Due 12/05/2024 | 1,460,000 | 1,497,392 | ||||||
AON Corp. Senior Unsecured Notes, 4.000% Due 11/27/2023 | 2,116,000 | 2,260,586 | ||||||
BB&T Corp. Subordinated Notes, 3.950% Due 03/22/2022 | 500,000 | 536,337 | ||||||
BB&T Corp. Subordinated Notes, 5.250% Due 11/01/2019 | 1,000,000 | 1,108,071 | ||||||
ERP Operating LP Senior Unsecured Notes, 4.625% Due 12/15/2021 | 1,250,000 | 1,411,528 | ||||||
Fifth Third Bancorp Subordinated Notes, 4.300% Due 01/16/2024 | 2,000,000 | 2,130,130 | ||||||
Huntington National Bank Senior Unsecured Notes, 2.600% Due 08/02/2018 | 1,610,000 | 1,640,846 | ||||||
JPMorgan Chase & Co. Senior Subordinated Notes, 3.875% Due 09/10/2024 | 1,600,000 | 1,656,539 | ||||||
Key Bank NA Subordinated Notes, 4.625% Due 06/15/2018 | 1,000,000 | 1,044,954 | ||||||
Keycorp Senior Unsecured Notes, 5.100% Due 03/24/2021 | 500,000 | 562,462 | ||||||
Marsh & McLennan Companies Inc. Senior Unsecured Notes, 3.500% Due 06/03/2024 | 1,500,000 | 1,557,728 | ||||||
PNC Bank NA Subordinated Notes, 6.875% Due 05/15/2019 | 1,500,000 | 1,690,731 | ||||||
Prudential Financial Inc. Senior Unsecured Notes, 4.500% Due 11/15/2020 | 1,000,000 | 1,103,589 | ||||||
Suntrust Banks Inc. Senior Unsecured Notes, 6.000% Due 09/11/2017 | 1,600,000 | 1,685,877 | ||||||
US Bancorp Subordinated Notes, 2.950% Due 07/15/2022 | 1,246,000 | 1,296,632 | ||||||
US Bancorp Subordinated Notes, 3.600% Due 09/11/2024 | 1,000,000 | 1,077,173 | ||||||
Wells Fargo & Co. Subordinated Notes, 4.300% Due 07/22/2027 | 1,400,000 | 1,511,623 | ||||||
Wells Fargo & Co. Subordinated Notes, 4.480% Due 01/16/2024 | 1,220,000 | 1,337,293 | ||||||
24.8% – Total Finance | $ | 27,201,575 |
Fixed Income Securities | Face Value | Fair Value | ||||||
Industrial | ||||||||
AT&T Inc. Senior Unsecured Notes, 3.000% Due 02/15/2022 | 1,500,000 | $ | 1,529,716 | |||||
Becton Dickinson Senior Unsecured Notes, 3.125% Due 11/08/2021 | 1,500,000 | 1,573,849 | ||||||
Chevron Corp. Senior Unsecured Notes, 2.335% Due 12/05/2022 | 1,500,000 | 1,522,551 | ||||||
CVS Health Corp. Senior Unsecured Notes, 3.500% Due 07/20/2022 | 1,200,000 | 1,292,027 | ||||||
CR Bard Inc. Senior Unsecured Notes, 4.400% Due 01/15/2021 | 1,310,000 | 1,445,476 | ||||||
Eaton Corp. Senior Unsecured Notes, 2.750% Due 11/02/2022 | 1,500,000 | 1,537,758 | ||||||
General Electric Capital Corp. Senior Unsecured Notes, 1.428% Due 04/15/2020** | 753,000 | 760,678 | ||||||
General Electric Capital Corp. Senior Unsecured Notes, 1.653% Due 03/15/2023** | 2,230,000 | 2,216,116 | ||||||
Johnson Controls Inc. Senior Unsecured Notes, 3.750% Due 12/01/2021 | 990,000 | 1,055,981 | ||||||
Kroger Co. Senior Unsecured Notes, 6.800% Due 12/15/2018 | 1,100,000 | 1,237,819 | ||||||
McDonald’s Corp. Senior Unsecured Notes, 2.200% Due 05/26/2020 | 1,200,000 | 1,227,703 | ||||||
Norfolk Southern Corp. Senior Unsecured Notes, 5.750% Due 04/01/2018 | 1,000,000 | 1,076,929 | ||||||
Norfolk Southern Corp. Senior Unsecured Notes, 5.900% Due 06/15/2019 | 500,000 | 561,890 | ||||||
Pepsico Inc. Senior Unsecured Notes, 7.900% Due 11/01/2018 | 215,000 | 248,670 | ||||||
Shell International Finance Senior Unsecured Notes, 2.150% Due 05/11/2020 | 1,250,000 | 1,275,783 | ||||||
Shell International Finance Senior Unsecured Notes, 3.250% Due 05/11/2025 | 1,000,000 | 1,049,087 | ||||||
Target Corp. Senior Unsecured Notes, 4.875% Due 05/15/2018 | 1,000,000 | 1,070,329 | ||||||
Union Pacific Corp. Senior Unsecured Notes, 5.650% Due 05/01/2017 | 500,000 | 519,453 |
The accompanying notes are an integral part of these financial statements.
10
Fixed Income Securities | Face Value | Fair Value | ||||||
United Technologies Corp. Senior Unsecured Notes, 4.875% Due 03/01/2020 | 1,000,000 | $ | 1,106,060 | |||||
United Technologies Junior Subordinated Notes, 1.778% Due 05/04/2018** | 1,500,000 | 1,513,476 | ||||||
Verizon Communications Senior Unsecured Notes, 4.672% Due 03/13/2055 | 1,782,000 | 1,802,386 | ||||||
23.5% – Total Industrial | $ | 25,623,737 | ||||||
Utilities | ||||||||
Berkshire Hathaway Energy Senior Unsecured Notes, 5.750% Due 04/01/2018 | 460,000 | 495,643 | ||||||
Duke Energy Corp. Senior Unsecured Notes, 5.050% Due 09/15/2019 | 620,000 | 683,430 | ||||||
Duke Energy Ohio First Mortgage, 5.450% Due 04/01/2019 | 1,000,000 | 1,110,176 | ||||||
Enterprise Products Senior Unsecured Notes, 3.350% Due 03/15/2023 | 500,000 | 513,635 | ||||||
Enterprise Products Senior Unsecured Notes, 4.050% Due 02/15/2022 | 1,000,000 | 1,079,079 | ||||||
Eversource Energy Senior Unsecured Notes, 1.450% Due 05/01/2018 | 1,190,000 | 1,191,659 | ||||||
Eversource Energy Senior Unsecured Notes, 4.500% Due 11/15/2019 | 500,000 | 547,990 | ||||||
Georgia Power Co. Senior Unsecured Notes, 2.850% Due 05/15/2022 | 1,111,000 | 1,166,251 | ||||||
National Rural Utilities Corp. Collateral Trust, 10.375% Due 11/01/2018 | 500,000 | 604,151 | ||||||
National Rural Utilities Corp. Collateral Trust, 5.450% Due 02/01/2018 | 1,190,000 | 1,269,503 | ||||||
Northern Natural Gas Senior Unsecured Notes, 5.750% Due 07/15/2018* | 1,000,000 | 1,087,592 | ||||||
Virginia Electric & Power Co. Senior Unsecured Notes, 2.950% Due 01/15/2022 | 415,000 | 437,195 | ||||||
Williams Partners Senior Unsecured Notes, 4.875% Due 05/15/2023 | 1,500,000 | 1,449,832 |
Fixed Income Securities | Face Value | Fair Value | ||||||
Xcel Energy Inc. Senior Unsecured Notes, 4.700% Due 05/15/2020 | 1,000,000 | $ | 1,105,239 | |||||
11.6% – Total Utilities | $ | 12,741,375 | ||||||
United States Government Treasury Obligations | ||||||||
Treasury Inflation Protected Security, 0.625% Due 02/15/2043 | 1,722,028 | 1,676,084 | ||||||
United States Treasury Notes, 2.750% Due 11/15/2042 | 1,150,000 | 1,265,090 | ||||||
United States Treasury Notes, 3.000% Due 02/28/2017 | 6,000,000 | 6,099,378 | ||||||
United States Treasury Floating Rate Notes, 0.532% Due 01/31/2018** | 4,300,000 | 4,308,140 | ||||||
United States Treasury Floating Rate Notes, 0.450% Due 04/30/2018** | 4,000,000 | 4,000,444 | ||||||
15.8% – Total United States Government Treasury Obligations | $ | 17,349,136 | ||||||
United States Government Agency Obligations | ||||||||
FHLMC Step-up Coupon Notes, 1.150% Due 07/12/2021** | 2,000,000 | 1,999,466 | ||||||
FHLMC Step-up Coupon Notes, 1.000% Due 04/28/2021** | 2,000,000 | 2,001,086 | ||||||
FHLMC Step-up Coupon Notes, 1.100% Due 06/07/2021** | 3,250,000 | 3,252,132 | ||||||
Tennessee Valley Authority Senior Unsecured Notes, 6.250% Due 12/15/2017 | 825,000 | 889,962 | ||||||
FHLMC Step-up Coupon Notes, 1.100% Due 06/21/2021** | 3,000,000 | 3,002,073 | ||||||
10.2% – Total United States Government Agency Obligations | $ | 11,144,719 | ||||||
United States Government Agency Obligations – Mortgage Backed Securities | ||||||||
FHLMC 10/1 Hybrid Adjustable Rate Mortgage, 3.251% Due 04/01/2042** | 723,782 | 758,107 | ||||||
FHLMC CMO Pool J12635, 4.000% Due 07/01/2025 | 733,628 | 781,383 | ||||||
FHLMC CMO Series 2985 Class GE, 5.500% Due 06/15/2025 | 214,355 | 237,224 | ||||||
FHLMC CMO Series 3946 Class LN, 3.500% Due 04/15/2041 | 1,133,216 | 1,216,732 |
The accompanying notes are an integral part of these financial statements.
11
Fixed Income Securities | Face Value | Fair Value | ||||||
FHLMC CMO Series 4017 Class MA, 3.000% Due 03/01/2042 | 286,425 | $ | 296,203 | |||||
FHLMC Gold Partner Certificate Pool G08068, 5.500% Due 07/01/2035 | 343,593 | 387,793 | ||||||
FNMA 10/1 Hybrid Adjustable Rate Mortgage, 3.266% Due 12/01/2041** | 483,349 | 504,061 | ||||||
FNMA 7/1 Hybrid ARM, 2.794% Due 12/01/2044 | 1,027,775 | 1,071,120 | ||||||
FNMA CMO Pool AA4392, 4.000% Due 04/01/2039 | 461,012 | 495,417 | ||||||
5.2% – Total United States Government Agency Obligations – Mortgage Backed Securities | $ | 5,748,040 | ||||||
Taxable Municipal Bonds | ||||||||
Bowling Green State University Ohio Revenue – Build America Bonds, 5.330% Due 06/01/2020 | 725,000 | 816,531 | ||||||
Florida Atlantic University Capital Improvement Revenue – Build America Bonds, 7.589% Due 07/01/2037 | 1,000,000 | 1,185,250 | ||||||
Kentucky Asset Liability Commission Revenue – Build America Bonds, 4.104% Due 04/01/2019 | 1,000,000 | 1,067,590 | ||||||
Kentucky Asset Liability Commission Revenue – Build America Bonds, 5.339% Due 04/01/2022 | 300,000 | 340,248 | ||||||
University of Cincinnati Ohio General Receipts Revenue – Build America Bonds, 5.117% Due 06/01/2021 | 1,435,000 | 1,616,370 | ||||||
University of North Carolina Chapel Hill Hospital Revenue – Build America Bonds, 3.539% Due 02/01/2017 | 1,315,000 | 1,337,999 | ||||||
5.8% – Total Taxable Municipal Bonds | $ | 6,363,988 |
Fixed Income Securities | Face Value | Fair Value | ||||||
Non-Taxable Municipal Bonds | ||||||||
Hamilton County Ohio Health Care Facilities Revenue Bond – The Christ Hospital, 5.000% Due 06/01/2042 | 500,000 | $ | 563,510 | |||||
0.5% – Non-Total Taxable Municipal Bonds | $ | 563,510 | ||||||
Total Fixed Income Securities 97.4% | $ | 106,736,080 | ||||||
(Identified Cost $103,847,162) |
Preferred Stocks | Shares | |||||||
Allstate Corp. Subordinated Debentures, 5.100% Due 01/15/2053 | 52,390 | 1,410,863 | ||||||
Total Preferred Stocks 1.3% | $ | 1,410,863 | ||||||
(Identified Cost $1,248,635) | ||||||||
Cash Equivalents | ||||||||
First American Government Obligation Fund, Class Z, 0.01%** | 2,706,623 | 2,706,623 | ||||||
Total Cash Equivalents 2.5% | $ | 2,706,623 | ||||||
(Identified Cost $2,706,623) | ||||||||
Total Portfolio Value 101.2% | $ | 110,853,566 | ||||||
(Identified Cost $107,802,420) | ||||||||
Liabilities in Excess of Other Assets -1.2% | $ | (1,275,576 | ) | |||||
Total Net Assets 100% | $ | 109,577,990 |
* | 144A Restricted Security. The total fair value of such securities as of June 30, 2016 was $1,087,592 and represented 0.99% of net assets. |
- | Northern Natural Gas Co. Bond was purchased on October 12, 2012, for $1,223,180; price on June 30, 2016 was $108.759. |
** | Variable Rate Security; the rate shown is as of June 30, 2016. |
CMO – Collateralized Mortgage Obligation
FDIC – Federal Deposit Insurance Corporation
FHLB – Federal Home Loan Bank
FHLMC – Federal Home Loan Mortgage Corporation
FNMA – Federal National Mortgage Association
TVA – Tennessee Valley Authority
The accompanying notes are an integral part of these financial statements.
12
Fixed Income Securities | Face Value | Fair Value | ||||||
Corporate Bonds: | ||||||||
Finance | ||||||||
American Express Co. Subordinated Notes, 3.6250% Due 12/05/2024 | 1,300,000 | $ | 1,333,294 | |||||
AON Corp. Senior Unsecured Notes, 4.000% Due 11/27/2023 | 1,000,000 | 1,068,330 | ||||||
BB&T Corp. Subordinated Notes, 5.250% Due 11/01/2019 | 1,000,000 | 1,108,071 | ||||||
ERP Operating LP Senior Unsecured Notes, 4.625% Due 12/15/2021 | 1,069,000 | 1,207,138 | ||||||
Fifth Third Bancorp Subordinated Notes, 4.300% Due 01/16/2024 | 1,250,000 | 1,331,331 | ||||||
Huntington National Bank Senior Unsecured Notes, 2.600% Due 08/02/2018 | 1,300,000 | 1,324,907 | ||||||
JPMorgan Chase & Co. Senior Subordinated Notes, 3.875% Due 09/10/2024 | 1,300,000 | 1,345,938 | ||||||
Key Bank NA Subordinated Notes, 4.625% Due 06/15/2018 | 1,000,000 | 1,044,954 | ||||||
Marsh & McLennan Companies Inc. Senior Unsecured Notes, 2.300% Due 04/01/2017 | 1,270,000 | 1,281,224 | ||||||
MUFG Americas Holdings Corp. Senior Unsecured Notes, 2.250% Due 02/10/2020 | 1,500,000 | 1,510,832 | ||||||
PNC Bank NA Subordinated Notes, 6.875% Due 05/15/2019 | 1,000,000 | 1,127,154 | ||||||
PNC Financial Services Subordinated Notes, 3.900% Due 04/29/2024 | 500,000 | 536,425 | ||||||
Prudential Financial Inc. Senior Unsecured Notes, 4.500% Due 11/15/2020 | 1,165,000 | 1,285,681 | ||||||
Suntrust Banks Senior Unsecured Notes, 6.000% Due 09/11/2017 | 1,000,000 | 1,053,673 | ||||||
US Bank NA Subordinated Notes, 2.950% Due 07/15/2022 | 1,640,000 | 1,706,643 | ||||||
Wells Fargo & Co. Subordinated Notes, 5.606% Due 01/15/2044 | 1,800,000 | 2,153,248 | ||||||
22.2% – Total Finance | $ | 20,418,843 | ||||||
Industrial | ||||||||
AT&T Inc. Senior Unsecured Notes, 5.000% Due 03/01/2021 | 1,500,000 | 1,679,625 | ||||||
Becton Dickinson Senior Unsecured Notes, 3.125% Due 11/08/2021 | 1,400,000 | 1,468,926 |
Fixed Income Securities | Face Value | Fair Value | ||||||
Burlington Northern Santa Fe Senior Unsecured Notes, 3.450% Due 09/15/2021 | 1,000,000 | $ | 1,083,705 | |||||
Chevron Corp. Senior Unsecured Notes, 2.335% Due 12/05/2022 | 2,000,000 | 2,030,068 | ||||||
CR Bard Inc. Senior Unsecured Notes, 4.400% Due 01/15/2021 | 1,420,000 | 1,566,852 | ||||||
Dover Corp. Senior Unsecured Notes, 5.450% Due 03/15/2018 | 1,395,000 | 1,491,841 | ||||||
General Electric Capital Corp. Senior Unsecured Floating Rate Notes, 1.653% Due 03/15/2023** | 2,000,000 | 1,987,548 | ||||||
Johnson Controls Inc. Senior Unsecured Notes, 3.625% Due 07/02/2024 | 625,000 | 660,536 | ||||||
Johnson Controls Inc. Senior Unsecured Notes, 3.750% Due 12/01/2021 | 850,000 | 906,650 | ||||||
Kroger Co. Senior Unsecured Notes, 3.400% Due 04/15/2022 | 385,000 | 411,840 | ||||||
Kroger Co. Senior Unsecured Notes, 6.800% Due 12/15/2018 | 1,000,000 | 1,125,290 | ||||||
McDonalds Corp. Senior Unsecured Notes, 6.300% Due 03/01/2038 | 1,300,000 | 1,719,881 | ||||||
Norfolk Southern Corp. Senior Unsecured Notes, 5.750% Due 04/01/2018 | 1,000,000 | 1,076,929 | ||||||
Shell International Finance Senior Unsecured Notes, 3.250% Due 05/11/2025 | 1,600,000 | 1,678,539 | ||||||
Union Pacific Corp. Senior Unsecured Notes, 5.650% Due 05/01/2017 | 580,000 | 602,565 | ||||||
United Technologies Junior Subordinated Notes, 1.778% Due 05/04/2018** | 1,570,000 | 1,584,105 | ||||||
Verizon Communications Senior Unsecured Notes, 4.672% Due 03/13/2055 | 1,532,000 | 1,549,526 | ||||||
24.6% – Total Industrial | $ | 22,624,426 | ||||||
Utilities | ||||||||
Duke Energy Corp., Senior Unsecured Notes, 3.550% Due 09/15/2021 | 1,325,000 | 1,412,003 | ||||||
Enterprise Products Senior Unsecured Notes, 3.350% Due 03/15/2023 | 1,405,000 | 1,443,313 |
The accompanying notes are an integral part of these financial statements.
13
Fixed Income Securities | Face Value | Fair Value | ||||||
Eversource Energy Senior Unsecured Notes, 1.450% Due 05/01/2018 | 500,000 | $ | 500,697 | |||||
Eversource Energy Senior Unsecured Notes, 4.500% Due 11/15/2019 | 1,000,000 | 1,095,980 | ||||||
Georgia Power Co. Senior Unsecured Notes, 5.700% Due 06/01/2017 | 425,000 | 442,151 | ||||||
National Rural Utilities Corp. Collateral Trust, 5.450% Due 04/10/2017 | 400,000 | 413,247 | ||||||
Northern Natural Gas Co. Senior Unsecured Notes, 5.750% Due 07/15/2018* | 1,000,000 | 1,087,592 | ||||||
Williams Partners Senior Unsecured Notes, 4.875% Due 05/15/2023 | 1,465,000 | 1,416,003 | ||||||
Xcel Energy Inc. Senior Unsecured Notes, 4.700% Due 05/15/2020 | 1,000,000 | 1,105,239 | ||||||
9.7% – Total Utilities | $ | 8,916,225 | ||||||
United States Government Treasury Obligations | ||||||||
Treasury Inflation Protected Security, 0.625% Due 02/15/2043 | 1,435,890 | 1,397,580 | ||||||
United States Treasury Floating Rate Notes, 0.450% Due 04/30/2018** | 3,000,000 | 3,000,333 | ||||||
United States Treasury Floating Rate Notes, 0.532% Due 01/31/2018** | 2,400,000 | 2,404,543 | ||||||
United States Treasury Notes, 2.750% Due 08/15/2042 | 3,000,000 | 3,305,391 | ||||||
United States Treasury Notes, 2.750% Due 11/15/2042 | 3,500,000 | 3,850,273 | ||||||
15.2% – Total United States Government Treasury Obligations | $ | 13,958,120 | ||||||
United States Government Agency Obligations | ||||||||
FHLMC Step-up Coupon Notes, 1.100% Due 06/21/2021** | 1,500,000 | 1,501,037 | ||||||
FHLMC Step-up Coupon Notes, 1.110% Due 06/21/2021** | 1,500,000 | 1,501,126 | ||||||
FHLMC Step-up Coupon Notes, 1.150% Due 07/12/2021** | 1,500,000 | 1,499,599 | ||||||
4.9% – Total United States Government Agency Obligations | $ | 4,501,762 |
Fixed Income Securities | Face Value | Fair Value | ||||||
United States Government Agency Obligations – Mortgage Backed Securities | ||||||||
FHLMC 10/1 Hybrid Adjustable Rate Mortgage, 3.251% Due 04/01/2042** | 723,782 | $ | 758,107 | |||||
FHLMC CMO Series 2985 Class GE, 5.500% Due 06/15/2025 | 187,560 | 207,571 | ||||||
FHLMC CMO Series 3289 Class ND, 5.500% Due 06/15/2035 | 9,313 | 9,391 | ||||||
FHLMC CMO Series 3946 Class LN, 3.500% Due 04/15/2041 | 1,133,216 | 1,216,732 | ||||||
FHLMC CMO Series 4017 Class MA, 3.000% Due 03/01/2042 | 572,850 | 592,406 | ||||||
FHLMC Gold Partner Certificate Pool G06616, 4.500% Due 12/01/2035 | 307,348 | 336,001 | ||||||
FHLMC Gold Partner Certificate Pool G08068, 5.500% Due 07/01/2035 | 776,819 | 876,749 | ||||||
FHLMC Gold Partner Certificate Pool G13596, 4.000% Due 07/01/2024 | 1,963,340 | 2,088,177 | ||||||
FNMA 10/1 Hybrid Adjustable Rate Mortgage, 3.266% Due 12/01/2041** | 483,349 | 504,061 | ||||||
FNMA CMO Series 2003-79 Class NJ, 5.000% Due 08/25/2023 | 370,791 | 403,125 | ||||||
FNMA CMO Series 2013-21 Class VA, 3.000% Due 07/25/2028 | 1,281,424 | 1,355,040 | ||||||
FNMA CMO Series 2013-83 Class MH, 4.000% Due 08/25/2043 | 587,184 | 643,323 | ||||||
FNMA CMO Series 2014-28 Class PA, 3.500% Due 02/25/2043 | 661,449 | 708,723 | ||||||
FNMA Partner Certificate Pool 889050, 6.000% Due 05/01/2037 | 561,240 | 650,046 | ||||||
FNMA Partner Certificate Pool 995112, 5.500% Due 07/01/2036 | 307,867 | 349,684 | ||||||
FNMA Partner Certificate Pool AA4392, 4.000% Due 04/01/2039 | 461,012 | 495,417 |
The accompanying notes are an integral part of these financial statements.
14
Fixed Income Securities | Face Value | Fair Value | ||||||
GNMA Pass Thru Certificate Pool 781397, 5.500% Due 02/15/2017 | 2,369 | $ | 2,384 | |||||
12.2% – Total United States Government Agency Obligations – Mortgage Backed Securities | $ | 11,196,937 | ||||||
Taxable Municipal Bonds | ||||||||
Bowling Green State University Ohio Revenue – Build America Bonds, 5.330% Due 06/01/2020 | 750,000 | 844,687 | ||||||
Florida Atlantic University Capital Improvement Revenue – Build America Bonds, 7.589% Due 07/01/2037 | 1,785,000 | 2,115,671 | ||||||
Miami University Ohio General Receipts Revenue – Build America Bonds, 5.263% Due 09/01/2018 | 1,000,000 | 1,081,800 | ||||||
Hamilton County Ohio Health Care Facilities Revenue Bond – The Christ Hospital, 5.000% Due 06/01/2042 | 500,000 | 563,510 | ||||||
Ohio Higher Education Facilities – Cleveland Clinic Health Systems, 3.849% Due 01/01/2022 | 945,000 | 1,044,868 | ||||||
Ohio Major New Infrastructure Revenue – Build America Bonds, 4.994% Due 12/15/2020 | 850,000 | 959,718 | ||||||
University of Cincinnati Ohio General Receipts Revenue – Build America Bonds, 4.667% Due 06/01/2018 | 1,000,000 | 1,068,600 | ||||||
8.3% – Total Taxable Municipal Bonds | $ | 7,678,854 | ||||||
Total Fixed Income Securities 97.1% | $ | 89,295,167 | ||||||
(Identified Cost $85,544,973) |
Preferred Stocks | Shares | Fari Value | ||||||
Allstate Corp. Subordinated Debentures, 5.100% Due 01/15/2053 | 54,000 | $ | 1,454,220 | |||||
Total Preferred Stocks 1.6% | $ | 1,454,220 | ||||||
(Identified Cost $1,298,315) | ||||||||
Cash Equivalents | ||||||||
First American Government Obligation Fund, Class Z, 0.01%** | 2,051,995 | 2,051,995 | ||||||
Total Cash Equivalents 2.2% | $ | 2,051,995 | ||||||
(Identified Cost $2,051,995) | ||||||||
Total Portfolio Value 100.9% | $ | 92,801,382 | ||||||
(Identified Cost $88,895,283) | ||||||||
Liabilities in Excess of Other Assets -0.9% | $ | (795,586 | ) | |||||
Total Net Assets 100.0% | $ | 92,005,796 |
* | 144A Restricted Security. The total fair value of such securities as of June 30, 2016 was $1,087,592 and represented 1.18% of net assets. |
- | Northern Natural Gas Co. Bond was purchased on October 12, 2012, for $1,223,180; price on March 31, 2016 was $108.759. |
** | Variable Rate Security; the rate shown is as of June 30, 2016. |
CMO – Collateralized Mortgage Obligation
FDIC – Federal Deposit Insurance Corporation
FHLMC – Federal Home Loan Mortgage Corporation
FNMA – Federal National Mortgage Association
GNMA – Government National Mortgage Association
The accompanying notes are an integral part of these financial statements.
15
Fixed Income Securities | Face Value | Fair Value | ||||||
Corporate Bonds | ||||||||
Finance | ||||||||
Ace INA Holdings Senior Unsecured Notes, 5.900% Due 06/15/2019 | 525,000 | $ | 591,282 | |||||
American Express Bank Senior Unsecured Notes, 6.000% Due 09/13/2017 | 1,925,000 | 2,027,993 | ||||||
AON Corp. Senior Unsecured Notes, 5.000% Due 09/30/2020 | 610,000 | 681,304 | ||||||
BB&T Corp. Subordinated Notes, 4.900% Due 06/30/2017 | 1,383,000 | 1,430,409 | ||||||
BB&T Corp. Subordinated Notes, 5.250% Due 11/01/2019 | 490,000 | 542,955 | ||||||
ERP Operating LP Senior Unsecured Notes, 5.750% Due 06/15/2017 | 1,904,000 | 1,981,988 | ||||||
Fifth Third Bancorp Senior Unsecured Notes, 5.450% Due 01/15/2017 | 1,000,000 | 1,022,265 | ||||||
Huntington Bancshares Senior Unsecured Notes, 2.600% Due 08/02/2018 | 1,500,000 | 1,528,739 | ||||||
JPMorgan Chase & Co. Senior Unsecured Notes, 2.750% Due 06/23/2020 | 2,000,000 | 2,060,864 | ||||||
Keycorp Senior Unsecured Notes, 5.100% Due 03/24/2021 | 1,800,000 | 2,024,861 | ||||||
Manufacturers and Traders Trust Co. Subordinated Notes, 6.625% Due 12/04/2017 | 1,470,000 | 1,568,541 | ||||||
Marsh & McLennan Companies Inc. Senior Unsecured Notes, 2.300% Due 04/01/2017 | 1,685,000 | 1,699,892 | ||||||
Morgan Stanley Senior Unsecured Notes, 2.125% Due 04/25/2018 | 1,875,000 | 1,894,624 | ||||||
PNC Bank NA Subordinated Notes, 4.875% Due 09/21/2017 | 1,000,000 | 1,039,151 | ||||||
PNC Funding Corp. Guaranteed Notes, 5.125% Due 02/01/2017 | 789,000 | 808,489 | ||||||
Suntrust Banks Inc. Senior Unsecured Notes, 3.500% Due 01/20/2017 | 1,200,000 | 1,213,362 | ||||||
Travelers companies Inc. Senior Unnsecured Notes, 5.800% Due 05/15/2018 | 1,000,000 | 1,084,678 | ||||||
Wachovia Bank NA Subordinated Notes, 6.000% Due 11/15/2017 | 1,800,000 | 1,915,249 | ||||||
22.4% – Total Finance | $ | 25,116,646 |
Fixed Income Securities | Face Value | Fair Value | ||||||
Industrial | ||||||||
AT&T Inc. Senior Unsecured Notes, 5.500% Due 02/01/2018 | 1,500,000 | $ | 1,596,541 | |||||
Becton Dickinson Senior Unsecured Notes, 1.750% Due 11/08/2016 | 1,389,000 | 1,392,189 | ||||||
CR Bard Inc. Senior Unsecured Notes, 1.375% Due 01/15/2018 | 1,330,000 | 1,335,248 | ||||||
Eaton Corp. Senior Unsecured Notes, 5.600% Due 05/15/2018 | 1,000,000 | 1,075,638 | ||||||
Eaton Electric Holdings Senior Unsecured Notes, 3.875% Due 12/15/2020 | 1,025,000 | 1,100,872 | ||||||
General Electric Capital Corp. Senior Unsecured Floating Rate Notes, 0.928% Due 05/13/2024** | 1,100,000 | 1,035,933 | ||||||
General Electric Capital Corp. Senior Unsecured Floating Rate Notes, 1.428% Due 04/15/2020** | 1,175,000 | 1,186,980 | ||||||
General Electric Capital Corp. Senior Unsecured Floating Rate Notes, 1.628% Due 04/15/2023** | 2,000,000 | 1,994,000 | ||||||
Johnson Controls Inc. Senior Unsecured Notes, 5.000% Due 03/30/2020 | 1,560,000 | 1,706,938 | ||||||
Kroger Co. Senior Unsecured Notes, 1.200% Due 10/17/2016 | 500,000 | 500,608 | ||||||
Kroger Co. Senior Unsecured Notes, 6.400% Due 08/15/2017 | 1,000,000 | 1,058,038 | ||||||
McDonald’s Corp. Senior Unsecured Notes, 2.200% Due 05/26/2020 | 1,745,000 | 1,785,285 | ||||||
Norfolk Southern Corporation Senior Unsecured Notes, 5.750% Due 04/01/2018 | 1,564,000 | 1,684,317 | ||||||
Schulmberger Norge AS Senior Unsecured Notes, 1.250% Due 08/01/2017* | 1,800,000 | 1,799,095 | ||||||
Shell International Senior Unsecured Notes, 4.300% Due 09/22/2019 | 1,800,000 | 1,960,492 | ||||||
United Technologies Junior Subordinated Notes, 1.778% Due 05/04/2018** | 2,000,000 | 2,017,968 | ||||||
Verizon Communications Senior Unsecured Notes, 4.500% Due 09/15/2020 | 1,458,000 | 1,618,316 | ||||||
22.2% – Total Industrials | $ | 24,848,458 |
The accompanying notes are an integral part of these financial statements.
16
Fixed Income Securities | Face Value | Fair Value | ||||||
Utilities | ||||||||
Berkshire Hathaway Energy Co. Senior Unsecured Notes, 2.000% Due 11/15/2018 | 1,000,000 | $ | 1,016,545 | |||||
Berkshire Hathaway Energy Co. Senior Unsecured Notes, 5.750% Due 04/01/2018 | 1,000,000 | 1,077,485 | ||||||
Duke Energy Corp. Senior Unsecured Notes, 5.050% Due 09/15/2019 | 1,417,000 | 1,561,969 | ||||||
Enterprise Products Senior Unsecured Notes, 6.500% Due 01/31/2019 | 1,500,000 | 1,679,761 | ||||||
Eversource Energy Senior Unsecured Notes, 1.450% Due 05/01/2018 | 1,425,000 | 1,426,986 | ||||||
Eversource Energy Senior Unsecured Notes, 4.500% Due 11/15/2019 | 480,000 | 526,070 | ||||||
Georgia Power Co. Senior Unsecured Notes, 5.700% Due 06/01/2017 | 1,395,000 | 1,451,297 | ||||||
National Rural Utilities Collateral Trust, 5.450% Due 02/01/2018 | 870,000 | 928,124 | ||||||
Virginia Electric & PowerCo. Senior Unsecured notes, 5.400% Due 04/30/2018 | 1,000,000 | 1,073,833 | ||||||
Williams Partners LP Senior Unsecured Notes, 7.250% Due 02/01/2017 | 500,000 | 514,956 | ||||||
Xcel Energy Inc. Senior Unsecured Notes, 5.613% Due 04/01/2017 | 1,695,000 | 1,752,040 | ||||||
11.6% – Total Utilities | $ | 13,009,066 | ||||||
United States Government Treasury Obligations | ||||||||
Treasury Inflation Protected Security, 0.125% Due 04/15/2018 | 4,139,520 | 4,200,967 | ||||||
United States Treasury Notes, 0.375% Due 10/31/2016 | 3,114,000 | 3,114,212 | ||||||
United States Treasury Notes, 0.500% Due 09/30/2016 | 2,205,000 | 2,205,820 | ||||||
United States Treasury Notes, 0.625% Due 05/31/2017 | 3,000,000 | 3,002,694 | ||||||
United States Treasury Floating Rate Notes, 0.532% Due 01/31/2018** | 2,500,000 | 2,504,733 |
Fixed Income Securities | Face Value | Fair Value | ||||||
United States Treasury Floating Rate Notes, 0.450% Due 04/30/2018** | 2,000,000 | $ | 2,000,222 | |||||
15.2% – Total United States Government Treasury Obligations | $ | 17,028,648 | ||||||
United States Government Agency Obligations | ||||||||
FHLMC Step-up Coupon Notes, 1.150% Due 07/12/2021** | 2,000,000 | 1,999,466 | ||||||
FHLMC Step-up Coupon Notes, 1.000% Due 04/28/2021** | 1,000,000 | 1,000,543 | ||||||
FHLMC Step-up Coupon Notes, 1.000% Due 04/14/2021** | 2,000,000 | 2,000,530 | ||||||
FHLMC Step-up Coupon Notes, 1.100% Due 06/07/2021** | 1,000,000 | 1,000,656 | ||||||
FHLMC Step-up Coupon Notes, 1.100% Due 06/21/2021** | 1,200,000 | 1,200,901 | ||||||
FNMA Step-up Coupon Notes, 1.100% Due 02/12/2021** | 3,000,000 | 3,000,549 | ||||||
9.1% – Total United States Government Agency Obligations | $ | 10,202,645 | ||||||
United States Government Agency Obligations – Mortgage Backed Securities | ||||||||
FHLMC Gold Partner Certificate Pool J12635, 4.000% Due 07/01/2025 | 230,569 | 245,578 | ||||||
FHLMC CMO Series 4287 Class AB, 2.000% Due 12/15/2026 | 1,241,529 | 1,266,977 | ||||||
FNMA 10/1 Hybrid Adjustable Rate Mortgage, 3.266% Due 12/01/2041** | 483,349 | 504,061 | ||||||
FNMA CMO Pool 1106, 3.000% Due 07/01/2032 | 1,518,910 | 1,601,022 | ||||||
FNMA CMO Pool 833200, 5.500% Due 09/01/2035 | 830,899 | 953,285 | ||||||
FNMA CMO Series 2010-13 Class EV, 5.000% Due 01/25/2022 | 540,292 | 541,860 | ||||||
GNMA Pool 726475, 4.000% Due 11/15/2024 | 340,149 | 359,245 | ||||||
GNMA Pool 728920, 4.000% Due 12/15/2024 | 488,242 | 519,796 | ||||||
5.3% – Total United States Government Agency Obligations – Mortgage Backed Securities | $ | 5,991,824 |
The accompanying notes are an integral part of these financial statements.
17
Fixed Income Securities | Face Value | Fair Value | ||||||
Taxable Municipal Bonds | ||||||||
Columbus – Franklin County OH Finance Authority Revenue Bond – Ohio Capital Fund, 1.557% Due 08/15/2016 | 1,500,000 | $ | 1,501,500 | |||||
Ohio Higher Education Facilities Commission – Cleveland Clinic Health System, 2.731% Due 01/01/2017 | 1,000,000 | 1,009,750 | ||||||
2.2% – Total Taxable Municipal Bonds | $ | 2,511,250 | ||||||
Total Fixed Income Securities 88.0% | $ | 98,708,537 | ||||||
(Identified Cost $98,249,901) |
Cash & Cash Equivalents | Shares | |||||||
First American Government Obligation Fund, Class Z, 0.01%** | 14,927,593 | 14,927,593 | ||||||
Total Cash Equivalents 13.3% | $ | 14,927,593 | ||||||
(Identified Cost $14,927,593) | ||||||||
Total Portfolio Value 101.3% | $ | 113,636,130 | ||||||
(Identified Cost $113,177,494) | ||||||||
Liabilities in Excess of Other Assets -1.3% | $ | (1,465,642 | ) | |||||
Total Net Assets: 100.0% | $ | 112,170,488 |
Futures Contracts | Long Contracts | Unrealized Appreciation | ||||||
E-mini Standard & Poor’s 500 expiring September 2016 (50 units per contract) (Notional Value of $111,764,295) | 1,065 | $ | 436,955 |
* | 144A Restricted Security. The total fair value of such securities as of June 30, 2016 was $1,799,095 and represented 1.60% of net assets. |
- | Schlumberger Norge Bond, Lot 1, purchased on June 23, 2016, for $1,799,095; price on June 30, 2016 was $99.950. |
** | Variable Rate Security; the rate shown is as of June 30, 2016. |
CMO – Collateralized Mortgage Obligation
FDIC – Federal Deposit Insurance Corporation
FHLB – Federal Home Loan Bank
FHLMC – Federal Home Loan Mortgage Corporation
FNMA – Federal National Mortgage Association
GNMA – Government National Mortgage Association
The accompanying notes are an integral part of these financial statements.
18
Statements of Assets and Liabilities
Johnson Institutional Short Duration Bond Fund | Johnson Institutional Intermediate Bond Fund | Johnson Institutional Core Bond Fund | Johnson Enhanced Return Fund | |||||||||||||
Assets: | ||||||||||||||||
Investment Securities at Fair Value* | $ | 116,731,010 | $ | 110,853,566 | $ | 92,801,382 | $ | 113,636,130 | ||||||||
Receivable for Variation Margin on Futures Contracts | — | — | — | 1,246,050 | ||||||||||||
Interest Receivable | 848,792 | 777,640 | 709,293 | 751,411 | ||||||||||||
Fund Shares Sold Receivable | 11,021 | 16,299 | 11,115 | — | ||||||||||||
Receivable for CMO Paydowns | 1,672 | 1,791 | 1,791 | — | ||||||||||||
Total Assets | $ | 117,592,495 | $ | 111,649,296 | $ | 93,523,581 | $ | 115,633,591 | ||||||||
Liabilities: | ||||||||||||||||
Accrued Management Fee | $ | 22,638 | $ | 21,040 | $ | 17,680 | $ | 28,510 | ||||||||
Investment Securities Purchased | 596,068 | 2,000,000 | 1,500,000 | 3,419,960 | ||||||||||||
Other Payables | 9,534 | 105 | 105 | 14,633 | ||||||||||||
Fund Shares Redeemed Payable | 39,000 | 50,161 | — | — | ||||||||||||
Total Liabilities | $ | 667,240 | $ | 2,071,306 | $ | 1,517,785 | $ | 3,463,103 | ||||||||
Net Assets | $ | 116,925,255 | $ | 109,577,990 | $ | 92,005,796 | $ | 112,170,488 | ||||||||
Net Assets Consist of: | ||||||||||||||||
Paid in Capital | $ | 116,133,759 | $ | 106,277,486 | $ | 87,287,100 | $ | 109,478,765 | ||||||||
Accumulated Net Investment Income/(Loss) | 4,547 | 21,536 | 15,915 | (41,005 | ) | |||||||||||
Accumulated Net Realized Gain from Security Transactions & Futures Contracts | 45,062 | 227,822 | 796,682 | 1,837,137 | ||||||||||||
Net Unrealized Gain on Investments | 741,887 | 3,051,146 | 3,906,099 | 458,636 | ||||||||||||
Net Unrealized Gain on Futures Contracts | — | — | — | 436,955 | ||||||||||||
Net Assets | $ | 116,925,255 | $ | 109,577,990 | $ | 92,005,796 | $ | 112,170,488 | ||||||||
Shares Outstanding (Unlimited Amount Authorized) | 7,713,342 | 6,879,438 | 5,627,964 | 7,064,411 | ||||||||||||
Offering, Redemption and Net Asset Value Per Share | $ | 15.16 | $ | 15.93 | $ | 16.35 | $ | 15.88 | ||||||||
*Identified Cost of Investment Securities | $ | 115,989,123 | $ | 107,802,420 | $ | 88,895,283 | $ | 113,177,494 |
The accompanying notes are an integral part of these financial statements.
19
Statements of Operations
Johnson Institutional Short Duration Bond Fund | Johnson Institutional Intermediate Bond Fund | Johnson Institutional Core Bond Fund | Johnson Enhanced Return Fund | |||||||||||||
Period Ended 6/30/2016 | Period Ended 6/30/2016 | Period Ended 6/30/2016 | Period Ended 6/30/2016 | |||||||||||||
Investment Income: | ||||||||||||||||
Interest | $ | 824,436 | $ | 1,229,129 | $ | 1,186,427 | $ | 680,733 | ||||||||
Dividends | 3,792 | 35,862 | 36,128 | 4,529 | ||||||||||||
Total Investment Income | $ | 828,228 | $ | 1,264,991 | $ | 1,222,555 | $ | 685,262 | ||||||||
Expenses: | ||||||||||||||||
Gross Management Fee | $ | 166,393 | $ | 157,798 | $ | 134,869 | $ | 169,783 | ||||||||
Management Fee Waiver (Note #4) | (36,218 | ) | (34,361 | ) | (29,368 | ) | — | |||||||||
Net Expenses | $ | 130,175 | $ | 123,437 | $ | 105,501 | $ | 169,783 | ||||||||
Net Investment Income | $ | 698,053 | $ | 1,141,554 | $ | 1,117,054 | $ | 515,479 | ||||||||
Realized and Unrealized Gains/(Losses): | ||||||||||||||||
Net Realized Gain from Security Transactions | $ | 123,789 | $ | 340,738 | $ | 796,682 | $ | 73,517 | ||||||||
Net Realized Gain from Futures Contracts | — | — | — | 4,158,599 | ||||||||||||
Net Change in Unrealized Gain on Investments | 1,331,164 | 3,136,976 | 3,236,178 | 1,034,818 | ||||||||||||
Net Change in Unrealized (Loss) on Futures Contracts | — | — | — | (512,095 | ) | |||||||||||
Net Gain/(Loss) on Investments | $ | 1,454,953 | $ | 3,477,714 | $ | 4,032,860 | $ | 4,754,839 | ||||||||
Net Change in Net Assets from Operations | $ | 2,153,006 | $ | 4,619,268 | $ | 5,149,914 | $ | 5,270,318 |
The accompanying notes are an integral part of these financial statements.
20
Statements of Changes in Net Assets
Johnson Institutional Short Duration Bond Fund | Johnson Institutional Intermediate Bond Fund | Johnson Institutional Core Bond Fund | Johnson Enhanced Return Fund | |||||||||||||||||||||||||||||
Period Ended 6/30/2016* | Year Ended 12/31/2015 | Period Ended 6/30/2016* | Year Ended 12/31/2015 | Period Ended 6/30/2016* | Year Ended 12/31/2015 | Period Ended 6/30/2016* | Year Ended 12/31/2015 | |||||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||||
Net Investment Income | $ | 698,053 | $ | 1,139,641 | $ | 1,141,554 | $ | 2,048,117 | $ | 1,117,054 | $ | 2,001,980 | $ | 515,479 | $ | 887,743 | ||||||||||||||||
Net Realized Gain (Loss) from Security Transactions | 123,789 | 39,757 | 340,738 | (36,384 | ) | 796,682 | 792,497 | 73,517 | (25,227 | ) | ||||||||||||||||||||||
Net Realized Gain from Futures Contracts | — | — | — | — | — | — | 4,158,599 | 2,580,724 | ||||||||||||||||||||||||
Net Change in Unrealized Gain (Loss) on Investments | 1,331,164 | (627,051 | ) | 3,136,976 | (1,342,550 | ) | 3,236,178 | (1,919,456 | ) | 1,034,818 | (404,105 | ) | ||||||||||||||||||||
Net Change in Unrealized Gain on Futures Contracts | — | — | — | — | — | — | (512,095 | ) | (1,727,628 | ) | ||||||||||||||||||||||
Net Change in Net Assets from Operations | $ | 2,153,006 | $ | 552,347 | $ | 4,619,268 | $ | 669,183 | $ | 5,149,914 | $ | 875,021 | $ | 5,270,318 | $ | 1,311,507 | ||||||||||||||||
Distributions to Shareholders: | ||||||||||||||||||||||||||||||||
Net Investment Income | $ | (693,505 | ) | $ | (1,289,701 | ) | $ | (1,120,017 | ) | $ | (2,124,925 | ) | $ | (1,101,139 | ) | $ | (2,157,724 | ) | $ | (556,485 | ) | $ | (1,033,730 | ) | ||||||||
Return of Capital | — | (11,931 | ) | — | (9,596 | ) | — | (12,314 | ) | — | (14,030 | ) | ||||||||||||||||||||
Net Realized Gain from Security Transactions | — | — | — | — | 0 | (636,753 | ) | 0 | (4,269,751 | ) | ||||||||||||||||||||||
Net Change in Net Assets from Distributions | $ | (693,505 | ) | $ | (1,301,632 | ) | $ | (1,120,017 | ) | $ | (2,134,521 | ) | $ | (1,101,139 | ) | $ | (2,806,791 | ) | $ | (556,485 | ) | $ | (5,317,511 | ) | ||||||||
Capital Share Transactions: | ||||||||||||||||||||||||||||||||
Proceeds From Sale of Shares | $ | 18,610,475 | $ | 45,463,374 | $ | 11,518,036 | $ | 36,414,364 | $ | 8,628,598 | $ | 24,627,392 | $ | 20,568,510 | $ | 7,083,579 | ||||||||||||||||
Net Asset Value of Shares Issued on Reinvestment of Distributions | 90,667 | 134,461 | 74,351 | 118,872 | 136,243 | 22,023 | 556,485 | 5,315,623 | ||||||||||||||||||||||||
Cost of Shares Redeemed | (11,313,265 | ) | (15,038,393 | ) | (9,873,571 | ) | (10,347,648 | ) | (7,703,322 | ) | (10,639,496 | ) | (11,620,229 | ) | (7,591,404 | ) | ||||||||||||||||
Net Change in Net Assets from Capital Share Transactions | $ | 7,387,877 | $ | 30,559,442 | $ | 1,718,816 | $ | 26,185,588 | $ | 1,061,519 | $ | 14,009,919 | $ | 9,504,766 | $ | 4,807,798 | ||||||||||||||||
Net Change in Net Assets | $ | 8,847,378 | $ | 29,810,157 | $ | 5,218,067 | $ | 24,720,250 | $ | 5,110,294 | $ | 12,078,149 | $ | 14,218,599 | $ | 801,794 | ||||||||||||||||
Net Assets at Beginning of Year | $ | 108,077,877 | $ | 78,267,720 | $ | 104,359,923 | $ | 79,639,673 | $ | 86,895,502 | $ | 74,817,353 | $ | 97,951,889 | $ | 97,150,095 | ||||||||||||||||
Net Assets at End of Period | $ | 116,925,255 | $ | 108,077,877 | $ | 109,577,990 | $ | 104,359,923 | $ | 92,005,796 | $ | 86,895,502 | $ | 112,170,488 | $ | 97,951,889 | ||||||||||||||||
Accumulated (Distribution in Excess of) Undistributed Net Investment Income | $ | 4,547 | $ | — | $ | 21,536 | $ | — | $ | 15,915 | $ | — | $ | (41,005 | ) | $ | — |
* | Unaudited |
The accompanying notes are an integral part of these financial statements.
21
Selected Data for a Share Outstanding Throughout each Period:
Six Months Ended 6/30/2016* | Year Ended December 31 | |||||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||||||
Net Asset Value Beginning of Period | $ | 14.96 | $ | 15.05 | $ | 15.03 | $ | 15.27 | $ | 15.27 | $ | 15.27 | ||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income | 0.09 | 0.17 | 0.18 | 0.25 | 0.32 | 0.36 | ||||||||||||||||||
Net Gains (Losses) on Securities (Realized and Unrealized) | 0.20 | (0.07 | ) | 0.04 | (0.22 | ) | 0.04 | 0.03 | ||||||||||||||||
Total Operations | $ | 0.29 | $ | 0.10 | $ | 0.22 | $ | 0.03 | $ | 0.36 | $ | 0.39 | ||||||||||||
Distributions: | ||||||||||||||||||||||||
Net Investment Income | (0.09 | ) | (0.19 | ) | (0.20 | ) | (0.25 | ) | (0.32 | ) | (0.37 | ) | ||||||||||||
Return of Capital | — | 0.00 | (a) | — | — | — | — | |||||||||||||||||
Net Realized Capital Gains | — | — | — | (0.02 | ) | (0.04 | ) | (0.02 | ) | |||||||||||||||
Total Distributions | $ | (0.09 | ) | $ | (0.19 | ) | $ | (0.20 | ) | $ | (0.27 | ) | $ | (0.36 | ) | $ | (0.39 | ) | ||||||
Net Asset Value at End of Period | $ | 15.16 | $ | 14.96 | $ | 15.05 | $ | 15.03 | $ | 15.27 | $ | 15.27 | ||||||||||||
Total Return(b) | 1.96 | %(c) | 0.67 | % | 1.44 | % | 0.16 | % | 2.35 | % | 2.56 | % | ||||||||||||
Net Assets End of Period (Millions) | $ | 116.93 | $ | 108.08 | $ | 78.27 | $ | 74.11 | $ | 70.08 | $ | 67.44 | ||||||||||||
Ratios(d) | ||||||||||||||||||||||||
Ratio of Expenses to | ||||||||||||||||||||||||
Average Net Assets before Waiver | 0.30 | %(e) | 0.30 | % | 0.30 | % | 0.30 | % | 0.30 | % | 0.30 | % | ||||||||||||
Average Net Assets after Waiver | 0.24 | %(e) | 0.23 | % | 0.24 | % | 0.24 | % | 0.26 | % | 0.27 | % | ||||||||||||
Ratio of Net Investment Income to | ||||||||||||||||||||||||
Average Net Assets before Waiver | 1.20 | %(e) | 1.07 | % | 1.14 | % | 1.57 | % | 2.02 | % | 2.33 | % | ||||||||||||
Average Net Assets after Waiver | 1.26 | %(e) | 1.14 | % | 1.20 | % | 1.63 | % | 2.06 | % | 2.36 | % | ||||||||||||
Portfolio Turnover Rate | 44.97 | %(c) | 42.30 | % | 42.41 | % | 56.49 | % | 43.98 | % | 37.61 | % |
* | Unaudited |
(a) | Return of Capital is less than $0.005 per share. |
(b) | Total Return in the above table represents the rate that the investor would have earned on an investment in the Fund, assuming reinvestment of dividends. |
(c) | Not annualized |
(d) | In 2016, 2015, 2014, 2013, 2012, and 2011, the Adviser waived a portion of the 0.30% management fee to sustain a net fee of 0.24%, 0.23%, 0.24%, 0.24%, 0.26%, and 0.27%, respectively. The Adviser intends this fee waiver to be permanent, although the Adviser retains the right to remove the waiver after April 30, 2017. (Note #4) |
(e) | Annualized. |
The accompanying notes are an integral part of these financial statements.
22
Selected Data for a Share Outstanding Throughout each Period:
Six Months Ended 6/30/2016* | Year Ended December 31 | |||||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||||||
Net Asset Value Beginning of Period | $ | 15.41 | $ | 15.61 | $ | 15.40 | $ | 16.24 | $ | 16.06 | $ | 15.86 | ||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income | 0.17 | 0.33 | 0.37 | 0.45 | 0.52 | 0.56 | ||||||||||||||||||
Net Gains on Securities (Realized and Unrealized) | 0.52 | (0.19 | ) | 0.29 | (0.56 | ) | 0.22 | 0.33 | ||||||||||||||||
Total Operations | $ | 0.69 | $ | 0.14 | $ | 0.66 | $ | (0.11 | ) | $ | 0.74 | $ | 0.89 | |||||||||||
Distributions: | ||||||||||||||||||||||||
Net Investment Income | (0.17 | ) | (0.34 | ) | (0.39 | ) | (0.45 | ) | (0.52 | ) | (0.57 | ) | ||||||||||||
Return of Capital | — | 0.00 | (a) | |||||||||||||||||||||
Net Realized Capital Gains | — | — | (0.06 | ) | (0.28 | ) | (0.04 | ) | (0.12 | ) | ||||||||||||||
Total Distributions | $ | (0.17 | ) | $ | (0.34 | ) | $ | (0.45 | ) | $ | (0.73 | ) | $ | (0.56 | ) | $ | (0.69 | ) | ||||||
Net Asset Value at End of Period | $ | 15.93 | $ | 15.41 | $ | 15.61 | $ | 15.40 | $ | 16.24 | $ | 16.06 | ||||||||||||
Total Return(b) | 4.47 | %(c) | 0.90 | % | 4.31 | % | (0.68 | )% | 4.70 | % | 5.66 | % | ||||||||||||
Net Assets End of Period (Millions) | $ | 109.58 | $ | 104.36 | $ | 79.64 | $ | 76.12 | $ | 73.63 | $ | 68.04 | ||||||||||||
Ratios(d) | ||||||||||||||||||||||||
Ratio of Expenses to | ||||||||||||||||||||||||
Average Net Assets before Waiver | 0.30 | %(e) | 0.30 | % | 0.30 | % | 0.30 | % | 0.30 | % | 0.30 | % | ||||||||||||
Average Net Assets after Waiver | 0.24 | %(e) | 0.23 | % | 0.24 | % | 0.24 | % | 0.26 | % | 0.27 | % | ||||||||||||
Ratio of Net Investment Income to | ||||||||||||||||||||||||
Average Net Assets before Waiver | 2.11 | %(e) | 2.06 | % | 2.30 | % | 2.79 | % | 3.05 | % | 3.45 | % | ||||||||||||
Average Net Assets after Waiver | 2.17 | %(e) | 2.13 | % | 2.36 | % | 2.85 | % | 3.09 | % | 3.48 | % | ||||||||||||
Portfolio Turnover Rate | 33.71 | %(c) | 32.75 | % | 34.31 | % | 55.78 | % | 21.08 | % | 26.91 | % |
* | Unaudited |
(a) | Return of Capital is less than $0.005 per share. |
(b) | Total Return in the above table represents the rate that the investor would have earned on an investment in the Fund, assuming reinvestment of dividends. |
(c) | Not annualized |
(d) | In 2016, 2015, 2014, 2013, 2012, and 2011, the Adviser waived a portion of the 0.30% management fee to sustain a net fee of 0.24%, 0.23%, 0.24%, 0.24%, 0.26%, and 0.27%, respectively. The Adviser intends this fee waiver to be permanent, although the Adviser retains the right to remove the waiver after April 30, 2017. (Note #4) |
(e) | Annualized. |
The accompanying notes are an integral part of these financial statements.
23
Selected Data for a Share Outstanding Throughout each Period:
Six Months Ended 6/30/2016* | Year Ended December 31 | |||||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||||||
Net Asset Value Beginning of Period | $ | 15.63 | $ | 15.98 | $ | 15.43 | $ | 16.52 | $ | 16.54 | $ | 16.03 | ||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income | 0.19 | 0.39 | 0.40 | 0.49 | 0.56 | 0.64 | ||||||||||||||||||
Net Gains on Securities (Realized and Unrealized) | 0.72 | (0.21 | ) | 0.63 | (0.80 | ) | 0.26 | 0.70 | ||||||||||||||||
Total Operations | $ | 0.91 | $ | 0.18 | $ | 1.03 | $ | (0.31 | ) | $ | 0.82 | $ | 1.34 | |||||||||||
Distributions: | ||||||||||||||||||||||||
Net Investment Income | (0.19 | ) | (0.42 | ) | (0.43 | ) | (0.49 | ) | (0.56 | ) | (0.67 | ) | ||||||||||||
Return of Capital | — | 0.00 | (a) | |||||||||||||||||||||
Net Realized Capital Gains | — | (0.11 | ) | (0.05 | ) | (0.29 | ) | (0.28 | ) | (0.16 | ) | |||||||||||||
Total Distributions | $ | (0.19 | ) | $ | (0.53 | ) | $ | (0.48 | ) | $ | (0.78 | ) | $ | (0.84 | ) | $ | (0.83 | ) | ||||||
Net Asset Value at End of Period | $ | 16.35 | $ | 15.63 | $ | 15.98 | $ | 15.43 | $ | 16.52 | $ | 16.54 | ||||||||||||
Total Return(b) | 5.88 | %(c) | 1.16 | % | 6.79 | % | (1.87 | )% | 5.05 | % | 8.51 | % | ||||||||||||
Net Assets End of Period (Millions) | $ | 92.01 | $ | 86.90 | $ | 74.82 | $ | 71.30 | $ | 73.55 | $ | 60.57 | ||||||||||||
Ratios(d) | ||||||||||||||||||||||||
Ratio of Expenses to | ||||||||||||||||||||||||
Average Net Assets before Waiver | 0.30 | %(e) | 0.30 | % | 0.30 | % | 0.30 | % | 0.30 | % | 0.30 | % | ||||||||||||
Average Net Assets after Waiver | 0.24 | %(e) | 0.23 | % | 0.24 | % | 0.24 | % | 0.26 | % | 0.27 | % | ||||||||||||
Ratio of Net Investment Income to | ||||||||||||||||||||||||
Average Net Assets before Waiver | 2.43 | %(e) | 2.39 | % | 2.46 | % | 2.99 | % | 3.19 | % | 3.87 | % | ||||||||||||
Average Net Assets after Waiver | 2.49 | %(e) | 2.46 | % | 2.52 | % | 3.04 | % | 3.23 | % | 3.90 | % | ||||||||||||
Portfolio Turnover Rate | 26.33 | %(c) | 29.51 | % | 28.30 | % | 67.39 | % | 23.33 | % | 20.08 | % |
* | Unaudited |
(a) | Return of Capital is less than $0.005 per share. |
(b) | Total Return in the above table represents the rate that the investor would have earned on an investment in the Fund, assuming reinvestment of dividends. |
(c) | Not annualized |
(d) | In 2016, 2015, 2014, 2013, 2012, and 2011, the Adviser waived a portion of the 0.30% management fee to sustain a net fee of 0.24%, 0.23%, 0.24%, 0.24%, 0.26%, and 0.27%, respectively. The Adviser intends this fee waiver to be permanent, although the Adviser retains the right to remove the waiver after April 30, 2017. (Note #4) |
(e) | Annualized. |
The accompanying notes are an integral part of these financial statements.
24
Selected Data for a Share Outstanding Throughout each Period:
Six Months Ended 6/30/2016* | Year Ended December 31 | |||||||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||||||
Net Asset Value Beginning of Period | $ | 15.17 | $ | 15.82 | $ | 16.27 | $ | 15.50 | $ | 13.43 | $ | 13.30 | ||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income | 0.08 | 0.15 | 0.16 | 0.24 | 0.23 | 0.29 | ||||||||||||||||||
Net Gains (Losses) on Securities and Futures Contracts (Realized and Unrealized) | 0.72 | 0.07 | 2.21 | 4.58 | 2.24 | 0.13 | ||||||||||||||||||
Total Operations | $ | 0.80 | $ | 0.22 | $ | 2.37 | $ | 4.82 | $ | 2.47 | $ | 0.42 | ||||||||||||
Distributions: | ||||||||||||||||||||||||
Net Investment Income | (0.09 | ) | (0.17 | ) | (0.17 | ) | (0.24 | ) | (0.23 | ) | (0.29 | ) | ||||||||||||
Return of Capital | — | 0.00 | (a) | |||||||||||||||||||||
Net Realized Capital Gains | — | (0.70 | ) | (2.65 | ) | (3.81 | ) | (0.17 | ) | — | ||||||||||||||
Total Distributions | $ | (0.09 | ) | $ | (0.87 | ) | $ | (2.82 | ) | $ | (4.05 | ) | $ | (0.40 | ) | $ | (0.29 | ) | ||||||
Net Asset Value at End of Period | $ | 15.88 | $ | 15.17 | $ | 15.82 | $ | 16.27 | $ | 15.50 | $ | 13.43 | ||||||||||||
Total Return(b) | 5.26 | %(c) | 1.34 | % | 14.42 | % | 31.31 | % | 18.43 | % | 3.16 | % | ||||||||||||
Net Assets End of Period (Millions) | $ | 112.17 | $ | 97.95 | $ | 97.15 | $ | 83.93 | $ | 65.19 | $ | 51.13 | ||||||||||||
Ratios(d) | ||||||||||||||||||||||||
Ratio of Expenses to | ||||||||||||||||||||||||
Average Net Assets before Waiver | 0.35 | %(e) | 0.35 | % | 0.35 | % | 0.67 | % | 1.00 | % | 1.00 | % | ||||||||||||
Average Net Assets after Waiver | 0.35 | %(e) | 0.35 | % | 0.35 | % | 0.35 | % | 0.35 | % | 0.35 | % | ||||||||||||
Ratio of Net Investment Income to | ||||||||||||||||||||||||
Average Net Assets before Waiver | 1.06 | %(e) | 0.91 | % | 0.93 | % | 1.00 | % | 0.85 | % | 1.48 | % | ||||||||||||
Average Net Assets after Waiver | 1.06 | %(e) | 0.91 | % | 0.93 | % | 1.32 | % | 1.50 | % | 2.13 | % | ||||||||||||
Portfolio Turnover Rate | 36.85 | %(c) | 57.75 | % | 56.32 | % | 33.09 | % | 49.63 | % | 68.09 | % |
* | Unaudited |
(a) | Return of Capital is less than $0.005 per share. |
(b) | Total Return in the above table represents the rate that the investor would have earned on an investment in the Fund, assuming reinvestment of dividends. |
(c) | Not annualized |
(d) | Prior to May 1, 2013, the Adviser waived a portion of the 1.00% management fee to sustain a fee of 0.35%. Effective May 1, 2013, the Adviser removed the fee waiver, and reduced the management fee to 0.35%. (Note #4) |
(e) | Annualized |
The accompanying notes are an integral part of these financial statements.
25
1) Organization
The Johnson Institutional Short Duration Bond Fund (formerly the JIC Institutional Bond Fund I), Johnson Institutional Intermediate Bond Fund (formerly the JIC Institutional Bond Fund II), Johnson Institutional Core Bond Fund (formerly the JIC Institutional Bond Fund III) (the “Bond Funds”) and Johnson Enhanced Return Fund (each individually a “Fund” and collectively the “Funds”) are each a diversified series of the Johnson Mutual Funds Trust (the “Trust”), and are registered under the Investment Company Act of 1940, as amended, as no-load, open-end investment companies. The Johnson Mutual Funds Trust was established as an Ohio business trust under an Agreement and Declaration of Trust dated September 30, 1992. The Bond Funds began offering their shares publicly on August 31, 2000. The Johnson Enhanced Return Fund began offering shares publicly on December 30, 2005. All Funds are managed by Johnson Investment Counsel, Inc. (the “Adviser”).
The investment objective of the Bond Funds is a high level of income over the long term consistent with preservation of capital. The investment objective of the Johnson Enhanced Return Fund is to outperform the Fund’s benchmark, the S&P 500 Composite Stock Index, over a full market cycle.
2) Summary of Significant Accounting Policies
Basis of Accounting:
The financial statements are prepared in accordance with accounting principles generally accepted in the United State of America (GAAP). The Funds are investment companies and accordingly follow the investment company guidance of Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946.
Financial Futures Contracts:
The Enhanced Return Fund invests in stock index futures (equity risk) only for the replication of returns, not speculation. The Fund enters into S&P 500 E-Mini contracts four times a year generally near the time the contracts would expire (contracts expire the third Friday of March, June, September and December). The contracts are generally held until it is time to roll into the next contracts. The average daily notional value for the six month period ended June 30, 2016 was $96,840,835. Upon entering into a financial futures contract, the Fund is required to pledge to the broker an amount of cash, U.S. government securities, or other assets, equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made or received by the Fund each day, depending on the daily fluctuations in the fair value of the futures contract. The Fund recognizes an unrealized gain or loss equal to the daily variation margin. The amount of the daily variation margin is reflected as an asset or liability within the Statements of Assets and Liabilities, while the cumulative change in unrealized gain/loss on futures contracts is reported separately within the Statements of Operations. The Net Unrealized Loss on futures contracts, as of June 30, 2016, is presented separately within the components of next assets on the Statements of Assets and Liabilities. Should market conditions move unexpectedly, the Fund may not achieve the anticipated benefits of the financial futures contracts and may realize a loss at the contract settlement date. A realized gain or loss is recognized when a contract is sold, and is the difference between the fair value of the contract at purchase and the fair value of the contract when sold. Realized gains/losses on futures contracts are reported separately within the Statements of Operations. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates, and the underlying hedged asset, as well as the risk that the counterparty will fail to perform its obligations.
As of June 30, 2016, Cash Collateral held by R.J. O’Brien is cash held as collateral against the futures contracts, and is restricted from withdrawal. Net variation margin receivable on futures contracts as of June 30, 2016 was $1,246,050.
Offsetting Assets and Liabilities:
The Enhanced Return Fund has adopted financial reporting rules regarding offsetting assets and liabilities and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The Fund’s policy is to recognize a net asset/liability equal to the net variation margin for the futures contracts. As of June 30, 2016, the Fund only has one position and the variation margin applicable to that position is presented in the Statement of Assets and Liabilities. The Fund has no master netting agreements in place as of June 30, 2016.
Investment Income and Realized Capital Gains and Losses on Investment Securities:
Interest income is recorded on an accrual basis. Gains and losses on sales of investments are calculated using the specific identification method. Discounts and premiums on securities purchased are amortized over the lives of the respective securities, using the interest method. Gains and losses on paydowns of mortgage-backed securities are reflected in interest income on the Statements of Operations. The ability of issuers of debt securities held by the Funds to meet their obligations may be affected by economic and political developments in a specific country or region.
26
2) Summary of Significant Accounting Policies, continued
Income Taxes:
It is the Funds’ policy to distribute annually, prior to the end of the year, dividends sufficient to satisfy excise tax requirements of the Internal Revenue Service. This Internal Revenue Service requirement may cause an excess of distributions over the book year-end accumulated income. In addition, it is the Funds’ policy to distribute annually, after the end of the calendar year, any remaining net investment income and net capital gains to comply with the special provisions of the Internal Revenue Code available to registered investment companies (“RICs”). Each year, each Fund intends to continue to qualify as a RIC under Subchapter M of the Internal Revenue Code by making distributions as noted above and complying with other requirements applicable to RICs. As a result, no provision for income taxes is required.
Accounting for Uncertainty in Income Taxes:
As of and during the six month period ended June 30, 2016, the Funds did not have a liability for any unrecognized tax benefits. The Funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statements of Operations. During the year, the Funds did not incur any interest or penalties.
Distributions:
Distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. The Funds intend to distribute net investment income on a calendar quarter basis. The Funds intend to distribute their net realized long-term capital gains and their net realized short-term capital gains, if any, at least once a year. The treatment for financial reporting purposes of distributions made to shareholders during the year from net investment income or net realized capital gains may differ from their ultimate treatment for federal income tax purposes. These differences are caused primarily by differences in the timing of the recognition of certain components of income, expense or realized capital gain for federal income tax purposes. Where such differences are permanent in nature, they are reclassified in the components of net assets based on their ultimate characterization for federal income tax purposes. Any such reclassifications will have no effect on net assets, results of operations, or net asset values per share of the Funds.
3) Security Valuation and Transactions
The Funds utilize various methods to measure the fair value of most of their investments on a recurring basis.
Securities for which representative market quotations are not readily available or are considered unreliable by the Investment Adviser are valued as determined in good faith by, or under the direction of, the Board of Trustees. Various inputs may be reviewed in order to make a good faith determination of a security’s fair value. These inputs include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions. Fair valuations and valuations of investments that are not actively trading involve judgment and may differ materially from valuations of investments that would have been used had greater market activity occurred.
Generally Accepted Accounting Principles in the United States (“GAAP”) establish a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:
¨ | Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities that the Funds have the ability to access. |
¨ | Level 2 — Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data. |
¨ | Level 3 — Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available. |
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the
27
3) Security Valuation and Transactions, continued
security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. 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 level of the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
Fair Value Measurements:
A description of the valuation techniques applied to the Funds’ major categories of assets and liabilities measured at fair value on a recurring basis follows.
Corporate Bonds. Corporate bonds are generally valued at prices obtained from pricing vendors. The fair value of corporate bonds is estimated using market approach valuation techniques, which may consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations for similar securities (where observable), bond spreads, fundamental data relating to the issuer, and credit default swap spreads adjusted for any basis difference between cash and derivative instruments. While most corporate bonds are categorized in Level 2 of the fair value hierarchy, in instances where lower relative weight is placed on transaction prices, quotations, or similar observable inputs, they will be categorized in Level 3.
U.S. Government Securities. U.S. government securities are generally valued at prices obtained from pricing vendors. U.S. government securities, including U.S. Treasury Obligations, are normally valued using market approach valuation techniques that incorporate observable market data such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued principally using dealer quotations. U.S. government securities are categorized in Level 2 of the fair value hierarchy.
U.S. Agency Securities. U.S. agency securities are generally valued at prices obtained from pricing vendors. U.S. agency securities are comprised of two main categories consisting of agency issued debt and mortgage-backed securities. Agency issued debt securities are generally valued in a manner similar to U.S. government securities. Mortgage-backed securities are generally valued based on models that consider the estimated cash flows of each tranche of the entity, establish a benchmark yield, and develop an estimated tranche-specific spread to the benchmark yield based on the unique attributes of the tranche. Depending on market activity levels and whether quotations or other data are used, these securities are typically categorized in Level 2 of the fair value hierarchy.
Municipal Bonds. Municipal bonds are generally valued at prices obtained from pricing vendors. Municipal Bonds are normally valued using a market approach valuation technique that incorporates observable market data such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued principally using dealer quotations. Municipal Bonds are categorized in Level 2 of the fair value hierarchy.
Preferred Stocks. Securities traded on a national securities exchange (or reported on the NASDAQ national market) are stated at the last reported sales price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized in Level 1 of the fair value hierarchy.
Certificates of Deposit. Certificates of Deposit are generally valued at prices obtained from pricing vendors. Certificates of Deposit which are traded on the open market are normally valued using a market approach valuation technique that incorporates observable market data such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued principally using dealer quotations. Certificates of Deposit are categorized in Level 2 of the fair value hierarchy.
Money Market. Investments in mutual funds, including money market mutual funds (notated throughout these financials as cash equivalents), are generally priced at the ending net asset value (“NAV”) provided by the service agent of the funds. These securities will be categorized as Level 1 securities.
Derivative Instruments. Listed derivatives, including futures contracts that are actively traded, are valued based on quoted prices from the exchange and are categorized in Level 1 of the fair value hierarchy.
28
3) Security Valuation and Transactions, continued
The following is a summary of the inputs used to value each Fund’s investments as of June 30, 2016:
Johnson Institutional Short Duration Bond Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Corporate Bonds* | $ | — | $ | 74,086,177 | $ | — | $ | 74,086,177 | ||||||||
U.S. Government Treasury Obligations | — | 11,308,025 | — | 11,308,025 | ||||||||||||
U.S. Government Agency Obligations | — | 12,884,571 | — | 12,884,571 | ||||||||||||
U.S. Government Agency Obligations – Mortgage-Backed | — | 7,057,985 | — | 7,057,985 | ||||||||||||
Taxable Municipal Bonds | — | 2,553,082 | — | 2,553,082 | ||||||||||||
Money Market Fund | 8,841,170 | — | — | 8,841,170 | ||||||||||||
Total | $ | 8,841,170 | $ | 107,889,840 | $ | — | $ | 116,731,010 |
Johnson Institutional Intermediate Bond Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Corporate Bonds* | $ | — | $ | 65,566,687 | $ | — | $ | 65,566,687 | ||||||||
U.S. Government Treasury Obligations | — | 17,349,136 | — | 17,349,136 | ||||||||||||
U.S. Government Agency Obligations | — | 11,144,719 | — | 11,144,719 | ||||||||||||
U.S. Government Agency Obligations – Mortgage-Backed | — | 5,748,040 | — | 5,748,040 | ||||||||||||
Taxable Municipal Bonds | — | 6,363,988 | — | 6,363,988 | ||||||||||||
Non-Taxable Municipal Bonds | — | 563,510 | — | 563,510 | ||||||||||||
Preferred Stocks | 1,410,863 | — | — | 1,410,863 | ||||||||||||
Money Market Fund | 2,706,623 | — | — | 2,706,623 | ||||||||||||
Total | $ | 4,117,486 | $ | 106,736,080 | $ | — | $ | 110,853,566 |
Johnson Institutional Core Bond Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Corporate Bonds* | $ | — | $ | 51,959,494 | $ | — | $ | 51,959,494 | ||||||||
U.S. Government Treasury Obligations | — | 13,958,120 | — | 13,958,120 | ||||||||||||
U.S. Government Agency Obligations | — | 4,501,762 | — | 4,501,762 | ||||||||||||
U.S. Government Agency Obligations – Mortgage-Backed | — | 11,196,937 | — | 11,196,937 | ||||||||||||
Taxable Municipal Bonds | — | 7,678,854 | — | 7,678,854 | ||||||||||||
Preferred Stocks | 1,454,220 | — | — | 1,454,220 | ||||||||||||
Money Market | 2,051,995 | — | — | 2,051,995 | ||||||||||||
Total | $ | 3,506,215 | $ | 89,295,167 | $ | — | $ | 92,801,382 |
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3) Security Valuation and Transactions, continued
Enhanced Return Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Corporate Bonds* | $ | — | $ | 62,974,170 | $ | — | $ | 62,974,170 | ||||||||
U.S. Government Treasury Obligations | — | 17,028,648 | — | 17,028,648 | ||||||||||||
U.S. Government Agency Obligations | — | 10,202,645 | — | 10,202,645 | ||||||||||||
U.S. Government Agency Obligations – Mortgage-Backed | — | 5,991,824 | — | 5,991,824 | ||||||||||||
Taxable Municipal Bonds | — | 2,511,250 | — | 2,511,250 | ||||||||||||
Cash Equivalents | 14,927,593 | — | — | 14,927,593 | ||||||||||||
Sub-Total | $ | 14,927,593 | $ | 98,708,537 | $ | — | $ | 113,636,130 | ||||||||
Other Financial Instruments** | 436,955 | — | — | 436,955 | ||||||||||||
Total | $ | 15,364,548 | $ | 96,423,007 | $ | — | $ | 114,073,085 |
* | See Schedule of Investments for industry classification. |
** | Other financial instruments are futures contracts reflected separately in the Portfolio of Investments, and are reflected at the net unrealized appreciation on the futures contracts. |
The Funds did not hold any investments at any time during the reporting period in which unobservable inputs were used in determining fair value. Therefore, no reconciliation of Level 3 securities is included for this reporting period. As of and during the six month period ended June 30, 2016, no securities were transferred into or out of Level 1 or Level 2. If any transfers between levels would occur, they would be reflected as of the end of the period.
4) Investment Advisory Agreement
The investment advisory agreements provide that the Adviser will pay all of the Funds’ operating expenses, excluding brokerage fees and commissions, taxes, borrowing costs (such as (a) interest and (b) dividend expenses on securities sold short), any 12b-1 fees, and extraordinary expenses. Under the terms of the investment advisory agreements, each of the Bond Funds pays the Adviser a management fee at the annual rate of 0.30% (before the contractual waiver described below) of the Fund’s average daily net assets, which is accrued daily and paid monthly. The Johnson Enhanced Return Fund pays the Adviser a management fee at the annual rate of 0.35% of the Fund’s average daily net assets.
The Adviser received management fees for the six month period ended June 30, 2016 as indicated below. The Adviser has agreed to waive a part of the management fee for the Bond Funds from a maximum of 0.30% to an effective fee ratio of 0.236%. This is a change from the fee for the prior period (May 1, 2015 to April 30, 2016) of 0.234%. The Adviser has the right to remove this fee waiver any time after April 30, 2017.
As of June 30, 2016, information regarding fees was as follows:
Fund | Fee | Fee Waiver | Effective Fee Ratio | Management Fee After Waiver | Contractual Waiver | Payable | ||||||||||||||||||
Short Duration Bond Fund | 0.30 | % | 0.064 | % | 0.236 | % | $ | 130,175 | $ | 36,218 | $ | 22,638 | ||||||||||||
Intermediate Bond Fund | 0.30 | % | 0.064 | % | 0.236 | % | 123,437 | 34,361 | 21,040 | |||||||||||||||
Core Bond Fund | 0.30 | % | 0.064 | % | 0.236 | % | 105,501 | 29,368 | 17,680 | |||||||||||||||
Enhanced Return Fund | 0.35 | % | — | 0.35 | % | 169,783 | — | 28,510 |
5) Related Party Transactions
All officers and one Trustee of the Trust are employees of the Adviser. Total compensation for the Independent Trustees as a group was $40,000 for the year ended December 31, 2015, which was paid by the Adviser, and as a group they received no additional compensation from the Trust. The Trust consists of eleven Funds: Johnson Equity Income Fund, Johnson Growth Fund, Johnson Opportunity Fund, Johnson Realty Fund, Johnson International Fund, Johnson Fixed Income Fund, Johnson Municipal Income Fund, Johnson Institutional Short Duration Bond Fund, Johnson Institutional Intermediate Bond Fund, Johnson Institutional Core Bond Fund, and Johnson Enhanced Return Fund. The Adviser is not a registered
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5) Related Party Transactions, continued
broker-dealer of securities and thus does not receive commissions on trades made on behalf of the Funds. The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates a presumption of control of the Fund, under Section 2(a)(9) of the Investment Company Act of 1940. As of June 30, 2016, Covie and Company owned in aggregate 59.90% of the Short Duration Bond Fund, 69.90% of the Intermediate Bond Fund, and 82.31% of the Core Bond Fund. At June 30, 2016, client accounts managed by the Adviser, with full advisory discretion, held in aggregate 82.32% of the Enhanced Return Fund.
Johnson Financial, Inc. is a wholly-owned subsidiary of Johnson Investment Counsel, Inc., the Adviser. Johnson Financial, Inc. provides transfer agency, fund accounting, and administration services to the Funds. Fund accounting services are provided by Ultimus Fund Solutions, Cincinnati, Ohio. These services are paid for by the Adviser.
6) Purchases and Sales of Securities
For the six month period ended June 30, 2016, purchases and sales of investment securities aggregated:
Investment Securities Other Than Short Term Investments and U.S. Government Obligations | U.S. Government Obligations | |||||||||||||||
Fund | Purchases | Sales | Purchases | Sales | ||||||||||||
Short Duration Bond Fund | $ | 43,460,411 | $ | 37,193,619 | $ | 5,158,234 | $ | 10,654,306 | ||||||||
Intermediate Bond Fund | 19,401,872 | 21,194,795 | 15,087,715 | 13,483,843 | ||||||||||||
Core Bond Fund | 17,672,642 | 22,793,827 | 6,798,502 | 542,578 | ||||||||||||
Enhanced Return Fund | 30,454,468 | 24,908,744 | 19,346,109 | 6,610,227 |
7) Capital Share Transactions
As of June 30, 2016, there were an unlimited number of shares of beneficial interest authorized for each Fund. Each Fund records purchases of its shares at the daily net asset value determined after receipt of a shareholder’s order in proper form. Redemptions are recorded at the net asset value determined following receipt of a shareholder’s written or telephone request in proper form.
Shares Sold to Investors | Shares Issued on Reinvestment of Dividends | Subtotal | Shares Redeemed | Net Change | Shares Outstanding: | |||||||||||||||||||||||
Beginning of Period | End of Period | |||||||||||||||||||||||||||
Short Duration Bond Fund | ||||||||||||||||||||||||||||
1/1/16 to 6/30/16 | 1,233,442 | 6,009 | 1,239,451 | (750,760 | ) | 488,691 | 7,224,651 | 7,713,342 | ||||||||||||||||||||
1/1/15 to 12/31/15 | 3,012,855 | 8,939 | 3,021,794 | (999,272 | ) | 2,022,522 | 5,202,129 | 7,224,651 | ||||||||||||||||||||
Intermediate Bond Fund | ||||||||||||||||||||||||||||
1/1/16 to 6/30/16 | 732,980 | 4,726 | 737,706 | (628,564 | ) | 109,142 | 6,770,296 | 6,879,438 | ||||||||||||||||||||
1/1/15 to 12/31/15 | 2,324,335 | 7,629 | 2,331,964 | (664,012 | ) | 1,667,952 | 5,102,344 | 6,770,296 | ||||||||||||||||||||
Core Bond Fund | ||||||||||||||||||||||||||||
1/1/16 to 6/30/16 | 542,248 | 8,452 | 550,700 | (480,782 | ) | 69,918 | 5,558,046 | 5,627,964 | ||||||||||||||||||||
1/1/15 to 12/31/15 | 1,542,013 | 1,396 | 1,543,409 | (666,187 | ) | 877,222 | 4,680,824 | 5,558,046 | ||||||||||||||||||||
Enhanced Return Fund | ||||||||||||||||||||||||||||
1/1/16 to 6/30/16 | 1,311,873 | 35,692 | 1,347,565 | (742,097 | ) | 605,468 | 6,458,943 | 7,064,411 | ||||||||||||||||||||
1/1/15 to 12/31/15 | 442,597 | 347,143 | 789,740 | (470,652 | ) | 319,088 | 6,139,855 | 6,458,943 |
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8) Security Transactions
For Federal income tax purposes, the cost of investment securities owned on June 30, 2016 was the same as identified cost for the JIC Institutional Bond Funds and the Enhanced Return Fund. As of June 30, 2016, the composition of unrealized appreciation (the excess of value over tax cost) and depreciation (the excess of tax cost over value), excluding futures contracts, was as follows:
Tax Cost of Securities | Appreciation | Depreciation | Net Appreciation (Depreciation) | |||||||||||||
Short Duration Bond Fund | $ | 115,989,123 | $ | 829,729 | $ | (87,842 | ) | $ | 741,887 | |||||||
Intermediate Bond Fund | 107,802,420 | 3,087,282 | (36,136 | ) | 3,051,146 | |||||||||||
Core Bond Fund | 88,895,283 | 3,935,006 | (28,907 | ) | 3,906,099 | |||||||||||
Enhanced Return Fund | 113,177,494 | 1,467,257 | (571,666 | ) | 895,591 |
9) Estimates
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.
10) Distributions to Shareholders
The tax character of the distributions paid is as follows:
Ordinary Income | Net Realized Long-Term Capital Gain | Net Realized Short-Term Capital Gain* | Return of Capital | Total Distributions Paid | ||||||||||||||||||||
Short Duration Bond Fund | 2015 | 1,271,927 | — | 17,774 | 11,931 | 1,301,632 | ||||||||||||||||||
2016 | 693,505 | — | — | — | 693,505 | |||||||||||||||||||
Intermediate Bond Fund | 2015 | 2,124,649 | 241 | 35 | 9,596 | 2,134,521 | ||||||||||||||||||
2016 | 1,120,017 | — | — | — | 1,120,017 | |||||||||||||||||||
Core Bond Fund | 2015 | 2,157,724 | 441,659 | 195,094 | 12,314 | 2,806,791 | ||||||||||||||||||
2016 | 1,101,139 | — | — | — | 1,101,139 | |||||||||||||||||||
Enhanced Return Fund | 2015 | 1,033,730 | 2,529,054 | 1,740,697 | 14,030 | 5,317,511 | ||||||||||||||||||
2016 | 556,485 | — | — | — | 556,485 |
* | Short-Term Capital Gains can be combined with Ordinary Income, and are taxed at the Ordinary Income tax rate. |
As of December 31, 2015, the Enhanced Return Fund deferred post-October capital losses in the amount of $1,450,930.
Under the Regulated Investment Company Modernization Act of 2010, Funds will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years. As a result of this, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.
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10) Distributions to Shareholders, continued
As of December 31, 2015, the components of distributable earnings on a tax basis were as follows:
Undistributed Ordinary Income | Short Term Capital Loss Carryovers | Long-Term Capital Loss Carryovers | Unrealized Appreciation (Depreciation) | Post-October Capital Loss | Total Distributable Income on a Tax Basis | |||||||||||||||||||
Short Duration Bond Fund | $ | — | $ | (7,085 | ) | $ | (71,643 | ) | $ | (589,278 | ) | $ | — | $ | (668,006 | ) | ||||||||
Intermediate Bond Fund | — | (11,719 | ) | (101,197 | ) | (85,830 | ) | — | (198,746 | ) | ||||||||||||||
Core Bond Fund | — | — | — | 669,921 | — | 669,921 | ||||||||||||||||||
Enhanced Return Fund | — | — | — | (571,181 | ) | (1,450,930 | ) | (2,022,111 | ) |
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Shareholders of the Funds incur ongoing operating expenses consisting solely of management fees. The following example is intended to help you understand your ongoing expenses of investing in the Funds and to compare these expenses with similar costs of investing in other mutual funds. The example is based on an investment of $1,000 invested in the Funds on December 31, 2015 and held through June 30, 2016.
The first line of the table below provides information about actual account values and actual expenses. In order to estimate the expenses a shareholder paid during the period covered by this report, shareholders can divide their account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6) and then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Period.”
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses paid by a shareholder for the period. Shareholders may use this information to compare the ongoing expenses of investing in the Funds and other funds 5% hypothetical examples with the 5% hypothetical examples that appear in other funds’ shareholder reports.
Beginning Account Value December 31, 2015 | Ending Account Value June 30, 2016 | Expenses Paid During Period* January 1, 2016 – June 30, 2016 | ||||||||||
Short Duration Bond Fund | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,019.70 | $ | 1.18 | ||||||
Hypothetical | $ | 1,000.00 | $ | 1,023.62 | $ | 1.18 | ||||||
Intermediate Bond Fund | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,044.70 | $ | 1.20 | ||||||
Hypothetical | $ | 1,000.00 | $ | 1,023.62 | $ | 1.18 | ||||||
Core Bond Fund | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,058.80 | $ | 1.20 | ||||||
Hypothetical | $ | 1,000.00 | $ | 1,023.62 | $ | 1.18 | ||||||
Enhanced Return Fund | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,052.60 | $ | 1.78 | ||||||
Hypothetical | $ | 1,000.00 | $ | 1,023.06 | $ | 1.76 |
* | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). For the Short Duration, Intermediate, and Core Bond Funds, the expense ratio is 0.236%, and for the Enhanced Return Fund, the expense ratio is 0.35%. |
34
At a regular board meeting of the Johnson Mutual Funds Trust, on May 18, 2016, the Trustees, including the Trustees who are not “interested persons” of the Trust (the “Independent Trustees”), considered the renewal of the Management Agreements between the Trust and the Adviser. The Trustees were assisted by experienced independent legal counsel throughout the contract review process. The Independent Trustees discussed the proposed continuance in executive session with such counsel at which no representatives of the Adviser were present. The Independent Trustees relied upon the advice of independent legal counsel and their own business judgment in determining the material factors to be considered in evaluating the Management Agreements and the weight to be given to each such factor. Among other factors, the Trustees considered (i) the investment performance of each Fund and the Adviser; (ii) the nature, extent and quality of the services provided by the Adviser; (iii) the cost of services provided and the profits to be realized by the Adviser and its affiliates from the relationship with the Funds; and (iv) economies of scale. The conclusions reached by the Independent Trustees were based on a comprehensive evaluation of all of the information provided and were not the result of any one factor, Moreover, each Independent Trustee may have afforded different weight to the various factors in reaching his or her conclusions with respect to the Management Agreements.
The Trustees reviewed information prepared by the Adviser, discussing, among other things, the Adviser’s business, its personnel and operations, services provided to the Funds, the compensation received for management services, information regarding brokerage commissions paid to unaffiliated brokers, performance for various periods ended March 31, 2016, profitability of the Funds to the Adviser and economies of scale.
As to the performance of the Funds, the Trustees considered performance data presented by the Adviser showing the relevant Fund’s performance over various periods ending March 31, 2016. Information regarding each Fund’s performance was compared to the performance of the Fund and its Morningstar category (the “Peer Group”) and the Fund’s benchmark index. The Trustees considered the percentile ranking by Morningstar category for each of the Funds. The Trustees also considered charts comparing each Fund’s 1-year and 3-year returns to those of its Peer Group over rolling 1- and 3-year periods, as well as charts comparing each Fund’s 1-year and 3-year total returns and standard deviations to those of its Peer Group. They also discussed, with representatives of the Adviser, the Adviser’s expectations as to each Fund’s “risk,” measured by standard deviation as opposed to its benchmark.
As to the nature, extent and quality of services provided by the Adviser, the Trustees reviewed the information provided in the memorandum that described the Adviser’s business and personnel and analyzed the Adviser’s experience and capabilities. The Board noted that the Adviser has been providing services to the Trust since 1992 and presently services the 11 no-load funds, which includes four institutional funds. The Board materials also included a review of the firm personnel who serve as portfolio managers to the various Funds. The Trustees noted that they are satisfied with the portfolio management and other services being provided to the Funds by the Adviser and its responsiveness to Board requests. They noted that the fund performance watchlist was helpful in tracking the performance of the Funds, especially those that may be underperforming. The Trustees next discussed the professionalism and experience of the Adviser’s personnel, in particular those dedicated to portfolio management and fund matters. They noted the many years of experience for much of the Adviser’s professional staff as well as the Adviser’s ability to attract and retain talented portfolio managers. With respect to compliance, the Trustees discussed the Adviser’s compliance program, the resources allocated to compliance and the responsiveness of the Adviser to issues raised by the Trust’s Chief Compliance Officer. Additionally, the Trustees considered the absence of any litigations or regulatory investigations related to the Adviser. A representative of the Adviser provided an overview of the Adviser’s financial status and discussed the Adviser’s resources in providing services to the Funds. The Trustees, including the Independent Trustees, concluded that the nature and extent of services provided by the Adviser was consistent with the Board’s expectations, and that the overall quality of services was excellent. The Trustees also concluded that the Adviser has the appropriate resources to continue to provide quality advisory services to the Funds.
The Trustees recognized that the Equity Income Fund had underperformed the S&P 500 Index for the 1-year period and 3-year periods but had recently significantly outperformed the Index for the first quarter of 2016. The Trustees considered that the Growth Fund had modestly underperformed against its benchmark, the S&P 500 Index, and its Peer Group average for the 1-year and 3-year periods. With respect to the Opportunity Fund, the Trustees considered that the Fund had outperformed the Russell 2500 Index for the year to date, 1-year and 3-year periods, and underperformed the benchmark for the 5-year period. The Board next discussed the performance of the Realty Fund, noting that it had outperformed its benchmark for the 1-year period and slightly underperformed its Peer Group average and benchmark for the 3-year and 5-year periods. The Trustees noted the International Fund slightly underperformed its benchmark for each of the periods except for the 3-year period where it had outperformed. Next, the Trustees discussed the performance of the Fixed Income Fund, noting that the Fund had slightly underperformed its benchmark 1, 3 and 5-year periods but that it had recently performed well in 2016. The Trustees recognized that the Municipal Income Fund had outperformed the Barclays 5-year GO Index for the year to date 2016 and 3-year and 5-year periods. After discussion, the Trustees indicated that it was consensus that none of the Funds had unreasonable performance.
35
The Trustees then reviewed each of the Institutional Funds individually. They noted that the Short Duration Bond Fund had outperformed its benchmark, the Bank of America Merrill Lynch 1 to 3 year U.S. Corporate and Government Index for the year to date 2016 period as well as for the 1, 3 and 5-year periods. Next, the Trustees discussed the performance of the Intermediate Bond Fund. They reviewed its performance for each of the periods, noting that it had outperformed the Barclays Intermediate U.S. Government Credit Index for the year to date period and for the 3 and 5 year periods but had underperformed slightly for the 1 year period. With respect to the Core Bond Fund, the Board noted that the Fund had significantly outperformed the Barclays U.S. Aggregate Index for the year to date 2016 period, and for the 1, 3, 5 and 10-year periods. The Board also noted the Core Bond Fund’s overall 5 star rating from Morningstar. The Trustees next discussed the performance for the Enhanced Return Fund. The Board reviewed its performance, noting that the Enhanced Return Fund outperformed its benchmark, the S&P 500 Index, and its Peer Group average for the year to date 2016, 1, 3 and 5-year periods and that it also maintained an overall 5-star rating from Morningstar. After discussion, the Trustees indicated that it was their consensus all four of these Funds had satisfactory performance given their respective investment objectives and strategies.
As to the cost of the services provided and the profits realized by the Adviser from the relationship with the Funds, the Trustees reviewed the fees paid to the Adviser for the fiscal year ended December 31, 2015 by the Funds. The Trustees also reviewed a report that includes a percentile ranking of the expense ratio of each Fund compared to the expense ratios of all funds in the applicable Morningstar category. The Board agreed that the expense ratio was a more meaningful comparison than the actual advisory fee because the Management Agreements have a unitary fee structure where the Adviser pays substantially all of the expenses of each Fund and is compensated with a higher fee (noting that most of the funds in the Peer Group comparisons do not share this structure). The expense ratio for each Fund was well below the mean, except that the Fixed Income Fund’s expense ratio was just above the mean. The Trustees noted the contractual fee waivers which were in effect during the period for the Short Duration Bond Fund, the Intermediate Bond Fund and the Core Bond Fund as well as the overall fees paid to the Adviser by each Fund for the period. The Trustees also discussed with the representatives of the Adviser the benefits to the Adviser of the “soft dollar” research it receives as a result of the Funds’ brokerage activity. The Trustees also discussed the profitability of each of the Funds to the Adviser, and a representative of the Adviser reported on the Adviser’s financial condition and current business environment. The Trustees, including the Independent Trustees, concluded that the Management Fee payable to each Fund and that the Adviser’s level of profitability from its relationship with the Funds is not excessive.
The Trustees next considered economies of scale. The Trustees considered that because the Funds’ expense ratios were reasonable, and given the size of the Funds and other data, that there were no excessive profits being derived from any of the Funds by the Adviser as a result of its management of the Funds. The Board also noted that the Adviser had agreed to extend its contractual fee waiver with respect to the Core Bond, Short Duration and Intermediate Bond Funds. The Trustees and representatives from the Adviser again agreed to explore the possibility of fee breakpoints in the future. After a discussion, the Trustees concluded that no breakpoints or additional fee reductions are necessary at this time. After a discussion, the Trustees concluded and agreed, including all Independent Trustees, that renewal of each Management Agreement was in the best interests of the each Fund and its shareholders. Accordingly, the Board renewed the Management Agreements for an additional year.
36
Proxy Disclosure
A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities and information regarding how the Funds voted those proxies during the most recent 12-month period ended June 30 are available without charge: (1) upon request by calling the Funds at 513-661-3100 or toll free at 1-800-541-0170; or (2) from the Fund’s documents filed with the Securities and Exchange Commission (“SEC”) on the SEC’s website at www.sec.gov.
Availability of Schedules of Portfolio Investments:
The Funds file their complete schedules of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available, without charge, (1) upon request by calling the Funds at 513-661-3100 or toll free at 1-800-541-0170; or (2) from the Fund’s documents filed with the Securities and Exchange Commission (“SEC”) on the SEC’s website at www.sec.gov.
Code of Ethics
The Trust's Code of Ethics is available on request without charge; please call for your copy at 513-661-3100 or 1-800-541-0170 or write us at:
Johnson Mutual Funds
3777 West Fork Road
Cincinnati OH 45247
37
Information pertaining to the Trustees and Officers of the Funds is provided below. Trustees who are not deemed to be interested persons of the Funds, as defined in the Investment Company Act of 1940, are referred to as Independent Trustees. Trustees who are deemed to be “interested persons” of the Funds are referred to as Interested Trustees. The Statement of Additional Information includes additional information about the Funds’ Trustees and may be obtained without charge by calling (513) 661-3100 or (800) 541-0170.
Name, Address And Age | Current Position Held With Trust | Year Service Commenced | Principal Occupation During Past Five Years | Number Of Portfolios Overseen | Other Directorships Held During The Past Five Years | |||||
Interested Trustee | ||||||||||
Timothy E. Johnson (74) 3777 West Fork Road Cincinnati, Ohio 45247 | Trustee | Since 1992 | Chairman of Johnson Investment Counsel, Inc., the Trust’s Adviser, and Professor of Finance at the University of Cincinnati; previously President of the Adviser until October 2013. | 11 | Director, Kendle International, Inc. (2002 – 2011) | |||||
Independent Trustees | ||||||||||
Ronald H. McSwain (73) 3777 West Fork Road Cincinnati, Ohio 45247 | Chairman and Trustee | Since 1992 | President of McSwain Carpets, Inc. until 2001; partner of P&R Realty, a real estate development partnership since 1984. | 11 | None | |||||
John R. Green (73) 3777 West Fork Rd. Cincinnati, Ohio 45247 | Trustee | Since 2006 | Retired from The Procter & Gamble Company. | 11 | None | |||||
James J. Berrens (50) 3777 West Fork Rd Cincinnati, Ohio 45247 | Trustee | Since 2006 | Chief Executive Officer since May 2015, Chief Financial Officer September 2010 to May 2015 for Christian Community Health Services. | 11 | None | |||||
Dr. Jeri B. Ricketts (58) 3777 West Fork Rd. Cincinnati, Ohio 45247 | Trustee | Since 2013 | Director of Carl H. Lindner Honors-PLUS Program, University of Cincinnati, since 2002; Associate Professor in Accounting, University of Cincinnati since 1986. | 11 | None |
38
Name, Address And Age | Current Position Held With Trust | Year Service Commenced | Principal Occupation During Past Five Years | Number Of Portfolios Overseen | Other Directorships Held During The Past Five Years | |||||
Officers | ||||||||||
Jason O. Jackman (45) 3777 West Fork Rd. Cincinnati, Ohio 45247 | President | Since 2013 | President and Chief Investment Officer of the Adviser since October 2013; Director of Fixed Income and Institutional Management March 2004 to October 2013. | N/A | N/A | |||||
Dale H. Coates (57) 3777 West Fork Road Cincinnati, Ohio 45247 | Vice President | Since 1992 | Portfolio Manager of the Trust’s Adviser. | N/A | N/A | |||||
Marc E. Figgins (52) 3777 West Fork Road Cincinnati, Ohio 45247 | Chief Financial Officer and Treasurer | Since 2002 | Mutual Funds Manager for Johnson Financial, Inc. | NA | NA | |||||
Scott J. Bischoff (50) 3777 West Fork Road Cincinnati, Ohio 45247 | Chief Compliance Officer | Since 2005 | Director of Operations of the Trust’s Adviser; Chief Compliance Officer of the Adviser. | NA | NA | |||||
Jennifer J. Kelhoffer (44) 3777 West Fork Road Cincinnati, Ohio 45247 | Secretary | Since 2007 | Client Service and Compliance Associate for the Adviser since March 2006. | NA | NA |
39
Trustees and Officers
Ronald H. McSwain | Independent Trustee, Chairman | |||
Timothy E. Johnson | Interested Trustee | |||
James J. Berrens | Independent Trustee | |||
John R. Green | Independent Trustee | |||
Jeri B. Ricketts | Independent Trustee | |||
Jason Jackman | President | |||
Dale H. Coates | Vice President | |||
Scott J. Bischoff | Chief Compliance Officer | |||
Marc E. Figgins | Chief Financial Officer, Treasurer | |||
Jennifer J. Kelhoffer | Secretary |
Transfer Agent and Fund Accountant
Johnson Financial, Inc.
3777 West Fork Road
Cincinnati, Ohio 45247
(513) 661-3100 (800) 541-0170
Custodian
US Bank
425 Walnut Street
Cincinnati, OH 45202
Independent Registered Public Accounting Firm
Cohen Fund Audit Services, Ltd.
1350 Euclid Avenue, Suite 800
Cleveland, Ohio 44115
Legal Counsel
Thompson Hine LLP
312 Walnut Street, 14th Floor
Cincinnati, Ohio 45202
This report is authorized for distribution to prospective investors only when accompanied or preceded
by the Funds' prospectus, which illustrates each Fund's objectives, policies, management fees,
and other information that may be helpful in making an investment decision.
Investment Company Act #811-7254
Item 2. Code of Ethics.
Not applicable to semiannual report.
Item 3. Audit Committee Financial Expert.
Not applicable to semiannual report.
Item 4. Principal Accountant Fees and Services.
Not applicable to semiannual report.
Item 5. Audit Committee of Listed Companies.
Not applicable.
Item 6. Schedule of Investments.
Not applicable – schedule filed with Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds.
Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Funds.
Not applicable.
Item 9. Purchases of Equity Securities by Closed End Funds and Affiliated Purchases.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
The registrant has not adopted procedures by which shareholders may recommend nominees to the registrant's board of trustees.”
Item 11. Controls and Procedures.
(a) Based on an evaluation of the registrant’s disclosure controls and procedures as of August 12, 2016, the disclosure controls and procedures are reasonably designed to ensure that the information required in filings on Forms N-CSR is recorded, processed, summarized, and reported on a timely basis.
(b) There were no significant changes in the registrant’s internal control over financial reporting that occurred during the 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.
Item 12. Exhibits.
(a)(1) | Not applicable |
(a)(2) | Certifications required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2(a)) |
(a)(3) | Not applicable |
(b) | Certifications required by Rule 30a-2(b) |
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.
Johnson Mutual Funds Trust
By: /s/ Jason O. Jackman
Jason O. Jackman, President
Date September 8, 2016
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/ Jason O. Jackman
Jason O. Jackman, President
Date September 8, 2016
By: /s/ Marc E. Figgins
Marc E. Figgins, Treasurer
Date September 8, 2016
* Print the name and title of each signing officer under his or her signature.