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: 6/30/18
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, 2018
(Unaudited)
t | Johnson Equity Income 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
Our Message to You | 1 | |||
Performance Review and Management Discussion | ||||
Equity Income Fund | 3 | |||
Opportunity Fund | 4 | |||
Realty Fund | 5 | |||
International Fund | 6 | |||
Fixed Income Fund | 7 | |||
Municipal Income Fund | 8 | |||
Portfolio of Investments | ||||
Equity Income Fund | 9 | |||
Opportunity Fund | 10 | |||
Realty Fund | 12 | |||
International Fund | 14 | |||
Fixed Income Fund | 16 | |||
Municipal Income Fund | 20 | |||
Statements of Assets and Liabilities | 30 | |||
Statements of Operations | 32 | |||
Statements of Changes in Net Assets | 34 | |||
Financial Highlights | ||||
Equity Income Fund | 36 | |||
Opportunity Fund | 37 | |||
Realty Fund | 38 | |||
International Fund | 39 | |||
Fixed Income Fund | 40 | |||
Municipal Income Fund | 41 | |||
Notes to the Financial Statements | 42 | |||
Disclosure of Expenses | 51 | |||
Review and Renewal of Management Agreements | 52 | |||
Additional Information | 54 | |||
Trustees and Officers | 55 | |||
Trustees and Officers, Transfer Agent and Fund Accountant, Custodian, Independent Registered Public Accounting Firm, Legal Counsel | Back Page |
July 2018
We are pleased to present you with the Johnson Mutual Funds’ June 30, 2018 Semi-Annual Report. On the following pages, we have provided commentary on the performance of each of the Funds in the first half of 2018 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.
U.S. Stocks Advance, but Emerging Markets Drag Down International Stocks
U.S. large cap technology companies continued driving overall stock markets higher in the first half of 2018. The NASDAQ Index, largely made up of tech and consumer discretionary stocks, has outperformed the broader S&P 500 Index for six quarters in a row. International stocks were weak, particularly in emerging markets. Ongoing global trade concerns, a rising U.S. dollar, rising U.S. interest rates, and rising crude oil prices led to poor performance in emerging market stocks.
The tech leadership continued despite the heated rhetoric on trade policy. Historically, tech companies have been more insulated from trade battles, but that dynamic may be changing. President Trump has made clear that intellectual property theft is one of his primary concerns as it relates to trade relations with China. In addition, tech companies now represent a far greater share of the economy than in the past.
Still, the narrow leadership of tech stocks over the last several quarters has caused some concern that the broader market would take a larger hit when tech stock performance turns. In addition to potential fallout from tariffs and trade policy changes, tech companies are facing increasing scrutiny from the government and a stronger dollar. With more than half of their sales coming from overseas, tech companies are vulnerable as foreign revenues translate to fewer U.S. dollars.
Global Trade: Lots of Tough Talk, Limited Action So Far
Along with central bank policy, global trade is the key issue for the markets in the second half of 2018 and beyond. While there has been a lot of attention, headlines, and debate on the topic, very little has actually been done so far. It is clear President Trump believes unfair global trade practices have harmed American businesses and caused American jobs to move overseas. His stated objective is to level the playing field and ultimately bring jobs and industry back to the U.S.
So far, the amount of tariffs that have been implemented versus threatened remains small. But Trump’s recent actions demonstrate his commitment to take action. At first, the Trump administration placed tariffs on just a small fraction of U.S. imports. But after foreign powers, particularly China and Europe, responded in kind with their own threats, Trump has turned up the heat. As of today Trump has threatened tariffs on nearly one-third of total U.S. imports, and nearly everything imported from China.
It is impossible to predict the extent to which tariffs and other policy changes will actually impact the global economy. This is especially true given the difficulty of predicting the effect on business and consumer confidence. But the direct hit to U.S. economic growth would likely be modest. Most economists are predicting that U.S. GDP growth would slow by less than 0.5%. It’s also likely inflation would temporarily move slightly higher, reflecting the one-time adjustments for tariffs.
The effect on certain industries is more easily predicted. Automotive companies, some technology companies, and manufacturing companies that use steel and/or aluminum inputs are likely to suffer the most. Already, some companies have provided details on how these tariffs harm their business. In some cases companies have warned they may shift production abroad to avoid them.
Growth in Earnings, Economy Tempered by Risk Awareness
Meanwhile, corporate earnings as well as economic growth have been healthy. The first quarter earnings season produced strong results, with revenues, margins, and earnings numbers all impressive. On top of that, the economy continues to perform well. However, several potential headwinds combined to temper the market’s enthusiasm. The trade war topic is front-and-center, but others are in play.
One of the biggest questions facing investors now is where we stand in the economic cycle. The current period of expansion is nearly ten years old, one of the longest in American history. Age alone doesn’t send the economy into decline. But the length of the expansion increases the difficulty of overcoming the various risks facing it. The passage of tax reform brought a potential boost, but there is some concern that any improvement may only be temporary. Such government stimulus is typically more impactful when the economy is closer to a low point, and may have come too late in the cycle to make much difference.
1
Rising interest rates are another headwind to further growth. Rates rose again in the first half of the year. The ten-year U.S. Treasury yield has hovered near 3%, its highest level in nearly seven years. But with inflation data showing signs of acceleration, and the Fed indicating more rate hikes are likely in 2018, rates could be headed higher in the months ahead. Central banks overseas also plan to take steps to normalize policy. And finally, a rising U.S. dollar, rising oil prices, and emerging market volatility are other headwinds that could slow the economy’s momentum.
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 Equity Income Fund provided a total return of 0.32% in the first half of 2018, trailing the S&P 500 Index’s 2.65% return.
Relative sector allocations and stock selection both contributed to the underperformance during the first half of the year. A significant overweight in the Consumer Staples sector, which was the worst performing sector in the S&P 500 Index, and underweight in the strong performing Information Technology and Consumer Discretion sectors contributed to the negative contribution from relative sector allocations. The negative impact from stock selection was as much about what the Fund did not own as what it owned as a few securities within the consumer sectors, which do not meet our desired valuation and yield characteristics, were market leaders. For example, Amazon alone was responsible for approximately half of the Fund’s overall relative underperformance. Although the underweight position in the Technology sector was a headwind, a positive contribution from stock selection within the sector more than offset the negative contribution from being underweight. Notable strong performers within the Fund’s Technology holdings included Mastercard and Automatic Data Processing.
Market dynamics in the first half of the year posed formidable headwinds to the Fund’s relative performance as the market exhibited narrow leadership and significant outperformance by growth stocks over value stocks. Stocks characterized by the highest earnings growth, highest valuations, and lowest dividend yields were the strongest performers. A market environment with these attributes is not conducive to the Fund outperforming.
During the first half of the year, new additions to the portfolio included Hasbro, AXIS Capital, Hershey, Waste Management, Fidelity National Information Services and Alliant Energy. The new additions are from various sectors of the economy, but if there was a theme across these purchases it would be that these businesses have historically demonstrated less cyclicality through various stages of the economic cycle and should provide defensive characteristics to the portfolio in a difficult economic or market environment. In a shift from what we have been communicating in past letters, on the margin, we are finding more attractive opportunities in stocks with above average dividend yields once again. The Fund sold its positions in Morningstar, PNC Financial Services Group, Lowes and Nike. All of these sales were the result of strong performance resulting in the stocks exceeding our estimates of fair value.
Average Annual Total Returns as of June 30, 2018 | ||||||||
Equity Income Fund | S&P 500 Index | |||||||
Six Months | 0.32 | % | 2.65 | % | ||||
One Year | 12.53 | % | 14.37 | % | ||||
Three Years | 10.32 | % | 11.93 | % | ||||
Five Years | 10.68 | % | 13.42 | % | ||||
Ten Years | 8.69 | % | 10.17 | % |
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
The Johnson Opportunity Fund provided a total return of +2.15% in the first half of 2018, trailing the Russell 2500 Index’s +5.46% return. Volatility returned briefly with a quick 9% pullback in the Index during the 1st quarter. On the other hand, booming late cycle earnings growth and lower relative international exposure among smaller companies continued to fuel a SMID Cap rally that extended to yet another all-time high in the first half of the year. However, it was a relatively narrow market rally with only three sectors outperforming the Russell 2500 Index — Health Care, Technology, and Energy. The Fund was underweight all three groups and its quality focus and valuation sensitivity continued to be out of favor, negatively influencing relative performance.
Growth continued its streak of dominance over Value in the first half, with the Russell 2500 Growth Index returning 8.0% versus Value’s 3.0%. Investors have continued to pay a premium valuation for companies with strong earnings growth. Many of the top performers in the Fund were from growth sectors. Align Technology, the maker of an orthodontic product called Invisalign, was the Fund’s top contributor in 2017, and repeated that in the first half of this year with a 54% return. Inogen, a maker of portable oxygen concentrators, was another fast-growing Health Care company with stock returns of over 50%. The Technology sector also represented a large number of top contributors, including Veeva Systems, CACI International, Perficient and Constellation Software.
Competitive pressures and margin compression were common themes among many companies in the Consumer and Industrials sectors. Twelve of the 15 most negative contributors in the Fund were in these sectors. Seven of these had declines of more than 20%. Late cycle fears will likely persist, but we expect that quality companies will be able to defend their competitive position and have the ability to pass cost increases on to their customers in the coming quarters, and current stock valuations seem to underestimate that.
While corporate tax cut savings have played an important role in earnings growth this year, the U.S. economy has been strong and smaller company revenues have been growing at a double-digit pace for the first time since 2011. As worries of a global trade war heated up in the second quarter, investors tended to favor U.S. companies that had less exposure to overseas earnings, and this gave SMID Cap companies an advantage over the more multinational Large Cap segment. Low quality companies continued to lead the market coming out of the February correction, and the Fund’s style has been out of favor over that time. However, we expect earnings growth will struggle to maintain the same pace in the quarters ahead and investors will ultimately penalize overvalued growth companies and highly-levered cyclicals that are not allocating capital prudently. As that shift occurs, the Fund’s less aggressive positioning should be rewarded.
Average Annual Total Returns as of June 30, 2018 | ||||||||
Opportunity Fund | Russell 2500 Index | |||||||
Six Months | 2.15 | % | 5.46 | % | ||||
One Year | 13.32 | % | 16.24 | % | ||||
Three Years | 9.90 | % | 10.30 | % | ||||
Five Years | 11.62 | % | 12.29 | % | ||||
Ten Years | 8.16 | % | 10.74 | % |
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.
4
The Johnson Realty Fund provided a total return of 1.42% in the first half of 2018, outperforming the S&P US REIT Index’s 1.37% return.
It was a tale of two quarters in the REIT market. In the first quarter of 2018 REITs experienced a decline of 8.2%. The market remained focused on the Federal Reserve and the fact that it was going to increase short term interest rates four times in 2018. Interest rates moved up considerably in the first quarter and all interest rate sensitive segments of the market came under pressure. During the second quarter REITs staged a nice recovery, moving up over 10%, driven by the movement back down in interest rates. The 10-year treasury hit off of 3.10% in May and then fell, now back below 3%. As we have said for many years, REITs tend to exhibit strong correlation in the short term to the direction of interest rates. REITs dramatically underperformed the broader market in the first quarter, with the S&P 500 only down 0.76%. The outperformance in the second quarter was strong but REITs still trail the broader market, which ended the first half of 2018 up 2.65%. REIT fundamentals had seen some strength but are now starting to experience some tough comparisons in certain regions of the country. Valuation overall has improved and now looks fairly neutral versus the overvalued posture it has exhibited the past few years.
The Johnson Realty Fund outperformed by a small amount in the first half of 2018. We continue to be fairly neutral in our positioning relative to property type holdings. We have been able to keep the portfolio fully invested and continue to be slightly overweight in Residential and Office/Industrials, in which portion of these groups were some of the better performing areas.
Security selection was a positive with a couple of names contributing and detracting to the relative performance. Strength in DDR Corp, Ryman Hospitality, DCT Industrial and Life Sciences all provide a strong boost to relative performance. Regency Centers and Federal Realty were two names that detracted from our relative performance.
REITs continue to possess long term portfolio diversification benefits as their correlation to the larger equity market has demonstrated. We expect as interest rates rise, yield oriented investors may continue to exit the asset class. We are three years into this elongated interest rate rise cycle as we are coming off historically low interest rate levels. Valuations have become more appropriate and as the interest rates stabilize, investors may again find value in the REIT sector. Shareholders have received information regarding the closure of this Fund, effective November 1, 2108.
Average Annual Total Returns as of June 30, 2018 | ||||||||
Realty Fund | S&P US REIT Index | |||||||
Six Months | 1.42 | % | 1.37 | % | ||||
One Year | 3.82 | % | 3.47 | % | ||||
Three Years | 7.93 | % | 7.85 | % | ||||
Five Years | 7.97 | % | 8.08 | % | ||||
Ten Years | 6.51 | % | 7.82 | % |
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.
5
The Johnson International Fund provided a total return of -2.16% in the first half of 2018, outperforming the MSCI ACWI ex-US Index’s -3.77% return. Foreign economic growth has been sluggish in comparison to the U.S., and international stock returns lagged (e.g. the S&P 500 Index returned +2.7%). In the U.S., companies have benefitted from the recently passed corporate tax cuts and monetary policy has not yet become too restrictive. The U.S. Dollar strengthened by over 2% in the first half as capital flowed out of international markets, especially emerging markets. The Fund’s positive relative performance can be attributed to small positive selection effects by region, country, sector, and security.
Trade war threats have impacted emerging markets in recent months, as the U.S. and China exchanged tariff threats. A slowdown in global trade would especially hurt the emerging market countries, which depend heavily upon the developed countries. The Fund’s underweight position in emerging markets was beneficial to relative performance. Some of the Fund’s weaker performers were those caught in the emerging market weakness, such as Tata Motors Ltd., Banco Bradesco and Enel Americas SA.
Although the global economy has continued its expansion into 2018, late cycle worries such as interest rate increases and developing margin pressures have emerged. Sectors that might be most sensitive to decelerating growth trends are Financials and Industrials. They underperformed during the first six months, which helped the fund’s performance because of their underweight position. Overall, sector selection was a small positive in the first half, but an overweight in Telecommunication Services, the index’s worst-performing sector, was a slight detractor.
The top stock contributor to Fund performance was Sky plc, a large European TV broadcasting company that has become a prized jewel in an industry consolidation involving Fox, Comcast, and Disney. A bidding war for Sky pushed its market price up over 40% in the first half of the year. Astellas Pharma Inc., a Japanese pharmaceutical company, was another top performer as it regained its earnings momentum with improved results. Good security selection in Technology and Consumer Discretionary captured some of the global growth trends in IT consulting, software, and consumer brands. Japanese bank holdings, Mitsubishi UFJ and Sumitomo Mitsui, were among the weakest performers in the Fund, facing both growth challenges to earnings and concerns about global trade friction.
Our intent remains to manage a diversified portfolio of stocks that offers the potential to reward long-term investors who seek exposure to foreign markets. Foreign company earnings have continued their improvement into 2018, but a continuation of that trend will likely require low interest rates, moderate inflation, and a reduction in global trade tensions. We remain vigilant in monitoring these risks, but international stocks seem to be cheap relative to U.S. stocks.
Average Annual Total Returns as of June 30, 2018 | ||||||||
International Fund | MSCI ACWI ex US Index | |||||||
Six Months | -2.16 | % | -3.77 | % | ||||
One Year | 6.91 | % | 6.68 | % | ||||
Three Years | 2.96 | % | 4.98 | % | ||||
Five Years | 5.15 | % | 5.99 | % | ||||
Since Inception* | 8.05 | % | 8.86 | % |
Asset Allocation by Country as of June 30, 2018 | ||||||||||||
Japan | 17.66 | % | Hong Kong | 2.88 | % | |||||||
United Kingdom | 13.06 | % | Sweden | 2.65 | % | |||||||
Other* | 9.37 | % | Taiwan | 2.43 | % | |||||||
China | 8.15 | % | South Korea | 2.35 | % | |||||||
Germany | 7.91 | % | Netherlands | 2.00 | % | |||||||
Canada | 6.97 | % | South Africa | 1.96 | % | |||||||
France | 6.22 | % | Russia | 1.69 | % | |||||||
Switzerland | 6.02 | % | Norway | 1.67 | % | |||||||
Australia | 5.34 | % | Mexico | 1.67 | % |
* | Countries in “Other” category include: India, Brazil, Denmark, Spain, Singapore, Israel, Italy, Chile, Belgium, Phillipines. |
* | 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.
6
The Johnson Fixed Income Fund provided a total return of -1.73% in the first half of 2018, trailing the Bloomberg Barclays Capital Aggregate Index’s -1.62% return.
Bond yields began the year at somewhat low levels, and the Fund maintained a shorter duration relative to its benchmark as a result. Solid domestic economic growth and steady inflation enabled the Federal Reserve to continue tightening monetary policy. The Fed enacted two additional 25 basis point rate hikes and continued with its well telegraphed plan to slow the amount of securities it would reinvest from its balance sheet. This caused the short end of the yield curve to move sharply higher. Longer dated interest rates rose as well, but at a much more modest pace. The Fund’s overweight position to longer dated bonds was helpful relative to its benchmark.
Credit spreads began the year at tight levels after narrowing consistently throughout 2017. Spreads began to widen in February because the market grew increasingly concerned over the President’s threat to enact significant new tariffs. Sector performance was evenly distributed across industrials, utilities, and financials. Intermediate credit spreads widened less than longer dated credit spreads and the Fund benefited from its underweight position in long maturity corporate bonds. While the Fund’s overweight position to corporate bonds was a headwind to performance relative to its benchmark so far this year, its focus on high quality credits with lower spread volatility was helpful. More than half of the Fund’s bond allocation consists of investment-grade rated corporate securities, which is greater than the Fund’s benchmark index and is a key reason why the yield is traditionally 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 the year we expect the Fed will likely continue to tighten monetary policy. Economic growth should continue to remain anchored by last year’s fiscal stimulus package. Corporate tax cuts have incentivized businesses to spend on capital investment which has caused manufacturing activity to accelerate. The consumer should continue to benefit from lower tax burdens, rising wages and solid job creation. The economic optimism may be somewhat offset by uncertainty related to trade policy. Overall, the economic backdrop should continue to support credit spreads, though the amount of tightening from current levels is likely to be somewhat limited. The Fund’s duration is neutral to that of its benchmark, but the addition of securities such as floating rate and step-up coupon bonds will help serve as a cushion to rising rates. Inflation expectations remain below historical averages, and the Fund’s position in Treasury Inflation Protected Securities will benefit as inflation rebounds. Finally, we anticipate continued upward pressure on short term bond yields, leading to a slightly 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, 2018 | ||||||||
Fixed Income Fund | Bloomberg Barclays Capital Aggregate Index | |||||||
Six Months | -1.73 | % | -1.62 | % | ||||
One Year | -0.77 | % | -0.54 | % | ||||
Three Years | 1.60 | % | 1.73 | % | ||||
Five Years | 2.24 | % | 2.27 | % | ||||
Ten Years | 3.72 | % | 3.73 | % |
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.
7
The Johnson Municipal Income Fund provided a total return of -0.62% in the first half of 2018, trailing the Bloomberg Barclays 5-Year General Obligation Municipal Index’s +0.29% return.
After falling during 2017, municipal bond yields rose during the first half of 2018, leading to the Fund’s negative year-to-date return. The Fund’s laddered maturity structure detracted from performance as bond yields rose the most on longer maturities, leading to underperformance versus the Fund’s benchmark. While the benchmark is comprised solely of 4–6 year maturity securities, the Fund is constructed with a more diverse maturity profile of bonds primarily due within 1 to 15 years.
New issue supply of municipal securities has declined during 2018 after restrictions against “advance refundings,” a type of municipal refinancing, took effect as part of the tax reform package passed in December. Despite the passage of tax reform toward the end of 2017, demand for municipal securities has remained strong as safety, stability and tax-free income continue to appeal to a broad set of investors. In addition, new limits to state and local income tax deductions have boosted demand from high-income investors, particularly those who reside in high-tax locations. Growth in tax revenues for many municipalities has moderated, but the majority of states and local governments continue to report healthy revenue from income, sales and property tax collections. In addition, the broader tax base adopted under tax reform should positively impact state budgets near-term. Defaults in the municipal sector have remained very low on an absolute basis despite headlines surrounding fiscal challenges in a few municipalities. 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 65% of the Fund holds securities rated AA or higher. Furthermore, the Fund is diversified by issuer, sector and state with approximately 23% of its assets in states other than Ohio.
Looking forward into the second half of the year we expect the Fed will likely continue to tighten monetary policy. Economic growth should continue to remain anchored by last year’s fiscal stimulus package. Corporate tax cuts have incentivized businesses to spend on capital investment which has caused manufacturing activity to accelerate. The consumer should continue to benefit from lower tax burdens, rising wages and solid job creation. The economic optimism may be somewhat offset by uncertainty related to trade policy. Although lower tax rates can reduce demand for municipal bonds, investors have historically shown greater interest in municipal bonds at higher rates. Finally, we anticipate modest upward pressure on intermediate bond yields, 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, 2018 | ||||||||
Municipal Income Fund | Bloomberg Barclays Capital 5 Year G.O. Municipal Bond Index | |||||||
Six Months | -0.62 | % | 0.29 | % | ||||
One Year | 0.19 | % | 0.15 | % | ||||
Three Years | 1.58 | % | 1.50 | % | ||||
Five Years | 2.22 | % | 1.93 | % | ||||
Ten Years | 3.20 | % | 3.27 | % |
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.
8
Common Stocks | Shares | Fair Value | ||||||
Comcast Corp. – Class A | 78,000 | $ | 2,559,180 | |||||
Hasbro Inc. | 62,400 | 5,760,144 | ||||||
Starbucks Corp. | 138,700 | 6,775,495 | ||||||
TJX Companies Inc. | 56,570 | 5,384,333 | ||||||
7.8% – Total For Consumer Discretionary | $ | 20,479,152 | ||||||
Coca Cola Co. | 118,020 | 5,176,357 | ||||||
Hersey Company | 55,900 | 5,202,054 | ||||||
Ingredion Inc. | 37,500 | 4,151,250 | ||||||
J. M. Smuckers Co. | 62,500 | 6,717,500 | ||||||
Procter & Gamble Co. | 130,690 | 10,201,661 | ||||||
Wal – Mart Stores Inc. | 61,310 | 5,251,202 | ||||||
14.0% – Total For Consumer Staples | $ | 36,700,024 | ||||||
Chevron Corp. | 43,575 | 5,509,187 | ||||||
Royal Dutch Shell PLC, Class B ADR | 113,600 | 8,253,040 | ||||||
Schlumberger Ltd. | 73,555 | 4,930,392 | ||||||
7.0% – Total For Energy | $ | 18,692,619 | ||||||
American Express Co. | 77,166 | 7,562,268 | ||||||
Axis Capital Holdings Inc. | 94,950 | 5,281,119 | ||||||
Bank of America Corp. | 243,725 | 6,870,608 | ||||||
Chubb Ltd. | 39,125 | 4,969,657 | ||||||
Iberiabank Corp. | 92,710 | 7,027,418 | ||||||
Invesco Ltd. | 69,685 | 1,850,834 | ||||||
Marsh & McLennan Companies Inc. | 65,300 | 5,352,641 | ||||||
S&P Global Inc. | 15,590 | 3,178,645 | ||||||
16.1% – Total For Financial Services | $ | 42,093,190 | ||||||
Abbott Laboratories | 127,800 | 7,794,522 | ||||||
CVS Health Corp. | 102,525 | 6,597,484 | ||||||
Danaher Corp. | 52,430 | 5,173,792 | ||||||
Medtronic PLC | 95,870 | 8,207,431 | ||||||
Zimmer Biomet Holdings | 64,700 | 7,210,168 | ||||||
Zoetis Inc. | 60,654 | 5,167,114 | ||||||
15.3% – Total For Health Care | $ | 40,150,511 | ||||||
Carlisle Companies Inc. | 48,840 | 5,289,860 | ||||||
Hubbell Inc. | 74,700 | 7,898,778 | ||||||
Paccar Inc. | 79,540 | 4,928,299 | ||||||
Union Pacific Corp. | 41,960 | 5,944,893 | ||||||
Waste Management Inc. | 62,700 | 5,100,018 | ||||||
11.1% – Total For Industrials | $ | 29,161,848 |
Common Stocks | Shares | Fair Value | ||||||
Accenture PLC – Class A | 15,420 | $ | 2,522,558 | |||||
Alphabet Inc. – Class A* | 6,670 | 7,531,697 | ||||||
Alphabet Inc. – Class C* | 979 | 1,092,221 | ||||||
Apple Inc. | 42,040 | 7,782,024 | ||||||
Automatic Data Processing Inc. | 45,250 | 6,069,835 | ||||||
Cognizant Technology Solutions Corp.* | 31,620 | 2,497,664 | ||||||
Fidelity National Information Services | 49,700 | 5,269,691 | ||||||
Mastercard Inc. – Class A | 27,250 | 5,355,170 | ||||||
Microsoft Corp. | 58,360 | 5,754,880 | ||||||
Oracle Corp. | 156,210 | 6,882,613 | ||||||
19.4% – Total For Information Technology | $ | 50,758,353 | ||||||
Sherwin – Williams Co. | 20,620 | 8,404,093 | ||||||
3.2% – Total For Materials | $ | 8,404,093 | ||||||
Realty Income Corp. | 49,700 | 2,673,363 | ||||||
1.0% – Total For Real Estate | $ | 2,673,363 | ||||||
AT&T Inc. | 112,540 | 3,613,659 | ||||||
1.4% – Total For Telecommunication Services | $ | 3,613,659 | ||||||
Alliant Energy Corp. | 140,000 | 5,924,800 | ||||||
2.3% – Total For Utilities | $ | 5,924,800 | ||||||
Total Common Stocks 98.6% | $ | 258,651,612 | ||||||
(Identified Cost $219,209,558) | ||||||||
Cash Equivalents | ||||||||
First American Government Obligation Fund, Class Z** | 3,415,927 | 3,415,927 | ||||||
Total Cash Equivalents 1.3% | $ | 3,415,927 | ||||||
(Identified Cost $3,415,927) | ||||||||
Total Portfolio Value 99.9% | $ | 262,067,539 | ||||||
(Identified Cost $222,625,485) | ||||||||
Other Assets in Excess of Liabilities 0.1% | $ | 171,793 | ||||||
Total Net Assets 100.0% | $ | 262,239,332 |
* | Non – income producing security. |
** | Variable Rate Security; as of June 30, 2018, the 7 day annualized yield was 1.76%. |
ADR – American Depositary Receipt
PLC – Public Liability Company
The accompanying notes are an integral part of these financial statements.
9
Common Stocks | Shares | Fair Value | ||||||
Burlington Stores Inc. | 7,800 | $ | 1,174,134 | |||||
Carter’s Inc. | 12,800 | 1,387,392 | ||||||
Cooper-Standard Holdings | 8,300 | 1,084,561 | ||||||
Culp Inc. | 32,767 | 804,430 | ||||||
Gentex Corp. | 40,000 | 920,800 | ||||||
Hanesbrands Inc. | 39,000 | 858,780 | ||||||
Hasbro Inc. | 12,200 | 1,126,182 | ||||||
Lithia Motors Inc. | 8,800 | 832,216 | ||||||
LKQ Corp.* | 27,000 | 861,300 | ||||||
Monro Inc. | 20,900 | 1,214,290 | ||||||
Petmed Express Inc. | 15,000 | 660,750 | ||||||
Steven Madden Ltd.* | 19,100 | 1,014,210 | ||||||
Strum Ruger & Co. | 16,500 | 924,000 | ||||||
Thor Industries Inc. | 9,900 | 964,161 | ||||||
16.0% – Total For Consumer Discretionary | $ | 13,827,206 | ||||||
Church & Dwight Co. Inc. | 26,800 | 1,424,688 | ||||||
Ingredion Inc. | 7,300 | 808,110 | ||||||
J. M. Smuckers Co. | 10,300 | 1,107,044 | ||||||
Spectrum Brands Holdings Corp. | 13,000 | 1,061,060 | ||||||
5.1% – Total For Consumer Staples | $ | 4,400,902 | ||||||
Delek US Holdings Inc. | 12,700 | 637,159 | ||||||
Hollyfrontier Corp. | 9,000 | 615,870 | ||||||
World Fuel Services Corp. | 50,000 | 1,020,500 | ||||||
2.6% – Total For Energy | $ | 2,273,529 | ||||||
Assurant Inc. | 6,000 | 620,940 | ||||||
Axis Capital Holdings Ltd. | 22,000 | 1,223,640 | ||||||
Bar Harbor Bancshares | 40,760 | 1,234,620 | ||||||
Berkshire Hills Bancorp Inc. | 30,400 | 1,234,240 | ||||||
Bryn Mawr Bank Corp. | 18,000 | 833,400 | ||||||
Diamond Hill Investment Group Inc. | 4,900 | 952,707 | ||||||
East West Bancorp Inc. | 12,000 | 782,400 | ||||||
Everest Re Group Ltd. | 5,000 | 1,152,400 | ||||||
Farmers National Banc | 65,400 | 1,043,130 | ||||||
First Interstate Bancsystem Inc. | 18,000 | 759,600 | ||||||
Iberiabank Corp. | 16,000 | 1,212,800 | ||||||
Invesco Ltd. | 42,700 | 1,134,112 | ||||||
MidWestOne Financial Group | 35,410 | 1,196,150 | ||||||
Reinsurance Group of America Inc. | 7,600 | 1,014,448 | ||||||
Signature Bank | 8,900 | 1,138,132 | ||||||
Westwood Holdings Group Inc. | 12,600 | 750,204 | ||||||
18.9% – Total For Financial Services | $ | 16,282,923 |
Common Stocks | Shares | Fair Value | ||||||
Align Technology Inc.* | 2,600 | $ | 889,564 | |||||
Inogen Inc. | 4,500 | 838,485 | ||||||
Lemaitre Vascular Inc. | 40,000 | 1,339,200 | ||||||
Mimedx Group Inc. | 36,000 | 230,040 | ||||||
Prestige Brands Holdings Inc.* | 31,000 | 1,189,780 | ||||||
United Therapeutics Corp.* | 7,300 | 825,995 | ||||||
Universal Health Services Inc. – Class B | 10,100 | 1,125,544 | ||||||
Veeva Systems Inc. – Class A | 14,300 | 1,099,098 | ||||||
8.7% – Total For Health Care | $ | 7,537,706 | ||||||
Alamo Group Inc. | 10,000 | 903,600 | ||||||
American Woodmark Corp.* | 9,000 | 823,950 | ||||||
Barnes Group Inc. | 16,600 | 977,740 | ||||||
Carlisle Coompanies Inc. | 12,900 | 1,397,199 | ||||||
Continental Building Products | 40,300 | 1,271,465 | ||||||
Deluxe Corp. | 17,800 | 1,178,538 | ||||||
Gorman – Rupp Co. | 19,487 | 682,045 | ||||||
Hillenbrand Inc. | 25,200 | 1,188,180 | ||||||
Hubbell Inc. | 10,000 | 1,057,400 | ||||||
ICF International Inc. | 15,000 | 1,065,750 | ||||||
Quanta Services Inc.* | 23,300 | 778,220 | ||||||
Regal Beloit Corp. | 15,100 | 1,235,180 | ||||||
Snap – On Inc. | 8,800 | 1,414,336 | ||||||
Standex International Inc. | 14,100 | 1,441,020 | ||||||
17.9% – Total For Industrials | $ | 15,414,623 | ||||||
Amdocs Ltd. | 20,300 | 1,343,657 | ||||||
Blackbaud Inc. | 11,000 | 1,126,950 | ||||||
CACI International Inc. | 7,300 | 1,230,415 | ||||||
Constellation Software | 1,200 | 927,780 | ||||||
Flir Systems Inc. | 18,800 | 977,036 | ||||||
Manhattan Associates Inc. | 21,900 | 1,029,519 | ||||||
Perficient Inc.* | 33,000 | 870,210 | ||||||
Ultimate Software Group Inc.* | 1,700 | 437,427 | ||||||
Tyler Technologties Inc. | 4,800 | 1,066,080 | ||||||
Worldpay Inc. | 11,700 | 956,826 | ||||||
11.5% – Total For Information Technology | $ | 9,965,900 | ||||||
AptarGroup Inc. | 8,200 | 765,716 | ||||||
Avery Dennison Corp. | 10,300 | 1,051,630 | ||||||
Packaging Corp. of America | 8,300 | 927,857 | ||||||
RPM International Inc. | 23,900 | 1,393,848 | ||||||
Sensient Technologies | 7,500 | 536,625 | ||||||
Westlake Chemical Corp. | 11,000 | 1,183,930 | ||||||
6.8% – Total For Materials | $ | 5,859,606 |
The accompanying notes are an integral part of these financial statements.
10
Common Stocks | Shares | Fair Value | ||||||
Alexandria Real Estate Equities Inc. | 8,900 | $ | 1,122,913 | |||||
Apartment Investment & Management Co. | 32,200 | 1,362,060 | ||||||
Extra Space Storage Inc. | 11,900 | 1,187,739 | ||||||
National Retail Properties Inc. | 23,500 | 1,033,060 | ||||||
Realty Income Corp. | 21,800 | 1,172,622 | ||||||
6.8% – Total For Real Estate | $ | 5,878,394 | ||||||
Alliant Energy Corp. | 26,800 | 1,134,176 | ||||||
Atmos Energy Corp. | 14,400 | 1,298,016 | ||||||
2.8% – Total For Utilities | $ | 2,432,192 | ||||||
Total Common Stocks 97.1% | $ | 83,872,981 | ||||||
(Identified Cost $72,910,814) | ||||||||
Cash Equivalents | ||||||||
First American Government Obligation Fund, Class Z** | 3,109,215 | 3,109,215 | ||||||
Total Cash Equivalents 3.6% | $ | 3,109,215 | ||||||
(Identified Cost $3,109,215) | ||||||||
Total Portfolio Value 100.7% | $ | 86,982,196 | ||||||
(Identified Cost $76,020,029) | ||||||||
Liabilities in Excess of Other Assets (0.7)% | $ | (585,528 | ) | |||||
Total Net Assets 100.0% | $ | 86,396,668 |
* | Non – income producing security. |
** | Variable Rate Security; as of June 30, 2018, the 7 day annualized yield was 1.76%. |
ADR – American Depositary Receipt
PLC – Public Liability Company
The accompanying notes are an integral part of these financial statements.
11
Real Estate Investment Trusts (REITs) | Shares | Fair Value | ||||||
American Campus Communities Inc. | 1,600 | $ | 68,608 | |||||
Apartment Investment & Management Co. | 2,624 | 110,995 | ||||||
Avalonbay Communities Inc. | 1,809 | 310,949 | ||||||
Camden Property Trust | 1,200 | 109,356 | ||||||
Equity LifeStyle Properties Inc. | 1,500 | 137,850 | ||||||
Equity Residential | 5,000 | 318,450 | ||||||
Essex Property Trust Inc. | 865 | 206,796 | ||||||
Macerich Co. | 2,192 | 124,571 | ||||||
Simon Property Group Inc. | 4,279 | 728,243 | ||||||
Taubman Centers Inc. | 800 | 47,008 | ||||||
Urban Edge Properties | 1,530 | 34,991 | ||||||
20.2% – Total For Residential | $ | 2,197,817 | ||||||
American Tower Corp. | 5,839 | 841,809 | ||||||
Brandywine Realty Trust | 3,000 | 50,640 | ||||||
Cousins Properties Inc. | 3,500 | 33,915 | ||||||
Equinix Inc. | 600 | 257,934 | ||||||
Douglas Emmett Inc. | 2,500 | 100,450 | ||||||
Kimco Realty Corp. | 5,667 | 96,282 | ||||||
Mid – America Apartment Communities Inc. | 2,233 | 224,796 | ||||||
LTC Properties Inc. | 650 | 27,781 | ||||||
Realty Income Corp. | 3,569 | 191,977 | ||||||
Quality Care Properties* | 1,300 | 27,963 | ||||||
Universal Health Realty Income Trust | 300 | 19,194 | ||||||
Ventas Inc. | 4,700 | 267,665 | ||||||
19.7% – Total For Diversified | $ | 2,140,406 | ||||||
Highwoods Properties Inc. | 1,700 | 86,241 | ||||||
Host Hotels & Resorts Inc. | 10,354 | 218,159 | ||||||
Lexington Realty Trust | 3,500 | 30,555 | ||||||
National Retail Properties Inc. | 2,250 | 98,910 | ||||||
Piedmont Office Realty Trust Inc. | 3,500 | 69,755 | ||||||
Regency Centers Corp. | 2,095 | 130,058 | ||||||
Vornado Realty Trust | 2,561 | 189,309 | ||||||
Welltower Inc. | 4,750 | 297,778 | ||||||
HCP Inc. | 6,500 | 167,830 | ||||||
11.9% – Total For Health Care Facilities | $ | 1,288,595 |
Real Estate Investment Trusts (REITs) | Shares | Fair Value | ||||||
Diamondrock Hospitality Co. | 4,000 | $ | 49,120 | |||||
JBG Smith Properties | 1,280 | 46,682 | ||||||
Liberty Property Trust | 2,661 | 117,962 | ||||||
Prologis Inc. | 7,306 | 479,931 | ||||||
Retail Properties of America | 3,500 | 44,730 | ||||||
RL Lodging Trust | 2,500 | 55,125 | ||||||
7.3% – Total For Hotels/Motels | $ | 793,550 | ||||||
Alexandria Real Estate Equities Inc. | 1,000 | 126,170 | ||||||
Boston Properties Inc. | 2,020 | 253,348 | ||||||
CoreSite Realty Corp. | 500 | 55,410 | ||||||
Omega Healthcare Investors Inc. | 2,500 | 77,500 | ||||||
Digital Realty Trust Inc. | 3,281 | 366,094 | ||||||
Duke Realty Corp. | 5,000 | 145,150 | ||||||
Equity Commonwealth* | 1,700 | 53,550 | ||||||
Hospitality Properties Trust | 2,100 | 60,081 | ||||||
LaSalle Hotel Properties | 1,500 | 51,345 | ||||||
Life Storage Inc. | 450 | 43,789 | ||||||
Mack – Cali Realty Corp. | 1,500 | 30,420 | ||||||
Pebblebrook Hotel Trust | 1,200 | 46,560 | ||||||
12.0% – Total For Office | $ | 1,309,417 | ||||||
CubeSmart | 2,500 | 80,550 | ||||||
DCT Industrial Trust Inc. | 1,375 | 91,754 | ||||||
EastGroup Properties Inc. | 600 | 57,336 | ||||||
Extra Space Storage Inc. | 1,750 | 174,667 | ||||||
First Industrial Realty Trust Inc. | 1,675 | 55,844 | ||||||
Public Storage | 2,400 | 544,464 | ||||||
PS Business Parks Inc. | 500 | 64,250 | ||||||
9.8% – Total For Industrial | $ | 1,068,865 | ||||||
Acadia Realty Trust | 1,000 | 27,370 | ||||||
Alexander’s Inc. | 100 | 38,263 | ||||||
DDR Corp. | 2,027 | 36,283 | ||||||
EPR Properties | 1,000 | 64,790 | ||||||
Federal Realty Investment Trust | 1,000 | 126,550 | ||||||
General Growth Properties Inc. | 12,200 | 249,246 | ||||||
Healthcare Realty Trust Inc. | 1,500 | 43,620 | ||||||
Kilroy Realty Corp. | 1,545 | 116,864 | ||||||
Medical Properties Trust Inc. | 2,800 | 39,312 | ||||||
Corporate Office Properties Trust | 2,000 | 57,980 |
The accompanying notes are an integral part of these financial statements.
12
Real Estate Investment Trusts (REITs) | Shares | Fair Value | ||||||
Ryman Hospitality Properties | 1,000 | $ | 83,150 | |||||
Sun Communities Inc. | 650 | 63,622 | ||||||
Senior Housing Properties Trust | 2,000 | 36,180 | ||||||
SL Green Realty Corp. | 1,500 | 150,795 | ||||||
Tanger Factory Outlet Centers Inc. | 2,000 | 46,980 | ||||||
UDR Inc. | 3,807 | 142,915 | ||||||
Washington Real Estate Investment Trust | 1,500 | 45,495 | ||||||
Weingarten Realty Investors | 2,500 | 77,025 | ||||||
Washington Prime Group Inc. | 3,353 | 27,193 | ||||||
13.5% – Total For Retail | $ | 1,473,633 | ||||||
Rayonier Inc. | 2,000 | 77,380 | ||||||
Weyerhaeuser Co. | 10,700 | 390,122 | ||||||
4.3% – Total For Lumber, Wood Products | $ | 467,502 | ||||||
Total REITs 98.7% | $ | 10,739,785 | ||||||
(Identified Cost $5,377,073) | ||||||||
Cash Equivalents | ||||||||
First American Government Obligation Fund, Class Z** | 113,748 | 113,748 | ||||||
Total Cash Equivalents 1.0% | $ | 113,748 | ||||||
(Identified Cost $113,748) | ||||||||
Total Portfolio Value 99.7% | $ | 10,853,533 | ||||||
(Identified Cost $5,490,821) | ||||||||
Other Assets in Excess of Liabilities 0.3% | $ | 27,946 | ||||||
Total Net Assets 100.0% | $ | 10,881,479 |
* | Non-income producing security. |
** | Variable Rate Security; as of June 30, 2018, the 7 day annualized yield was 1.76%. |
The accompanying notes are an integral part of these financial statements.
13
Common Stocks | Shares | Fair Value | ||||||
Adidas AG ADR | 2,000 | $ | 218,000 | |||||
Bridgestone ADR | 4,400 | 85,866 | ||||||
CIE Financiere Richemont AG ADR | 22,000 | 185,240 | ||||||
Compass Group PLC ADR | 6,500 | 140,725 | ||||||
Daimler AG | 1,200 | 77,040 | ||||||
Honda Motor Co. Ltd. ADR | 3,500 | 102,445 | ||||||
Magna International Inc. | 3,000 | 174,390 | ||||||
Publicis Groupe SA ADR | 7,800 | 133,848 | ||||||
RTL Group SA ADR | 15,000 | 96,000 | ||||||
Sky PLC ADR | 4,500 | 354,960 | ||||||
Sony Corp. ADR | 3,800 | 194,788 | ||||||
Tata Motors Ltd. ADR | 3,425 | 66,959 | ||||||
Toyota Motor Corp. ADR | 2,500 | 322,025 | ||||||
WPP PLC ADR | 1,800 | 141,444 | ||||||
12.5% – Total For Consumer Discretionary | $ | 2,293,730 | ||||||
Coca-Cola Amatil Ltd. ADR | 10,860 | 73,902 | ||||||
Danone ADR | 6,184 | 90,163 | ||||||
Essity AB ADR | 5,300 | 130,778 | ||||||
L’Oreal ADR | 2,800 | 137,732 | ||||||
Nestle SA ADR | 3,600 | 278,748 | ||||||
Reckitt Benckiser Group PLC ADR | 5,900 | 97,438 | ||||||
Shoprite Holdings Ltd. ADR | 15,500 | 248,078 | ||||||
Svenska Cellulosa Aktiebolaget ADR | 11,100 | 120,082 | ||||||
Unilever NV ADR | 2,500 | 139,300 | ||||||
Unilever PLC ADR | 3,000 | 165,840 | ||||||
Wal – Mart De Mexico SAB de CV ADR | 12,000 | 316,800 | ||||||
9.8% – Total For Consumer Staples | $ | 1,798,861 | ||||||
BP PLC ADR | 2,298 | 104,927 | ||||||
CNOOC Ltd. ADR | 900 | 154,116 | ||||||
Equinor ASA ADR | 4,000 | 105,640 | ||||||
Lukoil Corp. ADR | 4,700 | 323,971 | ||||||
Royal Dutch Shell PLC, Class B ADR | 2,600 | 188,890 | ||||||
Sasol Ltd. ADR | 2,800 | 102,312 | ||||||
Suncor Energy Inc. | 3,200 | 130,176 | ||||||
Technip FMC PLC | 3,100 | 98,394 | ||||||
Total SA ADR | 2,352 | 142,437 | ||||||
Woodside Petroleum ADR | 5,200 | 137,332 | ||||||
8.1% – Total For Energy | $ | 1,488,195 |
Common Stocks | Shares | Fair Value | ||||||
Admiral Group PLC ADR | 6,400 | $ | 159,872 | |||||
Allianz SE ADR | 7,900 | 161,792 | ||||||
Australia and New Zealand Banking Group Ltd. ADR | 3,200 | 67,184 | ||||||
Banco Bradesco ADR | 22,741 | 156,003 | ||||||
Banco Santander SA ADR | 17,974 | 95,981 | ||||||
Bank of Montreal | 1,240 | 95,802 | ||||||
Barclays PLC ADR | 15,000 | 150,450 | ||||||
BNP Paribas ADR | 4,000 | 123,040 | ||||||
China Construction Bank ADR | 5,300 | 97,070 | ||||||
Credit Suisse Group ADR | 3,777 | 56,202 | ||||||
Deutsche Boerse AG ADR | 7,000 | 92,820 | ||||||
ICICI Bank Ltd. ADR | 9,680 | 77,730 | ||||||
Industrial and Commercial Bank Of China Ltd. ADR | 19,600 | 291,158 | ||||||
Itau Unibanco Holding SA ADR | 7,700 | 79,926 | ||||||
KB Financial Group Inc. ADR | 2,400 | 111,552 | ||||||
Legal and General Group PLC | 5,000 | 88,900 | ||||||
Lend Lease Group ADR | 7,000 | 103,320 | ||||||
Manulife Financial Corp. | 4,420 | 79,427 | ||||||
Mitsubishi UFJ Financial Group Inc. ADR | 29,000 | 163,850 | ||||||
Mizuho Financial Group Inc. ADR | 25,000 | 84,750 | ||||||
National Australia Bank | 8,700 | 88,088 | ||||||
Orix Corp. ADR | 2,450 | 193,574 | ||||||
Royal Bank of Canada | 1,000 | 75,300 | ||||||
Sumitomo Mitsui Financial Group Inc. ADR | 37,000 | 287,490 | ||||||
Tokio Marine Holdings Inc. ADR | 7,000 | 330,260 | ||||||
Toronto Dominion Bank | 1,400 | 81,004 | ||||||
United Overseas Bank Ltd. ADR | 1,900 | 74,917 | ||||||
Westpac Banking Corp. Ltd. ADR | 7,250 | 157,180 | ||||||
Zurich Insurance Group Ltd. ADR | 3,240 | 95,629 | ||||||
20.3% – Total For Financial Services | $ | 3,720,271 | ||||||
Astellas Pharma Inc. ADR | 23,000 | 348,680 | ||||||
Bayer AG ADR | 5,200 | 143,416 | ||||||
Dr. Reddy’s Laboratories Ltd. ADR | 3,340 | 107,548 | ||||||
Novartis AG ADR | 2,480 | 187,339 | ||||||
Novo Nordisk AS | 5,200 | 239,824 | ||||||
Roche Holdings Ltd. ADR | 8,400 | 232,092 | ||||||
Shire PLC ADR | 1,200 | 202,560 | ||||||
Taro Pharmaceuticals Ltd.* | 800 | 92,552 | ||||||
Teva Pharmaceuticals ADR | 2,400 | 58,368 | ||||||
8.8% – Total For Health Care | $ | 1,612,379 |
The accompanying notes are an integral part of these financial statements.
14
Common Stocks | Shares | Fair Value | ||||||
ABB Ltd. ADR | 2,900 | $ | 63,133 | |||||
Atlas Copco AB ADR | 5,400 | 212,058 | ||||||
BAE Systems PLC ADR | 1,600 | 55,392 | ||||||
Bunzl PLC ADR | 5,600 | 171,472 | ||||||
Canadian National Railway Co. | 1,400 | 114,450 | ||||||
CK Hutchison Holdings Ltd. ADR | 8,000 | 84,480 | ||||||
Fanuc Corp. ADR | 4,000 | 79,320 | ||||||
Itochu Corp. ADR | 3,700 | 133,570 | ||||||
Keppel Corp. Ltd. ADR | 7,900 | 82,634 | ||||||
Komatsu Ltd. ADR | 4,000 | 113,900 | ||||||
Mitsui & Co., Ltd. ADR | 300 | 99,876 | ||||||
Schneider Electric SE ADR | 10,000 | 166,050 | ||||||
Sensata Technologies Holding NV* | 4,300 | 204,594 | ||||||
Siemens AG ADR | 1,800 | 118,593 | ||||||
9.3% – Total For Industrials | $ | 1,699,522 | ||||||
Alibaba Group Holdings ADR* | 1,300 | 241,189 | ||||||
Baidu Inc. ADR* | 400 | 97,200 | ||||||
Cap Gemini SA ADR | 4,000 | 107,184 | ||||||
CGI Group Inc.* | 5,100 | 322,932 | ||||||
Lenovo Group Ltd. ADR | 15,000 | 162,225 | ||||||
Open Text Corp. | 5,000 | 175,950 | ||||||
SAP SE ADR | 3,100 | 358,546 | ||||||
Taiwan Semiconductor Manufacturing Co. Ltd. ADR | 8,000 | 292,480 | ||||||
Tencent Holdings Ltd. ADR | 6,500 | 326,625 | ||||||
United Microelectronics ADR | 44,930 | 126,703 | ||||||
12.1% – Total For Information Technology | $ | 2,211,034 | ||||||
Air Liquide SA ADR | 4,154 | 103,954 | ||||||
BASF SE ADR | 7,400 | 176,860 | ||||||
BHP Billiton Ltd. ADR | 2,550 | 127,525 | ||||||
Newcrest Mining Ltd. ADR | 15,000 | 243,075 | ||||||
Nitto Denko Corp. ADR | 4,200 | 158,319 | ||||||
Posco ADR | 1,400 | 103,768 | ||||||
Rio Tinto PLC ADR | 1,570 | 87,104 | ||||||
5.5% – Total For Materials | $ | 1,000,605 | ||||||
Sun Hung Kai Properties Ltd. ADR | 17,500 | 266,437 | ||||||
1.5% – Total For Real Estate | $ | 266,437 |
Common Stocks | Shares | Fair Value | ||||||
BT Group PLC ADR | 3,800 | $ | 54,948 | |||||
China Mobile Ltd. ADR | 5,000 | 221,950 | ||||||
Deutsche Telekom AG ADR | 4,000 | 61,740 | ||||||
KDDI Corp. ADR | 22,000 | 299,640 | ||||||
Nippon Telegraph and Telephone Corp. ADR | 1,200 | 54,408 | ||||||
Orange ADR | 7,500 | 125,025 | ||||||
PLDT Inc. ADR | 3,600 | 84,168 | ||||||
SK Telecom Co. Ltd. ADR | 3,400 | 79,288 | ||||||
SoftBank Group Corp. ADR | 1,800 | 64,170 | ||||||
Telenor ASA ADR | 9,600 | 196,896 | ||||||
6.8% – Total For Telecommunication Services | $ | 1,242,233 | ||||||
Enel SpA ADR | 21,100 | 115,839 | ||||||
Enel Americas SA ADR | 12,000 | 105,720 | ||||||
Iberdrola SA ADR | 3,578 | 110,274 | ||||||
Korea Electric Power Corp. ADR | 7,800 | 111,852 | ||||||
National Grid PLC ADR | 1,600 | 89,360 | ||||||
SSE PLC ADR | 4,000 | 72,260 | ||||||
3.3% – Total For Utilities | $ | 605,305 | ||||||
Total Common Stocks 98.0% | $ | 17,938,572 | ||||||
(Identified Cost $14,475,855) | ||||||||
Cash Equivalents | ||||||||
First American Government Obligation Fund, Class Z** | 316,740 | 316,740 | ||||||
Total Cash Equivalents 1.7% | $ | 316,740 | ||||||
(Identified Cost $316,740) | ||||||||
Total Portfolio Value 99.7% | $ | 18,255,312 | ||||||
(Identified Cost $14,792,595) | ||||||||
Other Assets in Excess of Liabilities 0.3% | $ | 57,783 | ||||||
Total Net Assets 100.0% | $ | 18,313,095 |
* | Non-income producing security. |
** | Variable Rate Security; as of June 30, 2018, the 7 day annualized yield was 1.76%. |
ADR – American Depositary Receipt
PLC – Public Liability Company
The accompanying notes are an integral part of these financial statements.
15
Fixed Income Securities – Bonds | Face Value | Fair Value | ||||||
Corporate Bonds: | ||||||||
Ace INA Holdings, 2.875% Due 11/03/2022 | 2,375,000 | $ | 2,333,520 | |||||
AON PLC, 3.500% Due 06/14/2024 | 3,320,000 | 3,229,468 | ||||||
AON PLC, 4.000% Due 11/27/2023 | 3,285,000 | 3,324,511 | ||||||
American Express Co., 3.000% Due 10/30/2024 | 6,000,000 | 5,724,900 | ||||||
Bank of America Corp., 3.248% Due 10/21/2027 | 9,000,000 | 8,387,733 | ||||||
BB&T Corp., 3.950% Due 03/22/2022 | 4,919,000 | 4,993,464 | ||||||
BB&T Corp., 5.250% Due 11/01/2019 | 2,617,000 | 2,688,814 | ||||||
Chubb INA Holdings Inc., 2.300% Due 11/03/2020 | 7,793,000 | 7,654,320 | ||||||
Fifth Third Bancorp, 4.300% Due 01/16/2024 | 7,999,000 | 8,104,860 | ||||||
Huntington Bancshares, 2.300% Due 01/14/2022 | 2,290,000 | 2,199,118 | ||||||
Huntington Bancshares, 3.150% Due 03/14/2021 | 4,280,000 | 4,256,032 | ||||||
JP Morgan Chase & Co., 3.875% Due 09/10/2024 | 7,000,000 | 6,935,083 | ||||||
Keycorp, 4.100% Due 04/30/2028 | 7,300,000 | 7,241,939 | ||||||
Marsh & McLennan Co. Inc., 3.500% Due 06/03/2024 | 435,000 | 430,578 | ||||||
Marsh & McLennan Co. Inc., 4.800% Due 07/15/2021 | 3,955,000 | 4,112,285 | ||||||
Morgan Stanley, 2.625% Due 11/17/2021 | 6,000,000 | 5,824,825 | ||||||
Morgan Stanley, 5.500% Due 07/28/2021 | 1,500,000 | 1,587,276 | ||||||
PNC Financial Services, 3.900% Due 04/29/2024 | 3,640,000 | 3,646,368 | ||||||
MUFG Americas Holdings Corp., 2.250% Due 02/10/2020 | 4,000,000 | 3,940,529 | ||||||
MUFG Americas Holdings Corp., 3.500% Due 06/18/2022 | 3,924,000 | 3,913,560 | ||||||
National City Corp., 6.875% Due 05/15/2019 | 1,784,000 | 1,843,176 | ||||||
Prudential Financial Inc., 4.500% Due 11/15/2020 | 3,135,000 | 3,227,332 | ||||||
Prudential Financial Inc., 5.375% Due 06/21/2020 | 105,000 | 109,268 | ||||||
Suntrust Banks Inc., 4.000% Due 05/01/2025 | 7,000,000 | 7,033,357 |
Fixed Income Securities – Bonds | Face Value | Fair Value | ||||||
US Bancorp, 3.100% Due 04/27/2026 | 4,000,000 | $ | 3,772,732 | |||||
US Bancorp, 3.600% Due 09/11/2024 | 4,980,000 | 4,919,643 | ||||||
Wells Fargo & Co., 4.300% Due 07/22/2027 | 3,600,000 | 3,547,752 | ||||||
Wells Fargo & Co., 5.606% Due 01/15/2044 | 5,500,000 | 5,917,155 | ||||||
24.4% – Total For Corporate Bonds: Bank and Finance | $ | 120,899,598 | ||||||
AT&T Inc., 3.400% Due 05/15/2025 | 7,000,000 | 6,564,174 | ||||||
Burlington Northern Santa Fe, 3.600% Due 09/01/2020 | 1,787,000 | 1,806,244 | ||||||
Burlington Northern Santa Fe, 4.700% Due 10/01/2019 | 475,000 | 485,745 | ||||||
CVS Health Corp., 3.875% Due 07/20/2025 | 7,000,000 | 6,782,537 | ||||||
Eaton Corp., 2.750% Due 11/02/2022 | 3,166,000 | 3,073,873 | ||||||
General Electric Capital Corp. (3 month LIBOR + 1.000%)*, 3.339% Due 04/15/2023 | 7,275,000 | 7,320,469 | ||||||
General Electric Capital Corp. (3 month LIBOR + 1.000%)*, 3.341% Due 03/15/2023 | 2,180,000 | 2,205,289 | ||||||
Goodrich Corp., 4.875% Due 03/01/2020 | 1,025,000 | 1,052,504 | ||||||
Johnson Controls International PLC, 3.900% Due 02/14/2026 | 6,430,000 | 6,346,710 | ||||||
Johnson Controls International PLC, 5.000% Due 03/30/2020 | 1,595,000 | 1,640,850 | ||||||
Kroger Co. Senior, 3.500% Due 02/01/2026 | 7,000,000 | 6,655,564 | ||||||
Kroger Co. Senior, 4.000% Due 02/01/2024 | 595,000 | 596,358 | ||||||
Norfolk Southern Corp., 5.900% Due 06/15/2019 | 2,918,000 | 2,997,198 | ||||||
Target Corp., 2.500% Due 04/15/2026 | 5,500,000 | 5,053,612 | ||||||
Union Pacific Corp., 3.500% Due 06/08/2023 | 4,200,000 | 4,202,885 | ||||||
Union Pacific Corp., 7.875% Due 01/15/2019 | 500,000 | 512,821 | ||||||
Verizon Communications, 4.672% Due 03/15/2055 | 7,000,000 | 6,216,949 | ||||||
12.9% – Total For Corporate Bonds: Industrial | $ | 63,513,782 |
The accompanying notes are an integral part of these financial statements.
16
Fixed Income Securities – Bonds | Face Value | Fair Value | ||||||
Berkshire Hathaway Energy Co., 3.500% Due 02/01/2025 | 1,500,000 | $ | 1,489,089 | |||||
Berkshire Hathaway Energy Co., 3.750% Due 11/15/2023 | 8,429,000 | 8,530,815 | ||||||
Duke Energy Corp., 2.650% Due 09/01/2026 | 1,000,000 | 900,672 | ||||||
Duke Energy Corp., 3.550% Due 09/15/2021 | 6,860,000 | 6,888,126 | ||||||
Enterprise Products, 3.750% Due 02/15/2025 | 7,000,000 | 6,931,709 | ||||||
Eversource Energy, 2.500% Due 03/15/2021 | 1,665,000 | 1,631,008 | ||||||
Eversource Energy, 2.750% Due 03/15/2022 | 1,500,000 | 1,462,638 | ||||||
Eversource Energy Senior, 2.800% Due 05/01/2023 | 3,750,000 | 3,611,508 | ||||||
Eversource Energy Senior, 4.500% Due 11/15/2019 | 1,200,000 | 1,221,954 | ||||||
Georgia Power Co., 1.950% Due 12/01/2018 | 1,165,000 | 1,160,233 | ||||||
Georgia Power Co., 2.000% Due 03/30/2020 | 3,610,000 | 3,549,834 | ||||||
Georgia Power Co., 2.000% Due 09/08/2020 | 1,000,000 | 976,844 | ||||||
Georgia Power Co., 2.850% Due 05/15/2022 | 1,780,000 | 1,744,523 | ||||||
Georgia Power Co., 4.250% Due 12/01/2019 | 2,140,000 | 2,179,501 | ||||||
Interstate Power & Light, 3.250% Due 12/01/2024 | 5,120,000 | 4,990,517 | ||||||
Interstate Power & Light, 3.650% Due 09/01/2020 | 625,000 | 631,362 | ||||||
National Rural Utilities Collateral Trust, 10.375% Due 11/01/2018 | 2,005,000 | 2,056,333 | ||||||
National Rural Utilities Collateral Trust, 2.300% Due 11/01/2020 | 2,699,000 | 2,648,903 | ||||||
Virginia Electric & Power Co., 2.950% Due 01/15/2022 | 3,170,000 | 3,135,143 | ||||||
Virginia Electric & Power Co., 5.000% Due 06/30/2019 | 498,000 | 507,557 | ||||||
Xcel Energy Inc., 3.300% Due 06/01/2025 | 2,500,000 | 2,418,584 | ||||||
Xcel Energy Inc., 4.700% Due 05/15/2020 | 5,496,000 | 5,614,180 | ||||||
13.0% – Total For Corporate Bonds: Utilities | $ | 64,281,033 | ||||||
50.3% Total Corporate Bonds | $ | 248,694,413 |
Fixed Income Securities – Bonds | Face Value | Fair Value | ||||||
United States Government Treasury Obligations | ||||||||
Treasury Bond, 2.500% Due 02/15/2045 | 20,500,000 | $ | 18,691,035 | |||||
Treasury Inflation Protected Security, 1.000% Due 02/15/2046 | 4,229,040 | 4,355,519 | ||||||
Treasury Inflation Protected Security, 1.375% Due 02/15/2044 | 5,374,450 | 5,999,320 | ||||||
Treasury Note, 1.750% Due 11/30/2019 | 20,000,000 | 19,798,438 | ||||||
Treasury Note, 2.125% Due 11/30/2023 | 8,500,000 | 8,227,734 | ||||||
Treasury Note, 2.500% Due 05/15/2046 | 19,700,000 | 17,900,836 | ||||||
Treasury Note, 2.750% Due 08/15/2047 | 3,200,000 | 3,053,625 | ||||||
Treasury Note, 2.750% Due 08/15/2042 | 2,250,000 | 2,165,185 | ||||||
Treasury Note, 2.750% Due 11/15/2042 | 8,425,000 | 8,104,455 | ||||||
Treasury Note (TBill 13-week auction high rate + 0)*, 1.990% Due 01/31/2020 | 4,000,000 | 3,999,031 | ||||||
Treasury Note (TBill 13-week auction high rate + 0.033%)*, 2.023% Due 04/30/2020 | 4,000,000 | 3,999,286 | ||||||
19.4% – Total For United States Government Treasury Obligations | $ | 96,294,464 | ||||||
United States Government Agency Obligations | ||||||||
FHLMC Step-up*, 1.875% Due 07/12/2021 | 5,000,000 | 4,892,910 | ||||||
FHLMC Step-up*, 1.875% Due 06/15/2022 | 6,000,000 | 5,878,848 | ||||||
FHLMC Step-up*, 1.950% Due 06/21/2022 | 9,000,000 | 8,849,070 | ||||||
FHLMC Step-up*, 2.000% Due 07/12/2022 | 3,445,000 | 3,392,216 | ||||||
FHLMC Step-up*, 2.000% Due 07/18/2022 | 8,355,000 | 8,196,288 | ||||||
FHLMC Step-up*, 3.000% Due 06/28/2023 | 5,000,000 | 5,000,140 | ||||||
FHLMC Step-up*, 2.000% Due 10/27/2022 | 3,500,000 | 3,434,190 | ||||||
FHLMC Step-up*, 2.000% Due 12/27/2022 | 4,000,000 | 3,981,472 | ||||||
8.8% – Total For United States Government Agency Obligations | $ | 43,625,134 |
The accompanying notes are an integral part of these financial statements.
17
Fixed Income Securities – Bonds | Face Value | Fair Value | ||||||
United States Government Agency Obligations – Mortgage Backed Securities | ||||||||
FHLMC 10/1 Hybrid ARM (12 month LIBOR + 1.860%)*, 3.306% Due 04/01/2042 | 1,720,655 | $ | 1,739,500 | |||||
FHLMC Series 2877 Class AL, 5.000% Due 10/15/2024 | 281,550 | 292,344 | ||||||
FHLMC Series 2985 Class GE, 5.500% Due 06/15/2025 | 164,560 | 172,026 | ||||||
FHLMC Series 3109 Class ZN, 5.500% Due 02/15/2036 | 1,602,352 | 1,746,729 | ||||||
FHLMC Series 3592 Class BZ, 5.000% Due 10/15/2039 | 1,371,793 | 1,462,270 | ||||||
FHLMC Series 3946 Class LN, 3.500% Due 04/15/2041 | 436,594 | 437,102 | ||||||
FHLMC Series 4017 Class MA, 3.000% Due 03/15/2041 | 787,568 | 771,922 | ||||||
FHLMC Series 4105 Class PJ, 3.500% Due 06/15/2041 | 1,361,905 | 1,370,807 | ||||||
FHLMC Series 4180 Class ME, 2.500% Due 10/15/2042 | 2,556,832 | 2,487,980 | ||||||
FHLMC Series 4287 Class AB, 2.000% Due 12/15/2026 | 1,533,025 | 1,489,009 | ||||||
FHLMC Series 4517 Class PC, 2.500% Due 05/15/2044 | 3,183,319 | 3,077,058 | ||||||
FHLMC Series 4567 Class LA, 3.000% Due 08/15/2045 | 470,233 | 459,889 | ||||||
FHLMC Series 4582 Class PA, 3.000% Due 11/15/2045 | 3,398,199 | 3,340,117 | ||||||
FHLMC Series 4689 Class DA, 3.000% Due 07/15/2044 | 1,675,403 | 1,647,213 | ||||||
FHLMC Pool A89335, 5.000% Due 10/01/2039 | 173,360 | 185,289 | ||||||
FHLMC Pool C01005, 8.000% Due 06/01/2030 | 1,260 | 1,447 | ||||||
FHLMC Pool G06616, 4.500% Due 12/01/2035 | 561,354 | 586,738 | ||||||
FHLMC Pool G08068, 5.500% Due 07/01/2035 | 1,203,214 | 1,305,110 | ||||||
FHLMC Pool G13596, 4.000% Due 07/01/2024 | 1,039,798 | 1,068,963 | ||||||
FHLMC Pool G18642, 3.500% Due 04/01/2032 | 7,170,897 | 7,260,205 | ||||||
FHLMC Pool G18667, 3.500% Due 11/01/2032 | 3,277,517 | 3,318,293 | ||||||
FHLMC Pool 780439 (1 year US T-Note Yield Curve + 2.223%)*, 4.098% Due 04/01/2033 | 63,009 | 66,060 |
Fixed Income Securities – Bonds | Face Value | Fair Value | ||||||
FNMA Series 2003-79 Class NJ, 5.000% Due 08/25/2023 | 585,347 | $ | 604,945 | |||||
FNMA Series 2013-6 Class BC, 1.500% Due 12/25/2042 | 1,822,376 | 1,764,802 | ||||||
FNMA Series 2013-21 Class VA, 3.000% Due 07/25/2028 | 3,274,093 | 3,251,145 | ||||||
FNMA Series 2013-75 Class EG, 3.000% Due 02/25/2043 | 661,319 | 651,975 | ||||||
FNMA Series 2014-04 Class PC, 3.000% Due 02/25/2044 | 3,250,717 | 3,228,634 | ||||||
FNMA Series 2014-28 Class PA, 3.500% Due 02/25/2043 | 417,815 | 421,838 | ||||||
FNMA Series 2015-72 Class GB, 2.500% Due 12/25/2042 | 3,965,202 | 3,873,468 | ||||||
FNMA Series 2016-39 Class LA, 2.500% Due 03/25/2045 | 1,168,488 | 1,121,092 | ||||||
FNMA Series 2016-40 Class PA, 3.000% Due 07/25/2045 | 339,220 | 336,589 | ||||||
FNMA Series 2016-49 Class PA, 3.000% Due 09/25/2045 | 2,456,821 | 2,416,285 | ||||||
FNMA Series 2016-79 Class L, 2.500% Due 10/25/2044 | 1,606,509 | 1,549,533 | ||||||
FNMA Series 2017-30 Class G, 3.000% Due 07/25/2040 | 3,998,853 | 3,984,422 | ||||||
FNMA Series 2018-22 Class D, 3.250% Due 11/25/2042 | 4,604,929 | 4,591,367 | ||||||
FNMA Series 2018-25 Class P, 3.500% Due 03/25/2046 | 2,785,258 | 2,804,925 | ||||||
FNMA Pool 253300, 7.500% Due 05/01/2020 | 233 | 235 | ||||||
FNMA Pool 725027, 5.000% Due 11/01/2033 | 397,229 | 426,735 | ||||||
FNMA Pool 725704, 6.000% Due 08/01/2034 | 153,127 | 168,772 | ||||||
FNMA Pool 888223, 5.500% Due 01/01/2036 | 551,237 | 598,443 | ||||||
FNMA Pool 889185, 5.000% Due 12/01/2019 | 12,788 | 13,006 | ||||||
FNMA Pool 995112, 5.500% Due 07/01/2036 | 377,927 | 411,254 | ||||||
FNMA Pool AA4392, 4.000% Due 04/01/2039 | 1,233,381 | 1,266,518 | ||||||
FNMA Pool AL9309, 3.500% Due 10/01/2031 | 1,766,227 | 1,791,325 | ||||||
FNMA Pool MA0384, 5.000% Due 04/01/2030 | 1,100,050 | 1,166,298 | ||||||
FNMA Pool MA3337, 4.000% Due 04/01/2038 | 4,915,904 | 5,071,692 |
The accompanying notes are an integral part of these financial statements.
18
Fixed Income Securities – Bonds | Face Value | Fair Value | ||||||
GNMA Series 2009-124 Class L, 4.000% Due 11/20/2038 | 98,463 | $ | 99,174 | |||||
GNMA II Pool 2658, 6.500% Due 10/20/2028 | 18,774 | 20,953 | ||||||
GNMA II Pool 2945, 7.500% Due 07/20/2030 | 3,290 | 3,684 | ||||||
GNMA II Pool 4187, 5.500% Due 07/20/2038 | 13,864 | 14,393 | ||||||
GNMA II Pool 4847, 4.000% Due 11/20/2025 | 291,212 | 299,567 | ||||||
GNMA Pool 780400, 7.000% Due 12/15/2025 | 2,284 | 2,527 | ||||||
GNMA Pool 780420, 7.500% Due 08/15/2026 | 1,329 | 1,462 | ||||||
15.4% – Total For Government Agency Obligations – Mortgage Backed Securities | $ | 76,243,129 | ||||||
Taxable Municipal Bonds | ||||||||
Cincinnati Children’s Hospital Medical Center, 2.853% Due 11/15/2026 | 1,085,000 | 1,030,945 | ||||||
Florida Atlantic University Capital Improvement Revenue, 6.249% Due 07/01/2020 | 1,000,000 | 1,053,130 | ||||||
Florida Atlantic University Capital Improvement Revenue, 7.439% Due 07/01/2030 | 2,125,000 | 2,312,000 | ||||||
Florida Atlantic University Capital Improvement Revenue, 7.589% Due 07/01/2037 | 2,500,000 | 2,718,425 | ||||||
Kansas Development Finance Authority Revenue, 3.941% Due 04/15/2026 | 8,000,000 | 8,087,120 | ||||||
Kentucky Property and Buildings Commission Revenue, 6.164% Due 08/01/2023 | 1,000,000 | 1,084,350 | ||||||
Ohio Major New Infrastructure Revenue, 4.844% Due 12/15/2019 | 2,450,000 | 2,517,326 | ||||||
University of Cincinnati Ohio General Receipts Revenue, 5.616% Due 06/01/2025 | 930,000 | 995,649 | ||||||
University of Washington Revenue, 5.400% Due 06/01/2036 | 3,000,000 | 3,617,850 | ||||||
4.7% – Total For Taxable Municipal Bonds | $ | 23,416,795 | ||||||
Total Fixed Income Securities – Bonds 98.6% | $ | 488,273,935 | ||||||
(Identified Cost $494,695,071) |
Preferred Stocks | Shares | Fair Value | ||||||
Allstate Corp., 5.100% Due 01/15/2053 | 140,077 | $ | 3,643,403 | |||||
Total Preferred Stocks 0.7% | $ | 3,643,403 | ||||||
(Identified Cost $3,489,282) | ||||||||
Total Portfolio Value 99.3% | $ | 491,917,338 | ||||||
(Identified Cost $498,184,353) | ||||||||
Other Assets in Excess of Liabilities 0.7% | $ | 3,465,536 | ||||||
Total Net Assets 100% | $ | 495,382,874 |
* | Variable Rate Security; the rate shown is as of June 30, 2018. |
ARM – Adjustable Rate Mortgage
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.
19
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Akron Ohio GO Limited, 4.000% Due 12/01/2025 | 650,000 | $ | 701,415 | |||||
Akron Ohio GO Limited, 4.000% Due 12/01/2026 | 395,000 | 427,216 | ||||||
Akron Ohio GO Limited, 5.000% Due 12/01/2024 | 400,000 | 459,400 | ||||||
Brecksville Ohio GO Limited, 2.750% Due 06/06/2019 | 1,160,000 | 1,170,301 | ||||||
Cincinnati Ohio GO Unlimited, 4.000% Due 12/01/2032 | 1,000,000 | 1,076,340 | ||||||
Cincinnati Ohio GO Unlimited, 5.000% Due 12/01/2019 | 1,000,000 | 1,047,240 | ||||||
Cincinnati Ohio GO Unlimited, 5.250% Due 12/01/2029 | 200,000 | 234,014 | ||||||
Columbus Ohio GO Unlimited, 4.000% Due 04/01/2031 | 1,000,000 | 1,087,610 | ||||||
Coshocton Ohio GO Limited Bond Anticipation Notes, 3.000% Due 12/21/2019 | 400,000 | 403,272 | ||||||
Delaware Ohio GO Bond Anticipation Note, 3.000% Due 04/10/2019 | 1,000,000 | 1,009,610 | ||||||
Fairborn Ohio GO Limited, 1.750% Due 09/07/2018 | 425,000 | 424,979 | ||||||
Gahanna Ohio GO Limited, 4.000% Due 12/01/2021 | 420,000 | 449,135 | ||||||
Groveport Ohio GO Limited (AMBAC Insured), 3.500% Due 12/01/2023 | 185,000 | 191,190 | ||||||
Hurst Texas GO Limited, 4.000% Due 08/15/2031 | 335,000 | 356,008 | ||||||
Lakewood Ohio GO Limited, 4.000% Due 12/01/2028 | 840,000 | 907,855 | ||||||
Lakewood Ohio GO Limited, 4.000% Due 12/01/2029 | 300,000 | 322,380 | ||||||
Marysville Ohio GO Limited Bond Anticipation Notes, 1.750% Due 08/23/2018 | 500,000 | 499,985 | ||||||
Medina Ohio GO Limited, 2.000% Due 12/01/2020 | 165,000 | 165,388 | ||||||
Newport Kentucky GO Unlimited, 3.000% Due 05/01/2023 | 205,000 | 210,478 | ||||||
Pembroke Pines Florida GO Unlimited, 5.000% Due 09/01/2024 | 200,000 | 230,476 | ||||||
Shaker Heights Ohio GO Limited, 3.000% Due 05/30/2019 | 805,000 | 813,243 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Pickerington Ohio GO Limited Bond Anticipation Note, 2.375% Due 02/07/2019 | 1,000,000 | $ | 1,003,040 | |||||
Riversouth Ohio Authority Revenue, 4.000% Due 12/01/2031 | 700,000 | 736,673 | ||||||
Strongsville Ohio GO Limited, 4.000% Due 12/01/2030 | 350,000 | 375,546 | ||||||
Sycamore Township Ohio GO Limited, 3.000% Due 05/08/2019 | 750,000 | 756,660 | ||||||
Tiffin Ohio GO Unlimited, 3.000% Due 12/01/2018 | 420,000 | 422,516 | ||||||
Tiffin Ohio GO Unlimited, 3.000% Due 12/01/2020 | 225,000 | 230,483 | ||||||
10.7% – Total For General Obligation – City | $ | 15,712,453 | ||||||
Butler County Ohio General Obligation Limited, 5.000% Due 12/01/2024 | 160,000 | 185,301 | ||||||
Franklin County Ohio GO Limited, 4.000% Due 12/01/2018 | 220,000 | 222,215 | ||||||
Hamilton County Ohio GO Limited, 5.000% Due 12/01/2028 | 500,000 | 596,830 | ||||||
Hamilton County Ohio Various Purpose GO Limited, 4.000% Due 12/01/2018 | 160,000 | 161,698 | ||||||
Knox County Ohio GO Limited, 4.000% Due 12/01/2025 | 460,000 | 497,343 | ||||||
Licking County Ohio GO Limited, 3.000% Due 12/01/2024 | 555,000 | 569,807 | ||||||
Lorain County Ohio GO Limited, 4.000% Due 12/01/2025 | 795,000 | 855,825 | ||||||
Lorain County Ohio GO Unlimited, 4.000% Due 12/01/2030 | 450,000 | 474,984 | ||||||
Lucas County Ohio GO Limited, 4.000% Due 10/01/2028 | 1,000,000 | 1,081,570 | ||||||
Mercer County Ohio GO Limited, 3.000% Due 11/01/2018 | 200,000 | 200,980 | ||||||
Ottawa County Ohio GO Limited, 4.000% Due 12/01/2021 | 295,000 | 313,954 | ||||||
Portage County Ohio GO Limited, 3.000% Due 12/01/2021 | 270,000 | 271,550 | ||||||
Preble County Ohio GO Limited Bond Anticipation, 1.200% Due 09/19/2018 | 250,000 | 249,655 | ||||||
Rowan County Kentucky GO Unlimited (AGM Insured), 4.000% Due 06/01/2024 | 390,000 | 419,730 |
The accompanying notes are an integral part of these financial statements.
20
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Summit County Ohio GO Limited, 4.000% Due 12/01/2023 | 300,000 | $ | 327,723 | |||||
Warren County Ohio GO Limited Bond Anticipation, 1.625% Due 08/23/2018 | 500,000 | 499,995 | ||||||
4.7% – Total For General Obligation – County | $ | 6,929,160 | ||||||
Ohio GO Limited, 3.000% Due 09/01/2026 | 1,385,000 | 1,416,897 | ||||||
Ohio GO Limited, 4.000% Due 03/01/2026 | 1,060,000 | 1,151,001 | ||||||
Ohio GO Unlimited, 3.125% Due 08/01/2019 | 235,000 | 238,964 | ||||||
Ohio GO Unlimited, 5.000% Due 08/01/2018 | 635,000 | 636,810 | ||||||
Ohio GO Unlimited, 5.000% Due 02/01/2019 | 500,000 | 510,170 | ||||||
Ohio GO Unlimited, 5.000% Due 09/15/2021 | 565,000 | 619,116 | ||||||
Ohio GO Unlimited, 5.000% Due 05/01/2019 | 1,000,000 | 1,028,670 | ||||||
Ohio GO Unlimited, 5.000% Due 09/01/2022 | 400,000 | 447,504 | ||||||
Ohio GO Unlimited Common Schools – Series C, 4.250% Due 09/15/2022 | 845,000 | 920,847 | ||||||
Ohio Infrastructure Improvement GO Unlimited, 5.000% Due 08/01/2022 | 500,000 | 558,450 | ||||||
Pennsylvania GO Unlimited, 4.000% Due 01/01/2030 | 500,000 | 523,100 | ||||||
Pennsylvania GO Unlimited, 5.000% Due 01/01/2024 | 375,000 | 422,029 | ||||||
Pennsylvania GO Unlimited, 5.000% Due 01/15/2027 | 1,000,000 | 1,150,390 | ||||||
6.5% – Total For General Obligation – State | $ | 9,623,948 | ||||||
Arizona Board of Regents Revenue Arizona State University, 5.000% Due 08/01/2028 | 815,000 | 927,731 | ||||||
Arizona Board of Regents Revenue University of Arizona, 5.000% Due 06/01/2029 | 125,000 | 142,956 | ||||||
Bowling Green State University Ohio Revenue, 5.000% Due 06/01/2024 | 405,000 | 461,741 | ||||||
Bowling Green State University Ohio Revenue, 5.000% Due 06/01/2032 | 500,000 | 573,460 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Colorado Board of Governors University Enterprise System Revenue, 5.000% Due 03/01/2027 | 225,000 | $ | 267,206 | |||||
Colorado Higher Education Lease Financing Program Certificate of Participation, 5.000% Due 11/01/2025 | 290,000 | 336,574 | ||||||
Cuyahoga County Ohio Community College GO Unlimited, 4.000% Due 12/01/2033 | 400,000 | 424,212 | ||||||
Cuyahoga County Ohio Community College GO Unlimited, 5.000% Due 12/01/2027 | 400,000 | 468,548 | ||||||
Florida State Board of Governors Florida State University Mandatory Student Fee Revenue Series A, 4.000% Due 07/01/2018 | 600,000 | 600,000 | ||||||
Kent State University Ohio General Receipt Revenue, 4.000% Due 05/01/2022 | 255,000 | 272,628 | ||||||
Lake County Ohio Community College District GO Unlimited, 2.000% Due 12/01/2018 | 155,000 | 155,378 | ||||||
Lorain County Ohio Community College District General Receipts Revenue Bond, 3.000% Due 06/01/2020 | 190,000 | 193,903 | ||||||
Lorain County Ohio Community College District General Receipts Revenue Bond, 4.000% Due 12/01/2025 | 600,000 | 652,482 | ||||||
Miami University Ohio General Receipts Revenue, 4.000% Due 09/01/2023 | 1,040,000 | 1,096,191 | ||||||
Miami University Ohio General Receipts Revenue, 5.000% Due 09/01/2020 | 400,000 | 427,356 | ||||||
Miami University Ohio General Receipts Revenue, 5.000% Due 09/01/2020 | 100,000 | 106,751 | ||||||
Miami University Ohio Revenue, 4.000% Due 09/01/2027 | 300,000 | 316,575 | ||||||
Miami Valley Ohio Career Tech Center GO Unlimited, 4.000% Due 12/01/2024 | 1,000,000 | 1,099,530 | ||||||
Northern Kentucky University General Receipts Revenue, 3.000% Due 09/01/2021 | 210,000 | 215,099 |
The accompanying notes are an integral part of these financial statements.
21
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Ohio Higher Education Facilities Revenue – University of Dayton, 3.000% Due 12/01/2018 | 125,000 | $ | 125,780 | |||||
Ohio Higher Education Facilities Revenue – University of Dayton, 5.000% Due 12/01/2018 | 155,000 | 157,232 | ||||||
Ohio Higher Education Facilities Revenue – University of Dayton*, 5.500% Due 12/01/2024 | 250,000 | 254,110 | ||||||
Ohio Higher Education Facilities Revenue – Xavier University, 4.500% Due 05/01/2036 | 1,000,000 | 1,039,410 | ||||||
Ohio State University General Receipts Revenue, 4.000% Due 06/01/2030 | 200,000 | 213,406 | ||||||
Ohio State University General Receipts Revenue**, 0.960% Due 06/01/2035 | 1,000,000 | 1,000,000 | ||||||
Ohio University General Receipts Revenue Bond, 5.000% Due 12/01/2019 | 135,000 | 141,300 | ||||||
Ohio University General Receipts Revenue Bond, 5.000% Due 12/01/2022 | 110,000 | 123,174 | ||||||
South Dakota Board of Regents Housing and Auxiliary Facilities System Revenue, 5.000% Due 04/01/2026 | 315,000 | 364,597 | ||||||
University of Akron Ohio General Receipts Revenue, 5.000% Due 01/01/2028 | 410,000 | 465,567 | ||||||
University of Akron Ohio General Receipts Revenue, 5.000% Due 01/01/2029 | 650,000 | 725,861 | ||||||
University of Akron Ohio General Receipts Revenue, 5.000% Due 01/01/2024 | 610,000 | 691,856 | ||||||
University of Akron Ohio General Receipts Revenue, 5.000% Due 01/01/2029 | 335,000 | 382,309 | ||||||
University of Akron Ohio General Receipts Revenue (AGM Insured), 5.000% Due 01/01/2022 | 350,000 | 366,705 | ||||||
University of Akron Ohio Revenue, 5.000% Due 01/01/2027 | 350,000 | 402,647 | ||||||
University of Cincinnati General Receipts Revenue, 4.000% Due 06/01/2036 | 250,000 | 258,915 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
University of Cincinnati General Receipts Revenue, 5.000% Due 06/01/2020 | 300,000 | $ | 318,066 | |||||
University of Cincinnati General Receipts Revenue, 5.000% Due 06/01/2026 | 470,000 | 515,444 | ||||||
University of Cincinnati Ohio Receipts Revenue (Assured Guaranty Insured), 5.000% Due 06/01/2019 | 1,000,000 | 1,030,520 | ||||||
University of Toledo Revenue, 5.000% Due 06/01/2021 | 300,000 | 325,059 | ||||||
University of Toledo Revenue, 5.000% Due 06/01/2026 | 885,000 | 978,447 | ||||||
University of Toledo Revenue, 5.000% Due 06/01/2027 | 1,590,000 | 1,868,250 | ||||||
University of Toledo Revenue, 5.000% Due 06/01/2031 | 500,000 | 597,490 | ||||||
14.3% – Total For Higher Education | $ | 21,084,466 | ||||||
Allegheny County Pennsylvania Hospital Development Authority Revenue – University of Pittsburgh Medical Center, 5.000% Due 10/15/2024 | 100,000 | 108,919 | ||||||
Allegheny County Pennsylvania Hospital Development Authority Revenue – University of Pittsburgh Medical Center, 6.000% Due 07/01/2027 | 250,000 | 313,220 | ||||||
Franklin County Ohio Hospital Revenue Nationwide Childrens, 4.000% Due 11/01/2036 | 800,000 | 824,600 | ||||||
Franklin County Ohio Hospital Revenue Nationwide Childrens, 5.000% Due 11/01/2032 | 500,000 | 582,145 | ||||||
Franklin County Ohio Hospital Revenue Nationwide Childrens – Series A*, 4.500% Due 11/01/2021 | 335,000 | 338,286 | ||||||
Franklin County Ohio Hospital Revenue Nationwide Childrens*, 5.000% Due 11/01/2024 | 500,000 | 522,030 | ||||||
Hamilton County Ohio Health Care Facilities Revenue – The Christ Hospital, 5.250% Due 06/01/2025 | 1,000,000 | 1,103,800 | ||||||
Hamilton County Ohio Health Care Facilities Revenue – The Christ Hospital Obligated Group, 5.250% Due 06/01/2027 | 1,000,000 | 1,100,660 |
The accompanying notes are an integral part of these financial statements.
22
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Hamilton County Ohio Hospital Facilities Revenue Cincinnati Children’s Hospital, 5.000% Due 05/15/2027 | 100,000 | $ | 113,210 | |||||
Hamilton County Ohio Hospital Facilities Revenue Cincinnati Children’s Hospital, 5.000% Due 05/15/2028 | 1,715,000 | 1,936,578 | ||||||
Kentucky Economic Development Finance Authority Hospital Facilities Revenue – St. Elizabeth Medical Center*, 5.000% Due 05/01/2024 | 500,000 | 513,955 | ||||||
Monroeville Pennsylvania Finance Authority Revenue – University of Pittsburgh Medical Center, 5.000% Due 02/15/2027 | 300,000 | 352,218 | ||||||
Nashville and Davidson County Tennessee Vanderbilt University Medical Center, 5.000% Due 07/01/2031 | 430,000 | 486,480 | ||||||
Ohio Hospital Facilities Revenue – Cleveland Clinic, 5.000% Due 01/01/2020 | 170,000 | 178,192 | ||||||
Ohio Hospital Facilities Revenue – Cleveland Clinic*, 5.000% Due 01/01/2025 | 430,000 | 437,538 | ||||||
Pennsylvania Economic Development Financing Authority – University of Pittsburgh Medical Center Revenue, 5.000% Due 02/01/2025 | 450,000 | 515,520 | ||||||
Pennsylvania Economic Development Financing Authority – University of Pittsburgh Medical Center Revenue, 5.000% Due 02/01/2029 | 250,000 | 280,983 | ||||||
Pennsylvania State Higher Education Facility Bond – University of Pennsylvania Health System*, 5.250% Due 08/15/2026 | 500,000 | 551,405 | ||||||
7.0% – Total For Hospital/Health Bonds | $ | 10,259,739 | ||||||
Columbus Ohio Metropolitan Library Special Obligation Revenue, 5.000% Due 12/01/2026 | 505,000 | 598,541 | ||||||
Columbus Ohio Metropolitan Library Special Obligation Revenue, 5.000% Due 12/01/2027 | 500,000 | 598,675 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Franklin County Ohio Convention Facilities Authority Revenue, 5.000% Due 12/01/2022 | 500,000 | $ | 558,985 | |||||
Hopkins County Kentucky Public Properties Corp. Judicial Center Project First Mortgage Revenue, 3.000% Due 06/01/2019 | 300,000 | 303,399 | ||||||
Huntsville Alabama Public Building Authority Revenue, 5.000% Due 10/01/2033 | 800,000 | 930,408 | ||||||
Mason Ohio Certificate of Participation – Community Center Project, 3.625% Due 12/01/2018 | 150,000 | 151,362 | ||||||
Newport Kentucky First Mortgage Court Facilities Project Revenue, 4.000% Due 10/01/2025 | 500,000 | 511,035 | ||||||
Newport Kentucky First Mortgage Court Facilities Project Revenue, 4.000% Due 10/01/2026 | 100,000 | 102,009 | ||||||
Ohio Capital Facilities Lease Appropriation – Parks & Recreational Improvement Revenue, 1.500% Due 08/01/2018 | 100,000 | 100,010 | ||||||
Ohio Capital Facilities Lease Appropriation Revenue, 5.000% Due 04/01/2020 | 520,000 | 549,359 | ||||||
Ohio Capital Facilities Lease Appropriation Revenue, 5.000% Due 04/01/2022 | 425,000 | 470,925 | ||||||
Ohio Capital Facilities Lease Appropriation Revenue*, 4.000% Due 04/01/2026 | 150,000 | 158,547 | ||||||
Ohio Capital Facilities Lease Appropriation Revenue*, 5.000% Due 04/01/2024 | 275,000 | 297,993 | ||||||
Ohio Cultural and Sports Facilities Project Revenue, 4.000% Due 10/01/2019 | 225,000 | 231,651 | ||||||
Ohio Parks and Recreation Capital Facilities Revenue, 5.000% Due 12/01/2020 | 1,000,000 | 1,076,140 | ||||||
Ohio Parks and Recreation Capital Facilities Revenue, 5.000% Due 02/01/2023 | 300,000 | 337,779 | ||||||
4.7% – Total For Revenue Bonds – Facility | $ | 6,976,818 | ||||||
Anderson Indiana Sewage Works Revenue (AGM Insured), 4.000% Due 11/01/2026 | 300,000 | 328,902 |
The accompanying notes are an integral part of these financial statements.
23
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Arizona Water Infrastructure Finance Authority Revenue*, 5.000% Due 12/01/2021 | 500,000 | $ | 504,425 | |||||
Cape Coral Florida Water & Sewer Revenue, 5.000% Due 10/01/2024 | 535,000 | 613,527 | ||||||
Central Ohio Solid Waste Authority GO Limited, 5.000% Due 12/01/2023 | 45,000 | 49,982 | ||||||
Central Ohio Solid Waste Authority GO Limited*, 5.000% Due 12/01/2023 | 10,000 | 11,107 | ||||||
Central Ohio Solid Waste Authority GO Limited*, 5.000% Due 12/01/2023 | 75,000 | 83,303 | ||||||
Clermont County Ohio Sewer System Revenue, 2.000% Due 08/01/2018 | 300,000 | 300,150 | ||||||
Evansville Indiana Waterworks District Revenue (BAM Insured), 4.000% Due 01/01/2029 | 400,000 | 426,088 | ||||||
Evansville Indiana Waterworks District Revenue (BAM Insured), 5.000% Due 01/01/2022 | 300,000 | 327,894 | ||||||
Hamilton Ohio Wastewater System Revenue (BAM Insured), 5.000% Due 10/01/2027 | 930,000 | 1,100,581 | ||||||
Lafayette Indiana Sewage Works Revenue, 5.000% Due 07/01/2022 | 150,000 | 166,523 | ||||||
Lima Ohio Sanitary Sewer Revenue, 5.000% Due 12/01/2024 | 200,000 | 221,020 | ||||||
Mt. Vernon Ohio Waterworks Revenue, 3.750% Due 12/01/2018 | 225,000 | 227,036 | ||||||
Northern Kentucky Water District Revenue, 5.000% Due 02/01/2023 | 1,000,000 | 1,125,930 | ||||||
Ohio Water Development Authority Revenue, 5.000% Due 12/01/2022 | 275,000 | 310,282 | ||||||
Ohio Water Development Authority Revenue, 4.000% Due 06/01/2030 | 500,000 | 556,650 | ||||||
Springboro Ohio Sewer System Revenue, 4.000% Due 06/01/2022 | 245,000 | 261,817 | ||||||
St. Charles County Missouri Public Water Supply Dist. 2 Certificates of Participation, 4.000% Due 12/01/2031 | 400,000 | 422,308 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Toledo Ohio Water System Revenue, 5.000% Due 11/15/2025 | 255,000 | $ | 294,812 | |||||
Toledo Ohio Waterworks Revenue, 4.000% Due 11/15/2022 | 365,000 | 393,945 | ||||||
Toledo Ohio Waterworks Revenue, 5.000% Due 11/15/2026 | 500,000 | 588,050 | ||||||
5.6% – Total For Revenue Bonds – Water & Sewer | $ | 8,314,332 | ||||||
Akron Ohio Income Tax Revenue, 5.000% Due 12/01/2023 | 1,100,000 | 1,250,282 | ||||||
Akron Ohio Income Tax Revenue Community Learning Centers, 5.000% Due 12/01/2028 | 380,000 | 418,608 | ||||||
Aurora Colorado Certificates of Participation, 3.500% Due 12/01/2018 | 280,000 | 282,363 | ||||||
Cincinnati Ohio Economic Development Revenue (Baldwin 300 Project), 4.750% Due 11/01/2030 | 500,000 | 560,625 | ||||||
Cincinnati Ohio Economic Development Revenue (Baldwin 300 Project), 5.000% Due 11/01/2032 | 390,000 | 443,750 | ||||||
Cincinnati Ohio Economic Development Revenue U-Square-the-Loop Project, 3.500% Due 11/01/2024 | 110,000 | 113,346 | ||||||
Cincinnati Ohio Economic Development Revenue*, 4.200% Due 11/01/2019 | 150,000 | 151,376 | ||||||
Escambia County Florida Pollution Control Revenue (Gulf Power Company), 2.100% Due 07/01/2022 | 820,000 | 821,115 | ||||||
Hamilton County Ohio Economic Development King Highland Community Urban Redevelopment Corp. Revenue, 5.000% Due 06/01/2030 | 655,000 | 745,842 | ||||||
Humboldt County Nevada Polution Control Revenue (Sierra Pacific Power Co.), 1.250% Due 10/01/2029 | 300,000 | 298,101 | ||||||
Lorain County Ohio Sales Tax Revenue Bond Anticipation Notes, 1.750% Due 11/27/2018 | 500,000 | 500,115 | ||||||
Louisa Virginia Industrial Development Authority (Virginia Electric & Power Co.), 1.850% Due 11/01/2035 | 550,000 | 549,852 |
The accompanying notes are an integral part of these financial statements.
24
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Louisa Virginia Industrial Development Authority (Virginia Electric & Power Co.), 2.150% Due 11/01/2035 | 650,000 | $ | 649,721 | |||||
Mason Ohio Certificate of Participation, 5.000% Due 12/01/2023 | 750,000 | 801,592 | ||||||
Mobile Alabama Industrial Development Board Pollution Control Revenue, 1.625% Due 07/15/2034 | 400,000 | 399,948 | ||||||
Monroe County Georgia Development Authority Pollution Control Revenue, 2.050% Due 07/01/2049 | 500,000 | 492,910 | ||||||
Montgomery County Ohio Transportation Improvement Special Obligation Revenue, 3.500% Due 12/01/2019 | 400,000 | 403,728 | ||||||
Ohio Major New State Infrastructure Project Revenue, 5.000% Due 12/15/2022 | 250,000 | 277,542 | ||||||
Ohio Major New State Infrastructure Project Revenue, 5.000% Due 12/15/2023 | 500,000 | 572,910 | ||||||
Ohio Major New State Infrastructure Project Revenue, 5.000% Due 12/15/2023 | 500,000 | 572,910 | ||||||
Ohio Major New State Infrastructure Project Revenue, 5.000% Due 12/15/2026 | 500,000 | 586,855 | ||||||
Ohio Major New State Infrastructure Project Revenue, 5.000% Due 12/15/2028 | 570,000 | 665,002 | ||||||
Ohio Mental Health Capital Facilities Revenue, 5.000% Due 02/01/2025 | 1,000,000 | 1,158,640 | ||||||
Ohio Special Obligation Revenue, 5.000% Due 12/01/2029 | 510,000 | 593,553 | ||||||
Ohio Turnpike and Infrastructure Commission (National Re Insured), 5.500% Due 02/15/2019 | 705,000 | 722,322 | ||||||
Texas Tax and Revenue Anticipation, 4.000% Due 08/30/2018 | 900,000 | 903,735 | ||||||
Walton County Florida Board Certificates of Participation, 5.000% Due 07/01/2027 | 500,000 | 587,800 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Washington Certificates of Participation, 5.000% Due 07/01/2019 | 900,000 | $ | 930,069 | |||||
11.2% – Total For Other Revenue Bonds | $ | 16,454,612 | ||||||
Aldine Texas ISD GO Unlimited, 4.000% Due 02/15/2030 | 780,000 | 835,185 | ||||||
Avon Indiana Community School Building Corporation Revenue, 4.000% Due 01/15/2019 | 500,000 | 506,290 | ||||||
Bellbrook-Sugarcreek Ohio LSD GO Unlimited, 4.000% Due 12/01/2031 | 325,000 | 349,128 | ||||||
Berea Ohio CSD GO Unlimited, 4.000% Due 12/01/2031 | 500,000 | 528,150 | ||||||
Boone County Kentucky SD Finance Corporation Revenue, 2.500% Due 05/01/2019 | 500,000 | 503,270 | ||||||
Breckinridge County Kentucky SD Finance Corp., 5.000% Due 04/01/2025 | 265,000 | 303,748 | ||||||
Chagrin Falls Ohio Exempted Village SD GO, 4.000% Due 12/01/2022 | 100,000 | 108,227 | ||||||
Bullitt County Kentucky SD Finance Corp. School Building Revenue Bond, 2.500% Due 07/01/2018 | 315,000 | 315,000 | ||||||
Chillicothe Ohio CSD Special Obligation Revenue, 4.000% Due 12/01/2023 | 130,000 | 138,654 | ||||||
Chillicothe Ohio SD GO Unlimited (AGM Insured), 4.000% Due 12/01/2029 | 400,000 | 426,772 | ||||||
Clark County Kentucky SD Finance Corp. Revenue Bond, 3.000% Due 08/01/2022 | 115,000 | 118,568 | ||||||
Cleveland Heights and University Heights Ohio CSD GO Unlimited, 4.000% Due 12/01/2032 | 1,000,000 | 1,067,900 | ||||||
Columbus Ohio CSD GO Unlimited, 4.000% Due 12/01/2029 | 400,000 | 428,848 | ||||||
Columbus Ohio CSD School Facilities Construction and Improvement GO*, 4.000% Due 12/01/2023 | 175,000 | 178,894 | ||||||
Dayton Ohio CSD GO Unlimited (SDCP), 1.500% Due 11/01/2018 | 500,000 | 499,875 |
The accompanying notes are an integral part of these financial statements.
25
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Dexter Michigan CSD GO Unlimited, 4.000% Due 05/01/2031 | 500,000 | $ | 534,505 | |||||
Dublin Ohio CSD GO Unlimited, 5.000% Due 12/01/2026 | 500,000 | 564,325 | ||||||
Elyria Ohio SCD GO Unlimited (SDCP), 4.000% Due 12/01/2030 | 1,000,000 | 1,062,360 | ||||||
Fairfield Ohio CSD GO Unlimited, 5.000% Due 12/01/2020 | 420,000 | 451,156 | ||||||
Fairlawn Ohio LSD GO Unlimited (School District Credit Program), 3.000% Due 12/01/2018 | 170,000 | 171,117 | ||||||
Fort Mill South Carolina School Facilities Corp. Installment Purchase Revenue, 5.000% Due 12/01/2024 | 300,000 | 343,020 | ||||||
Franklin Indiana Community Multi-School Building Corp., 5.000% Due 01/15/2023 | 200,000 | 224,310 | ||||||
Granville Ohio Exempted Village SD GO Unlimited, 1.750% Due 12/01/2018 | 455,000 | 454,718 | ||||||
Greenville Ohio CSD GO Unlimited (SD Credit Program Insured), 4.000% Due 01/01/2021 | 110,000 | 115,135 | ||||||
Hamilton Ohio CSD GO Unlimited (School District Credit Program), 5.000% Due 12/01/2019 | 300,000 | 313,785 | ||||||
Hardin County Kentucky SD Finance Corp. Revenue, 2.500% Due 06/01/2021 | 100,000 | 100,812 | ||||||
Hardin County Kentucky SD Finance Corp. Revenue, 5.000% Due 05/01/2024 | 500,000 | 567,380 | ||||||
Hillsborough County Florida School Board Certificates of Participation, 5.000% Due 07/01/2025 | 200,000 | 232,182 | ||||||
Houston Texas ISD GO Limited, 5.000% Due 12/15/2030 | 440,000 | 508,908 | ||||||
Hudson Ohio CSD GO Unlimited, 4.000% Due 12/01/2033 | 400,000 | 422,488 | ||||||
Indian Lake Ohio LSD GO Unlimited, 2.000% Due 12/01/2018 | 250,000 | 250,570 | ||||||
Jackson Milton Ohio LSD Certificates of Participation (BAM Insured), 2.000% Due 06/01/2019 | 200,000 | 200,684 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Jackson Milton Ohio LSD Certificates of Participation (BAM Insured), 4.000% Due 06/01/2031 | 270,000 | $ | 282,269 | |||||
Jefferson County Kentucky SD Finance Corp., 3.500% Due 04/01/2021 | 340,000 | 347,929 | ||||||
Johnstown-Monroe Ohio LSD GO Unlimited, 4.000% Due 12/01/2029 | 800,000 | 855,992 | ||||||
Keller Texas ISD GO Unlimited, 4.500% Due 02/15/2020 | 5,000 | 5,088 | ||||||
Kenston Ohio LSD Improvement GO Unlimited, 5.000% Due 12/01/2019 | 150,000 | 157,194 | ||||||
Kenton County Kentucky SD Finance Corp. Revenue, 4.000% Due 02/01/2028 | 400,000 | 427,204 | ||||||
Kettering Ohio CSD GO Unlimited, 4.000% Due 12/01/2020 | 240,000 | 251,820 | ||||||
Kettering Ohio CSD GO Unlimited, 4.000% Due 12/01/2030 | 400,000 | 425,300 | ||||||
Lake Ohio LSD of Stark County GO Unlimited, 4.000% Due 12/01/2023 | 400,000 | 426,976 | ||||||
Lakota Ohio LSD GO, 5.250% Due 12/01/2025 | 205,000 | 243,528 | ||||||
Lakota Ohio LSD GO Unlimited, 4.000% Due 12/01/2027 | 275,000 | 295,185 | ||||||
Lakota Ohio LSD GO Unlimited, 5.000% Due 12/01/2021 | 350,000 | 385,179 | ||||||
Licking Heights Ohio LSD GO Unlimited, 5.000% Due 10/01/2025 | 715,000 | 821,506 | ||||||
Licking Heights Ohio LSD GO Unlimited, 5.000% Due 10/01/2026 | 350,000 | 406,042 | ||||||
Logan Hocking Ohio LSD Certificates of Participation, 4.000% Due 12/01/2032 | 420,000 | 440,307 | ||||||
Louisville Ohio CSD GO Unlimited (SDCP), 3.000% Due 12/01/2020 | 370,000 | 380,249 | ||||||
Marysville Michigan PSD GO Unlimited, 5.000% Due 05/01/2021 | 250,000 | 270,727 | ||||||
Marysville Ohio Exempted Village SD GO Unlimited, 4.000% Due 12/01/2023 | 165,000 | 177,923 |
The accompanying notes are an integral part of these financial statements.
26
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Marysville Ohio Exempted Village SD GO Unlimited, 5.000% Due 12/01/2022 | 715,000 | $ | 799,349 | |||||
Mayfield Ohio CSD Certificates of Participation, 4.000% Due 09/01/2032 | 280,000 | 294,938 | ||||||
Miamisburg Ohio CSD Certificates of Participation, 2.000% Due 12/01/2018 | 160,000 | 160,365 | ||||||
Milford Ohio Exempt Village SD GO Unlimited (AGM Insured), 5.500% Due 12/01/2030 | 1,260,000 | 1,535,612 | ||||||
Mt. Healthy Ohio CSD GO Unlimited (School District Credit Program), 5.000% Due 12/01/2018 | 250,000 | 253,527 | ||||||
Munster Indiana School Building Corp. Revenue (State Intercept), 4.000% Due 01/15/2029 | 400,000 | 417,856 | ||||||
Murray Kentucky ISD Finance Corporation Revenue, 5.000% Due 03/01/2025 | 810,000 | 927,102 | ||||||
Newark Ohio CSD GO Unlimited (School District Credit Program), 4.000% Due 12/01/2026 | 235,000 | 252,726 | ||||||
North Olmsted Ohio CSD GO Unlimited, 4.000% Due 12/01/2029 | 500,000 | 537,745 | ||||||
Northwest Ohio LSD Hamilton & Butler Counties Certificates of Participation, 2.500% Due 12/01/2019 | 150,000 | 151,896 | ||||||
Northwest Ohio LSD Hamilton & Butler Counties GO Unlimited, 5.000% Due 12/01/2028 | 100,000 | 113,172 | ||||||
Northwest Ohio LSD Hamilton & Butler Counties GO Unlimited, 5.000% Due 12/01/2029 | 150,000 | 169,432 | ||||||
Olmsted Falls Ohio CSD GO Unlimited, 2.000% Due 12/01/2018 | 110,000 | 110,273 | ||||||
Orange County Florida School Board Certificates of Participation, 5.000% Due 08/01/2032 | 500,000 | 568,110 | ||||||
Princeton Ohio CSD Certificates of Participation, 3.500% Due 12/01/2026 | 275,000 | 278,974 | ||||||
Reynoldsburg Ohio CSD GO, 4.375% Due 12/01/2018 | 200,000 | 200,434 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Sarah Scott Indiana Middle School Building Corp. Revenue, 5.000% Due 07/10/2022 | 640,000 | $ | 710,138 | |||||
South Range Ohio LSD GO Unlimited, 2.000% Due 12/01/2018 | 125,000 | 125,207 | ||||||
Southwest Licking Ohio LSD GO Unlimited, 2.000% Due 11/01/2018 | 500,000 | 500,970 | ||||||
Springboro Ohio CSD GO (AGM Insured), 5.250% Due 12/01/2018 | 310,000 | 314,817 | ||||||
Switzerland Ohio LSD GO Unlimited (SDCEP Insured), 4.000% Due 12/01/2026 | 415,000 | 438,086 | ||||||
Toledo Ohio CSD GO Unlimited, 5.000% Due 12/01/2029 | 660,000 | 757,984 | ||||||
Trotwood-Madison Ohio CSD GO Unlimited (SDCP), 4.000% Due 12/01/2028 | 210,000 | 226,315 | ||||||
Trotwood-Madison Ohio CSD GO Unlimited (SDCP), 4.000% Due 12/01/2029 | 500,000 | 536,530 | ||||||
Trotwood-Madison Ohio CSD GO Unlimited (SDCP), 4.000% Due 12/01/2030 | 350,000 | 373,961 | ||||||
Upper Arlington Ohio CSD GO Unlimited, 4.000% Due 12/01/2030 | 1,380,000 | 1,499,467 | ||||||
Vandalia Butler Ohio CSD GO Unlimited, 3.000% Due 12/01/2024 | 500,000 | 515,015 | ||||||
Vermillion Ohio LSD Certificates of Participation, 5.000% Due 12/01/2023 | 230,000 | 246,215 | ||||||
Wadsworth Ohio CSD GO Unlimited, 3.000% Due 12/01/2019 | 120,000 | 122,724 | ||||||
Wadsworth Ohio CSD GO Unlimited, 3.500% Due 12/01/2022 | 215,000 | 225,068 | ||||||
Washington County Kentucky SD Finance Corp. Revenue Bond, 3.000% Due 08/01/2019 | 185,000 | 187,477 | ||||||
Wentzville R-IV SD of Saint Charles County Missouri Certificates of Participation, 4.000% Due 04/01/2030 | 395,000 | 414,754 | ||||||
Western Reserve Ohio LSD GO (SDCEP Insured), 4.000% Due 12/01/2022 | 240,000 | 249,780 |
The accompanying notes are an integral part of these financial statements.
27
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Willoughby-Eastlake Ohio CSD Certificates of Participation (BAM Insured), 4.000% Due 03/01/2030 | 810,000 | $ | 854,761 | |||||
Wyoming Ohio CSD GO Unlimited, 5.000% Due 12/01/2023 | 200,000 | 227,324 | ||||||
Wyoming Ohio CSD School Improvement GO Unlimited, 3.000% Due 12/01/2018 | 160,000 | 161,037 | ||||||
Zanesville Ohio CSD GO Unlimited (SDCEP Insured), 4.500% Due 12/01/2019 | 200,000 | 207,802 | ||||||
23.8% – Total For School District | $ | 35,093,325 | ||||||
Kansas Development Finance Authority, 5.000% Due 04/01/2019 | 580,000 | 594,918 | ||||||
Kentucky Asset and Liability Commission Revenue, 5.250% Due 09/01/2023 | 965,000 | 1,098,228 | ||||||
Kentucky Association of Counties Finance Corp. Revenue, 4.250% Due 02/01/2023 | 20,000 | 20,924 | ||||||
Kentucky Association of Counties Finance Corp. Revenue*, 4.250% Due 02/01/2023 | 180,000 | 188,613 | ||||||
Kentucky Certificates of Participation, 4.000% Due 04/15/2031 | 500,000 | 516,350 | ||||||
Kentucky Interlocal School Transportation Assoc. Certificate of Participation, 3.000% Due 03/01/2024 | 560,000 | 569,022 | ||||||
Kentucky Property and Buildings Commission Revenue, 5.000% Due 10/01/2023 | 350,000 | 392,378 | ||||||
Kentucky Property and Buildings Commission Revenue, 5.000% Due 11/01/2026 | 1,000,000 | 1,142,410 | ||||||
Kentucky Property and Buildings Commission Revenue, 5.000% Due 08/01/2029 | 600,000 | 674,778 | ||||||
Kentucky Property and Buildings Commission Revenue, 5.000% Due 08/01/2030 | 600,000 | 673,152 | ||||||
Ohio Building Authority Revenue, 5.000% Due 10/01/2020 | 215,000 | 223,993 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Ohio Department of Administration Certificate of Participation, 4.000% Due 09/01/2025 | 775,000 | $ | 819,586 | |||||
Ohio Department of Administration Certificate of Participation, 5.000% Due 09/01/2018 | 435,000 | 437,445 | ||||||
Ohio Department of Administration Certificate of Participation, 5.000% Due 09/01/2018 | 850,000 | 854,777 | ||||||
Ohio Department of Administration Certificate of Participation, 5.000% Due 03/01/2020 | 500,000 | 526,985 | ||||||
Ohio Department of Administration Certificate of Participation, 5.000% Due 09/01/2023 | 1,320,000 | 1,453,690 | ||||||
Ohio Department of Administration Certificate of Participation, 5.000% Due 03/01/2024 | 300,000 | 330,051 | ||||||
Ohio Department of Administration Certificate of Participation – Multi-Agency Radio Communication Project, 4.000% Due 09/01/2027 | 145,000 | 152,560 | ||||||
Ohio Department of Administration Certificate of Participation – Multi-Agency Radio Communication Project, 5.000% Due 09/01/2020 | 810,000 | 864,683 | ||||||
7.8% – Total For State Agency | $ | 11,534,543 | ||||||
Missouri State Housing Development Commission Single Family Mortgage Revenue (GNMA/FNMA/FHLMC Insured), 3.550% Due 05/01/2023 | 210,000 | 215,920 | ||||||
Missouri State Housing Development Commission Single Family Mortgage Revenue Series C (GNMA/FNMA/FHLMC Insured), 4.650% Due 09/01/2024 | 30,000 | 30,785 | ||||||
Ohio Housing Finance Agency Residential Mortgage Revenue 2009 Series A, 5.550% Due 09/01/2028 | 105,000 | 105,528 | ||||||
Ohio Housing Finance Agency Residential Mortgage Revenue Series F (FNMA/GNMA/FHLMC Insured), 4.500% Due 09/01/2024 | 165,000 | 167,841 |
The accompanying notes are an integral part of these financial statements.
28
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Ohio Housing Finance Agency Revenue, 5.900% Due 09/01/2023 | 80,000 | $ | 80,244 | |||||
0.4% – Total For Housing | $ | 600,318 | ||||||
Total Municipal Income Securities – Bonds 96.7% | $ | 142,583,714 | ||||||
(Identified Cost $142,596,453) |
Cash Equivalents | Shares | |||||||
Dreyfus AMT-Free Tax Cash Management Fund*** | 3,986,167 | 3,986,167 | ||||||
Total Cash Equivalents 2.7% | $ | 3,986,167 | ||||||
(Identified Cost $3,986,167) | ||||||||
Total Portfolio Value 99.4% | $ | 146,569,881 | ||||||
(Identified Cost $146,582,620) | ||||||||
Other Assets in Excess of Liabilities 0.6% | $ | 849,573 | ||||||
Total Net Assets 100.0% | $ | 147,419,454 |
* | Pre-refunded/Escrowed-to-Maturity Bonds; as of June 30, 2018, these bonds represented 3.25% of total assets. |
** | Variable Rate Security; the rate shown is as of June 30, 2018. |
*** | Variable Rate Security; as of June 30, 2018, the 7 day annualized yield was 1.32%. |
AGM – Assured Guaranty Municipal Mortgage Association
AMBAC – American Municipal Bond Assurance Corp.
BAM – Build America Mutual
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
SDCP – Ohio School District Credit Program
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 | Opportunity Fund | Realty Fund | ||||||||||
Assets: | ||||||||||||
Investment Securities at Fair Value* | $ | 262,067,539 | $ | 86,982,196 | $ | 10,853,533 | ||||||
Cash & Cash Equivalents | 108,873 | — | — | |||||||||
Dividends and Interest Receivable | 280,890 | 74,126 | 36,736 | |||||||||
Total Assets | $ | 262,457,302 | $ | 87,056,322 | $ | 10,890,269 | ||||||
Liabilities: | ||||||||||||
Accrued Management Fees | $ | 217,970 | $ | 71,900 | $ | 8,790 | ||||||
Due to Custodian | — | 342,396 | — | |||||||||
Securities Purchased Payable | — | 245,358 | — | |||||||||
Total Liabilities | $ | 217,970 | $ | 659,654 | $ | 8,790 | ||||||
Net Assets | $ | 262,239,332 | $ | 86,396,668 | $ | 10,881,479 | ||||||
Net Assets Consist of: | ||||||||||||
Paid in Capital | $ | 204,237,241 | $ | 72,030,525 | $ | 5,509,179 | ||||||
Accumulated Undistributed Net Investment Income (Loss) | 1,268,992 | 183,304 | 47,288 | |||||||||
Accumulated Net Realized Gain (Loss) from Security Transactions | 17,291,045 | 3,220,672 | (37,700 | ) | ||||||||
Net Unrealized Gain on Investments | 39,442,054 | 10,962,167 | 5,362,712 | |||||||||
Net Assets | $ | 262,239,332 | $ | 86,396,668 | $ | 10,881,479 | ||||||
Shares Outstanding (Unlimited Amount Authorized) . | 10,407,331 | 1,971,862 | 680,186 | |||||||||
Offering, Redemption and Net Asset Value Per Share | $ | 25.20 | $ | 43.81 | �� | $ | 16.00 | |||||
*Identified Cost of Investment Securities | $ | 222,625,485 | $ | 76,020,029 | $ | 5,490,821 |
The accompanying notes are an integral part of these financial statements.
30
Statements of Assets and Liabilities – continued
International Fund | Fixed Income Fund | Municipal Income Fund | ||||||||||
Assets: | ||||||||||||
Investment Securities at Fair Value* | $ | 18,255,312 | $ | 491,917,338 | $ | 146,569,881 | ||||||
Cash | 8,272 | — | 10,000 | |||||||||
Dividends and Interest Receivable | 64,873 | 3,492,820 | 1,266,391 | |||||||||
Securities Sold Receivable | — | 2,006,658 | — | |||||||||
Receivable for CMO Paydowns | — | 4,904 | — | |||||||||
Fund Shares Sold Receivable | — | — | — | |||||||||
Total Assets | $ | 18,328,457 | $ | 497,421,720 | $ | 147,846,272 | ||||||
Liabilities: | ||||||||||||
Accrued Management Fees | $ | 15,362 | $ | 345,122 | $ | 78,114 | ||||||
Due to Custodian | — | 1,693,724 | — | |||||||||
Securities Purchased Payable | — | — | 348,704 | |||||||||
Fund Shares Redeemed Payable | — | — | — | |||||||||
Total Liabilities | $ | 15,362 | $ | 2,038,846 | $ | 426,818 | ||||||
Net Assets | $ | 18,313,095 | $ | 495,382,874 | $ | 147,419,454 | ||||||
Net Assets Consist of: | ||||||||||||
Paid in Capital | $ | 15,227,392 | $ | 501,757,861 | $ | 147,419,144 | ||||||
Accumulated Undistributed Net Investment Income (Loss) | 59,186 | (180,329 | ) | 14,616 | ||||||||
Accumulated Net Realized Gain (Loss) from Security Transactions | (436,200 | ) | 72,357 | (1,567 | ) | |||||||
Net Unrealized Gain (Loss) on Investments | 3,462,717 | (6,267,015 | ) | (12,739 | ) | |||||||
Net Assets | $ | 18,313,095 | $ | 495,382,874 | $ | 147,419,454 | ||||||
Shares Outstanding (Unlimited Amount Authorized) | 709,908 | 30,237,322 | 8,654,836 | |||||||||
Offering, Redemption and Net Asset Value Per Share | $ | 25.80 | $ | 16.38 | $ | 17.03 | ||||||
*Identified Cost of Investment Securities | $ | 14,792,595 | $ | 498,184,353 | $ | 146,582,620 |
The accompanying notes are an integral part of these financial statements.
31
Statements of Operations
Equity Income Fund | Opportunity Fund | Realty Fund | ||||||||||
Six Months Ended 6/30/2018 | Six Months Ended 6/30/2018 | Six Months Ended 6/30/2018 | ||||||||||
Investment Income: | ||||||||||||
Interest | $ | 35,620 | $ | 21,413 | $ | 1,090 | ||||||
Dividends | 2,343,405 | 503,727 | 199,386 | |||||||||
Foreign withholding taxes on dividends | — | (180 | ) | — | ||||||||
Total Investment Income | $ | 2,379,025 | $ | 524,960 | $ | 200,476 | ||||||
Expenses: | ||||||||||||
Management Fee | $ | 1,129,807 | $ | 341,656 | 51,059 | |||||||
Total Expenses | $ | 1,129,807 | $ | 341,656 | $ | 51,059 | ||||||
Net Investment Income | $ | 1,249,218 | $ | 183,304 | $ | 149,417 | ||||||
Realized and Unrealized Gains/(Losses): | ||||||||||||
Net Realized Gain (Loss) from Security Transactions | $ | 13,749,861 | $ | 3,201,079 | $ | (33,712 | ) | |||||
Net Change in Unrealized Gain (Loss) on Investments | (4,824,593 | ) | (1,389,471 | ) | (5,787 | ) | ||||||
Net Gain/(Loss) on Investments | $ | 8,925,268 | $ | 1,811,608 | $ | (39,499) | ||||||
Net Change in Net Assets from Operations | $ | 10,174,486 | $ | 1,994,912 | $ | 109,918 |
The accompanying notes are an integral part of these financial statements.
32
Statements of Operations – Continued
International Fund | Fixed Income Fund | Municipal Income Fund | ||||||||||
Six Months Ended 6/30/2018 | Six Months Ended 6/30/2018 | Six Months Ended 6/30/2018 | ||||||||||
Investment Income: | ||||||||||||
Interest | $ | 4,167 | $ | 6,623,307 | $ | 1,732,522 | ||||||
Dividends | 320,842 | 89,299 | 21,927 | |||||||||
Foreign withholding taxes on Dividends | (38,909 | ) | — | — | ||||||||
Total Investment Income | $ | 286,100 | $ | 6,712,606 | $ | 1,754,449 | ||||||
Expenses: | ||||||||||||
Management Fee | $ | 91,207 | $ | 1,948,492 | $ | 445,128 | ||||||
Net Expenses | $ | 91,207 | $ | 1,948,492 | $ | 445,128 | ||||||
Net Investment Income | $ | 194,893 | $ | 4,764,114 | $ | 1,309,321 | ||||||
Realized and Unrealized Gains/(Losses): | ||||||||||||
Net Realized Gain (Loss) from Security Transactions | $ | 3,811 | $ | 246,300 | $ | (1,567 | ) | |||||
Net Change in Unrealized Gain (Loss) on Investments | (627,042 | ) | (12,170,863 | ) | (1,994,582 | ) | ||||||
Net Gain/(Loss) on Investments | $ | (623,231) | $ | (11,924,563) | $ | (1,996,149) | ||||||
Net Change in Net Assets from Operations | $ | (428,338) | $ | (7,160,449) | $ | (686,828) |
The accompanying notes are an integral part of these financial statements.
33
Statements of Changes in Net Assets
Equity Income Fund | Opportunity Fund | Realty Fund | ||||||||||||||||||||||
Six Months Ended 6/30/2018* | Year Ended 12/31/2017 | Six Months Ended 6/30/2018* | Year Ended 12/31/2017 | Six Months Ended 6/30/2018* | Year Ended 12/31/2017 | |||||||||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income | $ | 1,249,218 | $ | 1,960,186 | $ | 183,304 | $ | 171,177 | $ | 149,417 | $ | 188,427 | ||||||||||||
Net Realized Gain (Loss) from Security Transactions | 13,749,861 | 15,434,609 | 3,201,079 | 5,517,217 | (33,712 | ) | 59,677 | |||||||||||||||||
Net Change in Unrealized Gain (Loss) on Investments | (4,824,593 | ) | 21,383,528 | (1,389,471 | ) | 2,301,480 | (5,787 | ) | 370,874 | |||||||||||||||
Net Change in Net Assets from Operations | $ | 10,174,486 | $ | 38,778,323 | $ | 1,994,912 | $ | 7,989,874 | $ | 109,918 | $ | 618,978 | ||||||||||||
Distributions to Shareholders: | ||||||||||||||||||||||||
Net Investment Income | $ | — | $ | (1,939,577 | ) | $ | — | $ | (182,864 | ) | $ | (102,129 | ) | $ | (255,898 | ) | ||||||||
Return of Capital | — | — | — | — | — | — | ||||||||||||||||||
Net Realized Gain from Security Transactions | — | (12,678,975 | ) | — | (5,485,937 | ) | — | — | ||||||||||||||||
Net Change in Net Assets from Distributions | $ | — | $ | (14,618,552 | ) | $ | — | $ | (5,668,801 | ) | $ | (102,129 | ) | $ | (255,898 | ) | ||||||||
Capital Share Transactions: | ||||||||||||||||||||||||
Proceeds From Sale of Shares | $ | 17,571,169 | $ | 30,137,370 | $ | 28,432,613 | $ | 13,964,000 | $ | 80,577 | $ | 208,403 | ||||||||||||
Assets Acquired From: Growth Fund | 49,563,951 | — | — | — | — | — | ||||||||||||||||||
Shares Issued on Reinvestment of Distributions | — | 14,553,568 | — | 5,658,637 | 102,129 | 255,905 | ||||||||||||||||||
Cost of Shares Redeemed | (13,346,845 | ) | (20,593,327 | ) | (2,644,608 | ) | (4,852,966 | ) | (271,401 | ) | (486,907 | ) | ||||||||||||
Net Change in Net Assets from Capital Share Transactions | $ | 53,788,275 | $ | 24,097,611 | $ | 25,788,005 | $ | 14,769,671 | $ | (88,695 | ) | $ | (22,599 | ) | ||||||||||
Net Change in Net Assets | $ | 63,962,761 | $ | 48,257,382 | $ | 27,782,917 | $ | 17,090,744 | $ | (80,906) | $ | 340,481 | ||||||||||||
Net Assets at Beginning of Period | $ | 198,276,571 | $ | 150,019,189 | $ | 58,613,751 | $ | 41,523,007 | $ | 10,962,385 | $ | 10,621,904 | ||||||||||||
Net Assets at End of Period | $ | 262,239,332 | $ | 198,276,571 | $ | 86,396,668 | $ | 58,613,751 | $ | 10,881,479 | $ | 10,962,385 | ||||||||||||
Including accumulated undistributed net investment income (loss) of | $ | 1,268,992 | $ | 19,774 | $ | 183,304 | $ | — | $ | 47,288 | $ | — |
* | Unaudited |
The accompanying notes are an integral part of these financial statements.
34
Statements of Changes in Net Assets – Continued
International Fund | Fixed Income Fund | Municipal Income Fund | ||||||||||||||||||||||
Six Months Ended 6/30/2018* | Year Ended 12/31/2017 | Six Months Ended 6/30/2018* | Year Ended 12/31/2017 | Six Months Ended 6/30/2018* | Year Ended 12/31/2017 | |||||||||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income | $ | 194,893 | $ | 244,277 | $ | 4,764,114 | $ | 6,388,893 | $ | 1,309,321 | $ | 1,864,578 | ||||||||||||
Net Realized Gain (Loss) from Security Transactions | 3,811 | (126,955 | ) | 246,300 | 1,298,390 | (1,567 | ) | 58,804 | ||||||||||||||||
Net Change in Unrealized Gain (Loss) on Investments | (627,042 | ) | 2,831,452 | (12,170,863 | ) | 2,786,440 | (1,994,582 | ) | 1,123,221 | |||||||||||||||
Net Change in Net Assets from Operations | $ | (428,338 | ) | $ | 2,948,774 | $ | (7,160,449 | ) | $ | 10,473,723 | $ | (686,828 | ) | $ | 3,046,603 | |||||||||
Distributions to Shareholders: | ||||||||||||||||||||||||
Net Investment Income | $ | — | $ | (255,533 | ) | $ | (4,964,855 | ) | $ | (6,824,138 | ) | $ | (1,294,705 | ) | $ | (1,864,295 | ) | |||||||
Return of Capital | — | — | — | — | — | — | ||||||||||||||||||
Net Realized Gain from Security Transactions | — | — | — | (837,298 | ) | — | (71,272 | ) | ||||||||||||||||
Net Change in Net Assets from Distributions | $ | — | $ | (255,533 | ) | $ | (4,964,855 | ) | $ | (7,661,436 | ) | $ | (1,294,705 | ) | $ | (1,935,567 | ) | |||||||
Capital Share Transactions: | ||||||||||||||||||||||||
Proceeds From Sale of Shares | $ | 1,927,170 | $ | 2,301,022 | $ | 107,522,470 | $ | 137,993,361 | $ | 32,864,919 | $ | 44,583,013 | ||||||||||||
Shares Issued on Reinvestment of Distributions | — | 255,470 | 4,868,932 | 7,520,933 | 1,266,433 | 1,887,083 | ||||||||||||||||||
Cost of Shares Redeemed | (864,828 | ) | (1,746,316 | ) | (22,543,495 | ) | (33,777,011 | ) | (8,654,392 | ) | (11,409,369 | ) | ||||||||||||
Net Change in Net Assets from Capital Share Transactions | $ | 1,062,342 | $ | 810,176 | $ | 89,847,907 | $ | 111,737,283 | $ | 25,476,960 | $ | 35,060,727 | ||||||||||||
Net Change in Net Assets | $ | 634,004 | $ | 3,503,417 | $ | 77,722,603 | $ | 114,549,570 | $ | 23,495,427 | $ | 36,171,763 | ||||||||||||
Net Assets at Beginning of Period | $ | 17,679,091 | $ | 14,175,674 | $ | 417,660,271 | $ | 303,110,701 | $ | 123,924,027 | $ | 87,752,264 | ||||||||||||
Net Assets at End of Period | $ | 18,313,095 | $ | 17,679,091 | $ | 495,382,874 | $ | 417,660,271 | $ | 147,419,454 | $ | 123,924,027 | ||||||||||||
Including accumulated undistributed net investment income (loss) of | $ | 59,186 | $ | 59,186 | $ | (180,329 | ) | $ | (180,329 | ) | $ | 14,616 | $ | 14,616 |
* | 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 6/30/2018* | Year Ended December 31 | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net Asset Value Beginning of Period | $ | 25.12 | $ | 21.67 | $ | 19.92 | $ | 22.93 | $ | 23.11 | $ | 19.00 | ||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income | 0.12 | 0.26 | 0.29 | 0.38 | 0.30 | 0.27 | ||||||||||||||||||
Net Gains (Losses) on Securities (Realized & Unrealized)** | (0.04 | ) | 5.15 | 2.13 | (1.87 | ) | 1.51 | 5.63 | ||||||||||||||||
Total Operations | $ | 0.08 | $ | 5.41 | $ | 2.42 | $ | (1.49 | ) | $ | 1.81 | $ | 5.90 | |||||||||||
Distributions: | ||||||||||||||||||||||||
Net Investment Income | — | (0.26 | ) | (0.29 | ) | (0.38 | ) | (0.30 | ) | (0.27 | ) | |||||||||||||
Net Realized Capital Gains | $ | — | (1.70 | ) | (0.38 | ) | (1.14 | ) | (1.69 | ) | (1.52 | ) | ||||||||||||
Total Distributions | $ | — | $ | (1.96 | ) | $ | (0.67 | ) | $ | (1.52 | ) | $ | (1.99 | ) | $ | (1.79 | ) | |||||||
Net Asset Value End of Period | $ | 25.20 | $ | 25.12 | $ | 21.67 | $ | 19.92 | $ | 22.93 | $ | 23.11 | ||||||||||||
Total Return(a) | 0.32 | %(b) | 25.03 | % | 12.16 | % | (6.56) | % | 7.73 | % | 31.09 | % | ||||||||||||
Net Assets, End of Period (Millions) | $ | 262.24 | $ | 198.28 | $ | 150.02 | $ | 132.19 | $ | 150.13 | $ | 131.14 | ||||||||||||
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 | 1.10 | %(c) | 1.13 | % | 1.39 | % | 1.62 | % | 1.28 | % | 1.27 | % | ||||||||||||
Portfolio Turnover Rate | 16.96 | %(b) | 34.76 | % | 42.36 | % | 39.41 | % | 27.89 | % | 34.31 | % |
* | 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.
36
Selected Data for a Share Outstanding Throughout each Period:
Six Months Ended 6/30/2018* | Year Ended December 31 | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net Asset Value Beginning of Period | $ | 42.89 | $ | 40.54 | $ | 35.08 | $ | 39.35 | $ | 42.14 | $ | 31.69 | ||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income | 0.09 | 0.14 | 0.20 | 0.18 | 0.08 | 0.12 | ||||||||||||||||||
Net Gains (Losses) on Securities (Realized & Unrealized) | 0.83 | 6.74 | 6.09 | (1.08 | ) | 1.80 | 13.33 | |||||||||||||||||
Total Operations | $ | 0.92 | $ | 6.88 | $ | 6.29 | $ | (0.90 | ) | $ | 1.88 | $ | 13.45 | |||||||||||
Distributions: | ||||||||||||||||||||||||
Net Investment Income | — | (0.14 | ) | (0.20 | ) | (0.20 | ) | (0.11 | ) | (0.17 | ) | |||||||||||||
Return of Capital | — | — | (0.05 | ) | — | — | — | |||||||||||||||||
Net Realized Capital Gains | — | (4.39 | ) | (0.58 | ) | (3.17 | ) | (4.56 | ) | (2.83 | ) | |||||||||||||
Total Distributions | $ | — | $ | (4.53 | ) | $ | (0.83 | ) | $ | (3.37 | ) | $ | (4.67 | ) | $ | (3.00 | ) | |||||||
Net Asset Value End of Period | $ | 43.81 | $ | 42.89 | $ | 40.54 | $ | 35.08 | $ | 39.35 | $ | 42.14 | ||||||||||||
Total Return(a) | 2.15 | %(b) | 16.91 | % | 17.90 | % | (2.39) | % | 4.37 | % | 42.51 | % | ||||||||||||
Net Assets, End of Period (Millions) | $ | 86.40 | $ | 58.61 | $ | 41.52 | $ | 37.77 | $ | 44.88 | $ | 44.38 | ||||||||||||
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 | 0.54 | %(c) | 0.35 | % | 0.50 | % | 0.40 | % | 0.19 | % | 0.30 | % | ||||||||||||
Portfolio Turnover Rate | 18.67 | %(b) | 41.50 | % | 34.62 | % | 35.17 | % | 38.37 | % | 72.36 | % |
* | 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 6/30/2018* | Year Ended December 31 | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net Asset Value Beginning of Period | $ | 15.93 | $ | 15.40 | $ | 15.03 | $ | 15.76 | $ | 13.20 | $ | 14.05 | ||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income | 0.21 | 0.27 | 0.23 | 0.21 | 0.26 | 0.29 | ||||||||||||||||||
Net Gains (Losses) on Securities (Realized & Unrealized)** | — | 0.63 | 0.76 | 0.21 | 3.54 | (0.11 | ) | |||||||||||||||||
Total Operations | $ | 0.21 | $ | 0.90 | $ | 0.99 | $ | 0.42 | $ | 3.80 | $ | 0.18 | ||||||||||||
Distributions: | ||||||||||||||||||||||||
Net Investment Income | (0.14 | ) | (0.37 | ) | (0.41 | ) | (0.36 | ) | (0.39 | ) | (0.29 | ) | ||||||||||||
Return of Capital | — | — | (0.01 | ) | — | — | — | |||||||||||||||||
Net Realized Capital Gains | — | — | (0.20 | ) | (0.79 | ) | (0.85 | ) | (0.74 | ) | ||||||||||||||
Total Distributions | $ | (0.14 | ) | $ | (0.37 | ) | $ | (0.62 | ) | $ | (1.15 | ) | $ | (1.24 | ) | $ | (1.03 | ) | ||||||
Net Asset Value End of Period | $ | 16.00 | $ | 15.93 | $ | 15.40 | $ | 15.03 | $ | 15.76 | $ | 13.20 | ||||||||||||
Total Return(a) | 1.42 | %(b) | 5.93 | % | 6.57 | % | 2.75 | % | 28.92 | % | 1.19 | % | ||||||||||||
Net Assets, End of Period (Millions) | $ | 10.88 | $ | 10.96 | $ | 10.62 | $ | 10.11 | $ | 11.08 | $ | 10.14 | ||||||||||||
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 | 2.93 | %(c) | 1.75 | % | 1.42 | % | 1.51 | % | 1.57 | % | 1.43 | % | ||||||||||||
Portfolio Turnover Rate | 0.00 | %(b) | 0.00 | % | 3.95 | % | 2.28 | % | 1.04 | % | 9.97 | % |
* | 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.
38
Selected Data for a Share Outstanding Throughout each Period:
Six Months Ended 6/30/2018* | Year Ended December 31 | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net Asset Value Beginning of Period | $ | 26.37 | $ | 22.20 | $ | 22.01 | $ | 24.23 | $ | 25.07 | $ | 22.23 | ||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income (Loss) | 0.29 | 0.37 | 0.43 | 0.57 | 0.54 | 0.39 | ||||||||||||||||||
Net Gains (Losses) on Securities (Realized & Unrealized) | (0.86 | ) | 4.18 | 0.23 | (2.11 | ) | (0.83 | ) | 2.90 | |||||||||||||||
Total Operations | $ | (0.57 | ) | $ | 4.55 | $ | 0.66 | $ | (1.54 | ) | $ | (0.29 | ) | $ | 3.29 | |||||||||
Distributions: | ||||||||||||||||||||||||
Net Investment Income | — | (0.38 | ) | (0.45 | ) | (0.68 | ) | (0.55 | ) | (0.45 | ) | |||||||||||||
Return of Capital | — | — | (0.02 | ) | — | — | — | |||||||||||||||||
Net Realized Capital Gains | — | — | — | — | — | — | ||||||||||||||||||
Total Distributions | $ | — | $ | (0.38 | ) | $ | (0.47 | ) | $ | (0.68 | ) | $ | (0.55 | ) | $ | (0.45 | ) | |||||||
Net Asset Value End of Period | $ | 25.80 | $ | 26.37 | $ | 22.20 | $ | 22.01 | $ | 24.23 | $ | 25.07 | ||||||||||||
Total Return(a) | (2.16) | %(b) | 20.50 | % | 3.00 | % | (6.38) | % | (1.16) | % | 14.81 | % | ||||||||||||
Net Assets, End of Period (Millions) | $ | 18.31 | $ | 17.68 | $ | 14.18 | $ | 13.09 | $ | 18.23 | $ | 16.74 | ||||||||||||
Ratios(c) | ||||||||||||||||||||||||
Ratio of Expenses to Average Net Assets before Waiver | 1.00 | %(d) | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.19 | % | ||||||||||||
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 | 2.14 | %(d) | 1.53 | % | 1.95 | % | 1.85 | % | 2.20 | % | 1.51 | % | ||||||||||||
Average Net Assets after Waiver | 2.14 | %(d) | 1.53 | % | 1.95 | % | 1.85 | % | 2.20 | % | 1.70 | % | ||||||||||||
Portfolio Turnover Rate | 3.82 | %(b) | 2.48 | % | 7.71 | % | 20.49 | % | 10.25 | % | 5.23 | % |
* | 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) | For the year ended December 31, 2013, 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.
39
Selected Data for a Share Outstanding Throughout each Period:
Six Months Ended 6/30/2018* | Year Ended December 31 | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net Asset Value Beginning of Period | $ | 16.84 | $ | 16.67 | $ | 16.61 | $ | 17.03 | $ | 16.47 | $ | 17.37 | ||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income | 0.16 | 0.31 | 0.30 | 0.32 | 0.35 | 0.35 | ||||||||||||||||||
Net Gains on Securities (Realized & Unrealized) | (0.45 | ) | 0.22 | 0.21 | (0.27 | ) | 0.71 | (0.76 | ) | |||||||||||||||
Total Operations | $ | (0.29 | ) | $ | 0.53 | $ | 0.51 | $ | 0.05 | $ | 1.06 | $ | (0.41 | ) | ||||||||||
Distributions: | ||||||||||||||||||||||||
Net Investment Income | (0.17 | ) | (0.33 | ) | (0.32 | ) | (0.35 | ) | (0.39 | ) | (0.41 | ) | ||||||||||||
Return of Capital | — | — | — | (a) | — | — | — | |||||||||||||||||
Net Realized Capital Gains | — | (0.03 | ) | (0.13 | ) | (0.12 | ) | (0.11 | ) | (0.08 | ) | |||||||||||||
Total Distributions | $ | (0.17 | ) | $ | (0.36 | ) | $ | (0.45 | ) | $ | (0.47 | ) | $ | (0.50 | ) | $ | (0.49 | ) | ||||||
Net Asset Value End of Period | $ | 16.38 | $ | 16.84 | $ | 16.67 | $ | 16.61 | $ | 17.03 | $ | 16.47 | ||||||||||||
Total Return(b) | (1.73) | %(c) | 3.22 | % | 3.08 | % | 0.32 | % | 6.48 | % | (2.36) | % | ||||||||||||
Net Assets, End of Period (Millions) | $ | 495.38 | $ | 417.66 | $ | 303.11 | $ | 244.24 | $ | 226.14 | $ | 224.67 | ||||||||||||
Ratios(d) | ||||||||||||||||||||||||
Ratio of Expenses to Average Net Assets before Waiver | 0.85 | %(e) | 0.85 | % | 0.85 | % | 0.85 | % | 0.85 | % | 0.92 | % | ||||||||||||
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 | 2.08 | %(e) | 1.88 | % | 1.83 | % | 1.90 | % | 2.08 | % | 2.00 | % | ||||||||||||
Average Net Assets after Waiver | 2.08 | %(e) | 1.88 | % | 1.83 | % | 1.90 | % | 2.08 | % | 2.07 | % | ||||||||||||
Portfolio Turnover Rate | 40.31 | %(c) | 34.97 | % | 40.80 | % | 37.09 | % | 27.79 | % | 48.53 | % |
* | 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) | For the year ended December 31, 2013, 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.
40
Selected Data for a Share Outstanding Throughout each Period:
Six Months Ended 6/30/2018* | Year Ended December 31 | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net Asset Value Beginning of Period | $ | 17.29 | $ | 17.06 | $ | 17.36 | $ | 17.32 | $ | 16.83 | $ | 17.49 | ||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income | 0.15 | 0.31 | 0.31 | 0.34 | 0.37 | 0.38 | ||||||||||||||||||
Net Gains (Losses) on Securities (Realized & Unrealized) | (0.26 | ) | 0.24 | (0.30 | ) | 0.06 | 0.53 | (0.64 | ) | |||||||||||||||
Total Operations | $ | (0.11 | ) | $ | 0.55 | $ | 0.01 | $ | 0.40 | $ | 0.90 | $ | (0.26 | ) | ||||||||||
Distributions: | ||||||||||||||||||||||||
Net Investment Income | (0.15 | ) | (0.31 | ) | (0.31 | ) | (0.34 | ) | (0.38 | ) | (0.38 | ) | ||||||||||||
Return of Capital | — | — | — | (a) | (0.00)(a) | — | — | |||||||||||||||||
Net Realized Capital Gains | — | (0.01 | ) | — | (0.02 | ) | (0.03 | ) | (0.02 | ) | ||||||||||||||
Total Distributions | $ | (0.15 | ) | $ | (0.32 | ) | $ | (0.31 | ) | $ | (0.36 | ) | $ | (0.41 | ) | $ | (0.40 | ) | ||||||
Net Asset Value End of Period | $ | 17.03 | $ | 17.29 | $ | 17.06 | $ | 17.36 | $ | 17.32 | $ | 16.83 | ||||||||||||
Total Return(b) | (0.62) | %(c) | 3.25 | % | 0.05 | % | 2.34 | % | 5.41 | % | (1.52) | % | ||||||||||||
Net Assets, End of Period (Millions) | $ | 147.42 | $ | 123.92 | $ | 87.75 | $ | 66.51 | $ | 58.98 | $ | 56.29 | ||||||||||||
Ratios(d) | ||||||||||||||||||||||||
Ratio of Expenses to Average Net Assets before Waiver | 0.65 | %(e) | 0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | 0.81 | % | ||||||||||||
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) | 1.85 | % | 1.85 | % | 1.98 | % | 2.19 | % | 2.10 | % | ||||||||||||
Average Net Assets after Waiver | 1.91 | %(e) | 1.85 | % | 1.85 | % | 1.98 | % | 2.19 | % | 2.26 | % | ||||||||||||
Portfolio Turnover Rate | 2.23 | %(c) | 12.49 | % | 10.05 | % | 13.31 | % | 18.24 | % | 8.96 | % |
* | 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) | For the years ended December 31, 2013, 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.
41
1) Organization
The Johnson Equity Income 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 net assets of the Johnson Growth Fund were merged with the Johnson Equity Income Fund in a tax-free reorganization on April 20, 2018, and the Growth Fund was subsequently closed. See Note 10 for details of the merger. The Johnson Mutual Funds Trust was established as an Ohio business trust under an Agreement and Declaration of Trust dated September 30, 1992. The Fixed Income Fund began offering its 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 | |
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 Funds are each diversified. The Municipal Income Fund 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, “Financial Services — Investment Companies.”
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 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 generally required.
42
2) Significant Accounting Policies, continued
Accounting for Uncertainty in Income Taxes:
As of and during the six months ended June 30, 2018, and for all open tax years, 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, 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.
For the year ended December 31, 2017, the Funds made the following reclassifications to increase (decrease) the components of the net assets:
Paid in Capital | Accumulated Undistributed Net Investment Income (Loss) | Accumulated Net Realized Gain (Loss) | ||||||||||
Equity Income Fund | $ | (533 | ) | $ | (835 | ) | $ | 1,368 | ||||
Growth Fund | — | — | — | |||||||||
Opportunity Fund | — | 11,687 | (11,687 | ) | ||||||||
Realty Fund | (7,794 | ) | 67,471 | (59,677 | ) | |||||||
International Fund | (18,694 | ) | 18,694 | — | ||||||||
Fixed Income Fund | — | 455,687 | (455,657 | ) | ||||||||
Municipal Income Fund | (12,185 | ) | (283 | ) | 12,468 |
Reasons for the reclassification of components of net assets are attributable to capital gain distributions from REIT holdings, distribution re-designation for return of capital distributions and/or paydowns received during the year from collateralized mortgage obligations.
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.
43
3) Security Valuation and Transactions, continued
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.
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. When adjustments to observable prices are applied or when the market is considered inactive, securities will be categorized in Level 2 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.
44
3) Security Valuation and Transactions, continued
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 financial statements 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 investment securities as of June 30, 2018:
Equity Income Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks* | $ | 258,651,612 | $ | — | $ | — | $ | 258,651,612 | ||||||||
Cash Equivalents | 3,415,927 | — | — | 3,415,927 | ||||||||||||
Total | $ | 262,067,539 | $ | — | $ | — | $ | 262,067,539 |
Opportunity Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks* | $ | 83,872,981 | $ | — | $ | — | $ | 83,872,981 | ||||||||
Cash Equivalents | 3,109,215 | — | — | 3,109,215 | ||||||||||||
Total | $ | 86,982,196 | $ | — | $ | — | $ | 86,982,196 |
Realty Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Real Estate Investment Trusts* | $ | 10,739,785 | $ | — | $ | — | $ | 10,739,785 | ||||||||
Cash Equivalents | 113,748 | — | — | 113,748 | ||||||||||||
Total | $ | 10,853,533 | $ | — | $ | — | $ | 10,853,533 |
International Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks* | $ | 17,938,572 | $ | — | $ | — | $ | 17,938,572 | ||||||||
Cash Equivalents | 316,740 | — | — | 316,740 | ||||||||||||
Total | $ | 18,255,312 | $ | — | $ | — | $ | 18,255,312 |
Fixed Income Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Corporate Bonds* | $ | — | $ | 248,694,413 | $ | — | $ | 248,694,413 | ||||||||
U.S. Government Treasury Obligations | — | 96,294,464 | — | 96,294,464 | ||||||||||||
U.S. Government Agency Obligations | — | 43,625,134 | — | 43,625,134 | ||||||||||||
U.S. Government Agency Obligations – Mortgage-Backed | — | 76,243,129 | — | 76,243,129 | ||||||||||||
Taxable Municipal Bonds | — | 23,416,795 | — | 23,416,795 | ||||||||||||
Preferred Stocks | 3,643,403 | — | — | 3,643,403 | ||||||||||||
Total | $ | 3,643,403 | $ | 488,273,935 | $ | — | 491,917,338 |
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3) Security Valuation and Transactions, continued
Municipal Income Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Municipal Bonds* | $ | — | $ | 142,583,714 | $ | — | $ | 142,583,714 | ||||||||
Cash Equivalents | 3,986,167 | — | — | 3,896,167 | ||||||||||||
Total | $ | 3,986,167 | $ | 142,583,714 | $ | — | $ | 146,569,881 |
* | See Portfolio 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 months ended June 30, 2018, 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 the six months ended June 30, 2018.
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 interest), and extraordinary expenses.
The Adviser received management fees for the six months ended June 30, 2018, as indicated below.
Fund | Fee | Management Fee | Payable as of June 30, 2018 | |||||||||
Equity Income Fund | 1.00 | % | $ | 1,129,807 | $ | 217,970 | ||||||
Opportunity Fund | 1.00 | % | 341,656 | 71,900 | ||||||||
Realty Fund | 1.00 | % | 51,059 | 8,790 | ||||||||
International Fund | 1.00 | % | 91,207 | 15,362 | ||||||||
Fixed Income Fund | 0.85 | % | 1,948,492 | 345,122 | ||||||||
Municipal Income Fund | 0.65 | % | 445,128 | 78,114 |
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 $24,000 for the six months ended June 30, 2018, 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 ten Funds: Johnson Equity Income 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, 2018, client accounts managed by the Adviser and held by Charles Schwab & Co, with full advisory discretion, held in aggregate the following:
Equity Income Fund | 63.45 | % | International Fund | 31.59 | % | |||||||
Opportunity Fund | 78.00 | % | Fixed Income Fund | 90.48 | % | |||||||
Realty Fund | 74.87 | % | Municipal Income Fund | 96.84 | % |
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5) Related Party Transactions, continued
Johnson Financial, Inc. is a wholly-owned subsidiary of the Adviser. Johnson Financial, Inc. provides transfer agency and administration services to the Funds. These services are paid for by the Adviser.
6) Purchases and Sales of Securities
From January 1, 2018 through June 30, 2018, 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 | $ | 93,503,380 | $ | 38,129,125 | $ | — | $ | — | ||||||||
Johnson Opportunity Fund | 36,101,420 | 12,397,844 | — | — | ||||||||||||
Johnson Realty Fund | — | — | — | — | ||||||||||||
Johnson International Fund | 1,828,398 | 675,601 | — | — | ||||||||||||
Johnson Fixed Income Fund | 115,043,619 | 47,282,869 | 61,885,016 | 33,030,402 | ||||||||||||
Johnson Municipal Income Fund | 26,216,758 | 2,770,000 | — | — |
7) Capital Share Transactions
As of June 30, 2018, 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.
Johnson Equity Income Fund | Johnson Opportunity Fund | Johnson Realty Fund | ||||||||||||||||||||||
Six months ended 6/30/18 | Year ended 12/31/2017 | Six months ended 6/30/18 | Year ended 12/31/2017 | Six months ended 6/30/18 | Year ended 12/31/2017 | |||||||||||||||||||
Shares Sold to Investors | 3,015,728 | 1,245,288 | 665,973 | 323,880 | 3,333 | 13,171 | ||||||||||||||||||
Shares Issued on Reinvestment of Dividends | — | 579,448 | — | 131,294 | 6,650 | 16,288 | ||||||||||||||||||
Subtotal | 3,015,728 | 1,824,736 | 665,973 | 455,174 | 9,983 | 29,459 | ||||||||||||||||||
Shares Redeemed | (502,918 | ) | (851,872 | ) | (60,835 | ) | (112,740 | ) | (17,951 | ) | (31,225 | ) | ||||||||||||
Net Change | 2,512,810 | 972,864 | 605,138 | 342,434 | (7,968 | ) | (1,766 | ) | ||||||||||||||||
Shares Outstanding: | ||||||||||||||||||||||||
Beginning of Year | 7,894,521 | 6,921,657 | 1,366,724 | 1,024,290 | 688,154 | 689,920 | ||||||||||||||||||
End of Period | 10,407,331 | 7,894,521 | 1,971,862 | 1,366,724 | 680,186 | 688,154 |
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7) Capital Share Transactions, continued
Johnson International Fund | Johnson Fixed Income Fund | Johnson Municipal Income Fund | ||||||||||||||||||||||
Six months ended 6/30/18 | Year ended 12/31/2017 | Six months ended 6/30/18 | Year ended 12/31/2017 | Six months ended 6/30/18 | Year ended 12/31/2017 | |||||||||||||||||||
Shares Sold to Investors | 71,822 | 92,853 | 6,509,113 | 8,176,390 | 1,920,385 | 2,574,023 | ||||||||||||||||||
Shares Issued on Reinvestment of Dividends | — | 9,695 | 296,542 | 447,114 | 74,385 | 109,262 | ||||||||||||||||||
Subtotal | 71,822 | 102,548 | 6,805,655 | 8,623,504 | 1,994,770 | 2,683,285 | ||||||||||||||||||
Shares Redeemed | (32,328 | ) | (70,669 | ) | (1,367,574 | ) | (2,004,861 | ) | (507,128 | ) | (658,911 | ) | ||||||||||||
Net Change | 39,494 | 31,879 | 5,438,081 | 6,618,863 | 1,487,642 | 2,024,374 | ||||||||||||||||||
Shares Outstanding: | ||||||||||||||||||||||||
Beginning of Year | 670,414 | 638,535 | 24,799,241 | 18,180,598 | 7,167,194 | 5,142,820 | ||||||||||||||||||
End of Period | 709,908 | 670,414 | 30,237,322 | 24,799,241 | 8,654,836 | 7,167,194 |
8) 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.
9) Federal Tax Information
As of June 30, 2018, 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 | $ | 222,625,485 | $ | 47,355,935 | $ | (7,913,881 | ) | $ | 39,442,054 | |||||||
Johnson Opportunity Fund | 76,020,029 | 13,116,759 | (2,154,592 | ) | 10,962,167 | |||||||||||
Johnson Realty Fund | 5,490,821 | 5,423,885 | (61,173 | ) | 5,362,712 | |||||||||||
Johnson International Fund | 14,792,595 | 4,373,017 | (910,300 | ) | 3,462,717 | |||||||||||
Johnson Fixed Income Fund | 498,184,353 | 3,621,414 | (9,888,429 | ) | (6,267,015 | ) | ||||||||||
Johnson Municipal Income Fund | 146,582,620 | 1,128,565 | (1,141,304 | ) | (12,739 | ) |
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9) Federal Tax Information, continued
The tax character of the distributions paid, as of December 31, 2017, is as follows:
Tax year | Ordinary Income | Tax-Exempt Income | Net Realized Long-Term Capital Gain | Return of Capital | Total Distributions Paid | |||||||||||||||||||
Johnson Equity Income Fund | 2016 | $ | 1,949,411 | $ | — | $ | 2,606,180 | $ | — | $ | 4,555,591 | |||||||||||||
2017 | 5,965,055 | — | 8,653,497 | — | 14,618,554 | |||||||||||||||||||
Johnson Growth Fund | 2016 | 239,727 | — | 344,231 | — | 583,958 | ||||||||||||||||||
2017 | 1,048,484 | — | 4,441,492 | — | 5,489,976 | |||||||||||||||||||
Johnson Opportunity Fund | 2016 | 301,204 | — | 474,807 | 52,540 | 828,551 | ||||||||||||||||||
2017 | 1,009,120 | — | 4,659,681 | — | 5,668,801 | |||||||||||||||||||
Johnson Realty Fund | 2016 | 183,389 | — | 228,985 | 7,600 | 419,974 | ||||||||||||||||||
2017 | 189,962 | — | 58,142 | 7,794 | 255,898 | |||||||||||||||||||
Johnson International Fund | 2016 | 284,581 | — | — | 10,100 | 294,681 | ||||||||||||||||||
2017 | 236,839 | — | — | 18,694 | 255,533 | |||||||||||||||||||
Johnson Fixed Income Fund | 2016 | 5,577,177 | — | 1,991,238 | 46,870 | 7,615,285 | ||||||||||||||||||
2017 | 6,824,138 | — | 837,298 | — | 7,661,436 | |||||||||||||||||||
Johnson Municipal Income Fund | 2016 | — | 1,392,042 | 7,636 | 2,906 | 1,402,584 | ||||||||||||||||||
2017 | — | 1,864,578 | 58,804 | 12,185 | 1,935,567 |
* | Short-Term Capital Gains were combined with Ordinary Income, as they are taxed at the Ordinary Income tax rate. |
As of December 31, 2017, 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:
Indefinite Long-Term | Indefinite Short-Term | Total Capital Loss Carryover | ||||||||||
Johnson International Fund | $ | 288,479 | $ | 151,254 | $ | 439,733 |
As of December 31, 2017, 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 | Post-October/ Late Year Net Investment Losses | Total Distributable Earnings on a tax basis | |||||||||||||||||||
Johnson Equity Income Fund | $ | 1,600,063 | $ | — | $ | 1,963,701 | $ | 44,263,841 | $ | — | $ | 47,827,605 | ||||||||||||
Johnson Growth Fund | 9,523 | — | 4,184 | 14,490,931 | — | 14,504,638 | ||||||||||||||||||
Johnson Opportunity Fund | — | — | 19,593 | 12,351,638 | — | 12,371,231 | ||||||||||||||||||
Johnson Realty Fund | — | — | — | 5,364,511 | — | 5,364,511 | ||||||||||||||||||
Johnson International Fund | — | (439,733 | ) | — | 3,983,987 | (11,519 | ) | 3,532,735 | ||||||||||||||||
Johnson Fixed Income Fund | 20,412 | — | 5,434 | 5,724,471 | — | 5,750,317 | ||||||||||||||||||
Johnson Municipal Income Fund | — | — | — | 1,981,843 | — | 1,981,843 |
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10) Merger of the Equity Income Fund and the Growth Fund
The Equity Income Fund acquired all of the assets and liabilities of the Growth Fund in a tax-free reorganization at the close of business on April 20, 2018, pursuant to an Agreement and Plan of Reorganization approved the by Board of Trustees of the Johnson Mutual Funds Trust on January 31, 2018. The acquisition was accomplished by a tax-free exchange of 1,750,757.706 shares of the Growth Fund (valued at $28.31 per share) for 1,988,124.783 shares of the Equity Income Fund (valued at $24.93 per share). Each share of the Growth Fund was exchanged for 1.13558 shares of the Equity Income Fund. The Growth Fund’s net assets, on the day of reorganization, were $49,563,951 including $9,052,398 of unrealized appreciation, and were combined with the Equity Income Fund’s net assets. The net assets of the Equity Income Fund and the Growth Fund, immediately before the acquisition, were $209,271,028, and 49,563,951, respectively. The combined net assets immediately after the acquisition were $258,834,979 for 10,382,470 shares outstanding.
Assuming the reorganization had been completed on January 1, 2018, the beginning of the annual reporting period for both Funds, the Equity Income Fund’s pro forma results of operations for the period ended June 30, 2018 are as follows:
Net investment income | $ | 1,341,992 | ||
Net realized gain (loss) on investment transactions | 19,531,714 | |||
Net change in unrealized appreciation (depreciation) on investments | 48,494,452 | |||
Net increase (decrease) in net assets resulting from operations | $ | 69,368,158 |
Because the combined investment portfolios have been managed as a single integrated portfolio since the Reorganization has been completed, it is not practicable to separate the amounts of revenue and earnings of the Growth Fund that have been included in the Equity Income Fund’s statement of operations since April 20, 2018.
11) Subsequent Event
On August 1, 2018, the Trustees approved a Plan of Liquidation for the Realty Fund that authorizes the liquidation of the Realty Fund on or about November 1, 2018.
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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, 2017 and held through June 30, 2018.
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, 2017 | Ending Account Value June 30, 2018 | Expenses Paid During Period* January 1, 2018 – June 30, 2018 | ||||||||||
Johnson Equity Income Fund | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 1,003.20 | $ | 4.97 | ||||||
Hypothetical Return | $ | 1,000.00 | $ | 1,019.84 | $ | 5.01 | ||||||
Johnson Opportunity Fund | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 1,021.50 | $ | 5.01 | ||||||
Hypothetical Return | $ | 1,000.00 | $ | 1019.84 | $ | 5.01 | ||||||
Johnson Realty Fund | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 1,014.20 | $ | 4.99 | ||||||
Hypothetical Return | $ | 1,000.00 | $ | 1,019.84 | $ | 5.01 | ||||||
Johnson International Fund | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 978.40 | $ | 4.91 | ||||||
Hypothetical Return | $ | 1,000.00 | $ | 1,019.84 | $ | 5.01 | ||||||
Johnson Fixed Income Fund | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 982.70 | $ | 4.18 | ||||||
Hypothetical Return | $ | 1,000.00 | $ | 1,020.58 | $ | 4.26 | ||||||
Johnson Municipal Income Fund | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 993.80 | $ | 3.21 | ||||||
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 30, 2018, the Trustees, including the Trustees who are not “interested persons” of the Trust (the “Independent Trustees”), then 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 by the Adviser to the Funds, the compensation received for management services, Fund performance for various periods ended March 31, 2018 and May 29, 2018, profitability of the Adviser with respect to the Funds and economies of scale.
With respect 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 discussed the Adviser’s experience and capabilities. The Board noted that the Adviser has been providing services to the Trust since 1992 and the 10 Funds, which includes four institutional funds. The Board reviewed the firm personnel who serve as portfolio managers to the various Funds. The Trustees noted that they were satisfied with the portfolio management and other management services being provided to the Funds by the Adviser. The Trustees noted their cooperative relationship with the Adviser. The Trustees next discussed the Adviser’s personnel, in particular those dedicated to portfolio management and fund matters. The Trustees then discussed the Adviser’s compliance program, the resources allocated to compliance matters and the responsiveness of the Adviser to issues raised by the Trust’s chief compliance officer. Additionally, the Trustees noted that there not any recent litigations or regulatory investigations related to the Adviser. A representative of the Adviser provided an overview of the Adviser’s financial status and reviewed 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 satisfactory, 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.
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 ended March 31, 2018 and May 29, 2018. 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. The Board also reviewed the Adviser’s expectations as to each Fund’s risk/return profile as measured by its standard deviation as opposed to its benchmark.
The Trustees recognized that the Equity Income Fund had slightly underperformed the S&P 500 Index for the 3-year period but had recently significantly outperformed the Index more recently for the 1-year period benchmark, the S&P 500 Index, for the 3-year period but had also outperformed the Index for 1-year period. With respect to the Opportunity Fund, the Trustees noted that the Fund had outperformed the Russell 2500 Index for the 1 year and 3-year periods. The Board next discussed the performance of the Realty Fund, noting that it had also outperformed its benchmark for the 1-year and 3-year periods. The Trustees noted the International Fund slightly underperformed its benchmark for each of the periods. Next, the Trustees reviewed the performance of the Fixed Income Fund, noting that the Fund’s returns has slightly lagged those of its benchmark, the Barclays U.S. Aggregate Bond Index. The Trustees noted that the Municipal Income Fund had outperformed the Barclays 5-year GO Index for the 1-year, 3-year and 5-year periods. After discussion, the Trustees agreed that each of the Funds had reasonable performance.
The Trustees then reviewed each of the Institutional Funds. 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 each of the 1, 3 and 5-year periods. Next, the Trustees discussed the performance of the Intermediate Bond Fund, noting that it had outperformed the Barclays Intermediate U.S. Government Credit Index for all periods as well. With respect to the Core Bond Fund, the Board noted that the Fund had also outperformed the Barclays U.S. Aggregate
52
Index for the 1, 3, 5-year periods. The Trustees next discussed the performance for the Enhanced Return Fund. The Board reviewed its performance, noting that the Enhanced Return Fund slightly lagged its benchmark, the S&P 500 Index, for the 1, 3 and 5-year periods. 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, 2017 by the Funds. The Trustees also reviewed a report from the Adviser that included a percentile ranking of the expense ratio of each Fund compared to the average expense ratios of the funds in the applicable Morningstar category. As in past years, the Board noted that total expense ratio was a more meaningful comparison than the actual advisory fee because the Management Agreements for the Funds have a unitary fee structure where the Adviser pays substantially all of the expenses of each Fund and is compensated with a single fee (noting that most of the funds in the Peer Group comparisons do not share this structure). The expense ratios for Realty Fund, Municipal Income Fund, Short Duration Bond Fund, Intermediate Bond Fund, Core Bond Fund and Enhanced Return Fund were well below the mean, while expense ratios for Equity Income Fund, Opportunity Fund, Fixed Income Fund and International Fund were slightly above the averages for their respective categories. 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 the profitability of each of the Funds to the Adviser and the profitability of the Adviser in the aggregate with respect to the Funds. Representatives of the Adviser reported on the Adviser’s profitability on a fund by fund basis. The Trustees, including the Independent Trustees, concluded that the Management Fee payable by each Fund was reasonable and that the Adviser’s level of profitability from its relationship with the Funds is not excessive.
The Trustees then reviewed economies of scale. The Trustees considered that because the Funds’ expense ratios were reasonable, and given the asset levels of the Funds and other information, 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 for another year. The Trustees and representatives from the Adviser again agreed to discuss the possibility of fee breakpoints in the future, depending on the asset level of a Fund. After a discussion, the Trustees concluded that no breakpoints 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 (76) 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. | 10 | None | ||||||
Independent Trustees | |||||||||||
Ronald H. McSwain (75) 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 | 10 | None | ||||||
John R. Green (75) 3777 West Fork Rd. Cincinnati, OH 45247 | Trustee | Since 2006 | Retired from The Procter & Gamble Company | 10 | None | ||||||
James J. Berrens (52) 3777 West Fork Rd Cincinnati, OH 45247 | Trustee | Since 2006 | Chief Executive Officer since May 2015, Chief Financial Officer September 2010 to May 2015 for Christian Community Health | 10 | None | ||||||
Dr. Jeri B. Ricketts (60) 3777 West Fork Rd. Cincinnati, OH 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. | 10 | None |
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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 (47) 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 (59) 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 (54) 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 (52) 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 (46) 3777 West Fork Road Cincinnati, Ohio 45247 | Secretary | Since 2007 | Compliance Associate for the Adviser since March 2006 | NA | NA |
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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, Ohio 45202
Independent Registered Public Accounting Firm
Cohen & Company
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, 2018
(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
Our Message to You | 1 | |||
Performance Review and Management Discussion | ||||
Institutional Short Duration Bond Fund | 3 | |||
Institutional Intermediate Bond Fund | 4 | |||
Institutional Core Bond Fund | 5 | |||
Enhanced Return Fund | 6 | |||
Portfolio of Investments | ||||
Institutional Short Duration Bond Fund | 7 | |||
Institutional Intermediate Bond Fund | 10 | |||
Institutional Core Bond Fund | 13 | |||
Enhanced Return Fund | 16 | |||
Statements of Assets and Liabilities | 19 | |||
Statements of Operations | 20 | |||
Statements of Changes in Net Assets | 21 | |||
Financial Highlights | ||||
Institutional Short Duration Bond Fund | 23 | |||
Institutional Intermediate Bond Fund | 25 | |||
Institutional Core Bond Fund | 26 | |||
Enhanced Return Fund | 28 | |||
Notes to the Financial Statements | 29 | |||
Disclosure of Expenses | 37 | |||
Review and Renewal of Management Agreement | 38 | |||
Additional Information | 40 | |||
Trustees and Officers Table | 41 | |||
Trustees and Officers, Transfer Agent and Fund Accountant, Custodian, Independent Registered Public Accounting Firm, Legal Counsel | Back Page |
We are pleased to present you with the Johnson Mutual Funds’ June 30, 2018 Semi-Annual Report. On the following pages, we have provided commentary on the performance of each of the Funds in the first half of 2018 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.
U.S. Stocks Advance, but Emerging Markets Drag Down International Stocks
U.S. large cap technology companies continued driving overall stock markets higher in the first half of 2018. The NASDAQ Index, largely made up of tech and consumer discretionary stocks, has outperformed the broader S&P 500 Index for six quarters in a row. International stocks were weak, particularly in emerging markets. Ongoing global trade concerns, a rising U.S. dollar, rising U.S. interest rates, and rising crude oil prices led to poor performance in emerging market stocks.
The tech leadership continued despite the heated rhetoric on trade policy. Historically, tech companies have been more insulated from trade battles, but that dynamic may be changing. President Trump has made clear that intellectual property theft is one of his primary concerns as it relates to trade relations with China. In addition, tech companies now represent a far greater share of the economy than in the past.
Still, the narrow leadership of tech stocks over the last several quarters has caused some concern that the broader market would take a larger hit when tech stock performance turns. In addition to potential fallout from tariffs and trade policy changes, tech companies are facing increasing scrutiny from the government and a stronger dollar. With more than half of their sales coming from overseas, tech companies are vulnerable as foreign revenues translate to fewer U.S. dollars.
Global Trade: Lots of Tough Talk, Limited Action So Far
Along with central bank policy, global trade is the key issue for the markets in the second half of 2018 and beyond. While there has been a lot of attention, headlines, and debate on the topic, very little has actually been done so far. It is clear President Trump believes unfair global trade practices have harmed American businesses and caused American jobs to move overseas. His stated objective is to level the playing field and ultimately bring jobs and industry back to the U.S.
So far, the amount of tariffs that have been implemented versus threatened remains small. But Trump’s recent actions demonstrate his commitment to take action. At first, the Trump administration placed tariffs on just a small fraction of U.S. imports. But after foreign powers, particularly China and Europe, responded in kind with their own threats, Trump has turned up the heat. As of today Trump has threatened tariffs on nearly one-third of total U.S. imports, and nearly everything imported from China.
It is impossible to predict the extent to which tariffs and other policy changes will actually impact the global economy. This is especially true given the difficulty of predicting the effect on business and consumer confidence. But the direct hit to U.S. economic growth would likely be modest. Most economists are predicting that U.S. GDP growth would slow by less than 0.5%. It’s also likely inflation would temporarily move slightly higher, reflecting the one-time adjustments for tariffs.
The effect on certain industries is more easily predicted. Automotive companies, some technology companies, and manufacturing companies that use steel and/or aluminum inputs are likely to suffer the most. Already, some companies have provided details on how these tariffs harm their business. In some cases companies have warned they may shift production abroad to avoid them.
Growth in Earnings, Economy Tempered by Risk Awareness
Meanwhile, corporate earnings as well as economic growth have been healthy. The first quarter earnings season produced strong results, with revenues, margins, and earnings numbers all impressive. On top of that, the economy continues to perform well. However, several potential headwinds combined to temper the market’s enthusiasm. The trade war topic is front-and-center, but others are in play.
One of the biggest questions facing investors now is where we stand in the economic cycle. The current period of expansion is nearly ten years old, one of the longest in American history. Age alone doesn’t send the economy into decline. But the length of the expansion increases the difficulty of overcoming the various risks facing it. The passage of tax reform brought a potential boost, but there is some concern that any improvement may only be temporary. Such government stimulus is typically more impactful when the economy is closer to a low point, and may have come too late in the cycle to make much difference.
1
Rising interest rates are another headwind to further growth. Rates rose again in the first half of the year. The ten-year U.S. Treasury yield has hovered near 3%, its highest level in nearly seven years. But with inflation data showing signs of acceleration, and the Fed indicating more rate hikes are likely in 2018, rates could be headed higher in the months ahead. Central banks overseas also plan to take steps to normalize policy. And finally, a rising U.S. dollar, rising oil prices, and emerging market volatility are other headwinds that could slow the economy’s momentum.
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 -0.06% in the first half of 2018, trailing the Bank of America/Merrill Lynch 1–3 Year US Corporate & Government Index’s 0.10% return.
Short duration bond yields began the year at somewhat elevated levels and continued to rise further as solid domestic economic growth and steady inflation enabled the Federal Reserve to continue tightening monetary policy. The Fed enacted two additional 25 basis point rate hikes and continued with its well telegraphed plan to slow the amount of securities it would reinvest from its balance sheet. The fund has maintained a duration neutral to that of its benchmark, which had a limited effect on relative returns as rates moved higher.
Credit spreads began the year at tight levels after narrowing consistently throughout 2017. Spreads began to widen in February, however, the market grew increasingly concerned over the President’s threat to enact significant new tariffs. Sector performance was evenly distributed across industrials, utilities, and financials. While the Fund’s overweight position in corporate bonds was a headwind to performance relative to its benchmark so far this year. Its focus on high quality credits with lower spread volatility was helpful. More than 60% of the Fund’s bond allocation consists of investment-grade rated corporate securities which is greater than the Fund’s benchmark index. For that reason, the yield is traditionally 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 the year we expect the Fed will likely continue to tighten monetary policy. Economic growth should continue to remain anchored by last year’s fiscal stimulus package. Corporate tax cuts have incentivized businesses to spend on capital investment which has caused manufacturing activity to accelerate. The consumer should continue to benefit from lower tax burdens, rising wages and solid job creation. The economic optimism may, however, be somewhat offset by uncertainty related to trade policy. Overall, the economic backdrop should continue to support credit spreads, though the amount of tightening from current levels is likely somewhat limited. The Fund’s duration is neutral to that of its benchmark, but the addition of securities such as floating rate and step-up coupon bonds will help serve as a cushion to rising rates. Finally, we anticipate modest upward pressure on short term bond yields, leading to a slightly 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, 2018 | ||||||||||||
Short Duration Bond Fund Class I | Short Duration Bond Fund Class F* | Bank of America/ Merrill Lynch 1–3 Year Gov’t/Corp Index | ||||||||||
Six Month | -0.06 | % | 0.30%* | 0.10 | % | |||||||
One Year | 0.41 | % | n/a | 0.23 | % | |||||||
Five Years | 1.26 | % | n/a | 0.87 | % | |||||||
Ten Years | 2.34 | % | n/a | 1.66 | % |
* | Inception date for Class F shares was May 1, 2018. 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 Johnson Institutional Intermediate Bond Fund provided a total return of -1.04% in the first half of 2018, trailing the Bloomberg Barclays Capital Intermediate Government Credit Index’s -0.97% return.
Bond yields began the year at somewhat low levels, and the Fund maintained a shorter duration relative to its benchmark as a result. Solid domestic economic growth and steady inflation enabled the Federal Reserve to continue tightening monetary policy. The Fed enacted two additional 25 basis point rate hikes and continued with its well telegraphed plan to slow the amount of securities it would reinvest from its balance sheet. This caused the short end of the yield curve to move sharply higher. Longer dated interest rates rose as well, but at a much more modest pace. The Fund’s overweight position to longer dated bonds was helpful relative to its benchmark.
Credit spreads began the year at tight levels after narrowing consistently throughout 2017. Spreads began to widen in February, however, the market grew increasingly concerned over the President’s threat to enact significant new tariffs. Sector performance was evenly distributed across industrials, utilities, and financials. Intermediate credit spreads widened less than longer dated credit spreads and the Fund benefited from its underweight position in long maturity corporate bonds. While the Fund’s overweight position to corporate bonds was a headwind to performance relative to its benchmark so far this year, its focus on high quality credits with lower spread volatility was helpful. More than half of the Fund’s bond allocation consists of investment-grade rated corporate securities which is greater than the Fund’s benchmark index. For that reason, the yield is traditionally 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 the year we expect the Fed will likely continue to tighten monetary policy. Economic growth should continue to remain anchored by last year’s fiscal stimulus package. Corporate tax cuts have incentivized businesses to spend on capital investment which has caused manufacturing activity to accelerate. The consumer should continue to benefit from lower tax burdens, rising wages and solid job creation. The economic optimism may be somewhat offset by uncertainty related to trade policy. Overall, the economic backdrop should continue to support credit spreads, though the amount of tightening from current levels is likely to be somewhat limited. The Fund’s duration is neutral to that of its benchmark, but the addition of securities such as floating rate and step-up coupon bonds will help serve as a cushion to rising rates. Inflation expectations remain below historical averages, and the Fund’s position in Treasury Inflation Protected Securities will benefit as inflation rebounds. Finally, we anticipate continued upward pressure on short term bond yields, leading to a slightly 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, 2018 | ||||||||||||
Intermediate Bond Fund Class I | Intermediate Bond Fund Class F* | Bloomberg Barclays Capital Intermediate Government Credit Index | ||||||||||
Six Month | -1.04 | % | 0.57%* | -0.97 | % | |||||||
One Year | -0.07 | % | n/a | -0.69 | % | |||||||
Five Years | 2.32 | % | n/a | 1.60 | % | |||||||
Ten Years | 3.81 | % | n/a | 3.08 | % |
* | Inception date for Class F shares was May 1, 2018. 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 Bloomberg Barclays Capital 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 -1.52% in the first half of 2018, slightly ahead of the Bloomberg Barclays Capital Aggregate Index’s -1.62% return.
Bond yields began the year at somewhat low levels, and the Fund maintained a shorter duration relative to its benchmark as a result. Solid domestic economic growth and steady inflation enabled the Federal Reserve to continue tightening monetary policy. The Fed enacted two additional 25 basis point rate hikes and continued with its well telegraphed plan to slow the amount of securities it would reinvest from its balance sheet. This caused the short end of the yield curve to move sharply higher. Longer dated interest rates rose as well, but at a much more modest pace. The Fund’s overweight position to longer dated bonds was helpful relative to its benchmark.
Credit spreads began the year at tight levels after narrowing consistently throughout 2017. Spreads began to widen in February, however, the market grew increasingly concerned over the President’s threat to enact significant new tariffs. Sector performance was evenly distributed across industrials, utilities, and financials. Intermediate credit spreads widened less than longer dated credit spreads and the Fund benefited from its underweight position in long maturity corporate bonds. While the Fund’s overweight position in corporate bonds was a headwind to performance relative to its benchmark so far this year, its focus on high quality credits with lower spread volatility was helpful. More than half of the Fund’s bond allocation consists of investment-grade rated corporate securities which is greater than the Fund’s benchmark index and a key reason why the yield is traditionally 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 the year we expect the Fed will likely continue to tighten monetary policy. Economic growth should continue to remain anchored by last year’s fiscal stimulus package. Corporate tax cuts have incentivized businesses to spend on capital investment which has caused manufacturing activity to accelerate. The consumer should continue to benefit from lower tax burdens, rising wages and solid job creation. The economic optimism may be somewhat offset by uncertainty related to trade policy. Overall, the economic backdrop should continue to support credit spreads, though the amount of tightening from current levels is likely to be somewhat limited. The Fund’s duration is neutral to that of its benchmark, but the addition of securities such as floating rate and step-up coupon bonds will help serve as a cushion to rising rates. Inflation expectations remain below historical averages, and the Fund’s position in Treasury Inflation Protected Securities will benefit as inflation rebounds. Finally, we anticipate continued upward pressure on short term bond yields, leading to a slightly 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, 2018 | ||||||||||||
Core Bond Fund Class I | Core Bond Fund Class F* | Bloomberg Barclays Capital Aggregate Index | ||||||||||
Six Month | -1.52 | % | 0.78%* | -1.62 | % | |||||||
One Year | -0.29 | % | n/a | -0.54 | % | |||||||
Five Years | 2.83 | % | n/a | 2.27 | % | |||||||
Ten Years | 4.60 | % | n/a | 3.73 | % |
* | Inception date for Class F shares was May 1, 2018. 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 Bloomberg 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 Johnson Enhanced Return Fund provided a total return of 1.21% in the first of 2018, trailing the S&P 500 Index’s 2.65% return. The Fund’s underperformance was driven by rising short and intermediate bond yields which muted total returns in the bond portion of the portfolio. Reminder that the Fund uses futures contracts to replicate the S&P 500, and a bond portfolio to enhance the Fund’s returns.
Stock markets experienced volatility during the first half of 2018 as solid economic growth and strong earnings competed with headwinds from higher interest rates and talk of trade wars. The market experienced a 10% correction early in the year, and then fully recovered to close out the first half with a positive return. Returns were mixed by sector, with Consumer Discretionary and Technology posting double-digit gains while Consumer Staples and Telecom experienced losses of over 8%. Meanwhile, the Federal Reserve hiked interest rates an additional 25 basis points twice during the first half of the year and continued to allow securities to gradually mature from its balance sheet. Although incoming economic and inflation data may influence their outlook, the Fed anticipates a continued gradual tightening of monetary policy. The pace of potential rate increases continues to be instrumental in our strategic positioning of the underlying bond portfolio.
Short duration bond yields began the year at somewhat elevated levels and continued to rise further as solid domestic economic growth and steady inflation enabled the Federal Reserve to continue tightening monetary policy. Although the Fund maintained a relatively short duration stance to guard against rising interest rates, the increase in government bond yields contributed to the Fund’s underperformance relative to its benchmark. In addition, the fund’s corporate bond holdings detracted from relative performance as spreads widened during the first half of 2018. The Fund continues to have a yield advantage over the cost of carry in the futures contracts due to the upward sloping yield curve and increasingly attractive corporate yield spreads. More than half of the Fund’s bond allocation consists of investment-grade rated corporate securities. 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 rates.
Looking forward into the second half of the year we expect the Fed will likely continue to tighten monetary policy. The Fund is positioned defensively against this risk, maintaining a short duration stance and holding securities such as floating rate and step-up coupon bonds which will help serve as a cushion to higher rates. Economic growth should continue to remain anchored by last year’s fiscal stimulus package. Corporate tax cuts have incentivized businesses to spend on capital investment which has caused manufacturing activity to accelerate. The economic optimism may be somewhat offset by uncertainty related to trade policy. Overall, the economic backdrop should continue to support credit spreads, though the amount of tightening from current levels is likely somewhat limited. Finally, although we anticipate modest upward pressure on short and intermediate bond yields to develop over time, this should provide an opportunity to extend duration in the future and further enhance the Fund’s yield advantage.
Average Annual Total Returns as of June 30, 2018 | ||||||||
Enhanced Return Fund | S&P 500 Index | |||||||
Six Month | 1.21 | % | 2.65 | % | ||||
One Year | 12.28 | % | 14.56 | % | ||||
Five Years | 13.43 | % | 13.42 | % | ||||
Ten Years | 11.12 | % | 10.18 | % |
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 – Bonds | Face Value | Fair Value | ||||||
Corporate Bonds: | ||||||||
American Express Credit, 2.250% Due 05/05/2021 | 2,750,000 | $ | 2,672,260 | |||||
Bank of America Corp., 3.300% Due 01/11/2023 | 2,900,000 | 2,857,457 | ||||||
AON Corp., 5.000% Due 09/30/2020 | 2,575,000 | 2,664,499 | ||||||
BB&T Corp., 5.250% Due 11/01/2019 | 2,400,000 | 2,465,859 | ||||||
Chubb INA Holdings Inc., 2.300% Due 11/03/2020 | 2,800,000 | 2,750,173 | ||||||
Goldman Sachs Group, 7.500% Due 02/15/2019 | 2,200,000 | 2,260,771 | ||||||
Huntington Bancshares, 2.300% Due 01/14/2022 | 2,500,000 | 2,400,784 | ||||||
JP Morgan Chase & Co., 3.375% Due 05/01/2023 | 1,000,000 | 976,703 | ||||||
JP Morgan Chase & Co., 4.500% Due 01/24/2022 | 2,000,000 | 2,068,824 | ||||||
Keycorp, 5.100% Due 03/24/2021 | 1,500,000 | 1,566,127 | ||||||
Manufacturers & Traders Trust Co., 2.300% Due 01/30/2019 | 2,700,000 | 2,694,189 | ||||||
Morgan Stanley, 5.500% Due 07/28/2021 | 2,500,000 | 2,645,460 | ||||||
MUFG Americas Holdings Corp., 2.250% Due 02/10/2020 | 1,630,000 | 1,605,766 | ||||||
MUFG Union Bank NA, 2.250% Due 05/06/2019 | 1,495,000 | 1,486,925 | ||||||
National City Corp., 6.875% Due 05/15/2019 | 2,400,000 | 2,479,609 | ||||||
Prudential Financial Inc., 5.375% Due 06/21/2020 | 750,000 | 780,485 | ||||||
Suntrust Banks Inc., 2.900% Due 03/03/2021 | 2,500,000 | 2,469,401 | ||||||
Travelers Companies Inc., 5.900% Due 06/02/2019 | 1,500,000 | 1,542,945 | ||||||
Wells Fargo & Co., 3.450% Due 02/13/2023 | 2,800,000 | 2,744,089 | ||||||
27.0% – Total Finance | $ | 41,132,326 | ||||||
AT&T Inc., 3.600% Due 02/17/2023 | 2,400,000 | 2,364,507 | ||||||
BP Capital Markets PLC, 4.750% Due 03/10/2019 | 1,965,000 | 1,993,428 | ||||||
BP Capital Markets PLC, 2.241% Due 09/26/2018 | 1,000,000 | 999,653 | ||||||
Burlington Northern Santa Fe, 4.700% Due 10/01/2019 | 1,500,000 | 1,533,933 | ||||||
Caterpillar Financial, 1.800% Due 11/13/2018 | 2,900,000 | 2,892,073 |
Fixed Income Securities – Bonds | Face Value | Fair Value | ||||||
Chevron Corp. (3 month LIBOR + 0.950%)*, 3.280% Due 05/16/2021 | 1,000,000 | $ | 1,023,515 | |||||
CVS Health Corp., 4.125% Due 05/15/2021 | 2,477,000 | 2,520,784 | ||||||
Eaton Electric Holdings, 3.875% Due 12/15/2020 | 2,409,000 | 2,440,215 | ||||||
Emerson Electric Co., 4.250% Due 11/15/2020 | 1,200,000 | 1,229,653 | ||||||
General Electric Capital Corp. (3 month LIBOR + 1.000%)*, 3.341% Due 03/15/2023 | 3,500,000 | 3,540,602 | ||||||
Johnson Controls International PLC, 3.750% Due 12/01/2021 | 1,476,000 | 1,488,410 | ||||||
Johnson Controls International PLC, 5.000% Due 03/30/2020 | 1,025,000 | 1,054,465 | ||||||
Kroger Co., 6.150% Due 01/15/2020 | 2,000,000 | 2,089,224 | ||||||
Norfolk Southern Corp., 5.900% Due 06/15/2019 | 2,500,000 | 2,567,853 | ||||||
Shell International, 4.375% Due 03/25/2020 | 2,800,000 | 2,872,822 | ||||||
Union Pacific Corp., 2.250% Due 02/15/2019 | 1,492,000 | 1,487,997 | ||||||
Verizon Communications, 5.150% Due 09/15/2023 | 2,600,000 | 2,765,107 | ||||||
22.9% – Total Industrial | $ | 34,864,241 | ||||||
Duke Energy Corp., 5.050% Due 09/15/2019 | 2,494,000 | 2,551,002 | ||||||
Enterprise Products, 3.350% Due 03/15/2002 | 500,000 | 492,655 | ||||||
Enterprise Products, 6.500% Due 01/31/2019 | 2,000,000 | 2,041,680 | ||||||
Eversource Energy, 2.500% Due 03/15/2021 | 700,000 | 685,709 | ||||||
Eversource Energy, 2.750% Due 03/15/2022 | 1,330,000 | 1,296,873 | ||||||
Georgia Power Co., 2.850% Due 05/15/2022 | 1,600,000 | 1,568,111 | ||||||
Georgia Power Co., 4.250% Due 12/01/2019 | 1,040,000 | 1,059,197 | ||||||
Interstate Power & Light, 3.650% Due 09/01/2020 | 2,600,000 | 2,626,464 | ||||||
National Rural Utilites Corp., 1.500% Due 11/01/2019 | 1,000,000 | 982,461 | ||||||
National Rural Utilites Corp., 2.300% Due 11/15/2019 | 1,000,000 | 992,885 | ||||||
National Rural Utilites Corp., 2.350% Due 06/15/2020 | 1,000,000 | 986,614 | ||||||
Berkshire Hathaway Energy Co., 2.400% Due 02/01/2020 | 1,600,000 | 1,586,969 |
The accompanying notes are an integral part of these financial statements.
7
Fixed Income Securities – Bonds | Face Value | Fair Value | |||||||
Northern Natural Gas Co.**, 5.750% Due 07/15/2018 | 1,280,000 | $ | 1,281,437 | ||||||
NStar, 4.500% Due 11/15/2019 | 600,000 | 610,977 | |||||||
Virginia Electric & Power Co., 5.000% Due 06/30/2019 | 2,500,000 | 2,547,975 | |||||||
Xcel Energy Inc., 4.700% Due 05/15/2020 | 2,566,000 | 2,621,176 | |||||||
15.7% – Total Utilities | $ | 23,932,185 | |||||||
65.6% Total Corporate Bonds | $ | 99,928,752 | |||||||
United States Government Treasury Obligations | |||||||||
Treasury Bond, 1.250% Due 04/30/2019 | 1,000,000 | 991,211 | |||||||
Treasury Note, 1.500% Due 05/31/2020 | 2,300,000 | 2,255,617 | |||||||
Treasury Note, 1.625% Due 08/31/2022 | 2,200,000 | 2,106,930 | |||||||
Treasury Note, 1.625% Due 03/31/2019 | 2,000,000 | 1,990,313 | |||||||
Treasury Note (TBill 13-week auction high rate + 0.140%)*, 2.130% Due 01/31/2019 | 3,850,000 | 3,854,030 | |||||||
Treasury Note (TBill 13-week auction high rate + 0.033%)*, 2.023% Due 04/30/2020 | 3,800,000 | 3,799,321 | |||||||
9.9% – Total United States Government Treasury Obligations | $ | 14,997,422 | |||||||
United States Government Agency Obligations | |||||||||
FHLMC Step-up*, 1.350% Due 07/27/2021 | 1,800,000 | 1,746,317 | |||||||
FHLMC Step-up*, 1.500% Due 08/24/2021 | 1,500,000 | 1,472,054 | |||||||
FHLMC Step-up*, 1.750% Due 11/23/2021 | 2,000,000 | 1,964,852 | |||||||
FHLMC Step-up*, 3.000% Due 06/28/2023 | 1,500,000 | 1,500,042 | |||||||
FHLMC Step-up*, 2.000% Due 05/10/2022 | 1,000,000 | 996,452 | |||||||
FHLMC Step-up*, 1.950% Due 06/21/2022 | 2,000,000 | 1,966,460 | |||||||
FHLMC Step-up*, 2.000% Due 07/12/2022 | 2,000,000 | 1,969,356 | |||||||
FHLMC Step-up*, 2.000% Due 07/18/2022 | 1,000,000 | 981,004 | |||||||
FHLMC Step-up*, 1.750% Due 07/26/2022 | 1,750,000 | 1,734,728 | |||||||
FHLMC Step-up*, 2.000% Due 10/27/2022 | 1,900,000 | 1,864,274 |
Fixed Income Securities – Bonds | Face Value | Fair Value | |||||||
FHLMC Step-up*, 1.875% Due 09/29/2022 | 2,000,000 | $ | 1,958,588 | ||||||
11.9% – Total United States Government Agency Obligations | $ | 18,154,127 | |||||||
United States Government Agency Obligations – Mortgage-Backed Securities | |||||||||
FHLMC 10/1 Hybrid ARM (12 month LIBOR + 1.860%)*, 3.306% Due 04/01/2042 | 378,486 | 382,631 | |||||||
FHLMC Series 2989 Class TG, 5.000% Due 06/15/2025 | 507,483 | 531,873 | |||||||
FHLMC Series 3925 Class VA, 4.000% Due 11/15/2022 | 22,115 | 22,086 | |||||||
FHLMC Series 4009 Class PA, 2.000% Due 06/15/2041 | 390,583 | 374,085 | |||||||
FHLMC Series 4017 Class MA, 3.000% Due 03/15/2041 | 385,908 | 378,242 | |||||||
FHLMC Pool G18642, 3.500% Due 04/01/2032 | 4,384,487 | 4,439,092 | |||||||
FNMA 7/1 Hybrid ARM (12 month LIBOR + 1.599%)*, 2.760% Due 02/01/2046 | 775,052 | 775,130 | |||||||
FNMA 7/1 Hybrid ARM (12 month LIBOR + 1.600%)*, 2.807% Due 12/01/2044 | 608,743 | 610,364 | |||||||
FNMA Series 2003-79 Class NJ, 5.000% Due 08/25/2023 | 319,014 | 329,695 | |||||||
FNMA Series 2013-6 Class BC, 1.500% Due 12/25/2042 | 1,214,917 | 1,176,535 | |||||||
FNMA Series 2017-30 Class G, 3.000% Due 07/25/2040 | 1,562,662 | 1,557,023 | |||||||
FNMA Pool MA0384, 5.000% Due 04/01/2030 | 698,445 | 740,507 | |||||||
GNMA Pool 2004-95 Class QA, 4.500% Due 03/20/2034 | 32,850 | 33,611 | |||||||
GNMA Pool 726475, 4.000% Due 11/15/2024 | 190,507 | 196,883 | |||||||
7.6% – Total United States Government Agency Obligations – Mortgage-Backed Securities | $ | 11,547,757 | |||||||
Taxable Municipal Bonds | |||||||||
Kansas Development Finance Authority Revenue, 3.491% Due 04/15/2023 | 1,400,000 | 1,402,827 | |||||||
0.9% – Total For Taxable Municipal Bonds | $ | 1,402,827 | |||||||
Total Fixed Income Securities 95.9% | $ | 146,030,885 | |||||||
(Identified Cost $148,035,341) |
The accompanying notes are an integral part of these financial statements.
8
Cash Equivalents | Shares | Fair Value | ||||||
First American Government Obligation Fund, Class Z*** | 7,482,583 | $ | 7,482,583 | |||||
Total Cash Equivalents 4.9% | $ | 7,482,583 | ||||||
(Identified Cost $7,482,583) | ||||||||
Total Portfolio Value 100.8% | $ | 153,513,468 | ||||||
(Identified Cost $155,517,924) | ||||||||
Liabilities in Excess of Other Assets -0.8% | $ | (1,257,301 | ) | |||||
Total Net Assets 100.0% | $ | 152,256,167 |
* | Variable Rate Security; the rate shown is as of June 30, 2018. |
** | 144A Restricted Security. The total fair value of such securities as of June 30, 2018, was $1,281,437 and represented 0.84% of net assets. |
- | Northern Natural Gas Co. Bond, Lot 1, was purchased on October 12, 2012, for $1,223,180; price on June 30, 2018 was $100.112. |
- | Northern Natural Gas Co. Bond, Lot 2, was purchased on January 15, 2013, for $72,413; price on June 30, 2018 was $100.112. |
- | Northern Natural Gas Co. Bond, Lot 3, was purchased on November 26, 2014, for $249,766; price on June 30, 2018 was $100.112. |
*** | Variable Rate Security; as of June 30, 2018, the 7 day annualized yield was 1.76%. |
ARM – Adjustable Rate Mortgage
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: | ||||||||
AON Corp., 4.000% Due 11/27/2023 | 2,116,000 | $ | 2,141,451 | |||||
American Express Co., 3.000% Due 10/30/2024 | 2,000,000 | 1,908,300 | ||||||
BB&T Corp., 3.950% Due 03/22/2022 | 1,000,000 | 1,015,138 | ||||||
BB&T Corp., 5.250% Due 11/01/2019 | 1,000,000 | 1,027,441 | ||||||
Bank of America Corp., 3.248% Due 10/21/2027 | 2,500,000 | 2,329,926 | ||||||
Fifth Third Bancorp, 4.300% Due 01/16/2024 | 2,000,000 | 2,026,468 | ||||||
Huntington Bancshares, 2.300% Due 01/14/2022 | 2,000,000 | 1,920,627 | ||||||
JP Morgan Chase & Co., 3.875% Due 09/10/2024 | 2,000,000 | 1,981,452 | ||||||
Keycorp, 5.100% Due 03/24/2021 | 1,000,000 | 1,044,085 | ||||||
Keycorp, 4.100% Due 04/30/2028 | 1,000,000 | 992,046 | ||||||
Marsh & McLennan Co. Inc., 3.500% Due 06/03/2024 | 1,500,000 | 1,484,753 | ||||||
Morgan Stanley, 5.500% Due 07/28/2021 | 2,000,000 | 2,116,368 | ||||||
MUFG Americas Holdings Corp., 2.250% Due 02/10/2020 | 1,300,000 | 1,280,672 | ||||||
MUFG Americas Holdings Corp., 3.500% Due 06/18/2022 | 1,290,000 | 1,286,568 | ||||||
PNC Bank NA, 3.900% Due 04/29/2024 | 500,000 | 500,875 | ||||||
PNC Bank NA, 6.875% Due 05/15/2019 | 1,500,000 | 1,549,755 | ||||||
Prudential Financial Inc., 4.500% Due 11/15/2020 | 1,000,000 | 1,029,452 | ||||||
Suntrust Bank Inc., 4.000% Due 05/01/2025 | 2,000,000 | 2,009,531 | ||||||
US Bancorp, 3.100% Due 04/27/2026 | 1,500,000 | 1,414,774 | ||||||
US Bancorp, 3.600% Due 09/11/2024 | 1,000,000 | 987,880 | ||||||
Wells Fargo & Co., 4.300% Due 07/22/2027 | 1,400,000 | 1,379,681 | ||||||
Wells Fargo & Co., 4.480% Due 01/16/2024 | 1,220,000 | 1,244,410 | ||||||
24.1% – Total Finance | $ | 32,671,653 | ||||||
AT&T Inc., 3.400% Due 05/15/2025 | 2,000,000 | 1,875,478 | ||||||
CVS Health Corp., 3.875% Due 07/20/2025 | 2,000,000 | 1,937,868 |
Fixed Income Securities | Face Value | Fair Value | ||||||
Eaton Corp., 2.750% Due 11/02/2022 | 1,900,000 | $ | 1,844,712 | |||||
General Electric Capital Corp. (3 month LIBOR + 0.950%)*, 3.341% Due 03/15/2023 | 2,950,000 | 2,984,222 | ||||||
Goodrich Corp., 4.875% Due 03/01/2020 | 1,000,000 | 1,026,833 | ||||||
Johnson Controls International PLC, 3.750% Due 12/01/2021 | 990,000 | 998,324 | ||||||
Johnson Controls International PLC, 3.900% Due 02/14/2026 | 1,000,000 | 987,047 | ||||||
Kroger Co., 3.500% Due 02/01/2026 | 1,800,000 | 1,711,431 | ||||||
Norfolk Southern Corp., 5.900% Due 06/15/2019 | 500,000 | 513,570 | ||||||
Shell International, 2.125% Due 05/11/2020 | 1,535,000 | 1,516,602 | ||||||
Target Corp., 2.500% Due 04/15/2026 | 2,000,000 | 1,837,677 | ||||||
Union Pacific Corp., 3.500% Due 06/08/2023 | 2,150,000 | 2,151,477 | ||||||
Verizon Communications, 4.672% Due 03/15/2055 | 1,782,000 | 1,582,657 | ||||||
15.5% – Total Industrial | $ | 20,967,898 | ||||||
Berkshire Hathaway Energy Co., 3.750% Due 11/15/2023 | 1,000,000 | 1,012,079 | ||||||
Duke Energy Corp., 5.050% Due 09/15/2019 | 620,000 | 634,171 | ||||||
Duke Energy Ohio First Mortgage, 5.450% Due 04/01/2019 | 1,000,000 | 1,018,510 | ||||||
Enterprise Products, 3.750% Due 02/15/2025 | 1,860,000 | 1,841,854 | ||||||
Eversource Energy, 2.500% Due 03/15/2021 | 1,000,000 | 979,585 | ||||||
Eversource Energy, 2.800% Due 05/01/2023 | 550,000 | 529,688 | ||||||
Interstate Power & Light, 3.250% Due 12/01/2024 | 1,825,000 | 1,778,846 | ||||||
Georgia Power Co., 2.000% Due 03/30/2020 | 1,300,000 | 1,278,334 | ||||||
Georgia Power Co., 2.850% Due 05/15/2022 | 1,111,000 | 1,088,857 | ||||||
National Rural Utilities Corp., 2.150% Due 02/01/2019 | 2,000,000 | 1,994,047 | ||||||
National Rural Utilities Corp., 10.375% Due 11/01/2018 | 500,000 | 512,801 | ||||||
Northern Natural Gas **, 5.750% Due 07/15/2018 | 1,000,000 | 1,001,122 | ||||||
NStar, 4.500% Due 11/15/2019 | 500,000 | 509,148 | ||||||
Virginia Electric & Power, 5.000% Due 06/30/2019 | 2,000,000 | 2,038,380 |
The accompanying notes are an integral part of these financial statements.
10
Fixed Income Securities | Face Value | Fair Value | |||||||
Xcel Energy Inc., 4.700% Due 05/15/2020 | 2,000,000 | $ | 2,043,006 | ||||||
13.5% – Total Utilities | $ | 18,260,428 | |||||||
53.1% Total Corporate Bonds | $ | 71,899,979 | |||||||
United States Government Treasury Obligations | |||||||||
Treasury Inflation Protected Security, 1.000% Due 02/15/2046 | 1,797,342 | 1,851,095 | |||||||
Treasury Note, 1.750% Due 11/30/2019 | 7,000,000 | 6,929,453 | |||||||
Treasury Note, 2.125% Due 11/30/2023 | 7,000,000 | 6,775,781 | |||||||
Treasury Note, 2.500% Due 05/15/2046 | 2,500,000 | 2,271,680 | |||||||
Treasury Note (TBill 13-week auction high rate + 0.048%)*, 2.038% Due 10/31/2019 | 2,000,000 | 2,001,244 | |||||||
Treasury Note (TBill 13-week auction high rate + 0)*, 1.990% Due 01/31/2020 | 6,500,000 | 6,498,426 | |||||||
19.4% – Total United States Government Treasury Obligations | $ | 26,327,679 | |||||||
United States Government Agency Obligations | |||||||||
FHLMC Step-up*, 1.875% Due 07/12/2021 | 2,000,000 | 1,957,164 | |||||||
FHLMC Step-up*, 1.750% Due 10/28/2021 | 1,500,000 | 1,456,606 | |||||||
FHLMC Step-up*, 1.750% Due 11/23/2021 | 1,500,000 | 1,473,639 | |||||||
FHLMC Step-up*, 1.875% Due 06/15/2022 | 1,800,000 | 1,763,654 | |||||||
FHLMC Step-up*, 1.950% Due 06/21/2022 | 3,000,000 | 2,949,690 | |||||||
FHLMC Step-up*, 2.000% Due 07/12/2022 | 3,500,000 | 3,446,373 | |||||||
9.6% – Total United States Government Agency Obligations | $ | 13,047,126 | |||||||
United States Government Agency Obligations – Mortgage Backed Securities | |||||||||
FHLMC 10/1 Hybrid ARM (12 month LIBOR + 1.860%)*, 3.306% Due 04/01/2042 | 405,520 | 409,962 | |||||||
FHLMC Pool J12635, 4.000% Due 07/01/2025 | 398,714 | 409,911 | |||||||
FHLMC Series 2985 Class GE, 5.500% Due 06/15/2025 | 131,648 | 137,621 | |||||||
FHLMC Series 3946 Class LN, 3.500% Due 04/15/2041 | 786,767 | 787,683 |
Fixed Income Securities | Face Value | Fair Value | |||||||
FHLMC Series 4017 Class MA, 3.000% Due 03/15/2041 | 157,514 | $ | 154,384 | ||||||
FHLMC Pool G08068, 5.500% Due 07/01/2035 | 217,789 | 236,233 | |||||||
FHLMC Pool G18642, 3.500% Due 04/01/2032 | 2,447,155 | 2,477,633 | |||||||
FNMA 10/1 Hybrid ARM (12 month LIBOR + 1.780%)*, 3.288% Due 12/01/2041 | 275,686 | 278,957 | |||||||
FNMA 7/1 Hybrid ARM (12 month LIBOR + 1.600%)*, 2.807% Due 12/01/2044 | 625,259 | 626,924 | |||||||
FNMA Pool AA4392, 4.000% Due 04/01/2039 | 306,430 | 314,663 | |||||||
FNMA Series 2015-37 Class BA, 3.000% Due 08/25/2044 | 1,677,808 | 1,659,879 | |||||||
FNMA Series 2016-39 Class LA, 2.500% Due 03/25/2045 | 1,168,488 | 1,121,092 | |||||||
FNMA Series 2016-99 Class TA, 3.500% Due 03/25/2036 | 937,826 | 947,088 | |||||||
FNMA Pool MA0384, 5.000% Due 04/01/2030 | 279,378 | 296,203 | |||||||
FNMA Series 2011-52 Class PC, 3.000% Due 03/25/2041 | 1,411,297 | 1,402,132 | |||||||
8.3% – Total United States Government Agency Obligations – Mortgage Backed Securities | $ | 11,260,365 | |||||||
Taxable Municipal Bonds | |||||||||
Bowling Green State University Ohio Revenue, 5.330% Due 06/01/2020 | 725,000 | 753,152 | |||||||
Florida Atlantic University Capital Improvement Revenue, 7.589% Due 07/01/2037 | 1,000,000 | 1,087,370 | |||||||
Kansas Development Finance Authority Revenue, 4.091% Due 04/15/2027 | 3,000,000 | 3,062,280 | |||||||
Kentucky Asset Liability Commission Revenue, 4.104% Due 04/01/2019 | 1,000,000 | 1,009,970 | |||||||
Kentucky Asset Liability Commission Revenue, 5.339% Due 04/01/2022 | 300,000 | 314,748 | |||||||
University of Cincinnati Ohio General Receipts Revenue, 5.117% Due 06/01/2021 | 1,435,000 | 1,501,039 | |||||||
5.7% – Total Taxable Municipal Bonds | $ | 7,728,559 | |||||||
Total Fixed Income Securities 96.1% | $ | 130,263,708 | |||||||
(Identified Cost $132,145,135) |
The accompanying notes are an integral part of these financial statements.
11
Preferred Stocks | Shares | Fair Value | ||||||
Allstate Corp., 5.100% Due 01/15/2053 | 59,890 | $ | 1,557,739 | |||||
Total Preferred Stocks 1.1% | $ | 1,557,739 | ||||||
(Identified Cost $1,446,031) | ||||||||
Cash Equivalents | ||||||||
First American Government Obligation Fund, Class Z*** | 5,598,116 | 5,598,116 | ||||||
Total Cash Equivalents 4.1% | $ | 5,598,116 | ||||||
(Identified Cost $5,598,116) | ||||||||
Total Portfolio Value 101.3% | $ | 137,419,563 | ||||||
(Identified Cost $139,189,282) | ||||||||
Liabilities in Excess of Other Assets -1.3% | $ | (1,865,053 | ) | |||||
Total Net Assets 100.0% | $ | 135,554,510 |
* | Variable Rate Security; the rate shown is as of June 30, 2018. |
** | 144A Restricted Security. The total fair value of such securities as of June 30, 2018 was $1,001,122 and represented 0.74% of net assets. |
- | Northern Natural Gas Co. Bond was purchased on October 12, 2012, for $1,223,180; price on June 30, 2018 was $100.112. |
*** | Variable Rate Security; as of June 30, 2018, the 7 day annualized yield was 1.76%. |
ARM – Adjustable Rate Mortgage
FHLB – Federal Home Loan Bank
FHLMC – Federal Home Loan Mortgage Corporation
The accompanying notes are an integral part of these financial statements.
12
Fixed Income Securities | Face Value | Fair Value | ||||||
Corporate Bonds: | ||||||||
American Express Co., 3.000% Due 10/30/2024 | 3,300,000 | $ | 3,148,695 | |||||
American Express Co., 3.625% Due 12/05/2024 | 100,000 | 98,491 | ||||||
AON Corp., 3.500% Due 06/14/2024 | 750,000 | 729,548 | ||||||
AON Corp., 3.875% Due 12/15/2025 | 1,850,000 | 1,826,337 | ||||||
AON Corp., 4.000% Due 11/27/2023 | 1,000,000 | 1,012,028 | ||||||
Bank of America Corp., 3.248% Due 10/21/2027 | 5,000,000 | 4,659,852 | ||||||
BB&T Corp., 3.950% Due 03/22/2022 | 75,000 | 76,135 | ||||||
BB&T Corp., 5.250% Due 11/01/2019 | 2,500,000 | 2,568,603 | ||||||
Fifth Third Bancorp, 4.300% Due 01/16/2024 | 3,500,000 | 3,546,319 | ||||||
Huntington Bancshares, 2.300% Due 01/14/2022 | 225,000 | 216,070 | ||||||
Huntington Bancshares, 3.150% Due 03/14/2021 | 3,525,000 | 3,505,260 | ||||||
JP Morgan Chase & Co., 3.375% Due 05/01/2023 | 100,000 | 97,670 | ||||||
JP Morgan Chase & Co., 3.875% Due 09/10/2024 | 3,400,000 | 3,368,469 | ||||||
Keycorp, 4.100% Due 04/30/2028 | 2,000,000 | 1,984,093 | ||||||
Marsh & McLennan Co. Inc., 3.500% Due 06/03/2024 | 1,265,000 | 1,252,141 | ||||||
Morgan Stanley, 2.625% Due 11/17/2021 | 3,250,000 | 3,155,114 | ||||||
MUFG Americas Holdings Corp., 2.250% Due 02/10/2020 | 2,500,000 | 2,462,831 | ||||||
MUFG Americas Holdings Corp., 3.500% Due 06/18/2022 | 1,150,000 | 1,146,940 | ||||||
National City Bank NA, 6.875% Due 05/15/2019 | 1,745,000 | 1,802,882 | ||||||
Suntrust Bank Inc., 4.000% Due 05/01/2025 | 3,300,000 | 3,315,726 | ||||||
PNC Financial Services, 3.900% Due 04/29/2024 | 1,325,000 | 1,327,318 | ||||||
US Bancorp, 3.100% Due 04/27/2026 | 3,500,000 | 3,301,140 | ||||||
US Bancorp, 3.600% Due 09/11/2024 | 1,100,000 | 1,086,668 | ||||||
Wells Fargo & Co., 5.606% Due 01/15/2044 | 4,030,000 | 4,335,661 | ||||||
25.4% – Total Finance | $ | 50,023,991 |
Fixed Income Securities | Face Value | Fair Value | ||||||
AT&T Inc., 3.340% Due 05/15/2025 | 3,500,000 | $ | 3,282,087 | |||||
CVS Health Corp., 3.875% Due 07/20/2025 | 3,300,000 | 3,197,481 | ||||||
Eaton Corp., 2.750% Due 11/02/2022 | 2,275,000 | 2,208,800 | ||||||
General Electric Capital Corp. (3 month LIBOR + 1.000%)*, 3.339% Due 04/15/2023 | 1,165,000 | 1,172,281 | ||||||
Georgia Power, 2.000% Due 03/30/2020 | 1,930,000 | 1,897,834 | ||||||
Georgia Power, 2.000% Due 09/08/2020 | 2,525,000 | 2,466,532 | ||||||
Johnson Controls International PLC, 3.625% Due 07/02/2024 | 1,225,000 | 1,207,921 | ||||||
Johnson Controls International PLC, 3.750% Due 12/01/2021 | 1,000,000 | 1,008,408 | ||||||
Johnson Controls International PLC, 3.900% Due 02/14/2026 | 1,000,000 | 987,047 | ||||||
Kroger Co., 4.000% Due 02/01/2024 | 150,000 | 150,342 | ||||||
Kroger Co., 3.500% Due 02/01/2026 | 3,300,000 | 3,137,623 | ||||||
McDonalds Corp., 3.625% Due 05/20/2021 | 545,000 | 551,425 | ||||||
Norfolk Southern Corp., 5.900% Due 06/15/2019 | 70,000 | 71,900 | ||||||
Union Pacific Corp., 3.500% Due 06/08/2023 | 2,800,000 | 2,801,923 | ||||||
Union Pacific Corp., 7.875% Due 01/15/2019 | 250,000 | 256,411 | ||||||
Verizon Communications, 4.672% Due 03/15/2055 | 3,379,000 | 3,001,010 | ||||||
13.9% – Total Industrial | $ | 27,399,025 | ||||||
Berkshire Hathaway Energy Co., 3.750% Due 11/15/2023 | 2,120,000 | 2,145,608 | ||||||
Duke Energy Corp., 2.650% Due 09/01/2026 | 475,000 | 427,819 | ||||||
Duke Energy Corp., 3.550% Due 09/15/2021 | 2,825,000 | 2,836,583 | ||||||
Enterprise Products, 3.350% Due 03/15/2023 | 1,640,000 | 1,615,909 | ||||||
Enterprise Products, 3.750% Due 02/15/2025 | 1,275,000 | 1,262,561 | ||||||
Eversource Energy, 2.800% Due 05/01/2023 | 2,225,000 | 2,142,828 | ||||||
Interstate Power & Light, 3.400% Due 08/15/2025 | 225,000 | 218,784 | ||||||
Interstate Power & Light, 3.650% Due 09/01/2020 | 2,575,000 | 2,601,210 |
The accompanying notes are an integral part of these financial statements.
13
Fixed Income Securities | Face Value | Fair Value | |||||||
National Rural Utilities Corp., 2.300% Due 11/15/2019 | 1,595,000 | $ | 1,583,652 | ||||||
National Rural Utilities Corp., 3.050% Due 02/15/2022 | 100,000 | 99,311 | |||||||
NStar, 4.500% Due 11/15/2019 | 1,000,000 | 1,018,295 | |||||||
Virginia Electric & Power Co., 2.950% Due 01/15/2022 | 390,000 | 385,712 | |||||||
Virginia Electric & Power Co., 3.450% Due 09/01/2022 | 2,315,000 | 2,316,162 | |||||||
Xcel Energy Inc., 3.300% Due 06/01/2025 | 725,000 | 701,389 | |||||||
Xcel Energy Inc., 4.700% Due 05/15/2020 | 2,290,000 | 2,339,242 | |||||||
11.0% – Total Utilities | $ | 21,695,065 | |||||||
50.3% Total Corporate Bonds | $ | 99,118,081 | |||||||
United States Government Treasury Obligations | |||||||||
Treasury Bond, 2.500% Due 02/15/2045 | 9,000,000 | 8,205,820 | |||||||
Treasury Bond, 2.750% Due 08/15/2047 | 2,150,000 | 2,051,654 | |||||||
Treasury Inflation Protected Security, 1.375% Due 02/15/2044 | 2,364,758 | 2,639,701 | |||||||
Treasury Note, 1.750% Due 11/30/2019 | 8,500,000 | 8,414,336 | |||||||
Treasury Note, 2.500% Due 05/15/2046 | 11,800,000 | 10,722,328 | |||||||
Treasury Note (TBill 13-week auction high rate + 0)*, 1.990% Due 01/31/2020 | 2,500,000 | 2,499,394 | |||||||
Treasury Note (TBill 13-week auction high rate + 0.033)*, 2.023% Due 04/30/2020 | 4,000,000 | 3,999,286 | |||||||
19.5% – Total United States Government Treasury Obligations | $ | 38,532,519 | |||||||
United States Government Agency Obligations | |||||||||
FHLMC Step-up*, 1.875% Due 07/12/2021 | 1,650,000 | 1,614,660 | |||||||
FHLMC Step-up*, 1.350% Due 07/27/2021 | 100,000 | 97,018 | |||||||
FHLMC Step-up*, 1.500% Due 08/24/2021 | 5,225,000 | 5,127,653 | |||||||
FHLMC Step-up*, 1.750% Due 10/28/2021 | 125,000 | 121,384 | |||||||
FHLMC Step-up*, 2.000% Due 05/10/2022 | 2,000,000 | 1,992,904 | |||||||
FHLMC Step-up*, 2.000% Due 07/18/2022 | 200,000 | 196,201 |
Fixed Income Securities | Face Value | Fair Value | |||||||
FHLMC Step-up*, 1.750% Due 07/26/2022 | 1,500,000 | $ | 1,486,909 | ||||||
FHLMC Step-up*, 1.875% Due 09/29/2022 | 200,000 | 195,859 | |||||||
FHLMC Step-up*, 2.000% Due 10/27/2022 | 1,000,000 | 981,197 | |||||||
FHLMC Step-up*, 3.000% Due 06/28/2023 | 2,500,000 | 2,500,070 | |||||||
7.2% – Total United States Government Agency Obligations | 14,313,855 | ||||||||
United States Government Agency Obligations – Mortgage Backed Securities | |||||||||
FHLMC 10/1 Hybrid ARM (12 month LIBOR + 1.860%)*, 3.306% Due 04/01/2042 | 405,520 | 409,962 | |||||||
FHLMC Series 2985 Class GE, 5.500% Due 06/15/2025 | 115,192 | 120,418 | |||||||
FHLMC Series 3946 Class LN, 3.500% Due 04/15/2041 | 786,767 | 787,683 | |||||||
FHLMC Series 4017 Class MA, 3.000% Due 03/15/2041 | 315,027 | 308,769 | |||||||
FHLMC Series 4087 Class PT, 3.000% Due 07/15/2042 | 1,080,958 | 1,072,237 | |||||||
FHLMC Series 4161 Class QA, 3.000% Due 02/15/2043 | 242,858 | 238,058 | |||||||
FHLMC Series 4582 Class PA, 3.000% Due 11/15/2045 | 1,585,826 | 1,558,721 | |||||||
FHLMC Series 4689 Class DA, 3.000% Due 07/15/2044 | 1,882,475 | 1,850,802 | |||||||
FHLMC Pool G01880, 5.000% Due 08/01/2035 | 96,094 | 102,570 | |||||||
FHLMC Pool G06616, 4.500% Due 12/01/2035 | 193,465 | 202,214 | |||||||
FHLMC Pool G08068, 5.500% Due 07/01/2035 | 492,392 | 534,091 | |||||||
FHLMC Pool G09921, 4.000% Due 07/01/2024 | 261,349 | 268,715 | |||||||
FHLMC Pool G13596, 4.000% Due 07/01/2024 | 1,026,294 | 1,055,080 | |||||||
FHLMC Pool G18642, 3.500% Due 04/01/2032 | 3,670,733 | 3,716,449 | |||||||
FHLMC Pool G18667, 3.500% Due 11/01/2032 | 2,715,376 | 2,749,157 | |||||||
FNMA 10/1 Hybrid ARM (12 month LIBOR + 1.780%)*, 3.288% Due 12/01/2041 | 275,686 | 278,957 | |||||||
FNMA Series 2003-79 Class NJ, 5.000% Due 08/25/2023 | 195,116 | 201,648 |
The accompanying notes are an integral part of these financial statements.
14
Fixed Income Securities | Face Value | Fair Value | ||||||
FNMA Series 2005-64 Class PL, 5.500% Due 07/25/2035 | 118,285 | $ | 126,455 | |||||
FNMA Series 2011-53 Class DT, 4.500% Due 06/25/2041 | 290,916 | 307,728 | ||||||
FNMA Series 2013-21 Class VA, 3.000% Due 07/25/2028 | 986,172 | 979,261 | ||||||
FNMA Series 2013-83 Class MH, 4.000% Due 08/25/2043 | 440,361 | 455,788 | ||||||
FNMA Series 2014-20 Class AC, 3.000% Due 08/25/2036 | 793,423 | 789,038 | ||||||
FNMA Series 2014-28 Class PA, 3.500% Due 02/25/2043 | 417,815 | 421,838 | ||||||
FNMA Series 2015-72 Class GB, 2.500% Due 12/25/2042 | 1,344,392 | 1,313,290 | ||||||
FNMA Series 2016-39 Class LA, 2.500% Due 03/25/2045 | 2,960,169 | 2,840,100 | ||||||
FNMA Series 2016-79 Class L, 2.500% Due 10/25/2044 | 1,963,511 | 1,893,874 | ||||||
FNMA Series 2016-99 Class TA, 3.500% Due 03/25/2036 | 793,545 | 801,382 | ||||||
FNMA Series 2017-30 Class G, 3.000% Due 07/25/2040 | 2,734,659 | 2,724,791 | ||||||
FNMA Pool 1107, 3.500% Due 07/01/2032 | 980,963 | 995,642 | ||||||
FNMA Pool 889050, 6.000% Due 05/01/2037 | 351,970 | 387,839 | ||||||
FNMA Pool 995112, 5.500% Due 07/01/2036 | 188,964 | 205,627 | ||||||
FNMA Pool AA4392, 4.000% Due 04/01/2039 | 306,430 | 314,663 | ||||||
FNMA Pool AL9309, 3.500% Due 10/01/2031 | 1,070,441 | 1,085,651 | ||||||
FNMA Pool MA0384, 5.000% Due 04/01/2030 | 223,502 | 236,962 | ||||||
GNMA Pool 2009-124 Class L, 4.000% Due 11/20/2038 | 69,190 | 69,690 | ||||||
15.9% – Total United States Government Agency Obligations – Mortgage Backed Securities | $ | 31,405,150 | ||||||
Taxable Municipal Bonds | ||||||||
Bowling Green State University Ohio Revenue, 5.330% Due 06/01/2020 | 750,000 | 779,122 | ||||||
Cincinnati Children’s Hospital Medical Center, 2.853% Due 11/15/2026 | 750,000 | 712,635 | ||||||
Florida Atlantic University Capital Improvement Revenue, 7.589% Due 07/01/2037 | 1,785,000 | 1,940,955 |
Fixed Income Securities | Face Value | Fair Value | ||||||
Kansas Development Finance Authority Revenue, 3.741% Due 04/15/2025 | 3,705,000 | $ | 3,715,522 | |||||
Kansas Development Finance Authority Revenue, 4.091% Due 04/15/2027 | 125,000 | 127,595 | ||||||
Kentucky Asset Liability Commission Revenue, 5.339% Due 04/01/2022 | 295,000 | 309,502 | ||||||
Kentucky Property and Buildings Commission Revenue, 5.373% Due 11/01/2025 | 590,000 | 635,725 | ||||||
Ohio Higher Education Facilities – Cleveland Clinic Health Systems, 3.849% Due 01/01/2022 | 945,000 | 967,444 | ||||||
Ohio Major New Infrastructure Revenue, 4.994% Due 12/15/2020 | 850,000 | 889,168 | ||||||
5.1% – Total Taxable Municipal Bonds | $ | 10,077,668 | ||||||
Total Fixed Income Securities 98.0% | $ | 193,447,273 | ||||||
(Identified Cost $197,729,307) |
Preferred Stocks | Shares | Fair Value | ||||||
Allstate Corp., 5.100% Due 01/15/2053 | 66,600 | 1,732,266 | ||||||
Total Preferred Stocks 0.9% | $ | 1,732,266 | ||||||
(Identified Cost $1,637,083) | ||||||||
Cash Equivalents | ||||||||
First American Government Obligation Fund, Class Z** | 710,614 | 710,614 | ||||||
Total Cash Equivalents 0.4% | $ | 710,614 | ||||||
(Identified Cost $710,614) | ||||||||
Total Portfolio Value 99.3% | $ | 195,890,153 | ||||||
(Identified Cost $200,077,004) | ||||||||
Other Assets in Excess of Liabilities 0.7% | $ | 1,355,927 | ||||||
Total Net Assets 100% | $ | 197,246,080 |
* | Variable Rate Security; the rate shown is as of June 30, 2018. |
** | Variable Rate Security; as of June 30, 2018, the 7 day annualized yield was 1.76%. |
ARM – Adjustable Rate Mortgage
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 | ||||||||
Ace INA Holdings Inc., 5.900% Due 06/15/2019 | 679,000 | $ | 698,302 | |||||
American Express Credit, 2.250% Due 05/05/2021 | 2,600,000 | 2,526,501 | ||||||
AON Corp., 5.000% Due 09/30/2020 | 2,500,000 | 2,586,892 | ||||||
Bank of America Corp., 3.300% Due 01/11/2023 | 2,700,000 | 2,660,391 | ||||||
BB&T Corp., 5.250% Due 11/01/2019 | 1,810,000 | 1,859,669 | ||||||
BB&T Corp., 6.850% Due 04/30/2019 | 1,000,000 | 1,034,060 | ||||||
Chubb INA Holdings Inc., 2.300% Due 11/03/2020 | 1,151,000 | 1,130,517 | ||||||
Huntington Bancshares, 2.300% Due 01/14/2022 | 1,500,000 | 1,440,470 | ||||||
Huntington Bancshares, 3.150% Due 03/14/2021 | 500,000 | 497,200 | ||||||
JP Morgan Chase & Co., 4.500% Due 01/24/2022 | 2,600,000 | 2,689,471 | ||||||
Key Bank NA, 2.350% Due 03/08/2019 | 500,000 | 498,559 | ||||||
Keycorp, 5.100% Due 03/24/2021 | 2,000,000 | 2,088,169 | ||||||
Mellon Funding Corp. (Bank of America), 5.500% Due 11/15/2018 | 1,500,000 | 1,515,485 | ||||||
Manufacturers & Traders Trust Co., 2.300% Due 01/30/2019 | 1,000,000 | 997,848 | ||||||
Morgan Stanley, 5.500% Due 07/28/2021 | 2,200,000 | 2,328,005 | ||||||
MUFG Americas Holdings Corp., 2.250% Due 02/10/2020 | 2,594,000 | 2,555,433 | ||||||
National City Bank NA, 6.875% Due 05/15/2019 | 2,600,000 | 2,686,243 | ||||||
Suntrust Banks Inc., 2.900% Due 03/03/2021 | 2,000,000 | 1,975,521 | ||||||
Travelers Companies Inc., 5.900% Due 06/02/2019 | 2,800,000 | 2,880,164 | ||||||
Wells Fargo & Co., 3.450% Due 02/13/2023 | 2,600,000 | 2,548,083 | ||||||
26.8% – Total Finance | $ | 37,196,983 | ||||||
AT&T, 3.600% Due 02/17/2023 | 2,300,000 | 2,265,986 | ||||||
BP Capital Markets PLC, 4.750% Due 03/10/2019 | 1,379,000 | 1,398,950 | ||||||
Burlington Northern Santa Fe, 4.700% Due 10/01/2019 | 1,640,000 | 1,677,100 | ||||||
Chevron Corp., 1.561% Due 05/16/2019 | 500,000 | 495,477 |
Fixed Income Securities | Face Value | Fair Value | ||||||
Chevron Corp. (3 month LIBOR + 0.530)*, 2.851% Due 03/03/2022 | 2,100,000 | $ | 2,122,643 | |||||
CVS Health Corp., 4.125% Due 05/15/2021 | 2,300,000 | 2,340,655 | ||||||
Eaton Electric Holdings, 3.875% Due 12/15/2020 | 1,025,000 | 1,038,282 | ||||||
General Electric Capital Corp. (3 month LIBOR + 0.300%)*, 2.639% Due 05/13/2024 | 1,600,000 | 1,526,975 | ||||||
General Electric Capital Corp. (3 month LIBOR + 1.000%)*, 3.339% Due 04/15/2023 | 2,000,000 | 2,012,500 | ||||||
Johnson Controls International PLC, 4.250% Due 03/01/2021 | 1,000,000 | 1,022,422 | ||||||
Johnson Controls International PLC, 5.000% Due 03/30/2020 | 1,560,000 | 1,604,844 | ||||||
Kroger Co., 6.150% Due 01/15/2020 | 1,800,000 | 1,880,301 | ||||||
McDonald’s Corp., 2.200% Due 05/26/2020 | 1,745,000 | 1,720,415 | ||||||
Norfolk Southern Corp., 5.900% Due 06/15/2019 | 1,377,000 | 1,414,373 | ||||||
Union Pacific Corp., 1.800% Due 02/01/2020 | 770,000 | 755,926 | ||||||
Union Pacific Corp., 2.250% Due 02/15/2019 | 2,000,000 | 1,994,635 | ||||||
Verizon Communications, 5.150% Due 09/15/2023 | 2,450,000 | 2,605,581 | ||||||
Walt Disney Co., 2.150% Due 09/17/2020 | 1,570,000 | 1,537,838 | ||||||
21.2% – Total Industrials | $ | 29,414,903 | ||||||
Berkshire Hathaway Energy Co., 2.000% Due 11/15/2018 | 1,728,000 | 1,724,329 | ||||||
Duke Energy Corp., 5.050% Due 09/15/2019 | 2,748,000 | 2,810,808 | ||||||
Enterprise Products, 6.500% Due 01/31/2019 | 2,000,000 | 2,041,680 | ||||||
Eversource, 4.500% Due 11/15/2019 | 480,000 | 488,782 | ||||||
Georgia Power, 2.850% Due 05/15/2022 | 2,600,000 | 2,548,180 | ||||||
Interstate Power & Light, 3.650% Due 09/01/2020 | 1,950,000 | 1,969,848 | ||||||
National Rural Utilites Corp., 1.650% Due 02/08/2019 | 1,000,000 | 993,950 | ||||||
National Rural Utilites Corp., 2.350% Due 06/15/2020 | 1,817,000 | 1,792,678 | ||||||
Nevada Power Co., 2.750% Due 04/15/2020 | 1,300,000 | 1,298,263 | ||||||
Virginia Electric & Power, 5.000% Due 06/30/2019 | 2,020,000 | 2,058,764 |
The accompanying notes are an integral part of these financial statements.
16
Fixed Income Securities | Face Value | Fair Value | |||||||
Xcel Energy Inc., 4.700% Due 05/15/2020 | 2,400,000 | $ | 2,451,607 | ||||||
14.5% – Total Utilities | $ | 20,178,889 | |||||||
62.5% Total Corporate Bonds | $ | 86,790,775 | |||||||
United States Government Treasury Obligations | |||||||||
Treasury Note, 1.625% Due 03/31/2019 | 1,500,000 | 1,492,734 | |||||||
Treasury Note, 1.590% Due 01/31/2019 | 6,800,000 | 6,668,781 | |||||||
Treasury Note (a), 0.875% Due 10/15/2018 | 2,000,000 | 1,993,561 | |||||||
Treasury Note, 1.125% Due 04/30/2020 | 1,000,000 | 975,117 | |||||||
Treasury Note (b), 3.625% Due 08/15/2019 | 5,610,000 | 5,684,508 | |||||||
12.1% – Total United States Government Treasury Obligations | $ | 16,814,701 | |||||||
United States Government Agency Obligations | |||||||||
FHLMC Step-up*, 1.750% Due 09/15/2022 | 1,500,000 | 1,459,155 | |||||||
FHLMC Step-up*, 1.350% Due 07/27/2021 | 2,500,000 | 2,425,440 | |||||||
FHLMC Step-up*, 1.500% Due 08/24/2021 | 1,000,000 | 981,369 | |||||||
FHLMC Step-up*, 1.875% Due 06/15/2022 | 1,175,000 | 1,151,275 | |||||||
FHLMC Step-up*, 1.950% Due 06/21/2022 | 2,910,000 | 2,861,199 | |||||||
FHLMC Step-up*, 1.875% Due 07/12/2021 | 2,000,000 | 1,957,164 | |||||||
FHLMC Step-up*, 2.000% Due 07/18/2022 | 1,600,000 | 1,569,607 | |||||||
FHLMC Step-up*, 1.750% Due 07/26/2022 | 3,500,000 | 3,469,456 | |||||||
FHLMC Step-up*, 3.000% Due 06/28/2023 | 1,500,000 | 1,500,042 | |||||||
FHLMC Step-up*, 1.875% Due 09/29/2022 | 1,000,000 | 979,294 | |||||||
FHLMC Step-up*, 2.000% Due 10/27/2022 | 1,200,000 | 1,177,437 | |||||||
14.1% – Total United States Government Agency Obligations | $ | 19,531,438 | |||||||
United States Government Agency Obligations – Mortgage Backed Securities | |||||||||
FHLMC Series 4009 Class PA, 2.000% Due 06/15/2041 | 1,352,018 | 1,294,910 |
Fixed Income Securities | Face Value | Fair Value | ||||||
FHLMC Series 4287 Class AB, 2.000% Due 12/15/2026 | 817,613 | $ | 794,138 | |||||
FHLMC Pool G18642, 3.500% Due 04/01/2032 | 3,426,018 | 3,468,686 | ||||||
FHLMC Pool J12635, 4.000% Due 07/01/2025 | 125,310 | 128,829 | ||||||
FNMA 10/1 Hybrid ARM (12 month LIBOR + 1.780%)*, 3.288% Due 12/01/2041 | 275,686 | 278,957 | ||||||
FNMA Pool 1106, 3.000% Due 07/01/2032 | 1,050,112 | 1,044,539 | ||||||
FNMA Pool 833200, 5.500% Due 09/01/2035 | 626,964 | 684,233 | ||||||
FNMA Series 2013-6 Class BC, 1.500% Due 12/25/2042 | 820,890 | 794,956 | ||||||
FNMA Series 2017-30 Class G, 3.000% Due 07/25/2040 | 1,562,662 | 1,557,023 | ||||||
GNMA Pool 726475, 4.000% Due 11/15/2024 | 190,507 | 196,883 | ||||||
GNMA Pool 728920, 4.000% Due 12/15/2024 | 258,852 | 267,807 | ||||||
7.5% – Total United States Government Agency Obligations – Mortgage Backed Securities | $ | 10,510,961 | ||||||
Taxable Municipal Bonds | ||||||||
Fairborn Ohio Special Obligation Bond Anticipation Notes, 2.500% Due 08/15/2018 | 1,525,000 | 1,524,893 | ||||||
Kentucky Asset Liability Commission Revenue, 2.668% Due 04/01/2021 | 820,000 | 809,881 | ||||||
1.7% Total Taxable Municipal Bonds | $ | 2,334,774 | ||||||
Total Fixed Income Securities 97.9% | $ | 135,982,649 | ||||||
(Identified Cost $137,860,174) |
Cash & Cash Equivalents | Shares | |||||||
First American Government Obligation Fund, Class Z** | 1,492,901 | 1,492,901 | ||||||
Total Cash Equivalents 1.1% | $ | 1,492,901 | ||||||
(Identified Cost $1,492,901) | ||||||||
Total Portfolio Value 99.0% | $ | 137,475,550 | ||||||
(Identified Cost $139,353,075) | ||||||||
Other Assets in Excess of Liabilities 1.0% | $ | 1,340,101 | ||||||
Total Net Assets: 100.0% | $ | 138,815,651 |
The accompanying notes are an integral part of these financial statements.
17
Futures Contracts | Long Contracts | Unrealized Appreciation (Depreciation) | ||||||
E-mini Standard & Poor’s 500 expiring September 2018 (50 units per contract) (Notional Value of $138,426,855) | 1,017 | $ | (2,681,843) |
* | Variable Rate Security; the rate shown is as of June 30, 2018. |
** | Variable Rate Security; as of June 30, 2018, the 7 day annualized yield was 1.76%. |
(a) | Held as collateral by RJ O’Brien for futures contracts |
(b) | Portion held as collateral by RJ O’Brien for futures contracts ($4,961,000 face) |
ARM – Adjustable Rate Mortgage
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* | $ | 153,513,468 | $ | 137,419,563 | $ | 195,890,153 | $ | 137,475,550 | ||||||||
Cash | 505,803 | 925,005 | — | 50,500 | ||||||||||||
Due from Broker | — | — | — | 108,815 | ||||||||||||
Interest Receivable | 1,214,064 | 944,685 | 1,505,538 | 1,221,242 | ||||||||||||
Total Assets | $ | 155,233,335 | $ | 139,289,253 | $ | 197,395,691 | $ | 138,856,107 | ||||||||
Liabilities: | ||||||||||||||||
Accrued Management Fee | $ | 95,082 | $ | 84,018 | $ | 131,364 | $ | 40,456 | ||||||||
Due to Custodian | — | — | 18,247 | — | ||||||||||||
Investment Securities Purchased | 2,882,086 | 3,650,725 | — | — | ||||||||||||
Total Liabilities | $ | 2,977,168 | $ | 3,734,743 | $ | 149,611 | $ | 40,456 | ||||||||
Net Assets | $ | 152,256,167 | $ | 135,554,510 | $ | 197,246,080 | $ | 138,815,651 | ||||||||
Net Assets Consist of: | ||||||||||||||||
Paid in Capital | $ | 154,594,848 | $ | 137,407,704 | $ | 201,363,335 | $ | 133,667,540 | ||||||||
Accumulated Net Investment Income/(Loss) | (65,754 | ) | 18,925 | (61,831 | ) | (5,967 | ) | |||||||||
Accumulated Net Realized Gain (Loss) from Security Transactions & Futures Contracts | (268,471 | ) | (102,400 | ) | 131,427 | 9,713,446 | ||||||||||
Net Unrealized Gain (Loss) on Investments | (2,004,456 | ) | (1,769,719 | ) | (4,186,851 | ) | (1,877,525 | ) | ||||||||
Net Unrealized (Loss) on Futures Contracts | — | — | — | (2,681,843 | ) | |||||||||||
Net Assets | $ | 152,256,167 | $ | 135,554,510 | $ | 197,246,080 | $ | 138,815,651 | ||||||||
Net Assets by Share Class | ||||||||||||||||
Class I Shares | $ | 152,255,164 | $ | 135,553,504 | $ | 197,245,072 | $ | 138,815,651 | ||||||||
Class F Shares | $ | 1,003 | $ | 1,006 | $ | 1,008 | n/a | |||||||||
Shares Oustanding (Unlimited Amount Authorized) | ||||||||||||||||
Class I Shares | 10,288,687 | 8,874,531 | 12,754,977 | 8,512,538 | ||||||||||||
Class F Shares | 68 | 66 | 65 | n/a | ||||||||||||
Offering, Redemption and Net Asset Value Per Share | ||||||||||||||||
Class I Shares | $ | 14.80 | $ | 15.27 | $ | 15.46 | $ | 16.31 | ||||||||
Class F Shares | $ | 14.79 | $ | 15.28 | $ | 15.47 | n/a | |||||||||
*Identified Cost of Investment Securities | $ | 155,517,924 | $ | 139,189,282 | $ | 200,077,004 | $ | 139,353,075 |
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 | |||||||||||||
Six Months Ended 6/30/2018 | Six Months Ended 6/30/2018 | Six Months Ended 6/30/2018 | Six Months Ended 6/30/2018 | |||||||||||||
Investment Income: | ||||||||||||||||
Interest | $ | 1,554,683 | $ | 1,727,179 | $ | 2,840,791 | $ | 1,472,987 | ||||||||
Dividends | 21,502 | 48,421 | 62,148 | 32,889 | ||||||||||||
Total Investment Income | $ | 1,576,185 | $ | 1,775,600 | $ | 2,902,939 | $ | 1,505,876 | ||||||||
Expenses: | ||||||||||||||||
Gross Management Fee | $ | 215,921 | $ | 189,134 | $ | 306,712 | $ | 241,774 | ||||||||
Distribution Fee | 1 | 1 | 1 | — | ||||||||||||
Management Fee Waiver (Note #4) | (39,345 | ) | (34,454 | ) | (55,907 | ) | — | |||||||||
Net Expenses | $ | 176,577 | $ | 154,681 | $ | 250,806 | $ | 241,774 | ||||||||
Net Investment Income | $ | 1,399,608 | $ | 1,620,919 | $ | 2,652,133 | $ | 1,264,102 | ||||||||
Realized and Unrealized Gains/(Losses): | ||||||||||||||||
Net Realized Gain (Loss) from Security Transactions | $ | (104,119 | ) | $ | (105,963 | ) | $ | 124,668 | $ | 4,567,732 | ||||||
Net Realized Gain from Futures Contracts | — | — | — | 565,829 | ||||||||||||
Net Change in Unrealized Gain (Loss) on Investments | (1,452,545 | ) | (2,820,445 | ) | (5,977,939 | ) | (1,471,977 | ) | ||||||||
Net Change in Unrealized (Loss) on Futures Contracts | — | — | — | (3,259,524 | ) | |||||||||||
Net Gain/(Loss) on Investments | $ | (1,556,664) | $ | (2,926,408) | $ | (5,853,271) | $ | 402,060 | ||||||||
Net Change in Net Assets from Operations | $ | (157,056) | $ | (1,305,489) | $ | (3,201,138) | $ | 1,666,162 |
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 | |||||||||||||||||||||||||||||
Six Months Ended 06/30/2018* | Year Ended 12/31/2017 | Six Months Ended 06/30/2018* | Year Ended 12/31/2017 | Six Months Ended 06/30/2018* | Year Ended 12/31/2017 | Six Months Ended 06/30/2018* | Year Ended 12/31/2017 | |||||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||||
Net Investment Income | $ | 1,399,608 | $ | 2,202,918 | $ | 1,620,919 | $ | 2,630,199 | $ | 2,652,133 | $ | 3,835,863 | $ | 1,264,102 | $ | 1,794,400 | ||||||||||||||||
Net Realized Gain (Loss) from Security Transactions | (104,119 | ) | 18,232 | (105,963 | ) | 367,955 | 124,668 | 381,659 | 4,567,732 | (173,129 | ) | |||||||||||||||||||||
Net Realized Gain from Futures Contracts | — | — | — | — | — | — | 565,829 | 20,712,938 | ||||||||||||||||||||||||
Net Change in Unrealized Gain (Loss) on Investments | (1,452,545 | ) | (96,553 | ) | (2,820,445 | ) | 418,852 | (5,977,939 | ) | 1,519,502 | (1,471,977 | ) | 42,695 | |||||||||||||||||||
Net Change in Unrealized (Loss) on Futures Contracts | — | — | — | — | — | — | (3,259,524 | ) | 1,544,201 | |||||||||||||||||||||||
Net Change in Net Assets from Operations | $ | (157,056 | ) | $ | 2,124,597 | $ | (1,305,489 | ) | $ | 3,417,006 | $ | (3,201,138 | ) | $ | 5,737,024 | $ | 1,666,162 | $ | 23,921,105 | |||||||||||||
Distributions to Shareholders: | ||||||||||||||||||||||||||||||||
From Net Investment Income | ||||||||||||||||||||||||||||||||
Class I | $ | (1,475,586 | ) | $ | (2,306,918 | ) | $ | (1,638,260 | ) | $ | (2,678,079 | ) | $ | (2,741,162 | ) | $ | (4,027,445 | ) | $ | (1,296,790 | ) | $ | (1,827,796 | ) | ||||||||
Class F** | (3 | ) | — | (4 | ) | — | (4 | ) | — | |||||||||||||||||||||||
From Net Realized Gain from Security Transactions | ||||||||||||||||||||||||||||||||
Class I | — | — | — | (280,242 | ) | — | (156,115 | ) | — | (22,653,984 | ) | |||||||||||||||||||||
Class F** | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Net Change in Net Assets from Distributions | $ | (1,475,589 | ) | $ | (2,306,918 | ) | $ | (1,638,264 | ) | $ | (2,958,321 | ) | $ | (2,741,166 | ) | $ | (4,183,560 | ) | $ | (1,296,790 | ) | $ | (24,481,780 | ) | ||||||||
Capital Share Transactions: | ||||||||||||||||||||||||||||||||
Proceeds From Sale of Shares | ||||||||||||||||||||||||||||||||
Class I | $ | 31,144,709 | $ | 51,043,212 | $ | 20,984,559 | $ | 30,563,616 | $ | 33,526,388 | $ | 70,962,697 | $ | 2,566,550 | $ | 12,189,279 | ||||||||||||||||
Class F** | 1,000 | — | 1,000 | — | 1,000 | — | — | |||||||||||||||||||||||||
Proceeds From Subscriptions-in-Kind – Class I | — | — | — | — | — | 21,899,732 | — | — | ||||||||||||||||||||||||
Reinvestment of Distributions | ||||||||||||||||||||||||||||||||
Class I | 354,511 | 587,804 | 176,828 | 343,443 | 1,623,734 | 2,226,415 | 1,296,719 | 24,481,738 | ||||||||||||||||||||||||
Class F** | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Cost of Shares Redeemed | ||||||||||||||||||||||||||||||||
Class I | (16,808,744 | ) | (36,624,555 | ) | (9,199,570 | ) | (15,538,392 | ) | (33,180,342 | ) | (12,114,574 | ) | (3,400,941 | ) | (8,309,846 | ) | ||||||||||||||||
Class F** | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Net Change in Net Assets from Capital Share Transactions | $ | 14,691,476 | $ | 15,006,461 | $ | 11,962,817 | $ | 15,368,667 | $ | 1,970,780 | $ | 82,974,270 | $ | 462,328 | $ | 28,361,171 | ||||||||||||||||
Net Change in Net Assets | $ | 13,058,831 | $ | 14,824,140 | $ | 9,019,064 | $ | 15,827,352 | $ | (3,971,524) | $ | 84,527,734 | $ | 831,700 | $ | 27,800,496 | ||||||||||||||||
Net Assets at Beginning of Period | $ | 139,197,336 | $ | 124,373,196 | $ | 126,535,446 | $ | 110,708,094 | $ | 201,217,604 | $ | 116,689,870 | $ | 137,983,951 | $ | 110,183,455 | ||||||||||||||||
Net Assets at End of Period | $ | 152,256,167 | $ | 139,197,336 | $ | 135,554,510 | $ | 126,535,446 | $ | 197,246,080 | $ | 201,217,604 | $ | 138,815,651 | $ | 137,983,951 | ||||||||||||||||
Accumulated (Distribution in Excess of) Undistributed Net Investment Income | $ | (65,754) | $ | 10,227 | $ | 18,925 | $ | 36,270 | $ | (61,831) | $ | 27,203 | $ | (5,967) | $ | 26,721 |
* | Unaudited |
** | Class F shares commenced operations on May 1, 2018. The period represented for the Class F shares is May 1, 2018 through June 30, 2018. |
The accompanying notes are an integral part of these financial statements.
21
Selected Data for a Share Outstanding Throughout each Period:
Six Months Ended 6/30/2018* | Year Ended December 31 | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Class I Shares | ||||||||||||||||||||||||
Net Asset Value Beginning of Period | $ | 14.96 | $ | 14.98 | $ | 14.96 | $ | 15.05 | $ | 15.03 | $ | 15.27 | ||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income | 0.14 | 0.24 | 0.21 | 0.17 | 0.18 | 0.25 | ||||||||||||||||||
Net Gains (Losses) on Securities (Realized and Unrealized) | (0.15 | ) | (0.01 | ) | 0.04 | (0.07 | ) | 0.04 | (0.22 | ) | ||||||||||||||
Total Operations | $ | (0.01 | ) | $ | 0.23 | $ | 0.25 | $ | 0.10 | $ | 0.22 | $ | 0.03 | |||||||||||
Distributions: | ||||||||||||||||||||||||
Net Investment Income | (0.15 | ) | (0.25 | ) | (0.23 | ) | (0.19 | ) | (0.20 | ) | (0.25 | ) | ||||||||||||
Return of Capital | — | — | (0.00)(a) | (0.00)(a) | — | — | ||||||||||||||||||
Net Realized Capital Gains | — | — | — | — | — | (0.02 | ) | |||||||||||||||||
Total Distributions | $ | (0.15 | ) | $ | (0.25 | ) | $ | (0.23 | ) | $ | (0.19 | ) | $ | (0.20 | ) | $ | (0.27 | ) | ||||||
Net Asset Value at End of Period | $ | 14.80 | $ | 14.96 | $ | 14.98 | $ | 14.96 | $ | 15.05 | $ | 15.03 | ||||||||||||
Total Return(b) | (0.06) | %(c) | 1.54 | % | 1.68 | % | 0.67 | % | 1.44 | % | 0.16 | % | ||||||||||||
Net Assets End of Period (Millions) | $ | 152.26 | $ | 139.20 | $ | 124.37 | $ | 108.08 | $ | 78.27 | $ | 74.11 | ||||||||||||
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 | 0.25 | %(e) | 0.24 | % | 0.24 | % | 0.23 | % | 0.24 | % | 0.24 | % | ||||||||||||
Ratio of Net Investment Income to | ||||||||||||||||||||||||
Average Net Assets before Waiver | 1.89 | %(e) | 1.53 | % | 1.32 | % | 1.07 | % | 1.14 | % | 1.57 | % | ||||||||||||
Average Net Assets after Waiver | 1.94 | %(e) | 1.59 | % | 1.38 | % | 1.14 | % | 1.20 | % | 1.63 | % | ||||||||||||
Portfolio Turnover Rate | 25.06 | %(c) | 48.04 | % | 73.88 | % | 42.30 | % | 42.41 | % | 56.49 | % |
* | 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 on an investment in the Fund, assuming reinvestment of dividends. |
(c) | Not annualized |
(d) | In 2018, 2017, 2016, 2015, 2014, and 2013, the Adviser waived a portion of the 0.30% management fee to sustain a net fee of 0.25%, 0.24%, 0.23%, 0.24%, and 0.24%, respectively. The Adviser intends this fee waiver to be permanent, although the Adviser retains the right to remove the waiver after April 30, 2018. (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:
Two Months Ended 6/30/2018* | ||||
Class F Shares (Effective May 1, 2018) | ||||
Net Asset Value Beginning of Period | $ | 14.97 | ||
Operations: | ||||
Net Investment Income | 0.04 | |||
Net Gains (Losses) on Securities (Realized and Unrealized) | (0.18 | ) | ||
Total Operations | $ | (0.14 | ) | |
Distributions: | ||||
Net Investment Income | (0.04 | ) | ||
Return of Capital | — | |||
Net Realized Capital Gains | — | |||
Total Distributions | $ | (0.04 | ) | |
Net Asset Value at End of Period | $ | 14.79 | ||
Total Return(b) | 0.30 | %(c) | ||
Net Assets End of Period (Millions) | $ | 0 | ||
Ratios | ||||
Ratio of Expenses to | ||||
Average Net Assets before Waiver | 0.30 | %(e) | ||
Average Net Assets after Waiver | 0.25 | %(e) | ||
Ratio of Net Investment Income to | ||||
Average Net Assets before Waiver | 1.89 | %(e) | ||
Average Net Assets after Waiver | 1.94 | %(e) | ||
Portfolio Turnover Rate | 25.06 | %(c) |
* | 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 2018, 2017, 2016, 2015, 2014, and 2013, the Adviser waived a portion of the 0.30% management fee to sustain a net fee of 0.25%, 0.24%, 0.23%, 0.24%, and 0.24%, respectively. The Adviser intends this fee waiver to be permanent, although the Adviser retains the right to remove the waiver after April 30, 2018. (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 6/30/2018* | Year Ended December 31 | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Class I Shares | ||||||||||||||||||||||||
Net Asset Value Beginning of Period | $ | 15.63 | $ | 15.56 | $ | 15.41 | $ | 15.61 | $ | 15.40 | $ | 16.24 | ||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income | 0.20 | 0.35 | 0.34 | 0.33 | 0.37 | 0.45 | ||||||||||||||||||
Net Gains (Losses) on Securities (Realized and Unrealized) | (0.36 | ) | 0.11 | 0.18 | (0.19 | ) | 0.29 | (0.56 | ) | |||||||||||||||
Total Operations | $ | (0.16 | ) | $ | 0.46 | $ | 0.52 | $ | 0.14 | $ | 0.66 | $ | (0.11 | ) | ||||||||||
Distributions: | ||||||||||||||||||||||||
Net Investment Income | (0.20 | ) | (0.36 | ) | (0.36 | ) | (0.34 | ) | (0.39 | ) | (0.45 | ) | ||||||||||||
Return of Capital | — | — | — | (0.00) (a) | — | — | ||||||||||||||||||
Net Realized Capital Gains | — | (0.03 | ) | (0.01 | ) | — | (0.06 | ) | (0.28 | ) | ||||||||||||||
Total Distributions | $ | (0.20 | ) | $ | (0.39 | ) | $ | (0.37 | ) | $ | (0.34 | ) | $ | (0.45 | ) | $ | (0.73 | ) | ||||||
Net Asset Value at End of Period | $ | 15.27 | $ | 15.63 | $ | 15.56 | $ | 15.41 | $ | 15.61 | $ | 15.40 | ||||||||||||
Total Return(b) | (1.04) | %(c) | 2.99 | % | 3.37 | % | 0.90 | % | 4.31 | % | (0.68) | % | ||||||||||||
Net Assets End of Period (Millions) | $ | 135.55 | $ | 126.54 | $ | 110.71 | $ | 104.36 | $ | 79.64 | $ | 76.12 | ||||||||||||
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 | 25.00 | %(e) | 0.24 | % | 0.24 | % | 0.23 | % | 0.24 | % | 0.24 | % | ||||||||||||
Ratio of Net Investment Income to | ||||||||||||||||||||||||
Average Net Assets before Waiver | 2.52 | %(e) | 2.19 | % | 2.12 | % | 2.06 | % | 2.30 | % | 2.79 | % | ||||||||||||
Average Net Assets after Waiver | 2.57 | %(e) | 2.25 | % | 2.18 | % | 2.13 | % | 2.36 | % | 2.85 | % | ||||||||||||
Portfolio Turnover Rate | 24.13 | %(c) | 40.37 | % | 50.71 | % | 32.75 | % | 34.31 | % | 55.78 | % |
* | 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 2018, 2017, 2016, 2015, 2014, and 2013, the Adviser waived a portion of the 0.30% management fee to sustain a net fee of 0.25%, 0.24%, 0.23%, 0.24%, and 0.24%, respectively. The Adviser intends this fee waiver to be permanent, although the Adviser retains the right to remove the waiver after April 30, 2018. (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:
Two Months Ended 6/30/2018* | ||||
Class F Shares (Effective May 1, 2018) | ||||
Net Asset Value Beginning of Period | $ | 15.25 | ||
Operations: | ||||
Net Investment Income | 0.06 | |||
Net Gains (Losses) on Securities (Realized and Unrealized) | 0.03 | |||
Total Operations | $ | 0.09 | ||
Distributions: | ||||
Net Investment Income | (0.06 | ) | ||
Return of Capital | — | |||
Net Realized Capital Gains | — | |||
Total Distributions | $ | (0.06 | ) | |
Net Asset Value at End of Period | $ | 15.28 | ||
Total Return(b) | 0.57 | % | ||
Net Assets End of Period (Millions) | $ | 0 | ||
Ratios | ||||
Ratio of Expenses to | ||||
Average Net Assets before Waiver | 0.30 | % | ||
Average Net Assets after Waiver | 0.25 | % | ||
Ratio of Net Investment Income to | ||||
Average Net Assets before Waiver | 2.52 | % | ||
Average Net Assets after Waiver | 2.57 | % | ||
Portfolio Turnover Rate | 24.13 | % |
* | 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 2018, 2017, 2016, 2015, 2014, and 2013, the Adviser waived a portion of the 0.30% management fee to sustain a net fee of 0.25%, 0.24%, 0.23%, 0.24%, and 0.24%, respectively. The Adviser intends this fee waiver to be permanent, although the Adviser retains the right to remove the waiver after April 30, 2018. (Note #4) |
(e) | Annualized. |
The accompanying notes are an integral part of these financial statements.
25
Selected Data for a Share Outstanding Throughout each Period:
Six Months Ended 6/30/2018* | Year Ended December 31 | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net Asset Value Beginning of Period | $ | 15.91 | $ | 15.73 | $ | 15.63 | $ | 15.98 | $ | 15.43 | $ | 16.52 | ||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income | 0.20 | 0.37 | 0.39 | 0.39 | 0.40 | 0.49 | ||||||||||||||||||
Net Gains on Securities (Realized and Unrealized) | (0.44 | ) | 0.21 | 0.19 | (0.21 | ) | 0.63 | (0.80 | ) | |||||||||||||||
Total Operations | $ | (0.24 | ) | $ | 0.58 | $ | 0.58 | $ | 0.18 | $ | 1.03 | $ | (0.31 | ) | ||||||||||
Distributions: | ||||||||||||||||||||||||
Net Investment Income | (0.21 | ) | (0.39 | ) | (0.40 | ) | (0.42 | ) | (0.43 | ) | (0.49 | ) | ||||||||||||
Return of Capital | — | — | (0.00)(a) | (0.00)(a) | — | — | ||||||||||||||||||
Net Realized Capital Gains | — | (0.01 | ) | (0.08 | ) | (0.11 | ) | (0.05 | ) | (0.29 | ) | |||||||||||||
Total Distributions | $ | (0.21 | ) | $ | (0.40 | ) | $ | (0.48 | ) | $ | (0.53 | ) | $ | (0.48 | ) | $ | (0.78 | ) | ||||||
Net Asset Value at End of Period | $ | 15.46 | $ | 15.91 | $ | 15.73 | $ | 15.63 | $ | 15.98 | $ | 15.43 | ||||||||||||
Total Return(b) | (1.52) | %(c) | 3.72 | % | 3.67 | % | 1.16 | % | 6.79 | % | (1.87) | % | ||||||||||||
Net Assets End of Period (Millions) | $ | 197.25 | $ | 201.22 | $ | 116.69 | $ | 86.90 | $ | 74.82 | $ | 71.30 | ||||||||||||
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 | 25.00 | %(e) | 0.24 | % | 0.24 | % | 0.23 | % | 0.24 | % | 0.24 | % | ||||||||||||
Ratio of Net Investment Income to | ||||||||||||||||||||||||
Average Net Assets before Waiver | 2.54 | %(e) | 2.29 | % | 2.34 | % | 2.39 | % | 2.46 | % | 2.99 | % | ||||||||||||
Average Net Assets after Waiver | 2.59 | %(e) | 2.35 | % | 2.40 | % | 2.46 | % | 2.52 | % | 3.04 | % | ||||||||||||
Portfolio Turnover Rate | 29.05 | %(c) | 31.42 | % | 42.29 | % | 29.51 | % | 28.30 | % | 67.39 | % |
* | 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 2018, 2017, 2016, 2015, 2014, and 2013, the Adviser waived a portion of the 0.30% management fee to sustain a net fee of 0.25%, 0.24%, 0.23%, 0.24%, and 0.24%, respectively. The Adviser intends this fee waiver to be permanent, although the Adviser retains the right to remove the waiver after April 30, 2018. (Note #4) |
(e) | Annualized. |
The accompanying notes are an integral part of these financial statements.
26
Selected Data for a Share Outstanding Throughout each Period:
Two Months Ended 6/30/2018* | ||||
Class F Shares (Effective May 1, 2018) | ||||
Net Asset Value Beginning of Period | $ | 15.41 | ||
Operations: | ||||
Net Investment Income | 0.06 | |||
Net Gains (Losses) on Securities (Realized and Unrealized) | 0.06 | |||
Total Operations | $ | 0.12 | ||
Distributions: | ||||
Net Investment Income | (0.06 | ) | ||
Return of Capital | — | |||
Net Realized Capital Gains | — | |||
Total Distributions | $ | (0.06 | ) | |
Net Asset Value at End of Period | $ | 15.47 | ||
Total Return(b) | 0.78 | % | ||
Net Assets End of Period (Millions) | $ | 0 | ||
Ratios | ||||
Ratio of Expenses to | ||||
Average Net Assets before Waiver | 0.30 | % | ||
Average Net Assets after Waiver | 0.25 | % | ||
Ratio of Net Investment Income to | ||||
Average Net Assets before Waiver | 2.54 | % | ||
Average Net Assets after Waiver | 2.59 | % | ||
Portfolio Turnover Rate | 29.05 | % | ||
* | 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 2018, 2017, 2016, 2015, 2014, and 2013, the Adviser waived a portion of the 0.30% management fee to sustain a net fee of 0.25%, 0.24%, 0.23%, 0.24%, and 0.24%, respectively. The Adviser intends this fee waiver to be permanent, although the Adviser retains the right to remove the waiver after April 30, 2018. (Note #4) |
(e) | Annualized. |
The accompanying notes are an integral part of these financial statements.
27
Selected Data for a Share Outstanding Throughout each Period:
Six Months Ended 6/30/2018* | Year Ended December 31 | |||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||
Net Asset Value Beginning of Period | $ | 16.27 | $ | 16.28 | $ | 15.17 | $ | 15.82 | $ | 16.27 | $ | 15.50 | ||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income | 0.15 | 0.26 | 0.18 | 0.15 | 0.16 | 0.24 | ||||||||||||||||||
Net Gains (Losses) on Securities and | ||||||||||||||||||||||||
Futures Contracts (Realized and Unrealized) | 0.04 | 3.21 | 1.76 | 0.07 | 2.21 | 4.58 | ||||||||||||||||||
Total Operations | $ | 0.19 | $ | 3.47 | $ | 1.94 | $ | 0.22 | $ | 2.37 | $ | 4.82 | ||||||||||||
Distributions: | ||||||||||||||||||||||||
Net Investment Income | (0.15 | ) | (0.26 | ) | (0.21 | ) | (0.17 | ) | (0.17 | ) | (0.24 | ) | ||||||||||||
Return of Capital | — | — | — | (0.00) (a) | — | — | ||||||||||||||||||
Net Realized Capital Gains | — | (3.22 | ) | (0.62 | ) | (0.70 | ) | (2.65 | ) | (3.81 | ) | |||||||||||||
Total Distributions | $ | (0.15 | ) | $ | (3.48 | ) | $ | (0.83 | ) | $ | (0.87 | ) | $ | (2.82 | ) | $ | (4.05 | ) | ||||||
Net Asset Value at End of Period | $ | 16.31 | $ | 16.27 | $ | 16.28 | $ | 15.17 | $ | 15.82 | $ | 16.27 | ||||||||||||
Total Return(b) | 1.21 | %(c) | 21.39 | % | 12.89 | % | 1.34 | % | 14.42 | % | 31.31 | % | ||||||||||||
Net Assets End of Period (Millions) | $ | 138.82 | $ | 137.98 | $ | 110.18 | $ | 97.95 | $ | 97.15 | $ | 83.93 | ||||||||||||
Ratios(d) | ||||||||||||||||||||||||
Ratio of Expenses to | ||||||||||||||||||||||||
Average Net Assets before Waiver | 0.35 | %(e) | 0.35 | % | 0.35 | % | 0.35 | % | 0.35 | % | 0.67 | % | ||||||||||||
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 | 1.83 | %(e) | 1.45 | % | 1.16 | % | 0.91 | % | 0.93 | % | 1.00 | % | ||||||||||||
Average Net Assets after Waiver | 1.83 | %(e) | 1.45 | % | 1.16 | % | 0.91 | % | 0.93 | % | 1.32 | % | ||||||||||||
Portfolio Turnover Rate | 38.29 | %(c) | 40.40 | % | 65.13 | % | 57.75 | % | 56.32 | % | 33.09 | % |
* | 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.
28
1) Organization
The Johnson Institutional Short Duration Bond Fund, Johnson Institutional Intermediate Bond Fund, Johnson Institutional Core Bond Fund (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.
Effective May 1, 2018, the Bond Funds each added a share class, Class F Shares. Each class of shares for each Fund has identical rights and privileges except with respect to distribution (12b-1) fees and voting rights on matters affecting a single class of shares. Class F shares have a maximum distribution (12b-1) fee of 0.25%, currently waived by the Adviser to 0.15%.
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 Services — Investment Companies”.
Financial Futures Contracts:
The Enhanced Return Fund invests in stock index futures (equity risk) in an attempt to replicate the returns of the leading large capitalization companies in the leading industries in the U.S. economy. 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 months ended June 30, 2018 was $139,252,455. 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 Gains on futures contracts, as of June 30, 2018, is presented separately within the components of net 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, 2018, RJ O’Brien holds U.S. Treasury Notes with the custodian, which serves as collateral for future contracts, with a value on June 30, 2018 of $6,961,000. Net variation margin receivable on futures contracts as of June 30, 2018 was $108,815.
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, 2018, the Fund only has one position and the variation margin applicable to that position is presented in the Statement of Assets and Liabilities.
29
2) Summary of Significant Accounting Policies, continued
The following table presents the Enhanced Return Fund’s liability derivatives available for offset under a master netting agreement, net of collateral pledged as of June 30, 2018.
Liabilities:
Description | Gross Amounts of Recognized Assets | Gross Amounts Offset in the Statement of Assets & Liabilities | Net Amounts Presented in the Statement of Assets & Liabilities | Gross Amounts Not Offset in the Statement of Assets & Liabilities | ||||||||||||||||||||
Financial Instruments | Cash Collateral Pledged/Received | Net Amount | ||||||||||||||||||||||
Futures Contracts | $ | 108,815 | $ | — | $ | 108,815 | $ | 108,815* | $ | — | $ | — | ||||||||||||
Total | $ | 108,815 | $ | — | $ | 108,815 | $ | 108,815* | $ | — | $ | — |
* | The amount is limited to the derivative balance, and accordingly, does not include excess collateral pledged. |
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. Income and expenses (other than expenses attributable to a specific class) and realized and unrealized gains or losses on investments are allocated to each class of shares based on the class’ respective net assets to the total net assets of the Fund.
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 all open tax years ended June 30, 2018, 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.
30
2) Summary of Significant Accounting Policies, continued
For the year ended December 31, 2017, the Funds made the following reclassifications to increase (decrease) the components of the net assets:
Paid in Capital | Accumulated Undistributed Net Investment Income (Loss) | Accumulated Net Realized Gain (Loss) | ||||||||||
Short Duration Bond Fund | $ | — | $ | 114,227 | $ | (114,227 | ) | |||||
Intermediate Bond Fund | — | 84,150 | (84,150 | ) | ||||||||
Core Bond Fund | — | 218,785 | (218,785 | ) | ||||||||
Enhanced Return Fund | — | 60,117 | (60,117 | ) |
Reasons for the reclassification of components of net assets are attributable to the paydowns received during the year from collateralized mortgage obligations.
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.
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.
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.
31
3) Security Valuation and Transactions, continued
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.
Money Market. Investments in mutual funds, including money market mutual funds (notated throughout these financial statements 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.
The following is a summary of the inputs used to value each Fund’s investments as of June 30, 2018:
Short Duration Bond Fund | Level 1 | Level 2 | Level 3 | Totals | ||||||||||||
Corporate Bonds* | $ | — | $ | 99,928,752 | $ | — | $ | 99,928,752 | ||||||||
U.S. Treasury Obligations | — | 14,997,422 | — | 14,997,422 | ||||||||||||
U.S. Agency Obligations | — | 18,154,127 | — | 18,154,127 | ||||||||||||
U.S. Agency Obligations – Mortgage-Backed | — | 11,547,757 | — | 11,547,757 | ||||||||||||
Taxable Municipal Bonds | — | 1,402,827 | — | 1,402,827 | ||||||||||||
Cash Equivalents | 7,482,583 | — | — | 7,482,583 | ||||||||||||
Total | $ | 7,482,583 | $ | 146,030,885 | $ | — | $ | 153,513,468 |
32
3) Security Valuation and Transactions, continued
Intermediate Bond Fund | Level 1 | Level 2 | Level 3 | Totals | ||||||||||||
Corporate Bonds* | $ | — | $ | 71,899,979 | $ | — | $ | 71,899,979 | ||||||||
U.S. Treasury Obligations | — | 26,327,679 | — | 26,327,679 | ||||||||||||
U.S. Agency Obligations | — | 13,047,126 | — | 13,047,126 | ||||||||||||
U.S. Agency Obligations – Mortgage-Backed | — | 11,260,365 | — | 11,260,365 | ||||||||||||
Taxable Municipal Bonds | — | 7,728,559 | — | 7,728,559 | ||||||||||||
Preferred Stocks | 1,557,739 | — | — | 1,557,739 | ||||||||||||
Cash Equivalents | 5,598,116 | — | — | 5,598,116 | ||||||||||||
Total | $ | 7,155,855 | $ | 130,263,708 | $ | — | $ | 137,419,563 |
Core Bond Fund | Level 1 | Level 2 | Level 3 | Totals | ||||||||||||
Corporate Bonds* | $ | — | $ | 99,118,081 | $ | — | $ | 99,118,081 | ||||||||
U.S. Treasury Obligations | — | 38,532,519 | — | 38,532,519 | ||||||||||||
U.S. Agency Obligations | — | 14,313,855 | — | 14,313,855 | ||||||||||||
U.S. Agency Obligations – Mortgage-Backed | — | 31,405,150 | — | 31,405,150 | ||||||||||||
Taxable Municipal Bonds | — | 10,077,668 | — | 10,077,668 | ||||||||||||
Preferred Stocks | 1,732,266 | — | — | 1,732,266 | ||||||||||||
Cash Equivalents | 710,614 | — | — | 710,614 | ||||||||||||
Total | $ | 2,442,880 | $ | 193,447,273 | $ | — | $ | 195,890,153 |
Enhanced Return Fund | Level 1 | Level 2 | Level 3 | Totals | ||||||||||||
Corporate Bonds* | $ | — | $ | 86,790,775 | $ | — | $ | 86,790,775 | ||||||||
U.S. Treasury Obligations | — | 16,814,701 | — | 16,814,701 | ||||||||||||
U.S. Agency Obligations | — | 19,531,438 | — | 19,531,438 | ||||||||||||
U.S. Agency Obligations – Mortgage-Backed | — | 10,510,961 | — | 10,510,961 | ||||||||||||
Taxable Municipal Bonds | — | 2,334,774 | — | 2,334,774 | ||||||||||||
Cash Equivalents | 1,492,901 | — | — | 1,492,901 | ||||||||||||
Sub-Total | $ | 1,492,901 | $ | 135,982,649 | $ | — | $ | 137,475,550 | ||||||||
Other Financial Instruments** | (2,681,843 | ) | — | — | (2,681,843 | ) | ||||||||||
Total | $ | (1,188,942 | ) | $ | 133,777,528 | $ | — | $ | 134,793,707 |
* | See Portfolio 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 depreciation 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 months ended June 30, 2018, 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.
33
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 interest), 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 months ended June 30, 2018 as indicated below. Effective May 1, 2018, 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 0.25%. This is a change in the fee from the prior period (May 1, 2017 to April 30, 2018) of 0.243%. The Adviser has the right to remove this fee waiver any time after April 30, 2019.
For the six months ended June 30, 2018, 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 | % | 0.050 | % | 0.250 | % | $ | 176,576 | $ | 39,345 | $ | 95,082 | ||||||||||||
Intermediate Bond Fund | 0.30 | % | 0.050 | % | 0.250 | % | 154,680 | 34,454 | 84,018 | |||||||||||||||
Core Bond Fund | 0.30 | % | 0.050 | % | 0.250 | % | 250,805 | 55,907 | 131,364 | |||||||||||||||
Enhanced Return Fund | 0.35 | % | — | 0.250 | % | 241,774 | — | 40,456 |
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 $24,000 for the six months ended June 30, 2018, 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 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. As of June 30, 2018, Covenant Trust Company, owned in aggregate 50.52% of the Short Duration Bond Fund, 63.12% of the Intermediate Bond Fund, and 42.56% of the Core Bond Fund. As of June 30, 2018, client accounts managed by the Adviser and held by Charles Schwab & Co, held in aggregate 92.16% 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 and administration services to the Funds. These fees are paid by the Adviser.
6) Purchases and Sales of Securities
For the six months ended June 30, 2018, 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 | $ | 30,124,661 | $ | 24,311,706 | $ | 4,348,476 | $ | 8,552,662 | ||||||||
Intermediate Bond Fund | 19,336,172 | 12,927,941 | 20,931,326 | 17,160,226 | ||||||||||||
Core Bond Fund | 38,470,649 | 34,869,443 | 27,117,389 | 5,633,184 | ||||||||||||
Enhanced Return Fund | 23,943,732 | 19,519,875 | 28,371,836 | 26,684,815 |
34
7) Capital Share Transactions
As of June 30, 2018, 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.
Short Duration Bond Fund | Intermediate Bond Fund | Core Bond Fund | ||||||||||||||||||||||
Six months ended 6/30/2018 | Year ended 12/31/2017 | Six months ended 6/30/2018 | Year ended 12/31/2017 | Six months ended 6/30/2018 | Year ended 12/31/2017 | |||||||||||||||||||
Class I Shares | ||||||||||||||||||||||||
Issued | 2,096,546 | 3,397,743 | 1,366,803 | 1,950,160 | 2,145,539 | 4,466,903 | ||||||||||||||||||
Issued for Subscriptions-in-Kind | — | — | — | — | — | 1,384,845 | ||||||||||||||||||
Reinvested | 23,890 | 39,159 | 11,520 | 21,939 | 104,508 | 140,131 | ||||||||||||||||||
Redeemed | (1,133,712 | ) | (2,437,114 | ) | (599,133 | ) | (993,716 | ) | (2,143,805 | ) | (762,198 | ) | ||||||||||||
Change in shares outstanding | 986,724 | 999,788 | 779,190 | 978,383 | 106,242 | 5,229,681 | ||||||||||||||||||
Shares Outstanding: | ||||||||||||||||||||||||
Beginning of period | 9,301,963 | 8,302,175 | 8,095,341 | 7,116,958 | 12,648,735 | 7,419,054 | ||||||||||||||||||
End of period | 10,288,687 | 9,301,963 | 8,874,531 | 8,095,341 | 12,754,977 | 12,648,735 | ||||||||||||||||||
Class F Shares | ||||||||||||||||||||||||
Issued | 68 | — | 66 | — | 65 | — | ||||||||||||||||||
Reinvested | — | — | — | — | — | — | ||||||||||||||||||
Redeemed | — | — | — | — | — | — | ||||||||||||||||||
Change in shares outstanding | 68 | — | 66 | — | 65 | — | ||||||||||||||||||
Shares Outstanding: | ||||||||||||||||||||||||
Beginning of period | 0 | — | 0 | — | 0 | — | ||||||||||||||||||
End of period | 68 | — | 66 | — | 65 | — |
Enhanced Return Fund | ||||||||
Six months ended 6/30/2018 | Year ended 12/31/2017 | |||||||
Issued | 155,291 | 669,109 | ||||||
Reinvested | 81,113 | 1,493,455 | ||||||
Redeemed | (205,623 | ) | (448,604 | ) | ||||
Change in shares outstanding | 30,781 | 1,713,960 | ||||||
Shares Outstanding: | ||||||||
Beginning of period | 8,481,757 | 6,767,797 | ||||||
End of period | 8,512,538 | 8,481,757 |
35
8) 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.
9) Federal Tax Information
For Federal income tax purposes, the cost of investment securities owned on June 30, 2018 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:
Fund | Tax Cost of Securities | Appreciation | Depreciation | Net Appreciation (Depreciation) | ||||||||||||
Short Duration Bond Fund | $ | 155,517,924 | $ | 47,257 | $ | (2,051,713 | ) | $ | (2,004,456 | ) | ||||||
Intermediate Bond Fund | 139,189,282 | 544,142 | (2,313,861 | ) | (1,769,719 | ) | ||||||||||
Core Bond Fund | 200,077,004 | 591,188 | (4,778,039 | ) | (4,186,851 | ) | ||||||||||
Enhanced Return Fund | 139,353,075 | 88,534 | (1,966,059 | ) | (1,877,525 | ) |
The difference between book value and tax value of unrealized appreciation (depreciation) is primarily attributable to the tax deferral of losses on wash sales.
The tax character of the distributions paid as of December 31, 2017 is as follows:
Ordinary Income | Net Realized Long-Term Capital Gain | Return of Capital | Total Distributions Paid | |||||||||||||||||
Short Duration Bond Fund | 2016 | 1,761,554 | — | 15,972 | 1,777,526 | |||||||||||||||
2017 | 2,306,918 | — | — | 2,306,918 | ||||||||||||||||
Intermediate Bond Fund | 2016 | 2,459,539 | 92,392 | — | 2,551,931 | |||||||||||||||
2017 | 2,678,079 | 280,242 | — | 2,958,321 | ||||||||||||||||
Core Bond Fund | 2016 | 2,547,906 | 492,798 | 19,024 | 3,059,728 | |||||||||||||||
2017 | 4,027,445 | 156,115 | — | 4,183,560 | ||||||||||||||||
Enhanced Return Fund | 2016 | 3,082,599 | 2,390,114 | — | 5,472,713 | |||||||||||||||
2017 | 10,973,814 | 13,507,966 | — | 24,481,780 |
* | Short-Term Capital Gains were combined with Ordinary Income, as they are taxed at the Ordinary Income tax rate. |
As of December 31, 2017, the components of distributable earnings on a tax basis were as follows:
Undistributed Ordinary Income | Undistributed Net Realized Long-Term Capital Gains | Short Term Capital Loss Carryovers (Indefinite) | Long-Term Capital Loss Carryovers (Indefinite) | Unrealized Appreciation (Depreciation) | Post-October Capital Loss | Total Distributable Income on a Tax Basis | ||||||||||||||||||||||
Short Duration Bond Fund | $ | 10,227 | $ | — | $ | (17,658 | ) | $ | (146,692 | ) | $ | (551,912 | ) | $ | — | $ | (706,035 | ) | ||||||||||
Intermediate Bond Fund | 36,270 | 3,563 | — | — | 1,050,726 | — | 1,090,559 | |||||||||||||||||||||
Core Bond Fund | 27,203 | 7,411 | — | — | 1,790,435 | — | 1,825,049 | |||||||||||||||||||||
Enhanced Return Fund | 2,098,515 | 3,085,772 | — | — | (405,548 | ) | — | 4,778,739 |
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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, 2017 and held through June 30, 2018.
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, 2017 | Ending Account Value June 30, 2018 | Expenses Paid During Period* January 1, 2018 – June 30, 2018 | ||||||||||
Short Duration Bond Fund | ||||||||||||
Actual – Class I | $ | 1,000.00 | $ | 999.40 | $ | 1.24 | ||||||
Hypothetical | $ | 1,000.00 | $ | 1,023.55 | $ | 1.25 | ||||||
Actual – Class F | $ | 1,000.00 | $ | 1,003.00 | $ | 1.99 | ||||||
Hypothetical | $ | 1,000.00 | $ | 1,022.81 | $ | 2.01 | ||||||
Intermediate Bond Fund | ||||||||||||
Actual – Class I | $ | 1,000.00 | $ | 989.60 | $ | 1.23 | ||||||
Hypothetical | $ | 1,000.00 | $ | 1,023.55 | $ | 1.25 | ||||||
Actual – Class F | $ | 1,000.00 | $ | 1,002.85 | $ | 1.99 | ||||||
Hypothetical | $ | 1,000.00 | $ | 1,022.81 | $ | 2.01 | ||||||
Core Bond Fund | ||||||||||||
Actual – Class I | $ | 1,000.00 | $ | 984.80 | $ | 1.23 | ||||||
Hypothetical | $ | 1,000.00 | $ | 1,023.55 | $ | 1.28 | ||||||
Actual – Class F | $ | 1,000.00 | $ | 1,007.80 | $ | 1.99 | ||||||
Hypothetical | $ | 1,000.00 | $ | 1,022.81 | $ | 2.01 | ||||||
Enhanced Return Fund | ||||||||||||
Actual | $ | 1,000.00 | $ | 1,012.10 | $ | 1.75 | ||||||
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 Class I, the expense ratio is 0.25%; for Short Duration, Intermediate, and Core Bond Funds Class F, the total expense ratio is 0.40%; and for the Enhanced Return Fund, the expense ratio is 0.35%. |
** | Beginning value as of May 1, 2018 |
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At a regular board meeting of the Johnson Mutual Funds Trust, on May 30, 2018, the Trustees, including the Trustees who are not “interested persons” of the Trust (the “Independent Trustees”), then 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 by the Adviser to the Funds, the compensation received for management services, Fund performance for various periods ended March 31, 2018 and May 29, 2018, profitability of the Adviser with respect to the Funds and economies of scale.
With respect 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 discussed the Adviser’s experience and capabilities. The Board noted that the Adviser has been providing services to the Trust since 1992 and the 10 Funds, which includes four institutional funds. The Board reviewed the firm personnel who serve as portfolio managers to the various Funds. The Trustees noted that they were satisfied with the portfolio management and other management services being provided to the Funds by the Adviser. The Trustees noted their cooperative relationship with the Adviser. The Trustees next discussed the Adviser’s personnel, in particular those dedicated to portfolio management and fund matters. The Trustees then discussed the Adviser’s compliance program, the resources allocated to compliance matters and the responsiveness of the Adviser to issues raised by the Trust’s chief compliance officer. Additionally, the Trustees noted that there not any recent litigations or regulatory investigations related to the Adviser. A representative of the Adviser provided an overview of the Adviser’s financial status and reviewed 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 satisfactory, 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.
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 ended March 31, 2018 and May 29, 2018. 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. The Board also reviewed the Adviser’s expectations as to each Fund’s risk/return profile as measured by its standard deviation as opposed to its benchmark.
The Trustees recognized that the Equity Income Fund had slightly underperformed the S&P 500 Index for the 3-year period but had recently significantly outperformed the Index more recently for the 1-year period benchmark, the S&P 500 Index, for the 3-year period but had also outperformed the Index for 1-year period. With respect to the Opportunity Fund, the Trustees noted that the Fund had outperformed the Russell 2500 Index for the 1 year and 3-year periods. The Board next discussed the performance of the Realty Fund, noting that it had also outperformed its benchmark for the 1-year and 3-year periods. The Trustees noted the International Fund slightly underperformed its benchmark for each of the periods. Next, the Trustees reviewed the performance of the Fixed Income Fund, noting that the Fund’s returns has slightly lagged those of its benchmark, the Barclays U.S. Aggregate Bond Index. The Trustees noted that the Municipal Income Fund had outperformed the Barclays 5-year GO Index for the 1-year, 3-year and 5-year periods. After discussion, the Trustees agreed that each of the Funds had reasonable performance.
The Trustees then reviewed each of the Institutional Funds. 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 each of the 1, 3 and 5-year periods. Next, the Trustees discussed the performance of the Intermediate Bond Fund, noting that it had outperformed the Barclays Intermediate U.S. Government Credit Index for all periods as well. With respect to the Core Bond Fund, the Board noted that the Fund had also outperformed the Barclays U.S. Aggregate
38
Index for the 1, 3, 5-year periods. The Trustees next discussed the performance for the Enhanced Return Fund. The Board reviewed its performance, noting that the Enhanced Return Fund slightly lagged its benchmark, the S&P 500 Index, for the 1, 3 and 5-year periods. 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, 2017 by the Funds. The Trustees also reviewed a report from the Adviser that included a percentile ranking of the expense ratio of each Fund compared to the average expense ratios of the funds in the applicable Morningstar category. As in past years, the Board noted that total expense ratio was a more meaningful comparison than the actual advisory fee because the Management Agreements for the Funds have a unitary fee structure where the Adviser pays substantially all of the expenses of each Fund and is compensated with a single fee (noting that most of the funds in the Peer Group comparisons do not share this structure). The expense ratios for Realty Fund, Municipal Income Fund, Short Duration Bond Fund, Intermediate Bond Fund, Core Bond Fund and Enhanced Return Fund were well below the mean, while expense ratios for Equity Income Fund, Opportunity Fund, Fixed Income Fund and International Fund were slightly above the averages for their respective categories. 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 the profitability of each of the Funds to the Adviser and the profitability of the Adviser in the aggregate with respect to the Funds. Representatives of the Adviser reported on the Adviser’s profitability on a fund by fund basis. The Trustees, including the Independent Trustees, concluded that the Management Fee payable by each Fund was reasonable and that the Adviser’s level of profitability from its relationship with the Funds is not excessive.
The Trustees then reviewed economies of scale. The Trustees considered that because the Funds’ expense ratios were reasonable, and given the asset levels of the Funds and other information, 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 for another year. The Trustees and representatives from the Adviser again agreed to discuss the possibility of fee breakpoints in the future, depending on the asset level of a Fund. After a discussion, the Trustees concluded that no breakpoints 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.
39
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
40
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 (76) 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. | 10 | None | ||||||
Independent Trustees | |||||||||||
Ronald H. McSwain (75) 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 | 10 | None | ||||||
John R. Green (75) 3777 West Fork Rd. Cincinnati, OH 45247 | Trustee | Since 2006 | Retired from The Procter & Gamble Company | 10 | None | ||||||
James J. Berrens (52) 3777 West Fork Rd Cincinnati, OH 45247 | Trustee | Since 2006 | Chief Executive Officer since May 2015, Chief Financial Officer September 2010 to May 2015 for Christian Community Health | 10 | None | ||||||
Dr. Jeri B. Ricketts (60) 3777 West Fork Rd. Cincinnati, OH 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. | 10 | None |
41
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 (47) 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 (59) 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 (54) 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 (52) 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 (46) 3777 West Fork Road Cincinnati, Ohio 45247 | Secretary | Since 2007 | Compliance Associate for the Adviser since March 2006 | NA | NA |
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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, Ohio 45202
Independent Registered Public Accounting Firm
Cohen and Company
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 17, 2018, 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 7, 2018
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 7, 2018
By /s/ Marc E. Figgins
Marc E. Figgins, Treasurer
Date September 7, 2018
* Print the name and title of each signing officer under his or her signature.