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 number811-07254
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:12/31/18
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.
Annual
Report
December 31, 2018
t | Johnson Equity Income Fund |
t | Johnson Opportunity Fund |
t | Johnson International Fund |
t | Johnson Fixed Income Fund |
t | Johnson Municipal Income Fund |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by contacting the Fund at 1-800-541-0170 or, if you own these shares through a financial intermediary, by contacting your financial intermediary.
You may elect to receive all future reports in paper free of charge. You can inform the Fund that you wish to continue receiving paper copies of your shareholder reports by contacting the Fund at 1-800-541-0170. If you own shares through a financial intermediary, you may contact your financial intermediary or follow instructions included with this document to elect to continue to receive paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with the fund complex or at your financial intermediary.
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 | |||
International Fund | 5 | |||
Fixed Income Fund | 6 | |||
Municipal Income Fund | 7 | |||
Portfolio of Investments | ||||
Equity Income Fund | 8 | |||
Opportunity Fund | 9 | |||
International Fund | 11 | |||
Fixed Income Fund | 13 | |||
Municipal Income Fund | 17 | |||
Statements of Assets and Liabilities | 27 | |||
Statements of Operations | 29 | |||
Statements of Changes in Net Assets | 31 | |||
Financial Highlights | ||||
Equity Income Fund | 33 | |||
Opportunity Fund | 34 | |||
International Fund | 35 | |||
Fixed Income Fund | 36 | |||
Municipal Income Fund | 37 | |||
Notes to the Financial Statements | 38 | |||
Disclosure of Expenses | 45 | |||
Additional Information | 46 | |||
Report of Independent Registered Public Accounting Firm | 47 | |||
Trustees and Officers | 48 | |||
Trustees and Officers, Transfer Agent and Fund Accountant, Custodian, Independent Registered Public Accounting Firm, Legal Counsel | Back Page |
Dear Shareholder:
We are pleased to present you with the Johnson Mutual Funds’ December 31, 2018 Annual Report. On the following pages, we have provided commentary on the performance of each of the Funds in 2018 as well as the relative performance compared to each Fund’s benchmark index.
The remainder of the report provides the holdings of each Johnson Mutual Fund as well as other financial data and notes.
Review of Markets
Stocks ended 2018 with a resounding thud, dragging returns from peaks of double-digit gains into negative territory for the first time since 2008. The S&P 500 fell nearly 7% in October, and November’s 2% gain was followed by the worst December since 1946, with a loss of 9%. The full-year losses for the S&P 500 and the Dow Jones Industrial Average were still in the low-single digits thanks to gains in the first nine months. The numbers would have been worse were it not for a record-day on December 26th. The Dow notched its first-ever 1,000-point daily gain, boosting the index over 5% in a single day. The final week of the year added more than 7% to the index.
The fourth-quarter weakness was broad. Stocks fell around the globe, especially those of tech companies. Tech experienced a massive reversal after leading the market higher through September. Earlier gains helped it finish third among sectors for the full year, behind health care and utilities stocks. Cyclical stocks like energy and materials were also big losers.
Mid cap and small cap stocks were hit even harder than large cap. The Russell 2000 Index of small-cap U.S. stocks fell into bear market territory, losing more than 20% from the peak. International stocks fared even worse than the U.S., especially those of emerging markets.
For the full year, bonds were generally flat. Typically bonds would provide positive returns in a year when stocks are negative. The first nine months brought rising interest rates, which left most indices in negative territory coming into the fourth quarter. The stock market selloff led to positive returns for bonds in the fourth quarter, bringing the full-year total returns roughly to even. Municipal bonds finished with slightly positive gains for the full year.
Markets at Odds with Fundamentals
2018 will be remembered as a year when market behavior was out of step with the underlying fundamentals. The volatility spike in the fourth quarter was largely a function of a shift in investor sentiment as opposed to declines in the actual data. While the global economy is showing some signs of slowing, there is little evidence that a global recession is imminent. This is particularly true in the U.S. economy. GDP rose at the fastest pace since 2011, and economic readings are still healthy for the most part. Corporate earnings per share also grew at the fastest pace since 2011, with revenues and margins both exceeding expectations throughout the year. The divergence of market prices from earnings led to a steep drop in valuation. The price-to-earnings (PE) ratio based on next-twelve-months earnings forecasts finished 2017 at 20.0, but fell to 15.4 by the end of 2018. This divergence between prices and fundamentals is a sign of weakening investor optimism about the outlook for 2019. Investors fear the best may be behind us for the economy and stocks. At the same time, this steep drop in valuations creates room for additional gains in 2019 should fundamentals stabilize or resume their upward trend.
Investors Focused on Shifts in Policy
Adding to the concern are several shifts in the policy backdrop. The passage of tax reform in late 2017 gave a one-time boost to corporate earnings growth numbers heading into 2018. With a full year behind us, the bar will be higher for corporations to grow their earnings in the year ahead. Analysts are still predicting growth, but the rate of expansion is expected to be lower than 2018.
Fed commentary exacerbated the volatility in late 2018, as investors were on edge regarding monetary policy. Central banks worldwide have been withdrawing stimulus, and attempting to do so without causing a hard landing for the economy. The Fed raised its benchmark rate several times in 2018, but late in the year backed off some of its earlier hawkish commentary regarding 2019. This was a main reason the market leapt higher in the final week of trading.
Meanwhile, the ongoing trade negotiations continue. They have produced little in the way of landmark agreements, but the concern around this issue has decreased as both sides have shown more willingness to bend. U.S. and Chinese leaders resumed talks in the first week of the New Year.
The U.S. political drama has also picked up. The Democrats won back the House in November, and since then have locked horns with President Trump. The federal government partially shut down after a dispute over funding a border wall prevented passage of a budget bill to fund the
1
Letter from the Fund President: December 31, 2018
government. With Congress split, 2019 is unlikely to produce significant policy shifts, and attention is turning to the 2020 presidential election. Divided government has often proved beneficial to stocks, but political forces are unlikely to be a major driver of returns in 2019 relative to economic and earnings growth.
We want you to know how much we appreciate the confidence you have placed in us for your investment needs. As always, please feel free to call us at (513) 661-3100 or (800) 541-0170 with your comments or questions. Thank you.
Sincerely,
Jason Jackman, President
2
For the year, the Johnson Equity Income Fund returned -2.68%. The Fund outperformed both the S&P 500 Index return of -4.38%.
Strong stock selection across a broad range of sectors contributed to the relative outperformance for the year, partially offset by negative overall attribution from sector allocation. Overweighted positions (as compared to the indices) in the Consumer Staples and Financials sectors, combined with an underweight position to the Information Technology sector, were the primary contributors to negative sector allocation attribution. Shifting to stock selection, positive attribution was broad-based coming from nine out of eleven sectors. Notable strong performers within the Fund in both absolute and relative terms included Abbott Laboratories, TJX Companies, Mastercard, Starbucks, Automatic Data Processing, Zoetis, and Medtronic. Notable individual stock detractors from performance included Schlumberger, Zimmer Biomet, Ingredion, Invesco, and J.M. Smucker.
It was a challenging year to manage the portfolio as market dynamics in the first half of the year posed formidable headwinds to the Fund’s relative performance. 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. However, the second half of the year saw a return of volatility as economic, geopolitical, and valuation risks all came to the forefront of investors’ minds. The intra-day peak-to-trough decline in the S&P 500 Index exceeded 20% briefly. With the investment strategy focus on quality companies, valuation, and relative downside protection, the Fund performed within the range of our expectations during the volatile last three months of the year, benefitting in relative performance versus the S&P 500 and pushing the Fund ahead for the full year.
New additions to the portfolio in the second half of 2018 included Carter’s, Xylem, Colgate-Palmolive, Essex Property Trust, and First Hawaiian, Inc. We are finding more attractive opportunities in stocks with above average dividend yields once again. The Fund sold its positions in Realty Income and Ingredion and trimmed positions in several stocks. The sales resulted from either certain individual stocks exceeding our estimate of fair value, or, given the increase in volatility and a greater number of stocks declining to what we estimate to be more attractive valuation levels, more attractive relative return opportunities. As we get later in the cycle, our continued focus will be to position the portfolio to provide the downside protection characteristics that our shareholders have come to expect.
Average Annual Total Returns as of December 31, 2018 | ||||||||
Equity Income Fund | S&P 500 Index | |||||||
One Year | -2.68 | % | -4.38 | % | ||||
Five Years | 6.56 | % | 8.49 | % | ||||
Ten Years | 11.17 | % | 13.12 | % |
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. As of the Fund’s most recent prospectus dated May 1, 2018, the Fund’s total operating expense ratio was 1.00%. 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. The Fund’s performance is after all fees and expenses, whereas the Index does not incur fees or expenses. The S&P 500 Index is the established benchmark. A shareholder cannot invest directly in the 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.
3
The Johnson Opportunity Fund had a net total return of -14.16% in 2018, trailing the Russell 2500 Index’s -10.00% return. Stocks had their worst year since 2008.
After recovering from a first quarter correction, small and mid-cap stocks plunged 25% from their all-time high in August to erase gains for the year. Even though earnings growth for the Russell 2500 is likely to surpass +20% for 2018 when fourth quarter earnings are announced, expectations for slowing growth into 2019 caused a sharp compression in price/earnings multiples during the past year, cancelling earnings-driven returns.
The Fund’s returns were negatively impacted by security selection as ten stocks fell more than 40%. Some of the Fund’s weakest performers were found in the more cyclical industries, such as building products, auto, and retail. Competitive pressures and margin compression were common themes among many companies in these areas. Investors were especially quick to sell cyclical companies that had a higher degree of financial leverage, such as American Woodmark, Thor Industries, Cooper-Standard, LKQ, and Hanesbrands. All of these stocks were among the Fund’s worst performers. The Fund was also negatively impacted by its holdings in capital markets companies Invesco, Westwood Holdings, and Diamond Hill Investment Group, which have high sensitivity to stock market returns. Other poor Fund performers included Blackbaud, a software company that cut earnings guidance, and MiMedx Group, a biotech company with major financial reporting errors.
Growth continued its streak of outperformance in 2018 with the Russell 2500 Growth Index only falling 7.5% versus Russell 2500 Value Index’s steeper decline of 12.4%. With macroeconomic risks rising, strong secular earnings growth companies remained in favor, and many of the top performers in the Fund were quality growth stocks. In Technology, software companies Veeva Systems and Constellation Software were top performers, as were consultants Perficient and CACI International. With unemployment low and spending steady, niche consumer stocks such as Church & Dwight, Monro, and Burlington Stores were also top positive contributors.
A disconnect about the path of the U.S. economy has developed with many market sentiment indicators (e.g. stock market, yield curve, business surveys) indicating recession risk while most hard economic data (e.g. employment, production, inflation) points to nothing more than a moderation in growth at this point. We think the odds still favor a base case of economic moderation rather than recession and are comfortable with our risk positioning. Growth still remains at a premium valuation. If fears begin to ease about the path and pace of the Federal Reserve’s tightening cycle and global trade wars and tariffs do not escalate, it should embolden investors to return to the Value stocks that were most negatively impacted by cyclical concerns. Our largest sector tilts — Industrials, Financials, and Consumer Discretionary — would stand to perform well. In these later stages of this cycle, our quality emphasis should remain useful regardless of whether the outcome is slowdown or recession.
Average Annual Total Returns as of December 31, 2018 | ||||||||
Opportunity Fund | Russell 2500 Index | |||||||
One Year | -14.16 | % | -10.00 | % | ||||
Five Years | 3.81 | % | 5.15 | % | ||||
Ten Years | 13.73 | % | 13.15 | % |
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. As of the Fund’s most recent prospectus dated May 1, 2018, the Fund’s total operating expense ratio was 1.01%. 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. The Fund’s performance is after all fees and expenses, whereas the Index does not incur fees or expenses. The Russell 2500 Index is the established benchmark. A shareholder cannot invest directly in the 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.
4
The Johnson International Fund had a total net return of -9.93% in 2018, outperforming the MSCI ACWI ex-US Index’s -14.20% return.
International stocks were among the worst performing asset classes in 2018 as investors worried about slowing economic growth globally, sustained interest rate increases by the Federal Reserve, and threats of a U.S. trade war with some of its major trading partners, particularly China. Although the Fund did lose value in this broad global equity market correction, its positive relative performance can be attributed to positive selection effects by region, country, sector, and security.
China is the largest of the emerging market countries, and it underperformed as the U.S. enacted tariffs and economic growth slowed. However, not all emerging markets did as poorly. Other emerging market countries, such as Brazil and Russia, outperformed the broad index meaningfully, and even had positive returns in local currency terms. Some of the Fund’s top performers were based in these emerging countries, including Lukoil, a Russian oil company, and two Brazilian banks, Banco Bradesco and Itau Unibanco.
The top stock contributor to Fund performance was Sky PLC, a large European TV broadcasting company that rose more than 60% during the year as it was acquired by Comcast Corp. after a long, competitive bidding war. Other winners were commonly found in the growth-oriented sectors, as that style continued to remain in favor during 2018. Examples included Lenovo Group and CGI Group in Technology and Shire PLC, Novartis, and Roche in Health Care.
Some of the Fund’s largest negative contributors were in the more cyclical areas that depend more upon economic growth. Tata Motors, an Indian auto manufacturer, suffered as Chinese volumes dropped. Nitto Denko Corp. and BASF are Materials sector stocks that underperformed on sales declines.
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. As we enter 2019, we see some signs that the pressures that negatively impacted 2018 are easing somewhat. The Federal Reserve has recently been signaling a more dovish tone. Trade negotiations between the U.S and China have continued to try to work toward a compromise agreement. While the macro risks that impacted 2018 have not vanished, we find valuation to be more compelling and international stocks remain cheap relative to U.S. stocks.
Average Annual Total Returns as of December 31, 2018 | ||||||||
International Fund | MSCI ACWI ex US Index | |||||||
One Year | -9.93 | % | -14.20 | % | ||||
Five Years | 0.68 | % | 0.67 | % | ||||
Ten Years | 6.03 | % | 6.57 | % |
Asset Allocation by Country as of December 31, 2018 | ||||||||||||
Japan | 17.47 | % | Hong Kong | 3.18 | % | |||||||
United Kingdom | 13.76 | % | Taiwan | 2.15 | % | |||||||
Other* | 9.63 | % | Netherlands | 2.13 | % | |||||||
China | 9.14 | % | Mexico | 2.13 | % | |||||||
Germany | 7.66 | % | Russia | 2.01 | % | |||||||
Canada | 6.48 | % | Sweden | 2.00 | % | |||||||
Switzerland | 6.35 | % | Brazil | 1.86 | % | |||||||
France | 5.98 | % | South Africa | 1.64 | % | |||||||
Australia | 4.84 | % | South Korea | 1.59 | % |
* | Countries in “Other” category include: Belgium, Chile, Denmark, India, Israel, Italy, Norway, Philippines, Singapore, and Spain. |
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. As of the Fund’s most recent prospectus dated May 1, 2018, the Fund’s total operating expense ratio was 1.00%. 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. The Fund’s performance is after all fees and expenses, whereas neither Index incurs fees nor expenses. The MSCI ACWI ex US Index is the primary benchmark. A shareholder cannot invest directly in the 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.
5
The Johnson Fixed Income Fund provided a total return of -0.56% during 2018, compared to a 0.01% return for the Bloomberg Barclays Capital Aggregate Index.
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 (the “Fed”) to continue tightening monetary policy. The Fed enacted a total of four 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 combined effect of monetary policy tightening caused interest rates to peak early in the fourth quarter. As a result, the Fund shifted its duration towards a more neutral stance relative to the benchmark. This was beneficial to the Fund’s performance, as concerns about slowing global growth and stock market volatility pushed bond yields lower to end the year.
Credit spreads began the year at tight levels after narrowing consistently throughout 2017. Spreads began to widen in February, however, as the market grew increasingly concerned over the U.S. 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 to long maturity corporate bonds. While the Fund’s overweight to corporate bonds was a headwind to performance relative to its benchmark this year, its focus on high quality credits with lower spread volatility was helpful. More than half of the Fund’s bond allocation is to investment-grade rated corporate securities which is greater than the Fund’s benchmark index and a key reason why the yield is 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 next year we expect the pace of Fed tightening to slow significantly. Economic growth is likely to soften some, as the impact of last year’s fiscal stimulus package begins to fade. Global economic growth is showing signs of slowing as well, which may pressure businesses to cut back on capital investment. The threat of implementing additional tariffs may also harm business confidence. Despite these economic headwinds, the consumer should continue to benefit from lower taxes, rising wages, and a strong labor market. Overall, the economic backdrop is consistent with current levels of credit spreads and the amount of tightening from current levels is likely to be somewhat limited. With the Fed Funds rate now quite close to the Fed’s own estimate of the long run neutral rate, further meaningful upside in interest rates is unlikely. As such, the Fund has shifted its duration to a more neutral stance to that of its benchmark. Inflation expectations remain below historical averages, and the Fund’s position in Treasury Inflation Protected Securities will benefit if inflation rebounds. Finally, we do not anticipate meaningful upward pressure on short term bond yields, leading to a slightly better total return outlook as rising rates have improved the Fund’s yield over time.
Average Annual Total Returns as of December 31, 2018 | ||||||||
Fixed Income Fund | Bloomberg Barclays Capital Aggregate Index | |||||||
One Year | -0.56 | % | 0.01 | % | ||||
Five Years | 2.48 | % | 2.52 | % | ||||
Ten Years | 3.35 | % | 3.48 | % |
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. As of the Fund’s most recent prospectus dated May 1, 2018, the Fund’s total operating expense ratio was 0.85%. 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. The Fund’s performance is after all fees and expenses, whereas the Index does not incur fees or expenses. The Bloomberg Barclays Capital Aggregate Index is the benchmark. A shareholder cannot invest directly in the 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.
6
The Johnson Municipal Income Fund provided a total return of 0.90% during 2018 compared to 1.79% for the Bloomberg Barclays 5-Year General Obligation Municipal Index.
After falling during 2017, municipal bond yields rose during 2018, leading to the Fund’s modest 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 declined during 2018 after restrictions against “advance refundings,” a type of municipal refinancing, took effect as part of the tax reform package passed in late 2017. Despite the lowering of the top marginal tax rate at the federal level, 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 remained solid, and most 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 66% of the Fund is rated AA or higher. Furthermore, the Fund is diversified by issuer, sector and state with approximately 24% of its assets in states other than Ohio.
Looking forward into next year, we expect the pace of Federal Reserves (the “Fed”) tightening to slow significantly. Economic growth is likely to soften some, as the impact of last year’s fiscal stimulus package begins to fade. Global economic growth is showing signs of slowing as well, which may pressure businesses to cut back on capital investment. The threat of implementing additional tariffs may also harm business confidence. Despite these economic headwinds, the consumer should continue to benefit from lower taxes, rising wages, and a strong labor market. With the Fed Funds rate now quite close to the Fed’s own estimate of the long run neutral rate, further meaningful upside in interest rates is unlikely. Although lower tax rates can reduce demand for municipal bonds, valuations should remain supported by reduced new issuance and the asset class continues to exhibit value for investors in high tax brackets. Finally, we do not anticipate meaningful upward pressure on bond yields, leading to a slightly better total return outlook as rising rates have improved the Fund’s yield over time.
Average Annual Total Returns as of December 31, 2018 | ||||||||
Municipal Income Fund | Bloomberg Barclays 5 Year G.O. Muni Bond Index | |||||||
One Year | 0.90 | % | 1.79 | % | ||||
Five Years | 2.37 | % | 1.88 | % | ||||
Ten Years | 2.99 | % | 2.97 | % |
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. As of the Fund’s most recent prospectus dated May 1, 2018, the Fund’s total operating expense ratio was 0.66%. 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. The Fund’s performance is after all fees and expenses, whereas the Index does not incur fees or expenses. The Fund’s benchmark is the Bloomberg Barclays Capital 5 Year General Obligation Municipal Bond Index. A shareholder cannot invest directly in the 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.
7
Common Stocks | Shares | Fair Value | ||||||
AT&T Inc. | 112,540 | $ | 3,211,892 | |||||
Alphabet Inc. – Class A* | 6,670 | 6,969,883 | ||||||
Alphabet Inc. – Class C* | 979 | 1,013,862 | ||||||
Comcast Corp. – Class A | 158,000 | 5,379,900 | ||||||
6.1% – Total For Communication Services | $ | 16,575,537 | ||||||
Carter’s Inc. | 66,000 | 5,386,920 | ||||||
Hasbro Inc. | 62,400 | 5,070,000 | ||||||
Starbucks Corp. | 88,690 | 5,711,636 | ||||||
TJX Companies Inc. | 113,140 | 5,061,884 | ||||||
7.8% – Total For Consumer Discretionary | $ | 21,230,440 | ||||||
Coca Cola Co. | 118,020 | 5,588,247 | ||||||
Colgate-Palmolive Co. | 92,000 | 5,475,840 | ||||||
Hersey Company | 27,300 | 2,926,014 | ||||||
J. M. Smuckers Co. | 62,500 | 5,843,125 | ||||||
Procter & Gamble Co. | 71,090 | 6,534,593 | ||||||
Wal-Mart Stores Inc. | 28,300 | 2,636,145 | ||||||
10.6% – Total For Consumer Staples | $ | 29,003,964 | ||||||
Chevron Corp. | 47,905 | 5,211,585 | ||||||
Royal Dutch Shell PLC, Class B ADR | 141,000 | 8,451,540 | ||||||
Schlumberger Ltd. | 94,555 | 3,411,544 | ||||||
6.1% – Total For Energy | $ | 17,074,669 | ||||||
American Express Co. | 81,566 | 7,774,871 | ||||||
Axis Capital Holdings Inc. | 103,150 | 5,326,666 | ||||||
Bank of America Corp. | 312,025 | 7,688,296 | ||||||
Chubb Ltd. | 43,625 | 5,635,477 | ||||||
First Hawaiian Inc. | 230,000 | 5,177,300 | ||||||
Iberiabank Corp. | 78,010 | 5,014,483 | ||||||
Invesco Ltd. | 110,185 | 1,844,497 | ||||||
Marsh & McLennan Companies Inc. | 65,300 | 5,207,675 | ||||||
S&P Global Inc. | 47,840 | 8,129,930 | ||||||
18.9% – Total For Financial Services | $ | 51,799,195 | ||||||
Abbott Laboratories | 127,800 | 9,243,774 | ||||||
CVS Health Corp. | 102,525 | 6,717,438 | ||||||
Danaher Corp. | 52,430 | 5,406,582 | ||||||
Medtronic PLC | 61,500 | 5,594,040 | ||||||
Zimmer Biomet Holdings | 50,700 | 5,258,604 | ||||||
Zoetis Inc. | 65,454 | 5,598,935 | ||||||
13.8% – Total For Health Care | $ | 37,819,373 |
Common Stocks | Shares | Fair Value | ||||||
Carlisle Companies Inc. | 56,440 | $ | 5,673,349 | |||||
Hubbell Inc. | 83,000 | 8,245,220 | ||||||
Paccar Inc. | 97,540 | 5,573,436 | ||||||
Union Pacific Corp. | 23,710 | 3,277,433 | ||||||
Waste Management Inc. | 62,700 | 5,579,673 | ||||||
Xylem Inc. | 81,500 | 5,437,680 | ||||||
12.3% – Total For Industrials | $ | 33,786,791 | ||||||
Accenture PLC – Class A | 15,420 | 2,174,374 | ||||||
Apple Inc. | 48,740 | 7,688,248 | ||||||
Automatic Data Processing Inc. | 45,250 | 5,933,180 | ||||||
Cognizant Technology Solutions Corp. | 38,620 | 2,451,598 | ||||||
Fidelity National Information Services | 53,800 | 5,517,190 | ||||||
Mastercard Inc. – Class A | 29,850 | 5,631,202 | ||||||
Microsoft Corp. | 58,360 | 5,927,625 | ||||||
Oracle Corp. | 114,710 | 5,179,156 | ||||||
14.8% – Total For Information Technology | $ | 40,502,573 | ||||||
Sherwin-Williams Co. | 20,620 | 8,113,145 | ||||||
3.0% – Total For Materials | $ | 8,113,145 | ||||||
Essex Property Trust Inc. | 23,400 | 5,737,914 | ||||||
2.1% – Total For Real Estate | $ | 5,737,914 | ||||||
Alliant Energy Corp. | 140,000 | 5,915,000 | ||||||
2.2% – Total For Utilities | $ | 5,915,000 | ||||||
Total Common Stocks 97.7% | $ | 267,558,601 | ||||||
(Identified Cost $240,911,588) | ||||||||
Cash Equivalents | ||||||||
First American Government Obligation Fund, Class Z** | 5,881,314 | 5,881,314 | ||||||
Total Cash Equivalents 2.2% | $ | 5,881,314 | ||||||
(Identified Cost $5,881,314) | ||||||||
Total Portfolio Value 99.9% | $ | 273,439,915 | ||||||
(Identified Cost $246,792,902) | ||||||||
Other Assets in Excess of Liabilities 0.1% | $ | 223,049 | ||||||
Total Net Assets 100.0% | $ | 273,662,964 |
* | Non-income producing security. |
** | Variable Rate Security; as of December 31, 2018, the 7 day annualized yield was 2.32%. |
ADR – American Depositary Receipt
PLC – Public Liability Company
The accompanying notes are an integral part of these financial statements.
8
Common Stocks | Shares | Fair Value | ||||||
BorgWarner Inc. | 20,900 | $ | 726,066 | |||||
Burlington Stores Inc.* | 4,200 | 683,214 | ||||||
Carter’s Inc. | 11,100 | 905,982 | ||||||
Cooper-Standard Holdings* | 8,300 | 515,596 | ||||||
Culp Inc. | 30,000 | 567,000 | ||||||
Hanesbrands Inc. | 50,100 | 627,753 | ||||||
Hasbro Inc. | 3,900 | 316,875 | ||||||
Lithia Motors Inc. | 6,400 | 488,512 | ||||||
LKQ Corp.* | 26,600 | 631,218 | ||||||
PVH Corp. | 8,700 | 808,665 | ||||||
Steven Madden Ltd. | 28,650 | 866,949 | ||||||
Strum Ruger & Co. | 7,100 | 377,862 | ||||||
12.1% – Total For Consumer Discretionary | $ | 7,515,692 | ||||||
Church & Dwight Co. Inc. | 9,800 | 644,448 | ||||||
Ingredion Inc. | 4,800 | 438,720 | ||||||
Sprouts Farmers Market* | 23,400 | 550,134 | ||||||
2.6% – Total For Consumer Staples | $ | 1,633,302 | ||||||
Delek US Holdings Inc. | 12,300 | 399,873 | ||||||
Hollyfrontier Corp. | 19,800 | 1,012,176 | ||||||
World Fuel Services Corp. | 42,700 | 914,207 | ||||||
3.7% – Total For Energy | $ | 2,326,256 | ||||||
Axis Capital Holdings Ltd. | 17,700 | 914,028 | ||||||
Bryn Mawr Bank Corp. | 14,000 | 481,600 | ||||||
Diamond Hill Investment Group Inc. | 4,900 | 732,305 | ||||||
East West Bancorp Inc. | 22,000 | 957,660 | ||||||
Everest Re Group Ltd. | 4,700 | 1,023,472 | ||||||
Farmers National Banc | 64,100 | 816,634 | ||||||
First Interstate Bancsystem Inc. | 20,900 | 764,104 | ||||||
Iberiabank Corp. | 16,000 | 1,028,480 | ||||||
Invesco Ltd. | 42,700 | 714,798 | ||||||
MidWestOne Financial Group | 30,000 | 744,900 | ||||||
Reinsurance Group of America Inc. | 5,900 | 827,357 | ||||||
Signature Bank | 10,000 | 1,028,100 | ||||||
Westwood Holdings Group Inc. | 12,600 | 428,400 | ||||||
Wintrust Financial Corp. | 13,600 | 904,264 | ||||||
18.4% – Total For Financial Services | $ | 11,366,102 | ||||||
Align Technology Inc.* | 2,600 | 544,518 | ||||||
Catalent Inc.* | 26,400 | 823,152 | ||||||
Charles River Laboratories International Inc.* | 8,300 | 939,394 | ||||||
Chemed Corp. | 2,500 | 708,200 | ||||||
Globus Medical Inc.* | 17,700 | 766,056 |
Common Stocks | Shares | Fair Value | ||||||
Inogen Inc.* | 7,200 | $ | 894,024 | |||||
Prestige Brands Holdings Inc.* | 24,000 | 741,120 | ||||||
Universal Health Services Inc. – Class B | 8,300 | 967,448 | ||||||
Veeva Systems Inc. – Class A* | 9,300 | 830,676 | ||||||
11.6% – Total For Health Care | $ | 7,214,588 | ||||||
Alamo Group Inc. | 10,000 | 773,200 | ||||||
American Woodmark Corp.* | 13,500 | 751,680 | ||||||
Barnes Group Inc. | 13,000 | 697,060 | ||||||
Beacon Roofing Supply Inc.* | 10,300 | 326,716 | ||||||
Carlisle Companies Inc. | 7,600 | 763,952 | ||||||
Comfort Systems USA Inc. | 19,400 | 847,392 | ||||||
Continental Building Products Inc.* | 24,000 | 610,800 | ||||||
Gorman-Rupp Co. | 19,487 | 631,574 | ||||||
Hubbell Inc. | 7,800 | 774,852 | ||||||
ICF International Inc. | 15,000 | 971,700 | ||||||
Quanta Services Inc. | 23,300 | 701,330 | ||||||
Regal Beloit Corp. | 12,000 | 840,600 | ||||||
Snap-On Inc. | 6,000 | 871,740 | ||||||
Standex International Inc. | 10,100 | 678,518 | ||||||
Xylem Inc. | 9,100 | 607,152 | ||||||
17.4% – Total For Industrials | $ | 10,848,266 | ||||||
Amdocs Ltd. | 16,500 | 966,570 | ||||||
Black Knight Inc.* | 27,700 | 1,248,162 | ||||||
Blackbaud Inc. | 17,200 | 1,081,880 | ||||||
CACI International Inc.* | 5,800 | 835,374 | ||||||
Coherent Inc.* | 3,300 | 348,843 | ||||||
Constellation Software | 1,600 | 1,020,803 | ||||||
Flir Systems Inc. | 13,600 | 592,144 | ||||||
Manhattan Associates Inc.* | 16,600 | 703,342 | ||||||
Tyler Technologies Inc.* | 6,400 | 1,189,248 | ||||||
Ultimate Software Group Inc.* | 1,700 | 416,279 | ||||||
Worldpay Inc.* | 11,700 | 894,231 | ||||||
15.0% – Total For Information Technology | $ | 9,296,876 | ||||||
AptarGroup Inc. | 8,200 | 771,374 | ||||||
Avery Dennison Corp. | 11,500 | 1,033,045 | ||||||
Packaging Corp. of America | 6,000 | 500,760 | ||||||
RPM International Inc. | 18,200 | 1,069,796 | ||||||
5.4% – Total For Materials | $ | 3,374,975 | ||||||
Alexandria Real Estate Equities Inc. | 7,000 | 806,680 | ||||||
American Assets Trust Inc. | 19,500 | 783,315 | ||||||
Apartment Investment & Mangement Co. | 26,400 | 1,158,432 | ||||||
Coresite Realty Corp. | 12,700 | 1,107,821 |
The accompanying notes are an integral part of these financial statements.
9
Common Stocks | Shares | Fair Value | ||||||
National Retail Properties Inc. | 20,600 | $ | 999,306 | |||||
Retail Properties of America Inc. | 94,000 | 1,019,900 | ||||||
9.4% – Total For Real Estate | $ | 5,875,454 | ||||||
Alliant Energy Corp. | 26,800 | 1,132,300 | ||||||
Atmos Energy Corp. | 11,900 | 1,103,368 | ||||||
3.6% – Total For Utilities | $ | 2,235,668 | ||||||
Total Common Stocks 99.2% | $ | 61,687,179 | ||||||
(Identified Cost $65,398,567) | ||||||||
Cash Equivalents | ||||||||
First American Government Obligation Fund, Class Z** | 657,262 | 657,262 | ||||||
Total Cash Equivalents 1.1% | $ | 657,262 | ||||||
(Identified Cost $657,262) | ||||||||
Total Portfolio Value 100.3% | $ | 62,344,441 | ||||||
(Identified Cost $66,055,829) | ||||||||
Liabilities in Excess of Other Assets – 0.3% | $ | (166,670 | ) | |||||
Total Net Assets 100.0% | $ | 62,177,771 |
* | Non-income producing security. |
** | Variable Rate Security; as of December 31, 2018, the 7 day annualized yield was 2.32%. |
The accompanying notes are an integral part of these financial statements.
10
Preferred Stocks | Shares | Fair Value | ||||||
Itau Unibanco Holding SA ADR | 11,550 | $ | 105,567 | |||||
0.6% – Total For Financial Services | $ | 105,567 | ||||||
Total Preferred Stocks 0.6% | $ | 105,567 | ||||||
(Identified Cost $63,654) | ||||||||
Common Stocks | ||||||||
Baidu, Inc. ADR* | 1,000 | 158,600 | ||||||
BT Group ADR | 7,200 | 109,440 | ||||||
China Mobile Ltd. ADR | 6,100 | 292,800 | ||||||
Deutsche Telekom AG ADR | 7,100 | 120,558 | ||||||
KDDI Corp. ADR | 22,000 | 260,700 | ||||||
Nippon Telegraph and Telephone Corp. ADR | 1,200 | 48,768 | ||||||
Orange ADR | 7,500 | 121,425 | ||||||
PLDT Inc. ADR | 3,600 | 76,968 | ||||||
Publicis Groupe SA ADR | 7,800 | 110,448 | ||||||
RTL Group SA ADR | 15,000 | 84,900 | ||||||
SK Telecom Co. Ltd. ADR | 3,400 | 91,120 | ||||||
SoftBank Group Corp. ADR | 1,800 | 58,680 | ||||||
Telenor ASA ADR | 9,600 | 185,952 | ||||||
Tencent Holdings Ltd. ADR | 6,500 | 256,555 | ||||||
WPP PLC ADR | 1,800 | 98,640 | ||||||
11.6% – Total For Consumer Discretionary | $ | 2,075,554 | ||||||
Adidas AG ADR | 2,000 | 208,680 | ||||||
Alibaba Group Holdings ADR* | 1,300 | 178,191 | ||||||
Bridgestone ADR | 4,400 | 84,436 | ||||||
CIE Financiere Richemont AG ADR | 22,000 | 141,900 | ||||||
Compass Group PLC ADR | 6,500 | 135,850 | ||||||
Daimler AG | 2,200 | 116,094 | ||||||
Honda Motor Co. Ltd. ADR | 5,500 | 145,475 | ||||||
Magna International Inc. | 4,100 | 186,345 | ||||||
Sony Corp. ADR | 3,800 | 183,464 | ||||||
Toyota Motor Corp. ADR | 2,500 | 290,200 | ||||||
9.3% – Total For Consumer Discretionary | $ | 1,670,635 | ||||||
Coca-Cola Amatil Ltd. ADR | 10,860 | 61,685 | ||||||
Danone ADR | 6,184 | 86,452 | ||||||
Essity AB ADR | 5,300 | 129,824 | ||||||
L’Oreal ADR | 2,800 | 127,848 | ||||||
Nestle SA ADR | 3,600 | 291,456 | ||||||
Reckitt Benckiser Group PLC ADR | 5,900 | 89,267 | ||||||
Shoprite Holdings Ltd. ADR | 15,500 | 206,305 | ||||||
Svenska Cellulosa Aktiebolaget ADR | 11,100 | 85,525 | ||||||
Unilever NV ADR | 2,500 | 134,500 | ||||||
Unilever PLC ADR | 3,000 | 156,750 |
Common Stocks | Shares | Fair Value | ||||||
Wal-Mart De Mexico SAB de CV ADR | 14,300 | $ | 363,935 | |||||
9.7% – Total For Consumer Staples | $ | 1,733,547 | ||||||
BP PLC ADR | 2,298 | 87,140 | ||||||
CNOOC Ltd. ADR | 1,400 | 213,430 | ||||||
Equinor ASA ADR | 4,000 | 84,680 | ||||||
Lukoil Corp. ADR | 4,700 | 335,298 | ||||||
Royal Dutch Shell PLC, Class B ADR | 2,600 | 155,844 | ||||||
Suncor Energy Inc. | 3,200 | 89,504 | ||||||
Technip FMC PLC | 5,900 | 115,522 | ||||||
Total SA ADR | 2,352 | 122,728 | ||||||
Woodside Petroleum ADR | 5,200 | 114,972 | ||||||
7.3% – Total For Energy | $ | 1,319,118 | ||||||
Admiral Group PLC ADR | 6,400 | 167,104 | ||||||
Allianz SE ADR | 7,900 | 159,106 | ||||||
Australia and New Zealand Banking Group Ltd. ADR | 3,200 | 54,560 | ||||||
Banco Bradesco ADR | 22,741 | 224,908 | ||||||
Banco Santander SA ADR | 17,974 | 80,524 | ||||||
Bank of Montreal | 1,240 | 81,034 | ||||||
Barclays PLC ADR | 15,000 | 113,100 | ||||||
BNP Paribas ADR | 4,000 | 90,160 | ||||||
China Construction Bank ADR | 8,500 | 138,550 | ||||||
Credit Suisse Group ADR | 3,777 | 41,018 | ||||||
Deutsche Boerse AG ADR | 7,000 | 83,510 | ||||||
ICICI Bank Ltd. ADR | 9,680 | 99,607 | ||||||
Industrial and Commercial Bank Of China Ltd. ADR | 23,500 | 332,760 | ||||||
KB Financial Group Inc. ADR | 2,400 | 100,752 | ||||||
Legal and General Group PLC | 5,000 | 74,025 | ||||||
Manulife Financial Corp. | 4,420 | 62,720 | ||||||
Mitsubishi UFJ Financial Group Inc. ADR | 40,000 | 194,800 | ||||||
Mizuho Financial Group Inc. ADR | 25,000 | 75,000 | ||||||
National Australia Bank | 8,700 | 73,950 | ||||||
Orix Corp. ADR | 2,450 | 175,298 | ||||||
Royal Bank of Canada | 1,000 | 68,520 | ||||||
Sumitomo Mitsui Financial Group Inc. ADR | 48,000 | 312,480 | ||||||
Tokio Marine Holdings Inc. ADR | 7,000 | 331,940 | ||||||
Toronto Dominion Bank | 1,400 | 69,608 | ||||||
United Overseas Bank Ltd. ADR | 1,900 | 68,628 | ||||||
Westpac Banking Corp. Ltd. ADR | 7,250 | 126,657 | ||||||
Zurich Insurance Group Ltd. ADR | 3,240 | 96,568 | ||||||
19.5% – Total For Financial Services | $ | 3,496,887 |
The accompanying notes are an integral part of these financial statements.
11
Common Stocks | Shares | Fair Value | ||||||
Astellas Pharma Inc. ADR | 23,000 | $ | 288,420 | |||||
Bayer AG ADR | 5,200 | 91,364 | ||||||
Dr. Reddy’s Laboratories Ltd. ADR | 3,340 | 125,918 | ||||||
Novartis AG ADR | 2,480 | 212,809 | ||||||
Novo Nordisk AS | 5,200 | 239,564 | ||||||
Roche Holdings Ltd. ADR | 8,400 | 261,072 | ||||||
Shire PLC ADR | 1,200 | 208,848 | ||||||
Taro Pharmaceuticals Ltd. | 1,400 | 118,496 | ||||||
Teva Pharmaceuticals ADR | 2,400 | 37,008 | ||||||
8.8% – Total For Health Care | $ | 1,583,499 | ||||||
ABB Ltd. ADR | 2,900 | 55,129 | ||||||
Atlas Copco AB ADR | 5,400 | 129,222 | ||||||
BAE Systems PLC ADR | 3,800 | 88,996 | ||||||
Bunzl PLC ADR | 5,600 | 172,032 | ||||||
Canadian National Railway Co. | 1,400 | 103,754 | ||||||
CK Hutchison Holdings Ltd. ADR | 8,000 | 75,840 | ||||||
Fanuc Corp. ADR | 4,000 | 60,240 | ||||||
Itochu Corp. ADR | 3,700 | 126,207 | ||||||
Keppel Corp. Ltd. ADR | 7,900 | 67,940 | ||||||
Komatsu Ltd. ADR | 4,000 | 86,160 | ||||||
Mitsui & Co., Ltd. ADR | 300 | 93,150 | ||||||
Schneider Electric SE ADR | 13,900 | 187,928 | ||||||
Sensata Technologies Holding NV* | 5,500 | 246,620 | ||||||
Siemens AG ADR | 1,800 | 100,944 | ||||||
8.9% – Total For Industrials | $ | 1,594,162 | ||||||
Cap Gemini SA ADR | 4,000 | 78,120 | ||||||
CGI Group Inc.* | 5,100 | 312,069 | ||||||
Lenovo Group Ltd. ADR | 15,000 | 201,000 | ||||||
Open Text Corp. | 5,000 | 163,000 | ||||||
SAP SE ADR | 3,100 | 308,605 | ||||||
Taiwan Semiconductor Manufacturing Co. Ltd. ADR | 8,000 | 295,280 | ||||||
United Microelectronics ADR | 44,930 | 80,425 | ||||||
8.0% – Total For Information Technology | $ | 1,438,499 | ||||||
Air Liquide SA ADR | 4,154 | 102,479 | ||||||
BASF SE ADR | 7,400 | 130,166 | ||||||
BHP Billiton Ltd. ADR | 2,550 | 123,139 | ||||||
Newcrest Mining Ltd. ADR | 15,000 | 233,250 | ||||||
Nitto Denko Corp. ADR | 7,100 | 177,855 | ||||||
Posco ADR | 1,400 | 76,916 | ||||||
Rio Tinto PLC ADR | 1,570 | 76,114 | ||||||
Sasol LTD ADR | 2,800 | 82,012 | ||||||
5.6% – Total For Materials | $ | 1,001,931 |
Common Stocks | Shares | Fair Value | ||||||
Lend Lease Group ADR | 7,000 | $ | 56,350 | |||||
Sun Hung Kai Properties Ltd. ADR | 17,500 | 250,425 | ||||||
1.7% – Total For Real Estate | $ | 306,775 | ||||||
Enel SpA ADR | 21,100 | 122,591 | ||||||
Enersis SA ADR | 18,200 | 162,344 | ||||||
Iberdrola SA ADR | 3,578 | 114,800 | ||||||
National Grid PLC ADR | 1,600 | 76,768 | ||||||
SSE PLC ADR | 4,000 | 55,080 | ||||||
2.9% – Total For Utilities | $ | 531,583 | ||||||
Total Common Stocks 93.3% | $ | 16,752,190 | ||||||
(Identified Cost $15,122,302) | ||||||||
Cash Equivalents | ||||||||
First American Government Obligation Fund, Class Z** | 1,057,452 | 1,057,452 | ||||||
Total Cash Equivalents 5.9% | $ | 1,057,452 | ||||||
(Identified Cost $1,057,452) | ||||||||
Total Portfolio Value 99.8% | $ | 17,915,209 | ||||||
(Identified Cost $16,243,408) | ||||||||
Other Assets in Excess of Liabilities 0.2% | $ | 33,795 | ||||||
Total Net Assets 100.0% | $ | 17,949,004 |
* | Non-income producing security. |
** | Variable Rate Security; as of December 31, 2018, the 7 day annualized yield was 2.32%. |
ADR – American Depositary Receipt
PLC – Public Liability Company
The accompanying notes are an integral part of these financial statements.
12
Fixed Income Securities – Bonds | Face Value | Fair Value | ||||||
Corporate Bonds: | ||||||||
Ace INA Holdings, 2.875% Due 11/03/2022 | 2,375,000 | $ | 2,354,888 | |||||
AON PLC, 3.500% Due 06/14/2024 | 3,320,000 | 3,241,905 | ||||||
AON PLC, 4.000% Due 11/27/2023 | 4,330,000 | 4,382,088 | ||||||
American Express Co., 3.000% Due 10/30/2024 | 9,000,000 | 8,612,460 | ||||||
Bank of America Corp., 3.248% Due 10/21/2027 | 13,100,000 | 12,125,954 | ||||||
BB&T Corp., 3.950% Due 03/22/2022 | 7,309,000 | 7,402,859 | ||||||
BB&T Corp., 5.250% Due 11/01/2019 | 212,000 | 215,544 | ||||||
Chubb INA Holdings Inc., 2.300% Due 11/03/2020 | 7,793,000 | 7,681,549 | ||||||
Fifth Third Bancorp, 4.300% Due 01/16/2024 | 8,999,000 | 9,103,984 | ||||||
Huntington Bancshares, 2.300% Due 01/14/2022 | 2,290,000 | 2,211,018 | ||||||
Huntington Bancshares, 3.150% Due 03/14/2021 | 4,280,000 | 4,260,945 | ||||||
JP Morgan Chase & Co., 3.875% Due 09/10/2024 | 8,000,000 | 7,871,804 | ||||||
Keycorp, 4.100% Due 04/30/2028 | 7,300,000 | 7,309,652 | ||||||
Marsh & McLennan Co. Inc., 3.500% Due 06/03/2024 | 435,000 | 428,490 | ||||||
Marsh & McLennan Co. Inc., 4.800% Due 07/15/2021 | 3,955,000 | 4,075,916 | ||||||
Morgan Stanley, 2.625% Due 11/17/2021 | 6,000,000 | 5,856,162 | ||||||
Morgan Stanley, 5.500% Due 07/28/2021 | 1,500,000 | 1,571,977 | ||||||
PNC Financial Services, 3.900% Due 04/29/2024 | 7,041,000 | 6,980,810 | ||||||
MUFG Americas Holdings Corp., 3.000% Due 02/10/2025 | 1,543,000 | 1,479,723 | ||||||
MUFG Americas Holdings Corp., 3.500% Due 06/18/2022 | 7,474,000 | 7,491,845 | ||||||
National City Corp., 6.875% Due 05/15/2019 | 1,784,000 | 1,808,482 | ||||||
Prudential Financial Inc., 4.500% Due 11/15/2020 | 3,135,000 | 3,206,709 | ||||||
Prudential Financial Inc., 5.375% Due 06/21/2020 | 105,000 | 108,198 | ||||||
Suntrust Banks Inc., 4.000% Due 05/01/2025 | 8,000,000 | 8,025,707 | ||||||
US Bancorp, 3.100% Due 04/27/2026 | 4,000,000 | 3,787,539 |
Fixed Income Securities – Bonds | Face Value | Fair Value | ||||||
US Bancorp, 3.600% Due 09/11/2024 | 6,000,000 | $ | 5,971,174 | |||||
Wells Fargo & Co., 4.300% Due 07/22/2027 | 4,600,000 | 4,524,859 | ||||||
Wells Fargo & Co., 4.100% Due 06/03/2026 | 5,500,000 | 5,370,919 | ||||||
22.0% – Total For Corporate Bonds: Bank and Finance | $ | 137,463,160 | ||||||
AT&T Inc., 3.400% Due 05/15/2025 | 8,500,000 | 8,004,049 | ||||||
Burlington Northern Santa Fe, 3.600% Due 09/01/2020 | 1,787,000 | 1,804,527 | ||||||
Burlington Northern Santa Fe, 4.700% Due 10/01/2019 | 475,000 | 480,789 | ||||||
Chevron Corp., 2.355% Due 12/05/2022 | 5,000,000 | 4,841,946 | ||||||
CVS Health Corp., 3.875% Due 07/20/2025 | 8,500,000 | 8,283,252 | ||||||
Eaton Corp., 2.750% Due 11/02/2022 | 3,166,000 | 3,079,230 | ||||||
General Electric Capital Corp. (3 month LIBOR + 1.000%)*, 3.436% Due 04/15/2023 | 7,275,000 | 6,590,788 | ||||||
General Electric Capital Corp. (3 month LIBOR + 1.000%)*, 3.788% Due 03/15/2023 | 2,180,000 | 1,966,474 | ||||||
Goodrich Corp., 4.875% Due 03/01/2020 | 1,025,000 | 1,039,900 | ||||||
Johnson Controls International PLC, 3.900% Due 02/14/2026 | 6,430,000 | 6,305,956 | ||||||
Johnson Controls International PLC, 5.000% Due 03/30/2020 | 1,595,000 | 1,628,299 | ||||||
Kroger Co. Senior, 3.500% Due 02/01/2026 | 8,000,000 | 7,589,352 | ||||||
Kroger Co. Senior, 4.000% Due 02/01/2024 | 595,000 | 600,034 | ||||||
McDonald’s Corp., 3.700% Due 01/30/2026 | 4,269,000 | 4,184,860 | ||||||
Norfolk Southern Corp., 5.900% Due 06/15/2019 | 2,918,000 | 2,949,124 | ||||||
Shell International, 3.250% Due 05/11/2025 | 6,779,000 | 6,684,361 | ||||||
Target Corp., 2.500% Due 04/15/2026 | 5,500,000 | 5,134,821 | ||||||
Union Pacific Corp., 3.500% Due 06/08/2023 | 8,365,000 | 8,380,894 | ||||||
Union Pacific Corp., 7.875% Due 01/15/2019 | 500,000 | 500,781 |
The accompanying notes are an integral part of these financial statements.
13
Fixed Income Securities – Bonds | Face Value | Fair Value | |||||||||||
Verizon Communications, 4.672% Due 03/15/2055 | 7,000,000 | $ | 6,428,095 | ||||||||||
13.9% – Total For Corporate Bonds: Industrial | $ | 86,477,532 | |||||||||||
Berkshire Hathaway Energy Co., 3.500% Due 02/01/2025 | 1,500,000 | 1,487,349 | |||||||||||
Berkshire Hathaway Energy Co., 3.750% Due 11/15/2023 | 9,574,000 | 9,709,967 | |||||||||||
Duke Energy Corp., 2.650% Due 09/01/2026 | 1,000,000 | 909,135 | |||||||||||
Duke Energy Corp., 3.550% Due 09/15/2021 | 6,860,000 | 6,878,620 | |||||||||||
Enterprise Products, 3.750% Due 02/15/2025 | 9,000,000 | 8,905,114 | |||||||||||
Eversource Energy, 2.500% Due 03/15/2021 | 1,665,000 | 1,636,403 | |||||||||||
Eversource Energy, 2.750% Due 03/15/2022 | 1,500,000 | 1,473,975 | |||||||||||
Eversource Energy Senior, 2.800% Due 05/01/2023 | 3,750,000 | 3,659,304 | |||||||||||
Eversource Energy Senior, 4.500% Due 11/15/2019 | 1,200,000 | 1,211,036 | |||||||||||
Georgia Power Co., 2.000% Due 03/30/2020 | 5,660,000 | 5,567,609 | |||||||||||
Georgia Power Co., 2.000% Due 09/08/2020 | 1,000,000 | 977,285 | |||||||||||
Georgia Power Co., 2.850% Due 05/15/2022 | 2,200,000 | 2,161,250 | |||||||||||
Georgia Power Co., 4.250% Due 12/01/2019 | 2,140,000 | 2,156,562 | |||||||||||
Interstate Power & Light, 3.250% Due 12/01/2024 | 5,120,000 | 4,989,661 | |||||||||||
Interstate Power & Light, 3.650% Due 09/01/2020 | 3,211,000 | 3,232,477 | |||||||||||
National Rural Utilities Collateral Trust, 2.300% Due 11/01/2020 | 2,699,000 | 2,660,002 | |||||||||||
Virginia Electric & Power Co., 2.950% Due 01/15/2022 | 3,170,000 | 3,135,479 | |||||||||||
Xcel Energy Inc., 3.300% Due 06/01/2025 | 4,500,000 | 4,397,399 | |||||||||||
Xcel Energy Inc., 4.700% Due 05/15/2020 | 5,496,000 | 5,561,645 | |||||||||||
11.3% – Total For Corporate Bonds: Utilities | $ | 70,710,272 | |||||||||||
47.2% Total Corporate Bonds | $ | 294,650,964 | |||||||||||
Certificates of Deposit | |||||||||||||
Goldmans Sachs, 3.400% Due 10/17/2023 | 250,000 | $ | 248,288 |
Fixed Income Securities – Bonds | Face Value | Fair Value | |||||||
0.0% – Total For Certificates of Deposit | $ | 248,288 | |||||||
United States Government Treasury Obligations | |||||||||
Treasury Bond, 2.500% Due 02/15/2045 | 20,500,000 | 18,578,125 | |||||||
Treasury Inflation Protected Security, 1.000% Due 02/15/2046 | 4,268,840 | 4,046,727 | |||||||
Treasury Inflation Protected Security, 1.375% Due 02/15/2044 | 5,425,050 | 5,600,516 | |||||||
Treasury Note, 1.750% Due 11/30/2019 | 23,000,000 | 22,819,414 | |||||||
Treasury Note, 2.125% Due 11/30/2023 | 11,000,000 | 10,801,484 | |||||||
Treasury Note, 2.500% Due 05/15/2046 | 19,700,000 | 17,766,168 | |||||||
Treasury Note, 2.750% Due 02/15/2028 | 11,000,000 | 11,056,719 | |||||||
Treasury Note, 2.750% Due 08/15/2047 | 16,500,000 | 15,626,660 | |||||||
Treasury Note, 2.750% Due 08/15/2042 | 2,250,000 | 2,153,848 | |||||||
Treasury Note, 2.750% Due 11/15/2042 | 8,425,000 | 8,055,419 | |||||||
Treasury Note, 3.125% Due 11/15/2028 | 5,500,000 | 5,704,961 | |||||||
19.6% – Total For United States Government Treasury Obligations | $ | 122,210,041 | |||||||
United States Government Agency Obligations | |||||||||
FHLMC Step-up*, 1.875% Due 07/12/2021 | 5,000,000 | 4,946,105 | |||||||
FHLMC Step-up*, 2.000% Due 06/15/2022 | 6,000,000 | 5,956,050 | |||||||
FHLMC Step-up*, 2.050% Due 06/21/2022 | 9,000,000 | 8,938,674 | |||||||
FHLMC Step-up*, 2.000% Due 07/12/2022 | 3,445,000 | 3,423,682 | |||||||
FHLMC Step-up*, 2.000% Due 07/18/2022 | 8,355,000 | 8,281,735 | |||||||
FHLMC Step-up*, 3.000% Due 06/28/2023 | 5,000,000 | 5,001,995 | |||||||
FHLMC Step-up*, 2.150% Due 10/27/2022 | 3,500,000 | 3,471,944 | |||||||
FHLMC Step-up*, 2.500% Due 12/27/2022 | 4,000,000 | 4,001,124 | |||||||
7.1% – Total For United States Government Agency Obligations | $ | 44,021,309 |
The accompanying notes are an integral part of these financial statements.
14
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%)*, 3.311% Due 04/01/2042 | 1,475,006 | $ | 1,495,471 | |||||
FHLMC Series 2877 Class AL, 5.000% Due 10/15/2024 | 237,758 | 242,859 | ||||||
FHLMC Series 2985 Class GE, 5.500% Due 06/15/2025 | 141,799 | 145,597 | ||||||
FHLMC Series 3109 Class ZN, 5.500% Due 02/15/2036 | 1,487,071 | 1,613,540 | ||||||
FHLMC Series 3592 Class BZ, 5.000% Due 10/15/2039 | 1,235,390 | 1,311,918 | ||||||
FHLMC Series 3946 Class LN, 3.500% Due 04/15/2041 | 390,000 | 393,646 | ||||||
FHLMC Series 4017 Class MA, 3.000% Due 03/15/2041 | 725,978 | 717,228 | ||||||
FHLMC Series 4105 Class PJ, 3.500% Due 06/15/2041 | 1,225,585 | 1,241,438 | ||||||
FHLMC Series 4180 Class ME, 2.500% Due 10/15/2042 | 2,321,302 | 2,287,740 | ||||||
FHLMC Series 4287 Class AB, 2.000% Due 12/15/2026 | 1,372,915 | 1,342,075 | ||||||
FHLMC Series 4517 Class PC, 2.500% Due 05/15/2044 | 2,971,938 | 2,896,146 | ||||||
FHLMC Series 4567 Class LA, 3.000% Due 08/15/2045 | 437,837 | 432,727 | ||||||
FHLMC Series 4582 Class PA, 3.000% Due 11/15/2045 | 3,142,370 | 3,124,366 | ||||||
FHLMC Series 4646 Class D, 3.500% Due 01/15/2042 | 1,047,878 | 1,065,218 | ||||||
FHLMC Series 4689 Class DA, 3.000% Due 07/15/2044 | 1,595,343 | 1,583,670 | ||||||
FHLMC Series 4709 Class EA, 3.000% Due 01/15/2046 | 1,353,917 | 1,351,366 | ||||||
FHLMC Series 4768 Class GA, 3.500% Due 09/15/2045 | 9,556,699 | 9,704,544 | ||||||
FHLMC Series 4831 Class BA, 3.500% Due 10/15/2044 | 3,820,006 | 3,864,026 | ||||||
FHLMC Pool A89335, 5.000% Due 10/01/2039 | 159,217 | 169,264 | ||||||
FHLMC Pool C01005, 8.000% Due 06/01/2030 | 1,135 | 1,298 | ||||||
FHLMC Pool G06616, 4.500% Due 12/01/2035 | 522,120 | 542,865 | ||||||
FHLMC Pool G08068, 5.500% Due 07/01/2035 | 1,101,211 | 1,187,563 | ||||||
FHLMC Pool G13596, 4.000% Due 07/01/2024 | 878,686 | 901,235 |
Fixed Income Securities – Bonds | Face Value | Fair Value | ||||||
FHLMC Pool G18642, 3.500% Due 04/01/2032 | 6,587,162 | $ | 6,676,009 | |||||
FHLMC Pool G18667, 3.500% Due 11/01/2032 | 2,982,887 | 3,023,031 | ||||||
FHLMC Pool 780439 (1 year US T-Note Yield Curve + 2.223%)*, 4.098% Due 04/01/2033 | 53,166 | 55,620 | ||||||
FNMA Series 2003-79 Class NJ, 5.000% Due 08/25/2023 | 493,312 | 504,277 | ||||||
FNMA Series 2013-6 Class BC, 1.500% Due 12/25/2042 | 1,607,083 | 1,566,064 | ||||||
FNMA Series 2013-21 Class VA, 3.000% Due 07/25/2028 | 3,024,043 | 3,017,864 | ||||||
FNMA Series 2013-75 Class EG, 3.000% Due 02/25/2043 | 607,239 | 605,390 | ||||||
FNMA Series 2014-04 Class PC, 3.000% Due 02/25/2044 | 2,923,759 | 2,924,597 | ||||||
FNMA Series 2014-28 Class PA, 3.500% Due 02/25/2043 | 359,829 | 365,220 | ||||||
FNMA Series 2015-72 Class GB, 2.500% Due 12/25/2042 | 3,654,865 | 3,597,398 | ||||||
FNMA Series 2016-39 Class LA, 2.500% Due 03/25/2045 | 1,088,896 | 1,067,376 | ||||||
FNMA Series 2016-40 Class PA, 3.000% Due 07/25/2045 | 314,196 | 311,780 | ||||||
FNMA Series 2016-49 Class PA, 3.000% Due 09/25/2045 | 2,280,264 | 2,258,321 | ||||||
FNMA Series 2016-64 Class PG, 3.000% Due 05/25/2045 | 4,459,029 | 4,436,423 | ||||||
FNMA Series 2016-79 Class L, 2.500% Due 10/25/2044 | 1,514,718 | 1,462,529 | ||||||
FNMA Series 2017-30 Class G, 3.000% Due 07/25/2040 | 3,545,224 | 3,578,359 | ||||||
FNMA Series 2018-22 Class D, 3.250% Due 11/25/2042 | 4,201,997 | 4,239,528 | ||||||
FNMA Series 2018-25 Class P, 3.500% Due 03/25/2046 | 5,738,051 | 5,808,796 | ||||||
FNMA Series 2018-67 Class BA, 4.500% Due 03/25/2046 | 7,910,118 | 8,325,207 | ||||||
FNMA Pool 109733, 3.530% Due 09/01/2028 | 7,275,000 | 7,345,473 | ||||||
FNMA Pool 253300, 7.500% Due 05/01/2020 | 122 | 122 | ||||||
FNMA Pool 725027, 5.000% Due 11/01/2033 | 363,170 | 386,807 | ||||||
FNMA Pool 725704, 6.000% Due 08/01/2034 | 139,810 | 152,478 | ||||||
FNMA Pool 888223, 5.500% Due 01/01/2036 | 498,524 | 536,892 |
The accompanying notes are an integral part of these financial statements.
15
Fixed Income Securities – Bonds | Face Value | Fair Value | |||||||||||
FNMA Pool 889185, 5.000% Due 12/01/2019 | 4,926 | $ | 5,011 | ||||||||||
FNMA Pool 995112, 5.500% Due 07/01/2036 | 344,857 | 371,307 | |||||||||||
FNMA Pool AA4392, 4.000% Due 04/01/2039 | 1,100,943 | 1,131,923 | |||||||||||
FNMA Pool AL9309, 3.500% Due 10/01/2031 | 1,615,649 | 1,638,093 | |||||||||||
FNMA Pool AN8842, 3.320% Due 04/01/2028 | 6,000,000 | 5,974,593 | |||||||||||
FNMA Pool AN9848, 3.740% Due 07/01/2028 | 6,438,000 | 6,580,871 | |||||||||||
FNMA Pool BM1971, 3.500% Due 12/01/2035 | 4,185,829 | 4,263,702 | |||||||||||
FNMA Pool MA0384, 5.000% Due 04/01/2030 | 1,004,316 | 1,052,461 | |||||||||||
FNMA Pool MA3337, 4.000% Due 04/01/2038 | 4,672,713 | 4,803,072 | |||||||||||
GNMA Series 2009-124 Class L, 4.000% Due 11/20/2038 | 70,250 | 70,490 | |||||||||||
GNMA II Pool 2658, 6.500% Due 10/20/2028 | 17,422 | 19,467 | |||||||||||
GNMA II Pool 2945, 7.500% Due 07/20/2030 | 3,058 | 3,418 | |||||||||||
GNMA II Pool 4187, 5.500% Due 07/20/2038 | 12,427 | 12,768 | |||||||||||
GNMA II Pool 4847, 4.000% Due 11/20/2025 | 259,099 | 266,145 | |||||||||||
GNMA Pool 780400, 7.000% Due 12/15/2025 | 2,122 | 2,322 | |||||||||||
GNMA Pool 780420, 7.500% Due 08/15/2026 | 1,140 | 1,255 | |||||||||||
20.2% – Total For Government Agency Obligations – Mortgage Backed Securities | $ | 126,058,259 | |||||||||||
Taxable Municipal Bonds | |||||||||||||
Cincinnati Children’s Hospital Medical Center, 2.853% Due 11/15/2026 | 1,085,000 | 1,035,133 | |||||||||||
Florida Atlantic University Capital Improvement Revenue, 6.249% Due 07/01/2020 | 1,000,000 | 1,044,530 | |||||||||||
Florida Atlantic University Capital Improvement Revenue, 7.439% Due 07/01/2030 | 2,125,000 | 2,256,240 | |||||||||||
Florida Atlantic University Capital Improvement Revenue, 7.589% Due 07/01/2037 | 2,500,000 | 2,659,825 |
Fixed Income Securities – Bonds | Face Value | Fair Value | ||||||
Kansas Development Finance Authority Revenue, 3.941% Due 04/15/2026 | 8,000,000 | $ | 8,230,240 | |||||
Kentucky Property and Buildings Commission Revenue, 6.164% Due 08/01/2023 | 1,000,000 | 1,082,240 | ||||||
Ohio Major New Infrastructure Revenue, 4.844% Due 12/15/2019 | 2,450,000 | 2,490,278 | ||||||
University of Cincinnati Ohio General Receipts Revenue, 5.616% Due 06/01/2025 | 930,000 | 982,210 | ||||||
University of Washington Revenue, 5.400% Due 06/01/2036 | 3,000,000 | 3,621,720 | ||||||
3.8% – Total For Taxable Municipal Bonds | $ | 23,402,416 | ||||||
Total Fixed Income Securities – Bonds 97.9% | $ | 610,591,277 | ||||||
(Identified Cost $615,096,618) | ||||||||
Preferred Stocks | Shares | |||||||
Allstate Corp., 5.100% Due 01/15/2053 | 264,996 | 6,317,505 | ||||||
Total Preferred Stocks 1.0% | $ | 6,317,505 | ||||||
(Identified Cost $6,491,218) | ||||||||
Cash Equivalents | ||||||||
First American Government Obligation Fund, Class Z** | 2,725,144 | 2,725,144 | ||||||
Total Cash Equivalents 0.4% | $ | 2,725,144 | ||||||
(Identified Cost $2,725,144) | ||||||||
Total Portfolio Value 99.3% | $ | 619,633,926 | ||||||
(Identified Cost $624,312,980) | ||||||||
Other Assets in Excess of Liabilities, 0.7% | $ | 3,803,106 | ||||||
Total Net Assets 100% | $ | 623,437,032 |
* | Variable Rate Security; the rate shown is as of December 31, 2018. |
** | Variable Rate Security; as of December 31, 2018, the 7 day annualized yield was 1.94%. |
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.
16
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Akron Ohio GO Limited, 4.000% Due 12/01/2025 | 650,000 | $ | 711,523 | |||||
Akron Ohio GO Limited, 4.000% Due 12/01/2026 | 395,000 | 432,233 | ||||||
Akron Ohio GO Limited, 5.000% Due 12/01/2024 | 400,000 | 458,888 | ||||||
Brecksville Ohio GO Limited, 2.750% Due 06/06/2019 | 1,160,000 | 1,163,724 | ||||||
Cincinnati Ohio GO Unlimited, 4.000% Due 12/01/2030 | 685,000 | 743,225 | ||||||
Cincinnati Ohio GO Unlimited, 4.000% Due 12/01/2032 | 1,000,000 | 1,076,850 | ||||||
Cincinnati Ohio GO Unlimited, 5.000% Due 12/01/2019 | 1,000,000 | 1,029,140 | ||||||
Cincinnati Ohio GO Unlimited, 5.250% Due 12/01/2029 | 200,000 | 233,810 | ||||||
Columbus Ohio GO Unlimited, 4.000% Due 04/01/2027 | 500,000 | 561,890 | ||||||
Columbus Ohio GO Unlimited, 4.000% Due 04/01/2031 | 1,000,000 | 1,091,610 | ||||||
Coshocton Ohio GO Limited Bond Anticipation Notes, 3.000% Due 02/21/2019 | 400,000 | 400,588 | ||||||
Delaware Ohio GO Bond Anticipation Note, 3.000% Due 04/10/2019 | 1,000,000 | 1,002,780 | ||||||
Dublin Ohio GO Limited, 4.000% Due 12/01/2028 | 500,000 | 545,000 | ||||||
Forest Park Ohio GO Limited Bond Anticipation Note, 3.000% Due 05/29/2019 | 1,095,000 | 1,098,745 | ||||||
Gahanna Ohio GO Limited, 4.000% Due 12/01/2021 | 420,000 | 444,734 | ||||||
Groveport Ohio GO Limited (AMBAC Insured), 3.500% Due 12/01/2023 | 185,000 | 191,307 | ||||||
Hurst Texas GO Limited, 4.000% Due 08/15/2031 | 335,000 | 356,758 | ||||||
Lakewood Ohio GO Limited, 4.000% Due 12/01/2028 | 840,000 | 914,180 | ||||||
Lakewood Ohio GO Limited, 4.000% Due 12/01/2029 | 300,000 | 324,939 | ||||||
Medina Ohio GO Limited, 2.000% Due 12/01/2020 | 110,000 | 110,305 | ||||||
Newport Kentucky GO Unlimited, 3.000% Due 05/01/2023 | 205,000 | 210,765 | ||||||
Pembroke Pines Florida GO Unlimited, 5.000% Due 09/01/2024 | 200,000 | 230,224 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Pickerington Ohio GO Limited Bond Anticipation Note, 2.375% Due 02/07/2019 | 1,000,000 | $ | 1,000,290 | |||||
Reynoldsburg Ohio GO Limited, 4.000% Due 12/01/2030 | 1,000,000 | 1,100,400 | ||||||
Reynoldsburg Ohio GO Limited, 4.000% Due 12/01/2031 | 595,000 | 651,638 | ||||||
Riversouth Ohio Authority Revenue, 4.000% Due 12/01/2031 | 700,000 | 738,458 | ||||||
Sevens Hills Ohio GO Limited Bond Anticipation Notes, 2.875% Due 04/10/2019 | 775,000 | 776,426 | ||||||
Shaker Heights Ohio GO Limited, 3.000% Due 05/30/2019 | 805,000 | 807,866 | ||||||
Strongsville Ohio GO Limited, 4.000% Due 12/01/2030 | 350,000 | 376,085 | ||||||
Sycamore Township Ohio GO Limited, 3.000% Due 05/08/2019 | 750,000 | 752,055 | ||||||
Tiffin Ohio GO Unlimited, 3.000% Due 12/01/2020 | 225,000 | 229,450 | ||||||
Vandalia Ohio GO Limited Bond Anticipation Notes, 2.750% Due 09/04/2019 | 1,000,000 | 1,005,640 | ||||||
Violet Township Ohio GO Limited Bond Anticipation Notes, 3.000% Due 07/10/2019 | 1,100,000 | 1,104,829 | ||||||
12.2% – Total For General Obligation – City | $ | 21,876,355 | ||||||
Ashtabula County Ohio GO Limited, 4.000% Due 12/01/2027 | 500,000 | 528,400 | ||||||
Butler County Ohio GO Limited, 5.000% Due 12/01/2024 | 160,000 | 185,954 | ||||||
Butler County Ohio GO Limited, 5.250% Due 12/01/2026 | 1,000,000 | 1,173,310 | ||||||
Clark County Ohio GO Limited, 5.000% Due 12/01/2026 | 340,000 | 404,692 | ||||||
Clark County Ohio GO Limited, 5.000% Due 12/01/2028 | 325,000 | 394,024 | ||||||
Hamilton County Ohio GO Limited, 5.000% Due 12/01/2028 | 500,000 | 600,175 | ||||||
Knox County Ohio GO Limited, 4.000% Due 12/01/2025 | 460,000 | 501,400 | ||||||
Lake County Ohio GO Bond Anticipation Notes, 2.250% Due 09/05/2019 | 700,000 | 701,813 | ||||||
Licking County Ohio GO Limited, 3.000% Due 12/01/2024 | 555,000 | 572,677 | ||||||
Lorain County Ohio GO Limited, 4.000% Due 12/01/2025 | 795,000 | 857,797 |
The accompanying notes are an integral part of these financial statements.
17
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Lorain County Ohio GO Unlimited, 4.000% Due 12/01/2030 | 450,000 | $ | 476,199 | |||||
Lucas County Ohio GO Limited, 4.000% Due 10/01/2028 | 1,000,000 | 1,087,350 | ||||||
Lucas County Ohio GO Limited, 4.000% Due 10/01/2029 | 605,000 | 655,899 | ||||||
Ottawa County Ohio GO Limited, 4.000% Due 12/01/2021 | 295,000 | 311,257 | ||||||
Portage County Ohio GO Limited, 3.000% Due 12/01/2021 | 270,000 | 270,292 | ||||||
Rowan County Kentucky GO Unlimited (AGM Insured), 4.000% Due 06/01/2024 | 390,000 | 420,248 | ||||||
Summit County Ohio GO Limited, 4.000% Due 12/01/2023 | 300,000 | 326,607 | ||||||
Summit County Ohio GO Limited, 4.000% Due 12/01/2031 | 500,000 | 535,850 | ||||||
5.6% – Total For General Obligation – County | $ | 10,003,944 | ||||||
Ohio GO Limited, 3.000% Due 09/01/2026 | 1,385,000 | 1,427,132 | ||||||
Ohio GO Limited, 4.000% Due 03/01/2026 | 1,060,000 | 1,150,429 | ||||||
Ohio GO Unlimited, 3.125% Due 08/01/2019 | 235,000 | 236,833 | ||||||
Ohio GO Unlimited, 5.000% Due 02/01/2019 | 500,000 | 501,300 | ||||||
Ohio GO Unlimited, 5.000% Due 05/01/2019 | 1,000,000 | 1,010,810 | ||||||
Ohio GO Unlimited, 5.000% Due 06/15/2024 | 410,000 | 472,750 | ||||||
Ohio GO Unlimited, 3.000% Due 03/01/2027 | 555,000 | 568,986 | ||||||
Ohio GO Unlimited, 5.000% Due 09/01/2022 | 400,000 | 443,496 | ||||||
Ohio GO Unlimited, 5.000% Due 12/15/2023 | 500,000 | 570,605 | ||||||
Ohio GO Unlimited Common Schools – Series C, 4.250% Due 09/15/2022 | 845,000 | 914,662 | ||||||
Ohio Infrastructure Improvement GO Unlimited, 5.000% Due 08/01/2022 | 500,000 | 553,360 | ||||||
Pennsylvania GO Unlimited, 4.000% Due 01/01/2030 | 645,000 | 686,293 | ||||||
Pennsylvania GO Unlimited, 5.000% Due 01/01/2024 | 375,000 | 422,704 | ||||||
Pennsylvania GO Unlimited, 5.000% Due 01/15/2027 | 1,000,000 | 1,174,560 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Pennsylvania GO Unlimited, 5.000% Due 09/15/2024 | 1,000,000 | $ | 1,141,710 | |||||
6.3% – Total For General Obligation – State | $ | 11,275,630 | ||||||
Arizona Board of Regents Revenue Arizona State University, 5.000% Due 08/01/2028 | 815,000 | 924,536 | ||||||
Arizona Board of Regents Revenue University of Arizona, 5.000% Due 06/01/2029 | 125,000 | 142,145 | ||||||
Bowling Green State University Ohio Revenue, 5.000% Due 06/01/2024 | 405,000 | 460,331 | ||||||
Bowling Green State University Ohio Revenue, 5.000% Due 06/01/2032 | 500,000 | 572,240 | ||||||
Colorado Board of Governors University Enterprise System Revenue, 5.000% Due 03/01/2027 | 225,000 | 268,668 | ||||||
Colorado Higher Education Lease Financing Program Certificate of Participation, 5.000% Due 11/01/2025 | 290,000 | 338,407 | ||||||
Cuyahoga County Ohio Community College GO Unlimited, 4.000% Due 12/01/2033 | 400,000 | 425,028 | ||||||
Cuyahoga County Ohio Community College GO Unlimited, 5.000% Due 12/01/2027 | 400,000 | 471,704 | ||||||
Kent State University Ohio General Receipt Revenue, 4.000% Due 05/01/2022 | 255,000 | 270,657 | ||||||
Lorain County Ohio Community College District General Receipts Revenue Bond, 3.000% Due 06/01/2020 | 190,000 | 192,576 | ||||||
Lorain County Ohio Community College District General Receipts Revenue Bond, 4.000% Due 12/01/2025 | 600,000 | 656,790 | ||||||
Miami University Ohio General Receipts Revenue, 4.000% Due 09/01/2022 | 450,000 | 472,482 | ||||||
Miami University Ohio General Receipts Revenue, 4.000% Due 09/01/2023 | 1,040,000 | 1,089,754 | ||||||
Miami University Ohio General Receipts Revenue, 5.000% Due 09/01/2020 | 400,000 | 420,440 | ||||||
Miami University Ohio General Receipts Revenue, 5.000% Due 09/01/2020 | 100,000 | 105,110 |
The accompanying notes are an integral part of these financial statements.
18
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Miami University Ohio Revenue, 4.000% Due 09/01/2027 | 300,000 | $ | 315,534 | |||||
Miami Valley Ohio Career Tech Center GO Unlimited, 4.000% Due 12/01/2024 | 1,000,000 | 1,101,580 | ||||||
Northern Kentucky University General Receipts Revenue, 3.000% Due 09/01/2021 | 210,000 | 215,111 | ||||||
Ohio Higher Education Facilities Revenue – University of Dayton, 4.000% Due 12/01/2033 | 620,000 | 655,365 | ||||||
Ohio Higher Education Facilities Revenue – Xavier University, 4.500% Due 05/01/2036 | 1,000,000 | 1,039,820 | ||||||
Ohio State University General Receipts Revenue, 4.000% Due 06/01/2030 | 200,000 | 214,434 | ||||||
Ohio State University Revenue**, 1.580% Due 12/01/2034 | 1,150,000 | 1,150,000 | ||||||
Ohio University General Receipts Revenue Bond, 5.000% Due 12/01/2019 | 135,000 | 138,847 | ||||||
Ohio University General Receipts Revenue Bond, 5.000% Due 12/01/2022 | 110,000 | 121,959 | ||||||
South Dakota Board of Regents Housing and Auxiliary Facilities System Revenue, 5.000% Due 04/01/2026 | 315,000 | 366,194 | ||||||
University of Akron Ohio General Receipts Revenue, 5.000% Due 01/01/2028 | 410,000 | 465,998 | ||||||
University of Akron Ohio General Receipts Revenue, 5.000% Due 01/01/2029 | 650,000 | 723,268 | ||||||
University of Akron Ohio General Receipts Revenue, 5.000% Due 01/01/2024 | 610,000 | 688,519 | ||||||
University of Akron Ohio General Receipts Revenue, 5.000% Due 01/01/2029 | 335,000 | 386,962 | ||||||
University of Akron Ohio General Receipts Revenue (AGM Insured), 5.000% Due 01/01/2022 | 215,000 | 221,405 | ||||||
University of Akron Ohio General Receipts Revenue*, 5.000% Due 01/01/2022 | 135,000 | 139,158 | ||||||
University of Akron Ohio Revenue, 5.000% Due 01/01/2027 | 350,000 | 408,681 | ||||||
University of Cincinnati General Receipts Revenue, 4.000% Due 06/01/2036 | 250,000 | 258,852 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
University of Cincinnati General Receipts Revenue, 5.000% Due 06/01/2020 | 300,000 | $ | 312,882 | |||||
University of Cincinnati General Receipts Revenue, 5.000% Due 06/01/2026 | 470,000 | 508,427 | ||||||
University of Cincinnati Ohio Receipts Revenue (Assured Guaranty Insured), 5.000% Due 06/01/2019 | 1,000,000 | 1,012,900 | ||||||
University of Toledo Revenue, 5.000% Due 06/01/2021 | 300,000 | 320,856 | ||||||
University of Toledo Revenue, 5.000% Due 06/01/2026 | 885,000 | 977,624 | ||||||
University of Toledo Revenue, 5.000% Due 06/01/2027 | 1,590,000 | 1,879,237 | ||||||
University of Toledo Revenue, 5.000% Due 06/01/2031 | 500,000 | 601,250 | ||||||
11.7% – Total For Higher Education | $ | 21,035,731 | ||||||
Allegheny County Pennsylvania Hospital Development Authority Revenue – University of Pittsburgh Medical Center, 5.000% Due 10/15/2024 | 100,000 | 107,516 | ||||||
Allegheny County Pennsylvania Hospital Development Authority Revenue – University of Pittsburgh Medical Center, 6.000% Due 07/01/2027 | 250,000 | 312,898 | ||||||
Butler County Ohio Cincinnati Childrens Hospital Medical Center Revenue, 5.000% Due 05/15/2030 | 1,005,000 | 1,218,944 | ||||||
Franklin County Ohio Hospital Revenue Nationwide Childrens, 4.000% Due 11/01/2036 | 800,000 | 825,728 | ||||||
Franklin County Ohio Hospital Revenue Nationwide Childrens, 5.000% Due 11/01/2032 | 500,000 | 581,665 | ||||||
Franklin County Ohio Hospital Revenue Nationwide Childrens*, 5.000% Due 11/01/2024 | 500,000 | 512,655 | ||||||
Franklin County Ohio Hospital Revenue Nationwide Childrens**, 1.620% Due 11/01/2045 | 1,000,000 | 1,000,000 | ||||||
Hamilton County Ohio Health Care Facilities Revenue – The Christ Hospital, 5.250% Due 06/01/2025 | 1,000,000 | 1,092,790 |
The accompanying notes are an integral part of these financial statements.
19
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Hamilton County Ohio Health Care Facilities Revenue – The Christ Hospital Obligated Group, 5.250% Due 06/01/2027 | 1,000,000 | $ | 1,090,040 | |||||
Hamilton County Ohio Hospital Facilities Revenue Cincinnati Children’s Hospital, 5.000% Due 05/15/2027 | 100,000 | 113,339 | ||||||
Hamilton County Ohio Hospital Facilities Revenue Cincinnati Children’s Hospital, 5.000% Due 05/15/2028 | 1,715,000 | 1,936,389 | ||||||
Monroeville Pennsylvania Finance Authority Revenue – University of Pittsburgh Medical Center, 5.000% Due 02/15/2027 | 300,000 | 352,131 | ||||||
Nashville and Davidson County Tennessee Vanderbilt University Medical Center, 5.000% Due 07/01/2031 | 480,000 | 537,168 | ||||||
Ohio Hospital Facilities Revenue – Cleveland Clinic, 5.000% Due 01/01/2020 | 170,000 | 175,200 | ||||||
Ohio Hospital Facilities Revenue – Cleveland Clinic*, 5.000% Due 01/01/2025 | 430,000 | 430,000 | ||||||
Pennsylvania Economic Development Financing Authority – University of Pittsburgh Medical Center Revenue, 5.000% Due 02/01/2025 | 450,000 | 515,281 | ||||||
Pennsylvania Economic Development Financing Authority – University of Pittsburgh Medical Center Revenue, 5.000% Due 02/01/2029 | 250,000 | 280,960 | ||||||
6.2% – Total For Hospital/Health Bonds | $ | 11,082,704 | ||||||
Columbus Ohio Metropolitan Library Special Obligation Revenue, 5.000% Due 12/01/2026 | 705,000 | 840,311 | ||||||
Columbus Ohio Metropolitan Library Special Obligation Revenue, 5.000% Due 12/01/2027 | 500,000 | 602,480 | ||||||
Franklin County Ohio Convention Facilities Authority Revenue, 5.000% Due 12/01/2022 | 500,000 | 553,570 | ||||||
Hopkins County Kentucky Public Properties Corp. Judicial Center Project First Mortgage Revenue, 3.000% Due 06/01/2019 | 300,000 | 301,329 | ||||||
Huntsville Alabama Public Building Authority Revenue, 5.000% Due 10/01/2033 | 800,000 | 934,288 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Newport Kentucky First Mortgage Court Facilities Project Revenue, 4.000% Due 10/01/2025 | 500,000 | $ | 504,355 | |||||
Newport Kentucky First Mortgage Court Facilities Project Revenue, 4.000% Due 10/01/2026 | 100,000 | 100,834 | ||||||
Ohio Capital Facilities Lease Appropriation Revenue, 5.000% Due 04/01/2020 | 520,000 | 540,176 | ||||||
Ohio Capital Facilities Lease Appropriation Revenue, 5.000% Due 04/01/2022 | 425,000 | 464,708 | ||||||
Ohio Capital Facilities Lease Appropriation Revenue*, 4.000% Due 04/01/2026 | 150,000 | 157,021 | ||||||
Ohio Capital Facilities Lease Appropriation Revenue*, 5.000% Due 04/01/2024 | 275,000 | 293,887 | ||||||
Ohio Cultural and Sports Facilities Project Revenue, 4.000% Due 10/01/2019 | 225,000 | 228,604 | ||||||
Ohio Parks and Recreation Capital Facilities Revenue, 5.000% Due 12/01/2020 | 1,000,000 | 1,058,480 | ||||||
Ohio Parks and Recreation Capital Facilities Revenue, 5.000% Due 02/01/2023 | 300,000 | 334,821 | ||||||
3.9% – Total For Revenue Bonds – Facility | $ | 6,914,864 | ||||||
Anderson Indiana Sewage Works Revenue (AGM Insured), 4.000% Due 11/01/2026 | 300,000 | 331,806 | ||||||
Cape Coral Florida Water & Sewer Revenue, 5.000% Due 10/01/2024 | 535,000 | 612,607 | ||||||
Central Ohio Solid Waste Authority GO Limited, 5.000% Due 12/01/2023 | 45,000 | 49,429 | ||||||
Central Ohio Solid Waste Authority GO Limited*, 5.000% Due 12/01/2023 | 10,000 | 10,991 | ||||||
Central Ohio Solid Waste Authority GO Limited*, 5.000% Due 12/01/2023 | 75,000 | 82,434 | ||||||
Cincinnati Ohio Water System Revenue, 4.000% Due 12/01/2030 | 1,000,000 | 1,095,760 | ||||||
Evansville Indiana Waterworks District Revenue (BAM Insured), 4.000% Due 01/01/2029 | 400,000 | 430,012 | ||||||
Evansville Indiana Waterworks District Revenue (BAM Insured), 5.000% Due 01/01/2022 | 300,000 | 325,578 |
The accompanying notes are an integral part of these financial statements.
20
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Hamilton Ohio Wastewater System Revenue (BAM Insured), 5.000% Due 10/01/2027 | 930,000 | $ | 1,106,747 | |||||
Lafayette Indiana Sewage Works Revenue, 5.000% Due 07/01/2022 | 150,000 | 164,796 | ||||||
Lima Ohio Sanitary Sewer Revenue, 5.000% Due 12/01/2024 | 200,000 | 219,142 | ||||||
Lima Ohio Sewer Revenue, 3.000% Due 12/01/2021 | 575,000 | 590,353 | ||||||
Northern Kentucky Water District Revenue, 5.000% Due 02/01/2023 | 1,000,000 | 1,116,070 | ||||||
Ohio Water Development Authority Revenue, 4.000% Due 06/01/2030 | 500,000 | 561,370 | ||||||
Ohio Water Development Authority Water Pollution Control Revenue, 1.780% Due 12/01/2036 | 1,000,000 | 1,000,000 | ||||||
Owensboro Kentucky Water Revenue (BAM Insured), 5.000% Due 09/15/2025 | 485,000 | 557,420 | ||||||
Springboro Ohio Sewer System Revenue, 4.000% Due 06/01/2022 | 245,000 | 260,077 | ||||||
St. Charles County Missouri Public Water Supply Dist. 2 Certificates of Participation, 4.000% Due 12/01/2031 | 400,000 | 422,232 | ||||||
Toledo Ohio Water System Revenue, 5.000% Due 11/15/2025 | 255,000 | 294,737 | ||||||
Toledo Ohio Waterworks Revenue, 4.000% Due 11/15/2022 | 365,000 | 390,900 | ||||||
Toledo Ohio Waterworks Revenue, 5.000% Due 11/15/2026 | 500,000 | 591,100 | ||||||
5.7% – Total For Revenue Bonds – Water & Sewer | $ | 10,213,561 | ||||||
Akron Ohio Certificate of Participation, 5.000% Due 12/01/2025 | 500,000 | 575,450 | ||||||
Akron Ohio Income Tax Revenue, 5.000% Due 12/01/2023 | 1,100,000 | 1,244,804 | ||||||
Akron Ohio Income Tax Revenue Community Learning Centers, 5.000% Due 12/01/2028 | 380,000 | 415,298 | ||||||
Cincinnati Ohio Economic Development Revenue (Baldwin 300 Project), 4.750% Due 11/01/2030 | 500,000 | 561,355 | ||||||
Cincinnati Ohio Economic Development Revenue (Baldwin 300 Project), 5.000% Due 11/01/2032 | 525,000 | 596,180 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Cincinnati Ohio Economic Development Revenue U-Square-the-Loop Project, 3.500% Due 11/01/2024 | 110,000 | $ | 113,347 | |||||
Escambia County Florida Pollution Control Revenue (Gulf Power Company), 2.100% Due 07/01/2022 | 1,030,000 | 1,029,351 | ||||||
Hamilton County Ohio Economic Development King Highland Community Urban Redevelopment Corp. Revenue, 5.000% Due 06/01/2030 | 655,000 | 745,194 | ||||||
Humboldt County Nevada Polution Control Revenue (Sierra Pacific Power Co.), 1.250% Due 10/01/2029 | 300,000 | 298,782 | ||||||
Lorain County Ohio Sales Tax Receipts Bond Anticipation Note, 2.100% Due 04/11/2019 | 350,000 | 350,018 | ||||||
Louisa Virginia Industrial Development Authority (Virginia Electric & Power Co.), 1.850% Due 11/01/2035 | 550,000 | 549,302 | ||||||
Louisa Virginia Industrial Development Authority (Virginia Electric & Power Co.), 2.150% Due 11/01/2035 | 650,000 | 648,304 | ||||||
Mason Ohio Certificate of Participation, 5.000% Due 12/01/2023 | 750,000 | 789,653 | ||||||
Mobile Alabama Industrial Development Board Pollution Control Revenue, 1.625% Due 07/15/2034 | 1,025,000 | 1,025,000 | ||||||
Monroe County Georgia Development Authority Pollution Control Revenue, 2.050% Due 07/01/2049 | 1,000,000 | 975,330 | ||||||
Montgomery County Ohio Transportation Improvement Special Obligation Revenue, 3.500% Due 12/01/2019 | 400,000 | 402,604 | ||||||
Ohio Major New State Infrastructure Project Revenue, 5.000% Due 12/15/2022 | 250,000 | 274,792 | ||||||
Ohio Major New State Infrastructure Project Revenue, 5.000% Due 12/15/2023 | 500,000 | 568,835 | ||||||
Ohio Major New State Infrastructure Project Revenue, 5.000% Due 12/15/2023 | 500,000 | 568,835 |
The accompanying notes are an integral part of these financial statements.
21
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Ohio Major New State Infrastructure Project Revenue, 5.000% Due 12/15/2026 | 500,000 | $ | 590,815 | |||||
Ohio Major New State Infrastructure Project Revenue, 5.000% Due 12/15/2028 | 570,000 | 667,151 | ||||||
Ohio Mental Health Capital Facilities Revenue, 5.000% Due 02/01/2025 | 1,000,000 | 1,157,840 | ||||||
Ohio Special Obligation Revenue, 3.000% Due 12/01/2019 | 500,000 | 505,300 | ||||||
Ohio Special Obligation Revenue, 5.000% Due 12/01/2029 | 510,000 | 599,393 | ||||||
Ohio Turnpike and Infrastructure Commission (National Re Insured), 5.500% Due 02/15/2019 | 705,000 | 708,130 | ||||||
Summit County Ohio Development Finance Authority Akron Lease Revenue, 4.000% Due 12/01/2027 | 220,000 | 234,626 | ||||||
Summit County Ohio Development Finance Authority Akron Lease Revenue, 4.000% Due 12/01/2028 | 215,000 | 228,188 | ||||||
Washington Certificates of Participation, 5.000% Due 07/01/2019 | 900,000 | 914,247 | ||||||
9.7% – Total For Other Revenue Bonds | $ | 17,338,124 | ||||||
Aldine Texas ISD GO Unlimited, 4.000% Due 02/15/2030 | 780,000 | 837,712 | ||||||
Athens Ohio CSD GO Unlimited Bond Anticipation, 3.000% Due 06/26/2019 | 500,000 | 501,840 | ||||||
Bellbrook-Sugarcreek Ohio LSD GO Unlimited, 4.000% Due 12/01/2031 | 325,000 | 349,557 | ||||||
Bellfontaine Ohio SCD GO Unlimited (National RE Insured), 5.500% Due 12/01/2026 | 615,000 | 724,759 | ||||||
Berea Ohio CSD GO Unlimited, 4.000% Due 12/01/2031 | 500,000 | 525,605 | ||||||
Bloom-Carroll Ohio LSD GO Unlimited, 4.000% Due 11/01/2030 | 290,000 | 317,620 | ||||||
Bloom-Carroll Ohio LSD GO Unlimited, 4.000% Due 11/01/2031 | 150,000 | 162,813 | ||||||
Bloom-Carroll Ohio LSD GO Unlimited (SDCP), 4.000% Due 11/01/2029 | 325,000 | 361,247 | ||||||
Boone County Kentucky SD Finance Corporation Revenue, 2.500% Due 05/01/2019 | 500,000 | 501,045 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Boone County Kentucky SD Finance Corporation Revenue, 2.000% Due 02/01/2019 | 465,000 | $ | 465,060 | |||||
Breckinridge County Kentucky SD Finance Corp., 5.000% Due 04/01/2025 | 265,000 | 304,228 | ||||||
Brownsville Indianna CSC Revenue, 5.000% Due 01/15/2027 | 535,000 | 631,792 | ||||||
Chagrin Falls Ohio Exempted Village SD GO, 4.000% Due 12/01/2022 | 100,000 | 107,487 | ||||||
Chillicothe Ohio CSD Special Obligation Revenue, 4.000% Due 12/01/2023 | 130,000 | 138,169 | ||||||
Chillicothe Ohio SD GO Unlimited (AGM Insured), 4.000% Due 12/01/2029 | 400,000 | 428,452 | ||||||
Clark County Kentucky SD Finance Corp. Revenue Bond, 3.000% Due 08/01/2022 | 115,000 | 118,307 | ||||||
Cleveland Heights and University Heights Ohio CSD GO Unlimited, 4.000% Due 12/01/2032 | 1,000,000 | 1,070,390 | ||||||
Colorado Building Excellent Schools Today Certificates of Participation, 4.000% Due 03/15/2030 | 1,000,000 | 1,090,770 | ||||||
Columbus Ohio CSD GO Unlimited, 4.000% Due 12/01/2029 | 400,000 | 431,640 | ||||||
Columbus Ohio CSD School Facilities Construction and Improvement GO*, 4.000% Due 12/01/2023 | 175,000 | 176,654 | ||||||
Dayton Ohio SCD GO Unlimited (SDCP), 5.000% Due 11/01/2025 | 1,000,000 | 1,155,310 | ||||||
Denver Colorado City & County SD #1 Certificates of Participation, 5.000% Due 12/01/2021 | 500,000 | 531,885 | ||||||
Dexter Michigan CSD GO Unlimited, 4.000% Due 05/01/2031 | 500,000 | 540,030 | ||||||
Dublin Ohio CSD GO Unlimited, 5.000% Due 12/01/2026 | 500,000 | 560,100 | ||||||
Elyria Ohio SCD GO Unlimited (SDCP), 4.000% Due 12/01/2030 | 1,000,000 | 1,067,760 | ||||||
Fairfield Ohio CSD GO Unlimited, 5.000% Due 12/01/2020 | 420,000 | 444,314 |
The accompanying notes are an integral part of these financial statements.
22
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Firelands Ohio LSD GO Unlimited Bond Anticipation Notes, 3.000% Due 08/22/2019 | 1,000,000 | $ | 1,005,730 | |||||
Fort Mill South Carolina School Facilities Corp. Installment Purchase Revenue, 5.000% Due 12/01/2024 | 300,000 | 343,275 | ||||||
Franklin Indiana Community Multi-School Building Corp., 5.000% Due 01/15/2023 | 200,000 | 222,316 | ||||||
Granville Ohio Exempted Village SD GO Unlimited, 5.000% Due 12/01/2026 | 510,000 | 595,384 | ||||||
Greenville Ohio CSD GO Unlimited (SD Credit Program Insured), 4.000% Due 01/01/2021 | 110,000 | 114,434 | ||||||
Hamilton Ohio CSD GO Unlimited (School District Credit Program), 5.000% Due 12/01/2019 | 300,000 | 308,439 | ||||||
Hardin County Kentucky SD Finance Corp. Revenue, 2.500% Due 06/01/2021 | 100,000 | 100,676 | ||||||
Hardin County Kentucky SD Finance Corp. Revenue, 5.000% Due 05/01/2024 | 500,000 | 565,440 | ||||||
Hillsborough County Florida School Board Certificates of Participation, 5.000% Due 07/01/2025 | 200,000 | 232,796 | ||||||
Houston Texas ISD GO Limited, 5.000% Due 02/15/2030 | 440,000 | 510,052 | ||||||
Hudson Ohio CSD GO Unlimited, 4.000% Due 12/01/2033 | 800,000 | 848,416 | ||||||
Huntington County Indiana Countryside School Building Corp. Revenue, 4.000% Due 01/15/2028 | 1,000,000 | 1,094,350 | ||||||
Jackson Milton Ohio LSD Certificates of Participation (BAM Insured), 2.000% Due 06/01/2019 | 200,000 | 200,136 | ||||||
Jackson Milton Ohio LSD Certificates of Participation (BAM Insured), 4.000% Due 06/01/2031 | 270,000 | 283,063 | ||||||
Jefferson County Kentucky SD Finance Corp., 3.500% Due 04/01/2021 | 340,000 | 346,453 | ||||||
Jefferson County Kentucky SD Finance Corp., 5.000% Due 10/01/2026 | 530,000 | 624,382 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Johnstown-Monroe Ohio LSD GO Unlimited, 4.000% Due 12/01/2029 | 800,000 | $ | 862,384 | |||||
Keller Texas ISD GO Unlimited, 4.500% Due 02/15/2020 | 5,000 | 5,016 | ||||||
Kenston Ohio LSD Improvement GO Unlimited, 5.000% Due 12/01/2019 | 150,000 | 154,316 | ||||||
Kenton County Kentucky SD Finance Corp. Revenue, 4.000% Due 02/01/2028 | 400,000 | 430,084 | ||||||
Kettering Ohio CSD GO Unlimited, 4.000% Due 12/01/2020 | 240,000 | 249,550 | ||||||
Kettering Ohio CSD GO Unlimited, 4.000% Due 12/01/2030 | 400,000 | 426,852 | ||||||
Kettering Ohio CSD GO Unlimited, 5.250% Due 12/01/2031 | 500,000 | 599,050 | ||||||
Lake Ohio LSD of Stark County GO Unlimited, 4.000% Due 12/01/2023 | 400,000 | 425,908 | ||||||
Lakota Ohio LSD GO, 5.250% Due 12/01/2025 | 205,000 | 244,155 | ||||||
Lakota Ohio LSD GO Unlimited, 4.000% Due 12/01/2027 | 275,000 | 294,473 | ||||||
Lakota Ohio LSD GO Unlimited, 5.000% Due 12/01/2021 | 350,000 | 379,855 | ||||||
Lancaster Ohio CSD GO Limited (SDCP), 4.000% Due 10/01/2027 | 1,000,000 | 1,085,350 | ||||||
Licking Heights Ohio LSD GO Unlimited, 5.000% Due 10/01/2025 | 715,000 | 823,844 | ||||||
Licking Heights Ohio LSD GO Unlimited, 5.000% Due 10/01/2026 | 350,000 | 408,300 | ||||||
Licking Heights Ohio LSD GO Unlimited, 5.000% Due 10/01/2027 | 500,000 | 589,445 | ||||||
Logan Hocking Ohio LSD Certificates of Participation, 4.000% Due 12/01/2032 | 420,000 | 441,340 | ||||||
Louisville Ohio CSD GO Unlimited (SDCP), 3.000% Due 12/01/2020 | 370,000 | 377,248 | ||||||
Marysville Michigan PSD GO Unlimited, 5.000% Due 05/01/2021 | 250,000 | 267,088 | ||||||
Marysville Ohio Exempted Village SD GO Unlimited, 4.000% Due 12/01/2023 | 165,000 | 176,646 |
The accompanying notes are an integral part of these financial statements.
23
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Marysville Ohio Exempted Village SD GO Unlimited, 5.000% Due 12/01/2022 | 715,000 | $ | 791,605 | |||||
Marysville Ohio Exempted Village SD GO Unlimited (SDCP), 5.000% Due 12/01/2025 | 500,000 | 561,660 | ||||||
Mayfield Ohio CSD Certificates of Participation, 4.000% Due 09/01/2032 | 280,000 | 295,688 | ||||||
Merrillville Indiana Multi School Building Corp., 5.000% Due 07/15/2026 | 1,000,000 | 1,178,950 | ||||||
Milford Ohio Exempt Village SD GO Unlimited (AGM Insured), 5.500% Due 12/01/2030 | 1,260,000 | 1,540,136 | ||||||
Munster Indiana School Building Corp. Revenue (State Intercept), 4.000% Due 01/15/2029 | 400,000 | 422,580 | ||||||
Murray Kentucky ISD Finance Corporation Revenue, 5.000% Due 03/01/2025 | 810,000 | 927,928 | ||||||
Newark Ohio CSD GO Unlimited (School District Credit Program), 4.000% Due 12/01/2026 | 235,000 | 254,120 | ||||||
North Olmsted Ohio CSD GO Unlimited, 4.000% Due 12/01/2029 | 500,000 | 549,505 | ||||||
Northwest Ohio LSD Hamilton & Butler Counties Certificates of Participation, 2.500% Due 12/01/2019 | 150,000 | 150,890 | ||||||
Northwest Ohio LSD Hamilton & Butler Counties GO Unlimited, 5.000% Due 12/01/2028 | 100,000 | 112,469 | ||||||
Northwest Ohio LSD Hamilton & Butler Counties GO Unlimited, 5.000% Due 12/01/2029 | 150,000 | 168,406 | ||||||
Olentangy Ohio LSD GO Unlimited, 4.000% Due 12/01/2026 | 1,000,000 | 1,069,030 | ||||||
Orange County Florida School Board Certificates of Participation, 5.000% Due 08/01/2032 | 500,000 | 565,655 | ||||||
Princeton Ohio CSD Certificates of Participation, 3.500% Due 12/01/2026 | 275,000 | 279,955 | ||||||
Princeton Ohio CSD GO Unliimited (National RE Insured), 5.250% Due 12/01/2030 | 1,000,000 | 1,215,650 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Sarah Scott Indiana Middle School Building Corp. Revenue, 5.000% Due 07/10/2022 | 640,000 | $ | 702,643 | |||||
South-Western City Ohio SD GO Unlimited, 4.000% Due 12/01/2025 | 1,000,000 | 1,059,160 | ||||||
South-Western City Ohio SD GO Unlimited Bond Anticipation Note, 3.125% Due 06/04/2019 | 500,000 | 502,120 | ||||||
Switzerland Ohio LSD GO Unlimited (SDCEP Insured), 4.000% Due 12/01/2026 | 415,000 | 439,414 | ||||||
Toledo Ohio CSD GO Unlimited, 5.000% Due 12/01/2029 | 660,000 | 758,696 | ||||||
Trotwood-Madison Ohio CSD GO Unlimited (SDCP), 4.000% Due 12/01/2028 | 210,000 | 227,923 | ||||||
Trotwood-Madison Ohio CSD GO Unlimited (SDCP), 4.000% Due 12/01/2029 | 500,000 | 540,460 | ||||||
Trotwood-Madison Ohio CSD GO Unlimited (SDCP), 4.000% Due 12/01/2030 | 350,000 | 375,753 | ||||||
Upper Arlington Ohio CSD GO Unlimited, 4.000% Due 12/01/2030 | 1,380,000 | 1,507,498 | ||||||
Vandalia Butler Ohio CSD GO Unlimited, 3.000% Due 12/01/2024 | 500,000 | 518,395 | ||||||
Vermillion Ohio LSD Certificates of Participation, 5.000% Due 12/01/2023 | 230,000 | 242,471 | ||||||
Wadsworth Ohio CSD GO Unlimited, 3.000% Due 12/01/2019 | 120,000 | 121,121 | ||||||
Wadsworth Ohio CSD GO Unlimited, 3.500% Due 12/01/2022 | 215,000 | 221,861 | ||||||
Wadsworth Ohio CSD GO Unlimited, 4.000% Due 12/01/2027 | 840,000 | 908,821 | ||||||
Wadsworth Ohio CSD GO Unlimited, 4.000% Due 12/01/2033 | 1,075,000 | 1,131,018 | ||||||
Walton County Florida Board Certificates of Participation, 5.000% Due 07/01/2027 | 500,000 | 590,100 | ||||||
Washington County Kentucky SD Finance Corp. Revenue Bond, 3.000% Due 08/01/2019 | 185,000 | 186,184 |
The accompanying notes are an integral part of these financial statements.
24
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Wentzville R-IV SD of Saint Charles County Missouri Certificates of Participation, 4.000% Due 04/01/2030 | 395,000 | $ | 417,558 | |||||
Western Reserve Ohio LSD GO (SDCEP Insured), 4.000% Due 12/01/2022 | 240,000 | 246,811 | ||||||
Westerville Ohio SCD Certificate of Participation, 5.000% Due 12/01/2032 | 555,000 | 646,408 | ||||||
Willoughby-Eastlake Ohio CSD Certificates of Participation (BAM Insured), 4.000% Due 03/01/2030 | 810,000 | 857,053 | ||||||
Wyoming Ohio CSD GO Unlimited, 5.000% Due 12/01/2023 | 200,000 | 226,030 | ||||||
Zanesville Ohio CSD GO Unlimited (SDCEP Insured), 4.500% Due 12/01/2019 | 200,000 | 204,726 | ||||||
29.0% – Total For School District | $ | 51,897,243 | ||||||
Kansas Development Finance Authority, 5.000% Due 04/01/2019 | 580,000 | 584,559 | ||||||
Kentucky Asset and Liability Commission Revenue, 5.250% Due 09/01/2023 | 965,000 | 1,089,659 | ||||||
Kentucky Association of Counties Finance Corp. Revenue, 4.000% Due 02/01/2029 | 575,000 | 621,811 | ||||||
Kentucky Association of Counties Finance Corp. Revenue, 4.250% Due 02/01/2023 | 20,000 | 20,665 | ||||||
Kentucky Association of Counties Finance Corp. Revenue*, 4.250% Due 02/01/2023 | 180,000 | 186,257 | ||||||
Kentucky Certificates of Participation, 4.000% Due 04/15/2031 | 500,000 | 524,505 | ||||||
Kentucky Interlocal School Transportation Assoc. Certificate of Participation, 3.000% Due 03/01/2024 | 560,000 | 570,987 | ||||||
Kentucky Property and Buildings Commission Revenue, 5.000% Due 10/01/2023 | 350,000 | 388,241 |
Municipal Income Securities – Bonds | Face Value | Fair Value | ||||||
Kentucky Property and Buildings Commission Revenue, 5.000% Due 11/01/2026 | 1,000,000 | $ | 1,149,100 | |||||
Kentucky Property and Buildings Commission Revenue, 5.000% Due 08/01/2029 | 600,000 | 678,018 | ||||||
Kentucky Property and Buildings Commission Revenue, 5.000% Due 08/01/2030 | 600,000 | 676,482 | ||||||
Ohio Building Authority Revenue, 5.000% Due 10/01/2020 | 215,000 | 220,076 | ||||||
Ohio Certificate of Participation, 5.000% Due 09/01/2027 | 1,520,000 | 1,823,407 | ||||||
Ohio Department of Administration Certificate of Participation, 4.000% Due 09/01/2025 | 775,000 | 814,447 | ||||||
Ohio Department of Administration Certificate of Participation, 5.000% Due 03/01/2020 | 500,000 | 518,000 | ||||||
Ohio Department of Administration Certificate of Participation, 5.000% Due 09/01/2023 | 1,320,000 | 1,436,873 | ||||||
Ohio Department of Administration Certificate of Participation, 5.000% Due 03/01/2024 | 300,000 | 326,562 | ||||||
Ohio Department of Administration Certificate of Participation – Multi-Agency Radio Communication Project, 4.000% Due 09/01/2027 | 145,000 | 151,747 | ||||||
Ohio Department of Administration Certificate of Participation – Multi-Agency Radio Communication Project, 5.000% Due 09/01/2020 | 810,000 | 851,124 | ||||||
7.1% – Total For State Agency | $ | 12,632,520 | ||||||
Missouri State Housing Development Commission Single Family Mortgage Revenue (GNMA/FNMA/FHLMC Insured), 3.550% Due 05/01/2023 | 190,000 | 194,782 | ||||||
Missouri State Housing Development Commission Single Family Mortgage Revenue Series C (GNMA/FNMA/FHLMC Insured) 4.650% Due 09/01/2024 | 20,000 | 20,426 | ||||||
0.1% – Total For Housing | $ | 215,208 | ||||||
Total Municipal Income Securities – Bonds 97.5% | $ | 174,485,884 | ||||||
(Identified Cost $173,565,228) |
The accompanying notes are an integral part of these financial statements.
25
Cash Equivalents | Shares | Fair Value | ||||||
---|---|---|---|---|---|---|---|---|
Dreyfus AMT-Free Tax Cash Management Fund*** | 3,191,171 | $ | 3,191,171 | |||||
Total Cash Equivalents 1.8% | $ | 3,191,171 | ||||||
(Identified Cost $3,191,171) | ||||||||
Total Portfolio Value 99.3% | $ | 177,677,055 | ||||||
(Identified Cost $176,756,399) | ||||||||
Other Assets in Excess of Liabilities 0.7% | $ | 1,295,807 | ||||||
Total Net Assets 100.0% | $ | 178,972,862 |
* | Pre-refunded/Escrowed-to-Maturity Bonds; as of December 31, 2018, these bonds represented 1.11% of total assets. |
** | Variable Rate Security; the rate shown is as of December 31, 2018. |
*** | Variable Rate Security; as of December 31, 2018, the 7 day annualized yield was 1.57%. |
AGM – Assured Guaranty Municipal Mortgage Association
AMBAC – American Municipal Bond Assurance Corp.
BAM – Build America Mutual
CSC – Community School Corporation
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.
26
Statements of Assets and Liabilities
Equity Income Fund | Opportunity Fund | International Fund | ||||||||||
Assets: | ||||||||||||
Investment Securities at Fair Value* | $ | 273,439,915 | $ | 62,344,441 | $ | 17,915,209 | ||||||
Dividends and Interest Receivable | 535,677 | 85,553 | 49,447 | |||||||||
Securities Sold Receivable | — | 1,152,318 | — | |||||||||
Fund Shares Sold Receivable | 34,696 | 465 | 812 | |||||||||
Total Assets | $ | 274,010,288 | $ | 63,582,777 | $ | 17,965,468 | ||||||
Liabilities: | ||||||||||||
Accrued Management Fees | $ | 238,811 | $ | 60,198 | $ | 15,171 | ||||||
Fund Shares Redeemed Payable | 108,513 | 1,344,808 | 1,293 | |||||||||
Total Liabilities | $ | 347,324 | $ | 1,405,006 | $ | 16,464 | ||||||
Net Assets | $ | 273,662,964 | $ | 62,177,771 | $ | 17,949,004 | ||||||
Net Assets Consist of: | ||||||||||||
Paid in Capital | $ | 256,262,695 | $ | 65,874,982 | $ | 16,805,436 | ||||||
Accumulated Earnings/(Deficit) | 17,400,269 | (3,697,211 | ) | 1,143,568 | ||||||||
Net Assets | $ | 273,662,964 | $ | 62,177,771 | $ | 17,949,004 | ||||||
Shares Outstanding (Unlimited Amount Authorized) | 12,171,792 | 1,803,839 | 774,713 | |||||||||
Offering, Redemption and Net Asset Value Per Share | $ | 22.48 | $ | 34.47 | $ | 23.17 | ||||||
*Identified Cost of Investment Securities | $ | 246,792,902 | $ | 66,055,829 | $ | 16,243,408 |
The accompanying notes are an integral part of these financial statements.
27
Statements of Assets and Liabilities – Continued
Fixed Income Fund | Municipal Income Fund | |||||||
Assets: | ||||||||
Investment Securities at Fair Value* | $ | 619,633,926 | $ | 177,677,055 | ||||
Dividends and Interest Receivable | 4,212,727 | 1,429,375 | ||||||
Receivable for Mortgage-backed Securities Paydowns | 4,863 | — | ||||||
Fund Shares Sold Receivable | 76,856 | 33 | ||||||
Total Assets | $ | 623,928,372 | $ | 179,106,463 | ||||
Liabilities: | ||||||||
Accrued Management Fees | $ | 442,353 | $ | 97,308 | ||||
Fund Shares Redeemed Payable | 48,987 | 36,293 | ||||||
Total Liabilities | $ | 491,340 | $ | 133,601 | ||||
Net Assets | $ | 623,437,032 | $ | 178,972,862 | ||||
Net Assets Consist of: | ||||||||
Paid in Capital | $ | 629,181,282 | $ | 178,052,206 | ||||
Accumulated Earnings/(Deficit) | (5,744,250 | ) | 920,656 | |||||
Net Assets | $ | 623,437,032 | $ | 178,972,862 | ||||
Shares Outstanding (Unlimited Amount Authorized) | 38,036,640 | 10,453,583 | ||||||
Offering, Redemption and Net Asset Value Per Share | $ | 16.39 | $ | 17.12 | ||||
*Identified Cost of Investment Securities | $ | 624,312,980 | $ | 176,756,399 |
The accompanying notes are an integral part of these financial statements.
28
Statements of Operations
Equity Income Fund | Opportunity Fund | International Fund | ||||||||||
Year Ended 12/31/2018 | Year Ended 12/31/2018 | Year Ended 12/31/2018 | ||||||||||
Investment Income: | ||||||||||||
Dividends | $ | 5,799,096 | $ | 1,299,700 | $ | 661,192 | ||||||
Less: Foreign withholding taxes on dividends, net of reclaims | (73,578 | ) | (660 | ) | (71,187 | ) | ||||||
Total Investment Income | $ | 5,725,518 | $ | 1,299,040 | $ | 590,005 | ||||||
Expenses: | ||||||||||||
Management Fee | $ | 2,558,002 | $ | 776,647 | $ | 184,238 | ||||||
Net Expenses | $ | 2,558,002 | $ | 776,647 | $ | 184,238 | ||||||
Net Investment Income | $ | 3,167,516 | $ | 522,393 | $ | 405,767 | ||||||
Realized and Unrealized Gains/(Losses): | ||||||||||||
Net Realized Gain from Security Transactions | $ | 15,156,254 | $ | 3,484,502 | $ | 63,885 | ||||||
Net Change in Unrealized (Loss) on Investments | (26,686,853 | ) | (16,063,026 | ) | (2,417,956 | ) | ||||||
Net Gain/(Loss) on Investments | $ | (11,530,599) | $ | (12,578,524) | $ | (2,354,071) | ||||||
Net Change in Net Assets from Operations | $ | (8,363,083) | $ | (12,056,131) | $ | (1,948,304) |
The accompanying notes are an integral part of these financial statements.
29
Statements of Operations – Continued
Fixed Income Fund | Municipal Income Fund | |||||||
Year Ended 12/31/2018 | Year Ended 12/31/2018 | |||||||
Investment Income: | ||||||||
Interest | $ | 15,138,562 | $ | 3,851,164 | ||||
Dividends | 332,217 | 50,833 | ||||||
Total Investment Income | $ | 15,470,779 | $ | 3,901,997 | ||||
Expenses: | ||||||||
Management Fee | $ | 4,343,739 | $ | 979,432 | ||||
Net Expenses | $ | 4,343,739 | $ | 979,432 | ||||
Net Investment Income | $ | 11,127,040 | $ | 2,922,565 | ||||
Realized and Unrealized Gains/(Losses): | ||||||||
Net Realized Gain (Loss) from Security Transactions | $ | (378,946 | ) | $ | 61,291 | |||
Net Change in Unrealized Gain (Loss) on Investments | (10,582,903 | ) | (1,061,187 | ) | ||||
Net Gain/(Loss) on Investments | $ | (10,961,849) | $ | (999,896) | ||||
Net Change in Net Assets from Operations | $ | 165,191 | $ | 1,922,669 |
The accompanying notes are an integral part of these financial statements.
30
Statements of Changes in Net Assets
Equity Income Fund | Opportunity Fund | International Fund | ||||||||||||||||||||||
Year Ended 12/31/2018 | Year Ended 12/31/2017 | Year Ended 12/31/2018 | Year Ended 12/31/2017 | Year Ended 12/31/2018 | Year Ended 12/31/2017 | |||||||||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income | $ | 3,167,516 | $ | 190,188 | $ | 522,393 | $ | 171,177 | $ | 405,767 | $ | 244,277 | ||||||||||||
Net Realized Gain (Loss) from Security Transactions | 15,156,254 | 15,434,609 | 3,484,502 | 5,517,217 | 63,885 | (126,955 | ) | |||||||||||||||||
Net Change in Unrealized Gain (Loss) on Investments | (26,686,853 | ) | 21,383,528 | (16,063,026 | ) | 2,301,480 | (2,417,956 | ) | 2,831,452 | |||||||||||||||
Net Change in Net Assets from Operations | $ | (8,363,083 | ) | $ | 38,778,325 | $ | (12,056,131 | ) | $ | 7,989,874 | $ | (1,948,304 | ) | $ | 2,948,774 | |||||||||
Distributions to Shareholders (see Note 2)(a) | $ | (22,064,249 | ) | $ | (14,618,554 | ) | $ | (4,012,310 | ) | $ | (5,668,801 | ) | $ | (440,863 | ) | $ | (236,839 | ) | ||||||
Return or capital | — | — | — | — | — | (18,694 | ) | |||||||||||||||||
Total Distributions | (22,064,249 | ) | $ | (14,618,554 | ) | $ | (4,012,310 | ) | $ | (5,668,801 | ) | $ | (440,863 | ) | (255,533 | ) | ||||||||
Capital Share Transactions: | ||||||||||||||||||||||||
Proceeds from Sale of Shares | $ | 64,017,364 | $ | 30,137,370 | $ | 35,723,621 | $ | 13,964,000 | $ | 4,384,150 | $ | 2,301,022 | ||||||||||||
Assets Acquired from: Johnson Growth Fund (see Note 8) | 49,563,951 | — | — | — | — | — | ||||||||||||||||||
Shares Issued on Reinvestment of Distributions | 21,953,515 | 14,553,568 | 4,001,832 | 5,658,637 | 440,863 | 255,470 | ||||||||||||||||||
Cost of Shares Redeemed | (29,721,105 | ) | (20,593,327 | ) | (20,092,992 | ) | (4,852,966 | ) | (2,165,933 | ) | 1,746,316 | |||||||||||||
Net Change in Net Assets from Capital Share Transactions | $ | 105,813,725 | $ | 24,097,611 | $ | 19,632,461 | $ | 14,769,671 | $ | 2,659,080 | $ | 810,176 | ||||||||||||
Net Change in Net Assets | $ | 75,386,393 | $ | 48,257,382 | $ | 3,564,021 | $ | 17,090,744 | $ | 269,913 | $ | 3,503,417 | ||||||||||||
Net Assets at Beginning of Year | $ | 198,276,571 | $ | 150,019,189 | $ | 58,613,751 | $ | 41,523,007 | $ | 17,679,091 | $ | 14,175,674 | ||||||||||||
Net Assets at End of Year | $ | 273,662,964 | $ | 198,276,571 | $ | 62,177,771 | $ | 58,613,751 | $ | 17,949,004 | $ | 17,679,091 | ||||||||||||
Capital Share Activity(b) | ||||||||||||||||||||||||
Shares Sold | 2,476,881 | 1,245,288 | 831,775 | 323,880 | 169,539 | 92,853 | ||||||||||||||||||
Shares Acquired from: Johnson Growth Fund (see Note 8) | 1,988,125 | — | — | — | — | — | ||||||||||||||||||
Share Reinvested | 984,463 | 579,448 | 117,081 | 131,294 | 19,118 | 9,695 | ||||||||||||||||||
Shares Redeemed | (1,172,198 | ) | (851,872 | ) | (511,741 | ) | (112,740 | ) | (84,358 | ) | (70,669 | ) | ||||||||||||
Net Increase (Decrease) in Shares Outstanding | 4,277,271 | 972,864 | 437,115 | 342,434 | 104,299 | 31,879 | ||||||||||||||||||
Shares Outstanding, Beginning of Year | 7,894,521 | 6,921,657 | 1,366,724 | 1,024,290 | 670,414 | 638,535 | ||||||||||||||||||
Shares Outstanding, End of Year | 12,171,792 | 7,894,521 | 1,803,839 | 1,366,724 | 774,713 | 670,414 |
(a) | The presentation of Distributions to Shareholders has been updated to reflect the changes prescribed in amendments to Regulation S-X, effective November 5, 2018. For the year ended December 31, 2017, distributions to shareholders for the Equity Income Fund consisted of $1,939,577 from net investment income and $12,678,977 from net realized gain from security transactions; for the Opportunity Fund, $182,864 from net investment income and $5,485,937 from net realized gain from security transactions; and for the International Fund, $236,839 from net investment income. As of December 31, 2017, Accumulated Undistributed Net Investment Income (Loss) for the Equity Income Fund and International Fund was $19,774 and (117,013), respectively. |
(b) | 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 |
The accompanying notes are an integral part of these financial statements.
31
Statements of Changes in Net Assets – Continued
Fixed Income Fund | Municipal Income Fund | |||||||||||||||
Year Ended 12/31/2018 | Year Ended 12/31/2017 | Year Ended 12/31/2018 | Year Ended 12/31/2017 | |||||||||||||
Operations: | ||||||||||||||||
Net Investment Income | $ | 11,127,040 | $ | 6,388,893 | $ | 2,922,565 | $ | 1,864,578 | ||||||||
Net Realized Gain (Loss) from Security Transactions | (378,946 | ) | 1,298,390 | 61,291 | 58,804 | |||||||||||
Net Change in Unrealized Gain (Loss) on Investments | (10,582,903 | ) | 2,786,440 | (1,061,187 | ) | 1,123,221 | ||||||||||
Net Change in Net Assets from Operations | $ | 165,191 | $ | 10,473,723 | $ | 1,922,669 | $ | 3,046,603 | ||||||||
Distributions to Shareholders (see Note 2)(a) | $ | (11,659,758 | ) | $ | (7,661,436 | ) | $ | (3,000,325 | ) | $ | (1,935,567 | ) | ||||
Capital Share Transactions: | ||||||||||||||||
Proceeds from Sale of Shares | $ | 260,346,080 | $ | 137,993,361 | $ | 75,849,549 | $ | 44,583,013 | ||||||||
Shares Issued on Reinvestment of Distributions | 11,436,686 | 7,520,933 | 2,939,875 | 1,887,083 | ||||||||||||
Cost of Shares Redeemed | (54,511,438 | ) | (33,777,011 | ) | (22,662,933 | ) | (11,409,369 | ) | ||||||||
Net Change in Net Assets from Capital Share Transactions | $ | 217,271,328 | $ | 111,737,283 | $ | 56,126,491 | $ | 35,060,727 | ||||||||
Net Change in Net Assets | $ | 205,776,761 | $ | 114,549,570 | $ | 55,048,835 | $ | 36,171,763 | ||||||||
Net Assets at Beginning of Year | $ | 417,660,271 | $ | 303,110,701 | $ | 123,924,027 | $ | 87,752,264 | ||||||||
Net Assets at End of Year | $ | 623,437,032 | $ | 417,660,271 | $ | 178,972,862 | $ | 123,924,027 | ||||||||
Capital Share Activity(b) | ||||||||||||||||
Shares Sold | 15,866,696 | 8,176,390 | 4,445,823 | 2,574,023 | ||||||||||||
Share Reinvested | 698,905 | 447,114 | 172,677 | 109,262 | ||||||||||||
Shares Redeemed | (3,328,202 | ) | (2,004,861 | ) | (1,332,111 | ) | (658,911 | ) | ||||||||
Net Increase (Decrease) in Shares Outstanding | 13,237,399 | 6,618,643 | 3,286,389 | 2,024,374 | ||||||||||||
Shares Outstanding, Beginning of Year | 24,799,241 | 18,180,598 | 7,167,194 | 5,142,820 | ||||||||||||
Shares Outstanding, End of Year | 38,036,640 | 24,799,241 | 10,453,583 | 7,167,194 |
(a) | The presentation of Distributions to Shareholders has been updated to reflect the changes prescribed in amendments to Regulation S-X, effective November 5, 2018. For the year ended December 31, 2017, distributions to shareholders for the Fixed Income Fund consisted of $6,824,138 from net investment income and $837,298 from net realized gain from security transactions; and for the Municipal Income Fund, $1,864,578 from net investment income and $70,989 from net realized gain from security transactions. As of December 31, 2017 Accumulated Undistributed Net Investment Income for the Fixed Income Fund was $20,412. |
(b) | 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. |
The accompanying notes are an integral part of these financial statements.
32
Selected Data for a Share Outstanding Throughout each Period:
Year Ended December 31 | ||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||
Net Asset Value, Beginning of Year | $ | 25.12 | $ | 21.67 | $ | 19.92 | $ | 22.93 | $ | 23.11 | ||||||||||
Operations: | ||||||||||||||||||||
Net Investment Income | 0.28 | 0.26 | 0.29 | 0.38 | 0.30 | |||||||||||||||
Net Realized and Unrealized Gains/(Losses) on Securities(a) | (0.97 | ) | 5.15 | 2.13 | (1.87 | ) | 1.51 | |||||||||||||
Total Operations | $ | (0.69 | ) | $ | 5.41 | $ | 2.42 | $ | (1.49 | ) | $ | 1.81 | ||||||||
Distributions: | ||||||||||||||||||||
Net Investment Income | (0.28 | ) | (0.26 | ) | (0.29 | ) | (0.38 | ) | (0.30 | ) | ||||||||||
Net Realized Capital Gains | (1.67 | ) | (1.70 | ) | (0.38 | ) | (1.14 | ) | (1.69 | ) | ||||||||||
Total Distributions | $ | (1.95 | ) | $ | (1.96 | ) | $ | (0.67 | ) | $ | (1.52 | ) | $ | (1.99 | ) | |||||
Net Asset Value, End of Year | $ | 22.48 | $ | 25.12 | $ | 21.67 | $ | 19.92 | $ | 22.93 | ||||||||||
Total Return(b) | (2.68 | )% | 25.03 | % | 12.16 | % | (6.56 | )% | 7.73 | % | ||||||||||
Net Assets, End of Year (Millions) | $ | 273.66 | $ | 198.28 | $ | 150.02 | $ | 132.19 | $ | 150.13 | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Ratio of Expenses to Average Net Assets | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||||||
Ratio of Net Investment Income to Average Net Assets | 1.23 | % | 1.13 | % | 1.39 | % | 1.62 | % | 1.28 | % | ||||||||||
Portfolio Turnover Rate(c) | 30.17 | % | 34.76 | % | 42.36 | % | 39.41 | % | 27.89 | % |
(a) | 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. |
(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) | Turnover Rate does not include the purchase of securities, resulting from the merger with the Growth Fund. (See Note 8.) |
The accompanying notes are an integral part of these financial statements.
33
Selected Data for a Share Outstanding Throughout each Period:
Year Ended December 31 | ||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||
Net Asset Value, Beginning of Year | $ | 42.89 | $ | 40.54 | $ | 35.08 | $ | 39.35 | $ | 42.14 | ||||||||||
Operations: | ||||||||||||||||||||
Net Investment Income | 0.31 | 0.14 | 0.20 | 0.18 | 0.08 | |||||||||||||||
Net Realized and Unrealized Gains/(Losses) on Securities | (6.40 | ) | 6.74 | 6.09 | (1.08 | ) | 1.80 | |||||||||||||
Total Operations | $ | (6.09 | ) | $ | 6.88 | $ | 6.29 | $ | (0.90 | ) | $ | 1.88 | ||||||||
Distributions: | ||||||||||||||||||||
Net Investment Income | (0.30 | ) | (0.14 | ) | (0.20 | ) | (0.20 | ) | (0.11 | ) | ||||||||||
Return of Capital | — | — | (0.05 | ) | — | — | ||||||||||||||
Net Realized Capital Gains | (2.03 | ) | (4.39 | ) | (0.58 | ) | (3.17 | ) | (4.56 | ) | ||||||||||
Total Distributions | $ | (2.33 | ) | $ | (4.53 | ) | $ | (0.83 | ) | $ | (3.37 | ) | $ | (4.67 | ) | |||||
Net Asset Value, End of Year | $ | 34.47 | $ | 42.89 | $ | 40.54 | $ | 35.08 | $ | 39.35 | ||||||||||
Total Return(a) | (14.16 | )% | 16.91 | % | 17.90 | % | (2.39 | )% | 4.37 | % | ||||||||||
Net Assets, End of Year (Millions) | $ | 62.18 | $ | 58.61 | $ | 41.52 | $ | 37.77 | $ | 44.88 | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Ratio of Expenses to Average Net Assets | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||||||
Ratio of Net Investment Income to Average Net Assets | 0.69 | % | 0.35 | % | 0.50 | % | 0.40 | % | 0.19 | % | ||||||||||
Portfolio Turnover Rate | 61.22 | % | 41.50 | % | 34.62 | % | 35.17 | % | 38.37 | % |
(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. |
The accompanying notes are an integral part of these financial statements.
34
Selected Data for a Share Outstanding Throughout each Period:
Year Ended December 31 | ||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||
Net Asset Value, Beginning of Year | $ | 26.37 | $ | 22.20 | $ | 22.01 | $ | 24.23 | $ | 25.07 | ||||||||||
Operations: | ||||||||||||||||||||
Net Investment Income | 0.55 | 0.37 | 0.43 | 0.57 | 0.54 | |||||||||||||||
Net Realized and Unrealized Gains/(Losses) on Securities(a) | (3.17 | ) | 4.18 | 0.23 | (2.11 | ) | (0.83 | ) | ||||||||||||
Total Operations | $ | (2.62 | ) | $ | 4.55 | $ | 0.66 | $ | (1.54 | ) | $ | (0.29 | ) | |||||||
Distributions: | ||||||||||||||||||||
Net Investment Income | (0.58 | ) | (0.38 | ) | (0.45 | ) | (0.68 | ) | (0.55 | ) | ||||||||||
Net Realized Capital Gains | — | — | (0.02 | ) | — | — | ||||||||||||||
Total Distributions | $ | (0.58 | ) | $ | (0.38 | ) | $ | (0.47 | ) | $ | (0.68 | ) | $ | (0.55 | ) | |||||
Net Asset Value, End of Year | $ | 23.17 | $ | 26.37 | $ | 22.20 | $ | 22.01 | $ | 24.23 | ||||||||||
Total Return(b) | (9.93 | )% | 20.50 | % | (3.00 | )% | (6.38 | )% | (1.16)% | |||||||||||
Net Assets, End of Year (Millions) | $ | 17.95 | $ | 17.68 | $ | 14.18 | $ | 13.09 | $ | 18.23 | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Ratio of Expenses to Average Net Assets | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||||||
Ratio of Net Investment Income to Average Net Assets | 2.21 | % | 1.53 | % | 1.95 | % | 1.85 | % | 2.20 | % | ||||||||||
Portfolio Turnover Rate | 6.87 | % | 2.48 | % | 7.71 | % | 20.49 | % | 10.25 | % |
(a) | 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. |
(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. |
The accompanying notes are an integral part of these financial statements.
35
Selected Data for a Share Outstanding Throughout each Period:
Year Ended December 31 | ||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||
Net Asset Value, Beginning of Year | $ | 16.84 | $ | 16.67 | $ | 16.61 | $ | 17.03 | $ | 16.47 | ||||||||||
Operations: | ||||||||||||||||||||
Net Investment Income | 0.34 | 0.31 | 0.30 | 0.32 | 0.35 | |||||||||||||||
Net Realized and Unrealized Gains/(Losses) on Securities | (0.44 | ) | 0.22 | 0.21 | (0.27 | ) | 0.71 | |||||||||||||
Total Operations | $ | (0.10 | ) | $ | 0.53 | $ | 0.51 | $ | 0.05 | $ | 1.06 | |||||||||
Distributions: | ||||||||||||||||||||
Net Investment Income | (0.35 | ) | (0.33 | ) | (0.32 | ) | (0.35 | ) | (0.39 | ) | ||||||||||
Return of Capital | — | — | 0.00 | (a) | — | — | ||||||||||||||
Net Realized Capital Gains | — | (0.03 | ) | (0.13 | ) | (0.12 | ) | (0.11 | ) | |||||||||||
Total Distributions | $ | (0.35 | ) | $ | (0.36 | ) | $ | (0.45 | ) | $ | (0.47 | ) | $ | (0.50 | ) | |||||
Net Asset Value, End of Year | $ | 16.39 | $ | 16.84 | $ | 16.67 | $ | 16.61 | $ | 17.03 | ||||||||||
Total Return(b) | (0.56 | )% | 3.22 | % | 3.08 | % | 0.32 | % | (6.48 | )% | ||||||||||
Net Assets, End of Year (Millions) | $ | 623.44 | $ | 417.66 | $ | 303.11 | $ | 244.24 | $ | 226.14 | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Ratio of Expenses to Average Net Assets | 0.85 | % | 0.85 | % | 0.85 | % | 0.85 | % | 0.85 | % | ||||||||||
Ratio of Net Investment Income to Average Net Assets | 2.17 | % | 1.88 | % | 1.83 | % | 1.90 | % | 2.08 | % | ||||||||||
Portfolio Turnover Rate | 23.40 | % | 34.97 | % | 40.80 | % | 37.09 | % | 27.79 | % |
(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. |
The accompanying notes are an integral part of these financial statements.
36
Selected Data for a Share Outstanding Throughout each Period:
Year Ended December 31 | ||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||
Net Asset Value, Beginning of Year | $ | 17.29 | $ | 17.06 | $ | 17.36 | $ | 17.32 | $ | 16.83 | ||||||||||
Operations: | ||||||||||||||||||||
Net Investment Income | 0.32 | 0.31 | 0.31 | 0.34 | 0.37 | |||||||||||||||
Net Realized and Unrealized Gains/(Losses) on Securities | (0.16 | ) | 0.24 | (0.30 | ) | 0.06 | 0.53 | |||||||||||||
Total Operations | $ | 0.16 | $ | 0.55 | $ | 0.01 | $ | 0.40 | $ | 0.90 | ||||||||||
Distributions: | ||||||||||||||||||||
Net Investment Income | (0.32 | ) | (0.31 | ) | (0.31 | ) | (0.34 | ) | (0.38 | ) | ||||||||||
Return of Capital | — | — | 0.00 | (a) | 0.00 | (a) | — | |||||||||||||
Net Realized Capital Gains | (0.01 | ) | (0.01 | ) | — | (0.02 | ) | (0.03 | ) | |||||||||||
Total Distributions | $ | (0.33 | ) | $ | (0.32 | ) | $ | (0.31 | ) | $ | (0.36 | ) | $ | (0.41 | ) | |||||
Net Asset Value, End of Year | $ | 17.12 | $ | 17.29 | $ | 17.06 | $ | 17.36 | $ | 17.32 | ||||||||||
Total Return(b) | 0.90 | % | 3.25 | % | 0.05 | % | 2.34 | % | 5.41% | |||||||||||
Net Assets, End of Year (Millions) | $ | 178.97 | $ | 123.92 | $ | 87.75 | $ | 66.51 | $ | 58.98 | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Ratio of Expenses to Average Net Assets | 0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | ||||||||||
Ratio of Net Investment Income to Average Net Assets | 1.94 | % | 1.85 | % | 1.85 | % | 1.98 | % | 2.19 | % | ||||||||||
Portfolio Turnover Rate | 10.45 | % | 12.49 | % | 10.05 | % | 13.31 | % | 18.24 | % |
(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. |
The accompanying notes are an integral part of these financial statements.
37
JOHNSON MUTUAL FUNDS
1) Organization
The Johnson Equity Income Fund, Johnson Opportunity 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 8 for details of the merger. The Johnson Realty Fund was liquidated and closed on October 31, 2018; see Note 9. 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 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 | |
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.”
New Accounting Pronouncement:
On August 28, 2018, FASB issued Accounting Standards Update No. 2018-13 (“ASU 2018-13”), “Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement,” which amends the fair value measurement disclosure requirements of ASC Topic 820, “Fair Value Measurement” (“ASC 820”). ASU 2018-13 includes new, eliminated, and modified disclosure requirements for ASC 820. In addition, ASU 2018-13 clarifies that materiality is an appropriate consideration for entities when evaluating disclosure requirements. ASU 2018-13 is effective for all entities for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted and the Funds have adopted ASU 2018-13 with these financial statements.
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 (a portion of which may be reclaimable) 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.
38
2) Significant Accounting Policies, continued
Federal Income Tax:
The Funds have qualified and intend to continue to qualify as a regulated investment company under the Internal Revenue Code of 1986, as amended (the “Code”). Qualification generally will relieve the Fund of liability for federal income taxes to the extent is net investment income and net realized capital gains are distributed in accordance with the Code.
In order to avoid imposition of a federal excise tax applicable to regulated investment companies, it is also the Funds’ intention to declare and pay as dividends in each calendar year at least 98% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the 12 months ended December 31, 2018 for the Opportunity, Fixed Income and Municipal Income Funds, and the 12 months ended October 31, 2018 for the Equity Income and International Funds) plus undistributed amounts from prior years.
The following information is computed on a tax basis for each item as of December 31, 2018:
Equity Income | Opportunity | International | Fixed Income | Municipal Income | ||||||||||||||||
Cost of Portfolio Investments | $ | 246,807,464 | $ | 66,055,829 | $ | 16,323,802 | $ | 624,492,358 | $ | 176,756,399 | ||||||||||
Gross unrealized appreciation | 43,481,538 | 5,346,936 | 3,266,656 | 4,969,580 | 1,680,516 | |||||||||||||||
Gross unrealized depreciation | (25,916,306 | ) | (9,058,324 | ) | (1,675,248 | ) | (9,828,012 | ) | (759,860 | ) | ||||||||||
Net unrealized appreciation/(depreciation) | 17,565,232 | (3,711,388 | ) | 1,591,408 | (4,858,432 | ) | 920,656 | |||||||||||||
Undistributed ordinary income | — | — | 882 | 3,297 | — | |||||||||||||||
Undistributed long-term capital gains | 15,833 | 14,177 | — | — | — | |||||||||||||||
Other Accumulated Losses | (180,796 | ) | — | (448,722 | ) | (889,115 | ) | — | ||||||||||||
Accumulated Earnings/(Deficits) | $ | 17,400,269 | $ | (3,697,211 | ) | $ | 1,143,568 | $ | (5,744,250 | ) | $ | 920,656 |
The difference between the federal income tax cost and the financial statement cost of the Funds’ portfolio investments is due to certain timing differences in the recognition of capital gains and losses under income tax regulations and GAAP. These timing differences are temporary in nature and are due to the tax deferral of losses on wash sales, and un-reversed Passive Foreign Investment Company inclusions. Also, as of December 31, 2018, the Equity Income Fund deferred post October losses of $180,796; and the International Fund deferred late year ordinary losses of $72,875.
As of December 31, 2018, 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, which are not subject to expiration, are as follows:
Indefinite Long-Term | Indefinite Short-Term | Total Capital Loss Carryover | ||||||||||
Johnson International Fund | $ | 225,416 | $ | 150,431 | $ | 375,847 | ||||||
Fixed Income Fund | 577,029 | 312,086 | 889,115 |
For the year ended December 31, 2018, the International Fund utilized prior year capital loss carryovers of $63,885.
The Funds recognize the tax benefits or expenses of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has reviewed the tax positions taken on Federal income tax returns for all open tax years (generally three years) and has concluded that no provision for unrecognized tax benefits or expenses is required in these financial statements. The Funds identify its major tax jurisdictions as U.S. Federal and certain State tax authorities. The Funds are not aware of any tax positions for which it is reasonably likely that the total amounts of unrecognized tax benefits or expenses will change materially in the next twelve months. The Funds recognize interest and penalties, if any, related to unrecognized tax expenses as income tax expense in the Statement of Operations. During the year ended December 31, 2018, the Funds did not incur any interest or penalties.
39
2) Significant Accounting Policies, continued
Distributions:
Distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date. The 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, 2018, the Funds made the following reclassifications to increase (decrease) the components of the net assets:
Paid in Capital | Accumulated Earnings | |||||||
Equity Income Fund | $ | 4 | $ | (4 | ) | |||
Opportunity Fund | — | — | ||||||
International Fund | — | — | ||||||
Fixed Income Fund | — | — | ||||||
Municipal Income Fund | (16,469 | ) | 16,469 |
Reasons for the reclassification of components of net assets are attributable to distribution re-designation for return of capital distributions.
The tax character of the distributions paid, as of December 31, 2018, 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 | 2017 | $ | 5,965,055 | $ | — | $ | 8,653,497 | $ | — | $ | 14,618,554 | |||||||||||||
2018 | 5,920,630 | — | 16,143,619 | — | 22,064,249 | |||||||||||||||||||
Johnson Opportunity Fund | 2017 | 1,009,120 | — | 4,659,681 | — | 5,668,801 | ||||||||||||||||||
2018 | 480,234 | — | 3,532,076 | — | 4,012,310 | |||||||||||||||||||
Johnson International Fund | 2017 | 236,839 | — | — | 18,694 | 255,533 | ||||||||||||||||||
2018 | 440,863 | — | — | — | 440,863 | |||||||||||||||||||
Johnson Fixed Income Fund | 2017 | 6,824,138 | — | 837,298 | — | 7,661,436 | ||||||||||||||||||
2018 | 11,654,323 | — | 5,435 | — | 11,659,758 | |||||||||||||||||||
Johnson Municipal Income Fund | 2017 | — | 1,864,578 | 58,804 | 12,185 | 1,935,567 | ||||||||||||||||||
2018 | — | 2,937,619 | 62,706 | — | 3,000,325 |
*Short-Term Capital Gains were combined with Ordinary Income, as they are taxed at the Ordinary Income tax rate.
3) Security Valuation and Transactions
The Funds utilize various methods to measure the fair value of their investments on a recurring basis. The Funds’ portfolio securities are valued as of the close of business of the regular session of the New York Stock Exchange (normally 4:00 p.m., Eastern time).
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
40
3) Security Valuation and Transactions, continued
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 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.
Certificates of Deposit. Certificates of Deposit are generally valued at prices obtained from pricing vendors. Certificates of Deposit which are traded on the open market are normally valued using a market approach valuation technique that incorporates observable market data such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued principally using dealer quotations. Certificates of Deposit are categorized in Level 2 of the fair value hierarchy.
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.
41
3) Security Valuation and Transactions, continued
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.
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 December 31, 2018:
Equity Income Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks* | $ | 267,558,601 | $ | — | $ | — | $ | 267,558,601 | ||||||||
Cash Equivalents | 5,881,314 | — | — | 5,881,314 | ||||||||||||
Total | $ | 273,439,915 | $ | — | $ | — | $ | 273,439,915 |
Opportunity Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Common Stocks* | $ | 61,687,179 | $ | — | $ | — | $ | 61,687,179 | ||||||||
Cash Equivalents | 657,262 | — | — | 657,262 | ||||||||||||
Total | $ | 62,344,441 | $ | — | $ | — | $ | 62,344,441 |
International Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Preferred Stocks | $ | 105,567 | $ | — | $ | — | $ | 105,567 | ||||||||
Common Stocks* | 16,752,190 | $ | — | $ | — | 16,752,190 | ||||||||||
Cash Equivalents | 1,057,452 | — | — | 1,057,452 | ||||||||||||
Total | $ | 17,915,209 | $ | — | $ | — | $ | 17,915,209 |
Fixed Income Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Corporate Bonds* | $ | — | $ | 294,650,964 | $ | — | $ | 294,650,964 | ||||||||
Certificates of Deposit | — | 248,288 | — | 248,288 | ||||||||||||
U.S. Government Treasury Obligations | — | 122,210,041 | — | 122,210,041 | ||||||||||||
U.S. Government Agency Obligations | — | 44,021,309 | — | 44,021,309 | ||||||||||||
U.S. Government Agency Obligations – Mortgage-Backed | — | 126,058,259 | — | 126,058,259 | ||||||||||||
Taxable Municipal Bonds | — | 23,402,416 | — | 23,402,416 | ||||||||||||
Preferred Stocks | 6,317,505 | — | — | 6,317,505 | ||||||||||||
Cash Equivalents | 2,725,144 | — | — | 2,725,144 | ||||||||||||
Total | $ | 9,042,649 | $ | 610,591,277 | $ | — | $ | 619,633,926 |
42
3) Security Valuation and Transactions, continued
Municipal Income Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Municipal Bonds* | $ | — | $ | 174,485,884 | $ | — | $ | 174,485,884 | ||||||||
Cash Equivalents | 3,191,171 | — | — | 3,191,171 | ||||||||||||
Total | $ | 3,191,171 | $ | 174,485,884 | $ | — | $ | 177,677,055 |
* | 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.
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 year ended December 31, 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 year ended December 31, 2018, as indicated below.
Fund | Fee | Management Fee | Payable as of December 31, 2018 | |||||||||
Equity Income Fund | 1.00 | % | $ | 2,558,002 | $ | 238,811 | ||||||
Opportunity Fund | 1.00 | % | 776,647 | 60,198 | ||||||||
International Fund | 1.00 | % | 184,238 | 15,171 | ||||||||
Fixed Income Fund | 0.85 | % | 4,343,739 | 442,353 | ||||||||
Municipal Income Fund | 0.65 | % | 979,432 | 97,308 |
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 $48,000 for the year ended December 31, 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 nine Funds: Johnson Equity Income Fund, Johnson Opportunity 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 December 31, 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 | 66.26 | % | ||||||||||
Opportunity Fund | 74.79 | % | ||||||||||
International Fund | 35.71 | % | ||||||||||
Fixed Income Fund | 91.75 | % | ||||||||||
Municipal Income Fund | 97.39 | % |
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.
43
6) Purchases and Sales of Securities
From January 1, 2018 through December 31, 2018, purchases and sales of investment securities aggregated:
Fund | Investment Securities Other Than Short Term Investments and U.S. Government Obligations | U.S. Government Obligations | ||||||||||||||
Purchases | Sales | Purchases | Sales | |||||||||||||
Johnson Equity Income Fund | $ | 110,337,405 | $ | 75,116,329 | $ | — | $ | — | ||||||||
Johnson Opportunity Fund | 61,196,819 | 45,268,250 | — | — | ||||||||||||
Johnson International Fund | 3,015,552 | 1,212,728 | — | — | ||||||||||||
Johnson Fixed Income Fund | 237,816,365 | 69,365,711 | 96,034,663 | 41,030,362 | ||||||||||||
Johnson Municipal Income Fund | 63,577,389 | 14,113,668 | — | — |
7) 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.
8) 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 $209,264,335, and $49,563,951, respectively. The combined net assets immediately after the acquisition were $258,827,911 for 10,382,516 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 year ended December 31, 2018 are as follows:
Net investment income | $ | 3,250,355 | ||
Net realized gain (loss) on investment transactions | 20,938,106 | |||
Net change in unrealized appreciation (depreciation) on investments | (23,085,335 | ) | ||
Net increase (decrease) in net assets resulting from operations | $ | 1,103,126 |
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.
9) Liquidation of the Realty Fund
The Board of the Trust voted to liquidate the Johnson Realty Fund on August 1, 2018. This liquidation was carefully considered by the Board and came as a recommendation by the Adviser. After an extensive review of the Fund, the Board believed it to be in the best interest of the shareholders to liquidate the Fund. The Fund had not been able to achieve a significant enough size to provide the necessary scale for an efficient operating structure of the Fund.
44
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 June 30, 2018 and held through December 31, 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 June 30, 2018 | Ending Account Value December 31, 2018 | Expenses Paid During Period* July 1, 2018 – December 31, 2018 | ||||||||||
Johnson Equity Income Fund | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 946.03 | $ | 4.77 | ||||||
Hypothetical Return | $ | 1,000.00 | $ | 1,020.16 | $ | 5.14 | ||||||
Johnson Opportunity Fund | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 893.40 | $ | 4.50 | ||||||
Hypothetical Return | $ | 1,000.00 | $ | 1,020.16 | $ | 5.14 | ||||||
Johnson International Fund | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 949.03 | $ | 4.78 | ||||||
Hypothetical Return | $ | 1,000.00 | $ | 1,020.16 | $ | 5.14 | ||||||
Johnson Fixed Income Fund | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 1,000.61 | $ | 4.29 | ||||||
Hypothetical Return | $ | 1,000.00 | $ | 1,020.92 | $ | 4.37 | ||||||
Johnson Municipal Income Fund | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 1,005.28 | $ | 3.29 | ||||||
Hypothetical Return | $ | 1,000.00 | $ | 1,021.93 | $ | 3.35 |
* | Expenses are equal to the Fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). For the Equity Income, Opportunity, 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%. |
45
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
46
To the Shareholders and Board of Trustees of
Johnson Mutual Funds Trust
We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of Johnson Equity Income Fund, Johnson Opportunity Fund, Johnson International Fund, Johnson Fixed Income Fund, and Johnson Municipal Income Fund (the “Funds”), each a series of Johnson Mutual Funds Trust, as of December 31, 2018, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, including the related notes, and the financial highlights for each of the five years in the period then ended (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of December 31, 2018, and the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits include performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and confirmation of securities owned as of December 31, 2018, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. Our audits also include evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the Funds’ auditor since 2004.
/s/ COHEN & COMPANY, LTD.
Cleveland, Ohio
March 1, 2019
47
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. | 9 | None | |||||
Independent Trustees | ||||||||||
Ronald H. McSwain (76) 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 | 9 | None | |||||
John R. Green (76) 3777 West Fork Rd. Cincinnati, OH 45247 | Trustee | Since 2006 | Retired from The Procter & Gamble Company | 9 | None | |||||
James J. Berrens (53) 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 | 9 | None | |||||
Dr. Jeri B. Ricketts (61) 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. | 9 | None |
48
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 (48) 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 (60) 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. | N/A | N/A | |||||
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 | N/A | N/A | |||||
Jennifer J. Kelhoffer (47) 3777 West Fork Road Cincinnati, Ohio 45247 | Secretary | Since 2007 | Compliance Associate for the Adviser since March 2006 | N/A | N/A |
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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, OH 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
Annual Report
December 31, 2018
t | Johnson Institutional Short Duration Bond Fund |
t | Johnson Institutional Intermediate Bond Fund |
t | Johnson Institutional Core Bond Fund |
t | Johnson Enhanced Return Fund |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by contacting the Fund at 1-800-541-0170 or, if you own these shares through a financial intermediary, by contacting your financial intermediary.
You may elect to receive all future reports in paper free of charge. You can inform the Fund that you wish to continue receiving paper copies of your shareholder reports by contacting the Fund at 1-800-541-0170. If you own shares through a financial intermediary, you may contact your financial intermediary or follow instructions included with this document to elect to continue to receive paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with the fund complex or at your financial intermediary.
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 | 5 | |||
Institutional Core Bond Fund | 7 | |||
Enhanced Return Fund | 9 | |||
Portfolio of Investments | ||||
Institutional Short Duration Bond Fund | 10 | |||
Institutional Intermediate Bond Fund | 13 | |||
Institutional Core Bond Fund | 16 | |||
Enhanced Return Fund | 20 | |||
Statements of Assets and Liabilities | 23 | |||
Statements of Operations | 24 | |||
Statements of Changes in Net Assets | 25 | |||
Financial Highlights | ||||
Institutional Short Duration Bond Fund | 26 | |||
Institutional Intermediate Bond Fund | 28 | |||
Institutional Core Bond Fund | 30 | |||
Enhanced Return Fund | 32 | |||
Notes to the Financial Statements | 33 | |||
Disclosure of Expenses | 42 | |||
Additional Information | 43 | |||
Report of Independent Registered Public Accounting Firm | 44 | |||
Trustees and Officers Table | 45 | |||
Trustees and Officers, Transfer Agent and Fund Accountant, Custodian, Independent Registered Public Accounting Firm, Legal Counsel | Back Page |
Dear Shareholder:
We are pleased to present you with the Johnson Mutual Funds’ December 31, 2018 Annual Report. On the following pages, we have provided commentary on the performance of each of the Funds in 2018 as well as the relative performance compared to each Fund’s benchmark index.
The remainder of the report provides the holdings of each Johnson Mutual Fund as well as other financial data and notes.
Review of Markets
Stocks ended 2018 with a resounding thud, dragging returns from peaks of double-digit gains into negative territory for the first time since 2008. The S&P 500 fell nearly 7% in October, and November’s 2% gain was followed by the worst December since 1946, with a loss of 9%. The full-year losses for the S&P 500 and the Dow Jones Industrial Average were still in the low-single digits thanks to gains in the first nine months. The numbers would have been worse were it not for a record-day on December 26th. The Dow notched its first-ever 1,000-point daily gain, boosting the index over 5% in a single day. The final week of the year added more than 7% to the index.
The fourth-quarter weakness was broad. Stocks fell around the globe, especially those of tech companies. Tech experienced a massive reversal after leading the market higher through September. Earlier gains helped it finish third among sectors for the full year, behind health care and utilities stocks. Cyclical stocks like energy and materials were also big losers.
Mid cap and small cap stocks were hit even harder than large cap. The Russell 2000 Index of small-cap U.S. stocks fell into bear market territory, losing more than 20% from the peak. International stocks fared even worse than the U.S., especially those of emerging markets.
For the full year, bonds were generally flat. Typically bonds would provide positive returns in a year when stocks are negative. The first nine months brought rising interest rates, which left most indices in negative territory coming into the fourth quarter. The stock market selloff led to positive returns for bonds in the fourth quarter, bringing the full-year total returns roughly to even. Municipal bonds finished with slightly positive gains for the full year.
Markets at Odds with Fundamentals
2018 will be remembered as a year when market behavior was out of step with the underlying fundamentals. The volatility spike in the fourth quarter was largely a function of a shift in investor sentiment as opposed to declines in the actual data. While the global economy is showing some signs of slowing, there is little evidence that a global recession is imminent. This is particularly true in the U.S. economy. GDP rose at the fastest pace since 2011, and economic readings are still healthy for the most part. Corporate earnings per share also grew at the fastest pace since 2011, with revenues and margins both exceeding expectations throughout the year. The divergence of market prices from earnings led to a steep drop in valuation. The price-to-earnings (PE) ratio based on next-twelve-months earnings forecasts finished 2017 at 20.0, but fell to 15.4 by the end of 2018. This divergence between prices and fundamentals is a sign of weakening investor optimism about the outlook for 2019. Investors fear the best may be behind us for the economy and stocks. At the same time, this steep drop in valuations creates room for additional gains in 2019 should fundamentals stabilize or resume their upward trend.
Investors Focused on Shifts in Policy
Adding to the concern are several shifts in the policy backdrop. The passage of tax reform in late 2017 gave a one-time boost to corporate earnings growth numbers heading into 2018. With a full year behind us, the bar will be higher for corporations to grow their earnings in the year ahead. Analysts are still predicting growth, but the rate of expansion is expected to be lower than 2018.
Fed commentary exacerbated the volatility in late 2018, as investors were on edge regarding monetary policy. Central banks worldwide have been withdrawing stimulus, and attempting to do so without causing a hard landing for the economy. The Fed raised its benchmark rate several times in 2018, but late in the year backed off some of its earlier hawkish commentary regarding 2019. This was a main reason the market leapt higher in the final week of trading.
Meanwhile, the ongoing trade negotiations continue. They have produced little in the way of landmark agreements, but the concern around this issue has decreased as both sides have shown more willingness to bend. U.S. and Chinese leaders resumed talks in the first week of the New Year.
The U.S. political drama has also picked up. The Democrats won back the House in November, and since then have locked horns with President Trump. The federal government partially shut down after a dispute over funding a border wall prevented passage of a budget bill to fund the
1
Letter from the Fund President: December 31, 2018
government. With Congress split, 2019 is unlikely to produce significant policy shifts, and attention is turning to the 2020 presidential election. Divided government has often proved beneficial to stocks, but political forces are unlikely to be a major driver of returns in 2019 relative to economic and earnings growth.
We want you to know how much we appreciate the confidence you have placed in us for your investment needs. As always, please feel free to call us at (513) 661-3100 or (800) 541-0170 with your comments or questions. Thank you.
Sincerely,
Jason Jackman, President
2
The Johnson Institutional Short Duration Bond Fund provided a total return of 1.16% during 2018, compared to a 1.63% return for the Bank of America/Merrill Lynch 1 – 3 Year US Corporate & Government Index.
Short duration bond yields began the year at somewhat elevated levels and continued to rise as solid domestic economic growth and steady inflation enabled the Federal Reserve (the “Fed”) to continue tightening monetary policy. The Fed enacted a total of four 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 combined effect of monetary policy tightening caused interest rates to peak early in the fourth quarter. The Fund has maintained a duration neutral relative to its benchmark, which had 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, as 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 more than shorter dated credit spreads which detracted from performance. While the Fund’s overweight to corporate bonds was a headwind to performance relative to its benchmark this year, its focus on high quality credits with lower spread volatility was helpful. More than 60% of the Fund’s bond allocation is to investment-grade rated corporate securities which is greater than the Fund’s benchmark index and a key reason why the yield is 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 next year we expect the pace of Fed tightening to slow significantly. Economic growth is likely to soften some, as the impact of last year’s fiscal stimulus package begins to fade. Global economic growth is showing signs of slowing as well, which may pressure business to cut back on capital investment. The threat of implementing additional tariffs may also harm business confidence. Despite these economic headwinds, the consumer should continue to benefit from lower taxes, rising wages, and a strong labor market. Overall, the economic backdrop is consistent with current levels of credit spreads and the amount of tightening from current levels is likely to be somewhat limited. With the Fed Funds rate now quite close to the Fed’s own estimate of the long run neutral rate, further meaningful upside in interest rates is unlikely. As such, the Fund maintains its duration neutral to that of its benchmark. Finally, we do not anticipate meaningful upward pressure on short term bond yields, leading to a slightly better total return outlook as rising rates have improved the Fund’s yield over time.
Performance Information
Class I Shares
Average Annual Total Returns as of December 31, 2018 | ||||||||
Johnson Institutional Short Duration Bond Fund – Class I Shares | B of A/ML 1 – 3 Year US Corp/Govt Index | |||||||
One Year | 1.16 | % | 1.63 | % | ||||
Five Years | 1.30 | % | 1.04 | % | ||||
Ten Years | 2.06 | % | 1.56 | % |
3
Performance Information
Class F Shares
Average Annual Total Returns as of December 31, 2018 | ||||||||
Johnson Institutional Short Duration Bond Fund – Class F Shares(a) | B of A/ML 1 – 3 Year US Corp/Govt Index | |||||||
Since Inception | 1.37 | % | 1.96 | % |
Commencement of operations was May 1, 2018.
Portfolio Information
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. As of the Fund’s most recent prospectus dated May 1, 2018, the Fund’s total operating expense ratio was 0.26% (Class I shares) and 0.41% (Class F shares). 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. The Fund’s performance is after all fees and expenses, whereas neither Index incurs fees or expenses. The Bank of America/Merrill Lynch 1 – 3 Year US Corporate & Government Index is the established benchmark. The total returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions of the redemption of Fund shares. 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 Intermediate Bond Fund provided a total return of 0.42% during 2018, compared to a 0.88% return for the Bloomberg Barclays Capital Intermediate Government Credit Index.
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 (the “Fed”) to continue tightening monetary policy. The Fed enacted a total of four 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 combined effect of monetary policy tightening caused interest rates to peak early in the fourth quarter. As a result, the Fund shifted its duration towards a more neutral stance relative to the benchmark. This was beneficial to the Fund’s performance, as concerns about slowing global growth and stock market volatility pushed bond yields lower to end the year.
Credit spreads began the year at tight levels after narrowing consistently throughout 2017. Spreads began to widen in February, however, as 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 to long maturity corporate bonds. While the Fund’s overweight to corporate bonds was a headwind to performance relative to its benchmark this year, its focus on high quality credits with lower spread volatility was helpful. More than half of the Fund’s bond allocation is to investment-grade rated corporate securities which is greater than the Fund’s benchmark index and a key reason why the yield is 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 next year we expect the pace of Fed tightening to slow significantly. Economic growth is likely to soften some, as the impact of last year’s fiscal stimulus package begins to fade. Global economic growth is showing signs of slowing as well, which may pressure business to cut back on capital investment. The threat of implementing additional tariffs may also harm business confidence. Despite these economic headwinds, the consumer should continue to benefit from lower taxes, rising wages, and a strong labor market. Overall, the economic backdrop is consistent with current levels of credit spreads and the amount of tightening from current levels is likely to be somewhat limited. With the Fed Funds rate now quite close to the Fed’s own estimate of the long run neutral rate, further meaningful upside in interest rates is unlikely. As such, the Fund has shifted its duration to a more neutral stance to that of its benchmark. Inflation expectations remain below historical averages, and the Fund’s position in Treasury Inflation Protected Securities will benefit if inflation rebounds. Finally, we do not anticipate meaningful upward pressure on short term bond yields, leading to a slightly better total return outlook as rising rates have improved the Fund’s yield over time.
Performance Information
Class I Shares
Average Annual Total Returns as of December 31, 2018 | ||||||||
Johnson Institutional Intermediate Bond Fund – Class I Shares | Bloomberg Barclays Capital Intermediate Govt Credit Index | |||||||
One Year | 0.42 | % | 0.88 | % | ||||
Five Years | 2.39 | % | 1.86 | % | ||||
Ten Years | 3.40 | % | 2.90 | % |
5
Performance Information
Class F Shares
Average Annual Total Returns as of December 31, 2018 | ||||||||
Johnson Institutional Intermediate Bond Fund – Class F Shares | Bloomberg Barclays Capital Intermediate Govt Credit Index | |||||||
Since Inception(b) | 1.72 | % | 2.55 | % |
Commencement of operations was May 1, 2018.
Portfolio Information
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. As of the Fund’s most recent prospectus dated May 1, 2018, the Fund’s total operating expense ratio was 0.26% (Class I shares) and 0.41% (Class F shares). 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. The Fund’s performance is after all fees and expenses, whereas neither Index incurs fees nor expenses. The Bloomberg Barclays Intermediate Government Credit Index is the established benchmark. The total returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions of the redemption of Fund shares. 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.
6
The Johnson Institutional Core Bond Fund provided a total return of 0.13% during 2018, compared to a 0.01% return for the Bloomberg Barclays Capital Aggregate Index.
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 (the “Fed”) to continue tightening monetary policy. The Fed enacted a total of four 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 combined effect of monetary policy tightening caused interest rates to peak early in the fourth quarter. As a result, the Fund shifted its duration towards a more neutral stance relative to the benchmark. This was beneficial to the Fund’s performance, as concerns about slowing global growth and stock market volatility pushed bond yields lower to end the year.
Credit spreads began the year at tight levels after narrowing consistently throughout 2017. Spreads began to widen in February, however, as 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 to long maturity corporate bonds and contributed to the Fund’s outperformance. While the Fund maintained an overweight to corporate bonds relative to its benchmark this year, its focus on high quality credits with lower spread volatility was helpful. More than half of the Fund’s bond allocation is to investment-grade rated corporate securities which is greater than the Fund’s benchmark index and a key reason why the yield is 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 next year we expect the pace of Fed tightening to slow significantly. Economic growth is likely to soften some, as the impact of last year’s fiscal stimulus package begins to fade. Global economic growth is showing signs of slowing as well, which may pressure business to cut back on capital investment. The threat of implementing additional tariffs may also harm business confidence. Despite these economic headwinds, the consumer should continue to benefit from lower taxes, rising wages, and a strong labor market. Overall, the economic backdrop is consistent with current levels of credit spreads and the amount of tightening from current levels is likely to be somewhat limited. With the Fed Funds rate now quite close to the Fed’s own estimate of the long run neutral rate, further meaningful upside in interest rates is unlikely. As such, the Fund has shifted its duration to a more neutral stance to that of its benchmark. Inflation expectations remain below historical averages, and the Fund’s position in Treasury Inflation Protected Securities will benefit if inflation rebounds. Finally, we do not anticipate meaningful upward pressure on short term bond yields, leading to a slightly better total return outlook as rising rates have improved the Fund’s yield over time.
Performance Information
Class I Shares
Average Annual Total Returns as of December 31, 2018 | ||||||||
Johnson Institutional Core Bond Fund – Class I Shares(a) | Bloomberg Barclays Capital Aggregate Index | |||||||
One Year | 0.13 | % | 0.01 | % | ||||
Five Years | 3.07 | % | �� | 2.52 | % | |||
Ten Years | 4.12 | % | 3.48 | % |
7
Performance Information
Class F Shares
Average Annual Total Returns as of December 31, 2018 | ||||||||
Johnson Institutional Core Bond Fund – Class F Shares | Bloomberg Barclays Capital Aggregate Index | |||||||
Since Inception | 2.14 | % | 2.49 | % |
Commencement of operations was May 1, 2018
Portfolio Information
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. As of the Fund’s most recent prospectus dated May 1, 2017, the Fund’s total operating expense ratio was 0.25% (Class I shares) and 0.40% (Class F shares). 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. The Fund’s performance is after all fees and expenses, whereas neither Index incurs fees or expenses. The Bloomberg Barclays Capital Aggregate Index is the established benchmark. The total returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions of the redemption of Fund shares. 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.
8
The total return for the Johnson Enhanced Return Fund in 2018 was -6.06% compared to -4.38% for the S&P 500 Index. 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 future contracts in seeking to replicate the S&P 500 Index and a bond portfolio to enhance the Fund’s returns.
In 2018, the S&P 500 Index posted its first calendar-year loss since 2008. Through mid-September, markets had gained 11% before sentiment shifted and volatility returned in the fourth quarter, with stock markets dropping 19% from their peak before recovering nearly 7% during the final week of trading. Returns were mixed by sector, with Health Care and Utility stocks posting mid-single digit gains and cyclical sectors such as Energy and Materials posting double-digit losses. Meanwhile, the Federal Reserve (the “Fed”) enacted a total of four 25 basis point rate hikes and continued to slow the amount of securities it reinvested from its balance sheet. Although incoming economic and inflationary data may influence their outlook, the Fed anticipates further tightening in monetary policy, albeit at a very gradual pace. 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 2018. The Fund continues to have a yield advantage over the cost of carry in the futures contracts due to increasingly attractive corporate yield spreads. More than half of the Fund’s bond allocation is to 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 next year we expect the pace of Fed tightening to slow significantly. Economic growth is likely to soften some, as the impact of last year’s fiscal stimulus package begins to fade. Global economic growth is showing signs of slowing as well, which may pressure businesses to cut back on capital investment. The threat of implementing additional tariffs may also harm business confidence. Despite these economic headwinds, the consumer should continue to benefit from lower taxes, rising wages, and a strong labor market. Overall, the economic backdrop is consistent with current levels of credit spreads and the amount of tightening from current levels is likely to be somewhat limited. With the Fed Funds rate now quite close to the Fed’s own estimate of the long run neutral rate, further meaningful upside in interest rates is unlikely. As such, the Fund has extended duration modestly in the bond portion of the portfolio, which helps to maintain the Fund’s yield advantage and will be additive to performance should interest rates decline.
Average Annual Total Returns as of December 31, 2018 | ||||||||
Enhanced Return Fund | S&P 500 Index | |||||||
One Year | -6.06 | % | -4.38 | % | ||||
Five Years | 8.34 | % | 8.49 | % | ||||
Ten Years | 14.09 | % | 13.12 | % |
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. As of the Fund’s most recent prospectus dated May 1, 2018, the Fund’s total operating expense ratio was 0.36%. 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. The Fund’s performance is after all fees and expenses, whereas the Index does not incur fees or expenses. 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.
9
Fixed Income Securities – Bonds | Face Value | Fair Value | ||||||
Corporate Bonds: | ||||||||
American Express Credit, 2.250% Due 05/05/2021 | 2,750,000 | $ | 2,691,077 | |||||
Bank of America Corp., 3.300% Due 01/11/2023 | 3,100,000 | 3,053,063 | ||||||
AON Corp., 5.000% Due 09/30/2020 | 2,575,000 | 2,650,119 | ||||||
BB&T Corp., 5.250% Due 11/01/2019 | 2,400,000 | 2,440,117 | ||||||
Chubb INA Holdings Inc., 2.300% Due 11/03/2020 | 2,800,000 | 2,759,956 | ||||||
Fifth Third Bancorp, 4.300% Due 01/16/2024 | 2,300,000 | 2,326,832 | ||||||
Huntington Bancshares, 2.300% Due 01/14/2022 | 2,500,000 | 2,413,775 | ||||||
JP Morgan Chase & Co., 3.375% Due 05/01/2023 | 1,000,000 | 978,131 | ||||||
JP Morgan Chase & Co., 4.500% Due 01/24/2022 | 2,000,000 | 2,060,771 | ||||||
Keycorp, 5.100% Due 03/24/2021 | 2,500,000 | 2,592,878 | ||||||
Morgan Stanley, 5.500% Due 07/28/2021 | 2,500,000 | 2,619,962 | ||||||
MUFG Union Bank NA, 2.250% Due 05/06/2019 | 1,745,000 | 1,739,420 | ||||||
PNC Bank, 2.700% Due 11/01/2022 | 2,900,000 | 2,818,075 | ||||||
Prudential Financial Inc., 5.375% Due 06/21/2020 | 750,000 | 772,845 | ||||||
Suntrust Banks Inc., 2.900% Due 03/03/2021 | 2,500,000 | 2,478,374 | ||||||
Travelers Companies Inc., 5.900% Due 06/02/2019 | 3,000,000 | 3,037,566 | ||||||
Wells Fargo & Co., 3.450% Due 02/13/2023 | 2,800,000 | 2,741,250 | ||||||
28.3% – Total Finance | $ | 40,174,211 | ||||||
AT&T Inc., 3.600% Due 02/17/2023 | 2,400,000 | 2,385,128 | ||||||
BP AMI Leasing Inc.(a), 5.523% Due 05/08/2019 | 1,000,000 | 1,008,221 | ||||||
BP Capital Markets PLC, 4.750% Due 03/10/2019 | 1,965,000 | 1,970,976 | ||||||
Burlington Northern Santa Fe, 4.700% Due 10/01/2019 | 3,000,000 | 3,036,564 | ||||||
Chevron Corp. (3 month LIBOR + 0.950%)*, 3.579% Due 05/16/2021 | 1,000,000 | 1,010,748 | ||||||
CVS Health Corp., 4.125% Due 05/15/2021 | 2,477,000 | 2,506,325 | ||||||
Eaton Electric Holdings, 3.875% Due 12/15/2020 | 2,409,000 | 2,429,879 |
Fixed Income Securities – Bonds | Face Value | Fair Value | ||||||
Emerson Electric Co., 4.250% Due 11/15/2020 | 1,200,000 | $ | 1,224,280 | |||||
General Electric Capital Corp. (3 month LIBOR + 1.000%)*, 3.788% Due 03/15/2023 | 3,500,000 | 3,157,182 | ||||||
Johnson Controls International PLC, 3.750% Due 12/01/2021 | 1,476,000 | 1,487,420 | ||||||
Johnson Controls International PLC, 5.000% Due 03/30/2020 | 1,025,000 | 1,046,399 | ||||||
Kroger Co., 3.850% Due 08/01/2023 | 2,200,000 | 2,218,062 | ||||||
Norfolk Southern Corp., 5.900% Due 06/15/2019 | 2,500,000 | 2,526,666 | ||||||
Shell International, 4.375% Due 03/25/2020 | 2,800,000 | 2,848,297 | ||||||
Verizon Communications, 5.150% Due 09/15/2023 | 2,600,000 | 2,767,323 | ||||||
22.3% – Total Industrial | $ | 31,623,470 | ||||||
Duke Energy Corp., 5.050% Due 09/15/2019 | 2,494,000 | 2,517,053 | ||||||
Enterprise Products, 3.350% Due 03/15/2023 | 500,000 | 493,170 | ||||||
Enterprise Products, 6.500% Due 01/31/2019 | 2,000,000 | 2,004,398 | ||||||
Eversource Energy, 2.500% Due 03/15/2021 | 700,000 | 687,977 | ||||||
Eversource Energy, 2.750% Due 03/15/2022 | 1,330,000 | 1,306,924 | ||||||
Georgia Power Co., 2.850% Due 05/15/2022 | 1,600,000 | 1,571,818 | ||||||
Georgia Power Co., 4.250% Due 12/01/2019 | 1,040,000 | 1,048,049 | ||||||
Interstate Power & Light, 3.650% Due 09/01/2020 | 2,600,000 | 2,617,391 | ||||||
National Rural Utilites Corp., 1.500% Due 11/01/2019 | 1,000,000 | 986,810 | ||||||
National Rural Utilites Corp., 2.300% Due 11/15/2019 | 1,000,000 | 994,282 | ||||||
National Rural Utilites Corp., 2.350% Due 06/15/2020 | 1,000,000 | 989,800 | ||||||
Berkshire Hathaway Energy Co., 2.400% Due 02/01/2020 | 2,807,000 | 2,788,672 | ||||||
NStar, 4.500% Due 11/15/2019 | 600,000 | 605,518 | ||||||
Virginia Electric & Power Co., 5.000% Due 06/30/2019 | 2,858,000 | 2,880,004 |
The accompanying notes are an integral part of these financial statements.
10
Fixed Income Securities – Bonds | Face Value | Fair Value | ||||||
Xcel Energy Inc., 4.700% Due 05/15/2020 | 2,566,000 | $ | 2,596,649 | |||||
16.9% – Total Utilities | $ | 24,088,515 | ||||||
67.5% Total Corporate Bonds | $ | 95,886,196 | ||||||
Certificates of Deposit | ||||||||
Goldmans Sachs, 3.400% Due 10/17/2023 | 250,000 | 248,288 | ||||||
0.2% – Total For Certificates of Deposit | $ | 248,288 | ||||||
United States Government Treasury Obligations | ||||||||
Treasury Bond, 1.250% Due 04/30/2019 | 1,000,000 | 995,898 | ||||||
Treasury Note, 1.500% Due 05/31/2020 | 2,300,000 | 2,266,219 | ||||||
Treasury Note, 1.625% Due 08/31/2022 | 1,000,000 | 970,000 | ||||||
Treasury Note, 1.625% Due 03/31/2019 | 2,000,000 | 1,996,081 | ||||||
Treasury Note (TBill 13-week auction high rate + 0.033%)*, 2.513% Due 04/30/2020 | 1,800,000 | 1,799,350 | ||||||
Treasury Note (TBill 13-week auction high rate + 0.043%)*, 2.523% Due 07/30/2020 | 1,650,000 | 1,649,146 | ||||||
6.8% – Total United States Government Treasury Obligations | $ | 9,676,694 | ||||||
United States Government Agency Obligations | ||||||||
FHLMC Step-up*, 1.625% Due 08/24/2021 | 1,500,000 | 1,481,802 | ||||||
FHLMC Step-up*, 1.900% Due 11/23/2021 | 2,000,000 | 1,977,548 | ||||||
FHLMC Step-up*, 3.000% Due 06/28/2023 | 1,500,000 | 1,500,599 | ||||||
FHLMC Step-up*, 2.000% Due 05/10/2022 | 1,000,000 | 994,354 | ||||||
FHLMC Step-up*, 2.050% Due 06/21/2022 | 2,000,000 | 1,986,372 | ||||||
FHLMC Step-up*, 2.000% Due 07/12/2022 | 2,000,000 | 1,987,624 | ||||||
FHLMC Step-up*, 2.000% Due 07/18/2022 | 1,000,000 | 991,231 | ||||||
FHLMC Step-up*, 2.000% Due 07/26/2022 | 1,750,000 | 1,733,597 | ||||||
FHLMC Step-up*, 2.150% Due 10/27/2022 | 1,900,000 | 1,884,770 |
Fixed Income Securities – Bonds | Face Value | Fair Value | ||||||
FHLMC Step-up*, 2.125% Due 09/29/2022 | 2,000,000 | $ | 1,981,832 | |||||
11.6% – Total United States Government Agency Obligations | $ | 16,519,729 | ||||||
United States Government Agency Obligations – Mortgage-Backed Securities | ||||||||
FHLMC 10/1 Hybrid ARM (12 month LIBOR + 1.860%)*, 3.311% Due 04/01/2042 | 324,451 | 328,953 | ||||||
FHLMC Series 2989 Class TG, 5.000% Due 06/15/2025 | 441,338 | 453,692 | ||||||
FHLMC Series 4009 Class PA, 2.000% Due 06/15/2041 | 357,166 | 347,093 | ||||||
FHLMC Series 4017 Class MA, 3.000% Due 03/15/2041 | 355,729 | 351,442 | ||||||
FHLMC Pool G18642, 3.500% Due 04/01/2032 | 4,027,575 | 4,081,899 | ||||||
FNMA 7/1 Hybrid ARM (12 month LIBOR + 1.599%)*, 2.760% Due 02/01/2046 | 717,255 | 721,053 | ||||||
FNMA 7/1 Hybrid ARM (12 month LIBOR + 1.600%)*, 2.804% Due 12/01/2044 | 527,523 | 530,325 | ||||||
FNMA Series 2003-79 Class NJ, 5.000% Due 08/25/2023 | 268,855 | 274,831 | ||||||
FNMA Series 2013-6 Class BC, 1.500% Due 12/25/2042 | 1,071,389 | 1,044,043 | ||||||
FNMA Series 2017-30 Class G, 3.000% Due 07/25/2040 | 1,385,395 | 1,398,343 | ||||||
FNMA Pool 465973, 3.590% Due 10/01/2020 | 2,848,940 | 2,883,151 | ||||||
FNMA Pool AL6465, 3.252% Due 11/01/2023 | 907,889 | 920,890 | ||||||
FNMA Pool MA0384, 5.000% Due 04/01/2030 | 637,661 | 668,229 | ||||||
GNMA Pool 2004-95 Class QA, 4.500% Due 03/20/2034 | 25,765 | 26,213 | ||||||
GNMA Pool 726475, 4.000% Due 11/15/2024 | 166,891 | 170,915 | ||||||
10.0% – Total United States Government Agency Obligations – Mortgage-Backed Securities | $ | 14,201,072 |
The accompanying notes are an integral part of these financial statements.
11
Fixed Income Securities – Bonds | Face Value | Fair Value | ||||||
Taxable Municipal Bonds | ||||||||
Kansas Development Finance Authority Revenue, 3.491% Due 04/15/2023 | 1,400,000 | $ | 1,418,858 | |||||
1.0% – Total For Taxable Municipal Bonds | $ | 1,418,858 | ||||||
Total Fixed Income Securities 97.1% | $137,950,837 | |||||||
(Identified Cost $139,736,631) |
Cash Equivalents | Shares | Fair Value | ||||||
First American Government Obligation Fund, Class Z** | 3,087,514 | $ | 3,087,514 | |||||
Total Cash Equivalents 2.2% | $ | 3,087,514 | ||||||
(Identified Cost $3,087,514) | ||||||||
Total Portfolio Value 99.3% | $ | 141,038,351 | ||||||
(Identified Cost $142,824,145) | ||||||||
Other Assets in Excess of Liabilities 0.7% | $ | 987,188 | ||||||
Total Net Assets 100.0% | $ | 142,025,539 |
* | Variable Rate Security; the rate shown is as of December 31, 2018. |
** | Variable Rate Security; as of December 31, 2018, the 7 day annualized yield was 2.32%. |
(a) | 144a Securities. The total fair value of such securities as of December 31, 2018 was $1,008,221 and represented 0.71% of net assets. |
- | BP AMI Leasing Inc. was purchased on September 27, 2018 for $1,016,940; price on December 31, 2018 was $100.822. |
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.
12
Fixed Income Securities | Face Value | Fair Value | ||||||
Goodrich Corp., 4.875% Due 03/01/2020 | 1,000,000 | $ | 1,014,536 | |||||
Johnson Controls International PLC, 3.750% Due 12/01/2021 | 990,000 | 997,660 | ||||||
Johnson Controls International PLC, 3.900% Due 02/14/2026 | 1,000,000 | 980,709 | ||||||
Kroger Co., 3.500% Due 02/01/2026 | 2,100,000 | 1,992,205 | ||||||
Norfolk Southern Corp., 5.900% Due 06/15/2019 | 500,000 | 505,333 | ||||||
Shell International, 2.125% Due 05/11/2020 | 1,535,000 | 1,520,654 | ||||||
Shell International, 3.250% Due 05/11/2025 | 1,350,000 | 1,331,153 | ||||||
Target Corp., 2.500% Due 04/15/2026 | 2,000,000 | 1,867,208 | ||||||
Union Pacific Corp., 3.500% Due 06/08/2023 | 2,150,000 | 2,154,085 | ||||||
Verizon Communications, 4.672% Due 03/15/2055 | 1,782,000 | 1,636,409 | ||||||
16.1% – Total Industrial | $ | 22,341,239 | ||||||
Berkshire Hathaway Energy Co., 3.750% Due 11/15/2023 | 2,175,000 | 2,205,889 | ||||||
Duke Energy Corp., 5.050% Due 09/15/2019 | 620,000 | 625,731 | ||||||
Duke Energy Ohio First Mortgage, 5.450% Due 04/01/2019 | 1,000,000 | 1,004,055 | ||||||
Enterprise Products, 3.750% Due 02/15/2025 | 1,860,000 | 1,840,390 | ||||||
Eversource Energy, 2.500% Due 03/15/2021 | 1,000,000 | 982,825 | ||||||
Eversource Energy, 2.800% Due 05/01/2023 | 1,000,000 | 975,815 | ||||||
Interstate Power & Light, 3.250% Due 12/01/2024 | 1,825,000 | 1,778,541 | ||||||
Georgia Power Co., 2.000% Due 03/30/2020 | 1,300,000 | 1,278,779 | ||||||
Georgia Power Co., 2.850% Due 05/15/2022 | 1,111,000 | 1,091,431 | ||||||
National Rural Utilities Corp., 2.150% Due 02/01/2019 | 2,000,000 | 1,998,125 | ||||||
NStar, 4.500% Due 11/15/2019 | 500,000 | 504,598 | ||||||
Virginia Electric & Power, 5.000% Due 06/30/2019 | 2,000,000 | 2,015,398 | ||||||
Xcel Energy Inc., 4.700% Due 05/15/2020 | 2,000,000 | 2,023,888 | ||||||
13.2% – Total Utilities | $ | 18,325,465 | ||||||
52.8% Total Corporate Bonds | $ | 73,119,909 |
The accompanying notes are an integral part of these financial statements.
13
Fixed Income Securities | Face Value | Fair Value | ||||||
Certificates of Deposit | ||||||||
Goldmans Sachs, 3.400% Due 10/17/2023 | 250,000 | $ | 248,288 | |||||
0.2% – Total For Certificates of Deposit | $ | 248,288 | ||||||
United States Government Treasury Obligations | ||||||||
Treasury Inflation Protected Security, 1.000% Due 02/15/2046 | 1,814,257 | 1,719,859 | ||||||
Treasury Note, 1.750% Due 11/30/2019 | 8,000,000 | 7,937,187 | ||||||
Treasury Note, 2.125% Due 11/30/2023 | 7,000,000 | 6,873,672 | ||||||
Treasury Note, 2.750% Due 02/15/2028 | 7,000,000 | 7,036,094 | ||||||
Treasury Note (TBill 13-week auction high rate + 0)*, 2.480% Due 01/31/2020 | 5,000,000 | 4,997,796 | ||||||
20.6% – Total United States Government Treasury Obligations | $ | 28,564,608 | ||||||
United States Government Agency Obligations | ||||||||
FHLMC Step-up*, 1.875% Due 07/12/2021 | 2,000,000 | 1,978,442 | ||||||
FHLMC Step-up*, 2.000% Due 06/15/2022 | 1,800,000 | 1,786,815 | ||||||
FHLMC Step-up*, 2.050% Due 06/21/2022 | 3,000,000 | 2,979,558 | ||||||
FHLMC Step-up*, 2.000% Due 07/12/2022 | 3,500,000 | 3,478,342 | ||||||
7.4% – Total United States Government Agency Obligations | $ | 10,223,157 | ||||||
United States Government Agency Obligations – Mortgage Backed Securities | ||||||||
FHLMC 10/1 Hybrid ARM (12 month LIBOR + 1.860%)*, 3.311% Due 04/01/2042 | 347,626 | 352,450 | ||||||
FHLMC Pool J12635, 4.000% Due 07/01/2025 | 345,043 | 353,941 | ||||||
FHLMC Series 2985 Class GE, 5.500% Due 06/15/2025 | 113,439 | 116,478 | ||||||
FHLMC Series 3946 Class LN, 3.500% Due 04/15/2041 | 702,802 | 709,372 | ||||||
FHLMC Series 4017 Class MA, 3.000% Due 03/15/2041 | 145,196 | 143,445 | ||||||
FHLMC Series 4646 Class D, 3.500% Due 01/15/2042 | 2,931,128 | 2,979,631 |
Fixed Income Securities | Face Value | Fair Value | ||||||
FHLMC Pool G08068, 5.500% Due 07/01/2035 | 199,326 | $ | 214,956 | |||||
FHLMC Pool G18642, 3.500% Due 04/01/2032 | 2,247,949 | 2,278,269 | ||||||
FNMA 10/1 Hybrid ARM (12 month LIBOR + 1.780%)*, 3.285% Due 12/01/2041 | 268,666 | 272,908 | ||||||
FNMA 7/1 Hybrid ARM (12 month LIBOR + 1.600%)*, 2.804% Due 12/01/2044 | 541,835 | 544,714 | ||||||
FNMA Pool AA4392, 4.000% Due 04/01/2039 | 273,526 | 281,223 | ||||||
FNMA Pool AN8842, 3.320% Due 04/01/2028 | 2,500,000 | 2,489,414 | ||||||
FNMA Series 2015-37 Class BA, 3.000% Due 08/25/2044 | 1,570,793 | 1,568,710 | ||||||
FNMA Series 2016-39 Class LA, 2.500% Due 03/25/2045 | 1,088,896 | 1,067,376 | ||||||
FNMA Series 2016-99 Class TA, 3.500% Due 03/25/2036 | 857,875 | 874,006 | ||||||
FNMA Pool MA0384, 5.000% Due 04/01/2030 | 255,064 | 267,292 | ||||||
FNMA Series 2011-52 Class PC, 3.000% Due 03/25/2041 | 1,249,734 | 1,249,749 | ||||||
11.4% – Total United States Government Agency Obligations – Mortgage Backed Securities | $ | 15,763,934 | ||||||
Taxable Municipal Bonds | ||||||||
Bowling Green State University Ohio Revenue, 5.330% Due 06/01/2020 | 725,000 | 747,069 | ||||||
Florida Atlantic University Capital Improvement Revenue, 7.589% Due 07/01/2037 | 1,000,000 | 1,063,930 | ||||||
Kansas Development Finance Authority Revenue, 4.091% Due 04/15/2027 | 3,000,000 | 3,111,780 | ||||||
Kentucky Asset Liability Commission Revenue, 4.104% Due 04/01/2019 | 1,000,000 | 1,003,160 | ||||||
Kentucky Asset Liability Commission Revenue, 5.339% Due 04/01/2022 | 300,000 | 313,821 | ||||||
University of Cincinnati Ohio General Receipts Revenue, 5.117% Due 06/01/2021 | 1,435,000 | 1,487,306 | ||||||
5.6% – Total Taxable Municipal Bonds | $ | 7,727,066 | ||||||
Total Fixed Income Securities, 98.0% | $ | 135,646,962 | ||||||
(Identified Cost $137,336,970) |
Fixed Income Securities | Shares | Fair Value | ||||||
Preferred Stocks | ||||||||
Allstate Corp., 5.100% Due 01/15/2053 | 59,890 | $ | 1,427,778 | |||||
Total Preferred Stocks, 1.0% | $ | 1,427,778 | ||||||
(Identified Cost $1,446,031) | ||||||||
Cash Equivalents | ||||||||
First American Government Obligation Fund, Class Z** | 483,910 | 483,910 | ||||||
Total Cash Equivalents 0.4% | $ | 483,910 | ||||||
(Identified Cost $483,910) | ||||||||
Total Portfolio Value 99.4% | $ | 137,558,650 | ||||||
(Identified Cost $139,266,911) | ||||||||
Other Assets in Excess of Liabilities 0.6% | $ | 858,655 | ||||||
Total Net Assets 100.0% | $ | 138,417,305 |
* | Variable Rate Security; the rate shown is as of December 31, 2018. |
** | Variable Rate Security; as of December 31, 2018, the 7 day annualized yield was 2.32%. |
ARM – Adjustable Rate Mortgage
FHLB – Federal Home Loan Bank
FHLMC – Federal Home Loan Mortgage Corporation
FNMA – Federal National Mortgage Association
The accompanying notes are an integral part of these financial statements.
15
Fixed Income Securities | Face Value | Fair Value | ||||||
General Electric Co., 4.650% Due 10/17/2021 | 2,000,000 | $ | 2,005,999 | |||||
General Electric Capital Corp. (3 month LIBOR + 1.000%)*, 3.436% Due 04/15/2023 | 1,165,000 | 1,055,432 | ||||||
Georgia Power, 2.000% Due 03/30/2020 | 1,930,000 | 1,898,496 | ||||||
Georgia Power, 2.000% Due 09/08/2020 | 2,525,000 | 2,467,645 | ||||||
Johnson Controls International PLC, 3.625% Due 07/02/2024 | 1,225,000 | 1,207,130 | ||||||
Johnson Controls International PLC, 3.750% Due 12/01/2021 | 1,000,000 | 1,007,737 | ||||||
Johnson Controls International PLC, 3.900% Due 02/14/2026 | 1,000,000 | 980,708 | ||||||
Kroger Co., 4.000% Due 02/01/2024 | 150,000 | 151,269 | ||||||
Kroger Co., 3.500% Due 02/01/2026 | 3,300,000 | 3,130,608 | ||||||
Norfolk Southern Corp., 5.900% Due 06/15/2019 | 70,000 | 70,747 | ||||||
Shell International, 3.250% Due 05/11/2025 | 2,115,000 | 2,085,473 | ||||||
Union Pacific Corp., 3.500% Due 06/08/2023 | 2,800,000 | 2,805,320 | ||||||
Union Pacific Corp., 7.875% Due 01/15/2019 | 250,000 | 250,391 | ||||||
Verizon Communications, 4.672% Due 03/15/2055 | 3,379,000 | 3,102,933 | ||||||
14.3% – Total Industrial | $ | 30,944,173 | ||||||
Berkshire Hathaway Energy Co., 3.750% Due 11/15/2023 | 3,120,000 | 3,164,309 | ||||||
Duke Energy Corp., 2.650% Due 09/01/2026 | 475,000 | 431,839 | ||||||
Duke Energy Corp., 3.550% Due 09/15/2021 | 2,825,000 | 2,832,668 | ||||||
Enterprise Products, 3.350% Due 03/15/2023 | 1,640,000 | 1,617,598 | ||||||
Enterprise Products, 3.750% Due 02/15/2025 | 1,275,000 | 1,261,558 | ||||||
Eversource Energy, 2.800% Due 05/01/2023 | 2,225,000 | 2,171,187 | ||||||
Interstate Power & Light, 3.400% Due 08/15/2025 | 525,000 | 508,646 | ||||||
Interstate Power & Light, 3.650% Due 09/01/2020 | 2,575,000 | 2,592,223 | ||||||
National Rural Utilities Corp., 2.300% Due 11/15/2019 | 1,595,000 | 1,585,880 |
The accompanying notes are an integral part of these financial statements.
16
Fixed Income Securities | Face Value | Fair Value | ||||||
National Rural Utilities Corp., 3.050% Due 02/15/2022 | 100,000 | $ | 99,644 | |||||
NStar, 4.500% Due 11/15/2019 | 1,000,000 | 1,009,196 | ||||||
Virginia Electric & Power Co., 2.950% Due 01/15/2022 | 390,000 | 385,753 | ||||||
Virginia Electric & Power Co., 3.450% Due 09/01/2022 | 2,315,000 | 2,323,545 | ||||||
Xcel Energy Inc., 3.300% Due 06/01/2025 | 725,000 | 708,470 | ||||||
Xcel Energy Inc., 4.700% Due 05/15/2020 | 2,290,000 | 2,317,352 | ||||||
10.6% – Total Utilities | $ | 23,009,868 | ||||||
47.7% Total Corporate Bonds | $ | 103,525,543 | ||||||
Certificates of Deposit | ||||||||
Goldmans Sachs, 3.400% Due 10/17/2023 | 250,000 | 248,288 | ||||||
0.1% – Total For Certificates of Deposit | $ | 248,288 | ||||||
United States Government Treasury Obligations | ||||||||
Treasury Bond, 2.500% Due 02/15/2045 | 9,000,000 | 8,156,250 | ||||||
Treasury Bond, 2.750% Due 08/15/2047 | 4,100,000 | 3,882,988 | ||||||
Treasury Inflation Protected Security, 1.375% Due 02/15/2044 | 2,387,022 | 2,464,227 | ||||||
Treasury Note, 1.500% Due 05/31/2020 | 2,000,000 | 1,970,625 | ||||||
Treasury Note, 1.750% Due 11/30/2019 | 6,500,000 | 6,448,965 | ||||||
Treasury Note, 2.500% Due 05/15/2046 | 11,800,000 | 10,641,664 | ||||||
Treasury Note, 2.750% Due 02/15/2028 | 10,000,000 | 10,051,563 | ||||||
Treasury Note (TBill 13-week auction high rate + 0.033)*, 2.513% Due 04/30/2020 | 950,000 | 949,657 | ||||||
20.5% – Total United States Government Treasury Obligations | $ | 44,565,939 | ||||||
United States Government Agency Obligations | ||||||||
FHLMC Step-up*, 1.625% Due 08/24/2021 | 5,225,000 | 5,161,610 | ||||||
FHLMC Step-up*, 2.000% Due 05/10/2022 | 2,000,000 | 1,988,708 |
Fixed Income Securities | Face Value | Fair Value | ||||||
FHLMC Step-up*, 2.000% Due 07/18/2022 | 200,000 | $ | 198,246 | |||||
FHLMC Step-up*, 2.000% Due 07/26/2022 | 1,500,000 | 1,485,941 | ||||||
FHLMC Step-up*, 2.150% Due 10/27/2022 | 1,000,000 | 991,984 | ||||||
FHLMC Step-up*, 2.125% Due 09/29/2022 | 200,000 | 198,183 | ||||||
FHLMC Step-up*, 3.000% Due 06/28/2023 | 2,500,000 | 2,500,998 | ||||||
FHLMC Step-up*, 3.000% Due 08/21/2023 | 1,000,000 | 1,000,353 | ||||||
6.2% – Total United States Government Agency Obligations | $ | 13,526,023 | ||||||
United States Government Agency Obligations – Mortgage Backed Securities | ||||||||
FHLMC 10/1 Hybrid ARM (12 month LIBOR + 1.860%)*, 3.311% Due 04/01/2042 | 347,626 | 352,450 | ||||||
FHLMC Pool G01880, 5.000% Due 08/01/2035 | 87,849 | 93,244 | ||||||
FHLMC Pool G06616, 4.500% Due 12/01/2035 | 179,944 | 187,093 | ||||||
FHLMC Pool G08068, 5.500% Due 07/01/2035 | 450,649 | 485,987 | ||||||
FHLMC Pool G09921, 4.000% Due 07/01/2024 | 229,269 | 235,174 | ||||||
FHLMC Pool G13596, 4.000% Due 07/01/2024 | 867,275 | 889,531 | ||||||
FHLMC Pool G18642, 3.500% Due 04/01/2032 | 3,371,923 | 3,417,403 | ||||||
FHLMC Pool G18667, 3.500% Due 11/01/2032 | 2,471,279 | 2,504,537 | ||||||
FHLMC Series 2985 Class GE, 5.500% Due 06/15/2025 | 99,259 | 101,918 | ||||||
FHLMC Series 3946 Class LN, 3.500% Due 04/15/2041 | 702,802 | 709,372 | ||||||
FHLMC Series 4017 Class MA, 3.000% Due 03/15/2041 | 290,391 | 286,891 | ||||||
FHLMC Series 4087 Class PT, 3.000% Due 07/15/2042 | 949,202 | 949,818 | ||||||
FHLMC Series 4161 Class QA, 3.000% Due 02/15/2043 | 225,962 | 223,931 | ||||||
FHLMC Series 4582 Class PA, 3.000% Due 11/15/2045 | 1,466,440 | 1,458,037 |
The accompanying notes are an integral part of these financial statements.
17
Fixed Income Securities | Face Value | Fair Value | ||||||
FHLMC Series 4689 Class DA, 3.000% Due 07/15/2044 | 1,792,520 | $ | 1,779,404 | |||||
FHLMC Series 4709 Class EA, 3.000% Due 01/15/2046 | 1,921,964 | 1,918,342 | ||||||
FHLMC Series 4808 Class PK, 3.500% Due 10/15/2045 | 1,465,747 | 1,487,126 | ||||||
FNMA 10/1 Hybrid ARM (12 month LIBOR + 1.780%)*, 3.285% Due 12/01/2041 | 268,666 | 272,908 | ||||||
FNMA Pool 1107, 3.500% Due 07/01/2032 | 910,378 | 927,302 | ||||||
FNMA Pool 889050, 6.000% Due 05/01/2037 | 322,102 | 350,944 | ||||||
FNMA Pool 995112, 5.500% Due 07/01/2036 | 172,428 | 185,654 | ||||||
FNMA Pool AA4392, 4.000% Due 04/01/2039 | 273,526 | 281,223 | ||||||
FNMA Pool AL9309, 3.500% Due 10/01/2031 | 979,181 | 992,783 | ||||||
FNMA Pool AN8842, 3.320% Due 04/01/2028 | 3,000,000 | 2,987,297 | ||||||
FNMA Pool AN9848, 3.740% Due 07/01/2028 | 2,500,000 | 2,555,480 | ||||||
FNMA Pool BL0189, 3.830% Due 10/01/2028 | 2,000,000 | 2,069,027 | ||||||
FNMA Pool MA0384, 5.000% Due 04/01/2030 | 204,052 | 213,833 | ||||||
FNMA Series 2003-79 Class NJ, 5.000% Due 08/25/2023 | 164,437 | 168,092 | ||||||
FNMA Series 2005-64 Class PL, 5.500% Due 07/25/2035 | 102,293 | 109,806 | ||||||
FNMA Series 2011-53 Class DT, 4.500% Due 06/25/2041 | 266,204 | 283,703 | ||||||
FNMA Series 2013-21 Class VA, 3.000% Due 07/25/2028 | 910,856 | 908,995 | ||||||
FNMA Series 2013-83 Class MH, 4.000% Due 08/25/2043 | 408,043 | 427,526 | ||||||
FNMA Series 2014-20 Class AC, 3.000% Due 08/25/2036 | 735,164 | 735,539 | ||||||
FNMA Series 2014-28 Class PA, 3.500% Due 02/25/2043 | 359,829 | 365,220 | ||||||
FNMA Series 2015-72 Class GB, 2.500% Due 12/25/2042 | 1,239,173 | 1,219,689 | ||||||
FNMA Series 2016-39 Class LA, 2.500% Due 03/25/2045 | 2,758,536 | 2,704,020 |
Fixed Income Securities | Face Value | Fair Value | ||||||
FNMA Series 2016-79 Class L, 2.500% Due 10/25/2044 | 1,851,322 | $ | 1,787,535 | |||||
FNMA Series 2016-99 Class TA, 3.500% Due 03/25/2036 | 725,894 | 739,544 | ||||||
FNMA Series 2017-30 Class G, 3.000% Due 07/25/2040 | 2,424,440 | 2,447,100 | ||||||
FNMA Series 2018-67 Class BA, 4.500% Due 03/25/2046 | 1,888,541 | 1,987,643 | ||||||
GNMA Pool 2009-124 Class L, 4.000% Due 11/20/2038 | 49,365 | 49,533 | ||||||
19.3% – Total United States Government Agency Obligations – Mortgage Backed Securities | $ | 41,850,654 | ||||||
Taxable Municipal Bonds | ||||||||
Bowling Green State University Ohio Revenue, 5.330% Due 06/01/2020 | 750,000 | 772,830 | ||||||
Cincinnati Children’s Hospital Medical Center, 2.853% Due 11/15/2026 | 750,000 | 715,530 | ||||||
Florida Atlantic University Capital Improvement Revenue, 7.589% Due 07/01/2037 | 1,785,000 | 1,899,115 | ||||||
Kansas Development Finance Authority Revenue, 3.741% Due 04/15/2025 | 3,705,000 | 3,788,474 | ||||||
Kansas Development Finance Authority Revenue, 4.091% Due 04/15/2027 | 125,000 | 129,658 | ||||||
Kentucky Asset Liability Commission Revenue, 5.339% Due 04/01/2022 | 295,000 | 308,591 | ||||||
Kentucky Property and Buildings Commission Revenue, 5.373% Due 11/01/2025 | 590,000 | 639,436 | ||||||
Ohio Higher Education Facilities – Cleveland Clinic Health Systems, 3.849% Due 01/01/2022 | 945,000 | 971,422 | ||||||
Ohio Major New Infrastructure Revenue, 4.994% Due 12/15/2020 | 850,000 | 887,120 | ||||||
4.7% – Total Taxable Municipal Bonds | $ | 10,112,176 | ||||||
Total Fixed Income Securities, Due 98.5% | $ | 213,828,623 | ||||||
(Identified Cost $216,710,123) |
The accompanying notes are an integral part of these financial statements.
18
Fixed Income Securities | Shares | Fair Value | ||||||
Preferred Stocks | ||||||||
Allstate Corp., 5.100% Due 01/15/2053 | 83,000 | $ | 1,978,720 | |||||
Total Preferred Stocks 0.9% | $ | 1,978,720 | ||||||
(Identified Cost $2,034,817) | ||||||||
Cash Equivalents | ||||||||
First American Government Obligation Fund, Class Z** | 53,940 | 53,940 | ||||||
Total Cash Equivalents 0.0% | $ | 53,940 | ||||||
(Identified Cost $53,940) | ||||||||
Total Portfolio Value 99.4% | $ | 215,861,283 | ||||||
(Identified Cost $218,798,880) | ||||||||
Other Assets in Excess of Liabilities 0.6% | $ | 1,386,130 | ||||||
Total Net Assets 100% | $ | 217,247,413 |
* | Variable Rate Security; the rate shown is as of December 31, 2018. |
** | Variable Rate Security; as of December 31, 2018, the 7 day annualized yield was 2.32%. |
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.
19
Fixed Income Securities | Face Value | Fair Value | ||||||
CVS Health Corp., 4.125% Due 05/15/2021 | 2,300,000 | $ | 2,327,230 | |||||
Eaton Electric Holdings, 3.875% Due 12/15/2020 | 1,025,000 | 1,033,884 | ||||||
General Electric Capital Corp. (3 month LIBOR + 0.300%)*, 2.736% Due 05/13/2024 | 1,600,000 | 1,312,000 | ||||||
General Electric Capital Corp. (3 month LIBOR + 1.000%)*, 3.436% Due 04/15/2023 | 2,000,000 | 1,811,900 | ||||||
Johnson Controls International PLC, 4.250% Due 03/01/2021 | 1,000,000 | 1,019,182 | ||||||
Johnson Controls International PLC, 5.000% Due 03/30/2020 | 1,560,000 | 1,592,568 | ||||||
Kroger Co., 3.850% Due 08/01/2023 | 2,200,000 | 2,218,062 | ||||||
McDonald’s Corp., 2.200% Due 05/26/2020 | 1,745,000 | 1,725,519 | ||||||
Norfolk Southern Corp., 5.900% Due 06/15/2019 | 1,377,000 | 1,391,688 | ||||||
Union Pacific Corp., 1.800% Due 02/01/2020 | 770,000 | 759,986 | ||||||
Union Pacific Corp., 2.250% Due 02/15/2019 | 2,000,000 | 1,996,477 | ||||||
Verizon Communications, 5.150% Due 09/15/2023 | 2,450,000 | 2,607,670 | ||||||
23.1% – Total Industrials | $ | 29,139,359 | ||||||
Duke Energy Corp., 5.050% Due 09/15/2019 | 2,748,000 | 2,773,401 | ||||||
Enterprise Products, 6.500% Due 01/31/2019 | 2,000,000 | 2,004,398 | ||||||
Eversource Energy, 2.750% Due 03/15/2022 | 2,000,000 | 1,965,299 | ||||||
Eversource, 4.500% Due 11/15/2019 | 480,000 | 484,414 | ||||||
Georgia Power, 2.850% Due 05/15/2022 | 2,600,000 | 2,554,204 | ||||||
Interstate Power & Light, 3.650% Due 09/01/2020 | 2,450,000 | 2,466,387 | ||||||
National Rural Utilites Corp., 1.650% Due 02/08/2019 | 1,000,000 | 998,537 | ||||||
National Rural Utilites Corp., 2.350% Due 06/15/2020 | 1,817,000 | 1,798,467 | ||||||
Nevada Power Co., 2.750% Due 04/15/2020 | 1,300,000 | 1,297,059 | ||||||
Virginia Electric & Power, 5.000% Due 06/30/2019 | 2,020,000 | 2,035,552 |
The accompanying notes are an integral part of these financial statements.
20
Fixed Income Securities | Face Value | Fair Value | ||||||
Xcel Energy Inc., 4.700% Due 05/15/2020 | 2,400,000 | $ | 2,428,666 | |||||
16.5% – Total Utilities | $ | 20,806,384 | ||||||
66.7% Total Corporate Bonds | $ | 84,113,809 | ||||||
Certificates of Deposit | ||||||||
Goldmans Sachs, 3.400% Due 10/17/2023 | 250,000 | 248,288 | ||||||
0.2% – Total For Certificates of Deposit | $ | 248,288 | ||||||
United States Government Treasury Obligations | ||||||||
Treasury Note(b), 1.500% Due 05/31/2020 | 1,665,000 | 1,640,545 | ||||||
Treasury Note(b), 3.625% Due 08/15/2019 | 5,610,000 | 5,645,501 | ||||||
5.8% – Total United States Government Treasury Obligations | $ | 7,286,046 | ||||||
United States Government Agency Obligations | ||||||||
FHLMC Step-up* 2.000% Due 09/15/2022 | 1,500,000 | 1,478,283 | ||||||
FHLMC Step-up*, 2.000% Due 06/15/2022 | 1,175,000 | 1,166,393 | ||||||
FHLMC Step-up*, 2.050% Due 06/21/2022 | 2,910,000 | 2,890,171 | ||||||
FHLMC Step-up*, 2.000% Due 07/18/2022 | 1,600,000 | 1,585,970 | ||||||
FHLMC Step-up*, 3.000% Due 06/28/2023 | 1,500,000 | 1,500,599 | ||||||
FHLMC Step-up*, 2.125% Due 09/29/2022 | 1,000,000 | 990,916 | ||||||
FHLMC Step-up*, 2.150% Due 10/27/2022 | 1,200,000 | 1,190,381 | ||||||
8.6% – Total United States Government Agency Obligations | $ | 10,802,713 | ||||||
United States Government Agency Obligations – Mortgage Backed Securities | ||||||||
FHLMC Series 4009 Class PA, 2.000% Due 06/15/2041 | 1,236,345 | 1,201,476 | ||||||
FHLMC Series 4287 Class AB, 2.000% Due 12/15/2026 | 732,221 | 715,773 | ||||||
FHLMC Pool G18642, 3.500% Due 04/01/2032 | 3,147,129 | 3,189,576 | ||||||
FHLMC Pool J12635, 4.000% Due 07/01/2025 | 108,442 | 111,239 |
Fixed Income Securities | Face Value | Fair Value | ||||||
FNMA 10/1 Hybrid ARM (12 month LIBOR + 1.780%)*, 3.285% Due 12/01/2041 | 268,666 | $ | 272,908 | |||||
FNMA Pool 1106, 3.000% Due 07/01/2032 | 968,721 | 963,702 | ||||||
FNMA Pool 465973, 3.590% Due 10/01/2020 | 2,739,365 | 2,772,261 | ||||||
FNMA Pool 833200, 5.500% Due 09/01/2035 | 613,287 | 660,795 | ||||||
FNMA Series 2013-6 Class BC, 1.500% Due 12/25/2042 | 723,911 | 705,434 | ||||||
FNMA Series 2017-30 Class G, 3.000% Due 07/25/2040 | 1,385,394 | 1,398,343 | ||||||
GNMA Pool 726475, 4.000% Due 11/15/2024 | 166,891 | 170,915 | ||||||
GNMA Pool 728920, 4.000% Due 12/15/2024 | 217,701 | 222,952 | ||||||
9.8% – Total United States Government Agency Obligations – Mortgage Backed Securities | $ | 12,385,374 | ||||||
Taxable Municipal Bonds | ||||||||
Kentucky Asset Liability Commission Revenue 2.668% Due 04/01/2021 | 820,000 | 816,236 | ||||||
0.7% Total Taxable Municipal Bonds | $ | 816,236 | ||||||
Total Fixed Income Securities 91.8% | $ | 115,652,466 | ||||||
(Identified Cost $117,288,060) | ||||||||
Cash & Cash Equivalents | Shares | |||||||
First American Government Obligation Fund, Class Z** | 8,713,755 | 8,713,755 | ||||||
Total Cash Equivalents 6.9% | $ | 8,713,755 | ||||||
(Identified Cost $8,713,755) | ||||||||
Total Portfolio Value 98.7% | $ | 124,366,221 | ||||||
(Identified Cost $126,001,815) | ||||||||
Other Assets in Excess of Liabilities 1.3% | $ | 1,562,899 | ||||||
Total Net Assets: 100.0% | $ | 125,929,120 |
The accompanying notes are an integral part of these financial statements.
21
Futures Contracts | Long Contracts | Unrealized Appreciation (Depreciation) | ||||||
E-mini Standard & Poor’s 500 expiring March 2019 (50 units per contract) | 996 | $ | (10,456,935) | |||||
(Notional Value of $124,841,130) |
* | Variable Rate Security; the rate shown is as of December 31, 2018. |
** | Variable Rate Security; as of December 31, 2018, the 7 day annualized yield was 2.32%. |
(a) | 144a Securities. The total fair value of such securities as of December 31, 2018 was $1,411,510 and represented 1.12% of net assets. |
- | BP AMI Leasing Inc. was purchased on September 27, 2018 for $1,423,716; price on December 31, 2018 was $100.822. |
(b) | Held as collateral by RJ O’Brien for futures contracts. |
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.
22
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* | $ | 141,038,351 | $ | 137,558,650 | $ | 215,861,283 | $ | 124,366,221 | ||||||||
Due from Broker | — | — | — | 24,604 | ||||||||||||
Variation Margin Receivable | — | — | — | 956,160 | ||||||||||||
Interest Receivable | 1,065,380 | 951,827 | 1,501,239 | 1,000,760 | ||||||||||||
Fund Shares Sold Receivable | 32,655 | 13,526 | 13,065 | 75,000 | ||||||||||||
Receivable for Mortgage-backed Securities Paydowns | 1,014 | 1,088 | 1,088 | — | ||||||||||||
Total Assets | $ | 142,137,400 | $ | 138,525,091 | $ | 217,376,675 | $ | 126,422,745 | ||||||||
Liabilities: | ||||||||||||||||
Accrued Management Fee | $ | 30,284 | $ | 29,165 | $ | 45,997 | $ | 38,160 | ||||||||
Due to Custodian | — | — | — | 455,465 | ||||||||||||
Fund Shares Redeemed Payable | 81,577 | 78,621 | 83,265 | — | ||||||||||||
Total Liabilities | $ | 111,861 | $ | 107,786 | $ | 129,262 | $ | 493,625 | ||||||||
Net Assets | $ | 142,025,539 | $ | 138,417,305 | $ | 217,247,413 | $ | 125,929,120 | ||||||||
Net Assets Consist of: | ||||||||||||||||
Paid in Capital | $ | 144,304,718 | $ | 140,305,745 | $ | 220,868,137 | $ | 138,015,705 | ||||||||
Accumulated Earnings/(Deficit) | (2,279,179 | ) | (1,888,440 | ) | (3,620,724 | ) | (12,086,585 | ) | ||||||||
Net Assets | $ | 142,025,539 | $ | 138,417,305 | $ | 217,247,413 | $ | 125,929,120 | ||||||||
Pricing of Class I Shares | ||||||||||||||||
Net assets applicable to Class I Shares | $ | 142,024,525 | $ | 138,416,288 | $ | 217,246,391 | $ | 125,929,120 | ||||||||
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value) | 9,593,409 | 9,063,697 | 14,020,988 | 8,860,271 | ||||||||||||
Net Asset Value, Offering price and redemption price | $ | 14.80 | $ | 15.27 | $ | 15.49 | $ | 14.21 | ||||||||
Pricing of Class F Shares | ||||||||||||||||
Net assets applicable to Class F Shares | $ | 1,014 | $ | 1,017 | $ | 1,022 | n/a | |||||||||
Shares of beneficial interest outstanding (unlimited number of shares authorized, no par value) | 68 | 66 | 65 | n/a | ||||||||||||
Net Asset Value, Offering price and redemption price | $ | 14.91 | $ | 15.39 | $ | 15.61 | n/a | |||||||||
*Identified Cost of Investment Securities | $ | 142,824,145 | $ | 139,266,911 | $ | 218,798,880 | $ | 126,001,815 |
(a) | NAV does not recalculate due to rounding of shares of beneficial interest outstanding. |
The accompanying notes are an integral part of these financial statements.
23
Statements of Operations
Johnson Institutional Short Duration Bond Fund | Johnson Institutional Intermediate Bond Fund | Johnson Institutional Core Bond Fund | Johnson Enhanced Return Fund | |||||||||||||
Year Ended 12/31/2018 | Year Ended 12/31/2018 | Year Ended 12/31/2018 | Year Ended 12/31/2018 | |||||||||||||
Investment Income: | ||||||||||||||||
Interest | $ | 3,429,580 | $ | 3,743,293 | $ | 5,940,845 | $ | 3,217,128 | ||||||||
Dividends | 34,875 | 99,228 | 128,395 | 65,325 | ||||||||||||
Total Investment Income | $ | 3,464,455 | $ | 3,842,521 | $ | 6,069,240 | $ | 3,282,453 | ||||||||
Expenses: | ||||||||||||||||
Gross Management Fee | $ | 439,700 | $ | 396,503 | $ | 623,186 | $ | 488,551 | ||||||||
Distribution Fee | 1 | 1 | 1 | — | ||||||||||||
Management Fee Waiver (Note #4) | (76,643 | ) | (69,016 | ) | (108,654 | ) | — | |||||||||
Net Expenses | $ | 363,058 | $ | 327,488 | $ | 514,533 | $ | 488,551 | ||||||||
Net Investment Income | $ | 3,101,397 | $ | 3,515,033 | $ | 5,554,707 | $ | 2,793,902 | ||||||||
Realized and Unrealized Gains/(Losses): | ||||||||||||||||
Net Realized Gain (Loss) from Security Transactions | $ | (189,216 | ) | $ | (93,901 | ) | $ | (442,426 | ) | $ | (280,061 | ) | ||||
Net Realized Gain from Futures Contracts | — | — | — | 2,002,075 | ||||||||||||
Net Change in Unrealized (Loss) on Investments | (1,233,884 | ) | (2,758,989 | ) | (4,728,685 | ) | (1,230,046 | ) | ||||||||
Net Change in Unrealized (Loss) on Futures Contracts | — | — | — | (11,034,616 | ) | |||||||||||
Net Gain/(Loss) on Investments | $ | (1,423,100) | $ | (2,852,890) | $ | (5,171,111) | $ | (10,542,648) | ||||||||
Net Change in Net Assets from Operations | $ | 1,678,297 | $ | 662,143 | $ | 383,596 | $ | (7,748,746) |
The accompanying notes are an integral part of these financial statements.
24
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 | |||||||||||||||||||||||||||||
Year Ended 12/31/2018 | Year Ended 12/31/2017 | Year Ended 12/31/2018 | Year Ended 12/31/2017 | Year Ended 12/31/2018 | Year Ended 12/31/2017 | Year Ended 12/31/2018 | Year Ended 12/31/2017 | |||||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||||||
Net Investment Income | $ | 3,101,397 | $ | 2,202,918 | $ | 3,515,033 | $ | 2,630,199 | $ | 5,554,707 | $ | 3,835,863 | $ | 2,793,902 | $ | 1,794,400 | ||||||||||||||||
Net Realized Gain (Loss) from Security Transactions | (189,216 | ) | 18,232 | (93,901 | ) | 367,955 | (442,426 | ) | 381,659 | (280,061 | ) | (173,129 | ) | |||||||||||||||||||
Net Realized Gain from Futures Contracts | — | — | — | — | — | — | 2,002,075 | 20,712,938 | ||||||||||||||||||||||||
Net Change in Unrealized Gain (Loss) on Investments | (1,233,884 | ) | (96,553 | ) | (2,758,989 | ) | 418,852 | (4,728,685 | ) | 1,519,502 | (1,230,046 | ) | 42,695 | |||||||||||||||||||
Net Change in Unrealized (Loss) on Futures Contracts | — | — | — | — | — | — | (11,034,616 | ) | 1,544,201 | |||||||||||||||||||||||
Net Change in Net Assets from Operations | $ | 1,678,297 | $ | 2,124,597 | $ | 662,143 | $ | 3,417,006 | $ | 383,596 | $ | 5,737,024 | $ | (7,748,746 | ) | $ | 23,921,105 | |||||||||||||||
Distributions to Shareholders:(a) | ||||||||||||||||||||||||||||||||
From Class I | $ | (3,259,834 | ) | $ | (2,306,918 | ) | $ | (3,641,134 | ) | $ | (2,678,079 | ) | $ | (5,829,361 | ) | $ | (4,183,560 | ) | $ | (9,131,225 | ) | $ | (24,481,780 | ) | ||||||||
From Class F | (6 | ) | — | (8 | ) | — | (8 | ) | — | n/a | n/a | |||||||||||||||||||||
Net Change in Net Assets from Capital Share Transactions | $ | (3,259,840 | ) | $ | (2,306,918 | ) | $ | (3,641,142 | ) | $ | (2,958,321 | ) | $ | (5,829,369 | ) | $ | (4,183,560 | ) | $ | (9,131,225 | ) | $ | (24,481,780 | ) | ||||||||
Capital Share Transactions: | ||||||||||||||||||||||||||||||||
From Class I | ||||||||||||||||||||||||||||||||
Proceeds from shares sold | $ | 41,303,874 | $ | 51,043,212 | $ | 31,235,691 | $ | 30,563,616 | $ | 62,044,275 | $ | 70,962,697 | $ | 3,957,689 | $ | 12,189,279 | ||||||||||||||||
Proceeds From Subscriptions-in-Kind | — | — | — | — | — | 21,899,732 | — | — | ||||||||||||||||||||||||
Net Asset Value of Shares Issued on Reinvestment of Distributions | 787,543 | 587,804 | 509,317 | 343,443 | 3,465,169 | 2,226,415 | 9,131,111 | 24,481,738 | ||||||||||||||||||||||||
Payments for Shares Redeemed | (37,682,677 | ) | (36,624,555 | ) | (16,885,158 | ) | (15,538,392 | ) | (44,034,870 | ) | (12,114,574 | ) | (8,263,660 | ) | (8,309,846 | ) | ||||||||||||||||
Net Increase from Class I share capital transactions | 4,408,740 | 15,006,461 | 14,859,850 | 15,368,667 | 21,474,574 | 82,974,270 | 4,825,140 | 28,361,171 | ||||||||||||||||||||||||
From Class F | ||||||||||||||||||||||||||||||||
Proceeds from shares sold | 1,000 | — | 1,000 | — | 1,000 | — | n/a | n/a | ||||||||||||||||||||||||
Net Asset Value of Shares Issued on Reinvestment of Distributions | 6 | — | 8 | — | 8 | — | n/a | n/a | ||||||||||||||||||||||||
Payments for Shares Redeemed | — | — | — | — | — | — | n/a | n/a | ||||||||||||||||||||||||
Net Increase from Class F share capital transactions | 1,006 | — | 1,008 | — | 1,008 | — | — | — | ||||||||||||||||||||||||
Net Change in Net Assets | $ | 2,828,203 | $ | 14,824,140 | $ | 11,881,859 | $ | 15,827,352 | $ | 16,029,809 | $ | 84,527,734 | $ | (12,054,831) | $ | 27,800,496 | ||||||||||||||||
Net Assets at Beginning of Year | $ | 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 Year | $ | 142,025,539 | $ | 139,197,336 | $ | 138,417,305 | $ | 126,535,446 | $ | 217,247,413 | $ | 201,217,604 | $ | 125,929,120 | $ | 137,983,951 |
(a) | The presentation of Distributions to Shareholders has been updated to reflect the changes prescribed in amendments to Regulation S-X, effective November 5, 2018. For the year ended December 31, 2017, distributions to shareholders for the Short Duration Bond Fund consisted of $2,306,918 from net investment income; for the Intermediate Bond Fund, $2,678,079 from net investment income and $280,242 from net realized gain from security transactions; for the Core Bond Fund, $4,027,445 from net investment income and $156,115 from net realized gain from security transactions; and for the Enhanced Return Fund, $1,827,796 from net investment income and $22,653,984 from net realized gain from security transactions. For the year ended December 31, 2017, Accumulated Net Investment Income for the Short Duration Bond Fund, Intermediate Bond Fund, Core Bond Fund and Enhanced Return Fund was $10,227, $36,270, $27,203 and $26,721, respectively. |
The accompanying notes are an integral part of these financial statements.
25
Class I
Selected Data for a Share Outstanding Throughout each Period:
Year Ended December 31 | ||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||
Net Asset Value, beginning of year | $ | 14.96 | $ | 14.98 | $ | 14.96 | $ | 15.05 | $ | 15.03 | ||||||||||
Operations: | ||||||||||||||||||||
Net Investment Income | 0.31 | 0.24 | 0.21 | 0.17 | 0.18 | |||||||||||||||
Net Realized and Unrealized Gains/(Losses) on Securities | (0.14 | ) | (0.01 | ) | 0.04 | (0.07 | ) | �� | 0.04 | |||||||||||
Total Operations | $ | 0.17 | $ | 0.23 | $ | 0.25 | $ | 0.10 | $ | 0.22 | ||||||||||
Distributions: | ||||||||||||||||||||
Net Investment Income | (0.33 | ) | (0.25 | ) | (0.23 | ) | (0.19 | ) | (0.20 | ) | ||||||||||
Return of Capital(a) | — | — | (0.00 | ) | (0.00 | ) | — | |||||||||||||
Net Realized Capital Gains | — | — | — | — | — | |||||||||||||||
Total Distributions | $ | (0.33 | ) | $ | (0.25 | ) | $ | (0.23 | ) | $ | (0.19 | ) | $ | (0.20 | ) | |||||
Net Asset Value, end of year | $ | 14.80 | $ | 14.96 | $ | 14.98 | $ | 14.96 | $ | 15.05 | ||||||||||
Total Return(b) | 1.16 | % | 1.54 | % | 1.68 | % | 0.67 | % | 1.44 | % | ||||||||||
Net Assets, end of year (millions) | $ | 142.03 | $ | 139.20 | $ | 124.37 | $ | 108.08 | $ | 78.27 | ||||||||||
Ratios/supplemental data(c) | ||||||||||||||||||||
Ratio of expenses to average net assets before Waiver | 0.30 | % | 0.30 | % | 0.30 | % | 0.30 | % | 0.30 | % | ||||||||||
Ratio of expenses to average net assets after Waiver | 0.25 | % | 0.24 | % | 0.24 | % | 0.23 | % | 0.24 | % | ||||||||||
Ratio of Net Investment Income to average net assets before Waiver | 2.06 | % | 1.53 | % | 1.32 | % | 1.07 | % | 1.14 | % | ||||||||||
Ratio of Net Investment Income to average net assets after Waiver | 2.11 | % | 1.59 | % | 1.38 | % | 1.14 | % | 1.20 | % | ||||||||||
Portfolio Turnover Rate | 39.88 | % | 48.04 | % | 73.88 | % | 42.30 | % | 42.41 | % |
(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) | 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%, 0.24%, 0.23%, 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, 2019. (Note #4) |
The accompanying notes are an integral part of these financial statements.
26
Class F
Selected Data for a Share Outstanding Throughout each Period:
Eight Months ended 12/31/2018 | ||||
Net Asset Value, beginning of period (effective May 1, 2018) | $ | 14.79 | ||
Operations: | ||||
Net Investment Income | 0.18 | |||
Net Realized and Unrealized Gains/(Losses) on Securities | 0.02 | |||
Total Operations | $ | 0.20 | ||
Distributions: | ||||
Net Investment Income | (0.08 | ) | ||
Net Realized Capital Gains | — | |||
Total Distributions | $ | (0.08 | ) | |
Net Asset Value, end of year | $ | 14.91 | ||
Total Return(b) | 1.37 | % | ||
Net Assets, end of year (millions) | $ | 0.001 | ||
Ratios/supplemental data(c) | ||||
Ratio of expenses to average net assets before Waiver | 0.55 | % | ||
Ratio of expenses to average net assets after Waiver | 0.40 | % | ||
Ratio of Net Investment Income to average net assets before Waiver | 1.06 | % | ||
Ratio of Net Investment Income to average net assets after Waiver | 1.21 | % | ||
Portfolio Turnover Rate | 39.88 | % |
(a) | 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. |
(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) | In 2018, the Adviser waived a portion of the 0.30% management fee to sustain a net management fee of 0.25%, and a portion of the 0.25% 12b-1 fee to sustain a net distribution fee of 0.15%. The Adviser intends these fee waivers to be permanent, although the Adviser retains the right to remove the waivers after April 30, 2019. (Note #4). Ratios are not annualized. |
The accompanying notes are an integral part of these financial statements.
27
Class I
Selected Data for a Share Outstanding Throughout each Period:
Year Ended December 31 | ||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||
Net Asset Value, beginning of year | $ | 15.63 | $ | 15.56 | $ | 15.41 | $ | 15.61 | $ | 15.40 | ||||||||||
Operations: | ||||||||||||||||||||
Net Investment Income | 0.41 | 0.35 | 0.34 | 0.33 | 0.37 | |||||||||||||||
Net Realized and Unrealized Gains/(Losses) on Securities | (0.35 | ) | 0.11 | 0.18 | (0.19 | ) | 0.29 | |||||||||||||
Total Operations | $ | 0.06 | $ | 0.46 | $ | 0.52 | $ | 0.14 | $ | 0.66 | ||||||||||
Distributions: | ||||||||||||||||||||
Net Investment Income | (0.42 | ) | (0.36 | ) | (0.36 | ) | (0.34 | ) | (0.39 | ) | ||||||||||
Return of Capital(a) | — | — | — | (0.00 | ) | — | ||||||||||||||
Net Realized Capital Gains | — | (0.03 | ) | (0.01 | ) | — | (0.06 | ) | ||||||||||||
Total Distributions | $ | (0.42 | ) | $ | (0.39 | ) | $ | (0.37 | ) | $ | (0.34 | ) | $ | (0.45 | ) | |||||
Net Asset Value, end of year | $ | 15.27 | $ | 15.63 | $ | 15.56 | $ | 15.41 | $ | 15.61 | ||||||||||
Total Return(b) | 0.42 | % | 2.99 | % | 3.37 | % | 0.90 | % | 4.31 | % | ||||||||||
Net Assets, end of year (millions) | $ | 138.42 | $ | 126.54 | $ | 110.71 | $ | 104.36 | $ | 79.64 | ||||||||||
Ratios/supplemental data(c) | ||||||||||||||||||||
Ratio of expenses to average net assets before Waiver | 0.30 | % | 0.30 | % | 0.30 | % | 0.30 | % | 0.30 | % | ||||||||||
Ratio of expenses to average net assets after Waiver | 0.25 | % | 0.24 | % | 0.24 | % | 0.23 | % | 0.24 | % | ||||||||||
Ratio of Net Investment Income to average net assets before Waiver | 2.61 | % | 2.19 | % | 2.12 | % | 2.06 | % | 2.30 | % | ||||||||||
Ratio of Net Investment Income to average net assets after Waiver | 2.66 | % | 2.25 | % | 2.18 | % | 2.13 | % | 2.36 | % | ||||||||||
Portfolio Turnover Rate | 39.66 | % | 40.37 | % | 50.71 | % | 32.75 | % | 34.31 | % |
(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) | 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%, 0.24%, 0.23%, 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, 2019. (Note #4) |
The accompanying notes are an integral part of these financial statements.
28
Class F
Selected Data for a Share Outstanding Throughout each Period:
Eight Months ended 12/31/2018 | ||||
Net Asset Value, beginning of period (effective May 1, 2018) | $ | 15.25 | ||
Operations: | ||||
Net Investment Income | 0.22 | |||
Net Realized and Unrealized Gains/(Losses) on Securities | 0.04 | |||
Total Operations | $ | 0.26 | ||
Distributions: | ||||
Net Investment Income | (0.12 | ) | ||
Net Realized Capital Gains | — | |||
Total Distributions | $ | (0.12 | ) | |
Net Asset Value, end of year | $ | 15.39 | ||
Total Return(b) | 1.72 | % | ||
Net Assets, end of year (millions) | $ | 0.001 | ||
Ratios/supplemental data(c) | ||||
Ratio of expenses to average net assets before Waiver | 0.55 | % | ||
Ratio of expenses to average net assets after Waiver | 0.40 | % | ||
Ratio of Net Investment Income to average net assets before Waiver | 1.31 | % | ||
Ratio of Net Investment Income to average net assets after Waiver | 1.46 | % | ||
Portfolio Turnover Rate | 39.66 | % |
(a) | 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. |
(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) | In 2018, the Adviser waived a portion of the 0.30% management fee to sustain a net management fee of 0.25%, and a portion of the 0.25% 12b-1 fee to sustain a net distribution fee of 0.15%. The Adviser intends these fee waivers to be permanent, although the Adviser retains the right to remove the waivers after April 30, 2019. (Note #4). Ratios are not annualized. |
The accompanying notes are an integral part of these financial statements.
29
Class I
Selected Data for a Share Outstanding Throughout each Period:
Year Ended December 31 | ||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||||
Net Asset Value, beginning of year | $ | 15.91 | $ | 15.73 | $ | 15.63 | $ | 15.98 | $ | 15.43 | ||||||||||||||
Operations: | ||||||||||||||||||||||||
Net Investment Income | 0.40 | 0.37 | 0.39 | 0.39 | 0.40 | |||||||||||||||||||
Net Realized and Unrealized Gains/(Losses) on Securities | (0.40 | ) | 0.21 | 0.19 | (0.21 | ) | 0.63 | |||||||||||||||||
Total Operations | $ | (0.00 | ) | $ | 0.58 | $ | 0.58 | $ | 0.18 | $ | 1.03 | |||||||||||||
Distributions: | ||||||||||||||||||||||||
Net Investment Income | (0.42 | ) | (0.39 | ) | (0.40 | ) | (0.42 | ) | (0.43 | ) | ||||||||||||||
Return of Capital(a) | — | — | (0.00 | ) | (0.00 | ) | — | |||||||||||||||||
Net Realized Capital Gains | — | (0.01 | ) | (0.08 | ) | (0.11 | ) | (0.05 | ) | |||||||||||||||
Total Distributions | $ | (0.42 | ) | $ | (0.40 | ) | $ | (0.48 | ) | $ | (0.53 | ) | $ | (0.48 | ) | |||||||||
Net Asset Value, end of year | $ | 15.49 | $ | 15.91 | $ | 15.73 | $ | 15.63 | $ | 15.98 | ||||||||||||||
Total Return(b) | 0.13 | % | 3.72 | % | 3.67 | % | 1.16 | % | 6.79 | % | ||||||||||||||
Net Assets, end of year (millions) | $ | 217.25 | $ | 201.22 | $ | 116.69 | $ | 86.90 | $ | 74.82 | ||||||||||||||
Ratios/supplemental data(c) | ||||||||||||||||||||||||
Ratio of expenses to average net assets before Waiver | 0.30 | % | 0.30 | % | 0.30 | % | 0.30 | % | 0.30 | % | ||||||||||||||
Ratio of expenses to average net assets after Waiver | 0.25 | % | 0.24 | % | 0.24 | % | 0.23 | % | 0.24 | % | ||||||||||||||
Ratio of Net Investment Income to average net assets before Waiver | 2.62 | % | 2.29 | % | 2.34 | % | 2.39 | % | 2.46 | % | ||||||||||||||
Ratio of Net Investment Income to average net assets after Waiver | 2.67 | % | 2.35 | % | 2.40 | % | 2.46 | % | 2.52 | % | ||||||||||||||
Portfolio Turnover Rate | 39.62 | % | 31.42 | % | 42.29 | % | 29.51 | % | 28.30 | % |
(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) | 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%, 0.24%, 0.23%, 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, 2019. (Note #4) |
The accompanying notes are an integral part of these financial statements.
30
Class F
Selected Data for a Share Outstanding Throughout each Period:
Eight Months ended 12/31/2018 | ||||
Net Asset Value, beginning of period (effective May 1, 2018) | $ | 15.41 | ||
Operations: | ||||
Net Investment Income | 0.23 | |||
Net Realized and Unrealized Gains/(Losses) on Securities | 0.10 | |||
Total Operations | $ | 0.33 | ||
Distributions: | ||||
Net Investment Income | (0.13 | ) | ||
Net Realized Capital Gains | — | |||
Total Distributions | $ | (0.13 | ) | |
Net Asset Value, end of year | $ | 15.61 | ||
Total Return(b) | 2.14 | % | ||
Net Assets, end of year (millions) | $ | 0.001 | ||
Ratios/supplemental data(c) | ||||
Ratio of expenses to average net assets before Waiver | 0.55 | % | ||
Ratio of expenses to average net assets after Waiver | 0.40 | % | ||
Ratio of Net Investment Income to average net assets before Waiver | 1.29 | % | ||
Ratio of Net Investment Income to average net assets after Waiver | 1.44 | % | ||
Portfolio Turnover Rate | 39.62 | % |
(a) | 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. |
(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) | In 2018, the Adviser waived a portion of the 0.30% management fee to sustain a net management fee of 0.25%, and a portion of the 0.25% 12b-1 fee to sustain a net distribution fee of 0.15%. The Adviser intends these fee waivers to be permanent, although the Adviser retains the right to remove the waivers after April 30, 2019. (Note #4). Ratios are not annualized. |
The accompanying notes are an integral part of these financial statements.
31
Selected Data for a Share Outstanding Throughout each Period:
Year Ended December 31 | ||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||
Net Asset Value, beginning of year | $ | 16.27 | $ | 16.28 | $ | 15.17 | $ | 15.82 | $ | 16.27 | ||||||||||
Operations: | ||||||||||||||||||||
Net Investment Income | 0.35 | 0.26 | 0.18 | 0.15 | 0.16 | |||||||||||||||
Net Realized and Unrealized Gains/(Losses) on Securities | (1.32 | ) | 3.21 | 1.76 | 0.07 | 2.21 | ||||||||||||||
Total Operations | $ | (0.97 | ) | $ | 3.47 | $ | 1.94 | $ | 0.22 | $ | 2.37 | |||||||||
Distributions: | ||||||||||||||||||||
Net Investment Income | (0.35 | ) | (0.26 | ) | (0.21 | ) | (0.17 | ) | (0.17 | ) | ||||||||||
Return of Capital(a) | — | — | — | (0.00 | ) | — | ||||||||||||||
Net Realized Capital Gains | (0.74 | ) | (3.22 | ) | (0.62 | ) | (0.70 | ) | (2.65 | ) | ||||||||||
Total Distributions | $ | (1.09 | ) | $ | (3.48 | ) | $ | (0.83 | ) | $ | (0.87 | ) | $ | (2.82 | ) | |||||
Net Asset Value, end of year | $ | 14.21 | $ | 16.27 | $ | 16.28 | $ | 15.17 | $ | 15.82 | ||||||||||
Total Return(b) | (6.06 | )% | 21.39 | % | 12.89 | % | 1.34 | % | 14.42 | % | ||||||||||
Net Assets, end of year (millions) | $ | 125.93 | $ | 137.98 | $ | 110.18 | $ | 97.95 | $ | 97.15 | ||||||||||
Ratios/supplemental data | ||||||||||||||||||||
Ratio of expenses to average net assets | 0.35 | % | 0.35 | % | 0.35 | % | 0.35 | % | 0.35 | % | ||||||||||
Ratio of Net Investment Income to average net assets | 2.00 | % | 1.45 | % | 1.16 | % | 0.91 | % | 0.93 | % | ||||||||||
Portfolio Turnover Rate | 73.00 | % | 40.40 | % | 65.13 | % | 57.75 | % | 56.32 | % |
(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. |
The accompanying notes are an integral part of these financial statements.
32
JOHNSON MUTUAL FUNDS
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”.
New Accounting Pronouncement:
On August 28, 2018, FASB issued Accounting Standards Update No. 2018-13 (“ASU 2018-13”), “Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement,” which amends the fair value measurement disclosure requirements of ASC Topic 820, “Fair Value Measurement” (“ASC 820”). ASU 2018-13 includes new, eliminated, and modified disclosure requirements for ASC 820. In addition, ASU 2018-13 clarifies that materiality is an appropriate consideration for entities when evaluating disclosure requirements. ASU 2018-13 is effective for all entities for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted and the Fund has adopted ASU 2018-13 with these financial statements.
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 year ended December 31, 2018 was $138,801,324. Upon entering into a financial futures contract, the Fund is required to pledge to the broker an amount of cash, U.S. government securities, or other assets, equal to a certain percentage of the contract amount (initial margin deposit). Subsequent payments, known as “variation margin,” are made or received by the Fund each day, depending on the daily fluctuations in the fair value of the futures contract. The Fund recognizes an unrealized gain or loss equal to the daily variation margin. The amount of the daily variation margin is reflected as an asset or liability within the Statements of Assets and Liabilities, while the cumulative change in unrealized gain/loss on futures contracts is reported separately within the Statements of Operations. The Net Unrealized Loss on futures contracts, as of December 31, 2018, was $10,456,935. 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 December 31, 2018, RJ O’Brien holds U.S. Treasury Notes with the custodian, which serves as collateral for future contracts, with a value of $7,286,046. Variation margin receivable on futures contracts as of December 31, 2018 was $956,160.
33
2) Summary of Significant Accounting Policies:, continued
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 December 31, 2018, the Fund only has one position and the variation margin applicable to that position is presented in the Statement of Assets and Liabilities.
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 December 31, 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 | $ | 956,160 | $ | — | $ | 956,160 | $ | 956,160* | $ | — | $ | — | ||||||||||||
Total | $ | 956,160 | $ | — | $ | 956,160 | $ | 956,160* | $ | — | $ | — |
* | The amount is limited to the derivative balance, and accordingly, does not include excess collateral pledged. This represents the variation margin amount, not the balance on the Portfolio of Investments. |
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.
Federal Income Tax:
The Funds have qualified and intend to continue to qualify as a regulated investment company under the Internal Revenue Code of 1986, as amended (the “Code”). Qualification generally will relieve the Fund of liability for federal income taxes to the extent is net investment income and net realized capital gains are distributed in accordance with the Code.
In order to avoid imposition of a federal excise tax applicable to regulated investment companies, it is also the Funds’ intention to declare and pay as dividends in each calendar year at least 98% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the 12 months ended December 31, 2018 for the Short Duration, Intermediate, and Core Bond Funds, and the 12 months ended October 31, 2018 for the Enhanced Return Fund) plus undistributed amounts from prior years.
The following information is computed on a tax basis for each item as of December 31, 2018:
Short Duration Fund | Intermediate Fund | Core Fund | Enhanced Return Fund | |||||||||||||
Cost of Portfolio Investments | $ | 142,824,145 | 139,269,548 | 218,798,880 | 126,010,390 | |||||||||||
Gross unrealized appreciation | 66,831 | 528,930 | 1,125,745 | 80,670 | ||||||||||||
Gross unrealized depreciation | (1,852,627 | ) | (2,239,828 | ) | (4,063,994 | ) | (1,724,840 | ) | ||||||||
Net unrealized depreciation | (1,785,796 | ) | (1,710,898 | ) | (2,938,249 | ) | (1,644,170 | ) | ||||||||
Undistributed ordinary income | — | 10,876 | 14,663 | — | ||||||||||||
Other Accumulated Losses | (493,383 | ) | (188,418 | ) | (697,138 | ) | (10,442,415 | ) | ||||||||
Accumulated Earnings/(Deficits) | (2,279,179 | ) | (1,888,440 | ) | (3,620,724 | ) | (12,086,585 | ) |
34
2) Summary of Significant Accounting Policies:, continued
The difference between the federal income tax cost and the financial statement cost of the Funds’ portfolio investments is due to certain timing differences in the recognition of capital gains and losses under income tax regulations and GAAP. These timing differences are temporary in nature and are due to the tax deferral of losses on wash sales. As of December 31, 2018, the Enhanced Return Fund deferred post-October losses in the amount of $10,442,415.
As of December 31, 2018, 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 which are not subject to expiration are as follows:
Long-term | Short-term | Total | ||||||||||
Short Duration: | $ | 330,112 | $ | 163,271 | $ | 493,383 | ||||||
Intermediate: | 81,828 | 106,590 | 188,418 | |||||||||
Core: | 250,572 | 446,566 | 697,138 |
The Funds recognize the tax benefits or expenses of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has reviewed the tax positions taken on Federal income tax returns for all open tax years (generally three years) and has concluded that no provision for unrecognized tax benefits or expenses is required in these financial statements. The Funds identify its major tax jurisdictions as U.S. Federal and certain State tax authorities. The Funds are not aware of any tax positions for which it is reasonably likely that the total amounts of unrecognized tax benefits or expenses will change materially in the next twelve months. The Funds recognize interest and penalties, if any, related to unrecognized tax expenses as income tax expense in the Statement of Operations. During the year ended December 31, 2018, the Funds did not incur any interest or penalties.
Allocations between Classes:
Investment income earned, realized capital gains and losses, and unrealized appreciation and depreciation are allocated daily to each class of shares based upon its proportionate share of total net assets of the Fund. Class specific expenses are charged directly to the class incurring the expense. Common expenses which are not attributable to a specific class are allocated daily to each class of shares based upon its proportionate share of total net assets of the Fund.
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.
For the year ended December 31, 2018, the Funds made the following reclassifications to increase (decrease) the components of the net assets:
Paid in Capital | Accumulated Earnings | |||||||
Short Duration Bond Fund | $ | (8,399 | ) | $ | 8,399 | |||
Intermediate Bond Fund | — | — | ||||||
Core Bond Fund | — | — | ||||||
Enhanced Return Fund | (14,647 | ) | 14,647 |
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2) Summary of Significant Accounting Policies:, continued
Reasons for the reclassification of components of net assets are attributable to the paydowns received during the year from collateralized mortgage obligations.
The tax character of the distributions paid as of December 31, 2018 is as follows:
Ordinary Income | Net Realized Long-Term Capital Gain | Total Distributions Paid | ||||||||||||||
Short Duration Bond Fund | 2017 | 2,306,918 | — | 2,306,918 | ||||||||||||
2018 | 3,259,840 | — | 3,259,840 | |||||||||||||
Intermediate Bond Fund | 2017 | 2,678,079 | 280,242 | 2,958,321 | ||||||||||||
2018 | 3,637,579 | 3,563 | 3,641,142 | |||||||||||||
Core Bond Fund | 2017 | 4,027,445 | 156,115 | 4,183,560 | ||||||||||||
2018 | 5,821,958 | 7,411 | 5,829,369 | |||||||||||||
Enhanced Return Fund | 2017 | 10,973,814 | 13,507,966 | 24,481,780 | ||||||||||||
2018 | 5,441,277 | 3,689,948 | 9,131,225 |
* — Short-Term Capital Gains were combined with Ordinary Income, as they are taxed at the Ordinary Income tax rate.
3) Security Valuation and Transactions:
The Funds’ portfolio securities are valued as of the close of business of the regular session of the New York Stock Exchange (normally 4:00 p.m., Eastern time. Fixed income securities typically are valued on the basis of prices furnished by a pricing service when the Adviser believes such prices accurately reflect the market value of such securities. A pricing service utilizes electronic data processing techniques based on yield spreads relating to securities with similar characteristics to determine prices for normal institutional-size trading units of debt securities without regard to sale or bid prices. When the Adviser decides that a price provided by the pricing service does not accurately reflect the market value of the securities, when prices are not readily available from the pricing service, or when restricted or illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Adviser, in conformity with guidelines adopted by and subject to review 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.
The Fund utilizes various methods to measure the fair value of its investments on a recurring basis. GAAP establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements.
GAAP established 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. |
36
3) Security Valuation and Transactions:, continued
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 or methodology used for valuing securities are not necessarily an indication of the risks associated with investing in those securities. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level of the fair value hierarchy within which the fair value measurement falls in its entirety, is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
Fair Value Measurements:
A description of the valuation techniques applied to the Funds’ major categories of assets and liabilities measured at fair value on a recurring basis follows.
Corporate Bonds. Corporate bonds are generally valued at prices obtained from pricing vendors. The fair value of corporate bonds is estimated using market approach valuation techniques, which may consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations for similar securities (where observable), bond spreads, fundamental data relating to the issuer, and credit default swap spreads adjusted for any basis difference between cash and derivative instruments. While most corporate bonds are categorized in Level 2 of the fair value hierarchy, in instances where lower relative weight is placed on transaction prices, quotations, or similar observable inputs, they will be categorized in Level 3.
Certificates of Deposit. Certificates of Deposit are generally valued at prices obtained from pricing vendors. Certificates of Deposit which are traded on the open market are normally valued using a market approach valuation technique that incorporates observable market data such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued principally using dealer quotations. Certificates of Deposit are categorized in Level 2 of the fair value hierarchy.
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.
37
3) Security Valuation and Transactions:, continued
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 December 31, 2018:
Short Duration Bond Fund | Level 1 | Level 2 | Level 3 | Totals | ||||||||||||
Corporate Bonds* | $ | — | $ | 95,886,196 | $ | — | $ | 95,886,196 | ||||||||
Certificates of Deposit | — | 248,288 | — | 248,288 | ||||||||||||
U.S. Treasury Obligations | — | 9,676,694 | — | 9,676,694 | ||||||||||||
U.S. Agency Obligations | — | 16,519,729 | — | 16,519,729 | ||||||||||||
U.S. Agency Obligations – Mortgage-Backed | — | 14,201,072 | — | 14,201,072 | ||||||||||||
Taxable Municipal Bonds | — | 1,418,858 | — | 1,418,858 | ||||||||||||
Cash Equivalents | 3,087,514 | — | — | 3,087,514 | ||||||||||||
Total | $ | 3,087,514 | $ | 137,950,837 | $ | — | $ | 141,038,351 |
Intermediate Bond Fund | Level 1 | Level 2 | Level 3 | Totals | ||||||||||||
Corporate Bonds* | $ | — | $ | 73,119,909 | — | $ | 73,119,909 | |||||||||
Certificates of Deposit | — | 248,288 | — | 248,288 | ||||||||||||
U.S. Treasury Obligations | — | 28,564,608 | — | 28,564,608 | ||||||||||||
U.S. Agency Obligations | — | 10,223,157 | — | 10,223,157 | ||||||||||||
U.S. Agency Obligations – Mortgage-Backed | — | 15,763,934 | — | 15,763,934 | ||||||||||||
Taxable Municipal Bonds | — | 7,727,066 | — | 7,727,066 | ||||||||||||
Preferred Stocks | 1,427,778 | — | — | 1,427,778 | ||||||||||||
Cash Equivalents | 483,910 | — | — | 483,910 | ||||||||||||
Total | $ | 1,911,688 | $ | 135,646,962 | $ | — | $ | 137,558,650 |
Core Bond Fund | Level 1 | Level 2 | Level 3 | Totals | ||||||||||||
Corporate Bonds* | $ | — | $ | 103,525,543 | $ | — | $ | 103,525,543 | ||||||||
Certificates of Deposit | — | 248,288 | — | 248,288 | ||||||||||||
U.S. Treasury Obligations | — | 44,565,939 | — | 44,565,939 | ||||||||||||
U.S. Agency Obligations | — | 13,526,023 | — | 13,526,023 | ||||||||||||
U.S. Agency Obligations – Mortgage-Backed | — | 41,850,654 | — | 41,850,654 | ||||||||||||
Taxable Municipal Bonds | — | 10,112,176 | — | 10,112,176 | ||||||||||||
Preferred Stocks | 1,978,720 | — | — | 1,978,720 | ||||||||||||
Cash Equivalents | 53,940 | — | — | 53,940 | ||||||||||||
Total | $ | 2,032,660 | $ | 213,828,623 | $ | — | $ | 215,861,283 |
Enhanced Return Fund | Level 1 | Level 2 | Level 3 | Totals | ||||||||||||
Corporate Bonds* | $ | — | $ | 84,113,809 | $ | — | $ | 84,113,809 | ||||||||
Certificates of Deposit | — | 248,288 | — | 248,288 | ||||||||||||
U.S. Treasury Obligations | — | 7,286,046 | — | 7,286,046 | ||||||||||||
U.S. Agency Obligations | — | 10,802,713 | — | 10,802,713 | ||||||||||||
U.S. Agency Obligations – Mortgage-Backed | — | 12,385,374 | — | 12,385,374 | ||||||||||||
Taxable Municipal Bonds | — | 816,236 | — | 816,236 | ||||||||||||
Cash Equivalents | 8,713,755 | — | — | 8,713,755 | ||||||||||||
Sub-Total | $ | 8,713,755 | $ | 115,652,466 | $ | — | $ | 124,366,221 | ||||||||
Other Financial Instruments** | (10,456,935 | ) | — | — | (10,456,935 | ) | ||||||||||
Total | $ | (1,743,180 | ) | $ | 115,652,466 | $ | — | $ | 113,909,286 |
* | 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. |
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3) Security Valuation and Transactions:, continued
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.
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 Bond Funds F share classes also have a 12b-1 fee at the annual rate of 0.25% (before the contractual waiver described below) of the Fund’s average daily net assets, which is accrued daily and paid monthly.
The Adviser received management fees for the year ended December 31, 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%. For the Bond Funds F share classes, the Adviser has agreed to waive a part of the 12b-1 fee from a maximum of 0.25% to an effective annual rate of 0.15%. This is a change in the effective fee ratio 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, and is not subject to recoupment.
For the year ended December 31, 2018, information regarding fees was as follows:
Fund | Management Fee | Management Fee Waiver | Effective Management Fee Ratio | Management Fee After Waiver | Contractual Waiver | Payable | ||||||||||||||||||
Short Duration Bond Fund | 0.30 | % | 0.050 | % | 0.250 | % | $ | 363,058 | $ | 76,643 | $ | 30,284 | ||||||||||||
Intermediate Bond Fund | 0.30 | % | 0.050 | % | 0.250 | % | 327,488 | 69,016 | 29,165 | |||||||||||||||
Core Bond Fund | 0.30 | % | 0.050 | % | 0.250 | % | 514,533 | 108,654 | 45,997 | |||||||||||||||
Enhanced Return Fund | 0.35 | % | — | 0.35 | % | 488,551 | — | 38,160 |
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 $48,000 for the year ended December 31, 2018, which was paid by the Adviser, and as a group they received no additional compensation from the Trust. The Trust consists of nine Funds: Johnson Equity Income Fund, Johnson Opportunity 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 December 31, 2018, Covenant Trust Company, owned in aggregate 54.41% of the Short Duration Bond Fund, Class I Shares; 61.91% of the Intermediate Bond Fund, Class I Shares; and 38.93% of the Core Bond Fund, Class I Shares. As of December 31, 2018, client accounts held by the Adviser owned in aggregate 100% of the Short Duration Bond Fund, Class F shares; 100% of the Intermediate Bond Fund, Class F Shares; and 100% of the Core Bond Fund, Class F Shares. As of December 31, 2018, client accounts managed by the Adviser and held by Charles Schwab & Co, held in aggregate 91.60% 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.
39
6) Purchases and Sales of Securities:
For the year ended December 31, 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 | $ | 45,461,649 | $ | 34,673,748 | $ | 16,539,248 | $ | 17,074,590 | ||||||||
Intermediate Bond Fund | 29,665,527 | 19,991,640 | 27,830,153 | 22,939,103 | ||||||||||||
Core Bond Fund | 66,905,116 | 49,357,036 | 40,553,135 | 30,547,847 | ||||||||||||
Enhanced Return Fund | 36,758,811 | 40,763,036 | 51,285,986 | 55,625,073 |
7) Capital Share Transactions:
As of December 31, 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 | ||||||||||||
Class I Shares Year Ended | Class F Shares* Year Ended | |||||||||||
12/31/2018 | 12/31/2017 | 12/31/2018 | ||||||||||
Issued | 2,783,205 | 3,397,743 | 67 | |||||||||
Reinvested | 53,186 | 39,159 | 1 | |||||||||
Redeemed | (2,544,945 | ) | (2,437,114 | ) | — | |||||||
Change in shares outstanding | 291,446 | 999,788 | 68 | |||||||||
Shares outstanding, beginning of period | 9,301,963 | 8,302,175 | — | |||||||||
Shares outstanding, end of period | 9,593,409 | 9,301,963 | 68 |
Intermediate Bond Fund | ||||||||||||
Class I Shares Year Ended | Class F Shares* Year Ended | |||||||||||
12/31/2018 | 12/31/2017 | 12/31/2018 | ||||||||||
Issued | 2,038,813 | 1,950,160 | 65 | |||||||||
Reinvested | 33,356 | 21,939 | 1 | |||||||||
Redeemed | (1,103,813 | ) | (993,716 | ) | — | |||||||
Change in shares outstanding | 968,356 | 978,383 | 66 | |||||||||
Shares outstanding, beginning of period | 8,095,341 | 7,116,958 | — | |||||||||
Shares outstanding, end of period | 9,063,697 | 8,095,341 | 66 |
40
7) Capital Share Transactions:, continued
Core Bond Fund | ||||||||||||
Class I Shares Year Ended | Class F Shares* Year Ended | |||||||||||
12/31/2018 | 12/31/2017 | 12/31/2018 | ||||||||||
Issued | 3,996,991 | 4,466,903 | 64 | |||||||||
Issued for Subscriptions-in-kind | 224,176 | 1,384,845 | — | |||||||||
Reinvested | — | 140,131 | 1 | |||||||||
Redeemed | (2,848,914 | ) | (762,198 | ) | — | |||||||
Change in shares outstanding | 1,372,253 | 5,229,681 | 65 | |||||||||
Shares outstanding, beginning of period | 12,648,735 | 7,419,054 | — | |||||||||
Shares outstanding, end of period | 14,020,988 | 12,648,735 | 65 |
Enhanced Return Fund | ||||||||
Year Ended | ||||||||
12/31/2018 | 12/31/2017 | |||||||
Issued | 245,529 | 669,109 | ||||||
Reinvested | 625,192 | 1,493,455 | ||||||
Redeemed | (492,207 | ) | (448,604 | ) | ||||
Change in shares outstanding | 378,514 | 1,713,960 | ||||||
Shares outstanding, beginning of period | 8,481,757 | 6,767,797 | ||||||
Shares outstanding, end of period | 8,860,271 | 8,481,757 |
* | Effective date for Class F shares was May 1, 2018. |
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.
41
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 June 30, 2018 and held through December 31, 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 June 30, 2018 | Ending Account Value December 31, 2018 | Expenses Paid During Period* July 1, 2018 – December 31, 2018 | ||||||||||
Short Duration Bond Fund | ||||||||||||
Class I – Actual Fund Return | $ | 1,000.00 | $ | 1,000.00 | $ | 1.26 | ||||||
Class I – Hypothetical Return | $ | 1,000.00 | $ | 1,023.95 | $ | 1.29 | ||||||
Class F – Actual Fund Return | $ | 1,000.00 | $ | 1,004.06 | $ | 2.02 | ||||||
Class F – Hypothetical Return | $ | 1,000.00 | $ | 1,023.19 | $ | 2.06 | ||||||
Intermediate Bond Fund | ||||||||||||
Class I – Actual Fund Return | $ | 1,000.00 | $ | 1,000.00 | $ | 1.26 | ||||||
Class I – Hypothetical Return | $ | 1,000.00 | $ | 1,023.95 | $ | 1.29 | ||||||
Class F – Actual Fund Return | $ | 1,000.00 | $ | 1,003.60 | $ | 2.02 | ||||||
Class F – Hypothetical Return | $ | 1,000.00 | $ | 1,023.19 | $ | 2.06 | ||||||
Core Bond Fund | ||||||||||||
Class I – Actual Fund Return | $ | 1,000.00 | $ | 1,000.97 | $ | 1.26 | ||||||
Class I – Hypothetical Return | $ | 1,000.00 | $ | 1,023.95 | $ | 1.29 | ||||||
Class F – Actual Fund Return | $ | 1,000.00 | $ | 1,004.52 | $ | 2.03 | ||||||
Class F – Hypothetical Return | $ | 1,000.00 | $ | 1,023.19 | $ | 2.06 | ||||||
Enhanced Return Fund | ||||||||||||
Actual Fund Return | $ | 1,000.00 | $ | 935.62 | $ | 1.65 | ||||||
Hypothetical Return | $ | 1,000.00 | $ | 1,023.44 | $ | 1.81 |
* | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). For the Institutional Bond Funds, the expense ratio (after waiver) is 0.25% (I shares, and 0.40% (F shares), and for the Enhanced Return Fund, the expense ratio is 0.35%. |
42
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
43
To the Shareholders and Board of Trustees of
Johnson Mutual Funds Trust
We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of Johnson Institutional Short Duration Bond Fund, Johnson Institutional Intermediate Bond Fund, Johnson Institutional Core Bond Fund, and Johnson Enhanced Return Fund (the “Funds”), each a series of Johnson Mutual Funds Trust, as of December 31, 2018, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, including the related notes, and the financial highlights for each of the five periods in the period then ended (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of December 31, 2018, and the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five periods in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits include performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and confirmation of securities owned as of December 31, 2018, by correspondence with the custodian and brokers. Our audits also include evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion. We have served as the Funds’ auditor since 2004.
/s/ COHEN & COMPANY, LTD.
Cleveland, Ohio
March 1, 2019
44
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. | 9 | None | |||||
Independent Trustees | ||||||||||
Ronald H. McSwain (76) 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 | 9 | None | |||||
John R. Green (76) 3777 West Fork Rd. Cincinnati, OH 45247 | Trustee | Since 2006 | Retired from The Procter & Gamble Company | 9 | None | |||||
James J. Berrens (53) 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 | 9 | None | |||||
Dr. Jeri B. Ricketts (61) 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. | 9 | None |
45
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 (48) 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 (60) 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 (47) 3777 West Fork Road Cincinnati, Ohio 45247 | Secretary | Since 2007 | Compliance Associate for the Adviser since March 2006 | NA | NA |
46
Trustees and Officers
Ronald H. McSwain | Independent Trustee, Chairman | |||
Timothy E. Johnson | Interested Trustee | |||
James J. Berrens | Independent Trustee | |||
John R. Green | Independent Trustee | |||
Jeri B. Ricketts | Independent Trustee | |||
Jason Jackman | President | |||
Dale H. Coates | Vice President | |||
Scott J. Bischoff | Chief Compliance Officer | |||
Marc E. Figgins | Chief Financial Officer, Treasurer | |||
Jennifer J. Kelhoffer | Secretary |
Transfer Agent and Fund Accountant
Johnson Financial, Inc.
3777 West Fork Road
Cincinnati, Ohio 45247
(513) 661-3100 (800) 541-0170
Custodian
US Bank
425 Walnut Street
Cincinnati, OH 45202
Independent Registered Public Accounting Firm
Cohen & 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.
(a) As of the end of the period covered by this report, the registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party.
(b) For purposes of this item, “code of ethics” means written standards that are reasonably designed to deter wrongdoing and to promote:
(1) | Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
(2) | Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the Commission and in other public communications made by the registrant; |
(3) Compliance with applicable governmental laws, rules, and regulations;
(4) | The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and |
(5) Accountability for adherence to the code.
(c) Amendments: During the period covered by the report, the code of ethics was not amended.
(d) Waivers: During the period covered by the report, the registrant has not granted any express or implicit waivers from the provisions of the code of ethics.
(e) Not applicable.
(f) 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
Item 3. Audit Committee Financial Expert.
The registrant’s board of trustees has determined that that the registrant does not have an audit committee financial expert serving on its Audit Committee as defined by the SEC. The board determined that, although none of the Audit Committee members meet the technical definition of an audit committee financial expert as defined by the SEC, the members have sufficient financial expertise to address any issues that are likely to come before the committee. It was the consensus of the Trustees that it is not necessary at the present time for the committee to have an audit committee financial expert and that, if an issue ever arises, the committee will consider hiring an expert to assist as needed.
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Item 4. Principal Accountant Fees and Services.
(a) | Audit Fees |
FY2017 | $ | 74,800.00 | ||||||
FY2018 | $ | 77,500.00 |
(b) | Audit-Related Fees |
Registrant | Adviser | |||||||
FY2017 | $ | 5,600.00 | $ | 9,500.00 | ||||
FY2018 | $ | 5,600.00 | $ | 9,500.00 |
(c) | Tax Fees |
Registrant | Adviser | |||||||
FY2017 | $ | 27,500.00 | $ | 0.00 | ||||
FY2018 | $ | 27,500.00 | $ | 0.00 |
Nature of the services: The auditor completed the annual tax returns.
(d) | All Other Fees |
Registrant | Adviser | |||||||
FY2017 | $ | 0.00 | $ | 0.00 | ||||
FY2018 | $ | 0.00 | $ | 0.00 |
(e) | (1) | Audit Committee’s Pre-Approval Policies |
The audit committee has not adopted pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. All non-audit services provided to the Trust or the Adviser by the Trust’s principal accountant are specifically approved in advance on a case-by-case basis by the Board’s audit committee.
(2) | Percentages of Services Approved by the Audit Committee |
None of the services described in paragraph (b) through (d) of this Item were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. All non-audit services were pre-approved by the audit committee pursuant to paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation S-X.
(f) During audit of registrant's financial statements for the most recent fiscal year, less than 50 percent of the hours expended on the principal accountant's engagement were attributed to work performed by persons other than the principal accountant's full-time, permanent employees.
-3- |
(g) The aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant:
Registrant | Adviser | |||||||
FY2017 | $ | 27,500.00 | $ | 0.00 | ||||
FY2018 | $ | 27,500.00 | $ | 0.00 |
(h) Not applicable.
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. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Funds.
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 February 8, 2019, 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 fourth fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
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Item 12. Exhibits.
(a)(1) Not applicable.
(a)(2) Certifications required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2(a)) are filed herewith.
(a)(3) Not applicable.
(b) Certifications required by Rule 30a-2(b) are filed herewith.
-5- |
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
DateMarch 8, 2019
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
DateMarch 8, 2019
By:/s/ Marc E. Figgins
Marc E. Figgins, Treasurer
DateMarch 8, 2019
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