TABLE OF CONTENTS
Portfolio Commentaries................................................... 1
Schedules of Investments
Intermediate Fixed Income Fund ........................................ 9
Large Cap Equity Fund ................................................. 13
Small Cap Equity Fund ................................................. 17
International Equity Fund ............................................. 21
Statements of Assets and Liabilities ..................................... 28
Statements of Operations ................................................. 29
Statements of Changes in Net Assets ...................................... 30
Financial Highlights ..................................................... 31
Notes to the Financial Statements ........................................ 32
Report of Independent Public Accountants ................................. 36
<PAGE>
PORTFOLIO COMMENTARIES OCTOBER 31, 1998
INTERMEDIATE FIXED INCOME FUND
Global financial and economic problems led to a dramatic shift by nervous
investors into U.S. treasury bonds and other bonds and equities. The result was
that interest rates fell significantly on treasuries and either fell less or
rose on other bonds. Over the course of the Fund's existence, 4/1/98 -
10/31/98, interest rates have declined, causing the Fund to realize a total
return over the period greater than the coupon income received. The recent poor
corporate bond performance for the quarter ended 10/31/98 was due to the flight
to quality. This has hurt the Fund's total return performance relative to its
benchmark since the Fund had been focused on corporate bonds and their higher
yields. The emphasis on high quality did cushion the Fund from the effect felt
by lower quality issues, which faced one of their worst periods in eight years.
For the period ended October 31, 1998, the Fund provided a total return, before
sales charges, that was favorable versus its Lipper benchmark, yet lagged the
Fund's benchmark.
TOTAL RETURN
for the period ended October 31, 1998
Since inception 3.01%
Lehman Bros. Lipper Intermediate
Intermediate Intermediate Fixed
Gov't./Corp. Investment Grade Income
Bond Index Debt Index Fund
------------ ----------------- ------------
4/1/98 $10,000 $10,000 $9,725
4/30/98 10,050 10,047 9,758
5/31/98 10,124 10,137 9,868
6/30/98 10,188 10,218 9,934
7/31/98 10,224 10,239 9,939
8/31/98 10,385 10,378 10,132
9/30/98 10,646 10,610 10,426
10/31/98 10,635 10,525 10,301
This chart assumes an initial gross investment of $10,000 with all sales charges
made on 3/31/98 (commencement). Returns shown include the reinvestment of all
dividends and reflect fee waivers in effect; in the absence of fee waivers,
performance would be reduced. Past performance is not predictive of future
results. Investment return and principal value will fluctuate, so that your
shares, when redeemed, may be worth more or less than their original cost.
The Lehman Brothers Intermediate Government/Corporate Bond Index includes all
public obligations of the U.S. Treasury, excluding flower bonds and foreign-
targeted issues; all publicly issued debt of U.S. government agencies and quasi-
federal corporations and corporate debt guaranteed by the U.S. government; all
publicly issued, fixed rate, nonconvertible investment-grade dollar-denominated,
SEC-registered corporate debt. The Index sectors are industrial, finance,
utility and Yankee. Also included among Yankees is debt issued or guaranteed by
foreign sovereign governments, municipalities or governmental or international
agencies. It includes only those bonds with maturities of up to 10 years.
The Lipper Intermediate Investment Grade Debt Index includes the 30
largest funds which, by prospectus or portfolio practice, invests at least
65% of its assets in investment grade debt issues (rated in the top four
grades) with dollar-weighted average maturities of one to five years.
Unlike actual fund performance, performance of an index does not reflect any
expenses or transaction costs. A direct investment in an unmanaged index is not
possible.
<PAGE>
PORTFOLIO COMMENTARIES OCTOBER 31, 1998
INTERMEDIATE FIXED INCOME FUND (continued)
As of October 31, we think corporate bonds are more attractive than they have
been in 10 years compared to other fixed income alternatives and the Fund is
positioned such that going forward it may provide a competitive return. The
Fund has a 4.00% weighting in the mortgage sector because of the prospect of
continued refinancing. In the last six months, this more rapid refinancing has
occurred, and the yield on some of these instruments has risen. Therefore, at
some point the Fund may again increase its allocation in this area. We expect
our continued emphasis to be on corporate bonds with less emphasis on treasury
issues.
While interest rates have risen in September, we expect them to decline as the
U.S. and foreign economies show only modest growth and low inflation. We
believe our conservative strategy and overweighting of corporate securities with
their higher relative yields will be rewarded longer term while providing a
competitive yield.
George A. Balistreri, CFA
Portfolio Manager
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
PORTFOLIO COMMENTARIES OCTOBER 31, 1998
LARGE CAP EQUITY FUND
The shockwaves of the Asian crisis that began in 1997 have finally reverberated
to the U.S. markets, having both a real effect in the form of weak corporate
earnings growth and an intangible effect through increasingly negative market
psychology. Since the end of June, there has been considerable volatility in
the equity markets, marked by the July/August downturn and the subsequent
September/October surge. As a portfolio with broad market exposure, the
Fund participated in this volatility. However, the Fund (before sales charges)
performed favorably versus the appropriate Lipper and Morningstar benchmarks,
but lagged the S&P 500/R Index.
TOTAL RETURN
for the period ended October 31, 1998
Since inception (7.74)%
Lipper Growth Large Cap
& Index Fund Equity
S&P 500/R Index Fund
------------ ----------------- ------------
4/1/98 $10,000 $10,000 $9,600
4/30/98 10,101 10,054 9,539
5/31/98 9,927 9,900 9,463
6/30/98 10,330 10,019 9,598
7/31/98 10,220 9,774 9,252
8/31/98 8,743 8,393 8,090
9/30/98 9,303 8,770 8,649
10/31/98 10,059 9,407 9,226
This chart assumes an initial gross investment of $10,000 with all sales charges
made on 3/31/98 (commencement). Returns shown include the reinvestment of all
dividends and reflect fee waivers in effect; in the absence of fee waivers,
performance would be reduced. Past performance is not predictive of future
results. Investment return and principal value will fluctuate, so that your
shares, when redeemed, may be worth more or less than their original cost.
The S&P 500/R Composite Stock Index is an unmanaged index of 500 selected
common stocks, most of which are listed on the New York Stock Exchange. The
Index is heavily weighted toward stocks with large market capitalizations and
represents approximately two-thirds of the total market value of all domestic
common stocks.
The Lipper Growth & Income Fund Index includes the 30 largest funds which, by
prospectus or portfolio practice, combine a growth of earning orientation and
an income requirement for level and/or rising dividends. Each fund is equally
weighted in the Index and is adjusted for capital gains distributions and income
dividends.
Unlike actual fund performance, performance of an index does not reflect any
expenses or transaction costs. A direct investment in an unmanaged index is not
possible.
- --------------------------------------------------------------------------------
Stable Sectors Led the Way
For the fiscal period, stocks of companies in sectors seen as more stable, such
as health care, communications and utilities, performed much better than the
cyclical sectors due to their resiliency in an economic downturn. Stocks held
in the economically sensitive sectors were adversely affected by the
expectations that a slower economy would impact these companies the most.
Retail and industrial issues were among the hardest hit as investors assumed
that both consumers and businesses would tighten their belts and curtail
spending in an uncertain economic environment. The negative performance in the
financial sector was most pronounced during August, when asset quality fears
associated with Asia penalized money centers and regional banks. We feel the
adverse performance of the regional banks was not justified due to their
negligible exposure to the Asian region. September and October were much more
favorable months for the cyclicals and financials, as the rate cuts initiated by
the Federal Reserve stemmed fears of an economic slowdown resulting in a
recession.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
PORTFOLIO COMMENTARIES OCTOBER 31, 1998
LARGE CAP EQUITY FUND (continued)
Focus on Valuation and Fundamentals
Risk control becomes more relevant in turbulent markets. Our process focuses
on owning fundamentally sound companies that are attractively valued within
their respective sectors. In the current volatile market that we have seen in
1998, concentrating on fundamentals is particularly important, due to the
softening of earnings growth that we anticipate. The Fund owns companies
with strong cash flow and low leverage, which should allow these companies
the financial flexibility needed to operate in a potentially difficult
environment. Portfolio diversification also enhances risk control. We
believe the Fund is well diversified across the economic spectrum, which
attempts to reduce portfolio volatility.
Large Cap Value vs. Large Cap Growth - The Disparity
The dispersion between growth and value is as large as it has ever been since
the BARRA indices began tracking in 1975. Shown below is the annual difference
between the S&P 500/BARRA Value Index and the S&P 500/BARRA Growth Index going
back to 1975. In basic terms, if the S&P 500/R Index is split in half based on
valuation measures, the result is the S&P 500/R/BARRA Value and S&P 500/BARRA
Growth indices. Our style, which focuses on value investing, helps explain why
the return lagged behind the S&P 500/R Index. While we cannot predict when value
investing will come back into favor, these trends tend to reverse, which we
believe will benefit value investing and the Fund. The advantage of our value
discipline can be summarized as follows: For each $1 paid for a stock, the Fund
seeks to buy more cash flow and earnings than the average stock in a broad
market universe.
S&P/BARRA Value Index minus S&P/BARRA Growth Index
(PHOTO HERE)
Wendell L. Perkins, CFA
Frank J. Gambino, CFA
Portfolio Managers
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
PORTFOLIO COMMENTARIES OCTOBER 31, 1998
SMALL CAP EQUITY FUND
The period 3/31/98 - 10/31/98 was a continuation of the nearly four-year trend
of small capitalization stocks underperforming large capitalization stocks.
This period underscored the volatility inherent in small capitalization stock
investing. The Fund's inception began near the peak of the 1998 small cap
market rally and was subject to investors' rotation out of more volatile assets
into less volatile assets (e.g. U.S. treasury securities) in the wake of the
Asian crisis. Small company issues rebounded nicely during September and
October, as market sentiment shifted a bit and corporate earnings, on average,
met or exceeded tempered forecasts. Although the Fund's performance (before
sales charges) was down substantially on an absolute basis, it outperformed its
peer group and its stated benchmark.
TOTAL RETURN
for the period ended October 31, 1998
Since inception (21.11)%
Lipper Small
S&P SmallCap Small Cap Cap
600 Stock Index Fund Index Fund
------------ ----------------- ------------
4/1/98 $10,000 $10,000 $9,600
4/30/98 10,059 10,042 9,578
5/31/98 9,526 9,487 9,146
6/30/98 9,554 9,613 9,021
7/31/98 8,823 8,943 8,618
8/31/98 7,120 7,168 7,361
9/30/98 7,556 7,556 7,582
10/31/98 7,907 7,865 7,889
This chart assumes an initial gross investment of $10,000 with all sales charges
made on 3/31/98 (commencement). Returns shown include the reinvestment of all
dividends and reflect fee waivers in effect; in the absence of fee waivers,
performance would be reduced. Past performance is not predictive of future
results. Investment return and principal value will fluctuate, so that your
shares, when redeemed, may be worth more or less than their original cost.
The S&P SmallCap 600 Index is a capitalization-weighted index of 600
domestic stocks that measures the performance of companies with a small
market capitalization. The S&P SmallCap 600 Index fluctuates due to changes in
the aggregate market value of these stocks.
The Lipper Small Cap Fund Index includes the 30 largest funds which, by
prospectus or portfolio practice, invest primarily in companies with market
capitalizations of less than $1 billion at the time of purchase. Each fund is
equally weighted in the Index and is adjusted for capital gains distributions
and income dividends.
Unlike actual fund performance, performance of an index does not reflect any
expenses or transaction costs. A direct investment in an unmanaged index is not
possible.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
PORTFOLIO COMMENTARIES OCTOBER 31, 1998
SMALL CAP EQUITY FUND (continued)
Cyclical Sectors Hurt the Most
Stocks held in the economically sensitive sectors were adversely affected by the
expectations that a slower economy would impact these companies the most.
Retail and capital goods issues were among the hardest hit as investors assumed
that both consumers and businesses would curtail spending in an uncertain
economic environment. Stocks of companies in sectors seen as more stable, such
as consumer staples and utilities, performed much better due to their resiliency
in an economic downturn. September and October were much more favorable months
for the cyclicals, as the rate cuts initiated by the Federal Reserve stemmed
fears of an economic slowdown resulting in a recession.
Focus on Valuation and Fundamentals
Our process focuses on owning companies we believe are fundamentally sound that
we consider to be attractively valued within their respective sectors. In the
current volatile market, we believe concentrating on fundamentals is
particularly important, due to the softening of earnings growth that is
anticipated. The Fund owns companies with strong cash flow and low leverage,
which we believe should allow these companies the financial flexibility needed
to operate in a potentially difficult environment.
Small Cap - When Will it Turn Around?
After 3+ years of underperformance, small cap performance may be due for a
reversal. Since 1945, the performance of small cap stocks has nearly doubled
the S&P 500/R. However, in many periods of low inflation, small cap stocks have
underperformed large cap stocks, as larger companies are better able to mitigate
pricing pressure by leveraging the benefits of lower costs. As of October 31,
the disinflationary environment may be one of the factors explaining investors'
preference of large cap stocks over small cap stocks. Another factor has been
institutional investors' appetite for liquidity, which has driven prices of
large capitalization stocks in the Dow Jones Industrial Average and the S&P
500/R to record valuations. Fortunately for small cap investors, these
factors tend to shift over time. Should another resurgence be experienced
in this long economic cycle and institutional investors reduce the premium paid
for liquidity, small cap stocks may be positioned to outperform.
Wendell L. Perkins, CFA
Frank J. Gambino, CFA
Portfolio Managers
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
PORTFOLIO COMMENTARIES OCTOBER 31, 1998
INTERNATIONAL EQUITY FUND
Investor confidence in global markets was continually tested throughout the
fiscal period, as fear spread the Asian financial woes would migrate to Latin
America and Europe. The collapse of global commodity prices, particularly
minerals, caused stunning currency and stock market declines in developed stable
countries such as Australia, Canada and New Zealand. The Asian and European
stock markets posted significant losses during the period, prior to recovering
during the global stock market rally in September and October. The German DAX,
French CAC and the Swiss Market Index all fell in excess of 30% from their July
highs before rebounding in early October. The Fund's European exposure is
neutral to its benchmark thus having little relative impact on the Fund's
performance versus its benchmark.
TOTAL RETURN
for the period ended October 31, 1998
Since inception (13.92)%
Morgan Stanley
Capital
International All Lipper
Country World International International
ex-USA Index Fund Index Equity
------------ ----------------- ------------
4/1/98 $10,000 $10,000 $9,600
4/30/98 10,047 10,154 9,578
5/31/98 9,835 10,174 9,501
6/30/98 9,778 10,086 9,347
7/31/98 9,856 10,241 9,491
8/31/98 8,447 8,767 8,205
9/30/98 8,259 8,494 8,100
10/31/98 9,110 9,119 8,608
This chart assumes an initial gross investment of $10,000 with all sales charges
made on 3/31/98 (commencement). Returns shown include the reinvestment of all
dividends and reflect fee waivers in effect; in the absence of fee waivers,
performance would be reduced. Past performance is not predictive of future
results. Investment return and principal value will fluctuate, so that your
shares, when redeemed, may be worth more or less than their original cost.
The Morgan Stanley Capital International All Country World ex-USA Index is the
aggregate of 47 of 51 individual country indices calculated by MSCI. The Index
excludes the USA. Each country index is calculated using the five following
steps: 1) define the local market by constructing a matrix of all listed
securities; 2) sort the matrix by industry; 3) capture 60% of the market cap of
each group by selecting the most investable stocks in each industry; 4) avoid
cross-ownership; and 5) apply full market cap weights to each stock in the
index.
The Lipper International Fund Index includes the 30 largest funds which, by
prospectus or portfolio practice, normally invest their assets in securities
whose primary trading markets are outside the United States. Each fund is
equally weighted in the Index and is adjusted for capital gains distributions
and income dividends.
Unlike actual fund performance, performance of an index does not reflect any
expenses or transaction costs. A direct investment in an unmanaged index is not
possible.
Investors are reminded that, while investing globally can be rewarding,
investments in foreign securities involve investment risks including currency,
liquidity, political, economic and market risks.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
PORTFOLIO COMMENTARIES OCTOBER 31, 1998
INTERNATIONAL EQUITY FUND (continued)
Stable Stocks Cushion the Fall
The Fund's holdings of consumer staple, telecommunication, utility and health
care stocks cushioned the dramatic decline in global equity prices during the
fiscal quarter. These sectors, as well as technology, actually posted positive
returns from 3/31/98 to 10/31/98 as investors fled from financial stocks and
cyclical stocks into the steady earning stable end of the market. The Fund's
holdings in banking, cyclical industrials and durables suffered significant
losses (in excess of 20%). While these stocks have bounced back from their
October lows, investors remain cautious.
Focus on Diversification, Valuation and Fundamentals
The Fund is structured with a focus on developed global markets, with a small
exposure to lesser-developed markets such as Mexico, Brazil and Malaysia. The
Fund, benchmarked to the MSCI All Country World less U.S., is nearly two-thirds
invested in Europe and the United Kingdom. Relative to the benchmark and as of
October 31, 1998, the Fund is underweighted in Japan and in the emerging Asian
markets, since these regions are currently in recession. Our investment process
focuses on companies we consider to be strong with solid cash flow, conservative
balance sheets and competitive market share. The holdings in the Fund are
diversified across 20 economic sectors in 28 countries, which may reduce
volatility over time.
Value is Underperforming Globally
The Fund owns international equity securities which we consider to be
undervalued relative to their respective country indices and industry peer
groups. The Fund's price/earnings ratio and price/book ratio at October 31,
1998 were 21.6x and 3.5x respectively versus nearly 23.9x and 4.2x for the
average Morningstar Foreign Stock Fund<F1>. While value stocks may perform
relatively better than growth stocks during a market downturn, the recent market
turbulence has been an exception. Investors were particularly scared by
uncertainties in the financial sector, following the collapse of the Russian
ruble. Cyclicals were punished as investors began to talk of a global recession
in 1999. As cyclicals and financials tend to be more value oriented, value
international funds were more susceptible during the late summer market
correction. Although the Fund underperformed its benchmark for the seven-month
period, the Fund did outperform (before sales charges) the value component of
the MSCI All Country World less U.S., which declined 11.0%.
Wendell L. Perkins, CFA
Frank J. Gambino, CFA
Jean-Claude Heritier
Patrick Gigon
Portfolio Managers
<F1> The Morningstar Foreign Stock Fund category is comprised of 843
international funds having no more than 10% of their stocks invested in the
United States.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
SCHEDULES OF INVESTMENTS October 31, 1998
Intermediate Fixed Income Fund
Principal
Amount Value
- ------------------------------------------------------------------------------
CORPORATE BONDS - 66.86%
$ 500,000 AT&T Capital Corp., 6.60%, 5/15/05 $510,625
300,000 AT&T Corp., 8.125%, 1/15/22 324,375
750,000 AirTouch Communications, Inc., 7.50%, 7/15/06 824,063
1,000,000 Alberto-Culver, Co., 6.375%, 6/15/28 1,016,250
500,000 Allstate Corp., 6.75%, 5/15/18 498,125
1,000,000 American Greetings, 6.10%, 8/1/28 1,026,250
500,000 American Home Products, 6.50%, 10/15/02 523,750
1,000,000 AMGEN Inc., 6.50%, 12/1/07 1,066,250
500,000 Anheuser-Busch Cos., Inc., 6.90%, 10/1/02 528,125
1,000,000 Applied Materials, Inc., 7.125%, 10/15/17 968,750
800,000 Associates Corp. N.A., 6.00%, 12/1/02 807,000
500,000 Autozone, Inc., 6.50%, 7/15/08 511,875
300,000 Baltimore Gas & Electric, 7.25%, 7/1/02 322,875
1,000,000 Bank One Texas, 6.25%, 2/15/08 1,021,250
705,000 BellSouth Telecommunications, Inc., 8.25%, 7/1/32 795,769
1,500,000 BellSouth Telecommunications, Inc., 7.50%, 6/15/33 1,612,500
500,000 Borg-Warner Automotive, Inc., 7.00%, 11/1/06 528,125
1,000,000 Commercial Credit Co., 6.25%, 1/1/08 1,000,000
1,500,000 Computer Associates, 6.50%, 4/15/08 1,479,375
500,000 Consolidated Edison Co., 6.45%, 12/1/07 531,250
1,000,000 Diago Capital PLC, 6.125%, 8/15/05 1,017,899
500,000 Donaldson, Lufkin & Jenrette, Inc., 6.875%, 11/1/05 503,125
500,000 Donaldson, Lufkin & Jenrette, Inc., 6.50%, 4/1/08 483,125
500,000 Dow Chemical Co., 6.85%, 8/15/13 538,125
500,000 Dresdner Bank New York, 6.625%, 9/15/05 507,500
250,000 Fleet Financial Group, Inc., 7.19%, 10/2/12 275,000
750,000 Ford Motor Credit Co., 6.25%, 12/8/05 771,563
1,000,000 GTE Corp., 6.46%, 4/15/08 1,053,750
1,000,000 GTE Corp., (MBIA Insured), 6.46%, 4/15/08 1,056,250
500,000 GTE North, Inc., 6.375%, 2/15/10 528,125
1,000,000 General Mills, Inc., 4.75%, 10/8/03 985,000
500,000 General Motors Corp., 8.10%, 6/15/24 554,375
1,000,000 Hercules, Inc., 6.60%, 8/1/27 1,072,500
250,000 Household Finance Corp., 7.25%, 7/15/03 265,938
500,000 Household Finance Corp., 7.30%, 7/30/12 536,250
400,000 Idaho Power Corp., 8.75%, 3/15/27 439,000
750,000 Knight-Ridder, Inc., 6.625%, 11/1/07 802,500
1,000,000 Lehman Brothers Holdings, Inc., 6.15%, 3/15/00 991,250
500,000 Loews Corp., 6.75%, 12/15/06 516,250
See Notes to the Financial Statements.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
SCHEDULES OF INVESTMENTS October 31, 1998
Intermediate Fixed Income Fund (continued)
Principal
Amount Value
- ------------------------------------------------------------------------------
CORPORATE BONDS (CONTINUED) - 66.86%
$1,375,000 Martin Marietta Corp., 7.75%, 4/15/23 $1,529,687
200,000 McGraw-Hill Co., Inc., 9.43%, 9/1/00 217,500
$250,000 Mead Corp., 8.125%, 2/1/23 279,687
350,000 Mellon Financial Co., 6.875%, 3/1/03 367,062
1,000,000 Monsanto Co., 6.21%, 2/5/08 1,048,750
1,000,000 Motorola, Inc., 5.80%, 10/15/08 1,000,000
250,000 J.P. Morgan & Co., Inc., 7.625%, 9/15/04 268,750
500,000 Nabisco, Inc., 6.00%, 2/15/01 497,500
1,000,000 NationsBank Corp., 7.19%, 7/30/12 1,051,250
1,000,000 National City Bank Cleveland, 7.10%, 9/25/12 1,113,750
500,000 Northern States Power Co., 5.75%, 10/1/03 516,250
200,000 Olsten Corp., 7.00%, 3/15/06 203,250
1,000,000 PaineWebber Group, 6.55%, 4/15/08 972,500
1,000,000 J.C. Penney Co., Inc., 6.875%, 10/15/15 1,012,500
350,000 Rockwell International Corp., 8.375%, 2/15/01 374,500
500,000 Sara Lee Corporation, 6.15%, 6/19/08 523,750
1,000,000 Scana Corp., 5.81%, 10/23/08 1,001,250
150,000 Security Pacific Corp., 9.75%, 5/15/99 153,562
300,000 SmithKline Beecham, 6.625%, 10/1/05 321,375
500,000 Snap-On Tools, Inc., 6.625%, 10/1/05 541,250
600,000 SunTrust Banks, Inc., 6.00%, 1/15/28 620,250
1,000,000 TRW Inc., 6.25%, 1/15/10 1,043,750
1,000,000 Tribune Co., 5.50%, 10/6/08 973,750
1,000,000 Wells Fargo & Co., 6.625%, 4/15/13 1,073,750
----------
TOTAL CORPORATE BONDS
(cost $44,305,569......................................45,499,730
----------
MUNICIPAL BONDS - 3.99%
500,000 Chicago, Illinois Public Building, 7.00%, 1/1/07 545,625
325,000 Cook County School District, 8.00%, 12/1/06 366,031
500,000 Harris County Sports, 6.75%, 11/15/17 510,000
350,000 Massachusetts State Port Authority, 6.35%, 7/1/07 369,250
500,000 Oakland, California Pension, 6.98%, 12/15/09 550,000
350,000 San Francisco, California, Series A, 6.95%, 6/15/03 375,375
----------
TOTAL MUNICIPAL BONDS
(cost $2,608,514).......................................2,716,281
----------
See Notes to the Financial Statements.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
SCHEDULES OF INVESTMENTS October 31, 1998
Intermediate Fixed Income Fund (continued)
Principal
Amount Value
- -----------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES - 19.33%
NOTES - 13.20%
$1,000,000 Federal Farm Credit Bureau Note, 6.51%, 1/7/08 $1,002,553
500,000 Federal Home Loan Bank, 6.375%, 10/22/02 507,575
400,000 Federal Home Loan Bank, 6.40%, 12/4/03 400,445
500,000 Federal Home Loan Bank, 6.00%, 8/25/04 510,089
500,000 Federal Home Loan Bank, 6.229%, 4/20/05 512,698
500,000 Federal Home Loan Bank, 6.85%, 12/4/06 500,520
1,000,000 Federal Home Loan Bank, 6.15%, 3/3/08 1,043,461
1,000,000 Federal Home Loan Mortgage Corp., 6.642%, 3/13/06 1,037,684
250,000 Federal Home Loan Mortgage Corp., 7.245%, 4/24/06 264,116
500,000 Federal Home Loan Mortgage Corp., 7.09%, 11/24/06 502,880
250,000 Federal National Mortgage Assoc., 7.00%, 9/3/03 254,330
300,000 Federal National Mortgage Assoc., 7.25%, 6/1/05 311,552
750,000 Federal National Mortgage Assoc., 6.85%, 9/12/05 777,003
800,000 Federal National Mortgage Assoc., 6.65%, 3/8/06 830,116
500,000 Federal National Mortgage Assoc., 6.29%, 4/23/08 526,183
----------
8,981,205
----------
REMICS - 4.56%
459,441 Federal Home Loan Mortgage Corp., 2044 BD,
6.25%, 3/15/09 461,834
500,000 Federal Home Loan Mortgage Corp., 2024 C,
6.50%, 11/15/10 511,333
500,000 Federal National Mortgage Assoc., 97-23PE,
6.00%, 9/25/08 498,208
500,000 Federal National Mortgage Assoc., 1993-194,
6.50%, 10/25/08 506,134
1,000,000 Federal National Mortgage Assoc., 6.75%, 3/25/23 1,000,439
123,269 Federal National Mortgage Assoc., 1994-4,
7.00%, 8/25/23 124,342
----------
3,102,290
----------
OTHER AGENCY ISSUES - 1.57%
500,000 Private Export Funding Corp., 7.90%, 3/31/00 522,500
500,000 Private Export Funding Corp., 6.49%, 7/15/07 546,875
----------
1,069,375
----------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $12,881,471).....................................13,152,870
----------
See Notes to the Financial Statements.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
SCHEDULES OF INVESTMENTS October 31, 1998
Intermediate Fixed Income Fund (continued)
Principal
Amount Value
- ------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 5.81%
$ 800,000 U.S. Treasury Note, 6.375%, 9/30/01 $843,785
2,750,000 U.S. Treasury Note, 5.875%, 11/30/01 2,868,632
1,000,000 U.S. Treasury Strips, 11/15/24 244,125
----------
TOTAL U.S. TREASURY OBLIGATIONS
(cost $3,790,018).......................................3,956,542
----------
Number
of Shares
- ----------
SHORT-TERM INVESTMENT - 3.22%
2,189,795 SSGA Money Market Fund 2,189,795
----------
TOTAL SHORT-TERM INVESTMENT
(cost $2,189,795).......................................2,189,795
----------
TOTAL INVESTMENTS - 99.21%
(cost $65,775,367) 67,515,218
Cash and Other Assets, less Liabilities - 0.79%...........534,420
----------
NET ASSETS - 100.00%..................................$68,049,638
===========
See Notes to the Financial Statements.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
SCHEDULES OF INVESTMENTS October 31, 1998
Large Cap Equity Fund
Number
of Shares Value
- ------------------------------------------------------------------------------
COMMON STOCKS - 96.70%
AEROSPACE - 4.35%
18,100 General Dynamics Corp. $1,071,294
2,930 Lockheed Martin Corp. 326,329
4,800 Northrop Grumman Corp. 382,800
----------
1,780,423
----------
BANKING - 10.10%
21,150 AmSouth Bancorporation 847,322
6,000 Chase Manhattan Corp. 340,875
4,050 Comerica, Inc. 261,225
3,300 J.P. Morgan & Co., Inc. 311,025
13,800 Mellon Bank Corp. 829,725
15,400 PNCBank Corp. 770,000
20,400 Summit Bancorp. 773,925
----------
4,134,097
----------
CHEMICALS - 2.07%
5,800 Dow Chemical Co. 543,025
9,000 Rohm & Haas Co. 303,750
----------
846,775
----------
CONSUMER DURABLES - 5.74%
12,000 Black & Decker Corp. 620,250
17,300 Ford Motor Co. 938,525
22,100 ITT Industries, Inc. 790,075
----------
2,348,850
----------
CONSUMER STAPLES - 11.41%
29,000 American Stores Co. 944,312
14,900 Brown-Forman Corp., Class B 1,012,269
26,000 Interstate Bakeries Corp. 651,625
5,250 Lancaster Colony Corp. 157,500
21,400 Rite Aid Corporation 849,312
1,700 Sara Lee Corp. 101,469
39,800 Supervalu, Inc. 955,200
----------
4,671,687
----------
See Notes to the Financial Statements.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
SCHEDULES OF INVESTMENTS October 31, 1998
Large Cap Equity Fund (continued)
Number
of Shares Value
- -------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) - 96.70%
ENERGY - 7.21%
6,000 Amerada Hess Corp. $331,500
7,400 Ashland, Inc. 356,125
6,400 Atlantic Richfield Co. 440,800
9,900 Murphy Oil Corporation 408,994
17,700 Phillips Petroleum Company 765,525
5,000 Sun Company, Inc. 171,563
9,400 Unocal Corporation 319,012
4,800 USX-Marathon Group 156,900
----------
2,950,419
----------
FINANCIAL SERVICES - 0.39%
2,253 Associates First Capital Corp., Class A 158,837
----------
HEALTH CARE - 12.29%
5,400 American Home Products Corp. 263,250
10,100 AMGEN Inc. 793,481
17,200 Becton Dickinson & Co. 724,550
4,800 Bristol-Myers Squibb Co. 530,700
2,112 Fresenius Medical Care AG ADR 31,944
6,700 Merck & Co., Inc. 906,175
100 Schering-Plough Corp. 10,288
15,700 Watson Pharmaceuticals, Inc.<F1> 873,312
12,200 Wellpoint Health Networks, Inc.<F1> 898,225
----------
5,031,925
----------
INDUSTRIAL - 9.03%
3,000 FMC Corp.<F1> 153,187
17,700 Harris Corp. 620,606
23,000 Harsco Corp. 753,250
15,000 Johnson Controls, Inc. 843,750
11,600 Raytheon Co., Class B 673,525
15,900 Rockwell International Corp. 652,894
----------
3,697,212
----------
INSURANCE - 4.48%
13,700 Ambac Financial Group, Inc. 797,169
36,650 Old Republic International Corp. 696,350
7,728 ReliaStar Financial Corp. 338,583
----------
1,832,102
----------
See Notes to the Financial Statements.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
SCHEDULES OF INVESTMENTS October 31, 1998
Large Cap Equity Fund (continued)
Number
of Shares Value
- -------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) - 96.70%
RETAIL - 4.10%
15,900 Sears, Roebuck & Co. $714,506
23,100 VF Corp. 965,869
----------
1,680,375
----------
SERVICES - 5.59%
13,600 Carnival Corp., Class A 440,300
9,100 Dun & Bradstreet Corp. 258,212
21,700 King World Productions, Inc.<F1> 569,625
1,820 R.H. Donnelley Corp. 25,480
14,450 Snap-On, Inc. 512,072
5,000 Xerox Corp. 484,375
----------
2,290,064
----------
TECHNOLOGY - 7.82%
16,700 Andrew Corp.<F1> 273,463
16,300 Compaq Computer Corp. 515,488
14,950 Computer Associates International, Inc. 588,656
6,800 Dell Computer Corp.<F1> 446,250
11,200 EMC Corp.<F1> 721,000
3,800 National Semiconductor Corp.<F1> 48,212
10,400 Sun Microsystems, Inc.<F1> 605,800
----------
3,198,869
----------
TELECOMMUNICATIONS - 7.49%
17,518 Bell Atlantic Corp. 930,644
5,800 ComSat Corp. 228,738
18,200 Frontier Corp. 547,137
10,100 GTE Corp. 592,744
176 SBC Communications Inc. 8,137
13,200 U S WEST, Inc. 757,350
----------
3,064,750
----------
See Notes to the Financial Statements.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
SCHEDULES OF INVESTMENTS October 31, 1998
Large Cap Equity Fund (continued)
Number
of Shares Value
- -------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) - 96.70%
UTILITIES - 4.63%
1,000 CMS Energy Corp. $44,062
17,000 DTE Energy Co. 724,625
15,100 Pinnacle West Capital Corp. 661,569
12,200 Public Service Enterprise Group, Inc. 463,600
----------
1,893,856
----------
TOTAL COMMON STOCKS - 96.70%
(cost $35,624,955)..................................... 39,580,241
----------
SHORT-TERM INVESTMENT - 3.07%
1,257,468 SSGA Money Market Fund 1,257,468
----------
TOTAL SHORT-TERM INVESTMENT
(cost $1,257,468)....................................... 1,257,468
----------
TOTAL INVESTMENTS - 99.77%
(cost $36,882,423) 40,837,709
Cash and Other Assets, less Liabilities - 0.23%.............95,279
----------
NET ASSETS - 100.00%...................................$40,932,988
===========
<F1> Non-income producing security
See Notes to the Financial Statements.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
SCHEDULES OF INVESTMENTS October 31, 1998
Small Cap Equity Fund
Number
of Shares Value
- ------------------------------------------------------------------------------
COMMON STOCKS - 97.97%
AEROSPACE - 3.25%
5,200 Alliant Techsystems, Inc.<F1> $364,000
9,300 Cordant Technologies, Inc. 378,394
----------
742,394
----------
BANKING - 11.36%
8,375 Associated Banc-Corp 294,172
8,900 Chittenden Corporation 265,887
27,900 Colonial BancGroup, Inc. 364,444
7,000 Commerce Bancshares, Inc. 304,937
6,000 F.N.B. Corporation 165,000
13,700 Riggs National Corporation 330,513
5,000 SierraWest Bancorp 125,000
5,581 Star Banc Corporation 422,063
7,000 UMB Financial Corporation 320,688
----------
2,592,704
----------
BUILDING PRODUCTS - 1.23%
9,500 Texas Industries, Inc. 280,844
----------
CAPITAL GOODS - 3.31%
9,400 Commercial Intertech Corp. 167,437
10,100 Milacron Inc. 195,688
16,600 Robbins & Myers, Inc. 392,175
----------
755,300
----------
CHEMICALS _ 3.14%
16,100 Ferro Corporation 410,550
12,600 International Specialty Products, Inc.<F1> 169,312
6,200 LeaRonal, Inc. 136,787
----------
716,649
----------
CONSUMER DURABLES - 4.95%
23,900 Excel Industries, Inc. 339,081
7,400 Mohawk Industries, Inc.<F1> 223,388
5,200 National Presto Industries, Inc. 200,525
6,000 Skyline Corp. 186,375
11,500 Standard Products Co. 180,406
----------
1,129,775
----------
See Notes to the Financial Statements.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
SCHEDULES OF INVESTMENTS October 31, 1998
Small Cap Equity Fund (continued)
Number
of Shares Value
- ------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) - 97.97%
CONSUMER STAPLES - 5.20%
8,200 Adolph Coors Company, Class B $410,000
2,200 Block Drug Co., Inc., Class A 79,475
7,900 Lancaster Colony Corp. 237,000
11,800 Longs Drug Stores Corp. 460,937
----------
1,187,412
----------
ENERGY - 4.81%
18,800 Questar Corp. 370,125
28,000 Seagull Energy Corp.<F1> 334,250
15,800 Valero Energy Corp. 395,000
----------
1,099,375
----------
HEALTH CARE - 10.93%
17,000 ADAC Laboratories<F1> 503,625
12,000 Arrow International, Inc. 333,000
12,933 Bindley Western Industries, Inc. 468,821
34,400 Chronimed, Inc.<F1> 313,900
3,400 CorVel Corp.<F1> 124,525
7,400 Empi, Inc.<F1> 141,525
3,600 First Health Group Corp.<F1> 83,025
8,600 Lincare Holdings, Inc.<F1> 343,462
12,700 Quorum Health Group, Inc.<F1> 184,150
----------
2,496,033
----------
INDUSTRIAL - 10.47%
12,900 AMETEK, Inc. 273,319
9,300 Blount International, Inc., Class A 204,019
10,500 Kennametal, Inc. 217,875
10,100 Pentair, Inc. 380,013
8,900 Pittston Brink's Group 264,775
10,200 Premark International, Inc. 323,213
8,600 Teleflex, Inc. 332,713
10,600 Trinity Industries, Inc. 393,525
----------
2,389,452
----------
See Notes to the Financial Statements.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
SCHEDULES OF INVESTMENTS October 31, 1998
Small Cap Equity Fund (continued)
Number
of Shares Value
- -------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) - 97.97%
INSURANCE - 6.32%
1,600 American National Insurance Co. $134,400
18,700 Capital Re Corp. 342,444
9,116 Delphi Financial Group, Inc., Class A<F1> 425,033
7,000 Everest Reinsurance Holdings, Inc. 241,062
2,900 NAC Re Corp. 140,469
6,300 PXRE Corp. 159,863
----------
1,443,271
----------
RETAIL - 6.26%
12,800 Guilford Mills, Inc. 160,000
10,900 Lands' End, Inc.<F1> 185,981
45,900 Pier 1 Imports, Inc. 424,575
8,400 Ross Stores, Inc. 273,000
12,300 ShopKo Stores, Inc.<F1> 385,144
----------
1,428,700
----------
SERVICES - 10.25%
18,000 Aaron Rents, Inc. 265,500
13,800 American Business Products, Inc. 256,162
34,200 Arctic Cat, Inc. 316,350
16,400 Bowne & Co., Inc. 220,375
17,400 Franklin Covey Co.<F1> 343,650
17,600 Huffy Corp. 223,300
12,300 Ogden Corp. 330,563
11,300 The McClatchy Co., Class A 383,494
----------
2,339,394
----------
TECHNOLOGY - 8.89%
6,700 Andrew Corp.<F1> 109,712
14,200 BARRA, Inc.<F1> 374,525
10,900 Boole & Babbage, Inc.<F1> 290,212
7,600 Communications Systems, Inc. 92,150
9,400 Dallas Semiconductor Corp. 347,800
8,200 MICROS Systems, Inc.<F1> 180,913
8,000 National Instruments Corp.<F1> 219,000
6,900 Novellus Systems, Inc.<F1> 267,806
10,400 Systems & Computer Technology Corp.<F1> 148,200
----------
2,030,318
----------
See Notes to the Financial Statements.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
SCHEDULES OF INVESTMENTS October 31, 1998
Small Cap Equity Fund (continued)
Number
of Shares Value
- -------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) - 97.97%
TELECOMMUNICATIONS - 1.79%
14,500 Aliant Communications, Inc. $409,172
----------
TRANSPORTATION - 1.50%
13,100 Avondale Industries, Inc.<F1> 341,419
----------
UTILITIES - 4.31%
8,600 BEC Energy 341,312
900 Interstate Energy Corp. 27,844
14,900 MidAmerican Energy Holdings Co. 387,400
6,800 TNP Enterprises, Inc. 229,500
----------
986,056
----------
TOTAL COMMON STOCKS
(cost $26,150,851)......................................22,368,268
----------
SHORT-TERM INVESTMENTS - 2.00%
297,574 SSGA Money Market Fund 297,574
159,168 SSGA U.S. Government Money Market Fund 159,168
----------
TOTAL SHORT-TERM INVESTMENTS
(cost $456,742)............................................456,742
----------
TOTAL INVESTMENTS - 99.97%
(cost $26,607,593) 22,825,010
Cash and Other Assets, less Liabilities - 0.03%..............6,325
----------
NET ASSETS - 100.00%...................................$22,831,335
===========
<F1> Non-income producing security
See Notes to the Financial Statements.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
SCHEDULES OF INVESTMENTS October 31, 1998
International Equity Fund
Number
of Shares Value
- ------------------------------------------------------------------------------
COMMON STOCKS - 90.79%
ARGENTINA - 0.49%
29,300 Telefonica de Argentina S.A. - Class B $98,038
---------
AUSTRIA - 0.93%
1,300 EVN AG 185,203
---------
AUSTRALIA - 6.31%
38,100 Coles Myer Ltd. 162,642
55,000 CSR Ltd. 125,264
16,200 National Australia Bank 213,715
143,500 RGC Ltd.<F1> 217,081
29,100 Rothmans Holdings Ltd. 210,056
40,000 Santos Limited 116,988
34,200 Westpac Banking Corporation Ltd. 207,073
----------
1,252,819
----------
BELGIUM - 3.09%
800 Electrabel SA 295,091
2,000 G.I.B. Group SA 95,729
600 PetroFina SA 223,074
----------
613,894
----------
BRAZIL - 1.00%
9,100,000 Companhia Brasileira de Petroleo Ipiranga - Preferred 48,826
4,900 Companhia Vale do Rio Doce - Preferred A 73,944
1,000,000 Telecomunicacoes Brasileiras S.A. -
Preferred Receipts<F1> 76,291
----------
199,061
----------
CANADA - 3.06%
2,800 Alberta Energy Company Ltd. 65,163
1,300 Alcan Aluminum Ltd. 32,565
1,500 BCE, Inc. 50,714
2,200 Canadian Imperial Bank of Commerce 43,591
1,300 Canadian Pacific Ltd. 29,120
2,000 Imasco Ltd. 37,494
4,200 Imperial Oil Ltd. 66,520
500 International, Inc. - Class A 30,917
5,500 National Bank of Canada 82,132
See Notes to the Financial Statements.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
SCHEDULES OF INVESTMENTS October 31, 1998
International Equity Fund (continued)
Number
of Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) - 90.79%
CANADA (CONTINUED) - 3.06%
800 Northern Telecom Ltd. $34,236
1,900 Quebecor, Inc. - Class A 38,690
2,100 Telus Corp. 43,102
1,800 The Toronto-Dominion Bank 53,410
----------
607,654
----------
DENMARK - 4.98%
2,000 A/S Forsikringsselskabet Codan 254,134
1,900 Den Danske Bank Group 258,025
2,700 Tele Danmark A.S. - Class B 294,191
2,400 Unidanmark A.S. - Class A 182,976
----------
989,326
----------
FINLAND - 3.58%
10,400 Enso Oyj 80,503
1,600 Huhtamaki 53,669
13,800 Kemira Oyj 113,669
1,600 Nokia Oyj - Class A 145,605
6,000 Orion-Yhtymae OY - Class B 144,096
6,300 Rauma Oyj 74,400
9,300 Valmet Oyj 99,492
----------
711,434
----------
FRANCE - 6.63%
1,100 Cap Gemini SA 165,293
1,600 Elf Aquitaine 185,143
400 Eridania Beghin-Say SA 71,984
200 L'Oreal 114,274
1,800 Pernod Ricard 119,853
100 Sagem SA 63,796
3,300 Scor 189,206
700 Societe Generale - A 92,589
1,400 Union des Assurances Federales 175,101
12,100 Usinor SA 138,272
----------
1,315,511
----------
GERMANY - 6.43%
3,000 BASF AG 127,166
3,700 Commerzbank AG 111,262
9,300 Deutsche Telekom AG 253,376
300 Dyckerhoff AG 88,763
See Notes to the Financial Statements.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
SCHEDULES OF INVESTMENTS October 31, 1998
International Equity Fund (continued)
Number
of Shares Value
- -------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) - 90.79%
GERMANY (CONTINUED) - 6.43%
3,000 Gehe AG $225,530
3,600 Merck KGaA 147,817
200 SAP AG 83,932
1,500 Schering AG 176,801
100 Wella AG 62,798
----------
1,277,445
----------
GREECE - 0.47%
4,100 Hellenic Telecommunication Organization SA 93,209
----------
HONG KONG - 2.80%
62,000 Hong Kong Telecommunications Ltd. 124,067
5,600 HSBC Holdings PLC 128,328
64,000 Johnson Electric Holdings Ltd. 148,726
67,000 New World Development Company Ltd. 155,697
----------
556,818
----------
ITALY - 0.68%
41,000 Benetton Group S.p.A. 68,700
22,900 Fiat SpA 65,700
----------
134,400
----------
JAPAN - 7.02%
5,000 Canon, Inc. 94,614
4,000 Dai Nippon Printing Company Ltd. 61,617
5,100 Daito Trust Construction Co. Ltd. 43,548
3,000 Fuji Photo Film 109,932
22,000 Mitsubishi Heavy Industries Ltd. 84,959
6,000 NEC Corporation 44,436
6,000 Nippon Express Co. Ltd. 33,726
17 Nippon Telegraph & Telephone Corp. 133,051
4,000 Sankyo Co. Ltd. 90,280
5,000 Shiseido Company, Ltd. 54,752
10,000 Suzuki Motor Corp. 115,081
16,000 Takara Standard Co. Ltd. 121,517
1,000 TDK Corp. 65,908
5,000 Toho Bank Ltd. 17,807
700 Toho Co. Ltd. 87,645
See Notes to the Financial Statements.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
SCHEDULES OF INVESTMENTS October 31, 1998
International Equity Fund (continued)
Number
of Shares Value
- ------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) - 90.79%
JAPAN (CONTINUED) - 7.02%
10,000 Tonen Corp. $63,677
10,000 Wacoal Corp. 113,966
2,000 Yamanouchi Pharmaceutical Co. Ltd. 57,326
----------
1,393,842
----------
MALAYSIA - 0.62%
96,000 Golden Hope Plantations Bhd 41,195
110,000 Highlands & Lowlands Bhd 40,720
50,000 Kuala Lumpur Kepong Bhd 41,069
----------
122,984
----------
MEXICO - 1.21%
31,000 Carso Global Telecom 84,217
26,000 Cemexa SA de CV<F1> 62,414
780 Cemexa SA de CV - CPO<F1> 1,857
31,000 Organizacion Soriana SA de CV 91,873
----------
240,361
----------
NETHERLANDS - 6.36%
9,400 ABN Amro Holding NV 176,162
1,200 DSM NV 113,665
3,646 Fortis Amev NV 236,806
3,425 ING Group NV 165,785
1,600 Phillips Electronics N.V. 85,157
5,000 Royal Dutch Petroleum Co. 241,486
4,900 Stork N.V. 122,264
4,800 Telegraaf Holdings MIJ_CVA 121,311
----------
1,262,636
----------
NEW ZEALAND - 0.84%
40,800 Telecom Corporation of New Zealand Ltd. 167,408
----------
NORWAY - 2.18%
35,200 Christiania Bank Og Kreditkasse 123,190
53,400 Den Norske Bank ASA 187,610
4,300 Norske Skogindustrier ASA 122,491
----------
433,291
----------
PORTUGAL - 0.48%
2,000 Portugal Telecom SA 94,840
----------
See Notes to the Financial Statements.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
SCHEDULES OF INVESTMENTS October 31, 1998
International Equity Fund (continued)
Number
of Shares Value
- ------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) - 90.79%
SINGAPORE - 2.30%
24,000 City Developments Ltd. $86,967
6,200 Creative Technology Ltd.<F1> 90,247
13,000 Development Bank of Singapore Ltd. 81,440
23,000 Overseas Union Bank Ltd. 62,437
22,000 Singapore Airlines Ltd. 135,118
----------
456,209
----------
SOUTH AFRICA - 0.44%
5,400 Anglo American Industrial Corp. Ltd. 86,538
----------
SPAIN - 1.74%
9,500 Iberdrola S.A. 153,155
4,254 Telefonica S.A. 191,725
----------
344,880
----------
SWEDEN - 1.81%
4,100 Mo och Domsjo AB - Class B 95,461
21,000 Nordbanken Holding AB 125,729
8,000 Trelleborg AB - Class B 73,176
3,000 Volvo AB - Class B 64,668
----------
359,034
----------
SWITZERLAND - 5.62%
100 Compagnie Financiere Richemont AG 132,940
200 Hilti AG 146,233
100 Nestle S.A. 212,703
100 Novartis A. G. 180,207
100 Schweizerische Rueckversicherungs-Gesellschaft 222,747
300 SGS Societe Generale de Surveillance Holding SA 58,715
600 The Swatch Group AG - REG 82,090
300 Valora Holding AG 80,761
----------
1,116,396
----------
TURKEY - 0.38%
183,000 Petkim Petrokimya Holdings A.S. 41,303
2,180,200 Tofas Turk Otomobil Fabrika A.S. 34,066
----------
75,369
----------
See Notes to the Financial Statements.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
SCHEDULES OF INVESTMENTS October 31, 1998
International Equity Fund (continued)
Number
of Shares Value
- -------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED) - 90.79%
UNITED KINGDOM - 19.34%
15,100 Allied Domecq PLC $139,089
5,350 Allied Zurich PLC<F1> 63,974
10,200 Barclays PLC 219,853
7,900 Boots Company PLC 118,679
14,400 British Aerospace PLC 107,198
7,600 British Airways PLC 55,240
5,350 British American Tobacco p.l.c. 48,339
46,500 British Steel PLC 79,823
17,000 British Telecommunications PLC 219,796
9,001 CGU PLC 142,679
13,650 Fairview Holdings PLC<F1> 18,688
7,000 Great Universal Stores PLC 75,264
24,000 Guardian Royal Exchange PLC 116,362
25,200 Guardian Royal Exchange PLC _ Class B 6,542
6,500 Hays PLC 95,851
27,300 Hillsdown Holdings PLC 38,634
9,200 HSBC Holdings PLC 215,709
7,000 Johnson Matthey PLC 39,508
13,200 Kingfisher PLC 115,950
26,100 Ladbroke Group PLC 95,618
9,900 Lonrho PLC 53,885
9,900 Lonrho Africa PLC 9,948
21,400 LucasVarity PLC 73,113
11,800 PowerGen PLC 166,991
18,800 Racal Electronics PLC 85,326
16,800 Shell Transport & Trading Co. 102,063
36,100 Smith (David S.) Holdings 75,574
15,300 SmithKline Beecham PLC 191,410
17,400 Tate & Lyle PLC 101,993
13,650 Terranova Foods PLC 26,747
9,808 Thames Water PLC 182,007
49,800 Woolwich PLC 295,873
20,600 WPP Group PLC 102,465
21,900 Yorkshire Water PLC 188,154
4,500 Zeneca Group PLC 172,886
----------
3,841,231
----------
See Notes to the Financial Statements.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
SCHEDULES OF INVESTMENTS October 31, 1998
International Equity Fund (continued)
Number
of Shares Value
- -------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(cost $20,489,413).................................... $18,029,831
----------
SHORT-TERM INVESTMENTS - 9.02%
1,056,393 SSGA Money Market Fund 1,056,393
733,733 SSGA U.S. Government Money Market Fund 733,733
----------
TOTAL SHORT-TERM INVESTMENTS
(cost $1,790,126)....................................... 1,790,126
----------
TOTAL INVESTMENTS - 99.81%
(cost $22,279,539) 19,819,957
Cash and Other Assets, less Liabilities - 0.19% 38,012
----------
NET ASSETS - 100.00%.................................. $19,857,969
===========
As of October 31, 1998, the International Equity Fund's investments,
excluding short-term investments, were diversified as follows:
INDUSTRY SECTOR
Consumer Durables 4.30%
Consumer Staples 9.10
Energy Sources 6.10
Financial Services 24.80
Health Care Products 8.40
Industrial 17.20
Retail 5.50
Services 4.00
Technology 4.10
Telecommunications 9.60
Utilities 6.90
------
TOTAL INDUSTRY SECTOR......................................100.00%
=======
<F1> Non-income producing security
See Notes to the Financial Statements.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES October 31, 1998
<TABLE>
<CAPTION>
INTERMEDIATE LARGE CAP SMALL CAP INTERNATIONAL
FIXED INCOME FUND EQUITY FUND EQUITY FUND EQUITY FUND
- -----------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C>
ASSETS:
Investments, at value (cost $65,775,367,
$36,882,423, $26,607,593 and
$22,279,539, respectively) $ 67,515,218 $ 40,837,709 $ 22,825,010 $ 19,819,957
Receivable for investment securities sold _ 889,442 _ _
Dividends, interest and tax withholding receivable 888,889 68,962 18,737 66,432
Organizational expenses, net
of accumulated amortization 25,776 25,776 25,776 25,776
Prepaids and other assets 3,777 2,967 2,380 2,483
------------ ------------ ------------ ------------
Total Assets 68,433,660 41,824,856 22,871,903 19,914,648
------------ ------------ ------------ ------------
LIABILITIES:
Payable for investments purchased _ 816,098 _ _
Dividend payable 292,890 _ _ _
Accrued investment advisory fees 24,891 34,369 14,549 20,069
Accrued distribution fees 14,625 8,211 4,303 3,972
Other liabilities 51,616 33,190 21,716 32,638
------------ ------------ ------------ ------------
Total Liabilities 384,022 891,868 40,568 56,679
------------ ------------ ------------ ------------
NET ASSETS $ 68,049,638 $ 40,932,988 $ 22,831,335 $ 19,857,969
============ ============ ============ ============
NET ASSETS CONSIST OF:
Capital stock $ 663 $ 427 $ 278 $ 221
Paid-in capital 66,248,839 36,649,426 26,962,882 22,123,570
Undistributed net investment income 21,661 32,397 6,353 191,380
Accumulated net realized gain (loss)
on investments 38,624 295,452 (355,595) 1,926
Accumulated net realized loss from foreign
currency transactions _ _ _ (286)
Net unrealized appreciation (depreciation)
on investments 1,739,851 3,955,286 (3,782,583) (3,278,581)
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies _ _ _ 819,739
------------ ------------ ------------ ------------
Net Assets $ 68,049,638 $ 40,932,988 $ 22,831,335 $ 19,857,969
============ ============ ============ ============
CAPITAL STOCK, $0.0001 PAR VALUE
Authorized 100,000,000 100,000,000 100,000,000 100,000,000
Issued and outstanding 6,625,127 4,266,457 2,778,564 2,214,951
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $ 10.27 $ 9.59 $ 8.22 $ 8.97
============ ============ ============ ============
MAXIMUM OFFERING PRICE PER SHARE $ 10.56 $ 9.99 $ 8.56 $ 9.34
============ ============ ============ ============
</TABLE>
See Notes to the Financial Statements.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
STATEMENTS OF OPERATIONS for the period ended October 31, 1998<F1>
<TABLE>
<CAPTION>
INTERMEDIATE LARGE CAP SMALL CAP INTERNATIONAL
FIXED INCOME FUND EQUITY FUND EQUITY FUND EQUITY FUND
- -----------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C>
INVESTMENT INCOME:
Dividends (net of withholding taxes of
$0, $39, $0 and $48,727, respectively) $ _ $ 416,609 $ 148,118 $ 328,393
Interest 2,373,438 47,383 43,613 106,449
------------- ------------- ------------- -------------
Total Investment Income 2,373,438 463,992 191,731 434,842
------------- ------------- ------------- -------------
EXPENSES:
Investment advisory fees 173,214 174,092 93,683 105,901
Distribution fees 96,230 58,031 31,228 29,417
Administration and fund accounting fees 76,984 46,424 24,982 23,534
Federal and state registration fees 20,069 13,286 8,891 7,549
Miscellaneous 12,338 7,783 4,229 4,334
Legal fees 11,170 6,894 3,718 3,532
Transfer agent fees and expenses 9,722 9,374 9,106 9,095
Custody fees 7,554 5,734 6,468 20,454
Pricing expenses 7,198 1,759 1,744 13,440
Directors' fees and expenses 6,087 6,087 6,087 6,087
Audit fees 4,075 4,075 4,075 4,075
Amortization of organizational costs 3,431 3,431 3,431 3,431
------------- ------------- ------------- -------------
Total Expenses Before Waivers 428,072 336,970 197,642 230,849
Waiver of expenses (100,890) (393) (10,276) (13,163)
------------- ------------- ------------- -------------
Net Expenses 327,182 336,577 187,366 217,686
------------- ------------- ------------- -------------
NET INVESTMENT INCOME 2,046,256 127,415 4,365 217,156
------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) on investments 38,624 295,452 (355,595) 1,926
Net realized loss on foreign currency transactions _ _ _ (27,945)
Net change in unrealized appreciation
(depreciation) on investments 1,640,755 (2,106,481) (3,782,583) (3,278,581)
Net change in unrealized appreciation on
translation of assets and liabilities
in foreign currencies _ _ _ 819,739
------------- ------------- ------------- -------------
Net gain (loss) on investments and
foreign currency transactions 1,679,379 (1,811,029) (4,138,178) (2,484,861)
------------- ------------- ------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 3,725,635 $(1,683,614) $(4,133,813) $(2,267,705)
============ ============ ============ ============
</TABLE>
<F1>Commenced operations on March 31, 1998.
See Notes to the Financial Statements.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS for the period ended October 31, 1998<F1>
<TABLE>
<CAPTION>
INTERMEDIATE LARGE CAP SMALL CAP INTERNATIONAL
FIXED INCOME FUND EQUITY FUND EQUITY FUND EQUITY FUND
- -----------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C>
OPERATIONS:
Net investment income $ 2,046,256 $ 127,415 $ 4,365 $ 217,156
Net realized gain (loss) on investments 38,624 295,452 (355,595) 1,926
Net realized loss on foreign
currency transactions _ _ _ (27,945)
Change in unrealized appreciation
(depreciation) on investments 1,640,755 (2,106,481) (3,782,583) (3,278,581)
Change in unrealized appreciation on translation
of assets and liabilities in foreign currencies _ _ _ 819,739
------------ ------------ ------------ ------------
Net Increase (Decrease) in Net Assets
Resulting from Operations 3,725,635 (1,683,614) (4,133,813) (2,267,705)
------------ ------------ ------------ ------------
DISTRIBUTIONS PAID FROM:
Net investment income (2,027,129) (97,237) _ _
------------ ------------ ------------ ------------
SHARE TRANSACTIONS:
Shares sold 29,847,907 21,512,846 28,599,992 23,895,804
Shares sold during common and
commingled trust fund conversions 40,058,886 23,721,464 _ _
Proceeds from reinvestment of distributions 933,300 50,640 _ _
Shares redeemed (4,538,961) (2,619,111) (1,635,844) (1,771,130)
------------ ------------ ------------ ------------
Net Increase from Share Transactions 66,301,132 42,665,839 26,964,148 22,124,674
------------ ------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS 67,999,638 40,884,988 22,830,335 19,856,969
NET ASSETS:
Beginning of period 50,000 48,000 1,000 1,000
------------ ------------ ------------ ------------
End of period (includes undistributed net
investment income of $21,661, $32,397,
$6,353 and $191,380, respectively) $ 68,049,638 $ 40,932,988 $ 22,831,335 $ 19,857,969
============ ============ ============ ============
</TABLE>
<F1>Commenced operations on March 31, 1998.
See Notes to the Financial Statements.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
FINANCIAL HIGHLIGHTS for the period ended October 31, 19981
<TABLE>
<CAPTION>
INTERMEDIATE LARGE CAP SMALL CAP INTERNATIONAL
FIXED INCOME FUND EQUITY FUND EQUITY FUND EQUITY FUND
- -----------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00 $ 10.00 $ 10.00 $ 10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.31 0.03 0.00 0.09
Net realized and unrealized gain (loss)
on investments and foreign currency transactions 0.27 (0.42) (1.78) (1.12)
------------ ------------ ------------ ------------
Total from Investment Operations 0.58 (0.39) (1.78) (1.03)
------------ ------------ ------------ ------------
LESS DISTRIBUTIONS PAID:
From net investment income (0.31) (0.02) 0.00 0.00
------------ ------------ ------------ ------------
Total Distribution Paid (0.31) (0.02) 0.00 0.00
------------ ------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD $ 10.27 $ 9.59 $ 8.22 $ 8.97
============ ============ ============ ============
TOTAL RETURN<F2> 5.89% (3.87)% (17.80)% (10.30)%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) $ 68,050 $ 40,933 $ 22,831 $ 19,858
Ratio of expenses to average net assets,
net of waivers<F3> 0.85% 1.45% 1.50% 1.85%
Ratio of net investment income to
average net assets, net of waivers<F3> 5.32% 0.55% 0.03% 1.85%
Ratio of expenses to average net assets,
before waivers<F3> 1.11% 1.45% 1.57% 1.96%
Ratio of net investment income to average net
assets, before waivers<F3> 5.06% 0.55% (0.04)% 1.74%
Portfolio turnover rate<F2> 47% 27% 3% 6%
</TABLE>
<F1>Commenced operations on March 31, 1998
<F2>Not annualized
<F3>Annualized
See Notes to the Financial Statements.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS October 31, 1998
1. Organization
JohnsonFamily Funds, Inc. (the "Company") was organized on January 27, 1998, as
a Maryland corporation and is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
issuing its shares in series, each series representing a distinct portfolio with
its own investment objectives and policies. At October 31, 1998, the only
series presently authorized are the JohnsonFamily Intermediate Fixed Income
Fund, the JohnsonFamily Large Cap Equity Fund, the JohnsonFamily Small Cap
Equity Fund and the JohnsonFamily International Equity Fund (individually
referred to as a "Fund" and collectively as the "Funds").
As of March 31, 1998, assets of the common and commingled trust funds of the
Johnson Heritage Fund for Income and the Johnson Heritage Income Fund were
transferred to the JohnsonFamily Intermediate Fixed Income Fund and assets of
the common and commingled trust funds of the Johnson Heritage Equity Income Fund
and Johnson Value Fund were transferred to the JohnsonFamily Large Cap Equity
Fund under Section 584(h) of the Internal Revenue Code. These transfers were
treated as a tax-free event. To qualify as a tax-exempt transaction, the
securities were transferred at market value with the original cost basis and
purchase dates being retained for book and tax purposes. Proceeds from
commingled and common trust fund conversions, as shown on the Statement of
Changes in Net Assets, represent the market value of the commingled and common
trust funds at the date of conversion. The net change in unrealized
appreciation on investments on the Statement of Operations does not reflect the
$99,096 and $6,061,767 unrealized appreciation for the Intermediate Fixed Income
Fund and Large Cap Equity Fund, respectively, that existed at the date of the
common and commingled trust funds transfer.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles
("GAAP").
A. INVESTMENT VALUATION
Equity securities listed on a recognized U.S. or foreign securities exchange are
valued at the last sale price on the securities exchange on which such
securities are primarily traded. Unlisted equity securities for which market
quotations are readily available will be valued at the most recent bid price.
Equity securities listed on a recognized U.S. or foreign securities exchange for
which there were no transactions are valued at the closing bid prices. Debt
securities (other than short-term instruments) are valued at bid prices
furnished by a pricing service. Debt instruments maturing within 60 days are
valued at amortized cost which approximates fair value. Securities for which
market quotations are not readily available are valued at their fair value as
determined in good faith by Johnson Asset Management Inc. (the "Adviser")
pursuant to guidelines established by the Board of Directors.
B. FOREIGN CURRENCY TRANSLATIONS
Values of investments denominated in foreign currencies are converted into U.S.
dollars using the spot market rate of exchange at the time of valuation.
Purchases and sales of investments and dividend income are translated into U.S.
dollars using the spot market rate of exchange prevailing on the respective
dates of such transactions. The Funds have elected to separately disclose the
results of operations due solely to the changes in foreign currency rates.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
C. FOREIGN CURRENCY EXCHANGE CONTRACTS
The Funds are authorized to enter into foreign currency contracts for the
purchase of a specific foreign currency at a fixed price on a future date as a
hedge against either specific transactions or portfolio positions. The
objective of a Fund's foreign currency hedging transactions is to reduce the
risk that the U.S. dollar value of a Fund's foreign currency denominated
securities will decline in value due to changes in foreign currency exchange
rates. At October 31, 1998, the International Equity Fund has no such contracts
outstanding.
D. ORGANIZATIONAL COSTS
Costs incurred by the Funds in connection with their organization, registration
and the initial public offering of shares have been deferred and will be
amortized over the period of benefit, but not to exceed five years from the date
upon which the Funds commenced their investment activities. If any of the
original shares of the Funds purchased by the initial shareholder are redeemed
by any holder thereof prior to the end of the amortization period, the
redemption proceeds will be reduced by the pro rata share of the unamortized
costs as of the date of redemption. The pro rata share by which the proceeds
are reduced will be derived by dividing the number of original shares of the
Funds being redeemed by the total number of original shares outstanding at the
time of redemption.
E. FEDERAL INCOME AND EXCISE TAXES
Each Fund intends to comply with the requirements of the Internal Revenue Code
necessary to qualify as a regulated investment company and to make the requisite
distributions of taxable income to its shareholders.
F. DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income, if any, will be declared and paid monthly
for the Intermediate Fixed Income Fund, quarterly for the Large Cap Equity Fund
and annually for both the Small Cap Equity and International Equity Funds.
Distributions of net realized gains, if any, will be declared at least annually.
Distributions to shareholders are recorded on the ex-dividend date. The Funds
may periodically make reclassifications among certain of their capital accounts
as a result of the recognition and characterization of certain income and
capital gain distributions determined annually in accordance with federal tax
regulations which may differ from generally accepted accounting principles.
Accordingly, at October 31, 1998, reclassifications were recorded to
increase/(decrease) undistributed net investment income by $2,534, $2,219,
$1,988 and $(25,776), increase accumulated net realized gain on investment and
foreign currency transactions by $0, $0, $0 and $27,659 and decrease paid-in
capital by $2,534, $2,219, $1,988 and $1,883 for the Intermediate Fixed Income
Fund, Large Cap Equity Fund, Small Cap Equity Fund and International Equity
Fund, respectively.
G. SECURITIES TRANSACTIONS AND INVESTMENT INCOME
For financial reporting purposes, investment transactions are accounted for on
the trade date. The Funds determine the gain or loss realized from investment
transactions by comparing the original cost of the security lot sold with the
net sale proceeds. Dividend income is recognized on the ex-dividend date and
interest income is recognized on an accrual basis.
H. EXPENSES
The Funds are charged for those expenses that are directly attributable to each
portfolio, such as advisory and custodian fees. Expenses that are not directly
attributable to a portfolio are typically allocated among the portfolios in
proportion to their respective net assets.
I. USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principals requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported changes in net assets during the reporting
period. Actual results could differ from those estimates.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
3. Capital Stock
Transactions in shares of capital stock were as follows:
For the period March 31,1998 <F1> to October 31, 1998
<TABLE>
<CAPTION>
INTERMEDIATE LARGE CAP SMALL CAP INTERNATIONAL
FIXED INCOME FUND EQUITY FUND EQUITY FUND EQUITY FUND
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 2,768,369 2,159,747 2,966,300 2,409,981
Shares sold during common and commingled
trust fund conversions 4,205,889 2,372,146 _ _
Shares issued to holders in reinvestment
of dividends 92,087 5,366 _ _
Shares redeemed (446,218) (275,602) (187,836) (195,130)
---------- ---------- ---------- ----------
Net increase 6,620,127 4,261,657 2,778,464 2,214,851
========== ========== ========== ==========
</TABLE>
4. Purchases and Sales of Securities
Purchases and sales of investment securities, excluding U.S. government and
short-term securities, for the period March 31,19981 to October 31, 1998
are as follows
<TABLE>
<CAPTION>
INTERMEDIATE LARGE CAP SMALL CAP INTERNATIONAL
FIXED INCOME FUND EQUITY FUND EQUITY FUND EQUITY FUND
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Purchases $38,948,917 $28,409,570 $27,121,262 $20,501,664
Sales 10,101,061 10,509,117 614,817 13,890
</TABLE>
Purchases of U.S. government securities for the Intermediate Fixed Income Fund
and for the International Equity Fund for the period March 31, 19981 to October
31, 1998 were $15,232,093 and $996,823, respectively. Sales of U.S. government
securities during the period March 31, 19981to October 31, 1998 were $19,554,791
and $1,000,000 for the Intermediate Fixed Income and the International Equity
Fund, respectively.
At October 31, 1998 gross unrealized appreciation and depreciation of
securities, based on the cost of investments for federal income tax purposes of
$65,775,367, $36,882,423, $26,607,593 and $22,281,881 for the Intermediate Fixed
Income, Large Cap Equity, Small Cap Equity and International Equity Funds,
respectively, were as follows:
<TABLE>
<CAPTION>
INTERMEDIATE LARGE CAP SMALL CAP INTERNATIONAL
FIXED INCOME FUND EQUITY FUND EQUITY FUND EQUITY FUND
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Unrealized appreciation $1,872,880 $6,259,016 $1,103,170 $765,284
Unrealized depreciation (133,029) (2,303,730) (4,885,753) (3,227,208)
---------- ---------- ---------- ----------
Net unrealized appreciation (depreciation) 1,739,851 3,955,286 (3,782,583) (2,461,924)
========== ========== ========== ==========
</TABLE>
For the period ended October 31, 1998, 100% and 100% of the dividends from
taxable income for the Large Cap Equity and Small Cap Equity Funds,
respectively, qualified for the dividends received deduction available to
corporate shareholders. At October 31, 1998, the Small Cap Equity Fund had a
deferred post-October capital loss of $355,595. To the extent the Small Cap
Equity Fund realizes future net capital gains, taxable distributions to
shareholders will be offset by any post-October loss deferral.
<F1> Commencement of operations.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
5. Investment Adviser
The Funds have an agreement with the Adviser, with whom certain officers and
Directors of the Funds are affiliated, to furnish investment advisory services
to the Funds. Under the terms of this agreement, the Funds will pay the Adviser
a monthly fee based on the Fund's average daily net assets at the annual rate of
0.45% for the Intermediate Fixed Income Fund, 0.75% for the Large Cap Equity
Fund and the Small Cap Equity Fund and 0.90% for the International Equity Fund.
Under the investment advisory agreements, if the aggregate annual operating
expenses (including the investment advisory fee and the administration fee but
excluding interest, taxes, brokerage commissions and other costs incurred in
connection with the purchase or sale of portfolio securities, and extraordinary
items) exceed 1.50% of the average daily net assets of the Intermediate Fixed
Income Fund, or 2.50% of each of the Large Cap Equity Fund, Small Cap Equity
Fund and International Equity Fund, the Adviser will reimburse the Funds for the
amount of such excess. Additionally, for the fiscal period ended October 31,
1998, the Adviser has voluntarily agreed to reimburse the Funds to the extent
aggregate annual operating expenses exceed 0.85%, 1.45%, 1.50% and 1.85% of the
average daily net assets of the Intermediate Fixed Income Fund, Large Cap Equity
Fund, Small Cap Equity Fund and International Equity Fund, respectively. For
the period March 31, 1998 to October 31,1998, the Adviser reimbursed the
Intermediate Fixed Income Fund, Large Cap Equity Fund, Small Cap Equity Fund and
International Equity Fund $100,890, $393, $10,276 and $13,163, respectively.
6. Service and Distribution Plan
The Company has entered into a distribution agreement with Sunstone Distribution
Services, LLC. Pursuant to Rule 12b-1 under the 1940 Act, the Company has
adopted a Service and Distribution Plan (the "Plan"). Under the Plan, each Fund
is authorized to pay expenses incurred for the purpose of financing activities,
including the employment of other dealers, intended to result in the sale of
shares of each Fund at an annual rate of up to 0.25% of the Fund's average daily
net assets.
JOHNSONFAMILY FUNDS Annual Report
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of JohnsonFamily Funds, Inc.:
We have audited the statements of assets and liabilities, including the
schedules of investments, of JohnsonFamily Funds, Inc. (a Maryland corporation,
comprising the JohnsonFamily Intermediate Fixed Income Fund, JohnsonFamily Large
Cap Equity Fund, JohnsonFamily Small Cap Equity Fund, and JohnsonFamily
International Equity Fund) as of October 31, 1998, and the related statements of
operations and the statements of changes in net assets for the period from
inception, March 31, 1998 to October 31, 1998, and the financial highlights for
the period presented. These financial statements and financial highlights are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
These standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of October 31, 1998, by correspondence with the custodian and brokers. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting the JohnsonFamily Funds, Inc. as of
October 31, 1998, the results of their operations and changes in their net
assets for the period from inception, March 31, 1998 to October 31, 1998, and
their financial highlights for the period presented, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
November 20, 1998
JOHNSONFAMILY FUNDS Annual Report
