<PAGE> 1
JOHNSON
----------
Mutual Funds
SEMI-ANNUAL REPORT JUNE 30, 1998 - UNAUDITED
/ / JOHNSON GROWTH FUND
/ / JOHNSON OPPORTUNITY FUND
/ / JOHNSON REALTY FUND
/ / JOHNSON FIXED INCOME FUND
/ / JOHNSON MUNICIPAL INCOME FUND
INVESTMENT ADVISER:
JOHNSON INVESTMENT COUNSEL, INC.
3777 WEST FORK ROAD
CINCINNATI, OHIO 45247
(513) 661-3100
(800) 541-0170
<PAGE> 2
JOHNSON MUTUAL FUNDS JUNE 30, 1998
TABLE OF CONTENTS
<TABLE>
<S> <C>
Our Message to You............................................................................1
Performance Review and Management Discussion
Growth Fund...............................................................................2
Opportunity Fund..........................................................................3
Realty Fund...............................................................................4
Fixed Income Fund.........................................................................5
Municipal Income Fund.....................................................................6
Portfolio of Investments
Growth Fund.............................................................................7-9
Opportunity Fund......................................................................10-12
Realty Fund...........................................................................13-14
Fixed Income Fund.....................................................................15-17
Municipal Income Fund.................................................................18-20
Statement of Assets and Liabilities..........................................................21
Statement of Operations......................................................................22
Statement of Changes in Net Assets
Stock Funds..............................................................................23
Bond Funds...............................................................................24
Financial Highlights
Growth Fund..............................................................................25
Opportunity Fund.........................................................................26
Realty Fund..............................................................................27
Fixed Income Fund........................................................................28
Municipal Income Fund....................................................................29
Notes to the Financial Statements.........................................................30-33
Trustees, Officers, Transfer Agent, Fund Accountant, Custodian, Auditors..............back page
</TABLE>
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<PAGE> 3
OUR MESSAGE TO YOU
August 24, 1998
Dear Shareholder:
We are pleased to provide you with the semi-annual report for the Johnson Mutual
Funds.
Over the past five and a half years, we have watched the Funds grow to over $115
million due to the support of our loyal clientele, good market conditions, and
quality portfolio management. We appreciate your continued confidence as we move
into a more uncertain economic environment.
The first five pages of this report include a review of each of the Funds'
performance for the first six months of 1998. This should give you insight as to
how the Funds performed compared to an appropriate index. In addition, this
report for the first time includes the financial statements for the newly
established Johnson Realty Fund, as well as a comprehensive review of the Fund's
performance for the first half year.
We hope that as you review this report you feel free to call with any questions
you may have. It is a pleasure serving your investment needs.
Sincerely,
/s/ TIMOTHY E. JOHNSON, PRESIDENT
---------------------------------
Timothy E. Johnson, President
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1
<PAGE> 4
GROWTH FUND, PERFORMANCE REVIEW JUNE 30, 1998 - UNAUDITED
$10,000 INITIAL INVESTMENT SINCE INCEPTION(a)
[GRAPH]
For periods ended June 30, 1998:
Since
Average Annual Inception
6 Months Total Returns(b) (a)
Ended -------------------- ---------
6/30/98 1 Year 3 Year 5.5 Years
------- ------ ------ ---------
Growth Fund 16.59% 33.34% 27.27% 17.59%
S&P 500 Index 17.71% 30.17% 30.22% 21.82%
(a) Inception of the Growth Fund was January 4, 1993. The data represented on
this page represents past performance and is not a guarantee of future
performance. The value of your shares may fluctuate and be worth more or less
than their original cost at the time of redemption.
(b) The average annual total return numbers above 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. The Index does not include any fees. A
shareholder cannot invest directly in the Standard & Poors 500 Index.
TOP TEN HOLDINGS:
- ----------------
Procter & Gamble Company 3.7%
General Electric Company 3.1%
Microsoft Corporation 3.1%
Staples, Inc. 3.1%
Walgreen Company 3.0%
Cisco Systems, Inc. 2.9%
Computer Associates International, Inc. 2.9%
Mobil Corporation 2.9%
Medtronic, Inc. 2.7%
Warnaco Group 2.6%
HOW DID THE GROWTH FUND PERFORM RELATIVE TO THE MARKET?
The rate of return for the Growth Fund for the six months ending June 30 was
16.6% as compared to the Standard & Poors 500 Index return of 17.7%. The
investment trends of the past couple of years that allowed the S&P 500 Index to
provide a return in excess of most equity mutual funds continued into the first
half of 1998. The so-called supercap stocks, which are very heavily weighted in
the Index, continued to be the best performers. The Johnson Funds will not
accept the risk inherent in allowing large overweights in certain industries or
sectors of the market. While such a philosophy can negatively affect relative
performance when it is contrary to strong trends in the market, it also reduces
risk in the portfolio and could provide for better relative performance when
those trends ultimately reverse.
In particular, the Growth Fund has reduced exposure to the basic industry, and
capital goods sectors over the past three months to reflect the expected slowing
of the economy late this year and into 1999. Exposure in the consumer staples
sector was also reduced due to concerns about high relative valuations. The
largest increase in weighting occurred in the consumer cyclical sector,
reflecting the continued strong spending by households. The three best
performing S&P sectors in the first half of 1998 were technology, consumer
cyclical, health care, and finance. The largest weightings within the Growth
Fund were in those same four sectors. Subsequent to June 30, volatility in the
market has increased and the S&P 500 Index has fallen modestly. In such an
environment, shareholders should be particularly appreciative of the high
quality and diversification characteristics of the Growth Fund.
GROWTH FUND OBJECTIVE: LONG-TERM CAPITAL GROWTH
PRIMARY ASSET CATEGORY: STOCKS OF LARGER-SIZED QUALITY GROWTH COMPANIES
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2
<PAGE> 5
OPPORTUNITY FUND, PERFORMANCE REVIEW
$10,000 INITIAL INVESTMENT SINCE INCEPTION(a)
[GRAPH]
For periods ended June 30, 1998:
Since
Average Annual Inception
6 Months Total Returns(b) (a)
Ended -------------------- ---------
6/30/98 1 Year 3 Year 4.1 Years
------- ------ ------ ---------
Opportunity Fund 13.24% 29.52% 23.82% 22.77%
S&P MidCap Index 8.63% 27.12% 23.99% 22.82%
(a) Inception of the Opportunity Fund was May 16, 1994. The data represented on
this page represents past performance and is not a guarantee of future
performance. The value of your shares may fluctuate and be worth more or less
than their original cost at the time of redemption.
(b) The average annual total return numbers above 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. The Index does not include any fees. A
shareholder cannot invest directly in the Standard & Poors MidCap Index.
TOP TEN HOLDINGS:
- -----------------
Southtrust Corporation 3.6%
Gap, Inc. 3.3%
Reliastar Financial Corporation 3.0%
Dollar General Corporation 2.9%
Medusa Corporation 2.9%
Staples, Inc. 2.9%
CVS Corporation 2.8%
Lexmark International Group, Inc. 2.5%
Office Depot, Inc. 2.3%
G&K Services, Inc. 2.2%
HOW DID THE OPPORTUNITY FUND PERFORM RELATIVE TO THE MARKET?
The Opportunity Fund had a return of 13.2% in the first half of 1998. The
Standard & Poors Midcap Index had a return of 8.6% for the same time period.
While the Opportunity Fund outperformed the Index, returns in the midcap sector
of the market continued to lag those of the large cap sector. We are not willing
to predict when a change in that trend will occur. However, it is obvious that
the longer the trend continues, the better the relative value of the midcap
sector. As of June 30, 1998, both the S&P 500 Index and the S&P Midcap Index had
the same price to earnings multiple based on 1999 expected earnings. However,
the S&P Midcap Index has expected earnings growth that is several percentage
points higher than the S&P 500 Index.
The largest sectors in the Opportunity Fund are the same as in the Growth Fund;
namely, consumer cyclical, technology, finance, and health care. Each of these
sectors is overweighted in the portfolio relative to the Midcap Index, but only
by two to four percentage points. The success of the Opportunity Fund in 1998 is
more specifically related to good stock selection.
OPPORTUNITY FUND OBJECTIVE: LONG-TERM CAPITAL APPRECIATION
PRIMARY ASSET CATEGORY: STOCKS OF MEDIUM/SMALL-SIZED GROWTH COMPANIES
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3
<PAGE> 6
REALTY FUND, PERFORMANCE REVIEW JUNE 30, 1998
$10,000 INITIAL INVESTMENT SINCE INCEPTION(a)
[GRAPH]
For periods ended June 30, 1998:
Since
Inception
6 Months (a)
Ended --------
6/30/98 6 Months
------- --------
Realty Fund -5.54% -5.54%
NAREIT Index -5.03% -5.03%
(a) Inception of the Realty Fund was January 2, 1998. The data represented on
this page represents past performance and is not a guarantee of future
performance. The value of your shares may fluctuate and be worth more or less
than their original cost at the time of redemption.
(b) The average annual total return numbers above 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. The Index does not include any fees. A
shareholder cannot invest directly in the NAREIT Index.
TOP TEN HOLDINGS:
- -----------------
Patriot American Hospitality, Inc. 5.0%
Avalon Properties, Inc. 4.7%
Cali Realty Corporation 4.6%
Boston Properties, Inc. 4.1%
Apartment Investment & Management Co. 4.0%
Prentiss Properties, Inc. 4.0%
Spieker Properties, Inc. 4.0%
Post Properties, Inc. 3.8%
Simon Debartolo Group, Inc. 3.7%
Regency Realty Corporation 3.4%
HOW DID THE REALTY FUND PERFORM RELATIVE TO THE MARKET?
The Realty Fund had a rate of return of -5.54% for the first six months of 1998.
That compares to a return of -5.03% for the National Association of Real Estate
Investment Trust Index (NAREIT Index). The real estate investment trust (REIT)
marketplace experienced a period of dramatic underperformance relative to other
domestic equity indexes. There are three main reasons for the divergence in
performance. The first centered around legislature proposed by the Clinton
administration to eliminate the operating advantage for some REIT types. This
caused uncertainty throughout the REIT marketplace, but in actuality affected
only a few publicly traded equity REITs. Secondly, new property development has
started, potentially signaling that speculative building in anticipation of
future demand may shortly begin. Finally, cash flow into the REIT market has
slowed dramatically compared to previous years.
The Realty Fund utilizes a conservative quality approach when selecting
individual securities. The combination of macroeconomic factors with in-depth
bottom-up analysis is utilized in constructing the portfolio. The Realty Fund
has its largest sector weighting in the Office/Industrial sector, which to date
has been the second worst performing sector. The fund has a large weighting in
the apartment sector, which was the third best performing property type. The
best performing property sector was retail, which was market weighted in the
Fund.
REALTY FUND OBJECTIVE: LONG-TERM CAPITAL GROWTH AND ABOVE AVERAGE INCOME
PRIMARY ASSET CATEGORY: REAL ESTATE RELATED EQUITY SECURITIES
- --------------------------------------------------------------------------------
4
<PAGE> 7
FIXED INCOME FUND, PERFORMANCE REVIEW JUNE 30, 1998
$10,000 INITIAL INVESTMENT SINCE INCEPTION(a)
[GRAPH]
For periods ended June 30, 1998:
Since
Average Annual Inception
6 Months Total Returns(b) (a)
Ended ---------------- ---------
6/30/98 1 Year 3 Year 5.5 Years
------- ------ ------ ---------
Fixed Income Fund 3.76% 9.98% 6.99% 6.57%
Lehman Int. Index 3.47% 8.54% 6.91% 6.62%
(a) Inception of the Fixed Income Fund was January 4, 1993. The data represented
on this page represents past performance and is not a guarantee of future
performance. The value of your shares may fluctuate and be worth more or less
than their original cost at the time of redemption.
(b) The average annual total return numbers above 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. The Index does not include any fees. A
shareholder cannot invest directly in the Lehman Intermediate Government
Corporate Index.
QUALITY ALLOCATION
------------------
AAA 43.2%
AA 3.4%
A 45.5%
BBB 7.9%
HOW DID THE FIXED INCOME FUND PERFORM RELATIVE TO THE MARKET?
Through the first six months of 1998, the Fixed Income Fund provided a total
return of 3.8%, compared to 3.5% for the Lehman Intermediate Government
Corporate Bond Index. The Asian crisis was the dominant influence on bond market
performance in the first half of the year. As the impact of the crisis became
more widespread, investors worldwide flocked to the safety of the U.S. Treasury
market causing interest rates to fall. A slowing economy and the elimination of
the budget deficit also supported lower interest rates. The Asian crisis had a
more negative impact on corporate bonds as earnings were reduced. This slowdown
in corporate earnings caused yield spreads on corporate bonds to widen,
resulting in relative underperformance of the sector. In this environment, the
Fixed Income Fund was able to outperform due to its slightly longer weighted
average maturity. The Fund's larger concentration in corporate bonds was a
slight negative, although this was mitigated by the Fund's focus on high quality
holdings.
As always, the Fixed Income Fund continues to focus on only high-quality
securities. Each security within the Fund is rated investment-grade quality by
the National Credit Ratings Services, with over 90% of the assets rated "A" or
better. These highly rated securities are considered to have adequate to strong
protection of principal and interest payments, and will help provide a stable
portfolio valuation should economic circumstances change in the future.
FIXED INCOME FUND OBJECTIVE: INCOME AND CAPITAL PRESERVATION
PRIMARY ASSET CATEGORY: INVESTMENT-GRADE GOVERNMENT/CORPORATE BONDS
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5
<PAGE> 8
MUNICIPAL INCOME FUND, PERFORMANCE REVIEW JUNE 30, 1998
$10,000 INITIAL INVESTMENT SINCE INCEPTION(a)
[GRAPH]
For periods ended June 30, 1998:
Since
Average Annual Inception
6 Months Total Returns(b) (a)
Ended ------------------- ---------
6/30/98 1 Year 3 Year 4.1 Years
------- ------ ------ ---------
Municipal Income 1.77% 6.05% 5.27% 5.55%
Lehman G.O. Index 2.20% 6.35% 6.01% 6.33%
(a) Inception of the Municipal Income Fund was May 16, 1994. The data
represented on this page represents past performance and is not a guarantee of
future performance. The value of your shares may fluctuate and be worth more or
less than their original cost at the time of redemption.
(b) The average annual total return numbers above 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. The Index does not include any fees. A
shareholder cannot invest directly in the Lehman Five-Year General Obligation
Municipal Index.
QUALITY ALLOCATION
------------------
AAA 48.7%
AA 26.4%
A 13.3%
NR 11.6%
HOW DID THE MUNICIPAL INCOME FUND PERFORM RELATIVE TO THE MARKET?
Through the first half of 1998, municipal bonds have been yielding historically
high levels as compared to Treasuries. The ratio of municipal bonds to Treasury
bonds is currently the highest it has been this decade. This means that
tax-exempt bonds are attractive looking ahead, but have been relative
underperformers so far this year. The main culprit for their lagging performance
has been a glut of new municipal bond issuance. The decline in interest rates
has resulted in a barrage of new issuance by municipalities. An example of this
phenomenon was the May offering of $3.4 billion Long Island Power Authority
municipal bonds, the largest tax-exempt bond sale in history. In this
environment, the Municipal Income Fund was able to provide a total return of
1.8% through the first six months of the year as compared to 2.2% for the Lehman
Five-Year Municipal Bond Index. The Fund's slightly lower return was due to the
expenses on the Fund that are not on the Index.
As has been the case since its inception, the credit quality of the Municipal
Income Fund remains very good. Approximately 75% of the securities in the Fund
are rated in one of the two highest quality rating categories (either "AAA" or
"AA"), with about half actually receiving the highest quality rating. In
addition, approximately 95% of the income generated by the Fund is the result of
investments in Ohio municipalities. As a result, in addition to being exempt
from Federal income taxes, most of the income earned is also exempt from Ohio
State Income Tax.
MUNICIPAL INCOME FUND OBJECTIVE: TAX-FREE INCOME AND CAPITAL PRESERVATION
PRIMARY ASSET CATEGORY: INTERMEDIATE-TERM OHIO MUNICIPAL BONDS
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6
<PAGE> 9
GROWTH FUND, PORTFOLIO OF INVESTMENTS JUNE 30, 1998 - UNAUDITED
<TABLE>
<CAPTION>
COMMON STOCKS NUMBER OF SHARES DOLLAR VALUE
- ------------- ---------------- ------------
<S> <C> <C>
CHEMICALS
Air Products & Chemicals, Inc. 13,980 559,200
-------------
TOTAL CHEMICALS - 1.4% $ 559,200
COMPUTER HARDWARE
Compaq Computer Corporation 25,945 736,189
Sun Microsystems Inc.* 19,020 826,181
-------------
TOTAL COMPUTER HARDWARE - 3.9% $ 1,562,370
COMPUTER NETWORKING
Cisco Systems Inc.* 12,900 1,187,606
-------------
TOTAL COMPUTER NETWORKING - 2.9% $ 1,187,606
COMPUTER SOFTWARE
Computer Associates International, Inc. 21,400 1,189,038
EMC Corporation* 19,700 882,806
Microsoft Corporation* 11,700 1,267,987
-------------
TOTAL COMPUTER SOFTWARE - 8.2% $ 3,339,831
ELECTRICAL EQUIPMENT
General Electric Company 13,730 1,249,430
-------------
TOTAL ELECTRICAL EQUIPMENT - 3.1% $ 1,249,430
ELECTRONICS - SEMI-CONDUCTORS
Intel Corporation 12,165 901,731
-------------
TOTAL ELECTRONICS - SEMI-CONDUCTORS - 2.2% $ 901,731
ENERGY SERVICES
Dresser Industries 21,000 925,312
Schlumberger Ltd. 11,200 765,100
-------------
TOTAL ENERGY SERVICES - 4.2% $ 1,690,412
ENTERTAINMENT AND LEISURE
Mattel Inc. 15,420 652,459
-------------
TOTAL ENTERTAINMENT AND LEISURE - 1.6% $ 652,459
FINANCIAL - INSURANCE
Conseco Inc. 17,915 837,526
Travelers Group Inc. 15,690 951,206
-------------
TOTAL FINANCIAL - INSURANCE - 4.4% $ 1,788,732
FINANCIAL - MISCELLANEOUS
American Express Company 7,200 820,800
Fannie Mae 13,000 789,750
-------------
TOTAL FINANCIAL - MISCELLANEOUS - 4.0% $ 1,610,550
FINANCIAL - REGIONAL BANKS
Comerica Inc. 11,250 745,312
Fifth Third Bancorp 13,500 850,500
Nationsbank Corporation 9,455 723,307
Regions Financial Corporation 15,000 615,938
Summit Bancorp 17,500 831,250
-------------
TOTAL FINANCIAL - REGIONAL BANKS - 9.3% $ 3,766,307
</TABLE>
* NON-DIVIDEND PAYING SECURITY.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
(SEE PAGES 30-33)
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7
<PAGE> 10
GROWTH FUND, PORTFOLIO OF INVESTMENTS JUNE 30, 1998 - UNAUDITED
<TABLE>
<CAPTION>
COMMON STOCKS NUMBER OF SHARES DOLLAR VALUE
- ------------- ---------------- ------------
<S> <C> <C>
FOODS AND FOOD RETAILERS
Hershey Foods Corporation 10,200 703,800
Sara Lee Corporation 14,185 793,473
Sysco Corporation 26,190 671,119
-------------
TOTAL FOODS AND FOOD RETAILERS - 5.3% $ 2,168,392
HEALTH CARE - PRODUCTS
Boston Scientific Corporation* 14,700 1,052,888
Johnson and Johnson 10,200 752,250
Medtronic Corporation 17,435 1,111,481
-------------
TOTAL HEALTH CARE - PRODUCTS - 7.2% $ 2,916,619
HEALTH CARE - DRUGS
Merck and Company 7,800 1,043,250
Pfizer, Inc. 8,300 902,106
Schering-Plough Corporation 9,500 870,438
Smithkline Beecham PLC ADR 13,400 810,700
-------------
TOTAL HEALTH CARE - DRUGS - 9.0% $ 3,626,494
HOUSEHOLD PRODUCTS
Gillette Company 14,814 839,769
Procter & Gamble Company 16,410 1,494,336
-------------
TOTAL HOUSEHOLD PRODUCTS - 5.8% $ 2,334,105
INDUSTRIAL SERVICES
Cintas Corporation 18,000 918,000
-------------
TOTAL INDUSTRIAL SERVICES - 2.3% $ 918,000
MANUFACTURING
Dover Corporation 21,340 730,895
-------------
TOTAL MANUFACTURING - 1.8% $ 730,895
PETROLEUM
Marathon Group Inc. (USX) 16,325 560,152
Mobil Corporation 15,340 1,175,428
-------------
TOTAL PETROLEUM - 4.3% $ 1,735,580
RETAILING
Office Max Inc.* 48,000 792,000
Staples Inc.* 43,805 1,267,607
Walgreen Company 29,200 1,206,325
-------------
TOTAL RETAILING - 8.1% $ 3,265,932
TELECOMMUNICATION SERVICES
Ameritech Corporation 23,000 1,032,125
-------------
TOTAL TELECOMMUNICATION SERVICES - 2.5% $ 1,032,125
TEXTILE - APPAREL
The Warnaco Group Inc. 24,845 1,054,360
-------------
TOTAL TEXTILE - APPAREL - 2.6% $ 1,054,360
</TABLE>
* NON-DIVIDEND PAYING SECURITY.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
(SEE PAGES 30-33)
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8
<PAGE> 11
GROWTH FUND, PORTFOLIO OF INVESTMENTS JUNE 30, 1998 - UNAUDITED
<TABLE>
<CAPTION>
COMMON STOCKS NUMBER OF SHARES DOLLAR VALUE
- ------------- ---------------- ------------
<S> <C> <C>
TRANSPORTATION
Burlington Northern, Inc. 6,460 634,291
-------------
TOTAL TRANSPORTATION - 1.6% $ 634,291
TOTAL COMMON STOCKS - 95.7% $ 38,725,421
(Common Stock Identified Cost $25,851,725)
CASH EQUIVALENTS
Federated U.S. Treasury Cash Reserves
Money Market Fund 1,754,367
-------------
TOTAL CASH EQUIVALENTS - 4.3% $ 1,754,367
(Cash Equivalents Identified
Cost $1,754,367)
TOTAL PORTFOLIO VALUE - 100.0% $ 40,479,788
(Total Portfolio Identified
Cost $27,606,092)
Other Assets Less Liabilities $ 33,660
TOTAL NET ASSETS $ 40,513,448
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
(SEE PAGES 30-33)
- --------------------------------------------------------------------------------
9
<PAGE> 12
OPPORTUNITY FUND, PORTFOLIO OF INVESTMENTS JUNE 30, 1998 - UNAUDITED
<TABLE>
<CAPTION>
COMMON STOCKS NUMBER OF SHARES DOLLAR VALUE
- ------------- ---------------- ------------
<S> <C> <C>
BEVERAGES
Coca-Cola Bottling Company Consolidated 12,200 806,725
-------------
TOTAL BEVERAGES - 1.9% $ 806,725
BUILDING MATERIALS
Medusa Corporation 20,000 1,255,000
-------------
TOTAL BUILDING MATERIALS - 2.9% $ 1,255,000
CHEMICALS
Cabot Corporation 21,000 678,562
Ecolab Inc. 25,600 793,600
International Specialty Products Inc.* 36,000 670,500
RPM, Inc. 31,250 531,250
-------------
TOTAL CHEMICALS - 6.2% $ 2,673,912
COMPUTER SOFTWARE
BMC Software, Inc* 18,400 955,650
Cambridge Technology Partners Inc.* 10,000 546,250
Sterling Commerce Inc.* 14,555 705,917
Sungard Data Systems, Inc.* 20,000 767,500
-------------
TOTAL COMPUTER SOFTWARE - 6.9% $ 2,975,317
COMPUTER SYSTEMS
EMC Corporation* 19,500 873,844
Ingram Micro, Inc.* 16,000 708,000
Lexmark International Group, Inc.* 17,500 1,067,500
-------------
TOTAL COMPUTER SYSTEMS - 6.1% $ 2,649,344
ELECTRONICS - SEMICONDUCTORS
Advanced Micro Devices Inc.* 27,000 460,688
Vitesse Semiconductor Corporation* 18,000 555,750
-------------
TOTAL ELECTRONICS - SEMICONDUCTORS - 2.4% $ 1,016,438
ENERGY SERVICES
Devon Energy Corporation 12,000 419,250
EVI, Inc.* 13,775 511,397
Smith International, Inc.* 7,000 243,688
-------------
TOTAL ENERGY SERVICES - 2.7% $ 1,174,335
FINANCIAL - BROKERAGE
Provident Financial Group 10,000 456,250
T. Rowe Price Associates, Inc. 12,000 450,750
-------------
TOTAL FINANCIAL - BROKERAGE - 2.1% $ 907,000
FINANCIAL - INSURANCE
AON Corporation 13,300 934,325
MBIA, Inc. 8,400 628,950
The PMI Group Inc. 6,000 440,250
Reliastar Financial Corporation 26,700 1,281,600
-------------
TOTAL FINANCIAL - INSURANCE - 7.6% $ 3,285,125
</TABLE>
* NON-DIVIDEND PAYING SECURITY.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
(SEE PAGES 30-33)
- --------------------------------------------------------------------------------
10
<PAGE> 13
OPPORTUNITY FUND, PORTFOLIO OF INVESTMENTS JUNE 30, 1998 - UNAUDITED
<TABLE>
<CAPTION>
COMMON STOCKS NUMBER OF SHARES DOLLAR VALUE
- ------------- ---------------- ------------
<S> <C> <C>
FINANCIAL - REGIONAL BANKS
Bank of New York Co., Inc. 15,800 958,862
First Tennessee National Corporation 14,000 441,875
Southtrust Corporation 35,700 1,552,950
-------------
TOTAL FINANCIAL - REGIONAL BANKS - 6.8% $ 2,953,687
FOODS AND FOOD RETAILERS
Smucker (JM) Company, Class A 16,000 397,000
Tootsie Roll Industries 8,669 665,346
-------------
TOTAL FOODS AND FOOD RETAILERS - 2.5% $ 1,062,346
HEALTH CARE - DRUGS
Centocor, Inc.* 13,500 489,375
Centocor, Inc. Option, 7/18/98* (135) (7,594)
Elan Corporation PLC, ADR* 10,000 643,125
Forest Lab. Inc. Class A* 25,200 900,900
Mylan Laboratories 26,700 802,669
-------------
TOTAL HEALTH CARE - DRUGS - 6.6% $ 2,828,475
HEALTH CARE - PRODUCTS
Hologic, Inc.* 21,000 381,938
-------------
TOTAL HEALTH CARE - PRODUCTS - 0.9% $ 381,938
HEALTH CARE - SERVICES
Quorum Health Group Inc.* 26,000 689,000
Stewart Enterprises, Inc. 36,000 958,500
-------------
TOTAL HEALTH CARE - SERVICES - 3.8% $ 1,647,500
INDUSTRIAL SERVICES
Cintas Corporation 7,200 367,200
G & K Services, Inc., Class A 22,000 959,750
-------------
TOTAL INDUSTRIAL SERVICES - 3.1% $ 1,326,950
MACHINERY
Kennametal, Inc. 17,000 709,750
Precision Castparts Corporation 10,000 533,750
Waterlink, Inc.* 44,500 378,250
-------------
TOTAL MACHINE TOOLS - 3.8% $ 1,621,750
NATURAL GAS
National Fuel Gas Company 12,000 522,750
-------------
TOTAL NATURAL GAS - 1.2% 522,750
OFFICE SUPPLIES
Herman Miller, Inc. 35,000 850,938
Office Depot, Inc.* 32,000 1,010,000
Staples, Inc.* 43,000 1,244,313
-------------
TOTAL OFFICE SUPPLIES - 7.2% $ 3,105,251
</TABLE>
* NON-DIVIDEND PAYING SECURITY.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
(SEE PAGES 30-33)
- --------------------------------------------------------------------------------
11
<PAGE> 14
OPPORTUNITY FUND, PORTFOLIO OF INVESTMENTS JUNE 30, 1998 - UNAUDITED
<TABLE>
<CAPTION>
COMMON STOCKS NUMBER OF SHARES DOLLAR VALUE
- ------------- ---------------- ------------
<S> <C> <C>
RETAILING
BJ's Wholesale Club Inc.* 19,000 771,875
CVS Corporation 31,500 1,226,531
Dollar General Corporation 31,640 1,251,758
Gap, Inc. 23,250 1,432,781
-------------
TOTAL RETAILING - 10.9% $ 4,682,945
TELECOMMUNICATION SERVICES
Century Telephone Enterprises, Inc. 19,500 894,562
Qwest Communications International, Inc.* 16,325 569,334
-------------
TOTAL TELECOMMUNICATION SERVICES - 3.4% $ 1,463,896
TRANSPORTATION SERVICES
Air Express International Corporation 23,000 615,250
-------------
TOTAL TRANSPORTATION SERVICES - 1.4% $ 615,250
TEXTILE - APPAREL
St. John Knits, Inc 22,500 869,062
-------------
TOTAL TEXTILE APPAREL - 2.0% 869,062
WASTE MANAGEMENT
U.S.A. Waste Services, Inc.* 17,950 886,281
-------------
TOTAL WASTE MANAGEMENT - 2.1% $ 886,281
TOTAL COMMON STOCKS - 94.5% $ 40,711,277
(Common Stock Identified Cost $28,080,116)
CASH EQUIVALENTS
Federated U.S. Treasury Cash Reserves
Money Market Fund 2,369,120
-------------
TOTAL CASH EQUIVALENTS - 5.5% $ 2,369,120
(Cash Equivalents Identified
Cost $2,369,120)
TOTAL PORTFOLIO VALUE - 100.0% $ 43,080,397
(Total Portfolio Identified Cost $30,449,236)
Other Assets Less Liabilities $ 335
TOTAL NET ASSETS $ 43,080,732
</TABLE>
* NON-DIVIDED PAYING SECURITY.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
(SEE PAGES 30-33)
- --------------------------------------------------------------------------------
12
<PAGE> 15
REALTY FUND, PORTFOLIO OF INVESTMENTS JUNE 30, 1998 - UNAUDITED
<TABLE>
<CAPTION>
COMMON STOCKS NUMBER OF SHARES DOLLAR VALUE
- ------------- ---------------- ------------
<S> <C> <C>
APARTMENTS
Apartment Investment & Management Company 5,245 207,178
Avalon Properties, Inc.* 6,392 242,896
BRE Properties, Inc. 6,130 159,763
Camden Property Trust 5,815 172,996
Equity Residential Properties Trust 3,475 164,845
Post Properties, Inc. 5,055 194,618
Security Capital Atlantic, Inc. 5,655 126,177
--------------
TOTAL APARTMENTS - 24.5% $ 1,268,473
HEALTH CARE
LTC Properties, Inc. 8,220 153,098
National Health Investors, Inc. 4,085 135,316
--------------
TOTAL HEALTH CARE - 5.6% $ 288,414
LODGING/HOTELS
Boykin Lodging Company 5,080 110,172
Patriot American Hospitality, Inc. 10,625 254,336
--------------
TOTAL LODGING/HOTELS - 7.0% $ 364,508
OFFICE/INDUSTRIAL
Bedford Property Investors, Inc. 8,025 146,456
Boston Properties, Inc. 6,075 209,588
Cali Realty Corporation 6,795 233,578
First Industrial Realty Trust, Inc. 5,180 164,789
Highwoods Properties, Inc. 5,150 166,409
Kilroy Realty Corporation 6,345 158,625
Liberty Property Trust 6,630 169,479
Prentiss Properties Trust 8,350 203,009
Security Capital Industrial Trust 6,505 162,625
Spieker Properties, Inc. 5,305 205,569
--------------
TOTAL OFFICE/INDUSTRIAL - 35.1% $ 1,820,127
RETAIL
Developers Diversified Realty Corporation 4,165 163,216
Macerich Company 4,830 141,579
Regency Realty Corporation 6,940 174,368
Simon Debartolo Group, Inc. 5,845 189,962
Weingarten Realty Investors 2,955 123,556
Westfield America, Inc. 7,540 138,548
--------------
TOTAL RETAIL - 18.0% $ 931,229
STORAGE
Sovran Self-Storage, Inc. 3,100 87,575
--------------
TOTAL STORAGE - 1.7% $ 87,575
</TABLE>
* NON-DIVIDEND PAYING SECURITY.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
(SEE PAGES 30-33)
- --------------------------------------------------------------------------------
13
<PAGE> 16
REALTY FUND, PORTFOLIO OF INVESTMENTS JUNE 30, 1998 - UNAUDITED
<TABLE>
<CAPTION>
COMMON STOCKS NUMBER OF SHARES DOLLAR VALUE
- ------------- ---------------- ------------
<S> <C> <C>
TOTAL COMMON STOCKS - 91.9% $ 4,760,326
(Common Stock Identified Cost $5,043,579)
CASH EQUIVALENTS
Federated U.S. Treasury Cash Reserves
Money Market Fund 422,382
--------------
TOTAL CASH EQUIVALENTS - 8.1% $ 422,382
(Cash Equivalents Identified
Cost $422,382)
TOTAL PORTFOLIO VALUE - 100.0% $ 5,182,708
(Total Portfolio Identified
Cost $5,465,961)
Other Assets Less Liabilities $ (60,085)
TOTAL NET ASSETS $ 5,122,623
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
(SEE PAGES 30-33)
- --------------------------------------------------------------------------------
14
<PAGE> 17
FIXED FUND, PORTFOLIO OF INVESTMENTS JUNE 30, 1998 - UNAUDITED
<TABLE>
<CAPTION>
FIXED INCOME SECURITIES - BONDS FACE VALUE DOLLAR VALUE
- ------------------------------- ---------- ------------
<S> <C> <C>
BANK BONDS - MAJOR REGIONAL
Banc One Corporation, 9.875%, Due 3/1/09 250,000 317,188
Comerica Bank Subordinated Note, 6.875%, Due 3/1/08 250,000 261,250
First Union Corporation, 7.5%, Due 7/15/06 400,000 433,000
NBD Bancorp, 7.125%, Due 5/15/07 400,000 424,500
PNC Funding Corporation, 6.875%, Due 7/15/07 400,000 414,000
Provident Bank, 6.375%, Due 1/15/04 400,000 402,000
Star Bank N.A., 6.625%, Due 12/15/06 400,000 410,500
-------------
TOTAL MAJOR REGIONAL BANKS - 13.5% $ 2,662,438
BANK BONDS - MONEY CENTER
BankAmerica Corporation, 6.625%, Due 10/15/07 350,000 358,312
Bankers Trust NY Corporation, 7.15%, Due 8/14/12 400,000 419,000
-------------
TOTAL MONEY CENTER BANKS - 3.9% $ 777,312
CAPITAL EQUIPMENT
Dover Corporation, 6.25%, Due 6/1/08 500,000 500,625
G.E. Corporation Medium Term Note,
6.87%, Due 12/29/99 250,000 253,350
Honeywell, Inc., 7.125%, Due 4/15/08 400,000 428,000
IBM Corporation, 6.45%, Due 8/1/07 300,000 308,250
-------------
TOTAL CAPITAL EQUIPMENT - 7.8% $ 1,490,225
CHEMICALS
Hercules, Inc., 6.625%, Due 6/1/03 250,000 254,375
-------------
TOTAL CHEMICALS - 1.3% $ 254,375
ELECTRIC UTILITIES
Carolina Power and Light Company, 6.75%, Due 10/1/02 250,000 256,562
Louisville Gas & Electric Company, 7.50%, Due 7/1/02 25,000 25,250
Midwest Power Corporation, 7.00%, Due 2/15/05 200,000 210,500
Pacific Gas & Electric Company, 6.875%, Due 12/1/99 40,000 40,100
Union Electric Power Co., First Mortgage,
6.875%, Due 8/1/04 200,000 209,000
-------------
TOTAL ELECTRIC UTILITIES - 3.7% $ 741,412
ENTERTAINMENT AND LEISURE
Walt Disney Company, 5.80%, Due 10/27/08 400,000 391,500
-------------
TOTAL ENTERTAINMENT AND LEISURE - 2.0% $ 391,500
FINANCIAL - SERVICES
American General Finance, 8.125%, Due 8/15/09 120,000 136,200
CIT Group Holdings, 8.375%, Due 11/1/01 250,000 267,812
Commercial Credit, 6.45%, Due 7/1/02 400,000 406,000
Household Finance Corporation Senior Note,
6.875%, Due 3/1/03 200,000 205,000
-------------
TOTAL FINANCIAL - SERVICES - 5.1% $ 1,015,012
FOOD AND BEVERAGE
Pepsico, Inc. Medium Term Note, 5.463%, Due 7/1/98 200,000 200,000
Sara Lee Corporation, Medium Term Note, 5.70%,
Due 7/14/00 250,000 249,375
-------------
TOTAL FOOD AND BEVERAGE - 2.3% $ 449,375
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
(SEE PAGES 30-33)
- --------------------------------------------------------------------------------
15
<PAGE> 18
FIXED INCOME FUND, PORTFOLIO OF INVESTMENTS JUNE 30, 1998 - UNAUDITED
<TABLE>
<CAPTION>
FIXED INCOME SECURITIES - BONDS FACE VALUE DOLLAR VALUE
- ------------------------------- ---------- ------------
<S> <C> <C>
FOREIGN UTILITIES (U.S. DOLLAR DENOMINATED)
Hydro Quebec Medium Term Note, 6.98%, Due 3/01/05 200,000 208,000
-------------
TOTAL FOREIGN UTILITIES - 1.1% $ 208,000
HEALTH CARE
McKesson Corporation Series 144A, 6.40%, Due 3/1/08 400,000 398,500
-------------
TOTAL HEALTH CARE - 2.0% $ 398,500
MORTGAGE BACKED SECURITIES - UNITED STATES GOVERNMENT AGENCY OBLIGATIONS
Federal Home Loan Bank Indexed Amortization Note
Series MI-05, 6.27%, Due 4/8/05 400,000 401,297
Federal Home Loan Mortgage Corporation Indexed
Amortization Note 6.83%, Due 3/20/04 300,000 302,684
Federal Home Loan Mortgage Corporation, CMO
Series 1639-PD 5.60%, Due 8/15/06 250,000 249,390
Federal Home Loan Mortgage Corporation, CMO
Series 1660-G 6.25%, Due 7/15/07 250,000 251,425
Federal Home Loan Mortgage Corporation, 15 Year Gold
7.00%, Due 3/01/11 311,869 317,717
Government National Mortgage Association, 7.00%,
Due 12/15/25 359,205 366,278
Government National Mortgage Association, 7.50%,
Due 8/15/26 345,522 356,320
-------------
TOTAL MORTGAGE BACKED SECURITIES -
GOVERNMENT AGENCY - 11.4% $ 2,245,111
NEWSPAPER/PUBLISHING
Scripps Howard Corporation, 7.375%, Due 12/15/98 225,000 226,012
-------------
TOTAL NEWSPAPER/PUBLISHING - 1.1% $ 226,012
PETROLEUM
Amoco Corporation Canada, 7.25%, Due 12/1/02 200,000 210,250
Texaco Capital, Inc., 6.875%, Due 7/15/99 200,000 202,000
-------------
TOTAL PETROLEUM - 2.1% $ 412,250
RAILROADS
CSX Transportation Equipment Trust, 6.07%,
Due 3/15/01 200,000 199,750
Union Pacific Corporation, 6.25%, Due 3/15/99 250,000 250,313
-------------
TOTAL RAILROADS - 2.3% $ 450,063
RETAILING
Gap Inc., 6.90%, Due 9/15/07 500,000 523,750
Wal-Mart Stores, Inc., 6.375%, Due 3/1/03 200,000 204,000
-------------
TOTAL RETAILING - 3.7% $ 727,750
REAL ESTATE INVESTMENT TRUSTS
Merry Land & Investment Company, Inc., 7.25%,
Due 6/15/05 400,000 412,500
-------------
TOTAL REAL ESTATE INVESTMENT TRUSTS - 2.1% $ 412,500
TELECOMMUNICATIONS
Cincinnati Bell, Inc., 6.24%, Due 12/30/03 250,000 251,875
GTE Corporation, 7.51%, Due 4/1/09 400,000 434,000
New York Telephone Co., 5.875%, Due 9/1/03 200,000 198,500
Southwestern Bell Corporation, 6.375%, Due 4/1/01 200,000 202,250
-------------
TOTAL TELECOMMUNICATIONS - 5.5% $ 1,086,625
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
(SEE PAGES 30-33)
- --------------------------------------------------------------------------------
16
<PAGE> 19
FIXED INCOME FUND, PORTFOLIO OF INVESTMENTS JUNE 30, 1998 - UNAUDITED
<TABLE>
<CAPTION>
FIXED INCOME SECURITIES - BONDS FACE VALUE DOLLAR VALUE
- ------------------------------- ---------- ------------
<S> <C> <C>
UNITED STATES GOVERNMENT AGENCY OBLIGATIONS
Federal Home Loan Bank, 6.10%, Due 12/13/10 750,000 771,060
Federal Home Loan Bank, 7.03%, Due 5/6/11 250,000 276,597
Federal Home Loan Mortgage Corporation, 6.55%,
Due 1/4/00 200,000 202,566
Federal Home Loan Mortgage Association, 6.005%,
Due 12/8/05 200,000 202,800
Federal Home Loan Mortgage Corporation, 5.95%,
Due 1/19/06 400,000 403,124
Federal National Mortgage Association, 7.50%,
Due 2/11/02 200,000 211,782
Federal National Mortgage Association, 7.55%,
Due 4/22/02 200,000 212,692
Federal National Mortgage Association, 7.80%,
Due 3/29/05 200,000 206,988
Federal National Mortgage Association, 5.80%,
Due 2/22/06 450,000 449,410
Federal National Mortgage Association, 5.75%,
Due 2/15/08 500,000 497,410
-------------
TOTAL UNITED STATES GOVERNMENT AGENCY
OBLIGATIONS - 17.4% $ 3,434,429
UNITED STATES GOVERNMENT OBLIGATIONS
United States Treasury Note, 7.875%, Due 8/15/01 400,000 426,048
United States Treasury Note, 7.50%, Due 11/15/01 200,000 211,700
United States Treasury Note, 7.875%, Due 11/15/04 325,000 364,855
United States Treasury Note, 6.875%, Due 5/15/06 200,000 216,440
United States Treasury Bond, 6.25%, Due 2/15/07 250,000 261,688
United States Treasury Note, 5.50%, Due 2/15/08 400,000 399,424
-------------
TOTAL UNITED STATES GOVERNMENT OBLIGATIONS - 9.5% $ 1,880,155
TOTAL FIXED INCOME - BONDS - 97.8% $ 19,263,044
(Fixed Income Identified Cost $18,652,322)
CASH EQUIVALENTS
Federated U.S. Treasury Cash Reserves 433,822
-------------
TOTAL CASH EQUIVALENTS - 2.2% $ 433,822
(Cash Equivalents Identified Cost $433,822)
TOTAL PORTFOLIO VALUE - 100.0% $ 19,696,866
(Total Portfolio Identified Cost $19,086,144)
Other Assets Less Liabilities $ 298,736
TOTAL NET ASSETS $ 19,995,602
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
(SEE PAGES 30-33)
- --------------------------------------------------------------------------------
17
<PAGE> 20
MUNICIPAL INCOME FUND, PORTFOLIO OF INVESTMENTS JUNE 30, 1998 - UNAUDITED
<TABLE>
<CAPTION>
FIXED INCOME SECURITIES - MUNICIPAL BONDS FACE VALUE DOLLAR VALUE
- ----------------------------------------- ---------- ------------
<S> <C> <C>
GENERAL OBLIGATION - CITY
Akron, Ohio, 5.00%, Due 12/1/05 100,000 103,243
Cincinnati, Ohio, 5.25%, Due 12/1/00 50,000 51,485
Cleveland, Ohio, (AMBAC Insured), 4.9%, Due 9/1/02 50,000 51,409
Columbus, Ohio, 12.375%, Due 2/15/07 25,000 38,912
Loveland, Ohio, 4.9%, Due 12/1/08 100,000 103,248
Vandalia, Ohio, 4.80%, Due 12/1/03 75,000 77,058
Warder Library, Ohio, 6.25%, Due 12/1/03 135,000 147,736
Westlake, Ohio, 4.90%, Due 12/1/04 50,000 51,769
-------------
TOTAL GENERAL OBLIGATION - CITY - 17.1% $ 624,860
GENERAL OBLIGATION - COUNTY
Anderson Township, Ohio Park District, 5.10%, Due 3/1/99 100,000 100,876
Belmont County, Ohio (MBIA Insured), 5.10%, Due 12/1/05 50,000 52,319
Delaware County, Ohio, 5.25%, Due 12/1/06 50,000 52,785
Hamilton County, Ohio Museum Center Building
Improvement, 5.75%, Due 12/1/00 50,000 52,076
Hocking County, Ohio, 4.90%, Due 12/1/06 50,000 51,111
Knox County, Ohio, 4.75%, Due 12/1/09 60,000 60,237
Medina County, Ohio, 12.625%, Due 12/1/99 25,000 27,984
Montgomery County, Ohio, 5.30%, Due 12/1/00 75,000 77,261
Portage County, Ohio, 5.15%, Due 12/1/07 75,000 78,960
Trumbull County, Ohio, 5.25%, Due 12/1/05 50,000 52,790
Washington Township, Ohio, 4.65%, Due 12/1/05 75,000 75,699
-------------
TOTAL GENERAL OBLIGATION - COUNTY - 18.6% $ 682,098
HIGHER EDUCATION
Ohio State Higher Education Facilities,
Denison University, 4.90%, Due 11/01/05 75,000 77,226
University of Cincinnati, Ohio General Receipts,
4.75%, Due 6/1/06 50,000 51,060
-------------
TOTAL HIGHER EDUCATION - 3.5% $ 128,286
HOSPITAL/HEALTH
Episcopol Retirement Homes, Ohio Hospital Facility
Revenue 5.00%, Due 1/1/15 100,000 101,918
Franklin County, Ohio Hospital, The Children's
Hospital Project 5.20%, Due 11/1/04 50,000 52,120
Hamilton County, Ohio Hospital Facility Revenue,
Children's Hospital (FGIC Insured),
5.00%, Due 5/15/06 50,000 51,742
Lorain County, Ohio Hospital Facility Revenue
Catholic Healthcare Partners (MBIA),
6.00%, Due 9/1/07 50,000 55,510
Maumee, Ohio Hospital Facility Revenue, St. Lukes
Hospital Project (AMBAC Insured),
4.90%, Due 12/1/99 50,000 50,681
-------------
TOTAL HOSPITAL/HEALTH - 8.5% $ 311,971
REVENUE BONDS - TRANSPORTATION
Butler County Transportation Improvement, (FSA Insured)
5.50%, Due 4/1/09 100,000 107,954
-------------
TOTAL REVENUE BONDS - TRANSPORTATION - 3.0% $ 107,954
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
(SEE PAGES 30-33)
- --------------------------------------------------------------------------------
18
<PAGE> 21
MUNICIPAL INCOME FUND, PORTFOLIO OF INVESTMENTS JUNE 30, 1998 - UNAUDITED
<TABLE>
<CAPTION>
FIXED INCOME SECURITIES - MUNICIPAL BONDS FACE VALUE DOLLAR VALUE
- ----------------------------------------- ---------- ------------
<S> <C> <C>
REVENUE BONDS - ELECTRIC
Weatherford, Texas Utility System Revenue,
(MBIA Insured), 5.10%, Due 9/1/03 50,000 52,000
-------------
TOTAL REVENUE BONDS - ELECTRIC - 1.4% $ 52,000
REVENUE BONDS - WATER AND SEWER
Akron, Ohio Sewer System, (MBIA Insured), 5.50%,
Due 12/1/07 50,000 54,110
Cleveland, Ohio Waterworks First Mortgage,
Series G (MBIA Insured), 5.25%, Due 1/1/04 50,000 52,486
Lorain, Ohio Water System, (AMBAC Insured),
4.75%, Due 4/01/04 50,000 51,323
Miamisburg, Ohio Sewer System (AMBAC Insured),
4.35%, Due 11/15/02 50,000 50,350
Montgomery County, Ohio Solid Waste (MBIA Insured)
5.125%, Due 11/1/08 50,000 52,292
Southwest Ohio Regional Water District Waterworks
5.25%, Due 12/1/05 50,000 52,725
Warren County, Ohio Water and Sewer Line Extension,
Special Assessment Bonds, 5.50%, Due 12/1/03 50,000 53,122
-------------
TOTAL REVENUE BONDS - WATER AND SEWER - 10.0% $ 366,408
SCHOOL DISTRICT
Centerburg, Ohio, 5.25%, Due 10/15/01 40,000 41,307
Cook County, Illinois, (AMBAC Insured), 5.20%,
Due 12/1/01 50,000 51,680
Forest Hills, Ohio, 4.90%, Due 12/01/04 100,000 102,747
Gallia County, Ohio, 5.00%, Due 3/1/03 25,000 25,571
Gallia County, Ohio, 5.00%, Due 3/1/04 25,000 25,448
Indian Valley, Ohio, (AMBAC Insured), 5.50%, Due 12/1/06 50,000 53,800
Northwestern, Ohio, 4.65%, Due 12/1/06 105,000 103,864
Olmsted Falls, Ohio, (FGIC Insured), 5.30%, Due 12/15/00 50,000 51,532
Southwestern City School District, Ohio, 6.25%,
Due 12/1/05 50,000 54,028
Stow, Ohio, 9.125%, Due 12/1/99 50,000 53,310
West Geauga, Ohio, (AMBAC Insured), 5.45%, Due 11/1/04 50,000 53,143
Westlake, Ohio, 4.85%, Due 12/1/03 100,000 102,983
-------------
TOTAL SCHOOL DISTRICT - 19.7% $ 719,413
STATE AGENCY - BUILDING AUTHORITY
Ohio State Building Authority, Administration Building
Fund 6.40%, Due 10/1/01 50,000 53,526
Ohio State Building Authority, Administrative Building
Fund (MBIA Insured), 5.40%, Due 10/1/02 90,000 94,246
Ohio State Building Authority, Correctional Facilities,
Prerefunded to 3/1/99 at 102, 7.30%, Due 3/1/02 50,000 52,156
Ohio State Building Authority, Ohio Center For The Arts,
5.45%, Due 10/1/07 100,000 107,452
Ohio State Building Authority, State Correctional
Facilities 6.50%, Due 10/1/01 50,000 53,645
-------------
TOTAL STATE AGENCY - BUILDING AUTHORITY - 9.9% $ 361,025
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
(SEE PAGES 30-33)
- --------------------------------------------------------------------------------
19
<PAGE> 22
MUNICIPAL INCOME FUND, PORTFOLIO OF INVESTMENTS JUNE 30, 1998 - UNAUDITED
<TABLE>
<CAPTION>
FIXED INCOME SECURITIES - MUNICIPAL BONDS FACE VALUE DOLLAR VALUE
- ----------------------------------------- ---------- ------------
<S> <C> <C>
STATE AGENCY - EDUCATION
Ohio State Elementary and Secondary Education
(FSA Insured), 5.0%, Due 12/1/07 100,000 104,137
Ohio State Higher Education Facilities (AMBAC Insured)
4.70%, Due 6/1/00 75,000 75,977
Ohio State Higher Education Facilities, 5.90%,
Due 12/1/05 50,000 53,288
-------------
TOTAL STATE AGENCY - EDUCATION - 6.4% $ 233,402
STATE AGENCY - WATER DEVELOPMENT AUTHORITY
Ohio State Water Development Authority (MBIA Insured),
5.50%, Due 6/1/01 50,000 51,895
-------------
TOTAL STATE AGENCY - WATER DEVELOPMENT
AUTHORITY - 1.4% $ 51,895
TOTAL FIXED INCOME - MUNICIPAL BONDS - 99.5% $ 3,639,312
(Municipal Bonds Identified Cost $3,535,658)
CASH EQUIVALENTS
Federated Ohio Municipal Cash Trust 19,547
-------------
TOTAL CASH EQUIVALENTS - 0.5% $ 19,547
(Cash Identified Cost $19,547)
TOTAL PORTFOLIO VALUE - 100.0% $ 3,658,859
(Total Portfolio Identified Cost $3,555,205)
Other Assets Less Liabilities $ 27,899
TOTAL NET ASSETS $ 3,686,758
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
(SEE PAGES 30-33)
- --------------------------------------------------------------------------------
20
<PAGE> 23
STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1998 - UNAUDITED
<TABLE>
<CAPTION>
STOCK FUNDS BOND FUNDS
------------------------------------- -----------------------
FIXED MUNICIPAL
GROWTH OPPORTUNITY REALTY INCOME INCOME
FUND FUND FUND FUND FUND
------------ ------------ ----------- ------------ ----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investment Securities $40,479,788 $43,080,397 $5,182,708 $19,696,866 $3,658,859
at Market Value*
Dividends and Interest
Receivable $64,200 $33,006 $38,373 $312,588 $29,868
------------ ------------ ----------- ------------ ----------
TOTAL ASSETS $40,543,988 $43,113,403 $5,221,081 $20,009,454 $3,688,727
LIABILITIES:
Investment Securities Purchased $0 $0 98,458 $0 $0
Accrued Management Fees $30,540 $32,671 $0 $13,852 $1,969
------------ ------------ ----------- ------------ ----------
TOTAL LIABILITIES $30,540 $32,671 $98,458 $13,852 $1,969
NET ASSETS $40,513,448 $43,080,732 $5,122,623 $19,995,602 $3,686,758
NET ASSETS CONSIST OF:
Paid in Capital $25,591,170 $28,870,031 $5,405,147 $19,341,795 $3,572,036
Undistributed Net
Investment Income $7,151 ($16,053) $13,018 $17,266 $1,778
Undistributed Net Realized Gain
(Loss) from Security
Transactions $2,041,431 $1,595,593 ($12,289) $25,819 $9,290
Net Unrealized Gain (Loss)
on Investments $12,873,696 $12,631,161 ($283,253) $610,722 $103,654
------------ ------------ ----------- ------------ ----------
NET ASSETS $40,513,448 $43,080,732 $5,122,623 $19,995,602 $3,686,758
Shares Outstanding 1,370,765 1,438,881 371,040 1,249,017 232,560
OFFERING, REDEMPTION AND
NET ASSET VALUE PER SHARE $29.56 $29.94 $13.81 $16.01 $15.85
*Identified Cost $27,606,092 $30,449,236 $5,465,961 $19,086,144 $3,555,205
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
(SEE PAGES 30-33)
- --------------------------------------------------------------------------------
21
<PAGE> 24
STATEMENT OF OPERATIONS JUNE 30, 1998 - UNAUDITED
<TABLE>
<CAPTION>
STOCK FUNDS BOND FUNDS
---------------------------------- ----------------------
FIXED MUNICIPAL
GROWTH OPPORTUNITY REALTY INCOME INCOME
FUND FUND FUND FUND FUND
---------- ---------- ---------- ---------- ----------
PERIOD PERIOD PERIOD PERIOD PERIOD
ENDED ENDED ENDED ENDED ENDED
6/30/98 6/30/98 6/30/98 6/30/98 6/30/98
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $30,001 $35,706 $8,435 $614,126 $87,841
Dividends $190,803 $135,104 $113,741 $0 $0
---------- ---------- ---------- ---------- ----------
TOTAL INVESTMENT INCOME $220,804 $170,810 $122,176 $614,126 $87,841
EXPENSES:
Gross Management Fee $237,896 $255,714 $16,066 $110,541 $21,636
Management Fee Waiver
(See accompanying note #3) ($64,049) ($68,846) ($16,066) ($28,837) ($9,407)
---------- ---------- ---------- ---------- ----------
TOTAL EXPENSES $173,847 $186,868 $0 $81,704 $12,229
NET INVESTMENT INCOME $46,957 ($16,058) $122,176 $532,422 $75,612
REALIZED AND UNREALIZED GAINS (LOSSES):
Net Realized Gain (Loss) from
Security Transactions $2,041,429 $1,595,590 ($12,289) $42,872 $9,290
Net Unrealized Gain (Loss)
on Investments $3,502,433 $3,287,531 ($283,253) $144,305 ($18,111)
---------- ---------- ---------- ---------- ----------
NET GAIN (LOSS) ON INVESTMENTS $5,543,862 $4,883,121 ($295,542) $187,177 ($8,821)
NET INCREASE IN ASSETS
FROM OPERATIONS $5,590,819 $4,867,063 ($173,366) $719,599 $66,791
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
(SEE PAGES 30-33)
- --------------------------------------------------------------------------------
22
<PAGE> 25
STATEMENT OF CHANGES IN NET ASSETS JUNE 30, 1998 - UNAUDITED
<TABLE>
<CAPTION>
STOCK FUNDS
-----------------------------------------------------------------------
GROWTH FUND OPPORTUNITY FUND REALTY FUND
-------------------------- --------------------------- -------------
PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED
6/30/98 12/31/97 6/30/98 12/31/97 6/30/98
------------ ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income $46,957 $177,863 ($16,058) $32,928 $122,176
Net Realized Gain (Loss)
from Security Transactions $2,041,429 $3,181,316 $1,595,590 $2,847,393 ($12,289)
Net Unrealized Gain (Loss)
on Investments $3,502,433 $4,619,375 $3,287,531 $4,342,324 ($283,253)
----------- ----------- ----------- ----------- ----------
NET INCREASE (DECREASE) IN
ASSETS FROM OPERATIONS $5,590,819 $7,978,554 $4,867,063 $7,222,645 ($173,366)
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income ($40,049) ($177,619) $0 ($32,962) ($109,158)
Net Realized Gain from
Security Transactions $0 ($3,181,370) $0 ($2,847,390) $0
------------ ------------- ------------- ----------- ----------
NET DECREASE IN ASSETS
FROM DISTRIBUTIONS ($40,049) ($3,358,989) $0 ($2,880,352) ($109,158)
CAPITAL SHARE TRANSACTIONS:
Proceeds From Sale of Shares $5,169,508 $4,489,896 $4,464,450 $6,374,904 $5,387,889
Net Asset Value of Shares
Issued on Reinvestment of
Distributions $29,698 $3,552,221 $0 $3,931,454 $20,250
Cost of Shares Redeemed ($2,137,306) ($2,183,617) ($1,307,084) ($1,684,251) ($2,992)
------------ ------------- ------------- ----------- ----------
NET INCREASE IN ASSETS FROM
CAPITAL SHARE TRANSACTIONS $3,061,900 $5,858,500 $3,157,366 $8,622,107 $5,405,147
NET CHANGE IN NET ASSETS $8,612,670 $10,478,065 $8,024,429 $12,964,400 $5,122,623
Net Assets at Beginning
of Perid $31,900,778 $21,422,713 $35,056,303 22,091,903 $0
NET ASSETS AT END OF PERIOD $40,513,448 $31,900,778 $43,080,732 $35,056,303 $5,122,623
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
(SEE PAGES 30-33)
- --------------------------------------------------------------------------------
23
<PAGE> 26
STATEMENT OF CHANGES IN NET ASSETS JUNE 30, 1998 - UNAUDITED
<TABLE>
<CAPTION>
BOND FUNDS
-----------------------------------------------------
FIXED INCOME FUND MUNICIPAL INCOME FUND
-------------------------- -------------------------
PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED
6/30/98 12/31/97 6/30/98 12/31/97
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income $532,422 $991,103 $75,612 $144,680
Net Realized Gain (Loss)
from Security Transactions $42,872 $34,654 $9,290 $1,607
Net Unrealized Gain (Loss)
on Investments $144,305 $415,756 ($18,111) $71,818
------------ ------------ ------------ -----------
NET INCREASE (DECREASE) IN
ASSETS FROM OPERATIONS $719,599 $1,441,513 $66,791 $218,105
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income ($515,092) ($991,205) ($73,802) ($144,712)
Net Realized Gain from
Security Transactions $0 $0 $0 ($1,427)
------------ ------------ ------------ -----------
NET DECREASE IN ASSETS
FROM DISTRIBUTIONS ($515,092) ($991,205) ($73,802) ($146,139)
CAPITAL SHARE TRANSACTIONS:
Proceeds From Sale of Shares $3,073,071 $3,804,230 $1,138,715 $1,550,612
Net Asset Value of Shares
Issued on Reinvestment of
Dividends/Gains $335,857 $843,824 $18,071 $46,997
Cost of Shares Redeemed ($2,492,634) ($2,362,597) ($1,369,520) ($577,731)
------------ ------------ ------------ -----------
NET INCREASE IN ASSETS FROM
CAPITAL SHARE TRANSACTIONS $916,294 $2,285,457 ($212,734) $1,019,878
NET CHANGE IN NET ASSETS $1,120,801 $2,735,765 ($219,745) $1,091,844
Net Assets at Beginning of
Period $18,874,801 $16,139,119 $3,906,503 $2,814,659
NET ASSETS AT END OF PERIOD $19,995,602 $18,874,884 $3,686,758 $3,906,503
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
(SEE PAGES 30-33)
- --------------------------------------------------------------------------------
24
<PAGE> 27
FINANCIAL HIGHLIGHTS JUNE 30, 1998 - UNAUDITED
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
<TABLE>
<CAPTION>
GROWTH FUND
-----------------------------------------------------------
UNAUDITED YEAR ENDED DECEMBER 31
1/1/98 TO -----------------------------------------------
6/30/98 1997 1996 1995 1994 1993
----------- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value
Beginning of Period $25.38 $21.16 $18.86 $14.82 $15.71 $15.00
OPERATIONS:
Net Investment Income $0.03 $0.16 $0.19 $0.24 $0.24 $0.18
Net Gains (Losses) on
Securities (Realized
& Unrealized) $4.18 $7.01 $2.98 $4.41 ($0.89) $0.71
----------- -------- -------- --------- -------- --------
TOTAL OPERATIONS $4.21 $7.17 $3.17 $4.65 ($0.65) $0.89
DISTRIBUTIONS:
Dividends from Net
Investment Income ($0.03) ($0.16) ($0.19) ($0.24) ($0.24) ($0.18)
Distributions from Net
Realized Capital Gains $0.00 ($2.79) ($0.68) ($0.37) $0.00 $0.00
----------- -------- -------- --------- -------- --------
TOTAL DISTRIBUTIONS ($0.03) ($2.95) ($0.87) ($0.61) ($0.24) ($0.18)
Net Asset Value
End of Period $29.56 $25.38 $21.16 $18.86 $14.82 $15.71
TOTAL RETURN 16.59% 33.96% 16.85% 31.61% -4.22% 5.93%
Net Assets, End of Period
(Millions) $40.51 $31.90 $21.42 $14.87 $9.30 $6.58
RATIOS AFTER FEE WAIVERS:(1)
Ratio of Expenses to
Average Net Assets(2) 0.95% 0.97% 1.00% 1.00% 1.00% 1.00%
Ratio of Net Income to
Average Net Assets(2) 0.26% 0.65% 0.99% 1.42% 1.65% 1.38%
Portfolio Turnover Rate 18.83% 54.44% 26.78% 52.91% 30.38% 23.57%
</TABLE>
- ----------
(1) The Adviser intends fee waivers of 0.35% to be permanent although the
Adviser retains the right to remove the waivers after 12/31/98. As of
6/30/98, assuming no waiver of management fee expenses, the Growth Fund
rates would have been: expenses to average net assets of 1.30%; and net
income to average net assets of -0.09% (see note #3 on pages 30-31).
(2) Ratios have been annualized in 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
(SEE PAGES 30-33)
- --------------------------------------------------------------------------------
25
<PAGE> 28
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
<TABLE>
<CAPTION>
OPPORTUNITY FUND
----------------------------------------------------
UNAUDITED YEAR ENDED DECEMBER 31
1/1/98 TO ----------------------------- 5/16/94-
6/30/98 1997 1996 1995 12/31/94
----------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value
Beginning of Period $26.44 $22.65 $19.42 $15.70 $15.00
OPERATIONS:
Net Investment Income ($0.01) $0.03 $0.06 $0.08 $0.05
Net Gains (Losses) on Securities
(Realized & Unrealized) $3.51 $6.13 $4.43 $3.89 $0.70
----------- -------- -------- --------- ---------
TOTAL OPERATIONS $3.50 $6.16 $4.49 $3.97 $0.75
DISTRIBUTIONS:
Dividends from Net
Investment Income $0.00 ($0.03) ($0.06) ($0.08) ($0.05)
Distributions from Net
Realized Capital Gains $0.00 ($2.34) ($1.20) ($0.17) $0.00
----------- -------- -------- --------- ---------
TOTAL DISTRIBUTIONS $0.00 ($2.37) ($1.26) ($0.25) ($0.05)
Net Asset Value
End of Period $29.94 $26.44 $22.65 $19.42 $15.70
TOTAL RETURN 13.24% 27.26% 23.10% 25.27% 4.99%
Net Assets, End of Period
(Millions) $43.08 $35.06 $22.09 $15.19 $6.29
RATIOS AFTER FEE WAIVERS:(1)
Ratio of Expenses to
Average Net Assets(2) 0.94% 0.97% 1.00% 1.00% 1.00%
Ratio of Net Income to
Average Net Assets(2) -0.08% 0.11% 0.28% 0.59% 1.01%
Portfolio Turnover Rate 22.35% 55.05% 46.43% 62.15% 58.73%
</TABLE>
- ----------
(1) The Adviser intends fee waivers of 0.35% to be permanent although the
Adviser retains the right to remove the waivers after 12/31/98. As of
6/30/98, assuming no waiver of management fee expenses, the Opportunity
Fund rates would have been: expenses to average net assets of 1.30%; and
net income to average net assets of -0.43% (see note #3 on pages 30-31).
(2) Ratios have been annualized in 1994 and 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
(SEE PAGES 30-33)
- --------------------------------------------------------------------------------
26
<PAGE> 29
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
REALTY FUND
-------------
UNAUDITED
1/1/98-
6/30/98
------------
Net Asset Value
Beginning of Period $ 15.00
OPERATIONS:
Net Investment Income 0.39
Net Gains (Losses) on Securities
(Realized & Unrealized) (1.22)
------------
TOTAL OPERATIONS $ (0.83)
DISTRIBUTIONS:
Dividends from Net
Investment Income (0.36)
Distributions from Net
Realized Capital Gains 0.00
------------
TOTAL DISTRIBUTIONS $ (0.36)
Net Asset Value
End of Period $ 13.81
TOTAL RETURN -5.54%
Net Assets, End of Period
(Millions) $ 5.17
RATIOS AFTER FEE WAIVERS:(1)
Ratio of Expenses to
Average Net Assets 0.00%
Ratio of Net Income to
Average Net Assets(2) 7.10%
Portfolio Turnover Rate 3.75%
- ----------
(1) The Adviser intends fee waivers of 0.35% to be permanent although the
Adviser retains the right to remove the waivers after 12/31/98. As of
6/30/98, assuming no waiver of management fee expenses, the Realty Fund
rates would have been: expenses to average net assets of 1.30%; and net
income to average net assets of 6.75% (see note #3 on pages 30-31).
(2) Ratios have been annualized in 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
(SEE PAGES 30-33)
- --------------------------------------------------------------------------------
27
<PAGE> 30
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
<TABLE>
<CAPTION>
FIXED INCOME FUND
---------------------------------------------------------
UNAUDITED YEAR ENDED DECEMBER 31
1/1/98 TO -----------------------------------------------
6/30/98 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value
Beginning of Period $15.84 $15.45 $15.84 $14.20 $15.80 $15.00
OPERATIONS:
Net Investment Income $0.43 $0.88 $0.86 $0.83 $0.80 $0.60
Net Gains (Losses) on
Securities (Realized
& Unrealized) $0.16 $0.39 ($0.39) $1.64 ($1.60) $0.83
-------- -------- -------- -------- -------- --------
TOTAL OPERATIONS $0.59 $1.27 $0.47 $2.47 ($0.80) $1.43
DISTRIBUTIONS:
Dividends from Net
Investment Income ($0.42) ($0.88) ($0.86) ($0.83) ($0.80) ($0.60)
Distributions from Net
Realized Capital Gains $0.00 $0.00 $0.00 $0.00 $0.00 ($0.03)
-------- -------- -------- -------- -------- --------
TOTAL DISTRIBUTIONS ($0.42) ($0.88) ($0.86) ($0.83) ($0.80) ($0.63)
Net Asset Value
End of Period $16.01 $15.84 $15.45 $15.84 $14.20 $15.80
TOTAL RETURN 3.76% 8.44% 3.11% 17.70% -5.14% 9.51%
Net Assets, End of Period
(Millions) $20.00 $18.87 $16.14 $15.97 $12.46 $10.08
RATIOS AFTER FEE WAIVERS:(1)
Ratio of Expenses to
Average Net Assets(2) 0.84% 0.85% 0.85% 0.85% 0.85% 0.85%
Ratio of Net Income to
Average Net Assets(2) 5.50% 5.67% 5.56% 5.54% 5.53% 5.08%
Portfolio Turnover Rate 17.21% 29.33% 14.04% 4.95% 0.04% 10.14%
</TABLE>
- ----------
(1) The Adviser intends fee waivers of 0.30% to be permanent although the
Adviser retains the right to remove the waivers after 12/31/98. As of
6/30/98, assuming no waiver of management fee expenses, the Fixed Income
Fund rates would have been: expenses to average net assets of 1.15%; and
net income to average net assets of 5.20% (see note #3 on pages 30-31).
(2) Ratios have been annualized in 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
(SEE PAGES 30-33)
- --------------------------------------------------------------------------------
28
<PAGE> 31
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
<TABLE>
<CAPTION>
MUNICIPAL INCOME FUND
-----------------------------------------------------
UNAUDITED YEAR ENDED DECEMBER 31
1/1/98 TO ----------------------------- 5/16/94-
6/30/98 1997 1996 1995 12/31/94
----------- -------- -------- --------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value
Beginning of Period $15.88 $15.57 $15.68 $14.73 $15.00
OPERATIONS:
Net Investment Income $0.32 $0.64 $0.63 $0.63 $0.39
Net Gains (Losses) on Securities
(Realized & Unrealized) ($0.04) $0.32 ($0.11) $0.96 ($0.27)
----------- -------- -------- --------- ----------
TOTAL OPERATIONS $0.28 $0.96 $0.52 $1.59 $0.12
DISTRIBUTIONS:
Dividends from Net
Investment Income ($0.31) ($0.64) ($0.63) ($0.63) ($0.39)
Distributions from Net
Realized Capital Gains $0.00 ($0.01) $0.00 ($0.01) $0.00
----------- -------- -------- --------- ----------
TOTAL DISTRIBUTIONS ($0.31) ($0.65) ($0.63) ($0.64) ($0.39)
Net Asset Value
End of Period $15.85 $15.88 $15.57 $15.68 $14.73
TOTAL RETURN 1.77% 6.23% 3.43% 10.88% 0.81%
Net Assets, End of Period
(Millions) $3.69 $3.90 $2.81 $2.28 $1.49
RATIOS AFTER FEE WAIVERS: (1)
Ratio of Expenses to
Average Net Assets (2) 0.64% 0.63% 0.75% 0.68% 0.01%
Ratio of Net Income to
Average Net Assets (3) 3.98% 4.19% 4.18% 4.28% 5.46%
Portfolio Turnover Rate 10.62% 9.95% 6.25% 7.81% 0.00%
</TABLE>
- ----------
(1) The Adviser intends fee waivers of 0.50% to be permanent although the
Adviser retains the right to remove the waivers after 12/31/98. As of
6/30/98, assuming no waiver of management fee expenses, the Municipal
Income Fund rates would have been: expenses to average net assets of 1.15%;
and net income to average net assets of 1.99% (see note #3 on pages 30-31).
(2) The Adviser waived 1.14% of the fee on the Municipal Income Fund in 1994,
0.47% of the fee in 1995, 0.40% in 1996, and 0.52% of the fee in 1997.
During the first 6 months of 1998, the Adviser waived 0.50% of the fee, and
intends to waive additional fees for the remainder of the year.
(3) Ratios have been annualized in 1994 and 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
(SEE PAGES 30-33)
- --------------------------------------------------------------------------------
29
<PAGE> 32
NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1998 - UNAUDITED
1) ORGANIZATION:
The Growth Fund, Opportunity Fund, Realty Fund, Fixed Income Fund, and
Municipal Income Fund are each series of the Johnson Mutual Funds 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 Declaration of Trust dated
September 30, 1992. The Growth and Fixed Income Funds began offering their
shares publicly on January 4, 1993. The Opportunity and Municipal Income
Funds began offering their shares publicly on May 16, 1994. The Realty Fund
began offering its shares publicly on January 2, 1998.
The investment objective of the Growth Fund is long term capital growth. The
investment objective of the Opportunity Fund is long term capital growth. The
investment objective of the Realty Fund is above average income and long term
capital growth. The investment objective of the Fixed Income Fund is a high
level of income over the long term consistent with preservation of capital.
The investment objective of the Municipal Income Fund is a high level of
federally tax-free income over the long term consistent with preservation of
capital.
2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
SECURITY VALUATION AND TRANSACTIONS:
The investments in securities are carried at market value. The market
quotation used for common stocks which are traded on any exchange or on the
NASDAQ over-the-counter market are valued at the last quoted sale price of
the day, determined as of the close of the New York Stock Exchange at 4:00
p.m. Eastern Standard Time. In absence of a sale price, a security is valued
at its last bid price except when, in the Adviser's opinion, the last bid
price does not accurately reflect the current value of the security.
Fixed income securities are valued by using independent pricing services
which use prices provided by market makers or estimates of market values
obtained from yield data relating to instruments or securities with similar
characteristics. When prices are not readily available from a pricing
service, or when illiquid securities are being valued, securities are valued
at fair value as determined in good faith by the Adviser, subject to review
of the Board of Trustees. Short-term investments in fixed income securities
with maturities of less than 60 days are valued by using the amortized cost
method of valuation. Purchases and sales of securities are recorded on a
trade date basis. Discounts and premiums on securities purchased are
amortized over the life of the respective securities.
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. Gains and losses on sales of investments are calculated
using the specific identification method.
DISTRIBUTIONS TO SHAREHOLDERS AND INCOME TAXES:
It is the Funds' policy to distribute annually, prior to the end of the
calendar year, dividends sufficient to satisfy excise tax requirements of the
Internal Revenue Service. This Internal Revenue Service requirement may cause
an excess of distributions over the book year-end accumulated income. In
addition, it is the Funds' policy to distribute annually, after the end of
the calendar year, any remaining net investment income and net realized
capital gains to comply with the special provisions of the Internal Revenue
Code available to registered investment companies. Accordingly, no tax
provision is required.
- --------------------------------------------------------------------------------
30
<PAGE> 33
NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1998 - UNAUDITED
2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CON'T):
Net investment income from the Growth, Realty, Fixed Income, and Municipal
Income Funds is paid to shareholders quarterly. The Opportunity Fund pays an
annual dividend from the net investment income. Each Fund determines annually
whether to distribute any realized long-term capital gains in excess of net
realized short-term capital losses, including capital losses carryovers from
the prior year. The amounts of the distributions are determined in accordance
with federal tax regulations, which may differ from those amounts determined
and distributed. If there are any book or tax differences that are temporary
or permanent, they will be charged or credited to paid-in capital in the
period that the difference has occurred.
The Realty Fund may for tax purposes have received ordinary income, capital
gains and return of capital from its investments in REIT's. Most REIT's do
not report this information until the close of the calendar year. The Realty
Fund pays a quarterly dividend that includes ordinary income, capital gains
and return of capital. After December 31, 1998, these distributions will be
classified for tax purposes as such. The amounts of the reportable
distributions are determined in accordance with federal tax regulations,
which may differ from those amounts distributed. If there are any book or tax
differences that are temporary or permanent, they will be charged or credited
to paid-in capital in the period that the difference has occurred. Any
taxable income or gain that is remaining at the end of the fiscal year is
distributed the following year.
The preparation of financial statements in conformity with generally accepted
accounting principles 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.
3) INVESTMENT ADVISORY AGREEMENT:
The investment advisory agreement provides that Johnson Investment Counsel,
Inc., the Adviser, will pay all of the Funds' operating expenses, excluding
brokerage fees and commissions, taxes, interest and extraordinary expenses.
The Growth Fund and the Opportunity Fund paid the Adviser a management fee at
the annual rate of 0.95% of the Funds' average daily net assets, which was
accrued daily and paid monthly. The Fixed Income Fund paid the Adviser a
management fee at the annual rate of 0.85% of the Fund's average daily net
assets, and the Municipal Income Fund paid the Adviser a management fee at
the annual rate of 0.65% of the Fund's average daily net assets, both of
which are accrued daily and paid monthly. For the period January 1, 1998
through June 30, 1998 the Realty Fund did not pay the Adviser a management
fee.
The Adviser has received management fees for the period January 1 - June 30,
1998 as follows:
Growth Fund $173,847 Fixed Income Fund $ 81,704
Opportunity Fund $186,868 Municipal Income Fund $ 12,229
Realty Fund $ 0
The Adviser is authorized to charge the Growth Fund, Opportunity Fund and
Realty Fund a management fee of 1.30% of the average daily net assets of the
Funds, and has waived 0.35% of these fees. Additionally, the Adviser waived
the remaining 0.95% of the management fee on the Realty Fund for the six
months ending June 30, 1998, only. The Adviser is authorized to charge the
Fixed Income Fund a management fee of 1.15%, of the average daily net assets
of the Fund, and has waived 0.30% of these fees. The Adviser is authorized to
charge a management fee of 1.15% on the Municipal Income Fund, and has waived
0.50% of these fees. The Adviser intends the current fee waivers on the
Growth, Opportunity, Fixed Income and the Municipal Income Fund to be
permanent, although the Adviser has the right to remove these fee waivers any
time after December 31, 1998. The Adviser intends the 0.35% waiver on the
Realty Fund to be permanent although the Adviser has the right to remove
these fee waivers any time after December 31, 1998.
- --------------------------------------------------------------------------------
31
<PAGE> 34
NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1998 - UNAUDITED
4) RELATED PARTY TRANSACTIONS:
All officers and one trustee of the Johnson Mutual Funds Trust are employees
of Johnson Investment Counsel, Inc., the Adviser. Each outside trustee has
received compensation during the 6 months ending June 30, 1998, of $1,500 for
his responsibilities as trustee and has received no additional compensation
from the Trust.
The Adviser is not a registered broker-dealer of securities and thus does not
receive commissions on trades made on behalf of the Funds. The beneficial
ownership, either directly or indirectly, of more than 25% of the voting
securities of a Fund creates a presumption of control of the Fund, under
Section 2(a)(9) of the Investment Company Act of 1940. As of June 30, 1998,
Johnson Investment Counsel, Inc. and entities which the Adviser could be
deemed to control or have discretion over owned in aggregate more than 25% of
the Growth Fund, the Opportunity Fund, the Realty Fund, the Fixed Income
Fund, and the Municipal Income Fund.
Johnson Financial, Inc. is a wholly owned subsidiary of Johnson Investment
Counsel, Inc., the Adviser. Johnson Financial, Inc. provides transfer agency,
fund accounting, and administration services to the Funds. These services are
paid for by the Adviser.
5) CAPITAL SHARE TRANSACTIONS:
As of June 30, 1998, there were an unlimited number of capital shares of no
par value authorized. Each Fund records purchases of its capital shares at
the daily net asset value next determined after receipt of a shareholder's
check or wire and application in proper form. Redemptions are recorded at the
net asset value next determined following receipt of a shareholder's written
or telephone request in proper form.
SHARE TRANSACTIONS FOR THE PERIOD JANUARY 1 - JUNE 30, 1998:
<TABLE>
<CAPTION>
GROWTH OPPORTUNITY REALTY FIXED MUNICIPAL
FUND FUND FUND FUND FUND
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Shares Sold to Investors 188,167 158,172 369,794 192,019 71,285
Shares Issued on Reinvestment Dividends 1,027 0 1,456 21,102 1,140
--------- --------- ------- --------- -------
Subtotal 189,194 158,172 371,250 213,121 72,425
Shares Redeemed (75,534) (45,233) (210) (155,954) (85,847)
--------- --------- ------- --------- -------
Net Increase 113,660 112,939 371,040 57,167 (13,422)
SHARES OUTSTANDING:
December 31, 1997 (beginning of period) 1,257,105 1,325,942 0 1,191,850 245,982
JUNE 30, 1998 (END OF PERIOD) 1,370,765 1,438,881 371,040 1,249,017 232,560
</TABLE>
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32
<PAGE> 35
NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 1998 - UNAUDITED
6) PURCHASES AND SALES OF SECURITIES:
During the 6 months ended June 30, 1998, purchases and sales of investment
securities aggregated:
<TABLE>
<CAPTION>
Investment Securities other than
Short Term Investments and US
Government Obligations US Government Obligations
PURCHASES SALES PURCHASES SALES
--------- ----- --------- -----
<S> <C> <C> <C> <C>
Growth Fund $8,604,061 $6,950,140 $ 0 $ 0
Opportunity Fund $9,672,732 $8,872,578 $ 0 $ 0
Realty Fund $5,187,890 $ 132,012 $ 0 $ 0
Fixed Income Fund $3,614,128 $2,913,263 $396,233 $386,500
Municipal Income Fund $ 362,705 $ 399,302 $ 0 $ 0
</TABLE>
7) SECURITY TRANSACTIONS:
For Federal income tax purposes, the cost of investments owned on June 30,
1998 was the same as identified cost. As of June 30, 1998 the composition of
unrealized appreciation (the excess of value over tax cost) and depreciation
(the excess of tax cost over value) was as follows:
NET
APPRECIATION
FUND APPRECIATION (DEPRECIATION) (DEPRECIATION)
----- ------------ -------------- --------------
Growth $13,151,319 ($ 277,623) $ 12,873,696
Opportunity $14,027,644 ($1,396,483) $ 12,631,161
Realty $ 39,552 ($ 322,805) ($ 283,253)
Fixed Income $ 613,226 ($ 2,504) $ 610,722
Municipal Income $ 104,790 ($ 1,136) $ 103,654
8) FINANCIAL INSTRUMENTS DISCLOSURE:
There are no reportable financial instruments that have any off balance sheet
risk as of June 30, 1998.
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33
<PAGE> 36
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TRUSTEES AND OFFICERS
Timothy E. Johnson Trustee, President
John W. Craig Trustee
Ronald H. McSwain Trustee
Kenneth S. Shull Trustee
Dale H. Coates Vice President
Richard T. Miller Vice President
Dianna J. Rosenberger CFO, Treasurer
David C. Tedford Secretary
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TRANSFER AGENT AND FUND ACCOUNTANT
Johnson Financial, Inc.
3777 West Fork Road
Cincinnati, Ohio 45247
513-661-3100
800-541-0170
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CUSTODIAN
The Provident Bank
Three East Fourth Street
Cincinnati, Ohio 45202
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AUDITORS
McCurdy & Associates CPA's, Inc.
27955 Clemens Road
Westlake, Ohio 44145
This report is authorized for distribution to prospective
investors only when accompanied or preceded by the Trust's
prospectus, which illustrates each Fund's policies
and other information that may be helpful in making an investment decision.
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