<PAGE> 1
Johnson
MUTUAL FUNDS
ANNUAL REPORT DECEMBER 31, 1997
[] JOHNSON GROWTH FUND
[] JOHNSON OPPORTUNITY FUND
[] JOHNSON FIXED INCOME FUND
[] JOHNSON MUNICIPAL INCOME FUND
Investment Adviser:
Johnson Investment Counsel, Inc.
Cincinnati, Ohio 45247
513-385-4001
800-541-0170
<PAGE> 2
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J0HNSON MUTUAL FUNDS DECEMBER 31, 1997
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TABLE OF CONTENTS
<TABLE>
<S> <C>
Our Message to You............................................................................1
Performance Review and Management Discussion
Growth Fund...............................................................................2
Opportunity Fund..........................................................................3
Fixed Income Fund.........................................................................4
Municipal Income Fund.....................................................................5
Portfolio of Investments
Growth Fund.............................................................................6-8
Opportunity Fund.......................................................................9-11
Fixed Income Fund.....................................................................12-14
Municipal Income Fund.................................................................15-17
Statement of Assets and Liabilities..........................................................18
Statement of Operations......................................................................19
Statement of Changes in Net Assets
Stock Funds..............................................................................20
Bond Funds...............................................................................21
Financial Highlights
Growth Fund..............................................................................22
Opportunity Fund.........................................................................23
Fixed Income Fund........................................................................24
Municipal Income Fund....................................................................25
Notes to the Financial Statements.........................................................26-28
Report of Independent Auditors...............................................................29
Trustees, Officers, Transfer Agent, Fund Accountant, Custodian, Auditors..............Back page
</TABLE>
<PAGE> 3
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OUR MESSAGE TO YOU
- --------------------------------------------------------------------------------
February 20, 1998
Dear Shareholder:
Stock investors enjoyed another year of excellent performance in 1997, exceeding
even the most optimistic of expectations. We are pleased to report that the
Johnson Growth Fund's equity performance surpassed the returns of the Standard
and Poor's 500 Index without sacrificing quality or skewing the portfolio toward
any one sector of the market. As concerns about Southeast Asia captured the
headlines, investors looked towards companies with stable earnings growth and
strong fundamentals. This "flight to quality" in conjunction with good stock
selection contributed to our excellent performance in 1997. The Opportunity
Fund's solid performance is illustrated on page three for your review as well.
The Asian crisis also positively impacted the U.S. bond market in 1997. Interest
rates fell amid concerns that Asian economic woes would translate into a
slowdown in U.S. economic growth. Bond investors flocked to the safe haven
offered by the U.S. market. In this uncertain international environment, both
the Fixed Income Fund and the Municipal Income Fund performed well as a result
of the Funds' investments in high quality U.S. Securities.
Thank you again for the opportunity to assist you over the past year. We
appreciate your continued confidence in our services and welcome your call
should you have any questions or comments.
Sincerely,
/s/ Timothy E. Johnson
Timothy E. Johnson, President
1
<PAGE> 4
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GROWTH FUND, PERFORMANCE REVIEW December 31, 1997
- --------------------------------------------------------------------------------
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
1993 1994 1995 1996 1997
Growth Fund --- S&P 500 Index
<TABLE>
<CAPTION>
For Periods Ended December 31, 1997:
Since
Average Annual Inception
Total Returns(b) (a)
------------------ ---------
1 Year 3 Year 5 Years
--------- --------- ---------
<S> <C> <C> <C>
Growth Fund 33.96% 27.22% 15.90%
S&P 500 Index 33.37% 31.16% 20.27%
</TABLE>
(a) Inception of the Growth Fund was January 4, 1993. The data represented
herein and below 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.
<TABLE>
<CAPTION>
TOP TEN HOLDINGS:
- ----------------
<S> <C>
Procter & Gamble Company 4.3%
Mobil Corporation 3.6%
Johnson & Johnson 3.5%
General Electric Company 3.3%
Computer Associates International Inc. 2.8%
Dresser Industries 2.8%
Travelers Group Inc. 2.7%
EMC Corporation 2.6%
Merck and Company 2.6%
Sara Lee Corporation 2.6%
</TABLE>
HOW DID THE GROWTH FUND PERFORM RELATIVE TO THE MARKET?
The rate of return on the Growth Fund for calendar year 1997 was 34.0%. That
compares favorably to a return of 33.4% on the Standard & Poors 500 Index and
24.9% on the Dow Jones Industrial Average. The outperformance of the Growth Fund
was primarily the result of good stock selection in many industries. The Growth
Fund stocks outperformed in seven out of ten economic sectors. The largest
relative contributions came from stocks in the basic industry, health care and
finance sectors. The portfolio return was also helped by a market weighting in
the finance sector and an overweighting in the health care sector, the two best
performing industry sectors.
Another factor that helped relative performance during the last few months of
the year was the increased interest by investors in owning the stocks of quality
companies. Investors were uncertain of the impact that the Asian crisis would
have on the U.S. economy and the profits of domestic corporations. As a result,
those companies that were perceived to be strong enough to weather the effects
of a stronger dollar and weaker foreign economies tended to be good relative
performers. That trend was advantageous to the quality growth style of the
Growth Fund.
GROWTH FUND OBJECTIVE: LONG-TERM CAPITAL GROWTH
PRIMARY ASSET CATEGORY: STOCKS OF LARGER-SIZED QUALITY GROWTH COMPANIES
2
<PAGE> 5
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OPPORTUNITY FUND, PERFORMANCE REVIEW DECEMBER 31, 1997
- --------------------------------------------------------------------------------
$25,000
$20,000
$15,000
$10,000
$5,000
1993 1994 1995 1996 1997
Opportunity Fund --- S&P MidCap Index
<TABLE>
<CAPTION>
For Periods Ended December 31, 1997:
Since
Average Annual Inception
Total Returns(b) (a)
--------------- ----------
1 Year 3 Year 3.6 Years
------ ------ ---------
<S> <C> <C> <C>
Opportunity Fund 27.26% 25.20% 22.07%
S&P MidCap Index 32.24% 27.33% 23.51%
</TABLE>
(a) Inception of the Opportunity Fund was May 16, 1994. The data represented
herein and below 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.
<TABLE>
<CAPTION>
TOP TEN HOLDINGS:
- ----------------
<S> <C>
Southtrust Corporation 4.3%
Dollar General Corporation 3.1%
USA Waste Services, Inc. 3.1%
Transatlantic Holdings, Inc. 3.0%
G & K Services, Inc., Class A 2.9%
Tidewater Inc. 2.8%
Reliastar Financial Corporation 2.7%
Arbor Drugs, Inc. 2.6%
Bank of New York Co., Inc. 2.6%
Ecolab Inc. 2.6%
</TABLE>
HOW DID THE OPPORTUNITY FUND PERFORM RELATIVE TO THE MARKET?
The Opportunity Fund had a return of 27.3% in 1997. That compares to a return of
32.2% for the Standard & Poors Midcap Index. While the Opportunity Fund return
was lower than that of this S&P index, it compares very favorably with the
return of 19.6% for the Lipper average for midcap stock funds. There occurred a
very large divergence in returns of midcap growth and value stocks. The midcap
value stocks had a return of about 34% versus a return of about 23% for midcap
growth stocks. The Opportunity Fund has a strong bias toward growth stocks.
Performance in the midcap index was very concentrated in three sectors; consumer
staples, finance and transportation. Finance was the best performing sector with
a return of over 65%. The Opportunity Fund consistently had an overweighting in
finance during the year, helping the relative performance. Health care was the
worst performing midcap sector for the second year in a row. The Opportunity
Fund had a slight overweighting in the sector during most of the year but
benefited from good stock selection.
OPPORTUNITY FUND OBJECTIVE: LONG-TERM CAPITAL APPRECIATION
PRIMARY ASSET CATEGORY: STOCKS OF MEDIUM/SMALL-SIZED GROWTH COMPANIES
3
<PAGE> 6
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FIXED INCOME FUND, PERFORMANCE REVIEW DECEMBER 31, 1997
- --------------------------------------------------------------------------------
$14,000
$12,000
$10,000
$8,000
1993 1994 1995 1996 1997
- --Fixed Income fund
- --Lehman Intermediate Government/Corporate Index
Periods Ended December 31, 1997:
<TABLE>
<CAPTION>
Since
Average Annual Inception
Total Returns(b) (a)
------------------ ---------
1 Year 3 Year 5 Years
------ ------ -------
<S> <C> <C> <C>
Fixed Income Fund 8.44% 9.59% 6.47%
Lehman Int. Index 7.87% 9.00% 6.58%
</TABLE>
(a) Inception of the Fixed Income Fund was January 4, 1993. The data represented
herein and below 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
50%
40%
30%
20%
10%
0%
AAA AA A BBB
HOW DID THE FIXED INCOME FUND PERFORM RELATIVE TO THE MARKET?
For the calendar year 1997, the Fixed Income Fund provided a total return of
8.4%, compared to 7.9% for the Lehman Intermediate Government Corporate Bond
Index. Following a mild interest rate hike by the Fed in March, monetary policy
remained on hold for the remainder of the year. As the threat of tighter
monetary policy diminished, the bond market was able to improve. However, as the
year continued, even more favorable news for the market surfaced in the form of
diminishing inflation pressures. For the entire year, the Consumer Price Index
increased only 1.7%, its best showing since 1986. Progress on the budget deficit
also helped to push interest rates lower, with many analysts now projecting a
budget surplus from much stronger-than-expected tax revenues. Finally, in the
fourth quarter, the Asian crisis caused investors to pour money into the U.S.
Treasury market as financial markets overseas plummeted. Each of these factors
combined to push Treasury prices higher and interest rates lower. In this
environment, the Fixed Income Fund was able to perform well compared to the
Lehman Intermediate Index due to its quality focus and its slightly
longer-weighted average maturity.
FIXED INCOME FUND OBJECTIVE: INCOME AND CAPITAL PRESERVATION
PRIMARY ASSET CATEGORY: INVESTMENT-GRADE GOVERNMENT/CORPORATE BONDS
4
<PAGE> 7
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MUNICIPAL INCOME FUND, PERFORMANCE REVIEW DECEMBER 31, 1997
- --------------------------------------------------------------------------------
$14,000
$12,000
$10,000
$8,000
1994 1995 1996 1997
- -- Municipal Income Fund
- -- Lehman Five-Year G.O. Municipal Index
<TABLE>
<CAPTION>
For Periods Ended December 31, 1997:
Since
Average Annual Inception
Total Returns(b) (a)
------------------ -----------
1 Year 3 Year 3.6 Years
------ ------ ---------
<S> <C> <C> <C>
Municipal Income Fund 6.23% 6.80% 5.83%
Lehman G.O. Index 6.49% 7.55% 6.55%
</TABLE>
(a) Inception of the Municipal Income Fund was May 16, 1994. The data
represented herein and below 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
60%
50%
40%
30%
20%
10%
0%
AAA AA A NR
HOW DID THE MUNICIPAL INCOME FUND PERFORM RELATIVE TO THE MARKET?
Compared to the volatility of the taxable bond market, yields on municipal
securities were relatively stable in the first half of 1997. But in the second
half, and during the fourth quarter in particular, yields on municipal bonds
fell as the general level of interest rates dropped. These falling yields pushed
up prices and boosted the returns of municipals to exceed their coupon. In this
environment, the Municipal Income Fund was able to improve its relative
performance due to its slightly longer-weighted average maturity. However, the
Fund had a slightly lower return than that of the Lehman Five-Year Municipal
Bond Index 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. More than 75% of the securities in the Fund are
rated in one of the two highest quality rating categories (either "AAA" or
"AA"), with over 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
5
<PAGE> 8
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GROWTH FUND, PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stocks Number of Shares Dollar Value
------------- ---------------- ------------
<S> <C> <C>
Beverages
Whitman Corporation 19,000 495,188
--------------
Total Beverages - 1.6% . . . . . . . . . . . . . . . . . . $ 495,188
Chemicals
Air Products & Chemicals, Inc. 7,300 600,425
--------------
Total Chemicals - 1.9% . . . . . . . . . . . . . . . . . . $ 600,425
Chemicals - Specialty
Avery Dennison Corporation 13,000 581,750
Ecolab Inc. 12,000 665,250
--------------
Total Chemicals - Specialty - 3.9% . . . . . . . . . . . . $ 1,247,000
Computer Hardware
Compaq Computer Corporation 13,500 761,906
Sun Microsystems Inc.* 19,600 781,550
--------------
Total Computer Hardware - 4.8% . . . . . . . . . . . . . . $ 1,543,456
Computer Networking
Cisco Systems Inc.* 12,900 719,175
--------------
Total Computer Networking - 2.3% . . . . . . . . . . . . . $ 719,175
Computer Software
Computer Associates International, Inc. 16,950 896,231
EMC Corporation* 30,000 823,125
Microsoft Corporation* 4,600 594,550
--------------
Total Computer Software - 7.3% . . . . . . . . . . . . . . $ 2,313,906
Electrical Equipment
General Electric Company 14,200 1,041,925
--------------
Total Electrical Equipment - 3.3% . . . . . . . . . . . . $ 1,041,925
Electronics - Semi-Conductors
Intel Corporation 9,600 674,400
--------------
Total Electronics - Semi-Conductors - 2.1% . . . . . . . . $ 674,400
Energy Services
Dresser Industries 21,000 880,688
--------------
Total Energy Services - 2.8% . . . . . . . . . . . . . . . $ 880,688
Financial - Equipment
Diebold Inc. 13,000 658,125
--------------
Total Financial - Equipment - 2.1% . . . . . . . . . . . . $ 658,125
Financial - Insurance
Conseco Inc. 14,000 636,125
Travelers Group Inc. 16,100 867,388
--------------
Total Financial - Insurance - 4.7% . . . . . . . . . . . . $ 1,503,513
Financial - Miscellaneous
Fannie Mae 13,000 741,813
--------------
Total Financial - Miscellaneous - 2.3% . . . . . . . . . . $ 741,813
*Non-dividend paying security.
</TABLE>
The accompanying notes are an integral part of the financial statements.
(see pages 26-28)
6
<PAGE> 9
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GROWTH FUND, PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stocks Number of Shares Dollar Value
------------- ---------------- ------------
<S> <C> <C>
Financial - Regional Banks
Comerica Inc. 7,500 676,875
Fifth Third Bancorp 9,000 735,750
Nationsbank Corporation 9,800 595,963
Regions Financial Corporation 19,000 801,562
--------------
Total Financial - Regional Banks - 8.8% . . . . . . . . . . $ 2,810,150
Foods and Food Retailers
Hershey Foods Corporation 10,200 631,762
Nabisco Holdings Corporation 12,200 590,938
Sara Lee Corporation 14,800 833,425
Sysco Corporation 13,590 619,194
--------------
Total Foods and Food Retailers - 8.4% . . . . . . . . . . . $ 2,675,319
Health Care - Products
Johnson and Johnson 17,000 1,119,875
Medtronic Corporation 14,200 742,837
--------------
Total Health Care - Products - 5.8% . . . . . . . . . . . . $ 1,862,712
Health Care - Drugs
Merck and Company 7,800 828,750
Pfizer, Inc. 8,300 618,869
Schering-Plough Corporation 11,400 708,225
Smithkline Beecham PLC ADR 15,400 792,137
--------------
Total Health Care - Drugs - 9.2% . . . . . . . . . . . . . $ 2,947,981
Household Products
Gillette Company 6,557 658,569
Procter & Gamble Company 17,000 1,356,812
--------------
Total Household Products - 6.3% . . . . . . . . . . . . . . $ 2,015,381
Industrial Services
Cintas Corporation 18,000 702,000
--------------
Total Industrial Services - 2.2% . . . . . . . . . . . . . $ 702,000
Manufacturing
Dover Corporation 22,000 794,750
--------------
Total Manufacturing - 2.5% . . . . . . . . . . . . . . . . $ 794,750
Petroleum
Marathon Group Inc. (USX) 17,000 573,750
Mobil Corporation 16,000 1,155,000
--------------
Total Petroleum - 5.4% . . . . . . . . . . . . . . . . . . $ 1,728,750
Retailing
Sherwin Williams Company, (The) 21,000 582,750
Staples Inc.* 22,000 610,500
Walgreen Company 22,000 690,250
--------------
Total Retailing - 5.9% . . . . . . . . . . . . . . . . . . $ 1,883,500
*Non-dividend paying security.
</TABLE>
The accompanying notes are an integral part of the financial statements.
(see pages 26-28)
7
<PAGE> 10
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GROWTH FUND, PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stocks Number of Shares Dollar Value
------------- ---------------- ------------
<S> <C> <C>
Savings and Loans
Washington Mutual, Inc. 8,300 529,644
--------------
Total Savings and Loans - 1.7% . . . . . . . . . . . . . . $ 529,644
Textile - Apparel
The Warnaco Group Inc. 21,500 674,563
--------------
Total Textile - Apparel - 2.1% . . . . . . . . . . . . . . $ 674,563
Transportation
Burlington Northern, Inc. 5,200 483,275
--------------
Total Transportation - 1.5% . . . . . . . . . . . . . . . . $ 483,275
Total Common Stocks - 98.9% . . . . . . . . . . . . . . . . . . $ 31,527,639
(Common Stock Identified Cost $22,156,376)
Cash Equivalents
Federated U.S. Treasury Cash Reserves Money Market Fund 340,819
--------------
Total Cash Equivalents - 1.1% . . . . . . . . . . . . . . . $ 340,819
(Cash Equivalents Identified Cost $340,819)
Total Portfolio Value - 100.0% . . . . . . . . . . . . . . . . . $ 31,868,458
(Total Portfolio Identified Cost $22,497,195)
Other Assets Less Liabilities . . . . . . . . . . . . . . . . $ 32,320
Total Net Assets . . . . . . . . . . . . . . . . . . . . . . . $ 31,900,778
*Non-dividend paying security.
</TABLE>
The accompanying notes are an integral part of the financial statements.
(see pages 26-28)
8
<PAGE> 11
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OPPORTUNITY FUND PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Common Stocks Number of Shares Dollar Value
- ------------- ---------------- ------------
Beverages
Coca-Cola Bottling Company Consolidated 11,500 793,500
--------------
Total Beverages - 2.3% . . . . . . . . . . . . . . . . .$ 793,500
Building Materials
Medusa Corporation 18,000 752,625
--------------
Total Building Materials - 2.1% . . . . . . . . . . . . $ 752,625
Chemicals
Cabot Corporation 14,000 386,750
Ecolab Inc. 16,500 914,719
M.A. Hanna Company 20,325 513,206
RPM, Inc. 31,250 476,563
--------------
Total Chemicals - 6.5% . . . . . . . . . . . . . . . . .$ 2,291,238
Computer Software
BMC Software, Inc* 7,000 459,375
Sterling Commerce Inc.* 14,555 559,458
Sungard Data Systems, Inc.* 20,000 620,000
Weatherford Enterra, Inc.* 14,500 634,375
--------------
Total Computer Software - 6.5% . . . . . . . . . . . . .$ 2,273,208
Computer Systems
EMC Corporation* 28,000 768,250
Ingram Micro, Inc.* 20,350 592,694
Lexmark International Group, Inc.* 21,000 798,000
Sequent Computer Systems, Inc.* 27,500 550,000
--------------
Total Computer Systems - 7.7% . . . . . . . . . . . . . $ 2,708,944
Electronics - Semiconductors
Adaptec, Inc.* 12,000 445,500
Xilinx, Inc.* 17,000 596,063
--------------
Total Electronics - Semiconductors - 3.0% . . . . . . . $ 1,041,563
Energy Services
Devon Energy Corporation 19,000 731,500
Smith International, Inc.* 7,000 429,625
Tidewater Inc. 18,000 992,250
--------------
Total Energy Services - 6.1% . . . . . . . . . . . . . .$ 2,153,375
Financial - Brokerage
Provident Financial Group 10,000 485,000
--------------
Total Financial - Brokerage - 1.4% . . . . . . . . . . .$ 485,000
Financial - Insurance
AON Corporation 13,300 779,713
MBIA, Inc. 12,400 828,475
Reliastar Financial Corporation 23,200 955,550
Transatlantic Holdings, Inc. 14,750 1,054,625
--------------
Total Financial - Insurance - 10.3% . . . . . . . . . . $ 3,618,363
</TABLE>
*Non-dividend paying security.
The accompanying notes are an integral part of the financial statements.
(see pages 26-28)
9
<PAGE> 12
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OPPORTUNITY FUND PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stocks Number of Shares Dollar Value
------------- ---------------- ------------
<S> <C> <C>
Financial - Miscellaneous
Arden Realty Group 13,000 399,750
Bay Apartment Communities, Inc. 10,000 390,000
--------------
Total Financial - Miscellaneous - 2.3% . . . . . . . . .$ 789,750
Financial - Regional Banks
Bank of New York Co., Inc. 15,800 913,438
Southtrust Corporation 23,800 1,509,813
St. Paul Bancorp Inc. 18,000 472,500
--------------
Total Financial - Regional Banks - 8.3% . . . . . . . . $ 2,895,751
Foods and Food Retailers
Tootsie Roll Industries 12,300 768,750
--------------
Total Foods and Food Retailers - 2.2% . . . . . . . . . $ 768,750
Health Care - Drugs
Elan Corporation PLC, ADR* 10,000 511,875
Forest Lab. Inc. Class A* 12,600 621,338
Mylan Laboratories 26,700 559,031
--------------
Total Health Care - Drugs - 4.8% . . . . . . . . . . . .$ 1,692,244
Health Care - Products
Hologic, Inc.* 21,000 434,437
Safeskin Corporation* 7,500 425,625
--------------
Total Health Care - Products - 2.5% . . . . . . . . . . $ 860,062
Health Care - Services
Stewart Enterprises 14,000 652,750
--------------
Total Health Care - Services - 1.9% . . . . . . . . . . $ 652,750
Industrial Services
G & K Services, Inc., Class A 23,900 1,003,800
--------------
Total Industrial Services - 2.9% . . . . . . . . . . . .$ 1,003,800
Machinery
Kennametal, Inc. 13,500 699,469
Waterlink, Inc.* 35,000 577,500
--------------
Total Machine Tools - 3.6% . . . . . . . . . . . . . . .$ 1,276,969
Natural Gas
National Fuel Gas Company 8,000 389,500
--------------
Total Natural Gas - 1.1% . . . . . . . . . . . . . . . .$ 389,500
Office Supplies
Herman Miller, Inc. 32,000 766,000
Office Depot, Inc.* 13,500 736,593
Staples, Inc.* 16,500 457,875
--------------
Total Office Supplies - 5.6% . . . . . . . . . . . . . .$ 1,960,468
Restaurants
Wendy's International, Inc. 26,500 637,656
--------------
Total Restaurants - 1.8% . . . . . . . . . . . . . . . .$ 637,656
*Non-dividend paying security.
</TABLE>
The accompanying notes are an integral part of the financial statements.
(see pages 26-28)
10
<PAGE> 13
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OPPORTUNITY FUND PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stocks Number of Shares Dollar Value
------------- ---------------- ------------
<S> <C> <C>
Retailing
Arbor Drugs, Inc. 49,500 915,750
Dollar General Corporation 30,312 1,098,810
Gap, Inc. 23,250 823,921
--------------
Total Retailing - 8.1% . . . . . . . . . . . . . . . . .$ 2,838,481
Telecommunication Services
Century Telephone Enterprises 13,000 647,562
--------------
Total Telecommunication Services - 1.8% . . . . . . . . $ 647,562
Transportation Services
Air Express International 15,000 457,500
--------------
Total Transportation Services - 1.3% . . . . . . . . . .$ 457,500
Textile - Apparel
St. John Knits, Inc 18,000 720,000
--------------
Total Textile Apparel - 2.1% . . . . . . . . . . . . . . 720,000
Waste Management
U.S.A. Waste Services, Inc.* 27,950 1,097,037
--------------
Total Waste Management - 3.1% . . . . . . . . . . . . . $ 1,097,037
Total Common Stocks - 99.3% . . . . . . . . . . . . . . . . . .$ 34,806,096
(Common Stock Identified Cost $25,462,465)
Cash Equivalents
Federated U.S. Treasury Cash Reserves Money Market Fund 251,356
--------------
Total Cash Equivalents - 0.7% . . . . . . . . . . . . . $ 251,356
(Cash Equivalents Identified Cost $251,356)
Total Portfolio Value - 100.0% . . . . . . . . . . . . . . . . $ 35,057,452
(Total Portfolio Identified Cost $25,713,821)
Other Assets Less Liabilities . . . . . . . . . . . . . . .$ (1,149)
Total Net Assets . . . . . . . . . . . . . . . . . . . . . . . $ 35,056,303
*Non-dividend paying security.
</TABLE>
The accompanying notes are an integral part of the financial statements.
(see pages 26-28)
11
<PAGE> 14
- -------------------------------------------------------------------------------
FIXED INCOME FUND PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fixed Income Securities - Bonds Face Value Dollar Value
------------------------------- ---------------- ------------
<S> <C> <C>
Bank Bonds - Major Regional
Banc One Corporation, 9.875% Due 3/1/09 250,000 313,125
Comerica Bank Subordinated Note, 6.875% Due 3/1/08 250,000 254,688
First Union Corporation, 7.5% Due 7/15/06 400,000 425,500
NBD Bancorp, 7.125% Due 5/15/07 400,000 416,000
PNC Funding Corporation, 6.875% Due 7/15/07 400,000 409,000
Provident Bank, 6.375%, Due 1/15/04 400,000 396,500
Star Bank N.A., 6.625% Due 12/15/06 400,000 402,500
-------------
Total Major Regional Banks - 14.1% . . . . . . . . . . . . .$ 2,617,313
Bank Bonds - Money Center
BankAmerica Corporation, 6.625%, Due 10/15/07 350,000 351,750
Bankers Trust NY Corporation, 7.15%, Due 8/14/12 400,000 409,500
Republic New York Corporation, 7.25% Due 7/15/02 200,000 207,000
-------------
Total Money Center Banks - 5.2% . . . . . . . . . . . . . . $ 968,250
Capital Equipment
G.E. Corporation Medium Term Note, 250,000 254,062
6.87% Due 12/29/99
Honeywell, Inc., 7.125% Due 4/15/08 400,000 423,500
IBM Corporation, 6.45%, Due 8/1/07 300,000 303,375
Motorola Inc., 7.6%, Due 1/1/07 250,000 273,125
-------------
Total Capital Equipment - 6.8% . . . . . . . . . . . . . . .$ 1,254,062
Chemicals
Hercules, Inc., 6.625% Due 6/1/03 250,000 252,500
-------------
Total Chemicals - 1.4% . . . . . . . . . . . . . . . . . . $ 252,500
Electric Utilities
Carolina Power and Light Company, 6.75% Due 10/1/02 250,000 255,313
Louisville Gas & Electric Company, 7.50% Due 7/1/02 25,000 25,312
Midwest Power Corporation, 7.00% Due 2/15/05 200,000 206,750
Pacific Gas & Electric Company, 6.875% Due 12/1/99 40,000 40,100
Union Electric Power Co., First Mortgage,
6.875% Due 8/1/04 200,000 206,750
-------------
Total Electric Utilities - 4.0% . . . . . . . . . . . . . . $ 734,225
Entertainment and Leisure
Walt Disney Company, 5.80% Due 10/27/08 400,000 380,500
-------------
Total Entertainment and Leisure - 2.0% . . . . . . . . . . $ 380,500
Financial - Insurance
Allstate Insurance Company, 5.875% Due 6/15/98 250,000 250,122
-------------
Total Financial - Insurance - 1.3% . . . . . . . . . . . . $ 250,122
Financial - Services
American General Finance, 8.125% Due 8/15/09 120,000 135,000
CIT Group Holdings, 8.375% Due 11/01/01 250,000 268,438
G.E. Capital Corporation Medium Term Note,
6.59% Due 1/15/98 30,000 30,007
Household Finance Corporation Senior Note,
6.875% Due 3/01/03 200,000 205,500
International Lease Finance Corporation,
6.50% Due 8/15/99 200,000 201,250
-------------
Total Financial - Services - 4.5% . . . . . . . . . . . . . $ 840,195
</TABLE>
The accompanying notes are an integral part of the financial statements.
(see pages 26-28)
12
<PAGE> 15
- -------------------------------------------------------------------------------
FIXED INCOME FUND PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fixed Income Securities - Bonds Face Value Dollar Value
------------------------------- ---------------- ------------
<S> <C> <C>
Food and Beverage
Pepsico, Inc. Medium Term Note, 5.463% Due 7/1/98 200,000 199,440
Sara Lee Corporation, Medium Term Note,
5.70% Due 7/14/00 250,000 248,125
-------------
Total Food and Beverage - 2.4% . . . . . . . . . . . . . . .$ 447,565
Foreign Utilities (U.S. Dollar Denominated)
Hydro Quebec Medium Term Note, 6.98% Due 3/01/05 200,000 205,750
-------------
Total Foreign Utilities - 1.1% . . . . . . . . . . . . . . $ 205,750
Mortgage Backed Securities - United States Government Agency Obligations
Federal Farm Credit Bank Indexed Amortization Note
Series G-02, 6.71% Due 3/25/02 250,000 250,654
Federal Home Loan Bank Indexed Amortization Note
Series DJ-03, 6.625% Due 12/23/03 241,000 241,960
Federal Home Loan Mortgage Corporation Indexed Amortization Note
6.83%, Due 3/20/04 300,000 302,402
Federal Home Loan Mortgage Corporation, CMO Series 1639-PD
5.60% Due 8/15/06 250,000 248,009
Federal Home Loan Mortgage Corporation, CMO Series 1660-G
6.25% Due 7/15/07 250,000 251,310
Federal Home Loan Mortgage Corporation, 15 Year Gold
7.00% Due 3/01/11 354,213 359,637
Government National Mortgage Association,
7.00%, Due 12/15/25 374,838 379,289
Government National Mortgage Association,
7.50%, Due 8/15/26 388,106 399,143
-------------
Total Mortgage Backed Securities-Government Agency-13.1% $ 2,432,404
Newspaper/Publishing
Scripps Howard Corporation, 7.375% Due 12/15/98 225,000 227,164
-------------
Total Newspaper/Publishing - 1.2% . . . . . . . . . . . . . $ 227,164
Petroleum
Amoco Corporation Canada, 7.25% Due 12/1/02 200,000 209,750
Texaco Capital, Inc., 6.875% Due 7/15/99 200,000 202,750
-------------
Total Petroleum - 2.2% . . . . . . . . . . . . . . . . . . .$ 412,500
Railroads
CSX Transportation Equipment Trust,
6.07% Due 3/15/01 200,000 198,500
Union Pacific Corporation, 6.25% Due 3/15/99 250,000 250,313
-------------
Total Railroads - 2.4% . . . . . . . . . . . . . . . . . . $ 448,813
Retailing
Sherwin-Williams Company, 6.85% Due 2/1/07 550,000 572,688
Wal-Mart Stores, Inc., 6.375% Due 3/1/03 200,000 202,750
-------------
Total Retailing - 4.2% . . . . . . . . . . . . . . . . . . $ 775,438
Real Estate Investment Trusts
Merry Land & Investment Company, Inc.,
7.25% Due 6/15/05 400,000 408,000
-------------
Total Real Estate Investment Trusts - 2.2% . . . . . . . . $ 408,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
(see pages 26-28)
13
<PAGE> 16
- -------------------------------------------------------------------------------
FIXED INCOME FUND PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fixed Income Securities - Bonds Face Value Dollar Value
------------------------------- ---------------- ------------
<S> <C> <C>
Telecommunications
Cincinnati Bell, Inc., 6.24% Due 12/30/03 250,000 248,750
GTE Corporation, 7.51%, Due 4/1/09 400,000 432,000
New York Telephone Co., 5.875% Due 9/1/03 200,000 196,750
Southwestern Bell Corporation, 6.375% Due 4/1/01 200,000 201,000
-------------
Total Telecommunications - 5.8% . . . . . . . . . . . . . . $ 1,078,500
United States Government Agency Obligations
Federal Home Loan Bank, 6.10% Due 12/13/10 250,000 249,232
Federal Home Loan Bank, 7.03% Due 5/6/11 250,000 268,545
Federal Home Loan Mortgage Association,
6.005% Due 12/8/05 200,000 199,428
Federal Home Loan Mortgage Corporation,
6.55% Due 1/4/00 200,000 202,876
Federal Home Loan Mortgage Corporation,
8.155% Due 3/9/05 150,000 150,578
Federal Home Loan Mortgage Corporation,
5.95% Due 1/19/06 400,000 397,468
Federal National Mortgage Association,
6.10% Due 2/10/00 250,000 251,545
Federal National Mortgage Association,
7.50% Due 2/11/02 200,000 211,106
Federal National Mortgage Association,
7.55% Due 4/22/02 200,000 211,876
Federal National Mortgage Association,
7.80% Due 3/29/05 200,000 206,234
Federal National Mortgage Association,
5.80% Due 2/22/06 450,000 442,814
-------------
Total United States Government Agency Obligations - 15.0%. $ 2,791,702
United States Government Obligations
United States Treasury Note, 8.50% Due 11/15/00 350,000 375,564
United States Treasury Note, 7.875% Due 8/15/01 400,000 427,512
United States Treasury Note, 7.50% Due 11/15/01 200,000 211,968
United States Treasury Note, 7.875% Due 11/15/04 325,000 363,308
United States Treasury Note, 6.875% Due 5/15/06 200,000 213,952
United States Treasury Bond, 6.25% Due 2/15/07 250,000 257,882
-------------
Total United States Government Obligations - 10.0% . . . . .$ 1,850,186
Total Fixed Income - Bonds - 98.9% . . . . . . . . . . . . . . . .$ 18,375,189
(Fixed Income Identified Cost $17,908,773)
Cash Equivalents
Federated U.S. Treasury Cash Reserves 202,811
-------------
Total Cash Equivalents - 1.1%. . . . . . . . . . . . . . . .$ 202,811
(Cash Equivalents Identified Cost $202,810)
Total Portfolio Value - 100.0% . . . . . . . . . . . . . . . . . .$ 18,578,000
(Total Portfolio Identified Cost $18,111,583)
Other Assets Less Liabilities . . . . . . . . . . . . . . . . .$ 296,884
Total Net Assets . . . . . . . . . . . . . . . . . . . . . . . . .$ 18,874,884
</TABLE>
The accompanying notes are an integral part of the financial statements.
(see pages 26-28)
14
<PAGE> 17
- -------------------------------------------------------------------------------
MUNICIPAL INCOME FUND, PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fixed Income Securities - Municipal Bonds Face Value Dollar Value
----------------------------------------- ---------------- ------------
<S> <C> <C>
General Obligation - City
Akron, Ohio, 5.00% Due 12/1/05 100,000 103,975
Cincinnati, Ohio, 5.25% Due 12/1/00 50,000 51,584
Cleveland, Ohio, (AMBAC Insured), 4.9% Due 9/1/02 50,000 51,528
Columbus, Ohio, 12.375% Due 2/15/07 25,000 39,400
Loveland, Ohio, 4.9% Due 12/1/08 100,000 103,462
Vandalia, Ohio, 4.80% Due 12/1/03 75,000 77,432
Westlake, Ohio, 4.90% Due 12/1/04 50,000 51,680
------------
Total General Obligation - City - 12.4% . . . . . . . . . . $ 479,061
General Obligation - County
Anderson Township, Ohio Park District 5.10% Due 3/1/99 100,000 100,885
Belmont County, Ohio (MBIA Insured),
5.10% Due 12/1/05 50,000 52,488
Butler County, Ohio Infrastructure Special Assessment
(AMBAC Insured), 4.90% Due 12/1/98 50,000 50,473
Delaware County, Ohio, 5.25% Due 12/1/06 50,000 52,774
Fayette County, Ohio, 5.10% Due 12/1/03 40,000 41,326
Hamilton County, Ohio Museum Center
Building Improvement, 5.75% Due 12/1/00 50,000 52,303
Medina County, Ohio 12.625% Due 12/1/99 25,000 28,895
Montgomery County, Ohio 5.30% Due 12/1/00 75,000 77,623
Portage County, Ohio 5.15% Due 12/1/07 75,000 79,502
Trumbull County, Ohio, 5.25% Due 12/1/05 50,000 53,260
Washington Township, Ohio, 4.65% Due 12/1/05 75,000 75,595
------------
Total General Obligation - County - 17.2% . . . . . . . . . $ 665,124
Higher Education
Ohio State Higher Education Facilities, Denison University,
4.90% Due 11/01/05 75,000 77,612
University of Cincinnati, Ohio General Receipts,
4.75% Due 6/1/06 50,000 51,118
------------
Total Higher Education - 3.3% . . . . . . . . . . . . . . . $ 128,730
Hospital/Health
Episcopol Retirement Homes, Ohio Hospital Facility
Revenue, 5.00% Due 1/1/15 100,000 101,987
Franklin County, Ohio Hospital, The Children's Hospital
Project, 5.20% Due 11/1/04 50,000 52,570
Hamilton County, Ohio Hospital Facility Revenue,
6.35% Due 1/1/98 50,000 50,000
Hamilton County, Ohio Hospital Facility Revenue, Children's Hospital
(FGIC Insured), 5.00% Due 5/15/06 50,000 51,978
Lorain County, Ohio Hospital Facility Revenue Catholic Healthcare
Partners (MBIA), 6.00% Due 9/1/07 50,000 55,920
Maumee, Ohio Hospital Facility Revenue, St. Lukes Hospital Project
(AMBAC Insured), 4.90% Due 12/1/99 50,000 50,806
------------
Total Hospital/Health - 9.4% . . . . . . . . . . . . . . . .$ 363,261
</TABLE>
The accompanying notes are an integral part of the financial statements.
(see pages 26-28)
15
<PAGE> 18
- -------------------------------------------------------------------------------
MUNICIPAL INCOME FUND, PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fixed Income Securities - Municipal Bonds Face Value Dollar Value
----------------------------------------- ---------------- ------------
<S> <C> <C>
Revenue Bonds - Transportation
Butler County Transportation Improvement, (FSA Insured)
5.50% 4/1/09 100,000 107,604
------------
Total Revenue Bonds - Transportation - 2.8% . . . . . . . . $ 107,604
Revenue Bonds - Electric
Weatherford, Texas Utility System Revenue,
(MBIA Insured), 5.10% Due 9/1/03 50,000 52,025
------------
Total Revenue Bonds - Electric - 1.3% . . . . . . . . . . . $ 52,025
Revenue Bonds - Water and Sewer
Akron, Ohio Sewer System, (MBIA Insured)
5.50% Due 12/1/07 50,000 54,250
Cleveland, Ohio Waterworks First Mortgage,
Series G (MBIA Insured), 5.25% Due 1/1/04 50,000 52,528
Lorain, Ohio Water System, (AMBAC Insured),
4.75% Due 4/01/04 50,000 51,263
Miamisburg, Ohio Sewer System (AMBAC Insured),
4.35% Due 11/15/02 50,000 50,349
Montgomery County, Ohio Solid Waste (MBIA Insured)
5.125% Due 11/1/08 50,000 52,150
Southwest Ohio Regional Water District Waterworks
5.25% Due 12/1/05 50,000 52,712
Warren County, Ohio Water and Sewer Line Extension, Special
Assessment Bonds, 5.50% Due 12/1/03 50,000 53,383
------------
Total Revenue Bonds - Water and Sewer - 9.5% . . . . . . . .$ 366,635
School District
Centerburg, Ohio, 5.25% Due 10/15/01 40,000 41,378
Centerville, Ohio, (FGIC Insured), 5.10% Due 12/1/03 50,000 52,453
Cincinnati, Ohio (AMBAC Insured), 4.65% Due 12/01/99 50,000 50,697
Cleveland, Ohio, (FGIC Insured), 5.40% Due 6/1/02 50,000 52,447
Cook County, Illinois, (AMBAC Insured),
5.20% Due 12/1/01 50,000 52,054
Forest Hills, Ohio, 4.90% Due 12/01/04 100,000 102,759
Gallia County, Ohio, 5.00% Due 3/1/03 25,000 25,512
Gallia County, Ohio, 5.00% Due 3/1/04 25,000 25,444
Indian Valley, Ohio, (AMBAC Insured), 5.50% Due 12/1/06 50,000 54,105
Olmsted Falls, Ohio, (FGIC Insured), 5.30% Due 12/15/00 50,000 51,730
Southwestern City School District, Ohio,
6.25% Due 12/1/05 50,000 54,389
Stow, Ohio, 9.125% Due 12/1/99 50,000 54,359
West Geauga, Ohio, (AMBAC Insured), 5.45% Due 11/1/04 50,000 53,730
Westlake, Ohio, 4.85% Due 12/1/03 100,000 103,132
Woodridge, Ohio, (AMBAC Insured), 5.45% Due 12/01/04 50,000 53,708
------------
Total School District - 21.3% . . . . . . . . . . . . . . . $ 827,897
</TABLE>
The accompanying notes are an integral part of the financial statements.
(see pages 26-28)
16
<PAGE> 19
- -------------------------------------------------------------------------------
MUNICIPAL INCOME FUND, PORTFOLIO OF INVESTMENTS DECEMBER 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fixed Income Securities - Municipal Bonds Face Value Dollar Value
----------------------------------------- ---------------- ------------
<S> <C> <C>
State Agency - Building Authority
Ohio State Building Authority, Administration Building Fund
6.40% Due 10/1/01 50,000 54,105
Ohio State Building Authority, Administrative Building Fund
(MBIA Insured), 5.40% Due 10/1/02 90,000 94,633
Ohio State Building Authority, Correctional Facilities,
Prerefunded to 3/1/99 at 102, 7.30% Due 3/1/02 50,000 52,822
Ohio State Building Authority, Ohio Center For The Arts,
5.45% Due 10/1/07 100,000 108,192
Ohio State Building Authority, State Correctional Facilities
6.50% Due 10/1/01 50,000 54,258
------------
Total State Agency - Building Authority - 9.4% . . . . . . .$ 364,010
State Agency - Education
Ohio State Elementary and Secondary Education
(FSA Insured), 5.0% Due 12/1/07 100,000 104,237
Ohio State Higher Education Facilities (AMBAC Insured)
4.70% Due 6/1/00 75,000 76,085
Ohio State Higher Education Facilities,
5.90% Due 12/1/05 50,000 53,597
------------
Total State Agency - Education - 6.0% . . . . . . . . . . . $ 233,919
State Agency - Water Development Authority
Ohio State Water Development Authority (MBIA Insured),
5.00% Due 12/1/98 50,000 50,543
Ohio State Water Development Authority (MBIA Insured),
5.50% Due 6/1/01 50,000 52,184
------------
Total State Agency - Water Development Authority - 2.7% . . $ 102,727
Total Fixed Income - Municipal Bonds - 95.3% . . . . . . . . . . . $ 3,690,993
(Municipal Bonds Identified Cost $3,569,227)
Cash Equivalents
Federated Ohio Municipal Cash Trust 180,495
------------
Total Cash Equivalents - 4.7% . . . . . . . . . . . . . . . . $ 180,495
(Cash Identified Cost $180,495)
Total Portfolio Value - 100.0% . . . . . . . . . . . . . . . . . . $ 3,871,488
(Total Portfolio Identified Cost $3,749,722)
Other Assets Less Liabilities . . . . . . . . . . . . . . . . . $ 35,015
Total Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,906,503
</TABLE>
The accompanying notes are an integral part of
financial statements. (see pages 26-28)
17
<PAGE> 20
- -------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES December 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Stock Funds Bond Funds
----------------------------- ------------------------------
Fixed Municipal
Growth Opportunity Income Income
Fund Fund Fund Fund
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investment Securities $ 31,868,458 $ 35,057,452 $ 18,578,000 $ 3,871,488
at Market Value*
Dividends and Interest Receivable 50,282 22,913 310,493 37,405
Receivable for Securities Sold 4,112
------------ ------------ ------------ ------------
TOTAL ASSETS ....................... $ 31,922,852 $ 35,080,365 $ 18,888,493 $ 3,908,893
LIABILITIES;
Investment Securities Purchased
Dividends Payable
Accrued Management Fees 22,074 24,062 13,609 2,390
------------ ------------ ------------ ------------
TOTAL LIABILITIES .................. $ 22,074 $ 24,062 $ 13,609 $ 2,390
NET ASSETS ............................ $ 31,900,778 $ 35,056,303 $ 18,874,884 $ 3,906,503
NET ASSETS CONSIST OF:
Paid in Capital 22,529,268 25,712,664 18,425,437 3,784,737
Undistributed Net
Investment Income 244 5 0 0
Undistributed Net Realized Gain
(Loss) from Security Transactions 3 3 (16,970) 0
Net Unrealized Gain (Loss)
on Investments 9,371,263 9,343,631 466,417 121,766
------------ ------------ ------------ ------------
NET ASSETS ............................ $ 31,900,778 $ 35,056,303 $ 18,874,884 $ 3,906,503
Shares Outstanding 1,257,105 1,325,942 1,191,850 245,982
OFFERING, REDEMPTION AND
NET ASSET VALUE PER SHARE ............. $ 25.38 $ 26.44 $ 15.84 $ 15.88
Identified Cost ....................... $ 22,497,195 $ 25,713,821 $ 18,111,583 $ 3,749,722
</TABLE>
The accompanying notes are an integral part of the financial statements. (see
pages 26-28)
18
<PAGE> 21
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Stock Funds Bond Funds
---------------------------- ----------------------------
Fixed Municipal
Growth Opportunity Income Income
Fund Fund Fund Fund
----------- ----------- ----------- -----------
Period Period Period Period
Ended Ended Ended Ended
12/31/97 12/31/97 12/31/97 12/31/97
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment Income:
Interest $ 43,019 $ 49,302 $ 1,139,880 $ 166,271
Dividends 398,539 268,628 0 0
----------- ----------- ----------- -----------
Total Investment Income .............. $ 441,558 $ 317,930 $ 1,139,880 166,271
EXPENSES:
Gross Management Fee 353,406 381,961 201,287 39,412
Management Fee Waiver
(See accompanying note #3) (89,711) (96,959) (52,510) (17,821)
----------- ----------- ----------- -----------
TOTAL EXPENSES ....................... $ 263,695 $ 285,002 $ 148,777 $ 21,591
Net Investment Income .................... $ 177,863 $ 32,928 $ 991,103 $ 144,680
Realized and Unrealized Gains (Losses):
Net Realized Gain (Loss) from
Security Transactions 3,181,316 2,847,393 34,654 1,607
Net Unrealized Gain (Loss)
on Investments 4,619,375 4,342,324 415,756 71,818
----------- ----------- ----------- -----------
NET GAIN (LOSS) ON INVESTMENTS ........... $ 7,800,691 $ 7,189,717 $ 450,410 $ 73,425
NET INCREASE IN ASSETS
FROM OPERATIONS ....................... $ 7,978,554 $ 7,222,645 $ 1,441,513 $ 218,105
</TABLE>
The accompanying notes are an integral part of the financial statements. (see
pages 26-28)
19
<PAGE> 22
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Stock Funds
------------------------------------------------------------------
Growth Fund Opportunity Fund
------------------------------ ------------------------------
Period Ended Year Ended Period Ended Year Ended
12/31/97 12/31/96 12/31/97 12/31/96
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Operations:
Net Investment Income $ 177,863 $ 187,238 $ 32,928 $ 54,469
Net Realized Gain (Loss)
from Security Transactions 3,181,316 683,564 2,847,393 1,170,699
Net Unrealized Gain (Loss)
on Investments 4,619,375 2,082,615 4,342,324 2,882,162
------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN
ASSETS FROM OPERATIONS ............. $ 7,978,554 $ 2,953,417 $ 7,222,645 $ 4,107,330
Distributions to Shareholders:
Net Investment Income (177,619) (187,246) (32,962) (54,430)
Net Realized Gain from
Security Transactions (3,181,370) (683,506) (2,847,390) (1,170,723)
------------ ------------ ------------ ------------
NET DECREASE IN ASSETS
FROM DISTRIBUTIONS ................. $ (3,358,989) $ (870,752) $ (2,880,352) $ (1,225,153)
Capital Share Transactions:
Proceeds From Sale of Shares 4,489,896 4,956,433 6,374,904 5,387,376
Net Asset Value of Shares Issued on
Reinvestment of Distributions 3,552,221 378,150 3,931,454 45,955
Cost of Shares Redeemed (2,183,617) (862,984) (1,684,251) (1,414,677)
------------ ------------ ------------ ------------
NET INCREASE IN ASSETS FROM
CAPITAL SHARE TRANSACTIONS ......... $ 5,858,500 $ 4,471,599 $ 8,622,107 $ 4,018,654
NET CHANGE IN NET ASSETS ............... $ 10,478,065 $ 6,554,264 $ 12,964,400 $ 6,900,831
Net Assets at Beginning of Period ...... $ 21,422,713 $ 14,868,449 $ 22,091,903 $ 15,191,072
NET ASSETS AT END OF PERIOD ............ $ 31,900,778 $ 21,422,713 $ 35,056,303 $ 22,091,903
</TABLE>
The accompanying notes are an integral part of the financial statements. (see
pages 26-28)
20
<PAGE> 23
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Bond Funds
------------------------------------------------------------------
Fixed Income Fund Municipal Income Fund
------------------------------ ------------------------------
Period Ended Year Ended Period Ended Year Ended
12/31/97 12/31/96 12/31/97 12/31/96
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net Investment Income $ 991,103 $ 878,629 $ 144,680 $ 101,166
Net Realized Gain (Loss)
from Security Transactions 34,654 (28,072) 1,607 (179)
Net Unrealized Gain (Loss)
on Investments 415,756 (362,410) 71,818 (14,667)
------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN
ASSETS FROM OPERATIONS............. $ 1,441,513 $ 488,147 $ 218,105 $ 86,320
Distributions to Shareholders:
Net Investment Income (991,205) (878,592) (144,712) (101,172)
Net Realized Gain from
Security Transactions 0 0 (1,427) 0
------------ ------------ ------------ ------------
NET DECREASE IN ASSETS
FROM DISTRIBUTIONS.................. $ (991,205) $ (878,592) $ (146,139) $ (101,172)
Capital Share Transactions:
Proceeds From Sale of Shares 3,804,230 3,685,344 1,550,612 590,156
Net Asset Value of Shares Issued on
Reinvestment of Dividends/Gains 843,824 590,859 46,997 69,737
Cost of Shares Redeemed (2,362,597) (3,721,495) (577,731) (113,280)
------------ ------------ ------------ ------------
NET INCREASE IN ASSETS FROM
CAPITAL SHARE TRANSACTIONS.......... $ 2,285,457 $ 554,708 $ 1,019,878 $ 546,613
NET CHANGE IN NET ASSETS............... $ 2,735,765 $ 164,263 $ 1,091,844 $ 531,761
Net Assets at Beginning of Period...... $ 16,139,119 $ 15,974,856 $ 2,814,659 $ 2,282,898
NET ASSETS AT END OF PERIOD............ $ 18,874,884 $ 16,139,119 $ 3,906,503 $ 2,814,659
</TABLE>
The accompanying notes are an integral part of the financial statements. (see
pages 26-28)
21
<PAGE> 24
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
GROWTH FUND
---------------------------------------------------------------------
YEAR ENDED DECEMBER 31
---------------------------------------------------------------------
1997 1996 1995 1994 1993
------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value
Beginning of Period ............................ $ 21.16 $ 18.86 $ 14.82 $ 15.71 $ 15.00
Operations:
Net Investment Income .......................... 0.16 0.19 0.24 0.24 0.18
Net Gains (Losses) on Securities
(Realized & Unrealized) .................... 7.01 2.98 4.41 (0.89) 0.71
----------- ----------- --------- --------- ---------
Total Operations .................................. $ 7.17 $ 3.17 $ 4.65 $ (0.65) $ 0.89
Distributions:
Dividends from Net
Investment Income .......................... (0.16) (0.19) (0.24) (0.24) (0.18)
Distributions from Net
Realized Capital Gains ..................... (2.79) (0.68) (0.37) 0.00 0.00
----------- ----------- --------- --------- ---------
Total Distributions ............................... $ (2.95) $ (0.87) $ (0.61) $ (0.24) $ (0.18)
Net Asset Value
End of Period .................................. $ 25.38 $ 21.16 $ 18.86 $ 14.82 $ 15.71
Total Return ...................................... 33.96% 16.85% 31.61% (4.22%) 5.93%
Net Assets, End of Period
(Millions) ..................................... $ 31.90 $ 21.42 $ 14.87 $ 9.30 $ 6.58
Ratios after Fee Waivers: (1)
Ratio of Expenses to
Average Net Assets ......................... 0.97% 1.00% 1.00% 1.00% 1.00%
Ratio of Net Income to
Average Net Assets ......................... 0.65% 0.99% 1.42% 1.65% 1.38%
Portfolio Turnover Rate ........................... 54.44% 26.78% 52.91% 30.38% 23.57%
Average Commission Rate
(cents per share) .............................. $ 0.0676 $ 0.0799
<FN>
--------------------------------
(1) The Adviser waived 0.33% of the management fee during 1997. The Adviser intends these fee waivers to be permanent,
although the Adviser retains the right to remove the waivers after 12/31/98. As of 12/31/97, assuming no waiver
of management fee expenses, the Growth Fund ratios would have been: Expenses to average net assets of 1.30% and
Net income to average net assets of 0.35% (see note #3 on pages 26-27).
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. (SEE PAGES 26-28)
</TABLE>
22
<PAGE> 25
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
OPPORTUNITY FUND
--------------------------------------------------------------------------
YEAR ENDED DECEMBER 31
-------------------------------------------------
5/16/94
1997 1996 1995 12/31/94
----------- --------- --------- ----------
Net Asset Value
<S> <C> <C> <C> <C>
Beginning of Period ............................... $ 22.65 $ 19.42 $ 15.70 $ 15.00
Operations:
Net Investment Income ............................. 0.03 0.06 0.08 0.05
Net Gains (Losses) on Securities
(Realized & Unrealized) ....................... 6.13 4.43 3.89 0.70
----------- --------- --------- ---------
Total Operations $ 6.16 $ 4.49 $ 3.97 $ 0.75
Distributions:
Dividends from Net
Investment Income ............................. (0.03) (0.06) (0.08) (0.05)
Distributions from Net
Realized Capital Gains ........................ (2.34) (1.20) (0.17) 0.00
----------- -------- --------- ---------
Total Distributions .................................. $ (2.37) $ (1.26) $ (0.25) $ (0.05)
Net Asset Value
End of Period ................................. $ 26.44 $ 22.65 $ 19.42 $ 15.70
Total Return ......................................... 27.26% 23.10% 25.27% 4.99%
Net Assets, End of Period
(Millions) .................................... $ 35.06 $ 22.09 $ 15.19 $ 6.29
Ratios after Fee Waivers: (1)
Ratio of Expenses to
Average Net Assets (2) ........................ 0.97% 1.00% 1.00% 1.00%
Ratio of Net Income to
Average Net Assets (2)......................... 0.11% 0.28% 0.59% 1.01%
Portfolio Turnover Rate .............................. 55.05% 46.43% 62.15% 58.73%
Average Commission Rate
(cents per share) ............................. $ 0.0721 $ 0.0876
<FN>
--------------------------------
(1) The Adviser waived 0.33% of the management fee during 1997. The Adviser intends these fee waivers to be permanent,
although the Adviser retains the right to remove the waivers after 12/31/98. As of 12/31/97, assuming no waiver
of management fee expenses, the Opportunity Fund ratios would have been: Expenses to average net assets of 1.30%
and Net income to average net assets of -0.17% (see note #3 on pages 26-27).
(2) Ratios were annualized in 1994.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. (SEE PAGES 26-28)
</TABLE>
23
<PAGE> 26
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
FIXED INCOME FUND
-------------------------------------------------------------
YEAR ENDED DECEMBER 31
-------------------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value
Beginning of Period ............... $ 15.45 $ 15.84 $ 14.20 $ 15.80 $ 15.00
Operations:
Net Investment Income ............. 0.88 0.86 0.83 0.80 0.60
Net Gains (Losses) on Securities
(Realized & Unrealized) 0.39 (0.39) 1.64 (1.60) 0.83
--------- --------- --------- --------- ---------
Total Operations ...................... $ 1.27 $ 0.47 $ 2.47 $ (0.80) $ 1.43
Distributions:
Dividends from Net
Investment Income ...... (0.88) (0.86) (0.83) (0.80) (0.60)
Distributions from Net
Realized Capital Gains 0.00 0.00 0.00 0.00 (0.03)
--------- --------- --------- --------- ---------
Total Distributions ................... $ (0.88) $ (0.86) $ (0.83) $ (0.80) $ (0.63)
Net Asset Value
End of Period ..................... $ 15.84 $ 15.45 $ 15.84 $ 14.20 $ 15.80
Total Return .......................... 8.44% 3.11% 17.70% (5.14%) 9.51%
Net Assets, End of Period
(Millions) ........................ $ 18.87 $ 16.14 $ 15.97 $ 12.46 $ 10.08
Ratios after Fee Waivers: (1)
Ratio of Expenses to
Average Net Assets .... 0.85% 0.85% 0.85% 0.85% 0.85%
Ratio of Net Income to
Average Net Assets .... 5.67% 5.56% 5.54% 5.53% 5.08%
Portfolio Turnover Rate ............... 29.33% 14.04% 4.95% 0.04% 10.14%
<FN>
--------------------------------
(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 12/31/97, assuming no waiver of management fee expenses, the Fixed Income Fund
ratios would have been: Expenses to average net assets of 1.15% and Net income to average net assets of 5.37%
(see note #3 on pages 26-27).
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. (SEE PAGES 26-28)
</TABLE>
24
<PAGE> 27
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD:
MUNICIPAL INCOME FUND
----------------------------------------------------
YEAR ENDED DECEMBER 31
-------------------------------------
5/16/94-
1997 1996 1995 12/31/94
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net Asset Value
Beginning of Period .............................. $ 15.57 $ 15.68 $ 14.73 $ 15.00
Operations:
Net Investment Income ............................ 0.64 0.63 0.63 0.39
Net Gains (Losses) on Securities
(Realized & Unrealized) ...................... 0.32 (0.11) 0.96 (0.27)
--------- --------- --------- ---------
Total Operations ..................................... $ 0.96 $ 0.52 $ 1.59 $ 0.12
Distributions:
Dividends from Net
Investment Income ............................ (0.64) (0.63) (0.63) (0.39)
Distributions from Net
Realized Capital Gains ....................... (0.01) 0.00 (0.01) 0.00
--------- --------- --------- ---------
Total Distributions .................................. $ (0.65) $ (0.63) $ (0.64) $ (0.39)
Net Asset Value
End of Period .................................... $ 15.88 $ 15.57 $ 15.68 $ 14.73
Total Return ......................................... 6.23% 3.43% 10.88% 0.81%
Net Assets, End of Period
(Millions) ....................................... $ 3.90 $ 2.81 $ 2.28 $ 1.49
Ratios after Fee Waivers: (1)
Ratio of Expenses to
Average Net Assets (2) ....................... 0.63% 0.75% 0.68% 0.01%
Ratio of Net Income to
Average Net Assets (3) ....................... 4.19% 4.18% 4.28% 5.46%
Portfolio Turnover Rate .............................. 9.95% 6.25% 7.81% 0.00%
<FN>
--------------------------------
(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 12/31/97, assuming no waiver of management fee expenses, the Municipal Income Fund
ratios would have been: Expenses to average net assets of 1.15% and Net income to average net assets of 3.67% (see
note #3 on pages 26-27).
(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.
(3) Ratios were annualized in 1994.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. (SEE PAGES 26-28)
</TABLE>
25
<PAGE> 28
- -------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 1997
- -------------------------------------------------------------------------------
1) ORGANIZATION:
The Growth Fund, Fixed Income Fund, Opportunity 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 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 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.
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.
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 Opportunity Fund paid the Adviser a management fee at the
annual rate of 0.97% 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 0.63% of the Fund's average daily net assets, both of which are
accrued daily and paid monthly.
26
<PAGE> 29
- --------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 1997
- --------------------------------------------------------------------------------
3) INVESTMENT ADVISORY AGREEMENT (CON'T):
The Adviser has received management fees for the period January 1 -
December 31, 1997 as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Growth Fund $263,695 Fixed Income Fund $ 148,777
Opportunity Fund $285,002 Municipal Income Fund $ 21,591
</TABLE>
The Adviser is authorized to charge the Growth Fund and Opportunity Fund a
management fee of 1.30% of the average daily net assets of the Funds, and has
waived 0.33% of these fees. 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 0.52%
of these fees. The Adviser intends the current fee waivers on the Growth,
Opportunity, and Fixed Income Funds to be permanent, and 0.50% of the waivers
on the Municipal Income Fund to be permanent, although the Adviser has the
right to remove these fee waivers any time after December 31, 1998.
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 12 months ending December 31, 1997, of
$3,000 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 December 31,
1997, 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 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 and
fund accounting services to the Funds. These services are paid for by the
Adviser.
5) CAPITAL SHARE TRANSACTIONS:
As of December 31, 1997, 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 - DECEMBER 31, 1997:
<TABLE>
<CAPTION>
GROWTH OPPORTUNITY FIXED MUNICIPAL
FUND FUND FUND FUND
--------- ------- --------- -------
<S> <C> <C> <C> <C>
Shares Sold to Investors 188,160 255,965 244,472 98,812
Shares Issued on Reinvestment Dividends 145,225 156,725 54,466 3,006
--------- ------- --------- -------
Subtotal 333,385 412,690 298,938 101,818
Shares Redeemed (88,733) (62,188) (151,669) (36,599)
--------- ------- --------- -------
Net Increase 244,652 350,502 147,269 65,219
SHARES OUTSTANDING:
December 31, 1996 (beginning of period) 1,012,453 975,440 1,044,581 180,763
DECEMBER 31, 1997 (END OF PERIOD) 1,257,105 1,325,942 1,191,850 245,982
</TABLE>
27
<PAGE> 30
- --------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 1997
- --------------------------------------------------------------------------------
6) PURCHASES AND SALES OF SECURITIES:
During the 12 months ended December 31, 1997, 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 $17,444,135 $14,862,689 $ 0 $ 0
Opportunity Fund $21,676,877 $16,307,893 $ 0 $ 0
Fixed Income Fund $ 6,844,942 $ 3,334,310 $ 247,614 $ 1,732,095
Municipal Income Fund $ 1,211,780 $ 342,546 $ 0 $ 0
</TABLE>
7) SECURITY TRANSACTIONS:
For Federal income tax purposes, the cost of investments owned on December 31,
1997 was the same as identified cost. As of December 31, 1997 the composition
of unrealized appreciation (the excess of value over tax cost) and
depreciation (the excess of tax cost over value) was as follows:
<TABLE>
<CAPTION>
NET
APPRECIATION
FUND APPRECIATION (DEPRECIATION) (DEPRECIATION)
---- ------------ ------------- -------------
<S> <C> <C> <C>
Growth $ 9,654,371 ($283,108) $9,371,263
Opportunity $ 10,035,605 ($691,974) $9,343,631
Fixed Income $ 479,268 ($ 12,851) $ 466,417
Municipal Income $ 121,769 ($ 3) $ 121,766
</TABLE>
8) RECLASSIFICATION OF CAPITAL ACCOUNTS:
The Trust has adopted Statement of Position 93-2, Determination, Disclosure
and Financial Statement Presentation of Income, Capital Gain and Return of
Capital Distributions by Investment Companies. As a result of this statement,
the Trust changed the classification of distributions to shareholders to
better disclose the differences between financial statement amounts and
distributions determined in accordance with income tax regulations.
Accordingly, undistributed net investment gain, undistributed capital gains,
and undistributed income have been adjusted to paid in capital as of December
31, 1997 in the following amounts. The restatements did not change net
investment income, net realized gain (loss), or net assets for the year ended
December 31, 1997.
<TABLE>
<CAPTION>
UNDISTRIBUTED NET UNDISTRIBUTED
CAPITAL PAID IN INVESTMENT INCOME CAPITAL GAIN
--------------- ----------------- ------------
<S> <C> <C> <C>
Growth Fund 0 0 0
Opportunity Fund 0 0 0
Fixed Income Fund (65) 65 0
Municipal Income Fund (32) 32 0
</TABLE>
9) FINANCIAL INSTRUMENTS DISCLOSURE:
There are no reportable financial instruments that have any off balance sheet
risk as of December 31, 1997.
28
<PAGE> 31
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
MCCURDY AND ASSOCIATES CPA'S, INC.
27955 CLEMENS ROAD
WESTLAKE, OHIO 44145
To The Shareholders and Board of Trustees
Johnson Mutual Funds Trust
We have audited the statements of assets and liabilities including the
portfolios of investments, of the Johnson Mutual Funds Trust (comprising,
respectively, the Growth Fund, the Fixed Income Fund, the Municipal Income Fund,
and the Opportunity Fund) as of December 31, 1997, and the related statements of
operations, the statements of changes in net assets, and the financial
highlights for each of the periods indicated. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those 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. Our procedures included confirmation of securities owned as of
December 31, 1997, by correspondence with the custodian. 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 audits provide 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 Johnson Mutual Funds Trust as
of December 31, 1997, the results of their operations, the changes in their net
assets, and the financial highlights for the periods indicated in conformity
with generally accepted accounting principles.
McCurdy & Associates CPA's, Inc.
January 14, 1998
29
<PAGE> 32
- --------------------------------------------------------------------------------
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
----------------------------------------------------
TRANSFER AGENT AND FUND ACCOUNTANT
Johnson Financial, Inc.
Cincinnati, Ohio 45247
513-385-4001
800-541-0170
----------------------------------------------------
CUSTODIAN
The Provident Bank
Three East Fourth Street
Cincinnati, Ohio 45202
----------------------------------------------------
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.
- --------------------------------------------------------------------------------
