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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective No. 8 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [ ]
OF 1940
Amendment No. 9 [X]
JOHNSON MUTUAL FUNDS TRUST
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File Nos. 33-52970 and 811-7254
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5556 Cheviot Road, Cincinnati, Ohio 45247
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(Address of Principal Executive Offices) Zip Code
Registrant's Telephone Number, including Area Code: (513) 385-4001
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Dianna J. Rosenberger, 5556 Cheviot Road, Cincinnati, Ohio 45247
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(Name and Address of Agent for Service)
Release Date: January 2, 1998
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It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[X] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] this Post-Effective Amendment designates a new effective date for a
previously filed Post-Effective Amendment.
Registrant continues its election made by the filing of its Registration
Statement, effective January 4, 1993, to register an indefinite number and
amount of securities under Rule 24f-2 of the Investment Company Act of 1940.
Pursuant to paragraph b(1) of Rule 24f-2, Registrant filed Form 24F-2 for the
fiscal year ended December 31, 1996 on February 28, 1997.
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JOHNSON MUTUAL FUNDS TRUST
CROSS REFERENCE SHEET
FORM N-1A
ITEM SECTION IN JOHNSON REALTY FUND PROSPECTUS
- ---- ------------------------------ ----------
1 Cover Page
2 Fund Expenses
3 None
4 Operation of the Funds, Investment
Objectives and Strategies, Investment
Policies and Techniques, Investment
Limitations, General Information
5 Operation of the Funds
5A Investment Performance
6 Operation of the Funds, Cover Page,
Dividends and Distributions, Taxes, General
Information
7 Operation of the Funds, How to Buy, Sell, or
Exchange Shares in the Fund, How to Buy
Shares, How to Exchange Shares, Share Price
Calculation
8 How to Sell Shares
9 None
15 General Information
20 Taxes
ITEM SECTION IN JOHNSON REALTY FUND STATEMENT OF
- ---- -------------------------------------------
ADDITIONAL INFORMATION
----------------------
10 Cover Page
11 Table of Contents
12 None
13 Additional Information about Fund
Investments, Investment Limitations, State
Restrictions
14 Trustees and Officers
15 Trustees and Officers
16 The Investment Adviser, Custodian and
Transfer Agent, Accountants
17 Portfolio Transactions and Brokerage
18 Description of the Trust
19 Determination of Share Price
20 None
21 Not Applicable
22 Investment Performance
23 None
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JOHNSON MUTUAL FUNDS TRUST
PART C. OTHER INFORMATION
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Item 24 (a) Financial Statements
Included in Part A: None
Included in Part B: None
(b) Exhibits
(1) (i) Copy of Registrant's Declaration of Trust, which
was filed as an Exhibit to Registrant's
Registration Statement, is hereby Incorporated
by reference.
(ii) Copy of Amendment No. 1 to Registrant's
Declaration of Trust, which was filed as an
Exhibit to Registrant's Post-Effective
Amendment No. 3 is hereby incorporated by
reference.
(2) Copy of Registrant's By-Laws, which was filed as
an Exhibit to Registrant's Registration Statement,
is hereby incorporated by reference.
(3) Voting Trust Agreements - None.
(4) None
(5) (i) Copy of Registrant's Management Agreement with
its Adviser, Johnson Investment Counsel, Inc.,
for the Johnson Growth Fund and Johnson Fixed
Income Fund, which was filed as an Exhibit to
Registrant's Pre-Effective Amendment No. 1, is
hereby incorporated by reference.
(ii) Copy of Registrant's Management Agreement with
its Adviser, Johnson Investment Counsel, Inc.,
for the Johnson Opportunity Fund and Johnson
Municipal Income Fund, which was filed as an
Exhibit to Registrant's Post-Effective Amendment
No. 2, is hereby incorporated by reference.
(iii) Copy of Registrant's Proposed Management
Agreement with Johnson Investment Counsel, Inc.,
for the Johnson Realty Fund, is filed herewith.
(6) Underwriting or Distribution Contracts and Agreements
with Principal Underwriters and Dealers - None.
(7) Bonus, Profit Sharing, Pension or Similar Contracts
for the benefit of Directors or Officers - None.
(8) (i) Copy of Registrant's Agreement with the
Custodian, The Provident Bank, which was
filed as an Exhibit to Registrant's
Pre-Effective Amendment No.1, is hereby
incorporated by reference.
(ii) Amended Schedule of Custodian Fees, which
was filed as an exhibit to Registrants
Post-Effective Amendment No.7, is hereby
incorporated by reference.
(9) None.
(10) Opinion and Consent of Brown, Cummins & Brown
Co., L.P.A. is filed herewith.
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(11) Consent of Independent Public accountants - None.
(12) Financial Statements Omitted from Item 23 - None.
(13) (i) Copy of Letter of Initial Stockholder
for the Growth Fund and the Fixed Income
Fund, which was filed as an Exhibit to
Registrant's Pre-Effective Amendment No. 1,
is hereby incorporated by reference.
(ii) Copy of Letter of Initial Stockholder for
the Opportunity Fund and the Municipal
Income Fund, which was filed as an Exhibit
to Registrant's Post-Effective Amendment
No. 4, is hereby incorporated by reference
(14) (i) Model Plan used in establishment of an IRA,
which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 3, is hereby
incorporated by reference.
(ii) Model Plan used in establishment of an
Simplified Employee Pension (SEP) Plan,
which was filed as an Exhibit to
Registrant's Post-Effective Amendment No.
3, is hereby incorporated by reference.
(15) 12b-1 Distribution Expense Plan - None.
(16) Schedule for Computation of Each Performance
Quotation - None
(17) Financial Data Schedule - None.
(18) Rule 18f-3 Plan - None.
(19) (i) Power of Attorney for Registrant and
Certificate with respect thereto which
were filed as an Exhibit to Registrant's
Post-Effective Amendment No.7, are hereby
incorporated by reference.
(ii) Powers of Attorney for Trustees and
Officers of Registrant which were filed
as an Exhibit to Registrant's
Post-Effective Amendment No. 7, are
hereby incorporated by reference.
Item 25. Persons Controlled by or Under Common Control with the Registrant
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As of September 30, 1997, Johnson Investment Counsel, Inc., an
Ohio corporation, the Johnson Investment Counsel, Inc. Profit
Sharing Plan, discretionary accounts of Johnson Investment
Counsel, Inc., and other accounts which its officers and/or
employees may control, may be deemed to control the Growth Fund,
the Opportunity Fund, the Fixed Income Fund and the Municipal
Income Fund as a result of their beneficial ownership of those
Funds.
Johnson Financial Services, Inc., is a wholly owned subsidiary
of Johnson Investment Counsel, Inc., and therefore may be deemed
to be under common control with the Registrant.
It is anticipated that the initial purchase of Johnson Realty
Fund shares will be made by Oakmont Trust, which is an entity
owned by the Adviser. As a result of this purchase, the
Registrant, Oakmont Trust, and Johnson Financial, Inc., may be
deemed to be under common control with the Registrant.
Item 26. Number of Holders of Securities (as of October 10, 1997 )
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Title of Class Number of Record Holders
Johnson Growth Fund 551
Johnson Opportunity Fund 241
Johnson Fixed Income Fund 298
Johnson Municipal Income Fund 24
Johnson Realty Fund 0
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Item 27. Indemnification
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(a) Article VI of the Registrant's Declaration of Trust
provides for indemnification of Officers and Trustees as
follows:
SECTION 6.4 INDEMNIFICATION OF TRUSTEES, OFFICERS,
ETC. Subject to and except as otherwise provided in the
Securities Act of 1933, as amended, and the 1940 Act,
the Trust shall indemnify each of its Trustees and
Officers (including persons who serve at the Trust's
request as directors, officers or trustees of another
organization in which the Trust has any interest as a
shareholder, creditor or otherwise (hereinafter referred
to as a "Covered Person") against all liabilities,
including but not limited to amounts paid in
satisfaction of judgments, in compromise or as fines and
penalties, and expenses, including reasonable
accountants' and counsel fees, incurred by any Covered
Person in connection with the defense or disposition of
any action, suit or other proceeding, whether civil or
criminal, before any court or administrative or
legislative body, in which such Covered Person may be or
may have been involved as a party or otherwise or with
which such person may be or may have been threatened,
while in office or thereafter, by reason of being or
having been such a Trustee or Officer, director or
trustee, and except that no Covered Person shall be
indemnified against any liability to the Trust or its
Shareholders to which such Covered Person would
otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's
office.
SECTION 6.5 ADVANCES OF EXPENSES. The Trust shall
advance attorneys' fees or other expenses incurred by a
Covered Person in defending a proceeding to the full
extent permitted by the Securities Act of 1933, as
amended, the 1940 Act, and Ohio Revised Code Chapter
1707, as amended. In the event any of these laws
conflict with Ohio Revised Code Section 1701.13(E), as
amended, these laws, and not Ohio Revised Code Section
1701.13(E), shall govern.
SECTION 6.6 INDEMNIFICATION NOT EXCLUSIVE, ETC.
The right of indemnification provided by this Article VI
shall not be exclusive of or affect any other rights to
which any such Covered Person may be entitled. As used
in this Article VI, "Covered Person" shall include such
person's heirs, executors and administrators. Nothing
contained in this article shall affect any rights to
indemnification to which personnel of the Trust, other
than Trustees and Officers, and other persons may be
entitled by contract or otherwise under law, nor the
power of the Trust to purchase and maintain liability
insurance on behalf of any such person.
The registrant may not pay for insurance which protects
the Trustees and Officers against liabilities rising
from action involving willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties
involved in the conduct of their offices.
(b) The Registrant maintains a standard mutual fund
investment advisory professional and directors and
officers liability policy. The policy provides coverage
to the Registrant, its Trustees and Officers, and its
Adviser, among others. Coverage under the policy
includes losses by reason of any act, error, omission,
misstatement, misleading statement, neglect or breach of
duty.
(c) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to Trustees,
Officers and controlling persons of the Registrant
pursuant to the provisions of Ohio law and the Agreement
and Declaration of the Registrant or the By-Laws of the
Registrant, or otherwise, the Registrant has been
advised that in the opinion of the Securities and
Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid
by a Trustee,
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Officer or controlling person of the Johnson Mutual
Funds Trust in the successful defense of any action,
suit or proceedings) in asserted by such trustee,
officer or controlling person in connection with the
securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
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(A) Johnson Investment Counsel, Inc. (the "Adviser") is a
registered investment adviser. It has engaged in no
other business during the past two fiscal years.
(B) The following list sets forth the business and other
connections of the Directors and Officers of Johnson
Investment Counsel, Inc. during the past two years.
(1) Timothy E. Johnson
(a) President and a Director of Johnson
Investment Counsel, Inc., 5556 Cheviot
Road, Cincinnati, Ohio 45247.
(b) President and a Trustee of Johnson
Mutual Funds Trust, 5556 Cheviot Road,
Cincinnati, Ohio 45247.
(c) President of Johnson Financial Services,
Inc., 5556 Cheviot Road, Cincinnati,
Ohio 45247.
(2) Janet L. Johnson -
(a) Vice President, Secretary and Director
of Johnson Investment Counsel, Inc.,
5556 Cheviot Road, Cincinnati, Ohio
45247.
(b) Vice President, Secretary and Director
of Johnson Financial Services, Inc.,
5556 Cheviot Road, Cincinnati, Ohio
45247.
Item 29. Principal Underwriters
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None.
Item 30. Location of Accounts and Records
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Accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder will be maintained by the
Registrant and Transfer Agent at 5556 Cheviot Road, Cincinnati,
Ohio 45247, or by The Provident Bank, the Registrant's custodian
at One East Fourth Street, Cincinnati, Ohio 45202.
Item 31. Management Services Not Discussed in Parts A or B - None.
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Item 32. Undertakings
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(a) Not Applicable.
(b) The Registrant hereby undertakes to file a
Post-Effective Amendment, using financial statements
which need not be certified, within four to six months
from the effective date of the registration.
(c) The Registrant hereby undertakes to furnish each person
to whom a prospectus is delivered with a copy of the
Registrant's latest annual report to shareholders, upon
request and without charge.
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JOHNSON MUTUAL FUNDS TRUST
THE JOHNSON REALTY FUND
PROSPECTUS
JANUARY 2, 1998
JOHNSON MUTUAL FUNDS TRUST
5556 CHEVIOT ROAD
CINCINNATI, OH 45247
(513) 385-4001
(800) 541-0170
FAX (513) 385-8947
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TABLE OF CONTENTS
Page
----
FUND EXPENSES............................................................ 2
INVESTMENT OBJECTIVES AND STRATEGIES.................................... 3
HOW TO BUY, SELL OR EXCHANGE SHARES IN EACH FUND........................ 4
HOW TO BUY SHARES ....................................................... 4
HOW TO SELL SHARES....................................................... 6
HOW TO EXCHANGE SHARES................................................... 7
SHARE PRICE CALCULATION.................................................. 7
DIVIDENDS AND DISTRIBUTIONS.............................................. 8
TAXES.....................................................................8
OPERATION OF THE FUND.................................................... 9
INVESTMENT POLICIES AND TECHNIQUES.......................................10
GENERAL INFORMATION......................................................12
INVESTMENT PERFORMANCE...................................................12
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THE JOHNSON REALTY FUND PROSPECTUS DATED JANUARY 2, 1998
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THE JOHNSON REALTY FUND
The Realty Fund's investment objective is above average income and long
term capital growth. The Fund invests primarily in real estate related equity
securities believed by its Adviser, Johnson Investment Counsel, Inc., to provide
above average income and/or to have above average prospects for appreciation.
NO-LOAD MUTUAL FUNDS
The Realty Fund is a "no-load" investment, which means there are no
sales charges or commissions for the purchase, sale or exchange of Fund shares.
In addition, there are no 12b-1 fees, distribution expenses or deferred sales
charges to the shareholders. The minimum initial investment for the Fund is
$2,000.
JOHNSON MUTUAL FUNDS TRUST
The Johnson Mutual Funds Trust (the "Trust") is a family of five
no-load mutual funds. The Johnson Realty Fund was organized as a series of the
Trust on November 12, 1997, and commenced operations on January 2, 1998. The
Johnson Realty Fund's investment objective is listed below. Information on the
other series in the Trust, the Johnson Growth Fund, the Johnson Fixed Income
Fund, the Johnson Opportunity Fund and the Johnson Municipal Income Fund, may be
obtained by calling or writing the Trust at the address and telephone number
listed throughout this prospectus.
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This Prospectus gives you information about the Johnson Realty Fund and
the Johnson Mutual Funds Trust that you should be aware of before investing.
Please read and retain this Prospectus for future reference. Additional
information is included in the Statement of Additional Information dated January
2, 1998 and filed with the Securities and Exchange Commission. It is
incorporated into this Prospectus by reference. To obtain a copy without charge,
call or write:
Johnson Mutual Funds Trust
5556 Cheviot Road, Cincinnati, Ohio 45247
(513) 385-4001 (800) 541-0170
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
1
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FUND EXPENSES
The purpose of the table below is to assist shareholders in
understanding the costs and expenses that shareholders in the Fund will bear
directly or indirectly. The expense information for the Fund is based on
estimated amounts for the current fiscal year. The expenses are expressed as a
percentage of average net assets.
Shareholders should be aware that the Fund is a no-load fund and,
accordingly, a shareholder does not pay any front or back end loads or
commission to buy, sell or exchange shares of the Fund. In addition, the Fund
does not have a 12b-1 Plan. Unlike most other mutual funds, the Fund does not
pay separately for transfer agency, fund accounting, pricing, custodial,
auditing or legal services, nor does it pay separately general administrative or
other operating expenses. The Adviser pays all of the expenses of the Fund
except brokerage, taxes, interest and extraordinary expenses.
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SHAREHOLDER TRANSACTION EXPENSES: REALTY FUND
-----------
Maximum Front End Load ............................................. NONE
Deferred Load ...................................................... NONE
Redemption Fee(1)................................................... NONE
Exchange Fee ....................................................... NONE
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)(2)
Management Fees (after fee waiver)(2)............................... 0.95%
12b-1 Fees ......................................................... NONE
Total Fund Operating Expenses (after fee waiver)(2)................. 0.95%
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1 A processing fee of $10 will be deducted from any wire sales proceeds and
paid to the custodian.
2 The Fund's total operating expenses are equal to the management fee paid to
the Adviser. The Adviser is authorized to charge the Realty Fund a
management fee of 1.30%, of the average daily net assets of the Fund. The
expenses shown in the above fee table reflect the fee waiver for the Fund
for the year ending December 31, 1998. The Adviser intends these fee
waivers to be permanent, although the Adviser reserves the right to remove
them at any time after December 31, 1998. Additionally, the Adviser intends
to waive additional fees for the fiscal year ending December 31, 1998, and
anticipates that the fee will be less than 0.95% for 1998.
Example
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You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) sale of your shares at the end of each time period:
1 YEAR 3 YEARS
Realty Fund $10 $30
The Example should not be considered a representation of past or future
expenses, and the Fund's actual expenses may be more or less than those shown.
2
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INVESTMENT OBJECTIVES AND STRATEGIES
The Johnson Realty Fund's investment objective is above
average income and long term capital growth. The Johnson Realty Fund (the
"Fund") invests primarily in equity securities of companies in the real estate
industry, including but not limited to REITs (real estate investment trusts),
and other real estate related equity securities, such as common stock, preferred
stock and/or convertible securities of companies engaged in real estate related
businesses. Under normal circumstances, at least 65% of the Fund's total asset
will be in the real estate industry. The Fund will not attempt to duplicate the
real estate market as a whole in terms of the proportion of invested assets in
any specific region or property category. Due to the Fund's concentration in the
real estate industry, the Fund is not intended to be a complete investment
program.
WHAT IS A REIT?
A REIT is an investment vehicle that invests in interests in
real estate. A REIT is not taxed as a corporation if it meets the definitional
requirements of the Internal Revenue Code of 1986 (the "Code"). To qualify under
the Code, a REIT must invest substantially all of its assets in interests in
real estate, cash or government securities, derive most of its income from real
estate rental income or real estate secured mortgage loan interest, and
distribute to its shareholders 95% or more of its taxable income. If the REIT
meets these requirements, it may deduct dividends paid for tax purposes, thereby
eliminating federal income tax. REITs typically have high income pay-out ratios
and therefore may provide significant income returns.
A REIT can be categorized as an equity REIT, a mortgage REIT
or a hybrid REIT. An equity REIT owns or leases land or buildings and derives
the majority of its income from rental income. In addition, an equity REIT may
realize capital gains upon the sale of land or buildings that have appreciated
in value from the time of purchase to the time of sale, or similarly realize
capital losses from the sale of property that has depreciated in value.
A mortgage REIT invests in real estate mortgage loans and
generates income primarily from the interest payments on mortgage loans. A
hybrid REIT has both the characteristics of an equity REIT and a mortgage REIT
and derives its income primarily from rental income and mortgage loan interest.
Of the REIT sector, the Fund will invest primarily in equity
REITs, as opposed to mortgage REITs. The focus of the equity REITs will be those
that invest in office, residential, retail, industrial, and other specialty
properties including hotels, self-storage facilities, healthcare facilities, and
parking facilities
WHAT ELSE MIGHT THE FUND INVEST IN?
In addition to REITs, the Fund may invest in other real
estate related equity securities, such as common stock, preferred stock and/or
convertible securities of companies engaged in real estate related businesses.
Real estate related equity securities may include equity securities issued by
real estate developers, home-builders, and hotels. They may also include
companies with substantial real estate holdings as an investment, or as part of
their operations, as well as companies whose products and services are directly
related to the real estate industry, such as building supply manufacturers,
mortgage lenders, or mortgage servicing companies.
The Fund may also invest in other securities outside the real
estate industry at the sole discretion of the Adviser. Please see "Investment
Policies and Techniques" for a more detailed discussion of the various other
types of securities the Fund is authorized to invest in.
WHAT ARE SOME OF THE RISKS OF THE FUND?
The concentration of the Fund's investments in the real
estate industry will subject the Fund to risks associated with the direct
ownership of real estate, in addition to those risks that apply to the equity
market as a whole. Some of these risks include decreases in real estate values,
overbuilding, environmental liabilities, and increases in operating costs. In
addition, the Fund will generally be subject to economic and regulatory risks
such as increases in interest rates, increases in property taxes, regulatory
limitations on rental income and changes in local zoning laws.
Some real estate related investments are not fully
diversified, and thus are subject to the risks associated with financing a
limited number of projects. REITS also are heavily dependent upon the management
team. They are also
3
<PAGE> 12
subject to heavy cash flow dependency, defaults by borrowers, and
self-liquidation. Additionally, equity REITs may be affected by changes in the
value of the underlying property owned by the trusts, and mortgage REITs may be
affected by the quality of any mortgage loans extended. The Adviser seeks to
mitigate these risks by selecting REITs diversified by sector as well as
geographic location.
As all investment securities are subject to inherent market
risks and fluctuations in value due to earnings, economic and political
conditions and other factors, the Fund cannot give any assurance that its
investment objective will be achieved. In addition, it should be noted that the
Fund has no operating history. Current yields or rates of total return quoted by
the Fund may be higher or lower than past quotations, and there can be no
assurance that the current yield or rate of total return will be maintained. See
"Investment Policies and Techniques" for a more detailed discussion of the
Fund's investment practices and the risks involved in such practices.
TEMPORARY DEFENSIVE PURPOSES
For temporary defensive purposes, the Fund may hold all or a
portion of its assets in money market instruments, securities of other no-load
mutual funds, and/or repurchase agreements. If the Fund invests in shares of
another mutual fund, the shareholders of the Fund generally will be subject to
duplicative management fees.
HOW TO BUY, SELL OR EXCHANGE SHARES IN THE FUND
The Fund and its transfer agent, Johnson Financial Services,
Inc., can be contacted at the same mailing address and telephone numbers. If you
need additional information on how to buy, sell or exchange shares in the Fund,
please contact:
FUNDS: TRANSFER AGENT:
Johnson Mutual Funds Trust Johnson Financial, Inc.
5556 Cheviot Road 5556 Cheviot Road
Cincinnati, Ohio 45247 Cincinnati, Ohio 45247
(513)-385-4001 (513) 385-4001
(800)-541-0170 (800) 541-0170
FAX: (513) 385-8947 FAX: (513) 385-8947
HOW TO BUY SHARES
The minimum initial investment for the Fund is $2,000, and $100 for each
subsequent investment.
INITIAL PURCHASE
BY MAIL - You may purchase shares of the Fund by completing
and signing an application, drafting a check made payable to: Johnson Mutual
Funds, identifying on the check "Johnson Realty Fund", and mailing it to the
Transfer Agent.
BY WIRE - You may purchase shares of the Fund by wiring
Federal Funds from your bank, which may charge you a fee for doing so. If money
is to be wired for a newly established account, you must call the Funds and
provide the following information:
Name(s) in which account is to be registered;
Address;
Social security or tax identification number;
Amount being wired;
Name of the Fund, (Johnson Realty Fund);
Name of the wiring bank;
Name and phone number of a contact person at the bank
initiating the wire.
The Fund or the Transfer Agent will provide you with your account
number and your bank must then wire the
4
<PAGE> 13
specified amount according to the following instructions:
The Provident Bank/Cincinnati, Johnson Mutual Funds
ABA #042000424
Account #0198-483
For Further Credit to:
Name of the Fund,(Johnson Realty Fund);
Shareholder Account Name - _________________________
Shareholder Account Number - _____________ (4 digit)
You must mail a completed application to Johnson Mutual Funds
after opening an account by wire transfer. If a completed application is not
received or your social security or tax identification number is not certified
with a Form W-9, your account will be subject to back-up withholding within 60
days.
Wire orders will be accepted only on a day on which the Fund
and the custodian bank are open for business. A wire purchase will not be
considered made until the wired money is received and the purchase is accepted
by the Fund . Any delays that may occur in wiring money, including delays that
may occur in processing by the banks, are not the responsibility of the Fund or
the custodian bank. There is presently no fee for the receipt of wired funds,
but the Fund reserve the right to charge shareholders for this service.
ADDITIONAL PURCHASES
You may buy additional shares of the Fund at any time (minimum
of $100) by mail or by bank wire. Each additional purchase request must contain:
Name of your account(s);
Account number(s);
Name of the Fund, (Johnson Realty Fund).
Checks should be made payable to "Johnson Mutual Funds" and
should be sent to The Johnson Mutual Funds at the address indicated throughout
this prospectus. A bank wire should be sent as outlined above. ACH (Automatic
Clearing House) transactions should be established in advance.
AUTOMATIC INVESTMENT OPTION
You may arrange to make additional investments ($100 minimum)
automatically on a monthly or bi-monthly basis by transfers from your checking
account. You must complete the "Optional Automatic Investment Plan" section of
the application and provide the Trust with a voided check for the account you
wish to use for the automatic investment. You may terminate this automatic
investment program at any time.
OTHER PURCHASE INFORMATION
You may exchange securities that you own for shares of the
Fund, provided the securities meet the Fund's investment criteria and the
Adviser deems them to be a desirable investment for the Fund. Any exchange will
be a taxable event and you may incur certain transaction costs relating to the
exchange. Contact the Fund for additional information.
If an order, with payment in proper form, is received before
the close of trading on the New York Stock Exchange (currently 4:00 p.m. Eastern
Time) by the Fund, shares will be purchased at the net asset value determined as
of the close of trading on that day. Otherwise, Fund shares will be purchased at
the net asset value determined as of the close of trading on the New York Stock
Exchange on the next business day.
The Fund does not issue share certificates. All shares are
held in non-certificate form registered on the books of the Fund's Transfer
Agent for the account of the shareholder. The rights to limit the amount of
purchases and to refuse to sell to any person are reserved by the Fund. If your
check or wire does not clear, you will be responsible for any loss incurred. If
you are already a shareholder in the Johnson Mutual Funds the Fund can sell
shares from any identically registered account in any of the Funds as
reimbursement for any loss incurred. You may be prohibited or restricted from
making future purchases in any of the Johnson Mutual Funds.
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<PAGE> 14
HOW TO SELL SHARES
You may sell shares in the Fund by mail or telephone, without
a charge. Shares will be sold at the next share price (net asset value)
calculated after receipt of your properly completed request for a sale, or
telephone call.
BY MAIL - You may sell shares at no charge by mail. All sales
will be made at the net asset value (NAV) determined after the Transfer Agent
has received the sale request in proper order. The proceeds of the sale may be
more or less than the purchase price of your shares, depending on the market
value of the Fund's securities at the time of your sale. Your request should be
addressed to the Johnson Mutual Funds. "Proper order" means your request for a
sale must include:
Letter of instruction;
Name of the Fund,(Johnson Realty Fund);
Account number(s);
Account name(s);
Dollar amount or the number of shares you wish to sell.
All registered share owner(s) must sign this request in the
exact name(s) and any special capacity in which they are registered. For joint
accounts with right of survivorship, only one signature is required for
withdrawal.
For sales in excess of $50,000, the Fund requires that
signatures be guaranteed by a bank or member firm of a national securities
exchange. Signature guarantees are for the protection of shareholders. At the
discretion of the Fund a shareholder may be required to furnish additional legal
documents to insure proper authorization. If you are not certain of the
requirements for a sale, please call the Transfer Agent at the number indicated
throughout this prospectus.
The Fund, at its discretion and with shareholder consent, may
use securities from the Fund's portfolio to pay you for your shares, provided
that the Adviser deems that such a distribution of securities will not adversely
affect the Fund's portfolio. Any such transfer of securities to you will be a
taxable event and you may incur certain transaction costs relating to the
transfer. Contact the Funds for additional information.
BY TELEPHONE - Telephone redemption privileges are
automatically available to all shareholders. Shareholders may sell shares on any
business day the New York Stock Exchange is open by calling the Transfer Agent
before 4:00 p.m. Eastern Time. The Funds will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine. Such procedures
will include requiring a form of personal identification from the caller. Sale
proceeds will be mailed or wired at the shareholder's direction to the
designated account. The minimum amount that may be wired is $1,000 (wire charges
of $10 will be deducted from sales proceeds).
By using the telephone redemption and exchange privileges, a
shareholder authorizes the Fund to act upon the instruction of any person by
telephone to sell shares from the account and transfer the proceeds to the bank
account designated or effect an exchange into another Fund. The Fund and the
Transfer Agent are not liable for following instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. The Fund may change, modify or terminate the telephone redemption
or exchange privilege at any time.
BY SYSTEMATIC WITHDRAWAL PROGRAM - Shareholders may request
that a predetermined amount be sent by check or wired to them periodically, each
month or calendar quarter. A shareholder's account must have Fund shares with a
value of at least $10,000 in order to start a Systematic Withdrawal Program, and
the minimum amount that may be withdrawn each month or quarter under the
Systematic Withdrawal Program is $100. This program may be terminated by a
shareholder or the Fund at any time without charge or penalty and will become
effective five business days following receipt of your instructions. In order to
facilitate the delivery of the checks as close as possible to the end of the
month, shares will be sold on the 24th day of the month or the last business day
prior to the 24th day if the 24th falls on a holiday or weekend. A withdrawal
under the Systematic Withdrawal Program involves a sale of shares, and may
result in a gain or loss for federal income tax purposes. In addition, if the
amount withdrawn exceeds the dividends credited to the shareholder's account,
the account ultimately may be depleted.
ADDITIONAL INFORMATION - Sale requests specifying a certain
date or share price cannot be accepted and
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<PAGE> 15
will be returned. If you invest by wire, you may sell your shares on the first
business day following such purchase. However, if you invest by a personal,
corporate, cashier's or government check, or through any of our telephone
services, the sales proceeds will not be paid until the first business day after
the 10th calendar day following receipt of payment by the Fund. Exchanges into
any of the other Funds are, however, permitted without the ten day waiting
period.
We will mail or wire the proceeds to you on or before the 5th
business day following the sale. Also, when the New York Stock Exchange is
closed (or when trading is restricted) for any reason other than its customary
weekend or holiday closing or under any emergency circumstances, as determined
by the Securities and Exchange Commission, we may suspend sales of Fund shares
or postpone payment dates. If you are unable to accomplish your transaction by
telephone (for example, during times of unusual market activity), consider
sending your order by express mail to the Funds, or facsimile to (513) 385-8947.
Because the Fund incurs certain fixed costs in maintaining
shareholder accounts, the Fund reserves the right to require any shareholder to
sell all of his or her shares in the Fund on 30 days' written notice if the
value of his or her shares in the Fund is less than $2,000 due to sales of Fund
shares, or such other minimum amount as the Fund may determine from time to
time. An involuntary sale will create a capital gain or a capital loss, which
may have tax consequences about which you should consult your tax adviser. A
shareholder may increase the value of his or her shares in the Fund to the
minimum amount within the 30 day period. Shares of the Fund are subject to a
sale at any time if the Board of Trustees determines in its sole discretion that
failure to sell may have materially adverse consequences to all or any of the
shareholders of the Trust or any Fund of the Trust.
HOW TO EXCHANGE SHARES
As a shareholder in any Fund, you may exchange shares valued
at $1,000 or more for shares of any other Fund in the Johnson Mutual Fund Trust.
Information on other funds within the Johnson Mutual Funds Trust, including the
Johnson Growth Fund, the Johnson Opportunity Fund, the Johnson Fixed Income
Fund, and the Johnson Municipal Income Fund may be obtained by writing or
calling the Trust, at the address and telephone numbers listed throughout this
prospectus. You may make an exchange by telephone or by written request.
BY TELEPHONE - Shareholders may call the Transfer Agent to
exchange shares. An exchange may also be made by written request signed by all
registered owners of the account mailed to the Transfer Agent. Requests for
exchanges received prior to close of trading on the New York Stock Exchange
(4:00 p.m. Eastern Time) will be processed at the next determined net asset
value as of the close of business on the same day.
An exchange is made by selling shares of one Fund and using
the proceeds to buy shares of another Fund, with the NAV for the sale and the
purchase calculated on the same day. See "How to Sell Shares". An exchange
results in a sale of shares for federal income tax purposes. If you make use of
the exchange privilege, you may realize either a long term or short term capital
gain or loss on the shares sold.
Before making an exchange, you should consider the investment
objective of the Fund to be purchased. If your exchange creates a new account,
you must satisfy the requirements of the Fund in which shares are being
purchased. You may make an exchange to a new account or an existing account;
however, the account ownership must be identical. Exchanges may be made only in
states where an exchange may legally be made. The Fund reserves the right to
terminate or modify the exchange privilege in the future upon 60 days prior
notice to the shareholders.
SHARE PRICE CALCULATION
The value of an individual share in the Fund, the net asset
value, (NAV) is calculated by dividing the total value of the Fund's investments
and other assets (including accrued income), less any liabilities (including
estimated accrued expenses), by the number of shares outstanding, rounded to the
nearest cent. Net asset value per share is determined as of the close of the New
York Stock Exchange (4:00 p.m. Eastern Time) on each day that the exchange is
open for business, and on any other day on which there is sufficient trading in
the Fund's securities to materially affect the net asset value. The net asset
value per share of each Fund will fluctuate.
Securities that are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price of the day.
Lacking a last 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. All other securities for
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<PAGE> 16
which over-the-counter market quotations are readily available are valued at
their last bid price. When market quotations are not readily available, or when
the Adviser determines the last bid price does not accurately reflect the
current value or when restricted securities are being valued, such securities
are valued as determined in good faith by the Adviser, in conformity with
guidelines adopted by and subject to review of the Board of Trustees of the
Trust.
Fixed income securities may be valued on the basis of prices
furnished by a pricing service when the Adviser believes such prices accurately
reflect the fair market value of such securities. A pricing service utilizes
electronic data processing techniques to determine prices for normal
institutional-size trading units of debt securities without regard to sale or
bid prices. When prices are not readily available from a pricing service, or
when restricted or illiquid securities are being valued, securities are valued
at fair value as determined in good faith by the Adviser, subject to review of
the Board of Trustees. Short term investments in fixed income securities with
maturities of less than 60 days when acquired, or which subsequently are within
60 days of maturity, are valued by using the amortized cost method of valuation.
DIVIDENDS AND DISTRIBUTIONS
The Realty Fund intends to distribute substantially all of
its net investment income as dividends to shareholders on a quarterly basis. The
Fund intends to distribute its net long term capital gains and net short term
capital gains at least once a year, at year end.
Dividends and capital gain distributions are automatically
reinvested in additional shares at the net asset value per share on the
distribution date. An election to receive a cash payment of dividends and/or
capital gain distributions may be made in the application to purchase shares or
by separate written notice to the Transfer Agent. Shareholders will receive a
confirmation statement reflecting the payment and reinvestment of dividends and
summarizing all other transactions. If cash payment is requested, a check
normally will be mailed within five business days after the payable date. If you
withdraw your entire account, all dividends accrued to the time of withdrawal,
including the day of withdrawal, will be paid at that time. Distributions of
less than $10 and distributions on shares purchased within the last 30 days,
however, will not be paid in cash and will be reinvested. You may elect to have
distributions on shares held in IRA's and 403(b) plans paid in cash only if you
are 59 1/2 years old or permanently and totally disabled or if you otherwise
qualify under the applicable plan.
TAXES
The Fund intends to qualify each year as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended. By so
qualifying, the Fund will not be subject to federal income taxes to the extent
that it distributes substantially all of its net investment income and any net
realized capital gains.
For federal income tax purposes, the Fund is treated as a
separate entity for the purpose of computing taxable net income and net realized
capital gains and losses. Dividends paid by the Fund from ordinary taxable
income are taxable to shareholders as ordinary income, but may be eligible in
part for the dividends received deduction for corporations. Pursuant to the Tax
Reform Act of 1986, all distributions of net capital gains to individuals are
taxed at the same rate as ordinary income. All distributions of net capital
gains to corporations are taxed at regular corporate rates. Any distributions
designated as being made from net realized long term capital gains are taxable
to shareholders as long term capital gains regardless of the holding period of
the shareholder. The tax consequences described in this section apply whether
distributions are taken in cash or reinvested in additional shares.
The Fund will mail to each shareholder after the close of the
calendar year a statement setting forth the federal income tax status of
distributions made during the year. Dividends and capital gains distributions
may also be subject to state and local taxes. Shareholders are urged to consult
their tax advisers regarding specific questions as to federal, state or local
taxes, the tax effect of distributions and withdrawals from the Fund and the use
of the Exchange Privilege.
Unless a shareholder of the Fund furnishes his or her
certified taxpayer identification number (social security number for
individuals) and certifies that he or she is not subject to backup withholding,
the Fund will be required to withhold and remit to the U.S. Internal Revenue
Service 31% of the dividends, distributions and sales proceeds payable to the
shareholder. Shareholders should be aware that, under Internal Revenue Service
regulations, the Fund may be fined $50 annually for each account for which a
certified taxpayer identification number is not provided. In the event that such
a fine is imposed with respect to a specific shareholder account in any year,
the Fund will make a corresponding charge against the shareholder account.
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<PAGE> 17
OPERATION OF THE FUND
The Johnson Realty Fund is a diversified series of The
Johnson Mutual Funds Trust, an open-end management investment company organized
as an Ohio business trust on September 30, 1992. The Board of Trustees
supervises the business activities of the Trust. Like other mutual funds, the
Trust retains various organizations to perform specialized services. It retains
Johnson Investment Counsel, Inc., 5556 Cheviot Road, Cincinnati, Ohio 45247 (the
"Adviser") to manage the Trust's investments and its business affairs. The
Adviser is a Cincinnati-based company of which Timothy E. Johnson is the
controlling shareholder. Since its inception in 1965, it has grown to become the
largest independent investment advisory firm in the Cincinnati area. The Adviser
has over $1.8 billion of assets under management with services extending to a
wide range of clients, including businesses, individuals, foundations, and
institutional endowments. Johnson Investment Counsel, Inc. solely provides
investment management, through individually managed portfolios and has no
commission-based affiliations from the sale of products.
A committee of the Adviser is responsible for the investment
decisions and the day-to-day management for the Fund. The committee consists of
a group of fifteen investment professionals at Johnson Investment Counsel, Inc.
including, but not limited to, Norman G. Miller, Ph.D., Mathew L. Grever, CFA,
and Fred A. Brink.
Norman G. Miller, Ph.D., is the Director of the Real Estate
Program at the University of Cincinnati (since 1981) and is the holder of the
West Shell, Jr. Professorship in real estate (since 1988). Dr. Miller received
his Ph.D. from the Ohio State University in 1977, after which he was an
Assistant Professor at the University of Georgia until 1981. Dr. Miller is
active on the Editorial Board of several national and international journals,
including The Journal of Real Estate Research, The Journal of Real Estate
Literature, The Journal of Property Finance, and Real Estate Economics, and is
also co-managing editor of Real Estate Finance. Dr. Miller has assisted several
institutional investors in developing research programs for use in investment
selection, has consulted with clients from the Pacific Rim region, and has
worked with national data firms on real estate market analysis techniques. Dr.
Miller is a regular member of the national forecast panel for the Housing Market
Report and is a part-time research analyst for Johnson Investment Counsel, Inc.
Matthew L. Grever, CFA is the Vice President of Acquisitions
for a midwestern-based real estate investment and development company that
specializes in the acquisition of retail shopping centers across the United
States. Mr. Grever holds a B.B.A. in accounting and real estate and an MBA with
concentration in finance, from The University of Cincinnati. Mr. Grever was
awarded the designation of Charter Financial Analyst (CFA) from The Institute of
Chartered Financial Analysts in 1997. Mr. Grever has been involved in anchor
tenant lease and operating covenant negotiation, real estate acquisition,
redevelopment analysis, and deal structuring, real estate joint venture
negotiation, as well as real estate acquisition, construction and permanent
financing. Prior to his current position, Mr. Grever was Vice President of a
large Midwestern based commercial mortgage banking company. Mr. Grever is a
part-time research analyst for Johnson Investment Counsel, Inc.
Fred A. Brink is a research analyst for Johnson Investment
Counsel, Inc. Prior to joining Johnson Investment Counsel, Inc., Mr. Brink
served as a Fund Manager and Trust Investment Officer for Star Bank, NA. During
his six year tenure at Star Bank, Mr. Brink managed the Star Capital
Appreciation Fund, the REIT portions of the Stellar and Strategic Income Funds,
as well as two in-house REIT Funds. Mr. Brink earned a Bachelor of Business
Administration degree in Finance from the University of Cincinnati in 1991, and
is currently enrolled in the Chartered Financial Analyst program through the
Institute of Chartered Financial Analysts.
The Realty Fund is authorized to pay the Adviser a fee equal
to an annual average rate of 1.30% of its average daily net assets, although the
Adviser has committed to limit its fee to 0.95% of such assets. The Adviser
intends that these fee limitations will be permanent, although the Adviser
reserves the right to remove them at any time after December 31, 1998.
Additionally, the Fund has committed to waiving additional fees during 1998 and
anticipates that the fee will be less than 0.95% for the one year period. The
Adviser pays all of the expenses of the Fund except brokerage, taxes, interest
and extraordinary expenses. It should be noted that most investment companies
pay their own operating expenses directly, while the Fund's expenses except
those specified above, are paid by the Adviser.
The Trust retains Johnson Financial, Inc. to serve as transfer
agent and dividend paying agent. Johnson Financial, Inc. is a wholly owned
subsidiary of Adviser and thus it and the Adviser may be deemed to be under
common control. Johnson Financial, Inc. operates under separate contractual
agreements with the Trust.
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<PAGE> 18
INVESTMENT POLICIES AND TECHNIQUES
This section contains general information about various types
of securities and investment techniques. The Fund may invest in any security or
employ any investment technique described in this section.
EQUITY SECURITIES-The Fund may invest in equity securities,
which include common stocks, convertible preferred stocks, convertible
debentures, rights, warrants, REITs (real estate investment trusts), REOCs (real
estate Operating Companies), and other real estate related companies.
Convertible preferred stock is preferred stock that can be converted into common
stock pursuant to its terms. Convertible debentures are debt instruments that
can be converted into common stock pursuant to their terms. Warrants are options
to purchase equity securities at a specified price valid for a specific time
period. Rights are similar to warrants, but normally have a short duration and
are distributed by the issuer to its shareholders. The Fund may not invest more
than 5% of its net assets at the time of purchase in rights and warrants.
FIXED INCOME SECURITIES-The Fund may invest in fixed income
securities which include corporate debt securities, U.S. government securities,
mortgage-backed securities, zero coupon bonds, asset-backed and
receivable-backed securities and participation interests in such securities.
Preferred stock and certain common stock equivalents may also be considered to
be fixed income securities. Fixed income securities are generally considered to
be interest rate sensitive, which means that their value will generally decrease
when interest rates rise and increase when interest rates fall. Securities with
shorter maturities, while offering lower yields, generally provide greater price
stability than longer term securities and are less affected by changes in
interest rates.
CORPORATE DEBT SECURITIES-The Fund may invest in corporate
debt securities, which are long and short term debt obligations issued by
companies (such as publicly issued and privately placed bonds, notes and
commercial paper). The Fund will not invest more than 5% of the value of its
net assets in securities, including convertible securities, that are below
investment grade. The Adviser considers corporate debt securities to be of
investment grade quality if they are rated BBB or higher by Standard & Poor's
Corporation ("S&P"), Baa or higher by Moody's Investors Services, Inc.
("Moody's"), or if unrated, determined by the Adviser to be of comparable
quality. Investment grade debt securities generally have adequate to strong
protection of principal and interest payments. In the lower end of this
category, credit quality may be more susceptible to potential future changes in
circumstances and the securities have speculative elements. If the rating of a
security by S&P or Moody's drops below investment grade, the Adviser will
dispose of the security as soon as practicable (depending on market conditions)
unless the Adviser determines based on its own credit analysis that the security
provides the opportunity of meeting the Fund's objective without presenting
excessive risk.
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U.S. GOVERNMENT SECURITIES-U.S. government securities may be
backed by the credit of the government as a whole or only by the issuing agency.
U.S. Treasury bonds, notes, and bills and some agency securities, such as those
issued by the Federal Housing Administration and the Government National
Mortgage Association (GNMA), are backed by the full faith and credit of the U.S.
government as to payment of principal and interest and are the highest quality
government securities. Other securities issued by U.S. government agencies or
instrumentalities, such as securities issued by the Federal Home Loan Banks and
the Federal Home Loan Mortgage Corporation, are supported only by the credit of
the agency that issued them, and not by the U.S. government. Securities issued
by the Federal Farm Credit System, the Federal Land Banks, and the Federal
National Mortgage Association (FNMA) are supported by the agency's right to
borrow money from the U.S. Treasury under certain circumstances, but are not
backed by the full faith and credit of the U.S. government.
MORTGAGE-BACKED SECURITIES-represent an interest in a pool of
mortgages. These securities, including securities issued by FNMA and GNMA,
provide investors with payments consisting of both interest and principal as the
mortgages in the underlying mortgage pools are repaid. Unscheduled or early
payments on the underlying mortgages may shorten the securities' effective
maturities. The average life of securities representing interests in pools of
mortgage loans is likely to be substantially less than the original maturity of
the mortgage pools as a result of prepayments or foreclosures of such mortgages.
Prepayments are passed through to the registered holder with the regular monthly
payments of principal and interest, and have the effect of reducing future
payments. To the extent the mortgages underlying a security representing an
interest in a pool of mortgages are prepaid, a Fund may experience a loss (if
the price at which the respective security was acquired by the Fund was at a
premium over par, which represents the price at which the security will be sold
upon prepayment). In addition, prepayments of such securities held by a Fund
will reduce the share price of the Fund to the extent the market value of the
securities at the time of prepayment exceeds their par value. Furthermore, the
prices of mortgage-backed securities can be significantly affected by changes in
interest rates. Prepayments may occur with greater frequency in periods of
declining mortgage rates because, among other reasons, it may be possible for
mortgagors to refinance their outstanding mortgages at lower interest rates. In
such periods, it is likely that any prepayment proceeds would be reinvested by a
Fund at lower rates of return.
COLLATERALIZED MORTGAGE OBLIGATIONS (CMOs)-Securities
collateralized by mortgages or mortgage-backed securities. CMOs are issued with
a variety of classes or series, which have different maturities and are often
retired in sequence. CMOs may be issued by governmental or non-governmental
entities such as banks and other mortgage lenders. Non-government securities may
offer a higher yield but also may be subject to greater price fluctuation than
government securities. Investments in CMOs are subject to the same risks as
direct investments in the underlying mortgage and mortgage-backed securities. In
addition, in the event of a bankruptcy or other default of an entity who issued
the CMO held by the Fund, the Fund could experience both delays in liquidating
its position and losses.
ZERO COUPON BONDS-Zero coupon bonds do not make regular
interest payments. Instead they are sold at a deep discount from their face
value. The Fund will accrue income on such bonds for tax and accounting
purposes, in accordance with applicable law. This income will be distributed to
shareholders. Because no cash is received at the time such income is accrued,
the Fund may be required to liquidate other portfolio securities to satisfy its
distribution obligations. Because a zero coupon bond does not pay current
income, its price can be very volatile when interest rates change. In
calculating its dividend, the Fund takes into account as income a portion of the
difference between a zero coupon bond's purchase price and its face value.
Certain types of CMOs pay no interest for a period of time and therefore present
risks similar to zero coupon bonds.
The Federal Reserve creates STRIPS (Separate Trading of
Registered Interest and Principal of Securities) by separating the coupon
payments and the principal payment from an outstanding Treasury security and
selling them as individual securities. A broker-dealer creates a derivative zero
by depositing a Treasury security with a custodian for
11
<PAGE> 20
safekeeping and then selling the coupon payments and principal payment that will
be generated by this security separately. Examples are Certificates of Accrual
on Treasury Securities (CATs), Treasury Investment Growth Receipts (TIGRs) and
generic Treasury Receipts (TRs). These derivative zero coupon obligations are
not considered to be government securities unless they are part of the STRIPS
program. Original issue zeros are zero coupon securities issued directly by the
U.S. government, a government agency, or by a corporation.
FOREIGN SECURITIES-The Fund may invest in foreign equity
securities through the purchase of American Depository Receipts. American
Depository Receipts are certificates of ownership issued by a U.S. bank as a
convenience to the investors in lieu of the underlying shares which it holds in
custody. The Fund may also invest in dollar denominated foreign fixed-income
securities issued by foreign companies, foreign governments or international
organizations and determined by the Adviser to be comparable in quality to
investment grade domestic securities. The Fund will not invest in a foreign
security if, immediately after a purchase and as a result of the purchase, the
total value of foreign securities owned by the Fund would exceed 30% of the
value of the total assets of the Fund. To the extent that the Fund does invest
in foreign securities, such investments may be subject to special risks, such as
changes in restrictions on foreign currency transactions and rates of exchange,
and changes in the administrations or economic and monetary policies of foreign
governments.
REPURCHASE AGREEMENTS-A repurchase agreement is a short term
investment in which the purchaser acquires ownership of a U.S. Government
security (which may be of any maturity) and the seller agrees to repurchase the
obligation at a future time at a set price, thereby determining the yield during
the purchaser's holding period (usually not more than seven days from the date
of purchase). Any repurchase transaction in which the Fund engages will require
full collateralization of the seller's obligation during the entire term of the
repurchase agreement. In the event of a bankruptcy or other default of the
seller, the Fund could experience both delays in liquidating the underlying
security and losses in value. However, the Fund intends to enter into repurchase
agreements only with the Trust's custodian, other banks with assets of $1
billion or more and registered securities dealers determined by the Adviser
(subject to review by the Board of Trustees) to be creditworthy. The Adviser
monitors the creditworthiness of the banks and securities dealers with which the
Fund engages in repurchase transactions, and the Fund will not invest more than
15% of its net assets in illiquid securities, including repurchase agreements
maturing in more than seven days.
WHEN ISSUED SECURITIES AND FORWARD COMMITMENTS
The Fund may buy and sell securities on a when-issued or
delayed delivery basis, with payment and delivery taking place at a future date.
The price and interest rate that will be received on the securities are each
fixed at the time the buyer enters into the commitment. The Fund may enter into
such forward commitments if they hold, and maintain until the settlement date in
a separate account at the Fund's Custodian, cash or U.S. government securities
in an amount sufficient to meet the purchase price. The Fund will not invest
more than 25% of their respective total assets in forward commitments. Forward
commitments involve a risk of loss if the value of the security to be purchased
declines prior to the settlement date. Any change in value could increase
fluctuations in the Fund's share price and yield. Although the Fund will
generally enter into forward commitments with the intention of acquiring
securities for its portfolio, the Fund may dispose of a commitment prior to the
settlement if the Adviser deems it appropriate to do so.
OPTIONS TRANSACTIONS
The Fund may write (sell) covered call options on individual
securities and on stock indices and engage in related closing transactions. A
covered call option on a security is an agreement to sell a particular portfolio
security if the option is exercised at a specified price, or before a set date.
An option on a stock index gives the option holder the right to receive, upon
exercising the option, a cash settlement amount based on the difference between
the exercise price and the value of the underlying stock index. Risks associated
with writing covered options include the possible inability to effect closing
transactions at favorable prices and an appreciation limit on the securities set
aside for settlement. There is no assurance of liquidity in the secondary market
for purposes of closing out covered call option positions.
The Fund may purchase put and call options on individual
securities and on stock indices for the purpose of hedging against the risk of
unfavorable price movements adversely affecting the value of the Fund's
securities or securities the Fund intends to buy. The Fund may also sell put and
call options in closing transactions.
GENERAL
The Fund may engage in short sales if, at the time of the
short sale, the Fund owns or has the right to
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<PAGE> 21
obtain an equal amount of the security being sold short at no additional cost.
The Fund may also borrow money for liquidity purposes in an amount not exceeding
5% of the Fund's total assets at the time the borrowing is made. Assets of the
Fund may be pledged in connection with borrowings. See "Investment Limitations"
in the Statement of Additional Information.
GENERAL INFORMATION
FUNDAMENTAL POLICIES
The investment limitations set forth in the Statement of Additional
Information as fundamental policies may not be changed without the affirmative
vote of the majority of the outstanding shares of the Fund. The investment
objective of the Fund may be changed without the affirmative vote of a majority
of the outstanding shares of the Fund.
PORTFOLIO TURNOVER
The Fund does not intend to purchase or sell securities for short term
trading purposes. The Fund will, however, sell any portfolio security (without
regard to the length of time it has been held) when the Adviser believes that
market conditions, creditworthiness factors or general economic conditions
warrant such action. It is anticipated that the Fund will have a portfolio
turnover rate of less than 100%.
SHAREHOLDER RIGHTS
Any Trustee of the Trust may be removed by vote of the shareholders
holding not less than two-thirds of the outstanding shares of the Trust. The
Trust does not hold an annual meeting of shareholders. When matters are
submitted to shareholders for a vote, each shareholder is entitled to one vote
for each whole share he owns and fractional votes for fractional shares he owns.
All shares of the Fund have equal voting rights and liquidation rights.
The beneficial ownership, either directly or indirectly, of more than
25% of the voting securities of the Fund creates a presumption of control of
the Fund under Section 2(a)(9) of the Investment Company Act of 1940. As of
January 2, 1998, the Oakmont Trust, which is controlled by officers and/or
employees of the Adviser, owned in aggregate more than 25% of the shares of the
Realty Fund.
INVESTMENT PERFORMANCE
The Fund may periodically advertise "average annual total
return." The "total return" of the Fund refers to the dividends and
distributions generated by an investment in the Fund plus the change in the
value of the investment from the beginning of the period to the end of the
period. The "average annual total return" of the Fund refers to the rate of
total return for each year of the period which would be equivalent to the
cumulative total return for the period. All dividends and distributions earned
on the investment are assumed to be reinvested.
The Fund may also periodically advertise its total return and
cumulative total return over various periods in addition to the value of a
$10,000 investment (made on the date of the initial public offering of the
Fund's shares) as of the end of a specified period. The "total return" and
"cumulative total return" for the Fund are calculated as indicated above for
"total return."
The Fund may periodically advertise its yield for a
thirty-day or one month period. The "yield" of the Fund refers to the income
generated by an investment in the Fund over the period, calculated on a per
share basis (using the net asset value per share on the last day of the period
and the average number of shares outstanding during the period). The Fund's
yield quotation will always be accompanied by the Fund's average annual total
return information described above.
The Fund may also include in advertisements data comparing
performance with other mutual funds as reported in non-related investment media,
published editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Morningstar or Lipper Analytical Services). Performance information may
be quoted numerically or may be presented in a table, graph or other
illustration. In addition, Fund performance may be compared to well-known
indices of market performance including the Standard & Poor's (S&P) 500 Index,
S&P MidCap 400 Index, S&P/BARRA Growth and Value Indices, the Dow Jones
Industrial Average, the NAREIT Index, the Wilshire REIT Index, or the Lehman
Brothers Indices. The Trust's annual report contains additional performance
information that is available upon request and without charge, by writing or
calling the Trust.
13
<PAGE> 22
The advertised performance data of the Fund is based on
historical performance and is not intended to indicate future performance.
Yields and rates of total return quoted by the Fund may be higher or lower than
past quotations, and there can be no assurance that any yield rate of total
return will be maintained. The principal value of an investment in each Fund
will fluctuate so that a shareholder's shares, when sold, may be worth more or
less than the shareholder's original investment.
INVESTMENT ADVISER TRANSFER AGENT
Johnson Investment Counsel, Inc. Johnson Financial, Inc.
5556 Cheviot Road 5556 Cheviot Road
Cincinnati, Ohio 45247 Cincinnati, Ohio 45247
AUDITORS CUSTODIAN
McCurdy & Associates CPA's, Inc. The Provident Bank
27955 Clemens Road Three East Fourth Street
Westlake, Ohio 44145 Cincinnati, Ohio 45202
No person has been authorized to give any information or to
make any representations, other than those contained in this Prospectus, in
connection with the sale of the Fund. Representations other than those contained
in this Prospectus must not be relied upon as being authorized by the Fund. This
Prospectus does not constitute an offer by the Fund to sell its shares in any
state to any person to whom it is unlawful to make such offer in such state.
14
<PAGE> 23
JOHNSON MUTUAL FUNDS TRUST
THE JOHNSON REALTY FUND
STATEMENT OF ADDITIONAL INFORMATION
JANUARY 2, 1998
This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the Prospectus of Johnson Mutual Funds dated January 2,
1998. A copy of the Prospectus can be obtained by writing the Trust at 5556
Cheviot Road, Cincinnati, Ohio 45247, or by calling the Trust at (513) 385-4001.
<PAGE> 24
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
Johnson Mutual Funds Trust
5556 Cheviot Road
Cincinnati, Ohio 45247
TABLE OF CONTENTS
-----------------
PAGE
----
DESCRIPTION OF THE TRUST.............................................. 3
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS......................... 3
INVESTMENT LIMITATIONS................................................ 6
TRUSTEES AND OFFICERS...................................................8
THE INVESTMENT ADVISER................................................. 9
PORTFOLIO TRANSACTIONS AND BROKERAGE................................... 9
DETERMINATION OF SHARE PRICE.......................................... 10
INVESTMENT PERFORMANCE................................................ 10
CUSTODIAN ............................................................ 11
TRANSFER AGENT........................................................ 11
ACCOUNTANTS........................................................... 11
FINANCIAL STATEMENTS.................................................. 13
2
<PAGE> 25
DESCRIPTION OF THE TRUST
Johnson Mutual Funds Trust (the "Trust"), formerly Johnson Investment
Mutual Funds Trust, is an open-end investment company established under the laws
of Ohio by an Agreement and Declaration of Trust dated September 30, 1992 (the
"Trust Agreement"). The Trust Agreement permits the Trustees to issue an
unlimited number of shares of beneficial interest of separate series without par
value. Shares of five series have been authorized, which shares constitute the
interests in the Johnson Growth Fund, the Johnson Opportunity Fund, the Johnson
Fixed Income Fund, the Johnson Municipal Income Fund, and the Johnson Realty
Fund.
Each share of a series represents an equal proportionate interest in
the assets and liabilities belonging to that series with each other share of
that series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the officers of the Trust, subject to
the review and approval of the Board of Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
any series into a greater or lesser number of shares of that series so long as
the proportionate beneficial interest in the assets belonging to that series and
the rights of shares of any other series are in no way affected. In case of any
liquidation of a series, the holders of shares of the series being liquidated
will be entitled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to that series. Expenses attributable to any series
are borne by that series. Any general expenses of the Trust not readily
identifiable as belonging to a particular series are allocated by Officers of
the Trust, or the Trustees in such manner as the Trustees determine to be fair
and equitable. No shareholder is liable to further calls or to assessment by the
Trust without his express consent.
Upon sixty days prior written notice to shareholders, a Fund may make
redemption payments in whole or in part in securities or other property if the
Trustees determine that existing conditions make cash payments undesirable. For
other information concerning the purchase and redemption of shares of the Funds,
see "How to Buy, Sell, or Exchange Shares in Each Fund," "How to Buy Shares,"
"How to Sell Shares" and "How to Exchange Shares" in the Prospectus. For a
description of the methods used to determine the share price and value of each
Fund's assets, see "Share Price Calculation" in the Prospectus.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS
This section contains a more detailed discussion of some of the
investments the Fund may make and some of the techniques it may use, as
described in the Prospectus (see "Investment Objectives and Strategies" and
"Investment Policies and Techniques").
A. CORPORATE DEBT SECURITIES. Corporate debt securities are
bonds or notes issued by corporations and other business organizations,
including business trusts, in order to finance their credit needs.
Corporate debt securities include commercial paper which consists of
short term (usually from one to two hundred seventy days) unsecured
promissory notes issued by corporations in order to finance their
current operations.
B. REAL ESTATE RELATED EQUITY SECURITIES. For the purpose of
determining whether the Fund has at least 65% of its total assets
invested in the real estate industry, the Fund will include a maximum
of 5% of its assets invested in securities of companies considered to
be real estate related solely because the companies have substantial
real estate holdings as part of their operations (and not as
investments).
C. ZERO COUPON AND PAY IN KIND BONDS. Corporate debt
securities and municipal obligations include so-called "zero coupon"
bonds and "pay-in-kind" bonds. Zero coupon bonds are issued at a
significant discount from their principal amount in lieu of paying
interest periodically. Pay-in-kind bonds allow the issuer, at its
option, to make current interest payments on the bonds either in cash
or in additional bonds. The value of zero coupon bonds and pay-in-kind
bonds is subject to greater fluctuation in response to changes in
market interest rates than
3
<PAGE> 26
bonds which make regular payments of interest. Both of these types of
bonds allow an issuer to avoid the need to generate cash to meet current
interest payments. Accordingly, such bonds may involve greater credit
risks than bonds that make regular payment of interest. Even though zero
coupon bonds and pay-in-kind bonds do not pay current interest in cash,
the Fund is required to accrue interest income on such investments and
to distribute such amounts at least annually to shareholders. Thus, the
Fund could be required at times to liquidate other investments in order
to satisfy its dividend requirements. The Fund will not invest more than
5% of its net assets in pay-in-kind bonds.
D. FINANCIAL SERVICE INDUSTRY OBLIGATIONS. Financial service
industry obligations include among others, the following:
(1) CERTIFICATES OF DEPOSIT. Certificates of deposit
are negotiable certificates evidencing the indebtedness of a commercial
bank or a savings and loan association to repay funds deposited with it
for a definite period of time (usually from fourteen days to one year)
at a stated or variable interest rate.
(2) TIME DEPOSITS. Time deposits are non-negotiable
deposits maintained in a banking institution or a savings and loan
association for a specified period of time at a stated interest rate.
Time Deposits are considered to be illiquid prior to their maturity.
(3) BANKERS' ACCEPTANCES. Bankers' acceptances are
credit instruments evidencing the obligation of a bank to pay a draft
which has been drawn on it by a customer, which instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of
the instrument upon maturity.
E. ASSET-BACKED AND RECEIVABLE-BACKED SECURITIES. Asset-backed
and receivable-backed securities are undivided fractional interests in
pools of consumer loans (unrelated to mortgage loans) held in a trust.
Payments of principal and interest are passed through to certificate
holders and are typically supported by some form of credit enhancement,
such as a letter of credit, surety bond, limited guaranty, or
senior/subordination. The degree of credit enhancement varies, but
generally amounts to only a fraction of the asset-backed or
receivable-backed security's par value until exhausted. If the credit
enhancement is exhausted, certificateholders may experience losses or
delays in payment if the required payments of principal and interest
are not made to the trust with respect to the underlying loans. The
value of these securities also may change because of changes in the
market's perception of the creditworthiness of the servicing agent for
the loan pool, the originator of the loans or the financial institution
providing the credit enhancement. Asset-backed and receivable-backed
securities are ultimately dependent upon payment of consumer loans by
individuals, and the certificateholder generally has no recourse
against the entity that originated the loans. The underlying loans are
subject to prepayments that shorten the securities' weighted average
life and may lower their return. As prepayments flow through at par,
total returns would be affected by the prepayments: if a security were
trading at a premium, its total return would be lowered by prepayments,
and if a security were trading at a discount, its total return would be
increased by prepayments. The Fund will not invest more than 5% of its
net assets in asset-backed or receivable-backed securities.
F. FORWARD COMMITMENTS AND REVERSE REPURCHASE AGREEMENTS. The
Fund will direct its Custodian to place cash or U.S. government
obligations in a separate account of the Trust in an amount equal to
the commitments of the Fund to purchase or repurchase securities as a
result of its forward commitment or reverse repurchase agreement
obligations. With respect to forward commitments to sell securities,
the Trust will direct its Custodian to place the securities in a
separate account. When a separate account is maintained in connection
with forward commitment transactions to purchase securities or reverse
repurchase agreements, the securities deposited in the separate account
will be valued daily at market for the purpose of determining the
adequacy of the securities in the account. If the market value of such
securities declines, additional cash or securities will be placed in
the account on a daily basis so that the market value of the account
will equal the amount of the Fund's commitments to purchase or
repurchase securities. To the extent funds are in a separate account,
they will not be available for new investment or to meet redemptions.
Reverse repurchase agreements constitute a borrowing by the Fund and
will not represent more than 5% of the net assets of the Fund. The Fund
will not invest more than 25% of its total assets in forward
commitments.
Securities purchased on a forward commitment basis,
securities subject to reverse repurchase agreements and the securities
held in the Fund's portfolio are subject to changes in market value
based upon the public's perception of the creditworthiness of the
issuer and changes in the level of interest rates (which will generally
result in all of those securities changing in value in the same way,
i.e., all those securities experiencing
4
<PAGE> 27
appreciation when interest rates decline and depreciation when interest
rates rise). Therefore, if in order to achieve a higher level of income,
the Fund remains substantially fully invested at the same time that it
has purchased securities on a forward commitment basis or entered into
reverse repurchase transactions, there will be a possibility that the
market value of the Fund's assets will have greater fluctuation.
With respect to 75% of the total assets of the Fund,
the value of the Fund's commitments to purchase or repurchase the
securities of any one issuer, together with the value of all securities
of such issuer owned by the Fund, may not exceed 5% of the value of the
Fund's total assets at the time the commitment to purchase or
repurchase such securities is made; provided, however, that this
restriction does not apply to U.S. government obligations or repurchase
agreements with respect thereto. In addition, the Fund will maintain an
asset coverage of 300% for all of its borrowings and reverse repurchase
agreements. Subject to the foregoing restrictions, there is no limit on
the percentage of the Fund's total assets that may be committed to such
purchases or repurchases.
G. RESTRICTED SECURITIES. Restricted securities are securities
the resale of which is subject to legal or contractual restrictions.
Restricted securities may be sold only in privately negotiated
transactions, in a public offering with respect to which a registration
statement is in effect under the Securities Act of 1933 or pursuant to
Rule 144 or Rule 144A promulgated under such Act. Where registration is
required, the Fund may be obligated to pay all or part of the
registration expense, and a considerable period may elapse between the
time of the decision to sell and the time such security may be sold
under an effective registration statement. If during such a period
adverse market conditions were to develop, the Fund might obtain a less
favorable price than the price it could have obtained when it decided
to sell. The Fund will not invest more than 5% of its net assets in
restricted securities.
H. OPTION TRANSACTIONS. The Fund may engage in option
transactions involving individual securities and market indexes. An
option involves either (a) the right or the obligation to buy or sell a
specific instrument at a specific price until the expiration date of
the option, or (b) the right to receive payments or the obligation to
make payments representing the difference between the closing price of
a market index and the exercise price of the option expressed in
dollars times a specified multiple until the expiration date of the
option. Options are sold (written) on securities and market indexes.
The purchaser of an option on a security pays the seller (the writer) a
premium for the right granted but is not obligated to buy or sell the
underlying security. The purchaser of an option on a market index pays
the seller a premium for the right granted, and in return the seller of
such an option is obligated to make the payment. A writer of an option
may terminate the obligation prior to expiration of the option by
making an offsetting purchase of an identical option. Options are
traded on organized exchanges and in the over-the-counter market.
Options on securities that the Fund sells (writes) will be covered or
secured, which means that it will own the underlying security in the
case of a call option. When the Fund writes options, it may be required
to maintain a margin account, to pledge the underlying securities or
U.S. government obligations or to deposit assets in escrow with the
Custodian.
The purchase and writing of options involves certain risks.
The purchase of options limits the Fund's potential loss to the amount
of the premium paid and can afford the Fund the opportunity to profit
from favorable movements in the price of an underlying security to a
greater extent than if transactions were effected in the security
directly. However, the purchase of an option could result in the Fund
losing a greater percentage of its investment than if the transaction
were effected directly. When the Fund writes a covered call option, it
will receive a premium, but it will give up the opportunity to profit
from a price increase in the underlying security above the exercise
price as long as its obligation as a writer continues, and it will
retain the risk of loss should the price of the security decline. In
addition, there can be no assurance that the Fund can effect a closing
transaction on a particular option it has written.
I. LOANS OF PORTFOLIO SECURITIES. The Fund may make short and
long term loans of its folio securities. Under the lending policy
authorized by the Board of Trustees and implemented by the Adviser in
response to requests of broker-dealers or institutional investors which
the Adviser deems qualified, the borrower must agree to maintain
collateral, in the form of cash or U.S. government obligations, with
the Fund on a daily mark-to-market basis in an amount at least equal to
100% of the value of the loaned securities. The Fund will continue to
receive dividends or interest on the loaned securities and may
terminate such loans at any time or reacquire such securities in time
to vote on any matter that the Board of Trustees determines to be
serious. With respect to loans of securities, there is the risk that
the borrower may fail to return the loaned securities or that the
borrower may not be able to provide additional collateral. No loan of
securities will be made if, as a result, the aggregate amount of such
loans would exceed 5% of the value of the Fund's net assets.
5
<PAGE> 28
INVESTMENT LIMITATIONS
FUNDAMENTAL. The investment limitations described below have been
adopted by the Trust with respect to the Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of the Fund. As used in the Prospectus and
this Statement of Additional Information, the term "majority" of the outstanding
shares of the Trust (or of any series) means the lesser of (1) 67% or more of
the outstanding shares of the Trust (or the applicable series) present at a
meeting, if the holders of more than 50% of the outstanding shares of the Trust
(or applicable series) are present or represented at such meeting; or (2) more
than 50% of the outstanding shares of the Trust (or the applicable series).
Other investment practices which may be changed by the Board of Trustees without
the approval of shareholders to the extent permitted by applicable law,
regulation or regulatory policy are considered non-fundamental
("Non-Fundamental").
1. BORROWING MONEY. The Fund will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. SENIOR SECURITIES. The Fund will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is (a) consistent with or permitted by the
Investment Company Act of 1940, as amended, the rules and regulations
promulgated thereunder or interpretations of the Securities and Exchange
Commission or its staff and (b) as described in the Prospectus and Statement of
Additional Information.
3. UNDERWRITING. The Fund will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the extent that,
in connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. REAL ESTATE. The Fund will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities that are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts
(REITs)).
5. COMMODITIES. The Fund will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts or from investing in securities or other instruments backed by
commodities.
6. LOANS. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing non-publicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. CONCENTRATION. The Fund will not invest 25% or more of its total
assets in any particular industry other than the real estate industry. This
limitation is not applicable to investments in obligations issued or guaranteed
by the U.S. government, its agencies and instrumentalities or repurchase
agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Trust,
provided that if such merger, consolidation or acquisition results in an
investment in the securities of any issuer prohibited by said paragraphs, the
Trust shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
6
<PAGE> 29
NON-FUNDAMENTAL. The following limitations have been adopted by the
Trust with respect to the Fund and are Non-Fundamental.
i. PLEDGING. The Funds will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
ii. BORROWING. The Fund will not purchase any security while borrowings
(including reverse repurchase agreements) representing more than 5% of its total
assets are outstanding.
iii. MARGIN PURCHASES. The Fund will not purchase securities or
evidences of interest thereon on "margin." This limitation is not applicable to
short term credit obtained by the Fund for the clearance of purchases and sales
or redemption of securities, or to arrangements with respect to transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.
iv. SHORT SALES. The Fund will not effect short sales of securities
unless it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short.
v. OPTIONS. The Fund will not purchase or sell futures, puts, calls,
options or straddles.
vi. ILLIQUID INVESTMENTS. The Fund will not invest more than 5% of its
net assets in securities for which there are legal or contractual restrictions
on resale and other illiquid securities.
7
<PAGE> 30
TRUSTEES AND OFFICERS
The Trustees and executive officers of the Trust and their principal
occupations during the last five years are set forth below. Each Trustee who is
an "interested person" of the Trust, as defined in the Investment Company Act of
1940, is indicated by an asterisk.
<TABLE>
<CAPTION>
NAME (AGE) POSITIONS HELD PRINCIPAL OCCUPATIONS
- ---- ----- -------------- ---------------------
<S> <C> <C>
Timothy E. Johnson (55)* President and Trustee President and a Director of Johnson Investment
5556 Cheviot Road Counsel, Inc., the Trust's Adviser and
Cincinnati, Ohio 45247 Professor of Finance at the University of
Cincinnati. President and Director of Johnson
Financial, Inc. (a)
John W. Craig (63) Trustee Retired director of Corporate Affairs at
5813 Twin Oak Drive R.A. Jones & Co., Inc. a manufacturing and
Cincinnati, Ohio 45224 packaging company, and the Chairman and Chief
Executive Officer of CP&I, Inc.
Ronald H. McSwain (55) Trustee President of McSwain Carpets, Inc. and a
765 Hedgerow Lane partner of P&R Realty, a real estate
Cincinnati, Ohio 45246 development partnership.
Kenneth S. Shull (68) Trustee Retired plant engineer at The Procter &
2145 Bluebell Drive Gamble Company.
Cincinnati, Ohio 45224
Dale H. Coates (39) Vice President Portfolio Manager of the Trust's Adviser.
5556 Cheviot Road
Cincinnati, Ohio 45247
Richard T. Miller (51) Vice President Portfolio Manager of the Trust's Adviser.
5556 Cheviot Road
Cincinnati, Ohio 45247
Dianna J. Rosenberger (33) Chief Financial Officer Portfolio Manager of the Trust's Adviser.
5556 Cheviot Road and Treasurer Chief Operating Officer of Johnson Financial,
Cincinnati, Ohio 45247 Inc. (a)
David C. Tedford (44) Secretary Office Administrator of the Trust's Adviser.
5556 Cheviot Road
Cincinnati, Ohio 45247
<FN>
- -----------------------------
(a) Johnson Financial, Inc. is a wholly owned subsidiary of Johnson
Investment Counsel, Inc., the Adviser.
</TABLE>
The compensation paid to the Trustees of the Trust for the year ended December
31,1996 is set forth in the following table:
<TABLE>
<CAPTION>
Total Compensation from Trust
(the Trust is not in a Fund Complex) (1)
----------------------------------------
<S> <C>
Timothy E. Johnson $0
John W. Craig $3,000
Ronald H. McSwain $3,000
Kenneth S. Shull; $3,000
<FN>
- -----------------------------
(1) Trustee fees are Trust expenses. However, because the management agreement
obligates the Adviser to pay all of the operating expenses of the Trust
(with limited exceptions), the Adviser makes the actual payment.
</TABLE>
As of January 2, 1998, the Oakmont Trust, an entity that is affiliated
with the Adviser, owned all of the outstanding shares of the Johnson Realty
Fund. The Trust's address is 5556 Cheviot Road, Cincinnati, Ohio, 45247.
8
<PAGE> 31
THE INVESTMENT ADVISER
The Fund's investment adviser is Johnson Investment Counsel, Inc.,
5556 Cheviot Road, Cincinnati, Ohio 45247. Timothy E. Johnson may be deemed to
be a controlling person and an affiliate of the Adviser due to his ownership of
its shares and his position as the President and a director of the Adviser. Mr.
Johnson, because of such affiliation, may receive benefits from the management
fees paid to the Adviser.
Under the terms of the Management Agreement, the Adviser manages the
Fund's investments subject to approval of the Board of Trustees and pays all of
the expenses of the Fund except brokerage, taxes, interest and extraordinary
expenses. As compensation for its management services and agreement to pay the
Fund's expenses, the Fund is obligated to pay the Adviser a fee computed and
accrued daily and paid monthly at an annual rate of 1.30% of the average daily
net assets of the Realty Fund. However, the Adviser has committed to limit its
fee to 0.95% of such assets for the Realty Fund. The Adviser intends that these
fee limitations will be permanent, although the Adviser reserves the right to
remove them at any time after December 31, 1998.
The Adviser retains the right to use the name "Johnson" in connection
with another investment company or business enterprise with which the Adviser is
or may become associated. The Trust's right to use the name "Johnson"
automatically ceases thirty days after termination of the Management Agreement
and may be withdrawn by the Adviser on thirty days written notice.
The Adviser may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Fund believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Fund believes that there would be no material impact on the Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks that provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust,
the Adviser is responsible for the Fund's portfolio decisions and the placing
of the Fund's portfolio transactions. In placing portfolio transactions, the
Adviser seeks the best qualitative execution for the Fund, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Adviser generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received.
The Adviser is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Trust and/or the other
accounts over which the Adviser exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Adviser determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Adviser's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and
economic analyses, statistical services and information with respect to the
availability of securities or purchasers or sellers of securities and analyses
of reports concerning performance of accounts. The research services and other
information furnished by brokers through whom the Trust effects securities
transactions may also be used by the Adviser in servicing all of its accounts.
Similarly, research and information provided by brokers or dealers serving other
clients may be useful to the Adviser in connection with its services to the
Fund. Although research services and other information are useful to the Fund
and the Adviser, it is not possible to place a dollar value on the research and
other information received. It is the opinion of the Board of Trustees and the
Adviser
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<PAGE> 32
that the review and study of the research and other information will not
reduce the overall cost to the Adviser of performing its duties to the Fund
under the Management Agreement.
Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to market makers may include the spread between the bid and
asked prices.
To the extent that the Fund and another of the Adviser's clients seek
to acquire the same security at about the same time, the Fund may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Fund may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. On the other hand, if the same securities
are bought or sold at the same time by more than one client, the resulting
participation in volume transactions could produce better executions for the
Fund. In the event that more than one client wants to purchase or sell the same
security on a given date, the purchases and sales will normally be allocated
using the following rules: (1) All client accounts would have their entire order
filled or receive no shares at all, unless the account's purchase would exceed
$50,000. In that case, filling part of the order for that account would be
acceptable. (2) The orders would be filled beginning with the account least
invested in that security type, relative to its goal, and proceed through the
list with the last order filled for the account most invested in that security
type, relative to its goal. Based on rule 1, some accounts may be skipped to
meet the exact number of shares purchased. For the sale of a security, the
orders would be filled beginning with the most fully invested account moving to
the least fully invested.
DETERMINATION OF SHARE PRICE
The prices (net asset values) of the shares of the Fund are determined
as of the close of trading of the New York Stock Exchange (4:00 P.M., Eastern
time) on each day the Trust is open for business and on any other day on which
there is sufficient trading in the Fund's securities to materially affect the
net asset value. The Trust is open for business on every day except Saturdays,
Sundays and the following holidays: New Year's Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas.
For a description of the methods used to determine the net asset value (share
price), see "Share Price Calculation" in the Prospectus.
INVESTMENT PERFORMANCE
"Average annual total return," as defined by the Securities and
Exchange Commission, is computed by finding the average annual compounded rates
of return (over the one and five year periods and the period from initial public
offering through the end of a Fund's most recent fiscal year) that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:
P(1+T)to the nth power=ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the
applicable period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered
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<PAGE> 33
to be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the real estate securities market in general.
The Fund will use the NAREIT Index and the Wilshire REIT Index. The NAREIT Index
measures the price, income and total return of all publicly traded REITs,
including mortgage-backed REITs and equity REITs. The Wilshire REIT Index
includes all publicly traded REITs with capitalizations above $100 million.
In addition, the performance of the Fund may be compared to other
groups of mutual funds tracked by any widely used independent research firm
which ranks mutual funds by overall performance, investment objectives and
assets, such as Lipper Analytical Services, Inc. or Morningstar, Inc. The
objectives, policies, limitations and expenses of other mutual funds in a group
may not be the same as those of the Fund. Performance rankings and ratings
reported periodically in national financial publications such as Barron's may
also be used.
CUSTODIAN
The Provident Bank, One East Fourth Street, Cincinnati, Ohio, is the
current custodian of the Fund's investments. The Custodian acts as the Fund's
depository, holds its portfolio securities in safekeeping, collects all income
and other payments with respect thereto, disburses funds at the Fund's request
and maintains records in connection with its duties.
TRANSFER AGENT
Johnson Financial, Inc., 5556 Cheviot Road, Cincinnati, Ohio, acts as
the Fund's transfer agent and, in such capacity, maintains the records of each
shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of the Fund's shares, acts as
dividend and distribution disbursing agent and performs other accounting and
shareholder service functions. Johnson Financial is affiliated with Johnson
Investment Counsel, Inc., the Fund's Adviser. The Adviser pays Johnson
Financial, Inc. $6,000 per month according to a flat fee schedule for services
rendered.
ACCOUNTANTS
The firm of McCurdy & Associates CPA's, Inc. of Westlake, Ohio, has
been selected as independent public accountants for the Trust for the fiscal
year ending December 31, 1998.
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<PAGE> 34
POST-EFFECTIVE AMENDMENT CERTIFICATION OF EFFECTIVENESS
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant duly caused this Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Cincinnati, State of Ohio, on the 13th day of October, 1997
JOHNSON MUTUAL FUNDS TRUST
By: /s/ Timothy E. Johnson
---------------------------------
TIMOTHY E. JOHNSON
President
By: /s/ Dianna J. Rosenberger
---------------------------------
DIANNA J. ROSENBERGER
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
RONALD H. McSWAIN TRUSTEE )
) By: /s/ Timothy E. Johnson
) ----------------------------
) TIMOTHY E. JOHNSON
) Attorney-In-Fact
)
KENNETH S. SHULL TRUSTEE ) October 13, 1997
)
)
)
JOHN W. CRAIG TRUSTEE )
/s/ Timothy E. Johnson
- --------------------------
TIMOTHY E JOHNSON
Trustee and President
/s/ Dianna J. Rosenberger
- ---------------------------
DIANNA J. ROSENBERGER
Treasurer and Chief Financial
Officer
<PAGE> 35
POST-EFFECTIVE AMENDMENT NUMBER _8
EXHIBIT INDEX
-------------
1. Proposed Management Agreement
2. Opinion of Brown, Cummins & Brown Co., L.P.A
<PAGE> 36
MANAGEMENT AGREEMENT
TO: Johnson Investment Counsel, Inc.
5556 Cheviot Road
Cincinnati, Ohio 45247
Dear Sir:
Johnson Mutual Funds Trust (hereinafter referred to as the
"Trust") herewith confirms our agreement with you.
The Trust has been organized to engage in the business of an
investment company. The Trust currently offers four series of shares to
investors: the Johnson Growth Fund,the Fixed Income Fund, the Johnson
Opportunity Fund and the Johnson Municipal Income Fund.
The Trust has previously entered into a management agreement (the
"Original Agreement") dated December 18, 1992, with you on behalf of the Johnson
Growth Fund and the Johnson Fixed Income Fund. The Trust has previously entered
into a management agreement dated February 15, 1994, with you on behalf of the
Johnson Opportunity Fund and the Johnson Municipal Income Fund. The Trust is
organizing a new series, the Johnson Realty Fund (the "Fund").
You have been selected to act as the sole investment adviser to
the Fund and to provide certain other services to the Fund, as more fully set
forth below, and you are willing to act as such investment adviser and to
perform such services under the terms and conditions hereinafter set forth. The
Original Agreement provides that your compensation with respect to series
established after December 18, 1992, may be determined pursuant to a different
fee than in the Original Agreement. The Board has determined, in the exercise of
its fiduciary duty, that it is in the best interests of the shareholders of the
Trust to enter into a separate management agreement, including a different fee
arrangement, with you on behalf of the Fund. Accordingly, the Trust agrees with
you, as follows, upon the date of the execution of this Agreement.
1. ADVISORY SERVICES
-----------------
You will regularly provide the Fund with such investment
advice as you, in your discretion, deem advisable, and will furnish a continuous
investment program for the Fund consistent with the respective series'
investment objectives and policies. You will determine the securities to be
purchased for the Fund, the portfolio securities to be held or sold by the
Fund, and the portion of the Fund's assets to be held uninvested, subject
always to the series' investment objectives, policies, and restrictions, as
each of the same shall be from time to time in effect, and subject further to
such policies and instructions as the Board may from time to time establish.
You will advise and assist the officers of the Trust in taking such steps
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<PAGE> 37
as are necessary or appropriate to carry out the decisions of the Board and the
appropriate committees of the Board regarding the conduct of the business of the
Fund.
2. ALLOCATION OF CHARGES AND EXPENSES
----------------------------------
You will pay all operating expenses of the Fund, including the
compensation and expenses of any trustees, officers, and employees of the Trust
and of any other persons rendering any services to the Fund; clerical and
shareholder service staff salaries; office space and other office expenses; fees
and expenses incurred by the Fund in connection with membership in investment
company organizations; legal, auditing and account expenses; non-organizational
expenses of registering shares under federal and state securities laws;
insurance expenses; fees and expenses of the custodian, transfer agent, dividend
disbursing agent, shareholder service agent, plan agent, administrator,
accounting and pricing services agent and underwriter of the Fund; expenses,
including clerical expenses, of issue, sale, redemption or repurchase of shares
of the Funds; the cost of preparing and distributing reports and notices to
shareholders, the cost of printing or preparing prospectuses and statements of
additional information for delivery to the Fund current and prospective
shareholders; the cost of printing or preparing stock certificates or any other
documents, statements or reports to shareholders; expenses of shareholders'
meetings and proxy solicitations; advertising, promotion and other expenses
incurred directly or indirectly in connection with the sale or distribution of
the Fund shares; and all other operating expenses not specifically assumed by
the Fund.
The Fund will pay all brokerage fees and commissions, taxes,
interest, and their share of such extraordinary or non-recurring expenses as may
arise, including litigation to which the Trust may be a party and
indemnification of the Trust's trustees and officers with respect thereto. You
may obtain reimbursement from the Fund, at such time or times as you may
determine in your sole discretion, for any of the expenses advanced by you,
which the Fund is obligated to pay, and such reimbursement shall not be
considered to be part of your compensation pursuant to this Agreement.
3. COMPENSATION OF THE ADVISER
---------------------------
For all of the services to be rendered and payments to be made
as provided in this Agreement, as of the last day of each month, the Johnson
Realty Fund will pay you a fee at the annual rate of 1.30% of the average value
of its daily net assets.
The average value of the daily net assets of the Fund shall be
determined pursuant to the applicable provisions of the Declaration of Trust of
the Trust or a resolution of the Board, if required. If, pursuant to such
provisions, the determination of net asset value of the Fund is suspended for
any particular business day, then for the purposes of this paragraph, the value
of the net assets of the Fund as last determined shall be deemed to be the value
of the net assets may lawfully be determined, on that day. If the determination
of the net asset value of the Fund has been suspended for a period including
such month, your compensation payable
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<PAGE> 38
at the end of such month shall be computed on the basis of the value of the net
assets of the series as last determined (whether during or prior to such month).
4. EXECUTION OF PURCHASE AND SALE ORDERS
-------------------------------------
In connection with purchases or sales of portfolio securities
for the account of the Fund, it is understood that you will arrange for the
placing of all orders for the purchase and sale of portfolio securities for the
account with brokers or dealers selected by you, subject to review of this
selection by the Board from time to time. You will be responsible for the
negotiation and the allocation of principal business and portfolio brokerage. In
the selection of such brokers or dealers and the placing of such orders, you are
directed at all times to seek for the series the best qualitative execution,
taking into account such factors as price (including the applicable brokerage
commission or dealer spread), the execution capability, financial
responsibility, and responsiveness of the broker or dealer and the brokerage and
research services provided by the broker or dealer.
You should generally seek favorable prices and commission
rates that are reasonable in relation to the benefits received. In seeking best
qualitative execution, you are authorized to select brokers or dealers who also
provide brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) the Trust and/or the other
accounts over which you exercise investment discretion. You are authorized to
pay a broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Fund which is in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction if you determine in good faith that the amount of the
commission is reasonable in relation to the value of the brokerage and research
services provided by the executing broker or dealer. The determination may be
viewed in terms of either a particular transaction or your overall
responsibilities with respect to the Trust and to accounts over which you
exercise investment discretion. The Trust and you understand and acknowledge
that, although the information may be useful to the Fund and you, it is not
possible to place a dollar value on such information. The Board shall
periodically review the commissions paid by the Fund to determine if the
commissions paid over representative periods of time were reasonable in relation
to the benefits to the Fund.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. and subjective to seeking best
qualitative execution as described above, you may give consideration to sales of
shares of the Trust as a factor in the selection of brokers and dealers to
execute the Trust portfolio transactions.
Subject to the provisions of the Investment Company Act of
1940, as amended, and other applicable law, you or any of your affiliates may
retain compensation in connection with effecting the Fund portfolio
transactions, including transactions effected through others. If any occasion
should arise in which you give any advice to clients of yours concerning the
shares of the Fund, you will act solely as investment counsel for such client
and
3
<PAGE> 39
not in any way on behalf of the Fund. Your services to the Fund pursuant to this
Agreement are not to be deemed to be exclusive and it is understood that you may
render investment advice, management and other services to others, including
other registered investment companies.
5. LIMITATION OF LIABILITY OF ADVISER
----------------------------------
You may rely on information reasonably believed by you to be
accurate and reliable. Except as may otherwise be required by the Investment
Company Act of 1940 or the rules thereunder, neither you nor your shareholders,
officers, directors, employees, agents, control persons, or affiliates of any
thereof shall be subject to any liability for, or any damages, expenses or
losses incurred by the Trust in connection with, any error of judgment, mistake
of law, any act or omission connected with or arising out of any services
rendered under or payments made pursuant to this Agreement or any other matter
to which this agreement relates, except by reason of willful misfeasance, bad
faith, or gross negligence on the part of any such persons in the performance of
your duties under this Agreement or by reason of reckless disregard by any of
such persons of your obligations and duties under this Agreement.
Any person, even though also a director, officer, employee,
shareholder or agent of you, who may be or become an officer, director, trustee,
employee or agent of the Trust, shall be deemed, when rendering services to the
Trust or acting on any business of the Trust (other than services or business in
connection with your duties hereunder), to be rendering such services to or
acting solely for the Trust and not as a director, officer, employee,
shareholder or agent of you, or one under your control or direction, even though
paid by you.
6. DURATION AND TERMINATION OF THIS AGREEMENT
------------------------------------------
This Agreement shall take effect on the date of its execution
and shall remain in force for a period of two (2) years from the date of its
execution and from year to year thereafter, subject to annual approval by (i)
the Board or (ii) a vote of a majority (as defined in the Investment Company Act
of 1940) of the outstanding voting securities of the Fund, provided that in
either event, continuance is also approved by a majority of the trustees who are
not "interested persons" as defined in the Investment Company Act of 1940 of you
or the Trust, by vote cast in person at a meeting called for the purpose of
voting such approval.
If the shareholders of the Fund fail to approve the Agreement
in the manner set forth above, upon request of the Board, you will continue to
serve or act in such capacity for the Fund for the period of time pending
required approval of the Agreement, of a new agreement with you or a different
adviser or other definitive action; provided that the compensation to be paid by
the Fund to you for your services to and payments or the amount you would have
received under this Agreement for furnishing such services and payments.
4
<PAGE> 40
This Agreement may, on sixty (60) days written notice, be
terminated with respect to the Fund at any time without the payment of any
penalty by the Board, by a vote of a majority of the outstanding voting
securities of the Fund or by you. This Agreement shall automatically terminate
in the event of its assignment.
7. USE OF NAME
-----------
The Trust and you acknowledge that all rights to the name
"Johnson" belong to you and that the Fund is being granted a limited license to
use such words in the name of the Fund. In the event you cease to be the adviser
to the Fund, the Fund's right to the use of the name "Johnson" shall
automatically cease on the thirtieth day following the this Agreement. You may
also withdraw the right to the name during the term of this Agreement upon
thirty (30) days written notice by you to the Fund. Nothing contained herein
shall impair or diminish in any respect your right to use the name "Johnson" in
the name of or in connection with any other business enterprises with which you
are or may become associated. There is no charge to the Fund for the right to
use this name.
8. AMENDMENT OF THIS AGREEMENT
---------------------------
No provision of this Agreement may be changed, waived,
discharged or terminated orally, and no amendment of this Agreement shall be
effective until approved: a) by the Board, including a majority of the Trustees
who are not interested persons of you or of the Trust, cast in person at a
meeting called for the purpose of voting on such approval; and b) if any only if
required by the Investment Company Act of 1940, by vote of the holders of a
majority of the outstanding voting securities of the Fund to which the amendment
relates.
9. LIMITATION OF LIABILITY TO TRUST PROPERTY
-----------------------------------------
The term "Johnson Mutual Funds Trust" means and refers to the
Trustees from time to time serving under the Trust's Declaration of Trust as the
same may subsequently thereto have been, or subsequently hereto be, amended. It
is expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the trustees, shareholders, nominees, officers, agents, or
employees of the Trust, personally, but bind only the trust property of the
Trust, as provided in the Declaration of Trust of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees and shareholders
of the Fund and signed by officers of the Trust, acting as such, and neither
such authorization by such trustees and shareholders nor such execution and
delivery by such officers shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in its Declaration of
Trust. A copy of the Agreement of Declaration of Trust of the Trust is on file
with the Secretary of the State of Ohio.
5
<PAGE> 41
10. SEVERABILITY
------------
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
11. QUESTIONS OF INTERPRETATION
---------------------------
a. This agreement shall be governed by the laws of the State
of Ohio.
b. Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the Investment Company Act of 1940, as amended (the "Act") shall be
resolved by reference to such term or provision of the Act and to interpretation
thereof, if any, by the United States courts or in the absence of any
controlling decision of any such court, by rules, regulations or orders of the
Securities and Exchange Commission issued pursuant to said Act. In addition,
where the effect of a requirement of the Act, reflected in any provision of this
Agreement is revised by rule, regulation or order of the Securities and Exchange
Commission, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
12. NOTICES
-------
Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust
and your address for this purpose shall be 5556 Cheviot Road, Cincinnati, Ohio
45247.
13. COUNTERPARTS
------------
This Agreement may be in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
14. BINDING EFFECT
--------------
Each of the undersigned expressly warrants and represents that
he has the full power and authority to sign this Agreement on behalf of the
party indicated, and that his signature will operate to bind the party indicated
to the foregoing terms.
6
<PAGE> 42
15. CAPTIONS
--------
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
If you are in agreement with the foregoing, please sign the
form of acceptance on the accompanying counterpart of this letter and return
such counterpart to the trust, whereupon this letter shall become a binding
contract upon the date thereof.
Yours very truly,
ATTEST: JOHNSON MUTUAL FUNDS TRUST
By By
------------------------------- -----------------------------------
David C. Tedford, Secretary Timothy E. Johnson, President
Dated: October , 1997
--------------
ACCEPTANCE
----------
The foregoing Agreement is hereby accepted.
ATTEST: JOHNSON INVESTMENT COUNSEL, INC.
By
--------------------------------------
Timothy E. Johnson, President
Dated: October , 1997
----------------------
7
