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Johnson Mutual Funds Prospectus August 31, 2000
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JIC Institutional Bond Fund I
JIC Institutional Bond Fund II
JIC Institutional Bond Fund III
Johnson Mutual Funds Trust
3777 West Fork Road
Cincinnati, OH 45247
(513) 661-3100
(800) 541-0170
FAX (513) 661-4901
www.johnsoninv.com
Like all mutual fund shares and prospectuses, the Securities and Exchange
Commission has not approved or disapproved these shares or passed upon the
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
<PAGE>
TABLE OF CONTENTS
Investment Objective, Principal Risks and Fund Performance
Fund I...............................................................3
Fund II............................................................. 4
Fund III............................................................ 5
Other Information about Investments
General..............................................................6
Cost of Investing in the Fund........................................6
How to Buy, Sell or Exchange Shares in the Fund
How to Buy Shares....................................................7
How to Sell Shares...................................................8
How to Exchange Shares...............................................9
Share Price Calculation.......................................................9
Dividends and Distributions...................................................9
Taxes ....................................................................10
Management of the Funds......................................................10
Service Providers............................................................11
Other Sources of Information.................................................11
<PAGE>
JIC INSTITUTIONAL BOND FUND I
Investment Objective
The investment objective of the JIC Fund I is a high level of income over
the long term consistent with preservation of capital.
Principal Strategies
The Fund's strategy is to provide a diversified portfolio of investment
grade bonds with aggregate risk, return and income characteristics similar to 1
to 3 year bonds. The Fund invests primarily in a broad range of investment grade
fixed income securities, including bonds, notes, mortgage-backed securities,
collaterized mortgage obligations, domestic corporate and government securities,
and short term obligations such as commercial paper and repurchase agreements.
The Fund will maintain a dollar weighted average maturity between 1 and 3 years
and invest in no bond with a maturity longer than 5 years. To the extent
consistent with the Fund's objective, the Adviser will try to avoid realization
of capital gains for tax purposes. The Fund will normally invest at least 65% of
its assets in bonds.
Principal Risks of Investing in the Fund
o Interest rate risk is the risk that the value of your investment may decrease
when interest rates rise. o Credit risk is the risk that the issuer of the fixed
income security may not be able to make interest and principal
payments when due.
o Prepayment risk is the risk that the value of the mortgage securities
held by the Fund may go down as a result of changes in prepayment rates
on the underlying mortgages.
o Specific maturity risk is the risk that the specific maturities in which
the Fund invests may fall in price more than other maturities. Generally,
a portfolio of bonds with a longer effective maturity will fluctuate more
than a portfolio of bonds with a shorter effective maturity.
o As with any mutual fund investment, the Fund's returns may vary and you could
lose money.
Is this Fund Right for You?
The Fund may be a suitable investment for:
o long term investors seeking a fund with an income and capital preservation
strategy o investors seeking a fund with risk, return and income commensurate
with 1 to 3 year bonds o investors seeking to diversify their holdings with
bonds and other fixed income securities o investors willing to accept price
fluctuations in their investments o investors with a $1 million initial
investment.
Bar Chart and Performance
The Bar Chart and Performance Table that would otherwise appear in this
prospectus have been omitted because the Fund is recently organized and
has less than one year of operations. The Fund's annual performance will
be compared to the Merrill Lynch 1-3 Year Government/ Corporate Index.
<PAGE>
JIC INSTITUTIONAL BOND FUND II
Investment Objective
The investment objective of the JIC Fund II is a high level of income over
the long term consistent with preservation of capital.
Principal Strategies
The Fund's strategy is to provide a diversified portfolio of investment
grade bonds with aggregate risk, return and income characteristics similar to 3
to 5 year bonds. The Fund invests primarily in a broad range of investment grade
fixed income securities, including bonds, notes, mortgage-backed securities,
collaterized mortgage obligations, and domestic corporate and government
securities. The Fund will maintain a dollar weighted average maturity between 3
and 5 years and invest in no bond with a maturity longer than 10 years. To the
extent consistent with the Fund's objective, the Adviser will try to avoid
realization of capital gains for tax purposes. The Fund will normally invest at
least 65% of its assets in bonds.
Principal Risks of Investing in the Fund
o Interest rate risk is the risk that the value of your investment may decrease
when interest rates rise. o Credit risk is the risk that the issuer of the fixed
income security may not be able to make interest and principal
payments when due.
o Prepayment risk is the risk that the value of the mortgage securities
held by the Fund may go down as a result of changes in prepayment rates
on the underlying mortgages.
o Specific maturity risk is the risk that the specific maturities in which
the Fund invests may fall in price more than other maturities. Generally,
a portfolio of bonds with a longer effective maturity will fluctuate more
than a portfolio of bonds with a shorter effective maturity.
o As with any mutual fund investment, the Fund's returns may vary and you could
lose money.
Is this Fund Right for You?
The Fund may be a suitable investment for:
o long term investors seeking a fund with an income and capital preservation
strategy o investors seeking a fund with risk, return and income commensurate
with 3 to 5 year bonds o investors seeking to diversify their holdings with
bonds and other fixed income securities o investors willing to accept price
fluctuations in their investments o investors with a $5 million initial
investment.
Bar Chart and Performance
The Bar Chart and Performance Table that would otherwise appear in this
prospectus have been omitted because the Fund is recently organized and
has less than one year of operations. The Fund's annual performance will
be compared to the Merrill Lynch 3-5 Year Government/ Corporate Index.
<PAGE>
JIC INSTITUTIONAL BOND FUND III
Investment Objective
The investment objective of the JIC Fund III is a high level of income
over the long term consistent with preservation of capital.
Principal Strategies
The Fund's strategy is to provide a diversified portfolio of investment
grade bonds with aggregate risk, return and income characteristics similar to 5
to 7 year bonds. The Fund invests primarily in a broad range of investment grade
fixed income securities, including bonds, notes, mortgage-backed securities,
collaterized mortgage obligations, and domestic corporate and government
securities. The Fund will maintain a dollar weighted average maturity between 5
and 7 years and invest in no bond with a maturity longer than 15 years. To the
extent consistent with the Fund's objective, the Adviser will try to avoid
realization of capital gains for tax purposes. The Fund will normally invest at
least 65% of its assets in bonds.
Principal Risks of Investing in the Fund
o Interest rate risk is the risk that the value of your investment may decrease
when interest rates rise. o Credit risk is the risk that the issuer of the fixed
income security may not be able to make interest and principal
payments when due.
o Prepayment risk is the risk that the value of the mortgage securities
held by the Fund may go down as a result of changes in prepayment rates
on the underlying mortgages.
o Specific maturity risk is the risk that the specific maturities in which
the Fund invests may fall in price more than other maturities. Generally,
a portfolio of bonds with a longer effective maturity will fluctuate more
than a portfolio of bonds with a shorter effective maturity.
o As with any mutual fund investment, the Fund's returns may vary and you could
lose money.
Is this Fund Right for You?
The Fund may be a suitable investment for:
o long term investors seeking a fund with an income and capital preservation
strategy o investors seeking a fund with risk, return and income commensurate
with 5 to 7 year bonds o investors seeking to diversify their holdings with
bonds and other fixed income securities o investors willing to accept price
fluctuations in their investments o investors with a $5 million initial
investment.
Bar Chart and Performance
The Bar Chart and Performance Table that would otherwise appear in
this prospectus have been omitted because the Fund is recently organized
and has less than one year of operations. The Fund's annual performance
will be compared to the Merrill Lynch 5-7 Year Government/ Corporate
Index.
GENERAL INFORMATION
From time to time, any JIC Fund may take temporary defensive positions
that are inconsistent with the Fund's principal investment strategies in
attempting to respond to adverse market, economic, political, or other
conditions. For example, any Fund may hold all or a portion of its assets in
money market instruments, securities of other no-load mutual funds or repurchase
agreements. If a Fund invests in shares of another mutual fund, the shareholders
of the Fund generally will be subject to duplicative management fees. As a
result of engaging in these temporary measures, the Funds may not achieve their
investment objectives. Each Fund may also invest in such instruments at anytime
to maintain liquidity or pending selection of investments in accordance with its
policies. The investment objective and strategies of any Fund may be changed
without shareholder approval.
<PAGE>
COSTS OF INVESTING IN THE FUND
This table describes the fees and expenses that you may pay if you buy and hold
shares of a Fund.
Fund I Fund II Fund III
Shareholder Fees 1
(fees paid directly from your investment)
Maximum Front End Load......................None None None
Deferred Load...............................None None None
Redemption Fee..............................None None None
Exchange Fee................................None None None
Annual Fund Operating Expenses
(expenses that are deducted from fund assets)
Management Fees......................................0.30% 0.30% 0.30%
12b-1 Fees...........................................None None None
Total Annual Fund Operating Expenses.................0.30% 0.30% 0.30%
Example:
The example below is intended to help you compare the cost of investing
in the Funds with the cost of investing in other mutual funds. The example uses
the same assumptions as other mutual fund prospectuses: a $10,000 initial
investment for the time periods indicated, 5% annual total return, constant
operating expenses, and sale of all shares at the end of each time period.
Although your actual expenses may be different, based on these assumptions your
cost are estimated to be:
1 year 3 years
Fund I $31 $97
Fund II $31 $97
Fund III $31 $97
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HOW TO BUY, SELL OR EXCHANGE SHARES IN THE FUND
The Funds and their transfer agent, Johnson Financial, 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:
Johnson Mutual Funds Trust
3777 West Fork Road
Cincinnati, Ohio 45247
(513) 661-3100 or (800) 541-0170
FAX: (513) 661-4901
Transfer Agent:
Johnson Financial, Inc.
3777 West Fork Road
Cincinnati, Ohio 45247
(513) 661-3100 or (800) 541-0170
FAX: (513) 661-4901
HOW TO BUY SHARES
Initial Purchase
The minimum initial investment for JIC Fund I is $1 million. The minimum initial
investment for JIC Fund II is $5 million, and the minimum initial investment for
JIC Fund III is $5 million.
By Mail - You may purchase shares of any Fund by following these steps: o
Complete and sign an application; o Draft a check made payable to: Johnson
Mutual Funds; o Identify on the check and on the application the Fund(s) in
which you would like to invest; o Mail the application, check and any letter of
instruction to the Transfer Agent.
By Wire - You must mail a completed application to Johnson Mutual Funds
after opening an account by wire transfer. Wire orders will be accepted only on
a day on which the Funds 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 Funds. Any delays that may occur in wiring money,
including delays that may occur in processing by the banks, are not the
responsibility of the Funds or the custodian bank.
You may purchase shares of any JIC 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 Transfer Agent first to open an account
and obtain an account number. Your bank must then wire the specified amount
according to the following instructions:
The Provident Bank/Cincinnati
Johnson Mutual Funds
ABA #042000424
Account #0198-483
For Further Credit to: Johnson Mutual Funds
Shareholder Account Name: ___________________
Shareholder Account Number: __________
Additional Purchases
You may buy additional shares of a JIC Fund at any time (minimum of $100)
by mail or by bank wire if you meet the initial investment requirement for each
fund. Each additional purchase request must contain: o Name of your account(s);
o Account number(s); o Name of the JIC Fund(s) in which you wish to invest.
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.
Other Purchase Information
The JIC Funds may limit the amount of purchases and reject any purchase
request in whole or in part. If your check or wire does not clear, you will be
responsible for any loss incurred. Each JIC Fund may sell other shares you own
as reimbursement for any loss incurred.
Each of the JIC Funds, or the designated officer or officers of the
Johnson Mutual Funds Trust, may waive the stated minimum initial investment
amount on any of the JIC Funds at its sole discretion.
HOW TO SELL SHARES
You may sell shares in a JIC Fund by mail or telephone, without a charge.
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 for a sale should be addressed to the Johnson Mutual
Funds and must include: o Letter of instruction; o Fund name; o Account
number(s); o Account name(s); o 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.
The Funds may require that a bank or a member firm of a national
securities exchange guarantee signatures on redemption requests. Signature
guarantees are for the protection of shareholders. At the discretion of any JIC
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.
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.
By using the telephone redemption and exchange privileges, a shareholder
authorizes the Funds to act upon the instruction of any person by telephone they
believe to be the shareholder. By telephone, this shareholder may sell shares
from the account and transfer the proceeds to the address of record or the bank
account designated or may exchange into another Fund. The Funds 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 Funds
may change, modify or terminate the telephone redemption or exchange privilege
at any time.
Additional Information - Sale requests specifying a certain date or share
price cannot be accepted and 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, the sales
proceeds will not be paid until your investment has cleared the bank, which may
take up to 15 calendar days from the date of purchase. Exchanges into any of the
other Funds are, however, permitted without the ten-day waiting period.
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 (during times of
unusual market activity), consider sending your order by express mail to the
Funds, or facsimile to (513) 661-4901 or (513) 661-3160.
Because the JIC Funds incur certain fixed costs in maintaining shareholder
accounts, each JIC Fund may require any shareholder to sell all of his or her
shares in the JIC Fund on 30 days' written notice if the value of his or her
shares in the JIC Fund is less than $500,000 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. Each share of each JIC Fund is 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.
HOW TO EXCHANGE SHARES
As a shareholder in any Fund in the Johnson Mutual Funds Trust, you may
exchange shares for shares of any other fund in the Johnson Mutual Funds Trust,
subject to the minimum initial investment requirement of the Fund in which you
are making the exchange. 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 4:00 p.m. Eastern Time will be processed at the next
determined net asset value (NAV) 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 Funds reserve 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 a 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 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
Stock Exchange is closed on weekends, Federal holidays and Good Friday. The net
asset value per share of each Fund will fluctuate.
Requests to purchase, exchange and redeem shares are processed at the NAV
calculated after the Transfer Agent receives your order in the form described
above in the applicable section. The Funds' assets are generally valued at their
market value. If market prices are not available, or if an event occurs after
the close of the trading market that materially affects the values, assets may
be valued at their fair value.
DIVIDENDS AND DISTRIBUTIONS
Each JIC Fund intends to distribute substantially all of its net
investment income as dividends to shareholders on a monthly basis. Each JIC Fund
intends to distribute its capital gains 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. You 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
In general, selling shares of a Fund and receiving distributions (whether
reinvested or taken in cash) are taxable events. Depending on the purchase price
and the sale price, you may have a gain or a loss on any shares sold. Any tax
liabilities generated by your transactions or by receiving distributions are
your responsibility. Because distributions of long term capital gains are
subject to capital gains taxes, regardless of how long you have owned your
shares, you may want to avoid making a substantial investment when a Fund is
about to make a long term capital gain distribution.
Each 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. You should consult with your tax adviser
regarding specific questions as to federal, state or local taxes, the tax effect
of distributions and withdrawals from the Funds and the use of the Exchange
Privilege.
Unless you furnish your certified taxpayer identification number (social
security number for individuals) and certify that you are not subject to backup
withholding, the Funds will be required to withhold and remit to the IRS 31% of
the dividends, distributions and sales proceeds payable to the shareholder. The
Funds 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.
MANAGEMENT OF THE FUNDS
Johnson Investment Counsel, Inc., 3777 West Fork Road, Cincinnati, Ohio
45247 ("Johnson") serves as investment adviser to the Funds. In this capacity,
Johnson is responsible for the selection and on going monitoring of the
securities in each Fund's investment portfolio and managing the Funds' business
affairs. Johnson is a Cincinnati-based company that has grown, since its
inception in 1965, to become the largest independent investment advisory firm in
the Cincinnati area. Johnson has over $2.7 billion of assets under management
with services extending to a wide range of clients, including businesses,
individuals, foundations, institutions and endowments. Johnson solely provides
investment management, through individually managed portfolios, and has no
commission-based affiliations from the sale of products. An investment committee
of Johnson is responsible for the investment decisions and the day-to-day
management of the Funds. Each of the JIC Institutional Bond Funds is authorized
to pay the Investment Adviser, Johnson Investment Counsel, Inc., an annual
management fee equal to 0.30% of its average daily net assets.
SERVICE PROVIDERS
<PAGE>
1
Investment Adviser Transfer Agent
Johnson Investment Counsel, Inc. Johnson Financial, Inc.
3777 West Fork Road 3777 West Fork 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
Legal Counsel
Brown, Cummins & Brown, Co. LPAs
3500 Carew Tower
441 Vine Street
Cincinnati, OH 45202
and operations. Shareholder reports contain management's discussion of market
conditions, investment strategies and performance results as of the Funds'
latest semi-annual or annual fiscal year end. The Funds' first shareholder
report will be issued in February 2001.
Call the Funds at 513-661-3100 or 800-541-0170 to request free copies of
the SAI and the Funds' annual and semi-annual reports (available in February
2001), to request other information about the Funds and to make shareholder
inquiries.
You may review and copy information about the Funds (including the SAI and
other reports) at the Securities and Exchange Commission (SEC) Public Reference
Room in Washington, D.C. Call the SEC at 1-202-942-8090 for room hours and
operation. You may also obtain reports and other information about the Funds on
the EDGAR Database on the SEC's Internet site at http.//www.sec.gov, and copies
of this information may be obtained, after paying a duplicating fee, by
electronic request at the following e-mail address: [email protected], or by
writing the SEC's Public Reference Section, Washington, D.C. 20549-0102.
Investment Company Act #811-7254
<PAGE>
JOHNSON
Mutual Funds
Statement of Additional Information dated August 31, 2000
JIC Institutional Bond Fund I
JIC Institutional Bond Fund II
JIC Institutional Bond Fund III
Johnson Mutual
Funds Trust 3777
West Fork Road
Cincinnati, OH
45247 (513)
661-3100 (800)
541-0170 FAX (513)
661-4901
This Statement of Additional Information ("SAI") is not a prospectus. It should
be read in conjunction with the Prospectus of the JIC Institutional Bond Funds
dated August 31, 2000. A free copy of the Prospectus can be obtained by writing
the Trust at 3777 West Fork Road, Cincinnati, Ohio 45247, or by calling the
Trust at (513) 661-3100 or (800) 541-0170.
12356 06/20/2000 8:48 AM88
TABLE OF CONTENTS PAGE
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DESCRIPTION OF THE TRUST 1
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS 1
INVESTMENT LIMITATIONS 4
TRUSTEES AND OFFICERS 6
THE INVESTMENT ADVISER 7
PORTFOLIO TRANSACTIONS AND BROKERAGE 7
DETERMINATION OF SHARE PRICE 8
TAXES 8
INVESTMENT PERFORMANCE 9
CUSTODIAN 10
TRANSFER AGENT AND FUND ACCOUNTANT 10
ACCOUNTANT 10
<PAGE>
5
<PAGE>
DESCRIPTION OF THE TRUST
Johnson Mutual Funds Trust (the "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 Board of Trustees
supervises the business activities of the Trust. The Trust Agreement permits the
Trustees to issue an unlimited number of shares of beneficial interest of
separate series without par value. Shares of eight series have been authorized,
three of which are the JIC Institutional Bond Fund I, JIC Institutional Bond
Fund II and JIC Institutional Bond Fund III (the "Funds"). The Funds were
established on August 31, 2000.
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 or under the direction of 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.
Each of the Funds, at its discretion and with shareholder consent, may use
securities from a 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.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS
This section contains a more detailed discussion of some of the investments the
Funds may make and some of the techniques they may use.
A. Quality Ratings. 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. The Fund will invest
no more than 10% of its assets in securities rated BBB by S&P and Baa by
Moody's. 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. No Fund will hold more than 5% of
the value of its net assets in securities that are below investment grade. If,
as a result of a downgrade, a Fund holds more than 5% of the value of its net
assets in securities rated below investment grade, the Fund will take action to
reduce the value of such securities below 5%.
B. 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.
C. Fixed Income Securities. Fixed income securities 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.
D. 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, the Federal Home Loan Mortgage Corporation, and the
Federal National Mortgage Association, are supported only by the credit of the
agency that issued them and 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.
E. Mortgage-Backed Securities. 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.
While there is no limit on issues backed by government agencies, no Fund will
invest more than 30% of its net assets in mortgage-backed securities issued by
entities other than government agencies.
F. Collateralized Mortgage Obligations (CMOs). CMOs are 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 a Fund, the Fund could experience both delays in liquidating its
position and losses. While there is no limit on issues backed by government
agencies, no Fund will invest more than 30% of its net assets in CMOs issued by
entities other than government agencies.
G. 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.
H. 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 which 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.
No Fund will invest more than 30% of its net assets in asset-backed or
receivable-backed securities.
I. 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. No Fund will invest more than 5% of its
net assets in restricted securities.
J. Foreign Securities. The Funds may 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. Neither Fund will 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
15% of the value of the total assets of the Fund. To the extent that a 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.
K. 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 a 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, a Fund could experience both delays in liquidating the underlying
security and losses in value. However, the Funds intend 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 a
Fund engages in repurchase transactions, and a Fund will not invest more than
15% of its net assets in illiquid securities, including repurchase agreements
maturing in more than seven days.
L. When Issued Securities and Forward Commitments. Each 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. A 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 Funds 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 a Fund's share price
and yield. Although a Fund will generally enter into forward commitments with
the intention of acquiring securities for its portfolio, a Fund may dispose of a
commitment prior to the settlement if the Adviser deems it appropriate to do so.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been adopted by the
Trust with respect to each 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 applicable 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 Funds 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 a 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 Funds 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 this
Statement of Additional Information.
3. Underwriting. The Funds 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 Funds will not purchase or sell real estate. This limitation
is not applicable to investments in marketable securities which are secured by
or represent interests in real estate. This limitation does not preclude the
Fund from investing in mortgage-backed securities or investing in companies
engaged in the real estate business.
5. Commodities. The Funds will not purchase or sell commodities unless acquired
as a result of ownership of securities or other investments. This limitation
does not preclude the Funds from purchasing or selling options or futures
contracts or from investing in securities or other instruments backed by
commodities.
6. Loans. The Funds will not make loans to other persons, except (a) by loaning
portfolio securities, (b) by engaging in repurchase agreements, or (c) by
purchasing nonpublicly 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. A Fund will not invest 25% or more of its total assets in a
particular 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.
Non-Fundamental. The following limitations have been adopted by the Trust with
respect to each 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.
ii. Borrowing. The Funds 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 Funds 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.
iv. Short Sales. The Funds 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. Futures and Options. The Funds will not purchase or sell puts, calls, o
ptions or straddles.
--------------------
vi. Illiquid Investments. A Fund will not invest more than 15% of its net
assets in securities for which there are legal
--------------------
or contractual restrictions on resale and other illiquid securities.
vii. Issuers. No Fund will invest more than 5% of its total assets in any one
issuer other than the U.S. government, its
--------
agencies or instrumentalities or any money market fund.
viii. Non-dollar denominated securities. The Funds will only purchase
dollar denominated investments.
----------------------------------
<PAGE>
6
<PAGE>
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.
NAME (AGE) POSITIONS HELD PRINCIPAL OCCUPATIONS
---- ------ -------------- ---------------------
Timothy E. Johnson (58)* President and Trustee President and a Director
3777 West Fork Road of Johnson Investment Counsel,
Cincinnati, Ohio 45247 Inc., the Trust's Adviser
and Professor of Finance at
the University of Cincinnati.
President and Director of
Johnson Financial, Inc. (a)
John W. Craig (66) Trustee Retired director of Corporate Affairs at
3784 Brighton Manor Lane R.A. Jones & Co., Inc. a manufacturing and
Cincinnati, Ohio 45208 packaging company, and the Chairman and Chief
Executive Officer of CP&I, Inc., a real estate
property development and management company.
Ronald H. McSwain (57) 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 (70) Trustee Retired plant engineer at The Procter &
2145 Bluebell Drive Gamble Company.
Cincinnati, Ohio 45224
Dale H. Coates (41) Vice President Portfolio Manager of the Trust's Adviser.
3777 West Fork Road
Cincinnati, Ohio 45247
Richard T. Miller (54) Vice President Portfolio Manager of the Trust's Adviser.
3777 West Fork Road
Cincinnati, Ohio 45247
Dianna J. Rosenberger (35) Chief Financial Officer Portfolio Manager of the
3777 West Fork Road and Treasurer Trust's Adviser. Chief
Cincinnati, Ohio 45247 Operating Officer of
Johnson Financial, Inc.(a)
a financial service company.
David C. Tedford (46) Secretary Office Administrator of the Trust's Adviser.
3777 West Fork Road
Cincinnati, Ohio 45247
(a) Johnson Financial, Inc. is a wholly owned subsidiary of Johnson Investment
<PAGE>
Counsel, Inc., the Adviser.
<PAGE>
The compensation paid to the Trustees of the
Trust for the year ended December 31, 1999
is set forth in the following table Total
Compensation
From Trust (the Trust is
Name not in a Fund Complex) (1)
-------------- ----------------------------
Timothy E. Johnson $0
John W. Craig $6,000
Ronald H. McSwain $6,000
Kenneth S. Shull $6,000
(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.
<PAGE>
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
a Fund have equal voting rights and liquidation rights.
The beneficial ownership, either directly or indirectly, of more than 25% of the
voting securities of a Fund creates a presumption of control of the Fund under
Section 2(a)(9) of the Investment Company Act of 1940.
THE INVESTMENT ADVISER
The Trust's investment adviser is Johnson Investment Counsel, Inc., 3777 West
Fork 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 Funds'
investments subject to approval of the Board of Trustees and pays all of the
expenses of the Funds except brokerage, taxes, borrowing costs (such as interest
and dividend expense on securities sold short) and extraordinary expenses. As
compensation for its management services and agreement to pay the Funds'
expenses, each Fund is obligated to pay the Adviser a fee computed and accrued
daily and paid monthly at an annual rate of 0.30% of the average daily net
assets of the Fund.
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. If a bank or
other financial institution 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 and other financial
institutions 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. A Fund may from time to time purchase
securities issued by banks and other financial institutions that provide such
services; however, in selecting investments for a 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 Trust's portfolio decisions and the placing of
the Trust's portfolio transactions. In placing portfolio transactions, the
Adviser seeks the best qualitative execution for the Trust, 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 Trust.
Although research services and other information are useful to the Trust 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
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 Trust 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 Trust and another of the Adviser's clients seek to
acquire the same security at about the same time, the Trust 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 Trust 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 Trust. 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.
The Trust and the Adviser have each adopted a Code of Ethics (the "Code") under
Rule 17j-1 of the Investment Company Act of 1940. The Code restricts the
personal investing activities of all employees of the Adviser. The Code requires
that all financial analysts and portfolio managers of the Adviser disclose their
and their families' personal holdings if the holding(s) in question become the
subject of research, recommendation or review by the Adviser's portfolio
management committee. In addition, no employee may engage in personal investing
on a day that the Fund has a buy/sell order on a security until the Fund's order
is executed or withdrawn. Other substantive restrictions also include a
requirement that prior authorization be obtained before acquiring any securities
in an initial public offering or private placement.
DETERMINATION OF SHARE PRICE
The prices (net asset values) of the shares of each 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 effect the net asset
value. The Trust is open for business on every day except Saturdays, Sundays and
the following holidays: New Year's Day, Martin Luther King, Jr. Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.
TAXESTAXES
Each Fund has qualified, and intends to continue to qualify, under Subchapter M
of the Internal Revenue Code. By so qualifying, no Fund will be liable for
federal income taxes to the extent its taxable net investment income and net
realized capital gains are distributed to shareholders. Each Fund is required by
federal law to withhold and remit to the U.S. Treasury a portion (31%) of the
dividend income and capital gains distributions of any account unless the
shareholder provides a taxpayer identification number and certifies that the
taxpayer identification number is correct and that the shareholder is not
subject to backup withholding.
INVESTMENT PERFORMANCE
Each Fund may periodically advertise "average annual total return." The "total
return" of a 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 a 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.
"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)n=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.
Each 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
each Fund are calculated as indicated above for "total return."
Each Fund may each periodically advertise its yield for a thirty day or one
month period. The "yield" of a 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). A Fund's yield quotation will
always be accompanied by the Fund's average annual total return information
described above.
A 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 Funds may be
compared to indices of broad groups of unmanaged securities considered to be
representative of or similar to the portfolio holdings of the appropriate Fund
or considered to be representative of the fixed income securities market in
general.
The JIC Institutional Bond Fund I, JIC Institutional Bond Fund II and JIC
Institutional Bond Fund III will use the Merrill Lynch 1-3 Year
Government/Corporate Bond Index, the Merrill Lynch 3-5 Year Government/Corporate
Bond Index and the Merrill Lynch 5-7 Year Government/Corporate Bond Index,
respectively. The Merrill Lynch Government/Corporate Bond Indices measure the
price, income and total return of a group of fixed income securities maturing in
one to three years, three to five years, and five to seven years, respectively.
The indices contain all public obligations of the U.S. Treasury (excluding
flower bonds and foreign-targeted issues), all publicly traded debt of agencies
of the U.S. Government, quasi-federal corporations and corporate debt guaranteed
by the U.S. Government, and all public, fixed rate, non-convertible, investment
grade, domestic corporate debt. The Index does not include mortgage-backed
securities or collateralized mortgage obligations.
All Funds 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. Performance rankings and ratings reported periodically in national
financial publications such as Barron's may also be used. The objectives,
policies, limitations and expenses of other mutual funds in a group may not be
the same as those of the applicable Fund. The Trust's annual report contains
additional performance information that will be made available upon request and
without charge.
<PAGE>
The advertised performance data of each Fund is based on historical performance
and is not intended to indicate future performance. Yields and rates of total
return quoted by a 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.
CUSTODIAN
The Provident Bank, One East Fourth Street, Cincinnati, Ohio is the current
custodian of the Funds' investments. The Custodian acts as each 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, FUND ACCOUNTANT
AND ADMINISTRATOR
Johnson Financial, Inc. ("JFI") 3777 West Fork Road, Cincinnati, Ohio, an
affiliate of the Adviser, acts as each 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 shareholder service functions. For its services as
transfer agent, JFI receives from the Adviser (not the Funds) an annual fee of
$6,000 for each Fund.
JFI also provides fund accounting services to each Fund, including maintaining
each Fund's accounts, books and records, calculating net asset value per share
and distributions, and providing reports and other accounting services. . For
its services as fund accountant, JFI receives from the Adviser (not the Funds)
an annual fee of $18,000 for each Fund.
JFI also provides fund administrative services to each Fund, including all
compliance, regulatory reporting and necessary office equipment, personnel and
facilities. For its services as fund administrator, JFI receives from the
Adviser (not the Funds) an annual fee of $264,000 for the Trust.
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, 2000. McCurdy & Associates CPA's, Inc. performs and annual audit of
the Trust's financial statements and provides financial, tax and accounting
consulting services as requested.
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