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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-08261
MEMBERS Mutual Funds
(Exact name of registrant as specified in charter)
550 Science Drive, Madison, WI 53711
(Address of principal executive offices)(Zip code)
Pamela M. Krill
Madison/Mosaic Legal and Compliance Department
550 Science Drive
Madison, WI 53711
(Name and address of agent for service)
Registrant's telephone number, including area code: 608-274-0300
Date of fiscal year end: October 31
Date of reporting period: October 31, 2012
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspoection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. s 3507.
Item 1. Report to Shareholders.
MEMBERS(R) Mutual Funds
Annual Report
October 31, 2012
CONSERVATIVE ALLOCATION FUND
MODERATE ALLOCATION FUND
AGGRESSIVE ALLOCATION FUND
CASH RESERVES FUND
BOND FUND
HIGH INCOME FUND
DIVERSIFIED INCOME FUND
EQUITY INCOME FUND
LARGE CAP VALUE FUND
LARGE CAP GROWTH FUND
MID CAP FUND
SMALL CAP FUND
INTERNATIONAL STOCK FUND
This material is for reporting purposes only and shall not be used in connection with a solicitation, offer or any proposed sale of securities unless preceded or accompanied by a prospectus.
MEMBERS Mutual Funds | October 31, 2012
New Name Coming to MEMBERS Mutual Funds
As you may recall, Madison Asset Management became the advisor to MEMBERS Mutual Funds on June 30, 2009. We are now pleased to announce MEMBERS(R) Mutual Funds will be renamed to Madison Funds(R). This new name will become effective at the end of February, 2013.
Madison has worked hard to continue the exemplary investment management and shareholder services you’ve come to expect. Our first priority is to continue serving you, our shareholder, with the same level of excellence.
As this is only a name change of the funds, there will be no change to the portfolio managers, investment objectives, or expenses of the funds, and there are no changes with your financial advisor.
At the end of February, 2013, you will find us on the web at www.madisonfunds.com. As always, you can reach shareholder services at 800-877-6089, or if you have any questions about the name change, you can reach Madison Asset Management directly at 800-670-3600.
There is no action required on your part; this notice is only to inform you of the name change to Madison Funds(R).
We appreciate the opportunity to manage your investments in MEMBERS Mutual Funds and we look forward to serving you as a Madison Funds(R) shareholder.
MEMBERS Mutual Funds are distributed by Mosaic Funds Distributor, LLC ©December 31, 2012.
Not part of the Annual Report
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MEMBERS Mutual Funds | October 31, 2012
Table of Contents
| Management’s Discussion of Fund Performance | |
| Period in Review | 4 |
| Outlook | 4 |
| Conservative Allocation Fund | 6 |
| Moderate Allocation Fund | 8 |
| Aggressive Allocation Fund | 10 |
| Cash Reserves Fund | 12 |
| Bond Fund | 14 |
| High Income Fund | 16 |
| Diversified Income Fund | 18 |
| Equity Income Fund | 20 |
| Large Cap Value Fund | 22 |
| Large Cap Growth Fund | 24 |
| Mid Cap Fund | 26 |
| Small Cap Fund | 28 |
| International Stock Fund | 30 |
| Notes to Management’s Discussion of Fund Performance | 32 |
| Benchmark Descriptions | 32 |
| Portfolios of Investments | |
| Conservative Allocation Fund | 34 |
| Moderate Allocation Fund | 35 |
| Aggressive Allocation Fund | 36 |
| Cash Reserves Fund | 37 |
| Bond Fund | 38 |
| High Income Fund | 41 |
| Diversified Income Fund | 44 |
| Equity Income Fund | 47 |
| Large Cap Value Fund | 50 |
| Large Cap Growth Fund | 51 |
| Mid Cap Fund | 53 |
| Small Cap Fund | 54 |
| International Stock Fund | 56 |
| Financial Statements | |
| Statements of Assets and Liabilities | 58 |
| Statements of Operations | 62 |
| Statements of Changes in Net Assets | 64 |
| Financial Highlights | 72 |
| Notes to Financial Statements | 92 |
| Report of Independent Registered Public Accounting Firm | 108 |
| Other Information | 109 |
| Trustees and Officers | 115 |
Nondeposit investment products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by any financial institution. For more complete information about MEMBERS Mutual Funds, including charges and expenses, request a prospectus from your financial advisor or from MEMBERS Mutual Funds, P.O. Box 8390, Boston, MA 02266-8390. Consider the investment objectives, risks, and charges and expenses of any fund carefully before investing. The prospectus contains this and other information about the investment company. For more current performance information, please call 1-800-877-6089 or visit our website at www.membersfunds.com. Current performance may be lower or higher than the performance data quoted within. Past performance does not guarantee future results. Nothing in this report represents a recommendation of a security by the investment adviser. Portfolio holdings may have changed since the date of this report.
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MEMBERS Mutual Funds | October 31, 2012
Management’s Discussion of Fund Performance
PERIOD IN REVIEW
The one-year-period ended October 31, 2012 was a positive one for stock and bond investors, despite an undercurrent of troubling economic news and considerable global uncertainty. The domestic stock market, as measured by the S&P 500 Index, was up 15.21%, the international stock markets were up 4.61% as measured by the MSCI EAFE Index, while domestic bonds showed a return of 5.25% as measured by Barclays U.S. Aggregate Index.
The global economic backdrop appeared bleak as we entered this one-year period in November, 2011. Ongoing turmoil in the Eurozone along with continued fears that U.S. economic growth would disappoint kept investors pessimistic. Renewed forecasts of imminent recession in the U.S. were widespread, and stocks and other volatile assets were again avoided in favor of the perceived safety and liquidity of U.S. dollar-based government bonds. The U.S. stock market hit its period low on November 25, 2011, at which point the prospects for robust returns for the next 11 months or so seemed dim. The flight-to-safety move pushed intermediate and long-term U.S. Treasury yields towards record territory, with the yield on the 10-Year Treasury dipping well below 2%.
However, early into the annual period the U.S. economic picture brightened and fears of an impending financial crisis in Europe eased. Domestically, capital spending picked up, labor markets showed signs of improvement, and consumer spending was reported to be better than expected. By the end of calendar-year 2011 the early stock market losses had been reversed and stocks continued to advance through the first months of 2012. This shift could be seen in the rapid rise of the yield on the 10-year Treasury, which spiked from its earlier lows near 1.8% to the period high of 2.38% on March 19, 2012.
However, the fragility of the worldwide economy was once again demonstrated in May and June: The public became aware of the extent of exposure of European banks to the potentially troubled loans to the shaky southern European economies. The fallout from the fears of a possible failure of these huge banks created a major worldwide selloff of stocks. From its April 2, 2012 high through June 1, 2012, the S&P 500 fell 9.58%. An even more telling sign of investor fear was the frenzy of Treasury securities buying which sent the yield on the bellwether 10-year Treasury to a record low of 1.39% on July 24, 2012.
With signs of an improvement in the domestic housing market and indications of improving manufacturing along with the hope of additional Federal Reserve (Fed) and overseas central bank easing, investors began to return to stocks in mid-summer. In September 2012, investors’ hopes were realized when the Fed announced its plan for another round of quantitative easing (quickly dubbed QE3) whereby the Fed plans to buy $40 billion of mortgage debt a month, with the expectation this would eventually produce an improvement in the labor market.
OUTLOOK
We remain mindful of the risks inherent in today’s market environment, especially when considering the valuations of domestic bonds. The foundation to support solid economic growth has grown significantly during the past three years as the Fed has aggressively eased monetary policy. Thus far, the substantial increase in money supply has failed to stimulate a level of economic growth necessary to significantly improve the employment situation which now appears to be the Fed’s
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MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
main goal. The continuation of global deleveraging along with U.S. fiscal uncertainties may cause businesses and consumers to behave differently than past recoveries. We have little doubt that both businesses and consumers will need to increase the pace of spending in order for economic growth to accelerate significantly and the Fed’s focus on employment may eventually put upward pressure on inflation.
We continue to rely on our years of experience managing stock and bond portfolios through difficult periods. Patience will remain a vital necessity as vast uncertainties play out in the quarters ahead. We expect interest rates to trend higher should the housing market continue its recovery; Congress to successfully address "fiscal cliff" issues; employment conditions to improve; and inflation begin to resurface. As these situations play out, we plan to proactively take advantage of any market dislocations with the ever present mindset of generating favorable risk-adjusted returns.
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MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
CONSERVATIVE ALLOCATION FUND
INVESTMENT STRATEGY HIGHLIGHTS
The MEMBERS Conservative Allocation Fund invests primarily in shares of registered investment companies (the "underlying funds"). The fund will be diversified among a number of asset classes and its allocation among underlying funds will be based on an asset allocation model developed by Madison Asset Management, LLC ("Madison"), the fund’s investment adviser.
The team may use multiple analytical approaches to determine the appropriate asset allocation:
•Asset allocation optimization analysis – considers the covariance between asset class returns (the degree to which returns in different asset classes do or do not move together), and the fund’s aim to achieve a favorable overall risk profile for any targeted portfolio return. |
•Scenario analysis – historical and expected return data is analyzed to model how individual asset classes and combinations of asset classes would affect the fund under different economic and market conditions. |
•Fundamental analysis – draws upon Madison’s investment teams to judge each asset class against current and forecasted market conditions. Economic, industry and security analysis is used to develop return and risk expectations that may influence asset class selection. |
In addition, Madison employs a risk management sleeve within the fund for the purpose of risk reduction when and if conditions exist that require reduction of equity exposure.
PERFORMANCE HISTORY
Cumulative Performance of $10,000 Investment Since Inception1,2
Average Annual Total Return through October 31, 20122 | |||||||||
| % Return Without Sales Charge | % Return After Sales Charge6 | ||||||||
1 Year | 3 Years | 5 Years | Since 6/30/06 Inception | Since 2/29/08 Inception | 1 Year | 3 Years | 5 Years | Since Inception | |
Class A Shares3 | 7.60 | 7.01 | 2.11 | 3.58 | – | 1.38 | 4.92 | 0.90 | 2.62 |
Class B Shares4 | 6.75 | 6.22 | 1.34 | 2.82 | – | 2.25 | 5.18 | 0.98 | 2.82 |
Class C Shares5 | 6.75 | 6.22 | – | – | 2.23 | 5.75 | 6.22 | – | 2.23 |
| Bank of America Merrill Lynch US Corp, Govt & Mortg Index | 5.40 | 6.08 | 6.48 | 6.71 | 6.10 | NA | NA | NA | NA |
| Conservative Allocation Fund Custom Index | 8.31 | 8.54 | 4.63 | 6.03 | 5.29 | NA | NA | NA | NA |
See accompanying Notes to Management’s Discussion of Fund Performance.
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MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
Conservative Allocation Fund (concluded)
| PORTFOLIO ALLOCATION AS A PERCENTAGE OF NET ASSETS | |
As of 10/31/12 | |
| Bond Funds | 64% |
| Foreign Bond Funds | 5% |
| Foreign Stock Funds | 5% |
| Money Market Funds and Other Net Assets | 1% |
| Stock Funds | 25% |
PERFORMANCE DISCUSSION
For the period, the MEMBERS Conservative -Allocation Fund returned 7.60% (Class A shares without sales load), underperforming the fund’s custom blended Conservative Allocation benchmark return of 8.31%. Overall, the fund was well positioned from an asset allocation standpoint with a material underweight to international equities compared to the fund’s custom benchmark. However, lagging relative returns in a number of the fund’s core holdings identified below, both equity and bond, explained the -underperformance.
Top contributors to performance included: MEMBERS Large Cap Value Fund Class Y which returned 14.64% over the period; PIMCO Investment Grade Corporate Bond Fund at 13.76%; and Madison Mosaic Disciplined Equity Fund Class Y at 12.64%.
Detractors from performance included: Madison Mosaic Institutional Bond Fund Class Y which returned 2.54%; IVA Worldwide Fund Class I at 3.27%; and MEMBERS Bond Fund Class Y at 3.10%.
FUND CHANGES
We made several changes to the portfolio over the past year in an effort to more fully capture our asset allocation decisions. Within the equity allocation, we added investments in the iShares S&P 100(R) Index (OEF) to increase the portfolio’s focus on domestic mega cap stocks. We believe U.S. mega cap stocks are well positioned for the current slow growth world economy, offering attractive relative valuations, pristine balance sheets, and more reliable earnings potential. We sold IVA Worldwide (IVWIX) from the portfolio, and applied the proceeds to a new position in Vanguard FTSE All-World ex-US (VEU) and OEF. We also liquidated our position in the Calamos Growth & Income Fund (CGIIX), which we sold in favor of OEF. Finally, on the fixed income side, we reduced Templeton Global Bond Fund (TGBAX) and added a new position in TCW Emerging Markets Income Fund (TGEIX) to better diversify the fund’s international bond exposure.
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MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
MODERATE ALLOCATION FUND
INVESTMENT STRATEGY HIGHLIGHTS
The MEMBERS Moderate Allocation Fund invests primarily in shares of registered investment companies (the "underlying funds"). The fund will be diversified among a number of asset classes and its allocation among underlying funds will be based on an asset allocation model developed by Madison Asset Management, LLC ("Madison"), the fund’s investment adviser.
The team may use multiple analytical approaches to determine the appropriate asset allocation:
•Asset allocation optimization analysis – considers the covariance between asset class returns (the degree to which returns in different asset classes do or do not move together), and the fund’s aim to achieve a favorable overall risk profile for any targeted portfolio return. |
•Scenario analysis – historical and expected return data is analyzed to model how individual asset classes and combinations of asset classes would affect the fund under different economic and market conditions. |
•Fundamental analysis – draws upon Madison’s investment teams to judge each asset class against current and forecasted market conditions. Economic, industry and security analysis is used to develop return and risk expectations that may influence asset class selection. |
In addition, Madison employs a risk management sleeve within the fund for the purpose of risk reduction when and if conditions exist that require reduction of equity exposure.
PERFORMANCE HISTORY
Cumulative Performance of $10,000 Investment Since Inception1,2
Average Annual Total Return through October 31, 20122 | |||||||||
| % Return Without Sales Charge | % Return After Sales Charge6 | ||||||||
1 Year | 3 Years | 5 Years | Since 6/30/06 Inception | Since 2/29/08 Inception | 1 Year | 3 Years | 5 Years | Since Inception | |
Class A Shares3 | 8.55 | 8.02 | (0.50) | 2.46 | – | 2.26 | 5.89 | (1.67) | 1.50 |
Class B Shares4 | 7.77 | 7.20 | (1.24) | 1.69 | – | 3.27 | 6.18 | (1.61) | 1.69 |
Class C Shares5 | 7.77 | 7.24 | – | – | 0.56 | 6.77 | 7.24 | – | 0.56 |
| S&P 500 Index | 15.21 | 13.21 | 0.36 | 3.87 | 2.93 | NA | NA | NA | NA |
| Moderate Allocation Fund Custom Index | 9.74 | 9.43 | 2.71 | 5.13 | 4.16 | NA | NA | NA | NA |
See accompanying Notes to Management’s Discussion of Fund Performance.
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MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
Moderate Allocation Fund (concluded)
| PORTFOLIO ALLOCATION AS A PERCENTAGE OF NET ASSETS | |
As of 10/31/12 | |
| Bond Funds | 39% |
| Foreign Bond Funds | 3% |
| Foreign Stock Funds | 10% |
| Money Market Funds and Other Net Assets | 1% |
| Stock Funds | 47% |
PERFORMANCE DISCUSSION
For the period, the MEMBERS Moderate Allocation Fund returned 8.55% (Class A shares without sales load), while the blended Moderate Allocation benchmark returned 9.74%. Over-all, the fund was well positioned from an asset allocation standpoint with a material underweighting to international equities as compared to the fund’s custom benchmark. However, lagging relative returns in a number of the fund’s core holdings identified below, both equity and bond, explained the underperformance.
Top contributors to performance included: MEMBERS Mid Cap Fund Class Y which returned 14.95%; MEMBERS Large Cap Value Fund Class Y at 14.64%; and PIMCO Investment Grade Corporate Bond Fund at 13.76%.
Detractors from performance included: Madison Mosaic Institutional Bond Fund Class Y which returned 2.54%; IVA Worldwide Fund Class I at 3.27%; and MEMBERS Bond Fund Class Y at 3.10%.
FUND CHANGES
We made several changes to the portfolio over the past year in an effort to more fully capture our asset allocation decisions. Within equities, we added an investment in the iShares S&P 100(R) Index (OEF) to increase the portfolio’s focus on domestic mega cap stocks. We believe U.S. mega cap stocks are well positioned for the current slow growth world economy, offering attractive relative valuations and more reliable earnings potential. We sold IVA Worldwide (IVWIX) from the portfolio, and applied the proceeds to a new position in Vanguard FTSE All-World ex-US (VEU) and OEF. We also liquidated positions in the Calamos Growth & Income Fund (CGIIX) and Yacktman Fund (YACKX), which we sold in favor of OEF and a new position in Schwab Fundamental U.S. Large Company Index Fund (SFLNX). Finally, on the fixed income side, we replaced Templeton Global Bond Fund (TGBAX) with TCW Emerging Markets Income Fund (TGEIX) based on our preference for emerging markets corporate bonds over sovereign issuers.
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MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
AGGRESSIVE ALLOCATION FUND
INVESTMENT STRATEGY HIGHLIGHTS
The MEMBERS Aggressive Allocation Fund invests primarily in shares of registered investment companies (the "underlying funds"). The fund will be diversified among a number of asset classes and its allocation among underlying funds will be based on an asset allocation model developed by Madison Asset Management, LLC ("Madison"), the fund’s investment adviser.
The team may use multiple analytical approaches to determine the appropriate asset allocation:
•Asset allocation optimization analysis – considers the degree to which returns in different asset classes do or do not move together, and the fund’s aim to achieve a favorable overall risk profile for any targeted portfolio return. |
•Scenario analysis – historical and expected return data is analyzed to model how individual asset classes and combinations of asset classes would affect the fund under different economic and market conditions. |
•Fundamental analysis – draws upon Madison’s investment teams to judge each asset class against current and forecasted market conditions. Economic, industry and security analysis is used to develop return and risk expectations that may influence asset class selection. |
In addition, Madison employs a risk management sleeve within the fund for the purpose of risk reduction when and if conditions exist that require reduction of equity exposure.
PERFORMANCE HISTORY
Cumulative Performance of $10,000 Investment Since Inception1,2
Average Annual Total Return through October 31, 20122 | |||||||||
| % Return Without Sales Charge | % Return After Sales Charge6 | ||||||||
1 Year | 3 Years | 5 Years | Since 6/30/06 Inception | Since 2/29/08 Inception | 1 Year | 3 Years | 5 Years | Since Inception | |
Class A Shares3 | 8.87 | 8.50 | (3.23) | 1.18 | – | 2.59 | 6.36 | (4.37) | 0.24 |
Class B Shares4 | 7.99 | 7.68 | (3.98) | 0.42 | – | 3.49 | 6.67 | (4.35) | 0.42 |
Class C Shares5 | 7.98 | 7.67 | – | 7.67 | (1.31) | 6.98 | 7.67 | – | (1.31) |
| S&P 500 Index | 15.21 | 13.21 | 0.36 | 3.87 | 2.93 | NA | NA | NA | NA |
| Aggressive Allocation Fund Custom Index | 10.59 | 9.59 | 0.30 | 3.87 | 2.53 | NA | NA | NA | NA |
See accompanying Notes to Management’s Discussion of Fund Performance.
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MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
Aggressive Allocation Fund (concluded)
| PORTFOLIO ALLOCATION AS A PERCENTAGE OF NET ASSETS | |
As of 10/31/12 | |
| Bond Funds | 16% |
| Foreign Bond Funds | 1% |
| Foreign Stock Funds | 15% |
| Money Market Funds and Other Net Assets | 1% |
| Stock Funds | 67% |
PERFORMANCE DISCUSSION
For the period, the MEMBERS Aggressive Allocation Fund returned 8.87% (Class A shares without sales load); while the custom blended Aggressive Allocation benchmark returned 10.59%. Overall, the fund was well positioned from an asset allocation standpoint with a material underweighting to international equities as compared to the fund’s custom benchmark. However, lagging relative returns in a number of the fund’s core equity holdings identified below explained the underperformance.
Top contributors to performance included: MEMBERS Mid Cap Fund Class Y which returned 14.95%; MEMBERS Large Cap Value Fund Class Y at 14.64%; and Madison Mosaic Disciplined Equity Fund Class Y at 12.64%.
Detractors from performance included: IVA Worldwide Fund Class I which returned 3.27%; MEMBERS Large Cap Growth Fund Class Y at 7.72%; and MEMBERS Equity Income Fund Class Y at 8.73%.
FUND CHANGES
We made several changes to the portfolio over the past year in an effort to more fully capture our asset allocation decisions. Within equities, we added an investment in iShares S&P 100(R) Index (OEF) to increase the portfolio’s focus on domestic mega cap stocks. We believe U.S. mega cap stocks are well positioned for the current slow growth world economy, offering attractive relative valuations and more reliable earnings potential. We sold IVA Worldwide (IVWIX) from the portfolio, and applied the proceeds to a new position in Vanguard FTSE All-World ex-US (VEU) and OEF. We also liquidated positions in the Calamos Growth & Income Fund (CGIIX) and Yacktman Fund (YACKX), which we sold in favor of OEF and a new position in Schwab Fundamental U.S. Large Company Index Fund (SFLNX). Finally, on the fixed income side, we replaced Templeton Global Bond Fund (TGBAX) with TCW Emerging Markets Income Fund (TGEIX) based on our preference for emerging markets corporate bonds over sovereign issuers.
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MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
CASH RESERVES FUND
INVESTMENT STRATEGY HIGHLIGHTS
The MEMBERS Cash Reserves Fund invests exclusively in U.S. dollar-denominated money market securities maturing in thirteen months or less from the date of purchase. These securities will be obligations of the U.S. Government and its agencies and instrumentalities, but may also include securities issued by U.S. and foreign financial institutions, corporations, municipalities, foreign governments, and multi-national organizations, such as the World Bank.
The fund may invest in mortgage-backed and asset-backed securities, including those representing pools of mortgage, commercial, or consumer loans originated by credit unions or other financial institutions.
| PORTFOLIO ALLOCATION AS A PERCENTAGE OF NET ASSETS | |
As of 10/31/12 | |
| Fannie Mae | 19% |
| Federal Farm Credit Bank | 13% |
| Federal Home Loan Bank | 31% |
| Freddie Mac | 25% |
| U.S. Treasury Bills | 8% |
| Cash and Other Net Assets | 4% |
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MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
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MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
BOND FUND
INVESTMENT STRATEGY HIGHLIGHTS
Under normal circumstances, the MEMBERS Bond Fund invests at least 80% of its assets in bonds. To keep current income relatively stable and to limit share price volatility, the fund emphasizes investment grade securities and maintains an intermediate (typically 3-6 year) average portfolio duration (a measure of a security’s price sensitivity to changes in interest rates). The fund also strives to minimize risk in the portfolio by making strategic decisions relating to credit risk and yield curve outlook. The fund may invest in corporate debt securities, U.S. Government debt securities, foreign government debt securities, non-rated debt securities, and asset-backed, mortgage-backed and commercial mortgage-backed securities.
PERFORMANCE HISTORY
Cumulative Performance of $10,000 Investment Since Inception1,2
Average Annual Total Return through October 31, 20122 | |||||||||
| % Return Without Sales Charge | % Return After Sales Charge6 | ||||||||
1 Year | 3 Years | 5 Years | 10 Years | Since 6/30/06 Inception | 1 Year | 3 Years | 5 Years | 10 Years | |
Class A Shares3 | 3.11 | 4.29 | 4.69 | 4.02 | – | (1.54) | 2.69 | 3.73 | 3.54 |
Class B Shares4 | 2.43 | 3.51 | 3.93 | 3.24 | – | (2.07) | 2.41 | 3.59 | 3.24 |
Class Y Shares7 | 3.36 | 4.53 | 4.97 | – | 5.19 | – | – | – | – |
| Bank of America Merrill Lynch US Corp, Govt & Mortg Index | 5.40 | 6.08 | 6.48 | 5.47 | 6.71 | NA | NA | NA | NA |
See accompanying Notes to Management’s Discussion of Fund Performance.
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MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
Bond Fund (concluded)
| PORTFOLIO ALLOCATION AS A PERCENTAGE OF NET ASSETS | |
As of 10/31/12 | |
| Asset Backed | 1% |
| Corporate Notes and Bonds | 19% |
| Mortgage Backed | 12% |
| U.S. Government and Agency Obligations | 65% |
| Cash and Other Net Assets | 3% |
PERFORMANCE DISCUSSION
During the year, the MEMBERS Bond Fund (Class A shares without sales load) returned 3.11% while the Bank of America Merrill Lynch U.S. Corp. Govt. & Mtg. Index returned 5.40%. This underperformance resulted from multiple
factors related to our focus on risk management. First, while interest rates fluctuated, the period ended with an overall rally with ten-year yields declining by 42 basis points. The fund was positioned to protect from a rising-rate environment and had generally held lower duration investments. Additionally, the fund was positioned defensively by being underweight spread product (bonds which provide a higher yield than a similar maturity Treasury bond). These higher-risk bonds significantly outperformed during the period. Even though policy makers were quite active, with respect to fiscal reforms, we believe none of their actions actually resolved the underlying issues. The resulting economic uncertainty produced an environment in which bond investors continue to face significant risks, most prominently, the potential for loss of capital should rates rise. We believe that the continued, aggressive stimulus from the Federal Reserve has created an artificially high valuation for bonds in general. We continue to be concerned that rates could rise faster than most investors anticipate, resulting in significant losses for portfolios that have chased yield from riskier edges of the market. We will continue to manage the fund with the idea that bond investors expect their fixed-income portfolios to provide prudent protection of capital should the markets face a change in interest rate trends or the kind of economic and market disruption we saw in 2008.
FUND CHANGES
We made various sales and one purchase of Treasuries during the period to adjust duration and offset maturities. We also purchased an American Express new issue corporate bond during the period.
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MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
HIGH INCOME FUND
INVESTMENT STRATEGY HIGHLIGHTS
The MEMBERS High Income Fund invests primarily in lower-rated, higher-yielding income bearing securities, such as "junk" bonds. Because the performance of these securities has historically been strongly influenced by economic conditions, the fund may emphasize security selection in business sectors that favor the economic outlook. Under normal market conditions, the fund invests at least 80% of its assets in bonds rated lower than investment grade (BBB/Baa) and their unrated equivalents or other high-yielding securities.
PERFORMANCE HISTORY
Cumulative Performance of $10,000 Investment Since Inception1,2
Average Annual Total Return through October 31, 20122 | |||||||||
| % Return Without Sales Charge | % Return After Sales Charge6 | ||||||||
1 Year | 3 Years | 5 Years | 10 Years | Since 6/30/06 Inception | 1 Year | 3 Years | 5 Years | 10 Years | |
Class A Shares3 | 9.67 | 9.59 | 7.04 | 8.36 | – | 4.70 | 7.94 | 6.07 | 7.86 |
Class B Shares4 | 8.74 | 8.75 | 6.22 | 7.54 | – | 4.24 | 7.76 | 5.90 | 7.54 |
Class Y Shares7 | 9.92 | 9.85 | 7.29 | – | 7.55 | – | – | – | – |
| Bank of America Merrill Lynch US High Yield Master II, Constrained | 13.15 | 12.20 | 9.28 | 10.94 | 9.27 | NA | NA | NA | NA |
See accompanying Notes to Management’s Discussion of Fund Performance.
HIGH YIELD MARKET INVESTING ENVIRONMENT
For the twelve-month period ended October 31, 2012, high yield bonds returned 13.15%, supported by moderate GDP growth, historically low Treasury yields and strong equity markets. Fund flows into high yield were strong while issuance of corporate bonds was robust and found ready buyers. With generally favorable economic conditions for most companies and open capital markets, default trends remained in the 1.5-2% range and helped to bolster investor confidence. The next fiscal year begins with some significant macro concerns regarding the U.S. fiscal cliff, economic growth in Europe and Asia, and political instability in key global economic regions. While the resolution of these issues will affect markets broadly, the relatively attractive yields and low default rates should continue to support the high yield bond market through year-end.
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MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
High Income Fund (concluded)
| SECTOR ALLOCATION AS A PERCENTAGE OF NET ASSETS | |
As of 10/31/12 | |
Consumer Discretionary | 32% |
| Consumer Staples | 4% |
| Energy | 12% |
| Financials | 2% |
| Health Care | 12% |
| Industrials | 13% |
| Information Technology | 5% |
| Materials | 7% |
| Telecommunication Services | 7% |
| Utilities | 3% |
| Cash and Other Net Assets | 3% |
Consumer Discretionary includes securities in the following industries: Auto Components; Automobiles; Hotels, Restaurants & Leisure; Household Durables; Media; Specialty Retail; and Textiles, Apparel & Luxury Goods | |
PERFORMANCE DISCUSSION
The MEMBERS High Income Fund returned 9.67% (Class A shares without sales load) during the twelve-month period ended October 31, 2012. For the same period, the Bank of America Merrill Lynch U.S. High Yield Constrained Index returned 13.15%. Investors found riskier assets attractive during the period ended October 31. While we opportunistically purchased stronger credits that became available, we continued to maintain very stringent standards, avoiding the most aggressive companies. Being underweighted Financials (including, but not limited to, Ally Financial Inc., and Royal Bank of Scotland Group, PLC) and positive selection within the Telecommunication Services sector, including being underweighted Sprint Nextel Corp., detracted from performance. Adding to returns was a broad overweighting of the Energy sector and strong selection within the Utilities sector, including a lack of exposure to TXU Energy.
FUND CHANGES
The portfolio positioning remains focused on investing in higher quality companies with solid free-cash flow and consistent revenue trends. We continue to minimize exposure to companies with cyclical risks, those with meaningful European businesses, and those producing globally priced commodities such as coal. We expect the recent turnover levels of roughly 3-4% per month to continue, as higher coupon bonds get retired by the issuance of lower coupon bonds. The fund’s top industry exposure remains Health Care, in which we are overweighted versus the Index, as we find issuers that can prosper within the framework of the new regulatory framework for health care put in place by the Obama Administration. The fund’s convertible bond exposure was eliminated. We closed out those positions by selling into the strong equity markets, which persisted through fiscal year-end. The portfolio’s duration was also brought down to 3 years from 3.4 years as bonds aged and we proactively managed risk. The portfolio’s diversification remained robust with investments in 116 issuers across 27 industries.
Business support services, Health Care, Telecommunication Services, and Utilities were emphasized in the fund. Media/cable TV became a focus during the period whereas the fund’s exposure to oil and gas was decreased.
17
MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
DIVERSIFIED INCOME FUND
INVESTMENT STRATEGY HIGHLIGHTS
The MEMBERS Diversified Income Fund seeks income by investing in a broadly diversified array of securities including bonds, common stocks, real estate securities, foreign market bonds and stocks and money market instruments. Bonds, stock and cash components will vary, reflecting the portfolio managers’ judgments of the relative availability of attractively yielding and priced stocks and bonds. Generally, however, bonds will constitute up to 80% of the fund’s assets, stocks will constitute up to 60% of the fund’s assets, real estate securities will constitute up to 25% of the fund’s assets, foreign stocks and bonds will constitute up to 25% of the fund’s assets and money market instruments may constitute up to 25% of the fund’s assets. The fund intends to limit the investment in lower credit quality bonds to less than 50% of the fund’s assets.
PERFORMANCE HISTORY
Cumulative Performance of $10,000 Investment Since Inception1,2
Average Annual Total Return through October 31, 20122 | ||||||||||
| % Return Without Sales Charge | % Return After Sales Charge6 | |||||||||
1 Year | 3 Years | 5 Years | 10 Years | Since 7/31/12 Inception | 1 Year | 3 Years | 5 Years | 10 Years | Since 7/31/12 Inception | |
Class A Shares3 | 9.69 | 10.03 | 3.83 | 6.08 | – | 3.40 | 7.88 | 2.60 | 5.46 | – |
Class B Shares4 | 8.89 | 9.21 | 3.05 | 5.29 | – | 4.39 | 8.22 | 2.71 | 5.29 | – |
Class C Shares5 | – | – | – | – | 0.94 | – | – | – | – | (0.06) |
| Custom Blended Index (50% Fixed 50% Equity) | 10.37 | 9.97 | 3.87 | 6.51 | 1.69 | NA | NA | NA | NA | NA |
See accompanying Notes to Management’s Discussion of Fund Performance.
| PORTFOLIO ALLOCATION AS A PERCENTAGE OF NET ASSETS | |
As of 10/31/12 | |
| Common Stocks | 54% |
| Corporate Notes and Bonds | 14% |
| Mortgage Backed | 8% |
| U.S. Government and Agency Obligations | 18% |
| Cash and Other Net Assets | 6% |
PERFORMANCE DISCUSSION
The Diversified Income Fund returned 9.69% (Class A shares without sales load) while the Custom Blended Index benchmark returned 10.37%. Our dividend-paying stocks had slight outperformance against the broader market as investors focused on income, while
18
MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
Diversified Income Fund (concluded)
our conservatively positioned bond portfolio lagged. In bonds, yield-seeking investors were willing to take on risk due to the low-yielding environment. While we generally do look to bonds for income, the aggressive pricing in the market gave us concern over principle risk. As a result, the bond portion of the fund was conservatively positioned and did not fully participate in the more aggressively priced area of the market. This detracted from the overall fund performance relative to the benchmark. Finally, the fund had a modest overweight to equities due to the aggressive pricing in the bond market, which was additive to performance.
Stock selection accounted for all of the relative strength compared to the Russell 1000 Index. The best results were in the Financial, Energy, and Health Care sectors. In Financials, regional bank M&T Bank Corp. and reinsurance company PartnerRe Ltd. contributed to performance, while deep-water oil driller Ensco PLC drove positive returns in Energy. Pharmaceutical manufacturer Merck & Co. Inc. was the most additive stock in the portfolio during the period. Other companies with strong performance were Pfizer Inc., another pharmaceutical manufacturer, spirits maker Diageo PLC and exploration and production firm ConocoPhillips.
There was relative weakness in the Utility and Technology Sectors. Utility services holding company Exelon Corp. was the most detractive stock in the portfolio, and semiconductor company Intel Corp. also negatively impacted results. Other notable detractors were railroad Norfolk Southern Corp. and industrial gas firm Air Products & Chemicals Inc.
The fund’s bond holdings benefitted from being underweighted in the treasury and mortgage sector of the market which relatively underperformed corporate bonds. The fund also benefitted from a significant overweighting to BBB rated securities and a modest exposure to high-yield securities. The fund’s fixed income positions were slightly underweighted in Financials which modestly reduced performance. Performance also suffered to a degree from a defensive posture against what we believe to be an eventual increase in interest rates.
FUND CHANGES
We increased equity exposure to the Consumer Discretionary Sector during the period although we remain in an underweighted position. We increased investments in the media space by purchasing Viacom Inc. and adding to an existing position in Time Warner Inc. We also added to global restaurant franchise McDonald’s Corp.
We also raised the fund’s equity Health Care Sector exposure to an overweight position. The fund bought global medical technology company Becton Dickinson & Co. and added to Johnson & Johnson. We believe our health care holdings are strong franchises with attractive valuations which pay dividends that can grow over time. We reduced the fund’s Information Technology sector exposure during the period and eliminated Utility sector exposure by selling Exelon Corp. and FirstEnergy.
During the year, the fund’s bond allocation saw numerous purchases of Treasury securities as bonds matured and to adjust portfolio duration. Additionally, the fund purchased corporate bonds in American Express Co., International Business Machines Corp. (IBM), and several Federal National Mortgage Association mortgage pools. The fund’s allocation to corporate bonds remained about the same at the end of the year compared to the beginning of its fiscal year.
19
MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
EQUITY INCOME FUND
INVESTMENT STRATEGY HIGHLIGHTS
The MEMBERS Equity Income Fund invests primarily in common stocks of large-and mid-capitalization companies that are, in the view of the fund’s investment adviser, selling at a reasonable price in relation to their long-term earnings growth rates. The portfolio managers will allocate the fund’s assets among stocks in sectors of the economy based upon their expected earnings growth rates, adjusted to reflect their views on economic and market conditions and sector risk factors.
The fund will seek to generate current earnings from option premiums by writing (selling) covered call options on a substantial portion of its portfolio securities. The fund seeks to produce a high level of current income and current gains generated from option writing premiums and, to a lesser extent, from dividends. The extent of option writing activity will depend upon market conditions and the portfolio manager’s ongoing assessment of the attractiveness of writing call options on the fund’s stock holdings. In addition to providing income, covered call writing helps to reduce the volatility (and risk profile) of the fund by providing downside protection.
PERFORMANCE HISTORY
Cumulative Performance of $10,000 Investment Since Inception1,2
Average Annual Total Return through October 31, 20122 | |||||||
| % Return Without Sales Charge | % Return After Sales Charge6 | ||||||
1 Year | 3 Years | Since 10/31/09 Inception | Since 7/31/12 Inception | 1 Year | 3 Years | Since Inception | |
Class A Shares3 | 8.61 | 6.94 | 6.94 | – | 2.36 | 4.85 | 4.85 |
Class C Shares5 | – | – | – | 2.88 | – | – | 1.85 |
Class Y Shares7 | 8.73 | 7.15 | 7.15 | – | – | – | – |
Class R6 Shares8 | – | – | – | 3.07 | – | – | – |
| S&P 500 Index | 15.21 | 13.21 | 13.21 | 2.96 | NA | NA | NA |
| CBOE BuyWrite Monthly Index | 13.07 | 9.21 | 9.21 | 1.05 | NA | NA | NA |
See accompanying Notes to Management’s Discussion of Fund Performance.
20
MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
Equity Income Fund (concluded)
| SECTOR ALLOCATION AS A PERCENTAGE OF NET ASSETS | ||
As of 10/31/12 | ||
| Fund | S&P 500 Index | |
| Consumer Discretionary | 9% | 11% |
| Consumer Staples | – | 11% |
| Energy | 13% | 11% |
| Financials | 8% | 15% |
| Health Care | 15% | 12% |
| Industrials | 7% | 10% |
| Information Technology | 25% | 19% |
| Materials | 4% | 4% |
| Telecommunication Services | – | 3% |
| Utilities | – | 4% |
| U.S. Government and Agency Obligations | 9% | – |
| Cash and Other Net Assets | 10% | – |
PERFORMANCE DISCUSSION
The CBOE BuyWrite Monthly Index (BXM), which represents a passive covered call strategy, returned 13.07%, for the full twelve-month period, while the MEMBERS Equity Income Fund delivered an 8.61% return (Class A shares without sales load).
Typically, a covered call strategy will lag the overall market during periods of strong upward movement in stock prices as the sale of call options against stock positions limits full participation in favor of higher income potential and downside protection. This impacted the fund’s ability to keep up with the S&P 500 return over the past twelve months. In addition, the sector positioning of the fund was a minor detractor from performance due primarily to an overweighted positioning in Information Technology and Energy sectors, which underperformed. The fund’s average cash position was above 10% due to a fairly steady stream of stock assignments which occurred as a direct result of the rising market. The performance of the fund’s individual holdings was mixed as strong gains in a number of portfolio holdings were limited by the call options. Strong performance in a number of technology holdings such as EBAY Inc., Google Inc. and QUALCOMM Inc. was partially offset by weakness in FLIR Systems Inc. and Altera Corp. Strong performance in Financials was somewhat curtailed as a number of holdings were called away during the year, including Wells Fargo & Co., US Bancorp and T. Rowe Price. Consumer Discretionary stock performance was also mixed with poor performance from Best Buy Co. Inc., Bed Bath & Beyond Inc., particularly late in the period, and Staples Inc., offset by strong performance in Target Corp., Lowe’s Companies and CarMax Inc.
As stated above, the fund lagged the BXM Index during the full fiscal year. However, this occurred mainly in late 2011 due to a sharp decline in short term volatility. This decline positively impacted the BXM Index because it writes short term options and had a lesser effect on the fund since it generally writes longer term options. However, the fund outpaced the BXM on a 2012 calendar year-to-date basis through October 2012.
FUND CHANGES
Following the sharp decline in late 2011, volatility has remained historically low for most of 2012. This has had the effect of keeping call option prices relatively low. Despite this, the fund has continued to meet its distribution objectives. Given the strong performance of the market over the past twelve months in the face of growing obstacles, stubborn high uemployment, federal deficits, and the "fiscal cliff," the fund remains focused on owning high quality securities and providing additional downside protection through the call option writing process.
21
MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
LARGE CAP VALUE FUND
INVESTMENT STRATEGY HIGHLIGHTS
The MEMBERS Large Cap Value Fund will, under normal market conditions, invest primarily in large cap stocks. The fund follows a "value" approach, meaning the portfolio managers seek to invest in stocks at prices below their perceived intrinsic value as estimated based on fundamental analysis of the issuing company and its prospects. By investing in value stocks, the fund attempts to limit the downside risk over time but may also produce smaller gains than other stock funds if their intrinsic values are not realized by the market or if growth-oriented investments are favored by investors. The fund will diversify its holdings among various industries and among companies within those industries. The fund typically sells a stock when the fundamental expectations for buying it no longer apply, the price exceeds its intrinsic value or other stocks appear more attractively priced relative to their intrinsic values.
PERFORMANCE HISTORY
Cumulative Performance of $10,000 Investment Since Inception1,2
Average Annual Total Return through October 31, 20122 | |||||||||
| % Return Without Sales Charge | % Return After Sales Charge6 | ||||||||
1 Year | 3 Years | 5 Years | 10 Years | Since 6/30/06 Inception | 1 Year | 3 Years | 5 Years | 10 Years | |
Class A Shares3 | 14.37 | 11.26 | (2.14) | 5.55 | – | 7.78 | 9.10 | (3.29) | 4.93 |
Class B Shares4 | 13.41 | 10.44 | (2.87) | 4.76 | – | 8.91 | 9.47 | (3.24) | 4.76 |
Class Y Shares7 | 14.64 | 11.56 | 11.89 | – | 1.69 | – | – | – | – |
Russell 1000(R) Value Index | 16.89 | 12.81 | (1.00) | 7.34 | 2.31 | NA | NA | NA | NA |
See accompanying Notes to Management’s Discussion of Fund Performance.
22
MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
Large Cap Value Fund (concluded)
| SECTOR ALLOCATION AS A PERCENTAGE OF NET ASSETS | ||
As of 10/31/12 | ||
| Fund | Russell 1000(R) Value Index | |
| Consumer Discretionary | 7% | 8% |
| Consumer Staples | 10% | 7% |
| Energy | 14% | 17% |
Financials | 25% | 27% |
| Health Care | 17% | 12% |
| Industrials | 11% | 9% |
| Information Technology | 5% | 6% |
| Materials | 2% | 4% |
| Telecommunication Services | 2% | 3% |
| Utilities | – | 7% |
| Cash and Other Net Assets | 7% | – |
| Financials includes securities in the following industries: Capital Markets; Commercial Banks; Insurance; and Real Estate Management & Development. | ||
PERFORMANCE DISCUSSION
During the twelve-month period ended October 31, 2012, the MEMBERS Large Cap Value Fund gained 14.37% (Class A shares without sales load), while the Russell 1000(R) Value Index returned 16.89%.
Sector allocation accounted for the relative weakness while stock selection was positive. Performance was hurt by overweight positions in Industrials, Energy and Information Technology and underweight positions in Consumer Discretionary and Telecommunications.
In terms of stock selection, there were strong results in the Financials sector driven by bank holdings U.S. Bancorp, Wells Fargo & Co. and M&T Bank Corp. Health Care was another area of relative strength as pharmaceutical stocks Merck & Co. Inc. and Pfizer Inc. performed well. Other companies that were notable contributors included software firm Microsoft Corp., spirits manufacturer Diageo PLC, and deep-water oil driller Ensco PLC.
Railroad company Norfolk Southern Co. and industrial conglomerate Emerson Electric Co. negatively impacted results in Industrials, while exploration and production companies Occidental Petroleum Corp., Canadian Natural Resources Ltd. and Apache Corp. detracted from performance in Energy.
FUND CHANGES
We increased exposure to the Financials sector during the period, although the fund held a modestly underweight position at the end of the period. We increased the fund’s insurance investments by adding to existing positions in specialty insurer Markel Corp. and financial conglomerate Berkshire Hathaway Inc. We also raised the fund’s Health Care sector exposure and the fund had an overweight position at the end of the period. The fund bought lab test and diagnostic company Laboratory Corporation of America Holdings and added to diversified health care company Johnson & Johnson.
We reduced the fund’s exposure to the Utilities and Information Technology sectors during the period. We sold utility companies Exelon Corp. and NextEra Energy Inc. and currently the fund has no exposure to the sector. In Information Technology, we sold processing solutions provider Broadridge Financial Solutions Inc., router manufacturing firm Cisco Systems Inc., software and consulting firm International Business Machines (IBM) and money transfer agent Western Union Co.
23
MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
LARGE CAP GROWTH FUND
INVESTMENT STRATEGY HIGHLIGHTS
The MEMBERS Large Cap Growth Fund invests primarily in common stocks of larger companies and will, under normal market conditions, maintain at least 80% of its assets in large cap stocks. The fund follows a "growth" approach, meaning the portfolio managers seek stocks that have low market prices relative to their perceived growth capabilities as estimated based on fundamental analysis of the issuing companies and their prospects. The fund typically seeks higher earnings growth capabilities in the stocks it purchases, and may include some companies undergoing more significant changes in their operations or experiencing significant changes in their markets. The fund will diversify its holdings among various industries and among companies within those industries. The fund has an active trading strategy which will lead to more portfolio turnover than a more passively-managed fund. The fund typically sells a stock when the fundamental expectations for buying it no longer apply, the price exceeds its perceived value or other stocks appear more attractively priced relative to their prospects.
PERFORMANCE HISTORY
Cumulative Performance of $10,000 Investment Since Inception1,2
Average Annual Total Return through October 31, 20122 | |||||||||
| % Return Without Sales Charge | % Return After Sales Charge6 | ||||||||
1 Year | 3 Years | 5 Years | 10 Years | Since 6/30/06 Inception | 1 Year | 3 Years | 5 Years | 10 Years | |
Class A Shares3 | 7.38 | 9.48 | (0.12) | 6.08 | – | 1.18 | 7.34 | (1.30) | 5.45 |
Class B Shares4 | 6.63 | 8.68 | (0.85) | 5.30 | – | 2.13 | 7.68 | (1.25) | 5.30 |
Class Y Shares7 | 7.72 | 9.77 | 0.14 | – | 3.99 | – | – | – | – |
Russell 1000(R) Growth Index | 13.02 | 14.12 | 1.95 | 7.15 | 5.59 | NA | NA | NA | NA |
See accompanying Notes to Management’s Discussion of Fund Performance.
24
MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
Large Cap Growth Fund (concluded)
| SECTOR ALLOCATION AS A PERCENTAGE OF NET ASSETS | ||
As of 10/31/12 | ||
| Fund | Russell 1000(R) Growth Index | |
| Consumer Discretionary | 15% | 16% |
| Consumer Staples | 10% | 13% |
| Energy | 7% | 4% |
| Financials | 5% | 5% |
| Health Care | 12% | 12% |
| Industrials | 10% | 12% |
Information Technology | 32% | 31% |
| Materials | 4% | 4% |
| Telecommunication Services | 2% | 3% |
| Utilities | – | – |
| Cash and Other Net Assets | 3% | – |
IInformation Technology includes securities in the following industries: Communications Equipment; Computers & Peripherals; Electrical Equipment; Internet Software & Services; IT Services; Semiconductors & Semiconductor Equipment; and Software. | ||
PERFORMANCE DISCUSSION
During the twelve-month period ended October 31, 2012, the MEMBERS Large Cap Growth Fund returned 7.38% (Class A shares without sales load) while the Russell 1000(R) Growth Index returned 13.02%.
By design, the portfolio has more exposure to higher quality companies and has a lower dividend yield. We believe that under more normal economic conditions, our philosophy is best suited for above average gains. However, for the fiscal period, the fund underperformed because of the investment environment generally not favoring growth stocks.
The Health Care sector was the largest detractor to performance. Allscripts Healthcare Solutions Inc., a healthcare information technology company, overly promoted its progress on system integration, causing a sharp 42% sell off and management re-alignment. We sold this stock during the period.
Also, SanDisk Corp., a solid state memory chip provider whose products are used in tablets and smartphones, did not execute as expected, causing a 25% stock drop. We lost confidence in the management controls in place, prompting us to exit the stock.
Partially offsetting these impairments, the fund had a 60% gain in Comcast Corp., the cable and internet company, which is growing its free cash flow through innovative product offerings which is cementing customer loyalty.
Additionally, the fund participated in the 47% gain in Apple and that of Visa Inc. which gained more than 45% for the period.
During the last fiscal year, while we under-performed the market, our relative performance improved each quarter. We spent the year improving upon the performance deficit of the first quarter.
FUND CHANGES
In response to the market environment, we have increased the average size of companies held. In addition, we are now more diversified on a sector basis while continuing our focus on fundamental execution.
25
MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
MID CAP FUND
INVESTMENT STRATEGY HIGHLIGHTS
The MEMBERS Mid Cap Fund invests generally in common stocks of midsize companies and will, under normal market conditions, maintain at least 80% of its assets in mid cap securities. The fund seeks attractive long-term returns through bottom-up security selection based on fundamental analysis in a diversified portfolio of high-quality growth companies with attractive valuations. These will typically be industry leading companies in niches with strong growth prospects. The fund’s portfolio managers believe in selecting stocks for the fund that show steady, sustainable growth and reasonable valuation. As a result, stocks of issuers that are believed to have a blend of both value and growth potential will be selected for investment. Stocks are generally sold when target prices are reached, company fundamentals deteriorate or more attractive stocks are identified.
PERFORMANCE HISTORY
Cumulative Performance of $10,000 Investment Since Inception1,2
Average Annual Total Return through October 31, 20122 | |||||||||
| % Return Without Sales Charge | % Return After Sales Charge6 | ||||||||
1 Year | 3 Years | 5 Years | 10 Years | Since 6/30/06 Inception | 1 Year | 3 Years | 5 Years | 10 Years | |
Class A Shares3 | 14.70 | 15.21 | 0.46 | 8.13 | – | 8.14 | 12.97 | (0.71) | 7.50 |
Class B Shares4 | 13.91 | 14.36 | (0.31) | 7.32 | – | 9.41 | 13.46 | (0.71) | 7.32 |
Class Y Shares7 | 14.95 | 15.43 | 0.70 | – | 4.55 | – | – | – | – |
Russell Midcap(R) Index | 12.15 | 15.59 | 1.70 | 10.52 | 4.61 | NA | NA | NA | NA |
See accompanying Notes to Management’s Discussion of Fund Performance.
26
MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
Mid Cap Fund (concluded)
| SECTOR ALLOCATION AS A PERCENTAGE OF NET ASSETS | ||
As of 10/31/12 | ||
| Fund | Russell Midcap(R) Index | |
| Consumer Discretionary | 21% | 17% |
| Consumer Staples | 4% | 6% |
| Energy | 7% | 7% |
| Financials | 24% | 20% |
| Health Care | 8% | 10% |
| Industrials | 19% | 13% |
| Information Technology | 4% | 13% |
| Materials | 6% | 6% |
| Telecommunication Services | – | 2% |
| Utilities | – | 6% |
| Cash and Other Net Assets | 7% | – |
PERFORMANCE DISCUSSION
During the twelve-month period ended October 31, 2012, the MEMBERS Midcap Fund gained 14.70% (Class A shares without sales load), which exceeded the return on the Russell Midcap(R) Index of 12.15%, by more than 2.5%.
Stock selection accounted for most of the relative strength compared to the benchmark. The best results were in the Materials, Energy and Consumer Discretionary sectors. In Materials, specialty coating company Valspar Corp. contributed nicely to performance, while exploration and production firm EOG Resources Inc. helped generate excess returns in Energy. A few Consumer Discretionary holdings were notable contributors, including off-price retailer TJX Companies, which was the most additive stock in the portfolio, along with cable media companies Liberty Global Inc. and Discovery Communications Inc.
There was relative weakness in the Health Care and Technology sectors. Biotechnology research and diagnostic product manufacturer Techne Corporation and independent lab testing firm Laboratory Corp. of America Holdings negatively impacted results within Health Care. In Technology, thermal imaging systems manufacturer FLIR Systems Inc. was the most detractive stock in the portfolio. Other notable detractors were financial conglomerate Leucadia National Corp. and home furnishing retailer Bed Bath and Beyond, Inc.
FUND CHANGES
We increased exposure to the Industrial and Consumer Discretionary sectors during the period and maintain overweighted positions. We increased investments in industrial logistics providers C.H. Robinson Worldwide Inc. and Expeditors International of Washington Inc. after shares reached attractive valuations. These companies generate impressive returns on invested capital and have significant growth opportunities. We also raised our Consumer Discretionary weighting by purchasing after-market automotive retailer Advanced Auto Parts Inc. and luxury jeweler Tiffany & Co. We believe these franchises are industry leaders with strong brand recognition and limited competitive threats from the internet.
We reduced the fund’s exposure to the Information Technology and Financials sectors during the period. The portfolio is underweighted in the Technology sector after selling FLIR Systems, securities processing provider Broadridge Financial Solutions Inc. and money transfer agent Western Union. Within Financials, we sold asset management firms T. Rowe Price Group Inc. and Northern Trust Corp.
27
MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
SMALL CAP FUND
INVESTMENT STRATEGY HIGHLIGHTS
The MEMBERS Small Cap Fund invests primarily in a diversified mix of common stocks of small cap U.S. companies that are believed to be undervalued by various measures and offer sound prospects for capital appreciation. The portfolio managers employ a value-oriented investment approach in selecting stocks, using proprietary fundamental research to identify securities of companies they believe have attractive valuations. The portfolio managers focus on companies with a record of above average rates of profitability that sell at a discount relative to the overall small cap market. Through fundamental research, the portfolio managers seek to identify those companies which possess one or more of the following characteristics: sustainable competitive advantages within a market niche; strong profitability and free cash flows; strong market share positions and trends; quality of and share ownership by management; and financial structures that are more conservative than the relevant industry average.
PERFORMANCE HISTORY
Cumulative Performance of $10,000 Investment Since Inception1,2
Average Annual Total Return through October 31, 20122 | |||||||||
| % Return Without Sales Charge | % Return After Sales Charge6 | ||||||||
1 Year | 3 Years | 5 Years | Since 12/27/06 Inception | Since 1/9/07 Inception | 1 Year | 3 Years | 5 Years | Since Inception | |
Class A Shares3 | 13.08 | 14.17 | 3.95 | 3.99 | – | 6.56 | 11.95 | 2.73 | 2.95 |
Class B Shares4 | 12.21 | 13.23 | 3.27 | 3.30 | – | 7.71 | 12.31 | 2.92 | 3.15 |
Class Y Shares7 | 13.39 | 14.43 | 4.22 | – | 4.60 | – | – | _ | – |
Russell 2000(R) Index | 12.08 | 14.82 | 1.19 | 2.05 | 2.30 | NA | NA | NA | NA |
See accompanying Notes to Management’s Discussion of Fund Performance.
28
MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
Small Cap Fund (concluded)
| SECTOR ALLOCATION AS A PERCENTAGE OF NET ASSETS | ||
As of 10/31/12 | ||
| Fund | Russell 2000(R) Index | |
| Consumer Discretionary | 13% | 14% |
| Consumer Staples | 2% | 4% |
| Energy | 3% | 6% |
| Financials | 21% | 22% |
| Health Care | 11% | 12% |
Industrials | 27% | 15% |
| Information Technology | 8% | 17% |
| Materials | 8% | 5% |
| Telecommunication Services | – | 1% |
| Utilities | 5% | 4% |
| Cash and Other Net Assets | 2% | – |
Industrials includes securities in the following industries: Aerospace & Defense; Air Freight & Logistics; Commercial Services & Supplies; Construction & Engineering; Electrical Equipment; Industrial Conglomerates; Machinery; Marine; Road & Rail; and Trading Companies & Distributors. | ||
PERFORMANCE DISCUSSION
The Class A shares (without sales load) of the MEMBERS Small Cap Fund returned 13.08% for the twelve-month period ended October 31, 2012, while its benchmark, the Russell 2000(R) Index, returned 12.08% for the same period.
The fund’s outperformance was primarily due to strong selection in the Industrials, Information Technology, and Energy sectors; this was somewhat offset by weaker stock selection within Materials and Consumer Discretionary. Allocation among sectors, a residual of the bottom-up stock selection process, was also additive in part due to underweighting exposure to Information Technology and Energy.
The fund’s largest contributors to relative and absolute performance during the period included Delphi Financial Group Inc., an insurance holding company specializing in life and disability insurance, U.S. retailer Stage Stores Inc., and diversified industrial manufacturer Carlisle Companies Inc., which has significant operations in commercial roofing and specialty tires and wheels.
The fund’s largest relative detractors during the period included Arbitron Inc., a media and marketing information services firm; Matthews International Corp., a designer, manufacturer and marketer of memorialization products; and United Stationers Inc., a wholesale distributor of business products. The fund’s position in, Websense Inc. was also among top detractors from absolute performance during the period.
FUND CHANGES
The fund’s investment approach emphasizes individual stock selection; sector weights are a residual of our bottom-up investment process. We do, however, carefully consider diversification across economic sectors to limit risk. As of the end of the period, the fund was most overweight in the Industrials and Materials sectors relative to the Russell 2000(R) Index and most underweighted in Information Technology.
29
MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
INTERNATIONAL STOCK FUND
INVESTMENT STRATEGY HIGHLIGHTS
The MEMBERS International Stock Fund will invest, under normal market conditions, primarily in foreign equity securities. Typically, a majority of the fund’s assets are invested in relatively large capitalization stocks of companies located or operating in developed countries. The fund may also invest up to 30% of its assets in securities of companies whose principal business activities are located in emerging market countries. The portfolio managers typically maintain this segment of the fund’s portfolio in such stocks which it believes have a low market price relative to their perceived value based on fundamental analysis of the issuing company and its prospects. The fund may also invest in foreign debt and other income bearing securities at times when it believes that income bearing securities have greater capital appreciation potential than equity securities.
PERFORMANCE HISTORY
Cumulative Performance of $10,000 Investment Since Inception1,2
Average Annual Total Return through October 31, 20122 | |||||||||
| % Return Without Sales Charge | % Return After Sales Charge6 | ||||||||
1 Year | 3 Years | 5 Years | 10 Years | Since 6/30/06 Inception | 1 Year | 3 Years | 5 Years | 10 Years | |
Class A Shares3 | 9.23 | 4.92 | (3.32) | 9.05 | – | 2.92 | 2.86 | (4.46) | 8.40 |
Class B Shares4 | 8.39 | 4.14 | (4.06) | 8.22 | – | 3.89 | 3.05 | (4.36) | 8.22 |
Class Y Shares7 | 9.61 | 5.18 | (3.09) | – | 1.78 | – | – | – | – |
| MSCI EAFE Index (net) | 4.61 | 2.83 | (5.81) | 7.73 | (0.01) | NA | NA | NA | NA |
See accompanying Notes to Management’s Discussion of Fund Performance.
INTERNATIONAL STOCK INVESTING ENVIRONMENT
The twelve-month period ended October 31, 2012 was eventful and volatile, but ultimately ended with an increase for international equity markets. Slowing global economic growth and sovereign debt problems weighed on investors, however, European Union (EU) and European Central Bank (ECB) actions helped allay market concerns. In December, the ECB announced a plan to backstop the banking system through liquidity provision. The Long-Term Refinancing Operation, conducted in December 2011 and February 2012, provided over a trillion dollars of three-year financing at 1% interest rates, easing financing concerns for banks and sovereigns. In June 2012, an EU summit proposed the establishment of a single banking supervisor and allowing the European Stability
30
MEMBERS Mutual Funds | Management’s Discussion of Fund Performance | October 31, 2012
International Stock Fund (concluded)
Mechanism (ESM) to directly inject capital into troubled banks. In July, ECB President Mario Draghi signaled that the bank is committed to preserving the euro zone, and would do "whatever it takes." In September, the Outright Monetary Transactions program, focused on unlimited purchases of sovereign bonds, was introduced. Lastly, Germany’s Constitutional Court ruled in favor of the ESM, the euro zone’s permanent bailout facility, bolstering confidence.
Elsewhere, the U.S. Federal Reserve (the Fed) announced its third round of quantitative easing (QE3), which focuses on the purchase of mortgage-backed securities. Fed Chairman Ben Bernanke stated that QE3 would remain open-ended until the U.S. labor market improved. Japan announced its own monetary easing in September by increasing its asset-purchase program. In emerging markets, China reduced interest rates and decreased bank reserve requirements as Chinese exports and manufacturing activity declined.
| GEOGRAPHICAL ALLOCATION AS A PERCENTAGE OF NET ASSETS | |
As of 10/31/12 | |
| Africa | 1% |
| Europe (excluding United Kingdom) | 39% |
| Japan | 15% |
| Latin America | 2% |
| Pacific Basin | 10% |
| United Kingdom | 23% |
| Other Countries | 5% |
| Cash and Other Net Assets | 5% |
PERFORMANCE DISCUSSION
The MEMBERS International Stock Fund returned 9.23% (Class A shares without sales load) during the reporting period, while the MSCI EAFE Index (Net) returned 5.15%. The fund’s strong outperformance was primarily driven by stock selection.
Within the Information Technology sector, Spanish travel information systems provider Amadeus IT Holding SA performed well on strong results including market-share gains. Positions in emerging market companies Samsung Electronics Co. Ltd. and Cielo SA also performed well.
Within the Materials sector, Australian building materials supplier James Hardie Industries PLC benefited the portfolio due to improving conditions within the U.S. housing market.
Additionally, stock selection in emerging markets added to relative returns. In addition to the aforementioned, South African retailer Mr. Price Group continued its strong relative returns and operational performance.
The portfolio was negatively impacted by stock selection in the Industrials sector. Japanese construction equipment maker Komatsu Ltd. underperformed following slower growth in global demand.
Low exposure to the Financials sector also detracted from relative returns over the period.
FUND CHANGES
During the period, we found interesting stock-specific opportunities, which led to changes in the fund’s exposures. Purchasing Red Electrica Corp. SA (Spain) and RWE AG (Germany) decreased our underweighting to the Utilities sector. We increased the fund’s exposure to the Health Care sector through purchases of Mediclinic International Ltd. (South Africa), Genomma Lab Internacional SAB de CV (Mexico), and Bayer AG (Germany).
The fund sold its positions in British Sky Broadcasting Group PLC (United Kingdom), Mr. Price Group (South Africa) and Yamada Denki Co. Ltd. (Japan), thereby reducing the exposure to the Consumer Discretionary sector.
Regionally, we reduced our exposure to the United Kingdom with the sale of William Morrison, Vodafone Group PLC, and British Sky Broadcasting Group PLC. As a consequence of the aforementioned purchases, we reduced our underweighting to Continental Europe.
31
MEMBERS Mutual Funds | October 31, 2012
Notes to Management’s Discussion of Fund Performance
| NANot Applicable. Index returns do not reflect sales charges, fees or expenses. |
1This chart compares a $10,000 investment made in the fund to a $10,000 investment made in the index. |
2Fund returns are calculated after fund expenses have been subtracted and assume that dividends and capital gains are reinvested in additional shares of the fund. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Investment return and principal value will fluctuate, so an investor’s shares, when redeemed, may be worth more or less than when purchased. Further information relating to the fund’s performance is contained in the Prospectus and elsewhere in this report. The fund’s past performance is not indicative of future performance. Current performance may be lower or higher than the performance data cited. For fund performance data current to the most recent month-end, please call 1-800-877-6089 or visit www.membersfunds.com. Indices are unmanaged and investors cannot invest in them directly. Index returns do not reflect fees or expenses. |
3Maximum sales charge is 5.75% for class A shares for the Conservative, Moderate and Aggressive Allocation Funds and the Diversified Income, Equity Income, Large Cap Value, Large Cap Growth, Mid Cap, Small Cap and International Stock Funds. The maximum sales charge is 4.50% for the Bond and High Income Fund class A shares. |
4Maximum contingent deferred sales charge (CDSC) is 4.50% for class B shares, which is reduced after 12 months and eliminated after six years. |
5Maximum contingent deferred sales charge (CDSC) is 1% for class C shares, which is eliminated after one year. |
6Assumes maximum applicable sales charge. |
7Class Y Shares are only available for purchase by MEMBERS Funds and other affiliated asset allocation funds, in managed account programs, and to certain other investors as described in the current Prospectus. |
8Class R6 shares are generally only available for purchase by retirement plan investors and certain other institutional investors. |
BENCHMARK DESCRIPTIONS
Allocation Fund Indexes
The Conservative Allocation Fund Custom Index consists of 65% Merrill Lynch U.S. Corporate, Government and Mortgage Index, 30% Russell 3000(R) Index and 5% MSCI EAFE Index. See market indexes descriptions below.
The Moderate Allocation Fund Custom Index consists of 40% Merrill Lynch U.S. Corporate, Government and Mortgage Index, 45% Russell 3000(R) Index and 15% MSCI EAFE Index. See market indexes descriptions below.
The Aggressive Allocation Fund Custom Index consists of 15% Merrill Lynch U.S. Corporate, Government and Mortgage Index, 55% Russell 3000(R) Index and 30% MSCI EAFE Index. See market indexes descriptions below.
Hybrid Fund Indexes
The Custom Blended Index consists of 50% S&P 500 Index and 50% Bank of America Merrill Lynch U.S. Corporate, Government & Mortgage Index. See market indexes’ descriptions below.
Market Indexes
The CBOE BuyWrite Monthly Index (BXM) is a benchmark index designed to track the performance of a hypothetical buy-write strategy (i.e. holding a long position in and selling covered call options on that position) on the S&P 500 Index.
The Bank of America Merrill Lynch U.S. Corporate, Government & Mortgage Index is a broad-based measure of the total rate of return performance of the U.S. investment-grade bond markets. The index is a capitalization-weighted aggregation of outstanding U.S. treasury, agency and supranational mortgage pass-through, and investment-grade corporate bonds meeting specified selection criteria.
32
MEMBERS Mutual Funds | Notes to Management’s Discussion of Fund Performance | October 31, 2012
The Bank of America Merrill Lynch U.S. High Yield Master II Constrained Index tracks the performance of below investment grade U.S. dollar denominated corporate bonds publicly issued in the U.S. domestic market, but limits any individual issuer to a maximum weighting of 2%.
The MSCI EAFE (Europe, Australasia & Far East) Index is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI EAFE Index (net) is calculated on a total return basis with dividends reinvested after the deduction of withholding taxes.
The Russell 1000(R) Index is a large-cap market index which measures the performance of the 1,000 largest companies in the Russell 3000(R) Index (see definition below).
The Russell 1000(R) Growth Index is a large-cap market index which measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.
The Russell 1000(R) Value Index is a large-cap market index which measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.
The Russell 2000(R) Index is a small-cap market index which measures the performance of the smallest 2,000 companies in the Russell 3000(R) Index (see definition below.)
The Russell 3000(R) Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents 98% of the investable U.S. equity market.
The Russell Midcap(R) Index is a mid-cap market index which measures the performance of the mid-cap segment of the U.S. equity universe.
The S&P 500 Index is a large-cap market index which measures the performance of a representative sample of 500 leading companies in leading industries in the U.S.
33
MEMBERS Mutual Funds | October 31, 2012
Conservative Allocation Fund Portfolio of Investments
Shares | Value (Note 2) | |
| INVESTMENT COMPANIES - 99.6% | ||
| Bond Funds - 63.7% | ||
| DoubleLine Total Return Bond Fund | 109,630 | $ 1,246,494 |
| Franklin Floating Rate Daily Access Fund Advisor Class | 410,417 | 3,738,903 |
| Madison Investment Grade Corporate Bond Fund (A) | 322,000 | 3,793,164 |
| Madison Mosaic Institutional Bond Fund (A) | 403,262 | 4,552,828 |
| MEMBERS Bond Fund Class Y (A) | 518,798 | 5,520,006 |
| MEMBERS High Income Fund Class Y (A) | 534,999 | 3,798,496 |
| Metropolitan West Total Return Bond Fund Class I | 601,359 | 6,657,046 |
| PIMCO Investment Grade Corporate Bond Fund Institutional Class | 335,636 | 3,802,758 |
| PIMCO Total Return Fund Institutional Class | 565,618 | 6,555,510 |
| 39,665,205 | ||
| Foreign Bond Funds - 5.0% | ||
| TCW Emerging Markets Income Fund Class I | 265,489 | 2,469,052 |
| Templeton Global Bond Fund Advisor Class | 47,093 | 633,398 |
| 3,102,450 | ||
| Foreign Stock Funds - 5.4% | ||
| MEMBERS International Stock Fund Class Y (A) | 144,401 | 1,562,415 |
| Vanguard FTSE All-World ex-U.S. ETF | 40,616 | 1,758,267 |
| 3,320,682 | ||
Shares | Value (Note 2) | |
| Money Market Funds - 0.6% | ||
| State Street Institutional U.S. Government Money Market Fund | 368,583 | $ 368,583 |
| Stock Funds - 24.9% | ||
| iShares Russell Midcap Index Fund | 6,611 | 723,839 |
| iShares S&P 100 Index Fund ETF | 43,462 | 2,816,772 |
| Madison Mosaic Disciplined Equity Fund (A) | 247,665 | 3,484,649 |
| MEMBERS Equity Income Fund Class Y (A) | 289,137 | 2,839,321 |
| MEMBERS Large Cap Growth Fund Class Y (A) | 125,452 | 2,174,086 |
| MEMBERS Large Cap Value Fund Class Y (A) | 248,407 | 3,480,187 |
15,518,854 | ||
TOTAL INVESTMENTS - 99.6% ( Cost $57,878,307** ) | 61,975,774 | |
NET OTHER ASSETS AND LIABILITIES - 0.4% | 263,584 | |
TOTAL NET ASSETS - 100.0% | $ 62,239,358 | |
| ** | Aggregate cost for Federal tax purposes was $58,908,160. |
| (A) | Affiliated Company (see Note 11). |
| ETF | Exchange Traded Fund |
See accompanying Notes to Financial Statements.
34
MEMBERS Mutual Funds | October 31, 2012
Moderate Allocation Fund Portfolio of Investments
Shares | Value (Note 2) | |
| INVESTMENT COMPANIES - 99.9% | ||
| Bond Funds - 39.0% | ||
| DoubleLine Total Return Bond Fund | 175,285 | $ 1,992,989 |
| Franklin Floating Rate Daily Access Fund Advisor Class | 733,501 | 6,682,196 |
| Madison Mosaic Institutional Bond Fund (A) | 454,323 | 5,129,305 |
| MEMBERS Bond Fund Class Y (A) | 910,982 | 9,692,844 |
| MEMBERS High Income Fund Class Y (A) | 899,984 | 6,389,885 |
| Metropolitan West Total Return Bond Fund Class I | 1,190,531 | 13,179,179 |
| PIMCO Investment Grade Corporate Bond Fund Institutional Class | 604,492 | 6,848,889 |
| 49,915,287 | ||
| Foreign Bond Funds - 3.1% | ||
| TCW Emerging Markets Income Fund Class I | 423,348 | 3,937,139 |
| Foreign Stock Funds - 10.1% | ||
| Matthews Asian Growth and Income Fund Institutional Shares | 109,347 | 1,982,457 |
| MEMBERS International Stock Fund Class Y (A) | 194,412 | 2,103,540 |
| NorthRoad International Fund Class Y (A) | 421,590 | 4,207,469 |
| Vanguard FTSE All-World ex-U.S. ETF | 108,037 | 4,676,922 |
| 12,970,388 | ||
| Money Market Funds - 0.8% | ||
| State Street Institutional U.S. Government Money Market Fund | 999,718 | 999,718 |
Shares | Value (Note 2) | |
| Stock Funds - 46.9% | ||
| iShares S&P 100 Index Fund ETF | 111,745 | $ 7,242,193 |
| iShares S&P Global Energy Sector Index Fund ETF | 24,555 | 955,681 |
| Madison Mosaic Disciplined Equity Fund (A) | 729,959 | 10,270,522 |
| MEMBERS Equity Income Fund Class Y (A) | 403,762 | 3,964,943 |
| MEMBERS Large Cap Growth Fund Class Y (A) | 510,449 | 8,846,090 |
| MEMBERS Large Cap Value Fund Class Y (A) | 745,327 | 10,442,033 |
| MEMBERS Mid Cap Fund Class Y (A) * | 752,107 | 5,783,699 |
| MEMBERS Small Cap Fund Class Y (A) | 195,584 | 2,311,804 |
| Schwab Fundamental U.S. Large Company Index Fund | 690,804 | 7,433,049 |
| Vanguard Health Care ETF | 17,644 | 1,274,426 |
| Vanguard Information Technology ETF | 22,425 | 1,539,028 |
60,063,468 | ||
TOTAL INVESTMENTS - 99.9% ( Cost $115,674,407** ) | 127,886,000 | |
| NET OTHER ASSETS AND LIABILITIES - 0.1% | 142,167 | |
| TOTAL NET ASSETS - 100.0% | $128,028,167 | |
| * | Non-income producing. |
| ** | Aggregate cost for Federal tax purposes was $118,032,010. |
| (A) | Affiliated Company (see Note 11). |
| ETF | Exchange Traded Fund. |
See accompanying Notes to Financial Statements.
35
MEMBERS Mutual Funds | October 31, 2012
Aggressive Allocation Fund Portfolio of Investments
Shares | Value (Note 2) | |
| INVESTMENT COMPANIES - 100.1% | ||
| Bond Funds - 15.8% | ||
| MEMBERS High Income Fund Class Y (A) | 254,704 | $ 1,808,402 |
| Metropolitan West Total Return Bond Fund Class I | 355,785 | 3,938,546 |
| PIMCO Investment Grade Corporate Bond Fund Institutional Class | 119,740 | 1,356,655 |
| 7,103,603 | ||
| Foreign Bond Funds - 0.5% | ||
| TCW Emerging Markets Income Fund Class I | 24,440 | 227,288 |
| Foreign Stock Funds - 15.4% | ||
| iShares MSCI Japan Index Fund | 24,865 | 225,028 |
| Market Vectors Gold Miners ETF | 4,318 | 228,206 |
| Matthews Asian Growth and Income Fund Institutional Shares | 63,505 | 1,151,338 |
| MEMBERS International Stock Fund Class Y (A) | 87,385 | 945,507 |
| NorthRoad International Fund Class Y (A) | 171,278 | 1,709,356 |
| Vanguard FTSE All-World ex-U.S. ETF | 62,342 | 2,698,785 |
| 6,958,220 | ||
| Money Market Funds - 0.8% | ||
| State Street Institutional US Government Money Market Fund | 362,230 | 362,230 |
Shares | Value (Note 2) | |
| Stock Funds - 67.6% | ||
| iShares S&P 100 Index Fund ETF | 59,073 | $ 3,828,521 |
| iShares S&P Global Energy Sector Index Fund ETF | 11,570 | 450,304 |
| Madison Mosaic Disciplined Equity Fund (A) | 382,489 | 5,381,623 |
| MEMBERS Equity Income Fund Class Y (A) | 77,260 | 758,695 |
| MEMBERS Large Cap Growth Fund Class Y (A) | 211,141 | 3,659,074 |
| MEMBERS Large Cap Value Fund Class Y (A) | 365,998 | 5,127,628 |
| MEMBERS Mid Cap Fund Class Y (A) * | 487,292 | 3,747,276 |
| MEMBERS Small Cap Fund Class Y (A) | 74,813 | 884,287 |
| Schwab Fundamental U.S. Large Company Index Fund | 443,047 | 4,767,182 |
| Vanguard Health Care ETF | 13,378 | 966,293 |
| Vanguard Information Technology ETF | 14,111 | 968,438 |
30,539,321 | ||
TOTAL INVESTMENTS - 100.1% ( Cost $40,111,688** ) | 45,190,662 | |
| NET OTHER ASSETS AND LIABILITIES - (0.1%) | (23,678) | |
| TOTAL NET ASSETS - 100.0% | $ 45,166,984 | |
| * | Non-income producing. |
| ** | Aggregate cost for Federal tax purposes was $40,971,186. |
| (A) | Affiliated Company (see Note 11). |
| ETF | Exchange Traded Fund. |
See accompanying Notes to Financial Statements.
36
MEMBERS Mutual Funds | October 31, 2012
Cash Reserves Fund Portfolio of Investments
Par Value | Value (Note 2) | |
| U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 96.7% | ||
| Fannie Mae - 19.3% | ||
| 0.137%, 11/7/12 (A) | $500,000 | $ 499,989 |
| 0.137%, 11/7/12 (A) | 100,000 | 99,998 |
| 0.122%, 11/14/12 (A) | 275,000 | 274,988 |
| 0.132%, 11/28/12 (A) | 250,000 | 249,976 |
| 0.137%, 12/7/12 (A) | 200,000 | 199,973 |
| 0.142%, 12/20/12 (A) | 208,000 | 207,960 |
| 0.375%, 12/28/12 | 450,000 | 450,155 |
| 5.920%, 1/25/13 | 422,000 | 427,624 |
| 2,410,663 | ||
| Federal Farm Credit Bank - 13.2% | ||
| 0.400%, 11/2/12 | 150,000 | 150,001 |
| 3.875%, 11/13/12 | 325,000 | 325,394 |
| 0.240%, 11/23/12 | 325,000 | 325,015 |
| 0.350%, 12/3/12 | 350,000 | 350,065 |
| 0.132%, 12/12/12 (A) | 345,000 | 344,949 |
| 0.162%, 1/14/13 (A) | 150,000 | 149,951 |
| 1,645,375 | ||
| Federal Home Loan Bank - 31.0% | ||
| 0.142%, 11/2/12 (A) | 450,000 | 449,998 |
| 0.131%, 11/9/12 (A) | 350,000 | 349,990 |
| 0.131%, 11/9/12 (A) | 100,000 | 99,997 |
| 4.500%, 11/15/12 | 200,000 | 200,330 |
| 1.625%, 11/21/12 | 420,000 | 420,334 |
| 0.142%, 12/5/12 (A) | 300,000 | 299,960 |
| 0.200%, 12/6/12 | 450,000 | 450,018 |
| 0.200%, 12/13/12 | 200,000 | 200,010 |
| 1.750%, 12/14/12 | 125,000 | 125,233 |
| 3.125%, 12/14/12 | 130,000 | 130,457 |
| 4.875%, 12/14/12 | 190,000 | 191,054 |
| 4.875%, 12/14/12 | 145,000 | 145,803 |
| 0.142%, 12/17/12 (A) | 450,000 | 449,920 |
| 0.112%, 1/9/13 (A) | 100,000 | 99,979 |
| 0.180%, 1/9/13 | 100,000 | 100,005 |
| 1.500%, 1/16/13 | 150,000 | 150,414 |
| 3,863,502 | ||
Par Value | Value (Note 2) | |
| Freddie Mac - 25.2% | ||
| 0.132%, 11/2/12 (A) | $300,000 | $ 299,999 |
| 0.122%, 11/14/12 (A) | 150,000 | 149,993 |
| 0.142%, 11/19/12 (A) | 600,000 | 599,958 |
| 0.515%, 11/26/12 | 500,000 | 500,121 |
| 0.375%, 11/30/12 | 400,000 | 400,073 |
| 0.375%, 11/30/12 | 150,000 | 150,024 |
| 4.125%, 12/21/12 | 300,000 | 301,631 |
| 0.137%, 12/24/12 (A) | 150,000 | 149,970 |
| 0.910%, 12/26/12 | 250,000 | 250,288 |
| 1.100%, 12/27/12 | 215,000 | 215,311 |
| 1.375%, 1/9/13 | 125,000 | 125,283 |
| 3,142,651 | ||
| U.S. Treasury Notes - 8.0% | ||
| 1.375%, 1/15/13 | 300,000 | 300,765 |
| 2.875%, 1/31/13 | 700,000 | 704,736 |
1,005,501 | ||
Total U.S. Government and Agency Obligations ( Cost $12,067,692 ) | 12,067,692 | |
Shares | ||
| INVESTMENT COMPANIES - 2.9% | ||
| State Street Institutional U.S. Government Money Market Fund | 367,036 | 367,036 |
Total Investment Companies ( Cost $367,036 ) | 367,036 | |
TOTAL INVESTMENTS - 99.6% ( Cost $12,434,728** ) | 12,434,728 | |
| NET OTHER ASSETS AND LIABILITIES - 0.4% | 45,224 | |
| TOTAL NET ASSETS - 100.0% | $ 12,479,952 | |
| ** | Aggregate cost for Federal tax purposes was $12,434,728. |
| (A) | Rate noted represents annualized yield at time of purchase. |
See accompanying Notes to Financial Statements.
37
MEMBERS Mutual Funds | October 31, 2012
Bond Fund Portfolio of Investments
Par Value | Value (Note 2) | |
| ASSET BACKED SECURITIES - 1.1% | ||
| ABSC Long Beach Home Equity Loan Trust, Series 2000-LB1, Class AF5 (A), 8.55%, 9/21/30 | $ 64,040 | $ 64,873 |
| New Century Home Equity Loan Trust, Series 2003-5, Class AI5 (B), 5.5%, 11/25/33 | 1,392,591 | 1,403,185 |
Total Asset Backed Securities( Cost $1,452,129 ) | 1,468,058 | |
| CORPORATE NOTES AND BONDS - 19.2% | ||
| Consumer Discretionary - 2.5% | ||
| American Association of Retired Persons (C) (D), 7.5%, 5/1/31 | 750,000 | 1,040,436 |
| DR Horton Inc., 5.25%, 2/15/15 | 215,000 | 227,900 |
| ERAC USA Finance LLC (C) (D), 6.7%, 6/1/34 | 575,000 | 715,937 |
| McDonald’s Corp., 5%, 2/1/19 | 1,000,000 | 1,176,007 |
| 3,160,280 | ||
| Consumer Staples - 4.1% | ||
| Campbell Soup Co., 4.5%, 2/15/19 | 1,000,000 | 1,152,770 |
| PepsiCo Inc., 4.65%, 2/15/13 | 215,000 | 217,573 |
| PepsiCo Inc., 7.9%, 11/1/18 | 1,000,000 | 1,363,551 |
| Walgreen Co., 5.25%, 1/15/19 | 1,000,000 | 1,182,933 |
| WM Wrigley Jr. Co. (C) (D), 3.05%, 6/28/13 | 1,240,000 | 1,259,305 |
| 5,176,132 | ||
| Energy - 1.1% | ||
| Hess Corp., 7.875%, 10/1/29 | 240,000 | 345,098 |
| Transocean Inc. (E), 6%, 3/15/18 | 850,000 | 1,001,406 |
| 1,346,504 | ||
| Financials - 1.6% | ||
| American Express Credit Corp., 2.375%, 3/24/17 | 380,000 | 399,603 |
| HCP Inc., 6.7%, 1/30/18 | 490,000 | 591,328 |
| Lehman Brothers Holdings Inc. (F) *, 5.75%, 1/3/17 | 520,000 | 52 |
| Simon Property Group L.P., 5.875%, 3/1/17 | 270,000 | 321,560 |
| Swiss Re Solutions Holding Corp., 7%, 2/15/26 | 290,000 | 360,333 |
| UBS AG (E), 5.75%, 4/25/18 | 250,000 | 295,025 |
| 1,967,901 | ||
| Health Care - 2.4% | ||
| Eli Lilly & Co., 6.57%, 1/1/16 | 500,000 | 582,918 |
| Genentech Inc., 5.25%, 7/15/35 | 325,000 | 406,842 |
| Johnson & Johnson, 2.95%, 9/1/20 | 1,000,000 | 1,080,811 |
| Merck & Co. Inc., 5.75%, 11/15/36 | 500,000 | 670,536 |
| Wyeth, 6.5%, 2/1/34 | 230,000 | 325,674 |
| 3,066,781 | ||
| Industrials - 2.5% | ||
| Boeing Co./The, 8.625%, 11/15/31 | 240,000 | 378,881 |
| Burlington Northern Santa Fe LLC, 8.125%, 4/15/20 | 285,000 | 383,241 |
Par Value | Value (Note 2) | |
| EI du Pont de Nemours & Co., 5%, 1/15/13 | $ 35,000 | $ 35,317 |
| Honeywell International Inc., 3.875%, 2/15/14 | 1,000,000 | 1,043,125 |
| Norfolk Southern Corp., 5.59%, 5/17/25 | 359,000 | 447,602 |
| Norfolk Southern Corp., 7.05%, 5/1/37 | 390,000 | 567,995 |
| Waste Management Inc., 7.125%, 12/15/17 | 235,000 | 282,273 |
| 3,138,434 | ||
| Information Technology - 0.4% | ||
| Cisco Systems Inc., 5.5%, 2/22/16 | 400,000 | 462,966 |
| Materials - 0.5% | ||
| Weyerhaeuser Co., 7.375%, 3/15/32 | 500,000 | 636,412 |
| Telecommunication Services - 2.6% | ||
| Cellco Partnership / Verizon Wireless Capital LLC, 8.5%, 11/15/18 | 1,500,000 | 2,090,897 |
| Comcast Cable Communications Holdings Inc., 9.455%, 11/15/22 | 525,000 | 794,573 |
| Rogers Communications Inc. (E), 6.25%, 6/15/13 | 455,000 | 470,835 |
| 3,356,305 | ||
| Utilities - 1.5% | ||
| Sierra Pacific Power Co., Series M, 6%, 5/15/16 | 650,000 | 759,786 |
| Virginia Electric and Power Co., Series C, 5.1%, 11/30/12 | 215,000 | 215,714 |
| Wisconsin Electric Power Co., 6.5%, 6/1/28 | 750,000 | 957,248 |
1,932,748 | ||
Total Corporate Notes and Bonds ( Cost $20,765,594 ) | 24,244,463 | |
| MORTGAGE BACKED SECURITIES - 12.4% | ||
| Fannie Mae - 10.8% | ||
| 4%, 4/1/15 Pool # 255719 | 129,305 | 138,164 |
| 5.5%, 4/1/16 Pool # 745444 | 120,801 | 130,523 |
| 6%, 5/1/16 Pool # 582558 | 7,824 | 8,329 |
| 5.5%, 2/1/18 Pool # 673194 | 148,515 | 160,823 |
| 5%, 5/1/20 Pool # 813965 | 241,555 | 264,672 |
| 4.5%, 9/1/20 Pool # 835465 | 238,994 | 258,066 |
| 6%, 5/1/21 Pool # 253847 | 21,793 | 24,301 |
| 4.5%, 4/1/23 Pool # 974401 | 503,942 | 550,284 |
| 4.5%, 6/1/23 Pool # 984075 | 271,643 | 292,812 |
| 7%, 12/1/29 Pool # 762813 | 21,579 | 25,160 |
| 7%, 11/1/31 Pool # 607515 | 23,551 | 28,141 |
| 6.5%, 3/1/32 Pool # 631377 | 188,955 | 217,451 |
| 7%, 4/1/32 Pool # 641518 | 2,097 | 2,503 |
| 7%, 5/1/32 Pool # 644591 | 9,631 | 11,508 |
| 6.5%, 6/1/32 Pool # 545691 | 285,280 | 328,661 |
| 6%, 12/1/32 Pool # 676552 | 76,700 | 86,942 |
| 5.5%, 4/1/33 Pool # 690206 | 604,528 | 670,899 |
| 5%, 10/1/33 Pool # 254903 | 310,404 | 340,999 |
| 5.5%, 11/1/33 Pool # 555880 | 385,373 | 427,683 |
See accompanying Notes to Financial Statements.
38
MEMBERS Mutual Funds | October 31, 2012
Bond Fund Portfolio of Investments
Par Value | Value (Note 2) | |
MORTGAGE BACKED SECURITIES (continued) | ||
Fannie Mae (continued) | ||
| 5%, 5/1/34 Pool # 775604 | $ 42,448 | $ 46,472 |
| 5%, 5/1/34 Pool # 780890 | 158,605 | 173,643 |
| 5%, 6/1/34 Pool # 255230 | 71,139 | 77,884 |
| 5.5%, 6/1/34 Pool # 780384 | 535,533 | 591,316 |
| 7%, 7/1/34 Pool # 792636 | 16,585 | 19,040 |
| 5.5%, 8/1/34 Pool # 793647 | 123,011 | 138,592 |
| 5.5%, 3/1/35 Pool # 815976 | 607,634 | 670,928 |
| 5.5%, 7/1/35 Pool # 825283 | 251,068 | 277,573 |
| 5%, 8/1/35 Pool # 829670 | 311,100 | 340,208 |
| 5.5%, 8/1/35 Pool # 826872 | 150,752 | 166,360 |
| 5%, 9/1/35 Pool # 820347 | 314,921 | 358,854 |
| 5%, 9/1/35 Pool # 835699 | 301,559 | 343,628 |
| 5%, 10/1/35 Pool # 797669 | 306,136 | 346,930 |
| 5.5%, 10/1/35 Pool # 836912 | 290,436 | 319,963 |
| 5%, 11/1/35 Pool # 844504 | 392,911 | 445,268 |
| 5%, 11/1/35 Pool # 844809 | 193,001 | 211,059 |
| 5%, 12/1/35 Pool # 850561 | 215,803 | 235,995 |
| 6%, 7/1/36 Pool # 870749 | 186,423 | 207,783 |
| 6%, 11/1/36 Pool # 902510 | 336,380 | 380,081 |
| 5.5%, 2/1/37 Pool # 905140 | 278,474 | 313,746 |
| 5.5%, 5/1/37 Pool # 899323 | 179,671 | 197,881 |
| 5.5%, 5/1/37 Pool # 928292 | 456,100 | 513,871 |
| 6%, 10/1/37 Pool # 947563 | 383,405 | 434,125 |
| 6.5%, 12/1/37 Pool # 889072 | 529,733 | 591,750 |
| 5%, 4/1/38 Pool # 257160 | 419,572 | 457,781 |
| 5.5%, 7/1/38 Pool # 986805 | 153,049 | 167,844 |
| 5.5%, 7/1/38 Pool # 986973 | 314,680 | 348,196 |
| 5%, 8/1/38 Pool # 988934 | 579,897 | 640,498 |
| 6.5%, 8/1/38 Pool # 987711 | 567,328 | 674,857 |
| 13,660,047 | ||
| Freddie Mac - 1.6% | ||
| 5%, 5/1/18 Pool # E96322 | 113,373 | 122,890 |
| 8%, 6/1/30 Pool # C01005 | 2,700 | 3,341 |
| 7%, 3/1/31 Pool # C48133 | 7,690 | 9,113 |
| 6.5%, 1/1/32 Pool # C62333 | 43,931 | 50,948 |
| 5%, 7/1/33 Pool # A11325 | 652,247 | 725,433 |
| 6%, 10/1/34 Pool # A28439 | 57,138 | 63,570 |
| 6%, 10/1/34 Pool # A28598 | 38,962 | 43,348 |
| 5%, 4/1/35 Pool # A32315 | 94,066 | 105,370 |
| 5%, 4/1/35 Pool # A32316 | 87,980 | 98,553 |
| 5.5%, 11/1/37 Pool # A68787 | 664,154 | 742,260 |
| 1,964,826 | ||
Par Value | Value (Note 2) | |
| Ginnie Mae - 0.0% | ||
| 8%, 10/20/15 Pool # 2995 | $ 7,888 | $ 8,402 |
| 6.5%, 2/20/29 Pool # 2714 | 25,453 | 29,479 |
| 6.5%, 4/20/31 Pool # 3068 | 13,549 | 15,684 |
53,565 | ||
Total Mortgage Backed Securities ( Cost $14,030,884 ) | 15,678,438 | |
| U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 65.1% | ||
| Federal Farm Credit Bank - 0.5% | ||
| 5.875%, 10/3/16 | 500,000 | 598,856 |
| Freddie Mac - 0.3% | ||
| 4.500%, 1/15/14 | 400,000 | 420,304 |
| U.S. Treasury Bonds - 9.4% | ||
| 6.625%, 2/15/27 | 2,905,000 | 4,505,475 |
| 4.500%, 5/15/38 | 5,500,000 | 7,354,534 |
| 11,860,009 | ||
| U.S. Treasury Notes - 54.9% | ||
| 1.375%, 1/15/13 | 2,000,000 | 2,005,000 |
| 3.125%, 8/31/13 | 6,175,000 | 6,323,830 |
| 4.000%, 2/15/14 | 3,850,000 | 4,036,032 |
| 4.250%, 8/15/14 | 8,360,000 | 8,949,773 |
| 2.375%, 9/30/14 | 2,000,000 | 2,079,376 |
| 2.250%, 1/31/15 | 7,000,000 | 7,301,329 |
| 2.500%, 3/31/15 | 265,000 | 278,830 |
| 4.250%, 8/15/15 | 5,500,000 | 6,089,534 |
| 2.750%, 11/30/16 | 5,000,000 | 5,441,015 |
| 3.125%, 1/31/17 | 3,800,000 | 4,203,454 |
| 2.375%, 7/31/17 | 2,200,000 | 2,374,110 |
| 4.250%, 11/15/17 | 4,300,000 | 5,048,806 |
| 2.750%, 2/15/19 | 6,200,000 | 6,871,342 |
| 3.625%, 8/15/19 | 2,750,000 | 3,210,839 |
| 2.625%, 11/15/20 | 4,600,000 | 5,052,815 |
69,266,085 | ||
Total U.S. Government and Agency Obligations ( Cost $74,275,492 ) | 82,145,254 | |
See accompanying Notes to Financial Statements.
39
MEMBERS Mutual Funds | October 31, 2012
Bond Fund Portfolio of Investments
Shares | Value (Note 2) | |
| INVESTMENT COMPANIES - 1.6% | ||
| State Street Institutional U.S. Government Money Market Fund | 1,961,112 | $ 1,961,112 |
Total Investment Companies ( Cost $1,961,112 ) | 1,961,112 | |
TOTAL INVESTMENTS - 99.4% ( Cost $112,485,211** ) | 125,497,325 | |
| NET OTHER ASSETS AND LIABILITIES - 0.6% | 748,267 | |
| TOTAL NET ASSETS - 100.0% | $126,245,592 | |
| * | Non-income producing. |
| ** | Aggregate cost for Federal tax purposes was $112,491,273. |
| (A) | Stepped rate security. Rate shown is as of October 31, 2012. |
| (B) | Floating rate or variable rate note. Rate shown is as of October 31, 2012. |
| (C) | Security sold within terms of a private placement memorandum exempt from registration under section 144A of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "qualified institutional investors." |
| (D) | Illiquid security. (See Note 2.) |
| (E) | Notes and bonds, issued by foreign entities, denominated in U.S. dollars. The aggregate of these securities is 1.4% of total net assets. |
| (F) | In default. Issuer is bankrupt. |
See accompanying Notes to Financial Statements.
40
MEMBERS Mutual Funds | October 31, 2012
High Income Fund Portfolio of Investments
Par Value | Value (Note 2) | |
| CORPORATE NOTES AND BONDS - 97.1% | ||
| Consumer Discretionary - 32.4% | ||
| Auto Components - 2.1% | ||
| Allison Transmission Inc. (A), 7.125%, 5/15/19 | $ 100,000 | $ 106,375 |
| American Axle & Manufacturing Inc., 7.875%, 3/1/17 | 750,000 | 777,187 |
| Dana Holding Corp., 6.5%, 2/15/19 | 350,000 | 365,313 |
| Lear Corp., 8.125%, 3/15/20 | 450,000 | 500,063 |
| 1,748,938 | ||
| Automobiles - 1.3% | ||
| Cooper Standard Automotive Inc., 8.5%, 5/1/18 | 1,000,000 | 1,071,250 |
| Hotels, Restaurants & Leisure - 3.4% | ||
| Boyd Acquisition Sub LLC / Boyd Acquisition Finance Corp. (A), 8.375%, 2/15/18 | 200,000 | 204,500 |
| Boyd Gaming Corp., 7.125%, 2/1/16 | 150,000 | 146,625 |
| Boyd Gaming Corp., 9.125%, 12/1/18 | 200,000 | 206,500 |
| Felcor Lodging L.P., 6.75%, 6/1/19 | 550,000 | 587,125 |
| Pinnacle Entertainment Inc., 8.625%, 8/1/17 | 800,000 | 864,000 |
| Pinnacle Entertainment Inc., 8.75%, 5/15/20 | 200,000 | 218,500 |
| Scientific Games International Inc., 9.25%, 6/15/19 | 250,000 | 278,125 |
| Scientific Games International Inc. (A), 6.25%, 9/1/20 | 350,000 | 355,687 |
| 2,861,062 | ||
| Household Durables - 2.6% | ||
| Griffon Corp., 7.125%, 4/1/18 | 1,000,000 | 1,055,000 |
| Jarden Corp., 8%, 5/1/16 | 500,000 | 534,375 |
| Spectrum Brands Holdings Inc., 9.5%, 6/15/18 | 500,000 | 561,250 |
| 2,150,625 | ||
| Media - 19.5% | ||
| Allbritton Communications Co., 8%, 5/15/18 | 500,000 | 542,500 |
| AMC Networks Inc., 7.75%, 7/15/21 | 300,000 | 339,750 |
| Belo Corp., 8%, 11/15/16 | 500,000 | 546,250 |
| Cablevision Systems Corp., 7.75%, 4/15/18 | 250,000 | 277,812 |
| Cablevision Systems Corp., 5.875%, 9/15/22 | 200,000 | 198,500 |
| CCO Holdings LLC / CCO Holdings Capital Corp., 8.125%, 4/30/20 | 1,000,000 | 1,125,000 |
| CCO Holdings LLC / CCO Holdings Capital Corp., 6.5%, 4/30/21 | 750,000 | 796,875 |
| Cequel Communications Holdings I LLC / Cequel Capital Corp. (A), 8.625%, 11/15/17 | 1,150,000 | 1,230,500 |
| CSC Holdings LLC (A), 6.75%, 11/15/21 | 400,000 | 445,000 |
| Cumulus Media Holdings Inc., 7.75%, 5/1/19 | 1,000,000 | 977,500 |
| DISH DBS Corp., 6.75%, 6/1/21 | 625,000 | 696,094 |
| Gannett Co. Inc., 7.125%, 9/1/18 | 1,000,000 | 1,091,250 |
| Hughes Satellite Systems Corp., 6.5%, 6/15/19 | 250,000 | 267,500 |
| Hughes Satellite Systems Corp., 7.625%, 6/15/21 | 750,000 | 834,375 |
Par Value | Value (Note 2) | |
| Inmarsat Finance PLC (A) (B), 7.375%, 12/1/17 | $ 300,000 | $ 323,250 |
| Intelsat Jackson Holdings S.A. (A) (B), 7.25%, 10/15/20 | 325,000 | 344,500 |
| Intelsat Luxembourg S.A. (B), 11.25%, 2/4/17 | 675,000 | 708,750 |
| Intelsat Luxembourg S.A., PIK (B), 11.5%, 2/4/17 | 375,000 | 394,687 |
| Mediacom LLC / Mediacom Capital Corp., 9.125%, 8/15/19 | 450,000 | 498,375 |
| Mediacom LLC / Mediacom Capital Corp., 7.25%, 2/15/22 | 100,000 | 107,250 |
| Nielsen Finance LLC / Nielsen Finance Co., 11.625%, 2/1/14 | 130,000 | 146,250 |
| Nielsen Finance LLC / Nielsen Finance Co., 7.75%, 10/15/18 | 1,000,000 | 1,125,000 |
| Quebecor Media Inc. (B), 7.75%, 3/15/16 | 250,000 | 256,458 |
| UPCB Finance V Ltd. (A), 7.25%, 11/15/21 | 350,000 | 385,000 |
| UPCB Finance V Ltd. (A), 6.875%, 1/15/22 | 250,000 | 267,500 |
| ViaSat Inc., 6.875%, 6/15/20 | 370,000 | 386,650 |
| Videotron Ltee (B), 5%, 7/15/22 | 1,000,000 | 1,035,000 |
| Virgin Media Finance PLC (B), 4.875%, 2/15/22 | 300,000 | 303,000 |
| XM Satellite Radio Inc. (A), 7.625%, 11/1/18 | 500,000 | 552,500 |
| 16,203,076 | ||
| Specialty Retail - 3.2% | ||
| Jo-Ann Stores Inc. (A), 8.125%, 3/15/19 | 750,000 | 754,688 |
| Michaels Stores Inc. (A), 7.75%, 11/1/18 | 750,000 | 805,312 |
| Penske Automotive Group Inc. (A), 5.75%, 10/1/22 | 500,000 | 509,375 |
| Sally Holdings LLC / Sally Capital Inc., 5.75%, 6/1/22 | 500,000 | 534,375 |
| Yankee Acquisition Corp., Series B, 8.5%, 2/15/15 | 15,000 | 15,131 |
| 2,618,881 | ||
| Textiles, Apparel & Luxury Goods - 0.3% | ||
| Hanesbrands Inc., 6.375%, 12/15/20 | 250,000 | 272,813 |
| Consumer Staples - 4.2% | ||
| Central Garden and Pet Co., 8.25%, 3/1/18 | 350,000 | 369,250 |
| Dole Food Co. Inc. (A), 8%, 10/1/16 | 200,000 | 208,750 |
| Ingles Markets Inc., 8.875%, 5/15/17 | 850,000 | 914,813 |
| Pinnacle Foods Finance LLC / Pinnacle Foods Finance Corp., 9.25%, 4/1/15 | 680,000 | 694,450 |
| Pinnacle Foods Finance LLC / Pinnacle Foods Finance Corp., 8.25%, 9/1/17 | 500,000 | 537,500 |
| Stater Brothers Holdings, 7.75%, 4/15/15 | 250,000 | 255,000 |
| Tops Markets LLC, 10.125%, 10/15/15 | 500,000 | 526,875 |
| 3,506,638 |
See accompanying Notes to Financial Statements.
41
MEMBERS Mutual Funds | October 31, 2012
High Income Fund Portfolio of Investments
Par Value | Value (Note 2) | |
CORPORATE NOTES AND BONDS (continued) | ||
| Energy - 12.4% | ||
| AmeriGas Finance LLC / AmeriGas Finance Corp., 7%, 5/20/22 | $ 400,000 | $ 434,500 |
| AmeriGas Partners L.P. / AmeriGas Finance Corp., 6.25%, 8/20/19 | 500,000 | 525,000 |
| Bill Barrett Corp., 7.625%, 10/1/19 | 500,000 | 530,000 |
| Chaparral Energy Inc., 8.25%, 9/1/21 | 500,000 | 546,250 |
| Chesapeake Energy Corp., 6.775%, 3/15/19 | 900,000 | 902,250 |
| Continental Resources Inc., 8.25%, 10/1/19 | 250,000 | 281,875 |
| Ferrellgas L.P. / Ferrellgas Finance Corp., 9.125%, 10/1/17 | 500,000 | 535,000 |
| FTS International Services LLC / FTS International Bonds Inc. (A), 8.125%, 11/15/18 | 500,000 | 522,500 |
| Helix Energy Solutions Group Inc. (A), 9.5%, 1/15/16 | 145,000 | 149,894 |
| Key Energy Services Inc., 6.75%, 3/1/21 | 300,000 | 298,500 |
| Linn Energy LLC / Linn Energy Finance Corp., 6.5%, 5/15/19 | 750,000 | 755,625 |
| MarkWest Energy Partners L.P. / MarkWest Energy Finance Corp., 6.75%, 11/1/20 | 500,000 | 545,000 |
| Oasis Petroleum Inc., 6.875%, 1/15/23 | 500,000 | 530,000 |
| PetroBakken Energy Ltd. (A) (B), 8.625%, 2/1/20 | 800,000 | 816,000 |
| Precision Drilling Corp. (B), 6.5%, 12/15/21 | 750,000 | 793,125 |
| Regency Energy Partners L.P. / Regency Energy Finance Corp., 6.875%, 12/1/18 | 500,000 | 537,500 |
| Regency Energy Partners L.P. / Regency Energy Finance Corp., 6.5%, 7/15/21 | 750,000 | 813,750 |
| Suburban Propane Partners L.P. / Suburban Energy Finance Corp. (A), 7.5%, 10/1/18 | 211,000 | 226,825 |
| Suburban Propane Partners L.P. / Suburban Energy Finance Corp. (A), 7.375%, 8/1/21 | 309,000 | 330,630 |
| Unit Corp., 6.625%, 5/15/21 | 250,000 | 255,000 |
| 10,329,224 | ||
| Financials - 2.2% | ||
| CIT Group Inc., 5%, 5/15/17 | 50,000 | 52,690 |
| CIT Group Inc., 5%, 8/15/22 | 725,000 | 751,265 |
| MPT Operating Partnership L.P. / MPT Finance Corp., 6.875%, 5/1/21 | 500,000 | 540,000 |
| Nuveen Investments Inc. (A), 9.125%, 10/15/17 | 500,000 | 499,375 |
| 1,843,330 | ||
| Health Care - 11.5% | ||
| Air Medical Group Holdings Inc., 9.25%, 11/1/18 | 500,000 | 538,750 |
| Biomet Inc., 10%, 10/15/17 | 500,000 | 527,500 |
| Biomet Inc. (A), 6.5%, 10/1/20 | 800,000 | 778,000 |
| DaVita Inc., 6.375%, 11/1/18 | 500,000 | 533,750 |
Par Value | Value (Note 2) | |
| DaVita Inc., 6.625%, 11/1/20 | $ 250,000 | $ 266,875 |
| DaVita Inc., 5.75%, 8/15/22 | 250,000 | 261,250 |
| Endo Health Solutions Inc., 7%, 12/15/20 | 800,000 | 860,000 |
| Fresenius Medical Care US Finance II Inc. (A), 5.625%, 7/31/19 | 300,000 | 315,750 |
| Fresenius Medical Care US Finance II Inc. (A), 5.875%, 1/31/22 | 550,000 | 585,063 |
| HCA Inc., 6.5%, 2/15/20 | 500,000 | 552,500 |
| HCA Inc., 7.5%, 2/15/22 | 650,000 | 726,375 |
| HCA Inc., 5.875%, 3/15/22 | 250,000 | 268,125 |
| Multiplan Inc. (A), 9.875%, 9/1/18 | 250,000 | 275,000 |
| Mylan Inc. (A), 6%, 11/15/18 | 250,000 | 266,250 |
| Tenet Healthcare Corp., 6.25%, 11/1/18 | 250,000 | 270,625 |
| Tenet Healthcare Corp., 8%, 8/1/20 | 850,000 | 894,625 |
| Valeant Pharmaceuticals International (A), 6.5%, 7/15/16 | 550,000 | 578,875 |
| Valeant Pharmaceuticals International (A), 6.875%, 12/1/18 | 500,000 | 533,125 |
| Vanguard Health Holding Co. II LLC / Vanguard Holding Co. II Inc. (A), 7.75%, 2/1/19 | 500,000 | 518,750 |
| 9,551,188 | ||
| Industrials - 12.8% | ||
| Alliance Data Systems Corp. (A), 6.375%, 4/1/20 | 700,000 | 742,875 |
| ARAMARK Corp., 8.5%, 2/1/15 | 1,550,000 | 1,575,203 |
| Ashtead Capital Inc. (A), 6.5%, 7/15/22 | 500,000 | 527,500 |
| Avis Budget Car Rental LLC / Avis Budget Finance Inc., 9.625%, 3/15/18 | 250,000 | 278,437 |
| Avis Budget Car Rental LLC / Avis Budget Finance Inc., 8.25%, 1/15/19 | 750,000 | 818,437 |
| Belden Inc. (A), 5.5%, 9/1/22 | 500,000 | 508,750 |
| FTI Consulting Inc., 7.75%, 10/1/16 | 350,000 | 359,625 |
| Geo Group Inc./The, 7.75%, 10/15/17 | 1,000,000 | 1,086,250 |
| Hertz Corp./The, 6.75%, 4/15/19 | 250,000 | 265,313 |
| Moog Inc., 7.25%, 6/15/18 | 500,000 | 530,000 |
| RBS Global Inc. / Rexnord LLC, 8.5%, 5/1/18 | 300,000 | 329,250 |
| RR Donnelley & Sons Co., 7.25%, 5/15/18 | 500,000 | 496,875 |
| ServiceMaster Co., 8%, 2/15/20 | 400,000 | 420,000 |
| Terex Corp., 8%, 11/15/17 | 400,000 | 417,500 |
| Tomkins LLC / Tomkins Inc., 9%, 10/1/18 | 163,000 | 182,560 |
| UR Merger Sub Corp., 9.25%, 12/15/19 | 500,000 | 567,500 |
| UR Merger Sub Corp., 8.25%, 2/1/21 | 150,000 | 165,750 |
| UR Merger Sub Corp. (A), 7.625%, 4/15/22 | 300,000 | 328,500 |
| West Corp./Old, 11%, 10/15/16 | 1,000,000 | 1,045,000 |
| 10,645,325 | ||
| Information Technology - 5.1% | ||
| Level 3 Financing Inc., 8.125%, 7/1/19 | 200,000 | 213,500 |
| Level 3 Financing Inc., 8.625%, 7/15/20 | 850,000 | 926,500 |
See accompanying Notes to Financial Statements.
42
MEMBERS Mutual Funds | October 31, 2012
High Income Fund Portfolio of Investments
Par Value | Value (Note 2) | |
CORPORATE NOTES AND BONDS (continued) | ||
Information Technology (continued) | ||
| Sensata Technologies BV (A) (B), 6.5%, 5/15/19 | $ 200,000 | $ 211,000 |
| SunGard Data Systems Inc., 10.25%, 8/15/15 | 1,150,000 | 1,176,450 |
| SunGard Data Systems Inc., 7.375%, 11/15/18 | 500,000 | 538,125 |
| Syniverse Holdings Inc., 9.125%, 1/15/19 | 1,100,000 | 1,171,500 |
| 4,237,075 | ||
| Materials - 6.6% | ||
| Ardagh Packaging Finance PLC / Ardagh MP Holdings USA Inc. (A) (B), 9.125%, 10/15/20 | 325,000 | 338,000 |
| FMG Resources August 2006 Pty Ltd. (A) (B), 7%, 11/1/15 | 100,000 | 101,000 |
| Graphic Packaging International Inc., 9.5%, 6/15/17 | 500,000 | 546,250 |
| Greif Inc., 6.75%, 2/1/17 | 250,000 | 275,625 |
| Huntsman International LLC, 5.5%, 6/30/16 | 750,000 | 751,875 |
| JMC Steel Group (A), 8.25%, 3/15/18 | 1,000,000 | 1,015,000 |
| Penn Virginia Resource Partners L.P. / Penn Virginia Resource Finance Corp., 8.25%, 4/15/18 | 700,000 | 727,125 |
| Reynolds Group Issuer Inc. / Reynolds Group Issuer LLC, 8.5%, 5/15/18 | 250,000 | 248,750 |
| Reynolds Group Issuer Inc. / Reynolds Group Issuer LLC, 9%, 4/15/19 | 250,000 | 253,125 |
| Reynolds Group Issuer Inc. / Reynolds Group Issuer LLC, 9.875%, 8/15/19 | 500,000 | 523,750 |
| Reynolds Group Issuer Inc. / Reynolds Group Issuer LLC, 8.25%, 2/15/21 | 750,000 | 736,875 |
| 5,517,375 | ||
| Telecommunication Services - 7.1% | ||
| CenturyLink Inc., 5.8%, 3/15/22 | 500,000 | 526,292 |
| CommScope Inc. (A), 8.25%, 1/15/19 | 500,000 | 538,750 |
| Crown Castle International Corp., 7.125%, 11/1/19 | 150,000 | 164,625 |
| Crown Castle International Corp. (A), 5.25%, 1/15/23 | 250,000 | 258,750 |
| Frontier Communications Corp., 8.25%, 5/1/14 | 8,000 | 8,700 |
| Nextel Communications Inc., Series D, 7.375%, 8/1/15 | 260,000 | 260,325 |
| Qwest Communications International Inc., 7.125%, 4/1/18 | 500,000 | 528,135 |
Par Value | Value (Note 2) | |
| SBA Communications Corp. (A), 5.625%, 10/1/19 | $ 500,000 | $ 508,125 |
| SBA Telecommunications Inc. (A), 5.75%, 7/15/20 | 300,000 | 312,000 |
| Sprint Nextel Corp. (A), 7%, 3/1/20 | 200,000 | 232,000 |
| Sprint Nextel Corp., 7%, 8/15/20 | 200,000 | 219,500 |
| tw telecom holdings, Inc., 8%, 3/1/18 | 500,000 | 550,000 |
| Windstream Corp., 7.875%, 11/1/17 | 900,000 | 1,002,375 |
| Windstream Corp., 7%, 3/15/19 | 250,000 | 255,938 |
| Windstream Corp., 7.75%, 10/15/20 | 500,000 | 538,750 |
| 5,904,265 | ||
| Utilities - 2.8% | ||
| AES Corp./The, 8%, 10/15/17 | 250,000 | 285,938 |
| Calpine Corp. (A), 7.25%, 10/15/17 | 500,000 | 530,000 |
| Calpine Corp. (A), 7.5%, 2/15/21 | 500,000 | 543,750 |
| GenOn Energy Inc., 7.875%, 6/15/17 | 200,000 | 216,000 |
| NRG Energy Inc., 8.25%, 9/1/20 | 725,000 | 799,312 |
2,375,000 | ||
Total Corporate Notes and Bonds ( Cost $76,351,254 ) | 80,836,065 | |
Shares | ||
| INVESTMENT COMPANIES - 1.5% | ||
| State Street Institutional U.S. Government Money Market Fund | 1,206,218 | 1,206,218 |
Total Investment Companies ( Cost $1,206,218 ) | 1,206,218 | |
TOTAL INVESTMENTS - 98.6% ( Cost $77,557,472** ) | 82,042,283 | |
| NET OTHER ASSETS AND LIABILITIES - 1.4% | 1,122,946 | |
| TOTAL NET ASSETS - 100.0% | $ 83,165,229 | |
| ** | Aggregate cost for Federal tax purposes was $77,574,618. |
| (A) | Security sold within terms of a private placement memorandum exempt from registration under section 144A of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "qualified institutional investors." |
| (B) | Notes and bonds, issued by foreign entities, denominated in U.S. dollars. The aggregate of these securities is 6.8% of total net assets. |
| PIK | Payment in Kind. |
| PLC | Public Limited Company. |
See accompanying Notes to Financial Statements.
43
MEMBERS Mutual Funds | October 31, 2012
Diversified Income Fund Portfolio of Investments
Shares | Value (Note 2) | |
| COMMON STOCKS - 53.9% | ||
| Consumer Discretionary - 5.1% | ||
| McDonald’s Corp. | 13,500 | $ 1,171,800 |
| Omnicom Group Inc. | 17,500 | 838,425 |
| Target Corp. | 17,400 | 1,109,250 |
| Time Warner Inc. | 32,500 | 1,412,125 |
| Viacom Inc., Class B | 14,000 | 717,780 |
| 5,249,380 | ||
| Consumer Staples - 7.5% | ||
| Coca-Cola Co./The | 24,000 | 892,320 |
| Diageo PLC, ADR | 6,800 | 776,832 |
| Nestle S.A., ADR | 14,500 | 918,430 |
| PepsiCo Inc. | 27,000 | 1,869,480 |
| Philip Morris International Inc. | 7,500 | 664,200 |
| Procter & Gamble Co./The | 18,500 | 1,280,940 |
| Sysco Corp. | 19,500 | 605,865 |
| Wal-Mart Stores Inc. | 9,000 | 675,180 |
| 7,683,247 | ||
| Energy - 6.4% | ||
| Chevron Corp. | 23,700 | 2,611,977 |
| ConocoPhillips | 37,500 | 2,169,375 |
| Exxon Mobil Corp. | 10,000 | 911,700 |
| Occidental Petroleum Corp. | 11,000 | 868,560 |
| 6,561,612 | ||
| Financials - 10.1% | ||
| Axis Capital Holdings Ltd. | 25,500 | 923,610 |
| Bank of New York Mellon Corp./The | 28,500 | 704,235 |
| BlackRock Inc. | 6,700 | 1,270,856 |
| M&T Bank Corp. | 8,900 | 926,490 |
| Northern Trust Corp. | 14,500 | 692,810 |
| PartnerRe Ltd. | 13,100 | 1,061,100 |
| Travelers Cos. Inc./The | 31,000 | 2,199,140 |
| US Bancorp | 33,500 | 1,112,535 |
| Wells Fargo & Co. | 40,900 | 1,377,921 |
| 10,268,697 | ||
| Health Care - 10.1% | ||
| Becton, Dickinson and Co. | 8,500 | 643,280 |
| Johnson & Johnson | 37,500 | 2,655,750 |
| Medtronic Inc. | 24,800 | 1,031,184 |
| Merck & Co. Inc. | 52,000 | 2,372,760 |
| Novartis AG, ADR | 15,800 | 955,268 |
| Pfizer Inc. | 109,062 | 2,712,372 |
| 10,370,614 | ||
| Industrials - 6.8% | ||
| 3M Co. | 20,500 | 1,795,800 |
| Boeing Co./The | 15,500 | 1,091,820 |
| Emerson Electric Co. | 12,500 | 605,375 |
Shares | Value (Note 2) | |
| Lockheed Martin Corp. | 6,300 | $ 590,121 |
| United Parcel Service Inc., Class B | 17,000 | 1,245,250 |
| United Technologies Corp. | 12,500 | 977,000 |
| Waste Management Inc. | 19,000 | 622,060 |
| 6,927,426 | ||
| Information Technology - 5.8% | ||
| Accenture PLC, Class A | 10,600 | 714,546 |
| Intel Corp. | 64,000 | 1,384,000 |
| Linear Technology Corp. | 23,500 | 734,610 |
| Microsoft Corp. | 77,000 | 2,197,195 |
| Paychex Inc. | 26,500 | 859,395 |
| 5,889,746 | ||
| Materials - 0.8% | ||
| Air Products & Chemicals Inc. | 10,700 | 829,571 |
| Telecommunication Service - 1.3% | ||
| AT&T Inc. | 39,292 | 1,359,110 |
Total Common Stocks ( Cost $45,932,360 ) | 55,139,403 | |
Par Value | ||
| ASSET BACKED SECURITIES - 0.1% | ||
| ABSC Long Beach Home Equity Loan Trust, Series 2000-LB1, Class AF5 (A), 8.55%, 9/21/30 | $ 98,971 | 100,259 |
Total Asset Backed Securities ( Cost $101,554 ) | 100,259 | |
| CORPORATE NOTES AND BONDS - 13.5% | ||
| Consumer Discretionary - 2.0% | ||
| American Association of Retired Persons (B) (C), 7.5%, 5/1/31 | 750,000 | 1,040,436 |
| DR Horton Inc., 5.25%, 2/15/15 | 130,000 | 137,800 |
| ERAC USA Finance LLC (B) (C), 6.7%, 6/1/34 | 325,000 | 404,660 |
| Royal Caribbean Cruises Ltd. (D), 7.25%, 6/15/16 | 400,000 | 452,000 |
| 2,034,896 | ||
| Consumer Staples - 0.9% | ||
| Kraft Foods Inc., 6.5%, 11/1/31 | 475,000 | 636,966 |
| WM Wrigley Jr. Co. (B) (C), 3.05%, 6/28/13 | 280,000 | 284,359 |
| 921,325 | ||
| Energy - 0.7% | ||
| Hess Corp., 7.875%, 10/1/29 | 150,000 | 215,687 |
| Transocean Inc. (D), 7.5%, 4/15/31 | 400,000 | 504,176 |
| 719,863 | ||
| Financials - 1.4% | ||
| American Express Credit Corp., 2.375%, 3/24/17 | 90,000 | 94,643 |
| HCP Inc., 6.7%, 1/30/18 | 335,000 | 404,275 |
| Lehman Brothers Holdings Inc. (E) *, 5.75%, 1/3/17 | 410,000 | 41 |
See accompanying Notes to Financial Statements.
44
MEMBERS Mutual Funds | October 31, 2012
Diversified Income Fund Portfolio of Investments
Par Value | Value (Note 2) | |
CORPORATE NOTES AND BONDS (continued) | ||
Financials (continued) | ||
| Simon Property Group L.P., 5.875%, 3/1/17 | $ 140,000 | $ 166,735 |
| Swiss Re Solutions Holding Corp., 7%, 2/15/26 | 210,000 | 260,931 |
| US Bank NA, 6.3%, 2/4/14 | 500,000 | 535,126 |
| 1,461,751 | ||
| Health Care - 2.3% | ||
| Amgen Inc., 5.85%, 6/1/17 | 1,050,000 | 1,265,802 |
| Eli Lilly & Co., 6.57%, 1/1/16 | 300,000 | 349,751 |
| Genentech Inc., 5.25%, 7/15/35 | 195,000 | 244,105 |
| Merck & Co. Inc., 5.75%, 11/15/36 | 220,000 | 295,036 |
| Wyeth, 6.5%, 2/1/34 | 150,000 | 212,396 |
| 2,367,090 | ||
| Industrials - 1.3% | ||
| Boeing Co./The, 8.625%, 11/15/31 | 150,000 | 236,801 |
| Burlington Northern Santa Fe LLC, 8.125%, 4/15/20 | 175,000 | 235,323 |
| Norfolk Southern Corp., 5.59%, 5/17/25 | 239,000 | 297,986 |
| Norfolk Southern Corp., 7.05%, 5/1/37 | 260,000 | 378,664 |
| Waste Management Inc., 7.125%, 12/15/17 | 150,000 | 180,174 |
| 1,328,948 | ||
| Information Technology - 0.7% | ||
| Cisco Systems Inc., 5.5%, 2/22/16 | 240,000 | 277,780 |
| International Business Machines Corp., 1.875%, 8/1/22 | 400,000 | 389,136 |
| 666,916 | ||
| Materials - 0.2% | ||
| Westvaco Corp., 8.2%, 1/15/30 | 175,000 | 236,506 |
| Telecommunication Services - 0.9% | ||
| Comcast Cable Communications Holdings Inc., 9.455%, 11/15/22 | 415,000 | 628,091 |
| Rogers Communications Inc. (D), 6.25%, 6/15/13 | 315,000 | 325,963 |
| 954,054 | ||
| Utilities - 3.1% | ||
| Interstate Power & Light Co., 6.25%, 7/15/39 | 175,000 | 232,789 |
| Nevada Power Co., Series R, 6.75%, 7/1/37 | 400,000 | 572,682 |
| Sierra Pacific Power Co., Series M, 6%, 5/15/16 | 126,000 | 147,282 |
| Southwestern Electric Power Co., Series E, 5.55%, 1/15/17 | 500,000 | 566,423 |
| Westar Energy Inc., 6%, 7/1/14 | 600,000 | 650,320 |
| Wisconsin Electric Power Co., 6.5%, 6/1/28 | 750,000 | 957,247 |
3,126,743 | ||
Total Corporate Notes and Bonds ( Cost $11,980,769 ) | 13,818,092 | |
Par Value | Value (Note 2) | |
| MORTGAGE BACKED SECURITIES - 8.4% | ||
| Fannie Mae - 7.0% | ||
| 4%, 4/1/15 Pool # 255719 | $ 46,469 | $ 49,653 |
| 5.5%, 4/1/16 Pool # 745444 | 77,041 | 83,241 |
| 6%, 5/1/16 Pool # 582558 | 11,737 | 12,494 |
| 5%, 12/1/17 Pool # 672243 | 188,412 | 205,442 |
| 5%, 5/1/20 Pool # 813965 | 197,636 | 216,550 |
| 4.5%, 9/1/20 Pool # 835465 | 238,994 | 258,066 |
| 6%, 5/1/21 Pool # 253847 | 30,510 | 34,022 |
| 7%, 12/1/29 Pool # 762813 | 13,732 | 16,011 |
| 7%, 11/1/31 Pool # 607515 | 23,551 | 28,141 |
| 7%, 5/1/32 Pool # 644591 | 15,409 | 18,412 |
| 5.5%, 10/1/33 Pool # 254904 | 209,928 | 232,976 |
| 5%, 5/1/34 Pool # 782214 | 11,232 | 12,297 |
| 5%, 6/1/34 Pool # 255230 | 174,081 | 190,587 |
| 7%, 7/1/34 Pool # 792636 | 10,425 | 11,968 |
| 5.5%, 8/1/34 Pool # 793647 | 75,240 | 84,770 |
| 5.5%, 3/1/35 Pool # 810075 | 126,657 | 139,809 |
| 5.5%, 3/1/35 Pool # 815976 | 372,986 | 411,837 |
| 5%, 8/1/35 Pool # 829670 | 180,872 | 197,795 |
| 5%, 9/1/35 Pool # 820347 | 187,848 | 214,053 |
| 5%, 9/1/35 Pool # 835699 | 187,705 | 213,891 |
| 5%, 10/1/35 Pool # 797669 | 278,305 | 315,390 |
| 5%, 11/1/35 Pool # 844504 | 275,038 | 311,688 |
| 5%, 11/1/35 Pool # 844809 | 122,819 | 134,310 |
| 5%, 12/1/35 Pool # 850561 | 131,358 | 143,649 |
| 5.5%, 2/1/36 Pool # 851330 | 42,048 | 46,390 |
| 5.5%, 9/1/36 Pool # 831820 | 360,827 | 413,183 |
| 6%, 9/1/36 Pool # 831741 | 159,190 | 176,827 |
| 5.5%, 10/1/36 Pool # 896340 | 35,816 | 39,402 |
| 5.5%, 10/1/36 Pool # 901723 | 168,132 | 184,595 |
| 5.5%, 12/1/36 Pool # 902853 | 319,105 | 356,233 |
| 5.5%, 12/1/36 Pool # 903059 | 307,536 | 350,238 |
| 5.5%, 12/1/36 Pool # 907512 | 184,853 | 203,588 |
| 5.5%, 12/1/36 Pool # 907635 | 245,828 | 279,962 |
| 3.5%, 8/1/42 Pool # AO8100 | 492,842 | 525,705 |
| 3.5%, 11/1/42 Pool # 11/12 (F) | 1,000,000 | 1,065,000 |
| 7,178,175 | ||
| Freddie Mac - 1.3% | ||
| 8%, 6/1/30 Pool # C01005 | 4,994 | 6,181 |
| 6.5%, 1/1/32 Pool # C62333 | 65,897 | 76,422 |
| 5%, 7/1/33 Pool # A11325 | 465,891 | 518,167 |
| 6%, 10/1/34 Pool # A28439 | 33,581 | 37,361 |
| 6%, 10/1/34 Pool # A28598 | 22,899 | 25,476 |
| 5%, 4/1/35 Pool # A32315 | 62,084 | 69,544 |
| 5%, 4/1/35 Pool # A32316 | 49,800 | 55,785 |
| 3%, 8/1/42 Pool # G08502 | 498,172 | 522,057 |
| 1,310,993 | ||
See accompanying Notes to Financial Statements.
45
MEMBERS Mutual Funds | October 31, 2012
Diversified Income Fund Portfolio of Investments
Par Value | Value (Note 2) | |
MORTGAGE BACKED SECURITIES (continued) | ||
| Ginnie Mae - 0.1% | ||
| 8%, 10/20/15 Pool # 2995 | $ 5,160 | $ 5,495 |
| 6.5%, 2/20/29 Pool # 2714 | 35,634 | 41,271 |
| 6.5%, 4/20/31 Pool # 3068 | 22,582 | 26,140 |
72,906 | ||
Total Mortgage Backed Securities ( Cost $7,872,511 ) | 8,562,074 | |
| U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 18.1% | ||
| U.S. Treasury Bonds - 1.8% | ||
| 6.625%, 2/15/27 | 860,000 | 1,333,807 |
| 3.000%, 5/15/42 | 500,000 | 516,484 |
| 1,850,291 | ||
| U.S. Treasury Notes - 16.3% | ||
| 1.375%, 1/15/13 | 1,000,000 | 1,002,500 |
| 3.125%, 8/31/13 | 290,000 | 296,990 |
| 4.000%, 2/15/14 | 1,150,000 | 1,205,568 |
| 4.250%, 8/15/14 | 1,575,000 | 1,686,112 |
| 0.500%, 10/15/14 | 2,500,000 | 2,509,967 |
| 4.250%, 11/15/14 | 2,000,000 | 2,160,000 |
| 2.500%, 3/31/15 | 1,190,000 | 1,252,104 |
| 4.250%, 8/15/15 | 60,000 | 66,431 |
| 3.125%, 1/31/17 | 1,400,000 | 1,548,641 |
| 2.375%, 7/31/17 | 200,000 | 215,828 |
| 4.250%, 11/15/17 | 2,100,000 | 2,465,696 |
| 3.375%, 11/15/19 | 500,000 | 576,133 |
| 2.625%, 11/15/20 | 800,000 | 878,750 |
| 1.750%, 5/15/22 | 750,000 | 757,383 |
16,622,103 | ||
Total U.S. Government and Agency Obligations ( Cost $17,715,184 ) | 18,472,394 | |
Shares | Value (Note 2 | |
| INVESTMENT COMPANIES - 8.9% | ||
| State Street Institutional U.S. Government Money Market Fund (G) | 9,137,449 | $ 9,137,449 |
Total Investment Companies ( Cost $9,137,449 ) | 9,137,449 | |
TOTAL INVESTMENTS - 102.9% ( Cost $92,739,827** ) | 105,229,671 | |
| NET OTHER ASSETS AND LIABILITIES - (2.9%) | (2,966,708) | |
| TOTAL NET ASSETS - 100.0% | $102,262,963 | |
| * | Non-income producing. |
| ** | Aggregate cost for Federal tax purposes was $92,929,901. |
| (A) | Stepped rate security. Rate shown is as of October 31, 2012. |
| (B) | Security sold within terms of a private placement memorandum exempt from registration under section 144A of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "qualified institutional investors." |
| (C) | Illiquid security. (See Note 2.) |
| (D) | Notes and bonds, issued by foreign entities, denominated in U.S. dollars. The aggregate of these securities is 1.3% of total net assets. |
| (E) | In default. Issuer is bankrupt. |
| (F) | Security purchased on a delayed delivery or when-issued basis. Rate shown is at issue date. |
| (G) | Security segregated for forward or when-issued purchase commitments outstanding as of October 31, 2012. |
| ADR | American Depositary Receipt. |
| PLC | Public Limited Company. |
See accompanying Notes to Financial Statements.
46
MEMBERS Mutual Funds | October 31, 2012
Equity Income Fund Portfolio of Investments
Shares | Value (Note 2) | |
| COMMON STOCK - 80.0%*** | ||
| Consumer Discretionary - 8.8% | ||
| Bed Bath & Beyond Inc.* | 20,000 | $ 1,153,600 |
| Best Buy Co. Inc. | 30,000 | 456,300 |
| CarMax Inc.* | 55,000 | 1,856,250 |
| Lowe’s Cos. Inc. | 43,300 | 1,402,054 |
| NIKE Inc., Class B | 20,000 | 1,827,600 |
| Staples Inc. | 100,000 | 1,151,500 |
| 7,847,304 | ||
| Energy - 13.3% | ||
| Apache Corp. | 30,000 | 2,482,500 |
| Canadian Natural Resources Ltd. | 75,000 | 2,265,000 |
| Petroleo Brasileiro, ADR | 85,000 | 1,802,850 |
| Schlumberger Ltd. | 50,000 | 3,476,500 |
| Southwestern Energy Co.* | 50,000 | 1,735,000 |
| 11,761,850 | ||
| Financials - 7.5% | ||
| Bank of New York Mellon Corp. | 100,000 | 2,471,000 |
| IntercontinentalExchange Inc.* | 10,000 | 1,310,000 |
| Morgan Stanley | 90,100 | 1,565,938 |
| State Street Corp. | 30,000 | 1,337,100 |
| 6,684,038 | ||
| Health Care - 15.3% | ||
| Celgene Corp.* | 25,000 | 1,833,000 |
| Laboratory Corp. of America Holdings* | 24,000 | 2,033,520 |
| Mylan Inc.* | 90,000 | 2,280,600 |
| St Jude Medical Inc. | 25,000 | 956,500 |
| Stryker Corp. | 45,000 | 2,367,000 |
| Teva Pharmaceutical Industries Ltd., ADR | 47,000 | 1,899,740 |
| UnitedHealth Group Inc. | 40,000 | 2,240,000 |
| 13,610,360 | ||
| Industrials - 6.7% | ||
| Expeditors International of Washington Inc. | 60,000 | 2,196,600 |
| Jacobs Engineering Group Inc.* | 50,000 | 1,929,500 |
| Norfolk Southern Corp. | 30,000 | 1,840,500 |
| 5,966,600 | ||
Shares | Value (Note 2) | |
| Information Technology - 24.7% | ||
| Adobe Systems Inc.* | 60,000 | $ 2,040,000 |
| Altera Corp. | 60,000 | 1,828,800 |
| Apple Inc. | 2,500 | 1,487,750 |
| BMC Software Inc.* | 20,000 | 814,000 |
| Broadcom Corp., Class A | 60,000 | 1,892,100 |
| Check Point Software Technologies Ltd.* | 50,000 | 2,226,500 |
| Cisco Systems Inc. | 50,000 | 857,000 |
| EMC Corp.* | 70,000 | 1,709,400 |
| FLIR Systems Inc. | 50,000 | 971,500 |
| Google Inc., Class A* | 2,500 | 1,699,425 |
| Microsoft Corp. | 75,000 | 2,140,125 |
| Oracle Corp. | 60,000 | 1,863,000 |
| QUALCOMM Inc. | 30,000 | 1,757,250 |
| Yahoo! Inc.* | 35,000 | 588,350 |
| 21,875,200 | ||
| Materials - 3.6% | ||
| Freeport-McMoRan Copper & Gold Inc. | 82,000 | 3,188,160 |
Total Common Stock (Cost $75,115,458) | 70,933,512 | |
| U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 9.0% | ||
| U.S. Treasury Bills - 9.0% | ||
| 0.1%, 11/23/12 | 2,500,000 | 2,499,845 |
| 0.14%, 3/21/13 | 5,500,000 | 5,497,112 |
7,996,957 | ||
Total U.S. Government and Agency Obligations (Cost $7,996,957) | 7,996,957 | |
| Repurchase Agreement - 12.5% | ||
| With U.S. Bank National Association issued 10/31/2012 at 0.01%, due 11/1/2012, collateralized by $11,318,576 in Freddie Mac Pool #E99430 due 09/1/2018. Proceeds at maturity are $11,096,555 (Cost $11,096,552) | 11,096,552 | |
TOTAL INVESTMENTS - 101.5% (Cost $94,208,967)** | 90,027,021 | |
| NET OTHER ASSETS AND LIABILITIES - 0.6% | 506,766 | |
| TOTAL CALL & PUT OPTIONS WRITTEN - (2.1%) | (1,827,227) | |
| TOTAL ASSETS - 100% | $ 88,706,560 | |
| * | Non-income producing. |
| ** | Aggregate Cost for Federal Tax purposes was $94,208,967. |
| *** | All or a portion of these securities’ positions represent covers (directly or through conversion rights) for outstanding options written. |
| ADR | American Depository Receipt |
See accompanying Notes to Financial Statements.
47
MEMBERS Mutual Funds | October 31, 2012
Equity Income Fund Portfolio of Investments
Call Options Written | Contracts (100 shares per contract) | Expiration Date | Exercise Price | Value (Note 2) |
| Adobe Systems Inc. | 300 | December2016 | $ 34.00 | $ 42,750 |
| Adobe Systems Inc. | 150 | January2017 | 32.00 | 44,325 |
| Adobe Systems Inc. | 150 | January2017 | 33.00 | 34,350 |
| Altera Corp. | 300 | December2016 | 37.00 | 1,500 |
| Apache Corp. | 150 | January2017 | 90.00 | 19,575 |
| Apache Corp. | 150 | January2017 | 97.50 | 4,200 |
| Apple Inc. | 25 | January2017 | 650.00 | 33,812 |
| Bank of New York Mellon Corp. | 300 | December2016 | 23.00 | 61,200 |
| Bank of New York Mellon Corp. | 300 | January2017 | 23.00 | 68,850 |
| Bank of New York Mellon Corp. | 400 | January2017 | 24.00 | 63,600 |
| Bed Bath & Beyond Inc. | 100 | November2016 | 65.00 | 450 |
| Bed Bath & Beyond Inc. | 100 | January2017 | 65.00 | 7,450 |
| BMC Software Inc. | 200 | January2017 | 42.00 | 42,500 |
| Broadcom Corp. | 400 | November2016 | 35.00 | 2,200 |
| Canadian Natural Resources Ltd. | 300 | December2016 | 30.00 | 48,000 |
| CarMax Inc. | 300 | January2017 | 30.00 | 138,000 |
| CarMax Inc. | 100 | January2017 | 32.00 | 31,500 |
| CarMax Inc. | 150 | January2017 | 33.00 | 37,875 |
| Celgene Corp. | 250 | December2016 | 75.00 | 57,000 |
| Check Point Software Technologies Ltd. | 150 | January2017 | 52.50 | 6,000 |
| Cisco Systems Inc. | 300 | January2017 | 19.00 | 7,950 |
| Cisco Systems Inc. | 200 | April2017 | 19.00 | 11,400 |
| Expeditors International of Washington Inc. | 300 | November2016 | 40.00 | 5,250 |
| FLIR Systems Inc. | 125 | January2017 | 21.00 | 3,125 |
| Freeport-McMoRan Copper & Gold Inc. | 200 | November2016 | 40.00 | 12,300 |
| Freeport-McMoRan Copper & Gold Inc. | 300 | December2016 | 40.00 | 42,750 |
| Freeport-McMoRan Copper & Gold Inc. | 320 | January2017 | 39.00 | 75,040 |
| Google Inc. | 25 | January2017 | 700.00 | 54,375 |
| Intercontinental Exchange Inc. | 100 | March2017 | 140.00 | 36,500 |
| Jacobs Engineering Group Inc. | 250 | January2017 | 43.00 | 11,250 |
| Laboratory Corp. of America Holdings | 240 | November2016 | 90.00 | 1,200 |
| Lowe’s Cos. Inc. | 100 | December2016 | 32.00 | 15,450 |
| Lowe’s Cos. Inc. | 100 | December2016 | 33.00 | 10,300 |
| Morgan Stanley | 200 | November2016 | 18.00 | 5,800 |
| Morgan Stanley | 200 | January2017 | 16.00 | 41,500 |
| Morgan Stanley | 200 | January2017 | 19.00 | 12,000 |
| Mylan Inc. | 300 | April2017 | 24.00 | 70,650 |
| Mylan Inc. | 200 | April2017 | 25.00 | 35,000 |
| Mylan Inc. | 300 | January2017 | 22.00 | 104,250 |
| Mylan Inc. | 100 | January2017 | 23.00 | 26,200 |
| Norfolk Southern Corp. | 150 | January2017 | 65.00 | 15,000 |
| Norfolk Southern Corp. | 150 | January2017 | 67.50 | 6,750 |
| Oracle Corp. | 300 | December2016 | 31.00 | 34,500 |
| Qualcomm Inc. | 150 | December2016 | 60.00 | 24,075 |
| Schlumberger Ltd. | 250 | November2016 | 75.00 | 3,000 |
| Southwestern Energy Co. | 250 | December2016 | 35.00 | 41,125 |
| Southwestern Energy Co. | 250 | January2017 | 36.00 | 40,625 |
See accompanying Notes to Financial Statements.
48
MEMBERS Mutual Funds | October 31, 2012
Equity Income Fund Portfolio of Investments
Call Options Written (continued) | Contracts (100 shares per contract) | Expiration Date | Exercise Price | Value (Note 2) |
| St Jude Medical Inc. | 250 | December2016 | $ 40.00 | $ 20,000 |
| State Street Corp. | 150 | November2016 | 43.00 | 28,350 |
| State Street Corp. | 150 | January2017 | 45.00 | 25,800 |
| Stryker Corp. | 250 | December2016 | 55.00 | 15,000 |
| Teva Pharmaceutical Industries Ltd. | 250 | December2016 | 40.00 | 35,250 |
| UnitedHealth Group Inc. | 150 | December2016 | 57.50 | 20,100 |
| UnitedHealth Group Inc. | 150 | January2017 | 57.50 | 27,150 |
| Yahoo! Inc. | 350 | January2017 | 16.00 | 41,825 |
Total Call Options Written (Premiums received $2,340,560) | 1,705,977 | |||
Put Options Written | ||||
| Apple Inc. | 25 | January2017 | 575.00 | 63,250 |
| Bed Bath & Beyond Inc. | 200 | November2016 | 55.00 | 6,500 |
| Intercontinental Exchange Inc. | 100 | March2017 | 125.00 | 51,500 |
Total Put Options Written (Premiums received $161,002) | 121,250 | |||
Total Value Options Written (Premiums received $2,501,562) | $1,827,227 |
See accompanying Notes to Financial Statements.
49
MEMBERS Mutual Funds | October 31, 2012
Large Cap Value Fund Portfolio of Investments
Shares | Value (Note2) | |
| COMMON STOCKS - 92.9% | ||
| Consumer Discretionary - 6.7% | ||
| Omnicom Group Inc. | 50,078 | $ 2,399,237 |
| Target Corp. | 47,000 | 2,996,250 |
| Time Warner Inc. | 69,800 | 3,032,810 |
| Viacom Inc., Class B | 30,000 | 1,538,100 |
| 9,966,397 | ||
| Consumer Staples - 10.5% | ||
| Diageo PLC, ADR | 18,199 | 2,079,054 |
| Nestle S.A., ADR | 28,000 | 1,773,520 |
| PepsiCo Inc. | 43,515 | 3,012,979 |
| Philip Morris International Inc. | 19,064 | 1,688,308 |
| Procter & Gamble Co./The | 51,185 | 3,544,049 |
| Sysco Corp. | 54,994 | 1,708,663 |
| Wal-Mart Stores Inc. | 23,500 | 1,762,970 |
| 15,569,543 | ||
| Energy - 13.9% | ||
| Apache Corp. | 34,000 | 2,813,500 |
| Chevron Corp. | 41,242 | 4,545,281 |
| ConocoPhillips | 56,568 | 3,272,459 |
| Ensco PLC, Class A | 29,500 | 1,705,690 |
| Exxon Mobil Corp. | 17,000 | 1,549,890 |
| Occidental Petroleum Corp. | 46,029 | 3,634,450 |
| Schlumberger Ltd. | 46,000 | 3,198,380 |
| 20,719,650 | ||
| Financials - 25.3% | ||
| Capital Markets - 4.6% | ||
| Bank of New York Mellon Corp./The | 142,052 | 3,510,105 |
| BlackRock Inc. | 9,000 | 1,707,120 |
| Franklin Resources Inc. | 12,500 | 1,597,500 |
| 6,814,725 | ||
| Commercial Banks - 6.6% | ||
| M&T Bank Corp. | 16,000 | 1,665,600 |
| US Bancorp | 114,542 | 3,803,940 |
| Wells Fargo & Co. | 130,058 | 4,381,654 |
| 9,851,194 | ||
| Insurance - 12.5% | ||
| American International Group Inc. * | 45,000 | 1,571,850 |
| Arch Capital Group Ltd. * | 60,037 | 2,650,633 |
| Berkshire Hathaway Inc., Class B * | 46,033 | 3,974,949 |
| Markel Corp. * | 8,900 | 4,200,266 |
| Travelers Cos. Inc./The | 62,539 | 4,436,517 |
| WR Berkley Corp. | 46,084 | 1,792,207 |
| 18,626,422 | ||
Shares | Value (Note2) | |
| Real Estate Management & Development - 1.6% | ||
| Brookfield Asset Management Inc., Class A | 68,552 | $ 2,360,931 |
| Health Care - 17.3% | ||
| Johnson & Johnson | 91,000 | 6,444,620 |
| Laboratory Corp. of America Holdings * | 19,000 | 1,609,870 |
| Medtronic Inc. | 66,026 | 2,745,361 |
| Merck & Co. Inc. | 132,782 | 6,058,843 |
| Novartis AG, ADR | 39,000 | 2,357,940 |
| Pfizer Inc. | 260,723 | 6,484,181 |
| 25,700,815 | ||
| Industrials - 10.7% | ||
| 3M Co. | 51,043 | 4,471,367 |
| Boeing Co./The | 35,500 | 2,500,620 |
| Emerson Electric Co. | 45,100 | 2,184,193 |
| General Dynamics Corp. | 24,500 | 1,667,960 |
| United Parcel Service Inc., Class B | 36,509 | 2,674,284 |
| United Technologies Corp. | 31,000 | 2,422,960 |
| 15,921,384 | ||
| Information Technology - 4.6% | ||
| Intel Corp. | 136,500 | 2,951,812 |
| Microsoft Corp. | 139,020 | 3,966,936 |
| 6,918,748 | ||
| Materials - 2.4% | ||
| Air Products & Chemicals Inc. | 24,304 | 1,884,289 |
| Newmont Mining Corp. | 32,000 | 1,745,600 |
| 3,629,889 | ||
| Telecommunication Service - 1.5% | ||
| AT&T Inc. | 63,578 | 2,199,163 |
Total Common Stocks( Cost $115,083,648 ) | 138,278,861 | |
| INVESTMENT COMPANIES - 6.7% | ||
| State Street Institutional U.S. Government Money Market Fund | 10,027,353 | 10,027,353 |
Total Investment Companies ( Cost $10,027,353 ) | 10,027,353 | |
TOTAL INVESTMENTS - 99.6% ( Cost $125,111,001** ) | 148,306,214 | |
| NET OTHER ASSETS AND LIABILITIES - 0.4% | 543,375 | |
| TOTAL NET ASSETS - 100.0% | $148,849,589 | |
| * | Non-income producing. |
| ** | Aggregate cost for Federal tax purposes was $125,430,852. |
| ADR | American Depositary Receipt. |
| PLC | Public Limited Company. |
See accompanying Notes to Financial Statements.
50
MEMBERS Mutual Funds | October 31, 2012
Large Cap Growth Fund Portfolio of Investments
Shares | Value (Note2) | |
| COMMON STOCKS - 96.8% | ||
| Consumer Discretionary - 15.1% | ||
| Amazon.com Inc. * | 6,276 | $ 1,461,178 |
| CarMax Inc. * | 20,087 | 677,936 |
| Comcast Corp., Class A | 58,727 | 2,202,850 |
| Ctrip.com International Ltd., ADR * | 15,166 | 303,472 |
| Discovery Communications Inc., Class C * | 22,449 | 1,229,756 |
| Home Depot Inc./The | 26,910 | 1,651,736 |
| J.C. Penney Company Inc. | 31,701 | 761,141 |
| Nielsen Holdings N.V. * | 26,700 | 772,164 |
| Omnicom Group Inc. | 37,022 | 1,773,724 |
| Panera Bread Co., Class A * | 8,720 | 1,470,541 |
| priceline.com Inc. * | 908 | 520,983 |
| Starbucks Corp. | 19,670 | 902,853 |
| Tractor Supply Co. | 6,420 | 617,861 |
| Walt Disney Co./The | 36,456 | 1,788,896 |
| Yum! Brands Inc. | 27,522 | 1,929,567 |
| 18,064,658 | ||
| Consumer Staples - 9.6% | ||
| Coca-Cola Co./The | 82,654 | 3,073,076 |
| Costco Wholesale Corp. | 14,857 | 1,462,375 |
| Diageo PLC, ADR | 24,724 | 2,824,470 |
| Hershey Co./The | 20,397 | 1,404,333 |
| PepsiCo Inc. | 39,742 | 2,751,736 |
| 11,515,990 | ||
| Energy - 6.7% | ||
| Exxon Mobil Corp. | 28,194 | 2,570,447 |
| Schlumberger Ltd. | 77,970 | 5,421,254 |
| 7,991,701 | ||
| Financials - 5.4% | ||
| Brookfield Asset Management Inc., Class A | 38,004 | 1,308,858 |
| CME Group Inc. | 11,530 | 644,873 |
| IntercontinentalExchange Inc. * | 19,345 | 2,534,195 |
| T Rowe Price Group Inc. | 29,321 | 1,904,106 |
| 6,392,032 | ||
| Health Care - 12.3% | ||
| Allergan Inc. | 13,480 | 1,212,122 |
| Becton, Dickinson and Co. | 20,193 | 1,528,206 |
| Biogen Idec Inc. * | 9,110 | 1,259,184 |
| Celgene Corp. * | 16,844 | 1,235,002 |
| Cerner Corp. * | 23,689 | 1,804,865 |
| Eli Lilly & Co. | 30,404 | 1,478,546 |
| Johnson & Johnson | 46,991 | 3,327,903 |
| UnitedHealth Group Inc. | 51,516 | 2,884,896 |
| 14,730,724 | ||
Shares | Value (Note2) | |
| Industrials - 9.9% | ||
| 3M Co. | 17,780 | $ 1,557,528 |
| Boeing Co./The | 27,076 | 1,907,233 |
| C.H. Robinson Worldwide Inc. | 15,170 | 915,206 |
| Copart Inc. * | 25,402 | 731,324 |
| Emerson Electric Co. | 24,661 | 1,194,332 |
| Expeditors International of Washington Inc. | 17,401 | 637,051 |
| IHS Inc., Class A * | 9,059 | 764,489 |
| Roper Industries Inc. | 13,189 | 1,439,843 |
| United Parcel Service Inc., Class B | 25,848 | 1,893,366 |
| W.W. Grainger Inc. | 4,125 | 830,816 |
| 11,871,188 | ||
| Information Technology - 32.1% | ||
| Communications Equipment - 2.7% | ||
| QUALCOMM Inc. | 53,983 | 3,162,054 |
| Computers & Peripherals - 9.0% | ||
| Apple Inc. | 16,574 | 9,863,188 |
| EMC Corp. * | 38,127 | 931,061 |
| 10,794,249 | ||
| Electrical Equipment - 0.5% | ||
| Sensata Technologies Holding N.V. * | 22,010 | 620,022 |
| Internet Software & Services - 5.8% | ||
| Baidu Inc., ADR * | 4,835 | 515,508 |
| eBay Inc. * | 27,891 | 1,346,856 |
| Google Inc., Class A * | 7,425 | 5,047,292 |
| 6,909,656 | ||
| IT Services - 3.8% | ||
| Accenture PLC, Class A | 40,007 | 2,696,872 |
| Visa Inc., Class A | 13,370 | 1,855,221 |
| 4,552,093 | ||
| Semiconductors & Semiconductor Equipment - 2.3% | ||
| ASML Holding N.V. | 18,280 | 1,004,852 |
| Intel Corp. | 81,970 | 1,772,601 |
| 2,777,453 | ||
| Software - 8.0% | ||
| MICROS Systems Inc. * | 25,589 | 1,161,485 |
| Microsoft Corp. | 151,670 | 4,327,903 |
| Nuance Communications Inc. * | 55,807 | 1,242,264 |
| Oracle Corp. | 67,275 | 2,088,889 |
| SAP AG, ADR | 9,262 | 675,200 |
| 9,495,741 |
See accompanying Notes to Financial Statements.
51
MEMBERS Mutual Funds | October 31, 2012
Large Cap Growth Fund Portfolio of Investments
Shares | Value (Note2) | |
COMMON STOCKS (continued) | ||
| Materials - 3.8% | ||
| Ecolab Inc. | 14,778 | $ 1,028,549 |
| International Flavors & Fragrances Inc. | 22,564 | 1,458,086 |
| Molycorp Inc. * | 46,314 | 481,665 |
| Monsanto Co. | 18,247 | 1,570,519 |
| 4,538,819 | ||
| Telecommunication Service - 1.9% | ||
| Verizon Communications Inc. | 49,795 | 2,222,849 |
Total Common Stocks ( Cost $97,488,672 ) | 115,639,229 | |
| INVESTMENT COMPANIES - 4.6% | ||
| State Street Institutional U.S. Government Money Market Fund | 5,505,511 | 5,505,511 |
Total Investment Companies ( Cost $5,505,511 ) | 5,505,511 | |
TOTAL INVESTMENTS - 101.4% ( Cost $102,994,183** ) | 121,144,740 | |
| NET OTHER ASSETS AND LIABILITIES - (1.4%) | (1,632,554) | |
| TOTAL NET ASSETS - 100.0% | $119,512,186 | |
| * | Non-income producing. |
| ** | Aggregate cost for Federal tax purposes was $103,577,650. |
| ADR | American Depositary Receipt. |
| PLC | Public Limited Company. |
See accompanying Notes to Financial Statements.
52
MEMBERS Mutual Funds | October 31, 2012
Mid Cap Fund Portfolio of Investments
Shares | Value (Note2) | |
| COMMON STOCKS - 93.1% | ||
| Consumer Discretionary - 21.1% | ||
| Advance Auto Parts Inc. | 48,685 | $ 3,453,714 |
| Bed Bath & Beyond Inc. * | 60,610 | 3,495,985 |
| CarMax Inc. * | 131,184 | 4,427,460 |
| Discovery Communications Inc., Class C * | 47,633 | 2,609,336 |
| Liberty Global Inc., Series C * | 61,819 | 3,479,791 |
| Omnicom Group Inc. | 85,513 | 4,096,928 |
| Tiffany & Co. | 45,670 | 2,887,257 |
| TJX Cos. Inc. | 107,332 | 4,468,231 |
| 28,918,702 | ||
| Consumer Staples - 3.7% | ||
| Brown-Forman Corp., Class B | 32,959 | 2,111,354 |
| McCormick & Co. Inc. | 48,263 | 2,973,966 |
| 5,085,320 | ||
| Energy - 7.5% | ||
| Ensco PLC, Class A | 47,071 | 2,721,645 |
| EOG Resources Inc. | 22,758 | 2,651,079 |
| Noble Corp. | 64,963 | 2,451,704 |
| World Fuel Services Corp. | 72,184 | 2,504,785 |
| 10,329,213 | ||
| Financials - 23.7% | ||
| Arch Capital Group Ltd. * | 83,902 | 3,704,273 |
| Brookfield Asset Management Inc., Class A | 153,493 | 5,286,299 |
| Brown & Brown Inc. | 106,462 | 2,720,104 |
| Glacier Bancorp Inc. | 138,689 | 2,010,991 |
| Leucadia National Corp. | 136,346 | 3,095,054 |
| M&T Bank Corp. | 37,221 | 3,874,706 |
| Markel Corp. * | 14,664 | 6,920,528 |
| WR Berkley Corp. | 126,693 | 4,927,091 |
| 32,539,046 | ||
| Health Care - 7.9% | ||
| DENTSPLY International Inc. | 80,814 | 2,977,188 |
| Laboratory Corp. of America Holdings * | 51,157 | 4,334,532 |
| Techne Corp. | 52,700 | 3,549,872 |
| 10,861,592 | ||
Shares | Value (Note2) | |
| Industrials - 19.0% | ||
| C.H. Robinson Worldwide Inc. | 77,728 | $ 4,689,330 |
| Copart Inc. * | 189,341 | 5,451,127 |
| Expeditors International of Washington Inc. | 91,075 | 3,334,256 |
| IDEX Corp. | 65,958 | 2,805,194 |
| Jacobs Engineering Group Inc. * | 68,425 | 2,640,521 |
| Ritchie Bros Auctioneers Inc. | 154,827 | 3,482,059 |
| Wabtec Corp. | 45,810 | 3,751,839 |
| 26,154,326 | ||
| Information Technology - 3.9% | ||
| Amphenol Corp., Class A | 40,407 | 2,429,673 |
| MICROS Systems Inc. * | 64,070 | 2,908,137 |
| 5,337,810 | ||
| Materials - 6.3% | ||
| Crown Holdings Inc. * | 73,151 | 2,798,026 |
| Ecolab Inc. | 47,014 | 3,272,175 |
| Valspar Corp. | 47,143 | 2,641,422 |
8,711,623 | ||
Total Common Stocks ( Cost $103,949,108 ) | 127,937,632 | |
| INVESTMENT COMPANIES - 7.0% | ||
| State Street Institutional U.S. Government Money Market Fund | 9,640,157 | 9,640,157 |
Total Investment Companies ( Cost $9,640,157 ) | 9,640,157 | |
TOTAL INVESTMENTS - 100.1% ( Cost $113,589,265** ) | 137,577,789 | |
| NET OTHER ASSETS AND LIABILITIES - (0.1%) | (180,707) | |
| TOTAL NET ASSETS - 100.0% | $137,397,082 | |
| * | Non-income producing. |
| ** | Aggregate cost for Federal tax purposes was $113,713,565. |
| PLC | Public Limited Company. |
See accompanying Notes to Financial Statements.
53
MEMBERS Mutual Funds | October 31, 2012
Small Cap Fund Portfolio of Investments
Shares | Value (Note2) | |
| COMMON STOCKS - 97.3% | ||
| Consumer Discretionary - 13.5% | ||
| Arbitron Inc. | 9,700 | $ 352,692 |
| Ascena Retail Group Inc. * | 13,000 | 257,400 |
| Cato Corp./The, Class A | 13,800 | 391,644 |
| CEC Entertainment Inc. | 8,200 | 254,200 |
| Choice Hotels International Inc. | 2,700 | 84,483 |
| Fred’s Inc., Class A | 16,600 | 224,930 |
| Helen of Troy Ltd. * | 9,900 | 299,178 |
| Matthews International Corp., Class A | 8,100 | 233,037 |
| Stage Stores Inc. | 14,100 | 345,450 |
| 2,443,014 | ||
| Consumer Staples - 1.9% | ||
| Casey’s General Stores Inc. | 4,500 | 231,975 |
| Post Holdings Inc. * | 3,900 | 123,045 |
| 355,020 | ||
| Energy - 3.4% | ||
| Bristow Group Inc. | 3,800 | 189,696 |
| Halcon Resources Corp. * | 10,412 | 67,365 |
| Penn Virginia Corp. | 7,200 | 32,544 |
| Scorpio Tankers Inc. * | 18,600 | 101,370 |
| SEACOR Holdings Inc. * | 2,490 | 218,398 |
| 609,373 | ||
| Financials - 21.0% | ||
| AMERISAFE Inc. * | 7,600 | 199,500 |
| Ares Capital Corp. | 15,400 | 268,884 |
| Assured Guaranty Ltd. | 10,600 | 147,234 |
| Campus Crest Communities Inc., REIT | 14,200 | 157,478 |
| DiamondRock Hospitality Co., REIT | 17,584 | 149,112 |
| First Busey Corp. | 31,430 | 148,350 |
| First Midwest Bancorp Inc. | 21,800 | 269,666 |
| First Niagara Financial Group Inc. | 21,480 | 177,854 |
| Flushing Financial Corp. | 11,020 | 171,361 |
| Hancock Holding Co. | 4,400 | 138,996 |
| International Bancshares Corp. | 15,520 | 281,688 |
| Mack-Cali Realty Corp., REIT | 5,000 | 129,950 |
| MB Financial Inc. | 9,300 | 188,418 |
| Northwest Bancshares Inc. | 24,800 | 295,120 |
| Platinum Underwriters Holdings Ltd. | 5,100 | 226,440 |
| Primerica Inc. | 10,600 | 299,556 |
| Summit Hotel Properties Inc., REIT | 16,200 | 133,812 |
| Webster Financial Corp. | 14,600 | 321,200 |
| Westamerica Bancorporation | 1,900 | 83,828 |
| 3,788,447 | ||
Shares | Value (Note2) | |
| Health Care - 10.7% | ||
| Amsurg Corp. * | 10,300 | $ 293,756 |
| Charles River Laboratories International Inc. * | 11,400 | 425,448 |
| Corvel Corp. * | 3,500 | 148,855 |
| Haemonetics Corp. * | 1,600 | 130,720 |
| ICON PLC, ADR * | 18,900 | 444,906 |
| ICU Medical Inc. * | 5,000 | 296,650 |
| STERIS Corp. | 5,600 | 199,416 |
| 1,939,751 | ||
| Industrials - 26.8% | ||
| Aerospace & Defense - 0.8% | ||
| Cubic Corp. | 3,100 | 151,280 |
| Air Freight & Logistics - 1.7% | ||
| Atlas Air Worldwide Holdings Inc. * | 2,900 | 159,471 |
| UTi Worldwide Inc. | 10,600 | 147,234 |
| 306,705 | ||
| Commercial Services & Supplies - 6.2% | ||
| ACCO Brands Corp. * | 36,500 | 264,260 |
| G&K Services Inc., Class A | 8,200 | 264,450 |
| McGrath RentCorp | 1,600 | 42,016 |
| Standard Parking Corp. * | 7,800 | 178,230 |
| United Stationers Inc. | 12,720 | 369,134 |
| 1,118,090 | ||
| Construction & Engineering - 0.1% | ||
| Sterling Construction Co. Inc. * | 1,800 | 16,020 |
| Electrical Equipment - 3.6% | ||
| Acuity Brands Inc. | 2,800 | 181,160 |
| Belden Inc. | 13,222 | 473,348 |
| 654,508 | ||
| Industrial Conglomerates - 3.7% | ||
| Carlisle Cos. Inc. | 11,900 | 661,045 |
| Machinery - 5.7% | ||
| Albany International Corp., Class A | 14,800 | 325,156 |
| ESCO Technologies Inc. | 8,200 | 307,008 |
| Mueller Industries Inc. | 9,100 | 398,580 |
| 1,030,744 | ||
| Marine - 1.9% | ||
| Kirby Corp. * | 5,600 | 321,888 |
| Matson Inc. | 1,300 | 27,625 |
| 349,513 | ||
| Road & Rail - 1.4% | ||
| Genesee & Wyoming Inc., Class A * | 3,400 | 246,398 |
| Trading Companies & Distributors - 1.7% | ||
| GATX Corp. | 7,300 | 302,658 |
See accompanying Notes to Financial Statements.
54
MEMBERS Mutual Funds | October 31, 2012
Small Cap Fund Portfolio of Investments
Shares | Value (Note2) | |
COMMON STOCKS (continued) | ||
| Information Technology - 7.6% | ||
| Coherent Inc. * | 3,100 | $ 141,515 |
| Diebold Inc. | 7,600 | 226,100 |
| Forrester Research Inc. | 4,300 | 124,442 |
| MAXIMUS Inc. | 5,000 | 275,900 |
| MTS Systems Corp. | 5,400 | 272,214 |
| Websense Inc. * | 10,000 | 132,200 |
| Zebra Technologies Corp., Class A * | 5,500 | 197,615 |
| 1,369,986 | ||
| Materials - 7.9% | ||
| Aptargroup Inc. | 4,900 | 251,272 |
| Deltic Timber Corp. | 3,900 | 264,654 |
| Greif Inc., Class A | 3,500 | 146,860 |
| Innospec Inc. * | 6,700 | 216,946 |
| Koppers Holdings Inc. | 4,800 | 171,360 |
| Sensient Technologies Corp. | 4,000 | 145,520 |
| Zep Inc. | 15,900 | 227,847 |
| 1,424,459 | ||
| Utilities - 4.5% | ||
| Atmos Energy Corp. | 6,100 | 219,417 |
| New Jersey Resources Corp. | 1,950 | 86,697 |
| UNS Energy Corp. | 4,700 | 200,408 |
| Westar Energy Inc. | 5,700 | 169,290 |
| WGL Holdings Inc. | 3,600 | 143,172 |
818,984 | ||
Total Common Stocks ( Cost $11,935,357 ) | 17,585,995 | |
Shares | Value (Note2) | |
| INVESTMENT COMPANIES - 2.5% | ||
| State Street Institutional U.S. Government Money Market Fund | 447,745 | $ 447,745 |
Total Investment Companies ( Cost $447,745 ) | 447,745 | |
TOTAL INVESTMENTS - 99.8% ( Cost $12,383,102** ) | 18,033,740 | |
| NET OTHER ASSETS AND LIABILITIES - 0.2% | 32,916 | |
| TOTAL NET ASSETS - 100.0% | $ 18,066,656 | |
| * | Non-income producing. |
| ** | Aggregate cost for Federal tax purposes was $12,578,341. |
| ADR | American Depositary Receipt. |
| PLC | Public Limited Company. |
| REIT | Real Estate Investment Trust. |
See accompanying Notes to Financial Statements.
55
MEMBERS Mutual Funds | October 31, 2012
International Stock Fund Portfolio of Investments
Shares | Value (Note2) | |
| COMMON STOCKS - 95.4% | ||
| Australia - 3.3% | ||
| James Hardie Industries Plc | 80,588 | $ 772,130 |
| Orica Ltd. | 22,060 | 575,232 |
| QBE Insurance Group Ltd. | 14,734 | 201,583 |
| 1,548,945 | ||
| Belgium - 3.4% | ||
| Anheuser-Busch InBev N.V. | 19,528 | 1,632,826 |
| Brazil - 0.8% | ||
| Cielo S.A. | 14,521 | 359,263 |
| Canada - 2.7% | ||
| Potash Corp. of Saskatchewan Inc. | 14,300 | 574,863 |
| Rogers Communications Inc. | 16,200 | 711,097 |
| 1,285,960 | ||
| Denmark - 0.6% | ||
| AP Moeller - Maersk AS | 43 | 300,048 |
| Finland - 1.3% | ||
| Danske Bank OYJ | 19,751 | 619,014 |
| France - 11.1% | ||
| BNP Paribas | 16,501 | 830,059 |
| Cie Generale de Geophysique - Veritas * | 17,297 | 565,196 |
| Rexel S.A. | 27,430 | 496,503 |
| Sanofi S.A. | 16,502 | 1,450,606 |
| Technip S.A. | 5,551 | 625,239 |
| Total S.A. | 15,902 | 800,133 |
| Valeo S.A. | 11,579 | 508,775 |
| 5,276,511 | ||
| Germany - 9.3% | ||
| Bayer AG | 12,006 | 1,045,582 |
| Bayerische Motoren Werke AG | 4,960 | 395,056 |
| Merck KGaA | 8,007 | 1,023,297 |
| RWE AG | 15,249 | 696,814 |
| SAP AG | 11,246 | 819,199 |
| ThyssenKrupp AG | 18,551 | 422,108 |
| 4,402,056 | ||
| Indonesia - 1.0% | ||
| Bank Mandiri Persero Tbk PT, ADR | 56,900 | 477,960 |
| Ireland - 0.8% | ||
| Ryanair Holdings PLC, ADR * | 11,400 | 367,650 |
| Italy - 1.2% | ||
| Atlantia SpA | 35,363 | 583,489 |
| Japan - 14.8% | ||
| Asics Corp. | 35,490 | 515,256 |
| Canon Inc. | 14,400 | 465,028 |
| Daikin Industries Ltd. | 17,400 | 481,263 |
Shares | Value (Note2) | |
| Daito Trust Construction Co. Ltd. | 8,350 | $ 843,054 |
| Don Quijote Co. Ltd. | 20,100 | 791,864 |
| FANUC Corp. | 2,300 | 366,191 |
| Komatsu Ltd. | 24,700 | 517,329 |
| LIXIL Group Corp. | 34,700 | 767,199 |
| Seven & I Holdings Co. Ltd. | 19,300 | 595,223 |
| Softbank Corp. | 11,400 | 360,864 |
| Sumitomo Mitsui Financial Group Inc. | 28,300 | 866,406 |
| Yahoo! Japan Corp. | 1,299 | 446,994 |
| 7,016,671 | ||
| Mexico - 0.9% | ||
| Genomma Lab Internacional S.A.B. de C.V. * | 216,400 | 432,998 |
| Netherlands - 1.9% | ||
| ING Groep N.V. * | 102,687 | 907,194 |
| New Zealand - 0.8% | ||
| Telecom Corp. of New Zealand Ltd. | 181,235 | 358,460 |
| Philippines - 0.5% | ||
| BDO Unibank Inc. * | 157,340 | 244,441 |
| Russia - 1.4% | ||
| Sberbank of Russia | 235,617 | 690,358 |
| South Africa - 0.7% | ||
| Mediclinic International Ltd. | 58,204 | 316,507 |
| South Korea - 2.7% | ||
| Duksan Hi-Metal Co. Ltd. * | 8,175 | 152,916 |
| Hyundai Mobis | 2,206 | 562,321 |
| Samsung Electronics Co. Ltd., GDR | 926 | 558,378 |
| 1,273,615 | ||
| Spain - 3.2% | ||
| Amadeus IT Holding S.A. | 19,661 | 486,737 |
| Mediaset Espana Comunicacion S.A. | 92,979 | 499,413 |
| Red Electrica Corp. S.A. | 11,690 | 548,123 |
| 1,534,273 | ||
| Sweden - 4.0% | ||
| Assa Abloy AB | 20,914 | 697,144 |
| Sandvik AB | 45,842 | 635,840 |
| Swedbank AB | 31,373 | 581,778 |
| 1,914,762 | ||
| Switzerland - 3.5% | ||
| Novartis AG | 27,405 | 1,649,361 |
| Thailand - 1.0% | ||
| Krung Thai Bank PCL | 796,200 | 467,589 |
| Turkey - 1.6% | ||
| KOC Holding AS | 60,102 | 282,320 |
| Turkcell Iletisim Hizmetleri AS * | 79,492 | 485,600 |
| 767,920 |
See accompanying Notes to Financial Statements.
56
MEMBERS Mutual Funds | October 31, 2012
International Stock Fund Portfolio of Investments
Shares | Value (Note2) | |
COMMON STOCKS (continued) | ||
| United Kingdom - 22.9% | ||
| BG Group PLC | 25,111 | $ 465,000 |
| BHP Billiton PLC | 40,265 | 1,290,131 |
| British American Tobacco PLC | 19,325 | 957,245 |
| Direct Line Insurance Group PLC * | 16,169 | 50,750 |
| GlaxoSmithKline PLC | 25,951 | 580,644 |
| Informa PLC | 138,763 | 896,163 |
| Petrofac Ltd. | 17,460 | 451,944 |
| Prudential PLC | 69,516 | 951,859 |
| Reed Elsevier PLC | 55,107 | 538,909 |
| Rexam PLC | 154,513 | 1,113,825 |
| Royal Dutch Shell PLC | 38,099 | 1,306,497 |
| Standard Chartered PLC | 33,929 | 801,309 |
| Unilever PLC | 39,787 | 1,483,806 |
10,888,082 | ||
Total Common Stocks ( Cost $37,998,353 ) | 45,315,953 | |
| INVESTMENT COMPANIES - 4.1% | ||
| United States - 4.1% | ||
| State Street Institutional U.S. Government Money Market Fund | 1,931,905 | 1,931,905 |
Total Investment Companies ( Cost $1,931,905 ) | 1,931,905 | |
TOTAL INVESTMENTS - 99.5% ( Cost $39,930,258** ) | 47,247,858 | |
| NET OTHER ASSETS AND LIABILITIES - 0.5% | 253,337 | |
| TOTAL NET ASSETS - 100.0% | $ 47,501,195 | |
| * | Non-income producing. |
| ** | Aggregate cost for Federal tax purposes was $40,369,790. |
| ADR | American Depositary Receipt. |
| GDR | Global Depositary Receipt. |
| PLC | Public Limited Company. |
| OTHER INFORMATION: | |
| Industry Concentration | |
% of Net Assets | |
| Consumer Discretionary | 10% |
| Consumer Staples | 10% |
| Energy | 9% |
| Financials | 18% |
| Health Care | 14% |
| Industrials | 11% |
| Information Technology | 7% |
| Materials | 10% |
| Money Market Funds | 4% |
| Telecommunication Services | 4% |
| Utilities | 2% |
| Net Other Assets & Liabilities | 1% |
| 100% | |
See accompanying Notes to Financial Statements.
57
MEMBERS Mutual Funds | October 31, 2012
Statements of Assets and Liabilities as of October 31, 2012
Conservative Allocation Fund | Moderate Allocation Fund | Aggressive Allocation Fund | |
| Assets: | |||
| Investments: | |||
| Investments at cost | |||
| Unaffiliated issuers | $ 29,754,871 | $ 56,742,473 | $ 20,437,380 |
Affiliated issuers3 | 28,123,436 | 58,931,934 | 19,674,308 |
| Net unrealized appreciation | |||
| Unaffiliated issuers | 1,015,751 | 2,001,393 | 731,434 |
Affiliated issuers3 | 3,081,716 | 10,210,200 | 4,347,540 |
| Total investments at value | 61,975,774 | 127,886,000 | 45,190,662 |
Cash: | – | 1,030 | – |
| Receivables: | |||
| Investments sold | 474,832 | – | 46,502 |
| Fund shares sold | 197,999 | 140,606 | 38,394 |
| Dividends and interest | 143,171 | 207,565 | 30,824 |
| Other assets | 906 | – | – |
| Total assets | 62,792,682 | 128,235,201 | 45,306,382 |
| Liabilities: | |||
| Payables: | |||
| Investments purchased | 475,000 | – | – |
| Fund shares repurchased | 25,001 | 108,059 | 59,424 |
| Advisory agreement fees | 10,558 | 21,859 | 7,735 |
| Service agreement fees | 13,197 | 27,323 | 9,668 |
| Distribution fees - Class B | 6,054 | 19,106 | 6,895 |
| Distribution fees - Class C | 6,799 | 3,364 | 704 |
| Shareholder servicing fees | 13,197 | 27,323 | 9,668 |
Other: | 3,518 | – | 45,304 |
| Total liabilities | 553,324 | 207,034 | 139,398 |
| Net Assets | $ 62,239,358 | $128,028,167 | $ 45,166,984 |
| Net Assets consist of: | |||
| Paid-in capital | $60,840,582 | $129,355,681 | $45,648,544 |
| Accumulated undistributed net investment income | 220,293 | 1,192,180 | 272,724 |
| Accumulated net realized loss on investments sold and foreign currency related transactions | (2,918,984) | (14,731,287) | (5,833,258) |
| Net unrealized appreciation of investments (including appreciation (depreciation) of foreign currency related transactions) | 4,097,467 | 12,211,593 | 5,078,974 |
| Net Assets | $ 62,239,358 | $128,028,167 | $ 45,166,984 |
| Class A Shares: | |||
| Net Assets | $ 41,905,104 | $ 92,954,005 | $ 33,281,907 |
| Shares of beneficial interest outstanding | 4,018,212 | 8,978,925 | 3,325,750 |
| Net Asset Value and redemption price per share | $ 10.43 | $ 10.35 | $ 10.01 |
Sales charge of offering price2 | 0.64 | 0.63 | 0.61 |
| Maximum offering price per share | $ 11.07 | $ 10.98 | $ 10.62 |
| Class B Shares: | |||
| Net Assets | $ 9,521,015 | $ 29,820,848 | $ 10,786,555 |
| Shares of beneficial interest outstanding | 913,661 | 2,897,747 | 1,090,261 |
Net Asset Value and redemption price per share1 | $ 10.42 | $ 10.29 | $ 9.89 |
| Class C Shares: | |||
| Net Assets | $ 10,813,239 | $ 5,253,314 | $ 1,098,522 |
| Shares of beneficial interest outstanding | 1,037,103 | 510,149 | 110,956 |
Net Asset Value and redemption price per share1 | $ 10.43 | $ 10.30 | $ 9.90 |
| 1 | If applicable, redemption price per share may be reduced by a contingent deferred sales charge. |
| 2 | Sales charge of offering price is 5.75% for the Conservative Allocation, Moderate Allocation and Aggressive Allocation Funds. |
| 3 | See Note 11 for information on affiliated issuers. |
See accompanying Notes to Financial Statements.
58
MEMBERS Mutual Funds | October 31, 2012
Statements of Assets and Liabilities as of October 31, 2012
Cash Reserves Fund | Bond Fund | High Income Fund | |
| Assets: | |||
| Investments: | |||
| Investments at cost | |||
| Unaffiliated issuers | $ 12,434,728 | $112,485,211 | $ 77,557,472 |
| Net unrealized appreciation (depreciation) | |||
| Unaffiliated issuers | ��� | 13,012,114 | 4,484,811 |
| Total investments at value | 12,434,728 | 125,497,325 | 82,042,283 |
| Cash | – | 12,431 | – |
| Receivables: | |||
| Fund shares sold | 2,066 | 122,019 | 29,297 |
| Dividends and interest | 46,338 | 1,169,937 | 1,511,084 |
| Due from Adviser | 4,890 | – | – |
| Total assets | 12,488,022 | 126,801,712 | 83,582,664 |
| Liabilities: | |||
| Payables: | |||
| Fund shares repurchased | 1,699 | 301,687 | 3,000 |
| Advisory agreement fees | 4,243 | 53,747 | 40,174 |
| Service agreement fees | 1,591 | 16,124 | 14,609 |
| Distribution fees - Class B | 537 | 3,846 | 1,896 |
| Shareholder servicing fees | – | 10,922 | 6,507 |
| Dividends payable | – | 169,794 | 347,349 |
| Other | – | – | 3,900 |
| Total liabilities | 8,070 | 556,120 | 417,435 |
| Net Assets | $ 12,479,952 | $126,245,592 | $ 83,165,229 |
| Net Assets consist of: | |||
| Paid-in capital | $ 12,479,958 | $113,393,644 | $ 78,649,724 |
| Accumulated net investment income | – | 14,965 | 345,910 |
| Accumulated net realized gain (loss) on investments sold and foreign currency related transactions | (6) | (175,131) | (315,216) |
| Net unrealized appreciation of investments (including appreciation (depreciation) of foreign currency related transactions) | – | 13,012,114 | 4,484,811 |
| Net Assets | $ 12,479,952 | $126,245,592 | $ 83,165,229 |
| Class A Shares: | |||
| Net Assets | $ 11,653,794 | $ 45,671,205 | $ 27,060,938 |
| Shares of beneficial interest outstanding | 11,656,098 | 4,283,114 | 3,785,985 |
| Net Asset Value and redemption price per share | $ 1.00 | $ 10.66 | $ 7.15 |
Sales charge of offering price2 | – | 0.50 | 0.34 |
| Maximum offering price per share | $ 1.00 | $ 11.16 | $ 7.49 |
| Class B Shares: | |||
| Net Assets | $ 826,158 | $ 6,088,090 | $ 2,983,475 |
| Shares of beneficial interest outstanding | 828,970 | 570,751 | 410,766 |
Net Asset Value and redemption price per share1 | $ 1.00 | $ 10.67 | $ 7.26 |
| Class Y Shares: | |||
| Net Assets | $ 74,486,297 | $ 53,120,816 | |
| Shares of beneficial interest outstanding | 6,999,767 | 7,480,883 | |
Net Asset Value and redemption price per share1 | $ 10.64 | $ 7.10 |
| 1 | If applicable, redemption price per share may be reduced by a contingent deferred sales charge. |
| 2 | Sales charge of offering price is 4.50% for the Bond and High Income Funds. |
See accompanying Notes to Financial Statements.
59
MEMBERS Mutual Funds | October 31, 2012
Statements of Assets and Liabilities as of October 31, 2012
Diversified Income Fund | Equity Income Fund | Large Cap Value Fund | |
| Assets: | |||
| Investments: | |||
| Investments at cost | |||
| Unaffiliated issuers | $ 92,739,827 | $ 83,112,415 | $125,111,001 |
| Repurchase agreement | – | 11,096,552 | – |
| Net unrealized appreciation (depreciation) | |||
| Unaffiliated issuers | 12,489,844 | (4,181,946) | 23,195,213 |
| Total investments at value | 105,229,671 | 90,027,021 | 148,306,214 |
| Cash | – | 316,166 | – |
| Receivables: | |||
| Investments sold | – | – | – |
| Fund shares sold | 281,630 | 202,564 | 653,962 |
| Dividends and interest | 527,867 | 70,161 | 146,228 |
| Other assets | 15,284 | – | 12,289 |
| Total assets | 106,054,452 | 90,615,912 | 149,118,693 |
| Liabilities: | |||
| Payables: | |||
| Investments purchased | 3,576,817 | – | – |
| Fund shares repurchased | 72,390 | 82,125 | 129,977 |
| Advisory agreement fees | 56,440 | – | 69,895 |
| Service agreement fees | 17,366 | – | 45,749 |
| Distribution fees - Class B | 9,228 | – | 3,736 |
| Distribution fees - Class C | 513 | – | – |
| Shareholder servicing fees | 25,168 | – | 13,853 |
| Dividends payable | 1,869 | – | – |
| Options written, at value (premium received $2,501,562) (Note 6) | – | 1,827,227 | – |
| Other | 31,698 | – | 5,894 |
| Total liabilities | 3,791,489 | 1,909,352 | 269,104 |
| Net Assets | $102,262,963 | $ 88,706,560 | $148,849,589 |
| Net Assets consist of: | |||
| Paid-in capital | $ 99,331,787 | $ 89,478,101 | $139,598,214 |
| Accumulated undistributed net investment income | 10,986 | 24,712 | 1,875,023 |
| Accumulated net realized gain (loss) on investments sold, options and foreign currency related transactions | (9,569,654) | 2,711,358 | (15,818,861) |
| Net unrealized appreciation (depreciation) of investments (including appreciation (depreciation) of options and foreign currency related transactions) | 12,489,844 | (3,507,611) | 23,195,213 |
| Net Assets | $102,262,963 | $ 88,706,560 | $148,849,589 |
| Class A Shares: | |||
| Net Assets | $ 86,952,432 | $ 6,297,331 | $ 58,537,011 |
| Shares of beneficial interest outstanding | 6,933,466 | 645,360 | 4,184,211 |
| Net Asset Value and redemption price per share | $ 12.54 | $ 9.76 | $ 13.99 |
Sales charge of offering price2 | 0.77 | 0.59 | 0.85 |
| Maximum offering price per share | $ 13.31 | $ 10.35 | $ 14.84 |
| Class B Shares: | |||
| Net Assets | $ 14,386,838 | $ 5,767,628 | |
| Shares of beneficial interest outstanding | 1,140,689 | 419,646 | |
Net Asset Value and redemption price per share1 | $ 12.61 | $ 13.74 | |
| Class C Shares: | |||
| Net Assets | $ 923,693 | $ 527,360 | |
| Shares of beneficial interest outstanding | 73,258 | 54,155 | |
Net Asset Value and redemption price per share1 | $ 12.61 | $ 9.74 | |
| Class Y Shares: | |||
| Net Assets | $ 81,778,762 | $ 84,544,950 | |
| Shares of beneficial interest outstanding | 8,326,055 | 6,036,079 | |
Net Asset Value and redemption price per share1 | $ 9.82 | $ 14.01 | |
| Class R6 Shares: | |||
| Net Assets | $ 103,107 | ||
| Shares of beneficial interest outstanding | 10,496 | ||
Net Asset Value and redemption price per share1 | $ 9.82 |
| 1 | If applicable, redemption price per share may be reduced by a contingent deferred sales charge. |
| 2 | Sales charge of offering price is 5.75% for the Diversified Income, Equity Income and Large Cap Value Funds. |
See accompanying Notes to Financial Statements.
60
MEMBERS Mutual Funds | October 31, 2012
Statements of Assets and Liabilities as of October 31, 2012
Large Cap Growth Fund | Mid Cap Fund | Small Cap Fund | International Stock Fund | |
| Assets: | ||||
| Investments: | ||||
| Investments at cost | ||||
| Unaffiliated issuers | $102,994,183 | $113,589,265 | $ 12,383,102 | $ 39,930,258 |
| Net unrealized appreciation (depreciation) | ||||
| Unaffiliated issuers | 18,150,557 | 23,988,524 | 5,650,638 | 7,317,600 |
| Total investments at value | 121,144,740 | 137,577,789 | 18,033,740 | 47,247,858 |
| Cash | – | – | – | 719 |
| Foreign currency (cost of $6)(Note 2) | – | – | – | 6 |
| Receivables: | ||||
| Investments sold | 282,000 | – | 42,692 | 72,822 |
| Fund shares sold | 14,150 | 39,707 | 2,816 | 46,282 |
| Dividends and interest | 76,149 | 18,751 | 7,934 | 83,584 |
| Other assets | 8,064 | – | – | 141,254 |
| Total assets | 121,525,103 | 137,636,247 | 18,087,182 | 47,592,525 |
| Liabilities: | ||||
| Payables: | ||||
| Investments purchased | 453,570 | – | – | 24,776 |
| Fund shares repurchased | 1,432,076 | 87,781 | – | 4,616 |
| Advisory agreement fees | 79,820 | 87,083 | 15,534 | 42,544 |
| Service agreement fees | 21,286 | 46,444 | 3,883 | 12,155 |
| Distribution fees - Class B | 3,730 | 3,926 | 203 | 2,063 |
| Shareholder servicing fees | 12,053 | 11,570 | 906 | 5,176 |
| Other | 10,382 | 2,361 | – | – |
| Total liabilities | 2,012,917 | 239,165 | 20,526 | 91,330 |
| Net Assets | $119,512,186 | $137,397,082 | $ 18,066,656 | $ 47,501,195 |
| Net Assets consist of: | ||||
| Paid-in capital | $104,773,896 | $125,606,778 | $ 14,268,442 | $ 54,653,315 |
| Accumulated net investment income (loss) | 220,282 | (291,051) | 123,791 | 595,689 |
| Accumulated net realized loss on investments sold, options and foreign currency related transactions | (3,632,549) | (11,907,169) | (1,976,215) | (15,073,645) |
| Net unrealized appreciation of investments (including appreciation (depreciation) of options and foreign currency related transactions) | 18,150,557 | 23,988,524 | 5,650,638 | 7,325,836 |
| Net Assets | $119,512,186 | $137,397,082 | $ 18,066,656 | $ 47,501,195 |
| Class A Shares: | ||||
| Net Assets | $ 49,824,442 | $ 48,423,539 | $ 3,941,276 | $ 21,001,861 |
| Shares of beneficial interest outstanding | 2,899,586 | 6,400,302 | 333,808 | 1,943,069 |
Net Asset Value and redemption price per share3 | $ 17.18 | $ 7.57 | $ 11.81 | $ 10.81 |
Sales charge of offering price2 | 1.05 | 0.46 | 0.72 | 0.66 |
| Maximum offering price per share | $ 18.23 | $ 8.03 | $ 12.53 | $ 11.47 |
| Class B Shares: | ||||
| Net Assets | $ 5,731,410 | $ 6,147,295 | $ 317,587 | $ 3,205,544 |
| Shares of beneficial interest outstanding | 367,250 | 893,953 | 27,731 | 302,874 |
Net Asset Value and redemption price per share1 | $ 15.61 | $ 6.88 | $ 11.45 | $ 10.58 |
| Class Y Shares: | ||||
| Net Assets | $ 63,956,334 | $ 82,826,248 | $ 13,807,793 | $ 23,293,790 |
| Shares of beneficial interest outstanding | 3,691,084 | 10,770,722 | 1,168,594 | 2,153,276 |
Net Asset Value and redemption price per share1 | $ 17.33 | $ 7.69 | $ 11.82 | $ 10.82 |
| 1 | If applicable, redemption price per share may be reduced by a contingent deferred sales charge. |
| 2 | Sales charge of offering price is 5.75% for the Large Cap Growth, Mid Cap, Small Cap and International Stock Funds. |
| 3 | If applicable, the redemption price per share of the International Stock and Small Cap Funds may be reduced by a redemption fee. |
See accompanying Notes to Financial Statements.
61
MEMBERS Mutual Funds | October 31, 2012
Statements of Operations for the Year Ended October 31, 2012
Conservative Allocation Fund | Moderate Allocation Fund | Aggressive Allocation Fund | Cash Reserves Fund | Bond Fund | |
| Investment Income: | |||||
| Interest | $ 116 | $ 223 | $ 102 | $ 10,687 | $ 4,938,041 |
| Dividends | |||||
| Unaffiliated issuers | 980,035 | 1,688,678 | 439,291 | – | – |
Affiliated issuers1 | 690,029 | 1,395,957 | 383,342 | – | – |
| Less: Foreign taxes withheld | – | – | – | – | – |
| Total investment income | 1,670,180 | 3,084,858 | 822,735 | 10,687 | 4,938,041 |
| Expenses: | |||||
| Advisory agreement fees | 110,318 | 241,308 | 85,662 | 53,153 | 749,548 |
Service agreement fees2 | 137,898 | 301,636 | 107,077 | 19,933 | 224,864 |
| Distribution fees - Class A | – | – | – | – | – |
| Distribution fees - Class B | 66,224 | 211,675 | 77,086 | 8,545 | 43,078 |
| Distribution fees - Class C | 58,298 | 35,745 | 7,476 | – | – |
| Shareholder servicing fees - Class A | 96,391 | 219,162 | 78,890 | – | 111,128 |
| Shareholder servicing fees - Class B | 22,075 | 70,559 | 25,695 | – | 14,359 |
| Shareholder servicing fees - Class C | 19,433 | 11,915 | 2,492 | – | – |
| Other expenses | – | – | – | – | 10 |
| Total expenses before reimbursement/waiver | 510,637 | 1,092,000 | 384,378 | 81,631 | 1,142,987 |
Less reimbursement/waiver3 | – | – | – | (70,944) | – |
| Total expenses net of reimbursement/waiver | 510,637 | 1,092,000 | 384,378 | 10,687 | 1,142,987 |
| Net Investment Income (Loss) | 1,159,543 | 1,992,858 | 438,357 | – | 3,795,054 |
| Net Realized and Unrealized Gain (Loss) on Investments | |||||
Net realized gain (loss) on investments (including net realized gain (loss) on options and foreign currency related transactions)4 | |||||
| Options | – | – | – | – | – |
| Unaffiliated issuers | (330,094) | 500,528 | 39,217 | (1) | 3,140,346 |
Affiliated issuers1 | 457,681 | 235,054 | 527,899 | – | – |
| Capital gain distributions received from underlying funds | |||||
| Unaffiliated issuers | 288,721 | 681,440 | 350,870 | – | – |
Affiliated issuers1 | 271,179 | 506,434 | 159,433 | – | – |
| Net change in unrealized appreciation (depreciation) on investments (including net unrealized appreciation (depreciation) on options and foreign currency related transactions) | |||||
| Options | – | – | – | – | – |
| Unaffiliated issuers | 1,309,658 | 1,781,351 | 488,268 | – | (1,952,463) |
Affiliated issuers1 | 788,783 | 3,989,977 | 1,523,205 | – | – |
| Net Realized and Unrealized Gain (Loss) on Investments | 2,785,928 | 7,694,784 | 3,088,892 | (1) | 1,187,883 |
| Net Increase (Decrease) in Net Assets from Operations | $ 3,945,471 | $ 9,687,642 | $ 3,527,249 | $ (1) | $ 4,982,937 |
| 1 | See Note 11 for information on affiliated issuers. |
| 2 | See Note 3 for information on service agreement fees. |
| 3 | Waiver includes advisory agreement fees of $53,154, service agreement fees of $9,245, and distribution fees of $8,545 for the Cash Reserves Fund. See Note 3 for more information on these waivers. |
| 4 | Includes foreign capital gains taxes paid of $9,407 for the International Stock Fund. |
See accompanying Notes to Financial Statements.
62
MEMBERS Mutual Funds | October 31, 2012
Statements of Operations for the Year Ended October 31, 2012
High Income Fund | Diversified Income Fund | Equity Income Fund | Large Cap Value Fund | Large Cap Growth Fund | Mid Cap Fund | Small Cap Fund | International Stock Fund |
$ 7,387,659 | $ 1,437,293 | $ 4,535 | $ 1,135 | $ 976 | $ 1,849 | $ 74 | $ 1,141 |
| 32,937 | 1,662,409 | 1,024,596 | 3,876,006 | 1,601,214 | 1,371,168 | 397,017 | 1,565,760 |
| – | – | – | – | – | – | – | – |
– | (7,835) | – | (28,515) | (12,595) | (23,761) | – | (127,302) |
| 7,420,596 | 3,091,867 | 1,029,131 | 3,848,626 | 1,589,595 | 1,349,256 | 397,091 | 1,439,599 |
| 555,384 | 618,698 | 803,273 | 792,125 | 930,773 | 947,245 | 196,287 | 535,920 |
| 201,958 | 190,369 | 141,721 | 518,481 | 248,206 | 505,197 | 49,072 | 153,120 |
| – | – | – | – | – | – | – | – |
| 21,157 | 112,883 | – | 48,320 | 49,327 | 53,239 | 2,202 | 25,587 |
| – | 878 | 579 | – | – | – | – | – |
| 66,613 | 200,040 | 12,269 | 143,445 | 124,755 | 116,880 | 9,137 | 50,791 |
| 7,052 | 37,628 | – | 16,107 | 16,442 | 17,746 | 734 | 8,529 |
| – | 293 | 193 | – | – | – | – | – |
42 | 1 | – | – | 759 | – | 10 | 47 |
852,206 | 1,160,790 | 958,035 | 1,518,478 | 1,370,262 | 1,640,307 | 257,442 | 773,994 |
– | – | – | – | – | – | – | – |
852,206 | 1,160,790 | 958,035 | 1,518,478 | 1,370,262 | 1,640,307 | 257,442 | 773,994 |
| 6,568,390 | 1,931,077 | 71,096 | 2,330,148 | 219,333 | (291,051) | 139,649 | 665,605 |
| – | – | 4,844,081 | – | – | – | – | – |
| 2,367,981 | 1,282,486 | 3,724,208 | 5,413,750 | 3,134,792 | 2,100,913 | 1,808,408 | 3,794,611 |
| – | – | – | – | – | – | – | – |
| – | – | – | – | – | – | – | – |
| – | – | – | – | – | – | – | – |
| – | – | 918,638 | – | – | – | – | – |
| 556,083 | 5,385,049 | (2,133,944) | 11,695,666 | 5,345,945 | 15,277,918 | 545,958 | 344,807 |
– | – | – | – | – | – | – | – |
2,924,064 | 6,667,535 | 7,352,983 | 17,109,416 | 8,480,737 | 17,378,831 | 2,354,366 | 4,139,418 |
$ 9,492,454 | $ 8,598,612 | $ 7,424,079 | $ 19,439,564 | $ 8,700,070 | $ 17,087,780 | $ 2,494,015 | $ 4,805,023 |
See accompanying Notes to Financial Statements.
63
MEMBERS Mutual Funds | October 31, 2012
Statements of Changes in Net Assets
Conservative Allocation Fund | ||
Year Ended October 31, | 2012 | 2011 |
| Net Assets at beginning of period | $ 49,342,098 | $ 47,054,462 |
| Increase in net assets from operations: | ||
| Net investment income | 1,159,543 | 1,061,933 |
| Net realized gain (loss) | 687,487 | 836,348 |
| Net change in unrealized appreciation (depreciation) | 2,098,441 | (613,175) |
| Net increase in net assets from operations | 3,945,471 | 1,285,106 |
| Distributions to shareholders from: | ||
| Net investment income | ||
| Class A | (954,164) | (1,259,740) |
| Class B | (157,672) | (257,797) |
| Class C | (132,926) | (162,110) |
| Total distributions | (1,244,762) | (1,679,647) |
| Capital Stock transactions: | ||
| Class A Shares | ||
| Shares sold | 9,208,301 | 7,563,695 |
| Issued to shareholders in reinvestment of distributions | 947,278 | 1,240,819 |
| Shares redeemed | (5,428,325) | (6,509,204) |
| Net increase from capital stock transactions | 4,727,254 | 2,295,310 |
| Class B Shares | ||
| Shares sold | 2,312,706 | 1,540,631 |
| Issued to shareholders in reinvestment of distributions | 156,562 | 256,799 |
| Shares redeemed | (1,577,184) | (1,879,105) |
| Net increase (decrease) from capital stock transactions | 892,084 | (81,675) |
| Class C Shares | ||
| Shares sold | 5,980,421 | 1,896,830 |
| Issued to shareholders in reinvestment of distributions | 132,711 | 161,831 |
| Shares redeemed | (1,535,919) | (1,590,119) |
| Net increase from capital stock transactions | 4,577,213 | 468,542 |
| Total net increase from capital stock transactions | 10,196,551 | 2,682,177 |
| Total increase in net assets | 12,897,260 | 2,287,636 |
| Net Assets at end of period | $ 62,239,358 | $ 49,342,098 |
| Undistributed net investment income (loss) | $ 220,293 | $ 4,157 |
| Capital Share transactions: | ||
| Class A Shares | ||
| Shares sold | 908,810 | 756,857 |
| Issued to shareholders in reinvestment of distributions | 94,012 | 125,495 |
| Shares redeemed | (533,812) | (652,368) |
| Net increase from capital share transactions | 469,010 | 229,984 |
| Class B Shares | ||
| Shares sold | 228,183 | 154,492 |
| Issued to shareholders in reinvestment of distributions | 15,602 | 25,961 |
| Shares redeemed | (155,144) | (189,249) |
| Net increase (decrease) from capital share transactions | 88,641 | (8,796) |
| Class C Shares | ||
| Shares sold | 588,367 | 190,935 |
| Issued to shareholders in reinvestment of distributions | 13,167 | 16,350 |
| Shares redeemed | (152,123) | (159,360) |
| Net increase from capital share transactions | 449,411 | 47,925 |
See accompanying Notes to Financial Statements.
64
MEMBERS Mutual Funds | October 31, 2012
Statements of Changes in Net Assets
Moderate Allocation Fund | Aggressive Allocation Fund | ||
2012 | 2011 | 2012 | 2011 |
$115,188,206 | $108,622,501 | $ 40,992,945 | $ 37,440,131 |
| 1,992,858 | 1,656,771 | 438,357 | 221,941 |
| 1,923,456 | 1,614,445 | 1,077,419 | 576,549 |
5,771,328 | 757,185 | 2,011,473 | 715,366 |
9,687,642 | 4,028,401 | 3,527,249 | 1,513,856 |
| (1,916,288) | (2,088,289) | (403,523) | (335,232) |
| (418,284) | (458,645) | (76,406) | (49,813) |
(65,044) | (70,769) | (6,635) | (2,731) |
(2,399,616) | (2,617,703) | (486,564) | (387,776) |
| 15,558,035 | 16,065,908 | 5,399,683 | 6,119,303 |
| 1,901,340 | 2,072,501 | 402,976 | 334,810 |
(14,146,049) | (14,635,384) | (4,959,514) | (4,930,241) |
3,313,326 | 3,503,025 | 843,145 | 1,523,872 |
| 5,277,522 | 4,862,924 | 1,782,472 | 2,178,299 |
| 417,419 | 457,445 | 76,278 | 49,745 |
(4,485,480) | (3,710,836) | (1,767,198) | (1,644,341) |
1,209,461 | 1,609,533 | 91,552 | 583,703 |
| 1,746,641 | 1,221,876 | 341,846 | 465,203 |
| 60,111 | 64,104 | 6,493 | 2,731 |
(777,604) | (1,243,531) | (149,682) | (148,775) |
1,029,148 | 42,449 | 198,657 | 319,159 |
5,551,935 | 5,155,007 | 1,133,354 | 2,426,734 |
12,839,961 | 6,565,705 | 4,174,039 | 3,552,814 |
$128,028,167 | $115,188,206 | $ 45,166,984 | $ 40,992,945 |
$ 1,192,180 | $ 1,069,200 | $ 272,724 | $ 136,547 |
| 1,565,188 | 1,641,969 | 561,746 | 646,773 |
| 199,093 | 215,661 | 43,802 | 35,962 |
(1,425,270) | (1,498,087) | (517,860) | (522,497) |
339,011 | 359,543 | 87,688 | 160,238 |
| 531,188 | 497,503 | 186,372 | 232,831 |
| 43,709 | 47,552 | 8,336 | 5,361 |
(452,791) | (380,530) | (184,748) | (174,259) |
122,106 | 164,525 | 9,960 | 63,933 |
| 175,970 | 124,096 | 36,346 | 48,946 |
| 6,288 | 6,664 | 710 | 294 |
(77,919) | (127,339) | (15,752) | (16,265) |
104,339 | 3,421 | 21,304 | 32,975 |
See accompanying Notes to Financial Statements.
65
MEMBERS Mutual Funds | October 31, 2012
Statements of Changes in Net Assets
Cash Reserves Fund | Bond Fund | |||
Year Ended October 31, | 2012 | 2011 | 2012 | 2011 |
| Net Assets at beginning of period | $ 13,898,862 | $ 13,743,471 | $194,577,898 | $216,815,810 |
| Increase (decrease) in net assets from operations: | ||||
| Net investment income | – | – | 3,795,054 | 5,202,419 |
| Net realized gain (loss) | (1) | 5 | 3,140,346 | 363,239 |
| Net unrealized appreciation (depreciation) | – | – | (1,952,463) | 1,161,020 |
| Net increase (decrease) in net assets from operations | (1) | 5 | 4,982,937 | 6,726,678 |
| Distributions to shareholders from: | ||||
| Net investment income | ||||
| Class A | – | – | (1,068,087) | (1,050,389) |
| Class B | – | – | (95,578) | (122,389) |
| Class Y | – | – | (2,676,061) | (4,001,052) |
| Net realized gains | ||||
| Class A | – | – | – | – |
| Class Y | – | – | – | – |
| Total distributions | – | – | (3,839,726) | (5,173,830) |
| Capital Stock transactions: | ||||
| Class A Shares | ||||
| Shares sold | 6,411,177 | 9,289,159 | 7,560,580 | 7,090,415 |
| Issued to shareholders in reinvestment of distributions | – | – | 1,004,430 | 981,197 |
| Shares redeemed | (7,054,867) | (8,679,197) | (6,971,049) | (8,998,457) |
| Net increase (decrease) from capital stock transactions | (643,690) | 609,962 | 1,593,961 | (926,845) |
| Class B Shares | ||||
| Shares sold | 130,529 | 639,104 | 2,278,896 | 685,539 |
| Issued to shareholders in reinvestment of distributions | – | – | 94,633 | 119,275 |
| Shares redeemed | (905,748) | (1,093,680) | (1,999,266) | (3,541,575) |
| Net increase (decrease) from capital stock transactions | (775,219) | (454,576) | 374,263 | (2,736,761) |
| Class Y Shares | ||||
| Shares sold | 9,859,822 | 15,145,259 | ||
| Issued to shareholders in reinvestment of distributions | 278,173 | 1,292,205 | ||
| Shares redeemed | (81,581,736) | (36,564,618) | ||
| Net decrease from capital stock transactions | (71,443,741) | (20,127,154) | ||
| Total net increase (decrease) from capital stock transactions | (1,418,909) | 155,386 | (69,475,517) | (23,790,760) |
| Total increase (decrease) in net assets | (1,418,910) | 155,391 | (68,332,306) | (22,237,912) |
| Net Assets at end of period | $ 12,479,952 | $ 13,898,862 | $126,245,592 | $194,577,898 |
| Undistributed net investment income | $ – | $ – | $ 14,965 | $ 83,385 |
| Capital Share transactions: | ||||
| Class A Shares | ||||
| Shares sold | 6,411,177 | 9,289,159 | 709,207 | 682,691 |
| Issued to shareholders in reinvestment of distributions | – | – | 94,226 | 94,715 |
| Shares redeemed | (7,054,867) | (8,679,197) | (654,505) | (871,910) |
| Net increase (decrease) from capital share transactions | (643,690) | 609,962 | 148,928 | (94,504) |
| Class B Shares | ||||
| Shares sold | 130,529 | 639,104 | 213,572 | 65,667 |
| Issued to shareholders in reinvestment of distributions | – | – | 8,873 | 11,533 |
| Shares redeemed | (905,748) | (1,093,680) | (187,778) | (342,627) |
| Net increase (decrease) from capital share transactions | (775,219) | (454,576) | 34,667 | (265,427) |
| Class Y Shares | ||||
| Shares sold | 927,096 | 1,437,823 | ||
| Issued to shareholders in reinvestment of distributions | 26,188 | 125,007 | ||
| Shares redeemed | (7,673,765) | (3,544,853) | ||
| Net decrease from capital share transactions | (6,720,481) | (1,982,023) | ||
See accompanying Notes to Financial Statements.
66
MEMBERS Mutual Funds | October 31, 2012
Statements of Changes in Net Assets
High Income Fund | Diversified Income Fund | |||
Year Ended October 31, | 2012 | 2011 | 2012 | 2011 |
| Net Assets at beginning of period | $109,894,185 | $124,464,299 | $ 88,819,418 | $ 91,550,650 |
| Increase in net assets from operations: | ||||
| Net investment income | 6,568,390 | 7,763,690 | 1,931,077 | 2,120,021 |
| Net realized gain on investments and options transactions | 2,367,981 | 4,106,214 | 1,282,486 | 3,845,446 |
| Net unrealized appreciation (depreciation) | 556,083 | (6,211,188) | 5,385,049 | 220,319 |
| Net increase in net assets from operations | 9,492,454 | 5,658,716 | 8,598,612 | 6,185,786 |
| Distributions to shareholders from: | ||||
| Net investment income | ||||
| Class A | (1,699,686) | (1,652,085) | (1,711,801) | (1,804,981) |
| Class B | (154,205) | (225,296) | (206,557) | (306,884) |
| Class C | (1.327) | |||
| Class Y | (4,841,184) | (5,944,123) | – | – |
| Total distributions | (6,695,075) | (7,821,504) | (1,919,685) | (2,111,865) |
| Capital Stock transactions: | ||||
| Class A Shares | ||||
| Shares sold | 4,302,192 | 3,839,404 | 16,959,889 | 8,593,838 |
| Issued to shareholders in reinvestment of distributions | 1,394,116 | 1,356,721 | 1,676,783 | 1,765,457 |
| Shares redeemed | (4,692,747) | (4,359,911) | (10,192,166) | (13,722,943) |
| Net increase (decrease) from capital stock transactions | 1,003,561 | 836,214 | 8,444,506 | (3,363,648) |
| Class B Shares | ||||
| Shares sold | 828,079 | 193,454 | 2,570,360 | 1,855,392 |
| Issued to shareholders in reinvestment of distributions | 137,349 | 198,809 | 204,674 | 302,436 |
| Shares redeemed | (1,095,552) | (1,870,845) | (5,382,351) | (5,599,333) |
| Net decrease from capital stock transactions | (130,124) | (1,478,582) | (2,607,317) | (3,441,505) |
| Class C Shares | ||||
| Shares sold | 928,648 | |||
| Issued to shareholders in reinvestment of distributions | 1,306 | |||
| Shares redeemed | (2,525) | |||
| Net increase from capital stock transactions | 927,429 | |||
| Class Y Shares | ||||
| Shares sold | 3,503,814 | 11,647,172 | ||
| Issued to shareholders in reinvestment of distributions | 22,416 | 274,445 | ||
| Shares redeemed | (33,926,002) | (23,686,575) | ||
| Net decrease from capital stock transactions | (30,399,772) | (11,764,958) | ||
| Total net increase (decrease) from capital stock transactions | (29,526,335) | (12,407,326) | 6,764,618 | (6,805,153) |
| Total increase (decrease) in net assets | (26,728,956) | (14,570,114) | 13,443,545 | (2,731,232) |
| Net Assets at end of period | $ 83,165,229 | $109,894,185 | $102,262,963 | $ 88,819,418 |
| Undistributed net investment income | $ 345,910 | $ 150,065 | $ 10,986 | $ 3,645 |
| Capital Share transactions: | ||||
| Class A Shares | ||||
| Shares sold | 609,219 | 544,373 | 1,392,685 | 741,735 |
| Issued to shareholders in reinvestment of distributions | 197,816 | 193,424 | 137,621 | 153,220 |
| Shares redeemed | (661,444) | (616,870) | (837,293) | (1,197,436) |
| Net increase (decrease) from capital share transactions | 145,591 | 120,927 | 693,013 | (302,481) |
| Class B Shares | ||||
| Shares sold | 115,954 | 26,987 | 209,678 | 160,437 |
| Issued to shareholders in reinvestment of distributions | 19,195 | 27,913 | 16,747 | 26,138 |
| Shares redeemed | (153,326) | (261,662) | (440,167) | (482,146) |
| Net decrease from capital share transactions | (18,177) | (206,762) | (213,742) | (295,571) |
| Class C Shares | ||||
| Shares sold | 73,355 | |||
| Issued to shareholders in reinvestment of distributions | 103 | |||
| Shares redeemed | (200) | |||
| Net increase from capital share transactions | 73,258 | |||
| Class Y Shares | ||||
| Shares sold | 505,952 | 1,708,180 | ||
| Issued to shareholders in reinvestment of distributions | 3,306 | 39,333 | ||
| Shares redeemed | (4,814,252) | (3,354,517) | ||
| Net decrease from capital share transactions | (4,304,994) | (1,607,004) | ||
See accompanying Notes to Financial Statements.
67
MEMBERS Mutual Funds | October 31, 2012
Statements of Changes in Net Assets
Equity Income Fund | ||
Year Ended October 31, | 2012 | 2011 |
| Net Assets at beginning of period | $ 67,466,736 | $ 35,520,264 |
| Increase in net assets from operations: | ||
| Net investment income (loss) | 71,096 | (72,344) |
| Net realized gain on investments and options transactions | 8,568,289 | 4,751,173 |
| Net unrealized depreciation on investments and options transactions | (1,215,306) | (1,818,380) |
| Net increase in net assets from operations | 7,424,079 | 2,860,449 |
| Distributions to shareholders from: | ||
| Net investment income | ||
| Class A | – | – |
| Class Y | (46,384) | – |
| Net realized gains | ||
| Class A | (425,229) | (364,554) |
| Class C | (8,339) | – |
| Class Y | (7,438,957) | (3,619,585) |
| Class R6 | (2,058) | – |
| Total distributions | (7,920,967) | (3,984,139) |
| Capital Stock transactions: | ||
| Class A Shares | ||
| Shares sold | 2,471,567 | 1,705,545 |
| Issued to shareholders in reinvestment of distributions | 408,292 | 351,254 |
| Shares redeemed | (600,124) | (675,671) |
| Net increase from capital stock transactions | 2,279,735 | 1,381,128 |
| Class C Shares | ||
| Shares sold | 528,648 | |
| Issued to shareholders in reinvestment of distributions | 8,133 | |
| Shares redeemed | – | |
| Net increase from capital stock transactions | 536,781 | |
| Class Y Shares | ||
| Shares sold | 46,994,347 | 40,372,210 |
| Issued to shareholders in reinvestment of distributions | 436,737 | 43,676 |
| Shares redeemed | (28,612,946) | (8,726,852) |
| Net increase from capital stock transactions | 18,818,138 | 31,689,034 |
| Class R6 Shares | ||
| Shares sold | 100,000 | |
| Issued to shareholders in reinvestment of distributions | 2,058 | |
| Net increase from capital stock transactions | 102,058 | |
| Total net increase from capital stock transactions | 21,736,712 | 33,070,162 |
| Total increase in net assets | 21,239,824 | 31,946,472 |
| Net Assets at end of period | $ 88,706,560 | $ 67,466,736 |
| Undistributed net investment income | $ 24,712 | $ – |
| Capital Share transactions: | ||
| Class A Shares | ||
| Shares sold | 247,158 | 168,040 |
| Issued to shareholders in reinvestment of distributions | 41,590 | 35,966 |
| Shares redeemed | (60,508) | (68,002) |
| Net increase from capital share transactions | 228,240 | 136,004 |
| Class C Shares | ||
| Shares sold | 53,328 | |
| Issued to shareholders in reinvestment of distributions | 827 | |
| Shares redeemed | – | |
| Net increase from capital share transactions | 54,155 | |
| Class Y Shares | ||
| Shares sold | 4,700,801 | 4,164,918 |
| Issued to shareholders in reinvestment of distributions | 44,135 | 4,957 |
| Shares redeemed | (2,879,140) | (880,662) |
| Net increase from capital share transactions | 1,865,796 | 3,289,213 |
| Class R6 Shares | ||
| Shares sold | 10,288 | |
| Issued to shareholders in reinvestment of distributions | 208 | |
| Net increase from capital share transactions | 10,496 | |
See accompanying Notes to Financial Statements.
68
MEMBERS Mutual Funds | October 31, 2012
Statements of Changes in Net Assets
Large Cap Value Fund | Large Cap Growth Fund | |||
Year Ended October 31, | 2012 | 2011 | 2012 | 2011 |
| Net Assets at beginning of period | $139,813,547 | $152,616,104 | $116,770,538 | $152,562,429 |
| Increase in net assets from operations: | ||||
| Net investment income | 2,330,148 | 2,277,582 | 219,333 | 80,676 |
| Net realized gain | 5,413,750 | 7,698,135 | 3,134,792 | 16,382,050 |
| Net unrealized appreciation (depreciation) | 11,695,666 | 5,024,639 | 5,345,945 | (8,658,903) |
| Net increase in net assets from operations | 19,439,564 | 15,000,356 | 8,700,070 | 7,803,823 |
| Distributions to shareholders from: | ||||
| Net investment income | ||||
| Class A | (834,914) | (668,428) | (9) | (58,148) |
| Class B | (54,356) | (42,622) | – | – |
| Class Y | (1,426,893) | (1,265,448) | (79,708) | (301,378) |
| Total distributions | (2,316,163) | (1,976,498) | (79,717) | (359,526) |
| Capital Stock transactions: | ||||
| Class A Shares | ||||
| Shares sold | 4,471,921 | 4,933,316 | 5,061,091 | 4,948,607 |
| Issued to shareholders in reinvestment of distributions | 819,618 | 655,541 | 9 | 57,439 |
| Shares redeemed | (7,814,640) | (9,577,922) | (6,795,165) | (7,853,822) |
| Net decrease from capital stock transactions | (2,523,101) | (3,989,065) | (1,734,065) | (2,847,776) |
| Class B Shares | ||||
| Shares sold | 343,203 | 665,658 | 416,580 | 708,800 |
| Issued to shareholders in reinvestment of distributions | 53,910 | 42,129 | – | – |
| Shares redeemed | (2,617,278) | (3,154,649) | (2,720,479) | (3,269,113) |
| Net decrease from capital stock transactions | (2,220,165) | (2,446,862) | (2,303,899) | (2,560,313) |
| Class Y Shares | ||||
| Shares sold | 10,978,450 | 5,796,947 | 15,807,505 | 958,486 |
| Issued to shareholders in reinvestment of distributions | 14,923 | – | 740 | 119 |
| Shares redeemed | (14,337,466) | (25,187,435) | (17,648,986) | (38,786,704) |
| Net decrease from capital stock transactions | (3,344,093) | (19,390,488) | (1,840,741) | (37,828,099) |
| Total net increase (decrease) from capital stock transactions | (8,087,359) | (25,826,415) | (5,878,705) | (43,236,188) |
| Total increase (decrease) in net assets | 9,036,042 | (12,802,557) | 2,741,648 | (35,791,891) |
| Net Assets at end of period | $148,849,589 | $139,813,547 | $119,512,186 | $116,770,538 |
| Undistributed net investment income | $ 1,875,023 | $ 1,860,913 | $ 220,282 | $ 79,708 |
| Capital Share transactions: | ||||
| Class A Shares | ||||
| Shares sold | 339,012 | 399,608 | 300,073 | 308,234 |
| Issued to shareholders in reinvestment of distributions | 65,517 | 54,765 | 1 | 3,597 |
| Shares redeemed | (588,442) | (779,278) | (405,649) | (490,786) |
| Net decrease from capital share transactions | (183,913) | (324,905) | (105,575) | (178,955) |
| Class B Shares | ||||
| Shares sold | 26,209 | 54,739 | 27,187 | 48,179 |
| Issued to shareholders in reinvestment of distributions | 4,358 | 3,558 | – | – |
| Shares redeemed | (200,764) | (259,584) | (177,945) | (223,275) |
| Net decrease from capital share transactions | (170,197) | (201,287) | (150,758) | (175,096) |
| Class Y Shares | ||||
| Shares sold | 824,369 | 478,071 | 935,714 | 60,055 |
| Issued to shareholders in reinvestment of distributions | 1,194 | – | 47 | 7 |
| Shares redeemed | (1,087,426) | (2,082,826) | (1,038,659) | (2,441,064) |
| Net decrease from capital share transactions | (261,863) | (1,604,755) | (102,898) | (2,381,002) |
See accompanying Notes to Financial Statements.
69
MEMBERS Mutual Funds | October 31, 2012
Statements of Changes in Net Assets
Mid Cap Fund | Small Cap Fund | |||
Year Ended October 31, | 2012 | 2011 | 2012 | 2011 |
| Net Assets at beginning of period | $111,303,061 | $ 78,606,852 | $ 20,505,842 | $ 32,042,388 |
| Increase (decrease) in net assets from operations: | ||||
| Net investment income (loss) | (291,051) | (33,474) | 139,649 | 182,774 |
| Net realized gain | 2,100,913 | 10,632,924 | 1,808,408 | 3,296,100 |
| Net unrealized appreciation (depreciation) | 15,277,918 | (1,507,500) | 545,958 | (209,651) |
| Net increase (decrease) in net assets from operations | 17,087,780 | 9,091,950 | 2,494,015 | 3,269,223 |
| Distributions to shareholders from: | ||||
| Net investment income | ||||
| Class A | – | – | (2) | (12,733) |
| Class B | – | – | – | (903) |
| Class Y | – | – | (506) | (176,780) |
| Net realized gains | ||||
| Class A | – | – | (106,289) | – |
| Class B | – | – | (9,033) | – |
| Class Y | – | – | (533,628) | – |
| Total distributions | – | – | (649,458) | (190,416) |
| Capital Stock transactions: | ||||
| Class A Shares | ||||
| Shares sold | 4,875,516 | 5,189,491 | 651,324 | 990,222 |
| Issued to shareholders in reinvestment of distributions | – | – | 106,290 | 12,733 |
| Shares redeemed | (6,590,652) | (8,625,351) | (342,284) | (536,474) |
| Redemption fees | – | – | 402 | 2,319 |
| Net increase (decrease) from capital stock transactions | (1,715,136) | (3,435,860) | 415,732 | 468,800 |
| Class B Shares | ||||
| Shares sold | 283,914 | 520,038 | 49,659 | 114,582 |
| Issued to shareholders in reinvestment of distributions | – | – | 8,926 | 873 |
| Shares redeemed | (3,273,176) | (3,229,600) | (30,124) | (128,820) |
| Net increase (decrease) from capital stock transactions | (2,989,262) | (2,709,562) | 28,461 | (13,365) |
| Class Y Shares | ||||
| Shares sold | 31,885,950 | 41,483,407 | 269,929 | 17,707 |
| Issued to shareholders in reinvestment of distributions | – | – | – | – |
| Shares redeemed | (18,175,311) | (11,733,726) | (4,997,865) | (15,088,495) |
| Net increase (decrease) from capital stock transactions | 13,710,639 | 29,749,681 | (4,727,936) | (15,070,788) |
| Total net increase (decrease) from capital stock transactions | 9,006,241 | 23,604,259 | (4,283,743) | (14,615,353) |
| Total increase (decrease) in net assets | 26,094,021 | 32,696,209 | (2,439,186) | (11,536,546) |
| Net Assets at end of period | $137,397,082 | $111,303,061 | $ 18,066,656 | $ 20,505,842 |
| Undistributed net investment income | $ (291,051) | $ – | $ 123,791 | $ 498 |
| Capital Share transactions: | ||||
| Class A Shares | ||||
| Shares sold | 682,033 | 790,275 | 57,143 | 89,570 |
| Issued to shareholders in reinvestment of distributions | – | – | 9,971 | 1,139 |
| Shares redeemed | (927,953) | (1,310,630) | (30,008) | (49,774) |
| Net increase (decrease) from capital share transactions | (245,920) | (520,355) | 37,106 | 40,935 |
| Class B Shares | ||||
| Shares sold | 43,505 | 85,309 | 4,438 | 10,434 |
| Issued to shareholders in reinvestment of distributions | – | – | 857 | 79 |
| Shares redeemed | (503,207) | (531,886) | (2,737) | (12,137) |
| Net increase (decrease) from capital share transactions | (459,702) | (446,577) | 2,558 | (1,624) |
| Class Y Shares | ||||
| Shares sold | 4,408,511 | 6,347,479 | 22,902 | 1,565 |
| Issued to shareholders in reinvestment of distributions | – | – | – | – |
| Shares redeemed | (2,492,781) | (1,832,006) | (436,397) | (1,369,753) |
| Net increase (decrease) from capital share transactions | 1,915,730 | 4,515,473 | (413,495) | (1,368,188) |
See accompanying Notes to Financial Statements.
70
MEMBERS Mutual Funds | October 31, 2012
Statements of Changes in Net Assets
International Stock Fund | |
2012 | 2011 |
$ 68,992,523 | $102,780,265 |
| 665,605 | 1,390,323 |
| 3,794,611 | 7,545,592 |
344,807 | (10,559,684) |
4,805,023 | (1,623,769) |
| (424,281) | (333,583) |
| (56,775) | (38,465) |
| (973,905) | (1,149,092) |
| – | – |
| – | – |
– | – |
(1,454,961) | (1,521,140) |
| 1,766,826 | 2,871,288 |
| 418,874 | 327,020 |
| (3,314,254) | (4,977,102) |
– | 315 |
(1,128,554) | (1,778,479) |
| 180,977 | 296,343 |
| 56,439 | 38,117 |
(1,117,821) | (1,142,294) |
(880,405) | (807,834) |
| 5,210,309 | 492,127 |
| 7,305 | – |
(28,050,045) | (28,548,647) |
(22,832,431) | (28,056,520) |
(24,841,390) | (30,642,833) |
(21,491,328) | (33,787,742) |
$ 47,501,195 | $ 68,992,523 |
$ 595,689 | $ 1,428,662 |
| 173,514 | 268,949 |
| 44,656 | 30,764 |
(326,980) | (469,641) |
(108,810) | (169,928) |
| 17,929 | 28,118 |
| 6,108 | 3,630 |
(111,399) | (108,680) |
(87,362) | (76,932) |
| 514,327 | 47,000 |
| 780 | – |
(2,741,504) | (2,693,985) |
(2,226,397) | (2,646,985) |
See accompanying Notes to Financial Statements.
71
MEMBERS Mutual Funds | October 31, 2012
Financial Highlights for a Share of Beneficial Interest Outstanding
CONSERVATIVE ALLOCATION FUND | |||||
Year Ended October 31, | |||||
2012 | 2011 | 2010 | 2009 | 2008 | |
| CLASS A | |||||
Net Asset Value at beginning of period | $9.94 | $10.02 | $ 9.34 | $ 8.53 | $11.13 |
| Income from Investment Operations: | |||||
Net investment income1 | 0.24 | 0.25 | 0.27 | 0.24 | 0.28 |
| Net realized and unrealized gain (loss) on investments | 0.50 | 0.04 | 0.70 | 0.98 | (2.58) |
| Total from investment operations | 0.74 | 0.29 | 0.97 | 1.22 | (2.30) |
| Less Distributions: | |||||
| Distributions from net investment income | (0.25) | (0.37) | (0.29) | (0.41) | (0.27) |
| Distributions from capital gains | – | – | – | - | (0.03) |
| Total distributions | (0.25) | (0.37) | (0.29) | (0.41) | (0.30) |
| Net increase (decrease) in net asset value | 0.49 | (0.08) | 0.68 | 0.81 | (2.60) |
Net Asset Value at end of period | $10.43 | $ 9.94 | $10.02 | $ 9.34 | $ 8.53 |
Total Return (%)2 | 7.60 | 3.00 | 10.58 | 14.91 | (21.19) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $41,905 | $35,293 | $33,274 | $27,225 | $19,753 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 0.70 | 0.70 | 0.70 | 0.92 | 1.14 |
| After reimbursement of expenses by Adviser (%) | 0.70 | 0.70 | 0.70 | 0.70 | 0.70 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 2.34 | 2.40 | 2.79 | 2.80 | 2.75 |
Portfolio Turnover (%)3 | 40 | 26 | 50 | 38 | 90 |
| CLASS B | |||||
Net Asset Value at beginning of period | $9.94 | $10.03 | $9.34 | $ 8.48 | $11.07 |
| Income from Investment Operations: | |||||
Net investment income1 | 0.16 | 0.17 | 0.20 | 0.18 | 0.18 |
| Net realized and unrealized gain (loss) on investments | 0.50 | 0.05 | 0.71 | 0.98 | (2.55) |
| Total from investment operations | 0.66 | 0.22 | 0.91 | 1.16 | (2.37) |
| Less Distributions: | |||||
| Distributions from net investment income | (0.18) | (0.31) | (0.22) | (0.30) | (0.19) |
| Distributions from capital gains | – | – | – | – | (0.03) |
| Total distributions | (0.18) | (0.31) | (0.22) | (0.30) | (0.22) |
| Net increase (decrease) in net asset value | 0.48 | (0.09) | 0.69 | 0.86 | (2.59) |
Net Asset Value at end of period | $10.42 | $ 9.94 | $10.03 | $ 9.34 | $ 8.48 |
Total Return (%) 2 | 6.75 | 2.19 | 9.87 | 14.09 | (21.82) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $9,521 | $ 8,203 | $8,363 | $6,287 | $5,506 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 1.45 | 1.45 | 1.45 | 1.68 | 1.89 |
| After reimbursement of expenses by Adviser (%) | 1.45 | 1.45 | 1.45 | 1.45 | 1.45 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 1.61 | 1.67 | 2.04 | 2.16 | 2.01 |
Portfolio Turnover (%)3 | 40 | 26 | 50 | 38 | 90 |
| 1 | Net investment income calculated excluding permanent tax adjustments to undistributed net investment income. |
| 2 | Total return without applicable sales charge. |
| 3 | Portfolio Turnover is calculated at the fund level and represents the entire fiscal year or period. |
See accompanying Notes to Financial Statements.
72
MEMBERS Mutual Funds | October 31, 2012
Financial Highlights for a Share of Beneficial Interest Outstanding
CONSERVATIVE ALLOCATION FUND (continued) | |||||
Year Ended October 31, | Inception to 10/31/081 | ||||
2012 | 2011 | 2010 | 2009 | ||
| CLASS C | |||||
Net Asset Value at beginning of period | $ 9.95 | $10.04 | $ 9.35 | $ 8.48 | $10.47 |
| Income from Investment Operations: | |||||
Net investment income2 | 0.16 | 0.19 | 0.20 | 0.16 | 0.03 |
| Net realized and unrealized gain (loss) on investments | 0.50 | 0.03 | 0.71 | 1.01 | (2.02) |
| Total from investment operations | 0.66 | 0.22 | 0.91 | 1.17 | (1.99) |
| Less Distributions: | |||||
| Distributions from net investment income | (0.18) | (0.31) | (0.22) | (0.30) | – |
| Total distributions | (0.18) | (0.31) | (0.22) | (0.30) | – |
| Net increase (decrease) in net asset value | 0.48 | (0.09) | 0.69 | 0.87 | (1.99) |
Net Asset Value at end of period | $10.43 | $ 9.95 | $10.04 | $ 9.35 | $ 8.48 |
Total Return (%)3 | 6.75 | 2.19 | 9.86 | 14.21 | (19.01)4 |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $10,813 | $5,846 | $5,417 | $3,412 | $2,198 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 1.45 | 1.45 | 1.45 | 1.87 | 2.675 |
| After reimbursement of expenses by Adviser (%) | 1.45 | 1.45 | 1.45 | 1.45 | 1.455 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 1.49 | 1.76 | 2.03 | 2.03 | 0.605 |
Portfolio Turnover (%)6 | 40 | 26 | 50 | 38 | 90 |
MODERATE ALLOCATION FUND | |||||
Year Ended October 31, | |||||
2012 | 2011 | 2010 | 2009 | 2008 | |
| CLASS A | |||||
Net Asset Value at beginning of period | $ 9.76 | $ 9.63 | $ 8.77 | $ 7.84 | $11.82 |
| Income from Investment Operations: | |||||
Net investment income2 | 0.19 | 0.16 | 0.18 | 0.15 | 0.16 |
| Net realized and unrealized gain (loss) on investments | 0.63 | 0.22 | 0.83 | 0.93 | (3.88) |
| Total from investment operations | 0.82 | 0.38 | 1.01 | 1.08 | (3.72) |
| Less Distributions: | |||||
| Distributions from net investment income | (0.23) | (0.25) | (0.15) | (0.15) | (0.18) |
| Distributions from capital gains | – | – | – | – | (0.08) |
| Total distributions | (0.23) | (0.25) | (0.15) | (0.15) | (0.26) |
| Net increase (decrease) in net asset value | 0.59 | 0.13 | 0.86 | 0.93 | (3.98) |
Net Asset Value at end of period | $10.35 | $ 9.76 | $ 9.63 | $ 8.77 | $ 7.84 |
Total Return (%)3 | 8.55 | 3.97 | 11.68 | 14.12 | (32.18) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $92,954 | $84,321 | $79,765 | $64,631 | $50,326 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 0.70 | 0.70 | 0.70 | 0.78 | 0.79 |
| After reimbursement of expenses by Adviser (%) | 0.70 | 0.70 | 0.70 | 0.70 | 0.70 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 1.86 | 1.64 | 1.98 | 1.93 | 1.41 |
Portfolio Turnover (%)6 | 50 | 20 | 54 | 30 | 83 |
| 1 | Commenced investment operations February 29, 2008. |
| 2 | Net investment income calculated excluding permanent tax adjustments to undistributed net investment income. |
| 3 | Total return without applicable sales charge. |
| 4 | Not annualized. |
| 5 | Annualized. |
| 6 | Portfolio Turnover is calculated at the fund level and represents the entire fiscal year or period. |
See accompanying Notes to Financial Statements.
73
MEMBERS Mutual Funds | October 31, 2012
Financial Highlights for a Share of Beneficial Interest Outstanding
MODERATE ALLOCATION FUND (continued) | |||||
Year Ended October 31, | |||||
2012 | 2011 | 2010 | 2009 | 2008 | |
| CLASS B | |||||
Net Asset Value at beginning of period | $ 9.70 | $ 9.58 | $ 8.72 | $ 7.80 | $11.75 |
| Income from Investment Operations: | |||||
Net investment income6 | 0.11 | 0.08 | 0.10 | 0.10 | 0.06 |
| Net realized and unrealized gain (loss) on investments | 0.63 | 0.21 | 0.84 | 0.92 | (3.84) |
| Total from investment operations | 0.74 | 0.29 | 0.94 | 1.02 | (3.78) |
| Less Distributions: | |||||
| Distributions from net investment income | (0.15) | (0.17) | (0.08) | (0.10) | (0.09) |
| Distributions from capital gains | – | – | – | – | (0.08) |
| Total distributions | (0.15) | (0.17) | (0.08) | (0.10) | (0.17) |
| Net increase (decrease) in net asset value | 0.59 | 0.12 | 0.86 | 0.92 | (3.95) |
Net Asset Value at end of period | $10.29 | $ 9.70 | $ 9.58 | $ 8.72 | $ 7.80 |
Total Return (%)2 | 7.77 | 3.19 | 10.78 | 13.20 | (32.64) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $29,821 | $ 26,928 | $25,002 | $20,221 | $17,728 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 1.45 | 1.45 | 1.45 | 1.53 | 1.54 |
| After reimbursement of expenses by Adviser (%) | 1.45 | 1.45 | 1.45 | 1.45 | 1.45 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 1.11 | 0.88 | 1.24 | 1.26 | 0.66 |
Portfolio Turnover (%)5 | 50 | 20 | 54 | 30 | 83 |
Year Ended October 31, | Inception to 10/31/081 | ||||
2012 | 2011 | 2010 | 2009 | ||
| CLASS C | |||||
Net Asset Value at beginning of period | $ 9.71 | $ 9.58 | $ 8.72 | $ 7.80 | $10.61 |
| Income from Investment Operations: | |||||
Net investment income6 | 0.10 | 0.08 | 0.10 | 0.09 | 0.02 |
| Net realized and unrealized gain (loss) on investments | 0.64 | 0.22 | 0.84 | 0.93 | (2.83) |
| Total from investment operations | 0.74 | 0.30 | 0.94 | 1.02 | (2.81) |
| Less Distributions: | |||||
| Distributions from net investment income | (0.15) | (0.17) | (0.08) | (0.10) | – |
| Total distributions | (0.15) | (0.17) | (0.08) | (0.10) | – |
| Net increase (decrease) in net asset value | 0.59 | 0.13 | 0.86 | 0.92 | (2.81) |
Net Asset Value at end of period | $10.30 | $ 9.71 | $ 9.58 | $ 8.72 | $ 7.80 |
Total Return (%)2 | 7.77 | 3.19 | 10.89 | 13.20 | (26.48)3 |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $5,253 | $3,939 | $3,856 | $3,094 | $2,149 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 1.45 | 1.45 | 1.45 | 1.74 | 2.384 |
| After reimbursement of expenses by Adviser (%) | 1.45 | 1.45 | 1.45 | 1.45 | 1.454 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 1.02 | 0.90 | 1.23 | 0.98 | 0.394 |
Portfolio Turnover (%)5 | 50 | 20 | 54 | 30 | 83 |
| 1 | Commenced investment operations February 29, 2008. |
| 2 | Total return without applicable sales charge. |
| 3 | Not annualized. |
| 4 | Annualized. |
| 5 | Portfolio Turnover is calculated at the fund level and represents the entire fiscal year or period. |
| 6 | Net investment income calculated excluding permanent tax adjustments to undistributed net investment income. |
See accompanying Notes to Financial Statements.
74
MEMBERS Mutual Funds | October 31, 2012
Financial Highlights for a Share of Beneficial Interest Outstanding
AGGRESSIVE ALLOCATION FUND | |||||
Year Ended October 31, | |||||
2012 | 2011 | 2010 | 2009 | 2008 | |
| CLASS A | |||||
Net Asset Value at beginning of period | $ 9.32 | $ 9.04 | $ 8.12 | $ 7.16 | $12.53 |
| Income from Investment Operations: | |||||
Net investment income4 | 0.12 | 0.07 | 0.09 | 0.08 | 0.04 |
| Net realized and unrealized gain (loss) on investments | 0.70 | 0.32 | 0.92 | 0.92 | (5.18) |
| Total from investment operations | 0.82 | 0.39 | 1.01 | 1.00 | (5.14) |
| Less Distributions: | |||||
| Distributions from net investment income | (0.13) | (0.11) | (0.09) | (0.04) | (0.13) |
| Distributions from capital gains | – | – | – | – | (0.10) |
| Total distributions | (0.13) | (0.11) | (0.09) | (0.04) | (0.23) |
| Net increase (decrease) in net asset value | 0.69 | 0.28 | 0.92 | 0.96 | (5.37) |
Net Asset Value at end of period | $10.01 | $ 9.32 | $ 9.04 | $ 8.12 | $ 7.16 |
Total Return (%)2 | 8.87 | 4.29 | 12.50 | 14.00 | (41.73) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $33,282 | $ 30,190 | $27,823 | $21,855 | $14,975 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 0.70 | 0.70 | 0.70 | 1.11 | 1.25 |
| After reimbursement of expenses by Adviser (%) | 0.70 | 0.70 | 0.70 | 0.70 | 0.70 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 1.22 | 0.74 | 1.03 | 1.06 | 0.09 |
Portfolio Turnover (%)3 | 67 | 29 | 62 | 17 | 91 |
| CLASS B | |||||
Net Asset Value at beginning of period | $ 9.23 | $ 8.96 | $ 8.05 | $ 7.12 | $12.46 |
| Income from Investment Operations: | |||||
Net investment income (loss)4 | 0.05 | 0.001 | 0.03 | 0.03 | (0.06) |
| Net realized and unrealized gain (loss) on investments | 0.68 | 0.32 | 0.91 | 0.90 | (5.14) |
| Total from investment operations | 0.73 | 0.32 | 0.94 | 0.93 | (5.20) |
| Less Distributions: | |||||
| Distributions from net investment income | (0.07) | (0.05) | (0.03) | – | (0.04) |
| Distributions from capital gains | – | – | – | – | (0.10) |
| Total distributions | (0.07) | (0.05) | (0.03) | – | (0.14) |
| Net increase (decrease) in net asset value | 0.66 | 0.27 | 0.91 | 0.93 | (5.34) |
Net Asset Value at end of period | $ 9.89 | $ 9.23 | $ 8.96 | $ 8.05 | $ 7.12 |
Total Return (%)2 | 7.99 | 3.54 | 11.67 | 13.06 | (42.17) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $10,787 | $ 9,975 | $9,109 | $7,518 | $6,050 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 1.45 | 1.45 | 1.45 | 1.88 | 2.00 |
| After reimbursement of expenses by Adviser (%) | 1.45 | 1.45 | 1.45 | 1.45 | 1.45 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 0.48 | (0.00)1 | 0.30 | 0.44 | (0.73) |
Portfolio Turnover (%)3 | 67 | 29 | 62 | 17 | 90 |
| 1 | Amounts represent less than $0.005 per share. |
| 2 | Total return without applicable sales charge. |
| 3 | Portfolio Turnover is calculated at the fund level and represents the entire fiscal year or period. |
| 4 | Net investment income (loss) calculated excluding permanent tax adjustments to undistributed net investment income. |
See accompanying Notes to Financial Statements.
75
MEMBERS Mutual Funds | October 31, 2012
Financial Highlights for a Share of Beneficial Interest Outstanding
AGGRESSIVE ALLOCATION FUND (continued) | |||||
Year Ended October 31, | Inception to 10/31/081 | ||||
2012 | 2011 | 2010 | 2009 | ||
| CLASS C | |||||
Net Asset Value at beginning of period | $ 9.24 | $ 8.97 | $ 8.06 | $ 7.12 | $10.70 |
| Income from Investment Operations: | |||||
Net investment income (loss)8 | 0.03 | (0.02) | 0.03 | 0.01 | (0.06) |
| Net realized and unrealized gain (loss) on investments | 0.70 | 0.34 | 0.91 | 0.93 | (3.52) |
| Total from investment operations | 0.73 | 0.32 | 0.94 | 0.94 | (3.58) |
| Less Distributions: | |||||
| Distributions from net investment income | (0.07) | (0.05) | (0.03) | – | – |
| Total distributions | (0.07) | (0.05) | (0.03) | – | – |
| Net increase (decrease) in net asset value | 0.66 | 0.27 | 0.91 | 0.94 | (3.58) |
Net Asset Value at end of period | $ 9.90 | $ 9.24 | $ 8.97 | $ 8.06 | $ 7.12 |
Total Return (%)2 | 7.98 | 3.54 | 11.66 | 13.20 | (33.46)3 |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $1,099 | $828 | $508 | $ 470 | $ 229 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 1.45 | 1.45 | 1.45 | 3.72 | 7.844 |
| After reimbursement of expenses by Adviser (%) | 1.45 | 1.45 | 1.45 | 1.45 | 1.454 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 0.32 | (0.32) | 0.34 | 0.28 | (1.23)4 |
Portfolio Turnover (%)6 | 67 | 29 | 62 | 17 | 91 |
CASH RESERVES FUND | |||||
Year Ended October 31, | |||||
2012 | 2011 | 2010 | 2009 | 2008 | |
| CLASS A | |||||
Net Asset Value at beginning of period | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 |
| Income from Investment Operations: | |||||
Net investment income (loss)8 | 0.005 | 0.005 | (0.00)5 | 0.005 | 0.02 |
| Total from investment operations | 0.005 | 0.005 | (0.00)5 | 0.005 | 0.02 |
| Less Distributions: | |||||
| Distributions from net investment income | – | – | – | (0.00)5 | (0.02) |
| Total distributions | – | – | – | (0.00)5 | (0.02) |
| Net increase (decrease) in net asset value | 0.00 | 0.00 | (0.00)5 | (0.00)5 | – |
Net Asset Value at end of period | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 |
Total Return (%)2 | 0.00 | 0.00 | 0.00 | 0.07 | 2.26 |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $11,654 | $12,298 | $11,687 | $13,690 | $15,339 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement and waiver of expenses by Adviser (%) | 0.55 | 0.55 | 0.55 | 0.80 | 1.02 |
| After reimbursement and waiver of expenses by Adviser (%) | 0.087 | 0.107 | 0.147 | 0.33 | 0.55 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement and waiver of expenses by Adviser (%) | 0.007 | 0.007 | 0.007 | 0.07 | 2.16 |
| 1 | Commenced investment operations February 29, 2008. |
| 2 | Total return without applicable sales charge. |
| 3 | Not annualized. |
| 4 | Annualized. |
| 5 | Amounts represent less than $0.005 per share. |
| 6 | Portfolio Turnover is calculated at the fund level and represents the entire fiscal year or period. |
| 7 | Ratio is net of fees waived by the adviser and distributor (See Note 3). |
| 8 | Net investment income (loss) calculated excluding permanent tax adjustments to undistributed net investment income. |
See accompanying Notes to Financial Statements.
76
MEMBERS Mutual Funds | October 31, 2012
Financial Highlights for a Share of Beneficial Interest Outstanding
CASH RESERVES FUND (continued) | |||||
Year Ended October 31, | |||||
2012 | 2011 | 2010 | 2009 | 2008 | |
| CLASS B | |||||
Net Asset Value at beginning of period | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 |
| Income from Investment Operations: | |||||
Net investment income (loss)1 | 0.003 | 0.003 | (0.00)3 | 0.003 | 0.01 |
| Total from investment operations | 0.003 | 0.003 | (0.00)3 | 0.003 | 0.01 |
| Less Distributions: | |||||
| Distributions from net investment income | – | – | – | (0.00)3 | (0.01) |
| Total distributions | 0.00 | 0.00 | 0.00 | (0.00)3 | (0.01) |
| Net increase (decrease) in net asset value | 0.00 | 0.00 | (0.00)3 | (0.00)3 | – |
Net Asset Value at end of period | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 | $ 1.00 |
Total Return (%)2 | 0.00 | 0.00 | 0.00 | 0.01 | 1.50 |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $826 | $1,601 | $2,056 | $3,250 | $4,655 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement and waiver of expenses by Adviser (%) | 1.30 | 1.30 | 1.30 | 1.56 | 1.77 |
| After reimbursement and waiver of expenses by Adviser (%) | 0.074 | 0.104 | 0.144 | 0.40 | 1.30 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement and waiver of expenses by Adviser (%) | 0.004 | 0.004 | 0.004 | 0.01 | 1.32 |
BOND FUND | |||||
Year Ended October 31, | |||||
2012 | 2011 | 2010 | 2009 | 2008 | |
| CLASS A | |||||
Net Asset Value at beginning of period | $10.59 | $10.46 | $10.11 | $ 9.48 | $ 9.78 |
| Income from Investment Operations: | |||||
Net investment income1 | 0.26 | 0.26 | 0.25 | 0.30 | 0.39 |
| Net realized and unrealized gain (loss) on investments | 0.07 | 0.13 | 0.35 | 0.63 | (0.30) |
| Total from investment operations | 0.33 | 0.39 | 0.60 | 0.93 | 0.09 |
| Less Distributions: | |||||
| Distributions from net investment income | (0.26) | (0.26) | (0.25) | (0.30) | (0.39) |
| Total distributions | (0.26) | (0.26) | (0.25) | (0.30) | (0.39) |
| Net increase (decrease) in net asset value | 0.07 | 0.13 | 0.35 | 0.63 | (0.30) |
Net Asset Value at end of period | $10.66 | $10.59 | $10.46 | $10.11 | $ 9.48 |
Total Return (%)2 | 3.11 | 3.81 | 5.97 | 9.91 | 0.89 |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $45,671 | $43,775 | $44,238 | $44,099 | $37,882 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 0.90 | 0.90 | 0.90 | 0.94 | 1.02 |
| After reimbursement of expenses by Adviser (%) | 0.90 | 0.90 | 0.90 | 0.90 | 0.90 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 2.41 | 2.54 | 2.42 | 3.04 | 4.05 |
Portfolio Turnover (%)5 | 6 | 12 | 7 | 37 | 22 |
| 1 | Net investment income (loss) calculated excluding permanent tax adjustments to undistributed net investment income. |
| 2 | Total return without applicable sales charge. |
| 3 | Amounts represent less than $0.005 per share. |
| 4 | Ratio is net of fees waived by the adviser and distributor (see Note 3). |
| 5 | Portfolio Turnover is calculated at the fund level and represents the entire fiscal year or period. |
See accompanying Notes to Financial Statements.
77
MEMBERS Mutual Funds | October 31, 2012
Financial Highlights for a Share of Beneficial Interest Outstanding
BOND FUND (continued) | |||||
Year Ended October 31, | |||||
2012 | 2011 | 2010 | 2009 | 2008 | |
| CLASS B | |||||
Net Asset Value at beginning of period | $10.59 | $10.46 | $10.12 | $ 9.48 | $ 9.78 |
| Income from Investment Operations: | |||||
Net investment income3 | 0.18 | 0.19 | 0.17 | 0.23 | 0.32 |
| Net realized and unrealized gain (loss) on investments | 0.08 | 0.12 | 0.34 | 0.64 | (0.30) |
| Total from investment operations | 0.26 | 0.31 | 0.51 | 0.87 | 0.02 |
| Less Distributions: | |||||
| Distributions from net investment income | (0.18) | (0.18) | (0.17) | (0.23) | (0.32) |
| Total distributions | (0.18) | (0.18) | (0.17) | (0.23) | (0.32) |
| Net increase (decrease) in net asset value | 0.08 | 0.13 | 0.34 | 0.64 | (0.30) |
Net Asset Value at end of period | $10.67 | $10.59 | $10.46 | $10.12 | $ 9.48 |
Total Return (%) 1 | 2.43 | 3.04 | 5.08 | 9.20 | 0.13 |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $6,088 | $5,678 | $8,388 | $9,363 | $15,941 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 1.65 | 1.65 | 1.65 | 1.69 | 1.77 |
| After reimbursement of expenses by Adviser (%) | 1.65 | 1.65 | 1.65 | 1.65 | 1.65 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 1.66 | 1.78 | 1.68 | 2.37 | 3.29 |
Portfolio Turnover (%)2 | 6 | 12 | 7 | 37 | 22 |
| CLASS Y | |||||
Net Asset Value at beginning of period | $10.58 | $10.46 | $10.11 | $ 9.47 | $ 9.77 |
| Income from Investment Operations: | |||||
Net investment income3 | 0.29 | 0.29 | 0.27 | 0.32 | 0.42 |
| Net realized and unrealized gain (loss) on investments | 0.06 | 0.12 | 0.35 | 0.64 | (0.30) |
| Total from investment operations | 0.35 | 0.41 | 0.62 | 0.96 | 0.12 |
| Less Distributions: | |||||
| Distributions from net investment income | (0.29) | (0.29) | (0.27) | (0.32) | (0.42) |
| Total distributions | (0.29) | (0.29) | (0.27) | (0.32) | (0.42) |
| Net increase (decrease) in net asset value | 0.06 | 0.12 | 0.35 | 0.64 | (0.30) |
Net Asset Value at end of period | $10.64 | $10.58 | $10.46 | $10.11 | $ 9.47 |
Total Return (%)1 | 3.36 | 4.03 | 6.23 | 10.30 | 1.14 |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $74,486 | $145,125 | $164,190 | $147,145 | $105,043 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 0.65 | 0.65 | 0.65 | 0.69 | 0.76 |
| After reimbursement of expenses by Adviser (%) | 0.65 | 0.65 | 0.65 | 0.65 | 0.65 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 2.64 | 2.79 | 2.67 | 3.28 | 4.23 |
Portfolio Turnover (%)2 | 6 | 12 | 7 | 37 | 22 |
| 1 | Total return without applicable sales charge. |
| 2 | Portfolio Turnover is calculated at the fund level and represents the entire fiscal year or period. |
| 3 | Net investment income calculated excluding permanent tax adjustments to undistributed net investment income. |
See accompanying Notes to Financial Statements.
78
MEMBERS Mutual Funds | October 31, 2012
Financial Highlights for a Share of Beneficial Interest Outstanding
HIGH INCOME FUND | |||||
Year Ended October 31, | |||||
2012 | 2011 | 2010 | 2009 | 2008 | |
| CLASS A | |||||
Net Asset Value at beginning of period | $ 6.95 | $ 7.10 | $ 6.66 | $ 5.57 | $ 7.29 |
| Income from Investment Operations: | |||||
Net investment income3 | 0.45 | 0.48 | 0.51 | 0.46 | 0.47 |
| Net realized and unrealized gain (loss) on investments | 0.20 | (0.16) | 0.43 | 1.09 | (1.65) |
| Total from investment operations | 0.65 | 0.32 | 0.94 | 1.55 | (1.18) |
| Less Distributions: | |||||
| Distributions from net investment income | (0.45) | (0.47) | (0.50) | (0.46) | (0.54) |
| Total distributions | (0.45) | (0.47) | (0.50) | (0.46) | (0.54) |
| Net increase (decrease) in net asset value | 0.20 | (0.15) | 0.44 | 1.09 | (1.72) |
Net Asset Value at end of period | $ 7.15 | $ 6.95 | $ 7.10 | $ 6.66 | $ 5.57 |
Total Return (%) 1 | 9.67 | 4.61 | 14.73 | 28.98 | (17.24) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $27,061 | $25,299 | $24,986 | $25,684 | $17,818 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 1.00 | 1.00 | 1.00 | 1.05 | 1.14 |
| After reimbursement of expenses by Adviser (%) | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 6.35 | 6.73 | 7.38 | 7.78 | 6.77 |
Portfolio Turnover (%)2 | 36 | 55 | 47 | 73 | 59 |
| CLASS B | |||||
Net Asset Value at beginning of period | $ 7.05 | $ 7.19 | $ 6.74 | $ 5.63 | $ 7.32 |
| Income from Investment Operations: | |||||
Net investment income3 | 0.40 | 0.44 | 0.46 | 0.44 | 0.45 |
| Net realized and unrealized gain (loss) on investments | 0.20 | (0.17) | 0.44 | 1.09 | (1.70) |
| Total from investment operations | 0.60 | 0.27 | 0.90 | 1.53 | (1.25) |
| Less Distributions: | |||||
| Distributions from net investment income | (0.39) | (0.41) | (0.45) | (0.42) | (0.44) |
| Total distributions | (0.39) | (0.41) | (0.45) | (0.42) | (0.44) |
| Net increase (decrease) in net asset value | 0.21 | (0.14) | 0.45 | 1.11 | (1.69) |
Net Asset Value at end of period | $ 7.26 | $ 7.05 | $ 7.19 | $ 6.74 | $ 5.63 |
Total Return (%)1 | 8.74 | 3.89 | 13.86 | 28.08 | (17.93) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $2,983 | $3,023 | $4,571 | $4,711 | $ 5,833 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 1.75 | 1.75 | 1.75 | 1.81 | 1.90 |
| After reimbursement of expenses by Adviser (%) | 1.75 | 1.75 | 1.75 | 1.75 | 1.75 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 5.60 | 6.01 | 6.62 | 7.01 | 6.04 |
Portfolio Turnover (%)2 | 36 | 55 | 47 | 73 | 59 |
| 1 | Total return without applicable sales charge. |
| 2 | Portfolio Turnover is calculated at the fund level and represents the entire fiscal year or period. |
| 3 | Net investment income calculated excluding permanent tax adjustments to undistributed net investment income. |
See accompanying Notes to Financial Statements.
79
MEMBERS Mutual Funds | October 31, 2012
Financial Highlights for a Share of Beneficial Interest Outstanding
HIGH INCOME FUND (continued) | |||||
Year Ended October 31, | |||||
2012 | 2011 | 2010 | 2009 | 2008 | |
| CLASS Y | |||||
Net Asset Value at beginning of period | $ 6.92 | $ 7.09 | $ 6.65 | $ 5.56 | $ 7.30 |
| Income from Investment Operations: | |||||
Net investment income3 | 0.47 | 0.49 | 0.52 | 0.47 | 0.48 |
| Net realized and unrealized gain (loss) on investments | 0.19 | (0.16) | 0.44 | 1.10 | (1.65) |
| Total from investment operations | 0.66 | 0.33 | 0.96 | 1.57 | (1.17) |
| Less Distributions: | |||||
| Distributions from net investment income | (0.48) | (0.50) | (0.52) | (0.48) | (0.57) |
| Total distributions | (0.48) | (0.50) | (0.52) | (0.48) | (0.57) |
| Net increase (decrease) in net asset value | 0.18 | (0.17) | 0.44 | 1.09 | (1.74) |
Net Asset Value at end of period | $ 7.10 | $ 6.92 | $ 7.09 | $ 6.65 | $ 5.56 |
Total Return (%) 1 | 9.92 | 4.81 | 15.04 | 29.35 | (17.09) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $53,121 | $81,572 | $94,907 | $80,394 | $33,127 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 0.75 | 0.75 | 0.75 | 0.80 | 0.89 |
| After reimbursement of expenses by Adviser (%) | 0.75 | 0.75 | 0.75 | 0.75 | 0.75 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 6.61 | 7.00 | 7.61 | 8.04 | 7.03 |
Portfolio Turnover (%)2 | 36 | 55 | 47 | 73 | 59 |
DIVERSIFIED INCOME FUND | |||||
Year Ended October 31, | |||||
2012 | 2011 | 2010 | 2009 | 2008 | |
| CLASS A | |||||
Net Asset Value at beginning of period | $11.68 | $11.16 | $10.17 | $ 9.92 | $13.24 |
| Income from Investment Operations: | |||||
Net investment income3 | 0.26 | 0.29 | 0.34 | 0.38 | 0.45 |
| Net realized and unrealized gain (loss) on investments | 0.86 | 0.52 | 0.98 | 0.28 | (2.30) |
| Total from investment operations | 1.12 | 0.81 | 1.32 | 0.66 | (1.85) |
| Less Distributions: | |||||
| Distributions from net investment income | (0.26) | (0.29) | (0.33) | (0.41) | (0.47) |
| Distributions from capital gains | – | – | – | – | (1.00) |
| Total distributions | (0.26) | (0.29) | (0.33) | (0.41) | (1.47) |
| Net increase (decrease) in net asset value | 0.86 | 0.52 | 0.99 | 0.25 | (3.32) |
Net Asset Value at end of period | $12.54 | $11.68 | $11.16 | $10.17 | $ 9.92 |
Total Return (%)1 | 9.69 | 7.32 | 13.15 | 7.07 | (15.39) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $86,952 | $72,913 | $73,040 | $71,014 | $70,095 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 1.10 | 1.10 | 1.10 | 1.27 | 1.29 |
| After reimbursement of expenses by Adviser (%) | 1.10 | 1.10 | 1.10 | 1.10 | 1.10 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 2.14 | 2.51 | 3.10 | 3.98 | 3.94 |
Portfolio Turnover (%)2 | 21 | 17 | 24 | 28 | 15 |
| 1 | Total return without applicable sales charge. |
| 2 | Portfolio Turnover is calculated at the fund level and represents the entire fiscal year or period. |
| 3 | Net investment income calculated excluding permanent tax adjustments to undistributed net investment income. |
See accompanying Notes to Financial Statements.
80
MEMBERS Mutual Funds | October 31, 2012
Financial Highlights for a Share of Beneficial Interest Outstanding
DIVERSIFIED INCOME FUND (continued) | |||||
Year Ended October 31, | |||||
2012 | 2011 | 2010 | 2009 | 2008 | |
| CLASS B | |||||
Net Asset Value at beginning of period | $11.74 | $11.22 | $10.22 | $ 9.96 | $13.25 |
| Income from Investment Operations: | |||||
Net investment income2 | 0.18 | 0.20 | 0.26 | 0.32 | 0.39 |
| Net realized and unrealized gain (loss) on investments | 0.86 | 0.52 | 0.99 | 0.28 | (2.34) |
| Total from investment operations | 1.04 | 0.72 | 1.25 | 0.60 | (1.95) |
| Less Distributions: | |||||
| Distributions from net investment income | (0.17) | (0.20) | (0.25) | (0.34) | (0.34) |
| Distributions from capital gains | – | – | – | – | (1.00) |
| Total distributions | (0.17) | (0.20) | (0.25) | (0.34) | (1.34) |
| Net increase (decrease) in net asset value | 0.87 | 0.52 | 1.00 | 0.26 | (3.29) |
Net Asset Value at end of period | $12.61 | $11.74 | $11.22 | $10.22 | $9.96 |
Total Return (%) 3 | 8.89 | 6.47 | 12.35 | 6.24 | (16.01) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $14,387 | $15,906 | $18,511 | $18,322 | $28,156 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 1.85 | 1.85 | 1.85 | 2.04 | 2.04 |
| After reimbursement of expenses by Adviser (%) | 1.85 | 1.85 | 1.85 | 1.85 | 1.85 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 1.42 | 1.77 | 2.35 | 3.33 | 3.18 |
Portfolio Turnover (%)4 | 21 | 17 | 24 | 28 | 15 |
Inception to 10/31/121 | |
| CLASS C | |
Net Asset Value at beginning of period | $12.53 |
| Income from Investment Operations: | |
Net investment income2 | 0.04 |
| Net realized and unrealized gain on investments | 0.08 |
| Total from investment operations | 0.12 |
| Less Distributions: | |
| Distributions from net investment income | (0.04) |
| Total distributions | (0.04) |
| Net increase in net asset value | 0.08 |
Net Asset Value at end of period | $12.61 |
Total Return (%) 3 | 0.945 |
| Ratios/Supplemental Data: | |
| Net Assets at end of period (in 000’s) | $924 |
| Ratios of expenses to average net assets: | |
| Before reimbursement of expenses by Adviser (%) | 1.836 |
| After reimbursement of expenses by Adviser (%) | 1.836 |
| Ratio of net investment income to average net assets | |
| After reimbursement of expenses by Adviser (%) | 0.836 |
Portfolio Turnover (%)4 | 21 |
| 1 | Commenced investment operations July 31, 2012. |
| 2 | Net investment income calculated excluding permanent tax adjustments to undistributed net investment income. |
| 3 | Total return without applicable sales charge. |
| 4 | Portfolio Turnover is calculated at the fund level and represents the entire period. |
| 5 | Not annualized. |
| 6 | Annualized. |
See accompanying Notes to Financial Statements.
81
MEMBERS Mutual Funds | October 31, 2012
Financial Highlights for a Share of Beneficial Interest Outstanding
EQUITY INCOME FUND | |||
Year Ended October 31, | Inception to 10/31/101 | ||
2012 | 2011 | ||
| CLASS A | |||
Net Asset Value at beginning of period | $ 9.76 | $10.27 | $10.00 |
| Income from Investment Operations: | |||
Net investment income (loss)2 | 0.008 | 0.008 | (0.04) |
| Net realized and unrealized gain (loss) on investments | 0.82 | 0.50 | 0.71 |
| Total from investment operations | 0.82 | 0.50 | 0.67 |
| Less Distributions: | |||
| Distributions from net investment income | 0.00 | – | – |
| Distributions from capital gains | (0.82) | (1.01) | (0.40) |
| Total distributions | (0.82) | (1.01) | (0.40) |
| Net increase (decrease) in net asset value | 0.00 | (0.51) | 0.27 |
Net Asset Value at end of period | $ 9.76 | $ 9.76 | $10.27 |
Total Return (%)3 | 8.61 | 5.22 | 7.03 |
| Ratios/Supplemental Data: | |||
| Net Assets at end of period (in 000’s) | $6,297 | $4,072 | $2,886 |
| Ratios of expenses to average net assets: | |||
| Before reimbursement of expenses by Adviser (%) | 1.24 | 1.25 | 1.25 |
| After reimbursement of expenses by Adviser (%) | 1.24 | 1.25 | 1.25 |
| Ratio of net investment income to average net assets | |||
| After reimbursement of expenses by Adviser (%) | (0.15) | (0.44) | (0.64) |
Portfolio Turnover (%)4 | 84 | 107 | 58 |
Inception to 10/31/127 | |
| CLASS C | |
Net Asset Value at beginning of period | $ 9.66 |
| Income from Investment Operations: | |
Net investment income2 | 0.008 |
| Net realized and unrealized gain on investments | 0.28 |
| Total from investment operations | 0.28 |
| Less Distributions: | |
| Distributions from capital gains | (0.20) |
| Total distributions | (0.20) |
| Net increase in net asset value | 0.08 |
Net Asset Value at end of period | $ 9.74 |
Total Return (%)3 | 2.885 |
| Ratios/Supplemental Data: | |
| Net Assets at end of period (in 000’s) | $527 |
| Ratios of expenses to average net assets | |
| Before reimbursement of expenses by Adviser (%) | 1.966 |
| After reimbursement of expenses by Adviser (%) | 1.966 |
| Ratio of net investment income to average net assets | |
| After reimbursement of expenses by Adviser (%) | (0.89)6 |
Portfolio Turnover (%)4 | 84 |
| 1 | Fund was seeded on October 31, 2009. |
| 2 | Net investment income (loss) calculated excluding permanent tax adjustments to undistributed net investment income. |
| 3 | Total return without applicable sales charge. |
| 4 | Portfolio Turnover is calculated at the fund level and represents the entire period. |
| 5 | Not annualized. |
| 6 | Annualized. |
| 7 | Commenced investment operations July 31, 2012. |
| 8 | Amounts represent less than $0.005 per share. |
See accompanying Notes to Financial Statements.
82
MEMBERS Mutual Funds | October 31, 2012
Financial Highlights for a Share of Beneficial Interest Outstanding
EQUITY INCOME FUND (continued) | |||
Year Ended October 31, | Inception to 10/31/101 | ||
2012 | 2011 | ||
| CLASS Y | |||
Net Asset Value at beginning of period | $ 9.81 | $10.29 | $10.00 |
| Income from Investment Operations: | |||
Net investment income (loss)2 | 0.008 | 0.03 | (0.04) |
| Net realized and unrealized gain on investments | 0.84 | 0.50 | 0.73 |
| Total from investment operations | 0.84 | 0.53 | 0.69 |
| Less Distributions: | |||
| Distributions from net investment income | (0.02) | – | – |
| Distributions from capital gains | (0.81) | (1.01) | (0.40) |
| Total distributions | (0.83) | (1.01) | (0.40) |
| Net increase (decrease) in net asset value | 0.01 | (0.48) | 0.29 |
Net Asset Value at end of period | $ 9.82 | $ 9.81 | $10.29 |
Total Return (%)3 | 8.73 | 5.51 | 7.23 |
| Ratios/Supplemental Data: | |||
| Net Assets at end of period (in 000’s) | $81,779 | $63,395 | $32,634 |
| Ratios of expenses to average net assets | |||
| Before reimbursement of expenses by Adviser (%) | 1.00 | 1.00 | 1.00 |
| After reimbursement of expenses by Adviser (%) | 1.00 | 1.00 | 1.00 |
| Ratio of net investment income to average net assets | |||
| After reimbursement of expenses by Adviser (%) | 0.09 | (0.15) | (0.46) |
Portfolio Turnover (%)6 | 84 | 107 | 58 |
Inception to 10/31/127 | |
| CLASS R6 | |
Net Asset Value at beginning of period | $ 9.72 |
| Income from Investment Operations: | |
Net investment income2 | 0.008 |
| Net realized and unrealized gain on investments | 0.30 |
| Total from investment operations | 0.30 |
| Less Distributions: | |
| Distributions from capital gains | (0.20) |
| Total distributions | (0.20) |
| Net increase in net asset value | 0.10 |
Net Asset Value at end of period | $ 9.82 |
Total Return (%)3 | 3.074 |
| Ratios/Supplemental Data: | |
| Net Assets at end of period (in 000’s) | $103 |
| Ratios of expenses to average net assets | |
| Before reimbursement of expenses by Adviser (%) | 0.865 |
| After reimbursement of expenses by Adviser (%) | 0.865 |
| Ratio of net investment income to average net assets | |
| After reimbursement of expenses by Adviser (%) | 0.175 |
Portfolio Turnover (%)6 | 84 |
| 1 | Fund was seeded on October 31, 2009. |
| 2 | Net investment income (loss) calculated excluding permanent tax adjustments to undistributed net investment income. |
| 3 | Total return without applicable sales charge. |
| 4 | Not annualized. |
| 5 | Annualized. |
| 6 | Portfolio Turnover is calculated at the fund level and represents the entire period. |
| 7 | Fund was seeded on July 31, 2012. |
| 8 | Amounts represent less than $0.005 per share. |
See accompanying Notes to Financial Statements.
83
MEMBERS Mutual Funds | October 31, 2012
Financial Highlights for a Share of Beneficial Interest Outstanding
LARGE CAP VALUE FUND | |||||
Year Ended October 31, | |||||
2012 | 2011 | 2010 | 2009 | 2008 | |
| CLASS A | |||||
Net Asset Value at beginning of period | $12.42 | $11.40 | $10.57 | $10.60 | $16.91 |
| Income from Investment Operations: | |||||
Net investment income1 | 0.21 | 0.18 | 0.12 | 0.20 | 0.28 |
| Net realized and unrealized gain (loss) on investments | 1.55 | 0.98 | 0.85 | (0.01) | (6.30) |
| Total from investment operations | 1.76 | 1.16 | 0.97 | 0.19 | (6.02) |
| Less Distributions: | |||||
| Distributions from net investment income | (0.19) | (0.14) | (0.14) | (0.22) | (0.19) |
| Distributions from capital gains | – | – | – | – | (0.10) |
| Total distributions | (0.19) | (0.14) | (0.14) | (0.22) | (0.29) |
| Net increase (decrease) in net asset value | 1.57 | 1.02 | 0.83 | (0.03) | (6.31) |
Net Asset Value at end of period | $13.99 | $12.42 | $11.40 | $10.57 | $10.60 |
Total Return (%)2 | 14.37 | 10.27 | 9.22 | 2.08 | (36.17) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $58,537 | $54,271 | $53,520 | $54,242 | $58,075 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 1.16 | 1.16 | 1.16 | 1.19 | 1.16 |
| After reimbursement of expenses by Adviser (%) | 1.16 | 1.16 | 1.16 | 1.18 | 1.16 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 1.51 | 1.44 | 1.07 | 2.00 | 1.87 |
Portfolio Turnover (%)3 | 25 | 39 | 70 | 86 | 55 |
| CLASS B | |||||
Net Asset Value at beginning of period | $12.21 | $11.20 | $10.38 | $10.42 | $16.61 |
| Income from Investment Operations: | |||||
Net investment income1 | 0.16 | 0.12 | 0.06 | 0.19 | 0.27 |
| Net realized and unrealized gain (loss) on investments | 1.47 | 0.94 | 0.82 | (0.08) | (6.29) |
| Total from investment operations | 1.63 | 1.06 | 0.88 | 0.11 | (6.02) |
| Less Distributions: | |||||
| Distributions from net investment income | (0.10) | (0.05) | (0.06) | (0.15) | (0.07) |
| Distributions from capital gains | – | – | – | – | (0.10) |
| Total distributions | (0.10) | (0.05) | (0.06) | (0.15) | (0.17) |
| Net increase (decrease) in net asset value | 1.53 | 1.01 | 0.82 | (0.04) | (6.19) |
Net Asset Value at end of period | $13.74 | $12.21 | $11.20 | $10.38 | $10.42 |
Total Return (%)2 | 13.41 | 9.52 | 8.45 | 1.23 | (36.59) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $5,768 | $7,199 | $8,863 | $9,637 | $14,993 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 1.91 | 1.91 | 1.91 | 1.95 | 1.91 |
| After reimbursement of expenses by Adviser (%) | 1.91 | 1.91 | 1.91 | 1.94 | 1.91 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 0.79 | 0.70 | 0.31 | 1.36 | 1.11 |
Portfolio Turnover (%)3 | 25 | 39 | 70 | 86 | 55 |
| 1 | Net investment income calculated excluding permanent tax adjustments to undistributed net investment income. |
| 2 | Total return without applicable sales charge. |
| 3 | Portfolio Turnover is calculated at the fund level and represents the entire period. |
See accompanying Notes to Financial Statements.
84
MEMBERS Mutual Funds | October 31, 2012
Financial Highlights for a Share of Beneficial Interest Outstanding
LARGE CAP VALUE FUND (continued) | |||||
Year Ended October 31, | |||||
2012 | 2011 | 2010 | 2009 | 2008 | |
| CLASS Y | |||||
Net Asset Value at beginning of period | $12.44 | $11.42 | $10.58 | $10.62 | $16.93 |
| Income from Investment Operations: | |||||
Net investment income1 | 0.22 | 0.23 | 0.15 | 0.18 | 0.22 |
| Net realized and unrealized gain (loss) on investments | 1.57 | 0.97 | 0.86 | 0.03 | (6.20) |
| Total from investment operations | 1.79 | 1.20 | 1.01 | 0.21 | (5.98) |
| Less Distributions: | |||||
| Distributions from net investment income | (0.22) | (0.18) | (0.17) | (0.25) | (0.23) |
| Return of capital | – | – | – | – | (0.10) |
| Total distributions | (0.22) | (0.18) | (0.17) | (0.25) | (0.33) |
| Net increase (decrease) in net asset value | 1.57 | 1.02 | 0.84 | (0.04) | (6.31) |
Net Asset Value at end of period | $14.01 | $12.44 | $11.42 | $10.58 | $10.62 |
Total Return (%)2 | 14.64 | 10.53 | 9.58 | 2.24 | (35.97) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $84,545 | $78,344 | $90,233 | $80,167 | $54,828 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 0.91 | 0.91 | 0.91 | 0.93 | 0.91 |
| After reimbursement of expenses by Adviser (%) | 0.91 | 0.91 | 0.91 | 0.93 | 0.91 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 1.76 | 1.69 | 1.31 | 2.12 | 2.07 |
Portfolio Turnover (%)3 | 25 | 39 | 70 | 86 | 55 |
LARGE CAP GROWTH FUND | |||||
Year Ended October 31, | |||||
2012 | 2011 | 2010 | 2009 | 2008 | |
| CLASS A | |||||
Net Asset Value at beginning of period | $16.00 | $15.20 | $13.15 | $11.07 | $17.39 |
| Income from Investment Operations: | |||||
Net investment income (loss)1 | 0.01 | (0.01) | 0.02 | 0.05 | 0.03 |
| Net realized and unrealized gain (loss) on investments | 1.17 | 0.83 | 2.08 | 2.05 | (6.35) |
| Total from investment operations | 1.18 | 0.82 | 2.10 | 2.10 | (6.32) |
| Less Distributions: | |||||
| Distributions from net investment income | – | (0.02) | (0.05) | (0.02) | – |
| Total distributions | – | (0.02) | (0.05) | (0.02) | – |
| Net increase (decrease) in net asset value | 1.18 | 0.80 | 2.05 | 2.08 | (6.32) |
Net Asset Value at end of period | $17.18 | $16.00 | $15.20 | $13.15 | $11.07 |
Total Return (%)2 | 7.38 | 5.39 | 15.96 | 18.99 | (36.34) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $49,824 | $48,068 | $48,389 | $45,398 | $38,538 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 1.20 | 1.20 | 1.20 | 1.31 | 1.34 |
| After reimbursement of expenses by Adviser (%) | 1.20 | 1.20 | 1.20 | 1.20 | 1.20 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 0.08 | (0.05) | 0.13 | 0.41 | 0.18 |
Portfolio Turnover (%)3 | 71 | 77 | 79 | 105 | 141 |
| 1 | Net investment income calculated excluding permanent tax adjustments to undistributed net investment income. |
| 2 | Total return without applicable sales charge. |
| 3 | Portfolio Turnover is calculated at the fund level and represents the entire fiscal year or period. |
See accompanying Notes to Financial Statements.
85
MEMBERS Mutual Funds | October 31, 2012
Financial Highlights for a Share of Beneficial Interest Outstanding
LARGE CAP GROWTH FUND (continued) | |||||
Year Ended October 31, | |||||
2012 | 2011 | 2010 | 2009 | 2008 | |
| CLASS B | |||||
Net Asset Value at beginning of period | $14.64 | $13.99 | $12.16 | $10.30 | $16.29 |
| Income from Investment Operations: | |||||
Net investment income (loss)1 | (0.12) | (0.13) | (0.08) | (0.02) | (0.11) |
| Net realized and unrealized gain (loss) on investments | 1.09 | 0.78 | 1.91 | 1.88 | (5.88) |
| Total from investment operations | 0.97 | 0.65 | 1.83 | 1.86 | (5.99) |
| Net increase (decrease) in net asset value | 0.97 | 0.65 | 1.83 | 1.86 | (5.99) |
Net Asset Value at end of period | $15.61 | $14.64 | $13.99 | $12.16 | $10.30 |
Total Return (%) 2 | 6.63 | 4.65 | 15.05 | 18.06 | (36.77) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $5,731 | $7,581 | $9,698 | $9,665 | $13,580 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 1.95 | 1.95 | 1.95 | 2.07 | 2.10 |
| After reimbursement of expenses by Adviser (%) | 1.95 | 1.95 | 1.95 | 1.95 | 1.95 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | (0.68) | (0.79) | (0.62) | (0.30) | (0.56) |
Portfolio Turnover (%)3 | 71 | 77 | 79 | 105 | 141 |
| CLASS Y | |||||
Net Asset Value at beginning of period | $16.11 | $15.30 | $13.23 | $11.14 | $17.45 |
| Income from Investment Operations: | |||||
Net investment income1 | 0.06 | 0.04 | 0.07 | 0.06 | 0.06 |
| Net realized and unrealized gain (loss) on investments | 1.18 | 0.82 | 2.08 | 2.07 | (6.37) |
| Total from investment operations | 1.24 | 0.86 | 2.15 | 2.13 | (6.31) |
| Less Distributions: | |||||
| Distributions from net investment income | (0.02) | (0.05) | (0.08) | (0.04) | – |
| Total distributions | (0.02) | (0.05) | (0.08) | (0.04) | – |
| Net increase (decrease) in net asset value | 1.22 | 0.81 | 2.07 | 2.09 | (6.31) |
Net Asset Value at end of period | $17.33 | $16.11 | $15.30 | $13.23 | $11.14 |
Total Return (%)2 | 7.72 | 5.63 | 16.26 | 19.26 | (36.16) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $63,956 | $61,122 | $94,475 | $106,390 | $70,203 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 0.95 | 0.95 | 0.95 | 1.06 | 1.09 |
| After reimbursement of expenses by Adviser (%) | 0.95 | 0.95 | 0.95 | 0.95 | 0.95 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 0.33 | 0.22 | 0.38 | 0.63 | 0.45 |
Portfolio Turnover (%) 3 | 71 | 77 | 79 | 105 | 141 |
| 1 | Net investment income (loss) calculated excluding permanent tax adjustments to undistributed net investment income. |
| 2 | Total return without applicable sales charge. |
| 3 | Portfolio Turnover is calculated at the fund level and represents the entire fiscal year or period. |
See accompanying Notes to Financial Statements.
86
MEMBERS Mutual Funds | October 31, 2012
Financial Highlights for a Share of Beneficial Interest Outstanding
MID CAP FUND | |||||
Year Ended October 31, | |||||
2012 | 2011 | 2010 | 2009 | 2008 | |
| CLASS A | |||||
Net Asset Value at beginning of period | $ 6.60 | $ 5.95 | $ 4.95 | $ 4.08 | $ 7.45 |
| Income from Investment Operations: | |||||
Net investment loss1 | (0.02) | (0.00)4 | (0.02) | (0.03) | (0.04) |
| Net realized and unrealized gain (loss) on investments | 0.99 | 0.65 | 1.02 | 0.90 | (3.28) |
| Total from investment operations | 0.97 | 0.65 | 1.00 | 0.87 | (3.32) |
| Less Distributions: | |||||
| Distributions from capital gains | – | – | – | - | (0.05) |
| Total distributions | – | – | – | – | (0.05) |
| Net increase (decrease) in net asset value | 0.97 | 0.65 | 1.00 | 0.87 | (3.37) |
Net Asset Value at end of period | $ 7.57 | $ 6.60 | $ 5.95 | $ 4.95 | $ 4.08 |
Total Return (%) 2 | 14.70 | 10.92 | 20.20 | 21.03 | (44.71) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $48,424 | $43,865 | $42,627 | $17,138 | $14,241 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 1.40 | 1.40 | 1.40 | 1.56 | 1.44 |
| After reimbursement of expenses by Adviser (%) | 1.40 | 1.40 | 1.40 | 1.40 | 1.40 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | (0.33) | (0.05) | (0.50) | (0.61) | (0.56) |
Portfolio Turnover (%)3 | 31 | 70 | 68 | 198 | 127 |
| CLASS B | |||||
Net Asset Value at beginning of period | $ 6.04 | $ 5.49 | $ 4.60 | $ 3.83 | $ 7.04 |
| Income from Investment Operations: | |||||
Net investment loss1 | (0.08) | (0.06) | (0.05) | (0.06) | (0.10) |
| Net realized and unrealized gain (loss) on investments | 0.92 | 0.61 | 0.94 | 0.83 | (3.06) |
| Total from investment operations | 0.84 | 0.55 | 0.89 | 0.77 | (3.16) |
| Less Distributions: | |||||
| Distributions from capital gains | – | – | – | – | (0.05) |
| Total distributions | – | – | – | – | (0.05) |
| Net increase (decrease) in net asset value | 0.84 | 0.55 | 0.89 | 0.77 | (3.21) |
Net Asset Value at end of period | $ 6.88 | $ 6.04 | $ 5.49 | $ 4.60 | $ 3.83 |
Total Return (%)2 | 13.91 | 10.02 | 19.35 | 20.10 | (45.18) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $6,147 | $8,181 | $9,879 | $4,231 | $4,891 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 2.15 | 2.15 | 2.15 | 2.32 | 2.19 |
| After reimbursement of expenses by Adviser (%) | 2.15 | 2.15 | 2.15 | 2.15 | 2.15 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | (1.07) | (0.79) | (1.24) | (1.34) | (1.32) |
Portfolio Turnover (%)3 | 31 | 70 | 68 | 198 | 127 |
| 1 | Net investment income (loss) calculated excluding permanent tax adjustments to undistributed net investment income. |
| 2 | Total return without applicable sales charge. |
| 3 | Portfolio Turnover is calculated at the fund level and represents the entire fiscal year or period. |
| 4 | Amounts represent less than $0.005 per share. |
See accompanying Notes to Financial Statements.
87
MEMBERS Mutual Funds | October 31, 2012
Financial Highlights for a Share of Beneficial Interest Outstanding
MID CAP FUND (continued) | |||||
Year Ended October 31, | |||||
2012 | 2011 | 2010 | 2009 | 2008 | |
| CLASS Y | |||||
Net Asset Value at beginning of period | $ 6.69 | $ 6.01 | $ 5.00 | $ 4.11 | $ 7.47 |
| Income from Investment Operations: | |||||
Net investment income (loss)1 | (0.01) | 0.01 | (0.01) | (0.01) | (0.02) |
| Net realized and unrealized gain (loss) on investments | 1.01 | 0.67 | 1.02 | 0.90 | (3.29) |
| Total from investment operations | 1.00 | 0.68 | 1.01 | 0.89 | (3.31) |
| Less Distributions: | |||||
| Distributions from capital gains | – | – | – | – | (0.05) |
| Total distributions | – | – | 0.00 | – | (0.05) |
| Net increase (decrease) in net asset value | 1.00 | 0.68 | 1.01 | 0.89 | (3.36) |
Net Asset Value at end of period | $ 7.69 | $ 6.69 | $ 6.01 | $ 5.00 | $ 4.11 |
Total Return (%)2 | 14.95 | 11.31 | 20.20 | 21.65 | (44.66) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $82,826 | $59,257 | $26,101 | $23,389 | $17,649 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 1.15 | 1.15 | 1.15 | 1.30 | 1.19 |
| After reimbursement of expenses by Adviser (%) | 1.15 | 1.15 | 1.15 | 1.15 | 1.15 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | (0.08) | 0.18 | (0.23) | (0.37) | (0.27) |
Portfolio Turnover (%)3 | 31 | 70 | 68 | 198 | 127 |
SMALL CAP FUND | |||||
Year Ended October 31, | |||||
2012 | 2011 | 2010 | 2009 | 2008 | |
| CLASS A | |||||
Net Asset Value at beginning of period | $10.79 | $ 9.93 | $ 8.24 | $ 7.29 | $10.36 |
| Income from Investment Operations: | |||||
Net investment income1 | 0.06 | 0.04 | 0.004 | 0.03 | 0.22 |
| Net realized and unrealized gain (loss) on investments | 1.31 | 0.86 | 1.70 | 0.94 | (3.07) |
| Total from investment operations | 1.37 | 0.90 | 1.70 | 0.97 | (2.85) |
Redemption Fees (see Note 2) | – | 0.01 | – | – | – |
| Less Distributions: | |||||
| Distributions from investment income | – | (0.05) | (0.01) | (0.02) | (0.05) |
| Distributions from capital gains | (0.35) | – | – | – | (0.17) |
| Total distributions | (0.35) | (0.05) | (0.01) | (0.02) | (0.22) |
| Net increase (decrease) in net asset value | 1.02 | 0.86 | 1.69 | 0.95 | (3.07) |
Net Asset Value at end of period | $11.81 | $10.79 | $ 9.93 | $ 8.24 | $ 7.29 |
Total Return (%)2 | 13.08 | 9.12 | 20.60 | 13.30 | (28.02) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $3,941 | $3,201 | $2,540 | $1,301 | $ 883 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 1.50 | 1.50 | 1.50 | 2.85 | 2.18 |
| After reimbursement of expenses by Adviser (%) | 1.50 | 1.50 | 1.50 | 1.50 | 1.50 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 0.53 | 0.33 | 0.04 | 0.50 | 0.56 |
Portfolio Turnover (%)3 | 15 | 15 | 40 | 21 | 55 |
| 1 | Net investment income (loss) calculated excluding permanent tax adjustments to undistributed net investment income. |
| 2 | Total return without applicable sales charge. |
| 3 | Portfolio Turnover is calculated at the fund level and represents the entire fiscal year or period. |
| 4 | Amount represents less than $0.005 per share. |
See accompanying Notes to Financial Statements.
88
MEMBERS Mutual Funds | October 31, 2012
Financial Highlights for a Share of Beneficial Interest Outstanding
SMALL CAP FUND (continued) | |||||
Year Ended October 31, | |||||
2012 | 2011 | 2010 | 2009 | 2008 | |
| CLASS B | |||||
Net Asset Value at beginning of period | $10.55 | $ 9.78 | $ 8.18 | $ 7.24 | $10.29 |
| Income from Investment Operations: | |||||
Net investment income (loss)1 | (0.02) | (0.06) | (0.07) | (0.02) | 0.03 |
| Net realized and unrealized gain (loss) on investments | 1.27 | 0.86 | 1.67 | 0.94 | (2.91) |
| Total from investment operations | 1.25 | 0.80 | 1.60 | 0.92 | (2.88) |
Redemption Fees (see Note 2) | – | – | – | 0.02 | 0.02 |
| Less Distributions: | |||||
| Distributions from net investment income | – | (0.03) | – | – | – |
| Distributions from capital gains | (0.35) | – | – | – | (0.17) |
| Total distributions | (0.35) | (0.03) | 0.00 | – | (0.17) |
| Net increase (decrease) in net asset value | 0.90 | 0.77 | 1.60 | 0.94 | (3.05) |
Net Asset Value at end of period | $11.45 | $10.55 | $ 9.78 | $ 8.18 | $ 7.24 |
Total Return (%)2 | 12.21 | 8.20 | 19.56 | 12.98 | (28.38) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $318 | $266 | $262 | $100 | $ 67 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 2.25 | 2.25 | 2.25 | 11.03 | 7.88 |
| After reimbursement of expenses by Adviser (%) | 2.25 | 2.25 | 2.25 | 2.25 | 2.25 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | (0.22) | (0.42) | (0.72) | (0.22) | (0.19) |
Portfolio Turnover (%)3 | 15 | 15 | 40 | 21 | 55 |
| CLASS Y | |||||
Net Asset Value at beginning of period | $10.77 | $ 9.91 | $ 8.22 | $ 7.31 | $10.37 |
| Income from Investment Operations: | |||||
Net investment income1 | 0.10 | 0.07 | 0.03 | 0.05 | 0.06 |
| Net realized and unrealized gain (loss) on investments | 1.30 | 0.85 | 1.69 | 0.92 | (2.88) |
| Total from investment operations | 1.40 | 0.92 | 1.72 | 0.97 | (2.82) |
| Less Distributions: | |||||
| Distributions from net investment income | – | (0.06) | (0.03) | (0.06) | (0.07) |
| Distributions from capital gains | (0.35) | – | – | – | (0.17) |
| Total distributions | (0.35) | (0.06) | (0.03) | (0.06) | (0.24) |
| Net increase (decrease) in net asset value | 1.05 | 0.86 | 1.69 | 0.91 | (3.06) |
Net Asset Value at end of period | $11.82 | $10.77 | $ 9.91 | $ 8.22 | $ 7.31 |
Total Return (%)2 | 13.39 | 9.29 | 20.90 | 13.53 | (27.71) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $13,808 | $17,039 | $29,240 | $20,389 | $13,453 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 1.25 | 1.25 | 1.25 | 1.52 | 1.61 |
| After reimbursement of expenses by Adviser (%) | 1.25 | 1.25 | 1.25 | 1.25 | 1.25 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 0.77 | 0.69 | 0.29 | 0.77 | 0.81 |
Portfolio Turnover (%)3 | 15 | 15 | 40 | 21 | 55 |
| 1 | Net investment income (loss) calculated excluding permanent tax adjustments to undistributed net investment income. |
| 2 | Total return without applicable sales charge. |
| 3 | Portfolio Turnover is calculated at the fund level and represents the entire fiscal year or period. |
See accompanying Notes to Financial Statements.
89
MEMBERS Mutual Funds | October 31, 2012
Financial Highlights for a Share of Beneficial Interest Outstanding
INTERNATIONAL STOCK FUND | |||||
Year Ended October 31, | |||||
2012 | 2011 | 2010 | 2009 | 2008 | |
| CLASS A | |||||
Net Asset Value at beginning of period | $10.12 | $10.58 | $ 9.94 | $ 8.47 | $17.05 |
| Income from Investment Operations: | |||||
Net investment income1 | 0.14 | 0.16 | 0.12 | 0.15 | 0.23 |
| Net realized and unrealized gain (loss) on investments | 0.76 | (0.47) | 0.77 | 1.69 | (6.06) |
| Total from investment operations | 0.90 | (0.31) | 0.89 | 1.84 | (5.83) |
Redemption Fees (see Note 2) | – | 0.004 | – | – | – |
| Less Distributions: | |||||
| Distributions from net investment income | (0.21) | (0.15) | (0.25) | (0.16) | (0.24) |
| Distributions from capital gains | – | – | – | (0.21) | (2.51) |
| Total distributions | (0.21) | (0.15) | (0.25) | (0.37) | (2.75) |
| Net increase (decrease) in net asset value | 0.69 | (0.46) | 0.64 | 1.47 | (8.58) |
Net Asset Value at end of period | $10.81 | $10.12 | $10.58 | $ 9.94 | $ 8.47 |
Total Return (%)2 | 9.23 | (3.00) | 9.01 | 22.82 | (40.46) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $21,002 | $20,763 | $23,505 | $23,094 | $19,040 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 1.60 | 1.60 | 1.60 | 1.73 | 1.93 |
| After reimbursement of expenses by Adviser (%) | 1.60 | 1.60 | 1.60 | 1.60 | 1.60 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 1.35 | 1.45 | 1.19 | 1.81 | 1.67 |
Portfolio Turnover (%)3 | 41 | 44 | 52 | 82 | 69 |
| CLASS B | |||||
Net Asset Value at beginning of period | $9.92 | $10.39 | $ 9.76 | $ 8.33 | $16.79 |
| Income from Investment Operations: | |||||
Net investment income1 | 0.09 | 0.08 | 0.05 | 0.14 | 0.18 |
| Net realized and unrealized gain (loss) on investments | 0.72 | (0.47) | 0.75 | 1.60 | (6.01) |
| Total from investment operations | 0.81 | (0.39) | 0.80 | 1.74 | (5.83) |
| Less Distributions: | |||||
| Distributions from net investment income | (0.15) | (0.08) | (0.17) | (0.10) | (0.12) |
| Distributions from capital gains | – | – | – | (0.21) | (2.51) |
| Total distributions | (0.15) | (0.08) | (0.17) | (0.31) | (2.63) |
| Net increase (decrease) in net asset value | 0.66 | (0.47) | 0.63 | 1.43 | (8.46) |
Net Asset Value at end of period | $10.58 | $ 9.92 | $10.39 | $ 9.76 | $ 8.33 |
Total Return (%)2 | 8.39 | (3.77) | 8.26 | 21.91 | (40.95) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $3,206 | $3,872 | $4,854 | $5,109 | $ 6,237 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 2.35 | 2.35 | 2.35 | 2.49 | 2.69 |
| After reimbursement of expenses by Adviser (%) | 2.35 | 2.35 | 2.35 | 2.35 | 2.35 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 0.59 | 0.72 | 0.43 | 1.09 | 1.04 |
Portfolio Turnover (%)3 | 41 | 44 | 52 | 82 | 69 |
| 1 | Net investment income (loss) calculated excluding permanent tax adjustments to undistributed net investment income. |
| 2 | Total return without applicable sales charge. |
| 3 | Portfolio Turnover is calculated at the fund level and represents the entire fiscal year or period. |
| 4 | Amounts represent less than $0.005 per share. |
See accompanying Notes to Financial Statements.
90
MEMBERS Mutual Funds | October 31, 2012
Financial Highlights for a Share of Beneficial Interest Outstanding
INTERNATIONAL STOCK FUND (continued) | |||||
Year Ended October 31, | |||||
2012 | 2011 | 2010 | 2009 | 2008 | |
| CLASS Y | |||||
Net Asset Value at beginning of period | $10.13 | $10.59 | $ 9.95 | $ 8.48 | $17.08 |
| Income from Investment Operations: | |||||
Net investment income1 | 0.18 | 0.21 | 0.22 | 0.16 | 0.31 |
| Net realized and unrealized gain (loss) on investments | 0.75 | (0.49) | 0.69 | 1.70 | (6.12) |
| Total from investment operations | 0.93 | (0.28) | 0.91 | 1.86 | (5.81) |
| Less Distributions: | |||||
| Distributions from net investment income | (0.24) | (0.18) | (0.27) | (0.18) | (0.28) |
| Distributions from capital gains | – | – | – | (0.21) | (2.51) |
| Total distributions | (0.24) | (0.18) | (0.27) | (0.39) | (2.79) |
| Net increase (decrease) in net asset value | 0.69 | (0.46) | 0.64 | 1.47 | (8.60) |
Net Asset Value at end of period | $10.82 | $10.13 | $10.59 | $ 9.95 | $ 8.48 |
Total Return (%)2 | 9.61 | (2.85) | 9.28 | 23.25 | (40.41) |
| Ratios/Supplemental Data: | |||||
| Net Assets at end of period (in 000’s) | $23,294 | $44,358 | $74,421 | $120,187 | $81,569 |
| Ratios of expenses to average net assets: | |||||
| Before reimbursement of expenses by Adviser (%) | 1.35 | 1.35 | 1.35 | 1.47 | 1.68 |
| After reimbursement of expenses by Adviser (%) | 1.35 | 1.35 | 1.35 | 1.35 | 1.35 |
| Ratio of net investment income to average net assets | |||||
| After reimbursement of expenses by Adviser (%) | 1.36 | 1.70 | 1.42 | 2.07 | 2.25 |
Portfolio Turnover (%)3 | 41 | 44 | 52 | 82 | 69 |
| 1 | Net investment income calculated excluding permanent tax adjustments to undistributed net investment income. |
| 2 | Total return without applicable sales charge. |
| 3 | Portfolio Turnover is calculated at the fund level and represents the entire fiscal year or period. |
See accompanying Notes to Financial Statements.
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MEMBERS Mutual Funds | October 31, 2012
Notes to Financial Statements
1. ORGANIZATION
The MEMBERS Mutual Funds, a Delaware business trust (the "Trust"), is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as a diversified, open-end, management investment company. As of the date of this report, the Trust offers thirteen funds (individually, a "Fund," collectively, the "Funds"). The Declaration of Trust permits the Trustees to issue an unlimited number of shares of beneficial interest of the Trust without par value. The Trust has entered into an Investment Advisory Agreement with Madison Asset Management, LLC (the "Investment Adviser"). The Investment Adviser, in turn, has entered into subadvisory agreements with certain subadvisers ("Subadvisers") for the management of the investments of the High Income Fund, Small Cap Fund, and the International Stock Fund. The accompanying financial statements include the Cash Reserves, Bond, High Income, Diversified Income, Equity Income, Large Cap Value, Large Cap Growth, Mid Cap, Small Cap and International Stock Funds (collectively, the "Core Funds"), and the Conservative Allocation, Moderate Allocation, and Aggressive Allocation Funds (collectively, the "Allocation Funds"). The Core Funds, excluding the Cash Reserves, Diversified Income and Equity Income Funds, offer three classes of shares: Class A, B and Y. The Diversified Income Fund and Allocation Funds offer three classes of shares: Class A, B and C. The Cash Reserves Fund offers two classes of shares: Class A and B. The Equity Income Fund offers four classes of shares: Class A, C, Y and R6. Each class of shares represents an interest in the assets of the respective Fund and has identical voting, dividend, liquidation and other rights, except that each class of shares bears its own distribution fees and servicing fees, if any, and its proportional share of Fund level expenses, is subject to its own sales charges, if any, and has exclusive voting rights on matters pertaining to Rule 12b-1 of the 1940 Act as it relates to that class and other class-specific matters.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reported period. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by each Fund in the preparation of its financial statements.
Portfolio Valuation: Securities and other investments are valued as follows: Equity securities, including American Depository Receipts ("ADRs"), Global Depositary Receipts ("GDRs") and exchange-traded funds ("ETFs") listed on any U.S. or foreign stock exchange or quoted on the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), are valued at the last quoted sale price or official closing price on that exchange or NASDAQ on the valuation day (provided that, for securities traded on NASDAQ, the Funds utilize the NASDAQ Official Closing Price). If no sale occurs, (a) equities traded on a U.S. exchange or on NASDAQ are valued at the mean between the closing bid and closing asked prices and (b) equity securities traded on a foreign exchange are valued at the official bid price. Debt securities purchased with a remaining maturity of 61 days or more are valued on the basis of last available bid prices or current market quotations provided by dealers or pricing services approved by the Trust. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrixes, market transactions in comparable investments, various relationships observed in the market between investments and calculated yield measurements based on valuation technology commonly employed in the market for such investments. Asset-backed and mortgage-backed securities are valued by independent pricing services using models that consider estimated cash flows of each tranche of the security, establish a benchmark yield and develop an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche.
Investments in shares of open-end mutual funds, including money market funds, are valued at their daily net asset value ("NAV") which is calculated as of the close of regular trading on the New York Stock Exchange (usually 4:00 p.m. Eastern Standard Time) on each day on which the New York Stock Exchange is open for business. NAV per share is determined by dividing each Fund’s total net assets by the number of shares of such fund outstanding at the time of calculation. Total net assets are determined by
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adding the current value of portfolio securities, cash, receivables, and other assets and subtracting liabilities. Because the assets of the Allocation Funds consist primarily of shares of underlying funds, the NAV of each fund is determined based on the NAVs of the underlying funds. Short-term instruments having maturities of 60 days or less and all securities in the Cash Reserves Fund are valued on an amortized cost basis, which approximates market value.
Over-the-counter securities not listed or traded on NASDAQ are valued at the last sale price on the valuation day. If no sale occurs on the valuation day, an over-the-counter security is valued at the mean between the last bid and asked prices. Over-the-counter options are valued based upon prices provided by market makers in such securities or dealers. Exchange traded options are valued at the last sale or bid price on the exchange where such option contract is principally traded, except for the Equity Income Fund where they are valued at the mean of the best bid and ask prices across all option exchanges. Spot and forward foreign currency exchange contracts are valued based on quotations supplied by dealers in such contracts. Overnight repurchase agreements are valued at cost, and term repurchase agreements (i.e., those whose maturity exceeds seven days), swaps, caps, collars and floors are valued at the average of the closing bids obtained daily from at least one dealer.
Through the end of this reporting period, the value of all assets and liabilities expressed in foreign currencies was converted into U.S. dollar values using the then-current exchange rate at the close of regular trading on the New York Stock Exchange (usually 4:00 p.m. Eastern Standard Time).
All other securities for which either quotations are not readily available, no other sales have occurred, or in the opinion of the Investment Adviser do not reflect the current market value, are appraised at their fair values as determined in good faith by the Committee and under the general supervision of the Board of Trustees. When fair value pricing of securities is employed, the prices of securities used by the Funds to calculate NAV may differ from market quotations or official closing prices. Because the Allocation Funds primarily invest in underlying funds, government securities and short-term paper, it is not anticipated that the Investment Adviser will need to "fair" value any of the investments of these funds. However, an underlying fund may need to "fair" value one or more of its investments, which may, in turn, require an Allocation Fund to do the same because of delays in obtaining the underlying fund’s NAV.
A Fund’s investments (or underlying fund) will be valued at fair value if, in the judgment of the Committee, an event impacting the value of an investment occurred between the closing time of a security’s primary market or exchange (for example, a foreign exchange or market) and the time the Fund’s share price is calculated as of the close of regular trading on the New York Stock Exchange (usually 4:00 p.m. Eastern Standard Time). Significant events may include, but are not limited to, the following: (1) significant fluctuations in domestic markets, foreign markets or foreign currencies; (2) occurrences not directly tied to the securities markets such as natural disasters, armed conflicts or significant government actions; and (3) major announcements affecting a single issuer or an entire market or market sector. In responding to a significant event, the Committee would determine the fair value of affected securities considering factors including, but not limited to: fundamental analytical data relating to the investment; the nature and duration of any restrictions on the disposition of the investment; and the forces influencing the market(s) in which the investment is purchased or sold. The Committee may rely on an independent fair valuation service to adjust the valuations of foreign equity securities based on specific market-movement parameters established by the Committee and approved by the Funds.
Security Transactions and Investment Income: Security transactions are accounted for on a trade date basis. Net realized gains or losses on sales are determined by the identified cost method. Interest income is recorded on an accrual basis. Dividend income is recorded on ex-dividend date. Amortization and accretion are recorded on the effective yield method.
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Expenses: Expenses that are directly related to one Fund are charged directly to that Fund. Other operating expenses are prorated to the Funds on the basis of relative net assets. Class-specific expenses are borne by that class.
Classes: Income and realized and unrealized gains/losses are allocated to the respective classes on the basis of relative net assets.
Repurchase Agreements: Each Fund may engage in repurchase agreements. In a repurchase agreement, a security is purchased for a relatively short period (usually not more than 7 days) subject to the obligation to sell it back to the issuer at a fixed time and price plus accrued interest. The Funds will enter into repurchase agreements only with members of the Federal Reserve System and with "primary dealers" in U.S. Government securities. As of October 31, 2012, only the Equity Income Fund had open repurchase agreements.
The Trust has established a procedure providing that the securities serving as collateral for each repurchase agreement must be delivered to the Funds’ custodian either physically or in book-entry form and that the collateral must be marked to market daily to ensure that each repurchase agreement is fully collateralized at all times. In the event of bankruptcy or other default by a seller of a repurchase agreement, a Fund could experience one of the following: delays in liquidating the underlying securities during the period in which the Fund seeks to enforce its rights thereto, possible subnormal levels of income, declines in value of the underlying securities, or lack of access to income during this period and the expense of enforcing its rights.
In April 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2011-03 "Reconsideration of Effective Control of Repurchase Agreements." ASU 2011-03 is an amendment to Topic 860 "Transfers and Servicing." These amendments simplify the accounting for repurchase agreements by eliminating the requirement that the transferor demonstrate it has adequate collateral to fund substantially all the cost of purchasing replacement assets. As a result, more arrangements could be accounted for as secured borrowings rather than sales. The guidance applies to public and nonpublic companies and is effective for interim and annual reporting periods beginning on or after December 15, 2011. The guidance should be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. The Funds have adopted this guidance and have determined that the updated standards have no material impact on the Funds’ financial statements.
Foreign Currency Transactions: The books and records are maintained in U.S. dollars. Foreign currency denominated transactions (i.e., market value of investment securities, assets and liabilities, purchases and sales of investment securities, and income and expenses) are translated into U.S. dollars at the current rate of exchange.
Each Fund, except the Cash Reserves Fund, which can only invest in U.S. dollar-denominated foreign money market securities, reports certain foreign currency-related transactions as components of realized gains or losses for financial reporting purposes, whereas such components are treated as ordinary income for federal income tax purposes. Only the International Stock Fund had net realized gains associated with currency transactions, and that amount of $19,520 is included in the Statements of Operations under the heading "Net realized gain (loss) on investments" for that Fund.
The Funds do not isolate the portion of gains and losses on investments in securities that is due to changes in the foreign exchange rates from that which is due to change in market prices of securities. Such amounts are categorized as gain or loss on investments for financial reporting purposes.
Forward Foreign Currency Exchange Contracts: Each Fund, except the Cash Reserves Fund, may purchase and sell forward foreign currency exchange contracts for defensive or hedging purposes. When entering into forward foreign currency exchange contracts, the Funds agree to receive or deliver a fixed quantity of foreign currency for an agreed-upon price on an agreed future date. These contracts are valued daily. The Funds’ net assets reflect unrealized gains or losses on the contracts as measured by the difference between the forward foreign currency exchange rates at the dates of entry into the contracts and the forward rates at
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Notes to Financial Statements
the reporting date. The Funds realize a gain or a loss at the time the forward foreign currency exchange contracts are settled or closed out with an offsetting contract. Realized and unrealized gains and losses are included in the Statements of Operations. As of October 31, 2012, none of the Funds had open forward foreign currency exchange contracts.
If a Fund enters into a forward foreign currency exchange contract to buy foreign currency for any purpose, the Fund will be required to place cash or other liquid assets in a segregated account with the Fund’s custodian in an amount equal to the value of the Fund’s total assets committed to the consummation of the forward contract. If the value of the securities in the segregated account declines, additional cash or securities will be placed in the segregated account so that the value of the account will equal the amount of the Fund’s commitment with respect to the contract.
Illiquid Securities: Each Fund currently limits investments in illiquid securities to 15% of net assets at the time of purchase, except for Cash Reserves Fund, which limits the investment in illiquid securities to 5% of net assets. An illiquid security is generally defined as any investment that may be difficult to sell within seven days for the price at which the fund values it. At October 31, 2012, investments in securities of the Bond and Diversified Income Funds included illiquid securities. The aggregate values of illiquid securities held by the Bond and Diversified Income Funds were $3,015,678 and $1,729,455, respectively, which represent 2.4% and 1.7% of net assets, respectively. Pursuant to guidelines adopted by the Board of Trustees, certain unregistered securities are determined to be liquid and are not included within the percent limitations specified above. Information concerning the illiquid securities held at October 31, 2012, which includes cost and acquisition date, is as follows:
| Security: | Acquisition Date | Acquisition Cost |
| Bond Fund | ||
| American Association of Retired Persons | 5/16/02 | $ 786,214 |
| ERAC USA Finance LLC | 12/16/04 | 622,522 |
| WM Wrigley Jr. Co. | 6/21/10 | 1,239,776 |
| $2,648,512 | ||
| Diversified Income Fund | ||
| American Association of Retired Persons | 5/16/02 | $ 786,214 |
| ERAC USA Finance LLC | 12/16/04 | 351,861 |
| WM Wrigley Jr. Co. | 6/21/10 | 279,949 |
| $1,418,024 |
Delayed Delivery Securities: Each Fund may purchase securities on a when-issued or delayed delivery basis. "When-issued" refers to securities whose terms are available and for which a market exists, but that have not been issued. For when-issued or delayed delivery transactions, no payment is made until delivery date, which is typically longer than the normal course of settlement, and often a month or more after the purchase. When a Fund enters into an agreement to purchase securities on a when-issued or delayed delivery basis, the Fund segregates cash or other liquid securities, of any type or maturity, equal in value to the Fund’s commitment. Losses may arise due to changes in the market value of the underlying securities, if the counterparty does not perform under the contract, or if the issuer does not issue the securities due to political, economic or other factors. As of October 31, 2012, only the Diversified Income Fund had delayed delivery securities.
Redemption Fees: The Small Cap and the International Stock Funds will deduct a fee of 2% from redemption proceeds on Class A and Class B shares held 30 calendar days or less. Redemption fees are treated as additional paid-in capital to the Fund from which the shares are redeemed and are designed to help offset any costs associated with short-term shareholder trading.
Fair Value Measurements: Each Fund has adopted the FASB guidance on fair value measurements. Fair value is defined as the price that each Fund would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market of the investment. A three-tier hierarchy is used to maximize the use of observable market data "inputs" and minimize the use of unobservable "inputs" and to establish classification of fair value measurements for disclosure
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Notes to Financial Statements
purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk (for example, the risk inherent in a particular valuation technique used to measure fair value including such a pricing model and/or the risk inherent in the inputs to the valuation technique). Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below:
Level 1 – unadjusted quoted prices in active markets for identical investments
Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates volatilities, prepayment speeds, credit risk, benchmark yields, transactions, bids, offers, new issues, spreads and other relationships observed in the markets among comparable securities, underlying equity of the issuer; and proprietary pricing models such as yield measures calculated using factors such as cash flows, financial or collateral performance and other reference data etc.)
Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)
The valuation techniques used by the Funds to measure fair value for the period ended October 31, 2012 maximized the use of observable inputs and minimized the use of unobservable inputs. The Funds utilized the following fair value techniques: multi-dimensional relational pricing model and option adjusted spread pricing; the Funds estimated the price that would have prevailed in a liquid market for an international equity security given information available at the time of evaluation. As of October 31, 2012, none of the Funds held securities deemed as a Level 3, and there were no transfers between classification levels.
The following is a summary of the inputs used as of October 31, 2012 in valuing the Funds’ investments carried at fair value (please see the Portfolio of Investments for each Fund for a listing of all securities within each category):
Fund | Quoted Prices in Active Markets for Identical Investments (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Value at 10/31/12 |
| Conservative Allocation | $ 61,975,774 | $ – | $ – | $ 61,975,774 |
| Moderate Allocation | 127,886,000 | – | – | 127,886,000 |
| Aggressive Allocation | 45,190,662 | – | – | 45,190,662 |
Cash Reserves1 | 367,036 | 12,067,692 | – | 12,434,728 |
| Bond | ||||
| Asset Backed | – | 1,468,058 | – | 1,468,058 |
| Corporate Notes and Bonds | – | 24,244,463 | – | 24,244,463 |
| Mortgage Backed | – | 15,678,438 | – | 15,678,438 |
| U.S. Government and Agency Obligations | – | 82,145,254 | – | 82,145,254 |
| Investment Companies | 1,961,112 | – | – | 1,961,112 |
| 1,961,112 | 123,536,213 | – | 125,497,325 | |
| High Income | ||||
| Corporate Notes and Bonds | – | 80,836,065 | – | 80,836,065 |
| Investment Companies | 1,206,218 | – | – | 1,206,218 |
| 1,206,218 | 80,836,065 | – | 82,042,283 | |
1 At October 31, 2012, all Level 2 securities held are Short Term Investments, see respective Portfolio of Investments. | ||||
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Notes to Financial Statements
Fund | Quoted Prices in Active Markets for Identical Investments (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Value at 10/31/12 |
| Diversified Income | ||||
| Common Stocks | $ 55,139,403 | $ – | $ – | $ 55,139,403 |
| Asset Backed | – | 100,259 | – | 100,259 |
| Corporate Notes and Bonds | – | 13,818,092 | – | 13,818,092 |
| Mortgage Backed | – | 8,562,074 | – | 8,562,074 |
| U.S. Government and Agency Obligations | – | 18,472,394 | – | 18,472,394 |
| Investment Companies | 9,137,449 | – | – | 9,137,449 |
| 64,276,852 | 40,952,819 | – | 105,229,671 | |
| Equity Income | ||||
| Assets: | ||||
| Common Stocks | 70,933,512 | – | – | 70,933,512 |
| U.S. Government and Agency Obligations | – | 7,996,957 | – | 7,996,957 |
| Repurchase Agreement | – | 11,096,552 | – | 11,096,552 |
| 70,933,512 | 19,093,509 | – | 90,027,021 | |
| Liabilities: | ||||
| Options Written | 1,827,228 | – | – | 1,827,228 |
| Large Cap Value | ||||
| Common Stocks | 138,278,861 | – | – | 138,278,861 |
| Investment Companies | 10,027,353 | – | – | 10,027,353 |
| 148,306,214 | – | – | 148,306,214 | |
| Large Cap Growth | ||||
| Common Stocks | 115,639,229 | – | – | 115,639,229 |
| Investment Companies | 5,505,511 | – | – | 5,505,511 |
| 121,144,740 | – | – | 121,144,740 | |
| Mid Cap | ||||
| Common Stocks | 127,937,632 | – | – | 127,937,632 |
| Investment Companies | 9,640,157 | – | – | 9,640,157 |
| 137,577,789 | – | – | 137,577,789 | |
| Small Cap | ||||
| Common Stocks | 17,585,995 | – | – | 17,585,995 |
| Investment Companies | 447,745 | – | – | 447,745 |
| 18,033,740 | – | – | 18,033,740 |
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Fund | Quoted Prices in Active Markets for Identical Investments (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Value at 10/31/12 |
| International Stock | ||||
| Common Stocks | ||||
| Australia | $ –– | $ 1,548,945 | $ – | $ 1,548,945 |
| Belgium | – | 1,632,826 | – | 1,632,826 |
| Brazil | – | 359,263 | – | 359,263 |
| Canada | – | 1,285,960 | – | 1,285,960 |
| Denmark | – | 300,048 | 300,048 | |
| Finland | – | 619,014 | – | 619,014 |
| France | – | 5,276,511 | – | 5,276,511 |
| Germany | – | 4,402,056 | – | 4,402,056 |
| Indonesia | 477,960 | – | 477,960 | |
| Ireland | 367,650 | – | – | 367,650 |
| Italy | – | 583,489 | – | 583,489 |
| Japan | – | 7,016,671 | – | 7,016,671 |
| Mexico | – | 432,998 | 432,998 | |
| Netherlands | – | 907,194 | – | 907,194 |
| New Zealand | – | 358,460 | – | 358,460 |
| Philippines | – | 244,441 | – | 244,441 |
| Russia | – | 690,358 | – | 690,358 |
| South Africa | – | 316,507 | – | 316,507 |
| South Korea | – | 1,273,615 | – | 1,273,615 |
| Spain | – | 1,534,273 | – | 1,534,273 |
| Sweden | – | 1,914,762 | – | 1,914,762 |
| Switzerland | – | 1,649,361 | – | 1,649,361 |
| Thailand | – | 467,589 | – | 467,589 |
| Turkey | – | 767,920 | – | 767,920 |
| United Kingdom | – | 10,888,082 | – | 10,888,082 |
| Investment Companies | 1,931,905 | – | – | 1,931,905 |
$ 2,777,515 | $ 44,470,343 | $ – | $ 47,247,858 |
Derivatives: The FASB issued guidance intended to enhance financial statements’ disclosures for derivative instruments and hedging activities and enable investors to understand: a) how and why a Fund uses derivative instruments, b) how derivative instruments and related hedge fund items are accounted for, and c) how derivative instruments and related hedge items affect a Fund’s financial position, results of operations and cash flows.
The following table presents the types of derivatives in the Equity Income Fund by location as presented on the Statements of Assets and Liabilities as of October 31, 2012:
Statement of Asset & Liabilities Presentation of Fair Values of Derivative Instruments | ||||
Asset Derivatives | Liability Derivatives | |||
Derivatives not accounted for as hedging instruments | Statements of Assets and Liabilities Location | Fair Value | Statements of Assets and Liabilities Location | Fair Value |
| Equity contracts | – | -- | Options written | $1,827,227 |
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Notes to Financial Statements
The following table presents the effect of Derivative Instruments on the Statements of Operations for the period ended October 31, 2012:
Derivatives not accounted for as hedging instruments | Realized Gain on Derivatives: | Change in Unrealized Depreciation on Derivatives |
| Equity contracts | $4,844,081 | $918,638 |
Management has determined that there is no impact on the financial statements of the other Funds held in the Trust as they currently do not hold derivative financial instruments.
New Accounting Pronouncements: In May 2011, FASB issued ASU 2011-04, modifying Topic 820, Fair Value Measurements and Disclosures. At the same time, the International Accounting Standards Board ("IASB") issued International Financial Reporting Standard ("IFRS") 13, Fair Value Measurement. The objective by the FASB and IASB is convergence of their guidance on fair value measurements and disclosures. The effective date of the ASU is for interim and annual periods beginning after December 15, 2011. The Funds have adopted the disclosures required by this update.
In December 2011, the IASB and the FASB issued ASU 2011-11 "Disclosures about Offsetting Assets and Liabilities." These common disclosure requirements are intended to help investors and other financial statements users to better assess the effect or potential effect of offsetting arrangements on a portfolio’s financial position. They also improve transparency in the reporting of how companies mitigate credit risk, including disclosure of related collateral pledged or received. In addition, ASU 2011-11 facilitates comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS. ASU 2011-11 requires entities to disclose both gross and net information about both instruments and transactions eligible for offset in the financial position; and disclose instruments and transactions subject to an agreement similar to a master netting agreement. ASU 2011-11 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. The Funds are currently evaluating the implications of ASU 2011-11 and its impact on financial statements disclosures.
3. ADVISORY, ADMINISTRATION AND DISTRIBUTION AGREEMENTS
Advisory Agreement. For its investment advisory services to the Funds, the Investment Adviser is entitled to receive a fee, which is computed daily and paid monthly, at an annualized percentage rate of the average daily value of the net assets of each Fund as follows: 0.20% for the Conservative, Moderate and Aggressive Allocation Funds (collectively, the "Allocation Funds") ; 0.40% for the Cash Reserves Fund; 0.50% for the Bond Fund; 0.55% for the High Income Fund; 0.65% for the Diversified Income Fund; 0.85% for the Equity Income Fund; 0.55% for the Large Cap Value Fund; 0.75% for the Large Cap Growth Fund; 0.75% for the Mid Cap Fund; 1.00% for the Small Cap Fund; and 1.05% for the International Stock Fund. Except for the Allocation Funds and the Equity Income Fund, each Fund’s management fee will be reduced by 0.05% on assets exceeding $500 million, and by another 0.05% on assets exceeding $1 billion. The Investment Adviser is solely responsible for the payment of all fees to the Subadvisers. The Subadvisers for the Funds at October 31, 2012, are Shenkman Capital Management, Inc. for the High Income Fund, Wellington Management Company, LLP for the Small Cap Fund and Lazard Asset Management LLC for the International Stock Fund.
The Investment Adviser may from time to time voluntarily agree to waive a portion of its fees or expenses related to the Funds. In that regard, the Investment Adviser waived a portion of management fees on the Cash Reserves Fund Class A Shares and Class B Shares for the purpose of maintaining a one–day yield of zero. The amount of the daily waiver is equal to the amount required to maintain a minimum daily distribution rate of zero. For the year ended October 31, 2012, the waivers totaled $48,596 for Class A Shares and $4,558 for Class B Shares and are reflected as fees waived in the accompanying Statements of Operations. The Investment Adviser does not have the right to recoup these waived fees.
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Services Agreement. The Investment Adviser provides or arranges for each Fund to have all of the necessary operational and support services it needs for a fee. These fees are computed daily and paid monthly, at an annualized percentage rate of the average daily value of the net assets of each Fund as follows: 0.25% for each of the Conservative, Moderate and Aggressive Allocation Funds; 0.15% for the Cash Reserves Fund; 0.15% for the Bond Fund; 0.20% for the High Income Fund; 0.20% for the Diversified Income Fund; 0.15% for the Equity Income Fund; 0.36% for the Large Cap Value Fund; 0.20% for the Large Cap Growth Fund; 0.40% for the Mid Cap Fund; 0.25% for the Small Cap Fund; and 0.30% for the International Stock Fund. The direct expenses of the Funds’ Independent Trustees and independent auditors are paid out of this fee on behalf of the Funds.
The Investment Adviser may from time to time voluntarily agree to waive a portion of its fees or expenses related to the Funds. In that regard, the Investment Adviser waived a portion of service agreement fees on the Cash Reserves Fund Class A Shares and Class B Shares for the purpose of maintaining a one–day yield of zero. The amount of the daily waiver is equal to the amount required to maintain a minimum daily distribution rate of zero. For the year ended October 31, 2012, the waivers totaled $8,373 for Class A Shares and $872 for Class B Shares and are reflected as fees waived in the accompanying Statements of Operations. The Investment Adviser does not have the right to recoup these waived fees.
Distribution Agreement. Mosaic Funds Distributor, LLC ("MFD") serves as distributor of the Funds. The Trust adopted distribution and/or service plans (the "Plans") with respect to the Trust’s Class A, B, and C shares pursuant to Rule 12b–1 under the 1940 Act. Under the Plans, the Trust will pay service fees to MFD for Class A, Class B, and Class C shares at an aggregate annual rate of 0.25% of each Fund’s daily net assets attributable to the respective class of shares for all Funds except the Cash Reserves Fund. The Trust will also pay distribution fees to MFD for Class B and Class C shares at an aggregate annual rate of 0.75% of each Fund’s daily net assets attributable to their respective classes. The distribution fees are used to reimburse MFD for its distribution expenses with respect to Class B and Class C only, including but not limited to: (1) initial and ongoing sales compensation to selling brokers and others engaged in the sale of Fund shares, (2) marketing, promotional and overhead expenses incurred in connection with the distribution of Fund shares, and (3) interest expenses on unreimbursed distribution expenses. The service fees are used by MFD to compensate selling brokers and others for providing personal and account maintenance services to shareholders. Fees incurred by the Funds under the Plans are detailed in the Statements of Operations.
Front-end sales charges and contingent deferred sales charges ("CDSC") do not represent expenses of the Funds. Rather, they are deduced from the proceeds of sales of Fund shares prior to investment (Class A shares) or from redemption proceeds prior to remittance (Class A, B and C shares), as applicable. MFD, in turn, uses a portion of these fees to pay financial advisors who sell Fund shares, as disclosed in the prospectus. The sales charges and CDSC collected from shareholders in this manner are presented in the "Amounts Collected" section of the table below. The amounts retained by MFD (and not paid to financial advisors who sell Fund shares) are shown in the "Amount Retained" section. The amounts collected and retained for the period November 1, 2011 through October 31, 2012, were as follows:
Amount Collected | Amount Retained | ||||||
Fund | Class A | Class B | Class C | Class A | Class B | Class C | |
| Conservative Allocation | $175,182 | $18,193 | $2,113 | $22,858 | $18,193 | $2,113 | |
| Moderate Allocation | 358,235 | 59,507 | 630 | 43,840 | 59,507 | 630 | |
| Aggressive Allocation | 134,819 | 20,769 | 134 | 15,924 | 20,769 | 134 | |
| Cash Reserves | - | 5,434 | - | - | 5,434 | - | |
| Bond | 113,270 | 6,189 | - | 13,805 | 6,189 | - | |
| High Income | 75,587 | 1,629 | - | 10,408 | 1,629 | - | |
| Diversified Income | 377,986 | 15,098 | 25 | 50,931 | 15,098 | 25 | |
| Equity Income | 40,177 | - | - | 5,083 | - | - | |
| Large Cap Value | 48,777 | 4,433 | - | 5,355 | 4,433 | - | |
| Large Cap Growth | 52,817 | 7,237 | - | 5,728 | 7,237 | - | |
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Notes to Financial Statements
Amount Collected | Amount Retained | ||||||
Fund | Class A | Class B | Class C | Class A | Class B | Class C | |
| Mid Cap | $41,155 | $3,098 | $ - | $4,342 | $3,098 | $ - | |
| Small Cap | 3,465 | 74 | - | 232 | 74 | - | |
| International Stock | 19,810 | 4,213 | - | 2,027 | 4,213 | - | |
MFD may from time to time voluntarily agree to waive a portion of its fees or expenses related to the Funds. In that regard, MFD waived a portion of 12b-1 fees on the Cash Reserves Fund Class B Shares for the purpose of maintaining a one-day yield of zero. The amount of the daily waiver is equal to the amount required to maintain a minimum daily distribution rate of zero. For the year ended October 31, 2012, the waivers totaled $8,545 and are reflected as fees waived in the accompanying Statements of Operations. MFD does not have the right to recoup these waived fees.
Officers and Trustees: Certain officers and trustees of the Funds are also officers of the Investment Adviser. The Funds do not compensate their officers or affiliated trustees. Unaffiliated trustees receive from the Trust an attendance fee for each Board or Committee meeting attended, with additional remuneration paid to the Audit Committee and Nominating and Goverance Committee chairpersons.
4. DIVIDENDS FROM NET INCOME AND DISTRIBUTIONS OF CAPITAL GAINS
With respect to dividends from net investment income, the Cash Reserves Fund declares dividends, if any, daily and reinvests monthly. The Bond Fund, High Income Fund and Diversified Income Fund declare and reinvest dividends, if any, monthly. The Conservative Allocation and Equity Income Funds declare and reinvest dividends, if any, quarterly. The Moderate Allocation, Aggressive Allocation, Large Cap Value Fund, Large Cap Growth Fund, Mid Cap Fund, Small Cap Fund, and the International Stock Fund declare and reinvest dividends, if any, annually. The Funds distribute net realized gains from investment transactions, if any, to shareholders annually.
Income and capital gain distributions, if any, are determined in accordance with federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. Taxable distributions from income and realized capital gains in the Funds differ from book amounts earned during the period due to differences in the timing of capital gains recognition, and due to the reclassification of certain gains or losses from capital to income. Dividends from net investment income are determined on a class level. Capital gains are determined on a Fund level.
5. SECURITIES TRANSACTIONS
For the year ended October 31, 2012, aggregate cost of purchases and proceeds from sales of securities, other than short-term investments, were as follows:
U.S. Government Securities | Other Investment Securities | |||
Fund | Purchases | Sales | Purchases | Sales |
| Conservative Allocation | $ – | $ – | $33,638,772 | $21,892,420 |
| Moderate Allocation | – | – | 68,016,608 | 59,342,785 |
| Aggressive Allocation | – | – | 30,176,358 | 28,107,546 |
| Bond | 8,101,590 | 51,900,060 | 378,970 | 13,023,607 |
| High Income | – | – | 34,019,576 | 59,312,320 |
| Diversified Income | 9,746,882 | 3,645,710 | 14,825,997 | 14,539,189 |
| Equity Income | – | – | 89,138,588 | 67,968,007 |
| Large Cap Value | – | – | 34,932,026 | 50,093,104 |
| Large Cap Growth | – | – | 83,545,254 | 86,998,388 |
| Mid Cap | – | – | 41,051,598 | 36,073,961 |
| Small Cap | – | – | 2,826,401 | 7,340,388 |
| International Stock | – | – | 20,063,535 | 46,652,645 |
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Notes to Financial Statements
6. COVERED CALL OPTIONS
The Equity Income Fund will pursue its primary objective by employing an option strategy of writing (selling) covered call options on common stocks. The number of call options the Fund can write (sell) is limited by the amount of equity securities the Fund holds in its portfolio. The Fund will not write (sell) "naked" or uncovered call options. The Fund seeks to produce a high level of current income and gains generated from option writing premiums and, to a lesser extent, from dividends. Covered call writing also helps to reduce volatility (and risk profile) of the Fund by providing protection from declining stock prices.
Transactions in option contracts during the year ended October 31, 2012 were as follows:
Number of Contracts | Premiums Received | |
| Options outstanding, beginning of period | 8,332 | $1,745,499 |
| Options written during the period | 56,413 | 11,370,578 |
| Options expired during the period | (18,626) | (3,521,861) |
| Options closed during the period | (21,230) | (4,293,190) |
| Options assigned during the period | (13,029) | (2,799,464) |
| Options outstanding, end of period | 11,860 | $2,501,562 |
7. FOREIGN SECURITIES
Each Fund may invest in foreign securities; however, the Cash Reserves Fund is limited to U.S. dollar–denominated foreign money market securities. Foreign securities include American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs"), Swedish Depositary Receipts ("SDRs") and foreign money market securities. Dollar–denominated securities that are part of the Merrill Lynch U.S. Domestic Master Index are not considered a foreign security.
Certain Funds have reclaim receivable balances, in which the Funds are due a reclaim on the taxes that have been paid to some foreign jurisdictions. The values of all reclaims are not significant for any of the Funds and are reflected in Other Assets on the Statements of Assets and Liabilities. These receivables are reviewed to ensure the current receivable balance is reflective of the amount deemed to be collectible.
8. SECURITIES LENDING
Each Fund, except the Allocation, Cash Reserves, Small Cap and Equity Income Funds, entered into a Securities Lending Agreement (the "Agreement") with State Street Bank and Trust Company ("State Street"). Under the terms of the Agreement, the Funds may lend portfolio securities to qualified borrowers in order to earn additional income. The Agreement requires that loans are collateralized at all times by cash or other liquid assets at least equal to 102% of the value of the securities, which is determined on a daily basis. Amounts earned as interest on investments of cash collateral, net of rebates and fees, if any, are included in the Statements of Operations. The primary risk associated with securities lending is if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Funds could experience delays and costs in recovering securities loaned or in gaining access to the collateral.
At October 31, 2012, none of the Funds had securities out on loan.
9. FEDERAL INCOME TAX INFORMATION
It is each Fund’s policy to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986 applicable to regulated investment companies and to distribute all its taxable income to its shareholders. Accordingly, no provisions for federal income taxes are recorded in the accompanying financial statements.
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MEMBERS Mutual Funds | October 31, 2012
Notes to Financial Statements
The Funds have not recorded any liabilities for material unrecognized tax benefits as of October 31, 2012. It is the Funds’ policy to recognize accrued interest and penalties related to uncertain tax benefits in income taxes, as appropriate. Tax years that remain open to examination by major tax jurisdictions include tax years ended October 31, 2009 through October 31, 2012.
The tax character of distributions paid during the years ended October 31, 2012 and 2011 was as follows:
Ordinary Income | Capital Gain | Ordinary Income | Capital Gain | ||||||
Fund | 2012 | 2011 | 2012 | 2011 | Fund | 2012 | 2011 | 2012 | 2011 |
| Conservative Allocation | $1,244,762 | $1,679,647 | $ ��– | $ – | Equity Income | $7,197,561 | $3,984,139 | $723,406 | $ – |
| Moderate Allocation | 2,399,616 | 2,617,703 | – | – | Large Cap Value | 2,316,163 | 1,976,498 | – | – |
| Aggressive Allocation | 486,564 | 387,776 | – | – | Large Cap Growth | 79,717 | 359,526 | – | – |
| Cash Reserves | – | – | – | – | Mid Cap | – | – | – | – |
| Bond | 3,839,726 | 5,173,830 | – | Small Cap | 508 | 190,416 | 648,950 | – | |
| High Income | 6,695,075 | 7,821,504 | – | – | International Stock | 1,454,961 | 1,521,140 | – | – |
| Diversified Income | 1,919,685 | 2,111,865 | – | – | |||||
As of October 31, 2012, the components of distributable earnings on a tax basis were as follows:
Fund | Ordinary Income | Capital Gain | Fund | Ordinary Income | Capital Gain | |
| Conservative Allocation | $ 220,293 | $ – | Equity Income | $2,736,070 | $ – | |
| Moderate Allocation | 1,192,180 | – | Large Cap Value | 1,875,023 | – | |
| Aggressive Allocation | 272,724 | – | Large Cap Growth | 220,282 | – | |
| Cash Reserves | – | – | Mid Cap | - | – | |
| Bond | 21,027 | – | Small Cap | 123,791 | 922,600 | |
| High Income | 345,910 | – | International Stock | 619,730 | – | |
| Diversified Income | 15,766 | – |
The Regulated Investment Company ("RIC") Modernization Act of 2010 (the "Modernization Act") modernized several of the federal income and excise tax provisions related to RICs. The Modernization Act contains simplification provisions which are aimed at preventing disqualification of a RIC for "inadvertent" failures of the asset diversification and/or qualifying income tests. These changes are effective for tax years ending after December 22, 2010. Additionally, the Modernization Act allows capital losses to be carried forward indefinitely, and retain the character of the original loss, exempts RICs from the preferential dividend rule, and repealed the 60-day designation requirement for certain types of pay-through income and gains. These changes are effective for tax years beginning after December 22, 2010. Previously, net capital losses were carried forward for up to eight years and treated as short-term losses. As a transition rule, the Modernization Act requires that post-enactment net capital losses be used before pre-enactment net capital losses.
For federal income tax purposes, the Funds listed below have capital loss carryovers as of October 31, 2012, which are available to offset future capital gains, if any, realized through the fiscal year listed:
No Expiration Date | |||||
Fund | 2016 | 2017 | 2018 | Short Term | Long Term |
| Conservative Allocation | $ 269,352 | $ 1,619,779 | $ – | $ – | $ – |
| Moderate Allocation | 2,653,911 | 6,462,247 | 3,257,526 | – | – |
| Aggressive Allocation | 578,550 | 2,049,055 | 2,346,155 | – | – |
| Cash Reserves | – | – | 5 | 1 | – |
| Bond | – | 175,131 | – | – | – |
| High Income | – | 298,070 | – | – | – |
| Diversified Income | – | 9,384,360 | – | – | – |
| Large Cap Value | – | 15,499,010 | – | – | – |
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MEMBERS Mutual Funds | October 31, 2012
Notes to Financial Statements
No Expiration Date | |||||
Fund | 2016 | 2017 | 2018 | Short Term | Long Term |
| Large Cap Growth | $ – | $3,049,082 | $ – | $ – | $ – |
| Mid Cap | 4,978,776 | 6,804,093 | – | – | – |
| Small Cap | 2,703,576 | – | – | – | – |
| International Stock | – | 13,268,536 | 1,381,274 | – | – |
Included in the net capital loss carryovers for Mid Cap Fund and Small Cap Fund is $4,978,776 and $2,703,576, respectively, of capital loss carryovers subject to certain limitations upon availability, to offset future gains, if any, as the successor of a merger.
Certain ordinary losses incurred after December 31 and within the taxable year are deemed to arise on the first day of the Funds’ next taxable year, if the Funds so elect. For the year ended October 31, 2012, the following Funds elected to defer late-year ordinary losses:
Fund | Late- Year Ordinary Losses |
| Mid-Cap | $291,051 |
For the year-ended October 31, 2012, capital losses utilized for each Fund were as follows:
Fund | Amount Utilized | Fund | Amount Utilized | |
| Conservative Allocation | $ 341,567 | Diversified Income | $1,286,537 | |
| Moderate Allocation | 765,674 | Large Cap Value | 5,383,838 | |
| Aggressive Allocation | 554,615 | Large Cap Growth | 2,940,969 | |
| Cash Reserves | – | Mid Cap | 2,115,561 | |
| Bond | 827,207 | Small Cap | 675,894 | |
| High Income | 2,105,296 | International Stock | 3,375,822 |
At October 31, 2012, the aggregate gross unrealized appreciation/depreciation and net unrealized appreciation (depreciation) for all securities, excluding options, as computed on a federal income tax basis for each Fund were as follows:
Fund | Appreciation | Depreciation | Net |
| Conservative Allocation | $ 3,091,451 | $ 23,837 | $ 3,067,614 |
| Moderate Allocation | 10,031,485 | 177,495 | 9,853,990 |
| Aggressive Allocation | 4,269,748 | 50,272 | 4,219,476 |
| Bond | 13,531,618 | 525,566 | 13,006,052 |
| High Income | 4,538,400 | 70,735 | 4,467,665 |
| Diversified Income | 13,011,748 | 711,978 | 12,299,770 |
| Equity Income | 1,941,301 | 6,123,247 | (4,181,946) |
| Large Cap Value | 24,205,219 | 1,329,857 | 22,875,362 |
| Large Cap Growth | 20,292,055 | 2,724,965 | 17,567,090 |
| Mid Cap | 24,679,218 | 814,994 | 23,864,224 |
| Small Cap | 5,672,968 | 217,569 | 5,455,399 |
| International Stock | 7,484,770 | 606,701 | 6,878,069 |
The differences between cost amounts for book purposes and tax purposes are primarily due to the tax deferral of wash sales.
Reclassification Adjustments: Paid-in capital, undistributed net investment income, and accumulated net realized gain (loss) have been adjusted in the Statements of Assets and Liabilities for permanent book-tax differences for all Funds.
Differences primarily relate to the tax treatment of net operating losses, paydown gains and losses, foreign currency gains and losses, and distributions from real estate investment trusts and passive foreign investment companies.
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MEMBERS Mutual Funds | October 31, 2012
Notes to Financial Statements
To the extent these book-tax differences are permanent in nature, such amounts are reclassified at the end of the fiscal year among paid-in capital in excess of par value, undistributed net investment income (loss) and undistributed net realized gain (loss) on investments and foreign currency translations. Accordingly, at October 31, 2012 reclassifications were recorded as follows:
Fund | Paid-in Capital | Undistributed Net Investment Income (Loss) | Accumulated Net Realized Gain (Loss) |
| Conservative Allocation | $ – | $301,355 | $ (301,355) |
| Moderate Allocation | 1 | 529,738 | (529,739) |
| Aggressive Allocation | – | 184,384 | (184,384) |
| Cash Reserves | – | – | – |
| Bond | 2,336,887 | (23,748) | (2,313,139) |
| High Income | – | 322,530 | (322,530) |
| Diversified Income | – | (4,051) | 4,051 |
| Equity Income | – | – | – |
| Large Cap Value | – | 125 | (125) |
| Large Cap Growth | – | 958 | (958) |
| Mid Cap | (1) | – | 1 |
| Small Cap | (402) | (15,848) | 16,250 |
| International Stock | (4) | (43,617) | 43,621 |
10. CONCENTRATION OF RISK
Investing in certain financial instruments, including forward foreign currency contracts, involves certain risks. Risks associated with these instruments include potential for an illiquid secondary market for the instruments or inability of counterparties to perform under the terms of the contracts, changes in the value of foreign currency relative to the U.S. dollar and financial statements’ volatility resulting from an imperfect correlation between the movements in the prices of the instruments and the prices of the underlying securities and interest rates being hedged. The International Stock Fund enters into these contracts primarily to protect the Fund from adverse currency movements.
Investing in foreign securities involves certain risks not necessarily found in U.S. markets. These include risks associated with adverse changes in economic, political, regulatory and other conditions, changes in currency exchange rates, exchange control regulations, expropriation of assets or nationalization, imposition of withholding taxes on dividend or interest payments or capital gains, and possible difficulty in obtaining and enforcing judgments against foreign entities. Further, issuers of foreign securities are subject to different, and often less comprehensive, accounting, reporting and disclosure requirements than domestic issuers.
The High Income Fund invests in securities offering high current income which generally will include bonds in the below investment grade categories of recognized rating agencies (so-called "junk bonds"). These securities generally involve more credit risk than securities in the higher rating categories. In addition, the trading market for high yield securities may be relatively less liquid than the market for higher-rated securities. The Fund generally invests at least 80% of its assets in high yield securities.
The Equity Income Fund invests in options on securities. As the writer of a covered call option, the Fund forgoes, during the option’s life, the opportunity to profit from increases in the market value of the security covering the call option above the sum of the premium and the strike price of the call but has retained the risk of loss should the price of the underlying security decline. The writer of an option has no control over the time when it may be required to fulfill its obligation as writer of the option. Once an option writer has received an exercise notice, it cannot effect a closing purchase transaction in order to terminate its obligation under the option and must deliver the underlying security at the exercise price.
The Allocation Funds are fund of funds, meaning that each invests primarily in the shares of other registered investment companies (the "underlying Funds"), including ETFs. Thus, each Fund’s investment performance and its ability to achieve its
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MEMBERS Mutual Funds | October 31, 2012
Notes to Financial Statements
investment goal are directly related to the performance of the underlying funds in which it invests; and the underlying fund’s performance, in turn, depends on the particular securities in which that underlying fund invests and the expenses of that fund. Accordingly, the Allocation Funds are subject to the risks of the underlying funds in direct proportion to the allocation of their respective assets among the underlying funds.
Additionally, the Allocation Funds are subject to asset allocation risk and manager risk. Manager risk (i.e., fund selection risk) is the risk that the fund(s) selected to fulfill a particular asset class underperforms their peer. Asset allocation risk is the risk that the allocation of the Fund’s assets among the various asset classes and market segments will cause the Fund to underperform other funds with a similar investment objective.
While investments in stocks and bonds have been keystones in wealth building and management for a hundred years, at times these investments have produced surprises for even the savviest Investors. Those who enjoyed growth and income of their investments were rewarded for the risks they took by investing in the markets. When the rare calamity strikes, the word "security" itself seems a misnomer. Although the Investment Adviser seeks to appropriately address and manage the risks identified and disclosed to you in connection with the management of the securities in the Funds, you should understand that the very nature of the securities markets includes the possibility that there may be additional risks of which we are not aware. We certainly seek to identify all applicable risks and then appropriately address them, take appropriate action to reasonably manage them and, of course, to make you aware of them so you can determine if they exceed your risk tolerance. Nevertheless, the often volatile nature of the securities markets and the global economy in which we work suggests that the risk of the unknown is something you must consider in connection with your investments in securities. Unforeseen events have the potential to upset the best laid plans of man, and could, under certain circumstances produce a material loss of the value of some or all of the securities we manage for you in the Funds.
11. CAPITAL SHARES AND AFFILIATED OWNERSHIP
The Allocation Funds invest in underlying funds, certain of which may be deemed to be under common control because of the same or affiliated investment adviser and membership in a common family of investment companies (the "affiliated underlying funds’’). A summary of the transactions with each affiliated underlying fund during the year ended October 31, 2012 follows:
Fund/Underlying Fund | Balance of Shares Held at 10/31/11 | Gross Additions | Gross Sales | Balance of Shares Held at 10/31/12 | Value at 10/31/12 | Realized Gain/ (Loss ) | Distributions Received1 |
| Conservative Allocation Fund | |||||||
| Madison Investment Grade Corporate Bond Fund | – | 322,000 | – | 322,000 | $ 3,793,164 | $ – | $ 66,796 |
| Madison Mosaic Disciplined Equity Fund | 211,655 | 66,263 | 30,253 | 247,665 | 3,484,649 | 31,563 | 41,036 |
| Madison Mosaic Institutional Bond Fund | 379,553 | 23,709 | – | 403,262 | 4,552,828 | – | 51,643 |
| MEMBERS Bond Fund Class Y | 798,349 | 15,862 | 295,413 | 518,798 | 5,520,006 | 245,266 | 197,090 |
| MEMBERS Equity Income Fund Class Y | 182,281 | 165,305 | 58,449 | 289,137 | 2,839,321 | (31,457) | 253,199 |
| MEMBERS High Income Fund Class Y | 601,148 | 43,075 | 109,224 | 534,999 | 3,798,496 | 23,857 | 278,928 |
| MEMBERS International Stock Fund Class Y | 99,855 | 55,150 | 10,604 | 144,401 | 1,562,415 | (11,983) | 21,037 |
| MEMBERS Large Cap Growth Fund Class Y | 88,132 | 72,829 | 35,509 | 125,452 | 2,174,086 | 100,160 | 1,998 |
| MEMBERS Large Cap Value Fund Class Y | 206,138 | 87,424 | 45,155 | 248,407 | 3,480,187 | 100,275 | 49,481 |
| Totals | $31,205,152 | $457,681 | $961,208 |
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MEMBERS Mutual Funds | October 31, 2012
Notes to Financial Statements
Fund/Underlying Fund | Balance of Shares Held at 10/31/11 | Gross Additions | Gross Sales | Balance of Shares Held at 10/31/12 | Value at 10/31/12 | Realized Gain/ (Loss ) | Distributions Received1 |
| Moderate Allocation Fund | |||||||
| Madison Mosaic Disciplined Equity Fund | 770,509 | 42,887 | 83,437 | 729,959 | $10,270,522 | $ 72,923 | $ 151,595 |
| Madison Mosaic Institutional Bond Fund | 511,896 | – | 57,573 | 454,323 | 5,129,305 | 7,042 | 67,219 |
| MEMBERS Bond Fund Class Y | 1,163,114 | 29,799 | 281,931 | 910,982 | 9,692,844 | 195,976 | 312,920 |
| MEMBERS Equity Income Fund Class Y | 359,282 | 104,372 | 59,892 | 403,762 | 3,964,943 | 11,634 | 366,151 |
| MEMBERS High Income Fund Class Y | 1,390,001 | 63,559 | 553,576 | 899,984 | 6,389,885 | (12,188) | 592,150 |
| MEMBERS International Stock Fund Class Y | 595,442 | – | 401,030 | 194,412 | 2,103,540 | (70,654) | 137,886 |
| MEMBERS Large Cap Growth Fund Class Y | 529,369 | 71,225 | 90,145 | 510,449 | 8,846,090 | 130,718 | 10,230 |
| MEMBERS Large Cap Value Fund Class Y | 779,150 | 79,142 | 112,965 | 745,327 | 10,442,033 | (216,492) | 182,878 |
MEMBERS Mid Cap Fund Class Y2 | 410,200 | 346,933 | 5,026 | 752,107 | 5,783,699 | 5,321 | – |
| MEMBERS Small Cap Fund Class Y | 230,416 | – | 34,832 | 195,584 | 2,311,804 | 110,774 | 81,362 |
| NorthRoad International Fund Class Y | – | 421,590 | – | 421,590 | 4,207,469 | – | – |
| Totals | $69,142,134 | $235,054 | $1,902,391 |
| Aggressive Allocation Fund | |||||||
| Madison Mosaic Disciplined Equity Fund | 421,199 | 11,372 | 50,082 | 382,489 | $ 5,381,623 | $ 50,836 | $ 85,286 |
| MEMBERS Equity Income Fund Class Y | 62,364 | 60,929 | 46,033 | 77,260 | 758,695 | (2,123) | 85,135 |
| MEMBERS High Income Fund Class Y | 422,809 | 75,781 | 243,886 | 254,704 | 1,808,402 | 195,744 | 184,684 |
| MEMBERS International Stock Fund Class Y | 244,736 | – | 157,351 | 87,385 | 945,507 | 5,993 | 57,687 |
| MEMBERS Large Cap Growth Fund Class Y | 234,112 | 71,969 | 94,940 | 211,141 | 3,659,074 | 207,214 | 5,128 |
| MEMBERS Large Cap Value Fund Class Y | 386,531 | 11,525 | 32,058 | 365,998 | 5,127,628 | (57,905) | 84,996 |
MEMBERS Mid Cap Fund Class Y2 | 256,739 | 247,901 | 17,348 | 487,292 | 3,747,276 | 11,860 | – |
| MEMBERS Small Cap Fund Class Y | 112,880 | – | 38,067 | 74,813 | 884,287 | 116,280 | 39,859 |
| NorthRoad International Fund Class Y | – | 171,278 | – | 171,278 | 1,709,356 | – | – |
| Totals | $24,021,848 | $527,899 | $ 542,775 | ||||
1 Distributions received include distributions from net investment income and from capital gains from the underlying funds. 2 Non-income producing. | |||||||
12.Subsequent Events
In November 2012, the Boards of Trustees of MEMBERS Mutual Funds and the Madison Mosaic Funds approved a proposal to reorganize each Madison Mosaic Fund into a corresponding MEMBERS Mutual Fund. The reorganizations require the approval of the shareholders of the affected Madison Mosaic Funds, and will result in the formation of nine new series of shares for MEMBERS Mutual Funds. The mergers are subject to customary approvals and closing conditions. If approved by shareholders, it is anticipated that the reorganizations will be effective at the close of business on April 19, 2013. As part of the reorganizations, MEMBERS Mutual Funds intends to change its name to "Madison Funds" in February 2013.
The Trust is aware of litigation relating to attempts by certain fixed income security-holders of Lyondell Chemical Company (LYO) to retrieve proceeds from the sale by equity security-holders of LYO shares occurring pursuant to its acquisition by merger in December 2007. The Midcap Fund received proceeds of approximately $389,000 from the sale of its LYO equity securities in December 2007. The Trust has not been named as a defendant in this litigation as of the date of this report.
Management has evaluated the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the Statements of Assets and Liabilities. There were no additional events or transactions that impacted the amounts or disclosures in the Funds’ financial statements.
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MEMBERS Mutual Funds | October 31, 2012
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees of MEMBERS Mutual Funds:
We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of MEMBERS Mutual Funds, comprising the Conservative Allocation Fund, Moderate Allocation Fund, Aggressive Allocation Fund, Cash Reserves Fund, Bond Fund, High Income Fund, Diversified Income Fund, Equity Income Fund, Large Cap Value Fund, Large Cap Growth Fund, Mid Cap Fund, Small Cap Fund, and International Stock Fund (collectively, the "Funds") as of October 31, 2012, and the related statements of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2012, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Funds as of October 31, 2012, the results of their operations for the year then ended, and the changes in their net assets and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
Milwaukee, WI
December 20, 2012
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Other Information
BOARD APPROVAL OF ADVISORY AND SUBADVISORY CONTRACTS
The Board reviewed a variety of matters in connection with the Trust’s investment advisory contract with the Adviser and the applicable subadvisers. The following description of the Board’s considerations summarizes the process, including matters discussed by the Board as part of its routine quarterly review of Trust and Adviser operations and performance:
With regard to the nature, extent and quality of the services to be provided by the Adviser and each subadviser, the Board reviewed the biographies and tenure of the personnel involved in Trust management and the experience of the Adviser (and applicable subadviser) and its affiliates as investment manager to other investment companies with similar investment strategies or to individual clients or institutions with similar investment strategies. They recognized the wide array of investment professionals employed by the respective firm or firms. Representatives of the Adviser and each subadviser discussed their firms’ ongoing investment philosophies and strategies intended to provide performance consistent with each Trust portfolio’s investment objectives under various market scenarios. The Trustees also noted their familiarity with the Adviser and its affiliates due to the Advisers’ history of providing advisory services to its proprietary investment company clients.
The Board also discussed the quality of services provided to the Trust by its applicable transfer agent, fund administrator and custodian as well as the various administrative services provided directly by the Adviser. Such services included arranging for third party service providers to provide all necessary administration as well as supervising any subadvisers to Trust portfolios.
With regard to the investment performance of the Trust and the investment adviser, the Board reviewed current performance information provided in written materials. They discussed the reasons for both outperformance and underperformance compared with peer groups and applicable indices and benchmarks. They reviewed both long-term and short-term performance and considered the effect on long-term performance that may have been attributable to any previous investment advisers to any Trust portfolio. They also considered whether any relative underperformance was appropriate to the Adviser’s conservative investment philosophy. The Board performed this review in connection with the Adviser and each subadviser that manages a subadvised Trust portfolio.
The Board conducted a comprehensive discussion of performance and market conditions with representatives of the Adviser and each subadviser. Representatives of the Adviser and each subadviser discussed with the Board the methodology for arriving at peer groups and indices used for performance comparisons.
With regard to the costs of the services to be provided and the profits to be realized by the investment adviser and its affiliates from the relationship with the Trust, the Board reviewed the expense ratios for a variety of other funds in each Trust portfolio’s peer group with similar investment objectives. Again, the Board reviewed these matters in connection with the Adviser and each subadviser that manages a subadvised Trust portfolio.
The Board noted that the Adviser or its affiliates, and, as applicable, each subaviser, provided investment management services to other investment company and/or non-investment company clients and considered the fees charged by the Adviser (and respective subadviser) to such funds and clients for purposes of determining whether the given advisory fee was disproportionately large under the so-called Gartenberg standard traditionally used by investment company boards in connection with contract renewal considerations. The Board took those fees into account and considered the differences in services and time required by the various types of funds and clients to which the Adviser (or subadviser, if applicable) provided services. The Board recognized that significant differences may exist between the services provided to one type of fund or client and those provided to others, such as those resulting from a greater frequency of shareholder redemptions in a mutual fund and the higher turnover of mutual fund assets. The Board gave such comparisons the weight that they merit in light of the similarities and differences between the services that the various Trust portfolios require and were wary of "inapt comparisons." They considered that, if the services rendered by the Adviser (or subadviser, if applicable) to one type of fund
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Other Information
or client differed significantly from others, then the comparison should not be used. In the case of non-investment company clients for which the Adviser (or subadviser, if applicable) may act as either investment adviser or subadviser, the Board noted that the fee may be lower than the fee charged to the Trust. The Board noted too the various administrative, operational, compliance, legal and corporate communication services required to be handled by the Adviser (or subadviser, if applicable) which are performed for investment company clients but are not performed for other institutional clients.
The Trustees reviewed each Trust portfolio’s fee structure based on total fund expense ratio as well as by comparing advisory fees to other advisory fees. The Board noted the simple expense structure maintained by the Trust: an advisory fee and a capped administrative "services" expense. The Board noted the total expense ratios paid by other funds with similar investment objectives, recognizing that such a comparison, while not dispositive, was an important consideration.
The Trustees sought to ensure that fees paid by the Trust were appropriate. The Board reviewed materials demonstrating that although the Adviser is compensated for a variety of the administrative services it provides or arranges to provide to the Trust pursuant to its administrative services agreement, such compensation does not always cover all costs due to the cap on administrative expenses. Administrative, operational, regulatory and compliance fees and costs in excess of the Services Agreement fees are paid by the Adviser from the investment advisory fees earned. In this regard, the Trustees noted that examination of each Trust portfolio’s total expense ratio compared to those of other investment companies was more meaningful than a simple comparison of basic "investment management only" fee schedules.
The Board recognized that to the extent a Trust portfolio invests in other mutual funds also managed by the Adviser (or its affiliates), the Adviser (or an affiliate) receives investment advisory fees from both the Trust portfolio and the underlying mutual fund. The Board was satisfied in this regard that the Adviser (or an affiliate) provides separate services to each respective Trust’s "fund of funds" portfolios and the underlying mutual funds in which each such fund invests in exchange for the fees received from them.
In reviewing costs and profits, the Board noted that for some smaller portfolios, the salaries of all portfolio management personnel, trading desk personnel, corporate accounting personnel and employees of the Adviser who serve as Trust officers, as well as facility costs (rent), could not be supported by fees received from such portfolios alone. However, the Board recognized that the Trust is profitable to the Adviser because such salaries and fixed costs are already paid in whole or in part from revenue generated by management of other client assets managed by the Adviser. The Trustees noted that total assets managed by the Adviser and its affiliates approximated $16 billion at the time of the meeting. As a result, although the fees paid by each Trust portfolio at its present size might not be sufficient to profitably support a stand-alone fund, the Trust is reasonably profitable to the Adviser as part of its larger, diversified organization. In sum, the Trustees recognized that the Trust is important to the Adviser and is managed with the attention given to the Adviser’s other clients.
With regard to the extent to which economies of scale would be realized as each Trust portfolio grows, the Trustees recognized that at their current sizes, it was premature to discuss any economies of scale not already factored into existing advisory and services agreements. In addition, the Trustees recognized that the Adviser was currently waiving fees with regard to the Cash Reserves Fund.
Counsel to the Independent Trustees confirmed that the Trusts’ Independent Trustees met and reviewed the written contract renewal materials provided by the Adviser. He noted that the Independent Trustees had considered such materials in light of the aforementioned Gartenberg standards as well as criteria either set forth or discussed in the recent Supreme Court decision in Jones v. Harris regarding the investment company contract renewal process under Section 15(c) of the Investment Company Act of 1940, as amended. The Independent Trustees made a variety of additional inquiries regarding such written materials to the Adviser and the subadvisers and representatives of the Adviser and subadvisers, respectively, discussed each matter raised.
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Other Information
After further discussion, analysis and review of the totality of the information presented, including the information set forth above and the other information considered by the Board of Trustees, the Trustees, including the Independent Trustees, concluded that the Trust’s advisory fees (including applicable subadvisory fees) are fair and reasonable for each respective portfolio and that renewal of its respective Advisory, Subadvisory and Services Agreements are in the best interests of each respective Trust portfolio and its shareholders.
In the course of their review of the contract renewal materials, the Board also reviewed and discussed with counsel the "Rule 12b-1" plans adopted by the Trust. Finally, the Board also reviewed the Trust’s distribution agreements and the information provided in the written materials regarding the distributor as well as applicable Codes of Ethics.
FUND EXPENSES PAID BY SHAREHOLDERS
As a shareholder of the Funds, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, and redemption fees; and (2) ongoing costs, including management fees; distribution and/or service (12b–1) fees; and other fund expenses. The examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples below are based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period ended October 31, 2012. Expenses paid during the period in the tables below are equal to the Fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one–half fiscal year period).
Actual Expenses
The table below provides information about actual account values using actual expenses and actual returns for the funds. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table for the fund you own under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
CLASS A | CLASS B | |||||||
Fund | Beginning Account Value | Ending Account Value | Annual Expense Ratio | Expenses Paid During Period | Ending Account Value | Annual Expense Ratio | Expenses Paid During Period | |
| Conservative Allocation | $1,000 | $1,031.20 | 0.70% | $3.57 | $1,026.40 | 1.45% | $7.39 | |
| Moderate Allocation | 1,000 | 1,025.80 | 0.70% | 3.56 | 1,021.80 | 1.45% | 7.37 | |
| Aggressive Allocation | 1,000 | 1,022.50 | 0.70% | 3.56 | 1,018.50 | 1.45% | 7.36 | |
| Cash Reserves | 1,000 | 1,000.00 | 0.12% | 0.60 | 1,000.00 | 0.12% | 0.60 | |
| Bond | 1,000 | 1,014.10 | 0.90% | 4.56 | 1,010.90 | 1.65% | 8.34 | |
| High Income | 1,000 | 1,035.60 | 1.00% | 5.12 | 1,031.90 | 1.75% | 8.94 | |
| Diversified Income | 1,000 | 1,028.00 | 1.10% | 5.61 | 1,024.70 | 1.85% | 9.42 | |
| Equity Income | 1,000 | 994.74 | 1.24% | 6.09 | N/A | N/A | N/A | |
| Large Cap Value | 1,000 | 1,027.90 | 1.16% | 5.91 | 1,023.80 | 1.91% | 9.72 | |
| Large Cap Growth | 1,000 | 985.70 | 1.20% | 5.99 | 982.40 | 1.95% | 9.72 | |
| Mid Cap Value | 1,000 | 1,016.10 | 1.40% | 7.09 | 1,011.80 | 2.15% | 10.87 | |
| Small Cap | 1,000 | 1,014.60 | 1.50% | 7.60 | 1,009.70 | 2.25% | 11.37 | |
| International Stock | 1,000 | 1,030.50 | 1.60% | 8.17 | 1,026.20 | 2.35% | 11.97 | |
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CLASS C | ||||
Fund | Beginning Account Value | Ending Account Value | Annual Expense Ratio | Expenses Paid During Period |
| Conservative Allocation | $1,000 | $1,027.40 | 1.45% | $7.39 |
| Moderate Allocation | 1,000 | 1,022.80 | 1.45% | 7.37 |
| Aggressive Allocation | 1,000 | 1,018.50 | 1.45% | 7.36 |
Diversified Income1 | 1,000 | 1009.00 | 1.81% | 4.62 |
Equity Income1 | 1,000 | 1,028.80 | 1.96% | 5.00 |
CLASS Y | ||||
Fund | Beginning Account Value | Ending Account Value | Annual Expense Ratio | Expenses Paid During Period |
| Bond | $1,000 | $1,015.20 | 0.65% | $3.29 |
| High Income | 1,000 | 1,036.90 | 0.75% | 3.84 |
| Equity Income | 1,000 | 994.75 | 1.00% | 4.91 |
| Large Cap Value | 1,000 | 1,029.40 | 0.91% | 4.64 |
| Large Cap Growth | 1,000 | 987.50 | 0.95% | 4.75 |
| Mid Cap | 1,000 | 1,017.20 | 1.15% | 5.83 |
| Small Cap | 1,000 | 1,015.50 | 1.25% | 6.33 |
| International Stock | 1,000 | 1,031.50 | 1.35% | 6.89 |
CLASS R6 | ||||
Fund | Beginning Account Value | Ending Account Value | Annual Expense Ratio | Expenses Paid During Period |
Equity Income1 | $1,000 | $1,030.68 | 0.86% | $2.20 |
1Commenced investment operations on July 31, 2012. | ||||
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratios and an assumed rate of return of 5% per year before expenses, which are not the Funds’ actual returns. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare the 5% hypothetical example of the funds you own with the 5% hypothetical examples that appear in the shareholder reports of other similar funds.
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CLASS A | CLASS B | |||||||
Fund | Beginning Account Value | Ending Account Value | Annual Expense Ratio | Expenses Paid During Period | Ending Account Value | Annual Expense Ratio | Expenses Paid During Period | |
| Conservative Allocation | $1,000 | $1,021.62 | 0.70% | $3.56 | $1,017.85 | 1.45% | $7.35 | |
| Moderate Allocation | 1,000 | 1,021.62 | 0.70% | 3.56 | 1,017.85 | 1.45% | 7.35 | |
| Aggressive Allocation | 1,000 | 1,021.62 | 0.70% | 3.56 | 1,017.85 | 1.45% | 7.35 | |
| Cash Reserves | 1,000 | 1,024.53 | 0.12% | 0.61 | 1,024.53 | 0.12% | 0.61 | |
| Bond | 1,000 | 1,020.61 | 0.90% | 4.57 | 1,016.84 | 1.65% | 8.36 | |
| High Income | 1,000 | 1,020.11 | 1.00% | 5.08 | 1,016.34 | 1.75% | 8.87 | |
| Diversified Income | 1,000 | 1,019.61 | 1.10% | 5.58 | 1,015.84 | 1.85% | 9.37 | |
| Equity Income | 1,000 | 1,025.40 | 1.24% | 6.31 | N/A | N/A | N/A | |
| Large Cap Value | 1,000 | 1,019.30 | 1.16% | 5.89 | 1,015.53 | 1.91% | 9.68 | |
| Large Cap Growth | 1,000 | 1,019.10 | 1.20% | 6.09 | 1,015.33 | 1.95% | 9.88 | |
| Mid Cap | 1,000 | 1,018.10 | 1.40% | 7.10 | 1,014.33 | 2.15% | 10.89 | |
| Small Cap | 1,000 | 1,017.60 | 1.50% | 7.61 | 1,013.83 | 2.25% | 11.39 | |
| International Stock | 1,000 | 1,017.09 | 1.60% | 8.11 | 1,013.32 | 2.35% | 11.89 | |
CLASS C | ||||
Fund | Beginning Account Value | Ending Account Value | Annual Expense Ratio | Expenses Paid During Period |
| Conservative Allocation | $1,000 | $1,017.85 | 1.45% | $7.35 |
| Moderate Allocation | 1,000 | 1,017.85 | 1.45% | 7.35 |
| Aggressive Allocation | 1,000 | 1,017.85 | 1.45% | 7.35 |
Diversified Income1 | 1,000 | 1,008.11 | 1.81% | 4.62 |
Equity Income1 | 1,000 | 1,012.62 | 1.96% | 4.95 |
CLASS Y | ||||
Fund | Beginning Account Value | Ending Account Value | Annual Expense Ratio | Expenses Paid During Period |
| Bond | $1,000 | $1,021.87 | 0.65% | $3.30 |
| High Income | 1,000 | 1,021.37 | 0.75% | 3.81 |
| Equity Income | 1,000 | 1,025.40 | 1.00% | 5.09 |
| Large Cap Value | 1,000 | 1,020.56 | 0.91% | 4.62 |
| Large Cap Growth | 1,000 | 1,020.36 | 0.95% | 4.82 |
| Mid Cap | 1,000 | 1,019.36 | 1.15% | 5.84 |
| Small Cap | 1,000 | 1,018.85 | 1.25% | 6.34 |
| International Stock | 1,000 | 1,018.35 | 1.35% | 6.85 |
CLASS R6 | ||||
Fund | Beginning Account Value | Ending Account Value | Annual Expense Ratio | Expenses Paid During Period |
Equity Income1 | $1,000 | $1,012.62 | 0.86% | $2.17 |
1Commenced investment operations on July 31, 2012. | ||||
Please note that the expenses shown in both tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), or redemption fees. The information provided in the hypothetical example table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
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Other Information
AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULES
The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N–Q. Form N–Q is available to shareholders at no cost by calling 1-800-877-6089 or on the SEC’s website at www.sec.gov. Form N–Q may also be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. More information on the operation of the Public Reference Room may be obtained by calling 1-202-551-8090.
PROXY VOTING POLICIES, PROCEDURES AND RECORDS
A description of the policies and procedures used by the Funds to vote proxies related to portfolio securities is available to shareholders at no cost on the Funds’ website at www.membersfunds.com or by calling 1-800-877-6089. The proxy voting records for the Funds for the most recent twelve-month period ended June 30 are available to shareholders at no cost on the SEC’s website at www.sec.gov.
FORWARD-LOOKING STATEMENT DISCLOSURE
One of our most important responsibilities as investment company managers is to communicate with shareholders in an open and direct manner. Some of our comments in our letters to shareholders are based on current management expectations and are considered "forward-looking statements." Actual future results, however, may prove to be different from our expectations. You can identify forward-looking statements by words such as "estimate," "may," "will," "expect," "believe," "plan" and other similar terms. We cannot promise future returns. Our opinions are a reflection of our best judgment at the time this report is compiled, and we disclaim any obligation to update or alter forward-looking statements as a result of new information, future events, or otherwise.
TAX INFORMATION
Foreign Tax Credits: The International Stock Fund expects to make an election under Internal Revenue Code Section 853 to pass through foreign taxes paid by the Fund to its shareholders. For the year ended October 31, 2012, the total amount of foreign taxes that is expected to pass through to shareholders and foreign source income for information reporting purposes will be $106,196 (all of which represents taxes withheld) and $1,565,760, respectively. Complete information regarding the Fund’s foreign tax credit pass through to shareholders for 2012 will be reported in conjunction with Form 1099-DIV.
Corporate Dividends Received Deduction: Of the dividends paid by the Conservative Allocation, Moderate Allocation, Aggressive Allocation, Diversified Income, Large Cap Value, Large Cap Growth and Small Cap Funds, 8.53%, 11.89%, 29.55%, 77.63%, 100%, 100%, and 100%, respectively, qualify for the corporate dividends received deduction.
Qualified Dividend Income: For the fiscal year ended October 31, 2012, the Conservative Allocation, Moderate Allocation, Aggressive Allocation, Diversified Income, Large Cap Value, Large Cap Growth, Small Cap and the International Stock Funds paid dividend income totaling $134,633, $642,986, $291,286, $1,654,736, $2,316,763, $79,717, $508, and $1,561,157, respectively. The Funds hereby designate the maximum amount of dividends allowable pursuant to the Internal Revenue Code, as qualified dividend income ("QDI") eligible for reduced tax rates (the rates range from 5% to 15% depending upon individual’s tax bracket).Complete information regarding each Fund’s income distributions paid during the calendar year 2012, including the portion, if any, which qualify as QDI, will be reported in conjunction with Form 1099-DIV.
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MEMBERS Mutual Funds’ Trustees and Officers
The address of each trustee and officer is 550 Science Drive, Madison WI 53711, except that Mr. Mason’s address is 8777 N. Gainey Center Drive, #220, Scottsdale, AZ 85258. The Statement of Additional Information, which includes additional information about the trustees and officers, is available at no cost on the Funds’ website at www.membersfunds.com or by calling 1-800-877-6089.
Interested Trustees and Officers
Name and Year of Birth | Position(s) and Length of Time Served | Principal Occupation(s) During Past Five Years | Other Directorships/Trusteeships |
Katherine L. Frank1 1960 | Trustee and President, 2009 - Present | Madison Investment Holdings, Inc. ("MIH") (affiliated investment advisory firm of Madison), Executive Director and Chief Operating Officer, 2010 - Present; Managing Director and Vice President, 1986 - 2010; Madison Asset Management, LLC ("Madison"), Executive Director and Chief Operating Officer, 2010 - Present; Vice President, 2004 - 2010 ; Madison Investment Advisors, LLC ("MIA") (affiliated investment advisory firm of Madison), Executive Director and Chief Operating Officer, 2010 - Present; President, 1996 - 2010; Madison Mosaic Funds (12) (mutual funds), President, 1996 - Present; Madison Strategic Sector Premium Fund (closed end fund), President, 2005 - Present; Madison/Claymore Covered Call and Equity Strategy Fund (closed end fund), Vice President, 2005 - Present; Ultra Series Fund (16) (mutual funds), President, 2009 - Present | Madison Mosaic Funds (all but Equity Trust), 1996 - Present; Madison Strategic Sector Premium Fund, 2005 - Present; Ultra Series Fund (16), 2009 - Present |
Frank E. Burgess 1942 | Vice President, 2009 - Present | MIH, Founder and Former Executive Director and President, 2010 - 4/2012; Managing Director and President, 1973 - 2010 ; Madison, Former Executive Director and President, 2010 - 4/2012; President, 2004 - 2010; MIA, Former Executive Director and President, 2010 - 4/2012; Madison Mosaic Funds (12), Vice President, 1996 - Present; Madison Strategic Sector Premium Fund, Vice President, 2005 - Present; Ultra Series Fund (16), Vice President, 2009 - Present | N/A |
Jay R. Sekelsky 1959 | Vice President, 2009 - Present | MIH, Executive Director and Chief Investment Officer, 2010 - Present; Managing Director and Vice President, 1990 - 2010; Madison, Executive Director and Chief Investment Officer, 2010 - Present; MIA, Executive Director and Chief Investment Officer, 2010 - Present; Vice President, 1996 - 2010; Madison Mosaic Funds (12), Vice President, 1996 - Present; Madison Strategic Sector Premium Fund, Vice President, 2005 - Present; Madison/Claymore Covered Call and Equity Strategy Fund, Vice President, 2005 - Present; Ultra Series Fund (16), Vice President, 2009 - Present | N/A |
Paul Lefurgey 1964 | Vice President, 2009 - Present | MIH, Managing Director and Head of Fixed Income Investments, 2005 - Present; Madison and MIA, Managing Director and Head of Fixed Income Investments, 2010 - Present; MEMBERS Capital Advisors, Inc. ("MCA") (investment advisory firm), Madison, WI, Vice President, 2003 - 2005; Madison Mosaic Funds (12), Vice President, 2009 - Present; Madison Strategic Sector Premium Fund, Vice President, 2010 - Present; Ultra Series Fund (16), Vice President, 2009 - Present | N/A |
Greg D. Hoppe 1969 | Treasurer, 2009 - Present | MIH and MIA, Vice President, 1999 - Present; Madison, Vice President, 2009 - Present ; Madison Mosaic Funds (12), Treasurer, 2009 - Present; Chief Financial Officer, 1999 - 2009; Madison Strategic Sector Premium Fund, Treasurer, 2009 - Present; Chief Financial Officer, 2005 - 2009; Madison/Claymore Covered Call and Equity Strategy Fund, Vice President, 2008 - Present; Ultra Series Fund (16), Treasurer, 2009 - Present | N/A |
1 "Interested person" as defined in the 1940 Act. Considered an interested Trustee because of the position held with the investment adviser of the Trust.
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MEMBERS Mutual Funds’ Trustees and Officers
Name and Year of Birth | Position(s) and Length of Time Served | Principal Occupation(s) During Past Five Years | Other Directorships/Trusteeships |
Holly S. Baggot 1960 | Secretary, 1999 - Present; Assistant Treasurer, 1999 - 2007; 2009 - Present Treasurer, 2008 - 2009 | MIH and MIA, Vice President, 2010 - Present; Madison, Vice President, 2009 - Present; Mosaic Funds Distributor, LLC ("MFD") (an affiliated brokerage firm of Madison), Vice President, 2012 - Present ; MCA, Director-Mutual Funds, 2008-2009; Director-Mutual Fund Operations, 2006-2008; Operations Officer-Mutual Funds, 2005-2006; Senior Manager-Product & Fund Operations, 2001-2005; Madison Mosaic Funds (12), Secretary and Assistant Treasurer, 2009 - Present; Madison Strategic Sector Premium Fund, Secretary and Assistant Treasurer, 2010 - Present; Ultra Series Fund (16), Secretary, 1999-Present and Treasurer, 2008-2009 and Assistant Treasurer, 1997-2007 and 2009-Present | N/A |
W. Richard Mason 1960 | Chief Compliance Officer, Corporate Counsel and Assistant Secretary, 2009 - Present | MIH, MIA, Madison and Madison Scottsdale, LC (an affiliated investment advisory firm of Madison), Chief Compliance Officer and Corporate Counsel, 2009 - Present; General Counsel and Chief Compliance Officer, 1996 - 2009 ; MFD, Principal, 1998 - Present; Concord Asset Management, LLC ("Concord") (an affiliated investment advisory firm of Madison), General Counsel, 1996 - 2009; NorthRoad Capital Management LLC ("NorthRoad") (an affiliated investment advisory firm of Madison), Chief Compliance Officer and Corporate Counsel, 2011 - Present ; Madison Mosaic Funds (12), Chief Compliance Officer, Corporate Counsel and Assistant Secretary, 2009 - Present; Secretary, General Counsel and Chief Compliance Officer, 1992 - 2009; Madison Strategic Sector Premium Fund, Chief Compliance Officer, Corporate Counsel and Assistant Secretary, 2009 - Present; Secretary, General Counsel and Chief Compliance Officer, 2005 - 2009; Ultra Series Fund (16), Chief Compliance Officer, Corporate Counsel and Assistant Secretary, 2009 - Present | N/A |
Pamela M. Krill 1966 | General Counsel, Chief Legal Officer and Assistant Secretary, 2009 - Present | MIH, MIA, Madison, Madison Scottsdale, LC, MFD, and Concord, General Counsel and Chief Legal Officer, 2009 - Present; NorthRoad, General Counsel & Chief Legal Officer, 2011 - Present ; Madison Mosaic Funds (12), General Counsel, Chief Legal Officer and Assistant Secretary, 2009 - Present; Madison Strategic Sector Premium Fund, General Counsel, Chief Legal Officer and Assistant Secretary, 2010 - Present; Ultra Series Fund (16), General Counsel, Chief Legal Officer and Assistant Secretary, 2009 - Present; CUNA Mutual Insurance Society (insurance company with affiliated investment advisory, brokerage and mutual fund operations), Madison, WI, Managing Associate General Counsel-Securities & Investments, 2007 - 2009; Godfrey & Kahn, S.C. (law firm), Madison and Milwaukee, WI, Shareholder, Securities Practice Group, 1994-2007 | N/A |
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MEMBERS Mutual Funds’ Trustees and Officers
Independent Trustees
Name and Year of Birth | Position(s) and Length of Time Served1 | Principal Occupation(s) During Past Five Years | Portfolios Overseen in Fund Complex2 | Other Directorships/Trusteeships |
Philip E. Blake 1944 | Trustee, 2009 - Present | Retired Investor; Lee Enterprises, Inc (news and advertising publisher), Madison, WI, Vice President, 1998 - 2001; Madison Newspapers, Inc., Madison, WI, President and Chief Executive Officer, 1993 - 2000 | 42 | Edgewood College, 2003 - Present; Chairman of the Board, 2010 - Present ; Nerites Corporation (technology company), 2004 - Present ; Madison Mosaic Funds (12), 2001- Present; Madison Strategic Sector Premium Fund, 2005 - Present; Ultra Series Fund (16), 2009 - Present |
James R Imhoff, Jr. 1944 | Trustee, 2009 - Present | First Weber Group (real estate brokers), Madison, WI, Chief Executive Officer, 1996 - Present | 42 | Park Bank, 1978 - Present; Madison Mosaic Funds (12), 1996 - Present; Madison Strategic Sector Premium Fund, 2005 - Present; Madison/Claymore Covered Call and Equity Strategy Fund, 2005 - Present; Ultra Series Fund (16), 2009 - Present |
Steven P. Riege 1954 | Trustee, 2005 - Present | Ovation Leadership (management consulting), Milwaukee, WI, Owner/President, 2001 - Present; Robert W. Baird & Company (financial services), Milwaukee, WI, Senior Vice President-Marketing and Vice President-Human Resources, 1986 - 2001 | 29 | Ultra Series Fund (16), 2005 - Present |
Richard E. Struthers 1952 | Trustee, 2004 - Present | Clearwater Capital Management (investment advisory firm), Minneapolis, MN, Chair and Chief Executive Officer, 1998 - Present; Park Nicollet Health Services, Minneapolis, MN, Chairman, Finance and Investment Committee, 2006 - Present; IAI Mutual Funds, Minneapolis, MN, President and Director, 1992-1997 | 29 | Park Nicolet Health Services, 2001 - Present; Ultra Series Fund (16), 2004 - Present |
Lorence D. Wheeler 1938 | Trustee, 2009 - Present | Retired investor; Credit Union Benefits Services, Inc. (a provider of retirement plans and related services for credit union employees nationwide), Madison, WI, President, 1986 - 1997 | 42 | Grand Mountain Bank FSB and Grand Mountain Bancshares, Inc. 2003 - Present ; Madison Mosaic Funds (12), 1996 - Present; Madison Strategic Sector Premium Fund, 2005 - Present; Madison/Claymore Covered Call and Equity Strategy Fund, 2005 - Present; Ultra Series Fund (16), 2009 - Present |
1 Independent Trustees serve in such capacity until the Trustee reaches the age of 76, unless retirement is waived by unanimous vote of the remaining Trustees on an annual basis.
2 As of the date of this report, the fund complex consists of the Trust with 13 portfolios, the Ultra Series Fund with 16 portfolios, the Madison Strategic Sector Premium Fund (a closed-end fund) and the Madison Mosaic Equity, Income, Tax-Free and Government Money Market Trusts, which together have 12 portfolios, for a grand total of 42 separate portfolios in the fund complex. Not every Trustee is a member of the Board of Trustees of every fund in the fund complex, as noted above.
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MEMBERS Mutual Fundsª
MEMBERS Mutual Funds
Post Office Box 8390
Boston, MA 02266-8390
1 (800) 877-6089
www.membersfunds.com
SEC File Number: 811-08261
4460-P1053
Rev: 1212
Item 2. Code of Ethics.
(a) The Trust has adopted a code of ethics that applies to the Trust’s principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions, regardless of whether these individuals are employed by the Trust or a third party.
(c) The Code was not amended during the fiscal year.
(d) The Trust granted no waivers from the code during the period covered by this report.
(f) Any person may obtain a complete copy of the code without charge by calling the Adviser at 800-767-0300 and requesting a copy of "the MEMBERS Mutual Funds Sarbanes Oxley Code of Ethics."
Item 3. Audit Committee Financial Expert.
In July 2012, James Imhoff, an “independent” Trustee and a member of the Trust’s audit committee, was appointed to serve as the Trust’s audit committee financial expert among the five independent Trustees who so qualify to serve in that capacity. He replaced Lorence R. Wheeler who served in that capacity through July 2012.
Item 4. Principal Accountant Fees and Services.
(a) Audit Fees. Total audit fees paid (or to be paid) to the registrant's principal accountant for the fiscal years ended October 31, 2012 and 2011, respectively were $107,500 ($405,500 including the Ultra Series Fund, an affiliated registered investment company ("USF")) and $100,824 ($396,000 including USF).
(b) Audit-Related Fees. Not applicable.
(c) Tax-Fees. The Audit Committee has pre-approved, as required by Rule 2-01(c)(7)(i)(C) of Regulation S-X, 100% of the services described in this Item 4(b) through (d), which such services are described above.
For the fiscal years ended October 31, 2012 and October 31, 2011, the aggregate fees for professional services rendered by Deloitte & Touche for tax compliance, tax advice and tax planning for such fiscal years, totaled $38,740 and $37,345, respectively.
In the scope of services comprising the fees disclosed under this Item 4(c) were the following services:
-Review and sign as signature preparer for U.S. Income Tax Return for Regulated Investment Companies, Form 1120-RIC and the Return of Excise Tax on Undistributed Income of Regulated Investment Companies, Form 8613.
(d) All Other Fees. Not applicable.
(e) (1) Before any accountant is engaged by the registrant to render audit or non-audit services, the engagement must be approved by the audit committee as contemplated by paragraph (c)(7)(i)(A) of Rule 2-01of Regulation S-X.
(2) The Audit Committee has pre-approved, as required by Rule 2-01(c)(7)(i)(C) of Regulation S-X, 100% of the services described in this Item 4(b) through (d), which such services are described above.
(f) Not applicable.
(g) Not applicable.
(h) Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments
Schedule included as part of the report to shareholders filed under Item 1 of this Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
The Trust does not normally hold shareholder meetings. There have been no changes to the Trust's procedures during the period covered by this report.
Item 11. Controls and Procedures.
(a) The Trust’s principal executive officer and principal financial officer determined that the Trust’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the "Act")) are effective, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934 within 90 days of the date of this report. There were no significant changes in the Trust’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. The officers identified no significant deficiencies or material weaknesses.
(b) There were no changes in the Trust's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Trust's internal control over financial reporting.
Item 12. Exhibits.
(a)(1) Code of ethics referred to in Item 2.
(a)(2) Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Act.
(b) Certification of principal executive and principal financial officers as required by Rule 30a-2(b) under the Act.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
MEMBERS Mutual Funds
By: (signature)
W. Richard Mason, CCO and Assistant Secretary
Date: December 20, 2012
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By: (signature)
Katherine L. Frank, Principal Executive Officer
Date: December 20, 2012
By: (signature)
Greg Hoppe, Principal Financial Officer
Date: December 20, 2012