UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-23149
Thrivent Core Funds
(Exact name of registrant as specified in charter)
625 Fourth Avenue South
Minneapolis, Minnesota 55415
(Address of principal executive offices) (Zip code)
John D. Jackson
Assistant Secretary
625 Fourth Avenue South
Minneapolis, Minnesota 55415
(Name and address of agent for service)
Registrants telephone number, including area code: (612) 844-7190
Date of fiscal year end: October 31
Date of reporting period: October 31, 2018
Item 1. | Report to Stockholders |
ANNUAL REPORT
OCTOBER 31, 2018
THRIVENT CORE FUNDS
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THRIVENT CORE EMERGING MARKETS DEBT FUND
Kent L. White, CFA, and Cortney L. Swensen, CFA , Portfolio Co-Managers
The Fund seeks to maximize total return while providing high current income and capital appreciation. The Funds investment objective may be changed without shareholder approval.
Investment in Thrivent Core Emerging Market Debt involves risks including credit, derivative, emerging markets, ETF, foreign securities, high yield, interest rate, investment adviser, issuer, liquidity, market, non-diversified, and sovereign debt risks. A detailed description of each risk can be found in the significant risks section of the accompanying notes to financial statements.
How did the Fund perform during the 12-month period ended October 31, 2018?
Thrivent Core Emerging Markets Debt Fund earned a return of -4.35%. The Funds market benchmark, the Bloomberg Barclays EM USD Aggregate Index, earned a return of -3.39%.
What factors affected the Funds performance?
The global backdrop was challenging for emerging market (EM) debt during the reporting period with several factors weighing on this market segment. First, global growth began to de-synchronize as the U.S. economy gained traction while other world economies showed signs of slowing. Second, global liquidity conditions tightened on the heels of four more federal funds rate increases by the Federal Reserve (Fed) totaling 1.00%. The combination of these two factors caused the U.S. dollar to strengthen versus most currencies. Third, trade tensions continued to escalate with the U.S. enacting tariffs on Chinese goods and aluminum and steel from Canada, Europe and Mexico, and these countries in turn retaliating with their own tariffs. The trade rhetoric between the U.S. and China was particularly problematic because EM economic growth is so highly dependent on global trade. Finally, we saw an elevated level of political cycle turmoil in these regions this year, which tends to heavily influence the markets, including contentious elections in Mexico and Brazil. The combination of these issues led to increased market volatility and stress across EM stock and bond markets.
EM countries are more negatively impacted by higher U.S. interest rates and the stronger dollar because many rely on foreign capital to fund their fiscal and current account deficits. As U.S. rates rise, more investment capital shifts back to that country, making it harder for EM countries to sell their debt. Also, much of EM debt is U.S. dollar-denominated, which makes it more difficult to service when local currencies devalue. The countries that performed the worst during this period were those that rely the most on external capital to fund their deficits. Two of the biggest laggards were Turkey and Argentina, which saw their economies thrown into chaos after the lira and peso plunged in value. The EM countries that performed best were those more heavily exposed to oil because prices for the commodity rose for most of the reporting period to reach four-year highs in early October. Given the risk-off sentiment throughout the period, investment-grade EM bonds outperformed high-yield EM bonds.
Because the Fund was launched shortly before this performance period began, we were continuing to invest inflows as the period got underway. The Funds underperformance versus the Bloomberg Barclays EM USD Aggregate Index was primarily because the benchmark has much higher corporate and quasi-sovereign exposure, and therefore a shorter duration than the Fund. In the rising rate environment, the Funds longer duration was detrimental because it made the portfolio more sensitive to the rate changes. Within its investment-grade exposure, the Fund benefited from security selection due to our weightings along the various credit curves and an overweighting in Middle Eastern countries. The Funds high-yield exposure had a slightly positive contribution with overweighted positions in Bahrain, Croatia and Brazil offsetting the significant negative impact of an overweighting in Argentina.
What is your outlook?
While EM valuations are more attractive now, there are several macro factors holding us back from being more constructive at the end of the reporting period. We expect continued tightening of global financial conditions and ongoing trade policy uncertainties between the U.S. and China. Also, many central banks in EM countries are increasing interest rates almost in lock step with the Fed in order to defend their currencies, which is not an overall positive for economic growth in these countries. Regardless of the broader market backdrop, we will continue to focus our efforts on finding the most attractive credits and securities within EM countries.
The returns shown do not reflect taxes a shareholder would pay on distributions or redemptions.
2
Bond quality ratings are obtained from Moodys Investors Service, Inc. (Moodys) and Standard & Poors Ratings Services (S&P). Ratings from S&P, when used, are converted into their equivalent Moodys ratings. If Moodys and S&P have assigned different ratings to a security, the lowest rating for the security is used. Not rated may include cash. Investments in derivatives and short-term investments are not reflected in the table.
Quoted Bond Quality Ratings Distributions, Major Market Sectors and Top 10 Countries are subject to change.
The lists of Major Market Sectors and Top 10 Countries exclude short-term investments and collateral held for securities loaned. Bond Quality Ratings Distributions exclude collateral held for securities loaned.
Past performance is not an indication of future results. The prospectus contains more complete information on the investment objectives, risks, charges and expenses of the investment company, which investors should read and consider carefully before investing. To obtain a prospectus, contact a registered representative or visit ThriventFunds.com. Total investment return and principal value of your investment will fluctuate, and your shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted. Call 800-847-4836 for performance results current to the most recent month-end.
1 | Average annual total returns represent past performance and reflect changes in share prices, the reinvestment of all dividends and capital gains, and the effects of compounding. Periods of less than one year are not annualized. At various times, the Funds adviser may have waived its management fee and/or reimbursed Fund expenses, without which the Funds total returns would have been lower. The returns shown do not reflect taxes a shareholder would pay on distributions or redemptions. Unless otherwise noted, the Index results shown do not reflect deductions for fees, expenses, or taxes. Index results shown reflect reinvestment of dividends. It is not possible to invest directly in an Index. |
* | The Bloomberg Barclays EM USD Aggregate Index is a hard currency Emerging Markets debt benchmark that includes USD denominated debt from sovereign, quasi-sovereign, and corporate EM issuers. |
** | The Consumer Price Index is an inflationary indicator that measures the change in the cost of a fixed basket of products and services, including housing, electricity, food and transportation. |
3
THRIVENT CORE INTERNATIONAL EQUITY FUND
Noah J. Monsen, CFA and Brian W. Bomgren, CQF, Portfolio Co-Managers
The Fund seeks long-term capital appreciation. The Funds investment objective may be changed without shareholder approval.
Investment in Thrivent Core International Equity involves risks including equity security, foreign currency, foreign securities, futures contracts, investment adviser, issuer, large cap, market, mid cap, quantitative investing, and small cap risks. A detailed description of each risk can be found in the significant risks section of the accompanying notes to financial statements.
How did the Fund perform during the since-inception period from November 14, 2017, through October 31, 2018?
Thrivent Core International Equity Fund earned a since-inception return of -7.08%. The Funds market benchmark, the MSCI World Ex-USA Index (net), earned a since-inception return of -6.12%
What factors affected the Funds performance?
At the beginning of the period, the world appeared to be enjoying a synchronized global economic recovery led by the U.S. with surprising strength also seen in Japan, Europe and China. International equity markets performed strongly through early 2018 as the combination of solid growth and accommodative monetary policies supported stocks. However, as the period progressed, world economies quickly began to diverge with the U.S. continuing to gain traction while other economies slowed. Global stock markets corrected in February as trade war talks heated up and Chinas economy appeared to falter. Geopolitical events continued to influence markets as dissatisfaction with the European Union (EU) percolated and factored into various European elections. The United Kingdom struck a deal with the EU over the countrys Brexit transition, but the timing and exact implications of the transition remained somewhat unclear. The U.S. enacted tariffs on Chinese goods and aluminum and steel from Canada, Europe and Mexico, and these countries in turn retaliated with their own tariffs, which ramped up trade war concerns. Although monetary policy remained accommodative across much of the world, the Federal Reserve (Fed) continued to raise the target federal funds rate with four hikes totaling 1.00%, which caused significant strengthening of the U.S. dollar versus other currencies. Emerging market (EM) countries were most negatively impacted by the stronger dollar because most EM debt is U.S. dollar-denominated. The stronger dollar, along with growing concern about the economic impact of trade wars, led to increased market volatility and stress among EM stock and bond markets. Oil prices rose for most of the reporting period to reach four-year highs in early October before dropping sharply in the final weeks due to a supply glut and falling demand because of the global economic slowdown. For the second time in 2018, world equity markets broadly corrected during Octobers risk-off mode due to a myriad of factors including the escalating trade tensions, potential monetary policy missteps by the Fed and policy uncertainty in other major economies, which could potentially dampen global economic growth. Over the period, U.S. equity markets produced solid positive returns on the back of strong corporate earnings and corporate tax reform, while international equities were negative, particularly EM stocks.
Our international equity team uses a quantitative approach to select securities that focuses on emphasizing certain factors in the markets that we believe will outperform. During the period since the Funds inception in November 2017, factor performance has been challenging. Our value factors, which are a key part of the Funds investment process, underperformed in most regions during this time frame. Also, our portfolios overall tilt toward smaller-capitalization stocks detracted because larger-cap stocks outperformed. The Fund experienced mixed results from our profitability and quality factors. The momentum factor, which emphasizes stocks that have recently performed well, worked well in most regions except for Japan. The Fund also benefited from our emphasis on low-volatility and high-quality stocks across all regions during the period.
Country allocations overall aided the Funds performance including an underweighting to Hong Kong and overweighting to Japan. The only detractor of note on a country basis was our portfolios overweighting in Denmark. On the other hand, sector allocations modestly detracted including our emphases on the consumer staples and consumer discretionary sectors, especially the automotive industry. The portfolios underweighted position in the financial sector proved helpful. Although currency exposure in the Funds portfolio was small, it benefited results. The primary contributor was an underweighting to the euro, which lost nearly 10% of its value in 2018 versus the U.S. dollar.
What is your outlook?
Going forward, factor exposures will continue to drive the investment process for this Fund. Among our international equity holdings, we are focused on finding profitable companies with attractive valuations, positive price momentum, low volatility and high earnings quality. The Funds industry and country weightings will continue to be driven by the companies we own based on the factors we are emphasizing.
The returns shown do not reflect taxes a shareholder would pay on distributions or redemptions.
4
Quoted Portfolio Composition, Major Market Sectors, and Top 10 Countries are subject to change.
The lists of Major Market Sectors and Top 10 Countries exclude short-term investments and collateral held for securities loaned. The Portfolio Composition chart excludes collateral held for securities loaned.
Past performance is not an indication of future results. The prospectus contains more complete information on the investment objectives, risks, charges and expenses of the investment company, which investors should read and consider carefully before investing. To obtain a prospectus, contact a registered representative or visit ThriventFunds.com. Total investment return and principal value of your investment will fluctuate, and your shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted. Call 800-847-4836 for performance results current to the most recent month-end.
1 | Average annual total returns represent past performance and reflect changes in share prices, the reinvestment of all dividends and capital gains, and the effects of compounding. Periods of less than one year are not annualized. At various times, the Funds adviser may have waived its management fee and/or reimbursed Fund expenses, without which the Funds total returns would have been lower. The returns shown do not reflect taxes a shareholder would pay on distributions or redemptions. Unless otherwise noted, the Index results shown do not reflect deductions for fees, expenses, or taxes. Index results shown reflect reinvestment of dividends. It is not possible to invest directly in an Index. |
^ | Effective September 11, 2018, the Funds benchmark changed from the MSCI EAFE + Canada Index to the MSCI World Ex-USA Index (Net). The Adviser made this benchmark change because the new index is more readily available and has identical returns to the old index going back at least ten years. Thus, the MSCI World Ex-USA Index (Net) will be shown in shareholder reports for periods ended October 31, 2018 and beyond. |
* | The MSCI World Ex-USA Index (Net) is an index which captures large and mid cap representation across 22 of 23 Developed Markets countries, excluding the United States |
** | The MSCI EAFE +Canada Index is an equity index which captures large and mid cap representation across Developed Markets countries around the world included Canada. |
*** | The Consumer Price Index is an inflationary indicator that measures the change in the cost of a fixed basket of products and services, including housing, electricity, food and transportation. |
5
THRIVENT CORE LOW VOLATILITY EQUITY FUND
Noah J. Monsen, CFA and Brian W. Bomgren, CQF, Portfolio Co-Managers
The Fund seeks to provide long-term capital appreciation with lower volatility relative to the domestic equity market. The Funds investment objective may be changed without shareholder approval.
Investment in Thrivent Core Low Volatility Equity involves risks including equity security, investment adviser, issuer, large cap, market, mid cap, quantitative investing, and small cap risks. A detailed description of each risk can be found in the significant risks section of the accompanying notes to financial statements.
How did the Fund perform during the since-inception period from February 28, 2018, through October 31, 2018?
Thrivent Core Low Volatility Equity Fund earned a since-inception return of 5.40%. The Funds market benchmark, the MSCI USA Minimum Volatility Index (USD), earned a since-inception return of 5.81%.
What factors affected the Funds performance?
During the time frame when this Fund was launched, world economies began to diverge from their previously synchronized growth. The U.S. economy continued to gain traction while other economies slowed, particularly in Europe and Asia. The Federal Reserve (Fed) continued to raise the target federal funds rate with three hikes since the Funds inception totaling 0.75% in March, June and September, which contributed to a flattening of the Treasury yield curve and significant strengthening of the U.S. dollar versus other currencies. The U.S. enacted tariffs on Chinese goods and aluminum and steel from Canada, Europe and Mexico, and these countries in turn retaliated with their own tariffs, which ramped up trade war fears. Oil prices rose for most of the reporting period to reach four-year highs in early October before dropping sharply in the final weeks due to a supply glut and falling demand because of the global economic slowdown. U.S. equity markets benefited during much of this period from strong corporate earnings and corporate tax reform. However, during the final month of the period, stocks sold off across U.S. and world markets due to a myriad of factors including the escalating trade tensions, potential monetary policy missteps by the Fed, geopolitical concerns and policy uncertainty in other major economies, which all have the potential to dampen global economic growth. On the heels of 2017s record-low levels, volatility-as measured by Wall Streets Fear Index (i.e., the Volatility Index, or VIX)-jumped sharply in February and March, before settling down again until October, when we saw another spike.
Since the Funds inception on February 28, 2018, low volatility as an investment strategy has worked well. The benchmark MSCI USA Minimum Volatility Index (USD) advanced 5.81%, but with 25% less volatility than the MSCI USA Index, which gained 1.07%. In managing the Fund, our investment team uses a quantitative approach to select securities that focuses on emphasizing certain factors in the market that we believe will outperform.
During the reporting period, the Funds relative return benefited overall from the various factors we emphasized, mainly because of our overweightings to momentum (stocks that have recently performed well) and liquidity (stocks that are more easily traded). However, the performance of our value factors, a key part of the Funds investment process, was challenging. The Fund experienced mixed results from our profitability and quality factors, with some positives offsetting others that were negative.
Also, although the Funds investment strategy generally worked well during the period, it was somewhat challenging for us to find stocks that were less volatile than our already low-volatility benchmark. That said, security selection was a positive contributor overall, primarily due to favorable results in the information technology sector, while stock selection in the consumer discretionary and real estate investment trust (REIT) sectors lagged. Industry allocations modestly detracted from the Funds results.
What is your outlook?
We believe the current fiscal and monetary policy uncertainties that are plaguing the market could further increase market volatility, which would be beneficial for a low-volatility strategy relative to the market. On the other hand, rising interest rates are a risk for this strategy because many low-volatility stocks are also high dividend payers, sometimes referred to a bond proxies, whose valuations are often hurt by rising interest rates. Current consensus estimates call for four more Fed rate hikes over the next 12 months, although policymakers may need to dial back the pace if U.S. economic growth falters or inflation does not increase from current levels. While value performed poorly during this period, we believe the market will shift back toward favoring these types of stocks in the coming months. We continue to focus on finding profitable companies with low volatility, attractive valuations, positive price momentum and high earnings quality. The Funds industry weightings will be driven by the companies we own based on the factors we are emphasizing.
The returns shown do not reflect taxes a shareholder would pay on distributions or redemptions.
6
Quoted Portfolio Composition, Major Market Sectors and Top 10 Holdings are subject to change.
The lists of Major Market Sectors and Top 10 holdings exclude short-term investments and collateral held for securities loaned. The Portfolio Composition chart excludes collateral held for securities loaned.
Past performance is not an indication of future results. The prospectus contains more complete information on the investment objectives, risks, charges and expenses of the investment company, which investors should read and consider carefully before investing. To obtain a prospectus, contact a registered representative or visit ThriventFunds.com. Total investment return and principal value of your investment will fluctuate, and your shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted. Call 800-847-4836 for performance results current to the most recent month-end.
1 | Average annual total returns represent past performance and reflect changes in share prices, the reinvestment of all dividends and capital gains, and the effects of compounding. Periods of less than one year are not annualized. At various times, the Funds adviser may have waived its management fee and/or reimbursed Fund expenses, without which the Funds total returns would have been lower. The returns shown do not reflect taxes a shareholder would pay on distributions or redemptions. Unless otherwise noted, the Index results shown do not reflect deductions for fees, expenses, or taxes. Index results shown reflect reinvestment of dividends. It is not possible to invest directly in an Index. |
* | The MSCI USA Minimum Volatility Index (USD) is an index which aims to reflect the performance characteristics of a minimum variance strategy applied to the large and mid cap USA equity universe. |
** | The Consumer Price Index is an inflationary indicator that measures the change in the cost of a fixed basket of products and services, including housing, electricity, food and transportation. |
7
THRIVENT CORE SHORT-TERM RESERVE FUND
William D. Stouten, Portfolio Manager
The Fund seeks a high level of current income consistent with liquidity and the preservation of capital.
Investment in Thrivent Core Short-Term Reserve Fund involves credit, government securities, interest rate, investment adviser, mortgage-backed and other asset-backed securities, portfolio turnover rate, prepayment, redemption and lending, and redemption and share ownership risks. A detailed description of each risk can be found in the significant risks section of the accompanying notes to financial statements.
For the 12-month period ended October 31, 2018, the Fund earned a return of 2.01%. The Funds market benchmark, the Bloomberg Barclays Short-Term Government/Corporate Index (3-6 months), earned a return of 1.67%. The Fund outperformed its benchmark primarily due to its high exposure to Tier II commercial paper and lower exposure to government securities. While the Bloomberg Barclays benchmark does not include any commercial paper, our Funds portfolio has significant exposure to the segment. More than 70% of the Funds portfolio was invested in commercial paper and certificates of deposit (CDs), more than 10% in corporate bonds and the remainder split between asset-backed securities, U.S. government obligations and municipal securities. At the end of the reporting period, the Funds one-day yield was 2.40% and its net assets totaled around $4.9 billion. The Funds weighted average life (WAL) was 113 days and its WAM was 70 days at period end. Due to the volatility of the total net assets of the Fund, we typically target an average WAM of less than 65 days. A shorter WAM reduces the price sensitivity of the portfolio to changes in interest rates and aids with liquidity. Our primary focus in managing the Fund continues to center on maximizing current income while preserving liquidity and minimizing net asset value volatility.
The returns shown do not reflect taxes a shareholder would pay on distributions or redemptions.
8
Quoted Major Market Sectors, Portfolio Composition and Top 10 Holdings are subject to change.
Past performance is not an indication of future results. The prospectus contains more complete information on the investment objectives, risks, charges and expenses of the investment company, which investors should read and consider carefully before investing. To obtain a prospectus, contact a registered representative or visit ThriventFunds.com. Total investment return and principal value of your investment will fluctuate, and your shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data quoted. Call 800-847-4836 for performance results current to the most recent month-end.
1 | Avenage annual total returns represent past performance and reflect changes in share prices, the reinvestment of all dividends and capital gains, and the effects of compounding. Periods of less than one year are not annualized. At various times, the Funds adviser may have waived its management fee and/or reimbursed Fund expenses, without which the Funds total returns would have been lower. The returns shown do not reflect taxes a shareholder would pay on distributions or redemptions. Unless otherwise noted, the Index results shown do not reflect deductions for fees, expenses, or taxes. Index results shown reflect reinvestment of dividends. It is not possible to invest directly in an Index. |
* | The Bloomberg Barclays Short-term Government/Corporate Index 3-6 months is an index which measures the performance of USD denominated, fixed rate, investment grade bonds that are in the government or corporate sector and have a remaining maturity of 3-6 months. |
** | The Consumer Price Index is an inflationary indicator that measures the change in the cost of a fixed basket of products and services, including housing, electricity, food and transportation. |
9
(unaudited)
As a shareholder of a Fund, you incur ongoing costs, including administrative fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from May 1, 2018 through October 31, 2018.
Actual Expenses
In the table below, the first line provides information about actual account values and actual expenses. You may use the information in this line, 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 first line under the heading entitled Expenses Paid during Period to estimate the expenses you paid on your account during the period.
Hypothetical Example for Comparison Purposes
In the table below, the second line provides information about hypothetical account values and hypothetical expenses based on the Funds actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds actual return. 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 Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical example that appears in the shareholder reports of the other funds.
Beginning Account Value 5/1/2018 |
Ending Account Value 10/31/2018 |
Expenses Paid
During Period 5/1/2018 -10/31/2018* |
Annualized Expense Ratio |
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Thrivent Core Emerging Markets Debt Fund |
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Actual |
$ | 1,000 | $ | 984 | $ | 0.25 | 0.05 | % | ||||||||
Hypothetical** |
$ | 1,000 | $ | 1,025 | $ | 0.25 | 0.05 | % | ||||||||
Thrivent Core International Equity Fund |
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Actual |
$ | 1,000 | $ | 905 | $ | 0.30 | 0.06 | % | ||||||||
Hypothetical** |
$ | 1,000 | $ | 1,025 | $ | 0.31 | 0.06 | % | ||||||||
Thrivent Core Low Volatility Equity Fund |
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Actual |
$ | 1,000 | $ | 1,065 | $ | 0.21 | 0.04 | % | ||||||||
Hypothetical** |
$ | 1,000 | $ | 1,025 | $ | 0.20 | 0.04 | % | ||||||||
Thrivent Core Short-Term Reserve Fund |
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Actual |
$ | 1,000 | $ | 1,012 | $ | 0.03 | 0.01 | % | ||||||||
Hypothetical** |
$ | 1,000 | $ | 1,025 | $ | 0.03 | 0.01 | % |
* | Expenses are equal to the Funds annualized expense ratio, multiplied by the average account value over the period, multiplied by 184/365 to reflect the one-half year period. |
** | Assuming 5% annualized total return before expenses. |
10
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Thrivent Core Funds and Shareholders of Thrivent Core Emerging Markets Debt Fund, Thrivent Core International Equity Fund, Thrivent Core Low Volatility Equity Fund and Thrivent Core Short-Term Reserve Fund
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments of each of the funds listed in the table below (constituting Thrivent Core Funds, hereafter collectively referred to as the Funds) as of October 31, 2018, the related statements of operations for the periods listed in the table below, the statements of changes in net assets for the periods listed in the table below, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of October 31, 2018, the results of each of their operations for the periods listed in the table below, the changes in each of their net assets for the periods listed in the table below, and each of the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Thrivent Core Emerging Markets Debt Fund (4) | Thrivent Core Low Volatility Equity Fund (3) | |
Thrivent Core International Equity Fund (2) | Thrivent Core Short-Term Reserve Fund (1) | |
(1) Statement of operations for the year ended October 31, 2018 and statement of changes in net assets for each of the two years in the period ended October 31, 2018 | ||
(2) Statements of operations and changes in net assets for the period November 14, 2017 (commencement of operations) through October 31, 2018 | ||
(3) Statements of operations and changes in net assets for the period February 28, 2018 (commencement of operations) through October 31, 2018 | ||
(4) Statement of operations for the year ended October 31, 2018 and statement of changes in net assets for the year ended October 31, 2018 and for the period September 5, 2017 (commencement of operations) through October 31, 2017 | ||
Basis for Opinions
These financial statements are the responsibility of the Funds management. Our responsibility is to express an opinion on the Funds financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
11
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of October 31, 2018 by correspondence with the custodian, transfer agent, and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.
December 17, 2018
We have served as the auditor of one or more investment companies in Thrivent Financial for Lutherans investment company complex since 1987.
12
Schedule of Investments as of October 31, 2018
The accompanying Notes to Financial Statements are an integral part of this schedule. |
13 |
EMERGING MARKETS DEBT FUND
Schedule of Investments as of October 31, 2018
The accompanying Notes to Financial Statements are an integral part of this schedule. |
14 |
EMERGING MARKETS DEBT FUND
Schedule of Investments as of October 31, 2018
The accompanying Notes to Financial Statements are an integral part of this schedule. |
15 |
EMERGING MARKETS DEBT FUND
Schedule of Investments as of October 31, 2018
Fair Valuation Measurements
The following table is a summary of the inputs used, as of October 31, 2018, in valuing Emerging Markets Debt Funds assets carried at fair value.
Investments in Securities |
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Long-Term Fixed Income |
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Energy |
14,478,521 | | 14,478,521 | | ||||||||||||
Foreign Government |
646,968,135 | | 646,968,135 | | ||||||||||||
Utilities |
1,445,325 | | 1,445,325 | | ||||||||||||
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Subtotal Investments in Securities | $ | 662,891,981 | $ | | $ | 662,891,981 | $ | | ||||||||
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Other Investments * |
Total | |||
Short-Term Investments |
12,269,508 | |||
Collateral Held for Securities Loaned |
4,446,979 | |||
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Subtotal Other Investments | $ | 16,716,487 | ||
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Total Investments at Value | $ | 679,608,468 | ||
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* | Certain investments are measured at fair value using a net asset value per share that is not publicly available (practical expedient). According to disclosure requirements of Accounting Standards Codification (ASC) 820, Fair Value Measurement, securities valued using the practical expedient are not classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Statement of Assets and Liabilities. |
There were no significant transfers between Levels during the period ended October 31, 2018. Transfers between Levels are identified as of the end of the period.
Investment in Affiliates
Affiliated issuers, as defined under the Investment Company Act of 1940, include those in which the Funds holdings of an issuer represent 5% or more of the outstanding voting securities of an issuer, any affiliated mutual fund, or a company which is under common ownership or control with the Fund. The Fund owns shares of Thrivent Cash Management Trust for the purpose of securities lending and Thrivent Core Short-Term Reserve Fund primarily to serve as a cash sweep vehicle for the Fund. Thrivent Cash Management Trust and Thrivent Core Funds are established solely for investment by Thrivent entities.
A summary of transactions (in thousands) for the fiscal year to date, in Emerging Markets Debt Fund, is as follows:
Fund |
Value 10/31/2017 |
Gross Purchases |
Gross Sales |
Shares Held at 10/31/2018 |
Value 10/31/2018 |
% of Net Assets |
||||||||||||||||||||||
Affiliated Short-Term Investments | ||||||||||||||||||||||||||||
Core Short-Term Reserve, 2.430% |
$ | 3,193 | $ | 204,749 | $ | 195,672 | 1,227 | $ | 12,270 | 1.8 | % | |||||||||||||||||
Total Affiliated Short-Term Investments | 3,193 | 12,270 | 1.8 | |||||||||||||||||||||||||
Collateral Held for Securities Loaned | ||||||||||||||||||||||||||||
Cash Management Trust- Collateral Investment |
| 13,015 | 8,568 | 4,447 | 4,447 | 0.6 | ||||||||||||||||||||||
Total Collateral Held for Securities Loaned | | 4,447 | 0.6 | |||||||||||||||||||||||||
Total Value | $ | 3,193 | $ | 16,717 |
Fund |
Net Realized Gain/(Loss) |
Change in Unrealized Appreciation/ (Depreciation) |
Distributions of Realized Capital Gains |
Income Earned 11/1/2017 -10/31/2018 |
||||||||||||
Affiliated Short-Term Investments | ||||||||||||||||
Core Short-Term Reserve, 2.430% |
$ | | $ | | $ | 0 | $ | 139 | ||||||||
Total Income from Affiliated Investments | $ | 139 | ||||||||||||||
Collateral Held for Securities Loaned | ||||||||||||||||
Cash Management Trust- Collateral Investment |
| | | 12 | ||||||||||||
Total Affiliated Income from Securities Loaned, Net | $ | 12 | ||||||||||||||
Total | $ | | $ | | $ | 0 |
The accompanying Notes to Financial Statements are an integral part of this schedule.
16
Schedule of Investments as of October 31, 2018
The accompanying Notes to Financial Statements are an integral part of this schedule. |
17 |
INTERNATIONAL EQUITY FUND
Schedule of Investments as of October 31, 2018
The accompanying Notes to Financial Statements are an integral part of this schedule. |
18 |
INTERNATIONAL EQUITY FUND
Schedule of Investments as of October 31, 2018
The accompanying Notes to Financial Statements are an integral part of this schedule. |
19 |
INTERNATIONAL EQUITY FUND
Schedule of Investments as of October 31, 2018
Fair Valuation Measurements
The following table is a summary of the inputs used, as of October 31, 2018, in valuing International Equity Funds assets carried at fair value.
Investments in Securities |
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Common Stock |
||||||||||||||||
Communications Services |
36,426,271 | | 36,426,271 | | ||||||||||||
Consumer Discretionary |
122,525,388 | 9,854,352 | 112,671,036 | | ||||||||||||
Consumer Staples |
95,105,340 | | 95,105,340 | | ||||||||||||
Energy |
32,312,642 | | 32,312,642 | | ||||||||||||
Financials |
92,134,332 | | 92,134,332 | | ||||||||||||
Health Care |
80,640,660 | | 80,640,660 | | ||||||||||||
Industrials |
124,616,367 | | 124,616,367 | | ||||||||||||
Information Technology |
63,940,293 | 150,727 | 63,789,566 | | ||||||||||||
Materials |
107,414,371 | 8,383,053 | 99,031,318 | | ||||||||||||
Real Estate |
20,446,124 | | 20,446,124 | | ||||||||||||
Utilities |
19,130,928 | | 19,130,928 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Subtotal Investments in Securities | $ | 794,692,716 | $ | 18,388,132 | $ | 776,304,584 | $ | | ||||||||
|
|
|
|
|
|
|
|
Other Investments * |
Total | |||
Short-Term Investments |
170,457 | |||
Collateral Held for Securities Loaned |
28,504,220 | |||
|
|
|||
Subtotal Other Investments | $ | 28,674,677 | ||
|
|
|||
Total Investments at Value | $ | 823,367,393 | ||
|
|
* | Certain investments are measured at fair value using a net asset value per share that is not publicly available (practical expedient). According to disclosure requirements of Accounting Standards Codification (ASC) 820, Fair Value Measurement, securities valued using the practical expedient are not classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Statement of Assets and Liabilities. |
There were no significant transfers between Levels during the period ended October 31, 2018. Transfers between Levels are identified as of the end of the period.
Investment in Affiliates
Affiliated issuers, as defined under the Investment Company Act of 1940, include those in which the Funds holdings of an issuer represent 5% or more of the outstanding voting securities of an issuer, any affiliated mutual fund, or a company which is under common ownership or control with the Fund. The Fund owns shares of Thrivent Cash Management Trust for the purpose of securities lending and Thrivent Core Short-Term Reserve Fund primarily to serve as a cash sweep vehicle for the Fund. Thrivent Cash Management Trust and Thrivent Core Funds are established solely for investment by Thrivent entities.
A summary of transactions (in thousands) for the fiscal year to date, in International Equity Fund, is as follows:
Fund |
Value 11/14/2017 (inception) |
Gross Purchases |
Gross Sales |
Shares Held at 10/31/2018 |
Value 10/31/2018 |
% of Net Assets |
||||||||||||||||||
Affiliated Short-Term Investments | ||||||||||||||||||||||||
Core Short-Term Reserve, 2.430% |
$ | | $ | 291,255 | $ | 291,085 | 17 | $ | 170 | <0.1 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Affiliated Short-Term Investments | | 170 | <0.1 | |||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
Collateral Held for Securities Loaned | ||||||||||||||||||||||||
Cash Management Trust-Collateral Investment |
| 240,461 | 211,957 | 28,504 | 28,504 | 3.6 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Collateral Held for Securities Loaned | | 28,504 | 3.6 | |||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
Total Value | $ | | $ | 28,674 | ||||||||||||||||||||
|
|
|
|
Fund |
Net Realized Gain/(Loss) |
Change in Unrealized Appreciation/ (Depreciation) |
Distributions of Realized Capital Gains |
Income Earned 11/14/2017 -10/31/2018 |
||||||||||||
Affiliated Short-Term Investments | ||||||||||||||||
Core Short-Term Reserve, 2.430% |
$ | | $ | | $ | 0 | $ | 63 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Income from Affiliated Investments | $ | 63 | ||||||||||||||
|
|
|||||||||||||||
Collateral Held for Securities Loaned | ||||||||||||||||
Cash Management Trust-Collateral Investment |
| | | 336 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Affiliated Income from Securities Loaned, Net | $ | 336 | ||||||||||||||
|
|
|||||||||||||||
Total | $ | | $ | | $ | 0 | ||||||||||
|
|
|
|
|
|
The accompanying Notes to Financial Statements are an integral part of this schedule.
20
Schedule of Investments as of October 31, 2018
The accompanying Notes to Financial Statements are an integral part of this schedule. |
21 |
LOW VOLATILITY EQUITY FUND
Schedule of Investments as of October 31, 2018
The accompanying Notes to Financial Statements are an integral part of this schedule. |
22 |
LOW VOLATILITY EQUITY FUND
Schedule of Investments as of October 31, 2018
Fair Valuation Measurements
The following table is a summary of the inputs used, as of October 31, 2018, in valuing Low Volatility Equity Funds assets carried at fair value.
Investments in Securities |
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Common Stock |
||||||||||||||||
Communications Services |
29,175,942 | 29,175,942 | | | ||||||||||||
Consumer Discretionary |
46,486,454 | 46,486,454 | | | ||||||||||||
Consumer Staples |
79,860,455 | 79,860,455 | | | ||||||||||||
Energy |
8,358,137 | 8,358,137 | | | ||||||||||||
Financials |
129,618,746 | 129,618,746 | | | ||||||||||||
Health Care |
140,329,091 | 140,329,091 | | | ||||||||||||
Industrials |
92,716,558 | 92,716,558 | | | ||||||||||||
Information Technology |
189,188,395 | 189,188,395 | | | ||||||||||||
Materials |
11,628,208 | 11,628,208 | | | ||||||||||||
Real Estate |
75,917,369 | 75,917,369 | | | ||||||||||||
Utilities |
69,188,004 | 69,188,004 | | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Subtotal Investments in Securities | $ | 872,467,359 | $ | 872,467,359 | $ | | $ | | ||||||||
|
|
|
|
|
|
|
|
Other Investments * |
Total | |||
Short-Term Investments |
830,094 | |||
|
|
|||
Subtotal Other Investments | $ | 830,094 | ||
|
|
|||
Total Investments at Value | $ | 873,297,453 | ||
|
|
* | Certain investments are measured at fair value using a net asset value per share that is not publicly available (practical expedient). According to disclosure requirements of Accounting Standards Codification (ASC) 820, Fair Value Measurement, securities valued using the practical expedient are not classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Statement of Assets and Liabilities. |
There were no significant transfers between Levels during the period ended October 31, 2018. Transfers between Levels are identified as of the end of the period.
Investment in Affiliates
Affiliated issuers, as defined under the Investment Company Act of 1940, include those in which the Funds holdings of an issuer represent 5% or more of the outstanding voting securities of an issuer, any affiliated mutual fund, or a company which is under common ownership or control with the Fund. The Fund owns shares of Thrivent Core Short-Term Reserve Fund primarily to serve as a cash sweep vehicle for the Fund. Thrivent Core Funds are established solely for investment by Thrivent entities.
A summary of transactions (in thousands) for the fiscal year to date, in Low Volatility Equity Fund, is as follows:
Fund |
Value 2/28/2018 (inception) |
Gross Purchases |
Gross Sales |
Shares Held at 10/31/2018 |
Value 10/31/2018 |
% of Net Assets |
||||||||||||||||||
Affiliated Short-Term Investments | ||||||||||||||||||||||||
Core Short-Term Reserve, 2.430% |
$ | | $ | 54,611 | $ | 53,781 | 83 | $ | 830 | 0.1 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Affiliated Short-Term Investments | | 830 | 0.1 | |||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
Total Value | $ | | $ | 830 | ||||||||||||||||||||
|
|
|
|
Fund |
Net Realized Gain/(Loss) |
Change in Unrealized Appreciation/ (Depreciation) |
Distributions of Realized Capital Gains |
Income Earned 2/28/2018 - 10/31/2018 |
||||||||||||
Affiliated Short-Term Investments | ||||||||||||||||
Core Short-Term Reserve, 2.430% |
$ | | $ | | $ | | $ | 23 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Income from Affiliated Investments | $ | 23 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total | $ | | $ | | $ | | ||||||||||
|
|
|
|
|
|
|
|
The accompanying Notes to Financial Statements are an integral part of this schedule.
23
Schedule of Investments as of October 31, 2018
The accompanying Notes to Financial Statements are an integral part of this schedule. |
24 |
SHORT-TERM RESERVE FUND
Schedule of Investments as of October 31, 2018
The accompanying Notes to Financial Statements are an integral part of this schedule. |
25 |
SHORT-TERM RESERVE FUND
Schedule of Investments as of October 31, 2018
The accompanying Notes to Financial Statements are an integral part of this schedule. |
26 |
SHORT-TERM RESERVE FUND
Schedule of Investments as of October 31, 2018
The accompanying Notes to Financial Statements are an integral part of this schedule. |
27 |
SHORT-TERM RESERVE FUND
Schedule of Investments as of October 31, 2018
The accompanying Notes to Financial Statements are an integral part of this schedule. |
28 |
SHORT-TERM RESERVE FUND
Schedule of Investments as of October 31, 2018
The accompanying Notes to Financial Statements are an integral part of this schedule. |
29 |
SHORT-TERM RESERVE FUND
Schedule of Investments as of October 31, 2018
Unrealized Appreciation (Depreciation)
Gross unrealized appreciation and depreciation of investments of the portfolio as a whole (including derivatives), based on cost for federal income tax purposes, were as follows: |
||||
Gross unrealized appreciation |
$ | 183,495 | ||
Gross unrealized depreciation |
(858,835 | ) | ||
|
|
|||
Net unrealized appreciation (depreciation) |
$ | (675,340 | ) | |
Cost for federal income tax purposes |
$ | 4,870,850,828 |
Fair Valuation Measurements
The following table is a summary of the inputs used, as of October 31, 2018, in valuing Short-Term Reserve Funds assets carried at fair value or amortized cost, which approximates fair value.
Investments in Securities |
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
Asset-Backed Securities |
464,400,371 | | 464,400,371 | | ||||||||||||
Basic Materials |
129,514,120 | | 129,514,120 | | ||||||||||||
Capital Goods |
273,751,337 | | 273,751,337 | | ||||||||||||
Communications Services |
54,947,716 | | 54,947,716 | | ||||||||||||
Consumer Cyclical |
295,801,364 | | 295,801,364 | | ||||||||||||
Consumer Non-Cyclical |
343,679,859 | | 343,679,859 | | ||||||||||||
Energy |
268,646,757 | | 268,646,757 | | ||||||||||||
Financials |
1,880,796,425 | | 1,880,796,425 | | ||||||||||||
Foreign |
429,240,680 | | 429,240,680 | | ||||||||||||
Technology |
158,866,632 | | 158,866,632 | | ||||||||||||
Transportation |
73,441,587 | | 73,441,587 | | ||||||||||||
U.S. Government and Agencies |
63,432,520 | | 63,432,520 | | ||||||||||||
U.S. Municipals |
54,702,951 | | 54,702,951 | | ||||||||||||
Utilities |
378,953,169 | | 378,953,169 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Investments at Value | $ | 4,870,175,488 | $ | | $ | 4,870,175,488 | $ | | ||||||||
|
|
|
|
|
|
|
|
There were no significant transfers between Levels during the period ended October 31, 2018. Transfers between Levels are identified as of the end of the period.
The accompanying Notes to Financial Statements are an integral part of this schedule.
30
STATEMENT OF ASSETS AND LIABILITIES
As of October 31, 2018 |
Emerging Markets Debt Fund |
International Equity Fund |
Low Volatility Equity Fund |
Short-Term Reserve Fund |
||||||||||||
Assets | ||||||||||||||||
Investments at cost | $ | 735,534,925 | $ | 896,478,282 | $ | 854,253,694 | $ | 4,870,850,828 | ||||||||
Investments in unaffiliated securities at value (#) |
662,891,981 | 794,692,716 | 872,467,359 | 4,870,175,488 | ||||||||||||
Investments in affiliated securities at value |
16,716,487 | 28,674,677 | 830,094 | | ||||||||||||
Cash |
| 521 | (a) | | 166,063 | |||||||||||
Dividends and interest receivable |
7,635,517 | 3,625,833 | 495,841 | 6,373,277 | ||||||||||||
Prepaid expenses |
2,500 | 2,988 | 5,153 | 8,867 | ||||||||||||
Prepaid trustee fees |
1,091 | 1,091 | 1,090 | 1,091 | ||||||||||||
Receivable for: |
||||||||||||||||
Investments sold |
1,491,274 | 5,155,438 | | | ||||||||||||
Total Assets |
688,738,850 | 832,153,264 | 873,799,537 | 4,876,724,786 | ||||||||||||
Liabilities |
||||||||||||||||
Distributions payable |
| | | 10,057,338 | ||||||||||||
Accrued expenses |
48,556 | 137,594 | 110,738 | 29,843 | ||||||||||||
Payable for: |
||||||||||||||||
Investments purchased |
| 5,269,147 | | 12,086,327 | ||||||||||||
Return of collateral for securities loaned |
4,446,979 | 28,504,220 | | | ||||||||||||
Administrative service fees |
11,807 | 13,915 | 15,261 | | ||||||||||||
Director deferred compensation |
880 | 880 | 865 | 2,496 | ||||||||||||
Commitments and contingent liabilities^ |
| | | | ||||||||||||
Total Liabilities |
4,508,222 | 33,925,756 | 126,864 | 22,176,004 | ||||||||||||
Net Assets | ||||||||||||||||
Capital stock (beneficial interest) |
742,251,702 | 859,601,448 | 824,997,173 | 4,855,236,810 | ||||||||||||
Distributable earnings/(accumulated loss) |
(58,021,074 | ) | (61,373,940 | ) | 48,675,500 | (688,028 | ) | |||||||||
Total Net Assets |
$ | 684,230,628 | $ | 798,227,508 | $ | 873,672,673 | $ | 4,854,548,782 | ||||||||
Shares of beneficial interest outstanding |
75,717,041 | 86,000,215 | 82,864,125 | 485,524,147 | ||||||||||||
Net asset value per share |
$ | 9.04 | $ | 9.28 | $ | 10.54 | $ | 10.00 | ||||||||
(#) Includes securities on loan of |
$ | 4,185,835 | $ | 26,888,047 | $ | | $ | |
(a) | Includes foreign currency holdings of $521 (cost $523). |
^ | Commitments and contingent liabilities accrual. Additional information can be found in the accompanying Notes to Financial Statements. |
The accompanying Notes to Financial Statements are an integral part of this statement.
31
STATEMENT OF OPERATIONS
For the year ended October 31, 2018 |
Emerging Markets Debt Fund |
International Equity Fund(a) |
Low
Volatility Equity Fund(b) |
Short-Term Reserve Fund |
||||||||||||
Investment Income |
||||||||||||||||
Dividends |
$ | | $ | 26,680,569 | $ | 10,902,277 | $ | | ||||||||
Interest |
26,640,292 | 33,932 | 29,208 | 99,494,049 | ||||||||||||
Affiliated income from securities loaned, net |
12,400 | 336,334 | | | ||||||||||||
Income from affiliated investments |
139,450 | 63,253 | 22,892 | | ||||||||||||
Non cash income |
| 2,458,630 | | | ||||||||||||
Foreign tax withholding |
| (2,838,486 | ) | (7,640 | ) | | ||||||||||
Total Investment Income |
26,792,142 | 26,734,232 | 10,946,737 | 99,494,049 | ||||||||||||
Expenses | ||||||||||||||||
Administrative service fees |
184,827 | 212,192 | 153,688 | 90,000 | ||||||||||||
Amortization of offering costs |
9,319 | 4,896 | 4,839 | | ||||||||||||
Audit and legal fees |
29,954 | 33,662 | 28,438 | 48,159 | ||||||||||||
Custody fees |
15,342 | 185,877 | 6,509 | 77,468 | ||||||||||||
Insurance expenses |
5,644 | 5,455 | 4,145 | 23,216 | ||||||||||||
Printing and postage expenses |
2,969 | 5,881 | 2,022 | 4,032 | ||||||||||||
SEC and state registration expenses |
37,703 | 101,760 | 99,990 | | ||||||||||||
Transfer agent fees |
30,000 | 30,000 | 20,000 | 30,000 | ||||||||||||
Directors fees |
7,341 | 7,029 | 5,081 | 7,476 | ||||||||||||
Pricing service fees |
5,413 | 10,965 | 667 | 80,333 | ||||||||||||
Other expenses |
7,939 | 10,191 | 5,976 | 8,597 | ||||||||||||
Total Expenses Before Reimbursement |
336,451 | 607,908 | 331,355 | 369,281 | ||||||||||||
Total Net Expenses |
336,451 | 607,908 | 331,355 | 369,281 | ||||||||||||
Net Investment Income/(Loss) |
26,455,691 | 26,126,324 | 10,615,382 | 99,124,768 | ||||||||||||
Realized and Unrealized Gains/(Losses) | ||||||||||||||||
Net realized gains/(losses) on: |
||||||||||||||||
Investments |
(2,183,616 | ) | (12,713,281 | ) | 19,013,033 | (17,348 | ) | |||||||||
Distributions of realized capital gains from affiliated investments |
73 | 48 | | | ||||||||||||
Foreign currency transactions |
| (618,630 | ) | | | |||||||||||
Change in net unrealized appreciation/(depreciation) on: |
||||||||||||||||
Investments |
(50,984,782 | ) | (73,110,889 | ) | 19,043,759 | (538,217 | ) | |||||||||
Foreign currency transactions |
| (57,264 | ) | | | |||||||||||
Net Realized and Unrealized Gains/(Losses) | (53,168,325 | ) | (86,500,016 | ) | 38,056,792 | (555,565 | ) | |||||||||
Net Increase/(Decrease) in Net Assets Resulting From Operations | $ | (26,712,634 | ) | $ | (60,373,692 | ) | $ | 48,672,174 | $ | 98,569,203 |
(a) | For the period from November 14, 2017 (inception) through October 31, 2018. |
(b) | For the period from February 28, 2018 (inception) through October 31, 2018. |
The accompanying Notes to Financial Statements are an integral part of this statement.
32
STATEMENT OF CHANGES IN NET ASSETS
Emerging Markets Debt Fund | International Equity Fund |
|||||||||||
For the periods ended |
10/31/2018 | 10/31/2017(a) | 10/31/2018(b) | |||||||||
Operations | ||||||||||||
Net investment income/(loss) |
$ | 26,455,691 | $ | 1,945,176 | $ | 26,126,324 | ||||||
Net realized gains/(losses) |
(2,183,543 | ) | (17,955 | ) | (13,331,863 | ) | ||||||
Change in net unrealized appreciation/(depreciation) |
(50,984,782 | ) | (4,941,675 | ) | (73,168,153 | ) | ||||||
Net Change in Net Assets Resulting From Operations | (26,712,634 | ) | (3,014,454 | ) | (60,373,692 | ) | ||||||
Distributions to Shareholders (%) | ||||||||||||
From net investment income/net realized gains |
(26,395,545 | ) | N/A | (1,001,317 | ) | |||||||
From net investment income |
N/A | (1,904,256 | ) | N/A | ||||||||
Total Distributions to Shareholders | (26,395,545 | ) | (1,904,256 | ) | (1,001,317 | ) | ||||||
Capital Stock Transactions | ||||||||||||
Sold |
183,634,669 | 426,772,907 | 858,700,000 | |||||||||
Distributions reinvested |
7,978,341 | | 1,001,317 | |||||||||
In-kind contributions |
124,931,300 | | | |||||||||
Redeemed |
(960,000 | ) | (99,700 | ) | (98,800 | ) | ||||||
Total Capital Stock Transactions | 315,584,310 | 426,673,207 | 859,602,517 | |||||||||
Net Increase/(Decrease) in Net Assets | 262,476,131 | 421,754,497 | 798,227,508 | |||||||||
Net Assets, Beginning of Period | 421,754,497 | | | |||||||||
Net Assets, End of Period | $ | 684,230,628 | $ | 421,754,497 | $ | 798,227,508 | ||||||
Capital Stock Share Transactions | ||||||||||||
Sold |
19,060,690 | 42,773,617 | 85,911,466 | |||||||||
Distributions reinvested |
874,746 | | 98,749 | |||||||||
In-kind contributions |
13,123,036 | | | |||||||||
Redeemed |
(105,048 | ) | (10,000 | ) | (10,000 | ) | ||||||
|
|
|
|
|
|
|||||||
Total Capital Stock Share Transactions |
32,953,424 | 42,763,617 | 86,000,215 | |||||||||
|
|
|
|
|
|
(a) | For the period from September 5, 2017 (inception) through October 31, 2017. |
(b) | For the period from November 14, 2017 (inception) through October 31, 2018. |
(%) | Distributions to Shareholders. Additional information can be found in the accompanying Notes to Financial Statements Recent Accounting Pronouncements Disclosure Update and Simplification. |
The accompanying Notes to Financial Statements are an integral part of this statement.
33
THRIVENT CORE FUNDS
STATEMENT OF CHANGES IN NET ASSETS CONTINUED
Low Volatility Equity Fund |
Short-Term Reserve Fund | |||||||||||
For the periods ended |
10/31/2018(a) | 10/31/2018 | 10/31/2017 | |||||||||
Operations | ||||||||||||
Net investment income/(loss) |
$ | 10,615,382 | $ | 99,124,768 | $ | 57,864,605 | ||||||
Net realized gains/(losses) |
19,013,033 | (17,348 | ) | 77,715 | ||||||||
Change in net unrealized appreciation/(depreciation) |
19,043,759 | (538,217 | ) | (1,903,290 | ) | |||||||
Net Change in Net Assets Resulting From Operations | 48,672,174 | 98,569,203 | 56,039,030 | |||||||||
Distributions to Shareholders (%) | ||||||||||||
From net investment income/net realized gains |
| (99,185,270 | ) | N/A | ||||||||
From net investment income |
N/A | N/A | (57,864,605 | ) | ||||||||
Total Distributions to Shareholders | | (99,185,270 | ) | (57,864,605 | ) | |||||||
Capital Stock Transactions | ||||||||||||
Sold |
825,099,999 | 12,052,138,996 | 10,504,705,250 | |||||||||
Redeemed |
(99,500 | ) | (12,185,182,945 | ) | (10,277,162,836 | ) | ||||||
Total Capital Stock Transactions | 825,000,499 | (133,043,949 | ) | 227,542,414 | ||||||||
Net Increase/(Decrease) in Net Assets | 873,672,673 | (133,660,016 | ) | 225,716,839 | ||||||||
Net Assets, Beginning of Period | | 4,988,208,798 | 4,762,491,959 | |||||||||
Net Assets, End of Period | $ | 873,672,673 | $ | 4,854,548,782 | $ | 4,988,208,798 | ||||||
Capital Stock Share Transactions |
||||||||||||
Sold |
82,874,125 | 1,205,213,900 | 1,050,470,525 | |||||||||
Redeemed |
(10,000 | ) | (1,218,518,295 | ) | (1,027,716,284 | ) | ||||||
|
|
|
|
|
|
|||||||
Total Capital Stock Share Transactions |
82,864,125 | (13,304,395 | ) | 22,754,241 | ||||||||
|
|
|
|
|
|
(a) | For the period from February 28, 2018 (inception) through October 31, 2018. |
(%) | Distributions to Shareholders. Additional information can be found in the accompanying Notes to Financial Statements Recent Accounting Pronouncements Disclosure Update and Simplification. |
The accompanying Notes to Financial Statements are an integral part of this statement.
34
NOTES TO FINANCIAL STATEMENTS
October 31, 2018
35
THRIVENT CORE FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 2018
36
THRIVENT CORE FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 2018
37
THRIVENT CORE FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 2018
38
THRIVENT CORE FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 2018
The following table presents the gross and net information about liabilities subject to master netting arrangements, as presented in the Statement of Assets and Liabilities:
Gross Amounts Not Offset in the | ||||||||||||||||||||||||||||
Statement of Assets and Liabilities | ||||||||||||||||||||||||||||
Fund |
Gross Amounts of Recognized Liabilities |
Gross Amounts Offset |
Net Amounts of Recognized Liabilities |
Financial Instruments |
Cash Collateral Pledged |
Non-Cash Collateral Pledged(**) |
Net Amount | |||||||||||||||||||||
Emerging Markets Debt Securities Lending |
4,446,979 | | 4,446,979 | 4,185,835 | | | 261,144 | (^) | ||||||||||||||||||||
International Equity Securities Lending |
28,504,220 | | 28,504,220 | 26,888,047 | | | 1,616,173 | (^) |
(**) | Excess of collateral pledged to the counterparty may not be shown for financial reporting purposes. |
(^) | Net securities lending amounts represent the net amount payable to the counterparty in the event of a default. |
39
THRIVENT CORE FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 2018
40
THRIVENT CORE FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 2018
In-kind Contributions During March 2018, the Thrivent Core Emerging Markets Debt Fund received an in-kind contribution which consisted of $124,931,300 in securities. As a result of the in-kind contribution, Thrivent Core Emerging Markets Debt Fund issued 13,123,036 shares at a $9.52/share net asset value. The in-kind amounts and shares issued are included in the Capital Stock Transactions of the Statement of Changes in Net Assets for Thrivent Core Emerging Markets Debt Fund. These in-kind transactions were conducted at market value. The transactions were as follows:
Contributing Fund/Portfolio |
Shares Issued |
In-kind Amount |
||||||
Balanced Income Plus Fund |
1,120,664 | $ | 10,668,722 | |||||
Balanced Income Plus Portfolio |
1,298,780 | $ | 12,364,385 | |||||
Diversified Income Plus Fund |
1,577,662 | $ | 15,019,338 | |||||
Diversified Income Plus Portfolio |
1,289,457 | $ | 12,275,624 | |||||
Growth and Income Plus Fund |
123,308 | $ | 1,173,896 | |||||
Growth and Income Plus Portfolio |
140,246 | $ | 1,335,143 | |||||
Opportunity Income Plus Fund |
6,361,609 | $ | 60,562,521 | |||||
Opportunity Income Plus Portfolio |
1,211,310 | $ | 11,531,671 | |||||
|
|
|
|
|||||
Totals |
13,123,036 | $ | 124,931,300 |
41
THRIVENT CORE FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 2018
The tax character of distributions paid during the years ended October 31, 2018 and 2017 was as follows:
Ordinary Income a | Long-Term Capital Gain |
|||||||||||||||
Fund |
10/31/2018 | 10/31/2017 | 10/31/2018 | 10/31/2017 | ||||||||||||
Emerging Markets Debt |
$ | 26,395,545 | $ | 1,904,256 | $ | | $ | | ||||||||
International Equity |
1,001,317 | | | | ||||||||||||
Short-Term Reserve |
99,124,770 | 57,864,605 | 60,500 | |
(a) | Ordinary income includes income derived from short-term capital gains. |
42
THRIVENT CORE FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 2018
43
THRIVENT CORE FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 2018
44
THRIVENT CORE FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 2018
45
THRIVENT CORE FUNDS
NOTES TO FINANCIAL STATEMENTS
October 31, 2018
46
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47
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD *
Income From Investment Operations | Less Distributions From | |||||||||||||||||||||||
Net Asset Value, Beginning of Period |
Net Investment Income/(Loss) |
Net Realized and Unrealized Gain/(Loss) on Investments(a) |
Total from Investment Operations |
Net Investment Income |
Net Realized Gain on Investments |
|||||||||||||||||||
EMERGING MARKETS DEBT FUND | ||||||||||||||||||||||||
Year Ended 10/31/2018 |
$ | 9.86 | $ | 0.40 | $ | (0.82 | ) | $ | (0.42 | ) | $ | (0.40 | ) | $ | | |||||||||
Year Ended 10/31/2017 (c) |
10.00 | 0.05 | (0.14 | ) | (0.09 | ) | (0.05 | ) | | |||||||||||||||
INTERNATIONAL EQUITY FUND | ||||||||||||||||||||||||
Year Ended 10/31/2018 (d) |
10.00 | 0.31 | (1.02 | ) | (0.71 | ) | (0.01 | ) | | |||||||||||||||
LOW VOLATILITY EQUITY FUND | ||||||||||||||||||||||||
Year Ended 10/31/2018 (e) |
10.00 | 0.13 | 0.41 | 0.54 | | | ||||||||||||||||||
SHORT-TERM RESERVE FUND | ||||||||||||||||||||||||
Year Ended 10/31/2018 |
10.00 | 0.20 | 0.00 | 0.20 | (0.20 | ) | 0.00 | |||||||||||||||||
Year Ended 10/31/2017 |
10.00 | 0.11 | 0.00 | 0.11 | (0.11 | ) | | |||||||||||||||||
Year Ended 10/31/2016 (f) |
10.00 | 0.03 | 0.00 | 0.03 | (0.03 | ) | |
(a) | The amount shown may not correlate with the change in aggregate gains and losses of portfolio securities due to the timing of sales and redemptions of portfolio shares. |
(b) | Total investment return assumes dividend reinvestment and does not reflect any deduction for applicable sales charges. Not annualized for periods less than one year. |
(c) | Since inception, September 5, 2017. |
(d) | Since inception, November 14, 2017. |
(e) | Since inception, February 28, 2018. |
(f) | Since inception, May 2, 2016. |
* | All per share amounts have been rounded to the nearest cent. |
** | Computed on an annualized basis for periods less than one year |
The accompanying Notes to Financial Statements are an integral part of this statement.
48
THRIVENT CORE FUNDS
FINANCIAL HIGHLIGHTS CONTINUED
RATIOS/SUPPLEMENTAL DATA
Ratio to Average Net Assets** | Ratio to Average Net Assets Before Expenses Waived, Credited or Paid Indirectly** |
|||||||||||||||||||||||||||||||||
Total |
Net Asset Value, End of Period |
Total Return(b) |
Net Assets, End of Period (in millions) |
Expenses | Net Investment Income/(Loss) |
Expenses | Net Investment Income/(Loss) |
Portfolio Turnover Rate |
||||||||||||||||||||||||||
$ | (0.40 | ) | $ | 9.04 | (4.35)% | $ | 684.2 | 0.06 | % | 4.38 | % | 0.06 | % | 4.38 | % | 13 | % | |||||||||||||||||
(0.05 | ) | 9.86 | (0.94)% | 421.8 | 0.21 | % | 3.48 | % | 0.21 | % | 3.48 | % | 0 | % | ||||||||||||||||||||
(0.01 | ) | 9.28 | (7.08)% | 798.2 | 0.08 | % | 3.42 | % | 0.08 | % | 3.42 | % | 73 | % | ||||||||||||||||||||
| 10.54 | 5.40% | 873.7 | 0.06 | % | 1.88 | % | 0.06 | % | 1.88 | % | 40 | % | |||||||||||||||||||||
(0.20 | ) | 10.00 | 2.01% | 4,854.5 | 0.01 | % | 1.99 | % | 0.01 | % | 1.99 | % | 213 | % | ||||||||||||||||||||
(0.11 | ) | 10.00 | 1.12% | 4,988.2 | 0.01 | % | 1.11 | % | 0.01 | % | 1.11 | % | 143 | % | ||||||||||||||||||||
(0.03 | ) | 10.00 | 0.32% | 4,762.5 | 0.01 | % | 0.67 | % | 0.01 | % | 0.67 | % | 31 | % |
The accompanying Notes to Financial Statements are an integral part of this statement.
49
(Unaudited)
PROXY VOTING
The policies and procedures that the Trust uses to determine how to vote proxies relating to portfolio securities are attached to the Trusts Statement of Additional Information. The Trust files a report of how it voted proxies relating to portfolio securities on Form N-PX with the SEC. You may request a free copy of the Statement of Additional Information or the report of how the Trust voted proxies relating to portfolio securities during the most recent 12-month period ended June 29 by calling 800-847-4836. You also may review the Statement of Additional Information or the report of how the Trust voted proxies relating to portfolio securities during the most recent 12-month period ended June 29 at SEC.gov.
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS
The Trust files its Schedule of Portfolio Holdings on Form N-Q with the SEC for the first and third quarters of each fiscal year. You may request a free copy of the Trusts Forms N-Q by calling 800-847-4836. The Trusts Forms N-Q also are available at SEC.gov where it is filed on Form N-Q. You also may review and copy the Forms N-Q for the Trust at the SECs Public Reference Room in Washington, DC. You may get information about the operation of the Public Reference Room by calling 800-SEC-0330.
SHAREHOLDER NOTIFICATION OF FEDERAL TAX INFORMATION
Pursuant to IRC 852(b)(3) of the Internal Revenue Code, Core Short-Term Reserve Fund hereby designates $60,500 as long-term capital gains distributed during the year ended October 31, 2018, or if subsequently determined to be different, the net capital gain of such year.
Core International Equity fund designates 95% of dividends declared from net investment income as qualified dividend income for individuals under the Jobs and Growth Tax Relief Reconciliation Act of 2003 for the tax period ending October 31, 2018.
50
BOARD OF TRUSTEES AND OFFICERS
The following table provides information about the Trustees and Officers of the Trust. The Board is responsible for the management and supervision of the Funds business affairs and for exercising all powers except those reserved to the shareholders. Each Trustee oversees the Trust and also serves as:
| Trustee of Thrivent Mutual Funds, a registered investment company consisting of 24 funds that offer Class A and Class S shares. |
| Director of Thrivent Series Fund, Inc., a registered investment company consisting of 29 funds that serve as underlying funds for variable contracts issued by Thrivent Financial and Thrivent Life Insurance Company and separate accounts of insurance companies not affiliated with Thrivent Financial. |
| Trustee of Thrivent Cash Management Trust, a registered investment company consisting of one fund that serves as a cash collateral fund for a securities lending program sponsored by Thrivent Financial. |
David Royal also serves as Trustee of Thrivent Church Loan and Income Fund, a closed-end registered investment company.
Thrivent Series Fund, Inc., Thrivent Mutual Funds, Thrivent Cash Management Trust, Thrivent Core Funds, and Thrivent Church Loan and Income Fund are referred to herein as the Fund Complex. The Statement of Additional Information includes additional information about the Trustees and is available, without charge, by calling 800-847-4836.
Interested Trustees (1)(2)(3)(4)
Name |
Principal Occupation(s) and Directorships of Public Companies and Other Investment Companies During the Past Five Years | |
David S. Royal (1971) 2015 |
Chief Investment Officer, Thrivent Financial since 2017; VP, President, Mutual Funds, Thrivent Financial from 2015 to 2017; Vice President and Deputy General Counsel from 2006 to 2015. Currently, Director of Childrens Cancer Research Fund and Advisory Board member of Twin Bridge Capital Partners; Director of Fairview Hospital Foundation until 2017. | |
Russell W. Swansen (1957) 2009 |
Retired; Chief Investment Officer, Thrivent Financial from 2003 to 2017. Currently, Advisory Board member of Twin Bridge Capital Partners, Advisory Board member of Invenshure LLC, and Director of Intellectual Takeout; Director of Childrens Cancer Research Fund until 2017. | |
Independent Trustees (2)(3)(4)(5) | ||
Name (Year of Birth) Year Elected |
Principal Occupation(s) and Directorships of Public Companies and Other Investment Companies During the Past Five Years | |
Janice B. Case (1952) 2011 |
Retired. Independent Trustee of North American Electric Reliability Corporation (the electric reliability organization (ERD) for North America) since 2008. | |
Robert J. Chersi (1961) 2017 |
Founder of Chersi Services LLC (consulting firm) since 2012; Executive Director of Center for Global Governance, Reporting & Regulation and Adjunct Professor of Finance and Economics at Pace University since 2013; Helpful Executive in Research (counseling) in the Department of Accounting & Information Systems at Rutgers University since 2013. Director and Chairman of the Audit Committee of Brightsphere Investment Group plc since 2016; Advisory Board member of the Pace University Lubin School of Business. | |
Richard A. Hauser (1943) 2004 |
Retired; Member, PowerHaus Advisors LLC since 2016; Vice President and Assistant General Counsel, The Boeing Company from 2007 to 2016. | |
Marc S. Joseph (1960) 2011 |
Managing Director of Granite Ridge LLP (consulting and advisory firm) since 2009; Managing Director of Triangle Crest (private investing and consulting firm) since 2004. | |
Paul R. Laubscher (1956) 2009 |
Portfolio Manager for U.S. private real estate portfolios of IBM Retirement Funds. | |
James A. Nussle (1960) 2011 |
President and Chief Executive Officer of Credit Union National Association since September 2014; President and Chief Operating Officer of Growth Energy (trade association) from 2010 through August 2014; Advisory Board member of AVISTA Capital Partners (private equity firm) from 2010 to 2015; CEO of The Nussle Group LLC (consulting firm) since 2009. Advisory Board member of AVISTA Capital Partners and Director of Portfolio Recovery Associates (PRAA) since 2010. |
51
BOARD OF TRUSTEES AND OFFICERS
Independent Trustees (2)(3)(4)(5)
Name (Year of Birth) Year Elected |
Principal Occupation(s) and Directorships of Public Companies and Other Investment Companies During the Past Five Years | |
Verne O. Sedlacek (1954) 2017 |
Chief Executive Officer of E&F Advisors LLC (consulting) since 2015; President & Chief Executive Officer of the Commonfund from 2003 to 2015. Director of Association of Governing Boards of Universities and Collleges since 2007; Trustee of Valparaiso University since 2015; Trustee of Museum of American Finance since 2015; Chairman of the Board of Directors of AGB Institutional Strategies since 2016. | |
Constance L. Souders (1950) 2007 |
Retired. |
52
BOARD OF TRUSTEES AND OFFICERS
Executive Officers (2)(4)
Name (Year of Birth) Position Held With Trust |
Principal Occupation(s) During the Past Five Years | |
David S. Royal (1971) Trustee, President and Chief Investment Officer |
Chief Investment Officer, Thrivent Financial since 2017; VP, President, Mutual Funds, Thrivent Financial from 2015 to 2017; Vice President and Deputy General Counsel from 2006 to 2015. | |
Gerard V. Vaillancourt (1967) Treasurer and Principal Accounting Officer |
Vice President, Mutual Fund Accounting since 2006. | |
Michael W. Kremenak (1978) Secretary and Chief Legal Officer |
Vice President, Thrivent Financial since 2015; Senior Counsel, Thrivent Financial from 2013 to 2015; Vice President and Assistant General Counsel at Nuveen Investments from 2011 to 2013. | |
Ted S. Dryden (1965) Chief Compliance Officer |
Vice President, Chief Compliance Officer - Thrivent Funds, Thrivent Financial since 2018; Director, Chief Compliance Officer - Thrivent Funds, Thrivent Financial from 2010 to 2018. | |
Janice M. Guimond (1964) Vice President |
Vice President, Investment Operations, Thrivent Financial since 2004. | |
Kathleen M. Koelling (1977) Privacy and Identity Theft and Anti-Money Laundering Officer (6) |
Vice President, Deputy General Counsel, Thrivent Financial since 2018; Vice President, Managing Counsel, Thrivent Financial from 2016 to 2018; Privacy and Identity Theft and Anti-Money Laundering Officer, Thrivent Financial since 2011; Senior Counsel, Thrivent Financial from 2002 to 2016. | |
Kathryn A. Stelter (1962) Vice President |
Vice President, Mutual Funds Chief Operations Officer, Thrivent Financial since 2017; Director, Mutual Fund Operations, Thrivent Financial from 2014 to 2017; Director, Mutual Fund Operations at Hartford Funds from 2006 to 2014. | |
Troy A. Beaver (1967) Vice President |
Vice President, Mutual Funds Marketing & Distribution, Thrivent Financial since 2015; Vice President, Marketing, American Century Investments from 2006 to 2015. | |
James M. Odland (1955) Assistant Secretary |
Vice President, Managing Counsel, Thrivent Financial since 2005. | |
Jill M. Forte (1974) Assistant Secretary |
Senior Counsel, Thrivent Financial since 2017; Counsel, Thrivent Financial from 2015 to 2017; Associate Counsel, Ameriprise Financial, Inc. from 2013 to 2015; Manager - Legal Affairs, Ameriprise Financial, Inc. from 2010 to 2013. | |
John D. Jackson (1977) Assistant Secretary |
Senior Counsel, Thrivent Financial since 2017; Associate General Counsel, RBC Global Asset Management (US) Inc. from 2011 to 2017. | |
Sarah L. Bergstrom (1977) Assistant Treasurer |
Head of Mutual Fund Accounting, Thrivent Financial since 2017; Director, Fund Accounting Administration, Thrivent Financial from 2007 to 2017. |
(1) | Interested person of the Trust as defined in the 1940 Act by virtue of a position with Thrivent Financial. Mr. Royal is considered an interested person because of his principal occupation with Thrivent Financial. Mr. Swansen is considered an interested person because of his past occupation with Thrivent Financial. |
(2) | Each Trustee generally serves an indefinite term until her or his successor is duly elected and qualified. Officers serve at the discretion of the Board until their successors are duly appointed and qualified. |
(3) | Each Trustee, other than Mr. Royal, oversees 58 portfolios. Mr. Royal oversees 59 portfolios. |
(4) | The address for each Trustee and Officer unless otherwise noted is 625 Fourth Avenue South, Minneapolis, MN 55415. |
(5) | The Trustees other than Mr. Royal and Mr. Swansen are not interested persons of the Trust and are referred to as Independent Trustees. |
(6) | The address for this Officer is 4321 North Ballard Road, Appleton, WI 54913. |
53
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This report is submitted for the information of shareholders
of Thrivent Core Funds. It is not authorized for distribution to
prospective investors unless preceded or accompanied by the
current prospectus for Thrivent Core Funds, which contains more
complete information about the Trust, including investment
objectives, risks, charges and expenses.
Item 2. | Code of Ethics |
As of the end of the period covered by this report, registrant has adopted a code of ethics (as defined in Item 2 of Form N-CSR) applicable to registrants Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer. No waivers were granted to such code of ethics during the period covered by this report. A copy of this code of ethics is filed as an exhibit to this Form N-CSR.
Item 3. | Audit Committee Financial Expert |
Registrants Board of Trustees has determined that Robert J. Chersi, an independent trustee, is the Audit Committee Financial Expert.
Item 4. | Principal Accountant Fees and Services |
(a) | Audit Fees |
The aggregate fees billed by registrants independent public accountants, PricewaterhouseCoopers LLP (PwC), for each of the last two fiscal years for professional services rendered in connection with the audit of registrants annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements were $16,520 for the year ended October 31, 2017 and $115,196 for the year ended October 31, 2018.
(b) | Audit-Related Fees |
The aggregate fees PwC billed to registrant for each of the last two fiscal years for assurance and other services that are reasonably related to the performance of registrants audit and are not reported under Item 4(a) were $0 for the year ended October 31, 2017 and $0 for the year ended October 31, 2018. The aggregate fees PwC billed to registrants investment adviser and any entity controlling, controlled by, or under common control with registrants investment adviser for assurance and other services directly related to the operations and financial reporting of registrant were $1,000 for the year ended October 31, 2017 and $3,515 for the year ended October 31, 2018. The 2017 payments were for corporate action consultation services. The 2018 payments were for review of SEC comment letter.
(c) | Tax Fees |
The aggregate tax fees PwC billed to registrant for each of the last two fiscal years for tax compliance, tax advice and tax planning services were $12,738 for the year ended October 31, 2017 and $6,938 for the year ended October 31, 2018. These fees include payments for tax return compliance services, excise distribution review services and other tax related matters. The aggregate tax fees PwC billed to registrants investment adviser and any entity controlling, controlled by, or under common control with registrants investment adviser for services directly related to the operations and financial reporting of registrant were $0 for the year ended October 31, 2017 and $0 for the year ended October 31, 2018.
(d) | All Other Fees |
The aggregate fees PwC billed to registrant for each of the last two fiscal years for products and services provided, other than the services reported in paragraphs (a) through (c) of this item, were $0 for the years ended October 31, 2017 and October 31, 2018. The aggregate fees PwC billed to registrants investment adviser and any entity controlling, controlled by, or under common control with registrants investment adviser for products and services provided, other than the services reported in paragraphs (a) through (c) of this item, were $3,600 for the year ended October 31, 2017 and $23,550 for the year ended October 31, 2018. The 2017 payments were for access to a PwC-sponsored online library that provides interpretive guidance regarding U.S. and foreign accounting standards. The 2018 payments were for access to a PwC-sponsored online library that provides interpretive guidance regarding U.S. and foreign accounting standards and for fees related to the merger of certain series of Thrivent Mutual Funds and certain series of Thrivent Series Fund, Inc. These figures are also reported in response to item 4(g) below.
(e) | Registrants audit committee charter provides that the audit committee (comprised of the independent Trustees of registrant) is responsible for pre-approval of all auditing services performed for the registrant. The audit committee also is responsible for pre-approval (subject to the de minimis exceptions for non-audit services described in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934) of all non-auditing services performed for the registrant or an affiliate of registrant. In addition, registrants audit committee charter permits a designated member of the audit committee to pre-approve, between meetings, one or more audit or non-audit service projects, subject to an expense limit and notification to the audit committee at the next committee meeting. Registrants audit committee pre-approved all fees described above that PwC billed to registrant. |
(f) | Less than 50% of the hours billed by PwC for auditing services to registrant for the fiscal year ended October 31, 2018 were for work performed by persons other than full-time permanent employees of PwC. |
(g) | The aggregate non-audit fees billed by PwC to registrant and to registrants investment adviser and any entity controlling, controlled by, or under common control with registrants investment adviser for the fiscal years ending October 31, 2017 and October 31, 2018 were $3,600 and $23,550 respectively. These figures are also reported in response to item 4(d) above. |
(h) | Registrants audit committee has considered the non-audit services provided to the registrant and registrants investment adviser and any entity controlling, controlled by, or under common control with registrants investment adviser as described above and determined that these services do not compromise PwCs independence. |
Item 5. | Audit Committee of Listed Registrants |
Not applicable.
Item 6. | Investments |
(a) | Registrants Schedule of Investments is included in the report to shareholders filed underItem 1. |
(b) | Not applicable to this filing. |
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 |
There have been no material changes to the procedures by which shareholders may recommend nominees to registrants board of trustees.
Item 11. | Controls and Procedures |
(a) Registrants principal executive and principal financial officers, or persons performing similar functions, have concluded that registrants disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are effective, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(b) Registrants principal executive and principal financial officers, or persons performing similar functions, are aware of no change in registrants internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, registrants internal control over financial reporting.
Item 12. | Disclosure of Securities Lending Activities for Closed-End Management Investment Companies |
Not applicable
Item 13. | Exhibits |
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit: See EX-99.CODE attached hereto.
(a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)) in the exact form set forth below: See EX-99.CERT attached hereto.
(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under the 1940 Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons: Not applicable.
(a)(4) Change in the registrants independent public accountant: Not applicable
(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2(b) under the 1940 Act (17 CFR 270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) as an exhibit. A certification furnished pursuant to this paragraph will not be deemed filed for purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference: See EX-99.906CERT attached hereto.
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.
Date: December 28, 2018 | THRIVENT CORE FUNDS | |||||
By: | /s/ David S. Royal | |||||
David S. Royal | ||||||
President and Chief Investment Officer |
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.
Date: December 28, 2018 | By: | /s/ David S. Royal | ||||
David S. Royal | ||||||
President and Chief Investment Officer | ||||||
(principal executive officer) | ||||||
Date: December 28, 2018 | By: | /s/ Gerard V. Vaillancourt | ||||
Gerard V. Vaillancourt | ||||||
Treasurer and Principal Accounting Officer | ||||||
(principal financial officer) |
CODE OF ETHICS
(Sarbanes-Oxley Act of 2002, Section 406)
for
PRINCIPAL EXECUTIVE OFFICER
PRINCIPAL FINANCIAL OFFICER
AND
PRINCIPAL ACCOUNTING OFFICER
OF
THRIVENT MUTUAL FUNDS
THRIVENT CASH MANAGEMENT TRUST
THRIVENT SERIES FUND, INC.
THRIVENT CORE FUNDS
AND
THRIVENT CHURCH LOAN AND INCOME FUND
November 14, 2018
I. CODE OF ETHICS
It is the policy of the Thrivent Mutual Funds, Thrivent Cash Management Trust, Thrivent Series Fund, Inc., Thrivent Core Funds and Thrivent Church Loan and Income Fund (collectively, the Funds) that the President, as chief executive officer, and the Treasurer, as chief financial officer and chief accounting officer (or persons performing similar functions), of each Fund adhere to and advocate the following principles governing their professional and ethical conduct in the fulfillment of their responsibilities:
A. | Act with honesty and integrity, and ethically handle actual or apparent conflicts between his or her personal, private interests and the interests of the Funds, including receiving improper personal benefits as a result of his or her position. |
B. | Take such actions as are necessary as to ensure that periodic reports filed with the Securities and Exchange Commission and other public communications contain information which provides full, fair, accurate, timely and understandable disclosure. Such actions shall include adoption and maintenance of adequate disclosure controls and procedures. |
C. | Comply with laws of federal, state, and local governments applicable to the Funds, and the rules and regulations of private and public regulatory agencies having jurisdiction over the Funds. |
D. | Act in good faith, responsibly, with due care and diligence, without misrepresenting or omitting material facts or allowing independent judgment to be compromised. |
E. | Respect the confidentiality of information acquired in the course of the performance of his or her responsibilities except when authorized or otherwise legally obligated to disclose such information. Do not use confidential information acquired in the course of the performance of his or her responsibilities for personal advantage. |
F. | Proactively promote ethical behavior among subordinates and peers. |
G. | Use Fund assets and resources employed or entrusted in a responsible manner. |
H. | Do not use Fund information, assets, opportunities or ones position with the Funds for personal gain. Do not compete directly or indirectly with the Funds. |
I. | Promptly report any violation of this Code to the Chief Compliance Officer. |
J. | Comply in all respects with (a) the Funds Code of Ethics; (b) Thrivent Financial for Lutherans Code of Conduct, and (c) Thrivent Financial for Lutherans and Thrivent Asset Management, LLCs Policy on Insider Trading. |
K. | Acknowledge and certify compliance with the foregoing annually and file a copy of such certification with the Audit Committee of each Funds Board of Directors/Trustees (Fund Board). |
2
II. ADMINISTRATION OF CODE
A. | Chief Compliance Officer. |
The Independent Directors of each Fund Board shall appoint a Chief Compliance Officer, who shall have overall responsibility for ensuring this Code is adhered to. In such capacity, the Chief Compliance Officer shall report to each Fund Boards Audit Committee. The Chief Compliance Officer shall be a person who has sufficient status within Thrivent Financial for Lutherans to engender respect for the Code and the authority adequately to deal with the persons subject to the Code regardless of their stature in the company.
B. | Amendments |
Any material amendment to this Code shall be disclosed in accordance with the requirements of Rule 30b2-1(a) under the Investment Company Act of 1940, as amended (the 1940 Act), and form N-CSR. Form N-CSR does not require disclosure of technical, administrative or other non-substantive amendments.
C. | Waivers |
A waiver of a provision of this Code must be requested whenever there is a reasonable likelihood that a contemplated action will violate the Code. Requests for waivers must be in writing and submitted to the Chief Compliance Officer, who shall make a recommendation to the Audit Committee for final determination. Any waiver or implicit waiver shall be disclosed in accordance with the requirements of Rule 30b2-1(a) under the 1940 Act and Form N-CSR.
As used herein, waiver means any approval by the Audit Committee of a material departure from a provision of this Code. Implicit waiver means failure by the Chief Compliance Officer or the Audit Committee to take action within a reasonable period of time regarding a material departure from a provision of the Code that has been made known to an executive officer (as defined by Rule 3b-7 under the Securities Exchange Act of 1934, as amended) of the Funds.
D. | Violations |
Upon learning of a violation or potential violation of this Code, the Chief Compliance Officer shall prepare a written report to Audit Committee providing full details and recommendations for further action.
The Audit Committee will, in consultation with the Chief Compliance Officer and/or such legal counsel as the Audit Committee deems appropriate, make the final determination of whether a violation has occurred and the action, if any, to be taken in response thereto. The Audit Committee may take into account the qualitative and quantitative materiality of the violation from the perspective of either the determent to the Fund or the benefit to the violating officer, the policy behind the provision violated and such other facts and circumstances as it deems advisable under all of the facts and circumstances.
3
Any material violation shall be reported in accordance with the requirements of Rule 30b2-1 of the 1940 Act and Form N-CSR.
E. | Regulatory Filing |
A copy of this Code of Ethics shall be filed as an exhibit to each Funds annual report on Form N-CSR.
F. | Records |
The Chief Compliance Officer or Chief Legal Officer shall retain copies of all records required by Form N-CSR and/or rules and regulations promulgated under the 1940 Act.
4
CERTIFICATION
I, David S. Royal, certify that:
1. | I have reviewed this report on Form N-CSR of Thrivent Core Funds; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrants internal control over financial reporting 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 registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed to registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: December 28, 2018 | ||
/s/ David S. Royal | ||
David S. Royal | ||
President and Chief Investment Officer (principal executive officer) |
CERTIFICATION
I, Gerard V. Vaillancourt, certify that:
1. | I have reviewed this report on Form N-CSR of Thrivent Core Funds; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrants internal control over financial reporting 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 registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed to registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize, and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: December 28, 2018 | ||
/s/ Gerard V. Vaillancourt | ||
Gerard V. Vaillancourt | ||
Treasurer and Principal Accounting Officer (principal financial officer) |
CERTIFICATION UNDER SECTION 906 OF SARBANES-OXLEY ACT OF 2002
Name of Registrant: Thrivent Core Funds
In connection with the Report on Form N-CSR for the above-named issuer, the undersigned hereby certify, to the best of their knowledge, that:
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. |
Date: December 28, 2018 | ||
/s/ David S. Royal | ||
David S. Royal | ||
President and Chief Investment Officer (principal executive officer) | ||
Date: December 28, 2018 | ||
/s/ Gerard V. Vaillancourt | ||
Gerard V. Vaillancourt | ||
Treasurer and Principal Accounting Officer (principal financial officer) |
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