<PAGE>
JP CAPITAL APPRECIATON FUND, INC.
- --------------------------------------------------------------------------------
A MUTUAL FUND SEEKING GROWTH OF CAPITAL
This report and accompanying financial statements are submitted for information
of the Fund shareholders and are not to be considered as an offer or
solicitation of offers to buy or sell any shares of the Fund. Such offering is
made only if preceded or accompanied by an effective prospectus.
FUND DIRECTORS AND OFFICERS INVESTMENT ADVISER AND TRANSFER AGENT
E. J. YELTON, Ph.D., DIRECTOR, JP Investment Management Company
PRESIDENT, AND TREASURER 100 North Greene Street
Greensboro, North Carolina 27401
JOHN C. INGRAM, CFA, DIRECTOR
J. LEE LLOYD, DIRECTOR CUSTODIAN
Investors Fiduciary Trust Company
RICHARD W. McENALLY, CFA, DIRECTOR 127 West Tenth Street
Kansas City, Missouri 64105
WILLIAM E. MORAN, DIRECTOR
W. HARDEE MILLS, CFA, VICE PRESIDENT
J. GREGORY POOLE, SECRETARY
GREGORY D. WALKER, CFA,
PORTFOLIO MANAGER
JP CAPITAL APPRECIATION FUND, INC.
100 North Greene Street
P.O. Box 21008
Greensboro, North Carolina 27420
<PAGE>
JP CAPITAL APPRECIATON FUND, INC.
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY
On June 30, 1995, the net asset value of your Fund was $16.81. Dividends
totaling $.191 per share from net investment income and $2.257 from capital
gains have been paid year to date.
On a total return basis for the first half of the year, the JP Capital
Appreciation Fund increased 17.11%, while the Growth and Income Median Mutual
Fund Manager increased 16.94%. Through June 30, 1995, JP Capital Appreciation
Fund's historical compound annual rate of total return is shown below for the
following holding periods:
1 Year - 19.43%
3 Years - 11.18%
5 Years - 9.57%
10 Years - 11.49%
Many major stock indices have risen to all-time highs this year. Depending on
which data source utilized, only 8-12% of all US equity managers have
outperformed the S&P 500 in the first half of the year. Many indices, such as
the S&P 500, are capitalization weighted so that the larger company's stock
performance has a greater impact on the indices' return than does a smaller
stock. Not owning the top ten performing stocks in the S&P 500 would have
resulted in 1.8% relative underperformance.
A slight improvement in terms of the number of stocks and industry groups
participating in the market rally occurred in the second quarter. This wider
breadth, however, is not broad enough to be associated with prior bull market
rallies. This is a cause for concern.
The market has continued to reward larger, lower yielding and higher beta
stocks. The Federal Reserve's much anticipated Fed Funds rate cut from 6.00% to
5.75% has continued to support the market. The anticipation of a Fed easing
resulted in smaller capitalization stocks rallying with a vengeance in June as
the NASDAQ rallied 10.2% and erased its underperformance relative to the S&P
500. Much of the NASDAQ strength, however, was the result of the larger
capitalization technology stocks such as Microsoft, Oracle, and Intel.
Restrained inflation and an expected lower, but positive rate of economic growth
has combined to lower interest rates and support higher price-earnings ratios
for the stock market. Earnings, a lagging result of prior economic strength, as
well as other factors seem to be continuing to hold up well. Our single largest
concern is the impact of a lower rate of economic growth on company earnings
which is more dramatic than most expect.
2
<PAGE>
PORTFOLIO DIVERSIFICATION
SECTOR % OF TOTAL NET ASSETS
Credit Cyclicals 0.00
Financial 13.27
Consumer Growth Staples 4.63
Consumer Staples 16.49
Consumer Cyclicals 8.47
Capital Goods -- Technology 13.74
Capital Goods 4.90
Energy 10.04
Basic Industries 8.38
Transportation 1.43
Utilities 11.26
Conglomerates 1.47
Cash 5.92
Your continued support and interest in the JP Capital Appreciation Fund are
appreciated, and we welcome any questions.
JP Capital Appreciation Fund, Inc.
/s/ E. J. Yelton
President
July 21, 1995
3
<PAGE>
JP CAPITAL APPRECIATON FUND, INC.
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS
June 30, 1995
COMPANY MARKET VALUE PERCENT OF FUND
Philip Morris Companies, Inc. $ 1,561,875 2.4
Atlantic Richfield Company 1,492,600 2.3
General Electric Company 1,409,375 2.2
Sara Lee Corporation 1,282,500 2.0
Royal Dutch Petroleum Company 1,279,687 2.0
Capital Cities/ABC, Inc. 1,252,800 1.9
Citicorp 1,192,225 1.8
Mobil Corporation 1,161,600 1.8
Equifax, Inc. 1,144,763 1.8
Schering-Plough Corporation 1,120,775 1.7
------------ ----
$ 12,898,200 19.9
4
<PAGE>
JP CAPITAL APPRECIATON FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
June 30, 1995 (Unaudited)
NUMBER OF SHARES
COMMON STOCKS -- 94.60% OR PRINCIPAL AMOUNT VALUE
Aerospace/Defense -- .64%
Loral Corporation 8,000 $ 414,000
Auto -- Car -- .34%
Ford Motor Company 7,400 220,150
Auto -- Replacement Parts -- .96%
Magna International, Inc. 14,100 622,162
Banks -- 4.80%
Bank of New York Company, Inc. 19,400 783,275
Chase Manhattan Corporation 10,000 470,000
Citicorp 20,600 1,192,225
NationsBank Corporation 12,400 664,950
Biotechnology -- 1.23%
Amgen, Inc. 9,900 794,475*
Broadcasting -- 1.93%
Capital Cities/ABC, Inc. 11,600 1,252,800
Chemicals -- Major -- 3.75%
Dow Chemical Company 10,400 747,500
du Pont, (E.I.) de Nemours and Company 11,300 776,875
Monsanto Company 10,000 901,250
Chemicals -- Miscellaneous -- 1.32%
PPG Industries, Inc. 19,800 851,400
Coal -- .90%
Pittston Services Group 24,400 585,600
Computer Software -- 1.67%
Silicon Graphics Computer System 13,800 550,275*
Sybase, Inc. 18,400 531,300*
Computer Systems -- 2.47%
EMC Corporation 21,900 531,075*
International Business Machines Corporation 11,100 1,065,600
5
<PAGE>
Conglomerates -- 1.47%
AlliedSignal, Inc. 14,000 623,000
Tenneco, Inc. 7,200 331,200
Containers -- Paper -- .44%
Bemis Company, Inc. 11,000 286,000
Cosmetics & Toilet -- 1.57%
International Flavors & Fragrances, Inc. 20,500 1,019,875
Drugs -- 4.27%
Lilly (Eli) & Company 7,600 596,600
Merck & Company, Inc. 9,000 441,000
Mylan Laboratories, Inc. 19,600 602,700
Schering-Plough Corporation 25,400 1,120,775
Electric Equipment -- Major -- 2.18%
General Electric Company 25,000 1,409,375
Electronics -- Instrument -- 2.14%
General Instrument Corporation 14,000 537,250*
Varian Associates, Inc. 15,300 845,325
Electronics -- Semi -- 3.76%
LSI Logic Corporation 18,800 735,550*
Microchip Technology, Inc. 18,000 652,500*
Texas Instruments, Inc. 7,800 1,044,225
Entertainment -- .96%
Disney, (Walt) & Company 11,200 623,000
Foods -- 3.38%
Archer-Daniels-Midland Company 48,450 902,381
Sara Lee Corporation 45,000 1,282,500
Footwear -- .91%
Nike, Inc. 7,000 588,000
Hospital -- Management -- 1.76%
Columbia/HCA Healthcare Corporation 16,600 717,950
Foundation Health Corporation 15,600 421,200*
Hospital -- Supplies -- 1.97%
Baxter International, Inc. 10,000 363,750
Johnson & Johnson 13,500 912,937
6
<PAGE>
Information Processing -- 1.77%
Equifax, Inc. 34,300 1,144,762
Insurance -- Multi-Line -- 4.04%
Aflac, Inc. 17,600 770,000
Allstate Corporation 20,500 607,312
American General Corporation 12,200 411,750
CIGNA Corporation 10,600 822,825
Leisure Time -- .35%
Callaway Golf Company 15,200 228,000
Machinery -- Agricultural -- .63%
Varity Corporation 9,300 409,200*
Machinery & Construction -- 1.47%
Caterpillar, Inc. 14,800 950,900
Machinery -- Industrial/Specialty -- .65%
York International Corporation 9,300 418,500
Merchandising -- Department -- .71%
Dayton Hudson Corporation 6,400 459,200
Merchandising -- Drugs -- .57%
Eckerd Corporation 11,500 368,000*
Merchandising -- Food -- .63%
Albertson's, Inc. 13,700 407,575
Merchandising -- Mass -- 1.30%
Penney, (JC) Company, Inc. 17,500 840,000
Merchandising -- Special -- 3.48%
Borders Group, Inc. 12,500 179,687*
Circuit City Stores, Inc. 28,000 885,500
Consolidated Stores Corporation 21,800 455,075*
Lowe's Companies, Inc. 24,550 733,431
Metals -- Copper -- 1.17%
Phelps Dodge Corporation 12,800 755,200
Metals -- Steel -- .25%
AK Steel Holding Corporation 6,000 163,500*
Miscellaneous Capital Goods -- Technology -- .48%
Minnesota Mining & Manufacturing Company 5,400 309,150
7
<PAGE>
Miscellaneous Consumer Cyclical -- .47%
Kelly Services, Inc. 12,000 303,000
Miscellaneous Financial -- 4.50%
Countrywide Credit Industries, Inc. 50,000 1,050,000
Dean Witter, Discover & Company 11,000 517,000
Federal Home Loan Mortgage Corporation 8,000 550,000
First USA, Inc. 18,000 798,750
Natural Gas -- Diverified -- .62%
Questar Corporation 14,000 402,500
Oils -- Integrated Domestic -- 4.80%
Amoco Corporation 15,600 1,039,350
Atlantic Richfield Company 13,600 1,492,600
Phillips Petroleum Company 17,200 574,050
Oils -- Integrated International -- 3.77%
Mobil Corporation 12,100 1,161,600
Royal Dutch Petroleum Company 10,500 1,279,688
Paper & Forest Products -- 1.50%
Scott Paper Company 15,400 762,300
Sonoco Products Company 8,400 207,900
Railroads -- .81%
CSX Corporation 7,000 525,875
Telecommunications -- .90%
DSC Communications Corporation 12,500 581,250*
Tobacco -- 2.96%
Philip Morris Companies, Inc. 21,000 1,561,875
UST, Inc. 12,000 357,000
Transportation -- Truckers -- .21%
Yellow Corporation 7,500 135,938
Transportation -- Miscellaneous -- .41%
Federal Express Corporation 4,400 267,300*
8
<PAGE>
Utilities -- Communications -- 8.42%
Ameritech Corporation 12,400 545,600
BCE, Inc. 15,300 491,512
Bell Atlantic Corporation 9,800 548,800
BellSouth Corporation 14,100 895,350
Century Telephone Enterprises, Inc. 14,000 397,250
SBC Communications, Inc. 14,500 690,563
Sprint Corporation 26,500 891,063
US West, Inc. 23,800 990,675
Utilities -- Electric -- 2.91%
American Electric Power Company, Inc. 11,550 405,694
Consolidated Edison Company of NY, Inc. 9,900 292,050
Dominion Resources, Inc. 7,650 279,225
Northeast Utilities 14,500 326,250
PECO Energy Company 8,300 229,288
Public Service Enterprise Group, Inc. 12,550 348,263
-----------
Total Common Stocks (Cost -- $51,209,195+) 61,231,131
-----------
SHORT-TERM SECURITIES -- 5.40%
Anheuser-Busch Companies, Inc., 7/05/95 $2,000,000 1,998,356
SunTrust Banks, Inc., 7/14/95 1,500,000 1,497,268
-----------
Total Short-Term Securities (Cost -- $3,495,624+) 3,495,624
-----------
Total Investments (Cost -- $54,704,819+) $64,726,755
-----------
-----------
*Non-income producing.
+Aggregate cost for Federal income tax purposes is the same.
See Notes to Financial Statements.
9
<PAGE>
JP CAPITAL APPRECIATON FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1995 (Unaudited)
ASSETS
Investments in securities at value (cost $54,704,819) $ 64,726,755
Cash 1,007,217
Receivables:
Capital shares sold 139,278
Securities sold 988,635
Dividends 118,549
------------
Total Assets 66,980,434
------------
LIABILITIES
Payables:
Securities purchased 1,845,690
Accrued expenses 48,131
------------
Total Liabilities 1,893,821
------------
NET ASSETS
Net Assets, equivalent to $16.81 per share on
3,872,359 shares of capital stock outstanding (Note 2) $ 65,086,613
------------
------------
See Notes to Financial Statements.
10
<PAGE>
JP CAPITAL APPRECIATON FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1995 (Unaudited)
Investment Income:
Income:
Interest $ 101,388
Dividends 760,417
----------
Total income 861,805
----------
Expenses:
Investment Adviser's fee (Note 3) 152,295
Custodian and Transfer agent fees 4,253
Directors' fees 1,680
Professional fees 8,834
Shareholder accounting services (Note 3) 9,600
----------
Total expenses 176,662
----------
Investment income -- net 685,143
----------
Realized and Unrealized Gain on Investments:
Net realized gain on investments 1,023,671
Unrealized appreciation of investments for the period 8,009,708
----------
Net gain on investments 9,033,379
----------
Net increase in net assets from operations $9,718,522
----------
----------
See Notes to Financial Statements.
11
<PAGE>
JP CAPITAL APPRECIATON FUND, INC.
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended June 30, 1995 and Year Ended December 31, 1994 (Unaudited)
SIX MONTHS YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
1995 1994
--------------- --------------
Increase in Net Assets from:
Operations:
Investment income -- net $ 685,143 $ 1,187,225
Net realized gain on investments 1,023,671 7,856,540
Unrealized appreciation (depreciation)
for the period 8,009,708 (11,642,733)
----------- -----------
Net increase (decrease) in net
assets from operations 9,718,522 (2,598,968)
Dividends paid to shareholders from:
Investment income -- net (663,916) (574,936)
Net realized gain on investments (7,845,335) (1,564,793)
Capital share transactions (Note 2) 5,517,508 6,473,023
----------- -----------
Total increase 6,726,779 1,734,326
Net Assets
Beginning of period 58,359,834 56,625,508
----------- -----------
End of period (including undistributed net
investment income of $683,891
and $662,664 respectively) $65,086,613 $58,359,834
----------- -----------
----------- -----------
See Notes to Financial Statements.
12
<PAGE>
JP CAPITAL APPRECIATON FUND, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES:
JP Capital Appreciation Fund, Inc. is an open-end management investment company
registered under the Investment Company Act of 1940. The following is a summary
of significant accounting policies followed in the preparation of its financial
statements:
VALUATION OF SECURITIES -- Investments are stated at value based on the closing
prices reported on national securities exchanges on the last business day of the
period, or for over-the-counter securities, at the last bid price, except that
short-term securities are stated at amortized cost which approximates value.
FEDERAL INCOME TAXES -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to "regulated investment companies" and
to distribute all of its taxable income to its shareholders. Therefore, no
provision for Federal income tax is required.
GENERAL -- Securities transactions are accounted for on the trade date. Dividend
income and distributions to shareholders are recorded on the ex-dividend date.
Interest income is accrued as earned.
2. CAPITAL STOCK:
At June 30, 1995, 10,000,000 shares of capital stock ($1.00 par value) were
authorized and capital paid-in amounted to $53,360,136. Transactions in capital
stock were as follows:
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31, 1994
----------------- -----------------
Shares Amount Shares Amount
Sold 167,129 $ 2,671,995 547,769 $ 9,476,781
Issued on reinvestment
of dividends 583,106 8,472,531 120,270 2,129,830
Redeemed (357,358) (5,627,018) (301,292) (5,133,588)
------- ----------- ------- ----------
Net increase 392,877 $ 5,517,508 366,747 $ 6,473,023
------- ----------- ------- ----------
------- ----------- ------- ----------
13
<PAGE>
3. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES: JP
Investment Management Company received investment advisory fees of $152,295
during the six months ended June 30, 1995. This fee is computed at the annual
rate of 0.5% of the Fund's average daily net asset value. If the Fund's
expenses, excluding interest and taxes, exceed 1% of the average daily net
asset value, the Investment Adviser will pay the excess. No such
reimbursement was required during the period.
Expenses include $9,600 of fees paid to JP Investment Management Company under
an Agency Agreement to provide shareholder accounting services.
4. INVESTMENT TRANSACTIONS:
Purchases and sales of investment securities, excluding short-term securities,
were $20,488,167 and $21,615,191 respectively.
Realized gains and losses are reported on an identified cost basis. Accumulated
undistributed net realized gain at June 30, 1995 was $1,020,650.
At June 30, 1995, the aggregate gross unrealized appreciation and (depreciation)
of portfolio securities was as follows:
Unrealized appreciation $10,998,782
Unrealized depreciation (976,846)
-----------
Net unrealized appreciation $10,021,936
-----------
-----------
14
<PAGE>
5. FINANCIAL HIGHLIGHTS:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEARS ENDED DECEMBER 31,
JUNE 30, ------------------------------------------------------
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period $16.77 $18.19 $18.17 $17.69 $13.76 $15.08
------ ------ ------ ------ ------ ------
Income from investment operations
Net investment income .18 .34 .28 .29 .37 .40
Net realized and unrealized
gain (loss) on investments 2.31 (1.10) 1.26 .75 3.91 (.65)
------ ------ ------ ------ ------ ------
Total from investment operations 2.49 (.76) 1.54 1.04 4.28 (.25)
------ ------ ------ ------ ------ ------
Less distributions
Dividends from net investment income (.19) (.17) (.27) (.33) (.35) (.41)
Distributions from net realized gains (2.26) (.49) (1.25) (.23) -- (.66)
------ ------ ------ ------ ------ ------
Total distributions (2.45) (.66) (1.52) (.56) (.35) (1.07)
------ ------ ------ ------ ------ ------
Net asset value, end of period $16.81 $16.77 $18.19 $18.17 $17.69 $13.76
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
Total return 17.11% (4.34)% 9.25% 6.16% 31.61% (1.39)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $65,087 $58,360 $56,625 $45,480 $37,319 $27,048
Ratios to average net assets:
Expenses .58%+ .58% .60% .63% .62% .63%
Net investment income 2.25+ 2.03 1.55 1.68 2.372.90
Portfolio turnover rate 35.67 126.70 23.93 48.72 36.71 31.75
</TABLE>
+Annualized
15
<PAGE>
JP INVESTMENT GRADE BOND FUND, INC.
A MUTUAL FUND SEEKING MAXIMUM INCOME
This report and accompanying financial statements are submitted for information
of the Fund shareholders and are not to be considered as an offer or
solicitation of offers to buy or sell any shares of the Fund. Such offering is
made only if preceded or accompanied by an effective prospectus.
FUND DIRECTORS AND OFFICERS INVESTMENT ADVISER AND TRANSFER AGENT
E. J. YELTON, PH.D., DIRECTOR, JP Investment Management Company
PRESIDENT, AND TREASURER 100 North Greene Street
Greensboro, North Carolina 27401
JOHN C. INGRAM, CFA, DIRECTOR
J. LEE LLOYD, DIRECTOR CUSTODIAN
Investors Fiduciary Trust Company
RICHARD W. MCENALLY, CFA, DIRECTOR 127 West Tenth Street
Kansas City, Missouri 64105
WILLIAM E. MORAN, DIRECTOR
W. HARDEE MILLS, CFA, VICE PRESIDENT
J. GREGORY POOLE, SECRETARY
H. LUSBY BROWN, CFA, Portfolio Manager
JP INVESTMENT GRADE BOND FUND, INC.
100 North Greene Street
P.O. Box 21008
Greensboro, North Carolina 27420
17
<PAGE>
JP INVESTMENT GRADE BOND FUND, INC.
INVESTMENT ACTIVITY
On June 30, 1995, the net asset value of your Fund was $11.10. The Fund paid
dividends of $.205 per share from interest income during the first half of 1995.
The Fund's year-to-date returns and annual returns for one, three, five, and
ten-year periods ending June 30, 1995 are as follows:
Year-to-Date 12.30%
1 Year - 12.35%
3 Years - 6.60%
5 Years - 8.17%
10 Years - 9.24%
The first half of 1995 witnessed one of the greatest bull markets for bonds
ever. After a record poor performance in 1994, the fixed income markets have
rallied considerably as investor fears of inflation spurred by the expectation
of further economic expansion subsided. These fears evaporated as the American
consumer retrenched from their spending spree that had been the economy's life
blood.
Interest rates fell over 100 basis points on long-term Treasuries during this
period and nearly 200 basis points on shorter term securities. This yield curve
steepening reflected growing expectations that the Federal Reserve Board would
abandon its efforts to slow the economy, letting rates fall instead to prevent
recession. Corporate bonds also rallied with Treasuries and outperformed
Treasury returns. Corporations have continued to expand profits and improve
their credit profiles through the generation of excess cash flow. The resulting
reduced need to issue debt coupled by improved credit quality caused spreads to
tighten on corporates. Mortgage-backed securities were also in short supply with
new CMO issuance down approximately 90% in the first quarter. The fears of heavy
prepayments on MBS and very high volatility, however, caused mortgages to lag
non-callable instruments.
The stance of the Fed has certainly changed to that of accommodation; however,
the degree of the change and the economy's need for monetary stimulus is less
certain. The balance of 1995 could see some pickup in economic activity driven
by the current low interest rate environment. Interest rates could trend higher
as a result. However, the underlying trend of moderate growth and subdued
inflation should remain intact and lead to stable to lower rates. Our Fund will
continue to maintain a duration consistent with the Lehman Aggregate Index and
our usual high credit quality profile.
On June 30, 1995, the Fund's assets were invested approximately 89.7% in medium
and long-term bonds.
18
<PAGE>
PORTFOLIO DIVERSIFICATION
SECTOR % OF TOTAL NET ASSETS
U. S. Government 28.77
Mortgage-Backed Securities 10.64
Industrials 20.36
Financials 9.03
Electric Utilities 5.94
Telephone Utilities 9.50
Gas Utilities 5.41
Cash Equivalents 10.35
Your continued support and interest in the JP Investment Grade Bond Fund are
appreciated, and we welcome any questions.
JP Investment Grade Bond Fund, Inc.
/s/ E. J. Yelton
- ---------------------------
President
July 21, 1995
19
<PAGE>
JP INVESTMENT GRADE BOND FUND, INC.
STATEMENT OF INVESTMENTS
June 30, 1995 (Unaudited)
Face
Ratings* Amount Issue Value
BONDS -- 91.78%
U.S. GOVERNMENT -- 29.45%
$ 500,000 U.S. Treasury Notes
5 1/8% due 11/30/98 $ 487,185
500,000 U.S. Treasury Notes
6 3/8% due 8/15/02 505,935
500,000 U.S. Treasury Notes
6 1/2% due 4/30/99 508,595
500,000 U.S. Treasury Notes
6 7/8% due 3/31/00 517,500
1,100,000 U.S. Treasury Notes
7 1/2% due 1/31/96 1,110,659
500,000 U.S. Treasury Bonds
8 1/2% due 5/15/97 522,970
500,000 U.S. Treasury Notes
8 1/2% due 7/15/97 525,000
500,000 U.S. Treasury Bonds
8 7/8% due 8/15/17 622,500
750,000 U.S. Treasury Notes
9 3/8% due 4/15/96 770,745
500,000 U.S. Treasury Bonds
10 3/8% due 11/15/09 639,295
1,000,000 U.S. Treasury Bonds
12 3/4% due 11/15/10 1,476,720
20
<PAGE>
MORTGAGE-BACKED SECURITIES -- 10.89%
1,000,000 Federal Home Loan Mortgage Corporation
6% due 3/15/09 $ 907,810
2,000,000 Federal Home Loan Mortgage Corporation
7% due 9/15/23 1,934,360
INDUSTRIALS -- 30.09%
FINANCE -- 12.10%
A1 1,000,000 Ford Motor Credit Company
6 3/4% Notes due 8/15/08 968,440
A1 750,000 Merrill Lynch & Company, Inc.
6 7/8% Notes due 3/01/03 745,665
A1 1,000,000 Morgan Stanley Group, Inc.
7% Senior Notes due 10/01/13 916,880
A1 500,000 SunTrust Banks, Inc.
8 7/8% Notes due 2/01/98 528,765
FOODS -- 2.88%
Aa2 750,000 Archer-Daniels-Midland Company
7 1/8% Debs. due 3/01/13 751,642
MACHINERY -- INDUSTRIAL/SPECIALTY -- 2.06%
A2 500,000 Johnson Controls, Inc.
7.70% Debs. due 3/01/15 536,835
NATURAL GAS -- 1.57%
Baa2 400,000 Tennessee Gas Pipeline Company
9 1/4% S.F. Debs. due 5/15/96 409,228
POLLUTION CONTROL -- 7.52%
Baa2 500,000 Laidlaw, Inc.
7.70% Debs. due 8/15/02 510,170
Baa2 750,000 Kansas City Southern Industries, Inc.
6 5/8% Senior Notes due 3/01/05 720,000
A1 750,000 United States Leasing International, Inc.
6 5/8% Senior Notes due 5/15/03 732,615
21
<PAGE>
TELECOMMUNICATIONS -- 1.90%
A2 500,000 Northern Telecom, Limited
6 7/8% Senior Notes due 10/01/02 $ 497,270
TOBACCO -- 2.06%
A2 500,000 Philip Morris Companies, Inc.
8 1/4% Senior Notes due 10/15/03 536,605
UTILITIES -- 21.35%
UTILITIES -- ELECTRIC -- 6.08%
A1 500,000 Baltimore Gas and Electric Company
9 1/8% 1st Mtge. due 10/15/95 503,940
A2 500,000 Midwest Power Systems, Inc.
7% 1st Mtge. due 2/15/05 504,830
A1 500,000 South Carolina Electric & Gas Company
9% 1st & Ref. Mtge. due 7/15/06 577,445
UTILITIES -- GAS -- 9.73%
A1 1,000,000 Consolidated Natural Gas Company
6 5/8% Debs. due 12/01/13 924,920
A3 500,000 National Fuel Gas Company
7 3/4% Debs. due 2/01/04 523,370
Baa1 500,000 Texas Gas Transmission
8 5/8% Notes due 4/01/04 554,775
Aa2 500,000 Washington Gas Light Company
8 3/4% 1st Mtge. due 7/01/19 536,025
UTILITIES -- TELEPHONE -- 5.54%
A2 1,000,000 Alltel Corporation
6 1/2% Debs. due 11/01/13 930,380
A3 500,000 United Telephone Company of Pennsylvania
7 3/8% 1st Mtge. Ser. Y due 12/01/02 515,995
-----------
Total Bonds (Cost -- $22,882,388+) 23,955,069
-----------
22
<PAGE>
SHORT-TERM SECURITIES -- 8.22%
500,000 AT&T Capital Corporation, 7/06/95 499,505
1,000,000 General Electric Capital
Corporation, 7/10/95 998,347
650,000 SunTrust Banks, Inc., 7/18/95 648,063
-----------
Total Short-Term Securities
(Cost -- $2,145,915+) 2,145,915
-----------
Total Investments
(Cost -- $25,028,303+) $26,100,984
-----------
-----------
* Bonds are rated by Moody's Investors Service, Inc. and
Commercial Paper is rated by Standard & Poor's Corporation.
+Aggregate cost for Federal income tax purposes is the same.
See Notes to Financial Statements.
23
<PAGE>
JP INVESTMENT GRADE BOND FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1995 (Unaudited)
ASSETS
Investment in securities at value (cost $25,028,303) $26,100,984
Cash 163,164
Receivables:
Interest 437,681
Capital shares sold 44,316
-----------
Total Assets 26,746,145
-----------
LIABILITIES
Accrued expenses 26,644
-----------
Total Liabilities 26,644
-----------
NET ASSETS
Net Assets, equivalent to $11.10 per share on
2,406,851 shares of capital stock outstanding (Note 2) $26,719,501
-----------
-----------
See Notes to Financial Statements.
24
<PAGE>
JP INVESTMENT GRADE BOND FUND, INC.
STATEMENT OF OPERATIONS
Six Months Ended June 30, 1995 (Unaudited)
Investment Income:
Income:
Interest $ 977,983
----------
Expenses:
Investment Adviser's fee (Note 3) 64,098
Directors' fees 1,680
Professional fees 8,985
Shareholder accounting services (Note 3) 6,000
----------
Total expenses 80,763
----------
Investment income -- net 897,220
----------
Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments (134,505)
Unrealized appreciation of investments for the period 2,219,854
----------
Net gain on investments 2,085,349
----------
Net increase in net assets from operations $2,982,569
----------
----------
See Notes to Financial Statements.
25
<PAGE>
JP INVESTMENT GRADE BOND FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended June 30, 1995 and Year Ended December 31, 1994 (Unaudited)
Six Months Year Ended
Ended June 30, December 31,
1995 1994
-------------- -------------
Increase (Decrease) in Net Assets from:
Operations:
Investment income -- net $ 897,220 $ 1,869,403
Net realized loss on investments (134,505) (602,753)
Unrealized appreciation (depreciation)
for the period 2,219,854 (3,000,854)
----------- -----------
Net increase (decrease) in net
assets from operations 2,982,569 (1,734,204)
Dividends paid to shareholders from:
Investment income -- net (498,903) (1,809,110)
Net realized gain on investments -- (86,113)
Capital share transactions (Note 2) (1,041,721) (1,090,522)
----------- -----------
Total increase (decrease) 1,441,945 (4,719,949)
Net Assets
Beginning of period 25,277,556 29,997,505
----------- -----------
End of period (including undistributed net
investment income of $458,610
and $60,293 respectively) $26,719,501 $25,277,556
----------- -----------
----------- -----------
See Notes to Financial Statements.
26
<PAGE>
JP INVESTMENT GRADE BOND FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES:
JP Investment Grade Bond Fund, Inc. is an open-end management investment company
registered under the Investment Company Act of 1940. The following is a summary
of significant accounting policies followed in the preparation of its financial
statements:
VALUATION OF SECURITIES -- Fixed income securities are valued by using market
quotations or independent pricing services which utilize prices provided by
market makers or estimates based on yield data related to similar securities;
short-term securities are stated at amortized cost which approximates value.
FEDERAL INCOME TAXES -- It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to "regulated investment companies" and
to distribute all of its taxable income to its shareholders. Therefore, no
provision for Federal income tax is required.
GENERAL -- Securities transactions are accounted for on the trade date. Dividend
income and distributions to shareholders are recorded on the ex-dividend date.
Interest income is accrued as earned.
2. CAPITAL STOCK:
At June 30, 1995, 10,000,000 shares of capital stock ($1.00 par value) were
authorized and capital paid-in amounted to $25,967,176. Transactions in capital
stock were as follows:
Six Months Ended Year Ended
June 30, 1995 December 31, 1994
------------------------ ------------------------
Shares Amount Shares Amount
Sold 126,733 $1,350,906 234,140 $2,530,665
Issued on reinvestment
of dividends 42,922 450,323 163,631 1,718,913
Redeemed (269,426) (2,842,950) (501,208) (5,340,100)
-------- ----------- -------- -----------
Net decrease (99,771) ($1,041,721) (103,437) ($1,090,522)
-------- ----------- -------- -----------
-------- ----------- -------- -----------
27
<PAGE>
3. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES:
JP Investment Management Company received investment advisory fees of $64,098
during the six months ended June 30, 1995. This fee is computed at the annual
rate of 0.5% of the Fund's average daily net asset value. If the Fund's
expenses, excluding interest and taxes, exceed 1% of the average daily net asset
value, the Investment Adviser will pay the excess. No such reimbursement was
required during the period.
Expenses include $6,000 of fees paid to JP Investment Management Company under
an Agency Agreement to provide shareholder accounting services.
4. INVESTMENT TRANSACTIONS:
Purchases and sales of investment securities, excluding short-term securities,
were $5,522,959 and $7,825,051, respectively.
Realized gains and losses are reported on an identified cost basis. Accumulated
net realized loss at June 30, 1995 was $778,966. This loss is available to
offset future realized capital gain.
At June 30, 1995 the aggregate gross unrealized appreciation and (depreciation)
of portfolio securities was as follows:
Unrealized appreciation $1,293,655
Unrealized depreciation (220,974)
----------
Net unrealized appreciation $1,072,681
----------
----------
28
<PAGE>
5. FINANCIAL HIGHLIGHTS:
<TABLE>
<CAPTION>
Six Months
Ended Years Ended December 31,
June 30, ------------------------------------------------
1995 1994 1993 1992 1991 1990
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period $10.08 $11.49 $11.19 $11.24 $10.61 $10.79
------ ------ ------ ------ ------ ------
Income from investment operations
Net investment income .37 .73 .74 .74 .85 .89
Net realized and unrealized
gain (loss) on investments .86 (1.40) .36 (.03) .62 (.20)
------ ------ ------ ------ ------ ------
Total from investment operations 1.23 (.67) 1.10 .71 1.47 .69
------ ------ ------ ------ ------ ------
Less distributions
Dividends from net investment income (.21) (.71) (.73) (.76) (.84) (.87)
Distributions from net realized gains -- (.03) (.07) -- -- --
------ ------ ------ ------ ------ ------
Total distributions (.21) (.74) (.80) (.76) (.84) (.87)
------ ------ ------ ------ ------ ------
Net asset value, end of period $11.10 $10.08 $11.49 $11.19 $11.24 $10.61
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
Total return 12.30% (5.92)% 10.01% 6.67% 14.61% 6.86%
Ratios/supplemental data:
Net assets, end of period (000 omitted) $26,720 $25,278 $29,997 $23,622 $19,134 $15,300
Ratios to average net assets:
Expenses .63%+ .65% .59% .67% .72% .76%
Net investment income 7.00+ 6.80 6.33 6.65 7.88 8.49
Portfolio turnover rate 22.80 28.93 19.88 18.05 7.23 --
</TABLE>
+Annualized
29
<PAGE>
JP INVESTMENT GRADE BOND FUND, INC.
CHANGES IN INVESTMENT POSITIONS
For the Period January 1, 1995 to June 30, 1995
ADDITIONS
Federal Home Loan Mortgage Corporation
7% due 9/15/23
Johnson Controls, Inc.
7.70% Debs. due 3/01/15
Merrill Lynch & Company, Inc.
6 7/8% Notes due 3/01/03
Texas Gas Transmission
8 5/8% Notes due 4/01/04
U.S. Treasury Notes
5 1/8% due 11/30/98
U.S. Treasury Notes
6 3/8% due 8/15/02
U.S. Treasury Notes
6 1/2% due 4/30/99
U.S. Treasury Notes
6 7/8% due 3/31/00
ELIMINATIONS
Aetna Life & Casualty Company
6 3/4% Debs. due 9/15/13
Burlington Northern, Inc.
7% Senior Notes due 8/01/02
Federal Home Loan Mortgage Corporation
6 1/2% due 10/15/04
Federal National Mortage Association
8% due 8/25/06
Federal National Mortage Association
9 3/4% S.F. Debs. due 2/10/99
TMC, Inc.
7 1/4% Debs. due 3/01/13
U.S. Treasury Notes
5 5/8% due 8/31/97
U.S. Treasury Notes
6% due 6/30/96
U.S. Treasury Notes
7 1/4% due 11/30/96
Weyerhaeuser Company
7 1/2% Debs. due 3/01/13
30
<PAGE>
SEMI-ANNUAL REPORT
JUNE 30, 1995
JP CAPITAL
APPRECIATION FUND
JP INVESTMENT
GRADE BOND FUND
