<PAGE>
PC&J PERFORMANCE FUND
Financial Statements and Financial Highlights for the
Year Ended December 31, 1996 and Independent
Auditor's Report
<PAGE>
PC&J PERFORMANCE FUND
ANNUAL REVIEW
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INTRODUCTION
The PC&J Performance Fund is a registered investment company under the
Investment Company Act of 1940 and, for your protection, is regulated by the
Securities and Exchange Commission. The enclosed 1996 Annual Report is for
your information and is provided to you in compliance with ongoing Securities
and Exchange Commission regulations. This report requires no action on your
part. Please give us a call if you have any questions.
MANAGEMENT REVIEW AND ANALYSIS
During 1996 the economy grew faster than generally expected, which put
upward pressure on interest rates. Nevertheless, stocks, as measured by
the S&P 500 had another good year, rising 23.0%. The PC&J Performance Fund
provided a 19.8% return for the year, slightly better than the 19.5%
return of the average general equity fund, as measured by Lipper Analytical.
The results of the Fund also beat the 16.3% return of the average fund in
our category of capital appreciation funds.
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
1 Year 5 Years 10 Years
<S> <C> <C> <C>
Performance Fund 19.8% 12.8% 11.7%
S&P 500 Index 23.0% 15.2% 15.3%
Lipper Gen'l Equity Funds 19.5% 13.5% 12.8%
</TABLE>
The primary reason that our Fund, as well as the vast majority of
equity mutual funds, have underperformed the S&P 500 Index is simply
corporate size. The largest companies have recently been the best
performers in the stock market and those stocks strongly influence the
return of the Index. By contrast, most actively managed funds, including
the PC&J Performance Fund, hold a mix of large and smaller stock issues.
Our Fund performed better than the average equity fund and the average
capital appreciation fund primarily because of our overweighted positions in
the energy sector and the financial sector. The energy sector produced our
largest gains for the year, led by the 72.9% gain in Cooper Cameron, an oil
services company, and the 67.4% gain in Newpark Resources, which processes
oilfield waste. The financial sector produced the second largest gains for
the year as SunAmerica, a life insurance and annuity company, increased in
value by 87.9% and Charles Schwab, a discount brokerage firm, rose by 59%.
While we are disappointed that our Fund did not outperform the S&P 500
Index, we are heartened by our outperformance of the general equity fund and
our capital appreciation peer group. We continue to believe a mix of large
and small is best for the long-term, however the extraordinary strength of
the large stock sector over the last two years has weighed heavily on the
Fund's comparison with the S&P 500.
GROWTH OF $10,000 INVESTMENT
<TABLE>
<CAPTION>
Performance S&P 500 Lipper
Year Growth Growth Growth
<S> <C> <C> <C>
1986 10,000 10,000 10,000
1987 9,000 10,520 10,020
1988 10,134 12,287 11,252
1989 13,509 16,158 13,953
1990 12,712 15,641 13,074
1991 16,589 20,411 17,728
1992 17,916 21,983 19,306
1993 20,478 24,203 21,719
1994 20,642 24,518 21,350
1995 25,335 33,712 27,990
1996 30,354 41,459 33,440
</TABLE>
TOTAL RETURNS AND THE GROWTH OF A $10,000 INVESTMENT ARE BASED ON PAST
PERFORMANCE AND ARE NOT AN INDICATION OF FUTURE PERFORMANCE. THE VALUE
OF YOUR SHARES WILL FLUCTUATE AND WILL BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST AT THE TIME OF REDEMPTION.
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<PAGE>
PC&J PERFORMANCE FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
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PERCENT NUMBER OF MARKET
SECURITY (Note A) OF NET SHARES VALUE
ASSETS
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<S> <C> <C> <C>
COMMON STOCKS:
Capital goods: 6.7%
Emerson Electric 7,800 $ 755,625
General Electric Co. 11,800 1,166,725
-------------
1,922,350
Consumer cyclical: 3.5
Disney (Walt) Co. 8,000 558,000
McDonalds Corp. 9,700 440,137
--------------
998,137
Consumer staple: 20.1
American Home Products 15,000 879,375
Campbell Soup Co. 8,600 690,150
Clorox Company 7,000 702,625
Columbia/HCA Corp. 18,900 770,175
Gillette Company 8,800 684,200
Merck & Co., Inc. 11,000 875,875
Shared Medical Systems Corp. 18,500 911,125
Sysco Corp. 7,500 244,688
--------------
5,758,213
Energy: 13.0
Chevron Corp. 10,200 663,000
Cooper Cameron Corp. <F1> 11,000 841,500
Mobil Corp. 5,800 709,050
Newpark Resources Inc. <F1> 24,120 898,470
Western Atlas Inc. <F1> 8,600 609,525
--------------
3,721,545
Financial services: 19.1
American Express Co. 19,000 1,073,500
Citicorp 9,200 947,600
Federal Nat'l Mortgage Assoc 15,000 564,375
Franklin Resources Inc. 8,000 547,000
Northern Trust Corp. 24,900 902,625
Schwab (Charles) Corp. 12,900 412,800
SunAmerica Inc. 22,900 1,021,913
--------------
5,469,813
------ --------------
COMMON STOCKS 62.4% $ 17,870,058
<FN>
<F1> Nonincome producing security.
</FN>
</TABLE>
See notes to financial statements.
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<PAGE>
PC&J PERFORMANCE FUND
SCHEDULE OF INVESTMENTS (Continued)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
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PERCENT NUMBER OF MARKET
SECURITY (Note A) OF NET SHARES VALUE
ASSETS
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS FORWARD: 62.4% $ 17,870,058
------ --------------
Industrial commodities: 9.1
Aluminum Co. of America 10,200 650,250
Loctite Corp. 10,600 645,275
Raychem Corp. 7,000 560,875
Sealed Air Corp. <F1> 18,000 749,250
--------------
2,605,650
Technology: 15.1
Boeing Co. 6,100 649,650
Computer Associates International 13,500 671,625
International Business Machines Inc. 6,600 999,900
Microsoft Corp. 12,400 1,024,550
United Technologies Corp. 14,800 980,500
--------------
4,326,225
Telecommunications: 5.6
AT&T Corp. 8,000 347,000
Dynatech Corp. <F1> 11,700 517,725
Lucent Technologies 16,192 748,880
--------------
1,613,605
------ --------------
TOTAL COMMON STOCKS 92.2 26,415,538
(Cost $19,098,998)
SHORT-TERM OBLIGATIONS 6.2 1,780,252
(Cost $1,780,252) ------ --------------
TOTAL INVESTMENTS
(Cost $20,879,250) 98.4% $ 28,195,790
====== ==============
<FN>
<F1> Nonincome producing security.
</FN>
</TABLE>
See notes to financial statements.
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PC&J PERFORMANCE FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
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<TABLE>
<S> <C>
ASSETS:
Investments in securities, at market value
(Cost basis - $20,879,250) (Notes A & D) $ 28,195,790
--------------
Receivables:
Dividends and interest 49,441
Securities sold 429,250
--------------
Total receivables 478,691
--------------
Total assets 28,674,481
LIABILITIES - Accrued expenses (Note B) (36,489)
--------------
NET ASSETS $ 28,637,992
==============
SHARES OUTSTANDING (Unlimited authorization -
no par value):
Beginning of year 1,248,376
Net increase (Note C) 108,201
--------------
End of year 1,356,577
==============
NET ASSET VALUE PER SHARE $21.11
==============
NET ASSETS CONSIST OF:
Paid in capital $ 21,321,452
Net unrealized appreciation 7,316,540
--------------
Net Assets $ 28,637,992
==============
</TABLE>
See notes to financial statements.
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<PAGE>
PC&J PERFORMANCE FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
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<TABLE>
<S> <C>
INVESTMENT INCOME (Note A):
Dividends $ 320,945
Interest 146,045
--------------
Total investment income 466,990
--------------
EXPENSES (Note B):
Investment advisory fee 259,438
Management fee 129,719
--------------
Total expenses 389,157
--------------
NET INVESTMENT INCOME 77,833
--------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (Note D):
Net realized gain on investments 2,249,448
Change in unrealized appreciation of investments 2,452,080
--------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 4,701,528
--------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 4,779,361
==============
</TABLE>
See notes to financial statements.
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Page 5
<PAGE>
PC&J PERFORMANCE FUND
STATEMENTS OF CHANGES IN NET ASSETS
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<TABLE>
<CAPTION>
For The Years Ended December 31,
1996 1995
-----------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 77,833 $ 29,014
Net realized gain on investments 2,249,448 2,754,585
Change in unrealized appreciation
(depreciation) of investments 2,452,080 1,791,320
------------- -------------
Net increase in net assets from operations 4,779,361 4,574,919
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income (77,833) (28,683)
Dividends from net realized gain on
investments (2,249,448) (2,754,585)
------------- -------------
Net decrease in net assets from
dividends to shareholders (2,327,281) (2,783,268)
INCREASE IN NET ASSETS RESULTING FROM
CAPITAL SHARE TRANSACTIONS (Note C) 2,237,215 2,403,982
------------ -------------
Total increase in net assets 4,689,295 4,195,633
NET ASSETS:
Beginning of year 23,948,697 19,753,064
------------- -------------
End of year $28,637,992 $23,948,697
============= =============
</TABLE>
See notes to financial statements.
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<PAGE>
PC&J PERFORMANCE FUND
NOTES TO FINANCIAL STATEMENTS
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A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PC&J Performance Fund (the 'Fund') commenced operations on December 23,
1983, as a 'no-load, open-end, diversified' investment company. It is
organized as an Ohio business trust and is registered under the Investment
Company Act of 1940.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates or
assumptions that affect the reported amounts of assets and liabilities
and disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
(1) Security Valuations - Investments in securities traded on a national
securities exchange are valued at the last reported sales price;
securities traded on the over-the-counter market are valued at the
average of the closing bid and ask prices.
(2) Federal Income Taxes - The Fund has elected to be treated as a
regulated investment company and intends to comply with the
requirements under Subchapter M of the Internal Revenue Code and
to distribute all of its net investment income and realized gains
on security transactions. Accordingly, no provision for federal
income taxes has been made in the accompanying financial statements.
(3) Other - Security transactions are accounted for on the date the
securities are purchased or sold (trade date). Realized gains and
losses on sales are determined using the first-in first-out method.
Dividends to shareholders from net investment income and net realized
capital gains are declared and paid annually. Dividend income is
recorded on the ex-dividend date. Interest income is accrued daily.
B. INVESTMENT ADVISORY AGREEMENT AND MANAGEMENT AGREEMENT
The Fund has an investment advisory agreement with Parker, Carlson &
Johnson, Inc. (the 'Advisor'), wherein the Fund pays the Advisor a
monthly advisory fee, accrued daily, based on an annual rate of one
percent of the daily net assets of the Fund. Investment advisory fees
were $259,438 for the year ended December 31, 1996.
The Fund has a management agreement with PC&J Service Corp., (the 'Service
Corp.'), wholly owned by the shareholders of the Advisor. The Fund pays
Service Corp. for the overall management of the Fund's business affairs,
exclusive of the services provided by the Advisor, and functions as the
Fund's transfer and dividend disbursing agent. Service Corp. pays all
expenses of the Fund (with certain exclusions) and is entitled to a monthly
fee, accrued daily, based on an annual rate of one-half of one percent of
the daily net assets of the Fund. Management fees were $129,719 for the
year ended December 31, 1996.
The Fund's shareholders have adopted a Distribution Expense Plan ('Plan')
pursuant to Rule 12b-1 of the Investment Company Act of 1940. This Plan
authorizes payments under the investment advisory agreement and management
agreement described above which might be deemed to be expenses primarily
intended to result in the sale of Fund shares. No other payments are
authorized under the Plan.
Certain officers and trustees of the Fund are officers and trustees, or
both, of the Advisor and of Service Corp.
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<PAGE>
PC&J PERFORMANCE FUND
NOTES TO FINANCIAL STATEMENTS - (Concluded)
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C. CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
For the Year Ending For the Year Ending
December 31, 1996 December 31, 1995
----------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 128,018 $ 2,600,524 138,400 $ 2,657,095
Shares issued in
reinvestment of
dividends 110,243 2,327,281 145,083 2,783,267
---------- ------------- --------- -------------
238,261 4,927,805 283,483 5,440,362
Shares redeemed (130,060) (2,690,590) (152,432) (3,036,380)
---------- ------------- --------- -------------
Net increase 108,201 $ 2,237,215 131,051 $ 2,403,982
========== ============= ========= =============
</TABLE>
D. INVESTMENT TRANSACTIONS
Securities purchased and sold (excluding short-term obligations) for the
year ended December 31, 1996, aggregated $15,482,994 and $14,949,452,
respectively.
At December 31, 1996 gross unrealized appreciation on investments was
$7,427,004 and gross unrealized depreciation on investments was $110,464
for a net unrealized appreciation of $7,316,540 for financial reporting
and federal income tax purposes.
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Page 8
PC&J PERFORMANCE FUND
FINANCIAL HIGHLIGHTS
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<TABLE>
<CAPTION>
Selected Data for Each Share of Capital For The Years Ended December 31,
Stock Outstanding Throughout the Year 1996 1995 1994 1993 1992
------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE-BEGINNING OF YEAR $19.18 $17.68 $18.13 $17.90 $17.42
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.06 0.03 0.06 0.08 0.10
Net realized and unrealized
gain on securities 3.73 3.99 0.08 2.47 1.30
-------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS 3.79 4.02 0.14 2.55 1.40
-------- -------- -------- -------- --------
Less dividends:
From net investment income (0.06) (0.03) (0.06) (0.08) (0.10)
From net realized gain
on investments (1.80) (2.49) (0.53) (2.24) (0.82)
-------- -------- -------- -------- --------
TOTAL DIVIDENDS (1.86) (2.52) (0.59) (2.32) (0.92)
-------- -------- -------- -------- --------
NET ASSET VALUE-END OF YEAR $21.11 $19.18 $17.68 $18.13 $17.90
======== ======== ======== ======== ========
TOTAL RETURN 19.80% 22.74% 0.77% 14.25% 8.04%
RATIOS TO AVERAGE NET ASSETS
Expenses 1.50% 1.50% 1.50% 1.52% 1.52%
Net investment income 0.30% 0.13% 0.35% 0.45% 0.61%
Portfolio turnover rate 64.31% 76.71% 68.56% 63.28% 48.26%
Average commissions per share <F2> $0.10
Net assets at end of year (000's) $28,638 $23,949 $19,753 $19,670 $16,045
<FN>
<F2> Due to new SEC disclosure guidelines, average commissions paid on equity
transactions are calculated only for the current year and not for the
prior years.
</FN>
</TABLE>
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[LOGO]
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders,
PC&J Performance Fund:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments of the
PC&J Performance Fund as of December 31, 1996, the related
statement of operations for the year then ended, and the
statements of changes in net assets and the financial
highlights for each of the years presented. These financial
statements and financial highlights are the responsibility
of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of December 31, 1996 by correspondence with
the Fund's custodian and brokers. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position
of the PC&J Performance Fund at December 31, 1996, the results of
its operations and the changes in its net assets for the respective
stated years in conformity with generally accepted accounting
principles.
\S\ Deloitte & Touche
January 31, 1997
Dayton, Ohio
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