<PAGE>
PROSPECTUS
April 24, 1999
PC&J PERFORMANCE FUND
A No-Load Fund
300 Old Post Office
120 West Third Street
Dayton, Ohio 45402
Investment Adviser: Parker Carlson & Johnson, Inc.
INVESTMENT OBJECTIVE
The investment objective of PC&J Performance Fund is long-term growth of
capital through investment in common stocks.
IMPORTANT FEATURES
Investment for Capital Growth
No Sales Commissions or Withdrawal Charges
Professional Management
Diversification
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
PAGE
RISK/RETURN SUMMARY OF THE FUND .............................. 3
FEE TABLE .................................................... 5
FINANCIAL HIGHLIGHTS ......................................... 6
INVESTMENT ADVISER ........................................... 7
DISTRIBUTION EXPENSE PLAN .................................... 7
DESCRIPTION OF SHARES AND TAXES .............................. 7
HOW TO INVEST IN THE FUND .................................... 8
HOW TO REDEEM YOUR INVESTMENT ................................ 9
DETERMINATION OF SHARE PRICE ................................. 10
NEW ACCOUNT APPLICATION ...................................... 11
<PAGE>
RISK/RETURN SUMMARY OF THE FUND
1. WHAT IS THE INVESTMENT OBJECTIVE OF THE FUND? The Fund seeks long-term
growth of capital through investment in common stocks. Current income is
of secondary importance.
2. WHAT IS THE MAIN INVESTMENT STRATEGY OF THE FUND? The portfolio manager
maintains a diversified portfolio of common stocks. Each stock is selected
on the basis of potential growth in earnings and cash flow that will
enable the stock to appreciate in value over time.
3. WHAT ARE THE MAIN RISKS OF INVESTING IN THE FUND? The biggest risk is
that the Fund's returns may vary, and you could lose money. If you are
considering investing in the Fund, remember that it is designed for long-
term investors who can accept the risks of investing in a portfolio with
significant common stock holdings.
Common stocks tend to be more volatile than other investment choices. The
stock price of a particular company might decrease in value in response to
the company's activities and financial prospects or in response to general
market and economic conditions.
The value of the Fund's portfolio may decrease if the value of an
individual company in the portfolio decreases. The value of the Fund's
portfolio could also decrease if the stock market goes down. If the value
of the Fund's portfolio decreases, the Fund's net asset value (NAV) will
also decrease.
4. WHO IS THE FUND DESIGNED FOR? The PC&J Performance Fund is designed for
long-term investors who seek growth of capital and who can tolerate the
greater risks associated with common stock investments.
The following information illustrates how the Fund's performance has varied
over time and provides an indication of the risks of investing in the Fund.
The bar chart depicts the change in performance from year-to-year during the
period indicated. The tables compare the Fund's average annual returns for
the periods indicated to a broad-based securities market index. Of course,
past performance cannot predict or guarantee future results.
THE PC&J PERFORMANCE FUND
A BAR CHART showing Annual Total Returns for the Fund from 1989 through 1998:
<TABLE>
<CAPTION>
Performance
Fund
<S> <C>
1989 33.4%
1990 -5.9%
1991 30.5%
1992 8.0%
1993 14.3%
1994 0.8%
1995 22.7%
1996 19.8%
1997 35.6%
1998 31.8%
</TABLE
A bar of proportionate size represents each percentage with the actual total
return printed above the bar.
Best Quarter 31.2% for the quarter ended 12/31/98
Worst Quarter -14.6% for the quarter ended 9/30/90
Average annual total return
for periods ended 12/31/98
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS
<S> <C> <C> <C>
The Fund 31.8% 21.5% 18.3%
S&P 500 Index<F1> 28.6% 24.1% 19.2%
<FN>
<F1> The S&P 500 is the Standard & Poor's Composite Index of 500 Stocks, a
widely recognized, unmanaged index of common stock prices.
</FN>
</TABLE>
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) 0%
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering
price) 0%
Deferred Sales Load (as a percentage
of original purchase price or redemption
proceeds, as applicable) 0%
Redemption Fees (as a percentage of
amount redeemed, if applicable) 0%
Exchange Fee 0%
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<S> <C>
Management Fees 1.00%
Distribution (12b-1) Fees 0%
Other Expenses 0.50%
-------
Total Fund Operating Expenses 1.50%
=======
</TABLE>
The following Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. Actual
expenses may be greater or less than those shown.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
You would pay the
following expenses on
a $10,000 investment,
assuming (1) 5% annual
return and (2) redemption
at the end of each time
period: $154 $485 $850 $1,934
</TABLE>
FINANCIAL HIGHLIGHTS
The information contained in the table below is for the years ended December
31, 1998, 1997, 1996, 1995, and 1994. Such information has been derived from
data contained in financial statements audited by Deloitte & Touche, LLP,
independent auditors. Such information should be read in conjunction with
the financial statements incorporated by reference in the Fund's Statement of
Additional Information. The Fund's Annual Report contains additional
performance information and will be made available upon request and without
charge.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Selected Data for Each For The Years Ended December 31,
Share of Capital
Stock Outstanding 1998 1997 1996 1995 1994
Throughout the Year
-------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE-BEGINNING OF YEAR $27.01 $21.11 $19.18 $17.68 $18.13
------- ------- ------- -------
Income from investment operations:
Net investment income(loss) (0.11) (0.03) 0.06 0.03 0.06
Net realized and unrealized
gain on securities 8.69 7.54 3.73 3.99 0.08
------- ------- ------- -------
TOTAL FROM INVESTMENT OPERATIONS 8.58 7.51 3.79 4.02 0.14
------- ------- ------- -------
Less dividends:
From net investment income (0.00) (0.00) (0.06) (0.03) (0.06)
From net realized gain
on investments (1.36) (1.61) (1.80) (2.49) (0.53)
------- ------- ------- -------
TOTAL DIVIDENDS (1.36) (1.61) (1.86) (2.52) (0.59)
------- ------- ------- -------
NET ASSET VALUE-END OF YEAR $34.23 27.01 $21.11 $19.18 $17.68
======= ======= ======= =======
TOTAL RETURN 31.77% 35.58% 19.80% 22.74% 0.77%
RATIOS TO AVERAGE NET ASSETS
Expenses 1.50% 1.50% 1.50% 1.50% 1.50%
Net investment income (0.38%) (0.12%) 0.30% 0.13% 0.35%
Portfolio turnover rate 25.60% 22.44% 64.31% 76.71% 68.56%
Net assets at end of year(000's) $48,832 $37,453 $28,638 $23,949 $19,753
</TABLE>
INVESTMENT ADVISER
The Fund has entered into an Investment Advisory Agreement ("Investment
Advisory Agreement") with Parker Carlson & Johnson, Inc., 300 Old Post
Office, 120 West Third Street, Dayton, Ohio (the "Adviser") in which the
Adviser has agreed to provide the Fund with continuous investment advice,
including management of the Fund's portfolio securities. The Adviser was
organized in 1982 and has been the only investment adviser of the Fund. The
Adviser is also the investment adviser to PC&J Preservation Fund and to
various individual, business and pension fund clients and is registered under
the Investment Advisers Act of 1940. All officers of the Adviser are members
of the Financial Analysts Federation, and James M. Johnson and Kathleen
Carlson are Chartered Financial Analysts.
As compensation for the investment advice, the Fund will pay the Adviser a
monthly fee, accrued daily, based on an annual rate of 1% of the daily net
asset value of the Fund.
Performance information for the Fund is contained in the Fund's annual
report, which will be made available upon request and without charge.
The investment objective of the Fund may be changed without the affirmative
vote of a majority of the outstanding voting securities of the Fund.
PORTFOLIO MANAGER
James M. Johnson is primarily responsible for the day to day management of
the Fund's portfolio and has been since the Fund's inception (December 23,
1983). Mr. Johnson has been the Secretary of the Adviser since September
1982 and Secretary and a Trustee of the Fund since its inception.
OTHER INFORMATION
Like most mutual funds, the Fund relies on computers in conducting daily
business and processing information. There is a concern that on January 1,
2000 some computer programs will be unable to recognize the new year and as a
consequence, computer malfunctions will occur. The Fund and its Adviser have
taken steps that they believe are reasonably designed to address this
potential problem and to obtain satisfactory assurance from other service
providers to the Fund that they are also taking steps to address the issue.
There can, however, be no assurance that these steps will be sufficient to
avoid any adverse impact on the Fund or shareholders. The Year 2000 concern
my also adversely impact issuers of obligations held in the Fund's
portfolio.
A particular identifiable risk for any stock in the portfolio is Year 2000
readiness. The portfolio manager carefully researches each potential
investment before making an investment decision and, among other things,
considers Year 2000 readiness when selecting portfolio holdings. However,
there is no guarantee that the information the portfolio manager receives
regarding a company's Year 2000 readiness is completely accurate. If a
company has not satisfactorily addressed Year 2000 issues, the Fund's
performance could suffer.
TEMPORARY DEFENSIVE STRATEGY
The Fund may invest all or a portion of its assets for temporary defensive
purposes in U.S. Treasury bills or other cash equivalents and in interest
bearing checking accounts, including those of the Custodian. Under normal
circumstances, such short-term investments are expected to represent only a
nominal portion of the Fund's total assets. To the extent that the Fund
takes such temporary defensive measures, there can be no assurance that the
Fund's investment objective will be obtained.
DISTRIBUTION EXPENSE PLAN
The Fund has adopted a plan under rule 12b-1 that permits the Trustees to
authorize the Fund to pay distribution expenses for the sale and distribution
of its shares. Currently, the Trustees have not authorized the Fund to pay
any distribution-related expenses.
DESCRIPTION OF SHARES AND TAXES
Ownership records of shares are maintained by the Fund's transfer agent, PC&J
Service Corp. (an affiliated company of the Adviser), which confirms purchase
and sale of shares and dividend and capital gain distributions. Certificates
representing shares will not be issued.
The Fund will distribute to its shareholders an annual dividend that will
consist of the Fund's net income and net realized capital gains. The
dividend will be paid only in additional shares and not in cash. For federal
income tax purposes, the portion of the dividend that consists of net income
and net short-term capital gains is taxable to shareholders as ordinary
income. The portion of the dividend that consists of net long-term capital
gains is taxable to shareholders at long-term capital gain rates. It is
important for shareholders to remember that the tax consequences described in
this section apply to dividends even though they are paid in additional
shares and not in cash.
Distributions you receive from the Fund's net long-term capital gains in
excess of its net short-term capital losses (also called " net capital
gains") are generally taxable to you at the long-term capital gains rate.
This is generally true no matter how long you have owned your shares and
whether you reinvest your distributions or take them in cash. You may also
have to pay taxes when you exchange or sell shares if the value of your
shares has increased above their cost basis since you bought them. Any loss
recognized on the sale of a share held for less than six months is treated as
long-term capital loss to the extent of any net capital gain distributions
made with respect to such share.
The Fund will mail a Form 1099 annually to shareholders which will include
the total dividend paid, the amount of the dividend subject to federal income
taxes as ordinary income and the amount of the dividend subject to long-term
capital gain tax rates. Dividend distributions may be subject to state and
local taxes. Shareholders are urged to consult their own tax advisers
regarding specific questions about federal, state or local taxes they may be
required to pay on their dividends.
Shareholders should direct all inquiries concerning the purchase or sale of
shares to the Fund. All other questions should be directed to Service Corp.
at 120 W. Third St., Suite 300, Dayton, Ohio 45402 or by telephoning Service
Corp. at 888-223-0600.
HOW TO INVEST IN THE FUND
You may purchase shares of the Fund on any business day the New York Stock
Exchange is open. The minimum initial investment is $1,000 ($2,000 for tax
deferred retirement plans). There is no required minimum subsequent
investment. The purchase price for shares will be the net asset value per
share next determined after the order is received. (See "Determination of
Share Price".) There is no sales charge or commission.<PAGE>
The Fund reserves
the right to refuse to sell to any person. If a purchaser's
check is returned to the Custodian as uncollectible, the purchase order is
subject to cancellation and the purchaser will be responsible for any loss
incurred by the Fund.
INITIAL INVESTMENT BY MAIL
You may purchase shares of the Fund by mail, in at least the minimum amount,
by submitting a check payable to the order of "PC&J Performance Fund" and a
completed and signed new account application, which accompanies this
Prospectus (page 12), to the Custodian at the following address:
PC&J - Lockbox Account
Location 0614
Cincinnati, Ohio 45264-0614
The Fund confirms with the Custodian, on a daily basis by telephone, that the
Custodian has received the properly completed new account application and the
accompanying check.
INITIAL INVESTMENTS BY WIRE
You may purchase shares of the Fund by wire, in at least the minimum amount,
by:
. first completing and signing the new account application;
. telephoning (888-223-0600) the information contained in the new
account application to the Fund;
. mailing the completed and signed new account application to the
Custodian at the address set forth in the preceding paragraph;
. instructing your bank to wire Federal Funds to the Custodian. (Your
bank may charge you a fee for sending such a wire.)
EFFECTIVE DATE OF PURCHASE
Your initial purchase of the Fund's shares will be effective on the date that
the Fund confirms with the Custodian that the Custodian has received the
properly completed new account application and the accompanying check or wire
transfer. The Fund's transfer agent, Service Corp., will mail you
confirmation of your initial investment.
SUBSEQUENT INVESTMENTS
You may purchase additional shares of the Fund by:
. first providing the Fund, by mail or by telephone, the necessary
information concerning the name of your account and account number;
. subsequently making the necessary payment, either by check or wire
transfer, to the Custodian.
Your purchase of additional shares of the Fund will be effective on the date
that the Fund confirms with the Custodian that the Custodian has received the
check or wire transfer. Service Corp. will mail you a confirmation of each
subsequent investment.
HOW TO REDEEM YOUR INVESTMENT
You may sell shares of the Fund without charge at the net asset value next
determined after the Fund receives your properly completed written request
for redemption. The Fund will pay you for the shares you sell within 7 days
of receiving your redemption request. However, the Fund will pay for
redemptions of shares originally purchased by check only after the check has
been collected, which normally occurs within fifteen days. The Fund further
reserves the right to delay payment for the redemption of shares until the
Fund has received the properly completed new account application with respect
to such shares.
You may sell shares of the Fund on each day that the Fund is open for
business by sending a written redemption request to the Fund. The written
request must be signed by each shareholder, including each joint owner,
exactly as the name appears on the Fund's account records. The redemption
request must state the number or dollar amount of shares to be redeemed and
your account number. For the protection of shareholders, additional
documentation may be required from individuals, corporations, partnerships,
executors, trustees and other fiduciaries.
Because the Fund incurs certain fixed costs in maintaining shareholder
accounts, the Fund reserves the right to redeem all shares of any account on
sixty days' written notice if the net asset value of the account, due to a
redemption, is less than $5,000 ($1,000 for tax deferred retirement plans),
or such other minimum amount as the Fund may determine from time to time. A
shareholder may increase the value of his shares to the minimum amount within
the sixty-day period. Each share of the Fund is subject to redemption at any
time if the Board of Trustees determines in its sole discretion that failure
to so redeem may have materially adverse consequences to all or any of the
shareholders of the Fund. It is anticipated that the redemption provisions
of the preceding sentence would be used only to preserve the tax status of
the Fund or to close the Fund.
The Fund may suspend the right of redemption or may delay payment as follows:
. during any period the New York Stock Exchange is closed other than
for customary weekend and holiday closings;
. when trading on the New York Stock Exchange is restricted, or an
emergency exists (as determined by the rules and regulations of the
Securities and Exchange Commission) so that disposal of the
securities held in the Fund or determination of the net asset value
of the Fund is not reasonably practicable;
. for such other periods as the Securities and Exchange Commission by
order may permit for the protection of the Fund's shareholders.
DETERMINATION OF SHARE PRICE
On each day that the Fund is open for business, the net asset value of the
shares is determined as of 4:00 P.M., Dayton, Ohio time. The Fund is open for
business on each day the New York Stock Exchange is open for business and on
any other day when there is sufficient trading in the Fund's portfolio
securities that the Fund's net asset value might be materially affected. The
net asset value per share is computed by dividing the sum of the value of the
securities held by the Fund plus any cash or other assets (including interest
and dividends accrued but not yet received) minus all liabilities (including
estimated accrued expenses) by the total number of shares then outstanding.
All portfolio securities are valued on the following basis:
. securities which are traded on stock exchanges are valued at the
last sale price as of the close of business on the day the
securities are being valued;
. securities traded in the over-the-counter market are valued at
either the mean between the bid and ask prices or the last sale
price as one or the other may be quoted by the National Association
of Securities Dealers Automated Quotations System ("NASDAQ") as of
the close of business on the day the securities are being valued;
. securities and other assets for which market quotations are not
readily available are valued at fair value as determined in good
faith under the direction of the Board of Trustees of the Fund.
The share price of the Fund will fluctuate with the value of its portfolio
securities.
<PAGE>
PC&J PERFORMANCE FUND
NEW ACCOUNT APPLICATION
INSTRUCTIONS: Complete Sections 1 through 4 where applicable. Please print or
type. This application should be completed, signed and mailed to PC&J
Lockbox Account, Cincinnati. If payment is by check or other negotiable
instrument such check or other negotiable instrument payable to PC&J
Performance Fund should accompany the New Account Application. Refer to the
Prospectus for more detailed information.
MAIL TO: PC&J - Lockbox Account
Location 0614
Cincinnati, Ohio 45264-0614
----------------------------------------------------------------------------
1. REGISTRATION (Complete one section only)
___________________________________ _______________
INDIVIDUALS First Name Initial Last Name Social Security
AND Number
JOINT TENANTS
_______________________________________________________
Joint Owner (A Joint Tenancy with right of survivorship
will be presumed, unless otherwise indicated)
___________________________________ _______________
GIFTS Custodian's Name (only one) Minor's state
TO of residence
MINORS
___________________________________ ________________
Minor's Name (Only one) Minor's Social
Security Number
___________________________________ _______________
TRUSTS Trust or Plan Name Tax Identifi-
AND QUALIFIED cation Number
RETIREMENT PLANS
___________________________________
Name of Trustee(s)
___________________________________ _______________
ORGANIZATIONS Name of Organization Tax Identifi-
cation Number
Type: ___Corporation ___Partnership ___Association
<PAGE>
2. MAILING ADDRESS
___________________________________ ________________
Street Telephone Number
___________________________________ ________________
City State Zip Code
___________________________________
Attention (if any)
-----------------------------------------------------------------------------
3. INITIAL INVESTMENT (Complete one only)
A. I am mailing $___________ by check or other negotiable instrument
Amount
B. I have arranged $___________ for wire transfer
Amount
to PC&J Lockbox Account, Cincinnati at the address set forth above for the
purchase of shares of PC&J Performance Fund. The minimum initial purchase is
$1,000 ($2,000 for tax deferred retirement plans).
-----------------------------------------------------------------------------
4. SIGNATURES
I have received and reviewed a copy of the Fund's Prospectus dated April
, 1999 and understand that (a) certificates with respect to shares of
the Fund will not be issued, and (b) dividends and capital gain
distributions will be made only in additional shares of the Fund and not
in cash.
_____________ __________________________________________________
Date Signature (Individual, Custodian, Trustee or Other)
_____________ __________________________________________________
Date Signature of Joint Owner (if any)
-----------------------------------------------------------------------------<PAGE>
<PAGE>
FOR MORE INFORMATION
Shareholder inquiries regarding the Fund can be made to:
PC&J Performance Fund
120 West Third St.
Suite 300
Dayton, Ohio 45402
Telephone: 888-223-0600
Several additional sources of information are available to you. The Fund's
STATEMENT OF ADDITIONAL INFORMATION (SAI), incorporated by reference into
this prospectus, contains detailed information on Fund policies and
operation. Shareholder reports contain management's discussion of market
conditions, investment strategies and performance results as of the Fund's
latest semi-annual or annual fiscal year end.
Call the Fund at 888-223-0600 to request free copies of the SAI and the
Fund's annual and semi-annual reports or to request other information about
the Fund.
You may also obtain information about the Fund (including the SAI and other
reports) from the Securities and Exchange Commission on their Internet site
at HTTP://WWW.SEC.GOV or at their Public Reference Room in Washington, D.C.
Call the SEC at 800-SEC-0330 for room hours and operation. You may also
obtain Fund information by sending a written request and duplicating fee to
the Public Reference Section of the SEC, Washington, D.C. 20549-6609.
Investment Company Act # 811-03906
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
APRIL 24, 1999
PC&J PERFORMANCE FUND
A No-Load Fund
300 Old Post Office
120 West Third Street
Dayton, Ohio 45402
Investment Adviser: Parker Carlson & Johnson, Inc.
(the "Adviser")
INVESTMENT OBJECTIVE
The investment objective of PC&J Performance Fund (the "Fund") is long-term
growth of capital through investment in common stocks. Current income is of
secondary importance.
IMPORTANT FEATURES
Investment for Capital Growth
No Sales Commissions or Withdrawal Charges
Professional Management
Diversification
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Prospectus of the Fund dated April 24, 1999
(the "Prospectus"). This Statement of Additional Information incorporates
by reference the Trust's Annual Report to Shareholders for the fiscal year
ended December 31, 1998. The Prospectus and Annual Report are available
upon request and without charge by calling the Fund at 888-223-0600. This
Statement of Additional Information is incorporated by reference in its
entirety into the Prospectus.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND POLICIES .............................. 1
Fundamental ............................................... 1
Non-Fundamental ........................................... 2
State Restrictions ........................................ 3
ORGANIZATION AND OPERATION OF THE FUND ......................... 4
Principal Holders of Equity Securities .................... 5
Investment Adviser ........................................ 5
Manager and Transfer Agent ................................ 6
Custodian ................................................. 7
Auditors .................................................. 7
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION ................ 8
DESCRIPTION OF SHARES AND TAXES ................................ 9
FINANCIAL STATEMENTS ........................................... 10
</TABLE>
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
FUNDAMENTAL
The investment limitations described below have been adopted by the Fund and
are fundamental ("Fundamental"), I.E., they may not be changed without the
affirmative vote of a majority of the outstanding shares of the Fund. As used
in the Prospectus and this Statement of Additional Information, the term
"majority" of the outstanding shares of the Fund means the lesser of (1) 67%
or more of the outstanding shares of the Fund present at a meeting, if the
holders of more than 50% of the outstanding shares of the Fund are present or
represented at such meeting; or (2) more than 50% of the outstanding shares of
the Fund. Other investment practices which may be changed by the Board of
Trustees without the approval of shareholders to the extent permitted by
applicable law, regulation or regulatory policy are considered non-fundamental
("Non-Fundamental").
1. BORROWING MONEY. The Fund will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering
into reverse repurchase transactions, provided that the Fund has an asset
coverage of 300% for all borrowings and repurchase commitments of the Fund
pursuant to reverse repurchase transactions.
2. SENIOR SECURITIES. The Fund will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is (a) consistent with or permitted by the
Investment Company Act of 1940, as amended, the rules and regulations
promulgated thereunder, or interpretations of the Securities and Exchange
Commission or its staff and (b) as described in the Prospectus and the
Statement of Additional Information.
3. UNDERWRITING. The Fund will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the extent
that, in connection with the disposition of portfolio securities (including
restricted securities), the Fund may be deemed an underwriter under certain
federal securities laws.
4. REAL ESTATE. The Fund will not purchase or sell real estate. This
limitation is not applicable to investments in securities which are secured by
or represent interests in real estate. This limitation does not preclude the
Fund from investing in mortgage-related securities, or investing in companies
which are engaged in the real estate business or have a significant portion of
their assets in real estate (including real estate investment trusts).
5. COMMODITIES. The Fund will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. LOANS. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. CONCENTRATION. The Fund will not invest 25% or more of its total
assets in a particular industry. This limitation is not applicable to
investments in obligations issued or guaranteed by the U.S. government, its
agencies and instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Fund as maximum limitations on
its investment policies and limitations, an excess above the fixed percentage
will not be a violation of the policy or limitation unless the excess results
immediately and directly from the acquisition of any security or the action
taken. It is the current position of the SEC staff that the provisions of
this paragraph do not apply to a fund's borrowing policy (paragraph 1 above).
As long as the SEC staff maintains that position, the Fund will not apply
the provisions to its borrowing policy.
Notwithstanding the concentration limitation in paragraph 7, any investment
company, whether organized as a trust, association or corporation, or a personal
holding company, may be merged or consolidated with or acquired by the Fund,
provided that if such merger, consolidation or acquisition results in any
concentration prohibited by said paragraph 7, the Fund shall, within ninety days
after the consummation of such merger, consolidation or acquisition, dispose of
all of the securities of such issuer so acquired or such portion thereof as
shall bring the total investment therein within the limitation imposed by said
paragraph 7 above as of the date of consummation.
NON-FUNDAMENTAL
The following limitations have been adopted by the Fund and are Non-Fundamental.
1. PLEDGING. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
2. MARGIN PURCHASES. The Fund will not purchase securities or evidences
of interest thereon on "margin." This limitation is not applicable to short
term credit obtained by the Fund for the clearance of purchases and sales or
redemption of securities, or to arrangements with respect to transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.
3. OPTIONS. The Fund will not purchase or sell puts, calls, options or
straddles except as described in the Prospectus and the Statement of Additional
Information.
4. SHORT SALES. The Fund will not effect short sales of securities
unless it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short.
5. ILLIQUID INVESTMENTS. The Fund will not invest more than 15% of its
net assets in securities for which there are legal or contractual restrictions
on resale and other illiquid securities.
6. SECURITIES AFFILIATED WITH TRUSTEES. The Fund will not invest in
securities of a company that is affiliated with a Trustee by reason of
employment or by representation of the Trustee on the company's Board of
Directors.
STATE RESTRICTIONS
To comply with the current blue sky regulations of the State of Ohio, the Fund
presently intends to observe the following restrictions, which may be changed by
the Board of Trustees without shareholder approval.
Other Information
As a diversified company, at least 75% of the Fund's assets must be invested in
the following:
. securities whereby no single stock exceeds 5% of the value of the
total assets of the fund and the Fund does not own greater than 10% of
the outstanding voting securities of the particular company;
. cash and cash equivalents;
. government securities;
. securities of other investment companies.
The Fund will not purchase or retain securities of any issuer if the Trustees
and officers of the Fund or of the Adviser, who individually own beneficially
more than 0.5% of the outstanding securities of such issuer, together own
beneficially more than 5% of such securities. The Fund will not purchase
securities issued by other investment companies except by purchase in the open
market where no commission or profit to a sponsor or dealer results from such
purchase other than customary broker's commission or except when such purchase
is part of a plan of merger, consolidation, reorganization or acquisition. The
Fund will not borrow (other than by entering into reverse repurchase
agreements), pledge, mortgage or hypothecate more than one-third of its total
assets. In addition, the Fund will engage in borrowing (other than reverse
repurchase agreements) only for emergency or extraordinary purposes and not for
leverage. The Fund will not invest more than 15% of its total assets in
securities of issuers which, together with any predecessors, have a record of
less than three years continuous operation or securities of issuers which are
restricted as to disposition. The Fund will not purchase the securities of any
issuer if such purchase at the time thereof would cause more than 10% of the
voting securities of any issuer to be held by the Fund.
ORGANIZATION AND OPERATION OF THE FUND
The Fund is a diversified, open-end management investment company organized as
an Ohio business trust on October 26, 1983. The responsibility for management of
the Fund is vested in its Board of Trustees. The Board of Trustees, among other
things, is empowered by the Fund's Declaration of Trust to elect officers of the
Fund and contract with and provide for the compensation of agents, consultants
and other professionals to assist and advise in such management.
The names of the executive officers and Trustees of the Fund are shown in the
table below. Each Trustee who is an "interested person" of the Fund, as defined
in the Investment Company Act of 1940, is indicated by an asterisk.
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME, ADDRESS AND AGE WITH FUND DURING PAST FIVE YEARS
<S> <C> <C>
*Leslie O. Parker III <F1> President and Since September 1982,
300 Old Post Office Trustee President of Adviser
120 West Third Street
Dayton, Ohio 45402
Age:59
*Kathleen A. Carlson, CFA <F1> Treasurer and Since September 1982,
300 Old Post Office Trustee Treasurer of Adviser
120 West Third Street
Dayton, Ohio 45402
Age:43
*James M. Johnson, CFA <F1> Secretary and Since September 1982,
300 Old Post Office Trustee Secretary of Adviser
120 West Third Street
Dayton, Ohio 45402
Age:46
Donald N. Lorenz Trustee Retired since December 1998;
210 B Mariners Point from December 1980 to
73 Skull Creek Drive December 1998, Vice
Hilton Head Island, S.C. 29926 President-Finance and
Age:64 Treasurer, Price Brothers
Company (concrete pipe
products)
Thomas H. Rodgers Trustee Since July 1986, Vice
World Headquarters Blvd. President-General Counsel
Troy, Ohio 45373 and Secretary, Premark
Age:54 International, Inc. Food
Equipment Group
<FN>
<F1> The Fund's President, Treasurer and Secretary are the President,
Treasurer and Secretary, respectively, of Adviser and own in the
aggregate a controlling interest in Adviser.
</FN>
</TABLE>
Each of the foregoing Trustees also is a Trustee of PC&J Preservation Fund.
As of February 12, 1999, all Trustees and officers of the Fund as a group owned
1.65% of the outstanding shares of the Fund.
The compensation paid to the Trustees of the Fund for the year ended December
31, 1998 is set forth in the following table:
<TABLE>
<CAPTION>
PENSION OR ESTIMATED TOTAL
RETIREMENT ANNUAL COMPENSA-
AGGREGATE ACCRUED AS BENEFITS TION FROM
COMPENSA- PART OF UPON FUND
TION FROM FUND RETIRE- COMPLEX
NAME FUND EXPENSES MENT
<S> <C> <C> <C> <C>
Leslie O. Parker, III $0 $0 $0 $0
Kathleen A. Carlson $0 $0 $0 $0
James M. Johnson $0 $0 $0 $0
Donald N. Lorenz $450 $0 $0 $900
Thomas H. Rodgers $450 $0 $0 $900
</TABLE>
The Fund and PC&J Preservation Fund are the two investment companies in the PC&J
Mutual Funds complex. They have identical Boards of Trustees, and Board and
committee meetings of both Funds are held at the same time. Although the fees
paid to Trustees are expenses of the Funds, Service Corp. makes the actual
payment pursuant to its management agreements with the Funds, which obligate
Service Corp. to pay all of the operating expenses of the Funds (with limited
exceptions). See "Manager and Transfer Agent."
PRINCIPAL HOLDERS OF EQUITY SECURITIES
The following table sets forth each person or group known to the Fund to be the
record or beneficial owner of five percent (5%) or more of the Fund's shares as
of January 31, 1999:
NONE.
INVESTMENT ADVISER
For the Fund's fiscal years ended December 31, 1996, 1997, 1998 the Adviser was
paid $259,438, $325,779, and $413,642 respectively, under the Investment
Advisory Agreement.
The Adviser and Service Corp., as manager, jointly and severally have agreed to
reimburse the Fund (up to the amount of the respective fee received by Adviser
or Service Corp.) for the aggregate expenses of the Fund during any fiscal year
which exceed the limits prescribed by any state in which the shares of the Fund
are registered for sale. Currently, the most stringent limitation provides that
annual expenses of the Fund, including investment advisory and management fees
but excluding interest, taxes, brokerage commissions and extraordinary expenses,
shall not exceed two percent of the first ten million dollars of the Fund's
average net assets and one and one-half percent of average net assets in excess
of ten million dollars. The Fund's expenses have never exceeded the foregoing
limitations.
MANAGER AND TRANSFER AGENT
The Fund has entered into a Management and Transfer Agent Agreement ("Management
Agreement") with PC&J Service Corp., 300 Old Post Office, 120 West Third Street,
Dayton, Ohio ("Service Corp."). Service Corp. has agreed to manage the Fund's
business affairs, exclusive of investment advice provided by Adviser, and to
serve as its transfer and dividend-disbursing agent. Service Corp. pays all
expenses of the Fund (excluding interest, taxes, brokerage and extraordinary
expenses and fees payable under the Investment Advisory Agreement and Management
Agreement, all of which are payable by the Fund).
These expenses include, but are not limited to, costs of furnishing documents to
shareholders and regulatory agencies, registration and filing fees, legal,
auditing, and custodian fees. Service Corp. pays the expenses of shareholders'
and Trustees' meetings and any fees paid to Trustees who are not interested
persons of the Adviser. Service Corp. was organized in October 1983, and its
officers and directors are identical to those of Adviser.
As compensation for the overall management, transfer and dividend disbursing
agent services and payment of the foregoing expenses, the Fund will pay Service
Corp. a monthly fee, accrued daily, based on an annual rate of .5% of the daily
net asset value of the Fund.
For the Fund's fiscal years ended December 31, 1996, 1997, and 1998 Service
Corp. was paid $129,719, $162,890, and $206,821 respectively, under the
Management Agreement.
Service Corp. has agreed to pay the Fund's organizational costs and to provide
and pay the compensation for the Fund's officers and employees, to provide and
pay for office space and facilities required for its operation and generally to
provide and pay for the general administration and operation of the Fund,
including its compliance obligations under state and federal laws and
regulations (but excluding interest, taxes, brokerage and extraordinary expenses
and fees payable under the Investment Advisory Agreement and Management
Agreement, all of which are payable by the Fund).
CUSTODIAN
The Fund has appointed Firstar Bank, formerly Star Bank, N.A., Cincinnati
("Custodian"), 425 Walnut Street, Cincinnati, Ohio 45202, as the Fund's
custodian. In such capacity the Custodian will receive all new account
applications in connection with initial purchases of the Fund's shares, will
receive and credit to the account of the Fund all checks payable to the Fund
and all wire transfers to the Fund. The Custodian will hold all portfolio
securities and other assets owned by the Fund. Compensation for such services
will be paid by Service Corp.
AUDITORS
The Fund has selected the firm of Deloitte & Touche, LLP as the independent
auditors for the Fund. The Auditors' principal business address is: 1700
Courthouse Plaza Northeast, Dayton, Ohio 45402.
It is expected that such independent public accountants will audit the annual
financial statements of the Fund, assist in the preparation of the Fund's
federal and state tax returns and advise the Fund as to accounting matters.
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION
Subject to the policies established by the Board of Trustees of the Fund, the
Adviser is responsible for the Fund's portfolio decisions and the placing of the
Fund's portfolio transactions. In executing such transactions, the Adviser seeks
to obtain the best net results for the Fund taking into account such factors as
price (including the applicable brokerage commission or dealer spread), size of
order, difficulties of execution and operational facilities of the firm involved
and the firm's risk in positioning a block of securities. While the Adviser
generally seeks reasonably competitive commission rates, for the reasons stated
in the prior sentence the Fund will not necessarily be paying the lowest
commission or spread available.
The Adviser may consider (a) provision of research, statistical and other
information to the Fund or to the Adviser, and (b) the occasional sale by a
broker-dealer of Fund shares as factors in the selection of qualified
broker-dealers who effect portfolio transactions for the Fund so long as the
Adviser's ability to obtain the best net results for portfolio transactions of
the Fund is not diminished. Such research services include supplemental
research, securities and economic analyses, and statistical services and
information with respect to the availability of securities or purchaser or
seller of securities. Such research services may also be useful to the Adviser
in connection with its services to other clients. Similarly, research services
provided by brokers serving such other clients may be useful to the Adviser in
connection with its services to the Fund. Although this information and the
occasional sale by a broker-dealer of Fund shares is useful to the Fund and the
Adviser, it is not possible to place a dollar value on it. It is the opinion of
the Board of Trustees and the Adviser that the review and study of this
information and the occasional sale by a broker-dealer of Fund shares will not
reduce the overall cost to the Adviser of performing its duties to the Fund
under the Investment Advisory Agreement. The Fund is not authorized to pay
brokerage commissions which are in excess of those which another qualified
broker would charge solely by reason of brokerage, research or occasional sales
services provided.
For the Fund's fiscal years ended December 31, 1996, 1997, and 1998 the Fund
paid $51,025, $29,608, and $50,633 respectively, in brokerage commissions. Of
this amount approximately 100% was paid to firms which provided either research,
statistical or other information to the Fund or Adviser.
To the extent that the Fund and other clients of the Adviser seek to acquire the
same security at about the same time, the Fund may not be able to acquire as
large a position in such security as it desires or it may have to pay a higher
price for the security. Similarly, the Fund may not be able to obtain as large
an execution of an order to sell or as high a price for any particular portfolio
security if the other client desires to sell the same portfolio security at the
same time. On the other hand, if the same securities are bought or sold at the
same time by more than one client, the resulting participation in volume
transactions could produce better executions for the Fund. In the event that
more than one client purchases or sells the same security on a given date, the
purchases and sales will be allocated by the Adviser in a manner that is fair
and equitable to all parties involved.
DESCRIPTION OF SHARES AND TAXES
Shareholders have equal voting rights on all matters submitted for shareholder
vote. The Declaration of Trust limits the matters requiring a shareholder vote
to the election or removal of Trustees, approval of certain contracts of the
Fund such as the Investment Advisory Agreement with Adviser, approval of the
termination or reorganization of the Fund and certain other matters described in
such Declaration.
Shareholders have neither any preemptive rights to subscribe for additional
shares nor any cumulative voting rights. In the event of a liquidation,
shareholders of the Fund are entitled to receive the excess of the assets of the
Fund over the liabilities of the Fund in proportion to the shares of the Fund
held by them.
The Fund has qualified and intends to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended. By so
qualifying, the Fund will not be subject to Federal income taxes to the extent
that it distributes substantially all of its net investment income and any net
realized capital gains.
FINANCIAL STATEMENTS
The financial statements and independent auditors' report required to be
included in this Statement of Additional Information are incorporated herein by
reference to the Trust's Annual Report to Shareholders for the fiscal year ended
December 31, 1998.
