PC&J PRESERVATION FUND
Semi-Annual Report
to Shareholders
June 30, 1996
The PC&J Preservation 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 Semi-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.
/s/
--------------------
James Johnson
Secretary
/s/
--------------------
Kathleen Carlson
Treasurer
<PAGE>
PC&J PRESERVATION FUND
- ----------------------
FINANCIAL HIGHLIGHTS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, 1993, AND 1992
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Selected Data for Each Share of
Capital Stock Outstanding 1996 1995 1994 1993 1992
Throughout the Year (UNAUDITED)
----------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE-BEGINNING OF YEAR $11.32 $10.34 $11.31 $11.24 $11.43
----------- -------- -------- -------- --------
Income from investment
operations:
Net investment income 0.31 0.59 0.70 0.67 0.82
Net realized and unrealized
gain (loss) on securities (0.44) 0.98 (0.97) 0.28 (0.11)
----------- -------- -------- -------- --------
TOTAL FROM INVESTMENT OPERATIONS ($0.13) 1.57 (0.27) 0.95 0.71
----------- -------- -------- -------- --------
Less dividends:
From net investment income 0.00 (0.59) (0.70) (0.67) (0.82)
From net realized gain
on investments 0.00 (0.00) (0.00) (0.21) (0.08)
----------- -------- -------- -------- --------
TOTAL DIVIDENDS 0.00 (0.59) (0.70) (0.88) (0.90)
----------- -------- -------- -------- --------
NET ASSET VALUE-END OF YEAR $11.19 $11.32 $10.34 $11.31 $11.24
=========== ======== ======== ======== ========
TOTAL RETURN <F1> -1.15% 15.18% -2.39% 8.45% 6.21%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.99%<F2> 1.00% 1.00% 1.00% 1.00%
Net investment income 5.44%<F2> 5.56% 5.83% 5.87% 6.66%
Portfolio turnover rate 32.10%<F2> 25.62% 30.03% 37.13% 26.10%
Net assets at end of year(000's) $15,799 $16,472 $14,261 $16,218 $13,997
<FN>
<F1> Total return is based on past performance and is not a guarantee of
future performance.
<F2> Annualized
</FN>
</TABLE>
- -------------------------------------------------------------------------------
Page 1
<PAGE>
PC&J PRESERVATION FUND
- ----------------------
SCHEDULE OF INVESTMENTS
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
PERCENT YEARS
OF NET TO PRINCIPAL MARKET
SECURITY (Note A) ASSETS MATURITY AMOUNT VALUE
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS:
Maturity of 1 - 5 years: 33.6%
Federal Nat'l. Mortgage Assoc.
Step Notes, 5.550%, due 10/98 2.25 750,000 731,303
Federal Nat'l. Mortgage Assoc.
Notes, 4.875%, due 10/98 2.25 1,000,000 967,344
Federal Nat'l Mortgage Assoc.
Notes, 9.550%, due 03/99 2.75 1,000,000 1,076,562
U.S. Treasury Notes,
7.000%, due 04/99 2.75 1,000,000 1,018,125
U.S. Treasury Notes,
6.500%, due 04/99 2.75 1,500,000 1,508,437
------------
5,301,771
Maturity of 6 - 10 years: 45.1
U.S. Treasury Notes,
6.375%, due 08/02 6.25 2,000,000 1,984,375
U.S. Treasury Notes,
5.875%, due 02/04 7.75 1,500,000 1,432,500
Federal Nat'l. Mortgage Assoc.
Notes, 7.600%, due 04/04 7.75 500,000 498,281
U.S. Treasury Notes,
7.250%, due 08/04 8.25 500,000 517,813
Federal Home Loan Bank Notes,
6.380%, due 10/04 8.25 1,000,000 958,500
U.S. Treasury Notes,
6.500%, due 05/05 9.00 750,000 739,453
Federal Home Loan Mortgage Corp.
Notes, 7.510%, due 08/05 9.25 1,000,000 995,220
------------
7,126,142
Maturity of more than 10 years 7.0
- -
U.S. Treasury Bonds,
8.750%, due 11/08 12.50 1,000,000 1,110,000
------- ------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $13,475,959) 85.7% $13,537,913
</TABLE>
See notes to financial statements.
- -------------------------------------------------------------------------------
Page 2
<PAGE>
PC&J PRESERVATION FUND
- ----------------------
SCHEDULE OF INVESTMENTS (Continued)
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
PERCENT YEARS
OF NET TO PRINCIPAL MARKET
SECURITY (Note A) ASSETS MATURITY AMOUNT VALUE
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TOTAL U.S. GOVERNMENT OBLIGATIONS
FORWARD (Cost $13,475,959) 85.7% $13,537,913
------- ------------
U.S. CORPORATE OBLIGATIONS:
Maturity of 1 - 5 years:
Lehman Brothers Holding Inc.
Notes, 5.750%, due 02/98 1.75 525,000 518,448
US Leasing Int'l Med Term Notes,
6.700%, due 09/99 3.25 500,000 496,930
American Express Credit Corp.
Notes, 6.125%, due 11/01 5.50 500,000 482,705
------------
TOTAL U.S. CORPORATE OBLIGATIONS
(Cost $1,508,155) 9.5 1,498,083
------- ------------
TOTAL U.S. GOVERNMENT AND
CORPORATE OBLIGATIONS
(Cost $14,984,114) 95.2 15,035,996
SHORT-TERM OBLIGATIONS
(Cost $504,959) 3.2 504,959
------- ------------
TOTAL INVESTMENTS
(Cost $15,489,073) 98.4% $15,540,955
======= ============
</TABLE>
See notes to financial statements.
- -------------------------------------------------------------------------------
Page 3
<PAGE>
PC&J PRESERVATION FUND
- ----------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996
(UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at market value
(Cost basis - $15,489,073) (Notes A & D) $15,540,955
Receivables - Interest 271,153
------------
Total assets 15,812,108
LIABILITIES - Accrued expenses (Note B) (12,825)
------------
NET ASSETS $15,799,283
============
SHARES OUTSTANDING 1,412,210
(Unlimited authorization - no par value) (Note C)
NET ASSET VALUE PER SHARE $11.19
============
NET ASSETS CONSIST OF:
Paid in capital $15,366,201
Net unrealized appreciation 51,882
Undistributed net investment income 440,466
Undistributed net (loss) (59,266)
------------
Net Assets $15,799,283
============
</TABLE>
See notes to financial statements.
- -------------------------------------------------------------------------------
Page 4
<PAGE>
PC&J PRESERVATION FUND
- ----------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME - Interest (Note A): $ 520,771
------------
EXPENSES (Note B):
Investment advisory fee 40,153
Management fee 40,152
------------
Total expenses 80,305
------------
NET INVESTMENT INCOME 440,466
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (Note D):
Net realized (loss) on investments (59,266)
Change in unrealized (depreciation) of investments (577,502)
------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS (636,768)
------------
NET DECREASE IN NET ASSETS FROM OPERATIONS ($196,302)
============
</TABLE>
See notes to financial statements.
- -------------------------------------------------------------------------------
Page 5
<PAGE>
PC&J PRESERVATION FUND
- ----------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND
FOR THE YEAR ENDED DECEMBER 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995
(UNAUDITED)
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $ 440,466 $ 813,759
Net realized gain (loss) on investments (59,266) 52,173
Change in unrealized appreciation
(depreciation) of investments (577,502) 1,188,939
------------ ------------
Net increase (decrease) in net assets from operations (196,302) 2,054,871
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income 0 (816,140)
Dividends from net realized gain on investments 0 (2,751)
CAPITAL STOCK TRANSACTIONS-Increase (decrease) in
net assets resulting from capital share
transactions (Note C) (476,202) 974,772
------------ ------------
Total increase (decrease) in net assets (672,504) 2,210,752
------------ ------------
NET ASSETS:
Beginning of year 16,471,787 14,261,035
------------ ------------
End of year $15,799,283 $16,471,787
============ ============
</TABLE>
See notes to financial statements.
- -------------------------------------------------------------------------------
Page 6
<PAGE>
PC&J PRESERVATION FUND
- ----------------------
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PC&J Preservation Fund (the 'Fund') commenced operations on April 30,
1985,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 the over-the-
counter market are valued at the average of the reported bid and ask
prices. All other securities are valued using established procedures
which involve approximating the yield-to-maturity of similar
securities traded on a national exchange.
(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 and distributions to shareholders are 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-half
of one percent of the daily net assets of the Fund. Investment advisory
fees were $40,153 for the six months ended June 30, 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 $40,152
for the six months ended June 30, 1996.
Certain officers and trustees of the Fund are officers and trustees, or
both, of the Advisor and of Service Corp.
- -------------------------------------------------------------------------------
Page 7
<PAGE>
PC&J PRESERVATION FUND
- ----------------------
NOTES TO FINANCIAL STATEMENTS - (Concluded)
- -------------------------------------------------------------------------------
C. CAPITAL STOCK TRANSACTIONS
<TABLE>
<CAPTION>
For the Six Months Ended For the Year Ended
June 30, 1996 December 31, 1995
------------------------ ------------------------
<S> <C> <C> <C> <C>
Shares sold 54,458 $ 608,699 204,399 $ 2,304,454
Shares issued in
reinvestment of
dividends and capital
gains distributions 0 0 72,336 818,891
---------- ------------ ---------- ------------
54,458 608,699 276,735 3,123,345
Shares redeemed (97,268) (1,084,901) (200,290) (2,148,573)
---------- ------------ ---------- ------------
Net increase(decrease) (42,810) (476,202) 76,445 974,772
Shares outstanding at
beginning of year 1,455,020 15,842,403 1,378,575 14,867,631
---------- ------------ ---------- ------------
Shares outstanding at
end of year 1,412,210 $15,366,201 1,455,020 $15,842,403
========== ============ ========== ============
</TABLE>
D. INVESTMENT TRANSACTIONS
Securities purchased and sold (excluding short-term obligations) for the
year ended June 30, 1996, aggregated $2,735,875 and $1,485,156,
respectively. In addition, $1,000,000 in securities matured or were
called.
At June 30, 1996 gross unrealized appreciation on investments was $294,108
and gross unrealized depreciation on investments was $242,226 for a net
unrealized appreciation of $51,882 for financial reporting and federal
income tax purposes.
E. DISTRIBUTION EXPENSE
The Fund's shareholders have adopted a Distribution Expense 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
(See Note B) which might be deemed to be expenses primarily intended to
result in the sale of Fund shares. No other payments are authorized under
the Distribution Expense Plan.
- -------------------------------------------------------------------------------
Page 8
