PC&J PRESERVATION FUND
Semi-Annual Report
to Shareholders
June 30, 1997
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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 1997 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
--------------------
James Johnson
Secretary
\s\ Kathleen Carlson
--------------------
Kathleen Carlson
Treasurer
<PAGE>
PC&J PRESERVATION FUND
FINANCIAL HIGHLIGHTS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, 1994, AND 1993
<TABLE>
<CAPTION>
Selected Data for Each Share
of Capital Stock Outstanding 1997 1996 1995 1994 1993
Throughout the Period (Unaudited)
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE-BEGINNING OF PERIOD $10.97 $11.32 $10.34 $11.31 $11.24
----------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income 0.31 0.62 0.59 0.70 0.67
Net realized and unrealized
gain (loss) on securities (0.04) (0.31) 0.98 (0.97) 0.28
----------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS $0.27 0.31 1.57 (0.27) 0.95
----------- ---------- ---------- ---------- ----------
Less dividends:
From net investment income (0.00) (0.62) (0.59) (0.70) (0.67)
From net realized gain
on investments (0.00) (0.04) (0.00) (0.00) (0.21)
----------- ---------- ---------- ---------- ----------
TOTAL DIVIDENDS (0.00) (0.66) (0.59) (0.70) (0.88)
----------- ---------- ---------- ---------- ----------
NET ASSET VALUE-END OF PERIOD $11.24 $10.97 $11.32 $10.34 $11.31
=========== ========== ========== ========== ==========
TOTAL RETURN <F1> 2.46% 2.75% 15.18% (2.39)% 8.45%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.99%<F2> 1.00% 1.00% 1.00% 1.00%
Net investment income 5.49%<F2> 5.38% 5.56% 5.83% 5.87%
Portfolio turnover rate 20.36%<F2> 28.66% 25.62% 30.03% 37.13%
Net assets at end of period (000's) $15,150 $16,151 $16,472 $14,261 $16,218
<FN>
<F1> TOTAL RETURN IS BASED ON PAST PERFORMANCE AND IS NOT A
GUARANTEE OF FUTURE PERFORMANCE.
<F2> ANNUALIZED
</FN>
</TABLE>
<PAGE>
PC&J PRESERVATION FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1997
(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: 28.4%
Federal Nat'l. Mortgage Assoc.
Step Notes, 5.550%, due 10/98 1.25 750,000 745,192
Federal Home Loan Bank
Bond, 6.000%, due 12/98 1.50 1,500,000 1,496,865
Federal Nat'l Mortgage Assoc.
Notes, 9.550%, due 03/99 1.75 1,000,000 1,054,687
U.S. Treasury Notes,
6.500%, due 04/99 1.75 1,000,000 1,007,188
------------
4,303,932
Maturity of 6 - 10 years: 49.3
U.S. Treasury Notes,
6.375%, due 08/02 5.25 2,000,000 1,998,750
U.S. Treasury Notes,
5.875%, due 02/04 6.75 1,500,000 1,452,656
U.S. Treasury Notes,
7.250%, due 08/04 7.00 500,000 521,094
Federal Home Loan Bank Notes,
6.380%, due 10/04 7.25 1,000,000 978,810
U.S. Treasury Notes,
6.500%, due 05/05 8.00 1,000,000 998,125
Federal Home Loan Mortgage Corp.
Notes, 7.510%, due 08/05 8.25 1,000,000 1,000,610
U.S. Treasury Notes,
7.000%, due 07/06 9.00 500,000 514,219
------------
7,464,264
------- ------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $11,639,679) 77.7% $11,768,19
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PC&J PRESERVATION FUND
SCHEDULE OF INVESTMENTS (Continued)
JUNE 30, 1997
(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 $11,639,679) 77.7% $11,768,196
------- ------------
U.S. CORPORATE OBLIGATIONS:
Maturity of less than 1 year 3.5
Lehman Brothers Holding Inc.
Notes, 5.750%, due 02/98 0.75 525,000 524,480
------------
Maturity of 1 - 5 years: 6.5
US Leasing Int'l Med Term Notes,
6.700%, due 09/99 2.25 500,000 501,300
American Express Credit Corp.
Notes, 6.125%, due 11/01 4.50 500,000 488,460
------------
989,760
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TOTAL U.S. CORPORATE OBLIGATIONS
(Cost $1,503,453) 10.0 1,514,240
------- ------------
MUNICIPAL OBLIGATIONS -
Maturity of 6-10 years - 3.3
Ohio Taxable Development
Assistance Bonds,
6.820%, due 04/03
(Cost $500,000) 5.75 500,000 498,770
------- ------------
TOTAL U.S. GOVERNMENT,
CORPORATE, AND MUNICIPAL
OBLIGATIONS
(Cost $13,643,132) 91.0 13,781,206
SHORT-TERM OBLIGATIONS
(Cost $1,127,854) 7.4 1,127,854
------- ------------
TOTAL INVESTMENTS
(Cost $14,770,986) 98.4% $14,909,060
======= ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PC&J PRESERVATION FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997
(UNAUDITED)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at market value
(Cost basis - $14,770,986) (Notes A & D) $14,909,060
Receivables _ Interest 253,080
------------
Total assets 15,162,140
LIABILITIES _ Accrued expenses (Note B) (12,408)
------------
NET ASSETS $15,149,732
============
SHARES OUTSTANDING (Unlimited authorization -
no par value):
Beginning of year 1,472,457
Net increase (Note C) (124,723)
------------
End of period 1,347,734
============
NET ASSET VALUE PER SHARE $11.24
============
NET ASSETS CONSIST OF:
Paid in capital $14,648,029
Net unrealized appreciation on investments 138,075
Undistributed net investment income 422,769
Undistributed net (loss) on investments (59,141)
------------
Net Assets $15,149,732
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PC&J PRESERVATION FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME - Interest (Note A): $ 499,078
------------
EXPENSES (Note B):
Investment advisory fee 38,155
Management fee 38,154
------------
Total expenses 76,309
------------
NET INVESTMENT INCOME 422,769
------------
REALIZED AND UNREALIZED GAIN / (LOSS) ON
INVESTMENTS (Note D):
Net realized (loss) on investments (59,141)
Change in unrealized appreciation/
(depreciation) of investments 3,862
------------
NET REALIZED AND UNREALIZED (LOSS) ON INVESTMENTS (55,279)
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 367,490
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PC&J PRESERVATION FUND
STATEMENTS OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months For the Year Ended Ended
June 30, 1997 December 31, 1996
(Unaudited)
-------------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income $ 422,769 $ 861,330
Net realized gain/(loss) on (59,141) 57,532
investments
Change in unrealized appreciation/
(depreciation) of investments 3,862 (495,171)
------------ ------------
Net increase in net assets from operations 367,490 423,691
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income 0 (861,330)
Dividends from net realized gain
on investments 0 (57,532)
------------ ------------
Net decrease in assets from dividends
to shareholders 0 (918,862)
INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS (Note C) (1,368,808) 174,434
------------ ------------
Total decrease in net assets (1,001,318) (320,737)
NET ASSETS:
Beginning of period 16,151,050 16,471,787
------------ ------------
End of period $15,149,732 $16,151,050
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PC&J PRESERVATION FUND
NOTES TO FINANCIAL STATEMENTS
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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 to shareholders from net investment income and net realized
capital gains are declared and paid annually. 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 $38,155 for the six months ended
June 30, 1997.
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 $38,154 for the six months ended June 30, 1997.
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.
<PAGE>
PC&J PRESERVATION FUND
NOTES TO FINANCIAL STATEMENTS - (Concluded)
- -----------------------------------------------------------------------------
C. CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
For the Six Months For the Year
Ending Ending
June 30, 1997 December 31, 1996
--------------------------------------------------
<S> <C> <C>
Shares sold 52,169 $ 574,723 120,451 $ 1,357,280
Shares issued in reinvestment
of dividends 0 0 83,771 918,862
Shares redeemed (176,893) (1,943,531) (186,785) (2,101,708)
--------- ------------ --------- ------------
Net increase/(decrease) (124,724) $(1,368,808) 17,437 $ 174,434
========= ============ ========= ============
</TABLE>
D. INVESTMENT TRANSACTIONS
Securities purchased and sold (excluding short-term obligations) for
the six months ended June 30, 1997 aggregated $1,496,563 and $3,517,148,
respectively. Purchases and sales of U.S. Government Securities for the
six months ended June 30, 1997 aggregated $1,496,563 and $3,517,147,
respectively.
At June 30, 1997 gross unrealized appreciation on investments was
$223,490 and gross unrealized depreciation on investments was $85,415
for net unrealized appreciation of $138,075 for financial reporting and
federal income tax purposes.
