PC&J PRESERVATION FUND
Semi-Annual Report
to Shareholders
June 30, 1998
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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 1998 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
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FINANCIAL HIGHLIGHTS
The information contained in the table below for the years ended December 31,
1997,1996, 1995, and 1994 have been derived from data contained in financial
statements examined by Deloitte & Touche, independent certified public
accountants. The information for the six months ended June 30, 1998 have been
derived from data contained in the unaudited financial statements but which are
believed to include all adjustments necessary for a fair presentation. Such
information should be read in conjunction with the enclosed financial
statements.
<TABLE>
<CAPTION>
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Selected Data for Each Share of Capital 1998 1997 1996 1995 1994
Stock Outstanding Throughout the Period (Unaudited)
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE-BEGINNING OF PERIOD $11.14 $10.97 $11.32 $10.34 $11.31
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income 0.30 0.64 0.62 0.59 0.70
Net realized and unrealized
gain (loss) on securities 0.08 0.17 (0.31) 0.98 (0.97)
--------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS $0.38 0.81 0.31 1.57 (0.27)
--------- --------- --------- --------- ---------
Less dividends:
From net investment income (0.00) (0.64) (0.62) (0.59) (0.70)
From net realized gain
on investments (0.00) (0.00) (0.04) (0.00) (0.00)
--------- --------- --------- --------- ---------
TOTAL DIVIDENDS (0.00) (0.64) (0.66) (0.59) (0.70)
--------- --------- --------- --------- ---------
NET ASSET VALUE-END OF PERIOD $11.52 $11.14 $10.97 $11.32 $10.34
========= ========= ========= ========= =========
TOTAL RETURN <F1> 3.41% 7.38% 2.75% 15.18% -2.39%
RATIOS TO AVERAGE NET ASSETS
Expenses 1.00%<F2> 1.00% 1.00% 1.00% 1.00%
Net investment income 5.40%<F2> 5.62% 5.38% 5.56% 5.83%
Portfolio turnover rate 37.66%<F2> 31.39% 28.66% 25.62% 30.03%
Net assets at end of period (000's) $17,609 $16,071 $16,151 $16,472 $14,261
<FN>
<F1> TOTAL RETURN IS MEASURE OF PAST PERFORMANCE AND IS NOT A GUARANTEE OF
FUTURE PERFORMANCE.
<F2> ANNUALIZED
</FN>
</TABLE>
<PAGE>
PC&J PRESERVATION FUND
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SCHEDULE OF INVESTMENTS
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
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PERCENT YEARS
OF NET TO PRINCIPLE MARKET
SECURITY (Note A) ASSETS MATURITY AMOUNT VALUE
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<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS:
Maturity of less than 1 year: 10.1%
Federal Nat'l. Mortgage Assoc.
Step Notes, 5.550%, due 10/98 0.25 750,000 $ 750,703
Federal Nat'l Mortgage Assoc.
Notes, 9.550%, due 03/99 0.75 1,000,000 1,025,625
------------
1,776,328
------------
Maturity of 1 - 5 years: 11.7
U.S. Treasury Notes,
6.375%, due 08/02 4.00 2,000,000 2,060,000
------------
Maturity of 5 - 10 years: 38.3
U.S. Treasury Notes,
5.875%, due 05/04 6.00 1,500,000 1,528,125
Federal Home Loan Bank Notes,
6.380%, due 10/04 6.25 1,000,000 1,034,375
U.S. Treasury Notes,
6.500%, due 05/05 7.00 1,000,000 1,055,625
Federal Nat'l Mortgage Assoc.
Notes, 6.650%, due 03/06 7.75 1,000,000 1,018,438
U.S. Treasury Notes,
7.000%, due 07/06 8.00 1,000,000 1,092,500
Federal Nat'l Mortgage Assoc.
Notes, 6.860%, due 10/07 9.25 1,000,000 1,019,375
------------
6,748,438
------------
Maturity of 10 - 20 years: 4.8
Student Loan Marketing Assoc.
Notes, 7.300%, due 08/12 14.00 750,000 852,656
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TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $10,982,393) 64.9% $11,437,422
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</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PC&J PRESERVATION FUND
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SCHEDULE OF INVESTMENTS (Continued)
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
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PERCENT YEARS
OF NET TO PRINCIPLE MARKET
SECURITY (Note A) ASSETS MATURITY AMOUNT VALUE
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<S> <C> <C> <C> <C>
TAXABLE MUNICIPAL OBLIGATIONS:
Maturity of 1 - 5 years - 2.9%
Ohio Development Assistance Taxable
Bonds, 6.820%, due 04/03 4.75 500,000 $ 517,925
------------
Maturity of 5 - 10 years: 3.2
Cleveland OH Airport Taxable Bonds,
6.490%, due 01/06 7.50 365,000 371,712
Chicago Heights IL General Obligation
Taxable Bonds, 7.350%, due 12/07 9.50 170,000 184,158
------------
555,870
------------
Maturity of 10 - 20 years: 12.5
Oklahoma City OK Airport Trust Taxable
Bonds, 6.950%, due 07/08 10.00 475,000 496,285
Dayton OH Housing Improvement
Taxable Bonds, 6.250%, due 11/08 10.25 140,000 137,792
Texas State Water Financial Assistance
Taxable Bonds, 6.550%, due 08/09 11.00 400,000 401,168
Texas State Water Development
Taxable Bonds, 8.800%, due 08/12 14.00 50,000 52,752
Mississippi State General Obligation
Taxable Bonds, 6.750%, due 11/12 14.25 300,000 306,459
New York City Taxable Bonds,
9.000%, due 02/13 14.50 50,000 55,327
St. Cloud MN Tax Increment
Taxable Bonds, 6.700%, due 02/13 14.50 70,000 70,237
Sacramento CA Redevelopment Agency
Taxable Bonds, 6.375%, due 11/13 15.25 200,000 195,490
Dayton OH Housing Improvement
Taxable Bonds, 6.500%, due 11/13 15.25 250,000 247,345
Palmdale CA Community Redev. Agency
Taxable Bonds, 7.900%, due 09/17 19.25 225,000 239,045
------------
2,201,900
------------
Maturity over 20 years - 2.5
California Housing Finance Agency Rev.
Taxable Bonds, 7.200%, due 08/19 21.00 425,000 432,353
------- ------------
TOTAL TAXABLE MUNICIPAL
OBLIGATIONS (Cost $3,677,779) 21.1% $ 3,708,048
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</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PC&J PRESERVATION FUND
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SCHEDULE OF INVESTMENTS (Concluded)
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
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PERCENT YEARS
OF NET TO PRINCIPAL MARKET
SECURITY (Note A) ASSETS MATURITY AMOUNT VALUE
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Maturity of 1 - 5 years: 8.7%
US Leasing Int'l Medium Term Notes,
6.700%, due 09/99 1.25 500,000 $ 504,063
American Express Credit Corp. Notes,
6.125%, due 11/01 3.25 500,000 504,062
Lehman Brothers Holdings Inc.
Notes, 7.250%, due 10/03 5.25 500,000 522,656
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TOTAL U.S. CORPORATE OBLIGATIONS
(Cost $1,521,248) 8.7 1,530,781
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TOTAL U.S. GOVERNMENT, MUNICIPAL,
AND CORPORATE OBLIGATIONS
(Cost $16,181,420) 94.7 16,676,251
SHORT-TERM OBLIGATIONS
(Cost $611,953) 3.5 611,953
------- ------------
TOTAL INVESTMENTS
(Cost $16,793,373) 98.2% $17,288,204
======= ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PC&J PRESERVATION FUND
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STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
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<S> <C>
ASSETS:
Investments in securities,at market value
(Cost basis - $16,793,373)(Notes A & D) $ 17,288,204
Receivables - Interest 335,266
-------------
Total assets 17,623,470
LIABILITIES - Accrued expenses (Note B) (14,578)
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NET ASSETS $ 17,608,892
=============
SHARES OUTSTANDING (Unlimited authorization - no par value):
Beginning of year 1,442,249
Net increase (Note C) 86,691
-------------
End of period 1,528,940
=============
NET ASSET VALUE, offering price and redemption price per share $11.52
=============
NET ASSETS CONSIST OF:
Paid in capital $ 16,684,430
Accumulated net realized loss carryover on investments (23,053)
Net unrealized appreciation on investments 494,831
Undistributed net investment income 459,795
Undistributed net realized loss on investments ( 7,111)
-------------
Net Assets $ 17,608,892
=============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PC&J PRESERVATION FUND
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STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
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<S> <C>
INVESTMENT INCOME - Interest (Note A): $ 544,100
-------------
EXPENSES (Note B):
Investment advisory fee 42,152
Management fee 42,153
-------------
Total expenses 84,305
-------------
NET INVESTMENT INCOME 459,795
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REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS (Note D):
Net realized loss on investments ( 7,111)
Change in unrealized appreciation of investments 108,579
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NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 101,468
-------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 561.263
=============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PC&J PRESERVATION FUND
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STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
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For the Six Months For the Year
Ended Ended
June 30, 1998 December 31, 1997
(Unaudited)
---------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 459,795 $ 871,155
Net realized loss on investments (7,111) (23,053)
Change in unrealized appreciation of investments 108,579 295,039
------------ ------------
Net increase in net assets from operations 561,263 1,100,141
operations
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income 0 (871,155)
Dividends from net realized gain of investments 0 0
------------ ------------
Net decrease in assets from dividends to shareholders 0 (871,155)
INCREASE / (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS (Note C) 976,357 (308,764)
------------ ------------
Total increase/(decrease) in net assets 1,537,620 (79,778)
NET ASSETS:
Beginning of period 16,071,272 16,151,050
------------ ------------
End of period $17,608,892 $16,071,272
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PC&J PRESERVATION FUND
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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 investment objective of the Fund is preservation of capital through
investment in fixed-income obligations.
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 for which quotations are
readily available are valued on the basis of quotations from dealers or
an independent pricing service with consideration of such factors as
yield, coupon rate, maturity, type of issue and other market information.
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 $42,152 for the
six months ended June 30, 1998.
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 $42,153 for the six
months ended June 30, 1998. 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 directors, or
both, of the Advisor and of Service Corp.
<PAGE>
PC&J PRESERVATION FUND
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NOTES TO FINANCIAL STATEMENTS - (Concluded)
<TABLE>
<CAPTION>
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C. CAPITAL SHARE TRANSACTIONS For the Six Months Ending For the Year Ending
June 30,1998 December 31, 1997
-------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 152,143 $ 1,723,930 108,897 $ 1,228,914
shares issued in reinvestment
of dividends 0 0 78,178 871,155
--------- ------------ --------- ------------
152,143 1,723,930 187,075 2,100,069
Shares redeemed (65,452) (747,573) (217,283 (2,408,833)
--------- ------------ --------- ------------
Net increase (decrease) 86,691 $ 976,357 (30,208) $ (308,764)
========= ============ ========= ============
</TABLE>
D. INVESTMENT TRANSACTIONS
Securities purchased and sold (excluding short-term obligations) for the six
months ended June 30, 1998 aggregated $4,585,888 and $3,105,297, respectively.
Purchases and sales of U.S. Government Securities for the six months ended
June 30, 1998 aggregated $2,442,246 and $3,105,297, respectively.
At June 30, 1998 gross unrealized appreciation on investments was $511,580
and gross unrealized depreciation on investments was $16,749 for net
unrealized appreciation of $494,831 for financial reporting and federal income
tax purposes.
At June 30, 1998, the Fund has available a capital loss carryover of $23,053
to offset future net capital gains, which expires December 31, 2005.
