<PAGE>
===============================================================================
CHAIRMAN'S LETTER
===============================================================================
Dear Fellow Shareholders:
For investors, 1995 was an excellent year. Stocks were strong; bonds were
strong; interest rates fell; the economy delivered growth without giving much
ground to inflation.
Increasing emphasis on cost control and increasing use of technology have
helped keep corporate America competitive and reasonably profitable. In the
year ahead, we believe that stabilizing interest rates coupled with positive
earnings reports, will justify current market valuations.
For the year ending December 31, 1995 Addison Capital Chares distributed
$.2092 in income per share and $1.8792 in capital gains.
We appreciate your support and we are confident that our focus on value
will continue to be successful in dealing with challenges we face in 1996.
Sincerely,
/s/ Rudolph C. Sander
----------------------
Rudolph C. Sander
Chairman
Dated: February 15, 1996
<PAGE>
===============================================================================
PRESIDENT'S LETTER
===============================================================================
Dear Fellow Shareholders:
Another year has passed, and what a year it has been for investors! Near the
end of 1994 we dared to suggest that, based on the recent history of stock
and bond market returns and what we foresaw for interest rates and corporate
earnings, we might have a very good period ahead of us -- perhaps as much as
30% or higher returns. It wasn't a forecast that contained a definite time
frame, but we could see that it was quite probable for the market to do well
after three lackluster years. Now that it has happened in less than a year,
what should we expect from the markets from this point? Like many others, we
have been on the edge of our seats over the last several months, waiting for
a "correction." Ironically, it is axiomatic that when the majority is looking
for a market setback, it is less likely to happen, although if you were an
investor in semiconductor or forest products issues during the last few
months of 1995, you have experienced a substantial "correction." What remains
to be seen is whether the market will have a more generalized decline, or if
it will continue to occur rotationally.
For the full year 1995, all the major stock market indices rose more than
30%, with the S&P 500 Index posting a total return of 37.5%, while Addison
Capital Shares enjoyed a total return of 40.3%. Those kinds of return numbers
across so many market measures indicate that most stocks did well, but many
of the best performing stocks were concentrated in two sectors, financial and
technology. Although Addison did not have particularly heavy concentrations
in any single sector, these best performing sectors were our most heavily
weighted relative to the market. Also contributing to our results for the
year was the generally superior performance of stocks with low price/earnings
ratios -- one of the factors which was so detrimental in 1994. In large
measure, interest rates account for much of the difference between 1994 and
1995, boosting prices of financial sector issues, utilities, and economically
sensitive stocks, and in all of these areas, as in technology, earnings were
not only robust, but often better than forecast -- a nearly sure-fire
<PAGE>
combination for better stock prices. Interest rates have continued to drop,
and the outlook for inflation and Federal Reserve policy in a Presidential
election year would seem to augur at worst a benign environment for fixed
income investors. Since the Fed stopped tightening credit and raising rates
at the end of 1994, it has been allowing the bond market to tell it where
interest rates should be. Short-term rates appear to have more room on the
downside, as the normal average spread between CPI inflation and the Fed
Funds rate is around 175 basis points, versus the current spread of roughly
275 basis points.
The big worry at the moment, when it isn't the lack of a federal budget,
is that the economy may be slowing enough to cause a substantial drop in
profits, perhaps even a recession. From the standpoint of the stock market,
it remains near the high end of fairly valued, with a P/E ratio of about 17
times earnings, compared with a long-term average of about 16, and dividend
yields remain historically low. We have to admit to worrying that there may
not be much room in many stock prices for earnings disappointments, and
earnings momentum appears to be slowing; although positive earnings surprises
continue to outnumber the negatives, the gap is narrowing and the economic
cycle is mature. Many cyclical companies have indicated that they don't
expect 1996 earnings to match those of 1995, so higher stock prices may
depend on rising P/E ratios. That isn't impossible if interest rates continue
to fall, however, it does seem to increase the risks.
Now that we've aired our fears, we can declare that we remain bullish
about the prospects for the financial markets. Considering that the current
environment is very much like the one that existed a year ago, it is a little
difficult to be bearish: inflation is low and shows no signs of heating up;
interest rates seem to be headed lower worldwide; earnings seem to be headed
higher (albeit at a slower pace than a year ago); equity mutual fund inflows
remain robust with savings and retirement funds of the baby-boom generation
seeking higher returns; and companies continue to buy back their own shares.
The biggest difference between a year ago and now is the price level of the
markets, but with sentiment still slightly skeptical, we are inclined to
<PAGE>
believe that the bull market has further to run. Bullish sentiment,
speculation, and foreign investment in the U.S. market will probably be at
higher levels before a bear market arrives. There will be some periods of
price weakness, perhaps a decline of as much as 10-15% along the way, but we
believe that 1996 should be a good year, with total returns for stocks
slightly better than the long-term average. The historic long-term rate of
return from stocks of around 11% has been achieved with a lot of volatility,
and we expect that volatility is likely to manifest itself in 1996. With
uncertainty about the federal budget and apparently soft economic activity,
the markets may act somewhat emotionally and erratically over the near-term.
At the same time, however, the demographic and economic forces appear to favor
financial assets, as the need for increased savings and retirement account
assets are powerful forces driving the financial markets. This environment is
convenient, given our preference for remaining as fully invested as each
client's risk tolerance will permit. Our aversion for market timing decisions
is well documented and supported by research; it is more productive for us to
focus our efforts on the security selection and portfolio construction aspects
of our investment process -- value, earnings and price momentum, and
diversification -- which have served us so well in the past. The short-term
ups and downs are the part of the unavoidable price of achieving the kind of
long-term returns which stocks can provide.
Sincerely,
/s/ Radcliffe Cheston
------------------------
Radcliffe Cheston
President
February, 1996
<PAGE>
ADDISON CAPITAL SHARES, INC.
VALUE HYPOTHETICAL GROWTH OF $10,000
OF INVESTED 9/15/86 THROUGH 12/31/95
ACCT. ADDISION CAPITAL SHARES
| |
| 11.9% WITH DIVIDENDS REINVESTED:* $28,506 |
| |
$23,000 |--------------------------------------------------------------------|
| |
| |
| |
$21,000 |--------------------------------------------------------------------|
| |
| 7.1% WITHOUT DIVIDENDS REINVESTED:* $18,980 |
| |
$18,000 |--------------------------------------------------------------------|
| |
| |
| |
$15,000 |--------------------------------------------------------------------|
| |
| |
| |
$10,000 |--------------------------------------------------------------------|
| |
| |
| |
|--------------------------------------------------------------------|
9/15/86 12/31/95
GROWTH OF / / /// TOTAL
ACCT. WITHOUT RETURN*
DIVIDEND
REINVESTMENT*
PERIOD ANNUALIZED CUMULATIVE
- ---------------------------------------------------------------------------
TO 12/31/95 TOTAL RETURN RETURN
- ---------------------------------------------------------------------------
ONE YEAR* 40.3% 40.3%
THREE YEARS* 13.9% 47.9%
FIVE YEARS* 15.5% 105.7%
FROM INCEPTION* 11.9% 184.0%
(9-15-86 THROUGH 12/31/95
*Past performance is no guarantee of future results. Your total return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
<PAGE>
===============================================================================
ADDISON CAPITAL SHARES, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
(UNAUDITED)
===============================================================================
Number
of Value
Shares (Note A)
- -------------------------------------------------------------------------------
COMMON STOCK -- 96.0%
- -------------------------------------------------------------------------------
Aerospace -- 5.9%
Northrop Grumman Corporation . 13,413 $ 858,432
Raytheon Company ............. 18,624 879,984
Textron, Incorporated ........ 12,000 810,000
----------
2,548,416
----------
Automotive Parts -- Equipment -- 3.1%
Echlin, Incorporated ......... 17,500 638,750
TRW, Incorporated ............ 9,000 697,500
----------
1,336,250
----------
Banking -- 10.2%
CitiCorp ..................... 11,000 739,750
Crestar Financial Corporation 15,000 886,875
First Bank Systems,
Incorporated ............... 16,500 818,812
First Fidelity Bancorp ....... 13,889 1,046,883
Standard Federal
Bancorporation ............. 24,000 945,000
----------
4,437,320
----------
Business Services -- 4.2%
Banta Corporation ............ 19,500 858,000
Reynolds & Reynolds Company .. 25,000 971,875
----------
1,829,875
----------
Capital Goods -- 6.4%
Briggs and Stratton
Corporation ................ 18,000 780,750
Harsco Corporation ........... 15,510 901,519
Precision Castparts
Corporation ................ 27,000 1,073,250
----------
2,755,519
----------
Chemicals -- 3.8%
Du Pont (E.I.) De Nemours and
Company .................... 11,000 768,625
Union Carbide Corporation .... 23,000 862,500
----------
1,631,125
----------
Computer Software -- 2.2%
Computer Associates
International, Incorporated 16,500 938,437
----------
Consumer Products -- 4.9%
Mattel, Incorporated ......... 26,250 807,188
Premark International,
Incorporated ............... 13,096 662,985
Unilever NV .................. 4,500 633,375
----------
2,103,548
----------
<PAGE>
===============================================================================
ADDISON CAPITAL SHARES, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
(UNAUDITED)
===============================================================================
Number
of Value
Shares (Note A)
- -------------------------------------------------------------------------------
Electronics -- 3.9%
Harris Corporation ........... 15,000 $ 819,375
US Robotics Corporation*** ... 10,000 877,500
----------
1,696,875
----------
Food, Beverage and Tobacco -- 3.6%
American Brands, Incorporated 18,000 803,250
IBP, Incorporated ............ 15,000 757,500
----------
1,560,750
----------
Household Products -- 2.0%
First Brands Corporation ..... 18,000 857,250
----------
Insurance -- 2.1%
Reliastar Financial
Corporation ................ 20,000 887,500
----------
International Oils -- 1.9%
Exxon Corporation ............ 10,000 801,250
----------
Machinery -- 3.4%
Pentair, Incorporated ........ 15,000 746,250
Kennametal, Incorporated ..... 23,200 736,600
----------
1,482,850
----------
Medical Supplies -- 2.1%
Becton Dickinson & Company ... 12,000 900,000
----------
Metals and Mining -- 1.5%
Phelps Dodge Corporation ..... 10,300 641,175
----------
Natural Gas -- 1.9%
Panhandle Eastern Corporation 30,000 836,250
----------
Office Equipment -- 1.8%
Xerox Corporation ............ 5,786 792,682
----------
Oil -- 3.9%
Amoco Corporation ............ 11,000 790,625
Royal Dutch Petroleum Company,
N.Y. ....................... 6,308 890,217
----------
1,680,842
----------
Oil Equipment & Services -- 1.9%
Halliburton Company .......... 16,000 810,000
----------
Paper & Forest Products -- 2.0%
Cheasapeake Corporation ...... 30,000 888,750
----------
<PAGE>
===============================================================================
ADDISON CAPITAL SHARES, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
(UNAUDITED)
===============================================================================
Number
of Value
Shares (Note A)
- -------------------------------------------------------------------------------
Pharmaceuticals -- 2.2%
Rhone-Poulenc Rorer,
Incorporated ............... 18,000 $ 958,500
------------
Rails/Trucking/Transportation -- 3.7%
Burlington Northern Sante Fe . 10,000 780,000
Norfolk Southern Corporation . 10,450 829,469
------------
1,609,469
------------
Real Estate -- 1.7%
Health Care Property
Investors, Incorporated .... 21,778 764,952
------------
Retail Merchandising - 4.5%
Penney (J.C.) Company,
Incorporated ............... 12,600 600,075
Sears, Roebuck and Company ... 20,000 780,000
Tandy Corporation ............ 14,500 601,750
------------
1,981,825
------------
Steel -- 2.1%
Carpenter Technology
Corporation ................ 22,000 904,750
------------
Utilities -- Electric -- 7.3%
DQE, Incorporated ............ 29,000 891,750
NIPSCO Industries,
Incorporated ............... 19,820 758,115
Northeast Utilities .......... 25,000 609,375
Portland General Corporation . 32,000 932,000
------------
3,191,240
------------
Utilities -- Natural Gas -- 1.8%
Nicor, Incorporated .......... 27,886 766,865
------------
TOTAL COMMON STOCK
(Cost $27,918,862) ........................ 41,594,265
------------
- -------------------------------------------------------------------------------
PREFERRED STOCK -- 3.8%
- -------------------------------------------------------------------------------
Data Processing -- 1.9%
General Motors Corporation
Preference Convertible
Class C .................... 11,207 820,913
-------------
Financial -- 1.9%
Sunamerica Incorporated
Convertible Preferred
Class D .................... 17,000 $ 813,875
------------
TOTAL PREFERRED STOCK
(Cost $1,284,305) ......................... 1,634,788
------------
- -------------------------------------------------------------------------------
<PAGE>
===============================================================================
ADDISON CAPITAL SHARES, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
(UNAUDITED)
===============================================================================
Number
of Value
Shares (Note A)
- -------------------------------------------------------------------------------
Par
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENTS** -- 4.8%
- -------------------------------------------------------------------------------
PNC Bank $2,085,000 at 4.75%
(Agreement dated 12/29/95, to
be repurchased at $2,086,100
on 01/02/96; collateralized by
$2,700,000 U.S. Treasury Note
7.50%, due 09/25/20).
(Value $2,754,000 -- Cost
$2,085,000) .................. $2,085,000 2,085,000
------------
TOTAL INVESTMENTS IN SECRUITIES
(Cost $31,288,167*) ......... 104.6% 45,314,053
LIABILITIES IN EXCESS OF
OTHER ASSETS ................. -4.6% (1,986,695)
---------- ------------
NET ASSETS ...................... 100.0% $ 43,327,358
===============================================================================
* Aggregate cost for federal income tax purposes was $31,288,167. The
aggregate gross unrealized appreciation (depreciation) for all securities
is as follows:
Gross Appreciation................... $14,132,974
Gross Depreciation................... (107,088)
-----------
Net Appreciation..................... $14,025,886
===========
** It is the Fund's policy to always receive, as collateral, securities
whose value, including accrued interest, will be at least equal to 102%
of the dollar amount to be paid to the Fund under each agreement at its
maturity. The values of the securities are monitored daily. If the value
falls below 101% of the amount to be paid at maturity, additional
collateral is obtained. The Fund makes payment for such securities only
upon physical delivery of evidence of book entry transferred to the
account of its custodian.
*** Non-income producing security.
See Notes to Financial Statements.
<PAGE>
===============================================================================
STATEMENT OF ASSETS AND LIABILITIES
===============================================================================
December 31, 1995 (Unaudited)
- -----------------------------------------------------------------------------
ASSETS
Investments at value (Cost $31,288,167) ................. $45,314,053
Cash .................................................... 95
Receivables:
Dividends .......................................... 77,108
Interest ........................................... 825
Fund shares sold ................................... 2,700
Prepaid insurance ....................................... 5,341
-----------
- -------------------------------------------------------------------------------
TOTAL ASSETS ................................ 45,400,122
-----------
- ----------------------------------------------------------------------------
LIABILITIES
Payable:
Dividend payable ................................... 1,995,502
Fund shares redeemed ............................... 33,000
Accrued expenses ........................................ 44,262
-----------
- -------------------------------------------------------------------------------
TOTAL LIABILITIES ........................... 2,072,764
-----------
- -------------------------------------------------------------------------------
NET ASSETS (applicable to 1,790,491 shares of $.001 par
value common stock outstanding; 2,000,000 shares authorized) $43,327,358
===========
NET ASSET VALUE and redemption price per share (43,327,358 /
1,790,491 shares) ........................................ $24.20
======
===============================================================================
Net Assets consisted of the following at December 31, 1995:
Paid-in capital ......................................... $29,163,018
Undistributed net investment income ..................... 51
Undistributed net realized gains ........................ 138,403
Unrealized appreciation of investments .................. 14,025,886
-----------
$43,327,358
===========
===============================================================================
See Notes to Financial Statements.
<PAGE>
===============================================================================
STATEMENT OF OPERATIONS
===============================================================================
For the Six Months Ended December 31, 1995 (Unaudited)
- -------------------------------------------------------------------------------
INVESTMENT INCOME:
Income:
Dividends ................................ $ 546,283
Interest ................................. 37,866
----------
- -------------------------------------------------------------------------------
Total Income ........................ 584,149
----------
- -------------------------------------------------------------------------------
Expenses:
Investment advisory fee (Note B) ......... 158,766
Distribution fee (Note B) ................ 84,675
Shareholder servicing .................... 52,922
Administration fee (Note B) .............. 37,705
Transfer agent fee ....................... 15,083
Insurance ................................ 11,566
Audit .................................... 9,551
Federal and state registration fees ...... 5,822
Legal fee (Note B) ....................... 9,551
Custodian fee ............................ 8,562
Directors' fee ........................... 7,542
Printing ................................. 7,704
Miscellaneous ............................ 2,725
Taxes -- State ........................... 4,018
----------
- -------------------------------------------------------------------------------
Total Expenses ......................... 416,192
----------
- -------------------------------------------------------------------------------
Net investment income ............... 167,957
----------
- -------------------------------------------------------------------------------
REALIZED & UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from security transactions .. 1,965,908
Change in unrealized appreciation of
investments ................................. 3,800,152
----------
- -------------------------------------------------------------------------------
Net gain on investments .................. 5,766,060
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $5,934,017
==========
===============================================================================
See Notes to Financial Statements.
<PAGE>
===============================================================================
STATEMENT OF CHANGES IN NET ASSETS
===============================================================================
<TABLE>
<CAPTION>
For the six
months ended
December 31, For the Year
1995 ended
(Unaudited) June 30, 1995
------------ -------------
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income .................................................. $ 167,957 $ 369,706
Net realized gain from security transactions ........................... 1,965,908 2,340,110
Change in unrealized appreciation of investments ....................... 3,800,152 4,180,284
----------- -----------
- ---------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations ................. 5,934,017 6,890,100
----------- -----------
- ---------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income ($0.21 and $0.20 per share, respectively) ........ (361,792) (349,936)
Capital gains ($1.88 and $1.32 per share, respectively) ................ (3,269,623) (2,332,298)
Capital share transactions:
Net increase (decrease) in net assets derived from capital share
transactions* ........................................................ 2,519,010 (1,873,420)
----------- -----------
Total increase in net assets ...................................... 4,821,612 2,334,446
----------- -----------
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------------------------------------------
Beginning of period ....................................................... 38,505,746 36,171,300
----------- -----------
End of period (including undistributed net investment income of
$51 & $193,886 respectively) ........................................... $43,327,358 $38,505,746
=========== ===========
===============================================================================================================
*Capital share transactions are as follows:
Shares Value
------ -----
For the six months ended December 31, 1995
Shares purchased ..................................................... 119,768 $ 2,859,451
Shares reinvested .................................................... 71,530 1,572,936
Shares redeemed ...................................................... (80,561) (1,913,377)
--------- -----------
Net Increase ...................................................... 110,737 $ 2,519,010
========= ===========
For the year ended June 30, 1995
Shares purchased .................................................... 73,638 $ 1,509,748
Shares reinvested ................................................... 133,661 2,572,854
Shares redeemed ..................................................... (296,201) (5,956,022)
--------- -----------
Net Decrease ...................................................... (88,902) $(1,873,420)
========= ===========
</TABLE>
See Notes to Financial Statements.
<PAGE>
===============================================================================
FINANCIAL HIGHLIGHTS
===============================================================================
The Table below sets forth financial data for a share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
For the six months
ended
December 31, 1995
(Unaudited) Years ended June 30,
----------------- --------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year .. $ 22.92 $ 20.45 $ 22.69 $ 19.64 $ 18.90 $ 18.17
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income ............. $ .09 $ .22 $ .21 $ .24 $ .26 $ .22
Net gains on securities (both
realized and unrealized) ....... 3.28 3.77 (.76) 3.72 1.57 .74
------- ------- ------- ------- ------- -------
Total from investment operations. 3.37 3.99 (.55) 3.96 1.83 .96
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment
income ......................... (.21) (.20) (.23) (.24) (.27) (.23)
Distributions from capital gains .. (1.88) (1.32) (1.46) (.67) (.82) --
------- ------- ------- ------- ------- -------
Total distributions ............. (2.09) (1.52) (1.69) (.91) (1.09) (.23)
------- ------- ------- ------- ------- -------
Net asset value, end of period ...... $ 24.20 $ 22.92 $ 20.45 $ 22.69 $ 19.64 $ 18.90
======= ======= ======= ======= ======= =======
Total Return (1) .................... 15.34%** 21.11% (2.73)% 20.98% 9.93% 5.40%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's) ..................... $43,327 $38,506 $36,171 $37,621 $31,243 $28,744
Ratio of expenses to average net
assets ......................... 1.97%* 2.06% 2.06% 2.13% 2.12% 2.34%
Ratio of net investment income to
average net assets ............. .79%* 1.03% 1.00% 1.14% 1.32% 1.24%
Portfolio Turnover ................ 17.97% 42.82% 43.26% 30.01% 57.34% 57.52%
- -------------------------------------------------------------------------------------------------------------------------
* Annualized
** Not Annualized
(1) Exclusive of deduction of sales charge on investment.
This report has been prepared for Shareholders and may be distributed to
others only preceded or accompanied by a current prospectus.
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
<PAGE>
===============================================================================
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
(UNAUDITED)
===============================================================================
A. Addison Capital Shares, Inc. (the "Fund") was organized as a Maryland
corporation on June 4, 1986. The Fund is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. Significant accounting policies relating to the Fund are
as follows:
Security Valuation -- Portfolio securities which are traded on a national
securities exchange or included in the NASDAQ National Market System are
valued at the last sales price. Securities traded on an exchange or NASDAQ
for which there has been no sale on that day and other over-the-counter
securities are valued at the mean between the closing bid and asked prices.
Debt instruments having a maturity of 60 days or less are valued at
amortized cost.
Securities Transactions and Investment Income -- Securities transactions are
accounted for on trade date. The cost of investments sold is determined by
use of the specific identification method for both financial reporting and
income tax purposes. Interest income is recorded on an accrual basis;
dividend income is recorded on the ex-dividend date.
Dividends and Distributions to Shareholders -- Substantially all of the
Fund's net investment income and net realized capital gains, if any, will be
distributed to shareholders on an annual basis.
Federal Income Taxes -- No provision is made for Federal income taxes as it
is the Fund's intention to qualify as a regulated investment company and to
make the requisite distributions to its shareholders which will be
sufficient to relieve it from all or substantially all Federal income taxes.
B. Addison Capital Management Company (Addison Capital), a wholly-owned
subsidiary of Janney Montgomery Scott Inc. (Janney), serves as the Fund's
investment adviser. For its services as adviser, Addison Capital receives a
fee, computed daily and paid monthly, at an annual rate of .75% of the Fund's
first $100 million in average net assets, .50% of the next $150 million in
average net assets, and .25% of average net assets in excess of $250 million.
PFPC, Inc., a wholly-owned, indirect subsidiary of PNC Bank, serves as the
Fund's administrative and accounting agent. As compensation for these
<PAGE>
===============================================================================
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
(UNAUDITED)
===============================================================================
services, PFPC receives a fee computed daily and paid monthly, at an annual
rate of .10% of the Fund's average net assets or $100,000, whichever is
greater, PFPC agreed to reduce its minimum annual fee to $75,000 for the
fiscal year ending June 30, 1996.
PNC Bank, acts as the Fund's custodian. PFPC, Inc. also acts as the Fund's
transfer agent and dividend disbursing agent.
Pursuant to an Underwriting Agreement with the Fund, Janney, an indirect
wholly-owned subsidiary of Penn Mutual Equity Services, Inc. (PMES), serves
as the Fund's distributor. As compensation for these services, Janney
receives a fee from the Fund, computed daily and paid monthly, at an annual
rate of .40% of the Fund's average net assets. Janney received no brokerage
commissions for the six months ended December 31, 1995.
Under a Services Agreement between the Fund and Janney, Janney will provide
office space to the Fund, will supervise performance by PNC Bank and PFPC,
Inc. of their respective duties, and will respond to shareholders' inquiries
for an annual fee equal to .25% of the Fund's average daily net assets.
If expenses borne by the Fund in any fiscal year exceed expense limitations
imposed by applicable state securities regulations, Janney and Addison
Capital may reduce their fees on a pro-rata basis to the extent required by
such regulations. No such reduction was required for the six months ended
December 31, 1995.
Certain officers and directors of the Fund are officers and/or directors of
Addison Capital and Janney. The law firm of Morgan, Lewis & Bockius, a member
of which is also an officer of the Fund, received $11,059 from the Fund for
legal services rendered during the six months ended December 31, 1995.
C. Purchases and sales of securities, other than short- term obligations,
aggregated $7,281,910 and $7,556,811, respectively, for the six months ended
December 31, 1995.
D. As of July 3, 1995 Fund shares are sold at their net asset value. As of
that date all sales charges are eliminated for all Fund share purchases.
<PAGE>
DIRECTORS & OFFICERS
Rudolph C. Sander
Chairman of the Board
Radcliffe Cheston
President & Chief Executive Officer
Margaret M. Healy
Director
Charles E. Mather, III
Director ADDISION
=================================
Charles A. Meyer CAPITAL
Director =================================
SHARES
James Wolitarsky
Treasurer, Chief Accounting Officer
& Chief Financial Officer
James V. Kelly
Vice President
Michael R. Patitucci
Vice President
Charles J. Sullivan
Vice President
Fred W. Thomas
Vice President
James W. Jennings
Secretary
INVESTMENT ADVISER
ADDISON CAPITAL MANAGEMENT CO.
1608 Walnut Street
Philadelphia, PA 19103
Distributed by:
DISTRIBUTOR (LOGO)
JANNEY MONTGOMERY SCOTT INC. JANNEY MONTGOMERY SCOTT INC.
1801 Market Street
Philadelphia, PA 19103
ADMINISTRATOR
PFPC, INC.
103 Bellevue Parkway
Wilmington, DE 19809
TRANSFER AGENT SEMI-ANNUAL REPORT
PFPC, INC. TO SHAREHOLDERS
103 Bellevue Parkway DECEMBER 31, 1995
Wilmington, DE 19809
