UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-04010
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PIA Mutual Fund
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(Exact name of registrant as specified in charter)
1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401
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(Address of principal executive offices) (Zip code)
Joseph Lloyd McAdams, Jr., Chairman
PIA Mutual Fund
1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401
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(Name and address of agent for service)
Registrant's telephone number, including area code: (310)393-1424
Date of fiscal year end: November 30
Date of reporting period: May 31, 2003
Item 1 - Reports to Stockholders
PIA MUTUAL FUND
OCM GOLD
SEMI-ANNUAL REPORT
(UNAUDITED)
MAY 31, 2003
Dear Fellow Shareholder:
Gold experienced significant volatility in the first half of the year due to
market focus on the Iraq War, trading in a range of $320 to $385. Meanwhile, the
first six months of 2003 proved to be a period of consolidation for gold shares.
Through June 30th, your Fund had returned -1.06% (-5.56% after maximum sales
load), versus 3.42% for the XAU (Philadelphia Gold and Silver Index). For the
fiscal six month period ending May 31st covered in this report, your Fund gained
19.79% (14.47% after maximum sales load) versus 17.13% for the XAU. Gold ended
the first half of the year at $346, up from $342.75 at the close of the year.
While gold and gold shares performed admirably as a portfolio hedge against
declining global equity markets over the past two years, in our opinion it is
gold's monetary role that is set to gain market appreciation. The Federal
Reserve is fighting the deflationary forces of the post bubble environment with
an aggressive monetary policy that has driven interest rates to the lowest
levels since 1955. As a result, the United States is in a negative real interest
rate environment, meaning short-term interest rates are lower than the inflation
rate. This is part of the Fed's deliberate monetary debasement strategy to
counteract the misallocation of capital, overcapacity, price competition,
bankruptcy and joblessness that is associated with excess credit cycles. If low
interest rates fail to spur the economy on, Fed Governor Ben Bernanke has
promised to turn on the printing presses and resort to "extraordinary monetary
measures." Foreign dollar holders have taken notice by driving the dollar down
9.8% so far this year, as measured by the trade weighted dollar index.
The Bush Administration maintains it is still in favor of a strong dollar, but
comments such as those by new U.S. Treasury Secretary John Snow referring to a
strong dollar as one that is difficult to counterfeit give little comfort to the
currency markets that the U.S is willing to intervene to stop the dollar's
slide. In an effort to protect trade positions, foreign central banks have
stepped in to support the dollar by issuing their own currency and buying
dollars. In the month of May, the Bank of Japan bought $33 billion in effort to
keep its exporters happy. While in June, the Bank of China saw its US dollar
position increase at the rate of $600 million daily to over $340 billion. The
expansionist policies of central banks promise to usher in an era of competitive
devaluations and bring into question the value of paper currencies in general.
It should be pointed out that the Bank of China has been quietly adding to its
gold reserves over the past two years with the stated purpose of bringing its
gold reserves closer to Western levels.
While the Federal Reserve is aggressively pursuing a reflationary monetary
policy in order to stimulate the economy, the Bush Administration is pursuing an
undisciplined fiscal policy of increased spending and tax cuts. Budget deficits
are now projected between $200 billion to $400 billion annually through the end
of the decade. Additionally, the U.S. current account deficit is running at a
record 5% of GDP, or over $1.5 billion per day. Given the poor fundamentals of
the U.S. economy, along with the Fed's admission of its willingness to
depreciate the dollar to no end, foreigners' tolerance to finance the United
States on favorable terms is severely being tested. With over $4 trillion in
U.S. assets held by foreigners and 75% of Central Bank reserves held in U.S.
dollars, we believe the current trickle of dollar selling could give way to an
uncontrollable flood in an effort to diversify dollar risk. The Federal
Reserve's ability to control any type of monetary policy in such an environment
would seem marginal at best.
- 1 -
Perhaps more worrisome than the declining dollar in the immediacy, in our
opinion is the explosion of debt issuance by sovereign, agency and corporate
borrowers. The Fed's effort to cushion the fallout of the equity bubble has led
to a new bubble in the bond market. During the past six years total credit
market borrowings have surged $10 trillion, or about 50%, to more than $32
trillion. Total mortgage borrowings are up $3.5 trillion, or 66% since the
beginning of 1998. With inflation or deflation, a bursting of the bond market
bubble seems to be only a matter of time and has the potential to set off a
cascading sequence of defaults, with the most toxic problem area residing in the
derivative market where the Bank for International Settlements estimates over
$140 trillion in notional value derivatives are outstanding. With counter-party
derivative risk concentrated in a handful of global money center banks,
financial institution integrity will most certainly come into question in such a
scenario. The fact that gold is an owned asset and not someone else's liability
has historically led investors to the gold market when creditworthiness becomes
compromised.
In addition to the pendulum of confidence beginning to shift away from the U.S.
dollar, there are a number of bullish factors converging that aid the case for
gold as an investment at this time, such as:
o Continued reduction of hedge books is supportive of gold prices as
companies look to reduce hedge books on pullbacks in the gold price and
deliver into existing contracts.
o A long lead-lag time of 5 to 7 years to bring new mines from discovery to
production means higher gold prices will equate to small levels of
incremental supply in the near term.
o Central bank gold sales appear set to decline following the completion of
the Swiss gold sales program in 2004.
o The introduction of a Gold Exchange Traded Fund (ETF) that will allow
individuals and institutions easy access to the bullion market should
increase capital flows into gold.
o China has moved to deregulate ownership of gold for its citizens. Opening
the Shanghai Gold Exchange in order to facilitate trading in gold. With
its large foreign exchange earnings, China is expected to be an important
demand source going forward.
o The post 9/11 era is one of chronic geopolitical tensions for the United
States and therefore uncertainty for the financial markets.
o The barometer of fair valuation for financial assets versus gold - the Dow
/Gold ratio - remains historically high at 26 ounces to buy one unit of
the Dow Jones.
- 2 -
Prepared for
ORRELL CAPITAL MANAGEMENT, INC. BY GOLD (LONDON PM FIX)
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Topline Investment Graphics
(303) 440-0157
Copyright (c) 2003
All rights reserved
REAL INTEREST RATES (6-MO. T-BILL)
GOLD MINING INDUSTRY
Higher gold prices have increased margins for the gold industry; however, the
industry is still faced with the daunting task of replacing 100 million ounces
of mined reserves annually. The cut-back on exploration spending during the
decline in gold prices from 1996 through 2001 severely curtailed exploration
spending and consequently the number of economic projects in the pipeline.
Industry consolidation further cut the amount of exploration spending as
exploration teams were viewed as redundant. We continue to believe that sub $400
gold prices will lead to annual production declines of 2% to 4% annually for the
industry overall for the next decade. Even with gold prices over $400, it will
take time to bring new production on stream as it typically takes five to seven
years to bring projects from the discovery stage through production.
The dire need to replace reserves has led to a pick-up in the level exploration
spending by both majors and junior explorers. Increased activity has led to an
important discovery in Nevada by Placer Dome at its Cortez Hills project. A
number of juniors have announced promising drill holes on individual projects
that warrant monitoring. It is our opinion that exploration success is the best
way for mining companies to build shareholder value. Growth through acquisitions
has historically destroyed shareholder value.
- 3 -
INVESTMENT STRATEGY
Your Fund employs a tiered approach to the gold mining industry. Currently,
approximately half of the portfolio is in major gold producers with annual
production in excess of one million ounces. The balance of the fund is allocated
over progressively smaller positions of intermediate sized producers, junior
producers and exploration companies. Our experience shows us that investment
flows into the sector rotate among the various categories, especially as a bull
market in gold matures.
With the major producers' insatiable appetite for replacement reserves, we have
added to the junior exploration and development sector over the last six months,
taking the percentage holding in the group up to 4.1% of the portfolio. Our
philosophy in this sector is to take a number of small individual positions
rather than concentrated positions in order to spread out the high inherent risk
associated with exploration companies.
Understanding that gold mining business is a global business and gold is where
you find it, we are constantly monitoring the political risk profile of the
portfolio in order to maintain what we believe is an acceptable level of
political risk. Overall, we prefer predominantly unhedged North American
companies.
CONCLUSION
The jury is still out on whether the post bubble outcome will be inflationary or
deflationary. However, it is clear the world has been engaged in a coordinated
monetary expansion in order to promote growth and to prevent bankruptcy in the
midst of strong deflationary forces. As was proved in the 1930's, deflationary
forces are the seeds of devaluations which are the precursor to the next
inflation. In our opinion, investors need to realize that the Federal Reserve is
sending a signal for all dollar holders to protect themselves against monetary
debasement. As a shareholder of this fund, you have moved to position yourself
in an asset class that has historically acted as a refuge and protector of value
in periods of monetary debasement and financial uncertainty.
We sincerely appreciate your continued confidence in the Fund's objectives.
Sincerely,
/s/ Gregory M. Orrell
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Gregory M. Orrell
Portfolio Manager July 9, 2003
- 4 -
PIA MUTUAL FUND
OCM GOLD FUND
Schedule of Investments - May 31, 2003
(Unaudited)
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Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS 80.8%
MAJOR GOLD PRODUCERS 39.1%
150,000 AngloGold Ltd. ADR .................................. $4,368,000
50,000 Ashanti Goldfields Co. Ltd. GDR* .................... 380,000
50,000 Durban Roodeport Deep Ltd. ADR* ..................... 125,000
50,000 Freeport-McMoRan Copper & Gold, Inc. ................ 1,097,500
250,000 Gold Fields Ltd. .................................... 2,845,000
160,000 Harmony Gold Mining Co. Ltd.* ....................... 2,096,000
109,469 Kinross Gold Corp.* ................................. 762,999
169,994 Newmont Mining Corp. ................................ 5,042,022
200,000 Placer Dome, Inc. ................................... 2,186,000
-----------
18,902,521
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INTERMEDIATE/MID-TIER GOLD PRODUCERS 24.4%
80,000 Agnico-Eagle Mines Ltd. ............................. 891,200
425,000 Apollo Gold Corp.* .................................. 956,273
25,000 Compania de Minas
Buenaventura SA ADR ................................. 736,250
125,000 Glamis Gold Ltd.* ................................... 1,406,250
280,000 Goldcorp, Inc. ...................................... 3,284,400
350,000 Iamgold Corp. ....................................... 1,750,000
15,000 Lihir Gold Ltd. ..................................... 271,500
50,000 Meridian Gold, Inc.* ................................ 587,500
400,000 Northgate Exploration Ltd.* ......................... 396,126
40,000 Randgold Resources Ltd. ADR* ........................ 699,200
750,000 Wheaton River Minerals Ltd.* ........................ 795,000
-----------
11,773,699
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- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
JUNIOR GOLD PRODUCERS 10.8%
175,000 Aurizon Mines Ltd.* ................................. $ 164,385
100,000 Bema Gold Corp.* .................................... 107,770
81,301 Canyon Resources Corp.*+ ............................ 88,537
750,000 Claude Resources, Inc.* ............................. 688,124
250,000 Claude Resources, Inc.*+ ............................ 229,374
430,000 Eldorado Gold Corp.* ................................ 685,721
90,000 Golden Cycle Gold Corp.* ............................ 1,440,450
200,000 Golden Star Resources Ltd.* ......................... 399,039
600,000 Kenor ASA* .......................................... 466,187
1,000,000 McWatters Mining, Inc.* ............................. 131,071
186,800 Miramar Mining Corp.* ............................... 198,593
200,000 Queenstake Resources Ltd.* .......................... 35,680
55,000 Richmont Mines, Inc.* ............................... 174,900
207,000 River Gold Mines Ltd.* .............................. 414,512
-----------
5,224,343
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EXPLORATION AND DEVELOPMENT COMPANIES 4.1%
200,000 Addwest Minerals International Ltd.* ................ --
319,500 Ascot Resources Ltd.* ............................... 54,673
500,000 Birim Goldfields, Inc.* ............................. 129,251
100,000 Cardero Resource Corp.* ............................. 109,226
50,000 Chesapeake Gold Corp.* .............................. 98,303
75,000 IMA Exploration, Inc.* .............................. 59,250
200,000 Intrepid Minerals Corp.* ............................ 80,099
200,000 Manhattan Minerals Corp.* ........................... 103,401
250,000 Maximus Ventures Ltd.* .............................. 109,226
54,500 Metallica Resources Inc.* ........................... 47,623
100,000 Nevsun Resources Ltd.* .............................. 219,908
185,500 New Guinea Gold Corp.* .............................. 11,481
500,000 Odyssey Resources Ltd.* ............................. 74,638
187,500 Queenston Mining, Inc.* ............................. 91,477
200,000 Radius Explorations Ltd.* ........................... 182,043
75,000 St. Jude Resources Ltd.* ............................ 68,266
118,000 Vision Gate Ventures Ltd.* .......................... 31,362
100,000 Wolfden Resources Inc.* ............................. 130,343
130,000 Western Silver Corp.* ............................... 265,055
500,000 X-Cal Resources Ltd.* ............................... 144,178
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2,009,803
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See notes to financial statements
- 5 -
PIA MUTUAL FUNDS
OCM GOLD FUND
SCHEDULE OF INVESTMENTS - MAY 31, 2003 (CONTINUED)
(Unaudited)
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Shares Value
- --------------------------------------------------------------------------------
PRIMARY SILVER PRODUCERS 2.4%
18,332 Coeur D'alene Mines Corp.* .......................... $ 24,198
197,100 Hecla Mining Co.* ................................... 815,994
48,075 PAN American Silver Corp.* .......................... 317,513
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1,157,705
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TOTAL COMMON STOCKS
(cost $24,528,146)................................... 39,068,071
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WARRANTS 0.8%
156,250 Apollo Gold Corp.* .................................. 101,571
50,000 Apollo Gold Corp.*................................... --
50,000 Bema Gold Corp.* .................................... 23,666
125,000 Claude Resources, Inc.*+ ............................ --
65,000 Eldorado Gold Corp.* ................................ 8,993
100,000 Manhattan Minerals Corp.* ........................... --
250,000 Maximus Ventures Ltd.*+ ............................. 27,306
110,000 Northgate Exploration Ltd.* ......................... 32,841
24,038 PAN American Silver Corp.* .......................... 56,012
93,750 Queenston Mining, Inc.* ............................. --
300,000 Wheaton River Minerals Ltd.* ........................ 120,149
500,000 X-Cal Resources Ltd.* ............................... 17,476
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Total Warrants
(cost $110,472)...................................... 388,014
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PREFERRED STOCKS 2.2%
20,000 Freeport-McMoran Copper & Gold, Inc.,
Class B Shares .................................... 708,000
10,000 Freeport-McMoran Copper & Gold, Inc.,
Class C Shares .................................... 371,000
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Total Preferred Stocks
(cost $727,176) .................................................. 1,079,000
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OTHER INVESTMENT COMPANIES 2.1%
240,000 Central Fund of Canada Ltd.,
Class A ........................................... 1,034,400
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Total Other Investment Companies
(cost $1,005,600) ................................................ 1,034,400
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- --------------------------------------------------------------------------------
Principal Amount/Shares Value
- --------------------------------------------------------------------------------
CONVERTIBLE BOND 0.3%
$ 150,000 Canyon Resources Corp.,
6.00%, due 2/12/05 .................................. $ 131,522
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Total Convertible Bond
(cost $150,000) ..................................... 131,522
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SHORT-TERM INVESTMENTS 14.2%
1,723,486 First American Treasury Obligations Fund ............ 1,723,486
$5,112,000 U.S. Bank, N.A. repurchase agreement, 1.05%,
dated 5/30/03, due 6/2/03, repurchase price
$5,112,447 (collateralized by FGCI Pool E89423,
5.50%, due 4/1/17) .................................. 5,112,000
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Total Short-Term Investments
(cost $6,835,486) ................................... 6,835,486
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Total Investments
(cost $33,356,880) ...... 100.4% 48,536,493
Liabilities less Other Assets ........ (0.4)% (192,508)
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NET ASSETS ........................... 100.0% $48,343,985
===========
- ---------
* Non-income producing security.
+ The following securities were purchased under Rule 144A of the
Securities Act of 1933:
Value as
Acquisition % of
Description Date Cost Value Net Assets
- --------------------------------------------------------------------------------
Canyon
Resources
Corp. March 29, 2002 $96,000 $88,537 0.2%
Claude
Resources,
Inc. January 31, 2003 248,275 229,374 0.5%
Claude
Resources
Inc. Warrants January 31, 2003 -- -- --
Maximus
Ventures
Ltd.
Warrants February 26, 2003 -- 27,306 0.1%
See notes to financial statements
- 6 -
PIA MUTUAL FUND
OCM GOLD FUND
Statement of Assets and Liabilities - May 31, 2003
(Unaudited)
ASSETS:
Investments in securities, at value (cost $28,244,880) ....................... $ 43,424,493
Repurchase agreement, at value (cost $5,112,000) ............................. 5,112,000
Receivable for fund shares sold .............................................. 123,505
Dividends and interest receivable ............................................ 8,872
Prepaid expenses and other assets ............................................ 20,521
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Total assets ............................................................... 48,689,391
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LIABILITIES:
Payable for fund shares redeemed ............................................. 164,312
Due to investment adviser (Note 3) ........................................... 40,558
Accrued distribution fees .................................................... 113,702
Accrued expenses and other liabilities ....................................... 26,834
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Total liabilities ............................................................ 345,406
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Net Assets ................................................................. $ 48,343,985
============
NET ASSETS CONSIST OF:
Shares of beneficial interest, no par value; unlimited shares authorized ..... $ 33,532,729
Accumulated net investment loss .............................................. (602,448)
Accumulated net realized gain on investments and foreign currency transactions 234,091
Net unrealized appreciation on investments and foreign currency translations . 15,179,613
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Net Assets ................................................................. $ 48,343,985
============
CALCULATION OF MAXIMUM OFFERING PRICE:
Net asset value and redemption price per share ............................... $ 9.02
Maximum sales charge (4.50% of offering price) ............................... 0.43
------------
Offering price to public ..................................................... $ 9.45
============
Shares outstanding ........................................................... 5,362,378
============
See notes to financial statements
- 7 -
PIA MUTUAL FUND
OCM GOLD FUND
Statement of Operations - Six Months Ended May 31, 2003
(Unaudited)
INVESTMENT INCOME:
Interest ............................................................ $ 27,962
Dividends (net of foreign withholding taxes of $6,373) .............. 246,795
-----------
Total investment income ........................................... 274,757
-----------
EXPENSES:
Investment advisory fees (Note 3) ................................... 224,104
Distribution fees (Note 4) .......................................... 221,863
Fund administration and accounting fees ............................. 33,975
Transfer agent fees and expenses .................................... 24,775
Professional fees ................................................... 15,460
Federal and state registration fees ................................. 8,388
Reports to shareholders ............................................. 3,478
Trustees' fees ...................................................... 1,446
Custody fees ........................................................ 1,260
Other expenses ...................................................... 2,494
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Total expenses .................................................... 537,243
-----------
Net investment loss ............................................... (262,486)
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments and foreign currency transactions .. 1,586,504
Net change in unrealized appreciation/depreciation on investments and
foreign currency translations ..................................... 5,463,843
-----------
Net gain on investments ........................................... 7,050,347
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Net increase in net assets resulting from operations ................ $ 6,787,861
===========
See notes to financial statements
- 8 -
PIA MUTUAL FUND OCM GOLD FUND
Statements of Changes in Net Assets
Six Months Ended Year ended
May 31, 2003 Nov. 30,
(Unaudited) 2002
---------------- -------------
OPERATIONS:
Net investment loss ................................... $ (262,486) $ (442,329)
Net realized gain on investments
and foreign currency transactions ................... 1,586,504 850,618
Net change in unrealized appreciation/depreciation
on investments and foreign currency translations .... 5,463,843 10,174,405
------------ ------------
Net increase in net assets resulting from operations .. 6,787,861 10,582,694
------------ ------------
FUND SHARE TRANSACTIONS:
Net proceeds from shares sold ......................... 9,703,015 14,654,286
Payment for shares redeemed ........................... (3,256,304) (8,051,464)
------------ ------------
Net increase in net assets from fund share transactions 6,446,711 6,602,822
------------ ------------
Total increase in net assets .......................... 13,234,572 17,185,516
============ ============
NET ASSETS, BEGINNING OF PERIOD ......................... 35,109,413 17,923,897
------------ ------------
NET ASSETS, END OF PERIOD ............................... $ 48,343,985 $ 35,109,413
============ ============
TRANSACTIONS IN SHARES:
Shares sold ........................................... 1,071,781 1,978,165
Shares redeemed ....................................... (369,219) (1,125,077)
------------ ------------
Net increase in shares outstanding .................... 702,562 853,088
============ ============
See notes to financial statements
- 9 -
PIA MUTUAL FUND OCM GOLD FUND Notes to Financial Statements - May 31, 2003
(Unaudited)
NOTE 1. ORGANIZATION
PIA Mutual Fund (formerly Monterey Mutual Fund) (the "Trust") is registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company. The Trust was organized as a Massachusetts business trust on
January 6, 1984 and consists of four portfolios: the OCM Gold Fund, the PIA
Equity Fund, the PIA Short-Term Government Securities Fund and the PIA Total
Return Bond Fund (collectively, the "Funds"), each of which has separate assets
and liabilities and differing investment objectives. The investment objective
for the OCM Gold Fund (the "Fund") is long-term growth of capital through
investing primarily in equity securities of domestic and foreign companies
engaged in activities related to gold and precious metals.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
Security Valuation - Portfolio securities that are listed on the national
securities exchanges are valued at the last sale price as of the close of
business of such securities exchanges, or, in the absence of recorded sales, at
the average of readily available closing bid and ask prices on such exchanges.
NASDAQ National Market((R))and SmallCap((R))securities are valued at the NASDAQ
Official Closing Price ("NOCP"). If a NOCP is not issued for a given day, these
securities are valued at the average of readily available closing bid and asked
prices. Unlisted securities are valued at the average of the quoted bid and ask
prices in the over-the-counter market. Securities and other assets for which
market quotations are not readily available are valued at fair value as
determined in good faith by the investment adviser under procedures established
by and under the general supervision and responsibility of the Trust's Board of
Trustees. Short-term investments which mature in less than 60 days are valued at
amortized cost (unless the Board of Trustees determines that this method does
not represent fair value). Short-term investments which mature after 60 days are
valued at market.
Repurchase Agreements - The Fund may enter into repurchase agreements. A
repurchase agreement transaction occurs when, at the time the Fund purchases a
security, the Fund agrees to resell it to the vendor (normally a commercial bank
or a broker-dealer) on an agreed upon date in the future. On a daily basis, the
Fund's custodian monitors the value of the collateral, including accrued
interest, to ensure it is at least equal to the amount owed to the Fund under
each repurchase agreement. All securities are held by the Fund's custodian.
Foreign Currency - Investment securities and other assets and liabilities
denominated in foreign currencies are translated into U.S. dollar amounts at the
date of valuation. Purchases and sales of investment securities and income and
expense items denominated in foreign currencies are translated into U.S. dollar
amounts on the respective dates of such transactions.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net unrealized and realized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
fair value of assets and liabilities, other than investments in securities at
fiscal year end, resulting from changes in exchange rates.
Federal Income Taxes - It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to shareholders. Therefore,
no provision for income taxes has been recorded.
Expenses - The Fund is charged for those expenses that are directly attributable
to the Fund, such as investment advisory and custodian fees. Expenses that are
not directly attributable to the Fund are typically allocated among the Funds in
proportion to their respective net assets.
Securities Transactions and Investment Income - Securities transactions are
accounted for on a trade date basis. Discounts and premiums on securities
purchased are amortized over the life of the respective security. Realized gains
and losses on sales of securities are calculated on the identified cost basis.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on an accrual basis.
- 10 -
PIA MUTUAL FUND
OCM GOLD FUND
Notes to Financial Statements - May 31, 2003 (Continued)
(Unaudited)
Distributions to Shareholders - Distributions to shareholders are recorded on
the ex-dividend date. The Fund declares and pays dividends of net investment
income, if any, annually and distributes net realized gains, if any, annually.
The amount and character of income and net realized gains to be distributed are
determined in accordance with federal income tax rules and regulations, which
may differ from accounting principles generally accepted in the United States of
America. To the extent that these differences are attributable to permanent book
and tax accounting differences, the components of net assets have been adjusted.
Redemption Fee - A 1.50% redemption fee is retained by the Fund to offset
transaction costs and other expenses associated with short-term investing. The
fee is imposed on redemptions or exchanges of shares held less than three months
from their purchase date on all shares purchased on or after May 1, 2003. The
Fund records the fee as a reduction of shares redeemed and as a credit to
paid-in-capital. For the six months ended May 31, 2003, the Fund received no
redemption fees.
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
increases and decreases in net assets from operations during the reporting
period. Actual results could differ from those estimates.
NOTE 3. INVESTMENT ADVISORY AGREEMENT
The Fund has an investment advisory agreement with Orrell Capital Management,
Inc. ("OCM"). Under the agreement, the Fund pays OCM a fee computed daily and
payable monthly, at the following annual rates based upon average daily net
assets:
$0 to $50 million ........................... 1.000%
$50 million to $75 million .................. 0.875%
$75 million to $100 million ................. 0.750%
$100 million to $150 million ................ 0.625%
$150 million to $250 million ................ 0.500%
Over $250 million ........................... 0.375%
For the six months ended May 31, 2003, OCM voluntarily agreed to limit the total
expenses of the Fund to an annual rate of 2.99% of average net assets.
NOTE 4. DISTRIBUTION AGREEMENT AND PLAN
The Trust has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended. The Plan authorizes the
Fund to reimburse the distributor for marketing expenses incurred in
distributing shares of each Fund, including the cost of printing sales material
and making payments to dealers of the Fund's shares, in any fiscal year, subject
to a limit of 0.99% of average daily net assets.
Syndicated Capital, Inc. serves as the Distributor of the Fund's shares. The
President and sole shareholder of the Distributor is also a Trustee of the
Trust. During the six months ended May 31, 2003, the Distributor earned $406
from commissions on sales of the Fund's capital stock.
NOTE 5. PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities (excluding short-term securities
and U.S. government obligations) for the six months ended May 31, 2003 were
$6,378,015 and $3,640,065, respectively. There were no purchases or sales of
U.S. government obligations.
- 11 -
PIA MUTUAL FUND OCM GOLD FUND
Notes to Financial Statements - May 31, 2003 (Continued)
(Unaudited)
NOTE 6. FEDERAL INCOME TAX INFORMATION
At May 31, 2003, gross unrealized appreciation and depreciation of investments
owned by the Fund, based on cost for federal income tax purposes were as
follows:
Cost of investments ........................... $33,405,404
===========
Unrealized appreciation ....................... $15,962,107
-----------
Unrealized depreciation ....................... (831,018)
Net unrealized appreciation on investments ... $15,131,089
===========
The difference between cost amounts for financial statement and federal income
tax purposes is due primarily to timing differences in recognizing certain gains
and losses in security transactions.
As of November 30, 2002 the components of accumulated earnings on a tax basis
were as follows:
Undistributed ordinary income ................ $ --
Undistributed long-term gains ................ --
Tax accumulated earnings ..................... --
Accumulated capital and other losses ......... (1,318,162)
Unrealized appreciation on investments........ 9,341,557
Total accumulated earnings ................... $ 8,023,395
At November 30, 2002, the Fund had capital loss carryforwards of $1,191,499, of
which $87,795, $364,267, $590,410 and $149,027 expire in 2003, 2006, 2007 and
2008, respectively. To the extent the Fund realizes future net capital gains,
those gains will be offset by any available capital loss carryforwards. At
November 30, 2002, the Fund had realized capital losses from transactions
between November 1, 2002 and November 30, 2002 of $126,695. Post-October capital
losses for tax purposes are deferred and will be recognized in 2003.
NOTE 7. OFFERING PRICE PER SHARE
A maximum front-end sales charge of 4.50% is imposed on purchases of the Fund's
shares. For the six months ended May 31, 2003, the Trust was advised that the
Distributor received $31,456 of sales charges from sales of the Fund's shares.
- 12 -
PIA MUTUAL FUND
OCM GOLD FUND
FINANCIAL HIGHLIGHTS
Six Months
Ended Year Ended Year Ended Year Ended Year Ended Year Ended
May 31, 2003 Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30,
(Unaudited) 2002 2001 2000 1999 1998
----------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout each period)
Net asset value, beginning of period ........... $ 7.53 $ 4.71 $ 3.52 $ 4.75 $ 4.98 $ 5.09
--------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ............................ (0.04) (0.09) (0.04) (0.05) (0.04) (0.03)
Net realized and unrealized gain
(loss) on investments and
foreign currency transactions ................ 1.53 2.91 1.23 (1.18) (0.19) (0.08)
--------- --------- --------- --------- --------- ---------
Total from investment operations ............... 1.49 2.82 1.19 (1.23) (0.23) (0.11)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period ................. $ 9.02 $ 7.53 $ 4.71 $ 3.52 $ 4.75 $ 4.98
========= ========= ========= ========= ========= =========
Total Return* .................................. 19.79%++ 59.87% 33.81% (25.89)% (4.62)% (2.16)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ........... $ 48,344 $ 35,109 $ 17,924 $ 9,240 $ 11,799 $ 8,251
Ratio of expenses to average net assets:
Net of waivers and reimbursements ............ 2.40%+ 2.66% 2.60% 2.44% 2.44% 2.44%
Before waivers and reimbursements ............ 2.40%+ 2.66% 2.60% 2.99% 3.02% 3.32%
Ratio of net investment loss to
average net assets:
Net of waivers and reimbursements ............ (1.17)%+ (1.46)% (1.14)% (1.19)% (1.03)% (0.96)%
Before waivers and reimbursements ............ (1.17)%+ (1.46)% (1.14)% (1.74)% (1.61)% (1.84)%
Portfolio turnover rate ........................ 9%++ 32% 5% 3% 9% 2%
- ----------
<FN>
* Assumes no sales charge.
+ Annualized for periods less than one year.
++ Not annualized for periods less than one year.
</FN>
See notes to financial statements
- 13 -
PIA Mutual Fund
Distributed by:
Syndicated Capital, Inc.
1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401
PIA MUTUAL
FUND
- PIA SHORT-TERM
GOVERNMENT SECURITIES
- PIA TOTAL RETURN BOND
- PIA EQUITY
Semi-Annual Report
(Unaudited)
May 31, 2003
Dear Shareholder:
We are pleased to provide you with this semi-annual report for the period ended
May 31, 2003 for the following series of the PIA Mutual Funds for which Pacific
Income Advisers is the adviser: the Short-Term Government Securities Fund, the
Total Return Bond Fund, and the Equity Fund.
During the six months ended May 31, 2003, the returns, including the
reinvestment of dividends and capital gains, were as follows:
PIA Short-Term Government Securities Fund .......... 1.22%
PIA Total Return Bond Fund ......................... 6.22%
PIA Equity Fund .................................... 9.97%*
Short term interest rates continued to decline to historically low levels of
less than 1.5%. Longer term interest rates declined by about 0.50% resulting in
price increases in longer term bonds. While the economic consensus continues to
expect low levels of inflation, the outlook for the economy has stabilized. In
this environment, the perceived debt quality of corporate borrowers has
materially improved and the prices of most short and long term corporate bonds
have increased from this effect. Highly stimulative monetary policies should
continue to aid the recovery in the U.S. economy.
During the six month period ended May 31, 2003, the Lehman Aggregate Bond Index
increased by 6.29%.
In the stock market, large capitalization stocks finally reversed their two year
decline, by modestly appreciating, as investors became more confident in
economic growth prospects. During the six month period ended May 31, 2003, the
small capitalization Russell 2000 Stock Index increased by 9.34%. The PIA Equity
Fund with its focus on smaller capitalization companies increased in value by
9.97%*.
Please take a moment to review your fund(s)' statement of assets and the results
of operations for the six months ended May 31, 2003. We look forward to
reporting to you again at year end.
Sincerely
Lloyd McAdams
Chairman of the Board
- -----------------
* Assumes no sales charge.
PIA MUTUAL FUND
Schedules of Investments - May 31, 2003
(Unaudited)
PIA SHORT-TERM GOVERNMENT
SECURITIES FUND
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES 2.7%
$ 45,808 CIT Equipment Collateral
6.84%, due 6/20/04 ............................... $ 46,022
1,000,000 Conseco Finance Securitizations Corp.
8.48%, due 12/1/30 ............................... 1,047,981
321,754 Fairbanks Capital Mortgage Loan Trust
1.92%, due 5/25/28*+ ............................. 317,401
23,639 Ford Credit Auto Owner Trust
7.24%, due 2/15/04 ............................... 23,712
99,275 Green Tree Recreational, Equipment
& Consumer Trust 6.55%, due 7/15/28 .............. 99,488
14,240 Onyx Acceptance Auto Trust
6.69%, due 12/15/04 .............................. 14,281
208,854 Structured Settlements Fund
7.25%, due 12/20/15+ ............................. 226,901
257,863 Union Acceptance Corp.
5.29%, due 11/8/05 ............................... 259,494
74,724 WFS Financial Owner Trust
6.83%, due 7/20/03 ............................... 75,374
----------
Total Asset-Backed Securities
(cost $2,069,904) ........................................ 2,110,654
----------
MORTGAGE-BACKED SECURITIES 35.4%
Collateralized Mortgage Obligations 1.8%
210,487 Countrywide Home Loans
8.00%, due 8/25/27 ............................... 215,498
585,728 GS Mortgage Securities Corp. II
1.59%, due 8/15/12*+ ............................. 585,092
214,067 GS Mortgage Securities Corp. II
1.67%, due 3/20/23*+ ............................. 216,731
434,687 Prudential Home Mortgage Securities
7.50%, due 3/25/08 ............................... 447,996
----------
1,465,317
----------
PIA SHORT-TERM GOVERNMENT
SECURITIES FUND (Continued)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
U.S. Government Agencies 33.6%
$2,318,020 FHLMC
5.50%, due 3/15/15 .............................. $ 2,401,263
193,542 FHLMC
6.50%, due 2/15/27 .............................. 193,531
10,780 FHLMC Gold Pool N96779
6.50%, due 8/1/03 ............................... 10,924
17,179 FHLMC Gold Pool L80215
6.50%, due 8/1/03 ............................... 17,409
24,577 FHLMC Gold Pool L80218
6.50%, due 9/1/03 ............................... 24,906
53,355 FHLMC Pool M80478
7.00%, due 6/1/04 ............................... 54,694
129,293 FHLMC ARM Pool 755204
4.157%, due 8/1/15* ............................. 134,237
117,951 FHLMC ARM Pool 845113
4.227%, due 2/1/22* ............................. 121,666
188,564 FHLMC ARM Pool 635206
5.648%, due 10/1/22* ............................ 194,037
85,042 FHLMC ARM Pool 845755
4.077%, due 6/1/23* ............................. 88,464
34,101 FHLMC ARM Pool 609231
4.241%, due 2/1/24* ............................. 35,519
1,190,478 FHLMC ARM Pool 1C0009
3.36%, due 2/1/32* .............................. 1,239,709
1,437,725 FNMA
7.00%, due 7/25/20 .............................. 1,490,922
2,500,000 FNMA
6.00%, due 5/25/23 .............................. 2,513,638
152,365 FNMA Pool 415842
11.00%, due 1/1/13 .............................. 172,449
520,624 FNMA Pool 555206
4.293%, due 7/1/25* ............................. 537,425
299,692 FNMA ARM Pool 547441
7.415%, due 8/1/30* ............................. 305,323
989,106 FNMA ARM Pool 556824
6.521%, due 8/1/30* ............................. 1,030,897
See notes to financial statements
- 1 -
PIA MUTUAL FUND
Schedules of Investments - May 31, 2003
(Unaudited)
PIA SHORT-TERM GOVERNMENT
SECURITIES FUND (Continued)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
$ 462,903 FNMA ARM Pool 551038
4.585%, due 9/1/30* ............................. $ 479,920
1,028,484 FNMA ARM Pool 592745
5.681%, due 7/1/31* ............................. 1,069,101
1,307,921 FNMA ARM Pool 629098
4.987%, due 4/1/32* ............................. 1,353,987
610,197 FNMA ARM Pool 656345
5.121%, due 7/1/32* ............................. 628,957
1,435,663 FNMA ARM Pool 670317
4.405%, due 10/1/30* ............................ 1,485,558
1,027,432 FNMA ARM Pool 610547
5.553%, due 11/1/31* ............................ 1,065,603
1,162,526 FNMA Pool 252500
5.50%, due 6/1/06 ............................... 1,196,588
95,869 GNMA II ARM Pool 8871
5.625%, due 11/20/21* ........................... 99,424
581,746 GNMA II ARM Pool 8062
5.625%, due 10/20/22* ........................... 603,125
1,600,314 GNMA II ARM Pool 80011
5.625%, due 11/20/26* ........................... 1,659,220
334,079 GNMA II ARM Pool 80013
5.625%, due 11/20/26* ........................... 346,523
192,509 GNMA II ARM Pool 80021
5.625%, due 12/20/26* ........................... 199,595
100,487 GNMA II ARM Pool 80029
4.375%, due 1/20/27* ............................ 103,621
1,541,233 GNMA II ARM Pool 80094
5.75%, due 7/20/27* ............................. 1,597,078
2,219,224 GNMA II ARM Pool 80104
5.75%, due 8/20/27* ............................. 2,299,649
110,558 GNMA II ARM Pool 80122
5.625%, due 10/20/27* ........................... 114,603
PIA SHORT-TERM GOVERNMENT
SECURITIES FUND (Continued)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
$ 857,249 GNMA II ARM Pool 80154
4.375%, due 1/20/28* ............................ $ 883,519
566,635 GNMA II ARM Pool 80344
5.00%, due 11/20/29* ............................ 588,585
-----------
26,341,669
-----------
Total Mortgage-Backed Securities
(cost $27,606,630) ...................................... 27,806,986
-----------
U.S. GOVERNMENT AGENCIES AND
INSTRUMENTALITIES 25.3%
U.S. GOVERNMENT AGENCIES 9.5%
2,000,000 FHLB
4.125%, due 1/14/05 ............................. 2,090,622
2,000,000 FHLB
4.875%, due 4/16/04 ............................. 2,064,786
3,220,000 FNMA
5.125%, due 2/13/04 ............................. 3,308,463
-----------
7,463,871
-----------
U.S. TREASURY NOTES 15.8%
2,000,000 U.S. Treasury Note
5.375%, due 6/30/03 ............................. 2,007,422
2,000,000 U.S. Treasury Note
5.75%, due 8/15/03 .............................. 2,019,532
2,000,000 U.S. Treasury Note
5.25%, due 5/15/04 .............................. 2,078,282
5,700,000 U.S. Treasury Note
5.75%, due 11/15/05 ............................. 6,294,715
-----------
12,399,951
-----------
TOTAL U.S. GOVERNMENT AGENCIES AND
INSTRUMENTALITIES
(cost $19,526,407) ...................................... 19,863,822
-----------
See notes to financial statements
- 2 -
PIA MUTUAL FUND
Schedules of Investments - May 31, 2003
(Unaudited)
PIA SHORT-TERM GOVERNMENT
SECURITIES FUND (Continued)
- --------------------------------------------------------------------------------
Principal Amount/Shares Value
- --------------------------------------------------------------------------------
CORPORATE BOND 0.7%
$ 500,000 Citigroup, Inc.
5.70%, due 2/6/04 ............................... $ 515,017
------------
Total Corporate Bond
(cost $499,652) ................................. 515,017
------------
SHORT-TERM INVESTMENTS 35.5%
6,250,000 FAMC Discount Note
Zero coupon bond to yield
1.19%, due 6/13/03 ................................ 6,247,500
4,400,000 FHLB Discount Note
Zero coupon bond to yield
1.19%, due 6/18/03 ................................ 4,397,527
11,750,000 FNMA Discount Note
Zero coupon bond to yield
1.19%, due 6/19/03 ................................ 11,743,126
2,308,000 U.S. Bank, N.A. repurchase agreement, 1.05%,
dated 5/30/03, due 6/2/03,
repurchase price $2,308,202
(collateralized by FGCI Pool
E89432, 5.50%, due 4/1/17) ........................ 2,308,000
3,142,427 First American Treasury Obligations Fund .......... 3,142,427
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $27,838,580) ...................................... 27,838,580
------------
TOTAL INVESTMENTS
(cost $77,541,173) .............................. 99.6% 78,135,059
OTHER ASSETS LESS LIABILITIES ........................... 0.4% 301,749
------------
NET ASSETS .............................................. 100.0% $ 78,436,808
============
PIA SHORT-TERM GOVERNMENT
SECURITIES FUND (Continued)
- --------------------------------------------------------------------------------
Value as
Acquisition % of
Description Date Cost Value Net Assets
- --------------------------------------------------------------------------------
- ---------------
* Variable rate note. Rate shown reflects the rate
in effect at May 31, 2003.
+ The following securities were purchased under
Rule 144A of the Securities Act of 1933 (Note 8):
Fairbanks Capital
Mortgage Loan
Trust, 1.92%,
due 5/25/28 June 28, 1999 $ 321,754 $ 317,401 0.4%
GS Mortgage
Securities
Corp. II, 1.59%,
due 8/15/12 Feb. 17, 2000 585,728 585,092 0.7%
GS Mortgage
Securities
Corp. II, 1.67%,
due 3/20/23 April 25, 2000 214,067 216,731 0.3%
Structured
Settlements
Fund, 7.25%,
due 12/20/15 April 2, 2003 173,563 226,901 0.3%
See notes to financial statements
- 3 -
PIA MUTUAL FUND
Schedules of Investments - May 31, 2003
(Unaudited)
PIA TOTAL RETURN
BOND FUND
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES 13.7%
$ 361,966 Aames Mortgage Trust
5.97%, due 8/25/31 .............................. $ 390,512
979,050 Bombardier Capital Mortgage
Securitization Corp.
7.575%, due 6/15/30 ............................. 806,257
365,000 California Infrastructure PG&E-1
6.42%, due 9/25/08 .............................. 396,950
166,350 CIGNA CBO 1996-1 Ltd.
6.46%, due 11/15/08+++ .......................... 181,219
98,377 CIT Equipment Collateral
5.31%, due 10/20/09 ............................. 99,482
850,000 Green Tree Financial Corp.
6.95%, due 5/15/29 .............................. 523,961
1,274,000 Merit Securities Corp.
7.88%, due 12/28/33 ............................. 1,215,331
424,072 Onyx Acceptance Auto Trust
3.63%, due 12/15/05 ............................. 428,917
600,000 Pegasus Aviation Lease Securitization
1.79%, due 5/10/31*+++ .......................... 568,166
1,000,000 Residential Funding Mortgage
Securities II
6.46%, due 1/25/27* ............................. 1,034,008
500,000 RHYNO CBO Delaware Corp.
6.33%, due 9/15/09+++ ........................... 544,100
181,825 Structured Settlements Fund
7.25%, due 12/20/15+++ .......................... 197,537
-----------
Total Asset-Backed Securities
(cost $6,749,572) ............................... 6,386,440
-----------
PIA TOTAL RETURN
BOND FUND (Continued)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
CORPORATE BONDS & NOTES 46.3%
AIRLINES 0.9%
$ 170,000 AMR Corp.
10.05%, due 3/7/06 .............................. $ 91,800
400,000 Delta Air Lines, Inc.
10.50%, due 4/30/16 ............................. 292,658
25,000 Southwest Airlines Co.
7.375%, due 3/1/27 .............................. 28,665
-----------
413,123
-----------
AUTOMOTIVE 1.4%
690,000 Ford Motor Co.
7.45%, due 7/16/31 .............................. 643,711
-----------
BANKS 8.2%
650,000 Bank One Corp.
6.50%, due 2/1/06 ............................... 723,462
135,000 Bank One Corp.
7.625%, due 10/15/26 ............................ 173,336
175,000 Bank Boston NA
6.375%, due 3/25/08 ............................. 200,864
110,000 First Security Corp.
6.875%, due 11/15/06 ............................ 125,543
660,000 J.P. Morgan Chase & Co.
6.75%, due 2/1/11 ............................... 778,898
315,000 PNC Bank NA
7.875%, due 4/15/05 ............................. 346,174
160,000 US Bancorp
7.625%, due 5/1/05 .............................. 177,452
610,000 Wachovia Corp.
4.95%, due 11/1/06 .............................. 665,599
550,000 Wells Fargo & Co.
5.90%, due 5/21/06 .............................. 610,024
-----------
3,801,352
-----------
CHEMICALS 0.4%
205,000 Eastman Chemical Co.
6.375%, due 1/15/04 ............................. 210,650
-----------
See notes to financial statements
- 4 -
PIA MUTUAL FUND
Schedules of Investments - May 31, 2003
(Unaudited)
PIA TOTAL RETURN
BOND FUND (Continued)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES 13.5%
$ 345,173 Airplanes Pass Through Trust
8.15%, due 3/15/11 .............................. $ 224,362
185,000 The Bear Stearns Companies, Inc.
7.00%, due 3/1/07 ............................... 214,435
335,000 Countrywide Home Loans, Inc.
7.26%, due 5/10/04 .............................. 353,344
250,000 Countrywide Home Loans, Inc.
5.50%, due 2/1/07 ............................... 274,345
400,000 Ford Motor Credit Co.
7.375%, due 2/1/11 .............................. 417,037
210,000 Ford Motor Credit Co.
9.14%, due 12/30/14 ............................. 223,321
255,000 General Electric Capital Corp.
8.875%, due 5/15/09 ............................. 330,509
210,000 General Electric Capital Corp.
5.875%, due 2/15/12 ............................. 237,153
1,210,000 General Motors Acceptance Corp.
8.00%, due 11/1/31 .............................. 1,253,639
630,000 Goldman Sachs Group, Inc.
6.60%, due 1/15/12 .............................. 736,089
400,000 Lehman Brothers Holdings, Inc.
6.625%, due 1/18/12 ............................. 469,918
550,000 Morgan Stanley
6.10%, due 4/15/06 .............................. 608,070
170,000 Morgan Stanley Group, Inc.
6.875%, due 3/1/07 .............................. 194,176
620,000 Washington Mutual Financial Corp.
6.875%, due 5/15/11 ............................. 735,236
-----------
6,271,634
-----------
DIVERSIFIED MANUFACTURING 1.2%
570,000 Tyco International Group SA
6.75%, due 2/15/11 .............................. 585,675
-----------
ELECTRONICS/SEMICONDUCTORS 0.4%
180,000 Applied Materials, Inc.
6.75%, due 10/15/07 ............................. 206,179
-----------
PIA TOTAL RETURN
BOND FUND (Continued)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
INSURANCE 1.9%
$ 200,000 American RE Corp.
7.45%, due 12/15/26 ............................. $ 224,511
170,000 CNA Financial Corp.
6.50%, due 4/15/05 .............................. 175,634
270,000 Fremont General Corp.
7.875%, due 3/17/09 ............................. 241,650
205,000 Lion Connecticut Holdings, Inc.
7.125%, due 8/15/06 ............................. 232,926
-----------
874,721
-----------
LEISURE 0.8%
180,000 Carnival Corp.
6.15%, due 4/15/08 .............................. 200,261
165,000 Royal Caribbean Cruises Ltd.
7.00%, due 10/15/07 ............................. 161,700
-----------
361,961
-----------
LODGING 0.5%
220,000 Marriott International, Inc.
6.875%, due 11/15/05 ............................ 239,334
-----------
MEDIA 2.7%
440,000 AOL Time Warner, Inc.
7.625%, due 4/15/31 ............................. 510,760
600,000 Liberty Media Corp.
8.25%, due 2/1/30+++ ............................ 738,139
-----------
1,248,899
-----------
OFFICE EQUIPMENT 0.7%
350,000 IKON Office Solutions, Inc.
6.75%, due 11/1/04 .............................. 348,227
-----------
REAL ESTATE 2.4%
600,000 EOP Operating LP
7.00%, due 7/15/11 .............................. 704,657
400,000 Southern Investment UK PLC
6.80%, due 12/1/06 .............................. 428,833
-----------
1,133,490
-----------
See notes to financial statements
- 5 -
PIA MUTUAL FUND
Schedules of Investments - May 31, 2003
(Unaudited)
PIA TOTAL RETURN
BOND FUND (Continued)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST 2.7%
$ 270,000 Health Care Property Investors, Inc.
6.50%, due 2/15/06 .............................. $ 288,784
191,000 Kimco Realty Corp.
6.50%, due 10/1/03 .............................. 194,107
150,000 Nationwide Health Properties, Inc.
8.67%, due 3/10/05 .............................. 163,450
205,000 Prologis
7.625%, due 7/1/17 .............................. 245,669
310,000 United Dominion Realty Trust, Inc.
7.95%, due 7/12/06 .............................. 354,013
-----------
1,246,023
-----------
RETAIL 2.5%
190,000 JCPenney Co., Inc.
7.60%, due 4/1/07 ............................... 194,750
800,000 Staples, Inc.
7.375%, due 10/1/12 ............................. 961,677
-----------
1,156,427
-----------
SOFTWARE 0.4%
175,000 Computer Associates International, Inc.
6.375%, due 4/15/05 ............................. 184,725
-----------
TELECOMMUNICATIONS 3.3%
217,000 AT&T Broadband Corp.
8.375%, due 3/15/13 ............................. 270,979
22,000 AT&T Corp.
6.00%, due 3/15/09 .............................. 22,912
205,000 Global Crossing North America, Inc.
7.25%, due 5/15/04** ............................ 13,838
355,000 Qwest Services Corp.
13.50%, due 12/15/10+++ ......................... 405,587
550,000 Sprint Capital Corp.
7.625%, due 1/30/11 ............................. 612,289
165,000 WorldCom, Inc. - WorldCom Group
7.55%, due 4/1/04** ............................. 49,087
625,000 WorldCom, Inc. - WorldCom Group
7.50%, due 5/15/11** ............................ 185,937
-----------
1,560,629
-----------
PIA TOTAL RETURN
BOND FUND (Continued)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
TRANSPORTATION 1.0%
$ 165,000 Canadian National Railway Co.
7.00%, due 3/15/04. ............................. $ 171,764
256,575 FedEx Corp.
6.845%, due 1/15/19 ............................. 287,583
-----------
459,347
-----------
UTILITIES-ELECTRIC 1.4%
600,000 Northwestern Corp.
8.75%, due 3/15/12 .............................. 477,000
180,000 Southern California Edison Co.
6.65%, due 4/1/29 ............................... 163,800
-----------
640,800
-----------
TOTAL CORPORATE BONDS & NOTES
(cost $21,010,113) .............................. 21,586,907
-----------
MORTGAGE-BACKED SECURITIES 35.0%
COLLATERALIZED MORTGAGE OBLIGATIONS 7.6%
141,168 BlackRock Capital Finance LP
1.94%, due 3/25/37*+++ .......................... 137,507
116,765 Capco America Securitization Corp.
5.86%, due 10/15/30 ............................. 126,427
229,516 Chase Mortgage Finance Corp.
7.25%, due 6/25/25 .............................. 230,004
700,000 Credit-Based Asset
Servicing and Securitization
5.974%, due 3/25/19 ............................. 715,749
See notes to financial statements
- 6 -
PIA MUTUAL FUND
Schedules of Investments - May 31, 2003
(Unaudited)
PIA TOTAL RETURN
BOND FUND (Continued)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
$ 730,274 FDIC Remic Trust
7.25%, due 5/25/26 .............................. $ 733,551
186,830 FDIC Remic Trust
7.125%, due 5/25/26 ............................. 187,224
717,102 First Union Residential
Securitization Transactions, Inc.
7.00%, due 4/25/25 .............................. 734,085
580,053 Merrill Lynch Mortgage Investors, Inc.
6.77%, due 6/15/21* ............................. 601,305
80,531 Residential Funding
Mortgage Securities I
7.50%, due 4/25/27 .............................. 80,432
-----------
3,546,284
-----------
U.S. GOVERNMENT AGENCIES 27.4%
1,600,000 FHLMC Gold TBA 30 Year
5.00%, due 6/33+ ................................ 1,643,000
1,600,000 FHLMC Gold TBA 30 Year
5.50%, due 6/33+ ................................ 1,657,000
75,164 FHLMC Series 1387 S
7.29%, due 10/15/07*++ .......................... 4,397
100,000 FHLMC Series 1704 E
6.50%, due 3/15/09 .............................. 109,810
83,858 FHLMC Series 1312 I
8.00%, due 7/15/22 .............................. 88,964
98,862 FHLMC Series 1424 S
7.24%, due 11/15/22*++ .......................... 11,215
322,000 FHLMC Series 42 I
8.00%, due 10/17/24 ............................. 378,557
538,305 FNMA Pool 423290
4.06%, due 6/1/26* .............................. 554,705
142,318 FNMA Pool 313947
7.00%, due 1/1/28 ............................... 150,256
155,546 FNMA Pool 429618
6.50%, due 7/1/28 ............................... 162,268
PIA TOTAL RETURN
BOND FUND (Continued)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
$ 24,483 FNMA Pool 443589
6.50%, due 10/1/28 .............................. $ 25,541
952,820 FNMA Pool 495378
6.00%, due 4/1/29 ............................... 991,073
446,970 FNMA Pool 502454
6.50%, due 7/1/29 ............................... 466,151
8,727 FNMA Pool 531331
7.50%, due 4/1/30 ............................... 9,281
78,422 FNMA Pool 533167
7.50%, due 4/1/30 ............................... 83,395
3,936,683 FNMA Pool 661705
6.50%, due 8/1/32 ............................... 4,104,003
1,167 FNMA Series 1992-12 SA
12.63%, due 1/25/22* ............................ 1,351
1,000,000 FNMA TBA 30 Year
6.00%, due 6/33+ ................................ 1,038,750
193,288 GNMA Pool 501569
7.50%, due 3/15/29 .............................. 205,693
303,017 GNMA Pool 503603
7.00%, due 4/15/29 .............................. 319,582
271,433 GNMA Series 1996-4 N
7.00%, due 4/16/26 .............................. 287,948
444,009 GNMA Series 2000-5 PC
7.50%, due 11/16/27 ............................. 449,312
-----------
12,742,252
-----------
TOTAL MORTGAGE-BACKED SECURITIES
(cost $15,928,207) ................................ 16,288,536
-----------
U.S. GOVERNMENT AGENCIES AND INSTRUMENTALITIES 2.7%
U.S. TREASURY BONDS 0.8%
300,000 U.S. Treasury Bond
6.125%, due 11/15/27 .............................. 374,590
-----------
See notes to financial statements
- 7 -
PIA MUTUAL FUND
Schedules of Investments - May 31, 2003
(Unaudited)
PIA TOTAL RETURN
BOND FUND (Continued)
- --------------------------------------------------------------------------------
Principal Amount/Shares Value
- --------------------------------------------------------------------------------
U.S. Treasury Notes 1.9%
$ 190,000 U.S. Treasury Note
3.25%, due 8/15/07 .............................. $ 199,411
640,000 U.S. Treasury Note
4.00%, due 11/15/12 ............................. 675,725
-----------
875,136
-----------
TOTAL U.S. GOVERNMENT AGENCIES
AND INSTRUMENTALITIES
(cost $1,178,493) ................................. 1,249,726
-----------
PREFERRED STOCK 0.4%
7,500 Thornburg Mortgage, Inc.,
Series A Convertible ............................ 204,375
-----------
TOTAL PREFERRED STOCK
(cost $169,356) ................................... 204,375
-----------
PIA TOTAL RETURN
BOND FUND (Continued)
- --------------------------------------------------------------------------------
Shares/Principal Amount Value
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 10.2%
$1,732,332 First American Treasury
Obligations Fund ................................ $ 1,732,332
1,850,000 FNMA Discount Note
Zero coupon bond to yield
1.19%, due 6/19/03 .............................. 1,848,918
1,189,000 U.S. Bank, N.A. repurchase agreement,
1.05%, dated 5/29/03,
due 6/2/03, repurchase
price $1,189,104 (collateralized
by FGCI Pool E89432,
5.50%, due 4/1/17) .............................. 1,189,000
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $4,770,250) ................................. 4,770,250
-----------
TOTAL INVESTMENTS
(cost $49,805,991) ............... 108.3% 50,486,234
-----------
LIABILITIES LESS OTHER ASSETS .................. (8.3)% (3,896,501)
-----------
TOTAL NET ASSETS ............................... 100.0% $46,589,733
===========
See notes to financial statements
- 8 -
PIA MUTUAL FUND
Schedules of Investments - May 31, 2003
(Unaudited)
PIA TOTAL RETURN
BOND FUND (Continued)
- --------------------------------------------------------------------------------
Value as
Acquisition % of
Description Date(s) Cost Value Net Assets
- --------------------------------------------------------------------------------
* Variable rate note. Rate shown reflects the rate
in effect at May 31, 2003.
** Bond is in default.
+ When-issued security.
++ Interest only security.
+++ The following securities were purchased under
Rule 144A of the Securities Act of 1933:
BlackRock Capital
Finance LP, 1.94%,
due 3/25/37 Aug. 17, 1999 $135,346 $137,507 0.3%
CIGNA CBO
1996-1 Ltd.,
6.46%,
due 11/15/08 Aug. 31, 1998 178,904 181,219 0.4%
Liberty Media
Corp., 8.25%,
due 2/1/30 Sept. 9, 2002 510,807 738,139 1.6%
Pegasus
Aviation Lease
Securitization,
1.79%,
due 5/10/31 March 13, 2001 599,777 568,166 1.2%
Qwest Services
Corp., 13.50%,
12/15/10 Nov. 29, 2001 560,803 405,587 0.9%
RHYNO CBO
Delaware
Corp., 6.33%,
due 9/15/09 Aug. 31, 1998 525,318 544,100 1.2%
Structured
Settlements
Fund, 7.25%, April 27, 1999
due 12/20/15 July 16, 2002 181,817 197,537 0.4%
PIA EQUITY FUND
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS 89.6%
BANKS 11.5%
3,000 Hudson United Bancorp ............................. $ 106,080
4,033 Pacific Capital Bancorp ........................... 137,042
3,500 Trustmark Corp. ................................... 91,910
---------
335,032
---------
COMMERCIAL SERVICES 5.8%
5,000 PRG-Schultz International, Inc.* .................. 35,000
2,000 Rent-A-Center, Inc.* .............................. 132,880
---------
167,880
---------
COMPUTERS 3.2%
20,000 Carreker Corp.* ................................... 93,000
---------
ELECTRONICS 1.1%
5,000 Power-One, Inc.* .................................. 34,550
---------
ENTERTAINMENT 9.7%
3,000 Cedar Fair, L.P. .................................. 81,990
15,000 Pinnacle Entertainment, Inc.* ..................... 90,750
14,000 Scientific Games Corp.* ........................... 108,500
---------
281,240
---------
HEALTH CARE 12.4%
3,000 Alpharma, Inc. .................................... 63,060
9,500 CryoLife, Inc.* ................................... 86,070
2,000 Medicines Co.* .................................... 46,800
5,000 MIM Corp.* ........................................ 34,250
6,000 North American Scientific, Inc.* .................. 48,474
2,500 Varian, Inc.* ..................................... 80,350
---------
359,004
---------
See notes to financial statements
- 9 -
PIA MUTUAL FUND
Schedules of Investments - May 31, 2003
(Unaudited)
PIA EQUITY FUND (Continued)
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
INTERNET 3.5%
20,000 LookSmart Ltd.* ................................... $ 47,200
12,000 SeeBeyond Technology Corp.* ....................... 33,840
4,000 ValueClick, Inc.* . ............................... 20,440
101,480
MACHINERY 3.7%
4,000 Albany International Corp. ........................ 106,480
MEDIA 1.9%
3,000 Cumulus Media, Inc., Class A* ..................... 54,270
RETAIL 18.7%
7,000 Blue Rhino Corp.* ................................. 93,870
12,800 CKE Restaurants, Inc.* ............................. 79,360
5,000 Coldwater Creek, Inc.* ............................ 61,500
3,500 Jo-Ann Stores, Inc.* .............................. 79,520
4,000 Pacific Sunwear of California* .................... 89,840
6,000 Tuesday Morning Corp.* ............................ 137,640
541,730
SEMICONDUCTORS 6.0%
6,000 Genesis Microchip, Inc.* .......................... 114,300
3,000 Zoran Corp.* ...................................... 61,410
175,710
SOFTWARE 0.0%
5,000 HPL Technologies, Inc.* ........................... 1,025
TELECOMMUNICATIONS 5.6%
10,000 Adaptec, Inc.* .................................... 80,000
30,000 MCK Communications, Inc.* ......................... 65,400
2,000 Network Equipment
Technologies, Inc.* ............................. 17,820
---------
163,220
---------
PIA EQUITY FUND (Continued)
- --------------------------------------------------------------------------------
Shares/Principal Amount Value
- --------------------------------------------------------------------------------
TRANSPORTATION 6.5%
7,000 Kansas City Southern* $ 83,510
8,100 SCS Transportation, Inc.* 104,814
----------
188,324
----------
TOTAL COMMON STOCKS
(cost $2,553,729) 2,602,945
----------
SHORT-TERM INVESTMENTS 16.8%
98,853 First American Treasury
Obligations Fund 98,853
----------
$ 100,000 FNMA Discount Note
Zero coupon bond to yield
1.19%, due 6/6/03 99,983
290,000 U.S. Bank, N.A. repurchase agreement,
1.05%, dated 5/30/03,
due 6/2/03, repurchase price
$290,025 (collateralized
by FGCI Pool E89432,
5.50%, due 4/1/17) 290,000
----------
TOTAL SHORT-TERM INVESTMENTS
(cost $488,836) 488,836
----------
TOTAL INVESTMENTS
(cost $3,042,565) 106.4% 3,091,781
----------
Liabilities less Other Assets (6.4)% (187,218)
NET ASSETS 100.0% $2,904,563
----------
* Non-income producing security.
See notes to financial statements
- 10 -
PIA MUTUAL FUND
Statements of Assets and Liabilities - May 31, 2003
(Unaudited)
SHORT-TERM TOTAL
GOVERNMENT RETURN
SECURITIES FUND BOND FUND EQUITY FUND
------------------------------------------------
ASSETS:
Investments in securities, at value
(cost $77,541,173, $49,805,991 and $3,042,565, respectively) ..... $ 78,135,059 $ 50,486,234 $ 3,091,781
Receivable for securities sold ........................................ 22,970 -- --
Receivable for fund shares sold ....................................... 150 -- --
Dividends and interest receivable ..................................... 338,726 447,121 1,546
Due from investment adviser (Note 3) .................................. 3,242 2,329 14,540
Prepaid expenses and other assets ..................................... 22,914 29,205 12,330
------------ ------------ ------------
Total assets ..................................................... 78,523,061 50,964,889 3,120,197
------------ ------------ ------------
LIABILITIES:
Payable for securities purchased ...................................... -- 4,331,038 191,376
Payable for fund shares redeemed ...................................... 45,543 -- --
Dividends payable ..................................................... 9,146 6,265 --
Accrued distribution fees ............................................. 10,947 8,143 2,752
Accrued expenses and other liabilities ................................ 20,617 29,710 21,506
------------ ------------ ------------
Total liabilities ................................................ 86,253 4,375,156 215,634
------------ ------------ ------------
Net Assets ....................................................... $ 78,436,808 $ 46,589,733 $ 2,904,563
============ ============ ============
NET ASSETS CONSIST OF:
Shares of beneficial interest, no par value;
unlimited shares authorized ...................................... $ 78,167,324 $ 45,770,271 $ 3,635,358
Accumulated net investment loss ....................................... (268,224) (18,747) (21,029)
Accumulated net realized gain (loss) on investments ................... (56,178) 157,966 (758,982)
Net unrealized appreciation on investments ............................ 593,886 680,243 49,216
------------ ------------ ------------
Net Assets ....................................................... $ 78,436,808 $ 46,589,733 $ 2,904,563
============ ============ ============
CALCULATION OF MAXIMUM OFFERING PRICE:
Net asset value and redemption price per share ........................ $ 10.24 $ 20.13 $ 18.09
Maximum sales charge (0%, 0% and 4.50% of offering
price, respectively) ............................................. -- -- 0.85
------------ ------------ ------------
Offering price to public .............................................. $ 10.24 $ 20.13 $ 18.94
============ ============ ============
Shares outstanding .................................................... 7,660,969 2,314,283 160,570
============ ============ ============
See notes to financial statements
- 11 -
PIA MUTUAL FUND
Statements of Operations - For the Six Months Ended May 31, 2003
(Unaudited)
SHORT-TERM TOTAL
GOVERNMENT RETURN
SECURITIES FUND BOND FUND EQUITY FUND
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 969,615 $ 1,451,138 $ 2,272
Dividends (net of foreign withholding taxes of $0, $0
and $65, respectively) . . . . . . . . . . . . . . . . . . . . . . . . -- 23,627 11,877
---------- ----------- --------
Total investment income . . . . . . . . . . . . . . . . . . . . . . . 969,615 1,474,765 14,149
EXPENSES:
Investment advisory fees (Note 3) . . . . . . . . . . . . . . . . . . . . . 77,237 75,879 17,677
Fund administration and accounting fees . . . . . . . . . . . . . . . . . . 39,939 32,589 29,668
Distribution fees (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . 26,236 8,143 5,619
Transfer agent fees and expenses. . . . . . . . . . . . . . . . . . . . . . 21,143 22,791 8,256
Professional fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,832 14,789 14,872
Federal and state registration fees . . . . . . . . . . . . . . . . . . . . 11,540 7,740 5,248
Custody fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,604 105 3,781
Reports to shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . 2,653 1,818 509
Trustees' fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,436 1,446 1,428
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,738 11,965 1,680
---------- ------------ ---------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206,358 177,265 88,738
Less: Expense reimbursement from adviser (Note 3) . . . . . . . . . . . . . (71,193) (63,447) (53,560)
---------- ------------ ---------
Net expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135,165 113,818 35,178
---------- ------------ ---------
Net investment income (loss) . . . . . . . . . . . . . . . . . . . . . 834,450 1,360,947 (21,029)
---------- ------------ ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments. . . . . . . . . . . . . . . . . . (9,457) 157,992 (128,060)
Net change in unrealized appreciation/depreciation on
investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111,836 1,399,779 316,729
---------- ------------ ---------
Net gain on investments . . . . . . . . . . . . . . . . . . . . . . . 102,379 1,557,771 188,669
---------- ------------ ---------
Net increase in net assets resulting from operations . . . . . . . . . $ 936,829 $ 2,918,718 $ 167,640
========== ============ =========
See notes to financial statements
- 12 -
PIA MUTUAL FUND
Statements of Changes in Net Assets
SHORT TERM TOTAL
GOVERNMENT RETURN
SECURITIES FUND BOND FUND EQUITY FUND
----------------------------------------------------------------------------------------------
Six Months Six Months Six Months
Ended Ended Ended
May 31, Year Ended May 31, Year Ended May 31, Year Ended
2003 Nov. 30, 2003 Nov. 30, 2003 Nov. 30,
(Unaudited) 2002 (Unaudited) 2002 (Unaudited) 2002
----------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) .. $ 834,450 $ 2,150,164 $ 1,360,947 $ 2,970,753 $ (21,029) $ (60,282)
Net realized gain (loss)
on investments ............ (9,457) 311,102 157,992 1,077,338 (128,060) (498,111)
Net change in unrealized
appreciation/depreciation
on investments ............ 111,836 (547,637) 1,399,779 (1,447,829) 316,729 (298,428)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease)
in net assets resulting
from operations .......... 936,829 1,913,629 2,918,718 2,600,262 167,640 (856,821)
------------ ------------ ------------ ------------ ------------ ------------
Distributions Paid to Shareholders:
Dividends from net
investment income ........ (1,167,078) (2,287,938) (1,469,273) (2,848,176) -- --
Distributions from net
realized gains ........... (140,009) (93,205) (1,033,152) (412,129) -- (25,959)
------------ ------------ ------------ ------------ ------------ ------------
Total distributions ........... (1,307,087) (2,381,143) (2,502,425) (3,260,305) -- (25,959)
------------ ------------ ------------ ------------ ------------ ------------
FUND SHARE TRANSACTIONS:
Net proceeds from
shares sold .............. 18,297,934 27,391,475 4,378,032 13,830,283 62,406 252,267
Distributions reinvested ...... 1,241,770 2,307,192 2,434,384 2,800,751 -- 25,502
Payment for shares
redeemed ................. (13,475,558) (27,629,604) (20,647,142) (15,435,671) (1,665,014) (660,335)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease)
in net assets
from fund share
transactions ............. 6,064,146 2,069,063 (13,834,726) 1,195,363 (1,602,608) (382,566)
------------ ------------ ------------ ------------ ------------ ------------
Total increase (decrease)
in net assets ............ 5,693,888 1,601,549 (13,418,433) 535,320 (1,434,968) (1,265,346)
Net Assets,
Beginning of Period ...... 72,742,920 71,141,371 60,008,166 59,472,846 4,339,531 5,604,877
------------ ------------ ------------ ------------ ------------ ------------
Net Assets,
End of Period ............ $ 78,436,808 $ 72,742,920 $ 46,589,733 $ 60,008,166 $ 2,904,563 $ 4,339,531
============ ============ ============ ============ ============ ============
TRANSACTIONS IN SHARES:
Shares sold ................... 1,781,609 2,654,582 221,879 699,003 3,994 13,751
Shares issued on
reinvestment of
distributions ............ 121,130 223,658 124,106 141,657 -- 1,550
Shares redeemed ............... (1,312,484) (2,676,756) (1,045,159) (779,098) (107,845) (39,225)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease)
in shares outstanding .... 590,255 201,484 (699,174) 61,562 (103,851) (23,924)
============ ============ ============ ============ ============ ============
See notes to financial statements
- 13 -
PIA MUTUAL FUND
Notes to Financial Statements - May 31, 2003
(Unaudited)
NOTE 1. ORGANIZATION
PIA Mutual Fund (formerly Monterey Mutual Fund) (the "Trust") is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company. The Trust was organized as a Massachusetts
business trust on January 6, 1984 and consists of four portfolios: the OCM Gold
Fund, the PIA Equity Fund, the PIA Short-Term Government Securities Fund and the
PIA Total Return Bond Fund (collectively, the "Funds"), each of which has
separate assets and liabilities and differing investment objectives. The
investment objective for each of the Funds presented herein are: the PIA
Short-Term Government Securities Fund (the "Short-Term Government Fund"), to
provide investors a high level of current income, consistent with low volatility
of principal through investing in short-term, adjustable rate and floating rate
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities; the PIA Total Return Bond Fund (the "Total Return Bond
Fund"), to maximize total return through investing in bonds while minimizing
risk as compared to the market; and the PIA Equity Fund (the "Equity Fund"),
long-term growth of capital.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies
followed by the Funds in the preparation of their financial statements.
SECURITY VALUATION - Portfolio securities that are listed on the
national securities exchanges are valued at the last sale price as of the close
of business of such securities exchanges, or, in the absence of recorded sales,
at the average of readily available closing bid and ask prices on such
exchanges. NASDAQ National Market((R))and SmallCap((R))securities are valued at
the NASDAQ Official Closing Price ("NOCP"). If a NOCP is not issued for a given
day, these securities are valued at the average of readily available closing bid
and asked prices. Unlisted securities are valued at the average of the quoted
bid and ask prices in the over-the-counter market. Securities and other assets
for which market quotations are not readily available are valued at fair value
as determined in good faith by the investment adviser under procedures
established by and under the general supervision and responsibility of the
Trust's Board of Trustees. Short-term investments which mature in less than 60
days are valued at amortized cost (unless the Board of Trustees determines that
this method does not represent fair value). Short-term investments which mature
after 60 days are valued at market.
REPURCHASE AGREEMENTS - The Funds may enter into repurchase
agreements. A repurchase agreement transaction occurs when, at the time a Fund
purchases a security, the Fund agrees to resell it to the vendor (normally a
commercial bank or a broker-dealer) on an agreed upon date in the future. On a
daily basis, the Funds' custodian monitors the value of the collateral,
including accrued interest, to ensure it is at least equal to the amount owed to
the Funds under each repurchase agreement. All securities are held by the Funds'
custodian.
FEDERAL INCOME TAXES - It is the Funds' policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to
shareholders. Therefore, no provision for income taxes has been recorded.
EXPENSES - Each Fund is charged for those expenses that are directly
attributable to the Fund, such as investment advisory and custodian fees.
Expenses that are not directly attributable to a Fund are typically allocated
among the Funds in proportion to their respective net assets.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME - Securities
transactions are accounted for on a trade date basis. Discounts and premiums on
securities purchased are amortized over the life of the respective security.
Realized gains and losses on sales of securities are calculated on the
identified cost basis. Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis.
DISTRIBUTIONS TO SHAREHOLDERS - Distributions to shareholders are
recorded on the ex-dividend date. The Short-Term Government Fund and the Total
Return Bond Fund each distribute substantially all net investment income monthly
and all net realized gains annually. The Equity Fund distributes substantially
all of its net investment income and its net realized gains annually. The amount
and character of income and net realized gains to be distributed are determined
in accordance with federal income tax rules and regulations, which may differ
from accounting principles generally accepted in the United States of America.
To the extent that these differences are attributable to permanent book and tax
accounting differences, the components of net assets have been adjusted.
USE OF ESTIMATES - The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of increases and decreases in net assets from operations during the reporting
period. Actual results could differ from those estimates.
- 14 -
PIA MUTUAL FUND
Notes to Financial Statements - May 31, 2003 (Continued)
(Unaudited)
NOTE 3. INVESTMENT ADVISORY AGREEMENT
The Funds have investment advisory agreements with Pacific Income
Advisers, Inc. ("PIA") whereby each Fund pays PIA a fee, computed daily and
payable monthly. The Short-Term Government Fund and the Total Return Bond Fund
pay fees calculated at an annual rate of 0.20% and 0.30%, respectively, of their
average daily net assets. The Equity Fund pays fees calculated at the following
annual rate based upon its average daily net assets:
ASSETS FEE RATE
------ --------
$0 to $50 million ............................ 1.000%
$50 million to $75 million ................... 0.875%
$75 million to $100 million .................. 0.750%
$100 million to $150 million ................. 0.625%
$150 million to $250 million ................. 0.500%
Over $250 million ............................ 0.375%
For the six months ended May 31, 2003, PIA voluntarily agreed to
limit the total expenses of the Short-Term Government Fund and the Total Return
Bond Fund to an annual rate of 0.35% and 0.45%, respectively, of average daily
net assets. For the period December 1, 2002 to March 27, 2003, PIA voluntarily
agreed to limit the total expenses of the Equity Fund to an annual rate of 1.80%
of average daily net assets. From March 28, 2003 to May 31, 2003, PIA
voluntarily agreed to limit the total expenses of the Equity Fund to 2.50% of
average daily net assets.
NOTE 4. DISTRIBUTION AGREEMENT AND PLAN
The Trust has adopted a Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended. The Plan
authorizes each of the Funds to reimburse the distributor for marketing expenses
incurred in distributing shares of the Fund, including the cost of printing
sales material and making payments to dealers in the Fund's shares, in any
fiscal year, subject to a limit of 0.10% of average daily net assets for the
Short-Term Government Fund, 0.10% of average daily net assets for the Total
Return Bond Fund and 0.50% of average daily net assets for the Equity Fund.
Prior to March 28, 2003, distribution expenses were subject to a limit of 0.05%
of average daily net assets for the Short-Term Government Fund, 0.00% of average
daily net assets for the Total Return Bond Fund and 0.25% of average daily net
assets for the Equity Fund.
Syndicated Capital, Inc. serves as the Distributor of each Fund's
shares. The President and sole shareholder of the Distributor is also a Trustee
of the Trust. During the six months ended May 31, 2003, the Distributor earned
$11,364, $3,267 and $1,322 from commissions on sales of the Short-Term
Government Fund's, Total Return Bond Fund's and the Equity Fund's capital stock,
respectively.
NOTE 5. PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities (excluding short-term
securities and U.S. government obligations) for the six months ended May 31,
2003 were:
PURCHASES SALES
--------- -----
Short-Term Government Fund ............... $18,558,019 $17,122,157
Total Return Bond Fund ................... 30,114,948 40,762,325
Equity Fund ............................. 2,435,783 3,923,374
Purchases and sales of U.S. government obligations for the six months
ended May 31, 2003 were:
PURCHASES SALES
--------- -----
Short-Term Government Fund ......................... -- --
Total Return Bond Fund ............................. $ 1,790,595 $ 2,504,720
Equity Fund ........................................ -- --
- 15 -
PIA MUTUAL FUND
Notes to Financial Statements - May 31, 2003 (Continued)
(Unaudited)
NOTE 6. FEDERAL INCOME TAX INFORMATION
At May 31, 2003, gross unrealized appreciation and depreciation of
investments owned by the Fund, based on cost for federal income tax purposes
were as follows:
SHORT-TERM
GOVERNMENT TOTAL RETURN
FUND BOND FUND EQUITY FUND
---- --------- -----------
Cost of Investments ............ $ 77,541,173 $ 49,805,991 $ 3,071,984
============ ============ ============
Unrealized appreciation ........ $ 635,486 $ 2,570,431 $ 351,092
Unrealized depreciation ........ (41,600) (1,890,188) (331,295)
------------ ------------ ------------
Net unrealized appreciation
on investments ............ $ 593,886 $ 680,243 $ 19,797
============ ============ ============
The difference between cost amounts for financial statement and
federal income tax purposes is due primarily to timing differences in
recognizing certain gains and losses in security transactions.
The tax character of distributions paid during the fiscal year ended
November 30, 2002 was as follows:
SHORT-TERM
GOVERNMENT TOTAL RETURN
FUND BOND FUND EQUITY FUND
---- --------- -----------
Ordinary income ................... $2,381,143 $3,142,554 $ --
Net long-term capital gains ....... -- 117,751 25,959
---------- ---------- ----------
Total distributions ............... $2,381,143 $3,260,305 $ 25,959
========== ========== ==========
As of November 30, 2002 the components of accumulated earnings on a
tax basis were as follows:
SHORT-TERM
GOVERNMENT TOTAL RETURN
FUND BOND FUND EQUITY FUND
---- --------- -----------
Undistributed ordinary income ...... $ 126,667 $ 908,877 $ --
Undistributed long-term gains ...... 77,634 213,828 --
----------- ----------- -----------
Tax accumulated earnings ........... 204,301 1,122,705 --
Accumulated capital and other losses (46,609) -- (573,979)
Unrealized appreciation
(depreciation) on investments . 482,050 (719,536) (324,456)
----------- ----------- -----------
Total accumulated earnings (deficit) $ 639,742 $ 403,169 $ (898,435)
=========== =========== ===========
- 16 -
PIA MUTUAL FUND
Notes to Financial Statements - May 31, 2003 (Continued)
(Unaudited)
At November 30, 2002, the Equity Fund had capital loss carryforwards
of $447,909, which expire in 2010. To the extent the Equity Fund realizes future
net capital gains, those gains will be offset by any available capital loss
carryforward. At November 30, 2002, the Short-Term Government Fund and the
Equity Fund had net realized capital losses from transactions between November
1, 2002 and November 30, 2002 of $46,609 and $126,072, respectively.
Post-October capital losses for tax purposes are deferred and will be recognized
in 2003 and are included in tax accumulated earnings for the Short-Term
Government Fund.
NOTE 7. OFFERING PRICE PER SHARE
A maximum front-end sales charge of 4.50% is imposed on purchases of
shares of the Equity Fund. For the six months ended May 31, 2003, the Trust was
advised that the Distributor received no sales charges from sales of the Equity
Fund's shares.
NOTE 8. RULE 144A SECURITIES
The registration statement for the Funds prohibits the Short-Term
Government Fund and the Equity Fund from purchasing any security restricted as
to disposition under federal securities laws. At May 31, 2003, the Short-Term
Government Fund held securities that were purchased under Rule 144A of the
Securities Act of 1933 ("Rule 144A Securities"). Rule 144A Securities are
considered restricted securities under Section 144 of the Securities Act of 1933
and sales of Rule 144A Securities are generally restricted to qualified
institutional buyers. At May 31, 2003, Rule 144A Securities in the Short-Term
Government Fund were valued at $1,346,125 and represented 1.72% of the Fund's
net assets. Management of the Funds has deemed these securities to be liquid.
Management of the Funds is taking steps to comply with the investment
restrictions on these securities in the Funds' registration statement. These
steps may include selling Rule 144A Securities when management of the Funds
believes those transactions would be in the best interest of the shareholders.
- 17 -
PIA MUTUAL FUND
PIA SHORT-TERM GOVERNMENT SECURITIES
Financial Highlights
Six Months
Ended
May 31, Year Ended Year Ended Year Ended Year Ended Year Ended
2003 Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30,
(Unaudited) 2002 2001 2000 1999 1998
------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout each period)
Net asset value, beginning of period ... $ 10.29 $ 10.36 $ 10.12 $ 10.07 $ 10.38 $ 10.26
--------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................. 0.11 0.36 0.52 0.66 0.55 0.57
Net realized and unrealized gain (loss)
on investments .................... 0.01 (0.07) 0.25 0.05 (0.25) 0.13
--------- --------- --------- --------- --------- ---------
Total from investment operations ....... 0.12 0.29 0.77 0.71 0.30 0.70
--------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income ... (0.15) (0.35) (0.52) (0.66) (0.55) (0.57)
Distribution from net realized gains ... (0.02) (0.01) -- -- (0.06) (0.01)
Tax return of capital .................. -- -- (0.01) -- -- --
--------- --------- --------- --------- --------- ---------
Total distributions .................... (0.17) (0.36) (0.53) (0.66) (0.61) (0.58)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period ......... $ 10.24 $ 10.29 $ 10.36 $ 10.12 $ 10.07 $ 10.38
========= ========= ========= ========= ========= =========
TOTAL RETURN ........................... 1.22%++ 2.87% 7.74% 7.30% 3.00% 6.99%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .. $ 78,437 $ 72,743 $ 71,141 $ 47,191 $ 47,455 $ 56,989
Ratio of expenses to average net assets:
Net of waivers and reimbursements . 0.35%+ 0.35% 0.33% 0.30% 0.30% 0.30%
Before waivers and reimbursements . 0.53%+ 0.58% 0.46% 0.48% 0.47% 0.46%
Ratio of net investment income to
average net assets:
Net of waivers and reimbursements . 2.16%+ 3.16% 4.97% 6.49% 5.40% 5.51%
Before waivers and reimbursements . 1.98%+ 2.93% 4.84% 6.31% 5.23% 5.35%
Portfolio turnover rate ................ 34%++ 185% 121% 89% 110% 138%
<FN>
- -----------
+ Annualized for periods less than one year.
++ Not annualized for periods less than one year.
See notes to financial statements
</FN>
- 18 -
PIA MUTUAL FUND PIA TOTAL RETURN BOND
Financial Highlights
Sept. 1, 1998
Six Months (Commencement
Ended of Operations)
May 31, Year Ended Year Ended Year Ended Year Ended through
2003 Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30,
(Unaudited) 2002 2001 2000 1999 1998
-----------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout each period)
Net asset value, beginning of period ... $ 19.91 $ 20.15 $ 19.23 $ 18.92 $ 20.27 $ 20.00
--------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................. 0.55 0.94 1.13 1.24 1.16 0.27
Net realized and unrealized gain (loss)
on investments .................... 0.65 (0.13) 0.93 0.31 (1.31) 0.26
--------- --------- --------- --------- --------- ---------
Total from investment operations ....... 1.20 0.81 2.06 1.55 (0.15) 0.53
--------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income ... (0.59) (0.91) (1.14) (1.24) (1.16) (0.26)
Distribution from net realized gains ... (0.39) (0.14) -- -- (0.04) --
--------- --------- --------- --------- --------- ---------
Total distributions .................... (0.98) (1.05) (1.14) (1.24) (1.20) (0.26)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period ......... $ 20.13 $ 19.91 $ 20.15 $ 19.23 $ 18.92 $ 20.27
========= ========= ========= ========= ========= =========
TOTAL RETURN ........................... 6.22%++ 4.17% 10.94% 8.54% (0.74)% 2.65%++
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ... $ 46,590 $ 60,008 $ 59,473 $ 34,545 $ 29,652 $ 24,944
Ratio of expenses to average net assets:
Net of waivers and reimbursements ...... 0.45%+ 0.45% 0.43% 0.40% 0.40% 0.40%+
Before waivers and reimbursements ...... 0.70%+ 0.70% 0.55% 0.61% 0.63% 0.63%+
Ratio of net investment income to
average net assets:
Net of waivers and reimbursements ...... 5.38%+ 4.76% 5.61% 6.61% 6.06% 5.49%+
Before waivers and reimbursements ...... 5.13%+ 4.51% 5.49% 6.40% 5.83% 5.26%+
Portfolio turnover rate ................ 65%++ 297% 134% 46% 104% 13%++
<FN>
- -----------
+ Annualized for periods less than one year.
++ Not annualized for periods less than one year.
See notes to financial statements
</FN>
- 19 -
PIA MUTUAL FUND
PIA EQUITY
Financial Highlights
Six Months
Ended
May 31, Year Ended Year Ended Year Ended Year Ended Year Ended
2003 Nov. 30, Nov.30, Nov. 30, Nov. 30, Nov. 30,
(Unaudited) 2002 2001 2000 1999 1998
-----------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout each period)
Net asset value, beginning of period ... $ 16.41 $ 19.44 $ 20.46 $ 17.68 $ 17.54 $ 20.79
--------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ........... (0.13) (0.23) (0.03) 0.01 0.05 0.06
Net realized and unrealized gain (loss)
on investments .................... 1.81 (2.70) 1.01 2.77 1.83 (0.91)
--------- --------- --------- --------- --------- ---------
Total from investment operations ....... 1.68 (2.93) 0.98 2.78 1.88 (0.85)
--------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income ... -- -- (0.02) -- (0.08) --
Distribution from net realized gains ... -- (0.10) (1.98) -- (1.66) (2.40)
--------- --------- --------- --------- --------- ---------
Total distributions .................... -- (0.10) (2.00) -- (1.74) (2.40)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period ......... $ 18.09 $ 16.41 $ 19.44 $ 20.46 $ 17.68 $ 17.54
========= ========= ========= ========= ========= =========
TOTAL RETURN* .......................... 9.97%++ (15.08)% 4.63% 15.72% 12.07% (4.86)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .. $ 2,905 $ 4,340 $ 5,605 $ 3,318 $ 2,072 $ 2,257
Ratio of expenses to average net assets:
Net of waivers and reimbursements . 1.99%+ 1.80% 1.80% 1.80% 1.80% 2.14%
Before waivers and reimbursements . 5.01%+ 3.41% 2.86% 3.72% 5.36% 3.21%
Ratio of net investment income (loss) to
average net assets:
Net of waivers and reimbursements . (1.19)% + (1.11)% (0.11)% 0.10% 0.30% 0.23%
Before waivers and reimbursements . (4.21)% + (2.72)% (1.17)% (1.82)% (3.26)% (0.84)%
Portfolio turnover rate ................ 81%++ 220% 186% 526% 276% 135%
<FN>
- -------------
* Assumes no sales charge.
+ Annualized for periods less than one year.
++ Not annualized for periods less than one year.
See notes to financial statements
</FN>
- 20 -
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PIA Mutual Fund
Distributed by:
Syndicated Capital, Inc.
1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401
Item 2 - Code of Ethics
Not applicable.
Item 3 - Audit Committee Financial Expert
Not applicable.
Item 4 - Principal Accountant Fees and Services
Not applicable.
Item 5 - Audit Committee of Listed Registrants
Not applicable.
Item 6 - [Reserved]
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies
Not applicable.
Item 8 - [Reserved]
Item 9 - Controls and Procedures
(a) The registrant's President and Treasurer have concluded that the
registrant's disclosure controls and procedures (as defined in Rule 30a-2 under
the Investment Company Act of 1940 (the "Act")) are effective in design and
operation and are sufficient to form the basis of the certifications required by
Rule 30a-2 under the Act, based on their evaluation of these disclosure controls
and procedures within 90 days of the filing date of this report on Form N-CSR.
(b) There were no significant changes in the registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Item 10 - Exhibits
(a) Not applicable.
(b)(1) Filed as an exhibit
(b)(2) Filed as an exhibit
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
PIA Mutual Fund
By: /s/ Lloyd McAdams
----------------------------
Lloyd McAdams
Chairman
Date: August 4, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Lloyd McAdams
----------------------------
Lloyd McAdams
Chairman
Date: August 4, 2003
By: /s/ Heather U. Baines
----------------------------
Heather U. Baines
President and Treasurer
Date: August 4, 2003