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
PIA Mutual Fund
--------------------------------------------------
(Exact name of registrant as specified in charter)
1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401
---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
Joseph Lloyd McAdams, Jr., Chairman
PIA Mutual Fund
1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401
---------------------------------------
(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: November 30, 2003
Item 1 - Reports to Stockholders
{PIA LOGO}
PIA MUTUAL FUND
- PIA SHORT-TERM
GOVERNMENT SECURITIES
- PIA TOTAL RETURN BOND
- PIA EQUITY
ANNUAL REPORT
NOVEMBER 30, 2003
Dear Shareholder:
We are pleased to provide you with this November 30 2003 Annual Report 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 12 months ended November 30, 2003, the returns, including the
reinvestment of dividends and capital gains, were as follows:
PIA Short-Term Government Securities Fund 1.56%
PIA Total Return Bond Fund 4.60%
PIA Equity Fund 38.60%*
The highly simulative monetary policies of recent years have steadily begun to
aid the longer-term recovery in the U.S. economy. While the economic consensus
continues to expect low levels of inflation, the outlook for the economy is much
improved over the past six months.
Both longer-term and short-term interest rates declined during the first part of
the year and then increased during the last half of our fiscal year. On November
30, 2003, short-term interest rates had increased to the levels of a year
earlier. Longer-term interest rates increased in yield by approximately 0.1%
during the annual period. In this environment, the perceived debt quality of
corporate borrowers has continued to materially improve and most short and long
term corporate bonds have benefited from this effect.
During the twelve month period ended November 30, 2003, the Lehman Government
Credit Bond Index increased by 6.39%. The Total Return Bond Fund's return was
less than this index due largely to an average maturity which was less than the
maturity of the index and a lower allocation to corporate bonds. The Lehman
Aggregate Index, which has a shorter maturity than the Government Credit Index
and a broader range of securities in which the Fund invests, had a return of
5.18%.
The Short-Term Government Fund which invests mostly in government securities
provided yields and returns less than 2002 largely because short-term interest
rates declined significantly in 2003.
Stocks generally reversed their three year decline as investors become more
confident in economic growth prospects. During the twelve month period ended
November 30, 2003, the S&P 500 Index rose 15.09% and the S&P 600 Small Cap Index
returned 31.77%.
Please take a moment to review your fund(s)' statement of assets and the results
of operations for the year ended November 30, 2003. We look forward to reporting
to you again at mid year.
/S/LLOYD MCADAMS
- ----------------
Lloyd McAdams
Chairman of the Board
- -------------
*Assumes no sales charge. One year return with the effect of 4.5% sales load
would be 32.33%.
- 1 -
PIA MUTUAL FUND
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 2003
PIA SHORT-TERM GOVERNMENT
SECURITIES FUND
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES 1.6%
$1,000,000 Conseco Finance Securitizations Corp. ................
8.48%, due 12/1/30 ................................... $1,052,394
76,610 Green Tree Recreational, Equipment & Consumer Trust
6.55%, due 7/15/28 ................................... 76,795
----------
TOTAL ASSET-BACKED SECURITIES
(cost $1,135,283) .................................... 1,129,189
----------
MORTGAGE-BACKED SECURITIES 43.8%
COMMERCIAL 0.6%
156,065 Countrywide Home Loans 8.00%, due 8/25/27 ............ 158,919
262,080 Prudential Home Mortgage Securities
7.50%, due 3/25/08 ................................... 266,624
----------
425,543
----------
U.S. GOVERNMENT AGENCIES 43.2%
809,811 FHLMC 5.50%, due 3/15/15 ............................. 823,438
14,518 FHLMC Pool M80478 7.00%, due 6/1/04 .................. 14,886
122,207 FHLMC ARM Pool 755204 3.47%, due 8/1/15* ............. 124,706
100,982 FHLMC ARM Pool 845113 3.70%, due 2/1/22* ............. 103,909
128,875 FHLMC ARM Pool 635206 4.815%, due 10/1/22* ........... 133,168
71,283 FHLMC ARM Pool 845755 3.553%, due 6/1/23* ............ 73,657
33,693 FHLMC ARM Pool 609231 4.241%, due 2/1/24* ............ 34,745
2,364,602 FHLMC ARM Pool 785726 3.756%, due 1/1/25* ............ 2,428,515
PIA SHORT-TERM GOVERNMENT
SECURITIES FUND (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
$1,179,026 FHLMC ARM Pool 1C0009 3.363%, due 2/1/32* ............ $1,199,807
505,222 FNMA 2002-1 HA 7.00%, due 7/25/20 .................... 515,528
120,638 FNMA Pool 415842 11.00%, due 1/1/13 .................. 135,260
337,789 FNMA Pool 555206 3.807%, due 7/1/25* ................. 347,260
1,580,899 FNMA Pool 424953 5.159%, due 7/1/27* ................. 1,619,100
923,907 FNMA Pool 556438 3.444%, due 3/1/28* ................. 954,444
1,327,703 FNMA Pool 508399 5.459%, due 6/1/29* ................. 1,366,966
2,550,846 FNMA Pool 180668 4.021%, due 1/1/33* ................. 2,621,971
133,425 FNMA ARM Pool 547441 5.415%, due 8/1/30* ............. 137,493
755,071 FNMA ARM Pool 556824 5.798%, due 8/1/30* ............. 784,728
1,518,430 FNMA ARM Pool 562912 5.016%, due 4/1/30* ............. 1,584,192
212,628 FNMA ARM Pool 551038 3.444%, due 9/1/30* ............. 220,465
1,222,131 FNMA ARM Pool 670317 3.634% 5.768%, due 7/1/31* ...... 515,274
705,819 FNMA ARM Pool 597196 5.336%, due 9/1/31* ............. 727,155
668,380 FNMA ARM Pool 610547 5.440%, due 11/1/31* ............ 689,243
788,531 FNMA ARM Pool 629098 4.927%, due 4/1/32* ............. 812,005
267,194 FNMA ARM Pool 656345 3.877%, due 7/1/32* ............. 273,547
See notes to financial statements
- 2 -
PIA MUTUAL FUND
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 2003
PIA SHORT-TERM GOVERNMENT
SECURITIES FUND (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
$ 1,344,850 FNMA ARM Pool 670257 4.266%, due 2/1/33* $ 1,374,764
665,626 FNMA Pool 252500 5.50%, due 6/1/06 ............... 680,701
72,679 GNMA II ARM Pool 8871 5.625%, due 11/20/21* ...... 74,678
429,894 GNMA II ARM Pool 8062 5.625%, due 10/20/22* ...... 442,575
1,166,061 GNMA II ARM Pool 80011 5.625%, due 11/20/26* ..... 1,201,501
252,753 GNMA II ARM Pool 80013 5.625%, due 11/20/26* ..... 259,911
149,285 GNMA II ARM Pool 80021 5.625%, due 12/20/26* ..... 153,822
77,972 GNMA II ARM Pool 80029 4.375%, due 1/20/27* ...... 79,482
1,101,293 GNMA II ARM Pool 80094 4.75%, due 7/20/27* ....... 1,121,495
1,591,642 GNMA II ARM Pool 80104 4.75%, due 8/20/27* ....... 1,620,723
80,860 GNMA II ARM Pool 80122 5.625%, due 10/20/27* ..... 83,302
663,424 GNMA II ARM Pool 80154 4.375%, due 1/20/28* ...... 676,113
2,226,036 GNMA II ARM Pool 80331 5.50%, due 10/20/29* ...... 2,282,985
416,033 GNMA II ARM Pool 80344 5.00%, due 11/20/29* ...... 427,067
------------
29,985,900
------------
TOTAL MORTGAGE-BACKED SECURITIES
(cost $30,360,543) ............................... 30,411,443
------------
PIA SHORT-TERM GOVERNMENT
SECURITIES FUND (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES AND
INSTRUMENTALITIES 18.1%
U.S. GOVERNMENT AGENCIES 10.5%
$ 2,000,000 FHLB 4.875%, due 4/16/04 ......................... $ 2,028,566
2,000,000 FHLB 4.125%, due 1/14/05 ......................... 2,056,916
3,220,000 FNMA 5.125%, due 2/13/04 ......................... 3,246,317
-----------
7,331,799
-----------
U.S. TREASURY NOTES 7.6%
2,000,000 U.S. Treasury Note 5.25%, due 5/15/04 ............ 2,038,438
3,000,000 U.S. Treasury Note 5.75%, due 11/15/05 ........... 3,216,213
-----------
5,254,651
-----------
TOTAL U.S. GOVERNMENT AGENCIES
AND INSTRUMENTALITIES
(cost $12,501,189) ............................... 12,586,450
-----------
CORPORATE BOND 0.7%
500,000 Citigroup, Inc. 5.70%, due 2/6/04 ................ 503,975
-----------
TOTAL CORPORATE BOND
(cost $499,652) .................................. 503,975
-----------
See notes to financial statements
- 3 -
PIA MUTUAL FUND
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 2003
PIA SHORT-TERM GOVERNMENT
SECURITIES FUND (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 35.5%
$ 7,000,000 FHLB Discount Note Zero coupon to yield
0.80%, due 12/23/03 ................. $ 6,995,594
7,100,000 FNMA Discount Note Zero coupon to yield
1.06%, due 12/17/03 ................. 7,096,813
10,200,000 U.S. Bank, N.A. repurchase agreement,
0.80%, dated 11/28/03, due 12/1/03,
repurchase price $10,200,680
(collateralized by FGCI Pool
E88725, 5.50%, due 4/1/17) .......... 10,200,000
346,961 First American Treasury
Obligations Fund .................... 346,961
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $24,639,368) .................. 24,639,368
-----------
TOTAL INVESTMENTS
(cost $69,136,035) .................. 99.7% 69,270,425
OTHER ASSETS LESS LIABILITIES ..................... 0.3% 211,231
----- -----------
NET ASSETS ........................................ 100.0% $69,481,656
===== ===========
- -------
* Variable rate note. Rate shown reflects the rate in effect at November 30,
2003.
PIA TOTAL RETURN
BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES 14.4%
$ 242,726 Aames Mortgage Trust 5.97%, due 8/25/31 ............ $ 256,766
345,173 Airplanes Pass Through Trust 8.15%,
due 3/15/11(OMEGA) ................................. 6,903
125,319 Blackrock Capital Financial L.P. ...................
7.93%, due 3/25/37*++ .............................. 114,001
943,203 Bombardier Capital Mortgage
Securitization Corp. 7.575%, due 6/15/30 ........... 778,727
352,745 California Infrastructure PG&E-1
6.42%, due 9/25/08 ................................. 374,282
105,576 Capco America Securitization Corp. .................
5.86%, 10/15/30 .................................... 111,126
160,320 CIGNA CBO 1996-1 Ltd. ..............................
6.46%, due 11/15/08++(OMEGA) ....................... 163,201
91,619 CIT Equipment Collateral 5.31%, due 10/20/09 ....... 91,919
213,133 Credit-based Asset Servicing and Securitization
5.974%, 3/25/19 .................................... 213,816
324,935 FDIC Remic Trust 7.25%, 5/25/26 .................... 325,019
232,796 First Union Residential Securitization
7.00%, 4/25/25 ..................................... 233,259
1,274,000 Merit Securities Corp. 7.88%, due 12/28/33 ......... 1,263,947
495,554 Merrill Lynch Mortgage Investors, Inc. .............
6.92%, 6/15/21* .................................... 497,752
171,681 Onyx Acceptance Auto Trust
3.63%, due 12/15/05 ................................ 172,779
600,000 Pegasus Aviation Lease Securitization
1.60%, due 5/10/31*++ .............................. 380,864
451,512 RHYNO CBO Delaware Corp. ...........................
6.33%, due 9/15/09++(OMEGA) ........................ 464,565
159,982 Structured Settlements Fund
7.25%, due 12/20/15++(OMEGA) ....................... 170,613
----------
TOTAL ASSET-BACKED SECURITIES
(cost $6,234,518) .................................. 5,619,539
----------
See notes to financial statements
- 4 -
PIA MUTUAL FUND
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 2003
PIA TOTAL RETURN
BOND FUND (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
CORPORATE BONDS & NOTES 12.1%
AIRLINES 0.4%
$ 170,000 AMR Corp. 10.05%, due 3/7/06 ....................... $ 145,775
----------
AUTOMOTIVE 0.5%
175,000 Daimler Chrysler 8.50%, due 1/18/31 ................ 203,456
----------
DIVERSIFIED MANUFACTURING 0.6%
200,000 Tyco International Group SA 6.75%, due 2/15/11 ..... 216,000
----------
INSURANCE 0.4%
170,000 CNA Financial Corp. 6.50%, due 4/15/05 ............. 173,892
----------
LEISURE 0.4%
165,000 Royal Caribbean Cruises Ltd. 7.00%, due 10/15/07 ... 175,106
----------
MEDIA 1.2%
200,000 AOL Time Warner, Inc. 7.625%, due 4/15/31 .......... 227,539
200,000 Liberty Media Corp. 8.25%, due 2/1/30 .............. 238,072
----------
465,611
----------
PIA TOTAL RETURN
BOND FUND (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST 3.2%
$ 200,000 EOP Operating LP 7.00%, due 7/15/11 ................ $ 225,534
270,000 Health Care Property Investors, Inc. ...............
6.50%, due 2/15/06 ................................. 286,960
150,000 Nationwide Health Properties, Inc. .................
8.67%, due 3/10/05 ................................. 159,113
205,000 Prologis Trust 7.625%, 7/1/17 ...................... 244,727
310,000 United Dominion Realty Trust, Inc. .................
7.95%, due 7/12/06 ................................. 343,215
----------
1,259,549
----------
RETAIL 1.1%
175,000 Albertson's Inc. 7.45%, 8/1/29 ..................... 191,298
200,000 Staples, Inc. 7.375%, due 10/1/12 .................. 230,538
----------
421,836
----------
SOFTWARE 0.5%
175,000 Computer Associates International, Inc. ............
6.375%, due 4/15/05 ................................ 182,952
----------
TELECOMMUNICATIONS 2.0%
217,000 AT&T Broadband Corp. 8.375%, due 3/15/13 ........... 263,763
205,000 Global Crossing North America, Inc. ................
7.25%, due 5/15/04** ............................... 27,162
355,000 Qwest Services Corp. 13.50%, due 12/15/10++ ........ 419,344
150,000 WorldCom, Inc. - WorldCom Group
7.50%, due 5/15/11** ............................... 50,813
----------
761,082
----------
See notes to financial statements
- 5 -
PIA MUTUAL FUND
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 2003
PIA TOTAL RETURN
BOND FUND (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
TRANSPORTATION 0.7%
$ 254,533 FedEx Corp. 6.845%, due 1/15/19 .................. $ 279,809
-----------
THRIFTS 0.7%
270,000 Fremont General Corp. 7.875%, due 3/17/09 ........ 263,250
-----------
UTILITY 0.4%
180,000 Southern California Edison 6.65%, due 4/1/29 ..... 171,000
-----------
TOTAL CORPORATE BONDS & NOTES
(cost $4,735,631) ................................ 4,726,221
-----------
MORTGAGE-BACKED SECURITIES 10.7%
U.S. GOVERNMENT AGENCIES 10.7%
51,239 FHLMC Series 1387 S 7.59%, due 10/15/07*+ ........ 2,693
100,000 FHLMC Series 1704 E 6.50%, due 3/15/09 ........... 106,972
53,184 FHLMC Series 1312 I 8.00%, due 7/15/22 ........... 56,578
66,714 FHLMC Series 1424 S 7.53%, due 11/15/22*+ ........ 8,372
82,279 FNMA Pool 313947 7.00%, due 1/1/28 ............... 86,994
88,587 FNMA Pool 429618 6.50%, due 7/1/28 ............... 92,519
11,163 FNMA Pool 443589 6.50%, due 10/1/28 .............. 11,659
265,834 FNMA Pool 502454 6.50%, due 7/1/29 ............... 277,434
8,668 FNMA Pool 531331 7.50%, due 4/1/30 ............... 9,252
45,281 FNMA Pool 533167 7.50%, due 4/1/30 ............... 48,328
PIA TOTAL RETURN
BOND FUND (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
$ 2,264,395 FNMA Pool 661705 6.50%, due 8/1/32 ............... $ 2,361,984
808 FNMA Series 1992-12 SA 11.27%, due 1/25/22* ...... 875
741,731 FNMA Pool 555285 6.00%, due 3/1/33 ............... 762,498
192,102 GNMA Pool 501569 7.50%, due 3/15/29 .............. 205,925
135,807 GNMA Pool 503603 7.00%, due 4/15/29 .............. 144,575
-----------
4,176,658
-----------
TOTAL MORTGAGE-BACKED SECURITIES
(cost $4,118,906) ................................ 4,176,658
-----------
U.S. GOVERNMENT AGENCIES AND
INSTRUMENTALITIES 52.1%
U.S. TREASURY BONDS 7.9%
2,975,000 U.S. Treasury Bond 5.375%, 2/15/31 ............... 3,083,311
-----------
U.S. TREASURY NOTES 44.2%
3,140,000 U.S. Treasury Note 3.25%, due 8/15/07 ............ 3,181,461
4,925,000 U.S. Treasury Note 4.00%, due 11/15/12 ........... 4,849,780
2,600,000 U.S. Treasury Note 2.00%, 5/15/06 ................ 2,585,378
6,800,000 U.S. Treasury Note 2.625%, 5/15/08 ............... 6,644,613
-----------
17,261,232
-----------
TOTAL U.S. GOVERNMENT AGENCIES
AND INSTRUMENTALITIES
(cost $20,574,807) ............................... 20,344,543
-----------
See notes to financial statements
- 6 -
PIA MUTUAL FUND
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 2003
PIA TOTAL RETURN
BOND FUND (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT/SALES VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 10.2%
$ 1,048,205 First American Treasury Obligations Fund $ 1,048,205
2,925,000 U.S. Bank, N.A. repurchase agreement,
0.80%, dated 11/28/03, due 12/1/03, repurchase price
$2,925,195 (collateralized by FGCI Pool E88725,
5.50%, due 4/1/17) ............................ 2,925,000
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $3,973,205) .................................... 3,973,205
TOTAL INVESTMENTS
(cost $39,637,067) ....................... 99.5% 38,833,263
OTHER ASSETS LESS LIABILITIES .................... 0.5% 218,151
----- -----------
TOTAL NET ASSETS ................................ 100.0% $39,051,414
===== ===========
- ----------
* Variable rate note. Rate shown reflects the rate in effect at November
30, 2003.
** Bond is in default.
+ Interest only security.
(OMEGA) Valued at fair value in accordance with procedures established by the
Fund's Board of Trustees.
++ The following securities were purchased under Rule 144A of the
Securities Act of 1933:
PIA TOTAL RETURN
BOND FUND (CONTINUED)
- --------------------------------------------------------------------------------
VALUE AS
ACQUISITION % OF
DESCRIPTION DATE COST VALUE NET ASSETS
- --------------------------------------------------------------------------------
RESTRICTED SECURITIES
BlackRock
Capital
Finance LP
1.94%, due
3/25/37 August 17, 1999 $120,150 $114,001 0.3%
CIGNA CBO
1996-1 Ltd.
6.46%, due
11/15/08 August 31, 1998 172,279 163,201 0.4%
Pegasus
Aviation
Lease
Securitization
1.79%, due
5/10/31 March 13, 2001 599,777 380,864 1.0%
Qwest Services
Corp., 13.50%,
due 12/15/10 Nov. 29, 2001 538,314 419,344 1.1%
RHYNO CBO
Delaware
Corp., 6.33%,
due 9/15/09 August 31, 1998 472,853 464,565 1.2%
Structured
Settlements
Fund
7.25%, due
12/20/15 July 16, 2002 159,975 170,613 0.4%
See notes to financial statements.
- 7 -
PIA MUTUAL FUND
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 2003
PIA EQUITY FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS 86.6%
AUTO PARTS & EQUIPMENT 3.4%
5,000 China Yuchai International Ltd. .................. $148,500
--------
BIOTECHNOLOGY 2.3%
18,600 CryoLife, Inc.* .................................. 99,696
--------
COMMERCIAL SERVICES 3.7%
5,000 Rent-A-Center, Inc.* ............................. 162,450
--------
COMPUTERS 7.1%
13,000 Carreker Corp.* .................................. 194,480
4,500 Dot Hill Systems Corp.* .......................... 76,725
20,000 NetWolves Corp.* ................................. 38,400
--------
309,605
--------
DIVERSIFIED FINANCIAL SERVICES 2.1%
7,000 Education Lending Group, Inc.* ................... 91,700
--------
ELECTRONICS 2.3%
2,500 Varian, Inc.* .................................... 101,400
--------
ENTERTAINMENT 8.3%
3,000 Cedar Fair, L.P. ................................. 89,400
10,000 Pinnacle Entertainment, Inc.* .................... 91,300
11,000 Scientific Games Corp., Class A* ................. 178,860
--------
359,560
--------
HEALTH CARE PRODUCTS 1.4%
6,000 North American Scientific, Inc.* ................. 60,000
--------
HEALTH CARE SERVICES 0.8%
1,500 Inveresk Research Group, Inc.* ................... 33,015
--------
PIA EQUITY FUND (CONTINUED)
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
INTERNET 4.7%
2,000 Ask Jeeves, Inc.* ................................ $ 38,640
8,900 Sapient Corp.* ................................... 50,018
30,000 Verso Technologies, Inc.* ........................ 115,500
--------
204,158
--------
INVESTMENT COMPANIES 1.3%
2,000 American Capital Strategies Ltd. ................. 58,500
--------
MACHINERY 3.3%
6,000 UNOVA, Inc.* ..................................... 143,520
--------
MINING 6.8%
2,100 Agnico-Eagle Mines Ltd. .......................... 24,885
3,000 AngloGold Ltd. ADR ............................... 143,910
7,000 Goldcorp, Inc. ................................... 125,300
--------
294,095
--------
OIL & GAS 0.5%
2,500 KCS Energy, Inc.* ................................ 22,650
--------
PHARMACEUTICALS 4.3%
6,000 Accredo Health, Inc.* ............................ 186,600
--------
RETAIL 13.5%
22,200 CKE Restaurants, Inc.* ........................... 155,400
4,500 Coldwater Creek, Inc.* ........................... 64,620
4,000 Jo-Ann Stores, Inc.* ............................. 80,200
4,500 Pacific Sunwear of California, Inc.* ............. 102,420
2,000 The Sports Authority, Inc.* ...................... 87,000
3,000 Tuesday Morning Corp.* ........................... 95,880
--------
585,520
--------
SEMICONDUCTORS 7.9%
15,000 Applied Micro Circuits Corp.* .................... 96,900
7,000 Artisan Components, Inc.* ........................ 144,683
2,000 Siliconix, Inc.* ................................. 101,580
--------
343,163
--------
See notes to financial statements
- 8 -
PIA MUTUAL FUND
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 2003
PIA EQUITY FUND (CONTINUED)
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
SOFTWARE 1.0%
2,000 Satyam Computer Services Ltd. ADR ............ $ 41,960
----------
TELECOMMUNICATIONS 7.4%
16,100 PTEK Holdings, Inc.* ......................... 140,392
3,000 SpectraSite, Inc.* ........................... 105,300
2,000 UTStarcom, Inc.* ............................. 75,760
----------
321,452
----------
TOYS 2.2%
3,000 Leapfrog Enterprises, Inc.* .................. 94,200
----------
TRANSPORTATION 2.3%
6,100 SCS Transportation, Inc.* .................... 101,443
----------
TOTAL COMMON STOCKS
(cost $3,043,743) ............................ 3,763,187
----------
PIA EQUITY FUND (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT/SHARES VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 18.0%
$ 11,795 First American Treasury Obligations Fund ........... $ 11,795
200,000 FNMA Discount Note Zero coupon to yield
1.05%, due 12/24/03 ................................ 199,870
572,000 U.S. Bank, N.A. repurchase agreement,
0.80%, dated 11/28/03, due 12/1/03,
repurchase price ................................... $572,040
(collateralized by FGCI Pool E88725,
5.50%, due 4/1/17) ................................. 572,000
---------
TOTAL SHORT-TERM INVESTMENTS
(cost $783,665) .................................... 783,665
----------
TOTAL INVESTMENTS
(cost $3,827,408) 104.6% 4,546,852
LIABILITIES LESS OTHER ASSETS (4.6)% (199,755)
-----------
NET ASSETS 100.0% $ 4,347,097
===========
- ---------------
* Non-income producing security.
See notes to financial statements
- 9 -
PIA MUTUAL FUND
STATEMENTS OF ASSETS AND LIABILITIES - NOVEMBER 30, 2003
SHORT-TERM TOTAL
GOVERNMENT RETURN
SECURITIES FUND BOND FUND EQUITY FUND
---------------------------------------------
ASSETS:
Investments in securities, at value
(cost $58,936,035, $36,712,067 and
$3,255,408, respectively) ...................... $ 59,070,425 $ 35,908,263 $ 3,974,852
Repurchase agreements, at value
(cost $10,200,000, $2,925,000 and
$572,000, respectively) ........................ 10,200,000 2,925,000 572,000
Receivable for fund shares sold .................. 1,446 -- --
Interest and dividends receivable ................ 257,478 262,940 124
Due from investment adviser (Note 3) ............. 6,306 -- 23,364
Prepaid expenses and other assets ............... 22,859 27,586 24,460
------------ ------------ ------------
Total assets .................................... 69,558,514 39,123,789 4,594,800
------------ ------------ ------------
LIABILITIES:
Payable for securities purchased ................. -- -- 212,804
Payable for fund shares redeemed ................. 8,678 -- --
Dividends payable ................................ 5,815 4,306 --
Due to investment adviser (Note 3) ............... -- 22,855 --
Accrued distribution fees ........................ 16,859 13,296 4,115
Accrued expenses and other liabilities ........... 45,506 31,918 30,784
------------ ------------ ------------
Total liabilities ................................ 76,858 72,375 247,703
------------ ------------ ------------
Net Assets ....................................... $ 69,481,656 $ 39,051,414 $ 4,347,097
============ ============ ============
NET ASSETS CONSIST OF:
Shares of beneficial interest,
no par value; unlimited shares
authorized ..................................... $ 69,900,870 $ 39,660,083 $ 4,226,985
Undistributed net investment income .............. 13,932 11,668 --
Undistributed net realized gain
(loss) on investments .......................... (567,536) 183,467 (599,332)
Net unrealized appreciation
(depreciation) on investments .................. 134,390 (803,804) 719,444
------------ ------------ ------------
Net Assets ....................................... $ 69,481,656 $ 39,051,414 $ 4,347,097
============ ============ ============
CALCULATION OF MAXIMUM OFFERING PRICE:
Net asset value and redemption price per share ... $ 10.15 $ 19.41 $ 22.80
Maximum sales charge (0%, 0% and 4.50% of offering
price, respectively) ............................. -- -- 1.07
------------ ------------ ------------
Offering price to public ......................... $ 10.15 $ 19.41 $ 23.87
============ ============ ============
Shares outstanding ............................... 6,845,096 2,012,023 190,646
============ ============ ============
See notes to financial statements
- 10 -
PIA MUTUAL FUND
STATEMENTS OF OPERATIONS - YEAR ENDED NOVEMBER 30, 2003
SHORT-TERM TOTAL
GOVERNMENT RETURN
SECURITIES FUND BOND FUND EQUITY FUND
---------------------------------------------
INVESTMENT INCOME:
Interest $ 1,759,373 $ 2,367,806 $ 4,682
Dividends (net of foreign
withholding taxes of $0, $0
and $121, respectively) ......................... -- 28,164 29,740
----------- ----------- -----------
Total investment income ........................... 1,759,373 2,395,970 34,422
----------- ----------- -----------
EXPENSES:
Investment advisory fees (Note 3) ................. 150,351 139,812 35,379
Fund administration and accounting fees ........... 78,846 60,606 60,763
Distribution fees (Note 4) ........................ 62,793 29,454 14,470
Transfer agent fees and expenses .................. 51,043 33,836 16,862
Professional fees ................................. 32,761 32,756 32,847
State registration fees ........................... 28,470 19,954 14,514
Custody fees ...................................... 12,204 2,027 5,581
Reports to shareholders ........................... 9,873 3,563 509
Trustees' fees .................................... 2,763 2,784 2,746
Other expenses .................................... 12,421 16,782 3,513
----------- ----------- -----------
Total expenses .................................... 441,525 341,574 187,184
Less: Expense reimbursement
from adviser (Note 3) ........................... (178,411) (131,855) (107,751)
----------- ----------- -----------
Net expenses ...................................... 263,114 209,719 79,433
----------- ----------- -----------
Net investment income (loss) ...................... 1,496,259 2,186,251 (45,011)
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments .................. 49,059 261,255 31,592
Net change in unrealized
appreciation/depreciation on
investments ..................................... (347,660) (84,268) 986,957
Increase from payment by affiliate (Note 9) ....... -- -- 12,463
----------- ----------- -----------
Net gain (loss) on investments .................... (298,601) 176,987 1,031,012
----------- ----------- -----------
Net increase in net assets
resulting from operations ....................... $ 1,197,658 $ 2,363,238 $ 986,001
=========== =========== ===========
See notes to financial statements
- 11 -
PIA MUTUAL FUND
STATEMENTS OF CHANGES IN NET ASSETS
SHORT-TERM TOTAL
GOVERNMENT RETURN
SECURITIES FUND BOND FUND EQUITY FUND
---------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended Year ended Year ended
Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30,
2003 2002 2003 2002 2003 2002
---------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ 1,496,259 $ 2,150,164 $ 2,186,251 $ 2,970,753 $ (45,011) $ (60,282)
Net realized gain (loss) on
investments ............... 49,059 311,102 261,255 1,077,338 31,592 (498,111)
Net change in unrealized
appreciation/depreciation
on investments ............ (347,660) (547,637) (84,268) (1,447,829) 986,957 (298,428)
Increase from payment
by affiliate (Note 9) ..... -- -- -- -- 12,463 --
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease)
in net assets resulting
from operations ........... 1,197,658 1,913,629 2,363,238 2,600,262 986,001 (856,821)
------------ ------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Dividends from net
investment income ......... (2,042,954) (2,287,938) (2,341,924) (2,848,176) -- --
Distributions from
net realized gains ........ (140,009) (93,205) (1,033,152) (412,129) -- (25,959)
------------ ------------ ------------ ------------ ------------ ------------
Total distributions ......... (2,182,963) (2,381,143) (3,375,076) (3,260,305) -- (25,959)
------------ ------------ ------------ ------------ ------------ ------------
FUND SHARE TRANSACTIONS:
Net proceeds from shares sold 33,360,344 27,391,475 11,868,850 13,830,283 881,252 252,267
Distributions reinvested .... 2,073,600 2,307,192 3,277,906 2,800,751 -- 25,502
Payment for shares redeemed . (37,709,903) (27,629,604) (35,091,670) (15,435,671) (1,859,687) (660,335)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease)
in net assets from fund
share transactions ........ (2,275,959) 2,069,063 (19,944,914) 1,195,363 (978,435) (382,566)
------------ ------------ ------------ ------------ ------------ ------------
Total increase (decrease)
in net assets ............. (3,261,264) 1,601,549 (20,956,752) 535,320 7,566 (1,265,346)
NET ASSETS, BEGINNING OF YEAR 72,742,920 71,141,371 60,008,166 59,472,846 4,339,531 5,604,877
------------ ------------ ------------ ------------ ------------ ------------
NET ASSETS, END OF YEAR ..... $ 69,481,656 $ 72,742,920 $ 39,051,414 $ 60,008,166 $ 4,347,097 $ 4,339,531
============ ============ ============ ============ ============ ============
TRANSACTIONS IN SHARES:
Shares sold ................. 3,259,164 2,654,582 603,184 699,003 43,123 13,751
Shares issued on
reinvestment
of distributions .......... 202,852 223,658 167,382 141,657 -- 1,550
Shares redeemed ............. (3,687,634) (2,676,756) (1,772,000) (779,098) (116,898) (39,225)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in
shares outstanding .......... (225,618) 201,484 (1,001,434) 61,562 (73,775) (23,924)
============ ============ ============ ============ ============ ============
See notes to financial statements
- 12 -
PIA MUTUAL FUND
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 2003
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 five portfolios: the OCM Gold
Fund, the PIA Equity Fund, the PIA Short-Term Government Securities Fund, the
PIA Total Return Bond Fund and the PIA BBB 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 traded 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 debt
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 are adjusted. Accordingly,
at November 30, 2003, reclassifications were recorded to increase (decrease)
paid-in-capital by $73,651, $0 and $(32,546), increase (decrease) undistributed
net investment income by $496,223, $77,762 and $45,011 and increase (decrease)
undistributed net realized gain (loss) on investments by $(569,874), $(77,762)
and $(12,465) for the Short-Term Government, Total Return Bond and Equity Funds,
respectively. The Short-Term Government Fund and the Total Return Bond Fund
hereby designate approximately $77,634 and $213,829, respectively, as capital
gain dividends, for purposes of the dividends paid deduction.
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.
- 13 -
PIA MUTUAL FUND
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 2003 (CONTINUED)
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 year ended November 30, 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. Beginning March 28, 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 year ended November 30, 2003, the Distributor earned
$31,191, $15,145 and $1,730 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 year ended November 30, 2003
were:
Purchases Sales
------------ ------------
Short-Term Government Fund . . . . . . $ 35,111,555 $ 31,571,890
Total Return Bond Fund . . . . . . . . 31,840,731 90,660,766
Equity Fund. . . . . . . . . . . . . . 6,898,259 8,055,489
Purchases and sales of U.S. government obligations for the year ended
November 30, 2003 were:
Purchases Sales
------------ -------------
Short-Term Government Fund . . . . . . -- $ 6,926,125
Total Return Bond Fund . . . . . . . . $ 49,479,162 $ 11,405,417
Equity Fund. . . . . . . . . . . . . . -- --
- 14 -
PIA MUTUAL FUND
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 2003 (CONTINUED)
NOTE 6. FEDERAL INCOME TAX INFORMATION
At November 30, 2003, gross unrealized appreciation and depreciation of
investments owned by the Fund, based on cost for federal income tax purposes
were as follows:
GOVERNMENT RETURN
FUND BOND FUND EQUITY FUND
---- --------- -----------
Cost of Investments ..................... $69,136,035 $40,012,566 $3,860,983
=========== =========== ==========
Unrealized appreciation ................. $ 223,573 $ 587,244 $ 839,612
Unrealized depreciation ................. (89,183) (1,766,547) (153,743)
----------- ----------- ----------
Net unrealized appreciation
(depreciation) on investments ........... $ 134,390 $(1,179,303 $ 685,869
=========== =========== ==========
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 years ended
November 30, 2003 and November 30, 2002 was as follows:
Short-Term Total Return
Government Fund Bond Fund Equity Fund
------------------------ ----------------------- --------------------
Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30,
2003 2002 2003 2002 2003 2002
---- ---- ---- ---- ---- ----
Ordinary income ... $2,105,329 $2,381,143 $3,161,247 $3,142,554 $ -- $ --
Net long-term
capital gains ... 77,634 -- 213,829 117,751 -- 25,959
---------- ---------- ---------- ---------- -------- ----------
Total distributions $2,182,963 $2,381,143 $3,375,076 $3,260,305 $ -- $ 25,959
========== ========== ========== ========== ======== ==========
As of November 30, 2003, the components of accumulated earnings on a
tax basis were as follows:
Short-Term Total
Government Return
Fund Bond Fund Equity Fund
----------- ----------- -----------
Undistributed ordinary income ..... $ 13,932 $ 136,221 $ --
Undistributed long-term gains ..... -- 1,133,700 --
----------- ----------- -----------
Tax accumulated earnings .......... 13,932 1,269,921 --
Accumulated capital and
other losses .................... (567,536) (699,287) (565,757)
Unrealized appreciation
(depreciation) on
investments ..................... 134,390 (1,179,303) 685,869
----------- ----------- -----------
Total accumulated
earnings (deficit) .............. $ (419,214) $ (608,669) $ 120,112
=========== =========== ===========
At November 30, 2003, the Short-Term Government and Equity Funds had
accumulated capital loss carryforwards of $525,317 and $504,920, respectively,
of which $0 and $447,909 respectively, expire in the year 2010 and $525,317 and
$57,011 respectively, expire in the year 2011. To the extent the Short-Term
Government and Equity Funds realize future net capital gains, those gains will
be offset by any available capital loss carry-forward. At November 30, 2003, the
Short-Term Government, Total Return Bond Fund and the Equity Fund had net
realized capital losses from transactions between November 1, 2003 and November
30, 2003 of $42,219, $699,287 and $60,837, respectively. Post-October capital
losses for tax purposes are deferred and will be recognized in 2004 and are
included in accumulated capital and other losses for the Short-Term Government,
Total Return Bond and Equity Funds.
- 15 -
PIA MUTUAL FUND
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 2003 (CONTINUED)
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 year ended November 30, 2003, the Trust was
advised that the Distributor received $1,112 of 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. During the year ended November 30,
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. All of the securities were sold
during the period.
NOTE 9. PAYMENT BY AFFILIATE
On August 13, 2003, an employee of Pacific Income Advisers, Inc.
("PIA") purchased shares of a security which was deemed by PIA as being under
consideration for purchase by PIA. The PIA Equity Fund subsequently purchased
shares of the security on August 15, August 17 and September 9, 2003. PIA
required the employee to surrender all gains realized on the security, $12,463,
to the Fund.
- 16 -
PIA MUTUAL FUND
SHORT-TERM GOVERNMENT SECURITIES FUND
FINANCIAL HIGHLIGHTS
Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30,
2003 2002 2001 2000 1999
---------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout each year)
Net asset value, beginning of year $ 10.29 $ 10.36 $ 10.12 $ 10.07 $ 10.38
------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............ 0.20 0.36 0.52 0.66 0.55
Net realized and unrealized
gain (loss) on
investments .................... (0.04) (0.07) 0.25 0.05 (0.25)
------- ---------- ---------- ---------- ----------
Total from investment
operations ..................... 0.16 0.29 0.77 0.71 0.30
------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS:
Dividends from net
investment income .............. (0.28) (0.35) (0.52) (0.66) (0.55)
Distribution from net
realized gains ................. (0.02) (0.01) -- -- (0.06)
Tax return of capital ............ -- -- (0.01) -- --
------- ---------- ---------- ---------- ----------
Total distributions .............. (0.30) (0.36) (0.53) (0.66) (0.61)
------- ---------- ---------- ---------- ----------
Net asset value, end of year ..... $ 10.15 $ 10.29 $ 10.36 $ 10.12 $ 10.07
======= ========== ========== ========== ==========
TOTAL RETURN ..................... 1.56% 2.87% 7.74% 7.30% 3.00%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(in 000's) ..................... $69,482 $72,743 $71,141 $47,191 $ 47,455
Ratio of expenses to
average net assets:
Net of waivers and
reimbursements ................. 0.35% 0.35% 0.33% 0.30% 0.30%
Before waivers and
reimbursements ................. 0.59% 0.58% 0.46% 0.48% 0.47%
Ratio of net investment
income to average net assets:
Net of waivers and
reimbursements ................. 1.99% 3.16% 4.97% 6.49% 5.40%
Before waivers and
reimbursements ................. 1.75% 2.93% 4.84% 6.31% 5.23%
Portfolio turnover rate .......... 74% 185% 121% 89% 110%
See notes to financial statements
- 17 -
PIA MUTUAL FUND TOTAL RETURN BOND FUND
FINANCIAL HIGHLIGHTS
Year Ended Year Ended Year Ended Year Ended Year Ended
Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30,
2003 2002 2001 2000 1999
--------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout each year)
Net asset value,
beginning of year ........ $ 19.91 $ 20.15 $ 19.23 $ 18.92 $ 20.27
--------- ---------- ---------- ----------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ...... 0.94 0.94 1.13 1.24 1.16
Net realized and unrealized
gain (loss) on investments . (0.05) (0.13) 0.93 0.31 (1.31)
--------- ---------- ---------- ----------- ----------
Total from investment
operations ............... 0.89 0.81 2.06 1.55 (0.15)
--------- ---------- ---------- ----------- ----------
LESS DISTRIBUTIONS:
Dividends from net
investment income ........ (1.00) (0.91) (1.14) (1.24) (1.16)
Distribution from net
realized gains ........... (0.39) (0.14) -- -- (0.04)
--------- ---------- ---------- ----------- ----------
Total distributions ........ (1.39) (1.05) (1.14) (1.24) (1.20)
--------- ---------- ---------- ----------- ----------
Net asset value, end of year $ 19.41 $ 19.91 $ 20.15 $ 19.23 $ 18.92
========= ========== ========== =========== ==========
TOTAL RETURN ............... 4.60% 4.17% 10.94% 8.54% (0.74)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (in 000's) ........ $39,051 $60,008 $ 59,473 $34,545 $ 29,652
Ratio of expenses to
average net assets:
Net of waivers and
reimbursements ........... 0.45% 0.45% 0.43% 0.40% 0.40%
Before waivers and
reimbursements ........... 0.73% 0.70% 0.55% 0.61% 0.63%
Ratio of net investment
income to average
net assets:
Net of waivers and
reimbursements ........... 4.69% 4.76% 5.61% 6.61% 6.06%
Before waivers and
reimbursements ........... 4.41% 4.51% 5.49% 6.40% 5.83%
Portfolio turnover rate .... 190% 297% 134% 46% 104%
See notes to financial statements
- 18 -
PIA MUTUAL FUND PIA EQUITY FUND
FINANCIAL HIGHLIGHTS
Year Ended Year Ended Year Ended Year Ended Year Ended
Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30,
2003 2002 2001 2000 1999
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout each year)
Net asset value,
beginning of year ......... $ 16.41 $ 19.44 $ 20.46 $ 17.68 $ 17.54
---------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (loss) (0.24) (0.23) (0.03) 0.01 0.05
Net realized and unrealized
gain (loss) on
investments ............... 6.56 (2.70) 1.01 2.77 1.83
Payment by affiliate (Note 9) 0.07 -- -- -- --
---------- --------- --------- --------- ---------
Total from investment
operations ................ 6.39 (2.93) 0.98 2.78 1.88
---------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net
investment income ......... -- -- (0.02) -- (0.08)
Distribution from net
realized gains ............ -- (0.10) (1.98) -- (1.66)
---------- --------- --------- --------- ---------
Total distributions ......... -- (0.10) (2.00) -- (1.74)
---------- --------- --------- --------- ---------
Net asset value,
end of period ............. $ 22.80 $ 16.41 $ 19.44 $ 20.46 $ 17.68
========== ========= ========= ============ ============
TOTAL RETURN* ............... 38.94%(1) (15.08)% 4.63% 15.72% 12.07%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (in 000's) ......... $ 4,347 $ 4,340 $ 5,605 $ 3,318 $ 2,072
Ratio of expenses to
average net assets:
Net of waivers and
reimbursements ............ 2.24% 1.80% 1.80% 1.80% 1.80%
Before waivers and
reimbursements ............ 5.29% 3.41% 2.86% 3.72% 5.36%
Ratio of net investment
income (loss) to
average net assets:
Net of waivers and
reimbursements ............ (1.27)% (1.11)% (0.11)% 0.10% 0.30%
Before waivers and
reimbursements ............ (4.32)% (2.72)% (1.17)% (1.82)% (3.26)%
Portfolio turnover rate ..... 224% 220% 186% 526% 276%
<FN>
- ---------
* Assumes no sales charge.
(1) For the year ended November 30, 2003, 0.37% of the Fund's total return
relates to payment by affiliate (see Note 9).
See notes to financial statements
</FN>
- 19 -
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of PIA Mutual Fund
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of PIA Short-Term Government
Securities Fund, PIA Total Return Bond Fund and PIA Equity Fund, series of PIA
Mutual Fund (the "Trust") at November 30, 2003, the results of each of their
operations for the year then ended, the changes in each of their net assets for
each of the two years then ended and each of their financial highlights for each
of the five years then ended, in conformity with accounting principles generally
accepted in the United States of America. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Trust's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
November 30, 2003 by correspondence with the custodian and brokers, provide a
reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP
- ------------------------------
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
January 9, 2004
- 20 -
PIA MUTUAL FUND
PERFORMANCE RESULTS - YEAR ENDED NOVEMBER 30, 2003
PIA SHORT-TERM
GOVERNMENT SECURITIES FUND
AVERAGE ANNUAL TOTAL RETURNS VALUE ON 11/30/03
1 year 1.56% PIA ST Gov't. $16,817
5 year 4.46% Lehman Index $17,403
Inception 5.56%
$10,000 INVESTMENT MADE 4/22/94 (INCEPTION DATE)
The returns shown included the reinvestment of all dividends, but do not reflect
the deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares. Past performance is not predictive of future
performance.
The Lehman Government 1-3 Year Index is an unmanaged index consisting of all US
Treasury & Agency bonds weighted according to market capitalization with
maturities between one and three years.
The PIA SHORT-TERM GOVERNMENT SECURITIES FUND provided a return of 1.56% this
year. The Fund continued its overweighting in short-term U.S. Government
mortgage securities. The Fund maintained a portfolio duration that averaged
three quarters of a year during the period in anticipation of rates rising
during an expanding economy. The Federal Reserve reduced their Fed Funds rate to
historical lows during the first half of the year and maintained the level for
the remainder of the year. During the same period the Lehman 1-3 year Government
Index provided a return of 2.39%. The Merrill 1 year Treasury Note Index, which
has a shorter maturity than the 1-3 year Government Index, had a return of
1.52%.
PIA TOTAL RETURN
BOND FUND
AVERAGE ANNUAL TOTAL RETURNS VALUE ON 11/30/03
1 year 4.60% PIA Total Return Bond $13,342
5 year 5.38% Lehman Index $14,076
Inception 5.65%
$10,000 INVESTMENT MADE 9/1/98 (INCEPTION DATE)
The returns shown included the reinvestment of all dividends, but do not
reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares.Past performance is not
predictive of future performance.
The Lehman Gov/Credit index is an unmanaged index consisting of US Treasury &
Agency bonds and publicly issued US corporate and foreign debentures and secured
notes.
The PIA TOTAL RETURN BOND FUND returned 4.60% this year. The Fund's emphasis on
investing in intermediate term bonds produced positive returns but were below
the index. An underweighting in corporate securities was the major reason for
the difference in performance. The Fund maintained a portfolio maturity that
fluctuated modestly during the year. Intermediate term interest rates ended the
period close to unchanged although the interest rate volatility was high during
the year. During the same period, the Lehman Government Credit Bond Index
returned 6.39%. The Lehman Aggregate Index, which has a shorter maturity than
the Government Credit Index and a broader range of securities in which the Fund
invests, had a return of 5.18%.
- 21 -
PIA MUTUAL FUND
PERFORMANCE RESULTS - YEAR ENDED NOVEMBER 30, 2003
(ALL PERFORMANCE MEASUREMENTS REFLECT THE MAXIMUM SALES LOAD CHARGED,
FOR EACH PERIOD)
PIA EQUITY FUND
AVERAGE ANNUAL TOTAL RETURNS VALUE ON 11/30/03
1 year 32.71% PIA Equity $16,301
5 year 8.86% S&P 500(R)Index $16,111
Inception 7.27%
$10,000 INVESTMENT MADE 12/13/96 (DATE PIA BECAME INVESTMENT ADVISER)(1)
The returns shown included the reinvestment of all dividends, but do not reflect
the deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares. Past performance is not predictive of future
performance.
The S&P 500(R) Index is a broad unmanaged index generallY considered to be
representative of the US equity market.
The PIA EQUITY FUND provided a return of 38.94% (32.71% after sales charge) this
year. The Fund's emphasis on relative value stocks produced favorable results.
During the past year, stock prices rose due to increased economic activity, an
accommodative Fed policy and outlook for corporate profits. During the same
period, the S&P 500 returned 5.09% and the S&P 600 Small Cap Index 31.77%.
(1) Previous periods during which time the Fund was advised by another
investment adviser are not shown.
- 22 -
PIA MUTUAL FUND
TRUSTEE AND OFFICER INFORMATION
INDEPENDENT TRUSTEES
- ----------------------------------------------------------------------------------------------------------------------
NUMBER OF IN OTHER
TERM OF PORTFOLIOS DIRECTOR-
OFFICE(1) FUND COMPLEX SHIPS
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN HELD BY
NAME, ADDRESS AND AGE HELD WITH FUND TIME SERVED DURING PAST 5 YEARS BY TRUSTEE TRUSTEE
- ----------------------------------------------------------------------------------------------------------------------
BEATRICE P. FELIX Trustee Served as Sales Agent, Roland 5 None
1011 4th Street, #218 Trustee since Land Realty
Santa Monica, CA 90403 1996 (1994 - present)
Age: 44
ANN LOUISE MARINACCIO Trustee Served as Sales Associate, 5 None
1 Norwood Road Trustee since Saks Fifth Avenue
Springfield, NJ 07081 1996 (1986 - present)
Age: 63
ROBERT I. WEISBERG Trustee Served as President and Managing 5 Environmental
41 West Shore Road Trustee since Partner, Alco Financial Power, Inc.,
Belvedere, CA 94920 1996 Services, LLC Titan General
Age: 56 (1997 - present) Holdings, Inc.
INTERESTED TRUSTEES AND OFFICERS
- ----------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS OTHER
TERM OF IN FUND DIRECTOR-
OFFICE(1) COMPLEX SHIPS
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN HELD BY
NAME, ADDRESS AND AGE HELD WITH FUND TIME SERVED DURING PAST 5 YEARS BY TRUSTEE TRUSTEE
- ----------------------------------------------------------------------------------------------------------------------
JOSEPH LLOYD MCADAMS, JR.(2)Trustee, Served as Chairman of the Board 5 None
1299 Ocean Avenue Chairman Trustee and and Chief Investment
Suite 210 Chairman Officer, Pacific Income
Santa Monica, CA 90401 since 1996 Advisers, Inc. (1986 -
Age: 58 present); Chairman of
the Board, Chief
Executive Officer and
President, Syndicated
Capital, Inc. (1987 -
present); Chairman of the
Board and Chief
Executive Officer,
Anworth Mortgage Asset
Corp. (1998 - present)
- 23 -
INTERESTED TRUSTEES AND OFFICERS
(CONTINUED)
- ----------------------------------------------------------------------------------------------------------------------
PORTFOLIOS OTHER
TERM OF IN FUND DIRECTOR-
OFFICE(1) COMPLEX SHIPS
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN HELD BY
NAME, ADDRESS AND AGE HELD WITH FUND TIME SERVED DURING PAST 5 YEARS BY TRUSTEE TRUSTEE
- ----------------------------------------------------------------------------------------------------------------------
HEATHER U. BAINES President and Served as President and Chief N/A N/A
1299 Ocean Avenue Treasurer President and Executive Officer,
Suite 210 Treasurer Pacific Income Advisers,
Santa Monica, CA 90401 since 1996 Inc. (1986 - present);
Age: 61 Executive Vice President,
Anworth Mortgage Asset
Corp. (1998 - present)
FLAVEN BUTLER Secretary Served as Assistant Vice President, N/A N/A
1299 Ocean Avenue Secretary Pacific Income Advisers,
Suite 210 since 2001 Inc. (1994 - Present)
Santa Monica, CA 90401
Age: 30
<FN>
- --------------
(1) Each Trustee serves an indefinite term until the election of a successor.
Each Officer serves an indefinite term, renewed annually, until the
election of a successor.
(2) Mr. McAdams is considered an Interested Trustee of the Trust within the
meaning of the Investment Company Act of 1940, as amended, and is
considered an Interested Trustee because of his affiliation with Pacific
Income Advisers, Inc. and Syndicated Capital, Inc.
</FN>
THE STATEMENT OF ADDITIONAL INFORMATION INCLUDES ADDITIONAL INFORMATION
ABOUT THE TRUSTEES AND IS AVAILABLE UPON REQUEST, WITHOUT CHARGE, BY
CALLING 1-800-628-9403.
- 24 -
This page intentionally left blank.
PIA Mutual Fund
Distributed by:
Syndicated Capital, Inc.
1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401
OCM GOLD FUND
-------------
A PIA MUTUAL
FUND PORTFOLIO
ANNUAL REPORT
NOVEMBER 30, 2003
Dear fellow Shareholder:
Responding to a decline in the U.S. dollar, gold prices forged over $400 an
ounce in 2003 for the first time since 1996, closing the year at $417, up 22%.
Despite gold's nearly 60% move off the lows of 2000, we continue to believe gold
is in the early stages of a major long-term uptrend. Your fund maintained its
strong correlation to rising bullion prices by gaining 48.31% for the calendar
year ( +92.03% for the fiscal year ended November 30, 2003 covered in this
report). The Philadelphia Gold and Silver Index of gold shares gained 43.95%
over the corresponding period (+75.91% year ended November 30, 2003.).
The aggressive fiscal and monetary policies employed by Washington to fight the
deflationary forces associated with the post bubble environment have accelerated
the debasement of the US dollar. The Federal budget deficit has exploded to over
$500 billion annually while real interest rates are negative. Dollar holders who
understand that the purchasing power of the dollar is being eroded have begun to
look for alternatives. In 2003, the trade weighted dollar index was down 8.8%,
as money flows moved into the euro, gold and other tangible assets.
When Federal Reserve Governor Ben Bernanke in November of 2002 boldly pronounced
the Federal Reserve has unlimited printing press money at its disposal to fight
deflationary forces, it reinforced the lack of intrinsic value of paper
currencies to the market. Further, it illustrated the vicious cycle monetary
authorities now find themselves in because of Government's desire to smooth out
business cycles and avoid the depressions that plagued the pre WWII era. In
order to avoid what Alan Greenspan describes as a "cascading sequence of
defaults", the Fed must inject ever increasing doses of liquidity into the
economy to reflate demand. This is necessary because cyclical downturns in the
economy are not allowed to run their course to fully unwind the financial
excesses of the previous economic expansion. Consequently, with each economic
expansion balance sheet leverage has scaled greater and greater heights, thereby
increasing the deflationary risks on the down side of the business cycle. The
Bank Credit Analyst calls this the Supercycle of Debt. In our opinion, it
represents an ever-increasing risk profile for the U.S. economy that must be
addressed with currency debasement.
The escalating debt levels associated with the Federal Reserve's latest attempt
to stimulate demand in the economy are staggering by all historical
measurements. Total U.S. household debt has ballooned to almost 90% of GDP, up
from 50% in 1984. Meanwhile total U.S. debt as a percentage of GDP now tops an
unprecedented 300%. Equally troublesome is the U.S. current account deficit that
is running at a record 5% of GDP. Some quarters of the market are taking notice
to the destruction of the American balance sheet. In a December 17th memo to
clients, Bridgewater Associates commenting on the perilous state of the U.S.
dollar stated; "Owing to the uncontrolled borrowing by the U.S., both the dollar
and dollar denominated bonds are in serious jeopardy."
The decline in the dollar over the past year could have been worse. While
private investors have been cutting back their purchases of U.S. bonds, central
banks, particularly Asian central banks, have dramatically increased their
purchases in order to hold their currencies down for competitive trade purposes.
As a result, foreign investors now own 46% of U.S. Treasury debt and 33% of U.S.
agency debt. Approximately 75% of central banks assets are
- 1 -
[NEED PLOT POINTS]
now held in U.S. dollar assets. At what point central banks decide they have too
much dollar exposure is unknown. What is known is there becomes a point where
purchasing dollars in exchange for local currencies becomes disruptive to local
economies because of the inflationary implications. In the case of China,
accelerating inflation is already appearing.
After an inauspicious beginning, the euro has emerged as a viable contender to
supplant the dollar as the world's reserve currency. Over the past twelve months
it has risen 20% versus the dollar. Recent rumblings out of OPEC and Russia that
serious consideration is being given to accepting oil settlement in euros rather
than dollars, would be a significant blow to the utilitarian value of the
dollar. The United States would be forced to re-balance its trade in order to
earn the goods and services it purchases rather than issue credit for them. The
implications for the American standard of living would be profound. The euro,
however, is not without its shortcomings. Most notably, it is a non-sovereign
backed fiat currency of a group of socialist government countries. Secondly, two
of its largest member countries, Germany and France, have blown apart the
stability pact that limits deficit levels to 3% of GDP. With the frailty of the
U.S. dollar, the euro looks attractive in comparison, but at the end of the day,
it will, in our opinion, be viewed as just another suspect paper currency.
- 2 -
In addition to the pendulum of confidence shifting away from the dollar and the
need for monetary insurance, there are a number of other bullish factors that
aid the case for gold as an investment at this time, such as:
o The barometer of fair valuation for financial assets versus gold - the
Dow/Gold ratio - remains historically high at approximately 26 ounces to buy
one unit of the Dow Jones. From 1968 through 2003 the average of the ratio
has been 8 ounces. Over the past 100 years the average is 5 ounces.
o Central Banks are reportedly set to renew the Washington Agreement that
limits gold sales with a cap of 450 tons annually. Although this is a 50 ton
per year increase, it sends the message to the gold market that there will
not undisciplined selling by the signatories.
o Major gold producers are committed to reducing the size of their hedge books
going forward. Over the past couple of years, dehedging has not only improved
sentiment toward the sector, it has offset gold sales by central banks.
o A long lead-lag time of 5-7 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 China has moved to deregulate ownership of gold for its 1.3 billion citizens.
A recent poll shows over 20% of the Chinese population interested in
converting a portion of their savings into gold. China is expected to be an
important source of gold demand going forward by its citizens and central
bank.
o The post 9/11 era is one of chronic geopolitical tensions for the United
States and therefore periods uncertainty for the financial markets.
o The introduction of gold exchange traded funds (ETF's) in London and
Australia in 2003 opens the gold market to institutions and individuals that
previously thought the market to cumbersome to deal in as a tool to hedge
against currency risk. A 2004 launch of a U.S. version gold ETF is awaiting
SEC approval.
o Government obligations in all major economies are set to rise sharply as baby
boomers head toward retirement. The options to pay off these large
liabilities are limited and will most likely be paid with printing press
money. The resultant inflation will reduce the real value of the debt.
GOLD MINING SHARES
Despite higher gold prices, the performance of gold mining shares was not
uniformly higher in 2003. Operating issues, strong local currencies and
environmental permitting hurdles negatively affected the share prices of a
number of gold mining companies over the past year. The industry remains
hamstrung by the daunting task of replacing 100 million ounces of mined reserves
annually. On the positive side, higher gold prices did provide improved cash
flow and earnings for a number of the major gold producers, such as Newmont
Mining and Placer Dome. On the exploration front, new discoveries by Nevsun
Resources, Bema Gold and Wolfden Resources created market excitement.
Additionally, companies exhibiting a growth profile, such as Golden Star and El
Dorado Gold saw appreciable share price gains.
After years of balance sheet starvation due to low gold prices, a number of
companies took advantage of increased investor interest by tapping the capital
markets. Overall, the gold industry market capitalization remains relatively
small after three years of gains, standing at about $90 billion for the entire
industry. By comparison, General Electric and Microsoft presently each have
market capitalizations over $320 billion.
- 3 -
INVESTMENT STRATEGY
The investment philosophy of your fund is to participate in all sectors of the
gold mining industry. Our tiered approach is designed to have progressively
smaller percentage allocations in major producers, intermediate producers, and
junior producers and exploration/development companies. Over the course of the
year we increased the fund's exposure to exploration/development companies to
approximately 15% of the portfolio, partly through appreciation of acquired
positions. It is our belief that higher gold prices increase the opportunities
of finding economic deposits and therefore increase the chance of creating
significant shareholder value. Our approach is active in this sector of the
industry as gains must be harvested in a disciplined manner due to the nature of
the discovery and development cycles.
Over the coming year, we believe the main themes in the gold industry will be a
weakening South African rand, which will favorably impact the cost structures
and margins of the South African gold producers. We also believe the market will
aggressively search out for those companies exhibiting growth, which will most
likely come from the junior sector. Additionally, exploration and development
companies will continue gain market focus as the industry seeks to replace mined
reserves.
CONCLUSION
Despite the significant percentage increases in the price of gold and gold
shares over the past couple of years, sentiment toward gold by Wall Street and
the investing public in general remains negative with few willing to recognize
the inherent fundamental risks associated with the dollar and the global
financial system. This is bullish for further advances in gold as renowned
investor Sir John Templeton once said; "Bull markets are born in pessimism, grow
in skepticism, mature in optimism and die in euphoria". 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
- ----------------------------------
Gregory M. Orrell
PORTFOLIO MANAGER JANUARY 20, 2004
- 4 -
PIA MUTUAL FUND
OCM GOLD FUND
SCHEDULE OF INVESTMENTS - NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS 92.2%
MAJOR GOLD PRODUCERS 34.0%
155,000 AngloGold Ltd. ADR ........................... $ 7,435,350
50,000 Ashanti Goldfields Co. Ltd. GDR* ............. 680,500
260,000 Gold Fields Ltd. ADR ......................... 3,559,400
175,000 Harmony Gold Mining Co. Ltd. ADR ............. 2,770,250
209,469 Kinross Gold Corp.* .......................... 1,860,085
179,994 Newmont Mining Corp. ......................... 8,664,911
200,000 Placer Dome, Inc. ............................ 3,630,000
-----------
28,600,496
-----------
INTERMEDIATE/MID-TIER GOLD PRODUCERS 21.2%
80,000 Agnico-Eagle Mines Ltd. ...................... 948,000
350,000 Bema Gold Corp.* ............................. 1,453,958
50,000 Durban Roodeport Deep Ltd. ADR* .............. 137,500
125,000 Glamis Gold Ltd.* ............................ 2,175,000
280,000 Goldcorp, Inc. ............................... 5,012,000
425,000 IAMGOLD Corp. ................................ 3,548,750
15,000 Lihir Gold Ltd. ADR .......................... 344,250
50,000 Meridian Gold, Inc.* ......................... 737,000
50,000 Randgold Resources Ltd. ADR* ................. 1,365,000
750,000 Wheaton River Minerals Ltd.* ................. 2,145,000
-----------
17,866,458
-----------
JUNIOR GOLD PRODUCERS 14.8%
425,000 Apollo Gold Corp.* 1,036,426
175,000 Aurizon Mines Ltd.* .......................... 304,254
115,802 Canyon Resources Corp.* ...................... 451,628
55,556 Canyon Resources Corp.*+ (OMEGA) ............. 195,002
1,000,000 Claude Resources, Inc.* ...................... 1,615,509
200,000 Crystallex International Corp.* .............. 600,000
430,000 Eldorado Gold Corp.* ......................... 1,554,735
90,000 Golden Cycle Gold Corp.* ..................... 1,170,000
284,000 Golden Star Resources Ltd.* .................. 2,093,023
600,000 Kenor ASA* ................................... 538,148
100,000 Kirkland Lake Gold Inc.* ..................... 338,488
45,800 Metallic Ventures Gold Inc.* ................. 320,625
186,800 Miramar Mining Corp.* ........................ 465,599
330,000 Northgate Exploration Ltd.* .................. 670,205
200,000 Queenstake Resources Ltd.* ................... 140,011
55,000 Richmont Mines, Inc.* ........................ 271,700
207,000 River Gold Mines Ltd.* ....................... 679,968
-----------
12,445,321
-----------
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
EXPLORATION AND DEVELOPMENT COMPANIES 14.8%
200,000 Addwest Minerals International
Ltd.* (OMEGA) .......................... $ --
150,000 Alquiline Resources, Inc.* .............. 108,470
137,875 Altius Minerals Corp.* .................. 243,951
319,500 Ascot Resources Ltd.* ................... 81,110
500,000 Birim Goldfields, Inc.* ................. 515,424
200,000 Bolivar Gold Corp.* ..................... 369,259
100,000 Cardero Resource Corp.* ................. 226,940
100,000 Champion Resources Inc.* ................ 56,927
100,000 Chesapeake Gold Corp.* .................. 274,636
250,000 Committee Bay Resources Ltd.* ........... 421,186
370,000 Continuum Resources Ltd.* ............... 335,872
500,000 Coronation Minerals Inc.* ............... 261,559
300,000 Crowflight Minerals Inc.* ............... 198,477
175,000 Desert Sun Mining Corp.* ................ 269,251
40,000 DRC Resources Corp.*+ (OMEGA) ........... 228,479
145,000 Frontier Pacific Mining Corp.* .......... 100,392
35,000 Gammon Lake Resources Inc.* ............. 182,000
50,000 Gateway Gold Corp.* ..................... 194,246
150,000 Gold-Ore Resources Ltd.* ................ 69,236
200,000 Intrepid Minerals Corp.* ................ 123,086
200,000 Manhattan Minerals Corp.* ............... 92,315
250,000 Maximus Ventures Ltd.* .................. 73,083
500,000 McWatters Mining, Inc.* ................. 15,386
54,500 Metallica Resources, Inc.* .............. 100,623
150,000 Mundoro Mining Inc.* .................... 357,720
500,000 Navigator Exploration Corp.* ............ 138,472
177,600 Nevsun Resources Ltd.* .................. 1,004,200
185,500 New Guinea Gold Corp.* .................. 85,622
47,100 North Atlantic Nickel Corp.* ............ 97,831
167,000 Northern Lion Gold Corp.* ............... 154,166
133,333 Northern Lion Gold Corp.*+(OMEGA) ....... 110,777
500,000 Odyssey Resources Ltd.* ................. 130,779
150,000 Orezone Resources Inc.* ................. 141,934
280,000 Platinum Group Metals Ltd.* ............. 286,484
175,000 QGX Ltd* ................................ 942,380
187,500 Queenston Mining, Inc.* ................. 129,817
250,000 Radius Explorations Ltd.* ............... 317,332
100,000 Radius Explorations Ltd.*+ (OMEGA) ...... 114,240
272,000 Red Back Mining NL* ..................... 118,090
300,000 Riddarhyttan Resources AB* .............. 250,129
200,000 Sabina Resources Ltd.*+ (OMEGA) ......... 193,861
See notes to financial statements
- 5 -
PIA MUTUAL FUND
OCM GOLD FUND
SCHEDULE OF INVESTMENTS - NOVEMBER 30, 2003 (CONTINUED)
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
75,000 St. Jude Resources Ltd.* ..................... $ 196,169
431,500 Strongbow Resources Inc.* .................... 165,974
3,000,000 Sub-Sahara Resources NL* ..................... 197,540
7,700 Sunridge Gold Corp.* ......................... 26,123
200,000 Sunridge Gold Corp.*+ (OMEGA) ................ 610,662
178,000 Temex Resources Corp.* ....................... 75,314
150,000 Tom Exploration Inc.* ........................ 45,580
130,000 Western Silver Corp.* ........................ 618,048
250,000 Wolfden Resources, Inc.* ..................... 1,440,495
-----------
12,491,647
-----------
OTHER 4.9%
200,000 Central Fund of Canada Ltd., ................. 1,032,000
178,000 Endeavour Mining Capital
Corp.*+ (OMEGA) .............................. 517,609
50,000 Gold Bullion Securities Ltd.* ................ 1,984,443
30,000 Royal Gold, Inc. ............................. 639,300
-----------
4,173,352
-----------
PRIMARY SILVER PRODUCERS 2.5%
197,100 Hecla Mining Co.* ............................ 1,462,482
48,075 PAN American Silver Corp.* ................... 639,447
-----------
2,101,929
-----------
TOTAL COMMON STOCKS
(cost $35,231,786) ...................................... 77,679,203
-----------
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
WARRANTS 2.0%
68,937 Altius Minerals Corp. (OMEGA) ................ $ 15,910
156,250 Apollo Gold Corp.* (OMEGA) ................... 131,039
50,000 Apollo Gold Corp.* ........................... --
50,000 Bema Gold Corp.* ............................. 147,704
50,000 Bolivar Gold Corp. (OMEGA) ................... 25,002
81,301 Canyon Resources Corp. (OMEGA) ............... 181,301
55,556 Canyon Resources Corp. (OMEGA) ............... 106,668
125,000 Claude Resources, Inc.* (OMEGA) .............. 24,040
87,500 Desert Sun Mining Corp.* (OMEGA) ............. 43,753
65,000 Eldorado Gold Corp.* (OMEGA) ................. 135,010
89,000 Endeavour Mining Capital Corp.* .............. --
100,000 Manhattan Minerals Corp.* .................... --
250,000 Maximus Ventures Ltd.* ....................... --
66,666 Northern Lion Gold Corp. (OMEGA) ............. 10,257
110,000 Northgate Exploration Ltd.* .................. 67,698
24,038 PAN American Silver Corp.* ................... 148,677
93,750 Queenston Mining, Inc.* ...................... --
50,000 Radius Explorations Ltd. ..................... --
100,000 Sabina Resources Ltd. (OMEGA) ................ 50,004
100,000 Sunridge Gold Corp. (OMEGA) .................. 185,399
37,500 Wheaton River Minerals Ltd.* ................. 62,601
112,500 Wheaton River Minerals Ltd.* ................. 192,130
500,000 X-Cal Resources Ltd.* (OMEGA) ................ 153,858
-----------
TOTAL WARRANTS
(cost $110,472) .............................. 1,681,051
-----------
PREFERRED STOCKS 0.5%
10,000 Freeport-McMoRan
Copper & Gold, Inc.* ......................... 421,600
-----------
TOTAL PREFERRED STOCKS
(cost $169,900) ............................ 421,600
-----------
See notes to financial statements
- 6 -
PIA MUTUAL FUND
OCM GOLD FUND
SCHEDULE OF INVESTMENTS - NOVEMBER 30, 2003 (CONTINUED)
PRINCIPAL
- --------------------------------------------------------------------------------
AMOUNT VALUE
- --------------------------------------------------------------------------------
CONVERTIBLE BOND 0.5%
$150,000 Canyon Resources Corp.,
6.00%, due 2/12/05 ........................... $ 423,913
-----------
TOTAL CONVERTIBLE BOND
(cost $150,000) .............................. 423,913
-----------
SHORT-TERM INVESTMENTS 4.7%
1,657,595 First American Treasury
Obligations Fund ............................. 1,657,595
2,316,000 U.S. Bank, N.A. repurchase
agreement, 0.80%, dated 11/28/03, due
12/1/03, repurchase price $2,316,155
(collateralized by FGCI Pools 5.50%,
due 4/1/17 through 5/1/17) .................. 2,316,000
-----------
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(cost $3,973,595) $ 3,973,595
-----------
TOTAL INVESTMENTS
(cost $39,635,753) 99.9% 84,179,362
OTHER ASSETS LESS LIABILITIES 0.1% 50,169
-----------
NET ASSETS 100.0% $84,229,531
===========
* Non-income producing security.
(OMEGA) Valued at a fair value in accordance with procedures established by the
Fund's Board of Trustees.
+ The following securities were purchased under Rule 144A of the
Securities Act of 1933:
RESTRICTED SECURITIES
VALUE AS %
DESCRIPTION ACQUISITION DATE COST VALUE OF NET ASSETS
- -------------------------------------------------------------------------------------------------------------
Canyon Resources Corp. September 29, 2003 $100,001 $195,002 0.2%
DRC Resources Corp. November 5, 2003 209,832 228,479 0.3
Endeavour Mining Capital Corp. November 10, 2003 469,849 517,609 0.6
Northern Lion Gold Corp. September 25, 2003 74,790 110,777 0.1
Radius Explorations Ltd. November 5, 2003 114,400 114,240 0.1
Sabina Resources Ltd. October 30, 2003 76,334 193,861 0.2
Sunridge Gold Corp. September 10, 2003 148,260 610,662 0.7
SUMMARY OF INVESTMENTS BY COUNTRY
- -------------------------------------------------------------------------------
PERCENT OF
COUNTRY MARKET VALUE INVESTMENT SECURITIES
- -------------------------------------------------------------------------------
Australia 2,300,073 2.7%
Canada 42,909,017 51.0
Cayman Islands 517,609 0.6
Ghana 680,500 0.8
Norway 538,148 0.7
Papua New Guinea 344,250 0.4
South Africa 15,267,500 18.1
Sweden 250,129 0.3
United States1 21,372,136 25.4
- -------------------------------------------------------------------------------
TOTAL $ 84,179,362 100.0%
- -------------------------------------------------------------------------------
1 Includes short-term securities
See notes to financial statements
- 7 -
PIA MUTUAL FUND OCM GOLD FUND
STATEMENT OF ASSETS AND LIABILITIES - NOVEMBER 30, 2003
ASSETS:
Investments in securities, at value (cost $39,635,753) .......................... $ 84,179,362
Cash ............................................................................ 176,454
Receivable for securities sold .................................................. 67,040
Receivable for fund shares sold ................................................. 288,508
Interest receivable ............................................................. 2,079
Prepaid expenses and other assets ............................................... 18,216
------------
Total assets ................................................................... 84,731,659
------------
LIABILITIES:
Payable for securities purchased ................................................ 115,319
Payable for fund shares redeemed ................................................ 70,993
Due to investment adviser (Note 3) .............................................. 60,063
Accrued distribution fees ....................................................... 215,108
Accrued expenses and other liabilities .......................................... 40,645
------------
Total liabilities .............................................................. 502,128
------------
Net Assets ..................................................................... $ 84,229,531
============
NET ASSETS CONSIST OF:
Shares of beneficial interest, no par value; unlimited shares authorized ........ $ 38,683,356
Undistributed net investment loss ............................................... (207,762)
Undistributed net realized gain on investments and foreign currency transactions. 1,210,328
Net unrealized appreciation on investments and foreign currency translations .... 44,543,609
------------
Net Assets ..................................................................... $ 84,229,531
============
CALCULATION OF MAXIMUM OFFERING PRICE:
Net asset value and redemption price per share .................................. $ 14.46
Maximum sales charge (4.50% of offering price) .................................. 0.68
------------
Offering price to public ........................................................ $ 15.14
============
Shares outstanding .............................................................. 5,825,951
===========
See notes to financial statements
- 8 -
PIA MUTUAL FUND
OCM GOLD FUND
STATEMENT OF OPERATIONS - YEAR ENDED NOVEMBER 30, 2003
INVESTMENT INCOME:
Interest .................................................................... $ 59,905
Dividends (net of foreign withholding taxes of $11,913) ..................... 458,290
------------
Total investment income ................................................... 518,195
------------
EXPENSES:
Investment advisory fees (Note 3) ........................................... 528,355
Distribution fees (Note 4) .................................................. 527,204
Fund administration and accounting fees ..................................... 81,440
Transfer agent fees and expenses ............................................ 56,487
Professional fees ........................................................... 34,283
State registration fees ..................................................... 20,504
Reports to shareholders ..................................................... 8,526
Custody fees ................................................................ 5,460
Trustees' fees .............................................................. 2,783
Other expenses .............................................................. 8,853
------------
Total expenses ............................................................ 1,273,895
------------
Net investment loss ....................................................... (755,700)
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments and foreign currency transactions .......... 3,450,641
Net change in unrealized appreciation/depreciation on investments and
foreign currency translations ............................................... 34,827,839
------------
Net gain on investments ..................................................... 38,278,480
------------
Net increase in net assets resulting from operations ........................ $ 37,522,780
============
See notes to financial statements
- 9 -
PIA MUTUAL FUND
OCM GOLD FUND
STATEMENTS OF CHANGES IN NET ASSETS
Year ended Year ended
Nov. 30, Nov. 30,
2003 2002
OPERATIONS:
Net investment loss ..................................................... $ (755,700) $ (442,329)
Net realized gain on investments and foreign currency transactions ...... 3,450,641 850,618
Net change in unrealized appreciation/depreciation on investments
and foreign currency translations ..................................... 34,827,839 10,174,405
------------ ------------
Net increase in net assets resulting from operations .................... 37,522,780 10,582,694
------------ ------------
FUND SHARE TRANSACTIONS:
Net proceeds from shares sold ........................................... 19,718,096 14,654,286
Redemption fees ......................................................... 2,239 --
Payment for shares redeemed ............................................. (8,122,997) (8,051,464)
------------ ------------
Net increase in net assets from fund share transactions ................. 11,597,338 6,602,822
------------ ------------
Total increase in net assets ............................................ 49,120,118 17,185,516
NET ASSETS, BEGINNING OF YEAR ............................................. 35,109,413 17,923,897
CNET ASSETS, END OF YEAR ................................................... $ 84,229,531 $ 35,109,413
============ ============
TRANSACTIONS IN SHARES:
Shares sold ............................................................. 1,992,966 1,978,165
Shares redeemed ......................................................... (826,831) (1,125,077)
------------ ------------
Net increase in shares outstanding ...................................... 1,166,135 853,088
============ ============
See notes to financial statements
- 10 -
PIA MUTUAL FUND
OCM GOLD FUND
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 2003
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 five portfolios: the OCM Gold Fund, the PIA
Equity Fund, the PIA Short-Term Government Securities Fund, the PIA Total Return
Bond Fund and the PIA BBB 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 traded 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 debt 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.
- 11 -
PIA MUTUAL FUND
OCM GOLD FUND
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 2003 (CONTINUED)
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 are adjusted.
Accordingly, at November 30, 2003, reclassifications were recorded to decrease
undistributed net investment loss by $887,900 and decrease undistributed net
realized gains on investments and foreign currency transactions by $887,900.
REDEMPTION FEE - A 1.50% redemption fee is retained by the Fund to offset
transaction costs and other expenses associated with short-term investing by
Fund shareholders. 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 year ended November 30, 2003, the
Fund received $2,239 in 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:
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 year ended November 30, 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 year ended November 30, 2003, the Distributor earned $2,296
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 year ended November 30, 2003
were $17,959,324 and $7,946,485, respectively. There were no purchases or sales
of U.S. government obligations.
- 12 -
PIA MUTUAL FUND
OCM GOLD FUND
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 2003 (CONTINUED)
NOTE 6. FEDERAL INCOME TAX INFORMATION
At November 30, 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 ........................ $ 39,947,591
Unrealized appreciation .................... $ 44,450,860
Unrealized depreciation .................... (219,089)
Net unrealized appreciation on investments . $ 44,231,771
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, 2003, the components of accumulated earnings on a tax
basis were as follows:
Undistributed ordinary income ............. $ 84,352
Undistributed long-term gains ............. 1,230,052
Tax accumulated earnings .................. 1,314,404
Accumulated capital and other losses ...... --
Unrealized appreciation on investments .... 44,231,771
Total accumulated earnings ................ $45,546,175
The Fund utilized $1,191,499 of its capital loss carryforwards during the
year ended November 30, 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 year ended November 30, 2003, the Trust was advised that
the Distributor received $64,552 of sales charges from sales of the Fund's
shares.
NOTE 8. OTHER TAX INFORMATION (UNAUDITED)
For the year ended November 30, 2003, 72% of dividends paid from net
investment income, qualifies for the dividends received deduction available to
corporate shareholders of the OCM Fund. The OCM Gold Fund intends to designate
the maximum amount allowable as qualified dividend income.
- 13 -
PIA MUTUAL FUND
OCM GOLD FUND
FINANCIAL HIGHLIGHTS
Year Ended Year Ended Year Ended Year Ended Year Ended
Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30,
2003 2002 2001 2000 1999
------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout each year)
Net asset value, beginning of year .................. $ 7.53 $ 4.71 $ 3.52 $ 4.75 $ 4.98
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ................................. (0.12) (0.09) (0.04) (0.05) (0.04)
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions ............................... 7.05 2.91 1.23 (1.18) (0.19)
---------- ---------- ---------- ---------- ----------
Total from investment operations .................... 6.93 2.82 1.19 (1.23) (0.23)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period ...................... $ 14.46 $ 7.53 $ 4.71 $ 3.52 $ 4.75
========== ========== ========== ========== ==========
Total Return* ....................................... 92.03% 59.87% 33.81% (25.89)% (4.62)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's) .................. $ 84,230 $ 35,109 $ 17,924 $ 9,240 $ 11,799
Ratio of expenses to average net assets:
Net of waivers and reimbursements ................. 2.39% 2.66% 2.60% 2.44% 2.44%
Before waivers and reimbursements ................. 2.39% 2.66% 2.60% 2.99% 3.02%
Ratio of net investment loss to average net assets:
Net of waivers and reimbursements ................. (1.42)% (1.46)% (1.14)% (1.19)% (1.03)%
Before waivers and reimbursements ................. (1.42)% (1.46)% (1.14)% (1.74)% (1.61)%
Portfolio turnover rate ............................. 17% 32% 5% 3% 9%
- -------------
* Assumes no sales charge
See notes to financial statements
- 14 -
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of PIA
Mutual Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of OCM Gold Fund, a series of PIA
Mutual Fund (the "Trust") at November 30, 2003, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended and its financial highlights for each of the five years
in the period then ended, in conformity with accounting principles generally
accepted in the United States of America. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Trust's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
November 30, 2003 by correspondence with the custodian and brokers, provide a
reasonable basis for our opinion.
/S/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
January 9, 2004
- 15 -
PIA MUTUAL FUND
OCM GOLD FUND
PERFORMANCE RESULTS - YEAR ENDED NOVEMBER 30, 2003
(ALL PERFORMANCE MEASUREMENTS REFLECT THE MAXIMUM SALES LOAD CHARGES FOR EACH
PERIOD SHOWN.)
OCM GOLD FUND
AVERAGE ANNUAL TOTAL RETURNS VALUE ON 11/30/02
- ---------------------------- -----------------------
1 year 83.50% OCM Gold Fund $16,697
5 year 22.65% S&P 500(R)Index $16,111
Inception 7.64% Philadelphia Gold
& Silver Index $10,310
$10,000 INVESTMENT MADE 12/13/96 (DATE ORRELL BECAME INVESTMENT ADVISER)1
OCM Gold Fund
Plot Points
Philadelphia
OCM Gold S&P 500 Gold & Silver
12/13/96 9,550 10,000 10,000
11/30/97 5,878 13,340 6,037
11/30/98 5,751 16,496 6,096
11/30/99 5,485 19,943 5,864
11/30/00 4,065 19,102 4,218
11/30/01 5,439 16,767 4,783
11/30/02 8,695 13,998 5,863
11/30/03 16,697 16,111 10,310
The returns shown include the reinvestment of all dividends, but do not reflect
the deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares.
Past performance is not indicative of future results.
The Philadelphia gold and silver share index (XAU) is an unmanaged index of 12
gold and silver shares listed on U.S. exchanges and is generally considered as
representative of the gold and silver share market.
The S&P 500(R) Index is a broad unmanaged index generally considered as
representative of the U.S. equity market. 1Previous periods during which time
the Fund was advised by another investment adviser are not shown.
- 16 -
PIA MUTUAL FUND
TRUSTEE AND OFFICER INFORMATION
INDEPENDENT TRUSTEES
- -------------------------------------------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS IN OTHER
OFFICE(1) FUND COMPLEX DIRECTORSHIPS
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN HELD BY
NAME, ADDRESS AND AGE HELD WITH FUND TIME SERVED DURING PAST 5 YEARS BY TRUSTEE TRUSTEE
- -------------------------------------------------------------------------------------------------------------------------
BEATRICE P. FELIX Trustee Served as Sales Agent, Roland Land Realty 5 None
1011 4th Street, #218 Trustee since (1994 - present)
Santa Monica, CA 90403 1996
Age: 44
ANN LOUISE MARINACCIO Trustee Served as Avenue Sales Associate, Saks Fifth 5 None
1 Norwood Road Trustee since (1986 - present)
Springfield, NJ 07081 1996
Age: 63
ROBERT I. WEISBERG Trustee Served as President and Managing Partner, 5 Environmental
41 West Shore Road Trustee since Alco Financial Services, LLC Power, Inc.,
Belvedere, CA 94920 1996 (1997 - present) Titan General
Age: 56 Holdings, Inc.
INTERESTED TRUSTEES AND OFFICERS
- ---------------------------------------------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS IN OTHER
OFFICE(1) FUND COMPLEX DIRECTORSHIPS
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN HELD BY
NAME, ADDRESS AND AGE HELD WITH FUND TIME SERVED DURING PAST 5 YEARS BY TRUSTEE TRUSTEE
- ---------------------------------------------------------------------------------------------------------------------------
JOSEPH LLOYD MCADAMS, JR.(2) Trustee, Served as Chairman of the Board and Chief 5 None
1299 Ocean Avenue Chairman Trustee and Investment Officer, Pacific Income
Suite 210 Chairman Advisers, Inc. (1986 - present);
Santa Monica, CA 90401 since 1996 Chairman of the Board, Chief
Age: 58 Executive Officer and
President, Syndicated Capital, Inc.
(1987 - present); Chairman of the
Board and Chief Executive Officer,
Anworth Mortgage Asset Corp.
(1998 - present)
- 17 -
INTERESTED TRUSTEES AND OFFICERS
(CONTINUED)
- -------------------------------------------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS IN OTHER
OFFICE(1) FUND COMPLEX DIRECTORSHIPS
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN HELD BY
NAME, ADDRESS AND AGE HELD WITH FUND TIME SERVED DURING PAST 5 YEARS BY TRUSTEE TRUSTEE
- -------------------------------------------------------------------------------------------------------------------------
HEATHER U. BAINES President and Served as President and Chief Executive N/A N/A
1299 Ocean Avenue Treasurer President and Officer, Pacific Income Advisers, Inc.
Suite 210 Treasurer since (1986 - present); Executive Vice
Santa Monica, CA 90401 1996 President, Anworth Mortgage Asset
Age: 61 Corp. (1998 - present)
FLAVEN BUTLER Secretary Served as Assistant Vice President, Pacific N/A N/A
1299 Ocean Avenue Secretary since Income Advisers, Inc. (1994 - Present)
Suite 210 2001
Santa Monica, CA 90401
Age: 30
(1) Each Trustee serves an indefinite term until the election of a successor.
Each Officer serves an indefinite term, renewed annually, until the election
of a successor.
(2) Mr. McAdams is considered an Interested Trustee of the Trust within the
meaning of the Investment Company Act of 1940, as amended, and is considered
an Interested Trustee because of his affiliation with Pacific Income
Advisers, Inc. and Syndicated Capital, Inc.
THE STATEMENT OF ADDITIONAL INFORMATION INCLUDES ADDITIONAL INFORMATION ABOUT
THE TRUSTEES AND IS AVAILABLE UPON REQUEST, WITHOUT CHARGE, BY CALLING
1-800-628-9403.
- 18 -
PIA Mutual Fund
Distributed by:
Syndicated Capital, Inc.
1299 Ocean Avenue, Suite 210 Santa
Monica, CA 90401
PIA MUTUAL FUND
PIA BBB FUND
Schedule of Investments - November 30, 2003
Principal
Amount Value
- --------- ----------
U.S. GOVERNMENT INSTRUMENTALITIES
90.6%
U.S. Treasury Bills 4.0%
$ 8,000 U.S. Treasury Bill
due 1/2/04 $ 7,994
----------
U.S. Treasury Bonds 56.9%
70,000 U.S. Treasury Bond
5.00%, due 2/15/11 74,703
37,000 U.S. Treasury Bond
5.375%, due 2/15/31 38,347
----------
113,050
----------
U.S. Treasury Notes 29.7%
59,000 U.S. Treasury Note
2.375%, due 8/15/06 58,975
----------
Total U.S. Government
Instrumentalities (cost $181,227) 180,019
----------
Total Investments (cost $181,227) 90.6% 180,019
----------
Other Assets less Liabilities 9.4% 18,653
----------
NET ASSETS 100.0% $ 198,672
==========
PIA MUTUAL FUND
PIA BBB BOND FUND
Statement of Assets and Liabilities - November 30, 2003
Assets:
Investments in securities, at value (cost $181,227) $ 180,019
Due from investment adviser (Note 3) 35,925
Interest receivable 1,975
Prepaid expenses and other assets 15,379
----------
Total assets 233,298
----------
Liabilities:
Payable to custodian 5,171
Accrued expenses and other liabilities 29,455
----------
Total liabilities 34,626
----------
Net Assets $ 198,672
==========
Net Assets Consist of:
Shares of beneficial interest, no par value;
unlimited shares authorized $ 200,000
Undistributed net investment income 1,136
Undistributed net realized loss on investments (1,256)
Net unrealized depreciation on investments (1,208)
----------
Net Assets $ 198,672
==========
Net asset value, redemption price and offering price per share $ 9.93
==========
Shares outstanding 20,000
==========
PIA MUTUAL FUND
PIA BBB BOND FUND
Statement of Operations - For the
Period September 26, 2003* to November 30, 2003
Investment Income:
Interest $ 1,136
--------
Total investment income 1,136
--------
Expenses:
Professional fees 52,758
Fund administration and accounting fees 10,747
State registration fees 9,407
Reports to shareholders 2,465
Transfer agent fees and expenses 2,397
Custody fees 1,135
Trustees' fees 941
Other expenses 897
--------
Total expenses 80,747
Less: Expense reimbursement from adviser (80,747)
--------
Net expenses --
--------
Net investment income 1,136
--------
Realized and Unrealized Loss on Investments:
Net realized loss on investments (1,256)
Net change in unrealized appreciation/depreciation
on investments (1,208)
--------
Net loss on investments (2,464)
--------
--------
Net decrease in net assets resulting from operations $ (1,328)
========
* Commencement of operations.
PIA MUTUAL FUND
BBB BOND FUND
Statement of Changes in Net Assets
Sept. 26, 2003* to
Nov. 30,
2003
------------------
Operations:
Net investment income $ 1,136
Net realized loss on investments (1,256)
Net change in unrealized
appreciation/depreciation on investments (1,208)
-----------------
Net decrease in net assets resulting from operations (1,328)
-----------------
Fund Share Transactions:
Net proceeds from shares sold 200,000
-----------------
Net increase in net assets from fund
share transactions 200,000
-----------------
Total increase in net assets 198,672
Net Assets, Beginning of Period -
------------------
Net Assets, End of Period $ 198,672
==================
Transactions in Shares:
Shares sold 20,000
------------------
Net increase in shares outstanding 20,000
==================
* Commencement of operations.
PIA MUTUAL FUND
BBB BOND FUND
Financial Highlights
Sept. 26, 2003* to
Nov. 30, 2003
------------------
Per Share Operating Performance
(For a fund share outstanding throughout the period)
Net asset value, beginning of period $ 10.00
----------
Income From Investment Operations:
Net investment income 0.06
Net realized and unrealized loss on
investments (0.13)
----------
Total from investment operations (0.07)
----------
Net asset value, end of period $ 9.93
==========
Total Return (0.70)++
Ratios/Supplemental Data:
Net assets, end of period (in 000's) $ 199
Ratio of expenses to average net assets:
Net of waivers and reimbursements 0.00%+
Before waivers and reimbursements 224.56%+
Ratio of net investment income (loss) to average net assets:
Net of waivers and reimbursements 3.16%+
Before waivers and reimbursements (221.40)+
Portfolio turnover rate 87%++
- --------------------------------------------------
* Commencement of operations.
+ Annualized for periods less than one year.
++ Not annualized for periods less than one year.
See notes to financial statements.
PIA MUTUAL FUND
PIA BBB BOND FUND
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 2003
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 five portfolios: the OCM Gold Fund, the PIA
Equity Fund, the PIA Short-Term Government Securities Fund, the PIA Total Return
Bond Fund and the PIA BBB Bond Fund (collectively, the "Funds"), each of which
has separate assets and liabilities and differing investment objectives. The
investment objective for the PIA BBB Bond Fund (the "Fund") is to provide a
total rate of return that approximates that of bonds rated within the BBB
category by Standard and Poor's Rating Group and the Baa category by Moody's
Investors Services. The Fund commenced operations on September 26, 2003. Only
authorized investment advisory clients of PIA are eligible to invest in the PIA
BBB Bond Fund.
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 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.
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.
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, monthly 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 are adjusted.
PIA MUTUAL FUND
PIA BBB BOND FUND
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 2003 (CONTINUED)
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 Pacific Income Advisers,
Inc. ("PIA" or the "Adviser"). Under the agreement, the Fund does not pay the
Adviser a fee. However, investors in the Fund will be charged management fees by
the Adviser and persons other than the Adviser. Clients of PIA pay PIA an
investment advisory fee to manage their assets, including assets invested in the
Fund. Participants in "wrap-fee" programs pay fees to the program sponsor, who
in turn pays fees to the Adviser. For the period ended November 30, 2003, the
Adviser received no investment advisory fees.
For the period ended November 30, 2003, PIA voluntarily agreed to limit the
total expenses of the Fund to an annual rate of 0.00% of average net assets. The
Adviser may discontinue reimbursing the Fund at anytime but will not do so prior
to November 30, 2004.
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. For the period September
26, 2003 (inception) through November 30, 2003 the Fund did not incur any such
expenses.
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 period ended November 30, 2003, the Distributor earned no
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 period ended November 30,
2003 were $0 and $0, respectively. Purchases and sales of U.S. government
obligations for the period ended November 30, 2003 were $292,646 and $117,941,
respectively.
NOTE 6. FEDERAL INCOME TAX INFORMATION
At November 30, 2003, gross unrealized appreciation and depreciation of
investments owned by the Fund, based on cost for federal income tax purposes
were as follows:
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of
PIA Mutual Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of PIA BBB Bond Fund, a series of PIA
Mutual Fund (the "Trust") at November 30, 2003, the results of its operations,
the changes in its net assets and its financial highlights for the period then
ended, in conformity accounting principles generally accepted in the United
States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Trust's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States of America, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at November 30, 2003 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
January 9, 2004
PIA MUTUAL FUND
TRUSTEE AND OFFICER INFORMATION
INDEPENDENT TRUSTEES
- -------------------------------------------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS IN OTHER
OFFICE(1) FUND COMPLEX DIRECTORSHIPS
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN HELD BY
NAME, ADDRESS AND AGE HELD WITH FUND TIME SERVED DURING PAST 5 YEARS BY TRUSTEE TRUSTEE
- -------------------------------------------------------------------------------------------------------------------------
BEATRICE P. FELIX Trustee Served as Sales Agent, Roland Land Realty 5 None
1011 4th Street, #218 Trustee since (1994 - present)
Santa Monica, CA 90403 1996
Age: 44
ANN LOUISE MARINACCIO Trustee Served as Avenue Sales Associate, Saks Fifth 5 None
1 Norwood Road Trustee since (1986 - present)
Springfield, NJ 07081 1996
Age: 63
ROBERT I. WEISBERG Trustee Served as President and Managing Partner, 5 Environmental
41 West Shore Road Trustee since Alco Financial Services, LLC Power, Inc.,
Belvedere, CA 94920 1996 (1997 - present) Titan General
Age: 56 Holdings, Inc.
INTERESTED TRUSTEES AND OFFICERS
- ---------------------------------------------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS IN OTHER
OFFICE(1) FUND COMPLEX DIRECTORSHIPS
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN HELD BY
NAME, ADDRESS AND AGE HELD WITH FUND TIME SERVED DURING PAST 5 YEARS BY TRUSTEE TRUSTEE
- ---------------------------------------------------------------------------------------------------------------------------
JOSEPH LLOYD MCADAMS, JR.(2) Trustee, Served as Chairman of the Board and Chief 5 None
1299 Ocean Avenue Chairman Trustee and Investment Officer, Pacific Income
Suite 210 Chairman Advisers, Inc. (1986 - present);
Santa Monica, CA 90401 since 1996 Chairman of the Board, Chief
Age: 58 Executive Officer and
President, Syndicated Capital, Inc.
(1987 - present); Chairman of the
Board and Chief Executive Officer,
Anworth Mortgage Asset Corp.
(1998 - present)
INTERESTED TRUSTEES AND OFFICERS
(CONTINUED)
- -------------------------------------------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS IN OTHER
OFFICE(1) FUND COMPLEX DIRECTORSHIPS
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN HELD BY
NAME, ADDRESS AND AGE HELD WITH FUND TIME SERVED DURING PAST 5 YEARS BY TRUSTEE TRUSTEE
- -------------------------------------------------------------------------------------------------------------------------
HEATHER U. BAINES President and Served as President and Chief Executive N/A N/A
1299 Ocean Avenue Treasurer President and Officer, Pacific Income Advisers, Inc.
Suite 210 Treasurer since (1986 - present); Executive Vice
Santa Monica, CA 90401 1996 President, Anworth Mortgage Asset
Age: 61 Corp. (1998 - present)
FLAVEN BUTLER Secretary Served as Assistant Vice President, Pacific N/A N/A
1299 Ocean Avenue Secretary since Income Advisers, Inc. (1994 - Present)
Suite 210 2001
Santa Monica, CA 90401
Age: 30
(1) Each Trustee serves an indefinite term until the election of a successor.
Each Officer serves an indefinite term, renewed annually, until the election
of a successor.
(2) Mr. McAdams is considered an Interested Trustee of the Trust within the
meaning of the Investment Company Act of 1940, as amended, and is considered
an Interested Trustee because of his affiliation with Pacific Income
Advisers, Inc. and Syndicated Capital, Inc.
THE STATEMENT OF ADDITIONAL INFORMATION INCLUDES ADDITIONAL INFORMATION ABOUT
THE TRUSTEES AND IS AVAILABLE UPON REQUEST, WITHOUT CHARGE, BY CALLING
1-800-628-9403.
PIA Mutual Fund
Distributed by:
Syndicated Capital, Inc.
1299 Ocean Avenue, Suite 210 Santa
Monica, CA 90401
Item 2 - Code of Ethics
The Registrant, as of the end of the period covered by this report, has adopted
a code of ethics that applies to the Registrant's principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions, regardless of whether these individuals
are employed by the Registrant or a third party. A copy of this code of ethics
is attached hereto as Exhibit (a).
(c) There have been no amendments to the Registrant's Code of Ethics during the
reporting period for Form N-CSR.
(d) There have been no waivers granted by the Registrant to individuals covered
by the Registrant's Code of Ethics during the reporting period for Form N-CSR.
(f) A copy of the Registrant's Code of Ethics is attached as an exhibit to this
Form N-CSR.
Item 3 - Audit Committee Financial Expert
Registrant's Board of Trustees has determined that it does not have
an "audit committee financial expert" serving on its audit committee. While
Registrant believes that each of the members of its audit committee has
sufficient knowledge of accounting principles and financial statements to serve
on the audit committee, none has the requisite experience to qualify as an
"audit committee financial expert" as such term is defined by the Securities and
Exchange Commission.
Item 4 - Principal Accountant Fees and Services
Not required for annual reports filed for periods ending before
December 15, 2003.
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 - Submission of Matters to a Vote of Security Holders Not
applicable.
Item 10 - 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 11 - Exhibits
(a)(1) Code of Ethics.
(a)(2) Certification for each principal executive and principal financial
officer of the registrant as required by Rule 30a-2 under the Act (17 CFR
270.30a-2(a)).
(b) Certifications required by Rule 30a-2(b) under the Act (17 CFR
270.30a-2(b)), Rule 13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR
240.13a-14(b) or 240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of
the United States Code (18 U.S.C. 1350) - Filed as an attachment to this filing.
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: February 6, 2004
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: February 6, 2004
By: /s/ Heather U. Baines
-----------------------
Heather U. Baines
President and Treasurer
Date: February 6, 2004
(b)(2) 1/4