UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number 811-04010
PIA MUTUAL FUND
---------------
(Exact name of registrant as specified in charter)
1299 Ocean Avenue, Suite 210
Santa Monica, California 90401
(Address of principal executive offices) (Zip code)
Joseph Lloyd McAdams, Jr.
Pacific Income Advisers, Inc.
1299 Ocean Avenue
Santa Monica, California 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: MAY 31, 2004
------------
ITEM 1. REPORTS TO STOCKHOLDERS.
PIA MUTUAL FUND
- PIA SHORT-TERM
GOVERNMENT SECURITIES
- PIA TOTAL RETURN BOND
- PIA EQUITY
SEMI-ANNUAL REPORT
(UNAUDITED)
MAY 31, 2004
Dear Shareholder:
We are pleased to provide you with this semi-annual report for the period ended
May 31, 2004 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 6 months ended May 31, 2004, the returns, including the reinvestment
of dividends and capital gains, were as follows:
PIA Short-Term Government Securities Fund............... 0.47%
PIA Total Return Bond Fund............................. (0.19)%
PIA Equity Fund........................................ (9.04)%
Short term interest rates remained around 1% during the period. Intermediate and
longer term interest rates rose by 20-50 basis points. The economic recovery
continues and there are signs of inflationary pressures mainly in commodities.
Corporate profits continue to look favorable. Geopolitical risk remains a
concern. It is anticipated that the Federal Reserve will begin to tighten
monetary policy in the near term.
During the six month period ended May 31, 2004, the Merrill Lynch 1 Year
Treasury Note Index increased by 0.49% and the Lehman Aggregate Bond Index by
0.60%. The S&P Small Cap 600 Index increased by 6.12%.
Please take a moment to review your Fund(s)' statement of assets and the results
of operations for the six month period ended May 31, 2004. We look forward to
reporting to you again at year end.
/s/ Lloyd McAdams
Lloyd McAdams
CHAIRMAN OF THE BOARD
- 2 -
PIA MUTUAL FUND
SCHEDULE OF INVESTMENTS - MAY 31, 2004
(UNAUDITED)
PIA SHORT-TERM GOVERNMENT
SECURITIES FUND
- -------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------
ASSET-BACKED SECURITIES 2.2%
$ 1,000,000 Conseco Finance
Securitizations Corp.
8.48%, due 12/1/30 .............................. $ 1,036,114
-----------
TOTAL ASSET-BACKED SECURITIES
(cost $1,058,916) ............................... 1,036,114
-----------
MORTGAGE-BACKED SECURITIES 49.4%
COMMERCIAL 0.7%
119,541 Countrywide Home Loans
8.00%, due 8/25/27 .............................. 119,532
200,941 Prudential Home Mortgage
Securities
7.50%, due 3/25/08 .............................. 206,695
-----------
326,227
-----------
U.S. GOVERNMENT AGENCIES 48.7%
364,027 FHLMC
5.50%, due 3/15/15 .............................. 367,165
9,093 FHLMC Pool M80478
7.00%, due 6/1/04 ............................... 9,247
99,991 FHLMC ARM Pool 755204
3.359%, due 8/1/15* ............................. 102,923
91,896 FHLMC ARM Pool 845113
3.447%, due 2/1/22* ............................. 94,337
123,292 FHLMC ARM Pool 635206
4.814%, due 10/1/22* ............................ 125,225
65,580 FHLMC ARM Pool 845755
3.403%, due 6/1/23* ............................. 67,360
33,167 FHLMC ARM Pool 609231
3.476%, due 2/1/24* ............................. 34,116
2,045,679 FHLMC ARM Pool 785726
3.484%, due 1/1/25* ............................. 2,092,454
1,125,506 FHLMC ARM Pool 1C0009
3.113%, due 2/1/32* ............................. 1,142,239
963,748 FHLMC ARM Pool 180668
4.018%, due 1/1/33* ............................. 1,987,313
PIA SHORT-TERM GOVERNMENT
SECURITIES FUND (CONTINUED)
- -------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED) $ 512,622 FNMA Pool 252500
5.50%, due 6/1/06 ............................... $ 521,181
108,216 FNMA Pool 415842
11.00%, due 1/1/13 .............................. 120,249
247,347 FNMA Series 2002-1 HA
7.00%, due 7/25/20 .............................. 250,512
238,072 FNMA ARM Pool 555206
3.352%, due 7/1/25* ............................. 243,095
1,410,842 FNMA ARM Pool 424953
4.644%, due 7/1/27* ............................. 1,447,909
831,643 FNMA ARM Pool 556438
3.501%, due 3/1/28* ............................. 852,617
942,550 FNMA ARM Pool 508399
4.948%, due 6/1/29* ............................. 966,784
1,077,710 FNMA ARM Pool 562912
4.416%, due 4/1/30* ............................. 1,094,126
699,482 FNMA ARM Pool 556824
5.313%, due 8/1/30* ............................. 732,770
208,582 FNMA ARM Pool 551038
3.445%, due 9/1/30* ............................. 216,988
1,061,002 FNMA ARM Pool 670317
3.408%, due 10/1/30* ............................ 1,097,719
272,457 FNMA ARM Pool 592745
5.729%, due 7/1/31* ............................. 279,101
700,600 FNMA ARM Pool 597196
5.337%, due 9/1/31* ............................. 719,268
362,128 FNMA ARM Pool 610547
5.27%, due 11/1/31* ............................. 372,823
562,130 FNMA ARM Pool 629098
4.924%, due 4/1/32* ............................. 579,319
264,769 FNMA ARM Pool 656345
3.877%, due 7/1/32* ............................. 268,333
1,213,240 FNMA ARM Pool 670257
4.255%, due 2/1/33* ............................. 1,231,354
59,235 GNMA II ARM Pool 8871
4.625%, due 11/20/21* ........................... 60,358
See notes to financial statements
- 3 -
PIA MUTUAL FUND
SCHEDULE OF INVESTMENTS - MAY 31, 2004
(UNAUDITED)
PIA SHORT-TERM GOVERNMENT
SECURITIES FUND (CONTINUED)
- -------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED) ............................. $ 356,251
GNMA II ARM Pool 8062
4.625%, due 10/20/22* ........................... $ 362,658
920,513 GNMA II ARM Pool 80011
4.625%, due 11/20/26* ........................... 937,609
209,843 GNMA II ARM Pool 80013
4.625%, due 11/20/26* ........................... 213,992
116,935 GNMA II ARM Pool 80021
4.625%, due 12/20/26* ........................... 119,106
63,713 GNMA II ARM Pool 80029
3.375%, due 1/20/27* ............................ 63,975
879,947 GNMA II ARM Pool 80094
4.75%, due 7/20/27* ............................. 891,762
1,249,533 GNMA II ARM Pool 80104
4.75%, due 8/20/27* ............................. 1,266,321
63,105 GNMA II ARM Pool 80122
4.625%, due 10/20/27* ........................... 64,283
527,971 GNMA II ARM Pool 80154
3.375%, due 1/20/28* ............................ 530,025
1,661,173 GNMA II ARM Pool 80331
4.50%, due 10/20/29* ............................ 1,677,368
334,234 GNMA II ARM Pool 80344
4.00%, due 11/20/29* ............................... 336,579
-----------
23,540,563
-----------
TOTAL MORTGAGE-BACKED SECURITIES
(cost $23,985,861) ................................. 23,866,790
-----------
U.S. GOVERNMENT AGENCIES AND
INSTRUMENTALITIES 10.7%
U.S. GOVERNMENT AGENCIES 4.2%
2,000,000 FHLB
4.125%, due 1/14/05 ............................. 2,031,196
-----------
U.S. TREASURY NOTES 6.5%
3,000,000 U.S. Treasury Note
5.75%, due 11/15/05 ............................. 3,153,282
-----------
PIA SHORT-TERM GOVERNMENT
SECURITIES FUND (CONTINUED)
- -------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES AND
INSTRUMENTALITIES
(cost $5,159,423) .................................. $ 5,184,478
-----------
SHORT-TERM INVESTMENTS 37.5%
$ 7,700,000 FHLB Discount Note
Zero coupon bond to
yield 1.00%, due 6/18/04 ........................ 7,696,418
2,650,000 FHLB Discount Note
Zero coupon bond to
yield 1.01%, due 6/23/04 ........................ 2,648,096
6,000,000 FNMA Discount Note
Zero coupon bond to
yield 0.99%, due 6/11/04 ........................ 5,998,367
1,763,685 First American Treasury
Obligations Fund ................................ 1,763,685
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $18,106,566) .............................. 18,106,566
-----------
TOTAL INVESTMENTS
(cost $48,310,766) 99.8% ........................... 48,193,948
OTHER ASSETS LESS LIABILITIES 0.2% 109,244
-----------
NET ASSETS 100.0% ................................................ $48,303,192
===========
- ------------
* Variable rate note. Rate shown reflects the rate in effect at May 31, 2004.
See notes to financial statements
- 4 -
PIA MUTUAL FUND
SCHEDULE OF INVESTMENTS - MAY 31, 2004
(UNAUDITED)
PIA TOTAL RETURN
BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES 2.6%
$ 189,270 Aames Mortgage Trust
5.97%, due 8/25/31* ............................. $ 193,460
289,015 California Infrastructure
PG&E-1
6.42%, due 9/25/08 .............................. 302,469
-----------
TOTAL ASSET-BACKED SECURITIES
(cost $482,203) ................................... 495,929
-----------
CORPORATE BONDS & NOTES 21.5%
AEROSPACE / DEFENSE 0.9%
160,000 Raytheon Co.
6.75%, due 8/15/07 .............................. 173,750
-----------
AUTO MANUFACTURERS 0.8%
65,000 DaimlerChrysler NA Holding
Corp. 8.50%, due 1/18/31 ........................ 73,464
70,000 Ford Motor Co.
7.45%, due 7/16/31 .............................. 66,528
-----------
139,992
-----------
BANKS 2.2%
150,000 Bank of America Corp.
4.75%, due 10/15/06 ............................. 155,272
270,000 Fremont General Corp.
7.875%, due 3/17/09 ............................. 267,300
-----------
422,572
-----------
COMPUTERS 1.1%
180,000 IBM Corp.
7.50%, due 6/15/13 .............................. 207,900
-----------
DEFENSE 0.8%
150,000 Boeing Capital Corp.
5.75%, due 2/15/07 .............................. 158,488
-----------
PIA TOTAL RETURN
BOND FUND (CONTINUED)
- -------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- -------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES 2.7%
$ 150,000 Citigroup, Inc.
5%, due 3/6/07 .................................. $ 156,017
165,000 General Electric Capital Corp.
5.875%, due 2/15/12 ............................. 173,274
170,000 Morgan Stanley
6.60%, due 4/1/12 ............................... 182,737
-----------
512,028
-----------
DIVERSIFIED MANUFACTURING 1.2%
200,000 Tyco International Group SA
6.75%, due 2/15/11 .............................. 215,186
-----------
ELECTRIC 0.5%
90,000 Southern California Edison Co.
6.65%, due 4/1/29 ............................... 91,497
-----------
FOOD 0.4%
75,000 Albertson's, Inc.
7.45%, 8/1/29 ................................... 80,874
-----------
MEDIA 1.9%
97,000 Comcast Cable Communications
Holdings, Inc.
8.375%, due 3/15/13 ............................. 114,061
85,000 Time Warner, Inc.
7.625%, due 4/15/31 ............................. 92,114
150,000 Viacom, Inc.
5.625%, due 5/1/07 .............................. 158,159
-----------
364,334
-----------
MINING 0.9%
160,000 Alcoa, Inc.
6.50%, due 6/1/11 ............................... 174,424
-----------
See notes to financial statements
- 5 -
PIA MUTUAL FUND
SCHEDULE OF INVESTMENTS - MAY 31, 2004
(UNAUDITED)
PIA TOTAL RETURN
BOND FUND (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
OIL & GAS 1.8%
$ 160,000 Anadarko Petroleum Corp.
5.375%, due 3/1/07 .............................. $ 167,695
155,000 Conoco, Inc.
6.95%, due 4/15/29 .............................. 170,150
-----------
337,845
-----------
REAL ESTATE INVESTMENT TRUST 2.4%
200,000 EOP Operating LP
7.00%, due 7/15/11 ................................. 217,896
205,000 Prologis Trust
7.625%, due 7/1/17 .............................. 236,173
-----------
454,069
-----------
RETAIL 1.2%
200,000 Staples, Inc.
7.375%, due 10/1/12 ............................. 224,552
-----------
SAVINGS & LOANS 1.0%
180,000 Washington Mutual, Inc.
4.375%, due 1/15/08 ............................. 182,216
-----------
TELECOMMUNICATIONS 1.7%
150,000 Bellsouth Capital Funding
7.875%, due 2/15/30 ............................. 174,676
130,000 Verizon Global Fdg. Corp.
7.75%, due 12/1/30 .............................. 146,765
-----------
321,441
-----------
TOTAL CORPORATE BONDS & NOTES
(cost $4,008,207) .................................. 4,061,168
-----------
PIA TOTAL RETURN
BOND FUND (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES 28.9%
COLLATERALIZED MORTGAGE OBLIGATIONS 4.4%
$ 105,721 Blackrock Capital Financial
L.P. 1.9007%, due 3/25/37* ++ ................... $ 110,654
291,377 FDIC Remic Trust
7.25%, 5/25/26 .................................. 291,559
117,297 First Union Residential
Securitization
7.00%, 4/25/25 .................................. 117,593
306,232 Merrill Lynch Mortgage
Investors, Inc.
7.03%, 6/15/21* ................................. 316,024
-----------
835,830
-----------
U.S. GOVERNMENT AGENCIES 24.5%
889,290 FHLMC Pool B10834
4.50%, due 11/1/18 .............................. 870,870
975,150 FHLMC Pool B11934
4.50%, due 1/1/19 ............................... 954,952
40,071 FHLMC Series 1387 S
7.68%, due 10/15/07*+ ........................... 2,338
100,000 FHLMC Series 1704 E
6.50%, due 3/15/09 .............................. 105,715
54,406 FHLMC Series 1424 S
7.64%, due 11/15/22*+ ........................... 7,012
381,554 FNMA Pool 661705
6.50%, due 8/1/32 ............................... 395,463
568,731 FNMA Pool 555285
6.00%, due 3/1/33 ............................... 578,804
616 FNMA Series 1992-12 SA
10.50%, due 1/25/22* ............................ 666
1,385,441 FNMA Pool 748710
5.50%, due 10/1/33 .............................. 1,374,993
190,852 GNMA Pool 501569
7.50%, due 3/15/29 .............................. 205,088
109,146 GNMA Pool 503603
7.00%, due 4/15/29 .............................. 115,588
-----------
4,611,489
-----------
See notes to financial statements
- 6 -
PIA MUTUAL FUND
SCHEDULE OF INVESTMENTS - MAY 31, 2004
(UNAUDITED)
PIA TOTAL RETURN
BOND FUND (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
TOTAL MORTGAGE-BACKED SECURITIES
(cost $5,500,346) .................................. $ 5,447,319
-----------
U.S. GOVERNMENT AGENCIES AND
INSTRUMENTALITIES 42.1%
U.S. TREASURY BONDS 5.3%
$ 992,000 U.S. Treasury Bond
5.375%, 2/15/31 .................................... 995,992
-----------
U.S. TREASURY NOTES 36.8%
970,000 U.S. Treasury Note
7.875%, due 11/15/05 ............................ 1,021,191
1,560,000 U.S. Treasury Note
2.00%, 5/15/06 .................................. 1,545,132
3,475,000 U.S. Treasury Note
3.00%, 2/15/09 .................................. 3,362,879
1,040,000 U.S. Treasury Note
4.25%, 8/15/13 .................................. 1,011,401
-----------
6,940,603
-----------
TOTAL U.S. GOVERNMENT AGENCIES AND
INSTRUMENTALITIES
(cost $8,107,484) .................................. 7,936,595
-----------
PIA TOTAL RETURN
BOND FUND (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 4.2%
$ 465,850 First American Treasury
Obligations Fund ................................ $ 465,850
-----------
328,000 U.S. Bank, N.A. repurchase
agreement, 0.80%, dated 5/28/04,
due 6/1/04, repurchase price
$328,029 (collateralized
by GNMA Series 2003-112 FG,
2.50%, due 12/16/33) ............................. 328,000
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $793,850) ....................................... 793,850
-----------
TOTAL INVESTMENTS
(cost $18,892,090) ......................... 99.3% 18,734,861
OTHER ASSETS LESS LIABILITIES ......................... 0.7% 135,124
-----------
TOTAL NET ASSETS ...................................... 100.0% $18,869,985
===========
* Variable rate note. Rate shown reflects the rate in effect at May 31, 2004.
+ Interest only security.
++ Security was purchased August 17, 1999 under Rule 144A of the Securities
Act of 1933. As of May 31, 2004, the security had a cost of $101,360 and a
value of $110,654 (0.6% of net assets).
See notes to financial statements
- 7 -
PIA MUTUAL FUND
SCHEDULE OF INVESTMENTS - MAY 31, 2004
(UNAUDITED)
PIA EQUITY FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS 92.7%
AUTO PARTS & EQUIPMENT 2.3%
5,000 China Yuchai International Ltd. ................. $ 89,800
-----------
BIOTECHNOLOGY 4.2%
18,600 CryoLife, Inc.* .................................... 94,860
3,000 Nektar Therapeutics* ............................... 64,470
-----------
159,330
-----------
CHEMICALS 1.9%
2,000 Cabot Corp. ........................................ 71,880
-----------
COAL 2.6%
2,000 Peabody Energy Corp. ............................... 99,480
-----------
COMMERCIAL SERVICES 4.9%
2,000 Rent-A-Center, Inc.* ............................ 59,100
5,000 SOURCECORP, Inc.* ............................... 128,400
-----------
187,500
-----------
COMPUTERS 2.1%
8,500 Dot Hill Systems Corp.* ............................ 80,750
-----------
DIVERSIFIED FINANCIAL SERVICES 2.1%
5,000 Education Lending Group, Inc.* ..................... 80,450
-----------
ELECTRICAL COMPO. AND EQUIPMENT 6.7%
2,000 American Power Conversion Corp. .................... 36,200
15,000 GrafTech International Ltd.* ....................... 142,500
1,700 Hubbell, Inc. ...................................... 76,194
-----------
254,894
-----------
ELECTRONICS 6.7%
5,775 AU Optronics Corp. ADR ............................. 123,354
3,000 Varian, Inc.* ...................................... 133,500
-----------
256,854
-----------
PIA EQUITY FUND (CONTINUED)
- -------------------------------------------------------------------------------
SHARES VALUE
- -------------------------------------------------------------------------------
ENTERTAINMENT 7.4%
3,000 Cedar Fair, L.P. ................................... $ 97,980
10,000 Scientific Games Corp.* ............................ 185,200
-----------
283,180
-----------
HEALTH CARE PRODUCTS 1.4%
6,000 North American Scientific, Inc.* ................... 53,700
-----------
HEALTH CARE SERVICES 2.8%
3,500 Inveresk Research Group, Inc.* ..................... 105,280
-----------
HOUSEHOLD PRODUCTS 1.8%
2,000 Helen of Troy Ltd.* ................................ 66,860
-----------
INSURANCE 1.5%
3,000 Conseco, Inc.* ..................................... 56,820
-----------
INTERNET 4.3%
15,000 Chordiant Software, Inc.* .......................... 58,050
10,000 Sapient Corp.* ..................................... 60,000
30,000 Verso Technologies, Inc.* .......................... 47,550
-----------
165,600
-----------
MACHINERY 2.3%
2,000 The Stanley Works .................................. 87,100
-----------
OIL & GAS 1.8%
3,000 Maverick Tube Corp.* ............................... 69,000
-----------
PHARMACEUTICALS 8.9%
4,000 Accredo Health, Inc.* .............................. 145,520
10,000 Discovery Laboratories, Inc.* ...................... 109,400
2,000 VCA Antech, Inc.* .................................. 86,000
-----------
340,920
-----------
See notes to financial statements
- 8 -
PIA MUTUAL FUND
SCHEDULE OF INVESTMENTS - MAY 31, 2004
(UNAUDITED)
PIA EQUITY FUND (CONTINUED)
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
RETAIL 18.0%
15,000 CKE Restaurants, Inc.* ............................. $ 151,800
4,000 Jo-Ann Stores, Inc.* ............................... 114,520
5,000 Pep Boys - Manny, Moe & Jack. ...................... 122,450
5,000 Ryan's Family Steak Houses, Inc.* .................. 84,150
3,000 The Sports Authority, Inc.* ........................ 102,300
4,000 Tuesday Morning Corp.* ............................. 114,200
-----------
689,420
-----------
TELECOMMUNICATIONS 3.0%
11,000 PTEK Holdings, Inc.* ............................... 115,390
-----------
TRANSPORTATION 6.0%
7,000 Central Freight Lines, Inc.* ....................... 89,600
6,100 SCS Transportation, Inc.* .......................... 138,775
-----------
228,375
-----------
TOTAL COMMON STOCKS
(cost $3,368,691) .................................. 3,542,583
-----------
PIA EQUITY FUND (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 11.3%
$ 151,914 First American Treasury
Obligations Fund ................................... $ 151,914
281,000 U.S. Bank, N.A. repurchase
agreement, 0.80%, dated 5/28/04, due
6/1/04, repurchase price $281,025
(collateralized by GNMA Series 2003-112 FG,
2.50%, due 12/16/33) ............................... 281,000
TOTAL SHORT-TERM INVESTMENTS
(cost $432,914) .................................... 432,914
TOTAL INVESTMENTS
(cost $3,801,605) ...................... 104.0% 3,975,497
LIABILITIES LESS OTHER ASSETS ........................ (4.0)% (151,821)
NET ASSETS ........................................... 100.0% $3,823,676
* Non-income producing security.
See notes to financial statements
- 9 -
PIA MUTUAL FUND
STATEMENTS OF ASSETS AND LIABILITIES - MAY 31, 2004
(UNAUDITED)
SHORT-TERM TOTAL
GOVERNMENT RETURN
SECURITIES FUND BOND FUND EQUITY FUND
---------------------------------------------
ASSETS:
Investments in securities, at value (cost $48,310,766,
$18,892,090 and $3,801,605, respectively) .................. $ 48,193,948 $ 18,734,861 $ 3,975,497
Interest and dividends receivable ............................ 150,906 165,482 3,178
Due from investment adviser .................................. 4,331 6,699 5,920
Prepaid expenses and other assets ............................ 17,032 14,906 8,184
------------ ------------ ------------
Total assets ............................................... 48,366,217 18,921,948 3,992,779
------------ ------------ ------------
LIABILITIES:
Payable for securities purchased ............................. -- -- 143,538
Payable for fund shares redeemed ............................. 448 -- --
Dividends payable ............................................ 7,027 2,925 --
Accrued distribution fees .................................... 24,386 22,098 4,273
Accrued expenses and other liabilities ....................... 31,164 26,940 21,292
------------ ------------ ------------
Total liabilities .......................................... 63,025 51,963 169,103
------------ ------------ ------------
Net Assets ................................................. $ 48,303,192 $ 18,869,985 $ 3,823,676
============ ============ ============
NET ASSETS CONSIST OF:
Shares of beneficial interest, no par value;
unlimited shares authorized ................................ $ 49,132,233 $ 20,856,154 $ 4,092,946
Undistributed net investment loss ............................ (145,557) (8,382) (39,037)
Undistributed net realized loss on investments ............... (566,666) (1,820,558) (404,125)
Net unrealized appreciation (depreciation) on investments .... (116,818) (157,229) 173,892
------------ ------------ ------------
Net Assets ................................................... $ 48,303,192 $ 18,869,985 $ 3,823,676
============ ============ ============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE ................................... $ 10.07 $ 18.39 $ 20.74
------------ ------------ ------------
SHARES OUTSTANDING ............................................. 4,796,463 1,026,180 184,390
============ ============ ============
See notes to financial statements
- 10 -
PIA MUTUAL FUND
STATEMENTS OF OPERATIONS - SIX MONTHS ENDED MAY 31, 2004
(UNAUDITED)
SHORT-TERM TOTAL
GOVERNMENT RETURN
SECURITIES FUND BOND FUND EQUITY FUND
-------------------------------------------
INVESTMENT INCOME:
Interest ........................................................ $ 692,098 $ 745,916 $ 1,450
Dividends (net of foreign withholding taxes of $0, $0
and $490, respectively) ....................................... -- -- 10,950
--------- --------- ---------
Total investment income ....................................... 692,098 745,916 12,400
--------- --------- ---------
EXPENSES:
Investment advisory fees ........................................ 61,461 56,898 20,576
Fund administration and accounting fees ......................... 35,592 31,238 31,253
Distribution fees ............................................... 30,730 18,966 10,288
Professional fees ............................................... 15,022 14,521 17,061
Transfer agent fees and expenses ................................ 14,277 10,317 9,409
State registration fees ......................................... 12,145 9,385 6,403
Custody fees .................................................... 6,283 6,582 2,861
Reports to shareholders ......................................... 3,186 1,974 1,040
Trustees' fees .................................................. 1,305 1,306 1,305
Other expenses .................................................. 8,626 7,357 1,356
--------- --------- ---------
Total expenses ................................................ 188,627 158,544 101,552
Less: Expense reimbursement from adviser .......................... (81,085) (71,409) (50,115)
--------- --------- ---------
Net expenses .................................................... 107,542 87,135 51,437
--------- --------- ---------
Net investment income (loss) .................................... 584,556 658,781 (39,037)
--------- --------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments ......................... 870 (756,464) 195,207
Net change in unrealized appreciation/depreciation on
investments ................................................... (251,208) 646,575 (545,552)
--------- --------- ---------
Net loss on investments ....................................... (250,338) (109,889) (350,345)
--------- --------- ---------
Net increase (decrease) in net assets resulting from operations . $ 334,218 $ 548,892 $(389,382)
========= ========= =========
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
-----------------------------------------------------------------------------------
Six months Six months Six months
ended Year ended ended Year ended ended Year ended
May 31, 2004 Nov. 30, May 31, 2004 Nov. 30, May 31, 2004 Nov. 30,
(Unaudited) 2003 (Unaudited) 2003 (Unaudited) 2003
-----------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ 584,556 $1,496,259 $ 658,781 $ 2,186,251 $ (39,037) $ (45,011)
Net realized gain (loss) on investments 870 49,059 (756,464) 261,255 195,207 31,592
Net change in unrealized appreciation/
depreciation on investments (251,208) (347,660) 646,575 (84,268) (545,552) 986,957
Increase from payment by affiliate -- -- -- -- -- 12,463
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations 334,218 1,197,658 548,892 2,363,238 (389,382) 986,001
---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS PAID TO SHAREHOLDERS:
Dividends from net investment income (744,045) (2,042,954) (678,831) (2,341,924) -- --
Distributions from net realized gains -- (140,009) (1,247,561) (1,033,152) -- --
---------- ---------- ---------- ---------- ---------- ----------
Total distributions (744,045) (2,182,963) (1,926,392) (3,375,076) -- --
---------- ---------- ---------- ---------- ---------- ----------
FUND SHARE TRANSACTIONS:
Net proceeds from shares sold 16,695,888 33,360,344 14,478,000 11,868,850 79,858 881,252
Distributions reinvested 686,368 2,073,600 1,862,183 3,277,906 -- --
Payment for shares redeemed (38,150,893) (37,709,903 (35,144,112) (35,091,670) (213,897) (1,859,687)
---------- ---------- ---------- ---------- ---------- ----------
Net decrease in net assets
from fund share transactions (20,768,637) (2,275,959) (18,803,929) (19,944,914) (134,039) (978,435)
---------- ---------- ---------- ---------- ---------- ----------
Total increase (decrease) in net assets (21,178,464) (3,261,264) 20,181,429) (20,956,752) (523,421) 7,566
NET ASSETS, BEGINNING OF PERIOD 69,481,656 72,742,920) 39,051,414 60,008,166 4,347,097 4,339,531
---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS, END OF PERIOD $48,303,192 $69,481,656 $18,869,985 $39,051,414 $ 3,823,676 $ 4,347,097
========== ========== ========== ========== ========== ==========
TRANSACTIONS IN SHARES:
Shares sold 1,643,213 3,259,164 765,677 603,184 3,585 43,123
Shares issued on reinvestment of 67,752 202,852 98,442 167,382 -- --
distributions
Shares redeemed (3,759,598) (3,687,634) (1,849,962) (1,772,000) (9,841) (116,898)
---------- ---------- ---------- ---------- ---------- ----------
Net decrease in shares outstanding (2,048,633) (225,618) (985,843) (1,001,434) (6,256) (73,775)
========== ========== ========== ========== ========== ==========
See notes to financial statements
- 12 -
PIA MUTUAL FUND
NOTES TO FINANCIAL STATEMENTS - MAY 31, 2004
(UNAUDITED)
NOTE 1. ORGANIZATION
PIA 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 National Market(R) and SmallCap(R) securities are valued at the NASDAQ
Official Closing Price ("NOCP"). If a NOCP is not issued for a given day, these
securities are valued at the average of readily available closing bid and asked
prices. Unlisted securities are valued at the average of the quoted bid and ask
prices in the over-the-counter market. Securities and other assets for which
market quotations are not readily available are valued at fair value as
determined in good faith by the investment adviser under procedures established
by and under the general supervision and responsibility of the Trust's Board of
Trustees. Short-term investments which mature in less than 60 days are valued at
amortized cost (unless the Board of Trustees determines that this method does
not represent fair value). Short-term investments which mature after 60 days are
valued at market.
REPURCHASE AGREEMENTS - The Funds may enter into repurchase agreements. A
repurchase agreement transaction occurs when, at the time a Fund purchases a
security, the Fund agrees to resell it to the vendor (normally a commercial bank
or a broker-dealer) on an agreed upon date in the future. On a daily basis, the
Funds' custodian monitors the value of the collateral, including accrued
interest, to ensure it is at least equal to the amount owed to the Funds under
each repurchase agreement. All securities are held by the Funds' custodian.
FEDERAL INCOME TAXES - It is the Funds' policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to
shareholders. Therefore, no provision for income taxes has been recorded.
EXPENSES - Each Fund is charged for those expenses that are directly
attributable to the Fund, such as investment advisory and custodian fees.
Expenses that are not directly attributable to a Fund are typically allocated
among the Funds in proportion to their respective net assets.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME - Securities transactions are
accounted for on a trade date basis. Discounts and premiums on securities
purchased are amortized over the life of the respective security. Realized gains
and losses on sales of securities are calculated on the identified cost basis.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on an accrual basis.
DISTRIBUTIONS TO SHAREHOLDERS - Distributions to shareholders are recorded
on the ex-dividend date. The Short-Term Government Fund and the Total Return
Bond Fund each distribute substantially all net investment income monthly and
all net realized gains annually. The Equity Fund distributes substantially all
of its net investment income and its net realized gains annually. The amount and
character of income and net realized gains to be distributed are determined in
accordance with federal income tax rules and regulations, which may differ from
accounting principles generally accepted in the United States of America. To the
extent that these differences are attributable to permanent book and tax
accounting differences, the components of net assets have been adjusted.
USE OF ESTIMATES - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
increases and decreases in net assets from operations during the reporting
period. Actual results could differ from those estimates.
- 13 -
PIA MUTUAL FUND
NOTES TO FINANCIAL STATEMENTS - MAY 31, 2004 (CONTINUED)
(UNAUDITED)
NOTE 3. INVESTMENT ADVISORY AGREEMENT
The Funds have investment advisory agreements with Pacific Income Advisers,
Inc. ("PIA") whereby each Fund pays PIA a fee, computed daily and payable
monthly. The Short-Term Government Fund and the Total Return Bond Fund pay fees
calculated at an annual rate of 0.20% and 0.30%, respectively, of their average
daily net assets. The Equity Fund pays fees calculated at the following annual
rate based upon its average daily net assets:
ASSETS FEE RATE
$0 to $50 million .............................. 1.000%
$50 million to $75 million ..................... 0.875%
$75 million to $100 million .................... 0.750%
$100 million to $150 million ................... 0.625%
$150 million to $250 million ................... 0.500%
Over $250 million .............................. 0.375%
For the six-month period ended May 31, 204, PIA voluntarily agreed to limit
the total expenses of the Short-Term Government Fund and the Equity Fund to an
annual rate of 0.35% and 2.50%, respectively, of average daily net assets. For
the period December 1, 2003 to March 28, 2004, PIA voluntarily agreed to limit
the total expenses of the Total Return Bond Fund to an annual rate of 0.45% of
average daily net assets. Beginning March 29, 2004, PIA voluntarily agreed to
limit the total expenses of the Total Return Bond Fund to 0.50% 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.
Syndicated Capital, Inc. serves as the Distributor of each Fund's shares.
The President and sole shareholder of the Distributor is also a Trustee of the
Trust. During the six-month period ended May 31, 2004, the Distributor earned
$15,048, $5,517 and $310 from commissions on sales of the Short-Term Government
Fund's, Total Return Bond Fund's and the Equity Fund's capital stock,
respectively.
NOTE 5. PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities (excluding short-term
securities and U.S. government obligations) for the six-month period ended May
31, 2004 were:
Purchases Sales
------------ ------------
Short-Term Government Fund ................... $ -- $ 11,882,046
Total Return Bond Fund ....................... 15,231,306 19,554,666
Equity Fund .................................. 3,302,711 3,172,967
Purchases and sales of U.S. government obligations for the six-month period
ended May 31, 2004 were:
Purchases Sales
------------ ------------
Short-Term Government Fund ................... $ -- $ 2,000,000
Total Return Bond Fund ....................... 46,316,426 58,729,048
Equity Fund .................................. -- --
- 14 -
PIA MUTUAL FUND
NOTES TO FINANCIAL STATEMENTS - MAY 31, 2004 (CONTINUED)
(UNAUDITED)
NOTE 6. FEDERAL INCOME TAX INFORMATION
At May 31, 2004, gross unrealized appreciation and depreciation of
investments owned by the Fund, based on cost for federal income tax purposes
were as follows:
Short-Term Total
Government Return
Fund Bond Fund Equity Fund
------------ ------------ ------------
Cost of Investments ...................... $ 48,310,766 $18,998,560 $ 3,819,664
=========== =========== ============
Unrealized appreciation .................. $ 72,602 $ 183,832 $ 503,423
Unrealized depreciation .................. (189,420) (447,531) (347,590)
------------ ----------- ------------
Net unrealized appreciation
(depreciation) on investments .......... $ (116,818) $ (263,699) $ 155,833
=========== =========== ============
The difference between cost amounts for financial statement and federal
income tax purposes is due primarily to timing differences in recognizing
certain gains and losses in security transactions.
The tax character of distributions paid during the fiscal year ended
November 30, 2003 and November 30, 2002 was as follows:
Short-Term Total Return
Government Fund Bond Fund Equity Fund
Nov. 30, 2003 Nov. 30, 2002 Nov. 30, 2003 Nov. 30, 2002 Nov. 30, 2003 Nov. 30, 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 Fund 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 Fund realizes 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 tax accumulated earnings for the Short-Term Government, Total Return
Bond and Equity Funds.
- 15 -
PIA MUTUAL FUND
NOTES TO FINANCIAL STATEMENTS - MAY 31, 2004 (CONTINUED)
(UNAUDITED)
NOTE 7. OFFERING PRICE PER SHARE
Prior to March 29, 2004, a maximum front-end sales charge of 4.50% was
imposed on purchases of shares of the Equity Fund. For the period from December
1, 2003 to March 28, 2004, the Trust was advised that the Distributor received
$250 from sales of the Equity Fund's shares.
NOTE 8. PROXY VOTING POLICIES AND PROCEDURES
A description of the Fund's proxy voting policies and procedures is
available without charge, upon request, by calling 800-251-1970 and on the
Securities and Exchange Commission's website at http://www.sec.gov.
- 16 -
PIA MUTUAL FUND
SHORT-TERM GOVERNMENT SECURITIES FUND
FINANCIAL HIGHLIGHTS
Six Months
Ended Year Ended Year Ended Year Ended Year Ended Year Ended
May 31, 2004 Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30,
(Unaudited) 2003 2002 2001 2000 1999
----------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout each period)
Net asset value, beginning of period ........ $ 10.15 $ 10.29 $ 10.36 $ 10.12 $ 10.07 $ 10.38
-------- -------- -------- -------- --------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ....................... 0.10 0.20 0.36 0.52 0.66 0.55
Net realized and unrealized gain
(loss) on investments ..................... (0.05) (0.04) (0.07) 0.25 0.05 (0.25)
-------- -------- -------- -------- --------- --------
Total from investment operations ............ 0.05 0.16 0.29 0.77 0.71 0.30
-------- -------- -------- -------- --------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income ........ (0.13) (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 ......................... (0.13) (0.30) (0.36) (0.53) (0.66) (0.61)
-------- -------- -------- -------- --------- --------
Net asset value, end of period .............. $ 10.07 $ 10.15 $ 10.29 $ 10.36 $ 10.12 $ 10.07
======== ======== ======== ======== ========= ========
TOTAL RETURN ................................ 0.47%++ 1.56% 2.87% 7.74% 7.30% 3.00%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ........ $48,303 $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% 0.35% 0.33% 0.30% 0.30%
Before waivers and reimbursements ......... 0.61%+ 0.59% 0.58% 0.46% 0.48% 0.47%
Ratio of net investment income to
average net assets:
Net of waivers and reimbursements ......... 1.90%+ 1.99% 3.16% 4.97% 6.49% 5.40%
Before waivers and reimbursements ......... 1.64%+ 1.75% 2.93% 4.84% 6.31% 5.23%
Portfolio turnover rate ..................... 0%++ 74% 185% 121% 89% 110%
+ Annualized for periods less than one year.
++ Not annualized for periods less than one year.
See notes to financial statements
- 17 -
PIA MUTUAL FUND
TOTAL RETURN BOND FUND
FINANCIAL HIGHLIGHTS
Six Months
Ended Year Ended Year Ended Year Ended Year Ended Year Ended
May 31, 2004 Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30,
(Unaudited) 2003 2002 2001 2000 1999
----------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout each period)
Net asset value, beginning of period ........ $ 19.41 $ 19.91 $ 20.15 $ 19.23 $ 18.92 $ 20.27
------- ------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ....................... 0.34 0.94 0.94 1.13 1.24 1.16
Net realized and unrealized gain
(loss) on investments ..................... (0.36) (0.05) (0.13) 0.93 0.31 (1.31)
------- ------- -------- -------- -------- --------
Total from investment operations ............ (0.02) 0.89 0.81 2.06 1.55 (0.15)
------- ------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income ........ (0.36) (1.00) (0.91) (1.14) (1.24) (1.16)
Distribution from net realized gains ........ (0.64) (0.39) (0.14) -- -- (0.04)
------- ------- -------- -------- -------- --------
Total distributions ......................... (1.00) (1.39) (1.05) (1.14) (1.24) (1.20)
------- ------- -------- -------- -------- --------
Net asset value, end of period .............. $ 18.39 $ 19.41 $ 19.91 $ 20.15 $ 19.23 $ 18.92
======= ======= ======== ======== ======== ========
TOTAL RETURN ................................ (0.19)%++ 4.60% 4.17% 10.94% 8.54% (0.74)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ........ $18,870 $39,051 $60,008 $59,473 $34,545 $29,652
Ratio of expenses to average net assets:
Net of waivers and reimbursements ........... 0.46%+ 0.45% 0.45% 0.43% 0.40% 0.40%
Before waivers and reimbursements ........... 0.84%+ 0.73% 0.70% 0.55% 0.61% 0.63%
Ratio of net investment income to
average net assets:
Net of waivers and reimbursements ........... 3.47%++ 4.69% 4.76% 5.61% 6.61% 6.06%
Before waivers and reimbursements ........... 3.09%++ 4.41% 4.51% 5.49% 6.40% 5.83%
Portfolio turnover rate ..................... 192%+ 190% 297% 134% 46% 104%
+ Annualized for periods less than one year.
++ Not annualized for periods less than one year.
See notes to financial statements
- 18 -
PIA MUTUAL FUND
PIA EQUITY FUND
FINANCIAL HIGHLIGHTS
Six Months
Ended Year Ended Year Ended Year Ended Year Ended Year Ended
May 31, 2004 Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30,
(Unaudited) 2003 2002 2001 2000 1999
-----------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout each period)
Net asset value, beginning of period $ 22.80 $ 16.41 $ 19.44 $ 20.46 $ 17.68 $ 17.54
-------- ------- -------- -------- ------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.21) (0.24) (0.23) (0.03) 0.01 0.05
Net realized and unrealized gain
(loss) on investments (1.85) 6.56 (2.70) 1.01 2.77 1.83
Payment by affiliate -- 0.07 -- -- -- --
-------- ------- -------- -------- ------- --------
Total from investment operations (2.06) 6.39 (2.93) 0.98 2.78 1.88
-------- ------- -------- -------- ------- --------
DISTRIBUTIONS AND OTHER:
Dividends from net investment income -- -- -- (0.02) -- (0.08)
Distribution from net realized gains -- -- (0.10) (1.98) -- (1.66)
-------- ------- -------- -------- ------- --------
Total distributions and other -- -- (0.10) (2.00) -- (1.74)
-------- ------- -------- -------- ------- --------
Net asset value, end of period $ 20.74 $ 22.80 $ 16.41 $ 19.44 $ 20.46 $ 17.68
======== ======= ======== ======== ======= ========
TOTAL RETURN (9.04)%^ 38.94%+ (15.08)% 4.63% 15.72% 12.07%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $ 3,824 $ 4,347 $ 4,340 $ 5,605 $ 3,318 $ 2,072
Ratio of expenses to average net assets:
Net of waivers and reimbursements 2.50%++ 2.24% 1.80% 1.80% 1.80% 1.80%
Before waivers and reimbursements 4.94%++ 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 (1.90)%++ (1.27)% (1.11)% (0.11)% 0.10% 0.30%
Before waivers and reimbursements (4.34)%++ (4.32)% (2.72)% (1.17)% (1.82)% (3.26)%
Portfolio turnover rate 88%^ 224% 220% 186% 526% 276%
+ For the year ended November 30, 2003, 0.37% of the Fund's total return
relates to payment by affiliate.
++ Annualized for periods less than one year.
^ Not annualized for periods less than one year.
See notes to financial statements
- 19 -
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
SEMI-ANNUAL REPORT
(UNAUDITED)
MAY 31, 2004
"TIMING IS NOT ONE OF THE IMPORTANT ELEMENTS OF SUCCESSFUL INVESTING; IT
IS THE MOST IMPORTANT FACTOR. THERE ARE GOOD AND BAD TIMES TO BUY ALL
INVESTMENTS. THE KEY IS TO BUY VALUE WHEN FEW OTHER PEOPLE WANT TO BUY.
LARGE FORTUNES HAVE BEEN MADE BY MEN WHO HAVE THE KNOWLEDGE TO BUY VALUE -
WHICH INVOLVES THE CRITICAL ISSUE OF TIMING - AND TO HAVE THE PATIENCE AND
COURAGE TO STAY WITH THE LONG-TERM TREND."
J. Paul Getty (1892-1976)
Dear Fellow Shareholder:
Market anticipation the Federal Reserve would change its interest rate policy in
response to stronger economic growth and inflationary pressures prompted the
dollar to rally off its lows and speculative money flows to exit the gold and
gold share markets in the first half of 2004. Gold traded in a range of $373 to
$428 over the period, ending June 30th at $395, down 5.3% from year end. Your
fund's NAV declined 22.63% over the six month period (22.75% for the fiscal
period ending May 31, 2004). The Philadelphia Gold and Silver Index of gold
shares declined 20.28% over the corresponding period (17.62% for the six months
ending May 31, 2004). Despite the recent sell-off in gold and gold shares, we
remain convinced the current economic and geopolitical environment favors higher
gold prices and a lower U.S. dollar.
The fiscal and monetary policies employed by Washington to fight the post bubble
deflationary pressures have successfully generated inflation and debasement of
the US dollar. Through the first six months of 2004, the inflation rate was
running at a 4.8% annual rate as measured by the CPI (which tends to understate
actual price increases). With short-term interest rates at 1%, real interest
rates were a negative 3.8%. In order for the Federal Reserve to move to a
neutral interest rate stance where short-term rates match the inflation rate,
the Fed would need to raise rates approximately 3%. While the Federal Reserve
lifted the Fed Funds rate 1/4% in June to show it is "on the job", it appears
the Fed faces a policy dilemma going forward. The low interest rate environment
created enormous demand for debt, much of it with adjustable rates. If the Fed
raises rates too quickly it could find itself collapsing not only economic
activity, but more importantly, real estate values and the collateral value of
the multi-trillion dollar mortgage backed securities market. On the other hand,
if it fails to squelch inflationary pressures, its credibility will be lost and
the US dollar will fall as foreigners become unwilling to finance the US current
account and budget deficits on favorable terms.
A look at the rapid growth of the money supply as measured by M-3 since 1996
(see chart), it is apparent that the fuel necessary to ignite inflationary
pressures is in the system. Global central banks have aided the cause with
expansive monetary policies, particularly the Asian central banks. In an effort
to maintain currency parity to foster exports, Asian central banks, most notably
China and Japan, have sold their own currencies and bought U.S. dollars. Foreign
exchange assets of Asian central banks have swelled to $2.1 trillion, up from
$790 billion in 1998. The flood of printing press money has enabled global
economic growth, particularly in large population countries China and India.
Consequently, upward pressure on commodity prices has been widespread from
grains to metals.
- 2 -
M-3 Money Supply ($Billions)
[GRAPHIC DELETED]
NEED PLOT POINTS
We believe the most likely scenario is for the Federal Reserve to stay behind
the inflation curve because it is afraid of collapsing the debt structure.
Should economic activity wane, deflationary fears will once again drive the Fed
to aggressively turn on the money spigot. Market confidence in the Federal
Reserve's ability to conduct sound monetary policy will, in our opinion,
dissipate as the market understands Fed policy has been boxed in by high debt
levels. The confidence that former Fed Chairman Paul Volker restored to central
banking by fighting the inflation of the 1970's most likely reached its pinnacle
with the knighting of Alan Greenspan by the Queen of England in 2002. Since gold
is the reciprocal of confidence in central banking and financial assets, erosion
of confidence in central banking should propel gold prices higher as it did in
the 1970's.
In addition to confidence in the Fed waning, the economic fundamentals of the
United States point to the dollar continuing to trend lower, in our opinion. The
U.S. budget deficit is presently running at $450 to $500 billion annually. Total
U.S. debt now tops an unprecedented 300% of GDP. Equally troublesome is the
growing U.S. current account deficit that is presently over 5% of GDP, a level
that has caused other countries to have currency crises.
The current account deficit is growing at $50 to $75 billion per year and it
must be financed. The respected Bridgewater Associates in a memo to clients put
it best: "THE FINANCES OF COUNTRIES WORK SIMILARLY TO THOSE OF COMPANIES AND
INDIVIDUALS - I.E., ONE CAN'T INDEFINITELY SUSTAIN ONE'S LIVING STANDARDS ON
BORROWED MONEY BECAUSE LENDERS DON'T ONLY WANT TO INCREASE THEIR LENDING; THEY
EXPECT TO BE PAID BACK WITH A PROFIT. THEY EXPECT TO SELL
- 3 -
FINANCIAL INVESTMENTS AND CONVERT THEM INTO GOODS AND SERVICES, AND LENDERS ARE
EXPECTING TO BE PAID BACK IN GOODS AND SERVICES. THE MAJOR DIFFERENCE BETWEEN
COUNTRIES ON THE ONE HAND, AND COMPANIES AND INDIVIDUALS ON THE OTHER, IS THAT
COUNTRIES CAN MANUFACTURE THE MONEY WITH WHICH THEY PAY BACK THEIR DEBT. IN OUR
OPINION, THE UNITED STATES IS APPROACHING A DEBT/BALANCE-OF-PAYMENTS CRISIS OF
SORTS, AND IT WILL DEAL WITH THIS SITUATION VIA THE INCREASED PRODUCTION OF
DOLLAR DENOMINATED LIQUIDITY. THIS IS BEARISH FOR THE DOLLAR AND BONDS AND
BULLISH FOR GOLD. WE EXPECT THIS MOVE TO BE RELATIVELY GRADUAL OVER THE NEXT
YEAR AND MUCH MORE ACUTE IN 2005."
The United States is not only facing daunting economic issues that affect the
value of the dollar; it is waging a chronic war against Islamic fundamentalists
that are hoping to bring the U.S. to its knees, both morally and economically.
Islamic terrorists have no intention of letting the United States maintain a
presence in Iraq for access to Iraqi oil and to spread Western culture. Further,
terrorist networks are working toward overthrowing the monarchy in Saudi Arabia
in order to disrupt oil flow and the world economy. A successful economic
terrorist act could have far reaching consequences for the overleveraged U.S.
economy.
GOLD MINING INDUSTRY
Despite higher gold prices, gold production of the senior gold producers
declined through the first six months of 2004. Overall South African production
declined 8.3% year over year as a 21% appreciation in the rand versus the dollar
and higher costs placed over half of the mines in a loss making position. Gold
production in South Africa, the world's largest producer, is at a 51 year low.
In North America mines processed lower grade ore in order to extend mine life.
Fears of rising gold prices causing a glut of new production are unfounded, in
our opinion. The gold mining industry is clearly challenged to maintain existing
production levels and replace the 100 million ounces of mined reserves lost to
depletion each year.
Merger activity among intermediate producers heated up in the second quarter of
the year as Iamgold and Wheaton River agreed to merge only to have Golden Star
and Coeur d'Alene Mines make competing offers for Iamgold and Wheaton River,
respectively. We anticipate further consolidation in the intermediate and junior
sectors as companies move to rationalize geographic and operating similarities.
INVESTMENT STRATEGY
The investment philosophy of your Fund is to participate in all sectors of the
gold mining industry. The largest percentage of the portfolio is in high quality
senior gold producers with progressively smaller percentage allocations to
intermediate producers, junior producers and exploration and development
companies. The Fund's focus in the intermediate and junior sectors is on
companies exhibiting a stable to growing production profile with exploration
upside.
It is our belief that higher gold prices increase the opportunities of finding
economic deposits and therefore increase exploration companies' chances of
creating significant shareholder value. Our approach in the exploration and
development sector is to have a diversified portfolio a number of small
positions in companies in order to increase our chance of success and reduce the
inherent risk that comes with exploration.
- 4 -
We anticipate reducing exposure to exploration and development companies from
current levels as ongoing exploration programs prompt decisions to harvest
profits or exit positions for lack of promising results.
Country risk in the gold mining industry is becoming more of an issue as the
search for gold deposits stretches to new frontiers, such as China and Russia.
We are intent in managing country risk within the context of risk/reward
benefits and not allowing the Fund to become over weighted in any one emerging
market. As of June 30th, the Fund's greatest perceived risk was its 15% exposure
to South Africa through three of the world's largest gold producers, AngloGold,
Gold Fields and Harmony. We are currently evaluating the Fund's position in
South Africa as the strong rand and deteriorating business climate squeeze
margins for mining companies.
CONCLUSION
Former Federal Reserve Chairman Paul Volker once commented, "The truly unique
power of a central bank is the power to create money, and ultimately the power
to create is the power to destroy." In our opinion, the excess credit creation
that fueled the financial asset bubble of the late 90's and the subsequent
aggressive monetary policy employed to prevent a deflationary collapse have set
the stage for gold to reassert its historic purchasing power. Adjusted for
inflation over past 24 years, the gold price should be 2.35 times the current
price level.
We sincerely appreciate your continued confidence in the Fund's objectives.
Sincerely,
/s/ Gregory M. Orrell
Gregory M. Orrell
PORTFOLIO MANAGER
JULY 14, 2004
- 5 -
PIA MUTUAL FUND
OCM GOLD FUND
SCHEDULE OF INVESTMENTS - MAY 31, 2004
(UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS 90.9%
MAJOR GOLD PRODUCERS 33.9%
169,500 AngloGold Ashanti Ltd. ADR ........................ $5,935,890
15,000 Barrick Gold Corp. ................................ 310,050
10,000 Freeport-McMoRan Copper & Gold, Inc. .............. 336,300
270,000 Gold Fields Ltd. ADR .............................. 3,140,100
175,000 Harmony Gold Mining Co. Ltd. ADR .................. 2,096,500
229,469 Kinross Gold Corp.* ............................... 1,411,234
179,994 Newmont Mining Corp. .............................. 7,147,562
200,000 Placer Dome, Inc. ................................. 3,118,000
----------
23,495,636
----------
INTERMEDIATE/MID-TIER GOLD PRODUCERS 22.8%
91,700 Agnico-Eagle Mines Ltd. ........................... 1,275,547
350,000 Bema Gold Corp.* .................................. 964,385
190,000 Cambior, Inc.* .................................... 526,300
50,000 Durban Roodeport Deep Ltd. ADR* ................... 146,500
125,000 Glamis Gold Ltd.* ................................. 2,097,500
280,000 Goldcorp, Inc. .................................... 3,390,800
425,000 IAMGOLD Corp. ..................................... 2,397,000
75,000 Meridian Gold, Inc.* .............................. 975,000
50,000 Newcrest Mining Ltd. .............................. 451,335
60,000 Randgold Resources Ltd. ADR* ...................... 1,091,400
350,000 Resolute Mining Ltd.* ............................. 314,685
750,000 Wheaton River Minerals Ltd.* ...................... 2,182,500
----------
15,812,952
----------
JUNIOR GOLD PRODUCERS 13.7%
425,000 Apollo Gold Corp.* ................................ 622,893
175,000 Aurizon Mines Ltd.* ............................... 194,929
400,000 Central Asia Gold Ltd.* ........................... 142,715
1,000,000 Claude Resources, Inc.* ........................... 989,301
200,000 Crystallex International Corp.* ................... 460,000
430,000 Eldorado Gold Corp.* .............................. 1,083,981
150,000 Glencairn Gold Corp.* ............................. 75,846
90,000 Golden Cycle Gold Corp.* .......................... 1,125,000
284,000 Golden Star Resources Ltd.* ....................... 1,406,889
600,000 Guinor Gold Corp.* ................................ 527,627
100,000 Kirkland Lake Gold, Inc.* ......................... 318,775
100,000 Mexgold Resources, Inc.*+# ........................ 280,302
30,000 Miramar Mining Corp.* ............................. 40,671
400,000 Northgate Minerals Corp.* ......................... 639,015
500,000 Oxiana Ltd.* ...................................... $ 296,132
500,000 Queenstake Resources Ltd.* ........................ 194,196
207,000 River Gold Mines Ltd.* ............................ 417,155
250,000 Sino Gold Ltd.* ................................... 406,736
100,000 Yamana Gold, Inc.* ................................ 241,000
----------
9,463,163
----------
EXPLORATION AND DEVELOPMENT COMPANIES 12.3%
200,000 Abacus Mining & Exploration Corp. ................. 45,435
200,000 Addwest Minerals International Ltd.*# ............. --
75,000 African Gold Group, Inc.*+# ....................... 98,930
137,875 Altius Minerals Corp.* ............................ 363,733
150,000 Aquiline Resources, Inc.* ......................... 91,236
319,500 Ascot Resources Ltd.* ............................. 79,606
250,000 Beartooth Platinum Corp.* ......................... 40,305
500,000 Birim Goldfields, Inc.* ........................... 238,165
200,000 Bolivar Gold Corp.* ............................... 199,326
300,000 Capstone Gold Corp.* .............................. 153,891
200,000 Cardero Resource Corp.* ........................... 414,774
250,000 Committee Bay Resources Ltd.* ..................... 348,087
370,000 Continuum Resources Ltd.* ......................... 154,551
300,000 Crowflight Minerals, Inc.* ........................ 87,938
175,000 Desert Sun Mining Corp.* .......................... 179,540
360,000 Erdene Gold, Inc. ................................. 163,564
146,000 Gateway Gold Corp.* ............................... 233,240
500,000 Geodex Minerals Ltd.* ............................. 54,961
175,000 Globestar Mining Corp.* ........................... 70,533
200,000 Manhattan Minerals Corp.* ......................... 21,984
250,000 Maximus Ventures Ltd.* ............................ 32,977
106,500 Metallica Resources, Inc.* ........................ 127,994
150,000 Mundoro Mining, Inc.* ............................. 208,852
212,400 Nevsun Resources Ltd.* ............................ 603,922
300,000 North American Gold, Inc.* ........................ 76,946
300,333 Northern Lion Gold Corp.* ......................... 374,151
500,000 Odyssey Resources Ltd.* ........................... 65,953
150,000 Orezone Resources, Inc.* .......................... 131,907
90,000 Palladon Ventures Ltd.* ........................... 46,167
280,000 Platinum Group Metals Ltd.* ....................... 203,136
187,500 Queenston Mining, Inc.* ........................... 89,312
350,000 Radius Explorations Ltd.* ......................... 248,791
166,667 Red Back Mining, Inc.* ............................ 265,035
See notes to financial statements
- 6 -
PIA MUTUAL FUNDS
OCM GOLD FUND
SCHEDULE OF INVESTMENTS - MAY 31, 2004 (CONTINUED)
(UNAUDITED)
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
EXPLORATION AND DEVELOPMENT COMPANIES (CONTINUED)
300,000 Riddarhyttan Resources AB . . . $ ................. 223,331
200,000 Sabina Resources Ltd.* ............................ 137,769
390,750 Strongbow Exploration, Inc.* ...................... 286,348
3,000,000 Sub-Sahara Resources NL* .......................... 149,850
207,700 Sunridge Gold Corp.* .............................. 220,698
200,000 Vedron Gold, Inc.* ................................ 48,366
130,000 Western Silver* ................................... 945,991
250,000 Wolfden Resources, Inc.* .......................... 897,699
250,000 X-Cal Resources Ltd.* ............................. 119,083
----------
8,544,077
----------
OTHER 5.4%
148,800 Central Fund of Canada Ltd., Class A .............. 807,984
178,000 Endeavour Mining Capital Corp. .................... 378,279
50,000 Gold Bullion Ltd.* ................................ 1,967,675
40,000 Royal Gold, Inc. .................................. 557,200
----------
3,711,138
----------
PRIMARY SILVER PRODUCERS 2.8%
197,100 Hecla Mining Co.* ................................. 1,279,179
48,075 PAN American Silver Corp.* ........................ 653,166
----------
1,932,345
----------
TOTAL COMMON STOCKS
(cost $39,591,816) ................................ 62,959,311
WARRANTS 1.5%
37,500 African Gold Group, Inc.*# ........................ --
68,937 Altius Minerals Corp.*# ........................... 80,829
50,000 Apollo Gold Corp.*# ............................... --
50,000 Bema Gold Corp.* .................................. 80,610
50,000 Bolivar Gold Corp.* ............................... 20,152
81,301 Canyon Resources Corp.*# .......................... 129,269
55,556 Canyon Resources Corp.*# .......................... 71,112
100,000 Capstone Gold Corp.*# ............................. --
50,000 Cardero Resource Corp.*# .......................... 21,252
87,500 Desert Sun Mining Corp.*# ......................... 3,206
89,000 Endeavour Mining Capital Corp.*# .................. --
125,000 Geodex Minerals Ltd.*# ............................ --
75,000 Glencairn Gold Corp.*# ............................ --
175,000 Globestar Mining Corp.*# .......................... --
100,000 Manhattan Minerals Corp.*# ........................ --
250,000 Maximus Ventures Ltd.*# ........................... --
50,000 Mexgold Resources, Inc.*# ......................... 64,121
15,000 Miramar Mining Corp.* ............................. --
35,000 Nevsun Resources Ltd.* ............................ --
150,000 North American Gold, Inc.*# ....................... --
66,666 Northern Lion Gold Corp.*# ........................ 34,198
110,000 Northgate Minerals Corp.*# ........................ 53,605
24,038 PAN American Silver Corp.* ........................ 176,154
50,000 Radius Explorations Ltd.*# ........................ --
100,000 Sabina Resources Ltd.*# ........................... 13,924
100,000 Sunridge Gold Corp.*# ............................. --
37,500 Wheaton River Minerals Ltd.* ...................... 64,579
112,500 Wheaton River Minerals Ltd.* ...................... 195,387
----------
TOTAL WARRANTS
-- (cost $110,472) ................................... 1,008,398
----------
PREFERRED STOCKS 0.6%
10,000 Freeport-McMoRan Copper & Gold, Inc.* ............. 408,100
----------
TOTAL PREFERRED STOCKS
-- (cost $169,900) ................................... 408,100
----------
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT
- --------------------------------------------------------------------------------
CONVERTIBLE BOND 0.5%
$ 150,000 Canyon Resources Corp., 6.00%, due 2/12/05 ......... . . 354,348
----------
. . . . .
TOTAL CONVERTIBLE BOND
-- (cost $150,000) ................................... 354,348
----------
SHORT-TERM INVESTMENTS 6.0%
2,111,767 First American Treasury Obligations Fund .......... 2,111,767
2,073,000 U.S. Bank, N.A. repurchase
agreement,
0.80%, dated 5/28/04, due 6/1/04,
repurchase price $2,073,182
(collateralized by GNMA
Series 2003-112 FC,
2.50%, due 12/16/33) .............................. 2,073,000
See notes to financial statements
- 7 -
PIA MUTUAL FUNDS
OCM GOLD FUND
SCHEDULE OF INVESTMENTS - MAY 31, 2004 (CONTINUED)
(UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
-- (cost $4,184,767) ................................. $4,184,767
TOTAL INVESTMENTS
-- (cost $44,206,955) ........................... 99.5% 68,914,924
OTHER ASSETS LESS LIABILITIES............................... 0.5% 329,894
-----------
NET ASSETS ................................................. 100.0 $69,244,818
===========
<FN>
- ----------
* Non-income producing security.
# Valued at a fair value in accordance with procedures estab- lished by the
Fund's Board of Trustees.
+ The following securities were purchased under Rule 144A of the Securities
Act of 1933:
</FN>
VALUE AS
ACQUISITION % OF
DESCRIPTION DATE COST VALUE NET ASSETS
- --------------------------------------------------------------------------------
African Gold
Group, Inc. April 20, 2004 $154,730 $98,930 0.1%
Mexgold
Resources, Inc. February 13, 2004 152,040 280,302 0.4
SUMMARY OF INVESTMENTS BY COUNTRY
PERCENT OF
COUNTRY MARKET VALUE INVESTMENT SECURITIES
- --------------------------------------------------------------------------------
Australia $ 3,729,128 5.4%
Canada 34,423,183 50.0
Cayman Islands 378,279 0.5
Jersey 1,091,400 1.6
South Africa 11,318,990 16.4
Sweden 223,331 0.3
United States1 17,750,613 25.8
TOTAL $ 68,914,924 100.0%
- ----------
1 Includes short-term securities.
See notes to financial statements
- 8 -
PIA MUTUAL FUND
OCM GOLD FUND
STATEMENT OF ASSETS AND LIABILITIES - MAY 31, 2004
(UNAUDITED)
ASSETS:
Investments in securities, at value (cost $44,206,955) ....................................... $ 68,914,924
Cash ......................................................................................... 206,136
Receivable for securities sold ............................................................... 250,064
Receivable for fund shares sold .............................................................. 170,566
Interest and dividends receivable ............................................................ 17,113
Prepaid expenses and other assets ............................................................ 11,272
-------------
Total assets ............................................................................. 69,570,075
-------------
LIABILITIES:
Payable for securities purchased ............................................................. 46,607
Due to investment adviser .................................................................... 53,765
Accrued distribution fees .................................................................... 190,659
Accrued expenses and other liabilities ....................................................... 34,226
-------------
Total liabilities ....................................................................... 325,257
-------------
Net Assets .............................................................................. $ 69,244,818
=============
NET ASSETS CONSIST OF:
Shares of beneficial interest, no par value; unlimited shares authorized ..................... $ 44,102,297
Undistributed net investment loss ............................................................ (909,836)
Undistributed net realized gain on investments and foreign currency transactions ............. 1,344,388
Net unrealized appreciation on investments and foreign currency translations ................. 24,707,969
-------------
Net Assets .............................................................................. 69,244,818
=============
CALCULATION OF MAXIMUM OFFERING PRICE:
Net asset value and redemption price per share ............................................... $ 10.99
Maximum sales charge (4.50% of offering price) ............................................... 0.52
-------------
Offering price to public ..................................................................... $ 11.51
=============
Shares outstanding ........................................................................... 6,299,919
=============
See notes to financial statements
- 9 -
PIA MUTUAL FUND
OCM GOLD FUND
STATEMENT OF OPERATIONS - SIX MONTHS ENDED MAY 31, 2004
(UNAUDITED)
INVESTMENT INCOME:
Interest ......................................................................... $ 9,528
Dividends (net of foreign withholding taxes of $13,709) .......................... 222,154
------------
Total investment income ........................................................ 231,682
------------
EXPENSES:
Distribution fees ................................................................ 367,506
Investment advisory fees ......................................................... 356,066
Fund administration and accounting fees .......................................... 48,633
Transfer agent fees and expenses ................................................. 29,688
Professional fees ................................................................ 16,963
State registration fees .......................................................... 10,478
Custody fees ..................................................................... 7,683
Reports to shareholders .......................................................... 3,057
Trustees' fees ................................................................... 1,306
Other expenses ................................................................... 8,002
------------
Total expenses ................................................................. 849,382
------------
Net investment loss ............................................................ (617,700)
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments and foreign currency transactions ............... 1,364,128
Net change in unrealized appreciation/depreciation on investments and
foreign currency translations .................................................. (19,835,640)
------------
Net loss on investments ........................................................ (18,471,512)
------------
Net decrease in net assets resulting from operations .............................$(19,089,212)
============
See notes to financial statements
- 10 -
PIA MUTUAL FUND
OCM GOLD FUND
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended Year ended
May 31, 2004 Nov. 30,
(Unaudited) 2003
----------- ----
OPERATIONS:
Net investment loss .............................................................. $ (617,700) $ (755,700)
Net realized gain on investments and foreign currency transactions ............... 1,364,128 3,450,641
Net change in unrealized appreciation/depreciation on investments
and foreign currency translations ............................................. (19,835,640) 34,827,839
------------- -----------
Net increase (decrease) in net assets resulting from operations .................. (19,089,212) 37,522,780
------------- -----------
DISTRIBUTIONS PAID TO SHAREHOLDERS:
Dividends from net investment income ............................................. (84,374) --
Distributions paid from net realized gains ....................................... (1,230,068) --
------------- -----------
Total distributions .............................................................. (1,314,442) --
------------- -----------
FUND SHARE TRANSACTIONS:
Net proceeds from shares sold .................................................... 11,619,736 19,718,096
Distributions reinvested ......................................................... 1,230,388 --
Payment for shares redeemed ...................................................... (7,431,183) (8,120,758)
------------- -----------
Net increase in net assets from fund share transactions .......................... 5,418,941 11,597,338
------------- -----------
Total increase (decrease) in net assets .......................................... (14,984,713) 49,120,118
NET ASSETS, BEGINNING OF PERIOD .................................................. 84,229,531 35,109,413
------------- -----------
NET ASSETS, END OF PERIOD ........................................................ $ 69,244,818 $84,229,531
============= ===========
TRANSACTIONS IN SHARES:
Shares sold ...................................................................... 961,204 1,992,966
Shares issued on reinvestment of distributions ................................... 88,517 --
Shares redeemed .................................................................. (575,753) (826,831)
------------- -----------
Net increase in shares outstanding ............................................... 473,968 1,166,135
============= ===========
See notes to financial statements
- 11 -
PIA MUTUAL FUND
OCM GOLD FUND
NOTES TO FINANCIAL STATEMENTS - MAY 31, 2004
(UNAUDITED)
NOTE 1. ORGANIZATION
PIA 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 National Market(R) and SmallCap(R) securities are valued at the NASDAQ
Official Closing Price ("NOCP"). If a NOCP is not issued for a given day, these
securities are valued at the average of readily available closing bid and asked
prices. Unlisted securities are valued at the average of the quoted bid and ask
prices in the over-the-counter market. Securities and other assets for which
market quotations are not readily available are valued at fair value as
determined in good faith by the investment adviser under procedures established
by and under the general supervision and responsibility of the Trust's Board of
Trustees. Short-term investments which mature in less than 60 days are valued at
amortized cost (unless the Board of Trustees determines that this method does
not represent fair value). Short-term investments which mature after 60 days are
valued at market.
REPURCHASE AGREEMENTS - The Fund may enter into repurchase agreements. A
repurchase agreement transaction occurs when, at the time the Fund purchases a
security, the Fund agrees to resell it to the vendor (normally a commercial bank
or a broker-dealer) on an agreed upon date in the future. On a daily basis, the
Fund's custodian monitors the value of the collateral, including accrued
interest, to ensure it is at least equal to the amount owed to the Fund under
each repurchase agreement. All securities are held by the Fund's custodian.
FOREIGN CURRENCY - Investment securities and other assets and liabilities
denominated in foreign currencies are translated into U.S. dollar amounts at the
date of valuation. Purchases and sales of investment securities and income and
expense items denominated in foreign currencies are translated into U.S. dollar
amounts on the respective dates of such transactions.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net unrealized and realized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
fair value of assets and liabilities, other than investments in securities at
fiscal year end, resulting from changes in exchange rates.
FEDERAL INCOME TAXES - It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to
shareholders. Therefore, no provision for income taxes has been recorded.
EXPENSES - The Fund is charged for those expenses that are directly
attributable to the Fund, such as investment advisory and custodian fees.
Expenses that are not directly attributable to the Fund are typically allocated
among the Funds in proportion to their respective net assets.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME - Securities transactions are
accounted for on a trade date basis. Discounts and premiums on securities
purchased are amortized over the life of the respective security. Realized gains
and losses on sales of securities are calculated on the identified cost basis.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on an accrual basis.
- 12 -
PIA MUTUAL FUND
OCM GOLD FUND
NOTES TO FINANCIAL STATEMENTS - MAY 31, 2004 (CONTINUED)
(UNAUDITED)
DISTRIBUTIONS TO SHAREHOLDERS - Distributions to shareholders are recorded on
the ex-dividend date. The Fund declares and pays dividends of net investment
income, if any, annually and distributes net realized gains, if any, annually.
The amount and character of income and net realized gains to be distributed are
determined in accordance with federal income tax rules and regulations, which
may differ from accounting principles generally accepted in the United States of
America. To the extent that these differences are attributable to permanent book
and tax accounting differences, the components of net assets have been adjusted.
REDEMPTION FEE - A 1.50% redemption fee is retained by the Fund to offset
transaction costs and other expenses associated with short-term investing. The
fee is imposed on redemptions or exchanges of shares held less than three months
from their purchase date. The Fund records the fee as a reduction of shares
redeemed and as a credit to paid-in-capital. For the six-month period ended May
31, 2004, the Fund received $2,959 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 six-month period ended May 31, 2004, OCM voluntarily agreed to limit
the total expenses of the Fund to an annual rate of 2.99% of average net assets.
NOTE 4. DISTRIBUTION AGREEMENT AND PLAN
The Trust has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended. The Plan authorizes the
Fund to reimburse the distributor for marketing expenses incurred in
distributing shares of each Fund, including the cost of printing sales material
and making payments to dealers of the Fund's shares, in any fiscal year, subject
to a limit of 0.99% of average daily net assets.
Syndicated Capital, Inc. serves as the Distributor of the Fund's shares. The
President and sole shareholder of the Distributor is also a Trustee of the
Trust. During the six-month period ended May 31, 2004, the Distributor earned
$4,080 from commissions on sales of the Fund's capital stock.
NOTE 5. PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities (excluding short-term securities
and U.S. government obligations) for the six-month period ended May 31, 2004
were $7,301,961 and $4,306,387, respectively. There were no purchases or sales
of U.S. government obligations.
- 13 -
PIA MUTUAL FUND
OCM GOLD FUND
NOTES TO FINANCIAL STATEMENTS - MAY 31, 2004 (CONTINUED)
(UNAUDITED)
NOTE 6. FEDERAL INCOME TAX INFORMATION
At May 31, 2004, 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. . . . . . . . . . . . . .. . . $ 44,492,537
===============
Unrealized appreciation. . . . . . . . . . . .. . . $ 26,652,205
Unrealized depreciation. . . . . . . . . . . .. . . (2,229,818)
---------------
Net unrealized appreciation on investments. . . . . $ 24,422,387
===============
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 six-month period ended May 31, 2004, the Trust was
advised that the Distributor received $39,359 of sales charges from sales of the
Fund's shares.
NOTE 8. PROXY VOTING POLICIES AND PROCEDURES
A description of the Fund's proxy voting policies and procedures is available
without charge, upon request, by calling 800-251-1970 and on the Securities and
Exchange Commission's website at http://www.sec.gov.
- 14 -
PIA MUTUAL FUND
OCM GOLD FUND
FINANCIAL HIGHLIGHTS
Six Months
Ended Year Ended Year Ended Year Ended Year Ended Year Ended
May 31, 2004 Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30,
(Unaudited) 2003 2002 2001 2000 1999
----------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout each period)
Net asset value, beginning of period ....... $ 14.46 $ 7.53 $ 4.71 $ 3.52 $ 4.75 $ 4.98
--------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ........................ (0.09) (0.12) (0.09) (0.04) (0.05) (0.04)
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ............................. (3.15) 7.05 2.91 1.23 (1.18) (0.19)
--------- -------- -------- -------- -------- --------
Total from investment operations ........... (3.24) 6.93 2.82 1.19 (1.23) (0.23)
--------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income ....... (0.02) -- -- -- -- --
Distribution from net realized gains ....... (0.21) -- -- -- -- --
--------- -------- -------- -------- -------- -------
Total distributions ........................ (0.23) -- -- -- -- --
--------- -------- -------- -------- -------- -------
Net asset value, end of period ............. $ 10.99 $ 14.46 $ 7.53 $ 4.71 $ 3.52 $ 4.75
======== ======= ======= ======= ====== =======
TOTAL RETURN* .............................. (22.75)%++ 92.03% 59.87% 33.81% (25.89)% (4.62)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ....... $69,245 $84,230 $35,109 $17,924 $ 9,240 $11,799
Ratio of expenses to average net assets:
Net of waivers and reimbursements .......... 2.29%+ 2.39% 2.66% 2.60% 2.44% 2.44%
Before waivers and reimbursements .......... 2.29%+ 2.39% 2.66% 2.60% 2.99% 3.02%
Ratio of net investment loss to average
net assets:
Net of waivers and reimbursements .......... (1.66)%+ (1.42)% (1.46)% (1.14)% (1.19)% (1.03)%
Before waivers and reimbursements .......... (1.66)%+ (1.42)% (1.46)% (1.14)% (1.74)% (1.61)%
Portfolio turnover rate .................... 6%++ 17% 32% 5% 3% 9%
<FN>
- ----------
* Assumes no sales charge.
+ Annualized for periods less than one year.
++ Not annualized for periods less than one year.
</FN>
See notes to financial statements
- 15 -
PIA Mutual Fund
Distributed by:
Syndicated Capital, Inc.
1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401
PIA LOGO
PIA BBB BOND FUND
A PIA MUTUAL FUND PORTFOLIO
SEMI-ANNUAL REPORT
(UNAUDITED)
MAY 31, 2004
Dear Shareholder:
We are pleased to provide you with this first semi-annual report for the period
ended May 31, 2004 for the PIA BBB Bond Fund for which Pacific Income Advisers
is the adviser.
During the six months ended May 31, 2004, the total return from the PIA BBB Bond
Fund including the reinvestment of dividends and capital gains, was (0.50)%.
During the same six month period, the Baa Credit Index increased by 0.67%. The
Fund's return during this period was less than that of this index primarily due
to our investment in U.S. Treasury securities during the Fund's initial
investment period when the assets of the Fund were small. The interest rate
spread (the yield advantage to a comparable maturity Treasury) between Baa
issues and Treasury securities narrowed causing the price of the Baa securities
to outperform.
As the accompanying May 31, 2004 financial statement shows, the assets of the
Fund have grown to approximately $31 million, representing a diversified
portfolio of over 70 BBB rated issuers. The return of the Fund for the three
month period ending May 31, 2004 was (2.98)% compared to the Baa Credit Index
return of (3.07)%.
Please take a moment to review your Fund's statement of assets and the results
of operations for the six month period ended May 31, 2004. We look forward to
reporting to you again at year end.
/S/ LLOYD MCADAMS
- -----------------
Lloyd McAdams
CHAIRMAN OF THE BOARD
-1-
PIA MUTUAL FUND PIA BBB BOND FUND
SCHEDULE OF INVESTMENTS - MAY 31, 2004
(UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
CORPORATE BONDS & NOTES 82.2%
AEROSPACE/DEFENSE 3.0%
$ 272,000 Lockheed Martin Corp. 7.75%, due 5/1/26 ............ $ 314,390
275,000 Northrup Grumman Corp. 7.75%, due 2/15/31 .......... 318,234
272,000 Raytheon Co. 8.30%, due 3/1/10 ..................... 318,578
-----------
951,202
-----------
AGRICULTURE 0.2%
55,000 Monsanto Co. 7.375%, due 8/15/12 ................... 61,978
-----------
AUTO MANUFACTURERS 4.8%
71,000 DaimlerChrysler NA Holding Corp. 8.00%, due 6/15/10 79,407
760,000 DaimlerChrysler NA Holding Corp. 7.30%, due 1/15/12 824,767
708,000 Ford Motor Company 6.625%, due 10/1/28 ............. 618,169
-----------
1,522,343
-----------
AUTO PARTS & EQUIPMENT 1.0%
295,000 Delphi Corp. 6.50%, due 5/1/09 ..................... 310,699
-----------
BANKS 1.1%
322,000 PNC Funding Corp. 5.25%, due 11/15/15 .............. 309,011
27,000 Union Planters Corp. 7.75%, due 3/1/11 ............. 31,224
-----------
340,235
-----------
BUILDING MATERIALS 1.0%
287,000 Masco Corp. 6.75%, due 3/15/06 ..................... 306,072
-----------
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
$ 286,000 Eastman Chemical Co. 7.00%, due 4/15/12 ............ $ 313,393
55,000 Rohm & Haas Co. 7.85%, due 7/15/29 ................. 65,637
-----------
379,030
-----------
COMMERCIAL SERVICES 1.0%
278,000 Cendant Corp. 7.375%, due 1/15/13 .................. 309,233
-----------
DIVERSIFIED FINANCIAL SERVICES 14.7%
304,000 Capital One Bank 5.75%, due 9/15/10 ................ 311,954
1,084,000 Ford Motor Credit Co. 6.50%, due 1/25/07 ........... 1,137,644
634,000 Ford Motor Credit Co. 7.375%, due 2/1/11 ........... 667,540
924,000 General Motors Acceptance Corp. 6.15%, due 4/5/07 .. 965,299
380,000 General Motors Acceptance Corp. 6.875%, due 9/15/11 387,694
840,000 General Motors Acceptance Corp. 8.00%, due 11/1/31 . 851,634
255,000 MBNA Corp. 7.50%, due 3/15/12 ...................... 288,533
-----------
4,610,298
-----------
ELECTRIC 8.6%
293,000 American Electric Power Co., Inc.
6.125%, due 5/15/06 .............................. 309,612
303,000 Cincinnati Gas & Electric Co. 5.70%, due 9/15/12 ... 308,371
280,000 Constellation Energy Group 7.60%, due 4/1/32 ....... 310,686
326,000 Dominion Resources, Inc. 8.125%, due 6/15/10 ....... 377,479
53,000 MidAmerican Energy Holdings Co. 8.48%, due 9/15/28 . 63,843
60,000 Pepco Holdings, Inc. 5.50%, due 8/15/07 ............ 62,118
25,000 PPL Electric Utilities Corp. 5.875%, due 8/15/07 ... 26,582
See notes to financial statements
-2-
PIA MUTUAL FUND PIA BBB BOND FUND
SCHEDULE OF INVESTMENTS - MAY 31, 2004 (CONTINUED)
(UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
ELECTRIC (CONTINUED)
$ 285,000 Progress Energy, Inc. 7.10%, due 3/1/11 ............ $ 312,896
248,000 PSEG Power LLC 8.625%, due 4/15/31 ................. 303,377
264,000 Public Service Company of Colorado
7.875%, due 10/1/12 .............................. 311,409
320,000 Southern California Edison Co. 6.00%, due 1/15/34 .. 307,038
-----------
2,693,411
-----------
ENVIRONMENTAL CONTROL 1.1%
24,000 Republic Services, Inc. 6.75%, due 8/15/11 ......... 26,209
274,000 Waste Management, Inc. 7.75%, due 5/15/32 .......... 311,070
-----------
337,279
-----------
FOOD 4.4%
287,000 Albertson's, Inc. 7.45%, due 8/1/29 ................ 309,477
55,000 Conagra Foods, Inc. 6.75%, due 9/15/11 ............. 60,155
60,000 General Mills, Inc. 2.625%, due 10/24/06 ........... 58,776
25,000 General Mills, Inc. 6.00%, due 2/15/12 ............. 26,123
274,000 Kellogg Co. 7.45%, due 4/1/31 ...................... 314,705
297,000 Kroger Co. 6.20%, due 6/15/12 ...................... 310,641
292,000 Safeway, Inc. 6.50%, due 3/1/11 .................... 309,802
-----------
1,389,679
-----------
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
FOREST PRODUCTS & PAPER 3.2%
$ 285,000 International Paper Co. 6.75%, due 9/1/11 .......... $ 309,924
292,000 MeadWestvaco Corp. 6.85%, due 4/1/12 ............... 312,915
340,000 Weyerhaeuser Co. 6.125%, due 3/15/07 ............... 360,623
24,000 Weyerhaeuser Co. 7.25%, due 7/1/13 ................. 26,630
-----------
1,010,092
-----------
INSURANCE 0.1%
24,000 Safeco Corp. 7.25%, due 9/1/12 ..................... 26,980
-----------
MEDIA 10.1%
295,000 Clear Channel Communications, Inc. .................
6.00%, due 11/1/06 ............................... 312,075
832,000 Comcast Cable Communications, Inc. .................
6.20%, due 11/15/08 .............................. 887,924
283,000 Cox Communications, Inc. 7.125%, due 10/1/12 ....... 310,100
272,000 Liberty Media Corp. 8.50%, due 7/15/29 ............. 315,481
60,000 News America, Inc. 6.625%, due 1/9/08 .............. 65,033
461,000 Time Warner, Inc. 6.125%, due 4/15/06 .............. 485,953
413,000 Time Warner, Inc. 6.875%, due 6/15/18 .............. 430,976
307,000 Walt Disney Co. 6.75%, due 3/30/06 ................. 327,387
25,000 Walt Disney Co. 6.375%, due 3/1/12 ................. 26,897
-----------
3,161,826
-----------
MINING 1.0%
321,000 Alcan, Inc. 6.125%, due 12/15/33 ................... 307,908
-----------
See notes to financial statements
-3-
PIA MUTUAL FUND PIA BBB BOND FUND
SCHEDULE OF INVESTMENTS - MAY 31, 2004 (CONTINUED)
(UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
OIL & GAS 7.3%
$ 281,000 Anadarko Finance Co. 6.75%, due 5/1/11 ............. $ 308,785
280,000 Burlington Resources Finance Co. ...................
5.60%, due 12/1/06 ............................... 294,949
27,000 Devon Energy Corp. 2.75%, due 8/1/06 ............... 26,710
288,000 Devon Financing Corp., U.L.C. 6.875%, due 9/30/11 .. 314,762
25,000 Kerr-McGee Corp. 5.875%, due 9/15/06 ............... 26,286
297,000 Marathon Oil Corp. 6.80%, due 3/15/32 .............. 309,723
46,000 Occidental Petroleum Corp. 8.45%, due 2/15/29 ...... 58,609
279,000 Transocean, Inc. 7.50%, due 4/15/31 ................ 315,940
285,000 Union Oil Co. of California 7.35%, due 6/15/09 ..... 319,470
279,000 Valero Energy Corp. 7.50%, due 4/15/32 ............. 309,440
-----------
2,284,674
-----------
PIPELINES 0.2%
57,000 Kinder Morgan, Inc. 6.50%, due 9/1/12 .............. 60,210
-----------
REAL ESTATE 3.0%
281,000 EOP Operating LP 7.75%, due 11/15/07 ............... 315,065
287,000 ERP Operating LP 6.95%, due 3/2/11 ................. 315,776
292,000 Simon Property Group LP 6.375%, due 11/15/07 ....... 312,800
-----------
943,641
-----------
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
RETAIL 1.3%
$ 56,000 Federated Department Stores, Inc. 6.625%, due 9/1/08 $ 60,850
305,000 May Department Stores Co. 7.90%, due 10/15/07 ...... 343,644
-----------
404,494
-----------
SAVINGS & LOANS 1.0%
335,000 Washington Mutual, Inc. 4.625%, due 4/1/14 ......... 305,443
-----------
TELECOMMUNICATIONS 10.3%
54,000 AT&T Corp. 8.75%, due 11/15/31* .................... 56,955
405,000 AT&T Wireless Services, Inc. 7.875%, due 3/1/11 .... 461,229
366,000 British Telecom PLC 8.375%, due 12/15/10* .......... 429,111
38,000 Deutsche Telekom International Finance BV
8.50%, due 6/15/10* .............................. 44,475
549,000 Deutsche Telekom International Finance BV
5.25%, due 7/22/13 ............................... 536,130
32,000 France Telecom SA 8.20%, due 3/1/06* ............... 34,543
315,000 France Telecom SA 8.75%, due 3/1/11* ............... 365,604
280,000 Motorola, Inc. 7.625%, due 11/15/10 ................ 312,816
268,000 Koninklijke KPN NV 8.00%, due 10/1/10 .............. 310,575
615,000 Sprint Capital Corp. 7.625%, due 1/30/11 ........... 683,720
-----------
3,235,158
-----------
See notes to financial statements
-4-
PIA MUTUAL FUND PIA BBB BOND FUND
SCHEDULE OF INVESTMENTS - MAY 31, 2004 (CONTINUED)
(UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
TRANSPORTATION 2.6%
$ 273,000 CSX Corp. 7.95%, due 5/1/27 ........................ $ 315,666
60,000 FedEx Corp.+ 3.50%, due 4/1/09 ..................... 57,633
305,000 Norfolk Southern Corp. 7.35%, due 5/15/07 .......... 335,498
100,000 Union Pacific Corp. 3.625%, due 6/1/10 ............. 93,310
-----------
802,107
-----------
TOTAL CORPORATE BONDS & NOTES
(cost $25,933,025) ................................. 25,753,992
-----------
U.S. GOVERNMENT
INSTRUMENTALITIES 12.5%
U.S. TREASURY BONDS 3.1%
988,000 U.S. Treasury Bond 5.375%, due 2/15/31 ............. 991,976
-----------
U.S. TREASURY NOTES 9.4%
70,000 U.S. Treasury Note 2.25%, due 7/31/04 .............. 70,161
1,438,000 U.S. Treasury Note 3.125%, due 5/15/07 ............. 1,440,248
1,415,000 U.S. Treasury Note 4.75%, due 5/15/14 .............. 1,426,055
-----------
2,936,464
-----------
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT INSTRUMENTALITIES
(cost $3,906,170) .................................. $ 3,928,440
-----------
SHORT-TERM INVESTMENTS 21.6%
$ 252,854 First American Treasury Obligations Fund ........... 252,854
6,532,000 U.S. Bank, N.A. repurchase agreement,
0.80%, dated 5/28/04, due 6/1/04, repurchase
price $6,532,581 (collateralized by GNMA Series
2003-112 FG, 2.50%, due 12/16/33) .................. 6,532,000
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $6,784,854) .................................. 6,784,854
-----------
TOTAL INVESTMENTS
(cost $36,624,049) ..................... 116.3% 36,467,286
LIABILITIES LESS OTHER ASSETS ........................ (16.3)% (5,124,734)
-----------
TOTAL NET ASSETS ..................................... 100.0% $31,342,552
===========
- ---------------
* Variable rate note. Rate shown reflects the rate in effect at May 31, 2004.
+ Security was purchased May 19, 2004 under Rule 144A of the Securities Act
of 1933 at a cost of The $57,385. security's value of $57,633 represents
0.2% of net assets as of May 31, 2004.
See notes to financial statements
- 5 -
PIA MUTUAL FUND PIA BBB BOND FUND
STATEMENT OF ASSETS AND LIABILITIES - MAY 31, 2004
(UNAUDITED)
ASSETS:
Investments in securities, at value (cost $30,092,049) ..... $ 29,935,286
Repurchase agreement, at value (cost $6,532,000) ........... 6,532,000
Receivable for securities sold ............................. 6,991,109
Receivable for fund shares sold ............................ 324,222
Due from investment adviser ................................ 11,482
Interest receivable ........................................ 393,537
Prepaid expenses and other assets .......................... 10,377
------------
Total assets ............................................. 44,198,013
------------
LIABILITIES:
Payable for securities purchased ........................... 12,663,220
Payable for fund shares purchased .......................... 145,936
Dividends payable .......................................... 21,024
Accrued expenses and other liabilities ..................... 25,281
------------
Total liabilities ........................................ 12,855,461
------------
Net Assets ............................................... $ 31,342,552
============
NET ASSETS CONSIST OF:
Shares of beneficial interest, no par value;
unlimited shares authorized .............................. $ 31,415,192
Undistributed net investment income ........................ 12,450
Undistributed net realized gain on investments ............. 71,673
Net unrealized depreciation on investments ................. (156,763)
------------
Net Assets ................................................. $ 31,342,552
============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE ................................. $ 9.69
============
SHARES OUTSTANDING ........................................... 3,232,864
============
See notes to financial statements
- 6 -
PIA MUTUAL FUND PIA BBB BOND FUND
STATEMENT OF OPERATIONS - SIX MONTHS ENDED MAY 31, 2004
(UNAUDITED)
INVESTMENT INCOME:
Interest ..................................................... $ 96,202
---------
Total investment income .................................... 96,202
---------
EXPENSES:
Fund administration and accounting fees ...................... 29,741
Professional fees ............................................ 15,354
State registration fees ...................................... 8,526
Transfer agent fees and expenses ............................. 8,231
Custody fees ................................................. 4,060
Trustees' fees ............................................... 863
Other expenses ............................................... 2,249
---------
Total expenses ............................................. 69,024
Less: Expense reimbursement from adviser ..................... (69,024)
---------
Net expenses ............................................... --
---------
Net investment income ...................................... 96,202
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments ............................. 72,929
Net change in unrealized appreciation/
depreciation on investments ................................ (155,555)
---------
Net loss on investments ...................................... (82,626)
---------
Net increase in net assets resulting from operations ......... $ 13,576
=========
See notes to financial statements
- 7 -
PIA MUTUAL FUND
PIA BBB BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Sept. 26, 2003*
Ended to
May 31, 2004 Nov. 30,
(Unaudited) 2003
------------ ------------
OPERATIONS:
Net investment income ...................... $ 96,202 $ 1,136
Net realized gain (loss) on investments .... 72,929 (1,256)
Net change in unrealized appreciation/
depreciation on investments .............. (155,555) (1,208)
------------ ------------
Net increase (decrease) in net assets
resulting from operations ................ 13,576 (1,328)
------------ ------------
DIVIDENDS PAID TO SHAREHOLDERS:
Dividends from net investment income ....... (84,888) --
------------ ------------
FUND SHARE TRANSACTIONS:
Net proceeds from shares sold .............. 31,328,708 200,000
Dividends reinvested ....................... 34,671 --
Payment for shares redeemed ................ (148,187) --
------------ ------------
Net increase in net assets from
fund share transactions .................. 31,215,192 200,000
------------ ------------
Total increase in net assets ............... 31,143,880 198,672
NET ASSETS, BEGINNING OF PERIOD .............. 198,672 --
------------ ------------
NET ASSETS, END OF PERIOD .................... $ 31,342,552 $ 198,672
============ ============
TRANSACTIONS IN SHARES:
Shares sold ................................ 3,224,675 20,000
Shares reinvested .......................... 3,483 --
Shares redeemed ............................ (15,294) --
------------ ------------
Net increase in shares outstanding ......... 3,212,864 20,000
============ ============
- ----------
* Commencement of operations.
See notes to financial statements
- 8 -
PIA MUTUAL FUND
BBB BOND FUND
NOTES TO FINANCIAL STATEMENTS - MAY 31, 2004
(UNAUDITED)
NOTE 1. ORGANIZATION
PIA 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 National Market(R) and SmallCap(R) securities are valued at
the NASDAQ Official Closing Price ("NOCP"). If a NOCP is not issued for a given
day, these securities are valued at the average of readily available closing bid
and asked prices. Unlisted securities are valued at the average of the quoted
bid and ask prices in the over-the-counter market. Securities and other assets
for which market quotations are not readily available are valued at fair value
as determined in good faith by the investment adviser under procedures
established by and under the general supervision and responsibility of the
Trust's Board of Trustees. Short-term investments which mature in less than 60
days are valued at amortized cost (unless the Board of Trustees determines that
this method does not represent fair value). Short-term investments which mature
after 60 days are valued at market.
REPURCHASE AGREEMENTS - The Fund may enter into repurchase agreements.
A repurchase agreement transaction occurs when, at the time the Fund purchases a
security, the Fund agrees to resell it to the vendor (normally a commercial bank
or a broker-dealer) on an agreed upon date in the future. On a daily basis, the
Fund's custodian monitors the value of the collateral, including accrued
interest, to ensure it is at least equal to the amount owed to the Fund under
each repurchase agreement. All securities are held by the Fund's custodian.
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.
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 six-month period ended May 31,
2004, the Adviser received no investment advisory fees.
- 9 -
PIA MUTUAL FUND
BBB BOND FUND
NOTES TO FINANCIAL STATEMENTS - MAY 31, 2004 (CONTINUED)
(UNAUDITED)
For the six-month period ended May 31, 2004, 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 six-month period
ended May 31, 2004 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 six-month period ended May 31, 2004, 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 six-month period ended May
31, 2004 were $25,633,819 and $343,028, respectively. Purchases and sales of
U.S. government obligations for the six-month period ended May 31, 2004 were
$27,541,438 and $23,219,377, respectively.
NOTE 6. FEDERAL INCOME TAX INFORMATION
At May 31, 2004, 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. ............................ $ 36,625,476
=============
Unrealized appreciation ......................... $ 100,810
Unrealized depreciation ......................... (259,000)
------------
Net unrealized depreciation on investments ...... $ (158,190)
============
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 $ 1,136
Undistributed long-term gains --
------------
Tax accumulated earnings 1,136
Accumulated capital and other losses (1,199)
Unrealized depreciation on investments (1,265)
------------
Total accumulated deficit $ (1,328)
============
At November 30, 2003, the BBB Bond Fund had accumulated a capital loss
carryforward of $1,199 which expires in the year 2011. To the extent the BBB
Bond Fund realizes future net capital gains, those gains will be offset by any
unused capital loss carryforwards.
NOTE 7. PROXY VOTING POLICIES AND PROCEDURES
A description of the Fund's proxy voting policies and procedures is
available without charge, upon request, by calling 800-251-1970 and on the
Securities and Exchange Commission's website at http://www.sec.gov.
- 10 -
PIA MUTUAL FUND
BBB BOND FUND
FINANCIAL HIGHLIGHTS
Six Months
Ended Sept. 26, 2003*
May 31, 2004 to
(Unaudited) Nov. 30, 2003
------------ ---------------
PER SHARE OPERATING PERFORMANCE
(For a fund share outstanding throughout the period)
Net asset value, beginning of period ........ $ 9.93 $ 10.00
---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ....................... 0.14 0.06
Net realized and unrealized
loss on investments ......................... (0.19) (0.13)
---------- ----------
Total from investment operations ............ (0.05) (0.07)
---------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income ........ (0.19) --
---------- ----------
Net asset value, end of period .............. $ 9.69 $ 9.93
========== ==========
TOTAL RETURN ................................ (0.50)%++ (0.70)%++
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ........ $ 31,343 $ 199
Ratio of expenses to average net assets:
Net of waivers and reimbursements ......... 0.00%+ 0.00%+
Before waivers and reimbursements ......... 2.80%+ 224.56%+
Ratio of net investment income
(loss) to average net assets:
Net of waivers and reimbursements ......... 3.90%+ 3.16%+
Before waivers and reimbursements ......... 1.10%+ (221.40)%+
Portfolio turnover rate ..................... 331%++ 87%++
- -------------
* Commencement of operations.
+ Annualized for periods less than one year.
++ Not annualized for periods less than one year.
See notes to financial statements
- 11 -
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PIA Mutual Fund
Distributed by:
Syndicated Capital, Inc.
1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401
ITEM 2. CODE OF ETHICS.
Not applicable to semi-annual reports.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable to semi-annual reports
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not applicable to semi-annual reports.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
The schedules of investments in securities in unaffiliated issuers are included
as part of the reports to shareholders filed under Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS
Not applicable.
ITEM 9. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's certifying officers 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 - Not applicable to semi-annual reports.
(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)) - Filed as an attachment to this filing.
(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 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/ JOSEPH LLOYD MCADAMS, JR.
-----------------------------
Joseph Lloyd McAdams, Jr.
Chairman, President and Treasurer
Date: JULY 30, 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/ JOSEPH LLOYD MCADAMS, JR.
-----------------------------
Joseph Lloyd McAdams, Jr.
Chairman, President and Treasurer
Date: JULY 30, 2004