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
OCM MUTUAL FUND
---------------
(Exact name of registrant as specified in charter)
1536 Holmes Street
Livermore, California 94550
(Address of principal executive offices) (Zip code)
Gregory M. Orrell
Orrell Capital Management, Inc
1536 Holmes Street
Livermore, California 94550
(Name and address of agent for service)
Registrant's telephone number, including area code: (925)455-0802
-------------
Date of fiscal year end: NOVEMBER 30
-----------
Date of reporting period: NOVEMBER 30, 2004
-----------------
ITEM 1. REPORTS TO STOCKHOLDERS.
[PIA LOGO]
PIA MUTUAL FUND
- PIA SHORT-TERM
GOVERNMENT SECURITIES
- PIA TOTAL RETURN BOND
- PIA EQUITY
ANNUAL REPORT
NOVEMBER 30, 2004
Dear Shareholder:
We are pleased to provide you with this annual report for the period ended
November 30, 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 12 months ended November 30, 2004, the returns, including the
reinvestment of dividends and capital gains, were as follows:
PIA Short-Term Government Securities Fund 1.33%
PIA Total Return Bond Fund 2.94%
PIA Equity Fund (11.58)%
The economic recovery continues along with corporate profits. Inflation remains
subdued in spite of sizable moves in commodity prices. The Federal Deficit rose
to over $400 billion which will increase the size of treasury auctions and put
upward pressure on rates. The U. S. dollar declined close to the lowest level in
a decade. Geopolitical risk is still a concern. The Federal Reserve began to
tighten monetary policy in June by raising the funds rate from a multi decade
low of 1.0 % to 2.0% by November. It is anticipated that the Federal Reserve
will continue tightening monetary policy into 2005. Yields on 2 and 5 year
treasury bonds rose 95 and 33 basis points respectively. The longer end of the
treasury yield curve actually declined by 12 basis points in yield.
The Short Term Government outperformed the Merrill Lynch 1-year Treasury Note
Index which was up 0.97% for the period. The allocation to shorter average life
floating rate securities helped the rate of return.
The Total Return Bond Fund's return was less than the Lehman Aggregate Bond
Index, which was up 4.44%, primarily due to selective corporate and asset backed
bonds that underperformed in the first several months of the year. These same
bonds had helped the Fund's rate of return the prior year and were sold or
reduced during the recent year.
The Equity Fund underperformed the index mainly due to an overweighting in
technology early in the year and an underweighting of energy and basic materials
for most of the year. The S&P Small Cap 600 Index increased by 22.13% and S&P
500 by 12.86% during the year. The Fund had generated a return of 38.94% during
the prior year.
Please take a moment to review your fund(s)' statement of assets and the results
of operations for the one year period ended November 30. We look forward to
reporting to you again in mid 2005.
/S/ LLOYD MCADAMS
- ------------------
Lloyd McAdams
Chairman of the Board
- 1 -
PIA MUTUAL FUND
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 2004
PIA SHORT-TERM GOVERNMENT
SECURITIES FUND
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES 37.3%
PRIVATE 0.3%
$ 153,529 Prudential Home Mortgage Securities
7.50%, due 3/25/08 ............................... $ 154,958
----------
U.S. GOVERNMENT AGENCIES 37.0%
93,197 FHLMC ARM Pool 755204 3.336%, due 8/1/15* ........ 95,534
78,773 FHLMC ARM Pool 845113 3.781%, due 2/1/22* ........ 81,044
118,478 FHLMC ARM Pool 635206 3.832%, due 10/1/22* ....... 121,260
55,458 FHLMC ARM Pool 845755 3.815%, due 6/1/23* ........ 57,132
32,544 FHLMC ARM Pool 609231 3.476%, due 2/1/24* ........ 34,029
1,864,988 FHLMC ARM Pool 785726 4.075%, due 1/1/25* ........ 1,914,606
1,112,030 FHLMC ARM Pool 1C0009 3.113%, due 2/1/32* ........ 1,107,211
1,243,391 FHLMC ARM Pool 180668 3.969%, due 1/1/33* ........ 1,247,335
107,151 FHLMC Series 2504 L 5.50%, due 3/15/15 ........... 107,277
397,588 FNMA Pool 252500 5.50%, due 6/1/06 ............... 403,415
97,928 FNMA Pool 415842 11.00%, due 1/1/13 .............. 107,921
17,286 FNMA Series 2002-1 HA 7.00%, due 7/25/20 ......... 17,283
204,495 FNMA ARM Pool 555206 3.61%, due 7/1/25* .......... 209,831
1,126,690 FNMA ARM Pool 424953 4.011%, due 7/1/27* ......... 1,146,608
710,953 FNMA ARM Pool 556438 3.504%, due 3/1/28* ......... 731,524
PIA MUTUAL FUND
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 2004
PIA SHORT-TERM GOVERNMENT
SECURITIES FUND (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
$ 632,098 FNMA ARM Pool 508399 4.415%, due 6/1/29* ......... $ 654,400
886,303 FNMA ARM Pool 562912 3.998%, due 4/1/30* ......... 902,945
551,690 FNMA ARM Pool 556824 4.126%, due 8/1/30* ......... 575,792
205,526 FNMA ARM Pool 551038 4.349%, due 9/1/30* ......... 213,246
873,795 FNMA ARM Pool 670317 3.781%, due 10/1/30* ........ 910,855
202,899 FNMA ARM Pool 592745 5.55%, due 7/1/31* .......... 210,481
130,098 FNMA ARM Pool 597196 4.191%, due 9/1/31* ......... 131,324
359,228 FNMA ARM Pool 610547 5.305%, due 11/1/31* ........ 371,006
409,107 FNMA ARM Pool 629098 4.893%, due 4/1/32* ......... 423,717
131,023 FNMA ARM Pool 656345 4.127%, due 7/1/32* ......... 134,619
762,062 FNMA ARM Pool 670257 4.308%, due 2/1/33* ......... 778,874
46,195 GNMA II ARM Pool 8871 4.625%, due 11/20/21* ...... 47,142
303,556 GNMA II ARM Pool 8062 4.625%, due 10/20/22* ...... 308,986
747,183 GNMA II ARM Pool 80011 4.625%, due 11/20/26* ..... 761,520
158,019 GNMA II ARM Pool 80013 4.625%, due 11/20/26* ..... 161,551
95,418 GNMA II ARM Pool 80021 4.625%, due 12/20/26* ..... 97,553
50,198 GNMA II ARM Pool 80029 3.375%, due 1/20/27* ...... 51,127
724,294 GNMA II ARM Pool 80094 3.75%, due 7/20/27* ....... 732,377
See notes to financial statements
- 2 -
PIA MUTUAL FUND
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 2004
PIA SHORT-TERM GOVERNMENT
SECURITIES FUND (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
$ 1,012,553 GNMA II ARM Pool 80104 3.75%, due 8/20/27* ....... $ 1,024,574
48,003 GNMA II ARM Pool 80122 4.625%, due 10/20/27* ..... 48,933
417,750 GNMA II ARM Pool 80154 3.375%, due 1/20/28* ...... 424,232
1,225,980 GNMA II ARM Pool 80331 4.50%, due 10/20/29* ...... 1,247,755
274,919 GNMA II ARM Pool 80344 4.00%, due 11/20/29* ...... 281,124
-----------
17,876,143
-----------
TOTAL MORTGAGE-BACKED SECURITIES
(cost $18,101,015) ............................... 18,031,101
-----------
U.S. GOVERNMENT AGENCIES AND
INSTRUMENTALITIES 30.7%
U.S. GOVERNMENT AGENCIES 12.8%
2,000,000 FHLB 4.125%, due 1/14/05 ......................... 2,004,226
1,500,000 FHLB 2.875%, due 9/15/06 ......................... 1,494,808
2,700,000 FNMA 2.625%, due 11/15/06 ........................ 2,671,250
-----------
6,170,284
-----------
U.S. TREASURY NOTES 17.9%
4,000,000 U.S. Treasury Note 2.50%, due 9/30/06 ............ 3,967,344
1,620,000 U.S. Treasury Note 2.75%, due 6/30/06 ............ 1,616,962
PIA SHORT-TERM GOVERNMENT
SECURITIES FUND (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
U.S. TREASURY NOTES (CONTINUED)
$ 3,000,000 U.S. Treasury Note 5.75%, due 11/15/05 ........... $ 3,087,072
-----------
8,671,378
-----------
TOTAL U.S. GOVERNMENT AGENCIES
AND INSTRUMENTALITIES
(cost $14,876,441) ............................... 14,841,662
-----------
SHORT-TERM INVESTMENTS 35.1%
1,550,000 FNMA Discount Note Zero coupon bond to yield
1.89%, due 12/1/04 ............................. 1,550,000
6,300,000 FNMA Discount Note Zero coupon bond to yield
2.00%, due 12/8/04 ............................. 6,297,550
6,600,000 FNMA Discount Note Zero coupon bond to yield
2.00%, due 12/15/04 ............................ 6,594,867
23,690 First American Treasury Obligations Fund ......... 23,690
2,506,000 U.S. Bank, N.A. repurchase agreement,
1.45%, dated 11/30/04, due 12/1/04,
repurchase price $2,506,101
(collateralized by FHLMC Pool
C01528, 5.00%, due 4/1/33) ..................... 2,506,000
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $16,972,107) ................................ 16,972,107
-----------
TOTAL INVESTMENTS
(cost $49,949,563) .......................103.1% 49,844,870
LIABILITIES LESS OTHER ASSETS .......................... (3.1)% (1,494,989)
-----------
NET ASSETS .............................................100.0% $48,349,881
===========
- ------
* Variable rate note. Rate shown reflects the rate in effect at November 30,
2004.
See notes to financial statements
- 3 -
PIA MUTUAL FUND
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 2004
PIA TOTAL RETURN
BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES 2.4%
$111,779 Aames Mortgage Trust 5.97%, due 8/25/31* ............. $115,143
230,417 California Infrastructure PG&E-1
6.42%, due 9/25/08 ................................. 237,486
-----------
TOTAL ASSET-BACKED SECURITIES
(cost $344,995) ...................................... 352,629
-----------
CORPORATE BONDS & NOTES 25.6%
AEROSPACE / DEFENSE 3.2%
150,000 Boeing Capital Corp. 5.75%, due 2/15/07 .............. 157,116
175,000 Lockheed Martin Corp. 8.20%, due 12/1/09 ............. 206,025
94,000 Raytheon Co. 6.75%, due 8/15/07 ...................... 101,650
-----------
464,791
-----------
AUTO MANUFACTURERS 1.0%
65,000 DaimlerChrysler NA Holding Corp. .....................
8.50%, due 1/18/31 ................................. 78,638
70,000 Ford Motor Co. 7.45%, due 7/16/31 .................... 68,293
-----------
146,931
-----------
BANKS 1.1%
150,000 Bank of America Corp. 4.75%, due 10/15/06 ............ 153,858
-----------
DIVERSIFIED FINANCIAL SERVICES 2.4%
150,000 Citigroup, Inc. 5.00%, due 3/6/07 .................... 155,002
170,000 Morgan Stanley 6.60%, due 4/1/12 ..................... 188,057
-----------
343,059
-----------
PIA TOTAL RETURN
BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
DIVERSIFIED MANUFACTURING 1.6%
$200,000 Tyco International Group SA 6.75%, due 2/15/11 ....... $223,767
-----------
ELECTRIC 0.7%
90,000 Southern California Edison Co. 6.65%, due 4/1/29 ..... 98,072
-----------
FOOD 0.6%
75,000 Albertson's, Inc. 7.45%, due 8/1/29 .................. 85,664
-----------
MEDIA 3.3%
190,000 Belo Corp. 8.00%, due 11/1/08 ........................ 214,497
85,000 Time Warner, Inc. 7.625%, due 4/15/31 ................ 99,913
150,000 Viacom, Inc. 5.625%, due 5/1/07 ...................... 157,090
-----------
471,500
-----------
MINING 1.2%
160,000 Alcoa, Inc. 6.50%, due 6/1/11 ........................ 178,468
-----------
REAL ESTATE INVESTMENT TRUST 4.5%
200,000 EOP Operating LP 7.00%, due 7/15/11 .................. 224,136
175,000 Health Care Property Investors, Inc.
6.45%, due 6/25/12 ................................. 187,900
205,000 Prologis Trust 7.625%, due 7/1/17 .................... 239,654
-----------
651,690
-----------
See notes to financial statements
- 4 -
PIA MUTUAL FUND
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 2004
PIA TOTAL RETURN
BOND FUND (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
RETAIL 1.6%
$ 200,000 Staples, Inc. 7.375%, due 10/1/12 .................. $ 231,151
----------
SAVINGS & LOANS 1.3%
180,000 Washington Mutual, Inc. 4.375%, due 1/15/08 ........ 182,758
----------
TELECOMMUNICATIONS 3.1%
97,000 Comcast Cable Communications Holdings, Inc. ........
8.375%, due 3/15/13 .............................. 117,706
150,000 Bellsouth Capital Funding 7.875%, due 2/15/30 ...... 180,338
130,000 Verizon Global Funding Corp. 7.75%, due 12/1/30 .... 156,681
----------
454,725
----------
TOTAL CORPORATE BONDS & NOTES
(cost $3,543,375) .................................. 3,686,434
----------
MORTGAGE-BACKED SECURITIES 34.5%
COLLATERALIZED MORTGAGE OBLIGATIONS 3.6%
91,312 Blackrock Capital Financial L.P. ...................
1.87%, due 3/25/37*++ ............................ 90,711
241,583 FDIC Remic Trust 7.25%, due 5/25/26 ................ 241,734
183,890 Merrill Lynch Mortgage Investors, Inc. .............
6.80%, due 6/15/21* .............................. 187,262
----------
519,707
----------
PIA TOTAL RETURN
BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
U.S. GOVERNMENT MORTGAGE-BACKED SECURITIES 30.9%
$ 845,618 FHLMC Pool B10834 4.50%, due 11/1/18 ............... $ 842,142
360,397 FHLMC Pool B11934 4.50%, due 1/1/19 ................ 358,915
543,749 FHLMC Pool G08004 5.00%, due 8/1/34 ................ 537,832
349,627 FHLMC Pool A27698 5.00%, due 10/1/34 ............... 345,822
27,635 FHLMC Series 1387 S 7.569%, due 10/15/07*+ ......... 891
100,000 FHLMC Series 1704 E 6.50%, due 3/15/09 ............. 104,140
40,614 FHLMC Series 1424 S 7.519%, due 11/15/22*+ ......... 4,602
461,060 FNMA Pool 555285 6.00%, due 3/1/33 ................. 476,281
1,175,254 FNMA Pool 748710 5.50%, due 10/1/33 ................ 1,191,134
498 FNMA Series 1992-12 SA 11.59%, due 1/25/22* ........ 542
47,177 GNMA Pool 503603 7.00%, due 4/15/29 ................ 50,243
527,539 GNMA Pool 623405 5.50%, due 3/15/34 ................ 537,335
----------
4,449,879
----------
TOTAL MORTGAGE-BACKED SECURITIES
(cost $4,973,289) .................................. 4,969,586
----------
See notes to financial statements
- 5 -
PIA MUTUAL FUND
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 2004
PIA TOTAL RETURN
BOND FUND (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES AND
INSTRUMENTALITIES 15.4%
U.S. GOVERNMENT AGENCIES 4.2%
$ 600,000 FNMA 4.625%, due 10/15/13 .......................... $ 599,330
U.S. TREASURY BONDS 5.3%
305,000 U.S. Treasury Bond 5.375%, due 2/15/31 ............. 321,108
330,000 U.S. Treasury Bond 8.125%, due 8/15/19 ............. 443,966
----------
765,074
----------
U.S. TREASURY NOTES 5.9%
860,000 U.S. Treasury Note 2.00%, due 5/15/06 .............. 850,224
----------
TOTAL U.S. GOVERNMENT AGENCIES
AND INSTRUMENTALITIES
(cost $2,231,427) ................................. 2,214,628
----------
RIGHTS 0.0%
1 Global Crossing North America, Inc.
Liquidating Trust (OMEGA) (cost $0) ................ --
----------
PIA TOTAL RETURN
BOND FUND (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 21.5%
$ 24,566 First American Treasury Obligations Fund ........... $ 24,566
383,000 U.S. Bank, N.A. repurchase agreement,
1.45%, dated 11/30/04, due 12/1/04,
repurchase price $383,015
(collateralized by FHLMC Pool C01528,
5.00%, due 04/1/33) ................................ 383,000
2,700,000 U.S. Treasury Bill, due 2/24/05 .................... 2,686,230
----------
TOTAL SHORT-TERM INVESTMENTS
(cost $3,093,796) ........................................... 3,093,796
----------
TOTAL INVESTMENTS
(cost $14,186,882) .................................... 99.4% 14,317,073
OTHER ASSETS LESS LIABILITIES .............................. 0.6% 86,320
----------
TOTAL NET ASSETS ........................................... 100.0% $ 14,403,393
============
* Variable rate note. Rate shown reflects the rate in effect at November
30, 2004.
(OMEGA) Valued at fair value in accordance with procedures established by the
Fund's Board of Trustees.
+ Interest only security.
++ Security was purchased August 17, 1999 under Rule 144A of the
Securities Act of 1933. As of November 30, 2004, the security had a
cost of $90,711 and a value of $87,545 (0.6% of net assets).
See notes to financial statements
- 6 -
PIA MUTUAL FUND
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 2004
PIA EQUITY FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS 95.7%
AUTO PARTS & EQUIPMENT 3.1%
7,000 China Yuchai International Ltd.* ................. $111,580
----------
BIOTECHNOLOGY 3.7%
18,600 CryoLife, Inc.* .................................. 132,432
----------
CHEMICALS 2.1%
2,000 Cabot Corp. ...................................... 75,300
----------
COAL 7.8%
3,000 Arch Coal, Inc. .................................. 114,600
2,000 Peabody Energy Corp. ............................. 166,000
----------
280,600
----------
COMMERCIAL SERVICES 2.3%
5,000 SOURCECORP, Inc.* ................................ 83,150
----------
COMPUTERS 5.0%
8,500 Dot Hill Systems Corp.* .......................... 56,100
8,000 M-Systems Flash Disk Pioneers Ltd.* .............. 126,880
----------
182,980
----------
DIVERSIFIED FINANCIAL SERVICES 2.0%
5,000 Education Lending Group, Inc.* ................... 70,300
----------
ELECTRICAL COMPONENTS & EQUIPMENT 8.3%
13,000 GrafTech International Ltd.* ..................... 124,020
1,700 Hubbell, Inc.- Class B ........................... 82,620
3,000 Trimble Navigation Ltd.* ......................... 94,710
----------
301,350
----------
PIA EQUITY FUND (CONTINUED)
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
ENGINEERING 4.5%
10,000 McDermott International, Inc.* ................... $165,000
----------
ENTERTAINMENT 7.0%
3,000 Cedar Fair, L.P. ................................. 95,820
6,500 Scientific Games Corp.* .......................... 155,350
----------
251,170
----------
GOLD MINING 2.4%
20,000 Golden Star Resources Ltd.* ...................... 86,400
----------
HEALTH CARE PRODUCTS 1.4%
11,000 North American Scientific, Inc.* ................. 49,500
----------
INSTRUMENTS - PHARMACEUTICAL 3.1%
3,000 Varian, Inc.* .................................... 112,350
----------
OIL & GAS 10.7%
3,000 Cimarex Energy Co.* .............................. 120,540
5,000 Forest Oil Corp.* ................................ 170,150
3,000 Maverick Tube Corp.* ............................. 95,100
----------
385,790
----------
PHARMACEUTICALS 8.2%
4,000 Accredo Health, Inc.* ............................ 108,280
5,000 NBTY, Inc.* ...................................... 130,300
3,000 Nektar Therapeutics* ............................. 56,055
----------
294,635
----------
PHYSICAL THERAPY CENTERS 1.7%
10,300 HEALTHSOUTH Corp.* ............................... 59,534
----------
See notes to financial statements
- 7 -
PIA MUTUAL FUND
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 2004
PIA EQUITY FUND (CONTINUED)
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
RETAIL 5.5%
6,000 CKE Restaurants, Inc.* ....................... $ 75,060
2,000 Jo-Ann Stores, Inc.* ......................... 55,040
2,000 Tuesday Morning Corp.* ....................... 66,980
----------
197,080
----------
SEISMIC DATA COLLECTION 3.7%
15,000 Input/Output, Inc.* .......................... 131,550
----------
SOFTWARE 3.0%
15,000 Chordiant Software, Inc.* .................... 30,750
10,000 Sapient Corp.* ............................... 79,100
----------
109,850
----------
STEEL 3.4%
3,000 International Steel Group, Inc.* ............. 120,990
----------
TELECOMMUNICATIONS 3.2%
11,000 PTEK Holdings, Inc.* ......................... 115,830
----------
TRANSPORTATION 3.6%
6,100 SCS Transportation, Inc.* .................... 129,015
----------
TOTAL COMMON STOCKS
(cost $3,170,223) ............................ 3,446,386
----------
PIA EQUITY FUND (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 2.5%
$ 547 First American Treasury
Obligations Fund ............................. $ 547
91,000 U.S. Bank, N.A. repurchase agreement,
1.45%, dated 11/30/04,
due 12/1/04, repurchase price
$91,004 (collateralized by
FHLMC Pool C01528, 5.00%, due 04/1/33) ....... 91,000
----------
TOTAL SHORT-TERM INVESTMENTS
(cost $91,547) .................................. 91,547
----------
TOTAL INVESTMENTS
(cost $3,261,770) ........................ 98.2% 3,537,933
OTHER ASSETS LESS LIABILITIES .......................... 1.8% 65,002
----------
NET ASSETS ............................................. 100.0% $3,602,935
==========
* Non-income producing security.
See notes to financial statements
- 8 -
PIA MUTUAL FUND
STATEMENTS OF ASSETS AND LIABILITIES - NOVEMBER 30, 2004
SHORT-TERM TOTAL
GOVERNMENT RETURN
SECURITIES FUND BOND FUND EQUITY FUND
----------------------------------------------
ASSETS:
Investments in securities, at value (cost $49,949,563,
$14,186,882 and $3,261,770, respectively) ............. $ 49,844,870 $ 14,317,073 $ 3,537,933
Receivable for securities sold .......................... 29,473 -- 75,065
Receivable for fund shares sold ......................... -- 45,630 --
Interest and dividends receivable ....................... 163,279 109,743 324
Due from investment adviser (Note 3) .................... 19,977 21,141 23,524
Prepaid expenses and other assets ....................... 7,870 7,549 6,831
------------ ------------ ------------
Total assets .......................................... 50,065,469 14,501,136 3,643,677
------------ ------------ ------------
LIABILITIES:
Payable for securities purchased ........................ 1,635,163 -- --
Payable for fund shares redeemed ........................ 673 -- 1,824
Dividends payable ....................................... 14,876 39,598 --
Accrued distribution fees ............................... 25,333 22,372 4,009
Accrued expenses and other liabilities .................. 39,543 35,773 34,909
------------ ------------ ------------
Total liabilities ..................................... 1,715,588 97,743 40,742
------------ ------------ ------------
Net Assets ............................................ $ 48,349,881 $ 14,403,393 $ 3,602,935
============ ============ ============
NET ASSETS CONSIST OF:
Shares of beneficial interest, no par value;
unlimited shares authorized ........................... $ 49,358,011 $ 16,144,861 $ 3,901,785
Undistributed net investment income ..................... 3,417 8,699 --
Undistributed net realized loss on investments .......... (906,854) (1,880,358) (575,013)
Net unrealized appreciation (depreciation) on investments (104,693) 130,191 276,163
------------ ------------ ------------
Net Assets ............................................ $ 48,349,881 $ 14,403,393 $ 3,602,935
============ ============ ============
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE .............................. $ 10.03 $ 18.59 $ 20.16
============ ============ ============
SHARES OUTSTANDING ........................................ 4,818,757 774,758 178,749
============ ============ ============
See notes to financial statements
- 9 -
PIA MUTUAL FUND
STATEMENTS OF OPERATIONS - YEAR ENDED NOVEMBER 30, 2004
SHORT-TERM TOTAL
GOVERNMENT RETURN
SECURITIES FUND BOND FUND EQUITY FUND
------------------------------------------
INVESTMENT INCOME:
Interest ........................................ $ 1,221,510 $ 1,154,381 $ 2,743
Dividends (net of foreign
withholding taxes of $573) .................... -- -- 17,478
----------- ----------- -----------
Total investment income ....................... 1,221,510 1,154,381 20,221
----------- ----------- -----------
EXPENSES:
Investment advisory fees ........................ 109,165 86,406 38,297
Fund administration and accounting fees ......... 67,401 63,651 63,651
Distribution fees ............................... 54,582 28,842 19,148
Professional fees ............................... 33,614 33,644 33,634
State registration fees ......................... 31,590 27,558 19,892
Transfer agent fees and expenses ................ 27,796 20,016 15,501
Custody fees .................................... 13,331 11,219 13,384
Reports to shareholders ......................... 5,915 465 2,787
Trustees' fees .................................. 2,979 2,980 2,979
Other expenses .................................. 12,984 11,166 2,713
----------- ----------- -----------
Total expenses ................................ 359,357 285,947 211,986
Less: Expense reimbursement from adviser (Note 3) (168,319) (149,632) (116,244)
----------- ----------- -----------
Net expenses .................................. 191,038 136,315 95,742
----------- ----------- -----------
Net investment income (loss) .................. 1,030,472 1,018,066 (75,521)
----------- ----------- -----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized gain (loss) on investments ......... (35,308) (782,944) 24,319
Net change in unrealized appreciation/
depreciation on investments ................... (239,083) 933,995 (443,281)
----------- ----------- -----------
Net gain (loss) on investments ................ (274,391) 151,051 (418,962)
----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations ..................... $ 756,081 $ 1,169,117 $ (494,483)
=========== =========== ===========
See notes to financial statements
- 10 -
PIA MUTUAL FUND
STATEMENTS OF CHANGES IN NET ASSETS
SHORT-TERM TOTAL
GOVERNMENT RETURN
SECURITIES FUND BOND FUND EQUITY FUND
---------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended Year ended Year ended
Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30,
2004 2003 2004 2003 2004 2003
---------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) .... $ 1,030,472 $ 1,496,259 $ 1,018,066 $ 2,186,251 $ (75,521) $ (45,011)
Net realized gain (loss)
on investments ................ (35,308) 49,059 (782,944) 261,255 24,319 31,592
Net change in unrealized
appreciation/depreciation
on investments ................ (239,083) (347,660) 933,995 (84,268) (443,281) 986,957
Increase from payment by
affiliate ..................... -- -- -- -- -- 12,463
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in
net assets resulting from
operations .................... 756,081 1,197,658 1,169,117 2,363,238 (494,483) 986,001
------------ ------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS PAID TO SHAREHOLDERS:
Dividends from net
investment income ............. (1,344,997) (2,042,954) (1,054,355) (2,341,924) -- --
Distributions from net
realized gains ................ -- (140,009) (1,247,561) (1,033,152) -- --
------------ ------------ ------------ ------------ ------------ ------------
Total distributions ............. (1,344,997) (2,182,963) (2,301,916) (3,375,076) -- --
------------ ------------ ------------ ------------ ------------ ------------
FUND SHARE TRANSACTIONS:
Net proceeds from shares sold ... 19,645,119 33,360,344 18,104,105 11,868,850 101,013 881,252
Distributions reinvested ........ 1,198,096 2,073,600 2,170,447 3,277,906 -- --
Payment for shares redeemed ..... (41,386,074) (37,709,903) (43,789,774) (35,091,670) (350,692) (1,859,687)
------------ ------------ ------------ ------------ ------------ ------------
Net decrease in net assets
from fund share transactions .. (20,542,859) (2,275,959) (23,515,222) (19,944,914) (249,679) (978,435)
------------ ------------ ------------ ------------ ------------ ------------
Total increase (decrease)
in net assets ................. (21,131,775) (3,261,264) (24,648,021) (20,956,752) (744,162) 7,566
NET ASSETS, BEGINNING OF YEAR ..... 69,481,656 72,742,920 39,051,414 60,008,166 4,347,097 4,339,531
------------ ------------ ------------ ------------ ------------ ------------
NET ASSETS, END OF YEAR ........... $ 48,349,881 $ 69,481,656 $ 14,403,393 $ 39,051,414 $ 3,602,935 $ 4,347,097
============ ============ ============ ============ ============ ============
UNDISTRIBUTED NET INVESTMENT INCOME $ 3,417 $ 13,932 $ 8,699 $ 11,668 $ -- $ --
============ ============ ============ ============ ============ ============
TRANSACTIONS IN SHARES:
Shares sold ..................... 1,936,082 3,259,164 959,557 603,184 4,687 43,123
Shares issued on reinvestment
of distributions .............. 118,664 202,852 114,975 167,382 -- --
Shares redeemed ................. (4,081,085) (3,687,634) (2,311,797) (1,772,000) (16,584) (116,898)
------------ ------------ ------------ ------------ ------------ ------------
Net decrease in shares
outstanding ................... (2,026,339) (225,618) (1,237,265) (1,001,434) (11,897) (73,775)
============ ============ ============ ============ ============ ============
See notes to financial statements
- 11 -
PIA MUTUAL FUND
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 2004
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 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 ask
prices. Unlisted securities are valued at the average of the quoted bid and ask
prices in the over-the-counter market. Debt securities (other than short-term
obligations maturing in sixty days or less), including listed issues, are valued
at market on the basis of valuations furnished by an independent pricing service
which utilizes both dealer-supplied valuations and formula-based techniques.
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. 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. For each
investment that is fair valued, the investment adviser considers, to the extent
applicable, various factors including, but not limited to, the type of security,
the financial condition of the company, comparable securities in the public
market, the nature and duration of the cause for a quotation not being readily
available and other relevant factors. There can be no assurance that the Fund
could obtain the fair value assigned to a security if it was to sell the
security at approximately the time at which the Fund determines its net asset
value per share.
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 collateral is 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.
GUARANTEES AND INDEMNIFICATIONS - In the normal course of business, the
Funds enter into contracts with service providers that contain general
indemnification clauses. The Funds' maximum exposure under these arrangements is
unknown as this would involve future claims against the Funds that have not yet
occurred. Based on experience, the Funds expect the risk of loss to be remote.
- 12 -
PIA MUTUAL FUND
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 2004 (CONTINUED)
USE OF ESTIMATES - The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of increases and decreases in net assets from operations during the reporting
period. Actual results could differ from those estimates.
NOTE 3. INVESTMENT ADVISORY AGREEMENT
The Funds have investment advisory agreements with Pacific Income
Advisers, Inc. ("PIA") whereby each Fund pays PIA a fee, computed daily and
payable monthly. The Short-Term Government Fund and the Total Return Bond Fund
pay fees calculated at an annual rate of 0.20% and 0.30%, respectively, of their
average daily net assets. The Equity Fund pays fees calculated at the following
annual rate based upon its average daily net assets:
ASSETS FEE RATE
------ --------
$0 to $50 million 1.000%
$50 million to $75 million 0.875%
$75 million to $100 million 0.750%
$100 million to $150 million 0.625%
$150 million to $250 million 0.500%
Over $250 million 0.375%
For the year ended November 30, 2004, 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 year ended November 30, 2004, the Distributor earned
$30,409, $8,817 and $613 from commissions on sales of the Short-Term Government
Fund's, Total Return Bond Fund's and the Equity Fund's capital stock,
respectively.
NOTE 5. PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities (excluding short-term
securities and U.S. government obligations) for the year ended November 30, 2004
were:
Purchases Sales
--------- -----
Short-Term Government Fund .... $ 5,666,474 $ 18,633,583
Total Return Bond Fund ........ 18,463,793 23,340,929
Equity Fund ................... 4,598,473 4,496,312
Purchases and sales of U.S. government obligations for the year ended
November 30, 2004 were:
Purchases Sales
--------- -----
Short-Term Government Fund $ 3,993,633 $ 2,000,000
Total Return Bond Fund 61,412,931 80,220,874
Equity Fund -- --
- 13 -
PIA MUTUAL FUND
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 2004 (CONTINUED)
NOTE 6. FEDERAL INCOME TAX INFORMATION
At November 30, 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 $49,949,563 $14,269,355 $ 3,261,770
Unrealized appreciation $ 60,019 $ 198,981 $ 594,724
Unrealized depreciation (164,712) (151,263) (318,561)
Net unrealized appreciation
(depreciation) on
investments $ (104,693) $ 47,718 $ 276,163
The difference between cost amounts for financial statement and federal
income tax purposes is due primarily to timing differences in recognizing
certain gains and losses in security transactions.
The tax character of distributions paid during the fiscal years ended
November 30, 2004 and November 30, 2003 was as follows:
Short-Term Total Return
Government Fund Bond Fund Equity Fund
----------------------- ---------------------- ------------------
Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30,
2004 2003 2004 2003 2004 2003
---- ---- ---- ---- ---- ----
Ordinary income ..... $1,344,997 $2,105,329 $1,168,216 $3,161,247 $ -- $ --
Net long-term capital
gains ............. -- 77,634 1,133,700 213,829 -- --
---------- ---------- ---------- ---------- ------- -------
Total distributions . $1,344,997 $2,182,963 $2,301,916 $3,375,076 $ -- $ --
========== ========== ========== ========== ======= =======
Ordinary income distributions may include dividends paid from
short-term capital gains. As of November 30, 2004 the components of accumulated
deficit on a tax basis were as follows:
Short-Term Total
Government Return
Fund Bond Fund Equity Fund
---- --------- -----------
Undistributed ordinary income ..... $ 3,417 $ 8,699 $ --
Undistributed long-term gains ..... -- -- --
----------- ----------- -----------
Tax accumulated earnings .......... 3,417 8,699 --
Accumulated capital and
other losses .................... (906,854) (1,797,885) (575,013)
Unrealized appreciation
(depreciation) on investments ... (104,693) 47,718 276,163
----------- ----------- -----------
Total accumulated deficit ......... $(1,008,130) $(1,741,468) $ (298,850)
=========== =========== ===========
At November 30, 2004, the Short-Term Government, Total Return Bond and
Equity Fund had accumulated capital loss carryforwards of $851,929, $1,770,594
and $522,934, respectively, of which $0, $0 and $447,909 respectively, expire in
the year 2010, $525,317, $0 and $57,011 respectively, expire in the year 2011
and $326,612, $1,770,594 and $18,014 respectively, expire in the year 2012. To
the extent the Funds realize future net capital gains, those gains will be
offset by any available capital loss carryforward. At November 30, 2004, the
Short-Term Government, Total Return Bond Fund and the Equity Fund had net
realized capital losses from transactions between November 1, 2004 and November
30, 2004 of $54,925, $27,291 and $52,079, respectively. Post-October capital
losses for tax purposes are deferred and will be recognized in 2005 and are
included in tax accumulated earnings for the Short-Term Government, Total Return
Bond and Equity Funds.
- 14 -
PIA MUTUAL FUND
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 2004 (CONTINUED)
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. SUBSEQUENT EVENT
At a special meeting of shareholders on December 23, 2004, the
shareholders of the PIA BBB Bond Fund, the Short-Term Government Fund, the Total
Return Bond Fund and the Equity Fund (collectively, the "PIA Funds") approved
the reorganization of the PIA Funds into corresponding series of the Advisors
Series Trust effective on December 23, 2004.
NOTE 9. OTHER TAX INFORMATION (UNAUDITED)
For the year ended November 30, 2004, the Total Return Bond Fund hereby
designates approximately $1,133,700, as capital gain dividends for the purpose
of the dividends paid deduction. For the year ended November 30, 2004, none of
the dividends paid from net investment income qualifies for the dividend
received deduction available to corporate shareholders of the Fund. For
shareholders in the Fund, none of the dividend income distributed for the year
ended November 30, 2004 is designated as qualified dividend income under the
Jobs and Growth Relief Act of 2003.
- 15 -
PIA MUTUAL FUND
SHORT-TERM GOVERNMENT SECURITIES FUND
FINANCIAL HIGHLIGHTS
Year Ended Year Ended Year Ended Year Ended Year Ended
Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30,
2004 2003 2002 2001 2000
-------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout each year)
Net asset value, beginning of year ..... $ 10.15 $ 10.29 $ 10.36 $ 10.12 $ 10.07
---------- ----------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................. 0.25 0.20 0.36 0.52 0.66
Net realized and unrealized
gain (loss) on investments ........... (0.12) (0.04) (0.07) 0.25 0.05
---------- ----------- ---------- ---------- ----------
Total from investment operations ....... 0.13 0.16 0.29 0.77 0.71
---------- ----------- ---------- ---------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income ... (0.25) (0.28) (0.35) (0.52) (0.66)
Distribution from net realized gains ... -- (0.02) (0.01) -- --
Tax return of capital .................. -- -- -- (0.01) --
---------- ----------- ---------- ---------- ----------
Total distributions .................... (0.25) (0.30) (0.36) (0.53) (0.66)
---------- ----------- ---------- ---------- ----------
Net asset value, end of year ........... $ 10.03 $ 10.15 $ 10.29 $ 10.36 $ 10.12
========== =========== ========== ========== ==========
TOTAL RETURN ........................... 1.33% 1.56% 2.87% 7.74% 7.30%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's) ..... $ 48,350 $ 69,482 $ 72,743 $ 71,141 $ 47,191
Ratio of expenses to average net assets:
Net of waivers and reimbursements ...... 0.35% 0.35% 0.35% 0.33% 0.30%
Before waivers and reimbursements ...... 0.66% 0.59% 0.58% 0.46% 0.48%
Ratio of net investment income to
average net assets:
Net of waivers and reimbursements ...... 1.88% 1.99% 3.16% 4.97% 6.49%
Before waivers and reimbursements ...... 1.57% 1.75% 2.93% 4.84% 6.31%
Portfolio turnover rate ................ 28% 74% 185% 121% 89%
See notes to financial statements
- 16 -
PIA MUTUAL FUND TOTAL RETURN BOND FUND
FINANCIAL HIGHLIGHTS
Year Ended Year Ended Year Ended Year Ended Year Ended
Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30,
2004 2003 2002 2001 2000
---------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout each year)
Net asset value, beginning of year ..... $ 19.41 $ 19.91 $ 20.15 $ 19.23 $ 18.92
-------- ------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................. 0.74 0.94 0.94 1.13 1.24
Net realized and unrealized
gain (loss) on investments ........... (0.19) (0.05) (0.13) 0.93 0.31
-------- ------- -------- -------- --------
Total from investment operations ....... 0.55 0.89 0.81 2.06 1.55
-------- ------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income ... (0.73) (1.00) (0.91) (1.14) (1.24)
Distribution from net realized gains ... (0.64) (0.39) (0.14) -- --
-------- ------- -------- -------- --------
Total distributions .................... (1.37) (1.39) (1.05) (1.14) (1.24)
-------- ------- -------- -------- --------
Net asset value, end of year ........... $ 18.59 $ 19.41 $ 19.91 $ 20.15 $ 19.23
======== ======= ======== ======== =========
TOTAL RETURN ........................... 2.94% 4.60% 4.17% 10.94% 8.54%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's) ..... $ 14,403 $39,051 $ 60,008 $ 59,473 $ 34,545
Ratio of expenses to average net assets:
Net of waivers and reimbursements ...... 0.47% 0.45% 0.45% 0.43% 0.40%
Before waivers and reimbursements ...... 0.99% 0.73% 0.70% 0.55% 0.61%
Ratio of net investment income to
average net assets:
Net of waivers and reimbursements ...... 3.53% 4.69% 4.76% 5.61% 6.61%
Before waivers and reimbursements ...... 3.01% 4.41% 4.51% 5.49% 6.40%
Portfolio turnover rate ................ 316% 190% 297% 134% 46%
See notes to financial statements
- 17 -
PIA MUTUAL FUND
EQUITY FUND
FINANCIAL HIGHLIGHTS
Year Ended Year Ended Year Ended Year Ended Year Ended
Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30,
2004 2003 2002 2001 2000
-------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout each year)
Net asset value, beginning of year ..... $ 22.80 $ 16.41 $ 19.44 $ 20.46 $ 17.68
--------- ------- --------- --------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ........... -- (0.24) (0.23) (0.03) 0.01
Net realized and unrealized gain
(loss) on investments ................ (2.64) 6.56 (2.70) 1.01 2.77
Payment by affiliate ................... -- 0.07 -- -- --
--------- ------- --------- --------- --------
Total from investment operations ....... (2.64) 6.39 (2.93) 0.98 2.78
--------- ------- --------- --------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income ... -- -- -- (0.02) --
Distribution from net realized gains ... -- -- (0.10) (1.98) --
--------- ------- --------- --------- --------
Total distributions and other .......... -- -- (0.10) (2.00) --
--------- ------- --------- --------- --------
Net asset value, end of period ......... $ 20.16 $ 22.80 $ 16.41 $ 19.44 $ 20.46
========= ======= ========= ========= ========
TOTAL RETURN ........................... (11.58)%(1) 38.94%(1,2) (15.08)%(1) 4.63%(1) 15.72%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's) ..... $ 3,603 $ 4,347 $ 4,340 $ 5,605 $ 3,318
Ratio of expenses to average net assets:
Net of waivers and reimbursements ...... 2.50% 2.24% 1.80% 1.80% 1.80%
Before waivers and reimbursements ...... 5.52% 5.29% 3.41% 2.86% 3.72%
Ratio of net investment income (loss)
to average net assets:
Net of waivers and reimbursements ...... (1.97)% (1.27)% (1.11)% (0.11)% 0.10%
Before waivers and reimbursements ...... (4.99)% (4.32)% (2.72)% (1.17)% (1.82)%
Portfolio turnover rate ................ 130% 224% 220% 186% 526%
- -----------
1 Assumes no sale charge. See Note 7.
2 For the year ended November 30, 2003, 0.37% of the Fund's total
return relates to payment by affiliate.
See notes to financial statements
- 18 -
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of PIA Mutual Fund
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of PIA Short-Term Government
Securities Fund, PIA Total Return Bond Fund and PIA Equity Fund, a series of PIA
Mutual Fund (the "Trust") at November 30, 2004, the results of each of their
operations for the year then ended, the changes in each of their net assets for
each of the two years in the period then ended and the financial highlights for
each of the five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at November 30, 2004 by
correspondence with the custodian, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP
- -------------------------------
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
January 25, 2005
- 19 -
PIA MUTUAL FUND
EXPENSE EXAMPLE - FOR THE SIX MONTHS ENDED NOVEMBER 30, 2004 (UNAUDITED)
As a shareholder of the PIA Mutual Fund (the "Funds"), you incur two
types of costs: (1) transaction costs; and (2) ongoing costs, including
management fees; distribution (12b-1) fees; and other Fund expenses. This
Example is intended to help you understand your ongoing costs (in dollars) of
investing in the Funds and to compare these costs with the ongoing costs of
investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the
beginning of the period and held for the entire period from June 1, 2004 to
November 30, 2004 (the "period").
ACTUAL EXPENSES
The first line of the table below provides information about actual
account values and actual expenses. You may use the information in this line,
together with the amount you invested, to estimate the expenses you paid over
the period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 equals 8.6), then multiply the result by the
number in the first line under the heading entitled "Expenses Paid During the
Period" to estimate the expenses you paid on your account during the period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about
hypothetical account values and hypothetical expenses based on the Funds' actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the actual return of any of the Funds. The hypothetical account
values and expenses may not be used to estimate the actual ending account
balance or expenses you paid for the period. You may use this information to
compare the ongoing costs of investing in the Funds and other funds. To do so,
compare this 5% hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight
your ongoing costs only and do not reflect any transactional costs. Therefore,
the second line of the table is useful in comparing the ongoing costs only, and
will not help you determine the relative total costs of owning different funds.
In addition, if these transactional costs were included, your costs could have
been higher.
EXPENSES PAID DURING THE PERIOD
BEGINNING ACCOUNT ENDING ACCOUNT DURING THE
VALUE VALUE PERIOD ENDED
JUNE 1, 2004 NOVEMBER 30, 2004 NOVEMBER 30, 2004*
------------ ----------------- ------------------
PIA SHORT-TERM GOVERNMENT SECURITIES FUND
Actual ............................. $ 1,000.00 $ 1,008.60 $ 1.76
Hypothetical
(5% return before expenses) ...... 1,000.00 1,023.25 1.77
PIA TOTAL RETURN BOND FUND
Actual ............................. $ 1,000.00 $ 1,031.40 $ 2.54
Hypothetical
(5% return before expenses) ...... 1,000.00 1,022.50 2.53
PIA EQUITY FUND
Actual ............................. $ 1,000.00 $ 972.00 $ 12.23
Hypothetical
(5% return before expenses) ...... 1,000.00 1,012.60 12.48
<FN>
- -----------
1 Expenses are equal to each Fund's annualized expense ratio for the period,
multiplied by the average account value over the period, multiplied by
183/366 (to reflect the one-half year period). For the period ended
November 30, 2004, the expense ratios of the PIA Short-Term Government
Securities Fund, PIA Total Return Bond Fund and PIA Equity Fund were
0.35%, 0.50% and 2.48%, respectively.
</FN>
- 20 -
PIA MUTUAL FUND
PIA SHORT-TERM GOVERNMENT
SECURITIES FUND
PERFORMANCE RESULTS
YEAR ENDED NOVEMBER 30, 2004
AVERAGE ANNUAL TOTAL RETURNS VALUE ON 11/30/04
- ---------------------------- -----------------
1 year 1.33% PIA ST Gov't. $16,636
5 year 4.12% Lehman Index $17,445
10 year 5.22%
$10,000 INVESTMENT MADE 11/30/94
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
PIA ST Fund Lehman Index
----------- ------------
11/30/94 10,000 10,000
11/30/95 10,748 11,022
11/30/96 11,576 11,668
11/30/97 12,335 12,363
11/30/98 13,197 13,262
11/30/99 13,593 13,612
11/30/00 14,585 14,558
11/30/01 15,714 15,985
11/30/02 16,165 16,794
11/30/03 16,417 17,195
11/30/04 16,636 17,445
The returns shown included the reinvestment of all dividends, but do not reflect
the deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares. Past performance is not predictive of future
performance.
The Lehman Government 1-3 Year Index is an unmanaged index consisting of all US
Treasury & Agency bonds weighted according to market capitalization with
maturities between one and three years.
INVESTMENTS BY ISSUER
AS A PERCENTAGE OF NET ASSETS
[THE FOLLOWING TABLE WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL.]
Federal National Mortgage Assoc. 52%
United States Treasury 18%
General National Mortgage Assoc. 11%
Federal Home Loan Mortgage Corp. 10%
Federal Home Loan Bank 7%
Cash and Other Assets 2%
- 21 -
PIA MUTUAL FUND
PIA TOTAL RETURN BOND FUND
PERFORMANCE RESULTS
YEAR ENDED NOVEMBER 30, 2004
AVERAGE ANNUAL TOTAL RETURNS VALUE ON 11/30/04
- ---------------------------- -----------------
1 year 2.94% PIA Total Return Bond $13,734
5 year 6.20% Lehman Index $14,655
Inception 5.21%
$10,000 INVESTMENT MADE 9/1/98 (INCEPTION DATE)
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
PIA Bond Lehman Index
-------- ------------
9/1/98 10,000 10,000
11/30/98 10,265 10,274
11/30/99 10,168 10,140
11/30/00 11,037 11,054
11/30/01 12,244 12,328
11/30/02 12,755 13,230
11/30/03 13,342 14,076
11/30/04 13,734 14,655
The returns shown included the reinvestment of all dividends, but do not reflect
the deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares. Past performance is not predictive of future
performance.
The Lehman Gov/Credit index is an unmanaged index consisting of US Treasury &
Agency bonds and publicly issued US corporate and foreign debentures and secured
notes.
INVESTMENTS BY TYPE
AS A PERCENTAGE OF NET ASSETS
[THE FOLLOWING TABLE WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL.]
Mortgage-Backed Securities 35%
Corporate Bonds & Notes 27%
Cash and Other Assets 21%
U.S. Government Agencies and
Instrumentalities 15%
Asset-Backed Securities 2%
- 22 -
PIA MUTUAL FUND
PIA EQUITY FUND
PERFORMANCE RESULTS
YEAR ENDED NOVEMBER 30, 2004
AVERAGE ANNUAL TOTAL RETURNS VALUE ON 11/30/04
- ---------------------------- -----------------
1 year (11.58)% PIA Equity $15,095
5 year 4.78% S&P 500(R) Index $18,182
Inception 5.31%
$10,000 INVESTMENT MADE 12/13/96 (DATE PIA BECAME INVESTMENT ADVISER)(1)
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
PIA Equity S&P 500
---------- -------
12/13/96 10,000 10,000
11/30/97 11,207 13,340
11/30/98 10,663 16,496
11/30/99 11,949 19,943
11/30/00 13,828 19,102
11/30/01 14,469 16,767
11/30/02 12,287 13,998
11/30/03 17,072 16,111
11/30/04 15,095 18,182
The returns shown included the reinvestment of all dividends, but do not reflect
the deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares. Past performance is not predictive of future
performance.
The S&P 500(R) Index is a broad unmanaged index generally considered to be
representative of the US equity market.
(1) Previous periods during which time the Fund was advised by another
investment adviser are not shown.
INVESTMENTS BY SECTOR
AS A PERCENTAGE OF NET ASSETS
[THE FOLLOWING TABLE WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL.]
Energy 22%
Industrial 20%
Consumer, Non-cyclical 17%
Consumer, Cyclical 16%
Basic Materials 8%
Communications 6%
Technology 5%
Cash and Other Assets 4%
Financial 2%
A description of the Funds' proxy voting policies and procedures and a
record of the Funds' proxy votes for the year ended June 30, 2004 are available
without charge, upon request by calling toll free 1-800-251-1970 and on the
Securities and Exchange Commission's (SEC) website at http://www.sec.gov.
The Funds will file their complete schedule of investments with the SEC
for the first and third quarters of each fiscal year on Form N-Q. The Funds'
Forms N-Q will be available on the EDGAR database on the SEC's website at
http://www.sec.gov. These Forms may also be reviewed and copied at the SEC's
Public Reference Room in Washington, D.C. Information about the operation of the
Public Reference Room may be obtained by calling 1-800-SEC-0330.
- 23 -
PIA MUTUAL FUND
TRUSTEES AND EXECUTIVE OFFICERS
The overall management of the business and affairs of the Trust is
vested with its Board of Trustees (the "Board"). The Board approves all
significant agreements between the Trust and persons or companies furnishing
services to it, including the agreements with the Advisor, Administrator,
Custodian and Transfer Agent. The day-to-day operations of the Trust are
delegated to its officers, subject to the Fund's investment objectives,
strategies, and policies and to general supervision by the Board.
The current Trustees and officers of the Trust, their birth dates and
positions with the Trust, term of office with the Trust and length of time
served, their business addresses and principal occupations during the past five
years and other directorships held are set forth in the table below. Unless
noted otherwise, each person has held the position listed for a minimum of five
years.
INDEPENDENT TRUSTEES OF THE TRUST
- -------------------------------------------------------------------------------------------------------------------
TERM OF OFFICE
POSITION HELD AND LENGTH OF PRINCIPAL OCCUPATION
NAME, ADDRESS AND AGE WITH THE TRUST TIME SERVED DURING PAST FIVE YEARS OTHER DIRECTORSHIPS HELD
- --------------------- -------------- ----------- ---------------------- ------------------------
WALTER E. AUCH* Trustee Indefinite Management Consultant Director, Nicholas-Applegate
2020 E. Financial Way term since Funds, Citigroup Funds,
Glendora, CA 91741 February 1997 Pimco Advisors LLP and
(born 1921) Senele Group.
DONALD E. O'CONNOR* Trustee Indefinite Financial Consultant; Independent Director,
2020 E. Financial Way term since formerly Executive The Forward Funds.
Glendora, CA 91741 February 1997 Vice President and
(born 1936) Chief Operating Officer of
ICI Mutual Insurance Company
(until January 1997).
GEORGE T. WOFFORD III* Trustee Indefinite Senior Vice President, None
2020 E. Financial Way term since Information Services,
Glendora, CA 91741 February 1997 Federal Home Loan Bank
(born 1939) of San Francisco.
JAMES CLAYBURN LAFORCE* Trustee Indefinite Dean Emeritus, John E. Director, The Payden & Rygel
2020 E. Financial Way term since Anderson Graduate School Investment Group, The
Glendora, CA 91741 May 2002 of Management, University Metzler/Payden Investment Group,
of California, PIC Investment Trust, PIC
Los Angeles. Small Cap Portfolio, PIC Balanced
Portfolio, PIC Growth
Portfolio, PIC Mid Cap Portfolio,
BlackRock Funds, Jacobs Engineering,
Arena Pharmaceuticals, Cancervax.
GEORGE J. REBHAN* Trustee Indefinite Retired; formerly Trustee, E*TRADE Funds.
2020 E. Financial Way term since President, Hotchkis and
Glendora, CA 91741 May 2002 Wiley Funds (mutual funds)
(born 1934) from 1985 to 1993.
- 24 -
INTERESTED TRUSTEE OF THE TRUST
- -------------------------------------------------------------------------------------------------------------------
TERM OF OFFICE
POSITION HELD AND LENGTH OF PRINCIPAL OCCUPATION
NAME, ADDRESS AND AGE WITH THE TRUST TIME SERVED DURING PAST FIVE YEARS OTHER DIRECTORSHIPS HELD
- --------------------- -------------- ----------- ---------------------- ------------------------
ERIC M. BANHAZL** Trustee Indefinite Senior Vice President, U.S. None
2020 E. Financial Way term since Bancorp Fund Services, LLC
Glendora, CA 91741 February 1997 since July 2001; Treasurer,
Investec Funds; formerly,
Executive Vice President,
Investment Company Administration,
LLC; ("ICA") (mutual fund
administrator and the Fund's former
administrator).
OFFICERS OF THE TRUST
ERIC M. BANHAZL** President, Indefinite Senior Vice President, U.S. None
2020 E. Financial Way Interested term since Bancorp Fund Services, LLC
Glendora, CA 91741 Trustee February 1997 since July 2001; Treasurer,
(born 1957) Investec Funds; formerly,
Executive Vice President,
Investment Company Administration, LLC;
("ICA") (mutual fund administrator
and the Fund's former administrator).
DOUGLAS G. HESS Treasurer Indefinite Vice President, Compliance and None
615 East Michigan St. term since Administration, U.S. Bancorp Fund
Milwaukee, WI 53202 June 2003 Services, LLC since March 1997.
(born 1967)
RODNEY A. DEWALT Secretary Indefinite Legal and Compliance None
615 East Michigan St. term since Administrator, U.S. Bancorp
Milwaukee, WI 53202 December Fund Services, LLC since
(born 1967) 2003 January 2003; Thrivent Financial
for Lutherans from
2000 to 2003; Attorney, Private
<FN>
Practice from 1997 to 2000..
- ----------------
* Denotes those Trustees of the Trust who are not "interested persons" of the
Trust as defined under the 1940 Act ("Independent Trustees").
** Denotes Trustee who is an "interested person" of the Trust under the 1940
Act. Mr. Banhazl is an interested person of the Trust by virtue of his
position as President of the Trust. He is also an officer of U.S. Bancorp
Fund Services, LLC, the administrator for the Fund. U.S. Bancorp Fund
Services, LLC is an affiliate of Quasar Distributors, LLC, the Fund's
distributor.
</FN>
- 25 -
PIA Mutual Fund
Distributed by:
Syndicated Capital, Inc.
1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401
[LOGO] OMITTED
-------------
OCM GOLD FUND
=============
ANNUAL REPORT
NOVEMBER 30, 2004
"DEFICIT SPENDING IS SIMPLY A SCHEME FOR THE 'HIDDEN'
CONFISCATION OF WEALTH. GOLD STANDS IN THE WAY OF THIS
INSIDIOUS PROCESS. IT STANDS AS A PROTECTOR OF PROPERTY
RIGHTS."
Alan Greenspan - 1966
Dear Fellow Shareholder:
It wasn't that long ago we were hearing a lot about a new era, but now we are
actually living in one. The world is rebalancing its historic overweight
exposure to the U.S dollar in response to a deteriorating U.S. balance sheet and
a less favorable world opinion of American policies. Consequently, the dollar's
role as the world's reserve currency has come under attack. High levels of
public and private debt have the country walking a tight rope between inflation
and deflation. Further, China has emerged as an economic force, establishing
itself as the price setter for raw materials and finished goods. Lastly, threats
of terrorism toward the United States are real and constant, with the United
States engaged in chronic war in the name of defeating terrorism. In our
opinion, the changing economic and geopolitical landscape creates enormous risk
and uncertainty for holders of U.S. dollars and punctuates our view that we are
still in the early stages of a long-term bull market in gold and a bear market
in financial assets.
Despite the gold price rising 5% in 2004, gold shares spent the year in a
corrective phase after strong gains in 2001 thru 2003. The only other time the
gold bullion price rose and gold share prices dropped was1986. The following
year both gold and gold shares experienced significant upside moves (noted for
historical purposes only, nothing implied). In 2004, gold traded in a range of
$373 and $455 over the year, ending December 31st at $437. Your fund's NAV
declined 13.59% for the year (-10.31% for the fiscal period ending November 30,
2004). The Philadelphia Gold and Silver Index of gold shares declined 7.70% over
the corresponding period (-1.59% for year ending November 30, 2004). Your fund
underperformed the index over the past year due to the poor relative performance
of the major South African gold producers held in the fund along with junior
producers and exploration stocks as a group underperforming the index.
ECONOMIC RISKS
For more than 60 years, the U.S. dollar has been the dominant reserve currency.
The United States has been in the enviable position of being able to pay for
imports without having to balance foreign purchases with earned foreign exchange
from exports. Foreigners have been more than willing to hold the U.S. dollar,
partly because of the history of the dollar being as good as gold, but also due
to there being few alternatives. No other currency possesses the size of economy
as the U.S. or the depth in financial markets. However, long-term profligate
spending practices appear to be leading to a complete revaluation of the U.S.
dollar with potential dire consequences for the U.S. economy.
Since early 2002 the U.S. dollar has lost 37% of its value against the euro and
24% against the yen. Against the Federal Reserve's broad basket of currencies it
has declined only 16%, because many Asian currencies are pegged or closely tied
to the dollar. Going back to 1960, the dollar has lost approximately two-thirds
of its value against the deutschemark/euro and the yen. Against gold it has
declined 93%.
The acceleration of the decline in the dollar can be traced to the aggressive
fiscal and monetary stimulus employed by Washington to fight the deflationary
forces associated with the post bubble environment. Increased spending on
defense and Medicare entitlements has sent the federal budget from a $237
billion surplus in fiscal 2000 to a record $413 billion deficit in fiscal 2004.
Given the continued commitment in Iraq and the unfunded liabilities of the
social security system with baby boomers hitting retirement, it will be
difficult for President Bush to right the ship, especially if the economy were
to slip back into recession.
- 1 -
[THE FOLLOWING TABLE WAS REPRESENTED AS LINE GRAPHS IN THE PRINTED MATERIAL.]
US Budget Deficit US Current Account Deficit
12/31/1973 -14.908 7.14
12/31/1974 -6.135 1.962
12/31/1975 -53.242 18.116
12/31/1976 -73.732 4.295
12/31/1977 -53.659 -14.335
12/31/1978 -59.186 -15.143
12/31/1979 -40.729 -0.285
12/31/1980 -73.835 2.317
12/31/1981 -78.976 5.03
12/31/1982 -127.989 -5.536
12/31/1983 -207.818 -38.691
12/31/1984 -185.388 -94.344
12/31/1985 -212.334 -118.155
12/31/1986 -221.245 -147.177
12/31/1987 -149.769 -160.655
12/31/1988 -155.187 -121.153
12/31/1989 -152.481 -99.486
12/31/1990 -221.194 -78.965
12/31/1991 -269.359 3.747
12/31/1992 -290.402 -48.013
12/31/1993 -255.013 -81.989
12/31/1994 -203.104 -117.678
12/31/1995 -163.899 -105.217
12/31/1996 -107.45 -117.203
12/31/1997 -21.94 -127.684
12/31/1998 69.242 -204.691
12/31/1999 124.36 -290.846
12/31/2000 236.897 -411.458
12/31/2001 127.276 -393.745
12/31/2002 -157.791 -480.861
12/31/2003 -377.139 -541.83
12/31/2004 -412.553 -600
More worrisome is the exponential explosion of the current account deficit. For
all of 2003 the current account deficit was a record $495 billion. The 2004
figure is expected to finish at $620 billion, up 27%. As a consequence, the
current account deficit is soaking up 80% of total global cross-border savings.
The Treasury Department reports net private investment declined 50% in 2004.
Therefore, the capital inflows necessary to finance the deficit have come
principally from foreign central banks propping up the dollar in hopes of
maintaining competitive trading positions, particularly Asian central banks. It
is not as though the Federal Reserve doesn't understand the risks, because
clearly they do. George McTeer, outgoing President of the Dallas Fed, said on
October 8th, 2004, "theoretically, some day...the flows will turn against us and
there will be a crisis that will result in rapidly rising interest rates and a
rapidly depreciating dollar." The U.S. and global credit system would come
unglued if the markets turned suddenly and violently as Mr. McTeer suggests.
In the past, the U.S. current account imbalance would have corrected on the back
of a weaker dollar. In the current environment the deficit has accelerated. Part
of the problem is America's hollowed-out its industrial capacity. It now relies
on outsourced labor and manufactured goods from low cost labor centers India and
China. Therefore, in order to curb the current account deficit the Federal
Reserve will have to increase interest rates to slow down the American consumer
and in turn slow down the U.S. economy. And herein lies the rub. How hard can
the Federal Reserve push interest rates up with total household debt at record
levels and personal savings rates near zero without collapsing the real estate
market and sending consumers and financial institutions to the brink? With
nearly half of new mortgage borrowing done at flexible interest rates, borrowers
and lenders are much more vulnerable to rate hikes.
Moreover, should the Federal Reserve move aggressively to a restrictive monetary
policy by taking interest rates above the rate of inflation, expectations of a
firmer dollar may be misguided. In his weekly piece to clients on January 10th,
2005, Morgan Stanly economist Stephen Roach, warned those betting on a stronger
dollar: "DON'T COUNT ON IT. BACK IN 1994, WHEN THE FED WAS LAST FACED WITH A
SIMILAR NORMALIZATION CHALLENGE, THE DOLLAR FELL LIKE A STONE EVEN AS THE US
AUTHORITIES PUSHED THE FEDERAL FUNDS RATE UP BY 300 BPS. IN TODAY'S CLIMATE,
WITH A US CURRENT ACCOUNT DEFICIT THAT IS NEARLY THREE TIMES WHAT IT WAS BACK
THEN, THE DOWNSIDE FOR THE DOLLAR CAN HARDLY BE MINIMIZED. THERE'S FAR MORE TO
CURRENCY ADJUSTMENTS THAN SWINGS IN RELATIVE INTEREST RATES."
In addition to fundamental issues of the current account and budget deficits,
the U.S. dollar is being liquidated in retaliation to American policies. Middle
Eastern central banks have reportedly switched reserves from dollars to euros
and sterling. Since the third quarter of 2001, members of OPEC have cut the
proportion of deposits held in dollars from 75% to 61.5% currently. Moreover,
private Middle East investors are believed to be worried about the prospect of
US-held assets being frozen.
- 2 -
Although we are ultimately not a fan of the euro, primarily because it is a
non-sovereign backed paper currency, it is gaining appreciation in the market
place as a reserve currency. Unlike America, the euro area is a net creditor.
The U.S. now owes the rest of the world $3.3 trillion. Never before has the
custodian of the world's main reserve currency been its biggest net debtor
because a debtor may be tempted to use devaluation to reduce its external
deficit. As a further recognition of euro acceptance as a reserve currency,
Asian central banks recently took up 30% of a recent euro bond offering in
Belgium.
GOLD MARKET
For years gold's detractors have tried to relegate gold to commodity status.
Refusing to understand gold is produced for accumulation, whereas, commodities
are produced for consumption. While history is on gold's side as the ultimate
form of money, one has to look no further than the recent relationship between
gold and the U.S. dollar to understand gold's role as a currency. Over the past
three years, the correlation between the U.S. dollar index and gold was 92%.
Gold's price fluctuations therefore are primarily driven by changing perceptions
in the value of paper money and confidence in financial assets.
The gold price reached its high for the year of $454.20 on December 2nd, as the
dollar sell-off accelerated following the re-election of President Bush. On the
heels of the election, the long-awaited new gold exchange traded fund (ETF) was
launched in the U.S., allowing a segment of investors that had previously been
precluded from owning gold bullion a convenient vehicle in which to do so. After
two months of trading, the ETF had accumulated an impressive total 142 tonnes
(metric) of gold, worth almost $2 billion.
According to Gold Fields Mineral Services (GFMS), investment demand for gold was
strongest in Asia and the Middle East. India remains the largest market for
gold, having accounted for approximately 880 tonnes of demand in 2004. The
dramatic economic growth in India and China is leading to increased purchasing
power in the hands of a large gold friendly population, which obviously bodes
well for future gold demand.
With the rising price of gold, it would be logical to assume that newly mined
supply would also increase. This has not been the case; in fact the opposite is
true. GFMS reported that mine production in 2004 dropped 110 tonnes or 4%, the
largest drop since the 1940's. South African production reached its lowest level
since 1967. Reducing supply further, mining companies continued to de-hedge by
buying back or delivering into their hedge books 400 tonnes of gold over the
year that had been previously sold forward.
As expected, European central banks renewed their agreement to limit gold sales
over the next five years to 500 tonnes per year, an increase of 100 tonnes over
the previous agreement that had expired in September. Socialists in Europe have
been eager to sell gold for social programs and to reduce budget deficits,
believing the creation of the European Central Bank has alleviated the need for
significant gold holdings. France acquiesced and announced it would sell 500
tonnes over the life of the agreement. So far Germany's Bundesbank has declined
to sell its allocation under the agreement, and according to GFMS it is "highly
improbable" the stated total allotment of 2,500 tonnes will be sold within five
years.
- 3 -
European central bank gold sales over the past year were partially offset by
Argentina's central bank purchase of 55 tonnes. In our opinion, the likely buyer
for future European gold sales is Asia with its $2.1 trillion in foreign
exchange reserves. Most of that is held in depreciating US dollars. Only about
1.3% of it is held in gold (1,930 tonnes). The more the dollar falls, the more
Asian policy makers and central bankers are likely to focus on the risks of
having all their eggs in one dollar basket. With few reserve asset alternatives,
we believe gold will be an important element of that diversification. If both
China and Japan were to adopt the fifteen percent gold weighting of the European
Central Bank, they would have to buy 17,000 tonnes of gold. To put this in
perspective, Europe collectively owns about 12,200 tonnes of gold and the United
States has 8,410 tonnes of gold.
GOLD MINING SHARES
Typically, gold mining shares outperform bullion in a rising gold price
environment as earnings are leveraged to the gold price and reserves in the
ground increase in value. Over the past year, gold mining shares underper-formed
the gold bullion price as profit margins suffered due to rising raw material
costs, such as steel and fuel, and strong local currencies in gold-producing
countries like Canada, Australia and South Africa. South African gold producers
as a group suffered the most due to the overvalued rand. Putting further
downward pressure on gold shares, especially juniors, was the large number of
equity financings done in 2003 that was absorbed back into the market over the
past year.
The best performers in your fund's portfolio over the year were driven by
success with the drill bit. Of the senior producers, Placer Dome gained 5.3% as
exploration success in Nevada at its Cortez Hills added high value resource
ounces. In the intermediates category, Meridian Gold regained some its shine
lost the previous year with a new discovery at its El Pinon mine in Chile. The
shares were up 29.8% for the year. The top performing security in your fund in
2004 was an exploration and development company, Western Silver, up 71.2%.
Countering the gains were poor performances by South African gold producer,
Harmony Gold, down 42.9%, along with a 67.2% drop in Nevsun Resources, which had
its exploration license put on hold by the Eritrean government.
2004 will probably best be remembered as the year of the almost merger. Attempts
to consolidate the gold mining industry failed miserably. Iamgold forged an
agreement to merge with Wheaton River Minerals, only to be turned back by
shareholders. Golden Start tried to make a run at Iamgold, but didn't gain the
necessary support. Coeur d'Alene mines had aspirations of taking control of
Wheaton River, but was turned away by Wheaton shareholders. Gold Fields
attempted to merge its international assets into Iamgold, but failed to get
shareholder approval after Harmony Gold entered the picture with a takeover
offer for all of Gold Fields that failed to gain traction. Finally, at the close
of the year, Goldcorp and Wheaton River announced plans to merge, however,
Glamis Gold showed up with a hostile offer to buy Goldcorp. At the end of the
day, investment bankers collected a lot of fees, while shareholder value was
compromised.
- 4 -
INVESTMENT PHILOSOPHY
The investment philosophy of your fund is to participate in all sectors of the
gold mining industry. Our tiered approach is designed to have larger allocations
in high quality senior gold producers, with progressively smaller percentage
allocations to intermediate producers, junior producers and
exploration/development companies. It is our belief that as the gold price
rises, investment funds flow down the food chain of the industry.
In 2003, we increased the fund's exposure to exploration and development
companies with the belief that higher gold prices increase the opportunities of
finding economic deposits and therefore creating significant shareholder value.
Overall, the exploration and development segment has done quite well with some
spectacular gains. However, because of the risk involved, we must spread the
exposure over a large number of relatively small percentage positions, which has
become increasingly difficult to manage. We anticipate harvesting the gains in
the exploration and development portfolio in 2005 and lowering the fund's
exposure to this sector to under 5%. Over the coming year, we see the gold
mining industry continuing to face the challenges of replacing mined reserves,
permitting new mines, and controlling costs. The companies that will outperform,
in our opinion, will be those companies exhibiting growing production profiles
that can maintain profit margins and successfully replace reserves. We do
believe that further attempts to consolidate the industry will be made, with
junior explorers possessing high quality deposits being the most attractive
acquisition targets for reserve starved producers.
CONCLUSION
In our opinion, years of attempting to smooth out business cycles and socialize
risk has led to excess credit creation and inordinate levels of speculative
activity. The decline in the dollar, we believe, is in the early stages of
working to correct the imbalances built up due to years of profligate spending
practices. Central banks will most likely continue to fight the decline of the
dollar through competitive devaluations that will ultimately lead to gold prices
rising against all currencies. In a period of depreciating financial assets,
investors, including central banks, will find comfort in the fact that gold is
an owned asset and not someone else's liability.
We appreciate your shareholding in the OCM Gold Fund, and we look forward to
meeting your investment objectives. If you have questions regarding the fund or
gold, please contact your financial advisor or you may contact us directly at
1-800-779-4681.
Sincerely,
/S/ GREGORY M. ORRELL
- ---------------------
Gregory M. Orrell
PRESIDENT AND PORTFOLIO MANAGER
JANUARY 19, 2005
- 5 -
OCM GOLD FUND
SCHEDULE OF INVESTMENTS - NOVEMBER 30, 2004
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS 95.5%
MAJOR GOLD PRODUCERS 35.9%
169,500 AngloGold Ashanti Ltd. ADR ..................... $ 6,764,745
15,000 Barrick Gold Corp. ............................. 368,850
25,000 Compania de Minas Buenaventura S.A.u. ADR ...... 587,500
10,000 Freeport-McMoRan Copper & Gold, Inc. ........... 391,300
270,000 Gold Fields Ltd. ADR ........................... 3,812,400
175,000 Harmony Gold Mining Co. Ltd. ADR ............... 1,834,000
275,000 Kinross Gold Corp.* ............................ 2,180,750
179,994 Newmont Mining Corp. ........................... 8,522,716
200,000 Placer Dome, Inc. .............................. 4,302,000
-----------
28,764,261
-----------
INTERMEDIATE/MID-TIER GOLD PRODUCERS 25.1%
100,000 Agnico-Eagle Mines Ltd. ........................ 1,572,000
350,000 Bema Gold Corp.* ............................... 1,277,437
190,000 Cambior, Inc.* ................................. 579,500
125,000 Glamis Gold Ltd.* .............................. 2,543,750
280,000 Goldcorp, Inc. ................................. 4,258,800
425,000 IAMGOLD Corp. .................................. 3,259,750
100,000 Meridian Gold, Inc.* ........................... 1,957,000
140,000 Randgold Resources Ltd. ADR* ................... 1,775,200
350,000 Resolute Mining Ltd.* .......................... 412,787
750,000 Wheaton River Minerals Ltd.* ................... 2,460,000
-----------
20,096,224
-----------
JUNIOR GOLD PRODUCERS 12.6%
256,250 Apollo Gold Corp.* ............................. 247,824
175,000 Aurizon Mines Ltd.* ............................ 225,170
400,000 Central Asia Gold Ltd.* ........................ 204,842
1,000,000 Claude Resources, Inc. * ....................... 1,135,312
200,000 Crystallex International Corp.* ................ 760,000
430,000 Eldorado Gold Corp.* ........................... 1,421,159
150,000 Glencairn Gold Corp.* .......................... 71,903
455,500 Golden Cycle Gold Corp.* ....................... 1,047,650
359,000 Golden Star Resources Ltd.* .................... 1,550,880
600,000 Guinor Gold Corp.* ............................. 509,629
50,000 Kirkland Lake Gold, Inc.* ...................... 253,974
100,000 Mexgold Resources, Inc.* ....................... 243,041
400,000 Northgate Minerals Corp.* ...................... 692,961
500,000 Oxiana Ltd.* ................................... 407,356
500,000 Queenstake Resources Ltd. * .................... 214,448
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
JUNIOR GOLD PRODUCERS (CONTINUED)
150,000 River Gold Mines Ltd.* ......................... $ 253,553
250,000 Sino Gold Ltd.* ................................ 448,091
150,000 Yamana Gold, Inc.* ............................. 460,500
-----------
10,148,293
-----------
EXPLORATION AND DEVELOPMENT COMPANIES 10.8%
200,000 Addwest Minerals International Ltd.*(OMEGA) .... --
137,875 Altius Minerals Corp.* ......................... 469,594
150,000 Aquiline Resources, Inc.* ...................... 152,636
224,500 Ascot Resources Ltd.* .......................... 58,527
500,000 Birim Goldfields, Inc.* ........................ 243,882
200,000 Bolivar Gold Corp.* ............................ 370,028
300,000 Capstone Gold Corp.* ........................... 206,879
100,000 Cardero Resource Corp.* ........................ 294,340
150,000 Committee Bay Resources Ltd.* .................. 194,265
370,000 Continuum Resources Ltd.* ...................... 84,013
175,000 Desert Sun Mining Corp.* ....................... 264,906
360,000 Erdene Gold, Inc.* ............................. 172,568
300,000 First Narrows Resources Corp.* ................. 100,917
125,000 Fronteer Development Group, Inc.* .............. 173,451
146,000 Gateway Gold Corp.* ............................ 200,135
500,000 Geodex Minerals Ltd.* .......................... 50,458
250,000 Maximus Ventures Ltd.* ......................... 34,690
106,500 Metallica Resources, Inc.* ..................... 155,841
150,000 Mundoro Mining, Inc.* .......................... 378,437
142,400 Nevsun Resources Ltd. * ........................ 285,016
300,000 North American Gold, Inc.* ..................... 105,963
300,333 Northern Lion Gold Corp.* ...................... 242,469
150,000 Orezone Resources, Inc.* ....................... 166,512
280,000 Platinum Group Metals Ltd.* .................... 259,019
284,300 Radius Gold, Inc. * ............................ 387,323
300,000 Red Back Mining, Inc.* ......................... 441,510
300,000 Riddarhyttan Resources AB ...................... 361,107
300,000 Sabina Resources Ltd.* ......................... 307,796
429,250 Strongbow Exploration, Inc.* ................... 137,175
207,700 Sunridge Gold Corp.* ........................... 127,509
100,000 Viceroy Exploration Ltd. * ..................... 195,947
100,000 Western Silver Corp. * ......................... 1,004,962
250,000 Wolfden Resources, Inc. * ...................... 918,762
250,000 X-Cal Resources Ltd.* .......................... 128,248
11,880 Yilgarn Mining Ltd.* ........................... 1,567
-----------
8,676,452
-----------
See notes to financial statements
- 6 -
OCM GOLD FUND
SCHEDULE OF INVESTMENTS - NOVEMBER 30, 2004 (CONTINUED)
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
OTHER 8.0%
178,000 Endeavour Mining Capital Corp. ................. $ 546,380
50,000 Gold Bullion Ltd.* ............................. 2,252,095
40,000 Royal Gold, Inc. ............................... 708,800
65,000 streetTRACKS Gold Trust* ....................... 2,932,800
-----------
6,440,075
-----------
PRIMARY SILVER PRODUCERS 3.1%
500,000 Chap Mercantile, Inc.*(OMEGA)#+ ................ 287,612
197,100 Hecla Mining Co.* .............................. 1,338,309
48,075 Pan American Silver Corp.* ..................... 868,026
-----------
2,493,947
-----------
TOTAL COMMON STOCKS
(cost $41,651,490) ............................. 76,619,252
-----------
RIGHTS 0.0%
300,000 Riddarhyttan Resources AB*
(cost $0) ...................................... 4,458
-----------
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
WARRANTS 1.2%
37,500 African Gold Group, Inc.*(OMEGA) ............... $ --
68,937 Altius Minerals Corp.*(OMEGA) .................. 118,847
50,000 Apollo Gold Corp.*(OMEGA) ...................... --
50,000 Bema Gold Corp.* ............................... 109,326
50,000 Bolivar Gold Corp.* ............................ 48,776
55,556 Canyon Resources Corp.*(OMEGA) ................. --
100,000 Capstone Gold Corp.*(OMEGA) .................... --
50,000 Cardero Resource Corp.*(OMEGA) ................. 52,561
250,000 Chap Mercantile, Inc.*(OMEGA) .................. --
87,500 Desert Sun Mining Corp.*(OMEGA) ................ 33,113
89,000 Endeavour Mining Capital Corp.*(OMEGA) ......... --
125,000 Geodex Minerals Ltd.*(OMEGA) ................... --
75,000 Glencairn Gold Corp.*(OMEGA) ................... --
175,000 Globestar Mining Corp.*(OMEGA) ................. --
100,000 Manhattan Minerals Corp.*(OMEGA) ............... --
250,000 Maximus Ventures Ltd.*(OMEGA) .................. --
50,000 Mexgold Resources, Inc.*(OMEGA) ................ 16,399
15,000 Miramar Mining Corp.*(OMEGA) ................... --
35,000 Nevsun Resources Ltd.*(OMEGA) .................. --
150,000 North American Gold, Inc.*(OMEGA) .............. --
110,000 Northgate Minerals Corp.* ...................... 37,928
24,038 Pan American Silver Corp.* ..................... 221,964
50,000 Radius Explorations Ltd.*(OMEGA) ............... --
112,500 Wheaton River Minerals Ltd.* ................... 221,386
37,500 Wheaton River Minerals Ltd.* ................... 76,003
-----------
TOTAL WARRANTS
(cost $110,472) ................................ 936,303
-----------
PREFERRED STOCKS 0.6%
10,000 Freeport-McMoRan Copper & Gold, Inc.* .......... 458,200
-----------
TOTAL PREFERRED STOCKS
(cost $169,900) ................................ 458,200
-----------
See notes to financial statements
- 7 -
OCM GOLD FUND
SCHEDULE OF INVESTMENTS - NOVEMBER 30, 2004 (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 3.1%
$ 54,789 First American Treasury Obligations Fund ....... $ 54,789
2,418,000 U.S. Bank, N.A. repurchase agreement,
1.45%, dated 11/30/04, due 12/1/04,
repurchase price $2,418,097
(collateralized by FHLMC Series
2682 YF, 3.49%, due 10/15/33) .................. 2,418,000
-----------
- --------------------------------------------------------------------------------
VALUE
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(cost $2,472,789) ....................................... $ 2,472,789
TOTAL INVESTMENTS
(cost $44,404,651) ............................... 100.4% 80,491,002
LIABILITIES LESS OTHER ASSETS ........................... (0.4)% (289,227)
-----------
NET ASSETS .............................................. 100.0% $80,201,775
===========
<FN>
- -------------
* Non-income producing security.
(OMEGA) Valued at fair value in accordance with procedures established by the
Fund's Board of Trustees.
# Affiliated company (see Note 8).
+ Security was purchased August 5, 2004 under Rule 144A of the Securities
Act of 1933. As of November 30, 2004, the security had a cost of
$153,780 and a value of $287,612 (0.36% of net assets).
</FN>
SUMMARY OF INVESTMENTS BY COUNTRY
PERCENT OF
COUNTRY MARKET VALUE INVESTMENT SECURITIES
- --------------------------------------------------------------------------------
Australia $ 3,726,738 4.6%
Canada 41,251,365 51.3
Cayman Islands 546,380 0.7
Jersey 1,775,200 2.2
Peru 587,500 0.7
South Africa 12,411,145 15.4
Sweden 365,565 0.4
United States(1) 19,827,109 24.7
- --------------------------------------------------------------------------------
TOTAL $ 80,491,002 100.0%
- --------------------------------------------------------------------------------
1 Includes short-term securities
See notes to financial statements
- 8 -
OCM GOLD FUND
STATEMENT OF ASSETS AND LIABILITIES - NOVEMBER 30, 2004
ASSETS:
Investments in unaffiliated issuers,
at value (cost $44,250,871) .............................. $ 80,203,390
Investments in affiliated issuers,
at value (cost $153,780) ................................. 287,612
Receivable for securities sold ............................. 501,223
Receivable for fund shares sold ............................ 88,573
Interest and dividends receivable .......................... 27,009
Prepaid expenses and other assets .......................... 17,936
------------
Total assets ............................................... 81,125,743
------------
LIABILITIES:
Payable for securities purchased ........................... 99,833
Payable for fund shares redeemed ........................... 565,770
Due to investment adviser .................................. 41,424
Accrued distribution fees .................................. 147,860
Accrued expenses and other liabilities ..................... 69,081
------------
Total liabilities .......................................... 923,968
------------
Net Assets ................................................. $ 80,201,775
============
NET ASSETS CONSIST OF:
Shares of beneficial interest, no par value;
unlimited shares authorized .............................. $ 43,951,094
Undistributed net investment loss .......................... (930,049)
Undistributed net realized gain on investments
and foreign currency transactions ........................ 1,094,379
Net unrealized appreciation on investments
and foreign currency translations ........................ 36,086,351
------------
Net Assets ................................................. $ 80,201,775
============
CALCULATION OF MAXIMUM OFFERING PRICE:
Net asset value and redemption price per share $ ........... 12.76
Maximum sales charge (4.50% of offering price) ............. 0.60
------------
Offering price to public ................................... $ 13.36
============
Shares outstanding ......................................... 6,286,549
============
See notes to financial statements
- 9 -
OCM GOLD FUND
STATEMENT OF OPERATIONS - YEAR ENDED NOVEMBER 30, 2004
INVESTMENT INCOME:
Interest ................................................ $ 30,679
Dividends (net of foreign withholding
taxes of $21,000) ............................... 381,519
-----------
Total investment income ......................... 412,198
-----------
EXPENSES:
Investment advisory fees ................................ 698,929
Distribution fees ....................................... 612,075
Fund administration and accounting fees ................. 96,005
Transfer agent fees and expenses ........................ 59,625
Professional fees ....................................... 33,668
Federal and state registration fees ..................... 20,862
Interest expense ........................................ 20,332
Custody fees ............................................ 13,807
Reports to shareholders ................................. 11,488
Trustees' fees .......................................... 2,981
Other expenses .......................................... 17,127
-----------
Total expenses .................................. 1,586,899
-----------
Less: Expense reimbursement from adviser ................ 20,332
-----------
Net expenses .................................... 1,566,567
-----------
Net investment loss ............................. (1,154,369)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments and foreign
currency transactions ........................... 1,630,388
Net change in unrealized appreciation/depreciation
on investments and foreign currency translations (8,457,258)
-----------
Net loss on investments ................................. (6,826,870)
-----------
Net decrease in net assets resulting
from operations ................................. $(7,981,239)
===========
See notes to financial statements
- 10 -
OCM GOLD FUND
STATEMENTS OF CHANGES IN NET ASSETS
Year ended Year ended
Nov. 30, Nov. 30,
2004 2003
------------ ------------
OPERATIONS:
Net investment loss ...................... $ (1,154,369) $ (755,700)
Net realized gain on investments
and foreign currency transactions 1,630,388 3,450,641
Net change in unrealized appreciation/
depreciation on investments
and foreign currency translations (8,457,258) 34,827,839
------------ ------------
Net increase (decrease) in net assets
resulting from operations ........ (7,981,239) 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 ............ 15,625,055 19,718,096
Distributions reinvested ................. 1,230,388 --
Payment for shares redeemed .............. (11,587,518) (8,120,758)
------------ ------------
Net increase in net assets from
fund share transactions .......... 5,267,925 11,597,338
------------ ------------
Total increase (decrease) in net assets .. (4,027,756) 49,120,118
NET ASSETS, BEGINNING OF YEAR .................... 84,229,531 35,109,413
------------ ------------
NET ASSETS, END OF YEAR .......................... $ 80,201,775 $ 84,229,531
============ ============
UNDISTRIBUTED NET INVESTMENT LOSS ................ $ (930,049) $ (207,762)
============ ============
TRANSACTIONS IN SHARES:
Shares sold .............................. 1,306,325 1,992,966
Shares issued on reinvestment of
distributions .................... 88,517 --
Shares redeemed .......................... (934,244) (826,831)
------------ ------------
Net increase in shares outstanding ....... 460,598 1,166,135
============ ============
See notes to financial statements
- 11 -
OCM GOLD FUND
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 2004
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 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 ask
prices. Unlisted securities are valued at the average of the quoted bid and ask
prices in the over-the-counter market. 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. 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. For each investment that is fair valued, the
investment adviser considers, to the extent applicable, various factors
including, but not limited to, the type of security, the financial condition of
the company, comparable companies in the public market, the nature and duration
of the cause for a quotation not being readily available and other relevant
factors. There can be no assurance that the Fund could obtain the fair value
assigned to a security if it was to sell the security at approximately the time
at which the Fund determines its net asset value per share.
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 collateral is 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. The Fund's adviser has agreed to reimburse the Fund for interest
expenses on (proforma income taxes) of $20,332 related to the unrealized gains
on Passive Foreign Investment Company securities (PFIC) identified in a year
subsequent to purchase.
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 -
OCM GOLD FUND
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 2004 (CONTINUED)
DISTRIBUTIONS TO SHAREHOLDERS - Distributions to shareholders are
recorded on the ex-dividend date. The Fund declares and pays dividends of net
investment income, if any, annually and distributes net realized gains, if any,
annually. The amount and character of income and net realized gains to be
distributed are determined in accordance with federal income tax rules and
regulations, which may differ from accounting principles generally accepted in
the United States of America. To the extent that these differences are
attributable to permanent book and tax accounting differences, the components of
net assets 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 credit
to paid-in-capital. For the year ended November 30, 2004, the Fund received
$6,706 in redemption fees.
GUARANTEES AND INDEMNIFICATIONS - In the normal course of business, the
Fund enters into contracts with service providers that contain general
indemnification clauses. The Fund's maximum exposure under these arrangements is
unknown as this would involve future claims against the Fund that have not yet
occurred. Based on experience, the Fund expects the risk of loss to be remote.
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.
RECLASSIFICATIONS - Certain amounts in the 2003 financial statements
have been reclassified to conform with the 2004 presentation.
NOTE 3. INVESTMENT ADVISORY AGREEMENT
The Fund has an investment advisory agreement with Orrell Capital
Management, Inc. ("OCM"). Under the agreement, the Fund pays OCM a fee computed
daily and payable monthly, at the following annual rates based upon average
daily net assets:
ASSETS FEE RATE
------ --------
$0 to $50 million .............................. 1.000%
$50 million to $75 million ..................... 0.875%
$75 million to $100 million .................... 0.750%
$100 million to $150 million ................... 0.625%
$150 million to $250 million ................... 0.500%
Over $250 million .............................. 0.375%
For the year ended November 30, 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 year ended November 30, 2004, the Distributor earned
$7,561 from commissions on sales of the Fund's capital stock.
NOTE 5. PURCHASES AND SALES OF SECURITIES
Purchases and sales of investment securities (excluding short-term
securities and U.S. government obligations) for the year ended November 30, 2004
were $12,974,312 and $8,337,769, respectively. There were no purchases or sales
of U.S. government obligations.
NOTE 6. FEDERAL INCOME TAX INFORMATION
At November 30, 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 .............................. $ 45,951,826
============
Unrealized appreciation .......................... $ 35,733,153
Unrealized depreciation .......................... (1,193,977)
------------
Net unrealized appreciation on investments ....... $ 34,539,176
============
- 13 -
OCM GOLD FUND
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 2004 (CONTINUED)
The difference between cost amounts for financial statement and federal
income tax purposes is due primarily to timing differences in recognizing
certain gains and losses in security transactions.
The tax character of distributions paid during the fiscal years ended
November 30, 2004 and 2003 was as follows:
2004 2003
Ordinary income .......................... $ 84,374 $ --
Net long-term capital gains .............. 1,230,068 --
---------- -----------
Total distributions ...................... $1,314,442 $ --
========== ===========
Ordinary income distributions may include dividends paid from
short-term capital gains. As of November 30, 2004 the components of accumulated
earnings on a tax basis were as follows:
Undistributed ordinary income ..................... $ 1,516,936
Undistributed long-term gains ..................... 1,013,596
------------
Tax accumulated earnings .......................... 2,530,532
Accumulated capital and other losses .............. (819,027)
Unrealized appreciation on investments ............ 34,539,176
------------
Total accumulated earnings ........................ $ 36,250,681
============
At November 30, 2004, the Fund had realized capital losses from
transactions between November 1, 2004 and November 30, 2004 of $819,027.
Post-October capital losses for tax purposes are deferred and will be recognized
in 2005 and are included in tax accumulated capital and other losses for the
Fund.
NOTE 7. OFFERING PRICE PER SHARE
A maximum front-end sales charge of 4.50% is imposed on purchases of
the Fund's shares. For the year ended November 30, 2004, the Trust was advised
that the Distributor received $44,400 of sales charges from sales of the Fund's
shares.
NOTE 8. TRANSACTIONS WITH AFFILIATES
The following is an analysis of transactions for the year ended
November 30, 2004 in the Fund with "affiliated companies" as defined by the
Investment Company Act of 1940:
AMOUNT OF GAIN (LOSS)
SHARE ACTIVITY AMOUNT OF DIVIDENDS REALIZED ON SALE OF
----------------------------- CREDITED TO INCOME SHARES FOR THE
BALANCE BALANCE FOR THE YEAR ENDED YEAR ENDED
SECURITY NAME 11/30/03 PURCHASES SALES 11/30/04 NOVEMBER 30, 2004 NOVEMBER 30, 2004
- ------------- -------- --------- ----- -------- ----------------- -----------------
Chap Merchantile, Inc. -- 500,000 -- 500,000 -- --
NOTE 9. SUBSEQUENT EVENT
At a special meeting of shareholders on December 23, 2004, the
shareholders of the PIA Short-Term Government Securities Fund, the PIA Total
Return Bond Fund, the PIA BBB Bond Fund and the PIA Equity Fund (collectively,
the "PIA Funds") approved the reorganization of the PIA Funds into corresponding
series of the Advisors Series Trust. Upon completion of the reorganization, the
Trust changed its name to OCM Mutual Fund and is comprised solely of the Fund.
NOTE 10. OTHER TAX INFORMATION (UNAUDITED)
For the year ended November 30, 2004, 5% of dividends paid from net
investment income qualifies for the dividend received deduction available to
corporate shareholders of the Fund. For shareholders in the Fund, 25.82% of
dividend income distributed for the year ended November 30, 2004 is designated
as qualified dividend income under the Jobs and Growth Relief Act of 2003.
- 14 -
OCM GOLD FUND
FINANCIAL HIGHLIGHTS
Year Ended Year Ended Year Ended Year Ended Year Ended
Nov. 30, Nov. 30, Nov. 30, Nov. 30, Nov. 30,
2004 2003 2002 2001 2000
---------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout each year)
Net asset value, beginning of year ..... $ 14.46 $ 7.53 $ 4.71 $ 3.52 $ 4.75
---------- ---------- ---------- ---------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss .................... (0.18) (0.12) (0.09) (0.04) (0.05)
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions ................ (1.30) 7.05 2.91 1.23 (1.18)
---------- ---------- ---------- ---------- ---------
Total from investment operations ....... (1.48) 6.93 2.82 1.19 (1.23)
---------- ---------- ---------- ---------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income ... (0.01) -- -- -- --
Distribution from net realized gains ... (0.21) -- -- -- --
---------- ---------- ---------- ---------- ---------
Total distributions .................... (0.22) -- -- -- --
---------- ---------- ---------- ---------- ---------
Net asset value, end of year ........... $ 12.76 $ 14.46 $ 7.53 $ 4.71 $ 3.52
========== ========== ========== ========== =========
TOTAL RETURN* .......................... (10.31)% 92.03% 59.87% 33.81% (25.89)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's) ..... $ 80,202 $ 84,230 $ 35,109 $ 17,924 $ 9,240
Ratio of expenses to average net assets:
Net of waivers and reimbursements .... 2.15% 2.39% 2.66% 2.60% 2.44%
Before waivers and reimbursements .... 2.17% 2.39% 2.66% 2.60% 2.99%
Ratio of net investment loss to
average net assets:
Net of waivers and reimbursements .... (1.58)% (1.42)% (1.46)% (1.14)% (1.19)%
Before waivers and reimbursements .... (1.60)% (1.42)% (1.46)% (1.14)% (1.74)%
Portfolio turnover rate ................ 12% 17% 32% 5% 3%
- ----------
* Assumes no sales charge.
See notes to financial statements
- 15 -
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of PIA Mutual Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statement of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of OCM Gold Fund, a series of PIA
Mutual Fund (the "Trust") at November 30, 2004, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended and the financial highlights for each of the five years
in the period then ended, in conformity with accounting principles generally
accepted in the United States of America. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Trust's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at November 30, 2004 by correspondence with the
custodian, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP
- ------------------------------
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
January 25, 2005
- 16 -
OCM GOLD FUND
EXPENSE EXAMPLE - FOR THE SIX MONTHS ENDED NOVEMBER 30, 2004 (UNAUDITED)
As a shareholder of the OCM Gold Fund (the "Fund"), you incur two types
of costs: (1) transaction costs, including sales charges (loads) on purchase
payments and redemption fees on certain redemptions; and (2) ongoing costs,
including management fees; distribution (12b-1) fees; and other Fund expenses.
This Example is intended to help you understand your ongoing costs (in dollars)
of investing in the Fund and to compare these costs with the ongoing costs of
investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the
beginning of the period and held for the entire period from June 1, 2004 to
November 30, 2004 (the "period").
ACTUAL EXPENSES
The first line of the table below provides information about actual
account values and actual expenses. You may use the information in this line,
together with the amount you invested, to estimate the expenses you paid over
the period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 equals 8.6), then multiply the result by the
number in the first line under the heading entitled "Expenses Paid During the
Period" to estimate the expenses you paid on your account during the period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight
your ongoing costs only and do not reflect any transactional costs, such as
sales charges (loads) and redemption fees. Therefore, the second line of the
table is useful in comparing the ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs could have been higher.
EXPENSES PAID DURING THE PERIOD
EXPENSES PAID
BEGINNING ACCOUNT ENDING ACCOUNT DURING THE
VALUE VALUE PERIOD ENDED
JUNE 1, 2004 NOVEMBER 30, 2004 NOVEMBER 30, 2004*
------------ ----------------- ------------------
Actual $ 1,000.00 $ 1,161.10 $ 10.81
Hypothetical (5% return
before expenses) 1,000.00 1,015.05 10.08
- -----------
* Expenses are equal to the Fund's annualized expense ratio of 2.00% for the
period, multiplied by the average account value over the period,
multiplied by 183/366 (to reflect the one-half year period).
- 17 -
OCM GOLD FUND
PERFORMANCE RESULTS
YEAR ENDED NOVEMBER 30, 2004
(ALL PERFORMANCE MEASUREMENTS REFLECT THE MAXIMUM
SALES LOAD CHARGES FOR EACH PERIOD SHOWN.)
AVERAGE ANNUAL TOTAL RETURNS VALUE ON 11/30/04
1 year (14.34%) OCM Gold Fund $14,976
5 year 21.15% S&P 500(R) Index $18,182
Inception 5.20% Philadelphia Gold
& Silver Index $10,146
$10,000 INVESTMENT MADE 12/13/96 (DATE ORRELL BECAME INVESTMENT ADVISER)(1)
Philadelphia
OCM Gold S&P 500 Gold & Silver
12/13/96 9,550 10,000 10,000
11/30/97 5,878 13,340 6,037
11/30/98 5,751 16,496 6,096
11/30/99 5,485 19,943 5,864
11/30/00 4,065 19,102 4,218
11/30/01 5,439 16,767 4,783
11/30/02 8,695 13,998 5,863
11/30/03 16,697 16,111 10,310
11/30/04 14,976 18,182 10,146
The returns shown include the reinvestment of all dividends, but do not reflect
the deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares. Past performance is not indicative of future results.
The Philadelphia gold and silver share index (XAU) is an unmanaged index of 12
gold and silver shares listed on U.S. exchanges and is generally considered as
representative of the gold and silver share market.
The S&P 500(R) Index is a broad unmanaged index generally considered as
representative of the U.S. equity market.
(1) Previous periods during which time the Fund was advised by another
investment adviser are not shown.
INVESTMENTS BY SECTOR
AS A PERCENTAGE OF NET ASSETS
[THE FOLLOWING TABLE WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL.]
Major Gold Producers 36.4%
Intermediate/Mid-Tier Gold Producers 25.6%
Junior Gold Producers 12.7%
Exploration and Development Companies 11.1%
Other 8.0%
Primary Silver Producers 3.4%
Cash and Other Assets 2.8%
A description of the Fund's proxy voting policies and procedures and a record
of the Fund's proxy votes for the year ended June 30, 2004 are available without
charge, upon request by calling toll free 1-800-779-4681 and on the Securities
and Exchange Commission's (SEC) website at http://www.sec.gov.
The Fund will file its complete schedule of investments with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q
will be available on the EDGAR database on the SEC's website at
http://www.sec.gov. These Forms may also be reviewed and copied at the SEC's
Public Reference Room in Washington, D.C. Information about the operation of the
Public Reference Room may be obtained by calling 1-800-SEC-0330.
- 18 -
OCM GOLD FUND
TRUSTEE AND OFFICER INFORMATION
INDEPENDENT TRUSTEES
- ----------------------------------------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS IN OTHER
OFFICE(1) FUND COMPLEX DIRECTORSHIPS
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN HELD BY
NAME, ADDRESS AND AGE HELD WITH FUND TIME SERVED DURING PAST 5 YEARS BY TRUSTEE TRUSTEE
- --------------------- -------------- ----------- ------------------- ---------- -------
BEATRICE P. FELIX Trustee Served as Sales Agent, Roland Land 5 None
1011 4th Street, #218 Trustee since Realty (1994 - present)
Santa Monica, CA 90403 1996
Age: 45
ANN LOUISE MARINACCIO Trustee Served as Sales Associate, 5 None
1 Norwood Road Trustee since Saks Fifth Avenue
Springfield, NJ 07081 1996 (1986 - present)
Age: 64
ROBERT I. WEISBERG Trustee Served as President and Managing 5 Environmental
41 West Shore Road Trustee since Partner, Alco Financial Power, Inc.,
Belvedere, CA 94920 1996 Services, LLC Titan General
Age: 57 (1997 - present) Holdings, Inc.
JOHN CRARY Trustee Served as President of Crary 5 microHelix, Inc.
1536 Holmes Street Trustee since Enterprises, LLC, and Scheid
Livermore, CA 94550 2004 a private investment company Vineyards,Inc.
Age: 51 (1999 - present)
INTERESTED TRUSTEES AND OFFICERS
- ----------------------------------------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS IN OTHER
OFFICE(1) FUND COMPLEX DIRECTORSHIPS
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN HELD BY
NAME, ADDRESS AND AGE HELD WITH FUND TIME SERVED DURING PAST 5 YEARS BY TRUSTEE TRUSTEE
- --------------------- -------------- ----------- ------------------- ---------- -------
JOSEPH LLOYD MCADAMS, Trustee, Served as Chairman of the Board and 5 None
JR.(2) Chairman, Trustee and Chief Investment Officer, Pacific
1299 Ocean Avenue President and Chairman Income Advisers, Inc. (1986 - present);
Suite 210 Treasurer since 1996; Chairman of the Board, Chief
Santa Monica, CA 90401 Served as Executive Officer and President,
Age: 59 President and Syndicated Capital, Inc. (1987 -
Treasurer present); Chairman of the Board
since 2004 and Chief Executive Officer,
Anworth Mortgage Asset Corp.
(1998 - present)
GREGORY M. ORRELL(3) Trustee Served as President of Orrell Capital 5 None
1536 Holmes Street Trustee Management, Inc.
Livermore, CA 94550 since 2004 since 1991
Age: 43
- 19 -
INTERESTED TRUSTEES AND OFFICERS (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------------
NUMBER OF
TERM OF PORTFOLIOS IN OTHER
OFFICE(1) FUND COMPLEX DIRECTORSHIPS
POSITION(S) AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN HELD BY
NAME, ADDRESS AND AGE HELD WITH FUND TIME SERVED DURING PAST 5 YEARS BY TRUSTEE TRUSTEE
- --------------------- -------------- ----------- ------------------- ---------- -------
FLAVEN BUTLER Secretary Served as Assistant Vice President, N/A N/A
1299 Ocean Avenue Secretary Pacific Income Advisers, Inc.
Suite 210 since 2001 (1994 - present)
Santa Monica, CA 90401
Age: 31
H. MITCHELL HARPER Chief Served as Senior Vice President, N/A N/A
1299 Ocean Avenue Compliance Chief JP Morgan Chase (1987-2001);
Suite 210 Officer Compliance Independent Consultant
Santa Monica, CA 90401 Officer since (2001-2002); Senior
Age: 59 2004 Vice President, Pacific
Income Advisers, Inc.
<FN>
(2002 - present)
- -------------
(1) Each Trustee serves an indefinite term until the election of a successor.
Each Officer serves an indefinite term, renewed annually, until the
election of a successor.
(2) Mr. McAdams is considered an Interested Trustee of the Trust within the
meaning of the Investment Company Act of 1940, as amended, because of his
affiliation with Pacific Income Advisers, Inc. and Syndicated Capital,
Inc.
(3) Mr. Orrell is considered an Interested Trustee of the Trust within the
meaning of the Investment Company Act of 1940, as amended, because of his
affiliation with Orrell Capital Management, Inc. Effective December 23,
2004, Beatrice Felix, Ann Louise Marinaccio, Robert Weisberg and Joseph
Lloyd McAdams, Jr. resigned as trustees of the Fund. On the same date,
Joseph Lloyd McAdams, Jr. and Flaven Butler resigned as officers of the
Fund.
THE STATEMENT OF ADDITIONAL INFORMATION INCLUDES ADDITIONAL INFORMATION
ABOUT THE TRUSTEES AND IS AVAILABLE UPON REQUEST, WITHOUT CHARGE, BY
CALLING 1-800-628-9403.
</FN>
- 20 -
OCM Gold 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
ANNUAL REPORT
NOVEMBER 30, 2004
Dear Shareholder:
We are pleased to provide you with our annual report for the PIA BBB Bond Fund
which is available only to clients of Pacific Income Advisers which is the
adviser. Our fiscal year ended on November 30, 2004.
While the fund was organized in September 2003, we invested the fund's assets in
treasury securities only until the first quarter of 2004. The return of the BBB
Fund for the nine month period ending November 2004 was 1.96% compared to the
Lehman Baa Credit Index return of 2.15%. During the same period, the Lehman
Aggregate Index provided a return of 1.46%.
For the year ending November 2004, the return for the PIA BBB Bond Fund,
including the reinvestment of dividends and capital gains was 4.57%. During the
same one year period, the Lehman Baa Credit Index and Lehman Aggregate Index
rose by 6.09% and 4.44%, respectively.
We believe that the PIA BBB Bond Fund provides our clients with a very cost
effective means of investing in a broadly diversified portfolio of BBB rated
bonds. Since BBB rated bonds have over long periods provided higher returns to
investors than most higher rated bonds, we believe that the Fund's broadly
diversified investments in BBB rated bonds will help the Fund's shareholders
achieve their goals.
The fund is a cost effective vehicle to do this because, as described in our
prospectus, PIA pays all expenses incurred by the Fund so our clients incur no
additional expense relative to their investment in the Fund.
As of November 30, 2004, BBB rated bonds as measured by the Lehman Baa Credit
Index provided a yield to maturity of 5.22% while the yield of the Lehman
Aggregate Index was 4.50% which represents a difference of 0.72%.
The economic recovery continues along with corporate profits. Inflation remains
subdued in spite of sizable increases in commodity prices. The Federal Deficit
increased to over $400 billion which will increase the size of treasury auctions
and put upward pressure on rates. The U. S. dollar declined close to the lowest
level in a decade. Geopolitical risk is still a concern. The Federal Reserve
began to tighten monetary policy in June by raising the funds rate from a multi
decade low of 1.0 % to 2.0% by November. It is anticipated that the Federal
Reserve will continue tightening monetary policy into 2005. Yields on 2 and 5
year treasury bonds rose 95 and 33 basis points respectively. The longer end of
the treasury yield curve declined by 12 basis points in yield.
Please take a moment to review your fund(s)' statement of assets and the results
of operations for the one year period ended November 30. We look forward to
reporting to you again in mid 2005.
/S/ LLOYD MCADAMS
- -----------------
Lloyd McAdams
CHAIRMAN OF THE BOARD
- 1 -
PIA MUTUAL FUND PIA BBB BOND FUND
SCHEDULE OF INVESTMENTS - NOVEMBER 30, 2004
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
CORPORATE BONDS & NOTES 95.5%
AEROSPACE/DEFENSE 3.0%
$ 402,000 Lockheed Martin Corp. 7.75%, due 5/1/26 .............. $ 493,694
395,000 Northrup Grumman Corp. 7.75%, due 2/15/31 ............ 491,138
412,000 Raytheon Co. 8.30%, due 3/1/10 ....................... 485,745
----------
1,470,577
----------
AUTO MANUFACTURERS 3.8%
1,075,000 DaimlerChrysler NA Holding Corp. 7.30%, due 1/15/12 .. 1,210,007
718,000 Ford Motor Co. 6.625%, due 10/1/28 ................... 650,464
----------
1,860,471
----------
AUTO PARTS & EQUIPMENT 0.9%
435,000 Delphi Corp. 6.50%, due 5/1/09 ....................... 452,237
----------
BANKS 1.0%
472,000 PNC Funding Corp. 5.25%, due 11/15/15 ................ 473,351
----------
BUILDING MATERIALS 1.2%
550,000 Masco Corp. 6.75%, due 3/15/06 ....................... 575,288
----------
CHEMICALS 2.0%
431,000 Eastman Chemical Co. 7.00%, due 4/15/12 .............. 486,319
405,000 Rohm & Haas Co. 7.85%, due 7/15/29 ................... 510,870
----------
997,189
----------
COMMERCIAL SERVICES 1.0%
423,000 Cendant Corp. 7.375%, due 1/15/13 .................... 484,611
----------
CONSTRUCTION 1.2%
590,000 Pulte Homes, Inc. 6.375%, due 5/15/33 ................ 569,136
----------
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES 14.7%
$ 525,000 Capital One Bank 5.75%, due 9/15/10 .................. $ 552,765
1,765,000 Ford Motor Credit Co. 6.50%, due 1/25/07 ............. 1,837,511
1,055,000 Ford Motor Credit Co. 7.375%, due 2/1/11 ............. 1,129,651
1,404,000 General Motors Acceptance Corp. 6.15%, due 4/5/07 .... 1,447,215
995,000 General Motors Acceptance Corp. 6.875%, due 9/15/11 .. 1,016,264
690,000 General Motors Acceptance Corp. 8.00%, due 11/1/31 ... 693,346
495,000 MBNA Corp. 7.50%, due 3/15/12 ........................ 567,993
----------
7,244,745
----------
DIVERSIFIED MANUFACTURING 1.2%
545,000 Tyco International Group SA 6.00%, due 11/15/13 ...... 587,796
----------
ELECTRIC 11.3%
470,000 American Electric Power Co., Inc. 6.125%, due 5/15/06 488,354
455,000 Cincinnati Gas & Electric Co. 5.70%, due 9/15/12 ..... 476,723
450,000 Constellation Energy Group 7.60%, due 4/1/32 ......... 531,929
465,000 Dominion Resources, Inc. 8.125%, due 6/15/10 ......... 545,330
300,000 DTE Energy Co. 6.45%, due 6/1/06 ..................... 313,303
300,000 MidAmerican Energy Holdings Co. 3.50%, due 5/15/08 ... 293,532
485,000 Pacific Gas & Electric 6.05%, due 3/1/34 ............. 490,484
430,000 Pepco Holdings, Inc. 5.50%, due 8/15/07 .............. 446,962
423,000 Progress Energy, Inc. 7.10%, due 3/1/11 .............. 472,933
378,000 PSEG Power LLC 8.625%, due 4/15/31 ................... 481,108
See notes to financial statements
- 2 -
PIA MUTUAL FUND PIA BBB BOND FUND
SCHEDULE OF INVESTMENTS - NOVEMBER 30, 2004 (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
ELECTRIC (CONTINUED)
$ 460,000 Southern California Edison Co. 6.00%, due 1/15/34 .... $ 476,990
500,000 XCEL Energy, Inc. 7.00%, due 12/1/10 ................. 563,110
----------
5,580,758
----------
ENVIRONMENTAL CONTROL 1.0%
414,000 Waste Management, Inc. 7.75%, due 5/15/32 ............ 499,684
----------
FOOD 6.0%
527,000 Albertson's, Inc. 7.45%, due 8/1/29 .................. 601,933
445,000 Conagra Foods, Inc. 6.00%, due 9/15/06 ............... 464,688
350,000 General Mills, Inc. 2.625%, due 10/24/06 ............. 344,044
414,000 Kellogg Co. 7.45%, due 4/1/31 ........................ 506,557
517,000 Kroger Co. 6.20%, due 6/15/12 ........................ 559,965
437,000 Safeway, Inc. 6.50%, due 3/1/11 ...................... 474,931
----------
2,952,118
----------
FOREST PRODUCTS & PAPER 2.9%
530,000 International Paper Co. 6.75%, due 9/1/11 ............ 590,988
527,000 MeadWestvaco Corp. 6.85%, due 4/1/12 ................. 591,893
225,000 Weyerhaeuser Co. 6.125%, due 3/15/07 ................. 237,255
----------
1,420,136
----------
INSURANCE 1.0%
385,000 AXA 8.60%, due 12/15/30 .............................. 495,374
----------
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
MEDIA 11.1%
$ 590,000 Clear Channel Communications, Inc. 6.00%, due 11/1/06 $ 614,328
757,000 Comcast Cable Communications, Inc. 6.20%, due 11/15/08 814,496
500,000 Comcast Corp. 7.05%, due 3/15/33 ..................... 556,509
428,000 Cox Communications, Inc. 7.125%, due 10/1/12 ......... 471,451
402,000 Liberty Media Corp. 8.50%, due 7/15/29 ............... 466,619
515,000 News America, Inc. 6.625%, due 1/9/08 ................ 556,339
615,000 Time Warner, Inc. 6.125%, due 4/15/06 ................ 638,487
810,000 Time Warner, Inc. 6.875%, due 6/15/18 ................ 893,100
450,000 Walt Disney Co. 6.75%, due 3/30/06 ................... 470,492
----------
5,481,821
----------
OIL & GAS 7.8%
425,000 Anadarko Finance Co. 6.75%, due 5/1/11 ............... 474,681
500,000 Burlington Resources Finance Co. 5.60%, due 12/1/06 .. 519,221
424,000 Devon Financing Corp., U.L.C. 6.875%, due 9/30/11 .... 478,121
542,000 Marathon Oil Corp. 6.80%, due 3/15/32 ................ 596,294
361,000 Occidental Petroleum Corp. 8.45%, due 2/15/29 ........ 479,630
404,000 Transocean, Inc. 7.50%, due 4/15/31 .................. 479,161
325,000 Union Oil Co. of California 7.35%, due 6/15/09 ....... 364,885
404,000 Valero Energy Corp. 7.50%, due 4/15/32 ............... 474,232
----------
3,866,225
----------
See notes to financial statements
- 3 -
PIA MUTUAL FUND PIA BBB BOND FUND
SCHEDULE OF INVESTMENTS - NOVEMBER 30, 2004 (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
PIPELINES 1.1%
$ 485,000 Kinder Morgan, Inc. 6.80%, due 3/1/08 ................ $ 524,394
----------
PRINTING 1.0%
475,000 Quebecor World Capital Corp. 6.125%, due 11/15/13 .... 491,269
----------
REAL ESTATE 5.1%
511,000 EOP Operating LP 7.75%, due 11/15/07 ................. 565,468
582,000 ERP Operating LP 6.95%, due 3/2/11 ................... 649,121
423,000 Healthcare Realty Trust 8.125%, due 5/1/11 ........... 490,642
300,000 Hospitality Properties 6.75%, due 2/15/13 ............ 321,145
445,000 Simon Property Group LP 6.375%, due 11/15/07 ......... 475,080
----------
2,501,456
----------
RETAIL 2.0%
445,000 Federated Department Stores, Inc. 6.90%, due 4/1/29 .. 486,485
435,000 May Department Stores Co. 7.90%, due 10/15/07 ........ 479,516
----------
966,001
----------
SAVINGS & LOANS 0.9%
485,000 Washington Mutual, Inc. 4.625%, due 4/1/14 ........... 457,534
----------
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS 10.3%
$ 680,000 AT&T Wireless Services, Inc. 7.875%, due 3/1/11 ...... $ 796,315
511,000 British Telecom PLC 8.375%, due 12/15/10* ............ 609,271
430,000 CenturyTel, Inc. 8.375%, due 10/15/10 ................ 503,750
494,000 Deutsche Telekom International Finance BV
5.25%, due 7/22/13 ................................. 501,782
515,000 France Telecom SA 8.50%, due 3/1/11* ................. 611,752
395,000 Koninklijke KPN NV 8.00%, due 10/1/10 ................ 463,882
420,000 Motorola, Inc. 7.625%, due 11/15/10 .................. 485,771
935,000 Sprint Capital Corp. 7.625%, due 1/30/11 ............. 1,079,040
----------
5,051,563
----------
TRANSPORTATION 4.0%
398,000 CSX Corp. 7.95%, due 5/1/27 .......................... 490,373
560,000 FedEx Corp. 3.50%, due 4/1/09 ........................ 545,584
450,000 Norfolk Southern Corp. 7.35%, due 5/15/07 ............ 485,614
500,000 Union Pacific Corp. 3.625%, due 6/1/10 ............... 478,204
----------
1,999,775
----------
See notes to financial statements
- 4 -
PIA MUTUAL FUND PIA BBB BOND FUND
SCHEDULE OF INVESTMENTS - NOVEMBER 30, 2004 (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
TOTAL CORPORATE BONDS & NOTES
(cost $46,252,014) .............................................. $47,003,509
-----------
U.S. GOVERNMENT
INSTRUMENTALITIES 1.1%
U.S. TREASURY BONDS 0.2%
$ 100,000 U.S. Treasury Bond 5.375%, due 2/15/31 ............... 105,281
-----------
U.S. TREASURY NOTES 0.9%
415,000 U.S. Treasury Note 4.75%, due 5/15/14 ................ 427,904
-----------
TOTAL U.S. GOVERNMENT INSTRUMENTALITIES
(cost $538,152) ................................................. 533,185
-----------
- --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 2.4%
$ 758 First American Treasury $ 758
Obligations Fund
1,197,000 U.S. Bank, N.A. repurchase agreement,
1.45%, dated 11/30/04, due 12/1/04, repurchase price
$1,197,048 (collateralized by FHLMC Pool C01528,
5.00%, due 4/1/33) ................................... 1,197,000
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $1,197,758) .................................... 1,197,758
-----------
TOTAL INVESTMENTS
(cost $47,987,924) ............................ 99.0% 48,734,452
OTHER ASSETS LESS LIABILITIES .............................. 1.0% 493,599
-----------
TOTAL NET ASSETS ........................................... 100.0% $49,228,051
===========
- ---------
* Variable rate note. Rate shown reflects the rate in effect at November 30,
2004.
See notes to financial statements
- 5 -
PIA MUTUAL FUND PIA BBB BOND FUND
STATEMENT OF ASSETS AND LIABILITIES - NOVEMBER 30, 2004
ASSETS:
Investments in securities, at value (cost $47,987,924) ....... $48,734,452
Receivable for fund shares sold .............................. 49,893
Due from investment adviser .................................. 46,082
Interest receivable .......................................... 676,426
Prepaid expenses and other assets ............................ 7,164
-----------
Total assets ............................................... 49,514,017
-----------
LIABILITIES:
Payable for fund shares purchased ............................ 54,257
Dividends payable ............................................ 193,148
Accrued expenses and other liabilities ....................... 38,561
-----------
Total liabilities .......................................... 285,966
-----------
Net Assets ................................................. $49,228,051
===========
NET ASSETS CONSIST OF:
Shares of beneficial interest, no par value;
unlimited shares authorized ................................ $48,440,447
Undistributed net investment income .......................... 6,845
Undistributed net realized gain on investments ............... 34,231
Net unrealized appreciation on investments ................... 746,528
-----------
Net Assets ................................................. $49,228,051
===========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE ................................... $ 9.94
===========
SHARES OUTSTANDING ............................................. 4,951,005
===========
See notes to financial statements
- 6 -
PIA MUTUAL FUND PIA BBB BOND FUND
STATEMENT OF OPERATIONS - YEAR ENDED NOVEMBER 30, 2004
INVESTMENT INCOME:
Interest .................................................... $ 1,123,323
-----------
Total investment income ................................... 1,123,323
-----------
EXPENSES:
Fund administration and accounting fees ..................... 59,380
Professional fees ........................................... 30,988
State registration fees ..................................... 26,832
Transfer agent fees and expenses ............................ 21,853
Pricing expense ............................................. 10,777
Custody fees ................................................ 8,876
Reports to shareholders ..................................... 6,013
Trustees' fees .............................................. 1,750
Other expenses .............................................. 88
-----------
Total expenses ............................................ 166,557
Less: Expense reimbursement from adviser .................... (166,557)
-----------
Net expenses .............................................. --
-----------
Net investment income ..................................... 1,123,323
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments ............................ 35,487
Net change in unrealized appreciation/
depreciation on investments ............................... 747,736
-----------
Net gain on investments ..................................... 783,223
-----------
Net increase in net assets resulting from operations ........ $ 1,906,546
===========
See notes to financial statements
- 7 -
PIA MUTUAL FUND PIA BBB BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
Year Sept. 26, 2003*
Ended to
Nov. 30, Nov. 30,
2004 2003
---- ----
OPERATIONS:
Net investment income ...................... $ 1,123,323 $ 1,136
Net realized gain (loss) on investments .... 35,487 (1,256)
Net change in unrealized appreciation/
depreciation on investments .............. 747,736 (1,208)
------------ ------------
Net increase (decrease) in net assets
resulting from operations ................ 1,906,546 (1,328)
------------ ------------
DIVIDENDS PAID TO SHAREHOLDERS:
Dividends from net investment income ....... (1,117,614) --
------------ ------------
FUND SHARE TRANSACTIONS:
Net proceeds from shares sold .............. 51,607,771 200,000
Dividends reinvested ....................... 219,745 --
Payment for shares redeemed ................ (3,587,069) --
------------ ------------
Net increase in net assets from
fund share transactions .................. 48,240,447 200,000
------------ ------------
Total increase in net assets ............... 49,029,379 198,672
NET ASSETS, BEGINNING OF PERIOD .............. 198,672 --
------------ ------------
NET ASSETS, END OF PERIOD .................... $ 49,228,051 $ 198,672
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME .......... $ 6,845 $ 1,136
============ ============
TRANSACTIONS IN SHARES:
Shares sold ................................ 5,274,174 20,000
Shares reinvested .......................... 22,117 --
Shares redeemed ............................ (365,286) --
------------ ------------
Net increase in shares outstanding ......... 4,931,005 20,000
============ ============
- -----
* Commencement of operations.
See notes to financial statements
- 8 -
PIA MUTUAL FUND PIA BBB BOND FUND
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 2004
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 Pacific Income Advisers, Inc. 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 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 ask
prices. Unlisted securities are valued at the average of the quoted bid and ask
prices in the over-the-counter market. Debt securities (other than short-term
obligations maturing in sixty days or less), including listed issues, are valued
at market on the basis of valuations furnished by an independent pricing service
which utilizes both dealer-supplied valuations and formula-based techniques.
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. 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. For each
investment that is fair valued, the investment adviser considers, to the extent
applicable, various factors including, but not limited to, the type of security,
the financial condition of the company, comparable securities in the public
market, the nature and duration of the cause for a quotation not being readily
available and other relevant factors. There can be no assurance that the Fund
could obtain the fair value assigned to a security if it was to sell the
security at approximately the time at which the Fund determines its net asset
value.
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 collateral is 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.
GUARANTEES AND INDEMNIFICATIONS - In the normal course of business, the
Fund enters into contracts with service providers that contain general
indemnification clauses. The Fund's maximum exposure under these arrangements is
unknown as this would involve future claims against the Fund that have not yet
occurred. Based on experience, the Fund expects the risk of loss to be remote.
- 9 -
PIA MUTUAL FUND PIA BBB BOND FUND
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 2004 (CONTINUED)
USE OF ESTIMATES - The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of increases and decreases in net assets from operations during the reporting
period. Actual results could differ from those estimates.
NOTE 3. INVESTMENT ADVISORY AGREEMENT
The Fund has an investment advisory agreement with Pacific Income
Advisers, Inc. ("PIA" or the "Adviser"). Under the agreement, the Fund does not
pay the Adviser a fee. However, investors in the Fund will be charged management
fees by the Adviser and persons other than the Adviser. Clients of PIA pay PIA
an investment advisory fee to manage their assets, including assets invested in
the Fund. Participants in "wrap-fee" programs pay fees to the program sponsor,
who in turn pays fees to the Adviser. For the year ended November 30, 2004, the
Adviser received no investment advisory fees.
For the year ended November 30, 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, 2005.
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 year ended November
30, 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 year ended November 30, 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 year ended November 30, 2004
were $51,346,191 and $4,789,869 respectively. Purchases and sales of U.S.
government obligations for the period ended November 30, 2004 were $41,651,293
and $41,396,787, respectively.
NOTE 6. FEDERAL INCOME TAX INFORMATION
At November 30, 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 ...................... $ 48,001,007
============
Unrealized appreciation .................. $ 924,166
Unrealized depreciation .................. (190,721)
------------
Net unrealized appreciation
on investments ......................... $ 733,445
============
The difference between cost amounts for financial statement and federal
income tax purposes is due primarily to timing differences in recognizing
certain gains and losses in security transactions.
The tax character of distributions paid during the fiscal years ended
November 30, 2004 and 2003 was as follows:
2004 2003
---- ----
Ordinary income ........... $1,117,614 $ --
Net long-term capital gains -- --
---------- ----------
Total distributions ....... $1,117,614 $ --
========== ==========
Ordinary income distributions may include dividends paid from
short-term capital gains.
- 10 -
PIA MUTUAL FUND PIA BBB BOND FUND
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 2004 (CONTINUED)
As of November 30, 2004 the components of accumulated earnings on a tax
basis were as follows:
Undistributed ordinary income ........ $ 54,159
Undistributed long-term gains ........ --
--------
Tax accumulated earnings ............. 54,159
Accumulated capital and other losses . --
Unrealized depreciation on investments 733,445
--------
Total accumulated earnings ........... $787,604
========
The Fund utilized $1,199 of its capital loss carryforwards during the year
ended November 30, 2004.
NOTE 7. SUBSEQUENT EVENT
At a special meeting of shareholders on December 23, 2004, the
shareholders of the Fund, the PIA Short-Term Government Securities Fund, the PIA
Total Return Bond Fund and the PIA Equity Fund (collectively, the "PIA Funds")
approved the reorganization of the PIA Funds into corresponding series of the
Advisors Series Trust effective on December 23, 2004.
NOTE 8. OTHER TAX INFORMATION (UNAUDITED)
For the year ended November 30, 2004, none of the dividends paid from
net investment income qualifies for the dividend received deduction available to
corporate shareholders of the Fund. For shareholders in the Fund, none of the
dividend income distributed for the year ended November 30, 2004 is designated
as qualified dividend income under the Jobs and Growth Relief Act of 2003.
See notes to financial statements
- 11 -
PIA MUTUAL FUND PIA BBB BOND FUND
FINANCIAL HIGHLIGHTS
Year Sept. 26, 2003*
Ended to
Nov. 30, 2004 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 ....................... 0.38 0.06
Net realized and unrealized loss
on investments ............................ 0.06 (0.13)
--------- ---------
Total from investment operations ............ 0.44 (0.07)
--------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income ........ (0.43) --
--------- ---------
Net asset value, end of period .............. $ 9.94 $ 9.93
========= =========
TOTAL RETURN ................................ 4.57% (0.70)%(2)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ........ $ 49,228 $ 199
Ratio of expenses to average net assets:
Net of waivers and reimbursements ......... 0.00% 0.00%(1)
Before waivers and reimbursements ......... 0.72% 224.56%(1)
Ratio of net investment income (loss)
to average net assets:
Net of waivers and reimbursements ......... 4.86% 3.16%(1)
Before waivers and reimbursements ......... 4.14% (221.40)%(1)
Portfolio turnover rate ..................... 202% 87%2
<FN>
- -------------
* Commencement of operations.
1 Annualized for periods less than one year.
2 Not annualized for periods less than one year.
</FN>
See notes to financial statements
- 12 -
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of PIA Mutual Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statement of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of PIA BBB Bond Fund, a series of PIA
Mutual Fund (the "Trust") at November 30, 2004, the results of its operations
for the year then ended, the changes in its net assets and the financial
highlights for each of the periods presented, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at November 30, 2004 by
correspondence with the custodian, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP
- ------------------------------
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
January 25, 2005
See notes to financial statements
- 13 -
PIA MUTUAL FUND
BBB BOND FUND
EXPENSE EXAMPLE - FOR THE SIX MONTHS ENDED NOVEMBER 30, 2004 (UNAUDITED)
As a shareholder of the PIA BBB Bond Fund (the "Fund"), you incur two
types of costs: (1) transaction costs; and (2) ongoing costs, including
management fees and other Fund expenses. This Example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the
beginning of the period and held for the entire period from June 1, 2004 to
November 30, 2004 (the "period").
ACTUAL EXPENSES
The first line of the table below provides information about actual
account values and actual expenses. You may use the information in this line,
together with the amount you invested, to estimate the expenses you paid over
the period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 equals 8.6), then multiply the result by the
number in the first line under the heading entitled "Expenses Paid During the
Period" to estimate the expenses you paid on your account during the period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight
your ongoing costs only and do not reflect any transactional costs. Therefore,
the second line of the table is useful in comparing the ongoing costs only, and
will not help you determine the relative total costs of owning different funds.
In addition, if these transactional costs were included, your costs could have
been higher.
EXPENSES PAID DURING THE PERIOD
BEGINNING ACCOUNT ENDING ACCOUNT DURING THE
VALUE VALUE PERIOD ENDED
JUNE 1, 2004 NOVEMBER 30, 2004 NOVEMBER 30, 2004*
Actual $1,000.00 $1,050.90 $0.00
Hypothetical
(5% return before expenses) 1,000.00 1,025.00 0.00
- ------------
* Expenses are equal to the Fund's annualized expense ratio of 0.00% for the
period, multiplied by the average account value over the period,
multiplied by 183/366 (to reflect the one-half year period).
- 14 -
PIA MUTUAL FUND
PIA BBB BOND FUND
PERFORMANCE RESULTS
YEAR ENDED NOVEMBER 30, 2004
AVERAGE ANNUAL TOTAL RETURNS VALUE ON 11/30/04
- ---------------------------- -----------------
1 year 4.57% PIA BBB Bond Fund $10,384
Inception 3.25% Lehman Brothers
Baa Credit Index $10,589
$10,000 INVESTMENT MADE 9/26/03 (INCEPTION)
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
PIA BBB Bond Fund Lehman Bros. Baa Credit Index
9/26/03 10,000 10,000
11/30/03 9,930 9,982
11/30/04 10,384 10,589
The returns shown include the reinvestment of all dividends, but do not reflect
the deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares. Past performance is not indicative of future results.
The Lehman Brothers Baa Credit Index includes both corporate and non-corporate
sectors. All issues must have one year to final maturity and have at least $250
million par value outstanding. Issues must be fixed rate and rated investment
grade.
A description of the Fund's proxy voting policies and procedures and a
record of the Fund's proxy votes for the year ended June 30, 2004 are available
without charge, upon request by calling toll free 1-800-251-1970 and on the
Securities and Exchange Commission's (SEC) website at http://www.sec.gov.
The Fund will file its complete schedule of investments with the SEC
for the first and third quarters of each fiscal year on Form N-Q. The Fund's
Forms N-Q will be available on the EDGAR database on the SEC's website at
http://www.sec.gov. These Forms may also be reviewed and copied at the SEC's
Public Reference Room in Washington, D.C. Information about the operation of the
Public Reference Room may be obtained by calling 1-800-SEC-0330.
INVESTMENTS BY SECTOR
AS A PERCENTAGE OF NET ASSETS
[THE FOLLOWING TABLE WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL.]
Financial 24%
Communications 21%
Utilities 11%
Industrial 10%
Energy 9%
Consumer Non-cylical 8%
Consumer Cylical 8%
Basic Materials 5%
Cash and Other Assets 3%
Government 1%
- 15 -
PIA MUTUAL FUND
TRUSTEES AND EXECUTIVE OFFICERS
The overall management of the business and affairs of the Trust is
vested with its Board of Trustees (the "Board"). The Board approves all
significant agreements between the Trust and persons or companies furnishing
services to it, including the agreements with the Advisor, Administrator,
Custodian and Transfer Agent. The day-to-day operations of the Trust are
delegated to its officers, subject to the Fund's investment objectives,
strategies, and policies and to general supervision by the Board.
The current Trustees and officers of the Trust, their birth dates and
positions with the Trust, term of office with the Trust and length of time
served, their business addresses and principal occupations during the past five
years and other directorships held are set forth in the table below. Unless
noted otherwise, each person has held the position listed for a minimum of five
years.
INDEPENDENT TRUSTEES OF THE TRUST
- ---------------------------------------------------------------------------------------------------------------------
TERM OF OFFICE
POSITION HELD AND LENGTH OF PRINCIPAL OCCUPATION
NAME, ADDRESS AND AGE WITH THE TRUST TIME SERVED DURING PAST FIVE YEARS OTHER DIRECTORSHIPS HELD
- --------------------- -------------- ----------- ---------------------- ------------------------
WALTER E. AUCH* Trustee Indefinite Management Consultant Director, Nicholas-Applegate
2020 E. Financial Way term since Funds, Citigroup Funds,
Glendora, CA 91741 February 1997 Pimco Advisors LLP and
(born 1921) Senele Group.
DONALD E. O'CONNOR* Trustee Indefinite Financial Consultant; Independent Director,
2020 E. Financial Way term since formerly Executive The Forward Funds.
Glendora, CA 91741 February 1997 Vice President and Chief
(born 1936) Operating Officer of ICI
Mutual Insurance Company
(until January 1997).
GEORGE T. WOFFORD III* Trustee Indefinite Senior Vice President, None
2020 E. Financial Way term since Information Services,
Glendora, CA 91741 February 1997 Federal Home Loan Bank
(born 1939) of San Francisco.
JAMES CLAYBURN LAFORCE* Trustee Indefinite Dean Emeritus, John E. Director, The Payden & Rygel
2020 E. Financial Way term since Anderson Graduate School Investment Group, The
Glendora, CA 91741 May 2002 of Management, University Metzler/Payden Investment
(born 1927) of California, Group, PIC Investment Trust, PIC
Los Angeles. Small Cap Portfolio, PIC Balanced
Portfolio, PIC Growth
Portfolio, PIC Mid Cap Portfolio,
BlackRock Funds, Jacobs Engineering,
Arena Pharmaceuticals, Cancervax.
GEORGE J. REBHAN* Trustee Indefinite Retired; formerly Trustee, E*TRADE Funds.
2020 E. Financial Way term since President, Hotchkis and
Glendora, CA 91741 May 2002 Wiley Funds (mutual funds)
(born 1934) from 1985 to 1993.
- 16 -
INTERESTED TRUSTEE OF THE TRUST
- ---------------------------------------------------------------------------------------------------------------------
TERM OF OFFICE
POSITION HELD AND LENGTH OF PRINCIPAL OCCUPATION
NAME, ADDRESS AND AGE WITH THE TRUST TIME SERVED DURING PAST FIVE YEARS OTHER DIRECTORSHIPS HELD
- --------------------- -------------- ----------- ---------------------- ------------------------
ERIC M. BANHAZL** Trustee Indefinite Senior Vice President, None
2020 E. Financial Way term since U.S. Bancorp Fund Services,
Glendora, CA 91741 February 1997 LLC since July 2001; Treasurer,
(born 1957) Investec Funds; formerly,
Executive Vice President,
Investment Company Administration, LLC;
("ICA") (mutual fund administrator
and the Fund's former administrator).
OFFICERS OF THE TRUST
- ---------------------------------------------------------------------------------------------------------------------
ERIC M. BANHAZL** President, Indefinite Senior Vice President, U.S. None
2020 E. Financial Way Interested term since Bancorp Fund Services, LLC since July
Glendora, CA 91741 Trustee February 1997 2001; Treasurer, Investec Funds;
(born 1957) formerly, Executive Vice President,
Investment Company Administration, LLC;
("ICA") (mutual fund administrator
and the Fund's former administrator).
DOUGLAS G. HESS Treasurer Indefinite Vice President, Compliance and None
615 East Michigan St. term since Administration, U.S. Bancorp Fund
Milwaukee, WI 53202 June 2003 Services, LLC since March 1997.
(born 1967)
RODNEY A. DEWALT Secretary Indefinite Legal and Compliance None
615 East Michigan St. term since Administrator, U.S. Bancorp
Milwaukee, WI 53202 December Fund Services, LLC since
(born 1967) 2003 January 2003; Thrivent Financial
for Lutherans from
2000 to 2003; Attorney, Private
Practice from 1997 to 2000.
<FN>
- -------------
* Denotes those Trustees of the Trust who are not "interested persons" of
the Trust as defined under the 1940 Act ("Independent Trustees").
** Denotes Trustee who is an "interested person" of the Trust under the 1940
Act. Mr. Banhazl is an interested person of the Trust by virtue of his
position as President of the Trust. He is also an officer of U.S. Bancorp
Fund Services, LLC, the administrator for the Fund. U.S. Bancorp Fund
Services, LLC is an affiliate of Quasar Distributors, LLC, the Fund's
distributor.
</FN>
- 17 -
PIA Mutual Fund
Distributed by:
Syndicated Capital, Inc.
1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401
ITEM 2. CODE OF ETHICS.
The registrant, as of the end of the period covered by this report, has adopted
a code of ethics that applies to the Registrant's principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions, regardless of whether these individuals
are employed by the Registrant or a third party. A copy of this code of ethics
is attached hereto as Exhibit (a)
There have been no amendments to the Registrant's Code of Ethics during the
reporting period for this Form N-CSR. There have also been no waivers granted by
the Registrant to individuals covered by the Registrant's Code of Ethics during
the reporting period for this Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Registrant's Board of Trustees has determined that it does not have an
"audit committee financial expert" serving on its audit committee. While the
Registrant believes that each of the members of its audit committee has
sufficient knowledge of accounting principles and financial statements to serve
on the audit committee, none has the requisite experience to qualify as an
"audit committee financial expert" as such item is defined by the Securities and
Exchange Commission.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The aggregate fees billed for each of the last two fiscal years for professional
services rendered by the principal accountant for the audit of the Registrant's
annual financial statements or services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
are listed below.
Fiscal year ended Fiscal year ended
November 30, 2004 November 30, 2003
Audit Fees $87,500 $74,800
Audit-Related Fees $0 $0
Tax Fees $22,750 $21,000
All Other Fees $0 $0
The Registrant's audit committee has adopted an Audit Committee Charter that
requires that the Audit Committee review the scope and plan of the registered
public accounting firm's annual and interim examinations, approve the services
(other than the annual audit) to be performed for the Registrant by the
independent public accountants and approve the fees and other compensation
payable to the independent accountants. During the fiscal years ended November
30, 2004 and 2003, all of the audit and non-audit services provided by the
Registrant's principal accountant were pre-approved by the audit committee.
(f) None.
(g) None.
(h) Not applicable.
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. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS
Not applicable.
ITEM 10. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 11. CONTROLS AND PROCEDURES.
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.
ITEM 12. EXHIBITS.
(a)(1) Code of Ethics - Filed as an attachment to this filing.
(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.
OCM Mutual Fund
By: /s/ Gregory M. Orrell
----------------------
Gregory M. Orrell
President
Date: February 4, 2005
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/ Gregory M. Orrell
---------------------
Gregory M. Orrell
President
Date: February 4, 2005
By: /s/ Jacklyn Orrell
------------------
Jacklyn Orrell
Secretary and Treasurer
Date: February 4, 2005