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 811-8411
--------------------------------------------
James Advantage Funds
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
1349 Fairground Road, Beavercreek, Ohio 45385
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(Address of principal executive offices) (Zip code)
Barry R. James, P.O. Box 8, Alpha, Ohio 45301
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(Name and address of agent for service)
Registrant's telephone number, including area code: (937) 426-7640
-----------------------------
Date of fiscal year end: 6/30
------------------
Date of reporting period: 12/31/07
-----------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
Item 1. Reports to Stockholders.
James Advantage Funds Semi-Annual Report
LETTER TO SHAREHOLDERS
OF THE JAMES ADVANTAGE FUNDS
================================================================================
In our December 2007 Economic Outlook, we warned that the U.S. housing market
was in serious trouble and that housing problems would slow the economy and hurt
stocks. We were correct. Our Funds that have the ability to take defensive
action in the face of that dire forecast were able to avoid many of the housing
related problems. The stock market correction that began in mid year continues
into 2008. Now we see many investors and pundits who did not see trouble ahead
last year selling stocks with abandon amidst the carnage resultant from an orgy
of subprime mortgage securitization and leverage.
The Markets Over the Past Six Months
The S&P 500, the Russell 2000 and the S&P MidCap Value Indexes all posted
negative returns over the final 6 months of 2007. Most of the damage occurred in
November, which truly was the cruelest month. It was in November that the
investing public became aware of the enormity of the losses hiding on the books
of major brokerage houses and banks. It seemed that every day a new announcement
was made of ever higher write-offs, sending Financial stocks lower. The Federal
Reserve's anemic response to a weakening economy was tempered by its desire to
bolster its inflation fighting credentials, thus further aggravating the
situation. Year end rallies, common in pre-election years, never came, setting
the stage for additional weakness in the stock markets in January.
Investment Goals and Objectives
The James Advantage: Golden Rainbow has as part of its objective "the
preservation of capital in declining markets". To succeed at that objective, the
Adviser's economic forecasts must be good. We appear to have gotten it right
both in forecasting a difficult stock market for 2007 and in moving heavily into
safer, longer term U.S. Treasury securities while lowering equity levels
significantly early in the year. The robust performance of these long term bonds
helped to offset stock market weakness. The Fund's income objective was met with
the regular quarterly distribution and the year end long term capital gains
distribution.
The James Equity Fund, James Small Cap Fund and James Mid Cap Fund do not have
the ability to hold bonds or to significantly reduce equity levels. These Funds
are charged with being fully invested in stocks that follow the Adviser's basic
value strategy. These Funds invest in stocks that the Adviser's research
determines are undervalued.
The James Market Neutral Fund seeks to provide positive returns regardless of
the returns on the stock market. To achieve its objective, the Fund uses a
combination of holding stocks that the believes to be undervalued and selling
short stocks that are considered overvalued. It may hold stocks held by the
other four Funds.
Investment Philosophy
James Investment Research, Inc., Adviser to the James Advantage Funds, has taken
a conservative approach to investing for over 35 years. Our experience has
taught us that stocks with strong earnings growth, low valuations and other
strong value traits are more likely to outperform the broad stock market over
time. In addition, we have found that preserving capital in down markets is very
important in achieving long term growth. Avoiding sectors that have become very
expensive by historic standards, such as the Housing sector in 2007, go a long
way in helping to preserve capital. We also believe that stock selection should
be a serious business undertaken by professionals with depth of experience and
strong credentials. Independent research, not tainted by the fad mentality of
Wall Street, is key to our value oriented philosophy.
1
Strategy for Meeting Fund Objectives
James Investment Research, Inc. uses a top down strategy to develop its
portfolios. Every Fall we update and formalize our Economic Outlook following an
intense period of independent research. That outlook helps us to identify
Sectors and Industries that we believe are better situated to prosper in the
coming year. Only then do we actually look for individual stocks in those
Industries. Our portfolios are well diversified, but an examination of the
holdings in comparison to the various popular stock indexes, will bear witness
to our unique approach and the impact of our research.
Our 2008 Annual Economic Outlook was prepared in December. We see the U.S.
economy weakening in 2008 as fallout from the bursting of the housing bubble
reaches into the Consumer Cyclical, Financial and Energy Sectors. Even Utilities
can be harmed as demand from businesses for electricity and gas drops. We have
identified Non-Cyclical industries, such as Pharmaceuticals and Agriculture, as
potential winners.
Importantly, we see opportunities arising for strong, albeit relatively brief,
rallies in the broad markets from time to time in 2008. These rallies will run
counter to the longer term downtrend, but can be captured by active management.
Our strategy for 2008 is to actively manage the allocation of the James
Balanced: Golden Rainbow Fund, and for all the Funds, to be nimble in
identifying sectors that have become too oversold and are ripe for a rally.
Fund Performance
The James Balanced: Golden Rainbow Fund returned 8.61 percent for calendar 2007
compared with 5.50 percent on the all stock S&P 500 and with 1.80 percent on the
Fund's benchmark, a blend of the S&P 500, the Russell 2000 and the Lehman
Intermediate Government Credit Bond Index. We are pleased to note that this
outperformance is consistent with outperformances over the last 5 and 10 years
as well, where the Fund earned a compound total return of 11.15 percent and 7.73
percent versus the benchmark blend returns of 8.77 percent and 6.32 percent
respectively. The Fund's strong performance in the second half of the year was
due to a low allocation to stocks and relatively heavy exposure to high quality,
longer term U.S. Treasury Bonds.
The James Equity Fund returned 3.62 percent for the 2007 calendar year. This
slightly trailed the benchmark S&P 500 which returned 5.50 percent. The Fund did
avoid investing in home builders and financial institutions that were exposed
heavily to them. However value stocks as a group underperformed growth in 2007.
For example, the S&P 500 Value Index returned 2.03 percent for the year and
actually declined by 4.98 percent over the last six months of 2007, whereas the
S&P 500 Growth Index returned 9.25 percent for the year and 2.53 percent for the
last six months.
The James Small Cap Fund lost 6.16 percent for the 2007 calendar year compared
with a decline of 1.55 percent on the benchmark Russell 2000. Value stocks
underperformed growth in this market capitalization category as well. While the
Fund did avoid investing in home builders and related companies, the Fund's
exposure to Consumer Cyclical and Financial stocks hurt over this time period,
while the index benefited from a larger exposure to Technology stocks.
The James Mid Cap Fund returned 1.63 percent for calendar 2007, trailing its
benchmark, the S&P 400 Citigroup Value Index, which returned 2.84 percent. The
Mid Cap Fund's sector allocation was similar to the Small Cap Fund. Again, the
underperformance of Value stocks relative to Growth stocks negatively impacted
the return as did its investments in various Cyclical stocks.
The James Market Neutral Fund returned 6.62 percent for the 2007 calendar year,
ahead of its benchmark, the ninety day U.S. Treasury Bill, which returned 5.00
percent. The Fund's short positions added value, even as Growth outperformed
Value. The Fund also paid a dividend of 10.36 cents/share in December.
2
Expectations for the Future
James Investment Research, Inc. is unique in that it does its own research. We
have developed quantitative models and processes that enable us to seek out
undervalued securities that we believe have a high probability of outperforming
the broad market. These qualities will be very important in 2008 as the U.S.
economy struggles to free itself from a housing related slowdown. We believe the
bear market that began in 2007 will be punctuated by sharp rallies in 2008 as
hopes for a quick recovery periodically arise. Politically motivated fiscal
stimulus packages may also act as a catalyst for such rallies.
Active management of asset allocation can help to add to portfolio returns in
2008. In addition, troubled markets, such as the ones we are forecasting
generally reward Value investors more than Growth investors. And as the economy
begins to recover from recession, Small Capitalization stocks should once again
begin to outperform.
/s/ Thomas L. Mangan
Thomas L. Mangan
Chief Financial Officer
Average Annual Total Returns
As of December 31, 2007
- ------------------------------------------------------------------------------------------------
Six One Five Ten Since
Months** Year Years Years Inception
- ------------------------------------------------------------------------------------------------
Golden Rainbow Fund 3.56% 8.61% 11.15% 7.73% 9.08%
Standard & Poor's 500 Index -1.37% 5.50% 12.83% 5.91% 10.86%
Blended Index* 1.04% 1.80% 8.77% 6.32% 8.96%
(Inception 7/1/91)
James Small Cap Fund -10.82% -6.16% 17.08% NA 9.98%
Russell 2000 Index -7.52% -1.55% 16.24% NA 10.20%
(Inception 10/2/98)
James Market Neutral Fund 2.85% 6.62% 5.14% NA 3.73%
90-Day U.S. Treasury Bill Index 2.40% 5.00% 3.07% NA 3.63%
(Inception 10/2/98)
James Equity Fund -4.23% 3.62% 16.46% NA 2.21%
Standard & Poor's 500 Index -1.37% 5.50% 12.83% NA 2.59%
(Inception 11/1/99)
James Mid Cap Fund -8.44% 1.63% NA NA 4.93%
Standard & Poor's 400 Value Index -6.86% 2.84% NA NA 6.83%
(Inception 6/30/06)
- ------------------------------------------------------------------------------------------------
Past performance is not predictive of future results. The performance of the
above Funds does not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
Current performance may be lower or higher than the performance data quoted.
Please call 1-800-995-2637 for most recent month-end performance information.
* The Blended Index is comprised of a 25% weighting in the Standard & Poor's
500 Index, a 25% weighting in the Russell 2000 Index and a 50% weighting
in the Lehman Brothers Intemediate Government/Credit Index.
** Returns not annualized.
3
JAMES ADVANTAGE FUNDS
REPRESENTATION OF PORTFOLIOS OF INVESTMENTS
December 31, 2007 (Unaudited)
================================================================================
The illustrations below provide the industry sectors for the James Balanced:
Golden Rainbow Fund, James Small Cap Fund, James Market Neutral Fund, James
Equity Fund and James Mid Cap Fund.
James Balanced: Golden Rainbow Fund
Industry Sector Allocation (% of Net Assets)
[pie chart]
BASIC MATERIALS 3.5%
CONSUMER, CYCLICAL 4.2%
CONSUMER, NON-CYCLICAL 6.1%
ENERGY 5.7%
FINANCIAL 3.0%
INDUSTRIAL 5.3%
TECHNOLOGY 5.2%
UTILITIES 4.5%
INTERNATIONAL EQUITY FUNDS 1.9%
BONDS (over 10 years) 24.1%
BONDS (2-10 years) 14.5%
BONDS (less than 2 years) 19.1%
CASH EQUIVALENTS 1.6%
OTHER 1.3%
James Small Cap Fund
Industry Sector Allocation (% of Net Assets)
[pie chart]
BASIC MATERIALS 10.5%
CONGLOMERATE 1.3%
CONSUMER, CYCLICAL 9.4%
CONSUMER, NON-CYCLICAL 15.7%
ENERGY 12.9%
FINANCIAL 13.6%
INDUSTRIAL 13.0%
TECHNOLOGY 9.4%
UTILITIES 9.8%
CASH EQUIVALENTS 4.7%
OTHER (0.3)%
4
JAMES ADVANTAGE FUNDS
REPRESENTATION OF PORTFOLIOS OF INVESTMENTS (Continued)
================================================================================
James Market Neutral Fund
Industry Sector Allocation (% of Net Assets)
(Cash, Cash Equivalents and Other Assets in Excess of Liabilities not included)
[bar chart]
Longs Shorts
----- ------
BASIC MATERIALS 7.1% 3.8%
CONSUMER, CYCLICAL 8.8% 10.4%
CONSUMER, NON-CYCLICAL 11.2% 9.0%
ENERGY 9.0% 4.0%
FINANCIAL 5.7% 10.5%
INDUSTRIAL 5.0% 9.5%
TECHNOLOGY 9.5% 11.5%
UTILITIES 8.4% 2.3%
INTERNATIONAL EQUITY FUNDS 2.9%
James Equity Fund
Industry Sector Allocation (% of Net Assets)
[pie chart]
BASIC MATERIALS 6.3%
CONGLOMERATE 1.2%
CONSUMER, CYCLICAL 13.1%
CONSUMER, NON-CYCLICAL 13.4%
ENERGY 13.8%
FINANCIAL 9.4%
INDUSTRIAL 14.4%
TECHNOLOGY 9.0%
UTILITIES 15.4%
CASH EQUIVALENTS 3.9%
OTHER 0.1%
5
JAMES ADVANTAGE FUNDS
REPRESENTATION OF PORTFOLIOS OF INVESTMENTS (Continued)
================================================================================
James Mid Cap Fund
Industry Sector Allocation (% of Net Assets)
[pie chart]
BASIC MATERIALS -- 12.3%
CONSUMER, CYCLICAL -- 7.3%
CONSUMER, NON-CYCLICAL -- 17.7%
ENERGY -- 12.2%
FINANCIAL -- 10.8%
INDUSTRIAL -- 11.1%
TECHNOLOGY -- 13.7%
UTILITIES -- 11.1%
CASH EQUIVALENTS -- 3.7%
OTHER -- 0.1%
6
JAMES ADVANTAGE FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 2007 (Unaudited)
================================================================================
James
Balanced: James James James James
Golden Rainbow Small Cap Market Neutral Equity Mid Cap
Fund Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investment securities:
At amortized cost $ 315,788,461 $ 236,435,941 $ 26,655,940 $ 15,053,573 $ 6,020,916
============= ============= ============= ============= =============
At value $ 363,031,909 $ 254,874,715 $ 31,556,711 $ 22,012,753 $ 6,191,772
Segregated cash with brokers -- -- 37,813,180 -- --
Dividends and interest receivable 3,118,006 609,281 381,329 37,024 5,851
Receivable for securities sold 1,532,947 -- 424,803 -- --
Receivable for capital shares sold 1,415,213 478,922 17,056 12,484 11,821
Other assets 31,221 1,522 -- -- --
------------- ------------- ------------- ------------- -------------
TOTAL ASSETS 369,129,296 255,964,440 70,193,079 22,062,261 6,209,444
------------- ------------- ------------- ------------- -------------
LIABILITIES
Payable for securities sold short
(proceeds $31,117,319) -- -- 25,562,885 -- --
Payable for dividends on
securities sold short -- -- 9,767 -- --
Payable for capital shares redeemed 712,554 1,523,590 1,321 2,100 --
Payable for securities purchased 280,530 -- 2,615,190 -- --
Accrued expenses:
Management fees 229,337 280,757 60,907 23,497 6,685
12b-1 distribution and service fees -- -- 17,702 9,294 6,181
Trustees' fees 9,408 -- -- -- --
Other affiliates 26,532 -- -- -- --
Other 10,884 -- -- -- --
------------- ------------- ------------- ------------- -------------
TOTAL LIABILITIES 1,269,245 1,804,347 28,267,772 34,891 12,866
------------- ------------- ------------- ------------- -------------
NET ASSETS $ 367,860,051 $ 254,160,093 $ 41,925,307 $ 22,027,370 $ 6,196,578
============= ============= ============= ============= =============
NET ASSETS CONSIST OF:
Paid-in capital $ 320,844,770 $ 252,952,526 $ 40,575,277 $ 16,314,537 $ 6,091,656
Accumulated net investment income (loss) 13,606 (502) (1,625) 8 (1,969)
Accumulated net realized losses from
security transactions (241,773) (17,230,705) (9,103,550) (1,246,355) (63,965)
Net unrealized appreciation
on investments 47,243,448 18,438,774 10,455,205 6,959,180 170,856
------------- ------------- ------------- ------------- -------------
NET ASSETS $ 367,860,051 $ 254,160,093 $ 41,925,307 $ 22,027,370 $ 6,196,578
============= ============= ============= ============= =============
Shares of beneficial interest
outstanding (unlimited number
of shares authorized, no par) 19,993,395 11,633,083 3,400,717 1,876,148 580,005
============= ============= ============= ============= =============
Net asset value, offering price and
redemption price per share $ 18.40 $ 21.85 $ 12.33 $ 11.74 $ 10.68
============= ============= ============= ============= =============
See accompanying notes to financial statements.
7
JAMES ADVANTAGE FUNDS
STATEMENTS OF OPERATIONS
For the Six Months Ended December 31, 2007 (Unaudited)
================================================================================
James
Balanced: James James James James
Golden Rainbow Small Cap Market Neutral Equity Mid Cap
Fund Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (Net of withholding
taxes of $3,267, $655, $784, $0,
$273, respectively) $ 1,580,153 $ 2,541,335 $ 1,117,420 $ 217,985 $ 48,513
Interest 4,979,890 279,990 23,770 -- 791
------------ ------------ ------------ ------------ ------------
TOTAL INVESTMENT INCOME 6,560,043 2,821,325 1,141,190 217,985 49,304
------------ ------------ ------------ ------------ ------------
EXPENSES
Management fees 1,311,667 1,807,778 372,970 143,740 35,482
12b-1 distribution and service fees 443,129 362,560 35,782 29,255 6,576
Dividend expense on
securities sold short -- -- 87,285 -- --
Servicing fees 138,052 -- -- -- --
Professional fees 40,011 -- -- -- --
Trustees' fees 8,750 5,028 5,006 5,007 5,001
Registration fees 30,755 -- -- -- --
Custodian fees and expenses 20,136 -- -- -- --
Shareholder report
printing and mailing 17,810 -- -- -- --
Postage and supplies 27,929 -- -- -- --
Compliance fees and expenses 4,281 -- -- -- --
Other expenses 3,536 -- -- -- --
------------ ------------ ------------ ------------ ------------
TOTAL EXPENSES 2,046,056 2,175,366 501,043 178,002 47,059
------------ ------------ ------------ ------------ ------------
NET INVESTMENT INCOME 4,513,987 645,959 640,147 39,983 2,245
------------ ------------ ------------ ------------ ------------
REALIZED AND UNREALIZED
GAINS (LOSSES)
ON INVESTMENTS
Net realized gains (losses) from
security transactions 882,122 (10,974,424) 1,188,353 (212,888) (68,179)
Net realized losses on closed
short positions -- -- (1,316,406) -- --
Net change in unrealized appreciation/
depreciation on investments 6,843,118 (23,763,288) 480,051 (872,160) (524,017)
------------ ------------ ------------ ------------ ------------
NET REALIZED AND
UNREALIZED GAINS (LOSSES)
ON INVESTMENTS 7,725,240 (34,737,712) 351,998 (1,085,048) (592,196)
------------ ------------ ------------ ------------ ------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS $ 12,239,227 $(34,091,753) $ 992,145 $ (1,045,065) $ (589,951)
============ ============ ============ ============ ============
See accompanying notes to financial statements.
8
JAMES BALANCED: GOLDEN RAINBOW FUND
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
Six Months
Ended Year
December 31, Ended
2007 June 30,
(Unaudited) 2007
- -------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 4,513,987 $ 6,906,976
Net realized gains on investments 882,122 7,508,290
Net change in unrealized appreciation/depreciation on investments 6,843,118 15,481,817
------------- -------------
Net increase in net assets from operations 12,239,227 29,897,083
------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (4,442,863) (6,967,365)
Distributions from net realized gains (6,758,977) (5,273,855)
------------- -------------
Decrease in net assets from distributions to shareholders (11,201,840) (12,241,220)
------------- -------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 62,030,008 125,693,280
Net asset value of shares issued in reinvestment of distributions to shareholders 10,763,794 11,752,390
Payments for shares redeemed (47,635,376) (82,203,239)
------------- -------------
Net increase in net assets from capital share transactions 25,158,426 55,242,431
------------- -------------
TOTAL INCREASE IN NET ASSETS 26,195,813 72,898,294
NET ASSETS
Beginning of period 341,664,238 268,765,944
------------- -------------
End of period $ 367,860,051 $ 341,664,238
============= =============
ACCUMULATED NET INVESTMENT INCOME (LOSS) $ 13,606 $ (57,518)
============= =============
SUMMARY OF CAPITAL SHARE ACTIVITY
Shares sold 3,354,117 7,069,682
Shares issued in reinvestment of distributions to shareholders 582,803 658,997
Shares redeemed (2,581,995) (4,607,914)
------------- -------------
Net increase in shares outstanding 1,354,925 3,120,765
Shares outstanding, beginning of period 18,638,470 15,517,705
------------- -------------
Shares outstanding, end of period 19,993,395 18,638,470
============= =============
See accompanying notes to financial statements.
9
JAMES SMALL CAP FUND
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
Six Months
Ended Year
December 31, Ended
2007 June 30,
(Unaudited) 2007
- ---------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 645,959 $ 1,543,958
Net realized losses on investments (10,974,424) (3,997,335)
Net change in unrealized appreciation/depreciation on investments (23,763,288) 25,687,814
------------- -------------
Net increase (Decrease) in net assets from operations (34,091,753) 23,234,437
------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (646,461) (1,543,871)
Distributions from net realized gains -- (2,572,028)
------------- -------------
Decrease in net assets from distributions to shareholders (646,461) (4,115,899)
------------- -------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 52,264,062 264,238,098
Net asset value of shares issued in reinvestment of distributions to shareholders 614,229 3,960,651
Payments for shares redeemed (91,446,795) (130,340,887)(A)
------------- -------------
Net increase (Decrease) in net assets from capital share transactions (38,568,504) 137,857,862
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (73,306,718) 156,976,400
NET ASSETS
Beginning of period 327,466,811 170,490,411
------------- -------------
End of period $ 254,160,093 $ 327,466,811
============= =============
ACCUMULATED NET INVESTMENT INCOME (LOSS) $ (503) $ 87
============= =============
SUMMARY OF CAPITAL SHARE ACTIVITY
Shares sold 2,263,546 11,336,919
Shares issued in reinvestment of distributions to shareholders 27,458 168,219
Shares redeemed (3,991,355) (5,495,532)
------------- -------------
Net increase (Decrease) in shares outstanding (1,700,351) 6,009,606
Shares outstanding, beginning of period 13,333,434 7,323,828
------------- -------------
Shares outstanding, end of period 11,633,083 13,333,434
============= =============
(A) The cost of payments for shares redeemed is net of the 1% redemption fee
on Fund shares which have been held for less than the stated period in the
prospectus. For the year ended June 30, 2007, these fees were $50,529.
Effective February 21, 2007, the redemption fee was eliminated.
See accompanying notes to financial statements.
10
JAMES MARKET NEUTRAL FUND
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
Six Months
Ended Year
December 31, Ended
2007 June 30,
(Unaudited) 2007
- ------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 640,147 $ 2,150,900
Net realized gains (losses) from:
Security transactions 1,188,353 9,516,718
Closed short positions (1,316,406) (6,743,102)
Net change in unrealized appreciation/depreciation on investments 480,051 (6,465,211)
------------ ------------
Net increase (Decrease) in net assets from operations 992,145 (1,540,695)
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (629,826) (2,166,597)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 3,844,926 24,350,134
Net asset value of shares issued in reinvestment of distributions to shareholders 592,985 2,045,700
Payments for shares redeemed (14,401,615) (46,379,464)(A)
------------ ------------
Net decrease in net assets from capital share transactions (9,963,704) (19,983,630)
------------ ------------
TOTAL DECREASE IN NET ASSETS (9,601,385) (23,690,922)
NET ASSETS
Beginning of period 51,526,692 75,217,614
------------ ------------
End of period $ 41,925,307 $ 51,526,692
============ ============
ACCUMULATED NET INVESTMENT LOSS IN EXCESS OF $ (1,625) $ (11,946)
============ ============
SUMMARY OF CAPITAL SHARE ACTIVITY
Shares sold 311,983 1,960,226
Shares issued in reinvestment of distributions to shareholders 48,663 169,177
Shares redeemed (1,192,157) (3,825,518)
------------ ------------
Net decrease in shares outstanding (831,511) (1,696,115)
Shares outstanding, beginning of period 4,232,227 5,928,342
------------ ------------
Shares outstanding, end of period 3,400,716 4,232,227
============ ============
(A) The cost of payments for shares redeemed is net of the 1% redemption fee
on Fund shares which have been held for less than the stated period in the
prospectus. For the year ended June 30, 2007, these fees were $20,790.
Effective February 21, 2007, the redemption fee was eliminated.
See accompanying notes to financial statements.
11
JAMES EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
Six Months
Ended Year
December 31, Ended
2007 June 30,
(Unaudited) 2007
- ------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 39,983 $ 97,524
Net realized gains (losses) on investments (212,888) 762,304
Net change in unrealized appreciation/depreciation on investments (872,160) 2,125,529
------------ ------------
Net increase (Decrease) in net assets from operations (1,045,065) 2,985,357
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (39,981) (97,518)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 2,996,710 17,092,635
Net asset value of shares issued in reinvestment of distributions to shareholders 39,649 95,205
Payments for shares redeemed (5,796,650) (27,995,177)(A)
------------ ------------
Net decrease in net assets from capital share transactions (2,760,291) (10,807,337)
------------ ------------
TOTAL DECREASE IN NET ASSETS (3,845,337) (7,919,498)
NET ASSETS
Beginning of period 25,872,707 33,792,205
------------ ------------
End of period $ 22,027,370 $ 25,872,707
============ ============
ACCUMULATED NET INVESTMENT INCOME $ 8 $ 6
============ ============
SUMMARY OF CAPITAL SHARE ACTIVITY
Shares sold 252,527 1,530,581
Shares issued in reinvestment of distributions to shareholders 3,304 8,075
Shares redeemed (487,349) (2,492,159)
------------ ------------
Net decrease in shares outstanding (231,518) (953,503)
Shares outstanding, beginning of period 2,107,666 3,061,169
------------ ------------
Shares outstanding, end of period 1,876,148 2,107,666
============ ============
(A) The cost of payments for shares redeemed is net of the 1% redemption fee
on Fund shares which have been held for less than the stated period in the
prospectus. For the year ended June 30, 2007, these fees were $7,252.
Effective February 21, 2007, the redemption fee was eliminated.
See accompanying notes to financial statements.
12
JAMES MID CAP FUND
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
Six Months
Ended Year
December 31, Ended
2007 June 30,
(Unaudited) 2007
- ------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 2,245 $ 15,182
Net realized gains (losses) on investments (68,179) 18,217
Net change in unrealized appreciation/depreciation on investments (524,017) 694,873
------------ ------------
Net increase (Decrease) in net assets from operations (589,951) 728,272
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (4,782) (14,614)
Distributions from net realized gains (14,003) --
------------ ------------
Decrease in net assets from distributions to shareholders (18,785) (14,614)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 1,370,979 6,055,137
Net asset value of shares issued in reinvestment of distributions to shareholders 18,776 14,577
Payments for shares redeemed (1,025,519) (442,294)(B)
------------ ------------
Net increase in net assets from capital share transactions 364,236 5,627,420
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (244,500) 6,341,078
NET ASSETS
Beginning of period 6,441,078 100,000(A)
------------ ------------
End of period $ 6,196,578 $ 6,441,078
============ ============
ACCUMULATED NET INVESTMENT INCOME (LOSS) $ (1,969) $ 568
============ ============
SUMMARY OF CAPITAL SHARE ACTIVITY
Shares sold 118,360 577,798
Shares issued in reinvestment of distributions to shareholders 1,700 1,383
Shares redeemed (90,672) (38,564)
------------ ------------
Net increase in shares outstanding 29,388 540,617
Shares outstanding, beginning of period 550,617 10,000(A)
------------ ------------
Shares outstanding, end of period 580,005 550,617
============ ============
(A) The proceeds and shares represent the initial issuance of shares on
commencement date of June 30, 2006.
(B) The cost of payments for shares redeemed is net of the 1% redemption fee
on Fund shares which have been held for less than the stated period in the
prospectus. For the year ended June 30, 2007, these fees were $2.
Effective February 21, 2007, the redemption fee was eliminated.
See accompanying notes to financial statements.
13
JAMES BALANCED: GOLDEN RAINBOW FUND
FINANCIAL HIGHLIGHTS
================================================================================
Per Share Data for a Share Outstanding Throughout Each Period
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended
December
31, Year Ended June 30,
2007 ------------------------------------------------------------------------
(Unaudited) 2007 2006 2005 2004 2003
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 18.33 $ 17.32 $ 17.18 $ 15.28 $ 13.72 $ 13.80
---------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income 0.23 0.39 0.34 0.26 0.26 0.27
Net realized and unrealized
gains on investments 0.42 1.34 0.75 1.95 1.56 0.28
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 0.65 1.73 1.09 2.21 1.82 0.55
---------- ---------- ---------- ---------- ---------- ----------
Less distributions:
From net investment income (0.23) (0.40) (0.34) (0.26) (0.26) (0.27)
From net realized gains
on investments (0.35) (0.32) (0.61) (0.05) (0.00)(A) (0.36)
---------- ---------- ---------- ---------- ---------- ----------
Total distributions (0.58) (0.72) (0.95) (0.31) (0.26) (0.63)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of period $ 18.40 $ 18.33 $ 17.32 $ 17.18 $ 15.28 $ 13.72
========== ========== ========== ========== ========== ==========
Total return 3.56%(B) 10.13% 6.48% 14.56% 13.32% 4.34%
========== ========== ========== ========== ========== ==========
Net assets at end of period (000's) $ 367,860 $ 341,664 $ 268,766 $ 147,605 $ 83,893 $ 69,169
========== ========== ========== ========== ========== ==========
Ratios/Supplemental Data:
Ratio of net expenses to average
net assets 1.16%(C) 1.18% 1.21% 1.26% 1.28% 1.32%
Ratio of net investment income
to average net assets 2.55%(C) 2.24% 2.11% 1.70% 1.77% 2.08%
Portfolio turnover rate 25%(C) 92% 68% 36% 29% 61%
(A) Amount rounds to less than $0.005.
(B) Not annualized.
(C) Annualized.
See accompanying notes to financial statements.
14
JAMES SMALL CAP FUND
FINANCIAL HIGHLIGHTS
================================================================================
Per Share Data for a Share Outstanding Throughout Each Period
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended
December
31, Year Ended June 30,
2007 ----------------------------------------------------------------------
(Unaudited) 2007 2006 2005 2004 2003
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 24.56 $ 23.28 $ 20.46 $ 18.66 $ 13.43 $ 12.08
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) from investment
operations:
Net investment income (loss) 0.05 0.11 (0.04) 0.05 0.01 0.10
Net realized and unrealized
gains
(losses) on investments (2.71) 1.50 3.19 2.65 5.26 1.35
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations (2.66) 1.61 3.15 2.70 5.27 1.45
---------- ---------- ---------- ---------- ---------- ----------
Less distributions:
From net investment income (0.05) (0.11) (0.04) -- (0.01) (0.10)
From net realized gains
on investments -- (0.22) (0.30) (1.00) (0.05) --
---------- ---------- ---------- ---------- ---------- ----------
Total distributions (0.05) (0.33) (0.34) (1.00) (0.06) (0.10)
---------- ---------- ---------- ---------- ---------- ----------
Paid-in capital from redemption fees (A) -- 0.00(B) 0.01 0.10 0.02 --
---------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of period $ 21.85 $ 24.56 $ 23.28 $ 20.46 $ 18.66 $ 13.43
========== ========== ========== ========== ========== ==========
Total return (10.82)%(C) 6.97% 15.59% 15.39% 39.47% 12.20%
========== ========== ========== ========== ========== ==========
Net assets at end of period (000's) $ 254,160 $ 327,467 $ 170,490 $ 54,489 $ 13,186 $ 9,199
========== ========== ========== ========== ========== ==========
Ratios/Supplemental Data:
Ratio of net expenses to average
net assets 1.51%(D) 1.50% 1.50% 1.50% 1.50% 1.50%
Ratio of net investment income
(loss) to average net assets 0.45%(D) 0.54% (0.25)% 0.45% 0.05% 0.90%
Portfolio turnover rate 46%(D) 104% 59% 94% 45% 52%
(A) Amount calculated based on average shares outstanding throughout the
period.
(B) Amount rounds to less than $0.005.
(C) Not annualized.
(D) Annualized.
See accompanying notes to financial statements.
15
JAMES MARKET NEUTRAL FUND
FINANCIAL HIGHLIGHTS
================================================================================
Per Share Data for a Share Outstanding Throughout Each Period
- -----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended
December
31, Year Ended June 30,
2007 ------------------------------------------------------------------------
(Unaudited) 2007 2006 2005 2004 2003
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning of period $ 12.17 $ 12.69 $ 12.27 $ 11.02 $ 9.97 $ 10.79
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) from investment
operations:
Net investment income (loss) 0.18 0.40 0.17 0.01 (0.13) (0.10)
Net realized and unrealized
gains
(losses) on investments 0.16 (0.51) 0.42 1.23 1.18 (0.72)
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 0.34 (0.11) 0.59 1.24 1.05 (0.82)
---------- ---------- ---------- ---------- ---------- ----------
Less distributions:
From net investment income (0.18) (0.41) (0.18) -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Paid-in capital from redemption
fees (A) -- 0.00(B) 0.01 0.01 0.00(B) --
---------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of period $ 12.33 $ 12.17 $ 12.69 $ 12.27 $ 11.02 $ 9.97
========== ========== ========== ========== ========== ==========
Total return 6.62%(C) (0.84)% 4.94% 11.34% 10.53% (7.60)%
========== ========== ========== ========== ========== ==========
Net assets at end of period (000's) $ 41,925 $ 51,527 $ 75,218 $ 47,303 $ 12,528 $ 9,219
========== ========== ========== ========== ========== ==========
Ratios/Supplemental Data:
Ratio of net expenses to average
net assets, excluding
dividends
on securities sold short 1.87%(D) 1.94% 1.95% 1.95% 1.95% 1.95%
Ratio of dividend expense
on securities sold short 0.39%(D) 0.32% 0.62% 0.42% 0.64% 0.53%
---------- ---------- ---------- ---------- ---------- ----------
Ratio of net expenses to average
net assets 2.26%(D) 2.26% 2.57% 2.37% 2.59% 2.48%
---------- ---------- ---------- ---------- ---------- ----------
Ratio of net investment income (loss)
to average net assets 2.89%(D) 3.21% 1.52% 0.11% (1.43)% (0.98)%
Portfolio turnover rate(E) 25%(D) 57% 27% 35% 13% 86%
(A) Amount calculated based on average shares outstanding throughout the
period.
(B) Amount rounds to less than $0.005.
(C) Not annualized.
(D) Annualized.
(E) Calculation does not include short positions or short transactions.
Portfolio turnover rate would be lower if included.
See accompanying notes to financial statements.
16
JAMES EQUITY FUND
FINANCIAL HIGHLIGHTS
================================================================================
Per Share Data for a Share Outstanding Throughout Each Period
- ----------------------------------------------------------------------------------------------------------------------------------
Six Months
Ended
December
31, Year Ended June 30,
2007 ---------------------------------------------------------------------------
(Unaudited) 2007 2006 2005 2004 2003
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value at beginning
of period $ 12.28 $ 11.04 $ 8.89 $ 7.36 $ 6.18 $ 6.62
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) from investment
operations:
Net investment income 0.02 0.04 0.01 0.01 0.02 0.03
Net realized and
unrealized gains
(losses) on investments (0.54) 1.24 2.16 1.53 1.18 (0.44)
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations (0.52) 1.28 2.17 1.54 1.20 (0.41)
---------- ---------- ---------- ---------- ---------- ----------
Less distributions:
From net investment income (0.02) (0.04) (0.01) (0.01) (0.02) (0.03)
From distributions in
excess of net investment
income -- -- (0.01) -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total distributions (0.02) (0.04) (0.02) (0.01) (0.02) (0.03)
---------- ---------- ---------- ---------- ---------- ----------
Paid-in capital from redemption
fees (A) -- 0.00(B) 0.00(B) 0.00(B) 0.00(B) --
---------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of period $ 11.74 $ 12.28 $ 11.04 $ 8.89 $ 7.36 $ 6.18
========== ========== ========== ========== ========== ==========
Total return (4.23)%(C) 11.59% 24.45% 20.96% 19.38% (6.14)%
========== ========== ========== ========== ========== ==========
Net assets at end of period (000's) $ 22,027 $ 25,873 $ 33,792 $ 16,833 $ 7,249 $ 5,379
========== ========== ========== ========== ========== ==========
Ratios/Supplemental Data:
Ratio of net expenses to average
net assets 1.50%(D) 1.50% 1.50% 1.50% 1.50% 1.50%
Ratio of net investment income to
average net assets 0.34%(D) 0.30% 0.06% 0.22% 0.25% 0.56%
Portfolio turnover rate 0%(D) 58% 43% 33% 70% 65%
(A) Amount calculated based on average shares outstanding throughout the
period.
(B) Amount rounds to less than $0.005.
(C) Not annualized.
(D) Annualized.
See accompanying notes to financial statements.
17
JAMES MID CAP FUND
FINANCIAL HIGHLIGHTS
================================================================================
Per Share Data for a Share Outstanding Throughout the Period
- ---------------------------------------------------------------------------------------
Six Months
Ended Year
December 31, Ended
2007 June 30,
(Unaudited) 2007
- ---------------------------------------------------------------------------------------
Net asset value at beginning of period $ 11.70 $ 10.00
------------ ------------
Income (loss) from investment operations:
Net investment income 0.00(A) 0.04
Net realized and unrealized gains
(losses) on investments (0.99) 1.70
------------ ------------
Total from investment operations (0.99) 1.74
------------ ------------
Less distributions:
From net investment income (0.01) --
From net realized gains on investments (0.02) (0.04)
------------ ------------
Total Distributions (0.03) (0.04)
------------ ------------
Paid-in capital from redemption fees (B) -- 0.00(A)
------------ ------------
Net asset value at end of period $ 10.68 $ 11.70
============ ============
Total return (8.44%)(C) 17.41%
============ ============
Net assets at end of period (000's) $ 6,197 $ 6,441
============ ============
Ratios/Supplemental Data:
Ratio of net expenses to average net assets 1.46%(D) 1.49%
Ratio of net investment income to average net assets 0.07%(D) 0.40%
Portfolio turnover rate 35%(D) 53%
(A) Amount rounds to less than $0.005.
(B) Amount calculated based on average shares outstanding throughout the
period.
(C) Not annualized.
(D) Annualized.
See accompanying notes to financial statements.
18
JAMES BALANCED: GOLDEN RAINBOW FUND
SCHEDULE OF INVESTMENTS
December 31, 2007 (Unaudited)
================================================================================
Shares COMMON STOCKS -- 39.4% Value
- -------------------------------------------------------------------------------
BASIC MATERIALS -- 3.5%
14,000 AEP Industries, Inc.* $ 448,140
15,000 Alliance Resource Partners, L.P. 544,050
45,000 Barrick Gold Corporation 1,892,250
6,500 Castle (A.M.) & Company 176,735
18,000 Dow Chemical Company 709,560
45,650 Methanex Corporation 1,259,940
46,000 Newmont Mining Corporation 2,246,180
19,000 Nucor Corporation 1,125,180
17,000 PPG Industries, Inc. 1,193,910
15,000 RPM International, Inc. 304,500
19,500 Terra Nitrogen Company, L.P. 2,915,835
------------
12,816,280
------------
CONSUMER, CYCLICAL -- 4.2%
80,812 Air Methods Corporation* 4,013,932
25,000 Dollar Trees Stores, Inc.* 648,000
25,000 Mattel, Inc. 476,000
70,000 McDonald's Corporation 4,123,700
45,000 Men's Wearhouse, Inc. 1,214,100
20,000 Movado Group 505,800
52,425 PACCAR, Inc. 2,856,114
43,500 The Buckle, Inc. 1,435,500
7,000 Walt Disney Company 225,960
------------
15,499,106
------------
CONSUMER, NON-CYCLICAL -- 6.1%
12,000 Archer-Daniels-Midland Company 557,160
15,000 Biovail Corporation 201,900
15,000 Caraco Pharmaceutical Laboratories, Ltd.* 257,250
30,000 Corn Products International, Inc. 1,102,500
81,000 EZCORP, Inc. - Class A* 914,490
48,000 Imperial Sugar Company 900,960
20,000 Ingles Markets, Inc. - Class A 507,800
91,000 King Pharmaceuticals, Inc.* 931,840
60,000 Kroger Company 1,602,600
24,000 Manpower, Inc. 1,365,600
83,000 Merck & Co., Inc. 4,823,130
40,000 PepsiAmericas, Inc. 1,332,800
108,000 Pfizer, Inc. 2,454,840
10,534 The Andersons, Inc. 471,923
43,000 The Toro Company 2,340,920
55,500 Watson Wyatt Worldwide, Inc. 2,575,755
------------
22,341,468
------------
19
JAMES BALANCED: GOLDEN RAINBOW FUND
SCHEDULE OF INVESTMENTS (Continued)
================================================================================
Shares COMMON STOCKS -- 39.4% (Continued) Value
- --------------------------------------------------------------------------------
ENERGY -- 5.7%
9,500 Apache Corporation $ 1,021,630
41,500 Bolt Technology Corporation* 1,576,170
32,940 Chevron Corporation 3,074,290
16,000 Devon Energy Corporation 1,422,560
44,500 Exxon Mobil Corporation 4,169,205
41,400 Hess Corporation 4,175,604
105,200 ICO, Inc.* 1,350,768
23,300 Sunoco, Inc. 1,687,852
38,000 Valero Energy Corporation 2,661,140
------------
21,139,219
------------
FINANCIAL -- 3.0%
32,500 AllianceBernstein Holding L.P. 2,445,625
46,500 American Financial Group, Inc. 1,342,920
48,750 American Physicians Capital, Inc. 2,021,175
14,500 Assurant, Inc. 970,050
28,000 CNA Surety Corporation* 554,120
25,000 SAFECO Corporation 1,392,000
75,000 W.R. Berkley Corporation 2,235,750
------------
10,961,640
------------
INDUSTRIAL -- 5.3%
14,000 Cascade Corporation 650,440
18,000 CSX Corporation 791,640
43,000 Cummins, Inc. 5,476,910
40,000 Deere & Company 3,724,800
15,000 Eaton Corporation 1,454,250
30,000 Johnson Controls, Inc. 1,081,200
75,000 Metal Management, Inc. 3,414,750
15,500 Norfolk Southern Corporation 781,820
22,000 Superior Essex, Inc.* 528,000
11,000 TBS International Ltd. - Class A* 363,660
42,000 The Timken Company 1,379,700
------------
19,647,170
------------
TECHNOLOGY -- 5.2%
46,000 Arrow Electronics, Inc.* 1,806,880
13,500 Ceradyne, Inc.* 633,555
61,500 Hewlett-Packard Company 3,104,520
4,500 Hurco Companies, Inc.* 196,425
29,000 International Business Machines Corporation (IBM) 3,134,900
8,000 Lockheed Martin Corporation 842,080
55,500 Northrop Grumman Corporation 4,364,520
10,000 Precision Castparts Corporation 1,387,000
119,000 Western Digital Corporation* 3,594,990
------------
19,064,870
------------
20
JAMES BALANCED: GOLDEN RAINBOW FUND
SCHEDULE OF INVESTMENTS (Continued)
================================================================================
Shares COMMON STOCKS -- 39.4% (Continued) Value
- --------------------------------------------------------------------------------
UTILITIES -- 4.5%
30,000 American Electric Power Company, Inc. $ 1,396,800
84,000 AT&T, Inc. 3,491,040
44,500 CenturyTel, Inc. 1,844,970
13,500 D&E Communications, Inc. 195,075
34,000 Edison International 1,814,580
75,800 Energen Corporation 4,868,634
14,000 FirstEnergy Corporation 1,012,760
30,500 Sempra Energy 1,887,340
------------
16,511,199
------------
INTERNATIONAL EQUITY FUNDS -- 1.9%
18,500 Chile Fund, Inc. 407,000
12,000 Greater China Fund, Inc. 297,720
11,000 India Fund, Inc. 684,860
8,000 iShares MSCI EMU Index Fund 951,440
124,000 iShares MSCI Japan Index Fund 1,640,520
9,000 iShares MSCI South Africa Index Fund 1,170,990
30,000 iShares MSCI Sweden Index Fund 924,900
50,000 iShares MSCI Taiwan Index Fund 753,000
------------
6,830,430
------------
TOTAL COMMON STOCKS $144,811,382
------------
================================================================================
Par Value U.S. GOVERNMENT & AGENCY BONDS -- 56.9% Value
- --------------------------------------------------------------------------------
$ 2,000,000 Federal Farm Credit Bank, 5.950%, 3/16/09 $ 2,048,644
550,000 Federal Home Loan Bank, 4.500%, 2/17/10 550,025
7,500,000 U.S. Treasury Bonds, 4.875%, 2/15/12 7,955,858
10,000,000 U.S. Treasury Bonds, 3.875%, 2/15/13 10,200,000
13,000,000 U.S. Treasury Bonds, 4.500%, 2/15/16 13,531,167
50,000,000 U.S. Treasury Bonds, 5.250%, 11/15/28 55,011,700
22,000,000 U.S. Treasury Bonds, 4.500%, 2/15/36 22,111,716
16,000,000 U.S. Treasury Notes, 5.500%, 2/15/08 16,046,188
14,000,000 U.S. Treasury Notes, 3.000%, 2/15/08 13,999,177
33,000,000 U.S. Treasury Notes, 4.875%, 5/31/08 33,201,102
5,000,000 U.S. Treasury Notes, 4.500%, 2/15/09 5,075,390
19,000,000 U.S. Treasury Notes, 4.625%, 2/15/17 19,863,911
7,750,260 U.S. Treasury Notes, 3.625%, 4/15/28 9,818,611
------------
TOTAL U.S. GOVERNMENT & AGENCY BONDS $209,413,489
------------
21
JAMES BALANCED: GOLDEN RAINBOW FUND
SCHEDULE OF INVESTMENTS (Continued)
================================================================================
Par Value CORPORATE BONDS -- 0.8% Value
- --------------------------------------------------------------------------------
$ 500,000 Anheuser-Busch Companies, Inc., 6.000%, 4/15/11 $ 523,825
500,000 Tennessee Valley Authority, 5.625%, 1/18/11 525,537
2,000,000 Walmart Stores, 5.250%, 9/1/35 1,774,027
------------
TOTAL CORPORATE BONDS $ 2,823,389
------------
================================================================================
Shares SHORT TERM INVESTMENTS -- 1.6%
- --------------------------------------------------------------------------------
5,983,649 First American Treasury Obligations Fund $ 5,983,649
------------
TOTAL INVESTMENT SECURITIES -- 98.7%
(Amortized Cost $315,788,461) $363,031,909
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.3% 4,828,142
------------
NET ASSETS -- 100.0% $367,860,051
============
* Non-income producing security.
See accompanying notes to financial statements.
22
JAMES SMALL CAP FUND
SCHEDULE OF INVESTMENTS
December 31, 2007 (Unaudited)
================================================================================
Shares COMMON STOCKS -- 95.6% Value
- --------------------------------------------------------------------------------
BASIC MATERIALS -- 10.5%
27,500 Alliance Resource Partners, L.P. $ 997,425
124,000 Cooper Tire & Rubber Company 2,055,920
40,600 NOVA Chemicals Corporation 1,315,034
146,800 Olin Corporation 2,837,644
20,000 OM Group, Inc.* 1,150,800
164,280 Quanex Corporation 8,526,132
73,690 Schnitzer Steel Industries, Inc. - Class A 5,094,190
22,728 Terra Nitrogen Company, L.P. 3,398,518
48,800 W.R. Grace & Co.* 1,277,584
------------
26,653,247
------------
CONGLOMERATE -- 1.3%
115,200 LSB Industries, Inc.* 3,250,944
------------
CONSUMER, CYCLICAL -- 9.4%
270,003 Barry (R.G.) Corporation* 1,903,521
187,850 Bob Evans Farms, Inc. 5,058,801
51,824 Champion Industries, Inc. 234,244
55,800 Cherokee, Inc. 1,800,666
99,312 Crown Crafts, Inc.* 347,592
80,900 E Com Ventures, Inc.* 2,016,028
41,300 JAKKS Pacific, Inc.* 975,093
32,100 Men's Wearhouse, Inc. 866,058
194,800 Pinnacle Airlines Corporation* 2,970,700
44,700 Tempur-Pedic International, Inc. 1,160,859
175,200 The Buckle, Inc. 5,781,600
78,460 Zones, Inc.* 849,722
------------
23,964,884
------------
CONSUMER, NON-CYCLICAL -- 15.7%
99,000 AMERIGROUP Corporation* 3,608,550
221,225 Axcan Pharma, Inc.* 5,088,175
53,000 Cal-Maine Foods, Inc. 1,406,090
169,525 Fresh Del Monte Produce, Inc. 5,692,650
202,143 Hanger Orthopedic Group, Inc.* 2,225,594
143,700 Imperial Sugar Company 2,697,249
242,725 Ingles Markets, Inc. - Class A 6,162,788
44,300 Interactive Data Corporation 1,462,343
86,623 Nutraceutical International Corporation* 1,147,755
18,200 Ritchie Brothers Auctioneers 1,505,140
276,580 Tupperware Corporation 9,135,437
------------
40,131,771
------------
23
JAMES SMALL CAP FUND
SCHEDULE OF INVESTMENTS (Continued)
================================================================================
Shares COMMON STOCKS -- 95.6% (Continued) Value
- --------------------------------------------------------------------------------
ENERGY -- 12.9%
30,360 Basic Energy Services, Inc.* $ 666,402
80,400 Bolt Technology Corporation* 3,053,592
106,100 Delek US Holdings, Inc. 2,146,403
328,410 ICO, Inc.* 4,216,784
34,400 Lufkin Industries, Inc. 1,970,776
383,625 Matrix Service Company* 8,370,698
199,175 Parker Drilling Company* 1,503,771
157,165 Suburban Propane Partners, L.P. 6,377,756
80,410 W-H Energy Services, Inc.* 4,519,846
------------
32,826,028
------------
FINANCIAL -- 13.6%
75,600 American Physicians Capital, Inc. 3,134,376
96,513 ASTA Funding, Inc. 2,551,804
236,100 CNA Surety Corporation* 4,672,419
147,750 FPIC Insurance Group, Inc.* 6,350,294
130,280 LTC Properties, Inc. 3,263,514
122,700 Max Re Capital Ltd. 3,434,373
75,300 Mercer Insurance Group, Inc. 1,352,388
158,500 MicroFinancial, Inc. 987,455
50,300 RLI Corporation 2,856,537
38,250 The Midland Company 2,474,393
119,400 United America Indemnity Ltd.* 2,378,448
76,500 UTEK Corporation 1,009,800
------------
34,465,801
------------
INDUSTRIAL -- 13.0%
97,200 Applied Industrial Technologies, Inc. 2,820,744
134,960 Cascade Corporation 6,270,241
133,000 Chase Corporation 3,358,250
269,050 Metalico, Inc.* 2,916,502
476,911 North American Galvanizing & Coatings, Inc.* 2,894,850
48,500 Park-Ohio Holdings Corporation* 1,217,350
20,300 Pope Resources Limited Partnership 867,825
104,902 Superior Essex, Inc.* 2,517,648
53,945 The Eastern Company 989,351
85,800 Tsakos Energy Navigation Ltd. 3,177,174
17,200 Twin Disc, Inc. 1,217,244
97,420 VSE Corporation 4,757,993
------------
33,005,172
------------
24
JAMES SMALL CAP FUND
SCHEDULE OF INVESTMENTS (Continued)
================================================================================
Shares COMMON STOCKS -- 95.6% (Continued) Value
- --------------------------------------------------------------------------------
TECHNOLOGY -- 9.4%
350,600 Avici Systems, Inc. $ 2,780,258
985,200 BroadVision, Inc.* 1,763,508
23,059 Corel Corporation* 246,731
23,900 DRS Technologies, Inc. 1,297,053
105,573 Ducommun, Inc.* 4,011,774
79,400 Hurco Companies, Inc.* 3,465,810
24,900 Preformed Line Products Company 1,481,550
37,200 Shanda Interactive Entertainment Ltd.* 1,240,248
147,600 Trio-Tech International 1,350,540
42,600 Triumph Group, Inc. 3,508,110
224,600 United Online, Inc. 2,654,772
------------
23,800,354
------------
UTILITIES -- 9.8%
352,200 Alaska Communications Systems Group, Inc. 5,283,000
87,751 Atlantic Tele-Network, Inc. 2,964,229
190,750 Central Vermont Public Service Corporation 5,882,730
57,600 New Jersey Resources Corporation 2,881,152
160,700 Northwest Natural Gas Company 7,819,662
------------
24,830,773
------------
TOTAL COMMON STOCKS $242,928,974
------------
================================================================================
Shares SHORT TERM INVESTMENTS -- 4.7% Value
- --------------------------------------------------------------------------------
11,945,741 First American Treasury Obligations Fund $ 11,945,741
------------
TOTAL INVESTMENT SECURITIES -- 100.3%
(Cost $236,435,941) $254,874,715
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.3%) (714,622)
------------
NET ASSETS -- 100.0% $254,160,093
============
* Non-income producing security.
See accompanying notes to financial statements.
25
JAMES MARKET NEUTRAL FUND
SCHEDULE OF INVESTMENTS
December 31, 2007 (Unaudited)
================================================================================
Shares COMMON STOCKS -- 67.6% Value
- --------------------------------------------------------------------------------
BASIC MATERIALS -- 7.1%
12,290 Castle (A.M.) & Company $ 334,165
9,870 Celanese Corporation 417,698
13,000 Dow Chemical Company 512,460
17,350 Methanex Corporation 478,860
9,060 Quanex Corporation 470,214
5,180 Terra Nitrogen Company, L.P. 774,566
------------
2,987,963
------------
CONSUMER, CYCLICAL -- 8.8%
11,490 Dollar Tree Stores, Inc.* 297,821
9,290 J.C. Penney Company, Inc. 408,667
8,760 McDonald's Corporation 516,052
29,167 PACCAR, Inc. 1,589,018
25,990 The Buckle, Inc. 857,670
------------
3,669,228
------------
CONSUMER, NON-CYCLICAL -- 11.2%
15,000 Archer-Daniels-Midland Company 696,450
29,160 EZCORP, Inc. - Class A* 329,216
13,000 Imperial Sugar Company 244,010
25,990 King Pharmaceuticals, Inc.* 266,138
18,970 Merck & Co., Inc. 1,102,347
18,270 PepsiAmericas, Inc. 608,756
12,370 Pfizer, Inc. 281,170
20,720 The Toro Company 1,127,996
------------
4,656,083
------------
ENERGY -- 9.0%
13,000 Bolt Technology Corporation* 493,740
8,330 Devon Energy Corporation 740,620
10,550 Exxon Mobil Corporation 988,430
25,990 Matrix Service Company* 567,102
12,150 Tesoro Corporation 579,555
5,980 Valero Energy Corporation 418,779
------------
3,788,226
------------
FINANCIAL -- 5.7%
9,270 Assurant, Inc. 620,163
36,500 CNA Surety Corporation* 722,335
12,670 KeyCorp 297,112
3,480 The Goldman Sachs Group, Inc. 748,374
------------
2,387,984
------------
INDUSTRIAL -- 5.0%
6,590 Cascade Corporation 306,171
9,100 Cummins, Inc. 1,159,068
6,920 Deere & Company 644,390
------------
2,109,629
------------
26
JAMES MARKET NEUTRAL FUND
SCHEDULE OF INVESTMENTS (Continued)
================================================================================
Shares COMMON STOCKS -- 67.6% (Continued) Value
- --------------------------------------------------------------------------------
TECHNOLOGY -- 9.5%
9,770 Arrow Electronics, Inc.* $ 383,766
5,980 Ceradyne, Inc.* 280,641
16,130 Hewlett-Packard Company 814,241
9,550 Hurco Companies, Inc.* 416,858
5,790 International Business Machines Corporation (IBM) 625,899
15,690 MKS Instruments, Inc.* 300,307
5,790 Northrop Grumman Corporation 455,326
5,180 Precision Castparts Corporation 718,466
------------
3,995,504
------------
UTILITIES -- 8.4%
25,990 CenturyTel, Inc. 1,077,546
11,580 Edison International 618,025
27,030 MDU Resources Group, Inc. 746,298
17,330 Sempra Energy 1,072,380
------------
3,514,249
------------
INTERNATIONAL EQUITY FUNDS -- 2.9%
2,190 iShares FTSE/Xinhua China 25 Index Fund 373,286
34,650 iShares MSCI Japan Index Fund 458,419
13,000 iShares MSCI Sweden Index Fund 400,790
------------
1,232,495
------------
TOTAL COMMON STOCKS $ 28,341,361
------------
================================================================================
Shares SHORT TERM INVESTMENTS -- 7.7% Value
- --------------------------------------------------------------------------------
3,215,350 First American Treasury Obligations Fund $ 3,215,350
------------
TOTAL INVESTMENT SECURITIES -- 75.3%
(Cost $26,655,940) $ 31,556,711
SEGREGATED CASH WITH BROKERS -- 90.2% 37,813,180
SECURITIES SOLD SHORT -- (61.0)%
(Proceeds $31,117,319) (25,562,885)
LIABILITIES IN EXCESS OF OTHER ASSETS -- (4.5%) (1,881,699)
------------
NET ASSETS -- 100.0% $ 41,925,307
============
* Non-income producing security.
See accompanying notes to financial statements.
27
JAMES MARKET NEUTRAL FUND
SCHEDULE OF SECURITIES SOLD SHORT
December 31, 2007 (Unaudited)
================================================================================
Shares COMMON STOCKS -- 61.0% Value
- --------------------------------------------------------------------------------
BASIC MATERIALS -- 3.8%
14,602 AbitibiBowater, Inc. $ 300,939
32,120 Georgia Gulf Corporation 212,634
75,850 International Coal Group, Inc. 406,556
16,000 Zoltek Companies, Inc. 685,920
------------
1,606,049
------------
CONSUMER, CYCLICAL -- 10.4%
13,500 Centex Corporation 341,010
20,340 Circuit City Stores, Inc. 85,427
71,880 Cumulus Media, Inc. - Class A 577,915
60,410 Fleetwood Enterprises, Inc. 361,252
10,440 Isle of Capri Casinos, Inc. 143,759
36,950 Jamba, Inc. 136,715
10,100 KB HOME 218,160
42,900 Leapfrog Enterprises, Inc. 288,717
14,630 Lennar Corporation 261,731
6,860 M.D.C. Holdings, Inc. 254,712
31,060 Martha Stewart Living Omnimedia, Inc. 287,926
61,360 Pier 1 Imports, Inc. 320,913
19,380 Pulte Homes, Inc. 204,265
14,710 RCN Corporation 229,329
27,370 Warner Music Group Corporation 165,862
36,340 XM Satellite Radio Holdings, Inc. 444,802
------------
4,322,495
------------
CONSUMER, NON-CYCLICAL -- 9.0%
6,970 Advanced Medical Optics, Inc. 170,974
64,140 BearingPoint, Inc. 181,516
44,410 INVESTools, Inc. 787,833
52,760 Nektar Therapeutics 354,020
21,900 Pozen, Inc. 262,800
10,330 ResMed, Inc. 542,635
25,390 Senomyx, Inc. 190,171
13,870 Sirona Dental Systems, Inc. 464,368
10,760 SonoSite, Inc. 362,289
11,500 Tejon Ranch Company 469,775
------------
3,786,381
------------
ENERGY -- 4.0%
14,160 Cheniere Energy, Inc. 462,182
37,800 Delta Petroleum Corporation 712,530
25,000 Energy Partners Ltd. 295,250
37,470 FX Energy, Inc. 212,830
------------
1,682,792
------------
28
JAMES MARKET NEUTRAL FUND
SCHEDULE OF SECURITIES SOLD SHORT (Continued)
================================================================================
Shares COMMON STOCKS -- 61.0% (Continued) Value
- --------------------------------------------------------------------------------
FINANCIAL -- 10.5%
1,370 Alexanders, Inc. $ 483,952
7,640 American Tower Corporation - Class A 325,464
22,766 BankFinancial Corporation 360,158
25,150 Brookline Bancorp, Inc. 255,524
14,880 Capitol Federal Financial 461,280
8,070 Forest City Enterprises, Inc. - Class A 358,631
32,420 Hudson City Bancorp, Inc. 486,948
30,200 Investors Bancorp, Inc. 427,028
15,840 Kearny Financial Corporation 188,655
43,140 Midwest Banc Holdings, Inc. 535,799
25,810 NewAlliance Bancshares, Inc. 297,331
43,420 Superior Bancorp 233,166
------------
4,413,936
------------
INDUSTRIAL -- 9.5%
15,900 Energy Conversion Devices, Inc. 535,035
9,480 ESCO Technologies, Inc. 378,631
46,960 Evergreen Solar, Inc. 810,999
14,630 Intermec, Inc. 297,135
14,250 Tecumseh Products Company - Class A 333,592
13,070 The Shaw Group, Inc. 789,951
32,560 TurboChef Technologies, Inc. 537,240
67,350 Visteon Corporation 295,667
------------
3,978,250
------------
TECHNOLOGY -- 11.5%
28,320 3D Systems Corporation 437,261
16,890 Affymetrix, Inc. 390,835
61,000 AudioCodes Ltd. 308,660
26,950 Cyberonics, Inc. 354,662
21,190 InfoSpace, Inc. 398,372
68,910 Keryx Biopharmaceuticals, Inc. 578,844
29,500 MannKind Corporation 234,820
22,310 Marvell Technology Group Ltd. 311,894
44,270 Momenta Pharmaceutical, Inc. 316,088
52,860 Powerwave Technologies, Inc. 213,025
14,020 Rambus, Inc. 293,579
10,190 Silicon Laboratories, Inc. 381,412
50,500 Verenium Corporation 251,995
33,650 Wind River Systems, Inc. 300,494
------------
4,771,941
------------
UTILITIES -- 2.3%
18,880 Aqua America, Inc. 400,256
79,150 Aquila, Inc. 295,230
12,130 Consolidated Water Co., Ltd. 305,555
------------
1,001,041
------------
TOTAL COMMON STOCKS SOLD SHORT
(Proceeds $31,117,319) $ 25,562,885
------------
See accompanying notes to financial statements.
29
JAMES EQUITY FUND
SCHEDULE OF INVESTMENTS
December 31, 2007 (Unaudited)
================================================================================
Shares COMMON STOCKS -- 96.0% Value
- --------------------------------------------------------------------------------
BASIC MATERIALS -- 6.3%
9,510 Alliance Resource Partners, L.P. $ 344,928
6,883 PPG Industries, Inc. 483,393
7,965 Schnitzer Steel Industries, Inc. - Class A 550,620
------------
1,378,941
------------
CONGLOMERATE -- 1.2%
9,600 LSB Industries, Inc.* 270,912
------------
CONSUMER, CYCLICAL -- 13.1%
9,737 Barry (R.G.) Corporation* 68,646
10,435 Crown Crafts, Inc.* 36,523
13,318 Darden Restaurants, Inc. 369,042
5,060 E Com Ventures, Inc.* 126,095
10,400 McDonald's Corporation 612,664
16,996 PACCAR, Inc. 925,942
20,456 The Buckle, Inc. 675,048
5,709 Zones, Inc.* 61,828
------------
2,875,788
------------
CONSUMER, NON-CYCLICAL -- 13.4%
55,500 EZCORP, Inc. - Class A* 626,595
4,750 Ingles Markets, Inc. - Class A 120,603
14,850 Merck & Co., Inc. 862,933
19,710 Pfizer, Inc. 448,008
8,000 The Toro Company 435,520
10,000 Watson Wyatt Worldwide, Inc. 464,100
------------
2,957,759
------------
ENERGY -- 13.8%
4,840 Bolt Technology Corporation* 183,823
6,300 Exxon Mobil Corporation 590,247
22,860 Frontier Oil Corporation 927,659
4,760 Hess Corporation 480,094
11,730 Marathon Oil Corporation 713,888
6,970 Matrix Service Company* 152,085
------------
3,047,796
------------
FINANCIAL -- 9.4%
5,580 AllianceBernstein Holding L.P. 419,895
10,665 American Financial Group, Inc. 308,005
9,180 American Physicians Capital, Inc. 380,603
20,250 CNA Surety Corporation* 400,748
6,240 Mercer Insurance Group, Inc. 112,070
2,040 The Goldman Sachs Group, Inc. 438,702
------------
2,060,023
------------
30
JAMES EQUITY FUND
SCHEDULE OF INVESTMENTS (Continued)
================================================================================
Shares COMMON STOCKS -- 96.0% (Continued) Value
- --------------------------------------------------------------------------------
INDUSTRIAL -- 14.4%
11,160 Cascade Corporation $ 518,494
8,460 Chase Corporation 213,615
12,591 Cummins, Inc. 1,603,715
7,830 Eaton Corporation 759,119
4,730 The Eastern Company 86,748
------------
3,181,691
------------
TECHNOLOGY -- 9.0%
14,600 Avici Systems, Inc. 115,778
58,140 BroadVision, Inc.* 104,071
23,400 Hewlett-Packard Company 1,181,231
6,300 Northrop Grumman Corporation 495,432
9,225 Trio-Tech International* 84,409
------------
1,980,921
------------
UTILITIES -- 15.4%
8,640 American Electric Power Company, Inc. 402,278
17,200 AT&T, Inc. 714,832
13,310 CenturyTel, Inc. 551,833
10,890 Energen Corporation 699,465
11,000 MDU Resources Group, Inc. 303,710
11,870 Sempra Energy 734,515
------------
3,406,633
------------
TOTAL COMMON STOCKS $ 21,160,464
------------
================================================================================
Shares SHORT TERM INVESTMENTS -- 3.9% Value
- --------------------------------------------------------------------------------
852,289 First American Treasury Obligations Fund $ 852,289
------------
TOTAL INVESTMENT SECURITIES -- 99.9%
(Cost $15,053,573) $ 22,012,753
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.1% 14,617
------------
NET ASSETS -- 100.0% $22,027,370
============
* Non-income producing security.
See accompanying notes to financial statements.
31
JAMES MID CAP FUND
SCHEDULE OF INVESTMENTS
December 31, 2007 (Unaudited)
================================================================================
Shares COMMON STOCKS -- 96.2% Value
- --------------------------------------------------------------------------------
BASIC MATERIALS -- 12.3%
5,000 Albermarle Corporation $ 206,250
4,500 Commercial Metals Company 132,075
12,500 Kinross Gold Corp.* 230,000
7,000 Methanex Corporation 193,200
------------
761,525
------------
CONSUMER, CYCLICAL -- 7.3%
2,500 Columbia Sportswear Company 110,225
4,000 Darden Restaurants, Inc. 110,840
5,500 Dollar Tree Stores, Inc.* 142,560
3,350 Men's Wearhouse, Inc. 90,383
------------
454,008
------------
CONSUMER, NON-CYCLICAL -- 17.7%
3,500 Corn Products International, Inc. 128,625
1,100 Energizer Holdings, Inc.* 123,343
2,200 Health Net, Inc.* 106,260
4,000 King Pharmaceuticals, Inc.* 40,960
4,000 Molson Coors Brewing Company - Class B 206,480
4,000 PepsiAmericas, Inc. 133,280
3,200 The Toro Company 174,208
4,000 Watson Wyatt Worldwide, Inc. 185,640
------------
1,098,796
------------
ENERGY -- 12.2%
5,000 Frontier Oil Corporation 202,900
6,000 Global Industries, Ltd.* 128,520
2,400 Questar Corporation 129,840
3,000 Sunoco Logistics Partners L.P. 150,630
3,000 Tesoro Corporation 143,100
------------
754,990
------------
FINANCIAL -- 10.8%
1,800 AllianceBernstein Holding L.P. 135,450
5,000 American Financial Group, Inc. 144,400
3,000 Assurant, Inc. 200,700
1,500 SAFECO Corporation 83,520
3,500 W.R. Berkley Corporation 104,335
------------
668,405
------------
INDUSTRIAL -- 11.1%
1,400 Cummins, Inc. 178,318
3,000 Greif Bros. Corporation 196,110
4,000 Metal Management, Inc. 182,120
4,000 The Timken Company 131,400
------------
687,948
------------
32
JAMES MID CAP FUND
SCHEDULE OF INVESTMENTS (Continued)
================================================================================
Shares COMMON STOCKS -- 96.2% (Continued) Value
- --------------------------------------------------------------------------------
TECHNOLOGY -- 13.7%
4,000 Arrow Electronics, Inc.* $ 157,120
3,000 Avnet, Inc.* 104,910
3,100 Ceradyne, Inc.* 145,483
2,500 Comtech Telecommunications Corporation* 135,025
3,000 Teledyne Technologies, Inc.* 159,990
4,900 Western Digital Corporation* 148,029
------------
850,557
------------
UTILITIES -- 11.1%
4,000 CenturyTel, Inc. 165,840
3,000 DTE Energy Company 131,880
3,500 Energen Corporation 224,805
6,000 MDU Resources Group, Inc. 165,660
------------
688,185
------------
TOTAL COMMON STOCKS $ 5,964,414
------------
================================================================================
Shares SHORT TERM INVESTMENTS -- 3.7% Value
- --------------------------------------------------------------------------------
227,358 First American Treasury Obligations Fund $ 227,358
------------
TOTAL INVESTMENT SECURITIES -- 99.9%
(Cost $6,020,916) $ 6,191,772
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.1% 4,806
------------
NET ASSETS -- 100.0% $ 6,196,578
============
* Non-income producing security.
See accompanying notes to financial statements.
33
JAMES ADVANTAGE FUNDS
NOTES TO FINANCIAL STATEMENTS
December 31, 2007 (Unaudited)
================================================================================
1. General Information and Significant Accounting Policies
James Balanced: Golden Rainbow Fund, James Small Cap Fund, James Market Neutral
Fund and James Mid Cap Fund are each a diversified series of James Advantage
Funds (the "Trust"), and James Equity Fund is a non-diversified series of the
Trust (individually the "Fund," collectively the "Funds"). The Trust is an
open-end management investment company that was organized as an Ohio business
trust on August 29, 1997. The Trust is registered under the Investment Company
Act of 1940 (the "1940 Act"). James Balanced: Golden Rainbow Fund was originally
organized as a series of the Flagship Admiral Funds Inc., a Maryland
corporation. On June 26, 1998, pursuant to an Agreement and Plan of
Reorganization, James Balanced: Golden Rainbow Fund was restructured through a
tax-free reorganization as a series of the Trust. The James Small Cap Fund and
James Market Neutral Fund each commenced its public offering of shares on
October 2, 1998. The James Equity Fund commenced its public offering of shares
on November 1, 1999. The James Mid Cap Fund commenced its public offering of
shares on June 30, 2006.
James Balanced: Golden Rainbow Fund seeks to provide total return through a
combination of growth and income and preservation of capital in declining
markets. The Fund seeks to achieve its objective by investing primarily in
common stocks and/or debt securities that the Fund's adviser, James Investment
Research, Inc. ("James"), believes are undervalued.
James Small Cap Fund seeks to provide long-term capital appreciation. The Fund
seeks to achieve its objective by investing primarily in common stocks of small
capitalization companies.
James Market Neutral Fund seeks to provide positive returns regardless of the
direction of the stock markets. The Fund seeks to achieve its objective by
investing in common stocks that James believes are undervalued and more likely
to appreciate, and selling short common stocks that James believes are
overvalued and more likely to depreciate.
James Equity Fund seeks to provide long-term capital appreciation and outperform
the Standard & Poor's 500 Index (the "S&P 500 Index"). The Fund seeks to achieve
its objective by investing primarily in equity securities without regard to the
market capitalization of the stock. The Fund often buys stocks in the S&P 500
Index.
James Mid Cap Fund seeks to provide long-term capital appreciation. The Fund
seeks to achieve its objective by investing primarily in common stocks of mid
capitalization companies.
The following is a summary of significant accounting policies followed by the
Funds in preparation of their financial statements, in accordance with
accounting principles generally accepted in the United States of America
("GAAP").
Share Valuation
The net asset value per share of each Fund is calculated daily by dividing the
total value of the Fund's assets, less liabilities, by the number of shares
outstanding. The net asset value is determined as of the close of the NYSE
(generally, 4:00 p.m., Eastern time) on each day that the NYSE is open for
business, and on any other day on which there is sufficient trading in a Fund's
securities to materially affect the net asset value.
Redemption Fees
Effective February 21, 2007, the Board of Trustees of the James Advantage Funds
voted to abolish the redemption fees for the James Small Cap Fund, the James
Market Neutral Fund, the James Equity Fund, and the James Mid Cap Fund. Prior to
February 21, 2007, the Funds charged a redemption fee of 1.00% of the amount
redeemed if the shares sold were held for fewer than 90 days. The redemption
fees were paid directly to the Funds.
34
JAMES ADVANTAGE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
Securities Valuation
Securities that are traded on any exchange are valued at the last quoted sale
price. Lacking a last sale price, a security is valued at its last bid price
except when, in James's opinion, the last bid price does not accurately reflect
the current value of the security. Securities that are traded on the NASDAQ
over-the-counter market are valued at their NASDAQ Official Closing Price
("NOCP") for all NASDAQ National Market ("NNM") and NASDAQ Capital Market(R)
securities. When market quotations are not readily available, if an event occurs
after the close of the trading market (But before the time as of which the Fund
calculates its net asset value) that materially affects a security's value, when
James determines that the market quotation does not accurately reflect the
current value or when a restricted security is being valued, that security will
be valued at its fair value as determined in good faith in conformity with
guidelines adopted by and subject to review of the Board of Trustees. The Funds
may use pricing services to determine market value for securities. Short-term
investments in fixed-income securities with maturities of less than 60 days when
acquired, or which subsequently are within 60 days of maturity, are valued by
using the amortized cost method of valuation, which the Board has determined
will represent fair value.
In accordance with the Trust's good faith pricing guidelines, James is required
to consider all appropriate factors relevant to the value of securities for
which it has determined other pricing sources are not available or reliable as
described above. No single standard for determining fair value controls, since
fair value depends upon the circumstances of each individual case. As a general
principle, the current fair value of an issue of securities being valued by the
adviser would appear to be the amount which the owner might reasonably expect to
receive for them upon their current sale. Methods which are in accord with this
principle may, for example, be based on (i) a multiple of earnings; (ii) a
discount from market of a similar freely traded security (including a derivative
security or a basket of securities traded on other markets, exchanges or among
dealers); or (iii) yield to maturity with respect to debt issues, or a
combination of these and other methods.
In September 2006, the Financial Accounting Standards Board ("FASB") issued
Statement on Financial Accounting Standards ("SFAS") No. 157, "Fair Value
Measurements." This standard establishes a single authoritative definition of
fair value, sets out a framework for measuring fair value and requires
additional disclosures about fair value measurements. SFAS No. 157 applies to
fair value measurements already required or permitted by existing standards.
SFAS No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007 and interim periods within those fiscal years.
The changes to current generally accepted accounting principles from the
application of this Statement relate to the definition of fair value, the
methods used to measure fair value, and the expanded disclosures about fair
value measurements. As of December 31, 2007, the Funds do not believe the
adoption of SFAS No. 157 will impact the amounts reported in the financial
statements; however, additional disclosures may be required about the inputs
used to develop the measurements and the effect of certain of the measurements
reported on the statement of changes in net assets for a fiscal period.
Securities Transactions
Securities transactions are recorded on a trade date basis. Realized gains and
losses from security transactions are determined using the specific
identification method. Securities purchased or sold on a when-issued or delayed
delivery basis may have extended settlement periods. Any securities so purchased
are subject to market fluctuation during this period. The James Balanced: Golden
Rainbow Fund will instruct its custodian to segregate assets in a separate
account with a current value at least equal to the amount of its when-issued and
delayed delivery purchase commitments. As of December 31, 2007, the James
Balanced: Golden Rainbow Fund had no such outstanding purchase commitments.
Withholding taxes on foreign dividends have been provided for in accordance with
the Trust's understanding of the applicable country's tax rules and rates.
35
JAMES ADVANTAGE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
Short Sales and Segregated Cash
The James Market Neutral Fund (the "Fund") actively sells short common stocks.
Short sales are transactions in which the Fund sells a security it does not own
in anticipation of a decline in the market value of that security. To complete
such a transaction, the Fund must borrow the security to deliver to the buyer
upon the short sale; the Fund is then obligated to replace the security borrowed
by purchasing it in the open market at some later date.
The Fund will incur a loss if the market price of the security increases between
the date of the short sale and the date on which the Fund replaces the borrowed
security. The Fund will realize a gain if the security declines in value between
those dates. If a security sold short pays a dividend while the Fund is short
that security, the Fund will pay the dividend and record that amount as an
expense.
All short sales are collateralized, as required by the Fund's prime broker. The
Fund maintains the collateral in segregated accounts consisting of cash and/or
high-grade liquid assets sufficient to collateralize the market value of its
short positions.
Investment Income
Dividend income is recorded on the ex-dividend date. Interest income is
determined on the basis of interest accrued, adjusted for amortization of
premiums and accretion of discounts on all debt securities. Amortization and
accretion is calculated using the effective yield method.
Dividends and Distributions to Shareholders
Net investment income, if any, is generally declared and distributed to
shareholders of each Fund quarterly. Net realized capital gains from security
transactions, if any, are distributed to shareholders not less frequently than
annually. Furthermore, capital gains are distributed only to the extent they
exceed available capital loss carryforwards. Distributions to shareholders of
net investment income and net realized capital gains are recorded on the
ex-dividend date. The amount and timing of distributions are determined in
accordance with federal income tax regulations, which may differ from GAAP.
Accordingly, temporary overdistributions as a result of these differences may
occur and will be classified as either distributions in excess of net investment
income and/or distributions in excess of net realized gains from security
transactions, where applicable.
Use of Estimates
The preparation of financial statements in conformity with GAAP 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.
Federal Income Taxes
The Funds generally intend to distribute all taxable income and capital gains to
shareholders and to otherwise comply with the requirements of Subchapter M of
the Internal Revenue Code applicable to regulated investment companies.
Therefore, no federal tax provision is required.
36
JAMES ADVANTAGE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
The tax character of distributions paid for the years ended June 30, 2007 and
2006 was as follows:
- ------------------------------------------------------------------------------------
James Balanced: James Small Cap
Golden Rainbow Fund Fund
-----------------------------------------------------
2007 2006 2007 2006
- ------------------------------------------------------------------------------------
From ordinary income $ 6,967,365 $ 4,473,409 $ 3,153,359 $ 140,631
From long-term capital gains 5,273,855 6,895,468 649,545 1,110,529
From return of capital -- -- 144,227 --
----------- ----------- ----------- -----------
$12,241,220 $11,368,877 $ 3,947,131 $ 1,251,160
=========== =========== =========== ===========
- ------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
James
James Market Neutral James Equity Mid Cap
Fund Fund Fund
- -------------------------------------------------------------------------------------
2007 2006 2007 2006 2007
- -------------------------------------------------------------------------------------
From ordinary income $2,166,597 $ 994,103 $ 97,518 $ 41,105 $ 14,614
---------- ---------- ---------- ---------- ----------
- -------------------------------------------------------------------------------------
The following information is computed on a tax basis for each item as of June
30, 2007:
- -----------------------------------------------------------------------------------------------------------------------
James
Balanced: James James James James
Golden Rainbow Small Cap Market Neutral Equity Mid Cap
Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------
Tax cost of investment securities $ 298,192,183 $ 284,410,882 $ 66,294,893 $ 17,585,038 $ 5,601,348
============= ============= ============== ============= =============
Gross unrealized appreciation $ 43,426,435 $ 52,655,160 $ 12,359,389 $ 7,945,974 $ 775,676
Gross unrealized depreciation (3,311,332) (10,453,098) (2,417,452) (114,634) (80,803)
------------- ------------- ------------- ------------- -------------
Net unrealized appreciation 40,115,103 42,202,062 9,941,937 7,831,340 694,873
Capital loss carryforward -- -- (8,942,280) (1,033,467) --
Post-October losses -- (6,256,281) -- -- --
Undistributed net investment income 29,576 26,640 9,254 1,076 18,785
Undistributed long-term gains 5,920,309 -- -- -- --
Other temporary differences (87,094) (26,640) (21,200) (1,070) --
------------- ------------- ------------- ------------- -------------
Accumulated earnings $ 45,977,894 $ 35,945,781 $ 987,711 $ 6,797,879 $ 713,658
============= ============= ============== ============= =============
- -----------------------------------------------------------------------------------------------------------------------
37
JAMES ADVANTAGE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
The difference between the cost of investment securities and financial statement
cost for the Funds is due to certain timing differences in the recognition of
capital losses under income tax regulations and GAAP.
During the year ended June 30, 2007, the James Equity Fund utilized $762,304 of
capital loss carryforwards. The capital loss carryforwards remaining as of June
30, 2007 in the table below expire as follows:
- --------------------------------------------------------------------------------
Amount Expiration Date
- --------------------------------------------------------------------------------
The James Market Neutral Fund $ 82,513 June 30, 2008
$ 987,690 June 30, 2012
$ 773,042 June 30, 2013
$ 642,007 June 30, 2014
$6,457,028 June 30, 2015
The James Equity Fund $ 725,408 June 30, 2010
$ 130,880 June 30, 2011
$ 177,179 June 30, 2012
- --------------------------------------------------------------------------------
The capital loss carryforwards may be utilized in future years to offset net
realized capital gains, if any, prior to distributing such gains to
shareholders.
On July 13, 2006, the Financial Accounting Standards Board ("FASB") released
FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN
48"). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the evaluation of tax positions taken or expected to be taken in the
course of preparing the Funds' tax returns to determine whether the tax
positions are "more-likely-than-not" of being sustained by the applicable tax
authority. Tax positions not deemed to meet the more-likely-than-not threshold
would be recorded as a tax benefit or expense in the current year. The Funds
have analyzed their tax positions on Federal income tax returns for all open
years (tax years ended December 31, 2004 through 2007) for purposes of
implementing FIN?48 and have concluded that no provision for income is required
in the financial statements.
Reclassification of Capital Accounts
Reclassifications result primarily from the difference in the tax treatment of
net investment losses and distributions in excess of net investment income. The
following reclassifications were made on the Statement of Assets and
Liabilities, for the year ended June 30, 2007 and have no impact on the net
assets or net asset value of the Funds:
- --------------------------------------------------------------------------------
Undistributed Accumulated
Paid-In Net Investment Net Realized
Capital Income (Loss) Gains (Losses)
- --------------------------------------------------------------------------------
James Small Cap Fund $ (144,227) $ (87) $ 144,314
James Market Neutral Fund $ 1 $ 2,400 $ (2,401)
- --------------------------------------------------------------------------------
38
JAMES ADVANTAGE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
As of December 31, 2007, the Funds had the following federal tax cost resulting
in net unrealized appreciation as follows:
- ----------------------------------------------------------------------------------------------------------------
Gross Gross
Unrealized Unrealized Net Unrealized
Federal Tax Cost Appreciation Depreciation Appreciation
- ----------------------------------------------------------------------------------------------------------------
James Balanced: Golden Rainbow Fund $ 316,073,688 $ 53,187,508 $ (6,229,287) $ 46,958,221
Small Cap Fund $ 236,435,942 $ 34,999,845 $ (16,561,072) $ 18,438,773
Market Neutral Fund $ 26,689,157 $ 13,637,386 $ (3,215,398) $ 10,421,988
Equity Fund $ 15,053,573 $ 7,370,314 $ (411,134) $ 6,959,180
Mid Cap Fund $ 6,020,916 $ 654,539 $ (483,683) $ 170,856
- ----------------------------------------------------------------------------------------------------------------
2. Securities Transactions
Purchases and sales (including maturities) of investments in long-term U.S.
Government obligations for James Balanced: Golden Rainbow Fund for the six
months ended December 31, 2007 were as follows:
- --------------------------------------------------------------------------------
Purchases Sales
- --------------------------------------------------------------------------------
James Balanced: Golden Rainbow Fund $64,636,729 $13,503,281
- --------------------------------------------------------------------------------
Purchases and sales (including maturities) of investments in other securities
for the six months ended December 31, 2007 were as follows:
- --------------------------------------------------------------------------------
Purchases Sales
- --------------------------------------------------------------------------------
James Balanced: Golden Rainbow Fund $11,880,802 $23,431,153
James Small Cap Fund 64,651,119 99,797,585
James Market Neutral Fund 3,821,800 8,838,147
James Equity Fund 0 2,893,851
James Mid Cap Fund 1,506,560 1,081,077
- --------------------------------------------------------------------------------
For the six months ended December 31, 2007, the cost of securities purchased to
cover short sales and the proceeds from securities sold short were $12,495,326
and $7,746,156, respectively, for the James Market Neutral Fund.
3. Management Fee and Other Transactions with Affiliates
A trustee and certain officers of the Trust were also officers of James or
JPMorgan Chase Bank, N.A. ("JPMorgan"), the administrative services agent,
shareholder services and transfer agent and accounting services agent for the
Trust and the exclusive agent for the distribution of the Funds' shares during
the six months ended December 31, 2007.
Investment Management Agreement
The Funds retain James to manage the Funds' investments. The investment
decisions for the Funds are made by a committee of James' personnel, which is
primarily responsible for the day-to-day management of each Fund's portfolio.
James Balanced: Golden Rainbow Fund is authorized to pay James a fee equal to an
annual rate of 0.74% of its average daily net assets. James Balanced: Golden
Rainbow Fund is responsible for the payment of all operating expenses of the
Fund.
39
JAMES ADVANTAGE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
James is authorized to receive a fee equal to (A) an annual rate of 1.25% of the
average daily net assets of the James Small Cap Fund, James Equity Fund and
James Mid Cap Fund, and 1.70% of James Market Neutral Fund; minus (B) the fees
and expenses of the non-interested person trustees incurred by the applicable
Fund. James is responsible for the payment of all operating expenses of the
James Small Cap Fund, James Market Neutral Fund, James Equity Fund, and James
Mid Cap Fund, except for brokerage fees and commissions, taxes, interest
(including dividend expense on securities sold short), 12b-1 expenses, fees and
expenses of non-interested person trustees and extraordinary expenses.
Administrative Services Agreement
Under the terms of an Administrative Services Agreement with the Trust, JPMorgan
supplies executive and regulatory services, supervises the preparation of tax
returns, and coordinates the preparation of reports to shareholders and reports
to and filings with the Securities and Exchange Commission and state securities
authorities. For these services, JPMorgan receives a monthly fee paid by James
Balanced: Golden Rainbow Fund, and paid by James for the James Small Cap Fund,
James Market Neutral Fund, James Equity Fund and James Mid Cap Fund, based on
each Fund's respective average daily net assets, subject to a minimum monthly
fee for each Fund.
Transfer Agent and Shareholder Service Agreement
Under the terms of the Transfer, Dividend Disbursing, Shareholder Service and
Plan Agency Agreement with the Trust, JPMorgan maintains the records of each
shareholder's account, answers shareholder inquiries concerning their accounts,
processes purchases and redemptions of each Funds' shares, acts as dividend and
distribution disbursing agent and performs other shareholder service functions.
For these services, JPMorgan receives a monthly fee paid by James Balanced:
Golden Rainbow Fund, and paid by James for the James Small Cap Fund, James
Market Neutral Fund, James Equity Fund and James Mid Cap Fund, subject to a
minimum monthly fee for each Fund. In addition, James Balanced: Golden Rainbow
Fund and James pay JPMorgan out-of-pocket expenses including, but not limited
to, postage and supplies.
Accounting Services Agreement
Under the terms of the Accounting Services Agreement with the Trust, JPMorgan
calculates the daily net asset value per share and maintains the financial books
and records of each Fund. For these services, JPMorgan receives a monthly fee
from James Balanced: Golden Rainbow Fund and from James with respect to each of
the James Small Cap Fund, James Market Neutral Fund, James Equity Fund and James
Mid Cap Fund. In addition, JPMorgan is reimbursed by James Balanced: Golden
Rainbow Fund and James for certain out-of-pocket expenses incurred by JPMorgan
in obtaining valuations of the Funds' portfolio securities.
Plan of Distribution
Each Fund has a Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act
(the "Plan") under which the Fund may incur or reimburse James for expenses
related to the distribution and promotion of its shares. The annual limitation
for payment of such expenses under the Plans of James Balanced: Golden Rainbow
Fund, James Small Cap Fund, James Market Neutral Fund, James Equity Fund and
James Mid Cap Fund is 0.25% of the average daily net assets of each respective
Fund.
Compliance Services Agreement
Under the terms of the Compliance Services Agreement between the Trust and
JPMorgan, JPMorgan provides certain compliance services to the Trust, including
developing and assisting in implementing a compliance program for JPMorgan on
behalf of the funds and providing administrative support services to the Funds'
Compliance Program and Chief Compliance Officer.
40
JAMES ADVANTAGE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
================================================================================
Beneficial Ownership
The beneficial ownership, either directly or indirectly, of more than 25% of the
voting securities of a fund creates a presumption of control of the fund under
section 2 (A)(9) of the Investment Company Act of 1940. As of December 31, 2007,
Charles Schwab & Co., Inc. owned, for the benefit of its customers, 40.03% and
32.66% of the James Balanced: Golden Rainbow Fund and the James Small Cap Fund,
respectively. James, Dr. Frank James, and other affiliates of James owned 52.20%
of the James Mid Cap Fund.
4. Commitments and Contingencies
The Funds indemnify the Trust's officers and trustees for certain liabilities
that might arise from their performance of their duties to the Funds.
Additionally, in the normal course of business, the Funds enter into contracts
that contain a variety of representations and warranties and that provide
general indemnifications. The Funds' maximum exposure under these arrangements
is unknown, as this would involve future claims that may be made against the
Funds that have not yet occurred. However, based on experience, the Funds expect
the risk of loss to be remote.
41
JAMES ADVANTAGE FUNDS
OTHER ITEMS (Unaudited)
================================================================================
Proxy Voting Guidelines
James is responsible for exercising the voting rights associated with the
securities purchased and held by the Funds. A description of the policies and
procedures that James uses in fulfilling this responsibility and information
regarding how those proxies were voted during the most recent twelve month
period ended June 30 are available without charge upon request by calling toll
free 1-800-995-2637. These items are also available on the Securities and
Exchange Commission's website at http://www.sec.gov. and on the James' website
at www.jamesfunds.com.
Quarterly Portfolio Disclosure
James files a complete listing of portfolio holdings for each Fund as of the end
of the first and third quarters of each fiscal year on Form N-Q. The complete
listing (i) is available on the Commission's website; (ii) may be reviewed and
copied at the Commission's Public Reference Room in Washington, DC; and (iii)
will be made available to shareholders upon request by calling 1-800-995-2637.
Information on the operation of the Public Reference Room may be obtained by
calling 1-800-SEC-0330.
Shareholder Expense Example
As a shareholder of the Funds, you incur two types of costs: (1) transaction
costs, including reinvested dividends or other distributions; and redemption
fees; 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 (July 1, 2007 through December 31, 2007).
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 that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During the Six
Months Ended December 31, 2007" to estimate the expenses you paid on your
account during this period, if you held your shares for the entire 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 Funds' 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 Funds and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
42
JAMES ADVANTAGE FUNDS
OTHER ITEMS (Unaudited) (Continued)
================================================================================
Note that expenses shown in the table are meant to highlight and help you
compare ongoing cost only. The calculations assume no shares were bought or sold
during the period. Your actual costs may have been higher or lower, depending on
the amount of your investment and the timing of any purchases or redemptions.
- -----------------------------------------------------------------------------------------------------------------
Expenses Paid
Net Expense During the
Ratio Beginning Ending Six Months
Annualized Account Value Account Value Ended
December 31, July 1, December 31, December 31,
2007 2007 2007 2007*
- -----------------------------------------------------------------------------------------------------------------
James Balanced: Golden Rainbow Fund
Actual 1.16% $ 1,000.00 $ 1,035.60 $ 5.94
Hypothetical 1.16% $ 1,000.00 $ 1,019.30 $ 5.89
James Small Cap Fund
Actual 1.51% $ 1,000.00 $ 891.80 $ 7.18
Hypothetical 1.51% $ 1,000.00 $ 1,017.55 $ 7.66
James Market Neutral Fund
Actual 1.87% $ 1,000.00 $ 1,066.20 $ 9.71
Hypothetical 1.87% $ 1,000.00 $ 1,015.74 $ 9.48
James Equity Fund
Actual 1.50% $ 1,000.00 $ 957.70 $ 7.38
Hypothetical 1.50% $ 1,000.00 $ 1,017.60 $ 7.61
James Mid Cap Fund
Actual 1.46% $ 1,000.00 $ 915.60 $ 7.03
Hypothetical 1.46% $ 1,000.00 $ 1,017.80 $ 7.41
- -----------------------------------------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio, multiplied by
the average account value over the period, multiplied by 184/366 (to
reflect the one-half year period).
43
INVESTMENT ADVISER
James Investment Research, Inc.
P.O. Box 8
Alpha, Ohio 45301
info@jamesfunds.com
O
CUSTODIAN
U.S. Bank
425 Walnut Street
Cincinnati, Ohio 45202
O
TRANSFER AGENT
JPMorgan Chase Bank, N.A.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
O
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
250 East Fifth Street
Suite 1900
Cincinnati, Ohio 45202
O
DISTRIBUTOR
IFS Fund Distributors, Inc.
303 Broadway
Cincinnati, Ohio 45202
O
LEGAL COUNSEL
Thompson Hine LLP
312 Walnut Street
14th Floor
Cincinnati, Ohio 45202
www.jamesfunds.com
For information about the Funds, or to
make inquiries about the Funds, please call
1-800-99JAMES (1-800-995-2637).
FORM IFS-163-0201
- --------------------------------------------------------------------------------
Semi-Annual Report
December 31, 2007
(Unaudited)
James Balanced:
Golden Rainbow Fund
James Small Cap Fund
James Market Neutral Fund
James Equity Fund
James Mid Cap Fund
[logo]
937 - 426 -7640
www.jamesfunds.com
- --------------------------------------------------------------------------------
Item 2. Code of Ethics.
Not Applicable
Item 3. Audit Committee Financial Expert.
Not Applicable
Item 4. Principal Accountant Fees and Services.
Not Applicable
Item 5. Audit Committee of Listed Companies.
Not applicable.
Item 6. Schedule of Investments.
The schedule is included as part of the report to shareholders filed under Item
1 of this Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed End
Management Investment Companies.
Not Applicable.
Item 8. Portfolio Managers of Closed-End Funds.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Funds.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable
Item 11. Controls and Procedures.
(a) Based on an evaluation of the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the 1940 Act) the registrant's
principal executive officer and principal financial officer have concluded that
the registrant's disclosure controls and procedures are effective as of a date
within 90 days of the filing date of this report.
(b) There were no significant changes in the registrant's internal control over
financial reporting that occurred during the registrant's last fiscal half-year
that have materially affected, or are reasonably likely to materially affect,
the registrant's internal control over financial reporting.
Item 12. Exhibits.
(a)(1) Not applicable.
(a)(2) Certifications required by Item 12(a)(2) of Form N-CSR are filed
herewith.
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.
(Registrant) The James Advantage Funds
--------------------------------------------------------------------
By (Signature and Title)
/s/ Barry R. James
- -------------------------------
Barry R. James
President
Date: March 3, 2008
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 (Signature and Title)
/s/ Barry R. James
- -------------------------------
Barry R. James
President
Date: March 3, 2008
By (Signature and Title)
/s/ Thomas L. Mangan
- -------------------------------
Thomas L. Mangan
Treasurer, Chief Financial Officer
Date: March 3, 2008