SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. __ [_]
Post-Effective Amendment No. __ [_]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940 [X]
Amendment No. __ [_]
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LABRADOR MUTUAL FUND
(formerly named "Labrador Fund")
(Exact name of registrant as specified in charter)
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2344 Corte De La Jara, Pleasanton, California 94566
(Address of principal executive offices)
Registrant's Telephone Number: 510-461-1848
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Peter Allen Schuh, 2344 Corte De La Jara, Pleasanton,
California 94566
(Name and address of agent for service)
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Approximate date of proposed public offering: As soon as
practicable after the effective date of the Registration
Statement.
Pursuant to Rule 24f-2 under the Investment Company Act of
1940, Registrant has elected to register an indefinite number
of shares of beneficial interest.
The amount of the registration fee pursuant to Rule 24f-2 of
the Investment Company Act of 1940 is $500 and the amount of
the registration fee pursuant to Rule 8b-6 of the Investment
Company Act of 1940 is $1,000.
The Registrant hereby amends this registration statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
LABRADOR MUTUAL FUND
FORM N-1A CROSS REFERENCE SHEET
Pursuant to Rule 481(a)
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Item in Part A of Form N-1A Location in Prospectus
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1. Cover Page Cover Page
2. Synopsis Summary of Fund Expenses
3. Condensed Financial Information Not Applicable
4. General Description of Cover Page; General
Registrant Information
5. Management of the Fund Management Services
5A. Managers Discussion of Not Applicable
Fund Performance
6. Capital Stock and Other General Information
Securities
7. Purchase of Securities How to Buy Shares;
Being Offered Distribution and
Shareholder Servicing Plan
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceedings Not Applicable
Item in Part B of Form N1-A Location In Statement of
Additional Information
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10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and General Information;
History General Information
(Prospectus)
13. Investment Objectives Investment Objective and
and Policies Policies
14. Management of the Registrant Management
15. Control Persons and Principal Trustees and Officers
Holders of Securities
16. Investment Advisory and Management
Other Services
17. Brokerage Allocation Portfolio Transactions;
Distribution and
Shareholder Servicing Plan
18. Capital Stock and Other General Information;
Securities General Information
(Prospectus)
19. Purchase, Redemption and Redemption of Fund Shares
Pricing of Securities How to Buy Shares
Being offered (Prospectus); How to
Redeem Shares (Prospectus)
Valuation
20. Tax Status Dividends, Distributions
and Taxes (Prospectus)
21. Underwriters Not Applicable
22. Calculation of Performance Not Applicable
Data
23. Financial Statements Financial Statements
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE
SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO
BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BY ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY
SUCH STATE.
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION
LABRADOR MUTUAL FUND
2344 Corte De La Jara
Pleasanton, California 94566
Telephone: 510.461.1848
February ___, 1998
Labrador Mutual Fund, (the "fund") is a mutual fund
that invests principally in common stocks, or securities
convertible into common stock, of companies which, in the
opinion of the fund's management, not only meet traditional
investment standards, but also show evidence that they are
high quality companies that conduct their business in a
socially responsible manner. Investment advisory and
management services are provided to the Fund by Labrador
Investment Advisors, Inc. (the "Manager"). For a description
of the Fund's investment objective and policies, including the
risk factors associated with an investment in the Fund, see
"Investment Objective, Policies And Risks." There can be no
assurance that the Fund's investment objective will be
achieved.
This Prospectus sets forth concisely the information
a prospective investor should know about the Fund before
investing. Please read it carefully before you invest and keep
it for future reference. Additional information about the
Fund, including a Statement of Additional Information, has
been filed with the Securities and Exchange Commission. The
Statement of Additional Information is available upon request
and without charge by calling or writing the Fund at the
telephone number or the address set forth above. The Statement
of Additional Information is dated the same date as this
Prospectus and is incorporated herein by reference in its
entirety.
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND SHARES ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY,
AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE LOSS OF
PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
TABLE OF CONTENTS
Summary of Fund Expenses............................ 1
Investment Objective, Policies and Risks............ 5
Management Services................................. 7
How to Buy Shares................................... 11
How to Redeem Shares................................ 14
Distribution and Shareholder Servicing Plan..........16
Dividends, Distributions and Taxes.................. 16
Systematic Investment Plan.......................... 17
Advertising the Fund's Performance.................. 18
General Information................................. 18
SUMMARY OF FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of
offering price)........................... None
Redemption Fee (as a percentage of the amount
subject to charge)........................ None
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
Management Fees (after fee waiver)*.........1.35%**
12b-1 Fees***............................... .25%
Other Expenses*............................. 1.00%
Total Fund Operating Expenses (after fee waiver)*... 2.60%
EXAMPLE
You would pay the following expenses on a $1,000
investment, assuming
(1) 5% annual return and (2) redemption at the end of
each time period:
1 YEAR............................................... $26
3 YEARS.............................................. $81
EXAMPLE
You would pay the following expenses on the same
investment, assuming no redemption:
1 YEAR............................................... $26
3 YEARS.............................................. $81
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* Based on estimated expenses for the current fiscal
year. The Manager has undertaken, until such time as it gives
investors 60 days notice to the contrary, to waive its
investment advisory fee to the extent Total Fund Operating
Expenses (other than interest, taxes, brokerage fees and
extraordinary items) exceed 2.60%, except that the amount of
such obligation will not exceed the amount of fees received by
the Manager for the applicable period. Without such waiver,
Management Fees stated above would be 1.35%, 12b-1
Distribution Fees would be .25%, Other Expenses would be 1.00%
and Total Fund Operating Expenses would be 2.60%.
** The Management Fee is payable at an annual rate equal
to 1.35% of the Fund's average daily net assets, subject to
increase by up to 0.35% annually depending on the Fund's
performance. See "Management Services."
*** Pursuant to the Rules of the National Association of
Securities Dealers, Inc., the aggregate annual distribution
fees on shares of the Fund may not exceed 6.25% of total gross
sales, subject to certain exclusions. The 6.25% limitation is
imposed on the Fund rather than on a per shareholder basis.
Therefore, a long-term shareholder of the Fund may pay more in
distribution fees than the economic equivalent of 6.25% of
such shareholder's investment in such shares.
THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE INDICATED. MOREOVER, WHILE THE
EXAMPLE ASSUMES A 5% ANNUAL RETURN, THE FUND'S ACTUAL
PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN
GREATER OR LESS THAN 5%.
The purpose of the foregoing table is to assist you in
understanding the various costs and expenses that investors
will bear, directly or indirectly, the payment of which will
reduce investors' return on an annual basis. Other Expenses
and Total Fund Operating Expenses are based on estimated
amounts for the current fiscal year. In addition to the
expenses noted above, the Fund will charge $15.00 for each
wire redemption. See "How to Redeem Shares." For a further
description of the various costs and expenses incurred in the
Fund's operation, as well as expense reimbursement or waiver
arrangements, see "Management Services."
INVESTMENT OBJECTIVE, POLICIES AND RISKS
INVESTMENT OBJECTIVES - The Fund's primary goal is to provide
capital growth through equity investment in companies that, in
the opinion of the Fund's management, not only meet
traditional investment standards but which also show evidence
that they are high quality companies that conduct their
business in a socially responsible manner. Current income is
secondary to the primary goal. There can be no assurances that
the Fund's investment objectives will be achieved.
SPECIAL CONSIDERATIONS - TYPES OF COMPANIES SOUGHT FOR
INVESTMENT - To assess whether a company is a high quality
company that conducts its business in a socially responsible
manner, the Fund considers a company's record in the areas of
(1) consumer protection and product safety, (2) protection and
improvement of the environment and the proper use of natural
resources, (3) equal employment opportunity, and (4)
occupational health and safety. For example, consistent with
its consumer protection screen, the Fund will not purchase
shares in a company which manufactures tobacco products. There
are few generally accepted measures of achievement in these
areas. The development of suitable measurement techniques,
therefore, will be largely within the discretion and judgment
of the management of the Fund. Management does not intend at
present to evaluate in depth a company's activities not
directly connected with the conduct of its business (such as
participation in community improvement projects) or the
secondary implications of corporate activities (for example,
in examining banks, the business activities of their borrowers
will not be evaluated).
The Fund's special considerations tend to limit the
availability of investment opportunities more than is
customary with other investment companies. Management
believes, however, that there are sufficient investment
opportunities among companies which meet the Fund's special
considerations to permit full investment, if management
believes it desirable, in securities which meet the Fund's
primary investment objective of capital growth through equity
investment.
The Fund's objectives and special considerations
described above cannot be changed without approval by the
holders of a majority, as defined in the Investment Company
Act of 1940, as amended (the "Act"), of the Fund's outstanding
voting shares.
The Fund's Board of Directors may adopt additional
criteria or restrictions governing the Fund's investments if
the Board of Directors determines that the new criteria or
restrictions are consistent with the Fund's objective of
investing in a socially responsible manner, but the Board may
not change the four existing special considerations described
above without shareholder approval.
THE INVESTMENT SELECTION PROCESS - Potential investment
portfolio selections (based on traditional investment
considerations, including an opinion of the fundamental value
of the security and other market factors) are designated to
the research staff. The staff begins a process of searching
publicly available information about the company to determine
its record in the areas of special concern to the Fund.
Researchers use commercially available computer data bases and
reviews and evaluations published or made available by
"watchdog" groups whose interests focus on one or more of the
special areas, such as the environment, as applicable.
Additional data may be obtained, where practical, from local,
state and federal agencies which maintain surveillance in
certain areas of interest to the Fund and which provide this
data to the public.
If the initial evaluation reveals no negative pattern
in the areas of special concern to the Fund, a company's
securities are eligible for purchase.
If it is determined at any stage that purchase or
retention of the portfolio security is not consistent with the
Fund's goal of investing in companies that are high quality
companies that conduct their business in a socially
responsible manner, the security will not be purchased or, if
already purchased, will be sold as expeditiously as possible,
consistent with the best interests of the Fund.
The Manager will review new portfolio acquisitions in
light of the Fund's special concerns at their next regular
meeting. While the Manager will disqualify a company
evidencing a pattern of conduct that is inconsistent with the
Fund's special standards, the Manager need not disqualify a
company on the basis of incidents that, in the Manager's
judgment, does not reflect the company's policies and overall
current level of performance in the areas of special concern
to the Fund. The performance of companies in the areas of
special concern are reviewed regularly to determine their
continued eligibility.
MANAGEMENT POLICIES - Depending on market conditions, the Fund
attempts to be invested fully in common stock, or securities
convertible into common stock, which meet both traditional
investment standards and the Fund's investment criteria
described under "Types of Companies Sought for Investment."
As a fundamental policy, the Fund is permitted to
borrow to the extent permitted under the Act. However, the
Fund currently intends to borrow money only for temporary or
emergency (not leveraging) purposes, in an amount up to 15% of
the value of the Fund's total assets (including the amount
borrowed) valued at the lesser of cost or market, less
liabilities (not including the amount borrowed) at the time
the borrowing is made. While borrowings exceed 5% of the
Fund's total assets, the Fund will not make any additional
investments.
The Fund may invest up to 5% of the value of its net
assets in securities which are illiquid securities, provided
such investments are consistent with the Fund's investment
objective. Illiquid securities are securities which are not
readily marketable, such as certain securities that are
subject to legal or contractual restrictions on resale,
repurchase agreements providing for settlement in more than
seven days after notice, and certain options traded in the
over-the-counter market and securities used to cover such
options. Investment in illiquid securities subjects the Fund
to the risk that it will not be able to sell such securities
when it may be opportune to do so.
During periods in which management believes adverse
trends are occurring in the financial markets or the economy,
the Fund may adopt a temporary defensive posture to preserve
shareholders' capital by investing in U.S. Government
securities, and also in corporate bonds, high grade commercial
paper, repurchase agreements, time deposits, bank certificates
of deposit, bankers' acceptances and other short-term bank
obligations issued in this country as well as those issued in
dollar denominations by the foreign branches of U.S. banks,
and cash or cash equivalents, without limit as to amount, as
long as such investments are made in securities of eligible
companies and domestic banks. When the Fund has adopted a
temporary defensive posture, the entire portfolio can be so
invested. During such periods, the Fund may not achieve its
investment objectives.
Repurchase agreements involve the acquisition by the
Fund of an underlying debt instrument subject to an obligation
of the seller to repurchase, and the Fund to resell, the
instrument at a fixed price, usually not more than one week
after its purchase. The Fund's custodian will have custody of,
and will hold in a segregated account, securities acquired by
the Fund under a repurchase agreement. Repurchase agreements
are considered by the staff of the Securities and Exchange
Commission to be loans by the Fund. In an attempt to reduce
the risk of incurring a loss on a repurchase agreement, the
Fund will enter into repurchase agreements only with domestic
banks with total assets in excess of one billion dollars or
primary government securities dealers reporting to the Federal
Reserve Bank of New York with respect to securities of the
type in which the Fund may invest, and the Fund will require
that additional securities be deposited with its custodian if
the value of the securities purchased should decrease below
resale price. The Manager will monitor on an ongoing basis the
value of the collateral to assure that it always equals or
exceeds the repurchase price. Certain costs may be incurred by
the Fund in connection with the sale of the securities if the
seller does not repurchase them in accordance with the
repurchase agreement. In addition, if bankruptcy proceedings
are commenced with respect to the seller of the securities,
realization on the securities by the Fund may be delayed or
limited. The Fund will consider on an ongoing basis the
creditworthiness of the institutions with which it enters into
repurchase agreements.
Certificates of deposit are negotiable certificates
evidencing the obligation of a bank to repay funds deposited
with it for a specified period of time.
Time deposits are non-negotiable deposits maintained
in a banking institution for a specified period of time (in no
event longer than seven days) at a stated interest rate. Time
deposits which may be held by the Fund will not benefit from
insurance from the Bank Insurance Fund or the Savings
Association Insurance Fund administered by the Federal Deposit
Insurance Corporation.
Bankers' acceptances are credit instruments evidencing
the obligation of a bank to pay a draft drawn on it by a
customer. These instruments reflect the obligation both of the
bank and of the drawer to pay the full amount of the
instrument upon maturity. The other short-term obligations may
include uninsured, direct obligations bearing fixed, floating
or variable interest rates.
To earn additional income on its portfolio, the Fund
may sell covered call option contracts on securities it owns
to the extent of 20% of the value of its net assets at the
time such option contracts are written. A call option gives
the purchaser of the option the right to buy, and obligates
the writer to sell, the underlying security at the exercise
price at any time during the option period. A covered call
option sold by the Fund, which is a call option on a security
owned by the Fund, exposes the Fund during the term of the
option to possible loss of opportunity to realize appreciation
in the market price of the underlying security or to possible
continued holding of a security which might otherwise have
been sold to protect against depreciation in the market price
of the security.
A more detailed description of the securities in which
the Fund may invest can be found in the Statement of
Additional Information.
The Fund may invest in companies with substantial
overseas activities, but, at present, management will not
examine corporate activities carried on outside the United
States.
CERTAIN FUNDAMENTAL POLICIES - The Fund may (i) borrow money
to the extent permitted under the Act, which currently limits
borrowing to no more than 33 1/3% of the value of the Fund's
total assets; (ii) invest up to 5% of the value of its total
net assets in the securities of any one issuer (except
securities of the U.S. Government or any instrumentality
thereof); (iii) invest in companies having less than three
years continuous operating history (including that of
predecessors) but only in an amount up to 5% of the value of
its net assets; and (iv) invest up to 25% of the value of its
total assets in
any single industry. This paragraph describes fundamental
policies of the Fund which cannot be changed without approval
by the holders of a majority (as defined in the Act) of the
Fund's outstanding voting shares. See "Investment Objectives
and Management Policies-Investment Restrictions" in the Fund's
Statement of Additional Information.
CERTAIN ADDITIONAL NON-FUNDAMENTAL POLICIES - The Fund may (i)
pledge, hypothecate, mortgage or otherwise encumber its
assets, but only to secure permitted borrowings; and (ii)
invest up to 5% of the value of its net assets in repurchase
agreements providing for settlement in more than seven days
after notice and in other illiquid securities. See "Investment
Objectives and Management Policies - Investment Restrictions"
in the Fund's Statement of Additional Information. INVESTMENT
CONSIDERATIONS - The Fund will not seek to realize profits by
anticipating short-term market movements. When market
conditions permit, the Fund generally intends to retain
securities for at least the statutory long-term capital gain
period. The annual portfolio turnover rate indicates the rate
of change in the Fund's portfolio; for instance, a rate of
100% would result if all the securities in the portfolio at
the beginning of an annual period had been replaced by the end
of the period. While the rate of portfolio turnover will not
be a limiting factor when management deems changes
appropriate, it is anticipated that, in view of the Fund's
investment objectives, its annual portfolio turnover rate
generally should not exceed 50%. When extraordinary market
conditions prevail, a higher turnover rate and increased
brokerage expenses may be expected.
CHANGES IN INVESTMENT POLICIES. Except as noted
below, the foregoing investment policies are not fundamental
and the Fund's Board of Trustees may change such policies
without the vote of a majority of the Fund's outstanding
voting securities. The Board will not change the Fund's
investment objective of seeking to produce capital
appreciation without such a vote. A more detailed description
of the Fund's investment policies, including a list of those
restrictions on the Fund's investment activities which cannot
be changed without such a vote, appears in the Statement of
Additional Information.
MANAGEMENT SERVICES
THE MANAGER. The Board of Trustees provides broad
supervision over the affairs of the Fund. Pursuant to a
Management Agreement between the Fund and Labrador Investment
Advisors, Inc. (the "Manager") and subject to the authority of
the Board of Trustees, the Manager manages the investments of
the Fund and is responsible for the overall management of the
business affairs of the Fund. The address of the Manager is
2344 Corte De La Jara, Pleasanton, California 94566. The
Manager has no previous experience in advising a mutual fund.
The Manager was founded in September 1997 by Peter
Allen Schuh and Allen John Schuh. Peter Allen Schuh, the
Chairman of the Board, President, Secretary and Treasurer of
the Fund, is the Chairman of the Board and President of the
Manager. Peter Allen Schuh is a co-portfolio manager of the
Fund. Peter Allen Schuh holds a B.S. degree from California
Polytechnic State University, San Luis Obispo. Peter Allen
Schuh has co-authored several articles. Peter Allen Schuh
worked at Merrill Lynch before starting Labrador Investment
Advisors, Inc.
Allen John Schuh, the vice-president of the Fund, is
also the vice-president of the Manager and co-portfolio
manager of the Fund. Allen John Schuh is currently a
professor in the Department of Management & Finance at the
California State University at Hayward. Allen John Schuh
holds an A.B. degree from San Diego State University, a M.A.
degree from the University of California, Berkeley, and a
Ph.D. from The Ohio State University. Allen John Schuh has
authored several dozen articles and papers dealing with
decision theory, investing and related management issues. He
has a management textbook in its fourth edition. His previous
experience was with the accounting firm Ernst & Ernst, active
duty with the United States Navy, and Lecturer at Old Dominion
University. He has had many consulting assignments in his 30
year professional career. Professional memberships include;
The Academy of Management, The Institute for Operations
Research and The Management Sciences, The American
Psychological Association and The American Psychological
Society.
MANAGEMENT FEES. Under the terms of the Management
Agreement, the Fund has agreed to pay the Manager a base
monthly management fee at the annual rate of 1.35% of the
Fund's average daily net assets (the "Base Fee") which will be
adjusted monthly (the "Monthly Performance Adjustment")
depending on the extent by which the investment performance of
the Fund, after expenses, exceeded the percentage change of
the S&P 500 Index. Under terms of the Management Agreement,
the monthly performance adjustment may increase the total
management fee payable to the Manager (the "Total Management
Fee") by up to .35% annual rate per year of the value of the
Fund's average daily net assets.
The monthly Total Management Fee is calculated as
follows: (a) one-twelfth of 1.35% annual Base Fee rate
(0.1125%) is applied to the Fund's average daily net assets
over the most recent calendar month, giving a dollar amount
which is the Base Fee for that month; (b) one-twelfth of the
applicable performance adjustment rate from the table below is
applied to the Fund's average daily net assets over the most
recent calendar month, giving a dollar amount which is the
Monthly Performance Adjustment (for the first twelve-month
period no performance adjustment will be made); and (c) the
Monthly Performance Adjustment is then added to the Base Fee
and the result is the amount payable by the Fund to the
Manager as the Total Management Fee for that month.
The full range of Total Management Fee on an
annualized basis is as follows:
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PERCENTAGE POINT DIFFERENCE BETWEEN FUND
PERFORMANCE (NET OF EXPENSES INCLUDING PERFORMANCE
ADVISORY FEES) AND PERCENTAGE CHANGE IN ADJUSTMENT
THE S&P 500 INDEX BASE FEE (%) RATE (%) TOTAL FEE (%)
- - -----------------------------------------------------------
+2.00 percentage points or more... 1.35% .35% 1.70%
The period over which performance is measured is a rolling
twelve-month period and the performance of the S&P 500 Index
is calculated as the sum of the change in the level of the S&P
500 Index during the period.
Because the maximum Monthly Performance Adjustment
for the Fund applies whenever the Fund's performance exceeds
the S&P 500 Index by 2.00% or more, the Manager could receive
a maximum Monthly Performance Adjustment even if the
performance of the Fund is negative. In 1972, the SEC issued
Release No. 7113 under the Investment Company Act (the
"Release") to call the attention of directors and investment
advisers to certain factors which must be considered in
connection with investment company incentive fee arrangements.
One of these factors is to "avoid basing significant fee
adjustments upon random or insignificant differences" between
the investment performance of a fund and that of the
particular index with which it is being compared. The Release
provides that "preliminary studies (of the SEC staff) indicate
that as a 'rule of thumb' the performance difference should be
at least +/-10 percentage points" annually before the maximum
performance adjustment may be made. However, the Release also
states that "because of the preliminary nature of these
studies, the Commission is not recommending, at this time,
that any particular performance difference exist before the
maximum fee adjustment may be made." The Release concludes
that the directors of a fund "should satisfy themselves that
the maximum performance adjustment will be made only for
performance differences that can reasonably be considered
significant." The Board of Trustees has fully considered the
Release and believes that the performance adjustments are
entirely appropriate although not within the +/-10 percentage
points per year range suggested by the Release.
EXPENSES. All expenses incurred in the operation of
the Fund will be borne by the Fund, except to the extent
specifically assumed by the Manager. The expenses to be borne
by the Fund will include: organizational costs, taxes,
interest, brokerage fees and commissions, fees of board
members who are not officers, directors or employees of the
Manager or its affiliates, Securities and Exchange Commission
fees, state Blue Sky qualification fees, advisory,
administrative and fund accounting fees, charges of
custodians, transfer and dividend disbursing agents' fees,
insurance premiums, industry association fees, outside
auditing and legal expenses, costs of maintaining the Fund's
existence, costs of independent pricing services, costs
attributable to investor services (including, without
limitation, telephone and personnel expenses), costs of
shareholders' reports and meetings, costs of preparing and
printing prospectuses and statements of additional
information, amounts payable under the Fund's Distribution and
Shareholder Servicing Plan (the "Plan") and any extraordinary
expenses.
The Manager has undertaken, until such time as it
gives investors 60 days' notice to the contrary, to waive its
Management Fee in the amount, if any, by which the total
expenses of the Fund for any fiscal year, including
amortization of organizational expenses and amounts paid by
the Fund under the Plan, exceed 2.60% of average annual net
assets of the Fund, except that the amount of such fee waiver
shall not exceed the amount of fees received by the Manager
under the Management Agreement for such fiscal year. The fee
waiver, if any, will be on a monthly basis, subject to year-
end adjustment. Interest expenses, taxes, brokerage fees and
commissions, and extraordinary expenses are not included as
expenses for these purposes.
PORTFOLIO TRANSACTIONS. The Management Agreement
recognizes that in the purchase and sale of portfolio
securities, the Manager will seek the most favorable price and
execution, and, consistent with that policy, may give
consideration to the research, statistical and other services
furnished by brokers or dealers to the Manager. The use of
brokers who provide investment and market research and
securities and economic analysis may result in higher
brokerage charges than the use of brokers selected on the
basis of the most favorable brokerage commission rates and
research and analysis received may be useful to the Manager in
connection with its services to other clients as well as to
the Fund. In over-the-counter markets, orders are placed with
responsible primary market makers unless a more favorable
execution or price is believed to be obtainable.
PORTFOLIO TURNOVER. A change in securities held by
the Fund is known as "portfolio turnover" which may result in
the payment by the Fund of dealer spreads or underwriting
commissions and other transaction costs on the sale of
securities as well as on the reinvestment of the proceeds in
other securities. Although it is the policy of the Fund to
hold securities for investment, changes in the securities held
by the Fund will be made from time to time when the Manager
believes such changes will strengthen the Fund's portfolio. It
is estimated that the portfolio turnover of the Fund generally
will not exceed 50%.
CUSTODIAN AND TRANSFER AGENT. Star Bank, N.A., 425
Walnut Street, M.L. 6118, P.O. Box 1118, Cincinnati, Ohio
45201-1118 is the Fund's custodian. American Data Services,
Inc., 24 West Carver Street, 2nd Floor, Huntington, New York
11743 is the Fund's transfer agent and dividend disbursing
agent (the "Transfer Agent").
HOW TO BUY SHARES
GENERAL. The minimum initial investment is $1,000
($500 for IRA's). Subsequent investments ordinarily must be
at least $50. The Fund reserves the right to reject any
purchase order. The Fund reserves the right to vary or waive
the initial and subsequent investment minimum requirements at
any time.
Purchase orders received in proper form before the
close of regular trading on the New York Stock Exchange
(currently 4:00 p.m., New York time) on any day the Fund
calculates its net asset value are priced according to the net
asset value determined on that date. Purchase orders received
in proper form after the close of trading on the New York
Stock Exchange are priced as of the time the net asset value
is next determined.
INITIAL PURCHASE.
By Mail -- You may purchase shares of the Fund by
completing and signing the application form which accompanies
this Prospectus and mailing it, in proper form, together with
a check (subject to the above minimum amounts) made payable to
Labrador Mutual Fund, and sent to the P.O. Box listed below.
If you prefer overnight delivery, use the overnight address
listed below.
Overnight:
U.S. mail: Labrador Mutual Fund
P.O. Box ________
Cincinnati, Ohio 45264-0335
By Wire -- You may also purchase shares of the Fund
by wiring federal funds from your bank, which may charge you a
fee for doing so. If money is to be wired, you must call
American Data Services, Inc., the Fund's Transfer Agent, at
____________ to set up your account and obtain an account
number. You should be prepared to provide the information on
the application form to the Transfer Agent. Then, you should
provide your bank with the following information for purposes
of wiring your investment:
Star Bank, N.A. Cinti/Trust
ABA #____________
Attn: Labrador Mutual Fund
D.D.A. #
Account Name
___________________________________________
(write in account registration name)
For the Account #
_____________________________________________
(write in account # assigned by Transfer Agent)
You are required to mail a signed application to the Transfer
Agent at the following address in order to complete your
initial wire purchase:
Labrador Mutual Fund
c/o American Data Services, Inc.
24 West Carver Street, 2nd Floor
Huntington, New York 11743
Wire orders will be accepted only on a day on which the Fund
and the Custodian and Transfer Agent are open for business. A
wire purchase will not be considered made until the wired
money is received and the purchase is accepted by the Fund.
Any delays which may occur in wiring money, including delays
which may occur in processing by the banks, are not the
responsibility of the Fund or the Transfer Agent. There is
presently no fee for the receipt of wired funds, but the right
to charge shareholders for this service is reserved by the
Fund.
ADDITIONAL INVESTMENTS. You may purchase additional
shares of the Fund at any time (minimum of $50) by mail or
wire. Each additional mail purchase request must contain the
additional investment portion of your shareholder statement or
a letter containing your name, the name of your account, your
account number and the name of the Fund. Checks should be made
payable to Labrador Mutual Fund and should be sent to the
Custodian as set forth above under "INITIAL PURCHASE - By
Mail". A bank wire should be sent as set forth above under
"INITIAL PURCHASE - By Wire".
PURCHASES THROUGH PROCESSING ORGANIZATIONS. Shares of
the Fund may also be purchased through a "Processing
Organization," which is a broker-dealer, bank or other
financial institution that purchases shares for its customers.
When shares are purchased this way, the Processing
Organization, rather than its customer, may be the shareholder
of record of the shares. Such shares may be transferred into
the investor's name following procedures established by the
Processing Organization and the Transfer Agent. The minimum
initial and subsequent investments in the Fund for
shareholders who invest through a Processing Organization
generally will be set by the Processing Organization.
Processing Organizations may also impose other charges and
restrictions in addition to or different from those applicable
to investors who remain the shareholder of record of their
shares. Certain Processing Organizations may receive
compensation from the Manager pursuant to the Fund's
Distribution and Shareholder Servicing Plan. An investor
contemplating investing with the Fund through a Processing
Organization should read materials provided by the Processing
Organization in conjunction with this Prospectus.
TAX SHELTERED RETIREMENT PLANS. Since the Fund is
oriented to longer term investments, shares of the Fund may be
an appropriate investment medium for tax sheltered retirement
plans, including: individual retirement plans (IRAs);
simplified employee pensions (SEPs); 401(k), 403(b) plans;
Keogh (HR-10) Plans, qualified corporate pension and profit
sharing plans (for employees); tax deferred investment plans
(for employees of public school systems and certain types of
charitable organizations); and other qualified retirement
plans. You should contact the Transfer Agent for the procedure
to open an IRA or SEP plan, as well as more specific
information regarding these retirement plan choices.
Consultation with an attorney or tax adviser regarding these
plans is advisable. Custodial fees and other processing fees
for an IRA will be paid by the shareholder by redemption of
sufficient shares of the Fund from the IRA unless the fees are
paid directly to the IRA custodian. You can obtain information
about IRA fees by calling the Transfer Agent at
______________.
AUTOMATIC INVESTMENT OPTION. Please see "SYSTEMATIC
INVESTMENT PLAN" below.
PURCHASE OF FUND SHARES WITH COMPATABLE SECURITIES.
At the discretion of the Manager, an investor may submit
securities in exchange for Labrador Mutual Fund shares,
provided the stocks submitted meet all of the criteria of the
Fund's portfolio at that time. Prior approval of such
exchange is required.
NET ASSET VALUE. Shares of the Fund are sold on a
continuous basis. Net asset value per share is determined as
of the close of regular trading on the floor of the New York
Stock Exchange (currently 4:00 p.m., New York time) on each
business day. The net asset value per share of the Fund is
computed by dividing the value of the Fund's net assets by the
total number of shares of the Fund outstanding. The Fund's
investments are valued based on market value or, where market
quotations are not readily available, based on fair value as
determined in good faith by, or in accordance with procedures
established by, the Fund's Board of Trustees.
ADDITIONAL INFORMATION. Federal regulations require
that investors provide a certified Taxpayer Identification
Number (a "TIN") upon opening or reopening an account. See
"Dividends, Distributions and Taxes." Failure to furnish a
certified TIN to the Fund could subject the investor to a $50
penalty imposed by the Internal Revenue Service (the "IRS").
Dividends begin to accrue after you become a
shareholder. The Fund does not issue share certificates. All
shares are held in non-certificate form registered on the
books of the Fund's Transfer Agent for the account of the
shareholder. The rights to limit the amount of purchases and
to refuse to sell to any person are reserved by the Fund. If
your check or wire does not clear, you will be responsible for
any loss incurred. If you are already a shareholder, the Fund
can redeem shares from any identically registered account in
the Fund as reimbursement for any loss incurred. You may be
prohibited or restricted from making future purchases in the
Fund.
HOW TO REDEEM SHARES
GENERAL. Investors may request redemption of Fund
shares at any time. Redemption requests may be made as
described below. When a request is received in proper form,
the Fund will redeem the shares at the next determined net
asset value.
The Fund ordinarily will make payment for all shares
redeemed within three days after receipt by the Transfer Agent
of a redemption request in proper form, except as provided by
the rules of the Securities and Exchange Commission. However,
if an investor has purchased Fund shares by check and
subsequently submits a redemption request, the redemption
proceeds will not be transmitted until the check used for
investment has cleared, which may take up to 15 days. This
procedure does not apply to shares purchased by wire payment.
The Fund reserves the right to redeem investor
accounts at its option upon not less than 60 days' written
notice if the account's net asset value is $500 ($250 for
IRA's) or less, for reasons other than market conditions, and
remains so during the notice period.
REDEMPTION PROCEDURES. Shareholders who wish to
redeem shares must do so through the Transfer Agent by mail or
telephone.
By Mail -- Redemption requests by mail must include
your letter of instruction (including Fund name, account
number, account name(s), address and the dollar amount or
number of shares you wish to redeem) and should be addressed
to:
Labrador Mutual Fund
c/o American Data Services, Inc.
24 West Carver Street, 2nd Floor
Huntington, New York 11743
By Telephone -- Shareholders that have elected the
telephone redemption option on the shareholder application
form may make a telephone redemption request by calling the
Transfer Agent at __________. The Transfer Agent may act on
telephone instructions from any person representing himself or
herself to be a shareholder and reasonably believed by the
Transfer Agent to be genuine. The Fund will require the
Transfer Agent to employ reasonable procedures, such as
requiring a form of personal identification, to confirm that
instructions are genuine and, if it does not follow such
procedures, the Transfer Agent or the Fund may be liable for
any losses due to unauthorized or fraudulent instructions.
Neither the Fund nor the Transfer Agent will be liable for
following telephone instructions reasonably believed to be
genuine.
During times of drastic economic or market
conditions, investors may experience difficulty in contacting
the Transfer Agent by telephone to request a redemption of
Fund shares. In such cases, investors should consider using
the other redemption procedures described herein. Use of these
other redemption procedures may result in the redemption
request being processed at a later time than it would have
been if telephone redemption had been used. During the delay,
Fund's the net asset value may fluctuate.
ADDITIONAL INFORMATION ABOUT REDEMPTIONS. A
shareholder may have redemption proceeds of $500 or more wired
to the shareholder's brokerage account or a commercial bank
account designated by the shareholder. A transaction fee of
$15.00 will be charged for payments by wire. Questions about
this option, or redemption requirements generally, should be
referred to the Transfer Agent at ______________.
Written redemption instructions must be received by
the Transfer Agent in proper form and signed exactly as the
shares are registered. All signatures must be guaranteed. The
Transfer Agent has adopted standards and procedures pursuant
to which signature guarantees in proper form generally will be
accepted from domestic banks, brokers, dealers, credit unions,
national securities exchanges, registered securities
associations, clearing agencies and savings associations, as
well as from participants in the New York Stock Exchange
Medallion Signature Program, the Stock Exchange Medallion
Program and the Securities Transfer Agents Medallion Program
("STAMP"). Such guarantees must be signed by an authorized
signatory thereof with "Signature Guaranteed" appearing with
the shareholder's signature. If the signature is guaranteed by
a broker or dealer, such broker or dealer must be a member of
a clearing corporation and maintain net capital of at least
$100,000. Signature-guarantees may not be provided by notaries
public. Redemption requests by corporate and fiduciary
shareholders must be accompanied by appropriate documentation
establishing the authority of the person seeking to act on
behalf of the account.
Investors may obtain from the Fund or the Transfer Agent forms
of resolutions and other documentation which have been
prepared in advance to assist compliance with the Fund's
procedures. Any questions with respect to signature guarantees
should be directed to the Transfer Agent by calling
_____________.
DISTRIBUTION AND SHAREHOLDER SERVICING PLAN
Under a plan adopted by the Fund's Board of Trustees
pursuant to Rule 12b-1 under the 1940 Act (the "Plan"), the
Fund pays the Manager a shareholder servicing and distribution
fee at the annual rate of .25% of the average daily net assets
of the Fund. Such fee will be used in its entirety by the
Manager to make payments for administration, shareholder
services and distribution assistance, including, but not
limited to (i) compensation to securities dealers and other
organizations (each, a "Service Organization" and
collectively, the "Service Organizations"), for providing
distribution assistance with respect to assets invested in the
Fund, (ii) compensation to Service Organizations for providing
administration, accounting and other shareholder services with
respect to Fund shareholders, and (iii) otherwise promoting
the sale of shares of the Fund, including paying for the
preparation of advertising and sales literature and the
printing and distribution of such promotional materials to
prospective investors. The fees paid to the Manager under the
Plan are in addition to the fees payable under the Management
Agreement and are payable without regard to actual expenses
incurred. The Fund understands that third parties also may
charge fees to their clients who are beneficial owners of Fund
shares in connection with their client accounts. These fees
would be in addition to any amounts which may be received by
them from the Manager under the Plan.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund ordinarily pays dividends from its net
investment income and distributes net realized securities
gains, if any, once a year, but it may make distributions on a
more frequent basis to comply with the distribution
requirements of the Code, in all events in a manner consistent
with the provisions of the 1940 Act. Dividends are
automatically reinvested in additional Fund shares at net
asset value, unless the shareholder has elected to receive
payment in cash. All expenses are accrued daily and deducted
before declaration of dividends to investors.
Dividends derived from net investment income,
together with distributions from net realized short-term
securities gains, paid by the Fund will be taxable to U.S.
shareholders as ordinary income for Federal income tax
purposes. Distributions from net realized long-term securities
gains of the Fund will be taxable to U.S. shareholders as
long-term capital gains for Federal income tax purposes.
Dividends and distributions also may be subject to state and
local taxes. The Fund's distributions are taxable in the year
paid, regardless of whether they are received in cash or
reinvested in additional shares of the Fund, except that
certain distributions declared in the last three months of the
year and paid in January are taxable as if paid on December
31.
Notice as to the tax status of investors' dividends
and distributions will be mailed to them annually. Investors
also will receive periodic summaries of their accounts which
will include information as to dividends and distributions
from securities gains, if any, paid during the year.
An investor's redemption of Fund shares may result in
a taxable gain or loss, depending upon whether the redemption
proceeds payable to such investor are more or less than his
adjusted tax basis for his redeemed shares.
Federal regulations generally require the Fund to
withhold ("backup withholding") and remit to the U.S. Treasury
31% of dividends, distributions from net realized securities
gains and the proceeds of any redemption, regardless of the
extent to which gain or loss may be realized, paid to a
shareholder if such shareholder fails to certify either that
the TIN furnished in connection with opening an account is
correct or that such shareholder has not received notice from
the IRS of being subject to backup withholding as a result of
a failure to properly report taxable dividend or interest
income on a Federal income tax return. Furthermore, the IRS
may notify the Fund to institute backup withholding if the IRS
determines a shareholder's TIN is incorrect or if a
shareholder has failed to properly report taxable dividend and
interest income on a Federal income tax return.
A TIN is either the Social Security number or
employer identification number of the record owner of the
account. Any tax withheld as a result of backup withholding
does not constitute an additional tax imposed on the record
owner of the account, and may be claimed as a credit on the
record owner's Federal income tax return.
The Fund intends to qualify as a "regulated
investment company" under the Code so long as such
qualification is in the best interests of its shareholders.
Such qualification relieves the Fund of any liability for
Federal income tax to the extent its earnings are distributed
in accordance with applicable provisions of the Code. The Fund
intends to make sufficient distributions prior to the end of
each calendar year to avoid liability for a 4% Federal excise
tax on undistributed income.
Each investor should consult its tax adviser
regarding specific questions as to Federal, state or local
taxes.
SYSTEMATIC INVESTMENT PLAN
The Systematic Investment Plan permits investors to
purchase shares of the Fund (minimum initial investment of
$500 and minimum subsequent investments of $50 per
transaction) at regular intervals selected by the investor.
Provided the investor's bank or other financial institution
allows automatic withdrawals, shares may be purchased by
transferring funds from the account designated by the
investor. At the investor's option, the account designated
will be debited in the specified amount, and shares will be
purchased once a month, on the twentieth day. Only an account
maintained at a domestic financial institution which is an
Automated Clearing House member may be so designated.
Investors desiring to participate in the Systematic Investment
Plan should call the Transfer Agent at _________ to obtain the
appropriate forms. The Systematic Investment Plan does not
assure a profit and does not protect against loss in declining
markets. Since the Systematic Investment Plan involves the
continuous investment in the Fund regardless of fluctuating
price levels of the Fund's shares, investors should consider
their financial ability to continue to purchase through
periods of low price levels. The Fund may modify or terminate
the Systematic Investment Plan at any time or charge a service
fee. No such fee currently is contemplated.
ADVERTISING THE FUND'S PERFORMANCE
From time to time the Fund advertises its "total
return" and "average annual total return". These figures are
based on historical earnings and are not intended to indicate
future performance. The "total return" shows what an
investment in shares of the Fund would have earned over a
specified period of time (for example, one and five year
periods or since inception) assuming the payment of the
redemption fee upon redemption and that all distributions and
dividends paid by the Fund were reinvested on the reinvestment
dates during the period. The "average annual total return" is
the annual rate required for the initial payment to grow to
the amount which would be received at the end of the specified
period; i.e., the average annual compound rate of return.
Total return and average annual total return may also be
presented without the effect of the redemption fee.
From time to time, reference may be made in
advertising or promotional material to performance
information, including mutual fund rankings, prepared by
Lipper Analytical Service, Inc. ("Lipper"), an independent
reporting service which monitors the performance of mutual
funds. In calculating the total return of the Fund's shares,
the Lipper analysis assumes investment of all dividends and
distributions paid but does not take into account applicable
sales loads. The Fund may also refer in advertisements or in
other promotional material to articles, comments listings and
columns in the financial press pertaining to the Fund's
performance.
GENERAL INFORMATION
The Fund is an open-end diversified portfolio of
Labrador Mutual Fund (the "Trust"). The Trust was organized as
a business trust under the laws of the state of Delaware in
1997. The Trust is authorized to issue an indefinite number of
shares of beneficial interest, par value $.001 per share.
Shares have non-cumulative voting rights, do not have
preemptive or subscription rights and are freely transferable.
Upon issuance and sale in accordance with the terms of this
Prospectus, each share will be fully paid and nonassessable.
Each share has one vote.
The Trust's Board has authority to create additional
portfolios of shares without shareholder approval. All
consideration received by the Trust for shares of one of the
portfolios and all assets in which such consideration is
invested will belong to that portfolio (subject only to the
rights of creditors of the Trust) and will be subject to the
liabilities related thereto. The assets attributable to, and
the expenses of, one portfolio are treated separately from
those of the other portfolios. Each portfolio is treated as a
separate entity for certain matters under the 1940 Act, and
for other purposes, and a shareholder of one portfolio is not
deemed to be a shareholder of any other portfolio. For certain
matters, Trust shareholders vote together as a group; as to
others, they vote separately by portfolio. By this Prospectus,
shares of the Fund are being offered.
In order to provide the initial capital for the Fund,
Labrador Investment Advisors, Inc. has purchased a total of
10,000 shares of the Fund at $10.00 per share for an
aggregate purchase price of $100,000. As long as Labrador
Investment Advisors, Inc. owns more than 25% of the Fund's
shares, it will be deemed to be in "control" of the Fund as
that term is defined in the 1940 Act.
Shareholder inquiries may be made by writing to the
Transfer Agent at American Data Services, Inc., 24 West Carver
Street, 2nd Floor, Huntington, New York 11743, or by calling
______________.
=======================================================
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LABRADOR MUTUAL FUND
- - -----------------------------------------------------
525 Vine Street, Suite 1330
Cincinnati, Ohio 45202
INVESTMENT MANAGER
Labrador Investment Advisors, Inc.
2344 Corte De La Jara
Pleasanton, California 94566
TRANSFER AGENT
American Data Services, Inc.
24 West Carver Street
Huntington, New York 11743
PORTFOLIO SECURITIES CUSTODIAN
Star Bank, N.A.
P.O. Box 1118
Cincinnati, Ohio 45201-1118
