LABRADOR MUTUAL FUND
ANNUAL REPORT
Dear Fellow Shareholders,
I would like to thank the Shareholders of the Labrador Mutual Fund for their
participation in 1999. There is some very good news. Since fund- inception,
(September 24, 1998), we have made a substantial amount of money for the
shareholders. I am pleased to report that the Fund has retained every
Shareholder since inception. Having very satisfied customers that maintain their
participation in the Fund is something that pleases me as President of the Fund.
It tells me that you think we are doing an excellent job. Speaking for everyone
here at the Fund, we hope to provide you with above-average returns for a fund
in the growth-and-income category in fiscal year 2000. Our total return since
inception through December 31, 1999 was 43.80% compared to 40.91% for the S&P
500. Our average annualized rate of return since inception as of December 31,
1999 was 33.16% compared to 31.04% for the S&P 500. For 1999 we returned 22.80%
compared to 19.53% for the S&P 500.
Future Opportunities
It is my opinion that the finest socially responsible companies will produce
high-quality goods and render services that are necessary no matter what changes
occur in the economic, social, or political environment. I believe that
excellent companies exist and will continue to prosper because of their internal
strengths with every type of change that is a threat or opportunity in the
marketplace.
Constant desire to outperform the market.
The shares of Labrador Mutual Fund are owned by our friends, our family members,
and of course, the Fund Management. Therefore, we must outperform our
growth-and-income mutual fund peers. If we do, we will make more money for you,
our dear Shareholder. This is a journey we are taking together. Shareholders and
Management all own a stake in the success of Labrador Mutual Fund.
How does Fund Management discover companies to buy for the portfolio?
First we apply the screens described in our Prospectus. Then hard work,
determination and the desire to make our Shareholders a lot of money focuses our
attention. That is the only encouragement we need to locate the best investment
possibilities. We look at prior financial performance such as previous revenues,
future earnings prospects, and the financial stability of the company as rated
by their lenders.
How can Shareholders help Management increase the likelihood of the Shareholder
making more money through future investment in the Labrador Mutual Fund?
Labrador Mutual Fund operates most efficiently when a steady stream of money
comes into the Fund and stays put. This constant (monthly) Shareholder
investment allows the Portfolio Manager to take advantage of perceived "price
inefficiencies" in security valuations in little steps every day. Because we
hold our portfolio turnover very low, we are dependent upon new money everyday
to shop for bargains in the marketplace. Management believes the money-
management technique commonly termed "dollar-cost-averaging" to be very
effective.
In an effort to help the Shareholders stay informed about the companies in which
Labrador Mutual Fund invests the Shareholder's money, the Portfolio Manager has
listed each company along with a brief description of its relevant business
practices on the Web site in the "Portfolio" section. We invite you to read
about these companies so you can see what Management believes makes the
composition and diversification of the Fund so special. Also on our Web site, we
have listed "Frequently Asked Questions" as well as a "Glossary" section. These
sections along with others can assist in keeping you informed about your
investment in the Labrador Mutual Fund. The Labrador Mutual Fund Web site can be
found at labradorfund.com. We invite your feedback regarding the Fund.
Thank you for your investment,
Peter Schuh
[email protected]
February 29, 2000
<PAGE>
LABRADOR MUTUAL FUND
STATEMENT OF NET ASSETS
As of December 31, 1999
Number Market
of Shares Value
Common Stocks - 98.74%
- ----------------------
Banks - 4.43%
Firstar 1,500 $31,687
Wells Fargo & Company 1,000 40,437
Computers/Technology - 34.14%
Cisco Systems Inc.* 1,200 128,550
Intel Corporation 800 65,850
International Business Machine 400 43,150
Microsoft Corporation * 800 93,400
America Online, Inc. 100 7,588
Sun Microsystems * 2,800 216,825
Drugs & Healthcare - 13.35%
Abbott Laboratories 600 21,788
Johnson & Johnson 400 37,300
Merck & Company Inc. 600 40,312
Pfizer Inc. 1,800 58,500
Schering-Plough Corporation 1,400 59,325
Financial Services - 3.31%
Automatic Data Processing Inc. 1,000 53,875
Food & Beverage - 3.70%
Coca Cola 800 46,600
Conagra Inc. 600 13,612
Insurance - 3.32%
American International Group Inc. 500 54,063
Machinery & Metal Processing - 2.49%
Illinois Tool Works 600 40,538
Marketing Service - 4.92%
Omnicom Group Inc. 800 80,000
Medical Equipment - 3.14%
Medtronic Inc. 1,400 51,012
Other Consumer Goods - 15.34%
General Electric Company 400 61,900
Gillette Company 400 16,475
Hewlett-Packard Company 1,000 113,750
Proctor & Gamble Company 400 43,825
Xerox Corporation 600 13,613
Retail - 4.14%
Walgreens Company 2,300 67,275
Telecommunications - 6.45%
Lucent Technology 1,400 105,000
-------
Total Common Stocks
(Cost $1,049,878) 1,606,250
---------
Money Market - 1.79%
- --------------------
Star Treasury Money Market
(Cost $29,172) 29,172
-------
Total Investments
(Cost $1,079,050) 1,635,422
Other Assets and Liabilities, Net - (0.53%) (8,602)
- ------------------------------------------- -------
Net Assets - 100% $1,626,820
==========
*Non-income producing security.
The accompanying notes are an integral part of these financial statements.
<PAGE>
LABRADOR MUTUAL FUND
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 1999
ASSETS:
Investments, at value (cost $1,079,050) $ 1,635,422
Receivables:
Dividends 1,237
Interest 131
Expense Reimbursement by Manager 7,836
Other assets 1,736
------
Total assets 1,646,362
LIABILITIES:
Accrued 12B-1 Fees 638
Accrued Administration Fees 5,243
Accrued Auditing Fees 1,498
Accrued Custodian Fees 489
Accrued Fund Accounting Fees 3,209
Accrued Insurance 2,300
Accrued Legal Fees 550
Accrued Advisor Fees 2,318
Accrued Postage 10
Accrued Report Printing 791
Accrued Transfer Agent Fees 2,496
-----
Total liabilities 19,542
------
NET ASSETS $ 1,626,820
============
Net assets consist of:
Paid-in capital 1,129,018
Accumulated undistributed net realized loss on investments (58,570)
Net unrealized appreciation on
investments 556,372
-------
Net assets $ 1,626,820
============
Shares of capital stock
outstanding (no par value,
unlimited shares authorized) 113,101
Net asset value, offering
and redemption, price per share $ 14.38
The accompanying notes are an integral part of these financial statements.
<PAGE>
LABRADOR MUTUAL FUND
STATEMENT OF OPERATIONS
For the year ended December 31, 1999
INVESTMENT INCOME:
Interest $ 996
Dividends 10,867
-----
Total investment income 11,863
-----
EXPENSES:
12B-1 Expense 3,633
Administration Expense 4,194
Auditing Expense 748
Custodian Expense 5,142
Fund Accounting Expense 17,997
Insurance Expense 2,300
Legal Expense 500
Management Expense 22,075
Postage Expense 99
Pricing Expense 1,498
Report Printing Expense 799
Miscellaneous Expense 3,648
Transfer Agent Expense 14,996
-----
Total expenses 77,629
------
Less: Expense reimbursement from Manager 42,678
Total net expenses 34,951
NET INVESTMENT LOSS (23,088)
-------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized change in investment (33,042)
Net change in unrealized appreciation on investments 364,115
-------
Net gain on investments 331,073
-------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 307,985
=======
The accompanying notes are an integral part of these financial statements.
<PAGE>
LABRADOR MUTUAL FUND
STATEMENT OF CHANGES IN NET ASSETS
For the year ended December 31, 1999
Ended Ended
Dec. 31, 1999 Dec. 31, 1998(a)
INCREASE IN NET ASSETS
Operations:
Net investment loss $ (23,088) $(2,439)
Net change in realized
appreciation on investments (33,042) ---
Net Change in unrealized appreciation
on investments 364,115 192,257
-------
Increase in net assets from operations 307,985 189,818
-------
Capital share transactions:
Proceeds from shares sold 40,114 1,157,565
Cost of shares repurchased (68,500) (162)
---------
Net increase in net assets
from capital share transactions (28,386) 1,157,403
---------
TOTAL INCREASE IN NET ASSETS 279,599 1,347,221
---------
NET ASSETS:
Beginning of period 1,347,221 ---
End of period 1,626,820 $ 1,347,221
===========
OTHER INFORMATION:
Share transactions:
Sold 3,313 115,039
Repurchased (5,237) (15)
-------
NET INCREASE IN SHARES OUTSTANDING 115,025
=======
(a) For the period September 24, 1998 (inception date of fund)
to December 31, 1998.
The accompanying notes are an integral part of these financial statements.
<PAGE>
LABRADOR MUTUAL FUND
FINANCIAL HIGHLIGHTS
Ended Ended
Dec. 31, Dec. 31,
1999 1998(a)
------ -------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 11.71 $ 10.00
Loss from investment operations:
Net investment income loss (0.20) (0.02)
Net realized and unrealized
gain on investments 2.87 1.73
---- ----
Total from investment operations 2.67 1.71
Net asset value, end of period $ 14.38 $ 11.71
=====
TOTAL RETURN 26.70% 17.10%(c)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $ 1,626,820 $ 1,347,221
Ratio of expenses to average
net assets:
Before reimbursement of
expenses by Manager (b) 5.33% 5.78%
After reimbursement of
expenses by Manager (b) 2.40% 2.40%
Ratio of net investment income
to average net assets:
Before reimbursement of
expenses by Manager (b) (4.55%) (4.80)%
After reimbursement of
expenses by Manager (b) (1.59%) (0.81)%
Portfolio turnover 9.56% 0.0%
(a) For the period September 24, 1998 (inception date of fund) to
December 31, 1998.
(b) Annualized.
(c) For the period ended December 31, 1998 total return was revised to reflect
actual total return.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Note 1 - General
The Labrador Mutual Fund, (the "Trust") which has a similarly named portfolio
called the Labrador Mutual Fund ("the Fund") is a mutual fund that invests
principally in securities of companies which, in the opinion of the Fund's
management, conduct their business in a socially responsible manner. Capital
growth and current income are the primary and secondary investment objectives.
Investment advisory and management services are provided to the Fund by Labrador
Investment Advisers, Inc., (the "Manager").
Note 2 - Significant Accounting Policies
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements. These policies are in
conformity with generally accepted accounting principles.
A) Security Valuations
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 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. The
Fund's net asset value per share is determined by dividing the sum of the market
value of all securities and all other assets of the Fund, less liabilities of
the Fund, by the total number of the Fund's shares outstanding.
B) Securities Transactions and Investment Income
Securities transactions are recorded on a trade basis. The cost of securities
sold is determined using the first-in-first-out method. Interest income is
recorded on the accrual basis and dividend income is recorded on the ex-dividend
date.
C) Dividends and Distributions to Shareholders
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. However, to the extent that net realized gains of the
Fund could be reduced by any capital loss carry-overs, such gains will not be
distributed.
D) Federal Income Taxes
The Fund has elected to be treated as a "regulated investment company" under
Sub-chapter M of the Internal Revenue Code so long as such qualification is in
the best interest of its shareholders. Such qualifications relevies 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 4.0% Federal excise tax on undistributed income. Accordingly, no
provisions for federal income taxes have been made in the accompanying financial
statements. The Fund intends to utilize provisions of the federal income tax
laws which allows it to carry a realized capital loss forward for eight years
following the year of the loss and offset such losses against any future
realized capital gains.
Net realized gains or losses may differ for financial and tax reporting purposes
for the Fund primarily as a result of losses from wash sales which are not
recognized for tax purposes until the corresponding shares are sold.
E) Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles 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 revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Note 3 - Agreements and Other Transactions with Affiliates
Under a plan adopted by the Fund's Board of trustees pursant to Rule 12b-1 under
the 1940 Act (the "Plan"), the Fund pays Unified Management Corporation a
shareholder servicing and distribution fee at the annual rate of 0.25% of the
average daily net assets of the Fund. Such fee will be used in its entirety by
Unified Management Corporation 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 Organization 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 Unified Management Corporation under the Plan 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 Unified Management Corporation under
the Plan.
The Board of Trustees provides broad supervision over the affairs of the Fund.
Pursuant to a Management Agreement between the Fund and the Manager and subject
to the authority of the Board of Trustees, the Manager manages the Fund's
investments and is responsible for the overall management of the business
affairs of the Fund. The Manager continually conducts investment research and
supervision for the Fund and is responsible for the purchase or sale of
portfolio instruments, for which it receives an annual fee from the Fund. The
Fund is authorized to pay the Manager a monthly fee equal to an annual average
rate of 1.50% of its average daily net assets, minus the amount by which the
Fund's total expenses (excluding brokerage, taxes, interest and extraordinary
expenses) exceeds 2.40%. The Manager has undertaken, until such time as it gives
investors 60 days notice to the contrary, to waive it's investment advisory fee
to the extent Total Fund Operating Expenses (excluding brokerage, taxes,
interest and extraordinary expenses) exceed 2.40%. At December 31, 1999 the
Manager owed the Fund $7,836 in net reimbursement.
Note 4- Investment Transactions
For the year ended December 31, 1999, purchases and sales of of investment
securities, excluding short-term investments, were $295,996.44 and $136,951.63
respectively.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Note 5- Unrealized Appreciation (Depreciation)
At December 31, 1999, the composition of gross unrealized appreciation
(depreciation) of investment securities is as follows:
Appreciation Depreciation Net Appreciation
The Labrador Mutual Fund $ 612,955 ($56,583) $ 556,372
Note 6- Shares of Beneficial Interest
The Fund is authorized to issue an unlimited number of shares of beneficial
interest with no par value. At December 31, 1999, Labrador Investment Adviser
and its affiliates owned 4,763.500 shares of the Fund.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and Board of Trustees of
Labrador Mutual Fund:
I have audited the statement of assets and liabilities of Labrador Mutual Fund
(the Fund), including the Funds statement of net assets, as of December 31, 1999
and the related statement of operations for the year then ended, the statements
of changes in net assets for the year then ended and for the period September
24, 1998 (inception date of Fund) to December 31, 1998, and the financial
highlights for each of the periods presented. These financial statements and
financial highlights are the responsibility of the Funds' management. My
responsibility is to express and opinion on these financial statements and
financial highlights based on the audit.
The audits were conducted in accordance with auditing standards generally
accepted in the United States. Those standards require that I plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial high lights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. These procedures included confirmation of securities
owned as of December 31, 1999, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. I believe that my audits provide a reasonable basis for the
opinion.
In my opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Labrador Mutual Fund as of December 31, 1999, the results of its operations for
the year then ended, the changes in its net assets for the year then ended and
for the period September 24, 1998 (inception date of Fund) to December 31, 1998,
and its financial highlights for each of the periods presented, in conformity
with accounting principles generally accepted in the United States.
Marie Jones CPA,
Saratoga, California
February 29, 2000
