Robert H. Solt
2610 Park Avenue
P. O. Box 209
Muscatine, Iowa 52761
(Name and address of agent for service)
|
Copies to:
Eric S. Purple
K&L Gates LLP
1601 K Street, NW
Washington, DC 20006
|
News for Pearl Shareholders
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1
|
|
Performance Review
|
2 - 3
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Investment Strategy
|
3 - 5
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Investment Management Team
|
5
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Pearl Total Return Fund Overview
|
6 - 7
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Pearl Aggressive Growth Fund Overview
|
8 - 9
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Understanding Your Expenses
|
10 - 11
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General Information
|
11 – 13
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Trustees and Officers
|
14 – 16
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Board Approval of Existing Advisory Agreement
|
17 – 20
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Report of Independent Registered Public Accounting Firm
|
21
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Pearl Total Return Fund Financial Statements
|
22 – 24
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Pearl Aggressive Growth Fund Financial Statements
|
25 – 27
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Notes to Financial Statements
|
28 – 30
|
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Pearl Total Return Fund Financial Highlights
|
31
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Pearl Aggressive Growth Fund Financial Highlights
|
32
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For the year ended December 31, 2010: | * All total returns include dividends reinvested. Pearl Funds’ total returns are net ― after deduction of all expenses of the Fund and all expenses of all the mutual funds in the Fund’s portfolio. In contrast, the total returns of indexes do not reflect any deduction of expenses (fees, transaction costs, etc.) Pearl Funds’ total returns do not reflect the deduction of taxes that a shareholder would pay on Fund dividends or on redemption of Fund shares. Likewise, the total returns of indexes do not reflect the deduction of taxes that an investor in stocks would pay on dividends or on sale of stocks. See page 13 for a description of each index. | |||
Pearl Total Return Fund |
+ 14.69%
|
|||
Pearl Aggressive Growth Fund
|
+ 18.71% | |||
Dow Jones Wilshire 5000 | + 17.70% | |||
MSCI World Index
|
+ 11.76% | |||
Standard & Poor’s 500 Index
|
+ 15.06% |
●
|
U.S. and global stock markets had moderate gains during 2010. Most stock markets experienced positive returns for the year despite volatile global markets through August before a prolonged rise began in September.
|
●
|
During the year 2010: U.S. growth-style stocks slightly outperformed U.S. value-style stocks. Morningstar’s U.S. Growth Index was up 17.11% while its U.S. Value Index was up 16.65%. U.S. small-capitalization stocks (up 28.37%) outperformed mid-cap stocks (up 24.92%) and greatly outperformed large-cap stocks (up 13.44%). Overall, foreign stocks underperformed U.S. stocks. Foreign small-to-mid-cap stocks generally outperformed foreign large-cap stocks. Foreign growth-style stocks outperformed foreign value-style stocks in 2010. We believe these combined trends helped both Pearl Total Return Fund and Pearl Aggressive Growth Fund, but both were slowed by foreign underperformance.
|
●
|
During 2010: Pearl Total Return Fund invested globally through mutual funds holding U.S. or foreign securities or both. A majority of this Fund’s investments were in mutual funds we believed to be relatively conservative and with below-average risk records. This Fund’s indirect investments (through the mutual funds in its portfolio; see page 4) had a slight emphasis on growth-style stocks plus large positions in value-style and blend-style stocks. This Fund emphasized exposure to U.S. stocks and small-cap and mid-cap stocks. Pearl Total Return Fund was 81% to 99% invested in equity mutual funds during 2010. This Fund usually invests 80% or more of its net assets in equity funds. The Fund held one high-quality bond fund, plus cash positions in money market funds. The Fund also had indirect investments (through its portfolio funds) in bonds and cash. We believe Pearl Total Return Fund’s partial defensive position (see pages 3-5) was helpful when stock markets declined but reduced the Fund’s performance when markets rose. Overall, we believe this partial defensive position decreased risk without significantly slowing performance. We believe the Fund’s performance was helped by its emphasis on U.S. mutual funds. See pages 6-7.
|
●
|
During 2010: Pearl Aggressive Growth Fund invested globally through mutual funds holding U.S. or foreign securities or both. This Fund’s indirect investments (through the mutual funds in its portfolio; see page 4) emphasized foreign stocks and emerging markets, and had a growth-stocks emphasis plus large positions in value-style and blend-style stocks. This Fund emphasized exposure to small-cap and mid-cap stocks and also had a large position in large-cap stocks. Pearl Aggressive Growth Fund’s investments tended to be
|
|
more volatile than Pearl Total Return Fund’s investments. We believe this additional risk and Pearl Aggressive Growth Fund’s fully-invested position helped its performance during rising market periods and reduced its performance during declining market periods. As its investment strategy requires, this Fund is always fully invested (95% or more) in equity mutual funds. We believe this Fund’s large indirect investments in select foreign markets slightly reduced its performance. See pages 8-9.
|
●
|
Both Funds made no-load purchases of mutual funds that would require many individual investors to pay a sales charge. We believe this reduced the cost of investing, and thus helped both Funds’ performance. See “Access to Many Funds” on page 4.
|
●
|
Both Pearl Funds did not pay any transaction costs – no commission, sales charge, or redemption fee. Both Funds made all their investments on a no-load basis. See “No-Load Investing” below. This helped both Funds control costs and helped their performance.
|
●
|
Pearl Management Company, the Funds’ Manager, continues to research, analyze, and evaluate data on many mutual funds, categories of funds, and global stock markets. We believe this work helps our allocation decisions and selection of mutual funds.
|
●
|
All Trustees, Officers, and employees of Pearl Funds and Pearl Management Company are Pearl Funds shareholders. This group, plus Pearl Management Company and its shareholders, owned more than $8.1 million of Pearl Funds shares at December 31, 2010. We believe this large investment gives all Pearl decision-makers and managers a shared interest with all our shareholders ― and a strong incentive to work for the Funds’ performance.
|
Total Return Fund | Aggressive Growth Fund | ||||
(as a percentage of total assets, rounded to nearest single decimal place) | |||||
Total Stocks | 84.9% | 94.3% | |||
U.S. Stocks | 51.3% | 35.4% | |||
Foreign Stocks | 33.6% | 58.9% | |||
Bonds | 2.8% | 0.3% | |||
Cash | 10.3% | 5.1% | |||
Other | 2.0% | 0.3% | |||
Total | 100.0% | 100.0% |
Pearl Total Return Fund: | Pearl Aggressive Growth Fund: | |||||
Fairholme Fund | 16.02% | John Hancock Funds Global Opps. Fund Class I | 19.77% | |||
Marshall Small Cap Growth Fund Class I | 14.65% | Matthews Pacific Tiger Fund Instl. Class | 17.66% | |||
Advantage Funds, Inc. Dreyfus Opportunistic Sm. Cap | 13.65% | Fidelity Leveraged Company Stock Fund | 16.08% | |||
Matthews Asia Pacific Fund Instl. Class | 10.52% | Lazard Emerging Markets Portfolio Instl. Shares | 14.39% | |||
Oakmark International Fund Class I | 10.10% | U.S. Global Investors Funds Eastern European Fund | 14.39% |
Did you know?
Current performance, daily prices (net asset value), and recent portfolio holdings of both
Pearl Funds are available at www.pearlfunds.com.
|
●
|
Through December 31, 2010, the value of an investment in Pearl Total Return Fund grew 18.08% during the last 5 years and grew 92.23% over the last 10 years (not annualized). The Fund outperformed all 3 comparison indexes during those 5 and 10 years.
|
Average Annual Total Returns for periods ended
December 31, 2010 with dividends reinvested:
|
1 year
|
3 years
|
5 years
|
10 years
|
Pearl Total Return Fund
|
+ 14.69%
|
- 3.93%
|
+ 3.38%
|
+ 6.75%
|
Dow Jones Wilshire 5000 Index
|
+ 17.70%
|
- 1.56%
|
+ 3.17%
|
+ 2.64%
|
MSCI World Index
|
+ 11.76%
|
- 4.85%
|
+ 2.43%
|
+ 2.31%
|
Standard & Poor’s 500 Index
|
+ 15.06%
|
- 2.86%
|
+ 2.29%
|
+ 1.41%
|
Did you know?
Your Pearl Investment Management Team — Rob Solt, Dave Stanley, and Rich Phillips —
together have over 52 years of experience in mutual funds investment management.
|
●
|
Pearl Total Return Fund had a + 14.69% total return for the year ended December 31, 2010.
|
●
|
During the 5 years through December 31, 2010, Pearl Total Return Fund was up 18.08% while the 3 comparison indexes were up 13.88% on average (not annualized). The Fund outperformed all 3 comparison indexes during that period: Dow Jones Wilshire 5000 up 16.89%, MSCI World up 12.76%, and S&P 500 up 11.99% (not annualized).
|
●
|
During the 10 years through December 31, 2010, Pearl Total Return Fund was up 92.23% while the 3 comparison indexes were up 23.48% on average (not annualized). The Fund outperformed all 3 comparison indexes during that period: Dow Jones Wilshire 5000 up 29.77%, MSCI World up 25.66%, and S&P 500 up 15.03% (not annualized).
|
●
|
Your Fund outperformed all 3 comparison indexes during the last 5 and 10 years ended December 31, 2010. We believe this outperformance is significant because (a) it was achieved during both rising and falling stock markets, and (b) usually less than 80% of Pearl Total Return Fund’s total assets were invested in stocks, as measured by the holdings of the mutual funds in the Fund’s portfolio. The 3 comparison indexes always consist of 100% stocks.
|
●
|
Your Fund’s annual total return was + 14.69% in 2010, + 26.05% in 2009, - 38.67% in 2008, + 10.37% in 2007, + 20.67% in 2006, + 11.55% in 2005, + 16.83% in 2004, + 35.73% in 2003, - 10.75% in 2002, and + 3.13% in 2001.
|
●
|
All Pearl Funds performance figures are after deduction of all expenses (all fees, transaction costs, etc.) — including all expenses of your Fund and all expenses of all the mutual funds in its portfolio. In contrast, the total returns of indexes do not reflect any expenses.
|
NAV (net asset value) per share: | $11.48 — up from $10.01 (after dividends) at Dec. 31, 2009 | |
Net Assets: | $84,131,609 — up from $78,581,535 at Dec. 31, 2009 |
Did you know?
Because of their large purchases, Pearl Funds are often able to purchase
Institutional class or “I” class shares of mutual funds.
Those special classes usually have lower expense ratios
than the share classes most investors would be able to purchase on their own.
Portfolio holdings of both Pearl Funds are posted on our Website each month:
www.pearlfunds.com/pearl_total_holdings.htm
www.pearlfunds.com/pearl_aggressive_holdings.htm
|
●
|
Through December 31, 2010, the value of an investment in Pearl Aggressive Growth Fund grew 25.68% during the last 5 years and grew 122.58% during the last 9½ years from this Fund’s inception (July 2, 2001) (not annualized). The Fund outperformed all 3 comparison indexes during all these periods ended December 31, 2010: 1 year, 5 years, and the 9½ years since this Fund’s inception.
|
Average Annual Total Returns for periods
ended December 31, 2010 with dividends
reinvested:
|
1 year
|
3 years
|
5 years
|
9½ years, since inception
|
Pearl Aggressive Growth Fund
|
+ 18.71%
|
- 4.75%
|
+ 4.68%
|
+ 8.79%
|
Dow Jones Wilshire 5000 Index
|
+ 17.70%
|
- 1.56%
|
+ 3.17%
|
+ 3.45%
|
MSCI World Index
|
+ 11.76%
|
- 4.85%
|
+ 2.43%
|
+ 3.64%
|
Standard & Poor’s 500 Index
|
+ 15.06%
|
- 2.86%
|
+ 2.29%
|
+ 2.23%
|
●
|
Pearl Aggressive Growth Fund had a + 18.71% total return for the year ended December 31, 2010, and outperformed all 3 comparison indexes.
|
●
|
During the 5 years through December 31, 2010, Pearl Aggressive Growth Fund was up 25.68% while the 3 comparison indexes were up 13.88% on average (not annualized). The Fund outperformed all 3 comparison indexes during that period: Dow Jones Wilshire 5000 up 16.89%, MSCI World up 12.76%, and S&P 500 up 11.99% (not annualized).
|
●
|
During the 9½ years from this Fund’s inception (July 2, 2001) through December 31, 2010, Pearl Aggressive Growth Fund was up 122.58% while the 3 comparison indexes were up 33.94% on average (not annualized). The Fund outperformed all 3 comparison indexes during that period: Dow Jones Wilshire 5000 up 38.07%, MSCI World up 40.43%, and S&P 500 up 23.33% (not annualized).
|
●
|
Pearl Aggressive Growth Fund outperformed the Standard & Poor’s 500 Index for each year, of the 7 years from this Fund’s inception (July 2, 2001) through 2007; underperformed it in 2008; and again outperformed it during 2009 and 2010.
|
●
|
Your Fund outperformed all 3 comparison indexes during all these periods through December 31, 2010: 1 year, 5 years, and the 9½ years since this Fund’s inception (July 2, 2001). We believe this outperformance is significant because (a) it was achieved during both rising and falling stock markets, and (b) usually less than 95% of this Fund’s total assets were invested in stocks, as measured by the holdings of the mutual funds in the Fund’s portfolio. The 3 comparison indexes always consist of 100% stocks. See page 4.
|
●
|
Your Fund’s annual total return was + 18.71% in 2010, + 54.34% in 2009, - 52.83% in 2008, + 19.11% in 2007, + 22.10% in 2006, + 18.01% in 2005, + 17.60% in 2004, + 53.36% in 2003, - 17.27% in 2002, and + 0.60% in the last 6 months of 2001.
|
●
|
All Pearl Funds performance figures are after deduction of all expenses (all fees, transaction costs, etc.) — including all expenses of your Fund and all expenses of all the mutual funds in its portfolio. In contrast, the total returns of indexes do not reflect any expenses.
|
NAV (net asset value) per share: | $12.88 — up from $10.85 at Dec. 31, 2009 | |
Net Assets: | $45,989,019 — up from $41,455,158 at Dec. 31, 2009 |
Did you know?
We are shareholders too!
All our Trustees, Officers, and employees, plus our Manager and all its shareholders,
are Pearl Funds shareholders.
Together we own more than $8.1 million of Pearl Funds shares at December 31, 2010.
We eat our own cooking!
When your Pearl Funds investment goes up or down, so does ours!
|
Account value
at the
beginning of the period ($)
|
Account value
at the
end of the period
($)
|
Expenses paid
during the period ($)
|
Fund’s annualized
expense ratio (%)
|
||||
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
|
Pearl Total Return Fund
|
1,000.00
|
1,000.00
|
1203.35
|
1,025.00
|
6.66
|
6.12
|
1.20%
|
Pearl Aggressive Growth Fund
|
1,000.00
|
1,000.00
|
1262.74
|
1,025.00
|
6.84
|
6.12
|
1.20%
|
Name and Age
at 12-31-10
|
Positions Held
with Both Funds
|
Date First Elected or Appointed to Office **
|
Principal Occupations
during Past 5 Years
|
Other
Public
Company
Directorships
|
Trustees who are “Interested Persons” of the Funds: *
|
||||
Robert H. Solt, 43
|
President, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Treasurer, and Trustee
|
Feb. 2001
|
Pearl Management Company: Director since Feb. 2001; Chairman, President, and Chief Executive Officer since May 2006; Chief Operating Officer, Chief Financial Officer, and Treasurer since June 2001; Chief Compliance Officer Sept. 2004 to April 2006; Executive Vice President and Secretary, June 2001 to April 2006.
|
None.
|
David M. Stanley, 82
|
Senior Counsel, Chief Legal Officer, Secretary, and Trustee
|
July 1972
|
Pearl Management Company: Director since July 1972; Senior Counsel and Secretary since May 2006; Chief Legal Officer since Sept. 2004; Chairman, President, and Chief Executive Officer, July 1972 to April 2006. Midwest Management Corporation (private investment company): Chairman and Director.
|
None.
|
Trustees who are not “Interested Persons” of the Funds:
|
||||
John W. Axel, 69
|
Trustee
|
Dec. 1974
|
Owner and Chief Executive Officer, Iowa Companies, Inc. (holding company). President, Environmental Services Inc. (waste hauling). President, Perfect Pallet Co. (pallet manufacturing). President, Earthcare Recycling, LLC.
|
None.
|
Douglas B. Coder, 74
|
Trustee
|
Dec. 1974
|
Owner, Coder Co. (purchase and sale of existing mortgages). Owner, DBC Realty (investments). Director, Chata Biosystems, Inc. (manufacturing pharmaceutical solutions).
|
Chairman and Director, Catalyst International, Inc. (software), 1996- 2004.
|
Dr. David N. DeJong, 47
|
Trustee
|
Dec. 1998
|
Vice Provost and Professor of Economics, University of Pittsburgh.
|
None.
|
David L. Evans, 69
|
Vice Chairman of the Board and Trustee
|
June 1977
|
Owner and Chief Executive Officer, Evanwood Corporation (consulting). Director, John Deere Receivables, Inc. (asset-backed securities). Chief Executive Officer, Rose Creek Ridge, LLC (farming).
|
None.
|
Dr. James P. Stein, 59
|
Chairman of the Board and Trustee
|
Oct. 2003
|
Chairman of Board of Directors and Director, Central Bancshares, Inc. Director, subsidiary banks of Central Bancshares, Inc. Doctor of Veterinary Medicine. Private investor.
|
None.
|
Name and Age
at 12-31-10
|
Positions Held
with Both Funds
|
Date First
Elected or Appointed to Office ** |
Principal Occupations
during Past 5 Years
|
Other
Public
Company
Directorships
|
Other Officers of Pearl Mutual Funds:
|
||||
Karen M. Brookhart, 39
|
Portfolio Management Associate
|
March 2002
|
Pearl Management Company: Portfolio Management Associate since Sept. 2004; employee since Sept. 2001.
|
None.
|
Peggy A. Cherrier, 58
|
Compliance Associate,
Transfer Agent Representative, and
Assistant Secretary
|
March 2001
|
Pearl Management Company: Compliance Associate since Sept. 2004; Transfer Agent Representative since March 2009; Assistant Secretary since Feb. 2001; employee since Aug. 2000.
|
None.
|
Christopher S. Ingstad, 30
|
Shareholder Services Director
|
Aug. 2006
|
Pearl Management Company: Shareholder Services Director since Aug. 2006. Allsteel (office furniture): Financial Analyst, March 2005 to Aug. 2006; Credit Analyst, April 2004 to March 2005.
|
None.
|
Renata R. LaMar, 46
|
Controller and Assistant Treasurer
|
March 2001
|
Pearl Management Company: Controller since Sept. 2004; Assistant Treasurer since Feb. 2001; employee since Aug. 2000.
|
None.
|
Richard R. Phillips, 57
|
Vice President and Assistant Secretary
|
Sept. 2005
|
Pearl Management Company: Vice President since Aug. 2005; Chief Compliance Officer and Assistant Secretary since May 2006; Consultant Nov. 2004 to July 2005. Reynolds Engineering (industrial equipment): Vice President and Secretary since 1998; General Counsel (1998 to 2009). Phillips Law Office: Owner, April 1998 to Aug. 2006.
|
None.
|
Anthony J. Toohill, 34
|
Chief Compliance Officer
|
Aug. 2004
|
Pearl Mutual Funds: Chief Compliance Officer since Aug. 2004. Stinnett & Associates (corporate accounting services), Senior Associate, Sept. 2004 to Dec. 2007.
|
None.
|
Did you know?
Pearl Management Company, the Funds’ Manager, receives compensation only from Pearl Funds.
Pearl Management Company does not manage any other funds or accounts
except Pearl Management Company’s own investment assets.
We believe this single focus on Pearl Funds helps your Management
to avoid conflicts of interest and give Pearl shareholders the top-priority service you deserve.
We give you prompt, personal service. When you call us, a real, live person will take your call.
You can talk with one of our Officers or Portfolio Managers.
You will get a straight answer.
If we don’t know the answer, we will find it and get back to you fast.
Your calls, e-mails, and faxes come directly into our office, to help us respond to you quickly.
We handle all inquiries, shareholder accounts, and transactions within our office in Muscatine, Iowa.
Because you and your concerns are important to us, we do this work ourselves
instead of hiring it out to some big, faceless company that puts you on hold.
|
Did you know?
Pearl Funds offer you an Automatic Investment Plan that allows you to make regular monthly
investments by electronic transfer from your bank account in the amount you choose.
To begin this plan, the minimum investment is $1,000; then the minimum monthly investment is $100.
For information, call toll-free 866-747-9030
or go to www.pearlfunds.com/application_information.htm
Systematic investing does not ensure a profit.
----------------------------------------------------------------------------------
We avoid transaction costs.
Pearl Aggressive Growth Fund has never paid ― and Pearl Total Return Fund
has not paid since 1998 ― any sales charge, commission, or redemption fee.
----------------------------------------------------------------------------------
Current performance, daily prices (net asset value), and recent portfolio holdings
of both Pearl Funds are available at www.pearlfunds.com.
|
Member of
Deloitte Touche Tohmatsu
|
PEARL TOTAL RETURN FUND
|
||||||||
STATEMENT OF NET ASSETS
December 31, 2010
|
||||||||
ASSETS:
|
||||||||
INVESTMENTS in mutual funds,
|
% of
|
|||||||
all unaffiliated issuers:
|
|
Shares
|
net
|
Market
|
||||
|
owned
|
assets
|
value
|
|||||
Equity mutual funds:
|
|
|||||||
Advantage Funds, Inc. Dreyfus Opportunistic Sm. Cap Fund (DSCVX)
|
|
380,772
|
13.65%
|
$11,484,077
|
||||
Fairholme Fund (FAIRX)
|
|
378,762
|
16.02%
|
13,476,350
|
||||
Marshall Small Cap Growth Fund Class I (MSGIX)
|
|
643,549
|
14.65%
|
12,323,966
|
||||
Matthews Asia Dividend Fund Institutional Class (MIPIX)
|
|
345,897
|
5.89%
|
4,956,698
|
||||
Matthews Asia Pacific Fund Institutional Class (MIAPX)
|
|
492,201
|
10.52%
|
8,849,772
|
||||
Matthews Asian Growth and Income Fund Institutional Class (MICSX)
|
|
174,672
|
3.75%
|
3,151,091
|
||||
Oakmark International Fund Class I (OAKIX)
|
|
437,608
|
10.10%
|
8,493,970
|
||||
T. Rowe Price New America Growth Fund (PRWAX)
|
|
49,968
|
1.96%
|
1,648,433
|
||||
Thornburg Global Opportunities Fund Class I (THOIX)
|
|
208,010
|
3.78%
|
3,180,468
|
||||
Thornburg International Growth Fund Class I (TINGX)
|
|
147,625
|
2.45%
|
2,057,893
|
||||
Weitz Funds Partners III Opportunity Fund (WPOPX)
|
|
613,762
|
8.49%
|
7,144,192
|
||||
Wells Fargo Advantage Growth Fund Institutional Class (SGRNX)
|
|
107,331
|
4.27%
|
3,595,593
|
||||
TOTAL EQUITY MUTUAL FUNDS (cost $65,154,838
|
|
|||||||
including reinvested dividends)
|
|
95.53%
|
80,362,503
|
|||||
Income mutual funds:
|
||||||||
PIMCO Total Return Fund, Institutional Class (cost $889,031,
|
|
|||||||
including reinvested dividends)
|
|
85,819
|
1.11%
|
931,133
|
||||
|
||||||||
TOTAL INCOME MUTUAL FUNDS
|
|
1.11%
|
931,133
|
|||||
Money market mutual funds:
|
||||||||
Vanguard Money Market Prime Fund (cost $47,540, including
|
|
|||||||
reinvested dividends)
|
|
47,540
|
0.06%
|
47,540
|
||||
TOTAL MONEY MARKET FUNDS
|
|
0.06%
|
47,540
|
|||||
TOTAL INVESTMENTS (cost $66,091,409, including
|
||||||||
reinvested dividends)
|
|
96.70%
|
81,341,176
|
|||||
Cash and cash equivalents through custodian bank
|
|
3.30%
|
2,792,667
|
|||||
Receivable for Fund shares sold
|
|
0.00%
|
0
|
|||||
Accrued interest
|
|
|
0.00%
|
49
|
||||
TOTAL ASSETS
|
100.00%
|
84,133,892
|
||||||
LIABILITIES:
|
||||||||
Dividend payable
|
|
0.00%
|
0
|
|||||
Payable for shares redeemed
|
|
0.00%
|
2,283
|
|||||
Investment manager's fees payable (Note 5)
|
|
0.00%
|
0
|
|||||
Payable to manager for expenses of Fund (Note 5)
|
|
0.00%
|
0
|
|||||
Other liabilities
|
|
0.00%
|
0
|
|||||
TOTAL LIABILITIES
|
0.00%
|
2,283
|
||||||
NET ASSETS, applicable to 7,327,811 outstanding shares of
|
||||||||
beneficial interest (no par value); unlimited shares authorized
|
|
100.00%
|
$84,131,609
|
|||||
NET ASSET VALUE -- OFFERING AND
|
|
|||||||
REDEMPTION PRICE PER SHARE
|
|
$11.48
|
||||||
NET ASSETS CONSIST OF:
|
||||||||
Capital
|
|
$93,705,050
|
||||||
Accumulated net realized losses
|
|
(24,823,208)
|
||||||
Net unrealized appreciation in value of investments
|
|
15,249,767
|
||||||
TOTAL NET ASSETS
|
|
$84,131,609
|
||||||
See notes to financial statements.
|
PEARL TOTAL RETURN FUND
|
||
STATEMENT OF OPERATIONS
|
||
Year Ended
|
||
December 31, 2010
|
||
INVESTMENT INCOME (LOSS):
|
||
INCOME:
|
||
Dividends, ordinary income
|
|
$731,882
|
Interest income
|
|
1,244
|
TOTAL INVESTMENT INCOME
|
|
733,126
|
|
||
EXPENSES, CURRENT YEAR (NOTE 5):
|
|
|
Investment management and administrative services fees (Note 5)
|
|
588,634
|
Associations
|
|
7,100
|
Auditors' fees
|
|
49,075
|
Chief Compliance Officer compensation
|
|
24,566
|
Chief Compliance Officer expenses
|
|
595
|
Custodian fees
|
|
7,370
|
Data processing
|
|
34,554
|
Trustees' fees (Note 7)
|
|
79,053
|
Registration fees
|
|
29,727
|
Insurance
|
|
24,591
|
Legal fees
|
|
75,233
|
Meetings
|
|
7,541
|
Other
|
|
19,000
|
TOTAL EXPENSES BEFORE REIMBURSEMENT
|
|
947,039
|
|
||
Expenses reimbursed by investment manager (Note 5)
|
|
(10,982)
|
|
||
TOTAL EXPENSES
|
|
936,057
|
|
||
NET INVESTMENT (LOSS)
|
|
(202,931)
|
|
||
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS:
|
|
|
|
||
Net realized gains on investments (securities of unaffiliated issuers)
|
|
4,414,557
|
|
||
Change in net unrealized appreciation on investments
|
|
6,799,941
|
|
||
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS
|
|
11,214,498
|
|
||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
|
$11,011,567
|
See notes to financial statements.
|
PEARL TOTAL RETURN FUND
|
||||
STATEMENT OF CHANGES IN NET ASSETS
|
||||
Year Ended
|
Year Ended
|
|||
INCREASE IN NET ASSETS:
|
December 31, 2010
|
December 31, 2009
|
||
FROM OPERATIONS:
|
||||
Net investment income (loss)
|
|
($202,931)
|
$574,736
|
|
|
||||
Net realized gains (losses) on investments
|
|
4,414,557
|
(12,934,273)
|
|
|
||||
Change in net unrealized appreciation on investments
|
|
6,799,941
|
29,148,823
|
|
|
||||
NET INCREASE IN NET ASSETS RESULTING
|
|
|||
FROM OPERATIONS
|
|
11,011,567
|
16,789,286
|
|
|
||||
FROM DIVIDENDS TO SHAREHOLDERS (Note 8):
|
|
|||
|
||||
Dividends from net investment income
|
|
0
|
(574,736)
|
|
Dividends from net realized gains
|
|
0
|
0
|
|
|
||||
TOTAL DIVIDENDS
|
|
0
|
(574,736)
|
|
FROM CAPITAL SHARES TRANSACTIONS (2010 and 2009 respectively):
|
|
|||
|
||||
Proceeds received for shares sold (159,207 and 140,788 shares)
|
|
1,701,391
|
1,229,916
|
|
|
||||
Net asset value of shares (0 and 55,272 shares) issued
|
|
|||
in reinvestment of dividends
|
|
0
|
553,272
|
|
|
||||
Paid on redemption of shares (682,741 and 673,387 shares),
|
||||
including exchanges into Pearl Aggressive Growth Fund
|
|
(7,162,884)
|
(6,017,848)
|
|
|
||||
(DECREASE ) IN NET ASSETS FROM CAPITAL
|
|
|||
SHARES TRANSACTIONS:
|
|
|||
(net decrease of 523,534 and 477,327 shares)
|
|
(5,461,493)
|
(4,234,660)
|
|
|
||||
TOTAL INCREASE IN NET ASSETS
|
|
5,550,074
|
11,979,890
|
|
|
||||
NET ASSETS:
|
|
|||
|
||||
Beginning of period
|
|
78,581,535
|
66,601,645
|
|
|
||||
End of period (including accumulated undistributed net investment
|
|
|||
income (loss), $0 and $0, respectively)
|
|
$84,131,609
|
$78,581,535
|
|
See notes to financial statements.
|
||||
PEARL AGGRESSIVE GROWTH FUND
|
||||||||
STATEMENT OF NET ASSETS
December 31, 2010
|
||||||||
ASSETS:
|
||||||||
INVESTMENTS in mutual funds,
|
% of
|
|||||||
all unaffiliated issuers:
|
Shares
|
net
|
Market
|
|||||
owned
|
assets
|
value
|
||||||
Equity mutual funds:
|
||||||||
Fidelity Leveraged Company Stock Fund (FLVCX)
|
|
260,163
|
16.08%
|
7,393,830
|
||||
Hotchkis and Wiley Small Cap Value Fund Class I (HWSIX)
|
|
118,571
|
10.85%
|
4,989,487
|
||||
John Hancock Funds Global Opportunities Fund Class I (JGPIX)
|
|
490,325
|
19.77%
|
9,090,631
|
||||
Lazard Emerging Markets Portfolio Institutional Shares (LZEMX)
|
|
303,826
|
14.39%
|
6,617,340
|
||||
Matthews Pacific Tiger Fund Institutional Class (MIPTX)
|
|
346,448
|
17.66%
|
8,120,739
|
||||
Morgan Stanley Instl. Fund Trust Mid Cap Growth Portfolio Class P (MACGX)
|
|
72,240
|
5.69%
|
2,615,071
|
||||
US Global Investors Funds Eastern European Fund (EUROX)
|
|
612,336
|
14.39%
|
6,619,350
|
||||
TOTAL EQUITY MUTUAL FUNDS (cost $38,794,619,
|
|
|||||||
including reinvested dividends)
|
|
98.83%
|
45,446,448
|
|||||
|
||||||||
Money market mutual fund:
|
|
|||||||
Vanguard Money Market Prime Fund (cost $9,796, including
|
|
|||||||
reinvested dividends)
|
|
9,796
|
0.02%
|
9,796
|
||||
|
||||||||
TOTAL MONEY MARKET FUNDS
|
|
0.02%
|
9,796
|
|||||
|
||||||||
TOTAL INVESTMENTS (cost $38,804,415, including
|
|
|||||||
reinvested dividends)
|
|
98.85%
|
45,456,244
|
|||||
Cash and cash equivalents through custodian bank
|
|
1.15%
|
532,765
|
|||||
Receivable for Fund shares sold
|
|
0.00%
|
0
|
|||||
Accrued interest
|
|
|
0.00%
|
10
|
||||
TOTAL ASSETS
|
|
100.00%
|
45,989,019
|
|||||
LIABILITIES:
|
||||||||
Dividend payable
|
|
0.00%
|
0
|
|||||
Payable for shares redeemed
|
|
0.00%
|
0
|
|||||
Investment manager's fees payable (Note 5)
|
|
0.00%
|
0
|
|||||
Payable to manager for expenses of Fund (Note 5)
|
|
0.00%
|
0
|
|||||
Other liabilities
|
|
0.00%
|
0
|
|||||
TOTAL LIABILITIES
|
|
0.00%
|
0
|
|||||
NET ASSETS, applicable to 3,569,870 outstanding shares of
|
||||||||
beneficial interest (no par value); unlimited shares authorized
|
|
100.00%
|
$45,989,019
|
|||||
NET ASSET VALUE -- OFFERING AND
|
||||||||
REDEMPTION PRICE PER SHARE
|
|
$12.88
|
||||||
NET ASSETS CONSIST OF:
|
||||||||
Capital
|
|
$51,151,538
|
||||||
Accumulated net realized losses
|
|
(11,814,348)
|
||||||
Net unrealized appreciation in value of investments
|
|
6,651,829
|
||||||
TOTAL NET ASSETS
|
|
$45,989,019
|
||||||
See notes to financial statements.
|
PEARL AGGRESSIVE GROWTH FUND
|
|||
STATEMENT OF OPERATIONS
|
|||
Year Ended
|
|||
December 31, 2010
|
|||
INVESTMENT INCOME (LOSS):
|
|||
Income:
|
|||
Dividends, ordinary income
|
|
$440,662
|
|
Interest income
|
|
77
|
|
TOTAL INVESTMENT INCOME
|
|
440,739
|
|
|
|||
Expenses, current year (Note 5):
|
|
||
Investment management and
|
|
||
administrative services fees (Note 5)
|
|
326,431
|
|
Associations
|
|
3,893
|
|
Auditors' fees
|
|
25,598
|
|
Chief Compliance Officer compensation
|
|
13,134
|
|
Chief Compliance Officer expenses
|
|
310
|
|
Custodian fees
|
|
3,922
|
|
Data processing
|
|
18,791
|
|
Trustees' fees (Note 7)
|
|
41,947
|
|
Registration fees
|
|
24,479
|
|
Insurance
|
|
12,973
|
|
Legal fees
|
|
39,603
|
|
Meetings
|
|
4,060
|
|
Other
|
|
10,279
|
|
TOTAL EXPENSES BEFORE REIMBURSEMENT
|
|
525,420
|
|
|
|||
Expenses reimbursed by investment manager (Note 5)
|
|
(26,369)
|
|
|
|||
TOTAL EXPENSES
|
|
499,051
|
|
|
|||
NET INVESTMENT LOSS
|
|
(58,312)
|
|
|
|||
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS:
|
|
||
|
|||
Net realized gains on investments (securities of unaffiliated issuers)
|
|
3,032,961
|
|
Change in net unrealized appreciation on investments
|
|
4,514,742
|
|
|
|||
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS
|
|
7,547,703
|
|
|
|||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
|
$7,489,391
|
|
See notes to financial statements.
|
PEARL AGGRESSIVE GROWTH FUND
|
||||
STATEMENTS OF CHANGES IN NET ASSETS
|
||||
Year Ended
|
Year Ended
|
|||
INCREASE (DECREASE) IN NET ASSETS:
|
December 31, 2010
|
December 31, 2009
|
||
FROM OPERATIONS:
|
||||
Net investment (loss)
|
|
($58,312)
|
($29,343)
|
|
|
||||
Net realized gains (losses) on investments
|
|
3,032,961
|
(13,691,636)
|
|
Change in net unrealized appreciation on investments
|
|
4,514,742
|
28,031,947
|
|
|
||||
NET INCREASE IN NET ASSETS RESULTING
|
|
|||
FROM OPERATIONS
|
|
7,489,391
|
14,310,968
|
|
|
||||
FROM DIVIDENDS TO SHAREHOLDERS (Note 8):
|
|
|||
|
||||
Dividends from net investment income
|
|
0
|
0
|
|
Dividends from net realized gains
|
|
0
|
0
|
|
|
||||
TOTAL DIVIDENDS
|
|
0
|
0
|
|
|
||||
FROM CAPITAL SHARES TRANSACTIONS (2010 and 2009 respectively):
|
|
|||
|
||||
Proceeds received for shares sold (137,103 and 130,008 shares)
|
|
1,606,801
|
1,118,155
|
|
|
||||
Net asset value of shares (0 and 0 shares) issued
|
|
|||
in reinvestment of dividends
|
|
0
|
0
|
|
|
||||
Paid on redemption of shares (389,510 and 814,508 shares),
|
||||
including exchanges into Pearl Total Return Fund
|
|
(4,562,331)
|
(5,653,636)
|
|
|
||||
(DECREASE) IN NET ASSETS FROM CAPITAL
|
|
|||
SHARES TRANSACTIONS:
|
|
|||
(net decrease of 252,407 and 684,500 shares)
|
|
(2,955,530)
|
(4,535,481)
|
|
|
||||
TOTAL INCREASE IN NET ASSETS
|
|
4,533,861
|
9,775,487
|
|
|
||||
NET ASSETS:
|
|
|||
|
||||
Beginning of period
|
|
41,455,158
|
31,679,671
|
|
End of period (including accumulated undistributed net investment
|
|
|||
income (loss), $0 and $0, respectively)
|
|
$45,989,019
|
$41,455,158
|
|
See notes to financial statements.
|
||||
1.
|
ORGANIZATION. Pearl Total Return Fund (“PTRF”) and Pearl Aggressive Growth Fund (“PAGF”) (collectively, the “Funds”) are each a series of Pearl Mutual Funds, a Massachusetts business trust (the “Trust”) registered under the Investment Company Act of 1940, and are diversified, no-load, open-end management investment companies (mutual funds).
|
The Funds’ investments are limited to: (1) shares of mutual funds (open-end funds) that the Funds can buy no-load (with no applicable sales load or redemption fee); (2) shares of “low-load” mutual funds (open-end funds) that the Funds can buy with a sales load or redemption fee that together do not exceed 2% of the purchase price (however, the Funds expect that substantially all of their investments in mutual funds will be on a no-load basis); and (3) cash and cash equivalents.
|
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES. The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates. (a) Investments in shares of other mutual funds are valued at the net asset value as reported by each mutual fund as of 4:00 p.m. Eastern (U.S.) on days the New York Stock Exchange is open. (b) Securities transactions are accounted for on the trade date. (c) Dividend income and the Funds' dividends to their shareholders are recorded on the ex-dividend date. (d) Interest income is recorded on the accrual basis. (e) Gains or losses on sales of investments and unrealized appreciation or depreciation of investments are determined on the basis of average cost. (f) All highly liquid investments purchased with an original maturity of three months or less are considered cash equivalents. Cash and cash equivalents consisted of cash deposits and short-term investments at the dates of these statements.
|
3.
|
INCOME TAXES. Each Fund qualifies and intends to continue to qualify as a regulated investment company by complying with the requirements under Subchapter M of the Internal Revenue Code of 1986 as amended (the “Code”). These requirements include distributing substantially all of its net investment income and net realized gains to shareholders so that the Funds will not be required to pay any federal or state income taxes. Therefore, the Funds make no provision for income taxes.
As of December 31, 2010, PTRF had a total capital loss carry-forward in the amount of $24,823,208 available to offset future capital gains. There is a $11,888,935 capital loss carry-forward from 2008 that may be used to offset future capital gains through December 31, 2016. There is an additional capital loss carry-forward in the amount of $12,934,273 from 2009 that may be used to offset future capital gains through December 31, 2017. In 2010 PTRF used $4,414,557 of the capital loss carry-forward set to expire in 2016 to offset 2010 capital gains. At December 31, 2010, PTRF had no post-October capital losses.
|
For Federal tax purposes PTRF’s cost was $66,091,409, including the amounts of all reinvested dividends, as of December 31, 2010; the aggregate gross unrealized appreciation was $15,249,767; and the aggregate gross unrealized depreciation was $0; resulting in net unrealized appreciation of $15,249,767. Certain reclassifications are made to the net assets components. For the year ended December 31, 2010, undistributed net investment income for PTRF was increased by $202,931 and capital was decreased by the same amount. These adjustments are primarily due to differences between book and tax treatments of income. The results of operations and net assets were not affected by these adjustments. PTRF has no undistributed ordinary income or capital gains at December 31, 2010. There is a total of $24,823,208 in accumulated net realized capital losses at December 31, 2010.
As of December 31, 2010, PAGF had a capital loss carry-forward in the amount of $11,814,348 available to offset future capital gains. There is a capital loss carry-forward in the amount of $11,814,348 from 2009 that may be used to offset future capital gains through December 31, 2017. In 2010 PAGF used the entire $1,155,673 capital loss carry-forward set to expire in 2016 and $1,877,288 of the capital loss carry-forward set to expire in 2017 to offset 2010 capital gains. At December 31, 2010, PAGF had no post-October capital losses.
|
For Federal tax purposes PAGF’s cost was $38,804,415, including the amounts of all reinvested dividends, as of December 31, 2010; the aggregate gross unrealized appreciation was $6,651,829; and the aggregate gross unrealized depreciation was $0; resulting in net unrealized appreciation of $6,651,829. Certain reclassifications are made to the net assets components. For the year ended December 31, 2010, undistributed net investment income for PAGF was increased by $58,312 and capital was decreased by the same amount. These adjustments are primarily due to differences between book and tax treatments of income. The results of operations and net assets were not affected by these adjustments. PAGF has no undistributed ordinary income or capital gains at December 31, 2010. There is a total of $11,814,348 in accumulated net realized capital losses at December 31, 2010.
|
|
The Funds are subject to accounting standards that establish a minimum threshold for recognizing, and a system for measuring, the benefits of a tax position taken or expected to be taken in a tax return. As of December 31, 2010, Management of the Funds has evaluated the application of these standards to the Funds, and has determined that no provision for income tax is required in the Funds’ financial statements for uncertain tax positions. The Funds have not recorded any liability for material unrecognized tax benefits as of December 31, 2010. It is the Funds’ policy to recognize accrued interest and penalties related to uncertain benefits in income taxes as appropriate. The Funds recognized no interest or penalties related to uncertain tax positions in 2010.
The Funds file U.S., Iowa, and Massachusetts tax returns. No tax returns are currently under examination. The statute of limitations on the Funds' tax returns remains open for the years ended December 31, 2007 through December 31, 2010.
|
|
4.
|
INVESTMENT TRANSACTIONS. PTRF's cost of purchases and proceeds of sales of investment securities (excluding money market mutual funds) were $41,375,782 and $47,843,251, respectively, for 2010. Purchases include reinvestments of dividends.
PAGF's cost of purchases and proceeds of sales of investment securities (excluding money market mutual funds) were $19,281,523 and $22,574,272, respectively, for 2010. Purchases include reinvestments of dividends.
|
5.
|
INVESTMENT MANAGEMENT AND ADMINISTRATIVE FEES. Pearl Management Company (the “Manager”) has supervisory responsibility for the general management and investment of the Funds’ assets, including the decisions to buy and sell securities. The Manager provides personnel and office space for the Funds and pays all expenses of marketing the Funds’ shares. The Manager's combined fees are at the annual rate of 0.81% of each Fund’s average net assets up to $30,000,000 (computed at the beginning of each month); 0.72% of each Fund’s net assets in excess of $30,000,000 and up to $100,000,000; and 0.48% of each Fund’s net assets in excess of $100,000,000.
The Funds’ expenses are limited by contract with the Manager. Through December 31, 2009, each Fund’s total operating expenses in any year (including the Manager’s fees but excluding interest, taxes, expenses for purchase or sale of investments, and extraordinary expenses) could not exceed 0.98% of the Fund’s average net assets up to $100,000,000 (computed at the beginning of each month) and 0.78% of the Fund’s average net assets in excess of $100,000,000. The Manager pays or reimburses all the Funds’ operating expenses beyond this limit.
|
Effective January 1, 2010, the Funds’ Board of Trustees approved an increase to the expense limit of both Funds to 1.20% of each Fund’s average net assets. At the same time, Pearl Management Company reduced its administrative services fee by 5 basis points, or 0.05%, to help keep the Funds’ expenses down.
The Manager can recoup the expenses listed below only if the Funds’ total operating expenses, including the recoupment, do not exceed the expense limit for the year when recoupment occurs. Also, any recoupment of expenses reimbursed for 2009 or any prior year will be allowed only if the Fund’s total operating expenses for the year when recoupment occurs, including the recoupment, do not exceed 0.98% of the Fund’s average net assets.
|
|
For 2010, expenses totaling $10,982 were reimbursed by the Manager beyond the expense limit for PTRF. Under the expense reimbursement agreement with PTRF, at December 31, 2010 the Manager may recoup a net total of $591,292 of reimbursed expenses from PTRF in the future, subject to the annual expense limit and a five year period in which the Manager has the right to recover such reimbursed expenses. The net total expenses that may be recouped by the Manager for the past five years are: $130,815 for 2006, $100,501 for 2007, $146,305 for 2008, $202,689 for 2009, and $10,982 for 2010.
|
For 2010, expenses totaling $26,369 were reimbursed by the Manager beyond the expense limit for PAGF. Under the expense reimbursement agreement with PAGF, at December 31, 2010 the Manager may recoup a net total of $400,343 of reimbursed expenses from PAGF in the future, subject to the annual expense limit and a five year period in which the Manager has the right to recover such reimbursed expenses. The net total expenses that may be recouped by the Manager for the past five years are: $79,553 for 2006, $76,425 for 2007, $99,027 for 2008, $118,969 for 2009, and $26,369 for 2010.
|
||
6.
|
OWNERSHIP OF FUND SHARES. The Manager and its shareholders, plus the Trustees, Officers, and employees of Pearl Mutual Funds and of the Manager, as a group owned 5.68% of PTRF's outstanding shares, with a net asset value of $4,775,158, as of December 31, 2010.
The Manager and its shareholders, plus the Trustees, Officers, and employees of Pearl Mutual Funds and of the Manager, as a group owned 7.33% of PAGF's outstanding shares, with a net asset value of $3,369,110, as of December 31, 2010.
|
|
7.
|
COMPENSATION. The Officers and two Trustees (Robert H. Solt and David M. Stanley) of the Funds are also Officers of the Manager; they are paid by the Manager and receive no compensation from the Funds. The Funds’ five Trustees who are not affiliated with the Manager are John W. Axel, Douglas B. Coder, Dr. David N. DeJong, David L. Evans, and Dr. James P. Stein. The Trustees not affiliated with the Manager received fees from the Funds of $121,000 for 2010 and $108,000 for 2009.
|
|
8.
|
DIVIDENDS. For 2010, PTRF paid no income dividend as PTRF had a net investment loss. On January 29, 2010, PTRF paid an income dividend of $.0737 per share from 2009 net investment income to shareholders of record on December 31, 2009. On January 31, 2009, PTRF paid an income dividend of $.1326 per share from 2008 net investment income to shareholders of record on December 31, 2008. For shareholders reinvesting dividends, each reinvestment date was the same as the record date.
For 2010, PAGF paid no income dividend as PAGF had a net investment loss. For 2009, PAGF paid no income dividend as PAGF had a net investment loss. On January 31, 2009, PAGF paid an income dividend of $.0498 per share from 2008 net investment income to shareholders of record on December 31, 2008. For shareholders reinvesting dividends, each reinvestment date was the same as the record date.
|
|
9.
|
FAIR VALUE MEASUREMENTS. The Funds adopted Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures. In accordance with ASC 820, fair value is defined as the price that the Funds would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market of the investment. ASC 820 established a three-tier hierarchy to maximize the use of the observable market data and minimize the use of unobservable inputs and to establish classification of the fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including the technique or pricing model used to measure fair value and the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability, developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability, developed based on the best information available in the circumstances.
The three-tier hierarchy of inputs is summarized in the three broad Levels listed below:
|
|
●
|
Level 1 - quoted prices in active markets for identical investments
|
|
●
|
Level 2 - other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risks, etc.)
|
|
●
|
Level 3 - significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)
|
|
The valuation techniques used by the Funds to measure fair value during the twelve months ended December 31, 2010 maximized the use of observable inputs and minimized the use of unobservable inputs.
|
The following is a summary of the inputs used as of December 31, 2010 in valuing the Funds’ investments carried at fair value:
|
|||||
VALUATION INPUTS
|
PTRF
|
PAGF
|
|||
Level 1 - Quoted Prices (A)
|
$81,341,176
|
$45,456,244
|
|||
Level 2 - Other Significant Observable Inputs
|
--
|
--
|
|||
Level 3 - Significant Unobservable Inputs
|
--
|
--
|
|||
TOTAL
|
$81,341,176
|
$45,456,244
|
|||
(A)
|
See Statements of Net Assets for further description of the Funds’ investments at December 31, 2010.
|
||||
10.
|
The Funds have assessed subsequent events through the date the financial statements were available to be issued.
|
PEARL TOTAL RETURN FUND
|
FINANCIAL HIGHLIGHTS
|
SELECTED PER-SHARE DATA
|
Year ended December 31, | |||||||||||||||||||
derived from the financial
statements:
|
2010
|
2009
|
2008
|
2007
|
2006
|
2005
|
2004
|
2003
|
2002
|
2001
|
||||||||||
|
||||||||||||||||||||
Net asset value, beginning of period
|
$10.01
|
$8.00
|
$13.26
|
$15.35
|
$14.13
|
$14.02
|
$12.69
|
|
$9.50
|
$10.75
|
$10.54
|
|||||||||
|
||||||||||||||||||||
Income from Investment Operations
|
||||||||||||||||||||
Net investment income
|
(0.03)
|
0.07
|
0.13
|
0.44
|
0.34
|
0.23
|
0.28
|
|
0.20
|
0.09
|
0.12
|
|||||||||
|
||||||||||||||||||||
Net realized and unrealized
gains (losses) on investments
|
1.50
|
2.01
|
(5.26)
|
1.15
|
2.58
|
1.39
|
1.85
|
|
3.19
|
(1.25)
|
0.21
|
|||||||||
Total investment operations
|
1.47
|
2.08
|
(5.13)
|
1.59
|
2.92
|
1.62
|
2.13
|
|
3.39
|
(1.16)
|
0.33
|
|||||||||
Less Dividends (Note 7)
|
||||||||||||||||||||
|
||||||||||||||||||||
Dividends from net investment income
|
None
|
(0.07)
|
(0.13)
|
(0.44)
|
(0.34)
|
(0.23)
|
(0.28)
|
|
(0.20)
|
(0.09)
|
(0.12)
|
|||||||||
|
||||||||||||||||||||
Dividends from net realized capital gains on investments
|
None
|
None
|
None
|
(3.24)
|
(1.36)
|
(1.28)
|
(0.52)
|
|
None
|
None
|
None
|
|||||||||
Total dividends
|
0.00
|
(0.07)
|
(0.13)
|
(3.68)
|
(1.70)
|
(1.51)
|
(0.80)
|
|
(0.20)
|
(0.09)
|
(0.12)
|
|||||||||
|
||||||||||||||||||||
Net asset value, end of period
|
$11.48
|
$10.01
|
$8.00
|
$13.26
|
$15.35
|
$14.13
|
$14.02
|
|
$12.69
|
$9.50
|
$10.75
|
|||||||||
Total Return
|
14.69%
|
26.05%
|
(38.67%)
|
10.37%
|
20.67%
|
11.55%
|
16.83%
|
35.73%
|
(10.75%)
|
3.13%
|
||||||||||
RATIOS AND SUPPLEMENTAL DATA
|
||||||||||||||||||||
|
||||||||||||||||||||
Net assets, end of period
(thousands of dollars)
|
$84,132
|
$78,582
|
$66,602
|
$121,204
|
$106,712
|
$88,159
|
$74,058
|
|
$56,352
|
$39,928
|
$46,807
|
|||||||||
|
||||||||||||||||||||
Ratio of net expenses to average net assets
|
1.20%
|
0.97%
|
0.98%
|
0.94%
|
0.98%
|
0.98%
|
0.98%
|
0.98%
|
0.97%
|
0.94%
|
||||||||||
|
||||||||||||||||||||
Ratio of gross expenses to average net assets
|
1.21%
|
1.26%
|
1.14%
|
1.03%
|
1.10%
|
1.16%
|
1.14%
|
1.17%
|
1.26%
|
1.29%
|
||||||||||
|
||||||||||||||||||||
Ratio of net investment
income to average net assets |
-0.26%
|
0.82%
|
1.12%
|
2.64%
|
2.20%
|
1.64%
|
2.25%
|
1.97%
|
0.90%
|
0.95%
|
||||||||||
|
||||||||||||||||||||
Ratio of total investment income less gross expenses to average net assets
|
-0.27%
|
0.53%
|
0.97%
|
2.56%
|
2.07%
|
1.45%
|
2.08%
|
1.75%
|
0.61%
|
0.61%
|
||||||||||
|
||||||||||||||||||||
Portfolio turnover (excluding
money market mutual funds) |
58%
|
82%
|
50%
|
67%
|
15%
|
24%
|
34%
|
34%
|
55%
|
50%
|
PEARL AGGRESSIVE GROWTH FUND | ||||||||||||||||||||||
FINANCIAL HIGHLIGHTS | ||||||||||||||||||||||
SELECTED PER-SHARE DATA
|
Period July 2, 2001
|
|||||||||||||||||||||
derived from the
|
Year ended December 31,
|
(inception) through
|
||||||||||||||||||||
financial statements:
|
2010
|
2009
|
2008
|
2007
|
2006
|
2005
|
2004
|
2003
|
2002
|
December 31,2001
|
||||||||||||
Net asset value,
|
||||||||||||||||||||||
beginning of period
|
$10.85
|
$7.03
|
$15.01
|
|
$14.48
|
$13.50
|
$13.51
|
$12.56
|
$8.19
|
$9.90
|
$10.00
|
|||||||||||
Income from Investment
|
||||||||||||||||||||||
Operations
|
||||||||||||||||||||||
Net investment income (loss)
|
(0.02)
|
(0.01)
|
0.05
|
|
0.21
|
0.35
|
0.30
|
0.15
|
(0.03)
|
(0.07)
|
0.06
|
|||||||||||
Net realized and unrealized
|
||||||||||||||||||||||
gains (losses) on investments
|
2.05
|
3.83
|
(7.98)
|
|
2.56
|
2.63
|
2.13
|
2.06
|
4.40
|
(1.64)
|
0.00
|
|||||||||||
Total investment operations
|
2.03
|
3.82
|
(7.93)
|
|
2.77
|
2.98
|
2.43
|
2.21
|
4.37
|
(1.71)
|
0.06
|
|||||||||||
Less Dividends (Note 7)
|
||||||||||||||||||||||
Dividends from net
|
||||||||||||||||||||||
investment income
|
None
|
None
|
(0.05)
|
|
(0.21)
|
(0.35)
|
(0.30)
|
(0.15)
|
None
|
None
|
(0.06)
|
|||||||||||
Dividends from net
|
||||||||||||||||||||||
realized capital gains
|
||||||||||||||||||||||
on investments
|
None
|
None
|
None
|
|
(2.02)
|
(1.65)
|
(2.14)
|
(1.11)
|
None
|
None
|
(0.10)
|
|||||||||||
Total dividends
|
0.00
|
0.00
|
(0.05)
|
|
(2.24)
|
(2.00)
|
(2.44)
|
(1.26)
|
None
|
None
|
(0.16)
|
|||||||||||
Net asset value,
|
||||||||||||||||||||||
end of period
|
$12.88
|
$10.85
|
$7.03
|
|
$15.01
|
$14.48
|
$13.50
|
$13.51
|
$12.56
|
$8.19
|
$9.90
|
|||||||||||
Total Return
|
18.71%
|
54.34%
|
(52.83%)
|
|
19.11%
|
22.10%
|
18.01%
|
17.60%
|
|
53.36%
|
(17.27%)
|
0.60%
|
||||||||||
RATIOS AND SUPPLEMENTAL DATA
|
||||||||||||||||||||||
Net assets, end of period
|
||||||||||||||||||||||
(thousands of dollars)
|
$45,989
|
$41,455
|
$31,680
|
|
$67,944
|
$47,872
|
$34,370
|
$26,382
|
$21,056
|
$14,605
|
$15,846
|
|||||||||||
Ratio of net expenses to
|
||||||||||||||||||||||
average net assets
|
1.20%
|
0.96%
|
0.98%
|
0.97%
|
0.98%
|
0.98%
|
0.98%
|
0.98%
|
0.98%
|
0.96%
|
*
|
|||||||||||
Ratio of gross expenses to
|
||||||||||||||||||||||
average net assets
|
1.25%
|
1.31%
|
1.16%
|
1.10%
|
1.16%
|
1.24%
|
1.20%
|
1.22%
|
1.31%
|
2.07%
|
*
|
|||||||||||
Ratio of net investment income (loss)
|
||||||||||||||||||||||
to average net assets
|
-0.14%
|
-0.09%
|
0.41%
|
1.44%
|
2.45%
|
2.21%
|
1.17%
|
(0.29%)
|
(0.82%)
|
1.48%
|
*
|
|||||||||||
Ratio of total investment income (loss) less
|
||||||||||||||||||||||
gross expenses to average net assets
|
-0.20%
|
-0.44%
|
0.23%
|
1.31%
|
2.26%
|
1.94%
|
0.93%
|
(0.55%)
|
(1.15%)
|
0.60%
|
*
|
|||||||||||
Portfolio turnover (excluding
|
||||||||||||||||||||||
money market mutual funds)
|
47%
|
57%
|
36%
|
38%
|
24%
|
44%
|
29%
|
47%
|
56%
|
13%
|
*
|
|||||||||||
See notes to financial statements.
|
(a)
|
(1)
|
The Code (as referenced in Item 2 above) is hereby incorporated by reference to the exhibit captioned “Pearl Mutual Funds Code of Ethics for Principal Executive and Senior Financial Officers” that was filed with the Registrant’s Form N-CSR on March 8, 2010.
|
|
(2)
|
Certification pursuant to Rule 30a-2 under the Investment Company Act of 1940 (17 CFR 270.30a-2), attached hereto as Exhibit (a)(2)(i)
|
||
(b)
|
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, attached hereto as Exhibit (b)
|
By:
|
/s/ Robert H. Solt | |
Robert H. Solt
|
||
President, Chief Executive Officer,
Chief Operating Officer and Treasurer
|
||
Date:
|
March 4, 2011
|
By:
|
/s/ Robert H. Solt
|
|
Robert H. Solt
|
||
President, Chief Executive Officer,
Chief Operating Officer and Treasurer
|
||
Date:
|
March 4, 2011
|
|
I, Robert H. Solt, certify that:
|
||
1. I have reviewed this report on Form N-CSR of Pearl Mutual Funds;
|
||
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
||
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
|
||
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
|
||
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
|
||
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
||
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
|
||
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
||
5. I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
||
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
|
||
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
/s/ Robert H. Solt | |
Robert H. Solt | |||
President, Chief Executive Officer, | |||
Chief Operating Officer and Treasurer |
Dated: March 4, 2011 |
|
/s/ Robert H. Solt |
Robert H. Solt
|
President, Chief Executive Officer, |
Chief Operating Officer and Treasurer |
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