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Courtesy of the Muscatine Journal, copyright 2003

Local Fund
Exceeding Expectations
Craig Cooper Lee News Network

MUSCATINE, Iowa - Pearl Funds are not available in brokerages and the funds are registered in only 15 key states and the District of Columbia.

The fund managers aren't unreachable figures in New York who have offices with a view and a summer place in the Hamptons. Pearl Fund managers summer in Muscatine and winter there, too.

And if you call for information about Pearl Funds, you are likely to get a manager involved in decision making about funds investment.

Based in Muscatine with a name that recognizes the history of the community - Muscatine was once a huge producer of pearl buttons made from Mississippi River clam shells - Pearl Funds is a small fund company that has produced big results.

For the first nine months of 2003, the Pearl Aggressive Growth Fund and the older, more conservative Pearl Total Return Fund out-performed the Standard & Poor's 500 index.

Pearl Aggressive Growth Fund had a 34.19 percent total return this year through Sept. 30. Pearl Total Return Fund had a 21.47 percent total return for the same period. The S&P 500 Index, including the reinvestment of dividends, was 14.72 percent for the same period.

For the past 12 months, the Pearl Aggressive Growth Fund had a total return of 41.44 percent. In the unstable market since the fund's inception on July 2, 2001, the gain has been 11.66 percent compared to the S&P 500 Index of -15.61 percent over the same period.

Meanwhile, the Total Return Fund gained 13.56 percent during the three years and nine months through Sept. 30, compared to the -28.42 percent of the S&P 500 Index.

Pearl Funds has been in existence since 1972 but prior to 2001, the investments were sold only on a private basis. The inception of the Pearl Aggressive Growth Fund in 2001 is when the company went public.

The funds have a combined $70.3 million in assets, a modest figure compared to the major mutual fund companies, but the performance has attracted notice.

Lipper, a Reuters global company that has analyzed and provided information about mutual funds for 30 years, rated the Pearl Total Return Fund 20th of 289 in its classification last year, 8th of 214 for the past three-year period and 10th of 165 over the past 10 years.

Morningstar, a major fund rating service, has given the Pearl Total Return Fund its highest rating - five stars - for all periods.

The Aggressive Growth Fund isn't rated yet for all periods because of its short history. The fund's inception was July 2001.

"The thing that has carried our funds in this bear market has been the small caps. All of the NASDAQ tech stocks and larger growth stocks have been hurt in the last three years,'' explained Robert Solt, executive vice president of Pearl Mutual Funds. "What we had noticed over the last three years was that small to medium cap value managers had done extremely well.

"We've been able to define what areas are doing well and go out and find the best managers in those sectors.

"Other funds picking stocks are trying their best to pick the best companies. We're looking to pick the best investment managers. We can find managers who have done well in their mutual fund companies.''

The funds are marketed directly and sold only through Pearl Funds in Muscatine. Solt said there are advantages and disadvantages to the approach.

One disadvantage is that growth in sales are limited by the lack of visibility compared to the big mutual funds. Solt said Pearl has fewer than 500 customers.

"If you don't go through brokers, it limits the people who see our funds. The positive side is that it's a less expensive way to go for us and for the investor,'' he said. "When you go through a broker-dealer, there is some type of commission that takes some of the money from the investor.

"What we're doing is not the usual way to do it. Most funds have a broker, and they want to go through somebody big. Part of the reason we don't do that is that we didn't want to be the tenth fund on list of funds a broker is promoting to clients.''

Solt said the company uses its Internet presence (www.pearlfunds.com), the media and referrals to draw potential clients. The performance of the funds has also helped Pearl Mutual Funds expand its presence.

"By self distributing our funds, we can pick the states we want to be registered in. We're in the largest population states,'' Solt explained.

Solt said the Pearl Total Return fund is for investors looking for long-term consistency without the volatility of more aggressive funds. He said total return funds typically are favored by older workers looking toward their retirement.

The Pearl Aggressive Growth fund attracts investors more willing to take the risk and potentially take some wild rides in the value of the fund.

Pearl Mutual Funds also offers IRA and retirement savings products for employees of not-for-profit organizations.

Solt said the fact that investments are sold only through the company make Pearl more accessible to investors.

"Unlike the big funds, if you are a customer and call us 10 times, you are going to get me nine of those times. It's one of the main benefits of being small,'' he said. "You are generally not going to talk to an investment manager with a big fund.

"I don't know that we ever want to get to 10,000 clients. As exciting as that might be, we would lose some of the personal contact we have now.''

Pearl Funds has been in existence since 1972 but prior to the inception of the Pearl Aggressive Growth Fund in July 2001, the investments were sold only on a private basis.

Craig Cooper can be contacted at 563-383-2360 or ccooper@qctimes.com

More information related to the newspaper article above

Pearl Mutual Funds are described in a Prospectus which contains more complete information, including fees and expenses.  Any investor should read the Prospectus carefully before investing or sending money.  Anyone can request a Prospectus by calling toll-free 866-747-9030, or can read and download it on the Prospectus page of this Website.  Any reprint of the article above is not authorized for distribution unless preceded or accompanied by a current Prospectus.

 Shares of both Pearl Funds are available to persons residing in 15 states (including Iowa and Illinois) and the District of Columbia.  The article above (and anything on this Website) is not an offer of or a solicitation of an offer to buy either Fund, nor shall either Fund be offered or sold to any person, in any jurisdiction in which the offer, solicitation, purchase, or sale would be unlawful under its securities law.  The Funds are offered only to residents of the United States.

Pearl Mutual Funds and Pearl Management Company, the Funds’ Manager, cannot guarantee the accuracy or completeness of any statement or numerical data in the article above.  Any discussion of investment strategy, shareholder services, and other items noted in the article represents the views of Management at the time of this article and are subject to change without notice.

Pearl Total Return Fund seeks long-term total return for its investors.  Pearl Aggressive Growth Fund seeks long-term aggressive growth of capital.  Each is a fund of funds that invests in shares of other registered investment companies. 

Both Pearl Funds are no-load.  This means an investor does not pay a commission, sales charge, or redemption fee. 

Both Pearl Funds do not impose any 12b-1 fee.  However, some of the mutual funds in which the Funds may invest may impose a 12b-1 fee. 

Limits on expenses.  Pearl Management Company, the Funds’ Manager, has contractually agreed to reimburse each Pearl Fund for all ordinary operating expenses (including management and administrative fees) exceeding these expense ratios: 0.98% of a Fund's average net assets up to $100 million and 0.78% in excess of $100 million.  The Manager’s reimbursement of expenses that exceed the expense limit lowers the expense ratio and increases the overall return to investors. 

Management of Pearl Mutual Funds and Pearl Management Company includes David M. Stanley, President; Robert H. Solt, Executive Vice President; Kevin J. Burns, Vice President of Investment Management; and Christopher A. Hoffman, Vice President. 

Pearl Total Return Fund’s average annual total returns for years ended Sept. 30, 2003 were:

1 year 29.35%, 5 years 9.32%, and 10 years 9.09%. 

Pearl Aggressive Growth Fund’s average annual total returns for years ended September 30, 2003 were: 1 year 41.44%, and 2 years 12.64%. 

Total return means total growth of the investment, with all dividends and distributions (including capital gains) reinvested.

Performance data represent past performance and do not guarantee future results.  Investment return and principal value of an investment in each Pearl Fund will fluctuate, so that an investor’s shares in the Fund, when redeemed, may be worth more or less than their original cost.  Performance changes over time and may be materially different by the time the above information is read.  For recent performance information, go to the Performance pages on this Website or call toll-free 866-747-9030. 

All investments involve risk.  Even though Pearl Total Return Fund and Pearl Aggressive Growth Fund each invest in many mutual funds, that investment strategy cannot eliminate risk.

From July 1, 1972 through July 1, 2001, Pearl Total Return Fund’s shares were not registered under the Securities Act of 1933 and only private sales were made.  The Fund began offering its shares to the public pursuant to an effective registration statement on July 2, 2001.

Description of Indexes:  The Wilshire 5000 Index is an unmanaged index that is market-capitalization weighted, includes all publicly-traded U.S. common stocks with readily available price data, and is generally representative of the performance of the average dollar invested in U.S. common stocks.  The MSCI World Index is an unmanaged index that is market-capitalization weighted and is generally representative of the performance of the global (including U.S. and international) market for common stocks.  The Value Line (Geometric) Index is an unmanaged index that equally weights a broad range of publicly-traded U.S. common stocks included in The Value Line Investment Survey and is generally representative of the performance of the average U.S. common stock.  The Standard & Poor’s (S&P) 500 Index is an unmanaged index of 500 stocks that is market-capitalization weighted and is generally representative of the performance of larger companies in the U.S.  The All Equity Funds Average (Lipper) is an unmanaged and unweighted average of the total return performance of all equity-oriented mutual funds as classified and calculated by Lipper Inc.  The All Long-Term Taxable Funds Average (Lipper) is an unmanaged and unweighted average of the total return performance of all long-term taxable mutual funds as classified and calculated by Lipper Inc. 

You cannot invest directly in an index.

The Standard & Poor’s (S&P) 500 Index is an unmanaged index of 500 stocks that is market-capitalization weighted and is generally representative of the performance of larger companies in the U.S.  You cannot invest directly in an index.

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