Courtesy of the
Quad City Times,
copyright 2003
Muscatine’s Pearl Funds
quietly hits the mark
By Craig
Cooper
Pearl Funds are not available in brokerages
and the funds are only registered in 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, Iowa, 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 once was 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 negative-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,
eighth 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.
