Labrador Mutual Fund · N-30D · For 12/31/98

Filed On 3/3/99   ·   SEC File 811-08503   ·   Accession Number 1048984-99-1

Annual or Semi-Annual Report Mailed to Shareholders   ·   Rule 30d-1
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: N-30D       Annual or Semi-Annual Report Mailed to                12±    51K 
                          Shareholders                                           

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LABRADOR MUTUAL FUND                                                            
ANNUAL REPORT                                                                   

Fellow Shareholders,                                                            

I would like to thank the Shareholders of the Labrador Mutual Fund for their    
participation in 1998.  There is some very good news.  Since fund-inception,    
(September 24, 1998), we have made a substantial amount of money.  The          
records show that every Shareholder was able to make a positive gain on his     
or her investment in 1998.  I am pleased to report that the Fund has retained   
every Shareholder.  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 1999.       
Our total return since inception through December 31, 1998 was 17.10%.  Our     
annualized rate of return for 1998 was 63.69%.                                  

Future Opportunities                                                            

I feel uneasy predicting anything, especially the future.  The usual macro      
threat or opportunity that dominates fund management is the possible change     
in long-term interest rates.  Most people who run businesses do try to look     
out to the future because they have to plan for contingencies.  Interest        
rates do get a lot of attention because they affect a company's ability to      
borrow to finance capital expansion, which in turn affects  many other things   
in the overall economy including consumer spending and employment rates.        
Some would say that interest rate prediction is incredibly difficult, often     
futile, and possibly unnecessary.  This difficulty and futility is witnessed    
by the large number of professional economists who are often wrong in their     
own predictions.  When they are wrong they often hide their mistake(s) by       
quickly predicting again.  This would be considered a "deviating-amplifying     
loop" in which the predictor predicts again because he or she feels they have   
to, because they were wrong, and not because a new prediction is actually       
warranted by the presentation of some "new significant data".  The              
consistently incorrect prediction followed by more incorrect predictions is     
termed "under-fitting by over-prediction".  The old saying of, "If              
predicting, predict often", applies to this ill-fated scenario.                 

We here at the Fund would rather not participate in such predictions.  We       
will take the view that if we select the correct companies to include in the    
portfolio, that their internal experts will make whatever micro-adjustments     
are necessary in an attempt to neutralize whatever threat the change in rates   
means to them.  There is only a limited amount of time.  We can either put      
our efforts into predicting interest rates, or into picking the high-quality    
companies that might actually outperform the market averages.  We will          
concentrate Labrador Mutual Fund's energies towards picking the high-quality    
companies that outperform the market averages!                                  

We have a portfolio approach here at the Fund where equity investment           
percentage levels inside of Labrador Mutual Fund should not be affected in      
any large way by changes in the interest rates.  We believe it is necessary     
to stay nearly 100% invested in common stock of companies with their            
headquarters in the United States.                                              

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, meaning the investing public, and Management all own a stake in   
the success of Labrador Mutual Fund.                                            

Probably, one of the more important questions is, "How was Fund performance     
so excellent while keeping portfolio turnover at zero?"                         

There were no sales of stock holdings by the Fund in 1998.  We stayed 99%       
invested in common stock.  Despite our limited amount of incoming capital       
from investors, Management was able to purchase equity ownership in many        
companies that outpaced market averages by year end.                            

When to sell?                                                                   

Our philosophy, which was borne out by performance figures, shows that there    
is no need to sell the stock of a company just because of its rising share      
price.  After all, the hope of stock price appreciation is the reason that      
Management purchases ownership in the companies that it does.  Labrador         
Mutual Fund wants to own the equity of companies that have potentially          
appreciating stock prices.  To us, the emphasis should be on careful            
selection of the security and then a long-term-hold strategy is implemented.    

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  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.  Anything else?  Sure, but we will not   
bore you with the details.  For the benefit of the Shareholders the Fund        
Management would rather keep the rest of the boredom in-house!                  

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 essentially at zero, 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 WebSite 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 WebSite, 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.  As our         
seasoned investor knows, The Labrador Mutual Fund WebSite can be found at       
www.labradorfund.com.  We invite your feedback regarding the Fund.              

Live long and prosper.                                                          
Peter Schuh                                                                     
President and Co-Portfolio Manager,                                             
February 28, 1999                                                               

FINANCIAL STATEMENTS                                                            

LABRADOR MUTUAL FUND                                                            
STATEMENT OF NET ASSETS                                                         
As of  December  31, 1998                                                       

                    Number        Market
                 of Shares       Value
                  -----------     --------

Common Stocks - 99.41%                                                          
----------------------                                                          

Banks -  6.42%                                                                  

Firstar                                  500         $46,625                    
Wells Fargo  & Company                 1,000          39,938                    

Computers/Technology - 24.03%                                                   

Cisco Systems Inc.*                      600          55,687                    
Hewlett-Packard Company                1,000          68,312                    
Intel Corporation                        400          47,425                    
International Business Machine           200          36,950                    
Microsoft Corporation *                  400          55,475                    
Sun Microsystems *                       700          59,938                    

Drugs & Healthcare - 18.67%                                                     

Abbott Laboratories                      800          39,200                    
Johnson & Johnson                        400          33,550                    
McKesson HBOC Inc.                       600          47,438                    
Merck & Company Inc.                     250          36,922                    
Pfizer Inc.                              400          50,175                    
Schering-Plough Corporation              800          44,200                    

Financial Services - 2.98%                                                      

Automatic Data Processing Inc.           500          40,094                    

Food & Beverage - 10.95%                                                        

BestFoods                                700          37,275                    
Coca Cola                                800          53,500                    
Conagra Inc.                           1,800          56,700                    

Insurance - 2.87%                                                               

American International Group Inc.        400          38,650                    

Machinery & Metal Processing - 2.58%                                            

Illinois Tool Works                      600          34,800                    

Marketing Service - 3.44%                                                       

Omnicom Group Inc.                       800          46,400                    

Medical Equipment - 3.86%                                                       

Medtronic Inc.                           700          51,975                    

Other Consumer Goods - 13.55%                                                   

General Electric Company                 400          40,825                    
Gillette Company                       1,200          57,975                    
Proctor & Gamble Company                 400          36,525                    
Xerox Corporation                        400          47,200                    

Retail - 4.35%                                                                  

Walgreens Company                      1,000          58,562                    

Telecommunications - 5.71%                                                      

Lucent Technology                        700          77,000                    
                                  ------

Total Common Stocks                                                             
(Cost $1,147,059)                            1,339,316              
                               ---------

Money Market - 0.74%                                                            
--------------------                                                            

Star Treasury Money Market                                                      
(Cost $9,930)                                    9,930              

Total Investments                                                               
(Cost $1,156,989)                            1,349,246              

Other Assets and Liabilities, Net - (0.15%)          (2,025)                    
-------------------------------------------          -------                    
Net Assets - 100%                                 $1,347,221                    
                              ==========

*Non-income producing security.                                                 
The accompanying notes are an integral part of these financial statements.      

LABRADOR MUTUAL FUND                                                            
STATEMENT OF ASSETS AND LIABILITIES                                             
As of December 31, 1998                                                         

ASSETS:                                                                         

  Investments, at value (cost $1,156,989)                   $  1,349,246
Receivables:                                                        
      Dividends                                                    1,223
      Interest                                                        36
      Expense Reimbursement by Manager                            10,366
                                                                  ------
  Total assets                                                 1,360,871

LIABILITIES:                                                                    

  Accrued 12B-1 Fees                                                 559
  Accrued Administration Fees                                      1,400
  Accrued Auditing Fees                                              750
  Accrued Custodian Fees                                             659
  Accrued Fund Accounting Fees                                     3,500
  Accrued Insurance                                                2,271
  Accrued Legal Fees                                                 250
  Accrued Postage                                                    143
  Accrued Pricing Fees                                               492
  Accrued Report Printing                                            531
  Accrued Miscellaneous Fees                                         345
  Accrued Transfer Agent Fees                                      2,750
                                                                   -----
  Total liabilities                                               13,650
                                                                  ------

NET ASSETS                                                      $  1,347,221    
                                                            ============

Net assets consist of:                                                          
  Paid-in capital                                              1,157,403
  Accumulated undistributed net realized loss on investments     (2,439)
Net unrealized appreciation on                                      
     investments                                                 192,257
                                                                 -------

Net assets                                                      $  1,347,221    
                                                            ============

Shares of capital stock                                                         
outstanding (no par value,                                          
  unlimited shares authorized)                                   115,024

Net asset value, offering                                                       
  and redemption, price per share                                $ 11.71

The accompanying notes are an integral part of these financial statements.      

LABRADOR MUTUAL FUND                                                            
STATEMENT OF OPERATIONS                                                         
For the period September 24, 1998 (inception date of fund)                      
to December 31, 1998                                                            

INVESTMENT INCOME:                                                              
  Interest                                                        $  545
  Dividends                                                        2,386
                                                                   -----
     Total investment income                                       2,931
                                                                   -----

EXPENSES:                                                                       

  12B-1 Expense                                                      559
  Administration Expense                                           1,400
  Auditing Expense                                                   750
  Custodian Expense                                                  874
  Fund Accounting Expense                                          3,500
  Insurance Expense                                                2,271
  Legal Expense                                                      250
  Management Expense                                               3,357
  Postage Expense                                                    143
  Pricing Expense                                                    492
  Report Printing Expense                                            531
  Miscellaneous Expense                                              445
  Transfer Agent Expense                                           2,750
                                                                   -----
     Total expenses                                               17,322
                                                                  ------

Less:  Expense reimbursement from Manager                             11,952    
     Total net expenses                                            5,370

NET INVESTMENT LOSS                                                  (2,439)    
                                                                 -------

REALIZED AND UNREALIZED GAIN ON INVESTMENTS:                                    
  Net change in unrealized appreciation on investments           192,257
                                                                 -------
  Net gain on investments                                        192,257
                                                                 -------

INCREASE IN NET ASSETS RESULTING FROM OPERATIONS                 $   189,818    
                                                                 =======

The accompanying notes are an integral part of these financial statements.      

LABRADOR MUTUAL FUND                                                            
STATEMENT OF CHANGES IN NET ASSETS                                              
For the period September 24, 1998 (inception date of fund)                      
to December 31, 1998                                                            

INCREASE IN NET ASSETS                                                          
Operations:                                                                     
  Net investment loss                                           $(2,439)
  Net change in unrealized appreciation on investments           192,257
                                                                 -------
  Increase in net assets from operations                         189,818
                                                                 -------

Capital share transactions:                                                     
  Proceeds from shares sold                                    1,157,565
  Cost of shares repurchased                                       (162)
                                                               ---------
  Net increase in net assets from capital share transactions   1,157,403
                                                               ---------
TOTAL INCREASE IN NET ASSETS                                       1,347,221    
                                                               ---------

NET ASSETS:                                                                     
  Beginning of period                                                ---
  End of period                                              $ 1,347,221
                                                             ===========

OTHER INFORMATION:                                                              
Share transactions:                                                             
  Sold                                                           115,039
  Repurchased                                                       (15)
                                                                 -------
NET INCREASE IN SHARES OUTSTANDING                                   115,024    
                                                                 =======

The accompanying notes are an integral part of these financial statements.      

LABRADOR MUTUAL FUND                                                            
FINANCIAL HIGHLIGHTS                                                            

                                                           1998(a)

PER SHARE OPERATING PERFORMANCE:                                                
Net asset value, beginning of period                              $ 10.00       
Loss from investment operations:                                                
Net investment income loss                                   (0.02) 
Net realized and unrealized gain on investments                1.73 
                                                              ----
Total from investment operations                                     1.71       

Net asset value, end of period                                    $ 11.71       
                                                             =====
TOTAL RETURN                                                    63.69%(b)       

RATIOS/SUPPLEMENTAL DATA:                                                       
Net assets, end of period                                $1,347,221 

Ratio of expenses to average net assets:                            
    Before reimbursement of expenses by Manager (b)          5.78%
    After reimbursement of expenses by Manager (b)           2.40%

Ratio of net investment income to average net assets:               
    Before reimbursement of expenses by Manager (b)        (4.80)%
    After reimbursement of expenses by Manager (b)         (0.81)%

Portfolio turnover                                             0.0% 

(a)   For the period September 24, 1998 (inception date of fund) to             
December 31, 1998.                                                  
(b)   Annualized.                                                               

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 relieves the     
Fund of any liability for Federal income tax to the extent its earnings are     
distributed in accordance with applicable provisions of the Code.  The Fund     
intends to make sufficient distributions prior to the end of each calendar      
year to avoid liability for a 4% Federal excise tax on undistributed income.    
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.                                      

D) Federal Income Taxes                                               

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 pursuant 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, 1998 the Manager owed the Fund          
$10,366 in net reimbursement.                                                   

Note 4- Investment Transactions                                                 

For the period ended December 31, 1998, the cost of purchases, excluding        
short-term investments, were $1,147,059, there were no proceeds from the sale   
of investments.                                                                 

Note 5- Unrealized Appreciation (Depreciation)                                  

At December 31, 1998, the composition of gross unrealized appreciation          
(depreciation) of investment securities is as follows:                          
                      Appreciation   Depreciation   Net Appreciation
                      ------------   ------------   ----------------
The Labrador Mutual Fund    $ 196,100        ($3,843)       $ 192,257           

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, 1998, Labrador Investment          
Adviser and its affiliates owned 10,000 shares of the Fund.                     

Note 7- Year 2000                                                               

The Fund's operations depend on the seamless functioning of computer systems    
in the financial service industry in general and specifically on the systems    
used by the Manager and Unified Fund Services.  The Year 2000 Issue relates     
to computer programs that use two digits rather than four to define calendar    
years.  Computer programs may recognize a two-digit reference to the year       
2000 (00), as 1900 rather than 2000.  This could result in system failures or   
miscalculations, disrupting the processing of date-related information.  If     
the Fund, the Manger, Unified Fund Services or their respective computer        
services suppliers do not adequately address the Year 2000 Issue, this issue    
could create problems in the handling of security trades, pricing and account   
servicing for the Fund.                                                         

The Manager has made compliance with the Year 2000 Issue a high priority and    
is taking steps that it believes are reasonably designed to address the year    
2000 Issue with respect to its computer systems.  The Manager has also been     
informed that appropriate steps are being taken by Unified Fund Services and    
the Fund's other major service providers.  The manager believes that the Year   
2000 Issue will not have a material impact on its ability to continue to        
fulfill its duties as Manager to the Fund.  As a result, no formal              
contingency plans have been developed.                                          

The cost to-date to determine the impact of the Year 2000 Issue is immaterial   
and no significant future costs are anticipated.                                

ACCOUNTANTS REPORT ON INTERNAL CONTROLS                                         

To the Shareholders and Board of Trustees of                                    
Labrador Mutual Fund:                                                           

In planning and performing the audit of the financial statements of Labrador    
Mutual Fund for the period ended December 31, 1998, I considered its internal   
control structure, including procedures for safeguarding securities, in order   
to determine our auditing procedures for the purpose of expressing an opinion   
on the financial statements and to comply with the requirements of Form N-      
SAR, not to provide assurance on the internal control structure.                

The management of Labrador Mutual Fund is responsible for establishing and      
maintaining an internal control structure. In fulfilling this responsibility,   
estimates and judgements by management are required to assess the expected      
benefits and related costs of internal control structure policies and           
procedures. Two of the objectives of an internal control structure are to       
provide management with reasonable, but not absolute, assurance that assets     
are safeguarded against loss from unauthorized use or disposition and           
transactions are executed in accordance with management's authorization and     
recorded properly to permit preparation of financial statements in conformity   
with generally accepted accounting principles.                                  

Because of inherent limitations in any internal control structure, errors or    
irregularities may occur and may not be detected. Also, projection of any       
evaluation of the structure to future periods is subject to the risk that it    
may become inadequate because of changes in conditions or that the              
effectiveness of the design and operation may deteriorate.                      

My consideration of the internal control structure would not necessarily        
disclose all matters in the internal control structure that might be material   
weaknesses under standards established by the American Institute of Certified   
Public Accountants. A material weakness is a condition in which the design or   
operation of the specific internal control structure elements does not reduce   
to a relatively low level the risk that errors or irregularities in amounts     
that would be material in relation to the financial statements being audited    
may occur and not be detected within a timely period by employees in the        
normal course of performing their assigned functions. However, I noted no       
matters involving the internal control structure, including procedures for      
safeguarding securities, that I consider to be material weaknesses as defined   
above as of December 31, 1998.                                                  

This report is intended solely for the information and use of management and    
the Securities and Exchange Commission.                                         

Marie Jones CPA                                                                 
Saratoga, California                                                            

March 1, 1999                                                                   

Dates Referenced Herein   and   Documents Incorporated By Reference

This N-30D Filing		Date		Other Filings
		9/24/98
For The Period Ended		12/31/98		NSAR-B, 24F-2NT
		2/28/99
		3/1/99
Filed On / Filed As Of		3/3/99
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