SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. 1 [X]
Post-Effective Amendment No. ___ [_]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940[X]
Amendment No. 1 [X]
PRASAD SERIES TRUST
(Exact name of registrant as specified in charter)
The Tower at Erieview, 36th Floor,
1301 East Ninth Street,
Cleveland, Ohio 44114-1800
(Address of principal executive offices)
Registrant's Telephone Number: 216-687-1000
Rajendra Prasad, 821 Hillside Drive, Long Beach, CA 90815
(Name and address of agent for service)
Copy to:
Michael J. Meaney, Esq.
Benesch, Friedlander, Coplan & Aronoff LLP
2300 BP America Building, 200 Public Square, Cleveland, Ohio 44114
Approximate date of proposed public offering: As soon as practicable after the
effective date of the Registration Statement.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
elected to register an indefinite number of shares of beneficial interest. The
amount of the registration fee pursuant to Rule 24f-2 of the Investment Company
Act of 1940 is $500.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
PRASAD GROWTH FUND The Tower at Erieview, 36th Floor
1301 East Ninth Street
Cleveland, Ohio 44114
(216) 687-1000
Prasad Growth Fund (the "Fund") is a portfolio of Prasad Series Trust, an
open-end management investment company (the "Trust").
The Fund has an investment objective of obtaining capital appreciation. It
seeks to achieve this objective by investing in equity securities.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor ought to know before investing. Investors should read this
Prospectus and retain it for future reference. Additional information about the
Fund has been filed with the Securities and Exchange Commission (the "SEC") in a
Statement of Additional Information dated the same date as this Prospectus and
is available upon request and without charge by calling the Fund's Transfer
Agent, Maxus Information Systems, Inc. at 1-800-44-MAXUS (1-800-446-2987) or at
(216) 687-1000. Such additional information is hereby incorporated by reference
into this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS/November __, 1998
Investors are advised to read this Prospectus and to retain it for future
reference.
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HIGHLIGHTS
Investment Objectives. The investment objective of the Fund is to obtain
capital appreciation. No assurance can be given that the Fund will achieve its
objective. See "Investment Objective and Management Techniques."
No Sales Charge. The Fund sells and redeems its shares at net asset value
without any sales charges or redemption charges.
Liquidity. The Fund continuously offers and redeems shares at the net asset
value next computed after receipt by the Fund's Transfer Agent of a purchase
order or redemption request in proper form. See "How to Purchase Shares" and
"How to Redeem Shares."
Minimum Investment. The minimum initial investment in the Fund is $1,000, with
subsequent minimum investments of $100. See "How to Purchase Shares." The Fund
has the right to redeem the shares in an account and pay the proceeds to the
shareholder if, because of shareholder redemptions, the value of the account
drops below $1,000. See "How to Redeem Shares."
Dividends. The Fund intends to pay dividends at least once annually to
shareholders. Unless otherwise directed, all dividends will be automatically
reinvested in additional shares. See "Dividends, Distributions and Taxes."
Investment Adviser. Mutual Funds Leader, Inc. (the "Adviser") is the investment
adviser for the Fund. Its annual fee is 1% of the Fund's net assets. The
Adviser is newly formed and has no prior experience as an adviser to mutual
funds. The Adviser is controlled by Rajendra Prasad, Chairman of the Trust.
See "Investment Management."
Risk Factors. The Fund is subject to the following risks (among others):
* Shares of the Fund may lose value, depending on market, economic and
other conditions affecting the securities in which the Fund invests.
The Fund is not intended to provide a balanced investment program.
* The Fund is non-diversified, which may result in greater fluctuation
in the Fund's share value than would be the case if the Fund was
diversified.
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FEE TABLE
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees 1.00%
Other Expenses* 0.50%
Total Fund Operating
Expenses* 1.50%
* Based on estimated expenses for the current fiscal year.
A shareholder who requests that the proceeds of a redemption be sent by
wire transfer will be charged for the cost of such wire, which is $7.00 as of
the date of this Prospectus (subject to change without notice).
Example 1 year 3 years
You would pay the following expenses on
a $1,000 investment in Shares of the
Fund, assuming (1) 5% annual return
and (2) redemption at the end of each
time period: $15 $47
The purpose of the foregoing table is to assist you in understanding the
various costs and expenses that an investor in the Fund will bear, directly or
indirectly. The Example set forth in the foregoing table should not be
considered a representation of actual or expected expenses or returns. Actual
expenses or returns may be greater or lesser than those shown.
INVESTMENT OBJECTIVE AND MANAGEMENT TECHNIQUES
Investment Objective
The Fund is a non-diversified fund whose investment objective is to obtain
capital appreciation. This objective is a fundamental policy of the Fund and
may not be changed without approval of a majority of the Fund's shares. There
is no assurance that this investment objective will be achieved.
Equity Securities
In seeking its objective, except as described below, this Fund will invest
at least 65% of its total assets in equity securities. Equity securities are
common stocks and preferred stocks and securities convertible into or
exchangeable for common stocks or preferred stocks, including American
Depository Receipts ("ADR's"). In selecting equity securities, the Adviser will
seek to invest in companies which have high earnings growth rates and which
currently demonstrate superior long term capital appreciation relative to other
equity securities and the S&P 500 Index.
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Money Market Investments
Under normal circumstances, the Fund may invest up to 35% of its assets in
no-load money market mutual funds, high-quality short-term debt securities and
money market instruments (such as repurchase agreements, commercial paper and
certificates of deposit) (collectively, "money market investments"). (See the
Appendix for a description of certain of these investments.) The Fund may also
invest up to 100% of the Fund's assets in money market investments for temporary
defensive purposes when and to the extent that, in the judgment of the Adviser,
other investments involve unreasonable risk. An investment by the Fund in money
market mutual funds involves some duplication of advisory fees and other
expenses.
Options
For the purposes of achieving capital appreciation, the Fund may invest up
to 5% of its net assets in put and call options which trade on securities
exchanges and for which it pays a premium (cost of option). The Fund may sell
the options, exercise them, or permit them to expire. The Fund may suffer a
total loss of its investment if the underlying security decreases in value in
the case of a call option or increase in value in the case of a put option.
Warrants
The Fund may invest up to 5% of its net assets in warrants, which are
options to purchase a specified security at a specified price (usually
representing a premium over the applicable market value of the underlying equity
security at the time of the warrant's issuance) and usually during a specified
period of time.
Futures Contracts
For the purpose of hedging the Fund's investment in equity securities or
its cash position, the Fund may invest up to 5% of its net assets in futures
contracts for the purchase or sale of specific securities or stock indexes. A
futures contract is an agreement between two parties to buy and sell a security
or an index for a set price on a future date. Futures are generally bought and
sold on commodity exchanges.
Short Sales
The Fund may seek to realize additional gains through short sale
transactions in securities listed on one or more national securities exchanges
or on NASDAQ. Short selling involves that sale of borrowed securities. At the
time a short sale is effected, the Fund incurs an obligation to replace the
security borrowed at whatever its price may be at the time the Fund purchases it
for delivery to the lender.
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Since short selling can result in profits when stock prices generally
decline, the Fund in this manner, can, to a certain extent, hedge the market
risk to the value of its other investments and protect its equity in a declining
market. However, the Fund could, at any given time, suffer both a loss on the
purchase or retention of one security if that security should decline in value,
and a loss on a short sale of another security, if the security sold short
should increase in value. When a short position is closed out, it may result in
a short term capital gain or loss for federal income tax purposes. Moreover, to
the extent that in a generally rising market the Fund maintains short positions
in securities rising with the market, the net asset value of the Fund would be
expected to increase to a lesser extent than the net asset value of a mutual
fund that does not engage in short sales.
No short sales will be effected which will, at the time of making such
short sale transaction and giving effect thereto, cause the aggregate market
value of all securities sold short to exceed 25% of the value of the Fund's net
assets. The value of the securities of any one issuer that have been shorted by
the Fund is limited to the lesser of 2% of the value of the Fund's net assets or
2% of the securities of any class of the issuer. In addition, to secure the
Fund's obligation to replace any borrowed security, it will place in a
segregated account, an amount of cash or U.S. Government securities equal to the
difference between the market value of the securities sold short at the time of
the short sale and any cash or U.S. Government securities originally deposited
with the broker in connection with the short sale (excluding the proceeds of the
short sale). The Fund will thereafter maintain daily the segregated amount at
such a level that the amount deposited in it plus the amount originally
deposited with the broker as collateral will equal the greater of the current
market value of the securities sold short or the market value of the securities
at the time they were sold short. The Fund may make short sales "against the
box", i.e., sales made when the Fund owns securities identical to those sold
short.
For a description of the principal risks of investing in the Fund, in
addition to the risks described above, please read the section of this
Prospectus entitled "Risks and Other Considerations."
Portfolio Turnover
The Fund is not restricted with regard to portfolio turnover and will make
changes in its investment portfolio from time to time as business and economic
conditions and market prices may dictate and its investment policies may
require. It is estimated that the portfolio turnover rate generally will not
exceed 100%. A high rate of portfolio turnover in any year will increase
brokerage commissions paid and could result in high amounts of realized
investment gain subject to the payment of taxes by shareholders. However, the
Fund expects to minimize these potential adverse effects of portfolio turnover
through its use of discount brokers and through investment in a relatively small
number of portfolio securities. Any realized net short-term investment gain
will be taxed to shareholders as ordinary income. See "Dividends, Distributions
and Taxes" below.
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INVESTMENT POLICIES AND RESTRICTIONS
The Fund has adopted certain fundamental policies which may not be changed
without the approval of the holders of a majority of the Fund's outstanding
voting securities (as defined in the 1940 Act). Certain of these policies are
detailed below, while other policies are set forth in the Statement of
Additional Information. The Fund may not:
(1) invest more than 25% of the value of the Fund's total assets
in securities of companies in a particular industry (except cash and
obligations issued or guaranteed by the United States Government, its
agencies and instrumentalities);
(2) purchase the securities of any issuer if, as a result, more than
10% of the value of the Fund's net assets would be invested in securities
that are not readily marketable;
(3) With respect to 50% of the total assets of the Fund,
purchase a security of any issuer (other than cash, money market
mutual funds and obligations issued or guaranteed by the United States
Government, its agencies and instrumentalities) if such purchase would
cause the Fund's holdings of that issuer to amount to more than 5% of
the Fund's total assets; or
(4) Invest more than 25% of its assets in a single issuer (other
than cash, money market mutual funds and obligations issued or
guaranteed by the United States Government, its agencies and
instrumentalities).
Changes in values of Fund assets or the assets of the Fund as a whole will
not cause a violation of the investment restrictions so long as percentage
restrictions are observed by the Fund at the time it purchases any security.
Other investment policies are discussed in the Statement of Additional
Information under the heading "Investment Policies and Restrictions."
RISKS AND OTHER CONSIDERATIONS
The Fund is not intended to provide a balanced investment program to meet
all requirements of every investor. No assurance can be given that the Fund
will achieve its investment objective.
The prices of equity securities fluctuate based on changes in a company's
activities and financial condition and in overall market and financial
conditions. The value of an investment in the Fund may sometimes decrease
instead of increase.
Additional risks associated with specific permitted investment activities
of the Fund are discussed in connection with the descriptions of those
activities under "Investment Objective and Management Techniques".
<PAGE>
The Fund is a "non-diversified" fund. The Fund is considered "non-
diversified" because a relatively high percentage of the Fund's assets may be
invested in the securities of a limited number of issuers. The Fund's portfolio
securities, therefore, may be more susceptible to any single economic,
political, or regulatory occurrence than the portfolio securities of a more
diversified investment company. The Fund's classification as a "non-
diversified" investment company means that the proportion of the Fund's assets
that may be invested in the securities of a single issuer is not limited by the
Investment Company Act of 1940 (the "1940 Act"). The Fund, however, intends to
seek to qualify as a "regulated investment company" for purposes of the Internal
Revenue Code, which imposes diversification requirements on the Fund that are
less restrictive than the requirements applicable to "diversified" investment
companies under the 1940 Act.
The Fund reserves the right to become a "diversified fund" by limiting the
investments in which more than 5% of its total assets are invested.
PERFORMANCE
From time to time, the Fund may advertise performance data represented by a
cumulative total return or an average annual total return. Total returns are
based on the overall or percentage change in value of a hypothetical investment
in the Fund and assume all of the Fund's dividends and capital gain
distributions are reinvested. A cumulative total return reflects the Fund's
performance over a stated period of time. An average annual total return
reflects the hypothetical annually compounded return that would have produced
the same cumulative total return if the Fund's performance had been constant
over the entire period. Because average annual returns tend to smooth out
variations in the Fund's returns, it should be recognized that they are not the
same as actual year-by-year results.
Performance may be compared to well-known indices such as the S&P 500 Index
or alternative investments such as Treasury Bills. Also, the Fund may include
published editorial comments compiled by independent organizations such as
Lipper Analytical Services or Morningstar, Inc.
All performance information is historical in nature and is not intended to
represent or guarantee future results. The value of Fund shares when redeemed
may be more or less than their original cost.
Further information about the performance of the Fund is contained in the
Fund's Annual Report to Shareholders which may be obtained from the Fund without
charge.
HOW TO PURCHASE SHARES
Shares may be purchased by any investor without a sales charge. A minimum
initial investment of $1,000 is required to open an account with subsequent
minimum investments of $100. Investment minimums may be waived at the
discretion of the Fund.
Shareholders Accounts
When a shareholder invests in the Fund, Maxus Information Systems Inc., the
Transfer Agent for the Fund, will establish an open account to which all full
and fractional shares (to three decimal places) will be credited, together with
any dividends and capital gains distributions, which are paid in additional
shares unless the shareholder otherwise instructs the Transfer Agent. Stock
certificates will be issued for full shares only when requested in writing.
Each shareholder is notified of the status of his account following each
purchase or sale transaction.
<PAGE>
Initial Purchase
The initial purchase may be made by check or by wire in the following
manner:
By Check. The Account application which accompanies this Prospectus should be
completed, signed, and, along with a check for the initial investment payable to
Prasad Series Trust, mailed to: Maxus Information Systems Inc., The Tower at
Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio 44114.
By Wire. In order to expedite the investment of funds, investors may advise
their bank or broker to transmit funds via Federal Reserve Wire System to:
Fifth Third Bank, ABA #042 000 314, for further credit to Account No. 729-37951,
Prasad Growth Fund. Also provide the shareholder's name and account number. In
order to obtain this needed account number and receive additional instructions,
the investor may contact, prior to wiring funds, Maxus Information Systems Inc.,
at 1-800-44-MAXUS (1-800-466-2987) or at (216) 687-1000. The investor's bank
may charge a fee for the wire transfer of funds.
Subsequent Purchases
Investors may make additional purchases in the following manner:
By Check. Checks made payable to Prasad Series Trust should be sent, along with
the stub from a previous purchase or sale confirmation, to Maxus Information
Systems Inc., The Tower at Erieview, 36th Floor, 1301 East Ninth Street,
Cleveland, Ohio 44114.
By Wire. Funds may be wired by following the previously discussed wire
instructions for an initial purchase.
By Telephone. Investors may purchase shares up to an amount equal to 3 times
the market value of shares held in the shareholder's account in the Fund on the
preceding day for which payment has been received, by telephoning Maxus
Information Systems Inc., at 1-800-44-MAXUS (1-800-466-2987) or at (216)
687-1000 and identifying their account by number. Shareholders wishing to
available themselves of this privilege must complete a Telephone Purchase
Authorization Form which is available from the Fund. A confirmation will be
mailed and payment must be received within 3 business days of date of purchase.
If payment is not received within 3 business days, the Fund reserves the right
to redeem the shares purchased by telephone, and if such redemption results in a
loss to the Fund, redeem sufficient additional shares from the shareholder's
account to reimburse the Fund for the loss. Payment may be made by check or by
wire. The Adviser has agreed to hold the Fund harmless from net losses
resulting from this service to the extent, if any, not reimbursed from the
shareholder's account. This telephone purchase option may be discontinued
without notice.
<PAGE>
Systematic Investment Plan
The Systematic Investment Plan permits investors to purchase shares of the
Fund at monthly intervals. Provided the investor's bank or other financial
institution allows automatic withdrawals, shares may be purchased by
transferring funds from the account designated by the investor. At the
investor's option, the account designated will be debited in the specified
amount, and shares will be purchased once a month, on or about the 15th day.
Only an account maintained at a domestic financial institution which is an
Automated Clearing House member may be so designated. Investors desiring to
participate in the Systematic Investment Plan should call the Transfer Agent at
1-800-44-MAXUS (1-800-466-2987) or at (216) 687-1000 to obtain the appropriate
forms. The Systematic Investment Plan does not assure a profit and does not
protect against loss in declining markets.
Price of Shares
The price paid for shares of the Fund is the net asset value per share of
the Fund next determined after receipt by the Transfer Agent of properly
identified purchase funds, except that the price for shares purchased by
telephone is the net asset value per share next determined after receipt of
telephone instructions. Net asset value per share is computed for the Fund as
of the close of business (currently 4:00 P.M., New York time) each day the New
York Stock Exchange is open for trading and on each other day during which there
is a sufficient degree of trading in the Fund's investments to affect materially
net asset value of its redeemable securities. Net asset value of the Fund is
determined by totaling the value of all portfolio securities, cash, other assets
held by the Fund, and interest and dividends accrued and subtracting from that
amount all liabilities, including accrued expenses. The net asset value of the
Fund is divided by the total number of shares outstanding to determine the net
asset value of each share.
For purposes of computing the net asset value per share, securities listed
on a national securities exchange or on the NASDAQ National Market System will
be valued on the basis of the last sale of the date on which the valuation is
made or, in the absence of sales, at the closing bid price. Over-the-counter
securities will be valued on the basis of the bid price at the close of business
on each day or, if market quotations are not readily available, at fair value as
determined in good faith by the Board of Trustees. Unless the particular
circumstances (such as an impairment of the credit-worthiness of the issuer)
dictate otherwise, the fair value of short-term securities with maturities of 60
days or less shall be their amortized cost. All other securities and other
assets of the Fund will be valued at their fair value as determined in good
faith by the Board of Trustees.
Other Information Concerning Purchase of Shares
The Fund reserves the right to reject any order, to cancel any order due to
non-payment and to waive or lower the investment minimums with respect to any
person or class of persons. If an order is canceled because of non-payment or
because your check does not clear, you will be responsible for any loss that the
Fund incurs. If you are already a shareholder, the Fund can redeem shares from
your account to reimburse it for any loss. The Adviser has agreed to hold the
Fund harmless from net losses to the Fund resulting from the failure of a check
to clear to the extent, if any, not recovered from the investor. For purchases
of $50,000 or more, the Fund may, in its discretion, require payment by wire or
cashier's or certified check.
<PAGE>
HOW TO REDEEM SHARES
All shares of the Fund offered for redemption will be redeemed at the net
asset value per share of the Fund next determined after receipt of the
redemption request, if in compliance with the requirements of this section, by
the Transfer Agent. See "Price of Shares." Because the net asset value of the
Fund's shares will fluctuate as a result of changes in the market value of
securities owned, the amount a stockholder receives upon redemption may be more
or less than the amount paid for the shares. Redemption proceeds will be mailed
to the shareholder's registered address of record or, if $5,000 or more, may be
transmitted by wire, upon request, to the shareholder's pre-designated account
at a domestic bank. The shareholder will be charged for the cost of such wire.
If shares have been purchased by check and are being redeemed, redemption
proceeds will be paid only after the check used to make the purchase has cleared
(usually within 15 days after payment by check). This delay can be avoided if,
at the time of purchase, the shareholder provides payment by certified or
cashier's check or by wire transfer.
Redemption by Mail
Shares may be redeemed by mail by writing directly to the Fund's Transfer
Agent, Maxus Information Systems Inc., The Tower at Erieview, 36th Floor, 1301
East Ninth Street, Cleveland, Ohio 44114. The redemption request must be signed
exactly as the shareholder's name appears on the registration form, with the
signature guaranteed, and must include the account number. If shares are owned
by more than one person, the redemption request must be signed by all owners
exactly as the names appear on the registration.
A request for redemption will not be processed until all of the necessary
documents have been received in proper form by the Transfer Agent. A
shareholder in doubt as to what documents are required should contact Maxus
Information Systems Inc. at 1-800-44-MAXUS (1-800-466-2987) or at (216)
687-1000.
You should be able to obtain a signature guarantee from a bank,
broker-dealer, credit union (if authorized under state law), securities exchange
or association, clearing agency or savings association. A notary public is not
an acceptable guarantor. The Fund may in its discretion waive the signature
guarantee in certain instances.
Redemption By Telephone
Shares may be redeemed by telephone by calling Maxus Information Systems
Inc. at 1-800-44-MAXUS (1-800-466-2987) or at (216) 687-1000 between 9:00 A.M.
and 4:00 P.M. eastern time on any day the New York Stock Exchange is open for
trading. An election to redeem by telephone must be made on the initial
application form or on other forms prescribed by the Fund which may be obtained
by calling the Funds at either of such phone numbers. This form contains a
space for the shareholder to supply his own four digit identification number
which must be given upon request for redemption. The Fund will not be liable
for following instructions communicated by telephone that the Fund reasonably
believes to be genuine. If the Fund fails to employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, the Fund may be
liable for any losses due to unauthorized or fraudulent instructions. Any
changes or exceptions to the original election must be made in writing with
signature guaranteed, and will be effective upon receipt by the Transfer Agent.
The Transfer Agent and the Fund reserve the right to refuse any telephone
instructions and may discontinue the aforementioned redemption option without
notice. The minimum telephone redemption is $1,000.
<PAGE>
Other Information Concerning Redemption
The Fund reserves the right to take up to seven days to make payment if, in
the judgment of the Fund's Investment Adviser, the Fund could be affected
adversely by immediate payment. In addition, the right of redemption for the
Fund may be suspended or the date of payment postponed (a) for any period during
which the NYSE is closed (other than for customary week-end and holiday
closings), (b) when trading in the markets that the Fund normally utilizes is
restricted, or when an emergency, as defined by the rules and regulations of the
SEC, exists, making disposal of the Fund's investments or determination of its
net asset value not reasonably practicable, or (c) for any other periods as the
SEC by order may permit for protection of that Fund's shareholders.
Due to the high cost of maintaining accounts, the Fund has the right to
redeem, upon not less than 30 days written notice, all of the shares of any
shareholder if, through redemptions, the shareholder's account has a net asset
value of less than $1,000. A shareholder will be given at least 30 days written
notice prior to any involuntary redemption and during such period will be
allowed to purchase additional shares to bring his account up to the applicable
minimum before the redemption is processed.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders who own shares of the Fund valued at $15,000 or more may elect
to receive a monthly or quarterly check (or direct deposit to the shareholder's
checking account) in a stated amount (minimum amount is $100 per month or
quarter). Shares will be redeemed at net asset value as may be necessary to
meet the withdrawal payments. If withdrawal payments exceed reinvested
dividends and distributions, the investor's shares will be reduced and
eventually depleted. A withdrawal plan may be terminated at any time by the
shareholder or the applicable Fund. Costs associated with a withdrawal plan are
borne by the Fund. Additional information regarding systematic withdrawal plans
may be obtained by calling Maxus Information Systems Inc. at 1-800-44-MAXUS
(1-800-466-2987) or at (216) 687-1000.
<PAGE>
INVESTMENT MANAGEMENT
Trustees and Officers
The business and affairs of the Fund are managed under the direction of the
Board Trustees of the Trust, as required by Delaware law. The day-to-day
operations of the Fund are conducted through or under the direction of its
officers. By virtue of the responsibilities assumed by the Adviser as
investment adviser (see below), the Fund has no executive employees other than
its officers, each of whom is employed by the Adviser and none of whom devotes
full time to the affairs of the Fund. No officer, director or employee of the
Adviser receives any compensation from the Fund for serving as a Trustee or
officer of the Fund. The Fund pays each Trustee who is not an officer, director
or employee of the Adviser or any of its affiliates a fee of $125 per meeting
attended and reimburses each such Trustee for travel and out-of-pocket expenses.
The Investment Adviser
The Fund has retained as its investment adviser Mutual Funds Leader, Inc.
(the "Adviser"), 821 Hillside Drive, Long Beach, California 90815, an investment
management firm founded in 1998. The Adviser is registered under the Investment
Advisers Act of 1940. The Adviser has not been sponsored, recommended or
approved, nor have its abilities or qualifications been passed upon, by the
Securities and Exchange Commission or any other government agency.
Rajendra Prasad, M.D. is the person primarily responsible for the
management of the portfolio of the Fund. Dr. Prasad is a part-time practicing
physician. He personally was registered as an investment advisor under the
Investment Advisors Act of 1940 from 1992 to 1998 and has managed accounts of
individual investors since 1996. From 1993 to the present, he has published a
monthly newsletter, "The Mutual Funds Leader," which seeks to guide investors in
selecting mutual funds. Neither the Adviser nor Dr. Prasad has any prior
experience in advising mutual funds.
Subject to the supervision and direction of the Fund's Trustees, the
Adviser manages the Fund's portfolio in accordance with the stated policies of
the Fund. The Adviser makes investment decisions for the Fund and places the
purchase and sale orders for portfolio transactions. In addition, the Adviser
or its affiliates furnishes office facilities and administrative services
necessary to perform its duties, pays the salaries of any officers or employees
who are employed by both it and the Fund and, subject to the direction of the
Trust's Board of Trustees, is responsible for the overall management of the
business affairs of the Fund.
Advisory Fee
The Adviser receives from the Fund as compensation for its services to the
Fund an annual fee of 1% of the Fund's net assets. This fee is higher than that
paid by most other investment companies. The fee is paid monthly and calculated
on the basis of that month's net assets.
<PAGE>
Expenses Borne by The Fund
The Fund pays all expenses not assumed by the Adviser, including brokerage
fees and commissions, fees of Trustees not affiliated with the Adviser, expenses
of registration of the Fund and of the shares of the Fund with the Securities
and Exchange Commission and the various states, charges of the custodian,
dividend and transfer agent, outside auditing and legal expenses, liability
insurance premiums on property or personnel (including officers and trustees),
maintenance of trust existence such as the filing of reports required by state
law, any taxes payable by the Fund, interest payments relating to Fund
borrowings, costs of preparing, printing and mailing registration statements,
prospectuses, periodic reports and other documents furnished to shareholders and
regulatory authorities, fees and expenses of legal counsel, and costs of
printing share certificates, portfolio pricing services and shareholder
meetings.
From time to time, the Adviser may waive receipt of its fees and/or
voluntarily assume certain fund expenses, which would have the effect of
lowering the Fund's expense ratio and increasing yield to investors during the
time such amounts are waived or assumed. The Fund will not be required to pay
the Adviser for any amounts voluntarily waived or assumed, nor will the Fund be
required to reimburse the Adviser for any amounts waived or assumed during a
prior fiscal year.
Execution of Portfolio Transactions
Orders for transactions in portfolio securities for the Fund are placed by
the Adviser with securities broker-dealers with the objective of obtaining the
best available price, investment services and execution. Cost of execution
(commissions) is an important consideration but may not be the overriding
determinant.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund will declare and pay, at least annually, dividends to shareholders
of substantially all of its net investment income, if any, earned during the
year from investments, and will distribute net realized capital gains, if any,
once each year. All dividends and distributions will be reinvested
automatically at net asset value in additional shares of the Fund unless the
shareholder has notified the Fund in writing of his election to receive
distributions in cash.
The Fund will be treated as a separate entity for federal income tax
purposes. The Fund intends to qualify continually as a regulated investment
company under Subchapter M of the Internal Revenue Code (the "Code"). Such
qualification removes from the Fund any liability for federal income taxes upon
the portion of its income distributed to shareholders and makes federal income
tax upon such distributed income generated by the Fund's investments the sole
responsibility of the shareholders. Continued qualification requires the Fund
to distribute to its shareholders each year substantially all of its income and
capital gains. In addition, amounts not distributed on a timely basis in
accordance with a calendar year distribution requirement are subject to a
nondeductible four percent (4%) excise tax. To prevent imposition of the excise
tax the Fund must distribute for each calendar year an amount equal to the sum
of (1) at least 98% of its calendar year net ordinary income, (2) at least 98%
of the excess of its capital gains over capital losses (adjusted for certain
ordinary losses) realized during the one-year period ending December 31 of such
year, and (3) 100% of any undistributed net ordinary income and net capital
gains for previous years. A distribution will be treated as paid on December 31
of the calendar year if it is declared by the Fund in December of that year with
a record date in December and paid by the Fund during January of the following
calendar year. Such distributions will be taxable to shareholders in the
calendar year in which the distributions are declared, rather than the calendar
year in which the distributions are received. The Fund will notify shareholders
of the tax status of dividends and distributions.
<PAGE>
Any dividend or distribution paid by the Fund has the effect of reducing
the net asset value per share on the ex-dividend date by the amount of the
dividend or distribution. Therefore, a dividend or distribution paid shortly
after a purchase of shares by an investor would represent, in substance, a
return of capital to the shareholder, even though subject to income taxes.
The Fund may also, from time to time, pay dividends in excess of net income
and net realized capital gains. Any such excess dividends would constitute a
non-taxable return of capital to the shareholder.
Depending on the residence of the shareholder for tax purposes,
distributions also may be subject to state and local taxes, including
withholding taxes. Shareholders should consult their own tax advisers as to the
tax consequences of ownership of shares of the Fund in their particular
circumstances.
In accordance with the Code, the Fund may be required to withhold a portion
of dividends or redemptions or capital gains paid to a shareholder and remit
such amount to the Internal Revenue Service if the shareholder fails to furnish
the Fund with a correct taxpayer identification number, if the shareholder fails
to supply the Fund with a tax identification number altogether, if the investor
fails to make a required certification that his taxpayer identification number
is correct and that he is not subject to backup withholding, or if the Internal
Revenue Service notifies the Fund to withhold a portion of such distributions
from a shareholder's account.
GENERAL INFORMATION
The Fund is a non-diversified portfolio of Prasad Series Trust (the
"Trust"). The Trust is an open-end management investment company, organized as
a business trust under the laws of the State of Delaware by an Agreement and
Declaration of Trust dated July 31, 1998. The Agreement and Declaration of
Trust provides for an unlimited number of authorized shares, which may, without
shareholder approval, be divided into an unlimited number of series of such
shares. There presently is only a single series of shares, that is, for the
Fund. Each share represents an equal proportionate interest in the Fund with
other shares of the same series, and is entitled to such dividends and
distributions out of the income earned on the assets belonging to the Fund as
are declared at the discretion of the Trustees. All consideration received by
the Trust for shares of the Fund and all assets in which such consideration is
invested will belong to the Fund and will be subject to the liabilities relating
thereto.
<PAGE>
Shareholders are entitled to one vote per share (with proportional voting
for fractional shares) on such matters as shareholders are entitled to vote.
Shareholders vote in the aggregate and not by series on all matters except that
shares shall be voted by individual series when required by the 1940 Act or when
the Trustees have determined that the matter affects only the interests of a
particular series.
As used in this Prospectus and in the Statement of Additional Information,
a "vote of a majority of the outstanding Shares" of the Trust or a particular
Fund means the affirmative vote, at a meeting of shareholders duly called, of
the lesser of (a) 67% or more of the votes of shareholders of the Trust or such
Fund present at such meeting at which the holders of more than 50% of the votes
attributable to the shareholders of record of the Trust or such Fund are
represented in person or by proxy, or (b) the holders of more than 50% of the
outstanding votes of shareholders of the Trust or such Fund.
Although the Trust is not required to hold annual meetings of the
shareholders, shareholders holding at least 10% of the Trust's outstanding
shares have the right to call a meeting to elect or remove one or more of the
Trustees of the Trust.
Upon issuance and sale in accordance with the terms of this Prospectus,
each share will be fully paid and non-assessable. Shares of the Fund have no
preemptive, subscription or conversion rights and are redeemable as set forth
under "How to Redeem Shares." The Agreement and Declaration of Trust also
provides that shareholders shall not be subject to any personal liability for
the acts or obligations of the Fund and that every agreement, obligation or
instrument entered into or executed by the Fund shall contain a provision to the
effect that the shareholders are not personally liable thereunder.
In order to provide the initial capital for the Fund, the Adviser has
purchased a total of 10,000 Shares of the Fund at $10.00 per share for an
aggregate purchase price of $100,000. As long as the Adviser owns more than 25%
of the Fund's shares, it will be deemed to be in "control" of the Fund as that
term is defined in the 1940 Act.
Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati, Ohio 45263, is the
custodian for the Fund's securities and cash. Maxus Information Systems Inc.,
The Tower at Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio
44114, is the Fund's Transfer, Redemption and Dividend Distributing Agent.
McCurdy & Associates C.P.A.'s, Inc., 27955 Clemens Road, Westlake, Ohio
44145, have been appointed as independent accountants for the Funds.
Benesch, Friedlander, Coplan & Aronoff LLP, 2300 BP America Building,
200 Public Square, Cleveland, Ohio 44114, is legal counsel to the Funds and to
the Adviser.
Shareholder inquiries should be directed to the Secretary of the Trust at
The Tower at Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio
44114.
<PAGE>
APPENDIX
Glossary of Investment Terms
This glossary provides a more detailed description of some of the types of
securities and other instruments in which the Fund may invest.
Commercial paper is a short-term debt obligation with a maturity ranging
from 1 to 270 days issued by banks, corporations and other borrowers to
investors seeking to invest idle cash.
Repurchase agreements involve the purchase of a security by the Fund and a
simultaneous agreement by the seller (generally a bank or dealer) to repurchase
the security from the Fund at a specified date or upon demand. This technique
offers a method of earning income on idle cash. These securities involve the
risk that the seller will fail to repurchase the security, as agreed. In that
case, the Fund will bear the risk of market value fluctuations until the
security can be sold and may encounter delays and incur costs in liquidating the
security.
<PAGE>
No dealer, salesman, or other person has been authorized to give any information
or to make any representations, other than those contained in this Prospectus,
and, if given or made, such other information or representations must not be
relied upon as having been authorized by the Funds or the Adviser. This
Prospectus does not constitute an offering in any state in which such offering
may not lawfully be made.
TABLE OF CONTENTS Page
HIGHLIGHTS 2
FEE TABLE 3
INVESTMENT OBJECTIVE AND MANAGEMENT TECHNIQUES 3
INVESTMENT POLICIES AND RESTRICTIONS 6
RISKS AND OTHER CONSIDERATIONS 6
PERFORMANCE 7
HOW TO PURCHASE SHARES 7
HOW TO REDEEM SHARES 10
SYSTEMATIC WITHDRAWAL PLAN 11
INVESTMENT MANAGEMENT 12
DIVIDENDS, DISTRIBUTIONS AND TAXES 13
GENERAL INFORMATION 14
<PAGE>
Investors are advised to read
this Prospectus and to retain
it for future reference.
PRASAD GROWTH FUND
PROSPECTUS
November __, 1998
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
November __, 1998
PRASAD GROWTH FUND
The Tower at Erieview, 36th Floor
1301 East Ninth Street
Cleveland, Ohio 44114
1-800-44-MAXUS (1-800-446-2987)
or (216) 687-1000
Prasad Growth Fund (the "Fund") is a non-diversified portfolio of Prasad
Series Trust, an open-end management investment company. The investment
objective of the Fund is to obtain capital appreciation. This Statement of
Additional Information relating to the Fund is not a prospectus and should be
read in conjunction with the Fund's prospectus. A copy of the Fund's prospectus
can be obtained from the Fund's Transfer Agent at The Tower at Erieview, 36th
Floor, 1301 East Ninth Street, Cleveland, Ohio 44114, telephone number 1-800-44-
MAXUS (1-800-446-2987) or (216) 687-1000. The prospectus to which this Statement
relates is dated the same date as this Statement of Additional Information.
The date of this Statement of Additional Information is November __, 1998.
TABLE OF CONTENTS
Caption Page Location in Prospectus
General Information and History 1 General Information
Investment Objective and Policies 1 Investment Objectives
and Management Techniques
Management of the Fund 2 Investment Management
Ownership of Shares 3 Not Applicable
Investment Advisory and Other 4 Investment Management
Services
Portfolio Transactions 5 Execution of Portfolio
Transactions
Capital Stock and Other Securities 6 General Information
Purchase, Redemption and Pricing of 6 How to Purchase Shares/
Securities Being Offered How to Redeem Shares
Determination of Net Asset Value 6 How to Purchase Shares
Tax Status 6 Dividends, Distributions
and Federal Taxes
Financial Statements 8 Not Applicable
<PAGE>
GENERAL INFORMATION AND HISTORY
Prasad Growth Fund (the "Fund") is a non-diversified portfolio of Prasad
Series Trust (the "Trust"), an open-end management investment company. The Fund
seeks capital appreciation. The Trust was organized as a business trust under
the laws of the State of Delaware pursuant to an Agreement and Declaration of
Trust dated July 31, 1998.
Investment Objective and Policies
The investment objective and policies of the Fund are briefly described in
the Prospectus under the heading "Investment Objective And Management
Techniques." The Fund has also adopted the following fundamental investment
policies and restrictions in addition to the fundamental investment policies
described in the Prospectus under the subheading "Investment Restrictions."
These policies cannot be changed without approval by the holders of a majority
of the outstanding voting securities of the Fund (as defined in the Prospectus
under "GENERAL INFORMATION"). Except as set forth in the Prospectus, the Fund
may not:
1. Invest in securities of other registered investment companies
(other than money market mutual funds), except by purchase in the open
market involving only customary brokerage commissions, or except as part of
a merger, consolidation, reorganization or acquisition; or
2. Invest in securities of any registered investment company, if
immediately after such purchase or acquisition the Fund would own more than
1% of the total outstanding stock of such company.
3. Invest more than 10% of the Fund's net assets in securities for
which market quotations are not readily available and repurchase agreements
maturing in more than seven days.
4. Lend money or securities, provided that the making of
interest-bearing demand deposits with banks and the purchase of debt
securities in accordance with its objective and policies are not
prohibited.
5. Borrow money except for temporary or emergency purposes from
banks (but not for the purpose of purchase of investments) and then only in
an amount not to exceed 5% of the Fund's net assets; or pledge the Fund's
securities or receivables or transfer or assign or otherwise encumber them
in an amount exceeding the amount of the borrowings secured thereby.
6. Make short sales of securities, or purchase any securities on
margin except to obtain such short-term credits as may be necessary for the
clearance of transactions.
7. Write (sell) put or call options, combinations thereof or similar
options; nor may it purchase put or call options if more than 5% of the
Fund's net assets would be invested in premiums on put and call options,
combinations thereof or similar options.
<PAGE>
8. Purchase or retain the securities of any issuer if any of the
officers or Trustees of the Trust or its investment adviser owns
beneficially more than 1/2 of 1% of the securities of such issuer and
together own more than 5% of the securities of such issuer.
9. Invest for the purpose of exercising control or management of
another issuer.
10. Invest in commodities or commodity futures contracts or in real
estate, although it may invest in securities which are secured by real
estate and securities of issuers which invest or deal in real estate.
11. Invest in interests in oil, gas or other mineral exploration or
development programs, although it may invest in the securities of issuers
which invest in or sponsor such programs.
12. Underwrite securities issued by others except to the extent the
Fund may be deemed to be an underwriter, under the federal securities laws,
in connection with the disposition of portfolio securities.
13. Issue senior securities as defined in the Act.
14. Purchase securities subject to restrictions on disposition under
the Securities Act of 1933.
If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage beyond the specified limit resulting from a
change in values or net assets will not be considered a violation.
MANAGEMENT OF THE FUND
The following table provides biographical information with respect to each
current Trustee and officer of the Trust. Each Trustee who is or may be deemed
to be an "interested person" of the Fund, as defined in the Act, is indicated by
an asterisk.
Name and Address Position Held Principal
With the Fund Occupation(s)
During Past 5 Years
Rajendra Prasad* Chairman, Physician; publisher
821 Hillside Drive Treasurer and of mutual funds
Long Beach, California Trustee newsletter; registered
90815 investment adviser.
<PAGE>
Anita Alamshaw, Trustee Sales and marketing in
M.B.A.* pharmaceutical
901 Calle Primavera industry
Glendale, California
91208
(daughter of Rajendra
Prasad)
Richard L.D. Saxton Trustee Television broadcaster
5545 Sunset Boulevard specializing in
Los Angeles, business news;
California 90028 formerly account
representative, Dean
Witter.
Samir Thakkar Trustee Managing Director, The
625 The City Drive Acacia Group
South (financial services)
Suite 250
Orange, California
92868
No officer, director or employee of Mutual Funds Leader Inc. (the
"Adviser") receives any compensation from the Trust for serving as an officer or
Trustee of the Trust. Each Trustee who is not an officer, director or employee
of the Adviser or any affiliate will receive from the Fund a fee of $125 for
each Board or shareholders meeting attended. The estimated fees payable to the
Trustees for the current fiscal year, which are the only compensation or
benefits payable to Trustees, are summarized in the following table:
COMPENSATION TABLE
Aggregate Compensation
Name of Trustee from Fund*
Rajendra Prasad $ 0
Anita Alamshaw 500
Richard L.D. Saxton 500
Samir Thakkar 500
*Estimated fees for first fiscal year.
OWNERSHIP OF SHARES
As of August 31, 1998, all of the outstanding shares of the Fund were owned
by the Adviser, whose address is 821 Hillside Drive, Long Beach, California
90815. A shareholder who beneficially owns, directly or indirectly, more than
25% of the Fund's voting securities may be deemed a "control person" (as defined
in the 1940 Act) of the Fund. The Adviser is controlled by Rajendra Prasad, the
Chairman of the Fund.
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
The Adviser is registered as an investment adviser under the Investment
Advisers Act of 1940. The Adviser has not been sponsored, recommended or
approved, nor have its abilities or qualifications been passed upon, by the
Securities and Exchange Commission or any other governmental agency.
As compensation for the Adviser's services rendered to the Fund, the Fund
pays a fee, computed and paid monthly, at an annual rate of 1% of the average
value of the Fund's daily net assets. This fee is higher than that paid by most
other investment companies.
The Adviser acts as investment adviser to the Fund pursuant to an
Investment Advisory and Administration Agreement dated September 3, 1998 (the
"Advisory Agreement"). Subject to the supervision and direction of the Board of
Trustees, the Adviser manages the Fund's portfolio in accordance with the stated
policies of the Fund. The Adviser makes investment decisions for the Fund and
places the purchase and sale orders for portfolio transactions. In addition, the
Adviser furnishes office facilities and clerical and administrative services and
subject to the direction of the Board of Trustees, is responsible for the
overall management of the business affairs of the Fund, including the provision
of personnel for record keeping, the preparation of governmental reports and
responding to shareholder communications.
Other expenses are borne by the Fund and include brokerage fees and
commissions, fees of Trustees not affiliated with the Adviser, expenses of
registration of the Fund and of the shares of the Fund with the Securities and
Exchange Commission (the "SEC") and the various states, charges of the
custodian, dividend and transfer agent, outside auditing and legal expenses,
liability insurance premiums on property or personnel (including officers and
trustees), maintenance of business trust existence, any taxes payable by the
Fund, interest payments relating to Fund borrowings, costs of preparing,
printing and mailing registration statements, prospectuses, periodic reports and
other documents furnished to shareholders and regulatory authorities, costs of
printing share certificates, portfolio pricing services and Fund meetings.
The Advisory Agreement is subject to annual approval by (i) the Board of
Trustees or (ii) vote of a majority (as defined in the Act) of the outstanding
voting securities of the Fund, provided that in either event the continuance is
also approved by a majority of the Trustees who are not "interested persons" (as
defined in the Act) of the Fund or the Adviser by vote cast in person at a
meeting called for the purpose of voting on such approval. The Board of
Trustees, including a majority of the Trustees who are not "interested persons,"
voted to approve the Advisory Agreement at a meeting held on October 28, 1998.
The Advisory Agreement is terminable without penalty, on not less than 60 days'
notice, by the Board of Trustees or by vote of the holders of a majority of the
Fund's shares or, upon not less than 90 days' notice, by the Adviser. The
Advisory Agreement will terminate automatically in the event of its assignment.
<PAGE>
The Trust has entered into an Administration Agreement with Maxus
Information Systems Inc. ("MIS"), The Tower at Erieview, 36th Floor, 1301 East
Ninth Street, Cleveland, Ohio 44114, pursuant to which MIS has agreed to act as
the Fund's transfer, redemption and dividend disbursing agent. As such, MIS
maintains the Fund's official record of shareholders and is responsible for
crediting dividends to shareholders' accounts. In consideration of such
services, the Fund pays MIS an annual fee, paid monthly, equal to $9.75 per
shareholder account (with a monthly minimum of $775) plus $12 per month for each
state in which the Fund is registered under such state's securities laws, plus
out-of-pocket expenses. In addition, the Fund has entered into an Accounting
Services Agreement with MIS, pursuant to which MIS has agreed to provide
portfolio pricing and related services, for the payment of an annual fee of
$21,000 for the first $25,000,000 in net assets, $10,500 for the next
$25,000,000 in net assets and $5,750 for each additional $25,000,000 in net
assets, plus out-of-pocket expenses. Notwithstanding the foregoing, if for any
month the average net assets of the Fund are less than $1,000,000, all of the
above amounts will be reduced based on a discount of 65% if net assets are under
$1,000,000 with proportionately lower discounts as net assets increase, until
the discount is removed completely if net assets exceed $11,000,000.
Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati, Ohio 45263, serves
as the Fund's custodian. As custodian, Fifth Third Bank maintains custody of the
Fund's cash and portfolio securities.
McCurdy & Associates C.P.A.'s, Inc., independent certified public
accountants located at 27955 Clemens Road, Westlake, Ohio 44145, has been
selected as auditors for the Fund. In such capacity, McCurdy & Associates
C.P.A.'s, Inc. periodically reviews the accounting and financial records of the
Fund and examines its financial statements.
PORTFOLIO TRANSACTIONS
Decisions to buy and sell securities for the Fund are made by the Adviser
subject to the overall supervision and review by the Board of Trustees.
Portfolio security transactions for the Fund are effected by or under the
supervision of the Adviser.
Transactions on stock exchanges involve the payment of negotiated brokerage
commissions. There is generally no stated commission in the case of securities
traded in the over-the-counter markets, but the price of those securities
includes an undisclosed commission or markup. The cost of securities purchased
from underwriters includes an underwriting commission or concession, and the
prices at which securities are purchased from and sold to dealers include a
dealer's markup or markdown.
In executing portfolio transactions and selecting brokers and dealers, it
is the Fund's policy to seek the best overall terms available. The Advisory
Agreement provides that, in assessing the best overall terms available for any
transaction, the Adviser shall consider the factors it deems relevant, including
the breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, for the specific transaction and on a
continuing basis. In addition, the Advisory Agreement authorizes the Adviser, in
selecting brokers or dealers to execute a particular transaction, and, in
evaluating the best overall terms available, to consider the brokerage and
research services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) provided to the Fund and/or other accounts over which the
Adviser exercises investment discretion.
<PAGE>
The Board of Trustees periodically reviews the commissions paid by the Fund
to determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits inuring to the Fund. It is possible that
certain of the services received will primarily benefit one or more other
accounts for which investment discretion is exercised. Conversely, the Fund may
be the primary beneficiary of services received as a result of portfolio
transactions effected for other accounts. The Adviser's fee under the Advisory
Agreement is not reduced by reason of the Adviser's receiving such brokerage and
research services.
Even though investment decisions for the Fund are made independently from
those of the other accounts managed by the Adviser, investments of the kind made
by the Fund may also be made by those other accounts. When the Fund and one or
more accounts managed by the Adviser are prepared to invest in, or desire to
dispose of, the same security, available investments or opportunities for sales
will be allocated in a manner believed by the Adviser to be equitable. In some
cases, this procedure may adversely affect the price paid or received by the
Fund or the size of the position obtained for or disposed of by the Fund.
CAPITAL STOCK AND OTHER SECURITIES
See "General Information" in the Fund's prospectus.
PURCHASE, REDEMPTION AND
PRICING OF SECURITIES BEING OFFERED
The information pertaining to the purchase and redemption of the Fund's
shares appearing in the Prospectus under the captions "How To Purchase Shares"
and "How To Redeem Shares" is hereby incorporated by reference.
DETERMINATION OF NET ASSET VALUE
The information pertaining to the determination of net asset value
appearing in the Prospectus under the caption "How to Purchase Shares -- Price
of Shares" is hereby incorporated by reference.
TAX STATUS
The Fund will be treated as a separate entity for federal income tax
purposes. The Fund's policy is to distribute at least annually, prior to the
end of the calendar year, dividends sufficient to satisfy excise tax
requirements of the Internal Revenue Service and to distribute annually, after
the end of the calendar year, any remaining net investment income and net
realized capital gains. Unless a shareholder elects otherwise, dividends and
capital gains distributions are paid in additional shares that are credited to
the shareholder's account with the Fund.
<PAGE>
The Fund intends to qualify each year as a "regulated investment company"
under the Internal Revenue Code of 1986, as amended (the "Code"). Qualification
as a regulated investment company will result in the Fund's paying no taxes on
net income and net realized capital gains distributed to shareholders. To
qualify for this treatment, the Fund must derive at least 90% of its gross
income from dividends, interest, and gains from the sale or other disposition of
securities; derive less than 30% of its gross income from the sale or other
disposition of securities held for fewer than three months; invest in securities
within certain limits; and distribute to its shareholders at least 90% of its
net taxable income earned in any year.
Dividends derived from the Fund's net investment income, whether received
in additional shares or in cash, will be taxable to shareholders as ordinary
income, but a portion may be eligible for the 70% dividends received deduction
available to corporations.
Distributions of the excess of net long-term capital gain over net
short-term capital loss are taxable to a shareholder in the year in which
received (except as set forth in the next paragraph), whether those
distributions are accepted in cash or in additional shares, and regardless of
the length of time the shareholder has held his Fund shares. These
distributions, like dividends, may also be subject to state and local taxes.
In addition to any dividends paid within the calendar year, dividends and
capital gain distributions declared in December and paid the following January
will be taxable in the year they are declared.
Investors should consider carefully the tax implications of purchasing
shares of the Fund just prior to the record date of a dividend or capital gains
distribution. Although a dividend or distribution paid shortly after shares have
been purchased is in effect a return of investment, it is subject to taxation as
described above, and a sale at a loss of shares held not more than six months
will be long-term capital loss to the extent of any long-term capital gain
dividends received within that period.
Shareholders must furnish the Fund with their correct Taxpayer
Identification Number to avoid being subject to a 20% federal backup withholding
tax on dividend distributions. Investors also must certify on the Account
Application that the stated Tax Identification Number is correct and that the
Investor is not subject to 20% backup withholding for previous under-reporting
to the IRS. Shareholders not subject to income taxation do not have to pay an
income tax on the dividend or capital gain distributions.
Shareholders shall upon demand disclose to the Fund in writing such
information with respect to direct and indirect ownership of Shares of the Fund
as the Trustees of the Fund deem necessary to comply with the provisions of the
Internal Revenue Code, or to comply with the requirements of any other taxing
authority.
Statements as to the tax status of each shareholder's dividends and
distributions will be mailed annually by the Fund's transfer agent. Shareholders
are urged to consult their own tax advisers regarding specific questions as to
Federal, state or local taxes.
<PAGE>
To The Shareholders and Trustees
The Prasad Series Trust:
We have audited the accompanying statement of assets and liabilities of the
Prasad Series Trust (comprised of the Prasad Growth Fund) as of October 22,
1998. This financial statement is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
statement of assets and liabilities presentation. Our procedures included
confirmation of cash held by the custodian as of October 22, 1998, by
correspondence with the custodian. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the Prasad
Growth Fund as of October 22, 1998, in conformity with generally accepted
accounting principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
October 22, 1998
<PAGE>
PRASAD SERIES TRUST
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 22, 1998
Prasad
Growth Fund
ASSETS:
Cash in Bank $100,000
Total Assets $100,000
LIABILITIES: $ 0
Total Liabilities $ 0
NET ASSETS $100,000
NET ASSETS CONSIST OF:
Capital Paid In $100,000
OUTSTANDING SHARES
Unlimited Number of Shares
Authorized Without Par Value 10,000
NET ASSET VALUE PER SHARE $ 10
OFFERING PRICE PER SHARE $ 10
<PAGE>
PRASAD SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
October 22, 1998
1. ORGANIZATION
Prasad Series Trust (the "Trust") is an open-end management investment
company organized as a business trust under the laws of the State of
Delaware by a Declaration of Trust dated July 31, 1998. The Declaration of
Trust provides for an unlimited number of authorized shares of beneficial
interest without par value, which may, without shareholder approval, be
divided into an unlimited number of series of such shares, and which
presently consist of one series of shares for the Prasad Growth Fund (the
"Fund").
The Fund uses an independent custodian and transfer agent. No transactions
other than those relating to organizational matters and the sale of 10,000
Shares of the Prasad Growth Fund have taken place to date.
2. RELATED PARTY TRANSACTIONS
As of October 22, 1998, all of the outstanding shares of the Fund were
owned by Rajendra Prasad and the Rajendra Prasad IRA. A shareholder who
beneficially owns, directly or indirectly, more than 25% of the Fund's
voting securities may be deemed a "control person" (as defined in the 1940
Act) of the Fund. Rajendra Prasad is the President of the Fund.
Mutual Funds Leader, Inc., the Fund's investment adviser, is registered as
an investment adviser under the Investment Advisers Act of 1940. Mutual
Funds Leader, Inc. is owned by Rajendra Prasad.
The adviser receives from the Fund as compensation for its services to the
Fund an annual fee of 1% of the Fund's net assets. This fee is higher than
that paid by most other investment companies. The fee is paid monthly and
calculated on the basis of that month's net assets.
The Fund pays all expenses not assumed by the Adviser, including brokerage
fees and commissions, fees of Trustees not affiliated with the Adviser,
expenses of registration of the Fund and of the shares of the Fund with the
Securities and Exchange Commission and the various states, charges of the
custodian, dividend and transfer agent, outside auditing and legal
expenses, liability insurance premiums on property or personnel (including
officers and trustees), maintenance of trust existence such as the filing
of reports required by state law, any taxes payable by the Fund, interest
payments relating to Fund borrowings, costs of preparing, printing and
mailing registration statements, prospectuses, periodic reports and other
documents furnished to shareholders and regulatory authorities, fees and
expenses of legal counsel, and costs of printing share certificates,
portfolio pricing services and shareholder meetings. From time to time,
the Adviser may waive receipt of its fees and/or voluntarily assume certain
fund expenses, which would have the effect of lowering the Fund's expense
ratio and increasing yield to investors during the time such amounts are
waived or assumed. The Fund will not be required to pay the Manager for
any amounts voluntarily waived or assumed, nor will the Fund be required to
reimburse the Manager for any amounts waived or assumed during a prior
fiscal year.
<PAGE>
3. CAPITAL STOCK AND DISTRIBUTION
At October 22, 1998, an unlimited number of shares were authorized and paid
in capital amounted to $100,000 for the Prasad Growth Fund. Transactions
in capital stock were as follows:
Shares Sold:
Prasad Growth Fund 10,000
Shares Redeemed:
Prasad Growth Fund 0
Net Increase:
Prasad Growth Fund 10,000
Shares Outstanding:
Prasad Growth Fund 10,000
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
The Financial Statements filed as part of this Registration
Statement are as follows:
Statement of Assets and Liabilities as of October 22, 1998,
together with Report of Independent Certified Public Accountants
dated October 22, 1998.
(b) Exhibits:
Exhibit
Number Description
1 Registrant's Agreement and Declaration of Trust
dated July 31, 1998.*
2 Registrant's By-Laws.*
3 None.
4 None.
5 Investment Advisory and Administration Agreement.*
7 None.
8 Custody Agreement.
9(a) Administration Agreement.*
9(b) Accounting Services Agreement.*
10 Opinion and consent.
11 Consent of Independent Auditors.
12 None.
13 Subscription Agreement between the Trust and the
Adviser
27 Financial Data Schedule.
*Previously filed.
<PAGE>
Item 25. Persons Controlled by or Under Common Control with Registrant.
The Fund and the Adviser may be deemed to be under common control of
Rajendra Prasad, the Chairman of the Fund and the President and
controlling shareholder of the Adviser.
Item 26. Number of Holders of Securities.
As of the date of this Registration Statement, there was one record
holder of the Fund's Shares.
Item 27. Indemnification.
Reference is made to Article IV of the Registrant's Agreement and
Declaration of Trust filed as Exhibit 1. The application of these
provisions is limited by the following undertaking set forth in the
rules promulgated by the Securities and Exchange Commission:
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted
to trustees, officers and controlling persons of
the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and
Exchange Commission such indemnification is
against public policy as expressed in such Act and
is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities
(other than the payment by the registrant of
expenses incurred or paid by a trustee, officer or
controlling person of the registrant in the
successful defense of any action, suit or
proceeding) is asserted by such trustee, officer
or controlling person in connection with the
securities being registered, the registrant will,
unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the
question whether such indemnification by it is
against public policy as expressed in such Act and
will be governed by the final adjudication of such
issue.
Item 28. Business and Other Connections of Investment Adviser.
Reference is made to the section in the Prospectus entitled
"Investment Management".
<PAGE>
Item 29. Principal Underwriters.
Not applicable.
Item 30. Location of Accounts and Records.
All accounts, books and documents required to be maintained by the
Registrant pursuant to Section 31(a) of the Investment Company Act of
1940 and Rules 31a-1 through 31a-3 thereunder are maintained at the
office of the Registrant and the Transfer Agent at The Tower at
Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio 44114,
except that all records relating to the activities of the Fund's
Custodian are maintained at the office of the Custodian, Fifth Third
Bank, 38 Fountain Square Plaza, Cincinnati, Ohio 45263.
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
The Registrant undertakes (1) to furnish a copy of the Registrant's
latest annual report, upon request and without charge, to every person
to whom a Prospectus is delivered, (2) to file a post-effective
amendment, using reasonably current financial statements which need
not be certified, within four to six months from the effective date of
Registrant's Registration Statement under the Securities Act of 1933,
and (3) to call a meeting of shareholders for the purpose of voting
upon the question of removal of a trustee or trustees when requesting
in writing to do so by the holders of at least 10% of the Registrant's
outstanding shares of beneficial interest and in connection with such
meeting to comply with the provisions of Section 16(c) of the
Investment Company Act of 1940 relating to shareholder communications.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Long Beach, State of California, on the 27th day
of October, 1998.
PRASAD SERIES TRUST
By: /s/ Rajendra Prasad
Rajendra Prasad, Chairman
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Rajendra Prasad Chairman, Treasurer and Trustee October 27, 1998
Rajendra Prasad (Principal Executive Officer,
Financial Officer and Accounting
Officer)
/s/ Anita Alamshaw Trustee October 27, 1998
Anita Alamshaw
/s/ Richard L.D. Saxton Trustee October 27, 1998
Richard L.D. Saxton
/s/ Samir Thakkar Trustee October 27, 1998
Samir Thakkar
<PAGE>
EXHIBIT 8
CUSTODY AGREEMENT
THIS AGREEMENT, is made as of October 27, 1998, by and between PRASAD
SERIES TRUST, a business trust organized under the laws of the State of Delaware
(the "Trust"), and THE FIFTH THIRD BANK, a banking company organized under the
laws of the State of Ohio (the "Custodian").
WITNESSETH:
WHEREAS, the Trust desires that the Securities and cash of each of the
investment portfolios identified in Exhibit A hereto (such investment portfolios
and individually referred to herein as a "Fund" and collectively as the
"Funds"), be held and administered by the Custodian pursuant to this Agreement;
and
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Trust and the Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1.1 "Authorized Person" means any Officer or other person duly authorized
by resolution of the Board of Trustees to give Oral Instructions and Written
Instructions on behalf of the Trust and named in Exhibit B hereto or in such
resolutions of the Board of Trustees, certified by an Officer, as may be
received by the Custodian from time to time.
1.2 "Board of Trustees" shall mean the Trustees from time to time serving
under the Trust's Agreement and Declaration of Trust, dated July 31, 1998, as
from time to time amended.
1.3 "Book-Entry System" shall mean a federal book-entry system as provided
in Subpart O of Treasury Circular No. 300, 31 CFR 306, in Subpart B of 31 CFR
Part 350, or in such book-entry regulations of federal agencies as are
substantially in the form of such Subpart O.
1.4 "Business Day" shall mean any day recognized as a settlement day by
The New York Stock Exchange, Inc. and any other day for which the Fund computes
the net asset value of the Fund.
<PAGE>
1.5 "NASD" shall mean The National Association of Securities Dealers, Inc.
1.6 "Officer" shall mean the President, any Vice President, the Secretary,
any Assistant Secretary, the Treasurer, or any Assistant Treasurer of the Trust.
1.7 "Oral Instructions" shall mean instructions orally transmitted to and
accepted by the Custodian because such instructions are: (i) reasonably
believed by the Custodian to have been given by an Authorized Person,
(ii) recorded and kept among the records of the Custodian made in the ordinary
course of business and (iii) orally confirmed by the Custodian. The Trust shall
cause all Oral Instructions to be confirmed by Written Instructions. If such
Written Instructions confirming Oral Instructions are not received by the
Custodian prior to a transaction, it shall in no way affect the validity of the
transaction or the authorization thereof by the Trust. If Oral Instructions
vary from the Written Instructions which purport to confirm them, the Custodian
shall notify the Trust of such variance but such Oral Instructions will govern
unless the Custodian has not yet acted.
1.8 "Custody Account" shall mean any account in the name of the Trust,
which is provided for in Section 3.2 below.
1.9 "Proper Instructions" shall mean Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by both parties.
1.10 "Securities Depository" shall mean The Participants Trust Company or
The Depository Trust Company and (provided that Custodian shall have received a
copy of a resolution of the Board of Trustees, certified by an Officer,
specifically approving the use of such clearing agency as a depository for the
Trust) any other clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities and Exchange Act of 1934 (the
"1934 Act"), which acts as a system for the central handling of Securities where
all Securities of any particular class or series of an issuer deposited within
the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of the Securities.
1.11 "Securities" shall include, without limitation, common and preferred
stocks, bonds, call options, put options, debentures, notes, bank certificates
of deposit, bankers' acceptances, mortgage-backed securities, other money market
instruments or other obligations, and any certificates, receipts, warrants or
other instruments or documents representing rights to receive, purchase or
subscribe for the same, or evidencing or representing any other rights or
interests therein, or any similar property or assets that the Custodian has the
facilities to clear and to service.
1.12 "Shares" shall mean the units of beneficial interest issued by the
Trust.
1.13 "Written Instructions" shall mean (i) written communications actually
received by the Custodian and signed by one or more persons as the Board of
Trustees shall have from time to time authorized, or (ii) communications by
telex or any other such system from a person or persons reasonably believed by
the Custodian to be Authorized, or (iii) communications transmitted
electronically through the Institutional Delivery System (IDS), or any other
similar electronic instruction system acceptable to Custodian and approved by
resolutions of the Board of Trustees, a copy of which, certified by an Officer,
shall have been delivered to the Custodian.
<PAGE>
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 Appointment. The Trust hereby constitutes and appoints the Custodian
as custodian of all Securities and cash owned by or in the possession of the
Trust at any time during the period of this Agreement, provided that such
Securities or cash at all times shall be and remain the property of the Trust.
2.2 Acceptance. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as hereinafter set forth and
in accordance with the 1940 Act as amended. Except as specifically set forth
herein, the Custodian shall have no liability and assumes no responsibly for any
non-compliance by the Trust or a Fund of any laws, rules or regulations.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1 Segregation. All Securities and non-cash property held by the
Custodian for the account of the Fund, except Securities maintained in a
Securities Depository or Book-Entry System, shall be physically segregated from
other Securities and non-cash property in the possession of the Custodian and
shall be identified as subject to this Agreement.
3.2 Custody Account. The Custodian shall open and maintain in its trust
department a custody account in the name of each Fund, subject only to draft or
order of the Custodian, in which the Custodian shall enter and carry all
Securities, cash and other assets of the Fund which are delivered to it.
3.3 Appointment of Agents. In its discretion, the Custodian may appoint,
and at any time remove, any domestic bank or trust company, which has been
approved by the Board of Trustees and is qualified to act as a custodian under
the 1940 Act, as sub-custodian to hold Securities and cash of the Funds and to
carry out such other provisions of this Agreement as it may determine, and may
also open and maintain one or more banking accounts with such a bank or trust
company (any such accounts to be in the name of the Custodian and subject only
to its draft or order), provided, however, that the appointment of any such
agent shall not relieve the Custodian of any of its obligations or liabilities
under this Agreement.
3.4 Delivery of Assets to Custodian. The Fund shall deliver, or cause to
be delivered, to the Custodian all of the Fund's Securities, cash and other
assets, including (a) all payments of income, payments of principal and capital
distributions received by the Fund with respect to such Securities, cash or
other assets owned by the Fund at any time during the period of this Agreement,
and (b) all cash received by the Fund for the issuance, at any time during such
period, of Shares. The Custodian shall not be responsible for such Securities,
cash or other assets until actually received by it.
<PAGE>
3.5 Securities Depositories and Book-Entry Systems. The Custodian may
deposit and/or maintain Securities of the Funds in a Securities Depository or in
a Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of Securities of the Funds in any Securities
Depository or Book-Entry System, the Fund shall deliver to the
Custodian a resolution of the Board of Trustees, certified by an
Officer, authorizing and instructing the Custodian on an on-going
basis to deposit in such Securities Depository or Book-Entry System
all Securities eligible for deposit therein and to make use of such
Securities Depository or Book-Entry System to the extent possible and
practical in connection with its performance hereunder, including,
without limitation, in connection with settlements of purchases and
sales of Securities, loans of Securities, and deliveries and returns
of collateral consisting of Securities. So long as such Securities
Depository or Book-Entry System shall continue to be employed for the
deposit of Securities of the Funds, the Trust shall annually re-adopt
such resolution and deliver a copy thereof, certified by an Officer,
to the Custodian.
(b) Securities of the Fund kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of the
Custodian in such Book-Entry System or Securities Depository which
includes only assets held by the Custodian as a fiduciary, custodian
or otherwise for customers.
(c) The records of the Custodian and the Custodian's account on the books
of the Book-Entry System and Securities Depository as the case may be,
with respect to Securities of a Fund maintained in a Book-Entry System
or Securities Depository shall, by book-entry, or otherwise identify
such Securities as belonging to the Fund.
(d) If Securities purchases by the Fund are to be held in a Book-Entry
System or Securities Depository, the Custodian shall pay for such
Securities upon (i) receipt of advice from the Book-Entry System or
Securities Depository that such Securities have been transferred to
the Depository Account, and (ii) the making of an entry on the records
of the Custodian to reflect such payment and transfer for the account
of the Fund. If Securities sold by the Fund are held in a Book-Entry
System or Securities Depository, the Custodian shall transfer such
Securities upon (i) receipt of advice from the Book-Entry System or
Securities depository that payment for such Securities has been
transferred to the Depository Account, and (ii) the making of an entry
on the records of the Custodian to reflect such transfer and payment
for the account of the Fund.
(e) Upon request, the Custodian shall provide the Fund with copies of any
report (obtained by the Custodian from a Book-Entry System or
Securities Depository in which Securities of the Fund is kept) on the
internal accounting controls and procedures for safeguarding
Securities deposited in such Book-Entry System or Securities
Depository.
<PAGE>
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Trust for any loss or damage to the
Trust resulting (i) from the use of a Book-Entry System or Securities
Depository by reason of any negligence or willful misconduct on the
part of Custodian or any sub-custodian appointed pursuant to
Section 3.3 above or any of its or their employees, or (ii) from
failure of Custodian or any such sub-custodian to enforce effectively
such rights as it may have against a Book-Entry System or Securities
Depository. At its election, the Trust shall be subrogated to the
rights of the Custodian with respect to any claim against a Book-Entry
System or Securities Depository or any other person for any loss or
damage to the Funds arising from the use of such Book-Entry System or
Securities Depository, if and to the extent that the Trust has been
made whole for any such loss or damage.
3.6 Disbursement of Moneys from Custody Accounts. Upon receipt of Proper
Instructions, the Custodian shall disburse moneys from a Fund Custody Account
but only in the following cases:
(a) For the purchase of Securities for the Fund but only upon compliance
with Section 4.1 of this Agreement and only (i) in the case of
Securities (other than options on Securities, futures contracts and
options on futures contracts), against the delivery to the Custodian
(or any sub-custodian appointed pursuant to Section 3.3 above) of such
Securities registered as provided in Section 3.9 below in proper form
for transfer, or if the purchase of such Securities is effected
through a Book-Entry System or Securities Depository, in accordance
with the conditions set forth in Section 3.5 above; (ii) in the case
of options on Securities, against delivery to the Custodian (or such
sub-custodian) of such receipts as are required by the customs
prevailing among dealers in such options; (iii) in the case of futures
contracts and options on futures contracts, against delivery to the
Custodian (or such sub-custodian) of evidence of title thereto in
favor of the Trust or any nominee referred to in Section 3.9 below;
and (iv) in the case of repurchase or reverse repurchase agreements
entered into between the Trust and a bank which is a member of the
Federal Reserve System or between the Trust and a primary dealer in
U.S. Government securities, against delivery of the purchased
Securities either in certificate form or through an entry crediting
the Custodian's account at a Book-Entry System or Securities
Depository for the account of the Fund with such Securities;
(b) In connection with the conversion, exchange or surrender, as set forth
in Section 3.7(f) below, of Securities owned by the Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Fund;
(d) In payment of the redemption price of Shares as provided in
Section 5.1 below;
(e) For the payment of any expense or liability incurred by the Trust,
including but not limited to the following payments for the account of
a Fund: interest; taxes; administration, investment management,
investment advisory, accounting, auditing, transfer agent, custodian,
trustee and legal fees; and other operating expenses of a Fund; in all
cases, whether or not such expenses are to be in whole or in part
capitalized or treated as deferred expenses;
<PAGE>
(f) For transfer in accordance with the provisions of any agreement among
the Trust, the Custodian and a broker-dealer registered under the 1934
Act and a member of the NASD, relating to compliance with rules of The
Options Clearing Corporation and of any registered national securities
exchange (or of any similar organization or organizations) regarding
escrow or other arrangements in connection with transactions by the
Trust;
(g) For transfer in accordance with the provisions of any agreement among
the Trust, the Custodian, and a futures commission merchant registered
under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any contract
market (or any similar organization or organizations) regarding
account deposits in connection with transactions by the Trust;
(h) For the funding of any uncertificated time deposit or other interest-
bearing account with any banking institution (including the
Custodian), which deposit or account has a term of one year or less;
and
(i) For any other proper purposes, but only upon receipt, in addition to
Proper Instructions, of a copy of a resolution of the Board of
Trustees, certified by an Officer, specifying the amount and purpose
of such payment, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom such payment is to
be made.
3.7 Delivery of Securities from Fund Custody Accounts. Upon receipt of
Proper Instructions, the Custodian shall release and deliver Securities from a
Custody Account but only in the following cases:
(a) Upon the sale of Securities for the account of a Fund but only against
receipt of payment therefor in cash, by certified or cashiers check or
bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of
Section 3.5 above;
(c) To an Offeror's depository agent in connection with tender or other
similar offers for Securities of a Fund; provided that, in any such
case, the cash or other consideration is to be delivered to the
Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the name of
the Trust, the Custodian or any sub-custodian appointed pursuant to
Section 3.3 above, or of any nominee or nominees of any of the
foregoing, or (ii) for exchange for a different number of certificates
or other evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the new Securities
are to be delivered to the Custodian;
<PAGE>
(e) To the broker selling Securities, for examination in accordance with
the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
issuer of such Securities, or pursuant to provisions for conversion
contained in such Securities, or pursuant to any deposit agreement,
including surrender or receipt of underlying Securities in connection
with the issuance or cancellation of depository receipts; provided
that, in any such case, the new Securities and cash, if any, are to be
delivered to the Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase or reverse
repurchase agreement entered into by a Fund;
(h) In the case of warrants, rights or similar Securities, upon the
exercise thereof, provided that, in any such case, the new Securities
and cash, if any, are to be delivered to the Custodian;
(i) For delivery in connection with any loans of Securities of a Fund, but
only against receipt of such collateral as the Trust shall have
specified to the Custodian in Proper Instructions;
(j) For delivery as security in connection with any borrowings by the
Trust on behalf of a Fund requiring a pledge of assets by such Fund,
but only against receipt by the Custodian of the amounts borrowed;
(k) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Trust or a Fund;
(l) For delivery in accordance with the provisions of any agreement among
the Trust, the Custodian and a broker-dealer registered under the 1934
Act and a member of the NASD, relating to compliance with the rules of
The Options Clearing Corporation and of any registered national
securities exchange (or of any similar organization or organizations)
regarding escrow or other arrangements in connection with transactions
by the Trust on behalf of a Fund;
(m) For delivery in accordance with the provisions of any agreement among
the Trust on behalf of a Fund, the Custodian, and a futures commission
merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading Commission
and/or any contract market (or any similar organization or
organizations) regarding account deposits in connection with
transactions by the Trust on behalf of a Fund; or
<PAGE>
(n) For any other proper corporate purposes, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of the
Board of Trustees, certified by an Officer, specifying the Securities
to be delivered, setting forth the purpose for which such delivery is
to be made, declaring such purpose to be a proper corporate purpose,
and naming the person or persons to whom delivery of such Securities
shall be made.
3.8 Actions Not Requiring Proper Instructions. Unless otherwise
instructed by the Trust, the Custodian shall with respect to all Securities held
for a Fund;
(a) Subject to Section 7.4 below, collect on a timely basis all income and
other payments to which the Trust is entitled either by law or
pursuant to custom in the securities business;
(b) Present for payment and, subject to Section 7.4 below, collect on a
timely basis the amount payable upon all Securities which may mature
or be called, redeemed, or retired, or otherwise become payable;
(c) Endorse for collection, in the name of the Trust, checks, drafts and
other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or certificates of
ownership under the federal income tax laws or the laws or regulations
of any other taxing authority now or hereafter in effect, and prepare
and submit reports to the Internal Revenue Service ("IRS") and to the
Trust at such time, in such manner and containing such information as
is prescribed by the IRS;
(f) Hold for a Fund, either directly or, with respect to Securities held
therein, through a Book-Entry System or Securities Depository, all
rights and similar securities issued with respect to Securities of the
Fund; and
(g) In general, and except as otherwise directed in Proper Instructions,
attend to all non-discretionary details in connection with sale,
exchange, substitution, purchase, transfer and other dealings with
Securities and assets of the Fund.
3.9 Registration and Transfer of Securities. All Securities held for a
Fund that are issued or issuable only in bearer form shall be held by the
Custodian in that form, provided that any such Securities shall be held in a
Book-Entry System for the account of the Trust on behalf of a Fund, if eligible
therefor. All other Securities held for a Fund may be registered in the name of
the Trust on behalf of such Fund, the Custodian, or any sub-custodian appointed
pursuant to Section 3.3 above, or in the name of any nominee of any of them, or
in the name of a Book-Entry System, Securities Depository or any nominee of
either thereof; provided, however, that such Securities are held specifically
for the account of the Trust on behalf of a Fund. The Trust shall furnish to
the Custodian appropriate instruments to enable the Custodian to hold or deliver
in proper form for transfer, or to register in the name of any of the nominees
hereinabove referred to or in the name of a Book-Entry System or Securities
Depository, any Securities registered in the name of a Fund.
<PAGE>
3.10 Records.
(a) The Custodian shall maintain, by Fund, complete and accurate records
with respect to Securities, cash or other property held for the Trust, including
(i) journals or other records of original entry containing an itemized daily
record in detail of all receipts and deliveries of Securities and all receipts
and disbursements of cash; (ii) ledgers (or other records) reflecting
(A) Securities in transfer, (B) Securities in physical possession, (C) monies
and Securities borrowed and monies and Securities loaned (together with a record
of the collateral therefor and substitutions of such collateral), (D) dividends
and interest received, and (E) dividends receivable and interest accrued; and
(iii) canceled checks and bank records related thereto. The Custodian shall
keep such other books and records of the Trust as the Trust shall reasonably
request, or as may be required by the 1940 Act, including, but not limited to
Section 3.1 and Rule 31a-1 and Rule 31a-2 promulgated thereunder.
(b) All such books and records maintained by the Custodian shall (i) be
maintained in a form acceptable to the Trust and in compliance with rules and
regulations of the Securities and Exchange Commission, (ii) be the property of
the Trust and at all times during the regular business hours of the Custodian be
made available upon request for inspection by duly authorized officers,
employees or agents of the Trust and employees or agents of the Securities and
Exchange Commission, and (iii) if required to be maintained by Rule 31a-1 under
the 1940 Act, be preserved for the periods prescribed in Rule 31a-2 under the
1940 Act.
3.11 Fund Reports by Custodian. The Custodian shall furnish the Trust with
a daily activity statement by Fund and a summary of all transfers to or from the
Custody Account on the day following such transfers. At least monthly and from
time to time, the Custodian shall furnish the Trust with a detailed statement,
by Fund, of the Securities and moneys held for the Trust under this Agreement.
3.12 Other Reports by Custodian. The Custodian shall provide the Trust
with such reports, as the Trust may reasonably request from time to time, on the
internal accounting controls and procedures for safeguarding Securities, which
are employed by the Custodian or any sub-custodian appointed pursuant to
Section 3.3 above.
3.13 Proxies and Other Materials. The Custodian shall cause all proxies if
any, relating to Securities which are not registered in the name of a Fund, to
be promptly executed by the registered holder of such Securities, without
indication of the manner in which such proxies are to be voted, and shall
include all other proxy materials, if any, promptly deliver to the Trust such
proxies, all proxy soliciting materials, which should include all other proxy
materials, if any, and all notices to such Securities.
3.14 Information on Corporate Actions. Custodian will promptly notify the
Trust of corporate actions, limited to those Securities registered in nominee
name and to those Securities held at a Depository or sub-Custodian acting as
agent for Custodian. Custodian will be responsible only if the notice of such
corporate actions is published by the Financial Daily Card Service, J.J. Kenny
Called Bond Service, DTC, or received by first class mail from the agent. For
market announcements not yet received and distributed by Custodian's services,
Trust will inform its custody representative with appropriate instructions.
Custodian will, upon receipt of Trust's response within the required deadline,
affect such action for receipt or payment for the Trust. For those responses
received after the deadline, Custodian will affect such action for receipt or
payment, subject to the limitations of the agent(s) affecting such actions.
Custodian will promptly notify Trust for put options only if the notice is
received by first class mail from the agent. The Trust will provide or cause to
be provided to Custodian with all relevant information contained in the
prospectus for any security which has unique put/option provisions and provide
Custodian with specific tender instructions at least ten business days prior to
the beginning date of the tender period.
<PAGE>
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
4.1 Purchase of Securities. Promptly upon each purchase of Securities for
the Trust, Written Instructions shall be delivered to the Custodian, specifying
(a) the name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any) or other units purchased, (c) the date of purchase and
settlement, (d) the purchase price per unit, (e) the total amount payable upon
such purchase, and (f) the name of the person to whom such amount is payable.
The Custodian shall upon receipt of such Securities purchased by a Fund pay out
of the moneys held for the account of such Fund the total amount specified in
such Written Instructions to the person named therein. The Custodian shall not
be under any obligation to pay out moneys to cover the cost of a purchase of
Securities for a Fund, if in the relevant Custody Account there is insufficient
cash available to the Fund for which such purchase was made.
4.2 Liability for Payment in Advance of Receipt of Securities Purchased.
In any and every case where payment for the purchase of Securities for a Fund is
made by the Custodian in advance of receipt for the account of the Fund of the
Securities purchased but in the absence of specific Written or Oral Instructions
to so pay in advance, the Custodian shall be liable to the Fund for such
Securities to the same extent as if the Securities had been received by the
Custodian.
4.3 Sale of Securities. Promptly upon each sale of Securities by a Fund,
Written Instructions shall be delivered to the Custodian, specifying (a) the
name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any), or other units sold, (c) the date of sale and settlement
(d) the sale price per unit, (e) the total amount payable upon such sale, and
(f) the person to whom such Securities are to be delivered. Upon receipt of the
total amount payable to the Trust as specified in such Written Instructions, the
Custodian shall deliver such Securities to the person specified in such Written
Instructions. Subject to the foregoing, the Custodian may accept payment in
such form as shall be satisfactory to it, and may deliver Securities and arrange
for payment in accordance with the customs prevailing among dealers in
Securities.
<PAGE>
4.4 Delivery of Securities Sold. Notwithstanding Section 4.3 above or any
other provision of this Agreement, the Custodian, when instructed to deliver
Securities against payment, shall be entitled, if in accordance with generally
accepted market practice, to deliver such Securities prior to actual receipt of
final payment therefor. In any such case, the Trust shall bear the risk that
final payment for such Securities may not be made or that such Securities may be
returned or otherwise held or disposed of by or through the person to whom they
were delivered, and the Custodian shall have no liability for any of the
foregoing.
4.5 Payment for Securities Sold, etc. In its sole discretion and from
time to time, the Custodian may credit the relevant Custody Account, prior to
actual receipt of final payment thereof, with (i) proceeds from the sale of
Securities which it has been instructed to deliver against payment,
(ii) proceeds from the redemption of Securities or other assets of the Trust,
and (iii) income from cash, Securities or other assets of the Trust. Any such
credit shall be conditional upon actual receipt by Custodian of final payment
and may be reversed if final payment is not actually received in full. The
Custodian may, in its sole discretion and from time to time, permit the Trust to
use funds so credited to its Custody Account in anticipation of actual receipt
of final payment. Any such funds shall be repayable immediately upon demand
made by the Custodian at any time prior to the actual receipt of all final
payments in anticipation of which funds were credited to the Custody Account.
4.6 Advances by Custodian for Settlement. The Custodian may, in its sole
discretion and from time to time, advance funds to the Trust to facilitate the
settlement of a Trust transactions on behalf of a Fund in its Custody Account.
Any such advance shall be repayable immediately upon demand made by Custodian.
ARTICLE V
REDEMPTION OF TRUST SHARES
Transfer of Funds. From such funds as may be available for the purpose in
the relevant Custody Account, and upon receipt of Proper Instructions specifying
that the funds are required to redeem Shares of a Fund, the Custodian shall wire
each amount specified in such Proper Instructions to or through such bank as the
Trust may designate with respect to such amount in such Proper Instructions.
Upon effecting payment or distribution in accordance with proper Instruction,
the Custodian shall not be under any obligation or have any responsibility
thereafter with respect to any such paying bank.
ARTICLE VI
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, the Custodian shall establish and
maintain a segregated account or accounts for and on behalf of each Fund, into
which account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among the Trust,
the Custodian and a broker-dealer registered under the 1934 Act and a
member of the NASD (or any futures commission merchant registered
under the Commodity Exchange Act), relating to compliance with the
rules of The Options Clearing Corporation and of any registered
national securities exchange (or the Commodity Futures Trading
commission or any registered contract market), or of any similar
organization or organizations, regarding escrow or other arrangements
in connection with transactions by the Trust,
<PAGE>
(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written by a Fund or in connection
with financial futures contracts (or options thereon) purchased or
sold by a Fund,
(c) which constitute collateral for loans of Securities made by a Fund,
(d) for purposes of compliance by the Trust with requirements under the
1940 Act for the maintenance of segregated accounts by registered
investment companies in connection with reverse repurchase agreements
and when-issued, delayed delivery and firm commitment transactions,
and
(e) for other proper corporate purposes, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of
the Board of Trustees, certified by an Officer, setting forth the
purpose or purposes of such segregated account and declaring such
purposes to be proper corporate purposes.
ARTICLE VII
CONCERNING THE CUSTODIAN
7.1 Standard of Care. The Custodian shall be held to the exercise of
reasonable care in carrying out its obligations under this Agreement, and shall
be without liability to the Trust for any loss, damage, cost, expense (including
attorneys' fees and disbursements), liability or claim unless such loss,
damages, cost, expense, liability or claim arises from negligence, bad faith or
willful misconduct on its part or on the part of any sub-custodian appointed
pursuant to Section 3.3 above. The Custodian's cumulative liability within a
calendar year shall be limited with respect to the Trust or any party claiming
by, through or on behalf of the Trust for the initial and all subsequent renewal
terms of this Agreement, to the lessor amount of (a) the actual damages
sustained by the Trust, (actual damages for uninvested funds shall be the
overnight Feds fund rate), or (b) to an amount not to exceed one-half of the net
fees paid to the Custodian within the prior three calendar months. The
Custodian shall be entitled to rely on and may act upon advice of counsel on all
matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice. The Custodian shall promptly notify the Trust
of any action taken or omitted by the Custodian pursuant to advice of counsel.
The Custodian shall not be under any obligation at any time to ascertain whether
the Trust is in compliance with the 1940 Act, the regulations thereunder, the
provisions of the Trust's charter documents or by-laws, or its investment
objectives and policies as then in effect.
7.2 Actual Collection Required. The Custodian shall not be liable for, or
considered to be the custodian of, any cash belonging to the Trust or any money
represented by a check, draft or other instrument for the payment of money,
until the Custodian or its agents actually receive such cash or collect on such
instrument.
<PAGE>
7.3 No Responsibility for title, etc. So long as and to the extent that
it is in the exercise of reasonable care, the Custodian shall not be responsible
for the title, validity or genuineness of any property or evidence of title
thereto received or delivered by it pursuant to this Agreement.
7.4 Limitation on Duty to Collect. Custodian shall not be required to
enforce collection, by legal means or otherwise, of any money or property due
and payable with respect to Securities held for the Trust if such Securities are
in default or payment is not made after due demand or presentation.
7.5 Reliance Upon Documents and Instructions. The Custodian shall be
entitled to rely upon any certificate, notice or other instrument in writing
received by it and reasonably believed by it to be genuine. The Custodian shall
be entitled to rely upon any Oral Instructions and/or any Written Instructions
actually received by it pursuant to this Agreement.
7.6 Express Duties Only. The Custodian shall have no duties or
obligations whatsoever except such duties and obligations as are specifically
set forth in this Agreement, and no covenant or obligation shall be implied in
this Agreement against the Custodian.
7.7 Cooperation. The Custodian shall cooperate with and supply necessary
information, by the Trust, to the entity or entities appointed by the Trust to
keep the books of account of the Trust and/or compute the value of the assets of
the Trust. The Custodian shall take all such reasonable actions as the Trust
may from time to time request to enable the Trust to obtain, from year to year,
favorable opinions from the Trust's independent accountants with respect to the
Custodian's activities hereunder in connection with (a) the preparation of the
Trust's report on Form N-1A and Form N-SAR and any other reports required by the
Securities and Exchange Commission, and (b) the fulfillment by the Trust of any
other requirements of the Securities and Exchange Commission.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification. The Trust shall indemnify and hold harmless the
Custodian and any sub-custodian appointed pursuant to Section 3.3 above, and any
nominee of the Custodian or of such sub-custodian from and against any loss,
damage, cost, expense (including attorneys' fees and disbursements), liability
(including, without limitation, liability arising under the Securities Act of
1933, the 1934 Act, the 1940 Act, and any state or foreign securities and/or
banking laws) or claim arising directly or indirectly (a) from the fact that
Securities are registered in the name of any such nominee, or (b) from any
action or inaction by the Custodian or such sub-custodian (i) at the request or
direction of or in reliance on the advice of the Trust, or (ii) upon Proper
Instructions, or (c) generally, from the performance of its obligations under
this Agreement or any sub-custody agreement with a sub-custodian appointed
pursuant to Section 3.3 above or, in the case of any such sub-custodian, from
the performance of its obligations under such custody agreement, provided that
neither the Custodian nor any such sub-custodian shall be indemnified and held
harmless from and against any such loss, damage, cost, expense, liability or
claim arising from the Custodian's or such sub-custodian's negligence, bad faith
or willful misconduct.
<PAGE>
8.2 Indemnity to be Provided. If the Trust requests the Custodian to take
any action with respect to Securities, which may, in the opinion of the
custodian, result in the Custodian or its nominee becoming liable for the
payment of money or incurring liability of some other form, the Custodian shall
not be required to take such action until the Trust shall have provided
indemnity therefor to the Custodian in an amount and form satisfactory to the
Custodian.
ARTICLE IX
FORCE MAJEURE
Neither the Custodian nor the Trust shall be liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes, acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation; provided, however, that the Custodian in the event of a failure
or delay shall use its best efforts to ameliorate the effects of any such
failure or delay. Notwithstanding the foregoing, the Custodian shall maintain
sufficient disaster recovery procedures to minimize interruptions.
ARTICLE X
EFFECTIVE PERIOD; TERMINATION
10.1 Effective Period. This Agreement shall become effective as of the
date first set forth above and shall continue in full force and effect until
terminated as hereinafter provided.
10.2 Termination. Either party hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than ninety (90) days after the date of the
giving of such notice. If a successor custodian shall have been appointed by
the Board of Trustees, the Custodian shall, upon receipt of a notice of
acceptance by the successor custodian, on such specified date of termination
(a) deliver directly to the successor custodian all Securities (other than
Securities held in a Book-Entry System or Securities Depository) and cash then
owned by the Trust and held by the Custodian as custodian, and (b) transfer any
Securities held in a Book-Entry System or Securities Depository to an account of
or for the benefit of the Trust at the successor custodian, provided that the
Trust shall have paid to the Custodian all fees, expenses and other amounts to
the payment or reimbursement of which it shall then be entitled. Upon such
delivery and transfer, the Custodian shall be relieved of all obligations under
this Agreement. The Trust may at any time immediately terminate this Agreement
in the event of the appointment of a conservator or receiver for the Custodian
by regulatory authorities in the State of Ohio or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of competent
jurisdiction.
<PAGE>
10.3 Failure to Appoint Successor Custodian. If a successor custodian is
not designated by the Trust on or before the date of termination specified
pursuant to Section 10.1 above, then the Custodian shall have the right to
deliver to a bank or trust company of its own selection, which is (a) a "Bank"
as defined in the 1940 Act, (b) has aggregate capital, surplus and undivided
profits as shown on its then most recent published report of not less than $25
million, and (c) is doing business in New York, New York, all Securities, cash
and other property held by Custodian under this Agreement and to transfer to an
account of or for the Trust at such bank or trust company all Securities of the
Trust held in a Book-Entry System or Securities Depository. Upon such delivery
and transfer, such bank or trust company shall be the successor custodian under
this Agreement and the Custodian shall be relieved of all obligations under this
Agreement. If, after reasonable inquiry, Custodian cannot find a successor
custodian as contemplated in this Section 10.3, then Custodian shall have the
right to deliver to the Trust all Securities and cash then owned by the Trust
and to transfer any Securities held in a Book-Entry System or Securities
Depository to an account of or for the Trust. Thereafter, the Trust shall be
deemed to be its own custodian with respect to the Trust and the Custodian shall
be relieved of all obligations under this Agreement.
ARTICLE XI
COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to compensation as agreed upon from time to
time by the Trust and the Custodian. The fees and other charges in effect on
the date hereof and applicable to the Funds are set forth in Exhibit B attached
hereto.
ARTICLE XII
LIMITATION OF LIABILITY
The Trust is a business trust organized under the laws of the State of
Delaware and under a Declaration of Trust, to which reference is hereby made a
copy of which is on file at the office of the Secretary of State of Delaware as
required by law, and to any and all amendments thereto so filed or hereafter
filed. The obligations of the Trust entered into in the name of the Trust or on
behalf thereof by any of the Trustees, officers, employees or agents are made
not individually, but in such capacities, and are not binding upon any of the
Trustees, officers, employees, agents or shareholders of the Trust or the Funds
personally, but bind only the assets of the Trust, and all persons dealing with
any of the Funds of the Trust must look solely to the assets of the Trust
belonging to such Fund for the enforcement of any claims against the Trust.
<PAGE>
ARTICLE XIII
NOTICES
Unless otherwise specified herein, all demands, notices, instructions, and
other communications to be given hereunder shall be in writing and shall be sent
or delivered to The receipt at the address set forth after its name herein
below:
To the Trust:
Prasad Series Trust
821 Hillside Drive
Long Beach, CA 90815
Attn: Rajendra Prasad
Telephone: ( )_____________________
Facsimile: ( )_____________________
To the Custodian:
The Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attn: Area Manager - Trust Operations
Telephone: (513) 579-5300
Facsimile: (513) 579-4312
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XIII. Writing shall include
transmission by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XIV
MISCELLANEOUS
14.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
14.2 References to Custodian. The Trust shall not circulate any printed
matter which contains any reference to Custodian without the prior written
approval of Custodian, excepting printed matter contained in the prospectus or
statement of additional information or its registration statement for the Trust
and such other printed matter as merely identifies Custodian as custodian for
the Trust. The Trust shall submit printed matter requiring approval to
Custodian in draft form, allowing sufficient time for review by Custodian and
its counsel prior to any deadline for printing.
<PAGE>
14.3 No Waiver. No failure by either party hereto to exercise and no delay
by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein are
cumulative and not exclusive of any remedies provided at law or in equity.
14.4 Amendments. This Agreement cannot be changed orally and no amendment
to this Agreement shall be effective unless evidenced by an instrument in
writing executed by the parties hereto.
14.5 Counterparts. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
14.6 Severability. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions shall not be affected or
impaired thereby.
14.7 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party hereto.
14.8 Headings. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed and delivered in its name and on its behalf by its representatives
thereunto duly authorized, all as of the day and year first above written.
ATTEST: PRASAD SERIES TRUST
By: /s/ Rajendra Prasad
Its: President
ATTEST: THE FIFTH THIRD BANK
By: /s/ Howard Kaplan
Its: Assistant Vice President
Dated: October 27, 1998
<PAGE>
EXHIBIT A
TO THE CUSTODY AGREEMENT BETWEEN
PRASAD SERIES TRUST AND THE FIFTH THIRD BANK
October 27, 1998
Name of Fund Date
Prasad Growth Fund
PRASAD SERIES TRUST
By: /s/ Rajendra Prasad
Its: President
THE FIFTH THIRD BANK
By: /s/ Howard Kaplan
Its: Assistant Vice President
Dated: October 27, 1998
<PAGE>
EXHIBIT B
TO THE CUSTODY AGREEMENT BETWEEN
PRASAD SERIES TRUST AND THE FIFTH THIRD BANK
October 27, 1998
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Trust to Administer each Custody Account.
Name Signature
Rajendra Prasad /s/ Rajendra Prasad
_________________________________ _________________________________
_________________________________ _________________________________
_________________________________ _________________________________
_________________________________
_________________________________
_________________________________
_________________________________
_________________________________
_________________________________
_________________________________
_________________________________
<PAGE>
SIGNATURE RESOLUTION
RESOLVED, That all of the following officers of PRASAD SERIES TRUST and any of
them, namely the Chairman, President, Secretary and Treasurer, are hereby
authorized as signers for the conduct of business for an on behalf of the Funds
with THE FIFTH THIRD BANK:
Rajendra Prasad CHAIRMAN /s/ Rajendra Prasad
Rajendra Prasad PRESIDENT /s/ Rajendra Prasad
Rajendra Prasad TREASURER /s/ Rajendra Prasad
Rajendra Prasad SECRETARY /s/ Rajendra Prasad
The undersigned officers of PRASAD SERIES TRUST hereby certify that the
foregoing is within the parameters of a Resolution adopted by Trustees of the
Trust in a meeting held October 28, 1998, directing and authorizing preparation
of documents and to do everything necessary to effect the Custody Agreement
between PRASAD SERIES TRUST and THE FIFTH THIRD BANK.
By: /s/ Rajendra Prasad
Its: President
<PAGE>
EXHIBIT C
FIFTH THIRD BANK
MUTUAL FUND CUSTODY FEE SCHEDULE
PRASAD SERIES TRUST
Per Unit
Fee
I. Basic Per Account Fee
Annual Asset Based Fees
Under $25 Million 1 bp
$25 - $100 Million .75 bp
$100- $200 Million .5 bp
Over $200 Million .25 bp
Minimum $2,400.00
II. Security Transaction Fees
DTC/Fed Eligible $9.00
Physical 25.00
Amortized Securities 25.00
Options 25.00
Mutual Funds 15.00
Foreign - Euroclear & Cedel 50.00
Foreign - Other TBD
III. Systems
Automated Securities Workstation $150.00
$200.00 Initial Setup
Mainframe-To-Mainframe 150.00
$200.00 Initial Setup
ACCESS Single Account 50.00
Multiple 100.00
Accounts
IV. Miscellaneous Fees
Principal & Interest Collection (or $5.00
amortized securities)
Per additional issue for repo collateral 5.00
Voluntary Corporate Actions 25.00
Wire Transfers (In/Out) 7.00
Automated Asset Reconciliation 25.00
* FIFTH THIRD IS WILLING TO REDUCE THE TOTAL ACCOUNT FEES 50% FOR THE FIRST SIX
MONTHS AND 25% FOR THE SECOND SIX MONTHS ONCE CONVERTED TO FIFTH THIRD
** Minimum Account Fee $2,400
<PAGE>
EXHIBIT 10
October 26, 1998
Prasad Series Trust
The Tower at Erieview, 36th Floor
1301 East Ninth Street
Cleveland, OH 44114
Gentlemen:
We have acted as counsel for Prasad Series Trust, a Delaware business trust (the
"Trust") in connection with the filing by the Trust of a Registration Statement
on Form N-1A pursuant to the Securities Act of 1933 and the Investment Company
Act of 1940 (the "Registration Statement") with respect to the proposed sale of
an indefinite number of shares (the "Shares") of the Prasad Growth Fund, being a
series of shares of beneficial interest in the Trust.
We have examined and relied upon originals or copies, certified or otherwise
identified to our satisfaction as being true copies, of all such records of the
Trust, all such agreements, certificates of officers of the Trust, public
officials and others, and such other documents, certificates and other records
as we have deem necessary as a basis for the opinions expressed in this letter,
including, without limitation, the Agreement and Declaration of Trust dated
July 31, 1998 (the "Declaration of Trust"), the By-laws of the Trust and the
record of proceedings of the Trustees of the Trust from the date of formation.
In our examination, we have assumed the genuineness of all signatures, the legal
capacity of all natural persons, the authenticity of all documents submitted to
us as originals, and the conformity to original documents of all documents
submitted to us as certified or photostatic copies.
We have investigated such questions of law for the purpose of rendering the
opinions expressed in this letter as we have deemed necessary. We express no
opinion in this letter concerning any law other than the law of the State of
Delaware and the federal law of the United States of America.
This opinion is being rendered to you as of October 26, 1998. The opinion
expressed herein assumes that there is no change in the facts, circumstances and
law in effect on the date of this opinion, particularly as they relate to trust
authority and the Trust's good standing under Delaware law.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when issued pursuant to the terms, provisions and conditions
set forth in the Declaration of Trust and in the Registration Statement, and
upon receipt of full authorized consideration therefor in cash, will be validly
issued, fully paid and non-assessable by the Trust.
<PAGE>
This opinion is rendered only to the Trust in connection with the filing of the
Registration Statement. We consent to the filing of this opinion as Exhibit 10
to the Registration Statement. This letter may not be paraphrased, quoted or
summarized, nor may it be duplicated or reproduced in part.
BENESCH, FRIEDLANDER,
COPLAN & ARONOFF LLP
<PAGE>
EXHIBIT 11
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this Pre-
effective Amendment No. 1 to the Registration Statement for the Prasad Growth
Fund of all references to our firm included in or made a part of this Amendment.
McCurdy & Associates CPA's, Inc.
October 22, 1998
<PAGE>
EXHIBIT 13
October 27, 1998
Prasad Series Trust
1301 East Ninth Street
Cleveland, OH 44114
Re: Purchase Agreement for Initial Capital
Gentlemen:
I am purchasing from you today 10,000 Shares of Prasad Growth Fund, a
portfolio of Prasad Series Trust, a Delaware business trust (the "Trust"), at a
price of $10.00 per share, for an aggregate price of $100,000, to provide the
initial capital you require pursuant to Section 14 of the Investment Company Act
of 1940 in order to make a public offering of shares of the Fund.
I hereby represent that I am acquiring said shares for investment and not for
distribution or resale to the public.
Very truly yours,
/s/ Rajendra Prasad
Rajendra Prasad
<PAGE>
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 - PRASAD SERIES TRUST
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 1-MO
<FISCAL-YEAR-END> OCT-01-1998
<PERIOD-END> OCT-22-1998
<INVESTMENTS-AT-COST> 100000
<INVESTMENTS-AT-VALUE> 100000
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 100000
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 100000
<SHARES-COMMON-STOCK> 10000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 100000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 100000
<PER-SHARE-NAV-BEGIN> 10
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
