Dear Shareholders:
After the bottom of the stock market on October 8th 1998, it took off like a
rocket. Our fund began its life six weeks after that. The green signal came from
the Securities and Exchange Commissionon 11/25/98, the day before Thanksgiving.
I started buying stocks the day after Thanksgiving. So Thanksgiving day has
quite a significance for Prasad Growth Fund. My thanks go to all the investors
and everyone behind the scene working hard for the fund.
It would have been fantastic if the fund had begun its life in October of 1998.
Irregardless our fund did well in December of 1998. It was up by 11.6% on
12/31/98 since its inception on 11/25/98. The benchmark S&P 500 grew by 3.6%.
This was quite good for a new fund joining the race where S&P 500 was already
running.
On January 29th 1999 our fund was up by 18.1% and S&P 500 was up by 7.3%. In
February of 1999 the over all market came down with growth stocks taking a
beating and cyclical ones going up. Our fund had around thirty growth stocks.
Because of this by the end of February 1999 our fund was up 6.5% from inception
when compared to S&P 500 of 4.3% from the same date. By the end of March 1999
our fund was up by 4.1% from inception when compared to S&P 500 which was up by
8.4% from the same date.
Our fund needs more time on its side to have a higher differential. I am
planning to increase the number of stocks held in the portfolio to reduce the
volatility. Our fund has stocks in several leading sectors. But during some
periods the leading sectors are overtaken by cyclicals. In the long run the best
growth stocks will prevail. My philosophy is to invest in the best of growth
stocks. As the earnings of these companies grow our fund would grow. I am
looking for the magic factor of compounding which needs time. In the next nine
years we can expect the market to perform extremely well because of the economic
stimulus caused by the baby boom generation. Also the environment is ideal
consisting of robust growth with low interest rates and subdued inflation.
Thank you and good bye.
Raj Prasad
<PAGE>
Prasad Growth Fund
Schedule of Investments
March 31, 1999
Shares/Principal Amount Market Value % of Assets
Computer-Local Networks
80 Cisco Systems Inc. * 8,765 4.17%
Computer Software-Enterprise
200 Oracle Corp. * 5,275
100 Siebel Systems * 4,750
50 Veritas Software * 4,038
---------
14,063 6.69%
Computer-Mainframes
160 Dell Computer Corp. * 6,540
90 Gateway 2000 * 6,171
50 Sun Microsystems * 6,253
---------
18,964 9.02%
Computer-Memory Devices
100 Network * 5,063 2.41%
Computer Software Desktop
300 Microsoft Corp. * 26,888 12.79%
Computer Software-Fin
150 Fund Tech * 4,519 2.15%
Comml Services-Misc
50 Abacus * 4,100 1.95%
Computer Software Security
175 Check Point Software Tech * 7,525 3.58%
Medical/Dental Services
75 ADV Paradigm * 4,739 2.25%
Telecommunications-Equip
100 Comverse Technology Inc * 8,500 4.04%
Financial Services Misc
50 Providian Corp 5,500 2.62%
Leisure/Toys/Games/Hobbies
450 Jakks Pacf * 8,325 3.96%
Elec-Semiconductor Mfg
85 Flextronics Intl Ltd * 4,335 2.06%
* Non-Income producing securities.
The accompanying notes are an integral part of the financial statements.
<PAGE>
Retail-Apparel/Shoe
90 Abercombe * 8,303
250 Pacific Sun * 8,687
---------
16,990 8.08%
Retail-Consumer Elect
100 Best Buy Co. Inc. * 5,200 2.47%
Telecommunications-Equip
200 Intl Intergration * 6,400
100 Nokia 15,575
50 Tellabs Inc. * 4,888
---------
26,863 12.78%
Telecommunications-Svcs
300 Gilat Comm * 4,181
100 MCI Worldcom Inc. * 8,856
---------
13,037 6.20%
Finance-Invesment Brokers
200 Knight/Trimark Group * 13,400 6.37%
---------
Total Stocks 196,776
Call Options
400 Dell Jan 01 - 25 Calls 9,000 4.28%
---------
Total Call Options 9,000
Repurchase Agreements
42,390 Repurchase 4.4%, 4-1-99 42,390 20.16%
FHLMC Pool #G106557 7.5%, 2/1/12
---------
Total Repurchase Agreements 42,390
Total Investments (cost $241,070) 248,166 118.04%
Other Assets Less Liabilities (37,933) -18.04%
Net Assets - Equivalent to
$10.46 per share on 210,233 100.00%
=========
* Non-Income producing securities.
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Assets and Liabilities
March 31, 1999
Assets
Investment Securities at Market Value 248,166
(Identified Cost - $241,070)
Cash 242
Receivables:
Dividends and Interest 5
Other Assets 0
---------
Total Assets 248,413
Liabilities
Payables:
Investment Securities Purchased 37,369
Shareholder Distributions 0
Accrued Expenses 811
---------
Total Liabilities 38,180
Net Assets 210,233
Net Assets Consist of:
Capital Paid In 205,202
Accumulated Realized Gain
(Loss) on Investments - Net (2,065)
Unrealized Appreciation in Value of Investments
Based on Identified Cost - Net 7,096
---------
Net Assets, for 20,096 Shares Outstanding 210,233
Net Asset Value and Redemption Price
Per Share ($210,233/20,096 shares) 10.46
Offering Price Per Share 10.46
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Operations
11/23/98 *
to
3/31/99
Investment Income: --------
Dividends 31
Interest 199
------
Total Investment Income 230
Expenses
Management Fees (Note 2) 543
Director fees 750
Custody 1,382
Transfer agent fees 3,600
Legal 534
Insurance 921
Audit 8,200
Other expenses 1,441
Organizational Costs 0
------
Total Expenses 17,371
Reimbursed expenses (16,560)
------
Total Expenses
after reimbursement 811
Net Investment Income (581)
Realized and Unrealized Gain
(Loss) on Investments:
Realized Gain
(Loss) on Investments (2,065)
Unrealized Gain (Loss)
from Appreciation
(Depreciation) on
Investments 7,096
------
Net Realized and Unrealized
Gain (Loss) on Investments 5,031
Net Increase (Decrease) in
Net Assets from Operations 4,450
======
* Commencement of operations
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Changes in Net Assets
11/23/98 *
to
3/31/99
--------
From Operations:
Net Investment Income (581)
Net Realized Gain (Loss) on Investments (2,065)
Net Unrealized Appreciation (Depreciation) 7,096
-------
Increase (Decrease) in Net Assets
from Operations 4,450
From Distributions to Shareholders
Net Investment Income 0
Net Realized Gain (Loss) from
Security Transactions 0
-------
Net Increase (Decrease) from Distributions 0
From Capital Share Transactions:
Proceeds From Sale of 10,096 Shares 105,783
Net Asset Value of 0 Shares Issued
on Reinvestment of Dividends 0
Cost of 0 Shares Redeemed 0
-------
105,783
Net Increase in Net Assets 110,233
Net Assets at Beginning of Period 100,000
-------
Net Assets at End of Period 210,233
The accompanying notes are an integral part of the financial statements.
<PAGE>
Financial Highlights
Selected data for a share of common stock outstanding throughout the period:
11/23/98 *
to
3/31/99
--------
Net Asset Value -
Beginning of Period 10.00
Net Investment Income (0.05)
Net Gains or Losses on Securities
(realized and unrealized) 0.51
------
Total from Investment Operations 0.46
Dividends
(from net investment income) 0.00
Distributions (from capital gains) 0.00
Return of Capital 0.00
------
Total Distributions 0.00
Net Asset Value -
End of Period 10.46
Total Return ** 13.37 %
Ratios/Supplemental Data
Net Assets - End of Period
(Thousands) 210
Before expense reimbursement
Ratio of Expenses to
Average Net Assets ** 32.16 %
Ratio of Net Income to
Average Net Assets ** (31.74)%
After expense reimbursement
Ratio of Expenses to
Average Net Assets ** 1.50 %
Ratio of Net Income to
Average Net Assets ** (1.08)%
Portfolio Turnover Rate 272.04 %
* Commencement of operations
** Annualized
The accompanying notes are an integral part of the financial statements.
<PAGE>
PRASAD GROWTH FUND
Notes to Financial Statements
March 31, 1999
1.) SIGNIFICANT ACCOUNTING POLICIES
The Fund is an open-end management investment company, organized as a Trust
under the laws of the State of Delaware by a Declaration of Trust in July
1998. The Fund's investment objective is to obtain capital appreciation. In
seeking its objective, this Fund will invest at least 65% of its total assets
in equity securities. Significant accounting policies of the Fund are
presented below:
SECURITY VALUATION:
The Fund intends to invest in a wide variety of equity and debt securities.
The investments in securities are carried at market value. The market
quotation used for common stocks, including those listed on the NASDAQ
National Market System, is the last sale price on 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 each business day. Short-term investments are valued at
amortized cost, which approximates market. Securities for which market
quotations are not readily available will be valued at fair value as
determined in good faith pursuant to procedures established by the Board of
Directors.
SECURITY TRANSACTION TIMING
Security transactions are recorded on the dates transactions are entered
into. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded as earned. The Fund uses the
identified cost basis in computing gain or loss on sale of investment
securities.
INCOME TAXES:
It is the Fund's policy to distribute annually, prior to the end of the
calendar year, dividends sufficient to satisfy excise tax requirements of the
Internal Revenue Service. This Internal Revenue Service requirement may
cause an excess of distributions over the book year-end accumulated income.
In addition, it is the Fund's policy to distribute annually, after the end of
the fiscal year, any remaining net investment income and net realized capital
gains.
ESTIMATES:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
2.) INVESTMENT ADVISORY AGREEMENT
The Fund has entered into an investment advisory and administration agreement
with Mutual Funds Leader, Inc. The Investment Advisor receives from the Fund
as compensation for its services an annual fee of 1% on the Fund'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 share of the fund
with the Securities and Exchange Commission and the various state, charges of
the custodian, dividend and transfer agent, outside auditing and legal
expenses, liability insurance premiums on property or personnel, etc. From
time to time, Mutual Funds Leader, Inc. may waive some or all of the fees and
may reimburse expenses of the Fund. The Fund paid investment management fees
of $543 during the fiscal year ended March 31, 1999. The Adviser paid
$16,500 of Fund expenses during that same period.
3.) RELATED PARTY TRANSACTIONS
Certain owners of Mutual Funds Leader, Inc. are also owners and/or directors
of the Prasad Growth Fund. These individuals may receive benefits from any
management fees paid to the Advisor.
As of March 31, 1999, Rajendra Prasad owned 69% of the shares. This
individual is considered a control person as defined under Section 2(1)(9) of
the 1940 Act, by virtue of their ownership of more than 25% of the voting
securities of the Fund.
<PAGE>
PRASAD GROWTH FUND
Notes to Financial Statements
March 31, 1999
(continued)
4.) CAPITAL STOCK AND DISTRIBUTION
At March 31, 1999 an indefinite number of shares of capital stock were
authorized, and paid-in capital amounted to $205,783. Transactions in common
stock were as follows:
Shares sold 10,096
Shares issued to shareholders in
reinvestment of dividends 10,096
Shares redeemed 0
-------
Net Increase 10,096
Shares Outstanding:
Beginning of Period 10,000
-------
End of Period 20,096
5.) PURCHASES AND SALES OF SECURITIES
During the period four-month period ending March 31, 1999, purchases and
sales of investment securities other than U.S. Government obligations and
short-term investments aggregated $549,089 and $348,295 respectively.
Purchases and sales of U.S. Government obligations aggregated $0 and $0
respectively.
6.) FINANCIAL INSTRUMENTS DISCLOSURE
There are no reportable financial instruments that have any off-balance sheet
risk as of March 31, 1999.
7.) SECURITY TRANSACTIONS
For Federal income tax purposes, the cost of investments owned at March 31,
1999 was the same as identified cost.
At March 31, 1999, the composition of unrealized appreciation (the excess of
value over tax cost) and depreciation (the excess of tax cost over value) was
as follows:
Net Appreciation
Appreciation (Depreciation) (Depreciation)
10,698 (3,603) 7,095
8.) RECLASSIFICATION OF CAPITAL ACCOUNTS
The Fund has adopted Statement of Position 93-2, Determination, Disclosure
and Financial Statement Presentation of Income, Capital Gain and Return of
Capital Distributions by Investment Companies. As a result of this
statement, the Fund changed the classification of distributions to
shareholder to better disclose the difference between financial statement
amounts and distributions determined in accordance with income tax
regulations. Accordingly, undistributed net investment loss and paid in
capital have adjusted as of March 31, 199 in the following amounts. These
restatements did not affect net investment income, net realized gain (loss)
or net assets for the year ended March 31, 1999.
Undistributed Net
Investment Loss Paid in Capital
581 (581)
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and
Board of Trustees
Prasad Growth Fund
We have audited the accompanying statement of assets and liabilities of the
Prasad Growth Fund, including the schedule of portfolio investments, as of March
31, 1999, and the related statement of operations, the statement of changes in
net assets, and financial highlights for the period from November 23, 1998
(commencement of operations) to March 31, 1999 in the period then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments and cash held
by the custodian as of March 31, 1999, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Prasad Growth Fund as of March 31, 1999, the results of its operations, the
changes in its net assets, and the financial highlights for the period from
November 23, 1998 (commencement of operations) to March 31, 1999 in the period
then ended, in conformity with generally accepted accounting principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
April 29, 1999
<PAGE>
