167898:
Registration No. 333-63151
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. __ [ ]
Post-Effective Amendment No. 2 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 3 [X]
PRASAD SERIES TRUST
(Exact name of registrant as specified in charter)
The Tower at Erieview
Suite 1005, 1301 East Ninth Street
Cleveland, Ohio 44114-1800
(Address of principal executive offices)
Registrant's Telephone Number: (216) 736-3500
Rajendra Prasad, 57 Eaglecreek, Irvine, CA 92618
(Name and address of agent for service)
Copy to:
Michael J. Meaney, Esq.
McDonald, Hopkins, Burke & Haber Co., L.P.A.
2100 Bank One Center, 600 Superior Avenue, East, Cleveland, Ohio 44114
It is proposed that this filing will become effective (check
appropriate box):
X immediately upon filing pursuant to paragraph (b) of Rule 485.
---
on February 1, 2000 pursuant to paragraph (b) of Rule 485.
---
60 days after filing pursuant to paragraph (a) of Rule 485.
---
on (date) pursuant to paragraph (a) of Rule 485.
---
<PAGE>
PROSPECTUS
PRASAD GROWTH FUND
July 1, 2000
The Tower at Erieview, Suite 1005
1301 East Ninth Street
Cleveland, Ohio 44114
(877) 59 FUNDS
(216) 736-3500
Investment Objective: Capital Appreciation
Minimum Investment Initial $1,000
Subsequent $100
Sales Charge: None, 100% No-Load
12(b)1 Fee: None
Exit or Redemption fee: None
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
RISK/RETURN SUMMARY
Investment Objective
The Fund's investment objective is to obtain capital appreciation.
Principal Investment Strategies
The Fund seeks its investment objective principally by investing 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.
The Fund's Adviser emphasizes a "growth" style of investing. 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.
When the Adviser believes that market conditions warrant a temporary
defensive posture, the Fund may invest up to 100% of its assets in money market
mutual funds, high-quality short-term debt securities and money market
instruments. The taking of such a temporary defensive posture may adversely
affect the ability of the Fund to achieve its investment objective.
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. A high rate of portfolio turnover in any year will increase
brokerage commissions paid by the Fund, thus reducing the Fund's total return,
and could result in high amounts of realized investment gain subject to the
payment of taxes by shareholders.
Main Risks
General Risks. Investing for capital appreciation ordinarily exposes
capital to added risk. Shares of the Fund are intended for you only if you are
able and willing to take such risk. There can be no assurance that the Fund's
investment objective will be attained. The Fund's share price may decline and
you could lose money.
Stock Market Risks. The stock market is subject to significant
fluctuations in value as a result of political, economic and market
developments. If the stock market declines in value, the Fund's share price is
likely to decline in value.
Growth Stock Risks. There is no assurance that the Fund's "growth"
style of investing will achieve its desired result. In fact, the Fund may
decline in value as a result of emphasizing this style of investing. "Growth"
stocks generally are more expensive relative to their earnings or assets than
other types of stocks. Consequently, these stocks are more volatile than other
types of stocks. In particular, growth stocks are very sensitive to changes in
their earnings. Negative developments in this regard could cause a stock to
decline dramatically, resulting in a decrease in the Fund's share price.
<PAGE>
Non-Diversification. The Fund is a "non-diversified" fund. The Fund is
considered "non-diversified" because, compared to other funds, a higher
percentage of the Fund's assets may be invested in the shares of a limited
number of companies. The Fund's portfolio securities, therefore, may be more
susceptible to a decline in value as a result of any single economic, political,
or regulatory occurrence than the portfolio securities of a "diversified" fund.
Bar Chart and Performance Table
The bar chart and table shown below provide an indication of the risks
of investing in the Fund by showing the Fund's performance for its only full
calendar year and by showing how the Fund's average annual returns for a
one-year period and the life of the Fund compare to those of a broad-based
securities market index. How the Fund has performed in the past is not
necessarily an indication of how the Fund will perform in the future.
[Bar Chart showing 1999 Total Return]
During the life of the Fund through December 31, 1999, the highest
return for a quarter was 85.04% (quarter ending December 31, 1999) and the
lowest return for a quarter was -14.07% (quarter ending September 30, 1999).
--------------------------------- ---------------------- ----------------------
Average Annual Total Returns Past Life
(for the periods One Year of Fund
ending December 31, 1999)
--------------------------------- ---------------------- ----------------------
Prasad Growth Fund 52% 62%
--------------------------------- ---------------------- ----------------------
Standard & Poor's 500 Index 21% 21%
--------------------------------- ---------------------- ----------------------
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you may pay if you buy
and hold shares of a Fund.
Annual Fund Operating Expenses (expenses that are deducted from Fund). *
Management Fees 1.50%
Other Expenses 0.00%
Total Annual Fund Operating Expenses 1.50%
<PAGE>
* 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
$10.00 as of the date of this Prospectus (subject to change without
notice).
Example: This Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and then
redeem all of your shares at the end of those periods. The Example also assumes
that your investment has a 5% return each year and that the Fund's operating
expenses remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
1 year 3 years 5 years 10 years
------ ------- ------- --------
$153 $474 $818 $1,791
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, Mutual Shareholder Services LLC
("Mutual Shareholder Services"), the Transfer Agent for the Fund, will establish
an open account to which all full and fractional shares 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.
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: Mutual Shareholder Services, The Tower at
Erieview, Suite 1005, 1301 East Ninth Street, Cleveland, Ohio 44114.
<PAGE>
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, Mutual Shareholder Services, at
(877) 59 FUNDS or (216) 736-3500. 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 Mutual Shareholder
Services, The Tower at Erieview, Suite 1005, 1301 East Ninth Street, Cleveland,
OH 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 Mutual
Shareholder Services, at (877) 59 FUNDS or (216) 736-3500 and identifying their
account by number. Shareholders wishing to avail 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.
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 your
investment in proper form, 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 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.
<PAGE>
The assets of the Fund are valued primarily on the basis of market
quotations.
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.
HOW TO REDEEM SHARES
All shares of the Fund offered for redemption will be redeemed at the
net asset value per share of such class of the Fund next determined after
receipt of the redemption request, if in good order, 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 Funds'
Transfer Agent, Mutual Shareholder Services, The Tower at Erieview, Suite 1005,
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.
<PAGE>
If a shareholder is in possession of the stock certificate, these
certificates must accompany the redemption request and must be endorsed as
registered with a signature guarantee. Additional documents may be required for
registered certificates owned by corporations, executors, administrators,
trustees or guardians. 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
Mutual Shareholder Services at (877) 59 FUNDS or (216) 736-3500.
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 Mutual Shareholder
Services at (877) 59 FUNDS or (216) 736-3500 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 Fund
at (877) 59 FUNDS or (216) 736-3500. 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.
Other Information Concerning Redemption
A shareholder who requests that the proceeds of a redemption of $5,000
or more be sent by wire transfer will be charged for the cost of such wire,
which is $10.00 as of the date of this Prospectus (subject to change without
notice).
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 the Fund's shareholders.
<PAGE>
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.
INVESTMENT MANAGEMENT
The Investment Adviser
The Fund has retained as its investment adviser Mutual Funds Leader,
Inc. (the "Adviser"), 57 Eaglecreek, Irvine, California 92618, an investment
management firm founded in 1998.
Subject to the supervision of the Fund's Board of Trustees, the Adviser
manages the Fund's assets, including buying and selling portfolio securities.
The Adviser also furnishes office space and certain administrative services to
the Fund, and pays all operating expenses of the Fund except for brokerage,
taxes, interest and extraordinary expenses.
The Adviser receives from the Fund as compensation for its services an
annual fee of 1.5% of the Fund's net assets.
Portfolio Manager
Rajendra Prasad, M.D. is the portfolio manager of the Fund. Dr. Prasad
is a retired 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 1999, he published a
monthly newsletter, "The Mutual Funds Leader," which sought to guide investors
in selecting mutual funds. Prior to the inception of the Fund in 1998, neither
the Adviser nor Dr. Prasad had any prior experience in advising mutual funds.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund declares and pays any dividends annually to shareholders.
Dividends are paid to all shareholders invested in the Fund on the record date.
The record date is the date on which a shareholder must officially own shares in
order to earn a dividend.
In addition, the Fund pays any capital gains at least annually. Your
dividends and capital gains distributions will be automatically reinvested in
additional Shares without a sales charge, unless you elect cash payments.
<page
If you purchase Shares just before the Fund declares a dividend or
capital gain distribution, you will pay the full price for the Shares and then
receive a portion of the price back in the form of a distribution, whether or
not you reinvest the distribution in Shares. Therefore, you should consider the
tax implications of purchasing Shares shortly before the Fund declares a
dividend or capital gain. Contact your investment professional or the Fund for
information concerning when dividends and capital gains will be paid.
The Fund sends an annual statement of your account activity to assist
you in completing your federal, state and local tax returns. Fund distributions
of dividends and capital gains are taxable to you whether paid in cash or
reinvested in the Fund. Dividends are taxable as ordinary income; capital gains
are taxable at different rates depending upon the length of time the Fund holds
its assets.
Fund distributions may be both dividends and capital gains. Generally,
distributions from the Fund are expected to be primarily capital gains
distributions. Redemptions and exchanges are taxable sales. Please consult your
tax adviser regarding your federal, state, and local tax liability.
GENERAL INFORMATION
Fifth Third Bank, 35 Fountain Square Plaza, Cincinnati, Ohio 45263, is
the custodian for the Fund's securities and cash. Mutual Shareholder Services
LLC, The Tower at Erieview, Suite 1005, 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 Fund.
McDonald, Hopkins, Burke & Haber Co., L.P.A., 2100 Bank One Center, 600
Superior Avenue, East, Cleveland, Ohio 44114, is legal counsel to the Fund and
to the Adviser.
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Fund's financial performance for the period of the Fund's operations. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) on an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by McCurdy & Associates
C.P.A.'s, Inc., whose report, along with the Fund's financial statements, are
included in the Fund's Statement of Additional Information, which is available
upon request.
4/1/99 11/23/98**
to to
3/31/00 3/31/99
------------------------------------------ ------------------- -----------------
Net Asset Value:
Beginning of Period $10.46 $10.00
Net Investment Income (0.12) (0.05)
Net Gains or Losses on Securities
(realized or unrealized) 7.26 0.51
---- ----
Total From Investment Operations 7.14 0.46
Dividends (from net investment income) 0.00 0.00
Distributions (from capital gains) 0.00 0.00
Return of Capital 0.00 0.00
---- ----
Total Distributions 0.00 0.00
Net Asset Value:
End of Period $17.60 $10.46
Total Return 68.26% 13.37%
Ratios/Supplemental Data:
Net Assets End of Period (Thousands 1,683 210
Ratio of Expenses to Average Net Assets 1.50% 1.50%*
Ratio of Net Income to Average Net Assets (1.21%) (1.08%)
Ratio of Expenses to Average Net Assets
(before reimbursement) 0.00% 32.16%
Ratio of Net Income to Average Net Assets
(before reimbursement) 0.00% (31.74)
Portfolio Turnover Rate 455.07 272.04%*
*Commencement of operations.
**Annualized
Notes to Financial Statements appear in the Fund's Statement of Additional
Information.
<PAGE>
TABLE OF CONTENTS...........................................................Page
RISK/RETURN SUMMARY............................................................2
FEES AND EXPENSES OF THE FUND..................................................4
HOW TO PURCHASE SHARES.........................................................4
HOW TO REDEEM SHARES...........................................................6
INVESTMENT MANAGEMENT..........................................................7
DIVIDENDS, DISTRIBUTIONS AND TAXES.............................................8
GENERAL INFORMATION............................................................9
FINANCIAL HIGHLIGHTS..........................................................10
A Statement of Additional Information (SAI) dated July 1, 2000, is
incorporated by reference into this prospectus. Additional information about the
Fund's investments is available in the Fund's annual and semi-annual reports to
shareholders. The annual report discusses market conditions and investment
strategies that significantly affected each Fund's performance during its last
fiscal year. To obtain the SAI, the annual report, semi-annual report and other
information without charge and to make shareholder inquires, call the Fund at
(877) 59 FUNDS.
Information about the Fund (including the SAI) can be reviewed and
copied at the Public Reference Room of the Securities and Exchange Commission in
Washington, D.C. Reports and other information about the Fund are available on
the Commission's Internet site at http://www.sec.gov and copies of this
information may be obtained, upon payment of a duplicating fee, by writing the
Public Reference Section of the Commission, Washington, D.C. 20549-6009. You can
call 1-800-SEC-0330 for information on the Public Reference Room's operations
and copying charges.
Prasad Series Trust
The Tower at Erieview, Suite 1005
1301 East Ninth Street
Cleveland, Ohio 44114
(216) 736-3500
Investment Company Act File No: 811-8993
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION July 1, 2000
PRASAD GROWTH FUND
The Tower at Erieview, Suite 1005
1301 East Ninth Street
Cleveland, Ohio 44114
(877) 59 FUNDS
or (216) 736-3500
Prasad Growth Fund (the "Fund") is a non-diversified portfolio of
Prasad Series Trust (the "Trust") an open-end management investment company. The
investment objective of the Fund is to obtain capital appreciation. This
Statement of Additional Information is not a prospectus. A copy of the Fund's
prospectus can be obtained from the Fund's Transfer Agent at The Tower at
Erieview, Suite 1005, 1301 East Ninth Street, Cleveland, Ohio 44114, telephone
number (877) 59 FUNDS or (216) 736-3500.
The date of this Statement of Additional Information is July 1, 2000.
<PAGE>
TABLE OF CONTENTS
CAPTION PAGE LOCATION IN PROSPECTUS
Fund History 3 Not Applicable
Investments and Risks 3 Risk/Return Summary
Management of the Fund 7 Investment Management
Ownership of Shares 8 Not Applicable
Investment Advisory and Other Services 8 Investment Management
Brokerage Allocation 10 Not Applicable
Capital Stock and Other Securities 11 Not Applicable
Purchase, Redemption and Pricing 11 How to Purchase Shares/
of Shares How to Redeem Shares
Taxation of Fund 11 Dividends, Distributions
and Taxes
Performance 12 Not Applicable
Financial Statements 13 Financial Highlights
<PAGE>
FUND HISTORY
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.
INVESTMENTS AND RISKS
Classification
The Fund is a non-diversified portfolio of the Trust, which is an
open-end management investment company.
Investment Strategies and Risks
The Fund has an investment objective of obtaining capital appreciation.
The principal investment strategies used by the Fund to pursue this objective,
together with the principal risks of investing in the Fund, are described in the
Prospectus under the heading "Risk/Return Summary."
Described below are (i) certain other investment strategies (including
strategies to invest in particular types of securities) which are not principal
strategies and (ii) the risks of those strategies:
Options. The Fund may invest up to 5% of its assets in put and call
options which trade on securities exchanges. Such options may be on individual
securities or on indexes. A put option gives the Fund, in return for the payment
of a premium, the right to sell the underlying security or index to another
party at a fixed price. If the market value of the underlying security or index
declines, the value of the put option would be expected to rise. If the market
value of the underlying security or index remains the same or rises, however,
the put option could lose all of its value, resulting in a loss to the Fund.
A call option gives the Fund, in return for the payment of a premium,
the right to purchase the underlying security or index from another party at a
fixed price. If the market value of the underlying security or index rises, the
value of the call option would also be expected to rise. If the market value of
the underlying security or index remains the same or declines, however, the call
option could lose all of its value, resulting in a loss to the Fund.
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. If the market value of the underlying security remains the same
or declines, the warrant could lose all of its value, resulting in a loss to the
Fund.
<PAGE>
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.
There are several risks in connection with the use of futures
contracts. In the event of an imperfect correlation between the futures contract
and the portfolio position that is intended to be protected, the desired
protection may not be obtained and the fund may be exposed to risk of loss.
Further, unanticipated changes in interest rates or stock price movements may
result in a poorer overall performance for the Fund than if it had not entered
into futures contracts on debt securities or stock indexes.
In addition, the market price of futures contracts may be affected by
certain factors. First, all participants in the futures market are subject to
margin deposit and maintenance requirements. Rather than meeting additional
margin deposit requirements, investors may close futures contracts through
offsetting transactions that could distort the normal relationship between the
securities and futures markets. Second, from the point of view of speculators,
the deposit requirements in the futures market are less onerous than margin
requirements in the securities market. Therefore, increased participation by
speculators in the futures market may also cause temporary price distortions.
Finally, positions in futures contracts may be closed out only on an
exchange or board of trade that provides a secondary market for such futures.
There is no assurance that a liquid secondary market on an exchange or board of
trade will exist at any particular time.
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.
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 that the net asset value of a mutual
fund that does not engage in short sales.
<PAGE>
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' 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.
Fund Policies
The Fund has adopted the following fundamental investment policies and
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 Act, the "vote of a majority of the outstanding voting securities" of the
Fund means the lesser of the vote of (a) 67% of the shares of the Fund at a
meeting where more than 50% of the outstanding shares are present in person or
by proxy or (b) more than 50% of the outstanding shares of the Fund. Except as
set forth in the Prospectus or this Statement of Additional Information, the
Fund may not:
1. Invest more than 25% of the value of such Fund's total
assets in securities of companies in a particular industry (except
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.
4. Invest more than 25% of the value of its assets in a single
issuer (except obligations issued or guaranteed by the United States
Government, its agencies and instrumentalities).
<PAGE>
5. Invest in securities of other registered investment
companies, except by purchase in the open market involving only
customary brokerage commissions, or except as part of a merger,
consolidation, reorganization or acquisition.
6. Invest in securities of any registered closed-end
investment company, if immediately after such purchase or acquisition
such Fund would own more than 1% of the total outstanding voting stock
of such closed-end company.
7. 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.
8. 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.
9. 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.
10. 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.
11. 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.
12. Purchase or retain the securities of any issuer if any of
the officers or Trustees of the Fund 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.
13. Invest for the purpose of exercising control or management
of another issuer.
14. 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.
15. 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.
<PAGE>
16. 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.
17. Issue senior securities as defined in the Act.
18. 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 Board of Trustees is responsible for managing the Fund's business
affairs and for exercising all the Fund's powers except those reserved for the
shareholders. The day-to-day operations of the Fund are conducted by its
officers. The following table provides biographical information with respect to
each current Trustee and officer of the Fund. 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.
Position Held Principal Occupation
Name and Address With the Fund During Past 5 Years
---------------- ------------- -------------------
Rajendra Prasad* Chairman, Treasurer Retired physician;
57 Eaglecreek and Trustee publisher of mutual funds
Irvine, California 92618 newsletter until 1999;
registered investment
adviser.
Anita Alamshaw, M.B.A.* Trustee Sales and marketing in
8160 Bailey Way pharmaceutical industry
Anaheim Hills, California 92817
(daughter of Rajendra Prasad)
Richard L.D. Saxton Trustee Television broadcaster
5545 Sunset Boulevard specializing in business
Los Angeles, California 90028 news; formerly account
representative, Dean
Witter.
Samir Thakkar Trustee Managing Director, The
625 The City Drive South Acacia Group (financial
Suite 250 services)
Orange, California 92868
<PAGE>
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 receives from the Fund a fee of $125 for each
Board or shareholders meeting attended. The fees paid to the Trustees for the
fiscal year ended March 31, 2000, which are the only compensation or benefits
payable to Trustees, are summarized in the following table:
COMPENSATION TABLE
Aggregate Compensation
Name of Trustee from the Fund*
Rajendra Prasad $ 0
Anita Alamshaw 500
Richard L.D. Saxton 500
Samir Thakkar 500
OWNERSHIP OF SHARES
As of May 19, 2000, the following persons were known by the Fund to be
the beneficial owners of more than 5% of the shares of the Fund:
Name and Address Percentage of
Ownership
Krishna & Parvataneni Arun, MD Tttees 21.93%
Profit Sharing Plan Trust
2777 Pacific Avenue - Suite D Long Beach, CA 90806
National Investors Services 11.01%
55 Water Street - 32nd Floor
New York, NY 10041
Babu Prasad IRA 10.37%
306 West 40th Street
Kays, KS 67601
Veena Charu IRA 9.76%
1757 N. Mountain View Place
Fullerton, CA 92831
Rajendra Prasad* 8.98%
57 Eaglecreek
Irvine, CA 92618
<PAGE>
Paul S. Yoon IRA 6.41%
18817 Jeffrey Avenue
Cerritos, CA 90703
Paul P. Lee Trustee 6.33%
Lee Family Trust Dtd 12-10-75
945 Via Del Monte
Palos Verdes Estates, CA 90274
*Rajendra Prasad may be deemed to "control" the Fund.
As of May 19, 2000, all officers and Trustees as a group beneficially owned
10,362 shares, constituting 8.98% of the outstanding shares of the Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Adviser
Mutual Funds Leader, Inc. (the "Adviser") is the investment adviser for the
Fund. Rajendra Prasad is the president and a principal shareholder of the
Adviser and, therefore, is deemed to be in control of the Adviser.
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 1.5% of the net
assets of the Fund. For the fiscal year ended March 31, 2000, the Adviser
received management fees from the Fund in the amount of $13,726.
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
furnishes office facilities and clerical and administrative services, and pays
all operating expenses of the Fund except for brokerage, taxes, interest and
extraordinary expenses. In addition, subject to the direction of the Fund's
Board of Trustees, the Adviser is responsible for the overall management of the
business affairs of the Fund.
Brokerage fees and commissions, taxes, interest and extraordinary expenses
are paid by the Fund.
<PAGE>
Other Service Providers
The Fund has entered into an Administration Agreement with Mutual
Shareholder Services LLC ("MSS"), pursuant to which MSS has agreed to act as the
Fund's Transfer, Redemption and Dividend Disbursing Agent. As such, MSS
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 MSS 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 MSS, pursuant to which MSS 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. For the fiscal year ended March 31, 2000,
the Fund paid MSS fees under the Administration Agreement and the Accounting
Services Agreement in the amount of $11,745.
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.
BROKERAGE ALLOCATION
Decisions to buy and sell securities for the Fund are made by the Adviser
subject to the overall supervision and review by the Fund's 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.
<PAGE>
In executing portfolio transactions and selecting brokers and dealers, it
is the Fund's policy to seek the best overall terms available. The Investment
Advisory and Administration 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 Investment
Advisory and Administration 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.
The Fund's 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
Investment Advisory and Administration Agreement is not reduced by reason of the
Adviser's receiving such brokerage and research services.
During the fiscal year ended March 31, 2000, the aggregate amount of
brokerage commissions paid by the Fund was $13,532.
CAPITAL STOCK AND OTHER SECURITIES
The Declaration of Trust provides for an unlimited number of authorized
shares of beneficial interest in the Fund. Shareholders are entitled to one vote
per share on such matters as shareholders are entitled to vote.
Upon issuance and sale in accordance with the terms of the Prospectus, each
share will be fully paid and non-assessable. Shares of the Fund have no
preemptive, subscription or conversion rights. The 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.
PURCHASE, REDEMPTION AND PRICING OF SHARES
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.
<PAGE>
The price paid for shares of the Fund is the net asset value per share 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 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.
For purposes of computing the net asset value per share of the Fund,
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 market 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.
TAXATION OF THE FUND
The Fund intends to qualify each year as a "regulated investment company"
under the requirements of Subchapter M of 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. If these requirements are not met, the Fund
will not receive special tax treatment and will pay federal income tax, thus
reducing the total return of the Fund.
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.
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 a 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.
<PAGE>
Performance may be compared to well-known indices such as the Dow Jones
Industrial Average or alternative investments such as Treasury Bills. Also, the
Funds 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.
<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, 2000, and the related statement of operations for the year then ended, the
statement of changes in net assets and financial highlights for the year then
ended and 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, 2000, by correspondence with the custodian. 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, 2000, the results of its operations for the
year then ended, the changes in its net assets and the financial highlights for
the year then ended and 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 27, 2000
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------- -----------------------------------------
Schedule of Investments
March 31, 2000
-------------------------------------------------------------------------- -----------------------------------------
<S> <C> <C>
-------------------------------------------------------------------------- -------------------- --------------------
Shares/Principal Amount Market Value % of Assets
-------------------------------------------------------------------------- -------------------- --------------------
COMMON STOCKS
Business Service
1 Labor Ready* 10 0.00%
--------------------
Computer-Local Networks
400 Cisco Systems Inc.* 30,925
400 Emulex Corp* 43,650
--------------------
74,575 4.43%
Computer-Memory Devices
400 Advanced Digital* 13,700 0.81%
--------------------
Computer Peripheral Equipment
600 Hauppauge Digital* 11,062
100 Lexmark International* 10,575
--------------------
21,637 1.29%
Computer Services
500 Formula Systems(1985) Ltd* 30,500
1,200 Troy Group* 33,000
--------------------
63,500 3.77%
Electronic Computers
200 RF Microdevices* 26,875 1.60%
--------------------
Electronic Misc Products
300 Solectron Corp* 12,019 0.71%
--------------------
Electronic Semiconductor Equipment
300 Applied Materials Inc* 28,275
600 JDS Uniphase* 72,338
--------------------
100,613 5.98%
Electronic Semiconductor Manufacturing
400 Analog Devices Inc* 32,225
200 Applied Micro Circuits Corp* 30,012
600 Broadcom* 145,725
100 Intel Corp 13,194
100 Qlogic* 13,550
200 SDL Inc* 42,575
650 Siliconix* 61,791
--------------------
339,072 20.15%
Instruments Measuring
600 Keithley Instruments 28,575 1.70%
--------------------
Internet Network
300 Exodus Communications* 42,150
400 Network Solutions* 61,481
400 RSA Security* 20,725
300 Sycamore Networks* 38,700
300 Verisign* 44,850
--------------------
207,906 12.35%
Internet Software
200 Verticalnet Inc* 27,200
100 Vignette Corp* 16,025
100 Yahoo* 17,138
--------------------
60,363 3.59%
Investment Management
2,600 London Pacific Ads 60,450 3.59%
--------------------
Software Business
600 Broadvision* 26,925
800 Citrix* 53,000
100 12 Technologies* 12,212
200 Infospace* 29,087
100 Mercury Interact* 7,925
100 Oracle Corp* 7,806
300 Siebel Systems* 35,831
225 Veritas Software* 29,475
--------------------
202,261 12.02%
Software Desktop
100 Microsoft Corp* 10,625 0.63%
--------------------
Software Security
300 Check Point Software Tech* 51,319 3.05%
--------------------
Telecommunications Equipment
130 Nortel Networks/Northern Telecom 16,380
1,000 QaulComm* 149,313
1,200 Tollgrade Communications* 63,600
--------------------
229,293 13.62%
Telecommunications Services
300 Xeta Corp* 13,650 0.81%
--------------------
Total Stocks 1,516,443 90.10%
====================
Call Options
Computer Networks
600 Emulex July 200 Calls* 7,200 0.43%
--------------------
Electronic Semiconductor Equipment
800 JDSU June 145 Calls* 9,400 0.56%
--------------------
Electronic Semiconductor Manufacturing
300 Rambus 320 Calls* 4,163 0.25%
--------------------
Internet Software
400 CMGI June 145 Calls* 2,100 0.12%
--------------------
Telecommunications Equipment
1,000 QualComm Inc. July 135 Calls* 33,000 1.96%
--------------------
Total Call Options 55,863 3.32%
====================
Money Market Funds
71,825 Fountain Square 71,825 4.27%
--------------------
Total Money Market Funds 71,825 4.27%
====================
Total Investments (Cost - 1,466,183) 1,644,131 97.68%
Other Assets Less Liabilities 39,024 2.32%
Net Assets 1,683,155 100.00%
</TABLE>
<PAGE>
--------------------------------------------------------------------------------
Statement of Assets and Liabilities
March 31, 2000
--------------------------------------------------------------------------------
Assets
Investment Securities at Market Value $1,644,131
(Identified Cost - 1,466,183)
Cash 41,189
Receivables:
Dividends and Interest 280
---------------
Total Assets 1,685,600
Liabilities
Accrued Expenses 2,445
----------------
Total Liabilities 2,445
----------------
Net Assets $1,683,155
Net Assets Consist of:
Capital Pain In 1,006,042
Accumulated Realized Gain on Options 241,099
Accumulated Realized Gain (Loss) on Investments - Net 258,066
Unrealized Depreciation in Value of Investments
Based on Identified Cost - Net 177,948
---------------
Net Assets for 95,633 Shares Outstanding $1,683,155
===============
Net Asset Value and Redemption Price
Per Share ($1,683,155/95,633 shares) 17.60
Offering Price Per Share 17.60
<PAGE>
Prasad Growth Fund
--------------------------------------------------------------------------------
Statement of Operations
For the year ended March 31, 2000
--------------------------------------------------------------------------------
Investment Income:
Dividends 380
Interest 2,293
---------------
Total Investment Income 2,673
Expenses:
Management Fees (Note 2) 13,726
---------------
Total Expenses 13,726
Net Investment Income (11,053)
Realized and Unrealized Gain (Loss) on Investments:
Realized Gain (Loss) on Investments 271,184
Realized Gain (Loss) on Options 241,099
Unrealized Appreciation (Depreciation) on Investments 170,852
--------------
Net Realized and Unrealized Gain (Loss) on Investments 683,135
Net Increase (Decrease) in Net Assets from Operations 672,082
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
Statement of Changes in Net Assets
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
------------------------------------------------------------------------------------ --------------- ---------------
4/1/99 11/23/98*
to to
3/31/00 3/31/99
------------------------------------------------------------------------------------ --------------- ---------------
From Operations:
Net Investment Income (11,053) (581)
Net Realized Gain (Loss) on Investments 271,184 (2,065)
Net Realized Gain (Loss) on Options 241,099 0
Net Unrealized Appreciation (Depreciation) 170,852 7,096
--------------- ---------------
Increase (Decrease) in Net Assets from Operations 672,082 4,450
From Distributions to Shareholders
Net Investment Income 0 0
Net Realized Gain (Loss) from Security Transactions 0 0
--------------- ---------------
Net Increase (Decrease) from Distributions 0 0
From Capital Share Transactions:
Proceeds from Sale of Shares 1,003,821 105,783
Shares Issued on Reinvestment of Dividends 0 0
Cost of Shares Redeemed (202,981) 0
--------------- ---------------
Net Increase from Shareholder Activity 800,840 105,783
Net Increase in Net Assets 1,472,922 110,233
Net Assets at Beginning of Period 210,233 100,000
Net Assets at End of Period 1,683,155 210,233
--------------- ---------------
Share Transactions:
Issued 88,534 10,096
Reinvested - -
Redeemed (12,997) -
--------------- ---------------
Net Increase (Decrease) in Shares 75,537 10,096
Shares Outstanding Beginning of Period 20,096 10,000
--------------- ---------------
Shares Outstanding End of Period 95,633 20,096
=============== ===============
*Commencement of operations
</TABLE>
<PAGE>
Prasad Growth Fund
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
Financial Highlights
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
------------------------------------------------------------------------------------------ ----------- -------------
Selected data for a share outstanding throughout the period: 4/1/99 11/23/98**
to to
3/31/00 3/31/99
------------------------------------------------------------------------------------------ ----------- -------------
Net Asset Value - Beginning of Period 10.46 10.00
Net Investment Income (0.12) (0.05)
Net Gains or Losses on Securities (realized and unrealized) 7.26 0.51
----------- -------------
Total from Investment Operations 7.14 0.46
Dividends (from net investment income) 0.00 0.00
Distributions (from capital gains) 0.00 0.00
Return of Capital 0.00 0.00
----------- -------------
Total Distributions 0.00 0.00
Net Asset Value - End of Period 17.60 10.46
Total Return 68.26% 13.37%
Ratios/Supplemental Data
Net Assets - End of Period (Thousands) 1,683 210
Ratio of Expenses to Average Net Assets 1.50% 1.50%*
Ratio of Net Income to Average Net Assets (1.21%) (1.08%)*
Ratio of Expenses to Average Net Assets Before Reimbursement 0.00% 32.16%
Ratio of Income to Average Net Assets Before Reimbursement 0.00% (31.74%)
Portfolio Turnover Rate 455.07% 272.04%*
*Annualized
**Commencement of operations
</TABLE>
<PAGE>
Prasad Growth Fund
Notes to Financial Statements
March 31, 2000
167898:
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 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.
Estimated:
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 1.5% on the Fund's net assets. The Advisor pays all expenses of the
fund except for brokerage fees, taxes interest and extraordinary
expenses. 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 $13,726 during the fiscal year ended
March 31, 2000.
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, 2000, Krishna & Parvataneni M.D. Profit Sharing Plan
owned 26.45% of the Fund. This shareholder 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.
4. CAPITAL STOCK AND DISTRIBUTION
At March 31, 2000 an indefinite number of shares of capital stock were
authorized, and paid-in capital amounted to $1,006,042. Transactions in
common stock were as follows:
5. PURCHASES AND SALES OF SECURITIES
During the fiscal year ending March 31, 2000, purchases and sales of
investment securities other than U.S. Government obligations and
short-term investments aggregated $4,621,141 and $3,801,489
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, 2000.
7. SECURITY TRANSACTIONS
For Federal income tax purposes, the cost of investments owned at March
31, 2000 was the same as identified cost. At March 31, 2000, the
composition of unrealized appreciation (the excess of value over tax
cost) and depreciation (the excess of tax cost over value) was as
follows:
<PAGE>
Appreciation (Depreciation) Net Appreciation (Depreciation)
437,605 (259,657) 177,948
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 accumulated realized gain on investments have adjusted as of
March 31, 2000 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, 2000.
Undistributed Net Investment Loss Accumulated Realized Gain on Investments
11,053 (11,053)
<PAGE>
PART C
OTHER INFORMATION
Item 23. Exhibits.
Exhibit Description
--------- -------------
a Amended and Restated Declaration of Trust. (1)
b Amended and Restated By-Laws. (1)
c None.
d(1) Investment Advisory and Administration Agreement. (1)
d(2) Amendment to Investment Advisory and Administration
Agreement. (3)
e None.
f None.
g Custody Agreement. (2)
h(1) Administration Agreement. (1)
h(2) Accounting Services Agreement. (1)
i Opinion and consent. (2)
j Consent of Independent Auditors.
k None.
l Subscription Agreement. (2)
m None.
n Financial Data Schedule
<PAGE>
(1) Incorporated by reference to the corresponding exhibit to the Registration
Statement.
(2) Incorporated by reference to the corresponding exhibit to
Pre-Effective Amendment No. 1 to the Registration Statement.
(3) Incorporated by reference to the corresponding exhibit to Post-Effective
Amendment No. 1 to the Registration Statement.
Item 24. 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 President of the
Adviser.
Item 25. Indemnification
Reference is made to Article IV of the Registrant's Agreement and
Declaration of Trust filed as Exhibit a. The application of these
provisions is limited by Article 10 of the Registrant's Amended and
Restated By-laws filed as Exhibit b and 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 26. Business and Other Connections of the Investment Adviser.
None.
Item 27. Principal Underwriters.
Not applicable.
Item 28. 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, Suite 1005, 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 29. Management Services.
Not Applicable.
Item 30. Undertakings.
Not Applicable.
<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 15th day
of June, 2000. The Registrant represents that this Amendment is filed solely for
the purposes described in SEC Rule 485(b)(1) and that no material event
requiring disclosure in the prospectus has occurred since the effective date of
Registrant's most recent post-effective Amendment.
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
Rajendra Prasad Chairman, Treasurer June 15, 2000
and Trustee (Principal
Executive Officer,
Financial Officer and
Accounting Officer)
Anita Alamshaw Trustee June 15, 2000
Richard L.D. Saxton Trustee June 15, 2000
Samir Thakkar Trustee June 15, 2000
<PAGE>
EXHIBIT J
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this
Post-effective Amendment No. 2 to the Registration Statement for Prasad Series
Trust of all references to our firm included in or made a part of this
Amendment.
/s/ McCurdy & Associates CPA's, Inc.
McCurdy & Associates CPA's, Inc.
June 7, 2000
<PAGE>
