PROSPECTUS
PRASAD GROWTH FUND
February 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.
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.
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.
(GRAPH)
During the life of the Fund, 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 ending December 31,1999) One Year of Fund
- -------------------------------------------------------------------------------
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%
* 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.
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.
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.
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.
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.
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, a
division of Maxus Information Systems Inc., 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.
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.
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 or 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
Notes to Financial Statements appear in the Fund's Statement of Additional
Information.
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 February 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: 811-899
<PAGE>
The accompanying notes are an integral part of the financial statements.
STATEMENT OF ADDITIONAL INFORMATION
February 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 February 1, 2000.
TABLE OF CONTENTS
CAPTION PAGE LOCATION IN
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
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.
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.
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).
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.
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.
Name and Address Position Held Principal Occupation
Rajendra Prasad* Chairman, Treasurer Retired physician;
and Trustee publisher of mutual
funds newsletter
until 1999;
registered investment
adviser
Anita Alamshaw, M.B.A.* Trustee Sales and marketing
in pharmaceutical
Richard L.D. Saxton Trustee Television broadcaster
specializing in
Samir Thakkar Trustee Managing Director,
The Acacia Group
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, 1999, 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 250
Richard L.D. Saxton 250
Samir Thakkar 250
OWNERSHIP OF SHARES
As of November 8, 1999, 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 Addressof Ownership Percentage
Rajendra Prasad* 14.8%
57 Eaglecreek
Irvine, California 92618
Krishna & Parvataneni Arun, M.D. Tttees. 27.07%
Profit Sharing Plan Trust
2777 Pacific Avenue - Suite D Long Beach, CA 90806
Veena Charu IRA 12.05%
1757 N. Mountain View Place
Fullerton, CA 92831
Paul P. Lee Trustee 5.25%
Lee Family Trust Dtd 12-10-75
945 Via Del Monte
Palos Verdes Estates, CA 90274
Arthur J. Lunsk IRA 7.30%
3691 Pirate Circle
Huntington Beach, CA 92649
National Investors Services 7.05%
55 Water Street - 32nd Floor
New York, NY 10041
Paul S. Yoon IRA 7.92%
18817 Jeffrey Avenue
Cerritos, CA 90703
*Rajendra Prasad may be deemed to "control" the Fund.
As of November 8, 1999, all officers and Trustees as a group beneficially
owned 13,829 shares, constituting 14.8% 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, 1999, the Adviser
received management fees from the Fund in the amount of $543.
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.
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, 1999,
the Fund paid MSS fees under the Administration Agreement and the Accounting
Services Agreement in the amount of $3,600.
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.
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, 1999, the aggregate amount of
brokerage commissions paid by the Fund was $2,396.
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.
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.
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, 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>
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>
- --------------------------------------------------------------------------------
Board of Trustees
Rajendra Prasad
Anita Alamshaw
Richard L.D. Saxton
Samir Thakkar
Investment Adviser
Mutual Funds Leader, Inc.
821 Hillside Drive
Long Beach, California 90815
Dividend Paying Agent,
Shareholders' Servicing Agent,
Transfer Agent
Mutual Shareholder Services
1301 E. 9th St., Suite 1005
Cleveland, Ohio 44114
Custodian
Fifth Third Bank
Mutual Fund Services
38 Fountain Square Plaza
MD 1090E5
Cincinnati, OH 45263
Counsel
Michael J. Meaney, Esq.
Benesch, Friedlander, Coplan & Aronoff LLP
2300 BP America Building
200 Public Square
Cleveland, Ohio 44114
Independent Auditors
McCurdy & Associates CPA's, Inc.
27955 Clemens Rd
Westlake, Ohio 44145
