ANNUAL REPORT
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Prasad Growth Fund
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March 31, 2000
<PAGE>
Dear Shareholders:
The market has been doing well since the fall of 1999 and our fund is doing
great. During most of 1999, the stock market was very volatile and showed no
specific direction until the middle of October. After that the market was going
up steadily. This helped the Fund a lot. Our strategy was to invest in high
quality stocks which were also favorites of the Wall Street. Also the selection
of these stocks was made using fundamental analysis and technical analysis. Lot
of attention was paid to sales growth and earnings growth of these companies.
Also importance was given to the debt ratio of these companies and most stocks
owned by the Fund had very low or no debt. Most of the gains were from
improvement in the prices of the technology stocks. The definite trend in the
market in the last quarter made it less difficult to manage our Fund. The low
interest rate environment gave a boost to the market. Also the recession in Asia
went away and industries and businesses around the world started improving. This
increased the demand for products made in the USA. The productivity of the U.S.
companies went up during last year because of low interest rate environment.
On June 15, 1999 the shareholders of the Fund, by written consent of the holders
of 54.14 % of the outstanding shares, approved an Amendment to the Investment
Advisory and Administration Agreement whereby the advisory fee was changed to
1.5% of the average value of the Fund's net assets and the Advisor was made
responsible for all operating expenses of the Fund except brokerage, taxes,
interest and extraordinary expenses. This step was undertaken to simplify the
accounting for the fund.
The fund has top quality stocks. These stocks have high revenue growth rates,
high earnings growth rates, low debt to equity ratios and are leaders in their
respective industries. Revenue growth and earnings growth are the ones that
propel the price of stocks. Companies with low debt to equity ratios are less
risky and the debt financing is not a major burden for them. These companies
will have more money to invest in research and development and also may be able
to acquire other companies with new technologies that would benefit them.
Demographic studies have shown that we should have continued growth of the
economy for another decade. This is because of stimulus to the industrial world
caused by the baby boom generation.
There is a technological revolution going on. We have come to flat screen
television sets from bulky color television sets and of course from black and
white. We have come from dial phones to touch tones phones to cell phones. We
used to wonder about Mr.Smart calling his chief using his cell phone is his
shoe! It has become real. We have come a long way from huge mainframe computers
to Palm Pilots. Internet has been a phenomenal discovery and it is going to grow
by leaps and bounds. Significant advances are being achieved in almost every
field of knowledge. Several years ago biotechnology companies like Amgen grew
very rapidly due to drugs like Epogen and Neupogen. In the next several years
major advances are expected in the development of vaccines, peptides, genetic
engineering, cloning, transplantation, etc. So the stock market in the next ten
years would be an excellent place for growth of investment dollar.
Years ago people used to buy stocks like IBM and GE and hold on to them for
years together and pass them on to the next generation. Buy and hold may be a
good method for someone who wants to invest for his or her newborn child for
college. You cannot look at these accounts on a daily, weekly or even on a
monthly basis. This method of buying and holding may not work for a mutual fund
because there would be investors with varied investment outlook. Also I remember
that even a great stock like IBM went down from over $150 to below $50 in the
late 1980s and it took a few years for the stock to get back over $150. One
problem of recent origin is caused by computers programmed by institutions to
buy and sell huge numbers of stocks in a moment. This causes tremendous
volatility in the price of stocks. The volatility has gone up significantly in
the last two years. Also major institutions with billions of dollars in
investment money make or break the markets. They can make the markets go up or
down any day. They can make any single stock go up or down quite a bit in one
day. This activity of the stock may have nothing to do with the way the
respective company is doing. We also do not know when major institutions are
going to buy lot of stocks or dump lot of stocks.
<PAGE>
The only way we can deal with these problems is to stay with high quality
companies which are leaders in their groups, with low debt and high sales and
earnings growth rates. Most such stocks currently fall in the high technology
area. Unfortunately, the volatility of these stocks is high but the price
appreciation of these stocks has been the highest in the past 10 years and it
will continue to dominate the markets in many years to come. Would you rather
buy the stock of a company making silicon chips or of a company making potato
chips? The stock of the latter obviously will be less volatile but the
appreciation potential would be much less. If you look at stocks in the NASDAQ
100 their growth rates are phenomenal as well as the volatility. But if we want
high growth rates we have to put up with the volatility. One answer would be to
buy stocks at the right low price and sell them at higher prices, then wait for
opportune time to buy these best companies again.
In summary the stock market is going to create a great base for making lot of
money in the next ten years due to the stimulus to the economy caused by the
baby boom generation. So we will try to take advantage of that.
Thank you and good bye,
(graph)
<PAGE>
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Prasad Growth Fund
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<TABLE>
<CAPTION>
Schedule of Investments
March 31, 2000
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Shares/Principal Amount Market Value % of Assets
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
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%
<PAGE> ------
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 I2 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 QualComm* 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%
-----
<PAGE>
Electronic Semiconductor Manufacturing
300 Rambus 320 Calls * 4,163 0.25%
-----
Internet Software
400 CMGI June 145 Calls * 2,100 0.12%
-----
Telecomunications 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>
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Prasad Growth Fund
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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 Paid 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>
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Prasad Growth Fund
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Statement of Operations
For the year ended March 31, 2000
Investment Income:
Dividends 380
Interest 2,293
-------
Total Investment Incom 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>
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Prasad Growth Fund
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<TABLE>
Statement of Changes in Net Assets
4/1/99 11/23/1998*
to to
3/31/00 3/31/99
<S> <C> <C>
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 7096
-------- -------
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>
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Prasad Growth Fund
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<TABLE>
Financial Highlights
Selected data for a share outstanding throughout the period: 4/1/99 11/23/1998**
to to
3/31/00 3/31/99
<S> <C> <C>
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%
Ration of Income to Average Net Assets Before Reimbursement 0.00% -31.74%
Portfolio Turnover Rate 455.07% 272.04% *
<FN>
* Annualized
** commencement of operations.
</FN>
</TABLE>
<PAGE>
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 1.5% 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.
<PAGE>
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:
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>
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>
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
