U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/
Pre-Effective Amendment No.
Post-Effective Amendment No. 7
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/
Amendment No. 7
(Check appropriate box or boxes)
LEEB PERSONAL FINANCETM INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
312 Walnut Street, 21st Floor
Cincinnati, OH 45202
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (513) 629-2000
Francis A. Mlynarczyk, Jr.
Brimberg & Co., L.P.
45 Rockefeller Plaza, Suite 2570
New York, New York 10111
(Name and Address of Agent for Service)
Copies to:
Charles J. Hecht
Hecht & Steckman, P.C.
60 East 42nd Street, Suite 1501
New York, NY 10165
It is proposed that this filing will become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b) of Rule 485
/X / on November 1, 1996 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>
LEEB PERSONAL FINANCETM INVESTMENT TRUST
Cross Reference Sheet
Pursuant to Rule 481(a)
Under the Securities Act of 1933
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PART A
<S> <C> <C>
Item No. Registration Statement Caption Caption in Prospectus
1. Cover Page Cover Page
2. Synopsis Expense Information
3. Condensed Financial Information Financial Highlights;
Performance Information
4. General Description of Registrant Operation of the Fund;
Investment Objectives,
Investment Policies and
Risk Considerations
5. Management of the Fund Investment Adviser;
Operation of the Fund
6. Capital Stock and Other Securities Cover Page; Operation of
the Fund; Dividends and
Distributions; Taxes
7. Purchase of Securities Being Offered How to Purchase Shares;
Shareholder Services;
Calculation of Share Price
8. Redemption or Repurchase How to Redeem Shares;
Shareholder Services
9. Pending Legal Proceedings Inapplicable
PART B
Caption in Statement
of Additional
Item No. Registration Statement Caption Information
10. Cover Page Cover Page
11. Table of Contents Table of Contents
(i)
<PAGE>
12. General Information and History Inapplicable
13. Investment Objectives and Policies Definitions, Policies and
Risk Considerations;
Quality Ratings of
Corporate Bonds;
Investment Limitations;
Securities Transactions;
Portfolio Turnover
14. Management of the Fund Trustees and Officers
15. Control Persons and Principal Holders Trustees and Officers
of Securities
16. Investment Advisory and Other Services The Investment Adviser;
Custodian; Accountants;
MGF Service Corp.;
Securities Transactions
17. Brokerage Allocation and Other Securities Transactions
Practices
18. Capital Stock and Other Securities The Fund
19. Purchase, Redemption and Pricing of Calculation of Share
Securities Being Offered Price; Redemption in Kind
20. Tax Status Taxes
21. Underwriters The Underwriter
22. Calculation of Performance Data Historical Performance
Information
23. Financial Statements Annual Report
</TABLE>
PART C
The information required to be included in Part C is set
forth under the appropriate Item, so numbered, in Part C to this Registration
Statement.
(ii)
<PAGE>
PROSPECTUS
November 1, 1996
Leeb Personal FinanceTM Investment Trust
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
THE LEEB PERSONAL FINANCETM FUND
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The Leeb Personal FinanceTM Fund (the "Fund"), a separate series
of Leeb Personal FinanceTM Investment Trust, seeks long-term capital
appreciation consistent with the preservation of capital. Earning current
income from dividends, interest and short-term capital gains is a secondary
objective. The Fund invests primarily in common stocks of established, larger
capitalization companies, and may at times have close to 100% of its assets
invested in such securities, although the Fund may invest up to 100% of its
assets in U.S. Government obligations and other debt securities. The Fund may
have a large portion of its assets invested in money market instruments from
time to time. The asset composition of the Fund's portfolio at any time will
be determined primarily upon the basis of market timing techniques developed
by Dr. Stephen Leeb, the President of the Fund and the Chief Investment
Officer of the Fund's investment adviser, Leeb Investment Advisors, and his
staff.
This Prospectus sets forth concisely the information about the Fund
that you should know before investing. Please retain this Prospectus for
future reference. A Statement of Additional Information dated November 1,
1996 has been filed with the Securities and Exchange Commission and is hereby
incorporated by reference in its entirety. A copy of the Statement of
Additional Information can be obtained at no charge by calling the number
listed below.
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For Information or Assistance in Opening An Account, Please Call:
Nationwide (Toll-Free). . . . . . . . . . . . . . . .800-545-0103
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
Expense Information . . . . . . . . . . . . . . . . . . . . . . 2
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . 3
Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . 4
Investment Objectives, Investment Policies and
Risk Considerations. . . . . . . . . . . . . . . . . . . . . . 6
How to Purchase Shares . . . . . . . . . . . . . . . . . . . . .10
Shareholder Services . . . . . . . . . . . . . . . . . . . . . .12
How to Redeem Shares . . . . . . . . . . . . . . . . . . . . . .13
Dividends and Distributions. . . . . . . . . . . . . . . . . . .15
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Operation of the Fund. . . . . . . . . . . . . . . . . . . . . .16
Calculation of Share Price . . . . . . . . . . . . . . . . . . .18
Performance Information. . . . . . . . . . . . . . . . . . . . .19
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EXPENSE INFORMATION
Shareholder Transaction Expenses
Sales Load Imposed on Purchases . . . . . . . . . . . . . None
Sales Load Imposed on Reinvested Dividends. . . . . . . . None
Redemption Fee. . . . . . . . . . . . . . . . . . . . . . None*
* A wire transfer fee is charged by the Fund's Custodian in the case of
redemptions made by wire. Such fee is subject to change and is
currently $8. See "How to Redeem Shares."
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees After Waivers . . . . . . . . . . . . . .40%(A)
12b-1 Fees. . . . . . . . . . . . . . . . . . . . . . . None
Other Expenses. . . . . . . . . . . . . . . . . . . . . 1.10%
Total Fund Operating Expenses After Waivers . . . . . . 1.50%(B)
(A) Absent waivers of management fees, such fees would have been
1.00% for the fiscal year ended June 30, 1996.
(B) Absent waivers of management fees, total Fund operating expenses
would have been 2.10% for the fiscal year ended June 30, 1996.
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. The percentages expressing annual fund operating expenses are
based on amounts incurred during the most recent fiscal year. The Example
below should not be considered a representation of past or future expenses and
actual expenses may be greater or less than those shown.
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<PAGE>
Example
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
1 Year $ 15
3 Years 47
5 Years 82
10 Years 179
FINANCIAL HIGHLIGHTS
The following information, which has been audited by Arthur Andersen LLP,
is an integral part of the audited financial statements and should be read in
conjunction with the financial statements. The financial statements as of June
30, 1996 and related auditors' report appear in the Statement of Additional
Information of the Fund, which can be obtained by shareholders at no charge by
calling toll-free 800-545-0103 or by writing to the Fund at the address on the
front of this Prospectus.
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PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
===================================================================================================================
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1994 1993 1992(A)
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<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period.......... $ 11.17 $ 10.29 $ 10.84 $ 10.36 $ 10.00
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income........................ 0.17 0.28 0.19 0.15 0.16
Net realized and unrealized
gains (losses) on investments.............. 1.72 0.95 ( 0.35) 0.55 0.51
---------- ---------- ---------- ---------- ----------
Total from investment operations................ 1.89 1.23 ( 0.16) 0.70 0.67
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Dividends and distributions:
Dividends from net investment income(B) ..... ( 0.17) ( 0.28) ( 0.19) ( 0.15) ( 0.16)
Distributions from net realized gains(B) .... ( 1.61) -- ( 0.20) ( 0.07) ( 0.15)
In excess of net realized gains.............. ( 0.01) ( 0.07) -- -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions............... ( 1.79) ( 0.35) ( 0.39) ( 0.22) ( 0.31)
---------- ---------- ---------- ---------- ----------
Net asset value at end of period................ $ 11.27 $ 11.17 $ 10.29 $ 10.84 $ 10.36
========== ========== ========== ========== ==========
Total return.................................... 17.10% 12.20% ( 1.50%) 6.79% 7.94% (D)
========== ========== ========== ========== ==========
Net assets at end of period (000's)............. $27,945 $ 32,976 $ 45,523 $ 58,955 $ 28,340
========== ========== ========== ========== ==========
Ratio of expenses to average net assets(C) .... 1.50% 1.50% 1.50% 1.50% 1.47% (D)
Ratio of net investment income to average
net assets................................... 1.30% 2.36% 1.65% 1.60% 2.21% (D)
Portfolio turnover rate......................... 115% 163% 143% 83% 75% (D)
<FN>
(A)Represents the period from the date of public offering (October 21, 1991)
through June 30, 1992. No income was earned or expenses incurred from the
start of business through the date of public offering.
(B)For the period ended June 30, 1992, the per share data was calculated using
average shares outstanding throughout the period, whereas for subsequent
periods, the per share data was calculated based upon actual distributions.
For the period ended June 30, 1992, actual distributions per share from net
investment income and from net realized gains from security transactions
amounted to $.11 and $.08, respectively.
(C)Ratios of expenses to average net assets assuming no waiver of fees or
reimbursement of expenses by the Adviser was 2.10%, 1.98%, 1.81%, 1.95%, and
2.71%(D) for the periods ended June 30, 1996, 1995, 1994, 1993 and 1992,
respectively
(D)Annualized.
</FN>
</TABLE>
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<PAGE>
INVESTMENT ADVISER
Leeb Investment Advisors (the "Adviser") provides the Fund
with management and investment advisory services. The executive
officers of the Adviser are Dr. Stephen Leeb, Mr. Allie P. Ash,
Jr., and Mr. Francis A. Mlynarczyk, Jr. Dr. Leeb and Mr.
Mlynarczyk are currently affiliated with other investment
advisers. Dr. Leeb has been engaged in the business of providing
investment advisory and portfolio management services for
approximately 19 years. Mr. Mlynarczyk has been engaged in
portfolio management services for approximately 24 years. The
business address of the Adviser is 1101 King Street, Alexandria,
Virginia 22314.
The Fund pays the Adviser a fee at the annual rate of 1% of the
average value of the Fund's daily net assets. For the fiscal year ended June
30, 1996, the advisory fee paid to the Adviser was 0.40% (net of waivers by
the Adviser) of the Fund's average net assets.
Dr. Stephen Leeb is, and since the Fund's inception has
been, the portfolio manager of the Fund. As such, he is
responsible for the day-to-day investment management of the Fund.
Dr. Leeb is the President of the Fund and President of Money
Growth Institute, Inc., a registered investment adviser and one
of two general partners of the Adviser. Stephen Leeb is editor
of Personal Finance, a highly regarded and award winning
investment advisory newsletter, and The Big Picture, one of the
nation's top market timing newsletters. Author of the acclaimed
book Getting In On the Ground Floor, Dr. Leeb accurately forecast
the great bull market of the 1980s and early 1990s. He is also
the author of Market Timing for the Nineties. Dr. Leeb holds a
Bachelor's Degree in Economics from The Wharton School. He also
received an M.A. in Psychology and Math and a Ph.D. in Psychology
from the University of Illinois. Dr. Leeb has been quoted in
numerous financial publications, and he has appeared on Wall
Street Week, Nightly Business Report, CNN and CNBC.
Mr. Allie P. Ash, Jr. is the Chairman of the Board of the
Fund and President of National Information Corporation, the
parent company of PF Funds Group, Inc., the other general partner
of the Adviser. Mr. Ash is President of the Adviser and has no
operating responsibilities in managing the Fund. KCI
Communications, Inc., a wholly-owned subsidiary of National
Information Corporation, is the publisher of Personal Finance,
The Big Picture and Special Alert Bulletin. For five of the past
ten years, the Newsletter Association, a trade organization for
newsletter publishers, has ranked Personal Finance as the #1
newsletter of its kind in the United States. Mr. Ash is a
graduate of George Washington University, with a B.B.A. in
Accounting, 1968, and an M.B.A., 1974.
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<PAGE>
Mr. Francis A. Mlynarczyk, Jr. has been engaged by the
Adviser to serve as chief administrative officer. Mr. Mlynarczyk
also serves as Executive Vice President of the Fund. Mr.
Mlynarczyk is Chairman of Prospect Advisors, Inc., an investment
adviser, and was a founder of that firm in 1985. Mr. Mlynarczyk
is a general partner of Brimberg & Co., L.P., the Fund's
principal underwriter, and also of President Street Fund, L.P.,
an investment partnership. He was Senior Vice President of
Brokaw Capital Management, Inc. from 1982 to 1985, President of
Greenwood Management Corporation from 1981 to 1982, and Vice
President of Citibank, N.A., where he worked in the Investment
Management Group from 1969 to 1981. He has extensive experience
in investments, including portfolio management, securities
analysis, block trading, and operations. Mr. Mlynarczyk in 1969-
1970 was Adjunct Assistant Professor, Graduate School of Business
Administration, New York University, where he taught courses in
data processing systems design and real-time computer systems.
Mr. Mlynarczyk received a B.S. in Engineering Sciences, Purdue
University, 1964, and an M.S. in Industrial Administration, 1965,
and a Ph.D. (Financial Accounting and Control), 1969, both from
Krannert Graduate School of Industrial Administration, Purdue
University.
Dr. Leeb, Mr. Ash and Mr. Mlynarczyk intend to devote the
necessary time and effort to the business of the Fund and the
Adviser to fulfill their respective responsibilities to the Fund
and the Adviser. These individuals may continue to be involved
in the activities of other investment advisers and investment
management entities.
Dr. Leeb and his wife are the sole indirect shareholders of Money
Growth Institute, Inc., which in turn is a 49% partner in the Adviser. Mr. Ash
is the controlling indirect shareholder of National Information Corporation,
which in turn indirectly owns 100% of PF Funds Group, Inc., which is a 51%
partner in the Adviser. There is an employment agreement between Dr. Leeb,
Money Growth Institute, Inc., and the Adviser which expires on December 31,
1996. No assurance can be offered that a suitable replacement can be found for
Dr. Leeb in the event of his physical or mental incapacity, or the possible
termination of his relationship with the Adviser.
The Board of Trustees has approved, and has recommended that
shareholders of the Fund approve, an Agreement and Plan of Reorganization (the
"Plan") pursuant to which the Fund will be reorganized into the MegaTrends
Fund, a new series of the Accolade Funds, a Massachusetts business trust. The
MegaTrends Fund will have the same investment objective and policies as the
Fund. If the Plan is approved by shareholders, upon consummation of the
reorganization, Fund shareholders will each receive shares of the MegaTrends
Fund equal in value to the value of their Fund shares at the time of the
reorganization. The Plan provides for
- 8 -
<PAGE>
the reorganization to be consummated on or about November 15,
1996. Following the reorganization, U.S. Global Investors, Inc.
will be responsible for the overall management of the business
affairs of the MegaTrends Fund, and Money Growth Institute, Inc.
will furnish investment advice as sub-advisor to the Fund. U.S.
Global Investors, Inc. serves as investment adviser to the United
Services Funds, a family of mutual funds with approximately $1.4
billion in assets. Frank E. Holmes is Chairman of the Board of
Directors and Chief Executive Officer of U.S. Global Investments,
Inc. and its controlling shareholder. As Portfolio Manager, Dr.
Leeb will be responsible for the day-to-day investment management
of the MegaTrends Fund. Additional information about the Plan
and the reorganization is contained in a prospectus/proxy
statement on file with the Securities and Exchange Commission.
To obtain this prospectus/proxy statement, or a prospectus for
the MegaTrends Fund, please call 1-800-524-LEEB.
INVESTMENT OBJECTIVES, INVESTMENT POLICIES AND RISK CONSIDERATIONS
The primary investment objective of the Fund is to seek long-term
capital appreciation consistent with the preservation of capital. Earning
current income from dividends, interest and short-term capital gains is a
secondary objective. The Fund is not intended to be a complete investment
program, and there is no assurance that its investment objectives can be
achieved. The Fund's investment objectives are fundamental and as such may not
be changed without the affirmative vote of the holders of a majority of its
outstanding shares. The term "majority" of the outstanding shares means the
lesser of (1) 67% or more of the outstanding shares of the Fund present at a
meeting, if the holders of more than 50% of the outstanding shares of the Fund
are present at or represented at such meeting or (2) more than 50% of the
outstanding shares of the Fund. Unless otherwise indicated, all investment
practices and limitations of the Fund are nonfundamental policies which may be
changed by the Board of Trustees without shareholder approval.
The Fund should be viewed essentially as an equity fund, since it is
expected that, unless the Fund is in a defensive posture, most of its assets
will be held in common stocks most of the time. The Fund, however, may from
time to time have a significant portion, and possibly all, of its assets in
obligations issued or guaranteed as to principal and interest by the United
States Government, its agencies or instrumentalities ("U.S. Government
obligations" described below) and corporate debt securities of various
maturities. When the Adviser believes substantial price risks exist for common
stocks because of uncertainties in the investment outlook or when, in the
judgment of the Adviser, it is otherwise warranted in selling to manage the
Fund's portfolio against the risks of a major stock market decline, the Fund
may temporarily hold for defensive purposes all or a portion of its assets in
money market instruments.
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<PAGE>
The Adviser determines the asset composition of the Fund's portfolio
primarily upon the basis of market timing techniques developed by Dr. Leeb and
his staff. These techniques attempt to identify the degree of risk in holding
stocks versus debt securities and/or versus money market instruments. Dr. Leeb
and his staff have developed models over the years to assist him in assessing
risk in the equity and debt markets. These models emphasize general economic
and monetary factors and, to a lesser extent, trends in the equity and debt
markets themselves.
Investors should be aware that the investment results of the Fund
depend upon the ability of the Adviser to correctly anticipate the relative
performance and risk of stocks, debt securities and money market instruments.
Historical evidence indicates that correctly timing portfolio allocations
among these asset classes has been an extremely difficult investment strategy
to implement successfully. While Dr. Leeb has substantial experience in
applying market timing techniques, there can be no assurance that the Adviser
will correctly anticipate relative asset class performance in the future on a
consistent basis. Investment results would suffer, for example, if only a
small portion of the Fund's assets were invested in stocks during a
significant stock market advance or if a major portion were invested in stocks
during a major decline.
The stock selection approach within the equity sector of the Fund's
portfolio can best be characterized in the vernacular of the investment
business as a "value" orientation. That is, great emphasis is placed on
"value" parameters, such as having a strong balance sheet, and/or having
substantial free cash flow, and/or having a record of rising dividends, and/or
having a high dividend yield. In addition, companies in whose equities the
Fund may invest will predominantly have large capitalizations in terms of
total market value. Usually, but not always, the stocks of such companies are
traded on major stock exchanges. Such stocks are usually very liquid, but
there may be periods when a particular stock or stocks in general become
substantially less liquid. Such periods are usually, but not always, brief,
and the Adviser will seek to minimize the overall liquidity risk of the Fund's
portfolio. In addition, it is unlikely that the Fund would have more than a
token amount of its assets, and in no case more than 5% of its net assets, in
stocks with market capitalizations less than $300 million at the time of
purchase. The Fund may invest in foreign companies through the purchase of
sponsored American Depository Receipts (certificates of ownership issued by an
American bank or trust company as a convenience to investors in lieu of the
underlying shares which it holds in custody) or other securities of foreign
issuers that are publicly traded in the United States. The Fund does not
currently intend to invest more than 5% of its net assets in American
Depository Receipts and other foreign securities.
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<PAGE>
When the Fund has a portion of its assets in U.S. Government
obligations or corporate debt securities, the maturities of these securities
will be based in large measure both on the Adviser's perception as to general
risk levels in the debt market versus the equity market, and on the Adviser's
perception of the future trend and term structure of interest rates. Dr. Leeb
with his staff has developed models that assist him in assessing risk in the
debt markets and interest rate trends.
"U.S. Government obligations" include securities which are issued or
guaranteed by the United States Treasury, by various agencies of the United
States Government, and by various instrumentalities which have been
established or sponsored by the United States Government. U.S. Treasury
obligations are backed by the "full faith and credit" of the U.S. Government.
U.S. Treasury obligations include Treasury bills, Treasury notes and Treasury
bonds. Agencies or instrumentalities established by the United States
Government include the Federal Home Loan Banks, the Federal Land Bank, the
Government National Mortgage Association, the Federal National Mortgage
Association, the Federal Home Loan Mortgage Corporation, the Student Loan
Marketing Association, the Bank for Cooperatives, the Federal Intermediate
Credit Bank, the Federal Financing Bank, the Federal Farm Credit Banks, the
Federal Agricultural Mortgage Corporation, the Resolution Funding Corporation,
the Financing Corporation of America and the Tennessee Valley Authority. Some
of these securities are supported by the full faith and credit of the United
States Government while others are supported only by the credit of the agency
or instrumentality, which may include the right of the issuer to borrow from
the United States Treasury.
The Fund may also purchase corporate debt securities rated "B" or
higher by Standard & Poor's Ratings Group or Moody's Investors Service, Inc.,
although the Fund does not hold, nor intend to invest, more than 5% of its net
assets in corporate debt securities rated at least "B" but less than "A" by
either of these two rating organizations. Lower-rated debt securities
(commonly called "junk bonds") are often considered to be speculative and
involve greater risk of default or price changes due to changes in the
issuer's creditworthiness. The Fund may also purchase debt securities on a
when-issued basis, but the Fund does not currently intend to invest more than
5% of its net assets in such securities.
Investments in equity and debt securities are subject to inherent
market risks and fluctuations in value due to earnings, economic conditions,
quality ratings and other factors beyond the control of the Adviser. Debt
securities also are subject to price fluctuations based upon changes in the
level of interest rates, which will generally result in all those securities
changing in price in the same way, i.e., all those securities experiencing
appreciation when interest rates decline and depreciation when interest rates
rise. As a result, the return and net asset value of the Fund will fluctuate.
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<PAGE>
The money market instruments which the Fund may own from time to time
include U.S. Government obligations having a maturity of less than one year,
commercial paper rated A-1 by Standard & Poor's Ratings Group or Prime-1 by
Moody's Investors Service, Inc., repurchase agreements collateralized by U.S.
Government obligations, bank debt instruments (certificates of deposit, time
deposits and bankers' acceptances) and other short-term instruments issued by
domestic branches of U.S. financial institutions that are insured by the
Federal Deposit Insurance Corporation and have assets exceeding $10 billion.
Repurchase agreements are transactions by which the Fund purchases a
security and simultaneously commits to resell that security to the seller at
an agreed upon time and price, thereby determining the yield during the term
of the agreement. In the event of a bankruptcy or other default by the seller
of a repurchase agreement, the Fund could experience both delays in
liquidating the underlying security and losses. To minimize these
possibilities, the Fund intends to enter into repurchase agreements only with
its Custodian, banks having assets in excess of $10 billion and the largest
and, in the Adviser's judgment, most creditworthy primary U.S. Government
securities dealers. Collateral for repurchase agreements is held in
safekeeping in the customer-only account of the Fund's Custodian at the
Federal Reserve Bank. At the time the Fund enters into a repurchase agreement,
the value of the collateral, including accrued interest, will equal or exceed
the value of the repurchase agreement and, in the case of a repurchase
agreement exceeding one day, the seller agrees to maintain sufficient
collateral so that the value of the underlying collateral, including accrued
interest, will at all times equal or exceed the value of the repurchase
agreement. The Fund will not enter into a repurchase agreement not terminable
within seven days if, as a result thereof, more than 10% of the value of the
net assets of the Fund would be invested in such securities and other illiquid
securities.
The Fund may make short-term loans of its portfolio securities to
banks, brokers and dealers, although the Fund has no present intention to do
so.
The Fund may borrow money from banks or as may be necessary for the
clearance of securities transactions but only for emergency or extraordinary
purposes in an amount not exceeding 5% of the Fund's total assets. The Fund's
policy on borrowing is a fundamental policy which may not be changed without
the affirmative vote of a majority of its outstanding shares.
The Fund does not intend to use short-term trading as a primary means
of achieving its investment objectives. However, the Fund's rate of portfolio
turnover will depend on market and other conditions, and it will not be a
limiting factor when
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<PAGE>
portfolio changes are deemed necessary or appropriate by the Adviser. Although
the annual portfolio turnover rate of the Fund cannot be accurately predicted,
it will likely be between 75% and 150%, but may be either higher or lower.
High turnover involves correspondingly greater commission expenses and
transaction costs and increases the possibility that the Fund would not
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code. The Fund will not qualify as a regulated investment company if
it derives 30% or more of its gross income from gains (without offset for
losses) from the sale or other disposition of securities held for less than
three months. High turnover may result in the Fund recognizing greater amounts
of income and capital gains, which would increase the amount of income and
capital gains which the Fund must distribute to its shareholders in order to
maintain its status as a regulated investment company and to avoid the
imposition of federal income or excise taxes (see "Taxes").
HOW TO PURCHASE SHARES
Your initial investment in the Fund ordinarily must be at least
$2,500 ($250 for tax-deferred retirement plans). Shares of the Fund are sold
on a continuous basis at the net asset value next determined after receipt of
a purchase order by the Fund. Purchase orders received by dealers prior to
4:00 p.m., Eastern time, on any business day and transmitted to the Fund's
transfer agent, MGF Service Corp., by 5:00 p.m., Eastern time, that day are
confirmed at the net asset value determined as of the close of the regular
session of trading on the New York Stock Exchange on that day. It is the
responsibility of dealers to transmit properly completed orders so that they
will be received by MGF Service Corp. by 5:00 p.m., Eastern time. Dealers may
charge a fee for effecting purchase orders. Direct purchase orders received by
MGF Service Corp. by 4:00 p.m., Eastern time, are confirmed at that day's net
asset value. Direct investments received by MGF Service Corp. after 4:00 p.m.,
Eastern time, and orders received from dealers after 5:00 p.m., Eastern time,
are confirmed at the net asset value next determined on the following business
day.
You may open an account and make an initial investment in the Fund by
sending a check and a completed account application form to MGF Service Corp.,
P.O. Box 5354, Cincinnati, Ohio 45201- 5354. Checks should be made payable to
"The Leeb Personal Finance Fund." An account application is included with this
Prospectus.
The Fund mails you confirmations of all purchases or redemptions of
Fund shares. Certificates representing shares are not ordinarily issued, but
you may receive a certificate without charge by sending a written request to
MGF Service Corp. Certificates for fractional shares will not be issued. If a
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<PAGE>
certificate has been issued to you, you will not be permitted to redeem shares
by telephone or to use the automatic withdrawal plan as to those shares. The
Fund and the Underwriter reserve the rights to limit the amount of investments
and to refuse to sell to any person.
Investors should be aware that the Fund's account application
contains provisions in favor of the Fund, MGF Service Corp. and certain of
their affiliates, excluding such entities from certain liabilities (including,
among others, losses resulting from unauthorized shareholder transactions)
relating to the various services (for example, telephone redemptions) made
available to investors.
Should an order to purchase shares be canceled because your check
does not clear, you will be responsible for any resulting losses or fees
incurred by the Fund or MGF Service Corp. in the transaction.
You may also purchase shares of the Fund by wire. Please telephone
MGF Service Corp. (Nationwide call toll-free 800-545- 0103) for instructions.
You should be prepared to give the name in which the account is to be
established, the address, telephone number and taxpayer identification number
for the account, and the name of the bank which will wire the money.
Your investment will be made at the net asset value next determined
after your wire is received together with the account information indicated
above. If the Fund does not receive timely and complete account information,
there may be a delay in the investment of your money and any accrual of
dividends. To make your initial wire purchase, you are required to mail a
completed account application to MGF Service Corp. Your bank may impose a
charge for sending your wire. There is presently no fee for receipt of wired
funds, but MGF Service Corp. reserves the right to charge shareholders for
this service upon thirty days' prior notice to shareholders.
You may purchase and add shares to your account by mail or by bank
wire. Checks should be sent to MGF Service Corp., P.O. Box 5354, Cincinnati,
Ohio 45201-5354. Checks should be made payable or endorsed to "The Leeb
Personal Finance Fund." Bank wires should be sent as outlined above. You may
also make additional investments at the Fund's offices at 312 Walnut Street,
21st Floor, Cincinnati, Ohio 45202. Each additional purchase request must
contain the name of your account and your account number to permit proper
crediting to your account. While there is no minimum amount required for
subsequent investments, the Fund reserves the right to impose such
requirement.
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<PAGE>
SHAREHOLDER SERVICES
Contact MGF Service Corp. (Nationwide call toll-free 800-
545-0103) for additional information about the shareholder
services described below.
Automatic Withdrawal Plan
If the shares in your account have a value of at least $5,000, you
may elect to receive, or may designate another person to receive, monthly or
quarterly payments in a specified amount of not less than $50 each. There is
no charge for this service.
Tax-Deferred Retirement Plans
Shares of the Fund are available for purchase in connection with the
following tax-deferred retirement plans:
- -- Keogh Plans for self-employed individuals
- -- Individual retirement account (IRA) plans for individuals
and their non-employed spouses
- -- Qualified pension and profit-sharing plans for employees,
including those profit-sharing plans with a 401(k) provision
- -- 403(b)(7) custodial accounts for employees of public school systems,
hospitals, colleges and other non-profit organizations meeting
certain requirements of the Internal Revenue Code
Direct Deposit Plans
Shares of the Fund may be purchased through direct deposit plans
offered by certain employers and government agencies. These plans enable a
shareholder to have all or a portion of his or her payroll or social security
checks transferred automatically to purchase shares of the Fund.
Automatic Investment Plan
You may make automatic monthly investments in the Fund from your
bank, savings and loan or other depository institution account. The minimum
initial and subsequent investments must be $50 under the plan. MGF Service
Corp. pays the costs associated with these transfers, but reserves the right,
upon thirty days' written notice, to make reasonable charges for this service.
Your depository institution may impose its own charge for debiting your
account which would reduce your return from an investment in the Fund.
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<PAGE>
HOW TO REDEEM SHARES
You may redeem shares of the Fund on each day that the Fund is open
for business. You will receive the net asset value per share next determined
after receipt by MGF Service Corp. of your redemption request in the form
described below. Payment is normally made within three business days after
tender in such form, provided that payment in redemption of shares purchased
by check will be effected only after the check has been collected, which may
take up to fifteen days from the purchase date. To eliminate this delay, you
may purchase shares of the Fund by certified check or wire.
By Telephone. You may redeem shares by telephone. The proceeds will
be sent by mail to the address designated on your account or wired directly to
your existing account in any commercial bank or brokerage firm in the United
States as designated on your application. To redeem by telephone, call MGF
Service Corp. (Nationwide call toll-free 800-545-0103). The redemption
proceeds will normally be sent by mail or by wire within three business days
after receipt of your telephone instructions. IRA accounts are not redeemable
by telephone.
The telephone redemption privilege is automatically available to all
shareholders. You may change the bank or brokerage account which you have
designated under this procedure at any time by writing to MGF Service Corp.
with your signature guaranteed by any eligible guarantor institution
(including banks, brokers and dealers, municipal securities brokers and
dealers, government securities brokers and dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies
and savings associations) or by completing a supplemental telephone redemption
authorization form. Contact MGF Service Corp. to obtain this form. Further
documentation will be required to change the designated account if shares are
held by a corporation, fiduciary or other organization.
Neither the Fund, MGF Service Corp., nor their respective affiliates
will be liable for complying with telephone instructions they reasonably
believe to be genuine or for any loss, damage, cost or expense in acting on
such telephone instructions. The affected shareholders will bear the risk of
any such loss. The Fund or MGF Service Corp., or both, will employ reasonable
procedures to determine that telephone instructions are genuine. If the Fund
and/or MGF Service Corp. do not employ such procedures, they may be liable for
losses due to unauthorized or fraudulent instructions. These procedures may
include, among others, requiring forms of personal identification prior to
acting upon telephone instructions, providing written confirmation of the
transactions and/or tape recording telephone instructions.
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<PAGE>
By Mail. You may redeem any number of shares from your account by
sending a written request to MGF Service Corp. The request must state the
number of shares or the dollar amount to be redeemed and your account number.
The request must be signed exactly as your name appears on the Fund's account
records. If the shares to be redeemed have a value of $25,000 or more, your
signature must be guaranteed by any of the eligible guarantor institutions
outlined above.
Written redemption requests may also direct that the proceeds be
deposited directly in the bank account or brokerage account designated on your
account application for telephone redemptions. Proceeds of redemptions
requested by mail are normally mailed within three business days following
receipt of instructions in proper form.
Through Broker-Dealers. You may also redeem shares by placing a wire
redemption request through a securities broker or dealer. Unaffiliated
broker-dealers may impose a fee on the shareholder for this service. You will
receive the net asset value per share next determined after receipt by the
Fund or its agent of your wire redemption request. It is the responsibility of
broker-dealers to promptly transmit wire redemption orders.
Additional Redemption Information. If your instructions request a
redemption by wire, you will be charged an $8 processing fee by the Fund's
Custodian. The Fund reserves the right, upon thirty days' written notice, to
change the processing fee. All charges will be deducted from your account by
redemption of shares in your account. Your bank or brokerage firm may also
impose a charge for processing the wire. In the event that wire transfer of
funds is impossible or impractical, the redemption proceeds will be sent by
mail to the designated account.
Redemption requests may direct that the proceeds be deposited
directly in your account with a commercial bank or other depository
institution via an Automated Clearing House (ACH) transaction. There is
currently no charge for ACH transactions. Contact MGF Service Corp. for more
information about ACH transactions.
If a certificate for shares of the Fund was issued, it must be
delivered to MGF Service Corp., or the dealer in the case of a wire
redemption, duly endorsed or accompanied by a duly endorsed stock power, with
the signature guaranteed by any of the eligible guarantor institutions
outlined above.
At the discretion of the Fund or MGF Service Corp., corporate
investors and other associations may be required to furnish an appropriate
certification authorizing redemptions to ensure proper authorization. The Fund
reserves the right to require you to close your account if at any time the
value of
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<PAGE>
your shares is less than $2,500 (based on actual amounts invested, unaffected
by market fluctuations), or $250 in the case of tax-deferred retirement plans,
or such other minimum amount as the Fund may determine from time to time.
After notification to you of the Fund's intention to close your account, you
will be given sixty days to increase the value of your account to the minimum
amount.
The Fund reserves the right to suspend the right of redemption or to
postpone the date of payment for more than three business days under unusual
circumstances as determined by the Securities and Exchange Commission.
DIVIDENDS AND DISTRIBUTIONS
The Fund expects to distribute substantially all of its net
investment income, if any, on a semiannual basis. The Fund expects to
distribute any net realized long-term capital gains at least once each year.
Management will determine the timing and frequency of the distributions of any
net realized short-term capital gains.
Distributions are paid according to one of the following options:
Share Option - income distributions and capital gains
distributions reinvested in additional
shares.
Income Option - income distributions and short-term
capital gains distributions paid in
cash; long-term capital gains
distributions reinvested in additional
shares.
Cash Option - income distributions and
capital gains distributions paid
in cash.
You should indicate your choice of option on your application. If no
option is specified on your application, distributions will automatically be
reinvested in additional shares. All distributions will be based on the net
asset value in effect on the payable date.
If you select the Income Option or the Cash Option and the U.S.
Postal Service cannot deliver your checks or if your checks remain uncashed
for six months, your dividends may be reinvested in your account at the
then-current net asset value and your account will be converted to the Share
Option.
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<PAGE>
TAXES
The Fund has qualified in all prior years and intends to continue to
qualify for the special tax treatment afforded a "regulated investment
company" under Subchapter M of the Internal Revenue Code so that it does not
pay federal taxes on income and capital gains distributed to shareholders. The
Fund intends to distribute substantially all of its net investment income and
any net realized capital gains to its shareholders. Distributions of net
investment income as well as from net realized short-term capital gains, if
any, are taxable to investors as ordinary income. Dividends distributed by the
Fund from net investment income may be eligible, in whole or in part, for the
dividends received deduction available to corporations. Distributions of net
realized long-term capital gains are taxable as long-term capital gains
regardless of how long you have held your Fund shares. Redemptions of shares
of the Fund are taxable events on which a shareholder may realize a gain or
loss.
The Fund will mail to each of its shareholders a statement indicating
the amount and federal income tax status of all distributions made during the
year. In addition to federal taxes, shareholders of the Fund may be subject to
state and local taxes on distributions. Shareholders should consult their tax
advisors about the tax effect of distributions and withdrawals from the Fund
and the use of the Automatic Withdrawal Plan. The tax consequences described
in this section apply whether distributions are taken in cash or reinvested in
additional shares.
OPERATION OF THE FUND
The Fund is a diversified series of Leeb Personal FinanceTM
Investment Trust, an open-end management investment company organized as an
Ohio business trust on August 19, 1991. The Board of Trustees supervises the
business activities of the Fund. Like other mutual funds, various
organizations are retained to perform specialized services for the Fund.
The Fund is responsible for the payment of all operating
expenses, including fees and expenses in connection with
membership in investment company organizations, brokerage fees
and commissions, legal, auditing and accounting expenses,
expenses of registering shares under federal and state securities
laws, insurance expenses, taxes or governmental fees, fees and
expenses of the custodian, transfer agent and accounting and
pricing agent of the Fund, fees and expenses of members of the
Board of Trustees who are not interested persons of the Fund, the
cost of preparing and distributing prospectuses, statements,
reports and other documents to shareholders, expenses of
shareholders' meetings and proxy solicitations, and such
extraordinary or non-recurring expenses as may arise, including
litigation to which the Fund may be a party and indemnification
of the Fund's officers and Trustees with respect thereto. For
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<PAGE>
the fiscal year ended June 30, 1996, total expenses of the Fund (net of
waivers by the Adviser of advisory fees payable) were 1.50% of the Fund's
average net assets.
The Fund has retained MGF Service Corp., P.O. Box 5354,
Cincinnati, Ohio, to serve as its transfer agent, dividend paying
agent and shareholder service agent. MGF Service Corp. is a
subsidiary of Leshner Financial, Inc., of which Robert H. Leshner
is the controlling shareholder.
MGF Service Corp. also provides accounting and pricing
services to the Fund. MGF Service Corp. receives $3,400 per
month from the Fund for calculating daily net asset value per
share and maintaining such books and records as are necessary to
enable it to perform its duties.
In addition, MGF Service Corp. has been retained to provide
administrative services to the Fund. In this capacity, MGF Service Corp.
supplies executive, administrative and regulatory services, supervises the
preparation of tax returns, and coordinates the preparation of reports to
shareholders and reports to and filings with the Securities and Exchange
Commission and state securities authorities. The Fund pays MGF Service Corp. a
fee for these administrative services at the annual rate of .2% of the average
value of its daily net assets up to $100,000,000, .175% of such assets from
$100,000,000 to $200,000,000 and .15% of such assets in excess of
$200,000,000; provided, however, that the minimum fee is $1,000 per month.
Brimberg & Co., L.P., 45 Rockefeller Plaza, New York, New York (the
"Underwriter"), serves as principal underwriter for the Fund and, as such, is
the exclusive agent for the distribution of shares of the Fund. Although the
Underwriter receives no direct compensation from the Fund for serving as
principal underwriter, the Underwriter executes securities transactions on a
"best execution" basis for the Fund's portfolio securities. Francis A.
Mlynarczyk, Jr., Executive Vice President of the Fund and Chief Administrative
Officer of the Adviser, is a general partner in the Underwriter. Money Growth
Institute, Inc., a partner in the Adviser, is among the limited partners in
the Underwriter.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to its objective of
seeking best execution of portfolio transactions, the Adviser may give
consideration to sales of shares of the Fund as a factor in the selection of
brokers and dealers to execute portfolio transactions of the Fund. Subject to
the requirements of the Investment Company Act of 1940 and procedures adopted
by the Board of Trustees, the Fund may execute portfolio transactions through
any broker or dealer and pay brokerage commissions to a broker (i) which is an
affiliated person of the
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<PAGE>
Fund, or (ii) which is an affiliated person of such person, or (iii) an
affiliated person of which is an affiliated person of the Fund, the Adviser or
the Underwriter.
Shares of the Fund have equal voting rights and liquidation rights.
When matters are submitted to shareholders for a vote, each shareholder is
entitled to one vote for each full share owned and fractional votes for
fractional shares owned. The Fund does not normally hold annual meetings of
shareholders. The Trustees shall promptly call and give notice of a meeting of
shareholders for the purpose of voting upon removal of any Trustee when
requested to do so in writing by shareholders holding 10% or more of the
Fund's outstanding shares. The Fund will comply with the provisions of Section
16(c) of the Investment Company Act of 1940 in order to facilitate
communications among shareholders.
CALCULATION OF SHARE PRICE
On each day that the Fund is open for business, the share price (net
asset value) of the Fund's shares is determined as of the close of the regular
session of trading on the New York Stock Exchange, currently 4:00 p.m.,
Eastern time. The Fund is open for business on each day the New York Stock
Exchange is open for business and on any other day when there is sufficient
trading in the Fund's investments that its net asset value might be materially
affected. The net asset value per share of the Fund is calculated by dividing
the sum of the value of the securities held by the Fund plus cash or other
assets minus all liabilities (including estimated accrued expenses) by the
total number of shares outstanding of the Fund, rounded to the nearest cent.
U.S. Government obligations are valued at their most recent bid
prices as obtained from one or more of the major market makers for such
securities. Other portfolio securities are valued as follows: (i) securities
which are traded on stock exchanges or are quoted by NASDAQ are valued at the
last reported sale price as of the close of the regular session of trading on
the New York Stock Exchange on the day the securities are being valued, or, if
not traded on a particular day, at the closing bid price, (ii) securities
traded in the over-the-counter market, and which are not quoted by NASDAQ, are
valued at the last sale price (or, if the last sale price is not readily
available, at the last bid price as quoted by brokers that make markets in the
securities) as of the close of the regular session of trading on the New York
Stock Exchange on the day the securities are being valued, (iii) securities
which are traded both in the over-the-counter market and on a stock exchange
are valued according to the broadest and most representative market, and (iv)
securities (and other assets) for which market quotations are not readily
available are valued at their fair value as determined in good faith in
accordance with consistently applied procedures
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<PAGE>
established by and under the general supervision of the Board of Trustees. The
net asset value per share of the Fund will fluctuate with the value of the
securities it holds.
PERFORMANCE INFORMATION
From time to time, the Fund may advertise its "average annual total
return." The Fund may also advertise "yield." Both yield and average annual
total return figures are based on historical earnings and are not intended to
indicate future performance.
The "average annual total return" of the Fund refers to the average
annual compounded rates of return over the most recent 1, 5 and 10 year
periods or, where the Fund has not been in operation for such period, over the
life of the Fund (which periods will be stated in the advertisement) that
would equate an initial amount invested at the beginning of a stated period to
the ending redeemable value of the investment. The calculation of "average
annual total return" assumes the reinvestment of all dividends and
distributions. The Fund may also advertise total return (a "nonstandardized
quotation") which is calculated differently from "average annual total
return." A nonstandardized quotation of total return may be a cumulative
return which measures the percentage change in the value of an account between
the beginning and end of a period, assuming no activity in the account other
than reinvestment of dividends and capital gains distributions. A
nonstandardized quotation of total return may also indicate average annual
compounded rates of return over periods other than those specified for
"average annual total return." A nonstandardized quotation of total return
will always be accompanied by the Fund's "average annual total return" as
described above.
The "yield" of the Fund is computed by dividing the net investment
income per share earned during a thirty-day (or one month) period stated in
the advertisement by the net asset value per share on the last day of the
period (using the average number of shares entitled to receive dividends). The
yield formula assumes that net investment income is earned and reinvested at a
constant rate and annualized at the end of a six-month period.
From time to time the Fund may advertise its performance rankings as
published by recognized independent mutual fund statistical services such as
Lipper Analytical Services, Inc. ("Lipper"), or by publications of general
interest such as Forbes, Money, The Wall Street Journal, Business Week,
Barron's, Fortune or Morningstar Mutual Fund Values. The Fund may also compare
its performance to that of other selected mutual funds, averages of the other
mutual funds within its category as determined by Lipper, or recognized
indicators such as the Dow Jones Industrial Average and the Standard & Poor's
500 Stock
- 22 -
<PAGE>
Index. In connection with a ranking, the Fund may provide additional
information, such as the particular category of funds to which the ranking
relates, the number of funds in the category, the criteria upon which the
ranking is based, and the effect of fee waivers and/or expense reimbursements,
if any. The Fund may also present its performance and other investment
characteristics, such as volatility or a temporary defensive posture, in light
of the Adviser's view of current or past market conditions or historical
trends.
Further information about the Fund's performance is contained in the
Fund's annual report which can be obtained by shareholders at no charge by
calling toll-free 800-545-0103 or by writing to the Fund at the address on the
front of this Prospectus.
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<PAGE>
THE LEEB PERSONAL FINANCETM FUND
Board of Trustees
Allie P. Ash, Jr.
Paul W. Halter
Stephen Leeb
Joel Novak
Dr. L. Noah Shaw
Investment Adviser
LEEB INVESTMENT ADVISORS
1101 King Street, Suite 400
Alexandria, Virginia 22314
Underwriter
BRIMBERG & CO., L.P.
45 Rockefeller Plaza, Suite 2570
New York, New York 10111
Transfer Agent
MGF SERVICE CORP.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
Shareholder Service
Nationwide: (Toll-Free) 800-545-0103
Fund Inquiries
Nationwide: (Toll-Free) 800-224-LEEB
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell
shares in any State to any person to whom it is unlawful for the Fund to make
such offer in such State.
Personal Finance is a registered trademark of KCI Communications, Inc.
<PAGE>
LEEB PERSONAL FINANCETM INVESTMENT TRUST
STATEMENT OF ADDITIONAL INFORMATION
November 1, 1996
The Leeb Personal FinanceTM Fund
This Statement of Additional Information is not a prospectus. It
should be read in conjunction with the Prospectus of The Leeb Personal
FinanceTM Fund dated November 1, 1996. A copy of the Fund's Prospectus can be
obtained by writing the Fund at 312 Walnut Street, 21st Floor, Cincinnati,
Ohio 45202-4094, or by calling the Fund nationwide toll-free 800-545-0103.
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<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Leeb Personal FinanceTM Investment Trust
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
TABLE OF CONTENTS
PAGE
THE FUND. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS. . . . . . . . 3
QUALITY RATINGS OF CORPORATE BONDS. . . . . . . . . . . . . . 9
INVESTMENT LIMITATIONS. . . . . . . . . . . . . . . . . . . . 11
TRUSTEES AND OFFICERS. . . . . . . . . . . . . . . . . . . . 13
THE INVESTMENT ADVISER. . . . . . . . . . . . . . . . . . . . 16
THE UNDERWRITER . . . . . . . . . . . . . . . . . . . . . . . 17
SECURITIES TRANSACTIONS . . . . . . . . . . . . . . . . . . . 18
PORTFOLIO TURNOVER . . . . . . . . . . . . . . . . . . . . . 20
CALCULATION OF SHARE PRICE . . . . . . . . . . . . . . . . . 20
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
REDEMPTION IN KIND . . . . . . . . . . . . . . . . . . . . . 22
HISTORICAL PERFORMANCE INFORMATION . . . . . . . . . . . . . 22
CUSTODIAN . . . . . . . . . . . . . .. . . . . . . . . . . . 24
AUDITORS. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
MGF SERVICE CORP. . . . . . . . . . . . . . . . . . . . . . . 25
ANNUAL REPORT . . . . . . . . . . . . . . . . . . . . . . . . 25
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<PAGE>
THE FUND
Leeb Personal FinanceTM Investment Trust (the "Trust") was organized
as an Ohio business trust on August 19, 1991. The Trust currently offers one
series of shares to investors, The Leeb Personal FinanceTM Fund (the "Fund").
Each share of the Fund represents an equal proportionate interest in
the assets and liabilities belonging to the Fund with each other share of the
Fund and is entitled to such dividends and distributions out of the income
belonging to the Fund as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares
of the Fund into a greater or lesser number of shares of the Fund so long as
the proportionate beneficial interest in the assets belonging to the Fund are
in no way affected. In case of any liquidation of the Fund, the holders of
shares of the Fund will be entitled to receive as a class a distribution out
of the assets, net of the liabilities, belonging to the Fund. No shareholder
is liable to further calls or to assessment by the Fund without his express
consent.
DEFINITIONS, POLICIES AND RISK CONSIDERATIONS
A more detailed discussion of some of the terms used and investment
policies described in the Prospectus (see "Investment Objectives, Investment
Policies and Risk Considerations") appears below:
Majority. As used in the Prospectus and this Statement of Additional
Information, the term "majority" of the outstanding shares of the Fund means
the lesser of (1) 67% or more of the outstanding shares of the Fund present at
a meeting, if the holders of more than 50% of the outstanding shares of the
Fund are present or represented at such meeting or (2) more than 50% of the
outstanding shares of the Fund.
Commercial Paper. Commercial paper consists of short-term (usually
from one to two hundred seventy days) unsecured promissory notes issued by
corporations in order to finance their current operations. The Fund will only
invest in commercial paper rated A-1 by Standard & Poor's Ratings Group or
Prime-1 by Moody's Investors Service, Inc. or unrated paper of issuers who
have outstanding unsecured debt rated AA or better by Standard & Poor's or Aa
or better by Moody's. Certain notes may have floating or variable rates.
Variable and floating rate notes with a demand notice period exceeding seven
days will be subject to the Fund's restriction on illiquid investments (see
"Investment Limitations") unless, in the judgment of the Adviser, such note is
liquid.
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<PAGE>
The rating of Prime-1 is the highest commercial paper rating
assigned by Moody's Investors Service, Inc. Among the factors considered by
Moody's in assigning ratings are the following: valuation of the management of
the issuer; economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain areas;
evaluation of the issuer's products in relation to competition and customer
acceptance; liquidity; amount and quality of long-term debt; trend of earnings
over a period of 10 years; financial strength of the parent company and the
relationships which exist with the issuer; and recognition by the management
of obligations which may be present or may arise as a result of public
interest questions and preparations to meet such obligations. These factors
are all considered in determining whether the commercial paper is rated
Prime-1. Commercial paper rated A (highest quality) by Standard & Poor's
Ratings Group has the following characteristics: liquidity ratios are adequate
to meet cash requirements; long-term senior debt is rated "A" or better,
although in some cases "BBB" credits may be allowed; the issuer has access to
at least two additional channels of borrowing; basic earnings and cash flow
have an upward trend with allowance made for unusual circumstances; typically,
the issuer's industry is well established and the issuer has a strong position
within the industry; and the reliability and quality of management are
unquestioned. The relative strength or weakness of the above factors
determines whether the issuer's commercial paper is rated A-1.
Bank Debt Instruments. Bank debt instruments in which the Fund may
invest consist of certificates of deposit, bankers' acceptances and time
deposits issued by national banks and state banks, trust companies and mutual
savings banks, or by banks or institutions the accounts of which are insured
by the Federal Deposit Insurance Corporation or the Federal Savings and Loan
Insurance Corporation. Certificates of deposit are negotiable certificates
evidencing the indebtedness of a commercial bank to repay funds deposited with
it for a definite period of time (usually from fourteen days to one year) at a
stated or variable interest rate. Bankers' acceptances are credit instruments
evidencing the obligation of a bank to pay a draft which has been drawn on it
by a customer, which instruments reflect the obligation both of the bank and
of the drawer to pay the face amount of the instrument upon maturity. The Fund
will only invest in bankers' acceptances of banks having a short-term rating
of A-1 by Standard & Poor's Ratings Group or Prime-1 by Moody's Investors
Service, Inc. Time deposits are non-negotiable deposits maintained in a
banking institution for a specified period of time at a stated interest rate.
The Fund will not invest in time deposits maturing in more than seven days if,
as a result thereof, more than 10% of the value of its net assets would be
invested in such securities and other illiquid securities.
When-Issued Securities. The Fund will only make commitments
to purchase securities on a when-issued basis with the intention
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<PAGE>
of actually acquiring the securities. In addition, the Fund may purchase
securities on a when-issued basis only if delivery and payment for the
securities takes place within 120 days after the date of the transaction. In
connection with these investments, the Fund will direct the Custodian to place
cash, U.S. Government obligations or high-grade debt instruments in a
segregated account in an amount sufficient to make payment for the securities
to be purchased. When a segregated account is maintained because the Fund
purchases securities on a when-issued basis, the assets deposited in the
segregated account will be valued daily at market for the purpose of
determining the adequacy of the securities in the account. If the market value
of such securities declines, additional cash or securities will be placed in
the account on a daily basis so that the market value of the account will
equal the amount of the Fund's commitments to purchase securities on a
when-issued basis. To the extent funds are in a segregated account, they will
not be available for new investment or to meet redemptions. Securities
purchased on a when-issued basis and the securities held in the Fund's
portfolio are subject to changes in market value based upon changes in the
level of interest rates (which will generally result in all of those
securities changing in value in the same way, i.e., all those securities
experiencing appreciation when interest rates decline and depreciation when
interest rates rise). Therefore, if in order to achieve higher returns, the
Fund remains substantially fully invested at the same time that it has
purchased securities on a when-issued basis, there will be a possibility that
the market value of the Fund's assets will experience greater fluctuation. The
purchase of securities on a when-issued basis may involve a risk of loss if
the broker-dealer selling the securities fails to deliver after the value of
the securities has risen.
When the time comes for the Fund to make payment for securities
purchased on a when-issued basis, the Fund will do so by using then available
cash flow, by sale of the securities held in the segregated account, by sale
of other securities or, although it would not normally expect to do so, by
directing the sale of the securities purchased on a when-issued basis
themselves (which may have a market value greater or less than the Fund's
payment obligation). Although the Fund will only make commitments to purchase
securities on a when-issued basis with the intention of actually acquiring the
securities, the Fund may sell these securities before the settlement date if
it is deemed advisable by the Adviser as a matter of investment strategy.
Repurchase Agreements. Repurchase agreements are transactions by
which the Fund purchases a security and simultaneously commits to resell that
security to the seller at an agreed upon time and price, thereby determining
the yield during the term of the agreement. In the event of a bankruptcy or
other default by the seller of a repurchase agreement, the Fund could
experience both delays in liquidating the underlying
- 29 -
<PAGE>
security and losses. To minimize these possibilities, the Fund intends to
enter into repurchase agreements only with its Custodian, with banks having
assets in excess of $10 billion and with broker-dealers who are recognized as
primary dealers in U.S. Government obligations by the Federal Reserve Bank of
New York. Collateral for repurchase agreements is held in safekeeping in the
customer-only account of the Fund's Custodian at the Federal Reserve Bank. The
Fund will not enter into a repurchase agreement not terminable within seven
days if, as a result thereof, more than 10% of the value of its net assets
would be invested in such securities and other illiquid securities.
Although the securities subject to a repurchase agreement might bear
maturities exceeding one year, settlement for the repurchase would never be
more than one year after the Fund's acquisition of the securities and normally
would be within a shorter period of time. The resale price will be in excess
of the purchase price, reflecting an agreed upon market rate effective for the
period of time the Fund's money will be invested in the securities, and will
not be related to the coupon rate of the purchased security. At the time the
Fund enters into a repurchase agreement, the value of the underlying security,
including accrued interest, will equal or exceed the value of the repurchase
agreement, and, in the case of a repurchase agreement exceeding one day, the
seller will agree that the value of the underlying security, including accrued
interest, will at all times equal or exceed the value of the repurchase
agreement. The collateral securing the seller's obligation must be of a credit
quality at least equal to the Fund's investment criteria for portfolio
securities and will be held by the Custodian or in the Federal Reserve Book
Entry System.
For purposes of the Investment Company Act of 1940, a repurchase
agreement is deemed to be a loan from the Fund to the seller subject to the
repurchase agreement and is therefore subject to the Fund's investment
restriction applicable to loans. It is not clear whether a court would
consider the securities purchased by the Fund subject to a repurchase
agreement as being owned by the Fund or as being collateral for a loan by the
Fund to the seller. In the event of the commencement of bankruptcy or
insolvency proceedings with respect to the seller of the securities before
repurchase of the security under a repurchase agreement, the Fund may
encounter delay and incur costs before being able to sell the security. Delays
may involve loss of interest or decline in price of the security. If a court
characterized the transaction as a loan and the Fund has not perfected a
security interest in the security, the Fund may be required to return the
security to the seller's estate and be treated as an unsecured creditor of the
seller. As an unsecured creditor, the Fund would be at the risk of losing some
or all of the principal and income involved in the transaction. As with any
unsecured debt obligation purchased for the Fund, the Adviser seeks to
minimize the risk of loss through repurchase agreements
- 30 -
<PAGE>
by analyzing the creditworthiness of the obligor, in this case, the seller.
Apart from the risk of bankruptcy or insolvency proceedings, there is also the
risk that the seller may fail to repurchase the security, in which case the
Fund may incur a loss if the proceeds to the Fund of the sale of the security
to a third party are less than the repurchase price. However, if the market
value of the securities subject to the repurchase agreement becomes less than
the repurchase price (including interest), the Fund will direct the seller of
the security to deliver additional securities so that the market value of all
securities subject to the repurchase agreement will equal or exceed the
repurchase price. It is possible that the Fund will be unsuccessful in seeking
to enforce the seller's contractual obligation to deliver additional
securities.
Loans of Portfolio Securities. The Fund may make short-term loans of
its portfolio securities to banks, brokers and dealers. Lending portfolio
securities exposes the Fund to the risk that the borrower may fail to return
the loaned securities or may not be able to provide additional collateral or
that the Fund may experience delays in recovery of the loaned securities or
loss of rights in the collateral if the borrower fails financially. To
minimize these risks, the borrower must agree to maintain collateral marked to
market daily, in the form of cash or U.S. Government obligations, with the
Fund's Custodian in an amount at least equal to the market value of the loaned
securities. It is the Fund's policy, which may not be changed without the
affirmative vote of a majority of its outstanding shares, that such loans will
not be made if as a result the aggregate of all outstanding loans exceeds 25%
of the value of the Fund's total assets.
Under applicable regulatory requirements (which are subject to
change), the loan collateral must, on each business day, at least equal the
value of the loaned securities. To be acceptable as collateral, letters of
credit must obligate a bank to pay amounts demanded by the Fund if the demand
meets the terms of the letter. Such terms and the issuing bank must be
satisfactory to the Fund. The Fund receives amounts equal to the dividends or
interest on loaned securities and also receives one or more of (a) negotiated
loan fees, (b) interest on securities used as collateral, or (c) interest on
short-term debt securities purchased with such collateral; either type of
interest may be shared with the borrower. The Fund may also pay fees to
placing brokers as well as custodian and administrative fees in connection
with loans. Fees may only be paid to a placing broker provided that the
Trustees determine that the fee paid to the placing broker is reasonable and
based solely upon services rendered, that the Trustees separately consider the
propriety of any fee shared by the placing broker with the borrower, and that
the fees are not used to compensate the Adviser or any affiliated person of
the Fund or an affiliated person of the Adviser or other affiliated person.
The terms of the Fund's loans must meet
- 31 -
<PAGE>
applicable tests under the Internal Revenue Code and permit the Fund to
reacquire loaned securities on five days' notice or in time to vote on any
important matter.
Foreign Securities. Subject to the Fund's investment policies and
quality standards, the Fund may invest in the securities (payable in U.S.
dollars) of foreign issuers. Because the Fund may invest in foreign
securities, investment in the Fund involves risks that are different in some
respects from an investment in a fund which invests only in securities of U.S.
domestic issuers. Foreign investments may be affected favorably or unfavorably
by changes in currency rates and exchange control regulations. There may be
less publicly available information about a foreign company than about a U.S.
company, and foreign companies may not be subject to accounting, auditing and
financial reporting standards and requirements comparable to those applicable
to U.S. companies. There may be less governmental supervision of securities
markets, brokers and issuers of securities. Securities of some foreign
companies are less liquid or more volatile than securities of U.S. companies,
and foreign brokerage commissions and custodian fees are generally higher than
in the United States. Settlement practices may include delays and may differ
from those customary in United States markets. Investments in foreign
securities may also be subject to other risks different from those affecting
U.S. investments, including local political or economic developments,
expropriation or nationalization of assets, restrictions on foreign investment
and repatriation of capital, imposition of withholding taxes on dividend or
interest payments, currency blockage (which would prevent cash from being
brought back to the United States), and difficulty in enforcing legal rights
outside the United States.
Warrants and Rights. Warrants are options to purchase equity
securities at a specified price and are valid for a specific time period.
Rights are similar to warrants, but normally have a short duration and are
distributed by the issuer to its shareholders. The Fund may purchase warrants
and rights, provided that the Fund does not invest more than 5% of its net
assets at the time of purchase in warrants and rights other than those that
have been acquired in units or attached to other securities. Of such 5%, no
more than 2% of the Fund's assets at the time of purchase may be invested in
warrants which are not listed on either the New York Stock Exchange or the
American Stock Exchange.
QUALITY RATINGS OF CORPORATE BONDS
The ratings of Moody's Investors Service, Inc. and Standard
& Poor's Ratings Group for corporate bonds in which the Fund may
invest are as follows:
Moody's Investors Service, Inc.
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<PAGE>
Aaa - Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred
to as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Baa - Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba - Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
- 33 -
<PAGE>
B - Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Standard & Poor's Ratings Group
AAA - Bonds rated AAA have the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA - Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in small degree.
A - Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB - Bonds rated BBB are regarded as having an adequate capacity to
pay interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for bonds in this category than for bonds in higher rated
categories.
BB and B - Bonds rated BB and B are regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and B the higher degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
Risk Factors of Lower-Rated Securities:
Lower-rated debt securities (commonly called "junk bonds") may be
subject to certain risk factors to which other securities are not subject to
the same degree. An economic downturn tends to disrupt the market for
lower-rated bonds and adversely affect their values. Such an economic downturn
may be expected to result in increased price volatility of lower-rated bonds
and of the value of the Fund's shares, and an increase in issuers' defaults on
such bonds.
Also, many issuers of lower-rated bonds are substantially leveraged,
which may impair their ability to meet their obligations. In some cases, the
securities in which the Fund invests are subordinated to the prior payment of
senior indebtedness, thus potentially limiting the Fund's ability to recover
full principal or to receive payments when senior securities are in default.
- 34 -
<PAGE>
The credit rating of a security does not necessarily address its
market value risk. Also, ratings may, from time to time, be changed to reflect
developments in the issuer's financial condition. Lower-rated securities held
by the Fund have speculative characteristics which are apt to increase in
number and significance with each lower rating category.
When the secondary market for lower-rated bonds becomes increasingly
illiquid, or in the absence of readily available market quotations for
lower-rated bonds, the relative lack of reliable, objective data makes the
responsibility of the Trustees to value such securities more difficult, and
judgment plays a greater role in the valuation of portfolio securities. Also,
increased illiquidity of the market for lower-rated bonds may affect the
Fund's ability to dispose of portfolio securities at a desirable price.
In addition, if the Fund experiences unexpected net redemptions, it
could be forced to sell all or a portion of its lower-rated bonds without
regard to their investment merits, thereby decreasing the asset base upon
which the Fund's expenses can be spread and possibly reducing the Fund's rate
of return. Also, prices of lower-rated bonds have been found to be less
sensitive to interest rate changes and more sensitive to adverse economic
changes and individual corporate developments than more highly rated
investments. Certain laws or regulations may have a material effect on the
Fund's investments in lower-rated bonds.
INVESTMENT LIMITATIONS
The Fund has adopted certain fundamental investment limitations
designed to reduce the risk of an investment in the Fund. These limitations
may not be changed without the affirmative vote of a majority of the
outstanding shares of the Fund. The Fund may not:
1. Invest in securities of any one issuer if immediately after and as
a result of such investment more than 5% of the total assets of the Fund, at
market value, would be invested in the securities of such issuer. This
restriction does not apply to investment in securities of the United States
Government, its agencies or instrumentalities.
2. Purchase more than 10% of the outstanding voting securities, or
any class of securities, of any one issuer. This restriction does not apply to
investment in securities of the United States Government, its agencies or
instrumentalities.
3. Invest more than 25% of its total assets in the securities of
issuers in any particular industry. This restriction does not apply to
investment in securities of the United States Government, its agencies or
instrumentalities.
- 35 -
<PAGE>
4. Purchase securities of other investment companies,
except in connection with a merger, consolidation, acquisition or
reorganization.
5. Purchase or sell commodities or real estate. However, the Fund may
invest in publicly traded securities secured by real estate or issued by
companies which invest in real estate or real estate interests.
6. Purchase securities on margin, make short sales of securities or
maintain a short position, except that the Fund may obtain such short-term
credit as may be necessary for the clearance of purchases and sales of
portfolio securities. This restriction on short sales does not apply to short
sales "against the box" (i.e., when the Fund owns or is long on the securities
sold short).
7. Lend money, except by engaging in repurchase agreements or by
purchasing publicly distributed or privately placed debt obligations in which
the Fund may invest consistent with its investment objectives and policies.
The Fund may make loans of its portfolio securities in an aggregate amount not
exceeding 25% of its total assets, provided that such loans are collateralized
by cash or cash equivalents or U.S. Government obligations in an amount equal
to the market value of the securities loaned, marked to market on a daily
basis.
8. Borrow money, except for i) temporary bank borrowings not in
excess of 5% of the value of the Fund's total assets for emergency or
extraordinary purposes or ii) short-term credits not in excess of 5% of the
value of the Fund's total assets as may be necessary for the clearance of
securities transactions.
9. Issue senior securities as defined in the Investment Company Act
of 1940, as amended, or mortgage, pledge, hypothecate or in any way transfer
as security for indebtedness any securities owned or held by the Fund except
as may be necessary in connection with borrowings described in (8) above, and
then not exceeding 10% of the Fund's total assets, taken at the lesser of cost
or market value.
10. Underwrite securities of other issuers except to the extent the
Fund may be deemed an underwriter under the Securities Act of 1933, as
amended, in selling portfolio securities.
11. Invest more than 10% of its net assets in securities
which are illiquid.
12. Invest in oil, gas or other mineral leases.
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<PAGE>
13. Invest more than 5% of its net assets in warrants and will not
invest more than 2% of its net assets in warrants which are not listed on the
New York or American Stock Exchange. This restriction does not apply to
investment in warrants acquired in units or attached to securities.
With respect to the percentages adopted by the Fund as maximum
limitations on the Fund's investment policies and restrictions, an excess
above the fixed percentage (except for the percentage limitations relative to
the borrowing of money) will not be a violation of the policy or restriction
unless the excess results immediately and directly from the acquisition of any
security or the action taken.
The Fund has never pledged, mortgaged or hypothecated the assets of
the Fund, and the Fund presently intends to continue this policy. The Fund has
never made, nor does it presently intend to make, short sales of securities
"against the box" as described in investment limitation 6. The Fund has never
made, nor does it presently intend to make, loans of its portfolio securities.
The statements of intention in this paragraph reflect nonfundamental policies
which may be changed by the Board of Trustees without shareholder approval.
TRUSTEES AND OFFICERS
<TABLE>
<CAPTION>
The following is a list of the Trustees and executive officers of the
Fund and their aggregate compensation from the Fund for the fiscal year ended
June 30, 1996. Each Trustee who is an "interested person" of the Fund, as
defined by the Investment Company Act of 1940, is indicated by an asterisk.
<S> <C> <C> <C>
NAME AGE POSITION HELD COMPENSATION
*Allie P. Ash, Jr. 50 Chairman of the Board/ Trustee $ 0
Paul W. Halter 52 Trustee 5,000
*Stephen Leeb 50 President/Trustee 0
Joel Novak 56 Trustee 5,000
Dr. L. Noah Shaw 55 Trustee 5,000
Francis A. Mlynarczyk, Jr. 53 Executive Vice President 0
Robert G. Dorsey 39 Vice President 0
John F. Splain 40 Secretary 0
Mark J. Seger 34 Treasurer 0
<FN>
* Allie P. Ash, Jr. and Stephen Leeb, as affiliated persons of
Leeb Investment Advisors, the Fund's investment adviser, are
"interested persons" of the Fund within the meaning of Section
2(a)(19) of the Investment Company Act of 1940.
</FN>
</TABLE>
The principal occupations of the Trustees and executive officers of
the Fund during the past five years are set forth below:
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<PAGE>
ALLIE P. ASH, JR., 1101 King Street, Suite 400, Alexandria, Virginia,
is President of Leeb Investment Advisors and is President and a director of
Parent Company, Inc. (a holding company) and its direct and indirect
subsidiaries, National Information Corporation (a publishing holding company),
NIC Financial, Inc. (a holding company) and PF Funds Group, Inc. (a general
partner of the Adviser). He is also President and a director of KCI
Communications, Inc. (a subsidiary of National Information Corporation and
publisher of Personal Finance, The Big Picture and Special Alert Bulletin);
Executive Vice President and a director of National Institute of Business
Management, Inc. (a newsletter publisher and a subsidiary of National
Information Corporation); President and a director of Washington Motor Sports,
Inc. (a sports marketing company and a subsidiary of National Information
Corporation); Executive Vice President and a director of Financial Services
Associates, Inc. (a newsletter publisher and a subsidiary of National
Information Corporation); Executive Vice President and a director of Wellness
Communications, Inc. (a newsletter publisher and a subsidiary of National
Information Corporation); Executive Vice President and a director of
Management Reports Division, Inc. (a newsletter publisher and a subsidiary of
National Information Corporation); and a director of MPL Communications, Inc.
(a newsletter publisher). Prior to June 1992, he was President and a director,
Free Enterprise, Inc. (a newsletter publisher and a subsidiary of National
Information Corporation); President, Ancillary Marketing Services, Inc. (a
newsletter publisher and a subsidiary of Free Enterprise, Inc.); President and
a director, Careers Information, Inc. (a newsletter publisher and a subsidiary
of National Information Corporation); Executive Vice President and a director,
RIEIC, Inc. (a newsletter publisher and a subsidiary of National Information
Corporation); Executive Vice President and a director, Special Reports and
Book Division, Inc. (a book publisher and a subsidiary of National Information
Corporation); and Executive Vice President and a director, SMASH, Inc. (a
newsletter publisher and a subsidiary of National Information Corporation).
PAUL W. HALTER, 21 Fern Hill Road, Kennett Square,
Pennsylvania, has served in various capacities for E.I. DuPont de
Nemours & Co., Inc. (a chemical company) for twenty-nine years
and is currently Director, Corporate Plans.
DR. STEPHEN LEEB, Ph.D., 45 Rockefeller Plaza, Suite 2570, New York,
New York, is Chief Investment Officer of the Adviser and is President and a
director of Money Growth Institute, Inc. (a general partner of the Adviser)
and Leeb Lines, Inc. (a holding company). He is also President of Leeb
Research Consultants, Inc., and serves as editor of Personal Finance, The Big
Picture and Special Alert Bulletin (newsletters which are published by KCI
Communications, Inc.).
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<PAGE>
JOEL NOVAK, 350 Park Avenue, 20th Floor, New York, New York,
is Managing Director of Veronis, Suhler & Associates, Inc. (an
investment banking firm). He is also a director of Mill Hollow
Corp. (a publishing company). Prior to September 1992, he was
President of Electronic News Publishing Co. (a publishing
company). Prior to December 1991, he was President of Goldhirsh
Group (a publishing company) and a director of INC. Magazine.
DR. L. NOAH SHAW, 35 West 90th Street, New York, New York,
is a psychiatrist in private practice.
FRANCIS A. MLYNARCZYK, JR., 45 Rockefeller Plaza, Suite
2570, New York, New York, is the Chief Administrative Officer of
the Adviser. He is the Chairman, President and a director of
Prospect Advisors, Inc. and is a general partner of Brimberg &
Co., L.P. (a registered broker-dealer and the Fund's principal
underwriter). He is also general partner of President Street
Fund, L.P. (an investment limited partnership).
ROBERT G. DORSEY, 312 Walnut Street, Cincinnati, Ohio, is
President and Treasurer of MGF Service Corp. (a registered
transfer agent) and Treasurer of Midwest Group Financial
Services, Inc. (a registered broker-dealer and investment
adviser) and Leshner Financial, Inc. (a financial services
company and parent of MGF Service Corp. and Midwest Group
Financial Services, Inc.). He is also Vice President of
Brundage, Story and Rose Investment Trust, PRAGMA Investment
Trust, Capitol Square Funds, Markman MultiFund Trust and
Maplewood Investment Trust and Assistant Vice President of
Fremont Mutual Funds, Inc., Schwartz Investment Trust, The
Tuscarora Investment Trust and Williamsburg Investment Trust (all
of which are registered investment companies).
JOHN F. SPLAIN, 312 Walnut Street, Cincinnati, Ohio, is Secretary and
General Counsel of MGF Service Corp., Midwest Group Financial Services, Inc.
and Leshner Financial, Inc. He is also Secretary of Midwest Trust, Midwest
Group Tax Free Trust, Midwest Strategic Trust, Brundage, Story and Rose
Investment Trust, PRAGMA Investment Trust, Markman MultiFund Trust, The
Tuscarora Investment Trust, Maplewood Investment Trust and Williamsburg
Investment Trust and Assistant Secretary of Schwartz Investment Trust, Capitol
Square Funds, and Fremont Mutual Funds, Inc. (all of which are registered
investment companies).
MARK J. SEGER, C.P.A., 312 Walnut Street, Cincinnati, Ohio, is Vice
President of Leshner Financial, Inc. and MGF Service Corp. He is also
Treasurer of Midwest Trust, Midwest Group Tax Free Trust, Midwest Strategic
Trust, Brundage, Story and Rose Investment Trust, PRAGMA Investment Trust,
Capitol Square Funds, Markman MultiFund Trust, Maplewood Investment Trust and
Williamsburg Investment Trust, Assistant Treasurer of Schwartz Investment
Trust and The Tuscarora Investment Trust and Assistant Secretary of Fremont
Mutual Funds, Inc.
- 39 -
<PAGE>
As of October 15, 1996, the Trustees and officers of the Fund as a
group owned of record or beneficially less than 1% of the outstanding shares
of the Fund.
THE INVESTMENT ADVISER
Leeb Investment Advisors (the "Adviser") is the Fund's
investment manager. Dr. Leeb, Mr. Ash and Mr. Mlynarczyk, as
employees of the Adviser, may directly or indirectly receive
benefits from the advisory fees paid to the Adviser. Dr. Leeb
and his wife are the sole shareholders of Leeb Lines, Inc., which
is the sole shareholder of Money Growth Institute, Inc., a 49%
partner in the Adviser. Mr. Ash is the controlling shareholder
of Parent Company, Inc., which controls National Information
Corporation whose wholly owned subsidiary, NIC Financial, Inc.,
in turn owns 100% of PF Funds Group, Inc., a 51% partner in the
Adviser.
Under the terms of the investment advisory agreement between the Fund
and the Adviser, the Adviser manages the Fund's investments. The Fund pays the
Adviser a fee computed and accrued daily and paid monthly at an annual rate of
1% of its average daily net assets. The rate of this fee is higher than that
paid by most mutual funds. For the fiscal years ended June 30, 1996, 1995 and
1994, the Fund paid advisory fees of $127,519 (net of voluntary fee waivers of
$177,359), $204,936 (net of voluntary fee waivers of $190,271) and $371,602
(net of voluntary fee waivers of $166,130), respectively.
The Fund is responsible for the payment of all expenses incurred in
connection with the organization, registration of shares and operations of the
Fund, including such extraordinary or non-recurring expenses as may arise,
such as litigation to which the Fund may be a party. The Fund may have an
obligation to indemnify the Fund's officers and Trustees with respect to such
litigation, except in instances of willful misfeasance, bad faith, gross
negligence or reckless disregard by such officers and Trustees in the
performance of their duties. The Adviser pays from its own resources
promotional expenses in connection with the distribution of the Fund's shares.
The compensation and expenses of any officer, Trustee or employee of the Fund
who is an officer or employee of the Adviser are paid by the Adviser, except
that the Fund reimburses all officers and Trustees, including those who may be
officers or employees of the Adviser, for actual reasonable out-of-pocket
costs related to attending meetings of the Fund's Trustees.
By its terms, the Fund's investment advisory agreement will remain in
force from year to year subject to annual approval by (a) the Board of
Trustees or (b) a vote of the majority of the Fund's outstanding voting
securities; provided that in either
- 40 -
<PAGE>
event continuance is also approved by a majority of the Trustees who are not
interested persons of the Fund, by a vote cast in person at a meeting called
for the purpose of voting such approval. The Fund's investment advisory
agreement may be terminated at any time, on sixty days' written notice,
without the payment of any penalty, by the Board of Trustees, by a vote of the
majority of the Fund's outstanding voting securities, or by the Adviser. The
investment advisory agreement automatically terminates in the event of its
assignment, as defined by the Investment Company Act of 1940 and the rules
thereunder.
The Adviser will reimburse the Fund to the extent that the expenses
of the Fund for any fiscal year exceed the applicable expense limitations
imposed by state securities administrators, as such limitations may be lowered
or raised from time to time. The most restrictive limitation is presently 2.5%
of the first $30 million of average daily net assets, 2% of the next $70
million of average daily net assets and 1.5% of average daily net assets in
excess of $100 million. If any such reimbursement is required, the payment of
the advisory fee at the end of any month will be reduced or postponed or, if
necessary, a refund will be made to the Fund at the end of such month. Certain
expenses such as brokerage commissions, if any, taxes, interest, extraordinary
items and other expenses subject to approval of state securities
administrators are excluded from such limitations. If the expenses of the Fund
approach the applicable limitation in any state, the Fund will consider the
various actions that are available to it, including suspension of sales to
residents of that state.
The name "Leeb" is a property right of Dr. Leeb and the name
"Personal Finance" is a property right of KCI Communications, Inc. Either or
both may use their respective names in other connections and for other
purposes, including in the name of other investment companies. The Fund has
agreed to discontinue any use of the names "Leeb" or "Personal Finance" if the
Adviser ceases to be employed as the Fund's investment manager.
THE UNDERWRITER
Brimberg & Co., L.P. (the "Underwriter") is the principal underwriter
of the Fund and, as such, the exclusive agent for distribution of shares of
the Fund. The Underwriter is obligated to sell the shares on a best efforts
basis only against purchase orders for the shares. Shares of the Fund are
offered to the public on a continuous basis.
The general partners of the Underwriter are Jack S. Brimberg
and Mr. Mlynarczyk, Executive Vice President of the Fund and
Chief Administrative Officer of the Adviser. Money Growth
Institute, Inc., a partner in the Adviser, is among the limited
partners of the Underwriter.
- 41 -
- 41 -
<PAGE>
The Adviser may compensate dealers, including the Underwriter and its
affiliates, based on sales of shares of the Fund to clients of the dealer or
based on the average balance of all accounts in the Fund for which the dealer
is designated as the party responsible for the account.
SECURITIES TRANSACTIONS
Decisions to buy and sell securities for the Fund and the placing of
the Fund's securities transactions and negotiation of commission rates where
applicable are made by the Adviser and are subject to review by the Board of
Trustees of the Fund. In the purchase and sale of portfolio securities, the
Adviser seeks best execution for the Fund, taking into account such factors as
price (including the applicable brokerage commission or dealer spread), the
execution capability, financial responsibility and responsiveness of the
broker or dealer and the brokerage and research services provided by the
broker or dealer. The Adviser generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received. For the fiscal
years ended June 30, 1996, 1995 and 1994, the Fund paid brokerage commissions
of $120,408, $95,561 and $135,045, respectively.
Generally, the Fund attempts to deal directly with the dealers who
make a market in the securities involved unless better prices and execution
are available elsewhere. Such dealers usually act as principals for their own
account. On occasion, portfolio securities for the Fund may be purchased
directly from the issuer.
The Adviser is specifically authorized to select brokers who also
provide brokerage and research services to the Fund and/or other accounts over
which the Adviser exercises investment discretion and to pay such brokers a
commission in excess of the commission another broker would charge if the
Adviser determines in good faith that the commission is reasonable in relation
to the value of the brokerage and research services provided. The
determination may be viewed in terms of a particular transaction or the
Adviser's overall responsibilities with respect to the Fund and to accounts
over which it exercises investment discretion.
Research services include securities and economic analyses, reports
on issuers' financial conditions and future business prospects, newsletters
and opinions relating to interest trends, general advice on the relative
merits of possible investment securities for the Fund and statistical services
and information with respect to the availability of securities or purchasers
or sellers of securities. Although this information is useful to the Fund and
the Adviser, it is not possible to place a dollar value on it. Research
services furnished by brokers through whom
- 42 -
<PAGE>
the Fund effects securities transactions may be used by the Adviser in
servicing all of its accounts and not all such services may be used by the
Adviser in connection with the Fund.
The Fund has no obligation to deal with any broker or dealer in the
execution of securities transactions. However, the Underwriter and other
affiliates of the Fund, the Adviser or the Underwriter may effect securities
transactions which are executed on a national securities exchange or
transactions in the over-the-counter market conducted on an agency basis.
During the fiscal year ended June 30, 1996, the Fund paid to the Underwriter
brokerage commissions of $120,408 (which equals 100% of the total brokerage
commissions paid by the Fund) for effecting 100% of the Fund's portfolio
transactions involving the payment of brokerage commissions. During the fiscal
years ended June 30, 1995 and 1994, the Fund paid to the Underwriter brokerage
commissions of $94,361 and $135,045, respectively. During the fiscal year
ended June 30, 1995, the Fund paid to Midwest Group Financial Services, Inc.
brokerage commissions of $1,200. Midwest Group Financial Services, Inc. may be
deemed to be an affiliate of the Fund by reason of having certain officers in
common. The Fund will not effect any brokerage transactions in its portfolio
securities with the Underwriter or Midwest Group Financial Services, Inc. if
such transactions would be unfair or unreasonable to its shareholders.
Over-the-counter transactions will be placed either directly with principal
market makers or with broker-dealers. Although the Fund does not anticipate
any ongoing arrangements with other brokerage firms, brokerage business may be
transacted from time to time with other firms. Neither the Underwriter nor
affiliates of the Fund, the Adviser or the Underwriter will receive reciprocal
brokerage business as a result of the brokerage business transacted by the
Fund with other brokers.
Code of Ethics. The Fund, the Adviser and the Underwriter have each adopted a
Code of Ethics under Rule 17j-1 of the Investment Company Act of 1940. The
code significantly restricts the personal investing activities of all
employees of the Adviser and, as described below, imposes additional, more
onerous, restrictions on investment personnel of the Adviser. The Code
requires that all employees of the Adviser preclear any personal securities
investment (with limited exceptions, such as U.S. Government obligations). The
preclearance requirement and associated procedures are designed to identify
any substantive prohibition or limitation applicable to the proposed
investment. In addition, no employee may purchase or sell any security which
at the time is being purchased or sold (as the case may be), or to the
knowledge of the employee is being considered for purchase or sale, by the
Fund. The substantive restrictions applicable to investment personnel of the
Adviser include a ban on acquiring any securities in an initial public
offering and a prohibition
- 43 -
<PAGE>
from profiting on short-term trading in securities. Furthermore, the Code
provides for trading "blackout periods" which prohibit trading by investment
personnel of the Adviser within periods of trading by the Fund in the same (or
equivalent) security.
PORTFOLIO TURNOVER
The Fund's portfolio turnover rate is calculated by dividing the
lesser of purchases or sales of portfolio securities for the fiscal year by
the monthly average of the value of the portfolio securities owned by the Fund
during the fiscal year. High portfolio turnover involves correspondingly
greater brokerage commissions and other transaction costs, which will be borne
directly by the Fund. A 100% turnover rate would occur if all of the Fund's
portfolio securities were replaced once within a one year period.
Generally, the Fund intends to invest for long-term purposes.
However, the rate of portfolio turnover will depend upon market and other
conditions, and it will not be a limiting factor when the Adviser believes
that portfolio changes are appropriate. For the fiscal years ended June 30,
1996 and 1995, the Fund's portfolio turnover rate was 115% and 163%,
respectively.
CALCULATION OF SHARE PRICE
The share price (net asset value) of the shares of the Fund is
determined as of the close of the regular session of trading on the New York
Stock Exchange (currently 4:00 p.m., Eastern time), on each day the Fund is
open for business. The Fund is open for business on every day except
Saturdays, Sundays and the following holidays: New Year's Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas. The Fund may also be open for business on other days in which there
is sufficient trading in the Fund's portfolio securities that its net asset
value might be materially affected. For a description of the methods used to
determine the share price, see "Calculation of Share Price" in the Prospectus.
TAXES
The Prospectus describes generally the tax treatment of distributions
by the Fund. This section of the Statement of Additional Information includes
additional information concerning federal taxes.
The Fund has qualified and intends to qualify annually for the
special tax treatment afforded a "regulated investment company" under
Subchapter M of the Internal Revenue Code so that it does not pay federal
taxes on income and capital gains
- 44 -
<PAGE>
distributed to shareholders. To so qualify the Fund must, among other things,
(i) derive at least 90% of its gross income in each taxable year from
dividends, interest, payments with respect to securities loans, gains from the
sale or other disposition of stock, securities or foreign currency, or certain
other income (including but not limited to gains from options, futures and
forward contracts) derived with respect to its business of investing in stock,
securities or currencies; (ii) derive less than 30% of its gross income in
each taxable year from the sale or other disposition of the following assets
held for less than three months: (a) stock or securities, (b) options, futures
or forward contracts not directly related to its principal business of
investing in stock or securities; and (iii) diversify its holdings so that at
the end of each quarter of its taxable year the following two conditions are
met: (a) at least 50% of the value of the Fund's total assets is represented
by cash, U.S. Government securities, securities of other regulated investment
companies and other securities (for this purpose such other securities will
qualify only if the Fund's investment is limited in respect to any issuer to
an amount not greater than 5% of the Fund's assets and 10% of the outstanding
voting securities of such issuer) and (b) not more than 25% of the value of
the Fund's assets is invested in securities of any one issuer (other than U.S.
Government securities or securities of other regulated investment companies).
The Fund's net realized capital gains from securities transactions
will be distributed only after reducing such gains by the amount of any
available capital loss carryforwards. Capital losses may be carried forward to
offset any capital gains for eight years, after which any undeducted capital
loss remaining is lost as a deduction.
A federal excise tax at the rate of 4% will be imposed on the excess,
if any, of the Fund's "required distribution" over actual distributions in any
calendar year. Generally, the "required distribution" is 98% of the Fund's
ordinary income for the calendar year plus 98% of its net capital gains
recognized during the one year period ending on October 31 of the calendar
year plus undistributed amounts from prior years. The Fund intends to make
distributions sufficient to avoid imposition of the excise tax.
The Fund is required to withhold and remit to the U.S. Treasury a
portion (31%) of dividend income on any account unless the shareholder
provides a taxpayer identification number and certifies that such number is
correct and that the shareholder is not subject to backup withholding.
- 45 -
<PAGE>
REDEMPTION IN KIND
Under unusual circumstances, when the Board of Trustees deems it in
the best interests of the Fund's shareholders, the Fund may make payment for
shares repurchased or redeemed in whole or in part in securities of the Fund
taken at current value. If any such redemption in kind is to be made, the Fund
intends to make an election pursuant to Rule 18f-1 under the Investment
Company Act of 1940. This election will require the Fund to redeem shares
solely in cash up to the lesser of $250,000 or 1% of the net asset value of
the Fund during any 90 day period for any one shareholder. Should payment be
made in securities, the redeeming shareholder will generally incur brokerage
costs in converting such securities to cash. Portfolio securities which are
issued in an in-kind redemption will be readily marketable.
HISTORICAL PERFORMANCE INFORMATION
From time to time, the Fund may advertise average annual total
return. Average annual total return quotations will be computed by finding the
average annual compounded rates of return over 1, 5 and 10 year periods that
would equate the initial amount invested to the ending redeemable value,
according to the following formula:
P (1 + T)n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1, 5 and 10 year
periods at the end of the 1, 5 or 10 year periods (or
fractional portion thereof)
The calculation of average annual total return assumes the reinvestment of all
dividends and distributions. If the Fund has been in existence less than one,
five or ten years, the time period since the date of the initial public
offering of shares will be substituted for the periods stated. The average
annual total returns of the Fund for the periods ended June 30, 1995 are as
follows:
1 year 17.10%
Since inception (October 21, 1991) 8.37%
The Fund may also advertise total return (a "nonstandardized
quotation") which is calculated differently from average annual total return.
A nonstandardized quotation of total return may be a cumulative return which
measures the percentage change in the value of an account between the
beginning and end of a period, assuming no activity in the account other than
reinvestment of dividends and capital gains distributions. The Fund's total
- 46 -
<PAGE>
returns as calculated in this manner for each fiscal year since inception are
as follows:
Period Ended
------------
June 30, 1992 5.50%*
June 30, 1993 6.79%
June 30, 1994 (1.50%)
June 30, 1995 12.20%
June 30, 1996 17.10%
* From date of initial public offering on October 21, 1991
A nonstandardized quotation may also indicate average annual compounded rates
of return over periods other than those specified for average annual total
return. For example, the Fund's average annual compounded rate of return for
the three years ended June 30, 1996 was 8.67%. A nonstandardized quotation of
total return will always be accompanied by the Fund's average annual total
return as described above.
From time to time the Fund may advertise its yield. A yield quotation
is based on a 30-day (or one month) period and is computed by dividing the net
investment income per share earned during the period by the maximum offering
price per share on the last day of the period, according to the following
formula:
Yield = 2[(a-b/cd + 1)6 - 1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price per share on the last day of the
period
Solely for the purpose of computing yield, dividend income is recognized by
accruing 1/360 of the stated dividend rate of the security each day that the
Fund owns the security. Generally, interest earned (for the purpose of "a"
above) on debt obligations is computed by reference to the yield to maturity
of each obligation held based on the market value of the obligation (including
actual accrued interest) at the close of business on the last business day
prior to the start of the 30-day (or one month) period for which yield is
being calculated, or, with respect to obligations purchased during the month,
the purchase price (plus actual accrued interest). The yield of the Fund for
June 1996 was 0.59%.
The performance quotations described above are based on historical
earnings and are not intended to indicate future performance.
- 47 -
<PAGE>
To help investors better evaluate how an investment in the Fund might
satisfy their investment objective, advertisements regarding the Fund may
discuss various measures of Fund performance, including current performance
ratings and/or rankings appearing in financial magazines, newspapers and
publications which track mutual fund performance. Advertisements may also
compare performance (using the calculation methods set forth in the
Prospectus) to performance as reported by other investments, indices and
averages. When advertising current ratings or rankings, the Fund may use the
following publications or indices to discuss or compare Fund performance:
Lipper Mutual Fund Performance Analysis measures total return and
average current yield for the mutual fund industry and ranks individual mutual
fund performance over specified time periods assuming reinvestment of all
distributions, exclusive of sales loads. The Fund may provide comparative
performance information appearing in the Growth Funds category. In addition,
the Fund may use comparative performance information of relevant indices,
including the S&P 500 Index and the Dow Jones Industrial Average. The S&P 500
Index is an unmanaged index of 500 stocks, the purpose of which is to portray
the pattern of common stock price movement. The Dow Jones Industrial Average
is a measurement of general market price movement for 30 widely held stocks
listed on the New York Stock Exchange.
In assessing such comparisons of performance an investor should keep
in mind that the composition of the investments in the reported indices and
averages is not identical to the Fund's portfolio, that the averages are
generally unmanaged and that the items included in the calculations of such
averages may not be identical to the formula used by the Fund to calculate its
performance. In addition, there can be no assurance that the Fund will
continue this performance as compared to such other averages.
CUSTODIAN
The Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati, Ohio, has
been retained to act as Custodian for the Fund's investments. The Fifth Third
Bank acts as the Fund's depository, safekeeps its portfolio securities,
collects all income and other payments with respect thereto, disburses funds
as instructed and maintains records in connection with its duties.
AUDITORS
The firm of Arthur Andersen LLP has been selected as independent
auditors for the Fund. Arthur Andersen LLP, 425 Walnut Street, Cincinnati,
Ohio, performs an annual audit of the Fund's financial statements and advises
the Fund as to certain accounting matters.
- 48 -
<PAGE>
MGF SERVICE CORP.
The Fund's transfer agent, MGF Service Corp. ("MGF"), maintains the
records of each shareholder's account, answers shareholders' inquiries
concerning their accounts, processes purchases and redemptions of the Fund's
shares, acts as dividend and distribution disbursing agent and performs other
shareholder service functions. MGF receives for its services as transfer agent
a fee payable monthly at an annual rate of $14 per account, provided, however,
that the minimum fee is $1,000 per month. In addition, the Fund pays
out-of-pocket expenses, including but not limited to, postage, envelopes,
checks, drafts, forms, reports, record storage and communication lines.
MGF also provides accounting and pricing services to the Fund. MGF
receives $3,400 per month from the Fund for calculating daily net asset value
per share and maintaining such books and records as are necessary to enable
MGF to perform its duties.
In addition, MGF is retained to provide administrative services to
the Fund. In this capacity, MGF supplies non-investment related statistical
and research data, internal regulatory compliance services and executive and
administrative services. MGF supervises the preparation of tax returns,
reports to shareholders of the Fund, reports to and filings with the
Securities and Exchange Commission and state securities commissions, and
materials for meetings of the Board of Trustees. For the performance of these
administrative services, the Fund pays MGF a fee at the annual rate of .2% of
the average value of its daily net assets up to $100,000,000, .175% of such
assets from $100,000,000 to $200,000,000 and .15% of such assets in excess of
$200,000,000; provided, however, that the minimum fee is $1,000 per month.
ANNUAL REPORT
The Fund's financial statements as of June 30, 1996 appear in the
Fund's annual report which is attached to this Statement of Additional
Information.
<PAGE>
LEEB
PERSONAL
FINANCE TM
INVESTMENT
TRUST
THE LEEB PERSONAL
FINANCE TM FUND
ANNUAL REPORT
June 30, 1996
<PAGE>
LETTER TO SHAREHOLDERS AUGUST 7, 1996
===============================================================================
Dear Fellow Shareholder,
I am pleased to bring you The Leeb Personal FinanceTM Fund's Annual
Report for the fiscal year ended June 30, 1996.
The total return for the Fund for the twelve months ended June 30,
1996 was 17.1% versus 26.0% for the S&P 500 Index.
In accordance with the Fund's objective of conservative long-term
capital appreciation, the Fund performed well over the past twelve months.
Although the stock market has been volatile in 1996, the Fund managed to
weather the storm. The market decline in the summer of 1996 created a buying
opportunity so we put a portion of the Fund's cash to work in stocks
possessing excellent fundamentals.
The Fund has steadily increased its equity exposure in recent months,
as we believe that the market can still move higher. The economy remains
strong with no signs of a recession. Interest rates, although volatile, are
not in a dramatic uptrend, and inflation still remains under control. If any
of these change, we would have to reconsider things with a view toward taking
a more conservative stance.
Sincerely,
/s/ Stephen Leeb
Stephen Leeb
Chief Investment Officer
<TABLE>
THE LEEB PERSONAL FINANCE TM FUND
Comparison of the Change in Value of a $10,000 Investment in the Leeb Personal
Finance TM Fund and the Standard & Poor's 500 Index
<CAPTION>
STANDARD & POOR'S 500 INDEX: THE LEEB PERSONAL FINANCE TM FUND:
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
<S> <C> <C> <C> <C> <C>
10/21/91 $10,000 10/21/91 $10,000
12/31/91 7.00% $10,700 12/31/91 4.23% $10,423
03/31/92 -2.53% $10,429 03/31/92 -0.10% $10,413
06/30/92 1.90% $10,627 06/30/92 1.32% $10,550
09/30/92 3.15% $10,962 09/30/92 2.80% $10,846
12/31/92 5.03% $11,514 12/31/92 2.08% $11,071
03/31/93 4.36% $12,016 03/31/93 1.30% $11,215
06/30/93 0.48% $12,069 06/30/93 0.46% $11,266
09/30/93 2.58% $12,381 09/30/93 1.20% $11,401
12/31/93 2.32% $12,668 12/31/93 -0.11% $11,389
03/31/94 -3.79% $12,188 03/31/94 -0.09% $11,378
06/30/94 0.42% $12,239 06/30/94 -2.47% $11,097
09/30/94 4.88% $12,836 09/30/94 1.07% $11,215
12/31/94 -0.02% $12,834 12/31/94 -1.59% $11,038
03/31/95 9.74% $14,084 03/31/95 5.38% $11,631
06/30/95 9.55% $15,429 06/30/95 7.04% $12,450
09/30/95 7.95% $16,655 09/30/95 2.42% $12,751
12/31/95 6.02% $17,658 12/31/95 7.52% $13,711
03/31/96 5.37% $18,605 03/31/96 1.92% $13,974
06/30/96 4.49% $19,440 06/30/96 4.34% $14,579
The Leeb Personal Finance TM Fund
Average Annual Total Returns
1 year 17.10%
Since Inception* 8.37%
Past performance is not predictive of future performance.
*Initial public offering of shares was October 21, 1991.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE LEEB PERSONAL FINANCETM FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996
==============================================================================================================
<S> <C>
ASSETS
Investments in securities:
At amortized cost (original cost $19,723,186)............................................ $ 19,723,186
===============
At market value (Note 1)................................................................. $ 22,808,348
Investments in repurchase agreements (Note 1)............................................... 4,624,000
Cash ....................................................................................... 1,520
Receivable for securities sold.............................................................. 611,062
Receivable for capital shares sold.......................................................... 16,588
Dividends and interest receivable........................................................... 29,396
Organization expenses, net (Note 1)......................................................... 2,534
Other assets................................................................................ 11,482
---------------
TOTAL ASSETS............................................................................. 28,104,930
---------------
LIABILITIES
Payable for capital shares redeemed......................................................... 44,757
Dividends payable........................................................................... 78,013
Payable to affiliates (Note 3).............................................................. 28,655
Other accrued expenses and liabilities...................................................... 8,220
---------------
TOTAL LIABILITIES........................................................................ 159,645
---------------
NET ASSETS ................................................................................. $ 27,945,285
===============
Net assets consist of:
Capital shares.............................................................................. $ 24,878,760
Distributions in excess of net realized gains (Note 1)...................................... ( 18,637)
Net unrealized appreciation on investments.................................................. 3,085,162
---------------
Net assets.................................................................................. $ 27,945,285
===============
Shares of beneficial interest outstanding (unlimited number of shares authorized,
no par value) (Note 4)................................................................... 2,479,333
===============
Net asset value, offering price and redemption price per share (Note 1)..................... $ 11.27
===============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE LEEB PERSONAL FINANCETM FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1996
===================================================================================================================
<S> <C>
INVESTMENT INCOME
Interest................................................................................. $ 574,629
Dividends................................................................................ 279,541
---------------
TOTAL INVESTMENT INCOME................................................................ 854,170
---------------
EXPENSES
Investment advisory fees (Note 3)........................................................ 304,878
Professional fees........................................................................ 86,786
Administrative services fees (Note 3).................................................... 60,582
Shareholder services and transfer agent fees (Note 3).................................... 48,613
Accounting services fees (Note 3)........................................................ 40,800
Postage and supplies..................................................................... 21,301
Trustees' fees and expenses.............................................................. 17,621
Insurance expense........................................................................ 15,200
Registration fees........................................................................ 12,100
Amortization of organization expenses (Note 1)........................................... 10,136
Reports to shareholders.................................................................. 9,055
Custodian fees........................................................................... 7,528
Other expenses........................................................................... 76
---------------
TOTAL EXPENSES.................................................................... 634,676
Fees waived by the Adviser (Note 3)...................................................... ( 177,359)
---------------
NET EXPENSES...................................................................... 457,317
---------------
NET INVESTMENT INCOME ...................................................................... 396,853
---------------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions............................................ 4,277,995
Net change in unrealized appreciation/depreciation on investments........................ 133,795
---------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS ........................................... 4,411,790
---------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ................................................. $ 4,808,643
===============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE LEEB PERSONAL FINANCETM FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JUNE 30, 1996 AND 1995
===================================================================================================================
YEAR YEAR
ENDED ENDED
JUNE 30, JUNE 30,
1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income.................................................. $ 396,853 $ 932,415
Net realized gains (losses) from security transactions................. 4,277,995 ( 414,008)
Net change in unrealized appreciation/depreciation on investments...... 133,795 3,662,740
--------------- ---------------
Net increase in net assets from operations................................ 4,808,643 4,181,147
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income............................................. ( 399,897) ( 937,468)
From net realized gains from security transactions..................... ( 3,618,910) --
In excess of net realized gains from security transactions............. ( 18,637) ( 247,953)
--------------- ---------------
Decrease in net assets from distributions to shareholders................. ( 4,037,444) ( 1,185,421)
--------------- ---------------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 4):
Proceeds from shares sold.............................................. 1,464,215 2,545,190
Net asset value of distributions to shareholders paid in
additional shares.................................................... 3,933,064 1,142,780
Payments for shares redeemed........................................... ( 11,199,062) ( 19,230,360)
--------------- ---------------
Net decrease in net assets from capital share transactions................ ( 5,801,783) ( 15,542,390)
--------------- ---------------
TOTAL DECREASE IN NET ASSETS ............................................. ( 5,030,584) ( 12,546,664)
NET ASSETS:
Beginning of year...................................................... 32,975,869 45,522,533
--------------- ---------------
End of year............................................................ $ 27,945,285 $ 32,975,869
=============== ===============
UNDISTRIBUTED NET INVESTMENT INCOME ...................................... $ -- $ 3,044
=============== ===============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE LEEB PERSONAL FINANCETM FUND
FINANCIAL HIGHLIGHTS
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
===================================================================================================================
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1994 1993 1992(A)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period.......... $ 11.17 $ 10.29 $ 10.84 $ 10.36 $ 10.00
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income........................ 0.17 0.28 0.19 0.15 0.16
Net realized and unrealized
gains (losses) on investments.............. 1.72 0.95 ( 0.35) 0.55 0.51
---------- ---------- ---------- ---------- ----------
Total from investment operations................ 1.89 1.23 ( 0.16) 0.70 0.67
---------- ---------- ---------- ---------- ----------
Dividends and distributions:
Dividends from net investment income(B) ..... ( 0.17) ( 0.28) ( 0.19) ( 0.15) ( 0.16)
Distributions from net realized gains(B) .... ( 1.61) -- ( 0.20) ( 0.07) ( 0.15)
In excess of net realized gains.............. ( 0.01) ( 0.07) -- -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions............... ( 1.79) ( 0.35) ( 0.39) ( 0.22) ( 0.31)
---------- ---------- ---------- ---------- ----------
Net asset value at end of period................ $ 11.27 $ 11.17 $ 10.29 $ 10.84 $ 10.36
========== ========== ========== ========== ==========
Total return.................................... 17.10% 12.20% ( 1.50%) 6.79% 7.94% (D)
========== ========== ========== ========== ==========
Net assets at end of period (000's)............. $27,945 $ 32,976 $ 45,523 $ 58,955 $ 28,340
========== ========== ========== ========== ==========
Ratio of expenses to average net assets(C) .... 1.50% 1.50% 1.50% 1.50% 1.47% (D)
Ratio of net investment income to average
net assets................................... 1.30% 2.36% 1.65% 1.60% 2.21% (D)
Portfolio turnover rate......................... 115% 163% 143% 83% 75% (D)
<FN>
(A)Represents the period from the date of public offering (October 21, 1991)
through June 30, 1992. No income was earned or expenses incurred from the
start of business through the date of public offering.
(B)For the period ended June 30, 1992, the per share data was calculated using
average shares outstanding throughout the period, whereas for subsequent
periods, the per share data was calculated based upon actual distributions.
For the period ended June 30, 1992, actual distributions per share from net
investment income and from net realized gains from security transactions
amounted to $.11 and $.08, respectively.
(C)Ratios of expenses to average net assets assuming no waiver of fees or
reimbursement of expenses by the Adviser was 2.10%, 1.98%, 1.81%, 1.95%, and
2.71%(D) for the periods ended June 30, 1996, 1995, 1994, 1993 and 1992,
respectively (Note 3).
(D)Annualized.
See accompanying notes to financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
THE LEEB PERSONAL FINANCE TM FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
===================================================================================================================
MARKET
COMMON STOCK -- 81.6% SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCE & INSURANCE -- 16.1%
Allmerica Financial Corp...................................................... 35,000 $ 1,041,250
American International Group, Inc............................................. 6,400 631,200
Federal Home Loan Mortgage Corp............................................... 7,500 641,250
Federal National Mortgage Assoc............................................... 19,000 636,500
ITT Hartford Group Inc........................................................ 29,000 1,544,250
-------------
$ 4,494,450
-------------
CONSUMER PRODUCTS -- 11.5%
Coca-Cola Co.................................................................. 8,000 $ 391,000
Cone Mills Corp.*............................................................. 80,000 900,000
The Walt Disney Co............................................................ 20,000 1,257,500
Sony Corp. - ADR.............................................................. 10,000 661,250
-------------
$ 3,209,750
-------------
ENERGY & RESOURCES -- 9.4%
Apache Corp................................................................... 24,000 $ 789,000
Chevron Corp.................................................................. 20,000 1,180,000
Oryx Energy Co.*.............................................................. 40,000 650,000
-------------
$ 2,619,000
-------------
OIL & GAS -- EQUIPMENT & SERVICES -- 6.2%
Global Marine, Inc.*.......................................................... 40,000 $ 555,000
Rowan Companies, Inc.*........................................................ 40,000 590,000
Schlumberger N.V.............................................................. 7,000 589,750
-------------
$ 1,734,750
-------------
METALS & MINING -- 5.7%
Horsham Corp.................................................................. 42,000 $ 582,750
LTV Corp.*.................................................................... 46,000 523,250
Newmont Mining Corp........................................................... 10,000 493,750
-------------
$ 1,599,750
-------------
HEALTH PRODUCTS/CARE -- 5.0%
Thermotrex Corp.*............................................................. 27,300 $ 1,344,525
Trex Medical Corp.*........................................................... 2,730 51,529
-------------
$ 1,396,054
-------------
REAL ESTATE -- 4.1%
BRE Properties, Inc........................................................... 42,000 $ 819,000
New Plan Realty Trust......................................................... 15,000 316,875
-------------
$ 1,135,875
-------------
TELEPHONE COMMUNICATIONS -- 4.0%
Telephone & Data Systems...................................................... 25,000 $ 1,125,000
-------------
COMMERCIAL SERVICES -- 3.1%
Sotheby's Holdings - Class A.................................................. 60,000 $ 870,000
-------------
<PAGE>
<CAPTION>
THE LEEB PERSONAL FINANCETM FUND (CONTINUED)
===================================================================================================================
MARKET
COMMON STOCK -- 81.6% SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AUTO & TRUCK EQUIPMENT -- 3.0%
Wabash National Corp.......................................................... 47,500 $ 843,125
-------------
ENGINEERING & CONSTRUCTION -- 2.3%
Fluor Corp.................................................................... 10,000 $ 653,750
-------------
BUILDING MATERIALS -- 2.2%
Royal Plastics Group Ltd...................................................... 40,000 $ 615,000
-------------
COMPUTERS -- 2.1%
Sun Microsystems, Inc.*....................................................... 10,000 $ 588,750
-------------
MULTI-INDUSTRY -- 1.6%
General Electric Co........................................................... 5,000 $ 432,500
-------------
AEROSPACE/DEFENSE -- 1.2%
Boeing Co..................................................................... 4,000 $ 348,500
-------------
AUTOMOTIVE -- 1.1%
Chrysler Corp................................................................. 5,000 $ 310,000
-------------
COMPUTER SOFTWARE -- 1.1%
Microsoft Corp.*.............................................................. 2,500 $ 300,313
-------------
PUBLISHING/PRINTING -- 1.0%
Time Warner, Inc.............................................................. 7,000 $ 274,750
-------------
ELECTRONICS/SEMICONDUCTORS -- 0.9%
Intel Corp.................................................................... 3,500 $ 257,031
-------------
TOTAL COMMON STOCK (COST $19,723,186) ........................................ $ 22,808,348
-------------
<PAGE>
<CAPTION>
===================================================================================================================
FACE MARKET
REPURCHASE AGREEMENTS(1) -- 16.6% AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
The Fifth Third Bank, 5.20%, dated 06/28/96, due 07/01/96,
repurchase proceeds $4,626,004................................................ $ 4,624,000 $ 4,624,000
-------------- -------------
TOTAL REPURCHASE AGREEMENTS .................................................. $ 4,624,000 $ 4,624,000
============== -------------
TOTAL INVESTMENTS AND REPURCHASE AGREEMENTS AT VALUE -- 98.2% ............... $ 27,432,348
OTHER ASSETS AND LIABILITIES, NET-- 1.8% ..................................... 512,937
-------------
NET ASSETS-- 100% ............................................................ $ 27,945,285
=============
<FN>
*Non-income producing security.
(1)Repurchase agreements are fully collateralized by U.S. Government
obligations.
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
THE LEEB PERSONAL FINANCETM FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
==============================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
Leeb Personal FinanceTM Investment Trust (the Trust) is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Trust was organized as an Ohio business
trust on August 19, 1991. The Trust currently offers one series of shares to
investors: The Leeb Personal FinanceTM Fund (the Fund). The Trust commenced
operations on September 13, 1991 when the general partners of Leeb Investment
Advisors (the Adviser) and a qualified retirement plan sponsored by one such
general partner purchased the initial 10,000 shares of the Fund at $10 per
share. The public offering of shares commenced on October 21, 1991.
The Fund seeks long-term capital appreciation consistent with the preservation
of capital. Earning current income from dividends, interest and short-term
capital gains is a secondary objective.
The following is a summary of the Fund's significant accounting policies:
Securities valuation -- The Fund's portfolio securities are valued as of the
close of the regular session of trading on the New York Stock Exchange
(currently 4:00 p.m., Eastern time). Portfolio securities listed on stock
exchanges and securities traded in the over-the-counter market are valued at
the last sale price as of the close of business on the day the securities are
being valued. Securities not traded on a particular day, or for which the last
sale price is not readily available, are valued at the closing bid price
quoted by brokers that make markets in the securities. U.S. Government
obligations and corporate bonds are valued at their most recent bid prices as
obtained from one or more of the major market makers for such securities.
Repurchase agreements, which are collateralized by U.S. Government
obligations, are valued at cost which, together with accrued interest,
approximates market. Collateral for repurchase agreements is held in
safekeeping in the customer-only account of the Fund's custodian, at the
Federal Reserve Bank. At the time the Fund enters into a repurchase agreement,
the seller agrees that the value of the underlying securities, including
accrued interest, will be equal to or exceed the face amount of the repurchase
agreement. The Fund enters into repurchase agreements only with institutions
deemed to be creditworthy by the Adviser, including banks having assets in
excess of $10 billion and primary U.S. Government securities dealers.
Share valuation -- The net asset value of the Fund is calculated daily by
dividing the total value of the Fund's assets, less liabilities, by the number
of shares outstanding. The offering and redemption price per share are equal
to the net asset value per share.
Investment income -- Interest income is accrued as earned. Dividend income is
recorded on the ex-dividend date.
<PAGE>
Distributions to shareholders -- Dividends arising from net investment income
are declared and paid semi-annually. Net realized short-term capital gains, if
any, may be distributed throughout the year and net realized long-term capital
gains, if any, are distributed at least once each year. Income distributions
and capital gain distributions are determined in accordance with income tax
regulations, which may differ from generally accepted accounting principles.
Organization expenses -- Expenses of organization, net of certain expenses
paid by the Adviser, have been capitalized and are being amortized on a
straight-line basis over five years.
Security transactions -- Security transactions are accounted for on the trade
date. Securities sold are valued on a specific identification basis.
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 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.
Federal income tax -- It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code available to regulated investment
companies. As provided therein, in any fiscal year in which the Fund so
qualifies and distributes at least 90% of its taxable net income, the Fund
(but not the shareholders) will be relieved of federal income tax on the
income distributed. Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends
in each calendar year at least 98% of its net investment income (earned during
the calendar year) and 98% of its net realized capital gains (earned during
the twelve months ended October 31) plus undistributed amounts from prior
years.
<PAGE>
<TABLE>
<CAPTION>
The following information is based upon federal income tax cost of portfolio
investments (excluding repurchase agreements) as of June 30, 1996:
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Gross unrealized appreciation............................................................... $ 3,422,054
Gross unrealized depreciation............................................................... ( 355,529)
---------------
Net unrealized appreciation................................................................. $ 3,066,525
===============
Federal income tax cost..................................................................... $ 19,741,823
===============
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
The differences between financial reporting and federal income tax cost
amounts is due to certain timing differences in recognizing capital losses
under generally accepting accounting principles and tax regulations.
2. INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investment securities,
other than short-term investments, amounted to $31,092,284 and $43,820,183,
respectively, for the year ended June 30, 1996.
<PAGE>
3. TRANSACTIONS WITH AFFILIATES
The Chairman of the Board of the Trust is the President and controlling
shareholder of one of two general partners of the Adviser. The President of
the Trust is the President and controlling shareholder of the other general
partner of the Adviser. The Executive Vice President of the Trust is a general
partner of Brimberg & Co., L.P. (Brimberg), the Fund's principal underwriter.
Certain officers of the Trust are officers of MGF Service Corp. (MGF), the
administrative services agent, shareholder servicing and transfer agent, and
accounting services agent for the Fund.
ADVISORY AGREEMENT
The Fund's investments are managed by the Adviser pursuant to the terms of an
Advisory Agreement. The Fund pays the Adviser a fee, computed and accrued
daily and paid monthly, at an annual rate of 1% of the Fund's average daily
net assets. In order to reduce the operating expenses of the Fund, the Adviser
waived $177,359 of its investment advisory fees for the year ended June 30,
1996.
SEC ADMINISTRATIVE PROCEEDING
On May 2, 1995, the Securities and Exchange Commission (the SEC) instituted
administrative proceedings against, among other parties, the Adviser and
certain officers of the Adviser who are also officers and members of the Board
of Trustees of the Fund. As part of these proceedings, the SEC alleged that
the parties carried out a marketing strategy for the Fund that allegedly
defrauded or operated as a potential fraud on actual and potential Fund
investors. The Fund was not a party to the administrative proceeding.
The administrative proceeding between the SEC and the parties was settled in
January of 1996 with no material impact on the financial position or results
of operations of the Fund.
UNDERWRITING AGREEMENT
Under the terms of an Underwriting Agreement between the Trust and Brimberg,
Brimberg serves as the exclusive underwriter of the Fund's shares. Brimberg
receives no direct compensation from the Fund for serving as underwriter but
executes securities transactions for the Fund. For the year ended June 30,
1996, Brimberg earned $120,408 of commissions as broker on trades of the
Fund's portfolio securities.
<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
Under the terms of the Administrative Services Agreement between the Trust and
MGF, MGF supplies non-investment related statistical and research data,
internal regulatory compliance services and executive and administrative
services for the Fund. MGF supervises the preparation of tax returns, reports
to shareholders of the Fund, reports to and filings with the Securities and
Exchange Commission and state securities commissions, and materials for
meetings of the Board of Trustees. For the performance of these administrative
services, MGF receives a monthly fee based on the Fund's average daily net
assets.
TRANSFER AGENT AND SHAREHOLDER SERVICE AGREEMENT
Under the terms of the Transfer, Dividend Disbursing, Shareholder Service and
Plan Agency Agreement between the Trust and MGF, MGF maintains the records of
each shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of the Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service functions. For these services, MGF receives a monthly fee based on the
number of shareholder accounts in the Fund. In addition, the Fund pays
out-of-pocket expenses including, but not limited to, postage and supplies.
ACCOUNTING SERVICES AGREEMENT
Under the terms of the Accounting Services Agreement between the Trust and
MGF, MGF calculates the daily net asset value per share and maintains the
financial books and records of the Fund. For these services, MGF receives a
monthly fee from the Fund.
<PAGE>
<TABLE>
4. CAPITAL SHARE TRANSACTIONS
Proceeds and payments on capital shares as shown in the Statements of Changes
in Net Assets are the result of the following capital share transactions:
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
YEAR YEAR
ENDED ENDED
JUNE 30, JUNE 30,
1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shares sold............................................................... 123,208 243,083
Distributions to shareholders paid in additional shares................... 344,965 109,427
Shares redeemed........................................................... ( 941,635) ( 1,825,293)
--------------- ---------------
Net decrease in shares outstanding........................................ ( 473,462) ( 1,472,783)
Shares outstanding, beginning of year..................................... 2,952,795 4,425,578
--------------- ---------------
Shares outstanding, end of year........................................... 2,479,333 2,952,795
=============== ===============
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
5. PROPOSED REORGANIZATION
The Board of Trustees have approved and will be recommending to the
shareholders the approval of an Agreement and Plan of Reorganization (the
Plan) pursuant to which the Fund will be reorganized into the Leeb Value Fund
(the Value Fund), a new series of the Accolade Funds, a Massachusetts business
trust. The Value Fund will have the same investment objectives and policies as
the Fund. If the Plan is approved by shareholders constituting a majority of
outstanding shares, shareholders will each receive shares of the Value Fund
equal to the value of their Fund shares upon consumation of the
reorganization.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
==============================================================================
Logo: Arthur Andersen LLP
To the Shareholders and Board of Trustees
of Leeb Personal FinanceTM Investment Trust:
We have audited the accompanying statement of assets and liabilities of The
Leeb Personal FinanceTM Fund of the Leeb Personal FinanceTM Investment Trust
(an Ohio business trust), including the portfolio of investments, as of June
30, 1996, the related statement of operations for the year then ended, and the
statements of changes in net assets and the financial highlights for the
periods indicated thereon. These financial statements and financial highlights
are the responsibility of the Trust'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 securities
owned as of June 30, 1996, 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
Leeb Personal FinanceTM Fund of the Leeb Personal FinanceTM Investment Trust
as of June 30, 1996, the results of its operations for the year then ended,
and the changes in its net assets and the financial highlights for the periods
indicated thereon, in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen LLP
Cincinnati, Ohio,
July 19, 1996
- 49 -
<PAGE>
LEEB PERSONAL
FINANCE TM
INVESTMENT
TRUST
INVESTMENT ADVISER
LEEB INVESTMENT ADVISORS
1101 King Street, Suite 400
Alexandria, VA 22314
UNDERWRITER
BRIMBERG & CO., L.P.
45 Rockefeller Plaza, Suite 2570
New York, New York 10111
TRANSFER AGENT
MFG SERVICE CORP.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
SHAREHOLDER SERVICE
Nationwide: 1 (800) 545-0103
Cincinnati: (513) 629-2070
This report is authorized for distribution
only when it is accompanied or preceded
by a current prospectus of the Fund.
LEEB PERSONAL FINANCETM INVESTMENT TRUST
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) (i) Financial Statements included in Part A:
Financial Highlights
(ii) Financial Statements included in Part B:
Statement of Assets and Liabilities, June 30,
1996
Statement of Operations for the Year Ended June
30, 1996
Statement of Changes in Net Assets for the Years
Ended June 30, 1996 and 1995
Financial Highlights for the Periods Ended June
30, 1996, 1995, 1994, 1993 and 1992.
Notes to Financial Statements, June 30, 1996
Portfolio of Investments, June 30, 1996
(b) Exhibits
(1) Agreement and Declaration of Trust*
(2) Bylaws*
(3) Inapplicable
(4) Specimen of Share Certificate*
(5) Advisory Agreement with Leeb Investment
Advisors*
(6) (i) Underwriting Agreement with Brimberg & Co..
L.P.*
(ii) Form of Underwriter's Dealer Agreement*
(7) Inapplicable
(8) Custody Agreement with The Fifth
Third Bank*
- 50 -
<PAGE>
(9) (i) Administration Agreement with MGF Service
Corp.*
(ii) Accounting Services Agreement with MGF
Service Corp.*
(iii) Transfer, Dividend Disbursing, Shareholder
Service and Plan Agency Agreement with MGF
Service Corp.*
(10) Opinion and Consent of Counsel*
(11) Consent of Independent Public Accountants
(12) Inapplicable
(13) Inapplicable
(14) (i) The Leeb Personal FinanceTM Individual
Retirement Account Plan*
(ii) The Leeb Personal FinanceTM 403(b)
Retirement Plan*
(iii) Defined Contribution Plan*
(15) Inapplicable
(16) Computations of Performance Quotations
Provided in Response to Item 22*
(17) Financial Data Schedule
(18) Inapplicable
- --------------------------------------
* Incorporated by reference to the Trust's registration
statement on Form N-1A.
Item 25. Persons Controlled by or Under Common Control with
Registrant.
None
Item 26. Number of Holders of Securities.
As of September 30, 1996, there are 2,128 holders of the
shares of beneficial interest of the Registrant.
Item 27. Indemnification
Article VI of the Registrant's Agreement and Declaration of
Trust provides for indemnification of officers and Trustees
as follows:
"Section 6.4 Indemnification of Trustees,
Officers, etc. The Trust shall indemnify each of
its Trustees and officers, including persons who
- 51 -
<PAGE>
serve at the Trust's request as directors, officers
or trustees of another organization in which the
Trust has any interest as a shareholder, creditor
or otherwise (hereinafter referred to as a "Covered
Person") against all liabilities, including but not
limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties,
and expenses, including reasonable accountants' and
counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any
action, suit or other proceeding, whether civil or
criminal, before any court or administrative or
legislative body, in which such Covered Person may
be or may have been involved as a party or
otherwise or with which such person may be or may
have been threatened, while in office or
thereafter, by reason of being or having been such
a Trustee or officer, director or trustee, and
except that no Covered Person shall be indemnified
against any liability to the Trust or its
Shareholders to which such Covered Person would
otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the
conduct of such Covered Person's office.
Section 6.5 Advances of Expenses. The Trust shall
advance attorneys' fees or other expenses incurred
by a Covered Person in defending a proceeding to
the full extent permitted by the Securities Act of
1933, as amended, the 1940 Act, and Ohio Revised
Code Chapter 1707, as amended. In the event any of
these laws conflict with Ohio Revised Code Section
1701.13(E), as amended, these laws, and not Ohio
Revised Code Section 1701.13(E), shall govern.
Section 6.6 Indemnification Not Exclusive, etc. The
right of indemnification provided by this Article
VI shall not be exclusive of or affect any other
rights to which any such Covered Person may be
entitled. As used in this Article VI, "Covered
Person" shall include such person's heirs,
executors and administrators. Nothing contained in
this article shall affect any rights to
indemnification to which personnel of the Trust,
other than Trustees and officers, and other persons
may be entitled by contract or otherwise under law,
nor the power of the Trust to purchase and maintain
liability insurance on behalf of any such person."
- 52 -
<PAGE>
Insofar as indemnification for liability 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 the 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 the Act and will be governed by the final
adjudication of such issue.
The Registrant maintains a standard mutual fund and
investment advisory professional and directors and officers
liability policy. The policy will provide coverage to the
Registrant, its Trustees and officers, its Adviser and its
Underwriter. Coverage under the policy will include losses
by reason of any act, error, omission, misstatement,
misleading statement, neglect or breach of duty.
The Advisory Agreement with Leeb Investment Advisors (the
"Adviser") provides that the Adviser shall not be liable for
any action taken, omitted or suffered to be taken by it in
its reasonable judgment, in good faith and believed by it to
be authorized or within the discretion or rights or powers
conferred upon it by the Agreement, or in accordance with
(or in the absence of) specific directions or instructions
from Registrant, provided, however, that such acts or
omissions shall not have resulted from Adviser's willful
misfeasance, bad faith or gross negligence, a violation of
the standard of care established by and applicable to the
Adviser in its actions under the Agreement or breach of its
duty or of its obligations thereunder.
The Underwriting Agreement with Brimberg & Co., L.P.
(the "Underwriter") provides that the Underwriter, its
directors, officers, employees, partners, shareholders
and control persons shall not be liable for any error
- 53 -
<PAGE>
of judgment or mistake of law or for any loss suffered by
Registrant in connection with the matters to which the
Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of
any of such persons in the performance of Underwriter's
duties or from the reckless disregard by any of such persons
of Underwriter's obligations and duties under the Agreement.
Registrant will advance attorneys' fees or other expenses
incurred by any such person in defending a proceeding, upon
the undertaking by or on behalf of such person to repay the
advance if it is ultimately determined that such person is
not entitled to indemnification.
Item 28. Business and Other Connections of the Investment
Adviser
(a) The Adviser is a Virginia partnership which was
created on April 4, 1991. The Adviser has no
other business of a substantial nature.
(b) The partners and officers of the Adviser and any
other business, profession, vocation or employment
of a substantial nature engaged in at any time
during the past two years:
(i) PF Funds Group, Inc (general partner of
Adviser) - - subsidiary of National
Information Corporation, a publishing
holding company; limited partner of
Brimberg & Co.,
L.P.
(ii) Money Growth Institute, Inc. (general partner
of Adviser) - - a registered investment
adviser; limited partner of Brimberg & Co.,
L.P.
(iii) Allie P. Ash, Jr. (officer of Adviser) - -
Chairman of the Board of Registrant;
President and a director of Parent Company,
Inc. (a holding company) and its direct and
indirect subsidiaries, PF Funds Group, Inc.,
National Information Corporation (a
publishing holding company) and NIC
Financial, Inc. (a holding company);
President and a director of KCI
Communications, Inc. (a subsidiary of
National Information Corporation and
publisher of Personal Finance, The Big
Picture and Special Alert Bulletin);
President and a director of Speed Promotions,
- 54 -
<PAGE>
Inc. (a sports marketing company and a
subsidiary of National Information
Corporation); Executive Vice President and a
director of Financial Services Associates,
Inc., Wellness Communications, Inc., National
Institute of Business Management, Inc. and
Management Reports Division, Inc. (each of
which is a newsletter publisher and a
subsidiary of National Information
Corporation); director of MPL Communications,
Inc. (a newsletter publisher).
(iv) Stephen Leeb (officer of Adviser) - -
President of Registrant; Editor of Personal
Finance, The Big Picture and Special Alert
Bulletin (newsletters); President and a
director of Money Growth Institute, Inc. and
Leeb Lines, Inc. (a holding company);
President of Leeb Research Consultants, Inc.
(v) Francis A. Mlynarczyk, Jr. (officer of
Adviser) - - Executive Vice President of
Registrant; Chairman, President and a
director of Prospect Advisors, Inc. (a
registered investment adviser); general
partner of Brimberg & Co., L.P. (a registered
broker-dealer and Registrant's principal
underwriter); general partner of President
Street Fund, L.P. (an investment limited
partnership).
Item 29. Principal Underwriters
(a) Inapplicable
Position Position
with with
(b) Name Underwriter Registrant
Jack S. Brimberg General None
Partner
Francis A. Mlynarczyk, Jr. General Executive
Partner Vice
President
Robert M. Lehr Limited None
Partner
PF Funds Group, Inc. Limited None
Partner
Money Growth Institute, Limited None
Inc. Partner
- 55 -
<PAGE>
Anne Brimberg Limited None
Partner
Walter Kaye Limited None
Partner
The address of PF Funds Group, Inc. is 1101 King Street,
Suite 400, Alexandria, Virginia 22314. The address of the
remaining above-named persons and Money Growth Institute,
Inc. is 45 Rockefeller Plaza, Suite 2570, New York, New York
10111.
(c) Inapplicable
Item 30. Location of Accounts and Records
Accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder will be maintained by the Registrant at its
offices located at 1101 King Street, Suite 400, Alexandria, Virginia 22314 or
312 Walnut Street, 21st Floor, Cincinnati, Ohio 45202 as well as at the office
of the Underwriter located at 45 Rockefeller Plaza, Suite 2570, New York, New
York 10111.
Item 31. Management Services Not Discussed in Parts A or B
Inapplicable
Item 32. Undertakings
(a) Inapplicable
(b) Inapplicable
(c) The Registrant undertakes that, if so requested, it
will furnish each person to whom a prospectus is
delivered with a copy of Registrant's latest annual
report to shareholders without charge.
- 56 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed below on its behalf by the undersigned,
thereunto duly authorized, in the City of Cincinnati and State of Ohio, on the
25th day of October, 1996.
LEEB PERSONAL FINANCETM INVESTMENT TRUST
By: /s/ John F. Splain
John F. Splain, Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
*Allie P. Ash, Jr. Chairman
of the Board
and Trustee
*Stephen Leeb President By:/s/ John F. Splain
and Trustee John F. Splain
Attorney-in-Fact*
*Dr. L. Noah Shaw Trustee October 25, 1996
*Joel Novak Trustee
*Paul W. Halter Trustee
/s/ Mark J. Seger Treasurer October 25, 1996
Mark J. Seger
- 57 -
INDEX TO EXHIBITS
(1) Agreement and Declaration of Trust*
(2) Bylaws*
(3) Inapplicable
(4) Specimen of Share Certificate*
(5) Advisory Agreement*
(6)(i) Underwriting Agreement*
(6)(ii) Form of Underwriter's Dealer Agreement*
(7) Inapplicable
(8) Custody Agreement*
(9)(i) Administrative Services Agreement*
(9)(ii) Accounting Services Agreement*
(9)(iii) Transfer, Dividend Disbursing, Shareholder
Service and Plan Agency Agreement*
(10) Opinion and Consent of Counsel*
(11) Consent of Independent Public Accountants
(12)-(13) Inapplicable
(14)(i) The Leeb Personal FinanceTM Individual
Retirement Account Plan*
(14)(ii) The Leeb Personal FinanceTM 403(b)
Retirement Plan*
(14)(iii) Defined Contribution Plan*
(15) Inapplicable
(16) Computations of Performance Quotations*
(17) Financial Data schedule
(18) Inapplicable
- ----------------------------
* Incorporated by reference to the Trust's registration
statement on Form N-1A.
- 58 -
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the use of our report
included in the June 30, 1996 Annual Report of Leeb Personal Finance Fund of
the Leeb Personal Finance Investment Trust, and to all references to our Firm
included in this Registration Statement.
/s/ Arthur Andersen LLP
Cincinnati, Ohio
October 25, 1996
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<NAME> LEEB PERSONAL FINANCE INVESTMENT TRUST
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