Letter of Transmittal
U.S. Securities and Exchange Commission
Filing Desk
450 5th. St., N.W.
Washington, DC 20549
Re: East End Mutual Funds, Inc.
CIK No. 0000920261
File Nos. 811-8408
Commissioners:
Filed herewith on EDGAR in accordance with the provisions of Regulation
S-T is post Effective Amendment No. 3 to the captioned Funds's
Registration Statement on Form N1-A. Changes have been marked in
accordance with Regulation 310, the Articles of Incorporation,
By-Laws and Investment Management agreement are incorporated by reference.
Very Truly Yours
Aristides M. Matsis
EAST END MUTUAL FUNDS,INC.
POST EFFECTIVE AMENDMENT
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON 9/7/98
FILE NO: 811-8408
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Post-Effective Amendment No. /_3_/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY /X/
ACT OF 1940
Amendment No. 2
(Check appropriate box or boxes.)
EAST END MUTUAL FUNDS, INC.
(Exact name of Registrant as Specified in Charter)
736 West End Avenue, Suite 3A
New York, New York 10025-6245
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code:
212-666-0289
ARISTIDES M. MATSIS, 736 WEST END AVENUE, SUITE 3A
NEW YORK, NEW YORK 10025-6245
(Name and Address of Agent for Service)
Please send a copy of communications to:
Aristides M.Matsis
736 West End Avenue, Ste. 3A
New York, New York 10025
212-666-0289
ANNUAL REGISTRATION STATEMENT PURSUANT TO RULE 485
It is proposed that this filing will become effective immediately
upon filing.
A Rule 24f-2 Notice for the year ended June 30, 1998 was filed on
September 7,1998
FORM N-1A
CROSS REFERENCE SHEET
Form N-1A Part A
ITEM NO. PROSPECTUS LOCATION
1. Cover Page . . Cover Page
2. Synopsis . . . Shareholder Transaction
Expenses
3. Condensed Financial
Information . . Per Share Table
4. General Description of
Registrant . . Investment Objective of the
Fund; Investment Policies of
the Fund; Other Investment
Policies; Investment Risks;
Who Should Invest; General
Information; Dividends and
Distributions; Taxation
5. Management of the
Fund . . . . Management's Experience;
How the Fund is Managed;
Fund Service Providers
5A. Management Discussion of
Fund Performance Management Discussion of
Fund Performance
6. Capital Stock and
Other Securities . General Information
7. Purchase of Securities
Being Offered . . How to Invest in the Fund;
How Net Asset Value is Determined
Plan of Distribution;
8. Redemption or
Repurchase How to Sell (Redeem) Your Shares
FORM N-1A PART B
LOCATION IN STATEMENT OF ADDITIONAL INFORMATION
ITEM NO.
9. Pending Legal
Proceedings . . . None
10. Cover Page . . . Cover Page
11. Table of Contents . . Table of Contents
12. General Information and The Company; Description of
History . . . Predecessor Company and the
Management; Independent
Auditors
13.Investment Objectives Investment Objective and
and Policies . . .Policies; Investment
Restrictions
14. Management of the Fund . . Investment Manager; Directors
and Officers
15. Control Persons and Control Persons and Principal
Principal Holders Holders of Securities
of Securities . .
16. Investment Advisory The Investment Manager
and Other Independent Auditors
Services . . . See item "Fund Service
Providers" in Prospectus
17. Brokerage Allocation Execution of Portfolio
Transactions
18. Capital Stock and Other
Securities . . See "General Information" in
Prospectus
19. Purchase, Redemption and Additional Purchase and
Pricing of Securities Redemption Information
Being Offered . . Distribution Plan
FORM N-1A PART B (Continued)
20. Tax Status . . . Tax Information
Tax Distributions of Dividends
21. Underwriters . . Not Applicable
22. Calculations of Performance
Data Measuring Performance
23. Financial Statements . Independent Auditors' Report;
Schedule of Investments 6/30/98;
Statement of Assets and Liabilities
6/30/98;Notes to Financial Statement
6/30/98.
PART C
OTHER INFORMATION
Item 24. Financial Statements
and Exhibits
(a) Financial Statements
Schedule of Investments 6/30/98
Statement of Assets and Liabilities 6/30/98
(b) Exhibits Exhibit No.
(1) copies of the Charter as now
in effect;
Articles of Incorporation 1*
(2) copies of the existing bylaws
or instruments corresponding
thereto;
Copy of Bylaws 2*
(3) copies of any voting trust None
agreement with respect to
more than 5 percent of any
class of equity securities
of the Registrant;
(4) copies of all instruments Article VI
defining the rights of holders Section (e)
of the Securities being of Exhibit
registered including where No. 1
applicable, the relevant
portion of the Articles of
Incorporation or bylaws of the
Registrant;
(5) copies of all investment
advisory contracts relating to
the management of the assets
of the Registrant;
Form of Investment Management 5*
Agreement between East End
Mutual Funds, Inc. with
respect to The Capital
Appreciation Series and East
End Investment Management Company;
(6) copies of each underwriting or 16*****
distribution contract between
the Registrant and a principal
underwriter, and specimens or
copies of all agreements between
principal underwriters and dealers;
(7) copies of all bonus, profit None
sharing, pension or other similar
arrangements wholly or partly for
the benefit of directors or
officers of the Registrant in
their capacity as such; any such
plan that is not set forth in a
formal document, furnish a
reasonably detailed description thereof;
(8) copies of all custodian
agreements and depository
contracts under Section 17(f)
of the 1940 Act with respect
to securities and similar
investments of the Registrant,
including the schedule of remuneration;
Form of Custodian Agreement 8***
between East End Mutual Funds,
Inc. and The Provident Bank;
(9) copies of all other material contracts
not made in the ordinary course
of business which are to be
performed in whole or in part at
or after the date of the filing of
the Registration Statement;
(a) Transfer Agency and Service 9(a)***
Agreement between East End
Mutual Funds, Inc. and
East End Investment Management
Company;
(b) Pricing of Portfolio 9(b)***
Agreement between East End
Mutual Funds, Inc. and
East End Investment Management
Company;
(c) Administration Agreement for 9(c)***
Reporting and Accounting
Services between East End Mutual
Funds, Inc. and East End
Investment Management Company.
(10) an opinion and consent of counsel 10****
as to the legality of the securities
being registered, indicating whether
they will, when sold, be legally
issued, fully paid and non-assessable;
(11) copies of any other opinions,
appraisals or rulings and consents
to use thereof relied on in the
preparation of this Registration
Statement and required by Section 7
of the 1933 Act.
(a) Independent Auditors Report
11(a)*****
(b) Consent of Independent Public
11(b)*****
Accountants
(12) all financial statements None
omitted from Item 23;
(13) copies of any agreements or None
understandings made in
consideration for providing the
initial capital between or among
the Registrant, the underwriter,
adviser, promoter, or initial
stockholders and written assurances
from promoters or initial shareholders
that their purchases were made for
investment purposes without any
present intention of redeeming or
reselling;
(14) copies of the model plan used in the
establishment of any retirement plan
in conjunction with which Registrant
offers its securities, any instructions
thereto and any other documents making
up the model plan. Such form(s) should
disclose the costs and fees charged in
connection therewith;
Master Retirement Plan 14(a)***
Master Retirement Plan - Profit Sharing
Adoption Agreement 14(b)***
Master Retirement Plan - Money Purchase
Adoption Agreement 14(c)***
Simplified Employee Pension Plan
Adoption Agreement 14(d)***
Self Directed Individual Retirement
Account 14(e)***
Standardized Paired Profit Sharing
Plan with Trust Agreement 14(f)***
(15) copies of any plan entered into
by Registrant pursuant to Rule 12b-1
under the 1940 Act, which describes
all material aspects of the
financing of distribution of
Registrant's shares, and any agreements
with any person relating to implement-
ation of such Plan;
Form of Plan of Distribution 15(a)**
to be adopted by East End Mutual (b)(ii) ***
Funds, Inc. with respect to the
Capital Appreciation Series;
Form of Agreement Pursuant to 15(b)***
Plan of Distribution between Form of Selling
East End Mutual Funds, Inc. with Agreement 15(b)(ii)
respect to the Capital Appreciation *****
Series and East End Investment
Management Company;
(16) Schedule for computation 16 *****
of each performance quotation
provided in the Registration
Statement in response to Item 22
(which need not be audited);
* These Exhibits were filed with Registration Statement - 6/2/94
** This Exhibit was filed with Pre-Effective Amendment No. 2 - 9/14/94
*** This Exhibit was filed with Pre-Effective Amendment No. 3 - 1/25/95
**** This Exhibit was filed with Post-Effective Amendment No.1 - 5/4/95
*****This Exhibit was filed with Post-Effective Amendment No.2 - 9/19/97
Item 25. Persons Controlled by or Under Common Control With Registrant
See Caption "Control Persons and Principal Holders of Securities" in the
Statement of Additional Information
Item 26. Number of Holders of Securities
(a) Title of Class
Common Capital Stock, $.001 par value
(b) Number of Record Holders
4
Item 27. Indemnification
(a) General. The Articles of Incorporation (the "Articles") of
the Corporation provide that to the fullest extent permitted by
Maryland statutory and decisional law and the Investment Company Act
of 1940, no director or officers of the Corporation shallbe personally
liable to the Corporation or its shareholders for money damages.
The Articles further provide that the Corporation shall indemnify
(1) its directors and officers, whether serving the corporation,
or at its request, any other entity, to the full extent permitted or
required by the general laws of the State of Maryland now or
hereafter in force, including the advancing of expenses under
the procedures and to the full extent permitted by law, and
(2) its other employees and agents,to such extent as shall
be authorized by the Board of Directors, the Corporation's
By-Laws and permitted by law. The foregoing rights indemnifi-
cation are not exclusive of any other rights to which those
seeking indemnification may be entitled. The Board of Directors
may take such action as is necessary to carry out the indemnification
provisions and is expressly empowered to adopt, approve, and amend,
from time to time, such By-Laws, resolutions or contracts
implementing such provisions or such further indemnification arrangements
as may be permitted by law.
The Articles further provide that no amendment of the Articles of
Incorporation shall limit or eliminate the right to indemnification
provided, with respect to acts or omissions occurring prior to such
amendment. Nothing contained in the Articles shall be construed to
authorize the Corporation to indemnify any officer or director of the
Corporation against any liability to the Corporation or to any hold-
ers of securities of the Corporation to which he or she is subject
by reason of willful malfeasance,bad faith,gross negligence,
or reckless disregard of the duties involved in the conduct of his
or her office. Any indemnification by the Corporation shall be
consistent with the requirements of law, including the Investment
Company Act of 1940.
The By-Laws of the Corporation provide that the Corporation shall
indemnify any individual who is a present or former director or
officer of the Corporation and who, by reason of his or her position
was, is or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter collectively
referred to as a "Proceeding") against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by such
director or officer in connection with such Proceeding, to the
fullest extent that such indemnification may be lawful under Maryland
law.
(b) Disabling Conduct. The By-Laws provide that nothing therein
shall be deemed to protect any director or officer against any
liability to the Corporation or its shareholders to which such
director or officer would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office (such conduct
hereinafter referred to as "Disabling Conduct
The By-Laws provide that no indemnification of a director or officer
may be made unless: (1) there is a final decision on the merits by a
court or other body before whom the Proceeding was brought that the
director or officer to be indemnified was not liable by reason of
Disabling Conduct; or (2) in the absence of such a decision, there is
a reasonable determination, based upon a review of the facts, that the
director or officer to be indemnified was not liable by reason of
Disabling Conduct, which determination shall be made by: (i) the
vote of a majority of a quorum of directors who are neither "int-
erested persons" of the Corporation as defined in Section 2(a)(19)
of the Investment Company Act of 1940, nor parties to the Proceeding;
or (ii) an independent legal counsel in a written opinion.
(c) Standard of Conduct. Under Maryland law, the Corporation may not
indemnify any director if it is proved that: (1) the act or omission
of the director was material to the cause of action adjudicated in
the Proceeding and (i) was committed in bad faith or (ii) was the
result of active and deliberate dishonesty; or (2) the director
actually received an improper personal benefit; or (3) in the case
of a criminal proceeding, the director had reasonable cause to
believe that the act or omission was unlawful. No indemnification
may be made under Maryland law unless authorized for a specific
proceeding after a determination has been made, in accordance with
Maryland law, that indemnification is permissible in the circum-
stances because the requisite standard of conduct has been met.
(d) Required Indemnification. Maryland law requires that a director
or officer who is successful, on the merits or otherwise, in the
defense of any Proceeding shall be indemnified against reasonable
expenses incurred by the director or officer in connection with
the Proceeding. In addition, under Maryland law, a court of appro-
priate jurisdiction may order indemnification under certain cir-
cumstances.
(e) Advance Payment. The By-Laws provide that the Corporation may
pay any reasonable expenses so incurred by any director or officer
in defending a Proceeding in advance of the final disposition there-
of to the fullest extent permissible under Maryland law. In accord-
ance with the By-Laws, such advance payment of expenses shall be
made only upon the undertaking by such director or officer to repay
the advance unless it is ultimately determined that such director
or officer is entitled to indemnification, and only if one of the
following conditions is met: (1) the director or officer to be
indemnified provides a security for his undertaking; (2) the Corp-
oration shall be insured against losses arising by reason of any
lawful advances; or (3) there is a determination, based on a review
of readily available facts,that there is reason to believe that the
director or officer to be indemnified ultimately will be entitled to
indemnification, which determination shall be made by:(i) a majority
of a quorum of directors who are neither "interested persons" of the
Corporation, as defined in Section 2(a)(19) of the Investment Company
Act of 1940, nor parties to the Proceeding; or (ii) an independent
legal counsel in a written opinion.
(f) Insurance. The By-Laws provide that, to the fullest extent
permitted by Maryland law and Section 17(h) of the Investment Company
Act of 1940, the Corporation may purchase and maintain insurance on
behalf of any officer or director of the Corporation, against any
liability asserted against him or her and incurred by him or her in and
arising out of his or her position, whether or not the Corporation
would have the power to indemnify him or her against such liability.
(g) Public Policy Presumption under the Securities Act of 1933 and
Undertaking Pursuant to Rule 484(b)(1) under the 1933 Act. Insofar
as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the Registrant's By-Laws 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 director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted
such director, 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 a controlling
precedent, submit to a court of appropriate jurisdiction the question
of whether indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
Aristides M.Matsis and Michael A.Matsis are principals in Matsis Associates
which is a company that was engaged in the business of owning and
operating restaurants.In addition, both have been managing a trust and in
connection therewith have been investing and reinvesting the trust assets.
Item 29. Principal Underwriter
The Fund does not have a principal underwriter
Item 30. Location of Accounts and Records
The books and records of the Fund, are maintained at East End
Investment Management Company, 736 West End Avenue, Suite 3A, New York,NY
10025.
Item 31. Management Services
There are no management service contracts not described in Part A
or Part B of this Form N-1A
Item 32. Undertakings
(a) Registrant agrees that the Directors of East End Mutual,
Funds, Inc. will promptly call a meeting of shareholders for the purpose of
acting upon questions of removal of a director or directors, when requested
in writing to do so by the record holders of not less than 10% of the
outstanding shares.
FORM N-30D
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and
Board of Directors of the
East End Mutual Funds, Inc.
Capital Appreciation Series
We have audited the accompanying statement of assets and
liabilities of East End Mutual Funds, Inc. - Capital Appreciation
Series, including the schedule of investments owned, as of June
30, 1998 and the related statements of operations, changes in net
assets, and the financial highlights for the period to June 30,
1998. These financial statements and financial highlights
are the responsibility of the Fund's management. Our respons-
ibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit 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 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, 1998 by correspondence with the custodian
and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audit provides 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 East End Mutual Funds, Inc. -
Capital Appreciation Series as of June 30, 1998 the results of
its operations, the changes in net assets, and the financial
highlights for the period June 30, 1997, in conformity with
generally accepted accounting principles.
Abington,Pennsylvania Sanville & Company
July 22,1998 Certified Public Accountants
MESSAGE FROM THE PRESIDENT
EAST END MUTUAL FUNDS, INC.
CAPITAL APPRECIATION SERIES
The financial markets during the past year appeared to balance
between economic strength at home and collapse overseas which
rotated between Japan, Malaysia, Indonesia and Korea. The
disinflation in Asia forced a reduction of purchases - from
commodities to software from the United States. This caused a 15%
reduction in exports from the U.S. to these Asian countries, from
a year ago levels.
As a result profits as a whole declined in the U.S. As of June
30,1998 over 44% of the stocks listed on the NASDAQ have seen 30%
or greater declines from their 52 week highs. The large cap
stocks in the S&P 500 also lost ground year to date.
The Fund's net asset value fell 7.7% during the 12 month period
due in part to adverse market conditions enumerated above.
As of June 30,1998 the Fund held 13.5% of its assets in short
term debt instruments of the U.S.government - which will be used
to purchase equities at their current depressed prices. The
manager will seek stocks that are not dependent upon exports for
the majority of their earnings.
We thank you for your support.
Sincerely,
Aristides M. Matsis
President
East End Mutual Funds, Inc.
July 25,1998
EAST END MUTUAL FUNDS, INC.- CAPITAL APPRECIATION SERIES
Schedule of Investments
June 30, 1998
COMMON STOCKS - 88.6% Shares Value
Computer Hardware - 9.0%
Ascend Communications Inc. * 199 $ 9,863
Bay Networks Inc. * 280 8,977
18,840
Computer Peripherals - 11.3%
Iomega Corp. * 3,420 20,092
Western Digital Corp. * 310 3,662
23,734
Computer Services - 6.8%
Inacom Corp. * 450 14,288
Consumer Products - 9.6%
Nike Inc. Class B 200 9,737
Ralston Purina 90 10,513
20,250
Education - 3.5%
The Learning Company Inc. * 250 7,406
Internet - 2.4%
Netscape Communications Co* 185 5,007
Medical Care - 2.0%
Oxford Health Plans Inc. * 280 4,288
Medical Information - 5.0%
HBO & Co. 300 10,575
Medical Products - 8.2%
Theragenics Corp. * 660 17,201
Pharmaceuticals - 4.7%
Bristol Myers Squibb Co. 85 9,770
Retail - 18.6%
Costco Companies Inc. * 157 9,901
Home Depot Inc. 117 9,718
TJX Companies Inc. 390 9,409
Wal-mart Stores Inc. 165 9,993
39,021
Semiconductor - 4.8%
Intel Corp 135 10,007
Telecommunication - 2.7%
Vocaltec Communications * 500 5,562
Total Investments - 88.6% 185,969
Cash and Other Assets Less Liabilities - 23,903
$ 209,872
*Non-incoming producing during the year.
The accompanying notes are an integral part of these financial statements.
EAST END MUTUAL FUNDS, INC. - CAPITAL APPRECIATION SERIES
Statement of Assets and Liabilities
June 30, 1998
ASSETS
Investments in securities, at value
(cost - $194,599)(Notes 1 and 3) $ 185,969
U. S. Government securities money market account 28,327
Cash at custodian bank to pay for investment securities
purchased 78,750
Receivable for investment securities sold 5,757
Dividend receivable 120
Due from manager 380
Deferred organization costs (Note 1) 28,989
Total assets 328,292
LIABILITIES
Payable for investment securities purchased 89,431
Due to manager for deferred organization costs (Note 1) 28,989
Total liabilities 118,420
NET ASSETS $ 209,872
Net assets consist of:
Capital paid-in $ 237,204
Accumulated net realized loss on investments ( 2,499)
Net unrealized appreciation of investments ( 8,630)
Accumulated net investment loss ( 16,203)
NET ASSETS $ 209,872
NET ASSET VALUE PER SHARE
(based on 22,094 shares outstanding -
shares authorized with $.001 per share par value) $ 9.50
The accompanying notes are an integral part of these financial
statements
EAST END MUTUAL FUNDS, INC. - CAPITAL APPRECIATION SERIES
Statement of Operations
Year Ended June 30, 1998
INVESTMENT INCOME
Income
Dividends $ 917
Total income 917
Expenses
Investment management fees (Note 2) 2,211
Distribution fees (Note 2) 1,105
Custodian fees 2,619
Registration fees 1,536
Printing and postage fees 72
Audit fees 4,500
Insurance 1,179
Taxes 100
Other expenses 201
Total expenses before reimbursement 13,523
Reimbursement of expenses by manager (Note 2) ( 6,499)
Expenses, after reimbursement 7,024
Net investment loss ( 6,107)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments 16,584
Change in net unrealized depreciation ( 29,403)
Net realized and unrealized loss on investments ( 12,819)
Net decrease in net assets resulting from operations $ ( 18,926)
The accompanying notes are an integral part of these financial statements
EAST END MUTUAL FUNDS, INC. - CAPITAL APPRECIATION SERIES
Statement of Changes In Net Assets
Year Ended Year Ended
June 30, June 30,
1998 1997
INCREASE (DECREASE) IN NET ASSETS:
From Operations:
Net investment loss $ ( 6,107) $ ( 8,560)
Net realized gain (loss) on investments 16,584 (20,619)
Change in net unrealized depreciation
on investments ( 29,403) (21,654)
Net decrease in net assets
resulting from operations ( 18,926) (50,833)
Distributions to shareholders from:
Net investment income
Net realized gain ($.937 per share) (19,557)
Total distributions (19,557)
Share Transactions
Net proceeds from sales of shares 5,173 12,000
Reinvestment of distributions 19,557
Cost of shares redeemed ( 11,514) (10,442)
Net (decrease)increase in net assets resulting
from share transactions ( 6,341) 21,115
Total decrease in net assets ( 25,267) (49,275)
Net Assets
Beginning of year 235,139 284,414
End of year $ 209,872 $ 235,139
Other information
Shares:
Sold 479 1,103
Issued in reinvestment of distributions 1,912
Redeemed ( 1,117) ( 995)
Net (decrease) increase $( 638) ( 2,020)
The accompanying notes are an integral part of these financial statements
EAST END MUTUAL FUNDS,INC . - CAPITAL APPRECIATION SERIES
Financial Highlights
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
For the period from
October 2, 1995
Year Year (commencement of
Ended Ended operations) to
June 30, June 30, June 30,
1998 1997 1996
Per Share Operating Performance
Net Asset Value, Beginning of Period $ 10.340 $ 13.730 $ 10.480
Income From Investment Operations:
Net Investment Loss ( 0.290) ( 0.370) ( 0.007)
Net Realized and Unrealized Gain (Loss)
on Investments ( 0.550) ( 2.083) 3.335
Total From Investment Operations ( 0.840) ( 2.453) 3.328
Less Distributions:
Distributions from Net Realized Gain - 0.937 0.078
Total Distributions - 0.937 0.078
Net Asset Value, End of Period $ 9.500 $ 10.340 $ 13.730
Total Return (8.124)% (17.870)% 31.760%
Ratios/Supplemental Data:
Ratio of Expenses (After Reimbursement)
to Average Net Assets 3.057 % 4.840 % 2.770% *
Ratio of Net Investment Loss to Average
Average Net Assets (2.658)% (3.670)% (0.910)% *
Portfolio Turnover Rate (%) 86.840 % 26.980% 65.810 %
Average Commission Rate $ 0.080 $ 0.050 $ 0.060
Net Assets, End of Period $209,872 $235,139 $284,414
* annualized
The acompanying notes are an integral part of these financial statements
INDEPENDENT AUDITOR'S REPORT
To the Shareholders and
Board of Directors of the
East End Mutual Funds, Inc. -
Capital Appreciation Series
We have audited the accompanying statement of assets and liabilities of East
End Mutual Funds, Inc. Capital Appreciation Series, including the schedule of
investments owned, as of June 30, 1998 and the related statement of operations
for the year then ended, the statements of changes in net assets and the
financial highlights for each of the periods indicated therein.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan, perform the audit to obtain reasonable
assurance about whether the financial statements are free of material mis-
statement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures inc-
luded confirmation of securities owned as of June 30, 1998 by correspondence
with the custodian and brokers. An audit also includes assessing accounting
principles used and significant estimates made by management, as well as evalu-
ating the overall financial statement presentation. We believe that our audit
provides 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 East
End Mutual Funds, Inc. - Capital Appreciation Series as of June 30, 1998 the
results of its operations for the year then ended, the changes in net assets
and the financial highlights for each of the periods indicated therein, in
conformity with generally accepted accounting principles.
Abington, Pennsylvania Sanville & Company
July 22, 1998 Certified Public Accountants
EAST END MUTUAL FUNDS, INC. - CAPITAL APPRECIATION SERIES
Notes to Financial Statements
June 30, 1998
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization: East End Mutual Funds, Inc. - Capital Appreciation Series (the
"Fund") is a series of East End Mutual Funds, Inc. (the "Company"), a Maryland
Corporation. The Fund is a diversified, open end management investment company
registered under the Investment Company Act of 1940, as amended.
The following is a summary of significant accounting policies followed by the
Fund.
Security Valuation: Securities are valued at the last reported sales price or
the case of securities where there is no reported last sale, the closing bid
price. Securities for which market quotations are not readily available are
valued at their fair values as determined in good faith by or under the super-
vision of the Company's Board of Directors in accordance with methods which
have been authorized by the Board. Short term debt obligations with maturities
60 days or less are valued at amortized cost which approximates market value.
Securities Transactions and Investment Income: Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Realized gains and losses on security transactions are determined on the
identified cost basis. Dividend income is recorded on the ex-dividend date.
Interest income is determined on the accrual basis. Discount on fixed income
securities is amortized.
Dividends and Distributions to Shareholders:The Fund records all dividends and
distributions payable to shareholders on the ex-dividend date.Permanent book
and tax differences relating to shareholder distributions may result in
reclassifications to paid in capital and may affect the per-share allocation
between net investment income and realized and unrealized gain/loss.
Undistributed net investment income and accumulated undistributed net realized
gain/loss on investment transactions may include temporary book and tax differ-
ences which reverse in subsequent periods. Any taxable income or gain
remaining at fiscal year end is distributed in the following year.
Federal Income Taxes: It is the Fund's intention to qualify as a regulated
investment company and distribute all of its taxable income. Accordingly, no
provision for Federal income taxes will be required in the financial statements.
EAST END MUTUAL FUNDS, INC. - CAPITAL APPRECIATION SERIES
Notes to Financial Statements (Continued)
June 30, 1998
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
Deferred Organization Expenses: East End Investment Management Company (the
"Manager") has paid the deferred organization expenses of the Fund. Deferred
organization expenses will be amortized over a period not exceeding five years
once the Fund has the ability to amortize the expenses and not exceed the most
restrictive annual expense limitation (see Note 2).The Manager will be repaid
at the rate in which the deferred organization expenses are amortized. In the
event that the Manager (or any subsequent holder) redeems any of its original
shares prior to the end of the five-year period, proceeds of the redemption
payable in respect of such shares shall be reduced by pro-rata share (based
on the proportionate share of the original shares redeemed to the total number
of original shares outstanding at the time of redemption) of the unamortized
deferred organization expenses as of the date of such redemption.
In the event that the Fund is liquidated prior to the end of the five-year
period, the Manager (or any subsequent holder) shall bear the unamortized
deferred organization expenses.
2. MANAGEMENT FEE AND TRANSACTIONS WITH AFFILIATES
Under the terms of the investment management agreement, the Manager has agreed
to provide the Fund investment management services and be responsible for the
day to day operations of the Fund. The Manager will receive a fee, payable
monthly, for the performance of its services at an annual rate of 1% on the
first $500 million of average daily net assets, .75% in excess of $500 million
of average daily net assets. The fee will be accrued daily and paid monthly.
A management fee of $2,211 was accrued but none paid for year ended June 30,
1998. Effective July 1, 1998 the Manager has voluntarily agreed to reimburse
the Fund for expenses in excess of 2% of daily net assets.
The Manager voluntarily agreed to reimburse the Fund for expenses in excess
of 2% of daily net assets plus any custodian fees. Total expenses after reim-
bursement for the year ended June 30, 1998 were 3.057% of daily net assets.
The Manager reimbursed the Fund by advancing fees and expenses totaling $6,499
for the year ended June 30, 1998.
Any deferrals or advances made by the Manager will be subject to recoupment
by the Manager and reimbursement by the Fund within the following three fiscal
years, provided the Fund is able to effect such reimbursement and remain in
compliance with applicable state expense limitations and further provided,that
payment would not adversely impact the Fund's tax status or otherwise have
an adverse tax impact on the Fund or its shareholders.The Fund is contingently
liable to the Manager subject to such recoupment in the amount of $6,499 for
year ended June 30, 1998; $12,483 for the year ended June 30, 1997 and $19,300
for the period ended June 30, 1996.
EAST END MUTUAL FUNDS, INC. - CAPITAL APPRECIATION SERIES
Notes to Financial Statements (Continued)
June 30, 1998
2. MANAGEMENT FEE AND TRANSACTIONS WITH AFFILIATES (Continued)
The Manager will also provide transfer agency, and portfolio pricing services
to the Fund.Under the terms of the Transfer Agency and Service Agreement,the
Manager will charge a minimum annual fee of $15,000 to the Fund. The terms of
the Portfolio Pricing Agreement provide for an annual fee of $12,000. In add-
ition, the Manager will also provide administrative services, accounting ser-
vices, financial reporting services, tax accounting services and compliance
control services. The Manager will charge a minimum annual fee of $38,000 for
these additional services. The Manager did not charge the Fund for any of the
above services for the year ended June 30, 1998.
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Plan provides that the Fund may
finance activities which are primarily intended to result in the sale of the
Fund's shares. The Fund may incur distribution expenses up to .50% of average
daily net assets. A distribution fee of $1,105 was accrued but none paid for
the year ended June 30, 1998.
Certain officers and directors of the Fund are officers and directors of the
Manager.
3. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term securities)
for the year ended June 30, 1998 were $186,906 and $184,826, respectively.
At June 30, 1998, net unrealized depreciation for Federal income tax purposes
aggregated $8,630 of which $20,171 related to unrealized appreciation of
securities and $28,801 related to unrealized depreciation of securities.
The cost of investments at June 30, 1998 for Federal income tax purposes was
$194,599.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the use of our report, dated July 22, 1998, on the annual
financial statements and financial highlights of the East End Mutual Funds,
Inc. - Capital Appreciation Series, which is included in Part A and Part B
in Post Effective Amendment No. 3 to Registration Statement under the
Securities Act of 1933 and included in the Prospectus and Statement of
Additional Information, as specified, and to the reference made to us under
the caption "Independent Auditors" in the Statement of Additional
Information.
Abington Pennsylvania August 20,1998
Sanville & Company Certified Public Accountants
MINUTES OF A SPECIAL MEETING OF THE BOARD
TO APPROVE FIDELITY BOND OF
EAST END MUTUAL FUNDS, INC.
MINUTES of the meeting, duly called, of the Board of Directors of
East End Mutual Funds, Inc. a Maryland corporation, held on the
26th day of August 1997 at 736 West End Avenue, Suite 3A New
York, New York at 6:30 PM.
The President of the Corporation called the meeting to order.
The Secretary called the roll and the following Independent
Directors were found present: Dr. Fred Fisher and Dr. Jeffrey
Newcomer, also Directors Michael Matsis and Aristides Matsis
The Secretary reported that Notice of the time and place of
holding the meeting was given to each Director by mail in
accordance with the By-Laws.
On motion duly made and carried, the notice was ordered filed.
The President then stated that a quorum was present and the
meeting was ready to transact business.
The minutes of the preceding meeting of the Board, held on the
27th. day of June 1997 were read and adopted.
The President presented his report.
WHEREAS this Corporation must pursuant to Rule 17g-1 of the 1940
Act approve the fidelity bond originally issued by Aetna
Insurance and is now called Travelers Casualty and Surety Company
in the amount of $50,000 in favor of East End Mutual Funds,Inc.
solely, of which the premium has been prepaid to September, 14,
of 1998.
Now therefore it is resolved that the Corporation by the majority
of its Independent Directors unanimously approves said bond.
On motion duly made and carried, the same was received and
ordered to be filed.
There being no further business before the meeting, on motion
duly made, seconded and carried, the meeting was adjourned.
IN WITNESS WHEREOF, I have hereunto set my hand on this 27 th.
day of July 1998.
/s/_______________________
Michael Matsis, Secretary
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant has duly
caused this 485BPOS annual filing updating its financials on its
behalf by the undersigned, hereunto duly authorized in New York,
New York, on the 7th. day of September, 1998.
EAST END MUTUAL FUNDS, INC.
BY: /s/ Aristides Matsis
President
