MH Elite Portfolio of Funds, Inc.
220 Russell Avenue
Rahway, New Jersey 07065
1-800-318-7969
Dear Shareholder:
After a disappointing first quarter, MH Elite Portfolio of Funds rebounded in
the second quarter to end the first half of 1999 with a return of 7.14%. The
Fund's net asset value on June 30, 1999 was $4.95 versus $4.62 on December 31,
1998. While the fear of rising interest rates has dampened the short term
outlook for stocks in general, we remind shareholders of the Fund's investment
objective for long-term capital appreciation.
Comparisons to the unmanaged Russell 2000 Index are mixed. Year to date, the
Fund trailed the Russell 2000 index by 1.3%. For the period June 30, 1998 to
June 30, 1999 the Fund has outperformed the same index (1.02% versus .06%.).
From inception (March 18,1998) the Fund has returned a negative 1% versus a
negative 2.85% for the Russell 2000 index.
With respect to the markets, April was a significant month due to a shift back
to value stocks that largely attributed to the Fund trailing the Russell 2000
index year to date. In May, due to an influx of new assets and the changes
made to the portfolio, the Fund achieved a balance in the portfolio between
value and growth funds which has led to a strong showing for the Fund in June
and into July.
The Fund thanks you for your past and continued investment in the Fund and
welcomes our new shareholders.
Sincerely,
Harvey Merson
President
Past Performance is no guarantee of future results. The Fund's average annual
total return assumes reinvestment of all divided and capital gain distributions.
Investment return and principal value will fluctuate so that, when redeemed, an
investor's shares may be worth more or less than their original cost.
This material must be accompanied or preceded by a prospectus for the Fund.
<PAGE>
MH Elite Portfolio of Funds, Inc.
Schedule of Portfolio of Investments
As of June 30, 1999 (Unaudited)
Mutual Funds (90.6%) Quantity Market Value
Artisan Small-Cap. Value 2,964 $ 31,393
Babson Enterprise II 1,361 33,328
Baron Asset 671 40,679
Berger Small Cap. Value 1,489 33,200
Bjurman Micro Cap. Growth 1,673 36,261
Brazos Small Cap. Growth 625 10,882
Eclipse Small Cap. Value 2,549 32,300
FAM Value 906 31,804
Fasciano 959 30,465
Forward Small Cap Stock 2,986 37,507
Henlopen 1,652 32,782
Kobrick Emerging Growth 642 10,732
Legg Mason Special Inv. Trust 1,349 49,740
Meridian Value 1,442 32,134
N & B Millenium 1,815 34,729
RS Emerging Growth 1,124 38,596
Transamerica Premier Small Co. 1,794 47,846
Wasatch Micro. Cap. 8,644 37,168
Total Mutual Funds (Cost $544,332) $ 601,546
Short-Term Securities (Cost: $62,428) (9.4%) 62,428
---------
Total Investments in Securities (Cost: $606,760) $ 663,974
Other Assets Less Liabilities (250)
---------
Net Assets $ 663,724
=========
The accompanying notes to financial statements are an integral part of the
statements.
<PAGE>
MH Elite Portfolio of Funds, Inc.
Schedule of Assets and Liabilities
As of June 30, 1999 (Unaudited)
Assets
Investments in Securities at value (Cost : 606,760) $ 663,974
Total Assets $ 663,974
=========
Liabilities and Net Assets
Liabilities
Due to Investment Advisor $ 250
---------
Total Liabilities $ 250
Net Assets
Capital Stock Outstanding at par $ 1,341
(134,141 shares issued and outstanding)
Additional paid-in capital 618,659
Accumulated undistributed net investment income (loss) 14,796
Accumulated undistributed net realized gain (loss)
on investments (28,286)
Net unrealized appreciation on investments 57,214
---------
Net Assets $ 663,724
Total Liabilities and Net Assets $ 663,974
=========
Net assets value per share $ 4.95
=========
The accompanying notes to financial statements are an integral part of the
statements.
<PAGE>
MH Elite Portfolio of Funds, Inc.
Statement of Operations
For The Six Month Period Ended June 30, 1999 (Unaudited)
Investment Income
Dividends $ 7,852
Interest 225
---------
Total Investment Income $ 8,077
Expenses
Investment advisory fees $ 2,377
filing fees 261
Supplies 251
Phone 82
----------
Total expenses $ 2,971
----------
Net Investment Income $ 5,106
Net Realized and Unrealized Gain (loss) on Investments
Net realized gain (loss) from investments $ (16,964)
Net change in unrealized appreciation
on investments 55,481
--------
Net realized and unrealized gain (loss)
in investments $ 38,517
Net Increase (Decrease) in net assets resulting
from operations $ 43,623
==========
The accompanying notes to financial statements are an integral part of the
statements.
<PAGE>
MH Elite Portfolio of Funds, Inc.
Statements of Change in Net Assets
For The Six Months Ended June 30, 1999 (Unaudited) and December 31, 1998
Increase (Decrease) in Net Assets from Operations June 30 December 31
1999 1998
------- -----------
Net Investment income $ 5,106 $ 9,690
Net realized gain (loss) on investments (16,964) (11,322)
Net unrealized appreciation (depreciation)
on investment 55,481 1,733
Dividends and Distributions to Shareholders 0 0
Capital Share Transactions
Proceeds from Sale of Shares -
39,917 and 74,224 shares respectively $ 185,000 $ 335,000
-------- --------
Net Increase in Net Assets $ 228,623 $ 335,101
-------- --------
Net Assets at Beginning of Period $ 435,101 $ 100,000
-------- --------
Net Assets at End of Period $ 663,724 $ 435,101
======== ========
The accompanying notes to financial statements are an integral part of the
statements.
<PAGE>
MH Elite Portfolio of Funds, Inc.
Financial Highlights
Unaudited Year End
Six Months Ended December 31
Selected per share data and ratios for the period June 30, 1999 1998
Net Asset Value, Beginning of Period $ 4.62 $ 5.00
Investment Operations
Net Investment Income .04 .10
Net Realized and Unrealized Gain (Loss) on Inv. .29 (.48)
Total From Operations $ .33 $ (.38)
Distribution 0 0
Net Assets Value, End of Period $ 4.95 $ 4.62
Total Return 7.1% (7.6%)
Ratios/Supplement Data
Net Assets, end of period $ 663,724 $ 435,101
Ratio of net expenses to average net asset .5% 1.0%
Ratio of net investment income to average new assets .9% 3.6%
Portfolio turnover rate 26.7%* 24.5%
* Not Annualized.
The accompanying notes to financial statements are an integral part of the
statements.
<PAGE>
MH Elite Portfolio of Funds, Inc.
Notes to the Financial Schedules and Statements
June 30, 1999
NOTE 1 - Organization
The MH Elite Portfolio of Funds, Inc. (the 'Fund') was organized as a
corporation in New Jersey on October 20, 1997. The Fund was organized as
an open-end diversified management investment company under the Investment
Company Act of 1940 and its securities under the Securities Act of 1933, the
sale and issuance of 20,000 shares of common stock for $100,000 ("initial
shares") to its initial investor occurred on February 17, 1998.
NOTE 2 - Additional Investors
Subsequent to February 17, 1998 there were additional infusions of capital in
the amount of $335,000.00 by eight shareholders. An additional 74,224.193
shares were issued. During the six months ended June 30, 1999 there was
additional capital invested of $185,000 by 7 shareholders with 39,916.87
shares issued.
NOTE 3 - Organization Costs
Organizational costs will be borne by the Fund's Investment Adviser.
NOTE 4 - Registration Fees
Registration fees will be borne by the Fund's Investment Adviser.
NOTE 5 - Legal and Accounting Expenses
Legal and accounting expenses will be borne by the Funds Investment Advisor.
NOTE 6 - Investment Advisory Agreement
The Investment Adviser furnishes the Fund with investment advice and, in
general, supervises the management and investment program of the fund. Under
the Investment Advisory Agreement, the Fund has agreed to pay the Investment
Adviser an annual fee, payable monthly, of 1.00% of the Fund's average daily
net assets. For the six month period ended June 30, 1999 this fee was $2,377.
<PAGE>
NOTE 7 - Fees
The expenses and fees that a shareholder of the MH Elite Portfolio of Funds,
Inc. will incur are: management fees of 1.00% and other expenses of .25% for
total annual fees of 1.25%. For the six month period ended June 30, 1999 these
fees were $2,971.
NOTE 8 - Purchase and Sale of Securities
The cost of securities purchased and the proceeds from sale of securities for
the six month period ended June 30, 1999 aggregated $295,000 and $146,770
respectively. For federal income tax purposes, the tax basis of investments
is the same as for financial reporting purposes.
NOTE 9 - Capital Stock
As of June 30, 1999, 134,141.060 shares of $ .01 par value stock were authorized
and issued, and paid in capital amounted to $618,659. This increase from
December 31, 1998 resulted from the sale of shares during 1999.
NOTE 10 - Significant Accounting Policies
These financial statements are prepared in accordance with generally accepted
accounting principles, which require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of increase and decrease in net assets
from operations during the fiscal period. Actual results could differ from
those estimates.
The following represent significant accounting policies of the Fund:
a) Underlying Fund Valuation
Underlying funds are valued at the last reported net asset value as quoted by
the respective fund. United States Government obligations and other debt
instruments having sixty days or less remaining until maturity are valued at
amortized cost.
b) Investment Income
Dividend income is recorded on the ex-dividend date. Interest income is
recorded on an accrual basis.
c) Distributions to Shareholders
Dividends from net investment income, if any, are declared and paid annually.
Capital gains, if any, are distributed to shareholders at least annually. No
distributions were made during 1998 or for the six months ended June 30, 1999.
<PAGE>
Distributions are based on amounts calculated in accordance with applicable
federal income tax regulations, which may differ from generally accepted
accounting principles. These differences are due primarily to differing
treatments of income and gain on various investment securities held by the
Fund, timing differences and differing characteristics of distributions made
by the Fund.
d) Federal Taxes
The Fund intends to qualify and continue to qualify each year as a regulated
investment company and distribute all of its taxable income. In addition, by
distributing in each calendar year substantially all of its net investment
income, capital gain and certain other amounts, if any, the Fund will not be
subject to a federal excise tax. Therefore, no federal income or excise tax
provision is required.
e) Realized Gain and Loss
Security transactions are recorded on a trade date basis. Realized gain and
loss on investments sold are recorded on the basis of identified cost.
<PAGE>
This report is submitted for the general information of the shareholders
of the Fund. It is not authorized for distribution to prospective investors
in the Fund unless preceded or accompanied by an effective prospectus, which
includes information regarding the Fund's objectives and policies, experience
of its management, marketability of shares, and other information.
MH Elite Portfolio of Funds, Inc.
220 Russell Avenue
Rahway, New Jersey 07065
Investor Adviser
MH Investment Management, Inc.
220 Russell Avenue
Rahway, New Jersey 07065
MH Elite Portfolio of Funds,Inc.
Semi-Annual Report
June 30, 1999
