MH Elite Portfolio of Funds, Inc.
220 Russell Avenue
Rahway, New Jersey 07065
1-800-318-7969
Dear Shareholder:
The Fund experienced its best one month performance this past February when it
advanced by 19.2%. Unfortunately, this was followed by a sharp market sell off
that lasted well into May. With no interest rate increase from the Federal
Reserve in June, the markets once again bounced back.
In this very volatile and moody market environment, we are pleased to report
that the Fund's NAV of $6.55 on June 30, 2000 represented a year to date return
of 8.44% and reflects upon our continued success of outperforming the Russell
2000 index of small cap stocks. During this same period the Russell 2000 index
returned 3.04%. For the one year period of 6-30-99 to 6-30-00 the Fund returned
34.34% vs. the Russell 2000 index return of 14.32%. Furthermore the shift to
small caps continued and widened during the first half of this year and over the
past 12 months. The S & P 500's one year trailing return was 7.3% and is -0.4%
year to date.
Our commitment to maintaining a blend of value and growth funds has been
instrumental in riding out the stock market's volatility. We firmly believe
investors will be rewarded for their patience during these periods of market
frenzy as evidenced by the enormous intra day price swings we have seen
recently. As I write this, the technology heavy NASDAQ composite index has
just completed a 10% decline for the week at a time when financial publications
are writing about a summer rally and how prominent analysts say it's time to
buy tech stocks again. Buy/Sell and the beat goes on for all the "experts" out
there.
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, 2000 (Unaudited)
Mutual Funds (94%) Quantity Market Value
Artisan Small-Cap. Value 4,090 $ 43,478
Bjurman Micro Cap. Growth 2,236 98,569
Bogle Small Cap Growth Inv 3,044 58,167
Berger Small Cap. Value 2,439 54,825
Dreyfus Emerging Leaders 1,594 63,095
FMI Focus Fund * 1,697 58,520
Fremont U.S. Micro-cap 1,819 88,594
Henlopen 2,581 73,264
ICM/Isabelle Small Cap Invmt 6,303 73,683
Loomis Sayles - Small Co. Growth Inst * 1,868 49,701
Meridian Value 2,473 64,007
Neuberger Berman Millenium 2,655 92,699
Reserve Private Equity Small Cap Growth * 1,109 58,592
RS Investment Diversified Growth 2,126 70,566
RS Investment Emerging Growth 1,817 117,170
Royce Opportunity * 6,394 54,414
State Street Research Aurora * 2,183 57,511
Tocqueville Small Cap Value * 2,798 54,589
Wasatch Micro. Cap. 11,566 69,976
Total Mutual Funds (Cost $981,417) $ 1,301,420
Short-Term Securities (Cost: $83,062) (6%) 83,062
---------
Total Investments in Securities (Cost: $1,064,479) $ 1,384,482
Other Assets Less Liabilities (500)
---------
Net Assets $ 1,383,982
=========
* These funds represent new additions to the portfolio during the period
1/1/2000 - 6/30/2000
The accompanying notes to financial statements are an integral part of the
statements.
<PAGE>
MH Elite Portfolio of Funds, Inc.
Statement of Assets and Liabilities
As of June 30, 2000 (Unaudited)
Assets
Investments in Securities at value (Cost : $1,064,479) $ 1,384,482
Total Assets $ 1,384,482
===========
Liabilities and Net Assets
Liabilities
Due to Investment Advisor $ 250
Accrued Expenses 250
---------
Total Liabilities $ 500
Net Assets
Capital Stock Outstanding at par $ .01 $ 2,113
(211,305 shares issued and outstanding)
Additional paid-in capital 1,061,866
Net unrealized appreciation on investments 320,003
-----------
Net Assets $ 1,383,982
Total Liabilities and Net Assets $ 1,384,482
===========
Net assets value per share $ 6.55
=========
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, 2000 (Unaudited)
Investment Income
Dividends $ 0
Interest 876
---------
Total Investment Income $ 876
Expenses
Investment advisory fees $ 6,144
Bank Fees 17
Trustee Fees 100
State Fees 358
Phone 108
Misc 952
----------
Total expenses 7,679
----------
Net Investment Income $ (6,803)
Net Realized and Unrealized Gain (loss) on Investments
Net realized gain (loss) from investments $ 7,220
Net change in unrealized appreciation
on investments 93,348
--------
Net realized and unrealized gain (loss)
in investments $ 100,568
Net Increase (Decrease) in net assets resulting
from operations $ 93,765
==========
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, 2000 (Unaudited) and December 31, 1999
June 30 December 31
2000 1999
------- -----------
Increase (Decrease) in Net Assets from Operations
Net Investment income $ (6,803) $ 31,882
Net realized gain (loss) on investments 7,220 (14,087)
Net unrealized appreciation on investment 93,348 225,184
------ -------
Net Income in Net Assets From Operations 93,765 242,979
Dividends and Distributions to Shareholders
Dividends from Net Investment Income 0 (16,842)
Capital Share Transactions
Proceeds from Sale of Shares -
40,102 shares in 2000 and 76,979 $ 256,570 $ 355,567
shares in 1999
Proceeds from Re-invested Dividends 0 16,842
--------- ---------
Net Increase (Decrease) in Net Assets $ 256,570 $ 372,409
from Capital Share Transactions --------- ---------
Net Increase in Net Assets $ 350,835 $ 598,546
Net Assets at Beginning of Period $ 1,033,647 $ 435,101
--------- ---------
Net Assets at End of Period $ 1,383,982 $ 1,033,647
=========== ===========
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 Year End
Selected per share data and Six Months December December
ratios for the period Ended 31, 1999 31, 1998*
June 30,
2000
-------------------------------------
Net Asset Value, Beginning of Period $ 6.04 $ 4.62 $ 5.00
Investment Operations
Net Investment Income (.03) .19 .10
Net Realized and Unrealized
Gain (Loss) on Investments .54 1.33 (.48)
Total From Operations .51 1.52 (.38)
Distributions 0 (.10) 0
Net Asset Value, End of Period $ 6.55 $ 6.04 $ 4.62
Total Return 8.4% 32.9% (7.6%)
Ratios/Supplement Data
Net Assets, end of period $ 1,383,982 $ 1,033,647 $ 435,101
Ratio of net expenses to average .6% 1.0% 1.0%
net assets
Ratio of net investment income (loss) (.6%) 4.3% 3.6%
to average net assets
Portfolio turnover rate 30.6% 41.0% 24.5%
* commenced operations on 3-18-98
The accompanying notes to financial statements are an integral part of the
statements.
<PAGE>
MH Elite Portfolio of Funds, Inc.
Notes to the Financial Statements
June 30, 2000
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 in 1998, $355,567 in 1999, $256,570 in 2000 with
74,224, 76,979, and 40,102 shares issued respectively.
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, 2000 this fee was $6,144.
<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 period ended June 30, 2000 these fees
were $7,679.
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, 2000 aggregated $500,000 and $370,366
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, 2000, 211,305 shares of $ .01 par value stock were authorized
and issued, and paid in capital amounted to $1,063,979. This includes a
dividend reinvestment of $16,842 in 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.
<PAGE>
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.
Distributions of $16,842 were reinvested in the Fund for 1999. 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
www.mhelite.com
Investor Adviser
MH Investment Management, Inc.
220 Russell Avenue
Rahway, New Jersey 07065
MH Elite Portfolio of Funds,Inc.
Semi-Annual Report to Shareholders
June 30, 2000
