MH Elite Portfolio of Funds, Inc.
220 Russell Avenue
Rahway, New Jersey 07065
1-800-318-7969
www.mhelite.com
Dear Shareholder:
A strong fourth quarter, fueled by our investment in technology driven growth
funds, helped make 1999 a very successful year for MH Elite Portfolio of Funds.
The Fund ended the year on December 31, 1999 with a net asset value of $ 6.04.
A distribution of $ .10 was paid to shareholders of record on December 31, 1999.
The Fund achieveed a total return for 1999 of 32.9%, outpacing the Russell 2000
index's 21.3% total return.
For the first time in a number of years, small cap stocks out performed larger
capitalization issues. The benchmark for large cap stocks, the S&P 500 index,
returned 19.5% for 1999.
During the last quarter the Fund added Bogle Small Cap Growth, Dreyus Emerging
Leaders, Fremont U.S. Micro-Cap, ICM/Isabelle Small Cap Investment, and
RS Diversified Growth Funds to the portfolio. During this period the Fund
sold shares of Babson Enterprisse II, Brazos Small Cap Growth, Fasciano, and
Forward Small Cap Stock Fund.
We are excited to now offer our shareholders access via the Internet.
Shareholders can visit the Fund's web site, www.mhelite.com, for daily
pricing and monthly updated performance figures. We welcome your comments
and suggestions on our new web site.
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 December 31, 1999
Mutual Funds (96.9%) Quantity Market Value
Artisan Small Cap Value Inv 4,090 $ 41,555
Baron Asset 671 39,443
Berger Small Cap Value Inv 1,520 32,895
Bjurman Micro-Cap Growth 1,967 59,651
Bogle Small Cap Growth Inv 2,392 37,345
Dreyfus Emerging Leaders 1,324 48,644
Eclipse Small Cap Value 2,667 31,358
FAM Value 947 29,695
Fremont U.S. Micro-Cap 1,325 52,123
Henlopen 2,174 56,710
ICM/Isabelle Small Cap Invmt 4,542 46,915
Kobrick Emerging Growth 2,578 56,629
Legg Mason Special Investment Trust Nav 1,392 59,375
Meridian Value 2,074 47,063
Neuberger Berman Millenium 2,285 75,122
RS Investment Diversified Growth 1,497 49,401
RS Investment Emerging Growth 1,617 98.085
Transamerica Premier Small Company 2,176 84,751
Wasatch Micro Cap 11,566 55,403
------
Total Mutual Funds (Cost $775,187) $ 1,002,152
Short-Term Securities (Cost: $31,9958) (3.1%) 31,995
----------
Total Investments in Securities (Cost: $807,182) $ 1,034,147
Other Assets Less Liabilities (500)
----------
Net Assets $ 1,033,647
===========
The accompanying notes to financial statements are an integral part of the
statements.
<PAGE>
MH Elite Portfolio of Funds, Inc.
Statements of Assets and Liabilities
As of December 31, 1999
Assets
Investments in Securities at value (Cost: $807,182) $ 1,034.147
Total Assets $ 1,034,147
===========
Liabilities and Net Assets
Liabilities
Due to Investment Advisor $ 250
Accrued Expenses 250
---------
Total Liabilities $ 500
Net Assets
Capital Stock Outstanding at par $.01 $ 1,712
(shares issued and outstanding 171,203)
Additional paid-in capital 805,697
Accumulated undistributed net investment income (loss) (727)
Net unrealized appreciation on investments 226,965
-----------
Net Assets $ 1,033,647
Total Liabilities and Net Assets $ 1,034,147
===========
Net assets value per share $ 6.04
===========
The accompanying notes to financial statements are an integral part of the
statements.
<PAGE>
MH Elite Portfolio of Funds, Inc.
Statements of Operations
For The Year Ended December 31, 1999
Investment Income
Dividends $ 38,891
Interest 947
----------
Total Investment Income 39,838
Expenses
Investment advisory fees 6,165
Accounting service fees 214
filing fees 695
Supplies 701
Phone 181
----------
Total expenses 7,956
----------
Net Investment Income 31,882
Net Realized and Unrealized Gain (loss) on Investments
Net realized gain (loss) from investments $ (14,087)
Net change in unrealized appreciation
on investments 225,184
-----------
Net realized and unrealized gain (loss)
in investments $ 211,097
Net Increase (Decrease) in net assets resulting
from operations $ 242,979
==========
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 Year Ended December 31, 1999 and 1998
Increase (Decrease) in Net Assets from Operations 1999 1998
---------- ----------
Net Investment income $ 31,882 $ 9,690
Net realized gain (loss) on investments (14,087) (11,322)
Net unrealized appreciation (depreciation)
on investment 225,184 1,733
--------- ----------
Net Income (Decrease) in Net Assets From
Operations 242,979 101
Dividends and Distributions to Shareholders
Dividends from Net Investment Income (16,842) 0
Capital Share Transactions
Proceeds from Sale of Shares
(76,979 shares in 1999 and 74,224
shares in 1998) $ 355,567 $ 335,000
Proceeds from Re-invested Dividends 16,842 0
----------- ---------
Net Increase (Decrease) n Net Assets
from Capital Share Transactions $ 372,409 $ 335,000
----------- ---------
Net Increase in Net Assets $ 598,546 $ 335,101
Net Assets at Beginning of Period $ 435,101 $ 100,000
----------- ---------
Net Assets at End of Period $ 1,033,647 $ 435,101
=========== =========
The accompanying notes to financial statements are an integral part of the
statements.
<PAGE>
MH Elite Portfolio of Funds, Inc.
Financial Highlights
Selected per share data and ratios for the period 1999 1998
Net Asset Value, Beginning of Period $ 4.62 $ 5.00
Investment Operations
Net Investment Income .19 .10
Net Realized and Unrealized Gain (Loss) on Inv. 1.33 (.48)
Total From Operations 1.52 (.38)
Distribution (.10) 0
Net Assets Value, End of Period $ 6.04 $ 4.62
Total Return 32.9% (7.6%)
Ratios/Supplement Data
Net Assets, end of period $ 1,033,647 $ 435,101
Ratio of net expenses to average net asset 1.0% 1.0%
Ratio of net investment income to average new assets 4.3% 3.6%
Portfolio turnover rate 41.0% 24.5%
The accompanying notes to financial statements are an integral part of the
statements.
<PAGE>
MH Elite Portfolio of Funds, Inc.
Notes to Financial Statements
December 31, 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 in 1998 and $355,567 in 1999 with 74,224 shares and
76,979 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 period ended December 31, 1999 this fee was $6,165.
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 December 31, 1999 these
fees were $7,706.
NOTE 8 - Purchase and Sale of Securities
The cost of securities purchased and the proceeds from sale of securities for
the year ended December 31, 1999 aggregated $609,626 and $264,459 respectively.
For federal income tax purposes, the tax basis of investments is the same as
for financial reporting purposes. At December 31, 1999, on a tax basis gross
unrealized appreciation on investments was $226,965.
<PAGE>
MH Elite Portfolio of Funds, Inc.
Notes to Financial Statements
December 31, 1999
NOTE 9 - Capital Stock
As of December 31, 1999, 171,203 shares of $ .01 par value stock were authorized
and issued, and paid in capital amounted to $805,697. 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.
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>
J. Michaels
Certfied Public Accountant
223 Main Street
Woodbridge, NJ 07095
(732) 634-0148
Fax No. (732) 885-4961
MH ELite Portfolio of Funds, Inc.
Independent Auditor's Report
To The Shareholders and Board of Directors
MH Elite Portfolio of Funds, Inc.
We have audited the accompanying statements of net assets of MH Elite Portfolio
of Funds, Inc. as of Dcember 31, 1999 the related statement of operations for
the year ended, the statement of changes in net assets for the period then
ended, and the financial highlights for the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally acccepted 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
December 31, 1999, by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial state-
ment presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of MH Elite
Portfolio of Funds, Inc. as of December 31, 1999, the results of its operations,
the changes in its net assets and its financial highlights for the respective
stated periods, in conformity with generally accepted accounting principles.
J. Michaels, CPA
Woodbridge, New Jersey
January 31, 2000
<PAGE>
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.
Annual Report
to
Shareholders
December 31, 1999
