<PAGE>
Millennium RHIM Funds, Inc.
Growth Fund
June 30, 1998
Dear Fellow Shareholders:
What a year it has been! The domestic economy continued its amazing growth
pattern despite the significant external shocks, such as the Asian crisis and
the White House concerns that came into play time and time again. As previously
predicted in our December 31,1997 report, all these issues combined forces to
introduce a measure of volatility in the marketplace never previously seen. As
we entered the 4th quarter of 1997 and through the 1st and 2nd quarter of 1998,
the financial markets continued to struggle over the effects of the Asian crisis
and the various currency devaluations on the domestic corporate earnings growth.
Our positions in application software, microcomputers, medical information
technology, and the medical instrument sector significantly outpaced the market
averages. The defensive posture of the portfolio and the 30% cash position we
held at the end of December gave us the flexibility to take advantage of market
inefficiencies during the first half of 1998, and helped us to obtain a 31.77%
total return for the 6-month period ending June 30, 1998. The total return since
the inception of the Fund was 17.80%.
We are very excited about the remainder of 1998. The inherent price volatility
of the markets, which is much intensified by the above-referenced external
forces, should uncover great investment opportunities. We will work diligently
to identify these opportunities and to invest with prudence and vigilance.
We understand that performance is critical to our success and yours, and hope to
continue the trend we began at the beginning of the year with performance that
significantly outpaced the S&P 500. The support and confidence you have placed
in us is greatly appreciated, and we hope you will keep The Millennium Fund as a
core holding in your portfolios.
Sincerely,
/s/
Robert A. Dowlett
President
<PAGE>
Millennium Growth Fund
Beginning Investment= $10,000
Beginning Price= $10.00
Beginning Shares= 1000.00
S & P 500 Index
Beginning Investment= $10,000
Beginning Price= $936.59
Beginning Shares= 10.677
Month Millenium Growth Fund S & P 500 Index
Jul-97 $ 10,240 $ 10,188
Aug-97 9,800 9,603
Sep-97 10,040 10,114
Oct-97 9,360 9,765
Nov-97 9,410 10,200
Dec-97 8,940 10,361
Jan-98 9,300 10,466
Feb-98 10,590 11,203
Mar-98 10,730 11,763
Apr-98 11,310 11,870
May-98 10,770 11,646
Jun-98 11,780 12,105
Past performance is not predictive of
future performance.
Total return since inception (July 16,
1997) was 17.8%.
<PAGE>
Millennium RHIM Funds, Inc.
Growth Fund
SCHEDULE OF INVESTMENTS
June 30, 1998
<TABLE>
<CAPTION>
Shares Market Value
COMMON STOCKS - 85.62%
Applications Software - 5.24%
<S> <C> <C>
11,000 + People Software Inc...................... $516,656
--------
Circuts - 1.43%
6,000 + Level One Communications Inc............. 141,187
-------
Computers-Micro - 7.52%
8,000 + Dell Computer Corp....................... 742,250
-------
Computer Software - 23.33%
6,000 + BMC Software Inc......................... 311,813
10,000 + Microsoft Corp........................... 1,084,063
4,000 SAP AG-Sponsored ADR..................... 906,000
-------
2,301,876
---------
Electronic Components-Semi Conductors - 7.96%
9,000 + Applied Material Inc..................... 265,781
8,000 + Novellus Systems Inc..................... 285,750
5,000 + PMC Sierra Inc........................... 234,063
-------
785,594
-------
Medical-Drugs - 1.65%
1,500 Pfizer Inc............................... 163,031
-------
Medical Information Systems - 4.29%
12,000 HBO & Co................................. 423,375
-------
Medical Instruments - 4.35%
3,000 + Boston Scientific Corp................... 214,875
3,000 Gudiant Corp............................. 213,938
-------
428,813
-------
Networking Products - 12.23%
10,000 + Bay Networks Inc......................... 322,500
7,000 + Cisco Systems Inc........................ 644,656
10,000 + Newbridge Networks Corp.................. 239,375
-------
1,206,531
---------
Printers & Related Products - 2.13%
10,000 + Electronics For Imaging Inc.............. 210,625
-------
Savings & Loans/Thrifts - 2.13%
6,000 + Golden State Bancorp Inc................. 178,500
6,000 + Golden State Bancorp Inc Litigation Warrants. 32,062
------
210,562
-------
<PAGE>
Telecommunications Equipment - 13.36%
5,000 + Advanced Fibre Communication............. 200,469
10,000 Lucent Technologines Inc................. 831,875
4,000 + Tellabs Inc.............................. 286,375
-------
1,318,719
TOTAL COMMON STOCKS
(Cost $6,368,028) 8,449,219
---------
Total Investments at Market
(Cost $6,368,028) 85.62% 8,449,219
----- ---------
Other Assets less Liabilities 14.38% 1,419,511
----- ---------
Total Net Assets 100.00% $9,868,730
====== ==========
<FN>
(1) Federal Tax Information: At June 30, 1998 the net unrealized
appreciation based on cost for Federal Income tax purposes of $6,368,028 was as
follows:
Aggregate gross unrealized apprecation for all investments for
which there was an excess of value over cost................. $2,406,672
Aggregate gross unrealized deprecation for all investments for
which there was an excess of cost over value................. (325,481)
--------
Net unrealized appreciation............................. $2,081,191
----------
+ Denotes non-income producing security
</FN>
</TABLE>
The accompanying notes are an integral part of
these financial statements.
<PAGE>
Millennium RHIM Funds, Inc.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1998
<TABLE>
<CAPTION>
GROWTH &
GROWTH INCOME
ASSETS:
Investments in securities, at value
(cost $6,368,028 and $0 respectively)
<S> <C> <C>
(Note2)................................................. $ 8,449,219 $ 0
Cash......................................................... 1,338,534 16,543
Receivable for securities sold............................... 690,751 0
Receivable for fund shares sold.............................. 0 1,155,125
Other assets................................................. 32,515 42,687
------ ------
Total Assets................................................. 10,511,019 1,214,355
---------- ---------
LIABILITIES:
Payables:
Fund shares redeemed................................... $ 631,972 $ 0
Advisory fees (Note 4)................................. 2,506 0
Other liabilities...................................... 7,811 42,690
----- ------
Total Liabilities...................................... 642,289 42,690
------- ------
Net Assets............................................. $ 9,868,730 $ 1,171,665
=========== ===========
NET ASSETS CONSIST OF:
Paid in capital........................................ $ 8,516,127 $ 1,171,668
Accumulated net investment loss........................ (59,794) (3)
Accumulated net realized loss from
investment transactions................................ (668,794) 0
Net unrealized appreciation on
investments............................................ 2,081,191 0
--------- -
Net Assets............................................. $ 9,868,730 $ 1,171,665
=========== ===========
Net asset value and redemption
price per share
($9,868,730/837,625 and $1,171,665/117,167 shares
of capital stock outstanding, respectively)
(Note 5).............................................. $ 11.78 $ 10.00
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
Millennium RHIM Funds, Inc.
STATEMENT OF OPERATIONS
For the period ended June 30, 1998
<TABLE>
<CAPTION>
GROWTH &
GROWTH* INCOME**
INVESTMENT INCOME:
<S> <C> <C>
Dividend............................................................ $ 7,228 $ 0
Interest............................................................ 32,075 0
------ -
39,303 0
------ -
Expenses:
Advisory fee........................................................ 64,806 2
Administration fee.................................................. 28,684 1
Fund accounting fee................................................. 14,831 0
Transfer agent fee.................................................. 13,651 0
Audit fee........................................................... 10,519 0
Shareholder reporting............................................... 7,650 0
Amortization of organizational cost................................. 6,795 131
Custody fee......................................................... 6,502 0
Trustee fee......................................................... 4,781 0
Legal fee........................................................... 3,825 0
Insurance........................................................... 3,786 0
Registration........................................................ 429 0
Other............................................................... 3,347 0
----- -
Total expenses................................................. 169,606 134
------- ---
Reimbursed expenses (Note 4)................................... (70,509) (131)
------- ----
Net investment loss............................................ (59,794) (3)
------- --
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
(Note 2)
Net realized gain(loss) from investment
transactions................................................... (668,794) 0
Net change in unrealized appreciation of
investments.................................................... 2,081,191 0
--------- -
Net realized and unrealized gain
on investments................................................. 1,412,397 0
--------- -
Net increase(decrease) in net assets resulting from
operations..................................................... $ 1,352,603 $ (3)
=========== ====
<FN>
*Commencement of operations was July 16, 1997.
**Commencement of operations was June 26, 1998.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
Millennium RHIM Funds, Inc.
Growth Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the period
ended
June 30, 1998*
---------------
<S> <C>
Net investment loss............................................................. $ (59,794)
Net realized loss from investment transactions.................................. (668,794)
Net change in unrealized appreciation of investments............................ 2,081,191
---------
Net increase in net assets resulting from operations............................ 1,352,603
Distributions from net investment income........................................ 0
Distributions from net gain on investments...................................... 0
Net capital share transactions (Note 5)......................................... 8,516,127
---------
Net increase in net assets...................................................... 9,868,730
NET ASSETS:
Beginning of period............................................................. 0
-
End of period .................................................................. $ 9,868,730
===========
<FN>
*Commencement of operations was July 16, 1997.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
Millennium RHIM Funds, Inc.
Growth & Income Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the period
ended
June 30, 1998**
---------------
<S> <C>
Net investment loss............................................................. $ (3)
Net realized gain from investment transactions.................................. 0
Net change in unrealized appreciation of investments............................ 0
-
Net decrease in net assets resulting from operations............................ (3)
Distributions from net investment income........................................ 0
Distributions from net realized gains........................................... 0
Net capital share transactions (Note 5)......................................... 1,171,668
---------
Net increase in net assets...................................................... 1,171,665
NET ASSETS:
Beginning of period............................................................. 0
-
End of period................................................................... $ 1,171,665
-----------
<FN>
**Commencement of operations was June 26, 1998.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
Millennium RHIM Funds, Inc.
GROWTH FUND
FINANCIAL HIGHLIGHTS
(For a fund share outstanding throughout the period)
<TABLE>
<CAPTION>
For the period
ended
June 30, 1998**
---------------
<S> <C>
Net asset value, beginning of period..................... $10.00
Income from investment operations:
Net investment income/(loss)....................................... (0.07)
Net realized and unrealized gain on investments... 1.85
----
Total from investment operations................................... 1.78
----
Less distributions:
Dividends from net investment income............................... 0.00
Distribution from realized gains from security
transactions................................................... 0.00
----
Total distributions................................................ 0.00
----
Net asset value, end of period $11.78
======
Total return (a)................................................... 17.80%
Ratios/supplemental data
Net assets, end of period (in 000's)............................... $9,869
Ratio of expenses to average
net assets ***................................................... 1.45%
Ratio of net investment income to
average net assets............................................... (0.87%)
Portfolio turnover rate............................................ 110.76%
<FN>
* Annualized
**Commencement of operations was July 16, 1997.
*** Net of expense reimbursement of 1.03% for the period ending June 30, 1998.
(a) Not annualized.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Millennium RHIM Funds, Inc.
GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
(For a fund share outstanding throughout the period)
<TABLE>
<CAPTION>
For the period
ended
June 30, 1998**
<S> <C>
Net asset value, beginning of period................................ $10.00
Income from investment operations:
Net investment income/(loss)........................................ 0.00
----
Net realized and unrealized gain on investments..................... 0.00
----
Total from investment operations.................................... 0.00
Less distributions:
Dividends from net investment income................................ 0.00
Distribution from realized gains from security
transactions...................................................... 0.00
Total distributions................................................. 0.00
----
Net asset value, end of period ..................................... $10.00
======
Total return........................................................ 0.00%
Ratios/supplemental data
Net assets, end of period (in 000's)................................ $1,172
Ratio of expenses to average
net assets ***.................................................... 1.45%
Ratio of net investment income to
average net assets................................................ (1.45%)
Portfolio turnover rate............................................. 0.00%
<FN>
* Annualized
**Commencement of operations was June 26, 1998.
*** Net of expense reimbursement of 3.86% for the
period ending June 30, 1998.
</FN>
</TABLE>
The accompanying notes are an integral part of
these financial statements.
<PAGE>
Millennium RHIM Funds, Inc.
Notes to Financial Statements
June 30, 1998
1. ORGANIZATION:
The Millennium RHIM Growth Fund (the "Growth Fund") and the Millennium RHIM
Growth & Income Fund (the "Growth & Income Fund') are registered as
non-diversified open-end management investment companies under the Investment
Company Act of 1940, as amended. The Growth Fund's primary investment objective
is growth of capital. The Growth & Income Fund's primary investment objective is
growth of capital and dividend income. The Growth Fund commenced operations on
July 16, 1997, and the Growth & Income Fund commenced operations on June 26,
1998.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies consistently
followed by the funds in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A. Security Valuation - Securities traded on national securities exchanges are
valued at the last sales price. Over-the-counter securities and listed
securities, for which no sales price is available, are valued at the last
bid price. Short-term securities which mature in 60 days or less are valued
at cost, which, when combined with accrued interest receivable,
approximates value. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith by or under
the direction of the Board of Trustees.
B. Security Transactions - Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined on the specific
identification method. Dividend income is recorded on the ex-dividend date.
Interest income is accrued daily.
C. Federal Income Tax Status - No provision for federal income taxes is
required since the funds intend to qualify as a regulated investment
companies and distribute all of their taxable income to their shareholders.
D. Dividends and Distributions to Shareholders - The funds record dividends
and distributions to shareholders on the ex-dividend date.
E. Deferred Organization Costs-The Growth Fund has incurred expenses of
$35,000 in connection with its organization. These costs have been deferred
and are being amortized on a straight-line basis through July 15, 2002. The
Growth and Income Fund has incurred expenses of $42,687 in connection with
its organization. Those costs have been deferred and are being amortized on
a straight-line basis through June 25, 2003.
F. 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 reported period. Actual results
could differ from those estimates.
3. INVESTMENT TRANSACTIONS:
Investment transactions, excluding short-term investments, for the period ended
June 30, 1998 were as follows:
Growth Fund:
Purchases.................$13,632,118
Sales.......................6,595,297
<PAGE>
Growth & Income Fund:
Purchases..........................$0
Sales..............................$0
4. INVESTMENT MANAGEMENT AGREEMENT:
The funds have an investment advisory agreement with Millennium Capital
Advisors, Inc. (the "Advisor"). Under this agreement, the Advisor provides the
funds with investment advisory and management services for which the funds pay a
fee at an annual rate of .95% of the average daily net assets of the funds.
The funds are responsible for their own operating expenses. The Advisor has
agreed to reimburse the funds to the extent necessary to limit aggregate annual
operating expenses to 1.45% of average net assets annually. Any such reductions
made by the Advisor in its fees or payments may be subject to reimbursement by
the funds, if the funds are able to effect such reimbursement and remain in
compliance with any expense limitations in effect at that time. For the year
ended June 30, 1998 the Advisor has reimbursed the Growth Fund in the amount of
$70,509, and the Growth and Income Fund $131.
Ridgeway Helms Securities Corp. (the "Distributor") acts as the principal
underwriter in a continuous public offering of both funds shares. The
Distributor is an affiliate of the Advisor.
5. FUND SHARE TRANSACTIONS:
At June 30, 1998, there were an unlimited number of shares authorized with no
par value.
Growth Fund:
For the
period July 16, 1997* to
June 30, 1998
Shares Value
Shares sold.............................. 928,042 $9,530,260
Dividend reinvestment.................... 0 0
Shares repurchased....................... (90,417) (1,014,133)
--------- -----------
837,625 $8,516,127
Growth & Income Fund:
For the
period June 26, 1998* to
June 30, 1998
Shares Value
Shares sold............................. 117,167 $1,171,668
Dividend reinvestment................... 0 0
Shares repurchased...................... 0 0
--------- -----------
117,167 $1,171,668
* Commencement of operations.
<PAGE>
Independant Auditors Report
To the Board of Trustees
The Millenium RHIM Funds, Inc.
Redwood Shores, CA
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of the Millennium Growth Fund and the Millennium
Growth and Income Fund, series of The Millennium RHIM Funds, Inc. as of June 30,
1998 and the related statement of operations, the statements of changes in net
assets, and the financial highlights for the periods indicated. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
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, 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 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
Millennium Growth Fund and the Millennium Growth and Income Fund as of June 30,
1998, the results of their operations, the changes in their net assets and the
financial highlights for the periods indicated, in conformity with generally
accepted accounting principles.
New York, New York
August 14, 1998
<PAGE>
Advisor
Millennium Capital Advisors, Inc.
303 Twin Dolphin Drive, Suite 530
Redwood Shores, CA 94065
Distributor
Ridgeway Helms Securities Corporation
303 Twin Dolphin Drive, Suite 530
Redwood Shores, CA 94065
Custodian
Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
Transfer Agent
American Data Services, Inc.
150 Motor Parkway, Suite 109
Hauppauge, NY 11788
(800) 535-9169
Legal Counsel
Spitzer & Feldman, P.C.
405 Park Avenue, 6th floor
New York, New York 10022
This report is intended for shareholders of the Fund and may not be used as
sales literature unless preceded or accompanied by a current prospectus.
Past performance results shown in this report should not be considered a
representation of future performance. Share price and returns will fluctuate so
that shares, when redeemed, may be worth more or less than their original cost.
Statements and other information herein are dated and are subject to change.
