Millennium
RHIM Funds, Inc.
ANNUAL REPORT
JUNE 30, 1999
<PAGE>
MILLENNIUM RHIM FUNDS, INC.
---------------------------
JUNE 30, 1999
Dear Fellow Shareholder:
Indeed, it has always been said that the Chinese curse of "May you live in
interesting times" seems to be appropriate for current market conditions. The
second quarter was marked by persistent volatility. According to the Hewitt
Investment Group, 41% of the quarter's trading days resulted in change of at
least 1% in the S&P 500 Index. The majority of volatility was based on wild
emotional swings related to the Consumer Price Index ("CPI") and speculations as
to the direction of the Federal Open Market Committee ("FOMC") and their
adoption of a tightening bias.
Although large capitalization stocks, as measured by the S&P 500 Index, fell by
2.4% in May, many of the technology and Internet-related issues fell by as much
as 30-40% or more in some cases.
During the month of June, overall market sentiment improved as subsequent CPI
data indicated an almost nonexistent core inflation and the possibility of
neutral to positive bias on the interest rates by the FOMC. Large capitalization
growth companies began to reassert themselves and regained some of the ground
lost earlier in the quarter.
INVESTMENT OUTLOOK
Although we do expect market volatility to persist and short-term setbacks to
occur, we remain very positive for the remainder of 1999. The current
macro-economic trends, such as productivity enhancements, Federal budget
surpluses, and possibility of a government debt paydown, Asian economic recovery
and the revolution of Internet all bodes well for favorable equity returns.
We will continually reassess our investment themes and work diligently to
identify opportunities and invest with prudence and vigilance.
We hope you will keep the Millennium Funds as part of your long-term investment
strategy.
Sincerely,
/S/ ROBERT A. DOWLETT
- ---------------------
Robert A. Dowlett
Portfolio Manager
<PAGE>
COMPARISON OF CHANGES IN VALUE OF $10,000 SINCE INCEPTION
MILLENNIUM GROWTH FUND S & P 500 INDEX
- ---------------------- ---------------
BEGINNING INVESTMENT = $10,000.00 BEGINNING INVESTMENT = $10,000.00
BEGINNING PRICE = $10.00 BEGINNING PRICE = 936.59
BEGINNING SHARES = 1,000.000 BEGINNING SHARES = 10.6770
12/23/98 EX DATE
2.72 @ 14.20 1,191.549
MONTH ENDING $ MONTH ENDING $
AMOUNT AMOUNT
- ----- --------- ----- --------
Jun-99 $10,000.00 Jun-99 $10,000.00
Jul-97 10.24 $10,240.00 Jul-97 954.29 $10,188.98
Aug-97 9.80 $ 9,800.00 Aug-97 899.47 $ 9,603.67
Sep-97 10.04 $10,040.00 Sep-97 947.28 $10,114.14
Oct-97 9.36 $ 9,360.00 Oct-97 914.62 $ 9,765.43
Nov-97 9.41 $ 9,410.00 Nov-97 955.40 $10,200.83
Dec-97 8.94 $ 8,940.00 Dec-97 970.43 $10,361.31
Jan-98 9.30 $ 9,300.00 Jan-98 980.28 $10,466.48
Feb-98 10.59 $10,590.00 Feb-98 1,049.34 $11,203.84
Mar-98 10.73 $10,730.00 Mar-98 1,101.75 $11,763.42
Apr-98 11.31 $11,310.00 Apr-98 1,111.75 $11,670.19
May-98 10.77 $10,770.00 May-98 1,090.82 $11,646.72
Jun-98 11.78 $11,780.00 Jun-98 1,133.84 $12,106.04
Jul-98 11.99 $11,990.00 Jul-98 1,120.67 $11,965.43
Aug-98 9.30 $ 9,300.00 Aug-98 957.28 $10,220.91
Sep-98 10.59 $10,590.00 Sep-98 1,017.01 $10,858.65
Oct-98 11.77 $11,770.00 Oct-98 1,098.67 $11,730.53
Nov-98 12.34 $12,340.00 Nov-98 1,163.63 $12,424.11
Dec-98 13.77 $16,407.63 Dec-98 1,229.23 $13,124.53
Jan-99 15.76 $18,778.81 Jan-99 1,279.64 $13,662.76
Feb-99 14.18 $16,896.16 Feb-99 1,238.33 $13,221.69
Mar-99 16.16 $19,255.43 Mar-99 1,286.37 $13,734.61
Apr-99 17.16 $20,446.98 Apr-99 1,335.18 $14,255.76
May-99 14.80 $17,634.93 May-99 1,301.84 $13,899.79
Jun-99 16.41 $19,553.32 Jun-99 1,372.71 $14,656.79
MILLENNIUM GROWTH & INCOME FUND S & P 500 INDEX
- ------------------------------- ---------------
BEGINNING INVESTMENT = $10,000.00 BEGINNING INVESTMENT = $10,000.00
BEGINNING PRICE = $10.00 BEGINNING PRICE = 1,133.20
BEGINNING SHARES = 1,000.000 BEGINNING SHARES = 8.825
12/23/98 EX DATE
.23 @ 12.77 1,018.011
MONTH ENDING $ MONTH ENDING $
AMOUNT AMOUNT
- ----- --------- ----- --------
Jun-98 10.00 $10,000.00 Jun-98 1,133.84 $11,005.65
Jul-98 10.04 $10,040.00 Jul-98 1,120.67 $ 9,889.43
Aug-98 8.60 $ 8,600.00 Aug-98 957.28 $ 8,447.58
Sep-98 9.36 $ 9,360.00 Sep-98 1,017.01 $ 8,974.67
Oct-98 9.89 $ 9,890.00 Oct-98 1,098.67 $ 9,695.29
Nov-98 11.18 $11,180.00 Nov-98 1,163.63 $10,268.53
Dec-98 12.41 $12,633.52 Dec-98 1,229.23 $10,847.42
Jan-99 14.15 $14,404.86 Jan-99 1,279.64 $11,292.27
Feb-99 12.87 $13,101.80 Feb-99 1,238.33 $10,927.73
Mar-99 14.27 $14,527.02 Mar-99 1,286.37 $11,351.66
Apr-99 14.57 $14,832.42 Apr-99 1,335.18 $11,782.39
May-99 12.85 $13,081.44 May-99 1,301.84 $11,488.18
Jun-99 13.83 $14,079.09 Jun-99 1,372.71 $12,113.67
AVERAGE ANNUAL TOTAL RETURN
MILLENNIUM GROWTH MILLENNIUM GROWTH & INCOME
- --------------------------------------------------------------------------------
1 Year 65.99% 40.79%
Since Inception 40.89% 40.27%
Past performance is not predictive of future performance.
- --------------------------------------------------------------------------------
-2-
<PAGE>
MILLENNIUM RHIM FUNDS, INC.
---------------------------
GROWTH FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999
<TABLE>
<CAPTION>
SHARES MARKET VALUE
------ ------------
COMMON STOCKS - 95.97%
ELECTRONIC COMPONENTS-SEMI CONDUCTORS - 10.92%
<C> <S> <C>
2,000 +Conexant Systems Inc. ..................... $ 116,063
10,000 +Galileo Technology Ltd. ................... 453,750
6,000 +PMC Sierra ................................ 353,812
----------
923,625
----------
FINANCE - 7.63%
7,000 +E*Trade Group Inc. ........................ 279,344
6,000 +Knight/Trimark Group Inc - A .............. 365,813
----------
645,157
----------
INTERNET ACCESS - 3.03%
10,000 +High Speed Access Corp. ................... 256,250
----------
INTERNET CONTENT - 15.93%
6,043 +At Home Corp. Ser A ....................... 326,107
2,500 +Broadcast.Com Inc. ........................ 334,063
3,993 +YAHOO! Inc. ............................... 687,690
----------
1,347,860
----------
INTERNET SOFTWARE - 27.33%
10,000 +Abovenet Communication .................... 403,437
4,000 +America Online Inc. ....................... 442,000
10,000 +Cais Internet Inc. ........................ 184,062
8,500 +Concentric Network Corp. .................. 337,609
5,000 +Exodus Communications Inc. ................ 599,844
5,000 +Realnetworks Inc. ......................... 344,531
----------
2,311,483
----------
LASER SYSTEMS/COMPONENTS - 9.82%
5,000 +Uniphase Corp. ............................ 830,625
----------
MEDICAL - DRUGS - 2.59%
2,000 Pfizer Inc. ................................ 219,500
----------
NETWORKING PRODUCTS - 6.09%
8,000 +Cisco Systems Inc. ........................ 515,250
----------
RETAIL - INTERNET - 0.54
3,000 +Rowecom Inc. .............................. 45,375
----------
TELECOMMUNICATIONS SERVICES - 3.31%
5,000 +Viatel Inc. ............................... 280,000
----------
-3-
<PAGE>
MILLENNIUM RHIM FUNDS, INC.
---------------------------
GROWTH FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999
SHARES MARKET VALUE
------ ------------
TELECOMMUNICATIONS EQUIPMENT - 8.78%
3,000 Lucent Technologies ....................... $ 202,313
8,000 +Tellabs Inc. .............................. 540,750
----------
743,063
----------
TOTAL COMMON STOCKS
(Cost $6,970,363) ......................... 8,118,188
Total Investments at Market
(Cost $6,970,363) 95.97% 8,118,188
Other Assets less Liabilities 4.03% 340,569
-------------------------
Total Net Assets 100.00% $8,458,757
=========================
<FN>
(1) Federal Tax Information: At June 30, 1999 the net unrealized appreciation
based on cost for Federal Income tax purposes of $7,257,170 was as follows:
Aggregate gross unrealized apprecation for all investments
for which there was an excess of value over cost .. $ 997,184
Aggregate gross unrealized deprecation for all investments
for which there was an excess of cost over value .. (136,166)
---------
Net unrealized appreciation ............... $ 861,018
=========
+ Denotes non-income producing security
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
MILLENNIUM RHIM FUNDS, INC.
---------------------------
GROWTH & INCOME FUND
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
JUNE 30, 1999
SHARES MARKET VALUE
------ ------------
<C> <S> <C>
COMMON STOCKS - 89.18%
AEROSPACE/DEFENSE - 3.27%
4,000 United Technologies Corp. ................ $ 286,750
----------
BROADCAST SERVICING - 0.71%
3,500 +4 Kids Entertainment ...................... 62,125
----------
DIVERSIFIED MANUFACTURING - 6.46%
2,500 General Electric Co. ...................... 282,500
3,000 Tyco International Ltd. ................... 284,250
----------
566,750
----------
ELECTRONIC COMPONENTS-SEMI CONDUCTORS - 5.27%
5,000 +Galileo Technology Ltd. ................... 226,875
4,000 +PMC-Sierra, Inc. .......................... 235,875
----------
462,750
----------
FIBER OPTICS - 2.93%
8,500 +Ciena Corp. ............................... 257,656
----------
FINANCE - 7.89%
3,000 +E*Trade Group Inc. ........................ 119,719
4,000 +Knight/Trimark Inc.-A ..................... 243,875
3,000 Schwab (Charles) Corp. ................... 329,625
----------
693,219
----------
INTERNET ACCESS - 2.92%
10,000 +High Speed Access Corp. ................... 256,250
----------
INTERNET CONTENT - 2.46
4,000 +At Home Corp. ............................. 215,875
----------
INTERNET SOFTWARE - 7.58%
4,000 +America Online, Inc. ...................... 442,000
4,200 +Covad Communications Group ................ 223,781
----------
665,781
----------
MEDICAL INSTRUMENTS - 2.35%
4,700 +Boston Scientific Corp. ................... 206,506
----------
MEDICAL - BIOMEDICAL/GENE - 4.40%
6,000 +Biogen, Inc. .............................. 386,062
----------
MEDICAL - DRUGS - 6.39%
2,400 Merck & Co. Inc. .......................... 177,600
1,600 Pfizer Inc. ............................... 175,600
3,000 Warner-Lambert Co. ........................ 208,125
----------
561,325
----------
-5-
<PAGE>
MILLENNIUM RHIM FUNDS, INC.
---------------------------
GROWTH & INCOME FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999
SHARES MARKET VALUE
------ ------------
NETWORKING PRODUCTS - 4.25%
5,800 +Cisco Systems, Inc. ....................... $ 373,556
----------
PAPER & RELATED PRODUCTS - 3.24%
6,000 Georgia-Pac ............................... 284,250
----------
RETAIL DISCOUNT - 3.28%
3,600 +Costco Companies Inc. ..................... 288,112
----------
SATELLITE TELECOMMUNICATIONS - 1.21%
5,000 +ICG Communications Inc. ................... 106,406
----------
TELECOMMUNICATIONS EQUIPMENT - 14.51%
3,000 Lucent Technologies Inc. .................. 202,313
5,800 Nokia Spon ADR ............................ 531,063
8,000 +Tellabs Inc. .............................. 540,750
----------
1,274,126
----------
TELEPHONE LONG DISTANCE - 8.35%
3,500 AT&T Corporation .......................... 195,344
3,000 +MCI Worldcom Inc. ......................... 258,094
5,000 +Viatel Inc. ............................... 280,000
----------
733,438
----------
TELEPHONE-INTEGRATED - 1.71%
5,000 +Intermedia Communications ................. 149,844
----------
TOTAL COMMON STOCKS
(Cost $7,087,677) ................. 7,830,781
----------
Total Investments at Market
(Cost $7,087,677) 89.18% 7,830,781
Other Assets less Liabilities 10.82% 950,581
-----------------------------
Total Net Assets 100.00% $8,781,362
=============================
(1) Federal Tax Information: At June 30, 1999 the net unrealized appreciation
based on cost for Federal Income tax purposes of $6,745,968 was as follows:
Aggregate gross unrealized apprecation for all investments
for which there was an excess of value over cost ...... $1,351,031
Aggregate gross unrealized deprecation for all investments
for which there was an excess of cost over value ..... ($266,218)
----------
Net unrealized appreciation ............................. $1,084,813
==========
<FN>
+ Denotes non-income producing security
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
-6-
<PAGE>
MILLENNIUM RHIM FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
<TABLE>
<CAPTION>
GROWTH &
GROWTH INCOME
------ ------
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $6,970,363 and $7,087,677
respectively) (Note 2) ........................... $8,118,188 $7,830,781
Cash ..................................................... 1,312,015 1,166,451
Receivable for fund shares sold .......................... 676 0
Interest & dividends ..................................... 0 1,493
Due from investment adviser (Note 4) ..................... 3,885 0
Other assets ............................................. 36,321 49,212
---------- ----------
Total Assets ..................................... 9,471,085 9,047,937
---------- ----------
LIABILITIES:
Payables:
Fund shares redeemed ..................................... $ 106,665 $ 0
Securities purchased ..................................... 886,702 256,250
Advisory fees (Note 4) ................................... 0 1,417
Other liabilities ........................................ 18,961 8,908
---------- ----------
Total Liabilities ................................ 1,012,328 266,575
---------- ----------
Net Assets ....................................... $8,458,757 $8,781,362
========== ==========
NET ASSETS CONSIST OF:
Additional paid in capital ....................... $4,504,961 $5,667,726
Accumulated net realized gain from
investment transactions ........................ 2,805,971 2,370,532
Net unrealized appreciation on
investments .................................... 1,147,825 743,104
---------- ----------
Net Assets ....................................... $8,458,757 $8,781,362
========== ==========
Net asset value and redemption
price per share
($8,458,757/515,600 and $8,781,362/634,896
shares of capital stock outstanding, respectively)
(Note 5) ......................................... $ 16.41 $ 13.83
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-7-
<PAGE>
MILLENNIUM RHIM FUNDS, INC.
---------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
GROWTH &
GROWTH INCOME
------ ------
INVESTMENT INCOME:
<S> <C> <C>
Dividend .............................................. $ 1,153 $ 25,671
Interest .............................................. 37,394 48,988
----------- -----------
38,547 74,659
Expenses:
Advisory fee .......................................... 61,253 72,146
Administration fee .................................... 26,287 25,502
Audit fee ............................................. 26,583 20,300
Shareholder reporting fee ............................. 1,142 7,158
Amortization of organizational costs .................. 7,451 8,520
Custody fee ........................................... 9,279 10,239
Trustee fee ........................................... 1,933 1,850
Legal fee ............................................. 23,713 4,541
Insurance ............................................. 2,835 705
Registration .......................................... 18,619 14,440
Interest ....... ...................................... 33,210 0
Other ................................................. 10,901 5,457
----------- -----------
Total expenses ................................... 223,206 170,858
----------- -----------
Reimbursed expenses (Note 4) ..................... (129,715) (60,726)
----------- -----------
Net investment loss .............................. (54,944) (35,473)
----------- -----------
NET REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS
(Note 2)
Net realized gain from investment
transactions .................................. 4,715,622 1,962,686
Net change in unrealized appreciation (depreciation) of
investments ................................... (933,366) 743,104
----------- -----------
Net realized and unrealized gain
on investments ................................ 3,782,256 2,705,790
----------- -----------
Net increase in net assets resulting
from operations ............................... $ 3,727,312 $ 2,670,317
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-8-
<PAGE>
MILLENNIUM RHIM FUNDS, INC.
---------------------------
GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED ENDED
JUNE 30, 1999 JUNE 30, 1998*
------------- --------------
<S> <C> <C>
Net investment loss ................................. $ (54,944) $ (59,794)
Net realized gain (loss) from investment transactions 4,715,622 (668,794)
Net change in unrealized appreciation (depreciation)
of investments .................................. (933,366) 2,081,191
----------- -----------
Net increase in net assets resulting from operations 3,727,312 1,352,603
Distributions from net realized gain on investments . (1,185,913) 0
Net capital share transactions (Note 5) ............. (3,951,372) 8,516,127
----------- -----------
Net increase (decrease) in net assets ............... (1,409,973) 9,868,730
NET ASSETS:
Beginning of year ................................... 9,868,730 0
----------- -----------
End of year ......................................... $ 8,458,757 $ 9,868,730
=========== ===========
<FN>
* Commencement of operations was July 16, 1997.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
-9-
<PAGE>
MILLENNIUM RHIM FUNDS, INC.
---------------------------
GROWTH & INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED ENDED
JUNE 30, 1999 JUNE 30, 1998**
------------- ---------------
<S> <C> <C>
Net investment loss ................................ $ (35,473) $ (3)
Net realized gain from investment transactions ..... 1,962,686 0
Net change in unrealized appreciation of investments 743,104 0
----------- -----------
Net increase (decrease) in net assets resulting
from operations ............................ 2,670,317 (3)
Distributions from net realized gains on investments (154,495) 0
Net capital share transactions (Note 5) ............ 5,093,875 1,171,668
----------- -----------
Net increase in net assets ......................... 7,609,697 1,171,665
NET ASSETS:
Beginning of year .................................. 1,171,665 0
----------- -----------
End of year ........................................ $ 8,781,362 $ 1,171,665
=========== ===========
<FN>
** Commencement of operations was June 26, 1998.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
-10-
<PAGE>
MILLENNIUM RHIM FUNDS, INC.
---------------------------
GROWTH FUND
FINANCIAL HIGHLIGHTS
(FOR A FUND SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED ENDED
JUNE 30, 1999 JUNE 30, 1998**
------------- ---------------
<S> <C> <C>
Net asset value, beginning of period .............. $ 11.78 $ 10.00
Income from investment operations
Net investment income (loss) ...................... (0.15) (0.07)
Net realized and unrealized gain on investments ... 7.50 1.85
------------ ------------
Total from investment operations .................. 7.35 1.78
------------ ------------
Less distributions
Distribution from realized gains from security
transactions .............................. (2.72) 0.00
------------ ------------
Net asset value, end of period .................... $ 16.41 $ 11.78
============ ============
Total return ...................................... 65.99% 17.80%
Ratios/supplemental data
Net assets, end of period (in 000's) .............. $ 8,459 $ 9,869
Ratio of expenses to average
net assets ................................ 1.45% 1.45% *
Ratio of expenses to average
net assets before expense reimbursement ... 3.46% 2.48% *
Ratio of net investment income (loss) to
average net assets ........................ (0.85%) (0.87%)*
Portfolio turnover rate ........................... 984.07% 110.76%
<FN>
* Annualized
** Commencement of operations was July 16, 1997.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
-11-
<PAGE>
MILLENNIUM RHIM FUNDS, INC.
---------------------------
GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
(FOR A FUND SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED ENDED
JUNE 30, 1999 JUNE 30, 1998**
-----------------------------
<S> <C> <C>
Net asset value, beginning of period .............. $ 10.00 $ 10.00
Income from investment operations
Net investment income (loss) ...................... (0.06) 0.00
Net realized and unrealized gain on investments ... 4.12 0.00
------------ ------------
Total from investment operations .................. 4.06 0.00
------------ ------------
Less distributions
Distribution from realized gains from security
transactions .............................. (0.23) 0.00
------------ ------------
Net asset value, end of period .................... $ 13.83 $ 10.00
============ ============
Total return ...................................... 40.79% 0.00%
Ratios/supplemental data
Net assets, end of period (in 000's) .............. $ 8,781 $ 1,172
Ratio of expenses to average
net assets ................................ 1.45% 1.45%*
Ratio of expenses to average
net assets before expense reimbursement ... 2.24% 5.31%*
Ratio of net investment income (loss) to
average net assets ........................ (0.47%) (1.45%)*
Portfolio turnover rate ........................... 578.98% 0.00%
<FN>
* Annualized
** Commencement of operations was June 26, 1998.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
-12-
<PAGE>
MILLENNIUM RHIM FUNDS, INC.
---------------------------
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
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 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.
-13-
<PAGE>
MILLENNIUM RHIM FUNDS, INC.
---------------------------
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
3. INVESTMENT TRANSACTIONS:
Investment transactions, excluding short-term investments, for the year ended
June 30, 1999 were as follows:
Growth Fund:
Purchases ................. $56,921,668
Sales ..................... $61,050,867
Growth & Income Fund:
Purchases ................. $38,828,142
Sales ..................... $34,300,966
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, 1999 the Advisor has reimbursed the Growth Fund in the amount of
$129,715, and the Growth and Income Fund $60,726. Cumulative reimbursed expenses
subject to recapture by the Advisor for the Growth Fund and the Growth & Income
Fund amounted to $200,224 and $60,857, respectively, at June 30, 1999.
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.
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<PAGE>
MILLENNIUM RHIM FUNDS, INC.
---------------------------
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
5. FUND SHARE TRANSACTIONS:
At June 30, 1999, there were an unlimited number of shares authorized with no
par value.
GROWTH FUND:
FOR THE FOR THE PERIOD
YEAR ENDED JULY 16, 1997* TO
JUNE 30, 1999 JUNE 30, 1998
SHARES VALUE SHARES VALUE
------ ----- ------ -----
Shares sold ......... 305,890 $ 4,051,925 928,042 $ 9,530,260
Dividend reinvestment 82,778 1,175,453 0 0
Shares repurchased .. (710,693) (9,178,750) (90,417) (1,014,133)
-------- ----------- ------- -----------
(322,025) ($3,951,372) 837,625 $ 8,516,127
======== =========== ======= ===========
GROWTH & INCOME FUND:
FOR THE FOR THE PERIOD
YEAR ENDED JULY 16, 1997* TO
JUNE 30, 1999 JUNE 30, 1998
SHARES VALUE SHARES VALUE
------ ----- ------ -----
Shares sold .......... 613,143 $ 6,279,910 117,167 $ 1,171,668
Dividend reinvestment 12,098 154,495 0 0
Shares repurchased ... (107,512) (1,340,530) 0 0
-------- ----------- ------- -----------
517,729 $ 5,093,875 117,167 $ 1,171,668
======== =========== ======= ===========
* Commencement of operations.
-15-
<PAGE>
INDEPENDENT AUDITORS REPORT
To the Board of Trustees
The Millennium RHIM Funds, Inc.
San Francisco, CA
We have audited the accompanying statements 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,
1999 and the related statements 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 audits.
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, 1999, 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,
1999, 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.
/S/ MCGLADRY & PULLEN LLP
- -------------------------
New York, New York
July 30, 1999
-16-
<PAGE>
ADVISOR
Millennium Capital Advisors, Inc.
400 Montgomery Street, Suite 800
San Francisco, CA 94104
DISTRIBUTOR
Ridgeway Helms Securities Corporation
400 Montgomery Street, Suite 800
San Francisco, CA 94104
CUSTODIAN
Firstar 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.
