MILLENNIUM FUNDS, INC.
SEMI-ANNUAL REPORT
DECEMBER 31, 1999
<PAGE>
Millennium Funds, Inc.
December 31, 1999
Dear Fellow Shareholder:
We are pleased to present you the Millennium Funds Semi-annual Report. As of
12/31/1999, the Millennium Growth Fund gained 103% and the Millennium Growth &
Income Fund gained 98.7%, respectively, while the S&P 500 Index advanced by 21%.
As previously reported to you on our June 30 letter, 1999 unfolded with some of
the most volatile market conditions ever. Inflation fears, fluctuating CPI data,
and the hawkish Federal Reserve on one end and productivity gains, corporate
earnings momentum, and the deflationary force of the Internet economy on the
other end produced some of the most spectacular market moves ever seen.
Investment Outlook: Our overall market perspective remains extremely bullish. In
our judgment, federal budget surpluses, technology-related productivity
enhancements, strong US consumer, low unemployment rates, and continued low
inflationary forces provide a favorable backdrop for the equity markets.
Although we are positive on the markets, we do believe that extreme volatility
will continue. Therefore, individual equity selection will be of critical
importance versus ownership of a basket of sector equities. It is ever so
critical that we continue to invest diligently and with prudence.
We deeply appreciate having you as a shareholder in the Millennium Funds and
hope that you will keep our Funds as an integral part of your long-term
investment strategy.
Sincerely,
/S/ ROBERT A. DOWLETT
- ---------------------
Robert A. Dowlett
Portfolio Manager
<PAGE>
<TABLE>
<CAPTION>
MILLENNIUM FUNDS, INC.
GROWTH FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
(Unaudited)
SHARES MARKET VALUE
- ------ ------------
COMMON STOCKS - 71.40%
ELECTRONIC COMPONENTS-SEMI CONDUCTORS - 9.92%
<S> <C> <C>
4,000 +Conexant Syst Inc. .............................. $ 264,875
6,000 +PMC Sierra Inc. ................................. 961,687
10,000 +RF Micro Devices Inc. ........................... 682,813
----------
1,909,375
----------
ENTERPRISE SOFTWARE - 1.56%
4,300 +BEA Systems Inc. ................................ 301,134
----------
INTERNET CONTENT - 0.00%
1 +At Home Corp. Ser A. ............................ 22
----------
INTERNET SOFTWARE - 4.15%
9,000 +Exodus Communications Inc. ...................... 799,594
----------
LASER SYSTEMS/COMPONENTS - 16.76%
20,000 +JDS Uniphase Corp. .............................. 3,226,250
----------
NETWORKING PRODUCTS - 30.85%
20,000 +Emulex Corp. .................................... 2,259,375
10,000 +Foundry Networks Inc. ........................... 3,016,250
10,000 +JNI Corp. ....................................... 661,250
----------
5,936,875
----------
TELECOMMUNICATION EQUIPMENT - 8.16%
6,000 +Qualcomm Inc. ................................... 1,056,563
8,000 +Tellabs Inc. .................................... 513,250
----------
1,569,813
----------
The accompanying notes are an integral part of these financial statements.
Page 1
<PAGE>
Millennium Funds, Inc.
GROWTH FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
(Unaudited)
MARKET VALUE
------------
TOTAL COMMON STOCKS
(Cost $7,402,756) ................................ $ 13,743,063
------------
Total Investments at Market
(Cost $7,402,756) ............. 71.40% ........... 13,743,063
Other Assets less Liabilities . 28.60% ........... 5,503,824
------- ------------
Total Net Assets ............. 100.00% ........... $ 19,246,887
======= ============
(1) Federal Tax Information: At December 31, 1999 the net unrealized
appreciation based on cost for Federal Income tax purposes of $7,402,756
was as follows:
Aggregate gross unrealized apprecation for all
investments for which there was an excess of
value over cost .................................. $ 6,483,453
Aggregate gross unrealized deprecation for all
investments for which there was an excess of
cost over value .................................. (143,146)
-----------
Net unrealized appreciation ...... $ 6,340,307
===========
+ Denotes non-income producing security
The accompanying notes are an integral part of these financial statements.
Page 2
<PAGE>
MILLENNIUM FUNDS, INC.
GROWTH & INCOME FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
(Unaudited)
Shares Market Value
COMMON STOCKS - 76.15%
APPLICATIONS-SOFTWARE - 1.83%
10,000 +Inso Corporation ................................ $ 322,500
-----------
COMPUTER-SOFTWARE - 2.41%
10,000 +Verity Inc. ..................................... 425,313
-----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS - 5.02%
2,000 +Novellus Systems Inc. ........................... 245,062
4,000 +PMC-Sierra Inc. ................................. 641,125
-----------
886,187
-----------
ENTERPRISE SOFTWARE - 1.71%
4,300 +BEA Systems ..................................... 301,134
-----------
FIBER OPTICS - 2.77%
8,500 +Ciena Corp. ..................................... 489,016
-----------
INTERNET CONTENT - 12.53%
7,800 +Internet Capital Group Inc. ..................... 1,325,269
10,000 +Exodus Communication Inc. ....................... 888,437
-----------
2,213,706
-----------
MEDICAL-BIOMEDICAL/GENE - 2.87%
6,000 +Biogen Inc. 506,813
-----------
NETWORKING PRODUCTS - 31.89%
18,000 +Emulex Corporation .............................. 2,033,437
10,000 +Foundry Networks Inc. ........................... 3,016,250
8,800 +JNI Corp. ....................................... 581,900
-----------
5,631,587
-----------
TELECOMMUNICATION EQUIPMENT - 15.13%
5,800 Nokia Spon ADR .................................. 1,102,000
6,000 +Qualcom Incorporated ............................ 1,056,563
8,000 +Tellabs Inc. .................................... 513,250
-----------
2,671,813
-----------
The accompanying notes are an integral part of these financial statements.
Page 3
<PAGE>
MILLENNIUM FUNDS, INC.
GROWTH & INCOME FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
(Unaudited)
MARKET VALUE
------------
TOTAL COMMON STOCKS
(Cost $8,266,663) ........................$ 13,448,069
-------------
Total Investments at Market
(Cost $8,266,663) .......... 76.15% 13,448,069
Other Assets less Liabilities ...... 23.85% 4,212,640
------- -------------
Total Net Assets .................. 100.00% $ 17,660,709
======= =============
(1) Federal Tax Information: At December 31, 1999 the net unrealized
appreciation based on cost for Federal Income tax purposes of $7,924,955
was as follows:
Aggregate gross unrealized appreciation for
all investments for which there was an
excess of value over cost ........................ $ 5,662,731
Aggregate gross unrealized depreciation for
all investments for which there was an
excess of cost over value ........................ $ (139,617)
------------
Net unrealized appreciation $ 5,523,114
</TABLE>
------------
+ Denotes non-income producing security.
The accompanying notes are an integral part of these financial statements.
Page 4
<PAGE>
<TABLE>
<CAPTION>
MILLENNIUM FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
(Unaudited)
GROWTH &
GROWTH INCOME
------ ------
ASSETS:
<S> <C> <C>
Investments in securities, at value
(cost $7,402,756 and $8,266,663) ....... $ 13,743,063 $ 13,448,069
Receivable for securities sold ................. 6,983,483 6,981,083
Receivable for fund shares sold ................ 206,019 66,317
Due from investment advisor (Note 4) ........... 16,108 21,044
Other assets ................................... 42,904 53,301
------------ ------------
Total Assets ........................... 20,991,577 20,569,814
------------ ------------
LIABILITIES:
Cash overdraft ................................. $ 1,532,157 $ 2,859,384
Payables:
Fund shares redeemed ................... 166,370 10,464
Other liabilities .............................. 46,162 39,257
------------ ------------
Total Liabilities ...................... 1,744,689 2,909,105
------------ ------------
Net Assets ............................. $ 19,246,888 $ 17,660,709
============ ============
NET ASSETS CONSIST OF:
Additional paid in capital ............. $ 10,581,638 $ 9,418,238
Accumulated net investment loss ........ (58,654) (47,292)
Accumulated net realized gain from
investment transactions ........ 2,383,597 3,108,358
Net unrealized appreciation on
investments .................... 6,340,307 5,181,405
------------ ------------
Net Assets ............................. $ 19,246,888 $ 17,660,709
============ ============
Net asset value and redemption
price per share
($19,246,888/ 891,089 and
$17,660,709/ 904,224 shares of capital
stock outstanding, respectively)
(Note 5) ............................... $ 21.60 $ 19.53
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 5
<PAGE>
<TABLE>
<CAPTION>
MILLENNIUM FUNDS, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999
(UNAUDITED)
GROWTH &
GROWTH INCOME
------ ------
INVESTMENT INCOME:
<S> <C> <C>
Dividend ....................................... $ 540 $ 7,553
Interest ....................................... 12,129 15,963
----------- -----------
12,669 23,516
Expenses:
Advisory fee (Note 4) .......................... 46,729 46,110
Administration fee ............................. 15,427 15,728
Audit fee ...................................... 7,562 6,050
Shareholder reporting fee ...................... 2,521 2,521
Amortization of organizational costs ........... 3,527 4,302
Custody fee .................................... 5,546 5,042
Trustee fee .................................... 756 756
Legal fee ...................................... 6,302 6,302
Insurance ...................................... 342 342
Registration ................................... 7,562 7,562
Interest ....................................... 24,454 28,384
Other .......................................... 4,966 4,967
----------- -----------
Total expenses ................. 125,694 128,066
Reimbursed expenses (Note 4) ... (54,372) (57,258)
----------- -----------
Net expenses ................... 71,322 70,808
----------- -----------
Net investment loss ............ (58,653) (47,292)
----------- -----------
NET REALIZED AND UNREALIZED GAINS
ON INVESTMENTS:
(Note 2)
Net realized gain from investment
transactions ........................... 2,672,105 3,112,314
----------- -----------
Net change in unrealized appreciation of
investments ............................ 5,192,482 4,438,301
----------- -----------
Net realized and unrealized gain
on investments ......................... 7,864,587 7,550,615
----------- -----------
Net increase in net assets resulting
from operations $ ...................... 7,805,934 $ 7,503,323
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 6
<PAGE>
<TABLE>
<CAPTION>
MILLENNIUM FUNDS, INC.
GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS FOR THE YEAR
ENDED ENDED
DECEMBER 31, JUNE 30,
1999 1999
------------------ ------------
(Unaudited)
<S> <C> <C>
Net investment loss .......................... $ (58,653) $ (54,944)
Net realized gain from investment
transactions ......................... 2,672,105 4,715,622
Net change in unrealized appreciation
(depreciation) of investments ........ 5,192,482 (933,366)
------------ ------------
Net increase in net assets resulting
from operations ...................... 7,805,934 3,727,312
Distributions from net investment income ..... 0 0
Distributions from net gain on investments ... (3,094,480) (1,185,913)
Net capital share transactions (Note 5) ...... 6,076,677 (3,951,372)
------------ ------------
Net increase (decrease) in net assets ........ 10,788,131 (1,409,973)
NET ASSETS:
Beginning of period .......................... 8,458,757 9,868,730
------------ ------------
End of period ................................ $ 19,246,888 $ 8,458,757
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 7
<PAGE>
<TABLE>
<CAPTION>
MILLENNIUM FUNDS, INC.
GROWTH & INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS FOR THE YEAR
ENDED ENDED
DECEMBER 31, JUNE 30,
1999 1999
---------------------------------
(Unaudited)
<S> <C> <C>
Net investment loss .......................... $ (47,292) $ (35,473)
Net realized gain from investment
transactions ......................... 3,112,314 1,962,686
Net change in unrealized appreciation
of investments ....................... 4,438,301 743,104
------------ ------------
Net increase in net assets resulting
from operations ...................... 7,503,323 2,670,317
Distributions from net investment income ..... 0 0
Distributions from net realized gains ........ (2,374,488) (154,495)
Net capital share transactions (Note 5) ...... 3,750,512 5,093,875
------------ ------------
Net increase in net assets ................... 8,879,347 7,609,697
NET ASSETS:
Beginning of period .......................... 8,781,362 1,171,665
------------ ------------
End of period ................................ $ 17,660,709 $ 8,781,362
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 8
<PAGE>
<TABLE>
<CAPTION>
MILLENNIUM FUNDS, INC.
GROWTH FUND
FINANCIAL HIGHLIGHTS
(FOR A FUND SHARE OUTSTANDING THROUGHOUT THE PERIOD)
FOR THE FOR THE FOR THE
SIX MONTHS YEAR PERIOD
ENDED ENDED ENDED
DECEMBER 31, JUNE 30, JUNE 30,
1999 1999 1998**
--------------------------------------
(Unaudited)
<S> <C> <C> <C>
Net asset value, beginning of period .......... $ 16.41 $ 11.78 $ 10.00
Income from investment operations
Net investment loss ........................... (0.10) (0.15) (0.07)
Net realized and unrealized gain
on investments ........................ 9.94 7.50 1.85
------- ------- -------
Total from investment operations .............. 9.84 7.35 1.78
------- ------- -------
Less distributions
Dividends from net investment income .......... 0.00 0.00 0.00
Distribution from realized gains from
security transactions ................. (4.65) (2.72) 0.00
------- ------- -------
Total distributions ........................... (4.65) (2.72) 0.00
------- ------- -------
Net asset value, end of period ................ $ 21.60 $ 16.41 $ 11.78
======= ======= =======
Total return .................................. 70.84% 65.99% 17.80%
Ratios/supplemental data
Net assets, end of period (in 000's) .......... $19,247 $ 8,459 $ 9,869
Ratio of expenses to average
net assets ............................ 1.45%* 1.45% 1.45%*
Ratio of expenses to average
net assets before expense reimbursement 2.62%* 3.46% 2.48%*
Ratio of net investment income (loss) to
average net assets .................... (1.18%)* (0.85%)
Portfolio turnover rate ....................... 124.64% 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.
Page 9
<PAGE>
<TABLE>
<CAPTION>
MILLENNIUM FUNDS, INC.
GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
(FOR A FUND SHARE OUTSTANDING THROUGHOUT THE PERIOD)
FOR THE FOR THE FOR THE
SIX MONTHS YEAR PERIOD
ENDED ENDED ENDED
DECEMBER 31, JUNE 30, JUNE 30,
1999 1999 1998**
--------------------------------------
(Unaudited)
<S> <C> <C> <C>
Net asset value, beginning of period .......... $ 13.83 $ 10.00 $ 10.00
Income from investment operations
Net investment income (loss) .................. (0.07) (0.06) 0.00
Net realized and unrealized gain
on investments ........................ 9.32 4.12 0.00
------- ------- -------
Total from investment operations .............. 9.25 4.06 0.00
------- ------- -------
Less distributions
Dividends from net investment income .......... 0.00 0.00 0.00
Distribution from realized gains from
security transactions ................. (3.55) (0.23) 0.00
------- ------- -------
Total distributions ........................... (3.55) (0.23) 0.00
------- ------- -------
Net asset value, end of period ................ $ 19.53 $ 13.83 $ 10.00
======= ======= =======
Total return .................................. 76.97% 40.79% 0.00%
Ratios/supplemental data
Net assets, end of period (in 000's) .......... $17,661 $ 8,781 $ 1,172
Ratio of expenses to average
net assets ............................ 1.45%* 1.45% 1.45%*
Ratio of expenses to average
net assets before expense reimbursement 2.54%* 2.24% 5.31%*
Ratio of net investment income (loss) to
average net assets .................... (0.97%)* (0.47%) (1.45%)*
Portfolio turnover rate ....................... 123.69% 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.
Page 10
<PAGE>
MILLENNIUM FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Unaudited)
1. ORGANIZATION:
The Millennium Growth Fund (the "Growth Fund") and the Millennium 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.
Page 11
MILLENNIUM FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Unaudited)
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 six months
ended December 31, 1999 were as follows:
Growth Fund:
Purchases .................................. $12,423,114
Sales ...................................... $14,662,827
Growth & Income Fund:
Purchases .................................. $11,812,721
Sales ...................................... $13,746,049
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 six
months ended December 31, 1999 the Advisor has reimbursed the Growth Fund in the
amount of $54,372, and the Growth and Income Fund $57,258.
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.
Page 12
<PAGE>
MILLENNIUM FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(Unaudited)
5. FUND SHARE TRANSACTIONS:
At December 31, 1999, there were an unlimited number of shares authorized with
no par value.
<TABLE>
<CAPTION>
GROWTH FUND:
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1999 JUNE 30, 1999
(UNAUDITED)
------------------- ------------------
SHARES VALUE SHARES VALUE
------ ----- ------ -----
<S> <C> <C> <C> <C>
Shares sold ......... 402,564 $ 6,885,811 305,890 $ 4,051,925
Dividend reinvestment 197,725 3,086,484 82,778 1,175,453
Shares repurchased .. (224,800) (3,895,618) (710,693) (9,178,750)
-------- ----------- -------- -----------
375,489 $ 6,076,677 (322,025) ($3,951,372)
GROWTH & INCOME FUND:
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1999 JUNE 30, 1999
(UNAUDITED)
------------------- ------------------
SHARES VALUE SHARES VALUE
------ ----- ------ -----
Shares sold ......... 241,207 $ 3,465,859 613,143 $ 6,279,910
Dividend reinvestment 169,199 2,372,168 12,098 154,495
Shares repurchased .. (141,078) (2,087,515) (107,512) (1,340,530)
-------- ----------- -------- -----------
269,328 $ 3,750,512 517,729 $ 5,093,875
</TABLE>
Page 13
<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
Union Bank of California
475 Sansome Street
San Francisco, CA 94145
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.
