SEMI - ANNUAL REPORT
MARCH 31, 1997
<PAGE>
Portfolio of Investments
The Elite Growth & Income Fund
March 31, 1997
(unaudited)
Market Value
Shares Note 2A
----------------
COMMON STOCK 69.1%
BASIC INDUSTRY 8.5%
16,000 Anadarko Petroleum Inc. $ 898,000
50,000 Longview Fiber Co 750,000
50,000 Ply-Gem Industries 675,000
16,000 Potash of Saskatchewan 1,216,000
40,000 Seagull Energy* 720,000
----------------
Total Basic Industry 4,259,000
----------------
CAPITAL GOODS 19.8%
24,000 Avnet Inc. 1,353,000
22,000 Cisco Systems* 1,058,750
16,000 Computer Sciences Corp* 988,000
12,000 General Electric Inc. 1,191,000
24,000 Hewlett-Packard 1,278,000
6,000 Intel Corporation 834,000
8,000 I.B.M. Corporation 1, 099,000
16,000 Microsoft Corporation* 1, 466,000
180,000 Xactlabs Inc.* (a) 1,800
12,000 Xerox Corporation 682,500
----------------
Total Capital Goods 9,952,050
----------------
CONSUMER GOODS & SERVICES 20.7%
135,000 Coffee Station, Inc* (a) 303,750
50,000 Fingerhut Companies 700,000
16,000 General Motors Inc. 886,000
40,000 H & R Block, Inc 1,175,000
12,000 Harley-Davidson, Inc 406,500
16,000 Manpower Inc 576,000
40,000 Mattel, Inc 960,000
50,000 Nextel Communication - A* 662,500
35,000 Optiva Corporation * (a) 525,000
20,000 Regis Corporation 350,000
60,000 Singer Company N.V. 1,095,000
100,000 Tele-Communications Inc. A* 1,200,000
<PAGE>
Portfolio of Investments
The Elite Growth & Income Fund
March 31, 1997- Continued
(unaudited)
Market Value
Shares Note 2A
- ------ ------------
CONSUMER GOODS & SERVICES - CONTINUED
30,000 U.S. West Media Group * 558,750
30,000 Viacom, Inc. -B* 993,750
-------------
Total Consumer Goods & Services 10,392,250
-------------
FINANCIAL INTERMEDIARIES 7.2%
20,000 A.C.E Limited (Insurance) 1,280,000
32,000 Federal National Mortgage 1,156,000
16,000 Mellon Bank Inc. 1,164,000
-------------
Total Financial Intermediaries 3,600,000
-------------
HEALTH CARE GOODS & SERVICES 12.9%
20,000 Alza Corporation* 550,000
12,000 American Home Products 720,000
20,000 Bristol-Myers Squibb 1,180,000
20,000 Horizon Healthcare Corp* 310,000
13,800 Merck & Co. 1,162,650
15,000 Pfizer Inc. 1,261,875
50,000 Sierra Health Services* 1,268,750
-------------
Total Health Care Goods & Services 6,453,275
-------------
Total Common Stock (Cost $26,299,099) 34,656,575
-------------
OPTIONS - COVERED CALLS ( 0.8%)
20,000 Alza Corp ( $30 7-18-97) ( 17,500)
24,000 Hewlett-Packard ( $60 8-15-97) ( 67,500)
13,800 Merck & Co ( $85 7-18-97) ( 75,900)
16,000 Microsoft ( $90 7-18-97) (149,000)
15,000 Pfizer Inc. ( $90 6-20-97) ( 47,813)
16,000 Seagull Energy ( $20 5-16-97) ( 9,000)
100,000 Tele-Comm. ( $15 7-18-97) ( 37,500)
------------
Total Value of Calls (Cost $ 366,150) (404,213)
------------
<PAGE>
Portfolio of Investments
The Elite Growth & Income Fund
March 31, 1997- Continued
(unaudited)
Par Value Market Value
Note 2A
--------------
U.S. GOVERNMENT TREASURY 29.9%
$75,000,000 Zero Coupon Bond due 05/15/19 14,996,992
--------------
(Cost $15,673,850)
Total Investments
(Cost $41,319,884**) 98.2% 49,249,354
Cash and receivables
in excess of liabilities 1.8% 910,233
-------- -------------
NET ASSETS 100.0% $ 50,159,587
======== =============
(a) Restricted security ( see note 3)
* Non - income producing
** Cost for Federal Income Tax purposes is the same. At March 31, 1997,
unrealized appreciation of securities for Federal Income Tax purposes is
as follows:
Unrealized appreciation $ 9,555,515
Unrealized depreciation (1,626,045)
-------------------
Net unrealized appreciation $ 7,929,470
===================
See Notes to Financial Statement
<PAGE>
Portfolio of Investments
The Elite Income Fund
March 31, 1997
(unaudited)
Market Value
Par Value Note 2A
-------------
BONDS 95.6%
U.S. Government Notes and Bonds 49.6%
$ 600,000 U.S. Treasury Note
6.375% due 01/15/99 $ 600,072
1,750,000 U.S. Treasury Note
7.875% due 11/15/99 1,804,827
2,100,000 U.S. Treasury Note
6.250% due 02/15/03 2,044,287
2,400,000 U.S. Treasury Bond
7.250% due 05/15/16 2,413,032
---------------
Total U.S. Government Notes and Bonds 6,862,218
---------------
ELECTRIC UTILITIES 15.3%
500,000 Portland General Electric
8.880% due 08/12/99 521,875
520,000 Ohio Power
6.750% due 04/01/03 507,650
500,000 Hawaiian Electric
6.660% due 12/05/05 461,250
650,000 Appalachian Power Co.
6.800% due 03/01/06 619,938
---------------
Total Electric Utility Bonds 2,110,713
---------------
GAS UTILITIES 20.5%
250,000 Consumer Energy Co.
8.750% due 02/15/98 254,687
500,000 Texas Utilities
5.875% due 04/01/98 496,875
170,000 Consumer Energy Co.
8.875% due 11/15/99 177,438
500,000 Pacificorp
8.900% due 02/15/01 526,875
300,000 Entergy Arkansas Inc
7.000% due 03/01/02 295,125
500,000 Long Island Lighting
7.050% due 03/15/03 491,250
600,000 Pacific Gas Transmission
7.100% due 06/01/05 582,000
--------------
Total Gas Utilities 2,824,250
--------------
<PAGE>
Portfolio of Investments
The Elite Income Fund
March 31, 1997 - Continued
(unaudited)
Market Value
Par Value Note 2A
-------------
FINANCIAL/CORPORATE BONDS 10.2%
500,000 Ford Motor Credit
8.200% due 02/15/02 518,750
350,000 S. California Edison Capital Notes
7.375% due 12/15/03 350,875
550,000 Federal Home Loan (Mortgage Backed)
6.100% due 05/15/16 535,810
-------------
Total Financial/Corporate Bonds 1,405,435
-------------
Total Value Bonds (Cost $13,462,451) 13,202,615
-------------
Shares
PREFERRED STOCK 2.6%
3,560 Entergy Gulf State Utilities $8.64 355,110
-------------
(Cost $369,350)
Total Investments
(Cost $13,831,801**) 98.3% 13,557,726
Cash and receivables
in excess of liabilities 1.8% 246,098
------- -------------
Net Assets 100.0% $ 13,803,824
======= =============
**Cost for Federal Income Tax purposes is the same.
At March 31, 1997, unrealized appreciation (depreciation) of securities for
Federal Income Tax purposes is as follows:
Unrealized appreciation $ 94,009
Unrealized depreciation (368,084)
-------------
Net unrealized depreciation $ (274,075)
=============
See Notes to Financial Statements
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1997
(unaudited)
<TABLE>
<S> <C> <C>
THE ELITE GROWTH THE ELITE
& INCOME FUND INCOME FUND
---------------------------------- ---------------------------
ASSETS:
Investments in securities at value (notes 2A, 3 )
(Cost $41,319,885 and $13,831,801) $ 49,249,355 $ 13,557,726
Cash and cash equivalent (Note 2E) 1,230,270 210,854
Receivables:
Securities sold 1,027,526 ---
Interest 6,524 261,085
Dividends 46,116 ---
Capital stock sold 13,467 ---
---------------------------- ----------------------------
Total Assets 51,573,257 14,029,664
---------------------------- ----------------------------
LIABILITIES:
Payables:
Securities purchased 1,134,731 ---
Capital stock reacquired 19,825 ---
Distributions 208,763 214,996
Accrued expenses 50,351 10,845
---------------------------- --------------------------
Total Liabilities 1,413,670 225,841
---------------------------- --------------------------
NET ASSETS:
The Elite Growth & Income Fund--applicable to
2,609,532 shares outstanding $ 50,159,587
============================
The Elite Income Fund-applicable to 1,433,305
shares outstanding $ 13,803,824
==========================
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
(Net assets / shares outstanding) $ 19.22 $ 9.63
============================ ==========================
At March 31, 1997 the components of net assets were as follows:
Paid-in capital $ 38,212,924 $ 14,168,380
Accumulated net realized gain on investments 4,054,051 (80,000)
Undistributed net investment income (36,858) (10,481)
Net unrealized appreciation (depreciation) 7,929,470 (274,075)
---------------------------- ----------------------------
Net assets $ 50,159,587 $ 13,803,824
============================ ============================
</TABLE>
See Notes to Financial Statements
<PAGE>
STATEMENT OF OPERATIONS
For the Six Months Ended March 31, 1997
(unaudited)
<TABLE>
<S> <C> <C>
THE ELITE GROWTH THE ELITE
& INCOME FUND INCOME FUND
------------------------------- ----------------------------
INVESTMENT INCOME:
Income:
Interest $ 392,108 $ 449,105
Dividends 238,957 26,398
---------------------------- ----------------------------
Total Income 631,065 475,503
---------------------------- ----------------------------
Expenses:
Investment management fee 243,907 47,158
Transfer agent fees 8,704 5,581
Custodian fees 10,833 3,984
Professional fees (Note 6) 5,069 6,063
Trustees fees and expenses 9,240 1,920
Record keeping services 19,733 7,163
Shareholder reports 3,088 807
Registration fees and other 5,780 1,743
---------------------------- ----------------------------
Total Expenses 306,354 74,419
---------------------------- ----------------------------
Expenses Reimbursed --- (10,534)
---------------------------- ----------------------------
Net Expenses 306,354 63,885
---------------------------- ----------------------------
Net Investment Income 324,711 411,618
---------------------------- ----------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES AND OPTIONS CONTRACT
Net realized gain (loss):
Investment securities 4,992,115 28,927
Expired and closed covered call
options written (Note 4) (879,485) ---
---------------------------- --------------------------
Net realized gain on investment securities
and option contracts 4,112,630 28,927
---------------------------- --------------------------
Net increase (decrease) in unrealized
appreciation of investment securities (2,035,443) (124,582)
---------------------------- --------------------------
Net increase in net assets
resulting from operations $ 2,401,898 $ 258,109
============================ ==========================
</TABLE>
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
THE ELITE
GROWTH & INCOME FUND
(unaudited)
<TABLE>
<S> <C> <C>
Six Months Ended Year Ended
March 31, 1997 Sept 30, 1996
---------------------------- ----------------------------
OPERATIONS:
Net investment income $ 324,711 $ 230,586
Net realized gain on investment
securities and options contracts 4,112,630 5,049,366
Net increase (decrease) in unrealized
appreciation of investment securities (2,035,443) 2,914,785
---------------------------- ----------------------------
Net increase in net assets
resulting from operations 2,401,898 8,194,737
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income (342,461) (252,709)
Distributions from net realized gains on
investment transactions (5,147,381) ---
CAPITAL SHARE TRANSACTIONS:
Increase in net assets resulting from capital
share transactions (a) (8,448,342) 5,674,686
---------------------------- ----------------------------
Total increase in net assets 5,360,398 13,616,714
NET ASSETS:
Beginning of period 44,799,189 31,182,475
---------------------------- ----------------------------
End of period (including undistributed
net investment income of $36,858 and
$14,688 respectively). $ 50,159,587 $ 44,799,189
============================ ============================
(a)Transactions in capital stock were as follows:
</TABLE>
<TABLE>
<S> <C> <C>
Six Months Ended Year Ended
March 31, 1997 September 30,1996
-------------------------- ----------------------------
Shares Value Shares Value
----------------- ----------------- ------------------- ----------------
Shares sold 228,855 $ 4,679,022 430,984 $ 7,948,298
Shares issued in reinvestment
of distributions 272,122 5,257,403 11,903 233,922
----------------- ------------------ ------------------- ----------------
500,977 9,936,425 442,887 8,182,220
Shares redeemed (71,842) (1,488,083) (136,267) (2,507,534)
----------------- ------------------ ------------------- ----------------
Net increase 429,135 $ 8,448,342 306,620 $ 5,674,686
================= ================== =================== =================
</TABLE>
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
THE ELITE
INCOME FUND
(unaudited)
<TABLE>
<S> <C> <C>
Six Months Ended Year Ended
March 31, 1997 Sept. 30, 1996
---------------------------- --------------------------
OPERATIONS:
Net investment income $ 411,618 $ 772,576
Net realized gain (loss)on investment securities (28,927) (45,430)
Net increase (decrease) in unrealized
appreciation of investment securities (124,582) (265,285)
---------------------------- --------------------------
Net increase (decrease) in net assets
resulting from operations 258,109 461,861
NET EQUALIZATION CREDITS (DEBITS) (NOTE 2d) 12,189 (739)
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income (420,004) (798,599)
Distributions from net realized gains on
investment transactions --- (69,581)
CAPITAL SHARE TRANSACTIONS:
Increase in net assets resulting from capital
share transactions (a) 1,335,047 660,024
---------------------------- --------------------------
Total increase (decrease) in net assets 1,185,341 252,966
NET ASSETS:
Beginning of period 12,618,483 12,365,517
---------------------------- --------------------------
End of period (including undistributed net
investment income of ($10,481) and $4,657
respectively). $ 13,803,824 $ 12,618,483
============================ ==========================
</TABLE>
(a)Transactions in capital stock were as follows:
<TABLE>
<S> <C> <C>
Six Months Ended Year Ended
March 31,1997 September 30,1996
------------------------------------- --------------------------------
Shares Value Shares Value
-------------- ------------------ ---------------- ----------
Shares sold 233,132 $ 2,308,377 274,284 $ 2,723,932
Shares issued in reinvestment
of distributions 20,344 200,391 85,432 844,750
-------------- ------------------- ----------------- --------------
253,476 2,508,769 359,716 3,568,682
Shares redeemed (117,492) (1,161,532) (295,122) (2,908,658)
-------------- ------------------- ----------------- --------------
Net increase 135,984 $ 1,347,236 64,594 $ 660,024
============== =================== ================= ==============
</TABLE>
See Notes to Financial Statement
<PAGE>
FINANCIAL HIGHLIGHTS
THE ELITE
GROWTH & INCOME FUND
For a share outstanding throughout each period
Years Ended September 30,
<TABLE>
<S> <C> <C> <C> <C> <C>
*1997 1996 1995 1994 1993
Net asset value, beginning of year $ 20.55 $16.64 $15.29 $14.44 $13.07
------- ------ ------ ------- ------
Income from investment operations
Net investment income .26 .11 .18 .11 .10
Net gains on securities
(both realized and unrealized) .86 3.92 2.52 1.56 1.65
--------- --------- ------- ------- -------
Total from investment
operations 1.12 4.03 2.70 1.67 1.75
--------- --------- ------- ------- -------
Less Distributions
Dividends from net investment
income (.14) (.12) (.18) (.10) (.09)
Distributions from capital gains (2.31) --- (1.17) (.72) (.29)
----------- ---------- -------- ----------- ----------
Total distributions (2.45) (.12) (1.35) (.82) (.38)
------------ ---------- -------- ------------ ----------
Net asset value, end of year $ 19.22 $ 20.55 16.64 $15.29 $ 14.44
============= =========== ======== ============ ==========
Total Return 5.44% 24.26% 19.92% 11.80% 13.54%
Ratios/Supplemental Data
Net asset value, end of period
(in 000's) $ 50,160 $ 44,799 $31,182 $25,380 $17,989
Ratio of expenses to average net
assets 1.27%(a) 1.33% 1.42% 1.42% 1.36%
Ratio of net investment income
to average net assets 1.35%(a)** .61% 1.18% .73% .69%
Portfolio turnover 138.39%(a) 156.93% 137.56% 153.34% 172.00%
Average Brokerage Commissions $ .06 .06 (1) (1) (1)
</TABLE>
*For the six months ending March 31, 1997
**Ratio reflects fees paid through a directed brokerage arrangement.
Including the expenses paid with brokerage commission would have increased
the expense ration to 1.43% and reduced net investment income to 1.28%
(1)Not required information prior to 1996
(a)Annualized
See Notes to Financial Statements
<PAGE>
FINANCIAL HIGHLIGHTS
THE ELITE
INCOME FUND
For a share outstanding throughout each period
Years Ended September 30,
<TABLE>
<S> <C> <C> <C> <C> <C>
*1997 1996 1995 1994 1993
Net asset value, beginning of year $ 9.73 $10.03 $ 9.48 $10.61 $10.28
----------- ------------ ---------------- ----------- ---------
Income from investment operations
Net investment income .30 .60 .62 .61 .59
Net gain (loss) on securities
(both realized and unrealized) (.10) (.23 ) .54 (1.03) .35
------------ -------------- ---------------- ------------- ---------
Total from investment
operations .20 .37 1.16 (.42) .94
------------ -------------- ----------------- -------------- ----------
Less Distributions
Dividends from net investment
income (.30) (.62) (.61) (.61) (.58)
Distributions from capital gains --- (.05) --- (.10) (.03)
-------------- --------------- ----------------- ---------------- -----------
Total distributions (.30) (.67) (.61) (.71) (.61)
--------------- --------------- ------------------ ---------------- -----------
Net asset value, end of year $ 9.63 $ 9.73 $10.03 $ 9.48 $10.61
=============== ================= ================== ================ ============
Total Return 2.04% 3.79% 12.56% (4.07%) 9.41%
Ratios/Supplemental Data
Net asset value, end of period
(in 000's) $ 13,804 $12,618 $12,366 $11,505 $11,751
Ratio of expenses to average
net assets .96%(a)(b) 1.00% 1.12% 1.11% 1.02%
Ratio of net investment income
to average net assets 6.14%(a)(b) 6.01% 6.34% 5.98% 5.66%
Portfolio turnover 31.89%(a) 43.37% 42.24% 40.88% 73.26%
</TABLE>
* For six months ended March 31, 1997
(a) annualized
(b) The manager has elected to reimburse the fund $10,534.
Without reimbursement the expense ratio would
have been 1.11% and the net investment income 6.00%
See Notes to Financial Statement
<PAGE>
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
(unaudited)
Note 1 - ORGANIZATION
The Elite Growth and Income Fund and The Elite Income Fund (the
"Funds") are two series of shares of beneficial interests of The Elite Group
(the "Trust"), which is registered under the Investment Company Act of 1940, as
amended, as a diversified open-end management company. The Trust was organized
in Massachusetts as a business trust on August 8, 1986. The Trust is authorized
to issue an unlimited number of no par shares of beneficial interest of any
number of series. Currently, the Trust has authorized only the two series above.
The Elite Growth & Income Fund investment objective is to maximize total returns
through an aggressive approach to the equity and debt securities markets. The
Elite Income Fund investment objective is to achieve the highest income return
obtainable over the long term commensurate with investments in a diversified
portfolio consisting primarily of investment grade debt securities.
Note 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies
consistently followed by the Funds. The policies are in conformity with
generally accepted accounting principles.
A. Security Valuation - Investments in securities traded on a national
securities exchange are valued at the last reported sales price. Securities
which are traded over- the counter are valued at the bid price. Securities for
which reliable quotations are not readily available are valued at their
respective fair value as determined in good faith by, or under procedures
established by the Board of Trustees.
B. Federal Income Taxes - The Funds intend to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and distribute all its taxable income to its shareholders. Therefore
no federal income tax provision is required.
C. Option Accounting Principles (The Elite Growth & Income Fund) - When
the Fund sells an option, an amount equal to the premium received by the Fund is
included as an asset and an equivalent liability. The amount of the liability is
marked-to-market to reflect the current market value of the options written. The
current market value of a traded option is the last sale price. When an option
expires on its stipulated expiration date or the Fund enters into a closing
purchase transaction, the Fund realizes a gain (or loss if the cost of a closing
purchase transaction exceeds the premium received when the option was sold)
without regard to any unrealized gain or loss on the underlying security, and
the liability related to such option is extinguished. If an option is exercised,
the Fund realizes a gain or loss from the sale of the underlying security and
the proceeds of the sale are increased by the premium received. The Elite Growth
& Income Fund as a writer of an option may have no control over whether the
underlying security may be sold (call) or purchased (put) and as a result bears
the market risk of an unfavorable change in the price of the security underlying
the written option.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
(unaudited)
D. Equalization (The Elite income Fund) - The Fund follows the practice
known as "equalization" by which a portion of the proceeds from sales and costs
of repurchases of shares of the Fund is credited or charged to income on the
date of the transaction so that undistributed net income per share is unaffected
by shares of the Fund sold or repurchased.
E. Cash Equivalent - Consists of investment in mutual fund money market
accounts.
F. Other - As is common in the industry, security transactions are
accounted for on the trade date. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Income distributions and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for post - October
losses. Interest income and estimated expenses are accrued daily.
G. Use Of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Note 3 - RESTRICTED SECURITIES
The Funds may invest in restricted securities. Restricted securities
are securities which have not been registered under the Securities Act of 1933,
as amended, and as a result are subject to restrictions on resale. Investments
in restricted securities are valued at fair value as determined in good faith by
the Trust's Board of Trustees. There are no unrestricted securities of these
issuers. At March 31, 1997, the Elite Growth and Income Fund had investments in
restricted securities with the date of acquisition, cost, fair value and
percentage of net assets listed below:
Dates of Percentage
of
Acquisition Cost Value Net Assets
Stocks
180,000 XactLabs Corporation. 08/29/94 $216,000 $ 1,800 .01%
35,000 Optiva Corporation 04/25/94 148,750 525,000 1.04%
135,000 Coffee Station, Inc 04/16/96 303,750 303,750 .61%
----------- --------- ------
Total $668,500 $830,550 1.66%
=========== ========= ======
<PAGE>
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
(unaudited)
Note 4 - PURCHASES AND SALES OF SECURITIES
For the six months ended March 31, 1997, purchases and sales of
securities, other than options and short-term notes were as follows:
Purchases Sales
The Elite Growth and Income Fund $36,783,879 $33,368,294
The Elite Income Fund $ 3,536,587 $ 2,137,659
For The Elite Growth & Income Fund, transactions in covered call
options written were as follows:
Number of
Contracts* Premiums
Options outstanding at beginning of year 615 $ 432,848
Options written 3,201 1,353,738
Options terminated in closing purchase
transactions (1,638) (1,280,486)
Options exercised (10) (6,950)
Options expired (120) (133,000)
------------- -------------
Options outstanding at March 31, 1997 2048 $ 366,150
============= =============
* Each contract represents 100 shares of common stock
Note 5 - INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Funds retain McCormick Capital Management Inc. as their Investment
Manager. Under an Investment Management Agreement, the Investment Manager
furnishes each Fund with investment advice, office space and salaries of
non-executive personnel needed by the Funds to provide general office services.
As compensation for its services, the Manager is paid a monthly fee based upon
the average daily net assets of each Fund. For The Elite Growth & Income Fund
and The Elite Income Fund, the rates are 1% and 7/10 of 1%, respectively, up to
$250 million; 3/4 of 1% and 5/8% of 1%, respectively, over $250 million up to
$500 million; and 1/2 of 1% over $500 million for each Fund.
The Manager has undertaken that the operating expenses of each Fund for
each fiscal year (including management fees, but excluding taxes, interest and
brokerage commissions), expressed as a percentage of average daily net assets,
will not exceed the lowest rate prescribed by any state in which shares of the
Funds are qualified for sale.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
(unaudited)
NOTE 6 - DIRECTED BROKERAGE ARRANGEMENT
In an effort to reduce the total expenses of the Funds, a portion of
the operating expenses may be paid through an arrangement with a third-party
broker-dealer who is compensated through commission trades. Payment of the
operating expenses by the broker-dealer, is based on a percentage of commissions
earned. There were $16,800 in expenses in the Growth & Income Fund for the six
months ending March 31, 1997 paid under this arrangement.
NOTE 7 - CONCENTRATION
Although both of the funds have a diversified investment portfolio,
there are certain credit risks due to the manner in which the portfolio is
invested which may subject the funds more significantly to economic changes
occurring in certain industries or sectors. The Elite Growth & Income Fund has
investments in excess of 10% in capital goods, consumer goods and services,
financial intermediaries, and health care goods and services industries. The
Elite Income Fund has investments in excess of 10% in electric utilities, gas &
electric utilities and financial industries.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000799196
<NAME> The Elite Group
<SERIES>
<NUMBER> 001
<NAME> The Elite Growth & Income Fund
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1.000
<INVESTMENTS-AT-COST> 41,319,885
<INVESTMENTS-AT-VALUE> 49,249,355
<RECEIVABLES> 1,093,633
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1,230,270
<TOTAL-ASSETS> 51,573,257
<PAYABLE-FOR-SECURITIES> 1,134,731
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 278,939
<TOTAL-LIABILITIES> 1,413,670
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50,159,587
<SHARES-COMMON-STOCK> 2,609,532
<SHARES-COMMON-PRIOR> 2,180,397
<ACCUMULATED-NII-CURRENT> 0
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<CIK> 0000799196
<NAME> The Elite Group
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<NAME> Elite Income Fund
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