<TABLE>
Portfolio of Investments
The Elite Growth and Income Fund
March 31, 1999
<S>
<C> <C> <C>
Market Value
Shares Note 2A
Common Stock 86.3%
Business Services 9.3%
60,000 Browning Ferris .................................... $2,313,750
50,000 Equifax Incorporated ............................... 1,718,750
24,000 FDX Corporation* ................................... 2,227,500
60,000 Personal Group of America* ......................... 431,250
20,000 Standard Register .................................. 593,750
----------
Total Business Services .......................... 7,285,000
----------
Capital Goods 23.4%
50,000 Flowserve Corporation ............................. 778,125
24,000 General Electric .................................. 2,655,000
60,000 Goodrich Incorporated ............................. 2,058,750
24,000 Hewlett-Packard ................................... 1,627,500
16,000 I.B.M. Corporation ................................ 2,127,000
32,000 Microsoft Corporation* ............................ 2,868,000
60,000 Sterling Commerce ................................. 1,845,000
20,000 Thomas & Betts .................................... 751,250
60,000 U.S. Filter* ...................................... 1,837,500
32,000 Xerox Corporation ................................. 1,708,000
----------
Total Capital Goods .............................. 18,256,125
----------
Consumer Goods & Services .......................... 19.8%
30,000 Best Foods ........................................ 1,410,000
24,000 Central Parking ................................... 828,000
135,000Coffee Station, Inc* (a) .......................... 168,750
50,000 Fortune Brands .................................... 2,321,250
30,000 H.R. Block ........................................ 1,421,250
30,000 Limited, Inc. ..................................... 1,188,750
140,000 Optiva * (a) ..................................... 1,575,000
40,000 Service Corp. Intl ................................ 570,000
70,000 Shaw Communications ............................... 2,253,125
60,000 Starbucks* ........................................ 1,683,750
60,000 Zale Corporation* ................................. 2,051,250
----------
Total Consumer
Goods & Services .................................. 15,471,125
----------
Energy ............................................ 3.3%
35,565 Bonneville Pacific* ............................... 195,608
90,000 Petroleum Geo Services* ........................... 1,220,000
50,000 Pogo Producing .................................... 650,000
20,000 Tidewater Incorporated ............................ 517,500
----------
Total Energy .................................... 2,583,108
----------
Financial Intermediaries .......................... 16.4%
32,000 Fannie Mae ........................................ 2,216,000
32,000 First Union ....................................... 1,710,000
32,000 Freddie Mac ....................................... 1,828,000
30,000 Mellon Bank, Inc. ................................. 2,111,250
30,000 Ohio Casualty ..................................... 1,170,000
40,000 Union Planters Corp. .............................. 1,757,500
50,000 Washington Mutual ................................. 2,043,750
----------
Total Financial
Intermediaries ..................................... 12,836,500
----------
</TABLE>
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS
THE ELITE GROWTH AND INCOME FUND
MARCH 31, 1999 CONTINUED
<S>
<C> <C> <C>
Health Care Goods & Services 14.1%
32,000 American Home Products ............................. 2,088,000
40,000 Becton, Dickinson & Co. ............................ 1,532,500
50,000 Maxxim Medical* .................................... 943,750
30,000 Mckesson - HBOC .................................... 1,980,000
30,000 Merck and Company .................................. 2,405,625
15,000 Pfizer, Inc. ....................................... 2,081,250
----------
Total Health Care
Goods & Services ................................... 11,031,125
----------
Total Value of Common Stock
(Cost $42,970,948) ................................. 67,462,983
----------
Convertible Securities 2.9%
90,000 Glenborough Reality
Preferred .......................................... 1,501,875
50,000 Republic Industries ................................ 725,000
----------
Total Value of
Preferred Stock
(Cost $2,493,422) .............................. 2,226,875
----------
Par Value Bonds 8.3%
$500,000 Q-Point International 6.00%
due 05/01/99 (a) .................................. 500,000
20,000,000 U.S. Government Zero
Coupon due 05/15/19 ............................. 5,969,504
---------
Total Value of Bonds
(Cost $5,453,145) .................................... 6,469,504
Total Investments
(Cost $50,917,515**) 97.5% 76,159,362
Cash and receivables
In excess of
Liabilities 2.5% ...................................... 1,988,447
-----------
NET ASSETS 100.0% ..................................... $78,147,809
===========
(a) Restricted security (see note 3)
* Non - income producing
** Cost for Federal Income Tax purposes is the same.
At March 31, 1999, unrealized appreciation of
securities for Federal Income Tax purposes is
as follows:
Unrealized appreciation ............................... $ 26,382,951
Unrealized depreciation ............................... (1,141,104)
------------
Net unrealized appreciation ........................... $ 25,241,847
============
</TABLE>
<PAGE>
<TABLE>
<S>
<C> <C> <C>
Portfolio of Investments
The Elite Income Fund
March 31, 1999
(unaudited)
Par Value Market Value
Note 2A
- --------- ---------------- -------------
Bonds 97.3%
U.S. Government Notes and Bonds 50.0%
$ 2,720,000 U.S. Treasury Note
6.250% due 02/15/03 ............................ $ 2,818,886
5,850,000 U.S. Treasury Note
7.875% due 11/15/04 ........................ 6,572,892
3,990,000 U.S. Treasury Bond
7.250% due 05/15/16 ........................ 4,576,775
-----------
Total U.S. Government
Notes and Bonds .................................... 13,968,553
-----------
Electric & Gas Utilities 21.6%
450,000 Entergy Arkansas Inc. ..........................
7.000% due 03/01/02 ............................ 461,813
1,485,000 Niagara Mohawk Power
5.875% due 09/01/02 ............................ 1,472,006
150,000 Detroit Edison
7.400% due 01/15/03 ............................ 157,688
520,000 Ohio Power
6.750% due 04/01/03 ........................ 536,900
600,000 PG&E Gas Transmission NW Co. ...................
7.100% due 06/01/05 ............................ 752,538
500,000 Hawaiian Electric
6.660% due 12/05/05 ........................ 506,875
650,000 Appalachian Power Co. ..........................
6.800% due 03/01/06 ........................ 671,125
1,500,000 Kentucky Power
6.450% due 11/10/08 ................................ 1,468,125
-----------
Total Electric & Gas
Utility Bonds .................................. 6,027,068
Mortgage Backed Bonds 4.1%
500,000 Fannie Mae (1993-93HA)
6.750% due 01/25/08 512,046
550,000 Federal Home Loan (Mortgage Backed)
6.100% due 02/15/24 550,941
96,663 Donaldson, Lufkin & Jenrette - A
6.500% due 04/25/24 96,328
---------
Total Mortgage
Backed Bonds ......................... 1,159,315
---------
Financial/Corporate Bonds 21.6%
150,000 GMAC
9.375% due ................... 04/01/00 155,519
500,000 Heller Financial
6.500% due ................... 05/15/00 505,914
360,000 Commercial Credit
5.750% due ................... 07/15/00 359,615
625,000 Chrysler Financial
5.875% due ................... 02/07/01 628,906
</TABLE>
<PAGE>
Portfolio of Investments
The Elite Income Fund
March 31, 1999
unaudited)
<TABLE>
<S>
<C> <C> <C>
760,000 GMAC
6.875% due ...... 07/15/01 779,950
1,000,000 U.S. Filter
4.500% due ...... 12/15/01 978,750
700,000 Ford Motor Credit
8.200% due ...... 02/15/02 744,625
500,000 Heller Financial
6.440% due ...... 10/06/02 506,875
145,000 GMAC
7.050% due ...... 09/29/03 150,800
105,000 GMAC
8.250% due ...... 02/24/04 113,663
500,000 Ford Motor Credit
6.375% due ...... 12/15/05 505,000
500,000 Federal Home Loan
7.270% due ...... 04/07/06 500,128
500,000 Federal Home Loan
0.000% due ...... 09/29/17 117,485
----------
Total Financial/Corporate Bonds 6,047,229
----------
Total Value Bonds
(Cost $26,517,619) 27,202,165
Shares
Preferred Stock 1.7%
28,400 Glenborough Reality ............................. 473,925
-----------
Total Preferred Stock
(Cost $516,254) ........................................ 473,925
-----------
Total Investments
(Cost $27,033,873**) 99.0% ............................. 27,676,090
Cash and Receivables
In excess of
liabilities 1.0% ....................................... 269,913
-----------
NET ASSETS 100.0% ...................................... $27,946,003
===========
</TABLE>
**Cost for Federal Income Tax purposes is the same.
At March 31, 1999, unrealized appreciation of Securities for Federal Income
Tax is as follows:
<TABLE>
<S>
<C> <C>
Unrealized appreciation ................................. $ 759,569
Unrealized depreciation ................................. (117,351)
=========
Net unrealized appreciation ............................. $ 642,218
</TABLE>
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1999
(unaudited)
<TABLE>
<S>
<C> <C>
THE ELITE GROWTH THE ELITE
AND INCOME FUND INCOME FUND
-------------- -----------
ASSETS:
Investments in securities at value (notes 2A, 3 )
(Cost $50,917,515 and $27,033,873) $ ........ 76,159,362 $ 27,872,191
Cash and cash equivalent (Note 2E) .......... 2,184,587 (47,932)
Receivables:
Securities sold ............................. 187,275 --
Interest ............................ 53,224 530,780
Dividends ........................... 136,046 13,757
Capital stock sold .................. 6,427 --
------------ ------------
Total Assets ........................ 78,726,921 28,368,796
------------ ------------
LIABILITIES:
Payables:
Securities purchased ........................ 252,582 --
Capital stock reacquired .................. 106,734 12,782
Distributions ............................. 228,751 406,610
Accrued expenses .......................... (8,955) 3,401
-------- --------
Total Liabilities ......................... 579,112 422,793
-------- --------
NET ASSETS:
The Elite Growth & Income Fund--applicable to
3,267,875 shares outstanding $78,147,808
===========
The Elite Income Fund-applicable to 2,710,736
shares outstanding $27,946,003
===========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
(Net assets ( shares outstanding) $23.91 $10.31
======== ========
At March 31, 1999 the components of net assets were as follows:
Paid-in capital ......................... $ 53,272,572 $ 27,137,879
Accumulated net realized
gain on investments ..................... (369,540) 74,641
Undistributed net
investment income ....................... 2,929 91,265
Net unrealized
appreciation (depreciation) ............. 25,241,847 642,218
------------ ------------
Net assets .............................. $ 78,147,808 $ 27,946,003
============ ============
</TABLE>
<PAGE>
STATEMENT OF OPERATIONS
For the Six Months Ended March 31, 1999
(unaudited)
<TABLE>
<S>
<C> .................................................. <C> <C>
THE ELITE GROWTH THE ELITE
AND INCOME FUND INCOME FUND
-------- --------
INVESTMENT INCOME:
Income:
Interest ............................................. $314,591 $928,490
Dividends ............................................ 544,411 22,929
-------- --------
Total Income ................................. 859,002 951,419
-------- --------
Expenses:
Investment management fee ............................ 385,238 104,865
Transfer agent fees .................................. 7,019 7,004
Custodian fees ....................................... 17,460 5,891
Professional fees (Note 6) ........................... 21,957 11,591
Trustees fees and expenses ........................... 8,700 3,300
Record keeping services .............................. 27,000 10,942
Shareholder reports .................................. 3,903 873
Registration fees and other .......................... 13,290 5,366
-------- --------
Total Expenses ................................. 484,567 149,832
-------- --------
Expenses Paid indirectly
(Note 6) ............................................. 58,000 0
Expenses Paid by manager
(Note 5) ............................................. 0 21,131
-------- --------
Net Expenses ......................................... 426,567 128,701
-------- --------
Net Investment Income ................................ 432,435 822,718
-------- --------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENT
SECURITIES AND OPTIONS CONTRACT
Net realized gain (loss):
Investment securities .................... 2,065,046 $ 71,482
Expired and closed covered call
options written (Note 4) ................. (1,284,362) --
------------ ------------
Net realized gain
on investment securities
and option contracts ..................... 780,684 71,482
------------ ------------
Net increase (decrease)
in unrealized appreciation
of investment securities ................. 9,191,735 (1,301,459)
------------ ------------
Net increase in net assets
resulting from operations ................ $ 10,404,853 ($ 407,260)
============ ============
See Notes to Financial Statements
</TABLE>
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
THE ELITE GROWTH & INCOME FUND
<TABLE>
<S>
<C> ............................................ <C> <C>
Six Months Ended Year Ended
March 31, 1999 Sept 30, 1998
OPERATIONS:
Net investment income .......................... $ 432,435 $ 605,847
Net realized gain (loss)
on investment securities
and options contracts .......................... 780,684 (1,150,223)
Net increase (decrease) in
unrealized appreciation of
investment securities .......................... 9,191,735 (3,913,327)
------------ ------------
Net increase (decrease) in
net assets resulting from
operations ..................................... 10,404,853 (4,457,703)
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net
investment income .............................. (466,267) (569,085)
Distributions from net
realized gains on
investment transactions ........................ 0 0
CAPITAL SHARE TRANSACTIONS:
Increase in net assets
resulting from capital
share transactions (a) ......................... (4,061,485) 9,578,726
------------ ------------
Total increase in
net assets ..................................... 5,877,102 4,551,938
NET ASSETS:
Beginning of year .............................. 72,270,707 67,718,769
------------ ------------
End of year (including undistributed
net investment income of $2,929 and
$ 36,762 respectively) ........................ $ 78,147,808 $ 72,270,707
============ ============
</TABLE>
(a)Transactions in capital stock were as follows:
<TABLE>
<S>
<C> <C> <C>
Six Months Ended Year Ended
March 31, 1999 September 30,1998
Shares Value Shares Value
------------ ------------ ------------ ------------
Shares sold .............................. 193,068 $ 4,392,384 868,755 $ 20,261,676
Shares issued in
Reinvestment of
Distributions ............................ 9,068 214,735 23,665 537,450
------------ ------------ ------------ ------------
202,136 4,607,119 892,420 20,799,126
Shares redeemed .......................... (372,654) (8,668,604) (497,374) (11,220,400)
------------ ------------ ------------ ------------
Net increase(decrease) ................... (170,518) (4,607,118) 395,046 9,578,726
============ ============ ============ ============
See Notes to Financial Statements
</TABLE>
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
THE ELITE INCOME FUND
<TABLE>
Six Months Ended Year Ended
March 31, 1999 Sept. 30, 1998
----------- -----------
OPERATIONS:
<S> <C> <C>
Net investment income ............................ $ 822,718 $ 1,190,508
Net realized gain on
investment securities ............................ 71,482 49,483
Net increase in unrealized
appreciation of investment
securities ....................................... (1,301,460) 1,712,996
----------- -----------
Net increase in net assets
resulting from Operations ........................ (407,260) 2,952,987
NET EQUALIZATION CREDITS
(NOTE 2D) ........................................ 0 108,697
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net
investment income ............ (755,996) (1,285,477)
CAPITAL SHARE TRANSACTIONS:
Increase (decrease) in net
assets resulting from capital
share transactions (a) ....... (1,731,592) 12,752,701
----------- -----------
Total increase in net assets . (2,894,848) 14,528,908
NET ASSETS:
Beginning of year ............ 30,840,851 16,311,943
------------ ------------
End of year (including
undistributed net
investment income of
$-0- and $24,544
respectively) ................ $ 27,946,003 $ 30,840,851
============ ============
</TABLE>
(a)Transactions in capital stock were as follows:
<TABLE>
<S>
<C> <C> <C>
Six Months Ended Year Ended
March 30,1999 September 30,1998
Shares Value Shares Value
------------ ------------ ------------ ------------
Shares sold ...................... 400,521 $ 4,237,684 1,603,301 $ 16,408,068
Shares issued in
Reinvestment of
Distributions .................... 29,718 314,413 109,272 1,135,100
------------ ------------ ------------ ------------
430,239 4,552,097 1,712,573 17,543,168
Shares redeemed .................. (595,476) (6,283,689) (468,391) (4,790,467)
------------ ------------ ------------ ------------
Net increase ..................... (165,237) ($ 1,731,592) 1,244,182 $ 12,752,701
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements
<PAGE>
FINANCIAL HIGHLIGHTS
THE ELITE GROWTH & INCOME FUND
For a share outstanding throughout each period
<TABLE>
Years Ended September 30
1999* 1998 1997 1996 1995
-------- -------- -------- -------- --------
Net asset value,
<S> <C> <C> <C> <C> <C>
beginning of period ..................... $ 21.02 $ 22.25 $ 20.55 $ 16.64 $ 15.29
Income from investment
Operations
Net investment income ................... .14 .18 .29 .11 .18
Net gains on securities
(both realized and
unrealized) ............................. 3.03 (1.24) 6.15 3.92 2.52
-------- -------- -------- -------- --------
Total from investment
Operations .............................. 3.17 (1.06) 6.44 4.03 2.70
-------- -------- -------- -------- --------
Less Distributions
Dividends from net investment
Income .................................. (.14) (.17) (.29) (.12) (.18)
Distributions from
capital gains ........................... 0 0 (4.45) 0 (1.17)
-------- -------- -------- -------- --------
Total distributions ..................... (.14) (.17) (4.74) (.12) (1.35)
-------- -------- -------- -------- --------
Net asset value,
end of year ............................. $ 23.91 $ 21.02 $ 22.25 $ 20.55 $ 16.64
======== ======== ======== ======== ========
Total Return ............................ 14.42% (4.82%) 34.66% 24.26% 19.92%
Ratios/Supplemental Data
Net asset value,
end of period
(in 000's) ..................... $ 78,148 $ 50,160 $ 44,799 $ 31,182 $ 25,380
Ratio of expenses
to average net assets 1.10%(a)** 1.23% 1.30% 1.33% 1.42%
Ratio of net investment income
to average net assets 1.12%(a)** .71% 1.41% .61% 1.18%
Portfolio turnover ............. 124.01% 138.49% 115.80% 156.93% 137.56%
Average Brokerage
Commissions .................... $ .06 $ .06 $ .06 (1) (1)
*For the six months ending March 31, 1999
**Ratio reflects fees paid through a directed brokerage arrangement.
Including the expenses paid with brokerage commission would have
increased the expense ration to 1.25% and reduced net investment
income to 0.64%
(1)Not required information prior to 1996
(a)Annualized
</TABLE>
<PAGE>
See Notes to Financial Statements
FINANCIAL HIGHLIGHTS
THE ELITE INCOME FUND
<TABLE>
For a share outstanding throughout each period
Years Ended September 30,
1999* 1998 1997 1996 1995
-------- -------- -------- -------- --------
Net asset value,
<S> <C> <C> <C> <C> <C>
beginning of year ............... $ 10.72 $ 10.00 $ 9.73 $ 10.03 $ 9.48
Income from investment operations
Net investment income ........... .27 .59 .60 .60 .62
Net gain (loss)
on securities
(both realized
and unrealized) ................. (.59) .72 .27 (.23) .54
-------- -------- -------- -------- --------
Total from investment
Operations ...................... (.32) 1.31 .87 .37 1.16
-------- -------- -------- -------- --------
Less Distributions
Dividends from net
Investment income ............... (.27) (.59) (.60) (.62) (.61)
Distributions from
capital gains ................... 0 0 0 (.05) 0
-------- -------- -------- -------- --------
Total distributions ............. (.27) (.59) (.60) (.67) (.61)
-------- -------- -------- -------- --------
Net asset value,
end of year ..................... $ 10.31 $ 10.72 $ 10.00 $ 9.73 $ 10.03
======== ======== ======== ======== ========
Total Return .................... (1.29%) 13.44% 9.20% 3.79% 12.56%
Ratios/Supplemental Data
Net asset value,
end of year (in 000's) ....... $ 27,946 $ 30,841 $ 16,312 $ 12,618 $ 12,366
Ratio of expenses to average
net assets ................... 1.00% .92% .96% 1.00% 1.12%**
Ratio of net investment income
to average net assets ........ 5.48% 5.63% 6.01% 6.01% 6.34%
Portfolio turnover ........... 30.25% 21.41% 37.60% 43.37% 42.24%
</TABLE>
* For the six months ending March 31, 1999
**Ratio reflects fees paid though a directed brokerage
arrangement. No fees were paid through a directed
brokerage arrangement for 1999, 1998, 1997 or 1996.
Expense ratio for 1995 after reduction of fees paid
through the directed brokerage arrangement was 1.08%
See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
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 non par shares of beneficial interest of any
number of series. Currently, the rust has authorized only the two series above.
The Elite Growth & Income Fund's investment objective is to maximize total
returns through an aggressive approach to the equity and debt securities
markets. The Elite Income Fund's 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 al 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.
D. Cash Equivalent - Consists of investment in mutual fund money market
accounts.
<PAGE>
E. 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.
F. 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. At March 31, 1999, 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:
<TABLE>
Date of ............. Percent
Acquisition Cost Value of Net Assets
Stocks
<S> <C> <C> <C> <C>
180,000 Atrieva Corp. ..................... 08/29/94 $216,000 $ 0 .00%
140,000 Optiva Corp. ...................... 04/25/94 148,750 1,575,000 2.01%
135,000 Coffee Station .................... 04/16/96 303,750 168,750 .21%
500,000 Q-Point Intl ...................... 12/08/97 500,000 500,000 .63%
6.000% due 05/01/99
---------- ---------- ----
Total Restricted
Securities ................................ $1,168,500 $2,243,750 2.85%
========== ========== ====
</TABLE>
Note 4 - Purchases and Sales of Securities
For the six months ending March 31, 1999, purchases and sales of securities,
other than options and short-term notes were as follows:
<TABLE>
<S>
<C> <C> <C>
Purchases Sales
The Elite Growth and Income Fund ........................ $47,888,483 $41,370,168
The Elite Income Fund ................................... $ 1,428,762 $ 4,545,964
</TABLE>
For The Elite Growth & Income Fund, transactions in covered
call options written were as follows:
<TABLE>
<S>
<C> <C> <C>
Number of Contracts* Premiums
Options outstanding at
beginning of year .......................................... 1,310 $ 2,114,503
Options written ............................................ 2,320 601,525
Options terminated in
closing purchase transactions .............................. (2,630) (4,366,265)
Options exercised .......................................... (400) 660,095
Options expired ............................................ (600) 990,142
----------- -----------
Options outstanding at
March 31,1999 .............................................. $ 0 $ 0
</TABLE>
* 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%, respectively, up to $250
million; .75% and .625%, respectively, over $250 million up to $500 million; and
.5% over $500 million for each Fund. The Manager may voluntary reimburse a
portion of the operating expenses of a Fund for any fiscal year (including
management fees, but excluding taxes, interest and brokerage commissions).
Voluntary reimbursements may cease at any time without prior notice.
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. Expenses paid under this arrangement during the six months ending March
31, 1999 were $58,000 for the Elite Growth & Income Fund.
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. The Elite Income Fund has
investments in excess of 10% in electric utilities, gas utilities and financial
intermediaries.
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