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www.stockcarstocks.com
Invest in the companies that invest in your sport (SM)
ANNUAL REPORT
September 30, 1999
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[GRAPHIC OMITTED: PHOTO OF KIM TORRENCE, JOHN ALLEN AND BOB CARTER]
From left to right: Kim Torrence-Fund Secretary, John Allen-Fund
President, Bob Carter-Portfolio Manager
Dear StockCar Stocks Shareholders,
We are proud to deliver the first annual report of StockCar Stocks
Mutual Fund to our shareholders. During the past year, the business of
NASCAR has been nearly as exciting as some of the racing on the track.
Listed below is a summary of many of the major events that occurred in
the Fund and in the sport over the past year.
Track Owners
Probably the most exciting business news of the 1999 NASCAR season was
the merger of International Speedway Corporation with Penske
Motorsports. The merger brought together two of the most influential
people in motorsports, Bill France and Roger Penske. The merger created
a motorsports powerhouse with track holdings including Daytona,
California, Michigan and Talladega. The merger also creates a company
with the financial muscle to continue to develop and modernize
Darlington and Rockingham. In fact, the Board of Directors of
International Speedway Corporation granted permission to Darlington to
explore the option of adding lights to the 50 year-old facility. Bruton
Smith's Speedway Motorsports also expanded its footprint with the
December acquisition of Las Vegas Motor Speedway. Speedway Motorsports
gained headlines with its continuing expansion of Bristol Motor
Speedway, where an additional 10,000 seats are to be added before next
year's race. As well, in an industry "first", the company announced the
sale of the "naming rights" to Charlotte Motor Speedway to Lowe's
Corporation. The deal, worth $35 million to the company over a 10-year
period, will be used in part to expand the speedway's capacity from its
present 165,000 seats to 255,000 by 2005.
With all this exciting news, it is not surprising that International
Speedway Corporation and Speedway Motorsports were two of the best-
performing stocks in the Fund. When the Fund was launched last October,
we began acquiring shares of International Speedway Corporation at $28 a
share, and as this letter is being written, the stock is currently
trading in the low $50s. Speedway Motorsports has seen its stock rise
from $18 a share last October, to the mid-$40s. As you will see in the
Fund financials, the additional shares received in the Penske merger
have made International Speedway Corporation the Fund's largest holding,
and Speedway Motorsports is the third-largest holding.
NASCAR Sponsors
The 1999 season has also been a watershed year for the embracing of
NASCAR racing by corporate America. With NASCAR racing criss-crossing
America from California to Miami, and from Phoenix to New Hampshire, the
cost of running a NASCAR team has sky-rocketed. While solid numbers are
confidential, industry sources put the cost of fielding a top team at
$10 million a year-and rising. Fortunately, corporate America has been
more-than-willing to pick up the bill, as NASCAR racing has become the
fastest-growing sport in America. With new sponsors, new stars are also
being created. The Home Depot is a perfect example of a rookie NASCAR
sponsor which has helped back rookie-sensation driver Tony Stewart. It
is safe to say that Home Depot has received plenty of exposure for its
marketing dollars. In fact, Dick Sullivan, The Home Depot's Senior Vice
President of Marketing, was quoted in a recent Fortune magazine article
saying, "I don't call NASCAR racing just a sport anymore, I call it a
marketing machine". Home Depot has also been a stand-out stock for the
Fund.
Other strong performers in the Fund include Ford and General Motors,
which both had solid years, with record-breaking truck and sport-
utility-vehicle sales. The Big Two learned recently that Dodge will
return to NASCAR Winston Cup competition. Not to be outdone, both Ford
and GM will launch new race cars next year, with updated Taurus and
Monte Carlo models making their debut at the 2000 Daytona 500.
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Long-time NASCAR sponsors and Fund holdings, McDonald's Corporation and
Procter & Gamble (using its Tide detergent brand), made headlines this
year with highly-publicized team changes. Tide announced that it will
leave Ricky Rudd following the 1999 season, and McDonald's will end its
relationship with Bill Elliott after next year. Not surprisingly,
neither decision was well-received by the drivers or their loyal fans.
However, the decisions serve as a reminder to the drivers and teams
that, for their $6-10 million yearly investment, sponsors demand both
on-track and off-track results.
NASCAR sponsors including Caterpillar, Texaco, Mobil, Lowe's, Deere &
Co. and duPont all continued to deliver strong financial results and
stock price performance in 1999. Each is a Fund holding. Some sponsors
including Coca-Cola, AT&T, Mattel and Sears disappointed investors in
1999, and negatively affected the performance of the Fund. However,
these are strong companies with great brands and we believe that, over
the long-term, they represent a great asset to the Fund.
NASCAR Television Broadcasters
While the off-season in NASCAR racing is full of Silly Season changes
among drivers and teams, the biggest news heading into the 2000 season
concerns where fans will watch future races. NASCAR is currently
negotiating a new television package which should be a win-win
situation. First, the new television package will further elevate
racing's profile versus other major sports -- pro basketball, baseball
and football. NASCAR fans will win with more in-depth coverage of their
sport.
Financially, NASCAR track owners gain, as 65% of all TV dollars will
flow to their bottom-lines. Race teams will also win, with 25% of TV
revenues allocated for the race purse. Therefore, teams finishing near
the back of the field will come away with more money each week, which
may give them the resources to better-compete in the future. With more
races being broadcast on networks such as CBS, NBC or ABC, as opposed to
their cable subsidiaries, corporate sponsors should also win as they
reach larger audiences. Finally,10% of the television dollars flow to
Nascar's home office in Daytona. This should make it stronger-
financially, and allow it to continue dedicating the resources necessary
to ensure that the sport continues its spectacular growth.
StockCar Stocks Index Fund currently holds Walt Disney (parent of ABC
and ESPN), CBS Corp. (CBS owns cable channel TNN), Time Warner (parent
of cable channel TBS) and General Electric Company (parent of network
broadcaster NBC). Overall, these companies have also been strong
performers in the Fund over the past year.
NASCAR Merchandisers
Merchandisers, including Action Performance and Racing Champions, are
also positioning themselves for continued growth in NASCAR racing. Total
sales of NASCAR merchandise in 1990 were only $60 million annually, and
today that number is around $1 billion. Action Performance has benefited
as the major producer of Dale Earnhardt and Jeff Gordon merchandise. It
is well-situated as it also has Dale Jarrett, current 1999 Winston Cup
points leader, under contract. Should Jarrett win the championship, he
should surely join Earnhardt and Gordon as a top-merchandising driver.
The year 2000 brings Dale Earnhardt, Jr. to the Winston Cup series, and
he has signed-on with Action Performance. Besides being a force on the
track, he should also be a popular driver in track-side sales of t-
shirts, hats, die-cast cars. Both Action Performance and Racing
Champions are investing heavily in building distribution beyond
traditional track-side and catalogue sales. Wal-Mart and K-Mart have
become new distribution allies for these companies. Perhaps even more
exciting, NASCAR merchandisers are looking to the internet and e-
commerce as major retail strategies of the future. While 1999 stock
performance of Action Performance and Racing Champions has been
negatively-affected by the enormous time, money and resources they have
dedicated to building these new distribution outlets, these efforts
position the companies for further growth as NASCAR heads toward the
21st century.
StockCar Stocks Performance Update
StockCar Stocks Index Fund currently invests in 59 companies that
sponsor or derive revenues from NASCAR Winston Cup Series racing. Thus,
Fund results will be dependent upon the performance of the companies we
have previously described. While the Fund's overall gain in its first
year was 19%, your individual performance as a shareholder is most
dependent on when you actually purchased your shares. When the Fund was
launched in October 1998, financial markets were already down 25%, the
result of significant losses in many international stock markets, and
the shock from the collapse of several prominent Wall Street hedge
funds. In this environment, the Fund began buying stocks that were well-
down from their all-time highs, and benefited from a rebound in stock
market performance after the Federal Reserve reduced interest rates
three times last fall in response to these financial crises.
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The first nine-months of 1999 saw continued strength in the U.S.
economy, and record corporate earnings for many companies in the Fund.
From inception, the Fund was up over 35% last spring before the Federal
Reserve reversed course. In an effort to rein-in the economy, Chairman
Alan Greenspan announced an interest rate hike in the spring, and
another increase this summer. Not surprisingly, the Dow Jones Industrial
Average (which had made history by passing the 10,000 level as well as
11,000) and the Standard & Poor 500 Stock Index as well, reacted by
retreating from their peaks. As many companies in the Dow Jones
Industrial Average, and the S&P 500, are also holdings in StockCar
Stocks, the Fund saw a similar performance decline over the summer.
As we moved toward the cooler weather of Fall, the stock market has
recovered somewhat. However, markets may be cautious heading into the
New Year. While there has been substantial concern about Y2K issues,
corporate America has invested millions of dollars to update computer
systems and programs. Similarly, StockCar Stocks has also updated its
systems to be Year 2000 compliant. No action is required by you as your
account has been automatically updated with this new system. Financial
markets are often affected, as well, in Presidential election years, and
it would not be surprising to see this pattern repeat itself.
NASCAR Racing in the 21st Century
In 1998, NASCAR celebrated its first 50 years of racing. The truly-
amazing part is how much of racing's growth has occurred just in the
1990s. NASCAR races have been added in Miami, California, Texas,
Indianapolis and New Hampshire. In the next few years, new races may be
added in Kansas City, New York City, Denver and Chicago. Attendance at
NASCAR races has grown 65% in the 1990s, to over 10 million fans.
Television ratings have more-than doubled. What has helped finance this
spectacular growth? Surprisingly, the answer is Wall Street. When Bill
France took International Speedway Corporation public, and Bruton Smith
did the same with Speedway Motorsports, Wall Street served as a medium
for them to raise the millions of dollars required to finance this
growth. In exchange, Wall Street received an ownership stake in the
companies. Similarly, you as a StockCar Stocks shareholder are truly
"Investing in the companies that invest in your sport". In return for
your investment in StockCar Stocks Index Fund, you receive an ownership
stake in companies involved in NASCAR racing and participate in their
growth. As we have often-said, we encourage you to take a long-term view
of your investment. All businesses experience times of spectacular
growth, slow growth, or no-growth. Even NASCAR racing may hit a few
speed bumps in the future. However, over the longer-term, American
business has thrived beyond that of any other economy in the world,
based on this Wall Street business model.
We at StockCar Stocks thank you for being shareholders in the Fund, and
for committing yourself to the long-term growth opportunities afforded
by the companies we collectively own. In February, NASCAR will launch a
new promotion called "NASCAR 2000", which will focus on the future of
the sport. As a StockCar Stocks shareholder, you will be more than just
a spectator at the "NASCAR 2000" promotion, but a participant in its
future, as well. We also believe that you will be rewarded for your
foresight, as the sponsors of Winston Cup racing are many of the same
companies that will help shape our economy in the year 2000 and beyond.
Sincerely,
/S/ John P. Allen II
John P. Allen, II
President
StockCar Stocks Mutual Fund, Inc.
Please call 1.87.RACE.FUND or visit our website at
www.stockcarstocks.com for a free prospectus, which includes information
on all fees and expenses. Read the prospectus carefully before investing
or sending money. There are special risks associated with investing in
an index fund. StockCar Stocks Index Fund is composed of only 59
companies, there is potential company turnover, possible addition to the
index of companies which may not have a long operating history, and the
risks inherent in the stock car auto racing industry. These factors may
affect the value of your investment. Total return and principal value
will vary so those shares when redeemed, may be worth more or less than
their original value. Past performance is no guarantee of future
results. The Fund offers multiple classes of shares for which
performance will differ. StockCar Stocks Index Fund Direct Shares were
launched October 1, 1998. StockCar Stocks Advisor Share were launched
August 2, 1999. The Fund is distributed by Declaration Distributors,
Inc., Conshohocken, PA. NASCAR is a registered trademark of the National
Association of Stock Car Auto Racing.
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PERFORMANCE UPDATE -- $10,000 INVESTMENT
For the period from October 1, 1998 to September 30, 1999
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StockCar Stocks offers Nascar fans a variety of methods for investing in
the Fund. While the underlying companies owned by the Fund are the same,
we have recently welcomed investors who prefer to use an Investment
Professional with the launch of the Advisor shares. Investors who prefer
to make their own investment decisions are now shareholders of the
Direct shares. We have produced separate performance graphs for the
Direct and Advisor shares. However, the financial statement of fund
holdings is the same for both share classes.
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No Load Class RCE Index
10/1/98 $10,000 $10,000
10/31/98 $11,180 $11,294
11/30/98 $11,813 $11,971
12/31/98 $12,187 $12,285
1/31/99 $12,327 $12,479
2/28/99 $12,033 $12,169
3/31/99 $12,400 $12,512
4/30/99 $12,953 $13,082
5/31/99 $12,960 $12,512
6/30/99 $12,987 $13,012
7/31/99 $12,707 $12,740
8/31/99 $12,193 $12,185
9/30/99 $11,893 $11,856
Advisor Class
8/2/99 $9,600
8/31/99 $9,220
9/30/99 $9,220
Commencement of operations
Annualized Total Return through 9/30/99
------------------------------------------
with sales charge without sales charge
No Load Class -- 18.93%
Advisor Class (10.07)% (6.32)%
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SCHEDULE OF INVESTMENTS September 30, 1999
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Number of Market
Shares Value
-------------- --------------
COMMON STOCK -- 96.32%
Agricultural -- 3.18%
Philip Morris Co., Inc. (Miller Lite) 1,650 $56,409
R.J. Reynolds Tobacco Holdings, Inc. 925 24,975
UST, Inc. (Skoal) 2,425 73,205
--------------
154,589
--------------
Automobile Manufacturers -- 3.11%
Ford Motor Co. 1,475 74,027
General Motors Corp. 1,225 77,098
--------------
151,125
--------------
Automobile Parts & Equipment -- 3.41%
Delphi Automotive Systems Corp. 825 13,252
Exide Corp. 5,000 47,812
Federal Mogul Corp. 1,300 35,831
Genuine Parts Co. (NAPA) 2,600 69,062
--------------
165,957
--------------
Broadcasting -- 5.86%
CBS Corp.* 2,660 123,025
Comcast Corp. (Primestar) 715 28,511
Cox Communications, Inc.* (Primestar) 610 25,468
Media One Group, Inc.* (Primestar) 400 27,325
Time Warner, Inc. (TBS, Cartoon Network) 1,325 80,494
--------------
284,823
--------------
Chemicals -- 1.97%
DuPont de Nemours & Co. 1,575 95,878
--------------
Diversified Conglomerates -- 2.81%
General Electric Co. (NBC) 825 97,814
The Seagram Co. Ltd. 850 38,675
--------------
136,489
--------------
Electronic Equipment -- 2.44%
Koninklijke Philips Electronics ADR 1,175 118,675
--------------
Entertainment & Leisure -- 15.75%
Action Performance* 2,250 47,391
Dover Downs Entertainment, Inc. 7,300 101,287
International Speedway Corp. CL A 5,600 294,368
Mattel, Inc. 3,900 74,100
Racing Champions Corp.* 6,900 39,244
Speedway Motorsports, Inc.* 3,075 133,186
The Walt Disney Co. (ESPN, ABC) 2,925 75,684
--------------
765,260
--------------
Financial Services -- 5.39%
Amex S&P Depository 300 38,522
Associates First Capital Corp. 1,475 53,100
MBNA Corp. 3,500 79,844
Paychex, Inc. 2,650 90,431
--------------
261,897
--------------
Food & Beverage -- 14.52%
Adolph Coors Co. 1,575 85,247
Anheuser-Busch Companies, Inc. 1,325 92,833
Coca-Cola Co. 1,300 62,481
General Mills, Inc. (Cheerios) 1,135 92,077
Kellogg Co. 2,625 98,273
Nabisco Group Holdings Corp. (Winston) 2,925 43,875
PepsiCo, Inc. 2,125 64,281
Quaker Oats Co. (Gatorade) 1,500 92,813
Sara Lee Corp. (Bryan Foods, Jimmy Dean) 3,150 73,828
--------------
705,708
--------------
Machinery, General Industrial -- 4.29%
Caterpillar, Inc. 1,900 104,144
Deere & Co. 2,700 104,456
--------------
208,600
--------------
Oil & Gas -- 8.73%
Ashland, Inc. (Valvoline) 1,775 59,684
Mobil Corp. 950 95,713
Pennzoil - Quaker State Co. 5,950 75,119
Texaco Inc. 1,700 107,312
Tosco Corp. (Unocal 76) 3,425 86,481
Tosco Corp. rights exp. 12/6/08* 325 --
--------------
424,309
--------------
Personal & Household Products -- 4.40%
Block Drug, Inc. (Goody's Headache Powder) 2,000 71,875
Procter & Gamble Co. (Tide) 900 84,375
The Clorox Co. (STP) 1,500 57,375
--------------
213,625
--------------
Photography Equipment -- 1.94%
Eastman Kodak Co. 1,250 94,297
--------------
Restaurant - Retail -- 3.23%
CBRL Group, Inc. (Craker Barrel) 3,750 58,125
McDonald's Corp. 2,300 98,900
--------------
157,025
--------------
Retail Stores -- 6.32%
Home Depot, (The) Inc. 1,435 98,477
K-Mart Corp.* 5,400 63,113
Lowe's Cos., Inc. 1,700 82,875
Sears, Roebuck & Co. (Die Hard) 2,000 62,750
--------------
307,215
--------------
Telecommunications -- 5.59%
American Telephone & Telegraph Co. 1,200 52,200
BellSouth Corp. 1,800 81,000
Global Crossing Ltd. 5,227 138,516
--------------
271,716
--------------
Tire & Rubber -- 1.66%
Goodyear Tire & Rubber 1,675 80,609
--------------
Utilities -- 1.72%
Peco Energy Co. (Power Team) 2,225 83,438
--------------
TOTAL COMMON STOCK (Cost $4,915,212) 4,681,235
--------------
MISCELLANEOUS ASSETS -- 3.28%
Evergreen Money Market Trust CL Y (Cost $159,420) 159,420
--------------
TOTAL INVESTMENTS (Cost $5,074,632) -- 99.60% 4,840,655
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.40% 19,331
--------------
NET ASSETS -- 100.00% $4,859,986
==============
* Non-income producing investment.
ADR - American Depository Receipt
See notes to financial statements.
<TABLE>
<CAPTION>
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STATEMENT OF ASSETS AND LIABILITIES
September 30, 1999
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<S> <C>
Assets:
Investments, at market (identified cost $5,074,632) (Note 1) $4,840,655
Cash 22,360
Receivables:
Dividends and interest 7,543
Due from advisor 8,312
Fund shares sold 2,800
------------
Total assets 4,881,670
------------
Liabilities:
Payables:
Payable for fund shares redeemed 493
Payable for investment securities purchased 19,010
Distibution fees payable 1,019
Other liabilities 1,162
------------
Total liabilities 21,684
------------
Net Assets $4,859,986
============
Net Assets consist of:
Common stock $28
Paid-in capital 5,067,612
Undistributed net investment income 6,551
Accumulated realized gain on investments 19,772
Net unrealized loss on investments (233,977)
------------
Total Net Assets $4,859,986
============
Advisor class shares:
Net Assets (Unlimited shares of $0.0001 par value
authorized; 15,409 shares outstanding) (Note 2) $207,880
Net Asset Value and redemption price per share $13.49
============
Offering price per share ($13.49 (divided by) .9600) $14.05
============
No-load class shares:
Net Assets (Unlimited shares of $0.0001 par value
authorized; 260,778 shares outstanding) (Note 2) $4,652,106
Net Asset Value, offering and redemption price per share $17.84
============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
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STATEMENT OF OPERATIONS
For the Year Ended September 30, 1999*
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<S> <C>
Investment Income:
Interest $3,412
Dividends 35,848
------------
Total investment income 39,260
------------
Expenses:
Investment advisory fees 11,599
Administration fee 18,821
12b-1 fees--Advisor class 62
12b-1 fees--No-load class 2,227
------------
Total expenses 32,709
------------
Net investment income 6,551
------------
Realized gain/(loss) on investments:
Net realized gain on investments 19,772
Net change in unrealized depreciation on investments (233,977)
------------
(214,205)
------------
Net decrease in net assets resulting from operations $(207,654)
============
* StockCar Stocks Index Fund commenced operations on October 1, 1998.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
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STATEMENT OF CHANGES IN NET ASSETS
For the Year Ended September 30, 1999*
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<S> <C>
Increase in Net Assets
Operations:
Net investment income $6,551
Net realized gain on investments 19,772
Net change in unrealized depreciation on investments (233,977)
------------
Net decrease in net assets resulting from operations (207,654)
------------
Increase in net assets derived from capital share
transactions (Note 2) 4,967,640
------------
Increase in net assets 4,759,986
Net Assets:
Beginning of year 100,000
------------
End of year** $4,859,986
============
* StockCar Stocks Index Fund commenced operations on October 1, 1998.
** Including undistributed net investment income of $6,551.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
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FINANCIAL HIGHLIGHTS
Per Share Data (For a Share Outstanding from October 1, 1998 through September 30, 1999)
- ----------------------------------------------------------------------------------------
<S> <C> <C>
For the Year For the Period
Ended Ended
September 30, 1999 September 30, 1999*
No-load Class Advisor Class
-------------- --------------
Net Asset Value, Beginning of Period $15.00 $14.40
-------------- --------------
Investment Operations:
Net investment income 0.02 0.01
Net realized and unrealized gain/(loss)
on investments 2.82 (0.92)
-------------- --------------
Total from investment operations 2.84 (0.91)
-------------- --------------
Net Asset Value, End of Period $17.84 $13.49
============== ==============
Total Return 18.93% (6.32)%
Ratios/Supplemental Data
Net assets, end of period (in 000's) $4,652 $208
Ratio of expenses to average net assets 1.41% 1.41%(1)
Ratio of net investment income (loss)
to average net assets: 0.28% 0.63%(1)
Portfolio turnover rate 6.60% 6.60%
1 Annualized
* The StockCar Stocks Index Fund Advisor class shares commenced operations on
August 2, 1999.
See notes to financial statements.
</TABLE>
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NOTES TO THE FINANCIAL STATEMENTS
September 30, 1999
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
StockCar Stocks Mutual Fund, Inc. (the "Company") was incorporated under
the laws of the state of Maryland on May 18, 1998, and consists solely
of StockCar Stocks Index Fund (the "Fund"). The Company is registered as
an, open-end diversified management investment company of the series
type under the Investment Company Act of 1940 (the "1940 Act"). The
Company is registered to offer two classes of shares, Advisor class and
No-load class. The Fund's investment strategy is to emphasize growth of
capital and current income. The Fund became effective with the SEC on
September 18, 1998 and commenced operations on October 1, 1998.
The costs incurred in connection with the organization, initial
registration and public offering of shares have been paid by StockCar
Stocks Advisors, LLC (the "Advisor"). Accordingly, no organization costs
have been recorded by the Fund.
The following is a summary of significant accounting policies
consistently followed by the Fund.
a) Investment Valuation-Common stocks and other equity-type securities
listed on a securities exchange are valued at the last quoted sales
price on the day of the valuation. Price information on listed stocks is
taken from the exchange where the security is primarily traded.
Securities that are listed on an exchange but which are not rated on the
valuation date are valued at the most recent bid prices. Other assets
and securities for which no quotations are readily available are valued
at fair value as determined in good faith by the Investment advisor
under the supervision of the Board of Directors. Short-term instruments
(those with remaining maturities of 60 days or less) are valued at
amortized cost, which approximates market value.
b) Federal Income Taxes-No provision for federal income taxes has been
made since the Fund has complied to date with the provision of the
Internal Revenue Code applicable to regulated investment companies and
intends to so comply in the future and to distribute substantially all
of its net investment income and realized capital gains in order to
relieve the Fund from all federal income taxes.
c) Distributions to Shareholders-Dividends from net investment income
and distributions of net realized capital gains, if any, will be
declared and paid at least annually. Income and capital gain
distributions are determined in accordance with income tax regulations
that may differ from generally accepted accounting principles.
d) 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 reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
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NOTES TO THE FINANCIAL STATEMENTS
September 30, 1999 (Continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES-(continued)
e) Other-Investment and shareholder transactions are recorded on trade
date. The Fund determines the gain or loss realized from the investment
transactions by comparing the original cost of the security lot sold
with the net sales proceeds. Dividend income is recognized on the ex-
dividend date or as soon as information is available to the Fund, and
interest income is recognized on an accrual basis.
2. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Fund for the Advisor class of shares for
the period ended September 30, 1999 were as follows:
Shares Amount
Sold 15,842 $224,193
Redeemed (433) (6,058)
---------- ----------
Net Increase 15,409 $218,135
========== ==========
Transactions in shares of the Fund for the No-load class of shares for
the year ended September 30, 1999 were as follows:
Shares Amount
Sold 270,133 $5,025,170
Redeemed (16,022) (275,665)
---------- ----------
Net Increase 254,111 $4,749,505
========== ==========
3. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of investments, excluding short-term
investments, by the Fund for the year ended September 30, 1999, were as
follows:
Purchases $5,044,321
Sales 145,535
At September 30, 1999, net unrealized depreciation of investments for
tax purposes was as follows:
Appreciation $215,138
Depreciation (449,115)
----------
Net depreciation on investments $(233,977)
==========
At September 30, 1999, the cost of investments for federal income tax
purposes was $5,074,632.
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NOTES TO THE FINANCIAL STATEMENTS
September 30, 1999 (Continued)
4. ADVISORY FEES AND OTHER RELATED PARTY TRANSACTIONS
The Fund has entered into an Advisory Agreement with StockCar Stocks
Advisors, LLC (the "Advisor") to provide investment management services
to the Fund, pursuant to the Advisory Agreement, the Advisor is entitled
to receive a fee, calculated daily and payable monthly at the annual
rate of 0.50% as applied to the Fund's daily net assets. For the year
ended September 30, 1999, the Advisor received advisory fees of $11,599.
The Fund has entered into an Operating Services Agreement (the
"Servicing Agreement") with the Advisor to provide or arrange for day-
to-day operational services to the Fund. Pursuant to the Servicing
Agreement, the Advisor is entitled to receive a fee, calculated daily
and payable monthly at the annual rate of 0.66% as applied to the Fund's
daily net assets. Prior to May 26, 1999 the Advisor received a monthly
fee at an annual rate of 0.91%. For the year ended September 30, 1999,
the Advisor received Servicing Agreement fees of $18,821.
The Fund and the Advisor have entered into an Investment Company
Services Agreement (the "ICSA") with Declaration Service Company to
provide day-to-day operational services to the Fund including, but not
limited to, accounting, administrative, transfer agent, dividend
disbursement, registrar and recordkeeping services.
The effect of the Advisory Agreement and the Servicing Agreement is to
place a "cap" on the Fund's normal operating expenses at 1.16%. The only
other expenses incurred by the fund are distribution fees, brokerage
fees, taxes, if any, legal fees relating to fund litigation, and other
extraordinary expenses.
The Fund and the Advisor have entered into a Distribution Agreement with
Declaration Distributors, Inc. to provide distribution services to the
Fund. Declaration Distributors, Inc. services as underwriter/distributor
of the Fund.
A separate plan of distribution has been adopted under Rule 12b-1 of the
Investment Company Act of 1940 for each class of shares. With respect to
all shares offered by the Fund, each plan provides that the Fund may pay
a servicing or Rule 12b-1 fee of 0.25% of the Fund's average net assets
(1/12 of 0.25% monthly) to persons or institutions for performing
certain servicing functions for the Funds shareholders. The distribution
plan also allows the Fund to pay or reimburse expenditures in connection
with sales and promotional services related to distribution of the Funds
shares, including personal services provided to prospective and existing
shareholders. The distribution plans for the Advisor class and the No-
load class of shares took effect July 1, 1999 and May 26,1999,
respectively.
Certain directors and officers of the Fund are directors and officers of
the Advisor.
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
StockCar Stocks Mutual Fund, Inc.
Mooresville, North Carolina
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of The StockCar Stocks Mutual
Fund, Inc. (consisting of the StockCar Stocks Index Fund) and the
related statements of operations and of changes in net assets and the
financial highlights for the year then ended. These financial statements
and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on this
financial statements and financial highlights based on our audit.
We conducted our audit 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 September 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 audit of the financial statements and
financial highlights provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above presents fairly, in all material respects, the
financial position of the StockCar Stocks Index Fund as of September 30,
1999, the results of its operations, the changes in its net assets and
the financial highlights for the year then ended, in conformity with
generally accepted accounting principles.
Tait, Weller & Baker
Philadelphia, Pennsylvania
October 29, 1999
[GRAPHIC OMITTED: STOCKCAR STOCKS INDEX FUND LOGO]
256 Raceway Dr.
Suite 11
Mooresville, NC 28117
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