Dear Fellow Shareholders,
On behalf of everyone at StockCar Stocks, I'd like to say thank you for
your confidence and investment in StockCar Stocks Index Fund. We are proud to
announce the results of the Fund's first six months of operations. Launched
October 1, 1998 at $15.00 per share, the Fund has performed well, with its NAV
(Net Asset Value) rising to $18.60 per share (as of 3/31/99); an increase of
24.0% for this six month period.
We felt it would be beneficial to briefly review the philosophy that guides
the management of the Fund. StockCar Stock Index Fund only invests in the
companies that sponsor or derive revenues from NASCAR(R) Winston Cup Series
racing, as determined by the StockCar Stocks IndexSM. Such companies include:
primary car sponsors, lead race sponsors, track owners, merchandisers, major
product sponsors, and major television broadcasters. Initially comprised of 52
companies, the Fund is now even more diversified with 58 companies in its
portfolio.
Its growing popularity, its 40 million loyal fans, and as a growing $2
billion a year industry, NASCAR has caught the eye of many Fortune 500
companies. In fact, 37 of the 58 companies in the Fund are also members of the
S&P 500 Index, and 12 of the companies are members of the 30-stock Dow Jones
Industrial Average. Based on a recent Fortune magazine cover story entitled
"Speed Sells," it appears NASCAR sponsors are very happy with their investment
in the sport. Many sponsors, including Lowe's, McDonald's, Anheuser Busch, Ford,
BellSouth and General Motors all have performed well for the Fund since October
1st of 1998.
The business of NASCAR Winston Cup racing has definitely been in the
headlines over the last six months. Speedway Motorsports, parent company of
Charlotte Motor Speedway, Bristol, Texas and others, announced the purchase of
Las Vegas Motor Speedway. The company also announced it had sold naming rights
of Charlotte Motor Speedway to Lowe's Home Improvement Company for $35 million
over a 10-year period. They also plan on expanding seating in Charlotte to over
255,000 by the year 2007.
International Speedway Corporation, owner of Daytona, Talladega and others,
announced plans to build speedways in Chicago, Kansas City and in New York City.
The New York City project is a joint venture with Donald Trump.
In addition to record attendance at this year's races, television broadcast
viewership is on average 10% higher than last season. Companies in the Fund that
broadcast races include Walt Disney (owns ABC and ESPN), CBS (also owns TNN),
General Electric (owns NBC) and Time Warner (owns TBS).
NASCAR also announced plans to negotiate a combined TV contract on behalf
of the speedways beginning in 2002. The current TV package is valued at $100
million annually, and analysts expect the new TV package to top $300 million,
with 65% of these dollars going back to the track owners.
NASCAR-related merchandise, such as die-cast cars, t-shirts and other
memorabilia, is now a $1 billion a year industry. Action Performance and Racing
Champions are Fund holdings that represent many of the top drivers including
Dale Earnhardt, Jeff Gordon and Bill Elliott. In addition to trackside sales,
these companies recently had successful launches of on-line e-commerce sites to
sell their merchandise.
<PAGE>
There have been a number of acquisitions in the portfolio since the Fund's
inception. First Brands, parent company of STP and sponsor of the Petty
Enterprises #43 Pontiac, was purchased by Clorox Company. Exxon also announced
plans to acquire Mobil Oil, sponsor of the #12 Jeremy Mayfield Ford. Recent new
additions to the portfolio include Home Depot, sponsor of the #20 Tony Stewart
Pontiac, and Sara Lee Corp., new sponsor of the #30 Derrick Cope Pontiac.
As NASCAR continues to monopolize the headlines, StockCar Stocks has
received its own share of publicity during the last six months. Articles were
found in Mutual Funds magazine (8/98), BusinessWeek (9/98, 11/98), Stock Car
Racing magazine (4/99), Pensions & Investments (11/98), USA Today (11/98), Your
Money magazine (9/98), and in a number of newspapers across the country. Kim
Torrence (Secretary of the Fund) and I were honored to be speakers at the 1999
NASCAR media tour hosted by Lowe's Motor Speedway in January.
We hope that you will view your holding of Fund shares as a long-term
investment. The companies held by the Fund and, indeed, NASCAR itself, have all
grown and prospered by taking a long-term approach to their respective
businesses. Each has experienced both good times and bad. We mention this
because financial markets have been very volatile since the Fund's beginnings,
with some stock prices climbing in spectacular fashion and others lagging. Some
short-term volatility is normal with stocks, but investors who have taken a
longer-term perspective have typically earned higher returns from stocks than
from bonds, money-market funds, or bank accounts.
Our offices are located in Mooresville, NC in the NASCAR business park
where many of the teams are headquartered including: Penske South, Rousch Racing
(#6, #99 and #97 cars), Rudd Performance Motorsports, Bahari Motorsports, just
to name a few. We are at the corner of Gasoline Alley and Raceway Drive, and we
invite you to please stop by if you are in the area.
We are grateful for the confidence you have shown by your investment in
StockCar Stocks Index Fund, and believe that the long-term success of NASCAR's
Winston Cup series and of those companies which support it will be reflected in
the Fund's results. We are happy to have you as investors in the Fund and hope
that you will use either our website address, www.stockcarstocks.com, or call us
at 1-800-494-2755 with your questions or comments.
Sincerely,
/s/ John P. Allen, II
John P. Allen, II
President
StockCar Stocks Mutual Fund, Inc.
<PAGE>
STOCKCAR STOCKS INDEX FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) MARCH 31, 1999
- --------------------------------------------------------------------------------
SHARES VALUE
------ -----
COMMON STOCK -- 94.37%
AGRICULTURAL - 3.72%
Philip Morris Co. (Miller Lite) 465 $ 16,362
RJR Nabisco Holdings Corp. (Winston) 900 22,500
UST, Inc. (Skoal) 800 20,900
-----------
59,762
-----------
AUTOMOBILE MANUFACTURERS - 3.76%
Ford Motor Co. 450 25,537
General Motors Corp. 400 34,750
-----------
60,287
-----------
AUTOMOBILE PARTS & EQUIPMENT - 3.97%
Exide Corp. 1,725 19,191
Federal Mogul Corp. 500 21,500
Genuine Parts Co. (NAPA) 800 23,050
-----------
63,741
-----------
BROADCASTING - 5.28%
CBS Corp.* 875 35,820
Comcast Corp. (Primestar) 85 5,350
Cox Communications, Inc.* (Primestar) 65 4,916
Media One Group, Inc.* (Primestar) 135 8,572
TCI Satellite Entertainment,
Inc. Cl A* (Primestar) 2,600 1,706
Time Warner, Inc. (TBS, Cartoon Network) 400 28,425
-----------
84,789
-----------
CHEMICALS - 1.90%
DuPont de Nemours & Co. 525 30,483
-----------
DIVERSIFIED CONGLOMERATES - 1.90%
General Electric Co. (NBC) 275 30,422
-----------
ELECTRONIC EQUIPMENT - 2.13%
Koninklijke Philips Electronics ADR 415 34,212
-----------
<PAGE>
ENTERTAINMENT & LEISURE - 15.81%
Action Performance* 750 22,594
Dover Downs Entertainment, Inc. 2,300 35,650
International Speedway Corp. Cl A 650 34,287
Mattel Inc. 1,250 31,094
Penske Motorsports* 1,075 37,894
Racing Champions Corp.* 2,150 23,650
Speedway Motorsports, Inc.* 1,000 41,250
The Walt Disney Co. (ESPN, ABC) 880 27,390
-----------
253,809
-----------
FINANCIAL SERVICES - 5.63%
Amex S&P Depository 300 38,550
MBNA Corp. 1,075 25,666
Paychex, Inc. 550 26,091
-----------
90,307
-----------
FOOD & BEVERAGE - 13.13%
Adolph Coors Co. 475 25,650
Anheuser- Busch Companies, Inc. 390 29,713
Coca-Cola Co. 400 24,550
General Mills, Inc. (Cheerios) 350 26,447
Kellogg Co. 750 25,359
PepsiCo, Inc. 650 25,472
Quaker Oats Co. (Gatorade) 450 28,153
Sara Lee Corp. (Bryan Foods, Jimmy Dean) 1,025 25,369
-----------
210,713
-----------
MACHINERY, GENERAL INDUSTRIAL - 3.60%
Caterpillar, Inc. 585 26,873
Deere & Co. 800 30,900
-----------
57,773
-----------
OIL & GAS - 8.00%
Ashland, Inc. (Valvoline) 540 22,106
Mobil Corp. 305 26,840
Pennzoil - Quaker State Co. 1,925 23,822
Texaco Inc. 500 28,375
Tosco Corp. (Unocal 76) 1,100 27,294
Tosco Corp. Rights* 325 --
-----------
128,437
-----------
PERSONAL & HOUSEHOLD PRODUCTS - 5.27%
Block Drug Co., Inc. (Goody's Headache Powder) 650 26,650
The Clorox Co. (STP) 235 27,539
Procter & Gamble Co. (Tide) 310 30,361
-----------
84,550
-----------
<PAGE>
PHOTOGRAPHY EQUIPMENT - 1.59%
Eastman Kodak Co. 400 25,550
-----------
RESTAURANT - RETAIL - 3.49%
CBRL Group, Inc. (Cracker Barrel) 1,225 22,050
McDonald's Corp. 750 33,984
-----------
56,034
-----------
RETAIL STORES - 7.65%
Home Depot (The), Inc. 475 29,569
K-Mart Corp. 1,850 31,103
Lowe's Companies, Inc. 560 33,880
Sears, Roebuck & Co. (Die Hard) 625 28,242
-----------
122,794
-----------
TELECOMMUNICATIONS - 4.18%
BellSouth Corp. 575 23,036
Frontier Corp. 850 44,094
-----------
67,130
-----------
TIRE & RUBBER - 1.55%
Goodyear Tire & Rubber 500 24,906
-----------
UTILITIES - 1.81%
Peco Energy Co. (Power Team) 625 28,906
-----------
TOTAL COMMON STOCK (Cost $1,398,696) 1,514,605
-----------
MISCELLANEOUS ASSETS - 4.41%
Evergreen Money Market Trust (Cost $70,723) 70,723
-----------
TOTAL INVESTMENTS (Cost $1,469,419) - 98.78% 1,585,328
OTHER ASSETS AND LIABILITIES, NET - 1.22% 19,648
-----------
NET ASSETS -- 100.00% $ 1,604,976
===========
* Non-income producing security.
ADR - American Depository Receipt
See notes to financial statements.
<PAGE>
STOCKCAR STOCKS INDEX FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) MARCH 31, 1999
- --------------------------------------------------------------------------------
ASSETS:
Investments, at market (identified cost $1,469,419) $ 1,585,328
Cash 1,000
Receivables:
Dividends and interest 2,738
Fund shares sold 72,205
-----------
Total assets 1,661,271
-----------
LIABILITIES:
Receivables:
Payable for fund shares purchased 3,750
Payable for investment securities purchased 49,820
Accrued expenses 2,725
-----------
Total liabilities 56,295
-----------
NET ASSETS $ 1,604,976
===========
NET ASSETS CONSIST OF:
Paid-in capital $ 1,464,425
Undistributed net investment income 2,059
Accumulated realized gain on investments 22,583
Net unrealized gain on investments 115,909
-----------
Net Assets, for 86,269 shares outstanding $ 1,604,976
===========
Net Asset Value, offering and redemption price per share $ 18.60
===========
See notes to financial statements.
<PAGE>
STOCKCAR STOCKS INDEX FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED MARCH 31, 1999* (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 684
Dividends 7,405
----------
Total investment income 8,089
----------
EXPENSES:
Investment advisory fees 2,138
Administration fee 3,892
----------
Total expenses 6,030
----------
Net investment income 2,059
----------
REALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 22,583
Net change in unrealized appreciation on investments 115,909
----------
138,492
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 140,551
==========
* StockCar Stocks Index Fund commenced operations on October 1, 1998.
See notes to financial statements.
<PAGE>
STOCKCAR STOCKS INDEX FUND
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
- --------------------------------------------------------------------------------
FOR THE PERIOD ENDED MARCH 31, 1999*
INCREASE IN NET ASSETS
Operations:
Net investment income $ 2,059
Net realized gain on investments 22,583
Net change in unrealized appreciation on investments 115,909
-----------
Net increase in net assets resulting from operations 140,551
-----------
Increase in net assets from Fund share transactions 1,464,425
-----------
Increase in net assets 1,604,976
NET ASSETS:
Beginning of period 0
-----------
End of period $ 1,604,976
===========
* StockCar Stocks Index Fund commenced operations on October 1, 1998.
See notes to financial statements.
<PAGE>
STOCKCAR STOCKS INDEX FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Per Share Data (For a Share Outstanding from October 1, 1998
through March 31, 1999)
FOR THE PERIOD
ENDED
MARCH 31, 1999*
(UNAUDITED)
----------
NET ASSET VALUE, BEGINNING OF PERIOD $ 15.00
----------
INVESTMENT OPERATIONS:
Net investment income 0.02
Net realized and unrealized gain on
investments 3.58
----------
Total from investment operations 3.60
----------
NET ASSET VALUE, END OF PERIOD $ 18.60
==========
TOTAL RETURN 24.00%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $ 1,605
Ratio of expenses to average net assets: 1.41%1
Ratio of net investment income (loss)
to average net assets: 0.47%1
Portfolio turnover rate 17.58%
1 Annualized
* The StockCar Stocks Index Fund commenced operations on October 1, 1998.
See notes to financial statements.
<PAGE>
STOCKCAR STOCKS INDEX FUND
- --------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 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 a no-load,
open-end diversified management investment company of the series type under the
Investment Company Act of 1940 (the "1940 Act"). The Fund's investment strategy
is to emphasize growth of capital and current income. The Fund became effective
with the SEC on September 16, 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 value 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 manager 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.
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
realize 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
<PAGE>
STOCKCAR STOCKS INDEX FUND
- --------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 1999
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES-(CONTINUED)
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
form those estimates.
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 period ended March 31, 1999 were
as follows:
SHARES AMOUNT
Sold ................................. 93,737 $ 1,577,947
Redeemed ............................. (7,468) (113,522)
----------- -----------
Net Increase ......................... 86,269 $ 1,464,425
=========== ===========
3. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of investments, excluding short-term
investments, by the Fund for the period ended March 31, 1999, were as follows:
Purchases:
U.S. Government ............... $ 0
Other ......................... 1,516,067
Sales:
U.S. Government ............... 0
Other ......................... 139,954
At March 31, 1999, gross unrealized appreciation of investments for tax
purposes were as follows:
Appreciation ......................... $ 167,056
Depreciation ......................... (51,147)
---------
Net appreciation on investments ...... $ 115,909
=========
<PAGE>
STOCKCAR STOCKS INDEX FUND
- --------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 1999
3. INVESTMENT TRANSACTIONS- (CONTINUED)
At March 31, 1999, the cost of investments for federal income tax purposes
was $1,469,419.
4. AGREEMENTS
The Fund has entered into a Management 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.
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 0.91% as applied to the Fund's daily net assets.
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 no limited to, accounting,
administrative, transfer agent, dividend disbursing, registrar and recordkeeping
services.
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.
First Union National Bank, Philadelphia, PA serves as custodian for the
Fund.
