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GOLF
ASSOCIATED
FUND (LOGO)
[GRAPHIC OMITTED]
Semi-Annual Report
June 30, 1999
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GOLF ASSOCIATED FUND
SEMI-ANNUAL REPORT TO SHAREHOLDERS
August 17, 1999
Dear Fellow Shareholder,
We are pleased to provide you with the first Golf Associated Fund
semi-annual report for the period ended June 30, 1999. For this period, the
Fund's Class A shares have appreciated by 7.4%.* A positive economic backdrop --
continued strength with little inflationary pressure -- has fostered market
confidence and helped propel the Fund's performance
In addition to Class A shares, the Fund now offers Class B shares for
sale. If you would like further information about the Class B shares, please
call us toll free at (877)623-GOLF.
The Fund's investment subadviser is Wallington Asset Management, Inc. of
Indianapolis, Indiana. In the letter that follows, Wallington discusses the
factors that have contributed to your Fund's performance. Because the Fund's
investments in golf-related and other companies span a broad array of industry
sectors, we believe your Fund can serve as a core domestic equity holding in
your overall investment portfolio. We hope you find the comments of Wallington
helpful in understanding how your investment portfolio has been managed during
the first six months of 1999.
On behalf of all of us at Golf Investment Management, Inc., thank you for
your continuing investment in the Golf Associated Fund. We look forward to
serving your investment needs and wish you many enjoyable rounds of golf for
years to come!
Sincerely yours,
/s/ MICHAEL T. WILLIAMS
Michael T. Williams, CFP, CFS
President
Golf Investment Management, Inc.
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* This return is calculated without the imposition of a front-end sales charge.
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Dear Fellow Shareholder,
We are pleased to be able to serve you as the sub-adviser to the Golf
Associated Fund (the "Fund"). Our investment philosophy for managing the assets
of the Fund has been, and will continue to be, to identify the stocks of those
companies associated with the golf industry that we believe, when combined into
a common portfolio, will create portfolio characteristics that will offer
shareholders the ability to profit from the ownership of a piece of the golf
industry while at the same time serve to reduce the overall risk of owning only
a few select stocks.
The Fund is invested in a broad array of stocks. As of June 30, 1999, the
Fund is comprised of 69.6% golf and golf-related issues and 30.4% other stocks.
Large-capitalized companies represent approximately three-fourths of the
portfolio, with the balance being split fairly equally between mid and
small-capitalized issues. The Fund invests in both "value" stocks and "growth"
stocks and currently has a slightly higher growth representation than value. The
Fund currently enjoys a broad sector weighting as well. While the Fund does not
seek to replicate the sector weightings of the Standard & Poor's 500 Index (S&P
500), most sectors do have some representation at present, with technology
stocks at 17.1% (under the S&P 500 weighting of 21.6%) and with consumer
cyclicals at15.1% (over the S&P 500 weighting of 9.2%). The majority of pure
golf stocks are typically found in the consumer cyclical sector. The diverse
allocation to sector representation is designed to allow the Fund to participate
in the upside potential of the golfing industry, while at the same time
attempting to limit the potential downside exposure in the event of an industry
downturn.
As we continue to evaluate companies for inclusion or removal from the
Fund, we must consider that consensus estimates are for corporate profits to
increase 11.4% on an operating basis when the final tally is in for the 2nd
quarter in late July. For the remaining two quarters of the year, consensus
expectations are for profit growth to be approximately 20%, which is excellent.
A large portion of this growth is coming from the capital equipment and basic
industry sectors. Those sectors experienced fairly significant profit erosion
last year due to the falloff in demand from Asia and the flood of cheap imports
into the United States. Of importance to equity investors, profit growth in the
final two calendar quarters of 1999 will be evaluated against profit growth in
the same periods last year of -3.1% and 6.0%, which should make comparisons
moving forward rather easy. However, given the uncertainty surrounding the
movement of the inflation rate, and subsequent uncertainty in Federal Reserve
action, we are taking nothing for granted and are continually monitoring and
evaluating market conditions to uncover investment opportunities.
Wallington Asset Management, Inc.
Investment Selection Committee
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GOLF ASSOCIATED FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999
(UNAUDITED)
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SHARES VALUE(DAGGER)
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COMMON STOCK -- 93.4%
BASIC MATERIALS -- 3.1%
Dow Chemical Co. 87 $ 11,038
Rohm & Haas Co. 120 5,145
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16,183
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CAPITAL GOODS -- 6.8%
Briggs & Stratton Corp. 120 6,930
Carlisle Cos., Inc. 130 6,256
General Electric Co. 57 6,441
Ingersoll Rand Co. 120 7,755
Tyco International, Ltd. 81 7,675
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35,057
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COMMUNICATIONS-- 7.4%
AT&T Corp. 196 10,939
BellSouth Corp. 94 4,406
Lucent Technologies, Inc. 110 7,418
MCI WorldCom, Inc.* 66 5,676
Sprint Corp. (FON Group) 180 9,506
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37,945
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CONSUMER CYCLICAL -- 15.1%
Brunswick Corp. 400 11,150
Callaway Golf Co. 600 8,775
Cutter & Buck, Inc.* 535 8,894
Dayton Hudson Corp. 117 7,605
Delphi Automotive Systems Corp. 51 947
Family Golf Centers, Inc.* 1,200 9,113
General Motors Corp. 73 4,818
Home Depot, Inc. 171 11,019
TJX Cos., Inc. 282 9,394
Tommy Hilfiger Corp.* 85 6,247
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77,962
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CONSUMER STAPLE -- 12.2%
Albertson's, Inc. 93 4,795
Anheuser-Busch Cos., Inc. 152 10,782
CVS Corp. 195 9,969
Colgate-Palmolive Co. 130 12,838
McDonald's Corp. 198 8,180
Pepsico, Inc. 232 8,975
Sara Lee Corp. 312 7,079
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62,618
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SHARES VALUE(DAGGER)
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COMMON STOCK -- (CONTINUED)
ENERGY-- 4.2%
Exxon Corp. 50 $ 3,856
Schlumberger, Ltd. 122 7,770
Shell Transport & Trading Co. 216 10,017
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21,643
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FINANCE -- 13.9%
American Express Co. 89 11,581
Bank One Corp. 110 6,552
Bank of America Corp. 35 2,566
Charles Schwab Corp. 55 6,043
Federal National Mortgage
Association 135 9,231
Golf Trust of America, Inc. 502 12,268
MBNA Corp. 89 2,726
Marsh & McLennan Cos., Inc. 97 7,324
UNUM Corp. 124 6,789
Wells Fargo Co. 150 6,412
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71,492
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FOREIGN SECURITIES -- 0.5%
Honda Motor Co. Ltd.- ADR 32 2,776
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HEALTHCARE -- 10.5%
Abbott Laboratories, Inc. 221 10,056
Bausch & Lomb, Inc. 155 11,858
Baxter International, Inc. 160 9,700
Bristol-Myers Squibb Co. 178 12,538
Warner-Lambert Co. 140 9,713
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53,865
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TRANSPORTATION -- 2.6%
FDX Corp.* 130 7,052
Union Pacific Corp. 112 6,531
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13,583
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TECHNOLOGY -- 17.1%
3Com Corp.* 187 4,979
Compaq Computer Corp. 265 6,277
Eastman Kodak Co. 99 6,707
Intel Corp. 170 10,104
International Business
Machines Corp. 128 16,544
Microsoft Corp.* 150 13,519
Motorola, Inc. 135 12,791
See Notes to Financial Statements.
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GOLF ASSOCIATED FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999
(UNAUDITED)
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SHARES VALUE(DAGGER)
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COMMON STOCK -- (CONTINUED)
TECHNOLOGY -- (CONTINUED)
Sun Microsystems, Inc.* 170 $ 11,709
Tektronix, Inc. 185 5,585
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88,215
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TOTAL COMMON STOCK
(Cost $445,872) 481,339
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TEMPORARY INVESTMENTS -- 6.6%
Provident Institutional Funds -
TempCash 16,900 16,900
Provident Institutional Funds -
TempFund 16,900 16,900
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TOTAL TEMPORARY INVESTMENTS
(Cost $33,800) 33,800
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TOTAL INVESTMENTS -- 100.0%
(Cost $479,672**) $515,139
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(DAGGER) See Note 2A to the Financial Statements.
* Non-income producing security.
** Also cost for Federal income tax purposes.
ADR -- American Depository Receipt.
The gross unrealized appreciation
(depreciation) on a tax basis
is as follows:
Gross unrealized appreciation $ 49,720
Gross unrealized depreciation (14,253)
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$ 35,467
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See Notes to Financial Statements.
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GOLF ASSOCIATED FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
(UNAUDITED)
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Assets
Investments at value (Cost $479,672 ) ..................... $515,139
Dividends receivable ...................................... 697
Interest receivable ....................................... 128
Receivable for securities sold ............................ 6,166
Deferred offering expenses ................................ 44,470
Other assets .............................................. 55
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Total Assets ............................................ 566,655
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Liabilities
Offering costs payable .................................... 9,600
Accrued expenses payable .................................. 20,253
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Total Liabilities ..................................... 29,853
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Net Assets
Applicable to 49,989 and 10 shares of beneficial
interest outstanding of Class A and Class B,
respectively (Note 6)* .................................... $536,802
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Net Asset Value and Redemption Price
Per Class A Share ($536,695 (DIVIDE) 49,989) .............. $10.74
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Maximum Offering Price Per Class A Share
($10.74 (DIVIDE) 0.9425) .................................. $11.40
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Net Asset Value and Offering Price Per
Class B Share ($107.38 (DIVIDE) 10) ....................... $10.74
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*At 6/30/99 Class B shares had not yet been offered to the public.
See Notes to Financial Statements.
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GOLF ASSOCIATED FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 1999(1)
(UNAUDITED)
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Investment Income:
Dividends ............................................... $ 2,371
Interest ................................................ 603
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Total Income ......................................... 2,974
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Expenses:
Investment advisory fee ................................. 1,749
Service Organization fee - Class A ...................... 437
Administration fee ...................................... 49,999
Custodian fee ........................................... 10,380
Trustees' fee ........................................... 5,866
Transfer Agent fee ...................................... 18,176
Audit fee ............................................... 10,266
Legal fee ............................................... 5,009
Deferred offering expense ............................... 35,013
Miscellaneous ........................................... 1,875
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Total expenses ........................................ 138,770
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Less waivers and reimbursements ......................... (135,797)
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Net expenses .......................................... 2,973
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Net investment income ...................................... 1
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Realized and unrealized gain (loss) on investments:
Net realized gain (loss) from
investment transactions ................................ (581)
Net unrealized appreciation (depreciation)
on investments ......................................... 35,467
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Net realized and unrealized gain (loss)
on investments ....................................... 34,886
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Increase (decrease) in net assets resulting
from operations ......................................... $ 34,887
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(1) Commencement of operations was January 5, 1999.
See Notes to Financial Statements.
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GOLF ASSOCIATED FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED JUNE 30, 1999(1)
(UNAUDITED)
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Increase (decrease) in net assets:
Operations:
Net investment income (loss) ............................. $ 1
Net realized gain (loss) from investment transactions .... (581)
Net unrealized appreciation (depreciation)
on investments ........................................ 35,467
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Increase (decrease) in net assets resulting
from operations ...................................... 34,887
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Capital share transactions:
Proceeds from sale of 40,105 shares ...................... 403,028
Value of shares reinvested ............................... --
Cost of 106 shares repurchased ........................... (1,113)
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Net increase (decrease) in net assets from
capital share transactions .......................... 401,915
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Total increase (decrease) in net assets 436,802
Net assets:
Beginning of period ...................................... 100,000
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End of period ............................................ $536,802
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(1) Commencement of operations was January 5, 1999.
See Notes to Financial Statements.
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GOLF ASSOCIATED FUND
FINANCIAL HIGHLIGHTS
FOR THE PERIOD ENDED JUNE 30, 1999(1)
(UNAUDITED)
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Net asset value, beginning of period ......................... $ 10.00
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Income from investment operations:
Net investment income (loss) .............................. 0.00
Net realized and unrealized gain (loss) on investments .... 0.74
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Total from investment operations ....................... 0.74
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Net asset value, end of period ............................... $ 10.74
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Total return: (2) ............................................ 7.40%
Ratios/Supplemental Data:
Net assets, end of period ................................. $536,802
Ratio of expenses to average daily net assets(3)(4) ....... 1.70%
Ratio of net investment income (loss) to average
daily net assets(3) ..................................... 0.00%
Portfolio turnover rate ................................... 2.17%
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(1) Commencement of operations was January 5, 1999.
(2) Not annualized; sales load is not reflected in total return.
(3) Annualized.
(4) Without the waiver of fees and expenses reimbursable the ratio of expenses
to average daily net assets would have been 79.23%.
See Notes to Financial Statements.
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GOLF ASSOCIATED FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
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1. ORGANIZATION
The Golf Associated Fund (the "Fund") was organized on June 11, 1998, as a
Massachusetts business trust and is registered under the Investment Company Act
of 1940, as amended, as an open-end management investment company. The Fund is
authorized to issue two classes of shares, Class A shares sold subject to a
5.75% maximum front-end sales charge ("Class A shares") and Class B shares sold
subject to a contingent deferred sales charge, declining from a high of 5% over
a six-year period ("Class B shares"). As of June 30, 1999, the Class B shares
had not yet been offered to the public.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies used by the
Fund in the preparation of the financial statements which are in accordance with
generally accepted accounting principles. The preparation of financial
statements in accordance with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates.
A. Security Valuation - Securities listed on a national securities
exchange are valued at their last sales price. Over-the-counter securities and
listed securities for which a sales price is not available are valued at the
last quoted bid price. Bonds maturing in more than 60 days are valued at the
mean of their bid and asked prices. Prices used for the valuation of securities
are provided by independent pricing services and brokers. Debt securities with a
maturity of less than 60 days are valued at amortized cost, which approximates
market value. When market quotations are not readily available, securities are
valued at fair value, as determined in good faith pursuant to procedures
approved by the Board of Trustees.
B. Federal Income Taxes - The Fund intends to continue to qualify as a
regulated investment company under the Internal Revenue Code and to distribute
substantially all of its net investment income and net realized capital gains to
shareholders. Accordingly, no provision for federal income tax is required.
C. Distributions - Dividends from the net investment income of the Fund
normally are declared annually. The Fund also distributes to its shareholders
substantially all of its net realized capital gains on portfolio securities and
net realized gains from foreign currency transactions after the end of the year
in which the gains are realized. The amounts of distributions from net
investment income and net realized capital gains are determined in accordance
with Federal income tax regulations, which may differ from those amounts
determined under generally accepted accounting principles.
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GOLF ASSOCIATED FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
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D. Repurchase Agreements - The Fund may purchase money market instruments,
subject to the seller's agreement to repurchase them at an agreed upon date and
price. The seller will be required on a daily basis to maintain the value of the
securities subject to the agreement at not less than the repurchase price
(including accrued interest). The agreements are conditioned upon collateral
being deposited under the Federal Reserve book-entry system or with the Fund's
custodian or a third party sub-custodian.
E. Organization Costs -- Costs incurred in connection with the
organization of the Fund, estimated at $31,000, were borne by the Fund, subject
to the expense limitation agreement described in Note 3 below. Certain costs
incurred and to be incurred in connection with the initial offering of shares of
the Fund, estimated at $79,483, will be paid initially by the Fund's Adviser,
Golf Investment Management, Inc. ("GIM"). The Fund will reimburse GIM for such
costs, which will be deferred and amortized by the Fund over the period of
benefit, not to exceed 12 months from the date the Fund commenced operations.
F. Other - Investment transactions are recorded on trade date. Interest
income, including the amortization of discount or premium, is recorded as
earned. Dividend income is recorded on the ex-dividend date.
3. ADVISORY, ADMINISTRATION AND DISTRIBUTION AGREEMENTS
Pursuant to an Advisory Agreement between the Fund and Golf Investment
Management, GIM will manage the Fund's business and investment affairs. As
compensation under the agreement, GIM will receive from the Fund an advisory
fee, which is computed daily and paid monthly, equal to 1.00% of the Fund's
average daily net assets.
The adviser has voluntarily agreed to waive its fees and, if necessary,
reimburse expenses for the period June 11, 1998 to October 31, 1999 which exceed
the annual rate of 1.70% of average daily net assets for Class A shares and
2.45% of average daily net assets for Class B shares, respectively. Any waivers
or reimbursements made by the Adviser during this period are subject to
repayment by the Fund by October 31, 2001, provided that repayment does not
result in the Fund's aggregate expenses exceeding the foregoing expense
limitations. GIM has agreed to permanently waive repayment of expenses prior to
the commencement of operations. For the period ended June 30, 1999, fees waived
and expenses reimbursable were $71,632.
The Fund recorded its initial organization costs of $31,000 as an expense
during the period ended October 16, 1998 and recognized an offsetting expense
reduction as a result of the Adviser's commitment to reimburse these costs. The
Fund may be obliged to repay some or all of these costs to GIM if the
Agreement's conditions are met.
The Adviser has entered into a Subadvisory Agreement with Wallington Asset
Management, Inc. ("Wallington") to provide investment advice and portfolio
management services to the Fund. Wallington, as Subadviser, receives a fee
directly from GIM and not from the Fund.
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GOLF ASSOCIATED FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
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Pursuant to an Administrative and Accounting Service Agreement, the Fund
retains PFPC, Inc. ("PFPC"), an indirect wholly-owned subsidiary of PNC Bank
N.A., as Administrator and Accounting Service Agent. As compensation for
administration and accounting services the Fund pays PFPC an annual fee equal to
.10% of the Fund's first $250 million of average daily net assets, .075% of the
next $250 million, .05% of the next $250 million, and .03% of average daily net
assets in excess of $750 million. In addition, PFPC Trust Co. ("PFPC Trust")
serves as the Fund's custodian and PFPC serves as transfer and dividend
disbursing agent. PFPC and PFPC Trust waived fees of $56,665 and $7,500,
respectively, during the period ended June 30, 1999.
Rafferty Capital Markets Inc. (the "Distributor") serves as distributor of
the Fund's shares.
4. DISTRIBUTION PLAN
The Fund has adopted a Plan of Distribution (the "Plan") pursuant to Rule
12b-1 of the Investment Company Act of 1940. Under the Plan, relating to Class A
and Class B shares, the Fund compensates the Distributor for services rendered
and expenses borne in connection with the distribution of the Fund's shares and
in connection with the servicing and maintenance of existing shareholder
accounts. For these service activities the Fund may make payments at a rate up
to .25% per annum of the average daily net assets of the Class A shares and
1.00% per annum of the average daily net assets of the Class B shares.
5. PURCHASES AND SALES OF SECURITIES
For the period ended June 30, 1999, purchases and sales of securities,
other than short-term investments and U.S. Government securities, were $454,173
and $7,720, respectively.
6. COMPOSITION OF NET ASSETS
At June 30, 1999, net assets consisted of:
Paid-in capital ........................................... $501,915
Undistributed net investment income (loss) ................ 1
Accumulated net realized gain (loss) ...................... (581)
Unrealized appreciation (depreciation)
of investment securities ................................. 35,467
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Net assets ................................................ $536,802
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TRUSTEES
Michael T .Williams, Chairman/President
John C. Bahl
J. Kenneth Perry
Scott M. Perry
Eric M. Snelz
INVESTMENT ADVISER
Golf Investment Management, Inc.
Vero Beach, FL
SUBADVISER
Wallington Asset Management, Inc.
Indianapolis, IN
ADMINISTRATOR, TRANSFER AGENT & FUND
ACCOUNTANT
PFPC, Inc.
Wilmington, DE
CUSTODIAN
PFPC Trust Co.
Lester, PA
DISTRIBUTOR
Rafferty Capital Markets, Inc.
Harrison, NY
COUNSEL
Kirkpatrick &Lockhart LLP
Washington, D.C.
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
Philadelphia, PA
This report is submitted for the general
information of the shareholders of the
Golf Associated Fund. It is not authorized
for distribution to prospective investors
unless accompanied or preceded by a
prospectus of the Golf Associated Fund.
Please read the prospectus carefully
before you invest or send money.
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