Boyar Value Fund, Inc.
----------------------
Semi-Annual Report
June 30, 1998
(Unaudited)
FUND MANAGER
------------
LADENBURG THALMANN FUND MANAGEMENT INC.
590 Madison Avenue
New York, NY 10022
INVESTMENT ADVISER ADMINISTRATOR
------------------ -------------
BOYAR ASSET MANAGEMENT, INC. COUNTRYWIDE FUND SERVICES, INC.
35 East 21st Street 312 Walnut Street
New York, NY 10010 P.O. Box 5354
1.212.995.8300 Cincinnati, OH 45201-5354
1.800.266.5566
<PAGE>
BOYAR
VALUE FUND
----------
August 20, 1998
Dear Shareholder:
o Naturally, everyone connected with the Boyar Value Fund is extraordinarily
excited about its official launch on May 5, 1998.
o Since this is my initial letter to Boyar Value Fund shareholders, let me
explain very briefly what I view as our mission.
o The Boyar Value Fund strives to be a risk-averse, tax-efficient,
value-oriented domestic common stock portfolio consisting primarily of
various equities of public companies which we feel the stock market has
unduly discounted. Our goal is, through extensive fundamental research, to
ferret out intrinsically undervalued U.S. corporations and purchase their
shares at low prices relative to what we perceive as their inherent worth.
We believe that this can lead to the potential for significant capital
appreciation, as well as create a "margin of safety" for our investments.
o The intrinsic value of a corporation, as we define it, is the estimated
current worth that would accrue to the stockholders of a company, either
through liquidation of corporate assets upon termination of operations, or
through the sale or merger of the entire enterprise as a continuing
business. In our opinion and experience, over an investment time horizon of
three to five years, these undervalued corporations often will be
re-evaluated upward by the stock market or the assets of the company will
be acquired by a third party.
o At the same time, this long-term "buy and hold" strategy allows capital to
compound without the return-eroding effects of commissions and capital
gains taxes. Such an orientation may sound stodgy, but we firmly believe
this approach is as important to investment success as picking the right
stocks at the right price and at the right time.
A WORD OF CAUTION:
- ------------------
o The stock market, as measured by the leading indexes, has advanced quite
smartly during the past three years, returning to investors an average
compound rate of return exceeding 20% per annum.
o Investors have come to expect these unsustainably high returns, but the
fact remains it will be virtually impossible to replicate these results
during the next five years. After all, during the prior 65-year period,
equities gained on average only approximately 12% per year.
o As investor extraordinaire Warren Buffett recently wrote, and we concur -
"There are times you can temporarily pay too much for even the best
businesses. The overpayment risk surfaces periodically in the stock market
and it may often take an extended period for the value of even an
outstanding company to catch up with the price one has paid."
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES o P.O. BOX 5354 o CINCINNATI, OH 45201-5354 o 800.266.5566
<PAGE>
o In his recently released book, STOCKS FOR THE LONG RUN, Jeremy Siegel, a
Wharton School Professor at the University of Pennsylvania, concludes that,
even if you buy stocks at seemingly ridiculous highs but hold them for
extended lengths of time, you still will compound at more than a
satisfactory rate. In fact, Professor Siegel calculates that an investor
who bought the Nifty Fifty at their seemingly ridiculous highs in December
1972, and held them for 25 years, did roughly as well as those who simply
bought the S&P 500. This certainly supports the stock market adage that
it's time in the market, not market timing, that counts.
o So when the inevitable market correction occurs, don't panic. Use these
declines to add to existing positions or to purchase the common shares of
businesses that were previously priced too high.
o A number of stock market pundits have been predicting a steep market
sell-off for years - had you heeded their advice and exited the market you
would certainly be significantly poorer today.
o Finally, there is absolutely no way to predict the future direction of the
market, but in this century there have been 50 declines of 10% or more, or
one every two years. Of the 50 declines 15 have been 25% or more. That's
one sharp drop every six years.
THE LONGER-TERM OUTLOOK FOR U.S. EQUITIES IS EXTREMELY POSITIVE
- ---------------------------------------------------------------
o Although the Boyar Value Fund normally ignores the future direction of the
stock market and chooses the companies it purchases equity stakes in solely
on the basis of the discount from intrinsic value that the company is
selling for in the marketplace - there are a number of factors that could
positively impact the U.S. stock market for the foreseeable future: (a) The
flow of money into equity mutual funds should continue to be a cushion for
the stock market. The demographics for such a trend to endure look quite
formidable. An aging population such as the one we are currently
experiencing in the United States implies less consumption and more
savings. This trend should continue unabated through at least the first
decade of the next millenium. (b) We are also experiencing a technological
revolution, similar in scope to the industrial revolution with all the
attendant benefits. (c) Globalization means new markets will open with
increasingly more affluent consumers - a potential boom for U.S.
businesses. (d) Demand for common stocks because of mutual fund activity,
cash mergers and acquisitions and stock buybacks has significantly exceeded
the supply (public offerings and secondary issues) for the past few years -
with no let up in sight.
In concluding, I want to paraphrase the closing of a letter that Warren Buffett
wrote to his partners many years ago: "I cannot promise results to partners, but
I can and do promise this: (a) our investments will be chosen on the basis of
value, not popularity; (b) our patterns of operations will attempt to reduce
permanent capital loss (not short-term quotational loss) to a minimum."
If you have any questions do not hesitate to call (212)-995-8300.
Very truly yours,
/s/ Mark A. Boyar
Mark A. Boyar
Chief Investment Officer
<PAGE>
BOYAR VALUE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1998
(Unaudited)
ASSETS
Investment securities:
At acquisition cost $1,052,156
==========
At market value (Note 1) $1,063,954
Receivable for capital shares sold 100,000
Dividends receivable 2,409
Organization expenses, net (Note 1) 85,939
Other assets 15,844
----------
TOTAL ASSETS 1,268,146
----------
LIABILITIES
Payable for securities purchased 29,397
Payable to affiliates (Note 3) 49,517
Other accrued expenses 750
----------
TOTAL LIABILITIES 79,664
----------
NET ASSETS $1,188,482
==========
NET ASSETS CONSIST OF:
Paid-in capital $1,174,964
Undistributed net investment income 1,720
Net unrealized appreciation on investments 11,798
----------
NET ASSETS $1,188,482
==========
Shares of beneficial interest outstanding
(1,000,000,000 shares
authorized, $0.001 par value) 119,320
==========
Net asset value, offering price,
and redemption price per share (Note 1) $ 9.96
==========
See accompanying notes to financial statements.
<PAGE>
BOYAR VALUE FUND, INC.
STATEMENT OF OPERATIONS
For the Period Ended June 30, 1998 (a)
(Unaudited)
INVESTMENT INCOME
Dividends $ 3,518
--------
EXPENSES
Registration fees 4,077
Accounting services fees (Note 3) 4,000
Amortization of organization expenses (Note 1) 2,963
Postage and supplies 2,900
Transfer agent fees (Note 3) 2,400
Insurance expense 2,200
Administrative services fees (Note 3) 2,000
Custodian fees 1,490
Investment advisory fees (Note 3) 514
Management fees (Note 3) 514
Distribution expenses (Note 3) 257
Printing and filing of shareholder reports 250
--------
TOTAL EXPENSES 23,565
Fees waived and expenses reimbursed by
the Manager and the Adviser (Note 3) (21,767)
--------
NET EXPENSES 1,798
--------
NET INVESTMENT INCOME 1,720
--------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions --
Net increase in unrealized appreciation on investments 11,798
--------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 11,798
--------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 13,518
========
(a) Represents the period from the commencement of operations (May 5, 1998)
through June 30, 1998.
See accompanying notes to financial statements.
<PAGE>
BOYAR VALUE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended June 30, 1998 (a)
(Unaudited)
FROM OPERATIONS:
Net investment income $ 1,720
Net realized gains from security transactions --
Net increase in unrealized appreciation on investments 11,798
----------
Net increase in net assets from operations 13,518
----------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 1,074,964
----------
TOTAL INCREASE IN NET ASSETS 1,088,482
NET ASSETS:
Beginning of period (Note 1) 100,000
----------
End of period $1,188,482
==========
UNDISTRIBUTED NET INVESTMENT INCOME $ 1,720
==========
CAPITAL SHARE ACTIVITY:
Shares sold 109,320
Shares outstanding, beginning of period (Note 1) 10,000
----------
Shares outstanding, end of period 119,320
==========
(a) Represents the period from the commencement of operations (May 5, 1998)
through June 30, 1998.
See accompanying notes to financial statements.
<PAGE>
BOYAR VALUE FUND, INC.
FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding
Throughout the Period Ended June 30, 1998 (a)
(Unaudited)
Net asset value at beginning of period $ 10.00
-----------
Income from investment operations:
Net investment income 0.01
Net realized and unrealized losses on investments (0.05)
-----------
Total from investment operations (0.04)
-----------
Net asset value at end of period $ 9.96
===========
Total return (0.40%)
===========
Net assets at end of period $ 1,188,482
===========
Ratio of net expenses to average net assets (b) 1.75%(c)
Ratio of net investment income to average net assets 1.62%(c)
Portfolio turnover rate 0%
(a) Represents the period from the commencement of operations (May 5, 1998)
through June 30, 1998.
(b) Absent fees waived and expenses reimbursed by the Manager and the Adviser,
the ratio of expenses to average net assets would have been 22.94%(c) for
the period ended June 30, 1998.
(c) Annualized.
See accompanying notes to financial statements.
<PAGE>
BOYAR VALUE FUND, INC.
PORTFOLIO OF INVESTMENTS
June 30, 1998
(Unaudited)
Market
Shares Value
------ -----
COMMON STOCKS - 44.2%
CONSUMER, CYCLICAL - 27.1%
300 Dow Jones & Company, Inc. $ 16,725
5,100 Loehmann's, Inc. (a) 24,544
1,700 Midas, Inc. 34,212
2,600 Mirage Resorts, Inc. (a) 55,413
800 Playboy Enterprises, Inc. - Class B (a) 14,200
1,100 Reader's Digest Association, Inc. (The) - Class A 29,837
5,600 Spiegel, Inc. (a) 40,250
800 Time Warner Inc. 68,350
1,600 Toys "R" Us, Inc. (a) 37,700
-----------
321,231
-----------
CONSUMER, NON-CYCLICAL - 11.5%
2,600 Cross (A.T.) Co. - Class A 38,675
1,100 Seagram Company Ltd. (The) 45,031
900 Tupperware Corp. 25,313
1,200 Whitman Corp. 27,525
-----------
136,544
-----------
FINANCIAL SERVICES - 1.4%
500 CoVest Bankshares, Inc. 9,063
100 Lehman Brothers Holdings Inc. 7,756
-----------
16,819
-----------
TECHNOLOGY - 3.1%
100 Cognizant Corp. 6,300
600 Motorola, Inc. 31,537
-----------
37,837
-----------
TELECOMMUNICATIONS - 1.1%
400 360 Communications Co. (a) 12,800
-----------
TOTAL COMMON STOCKS (COST $513,433) $ 525,231
-----------
MONEY MARKET FUND - 45.3%
538,723 Star Treasury Fund (Cost $538,723) $ 538,723
-----------
TOTAL INVESTMENT SECURITIES - 89.5% (COST $1,052,156) $ 1,063,954
OTHER ASSETS IN EXCESS OF LIABILITIES - 10.5% 124,528
-----------
NET ASSETS - 100.0% $ 1,188,482
===========
(a) Non-income producing security.
See accompanying notes to financial statements.
<PAGE>
BOYAR VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
(Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Boyar Value Fund, Inc. (the Fund), is registered as a no-load, open-end,
diversified management investment company under the Investment Company Act of
1940 (the 1940 Act), and was incorporated on February 28, 1997 under the laws of
the State of Maryland. The Fund was capitalized on November 19, 1997, when the
initial 10,000 shares of the Fund were purchased at $10.00 per share. Except for
the initial purchase of shares, the Fund had no operations prior to the
commencement of operations on May 5, 1998.
The Fund seeks to provide long-term capital appreciation through investment in
equity securities which are believed by the Adviser to be intrinsically
undervalued.
The following is a summary of the Fund's significant accounting policies:
Securities valuation -- The Fund's portfolio securities are valued as of the
close of business of the regular session of the New York Stock Exchange
(currently 4:00 p.m., Eastern time). Securities which are traded
over-the-counter are valued at the last reported sales price, if available,
otherwise, at the last quoted bid price.
Share valuation -- The net asset value per share of the Fund is calculated daily
by dividing the total value of the Fund's assets, less liabilities, by the
number of shares outstanding. The offering price and redemption price per share
of the Fund is equal to the net asset value per share.
Investment income and distributions to shareholders -- Interest income is
accrued as earned. Dividend income is recorded on the ex-dividend date.
Dividends arising from net investment income, if any, are declared and paid
annually. Net realized short-term capital gains, if any, may be distributed
throughout the year and net realized long-term capital gains, if any, are
distributed at least once each year. Income dividends and capital gain
distributions are determined in accordance with income tax regulations.
Organization expenses -- Expenses of organization have been capitalized and are
being amortized on a straight-line basis over five years.
Security transactions -- Security transactions are accounted for on trade date.
Securities sold are valued on a specific identification basis.
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 at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
Federal income tax -- It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so qualifies
and distributes at least 90% of its taxable net income, the Fund (but not the
shareholders) will be relieved of federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
<PAGE>
BOYAR VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
(Unaudited)
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends in
each calendar year at least 98% of its net investment income (earned during the
calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
Based upon the federal income tax cost of portfolio investments of $1,052,156 as
of June 30, 1998, the Fund had net unrealized appreciation of $11,798,
consisting of $25,556 of gross unrealized appreciation and $13,758 of gross
unrealized depreciation.
2. INVESTMENT TRANSACTIONS
Purchases, other than short-term investments, amounted to $513,434 for the
period ended June 30, 1998. There were no sales or maturities of investment
securities, other than short-term investments, during the period.
3. TRANSACTIONS WITH AFFILIATES
The business and affairs of the Fund are supervised under the direction of the
Board of Directors which is responsible for the overall management of the Fund.
Ladenburg Thalmann Fund Management Inc. (the Manager) is responsible for
managing the daily business operations of the Fund. Boyar Asset Management, Inc.
(the Adviser) provides continuous advisory services to the Fund and Ladenburg
Thalmann & Co. Inc. (LTCI) acts as distributor of the Fund's shares. The Fund
has employed Countrywide Fund Services, Inc. (CFS) to provide administration,
accounting and transfer agent services. Certain Directors and officers of the
Fund are also officers of the Manager, the Adviser, LTCI or CFS.
MANAGEMENT AGREEMENT AND INVESTMENT ADVISORY AGREEMENT
Pursuant to a Management Agreement with the Fund, the Manager, under the
supervision of the Board of Directors, oversees the daily operations of the Fund
and supervises the performance of administrative and professional services
provided by others, including the Adviser. As compensation for its services and
the related expenses borne by the Manager, the Fund pays the Manager a fee,
computed and accrued daily and paid monthly, at an annual rate of 0.50% of its
average daily net assets.
Pursuant to an Investment Advisory Agreement with the Manager and the Fund, the
Adviser agrees to furnish continuous investment advisory services to the Fund.
For these services, the Fund pays the Adviser a fee, which is computed and
accrued daily and paid monthly, at an annual rate of 0.50% of its average daily
net assets.
<PAGE>
BOYAR VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
(Unaudited)
The Manager currently intends to waive its management fees and the Adviser
currently intends to waive its investment advisory fees to the extent necessary
to limit the total operating expenses of the Fund to 1.75% of average daily net
assets. In accordance with the above limitation, the Manager voluntarily waived
its management fees of $514 and reimbursed the Fund for $20,482 of other
operating expenses, and the Adviser voluntarily waived its investment advisory
fees of $514 for the period ended June 30, 1998.
Certain organization expenses of the Fund were paid directly by the Manager
prior to the Fund's initial public offering. As of June 30, 1998, $49,517
remains due to the Manager for reimbursement of such expenses.
ADMINISTRATION AGREEMENT
Under the terms of the Administration Agreement between the Fund and CFS, CFS
supplies non-investment related statistical and research data, internal
regulatory compliance services and executive and administrative services for the
Fund. CFS supervises the preparation of tax returns, reports to shareholders of
the Fund, reports to and filings with the Securities and Exchange Commission and
state securities commissions, and materials for meetings of the Board of
Trustees. For these services, CFS receives a monthly fee at an annual rate of
0.15% of the Fund's average daily net assets up to $50 million; 0.125% of such
assets from $50 million to $100 million; and 0.10% of such assets in excess of
$100 million, subject to a monthly minimum fee of $1,000.
TRANSFER AGENT AGREEMENT
Under the terms of the Transfer Agent, Dividend Disbursing, Shareholder Service
and Plan Agency Agreement between the Fund and CFS, CFS maintains the records of
each shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of the Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service functions. For these services, CFS receives a monthly fee at an annual
rate of $18 per shareholder account, subject to a monthly minimum fee of $1,200.
In addition, the Fund pays out-of-pocket expenses including, but not limited to,
postage and supplies.
ACCOUNTING SERVICES AGREEMENT
Under the terms of the Accounting Services Agreement between the Fund and CFS,
CFS calculates the daily net asset value per share and maintains the financial
books and records of the Fund. For these services, CFS receives a monthly fee,
based on current net assets, of $2,000 from the Fund. In addition, the Fund pays
certain out-of-pocket expenses incurred by CFS in obtaining valuations of the
Fund's portfolio securities.
SHAREHOLDER SERVICING AND DISTRIBUTION PLAN
The Fund has adopted a Shareholder Servicing and Distribution Plan (the Plan)
pursuant to Rule 12b-1 under the 1940 Act. The Plan provides that a monthly
service fee is calculated by the Fund at an annual rate of 0.25% of its average
daily net assets and is paid to LTCI, as distributor, to provide compensation
for ongoing services and/or maintenance of the Fund's shareholder accounts, not
otherwise required to be provided by the Adviser or CFS.
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<NAME> BOYAR VALUE FUND, INC.
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