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BOYAR VALUE FUND, INC.
----------------------
SEMI-ANNUAL REPORT
JUNE 30, 2000
(UNAUDITED)
FUND MANAGER
------------
LADENBURG THALMANN FUND MANAGEMENT INC.
590 Madison Avenue
New York, NY 10022
INVESTMENT ADVISER ADMINISTRATOR
------------------ -------------
BOYAR ASSET MANAGEMENT, INC. INTEGRATED 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
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<PAGE>
August 18, 2000
----------------------------------------
"History has shown that whenever
companies, no matter how great, get
priced above 50 to 60 times earnings,
Buyer Beware."
Jeremy Siegel
Wharton School
University of Pennsylvania
----------------------------------------
Dear Shareholder:
A LOOK BACK AT THE FIRST HALF
-----------------------------
|_| One thing that is clear is the stock market has rediscovered the quaint
20th Century notion of earnings. Even as investors remain wide-eyed about
the possibilities of the Internet Age, their patience has begun to wear out
for businesses that don't deliver.
|_| Risk is back, and has returned with a vengeance after a wild and wooly
first half of the year. You have erased a good bit of the extremes of the
dot-com foolishness. You had a full balloon that even a rusty pin could
have popped.
|_| For the first six months of the current year all the leading indices with
the exception of the Russell 2000 were in negative territory. But that
doesn't tell the full story since most of the carnage occurred during the
second quarter. For example, after reaching a record on March 10th or
5,048.62, the NASDAQ Composite fell 37.3% to 3,164.55 on May 23.
Ultimately, the technology-heavy Composite finished at 3,966.1, down 606.72
or 13.3%, for the second quarter.
|_| Boyar Value Fund experienced favorable comparative results for the first
six months of the current calendar year.
SIX MONTHS ENDED JUNE 30TH COMPARATIVE RESULTS
----------------------------------------------
RUSSELL 2000 RUSSELL MIDCAP RUSSELL 2000
BOYAR VALUE FUND INDEX VALUE VALUE INDEX
---------------- ----- ----- -----------
+7.30% +3.04% -0.69% +5.85%
ADDITIONAL THOUGHTS ABOUT THE QUARTER/WHERE DO WE GO FROM HERE?
---------------------------------------------------------------
|_| Although the NASDAQ has bounced back quite handsomely from its May 23rd
low, valuations on a great many technology companies remain painfully high.
True, many of these companies have retreated significantly from their March
highs. The vast majority, however, are still trading at lofty multiples,
far exceeding even the most optimistic growth rate. In fact, most of these
companies are priced for perfection. So, let us assume they meet analysts'
expectations during the next five years, and I will wager a good many
won't, but let us assume they do - what kind of return can an investor
capture during that time frame, if the business is already trading at more
than 100 X current earnings? If you factor in the risk associated with such
an investment one might conclude it's a fool's game.
<PAGE>
|_| On the other hand, the recent rash of takeover activity, at significant
premiums to what the businesses were trading for in the stock market prior
to the offer, is usually a precursor to a better environment for value
investing. Large premiums were recently paid for such old economy stocks as
Paine Webber, Hussman, Wynn's International and Nabisco to name a few. We
predict, in the not too distant future individual and institutional
investors will take the cue from this burst of takeover activity and
realize this bifurcated stock market has left a great many businesses
blatantly undervalued. Furthermore, during the next five years the vast
majority of old economy stocks will best the leading stock market indices,
particularly the NASDAQ.
BOYAR VALUE FUND'S PHILOSOPHY AND GOALS:
----------------------------------------
|_| The Boyar Value Fund tends to buy the common shares of publicly traded
businesses that are selling in the market place at significant discounts to
our estimate of their intrinsic or private market value.
|_| Furthermore, a substantial number of the businesses that we invest in are
either not widely followed by the majority of Wall Street brokerage houses
or may have plummeted in value because they failed to meet analysts
earnings expectations.
|_| Purchasing out of favor companies may inhibit short-term performance, since
it may take some time for these companies to right themselves. On the other
hand it does create a "margin of safety," since most of these companies
have plummeted in value by such a margin that most of the downside risk has
been eliminated.
|_| Over an investment time horizon of three to five years, we believe these
undervalued corporations will be re-evaluated upward by the stock market or
the assets of the businesses may be acquired by a third party.
|_| Utilizing this long-term "Buy and Hold" strategy allows capital to compound
without the return-eroding effect 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.
|_| Since Boyar Value Fund will buy equity positions in businesses regardless
of their market capitalization it will be very difficult to compare its
performance to a particular index. Our goal is to return to investors over
a complete market cycle an absolute rate of return that is superior to the
stock market's total return over the past 60 years which approximates
10.65%.
If you have any questions please do not hesitate to call (212) 995-8300 or visit
our website: www.boyarvalue.com.
------------------
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, 2000
(Unaudited)
ASSETS
Investment securities:
At acquisition cost $2,783,151
==========
At market value (Note 1) $3,097,281
Dividends receivable 4,536
Receivable from Adviser (Note 3) 12,038
Organization expenses, net (Note 1) 50,378
Other assets 18,110
----------
TOTAL ASSETS 3,182,343
----------
LIABILITIES
Payable to affiliates (Note 3) 4,200
Other accrued expenses and liabilities 7,471
----------
TOTAL LIABILITIES 11,671
----------
NET ASSETS $3,170,672
==========
NET ASSETS CONSIST OF:
Paid-in capital $2,652,989
Undistributed net investment income 347
Accumulated net realized gains from security transactions 203,206
Net unrealized appreciation on investments 314,130
----------
Net assets $3,170,672
==========
Shares of beneficial interest outstanding (1,000,000,000 shares
authorized, $0.001 par value) 266,507
==========
Net asset value, and redemption price per share (Note 1) $ 11.90
==========
Maximum offering price per share (Note 1) $ 12.53
==========
See accompanying notes to financial statements.
<PAGE>
BOYAR VALUE FUND, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2000
(Unaudited)
INVESTMENT INCOME
Dividends $ 30,543
----------
EXPENSES
Accounting services fees (Note 3) 12,000
Amortization of organization expenses (Note 1) 8,890
Insurance expense 7,148
Transfer agent fees (Note 3) 7,200
Investment advisory fees (Note 3) 8,585
Management fees (Note 3) 8,585
Directors' fees and expenses 6,000
Administrative services fees (Note 3) 6,000
Custodian fees 4,246
Distribution expenses (Note 3) 4,286
Shareholder report costs 1,130
Postage and supplies 2,843
Registration fees 2,595
Professional fees 2,000
Other expenses 271
----------
TOTAL EXPENSES 81,778
Fees waived and expenses reimbursed (Note 3) (51,732)
----------
NET EXPENSES 30,046
----------
NET INVESTMENT INCOME 497
----------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions 228,784
Net change in unrealized appreciation/
depreciation on investments (45,559)
----------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 183,225
----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 183,721
==========
See accompanying notes to financial statements.
<PAGE>
BOYAR VALUE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
June 30, 2000 December 31,
(Unaudited) 1999
---------- ----------
FROM OPERATIONS
<S> <C> <C>
Net investment income $ 497 $ 5,136
Net realized gains (losses) from security transactions 228,784 (25,578)
Net change in unrealized appreciation/depreciation on investments (45,559) 372,929
---------- ----------
Net increase in net assets from operations 183,721 352,488
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income -- (5,285)
---------- ----------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 499,807 2,466,134
Net asset value of shares issued in
reinvestment of distributions to shareholders -- 5,072
Payments for shares redeemed (1,647,500) (99,592)
---------- ----------
Net increase (decrease) in net assets from capital share transactions (1,147,693) 2,371,615
---------- ----------
TOTAL INCREASE (DECREASE) IN NET ASSETS (963,971) 2,718,818
NET ASSETS
Beginning of period (Note 1) 4,134,644 1,415,827
---------- ----------
End of period $3,170,672 $4,134,644
========== ==========
CAPITAL SHARE ACTIVITY
Sold 45,401 236,006
Reinvested -- 464
Redeemed (151,732) (9,266)
---------- ----------
Net increase (decrease) in shares outstanding (106,331) 227,203
Shares outstanding, beginning of period (Note 1) 372,838 145,634
---------- ----------
Shares outstanding, end of period 266,507 372,838
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
BOYAR VALUE FUND, INC.
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios for a Share
Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Six Months Year Period
Ended Ended Ended
June 30, 2000 December 31, December 31,
(Unaudited) 1999 1998(a)
------------ ------------ ------------
<S> <C> <C> <C>
Net asset value at beginning of period $ 11.09 $ 9.72 $ 10.00
------------ ------------ ------------
Income (loss) from investment operations:
Net investment income -- 0.01 0.03
Net realized and unrealized gains (losses) on investments 0.81 1.37 (0.28)
------------ ------------ ------------
Total from investment operations 0.81 1.38 (0.25)
------------ ------------ ------------
Less distributions:
From net investment income -- (0.01) (0.03)
------------ ------------ ------------
Net asset value at end of period $ 11.90 $ 11.09 $ 9.72
============ ============ ============
Total return 7.30% (d) 14.24% (2.46%)(d)
============ ============ ============
Net assets at end of period $ 3,170,672 $ 4,134,644 $ 1,415,827
============ ============ ============
Ratio of net expenses to average net assets (b) 1.75%(c) 1.75%(b) 1.75%(c)
Ratio of net investment income (loss) to average net assets 0.03%(c) 0.15%(b) 0.66%(c)
Portfolio turnover rate 25%(c) 8% 0%
</TABLE>
(a) Represents the period from the commencement of operations (May 5, 1998)
through December 31, 1998.
(b) Absent fees waived and expenses reimbursed, the ratio of expenses to
average net assets would have been 4.77% (c), 5.28% and 13.19% (c) for the
periods ended June 30, 2000, December 31, 1999 and 1998, respectively (Note
3).
(c) Annualized.
(d) Not annualized.
See accompanying notes to financial statements.
<PAGE>
BOYAR VALUE FUND, INC.
PORTFOLIO OF INVESTMENTS
June 30, 2000
(Unaudited)
Market
Shares Value
------ ----------
COMMON STOCKS - 81.1%
CONSUMER, CYCLICAL - 53.9%
1,836 Chris-Craft Industries, Inc. (a) $ 121,290
1,000 Dow Jones & Company, Inc. 73,250
4,000 Dun & Bradstreet Corp. 114,500
15,000 Hanover Direct, Inc. 23,437
12,600 Hilton Hotels Corp. 118,125
200 IMS Health, Inc. 3,600
8,000 Mattel, Inc. 105,500
1,500 Meredith Corp. 50,625
3,100 Midas, Inc. 62,000
4,000 Neiman Marcus Group, Inc. (The) 120,750
18,000 Pier 1 Imports, Inc. 175,500
4,400 Playboy Enterprises, Inc. - Class B (a) 56,650
1,100 Reader's Digest Association, Inc. (The) - Class A 43,725
7,000 Regis Corp. 87,500
24,100 Spiegel, Inc. (a) 204,850
2,000 The Walt Disney Co. 77,625
1,000 Time Warner, Inc. 76,000
3,200 Toys "R" Us, Inc. (a) 46,600
10,000 Unapix Entertainment Inc. 13,125
1,953 Viacom, Inc. Class B 133,170
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1,707,822
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CONSUMER, NON-CYCLICAL - 7.6%
7,800 Cross (A.T.) Co. - Class A 38,513
2,300 Seagram Company Ltd. (The) 133,400
5,600 Whitman Corp. 69,300
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241,213
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FINANCIAL SERVICES - 14.5%
2,000 Bank One Corp. 53,125
750 Chase Manhattan Corp. (The) 34,547
3,450 Citigroup, Inc. 207,863
5,800 CoVest Bancshares, Inc. 60,900
1,100 Lehman Brothers Holdings, Inc. 104,019
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460,454
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INDUSTRIAL - 3.5%
4,000 Diebold, Inc. 111,500
----------
<PAGE>
COMMON STOCKS - 81.1%
TECHNOLOGY - 1.6%
2,500 Xerox Corp. $ 51,875
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TOTAL COMMON STOCKS (COST $2,258,734) $2,572,863
----------
MONEY MARKET FUND - 16.5%
524,417 Firstar Stellar Treasury Fund (Cost $524,417) $ 524,417
----------
TOTAL INVESTMENT SECURITIES - 97.6% (COST $2,783,151) $3,097,281
OTHER ASSETS IN EXCESS OF LIABILITIES - 2.4% 73,391
----------
NET ASSETS - 100.0% $3,170,672
==========
(a) Non-income producing security.
See accompanying notes to financial statements.
<PAGE>
BOYAR VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Boyar Value Fund, Inc. (the Fund), is registered as an 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
(normally 4:00 p.m., Eastern Time). Securities traded on a national stock
exchange or quoted by NASDAQ are valued at their closing sales price on the
principal exchange where the security is traded or, if not traded on a
particular day, at their closing bid price. Securities for which market
quotations are not readily available are valued at their fair value as
determined in good faith in accordance with consistently applied procedures
established by and under the general supervision of the Board of Directors.
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. Effective May 1, 2000, the maximum offering price
per share of the Fund is equal to the net asset value per share plus a sales
load equal to 5.26% of net asset value (or 5.00% of the offering price) and a
contingent deferred sales charge of 1.00% if redeemed within a one-year period
from the date of purchase. The redemption price per share 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 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.
<PAGE>
BOYAR VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
Security transactions -- Security transactions are accounted for on trade date.
Securities sold are determined 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.
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.
As of June 30, 2000, based upon a federal income tax cost of portfolio
investments of $2,783,151, the Fund had net unrealized appreciation of $314,130,
consisting of $514,410 of gross unrealized appreciation and $200,280 of gross
unrealized depreciation.
As of December 31, 1999 the Boyar Value Fund had a capital loss carryforward for
federal income tax purposes of $25,578,which expires on December 31, 2007. This
capital loss carryforward may be utilized in the current and future years to
offset net realized capital gains prior to distributing such gains to
shareholders.
2. INVESTMENT TRANSACTIONS
For the six months ended June 30, 2000, cost of purchases and proceeds from
sales of portfolio securities, other than short-term investments, amounted to
$346,896 and $1,008,777, respectively.
3. TRANSACTIONS WITH AFFILIATES
The business activities 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
<PAGE>
BOYAR VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
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 Integrated Fund Services, Inc. (IFS) 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 IFS.
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
management 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, the Adviser and
the Fund, the Adviser agrees to furnish continuous investment advisory services
to the Fund. For these services, the Fund pays the Adviser an investment
advisory fee, which is computed and accrued daily and paid monthly, at an annual
rate of 0.50% of its average daily net assets.
The Manager currently intends to waive its management fees and reimburse other
operating expenses of the Fund, 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
$8,585 and reimbursed the Fund for $30,276 of other operating expenses, and the
Adviser voluntarily waived its investment advisory fees of $8,585 for the six
months ended June 30, 2000.
ADMINISTRATION AGREEMENT
Under the terms of an Administration Agreement between the Fund and IFS, IFS
supplies non-investment related statistical and research data, internal
regulatory compliance services and executive and administrative services for the
Fund. IFS 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
Directors. For these services, IFS 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 a Transfer Agent, Dividend Disbursing, Shareholder Service
and Plan Agency Agreement between the Fund and IFS, IFS maintains the records of
each shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of the Fund's
<PAGE>
BOYAR VALUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
shares, acts as dividend and distribution disbursing agent and performs other
shareholder service functions. For these services, IFS 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 IFS out-of-pocket expenses including, but
not limited to, postage and supplies.
ACCOUNTING SERVICES AGREEMENT
Under the terms of an Accounting Services Agreement between the Fund and IFS,
IFS calculates the daily net asset per share and maintains the financial books
and records of the Fund. For these services, IFS receives a monthly fee, based
on current net assets, of $2,000 from the Fund. In addition, the Fund pays IFS
certain out-of-pocket expenses incurred by IFS 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 a 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 IFS. For the six months
ended June 30, 2000, the Fund incurred and subsequently waived $4,286 of
distribution expenses under the Plan.
