Securities Act Registration No. 2-61740
Investment Company Act Registration No. 811-13834
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
Post-Effective Amendment No. 27 /X/
Registration Statement Under the Investment Company Act of 1940 /X/
Amendment No. 26 /X/
COPLEY FUND, INC.
(Exact Name of Registrant as Specified in Charter)
25 SUNRISE AVENUE, PALM BEACH, FL 33480
(Address of Registrant's Principal Executive Office) (Zip Code)
(407) 665-8050
Registrant's Telephone Number, Including Area Code
Irving Levine, President
245 SUNRISE AVENUE, PALM BEACH, FL 33480
(Name and Address of Agent for Service)
Copy to:
Thomas C. Henry, Esquire
Roberts & Henry
P.O. Box 1138
St. Michaels, MD 21663
Approximate Date of Proposed Public Offering: As soon as practicable after this
Amendment become effective.
It is proposed that his filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b)
[X] on January 18, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)
[ ] on [date] pursuant to paragraph (a) of Rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant hereby incorporates herein by this reference thereto Post-Effective
Amendment No. 26 to Registration Statement No.2-61740 and Post-Effective
Amendment No. 25 to Registration Statement No. 811-13834 filed on or about
January 16, 2000.
<PAGE>
Item 23. (a) Financial Statements:
Semi-Annual Report dated August 31, 1999.
<PAGE>
Semi-Annual Report August 31, 1999
COPLEY FUND, INC.
A No-Load Fund
<PAGE>
COPLEY FUND, INC.
Copley Financial Services Corp. - Investment Manager
P.O. Box 3287 - Fall River, Massachusetts 02722 - (508) 674-8459
October 14, 1999
Dear Fellow Shareholder:
Lately the Securities and Exchange Commission has been putting stress
on the independence and unselfish dedication to shareholders of Mutual Fund
directors. Our board of Burton S. Stern, Albert Resnick, M.D., and Kenneth
Joblon are truly independent and capable and dedicated to and for the benefit of
the shareholders.
Burton Stern, a large independent investor and a founding board member,
had served on the Boards of Zayre and TJX Corporations for many years and has
been a great advisor re investments and our operating retail division. Albert
Resnick, M.D., a large independent investor and a founding board member has been
invaluable re his knowledge of financial institutions and their investment
trends. Kenneth Joblon who came on board following the death of founding board
member George Goldman, is the head of a large textile manufacturing operation.
His advice and guidance re our various operations have been invaluable.
I, as the largest stockholder of Copley Fund, Inc., and our great board
bend every effort to operate or the total benefit of the shareholder. I am sure
the SEC will recognize this when called upon. Most of our large investors regard
Copley Fund as a safe investment anchor leaving them free to pursue more
aggressive investments if they so choose. They are comfortable with our
philosophy of investing in stocks that mostly pay high dividends thus flooring
our net asset value as we cannot go below the basic yield of our portfolio
represent interest rates. Also the thrust of our dividends add to our net asset
values every month. Do keep in mind because we do not distribute dividends or
capital gains we have on average a 3% difference of net asset value (after taxes
to individual investors) than most other stock funds, i.e. if a fund has gained
13% and Copley Fund 10% the two funds are probably equal in after-tax return.
Our investment approach which we believe gives us the least amount of
risk of most stock funds has lead to the following very respectable record.
1984*.......................................+23.9 % (TOP PERFORMING
FUND IN 1984)
1985..........................................+25 %
1986..........................................+18 %
1987...........................................-8 %
1988..........................................+20 %
1989..........................................+16 % (Including a reserve
for taxes on
unrealized gains.)
1990...........................................-2 %
1991..........................................+18 %
*Calendar Years
1
<PAGE>
1992..........................................+18%
1993..........................................+10%
1994..........................................- 7%
1995..........................................+26%
1997..........................................+ 5%
1998..........................................+14%
1999........................................-1.67% (August 31, 1999)
Many of our stocks are in the midst of mergers such as Atlantic
Richfield, Exxon Mobil, (Bell Atlantic and Ameritech just completed), Eastern
Utilities, Kansas City Power and Light, Western Resources, New Century, New
England Electric, Carolina Power, Florida Progress, Wicor, Conn. Natural Gas,
Connecticut Energy, U.S. West, and others. We believe most of these mergers when
completed will lead to significant increases in net asset values.
The volatility of the present markets has been of great concern to
most investors who have seen the Dow Jones average go from 11,200 to 10,000.
Copley operates in a much narrower range as we are floored by our dividend
paying stocks even though these are out of favor with many investors who would
rather take big risks in order to "hit the long ball." A Copley investor would
rather sleep nights knowing we or she will participate in a safe measure of
growth.
Our operating division is completing contracts to sell mattresses and
ancillary merchandise over the Internet in a joint venture with Emattress.com.
We believe this will add to the profits of our operating division.
We are expanding our shoe merchandising division which also should
result in further operating profits.
Thus we are optimistic for the future of Copley Fund. We believe our
sane and logical approach will result in continued increases in value with
minimal amount of risk.
Our thanks to our Board and to our shareholders for their support
throughout our twenty years of operation.
Cordially,
/s/ Irvine Levine
Irvine Levine
PRESIDENT
2
<PAGE>
COPLEY FUND, INC. PER SHARE VALUE
CALENDAR YEARS ENDED DECEMBER 31, 1998
PERIOD ENDED SEPTEMBER 30, 1999
<PAGE>
ACCOUNTANT'S REVIEW REPORT
Shareholders and Board of Directors
Copley Fund, Inc.
Palm Beach, Florida
I have made a review of the accompanying statement of assets and
liabilities, including the portfolio of investments, of Copley Fund, Inc., as of
August 31, 1999, and the related statement of operations, the statement of cash
flows, the statement of changes in net assets, and the selected per share data
and ratios for the six months then ended, in accordance with Statements on
Standards for Accounting and Review Services issued by the American Institute of
Certified Public Accountants. All information included in these statements is
the representation of the management of Copley Fund, Inc.
A review of interim financial information consists principally of
obtaining an understanding of the system for the preparation of interim
financial information, applying analytical review procedures to financial data,
and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit in accordance with
generally accepted auditing standards, the objective of which is the expression
of an opinion regarding the financial statements taken as a whole. Accordingly,
I do not express such an opinion.
Based upon my review, I am not aware of any material modifications
that should be made to the financial statements referred to above for them to be
in conformity with generally accepted accounting principles.
I have previously audited, in accordance with generally accepted
auditing standards, the statement of assets and liabilities as of February 28,
1999 and the related financial statements and cash flows for the year then ended
(not presented in full herein); and in my report of April 22, 1999, I expressed
an unqualified opinion on those financial statements.
ROY G. HALE
Certified Public Accountant
La Plata, Maryland
October 13,1999
4
<PAGE>
COPLEY FUND, INC.
PORTFOLIO OF INVESTMENTS
August 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
------ -----
COMMON STOCKS - 100.00%
DIVERSIFIED UTILITY COMPANIES - 13.36%
<S> <C> <C>
Alliant Energy Corp......................................... 20,000 $ 578,750
Dominion Resources, Inc..................................... 30,000 1,387,500
Eastern Utilities Associates................................ 25,000 748,438
Florida Progress............................................ 35,000 1,638,437
FPL Group................................................... 55,000 2,970,000
GPU, Inc.................................................... 35,000 1,194,375
LG & E Energy Corp.......................................... 80,000 1,840,000
Texas Utilities Co.......................................... 25,000 1,010,938
-----------
............................................................ 11,368,438
----------
ELECTRIC AND GAS - 14.28%
American Electric Power..................................... 55,000 1,997,187
Carolina Power & Light Co................................... 60,000 2,182,500
Connectiv, Inc.............................................. 32,500 738,750
First Energy Corp........................................... 40,000 1,142,500
Kansas City Power & Light Co................................ 40,000 962,500
New Century Energy, Inc..................................... 45,000 1,625,625
SCANA, Corp................................................. 50,000 1,250,000
Sempra Energy, Inc.......................................... 45,000 1,004,063
UtiliCorp United, Inc....................................... 45,000 1,043,437
Western Resources, Inc...................................... 8,511 203,200
------------
............................................................ 12,149,762
----------
ELECTRIC POWER COMPANIES - 12.96%
Allegheny Energy, Inc....................................... 45,000 1,518,750
Ameren Corporation.......................................... 50,000 2,003,125
DTE Energy Company.......................................... 55,000 2,193,125
Nstar....................................................... 22,000 950,125
New England Electric System................................. 35,000 1,826,562
Pennsylvania Power & Light Co............................... 50,000 1,400,000
PECO Energy Co.............................................. 11,600 471,250
Potomac Electric Power Co................................... 25,000 662,500
------------
............................................................ $ 11,025,437
------------
Continued
See Accountant's Review Report.
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
COPLEY FUND, INC.
PORTFOLIO OF INVESTMENTS
August 31, 1999
(Unaudited)
NUMBER OF
SHARES VALUE
------ -----
GAS UTILITIES & SUPPLIES - 12.78%
Colonial Gas Co............................................. 50,000 $ 1,865,625
Connecticut Energy Corp..................................... 20,000 747,500
CTG Resources, Inc.......................................... 27,000 966,938
Delta Natural Gas Co........................................ 15,000 266,250
Keyspan Energy Corp......................................... 40,000 1,180,000
New Jersey Resources Corp................................... 25,000 968,750
Northwest Natural Gas Co.................................. 30,000 750,000
Peoples Energy Corp......................................... 25,000 910,937
Washington Gas Light Co..................................... 33,000 880,457
Wicor, Inc.................................................. 80,000 2,340,000
-----------
............................................................ 10,876,457
-----------
HYDRO ELECTRIC - 1.10%
Idaho Power Co.............................................. 30,000 939,375
DRUG COMPANIES - 9.60%
Bristol Myers Squibb Co..................................... 100,000 7,037,500
Pfizer, Inc................................................. 30,000 1,132,500
-----------
............................................................ 8,170,000
-----------
BANKING - 3.36%
Morgan J.P. & Co............................................ 10,000 1,291,875
PNC Bank Corporation........................................ 30,000 1,569,375
----------
............................................................ 2,861,250
----------
INSURANCE - 1.28%
Gallagher, Arthur J. & Company.............................. 20,000 1,092,500
----------
MANUFACTURING - CAPITAL GOODS - 1.13%
Xerox Corp.................................................. 20,000 958,750
-----------
MANUFACTURING - OTHER - 0.96%
International Flavors & Fragrances.......................... 20,000 $ 815,000
---------
See Accountant's Review Report.
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
COPLEY FUND, INC.
PORTFOLIO OF INVESTMENTS
August 31, 1999
(Unaudited)
NUMBER OF
SHARES VALUE
------ -----
OILS - 9.39%
Atlantic Richfield Co....................................... 15,000 $ 1,319,062
Exxon Corp.................................................. 24,000 1,893,000
Mobil Corp.................................................. 22,000 2,252,250
Sunco, Inc.................................................. 18,996 618,557
Texaco, Inc................................................. 30,000 1 ,905,000
-----------
............................................................ 7,987,869
-----------
RETAIL - 1.91%
Penney (J.C.), Inc.......................................... 20,000 725,000
Wal-Mart Stores, Inc........................................ 20,000 886,250
----------
............................................................ 1,611,250
----------
TELEPHONE - 17.89%
Ameritech Corp.............................................. 53,920 3,403,700
American Telephone & Telegraph.............................. 22,500 1,012,500
Bell Atlantic Corp.......................................... 94,232 5,777,600
Bell South Corp............................................. 20,000 905,000
SBC Communications, Inc..................................... 58,516 2,812,425
US West Communications Group, Inc........................... 25,000 1,306,250
-----------
............................................................ $15,217,475
-----------
Total value of investments (Cost $42,165,489).......... 85,073,563
Excess of cash and other assets over liabilities....... 3,345,125
------------
NET ASSETS............................................. $88,418,689
===========
</TABLE>
7
See Accountant's Review Report.
The accompanying notes are an integral part of the financial statements.
<PAGE>
COPLEY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
Investments in securities, at value (identified cost $42,165,489)(Note 1) $ 85,073,563
Cash ..................................................... 3,380,838
Receivables:
Subscriptions................................................... 6,700
Trade (Notes 5 & 6)............................................. 19,196
Dividends and interest.......................................... 210,411 236,307
---------
Inventory (Notes 1, 5 and 6)...................................... 199,555
Other Assets...................................................... 897
-------------------
TOTAL ASSETS......................................... 88,891,160
LIABILITIES
Payables:
Trade ..................................................... 10,002
Accrued income taxes - current.................................... 33,451
Accrued expenses.................................................. 55,309
Deferred income taxes (Notes 1 and 2)............................. 373,709
-----------
TOTAL LIABILITIES.................................... 472,471
------------
COMMITMENTS AND CONTINGENCIES (NOTE 7)
NET ASSETS ..................................................... $ 88,418,689
============
Net assets consist of:
Capital paid in $ 16,575,949
Undistributed net investment and operating income................. 31,219,335
Accumulated net realized loss on investment transactions.......... (2,284,669)
Net unrealized appreciation in value of investments (Note 2)...... 42,908,074
------------
TOTAL................................................ $ 88,418,689
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE,
(2,427,442 shares of $1.00 par value capital stock outstanding)... $ 36.42
========
</TABLE>
See Accountant's Review Report.
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
COPLEY FUND, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended August 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
INVESTMENT INCOME (Note 1)
Income
<S> <C> <C>
Dividends ..................................................... $1,652,556
Interest ..................................................... 84,818
-------------
Investment income.................................... $ 1,737,374
Expenses
Investment advisory fee (Note 5)................................ 309,050
Professional fees............................................... 52,808
Custodian fees.................................................. 19,066
Shareholder servicing costs..................................... 17,015
Printing ..................................................... 13,602
Postage and shipping............................................ 4,939
Accounting and pricing service costs............................ 20,250
Directors fees.................................................. 12,033
Blue Sky fees................................................... 8,080
Telephone 2,634
Insurance ..................................................... 36,500
Office expense and miscellaneous................................ 2,296
------------
Investment expenses.................................. 498,273
Less: Investment advisory fee waived................. 30,000 468,273
----------- -----------
Net investment income before income taxes............ 1,269,101
OPERATING PROFIT (Notes 2, 5 and 7)
Gross profit ..................................................... 17,664
Less: Operating expenses.......................................... 16,148
---------
Net operating profit before income taxes............. 1,516
--------------
NET INVESTMENT AND OPERATING INCOME BEFORE
INCOME TAXES...................................................... 1,270,617
Less provision for income taxes (Notes 2 and 7)................... 33,451
-------------
Net investment and operating income............................. 1,237,166
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Notes 2 and 4)
Realized gain from investment transactions during the year........ 291,950
Increase in unrealized appreciation of investments
during current year............................................. 3,936,132
-----------
Net realized and unrealized gain/loss on investments............ 4,228,082
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS........................................................ $ 5,465,248
===========
</TABLE>
See Accountant's Review Report.
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
COPLEY FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(Unaudited)
Six Months Ended Year Ended
August 31, February 28.
1999 1999
---- ----
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
<S> <C> <C>
Net investment and operating income........................... $ 1,237,166 $ 2,532,378
Net realized gain (loss) on investment transactions........... 291,950 (234,435)
Net change in unrealized appreciation on investments.......... 3,936,132 2,071,802
-------------- --------------
Increase (decrease) in net assets resulting from operations. 5,465,248 4,369,745
NET EQUALIZATION (DEBITS) CREDITS (Note 1)............................. (1,444,024) 7,254
CAPITAL SHARE TRANSACTIONS (Note 3)
Increase (decrease) in net assets resulting from capital
share transactions.......................................... (2,694,204) 1,741
-----------------------------
Total increase (decrease) in net assets.............. 1,327,020 4,378,740
NET ASSETS
Beginning of Year............................................. 87,091,669 82,712,929
------------ ------------
End of Period (including undistributed net investment
and operating income of $31,219,335 and
$30,902,222, respectively).................................... $ 88,418,689 $ 87,091,669
============ ============
</TABLE>
See Accountant's Review Report.
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
COPLEY FUND, INC.
STATEMENT OF CASH FLOWS
For the Six Months Ended August 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
INCREASE (DECREASE) IN CASH
Cash flows from operating activities
<S> <C>
Dividends and interest received.................................................. $1,736,269
Proceeds from disposition of long-term portfolio investments..................... 5,479,768
Receipts from customers.......................................................... 77,178
Payments of taxes, net........................................................... (15,282)
Expenses paid.................................................................... (460,820)
Purchase of long-term portfolio investments...................................... (5,102,956)
Payments to suppliers............................................................ (72,575)
----------------
Net cash provided by operating activities...................................... 1,641,582
===============
Cash flows provided by financing activities
Fund shares sold................................................................. 1,405,155
Fund shares repurchased.......................................................... (5,499,880)
-------------
Net cash used by financing activities.......................................... (4,094,725)
=============
Net decrease in cash...................................................... (2,453,143)
Cash at beginning of the year............................................. 5,883,981
--------------
Cash as of August 31, 1999................................................ $ 3,380,838
=============
RECONCILIATION OF NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Net increase in net assets resulting from operations............................. $ 5,465,248
------------
Increase in investments.......................................................... (3,826,851)
Increase in dividends and interest receivable.................................... (1,105)
Increase in receivables from customers........................................... (4,294)
Increase in inventory............................................................ (17,250)
Increase in income taxes payable-current......................................... 18,168
Increase in other assets......................................................... 483
Increase in accrued expenses..................................................... 7,453
-----------------
Total adjustments.............................................................. (3,823,666)
Net cash provided by operating activities...................................... $ 1,641,582
============
</TABLE>
See Accountant's Review Report.
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
COPLEY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management company. The following is a
summary of significant accounting policies consistently followed by the Fund in
the preparation of its financial statements. The policies are in conformity with
generally accepted accounting principles.
SECURITY VALUATION
Investments in securities traded on a national securities exchange are
valued at the last reported sales price on the last business day of the period;
securities traded on the over-the-counter market and listed securities for which
no sale was reported on that date are valued at the mean between the last
reported bid and asked prices.
SALES OF SECURITIES
In determining the net realized gain or loss from sales of securities,
the cost of securities sold is determined on the basis of identifying the
specific certificates delivered.
EQUALIZATION
The Fund follows the accounting practice known as equalization by which a
portion of the proceeds from sales and costs of repurchases of capital shares,
equivalent on a per-share basis to the amount of distributable net investment
and operating income on the date of the transaction, is credited or charged to
undistributed net investment and operating income.
DISTRIBUTION
It is the Fund's policy to manage its assets so as to avoid the necessity
of making annual taxable distributions. Net investment and operating income and
net realized gains are not distributed, but rather are accumulated within the
Fund and added to the value of the Fund shares.
INVENTORY
Inventory is valued at the lower of cost (determined by the first
in/first out method) or market.
INCOME TAXES
The Fund files tax returns as a regular corporation and accordingly the
financial statements include provisions for current and deferred income taxes.
OTHER
Security transactions are accounted for on the date the securities are
purchased or sold. Dividend income is recorded on the ex-dividend date. Interest
income is recorded as earned.
12
<PAGE>
COPLEY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
(Unaudited)
2. FEDERAL AND STATE INCOME TAXES
The income tax provision included in the financial statements is as
follows:
Regular federal tax liability............... $ 26,151
State tax liability......................... 7,300
-----------
....................................... $ 33,451
=========
The Fund provides deferred taxes for unrealized appreciation on its
investment portfolio to the extent that management anticipates that a liability
may exist. The amount of deferred taxes currently available to the Fund is
$1,748,613, consisting of $373,709 accumulated general liability and a
cumulative alternative minimum tax carryover of $13,74,904. The difference
between the effective rate on investment and operating income and the expected
statutory rate is due substantially to the use by the Fund of the dividends
received deduction.
In tax years beginning after 1997, a small corporation is no longer subject
to the alternative minimum tax. The Fund qualifies as a small corporation as set
forth in Internal Revenue Code, Section 55(e). The cumulative alternative
minimum tax carryover from prior years may be used to offset a portion of the
regular tax liability. In the current six months, the regular federal income tax
liability was reduced by $103,452 and the state income tax liability was reduced
by $13,500 due to alternative minimum tax carryovers.
The Fund has $2,284,669 in accumulated capital loss carryforwards which
expires as follows: $609,354 on February 29, 2000, $1,440,880 on February 28,
2003 and $234,435 on February 28, 2004.
The Fund is qualified and currently conducts business in the State of
Florida. The Fund is subject to Florida corporate taxes but is not subject to
alternative minimum tax in any year which the Fund does not pay a federal
alternative minimum tax. Consistent with the federal guidelines, the Fund will
be entitled to a credit against a portion of the regular corporate income tax
for alternative minimum tax paid in prior fiscal y ears.
In accordance with FASB-109, Accounting for Income Taxes (applicable for
fiscal years commencing after December 31, 1992), the Copley Fund, Inc. has
adopted the liability method of accounting for current and deferred tax assets
and liabilities.
13
<PAGE>
COPLEY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
(Unaudited)
3. CAPITAL STOCK
At August 31, 1999, there were 5,000,000 shares of $1.00 par value
capital stock authorized. Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
AUGUST 31, 1999 FEBRUARY 28, 1999
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares sold ............... 37,979 $ 1,385,836 154,149 $ 5,345,010
Shares repurchased........... (155,827) (5,524,064) (155,053) (5,336,015)
--------- ------------- ---------- -------------
Net Change.............. (117,848) $ (4,138,228) (904) $ 8,995
========= ============ ============= ==============
</TABLE>
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than United States government
obligations and short-term notes, aggregated $4,102,956 and $5,479,768,
respectively.
5. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH RELATED PARTIES
Copley Financial Services Corporation (CFSC), a Massachusetts
corporation, serves as investment advisor to the Fund. Irving Levine, Chairman
of the Board of the Fund, is the owner of all of the outstanding common stock of
CFSC and serves as its President, Treasurer and a member of its Board of
Directors.
Under the Investment Advisory Contract, CFSC is entitled to an annual fee,
payable monthly at the rate of 1.00% of the first $25 million of the average
daily net assets; .75% of the next $15 million; and .50% on average daily net
assets over $40 million.
Since September 1, 1978, in order to encourage the growth of the net asset
value of the Fund by keeping expenses to a minimum, CFSC has waived a portion of
the investment advisory fee on the first $15 million of average net assets. CFSC
has made no commitment to continue this policy.
For the six months ended August 31, 1999, the fee for investment advisory
service totaled $309,050, less fees of $30,000 voluntarily waived. Also , during
the period unaffiliated directors received $12,033 in directors' fees.
The Fund's operating division, which imports merchandise for resale, places
a portion of its merchandise on consignment with a company controlled by Irving
Levine. The Fund invoices the consignee when the merchandise is ultimately sold.
Sales of merchandise to the affiliate amounted to $76,366 during the period. An
amount of $19,196 is receivable in respect to these sales as of August 31, 1999.
6. NOTES PAYABLE
A $5,000,000 line of credit has been secured for the operating division
Fleet National Bank. The assets of the Fund are pledged as security for this
line of credit. The amount t currently outstanding on this line is zero.
14
<PAGE>
COPLEY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
(Unaudited)
7. COMMITMENTS AND CONTINGENCIES
Since the Fund accumulates its net investment income rather than
distributing it, the Fund may be subject to the imposition of the federal
accumulated earnings tax. The accumulated earnings tax is imposed on a
corporation's accumulated taxable income at a rate of 39.6% for years commencing
after December 31, 1992.
Accumulated taxable income is defined as adjusted taxable income minus the
sum of the dividends paid deduction and the accumulated earnings credit. The
dividends paid deduction and accumulated earnings credit is available only if
the Fund is not held to be a mere holding or investment company.
The Internal Revenue Service recently upheld management's position that the
Fund is not a mere holding or investment company since the Fund is conducting an
operating business. Provided the Fund manages accumulated and annual earnings
and profits, in excess of $250,000 in such a manner that the funds are deemed to
be obligated or consumed by capital losses, redemptions and expansion of the
operating division, the Fund should not be held liable for the accumulated
earnings tax by the Internal Revenue Service.
15
<PAGE>
COPLEY FUND, INC.
FINANCIAL HIGHLIGHTS
The following table presents information about the Fund's financial history. It
is based upon a single share outstanding throughout each fiscal year (which ends
on the last day of February).
<TABLE>
<CAPTION>
August February February February February February February February
31, 1999 28, 1999 28, 1998 28, 1997 29, 1996 28, 1995 28, 1994 28, 1993
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment and Operating
Income......................... $0.699 $1.386 $1.371 $1.368 $1.302 $1.194 $1.099 $1.089
Expenses (Including Taxes)..... 0.202 0.391 0.490 .0471 0.431 0.405 0.509 0.380
----- ------ ------ ----- ----- ----- ----- -----
Net Investment and Operating Income 0.497 0.995 0.881 0.897 0.871 0.789 0.590 0.709
Net Realized and Unrealized
Gain (Loss) on Investments.. 1.701 0.722 4.885 0.952 2.840 -0.368 -1.130 3.031
Change in Accounting Estimate..
Net Increase (Decrease) in
Net Asset Value............. 2.198 1.717 5.766 1.849 3.711 0.421 -0.540 4.890
Net Asset Value
Beginning of Period (1)..... 33.779 32.062 26.296 24.447 20.736 20.315 20.855 15.965
End of Period (1)........... $35.977 $33.779 $32.062 $$26.296 $ $24.447 $20.736 $ $20.315 $20.855
======= ======== ======= ======== ========= ======= ========= =======
Average Annual Total Return.... 6.51% 5.36% 21.93% 7.56% 17.89% 2.50% -2.60% 30.60%
Ratio to Average Net Assets:
Investment Expenses
(Excluding Taxes) 1.01%(a) 0.97% 0.95% 1.00% 1.03% 1.09% 1.51% 1.14%
Net Investment and Operating Income 2.69%(a) 2.98% 3.00% 3.51% 4.79% 3.84% 2.88% 5.93%
Portfolio Turnover............. 6.13% 2.49% 43.01% 9.15% 4.79% 31.00% 10.00% 5.00%
Number of Shares
Outstanding at End of
Period (in Thousands)....... 2,427 2,545 2,546 2,794 3,161 3,686 3,986 1,945
<FN>
(1) Based upon average number of shares.
(a) Annualized
</FN>
</TABLE>
16
<PAGE>
COPLEY FUND, INC.
A NO-LOAD FUND
SEMI-ANNUAL REPORT
AUGUST 31, 1999
INVESTMENT ADVISER
COPLEY FINANCIAL SERVICES CORP.
P.O. BOX 3287
FALL RIVER, MASSACHUSETTS 02722
CUSTODIAN
FLEET INVESTMENT SERVICES
111 WESTMINSTER STREET
PROVIDENCE, RHODE ISLAND 02903
TRANSFER AGENT
AMERITOR FINANCIAL CORP.
1730 K ST., N.W. - SUITE 904
WASHINGTON, D.C. 20006
TEL. (202) 223-1000
TEL. (800) 424-8570
GENERAL COUNSEL
ROBERTS AND HENRY
504 TALBOT STREET
ST. MICHAELS, MARYLAND 21663
AUDITORS
ROY G. HALE, C.P.A.
624 CLARKS RUN ROAD
LA PLATA, MARYLAND 20646
COPLEY FUND, INC.
A NO-LOAD FUND
17
ROBERTS & HENRY
504 TALBOT STREET
P.O. BOX 1138
ST. MICHAELS, MD 21663
(410) 822-4456
CONSENT OF LEGAL COUNSEL
Copley Fund, Inc.
245 Sunrise Avenue
Palm Beach, FL 33480
We hereby consent to the reference to our firm under the caption "Legal
Matters" in the Prospectus. Part I to be filed as Post-Effective Amendments No.
27 to Registration Statement No. 2-61740 which you are filing with the
Securities and Exchange Commission, Washington D.C. under the Securities Act of
1933, as amended.
Roberts & Henry
By /s/ Thomas C. Henry
Thomas C. Henry, Esq.
St. Michaels, MD
January 14, 2000
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
I hereby consent to the inclusion of my report, dated October 13, 1999, in the
Registration Statement being filed under the Securities Act of 1933 and the
Investment Company Act of 1940 by Copley Fund, Inc., relating to the financial
statements, as of August 31, 1999.
I also consent to the reference to my practice as an independent certified
public accountant
/s/ Roy G. Hale
Roy G. Hale
Certified Public Accountant
