UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-21291
Bertolet Capital Trust
(Exact name of registrant as specified in charter)
1414 Sixth Avenue, Suite 900
New York, NY 10019
(Address of principal executive offices)
(Zip code)
John E. Deysher
1414 Sixth Ave., Suite 900,
New York, NY 10019
(Name and address of agent for service)
With copy to:
Stephanie A. Djinis, Esq
Law Offices of Stephanie A. Djinis
1749 Old Meadow Road, Suite 310
McLean, Virginia 22102
Registrant's telephone number, including area code: (212) 508-4537
Date of fiscal year end: December 31
Date of reporting period: June 30, 2004
Form N-CSRS is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSRS in its regulatory, disclosure review, inspection and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSRS, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSRS unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
Pinnacle Value Fund
A Series of
Bertolet Capital Trust
Semi-Annual Report
June 30, 2004
PINNACLE VALUE FUND |
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BERTOLET CAPITAL TRUST |
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Schedule of Investments | ||||
June 30, 2004 (Unaudited) | ||||
Shares/Principal Amount |
| Basis | Market Value | % of Assets |
COMMON STOCKS | ||||
Aerospace & Defense |
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4,000 | Sifco Industries, Inc. * | $ 7,600 | $ 14,720 | 10366.20% |
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Apparel/Accessories | ||||
17,400 | Cutter & Buck, Inc. | 99,133 | 179,220 |
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3,000 | Delta Apparel * | 46,069 | 73,050 | |
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| 145,202 | 252,270 | 4.19% |
Chemical Distribution |
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15,600 | Arrow Magolia * | 25,649 | 24,804 | 0.41% |
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Electric Housewares | ||||
200 | National Presto Industries, Inc. | 8,188 | 8,246 | 0.14% |
Financial Services |
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61,500 | Cadus Corp* | 99,166 | 9,7785 | |
200 | Capital Southwest | 11,508 | 15,762 |
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65,000 | Equidyne* | 41,050 | 34,450 | |
28,400 | Kent Financial* | 69,397 | 65,036 |
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2,000 | MFC Bancorp* | 38,080 | 37,180 | |
31,000 | MVC Capital * | 251,369 | 292,640 |
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3,000 | Refac* | 14,856 | 14,400 | |
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| 525,426 | 557,253 | 9.25% |
Food Processing | ||||
4,500 | Golden Enterprises, Inc. | 9,900 | 12,690 | 0.21% |
Footwear |
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82,600 | Barry R G Corp. * | 173,814 | 134,638 | 2.24% |
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Furniture & Fixtures | ||||
13,900 | Reconditioned Systems * | 24,980 | 17,514 | 0.29% |
Hotels & Motels |
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8,200 | Prime Hospitality Corp. * | 50,388 | 87,084 | 1.45% |
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Instruments For Measurement, Display, and Control | ||||
4,300 | Electro Sensors, Inc. | 20,124 | 19,780 | 0.33% |
Insurance |
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12,800 | SCPIE Holdings, Inc. * | 114,892 | 116,480 | 1.93% |
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Manufacturing of Hook Loop Fasteners | ||||
200 | Velcro Industries NV | 2,449 | 2,302 | 0.04% |
Manufacturing Housing |
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500 | Liberty Homes, Inc. | 2,085 | 2,000 | |
1,100 | Patrick Industries, Inc. * | 6,996 | 10,780 |
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48,000 | Southern Energy Homes * | 106,489 | 196,800 | |
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| 115,570 | 209,580 | 3.48% |
Metals Distribution | ||||
4,000 | Friedman Industries | 11,747 | 18,520 | 0.31% |
Miscellaneous Capital Goods |
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5,900 | Hardinge, Inc. | $ 44,686 | $ 70,446 | |
1,500 | Minuteman International, Inc. | 12,075 | 19,485 |
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56,761 | 89,931 | 1.49% | ||
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Patent Owners & Lessors | ||||
38,500 | Opti* | 56,172 | 61,600 | 1.02% |
Conglomerate |
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45,200 | Regency Affiliates * | 278,595 | 291,540 | |
300 | United Capital* | 5,439 | 5,109 |
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284,034 | 296,649 | 4.92% | ||
Retail |
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6,000 | Deb Shops, Inc. | 111,276 | 144,360 | |
31,800 | United Retail Group, Inc. * | 71,024 | 81,408 | 1.34% |
182,300 | 225,768 | |||
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Ship & Boat Building & Repairing | ||||
38,300 | Conrad Ind. * | 85,363 | 92,303 | 1.53% |
Sporting & Athletic Goods |
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200 | Callaway Golf Co. | 2,252 | 2,268 | 0.04% |
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Textile & Mill Products | ||||
23,000 | Delta Woodside* | 25,927 | 25,760 |
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52,000 | Unifi, Inc. * | 177,251 | 152,361 | 2.53% |
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| 203,178 | 178,121 |
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Real Estate Investment Trusts |
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4,700 | BRT Realty Trust | 104,425 | 91,650 | |
14,000 | First Union Real Estate & Mortgage Investments | 40,006 | 44,240 |
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10,500 | Price Legacy | 162,587 | 193,830 | |
30 | USA Real Estate Investors Trust | 14,490 | 14,250 |
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321,508 | 343,970 | 5.71% | ||
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Total for Common Stocks | $ 2,427,497 | $ 2,766,491 | 45.93% | |
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Auction Market Preferreds |
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4 | AIM Select Real Estate, Inc. Fund Pfd - F | 100,000 | 100,000 | |
4 | Advent Claymore Pfd - M7 | 100,000 | 100,000 |
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4 | Pioneer High Income Trust Pfd - M | 100,000 | 100,000 | |
4 | Western Asset Premier Bond Fund Pfd - M | 100,000 | 100,000 |
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400,000 | 400,000 | 6.64% | ||
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Convertible Preferreds | ||||
14,300 | Ameritrans Capital Corp. Preferred | 161,196 | 178,750 |
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24,000 | Aristotle Corp. Convertible Pfd - I | 183,154 | 184,320 | |
4,000 | First Union Real Estate 8.4% Convertible Pfd - A | 96,090 | 97,320 |
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440,440 | 460,390 | 7.64% | ||
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Cash and Equivalents | ||||
305,361 | First Amer Govt Obligation Fund 0.60% | 305,361 | 305,361 | 5.07% |
500,000 | US Bank Repo 6/1/2004 .92% 7/1/2004 | 500,000 | 500,000 | 8.30% |
500,000 | US Bank Repo 6/7/2004 .92% 7/7/2004 | 500,000 | 500,000 | 8.30% |
500,000 | US Bank Repo 6/14/2004 .92% 7/14/2004 | 500,000 | 500,000 | 8.30% |
500,000 | US Bank Repo 6/21/2004 .92% 7/21/2004 | 500,000 | 500,000 | 8.30% |
2,305,361 | 2,305,361 | 38.27% | ||
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Total Investments | $ 5,573,298 | $ 5,932,242 | 98.48% | |
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| Assets less other Liabilities | 91,561 | 1.52% | |
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Net Assets | $ 6,023,803 | 100.00% | ||
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The accompanying notes are an integral part of the financial statements.
PINNACLE VALUE FUND |
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BERTOLET CAPITAL TRUST |
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Statement of Assets and Liabilities | |
June 30, 2004 (Unaudited) | |
Assets: |
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Investment Securities at Market Value | $ 5,932,242 |
(Identified Cost $5,573,298 ) |
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Receivables: | |
Cash | 9,092 |
Dividends and Interest | 3,469 |
Receivable for Securities Sold | 132,540 |
Total Assets | 6,077,343 |
Liabilities: |
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Payables: | |
Management Fees | 18,215 |
Accrued Expenses | 20,867 |
Securities Purchased | 14,458 |
Total Liabilities | 53,540 |
Net Assets | $ 6,023,803 |
Net Assets Consist of: | |
Paid-In Capital | $ 5,504,125 |
Accumulated Undistributed Net Investment Loss | (17,045) |
Accumulated Realized Gain on Investments - Net | 177,779 |
Unrealized Appreciation in Value | |
of Investments Based on Identified Cost - Net | 358,944 |
Net Assets, for 513,052 Shares Outstanding | $ 6,023,803 |
Net Asset Value and Redemption Price |
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Per Share ($6,023,803/513,052 shares) | $ 11.74 |
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The accompanying notes are an integral part of the financial statements.
PINNACLE VALUE FUND |
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BERTOLET CAPITAL TRUST |
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Statement of Operations | (Unaudited) |
1/1/2004 | |
to | |
6/30/2004 | |
Investment Income: |
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Dividends | $ 25,785 |
Interest | 7,106 |
Total Investment Income | 32,891 |
Expenses: (Note 2) |
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Investment Advisor Fees | 34,871 |
Audit Fees | 4,987 |
Accounting Fees | 7,090 |
Transfer Agent Fees | 3,140 |
Custodial Fees | 1,772 |
Trustee Fees | 1,995 |
Legal Fees | 2,992 |
Printing & Mailing Fees | 2,225 |
Registration Fees | 3,125 |
Miscellaneous Fees | 684 |
Insurance Fees | 4,296 |
Total Expenses | 67,177 |
Reimbursed Expenses | (17,241) |
Net Expenses | 49,936 |
Net Investment Loss | (17,045) |
Realized and Unrealized Gain (Loss) on Investments: |
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Realized Gain on Investments | 116,259 |
Unrealized Appreciation on Investments | 119,482 |
Net Realized and Unrealized Gain on Investments | 235,741 |
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Net Increase in Net Assets from Operations | $ 218,696 |
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The accompanying notes are an integral part of the financial statements.
PINNACLE VALUE FUND |
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BERTOLET CAPITAL TRUST |
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Statement of Changes in Net Assets | (Unaudited) | |
1/1/2004 | 4/1/2003* | |
to | to | |
6/30/2004 | 12/31/2003 | |
From Operations: |
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Net Investment Loss | $ (17,045) | $ (23,221) |
Net Realized Gain on Investments | 116,259 | 124,337 |
Net Unrealized Appreciation | 119,482 | 239,463 |
Increase in Net Assets from Operations | 218,696 | 340,579 |
From Distributions to Shareholders: | ||
Net Realized Gain from Security Transactions | 0 | (39,595) |
From Capital Share Transactions: | ||
Proceeds From Sale of Shares | 1,324,697 | 4,285,322 |
Shares issued in Reinvestment of Dividends | 0 | 38,470 |
Cost of Shares Redeemed | (244,366) | 0 |
Net Increase from Shareholder Activity | 1,080,331 | 4,323,792 |
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Net Increase in Net Assets | 1,299,027 | 4,624,776 |
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Net Assets at Beginning of Period | 4,724,776 | 100,000 |
Net Assets at End of Period | $ 6,023,803 | $ 4,724,776 |
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Share Transactions: | ||
Issued | 114,776 | 405,899 |
Reinvested | - | 3,441 |
Redeemed | (21,064) | - |
Net increase in shares | 93,712 | 409,340 |
Shares outstanding beginning of period | 419,340 | 10,000 |
Shares outstanding end of period | 513,052 | 419,340 |
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*commencement of operations |
The accompanying notes are an integral part of the financial statements.
PINNACLE VALUE FUND |
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BERTOLET CAPITAL TRUST |
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Financial Highlights | (Unaudited) | ||
Selected data for a share outstanding throughout the period: | 1/1/2004 | 4/1/2003* | |
to | to | ||
6/30/2004 | 12/31/2003 | ||
Net Asset Value - |
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Beginning of Period | $11.27 | $10.00 | |
Net Investment Loss | (0.04) | (0.09) |
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Net Gains or Losses on Securities | |||
(realized and unrealized) | 0.51 | 1.46 |
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Total from Investment Operations | 0.47 | 1.37 | |
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Distributions from Capital Gains | 0.00 | (0.10) | |
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Net Asset Value - | |||
End of Period | $11.74 | $11.27 |
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Total Return | 4.17 % | 13.71 % |
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Ratios/Supplemental Data | |||
Net Assets - End of Period (Thousands) | 6,024 | 4,725 |
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Before Reimbursement |
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Ratio of Expenses to Average Net Assets | 2.41% | 4.00% | ** |
Ratio of Net Loss to Average Net Assets | (1.23)% | (3.38)% | ** |
After Reimbursement | |||
Ratio of Expenses to Average Net Assets | 1.79% | 1.78% | ** |
Ratio of Net Loss to Average Net Assets | (0.61)% | (1.16)% | ** |
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Portfolio Turnover Rate | 77.04% | 68.44% | |
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*commencement of operations | |||
** annualized |
The accompanying notes are an integral part of the financial statements.
PINNACLE VALUE FUND
BERTOLET CAPITAL TRUST
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2004 (UNAUDITED)
1.)
ORGANIZATION:
Pinnacle Value Fund (”Fund”) is registered under the Investment Company Act of 1940 as an open-end investment management company and is the only series of the Bertolet Capital Trust, a Delaware business trust organized on January 1, 2003 (“Trust”). The Trust’s Declaration of Trust authorizes the Board of Trustees to issue an unlimited number of Fund shares. Each share of the Fund has equal voting, dividend, distribution, and liquidation rights. The Fund’s investment objective is long term capital appreciation with income as a secondary objective.
2.)
SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION:
The Fund will primarily invest in equities and convertible securities. The investments in securities are carried at market value. Securities that are traded on any exchange or on the NASDAQ over-the-counter market are valued at the last quoted sale price. Lacking a last sale price, a security is valued at its last bid price except when, in the Adviser’s opinion, the last bid price does not accurately reflect the current value of the security. When market quotations are not readily available, when the Adviser determines the last bid price does not accurately reflect the current value or when restricted securities are being valued, such securities are valued as determined in good faith by the Adviser, in conformity with guidelines adopted by and subject to review of the Board of Trustees.
Fixed income securities generally are valued by using market quotations, but may be valued on the basis of prices furnished by a pricing service when the Adviser believes such prices accurately reflect the fair market value of such securities. A pricing service utilizes electronic data processing techniques based on yield spreads relating to securities with similar characteristics to determine prices for normal institutional-size trading units of debt securities without regard to sale or bid prices. When prices are not readily available from a pricing service, or when restricted or illiquid securities are being valued, securities are valued at fair value as determined in good faith by the Adviser, subject to review of the Board of Trustees. Short term investments in fixed income securities with maturities of less than 60 days when acquired, or which subsequently are within 60 days of matu rity, are valued by using the amortized cost method of valuation.
SECURITY TRANSACTIONS AND INVESTMENT INCOME:
The Company records security transactions based on a trade date. Dividend income is recognized on the ex-dividend date, and interest income is recognized on an accrual basis. Discounts and premiums on securities purchased are amortized over the lives of the respective securities.
INCOME TAXES:
Federal income taxes. The Company’s policy is to continue to comply with the requirements of the Internal Revenue Code that are applicable to regulated investment companies and to distribute all its taxable income to its shareholders. Therefore, no federal income tax provision is required.
Distribution to shareholders. Distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date.
ESTIMATES:
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
3.)
INVESTMENT ADVISORY AGREEMENT
The Fund has entered into an investment advisory agreement with Bertolet Capital LLC (the Adviser). Under the Agreement, the Adviser receives a fee equal to the annual rate of 1.25% of the Fund’s average daily net assets. For the six months ended June 30, 2004, the Adviser waived $17,241 of its fee. An officer and trustee of the Fund is also an officer and trustee of the Adviser.
The Adviser will be entitled to reimbursement of fees waived or reimbursed by the Adviser to t he Fund. Fees waived or expenses reimbursed during a given year may be paid to the Adviser during the following three year period to the extent that payment of such expenses does not cause the Fund to exceed the expense limitation. At June 30, 2004, the cumulative unreimbursed amount paid/or waived by the Advisor on behalf of the Fund is $61,812. The Adviser may recapture this amount no later than December 31, 2006.
4.)
PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 2004, purchases and sales of investment securities other than U.S. Government obligations and short-term investments aggregated $2,923,187 and $1,151,023 respectively. Purchases and sales of U.S. Government obligations and short-term investments aggregated $4,500,000 and $3,000,000 respectively
5.)
SECURITY TRANSACTIONS
Net Investment income/(loss) and net realized gains/(losses) differ for financial statement and tax purposes due to differing treatments of was sale losses deferred and losses realized subsequent to October 31 on the sale of securities.
As of June 30, 2004, the components of accumulated earnings/(losses) on a tax basis were as follows:
Costs of investments | $5,573,298 |
Gross tax unrealized appreciation | $473,892 |
Gross tax unrealized depreciation | (114,947) |
Net tax unrealized appreciation | 358,945 |
Accumulated capital gains | 177,779 |
6.)
CONTROL OWNERSHIP
The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates a presumption of control of the fund, under Section 2(a)(9) of the Investment Company Act of 1940. As of June 30, 2004, the Deysher family held, in aggregate, more than 12.6% of the Fund.
SUPPLEMENTAL INFORMATION (Unaudited)
The following table provides biographical information with respect to each Trustee.
Name, Age | Position with Fund | Term of Office Length of Time Served | Principal Occupation During Past 5 years | Other Directorships |
Interested Trustee | ||||
John E. Deysher, CFA (49) | Trustee | Unlimited | President, Secretary, Treasurer | None |
Since Inception | Pinnacle Value Fund | |||
Principal, Portfolio Manager | ||||
Royce & Associates | ||||
Independent Trustees | ||||
Edward P. Breau, CFA (71) | Trustee | Unlimited | Private Investor | None |
Since Inception | ||||
Richard M. Connelly (48) | Trustee | Unlimited | Associate General Counsel | None |
Since Inception | JG Wentworth (finance) | |||
James W. Denney (39) | Trustee | Unlimited | President, Mohawk Asset | Director, Electric |
Since Inception | Management | City Funds |
TRUSTEES AND SERVICE PROVIDERS
Trustees: Edward P. Breau, Richard M. Connelly, James W. Denney, John E. Deysher
Transfer Agent: Mutual Shareholder Services, 8869 Brecksville Rd-C, Brecksville OH 44141
Custodian: US Bank, 425 Walnut St., Cincinnati OH 45202
Auditor: Tait, Weller & Baker, 1818 Market St, Suite 2400, Philadelphia PA 19103
Legal Counsel: Law Offices of Stephanie A. Djinis, 1749 Old Meadow Rd.-310, McLean, VA 22102
Item 2. Code of Ethics. Not applicable.
Item 3. Audit Committee Financial Expert. Not applicable.
Item 5. Audit Committee of Listed Companies. Not applicable.
Item 6. Schedule of Investments.
Not applicable – schedule filed with Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds. Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Funds. Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders.
The registrant has not adopted procedures by which shareholders may recommend nominees to the registrant's board of trustees.
Item 10. Controls and Procedures.
(a)
Based on an evaluation of the registrant’s disclosure controls and procedures as of August 16, 2004, the disclosure controls and procedures are reasonably designed to ensure that the information required in filings on Forms N-CSRS is recorded, processed, summarized, and reported on a timely basis.
(b)
There were no significant changes in the registrant’s internal control over financial reporting that occurred during the registrant’s last fiscal half-year that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 11. Exhibits.
(a)(1)
EX-99.CODE ETH. Not applicable.
(a)(2)
EX-99.CERT. Filed herewith.
(a)(3)
Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable.
(b)
EX-99.906CERT. Filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Bertolet Capital Trust
By /s/John E. Deysher President
*John E. Deysher President
Date August 18, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By /s/John E. Deysher Treasurer
*John E. Deysher Treasurer
Date August 18, 2004
* Print the name and title of each signing officer under his or her signature.