SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 - ----------- FORM N-CSRS - --------- CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES INVESTMENT COMPANY ACT FILE NUMBER 811-2815 COPLEY FUND, INC. (Exact name of registrant as specified in charter) - ---------- 245 Sunrise Ave. Palm Beach, FL 33480 (Address of principal executive offices) (Zip code) Irving Levine, President 245 Sunrise Ave. Palm Beach, FL 33480 (Name and address of agent for service) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 1-561-665-8050 DATE OF FISCAL YEAR END: FEBRUARY 29, 2004 DATE OF REPORTING PERIOD: AUGUST 31, 2004 ITEM 1.	REPORTS TO SHAREHOLDERS Semi-Annual Report August 31, 2004 COPLEY FUND, INC. A No-Load Fund Copley Fund, Inc. Copley Financial Services Corp. - Investment Manager PO Box 3287, Fall River, Massachusetts 02722, (508)674-8459 October 2004 Dear Fellow Shareholder: 2004, thus far, has been a most satisfactory year for Copley Fund, Inc. As of this writing we are up 8.4% for the year. Dividend paying stocks are in vogue for their safety and income; thus our present increase in value. All our categories of stocks such as Banking, Energy, Utilities, Gas, Health Care, etc., have shown solid increases. The Fed is in the process of slowly raising interest rates. These gradual increases should not affect the volatility of our types of holdings. As you know, Copley does not distribute dividends or capital gains as all other funds do. Thus our shareholders do not pay taxes unless they choose to redeem. This means that on average on an after tax basis we are better than most other funds by approximately 3% which distribute dividends and capital gains and which an individual is taxed. We do hope the SEC and Congress do not put too much of an expense burden on smaller ethical funds such as ours. The Sarbanes-Oxley Act will cause Copley to have added expenses from our past expenses. However, we will try to keep these expenses as small as possible. Thus we are continuing our same investment approach as of the last 26 years which has resulted in the following performance. *The record below gives an accurate history of our conservative approach. 	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) 1 	1990			 -2% 	1991			+18% 	1992			+18% 	1993			+10% 	1994			 -7% 	1995			+26% 	1996			+ 5% 	1997			+25% 	1998			+14% 	1999			-6.86% 	2000			+22.50% 	2001			-9.30% 	2002			-13.9% 	2003			+14.31% 2004 +7.40% (as of September 30, 2004) Our last letter informed you as to our adding new products in our operating division. This is starting to result in added volume. Our thanks to our Board and our many shareholders for their support throughout our twenty-six years of operation. Cordially yours, /s/ Irving Levine Irving Levine PRESIDENT P.S. The Wall Street Journal no longer lists Copley Fund under Mutual Funds as its minimum assets listing is one hundred million dollars. However, one can get our net asset value daily over the internet. 2 Copley Fund, Inc. Per Share Value CALENDAR YEARS ENDED DECEMBER 31, 2003 PERIOD ENDED August 31, 2004 Year Per Share Value 1981 4.53 1982 5.43 1983 6.06 1984 7.51 1985 9.36 1986 11.00 1987 10.11 1988 12.12 1989 14.28 1990 14.06 1991 16.47 1992 19.38 1993 21.35 1994 19.71 1995 24.65 1996 26.05 1997 32.58 1998 37.04 1999 34.50 2000 42.26 2001 38.33 2002 32.99 2003 37.71 2004 40.50(As of September 30, 2004) 	3 ACCOUNTS REVIEW REPORT Shareholders and Board of Directors Copley Fund, Inc. Palm Beach, Florida I have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Copley Fund, Inc., as of August 31, 2004, and the related statement of operations, the statement of cash flows, the statement of changes in net assets, and the financial highlights for the six months then ended. These interim financial statements are the responsibility of the Company's management. I conducted my review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, 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 option. Based upon my review, I am not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with U.S. generally accepted accounting principals. I have previously audited, in accordance with generally accepted auditing standards, the statement of assets and liabilities as of February 29, 2004 and the related financial statements and cash flows for the year then ended (not presented in full herein); and in my report dated April 20, 2004, I expressed an unqualified opinion on those financial statements. ROY G. HALE Certified Public Accountant La Plata, Maryland October 3, 2004 4 <page> COPLEY FUND, INC. PORTFOLIO OF INVESTMENTS February 29, 2004 Shares Value COMMON STOCKS-93.57% ------ ------ BANKING-7.20% Bank of America Corp 20,000 $ 899,600 J.P Morgan Chase & Company 42,000 1,662,360 KeyCorp 15,000 470,250 PNC Financial Services Group 35,000 1,878,450 ------------ 4,910,660 ------------ DIVERSIFIED UTILITY COMPANIES-9.20% Alliant Energy Corp. 20,000 519,800 Dominion Resources, Inc. 30,000 1,946,700 FPL Group 55,000 3,806,000 ------------ 6,272,500 ------------ DRUG COMPANIES-4.91% Bristol Myers Squibb Co. 100,000 2,373,000 Pfizer, Inc. 30,000 980,100 ------------ 3,353,100 ------------ ELECTRIC AND GAS-16.03% American Electric Power 35,000 1,145,550 Cinergy Corp. 35,000 1,416,800 First Energy Corp. 40,000 1,609,600 Great Plains Energy, Inc. 40,000 1,206,400 Progress Energy, Inc. 40,000 1,755,600 Public Service Enterprise Group 15,000 635,100 SCANA, Corp. 50,000 1,897,000 Sempra Energy, Inc. 35,000 1,265,250 ------------ $ 10,931,300 ------------ 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, 2004 Shares Value ------- ------ ELECTRIC POWER COMPANIES-13.50% Ameren Corporation 30,000 $ 1,403,700 DTE Energy Company 55,000 2,272,600 Exelon Corporation 23,200 854,920 Nstar 25,000 1,220,000 PP&L Corp. 50,000 2,391,500 Southern Company 35,000 1,062,250 ------------ 9,204,970 ------------ GAS UTILITIES & SUPPLIES-12.80% Delta Natural Gas Co. 20,000 527,600 Energy East Corp. 40,000 974,800 Keyspan Energy Corp. 45,000 1,714,500 New Jersey Resources Corp. 37,500 1,531,875 Northwest Natural Gas Co. 40,000 1,233,200 Peoples Energy Corp. 40,000 1,662,000 WGL Holdings Corp. 38,000 1,088,700 ----------- 8,732,675 ----------- HEALTH CARE PRODUCTS-1.05% *Zimmer Holdings, Inc. 10,000 713,000 ----------- INSURANCE-3.74% Arthur J. Gallagher & Company 80,000 2,548,800 ----------- OILS-14.74% BP Amoco PLC. 25,500 1,369,350 Chevron Texaco Corp. 23,100 2,252,250 Exxon-Mobil Corp. 106,086 4,890,565 Sunoco, Inc. 25,000 1,537,500 ----------- $ 10,049,665 ----------- 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, 2004 Shares Value ------- ------- RETAIL-1.54% Wal-Mart Stores, Inc. 20,000 $ 1,053,400 ---------- TELEPHONE-8.86% Bell South Corp. 20,000 535,200 Citizens Communications Company 20,000 252,600 SBC Communications, Inc. 60,430 1,558,490 Verizon Communications, Inc. 94,232 3,698,606 ---------- 6,044,896 ---------- Total Common Stocks (Cost $28,775,762) 63,814,966 ------------ PREFERRED STOCK-0.69% Franklin PR.(Cost $475,000) 4,750 475,000 Total value of investments (Cost $29,250,762) 64,289,966 Excess of cash and other assets over liabilities 3,912,462 ----------- NET ASSETS $ 68,202,428 *Non-income producing securities. Federal Tax Information: At August 31, 2004, the net unrealized appreciation based on cost for Federal income tax purposes of $35,039,204 was as follows: Aggregate gross unrealized appreciation for all investments for which there was an excess of value over cost $ 35,080,404 Aggregate gross unrealized depreciation for all investments for which there was an excess of cost over value ( 41,200) ------------ Net unrealized appreciation $ 35,039,204 ============ See Accountant's Review Report The accompanying notes are an integral part of the financial statements. 7 <page> COPLEY FUND, INC. STATEMENT OF ASSETS AND LIABILITIES August 31, 2004 ASSETS Investments in securities, at fair value (identified cost $29,250,762) (Note 1) $ 64,289,966 Cash 4,457,343 Receivables: Capital Stock Sold $ 32,397 Trade (Notes 5&6) 14,236 Dividends and interest 251,560 298,193 ---------- Inventory (Notes 1, 5 & 6) 171,730 Prepaid Expenses 868 ------------ Total Assets 69,218,100 LIABILITIES Payables: Redemptions 46,267 Trade 25,438 Accrued income taxes-current 102,833 Accrued expenses 61,662 Deferred income taxes (Notes 1 & 2) 779,472 Total Liabilities 1,015,672 ----------- Commitments and Contingencies (Note 7) Net Assets $ 68,202,428 ============= Net assets consist of: Capital Stock $ 1,711,266 Paid in Capital 3,599,576 Undistributed net investment and operating income 26,570,141 Accumulated net realized gain on investment transactions 1,282,241 Net unrealized appreciation in value of investments (Note 2) 35,039,204 ------------ Total $ 68,202,428 ============ Net Asset Value, Offering and Redemption Price Per Share (5,000,000 shares authorized) (1,711,266 shares of $1.00 par value capital stock outstanding) $ 39.86 ============ See Accountant's Review Report. The accompanying notes are an integral part of the financial statements. 8 <page> COPLEY FUND, INC. STATEMENT OF OPERATIONS August 31, 2004 Investment Income (Note 1) Income: Dividend $ 1,256,186 Interest 20,107 Other Income 1,207 ----------- Investment Income $ 1,277,500 Expenses: Investment advisory fee(Note 5) 250,704 Professional fees 44,595 Custodian fees 10,180 Accounting and Shareholding Services 37,956 Printing 5,478 Postage and shipping 2,353 Directors fees 12,096 Blue Sky fees 4,866 Insurance 50,055 Office expense & miscellaneous 2,284 ----------- 420,567 Less:Investment advisory fee waived 30,000 390,567 ----------- ---------- Net investment income before income taxes 886,933 Operating Profit(Notes 2, 5 & 7) Gross Profit 24,186 Less: Operating expenses 21,784 ----------- Net operating profit before income taxes 2,402 --------- Net Investment and Operating Income before Income Taxes 889,335 Less provision for income taxes (Notes 2 and 7) 57,833 --------- Net investment and operating income 831,502 Realized and Unrealized Gain (Loss) on Investments (Notes 2 and 4) Realized gain/loss from investment transactions during the period 0 Increase in unrealized appreciation of investments during current period 159,893 ---------- Net realized and unrealized gain 159,893 ---------- Net Increase in Net Assets Resulting from Operations $ 991,395 ============= See Accountant's Review Report The accompanying notes are an integral part of the financial statements. 9 <page> COPLEY FUND, INC. STATEMENT CHANGES IN NET ASSETS Six Months Ended Year Ended 8/31/04 2/29/04 ---------- ---------- Increase (Decrease)in Net Assets from Operations Net investment and operating income $ 831,502 $ 1,539,087 Net realized gain/loss on investment transactions 0 ( 308,205) Net change in unrealized appreciation on investments 159,893 13,130,685 ----------- ------------ Increase (decrease)in net assets resulting from operations 991,3957 14,361,567 CAPITAL SHARE TRANSACTIONS (Note 3) Increase (decrease) in net assets resulting from capital share transactions ( 2,261,943) (2,532,428) ------------- ------------ Total increase (decrease) in net assets (1,270,548) 11,829,139 NET ASSETS Beginning of Period 69,472,976 57,643,837 ------------- ------------ End of Period (including undistributed net investment and operating income of $26,570,141 and $27,799,949 respectively $ 68,202,428 $ 69,472,976 ============ ============ 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 Ending August 31, 2004 Increase (Decrease) in Cash Cash flows from operating activities Dividends and interest received $ 1,220,733 Proceeds from disposition of long-term portfolio investments 0 Receipts from customers 81,204 Payments of taxes, net ( 55,712) Expenses paid ( 385,408) Purchase of long-term portfolio investments ( 293,800) Payments to suppliers ( 77,848) ------------ Net cash provided by operating activities 489,169 ============ Cash flows provided by financing activities Fund shares sold 177,254 Fund shares repurchased ( 2,425,327) ------------ Net cash used by financing activities ( 2,248,073) ============= Net decrease in cash ( 1,758,904) Cash at beginning of year 6,216,247 ------------- Cash as of August 31, 2004 $ 4,457,343 ============= 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 $ 991,395 ------------ Increase in investments ( 453,693) Increase in dividends and interest receivable ( 55,723) Decrease in receivables from customers 3,161 Decrease in inventory 4,095 Increase in income taxes payable 48,269 Decrease in payables to customers ( 4,588) Decrease in deferred income taxes payable ( 45,000) Increase in other assets ( 760) Increase in accrued expenses 2,013 ------------ Total adjustments ( 502,226) ------------ Net cash provided by operating activities $ 489,169 ============ 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 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 accounting principles generally accepted in the United States of America. Security Valuations 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 distributed net investment and operating income on the date of the transaction, is credited or charged to undistributed net investment and operating income. Distributions 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. By not distributing the income gains to shareholders, the Fund is subject to federal and state income taxes on the current taxable income and realized gains. The income taxes paid by the Fund are part of the operating expenses of the Fund and, accordingly, serve to reduce the net asset value of the Fund. Inventory Inventory represents the value of marketable goods held by the Fund's operating division. Inventory is valued at the lower of cost (determined by the first in/first out method) or market value. The method of valuing the inventory is an annual count whereby inventory items are valued at original cost based upon a first in/first out method; those items that are damaged or no longer marketable at full value are written down to estimated market value. See Accountant's Review Report The accompanying notes are an integral part of the financial statements. 12 <page> COPLEY FUND, INC. NOTES TO FINANCIAL STATEMENTS Income Taxes The Fund files its 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. 2. Federal and State Income Taxes The income tax provision included in the financial statements is as follows: Regular tax liability............... $ 57,833 Deferred tax liability.............. 45,000 -------- $ 102,833 ========= The Fund provides deferred taxes for unrealized appreciation on its investment portfolio to the extent that management anticipates that a liability may exist based upon the Fund being a going-concern entity. If the Fund's income tax liability should exceed the amount of current and deferred income taxes, for some unforeseen reason, the Fund's Board of Directors is prepared to take the necessary steps to convert the Fund to a Regulated Investment Company (RIC). Income tax obligations associated with the conversion to RIC status will be recognized when the Board of Directors directs that a conversion be implemented. It is not the intent of management or the Board of Directors to convert to RIC status in the foreseeable future. The amount of deferred taxes currently available to the Fund is $779,472. 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, The Fund has $2,348,310 in accumulated capital loss carry forwards which expire as follows: $418,498 on February 28, 2007 and $1,621,607 on February 28, 2008; and $308,205 on February 28, 2009. 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. See Accountant's Review Report The accompanying notes are an integral part of the financial statements. 13 <page> COPLEY FUND, INC. NOTES TO FINANCIAL STATEMENTS 3. Capital Stock At August 31, 2004 there were 5,000,000 shares of $1.00 par value capital stock authorized. Transactions in capital shares were as follows: Six Months Ended Year Ended 8/31/04 2/29/04 	 Shares Amount Shares Amount Shares sold 3,952 $ 177,254 42,038 $ 1,496,347 Shares repurchased ( 62,189) ( 2,439,197) (112,226) ( 4,033,417) --------- ------------ --------- ------------ Net Change ( 58,237) $ (2,261,943) ( 70,188) $(2,537,070) ========= ============ ========= ============= 4. Purchases and Sales of Securities Purchases of securities, other than United States government obligations and short-term notes, were $293,800. The Fund did not sell securities during this accounting period. 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, 2004, the fee for investment advisory service totaled $250,704, less fees of $30,000 voluntarily waived. Also, during the period unaffiliated directors received $12,096 in directors' fees. See Accountant's Review Report The accompanying notes are an integral part of the financial statements. 14 <page> COPLEY FUND, INC. NOTES TO FINANCIAL STATEMENTS 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. Results of the operating division during this period are as follows: Sales.............................. $ 75,625 Cost of goods sold................. (53,857) ---------- Gross profit....................... 21,768 General & administrative expenses.. (21,784) ---------- Net loss from operation............ ( 16) Other income (dividends & interest. 2,418 ---------- Net income......................... $ 2,402 ========== 6. Notes Payable A $3,000,000 line of credit has been secured for the operating division from Fleet National Bank. The assets of the Fund are pledged as security for this line of credit. The amount currently outstanding on this line is zero. 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 15% for years commencing after December 31, 2002. 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 are available only if the Fund is not held to be a mere holding or investment company. The Internal Revenue Service has, during examinations of the Fund's federal income tax returns, upheld management's position that the Fund is not a mere holding or investment company since the Fund is This finding by the Internal Revenue Service is always subject to review by the Service and a finding different from the one issued in the past could be made by the Service. 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. See Accountant's Review Report The accompanying notes are an integral part of the financial statements. 15 <page> ABOUT THE FUND'S DIRECTORS AND OFFICERS The Fund is governed by a Board of Directors that meet to review investments, performance, expenses and other business matters, and is responsible for protecting the interests of shareholders. The majority of the Fund's directors are independent of Copley Financial Services Corp.; the only "inside" director is an officer and director of Copley Financial Services Corp. The Board of Directors elects the Fund's officers, who are listed in the final table. The business address of each director and officer is 245 Sunrise Ave., Palm Beach, FL 33480. INDEPENDENT DIRECTORS Name (Date of Birth)			Principal Occupations(s) During Past 5 Year Elected and Other Directorships of Public Companies - --------------------------------------------------------------------------- Albert Resnick, M.D.		Physician Since 1948 (March 23, 1922) 1978 Kenneth Joblon			President, Brittany Dyeing & Printing Corp. (February 28, 1946)		New Bedford, MA 1996 Burton S. Stern			Private Investor (March 24, 1926) 1978 INSIDE DIRECTORS Name (Date of Birth) Year Elected (Number of Copley Principal Occupations(s) During Past 5 years Portfolios Overseen) and Other Directorships of Public Companies Irving Levine			President, Treasurer and a Director of Copley (September 25, 1921)		Financial Services Corp. since 1978; a Director 1978 of Franklin Capital Corp. (an operating [1] investment company) since March, 1990; Chairman of the Board and Treasurer of Stuffco International, Inc., a ladies handbag processor and retail chain operator, since February 1978; Director of US Energy Systems, Inc. since 2000. OFFICERS Name (Date of Birth)			Principal Occupations(s) During Past 5 Title and Other Directorships of Public Companies Irvine Levine			See Above (September 25, 1921) Chairman of the Board of Directors and President Eileen Joinson			Clerk-Treasurer of the Fund since 1980; Clerk (March 14, 1948) and Office Manager of Stuffco International, Clerk Inc., a ladies handbag processor, since 1978. 16 The following supplemental information is furnished for the six month period ending August 31, 2004. Portfolio of Investments Copley Fund, Inc. will begin filing its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. This reporting procedure will commence for the Fund for the third quarter ending November 30, 2004. The Fund has 60 days after the end of the first and third quarters to file the report with the SEC. Forms N-Q will be available on the SEC website at http://www.sec.gov. The Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. and information on the operations of the Public Reference Room may be obtained by calling 1-800-SEC-0330. A description of the policies and procedures that the Fund used to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling 1-800-352-9908 and are available on the SEC website at http://www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities, during the most recent 12-month period is available without charge, upon request, by calling 1-800-352-9908 and are available on the SEC website at http://www.sec.gov. Shareholder Expenses As a shareholder of the Fund, you incur ongoing costs, including management fees and other Fund expenses. The following example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period (March 1, 2004 - August 31, 2004). Actual Expenses The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000=8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during the period. 17 <page> Hypothetical Example for Comparison Purposes The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. It is important to consider that the Copley Fund, Inc. includes federal and state income taxes paid by the Fund on current earnings in the expense ratios used in the following table. Most other funds do not pay income taxes on current earnings but pass the obligations to shareholders. Beginning Ending Expenses Paid Account Value Account Value During Period* March 1, 2004 August 31, 2004 (3/1/04-8/31/04) ---------------------------------------------------- Actual $1,000 $1,008 $7 Hypothetical $1,000 $1,018 $7 (5% return before expenses) *Expenses are equal to the Fund's annualized expense ratio of 1.30%, multiplied by the average account value over the period, multiplied by the number of days in the Fund's most recent fiscal half-year divided by 365 or 366 (to reflect the one-half year period shown). The actual return for the Fund during the six month period, which is not annualized, was 1.53% 18 <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). Year Ended August February February February February February 31, 2004 29, 2004 28, 2003 28, 2002 28, 2001 29, 2000 Net asset value, Beginning of year $39.26 $31.33 $37.66 $39.94 $31.68 $34.22 Income (loss) for Investment operations: Net investment income(loss) 0.50 0.85 0.95 0.67 0.97 1.06 Net gains(losses) on securities (both realized and unrealized) 0.10 7.08 (7.28) (2.95) 7.29 (3.60) Total investment operations 0.60 7.93 (6.33) (2.28) 8.26 (2.54) Net asset value, end of year $39.86 $39.26 $31.33 $37.66 $39.94 $31.68 Total Return (a) 1.53% 25.31% -16.81% -5.71% 26.07% -7.42% Net Assets, last day of February (in thousands) 68,202 69,473 57,644 76,607 83,573 71,723 Ratio of expenses to average Net assets (b)(c) 1.01% 1.01% 1.07% 0.98% 1.04% 1.06% Ratio of net income(loss) to Average net assets (c) 2.42% 2.42% 2.47% 1.70% 2.66% 3.01% Portfolio Turnover 0.46% 0.92% 8.65% 3.33% 26.26% 6.77% Number of shares outstanding at end of period (in thousands) 1,711 1,770 1,840 2,034 2,092 2,264 (a) Total return for periods less than one year are not annualized. (b) Ratio of expenses presented exclude income taxes. (c) Annualized for periods less than one year. See Accountant's Review Report The accompanying notes are an integral part of the financial statements. COPLEY FUND, INC. Semi-Annual Report A No-Load Fund August 31, 2004 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 Gemini Fund Services 4020 South 147th Street Suite 2 Omaha, Nebraska 68137 Tel. (402)493-4603 (800)635-3427, ext. 7204 FAX: (402)963-9094 General Counsel Roberts & Henry 504 Talbot Street St. Michaels, MD 21663 Auditors Roy G. Hale, C.P.A. 624 Clarks Run Road La Plata, MD 20646 <page> Item 2.	CODE OF ETHICS The registrant has adopted a Code of Ethics that applies to the registrant's principal executive officer and principal financial officer. The registrant has not made any amendments to its Code of Ethics during the covered period. The registrant has not granted any waivers from any provisions of the Code of Ethics during the covered period. The registrant undertakes to provide to any person without charge, upon request, a copy of its Code of Ethics by mail when they call the registrant toll free at (800)635-3427. Item 3.	AUDIT COMMITTEE FINANCIAL EXPERT (a)(1) The registrant's Board of Directors has determined that the Board's Audit Committee does not have an "audit committee financial expert", as the Securities and Exchange Commission has defined that term. After carefully considering all of the factors involved in the definition of "audit committee financial expert", the Board determined that none of the members of the audit committee met all five qualifications in the definition, although some members of the Audit Committee met some of the qualifications. The Board also determined that while the Audit Committee members have general financial expertise, given the size and type of the Copley Fund, Inc., (the "Fund") and in light of the nature of the accounting and valuation issues that the Fund has presented over the past several years, it did not appear that the Audit Committee members lacked any necessary skill to serve on the Audit Committee. Item 4.	PRINCIPAL ACCOUNTANT FEES AND SERVICES Not applicable - only effective for annual report. ITEM 5.	AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable to open-end investment management companies. ITEM 6. (Reserved) ITEM 7.	DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to open-end investment management companies. ITEM 8.	PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable to open-end investment management companies. ITEM 9.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 		Not applicable. ITEM 10. CONTROLS AND PROCEDURES. 	(a) The certifying officers, whose certifications are included herewith, have evaluated the registrant's disclosure controls and procedures within 90 days of this report. In their opinion, based on their evaluation, the registrant's disclosure controls and procedures are adequately designed, and are operating effectively to ensure, that information required to be disclosed by the registrant in the reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. (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 has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. <page> ITEM 11.	EXHIBITS. (a)(1) Code of Ethics is attached hereto. (a)(2) A separate certification for the principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(a)) is filed herewith. (b) Officer certifications as required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(b)) also accompany this filing. 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. Copley Fund, Inc. By: /s/ Irving Levine ___________________________ Name: Irving Levine Title: President (Chief Executive Officer) Date: November 1, 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/ Irving Levine ___________________________ Name: Irving Levine Title: President and Treasurer (Chief Financial Officer) Date: November 1, 2004