As filed with the Securities and Exchange Commission on September 7, 2005
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-03758
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MATRIX ADVISORS VALUE FUND, INC.
--------------------------------
(Exact name of registrant as specified in charter)
747 THIRD AVENUE, 31ST FLOOR, NEW YORK, NY 10017
------------------------------------------------
(Address of principal executive offices) (Zip code)
David A. Katz
747 Third Avenue, 31st Floor
New York, NY 10017
------------------
(Name and address of agent for service)
1(800) 366-6223
---------------
Registrant's telephone number, including area code
Copies to:
Christopher J. Tafone
Paul, Hastings, Janofsky & Walker, LLP
75 East 55th Street,
New York, New York 10022
Date of fiscal year end: JUNE 30
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Date of reporting period: JUNE 30, 2005
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ITEM 1. REPORT TO STOCKHOLDERS.
ANNUAL REPORT
MATRIX
ADVISORS
VALUE FUND, INC.
JUNE 30, 2005
747 THIRD AVENUE, 31ST FLOOR
NEW YORK, NY 10017
MATRIX ADVISORS
VALUE FUND, INC.
July 27, 2005
Dear Fellow Shareholder:
The Net Asset Value of the Fund ended the quarter at $51.94, a decline of
- -1.27%, compared to a rise of +1.37% for the S&P 500 Index. For the calendar
year to date, the Fund has declined by -4.54% versus a decline of -0.81% for the
S&P 500 Index. For the fiscal year ending June 30, 2005, the Fund declined by
- -1.61% as compared to an increase of +6.32% for the S&P 500 Index.
We continue to feel the impact of our underweight in energy stocks as well
as an overweight in technology stocks. Having said that, as the third quarter
begins, we are seeing a significant pick-up for the Fund based in part on the
recovery of some of its more depressed sectors.
We strongly suggest that you take the time to read our Capital Markets
Commentary, as well as the ensuing discussion in which I answer important
questions pertaining to the Fund's performance and positioning. We believe that
both pieces will provide perspective as to the current market situation, as well
as our conviction that the Fund will be experiencing better times in the near
future.
Some recent noteworthy points about the Fund:
o The longer term - three year, five year and since inception -
performance numbers for the Fund continue to be highly attractive
both in absolute and relative terms.
o Matrix partners and associates along with our friends and family
have a significant portion of our net worth invested in the Fund.
o Morningstar, the widely followed and respected analyst of mutual
funds, recently cited Matrix Asset Advisors in its capacity as the
Fund's manager in the FundInvestor Focused 10 which "highlight
managers that we think invest with conviction". The managers were
selected based on several criteria, including long-term successful
performance and the alignment of the manager's interests with its
clients.
We greatly appreciate your patience and confidence, and strongly believe
that it will be well rewarded. Best regards.
Sincerely,
/s/ David A. Katz
David A. Katz, CFA Chief
Investment Officer
MUTUAL FUND INVESTING INVOLVES RISK AND LOSS OF PRINCIPAL IS POSSIBLE.
The Morningstar FundInvestor Focused 10 is derived from the Morningstar
FundInvestor 500 list of funds. The Focused 10 is based upon Morningstar's own
research and in-depth evaluation of each fund by its analysts. Funds included on
the list follow a focused, low-turnover strategy.
1
MATRIX ADVISORS
VALUE FUND, INC.
[The following table was represented as a line chart in the printed material.]
Matrix Advisors
Value Fund, Inc. S&P 500 Index
1-Jul-96 10000 10000
30-Jun-97 12255 13472
30-Jun-98 13795 17538
30-Jun-99 16525 21531
30-Jun-00 18869 23090
30-Jun-01 20284 19666
30-Jun-02 18688 16128
30-Jun-03 20281 16168
30-Jun-04 24785 19258
30-Jun-05 24387 20475
AVERAGE ANNUALIZED TOTAL RETURN
PERIODS ENDED JUNE 30, 2005
--------------------------------------
SINCE
INCEPTION**
ONE YEAR FIVE YEARS (7/1/1996)
Matrix Advisors Value Fund, Inc. (1.61%) 5.26% 10.42%
S&P 500 Index* 6.32% (2.37%) 8.29%
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND DOES NOT GUARANTEE
FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST. CURRENT PERFORMANCE OF THE FUND MAY BE LOWER OR HIGHER
THAN THE PERFORMANCE QUOTED. PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH
END MAY BE OBTAINED BY VISITING WWW.MATRIXADVISORSVALUEFUND.COM.
Performance figures reflect fee waiver in effect and in the absence of fee
waivers, total returns would be lower.
- ----------
* The S&P 500 is an unmanaged index which is widely regarded as the standard
for measuring large-cap U.S. stock market performance. The index does not
incur expenses and is not available for investment.
** Matrix Asset Advisors became the Sub-Advisor on July 1, 1996 and Advisor
to the Fund on May 11, 1997. Prior to those dates the Fund was managed by
another Advisor.
2
MATRIX ADVISORS
VALUE FUND, INC.
CAPITAL MARKETS COMMENTARY AND 2005 ANNUAL REPORT
While we firmly believe that we are doing all the right things to succeed
in the stock market, the second quarter showed us that these efforts have not
yet paid off.
Although some aspects of the rotation that we have been anticipating for
the stock market began this past quarter, on balance it was a quarter still
focused on the thematic leaders of 2004: energy, utilities and real
estate-related stocks.
As a result, the stock market was able to scratch out a modest gain for
the quarter, with the S&P 500 Index rising by +1.37%, and the NASDAQ, following
a dreadful first quarter, rebounding with a +3.07% increase. However, as
evidence of the continuing lagging of large cap stocks, the Dow Jones Industrial
Average declined by -1.63% for the quarter.
ANNUAL REVIEW
The disappointing result in the past quarter reduced the Fund's annual
performance for its fiscal year to -1.61%.
Our negative performance during this period arose primarily from the
following: 1) an under-representation in the leading areas of the market during
the past 12 months, such as energy, utilities and real estate-related stocks; 2)
an over-representation in economically sensitive areas such as financials and
technology that lagged the market; and 3) ownership of a number of individual
stocks that experienced notable business disruptions during the past 12 months.
While we are frustrated by the Fund's absolute and relative performance
during the past 12 months, we do believe that our investment stance serves the
longer term interests of our shareholders. In our analysis, many of the recent
leaders of the market are substantially over-valued and are vulnerable to
reversal.
Conversely, many of our companies are performing extremely well as
businesses, yet their stock prices have not responded. We believe that there are
strong and realistic reasons to expect that these companies - many of which are
among the premier businesses in America - will return to stock market favor in
the near future. Now is the time to own them.
3
MATRIX ADVISORS
VALUE FUND, INC.
QUARTERLY REVIEW
It was a frustrating quarter for the Matrix Advisors Value Fund. While the
vast majority of our businesses met or beat their most recent earnings and
operational expectations, there continued to be a basic apathy from the stock
market to this progress. The result was modest negative performance for the
quarter, much of which came in the very last week of June.
For the year, the Fund continues to lag the S&P 500 Index, but has
certainly outpaced the Index for the two and a half years of the post-bear
market recovery. While we are highly displeased with our short-term
underperfor-mance, we are confident that the calendar year will end in far
better form, in both absolute and relative terms.
Our conviction is based not on wishful thinking, but from an unemotional
analysis of the business prospects of our holdings, a keen awareness of how such
companies traditionally trade in the market, and a strong conviction of their
relative risk/reward attractiveness compared with other areas of the market.
In the past, when we have experienced periods of pronounced relative
underperformance, they have been followed by even more pronounced
outperformance. As frustrating as the wait is for the wind to shift in our
favor, it has always been worth the wait.
FUND PERFORMANCE
The second quarter represented a bit of a role reversal for many of the
Fund's sectors and individual names. In contrast to most of the recent past, our
health care stocks were largely positive, with support coming from a number of
pharmaceutical holdings, as well as Baxter and MedImmune.
Financials eked out a modest profit, with strength from a recovering
American International Group helping to balance weakness among the brokerage
stocks, particularly Morgan Stanley. Technology was on balance a negative
contributor; however, there were as many positive as negative tech performers
during the quarter.
Also in contrast to the more recent past, Old Economy and retail stocks
were weak during the quarter, with media companies giving back some of their
gains from the past several months.
We continued to harvest profits during the second quarter, redeploying the
proceeds into what we believe to be compelling opportunities. We sold our
position in Liberty Media for a moderate profit, re-deploying profits into Time
Warner. We took a partial profit in CVS (the balance of the position was sold
early in the 3rd quarter). Two new positions, First Data Corp. and Tyco
International Ltd were begun during the period.
4
MATRIX ADVISORS
VALUE FUND, INC.
In addition, we continued to add to holdings in American International
Group, Boston Scientific, Symbol Technologies, Time Warner and Vishay
Intertechnologies. The common thread in our new purchases, as well as our
additions to existing positions, is that they represent market leading
franchises with very favorable growth prospects selling at compelling prices.
We engaged in a fair amount of tax selling to mitigate previous cumulative
capital gains, and hope to finalize our tax year with only a moderate amount of
realized capital gains.
Looking forward, while we have been frustrated by the inability of a
greater number of the portfolio holdings to see meaningful gains, we are
nevertheless encouraged by the increasing number that are starting to receive
favorable market treatment.
In addition, we are pleased to see that the majority of our holdings that
were front and center with negative business headlines earlier this year, seem
to have put the worst behind them; in fact, they are clearly on the mend. As the
market begins to re-value companies like American International Group, Freddie
Mac, Ross Stores and Morgan Stanley as normal operating companies rather than
distressed situations, we expect to see healthy upward revaluations.
In re-re-reviewing our holdings, we conclude that not only are they
businesses we would want to be owning if we were not already involved with them,
but equally important, that we remain highly confident that the vast majority of
our holdings should be higher within the next six to 12 months.
In other words, we believe our Fund is timely as well as fundamentally
attractive.
* * *
In this quarter's installment of IDEAS ABOUT INVESTING, we feature a
candid discussion with the Fund's Manager, David A. Katz. The discussion, in
question and answer format, attempts to focus on some of the more frequently
asked questions pertaining to portfolio construction and Fund performance. We
urge you to read it.
Ah Summer! The season of heat, humidity and the sudden thunderstorm. But
also the luxuriously lazy season of swimming, sunshine and lifelong memories of
glorious days with family and friends. Summer reminds us that there is balance
in nature, as there should be in our lives.
5
MATRIX ADVISORS
VALUE FUND, INC.
We hope this letter finds you more skewed in the balance to the glorious
aspects of Summer. In whatever way you are enjoying it, please be assured that
we are grateful for the opportunity to serve you and remain completely committed
to helping you effect your financial goals.
Best regards.
- ----------
The NASDAQ Composite Index is a market-capitalization weighted index that is
designed to represent the performance of the National Market System which
includes over 5,000 stocks traded only over the counter and not on an exchange.
The Dow Jones Industrial Average Index is an unmanaged index of common stocks
comprised of major industrial companies. The S&P 500 Index is a broad based
unmanaged index of 500 stocks, which is widely recognized as representative of
the equity market in general. You cannot invest directly in an index.
THE FUND MAY INVEST IN SMALLER COMPANIES WHICH INVOLVES ADDITIONAL RISKS SUCH AS
LIMITED LIQUIDITY AND GREATER VOLATILITY.
Please refer to the Schedule of Investments for details on fund holdings. Fund
holdings are subject to change at any time and are not recommendations to buy or
sell any security.
6
MATRIX ADVISORS
VALUE FUND, INC.
IDEAS ABOUT INVESTING
A QUARTERLY QUEST FOR INVESTMENT ENLIGHTENMENT
A FISCAL YEAR-END DISCUSSION WITH THE FUND'S MANAGER, DAVID A. KATZ, CFA
Q. AFTER A GREAT 2003, THE FUND'S PERFORMANCE DURING THE PAST YEAR
AND A HALF HAS BEEN SUB-PAR. WHY IS THAT?
A. First of all, we concur in that assessment. And we would also say
that the short-term performance should be put into context. Not just with
2003, but more importantly with the entire period, 2003-2005, of the
market recovery, as well as the terrible bear market that preceded it in
2000-2002.
In both cases, the Fund's performance has beaten the S&P 500 Index.
Combining the two periods produces a very significant performance
advantage for the Fund.
Now, having said that, we know we have many post-2003 shareholders
whose focus is on the most recent period. We have spoken previously about
how we have recently been under-represented in the leading areas of the
market, including energy, utilities, basic materials, and real estate
related stocks.
The real question is why we have not been in these stocks. The
answer has to do with a discipline that looks for undervalued companies.
Simply put, there has not been much under-valuation in these areas during
the past 18 months.
In fact there has been a lot of buying into these names to the point
where many of them, in our view, are significantly over-valued. We believe
it would be a serious mistake to chase these stocks because their downside
exposure is far greater than their upside potential.
Conversely, we see opportunities in the market for some of America's
best companies, whose stock prices have become rather compelling.
As far as underperforming the market, that has happened to us on a
few occasions in the past. Interestingly, each period of underperformance
has been followed immediately by a strong outperformance. While we do not
relish underperforming the market, we are confident that it is a
short-lived condition.
Q. YOU HAVE BEEN TALKING ABOUT THESE UNDERVALUED BLUE-CHIP COMPANIES
FOR OVER A YEAR AND THEY HAVE NOT PER- FORMED. ARE YOU EARLY OR JUST
WRONG?
A. We believe that we are early, but will be proven right. In 1999
we were talking about the over-valuation of Internet stocks, and people
pointed out that we were saying the same thing in 1998.
Sometimes it takes a while for market dynamics to change, even
though all the signs are there pointing to a change. Momentum in the
market is a powerful short-term influence, and it is extremely hard to
know when it will abate.
So today, there are many great companies whose stocks are quite
inexpensive compared to their profitability as businesses. We strongly
believe that paying attention to the fair business value of these
companies,
7
MATRIX ADVISORS
VALUE FUND, INC.
including the very substantial discount to those values that they are
trading at today, will lead to investment success with less downside risk
than today's inflated highfliers.
Q. WHY SHOULD THESE COMPANIES BE PROFITABLE STOCK CHOICES? HOW DO
YOU KNOW THEY WON'T BECOME "VALUE TRAPS?"
A. If you look at the Fund's holdings, you are looking at many of
the premier businesses in America. Their ranking is earned continually in
competitive market environments.
Value traps are usually found among companies which are experiencing
fundamental competitive pres- sures. Their prospects going forward might
not be nearly as attractive as they were in the past, and therefore
attractive valuation criteria might be misleading.
Examples of this situation include Eastman Kodak and the evaporation
of the traditional silver-halide film industry, and the large supermarket
chains encountering the industry-transforming presence of Wal-Mart.
By stark contrast, the companies held by our Fund lead and often
dominate their respective industries. Their businesses are growing
substantially, though they have recently failed to capture investors'
imaginations.
We are confident that once the market appreciates that these top
businesses deserve more than a bargain base ment stock price, they will
move up fairly quickly.
Q. WHEN MIGHT THAT BE? COULDN'T THAT TAKE A VERY LONG TIME
A. We believe that the vast majority of our portfolio will start to
see significant appreciation within the next 12 months. We base this on
the relationship between the historic valuation patterns for these
companies and where they are currently priced.
The fundamental considerations for these companies are highly
attractive, and they should be priced accordingly. The fact that they are
being priced as "down and out" companies only highlights the opportunity
to own them. These imbalances typically do not last for very long.
Q. WHAT ABOUT WAITING OUT A MARKET ENVIRONMENT THAT DOES NOT SEEM SO
HOSPITABLE TO THE COMPANIES YOU LIKE?
A. The great difficulty in market timing is that by the time one
feels it's right to get back into a stock, the major upward price movement
has usually already occurred, and the opportunity is lost.
The analogy that my partner Doug Altabef likes to use about timing I
think captures it: As a driver, Doug will be the first to admit that he is
"swervy." But he learned that by putting himself in the left lane and
stay- ing there, he arrived faster and with less aggravation.
We at Matrix have added value over time for clients by staying in
the market and looking for opportunities while being invested. It
requires patience and sometimes fortitude. And we have certainly learned
that the time you most want to be in the stock market and often times in
specific stocks is when it feels the least comfortable.
This is certainly one of those times for Matrix and for the Fund. We
are very confident that we will be well rewarded for our persistence and
conviction.
8
MATRIX ADVISORS
VALUE FUND, INC.
EXPENSE EXAMPLE (UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs; and (2) ongoing costs, including management fees; and other
Fund expenses. This 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 indicated and held for the entire period from January 01, 2005 to
June 30, 2005.
ACTUAL EXPENSES
The information in the table under the heading "Actual Performance"
provides information about actual account values and actual expenses. You may
use the information in these columns 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 row entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The information in the table under the heading "Hypothetical Performance
(5% return before expenses)" provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratios and
assumed rates of return of 5% per year before expenses, which are not the Fund's
actual returns. 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 transaction costs, such as
redemption fees. Therefore, the information under the heading "Hypothetical
Performance (5% return before expenses)" 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.
9
MATRIX ADVISORS
VALUE FUND, INC.
ACTUAL HYPOTHETICAL PERFORMANCE
EXPENSE EXAMPLE PERFORMANCE (5% RETURN BEFORE EXPENSES)
- --------------------------------------------------------------------------------
Beginning Account Value (01/01/05) $1,000.00 $1,000.00
Ending Account Value (06/30/05) $955.00 $1,020.00
Expenses Paid During Period(1) $4.80 $4.96
- --------------------------------------------------------------------------------
(1) Expenses are equal to the Fund's annualized expense ratio 0.99%
multiplied by the average account value over the period, multiplied
by 181/365 (to reflect the one-half year period).
SECTOR BREAKDOWN(2)
--------------------------------------
Consumer Durables 13.9%
Consumer Non-durables 6.2%
Energy 3.2%
Finance 29.1%
Industrial 4.9%
Medical 16.8%
Technology 25.2%
--------------------------------------
99.3%
Cash 0.7%
--------------------------------------
Total Investments 100.0%
======================================
(2) % of Total Investments as of June 30, 2005.
10
MATRIX ADVISORS
VALUE FUND, INC.
SCHEDULE OF INVESTMENTS
AT JUNE 30, 2005
---------------------------------------------------
COMMON STOCKS: 99.4%
SECURITY SHARES VALUE
- --------------------------------------------------------------------------------
ADVERTISING: 1.8%
Interpublic Group of Companies, Inc.* 345,000 $ 4,202,100
------------
BANK (MONEY CENTER): 6.3%
Citigroup, Inc. 195,000 9,014,850
JP Morgan Chase & Co. 175,000 6,181,000
------------
15,195,850
------------
BANK (PROCESSING): 3.4%
Bank of New York Co., Inc. 285,000 8,202,300
------------
BANK (SUPER REGIONAL): 4.6%
Bank of America Corp. 203,484 9,280,905
Fifth Third Bancorp 45,000 1,854,450
------------
11,135,355
------------
COMPUTERS AND PERIPHERALS: 3.3%
American Power Conversion Co. 331,700 7,824,803
------------
DRUG: 7.0%
Pfizer, Inc. 290,840 8,021,367
Wyeth 200,000 8,900,000
------------
16,921,367
------------
DRUGSTORE: 2.0%
CVS Corp. 168,400 4,895,388
------------
ELECTRICAL EQUIPMENT: 4.9%
General Electric Co. 265,000 9,182,250
Tyco International Ltd. 90,000 2,628,000
------------
11,810,250
------------
ELECTRONICS: 6.8%
Symbol Technologies, Inc. 835,400 8,245,398
Vishay Intertechnology, Inc.* 673,700 7,996,819
------------
16,242,217
------------
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS
SCHEDULE.
11
MATRIX ADVISORS
VALUE FUND, INC.
COMMON STOCKS: CONTINUED
SECURITY SHARES VALUE
- --------------------------------------------------------------------------------
FINANCIAL SERVICES: 1.3%
American Express Co. 60,000 $ 3,193,800
------------
FOOD (DIVERSIFIED): 1.8%
General Mills, Inc. 92,900 4,346,791
------------
INSURANCE (DIVERSIFIED): 5.2%
American International Group, Inc. 161,500 9,383,150
Marsh & McLennan Companies, Inc. 115,000 3,185,500
------------
12,568,650
------------
MEDIA: 5.1%
Comcast Corp.* 185,000 5,540,750
Time Warner, Inc.* 400,000 6,684,000
------------
12,224,750
------------
MEDICAL INSTRUMENTS: 2.1%
Boston Scientific Corp.* 185,000 4,995,000
------------
MEDICAL SUPPLIES: 3.0%
Baxter International, Inc. 195,000 7,234,500
------------
OIL & GAS SERVICES: 3.2%
Tidewater, Inc. 200,000 7,624,000
------------
PHARMACEUTICALS: 4.7%
Medimmune, Inc.* 425,000 11,356,000
------------
RECREATION: 2.1%
Walt Disney Co. 199,500 5,023,410
------------
RETAIL STORE: 6.9%
Gap, Inc. 450,000 8,887,500
Ross Stores, Inc. 65,000 1,879,150
Wal-Mart Stores, Inc. 120,000 5,784,000
------------
16,550,650
------------
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS
SCHEDULE.
13
MATRIX ADVISORS
VALUE FUND, INC.
COMMON STOCKS: CONTINUED
SECURITY SHARES VALUE
- --------------------------------------------------------------------------------
SECURITIES BROKERAGE: 7.4%
Merrill Lynch & Co. 156,000 $ 8,581,560
Morgan Stanley Dean Witter & Co. 175,000 9,182,250
------------
17,763,810
------------
SEMICONDUCTOR: 3.8%
Intel Corp. 350,000 9,121,000
------------
SEMICONDUCTOR (CAPITAL EQUIPMENT): 3.5%
Novellus Systems, Inc.* 340,000 8,401,400
------------
SOFTWARE: 4.2%
First Data Corp. 30,000 1,204,200
Microsoft Corp. 360,000 8,942,400
------------
10,146,600
------------
TELECOMMUNICATIONS (EQUIPMENT): 4.2%
Lucent Technologies, Inc.* 500,000 1,455,000
Nokia Corp. ADR 513,000 8,536,320
------------
9,991,320
------------
THRIFT: 0.8%
Federal Home Loan Mortgage Co. 29,000 1,891,670
------------
TOTAL COMMON STOCKS
(cost $219,681,751) 238,862,981
--------------------------------------------------
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS
SCHEDULE.
13
MATRIX ADVISORS
VALUE FUND, INC.
SHORT-TERM INVESTMENT: 0.7% PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------------------
SEI Daily Income Trust
Government Fund $1,640,599 $ 1,640,599
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $1,640,599)
--------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(cost $221,322,350): 100.1% 240,503,580
Liabilities in excess of
Other Assets: (0.1)% (151,220)
--------------------------------------------------
NET ASSETS: 100.0% $240,352,360
==================================================
- ----------
* Non-income producing security.
ADR-American Depositary Receipt.
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS
SCHEDULE.
14
MATRIX ADVISORS
VALUE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2005
--------------------------------------------------
ASSETS
Investments in securities, at value:
Common stocks (cost $221,322,350) ....................... $240,503,580
Receivables:
Securities sold ............................................ 523,278
Fund shares sold ........................................... 76,445
Dividends and interest ..................................... 116,671
Prepaid expenses and other assets ............................. 11,596
------------------------------------------------
TOTAL ASSETS .................... 241,231,570
------------------------------------------------
LIABILITIES
Payables:
Fund shares redeemed ....................................... 332,231
Securities purchased ....................................... 296,000
Advisory fees .............................................. 131,312
Administration fees ........................................ 24,698
Fund Accounting fees ....................................... 9,336
Custodian fees ............................................. 8,527
Transfer agent fees ........................................ 18,128
Directors fees ............................................. 251
Chief Compliance Officer fees .............................. 8,364
Accrued expenses .............................................. 50,363
------------------------------------------------
TOTAL LIABILITIES ............... 879,210
------------------------------------------------
NET ASSETS ...................... $240,352,360
================================================
COMPOSITION OF NET ASSETS
Paid-in capital ............................................... $213,085,901
Undistributed net investment income ........................... 1,170,724
Accumulated net realized gain on investments .................. 6,914,505
Net unrealized appreciation on investments .................... 19,181,230
------------------------------------------------
NET ASSETS ...................... $240,352,360
================================================
Number of shares, $0.01 par value, issued
and outstanding (unlimited shares authorized) .............. 4,627,163
------------------------------------------------
NET ASSET VALUE PER SHARE ....... $ 51.94
================================================
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS
SCHEDULE.
15
MATRIX ADVISORS
VALUE FUND, INC.
STATEMENT OF OPERATIONS
FOR THE
YEAR ENDED
JUNE 30, 2005
---------------------------------------------------
INVESTMENT INCOME
Income
Dividend income (Net of foreign tax withheld of $39,877) ...... $ 5,486,748
Interest income ............................................... 25,864
-------------------------------------------------
TOTAL INCOME ..................... 5,512,612
-------------------------------------------------
EXPENSES
Advisory fees ................................................. 2,788,820
Administration fees ........................................... 328,881
Transfer agent fees ........................................... 110,724
Reports to shareholders ....................................... 74,147
Custodian fees ................................................ 58,329
Fund Accounting fees .......................................... 56,498
Legal fees .................................................... 49,894
Registration fees ............................................. 42,422
Chief Compliance Officer fees ................................. 37,531
Audit fees .................................................... 19,001
Directors fees ................................................ 18,251
Miscellaneous fees ............................................ 11,336
-------------------------------------------------
TOTAL EXPENSES ................... 3,595,834
LESS: Advisory fees waived ....... (834,902)
-------------------------------------------------
NET EXPENSES ..................... 2,760,932
-------------------------------------------------
NET INVESTMENT INCOME ............ 2,751,680
-------------------------------------------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain from security transactions .................. 6,914,505
Net change in unrealized
depreciation on investments ................................ (14,415,761)
-------------------------------------------------
Net realized and unrealized
loss on investments ........................................ (7,501,256)
-------------------------------------------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS ........ $ (4,749,576)
=================================================
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS
SCHEDULE.
16
MATRIX ADVISORS
VALUE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEAR YEAR
ENDED ENDED
JUNE 30, 2005 JUNE 30, 2004
---------------------------------------------------
INCREASE (DECREASE)
IN NET ASSETS
OPERATIONS:
Net investment income ........................... $ 2,751,680 $ 1,136,543
Net realized gain on investments ................ 6,914,505 9,010,285
Net change in unrealized appreciation
(depreciation) of investments ................ (14,415,761) 21,569,634
---------------------------------------------------
NET INCREASE
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS ......... (4,749,576) 31,716,462
---------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS
Net investment income ........................... (2,333,203) (768,328)
Realized gain on investments .................... (4,469,059) --
---------------------------------------------------
TOTAL
DISTRIBUTIONS
TO SHAREHOLDERS .... (6,802,262) (768,328)
---------------------------------------------------
CAPITAL SHARE
TRANSACTIONS:
Proceeds from shares sold ....................... 59,455,802 251,014,702
Proceeds from reinvestment of distribution ...... 6,594,731 719,681
Cost of shares redeemed ......................... (130,051,935) (73,905,247)
Redemption fees ................................. 5,158 47,404
---------------------------------------------------
NET INCREASE
(DECREASE) FROM
CAPITAL SHARE
TRANSACTIONS ....... (63,996,244) 177,876,540
---------------------------------------------------
TOTAL INCREASE
(DECREASE)
IN NET ASSETS ...... (75,548,082) 208,824,674
---------------------------------------------------
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS
SCHEDULE.
17
MATRIX ADVISORS
VALUE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
YEAR YEAR
ENDED ENDED
JUNE 30, 2005 JUNE 30, 2004
---------------------------------------------------
NET ASSETS
Beginning of year ............................... 315,900,442 107,075,768
END OF YEAR ........ $240,352,360 $315,900,442
===================================================
UNDISTRIBUTED NET
INVESTMENT INCOME .. $ 1,170,724 $ 5,221,306
===================================================
CHANGE IN SHARES
Shares sold ..................................... 1,145,831 4,847,619
Shares issued on reinvestment of distributions .. 125,351 14,356
Shares redeemed ................................. (2,492,300) (1,425,744)
---------------------------------------------------
NET INCREASE
(DECREASE) ......... (1,221,118) 3,436,231
===================================================
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS
SCHEDULE.
18
MATRIX ADVISORS
VALUE FUND, INC.
NOTES TO
FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION
Matrix Advisors Value Fund, Inc. (the "Fund") is a Maryland corporation
registered under the Investment Company Act of 1940 (the "1940 Act") as a
diversified, open-end management investment company. The Fund commenced
operations September 16, 1983. The objective of the Fund is to achieve a total
rate of return composed of capital appreciation and current income.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The Fund consistently follows the accounting policies set forth below which are
in conformity with accounting principles generally accepted in the United States
of America.
A. Security Valuation.
Portfolio securities listed on a national securities exchange are valued at the
last sale price on the business day as of which such value is being determined.
If there has been no sale on such exchange on such day, the security is valued
at the mean between the bid and asked price. All equity securities that are
traded using the National Association of Securities Dealers' Automated Quotation
System ("NASDAQ") are valued using the NASDAQ Official Closing Price ("NOCP").
Readily marketable securities traded only in the over-the-counter market and not
on NASDAQ are valued at the current or last bid price. If no bid is quoted on
such day, the security is valued by such method as the Board of Directors of the
Fund shall determine in good faith to reflect the security's fair value. All
other assets of the Fund are valued in such manner as the Board of Directors in
good faith deems appropriate to reflect their fair value.
B. Shares Valuation.
The net asset value ("NAV") per share of the Fund is calculated by dividing the
sum of the value of the securities held by the Fund, plus cash or other assets,
minus all liabilities (including estimated accrued expenses) by the total number
of shares outstanding of the Fund, rounded to the nearest cent. The Fund's
shares will not be priced on the days on which the NYSE is closed for trading.
The offering and redemption price per share of the Fund is equal to the Fund's
net asset value per share. The Fund will assess a 1.00% fee on redemption of
Fund shares purchased and held for two months or less. These fees are deducted
from the redemption proceeds otherwise payable to the shareholder. The Fund will
retain the fee charged as paid-in capital and such fees become part of that
Fund's daily NAV calculation.
C. Federal Income Taxes.
The Fund has elected to be treated as a "regulated investment company" under
Subchapter M of the Internal Revenue Code. The Fund intends to distribute
substantially all of its taxable income and any capital gains less any
applicable capital loss carryforwards. Accordingly, no provision for Federal
income taxes has been made in the accompanying financial statements.
19
MATRIX ADVISORS
VALUE FUND, INC.
D. Portfolio Transactions.
Security transactions are accounted for on the trade date, the date the order to
buy or sell is executed. Security gains and losses are computed on an identified
cost basis.
E. Use of Estimates.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 these estimates.
F. Reclassification of Capital Accounts.
Accounting principles generally accepted in the United States of America require
that certain components of net assets relating to permanent differences be
reclassified between financial and tax reporting. These reclassifications have
no effect on net assets or net asset value per share. For the year ended June
30, 2005, the Fund increased accumulated net realized gain on investments by
$4,469,059 and decreased accumulated net investment income by $4,469,059.
G. Other.
Interest income is recorded on the accrual basis. Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
H. Indemnification Obligations.
Under the Fund's organizational documents, its current and former officers and
directors are indemnified against certain liabilities arising out of the
performance of their duties to the Fund. In addition, in the normal course of
business, the Fund enters into contracts that contain a variety of
representations and warranties that provide general indemnifications. The Fund's
maximum exposure under these arrangements is unknown as this would involve
future claims that may be made against the Fund that has not yet occurred or
that would be covered by other parties.
I. Line of Credit.
The Fund has a Loan Agreement with U.S. Bank N.A. Under the terms of the Loan
Agreement, the Fund's borrowings cannot exceed the lesser of $15,000,000 or 33
1/3% of the net assets of the Fund. The interest rate paid on the Loan equals
the prime rate per annum, payable monthly.
Borrowing activity under the Loan Agreement for the year ended June 30, 2005,
was as follows:
MAXIMUM AMOUNT
AMOUNT INTEREST OUTSTANDING AT
OUTSTANDING EXPENSE JUNE 30, 2005
-----------------------------------------------
$1,485,000 $ 236 $ --
20
MATRIX ADVISORS
VALUE FUND, INC.
NOTE 3 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS
The Fund has a management agreement with Matrix Asset Advisors, Inc. (the
"Advisor", "Matrix") to serve as investment advisor. Certain Officers of the
Advisor are also Officers of the Fund. Under the terms of the agreement, the
Fund has agreed to pay the Advisor as compensation for all services rendered,
staff and facilities provided and expenses paid or assumed, an annual fee,
accrued daily, paid monthly, of 1.00% of the Fund's average daily net assets.
The Advisor has contractually agreed to reduce its fees and/or pay expenses of
the Fund to ensure that the Fund's total annual operating expenses (excluding
interest and tax expenses) will not exceed 1.10% of the Fund's average daily net
assets. For the year June 30, 2005, the Advisor voluntarily reimbursed the Fund
for expenses in excess of 0.99%. Matrix voluntarily waived $834,902. Any
reduction in advisory fees or payment of expenses made by the Advisor may be
reimbursed by the Fund if the Advisor requests in subsequent fiscal years. This
reimbursement may be requested if the aggregate amount actually paid by the Fund
toward operating expenses for such fiscal year (taking into account the
reimbursement) does not exceed the applicable limitation on Fund expenses. The
Advisor is permitted to be reimbursed for fee reductions and/or expense payments
made in the prior three fiscal years. Any such reimbursement will be reviewed by
the Directors. The Fund must pay its current ordinary operating expenses before
the Advisor is entitled to any reimbursement of fees and/or expenses.
At June 30, 2005, the cumulative amount available for reimbursement that has
been paid and/or waived is $1,687,356. The advisor may recapture a portion of
this amount no later than the dates stated below:
June 30,
-------------------------------------------------------
2006 2007 2008
-------------------------------------------------------
$245,044 $607,410 $834,902
-------------------------------------------------------
U.S. Bancorp Fund Services, LLC (the "Administrator") acts as the Fund's
Administrator under an Administration Agreement. The Administrator prepares
various federal and state regulatory filings, reports and returns for the Fund;
prepares reports and materials to be supplied to the Directors; monitors the
activities of the Fund's custodian, transfer agent and accountants; coordinates
the preparation and payment of Fund expenses and reviews the Fund's expense
accruals. For its services, the Administrator receives a monthly fee from the
Fund based on the greater of an annual minimum $25,000 or the annual rate of:
0.15% of first $100 million of average daily net assets
0.10% thereafter of average daily net assets
For the year ended June 30, 2005, the Fund allocated $37,531 to the Chief
Compliance Officer.
21
MATRIX ADVISORS
VALUE FUND, INC.
NOTE 4 - INVESTMENT TRANSACTIONS
The cost of purchases and the proceeds from sales of securities, other than
short-term obligations and U.S. Government securities, for the year ended June
30, 2005, are as follows:
PURCHASES SALES
------------------------------------
Common Stock $49,024,340 $116,199,576
NOTE 5 - DISTRIBUTIONS TO SHAREHOLDERS
As of June 30, 2005, the components of distributable earnings on a tax basis
were as follows:
COST OF INVESTMENTS
FOR TAX PURPOSES $221,322,350
--------------------------------------------
Gross tax unrealized appreciation ............................. 27,333,764
Gross tax unrealized depreciation ............................. (8,152,534)
--------------------------------------------
Net tax unrealized appreciation on investments ................ 19,181,230
--------------------------------------------
UNDISTRIBUTED
ORDINARY INCOME $ 3,034,783
--------------------------------------------
UNDISTRIBUTED
LONG-TERM
CAPITAL GAINS $ 5,050,445
--------------------------------------------
TOTAL DISTRIBUTABLE EARNINGS $ 27,266,458
============================================
On November 12, 2004, a distribution of $1.2268 per share was declared. The
dividend was paid on November 15, 2004 to shareholders of record on November 11,
2004.
The tax character of distributions paid during the year ended June 30, 2005 and
2004 were as follows:
2005 2004
------------------------------------
Distributions Paid From:
Ordinary Income $6,802,262 $ 768,328
Long-Term Capital Gain -- --
------------------------------------
$6,802,262 $ 768,328
====================================
22
MATRIX ADVISORS
VALUE FUND, INC.
NOTE 6 - PROXY VOTING PROCEDURES
The Advisor votes proxies relating to portfolio securities in accordance with
procedures that have been approved by the Board of Directors of the Fund. You
may obtain a description of these procedures without charge (i) by calling a
toll-free, 1-800-366-6223; or (ii) on the SEC's website at http://www.sec.gov.
NOTE 7 - FORM N-Q DISCLOSURE
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission for the first and third quarters of each fiscal year on
Form N-Q. The Fund's Form N-Q is available on the Securities and Exchange
Commission's website at http://www.sec.gov. The Fund's Form N-Q may be reviewed
and copied at the Commission's Public Reference Room in Washington, DC, and
information on the operation of the Public Reference Room may be obtained by
calling 1-800-SEC-0330. This information is also available, without charge, by
calling toll-free, 1-800-366-6223.
--------------------------------------------------------------------
TAX NOTICE (UNAUDITED)
The percentage of dividend income distributed for the year ended
June 30, 2005, which is designated as qualified dividend income
under the Jobs and Growth Tax Relief Reconciliation Act of 2003, is
69.18%.
The percentage of dividend income distributed for the year ended
June 30, 2005 designated as qualified dividends received deduction
available to corporate shareholders, is 100.00%.
--------------------------------------------------------------------
23
MATRIX ADVISORS
VALUE FUND, INC.
NOTE 8 - DIRECTOR AND OFFICER INFORMATION
The Board of Directors is responsible for the overall management of the Fund's
business. The Board approves all significant agreements between the Fund and
persons or companies furnishing services to it, including the agreements with
the Advisor, Administrator, Custodian and Transfer Agent. The Board of Directors
delegates the day-to-day operations of the Fund to its Officers, subject to the
Fund's investment objective and policies and to general supervision by the
Board. The Statement of Additional Information includes additional information
about the Fund's Directors and is available, without charge, by calling
1-800-366-6223.
The Directors and Officers of the Fund, their business addresses and principal
occupations during the past five years are:
NUMBER
OF PORTFOLIOS
PRINCIPAL IN FUND OTHER
NAME, POSITION(S) OCCUPATION(S) COMPLEX DIRECTORSHIPS
ADDRESS, HELD WITH THE DATE DURING THE OVERSEEN HELD BY
AND AGE FUND ELECTED+ PAST 5 YEARS BY DIRECTOR DIRECTOR
- --------------------------------------------------------------------------------------------------------------------------
David A. Katz, CFA Director; Since President and Chief 1 None
747 Third Avenue President, 1997 Investment Officer of Matrix
New York, NY 10017 and Treasurer Asset Advisors, the Fund's
(43) Advisor, and portfolio
manager of the Fund (1996
to present).
Douglas S. Altabef Executive Since Senior Managing Director of N/A N/A
747 Third Avenue Vice President 2000 Matrix Asset Advisors, the
New York, NY 10017 and Secretary Fund's Advisor (1996 to
(54) present).
Steven G. Roukis, CFA Senior Vice Since Senior Vice President-Equity N/A N/A
747 Third Avenue President 2000 Research of Matrix Asset
New York, NY 10017 Advisors, the Fund's Advisor
(37) (1994 to present).
Bud Slotky Vice President Since Vice President, U.S. Bancorp N/A N/A
2020 E. Financial Way and Chief 2004 Fund Services, LLC since
Glendora, CA 91741 Compliance July 2001; formerly, Senior
(58) Officer Vice President, ICA (May
1997 - July 2001).
24
MATRIX ADVISORS
VALUE FUND, INC.
NUMBER
OF PORTFOLIOS
PRINCIPAL IN FUND OTHER
NAME, POSITION(S) OCCUPATION(S) COMPLEX DIRECTORSHIPS
ADDRESS, HELD WITH THE DATE DURING THE OVERSEEN HELD BY
AND AGE FUND ELECTED+ PAST 5 YEARS BY DIRECTOR DIRECTOR
- --------------------------------------------------------------------------------------------------------------------------
Robert M. Rosencrans* Director Since President of Columbia 1 None
747 Third Avenue 1985 International, Inc. (1984 to
New York, NY 10017 present).
(78)
T. Michael Tucker* Chairman Since Owner of T. Michael Tucker, 1 None
747 Third Avenue and Director 1997 a certified public accounting
New York, NY 10017 firm (1977 to present).
(63)
Larry D. Kieszek* Director Since Managing Partner of Purvis, 1 None
747 Third Avenue 1997 Gray & Company, a certified
New York, NY 10017 public accounting firm (1974
(54) to present).
- ----------
* Not an "interested person", as that is defined by the 1940 Act.
+ Directors and Officers of the Fund serve until their resignation,
removal or retirement.
25
MATRIX ADVISORS
VALUE FUND, INC.
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH YEAR
YEARS ENDED JUNE 30,
----------------------------------------------------------------
2005 2004 2003 2002 2001
----------------------------------------------------------------
Net asset value, beginning of year ........... $ 54.02 $ 44.39 $ 41.14 $ 45.79 $ 43.49
----------------------------------------------------------------
Income from investment operations:
Net investment income ..................... 0.54 0.94 0.14 0.09 0.20
Net realized and unrealized gain (loss)
on investments ......................... (1.39) 8.89 3.32 (3.59) 3.03
----------------------------------------------------------------
Total from investment operations ............. (0.85) 9.83 3.46 (3.50) 3.23
----------------------------------------------------------------
Less distributions:
Dividends from net investment
income ................................. (0.42) (0.21) (0.08) (0.15) (0.15)
Distributions from realized gains ......... (0.81) 0.00 (0.14) (1.03) (0.78)
----------------------------------------------------------------
Total distributions .......................... (1.23) (0.21) (0.22) (1.18) (0.93)
----------------------------------------------------------------
Paid-in capital from redemption
fees (Note 2) ............................. --(a) 0.01 0.01 0.03 --(a)
----------------------------------------------------------------
Net asset value, end of year ................. $ 51.94 $ 54.02 $ 44.39 $ 41.14 $ 45.79
================================================================
Total return ................................. (1.61%) 22.21% 8.52% (7.87%) 7.50%
Ratios/supplemental data:
Net assets, end of year (millions) ........... $ 240.4 $ 315.9 $ 107.1 $ 60.9 $ 42.6
Ratio of operating expenses to
average net assets:
Before expense reimbursement ........... 1.29% 1.26% 1.33% 1.37% 1.37%
After expense reimbursement ............ 0.99% 0.99% 0.99% 0.99% 0.99%
Ratio of net investment income
(loss) to average net assets:
Before expense reimbursement ........... 0.69% 0.24% 0.20% (0.09%) 0.22%
After expense reimbursement ............ 0.99% 0.51% 0.54% 0.29% 0.60%
Portfolio turnover rate ...................... 18% 17% 30% 51% 55%
- ----------
(a) less than 0.01.
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS
SCHEDULE.
26
MATRIX ADVISORS
VALUE FUND, INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTORS AND
SHAREHOLDERS OF MATRIX ADVISORS VALUE FUND, INC.
NEW YORK, NEW YORK
We have audited the accompanying Statement of assets and liabilities, including
the schedule of investments, of Matrix Advisors Value Fund, Inc. as of June 30,
2005 and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the five years in the period then
ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and financial highlights. Our procedures
included confirmation of securities owned as of June 30, 2005, by correspondence
with the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Matrix
Advisors Value Fund, Inc. as of June 30, 2005, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended and the financial highlights for each of the five years in
the period then ended in conformity with auditing standards generally accepted
in the United States of America.
TAIT WELLER & BAKER LLP
Philadelphia, Pennsylvania
July 22, 2005
27
BOARD OF DIRECTORS
David A. Katz, CFA
Larry D. Kieszek Robert M.
Rosencrans T. Michael Tucker
o
INVESTMENT ADVISOR
Matrix Asset Advisors, Inc.
747 Third Avenue, 31st Floor
New York, NY 10017
(800) 366-6223
o
CUSTODIAN
U.S. Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
o
TRANSFER AGENT
U.S. Bancorp Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202
o
ADMINISTRATOR
U.S. Bancorp Fund Services, LLC
2020 East Financial Way, Ste. 100
Glendora, CA 91741
o
INDEPENDENT ACCOUNTANTS
Tait, Weller & Baker
1818 Market Street, Ste. 2400
Philadelphia, PA 19103
o
DISTRIBUTOR
Quasar Distributors, LLC
615 East Michigan Street
Milwaukee, WI 53202-5207
This report is intended for shareholders of the Fund and may not be used as
sales literature unless preceded or accompanied by a current prospectus.
Past performance results shown in this report should not be considered a
representation of future performance. Share price and returns will fluctuate so
that shares, when redeemed, may be worth more or less than their original cost.
Statements and other information herein are dated and are subject to change.
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 period covered by this
report. The registrant has not granted any waivers from any provisions of the
code of ethics during the period covered by this report.
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 AT
1-800-366-6223.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's board of directors has determined that there are two audit
committee financial experts serving on its audit committee. Messrs. Kieszek and
Tucker are the "audit committee financial experts" and are considered to be
"independent" as each term are defined in Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The registrant has engaged its principal accountant to perform audit services,
audit-related services, tax services and other services during the past two
fiscal years. "Audit services" refer to performing an audit of the registrant's
annual financial statements or services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
for those fiscal years. "Audit-related services" refer to the assurance and
related services by the principal accountant that are reasonably related to the
performance of the audit. "Tax services" refer to professional services rendered
by the principal accountant for tax compliance, tax advice, and tax planning.
The following table details the aggregate fees billed for each of the last two
fiscal years for audit fees, audit-related fees, tax fees and other fees by the
principal accountant.
=================================================================
FYE 6/30/2005 FYE 6/30/2004
-----------------------------------------------------------------
Audit Fees $15,500 $13,500
Audit-Related Fees -- --
Tax Fees $2,500 $2,500
All Other Fees -- --
=================================================================
The audit committee has adopted pre-approval policies and procedures that
require the audit committee to pre-approve all audit and non-audit services of
the registrant, including services provided to any entity affiliated with the
registrant. All of the principal accountant's hours spent on auditing the
registrant's financial statements were attributed to work performed by full-time
permanent employees of the principal accountant. (IF MORE THAN 50 PERCENT OF THE
ACCOUNTANT'S HOURS WERE SPENT TO AUDIT THE REGISTRANT'S FINANCIAL STATEMENTS FOR
THE MOST RECENT FISCAL YEAR, STATE HOW MANY HOURS WERE ATTRIBUTED TO WORK
PERFORMED BY PERSONS OTHER THAN THE PRINCIPAL ACCOUNTANT'S FULL-TIME, PERMANENT
EMPLOYEES.)
The following table indicates the non-audit fees billed by the registrant's
accountant for services to the registrant and to the registrant's investment
adviser (and any other controlling entity, etc.--not sub-adviser) for the last
two years. The audit committee of the board of trustees/directors has considered
whether the provision of non-audit services that were rendered to the
registrant's investment adviser is compatible with maintaining the principal
accountant's independence and has concluded that the provision of such non-audit
services by the accountant has not compromised the accountant's independence.
=================================================================
Non-Audit Related Fees FYE 6/30/2005 FYE 6/30/2004
-----------------------------------------------------------------
Registrant -- --
Registrant's Investment Adviser -- --
=================================================================
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to open-end investment companies.
ITEM 6. SCHEDULE OF INVESTMENTS.
Schedule of Investments is included as part of the report to shareholders filed
under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to open-end investment companies.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable to open-end investment companies.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASES.
Not applicable to open-end investment companies.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of directors.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The Registrant's President and Treasurer has concluded that the
Registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940 (the "Act")) as of a
date within 90 days of the filing of this report, as required by Rule
30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934. Based on his review, such officer has
concluded that the disclosure controls and procedures are effective in
ensuring that information required to be disclosed in this report is
appropriately recorded, processed, summarized and reported and made known
to him by others within the Registrant and by the Registrant's service
provider.
(b) There were no significant changes in the Registrant's internal controls
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.
ITEM 12. EXHIBITS.
(a) (1) ANY CODE OF ETHICS OR AMENDMENT THERETO, THAT IS SUBJECT OF THE
DISCLOSURE REQUIRED BY ITEM 2, TO THE EXTENT THAT THE REGISTRANT INTENDS
TO SATISFY ITEM 2 REQUIREMENTS THROUGH FILING AN EXHIBIT. Incorporated by
reference to the Registrant's Form N-CSR filed September 3, 2004.
(2) CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF
2002. Filed herewith.
(3) ANY WRITTEN SOLICITATION TO PURCHASE SECURITIES UNDER RULE 23C-1 UNDER
THE ACT SENT OR GIVEN DURING THE PERIOD COVERED BY THE REPORT BY OR ON
BEHALF OF THE REGISTRANT TO 10 OR MORE PERSONS. Not applicable to open-end
investment companies.
(B) CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.
Furnished 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.
(Registrant) MATRIX ADVISORS VALUE FUND, INC.
By (Signature and Title) /S/ DAVID A. KATZ
--------------------------------------------------
David A. Katz, President
Date September 6, 2005
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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 (Signature and Title) /S/ DAVID A. KATZ
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David A. Katz, President/Treasurer
Date September 6, 2005
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* PRINT THE NAME AND TITLE OF EACH SIGNING OFFICER UNDER HIS OR HER SIGNATURE.