Aegis Value Fund, Inc.
Semi-Annual Report
February 29, 2004
Shareholders' Letter
April 15, 2004
To the shareholders of the Aegis Value Fund:
We are pleased to present the Aegis Value Fund's semi-annual report
for the six months ended February 29, 2004. We take this opportunity
to welcome new shareholders to the Fund and provide a brief overview
of the objectives and strategy of the Fund. The Aegis Value Fund seeks
to achieve long-term, above market returns while minimizing risk of
capital loss. Our strategy is to invest in well-researched small-cap
equities trading at a fraction of their intrinsic worth. We believe
the equity markets are often inefficient, and we are contrarian,
bottom-up stock selectors. We generally buy stocks trading at low
price-to-book and price-to-earnings ratios, a segment of the market
where academic research shows historical returns to be significantly
higher than the overall market.
We look for indications of strong corporate governance and ethical
stewardship as evidenced by high insider ownership, proper use of
corporate profits, including bargain-priced share repurchases, and
appropriate executive salary and option levels. We tend to purchase
companies when they are misunderstood, out of favor, or neglected,
and hold these companies until share prices reach our estimates of
intrinsic value.
Since the Aegis Value Fund's inception on May 15, 1998, the Fund has
performed well against the market averages,returning a cumulative gain
of 156.3 percent through April 15, 2004, compared to a gain of
62.5 percent in our primary small-cap value benchmark, the
Russell 2000 Value Index, a cumulative gain of 32.7 percent for the
Russell 2000 Index of small-cap stocks (growth and value), and
a 10.9 percent cumulative gain in the S&P 500 Index.
For the six months ended February 29, 2004, the Aegis Value Fund
posted a gain of 15.8 percent,versus a gain of 21.3 percent for the
Russell 2000 Value Index. The Russell 2000 Index gained 18.3 percent
while the S&P 500 Index returned 14.6 percent*.
Shareholders who have been with us for some time will notice a change
in the format of this report. Beginning this period, we have focused
the Semi-Annual Report solely on factual financial and operating data
regarding the Fund. Our traditional(and more subjective) market
commentary will be provided separately in an Advisor's Report.
Our decision to make this change is a result of the Sarbanes-Oxley
Act of 2002. Under the Act, mutual fund officers are required to
certify the entirety of the Semi-Annual report. After some
deliberation, we reached the conclusion that we will not certify data
provided by third parties, nor will we certify analysis and subjective
conclusions drawn from such data. Nonetheless, we strongly feel that
a thoughtful and (we hope) relevant discussion of current market
conditions is important to many shareholders. Therefore, please
continue to anticipate reading this kind of commentary and analysis,
subjective though it is, in the Advisor's Report.
We trust that this new approach will not impede communication with
our shareholders, which we continue to take very seriously.
Berno, Gambal, & Barbee, Inc.
Scott L. Barbee, CFA
Managing Director, Portfolio Manager
Note: All historical performance returns shown in this
shareholders' letter for the Aegis Value Fund Inc. are presented
on a pre-tax basis.
* - Aegis Value Fund's one-year, three year, five year, and since
inception (5/15/1998) average annual returns for the period ending
March 31, 2004 are 53.6%, 21.2%, 22.2%, and 17.5% respectively.
Returns include reinvestment of dividends and capital gains.
Russell 2000 Value Index comparative one-year, three-year,
five-year, and since inception average annual returns for the period
ending March 31, 2004 are 64.5%, 16.0%, 16.1%, and 9.0%.
Past performance is no guarantee of future results. Share prices
will fluctuate, so that shares may be worth more or less than
their original cost when redeemed.
Aegis Value Fund, Inc.
Schedule of Portfolio Investments
February 29, 2004
Common Stock - 48.1% Shares Mkt Value
Industrial Cyclicals - 6.0%
Allied Defense Group, Inc.* 208,900 $3,904,341
American Pacific Corp. 670,534 5,411,209
Ampco-Pittsburgh Corporation 65,000 893,750
Butler Manufacturing, Inc.* 196,800 4,396,512
Commonwealth Industries, Inc.* 47,996 312,502
Ethyl Corporation* 185,360 3,777,637
International Aluminum Corp. 32,300 1,091,740
Pope & Talbot, Inc. 109,100 1,876,520
Quipp, Inc.* 78,300 1,037,475
RTI International Metals Inc.* 148,600 2,523,228
Ryerson Tull Class A 519,800 7,053,686
Steel Technologies Inc. 30,743 528,503
Stewart & Stevenson Inc. 33,900 472,227
==========
33,279,330
Wholesale and Distribution - 0.9%
Nash Finch Company 212,300 4,942,344
==========
4,942,344
Finance and Real Estate - 11.1%
Acceptance Insurance Companies, Inc.* 229,400 5,735
Allmerica Financial Corp.* 224,000 8,261,120
American Physicians Capital Inc.* 178,738 3,646,255
California First National Bank Corp. * 12,100 152,218
First Union Real Estate Equity SBI* 1,045,000 2,779,700
Medallion Financial Corp. 11,400 101,460
Meristar Hospitality Inc.* 653,800 4,086,250
The MIIX Group Inc.* 720,000 504,000
Prime Hospitality Corp.* 786,000 8,402,340
Prime Group Realty Trust * 1,885,700 11,691,340
PXRE Group Ltd. 275,000 7,400,250
PMA Capital Corp. Cl. A.* 1,548,110 8,592,011
SCPIE Holdings, Inc. 747,902 6,095,401
==========
61,718,080
Textiles and Apparel - 2.2%
Delta Apparel, Inc. 171,000 3,385,800
Delta Woodside Industries* 428,700 1,136,055
Haggar Corporation 195,863 3,878,087
Nitches, Inc. * 37,620 216,315
Quaker Fabric Corporation 388,642 3,334,548
==========
11,950,806
Transportation - 4.6%
International Shipholding Corp.* 95,700 1,329,273
KLM Royal Dutch Airline 397,000 9,297,740
Maritrans, Inc. 73,800 1,208,844
National RV Holdings* 276,300 2,867,994
OMI Corporation 433,400 4,685,054
Sea Containers Ltd. - Class A 308,200 6,009,900
==========
25,398,805
Energy & Natural Resources - 8.6%
Alliant Energy Corp. 160,000 4,120,000
Atwood Oceanics Inc.* 155,000 5,786,150
Avista Corporation 45,800 827,606
Global Industries, Inc.* 747,217 3,780,918
Horizon Offshore Inc.* 1,222,024 3,959,358
Idacorp Inc. 80,800 2,525,000
PNM Resources, Inc. 170,000 5,178,200
Petroleum Development Corp.* 47,148 1,348,433
Reliant Resources Inc.* 1,125,900 8,556,840
Stillwater Mining Co.* 304,500 3,696,630
Ultimate Electronics * 200,614 1,466,488
USEC Inc. 740,500 6,205,390
==========
47,451,013
Agriculture - 5.4%
The Andersons, Inc. 300,028 5,847,546
Dimon Inc. 2,008,000 13,955,600
Seaboard Corporation 200 67,120
Standard Commercial Corporation 536,500 10,155,945
==========
30,026,211
Consumer Durables - 1.1%
Bassett Furniture Industries, Inc. 306,654 6,344,671
==========
6,344,671
Technology - 1.2%
Audiovox Corporation - Class A* 105,588 1,723,196
CAM Commerce Solutions, Inc.* 60,100 677,267
Clarus Corporation* 137,695 1,155,261
IDT Corporation* 10,000 201,000
IDT Corporation - Class B* 86,000 1,784,500
Integrated Telecom Express Inc.* 1 308,300 30,830
Liquid Audio Inc.* 372,250 141,455
Printware, Inc.* 1 32,000 0
Technology Solutions Company* 828,594 919,739
==========
6,633,248
Retail and Entertainment - 5.4%
Books-A-Million Inc.* 858,822 4,817,991
Bowl America Inc. - Class A 9,481 142,215
Duckwall-ALCO Stores, Inc.* 140,100 2,058,069
Luby's, Inc.* 2,032,300 9,856,655
Marsh Supermarkets, Inc. - Class B 205,107 2,678,697
Nathan's Famous, Inc.* 132,400 779,704
Toy R Us Inc. * 612,600 9,617,820
=========
29,951,151
Consumer Non-Durables - 1.5%
CPAC, Inc. 306,998 1,848,128
Head N.V. * 1,881,000 6,113,250
National Presto Industries, Inc. 15,000 578,100
=========
8,539,478
Total Common Stocks - (Cost $190,225,721) 266,235,138
Preferred Stocks - 0.4% Shares Market Value
Glenborough Realty 7.75%
Convertible Preferred 14,000 352,100
La Quinta Properties 9%
Series A Preferred 76,800 1,979,904
=========
Total Preferred Stocks - (Cost $1,925,256) 2,332,004
Investment Companies - 0.8% Shares Market Value
Federated Prime Obligations Fund 4,236,484 4,236,484
Total Investment Companies - (Cost $4,236,484) 4,236,484
Short-Term Investments - 49.6% Face Value Market Value
U. S. Treasury Bill due 3/4/04 35,000,000 34,995,303
U. S. Treasury Bill due 3/11/04 30,000,000 29,991,276
U. S. Treasury Bill due 3/18/04 40,000,000 39,982,320
U. S. Treasury Bill due 03/25/04 40,000,000 39,975,036
U. S. Treasury Bill due 04/01/04 20,000,000 19,984,836
U. S. Treasury Bill due 04/08/04 30,000,000 29,971,824
U. S. Treasury Bill due 04/15/04 30,000,000 29,966,130
U. S. Treasury Bill due 04/22/04 50,000,000 49,932,490
Total Short-Term Investments - (Cost $274,799,215) 274,799,215
Total Investments - 98.9% (Cost $471,186,673) 547,602,841
Other Assets and Liabilities - 1.1% 6,045,459
Net Assets - 100.0% $553,648,300
* Non-income producing securities
1 Company is in liquidation and security is being fair
valued by the board of directors.
Aegis Value Fund, Inc.
Statement of Assets and Liabilities
February 29, 2004
(Unaudited)
Assets
Investments at market value (cost $471,186,673) $547,602,841
Cash 4,829,547
Receivable for investment securities sold 1,984,802
Receivable for fund shares sold 3,342,735
Interest and dividends receivable 298,296
Other assets 1,764
Receivable from investment advisor 28,243
Total assets 558,088,227
Liabilities
Payable for investment securities purchased 3,873,121
Payable for fund shares redeemed 495,913
Accrued expenses 70,894
Total liabilities 4,439,927
Net assets (31,746,341 shares of $0.001 par
value capital stock outstanding; 100,000,000 shares
authorized) $553,648,300
Net assets consist of:
Capital stock at par value $31,746
Paid-in capital 463,094,531
Accumulated net investment income (340,977)
Accumulated net realized gain 14,446,836
Net unrealized appreciation 76,416,164
Net assets $553,648,300
Net asset value per share $17.44
Aegis Value Fund, Inc.
Statement of Operations
For the Period September 1, 2003
to February 29, 2004
(Unaudited)
Investment Income
Dividends $1,802,931
Interest 765,068
Total income 2,567,999
Expenses
Investment advisory fees 2,560,000
Transfer agency and administration fees 533,333
Registration fees 46,558
Custody fees 24,872
Printing and postage costs 19,435
Legal and accounting fees 17,300
Directors fees 13,597
Insurance and other 8,159
Gross expenses 3,223,255
Less: fees paid indirectly (11,309)
Less: fees reimbursed by investment advisor (14,147)
Net expenses 3,197,799
Net investment income (629,800)
Realized and unrealized gain (loss) on investments
Net realized gain on investments 20,362,239
Change in unrealized appreciation (depreciation) of
investments for the period 41,324,163
Net realized and unrealized gain (loss) on investments 61,686,402
Net increase in net assets resulting from operations $61,056,602
Aegis Value Fund, Inc.
Statement of Changes in Net Assets
For the Period September 1, 2003
to February 29, 2004
(Unaudited)
Increase in net assets from operations
Investment income - net ($629,800)
Net realized gain on investments 20,362,239
Change in unrealized appreciation 41,324,163
Net increase (decrease) in net assets
resulting from operations 61,056,602
Distributions
Investment income - net 0
Realized capital gains (11,091,093)
Total distributions (11,091,093)
Capital share transactions*
Subscriptions 277,491,307
Distributions reinvested 10,198,864
Redemptions (78,206,361)
Total capital share transactions 209,483,810
Total increase in net assets 259,449,320
Net assets at beginning of period 294,198,979
Net assets at end of period $553,648,300
*Share information
Subscriptions 16,788,906
Distributions reinvested 617,365
Redemptions (4,720,962)
Aegis Value Fund, Inc.
Financial Highlights
For Six Months Ending February 29, 2004
And Fiscal Year Ending August 31, 2003
(Unaudited)
Per share data: February 29, 2004 August 31, 2003
Net asset value -
beginning of period $15.44 $12.99
Income from investment operations-
Net investment income (0.02) 0.04
Net realized and unrealized
gain (loss) on investments 2.43 2.92
Total from investment operations 2.41 2.96
Less distributions declared to shareholders
Net investment income 0.00 (0.02)
Net realized capital gains (0.41) (0.49)
Total distributions (0.41) (0.51)
Net asset value - end of period $17.44 $15.44
Total investment return 15.80% 23.69%
Ratios (to average net assets)/supplemental data:
Expenses after reimbursement and 1.50% 1.50% 1
fees paid indirectly
Expenses before reimbursement and 1.50% 1.56%
fees paid indirectly
Net investment income (0.12%) 0.31%
Portfolio turnover (annualized) 31% 15%
Net assets at end of period (000's) $553,648 $294,199
1 Ratio after expense reimbursement, before fees paid
indirectly, was 1.51% in 2003
Aegis Value Fund, Inc.
1100 North Glebe Road, Suite 1040
Arlington, Virginia 22201
Phone: (800) 528-3780
Fax: (703) 528-1395
Internet: www.aegisvaluefund.com
Board of Directors
Scott L. Barbee
William S. Berno
Edward P. Faberman
Albert P. Lindemann III
Eskander Matta
Officers
William S. Berno, President
Scott L. Barbee, Treasurer
Paul Gambal, Secretary
Investment Advisor
Berno, Gambal & Barbee, Inc.
1100 North Glebe Road, Suite 1040
Arlington, Virginia 22201
Custodian
UMB Bank, n.a.
928 Grand Boulevard
Kansas City, Missouri 64106
Independent Auditors
PricewaterhouseCoopers LLP
250 W. Pratt Street, Suite 2100
Baltimore, Maryland 21201
Counsel
Dechert Price & Rhoads
1775 Eye Street, N.W.
Washington, DC 20006