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 811-09174
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Aegis Value Fund, Inc.
- ----------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
1100 N. Glebe Road, Suite 1040, Arlington, VA 22201
- ----------------------------------------------------------------------------
(Address of principal
executive offices) (Zip code)
William S. Berno, 1100 N. Glebe Rd., Suite 1040, Arlington, VA 22201
- ----------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (703) 528-7788
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Date of fiscal year end: 08/31
------------------
Date of reporting period: 08/31/05
-----------------
ITEM 1. REPORTS TO STOCKHOLDERS
Aegis Value Fund, Inc.
Eighth Annual Report
August 31, 2005
Shareholders Letter
October 14, 2005
To the shareholders of the Aegis Value Fund:
We are pleased to present the Aegis Value Fund annual report for
the year ended August 31, 2005.
We take this opportunity to 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 options 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 inception of the Aegis Value Fund on May 15, 1998,
performance has been strong relative to benchmark indices.
The Fund has posted a cumulative gain of 165.0 percent through
October 14, 2005, compared to cumulative gains of 88.2 percent
in our primary small-cap benchmark, the Russell 2000 Value Index.
During this period, the Russell 2000 Index of small-cap stocks
posted cumulative gains of 47.3 percent, and the S&P 500 posted
cumulative gains of 19.7 percent.*
For the year ended August 31, 2005, the Aegis Value Fund posted
a gain of 9.7 percent, versus a gain of 22.6 percent for the
Russell 2000 Value Index. The Russell 2000 Index returned
23.1 percent, while the S&P 500 Index returned 12.6 percent.
The majority of our performance shortfall versus the benchmark
index during the year resulted from our defensive positioning in
cash during a period of continued market exuberance. We also
believe performance suffered from our focus on low price-to-book
value securities, which resulted in a portfolio underweighted in
energy and natural resources during a period of extraordinary
strength for these sectors.
The rise in valuations this year continued to be broad: many
sectors of the stock market rose in valuation. The breadth of this
rise left us with fewer than usual opportunities to invest in
securities trading at low price-to-book multiples. Rather than
purchase stocks at higher multiples, we continue to conserve cash,
anticipating better future investment opportunities. Cash levels
in the Fund stand at approximately 30% versus an average of
approximately 48.0% through the fiscal year.
For more detailed commentary and analysis of the Fund performance
and our outlook on the investing climate, please read our annual
Advisors Report dated August 31, 2005.
We look forward to serving as your investment partner in the
coming year.
Aegis Financial Corporation
Scott L. Barbee, CFA
Managing Director, Portfolio Manager
* - Aegis Value Fund one-year, three year, five year, and since
inception (5/15/1998) average annual returns for the period
ending September 30, 2005 are 5.9%, 17.2%, 18.0%, and 14.7%
respectively. Returns include reinvestment of dividends and
capital gains. Russell 2000 Value Index one-year, three-year,
five-year, and since inception (AVALX-5/15/1998) average annual
returns for the period ending September 30, 2005 are 17.8%, 24.9%,
15.2%, and 9.7%. All historical performance returns shown in this
report are pre-tax returns.
This report does not constitute an offer or solicitation of
any transaction in any securities. The Aegis Value Fund is
offered by prospectus only.
Investors are advised to consider the Fund's investment
objectives, risks, charges and expenses carefully before investing.
The prospectus contains this and other information about the
Aegis Value Fund. For a prospectus and more complete information,
including charges and expenses, please call us at 1-800-528-3780,
or visit our website at www.aegisvaluefund.com where an online
prospectus is provided. The prospectus should be read carefully
before investing.
Performance data quoted represents past performance. Past
performance does not guarantee future results. 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 may be lower or higher
than the performance data quoted. Please call us at 1-800-528-
3780 to obtain performance data current to the most recent
month-end.
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
As a shareholder of the Fund, you incur 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 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 and held for the entire
semi-annual period, March 1, 2005 - August 31, 2005.
Actual expenses
The table below provides information about actual account
values and actual expenses.
[All figures in the following table are for the Aegis Value Fund]
Actual
Beginning Account Value (03/01/2005)
$1,000.00
Ending Account Value (08/31/2005)[1]
$1,016.35
Expenses Paid During Period[2]
$7.16
Hypothetical
Ending Account Value (08/31/2005)
$1,018.05
Expenses Paid During Period[2]
$7.16
[1] The actual ending account value is based on the
actual total return of the Fund for the period
March 1, 2005 to August 31, 2005 after actual
expenses and will differ from the hypothetical ending
account value which is based on the Fund actual
expense ratio and a hypothetical annual return of 5%
before expenses. The actual cumulative return at net
asset value for the period March 1, 2005 to August 31,
2005 was 1.63%.
[2] Expenses are equal to the Fund annualized expense
ratio (1.41%) multiplied by the average account value
over the period, multiplied by 184/365 (to reflect the
period between 03/01/2005 and 08/31/2005).
See performance data disclosure on Page 2.
You may use the information in this table, 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 table under the heading entitled
Actual Expenses Paid During Period to estimate the
expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table above also provides information about hypothetical
account values and hypothetical expenses based on the Fund
actual expense ratio and an assumed rate of return of 5% per
year before expenses, which is not the Fund 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. The Fund is a pure no-load fund and does not charge
any sales charges (loads), distribution or service fees, or
redemption fees.
KEY STATISTICS
Results of a $10,000 Investment
[The graph shows the return in dollars of a $10,000
investment in the Aegis Value Fund for the period
5/15/98-8/31/05 compared with the return of the Russell
2000 Value Index for the same period]
Aegis Value Fund Russell 2000 Value Index
5/15/98 $10,000 $10,000
8/31/98 $8,210 $7,564
8/31/99 $10,990 $8,629
8/31/00 $11,964 $9,811
8/31/01 $16,521 $11,581
8/31/02 $17,760 $10,933
8/31/03 $21,954 $13,521
8/31/04 $25,591 $16,157
8/31/05 $28,070 $19,810
Average Annual Total Returns (As of August 31, 2005)
AVALX Rus. 2000 Val.
Trailing 5 Year 18.6% 15.1%
Trailing 3 Year 16.5% 21.9%
Trailing 1 Year 9.7% 22.6%
Since inception (May 15, 1998) 15.2% 9.8%
Industry Breakdown
% of Fund assets
Common Stocks
Finance and Real Estate 14.9%
Industrial Cyclicals 9.4%
Agriculture 7.3%
Retail and Entertainment 7.0%
Transportation 6.0%
Energy and Natural Resources 4.5%
Basic Materials 4.4%
Technology 3.1%
Textiles and Apparel 2.6%
Capital Goods 2.1%
Consumer Non-Durables 1.5%
Consumer Durables 0.9%
Healthcare 0.3%
Wholesale and Distribution 0.1%
Commercial Services 0.0%
Preferred Stocks 0.3%
Warrants 0.0%
Cash and Short-Term Investments 35.6%
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Total Assets 100.0%
Aegis Value Fund, Inc.
Schedule of Portfolio Investments
August 31, 2005
Common Stock - 64.1% Shares Market
Value
Industrial Cyclicals - 9.4%
Allied Defense Group, Inc.* 210,200 $4,771,540
American Pacific Corp.*(1) 670,534 4,204,248
Ampco-Pittsburgh Corporation 65,000 916,500
International Aluminum Corp. 32,300 1,119,001
Pope & Talbot, Inc. 254,000 2,844,800
Quipp, Inc.* (1) 78,300 959,175
Ryerson Tull, Inc. - Class A (1) 1,710,200 35,127,508
Superior Industries Intl. Inc. 625,600 13,919,600
----------
63,862,372
Wholesale and Distribution - 0.1%
Advanced Marketing Services Inc.* 78,300 391,500
----------
391,500
Finance and Real Estate - 14.9%
Acceptance Insurance Companies, Inc.* 229,400 344
Allmerica Financial Corp.* 224,000 9,119,040
Amnet Mortgage Inc.* (1) 492,421 4,820,802
Boykin Lodging Company * 100,000 1,316,000
California First Natl. Bank Corp. (1) 577,892 7,801,542
First Union Real Estate Equity and
Mortgage Investment SBI* 593,456 2,818,916
Lodgian Inc.* 158,300 1,657,401
Medallion Financial Corp. 248,540 2,676,776
Meristar Hospitality Inc.* 653,800 6,014,960
MI Developments Inc. 123,000 4,065,150
The MIIX Group Inc.* (1) 720,000 9,720
PMA Capital Corp.
- Class A*(1) 2,674,157 23,532,582
Prospect Energy Corp. 283,088 3,227,203
PXRE Group Ltd. 748,300 17,427,907
SCPIE Holdings, Inc.*(1) 975,000 13,708,500
SWS Group Inc. 156,000 2,541,240
-----------
100,738,083
Textiles and Apparel - 2.6%
Delta Apparel, Inc. 342,000 5,301,000
Delta Woodside Industries*(1) 428,700 325,812
Haggar Corporation 195,863 4,532,270
Nitches, Inc.* 37,620 188,476
Quaker Fabric Corporation* (1) 1,600,000 5,152,000
Tandy Brands Accessories 182,743 2,010,173
----------
17,509,731
Transportation - 6.0%
Air France ADR* 436,700 7,166,247
Exide Technologies, Inc.* 600,000 2,658,000
International Shipholding Corp.* 95,700 1,530,243
MAIR Holdings, Inc.* 1,013,152 9,017,053
National RV Holdings* 276,300 1,660,563
Sea Containers Ltd. - Class A (1) 1,703,900 18,402,120
----------
40,434,226
Energy & Natural Resources - 4.5%
Alliant Energy Corp. 160,000 4,808,000
Avista Corporation 45,800 890,351
Horizon Offshore Inc.* 653,924 457,747
Idacorp Inc. 80,800 2,480,560
PNM Resources, Inc. 255,000 7,542,900
Reliant Resources Inc.* 690,300 8,628,750
USEC Inc. 497,250 5,852,633
----------
30,660,941
Commercial Services - 0.0%
LQ Corporation* 52,115 97,976
---------
97,976
Agriculture - 7.3%
Alliance One International Inc. (1) 6,398,900 25,595,600
The Andersons, Inc. 324,351 9,749,991
Imperial Sugar (1) 1,025,000 14,278,250
----------
49,623,841
Consumer Durables - 0.9%
Bassett Furniture Industries, Inc. 306,654 5,814,160
----------
5,814,160
Technology - 3.1%
Audiovox Corporation - Class A* 897,593 16,228,481
IDT Corporation* 10,000 130,300
IDT Corporation - Class B* 86,000 1,137,780
Integrated Telecom Express Inc.* (2) 308,300 30,830
Pemstar, Inc.* (1) 3,136,155 3,261,601
Technology Solutions Company* 828,594 281,722
---------
21,070,714
Retail and Entertainment - 7.0%
Books-A-Million Inc.(1) 918,414 9,450,480
Bowl America Inc. - Class A 9,481 132,165
Dillards Inc. - Class A 543,600 12,236,436
Duckwall-ALCO Stores, Inc.* 140,100 3,243,315
Luby's, Inc.* 1,057,267 13,892,488
Marsh Supermarkets, Inc. - Class B 207,409 2,443,278
Nathan's Famous, Inc.* 132,400 1,204,840
ShopKo Stores, Inc.* 176,500 4,389,555
Village Super Market Inc. 9,330 490,665
----------
47,483,222
Basic Materials - 4.4%
Adams Resources and Energy Inc. 38,700 857,979
NewMarket Corp.* 185,360 3,073,269
Olympic Steel Inc.* 498,907 8,281,856
Royal Group Technologies* 1,108,100 10,892,623
Steel Technologies 291,616 6,826,731
----------
29,932,458
Capital Goods - 2.1%
Dominion Homes Inc.* (1) 800,000 13,944,000
----------
13,944,000
Consumer Non-Durables - 1.5%
CPAC, Inc. (1) 306,998 1,458,241
Enesco Group* (1) 1,130,400 1,887,768
Head N.V.* 1,881,000 5,868,720
National Presto Industries, Inc. 15,000 668,850
----------
9,883,579
Healthcare - 0.3%
OCA Inc.* 1,514,400 1,968,720
----------
1,968,720
------------
Total Common Stocks - (Cost $352,072,800) $433,415,523
------------
[See explanation of footnotes below]
Preferred Stocks - 0.3%
Glenborough Realty 7.75%
Convertible Preferred 5,260 $134,025
La Quinta Properties 9%
Series A Preferred 76,800 1,989,427
---------
Total Preferred Stocks - (Cost $1,759,375) 2,123,452
---------
Warrants - 0.0%
Air France ADW* 397,000 158,800
---------
Total Warrants - (Cost $627,260) 158,800
---------
Short-Term Investments - 36.2% Face Value Market Value
U. S. Treasury Bill due 9/1/05 $45,000,000 45,000,000
U. S. Treasury Bill due 9/8/05 50,000,000 49,970,675
U. S. Treasury Bill due 9/15/05 50,000,000 49,938,520
U. S. Treasury Bill due 9/29/05 15,000,000 14,961,855
U. S. Treasury Bill due 10/06/05 45,000,000 44,855,487
U. S. Treasury Bill due 10/13/05 40,000,000 39,846,308
-----------
Total Short-Term Investments
- (Cost $244,572,845) 244,572,845
-----------
Total Investments - 100.6%
- (Cost $599,032,280)# 680,270,620
-----------
Other Assets and Liabilities - (0.6)% (4,373,430)
-----------
Net Assets - 100.0% $675,897,190
============
Footnotes:
Definitions of Abbreviations:
SBI: Shares of Beneficial Interest
ADR: American Depository receipts
ADW: American Depositary Warrants
* Non-income producing securities
# Aggregate cost for tax purposes of $599,032,280
(1) Affiliated company - see Note 4
(2) Company is in liquidation and security is
being fair valued by the Board of Directors.
See accompanying notes to the financial statements.
Aegis Value Fund, Inc.
Statement of Assets and Liabilities
August 31, 2005
Assets
Investments in unaffiliated companies/securities
at market value (cost $421,614,221) $496,350,671
Investments in affiliated companies
at market value (cost $177,418,059) 183,919,949
-----------
Total investments at market value (cost $599,032,280) 680,270,620
Cash 1,164,918
Receivable for fund shares sold 101,621
Receivable for investment securities sold 226,075
Interest and dividends receivable 279,398
------------
Total assets 682,042,632
------------
Liabilities
Payable for investment securities purchased 1,615,220
Payable for fund shares redeemed 3,682,374
Payable to Investment Advisor 738,354
Payable to Administrator, Transfer Agent 87,008
Accrued expenses 22,486
----------
Total liabilities 6,145,442
----------
Net assets (36,802,134 shares of $0.001 par
value capital stock outstanding;
100,000,000 shares authorized) $675,897,190
============
Net assets consist of:
Capital stock at par value $36,802
Paid-in capital 550,451,729
Undistributed net investment income 2,918,408
Accumulated net realized gain 41,251,911
Net unrealized appreciation 81,238,340
------------
Net assets $675,897,190
============
Net asset value per share $18.37
======
See accompanying notes to the financial statements
Aegis Value Fund, Inc.
Statement of Operations
for the Year Ended August 31, 2005
Investment Income
Dividends from unaffiliated companies* $2,471,758
Dividends from affiliated companies 3,112,301
Interest 7,994,813
----------
Total income 13,578,872
----------
Expenses
Investment advisory fees 9,077,482
Transfer agency and administration fees 1,153,710
Registration fees 98,262
Custody fees 60,370
Printing and postage costs 70,462
Legal and accounting fees 119,291
Directors fees 29,918
Insurance and other 33,164
----------
Gross expenses 10,642,659
Less: fees paid indirectly (41,517)
Less: fees recaptured by investment advisor 59,322
----------
Net expenses 10,660,464
----------
Net investment income 2,918,408
----------
Realized and unrealized gain on investments
Net realized gain on investments
- unaffiliated companies 39,934,490
Net realized gain on investments
- affiliated companies 9,373,089
Change in unrealized appreciation of
investments for the year 17,107,138
----------
Net realized and unrealized gain
on investments 66,414,717
----------
Net increase in net assets resulting
from operations $69,333,125
===========
*Net of foreign tax withholdings of $6,089
See accompanying notes to the financial statements
Aegis Value Fund
Statement of Changes in Net Assets
For the Years Ended August 31
2005 2004
---- ----
Increase in net assets from
operations
Net investment income (loss) $ 2,918,408 ($1,809,863)
Net realized gain on investments 49,307,579 37,207,610
Change in unrealized appreciation 17,107,138 29,039,201
---------- ----------
Net increase in net assets
resulting from operations 69,333,125 64,436,948
---------- ----------
Distributions
Investment income - net - (288,823)
Realized capital gains (37,826,835) (10,802,270)
------------ -----------
Total distributions (37,826,835) (11,091,093)
------------ -----------
Capital share transactions*
Subscriptions 225,375,283 551,631,825
Distributions reinvested 34,350,915 10,198,864
Redemptions (317,572,328) (207,138,493)
------------- -------------
Total capital share
transactions (57,846,130) 354,692,196
------------- -------------
Total increase in net assets (26,339,840) 408,038,051
Net assets at beginning of year 702,237,030 294,198,979
------------ ------------
Net assets at end of year $675,897,190 $702,237,030
============ ============
Undistributed net investment
income at end of year $2,918,408 $0
============= ============
* - Share information
Subscriptions 12,438,936 32,480,885
Distributions reinvested 1,916,700 617,364
Redemptions (17,553,910) (12,158,873)
----------- -----------
Net increase (3,198,274) 20,939,376
=========== ===========
See accompanying notes to the financial statements
Aegis Value Fund, Inc.
Financial Highlights
For the Years Ended August 31
The table below sets forth the financial data for a share
of the Fund outstanding throughout each year presented:
2005 2004 2003 2002 2001
---- ---- ---- ---- ----
Per share data:
Net asset value
- beginning of
year $17.56 $15.44 $12.99 $12.12 $9.72
Income from investment operations-
Net investment
income (loss) 0.08 (0.06) 0.04 0.01(2) 0.09
Net realized and
unrealized gain on
investments 1.60 2.59 2.92 0.90 3.25
----- ----- ----- ----- -----
Total from
investment
operations 1.68 2.53 2.96 0.91 3.34
----- ----- ----- ----- -----
Less distributions declared to shareholders-
Net investment
income (0.00) (0.01) (0.02) --(3) (0.18)
Net realized
capital gains (0.87) (0.40) (0.49) (0.04) (0.76)
----- ----- ----- ----- -----
Total
distributions (0.87) (0.41) (0.51) (0.04) (0.94)
----- ----- ----- ----- -----
Net asset value
- end of year $18.37 $17.56 $15.44 $12.99 $12.12
====== ====== ====== ====== =====
Total investment
return 9.7% 16.6% 23.7% 7.5% 37.8%
Ratios (to average net assets)/supplemental data:
Expenses after reimbursement and
fees paid
indirectly (1) 1.41% 1.50% 1.50% 1.50% 1.50%
Expenses before reimbursement and
fees paid
indirectly 1.41% 1.51% 1.56% 1.54% 2.27%
Net investment
income (loss) 0.39% (0.34)% 0.31% 0.04% 0.89%
Portfolio turnover 29% 27% 15% 29% 10%
Net assets at end
of year (000's) $675,897 $702,237 $294,199 $154,707 $23,202
(1)Ratio after expense reimbursement/recapture, before fees paid
indirectly, is 1.42% in 2005, 1.50% in 2004, 1.51% in 2003,
1.52% in 2002 and 1.50% in 2001
(2)Based on average shares outstanding during the period
(3)Less than $0.01
See accompanying notes to the financial statements
Aegis Value Fund, Inc.
Notes to Financial Statements
August 31, 2005
1. The Organization
Aegis Value Fund, Inc. (the Fund) is registered under
the Investment Company Act of 1940 as a diversified
open-end management company. The Fund was incorporated
October 22, 1997 in the State of Maryland and commenced
operations May 15, 1998. The Fund principal investment
goal is to seek long-term capital appreciation by
investing primarily in common stocks that are believed to
be significantly undervalued relative to the market based
on company book value, revenues, or cash flow. Refer
to a current Prospectus for additional information about
the Fund.
2. Summary of Significant Accounting Policies
Security valuation:
Investments in securities traded on a national securities
exchange (or reported on the NASDAQ National Market) are
stated at the last reported sales price or a market
official close price on the day of valuation; other
securities traded in the over-the-counter market and
listed securities for which no sale was reported on that
date are stated at the last quoted bid price, or the
average of bid and ask price for NASDAQ National Market
securities. Short-term notes are stated at amortized
cost, which is equivalent to value. Restricted securities
and other securities for which market quotations are not
readily available are valued at fair value as determined
by the Advisor under the supervision of the Board of
Directors. The valuation assigned to fair valued securities
for purposes of calculating the Fund s NAV may differ from
the security s most recent closing market price and from the
prices used by other mutual funds to calculate their NAVs.
Federal income taxes:
The Fund s policy is to continue to comply with the
requirements of the Internal Revenue Code that are
applicable to regulated investment companies and to
distribute all its taxable income to shareholders.
Therefore, no federal income tax provision is required.
Expenses paid indirectly:
Credits earned on temporarily uninvested cash balances
at the custodian are used to reduce the Fund s custody
charges. Custody expense in the statement of operations
is presented before the reduction for credits, which
were $41,517 for the year ended August 31, 2005.
Distributions to shareholders:
Distributions to Fund shareholders, which are determined
in accordance with income tax regulations, are recorded
on the ex-dividend date. Distributions of net investment
income, if any, are made at least annually. Net realized
gains from investment transactions, if any, will be
distributed to shareholders at least annually.
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 at the date of the
financial statements and the reported amounts of
revenues and expenses during the period. Actual
results could differ from those estimates.
Other:
The Fund records security transactions based on the
trade date. Dividend income is recognized on the
ex-dividend date, and interest income is recognized
on the accrual basis and includes accretion of
discounts and amortization of premiums.
Withholding taxes on foreign dividends have been
provided for in accordance with the Fund s
understanding of the applicable country s tax rules
and rates.
In the normal course of business, the Fund enters
into contracts that contain a variety of
representations, which provide general
indemnifications. The Fund maximum exposure
under these arrangements is unknown as this would
involve future claims that may be made against the
Fund that have not yet occurred. However, based on
experience, the Fund expects the risk of loss to be
remote.
3. Advisory Fees and Other Transactions with Affiliates
The Fund entered into an investment management and
advisory services agreement (the Agreement) with
Aegis Financial Corporation (the Advisor) that provides for
fees to be computed at an annual rate of 1.20% of the Fund s
average daily net assets. The Agreement provides for an
expense reimbursement from the Advisor if the Fund expenses,
exclusive of taxes, interest, fees incurred in acquiring or
disposing of portfolio securities, and extraordinary
expenses, exceed 1.50% of the Fund s average daily
net assets. The Agreement shall remain in force
through March 31, 2006. Either party may terminate the
Agreement anytime upon sixty (60) days written notice to
the other party. During the year ended August 31, 2005,
there were no Advisor reimbursements.
As part of the expense limitation agreement, the Fund has
agreed to repay the Advisor for amounts waived or reimbursed
by the Advisor provided that such repayment does not cause the
Fund expenses, exclusive of taxes, interest, fees incurred in
acquiring or disposing of portfolio securities, and extraordinary
expenses, to exceed 1.50% and the repayment is made within three
years after the year in which the Advisor incurred the expense.
The Advisor recaptured previously reimbursed amounts of $59,322
during the year ended August 31, 2005. There are no remaining
allowable recapturable amounts as of that date.
The Fund has an agreement with BGB Fund Services, Inc. to provide
fund accounting, administration, transfer agency and shareholder
services to the Fund for a fee of 0.25% on Fund average daily
net assets up to $200 million and 0.10% on Fund assets in excess
of $200 million.
BGB Securities, Inc., a registered broker/dealer, executes
portfolio transactions on behalf of the Fund. Brokerage
commissions paid to BGB Securities amounted to $272,406 for the
year ended August 31, 2005.
Certain officers and directors of the Fund are also officers and
directors of the Advisor, BGB Fund Services, Inc. and
BGB Securities, Inc. The Fund pays each director not affiliated
with the Advisor fees in cash or Fund shares of $1,000 for each
attended board meeting and $500 for each attended committee meeting.
4. Investment Transactions
Purchases and sales of investment securities were $163,299,869
and $115,034,410 respectively, for the year ended August 31, 2005.
The specific identification method is used to determine tax cost
basis when calculating realized gains and losses.
5. Distributions to Shareholders and Tax Components of Net Assets
The tax character of distributions paid during
the years ended August 31, 2005 and 2004 were
as follows:
2005 2004
Distribution paid from:
Ordinary income $3,913,122 $2,164,116
Long-term capital gain 33,913,713 8,926,977
---------- ----------
$37,826,835 $11,091,093
=========== ==========
As of August 31, 2005, the components of net assets on a tax
basis were as follows:
Undistributed ordinary income $ 4,407,057
Undistributed long-term gain 39,763,262
Unrealized appreciation 119,009,805
Unrealized depreciation (37,771,465)
Shares of capital stock 550,488,531
-----------
Total $ 675,897,190
============
Temporary book/tax differences are a result of differing
treatments of short-term capital gains.
6. Investments in Affiliated Companies
An affiliated company is a company in which the Fund has ownership
of at least 5% of the voting securities. Companies which are
affiliates of the Fund at fiscal year-end are noted in the Fund s
schedule of portfolio investments. Transactions during the period
with companies which are or were affiliates are as follows:
Value Value
Beginning Sales Dividend End
of Period Purchases Proceeds Income of Period
Alliance
One Intl. $13,668,088 $21,500,555 - $996,427 $25,595,600
American
Pacific
Corp. 4,995,478 - - - 4,204,248
AmNet
Mortgage
Inc. 2,836,743 986,145 - - 4,820,802
Books
- -A-
Million,
Inc. 5,951,636 454,977 - 160,547 9,450,480
Calif.
Fst. Natl.
Bank Corp. 6,947,140 585,919 - 1,247,293 7,801,542
CPAC,
Inc. 1,617,572 - - 85,959 1,458,241
Delta
Woodside
Indust
- -ries 385,830 - - - 325,812
Dominion
Homes,Inc. - 14,376,390 - - 13,944,000
Enesco
Group - 4,386,196 - - 1,887,768
Imperial
Sugar 7,857,670 7,281,204 - 130,852 14,278,250
Lubys,
Inc.* 13,209,950 42,588 12,916,895 - 13,892,488
MIIX
Group
Inc. 126,000 - - - 9,720
Pemstar
Inc. - 4,297,259 - - 3,261,601
PMA
Capital
Corp. Cl.A 11,343,105 7,783,212 - - 23,532,582
Prime
Realty
Group
Trust 12,390,938 - 15,650,575 - -
Quaker
Fabric
Corp. 5,704,324 3,331,781 - - 5,152,000
Quipp,
Inc. 1,054,701 - - - 959,175
Ryerson
Tull Inc. 15,170,098 8,269,904 - 228,265 35,127,508
SCPIE
Holdings 8,716,500 - - - 13,708,500
Sea Containers
Ltd. Cl. A 8,018,500 16,770,147 - 99,018 18,402,120
Standard
Commercial
Corp. 14,333,040 - 15,278,148 163,940 -
--------- --------- ---------- -------- ----------
Total $134,327,313 $90,066,277 $43,845,618 $3,112,301 $197,812,437
=========== =========== ========== ========== ===========
* No longer an affiliate at August 31, 2005.
7. Change of Independent Registered Public Accounting Firm
On July 28, 2004, Briggs, Bunting & Dougherty, LLP (BBD) was
selected to replace PriceWaterhouseCoopers LLP (PWC) as the
Fund's independent registered public accounting firm for the
2004 fiscal year. The Trust's selection of BBD was approved by
both the Audit Committee and the Board of Directors.
PWC had served as the principal independent registered public
accounting firm for the years ending August 31, 2003 and 2002.
PWC's report on the Fund's financial statements as of August 31,
2003 did not contain an adverse opinion or a disclaimer of
opinion and was not qualified or modified as to uncertainty,
audit scope or accounting principles. At the financial
statements' date and through the date of the engagement of BBD,
there were no disagreements between the Fund and PWC on any
matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedures, which
such disagreements, if not resolved to the satisfaction of PWC,
would have caused it to make reference to the subject matter
of the disagreement in connection with its reports on the
financial statements for such years.
Report Of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
Aegis Value Fund, Inc.
We have audited the accompanying statement of assets and
liabilities of Aegis Value Fund, Inc., including the schedule
of portfolio investments, as of August 31, 2005, and the
related statement of operations for the year then ended and the
statement of changes in net assets and the financial highlights
for each of the two 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. The financial
highlights for each of the three years in the period ended
August 31, 2003 have been audited by other auditors, whose
reports dated October 24, 2003 and September 21, 2001 expressed
an unqualified opinion on such financial highlights.
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. Our procedures included
confirmation of securities owned as of August 31, 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 audits provide 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 Aegis Value
Fund, Inc. as of August 31, 2005, the results of its
operations for the year then ended and the changes in its net
assets and its financial highlights for each of the two years
in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
Briggs, Bunting & Dougherty, LLP
Philadelphia, Pennsylvania
September 29, 2005
Aegis Value Fund, Inc.
Fund Directors and Secretary
August 31, 2005
Fund Directors
Business Experience
and Directorships
Name, Age and Address Position During the Past 5 Years
- --------------------- -------- -----------------------
William S. Berno*(51) President, President and Managing
1100 North Glebe Road Director Director of Aegis Financial
Suite 1040 Corporation since 1994;
Arlington, VA 22201 President and Trustee of the
Aegis Funds since 2003;
President and Director of
the Fund since 1997.
Scott L. Barbee*(34) Treasurer, Treasurer and Managing
1100 North Glebe Road Director Director of Aegis Financial
Suite 1040 Corporation since 1997;
Arlington, VA 22201 Treasurer and Trustee of the
Aegis Funds since 2003;
Treasurer and Director of
the Fund since 1997.
Edward P. Faberman(59) Director Attorney with the firm of
Wiley Rein & Fielding LLP Wiley Rein & Fielding LLP since
1776 K Street N.W. 2005; Attorney with the firm of
Washington, DC 20006 Ungaretti & Harris 1996-2005;
Trustee of the Aegis Funds since
2003; Director of the Fund since
1997.
Eskander Matta(35) Director Senior VP of Enterprise Internet
Wells Fargo & Co. Services, Wells Fargo & Co.
550 California Street since 2002; Director of
2nd Floor Strategic Consulting with
San Francisco, CA Cordiant Communications,
94111 2001-2002; Director of
Strategic Consulting,
Organic, Inc. 1999-2001;
Trustee of the Aegis Funds since
2003; Director of the Fund
since 1997.
Albert P.
Lindemann III(43) Director Director, Faison
Faison Enterprises Enterprises, since 2000;
121 West Trade Street Trustee of the Aegis Funds
Suite 2550 since 2003; Director of the Fund
Charlotte, NC 28202 since 2000.
Fund Secretary
Paul Gambal*(46) Secretary Chairman, Secretary and
1100 North Glebe Road Managing Director of
Suite 1040 Aegis Financial Corporation
Arlington, VA 22201 since 1994; Secretary
of the Aegis Funds since 2003;
Secretary of the Fund since
1997.
* Indicates persons who are affiliated with Aegis Financial
Corporation, the Fund investment advisor, and are
therefore considered to be interested persons under the
Investment Company Act of 1940, Section (2)(a).
The Fund Statement of Additional Information includes
additional information about Fund directors and is available,
without charge, by calling the Fund toll-free phone number,
(800)528-3780.
Shareholder Tax Information
Certain tax information regarding the Fund is required to be
provided to shareholders based upon the Fund s income and
distributions for the taxable year ended August 31, 2005. The
information and distributions reported herein may differ from
information and distributions taxable to the shareholders for
the calendar year ended December 31, 2004.
During the fiscal year ended August 31, 2005, the Fund paid
distributions per share of $0.09 and $0.78 for ordinary income
and long-term capital gains, respectively. During the fiscal
year ended August 31, 2005, the Fund paid distributions from
ordinary income and long-term capital gains of $3,913,122 and
$33,913,713, respectively.
Fund Holdings
The complete schedules of Fund holdings for the second and fourth
quarters of each fiscal year are contained in the Fund semi-annual
and annual shareholder reports, respectively. The Fund files
complete schedules of Fund holdings with the SEC for the first
and third quarters of each fiscal year on Form N-Q within 60 days
after the end of the period. Copies of the Fund s Form N-Q are
available without charge, upon request, by contacting the Fund at
(800)528-3780 and on the SEC website at http://www.sec.gov. You
may also review and copy Form N-Q at the SEC Public Reference
Room in Washington, D.C. For more information about the
operation of the Public Reference Room, please call the SEC
at 1-800-SEC-0330.
Code of Ethics
The Fund has adopted a code of ethics applicable to its
principal executive officer and principal financial officer.
A copy of this code is available without charge by calling the
Fund toll-free phone number, (800)528-3780.
Proxy Voting
A description of the policies and procedures that the Fund uses
to determine how to vote proxies relating to portfolio securities
is available, without charge, by calling the Fund toll-free
phone number, (800)528-3780.
Board Consideration of Investment Advisory Agreement
The Investment Advisory Agreement between the Fund and the
Advisor was most recently renewed at a meeting of the Board held
on February 25, 2005. Unless terminated as specified in the
Investment Advisory Agreement, the Investment Advisory
Agreement continues in effect for successive periods of twelve
months, provided such continuance is specifically approved at
least annually (a) by the vote of a majority of the Independent
Directors, cast in person at a meeting called for the purpose
of voting on such approval, and (b) by the Board of Directors
or by vote of a majority of the outstanding voting securities
of the Fund. In connection with its consideration of the
adoption of the Investment Advisory Agreement, the Board of
Directors requested, and the Advisor provided, information and
data relevant to the Board s consideration. The Board reviewed
information on expense ratios and management fees for certain
comparable funds. The Board discussed the proposed advisory
fee of 1.20% of the Fund s average daily net assets and the
Expense Limitation Agreement between the Fund and the
Advisor, pursuant to which the Advisor has agreed through
December 31, 2005 to limit its fee and/or reimburse other
expenses of the Fund to the extent necessary to limit the
total operating expenses of the Fund to an annual rate of
1.50% (as a percentage of the average daily net assets of
the Fund). The Board agreed that the proposed fee structure
is reasonable and fair to shareholders. They reviewed the past
performance of the Fund and the Advisor, and noted the range of
investment advisory and administrative services to be provided
by the Advisor to the Fund. The Board took note of the fact
that the Advisor has also served as investment advisor to another
mutual fund affiliated with the Fund and they noted the level
and quality of service provided by the Advisor to that fund.
They also took note of the fact that the Fund is not subject
to sales charges or Rule 12b-1 fees. Based upon their review
and consideration of these factors and other matters deemed
relevant by the Board in reaching an informed business
judgment, a majority of the Board of Directors, including a
majority of the Independent Directors, concluded that the
terms of the Investment Advisory Agreement are fair and
reasonable and the Board voted to approve the agreement.
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
Aegis Financial Corporation
1100 North Glebe Road, Suite 1040
Arlington, Virginia 22201
Custodian
UMB Bank, n.a.
928 Grand Boulevard
Kansas City, Missouri 64106
Independent Auditors
Briggs, Bunting & Dougherty, LLP
Two Penn Center Plaza, Suite 820
Philadelphia, PA 19102-1732
Counsel
Seward & Kissel LLP
1200 G Street N.W.
Washington, DC 20005
ITEM 2. CODE OF ETHICS
(a)The Registrant, as of the end of the period covered by this report,
has adopted a code of ethics that applies to the Registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the
Registrant or a third party.
(b)There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
Registrants principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are
employed by the Registrant or a third party, and that relates to any
element of the code of ethics description.
(c)The Registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
Registrants principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the Registrant or a third party, that relates to one or more of the
items set forth in paragraph (b) of this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1)The Registrant does not have an audit committee financial expert
serving on its audit committee.
(a)(2)Not applicable.
(a)(3)Registrants Audit Committee has determined that it will retain
the services of an independent expert when and if such need arises.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) AUDIT FEES: The aggregate fees billed for each of the last two fiscal
years for professional services rendered by the principal accountant for
the audit of the registrant 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 are
$17,500 in 2005 and $17,500 in 2004.
(b) AUDIT-RELATED FEES: The aggregate fees billed in each of the last two
fiscal years for assurance and related services by the principal accountant
that are reasonably related to the performance of the audit of the
registrant financial statements and are not reported under
paragraph (a) of this Item are NONE.
(c) TAX FEES: The aggregate fees billed in each of the last two fiscal
years for professional services rendered by the principal accountant for
tax compliance, tax advice, and tax planning are $1,500 in 2005
and $1,500 in 2004.
Tax Fees represent tax compliance services and tax consultation provided
in connection with the preparation of the Registrants federal
income tax and excise tax returns and compliance with IRS regulations.
(d) ALL OTHER FEES: The aggregate fees billed in each of the last two
fiscal years for products and services provided by the principal
accountant, other than the services reported in
paragraphs (a) through (c) of this Item are NONE.
(e)(1) Disclose the audit committee pre-approval policies and
procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
Audit Committee Pre-Approval Policy. All services to be performed for
the Registrant by Briggs Bunting & Dougherty, LLP must be pre-approved by
the audit committee. All services performed during 2004 and 2005 were
pre-approved by the committee.
(e)(2) The percentage of services described in each of
paragraphs (b) through (d) of this Item that were approved by the
audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of
Regulation S-X are as follows:
(b) Not applicable
(c) 100%
(d) Not applicable
(f) The percentage of hours expended on the principal accountant s
engagement to audit the registrant s financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant s full-time, permanent
employees was NONE.
(g) The aggregate non-audit fees billed by the registrant s accountant
for services rendered to the registrant, and rendered to the registrant s
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under
common control with the adviser that provides ongoing services to the
registrant for each of the last two fiscal years of the registrant
was $12,000 in 2005 and NONE in 2004.
(h) The registrant s audit committee of the board of directors has
considered whether the provision of non-audit services that were rendered
to the registrant s investment adviser (not including any sub-adviser
whose role is primarily portfolio management and is subcontracted
with or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the investment
adviser that provides ongoing services to the registrant that were not
pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X is compatible with maintaining the principal
accountant s independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Investments in securities of unaffiliated issuers is included as part
of the report to stockholders filed under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANY AND AFFILIATED PURCHASERS
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 10. CONTROLS AND PROCEDURES
(a)The registrant s principal executive officer and principal
financial officer have concluded that the registrant disclosure
controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940, as amended) are effective based on
their evaluation of these controls and procedures as of a date
within 90 days of the filing date of this document.
(b)There were no changes in the registrant s internal controls over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act)
that occurred during the registrant last fiscal half-year (the
registrant second fiscal half-year in the case of an annual report)
that has materially affected, or is reasonably likely to materially
affect, the registrant s internal control over financial reporting.
Item 11. Exhibits.
(a)(1) Code of ethics, or any amendment thereto, that is the subject
of disclosure required by Item 2 is attached hereto.
(a)(2) Certifications pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 are attached hereto.
- --------------------------------------------------------------------------------
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)Aegis Value Fund, Inc.
By (Signature and Title)* /s/William S. Berno
William S. Berno, President
Date: November 2, 2005
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/William S. Berno
William S. Berno, President
Date: November 2, 2005
By (Signature and Title)* /s/Scott L. Barbee
Scott L. Barbee, Treasurer
Date: November 2, 2005