UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number: 811-21576
Stock Dividend Fund, Inc.
(Exact name of registrant as specified in charter)
8150 N. Central Expressway #101 Dallas, Texas 75206
(Address of principal executive offices)
Laura S. Adams
8150 N. Central Expressway #101 Dallas, Texas 75206
(Name and address of agent for service)
Registrants telephone number, including area code: 800-704-6072
Date of fiscal year end: December 31
Date of Reporting Period: June 30, 2007
Item 1. Report to Shareholders.
STOCK DIVIDEND FUND, INC.
SEMI-ANNUAL REPORT
JUNE 30, 2007
Stock Dividend Fund, Inc.
8150 N. central Expressway #101
Dallas, Texas 75206
1-800-704-6072
Dear shareholders of Stock Dividend Fund, Inc.,
The Fund ended the first six months of 2007 with a Net Asset Value per
share of $28.25, up from a Net Asset Value per share of $24.87 at the
beginning of the year.
For the period December 31, 2006 through June 30, 2007 the Fund's total
return was 13.59% versus the S&P 500 of 6.96%.
We look forward to completing another year with excellent absolute and
relative returns utilizing our value strategy.
Sincerely,
Steven Adams
Portfolio Manager
STOCK DIVIDEND FUND, INC.
EXPENSES
JUNE 30, 2007
As a shareholder of the Fund you incur ongoing costs including
management fees and other operating 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. This example is based on an investment of
$1,000 invested at the beginning of the period and held for the entire
six month period of December 31, 2006 to June 30, 2007.
Actual Expenses
The first line of the table below provides information about actual
account values and actual expenses. You may use the information in
this line, together with the amount you invested at the beginning of
the period, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,500
account value divided by $1,000 equals 8.5), then multiply this result
by the number in the first line under the heading "Expenses Paid During
Period" to estimate the expenses you paid on your account during the
period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about
hypothetical account values and hypothetical expenses based on the
Fund's actual expense ratio and an assumed rate of return of 5% per
year before expenses, which is not the Fund's actual return. The
hypothetical account values and expenses may not be used to estimate
the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing
in the Fund to other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the
shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight
your ongoing costs only and do not reflect any transactional costs such
as sales charges (loads), redemption fees, or exchange fees.
Therefore, the second line of the table is useful in comparing ongoing
costs only.
Expenses Paid
Beginning Ending During Period*
Account Value Account Value December 31, 2006
December 31, 2006 June 30, 2007 to June 30, 2007
----------------- ------------- -----------------
Actual $ 1,000 $ 1,135.91 $ 4.50
Hypothetical** $ 1,000 $ 1,020.75 $ 4.26
*Expenses are equal to the Fund's annualized expense ratio of 0.85%,
multiplied by the average account value over the period, multiplied by
181 days/365 days to reflect the one-half year period.
** Hypothetical return assumes 5% return before expenses.
STOCK DIVIDEND FUND, INC.
STATEMENTS OF ASSETS AND LIABILITIES (Unaudited)
JUNE 30, 2007
ASSETS
Investment securities, at
fair value(cost $9,652,719) $ 11,432,988
Cash 289,133
Dividends Earned 25,776
Accrued Interest 771
-----------
Total assets 11,748,668
-----------
LABILITIES
Advisory fees payable 8,033
-----------
Total liabilities 8,033
-----------
NET ASSETS -
(Equivalent to $28.25 per
share based on 415,670 shares
of common stock issued and outstanding;
100,000,000 shares authorized,
$0.001 par value $ 11,740,635
============
NET ASSETS CONSIST OF:
Common stock $ 416
Paid-in capital 9,634,079
Net unrealized appreciation
of investments 1,779,795
Undistributed net investment income 133,007
Undistributed net realized gain on
investments 193,338
- ------------
Net assets $ 11,740,635
============
See accompanying notes to these financial statements.
STOCK DIVIDEND FUND, INC.
SCHEDULE OF INVESTMENTS (Unaudited)
JUNE 30, 2007
DESCRIPTION SHARES VALUE
- ----------- ------ ------------
COMMON STOCKS ? 97.38%
Capital Goods - 27.26%
Caterpiller 7541 $ 590,460
Dow Chemical 9086 401,783
Eastman Chemical 2649 170,410
Freeport McMoran Copper 9000 745,380
Lousiana Pacific 20795 393,441
Olin Corp 27045 567,945
Paccar 2452 213,422
PPG Industries 1539 117,133
--------
3,199,974
Consumer Discretionary - 7.00% --------
Masco 10978 312,544
Polaris 2855 154,627
Supervalue 2700 125,064
Whirlpool 2065 229,628
--------
821,863
Consumer Staples - 20.66% --------
Altria 4585 321,592
Belo 11700 240,903
Deluxe Corp 6724 273,062
Kraft 11172 393,813
Universal Corp 8956 545,600
U.S. Tobacco 12120 650,965
--------
2,425,935
Energy - 10.09% --------
Chevron Corp 2531 213,211
ConocoPhillips 7703 604,685
Petro China 2466 366,645
--------
1,184,541
Financial - 14.45% --------
Bank of America 9790 478,633
First Horizon 7472 291,408
Huntington Bancshares 12000 272,880
J.P. Morgan 1920 93,024
Washington Mutual 13153 560,844
--------
1,696,789
- - Continued -
STOCK DIVIDEND FUND, INC.
SCHEDULE OF INVESTMENTS, continued
JUNE 30, 2007
DESCRIPTION SHARES VALUE
- ----------- ------ ------------
Healthcare/Pharmaceutical - 5.14%
Merck 3595 $ 178,882
Pfizer 16606 424,615
--------
603,497
--------
Technology/Telecommunications - 6.37%
New Zealand Telecom 18450 515,124
Verizon 5641 232,240
--------
747,364
--------
Utilities - 6.41%
DTE Energy 2499 120,502
Hawaiian Electric 26700 632,523
--------
753,025
--------
Total common stocks (cost $9,652,719) 11,432,988
--------
SHORT-TERM INVESTMENTS - 2.46%
Schwab Value Advantage Money Fund
(cost $289,133) 289,133
--------
Total short-term investments (cost $289,133 ) 289,133
--------
Total investment securities - 99.84% (cost$9,941,852) 11,722,121
Other assets less liabilities - 0.16% 18,512
--------
Net assets - 100.00% $ 11,740,635
============
See accompanying notes to these financial statements.
STOCK DIVIDEND FUND, INC.
STATEMENT OF OPERATIONS (Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 2007
INVESTMENT INCOME:
Dividends $ 175,365
Interest 2,373
Accrued Interest 771
------------
Total investment income 178,509
EXPENSES -
Advisory fees 41,697
Misc fees,foreign tax paid 3,034
--------
44,731
Net investment income 133,778
------------
GAINS ON INVESTMENTS -
Net realized gain on investments 193,338
Net change in unrealized appreciation of securities 917,548
------------
Net realized and unrealized gain on investments 1,110,886
- ------------
Net increase in net assets resulting from operations $ 1,244,664
============
See accompanying notes to these financial statements.
STOCK DIVIDEND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS (Unaudited)
Six Months Ended Year Ended
June 30, 2007 Dec. 31, 2006
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 133,778 $ 122,953
Net realized gain on investments 193,338 64,395
Net change in unrealized appreciation
of securities 917,548 782,190
----------- ------------
Net increase in net assets
resulting from operations 1,244,664 969,538
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income & realized gains 0 (187,348)
----------- ------------
Total Distributions 0 (187,348)
CAPITAL SHARE TRANSACTIONS 3,014,940 4,044,631
----------- ------------
TOTAL INCREASE IN NET ASSETS 4,259,604 4,826,821
NET ASSETS, beginning of period 7,481,031 2,654,210
----------- ------------
NET ASSETS, end of period 11,740,635 $ 7,481,031
=========== ============
See accompanying notes to these financial statements.
STOCK DIVIDEND FUND, INC.
FINANCIAL HIGHLIGHTS
PER SHARE DATA AND RATIOS FOR A SHARE OUTSTANDING THROUGHOUT EACH
PERIOD ENDING:
(Unaudited)
6 Mo. Ended Year Ended Year Ended Year Ended
6/30/07 12/31/06 12/31/05 12/31/04 (a)
-------- -------- -------- --------
Net asset value,
beginning of period $ 24.87 $21.05 $ 20.19 $ 20.08
-------- -------- -------- --------
Income from investment
operations:
Net investment income 0.36 0.56 0.48 .03
Net realized and unrealized
gains(losses) on investments 3.02 3.90 0.86 .11
-------- -------- -------- --------
Total income from
investment operations 3.38 4.46 1.34 .14
Less distributions from:
net investment income 0.00 (0.58) (0.37) (0.03)
net realized gains 0.00 (0.06) (0.11) (0.00)
-------- ------ -------- --------
(0.64) (0.48) (0.03)
Net asset value,
end of period $ 28.25 $ 24.87 $ 21.05 $ 20.19
======== ======== ======= ========
Total Return 13.59% 21.19% 6.65% 0.68%(d)
Net assets, end of period
(000's omitted) $11,740 $ 7,481 $ 2,654 $ 504
Ratio of expenses to average
net assets (b) (c) 0.88% 0.86% 0.85% 1.25%(a)
Ratio of net investment income to
average assets (b) 2.63% 2.83% 2.60% 11.73%
Portfolio turnover
rate (annualized) 12.0% 6.35% 32.85% 0.00%
(a) Represents the period from December 27, 2004 (date investment
operations commenced) through December 31, 2004.
(b) Per share data has been annualized for period ending 6/30/07.
(c) The Fund's actual expenses are calculated daily at 0.85% of net
asset value (NAV). On 1/1/05, the expenses were reduced from
1.25% to 0.85% annually.
(d) Total return for 2004 (4 days) is not annualized.
See accompanying notes to these financial statements.
STOCK DIVIDEND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Stock Dividend Fund, Inc. (the "Fund") was incorporated in the
State of Texas on April 06, 2004 and is registered under the
Investment Company Act of 1940 as a non-diversified, open-end
management investment company. The investment objective of the
Fund is to achieve growth and income by investing primarily in
dividend paying common stocks. The Fund had no operations until
June 11, 2004, when it sold 7,500 shares of its common stock to its
original shareholder, Mrs. Laura S. Adams. Investment operations
commenced on December 27, 2004. The effective date of the Fund's
registration with the SEC was November 29, 2004.
2. SIGNIFICANT ACCOUNTING POLICIES
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 increases and
decreases in net assets from operations during the reporting
period. Actual results could differ from these estimates.
Security Valuation
Securities listed on a national securities exchange or in the over-
the-counter market are valued at the last quoted sales price on the
day of valuation, or if no quoted sales price was reported on that
date, the last quoted bid price. Short-term investments are valued
at cost which approximates fair value. Securities for which
quotations are not readily available are valued at their estimated
fair value as determined in good faith by the Fund's Board of
Directors.
Securities Transactions and Investment Income
Securities transactions are recorded on a trade-date basis.
Dividend income is recorded on the ex-dividend date and interest
income is recorded on the accrual basis. Realized gains and losses
are determined on a specific identification basis of the securities
sold. Unrealized gains and losses resulting from the appreciation
and depreciation of securities carrying values are included in the
statements of operations.
Distribution of Income and Gains
The Fund declares and pays dividends annually from net investment
income and from net realized gains, if any. Distributions from
realized gains for book purposes may include short-term capital
gains, which are included in ordinary income for tax purposes.
STOCK DIVIDEND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Federal Income Taxes
The Fund's policy is to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment
companies and to distribute all of its taxable income, including
any realized gains on investments, to its shareholders. Therefore,
no federal income tax provision is required.
Net investment income (loss), net realized gains (losses) and the
cost of investments in securities may differ for financial
statement and income tax purposes. The character of distributions
from net investment income or net realized gains may differ from
their ultimate characterization for income tax purposes. At June
30, 2007, there were no material differences. Also, due to the
timing of dividend distributions, the fiscal year in which amounts
are distributed may differ from the year that the income or
realized gains were recorded by the Fund.
3. CAPITAL SHARE TRANSACTIONS
Capital Share transactions in the Fund's $0.001 par value common
stock were as follows:
Period from
December 31, 2006
through June 30, 2007
-------------------
Shares Amount
Shares sold 114,923 $3,014,940
Shares issued in
reinvestment of
dividends 0 0
------ --------
Net increase 114,923 3,014,940
Beginning of period 126,079 6,618,784
------ --------
End of period 415,670 $9,633,724
======= ==========
4. INVESTMENT TRANSACTIONS
The cost of purchases and proceeds from sales of investment
securities, excluding short-term investments, aggregated $4,038,686
and $1,170,853, respectively, for the period ended June 30, 2007.
The aggregate cost of investment securities for federal income tax
purposes was $9,652,719 as of June 30, 2007.
5. DISTRIBUTION TO SHAREHOLDERS
There have been no distributions in 2007 as of June 30, 2007.
STOCK DIVIDEND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
6. ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund and the Advisor are under common control and the existence
of that control may create operating results and financial position
different than if they were autonomous.
The Fund has entered into an agreement with Adams Asset Advisors,
LLC (the "Advisor") to provide investment advisory services to the
Fund. Laura S. Adams is the managing member of the Advisor and is
an officer, director and shareholder of the Fund. Under the terms
of the agreement, the Fund will pay the Advisor a monthly fee at
the annual rate of 0.85% of the Fund's average daily net assets.
The fee is computed daily and payable monthly. The Advisor has
contractually agreed to pay all operating expenses of the Fund,
except brokerage fees and commissions, interest, taxes and
extraordinary expenses.
The Advisor acts as the transfer agent for the Fund.
Proxy Voting Information
Stock Dividend Fund, Inc. management is responsible for exercising the
voting rights associated with the securities held by the Fund. A
description of our philosophy on fulfilling this responsibility is
available without charge, upon request, by calling 1-800-704-6072.
Board of Directors Information
Name and Age Position Term Principal Occupation Other Public
Past five years Directorships
- ------------------- -------- ---- --------------------- -------------
INDEPENDENT DIRECTORS
Vicky L. Hubbard Director 1 Yr Private investor Alpha Hedge
Age 47 since 2000, Tech Co. Fund, Small
Manager prior Cap Value
Fund
Yolawnde F. Malone Director 1 Yr Tax Mngr-Cain Waters, Alpha Hedge
Age 43 Tolleson Wealth Mgmt Fund, Small
prior, Self Emp Tax Cap Value
Consultant prior Fund
Melissa D. Gordon, Director 1 Yr Pathologist, North Alpha Hedge
M.D. Dallas Pathology Fund, Small
Age 43 Cap Value
Fund
INTERESTED DIRECTORS
Laura S. Adams Director, 1 Yr President, Adams Alpha Hedge
Age 45 President Asset Advisors Fund, Small
Secretary Cap Value
Treasurer Fund
Item 2. Code of Ethics. The registrant, as of the end of the period
covered by this report, has adopted a code of ethics that applies to
all officers and employees of the Fund. The registrant has not made
any amendments to its code of ethics or granted any waivers or
exceptions to the code during the covered period.
Item 3. Audit Committee Financial Expert. The entire Board of
Directors, in effect, acts as the audit committee. The Board has two
financial experts serving on the Board. Laura Adams and Yolawnde
Malone are the financial experts. Mrs. Adams is an "interested"
Director and Mrs. Malone is an "independent" Director.
Item 4. Principal Accountant fees and services. As part of the
Registrants contract with the Investment Advisor of the Fund, the
Investment Advisor is responsible for paying all accountant and related
audit fees as part of the Advisory fee paid by the Fund.
Item 5. Audit Committee of listed Registrants. (Not applicable for
semi-annual reports)
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)
Item 8. Portfolio Managers of Closed-End Management Investment
Companies. Not Applicable to open-end investment companies.
Item 9. Purchase of equity securities by closed-end management
investment companies. (Not applicable)
Item 10. Submission of Matters to a vote of security holders. (None)
Item 11. Controls and Procedures
a) The Fund's President has concluded that the Fund's disclosure
controls and procedures are sufficient to ensure that information
required to be disclosed by the Fund in this Form N-CSR was
recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and
forms, based upon such officers' evaluation of these controls and
procedures as of a date within 90 days of the filing date of the
report.
b) There were no significant changes or corrective actions with
regard to deficiencies or material weaknesses in the Fund's internal
controls or in other factors that could significantly affect the
Fund's internal controls subsequent to the date of their evaluation.
Item 12. Exhibits.
a) (1)Code of Ethics-Not applicable for semi-annual reports.
(2)Certifications pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002- Attached
b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002- Attached
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.
Stock Dividend Fund
By /s/ Laura S. Adams
- --------------------------------------
Laura S. Adams
President
Principal Executive Officer and Principal Financial Officer
Date 8/01/07
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 dates indicated.
Stock Dividend Fund
By /s/ Laura S. Adams
- --------------------------------------
Laura S. Adams
President
Principal Executive Officer and Principal Financial Officer
Date 8/01/07