-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RCUF3NXrqJAZlmPDvL08me2wrjSuV/4oW/HRtmzXxHPlhIW+TDzvHrhPmnc1lPmB McEgUYXaUngw6+ncQTU9GA== 0000909012-04-000630.txt : 20040903 0000909012-04-000630.hdr.sgml : 20040903 20040903130106 ACCESSION NUMBER: 0000909012-04-000630 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040903 DATE AS OF CHANGE: 20040903 EFFECTIVENESS DATE: 20040903 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MATRIX ADVISORS VALUE FUND INC CENTRAL INDEX KEY: 0000720498 IRS NUMBER: 222457376 STATE OF INCORPORATION: MD FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-03758 FILM NUMBER: 041016060 BUSINESS ADDRESS: STREET 1: 2020 EAST FINANCIAL WAY, SUITE 100 CITY: GLENOORA STATE: CA ZIP: 91741 BUSINESS PHONE: 2124862004 MAIL ADDRESS: STREET 1: 560 HUDSON ST CITY: HACKENSACK STATE: NJ ZIP: 07601 FORMER COMPANY: FORMER CONFORMED NAME: MATRIX/LMH VALUE FUND DATE OF NAME CHANGE: 19980903 FORMER COMPANY: FORMER CONFORMED NAME: LMH FUND LTD DATE OF NAME CHANGE: 19920703 N-CSR 1 t301257.txt MATRIX ADVISORS VALUE FUND, INC. As filed with the Securities and Exchange Commission on September 2, 2004 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 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, 2004 ------------- Date of reporting period: JUNE 30, 2004 ------------- ITEM 1. REPORT TO STOCKHOLDERS. ANNUAL REPORT MATRIX ADVISORS VALUE FUND, INC. JUNE 30, 2004 747 THIRD AVENUE, 31ST FLOOR NEW YORK, NY 10017 MATRIX ADVISORS VALUE FUND, INC. August 9, 2004 Dear Fellow Shareholder: The Fund posted a small decline for the quarter, having recovered much of the loss of a very negative April during the months of May and June. The Net Asset Value of the Fund ended the quarter at $54.02, a decrease of -0.24% for the quarter compared to an increase of +1.72% for the S&P 500. For the calendar year to date as of June 30, 2004, the Fund increased 0.80% versus an increase of 3.44% for the S&P 500. For the fiscal year ending June 30, 2004, the Fund had an increase of 22.21% compared to an increase of +19.11% for the S&P 500. Despite the lackluster performance in calendar year 2004, the Fund continues to enjoy solid returns over the past 3 and 5 years, both on absolute as well as relative terms. We encourage you to read the accompanying report for greater detail about our performance in these time periods as well as our market commentary. Unfortunately, the second quarter was followed by a difficult July, both for the overall market and for the Fund in particular. There is significant negativity in the market this summer despite the accelerating economic recovery, including strong corporate profits. The weakness in our portfolio cannot be attributed to weak businesses in our portfolio, as most of them are among the American corporate elite. We therefore believe that now represents a very significant buying opportunity for the market in general and our Fund in particular. We remain confident that the Fund is very well positioned for more better-than-market gains, once the attitude towards the stock market turns more positive. The Fund is the investment vehicle of choice for Matrix partners, staff and our own families. Ever the ones to eat our own cooking and to practice what we preach, we continue to add to our own personal positions in the Fund during this atypical period of underperformance for the Fund. We are highly confident that the many new shareholders who have joined us recently will be pleased with their participation on a long-term basis. And we thank all of our shareholders, new and old for their confidence and trust and will do our utmost to keep it. 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. 1 MATRIX ADVISORS VALUE FUND, INC. MATRIX ADVISORS VALUE FUND, INC. Value of $10,000 vs S&P 500 Index Matrix Advisors Value Fund, Inc. S&P 500 Index -------------------------------- ---------------------- 1-Jul-96 10,000 10,000 30-Jun-97 12,255 13,472 30-Jun-98 13,795 17,538 30-Jun-99 16,525 21,531 30-Jun-00 18,869 23,090 30-Jun-01 20,284 19,666 30-Jun-02 18,688 16,128 30-Jun-03 20,281 16,168 30-Jun-04 24,785 19,258 Source: Lipper, Inc. AVERAGE ANNUALIZED TOTAL RETURN PERIODS ENDED JUNE 30, 2004 ----------------------------------------- SINCE INCEPTION ** ONE YEAR FIVE YEARS (7/1/1996) -------- ---------- ------------ Matrix Advisors Value Fund, Inc. 22.21% 8.45% 12.02% S&P 500 Index* 19.11% (2.20%) 8.53% 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 2004 ANNUAL REPORT "YOU PUT YOUR RIGHT HAND IN, YOU PUT YOUR RIGHT HAND OUT, YOU DO THE HOKEY POKEY AND YOU TURN YOURSELF AROUND, AND THAT'S WHAT IT'S ALL ABOUT." In searching for an image to capture the stock market this past quarter, one could do worse than to visualize the dance where, after a lot of moving, one keeps coming back to where one started. What the stock market was all about last quarter was also a tug of war between forces of almost equal strength. On the one hand there were the optimists who thought the market should be buoyed by the strength of macroeconomic recovery and corporate profit growth in particular. The other camp consisted of those who saw a litany of woes - joblessness, commodity price increases, oil price spikes, and above all the prospect of rising interest rates - that would warrant a market retreat. Of course, the issues of global terrorism hung like a pall over the market and could be a significant factor on any given day. It was more common than not for good overall economic news to be met with market negativity, as traders worried that the result of it all would be higher interest rates, leading to lower profits, ultimately leading to lower market valuations. Ironically, they often succeeded in creating that very outcome. During the quarter major markets moved modestly upward. The S&P 500 Index edged up by +1.72% while the NASDAQ increased by +2.80%. The Dow was also positive, but lagged with performance of +1.24%, indicating that the large cap and blue chip stocks continue to underperform the overall market. For the year to date period ending June 30, 2004, the S&P 500 posted a gain of +3.44% while the NASDAQ has risen by +2.43%. The Matrix Advisors Value Fund had a flat quarter and continues to modestly lag the S&P 500 Index as of June 30, 2004. We believe this positioning is largely attributable to a pull back of some of our strongest percentage gain performers in 2003, as well as a continued lagging by the mega cap and blue chip stocks. Such underperformance definitely does not reflect a relative unattractiveness of the businesses in our portfolio, since the majority of them are performing very strongly, and are routinely meeting and exceeding profit expectations. 3 MATRIX ADVISORS VALUE FUND, INC. Despite, or perhaps because of the lackluster first half of the year, we continue to maintain an optimistic bent for the remainder of the year. We would point to several factors that underscore our conviction: 1) an economy that is recovering steadily with no frightening signs of spiking inflation; 2) a Fed policy that is focused on providing realistic monetary parameters without shocking the markets; 3) continued attractive outlook for corporate earnings growth; 4) the ever greater likelihood of a rotation to the mega cap and blue chip stocks that are heavily represented in our portfolio; and 5) the historic pattern of market performance in Presidential election years, in which the second half of the year far outstrips the first half. FUND PERFORMANCE The quarter was a mixed picture for our portfolio. Like the overall market, there was no clear direction as between sectors, nor even within the particular sectors. Health care stocks had a positive quarter, and pharmaceutical stocks, led by Merck, added value. Medical products stocks were decidedly mixed, with strength in Baxter largely balanced by weakness in Guidant. Retail was a bright spot as CVS and Gap Stores posted strong results, and Old Economy stocks on balance produced gains, led by Disney, General Mills and Manpower. General Electric, a sector in and of itself, had a resurgent quarter, which might bode well for the fortunes of the mega-cap stocks going forward. Financial stocks came under pressure, as investors fretted about a rising interest rate environment. Ironically, these businesses have been operating at historically strong levels of profitability. Some of our strongest performers of 2003 - Citigroup, JP Morgan, Merrill Lynch and Morgan Stanley - all felt the downward pressure arising from concerns about rising interest rates and the impact on fixed income-related businesses. Technology stocks were also modestly down, though, again, in what might be the thematic future for the market, mega-cap Microsoft produced gains. During the quarter we completed the sale of Kyocera Corp. and Leggett & Platt. Each was sold at a profit, with Kyocera producing a very significant gain, while Leggett & Platt's gain was more modest. This latter sale was a move to lock in a desirable outcome for a company whose long-term prospects look increasingly uncertain. We also took profits in the substantial sale of Abbott Laboratories and Manpower during the quarter. Finally, at the very end of the quarter we swapped out of the newly issued Liberty Media International, a spin-off from Liberty Media, and put the proceeds back into Liberty Media itself. Our decision was based on our assessment of the relative risks/rewards for the two companies over the intermediate term. 4 MATRIX ADVISORS VALUE FUND, INC. We did begin a new position in Comcast Corp. Special Class A stock. We also opportunistically added to existing positions throughout the quarter including Marsh & McLennan, Morgan Stanley and Nokia. CAPITAL GAINS - A PRELIMINARY OUTLOOK For tax purposes the Fund's year ends June 30. While there probably will be some minor modifications, our preliminary indication is that the Fund's realized capital gains for the year ending June 30, 2004 will be quite modest. While there were certainly several highly profitable sales during the year, we also employed capital gain mitigation strategies that have kept gains to very manageable levels. * * * In this quarterly installment of IDEAS ABOUT INVESTING, we examine the prospects for the mega cap stocks, especially our conviction that the time is approaching for these stocks to finally come into the limelight. Ah, summertime! A time to re-connect with baseball, hammocks and books we've been meaning to get to since... well, since last summer. Wherever it is, we hope that summer finds you basking in the pleasures of the season. Don't forget your sunscreen and don't forget that we remain ever-vigilant on your behalf. Good investing has no seasonality to it. We are privileged to be able to work on your behalf and we take that responsibility seriously, no matter the time of year. Thank you for your confidence and trust; we will do our utmost to continue to warrant it. 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. Russell 2000 Index consists of the smallest 2,000 companies in a group of 3,000 U. S. companies in the Russell 3,000 Index, as ranked by market-capitalization. These indices are unmanaged, do not incur expenses and are not available for investment. 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. 5 MATRIX ADVISORS VALUE FUND, INC. IDEAS ABOUT INVESTING A QUARTERLY QUEST FOR INVESTING ENLIGHTENMENT IS THE EMPIRE READY TO STRIKE BACK? OR, WHY WE MIGHT SOON SEE THE RESURGENCE OF LARGE CAP STOCKS. Students of the stock market are well aware that since mid 1999 small capitalization stocks have significantly outperformed large capitalization stocks. They held up better during the long bear market of 2000-2002, and charged back more dramatically in 2003. As owners of overwhelmingly large cap stocks, including many of the very largest so-called mega cap stocks, we at Matrix view this inter-relationship with considerable interest. While we have actually outperformed the Russell 2000 Index, the widely used proxy for small cap stocks, during the period of the Russell's out-performance of the S&P 500 Index (the proxy for large stocks), we nonetheless have an obvious interest in seeing the relative resurgence of the large caps. Initially, we should explore why small caps have done better most recently. Much of the reason lies in the period leading up to 1999, when small caps both significantly underperformed the large caps and were far cheaper than the large caps on a fundamental level (Please note that historically small caps stocks sell at a price/earnings discount to the large stocks because of the reasonable assumption that they are less secure businesses.). However, that discount in the late `90's was abnormally high. So, when the tech bubble burst in 2000, the large caps were more dramatically impacted, fell further back down to earth, and also left a bad taste in the mouths of many investors. As the economy began to move out of recession in 2002, small cap stocks outperformed - as they traditionally do in the early stages of economic recovery, because they often show more dramatic earnings growth recovery. At the same time however, they ceased to be so cheap relative to the large cap sector. Much of that change is attributable to the rush of money into small stocks, bidding them back up closer to their historic prices compared with large stocks. And that is about where we find ourselves today. Through the first six months of 2004, the Russell 2000 outperformed the S&P 500 by +3.4%. But there are signs that the direction of the wind might be changing. Our friends at Leuthold & Co., point out that currently small caps are trading at a modest PREMIUM to the largest stocks, having risen dramatically in value from a price/earnings DISCOUNT to the largest stocks as low as 52% in late 1999. 6 MATRIX ADVISORS VALUE FUND, INC. In addition, Leuthold points out that we are currently 64 months into the small cap out-performance, versus a historic average of 58 months for periods of small cap out-performance. So the run for small caps is getting somewhat attenuated. None of this means that small cap stocks are about to collapse. However, it does tend to validate our conviction, expressed since the end of 2003, that the market is primed for a rotation back to the large cap stocks. Our conviction is based on such factors as large cap stocks tending to outperform in the more mature stages of economic recovery, and good old fashioned cyclicality. Nothing is forever in the stock market, and the relative lackluster performance of some of our economy's most powerful engines is not a condition that should last for long. Our increasing movement into such mega-cap stocks as AIG, Citigroup, GE, Intel, Microsoft, and many of the major pharmaceutical companies is in part based on this conviction. The fact that most of them have lagged the recovery of the market to date only tells us that we stand to benefit significantly once they revert to more normative market performance. Matrix has somewhat lagged the market in 2004 after a very strong 2003. The important role that the mega cap stocks play in our current portfolio tells us that we are primed for a relative, as well as an absolute upward bounce. We look at the recent operating performance of some of these bellwether companies and are very encouraged. We are expecting an exciting and exhilarating last half of the year. We're looking for the Empire to start striking back, and for the Kings of the Hill to start reclaiming their market, as well as their business, crowns. SOURCE: PERCEPTION, JULY 2004, THE LEUTHOLD GROUP Price to earnings ratio is a common tool for comparing the prices of different common stocks and is calculated by dividing the current market price of a stock by the earnings per share. 7 MATRIX ADVISORS VALUE FUND, INC.
SCHEDULE OF INVESTMENTS AT JUNE 30, 2004 ---------------------------------------------------- COMMON STOCKS: 99.3% SECURITY SHARES VALUE - ---------------------------------------------------------------------------------------------------- ADVERTISING: 1.5% Interpublic Group of Companies, Inc.* 345,000 $ 4,736,850 -------------- BANK (MONEY CENTER): 5.1% Citigroup, Inc. 214,000 9,951,000 JP Morgan Chase & Co. 156,800 6,079,136 -------------- 16,030,136 -------------- BANK (PROCESSING): 2.6% Bank of New York Co., Inc. 275,000 8,107,000 -------------- BANK (REGIONAL): 0.7% Comerica, Inc. 41,000 2,250,080 -------------- BANK (SUPER REGIONAL): 3.1% Bank of America Corp. 114,742 9,709,468 -------------- BIOTECHNOLOGY: 3.7% Medimmune, Inc.* 500,000 11,700,000 -------------- BROADCASTING/PROGRAM: 0.7% Liberty Media Corp.* 243,600 2,189,964 -------------- COMPUTERS AND PERIPHERALS: 4.1% American Power Conversion Co. 661,300 12,994,545 -------------- DRUG: 10.8% Bristol-Myers Squibb Co. 251,000 6,149,500 Merck & Co. 193,500 9,191,250 Pfizer, Inc. 270,840 9,284,395 Wyeth 260,000 9,401,600 -------------- 34,026,745 -------------- DRUGSTORE: 3.1% CVS Corp. 234,000 9,832,680 --------------
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS SCHEDULE. 8
COMMON STOCKS: CONTINUED SECURITY SHARES VALUE - -------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT: 3.7% General Electric Co. 360,000 $11,664,000 ------------ ELECTRONICS: 5.6% Symbol Technologies, Inc. 865,000 12,750,100 Vishay Intertechnology, Inc.* 262,700 4,880,966 ------------ 17,631,066 ------------ FINANCIAL SERVICES: 2.0% American Express Co. 125,000 6,422,500 ------------ FOOD (DIVERSIFIED): 2.3% General Mills, Inc. 152,900 7,267,337 ------------ INDUSTRIAL SERVICES: 1.1% Manpower, Inc. 68,000 3,452,360 ------------ INSURANCE (DIVERSIFIED): 4.9% American International Group, Inc. 146,000 10,406,880 Marsh & McLennan Companies, Inc. 115,000 5,218,700 ------------ 15,625,580 ------------ MEDIA: 1.2% Comcast Corp.* 139,000 3,837,790 ------------ MEDICAL INSTRUMENTS: 3.0% Guidant Corp. 170,000 9,499,600 ------------ MEDICAL SUPPLIES: 4.2% Abbott Laboratories 35,000 1,426,600 Baxter International, Inc. 335,000 11,560,850 Hospira, Inc.* 8,000 220,800 ------------ 13,208,250 ------------ OIL & GAS SERVICES: 2.1% Tidewater, Inc. 225,000 6,705,000 ------------ THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS SCHEDULE. 9 MATRIX ADVISORS VALUE FUND, INC. COMMON STOCKS: CONTINUED SECURITY SHARES VALUE - -------------------------------------------------------------------------------- RECREATION: 3.2% Walt Disney Co. 400,000 $10,196,000 ------------ RETAIL (SPECIAL LINES): 2.6% Office Depot, Inc.* 455,000 8,149,050 ------------ RETAIL STORE: 3.6% Gap, Inc. 470,000 11,397,500 ------------ SECURITIES BROKERAGE: 6.8% Merrill Lynch & Co. 175,000 9,446,500 Morgan Stanley Dean Witter & Co. 227,000 11,978,790 ------------ 21,425,290 ------------ SEMICONDUCTOR: 5.3% Adaptec, Inc.* 712,400 6,026,904 Intel Corp. 385,000 10,626,000 ------------ 16,652,904 ------------ SEMICONDUCTOR (CAPITAL EQUIPMENT): 3.7% Novellus Systems, Inc.* 374,000 11,758,560 ------------ SOFTWARE: 3.6% Microsoft Corp. 400,000 11,424,000 ------------ TELECOMMUNICATIONS (EQUIPMENT): 3.6% Lucent Technologies, Inc.* 500,000 1,890,000 Nokia Corp. ADR 648,000 9,421,920 ------------ 11,311,920 ------------ THRIFT: 1.4% Federal Home Loan Mortgage Co. 29,000 1,835,700 Federal National Mortgage Association 35,000 2,497,600 ------------ 4,333,300 ------------ TOTAL COMMON STOCKS (cost $279,942,484) $313,539,475 ------------------------------------------------------------- THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS SCHEDULE. 10 MATRIX ADVISORS VALUE FUND, INC. SHORT-TERM INVESTMENT: 0.7% PRINCIPAL AMOUNT VALUE - -------------------------------------------------------------------------------- SEI Daily Income Trust Government Fund $2,312,490 $ 2,312,490 ------------- TOTAL SHORT-TERM INVESTMENTS (cost $2,312,490) --------------------------------------------------------- TOTAL INVESTMENTS IN SECURITIES (cost $282,254,974): 100.0% 315,851,965 Other Assets less Liabilities: (0.0)% 48,477 --------------------------------------------------------- NET ASSETS: 100% $315,900,442 ========================================================= - -------------- * Non-income producing security. ADR-American Depositary Receipt. THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS SCHEDULE.
11
MATRIX ADVISORS VALUE FUND, INC. STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2004 - -------------------------------------------------------------------------------- ASSETS Investments in securities, at value: Common stocks (cost $279,942,484) ........................ $313,539,475 Short-term investments (cost $2,312,490) ................. 2,312,490 ------------ Total Investments (cost $282,254,974) ....................... 315,851,965 ------------ Receivables: Fund shares sold ............................................. 1,307,545 Dividends and interest ....................................... 272,646 Prepaid expenses and other assets .............................. 18,574 ------------ TOTAL ASSETS 317,450,730 ------------ LIABILITIES Payables: Fund shares redeemed ......................................... 238,512 Securities purchased ......................................... 1,029,682 Administration fees .......................................... 29,641 Advisory fees ................................................ 173,437 Custodian fees ............................................... 5,991 Fund Accounting fees ......................................... 12,767 Transfer agent fees .......................................... 18,230 Accrued expenses ............................................... 42,028 ------------ TOTAL LIABILITIES 1,550,288 ------------ NET ASSETS $315,900,442 ============ COMPOSITION OF NET ASSETS Paid-in capital ................................................ $277,082,145 Undistributed net investment income ............................ 5,221,306 Net unrealized appreciation on investments ..................... 33,596,991 ------------ NET ASSETS $315,900,442 ============ Number of shares, $0.01 par value, issued and outstanding (unlimited shares authorized) ................ 5,848,281 ============ NET ASSET VALUE PER SHARE $ 54.02 ============ THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS SCHEDULE. 12
MATRIX ADVISORS VALUE FUND, INC. STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 2004 -------------------------------------------- INVESTMENT INCOME Income Dividend income (Net of foreign tax withheld of $30,641) .................................................. $ 3,325,623 Interest income ............................................................. 34,306 ------------ TOTAL INCOME 3,359,929 ------------ EXPENSES Advisory fees ............................................................... 2,245,844 Administration fees ......................................................... 274,720 Transfer agent fees ......................................................... 62,129 Fund Accounting fees ........................................................ 49,182 Reports to shareholders ..................................................... 46,980 Custodian fees .............................................................. 45,859 Registration fees ........................................................... 37,831 Miscellaneous fees .......................................................... 30,696 Audit fees .................................................................. 15,154 Directors fees .............................................................. 12,478 Legal fees .................................................................. 9,923 ------------ TOTAL EXPENSES 2,830,796 LESS: Advisory fees waived (607,410) ------------ NET EXPENSES 2,223,386 ------------ NET INVESTMENT INCOME 1,136,543 ------------ REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain from security transactions ................................ 9,010,285 Net change in unrealized appreciation on investments ................................................. 21,569,634 ------------ Net realized and unrealized gain on investments ......................................................... 30,579,919 ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 31,716,462 ============ THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS SCHEDULE. 13
MATRIX ADVISORS VALUE FUND, INC. STATEMENT OF CHANGES IN NET ASSETS YEAR YEAR ENDED ENDED JUNE 30, 2004 JUNE 30, 2003 --------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS OPERATIONS: Net investment income ......................................................... $ 1,136,543 $ 384,065 Net realized gain (loss) on investments ....................................... 9,010,285 (4,541,253) Net change in unrealized appreciation of investments .......................... 21,569,634 13,206,258 ------------------------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 31,716,462 9,049,070 ------------------------------ DISTRIBUTIONS TO SHAREHOLDERS Net investment income ......................................................... (768,328) (145,072) Realized gain on investments .................................................. -- (238,418) ------------------------------ TOTAL DISTRIBUTIONS TO SHAREHOLDERS (768,328) (383,490) CAPITAL SHARE TRANSACTIONS: Proceeds from shares sold ..................................................... 251,014,702 59,643,979 Proceeds from reinvestment of distribution .................................... 719,681 378,713 Cost of shares redeemed ....................................................... (73,905,247) (22,520,931) Redemption fees ............................................................... 47,404 35,464 ------------------------------ NET INCREASE FROM CAPITAL SHARE TRANSACTIONS 177,876,540 37,537,225 ------------------------------ TOTAL INCREASE IN NET ASSETS 208,824,674 46,202,805 NET ASSETS Beginning of year ............................................................. 107,075,768 60,872,963 ------------------------------ END OF YEAR $ 315,900,442 $ 107,075,768 ============================== UNDISTRIBUTED NET INVESTMENT INCOME $ 5,221,306 $ 384,059 ============================== CHANGE IN SHARES Shares sold ................................................................... 4,847,619 1,503,533 Shares issued on reinvestment of distributions ................................ 14,356 9,806 Shares redeemed ............................................................... (1,425,744) (581,004) ------------------------------ NET INCREASE 3,436,231 932,335 ============================== THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS SCHEDULE. 14
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 charges a 0.75% redemption fee on shares redeemed or exchanged within two months of purchase. Effective August 1, 2004, the redemption fee for the Fund will be increased to 1.00% for shares 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. 15 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. Other. Interest income is recorded on the accrual basis. Dividend income and distributions to shareholders are recorded on the ex-dividend date. G. Reclassification of Capital Accounts. Accounting principles generally accepted in the United States of America require that 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, 2004, undistributed capital gains were decreased by $4,469,032 and undistributed net investment income was increased by $4,469,032. 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 ended June 30, 2004, the Advisor voluntarily reimbursed the Fund for expenses in excess of 0.99%. Matrix voluntarily waived $607,410. 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. 16 MATRIX ADVISORS VALUE FUND, INC. At June 30, 2004, the cumulative amount available for reimbursement that has been paid and/or waived is $1,047,097. The advisor may recapture a portion of this amount no later than the dates stated below: June 30, ------------------------------------------------------ 2005 2006 2007 ------------------------------------------------------ $194,643 $245,044 $607,410 ------------------------------------------------------ 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% of next $100 million of average daily net assets 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, 2004, are as follows: PROCEEDS FROM SALES (INCLUDING PURCHASES MATURITIES) ----------------------------------------- Common Stock $217,171,539 $37,904,218 NOTE 5 - DISTRIBUTIONS TO SHAREHOLDERS As of June 30, 2004, the components of distributable earnings on a tax basis were as follows: COST OF INVESTMENTS FOR TAX PURPOSES $282,254,974 ----------------------------------------- Gross tax unrealized appreciation . . . . . . . . . . . . . . 35,852,452 Gross tax unrealized depreciation . . . . . . . . . . . . . . (2,255,461) ----------------------------------------- Net tax unrealized appreciation on investments . . . . . . . . . . 33,596,991 ----------------------------------------- UNDISTRIBUTED ORDINARY INCOME $ 5,221,306 ----------------------------------------- On November 14, 2003, a distribution of $0.2133 per share was declared. The dividend was paid on November 17, 2003 to shareholders of record on November 13, 2003. 17 MATRIX ADVISORS VALUE FUND, INC. The tax character of distributions paid during the year ended June 30, 2004 and 2003 were as follows: 2004 2003 ------------------------------- Distributions Paid From: Ordinary Income $ 768,328 $ 145,072 Long-Term Capital Gain -- 238,418 ------------------------------- $ 768,328 $ 383,490 =============================== NOTE 6 - PROXY VOTING PROCEDURES (UNAUDITED) 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 - OTHER (UNAUDITED) The Board of Directors of the Fund has determined that a proposed reorganization of the Fund with a mutual fund managed by Strong Capital Management, Inc. ("Strong") would not be in the best interests of the Fund and its shareholders at this time. Accordingly, the shareholder meeting of the Fund was adjourned on December 12, 2003, without action, and the reorganization agreement has terminated. In connection with the above mentioned proposed reorganization of the Fund, Matrix Asset Advisors, Inc. (the "Advisor") had agreed to sell its business relating to the management of the Fund's assets to Strong, subject to various conditions including shareholder approval of the proposed reorganization. As it was not appropriate, given the pending allegations concerning trading activity at Strong, to complete the reorganization by the expiration of the period for holding the shareholder meeting (December 13, 2003), the Advisor and Strong entered into an agreement providing Strong the option to acquire that portion of the Advisor's business on or before December 13, 2004, subject to a variety of conditions including the reorganization of the Fund in substantially the same manner as was originally contemplated. The Fund is not a party to the agreement and is not obligated to proceed with any such reorganization. It is the Advisor's expectation that, given the developments described below, the option will expire unexercised and that no reorganization with Strong will take place. 18 MATRIX ADVISORS VALUE FUND, INC. Following a 2004 settlement of charges relating to its trading activities, Strong entered into an agreement with a unit of Wells Fargo Bank for the acquisition of Strong's financial management business. The acquisition is scheduled to close on or about January 1, 2005. While under no obligation to pursue any re-organization, the Advisor and the Board of Directors will monitor the progress of Wells Fargo's acquisition of the Strong business, and may in the future re-consider whether a reorganization of the Fund as a mutual fund managed by Wells Fargo or any other financial institution would be in the best interests of the Fund and its Shareholders. TAX NOTICE (UNAUDITED) The percentage of dividend income distributed for the year ended June 30, 2004, which is designated as qualified dividend income under the Jobs and Growth Tax Relief Reconciliation Act of 2003, is 73.97%. The percentage of dividend income distributed for the year ended June 30, 2004 designated as qualified dividends received deduction available to corporate shareholders, is 55.86%. 19 MATRIX ADVISORS VALUE FUND, INC. NOTE 8 - DIRECTOR AND OFFICER INFORMATION (UNAUDITED)
NUMBER OF PORTFOLIOS POSITION(S) IN FUND OTHER NAME, HELD WITH COMPLEX DIRECTORSHIPS ADDRESS, THE DATE PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD AND AGE CORPORATION ELECTED + DURING THE PAST 5 YEARS TRUSTEE BY DIRECTOR - ----------------------------------------------------------------------------------------------------------------- David A. Katz, CFA President, 1997 Mr. Katz is President and N/A None 747 Third Avenue Treasurer and Chief Investment Officer of New York, NY 10017 Director Matrix Asset Advisors, the (42) Fund's Advisor, and portfolio manager of the Fund. He has been associated with the Advisor and its predecessor since its founding in 1986. Douglas S. Altabef Executive 2000 Mr. Altabef is the Managing N/A N/A 747 Third Avenue Vice President Director of Matrix Asset New York, NY 10017 and Secretary Advisors, the Fund's Advisor. (53) He has been associated with the Advisor since 1996. From 1993 to 1996, he was President and Chief Executive Officer of Varsity Recreational Holdings Steven G. Roukis, CFA Senior Vice 2000 Mr. Roukis is Senior Vice N/A N/A 747 Third Avenue President President-Equity Research of New York, NY 10017 Matrix Asset Advisors, the (36) Fund's Advisor. He has been associated with the Advisor since 1994. - ------------- * 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. 20 MATRIX ADVISORS VALUE FUND, INC. NUMBER OF PORTFOLIOS POSITION(S) IN FUND OTHER NAME, HELD WITH COMPLEX DIRECTORSHIPS ADDRESS, THE DATE PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD AND AGE CORPORATION ELECTED + DURING THE PAST 5 YEARS TRUSTEE BY DIRECTOR - --------------------------------------------------------------------------------------------------------------- Robert M. Rosencrans * Director 1985 Mr. Rosencrans has been 1 None 747 Third Avenue President of Columbia New York, NY 10017 International, Inc. since (77) 1984. From 1962 to 1984 he was President and Chief Executive Officer of United Artists Cablesystems Corporation. T. Michael Tucker * Chairman 1997 Mr. Tucker is the owner of 1 None 747 Third Avenue and Director T. Michael Tucker, a New York, NY 10017 certified public accounting firm which (62) he established in 1977. Larry D. Kieszek * Director 1997 Mr. Kieszek is Managing 1 None 747 Third Avenue partner of Purvis, Gray & New York, NY 10017 Company, a certified public (53) accounting firm with which he has been associated since 1974. * 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. THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS SCHEDULE. 21
MATRIX ADVISORS VALUE FUND, INC. FINANCIAL HIGHLIGHTS FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH YEAR YEARS ENDED JUNE 30, -------------------------------------------------------- 2004 2003 2002 2001 2000 Net asset value, beginning of year .... $ 44.39 $ 41.14 $ 45.79 $ 43.49 $ 38.40 -------------------------------------------------------- Income from investment operations: Net investment income ................. 0.94 0.14 0.09 0.20 0.11 Net realized and unrealized gain (loss) on investments ...................... 8.89 3.32 (3.59) 3.03 5.30 -------------------------------------------------------- Total from investment operations ...... 9.83 3.46 (3.50) 3.23 5.41 -------------------------------------------------------- Less distributions: Dividends from net investment income .............................. (0.21) (0.08) (0.15) (0.15) 0.00 Distributions from realized gains ..... 0.00 (0.14) (1.03) (0.78) (0.32) -------------------------------------------------------- Total distributions ................... (0.21) (0.22) (1.18) (0.93) (0.32) -------------------------------------------------------- Paid-in capital from redemption fees (Note 2) ......................... 0.01 0.01 0.03 -- -- -------------------------------------------------------- Net asset value, end of year .......... $ 54.02 $ 44.39 $ 41.14 $ 45.79 $ 43.49 ======================================================== Total return .......................... 22.21% 8.52% (7.87%) 7.50% 14.18% Ratios/supplemental data: Net assets, end of year (millions) .... $ 315.9 $ 107.1 $ 60.9 $ 42.6 $ 18.1 Ratio of operating expenses to average net assets: Before expense reimbursement .......... 1.26% 1.33% 1.37% 1.37% 1.65% 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 .......... 0.24% 0.20% (0.09%) 0.22% (0.35%) After expense reimbursement ........... 0.51% 0.54% 0.29% 0.60% 0.31% Portfolio turnover rate ............... 17% 30% 51% 55% 40% THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS SCHEDULE.
22 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, 2004, 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 (US). 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, 2004, 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, 2004, 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 Philadelphia, Pennsylvania August 6, 2004 23 BOARD OF DIRECTORS Leonard M. Heine, Jr., Director Emeritus David A. Katz, CFA Larry D. Kieszek Robert M. Rosencrans T. Michael Tucker INVESTMENT ADVISOR Matrix Asset Advisors, Inc. 747 Third Avenue, 31st Floor New York, NY 10017 (800) 366-6223 CUSTODIAN U.S. Bank, N.A. 425 Walnut Street Cincinnati, OH 45202 TRANSFER AGENT U.S. Bancorp Fund Services, LLC 615 East Michigan Street Milwaukee, WI 53202 ADMINISTRATOR U.S. Bancorp Fund Services, LLC 2020 East Financial Way, Ste. 100 Glendora, CA 91741 DISTRIBUTOR Quasar Distributors, LLC 615 East Michigan Street Milwaukee, WI 53202-5207 INDEPENDENT ACCOUNTANTS Tait, Weller & Baker 1818 Market Street, Ste. 2400 Philadelphia, PA 19103 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. A COPY OF THE REGISTRANT'S CODE OF ETHICS IS FILED HEREWITH. 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 6/30/2004 FYE 6/30/2003 - ----------------------------- ----------------------- ----------------------- Audit Fees $13,500 $10,500 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 6/30/2004 FYE 6/30/2003 - ----------------------------------- -------------------- -------------------- Registrant -- -- Registrant's Investment Adviser -- -- - ----------------------------------- -------------------- -------------------- ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable to open-end investment companies. ITEM 6. SCHEDULE OF INVESTMENTS. Not applicable for periods ending before July 9, 2004. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable to open-end investment companies. ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASES. Not applicable to open-end investment companies. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The registrant does not have any procedures by which shareholders may recommend nominees to the registrant's board of directors. ITEM 10. 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 "1940 Act")) are effective as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rules 15d-15(b) under the Securities Exchange Act of 1934, as amended. (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 11. 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. Filed herewith (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 1, 2004 ----------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title) /s/ DAVID A. KATZ ------------------------------------- David A. Katz, President/Treasurer Date September 1, 2004 ----------------- EX-99.CODE ETH 2 ex99-code.txt CODE OF ETHICS DRAFT MATRIX ADVISORS VALUE FUND, INC. SUPPLEMENTAL CODE OF ETHICS FOR PRINCIPAL OFFICERS AND SENIOR FINANCIAL OFFICERS The Board of Directors (the "Board") of Matrix Advisors Value Fund, Inc. (the "Fund") has adopted this Supplemental Code of Ethics (the "Code") for the Fund's Principal Officers and Senior Financial Officers (the "Officers") to guide and remind the Officers of their responsibilities to the Fund, other Officers, shareholders of the Fund, and governmental authorities. Officers are expected to act in accordance with the guidance and standards set forth in this Code. For the purposes of this Code, the Fund's Principal Officers and Senior Financial Officers shall include: the Principal Executive Officer; the Principal Financial Officer; the Principal Accounting Officer; the Controller; and any persons performing similar functions on behalf of the Fund, regardless of whether such persons are employed by the Fund or a third party. This Code is intended to serve as the code of ethics described in Section 406 of The Sarbanes-Oxley Act of 2002 and Form N-CSR. To the extent that an Officer is subject to the Fund's code of ethics adopted pursuant to Rule 17j-1 of the Investment Company Act of 1940, as amended (the "Rule 17j-1 Code"), this Code is intended to supplement and be interpreted in the context of the Rule 17j-1 Code. This Code also should be interpreted in the context of all applicable laws, regulations, the Fund's Articles of Incorporation and Bylaws, as amended, and all other governance and disclosure policies and documents adopted by the Board. All Officers must become familiar and fully comply with this Code. Because this Code cannot and does not cover every applicable law or provide answers to all questions that might arise, all Officers are expected to use common sense about what is right and wrong, including a sense of when it is proper to seek guidance from others on the appropriate course of conduct. The purpose of this Code is to set standards for the Officers that are reasonably designed to deter wrongdoing and are necessary to promote: o honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; o full, fair, accurate, timely, and understandable disclosure in reports and documents that the Fund files with, or submits to, the Securities and Exchange Commission (the "SEC") and in any other public communications by the Fund; o compliance with applicable governmental laws, rules and regulations; o the prompt internal reporting of violations of the Code to the appropriate persons as set forth in the Code; and o accountability for adherence to the Code. 1. HONEST AND ETHICAL CONDUCT A. HONESTY, DILIGENCE AND PROFESSIONAL RESPONSIBILITY Officers are expected to observe both the form and the spirit of the ethical principles contained in this Code. Officers must perform their duties and responsibilities for the Fund: o with honesty, diligence, and a commitment to professional and ethical responsibility; o carefully, thoroughly and in a timely manner; and o in conformity with applicable professional and technical standards. Officers who are certified public accountants are expected carry out their duties and responsibilities in a manner consistent with the principles governing the accounting profession, including any guidelines or principles issued by the Public Company Accounting Oversight Board or the American Institute of Certified Public Accountants from time to time. B. OBJECTIVITY / AVOIDANCE OF UNDISCLOSED CONFLICTS OF INTEREST Officers are expected to maintain objectivity and avoid undisclosed conflicts of interest. In the performance of their duties and responsibilities for the Fund, Officers must not subordinate their judgment to personal gain and advantage, or be unduly influenced by their own interests or by the interests of others. Officers must avoid participation in any activity or relationship that constitutes a conflict of interest unless that conflict has been completely disclosed to affected parties. Further, Officers should avoid participation in any activity or relationship that could create the appearance of a conflict of interest. A conflict of interest would generally arise if an Officer directly or indirectly participated in any investment, interest, association, activity or relationship that may impair or appear to impair the Officer's objectivity. Any Officer who may be involved in a situation or activity that might be a conflict of interest or give the appearance of a conflict of interest should consider reporting such situation or activity using the reporting procedures set forth in Section 4 of this Code The Audit Committee will not be responsible for monitoring or enforcing this conflict of interest policy, but rather each Officer is responsible for self-compliance with this conflict of interest policy. C. PREPARATION OF FINANCIAL STATEMENTS Officers must not knowingly make any misrepresentations regarding the Fund's financial statements or any facts in the preparation of the Fund's financial statements, and must comply with all applicable laws, standards, principles, guidelines, rules and regulations in the preparation of the Fund's financial statements. This section is intended to prohibit: o making, or permitting or directing another to make, materially false or misleading entries in the Fund's financial statements or records; o failing to correct the Fund's financial statements or records that are materially false or misleading when he or she has the authority to record an entry; and o signing, or permitting or directing another to sign, a document containing materially false or misleading financial information. Officers must be scrupulous in their application of generally accepted accounting principles. No Officer may (i) express an opinion or state affirmatively that the financial statements or other financial data of the Fund are presented in conformity with generally accepted accounting principles, or (ii) state that he or she is not aware of any material modifications that should be made to such statements or data in order for them to be in conformity with generally accepted accounting principles, if such statements or data contain any departure from generally accepted accounting principles then in effect in the United States. Officers must follow the laws, standards, principles, guidelines, rules and regulations established by all applicable governmental bodies, commissions or other regulatory agencies in the preparation of financial statements, records and related information. If an Officer prepares financial statements, records or related information for purposes of reporting to such bodies, commissions or regulatory agencies, the Officer must follow the requirements of such organizations in addition to generally accepted accounting principles. If an Officer and his or her supervisor have a disagreement or dispute relating to the preparation of financial statements or the recording of transactions, the Officer should take the following steps to ensure that the situation does not constitute an impermissible subordination of judgment: o The Officer should consider whether (i) the entry or the failure to record a transaction in the records, or (ii) the financial statement presentation or the nature or omission of disclosure in the financial statements, as proposed by the supervisor, represents the use of an acceptable alternative and does not materially misrepresent the facts or result in an omission of a material fact. If, after appropriate research or consultation, the Officer concludes that the matter has authoritative support and/or does not result in a material misrepresentation, the Officer need do nothing further. o If the Officer concludes that the financial statements or records could be materially misstated as a result of the supervisor's determination, the Officer should follow the reporting procedures set forth in Section 4 of this Code. D. OBLIGATIONS TO THE INDEPENDENT AUDITOR OF THE FUND In dealing with the Fund's independent auditor, Officers must be candid and not knowingly misrepresent facts or knowingly fail to disclose material facts, and must respond to specific inquiries and requests by the Fund's independent auditor. Officers must not take any action, or direct any person to take any action, to fraudulently influence, coerce, manipulate or mislead the Fund's independent auditor in the performance of an audit of the Fund's financial statements for the purpose of rendering such financial statements materially misleading. 2. FULL, FAIR, ACCURATE, TIMELY AND UNDERSTANDABLE DISCLOSURE It is the Fund's policy to provide full, fair, accurate, timely, and understandable disclosure in reports and documents that the Fund files with, or submits to, the SEC and in any other public communications by the Fund. The Fund has designed and implemented Disclosure Controls and Procedures to carry out this policy. Officers are expected to use their best efforts to promote, facilitate, and prepare full, fair, accurate, timely, and understandable disclosure in all reports and documents that the Fund files with, or submits to, the SEC and in any other public communications by the Fund. Officers must review the Fund's Disclosure Controls and Procedures to ensure they are aware of and carry out their duties and responsibilities in accordance with the Disclosure Controls and Procedures and the public reporting obligations of the Fund. Officers are responsible for monitoring the integrity and effectiveness of the Fund's Disclosure Controls and Procedures. 3. COMPLIANCE WITH APPLICABLE LAWS, RULES AND REGULATIONS Officers are expected to know, respect and comply with all laws, rules and regulations applicable to the conduct of the Fund's business. If an Officer is in doubt about the legality or propriety of an action, business practice or policy, the Officer should seek advice from the Officer's supervisor or the Fund's legal counsel. In the performance of their work, Officers must not knowingly be a party to any illegal activity or engage in acts that are discreditable to the Fund. Officers are expected to promote the Fund's compliance with applicable laws, rules and regulations. To promote such compliance, Officers may establish and maintain mechanisms to educate employees carrying out the finance and compliance functions of the Fund about any applicable laws, rules or regulations that affect the operation of the finance and compliance functions and the Fund generally. 4. REPORTING OF ILLEGAL OR UNETHICAL BEHAVIOR Officers should promptly report any conduct or actions by an Officer that do not comply with the law or with this Code. Officers and the Fund shall adhere to the following reporting procedures: o Any Officer who questions whether a situation, activity or practice is acceptable must immediately report such practice to the Principal Executive Officer of the Fund (or to an Officer who is the functional equivalent of this position) or to the Fund's legal counsel. The person receiving the report shall consider the matter and respond to the Officer within a reasonable amount of time. o If the Officer is not satisfied with the response of the Principal Executive Officer or counsel, the Officer must report the matter to the Chairman of the Audit Committee. If the Chairman is unavailable, the Officer may report the matter to any other member of the Audit Committee. The person receiving the report shall consider the matter, refer it to the full Audit Committee if he or she deems appropriate, and respond to the Officer within a reasonable amount of time. o If, after receiving a response, the Officer concludes that appropriate action was not taken, he or she should consider any responsibility that may exist to communicate to third parties, such as regulatory authorities or the Fund's independent auditor. In this matter, the Officer may wish to consult with his or her own legal counsel. o The Audit Committee and the Fund will not be responsible for monitoring or enforcing this reporting of violations policy, but rather each Officer is responsible for self-compliance with this reporting of violations policy. o To the extent possible and as allowed by law, reports will be treated as confidential. o If the Audit Committee determines that an Officer violated this Code, failed to report a known or suspected violation of this Code, or provided intentionally false or malicious information in connection with an alleged violation of this Code, the Fund may take disciplinary action against any such Officer to the extent the Audit Committee deems appropriate. No Officer will be disciplined for reporting a concern in good faith. o The Fund and the Audit Committee may report violations of the law to the appropriate authorities. 5. ACCOUNTABILITY AND APPLICABILITY All Officers will be held accountable for adherence to this Code. On an annual basis, within 30 days of the beginning of each calendar year, each Officer shall certify in writing his or her receipt, familiarity and commitment to compliance with this Code, by signing the Acknowledgment Form (APPENDIX A to this Code). This Code is applicable to all Officers, regardless of whether such persons are employed by the Fund or a third party. If an Officer is aware of a person ("Potential Officer") who may be considered an Officer as defined by this Code, the Officer should inform legal counsel to the Fund of such Potential Officer so that a determination can be made regarding whether such Potential Officer has completed or should complete an Acknowledgment Form. However, the absence of such a determination will not be deemed to relieve any person of his or her duties under this Code. 6. DISCLOSURE OF THIS CODE This Code shall be disclosed by at least one of the following methods in the manner prescribed by the SEC, unless otherwise required by law: o by filing a copy of the Code with the SEC; o by posting the text of the Code on the Fund's website; or o by providing, without charge, a copy of the Code to any person upon request. 7. WAIVERS Any waiver of this Code, including an implicit waiver, that has been granted to an Officer, may be made only by the Board or a committee of the Board to which such responsibility has been delegated, and must be disclosed by the Fund in the manner prescribed by law and as set forth above in Section 6 (Disclosure of this Code). 8. AMENDMENTS This Code may be amended by the affirmative vote of a majority of the Board. Any amendment of this Code, must be disclosed by the Fund in the manner prescribed by law and as set forth above in Section 6 (Disclosure of this Code), unless such amendment is deemed to be technical, administrative, or otherwise non-substantive. Any amendments to this Code will be provided to the Officers. Approved by the Board of Directors on December 8, 2003. APPENDIX A MATRIX ADVISORS VALUE FUND, INC. CERTIFICATION AND ACKNOWLEDGMENT OF RECEIPT OF SUPPLEMENTAL CODE OF ETHICS FOR PRINCIPAL OFFICERS AND SENIOR FINANCIAL OFFICERS I acknowledge and certify that I have received a copy of Matrix Advisors Value Fund, Inc.'s Supplemental Code of Ethics for Principal Officers and Senior Financial Officers (the "Code"). I understand and agree that it is my responsibility to read and familiarize myself with the policies and procedures contained in the Code and to abide by those policies and procedures. I acknowledge my commitment to comply with the Code. - ------------------------------ ------------------------------ Officer Name (Please Print) Officer Signature ------------------------------ Date EX-99.CERT 3 ex99-cert.txt CERTIFICATION EX.99.CERT CERTIFICATIONS I, David A. Katz, certify that: 1. I have reviewed this report on Form N-CSR of Matrix Advisors Value Fund, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) [Omit] (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) [Omit]; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 1, 2004 /s/ DAVID A. KATZ ------------------ ------------------------------ David A. Katz President/Treasurer EX-99.906 4 ex99-906.txt 906 CERTIFICATION EX.99.906 CERT CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officer of the Matrix Advisors Value Fund, Inc., does hereby certify, to such officer's knowledge, that the report on Form N-CSR of the Matrix Advisors Value Fund, Inc. for the year ended June 30, 2004 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as applicable, and that the information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Matrix Advisors Value Fund, Inc. for the stated period. /S/ DAVID A. KATZ - ----------------------------------------------------- David A. Katz President/Treasurer, Matrix Advisors Value Fund, Inc. Dated: September 1, 2004 This statement accompanies this report on Form N-CSR pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed as filed by Matrix Advisors Value Fund, Inc. for purposes of the Securities Exchange Act of 1934. -----END PRIVACY-ENHANCED MESSAGE-----