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 811-09261
Foxby Corp.
(Exact name of registrant as specified in charter)
11 Hanover Square, New York, NY 10005
--------------------------------------------------------------
(Address of principal executive offices) (Zipcode)
Thomas B. Winmill, President
11 Hanover Square
New York, NY 10005
--------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 1-212-344-6310
Date of fiscal year end: 12/31
Date of reporting period: 1/1/06 - 06/30/06
Form N-CSRS is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSRS in its
regulatory, disclosure review, inspection, and policy making roles.
A registrant is required to disclose the information specified by Form N-CSRS
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSRS
unless the Form displays a current valid Office of Management and Budget ("OMB")
control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under clearance requirements of 44 U.S.C. sec. 3507.
Item 1. Report to Stockholders
FOXBY
CORP.
--------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
June 30, 2006
American Stock
Exchange Symbol:
FXX
www.foxbycorp.com
INVESTMENTS BY INDUSTRY*
[CHART APPEARS HERE]
Title Insurance 8.42%
Copper Exploration and Project Development 7.38%
State Commercial Banks 6.04%
Warrants (Miscellaneous) 5.89%
Malt Beverages 5.29%
Gold Exploration and Project Development 5.12%
In Vitro and In Vivo Diagnostic Substances 4.73%
Petroleum Refining 4.47%
Insurance Agents, Brokers and Services 4.43%
Silver Exploration and Project Development 4.40%
Patent Owners and Lessors 4.24%
Retail - Drug Stores and Proprietary Stores 3.91%
Industrial & Commercial Fans & Blowers & Air Purifying Equipment 3.59%
Cable and Other Pay Television Services 3.56%
Soap, Detergents, Cleaning Preparations, Perfumes, Cosmetics 3.50%
Wholesale - Medical, Dental & Hospital Equipment & Supplies 3.00%
Nickel Exploration and Project Development 2.91%
Radio, & TV Broadcasting, and Communications Equipment 2.68%
Semiconductors and Related Devices 2.68%
Wholesale - Farm Product Raw Materials 2.41%
Surety Insurance 2.39%
Gold Mining 2.37%
Water Supply 2.10%
Food and Kindred Products 2.02%
Cement, Hydraulic 1.71%
Natural Gas Distribution 1.03%
------
100.27%
PORTFOLIO ANALYSIS*
U.S. Equities 56.63%
Foreign Equities 37.60%
Money Market Instruments 6.04%
------
100.27%
* Investments by industry and portfolio analysis use approximate percentages of
total net assets, and may not add up to 100% due to leverage or other assets,
rounding, and other factors.
FOXBY American Stock
CORP. Exchange Symbol: FXX
--------------------------------------------------------------------------------
11 Hanover Square, New York, NY 10005
www.foxbycorp.com
July 18, 2006
Fellow Shareholders:
We are pleased to submit this 2006 Semi-Annual Report for Foxby Corp., and
to welcome our new shareholders who find the Fund's flexible total return
investment approach attractive. As a non-diversified, closed-end fund seeking
total return, the Fund uses a flexible strategy in the selection of securities,
and is not limited by the issuer's location, size, or market capitalization. The
Fund may invest in equity and fixed income securities of both new and seasoned
U.S. and foreign issuers, including securities convertible into common stock and
debt securities. The Fund also may employ aggressive and speculative investment
techniques, such as selling securities short, employing futures and options,
derivatives, and borrowing money for investment pur-poses, an approach known as
"leveraging," and may invest defensively in high grade money market instruments.
At June 30, 2006, the Fund's top ten holdings comprised approximately 44%
of net assets. As a percent of net assets, investments in U.S. equities
accounted for about 57% and foreign equities about 38%, with the balance
invested in high grade money market instruments. The Fund's exposure to
equities, however, was hedged to some extent by a short position in S&P 500
futures covering about 4.58% of net assets. As the Fund pursues its total return
objective through this flexible approach, these holdings and allocations are
subject to substantial change at any time, such as an increased short position
in S&P 500 futures as of this writing. By way of comparison, the Fund employed
leverage of about 2% and 14% at December 31, 2005 and December 31, 2004,
respectively.
Market Report
Under the new leadership of Federal Reserve Chairman Bernanke, the Federal
Open Market Committee (FOMC) increased the Federal funds target rate by a
quarter of one percent at each of its four meetings since the beginning of 2006,
when it stood at 4.25%, so that on June 30th it had climbed to 5.25%. When the
FOMC raised interest rates for the 17th straight time in June 2006, it signaled
that future increases would depend on current data regarding inflation and
economic growth. The FOMC, in its comments, has moved from a somewhat obscure
"balanced" approach to a "statistic" sensitive approach.
If the FOMC does in fact rely on statistical data, it may be that the FOMC
is close to ending the target rate increases of the last two years. The economy
is showing signs of having slowed down in the second quarter, and consumers
appear to be struggling under current economic conditions. Rising interest rates
and persistently high gasoline prices may even further pinch consumer spending
and weaken the U.S. economy for the rest of the year. Other indicators point
towards a decline of consumer confidence and to a slowdown in the housing
markets. Yet, unemployment is only 4.6% and the U.S. economy is growing in terms
of U.S. industrial production. In fact, the Federal Reserve recently reported
that industrial capacity utilization reached its highest level since June 2000.
The wild card in the markets, however, which may be difficult for the FOMC
to reduce to statistical trend analysis, is the heightened geopolitical tension
in the world today - from the Middle East to North Korea, Russia to South
America. Further, other important players are seeking a role on the global
financial stage: the Bank of Japan, China's central bank, Russia's Industry and
Energy Ministry, and OPEC. Their influence on global economics is becoming
increasingly significant and may be ignored only at an investor's own risk.
Global Allocation
In view of the cross-currents in global markets, the Fund's strategy in the
first six months of 2006 was to enlarge its holdings of foreign stocks, increase
the portfolio's focus on commodity based businesses, and reduce the Fund's
overall exposure to U.S. markets, particularly financial companies. Higher U.S.
interest rates and a slowing economy may put pressure on the U.S. dollar and
reduce growth rates of overall corporate profitability.
For the first six months of 2006, the Fund had a market total return on the
American Stock Exchange of 3.90% on a net asset value total return of 7.60%,
superior to that of the Standard & Poor's 500 of 2.71%, according to
Morningstar. These are gratifying results for our total return investment
process, which we believe provides a sound investing strategy for the Fund over
the long term. Our current view of financial conditions suggests that the Fund
will benefit during the remainder of 2006 from our flexible portfolio approach,
investing opportunistically in a variety of markets and employing aggressive and
speculative investment techniques as deemed appropriate.
We thank you for investing with Foxby and share your enthusiasm for the
Fund: affiliates of the Investment Manager own approximately 24.4% of the Fund's
shares. We believe that shares of the Fund are attractive, and look forward to
serving your investment needs over the years ahead.
Sincerely,
/s/ Thomas B. Winmill
---------------------
Thomas B. Winmill
President
Portfolio Manager
TOP TEN HOLDINGS
(at June 30, 2006)
1. State Street Bank & Trust Repurchase Agreement
2. IDEXX Laboratories, Inc.
3. Valero Energy Corp.
4. Brown & Brown, Inc.
5. Bear Creek Mining Co.
6. Etruscan Resources, Inc.
7. SurModics, Inc.
8. Peru Copper, Inc.
9. Walgreen Co.
10. Golden Star Resources Inc.
Warrants 2/14/07
Top ten holdings comprise approximately 44% of total net assets. This portfolio
information should not be considered as a recommendation to purchase or sell a
particular security and there is no assurance that any securities will remain in
or out of the Fund.
FOXBY CORP. 2
Schedule of Portfolio Investments - June 30, 2006 (Unaudited)
Shares Market Value
------- ------------
COMMON STOCKS (88.34%)
Cable and Other Pay Television Services (3.56%)
7,600 Comcast Corp. Class A/(1)/ .............................. $ 248,824
------------
Cement, Hydraulic (1.71%)
2,100 Cemex SA DE CV ADR/(1)/ ................................. 119,637
------------
Copper Exploration and Project Development (7.38%)
51,500 Corriente Resources, Inc./(1)/ .......................... 231,750
55,000 Peru Copper, Inc. /(1)/ ................................. 283,800
------------
515,550
------------
Food and Kindred Products (2.02%)
1,800 Nestle SA ADR ........................................... 141,061
------------
Gold Exploration and Project Development (5.12%)
99,000 Etruscan Resources Inc. /(1)/ ........................... 298,220
110,000 Reunion Gold Corp. /(1)/ ................................ 59,347
------------
357,567
------------
Gold Mining (2.37%)
40,000 Jaguar Mining, Inc. /(1)/ ............................... 165,453
------------
Industrial and Commercial Fans and Blowers and
Air Purifing Equipment (3.59%)
7,400 Donaldson Company, Inc. ................................. 250,638
------------
Insurance Agents, Brokers and Services (4.43%)
10,600 Brown & Brown, Inc. ..................................... 309,732
------------
In Vitro and In Vivo Diagnostic Substances (4.73%)
4,400 IDEXX Laboratories, Inc./(1)/ ........................... 330,572
------------
Malt Beverages (5.29%)
3,200 Anheuser-Busch Companies, Inc ........................... 145,888
3,300 Molson Coors Company Class B ............................ 224,004
------------
369,892
------------
Natural Gas Distribution (1.03%)
21,600 MetroGAS S.A. ADR/(1)/ .................................. 71,928
------------
Nickel Exploration and Project Development (2.91%)
25,000 Skye Resources Inc./(1)/ ................................ 203,444
------------
Patent Owners and Lessors (4.24%)
8,200 SurModics, Inc./(1)/ .................................... 296,102
------------
Petroleum Refining (4.47%)
4,700 Valero Energy Corp. ..................................... 312,644
------------
See notes to financial statements. 3 FOXBY CORP.
Schedule of Portfolio Investments - June 30, 2006 (Unaudited)
Shares Market Value
------- ------------
COMMON STOCKS - continued
Radio and TV Broadcasting and Communications
Equipment (2.68%)
12,800 NTT DoCoMo, Inc. ADR ..................................... $ 187,648
------------
Retail - Drug Stores and Proprietary Stores (3.91%)
6,100 Walgreen Co. ............................................. 273,524
------------
Semiconductors and Related Devices (2.68%)
9,900 Intel Corporation ........................................ 187,605
------------
Silver Exploration and Project Development (4.40%)
56,000 Bear Creek Mining Co. /(1)/ .............................. 307,440
------------
Soap, Detergents, Cleaning Preparations, Perfumes,
Cosmetics (3.50%)
4,400 The Procter & Gamble Company ............................. 244,640
------------
Surety Insurance (2.39%)
7,800 Old Republic International Corp .......................... 166,686
------------
Title Insurance (8.42%)
31,000 Capital Title Group, Inc. ................................ 228,470
4,600 Fidelity National Financial, Inc. ........................ 179,170
2,800 LandAmerica Financial Group, Inc. ........................ 180,880
------------
588,520
------------
Water Supply (2.10%)
4,200 Vivendi SA ADR ........................................... 146,622
------------
Wholesale - Farm Product Raw Materials (2.41%)
38,000 Alliance One International, Inc./(1)/ .................... 168,720
------------
Wholesale - Medical, Dental & Hospital Equipment and
Supplies (3.00%)
6,000 Patterson Companies Inc./(1)/ ............................ 209,580
------------
Total Common Stocks (cost: $5,785,511) ................... 6,174,029
------------
WARRANTS (5.89%)
100,000 Cambior Inc., Warrants expiring 8/12/08/(1)/ ............ 78,230
450,000 Golden Star Resources Inc., Warrants expiring 2/14/07/(1)/ 263,016
25,000 Jaguar Mining Inc., Warrants expiring 12/31/07/(1)/ ...... 28,100
9,375 Yamana Gold Inc., Warrants expiring 11/20/08/(1)/ ........ 42,150
------------
Total Warrants (cost: $430,413) .......................... 411,496
------------
FOXBY CORP. 4 See notes to financial statements.
Schedule of Portfolio Investments - June 30, 2006 (Unaudited)
Par Value Market Value
--------- ------------
SHORT TERM INVESTMENTS (6.04%)
$ 422,461 Repurchase Agreement with State Street Bank & Trust,
due 7/3/06 (collateralized by $425,000 U.S. Treasury
Note, 6.50%, due 10/15/06, value $432,437) ........... 422,461
------------
Total Short Term Investments (cost: $422,461) (6.04%) 422,461
------------
Total Investments (cost: $6,638,385) (100.27%) ... $ 7,007,986
------------
Liabilities in Excess of Receivables and
Other Assets (-0.27%) ............................ (18,993)
------------
Total Net Assets (100.00%) ...................... $ 6,988,993
============
Schedule of Short Futures Contract
June 30, 2006
(Unaudited)
Unrealized
Contract Depreciation
-------- ------------
SHORT FUTURES CONTRACT/(1)/
1 S&P Index Futures Contract, expiring September 2006
(Underlying Face Amount at Market Value $319,850) ..... $ 1,050
============
/(1)/ Non-income producing security.
ADR means "American Depositary Receipt."
See notes to financial statements. 5 FOXBY CORP.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2006 (Unaudited)
ASSETS:
Investments at market value
(cost: $6,638, 385) ...................................... $ 7,007,986
Dividend receivable ...................................... 2,029
Receivable for securities sold ........................... 1,790
Variation margin receivable .............................. 800
Other assets ............................................. 868
-------------
Total assets .......................................... 7,013,473
-------------
LIABILITIES:
Accrued expenses ........................................... 19,763
Investment management ...................................... 2,746
Administrative services .................................... 1,971
-------------
Total liabilities ..................................... 24,480
-------------
NET ASSETS: (applicable to 2,602,847 shares outstanding:
500,000,000 shares of $.01par value authorized) $ 6,988,993
=============
NET ASSET VALUE PER SHARE
($6,988,993 / 2,602,847
shares outstanding) ........................................ $ 2.69
=============
At June 30, 2006, net assets consisted of:
Paid-in capital ............................................ $ 22,830, 309
Net unrealized appreciation on investments ................. 368,552
Accumulated undistributed net investment loss .............. (23,798)
Accumulated net realized loss on investments and futures ... (16,186,070)
-------------
$ 6,988,993
=============
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2006 (Unaudited)
INVESTMENT INCOME:
Dividends .................................................. $ 42,966
Interest ................................................... 319
-------------
Total investment income .................................. 43,285
-------------
EXPENSES:
Loan interest and fees ..................................... 20,299
Investment management ...................................... 17,436
Bookkeeping and pricing .................................... 12,670
Administrative services .................................... 8,697
Audit ...................................................... 7,240
Printing and postage ....................................... 4,112
Exchange listing ........................................... 2,945
Directors .................................................. 1,810
Transfer agent ............................................. 1,209
Other ...................................................... (9,210)
-------------
Total expenses ........................................... 67,208
Expense reductions ....................................... (125)
-------------
Total net expenses ....................................... 67,083
-------------
Net investment loss ................................... (23,798)
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain:
Sale of investments ...................................... 822,849
Foreign currencies ....................................... 64,591
Net unrealized depreciation on:
Investments .............................................. (386,402)
Futures .................................................. (1,050)
-------------
Net realized and unrealized gain on investments ............ 499,988
-------------
Net increase in net assets resulting from operations ....... $ 476,190
=============
FOXBY CORP. 6 See notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended June 30, 2006 (Unaudited) and Year Ended December 31, 2005
Six Months
Ended Year
6/30/06 Ended
Unaudited) 12/31/05
------------ ------------
OPERATIONS:
Net investment loss ............................................ $ (23,798) $ (438,412)
Net realized gain (loss) on investment transactions ........... 887,440 (65,021)
Change in unrealized appreciation (depreciation) on investments
and futures .................................................. (387,452) 317,063
------------ ------------
Net increase (decrease) in net assets resulting from
operations .............................................. 476,190 (186, 370)
------------ ------------
Total change in net assets ............................... 476,190 (186, 370)
NET ASSETS:
Beginning of period ............................................ 6,512,803 6,699,173
------------ ------------
End of period (including accumulated undistributed net
investment loss of $23,798 and $0, respectively) ............. $ 6,988,993 $ 6,512,803
============ ============
STATEMENT OF CASH FLOWS
Six Months Ended June 30, 2006 (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets resulting from operations ........ $ 476,190
Adjustments to reconcile net increase in net assets resulting
from operations to net cash provided by (used in) operating
activities:
Net change in unrealized appreciation of investments ...... 387,452
Net realized gain on investments .......................... (887,440)
Proceeds from sales and long term securities ................ 5,529,229
Purchase of long term securities ............................ (4,540,728)
Net purchases of short term securities ...................... (842,054)
Decrease in accrued fees and expenses ....................... (45,093)
Decrease in receivables and other assets .................... 474
------------
Net cash provided by operating activities .............. 78,030
------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of bank line of credit ............................ (84,776)
------------
Net cash used in financing activities .................. (84,776)
------------
Net decrease in cash ................................... (6,746)
CASH:
Beginning of period .......................................... 6,746
------------
End of period ................................................ $ -
============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest ...................................... $ 18,108
============
See notes to financial statements. 7 FOXBY CORP.
Notes to Financial Statements
June 30, 2006 (Unaudited)
(1) Foxby Corp., a Maryland corporation registered under the Investment Company
Act of 1940, as amended (the "Act"), is a non-diversified, closed-end management
investment company whose shares are listed on the American Stock Exchange.
(2) The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. With
respect to security valuation, securities traded on a national securities
exchange are valued at the last reported sales price on the day the valuations
are made. Securities traded primarily on the NASDAQ Stock Market ("NASDAQ") are
normally valued by the Fund at the NASDAQ Official Closing Price ("NOCP")
provided by NASDAQ each business day. The NOCP is the most recently reported
price as of 4:00:02 p.m., Eastern time, unless that price is outside the range
of the "inside" bid and asked prices (i.e., the bid and asked prices that
dealers quote to each other when trading for their own accounts); in that case,
NASDAQ will adjust the price to equal the inside bid or asked price, whichever
is closer. Because of delays in reporting trades, the NOCP may not be based on
the price of the last trade to occur before the market closes. Such securities
that are not traded on a particular day and securities traded in the
over-the-counter market that are not on NASDAQ are valued at the mean between
the current bid and asked prices. Certain of the securities in which the Fund
invests are priced through pricing services which may utilize a matrix pricing
system which takes into consideration factors such as yields, prices,
maturities, call features and ratings on comparable securities. Bonds may be
valued according to prices quoted by a dealer in bonds which offers pricing
services. Debt obligations with remaining maturities of 60 days or less are
valued at cost adjusted for amortization of premiums and accretion of discounts.
Securities for which quotations are not readily available or reliable and other
assets may be valued as determined in good faith under the direction of and
pursuant to procedures established by the Fund's Board of Directors. Securities
denominated in foreign currencies are translated into U.S. dollars at
prevailing exchange rates. Realized gain or loss on sale of investments
denominated in foreign currencies is reported separately from gain or loss
attributable to the change in foreign exchange rates for those investments. The
Fund participates in repurchase agreements with the Fund's custodian. The
custodian takes possession of the underlying collateral securities which are
valued daily to ensure that the fair market value, including accrued interest is
at least equal, at all times, to the repurchase price. In the event of default
of the obligation to repurchase, the Fund has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of default or bankruptcy by the other part
to the agreement, realization and/or retention of the collateral may be subject
to legal proceedings. The Fund may sell a security it does not own in
anticipation of a decline in the fair value of the security. When the Fund sells
a security short, it must borrow the security sold short and deliver it to the
broker-dealer through which it made the short sale. A gain, limited to the price
at which the Fund sold the security short, or a loss, unlimited in size, will be
recognized upon the termination of a short sale. For financial reporting
purposes, investment transactions are accounted for on the trade date (the date
the order to buy or sell is executed). Dividend income and distributions to
shareholders are recorded on the ex-dividend date and interest income is
recorded on the accrual basis. Withholding taxes on foreign dividends have been
provided for in accordance with the Fund's understanding of the applicable
country's tax rules and rates. Certain expenses are applicable to multiple
funds. Expenses directly attributable to the Fund are charged to the Fund.
Expenses borne by the complex of related investment companies, which includes
open-end and closed-end investment companies for which the Investment Manager
and its affiliates serve as investment manager, that are not directly attributed
to the Fund are allocated among the Fund and the other investment companies in
the complex on the basis of relative net assets, except where a more appropriate
allocation of expenses to each investment company in the complex can otherwise
be made fairly.
In preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management makes estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements, as well as the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
(3) No provision has been made for U.S. income taxes because the Fund's current
intention is to continue to qualify as a regulated investment company under the
Internal Revenue Code and to distribute to its shareholders substantially all of
its taxable income and net realized gains. Foreign securities held by the Fund
may
FOXBY CORP. 8
Notes to Financial Statements
June 30, 2006 (Unaudited) (continued)
be subject to foreign taxation. Foreign taxes, if any, are recorded based on the
tax regulations and rates that exist in the foreign markets in which the Fund
invests. At December 31, 2005, the Fund had net capital loss carryovers that may
be used to offset future realized capital gains for federal income tax purposes
of $16,793,145, of which $8,986,140, $6,343,522, $414,304, $837,334, and
$211,845 expires in 2008, 2009, 2010, 2011, and 2013, respectively.
As of December 31, 2005, the components of distributable earnings on a tax basis
were as follows:
Capital loss carryover $ (16,793,145)
"Post-October" net capital losses (280, 364)
Unrealized appreciation 756,003
-------------
$ (16,317,506)
=============
Federal income tax regulations permit "post-October" net capital losses to be
deferred and recognized on the tax return of the next succeeding taxable year.
Accounting principles generally accepted in the United States of America require
certain components of net assets to 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 December 31, 2005, the Fund reclassified
$438,412 from accumulated investment loss to paid-in capital.
(4) The Fund retains CEF Advisers, Inc. as its Investment Manager. Under the
terms of the Investment Management Agreement, the Investment Manager receives a
management fee, payable monthly, based on the average daily net assets of the
Fund at the annual rate of 1/2 of 1% per annum. Certain officers and directors
of the Fund are officers and directors of the Investment Manager. Pursuant to
the investment management agreement, the Fund reimburses the Investment Manager
for providing at cost certain administrative services comprised of compliance
and accounting services. For the six months ended June 30, 2006, the Fund
incurred total administrative cost of $8,697 comprised of $4,841 and $3,856 for
compliance and accounting services, respectively. Through arrangements with the
Fund's custodian and cash management banks, credits realized as a result of
uninvested cash balances were used to reduce custody and transfer agency
expenses, respectively. For financial reporting purposes, the Fund includes
these credits as an expense offset in the Statement of Operations. Of the
2,602,847 shares of common stock outstanding at June 30, 2006, Investor Service
Center, Inc., an affiliate of the Investment Manager, owned 24.4% of the total
shares outstanding of the Fund.
(5) Purchases and sales of investment securities (excluding short term
investments) aggregated $4,540,728 and $5,529,229, respectively, for the six
months ended June 30, 2006.
At June 30, 2006, for federal income tax purposes the aggregate cost of
securities was $6,638,385 and net unrealized appreciation was $369,601 comprised
of gross unrealized appreciation of $980,117 and gross unrealized depreciation
of $610,516.
(6) The Fund may engage in transactions in futures contracts. Upon entering into
a futures contract, the Fund is required to deposit with the broker an amount of
cash or cash equivalents equal to a certain percentage of the contract amount.
This is known as the "initial margin." Subsequent payments ("variation margin")
are made or received by the Fund each day, depending on the daily fluctuation of
the value of the contract. The daily change in the contract is included in
unrealized appreciation/depreciation on investments and futures contracts. The
Fund realizes a gain or loss when the contract is closed. Futures transactions
sometimes may reduce returns or increase volatility. In addition, futures can be
illiquid and highly sensitive to changes in their underlying security, interest
rate or index, and as a result can be highly volatile. A small investment in
certain futures could have a potentially large impact on a Fund's performance.
9 FOXBY CORP.
Notes to Financial Statements
June 30, 2006 (Unaudited) (concluded)
Transactions in short futures contracts for the period ended June 30, 2006 were
as follows:
Number of Aggregate Face
contracts Value of Contracts
--------- ------------------
Outstanding at beginning of period - $ -
Contracts opened 1 319,850
Contracts closed - -
--------- ------------------
Outstanding at end of period 1 $ 319,850
========= ==================
At June 30, 2006, the Fund had $1,226,472 of investments pledged as
collateral for the variation margin account.
(7) The Fund, Global Income Fund, Inc., Midas Fund, Inc., and Midas Special
Fund, Inc. (the "Borrowers") have entered into a committed secured line of
credit facility with the Fund's custodian State Street Bank & Trust Company
("Bank"). Global Income Fund, Inc. is a closed-end investment company advised by
the Investment Manager and Midas Fund, Inc. and Midas Special Fund, Inc. are
open-end investment companies advised by an affiliate of the Investment Manager.
The aggregate amount of the line of credit is $25,000,000 which was renewed from
$9,000,000 effective June 15, 2006. The borrowing of each Borrower is
collateralized by the underlying investments of such Borrower. The Bank will
make revolving loans to a Borrower not to exceed in the aggregate outstanding at
any time with respect to any one Borrower the least of $25,000,000 or the
maximum amount permitted pursuant to each Borrower's investment policies or as
permitted under the Act. The commitment fee on this facility is 0.10% per annum
on the unused portion of the commitment, based on a 360-day year. All loans
under this facility will be available at the Borrower's option of (i) overnight
Federal funds or (ii) LIBOR (30, 60, 90 days), each as in effect from time to
time, plus 0.75% per annum, calculated on the basis of actual days elapsed for a
360-day year. For the six months ended June 30, 2006, the weighted average
interest rate was 5.41% based on the balances outstanding during the period and
the weighted average amount outstanding was $738,166. There was no loan
outstanding at June 30, 2006.
(8) The Fund indemnifies its officers and directors for certain liabilities that
might arise from their performance of their duties to the Fund. Additionally, in
the normal course of business the Fund enters into contracts that contain a
variety of representations and warranties and which provide general
indemnifications. The Funds' maximum exposure under these arrangements is
unknown, as this would involve future claims that may be made against the Fund
that have not occurred.
(9) In the Circuit Court for Baltimore City, Maryland, Civil Action No.
24-C-04-007613 filed on October 4, 2004, a group comprised of Richard J. Shaker,
Phillip Goldstein, Rajeev Das, and Andrew Dakos sued the Fund and its directors,
alleging various breaches by the directors of fiduciary duty under Maryland law
and seeking declaratory and injunctive relief. The lawsuit generally arose out
of the Fund's 2004 annual meeting of stockholders and the Fund's Bylaws. On
December 20, 2005 the parties entered into a settlement of the lawsuit. Under
the terms of the settlement, the management fee paid to the Investment Manager
was reduced to an annual rate of 0.50% of Foxby's average daily net assets. The
plaintiffs agreed to refrain from engaging in future efforts to seek control of
Foxby. The settlement was approved by the Board of Directors of the Fund.
The parties filed a Stipulation of Dismissal with the Court. Shaker and his
clients sold their stake in Foxby, 397,300 shares, to Investor Service Center,
Inc., an affiliate of the Investment Manager for a total of $893,925. In
connection with these and other legal matters, total legal expenses incurred by
the Fund were $316,704 and $83,200 for the years ended December 31, 2005 and
2004, respectively. Total litigation expenses incurred by the Fund on its own
behalf and as advances of legal and other expenses to the Fund's directors
before insurance recoveries reimbursed to the Fund pursuant to its director's
and officer's liability insurance policy were $881,450 and $36,512 for the years
ended December 31, 2005 and 2004, respectively. The Fund was reimbursed $607,700
in cash pursuant to its director's and officer's liability insurance policy for
the year ended December 31, 2005.
FOXBY CORP. 10
FINANCIAL HIGHLIGHTS
Six Months Nine
Ended Year Year Year Months Year Year
6/30/06 Ended Ended Ended Ended Ended Ended
(Unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 3/31/02 3/31/01
---------- ---------- --------- --------- -------- ------- --------
PER SHARE DATA
Net asset value at beginning of period .. $ 2.50 $ 2.57 $ 2.75 $ 2.59 $ 3.27 $ 3.77 $ 14.81
---------- --------- --------- --------- -------- ------- --------
Income from investment operations:
Net investment loss .................. (.01) (.17) (.11) (.10) (.04) (.08) (.09)
Net realized and unrealized gain
(loss) on investments ............... .20 .10 (.07) .26 (.64) (.16) (10.45)/(a)/
---------- --------- --------- --------- -------- ------- --------
Total from investment operations ..... .19 (.07) (.18) .16 (.68) (.24) (10.54)
---------- --------- --------- --------- -------- ------- --------
Less distributions:
Distributions to shareholders ........ - - - - - (.26) (.50)
---------- --------- --------- --------- -------- ------- --------
Net asset value at end of period ........ $ 2.69 $ 2.50 $ 2.57 $ 2.75 $ 2.59 $ 3.27 $ 3.77
========== ========= ========= ========= ======== ======= ========
Market value at end of period ........... $ 2.13 $ 2.05 $ 2.22 $ 2.40 $ 2.07 $ 3.00 $ 3.33
========== ========= ========= ========= ======== ======= ========
TOTAL RETURN ON NET ASSET
VALUE BASIS /(b)/....................... 7.60% (2.72)% (6.55)% 6.18% (20.80)% (6.65)% (73.46)%
========== ========= ========= ========= ======== ======= ========
TOTAL RETURN ON MARKET
VALUE BASIS /(b)/....................... 3.90% (7.66)% (7.50)% 15.94% (31.00)% (2.06)% (71.89)%
========== ========= ========= ========= ======== ======= ========
RATIOS/SUPPLEMENTAL DATA
Net assets at end of period
(000' s omitted) ....................... $ 6,989 $ 6,513 $ 6,699 $ 7,151 $ 6,731 $ 8,503 $ 9,735
========== ========= ========= ========= ======== ======= ========
Ratio of total expenses to average
net assets ............................. 1.91%/(c)/ 7.76% 5.27% 4.39% 4.70%/(c)/ 3.17% 2.19%
========== ========= ========= ========= ======== ======= ========
Ratio of net expenses to average
net assets ............................. 1.91%/(c)/ 7.76% 5.27% 4.39% 4.70%/(c)/ 3.17% 2.19%
========== ========= ========= ========= ======== ======= ========
Ratio of net expenses excluding loan
interest and fees to average
net assets ............................. 1.33%/(c)/ 7.54% 5.19% 4.39% 4.70%/(c)/ 3.17% 2.19%
========== ========= ========= ========= ======== ======= ========
Ratio of net investment loss to average
net assets ............................. (.68)%/(c)/ (6.78)% (4.31)% (3.91)% (3.30)%/(c)/ (2.41)% (.93)%
========== ========= ========= ========= ======== ======= ========
Portfolio turnover rate ................. 59.34% 26.92% 164.08% 75.39% 267.87% 89.31% 550.56%
========== ========= ========= ========= ======== ======= ========
(a) Includes $0.06 of gains resulting from the buy back of treasury shares at a
discount to net asset value.
(b) Total return on market value basis is calculated assuming a purchase of
common stock on the opening of the first day and sale on the closing of the
last day of each period reported. Dividends and distributions, if any, are
assumed for purposes of this calculation, to be reinvested at prices
obtained under the Fund's dividend reinvestment plan. Generally, total
return on net asset value basis will be higher than total return on market
value basis in periods where there is an increase in the discount or a
decrease in the premium of the market value to the net asset value from the
beginning to the end of such periods. Conversely, total return on net asset
value basis will be lower than total return on market value basis in
periods where there is a decrease in the discount or an increase in the
premium of the market value to the net asset value from the beginning to
the end of such periods. Total return calculated for a period of less than
one year is not annualized. The calculation does not reflect brokerage
commissions, if any.
(c) Annualized.
11 FOXBY CORP.
The additional information below and on the following pages is supplemental
and not part of the financial statements of the Fund.
BOARD OF DIRECTORS' ANNUAL APPROVAL OF THE INVESTMENT MANAGEMENT AGREEMENT
The investment management agreement (the "Agreement") between Foxby Corp. and
the investment manager, CEF Advisers, Inc., generally provides that the
Agreement shall continue automatically for successive periods of twelve months
each, provided that such continuance is specifically approved at least annually
(i) by a vote of a majority of the Directors of the Fund who are not parties to
the Agreement, or interested persons of any such party and (ii) by the Board of
Directors of the Fund or by the vote of the holders of a majority of the
outstanding voting securities of the Fund.
In considering the annual approval of the Agreement, the Board of Directors
considered information that had been provided throughout the year at regular
Board meetings, as well as information furnished to the Board for the meeting
held in March 2006 to specifically consider the renewal of the Agreement. Such
information included, among other things, the following: information comparing
the management fee of the Fund with those of comparable funds; information
regarding Fund investment performance in comparison to a relevant peer group of
funds; the economic outlook and the general investment outlook in relevant
investment markets; the investment manager's results and financial condition and
the overall organization of the investment manager; the allocation of brokerage
and the benefits received by the investment manager as a result of brokerage
allocation; the investment manager's management of relationships with the
custodian, transfer agents, and fund accountants; the resources devoted to the
investment manager's compliance efforts undertaken on behalf of the funds it
manages and the record of compliance with the investment policies and
restrictions and with policies on personal securities transactions; the quality,
nature, cost, and character of the administrative and other non-investment
management services provided by the investment manager and its affiliates; and
the terms of the Agreement and the reasonableness and appropriateness of the
particular fee paid by the Fund for the services described therein.
The Board of Directors also considered the nature, extent, and quality of the
management services provided by the investment manager. In so doing, the Board
considered the investment manager's management capa-bilities with respect to the
types of investments held by the Fund, including information relating to the
education, experience and number of investment professionals and other personnel
who provide services under the Agreement. The Board also took into account the
time and attention to be devoted by management to the Fund. The Board evaluated
the level of skill required to manage the Fund and concluded that the human
resources available at the investment manager were appropriate to fulfill
effectively its duties on behalf of the Fund. The Directors also noted that the
investment manager has managed the Fund since 2002 and the Directors believe
that a long-term relationship with a capable, conscientious investment manager
is in the best interests of the Fund.
The Board received information concerning the investment philosophy and
investment process applied by the investment manager in managing the Fund. In
this regard, the Board considered the investment manager's in-house research
capabilities as well as other resources available to the investment manager
personnel, including research services that may be available to the investment
manager as a result of securities transactions effected for the Fund. The Board
concluded that the investment manager's investment process, research
capabilities and philosophy were well suited to the Fund, given the Fund's
investment objective and policies.
In its review of comparative information with respect to Fund investment
performance, the Board received comparative information, comparing the Fund's
performance to that of similar peer groups. After reviewing this information,
the Board concluded that the Fund has performed within a range that the Board
deemed competitive. With respect to its review of the investment management fee,
the Board considered information comparing the Fund's management fee and expense
ratio to those of comparable funds with similar management fee characteristics.
The Board noted that economies of scale may develop for the Fund as its assets
increase and fund-level expenses decline as a percentage of assets, but that
fund-level economies of scale may not necessarily result in investment
manager-level economies of scale. This information assisted the Board in con-
FOXBY CORP. 12
cluding that the fee paid by the Fund is within the range of those paid by
comparable funds within the closed-end fund industry.
In reviewing the information regarding the expense ratio of the Fund, the Board
concluded that although the Fund's expense ratio is within a higher range,
excluding extraordinary expenses, it is competitive with comparable funds in
light of the quality of services received and assets managed.
In addition to the factors mentioned above, the Board reviewed the level of the
investment manager's profits in providing investment management and related
services for the Fund. The Board considered the fiduciary duty assumed by the
investment manager in connection with the services rendered to the Fund and the
business reputation of the investment manager and its financial resources. The
Board also considered information regarding the character and amount of other
incidental benefits received by the investment manager and its affiliates from
their association with the Fund. The Board concluded that potential "fall-out"
benefits that the investment manager and its affiliates may receive, such as
greater name recognition, affiliated brokerage commissions or increased ability
to obtain research services, appear to be reasonable, and may, in some cases,
benefit the Fund. The Board concluded that in light of the services rendered,
the profits realized by the investment manager are not unreasonable.
The Board did not consider any single factor as controlling in determining
whether or not to renew the Agreement. Nor are the items described herein all
the matters considered by the Board. In assessing the information provided by
the investment manager and its affiliates, the Board also took into
consideration the benefits to shareholders of investing in a fund that is part
of an investment company complex.
Based on its consideration of the foregoing factors and conclusions, and such
other factors and conclusions as it deemed relevant, and assisted by counsel,
the Board concluded that the approval of the Agreement, including the fee
structure, is in the interests of shareholders.
13 FOXBY CORP.
PRIVACY POLICY
The Fund recognizes the importance of protecting the personal and financial
information of its shareholders. We consider each shareholder's personal
information to be private and confidential. This describes the practices
followed by us to protect our shareholders' privacy. We may obtain information
about you from the following sources: (1) information we receive from you on
forms and other information you provide to us whether in writing, by telephone,
electronically or by any other means; (2) information regarding your
transactions with us, our corporate affiliates, or others. We do not sell
shareholder personal information to third parties. We will collect and use
shareholder personal information only to service shareholder accounts. This
information may be used by us in connection with providing services or financial
products requested by shareholders. We will not disclose shareholder personal
information to any nonaffiliated third party except as permitted by law. We take
steps to safeguard shareholder information. We restrict access to nonpublic
personal information about you to those employees and service providers who need
to know that information to provide products or services to you. With our
service providers we maintain physical, electronic, and procedural safeguards to
guard your nonpublic personal information. Even if you are no longer a
shareholder, our Privacy Policy will continue to apply to you. We reserve the
right to modify, remove or add portions of this Privacy Policy at any time.
DIVIDEND REINVESTMENT PLAN
The Fund has adopted a Dividend Reinvestment Plan (the "Plan"). Under the Plan,
each dividend and capital gain distribution, if any, declared by the Fund on
outstanding shares will, unless elected otherwise by each shareholder by
notifying the Fund in writing at any time prior to the record date for a
particular dividend or distribution, be paid on the payment date fixed by the
Board of Directors or a committee thereof in additional shares. If the Market
Price (as defined below) per share is equal to or exceeds the net asset value
per share at the time shares are valued for the purpose of determining the
number of shares equivalent to the cash dividend or capital gain distribution
(the "Valuation Date"), participants will be issued additional shares equal to
the amount of such dividend divided by the greater of that net asset value per
share or 95% of that Market Price per share. If the Market Price per share is
less than such net asset value on the Valuation Date, participants will be
issued additional shares equal to the amount of such dividend divided by the
Market Price. The Valuation Date is the day before the dividend or distribution
payment date or, if that day is not an American Stock Exchange trading day, the
next trading day. For all purposes of the Plan: (a) the Market Price of the
shares on a particular date shall be the average closing market price on the
five trading days the shares traded ex-dividend on the Exchange prior to such
date or, if no sale occurred on any of these days, then the mean between the
closing bid and asked quotations, for the shares on the Exchange on such day,
and (b) net asset value per share on a particular date shall be as determined by
or on behalf of the Fund.
PROXY VOTING
The Fund's Proxy Voting Guidelines (the "Guidelines") as well as its voting
record for the 12 months ended June 30, are available without charge, by calling
the Fund collect at 1-212-344-6310 and on the SEC's website at www.sec.gov. The
Guidelines are also posted on the Fund's website at www.foxbycorp.com.
QUARTERLY HOLDINGS
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q
are available on the SEC's website at http://www.sec.gov. The Fund's Forms N-Q
may be reviewed and copied at the SEC's Public Reference Room in Washington, DC,
and that information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330. The Fund makes the information on Form N-Q
available to shareholders on its website at www.foxby-corp.com.
FOXBY CORP. 14 Additional Information
WWW.FOXBYCORP.COM
Visit us on the Internet at www.foxbycorp. The site provides information about
the Fund including market performance, net asset value (NAV), dividends, press
releases, and shareholder reports. For further information, you can email us at
info@foxbycorp.com. The Fund is a member of the Closed-End Fund Association
(CEFA). Its website address is www.cefa.com. CEFA is solely responsible for the
content of its website.
FUND INFORMATION
Investment Manager Stock Transfer Agent and Registrar
CEF Advisers, Inc. American Stock Transfer & Trust Co.
11 Hanover Square 59 Maiden Lane
New York, NY 10005 New York, NY 10038
www.closedendfunds.net 1-800-278-4353
1-212-344-6310 www.amstock.com
Internet Custodian
www.foxbycorp.com State Street Bank & Trust Co.
email: info@foxbycorp.com 801 Pennsylvania Avenue
Kansas City, MO 64105
Additional Information 15 FOXBY CORP.
This report, including the financial statements herein, is transmitted to the
shareholders of the Fund for their information. The financial information
included herein is taken from the records of the Fund. This is not a prospectus,
circular or representation intended for use in the purchase of shares of the
Fund or any securities mentioned in this report. Pursuant to Section 23 of the
Investment Company Act of 1940, notice is hereby given that the Fund may in the
future, purchase shares of its common stock in the open market. These purchases
may be made from time to time, at such times, and in such amounts, as may be
deemed advantageous to the Fund, although nothing herein shall be considered a
commitment to purchase such shares.
FOXBY CORP. 16 Additional Information
FOXBY CORP.
11 Hanover Square
New York, NY 10005
Printed on recycled paper [GRAPHIC]
FXX-SAR 6/06
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
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.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and
procedures (as defined in Rule 30a- 3(c) under the Investment Company Act
of 1940, as amended (the "1940 Act")) are effective as of a date within 90
days of the filing date of this report that includes the disclosure
required by this paragraph, based on their evaluation of the disclosure
controls and procedures required by Rule 30a-3(b) under the 1940 Act and
15d-15(b) under the Securities Exchange Act of 1934.
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred
during the registrant's last fiscal half-year (the registrant's second
fiscal half-year in the case of an annual report) that have materially
affected, or are likely to materially affect the registrant's internal
control over financial reporting.
Item 12. Exhibits.
(a) The certifications required by Rule 30a-2 of the Investment Company Act
of 1940, as amended, and Sections 302 and 906 of the Sarbanes-Oxley Act of
2002 are attached as exhibits hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Foxby Corp.
By: /s/ Thomas B. Winmill
---------------------------------------------
Thomas B. Winmill, President
Date: September 6, 2006
By: /s/ Thomas O'Malley
---------------------------------------------
Thomas O'Malley, Chief Financial Officer
Date: September 6, 2006
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 below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: /s/ Thomas B. Winmill
---------------------------------------------
Thomas B. Winmill, President
Date: September 6, 2006
By: /s/ Thomas O'Malley
---------------------------------------------
Thomas O'Malley, Chief Financial Officer
Date: September 6, 2006