<PAGE> 1
M.S.B. FUND, INC.
MIDYEAR HIGHLIGHTS
Total net assets.................................................... $35,097,083
Shares outstanding.................................................. 2,380,899
Number of shareholders.............................................. 1,890
Individuals.................. 1,775
Corporate Accounts........... 6
IRA Accounts................. 56
Retirement Accounts.......... 3
Bank Trust Accounts.......... 11
Individual Trust Accounts.... 39
INVESTMENT ACHIEVEMENT
The following information is a statement of the past record of the Fund and
should not be construed as a representation or prediction of future results. The
investment return and principal value of an investment in the Fund will
fluctuate with changing market conditions so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
The total return of the Fund for various periods is compared with the
Standard & Poor's 500 Composite Stock Price Index (S&P 500) and the Dow Jones
Industrial Average (DJIA), which are groups of unmanaged securities, and with
Lipper Growth & Income Funds Average, which includes, for the six months, one,
five and ten years ended June 30, 1996, 527, 484, 208, and 120 mutual funds,
respectively, and is a broad equity fund measurement. The S&P 500 and DJIA do
not include a reduction of total return for expenses. These results should be
considered in light of the makeup of each index, the investment objectives and
portfolio composition of the Fund and the periods indicated.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
------------------------------------------
PERIODS ENDING 06/30/96*
------------------------------------------
6 Months Year 5 Years 10 Years
Ended Ended Ended Ended
6/30/96 6/30/96 6/30/96 6/30/96
-------- ------- ------- --------
<S> <C> <C> <C> <C>
M.S.B. Fund, Inc. .......................................... 11.4% 23.8% 13.6% 10.8%
Lipper Growth & Income Funds
Average................................................... 9.2 22.1 14.4 11.8
Standard & Poor's 500 Composite Stock Price Index........... 10.1 25.9 15.7 13.8
Dow Jones Industrial Average................................ 11.8 27.1 17.5 15.2
</TABLE>
* Reflects the assumption that all dividends and distributions have been
reinvested and the deduction of all applicable fees and expenses. Average
annual total returns are stated for periods greater than one year.
1
<PAGE> 2
MESSAGE FROM THE PRESIDENT
Dear Shareholder:
The directors and officers of the M.S.B. Fund, Inc. are pleased to send you the
Semi-Annual Report to Shareholders for the six month period ending June 30,
1996.
The investing public's knowledge of mutual funds and equity investing continues
to accelerate at a rapid pace. The Investment Company Institute, for example,
recently reported that from 1940 through 1991 inclusive, net inflows into equity
mutual funds amounted to $110 billion, while from 1992 through June of this
year, net inflows into equity mutual funds surpassed $450 billion.
More and more investors now realize what institutional investors have known for
some time. Namely, common stocks, over time, outperform both money market and
bond investments. They also agree with institutional investors that an efficient
strategy to create wealth over time is to marry a long-term goal such as
retirement income or a child's college tuition with a long-term, dollar-cost
averaging common stock investment plan. By investing equal dollar amounts on a
regular basis, such as weekly, monthly, or quarterly, more shares are purchased
when the price is lower and fewer shares when the price is higher. In addition,
a regular investment plan helps to avoid the dangers of market timing.
Updated data supplied by Ibbotson Associates, a leading stock market performance
measurement firm, continues to show that most of the stock market's gains
usually occur within a very short time-frame. From January 1, 1926 through
December 31, 1995, the compound annual total return in common stocks, as
measured by the S&P 500, averaged 10.5%. Yet when the best performing
thirty-five months are removed from this 840 month time period, the average
compound annual total return drops to 3.4%. More recently, for the twenty year
period ended December 31, 1995, the compound annual total return from common
stocks was 14.6%. However, when the best fifteen months of this 240 month time
period are removed, the compound annual total return is reduced to 6.8%. Both
the 3.4% return and the 6.8% return are less than what an investment in Treasury
bills would have provided for the same time period.
Fortunately for our economy and for our nation, the "Aging of America" is
occurring just as the global demand for American goods, services, technology,
expertise and management skill is accelerating. Over the next twenty years,
seventy-six million baby boomers will turn fifty years of age. Many of these
Americans have not planned properly for retirement. They may also be concerned
about an elderly parent or a child's college education. Consequently, this
group, on balance, will be consuming less and investing more than they have in
the past.
The International Monetary Fund recently forecast that the developing world
would grow by about 6.3% this year and next. This compares with a 2% growth
forecast for 1996 and 1997 for the industrialized nations. The developing
countries currently account for about 45% of world gross domestic product and
may advance to 50% in short order. Rising developing world demand for American
output should have a positive impact on both corporate profits and common stock
valuations.
The M.S.B. Fund's investment philosophy of creating wealth over time and its
investment discipline of only investing in companies with strong balance sheets
that also are believed to have the capability of generating rising earnings and
cash-flow blends in nicely with the investment philosophies held by many new
individual investors in the equity market. It also gives me great pleasure to
let you know the total return of the M.S.B. Fund for the first-half of 1996 was
11.39%.
Sincerely,
[Signature cut]
David Freer Jr.
President
2
<PAGE> 3
INVESTMENT RESULTS, OUTLOOK AND STRATEGIES
M.S.B. FUND, INC.
The equity market, as measured by the Standard & Poor's 500 Index, continued its
climb into record territory with a total return of 10.09% for the six month
period ending June 30, 1996. Mutual funds, in general, trailed the index, as is
evidenced by the 9.63% total return of the Lipper All Equity Funds Average and
the 9.24% total return of the Lipper Growth & Income Funds Average. However, the
M.S.B. Fund outperformed all three of these benchmarks during the period with a
total return of 11.39%. Total return assumes the reinvestment of all dividends
and capital gains and the deduction of all applicable fees and expenses.
The Fund's net asset value per share on June 30, 1996 was $14.74 versus $13.63
on December 31, 1995. Shareholders received distributions from dividend income
of $0.068 and capital gains of $0.368 during the first six months of 1996. The
March 1996 capital gains distribution resulted from undistributed realized
capital gains accumulated during calendar 1995.
As we entered into the 1996 calendar year, an interesting situation developed.
Interest rates started moving higher as the bond market declined on inflation
fears. Long-term (30 year) Treasury bond yields rose from below 6% at the start
of the year to well over 7% in June. Stock prices, however, also moved solidly
higher, producing double digit returns during the first half of the year. When
the stock and bond markets diverge (stock prices advance while bond prices
decline, or vice versa) it is often referred to as a de-coupling. At mid-year,
the bond market is concerned that the economy is experiencing increased growth
that will ultimately create higher inflation, which reduces the present value of
future interest payments. The stock market is also cognizant of potentially
higher economic growth, but considers it a potential catalyst for higher
corporate earnings. However, if the earnings outlook does not improve enough to
offset the higher interest rate environment, stock prices could be vulnerable to
a decline. During this period of rising interest rates and economic uncertainty,
it is crucial that valuations be monitored very carefully.
Our investment philosophy centers on the belief that the value of a company is
calculated by estimating the company's future stream of cash flows discounted
back to the present using an appropriate rate of interest. Consequently, using
our approach, two significant factors determine stock prices -- the estimated
stream of future cash flows and the rate of interest used to discount those cash
flows. The "appropriate rate of interest" is derived from prevailing market
rates which are ultimately determined by activity in the bond market.
As stock prices continued upward and the discount rate used in our valuation
process increased, a number of our holdings became fully valued according to our
valuation technique. As a result, we eliminated a number of securities from the
Fund during the period, namely Arbor Drugs, Avery Dennison, Bemis, Echlin,
Morton International, National Service Industries, PPG Industries, Reynolds &
Reynolds and Washington Post. Premier Industrial Corp. was eliminated from the
portfolio after it announced that it would be acquired by a foreign company and
its stock price reflected the value of the transaction.
We will also consider a security as a candidate for sale if its fundamental
outlook deteriorates, causing a reduction of its estimated future cash flow
stream thus reducing our valuation of the company. Cooper Tire & Rubber, Hormel
Foods, Rollins, Standard Register and Toys "R" Us were eliminated from the Fund
during the first half of the year for this reason. Two additional securities,
Earthgrains and Payless ShoeSource, were eliminated from the portfolio after
their shares were received in spin-off transactions from their respective parent
companies, Anheuser-Busch and May Department Stores.
Four securities were added to the Fund during the first six months of the year.
They were Abbott Laboratories, Federal Home Loan Mortgage, Intel and Sysco. All
of these companies appeared undervalued at the time of purchase according to our
valuation methodology. These companies exhibit the fundamental characteristics
that exemplify our investment discipline, namely steadily increasing earnings
and cash flow trends, solid balance sheets, efficient capital allocation,
industry leadership and strong management.
3
<PAGE> 4
M.S.B. FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED)
JUNE 30, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK-95.37%:
<TABLE>
<CAPTION>
VALUE
SHARES -----------
- ------ (NOTE 1)
<C> <S> <C>
BEVERAGES-3.13%
22,500 Coca-Cola Company....................... $ 1,099,688
BEVERAGES--ALCOHOLIC-3.10%
14,500 Anheuser-Busch Companies, Inc. ......... 1,087,500
BUILDING MATERIALS-2.52%
19,000 Sherwin-Williams Co. ................... 883,500
CHEMICALS--SPECIALTY-2.25%
14,000 Nordson Corp. .......................... 791,000
COMPUTER SOFTWARE & SERVICES-3.30%
30,000 Automatic Data Processing, Inc. ........ 1,158,750
COMPUTER SYSTEMS-2.55%
9,000 Hewlett-Packard Co. .................... 896,625
DISTRIBUTOR--CONSUMER
PRODUCTS-2.63%
27,000 Sysco Corp. ............................ 924,750
ELECTRICAL EQUIPMENT-8.34%
10,500 Emerson Electric Co. ................... 948,937
14,000 Grainger (W.W.), Inc. .................. 1,085,000
13,500 Hubbell, Inc. .......................... 894,375
-----------
2,928,312
ELECTRONICS & SEMICONDUCTORS-3.14%
15,000 Intel Corp. ............................ 1,101,563
ENTERTAINMENT-2.60%
14,500 Walt Disney Co. ........................ 911,688
FINANCIAL SERVICES-3.17%
13,000 Federal Home Loan Mortgage Corp. ....... 1,111,500
FOODS-4.97%
18,500 Lancaster Colony Corp. ................. 691,437
32,500 Sara Lee Corp. ......................... 1,052,187
-----------
1,743,624
<CAPTION>
SHARES VALUE
- ------ -----------
(NOTE 1)
<C> <S> <C>
FURNISHINGS & APPLIANCES-2.85%
36,000 Leggett & Platt, Inc. .................. $ 999,000
HEALTH CARE--DRUGS-7.43%
27,000 Abbott Laboratories..................... 1,174,500
83,000 Mylan Laboratories...................... 1,431,750
-----------
2,606,250
HEALTH CARE--HOSP. MGMT.-1.46%
13,000 Manor Care, Inc. ....................... 511,875
HEAVY DUTY TRUCKS & PARTS-2.13%
29,000 Donaldson Company, Inc. ................ 746,750
HOUSEHOLD PRODUCTS-3.28%
13,000 Clorox Co. ............................. 1,152,125
MANUFACTURED HOUSING-2.62%
46,000 Clayton Homes, Inc. .................... 920,000
MANUFACTURING-2.45%
18,000 Teleflex, Inc. ......................... 859,500
PUBLISHING--NEWSPAPERS-5.75%
14,000 Gannett Company, Inc. .................. 990,500
43,500 Lee Enterprises, Inc. .................. 1,027,688
-----------
2,018,188
RAILROADS-2.43%
30,000 Illinois Central Corp. Series A......... 851,250
RESTAURANTS-2.65%
50,000 Wendy's International, Inc. ............ 931,250
RETAIL--DEPARTMENT STORES-2.43%
19,500 May Department Stores Co. .............. 853,125
RETAIL--DRUG CHAINS-2.39%
25,000 Walgreen Company........................ 837,500
</TABLE>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
4
<PAGE> 5
M.S.B. FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK (CONTINUED):
<TABLE>
<CAPTION>
VALUE
-----------
SHARES (NOTE 1)
- ------
<C> <S> <C>
RETAIL--FOOD CHAINS-6.49%
34,000 Albertson's, Inc. ...................... $ 1,406,750
26,700 Hannaford Brothers Co. ................. 871,087
-----------
2,277,837
RETAIL--GENERAL MERCHANDISE-3.76%
52,000 Wal-Mart Stores, Inc. .................. 1,319,500
RETAIL--SPECIALTY STORES-2.29%
25,000 Gap, Inc. .............................. 803,125
TOBACCO-3.26%
11,000 Philip Morris Companies, Inc. .......... 1,144,000
-----------
Total Common Stock
(Cost $26,831,621).................... $33,469,775
-----------
</TABLE>
COMMERCIAL PAPER-8.97%:
<TABLE>
<CAPTION>
VALUE
-----------
PRINCIPAL (NOTE 1)
AMOUNT
- ----------
<C> <S> <C> <C>
$1,575,000 Ford Motor Credit Co.,
5.42%, due 07/01/96..... $ 1,575,000
1,574,000 Household Finance Corp.,
5.42%, due 07/01/96..... 1,574,000
-----------
Total Commercial Paper
(Cost $3,149,000)....... 3,149,000
-----------
Total Investments (Cost
$29,980,621*)........... 104.34% 36,618,775
Liabilities in excess of
other assets............ (4.34)% (1,521,692)
------ -----------
Net Assets................ 100.00% $35,097,083
====== ===========
</TABLE>
* Aggregate cost for Federal income tax purposes is identical. At June 30, 1996,
the net unrealized appreciation for all securities of $6,638,154 consists of
gross unrealized appreciation of $6,837,499 and gross unrealized depreciation
of $199,345.
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
5
<PAGE> 6
M.S.B. FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30,
1996
-----------
<S> <C>
ASSETS:
Investment in securities, at value (Cost $29,980,621)............................ $36,618,775
Cash............................................................................. 950
Receivable for securities sold................................................... 1,159,282
Receivable for fund shares sold.................................................. 5,743
Dividends and interest receivable................................................ 56,063
Prepaid expenses................................................................. 8,475
-----------
Total assets................................................................... 37,849,288
-----------
LIABILITIES:
Payable for fund shares redeemed................................................. 2,675,543
Accrued expenses payable......................................................... 76,662
-----------
Total liabilities.............................................................. 2,752,205
-----------
NET ASSETS, applicable to 2,380,899 shares of Class A
$.001 par value stock, 5,000,000 shares authorized............................. $35,097,083
===========
NET ASSETS:
Par value of capital shares...................................................... $ 2,381
Additional paid in capital....................................................... 26,709,443
Undistributed net realized gains................................................. 1,749,070
Overdistributed net investment income............................................ (1,965)
Net unrealized appreciation of investments....................................... 6,638,154
-----------
NET ASSETS....................................................................... $35,097,083
===========
NET ASSET VALUE, offering and redemption price
per share ($35,097,083 / 2,380,899 shares)..................................... $ 14.74
===========
</TABLE>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
6
<PAGE> 7
M.S.B. FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1996
-------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends......................................................... $273,326
Interest.......................................................... 74,119 $ 347,445
-------
EXPENSES:
Investment advisory fee........................................... 131,485
Administration fees............................................... 40,200
Legal............................................................. 29,980
Directors' fees................................................... 22,488
Transfer agent.................................................... 21,316
Audit............................................................. 11,778
Insurance......................................................... 11,302
Printing.......................................................... 8,673
Custody........................................................... 8,076
Registration...................................................... 7,128
Miscellaneous..................................................... 1,216 293,642
-------
Fee waivers....................................................... (36,552)
---------
Net expenses...................................................... 257,090
---------
Net investment income.......................................... 90,355
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain................................................... 1,750,213
Net change in unrealized appreciation............................... 1,975,291
---------
Net realized and unrealized gain.................................... 3,725,504
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................ $3,815,859
=========
</TABLE>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
7
<PAGE> 8
M.S.B. FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31,
(UNAUDITED) 1995
---------------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income.............................................. $ 90,355 $ 202,291
Net realized gain on investments................................... 1,750,213 6,187,058
Net change in unrealized appreciation.............................. 1,975,291 1,481,873
------------ ------------
Net increase in net assets resulting from operations................. 3,815,859 7,871,222
Net equalization..................................................... 0 (6,750)
Distributions to shareholders from:
Net investment income.............................................. (169,701) (188,986)
Net capital gains.................................................. (906,152) (6,209,959)
------------ ------------
Total distributions to shareholders.................................. (1,075,853) (6,398,945)
Net decrease from capital share transactions (See Note 4)............ (152,057) (3,978,291)
------------ ------------
Total increase (decrease) in net assets.............................. 2,587,949 (2,512,764)
NET ASSETS:
Beginning of period................................................ 32,509,134 35,021,898
------------ ------------
End of period (including overdistributed and undistributed net
investment income of ($1,965) and $77,381, respectively)......... $ 35,097,083 $32,509,134
============ ============
</TABLE>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
8
<PAGE> 9
M.S.B. FUND, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Selected Data for Each Share of Capital Stock
Outstanding Throughout Each Period
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1996 -----------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of
period.............................. $13.63 $13.39 $16.79 $15.67 $14.62 $14.54
INCOME FROM OPERATIONS:
Net investment income............... 0.04 0.08 0.16 0.18 0.22 0.22
Net realized and unrealized gain
(loss) on investments............. 1.51 3.17 (0.44) 3.04 1.33 2.18
-------- -------- -------- -------- -------- --------
Total from investment
operations...................... 1.55 3.25 (0.28) 3.22 1.55 2.40
DISTRIBUTIONS:
From net investment income.......... (0.07) (0.08) (0.18) (0.17) (0.28) (0.21)
From net realized gains............. (0.37) (2.93) (2.94) (1.93) (0.22) (2.11)
-------- -------- -------- -------- -------- --------
Total distributions............... (0.44) (3.01) (3.12) (2.10) (0.50) (2.32)
-------- -------- -------- -------- -------- --------
NET ASSET VALUE, end of period........ $14.74 $13.63 $13.39 $16.79 $15.67 $14.62
======== ======== ======== ======== ======== ========
Total return.......................... 11.39% 24.97% (1.70%) 20.6% 10.7% 17.0%
Ratio of expenses to average net
assets.............................. 1.47%(1)(2) 1.69%(1) 1.28%(1) 1.12% 1.13% 1.86%
Ratio of net investment income to
average net assets.................. 0.52%(2) 0.57% 0.97% 1.01% 1.43% 1.36%
Portfolio turnover rate............... 55% 68% 62% 26% 13% 17%
Average commission rate per share..... $ .0440(3) -- -- -- -- --
NET ASSETS, end of period (000's)..... $35,097 $32,509 $35,022 $45,205 $40,790 $41,346
</TABLE>
- --------------------------------------------------------------------------------
(1) Without fee waivers for the M.S.B. Fund, Inc. for the six months ended June
30, 1996 and the years ended December 31, 1995 and 1994, the ratios of
expenses to average net assets would have been 1.68% (annualized), 1.86%,
and 1.39%, respectively.
(2) Annualized.
(3) Computed by dividing the total amount of brokerage commissions paid by the
total shares of investment securities purchased and sold during the period
for which commissions were charged, as required by the Securities and
Exchange Commission for fiscal years beginning after September 1, 1995.
See Accompanying Notes to Financial Statements.
9
<PAGE> 10
- --------------------------------------------------------------------------------
M.S.B. FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
The M.S.B. Fund, Inc. (the "Fund") is registered under the Investment Company
Act of 1940, as amended, as a diversified open-end management investment
company. The primary investment objective of the Fund is to achieve capital
appreciation for its shareholders. The objective of income is secondary.
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A--Security Valuations--Securities traded on national exchanges are valued at
the closing prices or, in the case of over-the-counter securities, at the mean
between closing bid and asked prices. Short-term investments are valued at
amortized cost.
B--Security Transactions and Related Investment Income--Security transactions
are accounted for on the trade date and dividend income is recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. The specific
identification method is used in the determination of realized gains and losses
on the sale of securities.
C--Federal Income Taxes--No provision has been made for Federal income tax,
since it is the intention of the Fund to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income and net capital gains to its shareholders.
D--Equalization--Through July 31, 1995, the Fund followed the accounting
practice known as equalization, by which a portion of the proceeds from sales
and costs of repurchases of capital shares, equivalent on a per share basis to
the amount of undistributed net investment income on the date of the
transaction, was credited or charged to undistributed net investment income.
Commencing August 1, 1995, the Fund ceased accounting for share transactions in
this manner. The change in this policy had no effect on the Fund's net assets.
NOTE 2--PURCHASES AND SALES OF SECURITIES
The cost of purchases and the proceeds from sales of investments, exclusive of
short-term investments, during the six months ended June 30, 1996, were
$8,876,471 and $10,379,763, respectively.
NOTE 3--FEES
Shay Assets Management Co. (the "Investment Adviser") is a general partnership
that consists of two general partners, Shay Assets Management, Inc. and ACB
Assets Management, Inc., each of which holds a fifty-percent interest in the
Investment Adviser. Shay Assets Management, Inc. is controlled by Rodger D.
Shay, a Vice President of the Fund. ACB Assets Management, Inc. is an indirect
wholly-owned subsidiary of America's Community Bankers.
The Investment Adviser receives a fee from the Fund computed at an annual rate
of 0.75% of the first $100,000,000 of the Fund's average daily net assets and
0.50% of average daily net assets in excess of $100,000,000. The fee payable to
the Investment Adviser is reduced (but not below zero) to the extent expenses of
the Fund (exclusive of professional fees, such as legal and audit fees,
directors' fees and expenses, and distribution expenses, if any, payable under
Rule 12b-1) exceed 1.10% of the Fund's average daily net assets for any fiscal
year during the term of the Fund's agreement with the Investment Adviser. This
limitation resulted in the Investment Adviser waiving approximately 20% of its
fee for the six month period ending June 30, 1996. The waiver amounted to
$26,568.
PFPC Inc. (PFPC) is the Fund's administrator and transfer agent and PNC Bank NA
(PNC) is the Fund's custodian. PFPC and PNC are affiliates of PNC Bank Corp.
10
<PAGE> 11
M.S.B. FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1996
As compensation for its administrative services, the Fund pays PFPC a minimum
monthly fee of $6,700 (exclusive of out-of-pocket expenses). PFPC waived
approximately 20% of its administrative fee for the six month period ending June
30, 1996. The waiver amounted to $7,848.
As compensation for its services as transfer agent, the Fund pays PFPC a minimum
monthly fee of $1,500 (exclusive of out-of-pocket expenses). PFPC waived
approximately 9% of its transfer agent fee for the six month period ending June
30, 1996. The waiver amounted to $1,835.
As compensation for its custodial services, the Fund pays PNC a minimum monthly
fee of $500 (exclusive of out-of-pocket expenses). PNC waived approximately 4%
of its custodial fee for the six month period ending June 30, 1996. The waiver
amounted to $301.
NOTE 4--CAPITAL STOCK
At June 30, 1996, there were 5,000,000 shares of $.001 par value capital stock
authorized. Transactions in capital stock for the six months ended June 30, 1996
and the year ended December 31, 1995, respectively, were as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
(000) (000)
------------ -------------------
1996 1995 1996 1995
---- ---- ------- --------
<S> <C> <C> <C> <C>
Shares sold................................................. 193 84 $ 2,745 $ 1,260
Shares issued in reinvestment of
dividends................................................. 64 392 907 5,364
---- ---- ------ -------
257 476 3,652 6,624
Shares redeemed............................................. (261) (706) (3,804) (10,602)
---- ---- ------ -------
Net decrease................................................ (4) (230) $ (152) $ (3,978)
==== ==== ====== =======
</TABLE>
NOTE 5--SHAREHOLDER VOTING RESULTS
The Annual Meeting of Stockholders of the M.S.B. Fund, Inc. was held on March
21, 1996, at which the stockholders voted on two proposals. Each proposal and
the results of the voting are set forth below.
A--Election of Directors--The first proposal concerned the election of four
directors for a term of three years each, such term to expire in 1999. The
results of voting were as follows:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--------- ------- -------
<S> <C> <C> <C>
Harry P. Doherty.................................................. 1,351,795 18,257 4,772
Joseph R. Ficalora................................................ 1,354,505 15,547 4,772
Michael J. Gagliardi.............................................. 1,352,208 17,844 4,772
Gilbert O. Robert................................................. 1,344,888 23,480 6,456
</TABLE>
In addition, Messrs. Malcolm J. Delaney, David Freer, Jr., George J. Kelly,
William A. McKenna, Jr., Norman W. Sinclair and Ian D. Smith continue as members
of the Board of Directors.
B--Ratification of Independent Auditors--The second proposal concerned the
ratification of the selection of KPMG Peat Marwick LLP as Independent Auditors
of the Fund for the fiscal year ending December 31, 1996. The results of voting
for the proposal were 1,351,381 for, 6,093 against, and 17,350 abstaining.
11
<PAGE> 12
M.S.B.
FUND, INC.
OFFICERS
David Freer, Jr.
President
Joseph R. Ficalora
First Vice President
Ian D. Smith
Second Vice President
Rodger D. Shay
Vice President and Assistant Secretary
Edward E. Sammons, Jr.
Vice President and Secretary
John J. McCabe
Vice President
Mark F. Trautman
Vice President
Jay F. Nusblatt
Treasurer
BOARD OF DIRECTORS
Malcolm J. Delaney
Harry P. Doherty
Joseph R. Ficalora
David Freer, Jr.
Michael J. Gagliardi
George J. Kelly
William A. McKenna, Jr.
Gilbert O. Robert
Norman W. Sinclair
Ian D. Smith
<PAGE> 13
M.S.B.
FUND, INC.
M.S.B. FUND, INC.
c/o Shay Financial Services Co.
111 East Wacker Drive
Chicago, Illinois 60601
Telephone 800-661-3938
INVESTMENT ADVISER
Shay Assets Management Co.
200 Park Avenue
6th Floor, West
New York, New York 10166
DISTRIBUTOR
Shay Financial Services Co.
111 East Wacker Drive
Chicago, Illinois 60601
ADMINISTRATOR, TRANSFER AGENT,
REGISTRAR AND DIVIDEND PAYING AGENT
PFPC Inc.
103 Bellevue Parkway
Wilmington, DE 19809
CUSTODIAN
PNC Bank, NA
17th & Chestnut Streets
Philadelphia, Pennsylvania 19101
LEGAL COUNSEL
Hughes Hubbard & Reed LLP
One Battery Park Plaza
New York, New York 10004
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
1600 Market Street
Philadelphia, Pennsylvania 19103
M.S.B.
FUND, INC.
Semi-Annual Report
------------------
June 30, 1996
