<PAGE> 1
JULY 23, 1997
MESSAGE FROM THE PRESIDENT
Dear Shareholder:
I am very pleased to report that our MSB Fund produced a 15.27% total return for
the six months ended June 30, 1997. This advance helped to bring the Fund's one
year total return to 25.39%, the three year average annual return to 21.22%, the
five year average annual return to 17.08%, and the ten year average annual
return to 11.02%. The MSB Fund's longer term track record also remains quite
enviable. If a shareholder had invested $1,000 in the Fund at inception in 1964,
the shareholder's investment would have grown to $37,411 on June 30, 1997.
American industry deserves much credit for getting itself into fighting trim in
the 1980's to meet the global challenges of the 1990's and beyond. Today,
America's global dominance is truly awesome. Not only is our economy the world's
strongest and most competitive, our workers are the world's most productive, our
businesses on balance are the most profitable and we are the world's largest
exporter. We also account for forty percent of the world's technology
expenditures.
Since November of 1982, our economy has been performing quite well. The cost of
debt and equity capital has come down, economic growth has been steady,
inflation has been meek and the Dow Jones Industrial Average has risen over
900%. Happily, our economy has encountered just one brief, mild recession during
this time period. It lasted from August of 1990 until February of 1991.
Although not every American has participated in our nation's economic renewal,
many have increased their wealth through equity investing. Currently, over one
hundred million Americans and over forty percent of American households own
common stock either directly or through mutual funds. In 1985, only $53 billion
was invested in equity mutual funds. Today, over $2.0 trillion is invested in
equity mutual funds.
Most students of the economy would find it difficult to envision a deep
recession in the near term. Consumer confidence is high, unemployment is low,
inflation is meek and demand for American goods and services around the world is
growing. The industrialized world continues to dismantle the welfare state,
social programs are being reduced and government downsizing remains ongoing.
Privatization of public sector activities and industry deregulation are also on
the rise.
Our MSB Fund's investment philosophy of seeking to create wealth for its
shareholders over time and its investment discipline of investing only in
companies with strong balance sheets that are also believed to have the
capability of generating rising earnings and cash flow have led us to invest in
several companies that should be well positioned to capitalize on the emerging
world economy as well as in companies that are benefiting from the global
technology revolution.
We continue to receive many compliments for our quarterly Investment Outlook and
Review newsletter. This informative and educational piece is especially
worthwhile for new and existing investors and those just beginning to learn
about the investment world. If there are any topics that you would like us to
address in the Quarterly Investment Outlook and Review, please just give us a
call at 1-800-661-3938.
Sincerely,
Joseph R. Ficalora
Joseph R. Ficalora
President
<PAGE> 2
M.S.B. FUND, INC.
MIDYEAR HIGHLIGHTS
Total net assets.................................................... $44,814,182
Shares outstanding.................................................. 2,668,836
Number of shareholders.............................................. 2,238
Individuals................ 2,084
Corporate Accounts......... 19
IRA Accounts............... 89
Trust Accounts............. 46
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, 1997, 626, 547, 216, and 127 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 06/30/97*
---------------------------------------
6 Months Year 5 Years 10 Years
Ended Ended Ended Ended
6/30/97 6/30/97 6/30/97 6/30/97
-------- ------- ------- --------
<S> <C> <C> <C> <C>
M.S.B. Fund, Inc............................................ 15.27% 25.39% 17.08% 11.02%
Lipper Growth & Income Funds' Average....................... 15.52 28.07 17.35 12.77
Standard & Poor's 500 Composite Stock Price Index........... 20.60 34.68 19.76 14.63
Dow Jones Industrial Average................................ 20.12 38.54 21.36 15.78
</TABLE>
* Assumes reinvestment of all dividends and distributions and the deduction of
all applicable fees and expenses. Average annual total returns are stated for
periods greater than one year.
2
<PAGE> 3
INVESTMENT RESULTS, OUTLOOK AND STRATEGIES
M.S.B. FUND, INC.
The stock market, as measured by the Standard & Poor's 500 Index, continued its
ascent into record territory with a total return of 20.60% for the six-month
period ending June 30, 1997. The average equity mutual fund, as measured by the
Lipper All Equity Funds' Average, provided a total return of 11.95% during the
first half of the year, sharply trailing the S&P 500 Index. Growth and income
funds, represented by the Lipper Growth and Income Funds' Average, provided the
best performance among the Lipper universe of general equity mutual funds during
the six-month period with a total return of 15.52%. The M.S.B. Fund's
year-to-date total return as of June 30, 1997 was 15.27%.
The Fund's net asset value per share on June 30, 1997 was $16.79 versus $14.60
on December 31, 1996. Shareholders received distributions from dividend income
totaling $0.0384 per share during the first six months of 1997.
After starting the year on a strong note, rising more than 10% by mid-February,
the stock market reversed course, relinquishing all of its gains by early April.
The abrupt reversal was largely attributable to rising long-term interest rates.
Heightened inflation fears, due to renewed strength in the economy during the
first quarter, caused the 30-year Treasury bond yield to move from a low of
6.52% in mid-February up to 7.17% by mid-April. After several benign inflation
reports and evidence of slowing economic conditions emerged early in the second
quarter, interest rates fell below the critical 7% level. Rates continued their
descent to around 6.75% as the second quarter came to a close. The stock market
rose substantially during the second quarter as the interest rate environment
improved and corporations reported strong first quarter profit growth.
The superior return of the Standard & Poor's 500 Index during the first half of
the year, compared to the average equity mutual fund, appears to be the result
of equity investors' strong appetite for the largest capitalization stocks. The
S&P 500 Index is capitalization weighted; the larger the market capitalization
(price times number of shares outstanding), the larger the weighting in the
index. As of June 30, 1997, the top 25 stocks in the S&P 500 Index, in order of
market capitalization, accounted for approximately one-third of the index by
weight. The average return for these 25 stocks during the first half of the year
was 28.5% versus 20.6% for the entire index. Thus the remaining 475 stocks in
the S&P 500 Index, which accounted for two-thirds of the index by weight,
provided an average first half return of 16.6%. Many mutual fund managers were
reluctant to own the largest capitalization issues due to their high relative
valuations. As of June 30, 1997, the price-to-earnings ratio of the top 25 S&P
500 stocks was 24.3 times 1997 estimated earnings, versus an average of 19.7 for
the entire index. In addition, the dividend yield for these top 25 stocks was
1.5% versus 1.7% for the entire index. Mutual funds were further hampered by
weak relative returns provided by their cash reserves as well as normal
operating expenses incurred during the period.
The M.S.B. Fund's portfolio management team has continued to adhere to its
investment philosophy consisting of stringent investment guidelines focused on
identifying companies with stable cash flow and earnings growth, minimal capital
expenditure requirements, strong balance sheets and solid management at
reasonable prices. This "bottoms-up" approach seeks to identify attractive stock
candidates on a company-by-company basis. Industry sector outlook and general
stock market conditions are secondary considerations.
On occasion, a company's valuation may become very attractive, due to short-term
adverse circumstances that do not, in our opinion, affect its long-term
fundamental outlook. The additions of Federal National Mortgage Association,
McDonald's and Nike during the first six months of 1997 were prompted by such
events. Interpublic Group and Pitney Bowes were also new additions to the
portfolio during the period. All of these companies are leaders in their
industries and exhibit the characteristics that we seek in our portfolio
companies.
Three stocks were eliminated from the portfolio during the first half of the
year. W.W. Grainger and May Department Stores were removed after their prices
exceeded our valuations and were not supported by our future earnings and cash
flow projections. Mylan Laboratories was eliminated during the quarter due to
continued margin pressure rampant in the generic drug industry. The Fund's cash
position was approximately 7.5% as of June 30, 1997.
3
<PAGE> 4
M.S.B. FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED)
JUNE 30, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK-94.49%:
SHARES VALUE
- ------ -----------
(NOTE 1)
<C> <S> <C>
ADVERTISING-2.05%
15,000 Interpublic Group of Cos., Inc. ...... $ 919,687
AUTO PARTS--AFTER MARKET-2.72%
36,000 Genuine Parts Company................. 1,219,500
BANKS-2.83%
4,700 Wells Fargo & Co. .................... 1,266,650
BEVERAGES--ALCOHOLIC-2.53%
27,000 Anheuser-Busch Companies, Inc. ....... 1,132,312
BEVERAGES--SOFT DRINKS-3.01%
20,000 Coca-Cola Company..................... 1,350,000
CHEMICALS--SPECIALTY-5.03%
23,000 International Flavors & Fragrances.... 1,161,500
17,000 Nordson Corp. ........................ 1,092,250
-----------
2,253,750
COMPUTER SOFTWARE &
SERVICES-2.88%
27,500 Automatic Data Processing, Inc. ...... 1,292,500
COMPUTER SYSTEMS-3.06%
24,500 Hewlett-Packard Co. .................. 1,372,000
DISTRIBUTOR--CONSUMER
PRODUCTS-2.44%
30,000 Sysco Corp. .......................... 1,095,000
ELECTRICAL EQUIPMENT-5.23%
21,000 Emerson Electric Co. ................. 1,156,312
27,000 Hubbell, Inc. ........................ 1,188,000
-----------
2,344,312
ELECTRONICS &
SEMICONDUCTORS-3.01%
9,500 Intel Corp. .......................... 1,347,219
ENTERTAINMENT-2.87%
16,000 Walt Disney Co. ...................... 1,284,000
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCK-94.49%:
SHARES VALUE
- ------ -----------
(NOTE 1)
<C> <S> <C>
FINANCIAL SERVICES-6.12%
48,000 Federal Home Loan Mortgage Corp. ..... $ 1,650,000
Federal National Mortgage
25,000 Association......................... 1,090,625
-----------
2,740,625
FOODS-2.55%
27,500 Sara Lee Corp. ....................... 1,144,688
FOOTWEAR-2.08%
16,000 Nike, Inc. ........................... 934,000
HEALTH CARE-DRUGS-3.35%
22,500 Abbott Laboratories................... 1,501,875
HOUSEHOLD PRODUCTS-2.95%
10,000 Clorox Co. ........................... 1,320,000
MANUFACTURED HOUSING-2.67%
84,000 Clayton Homes, Inc. .................. 1,197,000
MANUFACTURING-5.39%
21,000 Dover Corporation..................... 1,291,500
36,000 Teleflex, Inc. ....................... 1,125,000
-----------
2,416,500
OFFICE EQUIPMENT AND
SUPPLIES-2.87%
18,500 Pitney Bowes, Inc. ................... 1,285,750
PUBLISHING--NEWSPAPERS-5.14%
14,000 Gannett Company, Inc. ................ 1,382,500
35,000 Lee Enterprises, Inc. ................ 923,125
-----------
2,305,625
RAILROADS-2.57%
33,000 Illinois Central Corp. Series A....... 1,152,938
RESTAURANTS-5.54%
24,500 McDonald's Corp. ..................... 1,183,656
50,000 Wendy's International, Inc. .......... 1,296,875
-----------
2,480,531
</TABLE>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
4
<PAGE> 5
M.S.B. FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK (CONTINUED): VALUE
SHARES -----------
- ------ (NOTE 1)
<S> <C> <C>
RETAIL-DRUG CHAINS-2.81%
23,500 Walgreen Company...................... $ 1,260,188
RETAIL-FOOD CHAINS-3.01%
37,000 Albertson's, Inc. .................... 1,350,500
RETAIL-GENERAL
MERCHANDISE-3.02%
40,000 Wal-Mart Stores, Inc. ................ 1,352,500
RETAIL-SPECIALTY STORES-3.69%
42,500 Gap, Inc. ............................ 1,652,187
TOBACCO-3.07%
31,000 Philip Morris Companies, Inc. ........ 1,375,625
-----------
Total Common Stock
(Cost $29,322,145).................. $42,347,462
-----------
</TABLE>
COMMERCIAL PAPER-7.52%:
<TABLE>
<CAPTION>
VALUE
-----------
PRINCIPAL (NOTE 1)
AMOUNT
- ----------
<S> <C> <C> <C>
$1,500,000 American Express Credit
Corp., 6.00%, due
07/02/97.............. $ 1,500,000
1,869,000 Household Finance Corp.,
6.08%, due 07/01/97... 1,869,000
-----------
Total Commercial Paper
(Cost $3,369,000)..... 3,369,000
-----------
Total Investments
(Cost $32,691,145*)... 102.01% 45,716,462
Liabilities in excess of
other assets.......... (2.01)% (902,280)
------- -----------
Net Assets.............. 100.00% $44,814,182
======== ===========
</TABLE>
* Aggregate cost for Federal income tax purposes is identical. At June 30, 1997,
the net unrealized appreciation for all securities of $13,025,317 consists of
gross unrealized appreciation of $13,069,100 and gross unrealized depreciation
of $43,783.
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
5
<PAGE> 6
M.S.B. FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30,
1997
-----------
<S> <C>
ASSETS:
Investment in securities, at value (Cost $32,691,145)................................... $45,716,462
Cash.................................................................................... 350
Dividends and interest receivable....................................................... 75,483
Receivable for securities sold.......................................................... 66,173
Receivable for fund shares sold......................................................... 19,643
Prepaid expenses........................................................................ 16,815
-----------
Total assets.......................................................................... 45,894,926
-----------
LIABILITIES:
Payable for securities purchased........................................................ 1,034,142
Accrued expenses payable................................................................ 44,046
Payable for fund shares redeemed........................................................ 2,556
-----------
Total liabilities..................................................................... 1,080,744
-----------
NET ASSETS, applicable to 2,668,836 shares of Class A
$.001 par value stock, 5,000,000 shares authorized.................................... $44,814,182
===========
NET ASSETS:
Par value of capital shares............................................................. $ 2,669
Additional paid in capital.............................................................. 31,055,720
Undistributed net investment income..................................................... 1,021
Undistributed net realized gains........................................................ 729,455
Net unrealized appreciation of investments.............................................. 13,025,317
-----------
NET ASSETS.............................................................................. $44,814,182
===========
NET ASSET VALUE, offering and redemption price
per share ($44,814,182 / 2,668,836 shares)............................................ $ 16.79
===========
</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, 1997
----------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends................................................................... $314,157
Interest.................................................................... 76,444 $ 390,601
--------
EXPENSES:
Investment advisory fee..................................................... 151,676
Administration fees......................................................... 40,200
Directors' fees............................................................. 29,885
Legal....................................................................... 24,658
Transfer agent.............................................................. 21,328
Audit....................................................................... 11,342
Printing.................................................................... 11,342
Insurance................................................................... 11,171
Custody..................................................................... 8,991
Registration................................................................ 2,736
Miscellaneous............................................................... 2,662 315,991
--------
Fee waivers................................................................. (27,634)
----------
Net expenses................................................................ 288,357
----------
Net investment income.................................................... 102,244
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain............................................................. 729,455
Net change in unrealized appreciation......................................... 5,005,116
----------
Net realized and unrealized gain.............................................. 5,734,571
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......................... $5,836,815
==========
</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, 1997 DECEMBER 31,
(UNAUDITED) 1996
---------------- ------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income............................................. $ 102,244 $ 253,670
Net realized gain on investments.................................. 729,455 3,295,884
Net change in unrealized appreciation............................. 5,005,116 3,357,338
------------ ------------
Net increase in net assets resulting from operations................ 5,836,815 6,906,892
Distributions to shareholders from:
Net investment income............................................. (101,223) (338,202)
Net capital gains................................................. 0 (4,200,893)
------------ ------------
Total distributions to shareholders................................. (101,223) (4,539,095)
Net increase from capital share transactions (See Note 4)........... 1,720,695 2,480,964
------------ ------------
Total increase in net assets........................................ 7,456,287 4,848,761
NET ASSETS:
Beginning of period............................................... 37,357,895 32,509,134
------------ ------------
End of period (including undistributed net investment income of
$1,021 at June 30, 1997)....................................... $ 44,814,182 $ 37,357,895
============ ============
</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, 1997 -----------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of period.......... $14.60 $13.63 $13.39 $16.79 $15.67 $14.62
INCOME FROM OPERATIONS:
Net investment income....................... 0.04 0.11 0.08 0.16 0.18 0.22
Net realized and unrealized gain (loss) on
investments............................... 2.19 2.76 3.17 (0.44) 3.04 1.33
------------- ------- ------- ------- ------- -------
Total from investment operations.......... 2.23 2.87 3.25 (0.28) 3.22 1.55
DISTRIBUTIONS:
From net investment income.................. (0.04) (0.14) (0.08) (0.18) (0.17) (0.28)
From net realized gains..................... 0.00 (1.76) (2.93) (2.94) (1.93) (0.22)
------------- ------- ------- ------- ------- -------
Total distributions....................... (0.04) (1.90) (3.01) (3.12) (2.10) (0.50)
=========== ======= ======= ======= ======= =======
NET ASSET VALUE, end of period................ $16.79 $14.60 $13.63 $13.39 $16.79 $15.67
=========== ======= ======= ======= ======= =======
Total return.................................. 15.27% 21.16% 24.97% (1.70%) 20.6% 10.7%
Ratio of expenses to average net
assets...................................... 1.43%(1)(2) 1.41%(1) 1.69%(1) 1.28%(1) 1.12% 1.13%
Ratio of net investment income to average net
assets...................................... 0.51%(2) 0.71% 0.57% 0.97% 1.01% 1.43%
Portfolio turnover rate....................... 28% 45% 68% 62% 26% 13%
Average commission rate per share............. $0.0487(3) $0.0443(3) -- -- -- --
NET ASSETS, end of period (000's)............. $44,814 $37,358 $32,509 $35,022 $45,205 $40,790
</TABLE>
- --------------------------------------------------------------------------------
(1) Without fee waivers for the M.S.B. Fund, Inc. for the six months ended June
30, 1997 and the years ended December 31, 1996, 1995, and 1994, the ratios
of expenses to average net assets would have been 1.56% (annualized), 1.61%,
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, 1997 (UNAUDITED)
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, dividend income is recorded on the
ex-dividend date and 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 shareholders.
D--Management Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
NOTE 2--PURCHASES AND SALES OF INVESTMENTS
The cost of purchases and the proceeds from sales of investments, exclusive of
short-term investments, during the six months ended June 30, 1997 were
$6,847,782 and $5,310,672, 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 10% of its
fee for the six month period ended June 30, 1997. The waiver amounted to
$15,334.
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.
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 25% of its administrative fee for the six month period ended June
30, 1997. The waiver amounted to $10,050.
10
<PAGE> 11
M.S.B. FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
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 11% of its transfer agent fee for the six month period ended June
30, 1997. The waiver amounted to $2,250.
As compensation for its custodial services, the Fund pays PNC a minimum monthly
fee of $500 (exclusive of out-of-pocket expenses).
NOTE 4--CAPITAL STOCK
At June 30, 1997, there were 5,000,000 shares of $.001 par value capital stock
authorized. Transactions in capital stock for the six months ended June 30, 1997
and the year ended December 31, 1996, respectively, were as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
(000) $(000)
----------- -----------------
1997 1996 1997 1996
--- ---- ------ -------
<S> <C> <C> <C> <C>
Shares sold........................................................... 158 251 $2,455 $ 3,623
Shares issued in reinvestment of dividends............................ 5 254 82 3,747
--- ---- ------ -------
163 505 2,537 7,370
Shares redeemed....................................................... (52) (332) (816) (4,889)
--- ---- ------ -------
Net increase.......................................................... 111 173 $1,721 $ 2,481
==== ===== ====== ========
</TABLE>
NOTE 5--SHAREHOLDER VOTING RESULTS
The Annual Meeting of the M.S.B. Fund, Inc. was held on April 17, 1997, at which
time 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 five
directors: four to serve a term of office of three years each, expiring in 2000,
and one to fill the unexpired term of a prior director, expiring in 1999.
<TABLE>
<CAPTION>
EXPIRATION
OF TERM FOR
---------- ---------
<S> <C> <C>
Timothy A. Dempsey.............................................................. 1999 1,669,856
David F. Holland................................................................ 2000 1,691,012
George J. Kelly................................................................. 2000 1,677,745
Norman W. Sinclair.............................................................. 2000 1,684,222
Ian D. Smith.................................................................... 2000 1,673,256
</TABLE>
In addition, Messrs. Malcolm J. Delaney, Harry P. Doherty, Joseph R. Ficalora,
David Freer, Jr., Michael J. Gagliardi, and William A. McKenna, Jr., continue as
members of the Board of Directors. Mr. Kelly resigned in July 1997.
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, 1997. The results of voting
for the proposal were 1,682,378 for, 6,671 against, and 22,934 abstaining.
11
<PAGE> 12
M.S.B.
FUND, INC.
OFFICERS
Joseph R. Ficalora
President
Michael J. Gagliardi
First Vice President
Norman W. Sinclair
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
Timothy A. Dempsey
Harry P. Doherty
Joseph R. Ficalora
David Freer, Jr.
Michael J. Gagliardi
David F. Holland
William A. McKenna, Jr.
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
45th Floor
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
Back Cover
