<PAGE> 1
JULY 15, 1999
MESSAGE FROM THE PRESIDENT
Dear Shareholder:
I am very pleased to report that the M.S.B. Fund produced a total return of
5.07% for the six months ended June 30, 1999. This performance helped to raise
our one-year annual return to 19.77% and our three-year average annual return to
24.64%. The five- and ten-year average annual returns for the period ending June
30, 1999 were 22.43% and 15.57%, respectively. If a shareholder had invested
$10,000 in the Fund at inception in 1964 and reinvested all capital gains and
dividends in the Fund, the shareholder's investment would have grown to
$577,700.36 on June 30, 1999.
Our nation's outstanding economic performance over the last twenty years to a
major degree has been the result of record technological innovation and
investment combined with sound monetary policy. Inflation, interest rates, and
unemployment have remained low. Consumer confidence is the highest it has been
in over a generation. Entrepreneurship has flourished, and the greatest new
business start-up boom in history continues. Perhaps best of all is that the
United States is the most computer literate nation the world has ever seen.
Surging technology investments have resulted in a major jump in productivity.
The Commerce Department recently reported that between 1995 and 1998 technology
generated one-third of the nation's increase in economic output and from 1990 to
1997 technology workers were twice as productive as other workers. The Commerce
Department now forecasts that by 2006 approximately fifty percent of all United
States workers will be employed in either "Hi Tech" industries or in heavy
"Hi-Tech" user industries.
Alan Greenspan recently commented that "the productivity growth seen in recent
years likely represents the benefits of the ongoing diffusion and implementation
of a succession of technological advances; likewise, the innovation
breakthroughs of today will continue to bear fruit in the future." He and others
have concluded that synergies have generated more capital flexibility and higher
rates of return on capital employed, and shorter lead-times and less funding are
now needed for productive investment than just three years ago. In addition,
design times for new product development have shortened, inventory management
has become more precise, and many new ways to do business and to create value
have developed.
Just look at how the Internet is altering our economic landscape. This
interactive invention knows no geographic boundaries and is changing the way
Americans work, play, shop and think. The efficiency, cost-savings, and
productivity it generates, have only just begun. Industry analysts estimate that
Internet retail sales, for example, could reach $17 billion this year and could
catapult to between $450 billion and $750 billion within a decade.
The opportunity, threat and potential the Internet poses for the corporate world
demand that business and marketing plans be constantly reviewed and updated.
Upstarts are already taking market share away from industry titans by offering
better service, more convenience, and lower prices. Pricing pressure is so
intense that profit margin improvement can only be achieved through increased
efficiency.
The two essential ingredients for rising economic prosperity are increased
output per hour of work and population growth. Technology and improved worker
skill-sets have caused productivity to leap over the last several years. Yet
population is only growing by about one-quarter of one percent annually,
including immigration. The best way, however, to achieve rising economic
prosperity for generations to come and to increase our worker bench strength is
to overhaul our decaying public elementary and high school system and produce a
knowledgeable workforce with the skill-sets, vitality and enthusiasm to realize
the full potential of our expanding technology.
We believe that the M.S.B. Fund's investment philosophy of seeking to create
shareholder value over time and its investment discipline of investing only in
companies with strong balance sheets that are believed to have the capability
1
<PAGE> 2
of generating rising cash-flow should be well positioned to capitalize on our
country's economic might, technological supremacy and growing share of world
gross domestic product.
Sincerely,
/s/ JOSEPH R. FICALORA
Joseph R. Ficalora
President
2
<PAGE> 3
M.S.B. FUND, INC.
MIDYEAR HIGHLIGHTS
<TABLE>
<S> <C>
Total net assets................... $70,037,177
Shares outstanding................. 3,101,845
Number of shareholders............. 3,861
</TABLE>
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, 1999, 922, 843, 323 and 148 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 06/30/99
---------------------------------------
6 Months Year 5 Years 10 Years
Ended Ended Ended Ended
6/30/99 6/30/99 6/30/99 6/30/99
-------- ------- ------- --------
<S> <C> <C> <C> <C>
M.S.B. Fund, Inc..... 5.07% 19.77% 22.43% 15.57%
Lipper Growth &
Income Funds'
Average............ 10.93 14.48 21.93 15.35
Standard & Poor's 500
Composite Stock
Price Index........ 12.39 22.77 27.87 18.78
Dow Jones Industrial
Average............ 20.46 24.67 27.44 19.34
</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.
3
<PAGE> 4
INVESTMENT RESULTS, OUTLOOK AND STRATEGIES
M.S.B. FUND, INC.
The Fund's net asset value per share on June 30, 1999 was $22.58 versus $21.49
on December 31, 1998. The Fund's total return for the six-month period ending
June 30, 1999 was 5.07%. The Lipper Growth & Income Funds Average's total return
for the six-month period ending June 30, 1999 was 10.93%. During the 7 1/2-year
period beginning December 31, 1991 and ending June 30, 1999, coinciding with the
tenure of the current portfolio management team, the M.S.B. Fund has provided an
average annual total return of 18.35% versus 16.22% for the Lipper Growth &
Income Funds Average. Total return assumes the reinvestment of all dividends and
capital gains and the deduction of all applicable fees and expenses.
After more than doubling the performance of the Lipper Growth & Income Funds
Average in 1998, it is not surprising that the M.S.B. Fund's return has trailed
its peer group average in the first half of 1999. The main reason for the
performance disparity in 1998 and 1999 is due in large part to the M.S.B. Fund's
significant weighting in large capitalization consumer stocks.
Consumer companies earnings are generally less affected by changes in the
economic environments in which they operate than are cyclical companies. As the
world economies weakened during the latter half of 1998, so did the earnings
prospects for cyclical companies. As a result, investors shifted their assets
out of cyclical stocks and into consumer stocks, which provided a significant
boost to the Fund's performance in 1998. As the U.S. economy continued to
strengthen in early 1999 and foreign economies began to show signs of
improvement, investors shifted assets back into cyclical stocks.
Our investment philosophy centers on buying companies that have demonstrated the
ability to grow their earnings steadily over an extended period of time.
Cyclical companies, whose prospects ebb and flow with the ups and downs of the
economic cycle, do not exhibit the characteristics that we look for in a
long-term investment. Our portfolio includes a large exposure to consumer
companies due to their historically stable earnings and cash flow growth. We
have also found that over the long term, returns have been more favorable and
are less volatile in this area.
We also believe that it is not in our shareholder's best interest to try to time
the market's shifts between market sectors, such as the shifts in 1998 and the
first half of 1999 between consumer stocks and cyclical stocks. This policy has
the additional benefit of reducing portfolio turnover, which tends to reduce the
Fund's taxable capital gains distributions. We are content to maintain our
investments in those companies that we believe offer favorable long-term
earnings prospects with stable financial histories, strong balance sheets, solid
management and reasonable prices.
4
<PAGE> 5
M.S.B. FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK-94.13%:
<TABLE>
<CAPTION>
SHARES VALUE
- --------- -----------
(NOTE 1)
<C> <S> <C>
ADVERTISING-3.34%
27,000 Interpublic Group of Cos.,
Inc. ........................... $ 2,338,875
BANKS-3.14%
4,000 M & T Bank Corp. ................. 2,200,000
BEVERAGES-SOFT DRINKS-2.85%
32,000 Coca-Cola Co. .................... 2,000,000
CHEMICALS-SPECIALTY-3.17%
50,000 International Flavors &
Fragrances, Inc. ............... 2,218,750
COMPUTER SOFTWARE &
SERVICES-10.23%
50,000 Automatic Data Processing,
Inc. ........................... 2,200,000
40,000 Electronic Data Systems Corp. ... 2,262,500
30,000 Microsoft Corp. # ................ 2,705,625
-----------
7,168,125
COMPUTER SYSTEMS-2.87%
20,000 Hewlett-Packard Co. ............. 2,010,000
DISTRIBUTOR-CONSUMER
PRODUCTS-2.98%
70,000 Sysco Corp. ...................... 2,086,875
ELECTRICAL EQUIPMENT-3.14%
35,000 Emerson Electric Co. ............ 2,200,625
ELECTRONICS &
SEMICONDUCTORS-3.65%
43,000 Intel Corp. ..................... 2,558,500
ENTERTAINMENT-2.86%
65,000 Walt Disney Co. ................. 2,002,813
FINANCIAL SERVICES-10.26%
20,000 American Express Co. ............ 2,602,500
34,000 Fannie Mae........................ 2,324,750
39,000 Freddie Mac....................... 2,262,000
-----------
7,189,250
FOODS-3.31%
50,000 Campbell Soup Co. ............... 2,318,750
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- --------- -----------
(NOTE 1)
<C> <S> <C>
HEALTH CARE-DIVERSIFIED-3.29%
23,500 Johnson & Johnson ............... $ 2,303,000
HEALTH CARE-DRUGS-6.29%
48,000 Abbott Laboratories............... 2,184,000
30,000 Merck & Co., Inc. ............... 2,220,000
-----------
4,404,000
HOUSEHOLD PRODUCTS-2.44%
16,000 Clorox Co. ...................... 1,709,000
INSURANCE-3.94%
40 Berkshire Hathaway, Inc. # ....... 2,756,000
OFFICE EQUIPMENT AND
SUPPLIES-2.75%
30,000 Pitney Bowes, Inc. ............... 1,927,500
PERSONAL CARE-2.46%
42,000 Gillette Co. ..................... 1,722,000
PUBLISHING-NEWSPAPERS-3.06%
30,000 Gannett Co., Inc. ................ 2,141,250
RESTAURANTS-2.65%
45,000 McDonald's Corp. ................. 1,859,063
RETAIL-DRUG CHAINS-2.39%
57,000 Walgreen Co. ..................... 1,674,375
RETAIL-FOOD CHAINS-3.02%
41,000 Albertsons, Inc. ................. 2,114,062
RETAIL-GENERAL
MERCHANDISE-3.10%
45,000 Wal-Mart Stores, Inc. ............ 2,171,250
RETAIL-SPECIALTY STORES-3.78%
52,500 Gap, Inc. ........................ 2,644,687
TOBACCO-3.16%
55,000 Philip Morris Cos.,Inc. .......... 2,210,312
Total Common Stock
(Cost $37,870,013).............. 65,929,062
</TABLE>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
5
<PAGE> 6
M.S.B. FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMERCIAL PAPER-5.80%:
PRINCIPAL
AMOUNT VALUE
- ---------- -----------
(NOTE 1)
<C> <S> <C> <C>
$2,062,000 Household Finance Corp.,
5.45%, due 07/01/99.....
$ 2,062,000
2,000,000 Ford Motor Credit Co.,
5.26%, due 07/07/99.....
2,000,000
-----------
Total Commercial Paper
(Cost $4,062,000)....... 4,062,000
-----------
Total Investments
(Cost $41,932,013*)..... 99.93% 69,991,062
Other assets in excess of
liabilities............. 0.07% 46,115
------ -----------
Net Assets................ 100.00% $70,037,177
------ -----------
</TABLE>
# Non-income producing security.
* Aggregate cost for Federal income tax purposes is identical. At June 30, 1999,
the net unrealized appreciation for tax purposes for all securities of
$28,059,049 consists of gross unrealized appreciation of $28,538,861 and gross
unrealized depreciation of $479,812.
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
6
<PAGE> 7
M.S.B. FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1999
-------------
<S> <C>
ASSETS:
Investment in securities, at value (Cost $41,932,013)....... $69,991,062
Cash........................................................ 1,162
Dividends and interest receivable........................... 83,788
Receivable for fund shares sold............................. 17,985
Prepaid expenses............................................ 29,770
-----------
Total assets.............................................. 70,123,767
LIABILITIES:
Accrued expenses payable.................................... 84,814
Payable for fund shares redeemed............................ 1,776
-----------
Total liabilities......................................... 86,590
-----------
NET ASSETS, applicable to 3,101,845 shares of Class A
$.001 par value stock, 5,000,000 shares authorized........ $70,037,177
===========
NET ASSETS:
Par value of capital shares................................. $ 3,102
Additional paid in capital.................................. 39,767,625
Net unrealized appreciation on investments.................. 28,059,049
Undistributed net realized gains............................ 2,204,148
Undistributed net investment income......................... 3,253
-----------
NET ASSETS.................................................. $70,037,177
===========
NET ASSET VALUE, offering and redemption price
per share ($70,037,177 / 3,101,845 shares)................ $ 22.58
===========
</TABLE>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
7
<PAGE> 8
M.S.B. FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999
------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends................................................. $353,511
Interest.................................................. 71,798 $ 425,309
--------
EXPENSES:
Investment advisory fee................................... 250,718
Administration fees....................................... 40,200
Directors' fees and expenses.............................. 25,789
Transfer agent............................................ 23,513
Legal..................................................... 22,034
Printing.................................................. 18,581
Insurance................................................. 14,516
Audit..................................................... 12,763
Custody................................................... 10,517
Registration.............................................. 7,483
Miscellaneous............................................. 4,963 431,077
--------
Fee waivers............................................... (9,021)
----------
Net expenses.............................................. 422,056
----------
Net investment income.................................. 3,253
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain........................................... 2,204,148
Net change in unrealized appreciation....................... 1,176,194
----------
Net realized and unrealized gain on investments............. 3,380,342
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $3,383,595
==========
</TABLE>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
8
<PAGE> 9
M.S.B. FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998
---------------- ------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income..................................... $ 3,253 $ 13,653
Net realized gain on investments.......................... 2,204,148 5,141,955
Net change in unrealized appreciation on investments...... 1,176,194 10,527,553
----------- -----------
Net increase in net assets resulting from operations........ 3,383,595 15,683,161
Distributions to shareholders:
From net investment income................................ 0 (13,653)
In excess of net investment income........................ 0 (5,934)
From net realized gain on investments..................... 0 (5,142,223)
----------- -----------
Total distributions to shareholders......................... 0 (5,161,810)
Net increase from capital share transactions (See Note 3)... 830,008 6,034,747
----------- -----------
Total increase in net assets................................ 4,213,603 16,556,098
NET ASSETS:
Beginning of period....................................... 65,823,574 49,267,476
----------- -----------
End of period (including undistributed net investment
income of $3,253 at June 30, 1999)..................... $70,037,177 $65,823,574
=========== ===========
</TABLE>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
9
<PAGE> 10
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, 1999 ---------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
---------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of
period........................... $21.49 $17.73 $14.60 $13.63 $13.39 $16.79
INCOME FROM OPERATIONS:
Net investment income............ 0.00 0.01 0.07 0.11 0.08 0.16
Net realized and unrealized gain
(loss) on investments.......... 1.09 5.55 4.10 2.76 3.17 (0.44)
------- ------- ------- ------- ------- -------
Total from investment
operations................... 1.09 5.56 4.17 2.87 3.25 (0.28)
DISTRIBUTIONS:
From net investment income....... 0.00 (0.01) (0.07) (0.14) (0.08) (0.18)
From net realized gains on
investments.................... 0.00 (1.79) (0.97) (1.76) (2.93) (2.94)
------- ------- ------- ------- ------- -------
Total distributions............ 0.00 (1.80) (1.04) (1.90) (3.01) (3.12)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, end of period..... $22.58 $21.49 $17.73 $14.60 $13.63 $13.39
======= ======= ======= ======= ======= =======
Total return....................... 5.07% 31.45% 28.88% 21.16% 24.97% (1.70%)
Ratio of expenses to average net
assets........................... 1.26%(1)(2) 1.32%(1) 1.41%(1) 1.41%(1) 1.69%(1) 1.28%(1)
Ratio of net investment income to
average net assets............... 0.01%(2) 0.02% 0.43% 0.71% 0.57% 0.97%
Portfolio turnover rate............ 7% 32% 23% 45% 68% 62%
Average commission rate per
share(3)......................... $0.0395 $0.0448 $0.0475 $0.0443 -- --
NET ASSETS, end of period
(000's).......................... $70,037 $65,824 $49,267 $37,358 $32,509 $35,022
</TABLE>
- --------------------------------------------------------------------------------
(1) Without fee waivers for the M.S.B. Fund, Inc. for the six months ended June
30, 1999 and the years ended December 31, 1998, 1997, 1996, 1995, and 1994,
the ratios of expenses to average net assets would have been 1.29% 1.39%,
1.55%, 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 year 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.
10
<PAGE> 11
M.S.B. FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 (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 current investment objective of the Fund is to achieve long-term
growth of capital for its shareholders. Prior to May 1, 1999, the investment
objective of the Fund was to achieve capital appreciation for its shareholders,
with a secondary objective of income.
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 as of 4:00 pm Eastern Time. Short-term
instruments maturing within 60 days of the valuation date 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 ordinary taxable income and net capital gains to its
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--FEES
Shay Assets Management, Inc. (the "Investment Adviser") is the investment
adviser to the Fund. The Investment Adviser is a wholly-owned subsidiary of Shay
Investment Services, Inc. ("SISI"), which is controlled by Rodger D. Shay, a
Vice President of the Fund.
The Investment Adviser receives fees 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
(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
did not result in any waiver of the Investment Adviser's fees during the six
month period ended June 30, 1999.
Shay Financial Services, Inc. (the "Distributor") is the distributor for the
Fund. The Distributor is a wholly-owned subsidiary of SISI, which is controlled
by Rodger D. Shay, a Vice President of the Fund. The Distributor receives no
compensation for its distribution services.
As compensation for its administrative services, the Fund paid PFPC a minimum
monthly fee of $6,700 (exclusive of out-of-pocket expenses). PFPC waived
approximately 17% of its administrative fee for the six month period ended June
30, 1999. The waiver amounted to $6,771.
11
<PAGE> 12
M.S.B. FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
As compensation for its services as transfer agent, the Fund paid 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 ended June
30, 1999. The waiver amounted to $2,250.
As compensation for its custodial services, the Fund paid PFPC Trust Co. a
minimum monthly fee of $500 (exclusive of out-of-pocket expenses).
The Fund has appointed BISYS Fund Services Ohio, Inc. ("BISYS") and The Bank of
New York ("BONY") to provide administration, fund accounting, transfer agency
and custodian services to the Fund. These services will replace the services
previously provided to the Fund by PFPC Inc. and PFPC Trust Company.
Effective August 1, 1999, BISYS, 3435 Stelzer Road, Columbus, Ohio 43219, became
the Fund's administrator and accounting agent pursuant to an Administration
Agreement and a Fund Accounting Agreement, each dated August 1, 1999. Pursuant
to these agreements, BISYS will perform various administrative services for the
Fund, including (i) maintenance of books and records, (ii) preparation of
various filings, reports, statements and returns filed with governmental
authorities or distributed to shareholders of the Fund and (iii) computation of
the Fund's net asset value for purposes of sales and redemptions of shares.
Effective August 9, 1999, BISYS also will become the Fund's transfer agent.
Effective July 30, 1999, BONY, One Wall Street, New York, NY 10286, became the
custodian of the Fund's securities and other investments and replaced PFPC Trust
Company in that capacity.
The fees payable to BISYS and BONY are substantially the same as the fees that
were payable under the Fund's prior agreements with PFPC and PFPC Trust Company.
NOTE 3--CAPITAL STOCK
At June 30, 1999, there were 5,000,000 shares of $.001 par value capital stock
authorized. Transactions in capital stock for the six month period ended June
30, 1999 and the year ended December 31, 1998, respectively, were as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
(000) ($000)
----------- -----------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Shares sold................................................. 183 280 $ 3,971 $ 5,638
Shares issued in reinvestment of dividends.................. 0 195 0 4,169
---- ---- ------- -------
183 475 3,971 9,807
Shares redeemed............................................. (144) (191) (3,141) (3,772)
---- ---- ------- -------
Net increase................................................ 39 284 $ 830 $ 6,035
==== ==== ======= =======
</TABLE>
NOTE 4--PURCHASES AND SALES OF SECURITIES
The cost of purchases and the proceeds from sales of investments, exclusive of
short-term investments, for the six month period ended June 30, 1999, were
$4,238,142 and $5,237,547, respectively.
12
<PAGE> 13
M.S.B. FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
NOTE 5--SHAREHOLDER VOTING RESULTS
The Annual Meeting of Stockholders of the M.S.B. Fund, Inc. was held on April
22, 1999, 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 to serve a term of office of three years each.
<TABLE>
<CAPTION>
EXPIRATION
OF TERM FOR
---------- ---
<S> <C> <C>
Timothy A. Dempsey.......................................... 2002 1,886,553
Harry P. Doherty............................................ 2002 1,893,225
Joseph R. Ficalora.......................................... 2002 1,892,483
Michael J. Gagliardi........................................ 2002 1,893,414
</TABLE>
In addition, Messrs. Malcolm J. Delaney, David Freer, Jr., David F. Holland,
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 Arthur Andersen LLP as Independent Auditors of
the Fund for the fiscal year ending December 31,1999. The results of voting for
the proposal were 1,868,654 for, 8,204 against, and 17,125 abstaining.
13
<PAGE> 14
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
Steve Pierce
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> 15
M.S.B.
FUND, INC.
M.S.B. FUND, INC.
c/o Shay Financial Services, Inc.
230 West Monroe Street
Chicago, Illinois 60606
Telephone 800-661-3938
INVESTMENT ADVISER
Shay Assets Management, Inc.
200 Park Avenue
45th Floor
New York, New York 10166
DISTRIBUTOR
Shay Financial Services, Inc.
230 West Monroe Street
Chicago, Illinois 60606
ADMINISTRATOR, TRANSFER AGENT,
REGISTRAR AND DIVIDEND PAYING AGENT
BISYS Fund Services Ohio, Inc.
3435 Stelzer Rd.
Columbus, OH 43219
CUSTODIAN
The Bank of New York
One Wall Street
New York, NY 10286
LEGAL COUNSEL
Hughes Hubbard & Reed LLP
One Battery Park Plaza
New York, New York 10004
INDEPENDENT AUDITORS
Arthur Andersen LLP
1601 Market Street
Philadelphia, Pennsylvania 19103
M.S.B.
FUND, INC.
SEMI-ANNUAL REPORT
June 30, 1999
