MSB FUND INC, 485BPOS, 2000-04-28

MSB FUND INC
485BPOS, 2000-04-28

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<PAGE> 1
As filed with the Securities and Exchange Commission on April 28, 2000
1933 ACT REGISTRATION NO. 002-22542
1940 ACT REGISTRATION NO. 811-1273
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

-------------

FORM N-1A

REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 ........................ X
PRE-EFFECTIVE AMENDMENT NO. .....................
POST-EFFECTIVE AMENDMENT NO. 43 ................. X
AND/OR
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY OF 1940..................... X
AMENDMENT NO. 43................................. X

-------------

M.S.B. FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

200 PARK AVENUE
NEW YORK, NEW YORK 10166
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (212) 573-9354

JAMES H. BLUCK
HUGHES HUBBARD & REED LLP
ONE BATTERY PARK PLAZA
NEW YORK, NEW YORK 10004
(NAME AND ADDRESS OF AGENT FOR SERVICE)
It is proposed that this filing will become effective (check
appropriate box)
_ IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (b)

X ON MAY 1, 2000 PURSUANT TO PARAGRAPH (b)

_ 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(1)

_ ON (DATE) PURSUANT TO PARAGRAPH (a)(1)

_ 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(2)
_ ON (DATE) PURSUANT TO PARAGRAPH (a)(2) OF RULE 485.
If appropriate, check the following box:
_ THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE
DATE FOR A PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.

TITLE OF SECURITIES BEING REGISTERED: CLASS A STOCK, PAR VALUE $.001 PER SHARE

===============================================================================

<PAGE> 2

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES AND HAS NOT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER AGENCY.

LOGO
PROSPECTUS
------------------
May 1, 2000

------------------

A NO-LOAD FUND

------------------

Investment Objective:
LONG-TERM GROWTH OF CAPITAL

You should read this Prospectus
and retain it for future reference.
<PAGE> 3

CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Key Points............................ 2
Performance Summary................... 3
Fees and Expenses of the Fund......... 4
Investment Objective and Strategies... 5
Principal Risks....................... 5
Share Price -- Net Asset Value........ 6
Purchase of Fund Shares............... 6
Share Purchase Options................ 8
Redeeming Shares...................... 10
Understanding Performance............. 13
</TABLE>

<TABLE>
<CAPTION>
PAGE
<S> <C>
Dividends, Distributions and Federal
Income Tax Status................... 13
Portfolio Management.................. 14
Administrator, Transfer Agent,
Dividend Paying Agent and
Custodian........................... 15
Distributor........................... 15
Financial Highlights.................. 15
Additional Information and Shareholder Back
Inquiries........................... Cover
</TABLE>

------------------------

KEY POINTS

OBJECTIVE: The Fund's investment objective is to achieve long-term growth of
capital for its shareholders.

PRINCIPAL STRATEGIES: The Fund seeks to achieve its objective by investing in a
diversified portfolio of equity securities, consisting primarily of securities
of U.S.-based companies whose growth, cash flow, earnings and dividend prospects
are promising and whose securities are reasonably priced and have the potential
for capital appreciation in the opinion of its Investment Adviser. The equity
securities in which the Fund invests consist primarily of dividend-paying common
stocks of large-capitalization companies, i.e., companies with a market
capitalization in excess of $5 billion. There is no assurance that the Fund in
fact will achieve this objective.

RISKS: All investments in equity mutual funds, like the Fund, involve some
level of risk. Simply defined, risk is the possibility that you will lose money
or not make money. Below is a summary of the principal risk factors for the
Fund.

- MARKET AND INVESTMENT RISKS. The value of the Fund's shares will
fluctuate in accordance with the value of the securities held in its
portfolio. Declines are possible in the overall stock market or in the
particular securities or types of securities held by the Fund, and it is
possible to lose money as a result of your investment.

- PORTFOLIO MANAGEMENT RISKS. The Investment Adviser's skill will affect
the ability of the Fund to achieve its investment objective. The
strategies employed by the Fund may not match the performance of other
strategies at different times or under different market or economic
conditions. Accordingly, the Fund's performance for any period may
differ from the performance of the overall market or from other
investments that may be available to you.

INVESTMENTS NOT INSURED OR GUARANTEED: An investment in the Fund is not a bank
deposit and is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.

2
<PAGE> 4

PERFORMANCE SUMMARY

The bar chart and table shown below provide an indication of the risks of
investing in the Fund by showing changes in the Fund's performance from
year-to-year over a 10-year period and by showing how the Fund's average annual
returns for one-, three-, five-, and ten-years compare to those of a broad-based
securities market index. All returns assume reinvestment of dividends. How the
Fund has performed in the past is not necessarily an indication of how the Fund
will perform in the future.

YEAR-BY-YEAR TOTAL RETURNS (YEARS ENDED DECEMBER 31)
PERFORMANCE GRAPH

<TABLE>
<S> <C> <C>
Best Quarter: 4th Quarter, 1998 +22.56%
Worst Quarter: 3rd Quarter, 1990 -16.93%
</TABLE>

AVERAGE ANNUAL TOTAL RETURNS (YEARS ENDED DECEMBER 31, 1999)

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
M.S.B. Fund, Inc..................................... 5.79% 21.47 22.10% 14.46%
S&P 500 Index*....................................... 21.04% 27.56 28.56% 18.21%
</TABLE>

- ---------------

* The S&P 500 Index is the Standard & Poor's Composite Index of 500 Stocks,
which is a commonly recognized unmanaged price index of 500 widely held common
stocks. Unlike the Fund's returns, index returns do not reflect any fees or
expenses.

3
<PAGE> 5

FEES AND EXPENSES OF THE FUND

THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND
HOLD SHARES OF THE FUND.

<TABLE>
<S> <C> <C>
SHAREHOLDER FEES (fees paid directly from your investment).......... NONE
ANNUAL FUND OPERATING EXPENSES (deducted from Fund assets)
Management Fees................................................... 0.75%*
Distribution or Service (12b-1) Fees.............................. NONE
Other Expenses.................................................... 0.51%
Administration, Transfer Agent and Custodian Fees...... 0.23%*
Professional and Directors' Expenses................... 0.17%
Insurance, Printing and Miscellaneous Expenses......... 0.11%
Total Annual Fund Operating Expenses.............................. 1.26%*
</TABLE>

- ---------------

* The preceding table is based on expenses incurred during the fiscal year
ended December 31, 1999, without giving effect to fee waivers by the Fund's
Administrator and Transfer Agent. The operating expenses are expressed as a
percentage of the Fund's average net assets. If the effect of the fee
waivers were included, the Administration, Transfer Agent and Custodian Fees
in the preceding table would have been 0.21%, and Total Annual Fund
Operating Expenses would have been 1.24%. The Administrator and Transfer
Agent has contractually agreed to continue the fee waiver through December
31, 2000, subject to review at the end of each calendar year.

EXAMPLE

This Example may help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. Because it uses hypothetical
conditions, your actual costs may be higher or lower.

The Example assumes that you invest $10,000 in the Fund for the time
periods indicated. The Example also assumes that your investment has a 5% return
each year, all dividends and distributions are reinvested and the Fund's
operating expenses described in the preceding table remain the same as a
percentage of net assets.* Based on these assumptions your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------- -------- -------- --------
<S> <C> <C> <C>
$128 $400 $692 $1,523
</TABLE>

- ---------------
* If the effect of expense limitations and fee waivers that were in effect
during the year were reflected in the Example, the expenses paid for the
one-, three-, five- and ten-year periods would have been $126, $393, $681
and $1,500, respectively.
4
<PAGE> 6

INVESTMENT OBJECTIVE AND STRATEGIES

INVESTMENT OBJECTIVE

The investment objective of the Fund is to achieve long-term growth of
capital for its shareholders. The Fund is designed as an investment vehicle for
investors who want to see their capital grow over the long term and who are
willing to take moderate risks to achieve that goal. There is no assurance that
the Fund will, in fact, achieve its objective.

The Board of Directors may change the Fund's investment objective without
shareholder approval.

PRINCIPAL INVESTMENT STRATEGIES

The Fund invests primarily in equity securities of U.S.-based companies
whose growth, cash flow, earnings and dividend prospects are promising and whose
securities are reasonably priced and have the potential for capital appreciation
in the opinion of its Investment Adviser. Specifically, the Investment Adviser
looks for companies with strong balance sheets and sustainable earnings growth.
In evaluating the prospects for a company's growth and earnings, the Investment
Adviser considers, among other things, the company's historical performance and
growth strategy, the growth rate of the industries in which it operates and the
markets into which it sells, the nature of its competitive environment,
technological developments and trends in market share. In attempting to
determine reasonable price levels for a company's securities, the Investment
Adviser utilizes a variety of measurement methods, including discounted cash
flow analysis of expected earnings streams and an evaluation of the company's
price-to-earnings ratio.

The equity securities in which the Fund invests consist primarily of
dividend-paying common stocks of large-capitalization companies, i.e., companies
with a market capitalization in excess of $5 billion. The Fund may invest up to
25% of its assets in equity securities of smaller companies. The equity
securities in which the Fund may invest also include common stocks that do not
pay dividends.

Under normal market conditions, it is the Fund's policy to invest
substantially all of its assets in equity securities. However, if the Fund's
Investment Adviser deems it beneficial for defensive purposes during adverse
market, economic or other conditions, the Fund may invest up to 100% of its
assets temporarily in non-equity securities, such as investment grade corporate
bonds, commercial paper and government securities. In taking this action, the
Fund would reduce its exposure to fluctuations and risks in the market for
equity securities and would increase its exposure to fluctuations and risks in
the market for debt securities. These defensive actions would reduce the benefit
from any upswing in the equity markets and, if the Investment Adviser does not
correctly anticipate fluctuations in the equity and debt securities markets, may
not contribute to the achievement of the Fund's investment objective.

To a limited extent, the Fund also may engage in other investment
practices.

More information about the Fund's investments and strategies is provided in
the Statement of Additional Information.

PRINCIPAL RISKS

All investments in equity mutual funds, like the Fund, involve some level
of risk. Simply defined, risk is the possibility that you will lose money or not
make money.

The principal risk factors for the Fund are discussed below. Before you
invest, please make sure you understand the risks that apply to your investment.

MARKET AND INVESTMENT RISKS

The value of the Fund's shares will fluctuate in accordance with the value
of the securities held in its portfolio so that your shares, when redeemed, may
be worth more or less than their original cost. Declines are possible in the
overall stock market or in the particular securities or types of securities held
by the Fund, and it is possible to lose money as a result of your investment.

The Fund may invest up to 25% of its assets in the securities of companies
with market capitalizations of less than $5 billion. These companies carry
additional risks because their earnings tend to be less predictable, their share
prices more volatile and

5
<PAGE> 7

their securities less liquid than the securities of larger companies.

PORTFOLIO MANAGEMENT RISKS

The Investment Adviser's skill in choosing appropriate investments for the
Fund will affect the ability of the Fund to achieve its investment objective,
and the investment strategies employed by the Fund may not match the performance
of other strategies at different times or under different market or economic
conditions. Accordingly, the Fund's performance for any period may differ from
the performance of the overall market or from other investments that may be
available to you.

YEAR 2000 RISKS

The Fund and its service providers do not appear to have been adversely
affected by computer problems related to the processing of date-related
information on or after January 1, 2000 (the "Year 2000 issue"). However, there
remains a risk that such problems could arise or be discovered in the future.
The Fund has taken steps it believes are reasonably designed to address the Year
2000 issue with respect to the computer system it uses, and the Fund's service
providers have informed the Fund that they intend to monitor and correct any
Year 2000 problems that may arise or be discovered affecting the computer
systems relied on by the Fund. However, there can be no assurance that the
operations of, and services provided to, the Fund and its shareholders will not
be adversely affected. The Fund also could be adversely affected if Year 2000
problems adversely affect any of the companies in which the Fund invests.

SHARE PRICE -- NET ASSET VALUE

The price of the Fund's shares is also referred to as its net asset value
or NAV per share. The net asset value per share of the Fund is determined by
computing the total value of all securities and other assets of the Fund,
subtracting all of its liabilities and then dividing by the total number of
shares of the Fund outstanding:

<TABLE>
<S> <C>
Net Asset Value = Total Assets - Liabilities
Number of Shares
Outstanding
</TABLE>

The Fund determines net asset value per share of the Fund as of 4:00 P.M.,
New York time. Shares will not be priced on days on which the New York Stock
Exchange is closed for trading.

The Fund uses market prices in valuing portfolio securities, but may use
fair value estimates if reliable market prices are unavailable.

PURCHASE OF FUND SHARES

You purchase shares at the Fund's next-determined net asset value after the
Fund receives your order to purchase. Except for orders by investors who elect
next-day settlement, all orders must be accompanied by a check or other form of
payment. Orders to purchase shares are not binding on the Fund until accepted by
the Fund. The Fund reserves the right to reject any purchase order.

As an M.S.B. Fund shareholder, you pay no shareholder transaction fees,
such as sales loads, redemption fees or exchange fees, when purchasing or
redeeming shares.

INITIAL AND SUBSEQUENT PURCHASES

To make an investment in the Fund, follow the instructions provided on page
8 under the heading "Share Purchase Options." An Account Application may be
obtained separately from the Fund by calling 800-982-1846.

You will receive a Confirmation Notice from the Fund confirming each share
purchase. Each Confirmation Notice includes a detachable order form which you
may use to make additional purchases of shares.

Subsequent purchases also may be made by telephone.

AUTOMATIC INVESTMENT PLAN

You may make automatic periodic investments in the Fund by authorizing the
Fund's Transfer Agent to withdraw funds from your bank account. If you desire to
participate in the Automatic Investment Plan, complete the application, which
may be obtained separately from the Fund by calling 800-982-1846, and mail it to
the Fund. Allow up to one month for processing of the application.

6
<PAGE> 8

TAX-SHELTERED RETIREMENT PLANS

The Fund offers certain tax-sheltered retirement plans through which you
may purchase shares, including traditional, SEP, Roth and Education IRAs. Call
the Fund at 800-982-1846 to obtain the appropriate forms.

PAYROLL DEDUCTION PLANS

A number of employers make purchases of M.S.B. Fund shares available to
their employees by means of payroll deductions. Contact your employer for
information about the availability of a payroll deduction plan.

NEXT-DAY SETTLEMENT OPTION

The Fund makes available a next-day settlement option for investors.
Next-day settlement permits an investor to place an order by telephone or fax to
purchase Fund shares at the net asset value per share next determined after
receipt of the order to purchase and to deliver payment for the order by wire
transfer the following business day.

To use the next-day settlement option, follow the instructions on page 8
under the heading "Share Purchase Options." You may obtain telephone transaction
authorization forms needed to activate next-day settlement by calling the Fund
at 800-661-3938.

NON-PAYMENT

A purchase order is binding upon the investor. If the Fund must cancel your
order because payment was not timely received, you will be responsible for the
difference between the price of the shares when ordered and the price of the
shares when the order is canceled, and for any fees or other losses and expenses
incurred by the Fund. The Fund may redeem shares from your account in an amount
equal to the amount of the difference in share price and the fees and other
losses and expenses incurred, if any, and may retain the proceeds of the
redemption in satisfaction of your liability to the Fund. You will continue to
be responsible for any deficiency. In addition, the Fund may prohibit or
restrict you from electing next-day settlement in the future or from making
future purchases of the Fund's shares.

Any funds received by the Fund in respect of a canceled purchase order will
be returned upon instructions from the sender without any liability to the Fund,
the Investment Adviser, the Distributor or the Custodian. If it is not possible
to return the funds the same day, you will not have use of the funds until the
next business day when it is possible to effect the return payment. The Fund
reserves the right to reject any purchase order.

REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS

You may elect to have dividends and capital gains distributions of the
Fund, when paid, reinvested in shares of the Fund at the net asset value per
share determined at the close of business on the ex-dividend date. The Fund will
so reinvest dividends and capital gains distributions unless you state a
contrary intention in the space provided for that purpose in the Account
Application. You may change an election at any time prior to a record date for a
dividend or distribution by notifying the Fund in writing.

7
<PAGE> 9
SHARE PURCHASE OPTIONS

<TABLE>
<CAPTION>
INITIAL PURCHASE SUBSEQUENT INVESTMENT
---------------- ---------------------
<S> <C> <C>
MINIMUM $250 ($50 for investors enrolling in $50 ($25 for investments through the
INVESTMENT the Automatic Investment Plan) Automatic Investment Plan)

BY MAIL OR Complete and sign the application. Make your check payable to "M.S.B.
OVERNIGHT COURIER Make your check payable to "M.S.B. Fund, Inc." and send it to the address
Fund, Inc." and send the completed at the left. Put your name, address
application and check to: and M.S.B. Fund account number on your
check. Subsequent investment forms
By Mail: M.S.B. Fund, Inc. will be included with each shareholder
P.O. Box 182010 statement for your convenience.
Columbus, OH 43218-2010 Alternatively, include a note giving
your M.S.B. Fund account number, your
By Courier: M.S.B. Fund, Inc. name and your address.
c/o BISYS Fund Services
Attn: Shareholder
Services
3435 Stelzer Road
Columbus, OH 43219

BY TELEPHONE Telephone transactions may not be used If you want to make telephone
for initial purchases, unless the transactions, call 800-661-3938 to set
investor is an institution. If you up your account for this feature. All
want to make telephone transactions, purchases made by telephone must be
call 800-661-3938 to set up your paid by wire transfer.
account for this feature. All
purchases made by telephone must be
paid by wire transfer.

WIRE INSTRUCTIONS Call 800-661-3938 to notify the Fund Please carefully follow instructions
that you intend to purchase shares by at left and include the following
wire and to verify wire instructions. information:
Shareholder Account #
Shareholder Name/Registration
Taxpayer Identification Number.
</TABLE>

8
<PAGE> 10

<TABLE>
<CAPTION>
INITIAL PURCHASE SUBSEQUENT INVESTMENT
---------------- ---------------------
<S> <C> <C>
NEXT-DAY 1. Open an account by submitting a Follow the directions to the left.
SETTLEMENT OPTION completed Account Application by mail
or overnight courier. Authorize
telephone transactions on an
authorization form available from the
Fund.
2. Notify the Fund by calling 800-661-
3938 that you desire to purchase
shares with next-day settlement.
3. Submit an order to purchase shares
either by fax or telephone, indicating
the amount of the investment or the
number of shares you desire to
purchase. Be sure to indicate on the
order that next-day settlement is
sought. If you are submitting the
purchase order by fax, please call
1-800-661-3938 to obtain a fax number.
4. Wire funds using the wire
instructions above. Immediately
available funds must be received by
4:00 P.M. New York City time on the
next business day after the order is
submitted or the order will be
canceled.

AUTOMATIC Complete the Account Application which Follow the directions to the left.
INVESTMENT PLAN may be obtained separately from the
Fund. Send the completed application
and a voided personal check to the
Fund at the address provided on page 8
for delivery by mail or overnight
courier. Allow up to one month for
processing of your application.

PAYROLL DEDUCTION See your employer for information. See your employer for information.
PLANS

TO OBTAIN ACCOUNT (Call the Fund at 1-800-661-3938.) (Call the Fund at 800-982-1846.)
APPLICATIONS AND
OTHER FORMS
</TABLE>

9
<PAGE> 11

SHARE CERTIFICATES

The Fund will not issue certificates representing the Fund's shares unless
you make a request in writing directly to the Fund's Administrator or to an
account representative of an eligible broker-dealer, bank or other financial
intermediary. Wire and telephone redemptions of shares held in certificate form
are not permitted.

PURCHASES THROUGH FINANCIAL INTERMEDIARIES

You may also purchase shares of the Fund through authorized broker/dealers
or other financial intermediaries such as banks, 401(k) plans, financial
advisers and financial supermarkets. These parties may charge transaction fees
and may set different minimum investments or limitations on buying or selling
shares. The intermediaries are responsible for transmitting purchase orders and
funds and for crediting their customers' accounts following timely redemptions
made in accordance with their customer agreements and this Prospectus.

REDEEMING SHARES

You may withdraw any part of your account at any time by redeeming shares
(subject to the conditions and limited exceptions described below). You may make
redemption requests in writing or by telephone if you have elected the telephone
redemption option. If share certificates were issued to you for the shares to be
redeemed, the share certificates must accompany the redemption request.
Procedures for redeeming shares are described below.

Shares are redeemed at their net asset value per share next determined
after receipt by the Fund of the request for redemption and all other necessary
documentation.

If the shares to be redeemed have been recently purchased by check, the
Fund may delay the payment of redemption proceeds until the check has cleared,
which may take up to 15 days.

WRITTEN REDEMPTION REQUESTS

To be in good order, written redemption requests must be signed exactly as
the account is registered by all persons in whose names the account is held and
must include the following information and documents:

- - the account number from which shares are to be redeemed,

- - the dollar value or number of shares to be redeemed,

- - the address the redemption proceeds should be mailed to,

- - the shareholder's daytime phone number,

- - the signatures of all account owners exactly as registered on the account,

- - signature guarantees (if required, as
described below under the heading "Signature Guarantees"),

- - any supporting legal documentation that may be required in the event of the
death or incapacity of a shareholder,

- - any certificates you are holding for the shares being redeemed.

You should direct redemption requests to M.S.B. Fund, Inc., P.O. Box
182010, Columbus, OH 43218-2010. Redemption requests sent by overnight courier
should be sent to M.S.B. Fund, Inc., c/o BISYS Fund Services, Attn: Shareholder
Services, 3435 Stelzer Road, Columbus, OH 43219.

SIGNATURE GUARANTEES

Except for redemption requests by 401(k) plan omnibus accounts and
redemptions by institutional investors, redemption requests that are greater
than $10,000 require signature guarantees. A signature guarantee is designed to
protect you and the Fund against fraudulent transactions by unauthorized
persons. The types of signature guarantees that are required are described
below.

10
<PAGE> 12

<TABLE>
<CAPTION>
AMOUNT OF
REDEMPTION TYPE OF SIGNATURE GUARANTEE REQUIRED
- ---------- ------------------------------------
<S> <C>
$10,000-$25,000 Signatures must be guaranteed by a
domestic bank or trust company,
broker-dealer, clearing agency,
credit union or savings association
(a "Qualified Guarantor").
OVER $25,000 Signatures must be guaranteed by a
Qualified Guarantor that is a
participant in a medallion program
(described below) recognized by the
Securities Transfer Association.
REDEMPTIONS BY
401(K) PLAN
OMNIBUS
ACCOUNTS OR BY
INSTITUTIONAL
INVESTORS Signature guarantee not required.
</TABLE>

The three recognized medallion programs are Securities Transfer Agents
Medallion (STAMP), Stock Exchanges Medallion Program (SEMP) and New York Stock
Exchange, Inc. Medallion Signature Program (MSP).

Signature guarantees by a Qualified Guarantor also are required if:

- - the proceeds of the redemption are to be paid to a person other than the
record owner,

- - the proceeds are to be sent to an address other than the address on the
records of the Fund's Transfer Agent,

- - the redemption request is received within thirty (30) days after the Transfer
Agent has been notified of an address change.

The Transfer Agent reserves the right to request additional information
from, and make reasonable inquiries of, any eligible guarantor institution.

TELEPHONE REDEMPTIONS

The Fund permits individual shareholders (once within a thirty day period)
or a representative of record for an account to redeem shares by telephone in
amounts up to $10,000 by calling the Fund at 800-661-3938. In order to use this
service, you must elect to do so on your application or complete a separate
authorization form supplied by the Fund.

Telephone redemptions must be in amounts of $500 or more. Instructions must
include your M.S.B. Fund account number and the dollar amount or number of
shares to be redeemed. Checks issued must be made payable to the owner of record
and may be mailed only to the address of record.

Telephone redemption requests are not available:

- - for retirement account shares,

- - for shares purchased within 15 days prior to the telephone redemption
request,

- - for shares for which share certificates have been issued or

- - if an address change has been made for the account within 60 days prior to
the telephone redemption request.

The Fund does not restrict institutional investors as to the frequency or
the maximum dollar amount of redemptions that they can make by telephone.

If there are multiple account owners, the Fund may rely on the telephone
instructions of only one owner.

The Fund will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. These procedures may include, among other
things, requiring some form of personal identification prior to acting upon
telephone instructions. The Fund reserves the right to refuse a telephone
redemption if it believes it advisable to do so. Assuming the Fund's security
procedures are followed, neither the Fund nor the Fund's Administrator or
Transfer Agent will be responsible for the authenticity of redemption
instructions received by telephone and believed to be genuine, and the investor
will bear any loss. The Fund may record all calls.

During periods of substantial economic or market change, telephone
redemptions may be difficult to complete. Shares may be redeemed by

11
<PAGE> 13

mail if you are unable to contact the Fund by telephone.

ADDITIONAL INFORMATION CONCERNING REDEMPTIONS

Wiring of Redemption Proceeds. An individual shareholder who holds Fund
shares in non-certificate form may elect to have redemption proceeds of $5,000
or more wired to the shareholder's brokerage account or a commercial bank
account designated by the shareholder. The Fund does not restrict institutional
buyers as to the minimum or maximum amount of redemption proceeds that may be
transmitted to them by wire transfer.

Redemption of IRA or Retirement Plan Accounts. If you desire to redeem
shares held in an IRA or other retirement plan account, you must indicate on
your redemption request whether or not to withhold federal income tax.
Redemption requests failing to indicate an election not to have federal tax
withheld will be subject to withholding.

Broker-Dealers. You also may redeem Fund shares through broker-dealers who
are holding shares on your behalf and have made arrangements with the Fund
permitting redemptions by telephone or fax transmission. These broker-dealers
may charge a fee for this service.

EXCEPTIONS TO OBLIGATION TO REDEEM

Redemptions may be suspended, and the date of payment postponed, if:

- - trading on the New York Stock Exchange is suspended or restricted,

- - an emergency makes determination of net asset value or disposition of
portfolio securities not reasonably practicable, or

- - the Securities and Exchange Commission by order permits suspension for the
protection of shareholders.

Requests for redemption received during a period when the right to redeem
is suspended may be withdrawn at any time until redemptions are recommenced.

REDEMPTION IN KIND

The Fund reserves the right to make a "redemption in kind"-- payment in
portfolio securities rather than cash -- if the amount you are redeeming in any
90-day period is large enough to effect Fund operations (i.e., if it represents
more than $250,000 or 1% of the Fund's assets). The Statement of Additional
Information contains supplementary details concerning redemption in kind.

AUTOMATIC WITHDRAWAL PLAN

You may elect to participate in an Automatic Withdrawal Plan which will
enable you to withdraw cash systematically from your investment in the Fund
without the necessity of submitting a redemption order each time a redemption of
shares is to be made. The redemption of shares under the Automatic Withdrawal
Plan will reduce and may eventually eliminate all shares held in your account.

Under the Automatic Withdrawal Plan, you may have payments made to you
either monthly or quarterly. In addition, you may request either payment of a
fixed dollar amount (through the redemption of sufficient shares on the
redemption date) or the redemption of a specified number of shares. If you
designate the redemption of a specified number of shares and not a fixed dollar
amount, the actual cash payments received will vary according to the net asset
value of your shares on the redemption date.

Under the Automatic Withdrawal Plan, you may not redeem shares for which
share certificates have been issued. If you elect to participate in the
Automatic Withdrawal Plan, all income dividends and capital gain distributions
payable to you will be reinvested in Fund shares regardless of previous
instructions which you may have given to the Fund.

Either you or the Fund may terminate the Automatic Withdrawal Plan by
giving at least 30 days' written notice at any time.

Additional information regarding the Automatic Withdrawal Plan and
applications are available from the Fund upon request.

REDEMPTION AT THE OPTION OF THE FUND

If the value of the shares in your account is less than $250, and you are
not enrolled in the Automatic Investment Plan, the Fund may notify you that,
unless you bring the account up to $250 in value, the Fund will redeem all
shares and close

12
<PAGE> 14

your account. The Fund will give you forty-five days after it sends the notice
to bring your account up to $250 before it takes any action. This minimum
balance requirement does not apply to IRAs and other tax-sheltered investment
accounts. This right of redemption will not apply if the value of your account
drops below $250 solely as the result of market action.

The Fund reserves the right to do this because of the expense to the Fund,
in relation to the size of the investment, of maintaining small accounts.

UNDERSTANDING PERFORMANCE

From time to time the Fund reports performance information in the form of
total return and average annual total return. See, for example, "Performance
Summary" at page 3 of this Prospectus. Total return shows the change in the
value of an investment in the Fund over a specified period of time (such as one,
three, five or ten years), assuming reinvestment of all dividends and
distributions and after deduction of all applicable charges and expenses. The
Fund's average annual total return represents the annual compounded growth rate
that would produce the total return achieved over the period. The performance
information reported by the Fund does not take into account any federal or state
income taxes that you may pay.

DIVIDENDS, DISTRIBUTIONS AND
FEDERAL INCOME TAX STATUS

DIVIDEND POLICY

The Fund pays dividends of net investment income, if any, annually. The
Fund usually makes distributions of net long-term capital gains, if any,
realized during a fiscal year in December of that fiscal year.

The Fund's dividend distribution will vary with the amount of dividend and
other investment income received, and the expenses incurred, by the Fund. In
periods of relatively low dividend and interest rates, the Fund's dividend and
interest income may not exceed the Fund's expenses, so that dividend
distributions may not occur or may be low.

TAX STATUS; TREATMENT OF DIVIDENDS, DISTRIBUTIONS, GAINS AND LOSSES

Tax Status of the Fund. The Fund has elected to qualify, and intends to
remain qualified, as a regulated investment company under Subchapter M of the
Internal Revenue Code. The Fund intends to distribute all of its net investment
income and capital gains to shareholders. Assuming that it is so qualified and
makes such distributions, the Fund will not be subject to federal income tax on
the net investment income and capital gains distributed. If the Fund failed to
qualify as a regulated investment company or failed to meet certain 90%
distribution requirements, it would be taxed as an ordinary corporation. Even if
it meets these qualifications, if the Fund did not distribute 98% of its
ordinary income and 98% of its capital gain net income, it would be subject to a
non-deductible 4% excise tax on the amount required to be but not distributed.

Taxation of Dividends and Distributions. All distributions received by a
shareholder will be taxable to the shareholder, either as ordinary income or
capital gains, whether or not the distributions are reinvested in additional
shares of the Fund and regardless of the length of time the shareholder has
owned his shares. Shareholders that are tax-exempt entities will not be subject
to tax on distributions by the Fund. The Fund expects that its distributions
will consist primarily of long-term capital gains. However, increases in the
Fund's portfolio turnover rate may cause the Fund to realize an increased level
of short-term gains.

Dividends from the net long-term capital gains of the Fund will be taxable
as long-term capital gains to shareholders, regardless of the length of time a
shareholder has owned his shares. Long-term capital gain distributions received
by shareholders that are individuals generally are taxed at a maximum tax rate
of 20%. Net long-term capital gains received by corporate shareholders are taxed
at the same rates as ordinary income.

Dividends paid out of the net investment income and short-term capital
gains of the Fund will be taxable as ordinary income to shareholders. A portion
of dividends paid from net investment

13
<PAGE> 15
income attributable to dividends from domestic corporations may qualify for the
dividends-received deduction for corporate shareholders.

Dividends or capital gains distributions declared in October, November or
December with a record date in such a month and paid during the following
January will be taxable as if received by shareholders on December 31 of the
calendar year in which the dividends or distributions are declared.

The Fund will notify shareholders after the close of its fiscal year of the
dollar amount and the tax status of that year's dividends and distributions.

Shareholders buying shares just prior to a distribution should note that
the distribution will be taxable to them even though the price of the shares
will have included the amount of the forthcoming distribution.

Taxation of Gains and Losses upon Sale or Redemption. Any gain (or loss)
realized by a shareholder that is an individual upon a sale or redemption of
Fund shares, generally will be subject to tax as long-term capital gain (or
loss) at a maximum tax rate of 20% if the shares have been held for more than
one year. If the shares have been held for one year or less the shareholder will
realize short-term capital gain or loss, except that any loss realized on Fund
shares that the shareholder has held for six months or less will be treated as
long-term capital loss to the extent of any capital gains dividend received by
the shareholder with respect to such shares. Gain realized by a corporate
shareholder will be taxed as ordinary income.

To avoid withholding tax on any dividends, capital gain distributions and
redemption proceeds, a shareholder must certify that the social security number
or taxpayer identification number provided to the Fund is correct and that the
shareholder is not currently subject to backup withholding or is exempt from
backup withholding.

Other. The foregoing discussion relates only to shareholders who are U.S.
persons (citizens, residents and domestic entities). Shareholders that are not
U.S. persons should consider that different tax consequences, including the
imposition of a 30% withholding tax, may apply.
You should consult your own tax advisers for specific questions about the
federal, state or local income tax implications of an investment in the Fund.

PORTFOLIO MANAGEMENT

INVESTMENT ADVISER

Shay Assets Management, Inc. (the "Investment Adviser") makes the
investment decisions for the Fund, subject to policies established by the Fund's
Board of Directors, and is responsible for placing purchase and sale orders for
portfolio securities and other investments.

Shay Assets Management, Inc. is a registered investment adviser under the
Investment Advisers Act of 1940 and serves as investment adviser to Asset
Management Fund, a registered investment company comprising five fixed-income
portfolios with aggregate net assets of approximately $1.1 billion at December
31, 1999, and as investment adviser to Institutional Investors Capital
Appreciation Fund, Inc., a registered investment company which had net assets at
December 31, 1999, of approximately $115 million.

The Investment Adviser's principal office is located at 230 West Monroe
Street, Chicago, Illinois 60606. The Investment Adviser is controlled by Rodger
D. Shay, who is a Vice President of the Fund. Shay Assets Management, Inc.,
together with its predecessor, Shay Assets Management Co., has served as the
Fund's investment adviser since May 19, 1995.

INVESTMENT ADVISER'S FEE

The Fund pays the Investment Adviser a graduated investment management fee.
The fee is computed at the annual rate of 0.75% of the first $100,000,000 of the
Fund's average daily net assets and 0.50% of the Fund's average daily net assets
in excess of $100,000,000. The fee payable to the Investment Adviser is reduced
to the extent the expenses of the Fund (exclusive of legal, audit fees and
directors' fees and expenses) exceed 1.10% of the Fund's average daily net
assets during any fiscal year. In 1999 the Fund's total payment for investment
advisory services was 0.75% of the Fund's average net assets.

14
<PAGE> 16

PORTFOLIO MANAGERS

The individuals with primary responsibility for the management of the
Fund's portfolio are John J. McCabe and Mark F. Trautman. Mr. McCabe and Mr.
Trautman have been responsible for the Fund's investments since 1991 and 1993,
respectively, first as employees of the Fund's prior investment adviser,
Nationar, and currently as Portfolio Managers of Shay Assets Management, Inc.

Mr. McCabe is Senior Vice President of the Investment Adviser and joined
the Investment Adviser in May 1995. Mr. McCabe previously served as Senior Vice
President and Chief Investment Officer of Nationar, the Fund's former investment
adviser, from August 1991 through May 1995, and in that capacity had
responsibility for the Fund's investments. Mr. McCabe is a director and past
President of the New York Society of Security Analysts, a past director of the
Financial Analysts Federation and a member and founding Governor of The
Association for Investment Management and Research.

Mr. Trautman is Vice President of the Investment Adviser and joined the
Investment Adviser in May 1995. Prior to May 20, 1995, Mr. Trautman served as
Director of Mutual Funds Investment for the Fund's former investment adviser,
Nationar, and in that capacity had responsibility for the Fund's investments. He
also has served as Portfolio Manager for Institutional Investors Capital
Appreciation Fund, Inc. since March 1993. From January 1992 through March 1993
he served as Senior Equity Analyst for the two funds.

ADMINISTRATOR, TRANSFER AGENT AND CUSTODIAN

Administrator and Transfer Agent. The Fund appointed BISYS Fund Services
Ohio, Inc. ("BISYS" or the "Administrator"), 3435 Stelzer Road, Columbus, OH
43219, as its administrator effective August 1, 1999. BISYS also serves as the
transfer agent and registrar for the Fund's shares.

Custodian. The Bank of New York ("BONY" or the "Custodian"), New York, New
York, is the custodian of the Fund's investments.

DISTRIBUTOR

Shay Financial Services, Inc. (the "Distributor") acts as the distributor
of the Fund. The Distributor's principal office is located at 230 West Monroe
Street, Chicago, IL 60606. The Distributor is controlled by Rodger D. Shay, a
Vice President of the Fund. The Fund has authorized the Distributor to undertake
certain activities in connection with the sale of shares of the Fund, including
informing potential investors about the Fund through written materials, seminars
and personal contacts. The Distributor does not receive any compensation from
the Fund for these activities.

FINANCIAL HIGHLIGHTS

The financial highlights information, including the financial highlights
table, contained in the Fund's Annual Report to shareholders for the year ended
December 31, 1999 (the "Annual Report") is incorporated herein by reference to
the Annual Report.

The financial highlights table is intended to help you understand the
Fund's financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in the Fund (assuming reinvestment of all dividends and distributions). The
information included in the financial highlights table for the year ended
December 31, 1999 was audited by Arthur Andersen LLP, whose report, along with
the Fund's financial statements, are included in the Annual Report, which is
available upon request. The financial highlights for prior periods were audited
by KPMG LLP.

15
<PAGE> 17

NOTES

16
<PAGE> 18

NOTES

17
<PAGE> 19

NOTES

18
<PAGE> 20

[M.S.B. FUND, INC. LOGO]
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.
230 West Monroe Street
Chicago, Illinois 60606

DISTRIBUTOR
Shay Financial Services, Inc.
230 West Monroe Street
Chicago, Illinois 60606

ADMINISTRATOR AND TRANSFER AGENT

BISYS Fund Services Ohio, Inc.
3435 Stelzer Road
Columbus, Ohio 43219

CUSTODIAN
The Bank of New York
One Wall Street
New York, New York 10005

LEGAL COUNSEL
Hughes Hubbard & Reed LLP
One Battery Park Plaza
New York, New York 10004

INDEPENDENT AUDITORS
Arthur Andersen LLP
425 Walnut Street
Cincinnati, Ohio 45202

19
<PAGE> 21

ADDITIONAL INFORMATION AND SHAREHOLDER INQUIRIES

A current Statement of Additional Information ("SAI") which provides more detail
about the Fund is on file with the Securities and Exchange Commission. The SAI
is incorporated herein by reference, which means that it is legally considered
part of this Prospectus.

Additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. In the Fund's annual report, you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year.

The SAI, annual report and semi-annual report are available without charge upon
request. To obtain a copy of the current SAI, annual or semi-annual report or
other information about the Fund or to make shareholder inquiries:

<TABLE>
<S> <C>
Call: 800-661-3938
Write to: M.S.B. Fund, Inc.
c/o Shay Financial Services, Inc.
230 West Monroe Street
Chicago, Illinois 60606
E-mail: Send your request to
[email protected]
</TABLE>

You may view and copy the SAI and other information about the Fund by visiting
the Securities and Exchange Commission's Public Reference Room in Washington,
DC, or by visiting the EDGAR Database on the Commission's Internet site at
http://www.sec.gov. Copies of this information may also be obtained, upon
payment of a duplicating fee, by electronic request at the following E-mail
address: [email protected], or by writing to the Commission's Public Reference
Section, Washington, DC 20549-0102. You may call the Commission at
1-202-942-8090 for information about the operation of the Public Reference Room.

LOGO

PROSPECTUS
------------------
May 1, 2000

------------------

A No-Load Fund

------------------

Investment Objective:
LONG-TERM GROWTH OF CAPITAL

Investment Company Act File No. 811-1273
<PAGE> 22
INVESTMENT OBJECTIVE:
LONG-TERM GROWTH
OF CAPITAL

M.S.B.
FUND, INC.
------------------------------------------------------------

M.S.B. Fund, Inc.
c/o Shay Financial Services, Inc.
230 West Monroe Street
Chicago, Illinois 60606
800-661-3938

STATEMENT OF ADDITIONAL INFORMATION

May 1, 2000

This Statement of Additional Information is not a
prospectus. You should read this document in conjunction
with the Prospectus of the Fund, dated May 1, 2000. This
document incorporates by reference the Prospectus and the
financial statements, accompanying notes and report of
independent auditors appearing in the Annual Report. You may
obtain a copy of the Prospectus and the Annual Report from
the Fund without charge at the above address or by calling
800-661-3938.

----------------------------------------------------------

<PAGE> 23

CONTENTS
PAGE
<S> <C>
The Fund.................................................................................................. 1

Investment Objective, Policies, and Risks................................................................. 1

Investment Objective................................................................................. 1

Risks................................................................................................ 1

Additional Investment Strategies..................................................................... 2

Investments under Abnormal Market Conditions......................................................... 2

Fundamental Investment Policies--Investment Restrictions Regarding Portfolio Securities.............. 3

Issuance of Senior Securities........................................................................ 4

Writing Covered Call Options......................................................................... 4

Portfolio Turnover................................................................................... 5

Purchase and Redemption of Shares......................................................................... 6

Performance Information................................................................................... 7

Income Tax Status, Dividends and Distributions............................................................ 8

Officers and Directors of The Fund........................................................................ 8

Certain Other Affiliations and Business Relationships................................................ 15

Compensation of Directors and Officers............................................................... 15

Code of Ethics............................................................................................ 17

Investment Advisory and Other Services.................................................................... 17

Investment Adviser................................................................................... 17

Administrator, Transfer Agent and Custodian.......................................................... 18

Distributor.......................................................................................... 19

Independent Auditors...................................................................................... 20

Purchase and Sale of Portfolio Securities................................................................. 20

Expenses of The Fund...................................................................................... 21

Description of Capital Stock.............................................................................. 21

General Information....................................................................................... 22

Financial Statements...................................................................................... 22

</TABLE>

<PAGE> 24

THE FUND

M.S.B. Fund, Inc. (the "Fund") is a diversified open-end management
investment company organized as a New York corporation. The Fund was
incorporated under the laws of the State of New York on June 8, 1964.

INVESTMENT OBJECTIVE, POLICIES, AND RISKS

INVESTMENT OBJECTIVE

The investment objective of the Fund is to achieve long-term growth of
capital for its shareholders. The Fund is designed as an investment vehicle for
investors who want to see their capital grow over the longer term and who are
willing to take moderate risks to achieve that goal. There is no assurance that
the Fund will, in fact, achieve its objective.

The Board of Directors may change the Fund's investment objective without
shareholder approval.

RISKS

All investments in equity mutual funds, like the Fund, involve some level
of risk.

Market and Investment Risks. The value of the Fund's shares will fluctuate
in accordance with the value of the securities held in its portfolio so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Declines are possible in the overall stock market or in the particular
securities or types of securities held by the Fund.

Investments in mutual funds are not bank deposits and are not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

The Fund may invest from time to time in convertible debt securities and
may, under abnormal market conditions, invest up to 100% of its assets in fixed
income securities. See "--Investments under Abnormal Market Conditions" in this
Statement of Additional Information. Investments in fixed income securities
expose the Fund to the risk that interest or principal may not be paid in a
timely manner. In addition, prices of fixed income securities tend to move
inversely with changes in interest rates. An increase in interest rates will
result in a drop in the prices of fixed income securities, which could adversely
affect the Fund's share price.

Portfolio Management Risks. The Investment Adviser's skill in choosing
appropriate investments for the Fund will affect the ability of the Fund to
achieve its investment objective, and the investment strategies employed by the
Fund may not match the performance of other strategies at different times or
under different market or economic conditions. Accordingly,

<PAGE> 25

the Fund's performance for any period may differ from the performance of the
overall market or from other investments that may be available to an investor.

Year 2000 Risks. The Fund and its service providers do not appear to have
been adversely affected by computer problems related to the processing of
date-related information on or after January 1, 2000 (the "Year 2000 issue").
However, there remains a risk that such problems could arise or be discovered in
the future. The Fund has taken steps it believes are reasonably designed to
address the Year 2000 issue with respect to the computer systems it uses, and
the Fund's service providers have informed the Fund that they intend to monitor
and correct any Year 2000 problems that may arise or be discovered affecting the
computer systems relied on by the Fund. However, there can be no assurance that
the operations of, and services provided to, the Fund and its shareholders will
not be adversely affected. The Fund also could be adversely affected if Year
2000 problems adversely affect any of the companies in which the Fund invests.

ADDITIONAL INVESTMENT STRATEGIES

In addition to the principal investments and investment strategies
described in the Prospectus (see "Investment Objective and Strategies" in the
Prospectus), the Fund may also invest in preferred stocks and corporate debt
securities convertible into common stock. It is not expected that the Fund's
holdings of convertible debt securities would ordinarily exceed 5% of the Fund's
assets. Additionally, the Fund invests its non-committed cash primarily in
commercial paper. The Fund's investments in commercial paper ordinarily consist
of commercial paper rated "Prime-2" or better by Moody's Investors Services,
Inc. or rated "A-2" or better by Standard & Poor's Corporation. The Fund's
investments in commercial paper typically mature overnight. The Fund may also
write covered options. See "--Writing Covered Call Options."

The Fund may not invest more than 5% of its total assets in the securities
of issuers which, together with any predecessors, have a record of less than
three years of continuous operation. The Fund may not purchase securities which
the Fund is restricted from selling to the public without registration under the
Securities Act of 1933, as amended, and may not invest more than 10% of its
total assets in securities which are otherwise restricted as to disposition. The
Fund may not purchase or retain the securities of any issuer if the officers or
directors of the Fund, and any of the advisers or managers of the Fund who
individually beneficially own more than one half of one percent of the
securities of that issuer, together beneficially own more than five percent of
the securities of the issuer.

INVESTMENTS UNDER ABNORMAL MARKET CONDITIONS

Under normal market conditions, it is the Fund's policy to invest
substantially all of its assets in equity securities. However, if the Fund's
Investment Adviser deems it beneficial for defensive purposes during adverse
market, economic or other conditions, the Fund may invest up to 100% of its
assets temporarily in non-equity securities, such as investment grade corporate
bonds, commercial paper and government securities. In taking this action, the
Fund would reduce its exposure to fluctuations and risks in the market for
equity securities and would increase its exposure to fluctuations and risks of
the market for debt securities. These defensive actions would reduce the benefit
from any upswing in the equity markets and, if the Investment Adviser

<PAGE> 26

does not correctly anticipate fluctuations in the equity and debt securities
markets, may not contribute to the achievement of the Fund's investment
objective.

FUNDAMENTAL INVESTMENT POLICIES -- INVESTMENT RESTRICTIONS REGARDING PORTFOLIO
SECURITIES

As a matter of fundamental policy, the Fund may not:

- Purchase securities of an issuer (other than obligations of the United
States and its instrumentalities) if such purchase would cause more
than 5% of the Fund's total assets, taken at market value, to be
invested in the securities of such issuer;

- Purchase securities of an issuer if such purchase would cause more
than 10% of any class of securities of such issuer to be held by the
Fund;

- Purchase or retain securities of an issuer if, to the knowledge of the
Fund, the officers and directors of the Fund together own more than 5%
of any class of securities of such issuer or an officer, director or
employee of, or counsel for, the Fund is an officer or employee of the
issuer;

- Invest more than 25% of its assets in any one industry;

- Invest in securities whose sale by the Fund would be restricted under
the Securities Act of 1933 (letter stock);

- Invest in companies for the purpose of exercising control or
management;

- Purchase securities issued by another registered investment company;

- Buy or sell real estate, commodities or commodity contracts, unless
acquired as a result of ownership of securities;

- Make loans other than by the purchase of a portion of publicly
distributed debt securities;

- Underwrite securities issued by others;

- Make short sales of securities;

- Buy securities on margin;

- Buy or sell put options;

- Borrow money except for temporary administrative or liquidity (but not
leveraging) purposes, and then only from banks up to an amount not in
excess of 5% of the value of total assets at the time of the loan,
repayable in not more than 60 days; or

- Pledge, mortgage or hypothecate its assets except as may be necessary
to enable it to borrow funds temporarily for administrative or
liquidity (but not leveraging) purposes or to engage in writing
covered call options.

<PAGE> 27

The Fund's fundamental investment policies may be changed only upon affirmative
vote of a majority of the voting securities of the Fund.

ISSUANCE OF SENIOR SECURITIES

The Fund does not issue senior securities, except that it may borrow money
for temporary administrative or liquidity (but not leveraging) purposes, as
described above under "Fundamental Investment Policies -- Investment
Restrictions Regarding Portfolio Securities." The Fund may borrow only from
banks up to an amount not in excess of 5% of the value of the Fund's total
assets at the time of the loan, repayable in not more than 60 days. This policy
is a fundamental investment policy of the Fund and may not be altered, amended,
or repealed except as authorized by the vote of a majority of the outstanding
shares of the Fund.

WRITING COVERED CALL OPTIONS

Covered Call Options. The Fund may engage in writing (i.e., selling) call
options listed on organized securities exchanges with respect to securities
owned by the Fund (called "covered" options). Except in the circumstances
described below, the Fund will not sell any security subject to a call option
written by the Fund so long as that option is outstanding. Call options are
currently listed on the Chicago Board Options Exchange and the New York,
American, Midwest and Pacific Stock Exchanges.

A call option gives the purchaser the right to buy a security from the Fund
at a fixed price (the "exercise price") at any time prior to the expiration of
the option contract regardless of the market price of the security at that time.
In return for such right, the purchaser pays the Fund a premium which the Fund
retains whether or not the purchaser exercises the option. The premium
represents consideration to the Fund for undertaking the option obligation and
thereby foregoing (during the period of the option) the opportunity to profit
from an increase in the market price of the underlying security above the
exercise price. For example, assume the Fund owns 100 shares of XYZ and, at a
time when the market price of XYZ was $50 per share, the Fund wrote a six month
call option on those shares at an exercise price of $50 for a premium of $500
(less transaction costs). If the price of XYZ declined to $40 per share the call
would likely not be exercised. The 100 XYZ shares would have declined $1,000 in
value and the Fund would have received income in the amount of $500. On the
other hand, should the price of XYZ rise to $60 per share the call would likely
be exercised with the result that, in exchange for the $500 premium, the Fund
would have foregone the $1,000 appreciation on the underlying shares.

When the Fund writes an option the securities subject to the option will be
segregated or otherwise held for delivery in accordance with the requirements of
any applicable securities exchange. The Fund may purchase call options only for
the purpose of closing out a previous option commitment (called a "closing
purchase transaction"). A closing purchase transaction is made by buying an
option with identical terms as an option previously written, resulting in the
cancellation of the Fund's previous option obligation. If the Fund wishes to
sell securities on which it has options outstanding it would execute a closing
purchase transaction prior to selling the securities. A profit or loss may be
realized on a closing purchase transaction if

<PAGE> 28

the amount paid to purchase a call option previously written is less or more
than the amount received from its sale.

The writing of covered call options involves certain risks. An option
position may be closed out only on an exchange which provides a market for an
option of the same series. Although the Fund will generally write only those
call options for which there appears to be an active market, there is no
assurance that an active market on an exchange will exist for any particular
option at any particular time. If the Fund as a covered call option writer is
unable to effect a closing purchase transaction in a secondary market, it would,
as a result, be subject to any price decline in the underlying security. If such
a situation were to arise, the Fund's Investment Adviser would determine whether
to hold the underlying securities and risk depreciation in their market value or
to sell the securities and substitute cash or other securities as collateral for
the option obligation.

In general, premiums received on options which are not exercised and gains
or losses realized on closing purchase transactions are treated as short-term
capital gains or losses. When an option is exercised the premium is added to the
exercise price and the resulting gain or loss is characterized as a short- or
long-term capital gain or loss depending on the holding period of the underlying
securities. In general, brokerage commissions associated with buying and selling
call options are higher than those associated with other securities
transactions.

The Board of Directors has directed the Fund's Investment Adviser to write
options only in situations where the exercise price plus the premium (less
transaction costs) would, at the time the option is written, equal a price at
which the Investment Adviser would recommend selling the underlying securities
because of fundamental investment considerations. Consequently, the Fund does
not believe that option writing has a material effect on the Fund's portfolio
turnover rate and the Fund believes that option writing may contribute to the
objective of the Fund of achieving long-term growth of capital. In addition, the
Board of Directors has directed the Investment Adviser to restrict option
writing so that no more than 5% of the Fund's total assets may be subject to
outstanding options at any time. The Board of Directors may change these
restrictions whenever such changes appear to be in the best interest of the
Fund.

PORTFOLIO TURNOVER

The Fund's annual portfolio turnover rate was 23%, 32% and 22% in 1997,
1998 and 1999, respectively. The portfolio turnover rate is determined by
dividing the amount of the lesser of the purchases or sales during the year by
the average value of the Fund's portfolio securities during such year. The
portfolio turnover rate of the Fund is not normally expected to exceed 75% but
may do so if the Fund's investment objective and policies in the light of market
conditions require more frequent trades.

PURCHASE AND REDEMPTION OF SHARES

Purchase and Redemption at Net Asset Value. Investors may purchase or
redeem shares of the Fund at the Fund's net asset value per share next
determined after receipt of an order for purchase or redemption as described in
the Prospectus.

<PAGE> 29

Net asset value per share of the Fund is determined as of 4:00 P.M., New
York time. The Fund computes its net asset value once daily on days the New York
Stock Exchange is open for trading. Purchase orders received prior to 4:00 P.M.,
New York time, on a trading day are executed at the net asset value per share
computed as of 4:00 P.M., New York time, on such day. Orders received after 4:00
P.M., New York time, on a trading day or on a day which is not a trading day are
executed at the net asset value per share computed as of 4:00 P.M., New York
time, on the next trading day.

The net asset value per share of the Fund is determined by computing the
total value of all securities and other assets of the Fund, subtracting all of
its liabilities and then dividing by the total number of shares of the Fund
outstanding. For purposes of such computation, a security listed on a national
securities exchange or on the NASDAQ National Market System is valued at the
last reported sale price thereof on the exchange or system where the security is
principally traded. If no trade occurs on such exchange or system on the date of
computation, such security will be valued at the mean of the last bid and asked
prices on such day on such exchange or system.

Securities not listed on a national securities exchange or on the NASDAQ
National Market System but traded in an over-the-counter market are valued at
the average of the last bid and asked prices prior to the computation. Short
term interest-bearing investments for which market quotations are not available
are valued at cost plus discount earned, which the Board of Directors has
determined to be fair value. Other securities are valued at their fair value, as
determined in good faith by the Board of Directors of the Fund.

Securities underlying outstanding call options written by the Fund are
valued at their market price as determined above. Premiums received on the sale
of call options are included in the net asset value; however, the current market
value of outstanding options written by the Fund is deducted in computing net
asset value. The current market value of an option listed on an organized
securities exchange is based on the last sales price on such exchange prior to
4:00 P.M., New York time, or, if none, the mean of the last bid and asked prices
as of 4:00 P.M., New York time.

Procedure for Purchasing and Redeeming Shares. Shares are purchased through
the Fund's Distributor, Shay Financial Services, Inc., or by sending money
directly to the Fund. Procedures for purchasing and selling shares are described
in the Prospectus.

Investors may also purchase shares of the Fund through authorized
broker/dealers or other financial intermediaries such as banks, 401(k) plans,
financial advisers and financial supermarkets. These parties may charge
transaction fees and may set different minimum investments or limitations on
buying or selling shares. The intermediaries are responsible for transmitting
purchase orders and funds and for crediting their customers' accounts following
timely redemptions made in accordance with their customer agreements and this
Prospectus.

Redemption in Kind. The Fund has filed a Notification under Rule 18f-1
under the Investment Company Act, pursuant to which it has undertaken to pay in
cash all requests for redemption by any shareholder of record, limited in amount
with respect to each shareholder

<PAGE> 30

during any 90-day period to the lesser of (i) $250,000, or (ii) 1% of the net
asset value of the Fund at the beginning of the 90-day period. The Fund reserves
the right to pay redemption proceeds in excess of this amount in kind if it is
deemed to be in the best interest of the Fund to do so.

In making a redemption in kind, the Fund reserves the right to select from
each portfolio holding a number of shares which will reflect the portfolio
make-up and the value of which (determined on the same basis used to compute the
net asset value of the shares being redeemed) will approximate the value of the
Fund shares being redeemed or to select from one or more portfolio investments
shares approximately equal in value to the total value of the Fund shares being
redeemed. Any shortfall will be made up in cash.

Investors receiving an in kind distribution will incur a
brokerage charge on the disposition of the securities through a broker.

PERFORMANCE INFORMATION

The following table sets forth the total return on an investment in the
Fund for the one-, three-, five- and ten-year periods ended December 31, 1999,
and the average annual total return for such periods:

M.S.B. FUND, INC. TOTAL RETURN DATA

PERIODS ENDED DECEMBER 31, 1999
------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Total Return.............................. 5.79% 79.22% 171.37% 285.85%

Average Annual Total Return............... 5.79% 21.47% 22.10% 14.46%

</TABLE>

Total return shows the percentage change in the value of an investment in
the Fund over the specified periods, assuming (i) a hypothetical investment of
$1,000 at the beginning of the period, (ii) reinvestment of all dividends and
distributions and (iii) deduction of all applicable charges and expenses. The
Fund's average annual total return represents the annual compounded growth rate
that would produce the total return achieved over the applicable period. For
example, as indicated in the table above, a 22.10% average annual rate of return
would produce a total return of 171.37% over a five-year period. The performance
information reported above does not take into account any federal or state
income taxes that may be payable by an investor.

The foregoing 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. Comparisons of
total returns on a year-to-year basis may facilitate an understanding of how
changing market conditions affect the Fund. The average annual total return
permits an investor

<PAGE> 31

to identify the overall rate of return achieved by the Fund during a multi-year
period without regard to year-to-year variations.

INCOME TAX STATUS, DIVIDENDS AND DISTRIBUTIONS

The Fund has elected to qualify, and intends to remain qualified, as a
regulated investment company under Subchapter M of the Internal Revenue Code. It
is the Fund's policy to distribute all of its net investment income (income from
dividends and interest, less expenses) and net short-term capital gain, if any,
as income dividends and to distribute substantially all net long-term capital
gain (net of short-term capital loss) on sales of portfolio securities as
capital gain distributions. If the Fund should fail to qualify for Subchapter M
status, it would be subject to federal corporate income tax on its net
investment income and capital gains. In addition, distributions to shareholders
would be taxed as corporate dividends at ordinary income rates. No portion of
the dividends would be afforded capital gains treatment. In the event the Fund
fails to distribute to shareholders in a calendar year an amount equal to the
sum of (i) 98% of its ordinary income (excluding capital gain), (ii) 98% of its
capital gain net income (determined as of the twelve-month period ending October
31), and (iii) the amount, if any, of ordinary income and capital gain not
distributed in the preceding calendar year, it would be subject to a
non-deductible 4% excise tax on the excess of the amounts not distributed over
the amounts required to be distributed. Because the Fund expects to distribute
all of its net investment income and net capital gain, it does not expect to
incur a liability for this tax.

OFFICERS AND DIRECTORS OF THE FUND

The directors of the Fund, in addition to reviewing the actions of the
Fund's Investment Adviser, decide upon matters of general policy at their
regular meetings. The Fund's officers supervise the business operations of the
Fund.

The Fund has eight directors who are elected for staggered terms of three
years each. The officers of the Fund are the President, First Vice President,
Second Vice President, Vice President, Treasurer, Secretary and Assistant
Secretary. All directors must be shareholders; the President and First Vice
President must be directors.

The directors and officers of the Fund, together with their ages, principal
occupations for the last five years and the expiration of their terms as
directors, are set forth in the following table.

<PAGE> 32

POSITION(S) HELD WITH
REGISTRANT AND EXPIRATION
NAME, AGE AND ADDRESS OF TERM AS A DIRECTOR PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- --------------------- -------------------------------- -----------------------------------------
<S> <C> <C>
JOSEPH R. FICALORA (Age 53)* President and Director (2002) Mr. Ficalora has been Chairman, President and Chief
38-25 Main Street Executive Officer of Queens County Bancorp, Inc.
Flushing, NY 11354 since its inception in July 1993, and has been
President of Queens County Savings Bank, its
principal subsidiary, since 1989. Mr. Ficalora
previously served as President and Chief Operating
Officer of Queens County Savings Bank. Mr. Ficalora
also previously served as Chairman of the Board of
the New York Savings Bank Life Insurance Fund,
President of the Queens Library Foundation Board,
Executive Vice President of Finance and Board
member of Queensborough Boy Scouts and Vice
President and a member of the Board of the Queens
Chamber of Commerce. He also serves on the Board of
the following organizations: Queensborough
Community College, Queens Museum, Flushing Cemetery
and the Community Bankers Association of New York
State. Mr. Ficalora has served as President of the
Fund since April 1997 and served as First Vice
President of the Fund from March 1996 to April
1997. Mr. Ficalora also serves as a director of
Institutional Investors Capital Appreciation Fund,
Inc., an investment company registered under the
Investment Company Act of 1940 for which Shay
Assets Management, Inc. acts as investment adviser.

MICHAEL J. GAGLIARDI (Age 59)* First Vice President and Mr. Gagliardi is Executive Vice President of
36 Pacific Street Director (2002) Richmond County Savings Bank. From 1993 through
Newark, NJ 07105 March 1999 he served as President, Chief Executive
Officer and a director of Ironbound Bank located in
Newark, NJ, and its holding company, Ironbound
Bankcorp, NJ, which were acquired by Richmond
County Financial Corp. From January 1992 through
February 1993 he served as Chairman, President and
Chief Executive Officer of Green Point Savings
Bank. From 1989 through 1992, Mr. Gagliardi served
as President and Chief Executive Officer, and from
1987 through 1989 he served as Executive Vice
President and Chief Financial Officer, of Green
Point Savings Bank. He also serves as a director of
the National Center for
</TABLE>

- -----------------

* These directors are regarded as "interested persons" under the Investment
Company Act of 1940 because they are officers of the Fund.

9
<PAGE> 33

WILLIAM A. McKENNA, JR. (Age 63)* Second Vice President and Since January 1992, Mr. McKenna has served as
71-02 Forest Avenue Director (2001) Chairman, President and Chief Executive Officer of
Ridgewood, NY 11385 Ridgewood Savings Bank. From January 1985 to
January 1992, Mr. McKenna served as President and
Chief Operating Officer of Ridgewood Savings Bank.
Mr. McKenna also serves as a director of
Institutional Investors Capital Appreciation Fund,
Inc., an investment company registered under the
Investment Company Act of 1940 for which Shay
Assets Management, Inc. acts as investment adviser.
Since May 1998, Mr. McKenna has served as a trustee
of RSI Trust, an investment company registered
under the Investment Company Act of 1940. In
addition, Mr. McKenna serves on the board of a
number of educational and civic organizations,
including St. Joseph's College in Brooklyn, New
York, St. Vincent's Services and Boys Hope/Girls
Hope.

MALCOLM J. DELANEY (Age 73) Director (2001) Mr. Delaney is retired. From 1986 through 1992, Mr.
518A Heritage Hills Delaney served as President and Chief Executive
Somers, NY 10589 Officer of Eastchester Savings Bank, which was
acquired by Southold Savings Bank in 1991. Mr.
Delaney had served as a trustee of the bank since
1981. Mr. Delaney also served as a director of the
North Fork Bancorporation, Inc. until August 1996.

TIMOTHY A. DEMPSEY (Age 66) Director (2003) Mr. Dempsey serves as Chairman of the Board and
18 Oakland Avenue Chief Executive Officer of Warwick Community
Warwick, NY 10990-0591 Bancorp, Inc. Mr. Dempsey also serves as Chairman
of the Board and Chief Executive Officer of its
principal subsidiary, The Warwick Savings Bank,
since 1985 Since January 1999, Mr. Dempsey has
served as Chairman of the Board of the Towne Center
Bank in Lodi, New Jersey. Mr. Dempsey also serves
as a director of Institutional Investors Capital
Appreciation Fund, Inc., an investment company
registered under the Investment Company Act of 1940
for which Shay
</TABLE>

<PAGE> 34

HARRY P. DOHERTY (Age 57)** Director (2002) Mr. Doherty serves as Chairman and Chief Executive
15 Beach Street Officer and as a director of Staten Island Bancorp,
Staten Island, NY 10304 Inc. and has been Chairman and Chief Executive
Officer of its principal subsidiary, Staten Island
Savings Bank, since 1990. Mr. Doherty also serves
as a director as President of Institutional
Investors Capital Appreciation Fund, Inc., which is
an investment company registered under the
Investment Company Act of 1940 for which Shay
Assets Management, Inc. acts as investment adviser.
Mr. Doherty also serves as a director of America's
Community Bankers, which until December 7, 1997,
owned through subsidiaries a 50% interest in Shay
Assets Management Co. and Shay Financial Services
Co., which served as the Fund's investment adviser
and distributor, respectively, from May 1995 to
December 7, 1997. Mr. Doherty also is a director of
the Community Bankers Association of New York
State.

DAVID FREER, JR. (Age 60) Director (2001) Since 1990, Mr. Freer has served as President,
Greatview Lane Treasurer and a director of Budget Payment
P.O. Box 732 Corporation, which until 1999 engaged in the
Highland, NY 12528 business of financing insurance premiums. Mr. Freer
served as President of the Fund from November 1990
to 1997, and as Vice President of the Fund from
1985 through 1990.

DAVID F. HOLLAND (Age 58) Director (2003) Mr. Holland has been Chief Executive Officer of
17 New England Executive Park Boston Federal Savings Bank since 1986 and Chairman
Burlington, MA 01803 of the Board of Boston Federal Savings Bank since
1989, and has been Chairman and Chief Executive
Officer of its holding company, BostonFed Bancorp
Inc. since its inception in 1995. Mr. Holland also
serves as a director of Asset Management Fund, an
investment company registered under the Investment
Company Act of 1940 for which Shay Assets
Management, Inc. acts as investment
</TABLE>

- -------------

** America's Community Bankers, of which Mr. Doherty is a director, receives
certain royalty and other payments from affiliates of the Fund's Investment
Adviser. See "-Certain Other Affiliations and Business Relationships."

11
<PAGE> 35

RODGER D. SHAY (Age 63) Vice President and Assistant Mr. Shay has been Chairman and the sole director of
1000 Brickell Avenue Secretary the Fund's investment adviser, Shay Assets
Miami, FL 33131 Management, Inc., since November 1997 and
previously served as its President and as a
director from 1990 to 1997. Mr. Shay also has
served as Chairman and the sole director of the
Fund's distributor, Shay Financial Services, Inc.,
since November 1997 and previously served as its
President and as a director from 1990 to 1997. Mr.
Shay held similar positions with Shay Assets
Management Co. and Shay Financial Services Co.,
which served as the Fund's investment adviser and
distributor, respectively, from 1995 through
December 1997. Mr. Shay has been the Chairman, sole
director and President of Shay Investment Services,
Inc., an enterprise which owns 100% of Shay Assets
Management, Inc., and Shay Financial Services,
Inc., since 1990. He serves or has previously
served in the following capacities: Chairman and a
Director, Asset Management Fund, a registered
investment company; Vice President and Assistant
Secretary of Institutional Investors Capital
Appreciation Fund, Inc., a registered investment
company; and Director, First Home Savings Bank,
S.L.A. since 1990. He previously was employed by
certain subsidiaries of Merrill Lynch & Co. from
1955 to 1981, where he served in various executive
positions including Chairman of the Board of
Merrill Lynch Government Securities, Inc., Chairman
of the Board of Merrill Lynch Money Market
Securities, Inc. and Managing Director of the Debt
Trading Division of Merrill Lynch, Pierce, Fenner &
Smith Inc.
</TABLE>

<PAGE> 36

POSITION(S) HELD WITH
REGISTRANT AND EXPIRATION
NAME, AGE AND ADDRESS OF TERM AS A DIRECTOR PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- --------------------- -------------------------------- -----------------------------------------
<S> <C> <C>
EDWARD E. SAMMONS, JR. Vice President and Secretary Mr. Sammons has been President of the Fund's
(Age 60) investment adviser, Shay Assets Management, Inc.,
230 West Monroe Street since November 1997 and previously served as its
Chicago, IL 60606 Executive Vice President from 1990 to 1997. Mr.
Sammons also has served as Executive Vice President
of the Fund's distributor, Shay Financial Services,
Inc., since 1990. He also held the position of
Executive Vice President with Shay Assets
Management Co. and Shay Financial Services Co. from
1990 through December 1997. These companies served
as the Fund's investment adviser and distributor,
respectively, from 1995 through December 1997. Mr.
Sammons has served as Executive Vice President of
Shay Investment Services, Inc., since September
1990. He serves or has previously served in the
following capacities: President and Treasurer of
Asset Management Fund, a registered investment
company; Vice President and Secretary of
Institutional Investors Capital Appreciation Fund,
Inc.; Vice President, from 1987 to 1990, Advance
America Funds, Inc.; and Senior Vice President and
Manager of Fixed Income Securities, Republic
National Bank in Dallas from 1962 to 1983.

JOHN J. McCABE (Age 56) Vice President Mr. McCabe has been a Senior Vice President of Shay
200 Park Avenue, 45th Floor Assets Management, Inc., since June 1995 and held
New York, NY 10166 the comparable position with Shay Assets Management
Co. through December 1997. From August 1991 through
May 1995, he was Senior Vice President and Chief
Investment Officer of Nationar. He also serves as a
Vice President of Institutional Investors Capital
Appreciation Fund, Inc. He previously served as
Managing Director and Portfolio Manager at Sterling
Manhattan Corporation, an investment banking firm,
for approximately three years and in various
positions at Bankers Trust Company, including
Director of Investment Research and Managing
Director of the Investment Management Group. Mr.
McCabe is a director and the President of the New
York Society of Security Analysts, a past director
of the Financial Analysts Federation and a member
and founding Governor of The Association for
Investment Management and Research.
</TABLE>

13
<PAGE> 37

POSITION(S) HELD WITH
REGISTRANT AND EXPIRATION
NAME, AGE AND ADDRESS OF TERM AS A DIRECTOR PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- --------------------- -------------------------------- -----------------------------------------
<S> <C> <C>
MARK F. TRAUTMAN (Age 34) Vice President Mr. Trautman has been a Vice President of Shay
200 Park Avenue, 45th Floor Assets Management, Inc., since June 1995 and held
New York, NY 10166 the comparable position with Shay Assets Management
Co. through December 1997. He has been Portfolio
Manager of the Fund since March 1993. From March
1993 through May 1995, he served as Director of
Mutual Funds Investment of Nationar. He also serves
as a Vice President and Portfolio Manager for
Institutional Investors Capital Appreciation Fund,
Inc. From January 1992 through March 1993 he served
as Senior Equity Analyst for the two funds. From
December 1988 through December 1991, Mr. Trautman
was a Senior Associate with Sterling Manhattan
Corporation. From June 1987 through November 1988,
Mr. Trautman held the position of Treasury Analyst
at Thomson McKinnon Securities, Inc., a securities
brokerage firm. He is also a member of The New York
Society of Security Analysts and The Association
for Investment Management and Research.

STEVEN D. PIERCE (Age 34) Treasurer Mr. Pierce has been Director of Financial Services
3435 Stelzer Road of BISYS Fund Services, Inc. since 1998. Mr. Pierce
Columbus, OH 43219 also serves as Treasurer of Institutional Investors
Capital Appreciation Fund, Inc. and Asset
Management Fund and as an officer to other mutual
funds registered under the Investment Company Act
of 1940 who are clients of BISYS. From 1996 to
1998, Mr. Pierce was the Manager of Financial
Operations at CNA Insurance. From 1994 to 1996, he
was a Trust Officer at First Chicago NBD
Corporation. From 1989 to 1994, he was a Senior
Financial Accountant at Kemper Financial Services.

ALAINA V. METZ (Age 33) Assistant Secretary Ms. Metz has been the Chief Administrative Officer
3435 Stelzer Road of the Blue Sky Compliance Department at BISYS Fund
Columbus, OH 43219 Services, Inc. since 1995. Ms. Metz also serves as
Assistant Secretary of Institutional Investors
Capital Appreciation Fund, Inc. and Asset
Management Fund. From 1989 to 1995, Ms. Metz served
as Supervisor for Alliance Capital Management, L.P.
</TABLE>

<PAGE> 38

The Fund has an Executive Committee, composed of Messrs.
Joseph R. Ficalora, Michael J. Gagliardi, David Freer, Jr. and William A.
McKenna, Jr., which meets from time to time between meetings of the Board, as
necessary, to consider matters concerning the Fund. Subject to limitations
provided by law or the Fund's by-laws, the Executive Committee is authorized to
exercise the power and authority of the Board of Directors as may be necessary
during the intervals between meetings of the Board of Directors.

CERTAIN OTHER AFFILIATIONS AND BUSINESS RELATIONSHIPS

Certain officers and directors of the Fund are also officers,
employees, directors or shareholders of Shay Assets Management, Inc. ("SAMI")
and Shay Financial Services, Inc. ("SFSI"). Messrs. Rodger D. Shay, Edward E.
Sammons, Jr., John J. McCabe and Mark F. Trautman, who are officers of the Fund,
are officers and employees of SAMI. Mr. Shay is the sole director of SAMI, SFSI
and Shay Investment Services, Inc. ("SISI"), which is the sole stockholder of
SAMI and SFSI. Mr. Shay also is the majority stockholder of SISI.

Harry P. Doherty, who is a director of the Fund, also is a
director of America's Community Bankers (the "Association"), which, prior to
December 1997, owned a 50% interest in the Fund's investment adviser. The
Association and its affiliates receive certain royalty and other payments from
SISI and its affiliates.

COMPENSATION OF DIRECTORS AND OFFICERS

Directors of the Fund receive compensation for their services
as directors of the Fund consisting of:

- a $3,000 annual retainer per director, payable in four quarterly
installments

- a per-meeting fee of $500 for each meeting of the Board of Directors
attended in person

- a per-meeting fee of $250 for each meeting of a Board committee
attended in person on a date on which a meeting of the Board of
Directors is not held.

The Board of Directors holds its regular meetings quarterly. Directors do not
receive any additional fee for telephonic meetings. Directors are also
reimbursed for reasonable expenses incurred in attending meetings or otherwise
incurred in connection with their attention to the affairs of the Fund.

In recognition of the additional responsibilities and duties
performed by the President of the Fund, the President receives an additional
annual retainer of $2,000, payable in four quarterly installments, which is in
addition to the compensation the President receives as a director.

The other officers of the Fund do not receive any compensation
from the Fund other than the compensation they may receive as directors of the
Fund. No fee is payable for

<PAGE> 39

telephonic meetings of the Board of Directors or any committee. No pension or
retirement benefits are paid to directors, advisory board members, or executive
officers.

The total compensation received by directors and officers of
the Fund for service during 1999 was $50,500. The total amount of expenses
incurred during 1999 for which the directors were reimbursed was $5,236.22. The
Fund does not provide officers or directors, directly or indirectly, with any
pension or retirement benefits.

The following table sets forth the aggregate compensation
received by each director of the Fund from the Fund and any other investment
company having the same investment adviser for services as a director or officer
during 1999. Such compensation does not include reimbursements to the directors
for their expenses incurred in connection with their activities as directors.

COMPENSATION TABLE

TOTAL COMPENSATION
AGGREGATE FROM THE FUND
COMPENSATION AND FUND COMPLEX
NAME OF DIRECTOR FROM THE FUND (3 FUNDS)
---------------- ------------- ------------------
<S> <C> <C>
Malcolm J. Delaney.............. $5,000 $5,000
Timothy A. Dempsey.............. $5,000 $9,250*
Harry P. Doherty................ $5,000 $10,750*
Joseph R. Ficalora.............. $6,500 $8,250*
David Freer, Jr................. $5,000 $5,000
Michael J. Gagliardi............ $4,500 $4,500
David F. Holland................ $5,000 $17,000*
William A. McKenna, Jr.......... $4,500 $8,750*
Norman W. Sinclair.............. $5,000 $5,000+
Ian D. Smith.................... $5,000 $5,000+
</TABLE>

- -----------------

* Includes compensation of $4,250, $1,750, $12,000 and $4,250 received by
Messrs. Dempsey, Ficalora, Holland and McKenna as directors and $5,750
received by Mr. Doherty as a director and officer of one other
investment company with the same Investment Adviser as the Fund.

+ Retired as a director, effective April 20, 2000.

As of March 31, 2000, all officers and directors of the Fund,
as a group, owned both of record or beneficially an aggregate of 107,230 shares
of the Fund (approximately 3.5% of the 3,087,165 shares outstanding on such
date).

<PAGE> 40

CODE OF ETHICS

The Fund, the Investment Adviser and the Distributor have
adopted a joint Code of Ethics that governs the conduct of employees of the
Fund, the Investment Adviser and the Distributor who may have access to
information about the Fund's securities transactions. The Code recognizes that
such persons owe a fiduciary duty to the Fund's shareholders and must place the
interests of shareholders ahead of their own interests. Among other things, the
Code requires pre-clearance of trading of initial public offerings and limited
offerings by investment personnel and requires reporting of personal securities
transactions. Violations of the code are subject to review by the directors and
could result in severe penalties.

INVESTMENT ADVISORY AND OTHER SERVICES

Shay Assets Management, Inc. serves as the Investment Adviser
of the Fund; BISYS Fund Services Ohio, Inc. serves as its administrator and
transfer agent; and The Bank of New York is the custodian for the Fund.

INVESTMENT ADVISER

Shay Assets Management, Inc. (the Fund's "Investment Adviser")
makes investment decisions for the Fund and is responsible for placing purchase
and sale orders for portfolio securities and other investments. Under the
investment advisory agreement between the Investment Adviser and the Fund (the
"Investment Advisory Agreement"), the Investment Adviser receives a fee from the
Fund computed at the annual rate of 0.75% of the first $100,000,000 of the
Fund's average daily net assets and 0.50% of the Fund's 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 the 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 during any fiscal year during the term of the
Fund's agreement with the Investment Adviser. The Investment Advisory Agreement
also provides for a reduction in the fee payable to the Investment Adviser to
the extent the expenses of the Fund would exceed any applicable limit
established pursuant to the statutes or regulations of any jurisdictions in
which the Fund's shares are qualified for offer and sale. The total amounts paid
by the Fund to the Investment Adviser and its predecessor, Shay Assets
Management Co., for the years ended December 31, 1997, 1998 and 1999 in respect
of investment advisory services were $294,823, $407,390 and $504,642,
respectively, representing 0.67%, 0.73% and 0.75% of the Fund's average daily
net assets (after all fee reductions and expense limitations). The Investment
Adviser pays for the Fund's legal counsel to prepare the minutes of meetings of
the Board of Directors and its committees to the extent not prepared by the
Fund's administrator.

The Investment Adviser is a registered investment adviser
under the Investment Advisers Act of 1940 and serves as investment adviser to
Asset Management Fund, a registered investment company comprising five
fixed-income portfolios with aggregate net assets of approximately $1.1 billion
at December 31, 1999, and to Institutional Investors Capital

<PAGE> 41

Appreciation Fund, Inc., a registered investment company with net assets of
approximately $115 million as of December 31, 1999.

The Investment Adviser, Shay Assets Management, Inc., is a
Florida corporation that is controlled by Rodger D. Shay. The Investment Adviser
is a wholly-owned subsidiary of Shay Investment Services, Inc., which is the
holding company for the Fund's Investment Adviser and Distributor and certain
other related companies engaged primarily in securities-related businesses.
Rodger D. Shay is the majority stockholder of Shay Investment Services, Inc. The
Investment Adviser's principal office is located at 230 West Monroe Street,
Chicago, Illinois 60606. Shay Assets Management, Inc. (together with its
predecessor, Shay Assets Management Co.) has served as the Fund's Investment
Adviser since May 19, 1995. The Fund's current investment advisory agreement
with Shay Assets Management, Inc. was approved by the shareholders of the Fund
on November 13, 1997.

Under the Investment Advisory Agreement, the Investment
Adviser is not liable to the Fund for any error of judgment or mistake of law or
for any loss suffered by the Fund, except a loss resulting from (i) a breach of
fiduciary duty with respect to the receipt of compensation for services, (ii) a
loss resulting from willful misfeasance, bad faith or gross negligence on its
part in the performance of its duties or (iii) reckless disregard by it of its
obligations and duties under the agreement.

The Investment Advisory Agreement will continue in effect from
year to year, subject to termination by the Fund or the Investment Adviser as
described below, if such continuance is approved at least annually by the vote
of the Fund's Board of Directors and a majority of the directors of the Fund who
are not "interested persons" of the Fund or of the Investment Adviser.

The Investment Adviser may terminate the Investment Advisory
Agreement upon 90 days' written notice to the Fund. The Investment Advisory
Agreement can be terminated at any time without penalty by the Fund upon 30
days' written notice to the Investment Adviser. The Investment Advisory
Agreement will terminate automatically in the event of its assignment.

Certain directors and officers of the Fund also are directors,
officers or employees of the Investment Adviser and its affiliates. See
"Officers and Directors of the Fund."

ADMINISTRATOR, TRANSFER AGENT AND CUSTODIAN

Administrator and Transfer Agent. BISYS Fund Services Ohio,
Inc. ("BISYS"), 3435 Stelzer Road, Columbus, Ohio 43219, is the Fund's
administrator. Pursuant to the terms of the Administration and Fund Accounting
Agreements between the Fund and BISYS, BISYS performs various administrative
services for the Fund, including: (i) maintenance of the Fund's 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.

<PAGE> 42

The Fund pays BISYS for its services a fee computed at the
annual rate of 0.10% of the first $200 million of the Fund's average net assets,
0.075% of the next $200 million of average net assets, with further reductions
in the applicable rate for net assets in excess of $400 million, subject to a
minimum annual charge of $80,400. Prior to August 1999, PFPC Inc. ("PFPC")
served as the Fund's administrator. The amounts paid to PFPC for such services
for the years ended December 31, 1997 and 1998 were $60,300 and $60,300 after
the fee waivers. The amount paid to PFPC during 1999 was $39,420. The amount
paid to BISYS for the period ended December 31, 1999 was $27,865 after the fee
waivers described below.

BISYS has served as the Fund's administrator and fund
accountant since August 1, 1999, and as the Fund's transfer agent since August
9, 1999. Certain employees of BISYS also are officers of the Fund. See "Officers
and Directors of the Fund."

Custodian. The Bank of New York ("BONY"), One Wall Street, New
York, New York, is the custodian of the Fund's investments. BONY has served as
the Fund's custodian since July 30, 1999.

Fee Waiver. The Fund's transfer agent agreed to waive a
portion (25%) of its fees during the first calendar year (which ended December
31, 1999) of its agreement with the Fund. Transaction charges, miscellaneous
fees and out-of-pocket expenses are billed as they are incurred. The Fund's
administrator agreed to waive a portion (25%) of its minimum fees (the "adjusted
minimum fee") during the first calendar year (which ended December 31, 1999) of
its agreement with the Fund. The greater of the adjusted minimum fee or the
calculated asset based fee will be charged to the Fund on a monthly basis. BISYS
has agreed to continue these waivers through the end of the year 2000. This
arrangement is reviewed by the Fund and BISYS at the end of each calendar year.

DISTRIBUTOR

Shay Financial Services, Inc. (the "Distributor") is the
distributor of the Fund. The Distributor is a Florida corporation that is
controlled by Rodger D. Shay, who is a Vice President of the Fund. The principal
business address of the Distributor is 230 West Monroe Street, Chicago, Illinois
60606.

The Fund has authorized the Distributor to undertake certain
activities in connection with the continuous offer and sale of shares of the
Fund, including informing potential investors about the Fund through written
materials, seminars and personal contacts. The Distributor is obligated to use
its best efforts to effect sales of shares of the Fund, but has no obligation to
sell any particular number of shares. The Distributor does not receive any
compensation from the Fund in connection with such activities.

Certain directors and officers of the Fund also are directors,
officers or employees of the Distributor and its affiliates. See "Officers and
Directors of the Fund."

<PAGE> 43

INDEPENDENT AUDITORS

Arthur Andersen LLP, 425 Walnut Street, Cincinnati, Ohio,
serves as the Fund's independent auditors, and in that capacity audited the
Fund's annual financial statements for the year ended December 31, 1999.

PURCHASE AND SALE OF PORTFOLIO SECURITIES

The primary aim of the Fund in the allocation of portfolio
transactions to various brokers is the attainment of best price and execution
consistent with obtaining investment research services and statistical
information at reasonable cost. The Investment Adviser is thus authorized to pay
a brokerage commission in excess of that which another broker might have charged
for effecting the same transaction in recognition of the value of efficient
execution and research and statistical information provided by the selected
broker. Transactions in portfolio securities were effected during the calendar
year 1999 through a total of 2 brokers, drawn from a list of brokers selected by
the Investment Adviser on the basis of their ability to provide efficient
execution of portfolio transactions and investment research and statistical
information. A large majority of the Fund's portfolio transactions are executed
on national securities exchanges through member firms. However, when the
Investment Adviser believes that a better price can be obtained for the Fund,
portfolio transactions may be executed in the third market. Portfolio
transactions in unlisted securities are executed in the over-the-counter market.
The brokerage list is reviewed continually in an effort to obtain maximum
advantage from investment research and statistical information made available by
brokers, and allocation among the brokers is made on the basis of best price and
execution consistent with obtaining research and statistical information at
reasonable cost.

In 1999, brokerage commissions of $11,675 (attributable to
purchases of $4,084,498.05 and proceeds from sales of $9,774,773.54) were paid
to brokers who provided investment research and statistical information to the
Investment Adviser. The research and statistical information provided to the
Investment Adviser consist primarily of written and electronic reports and
presentations analyzing specific companies, industry sectors, the stock market
and the economy. To the extent that the Investment Adviser uses such research
and information in rendering investment advice to the Fund, the research and
information tend to reduce the Investment Adviser's expenses. The Investment
Adviser may use research services and statistical information furnished by
brokers through which the Fund effects securities transactions in servicing all
of its accounts, and the Investment Adviser may not use all such services in
connection with the Fund. The total amounts of brokerage commissions paid in
1997, 1998 and 1999 were $26,700, $31,426 and $19,460, respectively. The
Investment Adviser monitors the reasonableness of commissions paid by the Fund
based on its experience in the market, and the Board of Directors periodically
reviews the reasonableness of such commissions as well. Brokerage commissions
were lower in 1999 than in 1998 as fewer securities were required to be sold
(which sales would have generated brokerage commissions) to meet redemption or
other cash requirements.

Neither the Fund nor any of its officers or directors, nor its
Investment Adviser, is affiliated with any broker employed by the Fund in
connection with the purchase or sale of

<PAGE> 44

portfolio securities or other investments. The Fund does not maintain joint or
joint and several trading accounts in securities.

EXPENSES OF THE FUND

The Fund is responsible for the payment of its expenses. Such
expenses include, without limitation, the fees payable to the Fund's Investment
Adviser, administrator, transfer agent and custodian; brokerage fees and
expenses; filing fees for the registration or qualification of the Fund's shares
under federal or state securities laws; taxes; interest; the cost of liability
insurance, fidelity bonds, indemnification expenses; legal and auditing fees and
expenses; any costs, expenses or losses arising out of any liability of, or
claim for damages or other relief asserted against, the Fund for violation of
any law; expenses of preparing and printing prospectuses, proxy materials,
reports and notices and of mailing the same to shareholders and regulatory
authorities; the compensation and expenses of the Fund's directors and officers
who are not affiliated with the Fund's Investment Adviser or administrator; and
any extraordinary expenses incurred by the Fund. Annual and semi-annual reports
to shareholders include a statement of operational expenses.

DESCRIPTION OF CAPITAL STOCK

The Fund is authorized to issue five classes of shares, par
value $.001 each. At present, shares of only one class are outstanding ("Class
A"), and each Class A share represents a proportionate interest in the Fund's
existing investment portfolio. Shares of other classes, if and when issued,
would represent interests in other portfolios of investments which would be
invested in accordance with the separate investment objectives, policies and
restrictions that the Board of Directors may establish for such other
portfolios. The investment return and net asset value of shares of each class
would be determined separately from all other classes of shares and would be
based upon the investment results of that class's separate portfolio. The Board
of Directors may establish additional portfolios at any time. Each share has one
vote on all matters submitted to a vote of the shareholders, except that
shareholders of a particular portfolio would not be entitled to vote on matters
which affect only the interests of other portfolios. Shareholders of each
portfolio would vote separately as a class on all matters which affect their
portfolio, unless the interests of each portfolio are substantially identical,
in which case shareholders of all portfolios would vote in the aggregate. In the
event of the liquidation or dissolution of the Fund, the shareholders of each
portfolio would have priority over shareholders of all other portfolios with
respect to the assets of their respective portfolios. They also would be
entitled to receive a pro rata portion of the assets of that portfolio after
provision for the debts and expenses relating to that portfolio. All shares of
each class are entitled to share pro rata in all dividends and distributions
paid on shares of that class, including liquidating dividends. Shareholders do
not have any conversion or pre-emptive rights.

GENERAL INFORMATION

Statements contained in the Prospectus and this Statement of
Additional Information as to the contents of any contract or agreement or other
document referred to are not

<PAGE> 45

necessarily complete. In each instance, reference is made to the copy of such
contract, agreement or other document filed as an exhibit to the Registration
Statement of which the Prospectus and this Statement of Additional Information
form a part, each such statement being qualified in all respects by such
reference.

FINANCIAL STATEMENTS

The audited financial statements of the Fund for the fiscal
year ended December 31, 1999, including the notes thereto and the report of
Arthur Andersen LLP, contained in the Fund's Annual Report to shareholders for
the year ended December 31, 1999 (the "Annual Report") are incorporated herein
by reference. Arthur Andersen LLP has audited such financial statements, and
the financial statements are incorporated by reference in reliance on the
report of Arthur Andersen LLP and the authority of such firm as experts in
accounting and auditing. The financial statements of the Fund for the fiscal
year ended December 31, 1998 and the financial highlights for the four years in
the period ended December 31, 1998 contained in the Annual Report have been
audited by the Fund's former independent accountant, KPMG LLP, and are
incorporated by reference in reliance on the report of KPMG LLP and the
authority of such firm as experts in accounting and auditing. Except as set
forth above, this Statement of Additional Information does not incorporate any
other portion of the Annual Report.

The Fund will provide a copy of the Annual Report without
charge to each person to whom this Statement of Additional Information is
delivered. Investors should direct requests to the Fund in writing c/o Shay
Financial Services, Inc., 230 West Monroe Street, Chicago, Illinois 60606, or by
telephone at 800-982-1846.

<PAGE> 46

PART C. OTHER INFORMATION

ITEM 23. EXHIBITS

(a) Certificate of Incorporation of the Registrant

(b) By-Laws of the Registrant. Previously filed with
Post-Effective Amendment No. 42 as Exhibit B.

(1) Form of Certificate for Common Stock. Previously filed
with Post-Effective Amendment No. 25 as Exhibit C.

(2) Articles Fourth and Seventh of Certificate of
Incorporation. (See Exhibit (a).)

(3) Articles II, VIII, and XIX of By-Laws. (See Exhibit
(b).)

(d) Investment Advisory Agreement dated as of December 9, 1997
between the Registrant and Shay Assets Management, Inc.
Previously filed with Post-Effective Amendment No. 40 as
Exhibit 5.

(e) Distribution Agreement dated as of December 9, 1997 between
the Registrant and Shay Financial Services, Inc. Previously
filed with Post-Effective Amendment No. 40 as Exhibit 9(c).

(f) Not Applicable

(g) Custodian Agreements

(1) Custodian Services Agreement dated as of
July 30, 1999, between the Registrant and
The Bank of New York. Previously filed with
Post-Effective Amendment No.
42 as Exhibit G(1).

(2) Domestic Custodian Fee Schedule dated as of
August 25, 1999, between the Registrant and
The Bank of New York. Previously filed with
Post-Effective Amendment No. 42 as Exhibit
G(2).

(3) Cash Management Agreement dated as of July
30, 1999, between the Registrant and The
Bank of New York. Previously filed with
Post-Effective Amendment No.
42 as Exhibit G(3).

<PAGE> 47

(h) Other Material Contracts

(1) Administration Agreement dated as of August
1, 1999, between the Registrant and BISYS
Fund Services Ohio, Inc. Previously filed
with Post-Effective Amendment No. 42 as
Exhibit H(1).

(2) Transfer Agency Agreement dated as of August
9, 1999, between the Registrant and BISYS
Fund Services Ohio, Inc. Previously filed
with Post-Effective Amendment No. 42 as
Exhibit H(2).

(3) Fund Accounting Agreement dated as of August
1, 1999, between the Registrant and BISYS
Fund Services Ohio, Inc. Previously filed
with Post-Effective Amendment No. 42 as
Exhibit H(3).

(4) Omnibus Fee Agreement dated as of August 1,
1999, between the Registrant and BISYS Fund
Services Ohio, Inc. Previously filed with
Post-Effective Amendment No. 42 as Exhibit
H(4).

(5) Fee Waiver Letter dated as of August 1,
1999, between the Registrant and BISYS Fund
Services Ohio, Inc. Previously filed with
Post-Effective Amendment No.
42 as Exhibit H(5).

(i) Legal Opinion and Consent of Hughes Hubbard & Reed LLP

(j) (1) Consent of Arthur Andersen LLP

(2) Consent of KPMG LLP.

(k) Not Applicable

(l) Not Applicable

(m) Not Applicable

(n) Not Applicable

(o) Not Applicable

(p) Code of Ethics

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH FUND

Not Applicable

ITEM 25. INDEMNIFICATION

Sections 721-726 of the New York Business Corporation Law provide that
a New York corporation shall have the power and, in certain cases, the
obligation to indemnify officers or directors against certain liabilities.

C-2
<PAGE> 48

Article XV of the By-Laws of the Registrant provides that the
Registrant shall indemnify directors or officers to the full extent permitted by
New York law.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted against the Registrant by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.

In addition, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission, indemnification by the Registrant of its
directors and officers against liabilities arising out of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of their respective offices is against public policy and, therefore,
unenforceable. In the event that any questions arise as to the lawfulness of
indemnification under the Investment Company Act of 1940 or the advancement of
legal fees or other expenses incurred by its officers and directors, the
Registrant will not advance such expenses or provide such indemnification unless
there has been a determination by a court, by a vote of a majority of a quorum
consisting of disinterested, non-party directors, or by independent legal
counsel in a written opinion or by other reasonable and fair means that such
indemnification or advancement would not violate Section 17 of the Investment
Company Act of 1940 and the rules and regulations thereunder.

In addition, the Registrant has entered into a Directors and Officers
Liability Insurance Policy covering the period August 1, 1999 to July 31, 2000.
Such policy insures against loss which any directors or officers of the
Registrant are obligated to pay by reason of claims based on actual or alleged
breach of duty, neglect, error, misstatement, misleading statement, omission or
other act done or wrongfully attempted or any matter claimed against them solely
by reason of their being directors or officers. The policy does not protect or
purport to protect any director or officer against any loss arising from fines
or penalties imposed by law or matters which may be deemed uninsurable under the
law.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

Incorporated herein by reference from the Statement of Additional
Information are the following: the description of the business of Shay Assets
Management, Inc. (the "Investment Adviser") contained in the section entitled
"Investment Advisory and Other Services"; the information concerning the
organization and controlling persons of Shay Financial Services, Inc. (the
"Distributor") contained in the section entitled "Investment Advisory and Other
Services";

C-3
<PAGE> 49

and the biographical information pertaining to Messrs. Shay, Sammons,
McCabe and Trautman contained in the section entitled "Officers and Directors of
the Fund."

The Investment Adviser is located at 230 West Monroe Street, Suite 2810,
Chicago, Illinois, 60606, and at 1000 Brickell Avenue, Miami, Florida, 33131,
and also has offices in New York City and Summit, New Jersey. The Investment
Adviser is a wholly-owned subsidiary of Shay Investment Services, Inc. ("SISI").
SISI is owned by Rodger D. Shay, Sr., Arthur M. Berardelli, Barbara M. Quesep
and Rodger D. Shay, Jr., with Rodger D. Shay, Sr. being the controlling
shareholder of SISI. Shay Financial Services, Inc. ("SFSI") and First Financial
Trust Company ("FFTC") are also wholly-owned subsidiaries of SISI.

Rodger D. Shay, Sr. is the Chairman of the Investment Adviser, SISI, and
SFSI. Edward E. Sammons, Jr. is President of the Investment Adviser and
Executive Vice President of SFSI. Rodger D. Shay, Jr. is the President of SFSI
and Executive Vice President of the Investment Adviser. Roy R. Hingston and
Robert T. Podraza are also Vice Presidents of the Investment Adviser, SISI and
SFSI.

SFSI is a securities broker-dealer registered with the Securities and
Exchange Commission. FFTC is a Texas trust company which provides custodial
services, primarily for institutional customers of SFSI.

Effective December 8, 1997, the Investment Adviser began rendering
investment adviser services to the Fund and two other registered investment
companies, Asset Management Fund ("AMF") and Institutional Investors Capital
Appreciation Fund, Inc. ("IICAF"). In addition, the Investment Adviser acts as
investment adviser to several savings banks located in New York State on a
non-discretionary basis.

From its inception in August 1990 to December 7, 1997, the Investment
Adviser was a 50% general partner and the managing partner of Shay Assets
Management Co. ("SAMC"), the Fund's prior investment adviser. SAMC was the
investment adviser for the Fund and IICAF from May 19, 1995 to December 7, 1997,
for AMF from September 1, 1990 to December 7, 1997, and for the Institutional
Investors Tax-Advantaged Income Fund, Inc. from May 19, 1995 to March 15, 1996,
and was the Sub-Adviser, providing portfolio management services, for the U.S.
Mortgage Securities Portfolio of Nationar Funds, Inc. from June 1994 to February
1995. In addition, SAMC acted as investment adviser to several savings banks
located in New York State on a non-discretionary basis. SAMC was dissolved on
December 7, 1997, with its assets, liabilities, and business (including
investment advisory services to the Fund) being transferred to the Investment
Adviser.

ITEM 27. PRINCIPAL UNDERWRITERS

(a) The Distributor, Shay Financial Services, Inc., serves as
the principal distributor for Institutional Investors
Capital Appreciation Fund, Inc. and Asset Management Fund in
addition to serving M.S.B. Fund, Inc.

C-4
<PAGE> 50

(b) Rodger D. Shay is the Chairman and sole director of the
Distributor. He also serves as an officer of the Registrant.
Edward E. Sammons, Jr. is the Executive Vice President of
the Distributor and an officer of the Registrant. Other
information about Messrs. Shay and Sammons required by this
Item 27 is incorporated herein by reference to Item 26 and
the "Officers and Directors of the Fund" in the Statement of
Additional Information. Set forth below are the names,
principal business addresses and positions and offices with
the Distributor of the other officers of the Distributor.

<TABLE>
<CAPTION>
Name of Director or Officer of the Positions and Offices with
Distributor Principal Business Address Distributor

<S> <C> <C>
Robert T. Podraza 230 West Monroe Street Chief Financial Officer and Chief
Chicago, IL 60606 Operating Officer

Rodger D. Shay, Jr. 230 West Monroe Street President
Chicago, IL 60606

</TABLE>

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS

The books and other documents required to be maintained pursuant to
Rule 31a-1(b) (4) and (b) (10) are in the physical possession of the Fund's
Investment Adviser, Shay Assets Management, Inc., 230 West Monroe Street, Suite
2810, Chicago, Illinois 60606; accounts, books and other documents required by
Rule 31a-1(b) (5) through (7) and (b) (11) and Rule 31a-1(f) are in the physical
possession of Shay Assets Management, Inc., 230 West Monroe Street, Suite 2810,
Chicago, Illinois 60606; all other books, accounts and other documents required
to be maintained under Section 31(a) of the Investment Company Act of 1940 and
the Rules promulgated thereunder are in the physical possession of BISYS Fund
Services Ohio, Inc., 3435 Stelzer Road, Columbus, Ohio 43219.

ITEM 29. MANAGEMENT SERVICES

Not Applicable

ITEM 30. UNDERTAKINGS

Not Applicable

C-5
<PAGE> 51

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment to Registration Statement No. 2-22542 to be signed on
its behalf by the undersigned, thereto duly authorized, in the City of New York,
and State of New York, on April 28, 2000.

M.S.B. FUND, INC.

By: /s/ JOSEPH R. FICALORA
-------------------------------------------
Joseph R. Ficalora
President

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to Registration Statement No. 2-22542 has been signed
below by the following persons in the capacities and on the dates indicated:

<TABLE>
<S> <C> <C>
/s/ JOSEPH R. FICALORA President and Director April 28, 2000
- -------------------------------------------- (Principal Executive Officer)
(Joseph R. Ficalora)

/s/ STEVEN D. PIERCE Treasurer (Principal Financial April 28, 2000
- -------------------------------------------- Officer)
(Steven D. Pierce)

/s/ MALCOLM J. DELANEY Director April 28, 2000
- --------------------------------------------
(Malcolm J. Delaney)

Director , 2000
- -------------------------------------------- ---------
(Timothy A. Dempsey)

/s/ HARRY P. DOHERTY Director April 28, 2000
- --------------------------------------------
(Harry P. Doherty)

/s/ DAVID FREER, JR. Director April 28, 2000
- --------------------------------------------
(David Freer, Jr.)

/s/ MICHAEL J. GAGLIARDI Director April 28, 2000
- --------------------------------------------
(Michael J. Gagliardi)

/s/ DAVID F. HOLLAND Director April 28, 2000
- --------------------------------------------
(David F. Holland)

/s/ WILLIAM A. McKENNA, JR. Director April 28, 2000
- --------------------------------------------
(William A. McKenna, Jr.)

</TABLE>

<PAGE> 1

EXHIBIT 99A

EXHIBIT (A)

Certificate of Incorporation of the Registrant

<PAGE> 2

RESTATED CERTIFICATE OF INCORPORATION

M.S.B. FUND, INC.

UNDER SECTION 807 OF THE BUSINESS CORPORATION LAW

We, the undersigned, being officers of M.S.B. Fund, Inc., do hereby
certify:

1. The name of the Corporation is M.S.B. FUND, INC.

2. The Certificate of Incorporation of the Corporation was filed by
the Department of State on June 8, 1964.

3. The Certificate of Incorporation is hereby amended as follows:

a. to reduce the minimum number of directors to five, to
eliminate the minimum number for directors of each class, and to
clarify the manner in which the number of directors of the Corporation
may be fixed by amending paragraph 1 of Article SEVENTH;

b. to conform the capitalization of the terms "By-Laws,"
"By-laws" and "Board of Directors," by modifying such terms, wherever
they occur, to "by-laws" and "board of directors;" and

c. to change the word "reaquired" to "reacquired" in paragraph
4(f) of Article SEVENTH.

4. The amendments referred to herein were duly authorized by the vote
of the board of directors of the Corporation, followed by the affirmative vote
of the holders of a majority of all outstanding shares entitled to vote thereon
at the Corporation's Annual Meeting of Stockholders duly called and held on
April 20, 2000, and the restatement of the Certificate of Incorporation, as so
amended, was authorized by the vote of the board of directors of the
Corporation.

<PAGE> 3
2

The text of the Certificate of Incorporation, as so amended, is hereby
restated to read in full as follows:

FIRST: The name of the Corporation is M.S.B. FUND, INC.

SECOND: The purposes for which it is formed are:

A. To engage generally in the business of an open-end investment
company, as defined in an act of Congress entitled "Investment Company
Act of 1940" and to conduct all activities generally engaged in by such
an investment company.

B. Except as limited by the by-laws of the Corporation, to
engage in the business of investing in, acquiring, owning, holding,
selling, pledging, hypothecating, exchanging or otherwise disposing of
or realizing upon, and generally dealing in and with securities,
whether shares of stocks, bonds, debentures, notes, warrants, rights,
scrip, rights to receive, purchase or subscribe for any interests,
mortgages, evidences of indebtedness or obligations, secured or
unsecured, or other securities of any description, whether in, of or
made, created or issued by any corporation, company, association,
partnership, trust, syndicate, individual, government, state,
municipality or other political subdivision; to exercise any and all
rights, powers and privileges with reference to such business and in
respect to any and all funds, property and securities owned by the
Corporation including, without limitation, the right to vote thereon,
to consent and otherwise act with respect thereto, to pay assessments,
subscriptions and other sums of money in connection therewith, to
deposit securities, to exercise any option appertaining to securities
and to do any and all acts and things the Corporation may deem
expedient for the protection of its interest as owner or holder of such
securities.

C. To issue and sell shares of stock of the Corporation in such
amounts, on such terms and conditions, for such purposes and for such
consideration, now or hereafter permitted by the laws of New York and
by this Certificate, as its board of directors may determine and
without the vote or consent of the holders of stock of the Corporation.

D. To acquire through purchase, exchange or otherwise, to hold,
dispose of, transfer, reissue or cancel, its own shares in any manner
and to the extent now or hereinafter permitted by the laws of New York
and by this Certificate.

E. Except as otherwise provided in the by-laws of the
Corporation, to borrow from any person or corporation for proper
corporate purposes, including the acquisition of funds for investment
in securities, and to issue and deliver notes, drafts, warrants, bonds,
debentures or other obligations of the Corporation to evidence such
borrowings, containing such terms and conditions and bearing such
interest rates and having such maturities as the board of directors
from time to time may determine, and to secure the same and the
interest thereon by mortgage of, conveyance of, deed of trust of,
pledge of or through lien upon, property, franchises, rights and
privileges of every kind or nature, or any part thereof, then owned or
thereafter acquired by the corporation.

<PAGE> 4
3

F. To do any and all such further acts and things and to
exercise any and all such further powers as may be necessary,
appropriate or desirable for, or in connection with, or incidental to,
the accomplishment, carrying out or attainment of all or any of the
foregoing purposes and objects.

The foregoing clauses shall be construed as powers as well as objects
and purposes and the matters expressed in each of the foregoing paragraphs,
unless otherwise expressly provided, shall not be limited by inference from the
terms of any other provision of this Certificate, but shall be regarded as
independent objects, purposes and powers and the enumeration of the specific
shall not be deemed to restrict the meaning of the general terms and powers, nor
shall the expression of one thing be deemed to exclude another not expressed
although of like nature.

THIRD: The office of the Corporation is to be located in the City of
New York, County and State of New York.

FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is 515,000,000 shares of a par value of one tenth of one
cent ($0.001) each, to be divided into five (5) classes designated and
classified as follows:

<TABLE>
<S> <C>
5,000,000 shares of Class A Stock
5,000,000 shares of Class B Stock
5,000,000 shares of Class C Stock
250,000,000 shares of Class D Stock
250,000,000 shares of Class E Stock
</TABLE>

The relative rights, preferences and limitations of the various classes of stock
of the Corporation shall be as follows:

1. The holder of each share of stock of the Corporation shall be
entitled to one vote for each share of stock, irrespective of the
class, then standing in his name on the books of the Corporation, and
each share shall entitle the holder thereof to vote with and in the
same manner as the holder of any other share on matters submitted to a
vote of the stockholders of the Corporation without differentiating
between holders of the various classes of stock; provided, however,
that as to any matter or proposal which does not affect any interest of
a particular class of stock, only holders of such classes as are
affected shall be entitled to vote with respect to such matter or
proposal; and provided, further, that the board of directors, in
accordance with the by-laws of the Corporation, may determine in the
case of any matter or proposal submitted to the stockholders for
approval, that approval of such matter or proposal shall be conditioned
upon the approval of the holders of each class of stock entitled to
vote thereon, voting as a class. The determination of the board of
directors of the Corporation as to whether any matter or proposal
submitted to a vote of the stockholders does or does not affect any
interest of any class of stock shall be conclusive and binding on the
stockholders of all classes for all purposes.

<PAGE> 5
4

2. All payments received by the Corporation for the issue or
sale of stock of a particular class together with all assets in which
such funds are invested or reinvested and all income, earnings and
profits thereon and proceeds therefrom and any funds derived from any
reinvestment of such proceeds shall belong to the class of stock with
respect to which such payments were received, and are herein referred
to as "assets belonging to" such class. In the event there are assets
not readily identifiable as belonging to a particular class, the value
of such assets shall be allocated to the various classes then existing
in proportion to the aggregate asset values of the outstanding shares
of stock of the respective classes or in such other manner as may be
determined by the board of directors in accordance with the by-laws of
the Corporation. The amount of each such asset allocated to a
particular class shall then belong to such class, and each such
allocation shall be conclusive and binding upon the stockholders of all
classes for all purposes.

3. The assets belonging to each particular class shall be
charged with the liabilities, expenses, costs and reserves of the
Corporation attributable to that class. Any general liabilities,
expenses, costs and reserves of the Corporation which are not readily
identifiable as attributable to a particular class shall be allocated
to the various classes then existing in proportion to the aggregate
asset values of the outstanding shares of stock of the respective
classes or in such other manner as may be determined by the board of
directors in accordance with the by-laws of the Corporation, and each
such allocation shall be conclusive and binding upon the stockholders
of all classes for all purposes.

4. The holders of the outstanding shares of each class of stock
of the Corporation shall be entitled to receive such dividends and
distributions as the board of directors may from time to time
determine; provided that any dividends or distributions paid on or with
respect to the shares of any class shall be payable only from and to
the extent of the assets (net of liabilities) belonging to that class.

5. In the event of the liquidation or dissolution of the
Corporation, or the liquidation of any class, holders of the shares of
each class to be liquidated shall be entitled to receive the assets
(less provision for liabilities) belonging to such class with such
assets to be distributed among the stockholders of such class in
proportion to the number of shares of such class held by them.

6. Each holder of shares of any class of stock shall be entitled
at his option, exercisable in accordance with the provisions hereof and
of the by-laws of the Corporation, to require the Corporation to redeem
or repurchase such stock at the asset value thereof; provided that any
payments made by the Corporation to redeem or repurchase shares of any
class shall be made only from the assets belonging to such class and
otherwise legally available for such purpose. Payment shall be made in
cash or in kind as determined by the Corporation.

7. The Corporation shall be entitled at its option, exercisable
in accordance with the provisions hereof and of the by-laws of the
Corporation, to cause the shares of any class of any stockholder to be
redeemed for an amount equal to the asset value of such shares,
whenever the number of shares of such class owned by such stockholder
or their

<PAGE> 6
5

aggregate asset value is less than any minimum fixed by the by-laws or
the board of directors in accordance with the by-laws.

8. Each holder of shares of any class of stock shall be entitled
at his option, exercisable in accordance with the provisions hereof and
of the by-laws of the Corporation, to convert such shares into shares
of stock of any other class of the Corporation on the basis of their
relative asset values less any applicable conversion charge or discount
determined by the board of directors in accordance with the by-laws of
the Corporation.

FIFTH: The Secretary of State is designated as the agent of the
Corporation upon whom process against it may be served. The post office address
to which the Secretary of State shall mail a copy of any process in any action
or proceeding against the corporation which may be served on him is c/o CT
Corporation System, 111 Eighth Avenue, New York, NY 10011.

SIXTH: The name and address of the registered agent of the Corporation
is CT CORPORATION SYSTEM located at 111 Eighth Avenue, New York, NY 10011. Said
registered agent is to be the agent of the Corporation upon whom process against
it may be served.

SEVENTH: In furtherance and not in limitation of powers conferred by
statute and by this Certificate of Incorporation, the following provisions are
inserted for the regulation of the business of the Corporation, its affairs, its
rights and powers and the rights or powers of its stockholders, directors or
officers.

1. The number of directors of the Corporation shall be as fixed
from time to time by or in accordance with the by-laws, but in no event shall
the number be less than five nor more than twenty-four. The directors shall be
divided into three classes. All classes shall be as nearly equal in number as
possible. The terms of office of the directors shall be as follows: that of the
first class shall expire at the next annual meeting of stockholders, the second
class at the second succeeding annual meeting and the third class at the third
succeeding annual meeting. At each annual meeting after such initial
classification directors to replace those whose terms expire at such annual
meeting shall be elected to hold office until the third succeeding annual
meeting. Directors must be stockholders of the Corporation.

2. Newly created directorships resulting from an increase in the
number of directors and vacancies occurring in the board of directors for any
reason may be filled by vote of a majority of the directors then in office. Any
and all of the directors may be removed for cause by action of the board of
directors.

3. No holder of shares shall have any preferential, preemptive
or other right to subscribe for or to purchase any securities of the
Corporation, whether now or hereafter authorized, issued or sold or offered for
sale by the Corporation other than such rights, if any, as the board of
directors may from time to time determine to offer to holders of shares at the
time outstanding, and the board of directors may sell or otherwise dispose of
securities of the

<PAGE> 7
6

Corporation, except as herein otherwise required, to any person and upon such
terms and conditions, as the board of directors may deem advisable.

4. The board of directors of the Corporation shall have the
entire management and control of the property, business and affairs of the
Corporation and in furtherance thereof, is expressly authorized from time to
time:

a. To authorize the issue and sale from time to time of
shares of stock of the Corporation (now or hereafter authorized)
for such consideration, not less than the asset value per share of
such stock outstanding at the time as of which the last preceding
computation of asset value shall have been made, and upon such
other terms and conditions as may be fixed from time to time by
the board of directors but in no event at less than par value. All
shares so issued for which the full consideration so fixed shall
have been paid shall be deemed to be fully paid and not liable for
any further call or assessment thereon.

b. To authorize the purchase, either directly or through an
agent, of shares of stock of the Corporation, upon tender thereof
by the holder, upon such terms as the board of directors shall
deem expedient, not in excess of the asset value of such shares as
of a time reasonably proximate to such purchase, and to pay for
such shares in cash, securities or other assets owned by the
Corporation, but only to the extent of assets legally available
for such purpose.

c. To determine, in accordance with sound accounting
practice, what constitutes annual or other net profits, and net
assets; to fix and vary from time to time the amount to be
reserved as working capital; to set apart out of any surplus of
the Corporation such reserves in such amount and for such purposes
as it shall determine and to abolish any such reserve or any part
thereof.

d. To distribute dividends in such amounts and in such
manner and to the stockholders of record on such dates as the
board of directors may from time to time determine, but only out
of net profits and surplus, including surplus arising from net
realized gains from the sale or other disposition of assets, or
out of any other funds legally available for the purpose; it being
intended to give to the board of directors the power to distribute
as ordinary dividends and as capital gains distributions, amounts
sufficient to enable the Corporation to avoid or minimize
liability for federal income tax.

e. To authorize the execution of a contract or contracts
(which may be exclusive) whereby, subject to the supervision and
control of the board of directors the other person to such
contract or contracts shall

(i) render managerial, investment advisory,
statistical, research and clerical and bookkeeping services,
or related services to the Corporation, upon such terms and
conditions as may be provided therein;

<PAGE> 8
7

(ii) render such other services as may be determined by
the board of directors of the Corporation and agreed upon in
said contract or contracts;

(iii) provide for the sale and repurchase of shares of
stock of the Corporation under such terms as may be provided
in said contract or contracts;

(iv) act as custodian of all or a part of the funds and
securities owned by the Corporation upon such terms as shall
be fixed by the board of directors;

(v) act as transfer agent and registrar of the shares
of stock of the Corporation.

f. To eliminate from the authorized number of shares of the
corporation or to restore to the status of authorized but unissued
shares any shares of stock of the Corporation theretofore
redeemed, purchased or otherwise reacquired.

5. For the purposes hereof, the asset value of shares of stock
of any class shall mean the proportionate interest in the net assets of the
Corporation belonging to such class determined by or pursuant to the direction
of the board of directors, in accordance with such methods as shall be set forth
in the by-laws and such regulations as the board of directors may from time to
time adopt in order to enable the Corporation to comply with any provision of
applicable law, state or federal.

<PAGE> 9
8

IN WITNESS WHEREOF, we have signed this Certificate on the 20th
day of April, 2000.

/s/ JOSEPH R. FICALORA
-------------------------------------
Joseph R. Ficalora
President

/s/ RODGER D. SHAY
-------------------------------------
Rodger D. Shay
Assistant Secretary

STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )

On this 20th day of April, 2000, before me personally came Joseph R.
Ficalora and Rodger D. Shay, to me known, and known to me to be the persons
described in and who executed the foregoing certificate, and they severally duly
acknowledged to me that they had executed the same.

/s/ JAMES H. BLUCK
-------------------------------------
Notary Public

(NOTARIAL SEAL)

<PAGE> 1

EXHIBIT 99.(I)

Opinion and Consent of Hughes Hubbard & Reed LLP

<PAGE> 2

Hughes Hubbard & Reed LLP One Battery Park Plaza
New York, New York 10004-1482
Telephone: 212-837-6000
Facsimile: 212-422-4726

April 27, 2000

M.S.B. Fund, Inc.
200 Park Avenue
New York, New York 10166

Dear Sirs:

You have requested our opinion in connection with the filing of
Post-Effective Amendment No. 43 on Form N-1A to the Registration Statement of
M.S.B. Fund, Inc. filed under the Securities Act of 1933 (Registration No.
2-22542) and the Investment Company Act of 1940 (File No. 811-1273) and
pertaining to shares (the "Shares") of Class A stock of the Fund, par value
$0.001 per share.

In this connection, we have examined such records and documents and have
made such examination of law as we have deemed appropriate. Based upon the
foregoing, it is our opinion that the Shares to be sold pursuant to Registration
Statement No. 2-22542 as amended by Post-Effective Amendment No. 43, upon
delivery of certificates for Shares or crediting of Shares to a shareholder's
account as provided for in Registration Statement No. 2-22542, as amended, and
payment therefor in accordance with the provisions of such Registration
Statement, will be legally issued, fully paid and non-assessable.

We hereby consent to the filing of this opinion as an exhibit to
Post-Effective Amendment No. 43 to Registration Statement No. 2-22542.

Very truly yours,

/s/ HUGHES HUBBARD & REED LLP

<PAGE> 1

EXHIBIT 99.(J)(1)

Consent of Arthur Andersen LLP

<PAGE> 2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants we hereby consent to the incorporation by
reference in this Post Effective Amendment No. 43 Form N-1A filing of M.S.B.
Fund, Inc. of our auditors' report on the financial statements of M.S.B. Fund,
Inc. dated February 10, 2000 and to all references to our Firm included in or
made a part of this Post Effective Amendment No. 43 Form N-1A.

ARTHUR ANDERSEN LLP

Cincinnati, Ohio,
April 27, 2000

<PAGE> 1

EXHIBIT 99 (J)(2)

Consent of KPMG LLP

<PAGE> 2
INDEPENDENT AUDITORS' CONSENT

To the Board of Directors
M.S.B. Fund, Inc.:

We consent to the use of our report dated February 5, 1999 incorporated by
reference herein and to the references to our firm under the heading "Financial
Highlights" in the Prospectus and under the heading "Financial Statements" in
the Statement of Additional Information in the Registration Statement.

/S/ KPMG LLP

Philadelphia, PA
April 28, 2000

<PAGE> 1

ASSET MANAGEMENT FUND
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
M.S.B. FUND, INC.
SHAY ASSETS MANAGEMENT, INC.
SHAY FINANCIAL SERVICES, INC.

CODE OF ETHICS

1. Purpose

This Code of Ethics has been adopted by the Board of Directors/Trustees
of Asset Management Fund, Institutional Investors Capital Appreciation Fund,
Inc., M.S.B. Fund, Inc., Shay Assets Management, Inc. and Shay Financial
Services, Inc. in accordance with Rule 17j-1 under the Investment Company Act of
1940 (the "Act"). Rule 17j-1 under the Act generally proscribes fraudulent or
manipulative practices with respect to purchases or sales of securities held or
to be acquired by investment companies, if effected by associated persons of
such companies. The purpose of this Code of Ethics is to provide regulations and
procedures consistent with the Act and Rule 17j-1 designed to give effect to the
general prohibitions set forth in Rule 17j- 1(b) as follows:

It is unlawful for any affiliated person of or principal underwriter
for an investment company registered under the Act, or any affiliated person of
an investment adviser of or principal underwriter for a registered investment
company, in connection with the purchase or sale, directly or indirectly, by
such person of a security held or to be acquired by the investment company:

(1) to employ any device, scheme or artifice to defraud
the investment company;

(2) to make any untrue statement of a material fact to
the investment company or omit to state a material
fact necessary in order to make the statements made
to the investment company, in light of the
circumstances under which they are made, not
misleading;

(3) to engage in any act, practice, or course of business
that operates or would operate as a fraud or deceit
on the registered investment company; or

(4) to engage in any manipulative practice with respect
to the investment company.

2. Definitions

(a) "Access Person" means with respect to a Fund (i) any
trustee, director, officer, general partner or Advisory Person of the
Fund or the Adviser; and (ii) any director, officer or general partner
of the Distributor who, in the ordinary course of business, makes,
participates in or obtains information regarding, the purchase or sale
of Covered Securities by the Fund, or whose functions or duties in the
ordinary course of

1
<PAGE> 2

business relate to the making of any recommendation to the Fund
regarding the purchase or sale of Covered Securities.

(b) "Adviser" means Shay Assets Management, Inc.

(c) "Advisory Person" of a Fund or the Adviser means
(i) any employee of the Fund or Adviser (or of any company in a control
relationship to the Fund or Adviser), who, in connection with his or
her regular functions or duties, makes, participates in, or obtains
information regarding the purchase or sale of a Covered Security by the
Fund, or whose functions relate to the making of any recommendations
with respect to the purchase or sale of Covered Securities; and (ii)
any natural person in a control relationship to the Fund or Adviser who
obtains information concerning recommendations made to the Fund with
regard to the purchase or sale of Covered Securities by the Fund.

(d) "Beneficial ownership" shall be interpreted in the
same manner as it would be in Rule 16a-1(a)(2) under the Securities
Exchange Act of 1934, except that the determination of direct or
indirect beneficial ownership shall apply to all securities which an
Access Person has or acquires (see Annex A).

(e) "Control" shall have the same meaning as that set
forth in Section 2(a)(9) of the Act.

(f) "Covered Security" means a security as defined in
Section 2(a)(36) of the Act, except that it shall not include (i)
direct obligations of the Government of the United States; (ii)
banker's acceptances, bank certificates of deposit, commercial paper
and high quality short-term debt instruments, including repurchase
agreements; and (iii) shares issued by registered open-end investment
companies.

(g) "Disinterested Director" means a director or trustee
of a Fund who is not an "interested person" of the Adviser or
Distributor within the meaning of Section 2(a)(19) of the Act. For
purposes of this Code, trustees shall be referred to as directors.

(h) "Distributor" means Shay Financial Services, Inc.

(i) "Ethics Committee" shall mean, with respect to each
Fund, the Adviser or the Distributor, the person or persons appointed
or designated by the Adviser to administer this Code of Ethics.

(j) "Funds" means Asset Management Fund; Institutional
Investors Capital Appreciation Fund, Inc.; and M.S.B. Fund, Inc. "Fund"
means any of the Funds.

(k) "Initial Public Offering" means an offering of
securities registered under the Securities Act of 1933, the issuer of
which, immediately before the registration, was not subject to the
reporting requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934.

2
<PAGE> 3

(l) "Investment Department Personnel" means with respect
to any Fund (i) any employee of the Fund or the Adviser (or of any
company in a control relationship to the Fund or the Adviser) who, in
connection with his or her regular functions or duties, makes or
participates in making recommendations regarding the purchase or sale
of securities by the Fund or assists in the trading process; and (ii)
any natural person who controls the Fund or the Adviser and who obtains
information concerning recommendations made to the Fund regarding the
purchase or sale of securities by the Fund, but shall not include any
person who is an officer or director of a Fund who is not also an
officer, director, partner or employee of the Adviser or Distributor or
of any affiliate of the Adviser or Distributor.

(m) "Limited Offering" means an offering that is exempt
from registration under the Securities Act of 1933 pursuant to Section
4(2) or Section 4(6) or pursuant to Rule 504, Rule 505, or Rule 506
under the Securities Act of 1933.

(n) "Security Held or to be Acquired" by a Fund means:
(i) any Covered Security which, within the most recent 15 days (A) is
or has been held by the Fund or (B) is being or has been considered by
the Fund or its Adviser for purchase by the Fund; and (ii) any option
to purchase or sell, and any security convertible into or exchangeable
for, a Covered Security described in clause (n)(i).

(o) "Purchase or Sale of a Covered Security" includes,
inter alia, the writing of an option to purchase or sell a Covered
Security.

(p) For purposes of this Code, (i) securities or
instruments that are convertible into or exchangeable for a security
shall be considered to be the same security as the security into which
they are convertible or exchangeable, (ii) options and warrants with
respect to a security shall be considered to be the same security as
the security for which they are exercisable and (iii) securities and
instruments that otherwise are economically related to a security shall
be considered to be the same security as such other security.

3. Prohibited Purchases and Sales

(a) (i) No Access Person of a Fund shall purchase or
sell, directly or indirectly, any Covered Security in which he or she
has, or by reason of such transaction acquires, any direct or indirect
beneficial ownership and which to his or her actual knowledge at the
time of such purchase or sale:

(A) is being considered for purchase or sale by
the Fund; or

(B) is being purchased or sold by the Fund,

"until either the Fund's transactions have been completed or consideration of
such transaction is abandoned."

(ii) No Investment Department Personnel shall
purchase or sell, directly or indirectly, any Covered Security
in which he or she has, or by reason of such

3
<PAGE> 4

transaction acquires, any direct or indirect beneficial
ownership and which to his or her actual knowledge at the time
of such purchase or sale;

(A) is being considered for purchase or sale by
any Fund; or

(B) is being purchased or sold by any Fund

until either the Fund's transactions have been completed or consideration of
such transactions is abandoned.

(b) No Access Person of a Fund shall reveal to any other
person (except in the normal course of his or her duties on behalf of
the Fund) any information regarding securities transactions by the Fund
or consideration by the Fund or the Adviser of any securities
transactions, other than information that is contained in reports to
shareholders of the Fund or otherwise is publicly available.

(c) No Access Person of a Fund shall recommend any securities
transactions by the Fund without having disclosed his or her interest,
if any, in such securities or the issuer thereof, including without
limitation (i) his or her direct or indirect beneficial ownership of
any securities of such issuer, (ii) any contemplated transaction by
such person in such securities, (iii) any position with such issuer or
its affiliates and (iv) any present or proposed business relationship
between such issuer or its affiliates, on the one hand, and such person
or any party in which such person has a significant interest, on the
other.

(d) No Investment Department Personnel may acquire beneficial
ownership, directly or indirectly, in any security in an Initial Public
Offering or in a Limited Offering without the express prior approval of
the Ethics Committee. Investment Department Personnel who have been
authorized to acquire a security in an Initial Public Offering or in a
Limited Offering pursuant to this subsection must disclose that
investment if they participate in any subsequent consideration by the
Adviser of an investment in the issuer of that security. The Adviser's
investment decision with respect to such a security must be
independently reviewed by investment personnel with no personal
interest in the issuer of the security.

(e) No Investment Department Personnel of a Fund may execute a
securities transaction on a day during which the Fund has a pending
"buy" or "sell" order in that same security (other than transactions
for the account of other bona fide advisory clients of the Adviser)
until that order is executed or withdrawn. In addition, a portfolio
manager of a Fund may not buy or sell a security within seven calendar
days before or after a portfolio that he or she manages trades in that
security; provided, however, a portfolio manager may sell a security
within seven calendar days after the portfolio executed a sales
transaction in that same security if the portfolio no longer has a
position in that security. Any profits realized by Investment
Department Personnel in contravention of this subsection must be
disgorged, as determined by the Ethics Committee, to either the Fund or
a charitable entity. Any payments to a charity will be directed by the
Ethics Committee

4
<PAGE> 5

in a manner that does not produce any benefits to the Adviser or the
person violating the Code.

4. Exempted Transactions

The prohibitions of Section 3 of this Code shall not apply to:

(a) Purchases or sales effected in any account over which the
Access Person has no direct or indirect influence or control.

(b) Purchases or sales which are non-volitional on the part of the
Access Person.

(d) Purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities,
to the extent such rights were acquired from such issuer, and
sales of such rights so acquired.

(e) Purchases or sales which are determined by the Ethics
Committee for the applicable Fund to be only remotely
potentially harmful to the Fund because they would be very
unlikely to affect the market for the securities involved, or
because they clearly are not related economically to the
securities to be purchased, sold or held by a Fund.

(f) Purchases or sales of securities which are not eligible for
purchase or sale by the applicable Fund, except that Section
3(d) of this Code shall continue to apply.

5. Preferential Treatment, Gifts and Entertainment

No Access Person of a Fund, other than a Disinterested Director, may
seek or accept gifts, favors, preferential treatment or valuable consideration
of more than a de minimis nature from any broker-dealer or other company or
person that does business with or has proposed doing business with the Fund or
any company in a control relationship with the Fund. No Disinterested Director
of a Fund may seek or accept gifts, favors, preferential treatment or valuable
consideration of more than a de minimis nature, because of his or her
association with the Fund, from a broker/dealer or other company or person that
does business with or has proposed doing business with the Fund or any company
in a control relationship with the Fund. For purposes of this subsection, de
minimis is defined as reasonable and customary business entertainment, such as
lunch or dinner or tickets to sporting or cultural events, but does not include
trips or similar activities.

6. Service as a Director

Investment Department Personnel are prohibited from serving on the
board of directors of any publicly traded company, absent prior authorization by
the Ethics Committee based upon a determination that the board service would be
consistent with the interests of the Funds and that adequate procedures exist to
ensure isolation from those making investment decisions.

5
<PAGE> 6

7. Reporting

(a) Unless excepted by Section 7(b) of this Code, every Access
Person of a Fund or of the Adviser or the Distributor of such Fund must
report to the Ethics Committee for such Fund:

(1) Initial Holdings Reports. No later than 10 days
after the person becomes an Access Person, the
following information:

(A) The title, number of shares and principal amount
of each Covered Security in which the Access Person had any direct or
indirect beneficial ownership as of the date the person became an
Access Person;

(B) The name of any broker, dealer or bank with whom
the Access Person maintained an account in which any securities were
held for the direct or indirect benefit of the Access Person as of the
date the person became an Access Person; and

(2) Quarterly Transaction Reports. No later than 10
days after the end of a calendar quarter the
following information:

(A) With respect to any transaction during the
quarter in a Covered Security in which the Access Person had any direct
or indirect beneficial ownership:

(i) The date of the transaction, the title, the
interest rate and maturity date (if
applicable), the number of shares and the
principal amount of each Covered Security
involved;

(ii) The nature of the transaction (i.e.,
purchase, sale or any other type of
acquisition or disposition);

(iii) The price of the Covered Security at
which the transaction was effected;

(iv) The name of the broker, dealer or
bank with or through which the
transaction was effected; and

(v) The date that the report is submitted by
the Access Person.

(B) With respect to any account established by the
Access Person in which any securities were held during the quarter for
the direct or indirect benefit of the Access Person:

(i) The name of the broker, dealer or bank with
whom the Access Person established the
account;

(ii) The date the account was established; and

6
<PAGE> 7

(iii) The date that the report is submitted by
the Access Person.

(3) Annual Holdings Reports. Annually, the following
information (which information must be current as of
a date no more than 30 days before the report is
submitted):

(A) The title, number of shares and principal amount
of each Covered Security in which the Access Person had any direct or
indirect beneficial ownership;

(B) The name of any broker, dealer or bank with whom
the Access Person maintains an account in which any securities are held
for the direct or indirect benefit of the Access Person; and

(b) Exceptions from Reporting Requirements

(1) A person need not make a report under Section 7(a) of
this Code with respect to transactions effected for,
and Covered Securities held in, any account over
which the person has no direct or indirect influence
or control.

(2) A director of a Fund who is not an "interested
person" of the Fund within the meaning of Section
2(a)(19) of the Act, and who would be required to
make a report solely by reason of being a Fund
director, need not make:

(A) An initial holdings report under Section 7(a)(1)
of this Code and an annual holdings report under Section 7(a)(3) of
this Code; and

(B) A quarterly transaction report under Section
7(a)(2) of this Code, unless the director knew or, in the ordinary
course of fulfilling his or her official duties as a Fund director,
should have known that during the 15-day period immediately before or
after his or her transaction in a Covered Security, the Fund purchased
or sold the Covered Security, or the Fund or its Adviser considered
purchasing or selling the Covered Security.

(3) An Access Person to a Fund's principal underwriter
need not make a report to the principal underwriter
under Section 7(a) of this Code if:

(A) The principal underwriter is not an affiliated
person of any Fund or the Adviser; and

(B) The principal underwriter has no officer,
director or general partner who serves as an officer, trustee, director
or general partner of the Fund or of the Adviser.

(4) An Access Person of the Adviser need not make a
quarterly transaction report to the Adviser under
Section 7(a)(2) of this Code if all the

7
<PAGE> 8

information in the report would duplicate information
recorded under Rule 204-2(a)(12) or 204-2(a)(13)
under the Investment Advisers Act of 1940.

(5) An Access Person need not make a quarterly
transaction report under Section 7(a)(2) of this Code
if the report would duplicate information contained
in broker trade confirmations or account statements
received by the Compliance Officer with respect to
the Access Person in the time period required by
Section 7(a)(2) of this Code, if all of the
information required by that Section is contained in
the broker trade confirmations or account statements,
or in the records of the Fund, the Adviser or the
Distributor.

(c) Any report required by Section 7(a) of this Code may
contain a statement that the report will not be construed as an
admission that the person making the report has any direct or indirect
beneficial ownership in the Covered Security to which the report
relates.

8. Review of Reports

The Ethics Committee must review the reports submitted pursuant to
Section 7(a) of this Code and monitor personal trading activity of all Access
Persons for compliance with this Code.

9. Notification of Reporting Obligation

Each Fund and the Adviser and the principal underwriter of each Fund
must identify all of their respective Access Persons who are required to make
reports pursuant to Section 7(a) of this Code and must inform those Access
Persons of their reporting obligations.

10. Reporting of Violations; Sanctions

(a) The Adviser shall provide a written report to the Board of
Directors of each Fund, and the Board of Directors shall consider, at
least quarterly any issues arising under this Code or related
compliance procedures since the most recent prior report, including but
not limited to any material violations of this Code or related
compliance procedures and the nature of any action taken by the Ethics
Committee in respect of such violation.

(b) Upon discovering a violation of this Code by any officer,
director, employee or general partner of the Adviser or Distributor or
of any company that, directly or indirectly, controls or is under
common control with the Adviser or Distributor, the Ethics Committee
may impose such sanctions as it deems appropriate, including, inter
alia, a letter of censure or suspension, termination of the employment
of the violator or disgorgement of profits.

(c) With respect to a violation of this Code by any officer,
director, or employee of a Fund, the Board of Directors of the Fund may
impose such sanctions as it

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deems appropriate, including inter alia, a letter of censure,
suspension of any officer or employee, termination of the employment of
the violator or disgorgement of profits.

11. Miscellaneous

(a) Management of each Fund and the Adviser and the
Distributor shall certify to the Board of Directors of such Fund, no
less frequently than annually, that the Fund, Adviser or Distributor,
as applicable, has adopted such procedures as are reasonably necessary
to prevent Access Persons who are directors, officers, general partners
or controlling persons of the Adviser or Distributor from violating
this Code of Ethics and to monitor compliance with this Code of Ethics
by access persons who are officers, directors or employees of the Fund.

(b) The Ethics Committee on behalf of the Funds, Adviser and
Distributor shall prepare an annual report to the Board of Directors of
each Fund that (i) summarizes existing procedures concerning personal
investing and any changes in the procedures made during the past year,
(ii) identifies any violations requiring significant remedial action
during the past year, and (iii) identifies any recommended changes in
existing restrictions or procedures based upon the Fund's experience
under this Code of Ethics, evolving industry practices, or developments
in applicable laws or regulations.

(c) Recordkeeping: The Adviser shall maintain the following
records in the manner specified for the benefit of the Funds:

(1) A copy of this Code and any amendment thereof and a
copy of each code of ethics which is or at any time
within the past five years has been in effect with
respect to a Fund or the Adviser or Distributor shall
be preserved in an easily accessible place;

(2) A record of any violation of this Code, as in effect
from time to time, and of any action taken as a
result of such violation, shall be preserved in an
easily accessible place for a period of not less than
five years following the end of the fiscal year in
which the violation occurs;

(3) A copy of each report made by an Access Person
pursuant to this Code (including any information
provided pursuant to Section 7(b)(5)) shall be
preserved by the entity receiving the report for a
period of not less than five years from the end of
the fiscal year in which it is made, the first two
years in an easily accessible place;

(4) A list of all persons who are, or within the past
five years have been, required to make reports
pursuant to this Code shall be maintained in an
easily accessible place;

(5) A list of the names of all persons who are, or within
the past five years, have been, responsible for
reviewing the reports filed pursuant to Section 7 of
this Code shall be maintained in an easily accessible
place;

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(6) A record of any approvals granted pursuant to Section
3(d) shall be preserved for a period of five years
from the end of the fiscal year in which such
approval is given; and

(7) A copy of each report made pursuant to Section 11(b)
of this Code must be maintained for at least five
years after the end of the fiscal year in which it
was made, the first two years in an easily accessible
place.

*************************

I acknowledge that I have read the Code of Ethics (a copy of which has
been supplied to me, which I will retain for future reference) and agree to
comply in all respects with the terms and provisions thereof. I have disclosed
or reported all personal securities transactions required to be disclosed or
reported by this Code of Ethics.

Print Name

Date Signature

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<PAGE> 11

ANNEX A

The term "beneficial ownership" of securities would include not only
ownership of securities held by an Access Person for his or her own benefit,
whether in bearer form or registered in his or her own name or otherwise, but
also ownership of securities held for his or her benefit by others (regardless
of whether or how they are registered) such as custodians, brokers, executors,
administrators, or trustees (including trusts in which he or she has only a
remainder interest), and securities held for his or her account by pledgees,
securities owned by a partnership in which he or she is a member, and securities
owned by any corporation which he or she should regard as a personal holding
corporation and securities in which the Access Person otherwise has a direct or
indirect pecuniary interest as defined in Rule 16a-1(2) under the Securities
Exchange Act of 1934. It would exclude securities held by a corporation or
similar entity in which the Access Person is a shareholder if the Access Person
is not a controlling shareholder of the corporation or entity and the Access
Person does not have or share investment control over the entity's portfolio.
Correspondingly, this term would exclude securities held by an Access Person for
the benefit of someone else.

Ordinarily, this term would not include securities held by executors or
administrators in estates in which an Access Person is a legatee or beneficiary
unless there is a specific legacy to such person of such securities or such
person is the sole legatee or beneficiary and there are other assets in the
estate sufficient to pay debts ranking ahead of such legacy, or the securities
are held in the estate more than a year after the decedent's death.

Securities held in the name of another should be considered as
"beneficially" owned by an Access Person where such person enjoys "benefits
substantially equivalent to ownership." The SEC has said that although the final
determination of beneficial ownership is a question to be determined in the
light of the facts of the particular case, generally a person is regarded as the
beneficial owner of securities held in the name of his or her spouse and their
minor children. Absent special circumstances such relationship ordinarily
results in such person obtaining benefits substantially equivalent to ownership,
e.g., application of the income derived from such securities to maintain a
common home, to meet expenses which such person otherwise would meet from other
sources, or the ability to exercise a controlling influence over the purchase,
sale or voting of such securities.

An Access Person also may be regarded as the beneficial owner of
securities held in the name of another person, if by reason of any contract,
understanding, relationship, agreement or other arrangement, he or she obtains
therefrom benefits substantially equivalent to those of ownership. Moreover, the
fact that the holder is a relative or relative of a spouse and sharing the same
home as an Access Person may in itself indicate that the Access Person would
obtain benefits substantially equivalent to those of ownership from securities
held in the name of such relative. Thus, absent countervailing facts, it is
expected that securities held by relatives who share the same home as an Access
Person will be treated as being beneficially owned by the Access Person.

An Access Person also is regarded as the beneficial owner of securities
held in the name of a spouse, children, or other person, even though he or she
does not obtain therefrom the aforementioned benefits of ownership, if he or she
can vest or revest title in him/herself at once or at some future time.