<PAGE> 1
MINERVA FUND, INC.
EQUITY PORTFOLIO
FIXED INCOME PORTFOLIO
ANNUAL REPORT
SEPTEMBER 30, 1995
<PAGE> 2
November 24, 1995
DEAR SHAREHOLDERS:
We are pleased to present the annual report for the Minerva Fund, Inc.
for the fiscal year ended September 30, 1995. The Equity Portfolio had net
assets on September 30, 1995 of $12,725,096 and the Fixed Income Portfolio had
net assets of $3,274,791.
Both Portfolios had an increase in assets from the annual report dated
September 30, 1994. The net asset value per share was $12.23 for the Equity
Portfolio and $9.60 for the Fixed Income Portfolio as of September 30, 1995.
Audited financial statements including each Portfolio of Investments
follow. Your support is appreciated.
John J. Pileggi
President & Treasurer
<PAGE> 3
INVESTMENT MANAGER'S DISCUSSION OF FUND PERFORMANCE
During the fiscal year ended September 30, 1995, the Minerva Equity
Portfolio realized an absolute return in excess of 24%. The return was below
the S&P 500 Index largely because of short-term fixed income positions
maintained throughout the year and an underweighting in technology. Our
assessment of the market called for maintaining meaningful reserves and
purchase of securities in the more defensive sectors of the market such as
utilities. The Equity Portfolio benefited from its underweighting in basic
resources, the technology issues, and the issues selected in heavy industry and
transportation.
For the fiscal year as a whole, performance of Minerva Fixed Income
Portfolio closely approximated that of the Lehman Brothers Government Corporate
Index. Total return was above 14% for the fiscal year. The last quarter of
the fiscal year proved to be the best in terms of relative performance because
of a successful yield curve strategy and contributions from foreign, mortgage
and corporate investments.
<PAGE> 4
Minerva Fund, Inc.
Equity Portfolio
Fixed Income Portfolio
Period Ended September 30, 1995
% Return Since Inception
Fund Performance Comparison*
The following graph illustrates the total return based on a $10,000
investment in the Equity Portfolio made at the inception date of October 1,
1993 and held through September 30, 1995, as well as performance of the S&P 500
Index over the same period. Past performance is not predictive of future
performance.
The S&P 500 Index is a widely accepted unmanaged index of stock market
performance which reflects the reinvestment of income dividends and, where
applicable, capital gains distributions.
The next graph illustrates the total return based on a $10,000
investment in the Fixed Income Portfolio made at inception date of November 2,
1993 and held through September 30, 1995, as well as performance of the Lehman
Government/Corporate Bond Index over the same period.
The Lehman Government/Corporate Bond Index is a widely accepted
unmanaged index of both corporate and government bond market performance which
reflects the reinvestment of income dividends and where applicable, capital
gains distributions.
Neither index reflects Portfolio operating expenses. If expenses had
been applied to the indices, the performance would have been lower.
The investment return and principal value of an investment in either
Portfolio will fluctuate, so that an investor's shares, where redeemed, may be
worth more or less than the original cost.
*Assumes reinvestment of all dividends and distributions and includes
the effect of each Portfolio's operating expenses. Total returns are aggregate
from inception, have not been annualized, and reflect voluntary fee waivers.
<PAGE> 5
MINERVA EQUITY PORTFOLIO VS S&P 500 INDEX
$10,000 INVESTMENT
<TABLE>
<CAPTION>
Equity S&P 500
Date Portfolio Index
- -------------------------------------------------------------
<S> <C> <C>
Oct. 1, 1993 100,000.00 100,000.00
November 2, 1993 -- --
Dec. 31, 1993 10,140.80 10,231.81
March 31, 1994 9,794.74 9,843.90
June 30, 1994 9,839.49 9,885.32
Sept. 30, 1994 10,179.11 10,368.75
Dec. 31, 1994 10,148.70 10,367.16
March 31, 1995 11,033.68 11,376.47
June 30, 1995 11,905.28 12,462.52
September 30, 1995 12,659.52 13,452.82
</TABLE>
<PAGE> 6
MINERVA FIXED INCOME PORTFOLIO VS LEHMAN GOV'T/CORP INDEX
$10,000 INVESTMENT
<TABLE>
<CAPTION>
Fixed Lehman
Income Gov't/Corp.
Date Portfolio Bond Index
- ------------------------------------------------------------------
<S> <C> <C>
Oct. 1, 1993 -- --
November 2, 1993 10,000.00 10,000.00
Dec. 31, 1993 10,042.90 9,930.20
March 31, 1994 9,646.80 9,619.26
June 30, 1994 9,405.33 9,499.64
Sept. 30, 1994 9,381.97 9,546.66
Dec. 31, 1994 9,413.14 9,581.78
March 31, 1995 9,866.25 10,059.22
June 30, 1995 10,462.15 10,711.97
September 30, 1995 10,741.88 10,916.96
</TABLE>
<PAGE> 7
MINERVA FUND, INC.
EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES COST (NOTE 2b)
- ------ ---------- ----------
<S> <C> <C>
COMMON STOCKS - 87.6%
AEROSPACE - 2.9%
615 Lockheed Martin Corp............................... $31,373 $41,282
800 Raytheon Co........................................ 50,548 68,000
900 Rockwell International Corp........................ 41,454 42,525
2,400 United Technologies Corp........................... 143,967 212,100
---------- ----------
267,342 363,907
---------- ----------
AIR TRANSPORTATION - 0.5%
900 AMR Corp*.......................................... 59,567 64,913
---------- ----------
APPAREL - 0.4%
1,000 Fruit of the Loom Inc*............................. 31,185 20,625
900 Springs Industries Inc. - Class A.................. 32,229 35,325
---------- ----------
63,414 55,950
---------- ----------
AUTOMOBILES - 1.7%
900 Chrysler Corporation............................... 51,242 47,700
3,600 General Motors Corp................................ 154,341 168,750
---------- ----------
205,583 216,450
---------- ----------
AUTOMOTIVE RELATED - 1.2%
1,100 Eaton Corporation.................................. 59,566 58,300
2,400 Goodyear Tire and Rubber Co........................ 99,069 94,500
---------- ----------
158,635 152,800
---------- ----------
BANKS - 6.7%
1,000 Bank of Boston Corp................................ 35,710 47,625
2,700 Chemical Banking Corp.............................. 112,612 164,363
1,200 Citicorp........................................... 49,722 84,900
900 Crestar Financial Corp............................. 42,017 50,288
1,500 First America Bancorp.............................. 62,903 64,500
1,200 First Union Corp................................... 61,422 61,200
1,350 Mercantile Bancorporation.......................... 45,729 60,413
2,900 NationsBank Corp................................... 148,262 195,025
500 Northern Trust Corp................................ 21,125 23,000
900 TCF Financial Corp................................. 35,267 52,425
1,700 U.S. Bancorp....................................... 44,500 48,025
---------- ----------
659,269 851,764
---------- ----------
BASIC CHEMICALS - 3.4%
400 Airgas Inc*........................................ 10,524 10,650
4,000 Du Pont (E.I.) De Nemours.......................... 226,628 275,000
600 Olin Corp.......................................... 37,761 41,250
600 Rohm & Haas........................................ 34,686 36,225
1,200 W.R. Grace & Co.................................... 52,422 80,100
---------- ----------
362,021 443,225
---------- ----------
BEVERAGES - 2.5%
1,000 Anheuser-Busch Co. Inc............................. 58,310 62,375
2,200 Cott Corp.......................................... 50,025 20,900
4,500 Pepsico Inc........................................ 172,173 229,500
---------- ----------
280,508 312,775
---------- ----------
BUILDING AND HOUSING - 0.3%
400 Armstrong World Industries Inc..................... 17,699 22,200
800 Danaher Corp....................................... 24,148 26,200
---------- ----------
41,847 48,400
---------- ----------
</TABLE>
See accompanying notes to financial statements.
<PAGE> 8
MINERVA FUND, INC.
EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
VALUE
SHARES COST (NOTE 2b)
- ------ ---------- ----------
<S> <C> <C>
BUSINESS SERVICES - 1.2%
400 Cintas Corp........................................ $11,200 $17,600
600 Gartner Group Inc. - Class A*...................... 12,600 19,650
1,100 PHH Corp........................................... 39,804 49,500
2,500 WMX Technologies, Inc.............................. 71,388 71,250
---------- ----------
134,992 158,000
---------- ----------
COMPUTERS AND OFFICE EQUIPMENT - 2.9%
2,200 Compaq Computer Corp*.............................. 83,882 106,425
1,100 International Business Machines Corp............... 118,329 103,813
2,400 Seagate Technology Inc*............................ 51,606 101,100
800 Stratus Computer, Inc*............................. 23,907 21,000
600 Sun Microsystems Corp*............................. 17,603 37,800
---------- ----------
295,327 370,138
---------- ----------
COMPUTER SOFTWARE AND SERVICES - 0.7%
500 Adobe Systems Inc.................................. 27,875 25,875
800 Fiserv, Inc*....................................... 17,000 23,100
1,000 Oracle Systems Corp*............................... 20,262 38,375
---------- ----------
65,137 87,350
---------- ----------
CONTAINERS - 0.5%
1,200 Temple-Inland Inc.................................. 62,885 63,900
---------- ----------
CREDIT AND FINANCE - 2.0%
800 Federal Home Loan Mortgage Corp.................... 40,248 55,300
1,300 Federal National Mortgage Association.............. 102,416 134,550
1,200 Sirrom Capital Corp................................ 19,350 21,750
597 TransAmerica Corp.................................. 34,543 42,536
---------- ----------
196,557 254,136
---------- ----------
DEPARTMENT STORES - 1.9%
1,200 Dillard Department Stores - Class A................ 37,961 38,250
2,300 Federated Department Stores........................ 65,976 65,263
3,700 Sears, Roebuck and Co.............................. 120,812 136,438
---------- ----------
224,749 239,951
---------- ----------
DISCOUNTERS - 1.1%
1,900 K Mart Corp........................................ 45,477 27,550
4,600 Wal-Mart Stores Inc................................ 115,551 114,425
---------- ----------
161,028 141,975
---------- ----------
DRUGS - 4.8%
1,700 Allergan Inc....................................... 37,404 56,738
600 Alza Corp. - Class A*.............................. 13,386 13,800
1,300 American Home Products Corp........................ 79,091 110,338
2,700 Bristol-Myers Squibb Co............................ 154,600 196,763
1,400 Johnson & Johnson.................................. 64,297 103,775
800 Rhone-Poulenc Rorer................................ 29,648 36,400
1,000 Warner-Lambert Co.................................. 74,015 95,250
---------- ----------
452,441 613,064
---------- ----------
ELECTRICAL EQUIPMENT - 2.2%
4,400 General Electric Co................................ 214,466 280,500
---------- ----------
</TABLE>
See accompanying notes to financial statements.
<PAGE> 9
MINERVA FUND, INC.
EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1995 - (CONTINUED)
<TABLE>
<CAPTION>
VALUE
SHARES COST (NOTE 2b)
- ------ ---------- ----------
<S> <C> <C>
ELECTRICAL POWER - 3.0%
700 Consolidated Edison of New York.................... $20,167 $21,263
2,400 Entergy Corp....................................... 73,319 62,700
700 Florida Progress Corp.............................. 20,255 22,663
2,700 Ohio Edison Co..................................... 60,912 61,425
2,000 Pacific Gas & Electric Co.......................... 56,870 59,750
1,600 Peco Energy Company................................ 47,971 45,800
1,400 Public Service Enterprise Group, Inc............... 37,797 41,650
2,000 Unicom Corporation................................. 50,208 60,500
---------- ----------
367,499 375,751
---------- ----------
ELECTRONICS - 3.0%
2,000 Intel Corp......................................... 61,575 120,250
800 LSI Logic Corp*.................................... 21,524 46,200
3,200 National Semiconductor Corp*....................... 88,788 88,400
1,600 Texas Instruments Inc.............................. 57,523 127,800
---------- ----------
229,410 382,650
---------- ----------
FOOD PRODUCTS - 2.3%
4,200 Archer-Daniels Midland Co.......................... 80,065 64,575
2,000 Campbell Soup Co................................... 86,973 100,500
800 Ralston Purina Group............................... 32,548 46,300
600 Unilever NV - ADR.................................. 75,636 78,000
---------- ----------
275,222 289,375
---------- ----------
FOOD RETAILERS - 0.5%
1,900 Kroger Supermarkets*............................... 47,977 64,838
---------- ----------
FURNISHINGS AND APPLIANCES - 0.8%
1,200 Premark International, Inc......................... 38,436 61,050
800 Whirlpool Corp..................................... 41,248 46,200
---------- ----------
79,684 107,250
---------- ----------
HEALTH SERVICES - 2.5%
2,436 Columbia HCA Healthcare Corp....................... 90,262 118,451
1,125 Health Management Associates Inc*.................. 20,030 36,141
2,100 Humana Inc*........................................ 43,959 42,263
900 Lincare Holdings Inc*.............................. 20,700 23,175
1,600 U.S. Healthcare Inc................................ 65,600 56,600
300 Vivra Inc*......................................... 9,806 9,525
---------- ----------
250,357 286,155
---------- ----------
HEALTH TECHNOLOGY - 0.3%
1,300 Beckman Instruments Inc............................ 35,178 39,325
---------- ----------
HOSPITAL SUPPLIES - 1.6%
1,900 Baxter International Inc........................... 44,064 78,138
1,400 Becton Dickinson & Co.............................. 52,759 88,025
1,100 Mallinckrodt Group Inc............................. 34,579 43,588
---------- ----------
131,402 209,751
---------- ----------
INSURANCE - 3.0%
1,100 Aetna Life & Casualty Co........................... 58,624 80,713
556 Allstate Corp...................................... 13,729 19,669
1,400 American General Corp.............................. 44,259 52,325
1,900 Exel Limited....................................... 89,102 110,438
1,000 Providian Corp..................................... 36,177 41,500
600 SAFECO Corp........................................ 35,325 39,375
600 St. Paul Companies Inc............................. 27,618 35,025
---------- ----------
304,834 379,045
---------- ----------
</TABLE>
See accompanying notes to financial statements.
<PAGE> 10
MINERVA FUND, INC.
EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1995 - (CONTINUED)
<TABLE>
VALUE
SHARES COST (NOTE 2b)
- ------ ---------- ----------
<S> <C> <C>
LODGING - 0.1%
600 La Quinta Inns Inc................................. $16,686 $16,800
---------- ----------
Machinery - 0.8%
1,200 Cummins Engine..................................... 50,048 46,200
700 Deere & Co......................................... 52,192 56,963
---------- ----------
102,240 103,163
---------- ----------
MISCELLANEOUS INDUSTRIALS - 2.8%
700 FMC Corp*.......................................... 34,692 53,200
500 ITT Corp........................................... 42,804 62,000
500 Minnesota Mining & Manufacturing Co................ 26,209 28,250
2,100 Tenneco Inc........................................ 87,530 97,125
1,000 Textron Inc........................................ 52,285 68,250
1,200 Trinova Corp....................................... 42,072 40,500
---------- ----------
285,592 349,325
---------- ----------
NATURAL GAS - 0.8%
2,200 Coastal Corp....................................... 60,157 73,975
1,000 El Paso Natural Gas................................ 32,310 27,500
---------- ----------
92,467 101,475
---------- ----------
OIL - DOMESTIC AND CRUDE - 3.6%
1,900 Amoco Corp......................................... 116,114 121,838
1,400 Atlantic Richfield Co.............................. 148,809 150,325
1,400 Burlington Resources Inc........................... 56,184 54,250
600 Mapco Inc.......................................... 38,211 30,900
1,100 Ultramar Corp...................................... 28,545 26,125
2,700 Unocal Corporation................................. 75,650 76,950
---------- ----------
463,513 460,388
---------- ----------
OIL - INTERNATIONAL - 3.2%
1,100 British Petroleum PLC - ADR........................ 87,673 98,863
1,300 Chevron Corporation................................ 57,783 63,213
1,400 Mobil Corp......................................... 113,659 139,475
800 Norsk Hydro A.S. - ADR............................. 36,211 34,500
2,500 Total S.A. - ADR................................... 68,225 75,313
---------- ----------
363,551 411,364
---------- ----------
OTHER CONSUMER SERVICES - 0.5%
1,500 Service Corporation International.................. 38,903 58,688
---------- ----------
PAPER - 1.6%
700 Georgia-Pacific Corp............................... 53,417 61,250
1,800 Scott Paper Co..................................... 59,717 87,300
1,100 Weyerhaeuser Co.................................... 48,604 50,188
---------- ----------
161,738 198,738
---------- ----------
PERSONAL PRODUCTS - 2.0%
1,000 Avon Products Inc.................................. 54,435 71,750
2,300 Proctor & Gamble Co................................ 117,101 177,100
---------- ----------
171,536 248,850
---------- ----------
PUBLISHING AND BROADCASTING - 2.2%
600 Capital Cities / ABC Inc........................... 49,311 70,575
500 Cicasters Inc*..................................... 19,500 16,688
1,350 Comcast Corp. - Class A............................ 26,100 27,000
700 International CableTelecommunications Inc*......... 19,425 19,600
1,500 Liberty Media Group - Class A*..................... 39,323 40,125
2,800 Telecommunications Inc. - Class A*................. 55,527 49,000
1,600 Time Warner, Inc................................... 64,496 63,600
---------- ----------
273,682 286,588
---------- ----------
</TABLE>
See accompanying notes to financial statements.
<PAGE> 11
MINERVA FUND, INC.
EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1995 - (CONTINUED)
<TABLE>
VALUE
SHARES COST (NOTE 2b)
- ------ ---------- ----------
<S> <C> <C>
RAILROADS - 2.1%
1,151 Burlington Northern, Inc........................... $52,627 $83,416
200 CSX Corp........................................... 15,562 16,825
2,600 Union Pacific Corp................................. 168,005 172,250
---------- ----------
236,194 272,491
---------- ----------
REAL ESTATE INVESTMENT TRUSTS - 0.3%
1,300 Debartolo Realty Corp.............................. 19,253 18,200
1,012 Security Capital Pacific Trust..................... 20,886 19,228
---------- ----------
40,139 37,428
---------- ----------
RECREATION AND TOYS - 0.3%
700 Eastman Kodak Co................................... 33,852 41,475
---------- ----------
RESTAURANTS - 0.6%
3,400 Wendy's International Inc.......................... 61,404 71,825
---------- ----------
SPECIALTY STORES - 1.7%
1,700 Circuit City Stores Inc............................ 40,906 53,763
800 Gymboree*.......................................... 18,250 24,100
1,800 Home Depot, Inc.................................... 70,583 71,775
1,200 Melville Corp...................................... 37,422 41,400
1,100 Officemax Inc*..................................... 23,166 26,675
400 Viking Office Products*............................ 11,800 16,700
---------- ----------
202,127 234,413
---------- ----------
TELECOMMUNICATIONS EQUIPMENT - 0.8%
300 Cidco Inc*......................................... 9,375 10,575
800 Motorola, Inc...................................... 40,024 61,100
300 Qualcomm, Inc*..................................... 14,513 13,763
400 Tellabs Inc*....................................... 13,650 16,850
---------- ----------
77,562 102,288
---------- ----------
TELEPHONE SERVICES - 7.1%
1,900 Airtouch Communications Co*........................ 46,735 58,188
400 Cellular Communications Inc*....................... 18,500 21,800
2,600 Frontier Corp*..................................... 54,453 69,225
800 Globalstar Telecommunications*..................... 12,400 17,100
4,000 GTE Corp........................................... 136,028 157,000
3,200 MCI Communications Corp............................ 86,800 83,400
650 Paging Network Inc*................................ 21,033 31,200
2,200 SBC Communications Inc............................. 93,882 121,000
3,200 Sprint Corporation................................. 104,567 112,000
2,800 U.S. West Inc...................................... 122,548 131,950
2,300 Vodafone Group PLC - ADR........................... 70,388 94,300
---------- ----------
767,334 897,163
---------- ----------
TOBACCO - 3.2%
2,800 Philip Morris Cos., Inc............................ 154,148 233,800
3,680 RJR Nabisco Holdings Corp.......................... 105,297 119,140
1,700 UST, Inc........................................... 45,177 48,646
---------- ----------
304,622 401,586
---------- ----------
TOTAL COMMON STOCK 9,320,473 11,147,386
---------- ----------
</TABLE>
See accompanying notes to financial statements.
<PAGE> 12
MINERVA FUND, INC.
EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1995
<TABLE>
VALUE
SHARES COST (NOTE 2b)
- ------ ----------- ------------
<S> <C> <C>
PREFERRED STOCKS - 0.5%
2,900 News Corp. Ltd. - ADR........................................ $63,612 $57,638
----------- ------------
MONEY MARKET FUNDS - 9.4%
$606,562 Federated Trust for Government Cash Reserves, 5.29% (a)....... 606,562 606,562
593,366 Fidelity Institutional Cash Treasury II, 5.60% (a)............ 593,366 593,366
----------- ------------
TOTAL MONEY MARKET FUNDS 1,199,928 1,199,928
----------- ------------
TOTAL INVESTMENTS - 97.5% $10,584,013 ** 12,404,952
===========
OTHER ASSETS IN EXCESS OF LIABILITIES - 2.5% 320,144
-----------
NET ASSETS - 100% $12,725,096
===========
</TABLE>
*Non-income producing security
**The cost for Federal income tax purposes is the same. See Note 6b.
ADR - American Depository Receipt
(a) Yield effective on 9/30/95.
See accompanying notes to financial statements.
<PAGE> 13
MINERVA FUND, INC.
FIXED INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT COST (NOTE 2b)
- --------- ------- ---------
<S> <C> <C>
CORPORATE OBLIGATIONS - 11.4%
ENERGY - 0.5%
$15,000 Maxus Energy 10.83%, 9/1/2004.................................................. $15,000 $15,711
------- ---------
FINANCE - 1.2%
15,000 Conseco Inc. 8.125%, 2/15/2003................................................. 14,297 14,325
15,000 Fireman's Fund Mortgage Corp. 8.875%, 10/15/2001............................... 16,441 16,050
10,000 Home Holdings Inc. 8.625%, 12/15/2003.......................................... 9,898 8,075
------- ---------
40,636 38,450
------- ---------
INDUSTRIALS - 8.0%
15,000 Blue Bell Funding 11.85%, 5/1/1999............................................. 15,889 15,788
15,000 Columbia/HCA Healthcare 7.69%, 6/15/2025....................................... 14,981 15,335
15,000 Comcast Corp. 9.375%, 5/15/2005................................................ 14,978 15,263
15,000 Digital Equipment Corporation 8.625%, 11/1/2012................................ 14,292 15,537
8,000 Dillon Read Structure Finance Series 94K2 9.35%, 8/15/2019..................... 7,864 7,897
15,000 Federated Department Stores 10.00%, 2/15/2001.................................. 15,012 16,256
20,000 Fleming Co. Inc. 10.625%, 12/15/2001........................................... 20,582 21,300
20,000 News American Holdings Inc. 10.125%, 10/15/2012................................ 21,328 22,775
15,000 Paramount Communications 8.25%, 8/1/2022....................................... 14,498 14,927
10,000 PT Alatief Freeport 9.75%, 4/15/2001........................................... 9,991 10,575
15,000 Rogers Cable Systems 10.00%, 3/15/2005......................................... 15,050 15,750
20,000 RJR Nabisco Inc. 8.75%, 4/15/2004.............................................. 19,106 20,250
13,645 Scotia Pacific Holdings 7.95%, 7/20/2015....................................... 13,207 14,106
25,000 Southland Corp. 5.00%, 12/15/2003.............................................. 18,098 19,344
5,000 Telecommunications Inc. 9.875%, 6/15/2022...................................... 5,156 5,663
15,000 Telecommunications Inc. 9.25%, 1/15/2023....................................... 14,640 15,769
15,000 Time Warner Inc. 9.15%, 2/1/2023............................................... 14,473 16,350
------- ---------
249,145 262,885
------- ---------
TELEPHONE - 0.7%
10,000 AT & T Corp. 8.35%, 1/15/2025.................................................. 10,782 10,888
15,000 Comcast Cellular 0.00% 3/5/2000................................................ 10,360 11,381
------- ---------
21,142 22,269
------- ---------
TRANSPORTATION - 0.8%
4,992 Jet Equipment Trust 10.91%, 6/15/2006.......................................... 5,179 5,659
20,000 Jet Equipment Trust 10.00%, 6/15/2012.......................................... 20,007 23,044
------- ---------
25,186 28,703
------- ---------
UTILITIES - 0.2%
5,000 Long Island Lighting Co. 8.90%, 7/15/2019...................................... 5,144 5,000
------- ---------
TOTAL CORPORATE OBLIGATIONS 356,253 373,018
------- ---------
FOREIGN GOVERNMENT OBLIGATIONS - 12.1%
125,000 (a)Government of Canada 8.50%, 4/1/2002........................................... 98,878 97,127
250,000 (b)Government of France OAT 8.50%, 11/25/2002..................................... 47,628 54,583
350,000 (b)Government of France OAT 8.50%, 4/25/2023...................................... 71,880 74,665
150,000 (b)Government of France OAT 9.50%, 1/25/2001...................................... 29,204 33,974
230,000 (c)Kingdom of Denmark 9.00%, 11/15/2000........................................... 44,109 44,643
100,000 (d)Treuhandanstalt 7.125%, 1/29/2003.............................................. 73,453 73,061
10,000 (e)United Kingdom 9.125%, 2/21/2001............................................... 13,898 16,996
------- ---------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS 379,050 395,049
------- ---------
MORTGAGE - BACKED SECURITIES - 20.0%
ADJUSTABLE RATE:
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 9.0%
146,903 #8326 6.50%, 11/20/2023.................................................... 148,966 149,107
47,375 #8399 5.00%, 4/20/2024..................................................... 46,288 47,346
48,448 #8496 5.50%, 9/20/2024..................................................... 47,722 48,902
48,490 #8502 6.00%, 9/20/2024..................................................... 49,041 49,460
------- ---------
292,017 294,815
------- ---------
FIXED RATE:
FEDERAL HOME LOAN MORTGAGE CORP. - 3.7%
43,462 #140509 11.50%, 3/1/2014................................................... 48,347 48,176
66,491 #555183 11.25%, 12/1/2015.................................................. 73,733 73,473
------- ---------
122,080 121,649
------- ---------
</TABLE>
See accompanying notes to financial statements.
<PAGE> 14
MINERVA FUND, INC.
FIXED INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT COST (NOTE 2b)
- --------- ---------- ----------
<S> <C> <C>
FIXED RATE - (CONTINUED)
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 4.4%
$66,983 #243156 10.50%, 8/1/2019................................................... $74,435 $73,619
63,817 #046364 11.50%, 11/1/2015.................................................. 71,152 71,297
---------- ----------
145,587 144,916
---------- ----------
NON-GOVERNMENT AGENCY ISSUED - 2.9%
25,000 American Southwest Financial Securities Corp. 7.40%, 11/17/2004................ 25,369 25,664
25,000 Residential Funding Mortgage Series 95 S16 A7 Mezz 7.50% 10/15/2025............ 25,098 25,009
48,147 Rural Housing Trust 1987-1 3.33%, 4/1/2026..................................... 44,548 43,900
---------- ----------
95,015 94,573
---------- ----------
TOTAL MORTGAGE BACKED SECURITIES 654,699 655,953
---------- ----------
U.S. TREASURY OBLIGATIONS - 27.3%
335,000 Bonds 8.75%, 8/15/2020..................................................... 405,191 419,467
320,000 Bonds 7.875%, 2/15/2021.................................................... 364,013 367,261
100,000 Notes 7.250%, 8/15/2004.................................................... 106,415 106,930
---------- ----------
TOTAL U.S. TREASURY OBLIGATIONS 875,619 893,658
---------- ----------
YANKEE BONDS - 1.4%
50,000 Argentina Par Bonds 5.00%, 3/31/23............................................. 26,629 24,250
20,000 Hydro Quebec 8.40%, 1/15/2022.................................................. 19,803 21,675
---------- ----------
TOTAL YANKEE BONDS 46,432 45,925
---------- ----------
MONEY MARKET FUNDS - 9.5%
156,297 Federated Trust for Gov6ernment Cash Reserves, 5.29%**......................... 156,297 156,297
154,993 Fidelity Institutional Cash Treasury II, 5.60%**............................... 154,993 154,993
---------- ----------
TOTAL MONEY MARKET FUNDS 311,290 311,290
---------- ----------
VARIABLE RATE NOTES+ - 1.5%
$25,000 Marshall & Illsley 5.9375%, 10/26/1995......................................... 24,993 24,995
25,000 Wells Fargo & Co. 5.8125%, 12/2/1995........................................... 24,922 24,993
---------- ----------
TOTAL VARIABLE RATE NOTES 49,915 49,988
---------- ----------
TOTAL INVESTMENTS 83.2% $2,673,258 * 2,724,881
==========
OTHER ASSETS IN EXCESS OF LIABILITIES 16.8% 549,910
----------
NET ASSETS 100.0% $3,274,791
==========
FORWARD FOREIGN CURRENCY CONTRACTS - SOLD SHORT
</TABLE>
<TABLE>
<CAPTION>
UNREALIZED
AMOUNT OF ORIGINAL MARKET APPRECIATION
CONTRACTS CURRENCY EXPIRATION DATE VALUE VALUE (DEPRECIATION)
- ------------- -------- --------------- -------- ------ --------------
<S> <C> <C> <C> <C> <C>
(35,000) Canadian Dollar 12/26/95 ($25,751) ($25,899) ($148)
(100,000) Canadian Dollar 12/14/95 (73,624) (73,914) (290)
(80,000) Danish Krone 10/11/95 (14,815) (14,402) 413
(10,000) Ecu 10/11/95 (13,343) (7,706) 5,637
(165,000) French Franc 12/12/95 (32,496) (33,582) (1,086)
(675,000) French Franc 10/12/95 (139,269) (137,450) 1,819
(100,000) German Mark 11/6/95 (70,878) (70,458) 420
(55,000) German Mark 10/19/95 (39,568) (38,716) 852
---------- ---------- ------
TOTAL FORWARD FOREIGN CURRENCY CONTRACTS - SOLD SHORT ($409,744) ($402,127) $7,617
========== ========== ======
</TABLE>
(a) Principal amount in Canadian Dollars.
(b) Principal amount in French Francs.
(c) Principal amount in Danish Krones.
(d) Principal amount in German Marks.
(e) Principal amount in British Pounds.
OAT - Obligation Assimilabli du Tresor
CMO- Collateralized Mortgage Obligation
*The cost for Federal income tax purposes is the same. See Note 6b.
**Yield effective 9/30/95
+Maturity date shown is the next interest reset date; rate shown is rate
in effect on September 30, 1995.
See accompanying notes to financial statements.
<PAGE> 15
MINERVA FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
EQUITY FIXED INCOME
PORTFOLIO PORTFOLIO
----------- ----------
<S> <C> <C>
ASSETS:
Investments in securities, at value
(identified cost $10,584,013 and $2,673,258 respectively).......................... $12,404,952 $2,724,881
Cash............................................................................... 239,589 400,493
Receivable for investment securities sold.......................................... 92,445 37,131
Receivable from Adviser............................................................ 89,818 98,496
Unamortized organizational cost.................................................... 63,829 64,060
Dividends and interest receivable.................................................. 24,233 44,852
Receivable for forward currency contracts closed(Note 2e).......................... -- 1,529
Receivable for forward currency contracts (Note 2e)................................ -- 7,617
----------- ----------
Total Assets................................................................... 12,914,866 3,379,059
----------- ----------
LIABILITIES:
Payable for investment securities purchased........................................ 127,398 78,944
Fund accounting fee payable........................................................ 2,500 2,500
Custodian fee payable.............................................................. 4,924 3,224
Administrative services fee payable................................................ 3,111 806
Transfer agent fee payable......................................................... 500 500
Other accrued expenses............................................................. 51,337 18,294
----------- ----------
Total Liabilities............................................................... 189,770 104,268
----------- ----------
NET ASSETS $12,725,096 $3,274,791
=========== ==========
Net Assets
Par value of shares of capital stock outstanding (par value $.001 per share,
200,000,000 shares authorized)..................................................... $1,040 $341
Additional paid-in capital......................................................... 10,400,827 3,283,594
Accumulated undistributed (overdistributed) net investment income.................. 19,577 (14,940)
Accumulated undistributed net realized gain (loss) on investments.................. 482,713 (53,444)
Unrealized appreciation on forward currency contracts (Note 2e).................... -- 7,617
Unrealized appreciation of investments............................................. 1,820,939 51,394
Unrealized foreign exchange gain................................................... -- 229
----------- ----------
Net Assets......................................................................... $12,725,096 $3,274,791
=========== ==========
Shares of Capital Stock Outstanding................................................ 1,040,164 341,145
--------- -------
Net Asset Value (Maximum Offering Price and Redemption Price Per Share) ........... $12.23 $9.60
====== =====
</TABLE>
See accompanying notes to financial statements
<PAGE> 16
MINERVA FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
EQUITY FIXED INCOME
PORTFOLIO PORTFOLIO
--------- ------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends........................................................................ $264,831 --
Interest ........................................................................ 61,963 $206,160 (a)
---------- ------------
326,794 206,160
---------- ------------
EXPENSES:
Advisory ........................................................................ 55,698 11,359
Fund accounting.................................................................. 45,000 32,276
Legal............................................................................ 32,000 10,176
Audit............................................................................ 23,700 15,841
Amortization of organization expenses............................................ 20,115 20,183
Administrative services ......................................................... 17,154 4,553
Custodian ....................................................................... 16,044 8,943
Insurance........................................................................ 14,256 3,933
Transfer agent .................................................................. 8,500 8,321
Reports to shareholders.......................................................... 8,500 3,388
Directors........................................................................ 7,000 6,852
Registration..................................................................... 5,960 5,570
Miscellaneous.................................................................... 7,000 4,280
---------- ------------
Total expenses before waivers / reimbursements................................... 260,927 135,675
Expenses waived / reimbursed by Adviser.......................................... (145,516) (109,856)
---------- ------------
NET EXPENSES..................................................................... 115,411 25,819
---------- ------------
NET INVESTMENT INCOME.............................................................. 211,383 180,341
---------- ------------
Net realized gain on investments................................................... 490,664 468
Net realized loss on forward currency contracts (Note 2e).......................... -- (25,081)
Change in unrealized appreciation on forward currency contracts and foreign exchang -- 11,968
Change in unrealized appreciation on investments................................... 1,795,679 245,771
---------- ------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS.................................... 2,286,343 233,126
---------- ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................... $2,497,726 $413,467
========== ============
</TABLE>
(a) Net $180 of foreign withholding tax expense.
See accompanying notes to financial statements.
<PAGE> 17
MINERVA FUND, INC.
MINERVA EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994
------------- -------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Net investment income............................................................ $211,383 $158,884
Net realized gain (loss) on investments.......................................... 490,664 (6,774)
Change in unrealized appreciation of investments................................. 1,795,679 25,260
------------- -------------
Net increase in net assets resulting from operations............................... 2,497,726 177,370
------------- -------------
DISTRIBUTIONS:
Net investment income............................................................ (202,662) (149,205)
Return of capital................................................................ ----- (18,362)
------------- -------------
Total Distributions.............................................................. (202,662) (167,567)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sales of shares.................................................... --- 10,000,000
Net asset value of shares issued in reinvestment of distributions................ 202,662 167,567
------------- -------------
Net increase in net assets from capital share transactions....................... 202,662 10,167,567
------------- -------------
Total Increase in Net A............................................................ 2,497,726 10,177,370
NET ASSETS:
Beginning of period.............................................................. 10,227,370 50,000
------------- -------------
End of period (including undistributed net investment income
of $19,577 and $10,856, respectively)........................................... $12,725,096 $10,227,370
============= =============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 18
MINERVA FUND, INC.
FIXED INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Year
Ended Ended
September 30, September 30,
1995 1994*
------------- -------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Net investment income...................................................................... $180,341 $148,170
Net realized loss on investments, forward currency contracts and foreign exchange.......... (24,613) (138,348)
Change in unrealized appreciation (depreciation) of investments and foreign exchange....... 257,739 (198,498)
------- --------
Net increase (decrease) in net assets resulting from operations.............................. 413,467 (188,676)
------- --------
DISTRIBUTIONS:
Net investment income...................................................................... (147,818) (102,636)
Return of capital.......................................................................... (35,725) (45,501)
-------- --------
Total Distributions........................................................................ (183,543) (148,137)
-------- --------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sales of shares.............................................................. --- 3,000,000
Net asset value of shares issued in reinvestment of distributions.......................... 183,543 148,137
------- -------
Net increase in net assets from capital share transactions................................. 183,543 3,148,137
------- ---------
Total Increase in Net Assets................................................................. 413,467 2,811,324
NET ASSETS:
Beginning of period........................................................................ 2,861,324 50,000
---------- ----------
End of period (including overdistribution of net investment income
of ($14,940) and ($38,902), respectively).................................................. $3,274,791 $2,861,324
========== ==========
</TABLE>
See accompanying notes to financial statements.
* Commencement of Operations - November 2, 1993
<PAGE> 19
MINERVA FUND, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
NOTE 1. DESCRIPTION AND ORGANIZATION. Minerva Fund, Inc. (the
"Fund") is registered under the Investment Company Act of 1940, as amended, as
an open-end management investment company, and was incorporated in the State of
Maryland on June 28, 1993. The Fund currently consists of two investment
portfolios: Equity Portfolio and Fixed Income Portfolio (the "Portfolios").
At September 30, 1995 there were authorized 200,000,000 shares of capital stock
having a par value of $.001 per share. Equity Portfolio commenced operations
on October 1, 1993 and Fixed Income Portfolio commenced operations on November
2, 1993. Prior to Commencement of Operations, the Portfolios had no operations
other than organizational matters and the sale of 5,000 shares of each of the
Portfolios at $10.00 per share to Furman Selz Incorporated ("Furman Selz"), the
Fund's Administrator and Distributor, representing the initial capital of the
Fund.
The majority shareholder of Equity Portfolio is Marine Midland Bank
Trustee for Dunlop Tire Corporation with 1,034,989 shares or 99.5% of the
outstanding shares as of September 30, 1995.
The majority shareholder of Fixed Income Portfolio is Japan First
Development Inc. with 335,553 shares or 98.4% of the outstanding shares as of
September 30, 1995.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES. Following is a summary of
the significant accounting policies followed by the Portfolios:
a. Security Valuation - Securities listed on a U.S. securities
exchange or NASDAQ for which market quotations are available are valued at the
last quoted sale price on the day the valuation is made. Price information on
listed securities is taken from the exchange where the security is primarily
traded. Securities listed on a foreign exchange are valued at the latest
quoted sales price available on the exchange where they are primarily traded
before the time when assets are valued. For purposes of net asset value per
share, all assets and liabilities denominated in foreign currencies are
converted into U.S. dollars at the bid price of such currencies against U.S.
dollars last quoted by any major bank. Unlisted securities and listed U.S.
securities not traded on the valuation date for which market quotations are
readily available are valued at the mean of the most recent quoted bid and
asked price. The value of securities and other assets for which no quotations
are readily available (including restricted securities) are determined in good
faith at fair value using methods approved by the Board of Directors.
<PAGE> 20
MINERVA FUND, INC
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1995
Fixed-income securities which are traded over-the-counter and on a
stock exchange will be valued according to the broadest and most representative
market. For bonds and other fixed-income securities this ordinarily is the
over-the-counter market. However, bonds and other fixed-income securities may
be valued on the basis of prices provided by a pricing service when such prices
are believed to reflect market value. The Fund has been informed that the
prices provided by the pricing service are determined without regard to bid or
last sale prices but take into account institutional size trading in similar
groups of securities and any developments related to specific securities.
Short-term securities with remaining maturities of 60 days or less are
valued at amortized cost.
b. Investment transactions are recorded on the trade date.
Identified cost of investments sold is used to calculate realized gains and
losses for both financial statement and Federal income tax purposes. Interest
income, including the amortization of discount or premium, is recorded as
earned or accrued.
c. Dividends and Capital Gains Distributions - Dividends from net
investment income are declared and paid to shareholders on a quarterly basis.
If any net capital gains are realized from the sale of securities, the
Portfolios normally distribute such gains with the last dividend for the
calendar year. Dividends are recorded on the ex-dividend date. The amount of
dividends and distributions from net investment income and net realized capital
gains are determined in accordance with Federal income tax regulations which
may differ with generally accepted accounting principles. These "book/tax"
differences are either temporary (primarily attributable to post October
capital and foreign currency loss deferrals) or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their tax-basis treatment. Temporary
differences do not require a reclassification.
Permanent differences ($16,520) which primarily resulted from a
difference in tax treatment for organizational expenses have been charged to
paid-in-capital. Realized currency losses of $25,081 were reclassified from
accumulated net investment income to accumulated realized loss to conform to
its tax treatment.
d. Forward Currency Contracts and Foreign Currency Translation - The
books and records of the Fixed Income Portfolio are maintained in U.S. dollars
as follows: (1) the foreign currency market value of investment securities,
forward currency contracts, and other assets and liabilities denominated in
foreign currencies are translated at the exchange rates at the end of the
period; and (2) purchases, sales, income and expenses are translated at the
rate of exchange prevailing on the respective dates of such transactions. The
Fixed Income Portfolio does not separately identify that portion of the results
of operations of the Portfolio that arise as a result
<PAGE> 21
MINERVA FUND, INC
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1995
of changes in the exchange rates from the fluctuations that arise from changes
in market prices of equity investments during the year. However, in accordance
with the requirements of the Internal Revenue Code, the portfolio isolates the
effect of changes in foreign exchange rates from the fluctuations arising from
changes in market prices of foreign debt obligations sold, and such net foreign
exchange gains, which amounted to $962 for fiscal year ended September 30,
1995, are included in ordinary income for Federal income tax purposes.
Foreign security and currency transactions may involve certain
considerations and risks not typically associated with those of domestic origin
as a result of, among other factors, level of governmental supervision and
regulation of foreign securities markets and the possibility of political or
economic instability.
The Fixed Income Portfolio may enter into forward currency contracts
to hedge the U.S. dollar value of securities and related receivables and
payables against changes in future exchange rates. Forward currency contracts
are valued based upon the current forward rates. Fluctuations in the value of
such contracts are recorded as unrealized gains or losses; realized gains or
losses include net gains or losses on contracts which have settled. The Fixed
Income Portfolio enters into a forward currency contract as a hedge against
foreign exchange rate fluctuation, upon the purchase or sale of a security
denominated in a foreign currency. The Fixed Income Portfolio maintains, as
collateral, U.S. Government or other highly liquid debt obligations in an
amount equal to or greater than its net obligation for forward currency
contracts. The Fixed Income Portfolio bears the risk of an unfavorable change
in the foreign exchange rate underlying the forward contracts. Risks may also
arise as a result of the potential inability of the counterparties to meet the
terms of their contracts. Forward contracts involve elements of market risk in
excess of the amount reflected in the Statement of Assets and Liabilities to
the extent of the value of the contracts.
e. Federal income taxes - The Portfolios intend to continue to qualify
as "regulated investment companies" under Subchapter M of the Internal Revenue
Code of 1986, as amended. By so qualifying, each Portfolio will not be subject
to Federal income taxes with respect to net investment income and net realized
capital gains, if any, that are distributed to shareholders. The Portfolios
also intend to meet the distribution requirements to avoid the payment of an
excise tax.
f. Organization Expenses. Costs incurred in connection with the
organization and initial registration of the Portfolios were paid by Furman
Selz and reimbursed by the Fund. These costs have been deferred and are being
amortized on the straight-line method against operations over a period of sixty
months beginning with each Portfolio's commencement of operations. In the
event any of the initial shares of the Fund are redeemed during the
amortization period, the redemption proceeds will be reduced by a pro-rata
<PAGE> 22
MINERVA FUND, INC
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1995
portion of any unamortized organization expenses in the same proportion as the
number of shares being redeemed bears to the number of initial shares
outstanding at the time of the redemption.
g. Expenses - Expenses directly attributable to a portfolio are
charged to that portfolio. Other expenses are allocated proportionately to
each Portfolio in relation to the net assets of the Fund or on another
reasonable basis.
NOTE 3. ADVISER. The Fund has entered into an investment management
agreement (the "Investment Management Agreement") with LTCB-MAS Investment
Management, Inc. ("LTCB-MAS") (the "Investment Manager"). LTCB-MAS is a joint
subsidiary of The Long-Term Credit Bank of Japan, Limited ("LTCB") and Miller,
Anderson & Sherrerd, LLP ("MA&S").
Pursuant to an Investment Services Agreement (the "Investment Services
Agreement") between the Investment Manager and MA&S, MA&S acting in
collaboration with and under the supervision of the Investment Manager, is
responsible on a day-to-day basis for selecting investments for each Portfolio
in conformity with the Portfolio's stated investment objective and policies,
consulting with the Investment Manager regarding specific decisions concerning
the purchase, sale, or holding of particular securities on behalf of each
Portfolio and placing purchase and sale orders for each Portfolio's securities.
MA&S receives no fee from the Investment Manager or the Fund pursuant to the
Investment Services Agreement for the services it provides.
Sixty percent of the outstanding capital stock of the Investment
Manager is owned by LTCB Capital Markets, Inc. ("LCM") which, in turn, is
wholly owned by LTCB. Forty percent of the outstanding capital stock of the
Investment Manager is owned by MA&S. LCM owns a non-voting limited partnership
interest in MA&S equal to approximately eighteen percent of the total equity of
MA&S.
MA&S has entered into an agreement to be acquired by Morgan Stanley
Group Inc. In connection with that transaction, the 40% of the outstanding
capital stock of LTCB-MAS currently held by MA&S will also be acquired by one
or more affiliates of Morgan Stanley Group Inc. Each of LTCB-MAS and MA&S will
retain its name and remain at its current location. Consummation of the
transaction with Morgan Stanley Group Inc will cause a termination of the
Current Investment Management Agreement between the Fund and LTCB-MAS and the
current investment services agreement between LTCB-MAS and MA&S.
At a special meeting held on September 29, 1995, the Fund's
shareholders voted to approve a New Investment Management Agreement with
LTCB-MAS and a New Investment Services Agreement between LTCB-MAS and MA&S,
which agreements will take effect upon the consummation of the transaction.
<PAGE> 23
MINERVA FUND, INC
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1995
At the meeting 1,362,404 shares or 100% were voted for approval of the
new contracts, and 0 shares voted against, and 0 shares abstained.
Except for different effective and terminations dates, the terms of
the New Investment Management Agreement are identical in all respects to the
terms of the Current Investment Management Agreement.
The Current Investment Management Agreement provides for Equity
Portfolio and Fixed Income Portfolio to pay the Investment Manager an
investment management fee calculated and accrued daily and paid monthly at the
annual rates of 0.50% and 0.375%, respectively, of the respective Portfolio's
average daily net assets. The Investment Manager will provide portfolio
management and certain administrative, clerical and bookkeeping services for
the Fund.
During the year ended September 30, 1995, the Investment Manager
waived its fees of $55,698 and $11,360, respectively, from Equity Portfolio and
Fixed Income Portfolio. In addition, LTCB Capital Markets, Inc. has agreed to
voluntarily reimburse expenses of $89,818 and $98,496 respectively, of the
Equity Portfolio and the Fixed Income Portfolio.
LTCB-MAS has agreed that, in any fiscal year, it will reduce its
management fee to a Portfolio to the extent that the Portfolio's expenses
exceed the most restrictive expense limitation imposed by state securities laws
or regulations in states where the Portfolio's shares are sold. There was no
reimbursement of expenses to meet these limitations for the fiscal year ended
September 30, 1995.
NOTE 4. ADMINISTRATOR AND DISTRIBUTOR. Furman Selz provides the Fund
with administrative and fund accounting services pursuant to an administration
agreement (the "Fund Administration Agreement"). The services under the Fund
Administration Agreement are subject to the supervision of the Fund's Board of
Directors and officers and includes the day-to-day administration of matters
related to the corporate existence of the Fund, maintenance of its records,
preparation of reports, supervision of the Fund's arrangements with its
custodians and assistance in the preparation of the Fund's registration
statements under federal and state laws. Pursuant to the Fund Administration
Agreement, the Fund pays Furman Selz a monthly fee which on an annualized basis
will not exceed 0.15% of the average daily net assets of each Portfolio.
For the year ended September 30, 1995, Furman Selz was entitled to and
received administrative services fees of $17,154 and $4,553, respectively, from
Equity Portfolio and Fixed Income Portfolio.
<PAGE> 24
MINERVA FUND, INC
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1995
In addition, Furman Selz is entitled to an annual fee of $30,000 per
portfolio for performing fund accounting services. For the fiscal year ended
September 30, 1995, Furman Selz received its full fund accounting fee from both
the Equity Portfolio and the Fixed Income Portfolio.
The Fund has entered into a distribution agreement (the "Distribution
Agreement") with Furman Selz. Under the Distribution Agreement, Furman Selz
does not receive any fee or other compensation for distributing shares of the
Fund.
NOTE 5. OTHER TRANSACTIONS WITH AFFILIATES. The Fund has
entered into a Transfer Agency Agreement (the "Transfer Agent Agreement") with
Furman Selz whereby Furman Selz provides personnel necessary to perform
shareholder servicing functions. For its services, Furman Selz receives a fee
of $15 per account with a minimum of $6,000 per year plus reimbursement of
out-of-pocket expenses.
For the year ended September 30, 1995, Furman Selz received the
minimum fee from each of the Equity Portfolio and Fixed Income Portfolio for
performing transfer agency services.
LTCB Trust Company, a subsidiary of LTCB and an affiliate of the
Investment Manager, serves as custodian for the Fund. For furnishing custodian
services, LTCB Trust Company is paid a monthly fee with respect to the
Portfolios at an annual rate based on a percentage of average daily net assets
plus certain transaction and out of pocket expenses. For the year ended
September 30, 1995, LTCB Trust Company received fees of $16,044 and $8,943,
respectively, from Equity Portfolio and Fixed Income Portfolio.
NOTE 6 - SECURITIES TRANSACTIONS.
(a) Purchase and Sale Transactions. The aggregate amount of purchases
and sales of investment securities, other than short-term securities, for the
year ended September 30, 1995 were as follows:
<TABLE>
<CAPTION>
Common Stocks & Bonds U.S. Gov't Obligations
Purchases Sales Purchases Sales
--------- ----- --------- -----
<S> <C> <C> <C> <C>
Equity Portfolio $5,765,014 $6,307,958 --- $ 991,719
Fixed Income
Portfolio 621,570 605,355 $2,836,706 3,536,414
</TABLE>
<PAGE> 25
MINERVA FUND, INC
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1995
(b) Federal income tax basis. Gross unrealized appreciation and
depreciation on investment securities at September 30, 1995, based on cost for
Federal income tax purposes is as follows:
<TABLE>
<CAPTION>
Gross Gross Net Unrealized
Unrealized Unrealized Appreciation
Appreciation Depreciation (Depreciation)
------------ --------------- --------------
<S> <C> <C> <C>
Equity Portfolio $1,995,871 $174,932 $1,820,939
Fixed Income
Portfolio 60,588 8,965 51,623
</TABLE>
NOTE 7 - CAPITAL SHARE TRANSACTIONS. The Board of Directors may, in
the future, authorize the issuance of additional classes of capital stock
representing shares in the same or additional investment portfolios. For the
periods indicated, transactions of capital stock were as follows:
<TABLE>
<CAPTION>
Year Ended Period Ended
September 30,1995 September 30, 1994
Equity Portfolio
-------------------------------------------
<S> <C> <C>
Shares sold..................... --- 1,000,000
Shares issued in reinvestment of
dividends..................... 18,234 16,930
------ ------
Net increase in shares ......... 18,234 1,016,930
------ ---------
</TABLE>
<TABLE>
<CAPTION>
Fixed Income Portfolio**
-------------------------------------------
<S> <C> <C>
Shares sold..................... --- 300,000
Shares issued in reinvestment of
dividends..................... 19,960 16,930
------ ------
Net increase in shares ......... 19,960 316,185
------ -------
</TABLE>
**November 2, 1993 - Commencement of Operations
NOTE 8. FEDERAL INCOME TAXES. Capital and foreign currency losses
incurred after October 31, 1994 within the year ended, September 30, 1995 are
deemed to arise on the first business day of the following fiscal year.
Minerva Fixed Income Portfolio incurred and will elect to defer post-October
capital and foreign currency losses of approximately $21,000 and $14,000,
respectively.
At September 30, 1995, Minerva Fixed Income Portfolio had net capital
loss carryovers of approximately $33,000, which will be available through
September 2003 to offset future capital gains as provided by the regulations.
To the extent that these carryover losses are used to offset future capital
gains, the gains so offset would not be distributed to shareholders.
<PAGE> 26
MINERVA FUND, INC.
Equity Portfolio
Financial Highlights
For a share outstanding throughout each period (1)
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994
------------- -------------
<S> <C> <C>
Net Asset Value, Beginning of Period........................................................ $10.01 $10.00
====== ======
Income from Investment Operations:
Net investment income................................................................... 0.22 0.16
Net realized and unrealized appreciation on investments................................. 2.20 0.02
---- ----
Total Increase from Investment Operations............................................... 2.42 0.18
---- ----
Less Distributions:
Dividends from net investment income.................................................... (0.20) (0.15)
Return of Capital....................................................................... -- (0.02)
---- ----
Total Distributions....................................................................... (0.20) (0.17)
---- ----
Net Asset Value, End of Period.............................................................. $12.23 $10.01
====== ======
Total Return................................................................................ 24.37% 1.99%
Ratios / Supplemental Data:
Net Assets, End of Period (in thousands) $12,725 $10,227
Ratio of Net Investment Income to Average Net Assets+ 1.90% 1.56%
Ratio of Expenses to Average Net Assets++ 1.03% 1.00%
Portfolio Turnover Rate 56% 35%
</TABLE>
(1) Per share based on the average number of shares outstanding during the
period.
+ Ratios of Net Investment Income before effect of waivers and reimbursements
were 0.59% and 0.72%, respectively.
++ Ratios of Expenses before effect of waivers and reimbursements were 2.34%
and 1.85%, respectively.
<PAGE> 27
MINERVA FUND, INC.
FIXED INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD (1)
<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994*
------------- -------------
<S> <C> <C>
Net Asset Value, Beginning of Period............................................... $8.91 $10.00
----- ------
Income from Investment Operations:
Net investment income.......................................................... 0.55 0.48
Net realized and unrealized appreciation (depreciation) on investments......... 0.70 (1.09)
----- ------
Total Increase (decrease) from Investment Operations........................... 1.25 (0.61)
----- ------
Less Distributions:
Dividends from net investment income........................................... (0.45) (0.33)
Return of Capital.............................................................. (0.11) (0.15)
----- ------
Total Distributions.............................................................. (0.56) (0.48)
----- ------
Net Asset Value, End of Period..................................................... $9.60 $8.91
===== ======
Total Return....................................................................... 14.49% -6.18%
Ratios / Supplemental Data:
Net Assets, End of Period (in thousands) $3,275 $2,861
Ratio of Net Investment Income to Average Net Assets+ 6.00% 5.49% (a)
Ratio of Expenses to Average Net Assets++ 0.85% 0.91% (a)
Portfolio Turnover Rate 150% 196%
</TABLE>
(1) Per share based on the average number of shares outstanding during the
period.
* Commencement of Operations - November 2, 1993
(a) Annualized
+ Ratios of Net Investment Income before effect of waivers and reimbursements
were 2.37% and 2.67%, respectively.
++ Ratios of Expenses before effect of waivers and reimbursements were 4.48%
and 3.73%, respectively.
<PAGE> 28
REPORT OF INDEPENDENT ACCOUNTANTS
To the Directors and Shareholders of
Minerva Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Minerva Equity Portfolio and
Minerva Fixed Income Portfolio (constituting Minerva Fund, Inc., hereafter
referred to as the "Portfolios") at September 30, 1995, the results of each of
their operations for the year then ended and the changes in each of their net
assets and the financial highlights for each of the periods indicated, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Portfolios' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at September 30, 1995 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
November 10, 1995
<PAGE> 29
TAX STATUS OF DIVIDENDS PAID (UNAUDITED)
The following table represents the tax status of dividends and
distributions paid by the Portfolios during the fiscal year ended September 30,
1995. This information is presented in order to comply with regulatory
requirements and no current action on your part is needed. You will be
receiving a Form 1099 at the close of calender 1995 for tax filing purposes.
<TABLE>
<CAPTION>
Percentage of
Income
Income Return of Derived from
Dividends Paid Capital Government
Per Share Per Share Securities
-------------- --------- -------------
<S> <C> <C> <C>
Equity Portfolio $0.20 -- 6.3%
Fixed Income Portfolio 0.45 $0.11 47.6%
</TABLE>
Additionally, 100% of the dividends paid by Minerva Equity Portfolio
qualify for the dividends received deduction available to corporations.
<PAGE> 30
<TABLE>
<CAPTION>
BOARD OF DIRECTORS
<S> <C>
James D. Schmid* Chairman of the Board,
Partner, Miller, Anderson
& Sherrerd
Carl T. Hagberg** Chairman, Carl T.
Hagberg & Associates
Raymond F. Miller** Partner, Cronus Partners, Inc.
Charles A. Parker** Director, T.C.W.
Convertible Fund, Inc.
Formerly, Executive Vice
President, Director and
Chief Investment Officer
Continental Corporation
</TABLE>
*Director is deemed to be an "interested person" of the Fund
as that term is defined in the Investment Company Act of 1940,
as amended.
**Member of Audit and Nominating Committees
<TABLE>
<CAPTION>
OFFICERS
<S> <C>
James D. Schmid Chairman of the Board
John J. Pileggi President & Treasurer
Joan V. Fiore Secretary
Donald E. Brostrom Assistant Treasurer
Sheryl Hirschfeld Assistant Secretary
</TABLE>
<PAGE> 31
MINERVA FUND, INC.
237 Park Avenue
New York, New York 10017
Information & Client Services:
(800) 393-9988
INVESTMENT MANAGER
LTCB-MAS Investment Management, Inc.
One Tower Bridge, Suite 1000
West Conshohocken, PA 19428
ADMINISTRATOR, TRANSFER AGENT,
DIVIDEND DISBURSING AGENT AND DISTRIBUTOR
Furman Selz Incorporated
230 Park Avenue
New York, New York 10169
CUSTODIAN
LTCB Trust Company
165 Broadway
New York, New York 10006
LEGAL COUNSEL
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of Americas
New York, New York 10036
This report is for the information of the
shareholders of Minerva Fund, Inc.
Its use in connection with any offering
of the Funds' shares is authorized
only in case of a concurrent or prior
delivery of the Funds' current prospectus.
Investments in mutual funds involve risk,
including possible loss of principal.
