<PAGE> 1
MINERVA FUND, INC.
EQUITY PORTFOLIO
FIXED INCOME PORTFOLIO
SEMI-ANNUAL REPORT
MARCH 31, 1996
<PAGE> 2
May 17, 1996
DEAR SHAREHOLDERS:
We are pleased to present the semi-annual report for the Minerva Fund,
Inc. for the six months ended March 31, 1996. The Equity Portfolio had net
assets on March 31, 1996 of $26,196,316 and the Fixed Income Portfolio had net
assets of $4,039,408.
Both Portfolios had an increase in assets from the annual report dated
September 30, 1995. The net asset value per share was $13.01 for the Equity
Portfolio and $9.57 for the Fixed Income Portfolio as of March 31, 1996.
Unaudited 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
In the six months ended March 31, 1996, the Minerva Equity Portfolio
earned a total return in excess of 11%. This was slightly less than the return
of the S&P 500 Index. The underperformance can be attributed to the holding of
cash reserves in the last quarter of 1995. The Minerva Equity Portfolio
outperformed the S&P 500 Index in the first quarter of 1996 by over 1%. This
performance can largely be attributed to holding less domestic telephone
service stocks and by emphasizing Heavy Industry and Transportation stocks.
In the six months ended March 31, 1996, the performance of the Minerva
Fixed Income Portfolio closely approximated that of the Lehman
Government/Corporate Bond Index. Total return was approximately 2% for the six
month period. In the fourth quarter of 1995, the Fixed Income Portfolio's
underperformance against the benchmark was due to conservative interest rate
sensitivity and mortgage overweighing. On the contrary, the same strategies
contributed to the 1996 first quarter outperformance against this benchmark
index. Foreign security positions with currency hedging also performed well.
<PAGE> 4
MINERVA FUND, INC.
EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS (UNAUDITED) - MARCH 31, 1996
<TABLE>
<CAPTION>
VALUE
SHARES COST (NOTE 2b)
- ---------------- --------------- -------------
<S> <C> <C> <C>
COMMON STOCKS - 97.1%
AEROSPACE - 1.9%
1,200 Loral Corp..................................................................... $56,935 $58,800
3,100 Raytheon Co.................................................................... 129,763 158,875
1,800 Rockwell International Corp.................................................... 94,608 105,975
1,600 United Technologies Corp....................................................... 138,628 179,600
--------------- -------------
419,934 503,250
--------------- -------------
AIR TRANSPORTATION - 1.5%
4,400 AMR Corp*...................................................................... 352,102 393,800
--------------- -------------
APPAREL - 1.1%
2,000 Fruit of the Loom Inc*......................................................... 56,870 51,750
1,800 Springs Industries Inc. - Class A.............................................. 74,133 82,800
1,200 Tommy Hilfiger Corp*........................................................... 55,656 55,050
1,800 VF Corp........................................................................ 97,388 99,450
--------------- -------------
284,047 289,050
--------------- -------------
AUTOMOBILES - 2.9%
5,100 Chrysler Corporation........................................................... 290,719 317,475
8,400 General Motors Corp............................................................ 420,041 447,300
--------------- -------------
710,760 764,775
--------------- -------------
AUTOMOTIVE RELATED - 0.9%
4,800 Goodyear Tire and Rubber Co.................................................... 218,013 244,800
--------------- -------------
BANKS - 7.6%
2,000 Bank of Boston Corp............................................................ 86,020 99,250
5,600 Chemical Banking Corp.......................................................... 314,611 394,800
1,600 Citicorp....................................................................... 80,396 128,000
1,800 Crestar Financial Corp......................................................... 93,483 103,500
4,800 First Chicago NBD Corp......................................................... 198,926 199,200
4,700 First Union Corp............................................................... 267,049 284,350
5,800 NationsBank Corp............................................................... 388,748 464,725
1,000 Northern Trust Corp............................................................ 48,750 54,000
4,400 TCF Financial Corp............................................................. 136,642 159,500
3,000 U.S. Bancorp................................................................... 88,538 102,000
--------------- -------------
1,703,163 1,989,325
--------------- -------------
BASIC CHEMICALS - 3.9%
800 Airgas Inc*.................................................................... 26,498 31,800
7,400 Du Pont (E.I.) De Nemours...................................................... 503,107 614,200
3,600 Grace W.R. & Co................................................................ 238,054 281,700
1,200 Olin Corp...................................................................... 89,847 104,400
--------------- -------------
857,506 1,032,100
--------------- -------------
BEVERAGES - 2.3%
9,200 Pepsico Inc.................................................................... 468,068 581,900
1,200 Petes Brewing Co*.............................................................. 24,696 22,500
--------------- -------------
492,764 604,400
--------------- -------------
BUILDING AND HOUSING - 0.2%
1,500 Danaher Corp................................................................... 49,653 55,500
--------------- -------------
BUSINESS SERVICES - 0.9%
800 Cintas Corp.................................................................... 31,300 40,000
1,000 Gartner Group Inc. - Class A*.................................................. 38,300 61,000
2,300 PHH Corp....................................................................... 100,063 127,938
--------------- -------------
169,663 228,938
--------------- -------------
</TABLE>
See accompanying notes to financial statements.
<PAGE> 5
MINERVA FUND, INC.
EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED) - MARCH 31, 1996
<TABLE>
<CAPTION>
VALUE
SHARES COST (NOTE 2b)
- ----------------- --------------- -------------
<S> <C> <C> <C>
COMPUTER SOFTWARE AND SERVICES - 0.9%
1,500 Fiserv, Inc*................................................................... $36,688 $42,000
1,400 McAfee Associates Inc*......................................................... 70,450 76,650
2,700 Oracle Systems Corp*........................................................... 103,337 127,238
--------------- -------------
210,475 245,888
--------------- -------------
COMPUTERS AND OFFICE EQUIPMENT - 3.7%
6,400 Cisco Systems Inc*............................................................. 286,732 296,800
2,300 International Business Machines Corp........................................... 246,151 255,588
3,300 Seagate Technology Inc*........................................................ 129,226 180,675
1,700 Stratus Computer, Inc*......................................................... 48,537 47,175
1,500 U.S. Robotics Inc*............................................................. 169,795 193,875
--------------- -------------
880,441 974,113
--------------- -------------
CONTAINERS - 0.4%
2,300 Temple-Inland Inc.............................................................. 114,513 107,813
--------------- -------------
CREDIT AND FINANCE - 1.0%
1,600 Federal Home Loan Mortgage Corp................................................ 122,859 136,400
2,300 Sirrom Capital Corp............................................................ 44,650 52,613
1,097 TransAmerica Corp.............................................................. 73,010 82,138
--------------- -------------
240,519 271,151
--------------- -------------
DEPARTMENT STORES - 3.0%
2,300 Dillard Department Stores - Class A............................................ 77,077 79,638
8,400 Federated Department Stores*................................................... 258,604 270,900
8,700 Sears, Roebuck and Co.......................................................... 366,425 424,125
--------------- -------------
702,106 774,663
--------------- -------------
DRUGS - 6.4%
3,400 Abbott Laboratories............................................................ 144,854 138,550
5,200 Allergan Inc................................................................... 161,014 191,750
1,200 Alza Corp. - Class A*.......................................................... 32,097 36,900
2,500 American Home Products Corp.................................................... 203,888 270,938
5,100 Bristol-Myers Squibb Co........................................................ 362,594 436,688
900 Cardinal Health Inc............................................................ 54,829 57,825
1,800 Johnson & Johnson.............................................................. 157,108 166,050
3,400 Schering Plough Corp........................................................... 191,532 197,625
1,900 Warner-Lambert Co.............................................................. 165,869 196,175
--------------- -------------
1,473,785 1,692,501
--------------- -------------
ELECTRICAL EQUIPMENT - 1.6%
5,700 General Electric Co............................................................ 363,252 443,887
--------------- -------------
ELECTRICAL POWER - 2.0%
2,500 DTE Energy Co.................................................................. 84,150 84,063
4,900 Entergy Corp................................................................... 146,007 137,200
5,300 Ohio Edison Co................................................................. 120,868 119,913
3,200 Peco Energy Company............................................................ 91,467 85,200
4,100 Unicom Corporation............................................................. 112,296 110,700
--------------- -------------
554,788 537,076
--------------- -------------
ELECTRONICS - 1.1%
4,200 Intel Corp..................................................................... 188,750 238,875
4,600 National Semiconductor Corp*................................................... 69,914 63,825
--------------- -------------
258,664 302,700
--------------- -------------
ENTERTAINMENT & LEISURE - 0.5%
4,600 Liberty Media Group - Class A*................................................. 123,973 121,325
--------------- -------------
</TABLE>
See accompanying notes to financial statements.
<PAGE> 6
MINERVA FUND, INC.
EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED) - MARCH 31, 1996
<TABLE>
<CAPTION>
VALUE
SHARES COST (NOTE 2b)
- ----------------- --------------- -------------
<S> <C> <C> <C>
FOOD PRODUCTS - 1.8%
4,600 Conagra Inc.................................................................... $201,326 $186,875
1,500 Ralston Purina Group........................................................... 79,753 100,313
1,300 Unilever NV - ADR.............................................................. 171,691 176,475
--------------- -------------
452,770 463,663
--------------- -------------
FOOD RETAILERS - 0.7%
4,400 Kroger Supermarkets*........................................................... 143,827 178,200
--------------- -------------
FURNISHINGS AND APPLIANCES - 0.5%
2,600 Premark International, Inc..................................................... 112,745 139,425
--------------- -------------
HEALTH SERVICES - 3.2%
4,936 Columbia HCA Healthcare Corp................................................... 224,850 285,054
3,487 Health Management Associates Inc*.............................................. 76,382 122,045
1,600 Healthcare Compare Corp*....................................................... 73,825 80,600
8,400 Humana Inc*.................................................................... 204,275 211,050
3,300 U.S. Healthcare Inc............................................................ 147,263 151,388
--------------- -------------
726,595 850,137
--------------- -------------
HEALTH TECHNOLOGY - 0.4%
2,500 Beckman Instruments Inc........................................................ 81,150 97,500
--------------- -------------
HOSPITAL SUPPLIES - 1.8%
4,000 Baxter International Inc....................................................... 137,328 181,000
2,300 Becton Dickinson & Co.......................................................... 128,076 188,313
3,000 Mallinckrodt Group Inc......................................................... 105,280 112,875
--------------- -------------
370,684 482,188
--------------- -------------
INSURANCE - 6.9%
3,700 Ace Limited.................................................................... 148,660 165,113
4,700 Aetna Life & Casualty Co....................................................... 326,015 354,850
4,750 AFLAC Inc...................................................................... 138,078 148,438
3,356 Allstate Corp.................................................................. 132,197 141,372
2,700 American General Corp.......................................................... 89,512 93,150
3,900 Exel Limited................................................................... 225,972 269,100
8,300 ITT Hartford Group Inc......................................................... 410,479 406,700
1,800 Providian Corp................................................................. 72,125 80,325
2,500 SAFECO Corp.................................................................... 80,175 83,750
1,100 St. Paul Companies Inc......................................................... 55,898 61,050
--------------- -------------
1,679,111 1,803,848
--------------- -------------
MACHINERY - 2.4%
1,500 Caterpillar Inc................................................................ 95,603 102,000
3,600 Cummins Engine................................................................. 144,844 145,350
4,300 Deere & Co..................................................................... 142,599 179,525
2,200 Eaton Corp..................................................................... 125,582 132,550
1,300 Tecumseh Products Co. - Class A................................................ 70,400 76,538
--------------- -------------
579,028 635,963
--------------- -------------
MISCELLANEOUS INDUSTRIALS - 3.7%
1,300 FMC Corp*...................................................................... 79,502 97,662
9,500 Hanson PLC - ADR............................................................... 142,570 142,500
600 ITT Corp*...................................................................... 21,085 36,000
2,200 Minnesota Mining & Manufacturing Co............................................ 141,557 142,725
2,600 Tenneco Inc.................................................................... 124,581 145,275
1,600 Textron Inc.................................................................... 95,370 128,000
4,700 Trinova Corp................................................................... 149,225 149,813
1,500 TRW Inc........................................................................ 124,490 133,687
--------------- -------------
878,380 975,662
--------------- -------------
</TABLE>
See accompanying notes to financial statements.
<PAGE> 7
MINERVA FUND, INC.
EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED) - MARCH 31, 1996
<TABLE>
<CAPTION>
VALUE
SHARES COST (NOTE 2b)
- ----------------- --------------- -------------
<S> <C> <C> <C>
NATURAL GAS - 0.9%
4,200 Coastal Corp................................................................... $141,026 $165,900
1,900 El Paso Natural Gas............................................................ 66,002 70,300
--------------- -------------
207,028 236,200
--------------- -------------
NON-FERROUS METALS - 0.3%
1,500 Reynolds Metals Co............................................................. 85,690 88,687
--------------- -------------
OIL - DOMESTIC AND CRUDE - 1.7%
1,400 Amoco Corp..................................................................... 100,109 101,150
1,700 Atlantic Richfield Co.......................................................... 191,265 202,300
1,300 Mapco Inc...................................................................... 76,477 72,637
2,100 Ultramar Corp*................................................................. 55,843 60,637
--------------- -------------
423,694 436,724
--------------- -------------
OIL - INTERNATIONAL - 3.4%
3,800 British Petroleum PLC - ADR.................................................... 367,346 403,750
2,700 Mobil Corp..................................................................... 265,725 312,862
4,900 Total S.A. - ADR............................................................... 151,668 166,600
--------------- -------------
784,739 883,212
--------------- -------------
OTHER CONSUMER SERVICES - 0.7%
3,500 Service Corporation International.............................................. 129,272 170,625
--------------- -------------
PAPER - 1.4%
2,500 Boise Cascade Crop............................................................. 91,957 105,000
2,800 Bowater Inc.................................................................... 115,630 104,300
3,500 Champion International Corp.................................................... 164,922 158,375
--------------- -------------
372,509 367,675
--------------- -------------
PERSONAL PRODUCTS - 3.5%
2,900 Avon Products Inc.............................................................. 209,879 248,675
800 Estee Lauder Co. - Class A..................................................... 28,647 28,600
3,762 Kimberley Clark Corp........................................................... 234,635 280,268
4,100 Proctor & Gamble Co............................................................ 272,908 347,475
--------------- -------------
746,069 905,018
--------------- -------------
PUBLISHING AND BROADCASTING - 2.7%
2,750 Comcast Corp. - Class A........................................................ 51,300 48,640
1,200 Infinity Broadcasting Co. - Class A*........................................... 53,697 52,050
2,700 Panamsat Corp*................................................................. 67,011 82,350
2,700 Sinclair Broadcasting Group - Class A*......................................... 61,437 71,550
8,000 Telecommunications Inc. - Class A*............................................. 158,489 148,500
4,300 Time Warner, Inc............................................................... 173,395 175,762
5,600 U.S. West Media Group*......................................................... 108,343 115,500
--------------- -------------
673,672 694,352
--------------- -------------
RAILROADS - 2.2%
2,150 Burlington Norther Santa Fe Corp............................................... 135,531 176,568
400 CSX Corp....................................................................... 15,561 18,250
5,400 Union Pacific Corp............................................................. 360,797 370,575
--------------- -------------
511,889 565,393
--------------- -------------
RECREATION AND TOYS - 0.3%
1,000 Eastman Kodak Co............................................................... 54,833 71,000
--------------- -------------
RESTAURANTS - 0.5%
7,900 Wendy's International Inc...................................................... 143,087 143,188
--------------- -------------
</TABLE>
See accompanying notes to financial statements.
<PAGE> 8
MINERVA FUND, INC.
EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED) - MARCH 31, 1996
<TABLE>
<CAPTION>
SHARES/ VALUE
PRINCIPAL AMOUNT COST (NOTE 2b)
- ---------------- --------------- -------------
<S> <C> <C> <C>
SPECIALTY STORES - 2.7%
3,900 Circuit City Stores Inc........................................................ $113,387 $116,512
1,800 Gymboree*...................................................................... 44,125 47,025
5,500 Home Depot, Inc................................................................ 248,530 263,312
2,700 Melville Corp.................................................................. 91,137 96,862
3,200 Office Depot Inc*.............................................................. 62,867 62,800
3,900 Officemax Inc*................................................................. 91,433 94,575
400 Viking Office Products*........................................................ 11,800 22,250
--------------- -------------
663,279 703,336
--------------- -------------
TELECOMMUNICATIONS EQUIPMENT - 0.9%
2,100 Glenayre Technologies Inc*..................................................... 71,114 80,325
2,000 Motorola, Inc.................................................................. 106,770 106,000
900 Tellabs Inc*................................................................... 30,790 43,537
--------------- -------------
208,674 229,862
--------------- -------------
TELEPHONE SERVICES - 5.2%
2,666 360 Communications Co*......................................................... 56,836 63,650
7,700 Frontier Corp.................................................................. 210,509 242,550
6,200 GTE Corp....................................................................... 244,835 272,025
5,700 Nynex Corp..................................................................... 285,405 284,287
2,500 Paging Network Inc*............................................................ 51,033 62,500
8,100 Sprint Corporation............................................................. 276,752 307,800
4,400 U.S. West Inc.................................................................. 136,075 142,450
--------------- -------------
1,261,445 1,375,262
--------------- -------------
TOBACCO - 5.2%
9,800 Philip Morris Cos., Inc........................................................ 805,131 859,950
7,680 RJR Nabisco Holdings Corp...................................................... 230,762 232,320
8,100 UST, Inc....................................................................... 258,473 258,187
--------------- -------------
1,294,366 1,350,457
--------------- -------------
TOTAL COMMON STOCK 22,764,657 25,424,632
--------------- -------------
PREFERRED STOCKS - 0.6%
8,000 News Corp. Ltd. - ADR.......................................................... 165,855 162,000
--------------- -------------
U.S. TREASURY OBLIGATIONS - 33.4%
$8,760,000 U.S. Treasury Bills, 4/11/1996................................................. 8,744,962 8,744,962
--------------- -------------
MONEY MARKET FUNDS - 9.6%
1,258,990 Federated Trust for Government Cash Reserves, 4.91% (a)........................ 1,258,990 1,258,990
1,263,830 Fidelity Institutional Cash Treasury II, 5.14% (a)............................. 1,263,830 1,263,830
--------------- -------------
Total Money Market Funds 2,522,820 2,522,820
--------------- -------------
TOTAL INVESTMENTS - 140.7% $34,198,294 ** 36,854,414
===============
LIABILITIES IN EXCESS OF OTHER ASSETS - (40.7%) (10,658,098)
-------------
NET ASSETS - 100% $26,196,316
=============
*Non-income producing security
**The cost for Federal income tax purposes is substantially the same. See Note 6b.
ADR - American Depository Receipt
(a) Yield effective on 3/31/96.
</TABLE>
See accompanying notes to financial statements.
<PAGE> 9
MINERVA FUND, INC.
FIXED INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS (UNAUDITED) - MARCH 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT COST (NOTE 2b)
- ---------------- -------------- -------------
<S> <C> <C> <C>
CORPORATE OBLIGATIONS - 10.6%
Energy - 0.4%
$15,000 Maxus Energy 10.83%, 9/1/2004.................................................... $15,000 $15,621
-------------- -------------
FINANCE - 1.5%
15,000 Conseco Inc. 8.125%, 2/15/2003................................................... 14,332 15,300
15,000 Federated Department Stores 8.125%, 10/15/2002................................... 14,984 14,850
15,000 Fireman's Fund Mortgage Corp. 8.875%, 10/15/2001................................. 16,322 16,444
5,000 Home Holdings Inc. 8.625%, 12/15/2003............................................ 4,951 4,188
10,000 Reliance Group Holdings Inc. 9.00%, 11/15/2000................................... 10,289 10,125
-------------- -------------
60,878 60,907
-------------- -------------
INDUSTRIALS - 6.8%
15,000 Blue Bell Funding 11.85%, 5/1/1999............................................... 15,705 14,869
15,000 Columbia/HCA Healthcare 7.69%, 6/15/2025......................................... 14,988 15,000
15,000 Comcast Corp. 9.375%, 5/15/2005.................................................. 14,979 15,244
15,000 Digital Equipment Corporation 8.625%, 11/1/2012.................................. 14,314 15,297
8,000 Dillon Read Structure Finance Series 94K2 9.35%, 8/15/2019....................... 7,868 6,821
4,628 Dillon Read Structure Finance 6.66%, 8/15/2010................................... 3,151 3,638
10,000 Dillon Read Structure Finance 8.375%, 8/15/2015.................................. 7,651 7,854
20,000 Fleming Co. Inc. 10.625%, 12/15/2001............................................. 20,545 17,600
15,000 ITT Corp. 7.75%, 11/15/2025...................................................... 15,210 14,345
20,000 News American Holdings Inc. 10.125%, 10/15/2012.................................. 21,282 22,525
15,000 Paramount Communications 8.25%, 8/1/2022......................................... 14,500 14,306
15,000 Philip Morris Cos., Inc. 6.375%, 2/01/2006....................................... 14,989 14,113
20,000 RJR Nabisco Inc. 8.75%, 4/15/2004................................................ 19,142 19,750
15,000 Rogers Cable System Ltd. 10.00%, 3/15/2005....................................... 15,048 15,694
13,315 Scotia Pacific Holdings 7.95%, 7/20/2015......................................... 12,898 13,531
19,000 Southland Corp. 5.00%, 12/15/2003................................................ 14,050 15,343
5,000 Telecommunications Inc. 9.875%, 6/15/2022........................................ 5,153 5,738
15,000 Telecommunications Inc. 9.25%, 1/15/2023......................................... 14,647 15,600
15,000 Time Warner Inc. 9.15%, 2/1/2023................................................. 14,475 16,088
10,000 Westpoint Stevens 8.75%, 12/15/2001.............................................. 10,096 10,000
-------------- -------------
270,691 273,356
-------------- -------------
TELEPHONE - 1.2%
15,000 360 Communications Co. 7.50%, 3/01/2006.......................................... 14,965 14,667
10,000 AT & T Corp. 8.35%, 1/15/2025.................................................... 10,764 10,700
15,000 Comcast Cellular 0.00% 3/5/2000.................................................. 10,805 11,306
15,000 Lenfest Communications 8.375%, 11/01/2005........................................ 15,009 14,466
-------------- -------------
51,543 51,139
-------------- -------------
TRANSPORTATION - 0.7%
4,992 Jet Equipment Trust 10.91%, 6/15/2006............................................ 5,170 5,737
20,000 Jet Equipment Trust 10.00%, 6/15/2012............................................ 20,007 22,713
-------------- -------------
25,177 28,450
-------------- -------------
TOTAL CORPORATE OBLIGATIONS 423,289 429,473
-------------- -------------
FOREIGN GOVERNMENT OBLIGATIONS - 14.5%
75,000(a) Government of Canada 8.50%, 4/1/2002............................................. 57,225 58,423
305,000(b) Kingdom of Denmark 9.00%, 11/15/2000............................................. 58,800 59,249
325,000(b) Kingdom of Denmark 8.00%, 3/15/2006.............................................. 61,008 58,869
50,000(d) Government of the Netherlands 8.50%, 3/15/2001................................... 34,914 34,237
115,000(d) Government of the Netherlands 5.75%, 1/15/2004................................... 68,493 67,861
4,500,000(e) Government of Spain 11.30%, 1/15/2002............................................ 39,640 39,217
235,000(c) Treuhandanstalt 7.125%, 1/29/2003................................................ 172,282 168,993
115,000(c) Treuhandanstalt 7.50%, 9/09/2004................................................. 84,668 83,690
10,000(f) United Kingdom 9.125%, 2/21/2001................................................. 13,829 16,939
-------------- -------------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS 590,859 587,478
-------------- -------------
</TABLE>
See accompanying notes to financial statements.
<PAGE> 10
MINERVA FUND, INC.
FIXED INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED) - MARCH 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT COST (NOTE 2b)
- --------------- -------------- -------------
<S> <C> <C> <C>
MORTGAGE - BACKED SECURITIES - 30.6%
ADJUSTABLE RATE:
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 7.3%
$133,573 #8326 6.50%, 11/20/2023...................................................... $135,435 $135,327
44,951 #8399 6.00%, 4/20/2024....................................................... 43,727 45,260
45,191 #8496 6.50%, 9/20/2024....................................................... 44,500 45,586
43,686 #8502 7.00%, 9/20/2024....................................................... 44,166 44,369
23,914 #8627 6.00%, 5/20/2025....................................................... 24,152 24,028
-------------- -------------
291,980 294,570
-------------- -------------
FIXED RATE:
FEDERAL HOME LOAN MORTGAGE CORP. - 3.0%
42,863 #140509 11.50%, 3/01/2014.................................................... 47,524 48,368
65,122 #555183 11.25%, 12/01/2015................................................... 71,982 73,161
-------------- -------------
119,506 121,529
-------------- -------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 9.2%
50,799 #243156 10.50%, 8/01/2019.................................................... 56,317 56,165
62,922 #046364 11.50%, 11/01/2015................................................... 69,903 70,354
150,000 7.00%, 10/01/2023............................................................ 146,789 145,922
100,000 7.00%, 11/15/2025............................................................ 99,344 97,438
-------------- -------------
372,353 369,879
-------------- -------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 7.1%
293,733 #347156 7.00%, 2/01/2006..................................................... 296,616 286,521
-------------- -------------
NON-GOVERNMENT AGENCY ISSUED - 4.0%
25,000 American Southwest Financial Securities Corp. 7.40%, 11/17/2004.................. 25,354 25,534
24,935 GE Capital Management Service 95-9 7.50%, 11/25/2025............................. 25,098 24,582
24,912 Independent National Mortgage Corp. 95-V A3 7.12%, 2/25/2026..................... 24,604 23,989
24,912 Residential Funding Mortgage Series 95 S16 A7 Mezz 7.50% 10/15/2025.............. 25,008 24,456
24,935 Residential Funding Mortgage Series 95 S17 A8 Mezz 7.50% 12/25/2025.............. 25,094 24,478
41,704 Rural Housing Trust 1987-1 3.33%, 4/1/2026....................................... 38,638 38,370
-------------- -------------
163,796 161,409
-------------- -------------
TOTAL MORTGAGE BACKED SECURITIES 1,244,251 1,233,908
-------------- -------------
U.S. TREASURY OBLIGATIONS - 37.9%
300,000 Bills, 5/16/1996............................................................. 298,166 298,166
460,000 Bonds 8.75%, 8/15/2020....................................................... 608,590 560,915
20,000 Bonds 7.875%, 2/15/2021...................................................... 21,916 22,352
450,000 Notes 5.125%, 11/30/1998..................................................... 452,823 441,477
325,000 Strips, 5/15/2018............................................................ 71,387 69,877
200,000 Strips, 2/15/2019............................................................ 40,497 40,730
525,000 Strips, 8/15/2020............................................................ 106,522 96,548
-------------- -------------
TOTAL U.S. TREASURY OBLIGATIONS 1,599,901 1,530,065
-------------- -------------
YANKEE BONDS - 1.2%
40,000 Argentina Par Bonds 5.25%, 3/31/2023............................................. 21,379 20,800
15,000 Brazil Par Bonds - Z Series 4.25%, 4/15/2024..................................... 8,550 7,650
19,081 YPF Structure Export Notes 7.50%, 10/26/2002..................................... 19,023 19,176
-------------- -------------
TOTAL YANKEE BONDS 48,952 47,626
-------------- -------------
MONEY MARKET FUNDS - 4.4%
52,339 Federated Trust for Government Cash Reserves, 4.91%**............................ 52,339 52,339
123,921 Fidelity Institutional Cash Treasury II, 5.14%**................................. 123,921 123,921
-------------- -------------
TOTAL MONEY MARKET FUNDS 176,260 176,260
-------------- -------------
</TABLE>
See accompanying notes to financial statements.
<PAGE> 11
MINERVA FUND, INC.
FIXED INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED) - MARCH 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT COST (NOTE 2b)
- -------------- -------------- -------------
<S> <C> <C> <C>
VARIABLE RATE NOTES+ - 1.2%
$25,000 Marshall & Illsley 5.46%, 4/26/1996.............................................. $24,995 $24,995
25,000 Wells Fargo & Co. 5.81%, 6/19/1996............................................... 24,950 24,993
-------------- -------------
TOTAL VARIABLE RATE NOTES 49,945 49,988
-------------- -------------
TOTAL INVESTMENTS - 100.4% $4,133,457 * 4,054,798
==============
LIABILITIES IN EXCESS OF OTHER ASSETS - (0.4%) (15,390)
-------------
NET ASSETS - 100% $4,039,408
=============
</TABLE>
Forward Foreign Currency Contracts - Sold Short
<TABLE>
<CAPTION>
Unrealized
Amount of Market Appreciation
Contracts Currency Expiration Date Proceeds Value (Depreciation)
- --------------- --------------------- ---------------------- ------------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
(83,000) Canadian Dollar 6/14/1996 ($60,559) ($60,896) ($337)
(415,000) Danish Krone 4/11/1996 (73,550) (72,744) 806
(200,000) Danish Krone 4/19/1996 (35,393) (35,066) 327
(85,000) Danish Krone 4/25/1996 (14,906) (14,906) 0
(240,000) Dutch Guilder 4/25/1996 (147,444) (145,423) 2,021
(130,000) German Mark 4/19/1996 (89,352) (88,286) 1,066
(105,000) German Mark 4/24/1996 (71,455) (71,329) 126
(140,000) German Mark 5/06/1996 (94,758) (95,172) (414)
------------------- ------------ --------------
Total Forward Foreign Currency Contracts ($587,417) ($583,822) $3,595
=================== ============ ==============
</TABLE>
(a) Principal amount in Canadian Dollars.
(b) Principal amount in Danish Krones.
(c) Principal amount in German Marks.
(d) Principal amount in Dutch Guilders.
(e) Principal amount in Spanish Pesetas.
(f) Principal amount in British Pounds.
*The cost for Federal income tax purposes is substantially the same.
See Note 6b.
**Yield effective 3/31/96
+Maturity date shown is the next interest reset date; rate shown is rate in
effect on March 31, 1996 See accompanying notes to financial statements.
<PAGE> 12
MINERVA FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
MARCH 31, 1996
<TABLE>
<CAPTION>
EQUITY FIXED INCOME
PORTFOLIO PORTFOLIO
------------- --------------
<S> <C> <C>
ASSETS:
Investments in securities, at value
(Identified cost $34,198,294 and $4,133,457 respectively)..................................... $36,854,414 $4,054,798
Cash.......................................................................................... 2,728 7
Unamortized organizational cost............................................................... 53,268 53,345
Dividends and interest receivable............................................................. 33,787 45,264
Receivable from Adviser....................................................................... 21,633 54,082
Prepaid insurance ............................................................................ 6,356 1,618
Receivable for investment securities sold..................................................... -- 115,405
Receivable for forward currency contracts (Note 2e)........................................... -- 3,595
------------- --------------
Total Assets.............................................................................. 36,972,186 4,328,114
------------- --------------
LIABILITIES:
Payable for investment securities purchased................................................... 10,738,220 277,973
Custodian fee payable......................................................................... 3,182 2,556
Fund accounting fee payable................................................................... 2,500 2,500
Administrative services fee payable........................................................... 1,540 392
Transfer agent fee payable.................................................................... 500 500
Other accrued expenses........................................................................ 29,928 4,785
------------- --------------
Total Liabilities.......................................................................... 10,775,870 288,706
------------- --------------
NET ASSETS $26,196,316 $4,039,408
============= ==============
COMPOSITION OF NET ASSETS
Par value of shares of capital stock outstanding (par value $.001 per share,
200,000,000 shares authorized)................................................................ $2,013 $422
Additional paid-in capital.................................................................... 23,051,309 4,264,850
Accumulated undistributed (overdistributed) net investment income............................. 384 (139)
Accumulated undistributed net realized gain (loss) on investments............................. 486,490 (150,661)
Unrealized appreciation on forward currency contracts (Note 2e)............................... -- 3,595
Unrealized appreciation (depreciation) of investments......................................... 2,656,120 (78,577)
Unrealized foreign exchange loss.............................................................. -- (82)
------------- --------------
Net Assets.................................................................................... $26,196,316 $4,039,408
============= ==============
Shares of Capital Stock Outstanding........................................................... 2,013,392 422,082
--------- -------
Net Asset Value (Maximum Offering Price and Redemption Price Per Share) ...................... $13.01 $9.57
====== =====
</TABLE>
See accompanying notes to financial statements
<PAGE> 13
MINERVA FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED)
SIX MONTHS ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
EQUITY FIXED INCOME
PORTFOLIO PORTFOLIO
------------- --------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends......................................................................................... $156,193 --
Interest ......................................................................................... 27,758 $102,288
------------- --------------
183,951 102,288
------------- --------------
EXPENSES:
Advisory ......................................................................................... 36,858 6,639
Fund accounting................................................................................... 17,531 16,261
Legal............................................................................................. 14,233 5,052
Audit............................................................................................. 13,680 14,070
Administrative services .......................................................................... 11,057 2,654
Amortization of organization expenses............................................................. 10,561 10,715
Custodian ........................................................................................ 6,938 5,003
Insurance......................................................................................... 6,252 1,627
Reports to shareholders........................................................................... 4,212 1,751
Transfer agent ................................................................................... 3,540 3,621
Directors......................................................................................... 3,468 3,502
Registration...................................................................................... 3,156 2,787
Miscellaneous..................................................................................... 3,851 2,490
------------- --------------
Total expenses before waivers / reimbursements.................................................... 135,337 76,172
Expenses waived / reimbursed by Adviser and Administrator......................................... (64,691) (62,205)
------------- --------------
NET EXPENSES...................................................................................... 70,646 13,967
------------- --------------
NET INVESTMENT INCOME............................................................................... 113,305 88,321
------------- --------------
Net realized gain on investments.................................................................... 522,763 79,931
Net realized gains on forward currency contracts (Note 2e).......................................... -- 16,804
Change in unrealized depreciation on forward currency contracts and foreign exchange (Note 2e)...... -- (4,022)
Change in unrealized appreciation (depreciation) on investments..................................... 835,843 (130,282)
------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS.............................................. 1,358,606 (37,569)
------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................ $1,471,911 $50,752
============= ==============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 14
MINERVA FUND, INC.
MINERVA EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
MARCH 31, SEPTEMBER 30,
1996 1995
------------- --------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Net investment income..................................................................... $113,305 $211,383
Net realized gain on investments.......................................................... 522,763 490,664
Change in unrealized appreciation of investments.......................................... 835,843 1,795,679
------- ---------
Net increase in net assets resulting from operations........................................ 1,471,911 2,497,726
--------- ---------
DISTRIBUTIONS:
Net investment income..................................................................... (112,943) (202,662)
Realized Capital Gains.................................................................... (520,825) -----
-------- --------
Total Distributions....................................................................... (633,768) (202,662)
-------- --------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sales of shares............................................................. 12,001,862 ---
Net asset value of shares issued in reinvestment of distributions......................... 631,215 202,662
------- -------
Net increase in net assets from capital share transactions................................ 12,633,077 202,662
---------- -------
TOTAL INCREASE IN NET ASSETS................................................................ 13,471,220 2,497,726
NET ASSETS:
Beginning of period....................................................................... 12,725,096 10,227,370
---------- ----------
End of period (including undistributed net investment income
of $384 and $19,577, respectively) (see Note 2c)............................................ $26,196,316 $12,725,096
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 15
MINERVA FUND, INC.
FIXED INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
MARCH 31, SEPTEMBER 30,
1995 1995
------------- -------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Net investment income.......................................................................... $88,321 $180,341
Net realized gain (loss) on investments, forward currency contracts and foreign exchange....... 96,735 (24,613)
Change in unrealized appreciation (depreciation) of investments and foreign exchange........... (134,304) 257,739
-------- -------
Net increase in net assets resulting from operations............................................. 50,752 413,467
------ -------
DISTRIBUTIONS:
Net investment income.......................................................................... (85,279) (147,818)
Return of capital.............................................................................. -- (35,725)
-- -------
Total Distributions............................................................................ (85,279) (183,543)
------- --------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sales of shares.................................................................. 713,864 ---
Net asset value of shares issued in reinvestment of distributions.............................. 85,279 183,543
------ -------
Net increase in net assets from capital share transactions..................................... 799,143 183,543
------- -------
Total Increase in Net Assets..................................................................... 764,616 413,467
NET ASSETS:
Beginning of period............................................................................ 3,274,791 2,861,324
--------- ---------
End of period (including overdistribution of net investment income
of ($139) and ($38,902), respectively) (see Note 2c)........................................... $4,039,407 $3,274,791
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 16
MINERVA FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1996
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 March 31, 1996 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 LLC, formerly, Furman Selz
Incorporated ("Furman Selz"), the Fund's Administrator and Distributor,
representing the initial capital of the Fund.
The majority shareholder of Fixed Income Portfolio is Japan First
Development Inc. with 343,402 shares or 81.4% of the outstanding shares as of
March 31, 1996.
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.
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.
<PAGE> 17
MINERVA FUND, INC
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 1996
Short-term securities with remaining maturities of 60 days or less are
valued at amortized cost.
b. INVESTMENT TRANSACTIONS - 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 resulting 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 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
loss, which amounted to $82 for the six months ended March 31, 1996, is
included in ordinary income for Federal income tax purposes.
<PAGE> 18
MINERVA FUND, INC
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 1996
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
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.
<PAGE> 19
MINERVA FUND, INC
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 1996
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.
As of January 3, 1996, MA&S was acquired by Morgan Stanley Group Inc.
Forty percent of the outstanding capital stock of LTCB-MA&S was also acquired
by affiliates of Morgan Stanley Group. Each of LTCB-MA&S and MA&S has retained
its name. A new Investment Management Agreement with LTCB-MA&S and a new
Investment Services Agreement between LTCB-MA&S and MA&S were approved on
September 29, 1995 due to this acquisition. The terms are identical to the
previous contracts.
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 six months ended March 31, 1996, the Investment Manager
waived its fees of $36,858 and $6,639, respectively, from Equity Portfolio and
Fixed Income Portfolio. In addition, LTCB Capital Markets, Inc. has agreed to
voluntarily reimburse expenses of $21,633 and $54,082 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 six months ended
March 31, 1996.
<PAGE> 20
MINERVA FUND, INC
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 1996
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 Funds'arrangements with its
custodians and assistance in the preparation of the Funds' 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 six months ended March 31, 1996, Furman Selz was entitled to
and waived administrative services fees as indicated below:
<TABLE>
<CAPTION>
Entitled Waived
-------- ------
<S> <C> <C>
Equity Portfolio $11,057 $6,200
Fixed Income Portfolio 2,654 1,484
</TABLE>
In addition, Furman Selz is entitled to an annual fee of $30,000 per
portfolio for performing fund accounting services.
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.
Effective March 1, 1996, Furman Selz has agreed to waive the $6,000
minimum per account transfer agent fee for each Portfolio.
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 six months ended
March 31, 1996, LTCB Trust Company received fees of $6,938 and $5,003,
respectively, from Equity Portfolio and Fixed Income Portfolio.
<PAGE> 21
MINERVA FUND, INC
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MARCH 31, 1996
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
six months ended March 31, 1996 were as follows:
<TABLE>
<CAPTION>
Common Stocks & Bonds U.S. Gov't Obligations
Purchases Sales Purchases Sales
--------- ----- --------- -----
<S> <C> <C> <C> <C>
Equity Portfolio $17,651,161 $ --- $4,170,746 ---
Fixed Income
Portfolio 762,765 434,313 6,109,912 $5,213,459
</TABLE>
(b) FEDERAL INCOME TAX BASIS - Gross unrealized appreciation and
depreciation on investment securities at March 31, 1996, 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 $2,765,313 $ 109,193 $2,656,120
Fixed Income
Portfolio 26,107 104,776 (78,659)
</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>
Period Ended Year Ended
March 31, 1996 September 30, 1995
Equity Portfolio
------------------------------------
<S> <C> <C>
Shares sold..................... 921,672 ---
Shares issued in reinvestment of
dividends..................... 51,555 18,234
------ ------
Net increase in shares ......... 973,227 18,234
------- ------
<CAPTION>
Fixed Income Portfolio
----------------------------------
<S> <C> <C>
Shares sold..................... 72,112 ---
Shares issued in reinvestment of
dividends..................... 8,824 19,960
----- ------
Net increase in shares ......... 80,936 19,960
------ ------
</TABLE>
<PAGE> 22
MINERVA FUND, INC.
EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS (UNAUDITED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD (1)
<TABLE>
<CAPTION>
SIX MONTHS YEAR PERIOD
ENDED ENDED ENDED
MARCH 31, SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1994*
------------- ------------- -------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period............................................. $12.23 $10.01 $10.00
====== ====== ======
Income from Investment Operations:
Net investment income........................................................ 0.10 0.22 0.16
Net realized and unrealized appreciation on investments...................... 1.22 2.20 0.02
------ ------ ------
Total Increase from Investment Operations.................................... 1.32 2.42 0.18
------ ------ ------
Less Distributions:
Dividends from net investment income......................................... (0.08) (0.20) (0.15)
Realized Capital Gains...................................................... (0.46) -- --
Return of Capital............................................................ -- -- (0.02)
------ ------ ------
Total Distributions............................................................ (0.54) (0.20) (0.17)
------ ------ ------
Net Asset Value, End of Period................................................... $13.01 $12.23 $10.01
====== ====== ======
Total Return..................................................................... 11.32% 24.37% 1.99%
Ratios / Supplemental Data:
Net Assets, End of Period (in thousands) $26,196 $12,725 $10,227
Ratios of Net Investment Income to Average Net Assets 1.54%(a) 1.90% 1.56%
Ratios of Net Investment Income before effect of waivers and reimbursements 0.67%(a) 0.59% 0.71%
Ratios of Net Expenses to Average Net Assets 0.96%(a) 1.03% 1.00%
Ratios of Expenses before effect of waivers and reimbursements 1.83%(a) 2.34% 1.85%
Portfolio Turnover Rate 28% 56% 35%
</TABLE>
(1) Per share based on the average number of shares outstanding during each
period.
*Commencement of Operations October 1, 1993
(a) Annualized
<PAGE> 23
MINERVA FUND, INC.
FIXED INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS (UNAUDITED) (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD (1)
<TABLE>
<CAPTION>
SIX MONTHS YEAR PERIOD
ENDED ENDED ENDED
MARCH 31, SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1994*
------------- -------------- -------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period............................................. $9.60 $8.91 $10.00
===== ===== ======
Income from Investment Operations:
Net investment income........................................................ 0.29 0.55 0.48
Net realized and unrealized appreciation (depreciation) on investments....... (0.09) 0.70 (1.09)
----- ----- ------
Total Increase (decrease) from Investment Operations......................... 0.20 1.25 (0.61)
----- ----- ------
Less Distributions:
Dividends from net investment income......................................... (0.23) (0.45) (0.33)
Return of Capital............................................................ -- (0.11) (0.15)
----- ----- ------
Total Distributions............................................................ (0.23) (0.56) (0.48)
----- ----- ------
Net Asset Value, End of Period................................................... $9.57 $9.60 $8.91
===== ===== ======
Total Return..................................................................... 1.59% 14.49% -6.18%
Ratios / Supplemental Data:
Net Assets, End of Period (in thousands) $4,039 $3,275 $2,861
Ratios of Net Investment Income to Average Net Assets 4.99%(a) 6.00% 5.49%(a)
Ratios of Net Investment Income before effect of waivers and reimbursements 1.48%(a) 2.37% 2.67%(a)
Ratios of Net Expenses to Average Net Assets 0.79%(a) 0.85% 0.91%(a)
Ratios of Expenses before effect of waivers/reimbursements 4.30%(a) 4.48% 3.73%(a)
Portfolio Turnover Rate 171% 150% 196%
</TABLE>
(1) Per share based on the average number of shares outstanding during each
period.
* Commencement of Operations - November 2, 1993
(a) Annualized
<PAGE> 24
BOARD OF DIRECTORS
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
*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
OFFICERS
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
<PAGE> 25
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 LLC
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
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.
