<PAGE>
MINERVA FUND, INC.
Equity Portfolio
Semi-Annual Report
March 31, 1997
<PAGE>
MINERVA FUND, INC. May 31, 1997
Dear Shareholders:
We are pleased to present the semi-annual report for the Minerva Fund, Inc. for
the period ending March 31, 1997. The Minerva Fund, Inc. is a no load open-end
investment company currently consisting of one Portfolio, the Equity Portfolio.
The Portfolio operates as a diversified investment company.
The Equity Portfolio seeks to achieve above-average total return over a market
cycle of three to five years, consistent with reasonable risk, by investing in a
diversified portfolio of common stocks of companies which are deemed to have
earnings and dividend growth potential above the average of the economy in
general.
Assets in the Portfolio have increased over 7% to $68,020,409 since September
30, 1996. The net asset value was $14.51 per share as of the end of the
reporting period.
We thank you for your continued confidence in the Minerva Fund, Inc. and look
forward to providing you with investment management that will serve your needs
now and in the future.
Sincerely,
/s/ W. Anthony Turner
W. Anthony Turner
President
<PAGE>
MINERVA FUND, INC.
Equity Portfolio
Portfolio of Investments - March 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2a)
- -------- -------------
<S> <C>
Common Stocks (89.7%):
Aerospace (2.2%):
7,800 Loral Space & Communications* $ 110,175
4,200 McDonnell Douglas Corp. 256,200
9,500 Raytheon Co. 428,688
9,000 United Technologies Corp. 677,250
-------------
1,472,313
-------------
Air Transportation (1.2%):
3,900 AMR Corp.* 321,750
2,600 Delta Air Lines Inc. 218,725
4,500 United Air Lines Inc.* 291,375
-------------
831,850
-------------
Apparel (0.5%):
2,000 Springs Industries Inc. - Class A 89,500
2,000 Tommy Hilfiger Corp.* 104,500
2,500 VF Corp. 167,188
-------------
361,188
-------------
Automobiles (3.7%):
20,400 Chrysler Corp. 612,000
23,100 Ford Motor Co. 724,762
21,100 General Motors Corp. 1,168,412
-------------
2,505,174
-------------
Automotive Related (0.8%):
10,800 Goodyear Tire & Rubber Co. 564,300
-------------
</TABLE>
<PAGE>
MINERVA FUND, INC.
Equity Portfolio
Portfolio of Investments - March 31, 1997 (Unaudited) (Continued)
<TABLE>
<CAPTION>
Value
Shares (Note 2a)
- ------------ --------------
<S> <C>
Banks (4.1%):
2,900 Chase Manhattan Corp. 271,513
2,700 Citicorp 292,275
4,700 Crestar Financial Corp. 162,738
10,300 First Union Corp. 835,588
4,400 Mellon Bank Corp. 320,100
4,400 Republic N Y Corp. 387,750
1,800 Wells Fargo & Co. 511,425
--------------
2,781,389
--------------
Basic Chemicals (2.8%):
3,800 Dow Chemical Co. 304,000
13,600 du Pont (E.I.) de Nemours and Co. 1,441,600
2,500 Rohm & Haas Co. 187,188
--------------
1,932,788
--------------
Building & Housing (0.2%):
3,300 Danaher Corp. 137,363
--------------
Business Services (1.0%):
700 Cintas Corp. 36,925
4,750 Ha-Lo Industries* 72,438
18,200 WMX Technologies Inc. 557,375
--------------
666,738
--------------
Computers & Office Equipment (3.5%):
19,000 Cisco Systems Inc.* 914,375
4,200 Compaq Computer Corp.* 321,825
1,000 International Business Machines Corp. 137,375
9,600 Seagate Technology Inc.* 430,800
10,200 US Robotics Corp.* 564,825
--------------
2,369,200
--------------
</TABLE>
<PAGE>
MINERVA FUND, INC.
Equity Portfolio
Portfolio of Investments - March 31, 1997 (Unaudited) (Continued)
<TABLE>
<CAPTION>
Value
Shares (Note 2a)
- ---------- -------------
<S> <C>
Credit & Finance (2.5%):
3,100 American Express Co. 185,613
4,100 CMAC Investment Corp. 136,837
4,900 Sirrom Capital Corp. 177,625
13,097 Transamerica Corp. 1,172,181
-------------
1,672,256
-------------
Department Stores (2.1%):
5,200 Dillard Department Stores Inc. - Class A 163,800
10,100 Federated Department Stores Inc. * 332,037
11,300 Saks Holdings Inc.* 324,875
12,300 Sears, Roebuck & Co. 618,075
-------------
1,438,787
-------------
Drugs (2.5%):
12,800 Bristol-Myers Squibb Co. 755,200
3,000 Cardinal Health Inc. 163,125
4,800 Merck & Co. Inc. 404,400
5,500 Smithkline Beecham Plc - ADR 385,000
-------------
1,707,725
-------------
Electronics (2.1%):
10,100 Intel Corp. 1,405,163
-------------
Electrical Equipment (0.8%):
5,200 General Electric Co. 516,100
-------------
Entertainment & Leisure (1.7%):
4,800 Carnival Corp.- Class A 177,600
12,100 GTECH Holdings Corp.* 364,512
11,100 International Game Technology 178,988
21,600 Liberty Media Group - Class A * 430,650
-------------
1,151,750
-------------
</TABLE>
<PAGE>
MINERVA FUND, INC.
Equity Portfolio
Portfolio of Investments - March 31, 1997 (Unaudited) (Continued)
<TABLE>
<CAPTION>
Value
Shares (Note 2a)
- ------------ ----------------
<S> <C>
Food Products (1.7%):
12,400 Campbell Soup Co. 575,050
3,100 Unilever NV - ADR 577,375
----------------
1,152,425
----------------
Funeral Services (1.2%):
26,800 Service Corp. International 797,300
----------------
Furnishings & Appliances (0.1%):
3,800 Premark International Inc. 75,525
----------------
Health Technology (0.4%):
6,300 Beckman Instruments Inc. 264,600
----------------
Healthcare Services (3.5%):
15,200 Aetna Inc. 1,305,300
12,654 Columbia/HCA Healthcare Corp. 425,491
4,600 Foundation Health Corp. * 167,900
16,630 Health Management Assoc. Inc. * 394,963
3,000 Lincare Holdings Inc.* 123,750
----------------
2,417,404
----------------
Hospital Supplies (1.4%):
8,800 Baxter International Inc. 379,500
12,300 Becton, Dickinson & Co. 553,500
----------------
933,000
----------------
Hotel / Motel (2.1%):
24,600 HFS Inc. 1,448,325
----------------
</TABLE>
<PAGE>
MINERVA FUND, INC.
Equity Portfolio
Portfolio of Investments - March 31, 1997 (Unaudited) (Continued)
Value
Shares (Note 2a)
- ---------------- -------------------
Insurance (6.2%):
6,100 Ace Ltd. 390,400
10,956 Allstate Corp. 650,513
9,200 American General Corp. 374,900
3,600 CIGNA Corp. 526,050
13,900 Exel Limited 587,275
11,900 ITT Hartford Group Inc. 858,287
6,300 Loews Corp. 559,913
4,500 Providian Corp. 240,750
-------------------
4,188,088
-------------------
Investment Companies (1.3%):
9,190 Bear Stearns Cos. Inc. 241,238
7,000 Dean Witter Discover & Co. 244,125
5,700 Lehman Brothers Holdings Inc. 166,012
4,700 Salomon Inc. 234,412
-------------------
885,787
-------------------
Machinery (5.0%):
12,400 Case Corp. 629,300
4,800 Caterpillar Inc. 385,200
24,600 Cummins Engine Co. Inc. 1,260,750
9,500 Deere & Co. 413,250
4,700 Eaton Corp. 333,113
6,400 Harnischfeger Industries Inc. 297,600
1,600 Tecumseh Products Co. - Class A 91,200
-------------------
3,410,413
-------------------
Media (0.4%):
19,100 News Ltd. - ADR 284,113
-------------------
<PAGE>
MINERVA FUND, INC.
Equity Portfolio
Portfolio of Investments - March 31, 1997 (Unaudited) (Continued)
Value
Shares (Note 2a)
- ---------------- -------------------
Miscellaneous Industries (3.2%):
1,900 Allied Signal Inc. 135,375
11,600 FMC Corp. * 710,500
3,400 Hillenbrand Industries Inc. 135,575
3,800 Tenneco Inc. 148,200
3,600 Textron Inc. 378,000
12,500 Trinova Corp.* 418,750
4,900 TRW Inc. 253,575
-------------------
2,179,975
-------------------
Natural Gas (1.0%):
8,500 Coastal Corp. 408,000
4,900 Columbia Gas System Inc. 283,588
-------------------
691,588
-------------------
Oil & Gas - Domestic & Crude (2.4%):
4,400 Amoco Corp. 381,150
5,600 MAPCO Inc. 173,600
18,100 Phillips Petroleum Co. 739,838
4,800 Ultramar Diamond Shamrock Corp. 152,400
6,272 Union Pacific Resources Group Inc. 167,776
-------------------
1,614,764
-------------------
Oil & Gas - International (3.5%):
7,700 British Petroleum Co. Plc - ADR 1,056,825
2,300 Mobil Corp. 300,438
10,800 Repsol S.A. - ADR 440,100
5,100 Texaco Inc. 558,450
-------------------
2,355,813
-------------------
Paper (1.7%):
9,500 Bowater Inc. 369,312
17,700 Champion International Corp. 805,350
-------------------
1,174,662
-------------------
<PAGE>
MINERVA FUND, INC.
Equity Portfolio
Portfolio of Investments - March 31, 1997 (Unaudited) (Continued)
<TABLE>
<CAPTION>
Value
Shares (Note 2a)
- -------------------- --------------
<S> <C>
Personal Products (1.4%):
2,562 Kimberly Clark Corp. 254,598
1,600 Lauder Estee Cos. - Class A 77,400
5,300 Procter & Gamble Co. 609,500
--------------
941,498
--------------
Publishing & Broadcasting (1.1%):
7,300 Clear Channel Communications Inc.* 312,988
5,750 Comcast Corp. Special 97,031
3,010 TCI Satellite Entertainment Inc.* 23,327
26,900 Tele-Communications - Class A* 322,800
--------------
756,146
--------------
Railroads (1.3%):
1,600 CSX Corp. 74,400
14,000 Union Pacific Corp. 794,500
--------------
868,900
--------------
Restaurants (1.7%):
25,900 Boston Chicken Inc.* 789,950
2,700 CKE Restaurants Inc. 59,738
7,500 Cracker Barrel Old Country Store Inc. 195,937
4,400 Einstein/Noah Bagel Corp.* 110,550
--------------
1,156,175
--------------
Software & Services (4.3%):
11,700 BMC Software Inc.* 539,663
3,400 Fiserv Inc.* 126,650
2,300 McAfee Associates Inc.* 101,775
17,400 Microsoft Corp. * 1,595,362
11,550 Oracle Corp.* 445,397
5,200 Sabre Group Holdings Inc.* 131,300
--------------
2,940,147
--------------
Specialty Chemicals (0.4%):
6,500 Great Lakes Chemical Corp. 299,000
--------------
</TABLE>
<PAGE>
MINERVA FUND, INC.
Equity Portfolio
Portfolio of Investments - March 31, 1997 (Unaudited) (Continued)
<TABLE>
<CAPTION>
Value
Shares (Note 2a)
- ---------------- -------------
<S> <C>
Specialty Stores (3.4%):
11,000 Borders Group Inc.* 207,625
19,100 CompUSA Inc.* 300,825
7,500 CVS Corp. 345,937
5,500 Gucci Group 396,687
16,700 Home Depot Inc. 893,450
7,200 Petsmart Inc.* 145,800
-------------
2,290,324
-------------
Telecommunications - Equipment (1.0%):
8,400 QUALCOMM Inc.* 473,550
3,000 Tellabs Inc. * 108,375
2,300 Uniphase Corp.* 85,100
-------------
667,025
-------------
Telephone Services (4.1%):
2,200 Globalstar Telecommunications Ltd. 117,700
12,700 GTE Corp. 592,137
12,700 SBC Communications Inc. 668,337
23,100 Sprint Corp. 1,051,050
16,720 WorldCom Inc.* 367,840
-------------
2,797,064
-------------
Tobacco (4.2%):
20,600 Philip Morris Cos. Inc. 2,350,972
16,680 RJR Nabisco Holdings Corp. 537,930
-------------
2,888,902
-------------
Total Common Stocks (Cost $58,184,160) 60,993,047
-------------
</TABLE>
<PAGE>
MINERVA FUND, INC.
Equity Portfolio
Portfolio of Investments - March 31, 1997 (Unaudited) (Continued)
<TABLE>
<CAPTION>
Value
Shares (Note 2a)
- ------------------ -----------------
<S> <C>
Money Market Funds (9.8%):
3,327,486 Federated Automated Government Cash Reserves 3,327,486
3,327,487 Fidelity Cash Treasury II 3,327,487
-----------------
Total Money Market Funds (Cost $6,654,973) 6,654,973
-----------------
Total Investments (99.5%): (Cost $64,839,133)(a) $ 67,648,020
Assets in excess of liabilities (0.5%): 372,389
-----------------
Net Assets (100.0%): $ 68,020,409
=================
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation $ 5,064,995
Unrealized depreciation (2,256,108)
-----------------
Net unrealized appreciation $ 2,808,887
=================
</TABLE>
* Non-income producing security
ADR - American Depository Receipt
Plc - Public Limited Co.
Percentages indicated are based on net assets of $68,020,409.
See accompanying notes to financial statements.
<PAGE>
MINERVA FUND, INC.
Equity Portfolio
Statement of Assets and Liabilities
March 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
Assets:
<S> <C>
Investments in securities, at value (Identified cost $64,839,133) $ 67,648,020
Cash 1,210,992
Receivable for investment securities sold 242,377
Dividends and interest recievable 140,560
Unamortized organization costs (Note 2e) 31,853
Other 88,122
------------
Total Assets 69,361,924
------------
Liabilities:
Payable for investment securities purchased 1,157,714
Accrued expenses and other payables:
Advisory fees 68,826
Administrative services fees 33,319
Custodian and accounting fees 23,402
Other 58,254
------------
Total Liabilities 1,341,515
------------
Net Assets $ 68,020,409
============
Composition of Net Assets:
Par value of shares of capital stock outstanding (par value $.001 per share,
200,000,000 shares authorized) $ 4,686
Additional paid-in capital 59,215,768
Accumulated undistributed net investment income 17,980
Accumulated undistributed net realized gain on investments 5,973,088
Unrealized appreciation of investments 2,808,887
------------
Net Assets $ 68,020,409
============
Shares of Capital Stock Outstanding 4,686,393
------------
Net Asset Value (Maximum Offering Price and Redemption Price Per Share) $ 14.51
============
</TABLE>
<PAGE>
MINERVA FUND, INC.
Equity Portfolio
Statement of Operations
For the Six Months Ended March 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
Investment Income:
<S> <C>
Dividends 629,671
Interest $ 43,207
---------------
672,878
---------------
Expenses:
Advisory (Note 3) 159,669
Administrative services (Note 4) 47,761
Fund accounting (Note 4) 20,344
Custodian (Note 5) 14,959
Audit 16,847
Legal 14,959
Amortization of organization expenses (Note 2e) 10,620
Directors 4,862
Transfer agent (Note 5) 4,987
Registration 16,082
Reports to shareholders 3,989
Insurance 7,950
Miscellaneous 9,603
---------------
Total expenses before waivers/reimbursements 332,632
Expenses waived/reimbursed by Adviser and Administrator (73,673)
---------------
Net expenses 258,959
---------------
Net investment income 413,919
---------------
Net realized gain on investments 6,406,596
Change in unrealized appreciation/depreciation
of investments (783,725)
---------------
Net realized and unrealized gain on investments 5,622,871
---------------
Net increase in net assets resulting from operations $ 6,036,790
===============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
MINERVA FUND, INC.
Equity Portfolio
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Year
Ended March 31, Ended
1997 September 30,
(Unaudited) 1996
---------------- ----------------
<S> <C> <C>
Increase in Net Assets:
Net investment income $ 413,919 $ 450,179
Net realized gain on investments 6,406,596 1,322,643
Change in unrealized appreciation (depreciation) of investments (783,725) 1,771,673
---------------- ----------------
Net increase in net assets resulting from operations 6,036,790 3,544,495
---------------- ----------------
Dividends and Distributions from:
Net investment income (413,919) (351,954)
In excess of net investment income (99,822) --------
Realized capital gains (1,718,039) (520,825)
---------------- ----------------
Total Dividends and Distributions (2,231,780) (872,779)
---------------- ----------------
Capital Share Transactions:
Proceeds from sales of shares 26,062,931 47,466,188
Net asset value of shares issued in reinvestment of distributions 1,926,128 846,684
Cost of shares redeemed (27,315,406) (167,938)
---------------- ----------------
Net increase in net assets from capital share transactions 673,653 48,144,934
---------------- ----------------
Total Increase in Net Assets 4,478,663 50,816,650
---------------- ----------------
Net Assets
Beginning of period 63,541,746 12,725,096
End of period (including undistributed net investment income
of $17,980 and $117,802, respectively) $ 68,020,409 $ 63,541,746
= = = = = = = = = = = = = = = =
</TABLE>
See accompanying notes to financial statements.
<PAGE>
MINERVA FUND, INC.
Equity Portfolio
Financial Highlights
For a share outstanding throughout each period
<TABLE>
<CAPTION>
Six Months Year Year Year
Ended March 31, Ended Ended Ended
1997 September 30, September 30, September 30,
(Unaudited) 1996(1) 1995(1) 1994(a)(1)
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 13.57 $ 12.23 $ 10.01 $ 10.00
-------------- ------------- ------------- -------------
Income from Investment Operations:
Net investment income 0.11 0.21 0.22 0.16
Net realized and unrealized appreciation
on investments 1.43 1.73 2.20 0.02
-------------- ------------- ------------- -------------
Total Increase from Investment Operations 1.54 1.94 2.42 0.18
-------------- ------------- ------------- -------------
Less Dividends and Distributions:
Dividends from net investment income (0.11) (0.14) (0.20) (0.15)
In excess of net investment income (0.02) --- --- ---
Realized Capital Gains (0.47) (0.46) --- ---
Return of Capital --- --- --- (0.02)
-------------- ------------- ------------- -------------
Total Dividends and Distributions (0.60) (0.60) (0.20) (0.17)
-------------- ------------- ------------- -------------
Net Asset Value, End of Period $ 14.51 $ 13.57 $ 12.23 $ 10.01
============== ============= ============= =============
Total Return 11.33%(b) 16.37% 24.37% 1.99%
Ratios / Supplemental Data:
Net Assets, End of Period (in thousands) $ 68,020 $ 63,542 $ 12,725 $ 10,227
Ratios of Net Investment Income
to Average Net Assets 1.31%(c) 1.59% 1.90% 1.56%
Ratios of Net Investment Income
before effect of waivers and reimbursements 1.08%(c) 1.13% 0.59% 0.71%
Ratios of Net Expenses
to Average Net Assets 0.82%(c) 0.98% 1.03% 1.00%
Ratios of Expenses
before effect of waivers and reimbursements 1.05%(c) 1.44% 2.34% 1.85%
Portfolio Turnover Rate 58% 55% 56% 35%
Average Commission Rate(d) $0.0507 $0.0590 --- ---
- --------
</TABLE>
(1) Per share based on the average number of shares outstanding during
each period.
(a) Commencement of Operations October 1, 1993.
(b) Not annualized.
(c) Annualized.
(d) Represents the total dollar amount of commissions paid on portfolio
transactions divided by the total number of shares purchased and sold
by the Fund for which commissions were charged.
<PAGE>
MINERVA FUND, INC.
Equity Portfolio
Notes to Financial Statements (Unaudited)
March 31, 1997
Note 1. Description and Organization. Minerva Fund, Inc. (the "Fund") is
registered under the Investment Company Act of 1940, as amended, as a no load
open-end management investment company currently consisting of one Portfolio,
the Equity Portfolio (the "Portfolio"). The Portfolio operates as a diversified
investment company. The Portfolio seeks to achieve above-average total return
over a market cycle of three to five years, consistent with reasonable risk, by
investing in a diversified portfolio of common stocks of companies which are
deemed to have earnings and dividend growth potential that is greater than the
economy in general. At March 31, 1997 there were authorized 200,000,000 shares
of capital stock having a par value of $0.001 per share.
Note 2. Significant Accounting Policies. Following is a summary of the
significant accounting policies followed by the Fund. Estimates and assumptions
are required to be made regarding assets, liabilities and changes in net assets
resulting from operations when financial statements are prepared. Changes in
the economic environment, financial markets and any other parameters used in
determining these estimates could cause actual results to differ from these
amounts.
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.
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. 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 Portfolio
normally distributes 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
from generally accepted accounting principles. These "book/tax" differences are
either temporary (primarily attributable
<PAGE>
MINERVA FUND, INC.
Equity Portfolio
Notes to Financial Statements (Unaudited) (continued)
March 31, 1997
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.
d. Federal Taxes - The Fund intends to continue to qualify as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended. By so qualifying, the Fund 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 Fund also intends to meet the
distribution requirements to avoid the payment of an excise tax.
e. Organization Expenses - Costs incurred in connection with the
organization and initial registration of the Fund were paid by the Fund's
initial administrator 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 the Fund'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.
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 the Fund in
conformity with the Fund'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 the Fund and
placing purchase and sale orders for the Fund'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.
<PAGE>
MINERVA FUND, INC.
Equity Portfolio
Notes to Financial Statements (Unaudited) (continued)
March 31, 1997
The Investment Management Agreement provides for the Portfolio to pay the
Investment Manager an investment management fee calculated and accrued daily and
paid monthly at an annual rate of 0.50% of 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, 1997, the Investment Manager voluntarily waived advisory fees of
$48,066. In addition, LTCB-MAS has voluntarily agreed to reimburse the
Portfolio for total annual operating expenses in excess of 1.00% of average net
assets for a period of at least one year from January 24, 1997.
Note 4. Administrator and Distributor. BISYS Fund Services, Inc.
("BISYS") is responsible for providing the Portfolio with fund accounting,
dividend and capital gains disbursing and transfer agency services, and BISYS
Fund Services Limited Partnership ("BISYS LP") is responsible for providing the
Portfolio with administrative services. BISYS and BISYS LP assumed these
functions during the six months ended March 31, 1997, following the acquisition
by The BISYS Group, Inc. of the Mutual Funds Division of Furman Selz
Incorporated, which organization had previously provided these services to the
Portfolio. BISYS provides the Fund with accounting services pursuant to an
accounting agreement (the "Fund Accounting Agreement"). BISYS LP provides the
Fund with administrative services pursuant to an administration agreement (the
"Fund Administration Agreement"). The services under the agreements are subject
to the supervision of the Fund's Board of Directors and officers, and include
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 Accounting Agreement, the Fund pays BISYS an annual fee of $30,000 for fund
accounting services. Pursuant to the Fund Administration Agreement, the
Portfolio pays BISYS LP a monthly fee which on an annualized basis will not
exceed 0.15% of the average daily net assets of the Portfolio. For the six
months ended March 31, 1997, BISYS voluntarily waived administrative services
fees of $25,607.
The Fund has entered into a distribution agreement (the "Distribution
Agreement") with BISYS LP. Under the Distribution Agreement, BISYS LP 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 Agency Agreement") with BISYS whereby
BISYS provides personnel necessary to perform shareholder servicing functions.
For its services, BISYS receives a fee of $15 per account plus reimbursement of
out-of-pocket expenses.
<PAGE>
MINERVA FUND, INC.
Equity Portfolio
Notes to Financial Statements (Unaudited) (continued)
March 31, 1997
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 Portfolio 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,
1997, LTCB Trust Company received fees of $14,959 from the Portfolio.
Note 6. Securities Transactions. The aggregate amount of purchases and
sales of investment securities, other than short-term securities, for the six
months ended March 31, 1997 were as follows:
Common Stocks & Bonds
Purchases Sales
------------- -------------
$49,014,685 $35,286,879
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 of Equity Portfolio were as
follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
March 31, 1997 September 30, 1996
----------------- -------------------
<S> <C> <C>
Shares sold....................... 1,726,209 3,586,262
Shares issued in reinvestment of
dividends...................... 133,767 67,536
Shares redeemed................... (1,854,749) (12,796)
---------- ---------
Net increase in shares............ 5,227 3,641,002
========== =========
</TABLE>
<PAGE>
BOARD OF DIRECTORS
James D. Schmid * Chairman of the Board,
Principal, Morgan Stanley Group;
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.;
Director, URC Holding Corp.;
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 1940 Act.
** Member of Audit and Nominating Committees
OFFICERS
James D. Schmid Chairman of the Board
W. Anthony Turner President
Michael Sakala Treasurer
Ellen F. Stoutamire Secretary
Alaina V. Metz Assistant Secretary
<PAGE>
MINERVA FUND, INC.
3435 Stelzer Road
Columbus, Ohio 43219
Information & Client Services:
(800) 393-9998
INVESTMENT MANAGER:
LTCB-MAS Investment Management, Inc.
One Tower Bridge, Suite 1000
West Conshohocken, Pennsylvania 19428
ADMINISTRATOR AND DISTRIBUTOR:
BISYS Fund Services Limited
Partnership
3435 Stelzer Road
Columbus, Ohio 43219
TRANSFER AGENT, DIVIDEND DISBURSING AGENT
AND ACCOUNTING AGENT:
BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219
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 the 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. 5/97
