ANNUAL REPORT
September 30, 1996
FIDUCIARY
CAPITAL GROWTH
FUND, INC.
A NO-LOAD
MUTUAL FUND
FIDUCIARY
CAPITAL GROWTH
FUND, INC.
October 25, 1996
Dear Fellow Shareholder:
The stock market began the quarter on a weak note, as the S&P 500 retreated
7% in the first four weeks of July. The smaller capitalization indices declined
more sharply, with the Russell 2000 off 11% over this time frame. July seemed to
usher in a period of caution and discernment on the part of investors, as many
of the high-flyers declined dramatically. The correction was short-lived,
however, and stocks advanced sharply in August and September. For the quarter
and nine months, the S&P 500 advanced 3% and 13%, respectively. The Russell 2000
was even, and up 10.5% in the corresponding periods, while Fiduciary Capital
Growth Fund rose 2.5% and 8.3% respectively.
Large cash flows into the largest market capitalization stocks again fueled
the performance of the S&P 500. Twenty stocks (4% of the index) contributed
about 8 of the 13 percentage points of the S&P 500 year-to-date performance. We
believe that any asset or group of assets can become overbought, and it appears
the S&P 500, especially the largest 100 companies, falls into that category. The
popularity of S&P index funds, and the belief that they will outperform active
managers, can be a self-fulfilling prophecy in the short run. History suggests,
however, that inflated assets eventually deflate. In the meantime, we remain
excited about the relative attractiveness of our companies versus the S&P. In
our view, we are approaching the tail end of a strong cyclical earnings
recovery, and will be entering a period over the next few quarters of generally
much slower corporate earnings growth. We expect very strong relative earnings
growth from our portfolio companies versus the S&P over the next couple of
years, and our companies presently sell at just over 13x projected 1997 earnings
versus a multiple of approximately 18x for the S&P 500. Our company balance
sheets are also much stronger, showing a median debt of less than 20% of total
capitalization versus almost 46% debt for the S&P companies. As the slowdown in
the rate of growth in corporate earnings becomes more pervasive, and the
stronger fundamentals of our portfolio companies become evident, we expect much
stronger relative performance from a stock standpoint.
As is customary in our October letter, we highlight a few of our present
holdings:
CASEY'S GENERAL STORES, INC. -- Casey's operates approximately 1,000
convenience stores in the rural Midwest, primarily Iowa, Illinois, and Missouri.
Over 70% of the stores are in towns of 5,000 or fewer people and are often the
only convenience store around. Casey's offers low priced gasoline, fresh
prepared foods (donuts, pizza, burgers), and essential groceries. In many towns,
Casey's has become the de facto Pizza Hut and Dunkin' Donuts. Casey's operates a
very large, efficient distribution facility near Des Moines, Iowa, that allows
them to be the "low cost producer" within a 500-mile radius. There are over
1,000 additional sites within this trade area that fit Casey's real estate
criteria. We have owned this stock for several years and continue to be
impressed with the management. Due to sharply higher gasoline prices in recent
quarters, margins have been squeezed and the stock has pulled back. We
anticipate two tough quarterly comparisons on gasoline -- which appear to be in
the stock -- and look forward to a resumption of strong growth thereafter. The
stock is trading at 18.8x calendar 1997 estimates and we believe the long term
growth rate will be 15%.
GENERAL INSTRUMENT CORP. -- General Instrument (GI) is the leading supplier
of equipment to the cable and satellite television industries. Product lines
include distribution electronics to cable headends, set-top terminals,
encryption/decryption equipment, cable modems, broad-band telephony network
equipment, coaxial and fiber-optic cable, and power rectifiers. GI has the
number one or number two position in nearly every one of its markets. Market
concerns regarding the rapid growth of direct broadcast satellite (DBS)
television, and increased competition in the video and telephony areas as a
result of deregulation, have created an opportunity to purchase GI at attractive
levels. We believe DBS will grow rapidly, but will coexist with cable, and GI's
digital set-tops, which can accommodate several hundred channels, are now
rolling out and this should neutralize the channel advantage of DBS. Cable
operators appear to have some advantages over their telephony competitors,
particularly in view of their ownership of the broadband pipe into the home. GI
is addressing these advantages with new products such as cable modems. But GI is
also more than happy to sell to traditional telephony providers; they have a
complete broadband access system that should begin to roll out next year. It is
apparent that competition will force cable and telephony companies to upgrade
their systems in coming years. GI is positioned to supply this arms race. The
Company is also benefiting from rapid deployment of cable and satellite systems
in overseas markets. The stock looks attractive at 14x 1997 estimates.
JOSTENS, INC. -- Jostens is a leading provider of products and services to
the education market. Major product lines include class rings, diplomas, caps
and gowns and yearbooks. Other products include photography, principally for
elementary and high school yearbooks, and customized products such as brochures,
watches, lamps, etc. to groups such as university alumni, fraternities and
sororities. Jostens also manufactures and markets corporate recognition products
for various achievements, including sales, service, retirement, etc.
Jostens enjoys 40-50% type market shares in its various businesses and
product lines, and represents an excellent franchise. At current prices, Jostens
also represents solid value at 6.5x cash flow and 13x earnings. Given the
characteristics of Jostens' businesses, the low valuation is unusual, probably
reflecting past earnings disappointments and not future opportunities. Several
important and favorable factors, which we believe will be key drivers to
earnings growth, have escaped Wall Street's notice, the two most important being
school demographics and a new management. School demographics, or simply, the
number of sixth grade through college students, shrank for most of the past ten
years. The student population started growing again last year, providing a
positive backdrop to Jostens' business. The Board of Directors brought in Bob
Buhrmaster, from Corning, Inc., several years ago to effect a major
restructuring. We believe he has done an excellent job rebuilding the Company
from the ground up, bringing in talented people to beef up important areas such
as sales and marketing. With most of the restructuring and personnel changes now
behind the Company, Jostens looks like it is ready to begin realizing its
potential. The stock sells at 13.5x estimated 1997 earnings, with a dividend
yield of 4.1%.
OLD REPUBLIC INTERNATIONAL CORP. -- Lead by industry veteran Al Zucaro, Old
Republic has added value for shareholders through focused, "nose to the
grindstone" execution. We have grown to appreciate the way Mr. Zucaro grinds out
excellent results in prosaic insurance businesses like trucking and coal
property; liability insurance (property/casualty insurance accounts for 55-60%
of Old Republic's total operating income); title insurance (about 10-15% of
normalized operating income); and the recent growth driver, private mortgage
insurance (30-35% of operating income).
Strong management combined with the Company's diversified, niche-type
insurance businesses have lead to steady, consistent earnings growth and stock
price appreciation. Despite Old Republic's excellent earnings progress, the
stock still sells at a 20-30% discount to other specialty property/casualty
insurers and private mortgage insurance companies. Old Republic trades at only
10x earnings, and 1.2x book value. Over time, we believe the valuation gap
between Old Republic and its peers will narrow, and help drive the stock price.
W.H. BRADY CO. -- W.H. Brady is a leading international manufacturer and
marketer of high-performance identification labels and specialty coded
materials. The Company's product line consists of more than 30,000 products sold
to over 50,000 customers. These products are used by customers to create a safer
work environment for employees, improve productivity and operating efficiencies,
and increase utilization of assets through tracking and inventory process
controls. The Company's markets include a wide variety of industrial,
commercial, governmental, public utility, medical, computer and consumer
products markets. The Company markets products domestically and internationally
through multiple sales channels, including direct sales, distributor sales, and
catalogs. Sales in the recently completed July fiscal year were $360 million, up
14.5%, while earnings were up only marginally, due to three large acquisitions
the Company made in fiscal 1996. This should set the stage for strong earnings
growth of almost 20% in 1997. With the stock at 14.5x earnings, and a growth
rate that we think will be in excess of 18% for the next few years, we view the
stock as attractively priced.
WATTS INDUSTRIES, INC. -- Watts is one of the largest manufacturers of valves
in the world. They are dominant in the plumbing, heating and water quality
markets, and have respectable niches in certain industrial and oil and gas
markets. Watts has a long record of outstanding growth; however, the Company has
struggled over the last couple of years, mainly as a result of some poorly
performing acquisitions. The Company appears to have turned the corner and we
anticipate strong performance in the coming year or two. Watts showed double
digit growth from core operations in the June quarter despite weak economic
conditions in Europe. Operations have been restructured and under-performing
businesses have been sold. The Company recently repurchased two million shares
and has authorization for another million, and the chairman recently bought
stock in the open market. We anticipate strong cash flow and earnings over the
next 12-24 months and believe the stock is attractive at 11x calendar 1997
earnings.
The Board of Directors has declared a distribution of $1.4242 from net long-
term realized capital gains and $0.82873 from ordinary income which includes
$0.69373 from net short-term realized capital gains. Your distribution
confirmation is enclosed.
Thank you for your continuing confidence in Fiduciary Capital Growth Fund,
Inc.
Sincerely,
/s/ Ted D. Kellner /s/ Donald S. Wilson
Ted D. Kellner, C.F.A. Donald S. Wilson, C.F.A.
President Vice President
225 E. Mason St. o Milwaukee, WI 53202 o 414-226-4555
FIDUCIARY CAPITAL GROWTH FUND, INC.
REPORT OF INDEPENDENT ACCOUNTANTS
100 East Wisconsin Avenue
Suite 1500
Milwaukee, WI 53202
(PRICE WATERHOUSE LLP LOGO)
October 25, 1996
To the Shareholders and Board of Directors
of Fiduciary Capital Growth Fund, Inc.
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Fiduciary Capital Growth Fund, Inc. (the "Fund") at September 30, 1996, the
results of its operations for the year then ended, the changes in its net as-
sets for each of the two years in the period then ended and the financial
highlights for each of the ten years in the period then ended, in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at September 30, 1996 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
/s/ Price Waterhouse LLP
STATEMENT OF NET ASSETS
September 30, 1996
QUOTED
MARKET
SHARES OR PRINCIPAL AMOUNT COST VALUE
- -------------------------- ------- -------
COMMON STOCKS -- 88.4% (A)<F2>
BANKS/SAVINGS & LOANS -- 4.6%
14,000 Banknorth Group, Inc. (Del.) $479,500 $523,250
52,000 Marshall & Ilsley Corp. 693,944 1,566,500
---------- ----------
1,173,444 2,089,750
COMPUTERS -- 1.8%
42,000 Stratus Computer, Inc.*<F1> 1,483,860 829,500
CONSUMER PRODUCTS - DURABLE -- 0.0%
1,297 Windmere-Durable
Holdings Inc. 9,727 17,834
CONSUMER SERVICES -- 3.3%
2,100 Grey Advertising Inc. 466,200 489,300
48,000 Jostens, Inc. 975,527 1,002,000
---------- ----------
1,441,727 1,491,300
Distribution -- 6.5%
17,000 Arrow Electronics, Inc.*<F1> 634,950 756,500
34,000 Black Box Corp.*<F1> 677,750 1,122,000
26,500 Fisher Scientific
International Inc. 850,929 1,093,125
---------- ----------
2,163,629 2,971,625
ELECTRONICS -- 2.8%
31,600 Measurex Corp. 893,882 833,450
25,000 Methode Electronics, Inc. 440,625 465,625
---------- ----------
1,334,507 1,299,075
ENERGY/ENERGY SERVICES -- 4.4%
45,000 Burlington Resources Inc. 1,703,625 1,996,875
HEALTH INDUSTRIES -- 8.6%
30,000 Dentsply International Inc. 1,042,500 1,335,000
48,800 Haemonetics Corp.*<F1> 1,013,645 1,006,500
19,000 Patterson Dental Co.*<F1> 437,000 508,250
38,000 Sybron International Corp.*<F1> 462,548 1,102,000
----------- ----------
2,955,693 3,951,750
INSURANCE -- 8.3%
47,000 John Alden Financial Corp. 922,885 969,375
8,500 MGIC Investment Corp. 452,165 572,687
48,000 Old Republic
International Corp. 760,194 1,188,000
19,000 Progressive Corp. (Ohio) 674,443 1,087,750
----------- ----------
2,809,687 3,817,812
LEISURE/RESTAURANTS -- 2.1%
128,500 Ryan's Family Steak
Houses, Inc.*<F1> 1,031,687 979,812
MACHINERY/TOOLS -- 1.0%
12,000 Harnischfeger Industries, Inc. 452,760 453,000
MEDIA/COMMUNICATION -- 1.0%
30,000 Comcast Corp.
Special Cl A NV 457,500 461,250
MISCELLANEOUS-BUSINESS SERVICES -- 2.2%
35,000 G & K Services, Inc. 309,167 1,023,750
MISCELLANEOUS-FINANCE -- 3.5%
46,400 Federal National
Mortgage Association 587,924 1,618,200
MISCELLANEOUS-TECHNOLOGY MANUFACTURING -- 6.7%
22,500 Corning Inc. 614,475 877,500
28,700 General Instrument Corp.*<F1> 629,248 710,325
19,600 Raychem Corp. 791,849 1,470,000
----------- ----------
2,035,572 3,057,825
PAPER/PACKAGING -- 3.6%
18,000 AptarGroup, Inc. 574,572 578,250
21,800 Liqui-Box Corp. 461,900 648,550
22,000 Wausau Paper Mills Co. 368,000 423,500
----------- ----------
1,404,472 1,650,300
POLLUTION CONTROL -- 3.2%
58,000 Browning-Ferris
Industries, Inc. 1,630,897 1,450,000
PRINTING/PUBLISHING/FORMS -- 3.0%
36,000 Deluxe Corp. 994,356 1,359,000
PRODUCER MANUFACTURING -- 13.1%
8,000 Bandag, Inc. Cl A 419,464 383,000
30,000 Belden Inc. 830,472 870,000
68,000 Pall Corp. 1,250,558 1,921,000
57,000 Regal-Beloit Corp. 502,545 947,625
57,000 Watts Industries, Inc. 1,168,999 1,118,625
29,500 W. H. Brady Co. 644,750 741,188
----------- ----------
4,816,788 5,981,438
RETAIL TRADE -- 5.4%
53,000 Casey's General Stores, Inc. 386,125 927,500
90,000 Family Dollar Stores, Inc. 1,443,350 1,563,750
----------- ----------
1,829,475 2,491,250
SOFTWARE/SERVICE -- 3.3%
33,600 SunGard Data Systems Inc.*<F1> 236,220 1,512,000
----------- ----------
Total common stocks 30,862,717 40,503,346
SHORT-TERM INVESTMENTS -- 10.3% (A)<F2>
VARIABLE RATE DEMAND NOTES
$200,000 American Family
Financial Services 200,000 200,000
150,000 General Mills, Inc. 150,000 150,000
1,425,000 Johnson Controls, Inc. 1,425,000 1,425,000
100,000 Pitney Bowes Credit Corp. 100,000 100,000
372,894 Sara Lee Corp. 372,894 372,894
300,000 Southwestern Bell
Telephone Co. 300,000 300,000
2,200,000 Wisconsin Electric
Power Co. 2,200,000 2,200,000
---------- ----------
Total variable rate
demand notes 4,747,894 4,747,894
----------- -----------
Total investments $35,610,611 45,251,240
-----------
-----------
Cash and receivables, less
liabilities 1.3% (A)<F2> 583,676
-----------
NET ASSETS $45,834,916
-----------
-----------
Net Asset Value Per Share
($0.01 par value
10,000,000 shares
authorized), offering
and redemption price
($45,834,916 / 2,106,702
shares outstanding) $21.76
-------
-------
*<F1>Non-income producing security.
(a)<F2>Percentages for the various classifications relate to net assets.
The accompanying notes to financial statements are an integral part of this
statement.
FIDUCIARY CAPITAL GROWTH FUND, INC.
STATEMENT OF OPERATIONS
For the Year Ended September 30, 1996
INCOME:
Dividends $484,470
Interest 323,752
--------
Total income 808,222
--------
EXPENSES:
Management fees 407,413
Administrative services 37,161
Professional fees 22,101
Transfer agent fees 16,917
Registration fees 13,823
Custodian fees 11,647
Printing and postage expense 11,596
Other expenses 7,166
---------
Total expenses 527,824
---------
NET INVESTMENT INCOME 280,398
---------
NET REALIZED GAIN ON INVESTMENTS 4,399,359
NET INCREASE IN UNREALIZED APPRECIATION ON INVESTMENTS 640,021
---------
NET GAIN ON INVESTMENTS 5,039,380
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $5,319,778
---------
---------
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended September 30, 1996 and 1995
1996 1995
------ -----
OPERATIONS:
Net investment income $280,398 $222,230
Net realized gain on investments 4,399,359 4,054,914
Net increase in unrealized appreciation
on investments 640,021 4,335,195
---------- ----------
Net increase in net assets resulting
from operations 5,319,778 8,612,339
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income
($0.11362 and $0.03683 per share, respectively) (222,238) (73,400)
Distributions from net realized gains ($2.07307
and $1.88352 per share, respectively) (4,054,872) (3,753,740)
----------- -----------
Total distributions (4,277,110)**(3,827,140)*
<F4> <F3>
------------ -----------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (194,324 and
381,983 shares, respectively) 3,955,578 7,197,877
Net asset value of shares issued in distributions
(223,475 and 212,856 shares, respectively) 4,149,937 3,731,370
Cost of shares redeemed (266,012 and 631,257
shares, respectively) (5,509,816)(12,388,732)
----------- -----------
Net increase (decrease) in net assets derived
from Fund share activities 2,595,699 (1,459,485)
----------- ----------
TOTAL INCREASE 3,638,367 3,325,714
NET ASSETS AT THE BEGINNING OF THE YEAR 42,196,549 38,870,835
----------- ----------
NET ASSETS AT THE END OF THE YEAR
(including undistributed net investment income
of $280,386 and $222,226, respectively) $45,834,916 $42,196,549
----------- ----------
----------- ----------
*<F3>Total distributions include $787,311 of ordinary income, of which 27% is
eligible for the corporate dividends received deduction.
**<F4>Total distributions include $912,199 of ordinary income, of which 40% is
eligible for the corporate dividends received deduction.
The accompanying notes to financial statements are an integral part of these
statements.
FIDUCIARY CAPITAL GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS
(Selected Data for each share of the Fund outstanding throughout each year)
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
----------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
----- ----- ----- ------ ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of year $21.58 $19.52 $20.08 $18.65 $17.55 $14.16 $18.79 $15.19 $21.96 $22.51
Income from
investment operations:
Net investment income 0.13 0.11 0.06 0.07 0.10 0.19 0.23 0.14 0.03 0.12
Net realized and unrealized
gains (losses) on investments 2.24 3.87 0.72 3.33 2.39 4.35 (4.66) 3.49 (3.21) 3.11
------ ------- ------- ------- ------- ------ ------- ------- ------- -------
Total from investment operations 2.37 3.98 0.78 3.40 2.49 4.54 (4.43) 3.63 (3.18) 3.23
Less distributions:
Dividends from net
investment income (0.12) (0.04) (0.05) (0.11) (0.16) (0.23) (0.20) (0.03) (0.14) (0.10)
Distributions from net
realized gains (2.07) (1.88) (1.29) (1.86) (1.23) (0.92) -- -- (3.45) (3.68)
------ ------- ------- ------- ------- ------ ------- ------- ------- -------
Total from distributions (2.19) (1.92) (1.34) (1.97) (1.39) (1.15) (0.20) (0.03) (3.59) (3.78)
------ ------- ------- ------- ------- ------ ------- ------- ------- -------
Net asset value, end of year $21.76 $21.58 $19.52 $20.08 $18.65 $17.55 $14.16 $18.79 $15.19 $21.96
------ ------- ------- ------- ------- ------ ------- ------- ------- -------
------ ------- ------- ------- ------- ------ ------- ------- ------- -------
TOTAL INVESTMENT RETURN 12.7% 22.7% 4.1% 20.1% 15.3% 34.9% (23.8%) 24.0% (11.1%) 16.8%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
year (in 000's $) 45,835 42,197 38,871 47,420 38,476 30,684 19,460 40,387 41,606 55,154
Ratio of expenses to
average net assets 1.2% 1.2% 1.2% 1.2% 1.3% 1.5% 1.4% 1.3% 1.3% 1.1%
Ratio of net investment
income to average net assets 0.6% 0.5% 0.3% 0.4% 0.6% 1.2% 1.1% 0.8% 0.3% 0.6%
Portfolio turnover rate 43.7% 28.6% 20.9% 32.5% 58.9% 62.7% 55.1% 42.2% 43.4% 83.4%
Average commission rate paid*<F5> $0.0601
*<F5>Disclosure required for fiscal years beginning after September 1, 1995.
The accompanying notes to financial statements are an integral part of this
statement.
</TABLE>
FIDUCIARY CAPITAL GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES --
The following is a summary of significant accounting policies of the
Fiduciary Capital Growth Fund, Inc. (the "Fund"), which is registered under
the Investment Company Act of 1940. The Fund was incorporated under the laws
of Wisconsin on July 29, 1981. The investment objective of the Fund is to
produce long-term capital appreciation principally through investing in common
stocks.
(a) Each security, excluding short-term investments, is valued at the last sale
price reported by the principal security exchange on which the issue is
traded, or if no sale is reported, the latest bid price. Securities which
are traded over-the-counter are valued at the latest bid price. Securities
for which quotations are not readily available are valued at fair value as
determined by the investment adviser under the supervision of the Board of
Directors. Short-term investments are valued at amortized cost which
approximates quoted market value. Investment transactions are recorded no
later than the first business day after the trade date. The cost amounts of
securities for Federal income tax purposes aggregates $35,630,611. The
difference between cost amounts for book purposes and tax purposes is due to
deferred wash losses.
(b) Net realized gains and losses on common stock are computed on the basis of
the cost of specific certificates.
(c) Provision has not been made for Federal income taxes since the Fund has
elected to be taxed as a "regulated investment company" and intends to
distribute substantially all net investment company taxable income and net
capital gains to its shareholders and otherwise comply with the provisions
of the Internal Revenue Code applicable to regulated investment companies.
(d) Dividend income is recorded on the ex-dividend date. Interest income is
recorded on the accrual basis.
(e) The Fund has significant investments in short-term variable rate demand
notes, which are unsecured instruments. The Fund may be susceptible to
credit risk with respect to these notes to the extent the issuer defaults on
its payment obligation. The Fund's policy is to monitor the
creditworthiness of the issuer and does not anticipate nonperformance by
these counterparties.
(f) Generally accepted accounting principles require that permanent financial
reporting and tax differences be reclassified to capital stock. For the
year ended September 30, 1996 the Fund had no such permanent differences.
(g) The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
(2) INVESTMENT ADVISER AND MANAGEMENT AGREEMENT AND TRANSACTIONS WITH RELATED
PARTIES --
The Fund has a management agreement with Fiduciary Management, Inc. ("FMI"),
with whom certain officers and directors of the Fund are affiliated, to serve
as investment adviser and manager. Under the terms of the agreement, the Fund
will pay FMI a monthly management fee at the annual rate of 1% of the daily
net assets up to and including $30,000,000 and 0.75% of the daily net assets
of the Fund in excess of $30,000,000. The Fund has an administrative
agreement with FMI to supervise all aspects of the Fund's operations except
those performed by FMI pursuant to the management agreement. Under the terms
of the agreement, the Fund will pay FMI a monthly administrative fee at the
annual rate of 0.1% of the daily net assets up to and including $30,000,000
and 0.05% of the daily net assets of the Fund in excess of $30,000,000.
(3) DISTRIBUTION TO SHAREHOLDERS --
Net investment income and net realized gains are distributed to shareholders.
On October 25, 1996, a dividend from net investment income of $280,386
($0.1350 per share) was declared. In addition, the Fund distributed
$1,441,002 from net short-term realized gains ($0.69373 per share) and
$2,958,342 from net long-term realized gains ($1.4242 per share). The
distributions will be paid on October 28, 1996, to shareholders of record on
October 24, 1996. The percentage of ordinary income which is eligible for the
corporate dividends received deduction for this income distribution is 25%.
(4) INVESTMENT TRANSACTIONS --
For the year ended September 30, 1996, purchases and proceeds of sales of
investment securities (excluding short-term investments) were $17,215,000 and
$17,113,697, respectively, and maturities of government securities of
$2,000,000.
(5) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES --
As of September 30, 1996, liabilities of the Fund included the following:
Payable to FMI for management and administrative fees $37,326
Other liabilities 16,819
(6) SOURCES OF NET ASSETS --
As of September 30, 1996, the sources of net assets were as follows:
Fund shares issued and outstanding $31,534,557
Net unrealized appreciation on investments 9,640,629
Accumulated net realized gains on investments 4,379,344
Undistributed net investment income 280,386
----------
$45,834,916
----------
----------
Aggregate net unrealized appreciation as of September 30,1996, consisted of
the following:
Aggregate gross unrealized appreciation $10,792,187
Aggregate gross unrealized depreciation (1,151,558)
----------
Net unrealized appreciation $9,640,629
----------
----------
FIDUCIARY CAPITAL GROWTH FUND, INC.
225 East Mason Street
Milwaukee, Wisconsin 53202
BOARD OF DIRECTORS
BARRY K. ALLEN
TED D. KELLNER
THOMAS W. MOUNT
DONALD S. WILSON
INVESTMENT ADVISER
AND ADMINISTRATOR
FIDUCIARY MANAGEMENT, INC.
225 East Mason Street
Milwaukee, Wisconsin 53202
CUSTODIAN, TRANSFER AGENT
AND DIVIDEND DISBURSING AGENT
FIRSTAR TRUST COMPANY
615 East Michigan Street
Milwaukee, Wisconsin 53202
INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP
100 East Wisconsin Avenue
Suite 1500
Milwaukee, Wisconsin 53202
LEGAL COUNSEL
FOLEY & LARDNER
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202