SEMIANNUAL REPORT
MARCH 31, 1999
Fiduciary
Capital Growth
Fund, Inc.
A NO-LOAD
MUTUAL FUND
Fiduciary
Capital Growth
Fund, Inc.
April 26, 1999
Dear Fellow Shareholder:
The underlying fundamental earnings of your portfolio companies improved in
the first quarter of 1999, and are expected to be up approximately 10%. As you
may recall from our year-end 1998 letter, the earnings growth of your companies
slowed last year from approximately 14% to 8%, with the fourth quarter beginning
to rebound. The acceleration in earnings growth in your portfolio companies in
the fourth quarter, and into the first quarter of 1999, is due to both internal
business improvement as well as the addition of some more rapidly growing firms,
which will be discussed below.
Contrast this performance with the March 31, 1999 Commerce Department report
showing that overall corporate earnings fell 2.2% in 1998. S&P 500 earnings,
according to a recent Merrill Lynch study, were down 1.7% in 1998, and are
expected to be up modestly in the first quarter.
The significant declines in most stocks in the first quarter of 1999 has
enabled us to add more rapidly growing franchises at truly bargain prices.
Added late last year, Allegiance Telecom became our biggest winner in the first
quarter, up over 100%. The uneven market also allowed us to increase the size
of some existing holdings that have particularly bright futures. For example,
early in the quarter, we visited Consolidated Stores at their headquarters in
Columbus, Ohio, and, impressed with the progress the Company was making, we
added to the stock. It was gratifying to see the stock up nearly 90% in the last
six weeks of the quarter! Another big rebounder was First Data, up 34% in the
quarter and 100% from the bottom; a good example of what should happen when one
sticks with excellent businesses through tough times.
Unfortunately, the pattern of outperformance by the megacap and internet
stocks continued in the first quarter. While it is painful to watch already
overvalued stocks go higher and already undervalued stocks go lower, we are
comforted by the historical precedence that these conditions do not last. While
your portfolio was down modestly in the first quarter, it was in line, or
slightly ahead of, the small- to mid-cap benchmarks. More importantly, it has
never been more attractively valued relative to the S&P 500. Most market
historians agree that the spread between the largest cap stocks and the rest of
the universe has never been wider. Currently, your portfolio, with historical
and prospective earnings growth greater than the S&P, sells at approximately a
50% discount. History and common sense tells us that dramatic relative
performance is on the horizon.
Below are some new names recently added to your portfolio.
NATIONAL DATA CORP. -- National Data (NDC) is a leading provider of
information and transactional services to the health care and payment systems
markets. Approximately 60% of the sales are in health care, where NDC is the
number one processor of pharmacy claims and drug interaction information. NDC
also provides transaction processing for dental, medical office, hospital, and
HMO customers, adjudicating over one billion transactions annually. In the
payment systems area, NDC provides credit card transaction authorization and
data capture for a variety of vertical markets, where they have a strong
competitive position. We have particularly good insight into this business, due
to our involvement with First Data. NDC has a niche focus in this business and
has recently been able to grow at twice the rate of the industry. National Data
recently reported its 17th straight quarter of operating income growth above
20%. This consistent level of strong growth is due to the leveraging of NDC's
value-added network and tactical acquisitions. Recurring revenue and strong
margins characterize both the health care and payment systems business. The
health care segment should provide a majority of the growth going forward, as
the Company leverages its data network in order to sell higher value-added
services to health care providers and payors. A large-cap stock with this kind
of consistent growth might sell at 30-40 times earnings in today's environment.
NDC, with a not insignificant market cap of $1.3 billion, trades for less than
20 times earnings, and with its significant non-cash expenses, is even more
attractive on a cash earnings basis.
NFO WORLDWIDE, INC. -- NFO ranks among the world's top ten market research
firms and is the largest custom market research company in America. At the core
of NFO's research is the world's largest proprietary pre-recruited household
panel, which provides cost-effective data and valuable consumer preference
information for such industries as consumer-packaged goods, pharmaceuticals,
telecommunications, high-tech and financial services. NFO sells a large amount
of relatively small preference information, less than $1 million per project, to
many of the Fortune 1000 corporations, which we believe makes the business more
predictable and less reliant on large, one-time projects. Large corporations
are looking to outsource this more and more as specialized firms can provide
cost effective and timely insights to product development. Over the past three
years, revenues have grown 33% annually, including acquisitions, and net income
has increased 16%. Internal revenue growth has been 10-15%, which is greater
than the overall industry, estimated to be 7%. We project similar internal
revenue growth going forward, and earnings per share growth of 15-20%. As NFO
integrates recent acquisitions and uses its strong free cash flow to pay down
debt, pre-tax margins should move to 10% from the current 7%. NFO currently
trades at a price/earnings ratio of 12, which is less than half the market
multiple, yet clearly has superior growth prospects.
SUPERIOR SERVICES INC. -- Milwaukee-based Superior Services is a $400 million
acquisition-oriented, fully integrated solid waste services company providing
waste collection, transfer, recycling and disposal services. The Company serves
approximately 500,000 residential, commercial and industrial customers in ten
states with a geographic concentration in the Midwest, Southeast, and Ohio River
Valley. Intriguing aspects to our investment in Superior are compelling
valuation, good acquisition strategy, and improving pricing. Over the past five
years, Superior has increased revenues 33% and earnings per share 16%
compounded. Over the next 2-3 years, we estimate that Superior, with its recent
acquisitions and pipeline of potential acquisitions within its existing or
contiguous markets, can increase revenues and earnings per share at the 20%
level. Private companies and municipalities control over 50% of the $36 billion
solid waste industry; thus, there is a large opportunity for both acquisition
and internal growth. Superior's strategy of fully integrating its solid waste
service results in maximizing efficiency and industry-leading profitability.
Pricing within the waste industry is improving due to the consolidation of the
larger participants (Allied Waste/Browning Ferris and Waste Management/USA Waste
Services). At the same time, smaller, private companies are finding it
difficult to compete, due to stricter landfill standards and increased capital
requirements. In the fourth quarter, Superior experienced 7% internal growth,
its best in over two years. Superior trades at a valuation of less than 16 times
earnings and just 5.6 times earnings before interest, depreciation, and
amortization (EBITDA).
MODIS PROFESSIONAL SERVICES, INC. -- Established in 1992, Modis is one of the
nation's largest providers of professional staffing and information technology
services, with over $1.2 billion in revenue and operating income of $170
million. Since its inception, Modis has consistently shifted its revenue mix
via acquisition, emphasizing information technology (70% of sales) and
professional services such as legal, accounting, engineering and scientific (30%
of sales). In 1998, Modis also sold Strategix, its general staffing business,
at a terrific price. This allowed the Company to eliminate all its debt and
repurchase over 15% of their shares outstanding. Modis has a strong track
record of growth; internal sales and earnings growth has been 15-25% over the
past five years, and over 40% compounded, if acquisitions are included. In the
second half of 1998, management pulled away from the acquisition market and
began unifying its existing operations. Concurrently, the market for
information technology staffing began to slow and several companies reported
disappointing results. The stocks for all the companies in this industry fell
sharply, and by December we believed Modis was attractively valued, particularly
in view of a positive long-term outlook. Although the stock has continued to
fall out of favor, as investors remain concerned about information technology
staffing in front of the year 2000 problem, the valuation of the shares is
compelling. The stock is trading at approximately 8 times earnings and less
than 5 times EBITDA. While we cannot rule out a major slowdown in their
business, right now it appears to be growing 13-15% and will likely accelerate
as 2000 unfolds.
ROMAC INTERNATIONAL, INC. -- Romac is a specialty staffing company focused on
information technology, finance and accounting and human resources. It has 80
offices in 44 markets and generates over $680 million in revenues and $60
million in operating income. The core operating companies go back to 1966, and
the Company has an outstanding track record and reputation in the industry.
Internal growth over the past five years has exceeded 25%, and acquisitions have
boosted the growth to over 50%. Currently 65% of the sales come from
information technology staffing, and 27% from finance and accounting. Like
Modis, Romac has slowed somewhat in the information technology segment, but
still reports a 15% trend line growth rate. Again, worries about the year 2000,
and a slowdown in software sales, have had a disproportionate effect on the
stock. We think that growth will accelerate as the millennium unfolds. Romac
trades at 9 times earnings and slightly less than 5 times EBITDA. The Company
has $76 million in cash, no debt and recently authorized a $50 million
repurchase program (12% of the shares outstanding at current prices). Looking
out over a three year period, we expect earnings to advance at least 15% per
annum, compared to the market's 5-10%. Yet this stock trades at one-third the
market multiple.
Thank you for your continued confidence in Fiduciary Capital Growth Fund,
Inc.
Sincerely,
/s/Ted D. Kellner /s/Donald S. Wilson /s/Patrick J. English
Ted D. Kellner, C.F.A Donald S. Wilson, C.F.A Patrick J. English, C.F.A.
225 E. Mason St. o Milwaukee, WI 53202 o 414-226-4555
Fiduciary Capital Growth Fund, Inc.
STATEMENT OF NET ASSETS
March 31, 1999 (Unaudited)
SHARES QUOTED
OR PRINCIPAL MARKET
AMOUNT COST VALUE
- ------------ ------ ------
LONG-TERM INVESTMENTS -- 95.6% (A)<F2>
COMMON STOCKS -- 93.0% (A)<F2>
BANKS/SAVINGS & LOANS -- 1.1%
13,000 Associated Banc-Corp. $ 390,000 $ 415,194
CHEMICAL/SPECIALTY MATERIALS -- 11.7%
44,000 Cambrex Corp. 1,055,624 973,500
31,000 Great Lakes Chemical Gorp. 1,461,269 1,139,250
17,000 Minerals Technologies Inc. 586,711 816,000
23,000 OM Group, Inc. 605,360 759,000
25,000 Sigma-Aldrich Corp. 873,828 731,250
----------- -----------
4,582,792 4,419,000
DISTRIBUTION -- 7.2%
53,000 Arrow Electronics, Inc.*<F1> 868,678 795,000
17,500 Black Box Corp.*<F1> 407,375 542,500
125,000 Pioneer-Standard
Electronics, Inc. 1,587,114 820,375
25,000 VWR Scientific
Products Corp.*<F1> 416,625 562,500
----------- -----------
3,279,792 2,720,375
ELECTRONICS -- 1.3%
43,500 Methode Electronics, Inc. 640,875 483,937
ENERGY/ENERGY SERVICES -- 6.0%
19,000 Burlington Resources Inc. 685,520 758,822
35,500 Noble Affiliates, Inc. 1,445,021 1,029,500
36,100 Pogo Producing Co. 1,093,727 469,300
----------- -----------
3,224,268 2,257,622
HEALTH INDUSTRIES -- 8.3%
50,000 Dentsply International Inc. 837,500 1,162,500
27,000 Haemonetics Corp.*<F1> 440,370 423,576
10,000 National Data Corp. 377,850 420,000
46,000 Sybron International Corp.*<F1> 279,923 1,150,000
----------- -----------
1,935,643 3,156,076
INDUSTRIAL SERVICES -- 2.0%
37,600 Superior Services Inc.*<F1> 731,289 744,969
INSURANCE -- 4.3%
25,100 Delphi Financial
Group, Inc.*<F1> $ 845,368 $ 850,263
42,000 Old Republic
International Corp. 442,861 766,500
----------- -----------
1,288,229 1,616,763
LEISURE/RESTAURANTS -- 0.8%
20,000 International
Game Technology 385,594 291,260
MEDIA/COMMUNICATION -- 1.1%
7,500 Telephone & Data
Systems, Inc. 399,900 422,812
MISCELLANEOUS - BUSINESS SERVICES -- 8.3%
20,000 AAR Corp. 311,400 356,260
2,600 Grey Advertising Inc. 606,700 902,200
63,000 Modis Professional
Services, Inc.*<F1> 720,769 570,969
20,000 Morrison Health Care, Inc. 380,103 357,500
40,000 NFO Worldwide, Inc.*<F1> 356,460 400,000
68,100 Romac International, Inc.*<F1> 860,882 578,850
----------- -----------
3,236,314 3,165,779
MISCELLANEOUS - FINANCE -- 1.0%
7,500 Financial Security Assurance
Holdings Ltd. 375,690 372,188
MISCELLANEOUS - TECHNOLOGY MANUFACTURING -- 5.9%
28,600 Bell & Howell Co.*<F1> 823,913 838,352
86,200 Paxar Corp.*<F1> 1,088,678 641,155
33,000 Raychem Corp. 664,591 744,579
----------- -----------
2,577,182 2,224,086
PAPER/PACKAGING -- 5.8%
6,400 AptarGroup, Inc. 153,984 166,400
18,000 Liqui-Box Corp. 366,000 873,000
83,500 Wausau-Mosinee
Paper Corp. 1,640,106 1,169,000
----------- -----------
2,160,090 2,208,400
PRINTING/PUBLISHING/FORMS -- 5.8%
72,000 PRIMEDIA Inc.*<F1> $ 932,350 $ 1,008,000
42,000 Thomas Nelson, Inc. 537,411 420,000
39,000 Wallace Computer
Services, Inc. 829,316 772,707
----------- -----------
2,299,077 2,200,707
PRODUCER MANUFACTURING -- 1.7%
36,000 Regal-Beloit Corp. 274,810 650,268
REAL ESTATE-- 1.0%
27,700 Security Capital
Group Inc. Cl B*<F1> 444,862 370,488
RETAIL TRADE -- 14.5%
41,000 Autozone, Inc.*<F1> 964,140 1,245,375
83,000 Casey's General Stores, Inc. 470,625 1,224,250
75,000 Consolidated Stores Corp.*<F1> 1,853,611 2,273,475
76,700 Stein Mart, Inc.*<F1> 913,916 767,000
----------- -----------
4,202,292 5,510,100
SOFTWARE/SERVICE -- 5.2%
23,000 First Data Corp. 604,187 983,250
53,000 Reynolds & Reynolds Co. 941,912 1,007,000
----------- -----------
1,546,099 1,990,250
----------- -----------
Total common stocks 33,974,798 35,220,274
REITS -- 2.6% (A)<F2>
48,900 Prologis Trust 1,081,121 1,002,450
----------- -----------
Total long-term
investments 35,055,919 36,222,724
SHORT-TERM INVESTMENTS -- 5.2% (A)<F2>
VARIABLE RATE DEMAND NOTES
$1,800,000 Firstar Bank U.S.A., N.A. 1,800,000 1,800,000
168,838 Warner-Lambert Co. 168,838 168,838
----------- -----------
Total short-term
investments 1,968,838 1,968,838
----------- -----------
Total investments $37,024,757 38,191,562
-----------
-----------
Liabilities, less cash and
receivables (0.8%) (A)<F2> (289,261)
-----------
NET ASSETS $37,902,301
-----------
-----------
Net Asset Value Per Share
($0.01 par value, 10,000,000
shares authorized), offering
and redemption price
($37,902,301 / 2,447,324
shares outstanding) $15.49
------
------
*<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 Period Ending March 31, 1999 (Unaudited)
INCOME:
Dividends $ 180,999
Interest 30,831
----------
Total income 211,830
----------
EXPENSES:
Management fees 188,060
Administrative services 17,524
Professional fees 14,805
Registration fees 11,610
Printing and postage expense 10,337
Transfer agent fees 8,698
Custodian fees 4,825
Board of Directors fees 1,800
Other expenses 2,525
----------
Total expenses 260,184
----------
NET INVESTMENT LOSS (48,354)
----------
NET REALIZED GAIN ON INVESTMENTS 594,594
NET INCREASE IN UNREALIZED APPRECIATION ON INVESTMENTS 3,525,338
----------
NET GAIN ON INVESTMENTS 4,119,932
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $4,071,578
----------
----------
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ending March 31, 1999 (Unaudited) and For the Year Ended
September 30, 1998
1999 1998
------------ ------------
OPERATIONS:
Net investment loss $ (48,354) $ (30,600)
Net realized gain on investments 594,594 10,326,329
Net increase (decrease) in unrealized
appreciation on investments 3,525,338 (18,869,020)
------------ ------------
Net increase (decrease) in net assets
resulting from operations 4,071,578 (8,573,291)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income
($0.01248 per share) -- (24,737)
Distributions from net realized gains
($4.711032 and $3.85996 per share,
respectively) (9,979,348) (7,692,320)
------------ ------------
Total distributions (9,979,348) (7,717,057)*<F3>
------------ ------------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (61,873 and
107,186 shares, respectively) 1,006,705 2,444,856
Net asset value of shares issued in
distributions (597,484 and 332,984
shares, respectively) 8,836,791 7,128,996
Cost of shares redeemed (323,247 and
314,365 shares, respectively) (5,080,040) (6,914,398)
------------ ------------
Net increase in net assets derived
from Fund share activities 4,763,456 2,659,454
------------ ------------
TOTAL DECREASE (1,144,314) (13,630,894)
NET ASSETS AT THE BEGINNING OF THE PERIOD 39,046,615 52,677,509
------------ ------------
NET ASSETS AT THE END OF THE PERIOD $37,902,301 $39,046,615
------------ ------------
------------ ------------
*<F3> See Note 7.
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 period)
<TABLE>
(UNAUDITED)
FOR THE PERIOD
ENDING
MARCH 31, YEARS ENDED SEPTEMBER 30,
------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period $18.49 $26.53 $21.76 $21.58 $19.52 $20.08 $18.65 $17.55 $14.16 $18.79 $15.19
Income from
investment operations:
Net investment (loss) income (0.02) (0.02) 0.03 0.13 0.11 0.06 0.07 0.10 0.19 0.23 0.14
Net realized and unrealized
gains (losses) on
investments 1.73 (4.15) 7.39 2.24 3.87 0.72 3.33 2.39 4.35 (4.66) 3.49
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from
investment operations 1.71 (4.17) 7.42 2.37 3.98 0.78 3.40 2.49 4.54 (4.43) 3.63
Less distributions:
Dividends from net
investment income -- (0.01) (0.15) (0.12) (0.04) (0.05) (0.11) (0.16) (0.23) (0.20) (0.03)
Distributions from net
realized gains (4.71) (3.86) (2.50) (2.07) (1.88) (1.29) (1.86) (1.23) (0.92) -- --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from distributions (4.71) (3.87) (2.65) (2.19) (1.92) (1.34) (1.97) (1.39) (1.15) (0.20) (0.03)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period $15.49 $18.49 $26.53 $21.76 $21.58 $19.52 $20.08 $18.65 $17.55 $14.16 $18.79
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN 10.5%* (17.6%) 38.4% 12.7% 22.7% 4.1% 20.1% 15.3% 34.9% (23.8%) 24.0%
<F4>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (in 000's $) 37,902 39,047 52,678 45,835 42,197 38,871 47,420 38,476 30,684 19,460 40,387
Ratio of expenses to
average net assets 1.3%** 1.2% 1.2% 1.2% 1.2% 1.2% 1.2% 1.3% 1.5% 1.4% 1.3%
Ratio of net investment (loss) <F5>
income to average net assets (0.2%)**(0.1%) 0.1% 0.6% 0.5% 0.3% 0.4% 0.6% 1.2% 1.1% 0.8%
<F5>
Portfolio turnover rate 24.0% 54.3% 60.7% 43.7% 28.6% 20.9% 32.5% 58.9% 62.7% 55.1% 42.2%
*<F4> Not Annualized.
**<F5> Annualized.
</TABLE>
The accompanying notes to financial statements are an integral part of this
statement.
Fiduciary Capital Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS
March 31, 1999 (Unaudited)
(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 as a
diversified, open-end management investment company 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
(securities with maturities of 60 days or less) are valued at amortized
cost which approximates quoted market value. For financial reporting
purposes, investment transactions are recorded on trade date. Cost
amounts as reported on the statement of net assets are the same for
Federal income tax purposes.
(b) Net realized gains and losses on common stock are computed on the
identified cost basis.
(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 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 the Fund does not anticipate
nonperformance by these counterparties.
(f) Generally accepted accounting principles require that permanent
differences between income for financial reporting and tax purposes be
reclassified in the capital accounts.
(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, if any, are distributed to
shareholders.
(4) INVESTMENT TRANSACTIONS --
For the period ending March 31, 1999, purchases and proceeds of sales of
investment securities (excluding short-term investments) were $9,362,716 and
$15,236,626, respectively.
(5) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES --
As of March 31, 1999, liabilities of the Fund included the following:
Payable to brokers for investments purchased $ 261,489
Payable to FMI for management and administrative fees 33,739
Other liabilities 22,486
(6) SOURCES OF NET ASSETS --
As of March 31, 1999, the sources of net assets were as follows:
Fund shares issued and outstanding $36,189,261
Net unrealized depreciation on investments 1,166,805
Accumulated net realized gains on investments 546,235
-----------
$37,902,301
-----------
-----------
Aggregate net unrealized appreciation as of March 31, 1999,
consisted of the following:
Aggregate gross unrealized appreciation $ 5,963,201
Aggregate gross unrealized depreciation (4,796,396)
-----------
Net unrealized appreciation $ 1,166,805
-----------
-----------
(7) REQUIRED FEDERAL INCOME TAX DISCLOSURES (UNAUDITED) --
In early 1998, shareholders received information regarding all
distributions paid to them by the Fund during the fiscal year ended
September 30, 1998. The fund hereby designates the following amounts as
long-term capital gains distributions.
Capital gains taxed at 20% $ 3,780,438
Capital gains taxed at 28% 2,483,552
-----------
Total long-term capital gains $ 6,263,990
-----------
-----------
The percentage of ordinary income which is eligible for the corporate dividend
received deduction for the fiscal year ended September 30, 1998 was 22%.
FIDUCIARY CAPITAL GROWTH FUND, INC.
225 East Mason Street
Milwaukee, Wisconsin 53202
414-226-4555
BOARD OF DIRECTORS
BARRY K. ALLEN
GEORGE D. DALTON
PATRICK J. ENGLISH
TED D. KELLNER
THOMAS W. MOUNT
DONALD S. WILSON
INVESTMENT ADVISER
AND ADMINISTRATOR
FIDUCIARY MANAGEMENT, INC.
225 East Mason Street
Milwaukee, Wisconsin 53202
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
FIRSTAR MUTUAL FUND SERVICES, LLC
615 East Michigan Street
Milwaukee, Wisconsin 53202
800-811-5311
or
414-765-4124
CUSTODIAN
FIRSTAR BANK MILWAUKEE, NA
615 East Michigan Street
Milwaukee, Wisconsin 53202
INDEPENDENT ACCOUNTANTS
PRICEWATERHOUSECOOPERS LLP
100 East Wisconsin Avenue
Suite 1500
Milwaukee, Wisconsin 53202
LEGAL COUNSEL
FOLEY & LARDNER
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of Fiduciary Capital Growth Fund unless accompanied or
preceded by the Fund's current prospectus. Past performance is not indicative of
future performance. Investment return and principal value of an investment may
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
