<PAGE> 1
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- --------------------------------------------------------------------------------
INSTITUTIONAL INVESTORS MUTUAL FUNDS
PERFORMANCE DATA
(UNAUDITED)
TOTAL RETURN FOR PERIODS ENDING
JUNE 30, 1995(1)
<TABLE>
<CAPTION>
YEAR ONE FIVE TEN
TO DATE YEAR YEARS YEARS
------- ----- ----- -----
<S> <C> <C> <C> <C>
CAPITAL APPRECIATION FUND,
INC..................... +12.5% +14.8% + 9.0% +11.1%
Lipper Growth and Income
Funds Average......... +16.8 +19.7 +11.2 +12.6
Standard & Poor's 500
Index................. +20.2 +26.0 +12.1 +14.7
Dow Jones Industrial
Average............... +20.4 +29.2 +13.0 +17.0
TAX ADVANTAGED INCOME
FUND, INC............... + 1.9 + 2.4 + 7.2 N/A(2)
</TABLE>
(1) Assumes reinvestment of all dividends and distributions. Average annual
total returns are stated for periods greater than one year.
(2) +5.53% since inception 2/28/88.
The foregoing information is a statement of the past record of the Funds and
should not be construed as a representation or prediction of future results. The
investment return and principal value of an investment in the Funds will
fluctuate with changing conditions so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
MESSAGE FROM THE PRESIDENT:
Dear Shareholder:
The directors and officers of the Institutional Investors Mutual Funds (IIMF)
are pleased to send you the Semi-Annual Report to Shareholders for the six month
period ending June 30, 1995.
We are very happy to report that Shay Assets Management Co. was approved by
shareholder vote in June to become the new investment adviser to the IIMF Funds
and that Shay Financial Services Co. was approved as the new distributor of the
Funds. In addition, the portfolio management team that was managing the Funds
for Nationar, the previous investment adviser, has been retained by Shay Assets
Management Co. We are also most happy to report that the transition to Shay
Assets Management Co. was accomplished in an orderly fashion with no
interruption in advisory services.
Shay Assets Management Co. has been in existence for over fourteen years. It is
the investment adviser for the Asset Management Fund, Inc.'s fixed-income
portfolios. These portfolios have in excess of $1 billion under management on
behalf of over 400 financial institutions across the United States. The
experience, expertise and level of professionalism that Shay possesses will
certainly be of benefit to the IIMF Funds.
The June shareholder vote also approved PFPC Inc., a subsidiary of PNC Bank,
N.A. as the Funds' new administrator, transfer agent, dividend paying agent and
shareholder servicing agent. These functions were previously performed by
Nationar. PNC Bank, N.A. was also approved as the Funds' new custodian. PFPC
Inc. and PNC Bank, N.A. have a long working relationship with Shay Assets
Management Co.
The current economic expansion which began in the second quarter of 1991 is
continuing and consumer spending, which accounts for about two-thirds of gross
domestic product (GDP), is growing at a modest pace. Federal government
spending, which amounts to about twenty three percent of GDP, is also advancing
at a relatively modest rate. Both Democrats and Republicans agree that the
federal budget should be balanced and want to put it
- --------------------------------------------------------------------------------
1
<PAGE> 2
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- --------------------------------------------------------------------------------
into a "date certain" law. The last time the federal budget was in balance was
back in 1969. The third major component of GDP, business activity, continues to
expand. U.S. business has whipped itself into shape and is now one of the
industrialized world's lowest cost producers. Consequently, export growth is
strong and the weak dollar, especially when compared to the German mark and the
Japanese yen, adds to this momentum. All these factors, when combined with low
inflation, suggest that our four year old economic recovery should continue for
some time to come.
During the first half of 1995 the Capital Appreciation Fund produced a total
return of 12.45%, well above its historical annual average return of 10.63%. As
you are aware, the Fund invests in common stocks of companies with attractive
financial and business characteristics that appear undervalued in the
marketplace. While certain stocks such as those in the technology and financial
service sectors have risen to lofty equity valuations, there are still
attractive undervalued candidates in the equity markets for our Fund. The Tax
Advantaged Income Fund with its low share price volatility and enhanced
after-tax income compared to the traditional equity funds provided a total
return of 1.94%.
Your Board of Directors looks forward to working closely with Shay Assets
Management Co., our new adviser, and Shay Financial Services Co., our new
distributor, to expand our asset base and improve shareholder services. Thank
you for your investments in the IIMF Tax Advantaged and Capital Appreciation
Funds.
Sincerely,
Harry Doherty
President
- --------------------------------------------------------------------------------
2
<PAGE> 3
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- --------------------------------------------------------------------------------
INVESTMENT RESULTS, OUTLOOK AND STRATEGIES
CAPITAL APPRECIATION FUND
After a lackluster 1994, the stock market rocketed out of the starting gate in
1995 and has propelled forward without much deviation from its trajectory. The
major averages and the Capital Appreciation Fund have posted double digit
returns in the first six months of the year.
The Capital Appreciation Fund is pleased to announce that the Fund has provided
a total return to its shareholders of 12.45% for the six month period ending
June 30, 1995. Total return assumes the reinvestment of all dividends and
capital gains. The Fund's net asset value per share on June 30, 1995 was
$125.35, versus $112.12 on December 31, 1994. Shareholders received
distributions from dividend income of $0.726 during the first six months of
1995.
Value funds, like the Capital Appreciation Fund, trailed growth funds during the
six month period as technology and large capitalization growth stocks provided
the greatest returns during the period. As the relative valuations between
growth stocks and value stocks widen to extremes, investors will likely begin to
favor value stocks over growth stocks as the growth stocks future earnings
prospects become fully discounted in their stock prices. The portfolio
management team has maintained its disciplined approach of buying equity
securities that appear relatively undervalued in the marketplace. During periods
of strong market performance, as we have witnessed during the first half of
1995, this approach appears too conservative. However, it is during times like
these that value managers are able to accumulate stocks of very strong companies
at unusually attractive prices as the attention from these stocks is diverted
elsewhere. In recent months, the hype over technology stocks has diverted the
attention of market participants away from many other industry groups. As you
will see below, we have been active in buying securities in many overlooked
industries at very reasonable prices on a relative basis.
Stocks that contributed at least 50 basis points (50 basis points equals 0.50
percentage points) to the Fund's total return during the first half of 1995
included (in descending order) IBP, Inc., Hewlett-Packard Co., Avnet, Inc.,
Wendy's International, Inc., Precision Castparts Corp., Black & Decker Corp.,
Weyerhaeuser Co. and Tektronix Inc. Half of the stocks listed above are involved
in technology-related industries. Although the Fund is not heavily weighted in
technology stocks, the contributions by those that are owned by the Fund were
prevalent during the first half of the year.
The Fund's ten largest holdings, as a percentage of net assets, as of June 30,
1995 included Weyerhaeuser Co. (2.57%), Avnet, Inc. (2.54%), Wendy's
International, Inc. (2.43%), American Greetings Corp. (2.38%), Frontier Corp.
(2.30%), Hewlett-Packard Co. (2.28%), Lancaster Colony Corp. (2.23%), J.C.
Penney Co., Inc. (2.20%), Echlin, Inc. (2.17%) and IBP, Inc. (2.12%). New
securities added to the portfolio during the first half of 1995 included
Albertson's, Inc., Avery Dennison Corp., Anheuser Busch Cos., Inc., Clorox Co.,
Cooper Tire & Rubber, Co., Diebold, Inc., Dow Jones, Inc., W.W. Grainger, Inc.,
Hormel Foods Co., Leggett & Platt, Inc., Philip Morris Companies, Inc., Mylan
Laboratories, Inc., Sherwin Williams Co., Sara Lee Corp., Toys "R" Us and Tyco
International Ltd. Securities removed from the portfolio during the first six
months of 1995 included Ford Motor Company common stock, Loral Corporation,
Mobil Corporation, Precision Castparts Corp., Shared Medical Systems Corp.,
Strattec Security Corp. (a spin-off from Briggs & Stratton Corp.) and Tektronix,
Inc. In addition, Intel Corporation was added to the portfolio during the six
month period and subsequently sold prior to the end of the fiscal half-year. As
of June 30, 1995, the Fund held 93.75% of its net assets in common stock and the
remainder in short-term commercial paper and other short-term assets.
The Fund's value philosophy consists of stringent investment guidelines which
enable the Investment Adviser to identify companies with strong balance sheets
and the potential for improvement in cash flow return on investment that are
currently undervalued by the equity market. This "bottoms-up" approach seeks to
identify attractive stock candidates on a company-by-company basis. Industry
sector outlook and general stock market conditions are secondary considerations.
The principal characteristics that the Investment Adviser continually searches
for include: improving cash flow return on investment resulting largely from the
efficient use of capital, lean cost structures and continual margin improvement
coupled with attractive stock valuations. The universe of potential equity
investments is continually screened for companies meeting these parameters,
thereby providing the opportunity to enhance shareholder value.
TAX ADVANTAGED INCOME FUND
The Tax Advantaged Income Fund produced a total return of 1.94% for the six
month period ending June 30, 1995. The Tax Advantaged Income Fund's net asset
value per share was $99.85 as of June 30, 1995, versus $99.75 on December 31,
1994. Dividend distributions during the first six months of 1995 totaled $1.812
per share. The Fund has maintained low volatility in its net asset value for the
duration of the first half of the year, ranging from a low of $99.65 to a high
of $100.68, while continuing to provide a steady stream of dividend income.
- --------------------------------------------------------------------------------
3
<PAGE> 4
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Tax Advantaged Income Fund's objective is to obtain a high level of current
income consisting of dividends eligible for the Dividends Received Deduction.
Tax paying corporations can earn attractive after-tax returns due to their
ability to exclude 70% of these dividends from their taxable income. The Fund is
conservatively managed with an emphasis on credit quality. All of the Fund's
auction rate and adjustable rate preferred holdings are investment grade.
As of June 30, 1995, the Tax Advantaged Income Fund was 85.62% invested in
auction rate preferred stocks and 7.25% in adjustable rate preferred stocks with
the remaining 7.13% in short-term commercial paper and other short-term assets.
With the majority of the Fund's assets in auction rate preferred stocks, which
adjust their yields every 49 days, the portfolio is well positioned to minimize
volatility in the Fund's net asset value while providing a steady stream of
dividend income eligible for the Dividends Received Deduction.
- --------------------------------------------------------------------------------
4
<PAGE> 5
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED)
JUNE 30, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK-93.75%:
<TABLE>
<CAPTION>
VALUE
-----------
SHARES (NOTE 1)
- ------
<C> <S> <C>
AUTO PARTS-4.12%
38,600 Cooper Tire & Rubber, Co................ $ 940,875
30,200 Echlin, Inc. ........................... 1,049,450
-----------
1,990,325
BEVERAGES--ALCOHOLIC-1.37%
11,600 Anheuser-Busch Companies, Inc. ......... 659,750
BUILDING MATERIALS-3.80%
31,600 National Service Industries, Inc. ...... 912,450
25,900 Sherwin Williams Co. ................... 922,688
-----------
1,835,138
CHEMICALS-3.97%
33,300 Morton International, Inc. ............. 974,025
21,900 PPG Industries, Inc. ................... 941,700
-----------
1,915,725
CHEMICALS--SPECIALTY-1.18%
14,200 Avery Dennison Corp. ................... 568,000
COMPUTER SYSTEMS-3.60%
14,600 Diebold, Inc. .......................... 635,100
14,800 Hewlett-Packard Co. .................... 1,102,600
-----------
1,737,700
CONTAINERS (PAPER)-1.87%
34,800 Bemis Company, Inc...................... 904,800
ELECTRICAL EQUIPMENT-6.30%
25,300 Avnet, Inc. ............................ 1,223,887
13,800 Emerson Electric Co. ................... 986,700
14,100 Grainger (W.W.), Inc. .................. 828,375
-----------
3,038,962
ELECTRONICS-- INSTRUMENTATION-0.47%
11,600 Methode Electronics, Inc. Class A....... 226,200
ENTERTAINMENT-1.43%
12,400 Walt Disney Co. ........................ 689,750
FOODS-8.25%
38,800 Hormel Foods Co. ....................... 1,013,650
23,500 IBP, Inc. .............................. 1,022,250
30,100 Lancaster Colony Corp. ................. 1,076,075
30,500 Sara Lee Corp. ......................... 869,250
-----------
3,981,225
FURNISHINGS & APPLIANCES-1.77%
19,400 Leggett & Platt, Inc. .................. 853,600
HEALTH CARE--DRUGS-1.60%
25,100 Mylan Laboratories, Inc. ............... 771,825
<CAPTION>
VALUE
-----------
SHARES (NOTE 1)
- ------
<C> <S> <C>
HEALTH CARE--
HOSP. MGMT.-1.97%
32,600 Manor Care, Inc. ....................... $ 949,475
HEAVY DUTY TRUCKS &
PARTS-1.86%
34,400 Donaldson Company, Inc. ................ 898,700
HOUSEHOLD PRODUCTS-2.30%
8,000 Clorox Co. ............................. 522,000
23,700 Dial Corp. ............................. 586,575
-----------
1,108,575
HOUSEWARES-3.58%
28,900 Black & Decker Corp. ................... 892,287
24,200 Briggs & Stratton Corp. ................ 834,900
-----------
1,727,187
LEISURE TIME-1.91%
54,200 Brunswick Corp. ........................ 921,400
MANUFACTURED HOUSING-2.01%
59,275 Clayton Homes, Inc. .................... 970,628
MANUFACTURING-2.62%
21,300 Standex International Corp. ............ 670,950
11,000 Tyco International Ltd. ................ 594,000
-----------
1,264,950
NATURAL GAS-1.40%
22,251 Coastal Corporation..................... 675,874
OFFICE EQUIPMENT & SUPPLIES-6.14%
38,600 Herman Miller, Inc. .................... 955,350
34,000 Reynolds & Reynolds Co. Class A ........ 1,003,000
52,800 Standard Register Co. .................. 1,003,200
-----------
2,961,550
OIL WELL EQUIPMENT & SERVICES-1.45%
31,500 Dresser Industries, Inc................. 700,875
PAPER & FOREST PRODUCTS-2.57%
26,300 Weyerhaeuser Co. ....................... 1,239,387
PUBLISHING-3.69%
39,100 American Greetings Corp. Class A........ 1,148,563
17,200 Dow Jones, Inc. ........................ 634,250
-----------
1,782,813
PUBLISHING--NEWSPAPERS-1.24%
2,300 Washington Post Co. Class B............. 600,300
</TABLE>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
5
<PAGE> 6
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK (CONTINUED):
<TABLE>
<CAPTION>
VALUE
-----------
SHARES (NOTE 1)
- ------
<C> <S> <C>
RESTAURANTS-2.43%
65,500 Wendy's International, Inc. ............ $ 1,170,813
RETAIL--DEPT. STORES-2.20%
22,100 J.C. Penney Co., Inc. .................. 1,060,800
RETAIL--DRUG CHAINS-1.56%
47,100 Arbor Drugs, Inc. ...................... 753,600
RETAIL--FOOD CHAINS-1.46%
23,600 Albertson's, Inc. ...................... 702,100
SHOES-1.66%
35,300 Brown Group, Inc. ...................... 803,075
SPECIALIZED SERVICES-1.92%
38,600 Rollins, Inc. .......................... 926,400
TELECOMMUNICATIONS-2.01%
18,300 AT&T Corp. ............................. 972,187
TELEPHONES-2.30%
46,300 Frontier Corp. ......................... 1,111,200
TEXTILE/APPAREL MFRS.-2.42%
41,850 Kellwood Co. ........................... 711,450
12,300 Springs Industries, Inc. ............... 458,175
-----------
1,169,625
TOBACCO-1.99%
12,900 Philip Morris Companies, Inc............ 959,438
TOYS-1.33%
22,000 Toys "R" Us, Inc.# ..................... 643,500
-----------
Total Common Stock
(Cost $39,402,916).................... $45,247,452
-----------
</TABLE>
COMMERCIAL PAPER-6.90%:
<TABLE>
<CAPTION>
VALUE
-----------
PRINCIPAL (NOTE 1)
AMOUNT
- ----------
<C> <S> <C> <C>
$2,300,000 Ford Motor Credit Corp.,
5.85%, due 07/05/95
(Cost $2,300,000)....... $ 2,300,000
1,030,000 Household Finance Corp.,
6.05%, due 07/03/95
(Cost $1,030,000)....... 1,030,000
-----------
Total Commercial Paper
(Cost $3,330,000)....... 3,330,000
-----------
Total Investments
(Cost $42,732,916*)..... 100.65% 48,577,452
Liabilities in excess of
other assets............ (.65)% (315,195)
------ -----------
Net Assets................ 100.00% $48,262,257
====== ===========
</TABLE>
# Non-income producing security.
* Aggregate cost for Federal income tax purposes is identical. At June 30,1995,
the aggregate net unrealized appreciation for all securities of $5,844,536
consists of gross unrealized appreciation of $7,271,080 and gross unrealized
depreciation of $1,426,544.
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
6
<PAGE> 7
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
JUNE 30,
ASSETS: 1995
----------
Common stock--at value (cost $39,402,916)................................................. $45,247,452
Commercial paper--at value (cost $3,330,000).............................................. 3,330,000
----------
Total Investments--at value (cost $42,732,916)............................................ 48,577,452
Cash...................................................................................... 362
Receivable for securities sold............................................................ 504,719
Dividends and interest receivable......................................................... 72,953
Prepaid expenses.......................................................................... 3,489
----------
Total assets............................................................................ 49,158,975
----------
LIABILITIES:
Payable for securities purchased.......................................................... 746,006
Dividends payable......................................................................... 144,800
Accrued expenses payable.................................................................. 5,912
----------
Total liabilities....................................................................... 896,718
----------
NET ASSETS applicable to 385,020 shares of
$1.00 par value stock................................................................... $48,262,257
==========
NET ASSETS:
Capital paid in........................................................................... $40,072,246
Undistributed net realized gains.......................................................... 2,343,623
Undistributed net investment income....................................................... 1,852
Net unrealized appreciation............................................................... 5,844,536
----------
NET ASSETS................................................................................ $48,262,257
==========
NET ASSET VALUE, offering and redemption price
per share ($48,262,257 / 385,020 shares)................................................ $ 125.35
==========
</TABLE>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
7
<PAGE> 8
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1995
-------------------------
<S> <C> <C>
INVESTMENT INCOME:
INCOME:
Dividends.................................................................. $460,272
Interest................................................................... 79,466 $ 539,738
-------
EXPENSES:
Investment advisory fees................................................... 168,759
Legal...................................................................... 37,191
Directors.................................................................. 24,794
Insurance.................................................................. 17,414
Audit...................................................................... 14,815
Administration............................................................. 6,970
Printing................................................................... 5,162
Transfer agent............................................................. 1,561
Custody.................................................................... 1,111
Miscellaneous.............................................................. 496 278,273
------- ---------
Net investment income........................................................ 261,465
---------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain............................................................ 2,343,623
Net change in unrealized appreciation of investments......................... 2,697,758
---------
Net realized and unrealized gain on investments.............................. 5,041,381
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS......................... $5,302,846
=========
</TABLE>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
8
<PAGE> 9
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994
------------- ------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income............................................................ $ 261,465 $ 553,688
Net realized gain on investments................................................. 2,343,623 6,821,337
Net change in unrealized appreciation of investments............................. 2,697,758 (7,799,499)
---------- ----------
Net increase (decrease) in net assets resulting from operations.................... 5,302,846 (424,474)
Net equalization credits........................................................... 2,586 3,761
Distributions to shareholders from:
Net investment income............................................................ (275,564) (544,084)
Net realized gain................................................................ 0 (6,821,337)
Net Increase from capital share transactions....................................... 3,005,547 9,670,522
---------- ----------
Total increase in net assets................................................... 8,035,415 1,884,388
NET ASSETS:
Beginning of period.............................................................. 40,226,842 38,342,454
---------- ----------
End of period (including undistributed net investment income of
$1,852 and $13,365, respectively).............................................. $48,262,257 $40,226,842
========== ==========
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Data for Each Share of Capital Stock
Outstanding Throughout Each Period
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31
JUNE 30, 1995 ---------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990
------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of period................ $112.12 $137.22 $135.14 $135.63 $154.21 $193.04
INCOME FROM OPERATIONS:
Net investment income............................. 0.70 1.78 1.63 2.36 4.25 4.93
Net realized and unrealized gain (loss)........... 13.26 (2.88) 25.94 11.40 18.90 (18.62)
------ ------ ------ ------ ------ ------
Total from investment operations................ 13.96 (1.10) 27.57 13.76 23.15 (13.69)
DISTRIBUTIONS:
From net investment income........................ (0.73) (1.73) (1.77) (2.24) (4.23) (5.13)
From net realized gains........................... -- (22.27) (23.72) (12.01) (36.27) (20.01)
Return of Capital................................. -- -- -- -- (1.23) --
------ ------ ------ ------ ------ ------
Total distributions............................. (0.73) (24.00) (25.49) (14.25) (41.73) (25.14)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, end of period...................... $125.35 $112.12 $137.22 $135.14 $135.63 $154.21
====== ====== ====== ====== ====== ======
Total return........................................ 12.45% (0.80)% 20.5% 10.2% 15.9% (7.2)%
Ratio of expenses to average net assets............. 1.23%(1) 1.06% 1.02% 0.99% 0.89% 0.88%
Ratio of net investment income to average net
assets............................................ 1.16%(1) 1.30% 1.09% 1.64% 2.51% 2.82%
Portfolio turnover rate............................. 37% 59% 23% 10% 21% 29%
NET ASSETS, end of period (000's)................... $48,262 $40,227 $38,342 $39,198 $58,670 $85,862
</TABLE>
(1) Annualized
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
9
<PAGE> 10
INSTITUTIONAL INVESTORS TAX ADVANTAGED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED)
JUNE 30, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT TERM AUCTION RATE PREFERRED STOCK-85.62%:
<TABLE>
<CAPTION>
VALUE
-----------
SHARES (NOTE 1)
- ------
<C> <S> <C>
BANKS-13.78%
300 J P Morgan Series B, 4.39%.............. $ 300,000
300 J P Morgan Series C, 4.35%.............. 300,000
100 J P Morgan Series D, 4.42%.............. 100,000
200 J P Morgan Series F, 4.39%.............. 200,000
100 Northern Trust C, 4.53%................. 100,000
800 Northern Trust D, 4.50%................. 800,000
300 Republic New York A, 4.56%.............. 300,000
500 Republic New York MMP, 4.53%............ 500,000
-----------
2,600,000
FINANCIAL-18.55%
8 First Colony B, 4.59%................... 800,000
1 Ford Holdings C, 4.53%.................. 100,000
8 Ford Holdings F, 4.40%.................. 800,000
General Electric Credit Corp. B,
1 4.40%................................. 100,000
General Electric Credit Corp. D,
3 4.45%................................. 300,000
General Electric Credit Corp. E,
1 4.45%................................. 100,000
General Electric Credit Corp. G,
2 4.48%................................. 200,000
General Electric Credit Corp. I,
1 4.47%................................. 100,000
General Electric Credit Corp. K,
1 4.40%................................. 100,000
6 International Lease Finance A, 4.61%.... 600,000
3 International Lease Finance B, 4.59%.... 300,000
-----------
3,500,000
FOOD-4.77%
3 Sara Lee Corporation A, 4.48%........... 300,000
2 Sara Lee Corporation B, 4.44%........... 200,000
1 Sara Lee Corporation D, 4.49%........... 100,000
3 Sara Lee Corporation F, 4.40%........... 300,000
-----------
900,000
INSURANCE-9.55%
5 CNA Financial Corp. E, 4.69%............ 500,000
4 CNA Financial Corp. F, 4.58%............ 400,000
6 Transamerica A-1, 4.69%................. 600,000
2 Transamerica B-1, 4.60%................. 200,000
1 Transamerica C-1, 4.56%................. 100,000
-----------
1,800,000
MEDICAL-2.65%
1 SmithKline Beecham A, 4.42%............. 500,000
OIL & GAS-8.75%
Shell Frontier Oil & Gas Series A,
4 4.42%................................. 400,000
Shell Frontier Oil & Gas Series B,
1 4.42%................................. 100,000
Shell Frontier Oil & Gas Series C,
3 4.47%................................. 300,000
Shell Frontier Oil & Gas Series D,
1 4.40%................................. 100,000
2 Texaco Inc. G, 4.54%.................... 500,000
1 Texaco Inc. H, 4.51%.................... 250,000
-----------
1,650,000
<CAPTION>
VALUE
-----------
SHARES (NOTE 1)
- ------
<C> <S> <C>
REAL ESTATE-4.77%
2 MEPC Capital Corp. II-A, 4.40%.......... $ 200,000
6 MEPC Capital Corp. II-B, 4.49%.......... 600,000
1 MEPC Capital Corp. II-D, 4.57%.......... 100,000
-----------
900,000
UTILITIES-22.80%
1 Alabama Power 1988, 4.50%............... 100,000
5 Alabama Power 1993, 4.49%............... 500,000
5 Central Power & Light II-B, 4.49%....... 500,000
3 Delmarva Power & Light A, 4.55%......... 300,000
2,000 Houston Power & Light C, 4.65%.......... 200,000
3,000 Houston Power & Light D, 4.40%.......... 300,000
1 Idaho Power Company A, 4.57%............ 100,000
6 Pacific Corp. Series A-1, 4.50%......... 600,000
4 Southern California Gas Co. A, 4.39%.... 400,000
1 VEPCO June 87, 4.47%.................... 100,000
6 VEPCO June 89, 4.65%.................... 600,000
1 VEPCO October 88, 4.65%................. 100,000
5 Washington Water & Power J, 4.69%....... 500,000
-----------
4,300,000
-----------
Total Short Term Auction Rate Preferred
Stock (Cost $16,150,000).............. 16,150,000
-----------
<CAPTION>
ADJUSTABLE RATE PREFERRED STOCK-7.25%:
<S> <C> <C>
BANKS-3.18%
4,000 Bank of America Series A, 6.50%......... 186,000
11,000 Chase Manhattan Corp. Series N, 6.38%... 244,750
3,700 Wells Fargo & Company Series B, 5.62%... 167,888
-----------
598,638
FINANCIAL INSTITUTIONS-1.98%
10,500 Bankers Trust NY Series Q, 5.90%........ 220,500
3,700 Bear Stearns & Co. Series A, 6.05%...... 153,550
-----------
374,050
UTILITIES-2.09%
11,000 Georgia Power Co. Series L, 5.98%....... 235,125
7,800 New York State Electric & Gas
Series D, 6.22%......................... 158,925
-----------
394,050
-----------
Total Adjustable Rate Preferred Stock
(Cost $1,570,981)..................... 1,366,738
-----------
</TABLE>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
10
<PAGE> 11
INSTITUTIONAL INVESTORS TAX ADVANTAGED INCOME FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMERCIAL PAPER-7.67%:
<TABLE>
<CAPTION>
VALUE
-----------
PRINCIPAL (NOTE 1)
AMOUNT
- ----------
<C> <S> <C> <C>
$ 900,000 American Express Credit
Corp., 5.75%, due
07/05/95
(Cost $900,000)......... $ 900,000
547,000 Household Finance,
6.05%, due 07/03/95
(Cost $547,000)......... 547,000
-----------
Total Commercial Paper
(Cost $1,447,000)....... 1,447,000
-----------
Total Investments
(Cost $19,167,981*)..... 100.54% $18,963,738
Liabilities in excess of
other assets............ (.54)% (102,310)
------ -----------
Net Assets................ 100.00% $18,861,428
====== ===========
</TABLE>
* Aggregate cost for Federal income tax purposes is identical. At June 30, 1995,
the net unrealized depreciation for all securities of $204,243 consists of
gross unrealized appreciation of $0 and gross unrealized depreciation of
$204,243.
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
11
<PAGE> 12
INSTITUTIONAL INVESTORS TAX ADVANTAGED INCOME FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
JUNE 30,
ASSETS: 1995
----------
Short term auction rate preferred stock--at value (Cost $16,150,000).................... $16,150,000
Adjustable rate preferred stock--at value (Cost $1,570,981)............................. 1,366,738
Commercial paper--at value (Cost $1,447,000)............................................ 1,447,000
----------
Total Investments--at value (Cost $19,167,981).......................................... 18,963,738
Cash.................................................................................... 794
Dividends and interest receivable....................................................... 69,090
Prepaid expenses........................................................................ 1,434
----------
Total assets.......................................................................... 19,035,056
----------
LIABILITIES:
Dividends payable....................................................................... 149,515
Accrued expenses payable................................................................ 24,113
----------
Total liabilities..................................................................... 173,628
----------
NET ASSETS applicable to 188,899 shares of
$0.01 par value stock................................................................. $18,861,428
==========
NET ASSETS:
Capital paid in......................................................................... $19,199,678
Accumulated net realized losses......................................................... (134,790)
Undistributed net investment income..................................................... 783
Net unrealized depreciation............................................................. (204,243)
----------
NET ASSETS.............................................................................. $18,861,428
==========
NET ASSET VALUE, offering and redemption price
per share ($18,861,428 / 188,899 shares).............................................. $ 99.85
==========
</TABLE>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
12
<PAGE> 13
INSTITUTIONAL INVESTORS TAX ADVANTAGED INCOME FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1995
---------------------
<S> <C> <C>
INVESTMENT INCOME:
INCOME:
Dividends.................................................................... $436,177
Interest..................................................................... 34,562 $470,739
-------
EXPENSES:
Investment advisory fees..................................................... 70,867
Legal........................................................................ 22,926
Audit........................................................................ 17,394
Directors.................................................................... 16,268
Insurance.................................................................... 7,148
Administration............................................................... 4,204
Printing..................................................................... 4,157
Transfer agent............................................................... 928
Custody...................................................................... 328
Miscellaneous................................................................ 417 144,637
------- -------
Net investment income.......................................................... 326,102
-------
REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS:
Net realized loss.............................................................. (13,501)
Net change in unrealized appreciation/depreciation of investments.............. 53,807
-------
Net realized and unrealized gain on investments................................ 40,306
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................... $366,408
=======
</TABLE>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
13
<PAGE> 14
INSTITUTIONAL INVESTORS TAX ADVANTAGED INCOME FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994
------------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income............................................................ $ 326,102 $ 503,903
Net realized gain (loss) on investments.......................................... (13,501) 12,604
Net change in unrealized appreciation/depreciation of investments................ 53,807 (252,977)
---------- ----------
Net increase in net assets resulting from operations............................... 366,408 263,530
Net equalization credits........................................................... 0 16,586
Distributions to shareholders from net investment income........................... (345,761) (514,303)
Net increase (decrease) from capital share transactions............................ (863,144) 4,779,563
---------- ----------
Total increase (decrease) in net assets........................................ (842,497) 4,545,376
NET ASSETS:
Beginning of period.............................................................. 19,703,925 15,158,549
---------- ----------
End of period (including undistributed net investment income of $783 and $20,442,
respectively).................................................................. $18,861,428 $19,703,925
========== ==========
</TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Data for Each Share of Capital Stock
Outstanding Throughout Each Period
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1995 ---------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990
------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of period................ $ 99.75 $100.94 $100.17 $ 96.12 $ 85.29 $ 89.21
INCOME FROM OPERATIONS:
Net investment income............................. 1.71 2.71 2.07 3.76 6.34 6.74
Net realized and unrealized gain (loss)........... 0.20 (1.24) 0.68 5.51 10.87 (3.91)
------ ------ ------ ------ ------ ------
Total from investment operations................ 1.91 1.47 2.75 9.27 17.21 2.83
DISTRIBUTIONS:
From net investment income........................ (1.81) (2.66) (1.98) (5.22) (6.38) (6.75)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, end of period...................... $ 99.85 $ 99.75 $100.94 $100.17 $ 96.12 $ 85.29
====== ====== ====== ====== ====== ======
Total return........................................ 1.94% 1.47% 2.8% 9.8% 20.6% 3.2%
Ratio of expenses to average net assets............. 1.51%(1) 1.23% 1.26% 1.33% 1.17% 1.09%
Ratio of net investment income to average net
assets............................................ 3.41%(1) 2.73% 2.04% 3.81% 6.88% 7.63%
Portfolio turnover rate............................. 0% 5% 11% 73% 26% 11%
NET ASSETS, end of period (000's)................... $18,861 $19,704 $15,159 $ 9,319 $11,642 $13,710
</TABLE>
(1) Annualized
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
14
<PAGE> 15
INSTITUTIONAL INVESTORS MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS
The Institutional Investors Capital Appreciation Fund, Inc. (the "Capital
Appreciation Fund") and the Institutional Investors Tax Advantaged Income Fund,
Inc. (the "Tax Advantaged Income Fund") (collectively, the "Funds") are
registered under the Investment Company Act of 1940, as amended, as diversified,
open-end management investment companies.
NOTE 1--Summary of Significant Accounting Policies
A--Security Valuations--Securities traded on national exchanges are valued at
the closing prices or, in the case of over-the-counter securities, at the mean
between closing bid and asked prices. Portfolio securities for which market
quotations are not readily available are valued at fair value using methods
determined in good faith by the Board of Directors. Short term instruments
maturing within 60 days of the valuation date are valued based upon their
amortized cost.
B--Security Transactions and Related Investment Income--Security transactions
are accounted for on the trade date and dividend income is recorded on the
ex-dividend date. Interest income and income on auction rate preferred stock is
recorded on the accrual basis. The identified cost basis is used in the
determination of realized gains and losses on security transactions.
C--Federal Income Taxes--No provision has been made for Federal income tax,
since it is the intention of each of the Funds to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute all of their taxable income to shareholders.
D--Equalization--The Capital Appreciation Fund and Tax Advantaged Income Fund
follow the accounting practice known as equalization, by which a portion of the
proceeds from sales and costs of redemptions of capital shares, equivalent on a
per share basis to the amount of distributable net investment income on the date
of the transaction, is credited or charged to undistributed net investment
income. As a result, undistributed net investment income per share is unaffected
by sales or redemptions of the Funds' shares.
NOTE 2--Purchases and Sales of Securities
Capital Appreciation Fund:
The cost of purchases and the proceeds from sales of investments, exclusive of
short term investments, for the six months ended June 30, 1995 were $15,859,913
and $14,404,152, respectively.
Tax Advantaged Income Fund:
Proceeds from sales of investments, exclusive of short term investments, for the
six months ended June 30, 1995 was $365,649. There were no purchases of such
investments.
NOTE 3--Investment Advisory Fee
Shay Assets Management Co. (the "Investment Adviser") was appointed as the Funds
investment adviser effective May 19, 1995. The Investment Adviser is a general
partnership that consists of two general partners, Shay Assets Management, Inc.
and ACB Assets Management, Inc., each of which holds a fifty-percent interest in
the Investment Adviser. Shay Assets Management, Inc. is controlled by Rodger D.
Shay, a Vice President of each of the Funds. ACB Assets Management, Inc. is an
indirect wholly-owned subsidiary of America's Community Bankers.
The Investment Adviser receives a fee from each Fund, computed separately, at
the annual rate of 0.75% of the first $100,000,000 of average daily net assets
and 0.50% of the average daily net assets in excess of $100,000,000. The fee
payable to the Investment Adviser is reduced (but not below zero) to the extent
expenses (exclusive of professional fees, such as legal and audit fees,
directors' fees and expenses and distribution expenses, if any, payable under
Rule 12b-1) exceed 1.10% of the average daily net assets of the Capital
Appreciation Fund or 1.15% of the average daily net assets of the Tax Advantaged
Income Fund for any fiscal year during the term of each Funds' agreement with
the Adviser.
Effective May 19, 1995, PFPC Inc. was appointed the administrator and transfer
agent of the Funds and PNC Bank, N.A. was appointed custodian.
15
<PAGE> 16
PFPC Inc. and PNC Bank, N.A. are affiliates of PNC Bank Corp.
Prior to May 19, 1995, Nationar was the Funds' investment adviser,
administrator, transfer agent and custodian. On February 6, 1995, the Banking
Department of the State of New York took possession of Nationar. With the
exception of custodial services, Nationar continued to temporarily provide
services, through May 18, 1995, while the Board of Directors of the Funds
initiated discussions with other institutions offering such services. For the
period February 6, 1995 to May 18, 1995, custodial services were provided by the
Federal Home Loan Bank of New York.
For the investment advisory, administrative, transfer agency and custodial
services provided prior to May 19, 1995, each Fund paid Nationar a quarterly fee
at an annual rate of 0.75% of the first $75,000,000 of its average daily net
assets, 0.625% of the next $25,000,000 of average daily net assets, 0.50% of the
next $50,000,000 of average daily net assets and 0.25% of average daily net
assets in excess of $150,000,000.
NOTE 4--Capital Stock
Capital Appreciation Fund:
At June 30, 1995, there were 2,000,000 shares of $1.00 par value capital stock
authorized. Transactions in capital stock for the six months ended June 30, 1995
and the year ended December 31, 1994, respectively, were as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
----------------- -------------------------
1995 1994 1995 1994
------- ------- ----------- -----------
<S> <C> <C> <C> <C>
Shares sold........ 36,178 71,651 $ 4,165,913 $ 9,877,080
Shares issued in
reinvestment of
dividends......... 896 54,339 108,246 6,133,716
------ -------- --------- ---------
37,074 125,990 4,274,159 16,010,796
Shares redeemed.... (10,824) (46,650) (1,268,612) (6,340,274)
------ -------- --------- ---------
Net increase....... 26,250 79,340 $ 3,005,547 $ 9,670,522
====== ======== ========= =========
</TABLE>
Tax Advantaged Income Fund:
At June 30, 1995, there were 5,000,000 shares of $.01 par value capital stock
authorized. Transactions in capital stock for the six months ended June 30, 1995
and the year ended December 31, 1994, respectively, were as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
---------------- ------------------------
1995 1994 1995 1994
------- ------ ----------- ----------
<S> <C> <C> <C> <C>
Shares sold.......... 0 48,328 $ 0 $4,873,130
Shares issued in
reinvestment of
dividends........... 1,562 4,033 155,653 404,648
------ ------ ------ ------
1,562 52,361 155,653 5,277,778
Shares redeemed...... (10,193) (5,000) (1,018,797) (498,215)
------ ------ ---------- ----------
Net increase
(decrease).......... (8,631) 47,361 $ (863,144) $4,779,563
====== ====== =========== ==========
</TABLE>
16
<PAGE> 17
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INSTITUTIONAL INVESTORS
MUTUAL FUNDS
OFFICERS
HARRY P. DOHERTY
President
THADDEUS L. ANTOS
Vice President
EDWARD E. SAMMONS, JR.
Vice President and
Secretary
MARK F. TRAUTMAN
Vice President
TIMOTHY A. DEMPSEY
Executive Vice President
RODGER D. SHAY
Vice President and
Assistant Secretary
JOHN J. MCCABE
Vice President
JAY F. NUSBLATT
Treasurer
BOARD OF DIRECTORS
THADDEUS L. ANTOS
RALPH F. BROUTY
ROBERT P. CAPONE
TIMOTHY A. DEMPSEY
HARRY P. DOHERTY
CHRIS C. GAGAS
MICHAEL R. KALLET
STEPHEN J. KELLY
CLIFFORD E. KELSEY, JR.
ROBERT E. KERNAN, JR.
WILLIAM A. MCKENNA, JR.
NICHOLAS J. SCALI
CHARLES M. SPROCK
JOHN M. TSIMBINOS
- --------------------------------------------------------------------------------
17
<PAGE> 18
[THIS PAGE INTENTIONALLY LEFT BLANK.]
18
<PAGE> 19
INVESTMENT ADVISOR
Shay Assets Management Co.
40 Broad Street
5th Floor
New York, New York 10004
DISTRIBUTOR
Shay Financial Services Co.
111 East Wacker Drive
Chicago, Illinois 60601
ADMINISTRATOR, TRANSFER AGENT,
REGISTRAR AND DIVIDEND PAYING AGENT
PFPC Inc.
103 Bellevue Parkway
Wilmington, Delaware 19809
CUSTODIAN
PNC Bank, NA
17th & Chestnut Streets
Philadelphia, Pennsylvania 19101
LEGAL COUNSEL
Hughes Hubbard & Reed
One Battery Park Plaza
New York, New York 10004
INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP
1345 Avenue of the Americas
New York, New York 10105
[INSTITUTIONAL INVESTORS MUTUAL FUNDS LOGO]
Capital Appreciation Fund, Inc
Tax Advantaged Income Fund, Inc.
Semi-Annual Report
To Shareholders
June 30, 1995
