<PAGE> 1
INSTITUTIONAL INVESTORS MUTUAL FUNDS
INSTITUTIONAL INVESTORS CAPITAL
APPRECIATION FUND, INC.
MESSAGE FROM THE PRESIDENT:
Dear Shareholder:
The directors and officers of the Institutional Investors Capital Appreciation
Fund are pleased to send you the Semi-Annual Report to Shareholders.
Our economy's transition to becoming more export-driven and less consumer-driven
is well underway and should bode well for both investors and for our economy.
"Demographics is destiny" may or may not be accurate all of the time, but for
the next decade or more demographics will limit consumer spending. This is so
because the number of Americans in the key spending age bracket of 25 to 35 is
shrinking. Moreover, beginning January first of this year and lasting for twenty
years, every seven and one-half seconds a "baby boomer" turns fifty years old.
Many of the boomers have not planned properly for retirement and many are also
concerned about elderly parents and their children's college education. As these
boomers take more control over their financial future, it is likely that they
will consume less and invest more.
International demand for American goods and services continues to grow at a
solid pace. The International Monetary Fund estimates the world's developing
nations will grow by 6.3% in real GDP this year and about the same in 1997. This
compares with just 2% real GDP growth in the industrialized world this year and
next. The developing nations account for about 45% of world gross domestic
product and could jump to 50% in a very few years. Consequently, we expect that
the demand for American goods, services, expertise, technology and management
skill will continue to grow. This demand should have a positive impact on
corporate profits and result in higher equity valuations.
Updated information from Ibbotson Associates, a leading stock market performance
measurement firm, continues to demonstrate the benefits of a dollar-cost
averaging investment plan and the pitfalls of trying to be a "market-timer." The
information shows that from January 1, 1926 through December 31, 1995, the
compound annual total return in common stocks, as measured by the Standard &
Poor's 500 Index, averaged 10.5%. However, when the best performing thirty-five
months are removed from this 840 month time period, the average annual total
return falls to 3.4%. For the most recent twenty year period ended December 31,
1995, the compound annual total return on equities was 14.6%. When the best
performing fifteen months of this 240 month time frame are removed, the compound
annual total return drops to 6.8%. In both instances, the 3.4% return and the
6.8% return are lower than the return an investment in Treasury bills would have
provided.
Thank you for your investment in the Institutional Investors Capital
Appreciation Fund. It gives me great pleasure to report that for the first-half
of 1996, the Capital Appreciation Fund produced a total return of 11.62%. This
Fund was created by New York State Savings Banks over forty years ago and
continues to demonstrate that it deserves a primary position in bank investment
allocation programs.
Sincerely,
[SIG]
Harry P. Doherty
President
PERFORMANCE SUMMARY
(UNAUDITED)
AVERAGE ANNUAL TOTAL RETURN
PERIODS ENDING JUNE 30, 1996*
<TABLE>
<CAPTION>
YEAR TO ONE FIVE TEN
DATE YEAR YEARS YEARS
------- ------ ------ ------
<S> <C> <C> <C> <C>
CAPITAL APPRECIATION
FUND............... 11.62% 23.97% 13.57% 10.28%
Lipper Growth &
Income Funds
Average............ 9.24 22.17 14.36 11.82
Standard & Poor's 500
Index.............. 10.09 25.98 15.71 13.79
Dow Jones Industrial
Average............ 11.77 27.09 17.46 15.24
</TABLE>
* Assumes reinvestment of all dividends and distributions and the deduction of
all applicable fees and expenses. Average annual returns are stated for
periods greater than one year. Data for the Lipper Growth & Income Funds
Average, Standard & Poor's 500 Index and Dow Jones Industrial Average is from
Lipper Analytical Services Corporation. The S&P 500 and DJIA do not include a
reduction in total return for expenses.
The foregoing information is a statement of the past performance of the Fund and
should not be construed as a representation or prediction of future results. The
investment return and principal value of an investment in the Fund will
fluctuate with changing market conditions so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
- --------------------------------------------------------------------------------
1
<PAGE> 2
INVESTMENT RESULTS, OUTLOOK AND STRATEGIES
The equity market, as measured by the Standard & Poor's 500 Index, continued its
climb into record territory with a total return of 10.09% for the six month
period ending June 30, 1996. Mutual funds, in general, trailed the index, as is
evidenced by the 9.63% total return of the Lipper All Equity Funds Average and
the 9.24% total return of the Lipper Growth & Income Funds Average. However, the
Capital Appreciation Fund outperformed all three of these benchmarks during the
period with a total return of 11.62%. Total return assumes the reinvestment of
all dividends and capital gains and the deduction of all applicable fees and
expenses.
The Fund's net asset value per share on June 30, 1996 was $135.31 versus $121.75
on December 31, 1995. Shareholders received distributions from dividend income
of $0.562 during the first six months of 1996.
As we entered into the 1996 calendar year, an interesting situation developed.
Interest rates started moving higher as the bond market declined on inflation
fears. Long-term (30 year) Treasury bond yields rose from below 6% at the start
of the year to well over 7% in June. Stock prices, however, also moved solidly
higher, producing double digit returns during the first half of the year. When
the stock and bond markets diverge (stock prices advance while bond prices
decline, or vice versa) it is often referred to as a de-coupling. At mid-year,
the bond market is concerned that the economy is experiencing increased growth
that will ultimately create higher inflation, which reduces the present value of
future interest payments. The stock market is also cognizant of potentially
higher economic growth, but considers it a potential catalyst for higher
corporate earnings. However, if the earnings outlook does not improve enough to
offset the higher interest rate environment, stock prices could be vulnerable to
a decline. During this period of rising interest rates and economic uncertainty,
it is crucial that valuations be monitored very carefully.
Our investment philosophy centers on the belief that the value of a company is
calculated by estimating the company's future stream of cash flows discounted
back to the present using an appropriate rate of interest. Consequently, using
our approach, two significant factors determine stock prices--the estimated
stream of future cash flows and the rate of interest used to discount those cash
flows. The "appropriate rate of interest" is derived from prevailing market
rates which are ultimately determined by activity in the bond market.
As stock prices continued upward and the discount rate used in our valuation
process increased, a number of our holdings became fully valued according to our
valuation technique. As a result, we eliminated a number of securities from the
Fund during the period, namely Arbor Drugs, Avery Dennison, Bemis, Echlin,
Morton International, National Service Industries, PPG Industries, Reynolds &
Reynolds and Washington Post. Premier Industrial Corp. was eliminated from the
portfolio after it announced that it would be acquired by a foreign company and
its stock price reflected the value of the transaction.
We will also consider a security as a candidate for sale if its fundamental
outlook deteriorates, causing a reduction of its estimated future cash flow
stream thus reducing our valuation of the company. Cooper Tire & Rubber,
Rollins, Standard Register and Toys "R" Us were eliminated from the Fund during
the first half of the year for this reason. Two additional securities,
Earthgrains and Payless ShoeSource, were eliminated from the portfolio after
their shares were received in spin-off transactions from their respective parent
companies, Anheuser-Busch and May Department Stores.
Four securities were added to the Fund during the first six months of the year.
They were Abbott Laboratories, Federal Home Loan Mortgage, Intel and Sysco. All
of these companies appeared undervalued at the time of purchase according to our
valuation methodology. These companies exhibit the fundamental characteristics
that exemplify our investment discipline, namely steadily increasing earnings
and cash flow trends, solid balance sheets, efficient capital allocation,
industry leadership and strong management.
- --------------------------------------------------------------------------------
2
<PAGE> 3
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED)
JUNE 30, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK-91.09%: VALUE
SHARES -----------
- ------- (NOTE 1)
<C> <S> <C>
BEVERAGES--ALCOHOLIC--3.22%
29,500 Anheuser-Busch Companies, Inc. ........ $ 2,212,500
BEVERAGES-2.99%
42,000 Coca-Cola Company...................... 2,052,750
BUILDING MATERIALS-2.37%
35,000 Sherwin-Williams Co. .................. 1,627,500
CHEMICALS--SPECIALTY-2.06%
25,000 Nordson Corp. ......................... 1,412,500
COMPUTER SOFTWARE &
SERVICES-3.18%
56,500 Automatic Data Processing, Inc. ....... 2,182,313
COMPUTER SYSTEMS-2.61%
18,000 Hewlett-Packard Co. ................... 1,793,250
DISTRIBUTOR--CONSUMER
PRODUCTS-2.44%
49,000 Sysco Corp. ........................... 1,678,250
ELECTRICAL EQUIPMENT-7.98%
19,000 Emerson Electric Co. .................. 1,717,125
28,000 Grainger (W.W.), Inc. ................. 2,170,000
24,000 Hubbell, Inc. ......................... 1,590,000
-----------
5,477,125
ELECTRONICS & SEMICONDUCTORS-2.89%
27,000 Intel Corp. ........................... 1,982,812
ENTERTAINMENT-2.38%
26,000 Walt Disney Co. ....................... 1,634,750
FINANCIAL SERVICES-2.93%
23,500 Federal Home Loan Mortgage Corp. ...... 2,009,250
<CAPTION>
VALUE
SHARES -----------
(NOTE 1)
<C> <S> <C>
FOODS-6.73%
58,000 Hormel Foods Co. ...................... $ 1,551,500
30,100 Lancaster Colony Corp. ................ 1,124,987
60,000 Sara Lee Corp. ........................ 1,942,500
-----------
4,618,987
FURNISHINGS & APPLIANCES-2.63%
65,000 Leggett & Platt, Inc. ................. 1,803,750
HEALTH CARE--DRUGS-6.37%
49,000 Abbott Laboratories.................... 2,131,500
130,000 Mylan Laboratories..................... 2,242,500
-----------
4,374,000
HEALTH CARE--HOSP.
MGMT.-1.43%
25,000 Manor Care, Inc. ...................... 984,375
HEAVY DUTY TRUCKS &
PARTS-2.01%
53,500 Donaldson Company, Inc. ............... 1,377,625
HOUSEHOLD PRODUCTS-3.10%
24,000 Clorox Co. ............................ 2,127,000
MANUFACTURED HOUSING-2.42%
83,000 Clayton Homes, Inc. ................... 1,660,000
MANUFACTURING-2.26%
32,500 Teleflex, Inc. ........................ 1,551,875
PUBLISHING--NEWSPAPERS-5.06%
24,000 Gannett Company, Inc. ................. 1,698,000
75,000 Lee Enterprises, Inc. ................. 1,771,875
-----------
3,469,875
RAILROADS-2.38%
57,500 Illinois Central Corp. Series A........ 1,631,563
RESTAURANTS-2.44%
90,000 Wendy's International, Inc. ........... 1,676,250
</TABLE>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
3
<PAGE> 4
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK (CONTINUED):
<TABLE>
<CAPTION>
VALUE
SHARES -----------
- ------- (NOTE 1)
<C> <S> <C>
RETAIL--DEPARTMENT
STORES-2.55%
40,000 May Department Stores Co. ............. $ 1,750,000
RETAIL--DRUG CHAINS-2.20%
45,000 Walgreen Company....................... 1,507,500
RETAIL--FOOD CHAINS-5.99%
61,000 Albertson's, Inc. ..................... 2,523,875
48,600 Hannaford Brothers Co. ................ 1,585,575
-----------
4,109,450
RETAIL--GENERAL
MERCHANDISE-3.18%
86,000 Wal-Mart Stores, Inc. ................. 2,182,250
RETAIL--SPECIALTY STORES-2.11%
45,000 Gap, Inc. ............................. 1,445,625
TOBACCO-3.18%
21,000 Philip Morris Companies, Inc. ......... 2,184,000
-----------
Total Common Stock
(Cost $51,624,076)................... $62,517,125
-----------
</TABLE>
COMMERCIAL PAPER-8.98%:
<TABLE>
<CAPTION>
VALUE
-----------
PRINCIPAL (NOTE 1)
AMOUNT
- ----------
<C> <S> <C> <C>
$3,083,000 Ford Motor Credit Co.,
5.42%, due 07/01/96....... $ 3,083,000
3,084,000 Household Finance Corp.,
5.42%, due 07/01/96....... 3,084,000
-----------
Total Commercial Paper
(Cost $6,167,000)......... 6,167,000
-----------
Total Investments
(Cost $57,791,076*)....... 100.07% 68,684,125
Liabilities in excess of
other assets.............. (.07%) (48,669)
------ -----------
Net Assets.................. 100.00% $68,635,456
====== ===========
</TABLE>
* Aggregate cost for Federal income tax purposes is identical. At June 30, 1996,
the net unrealized appreciation for all securities of $10,893,049 consists of
gross unrealized appreciation of $11,231,182 and gross unrealized depreciation
of $338,133.
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
4
<PAGE> 5
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30,
1996
-----------
<S> <C>
ASSETS:
Investment in securities, at value (cost $57,791,076)..................................... $68,684,125
Cash...................................................................................... 301
Dividends and interest receivable......................................................... 99,459
Prepaid expenses.......................................................................... 5,969
------------
Total assets............................................................................ 68,789,854
------------
LIABILITIES:
Payable for securities purchased.......................................................... 103,935
Accrued expenses payable.................................................................. 50,463
------------
Total liabilities....................................................................... 154,398
------------
NET ASSETS, applicable to 507,248 shares of
$1.00 par value stock, 2,000,000 shares authorized...................................... $68,635,456
============
NET ASSETS:
Capital paid in........................................................................... $55,130,820
Undistributed net realized gains.......................................................... 2,607,913
Undistributed net investment income....................................................... 3,674
Net unrealized appreciation............................................................... 10,893,049
------------
NET ASSETS................................................................................ $68,635,456
============
NET ASSET VALUE, offering and redemption price
per share ($68,635,456 / 507,248 shares)................................................ $ 135.31
============
</TABLE>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
5
<PAGE> 6
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1996
----------------
<S> <C>
INVESTMENT INCOME:
INCOME:
Dividends............................................................................. $ 477,412
Interest.............................................................................. 176,918
-----------
Total investment income............................................................... 654,330
EXPENSES:
Investment advisory................................................................... 232,665
Administration........................................................................ 40,200
Legal................................................................................. 27,830
Directors'............................................................................ 24,255
Audit................................................................................. 16,799
Custodian............................................................................. 11,791
Insurance............................................................................. 11,171
Transfer agent........................................................................ 9,384
Printing.............................................................................. 3,364
Miscellaneous......................................................................... 1,698
-----------
379,157
Fee waivers........................................................................... (8,571)
-----------
Net expenses....................................................................... 370,586
-----------
Net investment income.............................................................. 283,744
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments........................................................ 2,607,746
Net change in unrealized appreciation of investments.................................... 3,914,037
-----------
Net realized and unrealized gain on investments......................................... 6,521,783
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................... $6,805,527
===========
</TABLE>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
6
<PAGE> 7
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31,
(UNAUDITED) 1995
---------------- ------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income................................................... $ 283,744 $ 451,742
Net realized gain on investments........................................ 2,607,746 6,328,622
Net change in unrealized appreciation of investments.................... 3,914,037 3,832,234
----------- -----------
Net increase in net assets resulting from operations...................... 6,805,527 10,612,598
Net equalization.......................................................... 0 3,043
Distributions to shareholders from:
Net investment income................................................... (281,562) (466,658)
Net realized gain on investments........................................ 0 (6,328,455)
----------- -----------
Total distributions to shareholders....................................... (281,562) (6,795,113)
Net increase from capital share transactions.............................. 6,877,512 11,186,609
----------- -----------
Total increase in net assets......................................... 13,401,477 15,007,137
NET ASSETS:
Beginning of period..................................................... 55,233,979 40,226,842
----------- -----------
End of period (including undistributed net investment income of
$3,674 and $1,492, respectively)..................................... $ 68,635,456 $ 55,233,979
=========== ===========
</TABLE>
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
7
<PAGE> 8
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
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, 1996 ------------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
---------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of period......... $121.75 $112.12 $137.22 $135.14 $135.63 $154.21
INCOME FROM OPERATIONS:
Net investment income...................... 0.57 1.20 1.78 1.63 2.36 4.25
Net realized and unrealized gain (loss).... 13.55 26.55 (2.88) 25.94 11.40 18.90
------- ------- ------- ------- ------- -------
Total from investment operations......... 14.12 27.75 (1.10) 27.57 13.76 23.15
DISTRIBUTIONS:
From net investment income................. (0.56) (1.23) (1.73) (1.77) (2.24) (4.23)
From net realized gains.................... -- (16.89) (22.27) (23.72) (12.01) (36.27)
From return of capital..................... -- -- -- -- -- (1.23)
------- ------- ------- ------- ------- -------
Total distributions...................... (0.56) (18.12) (24.00) (25.49) (14.25) (41.73)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, end of period............... $135.31 $121.75 $112.12 $137.22 $135.14 $135.63
======= ======= ======= ======= ======= =======
Total return................................. 11.62% 24.90% (0.80%) 20.5% 10.2% 15.9%
Ratio of expenses to average net assets...... 1.20%(1)(2) 1.39%(2) 1.06% 1.02% 0.99% 0.89%
Ratio of net investment income to average net
assets..................................... 0.92%(1) 0.94% 1.30% 1.09% 1.64% 2.51%
Portfolio turnover rate...................... 51% 85% 59% 23% 10% 21%
Average commission rate per share............ $0.0447(3) -- -- -- -- --
NET ASSETS, end of period (000's)............ $68,635 $55,234 $40,227 $38,342 $39,198 $58,670
</TABLE>
- --------------------------------------------------------------------------------
(1) Annualized.
(2) Without fee waivers for the six months ended June 30, 1996 and the year
ended December 31, 1995, the ratios of expenses to average net assets would
have been 1.23% (annualized) and 1.43%, respectively.
(3) Computed by dividing the total amount of brokerage commissions paid by the
total shares of investment securities purchased and sold during the period
for which commissions were charged, as required by the Securities and
Exchange Commission for fiscal years beginning after September 1, 1995.
See Accompanying Notes to Financial Statements.
8
<PAGE> 9
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INSTITUTIONAL INVESTORS MUTUAL FUNDS
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
The Institutional Investors Capital Appreciation Fund, Inc. (the "Fund") is
registered under the Investment Company Act of 1940, as amended, as a
diversified open-end management investment company. The primary investment
objective of the Fund is to achieve capital appreciation for its shareholders.
The objective of income is secondary.
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. 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 is recorded on the accrual basis. The specific
identification method is used in the determination of realized gains and losses
on the sale of securities.
C.--Federal Income Taxes--No provision has been made for Federal income tax,
since it is the intention of the Fund to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income and net capital gains to its shareholders.
D.--Equalization--Through July 31, 1995, the Fund followed the accounting
practice known as equalization, by which a portion of the proceeds from sales
and costs of repurchases of capital shares, equivalent on a per share basis to
the amount of undistributed net investment income on the date of the
transaction, was credited or charged to undistributed net investment income.
Commencing August 1, 1995, the Fund ceased accounting for share transactions in
this manner. The change in this policy had no effect on the Fund's net assets.
NOTE 2--PURCHASES AND SALES OF SECURITIES
The cost of purchases and the proceeds from sales of investments, exclusive of
short-term investments, for the six months ended June 30, 1996, were $21,188,007
and $14,222,290, respectively.
NOTE 3--FEES
Shay Assets Management Co. (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 the Fund. ACB Assets Management, Inc. is an indirect
wholly-owned subsidiary of America's Community Bankers.
The Investment Adviser receives fees from the Fund, computed at an annual rate
of 0.75% of the first $100,000,000 of average daily net assets and 0.50% of
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 Fund's average daily net assets for any fiscal year during
the term of the Fund's agreement with the Investment Adviser. This limitation
did not result in any waiver of the Investment Adviser's fees during the six
months ended June 30, 1996.
PFPC Inc. ("PFPC") is the Fund's administrator and transfer agent and PNC Bank
NA ("PNC") is the Fund's custodian. PFPC and PNC are affiliates of PNC Bank
Corp.
As compensation for its administrative services, the Fund pays PFPC a minimum
monthly fee of $6,700 (exclusive of out-of-pocket expenses). PFPC waived
approximately 17% of its fee during the six months ended June 30, 1996. The
waiver amounted to $6,865.
- --------------------------------------------------------------------------------
9
<PAGE> 10
- --------------------------------------------------------------------------------
INSTITUTIONAL INVESTORS MUTUAL FUNDS
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED) (CONTINUED)
As compensation for its services as transfer agent, the Fund pays PFPC a minimum
monthly fee of $1,500 (exclusive of out-of-pocket expenses). PFPC waived
approximately 22% of its fee during the six months ended June 30, 1996. The
waiver amounted to $1,706.
As compensation for its custodial services, the Fund pays PNC a minimum monthly
fee of $500 (exclusive of out-of-pocket expenses).
NOTE 4--CAPITAL STOCK
At June 30, 1996, 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, 1996
and the year ended December 31, 1995, respectively, were as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
----------------- -------------------------
1996 1995 1996 1995
------ ------- ---------- -----------
<S> <C> <C> <C> <C>
Shares sold................................................. 52,453 72,300 $6,725,022 $ 8,579,318
Shares issued in reinvestment of dividends.................. 1,786 47,411 236,680 5,756,146
------- -------- ----------- ------------
54,239 119,711 6,961,702 14,335,464
Shares redeemed............................................. (648) (24,824) (84,190) (3,148,855)
------- -------- ----------- ------------
Net increase................................................ 53,591 94,887 $6,877,512 $11,186,609
======= ======== =========== ============
</TABLE>
NOTE 5--SHAREHOLDER VOTING RESULTS
The Annual Meeting of Stockholders of the Fund was held on March 20, 1996, at
which the stockholders voted on two proposals. The proposals and the results of
the voting are set forth below.
A--Election of Directors--The first proposal concerned the election of seven
directors: five to serve a term of office of three years each, one to serve a
term of office of two years and one to serve a term of office of one year. The
results of voting were as follows:
<TABLE>
<CAPTION>
EXPIRATION
OF TERM FOR
---------- -------
<S> <C> <C>
Robert P. Capone..................................................................... 1999 243,795
Chris C. Gagas....................................................................... 1999 243,795
Edward P. Henson..................................................................... 1999 243,795
Michael R. Kallet.................................................................... 1999 243,795
Robert E. Kernan, Jr. ............................................................... 1999 243,795
Joseph L. Mancino.................................................................... 1998 243,795
Vincent F. Palagiano................................................................. 1997 243,795
</TABLE>
There were no votes against any of the directors nor were there any abstentions.
In addition, Messrs. Ralph F. Brouty, Timothy A. Dempsey, Harry P. Doherty,
Stephen J. Kelly, Clifford E. Kelsey, Jr., William A. McKenna, Jr., Charles M.
Sprock and John M. Tsimbinos continue as members of the Board of Directors.
B--Ratification of Independent Auditors--The second proposal concerned the
ratification of the selection of Arthur Andersen LLP as independent auditors of
the Fund for the fiscal year ending December 31, 1996. All 243,795 votes were
cast in favor of the proposal. There were no votes against, nor were there any
abstentions.
- --------------------------------------------------------------------------------
10
<PAGE> 11
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INSTITUTIONAL INVESTORS MUTUAL FUNDS
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
OFFICERS
HARRY P. DOHERTY
President
MICHAEL R. KALLET
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
RALPH F. BROUTY
ROBERT P. CAPONE
TIMOTHY A. DEMPSEY
HARRY P. DOHERTY
CHRIS C. GAGAS
EDWARD P. HENSON
MICHAEL R. KALLET
STEPHEN J. KELLY
CLIFFORD E. KELSEY, JR.
ROBERT E. KERNAN, JR.
JOSEPH L. MANCINO
WILLIAM A. MCKENNA, JR.
VINCENT F. PALAGIANO
CHARLES M. SPROCK
JOHN M. TSIMBINOS
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INVESTMENT ADVISER
Shay Assets Management Co.
200 Park Avenue
6th Floor, West
New York, New York 10166
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, DE 19809
CUSTODIAN
PNC Bank, NA
17th & Chestnut Streets
Philadelphia, Pennsylvania 19101
LEGAL COUNSEL
Hughes Hubbard & Reed LLP
One Battery Park Plaza
New York, New York 10004
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
1601 Market Street
Philadelphia, Pennsylvania 19103
[Institutional Investors Mutual Funds LOGO]
Institutional Investors
Capital Appreciation Fund, Inc.
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
JUNE 30, 1996
