<PAGE> 1
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July 15, 1999
MESSAGE FROM THE PRESIDENT:
Dear Shareholder:
I am happy to report that Institutional Investors Capital Appreciation Fund,
Inc. produced a total return of 5.40% for the six months ended June 30, 1999.
This gain helped to bring our one-year return for the period ending June 30,
1999 to 20.00%. The Fund's three-year average annual return is 23.67% for the
period ending June 30, 1999 and the five- and ten-year average annual returns
are 21.89% and 15.21%, respectively. The Fund is celebrating its 46th
anniversary in 1999. If a shareholder institution had invested $100,000 at the
inception of the Fund and reinvested all capital gains and distributions the
investment would have grown to $24,831,678.49 by June 30, 1999.
There isn't any question that our nation is blasting into the 21st century on a
high note. Although it is home to just four percent of the world's nearly six
billion inhabitants, the United States is the most powerful and influential
nation the world has ever known. It is also the most secure and the wealthiest
nation. The United States also enjoys the world's highest living standards and
accounts for about 30% of world gross domestic product.
The superb economic performance of the last twenty years to a large extent has
been the result of technological innovation and sound monetary policy. Inflation
and interest rates have remained low. Unemployment is the lowest in over
twenty-five years and just about anyone who wants to work can find a job.
Continued technological advancements combined with technological innovations
like the Internet suggest that unemployment and inflation will remain under
control. The Internet alone may be as important to future increases in living
standards as electricity was at the turn of the century. It took forty-six years
for twenty-five percent of Americans to have electricity in the home, but only
seven years (1991-1997) passed before twenty-five percent of Americans had gone
online. Today, about thirty percent of Americans have Internet access, and
industry analysts estimate that seventy percent or more will be online by 2008
or sooner.
Business to business commerce is already exploding on this new medium, which has
no geographic boundaries. The opportunity, threat and potential it poses for
industry demand that business plans and models for thousands of companies such
as car dealerships, banks, clothing retailers, component parts suppliers, and
stock brokerage firms be changed. Upstarts are already taking significant market
shares away from established giants through lower prices, more convenience, and
better service. Pricing pressure alone is so intense that many companies will
not permit price increases to be included in any current business or marketing
plans.
Two ingredients are essential for an economy to prosper: population growth and
increased output per hour of work. Although technology combined with rising
worker skill sets has caused productivity to grow handsomely in the last several
years, our population, including immigration, is only growing by less than a
half of one percent each year. One of the downsides of rising living standards
is lower birth rates, and this is occurring throughout the industrialized world.
Europe, for example, is suffering negative population growth. Japan, the second
largest economy, is limping along with only 1.4 births per female. A nation
needs 2.1 births per female just to maintain population levels.
Our nation and our economy will never be all that they can be if we don't
improve our public grammar and high schools. The Wall Street Journal recently
reported that over seventy percent of inner city eighth graders score in the
fiftieth percentile or lower in both reading and mathematics. Our bench strength
is weakened further when about 850,000 children drop out of high school
annually.
Today, over sixty percent of American families with children living in the home
own a computer. Just think how fast the technology revolution would grow and how
high living standards would leap if the other forty percent had daily computer
access and were trained computer users. There is no question that the single
best way to embrace the future and to insure continued prosperity and
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1
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economic progress for generations to come is to build a knowledgeable workforce
with the skill sets and enthusiasm to realize the potential of our expanding
technology.
We believe that the Fund's investment philosophy of seeking to create
shareholder value over time and its investment discipline of investing only in
companies with strong balance sheets that are believed to have the capability of
generating rising cash flow should continue to be well-positioned to capitalize
on our nation's economic prowess, technological supremacy and rising share of
world output.
A special note of thanks to those Savings Banks Life Insurance (SBLI) Department
shareholders that continue to increase their investment in the Fund. The Fund
enables SBLI departments to match a long-term liability (life insurance) with a
long-term asset (common stock).
/s/ HARRY P. DOHERTY
Harry P. Doherty
President
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2
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PERFORMANCE SUMMARY
(UNAUDITED)
AVERAGE ANNUAL TOTAL RETURN
PERIODS ENDING JUNE 30, 1999*
<TABLE>
<CAPTION>
YEAR ONE FIVE TEN
TO DATE YEAR YEARS YEARS
------- ---- ----- -----
<S> <C> <C> <C> <C>
CAPITAL APPRECIATION
FUND.................... 5.40% 20.00% 21.89% 15.21%
Lipper Growth & Income
Funds Average....... 10.93 14.48 21.93 15.35
Standard & Poor's 500
Index............... 12.39 22.77 27.87 18.78
Dow Jones Industrial
Average............. 20.46 24.67 27.44 19.34
</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. The total return of the Fund for various periods is
compared with the Standard & Poor's 500 Composite Stock Price Index (S&P 500)
and the Dow Jones Industrial Average (DJIA), which are groups of unmanaged
securities, and with Lipper Growth & Income Funds' Average, which includes, for
the six months, one, five and ten years ended June 30, 1999, 922, 843, 323 and
148 mutual funds, respectively, and is a broad equity fund measurement. The S&P
500 and DJIA do not include a reduction of total return for expenses. These
results should be considered in light of the makeup of each index, the
investment objectives and portfolio composition of the Fund and the periods
indicated.
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.
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3
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INVESTMENT RESULTS, OUTLOOK AND STRATEGIES
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
The Fund's net asset value per share on June 30, 1999 was $205.82 versus $195.75
on December 31, 1998. Shareholders received distributions from dividend income
totaling $0.4851 per share during the first six months of 1999. The Fund's total
return for the six-month period ending June 30, 1999 was 5.40%. The Lipper
Growth & Income Funds Average's total return for the six-month period ending
June 30, 1999 was 10.93%. During the 7 1/2-year period beginning December 31,
1991 and ending June 30, 1999, coinciding with the tenure of the current
portfolio management team, the Capital Appreciation Fund has provided an average
annual total return of 18.06% versus 16.22% for the Lipper Growth & Income Funds
Average. Total return assumes the reinvestment of all dividends and capital
gains and the deduction of all applicable fees and expenses.
After more than doubling the performance of the Lipper Growth & Income Funds
Average in 1998, it is not surprising that the Capital Appreciation Fund's
return has trailed its peer group average in the first half of 1999. The main
reason for the performance disparity in 1998 and 1999 is due in large part to
the Fund's significant weighting in large capitalization consumer stocks.
Consumer companies earnings are generally less affected by changes in the
economic environments in which they operate than are cyclical companies. As the
world economies weakened during the latter half of 1998, so did the earnings
prospects for cyclical companies. As a result, investors shifted their assets
out of cyclical stocks and into consumer stocks, which provided a significant
boost to the Fund's performance in 1998. As the U.S. economy continued to
strengthen in early 1999 and foreign economies began to show signs of
improvement, investors shifted assets back into cyclical stocks.
Our investment philosophy centers on buying companies that have demonstrated the
ability to grow their earnings steadily over an extended period of time.
Cyclical companies, whose prospects ebb and flow with the ups and downs of the
economic cycle, do not exhibit the characteristics that we look for in a
long-term investment. Our portfolio includes a large exposure to consumer
companies due to their historically stable earnings and cash flow growth. We
have also found that over the long term, returns have been more favorable and
are less volatile in this area.
We also believe that it is not in our shareholders' best interest to try to time
the market's shifts between market sectors, such as the shifts in 1998 and the
first half of 1999 between consumer stocks and cyclical stocks. This policy has
the additional benefit of reducing portfolio turnover, which tends to reduce the
Fund's taxable capital gains distributions. We are content to maintain our
investments in those companies that we believe offer favorable long-term
earnings prospects with stable financial histories, strong balance sheets, solid
management and reasonable prices.
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4
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INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
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COMMON STOCK--95.89%:
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ------------
(NOTE 1)
<C> <S> <C>
ADVERTISING-3.67%
50,000 Interpublic Group of Cos., Inc. .... $ 4,331,250
AUTO PARTS-AFTER MARKET-1.48%
50,000 Genuine Parts Co. .................. 1,750,000
BEVERAGES-SOFT DRINKS-3.18%
60,000 Coca-Cola Co. ...................... 3,750,000
CHEMICALS-SPECIALTY-3.39%
90,000 International Flavors & Fragrances,
Inc. ............................. 3,993,750
COMPUTER SOFTWARE & SERVICES-11.15%
100,000 Automatic Data Processing, Inc. .... 4,400,000
75,000 Electronic Data Systems Corp. ...... 4,242,187
50,000 Microsoft Corp. # .................. 4,509,375
------------
13,151,562
COMPUTER SYSTEMS-2.98%
35,000 Hewlett-Packard Co.................. 3,517,500
DISTRIBUTOR-CONSUMER PRODUCTS-3.67%
145,000 Sysco Corp. ........................ 4,322,812
ELECTRICAL EQUIPMENT-6.29%
67,500 Emerson Electric Co. ............... 4,244,062
70,000 Hubbell, Inc. ...................... 3,176,250
------------
7,420,312
ELECTRONICS & SEMICONDUCTORS-3.78%
75,000 Intel Corp. ........................ 4,462,500
ENTERTAINMENT-3.00%
115,000 Walt Disney Co. .................... 3,543,438
FINANCIAL SERVICES-6.92%
60,000 Fannie Mae.......................... 4,102,500
70,000 Freddie Mac......................... 4,060,000
------------
8,162,500
FOODS-3.54%
90,000 Campbell Soup Co. .................. 4,173,750
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
- ------ ------------
(NOTE 1)
<C> <S> <C>
HEALTHCARE-DIVERSIFIED-3.82%
46,000 Johnson & Johnson................... $ 4,508,000
HEALTH CARE-DRUGS-6.73%
85,000 Abbott Laboratories................. 3,867,500
55,000 Merck & Co., Inc. .................. 4,070,000
------------
7,937,500
HOUSEHOLD PRODUCTS-2.72%
30,000 Clorox Co. ......................... 3,204,375
OFFICE EQUIPMENT AND SUPPLIES-3.11%
57,000 Pitney Bowes, Inc. ................. 3,662,250
PERSONAL CARE-2.61%
75,000 Gillette Co. ....................... 3,075,000
PUBLISHING-NEWSPAPERS-3.48%
57,500 Gannett Company, Inc. .............. 4,104,063
RESTAURANTS-2.98%
85,000 McDonald's Corp. ................... 3,511,563
RETAIL-DRUG CHAINS-2.86%
115,000 Walgreen Co. ....................... 3,378,125
RETAIL-FOOD CHAINS-3.28%
75,000 Albertson's, Inc. .................. 3,867,188
RETAIL-GENERAL MERCHANDISE-3.68%
90,000 Wal-Mart Stores, Inc. .............. 4,342,500
RETAIL-SPECIALTY STORES-4.16%
97,500 Gap, Inc. .......................... 4,911,562
TOBACCO-3.41%
100,000 Philip Morris Cos., Inc. ........... 4,018,750
------------
Total Common Stock
(Cost $64,317,016)................ $113,100,250
</TABLE>
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See Accompanying Notes to Financial Statements.
5
<PAGE> 6
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
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COMMERCIAL PAPER--3.99%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------
(NOTE 1)
<C> <S> <C> <C>
$4,701,000 Household Finance Corp.,
5.45%, due 07/01/99.... $ 4,701,000
Total Investments (Cost
$69,018,016*).......... 99.88% 117,801,250
Other assets in excess of
liabilities............ 0.12% 139,750
------ ------------
Net Assets............... 100.00% $117,941,000
====== ============
</TABLE>
# Non-income producing security.
* Aggregate cost for Federal income tax purposes is identical. At June 30, 1999,
the net unrealized appreciation for tax purposes for all securities of
$48,783,234 consists of gross unrealized appreciation of $49,686,193 and gross
unrealized depreciation of $902,959.
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
6
<PAGE> 7
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
- --------------------------------------------------------------------------------
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<TABLE>
<CAPTION>
JUNE 30, 1999
-------------
<S> <C>
ASSETS:
Investment in securities, at value (Cost $69,018,016)....... $117,801,250
Cash........................................................ 190,017
Receivable for fund shares sold............................. 25,000
Dividends and interest receivable........................... 6,221
Prepaid expenses............................................ 974
------------
Total assets.............................................. 118,023,462
LIABILITY:
Accrued expenses payable.................................... 82,462
------------
NET ASSETS, applicable to 573,038 shares of
$1.00 par value stock, 2,000,000 shares authorized........ $117,941,000
============
NET ASSETS:
Capital paid in............................................. $ 63,968,571
Net unrealized appreciation................................. 48,783,234
Undistributed net realized gains............................ 5,187,773
Undistributed net investment income......................... 1,422
------------
NET ASSETS.................................................. $117,941,000
============
NET ASSET VALUE, offering and redemption price per
share ($117,941,000/573,038 shares)....................... $ 205.82
============
</TABLE>
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See Accompanying Notes to Financial Statements.
7
<PAGE> 8
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED)
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<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999
----------------
<S> <C>
INVESTMENT INCOME:
INCOME:
Dividends................................................. $ 731,021
Interest.................................................. 159,267
----------
Total income........................................... 890,288
EXPENSES:
Investment advisory....................................... 421,326
Administration............................................ 59,471
Directors................................................. 41,655
Legal..................................................... 23,610
Insurance................................................. 16,185
Custodian................................................. 13,896
Transfer agent............................................ 9,663
Audit..................................................... 8,930
Printing.................................................. 3,615
Miscellaneous............................................. 4,100
----------
Total expenses......................................... 602,451
----------
Net investment income.................................. 287,837
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain........................................... 5,187,773
Net change in unrealized appreciation....................... 782,841
----------
Net realized and unrealized gain on investments............. 5,970,614
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $6,258,451
==========
</TABLE>
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See Accompanying Notes to Financial Statements.
8
<PAGE> 9
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
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<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED DECEMBER 31,
JUNE 30, 1999 1998
--------------- ------------
(UNAUDITED)
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income..................................... $ 287,837 $ 533,835
Net realized gain on investments.......................... 5,187,773 8,562,566
Net change in unrealized appreciation on investments...... 782,841 18,296,017
------------ ------------
Net increase in net assets resulting from operations........ 6,258,451 27,392,418
Distributions to shareholders from:
Net investment income..................................... (286,415) (533,835)
In excess of net investment income........................ 0 (8,840)
Net realized gain on investments.......................... 0 (8,562,566)
------------ ------------
Total distributions to shareholders......................... (286,415) (9,105,241)
Net increase (decrease) from capital share transactions..... (7,148,265) 3,343,182
------------ ------------
Total increase (decrease) in net assets................ (1,176,229) 21,630,359
NET ASSETS:
Beginning of period....................................... 119,117,229 97,486,870
------------ ------------
End of period (including undistributed net investment
income of $1,422 at June 30, 1999)..................... $117,941,000 $119,117,229
============ ============
</TABLE>
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See Accompanying Notes to Financial Statements.
9
<PAGE> 10
INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
FINANCIAL HIGHLIGHTS
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Selected Data for Each Share of Capital Stock
Outstanding Throughout Each Period
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
SIX MONTHS ENDED --------------------------------------------------------------
JUNE 30, 1999 1998 1997 1996 1995 1994
---------------- ---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of
period........................ $ 195.75 $ 164.68 $135.64 $121.75 $112.12 $137.22
INCOME FROM OPERATIONS:
Net investment income......... 0.49 0.93 1.10 1.09 1.20 1.78
Net realized and unrealized
gain (loss) on
investments................. 10.07 46.33 37.34 24.39 26.55 (2.88)
-------- -------- ------- ------- ------- -------
Total from investment
operations............. 10.56 47.26 38.44 25.48 27.75 (1.10)
DISTRIBUTIONS:
From net investment income.... (0.49) (0.93) (1.09) (1.09) (1.20) (1.73)
In excess of net investment
income...................... -- (0.01) -- -- (0.03) --
From net realized gains on
investments................. -- (15.25) (8.31) (10.50) (16.89) (22.27)
-------- -------- ------- ------- ------- -------
Total distributions....... (0.49) (16.19) (9.40) (11.59) (18.12) (24.00)
-------- -------- ------- ------- ------- -------
NET ASSET VALUE, end of
period........................ $ 205.82 $ 195.75 $164.68 $135.64 $121.75 $112.12
======== ======== ======= ======= ======= =======
Total return.................... 5.40% 28.85% 28.64% 20.82% 24.90% (0.80)%
Ratio of expenses to average net
assets........................ 1.01%(1) 1.07% 1.16% 1.28%(2) 1.39%(2) 1.06%
Ratio of net investment income
to average net assets......... 0.48%(1) 0.51% 0.71% 0.82% 0.94% 1.30%
Portfolio turnover rate......... 8% 22% 27% 48% 85% 59%
Average commission rate per
share (3)..................... $ 0.0430 $ 0.0453 $0.0473 $0.0447 -- --
NET ASSETS, end of period
(000's)....................... $117,941 $119,117 $97,487 $70,149 $55,234 $40,227
</TABLE>
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(1) Annualized.
(2) Without fee waivers for the years ended December 31, 1996 and 1995, the
ratio of expenses to average net assets would have been 1.29% 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.
10
<PAGE> 11
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INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 (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 as of 4:00 pm Eastern Time. Short-term
instruments maturing within 60 days of the valuation date are valued at
amortized cost.
B--Security Transactions and Related Investment Income--Security transactions
are accounted for on the trade date; dividend income is recorded on the
ex-dividend date; and 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 ordinary taxable income and net capital gains to its
shareholders.
D--Management Estimates--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 at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
NOTE 2--FEES
Shay Assets Management, Inc. (the "Investment Adviser") is the investment
adviser to the Fund. The Investment Adviser is a wholly-owned subsidiary of Shay
Investment Services, Inc. ("SISI"), which is controlled by Rodger D. Shay, a
Vice President of the Fund.
The Investment Adviser receives fees from the Fund computed at an annual rate of
0.75% of the first $100,000,000 of the Fund's 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 investment advisory fees during the six month
period ended June 30, 1999.
Shay Financial Services, Inc. ( the "Distributor") is the distributor for the
Fund. The Distributor is a wholly-owned subsidiary of SISI, which is controlled
by Rodger D. Shay, a Vice President of the Fund. The Distributor receives no
compensation for its distribution services.
PFPC Inc. ("PFPC"), an affiliate of PNC Bank Corp., was the Fund's administrator
until July 31, 1999, and is the Fund's transfer agent until September 13, 1999.
As compensation for its administrative services, PFPC received fees from the
Fund computed at an annual rate of 0.10% of the first $200,000,000 of the Fund's
average daily net
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11
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INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
assets, 0.075% of the next $200,000,000, 0.05% of the next $200,000,000, and
0.03% of average daily net assets in excess of $600,000,000 (exclusive of
out-of-pocket expenses). As compensation for its services as transfer agent, the
Fund paid PFPC a minimum monthly fee of $1,500 (exclusive of out-of-pocket
expenses).
The Fund has appointed BISYS Fund Services Ohio, Inc. ("BISYS") and The Bank of
New York ("BONY") to provide administration, fund accounting, transfer agency
and custodian services to the Fund. These services replace the services
previously provided to the Fund by PFPC Inc. and PFPC Trust Company.
Effective August 1, 1999, BISYS, 3435 Stelzer Road, Columbus, Ohio 43219, became
the Fund's administrator and accounting agent pursuant to an Administration
Agreement and a Fund Accounting Agreement, each dated August 1, 1999. Pursuant
to these agreements, BISYS will perform various administrative services for the
Fund, including (i) maintenance of books and records, (ii) preparation of
various filings, reports, statements and returns filed with governmental
authorities or distributed to shareholders of the Fund and (iii) computation of
the Fund's net asset value for purposes of sales and redemptions of shares.
Effective September 13, 1999, BISYS also will become the Fund's transfer agent.
Effective July 30, 1999, BONY, One Wall Street, New York, NY 10286, became the
custodian of the Fund's securities and other investments and replaced PFPC Trust
Company in that capacity.
The fees payable to BISYS and BONY are substantially the same as the fees that
were payable under the Fund's prior agreements with PFPC and PFPC Trust Company.
NOTE 3--CAPITAL STOCK
At June 30, 1999, 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, 1999
and the year ended December 31, 1998, respectively, were as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
------------------ ---------------------------
1999 1998 1999 1998
------- ------- ----------- ------------
<S> <C> <C> <C> <C>
Shares sold........................................... 11,847 57,835 $ 2,321,475 $ 10,620,797
Shares issued in reinvestment of dividends............ 1,357 43,487 266,881 8,418,691
------- ------- ----------- ------------
13,204 101,322 2,588,356 19,039,488
Shares redeemed....................................... (48,698) (84,761) (9,736,621) (15,696,306)
------- ------- ----------- ------------
Net increase/(decrease)............................... (35,494) 16,561 $(7,148,265) $ 3,343,182
======= ======= =========== ============
</TABLE>
NOTE 4--PURCHASES AND SALES OF SECURITIES
The cost of purchases and the proceeds from sales of investments, exclusive of
short-term investments, for the six month period ended June 30, 1999, were
$9,347,422 and $14,494,724, respectively.
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12
<PAGE> 13
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INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
NOTE 5--SHAREHOLDER VOTING RESULTS
The Annual Meeting of Stockholders of the Fund was held on April 21, 1999, 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 five
directors to serve a term of office of three years each, expiring in 2002.
<TABLE>
<CAPTION>
EXPIRATION
OF TERM FOR
---------- -------
<S> <C> <C>
Robert P. Capone............................................ 2002 535,318
Chris C. Gagas.............................................. 2002 535,318
Michael R. Kallet........................................... 2002 535,318
Robert E. Kernan, Jr........................................ 2002 535,318
Clifford M. Miller.......................................... 2002 535,318
</TABLE>
In addition, Messrs. Ralph F. Brouty, Timothy A. Dempsey, Harry P. Doherty,
Stephen J. Kelly, Clifford E. Kelsey, Jr., Joseph L. Mancino, William A.
McKenna, Jr., Vincent F. Palagiano, and Charles M. Sprock continue as Board of
Directors. Mr. Joseph R. Ficalora was appointed to succeed Mr. John M. Tsimbinos
who resigned as a director in February 1999.
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 31,1999. All 535,318 votes were
cast in favor of the proposal. There were no votes against, nor were there any
abstentions.
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<PAGE> 14
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INSTITUTIONAL INVESTORS MUTUAL FUND
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
JOSEPH L. MANCINO
Executive Vice President
RODGER D. SHAY
Vice President and
Assistant Secretary
JOHN J. MCCABE
Vice President
STEVE PIERCE
Treasurer
BOARD OF DIRECTORS
RALPH F. BROUTY
ROBERT P. CAPONE
TIMOTHY A. DEMPSEY
HARRY P. DOHERTY
JOSEPH R. FICALORA
CHRIS C. GAGAS
MICHAEL R. KALLET
STEPHEN J. KELLY
CLIFFORD E. KELSEY, JR.
ROBERT E. KERNAN, JR.
JOSEPH L. MANCINO
WILLIAM A. MCKENNA, JR.
CLIFFORD M. MILLER
VINCENT F. PALAGIANO
CHARLES M. SPROCK
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14
<PAGE> 15
INVESTMENT ADVISER
Shay Assets Management, Inc.
200 Park Avenue
45th Floor
New York, New York 10166
DISTRIBUTOR
Shay Financial Services, Inc.
230 West Monroe Street
Chicago, Illinois 60606
ADMINISTRATOR, REGISTRAR AND
DIVIDEND PAYING AGENT
BISYS Fund Services Ohio, Inc.
3435 Stelzer Road
Columbus, OH 43219
TRANSFER AGENT
Until September 13, 1999:
PFPC Inc.
103 Bellevue Parkway
Wilmington, DE 19809
Effective September 13, 1999:
BISYS Fund Services Ohio, Inc.
3435 Stelzer Road
Columbus, OH 43219
CUSTODIAN
The Bank of New York
One Wall Street
New York, NY 10286
LEGAL COUNSEL
Hughes Hubbard & Reed LLP
One Battery Park Plaza
New York, New York 10004
INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP
1601 Market Street
Philadelphia, Pennsylvania 19103
INSTITUTIONAL
INVESTORS
CAPITAL
APPRECIATION
SEMI-ANNUAL REPORT FUND, INC.
TO SHAREHOLDERS
JUNE 30, 1999
