INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND INC, N-30D, 2000-03-01

INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND INC
N-30D, 2000-03-01

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INSTITUTIONAL INVESTORS CAPITAL
APPRECIATION FUND, INC.

MESSAGE FROM THE PRESIDENT:

Dear Shareholder:

I am pleased to report that the Institutional Investors Capital Appreciation
Fund, Inc. produced a total return of 6.51% for the year-ended December 31,
1999. This performance helped to bring our three-year average annual return to
20.86%. The five- and ten-year average annual returns for the period ending
December 31, 1999 were 21.65% and 14.21%, respectively. The Fund celebrated its
46th Anniversary in 1999 and 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 $25,091,061 by December 31, 1999.

There is no question that the U.S.A. has blasted into the new Century on a very
high note. Inflation, interest rates, and unemployment have remained in check.
Consumer confidence is the highest in more than a generation. Entrepreneurship
is flourishing, the greatest new business start-up boom in history continues and
America's global technological dominance is expanding.

The last two decades of the 20th Century were particularly productive for the
United States and have laid a solid foundation for a rewarding 21st Century.
During this timeframe, American industry restructured, the technology revolution
accelerated, global competition expanded and monetary and fiscal policy came
together. Government downsized and confidence permeated the capital markets. As
a consequence, the cost of both debt and equity capital dropped, living
standards rose and many wealth creating opportunities materialized.

In addition to technology rapidly evolving as the dominant force in everyday
life, the growing "investor class" is aiding in the flight for low inflation and
rising productivity. This group puts continuing pressure on politicians not to
misspend taxpayer dollars. They also demand efficiency, rising profit growth and
increased shareholder value from public corporations.

Over the last decade, the stock market has emerged as a vital and potent force
in our consumer driven economy. A rising equity market produces more household
wealth and consumer spending than ever before. As a result, growing legislative
initiatives to further stimulate savings, investing and economic output could be
forthcoming.

The two essential elements for increased economic output are rising output per
hour of work and a growing population. Technology innovations and improved
worker skill-sets have caused productivity to rise handsomely over the last
several years. Population, including immigration, unfortunately is advancing by
less than one-half of one percent annually. The most efficient way to achieve
rising living standards for generations to come and to increase worker bench
strength is to overhaul our faltering public education system. Attracting
skill-bearing foreign neighbors to our shores will also help.

The Institutional Investors Capital Appreciation Fund seeks to capitalize on our
nation's economic superiority and rising share of world output by maintaining an
investment philosophy of seeking to create shareholder value over time and an
investment discipline of investing only in companies with strong balance sheets
that are believed to have the capability of generating rising earnings and cash-
flow.

Sincerely,

DOHERTY SIGNATURE
Harry P. Doherty
President

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INSTITUTIONAL INVESTORS CAPITAL
APPRECIATION FUND, INC.
PERFORMANCE SUMMARY

AVERAGE ANNUAL TOTAL RETURN
PERIODS ENDING DECEMBER 31, 1999(1)

<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
<S> <C> <C> <C>
INSTITUTIONAL INVESTORS CAPITAL
APPRECIATION FUND.............. 6.51% 21.65% 14.21%
Standard & Poor's 500
Composite Stock Price
Index (S&P 500)........ 21.04 28.56 18.21
Dow Jones Industrial
Average (DJIA)......... 27.21 27.03 18.35
Lipper Large
Capitalization Value
Funds Average.......... 11.23 22.56 15.06
</TABLE>

(1) 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 S&P 500, DJIA and Lipper Large
Capitalization Value Funds Average are from Lipper, Inc. The S&P 500 and
DJIA do not include a reduction in total return for expenses.

The following graph shows that an investment of $20,000 in the Fund on December
31, 1989 would have been worth $75,495 on December 31, 1999, assuming all
dividends and distributions had been reinvested. A similar investment in the S&P
500, over the same period, would have grown to $106,437.

CAPITAL APPRECIATION FUND, INC.

CUMULATIVE TOTAL RETURN

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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INVESTMENT RESULTS, OUTLOOK AND STRATEGIES

INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.

The Institutional Investors Capital Appreciation Fund's net asset value per
share on December 31, 1999 was $186.39 versus $195.75 on December 31, 1998.
Shareholders received per share distributions from dividend income of $1.0590,
short-term capital gains of $0.5821 and long-term capital gains of $19.8875
during the year. The Fund's total return for the one-year period ending December
31, 1999 was 6.51%. For comparison purposes, the one-year total return as of
December 31, 1999 for the Lipper Large Capitalization Value Funds Average(1) was
11.23%. Total return assumes the reinvestment of all dividends and capital gains
and the deduction of all applicable fees and expenses.

During the 8-year period beginning December 31, 1991 and ending December 31,
1999, coinciding with the tenure of the current portfolio management team, the
Institutional Investors Capital Appreciation Fund has provided a cumulative
total return of 250.99%. This compares favorably to the 8-year cumulative return
of 209.59% for the Lipper Growth & Income Funds Average(1) (1991-1998) / Lipper
Large Capitalization Value Funds Average (1999). The Fund's average annual total
return for the 8-year period ending December 31, 1999 was 16.99% versus 15.17%
for the Lipper Growth & Income / Large Capitalization Value Funds Average.

Our portfolio companies continued to deliver consistent earnings growth
throughout 1999, nearly identical to their fundamental performance in 1998 or
approximately 13%-14% on average. However, their collective stock price
performances did not accurately reflect this underlying growth in either year.
During 1998, the Fund gained over 30% compared to less than 10% in 1999. This
anomaly can be explained by Benjamin Graham's famous quote, "In the short-term,
the stock market is a voting machine, in the long-term it is a weighing
machine."

Investors' appetite for the type of companies owned by the Institutional
Investors Capital Appreciation Fund changed significantly from 1998 to 1999. In
1998, the market was suffering from the "Asian Contagion" and investors favored
companies that were likely to continue to deliver steady earnings growth through
various economic environments. Companies of this type are well represented in
the Fund. By early 1999, the memory of the "Asian Contagion" had all but
evaporated and Internet euphoria engrossed the investor community. The prospect
of rising inflation also fueled a majority of the cyclical companies this past
year. These two sectors of the market are not represented in the Institutional
Investors Capital Appreciation Fund due to the lack of earnings visibility and
high valuations in the technology sector and the volatility of earnings in the
cyclical sector.

During 1999, we continued our focus on large capitalization issues with strong
fundamentals available at reasonable prices with the additions of Cintas
Corporation, Microsoft Corporation and William Wrigley Jr. Company. We
eliminated a number of securities whose market prices reflected their full
potential in our opinion or whose fundamentals changed so that continued
ownership by the Fund was not warranted. These companies included Electronic
Data Systems Corporation, Genuine Parts Company, Hewlett-Packard Company, Nike
Inc., Philip Morris Companies Inc. and Wendy's International, Inc.(2)

We prefer to maintain our focus on those companies that can deliver steady
earnings growth over time and that can be purchased at reasonable prices. We are
confident that over the long-term the stock market will appropriately value the
earnings streams of our portfolio companies. We do not believe it is in
shareholders' best interest for the portfolio management team to try to jump
from sector to sector attempting to profit from the latest trend.

We do not view the ownership of a stock certificate as a slip of paper to be
sold to the next highest bidder, but as a partial ownership position in an
ongoing business. The Institutional Investors Capital Appreciation Fund's
portfolio turnover is significantly lower than that of other mutual funds. Our
average holding period is between 3 and 10 years, a number we would like to see
increase over time. In addition to reducing taxable distributions to
shareholders, it is a testament to our

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commitment to becoming long-term partners with our portfolio companies. From
time to time, some of our companies may stumble, but provided that the long-term
fundamental outlook remains intact, we may use that time as an opportunity to
increase our ownership position. However, if the long-term fundamental outlook
deteriorates for any of our companies, we will seek to reinvest our capital
elsewhere.

During the past 46 years, the Institutional Investors Capital Appreciation Fund
has experienced a wide variety of economic environments and stock market cycles.
The Fund's investment philosophy of purchasing high quality companies at
reasonable prices has persevered throughout this extended period. We are
confident that adherence to our investment principles will provide us with
continued success as we begin the next millennium.

Footnote 1: Lipper, Inc. reorganized its fund classifications during 1999. The
Growth & Income category, of which the Institutional Investors Capital
Appreciation Fund was a member, no longer exists. The Fund is now a member of
the Large Capitalization Value category.

Footnote 2: The Fund's portfolio composition is subject to change.

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INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1999
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COMMON STOCK--95.5%:

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------ ------
<C> <S> <C>
ADVERTISING-4.8%
95,000 Interpublic Group of Cos., Inc. .... $ 5,480,313
BEVERAGES--NON-ALCOHOLIC-3.8%
75,000 Coca-Cola Co. ...................... 4,368,750
CHEMICALS--SPECIALTY-3.0%
90,000 International Flavors &
Fragrances, Inc. ................. 3,397,500
COMMERCIAL SERVICES-3.0%
65,000 Cintas Corp. ....................... 3,453,125
COMPUTER SOFTWARE & SERVICES-9.8%
100,000 Automatic Data Processing, Inc. .... 5,387,500
50,000 Microsoft Corp.*.................... 5,837,499
------------
11,224,999
DISTRIBUTOR--CONSUMER PRODUCTS-4.1%
120,000 Sysco Corp. ........................ 4,747,500
ELECTRICAL EQUIPMENT-4.6%
67,500 Emerson Electric Co. ............... 3,872,813
50,000 Hubbell, Inc. ...................... 1,362,500
------------
5,235,313
ELECTRONICS & SEMICONDUCTORS-4.3%
60,000 Intel Corp. ........................ 4,938,750
ENTERTAINMENT-2.9%
115,000 Walt Disney Co. .................... 3,363,750
FINANCIAL SERVICES-6.7%
60,000 Fannie Mae.......................... 3,746,250
85,000 Freddie Mac......................... 4,000,312
------------
7,746,562
FOOD PROCESSING-3.6%
50,000 Wm. Wrigley Jr., Co. ............... 4,146,875
</TABLE>

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------ ------
<C> <S> <C>
FOODS-3.0%
90,000 Campbell Soup Co. .................. $ 3,481,875
HEALTH CARE--DIVERSIFIED-3.7%
46,000 Johnson & Johnson................... 4,283,750
HEALTH CARE--DRUGS-6.2%
90,000 Abbott Laboratories................. 3,268,125
58,000 Merck & Co., Inc. .................. 3,889,624
------------
7,157,749
HOUSEHOLD PRODUCTS-3.7%
85,000 Clorox Co. ......................... 4,281,875
OFFICE EQUIPMENT AND SUPPLIES-3.2%
75,000 Pitney Bowes, Inc. ................. 3,623,438
PERSONAL CARE-3.2%
90,000 Gillette Co. ....................... 3,706,875
PUBLISHING--NEWSPAPERS-4.1%
57,500 Gannett Co., Inc. .................. 4,689,844
RESTAURANTS-2.6%
75,000 McDonald's Corp. ................... 3,023,438
RETAIL--DRUG CHAINS-2.9%
115,000 Walgreen Co. ....................... 3,363,750
RETAIL--FOOD CHAINS-2.8%
100,000 Albertson's, Inc. .................. 3,225,000
RETAIL--GENERAL MERCHANDISE-5.1%
85,000 Wal-Mart Stores, Inc. .............. 5,875,625
RETAIL--SPECIALTY STORES-4.4%
110,000 Gap, Inc. .......................... 5,060,000
------------
Total Common Stock
(Cost $66,637,605)................ 109,876,656
</TABLE>

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See Accompanying Notes to Financial Statements.
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INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
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COMMERCIAL PAPER--4.4%:

<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- --------- ------
<C> <S> <C> <C>
FINANCIAL SERVICES-4.4%
$2,500,000 Ford Motor Credit Corp., 1.00%,
1/3/00......................... $ 2,500,000
2,511,000 Household Finance Corp., 4.00%,
1/3/00......................... 2,511,000
------------
Total Commercial Paper
(Cost $5,011,000).............. 5,011,000
------------
Total Investments
(Cost
$71,648,605)(a)........ 99.9% 114,887,656
Other assets in excess of
liabilities............ 0.1% 78,865
------ ------------
Total Net Assets......... 100.00% $114,966,521
====== ============
</TABLE>

(a) Aggregate cost for Federal income tax purposes is the same as for financial
reporting purposes. At December 31, 1999, the net unrealized appreciation
for tax purposes for all securities of $43,239,051 consists of gross
unrealized appreciation of $46,446,546 and gross unrealized depreciation of
$3,207,495.

* Non-income producing security.

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See Accompanying Notes to Financial Statements.
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INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
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<TABLE>
<CAPTION>
DECEMBER 31, 1999
-----------------
<S> <C>
ASSETS:
Investment in securities, at value (Cost $71,648,605)....... $114,887,656
Dividends and interest receivable........................... 92,444
Prepaid expenses............................................ 58,844
------------
Total assets.............................................. 115,038,944
LIABILITIES:
Payable to custodian for overdraft.......................... 70,424
Accrued expenses payable.................................... 1,999
------------
Total liabilities......................................... 72,423
------------
NET ASSETS, applicable to 616,805 shares of $1.00 par value
stock,
2,000,000 shares authorized............................... $114,966,521
============
NET ASSETS:
Capital paid in............................................. $ 71,727,470
Net unrealized appreciation................................. 43,239,051
------------
NET ASSETS.................................................. $114,966,521
============
NET ASSET VALUE, offering and redemption price
per share ($114,966,521/616,805 shares)................... $ 186.39
============
</TABLE>

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See Accompanying Notes to Financial Statements.
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INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
STATEMENT OF OPERATIONS
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<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1999
------------
<S> <C>
INVESTMENT INCOME:
Dividends................................................. $ 1,438,820
Interest.................................................. 350,570
-----------
Total investment income................................ 1,789,390
EXPENSES:
Investment advisory....................................... 840,430
Administration............................................ 118,092
Directors'................................................ 72,257
Transfer agent............................................ 18,840
Legal..................................................... 36,381
Insurance................................................. 36,712
Audit..................................................... 11,930
Custodian................................................. 28,379
Miscellaneous............................................. 11,434
-----------
Total expenses......................................... 1,174,455
-----------
Net investment income.................................. 614,935
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gain........................................... 11,408,542
Net change in unrealized appreciation/depreciation.......... (4,761,342)
-----------
Net realized and unrealized gain............................ 6,647,200
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $ 7,262,135
===========
</TABLE>

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See Accompanying Notes to Financial Statements.
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INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
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<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1999 1998
------------ ------------
<S> <C> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income..................................... $ 614,935 $ 533,835
Net realized gain on investments.......................... 11,408,542 8,562,566
Net change in unrealized appreciation/depreciation on
investments............................................ (4,761,342) 18,296,017
------------ ------------
Net increase in net assets resulting from operations........ 7,262,135 27,392,418
Distributions to shareholders:
From net investment income................................ (614,935) (533,835)
In excess of net investment income........................ (2,557) (8,840)
From net realized gains on investments.................... (11,408,542) (8,562,566)
------------ ------------
Total distributions to shareholders......................... (12,026,034) (9,105,241)
Net increase from capital share transactions (See Note 3)... 613,191 3,343,182
------------ ------------
Total increase (decrease) in net assets................ (4,150,708) 21,630,359
NET ASSETS:
Beginning of year......................................... 119,117,229 97,486,870
------------ ------------
End of year............................................... $114,966,521 $119,117,229
============ ============
</TABLE>

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See Accompanying Notes to Financial Statements.
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INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
FINANCIAL HIGHLIGHTS
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Selected Data for Each Share of Capital Stock
Outstanding throughout Each Year

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of year............. $ 195.75 $ 164.68 $135.64 $121.75 $112.12

INCOME FROM OPERATIONS:
Net investment income........................ 1.05 0.93 1.10 1.09 1.20
Net realized and unrealized gain on
investments................................ 11.12 46.33 37.34 24.39 26.55
-------- -------- ------- ------- -------
Total from investment operations......... 12.17 47.26 38.44 25.48 27.75
-------- -------- ------- ------- -------

DISTRIBUTIONS:
From net investment income................... (1.06) (0.93) (1.09) (1.09) (1.20)
In excess of net investment income........... -- (0.01) -- -- (0.03)
From net realized gains on investments....... (20.47) (15.25) (8.31) (10.50) (16.89)
-------- -------- ------- ------- -------
Total distributions...................... (21.53) (16.19) (9.40) (11.59) (18.12)
-------- -------- ------- ------- -------
NET ASSET VALUE, end of year................... $ 186.39 $ 195.75 $164.68 $135.64 $121.75
======== ======== ======= ======= =======
Total return................................... 6.51% 28.85% 28.64% 20.82% 24.90%
Ratio of net expenses to average net assets.... 1.00% 1.07% 1.16% 1.28% 1.39%
Ratio of net investment income to average net
assets....................................... 0.52% 0.51% 0.71% 0.82% 0.94%
Ratio of expenses to average net assets (1).... 1.00% 1.07% 1.16% 1.29% 1.43%
Portfolio turnover rate........................ 20% 22% 27% 48% 85%
NET ASSETS, end of year (000's)................ $114,967 $119,117 $97,487 $70,149 $55,234
</TABLE>

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(1) During certain periods, certain fees were waived. If such fee waivers had
not occurred, the ratio would have been as indicated.

See Accompanying Notes to Financial Statements.
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INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999

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 Fund was incorporated
under the laws of the State of New York on October 29, 1952. 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 Valuation--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--Dividends to Shareholders--Dividends from net investment income are declared
and paid quarterly. Net short-term and long-term capital gains, if any, are
declared and paid annually.

Distributions from net investment income and from net realized capital gains are
determined in accordance with Federal income tax regulations, which may differ
from generally accepted accounting principles. These "book/tax" differences are
either considered temporary or permanent in nature. To the extent these
differences are permanent in nature (i.e. reclass of market discounts,
gain/loss, paydowns and distributions) such amounts are reclassified within the
composition of net assets based on their Federal tax-basis treatment; temporary
differences do not require reclassification. Distributions to shareholders which
exceed net investment income and net realized capital gains for financial
reporting purposes but not for tax purposes are reported as distributions in
excess of net investment income or net realized gains. To the extent such
distributions exceed net investment income and net realized gains for tax
purposes, they are reported as distributions of capital.

D--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.

E--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
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INSTITUTIONAL INVESTORS CAPITAL APPRECIATION FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999

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 year ended December 31, 1999.

Shay Financial Services, Inc. (the "Distributor") is the distributor for the
Fund. The Distributor is also a wholly-owned subsidiary of SISI. The Distributor
receives no compensation for its distribution services.

Effective August 1, 1999, administration services to the Fund changed from PFPC
Inc. to BISYS Fund Services Ohio, Inc. (Administrator, Transfer Agent) (BISYS,
Ohio). BISYS, Ohio is a subsidiary of The BISYS Group, Inc. As compensation for
its administrative services, the Fund pays the administrator a fee computed at
an annual rate of 0.10% on the first $200,000,000 of the Fund's average daily
net 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).

Effective September 13, 1999, transfer agency services to the Fund changed from
PFPC Inc. to BISYS, Ohio. As compensation for its services as transfer agent,
the Fund pays the transfer agent a minimum monthly fee of $1,500 (exclusive of
out-of-pocket expenses).

NOTE 3--CAPITAL STOCK

At December 31, 1999, there were 2,000,000 shares of $1.00 par value capital
stock authorized. Transactions in capital stock for the years ended December 31,
1999 and 1998, respectively, were as follows:

<TABLE>
<CAPTION>
SHARES AMOUNT
------------------ ----------------------------
1999 1998 1999 1998
------- ------- ------------ ------------
<S> <C> <C> <C> <C>
Shares sold.......................................... 39,953 57,835 $ 7,927,605 $ 10,620,797
Shares issued in reinvestment of dividends........... 61,102 43,487 11,141,362 8,418,691
------- ------- ------------ ------------
101,055 101,322 19,068,967 19,039,488
Shares redeemed...................................... (92,781) (84,761) (18,455,776) (15,696,306)
------- ------- ------------ ------------
Net increase......................................... 8,274 16,561 $ 613,191 $ 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 year ended December 31, 1999, were $22,439,119
and $31,485,944, respectively.

NOTE 5--FEDERAL INCOME TAX INFORMATION (UNAUDITED)

During the year ended December 31, 1999, the Fund declared long-term capital
gain (20%) distributions of $11,084,104. For the taxable year ended December 31,
1999, 100% of income dividends paid by the Fund qualify for the dividends
received deduction available to corporations.

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors
of Institutional Investors Capital Appreciation Fund, Inc.:

We have audited the accompanying statement of assets and liabilities of
Institutional Investors Capital Appreciation Fund, Inc. (a New York
corporation), including the schedule of portfolio investments, as of December
31, 1999, and the related statement of operations, statements of changes in net
assets, and financial highlights for the periods indicated thereon. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1999, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Institutional Investors Capital Appreciation Fund, Inc. as of December 31, 1999,
the results of its operations, the changes in its net assets, and its financial
highlights for the periods indicated thereon, in conformity with accounting
principles generally accepted in the United States.

Cincinnati, Ohio,
February 10, 2000

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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

JOSEPH L. MANCINO
Executive Vice President

RODGER D. SHAY
Vice President and
Assistant Secretary

JOHN J. MCCABE
Vice President

STEVEN D. PIERCE
Treasurer

ALAINA V. METZ
Assistant Secretary

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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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, TRANSFER AGENT,
REGISTRAR AND DIVIDEND PAYING AGENT
BISYS Fund Services Ohio, Inc.
3435 Stelzer Road
Columbus, Ohio 43219

CUSTODIAN
The Bank of New York
100 Church Street
New York, New York 10286

LEGAL COUNSEL
Hughes Hubbard & Reed LLP
One Battery Park Plaza
New York, New York 10004

INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP
425 Walnut Street
Cincinnati, Ohio 45202

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