-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K7vun7xNscavN8sa/hYzHaHwzeroVdKSsMdhlX3STiP3bTSt04Y2NxqyVkKilhRT 8tgsuapLvhRpDdiJT1WtCA== 0000898531-97-000023.txt : 19970225 0000898531-97-000023.hdr.sgml : 19970225 ACCESSION NUMBER: 0000898531-97-000023 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970206 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIDUCIARY CAPITAL GROWTH FUND INC CENTRAL INDEX KEY: 0000354631 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 391393970 STATE OF INCORPORATION: MI FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30B-2 SEC ACT: 1940 Act SEC FILE NUMBER: 811-03235 FILM NUMBER: 97519358 BUSINESS ADDRESS: STREET 1: 225 EAST MASON ST 8TH FL CITY: MILAUKEE STATE: WI ZIP: 53202 BUSINESS PHONE: 4142264556 MAIL ADDRESS: STREET 1: 225 EAST MASON STREET CITY: MILWAUKEE STATE: WI ZIP: 53202 FORMER COMPANY: FORMER CONFORMED NAME: FIDUCIARY GROWTH FUND INC DATE OF NAME CHANGE: 19820208 N-30B-2 1 QUARTERLY REPORT December 31, 1996 Fiduciary Capital Growth Fund, Inc. A NO-LOAD MUTUAL FUND Fiduciary Capital Growth Fund, Inc. January 31, 1997 Dear Fellow Shareholder: Records are made to be broken, and 1996 produced a slew of new records. In addition to the record levels reached by virtually all market indices, the Dow Jones Industrials were up for the sixth straight year, a first in the 100 year history of the index. This 6-year advance for the Dow is now the third largest ever, exceeded only by the 1923 to 1929, and the 1949 to 1956 bull markets. While not keeping up with the Dow's torrid pace, most of the broader market indices had well above average years. The S&P 500, most investors' proxy for the stock market, rose 23.2% for the year while the Russell 2000, a good measure of the medium-size and smaller companies, was up 16.5%. Fiduciary Capital Growth Fund rose 17.1% for the year. Some new records were of the "market valuation" variety. Price-to-book ratio of 4.7 times and dividend yield of 2.1% are a record high and low, respectively, for the Dow, and the stock market's total value exceeds 100% of GDP for the first time in history (compared to 33% of GDP in 1982). Nearly $5 trillion of wealth has been created since the market's lows in 1990. Cash flows into equity mutual funds have continued to mushroom, reaching $210 billion through November, dwarfing the previous full year record of $130 billion set in 1993. Estimated new stock issuances totaled a record $148 billion, an increase of 55% over 1995. ECONOMY The backdrop for this record shattering stock market has been an economy which many argue is perfect for equity investing -- the "nirvana economy" -- moderate growth, low inflation and stable interest rates. While growth during this long recovery has not been stellar, its moderate pace has avoided past boom-bust cycles. Consensus for 1997 appears to be more of the same, and at this juncture it is difficult to pinpoint anything that may upset the apple cart. Some market nervousness has been precipitated by occasional signs that the economy may be too strong, engendering inflation concerns and bond market weakness. In our view, the greater risk may be an economy that is too weak, and which could gradually slip into a recession. Job growth has been strong over the past year, but recent increases in initial un-employment claims suggest some softening in the labor market. To a point this could be a positive, relieving some labor cost pressures, but if the weakness persists the implications are clearly negative as far as growth is concerned. The consumer has been on a borrowing binge which has taken consumer debt to record levels relative to disposable income. Despite this, the economic expansion has been subpar. As the borrowing slows, the moderate pace of economic expansion may slow further. The rate of increase in consumer borrowing has had a strong correlation with the growth in corporate earnings in the past (Chart 1), and the rate of increase in consumer borrowing is slowing. CHART 1 S&P 500 EARNINGS PER SHARE CONSUMER INSTALLMENT CREDIT Dec 59 17.301 15.7498 Mar 60 9.003 13.6983 Jun 60 -4.118 13.0031 Sep 60 -4.665 10.528 Dec 60 -3.54 7.2108 Mar 61 -8.85 6.2899 Jun 61 -7.055 3.1624 Sep 61 -6.728 2.7596 Dec 61 -2.446 3.7128 Mar 62 9.061 4.4241 Jun 62 14.521 7.9927 Sep 62 15.738 9.0944 Dec 62 15.047 9.518 Mar 63 10.089 11.0093 Jun 63 10.663 10.3865 Sep 63 12.181 11.552 Dec 63 9.537 12.4132 Mar 64 12.666 13.0981 Jun 64 12.76 13.2624 Sep 64 12.879 13.0999 Dec 64 13.184 12.2769 Mar 65 11.962 12.1655 Jun 65 11.778 12.7727 Sep 65 11.409 12.15 Dec 65 14.066 11.645 Mar 66 14.103 10.6815 Jun 66 12.81 8.6634 Sep 66 10.643 6.951 Dec 66 6.936 6.107 Mar 67 2.06 4.2786 Jun 67 -2.381 3.8852 Sep 67 -3.811 4.5202 Dec 67 -3.964 4.9112 Mar 68 -0.183 5.8265 Jun 68 4.503 7.056 Sep 68 6.792 8.2235 Dec 68 8.068 9.8715 Mar 69 6.985 10.7989 Jun 69 4.847 10.9828 Sep 69 4.064 10.2265 Dec 69 0.347 8.2767 Mar 70 -3.265 6.3245 Jun 70 -5.479 4.6374 Sep 70 -8.998 2.459 Dec 70 -11.246 1.6294 Mar 71 -7.282 4.2994 Jun 71 -3.623 5.727 Sep 71 1.306 5.8805 Dec 71 11.111 8.3446 Mar 72 11.303 6.9392 Jun 72 12.218 8.1273 Sep 72 13.078 11.1264 Dec 72 12.632 11.8074 Mar 73 17.04 14.0994 Jun 73 21.106 14.2831 Sep 73 25.244 13.3766 Dec 73 27.103 12.8111 Mar 74 22.941 10.3065 Jun 74 20.885 8.5289 Sep 74 18.466 7.2815 Dec 74 8.946 4.6314 Mar 75 1.077 3.1806 Jun 75 -8.924 1.2643 Sep 75 -14.819 1.6192 Dec 75 -10.461 4.4827 Mar 76 2.485 6.7454 Jun 76 16.206 9.4724 Sep 76 23.067 10.4574 Dec 76 24.497 11.8204 Mar 77 16.397 12.7089 Jun 77 12.649 14.8718 Sep 77 12.147 16.1043 Dec 77 9.889 15.9732 Mar 78 8.333 17.0415 Jun 78 7.774 18.0436 Sep 78 8.03 17.9803 Dec 78 13.223 17.7774 Mar 79 21.795 17.3069 Jun 79 24.488 15.1352 Sep 79 26.448 14.7302 Dec 79 20.519 12.6648 Mar 80 14.962 8.7857 Jun 80 6.867 3.0812 Sep 80 0.068 0.3341 Dec 80 -0.269 -0.1496 Mar 81 -4.644 0.5622 Jun 81 0.469 4.2348 Sep 81 4.235 5.6056 Dec 81 3.644 4.8601 Mar 82 1.578 4.437 Jun 82 -5.596 4.2025 Sep 82 -11.14 2.9023 Dec 82 -17.708 4.1687 Mar 83 -16.138 4.756 Jun 83 -11.15 6.3039 Sep 83 -1.917 9.5494 Dec 83 10.997 13.2743 Mar 84 22.866 16.7493 Jun 84 28.674 19.9499 Sep 84 24.511 20.0814 Dec 84 18.603 18.7208 Mar 85 7.405 19.297 Jun 85 -3.642 21.6281 Sep 85 -8.031 21.3365 Dec 85 -12.2 20.0184 Mar 86 -11.409 17.6291 Jun 86 -5.766 11.8087 Sep 86 -2.495 10.3327 Dec 86 -0.89 9.2717 Mar 87 3.994 6.3532 Jun 87 -1.971 5.4603 Sep 87 6.801 5.2872 Dec 87 20.856 5.1417 Mar 88 23.113 7.3748 Jun 88 50.277 8.0986 Sep 88 43.317 7.4927 Dec 88 35.714 8.6533 Mar 89 34.266 9.4035 Jun 89 16.382 8.8264 Sep 89 4.223 8.7545 Dec 89 -3.705 7.1354 Mar 90 -13.181 4.8588 Jun 90 -15.702 4.2289 Sep 90 -8.231 3.466 Dec 90 -6.69 1.8505 Mar 91 -3.692 0.679 Jun 91 -8.984 -0.3906 Sep 91 -18.031 -1.5968 Dec 91 -25.445 -1.9167 Mar 92 -22.377 -1.3011 Jun 92 -11.886 -1.5099 Sep 92 1.235 -0.553 Dec 92 19.987 0.4745 Mar 93 22.469 1.4954 Jun 93 13.372 3.1776 Sep 93 13.137 4.9327 Dec 93 14.667 7.5512 Mar 94 14.466 9.2805 Jun 94 30.367 11.9231 Sep 94 33.905 13.6955 Dec 94 39.79 14.493 Mar 95 43.329 15.2547 Jun 95 36.627 15.3382 Sep 95 28.723 15.3256 Dec 95 10.98 14.1593 Mar 96 4.578 13.6595 Jun 96 1.394 11.5476 Sep 96 2.331 9.4862 Sources: Standard & Poor's Corporation; Federal Reserve Board EARNINGS After a dramatic cyclical rise in reported earnings (23% per year) for the four years ending in 1995, earnings increased only about 8% in 1996 for the S&P 500. As a result of corporate write-offs and restructurings, reported earnings gave a rather distorted view of real growth, as cash flows grew at only half the rate of reported earnings. And corporate revenues grew at barely over 5% per year for the five years ended 1996. Factoring in modest economic growth and some slight pressure on the current historically high profit margins due to weaker productivity, little pricing power and lower capacity utilization, and with fewer opportunities remaining to boost earnings through restructurings, we would expect S&P earnings to be up only about 3-4% in 1997. As usual, adding up the Wall Street analysts' expectations of the earnings for the individual companies yields a much higher total, specifically an increase in S&P earnings of somewhere between 17% and 21%. In our view this increase is unrealistic, and the stage is being set for some significant downward revisions as we move through the year. VALUATION As past readers of these updates know, we are attracted to the simplicity of the price/earnings ratio as a measure of value. Over time, earnings must increase to support a continuing rise in stock prices. When prices rise faster than earnings, the ratio increases, eventually reaching levels which have historically represented peak valuations. At 21 times earnings, the S&P 500 P/E ratio is not at record levels, but it is higher than it has been about 95% of the time over the past 100 years (Chart 2), and it may well be understated, in view of the lengths to which corporate managements have gone to increase reported earnings. CHART 2 HISTORICAL PRICE/EARNINGS RATIO STANDARD & POOR'S 500 STOCK INDEX 1871 11.6 1872 11.6 1873 10.5 1874 10 1875 12.3 1876 14.5 1877 10.5 1878 10.8 1879 11 1880 10.6 1881 14.1 1882 13.8 1883 14.2 1884 15.4 1885 17 1886 16.3 1887 15.3 1888 20 1889 17.9 1890 18.5 1891 15 1892 15.2 1893 18.1 1894 27 1895 18.5 1896 20 1897 14.5 1898 14.5 1899 13.1 1900 12.9 1901 15.7 1902 13.4 1903 13.5 1904 14.5 1905 13.4 1906 12.6 1907 11.8 1908 13.5 1909 12.7 1910 12.9 1911 15.6 1912 13.4 1913 13.4 1914 15.6 1915 9.5 1916 6.2 1917 6.6 1918 7.6 1919 9.4 1920 9.9 1921 23.7 1922 12.1 1923 8.8 1924 9.7 1925 8.9 1926 10.88 1927 15.91 1928 17.64 1929 13.32 1930 15.81 1931 13.31 1932 16.8 1933 22.95 1934 19.39 1935 17.67 Mar 36 18.89 Jun 36 16.86 Sep 36 17.03 Dec 36 16.84 Mar 37 16.14 Jun 37 13.16 Sep 37 11.28 Dec 37 9.34 Mar 38 8.76 Jun 38 15.01 Sep 38 19.74 Dec 38 20.64 Mar 39 15.46 Jun 39 14.29 Sep 39 16.07 Dec 39 13.88 Mar 40 12.37 Jun 40 9.6 Sep 40 9.87 Dec 40 10.08 Mar 41 9.4 Jun 41 9.04 Sep 41 8.57 Dec 41 7.49 Mar 42 7.7 Jun 42 8.47 Sep 42 9.41 Dec 42 9.49 Mar 43 10.82 Jun 43 11.23 Sep 43 11.19 Dec 43 12.41 Mar 44 12.92 Jun 44 14.11 Sep 44 14.2 Dec 44 14.28 Mar 45 14.21 Jun 45 14.96 Sep 45 16.32 Dec 45 18.08 Mar 46 20.09 Jun 46 21.94 Sep 46 16.81 Dec 46 14.43 Mar 47 11.94 Jun 47 10.56 Sep 47 9.75 Dec 47 9.5 Mar 48 8.82 Jun 48 9 Sep 48 7.48 Dec 48 6.64 Mar 49 6.33 Jun 49 5.9 Sep 49 6.52 Dec 49 7.22 Mar 50 7.3 Jun 50 6.96 Sep 50 7.15 Dec 50 7.19 Mar 51 7.56 Jun 51 7.71 Sep 51 9.27 Dec 51 9.74 Mar 52 10.15 Jun 52 10.67 Sep 52 10.4 Dec 52 11.07 Mar 53 10.41 Jun 53 9.62 Sep 53 9.16 Dec 53 9.88 Mar 54 10.56 Jun 54 11.15 Sep 54 12.29 Dec 54 12.99 Mar 55 12.36 Jun 55 12.74 Sep 55 12.69 Dec 55 12.66 Mar 56 13.14 Jun 56 13.05 Sep 56 13.11 Dec 56 13.69 Mar 57 12.97 Jun 57 13.95 Sep 57 12.22 Dec 57 11.87 Mar 58 13.41 Jun 58 15.44 Sep 58 17.38 Dec 58 19.1 Mar 59 17.83 Jun 59 17.2 Sep 59 16.58 Dec 59 17.67 Mar 60 16.32 Jun 60 17.46 Sep 60 16.37 Dec 60 17.77 Mar 61 21.06 Jun 61 21.33 Sep 61 21.88 Dec 61 22.43 Mar 62 20.64 Jun 62 15.78 Sep 62 15.94 Dec 62 17.19 Mar 63 17.94 Jun 63 18.07 Sep 63 18.11 Dec 63 18.66 Mar 64 18.89 Jun 64 18.87 Sep 64 18.83 Dec 64 18.63 Mar 65 18.41 Jun 65 17.38 Sep 65 18.06 Dec 65 17.81 Mar 66 16.71 Jun 66 15.52 Sep 66 13.89 Dec 66 14.47 Mar 67 16.55 Jun 67 17.01 Sep 67 18.25 Dec 67 18.1 Mar 68 16.58 Jun 68 17.88 Sep 68 18.12 Dec 68 18.03 Mar 69 17.44 Jun 69 16.73 Sep 69 15.81 Dec 69 15.93 Mar 70 15.92 Jun 70 13.17 Sep 70 15.71 Dec 70 17.96 Mar 71 19.22 Jun 71 18.74 Sep 71 18.11 Dec 71 17.91 Mar 72 18.45 Jun 72 17.95 Sep 72 18 Dec 72 18.39 Mar 73 16.4 Jun 73 14.42 Sep 73 14.1 Dec 73 11.95 Mar 74 11.24 Jun 74 9.84 Sep 74 6.97 Dec 74 7.71 Mar 75 9.87 Jun 75 11.96 Sep 75 10.81 Dec 75 11.33 Mar 76 11.87 Jun 76 11.27 Sep 76 11.02 Dec 76 10.84 Mar 77 9.76 Jun 77 9.64 Sep 77 9.01 Dec 77 8.7 Mar 78 8.17 Jun 78 8.51 Sep 78 8.86 Dec 78 7.79 Mar 79 7.64 Jun 79 7.36 Sep 79 7.47 Dec 79 7.26 Mar 80 6.68 Jun 80 7.65 Sep 80 8.57 Dec 80 9.16 Mar 81 9.33 Jun 81 8.71 Sep 81 7.71 Dec 81 8.12 Mar 82 7.56 Jun 82 7.74 Sep 82 8.87 Dec 82 11.12 Mar 83 12.32 Jun 83 13.35 Sep 83 12.52 Dec 83 11.76 Mar 84 10.43 Jun 84 9.46 Sep 84 10.03 Dec 84 10.05 Mar 85 11.02 Jun 85 12.29 Sep 85 11.96 Dec 85 14.46 Mar 86 16.45 Jun 86 17.05 Sep 86 15.58 Dec 86 16.72 Mar 87 19.32 Jun 87 21.1 Sep 87 20.29 Dec 87 14.13 Mar 88 13.93 Jun 88 12.62 Sep 88 11.96 Dec 88 11.69 Mar 89 11.81 Jun 89 12.61 Sep 89 14.74 Dec 89 15.45 Mar 90 15.69 Jun 90 16.84 Sep 90 14.08 Dec 90 15.47 Mar 91 17.98 Jun 91 19.18 Sep 91 21.77 Dec 91 26.12 Mar 92 24.93 Jun 92 23.94 Sep 92 23.16 Dec 92 22.82 Mar 93 22.77 Jun 93 23.31 Sep 93 22.49 Dec 93 21.32 Mar 94 19.63 Jun 94 17.63 Sep 94 16.93 Dec 94 14.98 Mar 95 15.38 Jun 95 15.82 Sep 95 16.63 Dec 95 18.14 Mar 96 18.96 Jun 96 19.21 Sep 96 19.04 Dec 96 20.58 Last Observation 4th Quarter 1996 Sources: 1871-1925 Cowles Commission; 1926-1996 Standard & Poor's Corporation Copyright(c) 1997 Crandall, Pierce & Company Shaded areas represent recessionary periods. While the P/E ratio could go higher, we feel that stock price gains for the S&P from these levels will have to be supported by earnings increases. And as suggested above, we feel S&P earnings growth will slow significantly, creating a major drag for the S&P index. The record levels of other valuation measures were touched upon earlier. The significance of these levels is not so much that they offer any predictive value as to where the market, or individual stocks, are heading. Valuation levels could rise from here, or could certainly stay at these levels for an extended period of time if the economic backdrop remains sanguine. The importance for us relates to the risk/reward balance. The margin for error is much reduced, and the probability that any surprises are negative surprises increases as investors place higher valuations on stocks. Contrary to increasingly popular opinion, the business cycle has not been eliminated, nor do we feel that past valuation ranges have become irrelevant, i.e. we are not in a new valuation era. Despite a market that appears to be fully valued, however, we remind ourselves that this is a market of stocks, rather than a stock market, and that there are always opportunities to make attractive investments. MARKET The past two years have been good in an absolute sense for the broader market, but difficult in terms of relative performance as "investors" have chased fewer and fewer stocks which were performing well. Twenty stocks accounted for over half of the S&P's performance, and the bottom 450 companies' performance was virtually irrelevant as far as the index was concerned. Companies reporting disappointing results in this "slow growth" economy have generally seen a major sell-off in their stocks. The result has been a "two- tiered" market, with many companies selling at reasonable or cheap valuations, and a select group, which years ago may have been referred to as the "nifty fifty", selling at very high valuations. The pendulum will swing back the other way. As the S&P earnings growth slows, stops, or even declines, the superior fundamentals of our companies will attract renewed investor interest (Chart 3). And the low relative P/E ratio of our companies at about 14 times earnings will offer further attraction to investors. While we expect absolute returns for all sectors of the market to be more subdued in 1997, the relative returns in the mid- to small-cap value sector of the market should be much better. This has certainly been true over the long-term, and even though this period of relative under-performance has seemed interminably long (two years seems like a lifetime in this business), the rewards for investing in good growing companies at cheap prices have been, and will continue to be substantial. CHART 3 STATISTICAL COMPARISON FIDUCIARY S&P 500 MANAGEMENT Sales Growth (Projected 3 Year) 5.0% 13.0% Earnings Growth (Projected 3 Year) 5.0% 14.0% P/E Ratio 20.0x 14.0x P/E to Growth 4.0 1.0 Price/Book 3.8 2.6 Price/Sales 1.5 1.4 Debt/Cap 35.0% 21.0% Median Market Cap ($ billions) $5.4 $0.9 On December 27, 1996, a distribution of $0.179 from net long-term realized capital gains and $0.2196 from ordinary income which includes $0.2054 from net short-term realized capital gains was declared. The distributions were paid on December 30, 1996 to shareholders of record on December 26, 1996. Thank you for your continuing confidence in Fiduciary Capital Growth Fund, Inc. Sincerely, /s/ Ted D. Keller /s/ Donald S. Wilson Ted D. Kellner, C.F.A. Donald S. Wilson, C.F.A. President Vice President 225 E. Mason St. o Milwaukee, WI 53202 o 414-226-4555 FIDUCIARY CAPITAL GROWTH FUND, INC. STATEMENT OF NET ASSETS DECEMBER 31, 1996 (UNAUDITED) QUOTED MARKET SHARES OR PRINCIPAL AMOUNT VALUE (B) - ------ --------- COMMON STOCKS -- 92.5% (A) BANKS/SAVINGS & LOANS -- 4.9% 14,000 Banknorth Group, Inc. (Del.) $ 581,000 45,000 Marshall & Ilsley Corp. 1,558,125 ---------- 2,139,125 CONSUMER SERVICES -- 3.5% 2,100 Grey Advertising Inc. 525,000 48,000 Jostens, Inc. 1,014,000 ---------- 1,539,000 DISTRIBUTION -- 6.7% 17,000 Arrow Electronics, Inc. 909,500 19,000 Black Box Corp. 783,750 26,500 Fisher Scientific International Inc. 1,248,812 --------- 2,942,062 ELECTRONICS -- 5.3% 10,000 Fluke Corp. 446,250 28,700 General Instrument Corp. 620,637 31,600 Measurex Corp. 758,400 25,000 Methode Electronics, Inc. 506,250 --------- 2,331,537 ENERGY/ENERGY SERVICES -- 4.6% 40,000 Burlington Resources Inc. 2,015,000 HEALTH INDUSTRIES -- 8.9% 30,000 Dentsply International Inc. 1,425,000 48,800 Haemonetics Corp. 921,100 10,000 Patterson Dental Co. 282,500 38,000 Sybron International Corp. 1,254,000 --------- 3,882,600 INSURANCE -- 5.9% 48,000 Old Republic International Corp. 1,284,000 19,000 Progressive Corp. (Ohio) 1,280,125 --------- 2,564,125 LEISURE/RESTAURANTS -- 2.0% 128,500 Ryan's Family Steak Houses, Inc. 883,437 MEDIA/COMMUNICATION -- 3.4% 30,000 Comcast Corp. Special Cl A NV $ 534,390 40,000 Cox Communications, Inc. 925,000 --------- 1,459,390 MISCELLANEOUS-BUSINESS SERVICES -- 1.6% 18,000 G & K Services, Inc. 679,500 MISCELLANEOUS-FINANCE -- 6.7% 18,000 Amerin Corp. 463,500 14,500 Financial Security Assurance Holdings Ltd. 476,688 40,000 Federal National Mortgage Association 1,490,000 35,500 MoneyGram Payment Systems, Inc. 470,375 --------- 2,900,563 MISCELLANEOUS-TECHNOLOGY MANUFACTURING -- 6.0% 22,500 Corning Inc. 1,040,625 19,600 Raychem Corp. 1,570,450 --------- 2,611,075 PAPER/PACKAGING -- 4.0% 18,000 AptarGroup, Inc. 634,500 21,800 Liqui-Box Corp. 708,500 22,000 Wausau Paper Mills Co. 407,000 --------- 1,750,000 POLLUTION CONTROL -- 3.5% 58,000 Browning-Ferris Industries, Inc. 1,522,500 PRODUCER MANUFACTURING -- 15.6% 8,000 Bandag, Inc. Class A 366,000 30,000 Belden Inc. 1,110,000 27,000 Cuno Inc. 401,625 68,000 Pall Corp. 1,734,000 57,000 Regal-Beloit Corp. 1,118,625 57,000 Watts Industries, Inc. 1,360,875 29,500 W. H. Brady Co. 726,438 --------- 6,817,563 RETAIL TRADE -- 8.3% 53,000 Casey's General Stores, Inc. 993,750 90,000 Family Dollar Stores, Inc. 1,833,750 30,000 Mac Frugal's Bargains o Close-outs Inc. 783,750 --------- 3,611,250 SOFTWARE/SERVICE -- 1.6% 17,600 SunGard Data Systems Inc. 695,200 ---------- Total common stocks 40,343,927 SHORT-TERM INVESTMENTS -- 6.2% (A) VARIABLE RATE DEMAND NOTES $ 684,921 American Family Financial Services 684,921 1,950,000 Johnson Controls, Inc. 1,950,000 60,000 Wisconsin Electric Power Company 60,000 ----------- Total variable rate demand notes 2,694,921 ----------- Total investments 43,038,848 Cash and receivables, less liabilities 1.3% (A) 584,714 ----------- NET ASSETS $43,623,562 ----------- ----------- Net Asset Value Per Share ($0.01 par value 10,000,000 shares authorized), offering and redemption price ($43,623,562 / 2,104,853 shares outstanding) $ 20.73 ----------- ----------- (a)Percentages for the various classifications relate to net assets. (b)Each security, excluding short-term investments, is valued at the last sale price reported by the principal security exchange on which the issue is traded, or if no sale is reported, the latest bid price. Securities which are traded over-the-counter are valued at the latest bid price. Short-term investments are valued at cost which approximates quoted market value. FIDUCIARY CAPITAL GROWTH FUND, INC. 225 East Mason Street Milwaukee, Wisconsin 53202 BOARD OF DIRECTORS BARRY K. ALLEN TED D. KELLNER THOMAS W. MOUNT DONALD S. WILSON INVESTMENT ADVISER AND ADMINISTRATOR FIDUCIARY MANAGEMENT, INC. 225 East Mason Street Milwaukee, Wisconsin 53202 CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FIRSTAR TRUST COMPANY 615 East Michigan Street Milwaukee, Wisconsin 53202 INDEPENDENT ACCOUNTANTS PRICE WATERHOUSE LLP 100 East Wisconsin Avenue Suite 1500 Milwaukee, Wisconsin 53202 LEGAL COUNSEL FOLEY & LARDNER 777 East Wisconsin Avenue Milwaukee, Wisconsin 53202 -----END PRIVACY-ENHANCED MESSAGE-----