UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549FORM 10-Q

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For The Quarterly Period Ended June 30, 2004
or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File #0-21606
InLand Capital Fund, L.P.(Exact name of registrant as specified in its charter)



|Delaware                                   | 36-3767977                             
|------------------------------------------ | ---------------------------------------
|(State of organization)                    | (I.R.S. Employer Identification Number)
|                                           |                                        
|2901 Butterfield Road, Oak Brook, Illinois | 60523                                  
|(Address of principal executive office)    | (Zip Code)                             

Registrant's telephone number, including area code:  630-218-8000



N/A                   
(Former name, former address and former fiscal
year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes X  No



Indicate by a checkmark whether the registrant is an accelerated filer (as defined in Securities Exchange Act Rule 12b-2)          __ Yes          X No

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INLAND CAPITAL FUND, L.P.
(a limited partnership)
Balance Sheets
June 30, 2004 and December 31, 2003
(unaudited)
Assets



|                                                                                                                                                                                  |   | 2004       | 2003      
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ---------- | ----------
|Current assets:                                                                                                                                                                   |   |            |           
|Cash and cash equivalents (Note 1)                                                                                                                                                | $ | 6,327,047  | 1,402,121 
|Accrued interest and other receivables (net of allowance for 
    doubtful accounts of $62,289 at June 30, 2004 and December 31,     2003) (Note 5)                               |   | 202,330    | 184,414   
|Current portion of mortgage loan receivable (net of allowance for   doubtful accounts of $135,000 at June 30, 2004 and December 31,   2003) (Note 5)                              |   | 33,925     | 872,872   
|Other current assets                                                                                                                                                              |   | 7,863      | 6,419     
|                                                                                                                                                                                  |   |            |           
|Total current assets                                                                                                                                                              |   | 6,571,165  | 2,465,826 
|                                                                                                                                                                                  |   |            |           
|Other assets                                                                                                                                                                      |   | 173,074    | 3,074     
|Investment properties and improvements (including acquisition fees paid   to Affiliates of $397,188 and $630,226 at June 30, 2004 and   December 31, 2003, respectively) (Note 3) |   | 8,598,598  | 15,440,821
|                                                                                                                                                                                  |   |            |           
|Total assets                                                                                                                                                                      | $ | 15,342,837 | 17,909,721

See accompanying notes to financial statements.

-2-

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INLAND CAPITAL FUND, L.P.
(a limited partnership)
Balance Sheets
(continued)
June 30, 2004 and December 31, 2003
(unaudited)
Liabilities and Partners' Capital





|                                                                                                                                                                                                   |   | 2004         | 2003        
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------ | ------------
|Current liabilities:                                                                                                                                                                               |   |              |             
|Accounts payable                                                                                                                                                                                   | $ | 358,577      | 3,877       
|Accrued real estate taxes                                                                                                                                                                          |   | 15,963       | 49,986      
|Due to Affiliates (Note 2)                                                                                                                                                                         |   | 23,718       | 23,813      
|Unearned income                                                                                                                                                                                    |   | 14,052       | 151,435     
|                                                                                                                                                                                                   |   |              |             
|Total current liabilities                                                                                                                                                                          |   | 412,310      | 229,111     
|                                                                                                                                                                                                   |   |              |             
|Deferred gain on sale (Note 5)                                                                                                                                                                     |   | 13,374       | 491,157     
|                                                                                                                                                                                                   |   |              |             
|Total liabilities                                                                                                                                                                                  |   | 425,684      | 720,268     
|                                                                                                                                                                                                   |   |              |             
|Partners' capital:                                                                                                                                                                                 |   |              |             
|General Partner:                                                                                                                                                                                   |   |              |             
|Capital contribution                                                                                                                                                                               |   | 500          | 500         
|Cumulative cash distributions                                                                                                                                                                      |   | (4,413,471)  | (1,243,802) 
|Cumulative net income                                                                                                                                                                              |   | 4,423,194    | 1,255,167   
|                                                                                                                                                                                                   |   |              |             
|                                                                                                                                                                                                   |   | 10,223       | 11,865      
|                                                                                                                                                                                                   |   |              |             
|Limited Partners:                                                                                                                                                                                  |   |              |             
|Units of $1,000. Authorized 60,000 Units, 32,337 outstanding at       June 30, 2004 and December 31, 2003, (net of offering costs of       $4,466,765, of which $3,488,574 was paid to Affiliates) |   | 27,876,265   | 27,876,265  
|Cumulative cash distributions                                                                                                                                                                      |   | (45,663,321) | (28,832,990)
|Cumulative net income                                                                                                                                                                              |   | 32,693,986   | 18,134,313  
|                                                                                                                                                                                                   |   |              |             
|                                                                                                                                                                                                   |   | 14,906,930   | 17,177,588  
|                                                                                                                                                                                                   |   |              |             
|Total Partners' capital                                                                                                                                                                            |   | 14,917,153   | 17,189,453  
|                                                                                                                                                                                                   |   |              |             
|Total liabilities and Partners' capital                                                                                                                                                            | $ | 15,342,837   | 17,909,721  

See accompanying notes to financial statements.

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INLAND CAPITAL FUND, L.P.
(a limited partnership)
Statements of Operations
For the three and six months ended June 30, 2004 and 2003
(unaudited)

|                                                                                     |   | Three months  | Three months  | Six months    | Six months   
|------------------------------------------------------------------------------------ | - | ------------- | ------------- | ------------- | -------------
|                                                                                     |   | ended         | ended         | ended         | ended        
|                                                                                     |   | June 30, 2004 | June 30, 2003 | June 30, 2004 | June 30, 2003
|Income:                                                                              |   |               |               |               |              
|Sale of investment property (Notes     1 and 3)                                      | $ | 154,495       | 1,324,103     | 24,352,523    | 1,324,103    
|Recognition of deferred gain on     sale of investments in land and     improvements |   | 434,277       | 26,401        | 477,783       | 81,198       
|Rental income (Note 4)                                                               |   | 21,519        | 43,478        | 43,138        | 86,477       
|Interest income                                                                      |   | 23,227        | 24,866        | 61,146        | 48,764       
|Other income                                                                         |   | 1,250         | 5,050         | 2,950         | 7,300        
|                                                                                     |   |               |               |               |              
|                                                                                     |   | 634,768       | 1,423,898     | 24,937,540    | 1,547,842    
|                                                                                     |   |               |               |               |              
|Expenses:                                                                            |   |               |               |               |              
|Cost of investment property sold                                                     |   | 93,007        | 1,202,815     | 6,938,445     | 1,202,815    
|Professional services to Affiliates                                                  |   | 7,923         | 5,012         | 17,285        | 13,114       
|Professional services to non-    affiliates                                          |   | 3,813         | -             | 35,783        | 28,675       
|General and administrative     expenses to Affiliates                                |   | 5,622         | 5,173         | 11,862        | 13,205       
|General and administrative     expenses to non-affiliates                            |   | 11,073        | 5,366         | 169,531       | 50,523       
|Marketing expenses to Affiliates                                                     |   | 2,993         | 2,359         | 6,253         | 5,650        
|Marketing expenses to non-    affiliates                                             |   | 9,685         | 10,950        | 24,993        | 21,938       
|Land operating expenses to     Affiliates                                            |   | 3,872         | 9,236         | 9,972         | 18,472       
|Land operating expenses to non-    affiliates                                        |   | (12,500)      | 15,021        | (4,284)       | 49,240       
|                                                                                     |   |               |               |               |              
|                                                                                     |   | 125,488       | 1,255,932     | 7,209,840     | 1,403,632    
|                                                                                     |   |               |               |               |              
|Net income                                                                           | $ | 509,280       | 167,966       | 17,727,700    | 144,210      
|                                                                                     |   |               |               |               |              





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INLAND CAPITAL FUND, L.P.
(a limited partnership)
Statements of Operations
(continued)
For the three and six months ended June 30, 2004 and 2003
(unaudited)

|                                                                                                                                                                               |   | Three months  | Three months  | Six months    | Six months   
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | - | ------------- | ------------- | ------------- | -------------
|                                                                                                                                                                               |   | ended         | ended         | ended         | ended        
|                                                                                                                                                                               |   | June 30, 2004 | June 30, 2003 | June 30, 2004 | June 30, 2003
|                                                                                                                                                                               |   |               |               |               |              
|Net income (loss) allocated to:                                                                                                                                                |   |               |               |               |              
|General Partner                                                                                                                                                                | $ | (1,065)       | 203           | 3,168,027     | (583)        
|Limited Partners                                                                                                                                                               |   | 510,345       | 167,763       | 14,559,673    | 144,793      
|                                                                                                                                                                               |   |               |               |               |              
|Net income                                                                                                                                                                     | $ | 509,280       | 167,966       | 17,727,700    | 144,210      
|                                                                                                                                                                               |   |               |               |               |              
|Net income (loss) allocated to the   one General Partner Unit                                                                                                                  | $ | (1,065)       | 203           | 3,168,027     | (583)        
|                                                                                                                                                                               |   |               |               |               |              
|Net income per Unit allocated to   Limited Partners per weighted   average Limited Partnership   Units of 32,337 for the three and   six months ended June 30, 2004   and 2003 | $ | 15.78         | 5.19          | 450.25        | 4.48         
|                                                                                                                                                                               |   |               |               |               |              



See accompanying notes to financial statements.

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INLAND CAPITAL FUND, L.P.
(a limited partnership)
Statements of Cash Flows
For the six months ended June 30, 2004 and 2003
(unaudited)

|                                                                                     |   | 2004         | 2003     
|------------------------------------------------------------------------------------ | - | ------------ | ---------
|Cash flows from operating activities:                                                |   |              |          
|Net income                                                                           | $ | 17,727,700   | 144,210  
|Adjustments to reconcile net income to net cash used in operating
       activities: |   |              |          
|Gain on sale of investment properties                                                |   | (17,414,078) | (121,288)
|Recognition of deferred gain                                                         |   | (477,783)    | (81,198) 
|Changes in assets and liabilities:                                                   |   |              |          
|Accrued interest and other receivables                                               |   | (17,916)     | (39,261) 
|Other current assets                                                                 |   | (1,444)      | (5,280)  
|Accounts payable                                                                     |   | 354,700      | (11,811) 
|Accrued real estate taxes                                                            |   | (34,023)     | 11,130   
|Due to Affiliates                                                                    |   | (95)         | (6,931)  
|Unearned income                                                                      |   | (137,383)    | (122)    
|Other assets                                                                         |   | (170,000)    | -        
|                                                                                     |   |              |          
|Net cash used in operating activities                                                |   | (170,322)    | (110,551)
|                                                                                     |   |              |          
|Cash flows from investing activities:                                                |   |              |          
|Additions to investment properties                                                   |   | (96,222)     | (952)    
|Principal payments received                                                          |   | 838,947      | 145,226  
|Proceeds from sale of investment properties                                          |   | 24,352,523   | 1,324,103
|                                                                                     |   |              |          
|Net cash provided by investing activities                                            |   | 25,095,248   | 1,468,377
|                                                                                     |   |              |          
|Cash flows from financing activities:                                                |   |              |          
|Distributions                                                                        |   | (20,000,000) | -        
|                                                                                     |   |              |          
|Net cash (used in) financing activities                                              |   | (20,000,000) | -        
|                                                                                     |   |              |          
|Net increase in cash and cash equivalents                                            |   | 4,924,926    | 1,357,826
|                                                                                     |   |              |          
|Cash and cash equivalents at beginning of period                                     |   | 1,402,121    | 1,284,069
|                                                                                     |   |              |          
|Cash and cash equivalents at end of period                                           | $ | 6,327,047    | 2,641,895
|                                                                                     |   |              |          





See accompanying notes to financial statements.

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INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements
June 30, 2004

(unaudited)

Readers of this Quarterly Report should refer to the Partnership's audited financial statements for the fiscal year ended December 31, 2003, which are included in the Partnership's 2003 Annual Report, as certain footnote disclosures which would substantially duplicate those contained in such audited financial statements have been omitted from this Report.

(1)  Organization and Basis of Accounting

InLand Capital Fund, L.P. (the "Partnership") was organized on June 21, 1991 by the filing of a Certificate of Limited Partnership under the Revised Uniform Limited Partnership Act of the State of Delaware.  On December 13, 1991, the Partnership commenced an offering of 60,000 limited partnership units or Units pursuant to a Registration under the Securities Act of 1933. The Amended and Restated Agreement of Limited Partnership  (the  "Partnership Agreement") provides for Inland Real Estate Investment Corporation to be the General Partner.   The offering terminated on August 23, 1993, with total sales of 32,399.28 Units, at $1,000 per Unit, resulting in $32,399,282 in gross offering proceeds, not including the General Partner's capital contribution of  $500.  All of the holders of these Units have been admitted to the Partnership. The Limited Partners of the Partnership will share in their portion of benefits of ownership of the Partnership's real property investments according to the number of Units held. As of June 30, 2004, the Partnership has repurchased and canceled a total of 62 Units for $56,253 from various Limited Partners through the Unit Repurchase Program.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

In the opinion of management, the financial statements contain all the adjustments necessary to present fairly the financial position and results of operations for the period presented herein.  Results of interim periods are not necessarily indicative of results to be expected for the year.

The Partnership uses the area method of allocation, which approximates the relative sales method of allocation, whereby a per acre price is used as the standard allocation method for land purchases and sales. The total cost of the parcel is divided by the total number of acres to arrive at a per acre price.

In January 2003, FASB issued Interpretation No. 46 ("FIN 46") "Consolidation of Variable Interest Entities and Interpretation of Accounting Research Bulletin (ARB) No. 51", which was revised in December 2003.  The primary objectives of FIN No. 46 are to provide guidance on the identification of entities for which control is achieved through means other than through voting rights (Variable Interest Entities) and how to determine when and which business enterprise should consolidate the Variable Interest Entity (the Primary Beneficiary).  The effective date for the Partnership is March 31, 2004. FIN 46 does not have a material impact on the Partnership's financial condition and results of operations.

-7-

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INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
June 30, 2004
(unaudited)

(2)  Transactions with Affiliates

The General Partner and its affiliates are entitled to reimbursement for salaries and expenses of employees of the General Partner and its affiliates relating to the administration of the Partnership.  Such costs are included in professional services and general and administrative expenses to affiliates, of which $14,018 and $5,183 was unpaid as of June 30, 2004 and December 31, 2003, respectively.

The General Partner is entitled to receive Asset Management Fees equal to one-quarter of 1% of the original cost to the Partnership of undeveloped land annually, limited to a cumulative total over the life of the Partnership of 2% of the land's original cost to the Partnership.  Such fees of $9,972 and $18,472 have been incurred for the six months ended June 31, 2004 and 2003, respectively and are reported as land operating expenses to Affiliates on the statement of operations, all of which was paid as of June 30, 2004.

An affiliate of the General Partner performed sales marketing and advertising services for the Partnership and was reimbursed  (as set forth under terms of the Partnership Agreement) for direct costs. Such costs of $6,253 and $5,650 have been incurred and are included in marketing expenses to affiliates for the six months ended June 30, 2004 and 2003, respectively.

An affiliate of the General Partner performed property upgrades, rezoning, annexation and other activities to prepare the Partnership's land investments for sale and was reimbursed (as set forth under terms of the Partnership Agreement) for salaries and direct costs. For the six months ended June 30, 2004, the Partnership incurred $56,285 of such costs. The affiliate did not take a profit on any project. Such costs are included in investment properties of which $9,700 and $18,630 was unpaid at June 30, 2004 and December 31, 2003, respectively.

-8-

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INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements (continued)

June 30, 2004 (unaudited)

(3)  Investment Properties



|Initial Costs
|-------------
|Parcel       
|#            
|             
|1            
|             
|             
|2            
|             
|             
|             
|             
|             
|             
|             
|             
|3            
|             
|             
|4            
|             
|             
|             
|             
|             
|5            
|             
|             
|             
|6            
|             
|             
|             
|7            
|             
|             
|8            
|             
|9            
|             

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INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements (continued)

June 30, 2004 (unaudited)

(3)  Investment Properties (continued)



|Initial Costs
|-------------
|Parcel       
|#            
|             
|10           
|             
|             
|             
|             
|10A(a)       
|             
|             
|11           
|             
|             
|12           
|             
|             
|             
|13           
|             
|             
|             
|14           
|             
|             
|15           
|             
|             
|16           
|             
|             
|17           
|             
|18           
|             
|             
|             

-10-

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INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
June 30, 2004
(unaudited)

(3)  Investment Properties (continued)

1. Included in the purchase of Parcel 10 was a house and several outbuildings, located on approximately seven acres, which were sold on April 21, 1995.
2. Reconciliation of real estate owned:



|                         |   | June 30,    | December 31,
|------------------------ | - | ----------- | ------------
|                         |   | 2004        | 2003        
|                         |   |             |             
|Balance at January 1,    | $ | 15,440,821  | 18,283,928  
|Additions during period  |   | 96,222      | 412,195     
|Sales during period      |   | (6,938,445) | (3,255,302) 
|                         |   |             |             
|Balance at end of period | $ | 8,598,598   | 15,440,821  
|                         |   |             |             

(4)  Farm Rental Income

The Partnership has determined that all leases relating to the farm parcels are operating leases. Accordingly, rental income is reported when earned.

As of June 30, 2004, the Partnership had farm leases of generally one year in duration, for approximately 633 acres of the approximately 698 acres owned.

(5)  Mortgage Loans Receivable

Mortgage loans receivable are the result of sales of parcels, in whole or in part.  The Partnership has recorded a deferred gain on these sales.  The deferred gain will be recognized over the life of the related mortgage loan receivable as principal payments are received.

-11-



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INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
June 30, 2004
(unaudited)



|                                      |              |               | Principal Balance | Principal Balance | Accrued Interest Receivable | Deferred Gain
|------------------------------------- | ------------ | ------------- | ----------------- | ----------------- | --------------------------- | -------------
|Parcel                                | Maturity     | Interest Rate | 06/30/04          | 12/31/03          | 06/30/04                    | 06/30/04     
|                                      |              |               |                   |                   |                             |              
|1                                     | 12/31/04     | 7.50%         | $      7,790      | 846,737           | 200,896                     | -            
|                                      |              |               |                   |                   |                             |              
|12                                    | 03/31/04*    | 9.00%         | 161,135           | 161,135           | 62,289                      | 82,203       
|                                      |              |               |                   |                   |                             |              
|                                      |              |               | 168,925           | 1,007,872         | 263,185                     | 82,203       
|                                      |              |               |                   |                   |                             |              
|Less allowances for doubtful accounts | 135,000      | 135,000       | 62,289            | 68,829           
|                                      |              |               |                   |                  
|                                      | $     33,925 | 872,872       | 200,896           | 13,374           



*This loan will be extended.



The velocity of the developer's individual home sales at Parcel 12 was slower than was originally projected and consequently, the developer's carrying costs were higher.  As a result of the development's financial difficulties, the net sale proceeds available to the Partnership were lower than projected.  As of June 30, 2004 and December 31, 2003, the Partnership has recorded an allowance for doubtful accounts of $135,000 relating to the mortgage receivable, and $62,289 relating to accrued interest receivable, relating to the sale of Parcel 12.  A portion of the related deferred gain for Parcel 12 of $68,829 as of June 30, 2004 and December 31, 2003, has also been written off against bad debt expense.

The General Partner guaranteed the third party development loans owed by these limited liability companies.   In reviewing the developments' financial situation, our General Partner determined that it would be in its best interest to have an affiliate acquire the interests in the LLCs. The General Partner and its affiliates concluded that they could better control the continuing costs to complete these developments and would therefore have the best opportunity to limit their exposure under the guarantee agreements and possibly recover a portion of the amount owed. An affiliate of our General Partner contributed approximately $50,000 to acquire the interests in the LLCs. The affiliate of the General Partner will complete the development and sale of these projects. Our Limited Partners received distributions that equated to the invested capital allocated to each parcel (parcel capital) plus approximately a 6% return per annum on the parcel capital through the date of the distribution.

-12-

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Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations
Certain statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this quarterly report on Form 10-Q constitute "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995.  These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. These factors include, among other things the ability to obtain annexation and zoning approvals required to develop our properties; the approval of local governing bodies to develop our properties; successful lobbying of local "no growth" or limited development homeowner groups; adverse changes in real estate, financing and general economic or local conditions; eminent domain proceedings; changes in the environmental conditions or changes in the environmental positions of governmental bodies; and potential conflicts of interest between us and our affiliates, including our general partner.



We electronically file our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports with the Securities and Exchange Commission (SEC).  The public may read and copy any of the reports that are filed with the SEC at the SEC's Public Reference Room at 405 Fifth Street, NW, Washington, DC 20549.  The public may obtain information on the operation of the Public Reference room by calling the SEC at (800)-SEC-0330.  The SEC maintains an Internet site at (www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically.

Critical Accounting Policies

On December 12, 2001, the Securities and Exchange Commission issued Financial Reporting Release or FRR No. 60 "Cautionary Advice Regarding Disclosure About Critical Accounting Policies."  A critical accounting policy is one that would materially effect our operations or financial condition, and requires management to make estimates or judgements in certain circumstances. We believe that our most critical accounting policies relate to how we value our investment properties and mortgage loans receivable and revenue recognition.  These judgements often result from the need to make estimates about the effect of matters that are inherently uncertain.  The purpose of the FRR is to provide investors with an understanding of how management forms these policies.  Critical accounting policies discussed in this section are not to be confused with accounting principles and methods disclosed in accordance with accounting principles generally accepted in the United States of America  or GAAP.  GAAP requires information in financial statements about accounting principles, methods used and disclosures pertaining to significant estimates.  The following disclosure discusses judgements known to management pertaining to trends, events or uncertainties known which were taken into consideration upon the application of those policies and the likelihood that materially different amounts would be reported upon taking into consideration different conditions and assumptions.

Valuation of Investment Properties - On a quarterly basis, in accordance with Statement of Financial Accounting Standards No. 144, we conduct an impairment analysis to ensure that the carrying value of each property does not exceed its estimated fair value.  If this were to occur, we would be required to record an impairment loss equal to the excess of carrying value over fair value.

In determining the value of an investment property and whether the property is impaired, management considers several factors such as projected capital expenditures and sales prices. The aforementioned factors are considered by management in determining the value of any particular property.  The value of any particular property is sensitive to the actual results of any of these uncertain factors, either individually or taken as a whole.  Should the actual results differ from management's judgement, the valuation could be negatively or positively affected.

The valuation and possible subsequent impairment of investment properties is a significant estimate that can and does change based on management's continuous process of analyzing each property.

-13-

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Cost Allocation - We use the area method of cost allocation, which approximates the relative sales method of cost allocation, whereby a per acre price is used as the standard allocation method for land purchases and sales. The total cost of the parcel is divided by the total number of acres to arrive at a per acre price.

Valuation of Mortgage Loans Receivable - On a quarterly basis, we conduct an analysis to ensure that the carrying value of each mortgage loan receivable is recoverable from the borrower. If we determine that all or a portion of the receivable is not collectible, we would be required to record an allowance for doubtful accounts equal to the amount estimated to be uncollectible.

In determining the value of mortgage loans receivable, management considers projected sales proceeds available and expenses related to the property associated with the mortgage. Should the actual results differ from management's judgement, the valuation could be negatively or positively affected.

The valuation and possible subsequent allowance for doubtful accounts is a significant estimate that can and does change based on management's continuous process of analyzing each mortgage loan receivable.

Revenue Recognition - We recognize income from the sale of land parcels in accordance with Statement of Financial Accounting Standards No. 66, "Accounting for Sales of Real Estate".

Liquidity and Capital Resources
On December 13, 1991, we commenced an offering of 60,000 limited partnership units or units at $1,000 per unit, pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933. The offering terminated on August 23, 1993, after we had sold 32,399.28 units, at $1,000 per unit, resulting in $32,399,282 in gross offering proceeds, not including our general partner's capital contribution of $500. All of the holders of these units have been admitted to our partnership.  Our limited partners share in their portion of benefits of ownership of our real property investments according to the number of units held.

We used $25,945,989 of gross offering proceeds to purchase, on an all-cash basis, 18 parcels of land and one building. These investments include the payment of the purchase price, acquisition fees and acquisition costs of such properties.  One of the parcels was purchased during 1992, one during 1993, fifteen during 1994 and one during 1995. As of June 30, 2004, we have had multiple sales transactions through which we have disposed of a building and approximately 2,604 acres, or 79%, of the 3,302 acres originally owned. As of June 30, 2004, cumulative distributions to the limited partners have totaled $45,663,321 (which represents a return of all the original capital) and $4,413,471 to the general partner. Through June 30, 2004, we have used $5,634,142 of working capital for rezoning and other activities and such amount is included in investment properties.

Our capital needs and resources will vary depending upon a number of factors, including the extent to which we conduct rezoning and other activities relating to utility access, the installation of roads, subdivision and/or annexation of land to a municipality, changes in real estate taxes affecting our land, and the amount of revenue received from leasing. As of June 30, 2004, we own, in whole or in part, seven of our original parcels, the majority of which are leased to local farmers and are generating sufficient cash flow from farm leases to cover property taxes and insurance.

At June 30, 2004, we had cash and cash equivalents of $6,327,047, which is available to be used for our costs and liabilities, cash distributions to partners, and other activities with respect to some or all of our land parcels.

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During the six months ended June 30, 2004 we have received net sales proceeds of approximately $21,300,000 from the sales of Parcels 2, 10, 15 and 16.

We plan to enhance the value of our land through pre-development activities such as rezoning, annexation and land planning. We have already been successful in, or are in the process of, pre-development activity on a majority of our land investments.  Parcel 2, annexed to the village of McHenry and zoned for a business park, has two phases of improvements complete and sites are being marketed to potential buyers, of which 34 of the 167 lots were sold as of June 30, 2004. Parcel 4 was zoned for a variety of business uses and has improvements underway. Sites are being marketed to potential buyers, of which approximately 67 acres were sold in various transactions. Parcels 15 and 16 were annexed to the village of Huntley and zoned for residential and commercial development.  Parcels 15 and 16 were sold in 2004. Parcels 7 and 10 have been zoned for commercial use and are being marketed.



Transactions with Related Parties

Our general partner and its affiliates are entitled to reimbursement for salaries and expenses of employees of the general partner and its affiliates relating to our administration.  Such costs of $29,147 and $26,319 for the six months ended June 30, 2004 and June 30, 2003, respectively, are included in professional services and general and administrative expenses to affiliates, of which $14,018 and $5,183 was unpaid as of June 30, 2004 and  December 31, 2003, respectively.

Our general partner is entitled to receive asset management fees equal to one-quarter of 1% of the original cost  of our undeveloped parcels annually, limited to a cumulative total over our life of 2% of the parcels' original cost to us.  Such fees of $9,972 and $18,472 have been incurred for the six months ended June 30, 2004 and 2003, respectively, all of which was paid as of June 30, 2004.

An affiliate of our general partner performed sales marketing and advertising services for us and was reimbursed  for direct costs. Such costs of $6,253 and $5,650 have been incurred and are included in marketing expenses to affiliates for the six months ended June 30, 2004 and 2003, respectively.

An affiliate of the general partner performed property upgrades, rezoning, annexation and other activities to prepare our land investments for sale and was reimbursed for salaries and direct costs. For the six months ended June 30, 2004, the Partnership incurred $56,285 of such costs. The affiliate did not take a profit on any project. Such costs are included in investment properties, of which $9,700 and $18,630 was unpaid at June 30, 2004 and December 31, 2003, respectively.

Results of Operations

As of June 30, 2004, we owned seven parcels of land consisting of approximately 698 acres. Of the 698 acres owned, approximately 633 acres are tillable and leased to local farmers and are generating sufficient cash flow to cover property taxes, insurance and other miscellaneous property expenses.



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On January 11, 2002, we sold approximately 108 acres of Parcel 1 on an installment basis and recorded a deferred gain of $1,202,106.  As of June 30, 2004, we have received principal payments totaling $838,947 and recognized $477,783 of the deferred gain.  In addition, on April 16, 2001, we sold approximately 60 acres of Parcel 12 on an installment basis and recorded a deferred gain of $447,528. As of June 30, 2004, we have received principal payments totaling $713,865 and recognized $365,325 of the deferred gain. As of June 30, 2004 and December 31, 2003, we have recorded an allowance for doubtful accounts of $135,000 relating to this mortgage receivable and have reserved the related deferred gain of $68,829 against bad debt expense. The remaining deferred gain of $13,374 will be recognized as payments are received.

Rental income was $43,138 and $86,477 for the six months ended June 30, 2004 and 2003, respectively. The decrease is due to decreases in tillable acres as a result of land sales and pre-development activity on our land investments.  The decrease was partially offset by the annual increase in lease amounts from tenants.

Interest income was $61,146 and $48,764 for the six months ended June 30, 2004 and 2003, respectively. Interest income is primarily a result of approximately $35,900 of interest income earned on short term investments and approximately $25,200 of interest income earned on our mortgage loan receivable for the six months ended June 30, 2004, as compared to approximately $9,000 of interest income earned on short term investments and approximately $40,000 of interest income earned on our mortgage loan receivable for the six months ended June 30, 2003. The increase in interest income earned on short term investments is due to interest earned on sales proceeds invested prior to distribution to the limited partners.

Professional services to affiliates were $17,285 and $13,114 for the six months ended June 30, 2004 and 2003.  This increase was due to increases in legal fees as a result of increased sales activity.  Professional services to non-affiliates were $35,783 and $28,675 for the six months ended June 30, 2004 and 2003.  This increase was due to an increase in accounting fees.

General and administrative expenses to non-affiliates were $169,531 and $50,523 for the six months ended June 30, 2004 and 2003, respectively. The increase in 2004 is due to accrued state taxes payable as a result of land sales in 2004.

Marketing expenses to non-affiliates were $24,993 and $21,938 for the six months ended June 30, 2004 and 2003.  In 2003 and continuing into 2004, we changed our marketing approach to target homebuilders, industrial users and land developers through direct mailings, newspaper and trade publication advertising and an enhanced website.

Land operating expenses to affiliates were $9,972 and $18,472 for the six months ended June 30, 2004 and 2003, respectively and relate to asset management fees paid. Our general partner is entitled to receive asset management fees equal to one-quarter of 1% of the original cost  of our undeveloped parcels annually, limited to a cumulative total over our life of 2% of the parcels' original cost to us. These amounts decrease as acres are sold.

Land operating expenses to non-affiliates were $(4,284) and $49,240 for the six months ended June 30, 2004 and  2003, respectively. These costs primarily include real estate tax expense and ground maintenance expense and insurance expense on the parcels owned.  The decrease in 2004 is the result of the over accrual of 2003 real estate taxes payable in 2004.  The General Partner was able to obtain a significant reduction of approximately $20,000 in the 2003 real estate taxes payable relating to Parcel 4.



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We determined that the maximum value of Parcels 1 and 12 could be realized if the parcels were developed and sold as individual lots. However, if we had followed that plan, there is a possibility that the limited partners may have been subject to unrelated business taxable income. Therefore, we sold the parcels to a third party developer whereby 100% of the sales price was represented by notes receivable from the buyer. These transactions were deemed installment sales. After the sale, the developer, through limited liability companies or LLCs, secured third party financing to cover the deferred down payment owed to us as well as provide proceeds to begin the development of the project.  These sales were structured so that the deferred down payment received at the time of the sale was sufficient to provide a distribution to our limited partners that equated to the parcel capital allocated to the parcel plus approximately a 6% return per annum on the invested capital allocated to the parcel (parcel capital) through the date of the distribution.

The velocity of the developer's individual home sales at Parcel 12 was slower than was originally projected and consequently, the developer's carrying costs were higher.  As a result of the slower lot sales, the net sale proceeds available to us were lower than anticipated.  As of June 30, 2004 and December 31, 2003, we have recorded allowances for doubtful accounts of $135,000 relating to the mortgage receivable and $62,289 relating to accrued interest receivable, relating to the sale of Parcel 12.  A portion of the related deferred gain for Parcel 12 of $68,829 as of June 30, 2004 and December 31, 2003 has also been written off against bad debt expense.

The General Partner guaranteed the third party development loans owed by these limited liability companies.  In reviewing the developments' financial situation, our general partner determined that it would be in its best interest to have an affiliate acquire the interests in the LLCs. The general partner and its affiliates concluded that they could better control the continuing costs to complete these developments and would therefore have the best opportunity to limit their exposure under the guarantee agreements and possibly recover a portion of the amount owed. An affiliate of our general partner contributed approximately $50,000 to acquire the interests in the LLCs. The affiliate of the general partner will complete the development and sale of these projects. Our limited partners received distributions that equated to the invested capital allocated to each parcel (parcel capital) plus approximately a 6% return per annum on the parcel capital through the date of the distribution.



Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.



Item 4. Controls and Procedures

Our general partner conducted, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report.  Based upon that evaluation, the principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information that is required to be disclosed in the periodic reports that we must file with the Securities and Exchange Commission.

There were no changes in our internal controls over financial reporting that occurred during the six months ended June 30, 2004 that materially affected, or are reasonably likely to materially affect, our internal control of financial reporting.



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Items 1 through 5 are omitted because of the absence of conditions under which they are required.



Item 6: Exhibits and Reports on Form 8-K

(a)  Exhibits:

31.1 Rule 13a-14(a)/15d-14(a) Certification by principal executive officer

31.2 Rule 13a-14(a)/15d-14(a) Certification by principal financial officer

32.1 Section 1350 Certification by principal executive officer

32.2 Section 1350 Certification by principal financial officer

(b)  Reports on Form 8-K:

None

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SIGNATURES





Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.









|      | INLAND CAPITAL FUND, L.P.                                
|----- | ---------------------------------------------------------
|      |                                                          
|By:   | Inland Real Estate Investment Corporation General Partner
|      |                                                          
|      |                                                          
|      |                                                          
|      | /S/ BRENDA G. GUJRAL                                     
|      |                                                          
|By:   | Brenda G. Gujral                                         
|      | President                                                
|Date: | August 4, 2004                                           
|      |                                                          
|      |                                                          
|      |                                                          
|      | /S/ PATRICIA A. DELROSSO                                 
|      |                                                          
|By:   | Patricia A. DelRosso                                     
|      | Senior Vice President                                    
|Date: | August 4, 2004                                           
|      |                                                          
|      |                                                          
|      |                                                          
|      | /S/ KELLY TUCEK                                          
|      |                                                          
|By:   | Kelly Tucek                                              
|      | Vice President and                                       
|      | principal financial officer                              
|Date: | August 4, 2004                                           
|      |                                                          

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