ADDENDUM TO
INVESTORS RESEARCH FUND PROSPECTUS
DATED MARCH 1, 1999
January 24, 2000
A. ADVISER CHANGE
1. NEW ADVISER EFFECTIVE APRIL 1, 1999.
On April 1, 1999, the Fund's relationship with its new investment adviser
and portfolio Manager, Westcap Investors, LLC of Los Angeles, California became
effective and Westcap assumed the actual management of the Fund's portfolio on
that date. As of March 31, 1999, former adviser Fox Asset Management, Inc. was
no longer serving as investment adviser to the Fund. Wescap uses a "growth"
style of investment management, whereas Fox used a "value" style of investment
management.
Westcap Investors has been acting as an investment manager for the last
seven years, although the Westcap personnel themselves have been managing
investment portfolios for many years.
2. WESTCAP INVESTORS, LLC - ORGANIZATION AND PERSONNEL
Westcap Investors, LLC ("Westcap") is a Delaware limited liability company
which was organized in 1995 and is the successor to Westcap Investors, Inc., a
California corporation organized in 1991. Functionally, the two companies are
identical. Westcap is an investment adviser registered as such with the
Securities and Exchange Commission under the Investment Advisers Act of 1940. It
is 100% employee owned. The address of Westcap Investors is 11111 Santa Monica
Boulevard, Suite 820, Los Angeles, CA 90025. The telephone number is (310)
996-3200.
Glenn C. Weirick, CFA, CIC, is President and Co-Founder of Westcap
Investors. Mr. Weirick serves as chairman of both the firm's Investment Policy
Committee and its Equity Policy Committee. Prior to Westcap, Mr. Weirick was
Co-Founder of Trust Company of the West, where he remained for over 20 years and
served there as Chairman of the Equity Policy Committee, as the Director of
Investment Research and as Managing Director of Equities and Convertible
Securities. He also was the Manager of the TCW Convertible Securities Fund from
1987 to 1992, when he resigned to devote full time to Westcap. Mr. Weirick
formerly served as Executive Vice President and Chief Investment Officer of
Shareholders Management Company and as President of the Harbor Fund. He holds
the Bachelor of Arts degree from Occidental College and the Master of Science
degree in Finance from the Columbia University Graduate School of Business. He
has 40 years of investment management experience.
The managing directors of Westcap are: Geoffrey I. Edelstein, CFA, CIC;
Peter Harvie CFA, CIC; Donald L. Keene, CFA, CIC; Terence D. Lynch; Michael T.
Papworth; Bradley G. Slocum and Gregory S. Weirick. They are employees of
Westcap and serve as portfolio managers in the firm's investment process. Mr.
Edelstein, Mr. Slocum and Mr. Gregory S. Weirick are also co-founders of the
firm. These directors have investment experience ranging from 8 years to a high
of 44 years, with the average being almost 26 years.
Mr. Edelstein has a Bachelor of Arts degree from the University of Michigan
and a Juris Doctor degree from Northwestern University School of Law. Mr. Harvie
has the Bachelor of Arts degree from Brown University. Mr. Keene has a Bachelor
of Science degree from the University of California at Berkeley. Mr. Lynch and
Mr. Papworth have Bachelor of Arts degrees from the University of Southern
California. Mr. Slocum has a Bachelor of Arts degree from East Carolina
University. Mr. Gregory S. Weirick has a Bachelor of Arts degree from the
University of Arizona.
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"CFA" stands for "Chartered Financial Analyst" and "CIC" stands for
"Chartered Investment Counselor." The CFA designation is awarded by the
Institute of Chartered Financial Analysts (Charlottesville, Virginia) after the
applicant has met the required testing and experience requirements. The CIC
designation is awarded by the Investment Counsel Association of America
(Washington, D.C.) after its testing and experience requirements have been met.
3. WESTCAP PERFORMANCE BACKGROUND
In the past, Westcap has served primarily institutional and high net worth
private clients. It currently has approximately $1.2 billion under management.
Westcap is interested in managing the investment functions of a mutual fund and
has agreed to serve Investors Research Fund, Inc. in that capacity. Prior to
April 1, 1999, Westcap itself had not advised an equity mutual fund, although
several of its members have previously had mutual fund management experience.
A table of gross and net returns of Westcap's composite equity accounts
(Westcap net returns presented below are net of management fees and all
transaction costs in accordance with S.E.C. guidelines) in comparison with the
S&P 500 from April 1, 1992, when Westcap commenced operations, through 12/31/99
follows. In making comparisons with the Standard & Poor's 500 Index, it must be
recognized that the S&P 500 has no brokerage charges, no expenses, and no
operational costs subtracted from its performance results. Also, one cannot make
a single direct investment into the S&P 500.
Annualized Returns Annualized Returns
Westcap Annualized Westcap
Equity Composite Returns Equity Composite
(Gross) S&P 500 (net of fees)
------- ------- -------------
1 year 24.71% 21.04% 24.17%
3 years 30.95% 27.56% 30.26%
5 years 29.82% 28.55% 29.11%
Since 4/92 20.77% 20.79% 20.09%
Total Returns
Total Return Westcap Westcap
Equity Composite Total Returns Equity Composite
(Gross) S&P 500 (net of fees)
------- ------- -------------
1 year 24.71% 21.04% 24.17%
3 years 124.55% 108.02% 121.02%
5 years 268.70% 251.90% 258.76%
Since 4/92 331.64% 431.78% 313.22%
Westcap's table above presents its composite performance results from April
1, 1992 through December 31, 1999. The accounts in the composite had the same
general investment objective as the Fund and were all similarly managed by
Westcap for the entire quarter reported. All results are calculated on a time
weighted basis. From April 1, 1992 through December 31, 1999, the results are
presented on a dollar weighted basis (computed quarterly). All information set
forth above concerning Westcap's performance has been provided to the Fund by
Westcap and has not been independently verified or audited.
Westcap has informed the Fund that the results include all accounts with
investment objectives, policies, strategies, and risks substantially similar to
those of the Fund except (1) accounts less than $1 million in market value
(other than one account which is included through the 2nd quarter of 1995), (2)
accounts subject to material restrictions imposed by the client, (3) accounts
whose results have been materially affected by significant cash contributions or
withdrawals have been excluded, (4) accounts with directed brokerage
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arrangements paying commissions greater than 10 cents per share, and (5)
accounts managed under wrap fee arrangements. The equity portion of balanced
accounts (including cash results) are included in Westcap's Equity results from
the 3rd Quarter 1992 to the present. One fully discretionary non-fee paying
account is also included in Westcap's results beginning with the 2nd Quarter of
1992 through the 4th Quarter of 1993. Net results are after the deduction of
management fees, but gross results are not. Westcap has informed the Fund that
elimination of the accounts of less than $1 million has no significant effect on
the stated performance results because such accounts represent a small amount of
the relevant assets under management. Also, no provision has been made for
federal and state income taxes, if any.
In evaluating the foregoing statistics, it is to be recognized that the
past performance of Westcap's equity accounts does not indicate that the Fund's
future performance will necessarily be the same. Also, it is to be recognized
that private accounts are not subject to certain investment limitations,
diversification requirements, and other restrictions imposed by the Investment
Company Act of 1940 and the Internal Revenue Code. Had such requirements been
applicable, they might have adversely affected the performance results of the
private account composite. Additionally, the performance results set forth above
do not represent the historical performance of any particular client of Westcap
or of Investors Research Fund.
4. WESTCAP'S INVESTMENT APPROACH
Westcap's intention is to outperform the S&P 500 Index on a consistent
basis while minimizing risk.
Westcap's investment style utilizes a top down approach with a growth style
bias. Its portfolio holdings are generally concentrated in large capitalization,
high quality, publicly traded equity securities that combine growth potential
with superior financial strength. It invests in companies whose market
capitalization exceeds $1 billion, but also occasionally in other equity-like
instruments such as convertible securities. Convertible securities are used to
produce income and to reduce volatility. A money market account is used
occasionally for holding funds on a temporary basis, but Westcap's policy is to
remain fully invested.
A "top down" analytical approach starts with an overall study of the
relevant investment environment and the current economic situation. This
responsibility is that of the Investment Policy Committee. Westcap does much of
its own research on those subjects, but also accumulates information and
recommendations from outside consultants, brokerage analysts, and similar
experts specializing in demographic and domestic and foreign investment and
economic information.
After accumulating and evaluating the research information, the Investment
Policy Committee meets to formulate and update Westcap's investment analyses to
forecast both the investment environment and the economic environment. The
objective is to assess the prospects and probabilities for the next two to five
years. That includes both domestic U.S. and foreign economies. That committee
meets every Tuesday and at other times when it appears desirableto meet. When
the Investment Policy Committee has formulated its analyses and forecasts, it
turns them over to the Equity Policy Committee for action.
The Equity Policy Committee then utilizes the research findings to
formulate a list of industries and companies that are promising for investments.
The committee meets every Monday or more often, as needed. That Westcap
committee gives extensive and intensive attention to the selection of both
industries and companies in which to commit client funds. Westcap utilizes
outside consultants, Wall Street analysts, financial statement analysis
techniques, and information from company managements, customers and suppliers to
assist in the identification of the industries and companies for attention. The
committee then makes the selections of specific companies. However, each account
is assigned to one of Westcap's managing directors as an individual portfolio
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manager and the manager is the person who controls the final investments in the
event there should be specific desires and instructions of the particular
account holder. Glenn Weirick is the assigned portfolio manager for the
Investors Research Fund portfolio. At the present time, no specific instructions
have been given by the Fund to Westcap concerning the investment of its funds,
so the Fund's general objectives and policies apply.
In doing its work, the Investment Policy Committee divides the economy into
sectors that will contribute to growth, sectors that will restrain growth, and
those sectors that will be neutral. A further subdivision is made and matrixes
are developed on the basis of the industry groups that are expected to
outperform the S & P 500 (on a total return basis) over the coming 12-18 months
and those expected to underperform. The committee continually reviews these
groupings and classifications and makes any reclassifications needed as changes
occur in the national or world economies.
Individual equity investment selections are made by the Equity Investment
Committee starting with the "outperform" classifications of the Investment
Policy Committee. Industry sources, various publications, company managements,
company customers, Wall Street sources, and other contacts are utilized to
identify specific investment candidates within the favorable classifications.
Each candidate stock is then evaluated for decision purposes. Such evaluation
frequently involves visits to a company's headquarters and interviews with its
management personnel. The final result is a matrix identifying companies that
are appropriate for investment of the client's funds. At any given time, Westcap
will have a list of some 75 approved stocks, from which 40 to 60 issues will be
selected as the investment portfolio.
Westcap Investors occasionally invests in Level 2 sponsored American
Depository Receipts ("ADRs"). That would cause the Fund to make investments in
foreign companies. An ADR is an unguaranteed negotiable security that represents
interests in the shares of the foreign company, which shares are on deposit in a
United States commercial bank. They are priced in dollars and pay dividends in
dollars, although adjustments are made because of foreign currency exchange
rates.
Westcap's policy is to invest only in ADRs of foreign companies that
satisfy U.S. disclosure requirements and reconcile their home market accounting
to the generally accepted accounting principles observed by U.S. companies and
that provide audited financial statements based on such principles on at least
an annual basis. The sponsoring banks require that the foreign companies provide
direct disclosure to the bank and make monetary deposits of dividends directly
to the sponsoring bank.
B. WAIVER AMENDMENT
1. THE DISCUSSION IN THE CURRENT PROSPECTUS ON PAGE 15 UNDER THE HEADING
"FRONT-END SALES CHARGE WAIVERS" IS AMENDED AS FOLLOWS:
(a) Shares will be sold at net asset value and without sales
commission to persons who are affiliated with clients of Westcap
Investors, LLC and to persons sponsored to the Fund by Westcap.
(b) The above-described privilege will also be available to the
immediate family members of persons meeting the above stated
employee status requirements and to any trust, pension, profit
sharing or other benefit plan for such persons.
2. THE FOURTH SUBPARAGRAPH UNDER THE ABOVE SUBJECT HEADING IN THE CURRENT
PROSPECTUS IS DELETED.
