INVESTORS RESEARCH FUND, INC.
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SEMI-ANNUAL REPORT
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For the Six Months Ended
March 31, 2000
<PAGE>
Investors Research Fund, Inc.
Dear Fellow Shareholder:
The first half of our new fiscal year was very productive. As we have
previously communicated with you, the Board of Directors appointed Westcap
Investors, LLC as the investment manager of the Investors Research Fund, Inc. on
April 1, 1999. The portfolio was immediately changed so that investments are now
made in large capitalization growth companies.
This change was fruitful in the first half of the year, with the net asset
value rising from $3.75 to $4.49 per share -- a return of 19.73%. During the
same time period the S&P 500 Index rose 17.50%. Westcap's objective is to
outperform the S&P 500 Index over longer time periods; however, we are pleased
to report that this was also accomplished in a shorter time period.
We continue to be optimistic towards the longer-term outlook for the stock
market. Continuing Federal Government surpluses, accompanied by reasonable
Federal Reserve policies, are creating an economic climate that is producing a
favorable earnings environment for U.S. companies. The entrepreneurial spirit of
business executives combined with generous amounts of risk capital is having an
unprecedented effect on the way business is being conducted today. U.S.
corporations continue to dominate the growth industries of the future through
invention, innovation, marketing and competitive prices. Never before have we
witnessed a faster economic growth period marked by low inflation and huge
productivity gains.
Interest rates are rising in response to a red-hot economy. The Federal
Reserve Board believes that real GDP growth in the U.S. is too high, and will
eventually produce inflationary pressures. Therefore, we expect that the Board
will raise interest rates until the economy's growth rate slows. So far, there
is little evidence that higher interest rates are having a negative impact on
the economy's growth rate. We do expect however, that higher rates will slow the
economy later this year.
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The ability of companies to cut costs continues to be a major theme in
corporate America today. The combination of worldwide outsourcing and the
emerging use of the Internet to lower costs is producing huge gains in corporate
profits. As you know, profits are one part of the makeup of stock prices.
Another part of a stock's price is the valuation that investors place upon
a company's earnings. Generally, when interest rates rise, valuations decline.
Westcap is concerned that further increases in interest rates in the coming
months will negatively impact valuations, and is the biggest impediment to
higher stock prices. Currently, we are witnessing a tug of war between lower
valuations on the one hand and much higher earnings on the other. This battle is
producing very high volatility in the market, which will probably continue at
least through the end of June. Thereafter, higher interest rates should have a
slowing impact on the economy, allowing the stock market to produce positive
returns.
We look forward to hearing from you with any questions you may have, and
please direct any portfolio inquiries to me at (310) 996-3256.
Respectfully,
/s/ Glenn C. Weirick
Glenn C. Weirick
President
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Investors Research Fund, Inc.
SCHEDULE OF INVESTMENTS at March 31, 2000 (Unaudited)
Shares Value
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COMMON STOCKS: 99.86%
ADVERTISING: 2 40%
11,320 Interpublic Group, Inc $ 534,870
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BANKING/FINANCIAL SERVICES: 4 79%
9,280 Bank of America Corp 486,620
9,785 Citigroup, Inc 580,373
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1,066,993
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COMPUTER/PERIPHERAL: 23 39%
11,310 ADC Telecommunications, Inc * 609,326
10,360 Cisco Systems, Inc * 800,957
6,270 Computer Sciences Corp * 496,114
5,680 IBM 670,240
11,180 Lucent Technologies, Inc 679,185
7,010 Microsoft Corp 744,813
2,860 Motorola, Inc 407,193
14,860 SCI Systems, Inc 799,654
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5,207,482
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CONGLOMERATES: 5 49%
4,510 General Electric Co 699,896
10,480 Tyco International, Inc 522,690
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1,222,586
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DRUGS: 11 42%
8,460 Allergan, Inc 423,000
14,800 ALZA Corp * 555,925
8,520 Bristol Myers Squibb Co 492,030
17,310 Pfizer, Inc 632,897
11,950 Schering Plough Corp 439,163
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2,543,015
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ENERGY/OIL: 10 22%
11,650 Apache Corp 579,587
20,120 Baker Hughes, Inc 608,630
6,800 Chevron Corp 628,575
5,900 Exxon Mobil Corp 459,094
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2,275,886
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ENTERTAINMENT: 9 91%
8,350 AT&T - Liberty Media Group* 494,737
8,450 CBS Corp * 478,481
8,970 MediaOne Group, Inc * 726,570
5,060 Time Warner, Inc 506,000
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2,205,788
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FOOD: 2 01%
12,560 Sysco Corp $ 448,235
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HOUSEHOLD PRODUCTS: 1 48%
5,870 Procter & Gamble Co 330,188
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INSURANCE: 3 02%
6,132 American International Group, Inc 671,454
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RETAIL: 6 47%
8,520 Costco Wholesale Corp * 447,832
7,370 Home Depot, Inc 475,365
9,300 Wal-Mart Stores, Inc 516,150
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1,439,347
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SEMICONDUCTORS: 5 39%
5,160 Intel Corp 680,797
3,240 Texas Instruments 518,400
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1,199,197
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TELECOMMUNICATIONS: 8 37%
11,780 Bell Atlantic Corp 720,052
15,440 MCI WorldCom, Inc * 699,625
6,780 Sprint Corp (PCS Group)* 442,819
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1,862,496
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UTILITIES: 5 50%
7,750 AES Corp * 610,312
14,000 Williams Cos, Inc 615,125
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1,225,437
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TOTAL COMMON STOCKS: (Cost $18,861,767) 22,232,974
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Principal
Amount
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SHORT-TERM INVESTMENTS: 0 45%
$100,542 UMB Money Market Fiduciary
(Cost $100,542) 100,542
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Total Investments: 100 31%
(Cost $18,962,309) 22,333,516
Liabilities in excess of Other Assets: (0 31)% (69,865)
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Net Assets: 100 00% $22,263,651
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* Non-income producing security.
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Investors Research Fund, Inc.
STATEMENT OF ASSETS AND LIABILITIES at March 31, 2000 (Unaudited)
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ASSETS
Investments in securities, at value (cost $18,962,309) ....... $22,333,516
Receivables:
Dividends and interest .................................... 3,734
Prepaid expenses ............................................. 9,296
Other assets ................................................. 928
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Total assets ........................................... 22,347,474
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LIABILITIES
Payables:
Advisory fees ............................................. 24,826
Due to custodian .......................................... 24,274
Taxes ..................................................... 3,806
Accrued expenses ............................................. 30,917
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Total liabilities ...................................... 83,823
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NET ASSETS ..................................................... $22,263,651
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COMPOSITION OF NET ASSETS
Paid-in capital .............................................. $18,167,195
Accumulated net investment income ............................ 18,557
Accumulated net realized gain on investments ................. 706,692
Net unrealized appreciation of investments ................... 3,371,207
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Net assets ............................................. $22,263,651
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Shares outstanding (unlimited number of shares
authorized, $0.01 par value) ............................... 4,959,215
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NET ASSET VALUE AND REDEMPTION PRICE PER SHARE ............... $ 4.49
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Maximum offering price per share (100/96.25 of $4.49) ........ $ 4.66
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See accompanying Notes to Financial Statements.
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Investors Research Fund, Inc.
STATEMENT OF OPERATIONS For the Six Months Ended March 31, 2000 (Unaudited)
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INVESTMENT INCOME
Dividend income .............................................. $ 77,291
Interest income .............................................. 13,988
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Total investment income ................................ 91,279
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Expenses
Advisory fees ............................................. 51,818
Administration fees ....................................... 17,461
Legal fees ................................................ 17,411
Fund accounting fees ...................................... 15,045
Audit fee ................................................. 5,489
Transfer agent fees ....................................... 23,758
Distribution fees ......................................... 16,226
Custody fees .............................................. 6,983
Salaries - officer ........................................ 20,989
Director fees ............................................. 19,199
Rent expense .............................................. 9,860
Insurance expense ......................................... 8,881
Tax expense ............................................... 4,462
Registration expense ...................................... 7,515
Reports to shareholders ................................... 5,655
Miscellaneous expenses .................................... 11,304
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Total expenses ......................................... 242,056
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NET INVESTMENT LOSS ................................. (150,777)
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REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments ............................. 930,532
Net unrealized appreciation on investments ................... 3,082,780
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Net gain on investments ................................ 4,013,312
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NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS ........................................ $ 3,862,535
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See accompanying Notes to Financial Statements.
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Investors Research Fund, Inc.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six For the Year
Months Ended Ended
March 31, 2000* September 30, 1999
--------------- ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment loss ............................ $ (150,777) $ (164,948)
Net realized gain on investments ............... 930,532 132,667
Net unrealized appreciation on investments ..... 3,082,780 3,648,270
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NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS .......................... 3,862,535 3,615,989
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DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ..................... -- (185,349)
From net realized gain ......................... -- (357,012)
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DECREASE IN NET ASSETS FROM DISTRIBUTIONS.... -- (542,361)
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CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ...................... 956,261 407,390
Net asset value of shares issued on
reinvestment of distributions ............... -- 481,670
Cost of shares redeemed ........................ (2,664,920) (7,655,904)
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NET DECREASE FROM CAPITAL SHARE
TRANSACTIONS ............................. (1,708,659) (6,766,844)
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NET INCREASE (DECREASE) IN NET ASSETS .... 2,153,876 (3,693,216)
NET ASSETS
Beginning of period ......................... 20,109,775 23,802,991
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END OF PERIOD ............................... $ 22,263,651 $ 20,109,775
============ ============
CAPITAL SHARE ACTIVITY
Shares sold .................................... 250,318 519,631
Shares issued on reinvestment of distributions.. -- 505
Shares redeemed ................................ (649,728) (3,359,843)
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Net decrease in shares outstanding .......... (399,410) (2,839,707)
============ ============
</TABLE>
* Unaudited.
See accompanying Notes to Financial Statements.
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Investors Research Fund, Inc.
FINANCIAL HIGHLIGHTS For a capital share outstanding throughout the period
<TABLE>
<CAPTION>
For the Six For the Year Ended September 30,
Months Ended ------------------------------------------
March 31, 2000+ 1999 1998 1997 1996 1995
--------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ...................... $ 3.75 $ 3.32 $ 4.76 $ 4.33 $ 4.10 $ 4.62
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) ... (0.03) (0.02) 0.04 0.09 0.26 0.07
Net realized and unrealized
gain (loss) on investments ... 0.77 0.53 (0.40) 1.11 0.33 0.25
------ ------ ------ ------ ------ ------
Total from investment
operations ..................... 0.74 0.51 (0.36) 1.20 0.59 0.32
------ ------ ------ ------ ------ ------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income...... -- (0.03) (0.08) (0.28) (0.07) (0.50)
From net realized gain ......... -- (0.05) (1.00) (0.49) (0.29) (0.34)
------ ------ ------ ------ ------ ------
Total distributions .............. -- (0.08) (1.08) (0.77) (0.36) (0.84)
------ ------ ------ ------ ------ ------
Net asset value, end
of period ...................... $ 4.49 $ 3.75 $ 3.32 $ 4.76 $ 4.33 $ 4.10
====== ====== ====== ====== ====== ======
Total return ..................... 19.73%* 15.46% (9.55%) 30.42% 14.66% 7.74%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in millions) .................. $ 22 $ 20 $ 24 $ 33 $ 30 $ 32
Ratio of expenses to average
net assets ..................... 2.26%** 2.39% 1.85% 1.77% 1.76% 1.60%
Ratio of net investment income
(loss) to average net assets ... (1.41%)** (0.73%) 91.00% 1.94% 6.67% 1.52%
Portfolio turnover rate .......... 24.31%* 114.35% 260.95% 294.81% 669.79% 248.44%
</TABLE>
+ Unaudited.
* Not annualized.
** Annualized.
See accompanying Notes to Financial Statements.
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NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1 - ORGANIZATION
Investors Research Fund, Inc. ("The Fund") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund is incorporated in the state of
Delaware. The Fund began operations on March 1, 1959. The investment objective
of the Fund is to seek growth of capital over the long term. The Fund seeks to
achieve its objective by primarily investing in common stocks of large
capitalization domestic companies that combine growth potential with superior
financial strength.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles for
investment companies.
A. SECURITIES VALUATION. Securities traded on a national securities
exchange or NASDAQ are valued at the last reported sale price at the
close of regular trading on each day that the exchanges are open for
trading; securities traded on an exchange or NASDAQ for which there
have been no sales, and other over-the-counter securities, are valued
at the last reported bid price. Securities for which quotations are
not readily available are stated at their respective fair values as
determined in good faith by the Board of Directors. Short-term
obligations are valued at cost, which when combined with accrued
interest, approximates market value.
B. FEDERAL INCOME TAXES. The Fund's policy is to comply with the
requirements of the Internal Revenue Code that are applicable to
regulated investment companies and to distribute all its taxable
income to its shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
C. SECURITY TRANSACTIONS, INVESTMENT INCOME AND DISTRIBUTIONS. Security
transactions are accounted for on the date the securities are
purchased or sold (trade date). Realized gains or losses on security
transactions are computed on the basis of specific identification of
the securities sold. Interest income is recorded as earned from
settlement date and is recorded on the accrual basis. Dividend income
is recorded on the ex-dividend date. Net investment income and net
realized gains from security transactions are generally distributed in
December of each calendar year.
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D. USE OF ESTIMATES. Management uses estimates and assumptions in
preparing these financial statements in accordance with generally
accepted accounting principles. Those estimates and assumptions affect
the reported amounts of assets, liabilities, revenues and expenses.
Actual results could differ from those estimates.
NOTE 3 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS
Effective April 1, 1999, the Fund entered into an Investment Advisory
Agreement (the "Agreement") with Westcap Investors, LLC (the "Advisor"). Under
the terms of the Agreement, the Advisor furnishes all investment advice needed
by the Fund. As compensation for its services, the Advisor receives a quarterly
fee at the annual rate of 0.50% of the Fund's average daily net assets. For the
six months ended March 31, 2000, the Fund incurred $51,818 in advisory fees.
Investment Company Administration, L.L.C. (the "Administrator") acts as the
Fund's administrator under an Administration Agreement. The Administrator
prepares various federal and state regulatory filings, reports and returns for
the Fund; prepares reports and materials to be supplied to the directors;
monitors the activities of the Fund's custodian, transfer agent and accountants;
coordinates the preparation and payment of Fund expenses and reviews the Fund's
expense accruals. For its services, the Administrator receives a fee, payable
monthly on the value of the total average net assets of the Fund at an annual
rate of 0.10% of the first $200 million of such net assets, 0.05% of the next
$300 million, and 0.03% thereafter, subject to a minimum fee of $40,000. For the
six months ended March 31, 2000, the Fund incurred $17,461 in administration
fees.
First Fund Distributors, Inc. (the "Distributor") acts as the Fund's
principal underwriter in a continuous public offering of the Fund's shares. The
Distributor is an affiliate of the Administrator.
Certain officers of the Fund are also officers and/or directors of the
Administrator and Distributor.
NOTE 4 - LEASE COMMITMENTS
Under a lease expiring April 14, 2000, the Fund is committed to pay minimum
lease payments of $678 per month for the rent for its present office space. The
minimum monthly rent is subject to consumer price index adjustments each April 1
for the duration of the lease. In addition to the minimum monthly payments, the
lease requires monthly payments of increases in building operating expenses
effective January 1, 1998. Building operating expenses are adjusted annually
each January 1 by the lessor.
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Future minimum annual lease commitments for the remaining term of this
lease is $337. Rental expense for the six months ended March 31, 2000 was
$9,860.
NOTE 5 - DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940. The Plan allows the Fund to pay
distribution fees for the sale and distribution of its shares and for services
provided to its shareholders at an annual rate of up to 0.50% of the Fund's
average daily net assets. For the six months ended March 31, 2000, the Fund
incurred $16,226 in distribution fees.
NOTE 6 - APPRECIATION (DEPRECIATION) OF INVESTMENTS
At March 31, 2000, the net unrealized appreciation for stocks was as
follows:
Gross unrealized appreciation ......... $4,496,661
Gross unrealized depreciation ......... (1,125,454)
----------
Net unrealized appreciation ........ $3,371,207
==========
The cost basis used above is the same as that used for financial statement
purposes.
NOTE 7 - PURCHASES AND SALES OF SECURITIES
The cost of purchases and the proceeds from sales of securities for the six
months ended March 31, 2000, excluding short-term investments, were $5,049,059
and $6,532,680, respectively.
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Adviser
WESTCAP INVESTORS
11111 Santa Monica Blvd., Suite 820
Santa Monica, CA 90028
(310) 996-3256
(Mutual Fund Direct Line)
www.westcapinvestors.com
Distributor
FIRST FUND DISTRIBUTORS, INC.
4455 East Camelback Road, Suite 261E
Phoenix, AZ 85018
Custodian
UMBBANK
928 Grand Avenue, 10th floor
Kansas City, MO 64141
Transfer Agent
N D RESOURCES, INC.
#1 North Main Street
Minot, ND 58703
Legal Counsel
PAUL, HASTINGS, JANOFSKY & WALKER, LLP
345 California Street, 29th Floor
San Francisco, CA 94104
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This report is intended for the shareholders of the Fund and may not be used as
sales literature unless preceded or accompanied by a current prospectus.
Past performance results shown in this report should not be considered a
representation of future performance. Share price and returns will fluctuate so
that shares, when redeemed, may be worth more or less than their original cost.
Statements and other information herein are dated and are subject to change.
