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ADDISON CAPITAL SHARES, INC.
Supplement dated November 3, 1999
to the Prospectus dated November 1, 1999
Introduction
At a Special Meeting of the Board of Directors of Addison Capital Shares, Inc.
(the "Fund") held on October 27, 1999, the Board, including a majority of the
independent directors, voted to terminate the Fund's current investment
advisory agreement with Addison Capital Management Company ("Addison"), subject
to shareholder approval of a new investment advisory agreement with
Independence Capital Management, Inc. ("ICMI") (the "Proposed Advisory
Agreement"). The Board determined to recommend the Proposed Advisory Agreement
to shareholders because it believes that ICMI will improve the investment
performance of the Fund. A Special Meeting of Shareholders to consider the
Proposed Advisory Agreement has been scheduled for December 16, 1999.
ICMI, organized in 1989 as a wholly-owned subsidiary of The Penn Mutual Life
Insurance Company ("Penn Mutual"), manages approximately $1.8 billion in client
assets. ICMI currently serves as investment adviser to three portfolios of the
Penn Series Funds, several institutional fixed income portfolios and four
Separate Account portfolios for Penn Mutual.
Investment Style
If the Proposed Advisory Agreement is approved by shareholders, ICMI will
employ a growth and income investment style to achieve the Fund's investment
objective, which differs from the value-oriented approach used by Addison. In
selecting investments for the Fund, ICMI would emphasize companies that have
demonstrated business success, and which ICMI believes have the ability to
sustain earnings growth relative to expectations. This differs from Addison's
strategy of seeking to invest in securities of companies that are undervalued.
The Fund's investment objective of long term capital appreciation will not
change.
Portfolio Managers
If the Proposed Advisory Agreement is approved, Richardson T. Merriman and
Willard N. Woolbert will share the day-to-day portfolio management of the Fund.
Mr. Merriman, Senior Vice President of ICMI, has over 25 years of investment
management experience. He currently oversees the investment policies,
strategies and security selection for ICMI and The Pennsylvania Trust Company
of which he is President and Chief Executive Officer. Mr. Merriman is a member
of the Financial Analysts of Philadelphia, The Association of Investment
Management and Research and the Philadelphia Securities Association. He earned
a B.A. in Economics from Rollins College and an M.B.A. from New York
University.
Mr. Woolbert, Vice President of ICMI, has over 25 years of money management
experience and, as Senior Vice President of The Pennsylvania Trust Company, is
responsible for developing and implementing investment policies, strategies and
security selection. He is a member of the Financial Analysts of Philadelphia
and The Association for Investment Management and Research. He received an A.B.
in History from Brown University and an M.B.A. from Drexel University.
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Past Performance of ICMI
ICMI also acts as investment adviser to Penn Mutual Separate Account D
("Separate Account D"), which has an investment objective and investment
policies that do not differ in any material respect from the way that ICMI would
manage the Fund's assets. Below are the average annual returns for Separate
Account D over the time periods indicated.
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Average annual return for the periods ended September 30, 1999
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Fund One Year Three Years Since Inception (3/1/88)*
---- -------- ----------- ------------------------
<S> <C> <C> <C>
Separate Account D 21.93% 21.46% 14.63%
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* Mr. Merriman began managing the assets of Separate Account D on July 31,
1995 and Mr. Woolbert assumed shared responsibility for managing the assets of
Separate Account D on March 30, 1998. The average annual total return of
Separate Account D for the period from July 31, 1995 through September 30, 1999
was 20.97%.
The Proposed Advisory Agreement
ICMI has agreed to act as investment adviser to the Fund under substantially
the same terms and conditions as Addison serves under the current investment
advisory agreement. The fees to be paid to ICMI under the Proposed Advisory
Agreement will be the same as those paid to Addison under the current
investment advisory agreement.
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