PHILLIPS CAPITAL INVESTMENTS, INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS
FOR THE SIX MONTH PERIOD ENDED
JUNE 30, 1996
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
<S> <C> <C>
Assets:
Investments in securities, at value -
amortized cost $3,340,471.10 in 1996 and
$3,590,222.63 in 1995 - Note A $ 4,459,725.52 $ 4,844,148.96
Cash 275,865.78 509,731.11
Receivables - Note A
Interest 19,194.01 29,283.85
Dividends 3,178.06 4,578.55
Investment securities sold 0 32,440.00
Deferred registration expenses - Note B 386.97 675.97
Prepaid insurance 1,083.72 391.80
Other assets 1,109.17 0
---------------- ----------------
Total assets 4,760,543.23 5,421,250.24
---------------- ----------------
Liabilities
Accrued accounting fees 2,613.70 4,450.00
Accrued investment advisory fees 3,517.42 0
Federal income tax payable 0 375.00
Miscellaneous accounts payable 0 354.12
Due shareholders on sale 0 375,018.64
---------------- ----------------
Total liabilities 6,131.12 380,197.76
---------------- ----------------
Net Assets:
Net assets (equivalent to $15.56 and $14.65
per share based on 305,602.578 and
343,987.019 shares of capital stock
outstanding at June 30, 1996 and
December 31, 1995, respectively) - Note C $ 4,754,412.11 $ 5,041,052.48
================ ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
INVESTMENTS IN SECURITIES
JUNE 30, 1996
Principal
Amount or
COMMON STOCKS: 53.99% Shares Market Value
Insurance: 7.36%
American Bankers Insurance Group 2,200 95,975.00
American Travelers Corp. 3,750 86,250.00
ReliaStar Financial Corp. 1,200 51,750.00
RLI Corp. 2,500 60,937.50
Western National 3,000 55,125.00
-----------
350,037.50
-----------
Energy Sources & Related: 7.33%
Alamco, Inc. 7,500 $ 84,375.00
Norsk Hydro 1,500 73,312.50
Phillips Petroleum 1,400 58,625.00
Snyder Oil Corp. 4,000 40,500.00
USX Marathon Group 3,000 60,375.00
Wiser Oil 2,500 31,562.50
-----------
348,750.00
-----------
Consumer Products and Services: 4.12%
Liberty 375 9,937.50
Showbiz Pizza 6,000 94,500.00
Spaghetti Warehouse Inc. 1,200 64,500.00
Telecommunications "A" 1,500 27,187.50
-----------
196,125.00
-----------
Newspapers/Publishing: 4.08%
New York Times "A" 1,500 48,937.50
Pulitzer Publishing 700 41,475.00
Time Warner 1,200 47,100.00
Times-Mirror Co. 1,300 56,550.00
-----------
194,062.50
-----------
Business Products and Services: 4.02%
Computer Products 3,000 51,375.00
DH Technology 3,000 72,000.00
Pronet, Inc. 4,000 49,000.00
Stevens International "A" 7,500 18,750.00
-----------
191,125.00
-----------
Health Products and Services: 3.89%
Beverly Enterprises 3,000 36,000.00
Grancare, Inc. 2,400 47,700.00
Tenet Health Care 1,800 38,475.00
Universal Health Services "B" 2,400 62,700.00
-----------
184,875.00
-----------
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
INVESTMENTS IN SECURITIES (Continued)
JUNE 30, 1996
Principal
Amount or
Common Stocks, continued Shares Market Value
Chemicals: 3.58%
Akzo N.V. ADS 1,000 59,750.00
Dow Chemical 600 45,600.00
Monsanto 2,000 65,000.00
-----------
170,350.00
-----------
Merchandising: 3.36%
Burlington Coat Factory 4,500 47,250.00
KMart 6,700 82,912.50
Intertan 5,200 29,900.00
-----------
160,062.50
-----------
Multi-Industries: 3.11%
Canadian Pacific 2,000 44,000.00
Hanson, PLC 3,500 49,875.00
Harsco Corp. 800 53,800.00
-----------
147,675.00
-----------
Investment Co./Foreign Securities: 2.80%
First Australian Fund 2,400 22,050.00
Growth Fund of Spain 5,037.065 60,444.78
New Germany Fund, Inc. 4,000 50,500.00
-----------
132,994.78
-----------
Shipping and Transportation: 2.53%
Sea Containers, Ltd. "A" 3,600 68,400.00
Rollins Truck Leasing Corp. 5,000 51,875.00
-----------
120,275.00
-----------
Construction Products and Services: 2.52%
Centex Corp. 1,500 46,687.50
Oriole Homes "B" 4,000 29,500.00
Ply-Gem Industries 3,200 43,600.00
-----------
119,787.50
-----------
Banking and Financial Services: 2.44%
FirstFed Financial Corp. 1,400 24,325.00
Great Western Financial 2,000 47,750.00
MS Financial 7,000 43,750.00
-----------
115,825.00
-----------
Electric Utilities: 1.64%
Southern Company 1,600 39,400.00
Texas Utilities 900 38,475.00
-----------
77,875.00
-----------
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
INVESTMENTS IN SECURITIES (Continued)
JUNE 30, 1996
<TABLE>
<CAPTION>
Principal
Amount or
Common Stocks, continued Shares Market Value
<S> <C> <C>
Metal Products: .76%
IMCO Recycling, Inc. 2,000 36,000.00
------------
Forest Paper & Products: .45%
Georgia Pacific Corp. 300 21,300.00
------------
TOTAL COMMON STOCKS (Cost $1,448,072.97) 2,567,119.78
------------
SHORT-TERM DEPOSITS: 7.99%
Beal Banc C.D. 5.01% Due 8/7/96 95,000.00
Western American C.D. 5.59% Due 10/31/96 95,000.00
Guaranty Federal C.D. 4.91% Due 7/14/96 95,000.00
Imperial Bank of CA C.D. 5.2% Due 11/29/96 95,000.00
------------
TOTAL SHORT-TERM TIME DEPOSITS
(Cost $380,000.00) 380,000.00
OTHER SHORT-TERM SECURITIES: 31.81%
Institutional Liquid Assets - Treasury 214,761.99 214,761.99
U.S. Treasury Notes 4.375% of 8/15/96 1,000,000.00 999,062.50
U.S. Treasury Notes 4.375% of 11/15/96 300,000.00 298,781.25
------------
TOTAL OTHER SHORT-TERM SECURITIES
(Amortized Cost $1,512,398.13) 1,512,605.74
------------
TOTAL INVESTMENTS IN SECURITIES:
(Cost $3,340,471.10) 4,459,725.52
------------
OTHER ASSETS (NET OF LIABILITIES):6.21% 294,686.59
------------
NET ASSETS:100% $4,754,412.11
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
STATEMENT OF OPERATIONS
Six Months Year
Ended Ended
June 30, 1996 December 31, 1995
Investment Income
Income - Note A
Interest $ 50,590.65 $192,844.23
Dividends 18,698.65 42,855.80
------------ -----------
Total income 69,289.30 235,700.03
------------ -----------
Expenses
Investment advisory fees - Note E 20,406.50 52,383.99
Accounting fees 2,738.70 5,100.00
Registration fees and expenses 414.00 763.00
Directors' fees 750.00 1,875.00
Insurance 551.76 1,359.00
Postage and delivery 0 255.30
Printing and electronic filing 846.86 411.87
Professional fees 1,114.01 944.76
Other 0 639.82
Federal income tax 0 375.00
------------ -----------
Total expenses 26,821.83 64,107.74
------------ -----------
Investment income - net 42,467.47 171,592.29
------------ -----------
Realized and Unrealized Gain on
Investments - Note D
Net realized gain on investments 354,522.11 126,098.67
Change in unrealized appreciation
of investments for the period (134,671.91) 534,137.79
------------ -----------
Net gain (loss) on investments 219,850.20 660,236.46
------------ -----------
Net increase (decrease) in net
assets resulting from operations 262,317.67 831,828.75
============ ===========
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
June 30, 1996 December 31, 1995
<S> <C> <C>
Increase in Net Assets from Operations
Investment income - net $ 42,467.47 $ 171,592.29
Net realized gain on investment 354,522.11 126,098.67
Change in unrealized appreciation (134,671.91) 534,137.79
-------------- --------------
Net increase (decrease) in net assets
resulting from operations 262,317.67 831,828.75
-------------- --------------
Dividends Paid to Shareholders - Note F
Investment income 0 (171,167.97)
Net realized capital gains 0 (125,756.05)
-------------- --------------
Total dividends paid to shareholders 0 (296,924.02)
-------------- --------------
Capital Share Transactions (548,958.04) (1,123,961.00)
-------------- --------------
Net increase (decrease) (286,640.37) (589,056.27)
Net Assets
Beginning of period (including undistributed
investment income of $3,819.69) 5,041,052.48 5,630,108.75
-------------- --------------
End of period (including undistributed
investment income of $46,287.14) $ 4,754,412.11 $ 5,041,052.48
============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
Note A - Summary of Significant Accounting Policies
The Company is operated as a diversified, open-end management investment
company.
Security valuation: Investments in securities listed on the New York Stock
Exchange, American Stock Exchange or other security exchanges, and securities
traded in the Over-The-Counter market are valued at their closing sales price.
If no sale has been reported for that day, the last published sale or the last
recorded bid price, whichever is the more recent, is used, unless in the opinion
of the Board of Directors the value thus obtained may not fairly indicate the
actual market value, in which case these securities, and any other assets for
which market quotations are not readily available, are valued at fair value as
determined by the management and approved in good faith by the Board of
Directors.
Federal income taxes: For tax years beginning after December 31, 1987, it
is the Company's intention to comply with the provisions of the Internal Revenue
Code applicable to regulated investment companies and to distribute
substantially all of its capital gains and investment income to its
shareholders. Therefore, provision has been made for Federal income taxes only
on the undistributed income which is immaterial.
Other: The Company follows industry practice and records security
transactions on the trade date. Dividend income is recognized on the ex-dividend
date, and interest is recognized on an accrual basis.
Note B - Organizational and Registration Expenses
Registration expenses will be amortized as new shares are issued.
Note C - Capital Share Transactions
As of June 30, 1996 and December 31, 1995, there were 10,000,000 shares of
$1.00 par value capital stock authorized. Capital paid-in aggregated
$2,927,375.38 and $3,437,951.17 at June 30, 1996 and December 31, 1995,
respectively.
Transactions in capital stock for the six month period ended June 30, 1996
and for the year ended December 31, 1995 were as follows:
<TABLE>
<CAPTION>
Shares Amount
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Shares sold 19,077.057 2,894.969 $ 289,000.00 $ 43,000.00
Shares issued in reinvestment
of dividends 0 20,407.146 0 296,924.02
---------- ---------- ---------- ------------
19,077.057 23,302.115 289,000.00 339,924.02
Shares redeemed 57,461.498 98,445.797 837,958.04 1,463,885.02
---------- ---------- ---------- ------------
Net increase (decrease) (38,384.441) (75,143.682) ($ 548,958.04) ($ 1,123,961.00)
=========== =========== ============== ================
</TABLE>
7
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
JUNE 30, 1996
Note D - Investment Transactions
Purchases of common stocks during the six months ended June 30, 1996 were
$124,247.00 and $399,110.80 for the year ended December 31, 1995; sales were
$159,310.25 for the six months ended June 30, 1996 and $368,935.91 for the year
ended December 31, 1995. Purchases of U.S. Government obligations were
$597,990.87 and $1,663,734.38 for the six months ended June 30, 1996 and the
year ended December 31, 1995, respectively, and $1,000,000.00 and $2,692,656.25
were sold/matured during the six months ended June 30, 1996 and the year ended
December 31, 1995, respectively.
As of June 30, 1996 and December 31, 1995, the unrealized appreciation of
securities was $1,119,254.42 and $1,253,926.33, respectively; accumulated
undistributed net realized gains on investment transactions totaled $355,890.40
and $1,368.29 at June 30, 1996 and December 31, 1995, respectively.
Note E - Investment Advisory Fees
The Company pays advisory fees for investment management and advisory
services under a management agreement (Agreement) that provides for fees to be
computed monthly at an annual rate of 0.9 percent of the Company's average daily
net assets up to $30,000,000, 0.75 percent of assets from $30,000,000 to
$60,000,000 and 0.6 percent for those assets in excess of $60,000,000. The
Agreement provides for an expense reimbursement from the investment advisor if
the Company's total expenses exceed 2.0 percent of the Company's average daily
net assets for any year.
Note F - Distributions to Shareholders
On December 20, 1995, a distribution of $0.36 per share, aggregating
$125,756.05, was declared from net realized gains from investment transactions
and a dividend of $0.49 per share, aggregating $171,167.97 was declared from net
investment income. The distribution and dividend were paid on December 28, 1995
to shareholders of record on December 27, 1995.
8
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
SUPPLEMENTARY INFORMATION - SELECTED PER-SHARE DATA AND RATIOS*
<TABLE>
<CAPTION>
Six Months
Ended Year Ended December 31,
June 30, 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Per-Share Data:
Investment income $.20 $.67 $.47 $.34 $.47 $.91
Expenses (.08) .18 .16 .15 .15 .17
----- ----- ----- ----- ----- -----
Investment income - net .12 .49 .31 .19 .32 .74
Distributions from net investment income 0 (.49) (.31) (.19) (.32) (.73)
Net realized and unrealized gain (loss)
on securities .79 1.58 (.21) .77 .92 2.00
Distributions from net realized
long-term gains on securities 0 (.36) (.24) (.11) (.33) (.47)
----- ----- ----- ----- ----- -----
Net increase (decrease) in net
asset value .91 1.22 (.45) .66 .59 1.54
Net asset value:
Beginning of year 14.65 13.43 13.88 13.22 12.63 11.09
----- ----- ----- ----- ----- -----
End of Period $15.56 $14.65 $13.43 $13.88 $13.22 $12.63
====== ====== ====== ====== ====== ======
Ratios (Annualized)
Ratio of expenses to average net assets 1.17% 1.11% 1.11% 1.14% 1.18% 1.23%
Ratio of net investment income to
average net assets 1.85% 2.98% 2.19% 1.45% 2.09% 3.32%
Portfolio turnover rate 7.33% 28.17% 37.62% 3.10% 20.42% 28.20%
Shares Outstanding at End of Period 305,602.578 343,987.019 419,130.701 409,961.200 367,041.839 306,455.290
</TABLE>
* Selected data for a share of capital stock outstanding throughout the year.
9
