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Previous: PRESIDENTIAL VARIABLE ANNUITY ACCOUNT ONE, NSAR-U, 1999-03-01 |
Next: PHOENIX MULTI PORTFOLIO FUND, 24F-2NT, 1999-03-01 |
PHILLIPS CAPITAL INVESTMENTS, INC.
ANNUAL REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED DECEMBER 31, 1998
<PAGE>
CONTENTS
Independent Auditors' Report.........................................Page 3
Statements of Assets and Liabilities................................. 4
Investment in Securities as of December 31, 1998..................... 5 - 7
Statements of Operations............................................. 8
Statements of Changes in Net Assets.................................. 9
Notes to Financial Statements........................................ 10 - 11
Supplementary Information -
Selected Per-Share Data and Ratios............................... 12
2
<PAGE>
McCARTHY, ROSE & MILLS, L.L.P.
Certified Public Accountants
600 North Pearl Street, Suite 440
Dallas, Texas 75201-7465
Tel: (214) 969-0400 Fax (214) 855-0366
INDEPENDENT AUDITORS' REPORT
Shareholders and Board of Directors
Phillips Capital Investments, Inc.
Dallas, Texas
We have audited the statements of assets and liabilities of Phillips
Capital Investments, Inc., including the schedule of portfolio investments, as
of December 31, 1998 and 1997, and the related statements of operations and
changes in net assets for the years then ended, and selected per-share data and
ratios for each of the five years in the period then ended. These financial
statements and per-share data and ratios are the responsibility of management.
Our responsibility is to express an opinion on these financial statements and
per-share data and ratios based on our audits.
We conducted our audits in accordance with standards established by the
American Institute of Certified Public Accountants. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and per-share data and ratios are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1998 and 1997, by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and selected per-share data and
ratios referred to above present fairly, in all material respects, the financial
position of Phillips Capital Investments, Inc. as of December 31, 1998 and 1997,
and the results of its operations and the changes in its net assets for the
years then ended, and selected per-share data and ratios for each of the five
years in the period then ended in conformity with generally accepted accounting
principles.
/s/ McCarthy, Rose & Mills, L.L.P.
January 26, 1999
Dallas, Texas
3
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
December 31,
1998 1997
<S> <C> <C>
Assets:
Investments in securities, at value -
amortized cost $3,962,343.53 in 1998 and
$3,630,576.89 in 1997 - Note A $5,287,540.90 $5,028,727.83
Cash 82,253.72 44,005.87
Receivables - Note A
Interest 30,850.68 23,576.95
Dividends 4,460.60 18,865.05
Investment securities sold 3,167.12 2,677.63
Deferred registration expenses - Note B 937.63 1,169.79
Prepaid insurance 316.72 316,73
------------- -------------
Total assets 5,409,527.36 5,119,339.85
------------- -------------
Liabilities
Accrued accounting fees 6,000.00 5,350.00
Federal income tax payable 650.00 300.00
Miscellaneous accounts payable 570.97 581.28
------------- -------------
Total liabilities 7,220.97 6,231.28
------------- -------------
Net Assets:
Net assets (equivalent to $14.86 and $15.06 per share
based on 363,465.526 and 339,582.628 shares of capital
stock outstanding at December 31, 1998 and
1997, respectively) - Note C $5,402,306.39 $5,113,108.57
============= =============
</TABLE>
4
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
INVESTMENTS IN SECURITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
Principal
Amount or
COMMON STOCKS: 50.71% Shares Market Value
<S> <C> <C>
Media/Entertainment: 8.01%
Pulitzer Publishing 933 80,821.12
Telecommunications "A" 3,000 165,937.50
Time Warner 3,000 186,187.50
----------
432,946.12
----------
Shipping and Transportation: 5.45%
Motor Cargo Industries 3,000 24,000.00
Sea Containers, Ltd. "A" 5,000 149,687.50
Transport Corp. of America 5,000 60,000.00
Rush Enterprises 5,500 60,500.00
----------
294,187.50
----------
Energy Sources & Related: 5.22%
Norsk Hydro 1,500 51,281.25
Phillips Petroleum 1,400 59,675.00
Range Resources 8,000 27,500.00
Snyder Oil Corp. 4,000 53,250.00
USX Marathon Group 3,000 90,375.00
----------
282,081.25
----------
Electric Utilities: 5.05%
Houston Industries 2,000 64,125.00
PacifiCorp 2,000 42,125.00
Southern Company 2,500 72,656.25
Texas Utilities 900 42,018.75
Interstate Energy Corp 1,600 51,600.00
----------
272,525.00
----------
Consumer Products and Services: 4.46%
Fruit of the Loom 2,800 38,675.00
CEC Enterprises 4,000 111,000.00
Spaghetti Warehouse Inc. 12,000 91,500.00
----------
241,175.00
----------
Chemicals: 4.42%
Akzo N.V. ADS 2,000 89,250.00
Dow Chemical 600 54,562.50
Monsanto 2,000 95,000.00
----------
238,812.50
----------
Investment Co./Foreign Securities: 4.30%
First Australian Fund 7,500 49,218.75
Growth Fund of Spain 4,425.757 109,404.71
New Germany Fund, Inc. 5,708.807 73,857.69
----------
232,481.15
----------
</TABLE>
5
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
INVESTMENTS IN SECURITIES (Continued)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
Principal
Amount or
Common Stocks, continued Shares Market Value
<S> <C> <C>
Insurance: 3.97%
RellaStar Financial Corp. 2,400 110,700.00
RLI Corp. 3,125 103,906.25
----------
214,606.25
----------
Health Products and Services: 3.93%
Beverly Enterprises 6,000 40,500.00
Tenet Health Care 1,800 47,250.00
Universal Health Services "B" 2,400 124,500.00
----------
212.250.00
----------
Merchandising: 1.56%
KMart 5,500 84,218.75
----------
Metals/Mining: 1.52%
Timken Company 2,700 50,962.50
IMCO Recycling Inc. 2,000 30,875.00
----------
81,837.50
----------
Construction Products and Services: 1.15%
Encore Wire 3,000 27,750.00
Hanson, PLC 875 34,125.00
----------
61,875.00
----------
Forest & Paper Products: 0.97%
Abitibi Consolidated 3,000 27,937.50
Georgia Pacific Corp. 300 17,568.75
Georgia Pacific Timber 300 7,143.75
------------
52,650.00
------------
Multi-Industries: 0.70%
Canadian Pacific 2,000 37,750.00
----------
TOTAL COMMON STOCKS (Cost $1,407,829.25) 2,739,396.03
------------
PREFERRED STOCKS: 2.12%
ConAgra Capital LC Prf'd 2,500 50,000.00
Texaco Capital Prf'd "B" 3,000 64,500.00
------------
TOTAL PREFERRED STOCKS (Cost $121,400.00) 114,500.00
------------
</TABLE>
6
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
INVESTMENTS IN SECURITIES (Continued)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
Principal
Amount or
Shares Market Value
<S> <C> <C>
SHORT-TERM TIME DEPOSITS: 7.03%
Beal Banc CD 5.29% Due 1/07/99 95,000.00
Peoples Bank CD 4.8% Due 1/14/99 95,000.00
Guaranty Federal CD 5.34% Due 1/14/99 95,000.00
Western American CD 4.9% Due 4/28/99 95,000.00
------------
TOTAL SHORT-TERM TIME DEPOSITS 380,000.00
(Cost $380,000.00) ------------
OTHER SHORT-TERM SECURITIES: 38.02%
Institutional Liquid Assets - Treasury $210,272.65 210,272.65
U.S. T-Notes 5.00% OF 2/15/99 800,000.00 800,250.00
U.S. T-Notes 5.00% OF 1/31/99 500,000.00 500,000.00
FORD MOTOR CR COMM PAPER DUE 2/18/99 197,525.00 197,525.00
GE COMM PAPER DUE 3/8/99 197,472.22 197,472.22
SEARS COMM PAPER DUE 1/12/99 148,125.00 148,125.00
------------
TOTAL OTHER SHORT-TERM SECURITIES 2,053,644.87
(Cost $2,053,114.28) ------------
TOTAL INVESTMENTS IN SECURITIES 5,287,540.90
(Cost $3,962,343.53) ------------
TOTAL OTHER ASSETS (NET OF LIABILITIES): 2.12% 114,765.49
------------
NET ASSETS: 100.00% $5,402,306.39
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997
<S> <C> <C>
Investment Income
Income - Note A
Interest $128,502.17 $112,639.25
Dividends 51,331.01 47,191.17
----------- -----------
Total income 179,833.18 159,830.42
----------- -----------
Expenses
Investment advisory fees - Note E 48,503.38 43,693.37
Accounting fees 6,630.00 5,450.00
Registration fees and expenses 692.17 679.73
Directors' fees 1,750.00 1,500.00
Insurance 1,101.00 1,176.06
Postage and delivery 459.00 153.50
Printing 166.34 --
Professional fees 585.00 1,454.52
Other 2,783.92 3,522.01
Federal income tax 650.00 300.00
----------- -----------
Total expenses 63,320.81 57,929.19
----------- -----------
Investment income - net 116,512.37 101,901.23
----------- -----------
Realized and Unrealized Gain on
Investments - Note D
Net realized gain on investments 143,417.51 304,539.34
Change in unrealized appreciation
of investments for the period (72,953.58) 445,293.12
----------- -----------
Net gain (loss) on investments 70,463.93 749,832.46
----------- -----------
Net increase increase in net
assets resulting from operations $186,976.30 $851,733.69
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997
<S> <C> <C>
Increase in Net Assets from Operations
Investment income - net $116,512.37 $101,901.23
Net realized gain on investment 143,471.51 304,539.34
Change in unrealized appreciation (72,953.58) 445,293.12
------------- -------------
Net increase in net assets
resulting from operations 186,976.30 851,733.69
------------- -------------
Dividends Paid to Shareholders - Note F
Investment income (115,507.78) (101,452.98)
Net realized capital gains (143,091.66) (304,358.85)
------------- -------------
Total dividends paid to shareholders (258,599.44) (405,811.83)
------------- -------------
Capital Share Transactions 360,820.96 (214,897.01)
------------- -------------
Net increase (decrease) 289,197.82 231,024.85
Net Assets
Beginning of period (including undistributed
investment income of $5,279.34) 5,113,108.57 4,882,083.72
------------- -------------
End of period (including undistributed
investment income of $6,283.93) $5,402,306.39 $5,113,108.57
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
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 accrued on all debt securities on a daily basis. Discounts
and premiums on securities purchased are amortized over the life of the
respective securities.
Note B - Registration Expenses
Registration expenses will be amortized as new shares are issued.
Note C - Capital Share Transactions
As of December 31, 1998 and 1997, there were 10,000,000 shares of $1.00 par
value capital stock authorized. Capital paid-in aggregated $3,704,796.82 and
$3,367,858.76 at December 31, 1998 and 1997, respectively.
Transactions in capital stock for the period were as follows:
<TABLE>
<CAPTION>
Shares Amount
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Shares sold 14,702.421 11,990.444 $232,170.23 $167,000.00
Shares issued in reinvestment
of dividends 17,555.963 27,419.715 258,599.44 405,811.83
---------- ----------- ----------- ------------
32,258.384 39,410.159 490,769.67 572.811.83
Shares redeemed 8,375.486 55,227.171 129,948.71 787,708.84
---------- ----------- ----------- ------------
Net increase (decrease) 23,882.898 (15,817.012) $360,820.96 ($214,897.01)
========== =========== =========== ============
</TABLE>
10
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 1998
Note D - Investment Transactions
Purchases of common stocks during the year were $429,479.95 in 1998 and
$154,285.00 in 1997; sales were $533,096.68 and $651,731.14 in 1998 and 1997,
respectively. Purchases of U.S. Government obligations were $2,195,598.44 in
1998 and $1,195,781.20 in 1997, and $2,100,000.00 and $1,200,000.00 were
sold/matured in 1998 and 1997, respectively.
As of December 31, 1998 and 1997, the unrealized appreciation of securities
was $1,325,197.35 and $1,398,150.93, respectively; accumulated undistributed net
realized gains on investment transactions totaled $2,562.77 and $2,236.96 at
December 31, 1998 and 1997, 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 17, 1998, a distribution of $.415 per share, aggregating
$143,091.66, was declared from net realized gains from investment transactions
and a dividend of $.335 per share, aggregating $115,507.78 was declared from
net investment income. The distribution and dividend were paid on December 29,
1998 to shareholders of record on December 28, 1998.
On December 16, 1997, a distribution of $0.975 per share, aggregating
$304,358.85, was declared from net realized gains from investment transactions
and a dividend of $0.325 per share, aggregating $101,452.98 was declared from
net investment income. The distribution and dividend were paid on December 18,
1997 to shareholders of record on December 17, 1997.
11
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
SUPPLEMENTARY INFORMATION - SELECTED PER-SHARE DATA AND RATIOS*
<TABLE>
<CAPTION>
Year Ended December 31,
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Per-Share Data:
Investment income $0.52 $0.53 $0.48 $0.67 $0.47
Expenses 0.18 0.19 0.18 0.18 0.16
------ ------ ------ ------ ------
Investment income - net 0.34 0.34 0.30 0.49 0.31
Distributions from net investment income (0.34) (0.33) (0.29) (0.49) (0.31)
Net realized and unrealized gain (loss)
on securities 0.21 2.28 1.07 1.58 (0.21)
Distributions from net realized
long-term gains on securities (0.41) (0.97) (1.99) (0.36) (0.24)
------ ------ ------ ------ ------
Net increase (decrease) in net
asset value (0.20) 1.32 (0.91) 1.22 (0.45)
Net asset value:
Beginning of year 15.06 13.74 14.65 13.43 13.88
------ ------ ------ ------ ------
End of year $14.86 $15.06 $13.74 $14.65 $13.43
====== ====== ====== ====== ======
Ratios (Annualized)
Ratio of expenses to average net assets 1.18% 1.19% 1.20% 1.11% 1.11%
Ratio of net investment income to
average net assets 2.17% 2.10% 1.96% 2.98% 2.19%
Portfolio turnover rate 15.97% 5.71% 19.08% 28.17% 37.62%
Shares Outstanding at End of Year 363,465.526 339,582.628 355,399.640 343,987.019 419,130.701
</TABLE>
* Selected data for a share of capital stock outstanding throughout the year.
12
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