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Previous: PRESIDENTIAL VARIABLE ANNUITY ACCOUNT ONE, NSAR-U, 2000-02-29 |
Next: VARIABLE ACCOUNT D OF FORTIS BENEFITS INSURANCE CO, NSAR-U, 2000-02-29 |
PHILLIPS CAPITAL INVESTMENTS, INC.
ANNUAL REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED December 31, 1999
CONTENTS
Management Review of 1999............................................Page 2
Independent Auditors' Report......................................... 3
Statements of Assets and Liabilities................................. 4
Investment in Securities as of December 31, 1999..................... 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
<PAGE>
MANAGEMENT REVIEW OF 1999
Common stock prices generally rose during the first half of 1999. The net
asset value of Phillips Capital Investments, Inc. (the "Fund") participated in
this first half appreciation. As the year progressed, most stocks declined in
value around the end of the third quarter. Following this setback, a more
concentrated group of primarily technology and internet equities rallied through
the end of the year. Though the Fund did not suffer as severe a decline as many
individual stocks and mutual funds during the Fall downturn, the Fund's
value-oriented holdings did not rebound as strongly as many of the more
aggressively priced securities during the closing weeks of 1999.
As has been widely reported in both the television and print news, value
stocks and funds which invest in such stocks, have underperformed as a group for
the last several years. In 1999, the total return of the Fund was a negative
0.65%. Though this basically flat performance for the year was disappointing,
the Fund outperformed many other highly rated value funds.
As the year ended, most equities labeled as growth stocks were richly
priced by historical standards, many with technology and internet company stocks
priced at huge multiples of their sales per share. Many of these companies will
probably not survive, and one could easily project that the stock prices of most
of the others could see much lower levels in the years ahead. Nobody knows
exactly when this current momentum-driven and super-concentrated speculation
will end. However, we would suspect that each passing day brings us closer to
such a fate.
Protecting your investment against undue risk remains inherent in your
Fund's investment philosophy. As long-term investors, we believe your Fund's
value-oriented total return objective is even more appealing from the market
levels in place at the end of 1999.
(HISTORICAL PERFORMANCE TABLE)
<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, 1999 and 1998, 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, 1999 and 1998, 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, 1999 and 1998,
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 19, 2000
Dallas, Texas
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
December 31,
----------------------------------
1999 1998
--------------- ----------------
<S> <C> <C>
Assets:
Investments in securities, at value -
amortized cost $2,761,913.74 in 1999 and
$3,962,343.53 in 1998 - Note A $ 3,831,610.19 $ 5,287,540.90
Cash 157,908.33 82,253.72
Receivables - Note A
Interest 18,344.69 30,850.68
Dividends 3,910.82 4,460.60
Investment securities sold 72,576.66 3,167.12
Deferred registration expenses - Note B 690.92 937.63
Prepaid insurance 269.62 316.72
---------------- ----------------
Total assets 4,085.310.87 5,409,527.36
================ ================
Liabilities
Accrued accounting fees 5,150.00 6,000.00
Federal income tax payable 200.00 650.00
Miscellaneous accounts payable 176.93 570.97
---------------- ----------------
Total liabilities 5,526.93 7,220.97
---------------- ----------------
Net Assets:
Net assets (equivalent to $13.90 and $14.86
per share based on 293,475.708 and
363,465.526 shares of capital stock
outstanding at December 31, 1999 and
1998, respectively) - Note C $ 4,079,783.94 $ 5,402,306.39
================ ================
The accompanying notes are an integral part of these financial statements.
</TABLE>
4
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
INVESTMENTS IN SECURITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Principal
Amount or
COMMON STOCKS: 55.29% Shares Market Value
----------------- ----------------
<S> <C> <C>
Communications/Entertainment: 6.76%
AT & T 1,744 $ 88,617.00
Hearst-Argyle (Series A) 1,529 40,709.63
Pulitzer, Inc. 933 37,611.56
Time Warner 1,500 108,656.25
---------------
275,594.44
---------------
Shipping and Transportation: 6.74%
Sea Containers, Ltd. "A" 5,000 133,125.00
Transport Corp. of America 5,000 62,187.50
Rush Enterprises 5,500 79,750.00
---------------
275,062.50
---------------
Consumer Products and Services: 5.05%
CEC Enterprises 6,000 169,500.00
Rock of Ages 8,000 36,500.00
---------------
206,000.00
---------------
Energy Sources & Related: 5.04%
Phillips Petroleum 1,400 65,800.00
Santa Fe Snyder 8,200 65,600.00
USX Marathon Group 3,000 74,062.50
---------------
205,462.50
---------------
Insurance: 4.91%
ReliaStar Financial Corp. 2,400 94,050.00
RLI Corp. 3,125 106,250.00
---------------
200,300.00
---------------
Health Products and Services: 4.65%
Beverly Enterprises 7,500 32,812.50
Tenet Health Care 3,000 70,500.00
Universal Health Services "B" 2,400 86,400.00
---------------
189,712.50
---------------
Investment Co./Foreign Securities: 4.21%
First Australian Fund 6,400 48,800.00
Growth Fund of Spain 3,500 53,165.00
New Germany Fund, Inc 5,701.485 69,843.19
---------------
171,808.19
---------------
5
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
INVESTMENTS IN SECURITIES (CONTINUED)
December 31, 1999
Principal
Amount or
Common Stocks (continued) Shares Market Value
----------------- ----------------
Chemicals: 4.19%
Akzo N.V. ADS 2,000 99,500.00
Monsanto 2,000 71,250.00
----------------
170,750.00
----------------
Merchandising: 3.83%
Claire's Stores 2,500 56,562.50
Kmart 6,300 63,393.75
Stein Mart 6,400 36,400.00
----------------
156,356.25
----------------
Electric Utilities: 3.61%
Reliant Energy 2,000 45,750.00
Southern Company 2,500 58,750.00
Texas Utilities 1,200 42,675.00
----------------
147,175.00
----------------
Multi-Industries: 2.63%
Canadian Pacific 2,000 43,125.00
Norsk Hydro 1,500 64,125.00
----------------
107,250.00
----------------
Metals/Mining: 0.99%
IMCO Recycling, Inc. 3,200 40,400.00
----------------
Banking & Financial Services: 0.95%
Washington Mutual 1,500 38,812.50
----------------
Forest & Paper Products: 0.87%
Abitibi Consolidated 3,000 35,625.00
----------------
Construction Products/Services: 0.86%
Hanson, PLC 875 35,273.44
----------------
TOTAL COMMON STOCKS (Cost $1,157,896.98) $ 2,255,582.32
----------------
PREFERRED STOCKS: 2.79%
ConAgra Capital LC Prf'd 3,000 52,500.00
Texaco Capital Prf'd "B" 3,500 61,250.00
----------------
TOTAL PREFERRED STOCKS (Cost $140,600.00) 113,750.00
----------------
6
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1999
Principal
Amount or
Shares Market Value
---------------- ----------------
SHORT-TERM TIME DEPOSITS: 9.31%
Beal Banc CD 4.92% Due 02/07/00 $ 95,000.00
City National Bank Beverly Hills CD 5.65% due 02/25/00 95,000.00
Lehman Bros. CD 5.85% due 05/03/00 95,000.00
1st Bank of PR Santurce 6% due 06/14/00 95,000.00
----------------
TOTAL SHORT-TERM TIME DEPOSITS 380,000.00
----------------
(Cost $380,000.00)
OTHER SHORT-TERM SECURITIES: 26.53%
Institutional Liquid Assets - Treasury $ 193,760.72 193,760.72
U.S. T-Notes 5.375% OF 01/31/2000 300,000.00 299,906,25
U.S. T-Notes 5.125% OF 08/31/2000 250,000.00 248,515.62
General Motors Com Ppr due 03/07/00 145,776.67 145,776.67
GE Cap Corp Com Ppr due 05/22/00 194,318.61 194,318.61
----------------
TOTAL OTHER SHORT-TERM SECURITIES 1,082,277.87
----------------
(Cost $1,083,416.76)
TOTAL INVESTMENTS IN SECURITIES: 3,831,610.19
----------------
(Cost $2,761,913.74)
TOTAL OTHER ASSETS (NET OF LIABILITIES): 6.08% 248,173.75
----------------
NET ASSETS: 100.00% $4,079,783.94
================
The accompanying notes are an integral part of these financial statements.
</TABLE>
7
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
1999 1998
---------------- ---------------
<S> <C> <C>
Investment Income
Income - Note A
Interest $ 84,991.42 $ 128,502.17
Dividends 45,145.15 51,331.01
---------------- ---------------
Total income 130,136.57 179,833.18
---------------- ---------------
Expenses
Investment advisory fees - Note E 39,049.74 48,503.38
Accounting fees 5,800.00 6,630.00
Registration fees and expenses 706.70 692.17
Directors' fees 1,500.00 1,750.00
Insurance 983.48 1,101.00
Postage and delivery 497.68 459.00
Printing 25.43 166.34
Professional fees 2,430.50 585.00
Other (72.59) 2,783.92
Federal income tax 200.00 650.00
---------------- ----------------
Total expense 51,120.94 63,320.81
---------------- ----------------
Investment income - net 79,015.63 116,512.37
---------------- ----------------
Realized and Unrealized Gain on
Investments - Note D
Net realized gain on investments 159,270.62 143,417.51
---------------- ----------------
Change in unrealized appreciation
of investments for the period (255,500.91) (72,953.58)
---------------- ----------------
Net gain (loss) on investments (96,230.29) 70,463.93
---------------- ----------------
Net increase (decrease) in net
assets resulting from operations $ (17,214.66) $ 186,976.30
================ ================
The accompanying notes are an integral part of these financial statements.
</TABLE>
8
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
1999 1998
---------------- ---------------
<S> <C> <C>
Increase in Net Assets from Operations
Investment income - net $ 79,015.63 $116,512.37
Net realized gain on investment 159,270.62 143,417.51
Change in unrealized appreciation (255,500.91) (72,953.58)
---------------- ----------------
Net increase (decrease) in net assets
resulting from operations (17,214.66) 186,976.30
---------------- ----------------
Dividends Paid to Shareholders - Note F
Investment income (79,193.18) (115,507.78)
Net realized capital gains (158,386.35) (143,091.66)
---------------- ----------------
Total dividends paid to shareholders (237,579,53) (258,599.44)
---------------- ----------------
Capital Share Transactions (1,067,728.26) 360,820.96
---------------- ----------------
Net increase (decrease) (1,322,522.45) 289,197.82
Net Assets
Beginning of period (including undistributed
investment income of $6,283.93) 5,402,306.39 5,113,108.57
---------------- ----------------
End of period (including undistributed
investment income of $6,106.38) $ 4,079,783.94 $ 5,402,306.39
================ ================
The accompanying notes are an integral part of these financial statements.
</TABLE>
9
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
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, 1999 and 1998 there were 10,000,000 shares of $1.00 par
value capital stock authorized. Capital paid-in aggregated $2,707,058.36 and
$3,704,796.82 at December 31, 1999 and 1998, respectively.
Transactions in capital stock for the period were as follows:
<TABLE>
<CAPTION>
Shares Amount
---------------------------------- ----------------------------------
1999 1998 1999 1998
--------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Shares sold 16,457.782 14,702,241 $ 246,701.54 $ 232,170.23
Shares issued in reinvestment
of dividends 16,870.603 17,555.963 233,489.18 258,599.44
--------------- --------------- ---------------- ---------------
33,328.385 32,258.384 480,190.72 490,769.67
Shares redeemed (103,318.204) 8,375.486 (1,547,918.98) 129,948.71
--------------- --------------- ---------------- ---------------
Net increase (decrease) (69,989.819) 23,882.898 $ (1,067,728.26) $ 360,820.96
=============== =============== ================ ===============
</TABLE>
10
<PAGE>
PHILLIPS CAPITAL INVESTMENTS, INC.
INVESTMENTS IN SECURITIES (CONTINUED)
DECEMBER 31, 1999
Note D - Investment Transactions
Purchases of common stocks during the year were $290,409.42 in 1999 and
$429,479.95 in 1998; sales were $644,147.11 and $533,096.68 in 1999 and 1998,
respectively. Purchases of U.S. Government obligations were $954,231.98 and
$2,195,598.44 in 1998, and $1,700,000.00 and $2,100,000.00 were sold/matured
1999 and 1998, respectively.
As of December 31, 1999 and 1998, the unrealized appreciation of securities
was $1,069,696.45 and $1,325,192.35, respectively; accumulated undistributed net
realized gains on investment transactions totaled $3,447.04 and $2,562.77 at
December 31, 1999 and 1998, 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 16, 1999, a distribution of $0.58 per share, aggregating
$158,386.35, was declared from net realized gains from investment transactions
and a dividend of $0.29 per share, aggregating $79,193.18 was declared from net
investment income. The distribution and dividend were paid on December 30, 1999
to shareholders of record on December 29, 1999.
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.
11
<PAGE>
<TABLE>
<CAPTION>
PHILLIPS CAPITAL INVESTMENTS, INC.
SUPPLEMENTARY INFORMATION - SELECTED PER-SHARE DATA AND RATIOS*
Year Ended December 31,
-------------------------------------------------------------------
1999 1998 1997 1996 1995
--------- ---------- ---------- ---------- ----------
Per-Share Data:
<S> <C> <C> <C> <C> <C>
Investment income $0.48 $0.52 $0.53 $0.48 $0.67
Expenses 0.19 0.18 0.19 0.18 0.18
--------- ---------- ---------- ---------- ----------
Investment income - net 0.29 0.34 0.34 0.30 0.49
Distributions from net
investment income (0.29) (0.34) (0.33) (0.29) (0.49)
Net realized and unrealized
gain (loss) on securities (0.38) 0.21 2.28 1.07 1.58
Distributions from net
realized long-term gains
on securities (0.58) (0.41) (0.97) (1.99) (0.36)
--------- ---------- ---------- ---------- ----------
Net increase (decrease) in net
asset value (0.96) (0.20) 1.32 (0.91) 1.22
Net asset value:
Beginning of year 14.86 15.06 13.74 14.65 13.43
--------- ---------- ---------- ---------- ----------
End of year $13.90 $14.86 $15.06 $13.74 $14.65
========= ========== ========== ========== ==========
Ratios (Annualized)
Ratio of expenses to average
net assets 1.17% 1.18% 1.19% 1.20% 1.11%
Ratio of net investment income
to average net assets 1.81% 2.17% 2.10% 1.96% 2.98%
Portfolio turnover rate 11.48% 15.97% 5.71% 19.08% 28.17%
Shares Outstanding at End of
Year 293,475.708 363,465.526 339,582.628 355,399.640 343,987.019
</TABLE>
* Selected data for a share of capital stock outstanding throughout the year.
12
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