BASCOM HILL INVESTORS, INC.
6411 Mineral Point Road
Madison, WI 53705
(608) 273-2020
(800) 767-0300
Securities & Exchange Commission
Attention: Filing Desk
450 Fifth Street NW
Washington, DC 20549
Re: Bascom Hill Investors, Inc.
Registration No. 2-61528
Dear Sirs:
Enclosed are copies of the Bascom Hill Investors, Second Quarter
Report which was recently mailed to shareholders.
This filing is intended to fulfill the requirements of Section 24(b) and
Section 30(b)(2) of the Inevestment Company Act.
Sincerely,
Katherine L. Frank
Vice President/Secretary
KLF:mh
Enclosures
August, 1996
Dear Shareholder:
Following a very strong year in 1995, the stock market continued to
advance nicely in the first half of 1996. Bascom hill Investors increased
8.4% through June 30, 1996, and after a brief pause in July has posted
additional gains bringing the total return to 11.4% year-to-date.
This compares quite favorably with the 9.8% total return of the Standard
& Poor's 500 during the same time period.
The primary catalysts for the market's strong showing in the first half of
the year were low inflation, a strong economy and surprisingly robust corporate
earnings. The stock market chose to ignore the trauma experienced in the bond
world as interest rates rose dramatically through May. However, growing
inflationary pressures and higher interest rates finally caught up with stock
prices in July with mid and small-cap stocks bearing the brunt of the
correction. While most large-cap indicies declined less than 10%, the broad
market dropped in excess of 15%. After such an extended period of strong
performance, it was quite normal and healthy for the market to correct.
Ultimately, the sell-off was short lived. In August, the market once again
reversed course, however, only the large-cap stocks have recovered fully.
Throughout this turmoil, you Fund has remained quite steady, and on
balance the Fund has outpaced the market while maintaining a modest risk
posture. Many ask, "In the sixth year of this bull market how much higher
can stock prices go"? Our fundamental and technical analysis suggests that
we are undoubtedly operating in a relatively high risk environment. However,
we continue to find quality companies that represent good value. Granted the
hunting ground has narrowed due to excessive valuation/speculation in some
sectors.
Given the increased risk in the market, we have positioned Bascom Hill
Investors to participate in any additional gains while at the same time
provide ample protection should stocks or bonds suffer another set-back.
Obviously, the next four months will be exciting as we follow the mixed bag of
economic signals and get ready for an election that could have a major impact on
the markets. On balance, we expect to see continued volatility throughout
1996 which should create additional investment opportunities. Although
a repeat of 1995 returns isn't in the cards, shareholders should be pleased
with their results come year-end.
If we may provide additional information, please call. Best regards.
Sincerely,
Katherine L. Frank
Vice President
<TABLE>
BASCOM HILL INVESTORS, INC.
STATEMENT OF NET ASSETS (unaudited)
SCHEDULE OF INVESTMENTS
June 30, 1996
<CAPTION>
MARKET
COMMON STOCKS - 70.1% SHARES VALUE
- --------------------- --------- ----------
<S> <C> <C>
CONSUMER & BUSINESS SERVICES - 4.0%
Banta Corp. 19,800 $ 499,950
CONSUMER DISCRETIONARY - 4.3%
Carnival Corp. 18,400 531,300
CONSUMER PRODUCTS - 8.3%
Kimberly Clark Corp. 6,600 509,850
Lancaster Colony Corp. 13,900 519,513
CONSUMER - RETAIL - 3.8%
Wal-Mart Stores, Inc. 18,750 475,781
FINANCIAL -INSURANCE - 7.2%
MBIA, Inc. 4,950 385,481
MGIC Investment Corp. 9,050 507,931
FINANCIAL - REGIONAL BANKS - 4.3%
Norwest Corp. 15,450 538,819
FINANCIAL SERVICES - 8.4%
Federal Home Loan Mortgage Corp. 7,200 615,600
MBNA Corp. 14,850 423,225
MEDICAL & HEALTH CARE - 14.3%
Abbott Laboratories 12,150 528,525
Columbia/HCA Healthcare Corp. 7,000 375,375
Forest Laboratories, Inc. 7,800 301,275
Schering Plough Corp. 8,950 561,612
TECHNOLOGY - 15.5%
Cabletron Systems, Inc. 6,000 411,750
Compaq Computer Corp. 12,050 591,956
Fiserv, Inc. 13,600 408,000
Intel Corp. 6,950 510,391
---------
TOTAL COMMON STOCKS (COST $7,247,238) $8,696,334
----------
SHORT TERM INVESTMENTS - 29.9%
- ------------------------------
COMMERCIAL PAPER
American Express Credit Corp. 5.30% due 7/08/96 $450,000 $ 450,000
Associates Corp. 5.30% due 7/08/96 450,000 450,000
CIT Group 5.32% due 7/17/96 450,000 450,000
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<TABLE>
BASCOM HILL INVESTORS, INC.
STATEMENT OF NET ASSETS (continued)
<CAPTION>
SHARES OR
PRINCIPAL MARKET
AMOUNT VALUE
--------- ----------
<S> <C> <C>
VARIABLE RATE DEMAND NOTES
American Family Financial Services 5.08% due
7/1/96 $420,237 $ 420,237
General Mills, Inc. 5.07% due 7/1/96 428,583 428,583
Johnson Controls, Inc. 5.02% due 7/1/96 450,000 450,000
Pitney Bowes Credit Corp. 5.08% due 7/1/96 450,000 450,000
Southwestern Bell Telephone 5.06% due 7/1/96 159,994 159,994
Wisconsin Electric Power Corp. 5.12% due 7/1/96 450,000 450,000
---------
TOTAL SHORT TERM INVESTMENTS (COST $3,708,814) $3,708,814
----------
CASH & RECEIVABLES LESS LIABILITIES - .0% $ 172
- ----------------------------------------- ----------
TOTAL NET ASSETS - Equivalent to $19.55 per share
on 634,559.859 shares of $1 par value capital
stock outstanding (authorized capital stock -
1,000,000 shares). $12,405,320
===========
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
<TABLE>
BASCOM HILL INVESTORS, INC.
STATEMENT OF CHANGES IN NET ASSETS (unaudited)
<CAPTION>
Six Six
Months Months
Ended Ended
June 30, 1996 June 30,1995
------------- ------------
<S> <C> <C>
INVESTMENT ACTIVITIES
Net Investment Income $ 70,187 $ 147,368
Income Distributions to Shareholders 0 0
---------- ---------
Increase in Undistributed Net Investment Income $ 70,187 $ 147,368
---------- ---------
Net Realized Gains from Security Transactions $1,122,998 $ 552,575
Net Realized Gain Distribution to Shareholders 0 0
---------- ---------
Increase in Undistributed Realized Gains $1,122,998 $ 552,575
---------- ---------
Increase (Decrease) in Unrealized Appreciation $ (212,382) $ 523,639
----------- ---------
Increase in Undistributed Net Assets Derived
From Investment Activities $ 980,803 $1,223,582
========== ==========
SHARES SOLD AND REDEEMED
Net Proceeds from Shares Issued
(24,159 and 21,412 shares, respectively) $ 447,610 $ 356,772
Net Asset Value of Shares Issued in
Distributions 0 0
---------- ---------
447,610 356,772
Cost of Shares Redeemed
(47,320 and 19,391 shares, respectively) $ (883,543) $(326,242)
----------- ---------
Increase (Decrease) in Net Assets from Sale and
Redemption of Fund Shares $ (435,933) $ 30,530
=========== =========
NET ASSETS
Balance at Beginning of Period (Including
undistributed net income of $5,470 and $1,139) $11,860,450 $9,855,326
Net Increase from Investment Activities 980,803 1,223,582
Net Increase (Decrease) from Shares Sold and
Redeemed (435,933) 30,530
----------- ---------
Balance at End of Period (Including
undistributed net investment income of $75,657
and $148,507, respectively) $12,405,320 $11,109,438
=========== ===========
<FN>
See Accompanying Notes to Financial Statements.
</TABLE>
<TABLE>
BASCOM HILL INVESTORS, INC.
STATEMENTS OF OPERATIONS (unaudited)
<CAPTION>
Six Six
Months Months
Ended Ended
June 30, 1996 June 30, 1995
------------- -------------
<S> <C> <C>
INCOME:
Interest $ 95,048 $ 173,187
Dividends 47,896 41,042
--------- ---------
$ 142,944 $ 214,229
--------- ---------
EXPENSES:
Auditing Fee $ 2,483 $ 2,482
Custodian Fee 2,071 3,053
Directors' Fee 1,964 1,800
Investment Advisor Fee 48,542 44,030
Legal Fee 624 819
Licensing Fee 2,400 2,037
Printing Fee 3,557 4,042
Transfer Agent Fee 7,729 6,500
Other Fees 3,387 2,098
--------- ---------
$ 72,757 $ 66,861
--------- ---------
Net Investment Income $ 70,187 $ 147,368
========= =========
Ratio of Expenses to Income 50.9% 31.2%
REALIZED GAINS ON INVESTMENTS:
Proceeds from Sale $3,439,646 $2,309,467
Cost 2,316,648 1,756,892
--------- ---------
Net Realized Gains $1,122,998 $ 552,575
---------- ---------
UNREALIZED APPRECIATION (DEPRECIATION) ON
INVESTMENTS:
Balance, Beginning of Period $1,661,478 $ 302,946
Balance, End of Period 1,449,096 826,585
--------- ---------
Increase (Decrease) in Unrealized Appreciation $(212,382) $ 523,639
---------- ---------
NET REALIZED GAINS AND INCREASE (DECREASE) IN
UNREALIZED APPRECIATION $ 910,616 $1,076,214
========= ==========
<FN>
See Accompanying Notes to Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1996 AND 1995
(1) SIGNIFICANT ACCOUNTING PRINCIPLES
Bascom Hill Investors, Inc. began operations on November 1, 1978. The Fund
is registered under the Investment Company Act of 1940, as amended, as
an open-end management company. The following is a summary of
significant accounting principles followed by the Fund in the
preparation of its financial statements. The policies are in conformity
with generally accepted accounting principles.
(a)The market quotation for each security is the last reported sale
price on a national securities exchange, or, in the case of Over-The-
Counter securities, the latest available bid price. Other securities
for which quotations are not readily available are valued at fair
value as determined by the Board of Directors. Short-term securities
(maturing within 60 days) are valued on the basis of amortized cost.
Securities with maturities in excess of 60 days are valued at market
value.
(b)No provision is made for Federal income taxes since it is the
intention of the Fund to comply with the provisions of the Internal
Revenue Code available to investment companies, and to make the
requisite distribution to shareholders of taxable income which will be
sufficient to relieve it from all or substantially all Federal income
taxes.
(c)All percentages for the various classifications relate to total net
assets.
(d)The Fund follows industry practice and records security transactions on
the trade date. Dividend income is recognized on the ex-dividend date
and interest income is accrued on a daily basis.
(2) INVESTMENT ADVISORY AGREEMENT
The investment advisory agreement with Madison Investment Advisors, Inc.,
provides for an annual management fee of .80 of 1% of the first $50 million
of average net assets of the Fund. Such fees are remitted quarterly.
Although the investment advisor may be reimbursed for clerical or
administrative expenses incurred by it, none have been charged to the Fund
during 1996. The annual fee is reduced to the extent that the Fund's total
annual expenses (excluding interest, taxes, brokerage fees) exceeds 2% of
the first $10 million of average net assets and 1 1/2% of the next $20
million of average net assets. The advisor's fee was not so reduced for the
period ended June 30, 1996. Certain officers and directors of the Fund are
also officers and directors of Madison Investment Advisors, Inc. The Fund
owed Madison Investment Advisors, Inc. $24,774 as of June 30, 1996.
(3) COST OF INVESTMENTS PURCHASED AND PROCEEDS OF INVESTMENTS SOLD
For the period ended June 30, 1996, the purchases and sales of investment
securities (excluding short-term securities) were $3,338,764 and $3,439,646,
respectively, (purchases and sales of U.S. government obligations only were
$0 and $0, respectively).
(4) NET REALIZED GAINS AND LOSSES ON INVESTMENTS
Net realized gains and losses on investments are computed on the basis of
specifically identified certificates. During the period ended June 30, 1996,
net realized gains would have been $1,122,999 if computed on the basis of
average cost.
(5) AGGREGATE COST OF SECURITIES AND UNDISTRIBUTED INCOME OR CAPITAL GAINS
The aggregate cost of securities for Federal income tax purposes is
$7,247,238. The aggregate gross unrealized appreciation for all securities
in which there is an excess of value over tax cost is $1,505,834. The
aggregate gross unrealized depreciation for all securities in which there is
an excess of tax cost over value amounts to $56,738. The net unrealized
appreciation at June 30,1996, for all securities is $1,449,096. Through
the period ended June 30, 1966, the accumulated undistributed net investment
income is $75,657 and the accumulated undistributed realized capital gain
is $1,124,335.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BASCOM HILL
INVESTORS, INC. SEMI-ANNUAL REPORT DATED JUN-30-1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH SEMI-ANNUAL REPORT.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 10956
<INVESTMENTS-AT-VALUE> 12405
<RECEIVABLES> 19
<ASSETS-OTHER> 6
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 12430
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 25
<TOTAL-LIABILITIES> 25
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 9122
<SHARES-COMMON-STOCK> 635
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 70
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1123
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1661
<NET-ASSETS> 12405
<DIVIDEND-INCOME> 48
<INTEREST-INCOME> 95
<OTHER-INCOME> 0
<EXPENSES-NET> 73
<NET-INVESTMENT-INCOME> 70
<REALIZED-GAINS-CURRENT> 1123
<APPREC-INCREASE-CURRENT> (212)
<NET-CHANGE-FROM-OPS> 981
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 24
<NUMBER-OF-SHARES-REDEEMED> 47
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 545
<ACCUMULATED-NII-PRIOR> 5
<ACCUMULATED-GAINS-PRIOR> 1
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 49
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 12135
<PER-SHARE-NAV-BEGIN> 18.03
<PER-SHARE-NII> .11
<PER-SHARE-GAIN-APPREC> 1.77
<PER-SHARE-DIVIDEND> 1.88
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.55
<EXPENSE-RATIO> .60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
