BASCOM HILL INVESTORS, INC.
6411 Mineral Point Rd.
Madison, WI 53705
(608) 273-2020
March 5, 1996
Securities & Exchange Commisison
Attn: Filing Desk
450 Fifth Street NW
Washington, DC 20549
Re: Bascom Hill Investors, Inc.
Reg. No. 2-61528
Dear Sirs:
Enclosed please find the Annual Report, for the above named
registrant, covering the year ended December 31, 1995. This
report has been mailed to all shareholders of record.
This filing is intended to fulfill the requirements of
Section 24(b) and Section 30(b)(2) of the Investment Company
Act.
Sincerely,
Katherine L. Frank
Vice President
BASCOM HILL INVESTORS, INC.
Dear Shareholder:
We are pleased to report that Bascom Hill Investors,
Inc. increased 25% in 1995, a year that finally produced
above average results in the stock market. History shows
that every 4 or 5 years the market has an impressive run.
Your Fund participated nicely in 1995, on the heals of
excellent performance in 1994.
Throughout 1995, interest rates declined as the economy
slowed and corporate earnings posted surprisingly strong
gains. The stock market loved it. Although inappropriate for
a diversified portfolio, it would have been an excellent
year to be 100% invested in technology stocks. With all the
excitment this year, it is easy to forget that at the outset
there were several reasons to be somewhat cautious. First,
interest rates had risen dramatically in 1994, resulting in
one of the worst bond market performances on record. Second,
inflationary pressures had built in 1994 led by an increase
in raw material prices. And finally, a period of slowing
economic growth appeared to be on the horizon.
True to our long standing philosophy of managing risk
as a means to protect principal, we began the year with a
slightly defensive posture. However, as it became evident
that interest rates would decline in 1995 and corporate
earnings would not disappoint, we took advantage of minor
dips in the market to add quality stocks throughout the
year. The stock selection was right on target as the stocks
alone outperformed the market significantly.
Looking ahead, we have gotten off to a fast start in
1996. The primary factors driving the market continue to be
surprisingly strong corporate earnings, declining interest
rates, low inflation and the enormous amount of money
flowing into equity mutual funds. However, the overall
market is fully priced which limits the upside from here and
raises the potential for a sell-off. Still, a correction in
the short-term would be healthy, producing a good buying
opportunity, and providing a solid underpinning for longer-
term results. And, although the stock market marches on to
new highs daily, it is interesting to note that only 11% of
all equity mutual funds beat the S&P ``500'' last year. This
illustrates that the broad stock market has lagged the big-
stock indices and suggests a wide variety of stocks continue
to show promise for the year ahead. Weighing all the
evidence, we are reasonably positive about the outlook for
the market in 1996 and beyond.
While it is great to celebrate the return in 1995, it
is unlikely that we will see a repeat in 1996. The budget
debate and the upcoming elections will undoubtedly provide
some excitement in the months ahead, and it will be
important to keep focused on the underlying fundamentals. We
wish you the best in 1996, and we appreciate your continued
confidence in the management of your Fund.
Sincerely,
xxxxxxxx
Katherine L. Frank
Vice President
BASCOM HILL INVESTORS, INC.
STATEMENT OF NET ASSETS
Schedule of Investments
December 31, 1995
Market
Common Stocks - 66.5% Shares Value
--------------------- ------- --------
Consumer - Business Services-4.9%
Banta Corp. 13,200 $580,800
Consumer - Retail - 3.5%
Wal-Mart Stores, Inc. 18,750 417,187
Consumer - Discretionary - 12.2%
Carnival Corp. 18,400 448,500
Lancaster Colony Corp. 13,900 517,775
Newell Co. 18,500 478,687
Consumer - Financial - 8.1%
Federal Home Loan Mortgage Corp. 7,200 601,200
MBNA Corp. 9,900 365,063
Financial Services - 7.1%
MBIA, Inc. 4,950 371,250
United Asset Management Corp. 12,400 475,850
Medical & Health Care - 9.3%
Columbia/HCA Healthcare Corp. 7,000 355,250
Forest Laboratories, Inc. 7,800 352,950
Mylan Laboratories, Inc. 16,900 397,150
Regional Banks - 7.9%
Norwest Corp. 15,450 509,850
State Street Boston Corp. 9,350 420,750
Technology - 13.5%
Compaq Computer Corp. 9,600 460,800
Intel Corp. 6,950 394,413
Sun Microsystems, Inc. 16,200 739,125
-------
Total Common Stocks
(Cost $6,225,122) $7,886,600
----------
Short Term Investments - 40.1%
------------------------
Commercial Paper
Associates Corp.
5.73% due 01/18/96 $ 450,000 $ 450,000
G.E. Capital Services Corp.
5.76% due 01/10/96 450,000 450,000
Heller Financial Corp.
5.80% due 01/17/96 450,000 450,000
Prudential Funding Corp.
5.75% due 01/12/96 450,000 450,000
Variable Rate Demand Notes
American Family Financial Services
5.49% due 1/1/96 $ 76,598 $ 76,598
Eli Lilly and Company
5.32% due 1/1/96 386,081 386,081
General Mills, Inc.
5.49% due 1/1/96 450,000 450,000
Pitney Bowes Credit Corp.
5.49% due 1/1/96 450,000 450,000
Sara Lee Corp.
5.47% due 1/1/96 267,243 267,243
Southwestern Bell Telephone
5.72% due 1/1/96 450,000 450,000
Warner Lambert
5.46% due 1/1/96 450,000 450,000
Wisconsin Electric Power Corp.
5.53% due 1/1/96 426,931 426,931
-------
Total Short Term Investments
(Cost $4,756,853) $ 4,756,853
---------
Cash & Receivables Less Liabilities - (6.6%) $(783,003)
----------
TOTAL NET ASSETS - Equivalent
to $18.03 per share on
657,719.935 shares of $1 par
value capital stock
outstanding (authorized
capital stock - 1,000,000
shares), and paid-in capital
aggregated $9,534,442 $11,860,450
===========
BASCOM HILL INVESTORS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended Year Ended
December 31, 1995 December 31, 1994
----------------- -----------------
Investment Activities
Net Investment Income $273,224 $ 223,538
Income Distributions to
Shareholders
($.422 and $.39 per share,
respectively) (268,893) (223,031)
--------- ---------
Increase in Undistributed
Net Investment Income $ 4,331 $ 507
-------- ---------
Net Realized Gains from
Security Transactions $824,461 $ 680,269
Net Realized Gain
Distributions to
Shareholders
($1.26 and $1.15 per
share, respectively) (822,010) (667,108)
--------- ---------
Increase in Undistributed
Realized Gains $ 2,451 $ 13,161
-------- --------
Increase (Decrease) in
Unrealized Appreciation $1,358,532 $ (524,905)
---------- ---------
Increase (Decrease) in
Undistributed Net Assets
Derived From Investment
Activities $1,365,314 $ (511,237)
========== ==========
Shares Sold and Redeemed
Net Proceeds from Shares
Issued (63,002 and 47,442 shares,
respectively) $1,134,972 $ 819,757
Net Asset Value of Shares
Issued in Distributions
(56,550 and 47,184 shares
respectively) 1,013,566 750,169
--------- --------
$2,148,538 $ 1,569,926
Cost of Shares Redeemed
(84,141 and 65,190 shares,
respectively) (1,508,728) (1,122,477)
----------- ----------
Increase in Net Assets from
Sale and Redemption of
Fund Shares $639,810 $ 447,449
======== ========
Net Assets
Balance at Beginning of Year
(Including undistributed
net income of $1,139 and
$631) $9,855,326 $ 9,919,114
Net Increase (Decrease) from
Investment Activitie 1,365,314 (511,237)
Net Increase from Shares
Sold and Redeemed 639,810 447,449
-------- --------
Balance at End of Year
(Including undistributed
net investment income of
$5,470 and $1,139,
respectively) $11,860,450 $ 9,855,326
=========== ==========
BASCOM HILL INVESTORS, INC.
STATEMENTS OF OPERATIONS
Year Ended Year Ended
December 31, 1995 December 31, 1994
----------------- -----------------
Income:
Interest $316,336 $181,524
Dividends 87,726 125,089
Other 0 34,931
------- -------
$404,062 $341,544
-------- --------
Expenses:
Auditing Fee $ 5,006 $ 5,034
Custodial Fee 6,185 5,000
Directors' Fee 3,000 4,649
Investment Advisor Fee 91,637 78,454
Legal Fee 1,219 1,102
Licensing Fee 2,163 2,131
Printing Cost 5,303 5,340
Transfer Agent Fee 13,005 13,000
Other Fees 3,320 3,296
------- -------
$130,838 $118,006
-------- --------
Net Investment Income $273,224 $223,538
======== ========
Ratio of Expenses to Income 32.4% 34.6%
Realized Gains on
Investments:
Proceeds from Sale $4,126,378 $ 8,584,635
Cost 3,301,917 7,904,366
--------- ---------
Net Realized Gains $ 824,461 $ 680,269
------------ --------
Unrealized Appreciation on
Investments:
Balance, Beginning of Year $ 302,946 $ 827,851
Balance, End of Year 1,661,478 302,946
--------- -------
Increase (Decrease) in
Unrealized Appreciation $1,358,532 $ (524,905)
---------- ---------
Net Realized Gains and
Increase (Decrease)
in Unrealized Appreciation $2,182,993 $ 155,364
========== ========
See Accompanying Notes to Financial Statements.
<TABLE>
FINANCIAL HIGHLIGHTS-Selected Per Share Data and Ratios
Year Ended December 31,
------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986*
<S>
NET ASSET VALUE:
Beginning of year
$ 15.84 16.73 18.15 16.66 12.90 15.62 14.92 13.84 15.11 18.13
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net investment income
$ .42 .39 .19 .22 .36 .51 .77 .66 .69 .41
Net realized and unrealized gains or (losses) on securities
3.45 .26 .34 1.59 3.76 (2.71) 1.62 1.08 (.44) 2.22
----- ----- ---- ---- ---- ----- ---- ---- ----- ----
Total from investment operations
$ 3.87 .65 .53 1.81 4.12 (2.20) 2.39 1.74 .25 2.63
<CAPTION>
LESS DISTRIBUTIONS:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dividends from net income
$ (.42) (.39) (.19) (.22) (.36) (.52) (.78) (.66) (.99) (.43)
Capital gains distributions
(1.26) (1.15) (1.76) (.10) -- -- (.91) -- (.53) (5.22)
------ ------ ------ ----- ----- ----- ------
<CAPTION>
NET ASSET VALUE:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
End of year $ 18.03 15.84 16.73 18.15 16.66 12.90 15.62 14.92 13.84 15.11
TOTAL RETURN: % 24.63 4.09 3.16 10.98 32.05(14.25)16.25 12.76 1.11 16.30
<CAPTION>
RATIOS:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating expenses to average net assets
% 1.17 1.20 1.20 1.22 1.22 1.27 1.16 1.16 1.15 1.09
Net income to average net assets
% 2.44 2.28 1.00 1.33 2.28 3.78 4.73 4.48 4.60 3.75
Portfolio turnover rate
% 57.62 54.49 80.41 68.83 70.90 84.40 69.60 51.23 35.00 74.63
Average Commission Rate
.0819
</TABLE>
TOTAL RETURN OVER LIFETIME OF FUND
The following table illustrates the total return for
$10,000 invested in Bascom Hill Investors, Inc. on November
1, 1978, the date of the initial ublic offering with income
dividends and capital gain distributions reinvested in the
Fund.
Value of
Net Asset Capital Gains Income Initial
Value Per Distributions Dividends $10,000
Date Share Per Share Per Share Investment
November 1, 1978 $10.00 ------- ----- $10,000
December 31, 1978 $10.36 ------- ----- $10,360
December 31, 1979 $11.83 ------- $ .45 $12,338
December 31, 1980 $13.84 ------- $ .63 $15,192
December 31, 1981 $13.79 $ .650 $1.11 $17,292
December 31, 1982 $16.16 $ .735 $ .94 $23,071
December 31, 1983 $16.94 $ .440 $1.44 $27,162
December 31, 1984 $15.26 $ .800 $ .76 $27,003
December 31, 1985 $18.13 $ .870 $ .75 $35,508
December 31, 1986 $15.11 $ 4.956 $ .69 $41,296
December 31, 1987 $13.84 $ .530 $ .98 $41,766
December 31, 1988 $14.92 ------- $ .65 $47,097
December 31, 1989 $15.62 $ .913 $ .78 $54,750
December 31, 1990 $12.90 ------- $ .51 $46,949
December 31, 1991 $16.66 ------- $ .35 $62,002
December 31, 1992 $18.15 $ .101 $ .22 $68,783
December 31, 1993 $16.73 $ 1.760 $ .19 $70,956
December 31, 1994 $15.84 $ 1.150 $ .39 $73,855
December 31, 1995 $18.03 $ 1.260 $ .42 $91,529
GROWTH OF $10,000 CHART
BASCOM HILL INVESTORS AVERAGE ANNUAL RETURN
1 YEAR 24.63%
5 YEARS 14.33%
10 YEARS 9.93%
17 YEARS 13.67%
NOTES TO FINANCIAL STATEMENTS December 31, 1995 and 1994
(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 1995. 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 year ended December 31,
1995. Certain officers and directors of the Fund are also
officers and directors of Madison Investment Advisors,
Inc. The Fund owed Madison Investment Advisors, Inc.
$24,535 as of December 31, 1995.
(3) Cost of Investments Purchased and Proceeds of Investments
Sold
For the year ended December 31, 1995, the purchases and
sales of investment securities (excluding short-term
securities) were $5,846,915 and $4,126,378, 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 year ended December 31, 1995, net realized
gains would have been $824,867 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 $6,225,122. The aggregate gross unrealized
appreciation for all securities in which there is an
excess of value over tax cost is $1,714,165. The aggregate
gross unrealized depreciation for all securities in which
there is an excess of tax cost over value amounts to
$52,687. The net unrealized appreciation at December 31,
1995, for all securities is $1,661,478. Through the year
ended December 31, 1995, the accumulated undistributed net
investment income is $5,470 and the accumulated
undistributed realized capital gain is $1,336.
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
of Bascom Hill Investors, Inc.
We have audited the accompanying statement of net assets of
Bascom Hill Investors, Inc., including the schedule of
investments, as of December 31, 1995, the related statements
of operations and changes in net assets for each of the two
years in the period then ended, and the selected per share
data and ratios for each of the ten years in the period then
ended. These financial statements and selected per share
data and ratios are the responsibility of the Company's
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 generally
accepted auditing standards. 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, 1995, by correspondence
with the custodian. 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 Bascom Hill
Investors, Inc. as of December 31, 1995, the results of its
operations and the changes in its net assets for each of the
two years in the period then ended, and the selected per
share data and ratios for each of the ten years in the
period then ended, in conformity with generally accepted
accounting principles.
WILLIAMS, YOUNG & ASSOCIATES, LLC
XXXXXXXXXX
Madison, Wisconsin
January 25, 1996
BASCOM HILL INVESTORS, INC.
6411 Mineral Point Road
Madison, WI 53705
(608) 273-2020
(800) 767-0300
ANNUAL REPORT
December 31, 1995
OFFICERS and DIRECTORS
Frank E. Burgess
President, Director
Katherine L. Frank
Vice President, Secretary
Jay R. Sekelsky
Vice President
Christopher C. Berberet
Treasurer
Jacqueline Stoppleworth
Assistant Secretary
James R. Imhoff, Jr.
Director
Edmund B. Johnson
Director
Lorence D. Wheeler
Director
CUSTODIAN, TRANSFER AGENT
and DISBURSING AGENT
Firstar Trust Company
P.O. Box 701
Milwaukee, Wisconsin 53201-0701
(414)765-4124
COUNSEL
Ross & Stevens, S.C.
8000 Excelsior Drive
Madison, Wisconsin 53717-1914
(608)831-2100
AUDITORS
Williams, Young & Associates
P.O. Box 8700
Madison, Wisconsin 53708
