<PAGE>
- --------------------------------------------------------------------------------
- ----------------------------------
BERGSTROM
CAPITAL
CORPORATION
- ----------------------------------
1996 SEMI-ANNUAL REPORT
Listed: American Stock Exchange (Ticker symbol: BEM)
Transfer Agent, Registrar and Custodian: State Street Bank and Trust Company,
Boston, Massachusetts
Independent Auditors: Deloitte & Touche LLP, Boston, Massachusetts
Legal Counsel: Howard, Rice, Nemerovski, Canady, Falk & Rabkin PC,
San Francisco, California
- --------------------------------------------------------------------------------
<PAGE>
BERGSTROM CAPITAL CORPORATION
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SPECIAL STOCKHOLDER MEETING RESULTS
A Special Meeting of Stockholders of Bergstrom Capital Corporation (the
"Company") was held on Monday, May 13, 1996 at the Cutter Room, The Rainier
Club, Fourth Avenue and Marion Street, Seattle, Washington. At the meeting, a
new subadvisory agreement between Bergstrom Advisers, Inc., the Company's
investment adviser, and RCM Capital Management, L.L.C. was approved. The new
subadvisory agreement became effective June 14, 1996. The one matter voted
upon by Stockholders and the resulting votes for that matter are presented
below.
1. To approve or disapprove a new Investment Management and Advisory
Agreement between Bergstrom Advisers, Inc. and RCM Capital Management,
L.L.C., a wholly owned subsidiary of Dresdner Bank AG.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C>
644,787 9,080 6,474
</TABLE>
<PAGE>
BERGSTROM CAPITAL CORPORATION
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NOTICE OF IMPORTANT FEDERAL INCOME TAX INFORMATION
It is the presently declared policy of the Board of Directors, which is
subject to review by the Board of Directors from time to time, that in any
year in which the Company is taxed as a regulated investment company all or a
portion of the net long-term capital gains of the Company for such year may be
retained by the Company, and if such gains are retained taxes thereon would be
paid by the Company and appropriate credit therefore allowed to the
stockholders of the Company, all as provided in Section 852(b)(3)(D) of the
Internal Revenue Code. Stockholders of record on December 31 of such year
would be required to include in their income tax returns their share of the
Company's net long-term capital gains retained and take credit for the tax
paid on their behalf by the Company. Stockholders of record on December 31 of
such year should increase the tax basis of their stock by the excess of their
share of the net long-term capital gains retained over the tax paid on their
behalf. On or about February 1 following the end of such year the Company
would send Form 2439, Notice to Shareholders of Undistributed Capital Gains,
to stockholders of record on December 31 of such year. For the years 1980
through 1984, 1986, 1987, 1989, and 1991 through 1995, the Company retained
all or a portion of the net long-term capital gains realized. For the years
1985, 1988 and 1990 all of the net long-term capital gains realized were
distributed.
Based on the net long-term capital gains projected to be realized during the
ten months ending October 31, 1996 and in order to avoid the excise tax
provided for in the Federal Income Tax Reform Act of 1986, the Board of
Directors has elected to distribute a portion of the net long-term capital
gains realized during the year ending December 31, 1996 as a part of the cash
dividend and in-kind distribution payable on September 20, 1996, and to retain
the remainder of the net long-term capital gains realized during the year
ending December 31, 1996.
Please refer to the President's Letter in this report regarding the
declaration of the cash dividend and in-kind distribution payable on September
20, 1996.
A Form 1099 will be mailed by January 31, 1997 to each stockholder of record
on the dividend record date in 1996 setting forth the specific amounts to be
included in that stockholder's 1996 tax return.
<PAGE>
BERGSTROM CAPITAL CORPORATION
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505 Madison Street, Suite 220
Seattle, Washington 98104
August 12, 1996
Dear Fellow Stockholders:
On August 12, 1996, the Board of Directors of the Company declared a cash
dividend of $3.00 per share, together with an in-kind distribution of one
share of common stock of Adams Express Company ("ADX") for every five shares
of the Company's capital stock. The cash dividend and the in-kind distribution
are payable on September 20, 1996 to stockholders of record on August 22,
1996.
The Company estimates that the sources of the cash dividend and in-kind dis-
tribution will be $.61 per share from net investment income for the year end-
ing December 31, 1996, $.17 per share from short-term capital gains realized
during the year ending December 31, 1996, and $5.95 per share from net long-
term capital gains realized during the year ending December 31, 1996. No pre-
dictions can be made as to the amounts of future dividends since the amount of
dividends paid is necessarily dependent on the Company's future net investment
income and other factors.
For federal income tax purposes, a stockholder will realize income in the
amount of the fair market value on the payment date of the ADX stock distrib-
uted and the stockholder's basis in the ADX stock will be its fair market
value on such date. No fractional shares will be distributed. Fractional
shares will be sold in the open market on behalf of stockholders, and the cash
received will be distributed in lieu of fractional shares.
The Company currently holds 380,000 shares of ADX, which is a closed-end in-
vestment company like the Company. The in-kind distribution of 226,240 shares
of ADX permits the Company to save commission costs and to preserve the cash
which might otherwise be used to pay a larger cash dividend in 1996. This cash
can be used by the Company to purchase other investment securities. The Com-
pany is prohibited by law from investing more than 10% of its assets in in-
vestment companies, and the distribution of the ADX stock will allow the Com-
pany to purchase shares of other investment companies within this limitation.
As stockholders of the Company, Erik E. Bergstrom, his family, and their
foundation, will receive 67,733 shares of ADX in the distribution. Mr.
Bergstrom is a director of the Company and controls the Company's investment
adviser. Following the in-kind distribution, Mr. Bergstom, his family, and
their foundation, will hold approximately 4.3% of the outstanding common stock
of ADX. The in-kind distribution and the possible sale of the Company's re-
maining shares of ADX will give them more flexibility under the securities
laws to buy and sell shares of ADX for their own accounts. The other directors
and officers of the Company who are stockholders of the Company will also re-
ceive ADX shares in the distribution.
During the first half of 1996 the Company's net assets increased from
$149,357,224 to $152,218,537 which is an increase of $2,861,313. This increase
in net assets is after the repurchase of stock during the first six months of
1996 for $3,180,783. The increase in net assets, before deducting repurchase
of stock, was $6,042,096 which was composed of net investment income of
$345,354, realized gain from the sale of investments of $10,331,185, and a de-
crease in unrealized appreciation of $4,634,443.
The per share net asset value (based on the number of shares outstanding at
the end of each period) increased from $128.35 on December 31, 1995 to $133.89
on June 30, 1996, an increase of 4.3%. The Company's performance for the first
six months of 1996 was affected by the decrease in the value of the Company's
investment in the securities of Amgen, Inc. Excluding the value of the
Company's investment in the securities of Amgen, Inc., the per share net asset
value increased 8.0% during the first six months of 1996. During the same pe-
riod the Dow Jones Industrial Average, adjusted for dividends, increased 11.7%
and the Standard & Poor's 500 Stock Average, adjusted for dividends, increased
10.0%. The per share net asset value on Friday, August 9, 1996 was $131.90.
The value of the Company's investment in securities of Amgen, Inc. has in-
creased since the date of acquisition relative to the Company's other assets,
causing the Amgen, Inc. securities to account for 19.9% of the Company's total
assets on June 30, 1996. The investment of a substantial percentage of the
Company's assets in the securities of a single issuer or industry exposes the
Company to a greater risk of loss resulting from unfavorable price movements
or market conditions relating to such issuer or industry. To help reduce this
risk, the Company has been selling shares of Amgen, Inc. since the third quar-
ter of 1992. On September 30, 1992 the Company owned 1,240,000 shares of
Amgen, Inc. (as adjusted for the 2 for 1 stock split on August 16, 1995). On
June 30, 1996 the Company owned 565,000 shares of Amgen, Inc. This is a reduc-
tion of 54.4% since September 30, 1992.
On January 24, 1994 the Company's Board of Directors authorized the Company
to purchase, on the American Stock Exchange, up to 62,500 shares of its capi-
tal stock at market prices not in excess of the then current net asset value
per share. During the first six months of
<PAGE>
BERGSTROM CAPITAL CORPORATION
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1996 the Company purchased the remaining 13,700 shares of its capital stock
under this authorization.
On February 26, 1996 the Company's Board of Directors authorized the Company
to purchase, on the American Stock Exchange, up to 50,000 shares of its capi-
tal stock at market prices not in excess of the then current net asset value
per share. During the first six months of 1996 the Company purchased 13,100
shares of its capital stock under this authorization. As of June 30, 1996 the
Company had 36,900 shares remaining under this authorization.
During the first six months of 1996 the Company had total interest and divi-
dend income of $917,080 as compared to $1,182,033 for the same period in 1995
for a decrease of $264,953. During the first six months of 1996 operating ex-
penses were $571,726 which is a $3,430 increase from $568,296 for the first
six months of 1995. The resulting net investment income of $345,354 for the
first six months of 1996 is a decrease from $613,737 for the first six months
of 1995. This resulted in a decrease to $.30 per share versus $.50 per share.
During the second quarter the following changes were made in the Company's
portfolio of common stocks.
SHARES PURCHASED OR ACQUIRED
- -------------------------------------------------------------------------------
<TABLE>
<C> <S>
12,000 Aetna Life & Casualty Co.
4,000 Astra Sponsored AB ADR
12,000 Avon Products, Inc.(1)
15,000 Baker Hughes, Inc.
12,000 Boston Scientific Corp.
4,000 Citicorp
40,000 Coca Cola Co.(1)
12,000 Digital Equipment Corp.
17,000 Electronic Data Systems Corp.(2)
12,000 Fritz Companies, Inc.
5,000 Grace (W.R.) & Co.
8,000 Hasbro, Inc.
13,500 Host Marriott Corp.
4,000 Hercules, Inc.
2,000 Intel Corp.
13,700 Johnson & Johnson(3)
42,000 Loral Space & Communications Corporation(4)
12,000 Lucent Technologies, Inc.
14,000 Medaphis Corp.
23,000 Nokia Corp. Sponsored ADR A
12,000 Nordstrom, Inc.
7,000 Newbridge Networks Corp.
28,000 News Corp. Ltd. ADR
28,000 Oracle Corporation
15,000 Pepsico, Inc.(1)
9,000 Pfizer, Inc.
360,000 RCM Growth Equity Fund, Inc.(5)
13,000 Smithkline-Beecham PLC ADR
9,000 Stratacom, Inc.
9,000 Vivra Incorporated
14,000 Warner Lambert Co.(1)
9,000 Xerox Corp.(6)
</TABLE>
SHARES SOLD OR EXCHANGED
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
5,100 Abbott Laboratories
20,000 Adams Express Company
12,000 Aetna Live & Casualty Co.
15,000 Air Touch Communications, Inc.
5,900 Allergan, Inc.
15,000 Astra AB-Sponsored ADR A
1,000 Danka Business Systems PLC Sponsored ADR
8,400 Disney (Walt) Co.
1,000 Ericsson L M Tel Co ADR
6,000 Forest Labs, Inc.
17,000 General Motors Corp. Class E.(2)
13,000 Grainger (W. W.), Inc.
33,400 Harman International Industries, Inc. New
18,900 Hubbell, Inc.
42,000 Loral Corp.
12,000 Lucent Technologies, Inc.
70,000 Mattel, Inc.
8,000 McDonalds Corp.
1,000 Proctor & Gamble Co.
24,250 RPM, Inc. Ohio
18,000 Sara Lee Corporation
3,500 Xerox Corp.(6)
</TABLE>
(1) Received as a 2 for 1 stock split.
(2) 17,000 shares of General Motors Corp. Class E. was exchanged for 17,000
shares of Electronic Data Systems Corp.
(3) Purchased 3,700 shares and then received 10,000 shares as a 2 for 1
stock split.
(4) Received as a distribution from Loral Corp.
(5) Received as a 25 for 1 stock split.
(6) Sold 3,500 shares and then received 9,000 shares as a 3 for 1 stock
split.
The Company does not have a dividend reinvestment program. The Company has
considered this over the years and has determined that the cost of such a pro-
gram would not be commensurate with the benefit. The Company's policy of re-
taining all or a portion of the net long-term capital gains in certain years
accomplishes some of the same goals as would a dividend reinvestment program.
The Company's shares of capital stock are traded on the American Stock Ex-
change and are identified by the stock ticker symbol BEM. The net asset value
per share as of Friday's close of business is published each Saturday in
Barrons and each Monday in the Wall Street Journal, the New York Times and
certain other publications under "Closed-End Funds".
Your Company welcomes questions or comments from stockholders. If you wish
to communicate with the Company's transfer agent, State Street Bank and Trust
Company, the address is P.O. Box 8200, Boston, Massachusetts 02266-8200 and
the telephone number is 1-800-426-5523.
Yours very truly,
/s/ William L. McQueen
William L. McQueen
President
<PAGE>
BERGSTROM CAPITAL CORPORATION
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STATEMENT OF ASSETS AND LIABILITIES
June 30, 1996 (Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at value (see accompanying schedule)(Note 1):
Short-term investments (cost $8,691,908) $ 8,691,908
Common stocks (cost $73,437,719) 144,065,063
------------
TOTAL INVESTMENTS (COST $82,129,627) 152,756,971
Cash 5,613
Receivable for securities sold 738,163
Interest and dividends receivable 146,413
Other assets 9,777
------------
TOTAL ASSETS 153,656,937
------------
LIABILITIES:
Advisory fee payable (Note 5) 64,125
Payable for securities purchased 1,354,060
Other accrued expenses 20,215
------------
TOTAL LIABILITIES 1,438,400
------------
NET ASSETS applicable to 1,136,900 outstanding shares of capi-
tal stock equivalent to $133.89 per share on June 30, 1996
(Note 3) $152,218,537
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS (Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
1996 1995
<S> <C> <C>
OPERATIONS:
Net investment income $ 345,354 $ 613,737
Realized gain on investments 10,331,185 4,996,191
Increase (decrease) in unrealized appreciation (4,634,443) 16,337,005
------------ ------------
Net increase in net assets resulting from opera-
tions 6,042,096 21,946,933
COST OF SHARES OF BERGSTROM CAPITAL CORPORATION
STOCK PURCHASED (26,800 SHARES--1996; 5,900
SHARES--1995) (3,180,783) (557,027)
------------ ------------
TOTAL INCREASE IN NET ASSETS 2,861,313 21,389,906
NET ASSETS, BEGINNING OF PERIOD 149,357,224 114,680,269
------------ ------------
NET ASSETS, END OF PERIOD $152,218,537 $136,070,175
============ ============
</TABLE>
<PAGE>
BERGSTROM CAPITAL CORPORATION
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STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (Unaudited)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 205,746
Dividends 711,334
-----------
TOTAL INCOME 917,080
-----------
EXPENSES:
Advisory fees (Note 5) 444,531
Legal fees 9,086
Auditing fees 33,200
Stockholders' meeting and reports 6,971
Transfer agent fees and expenses 20,044
Custodian fees 10,460
Directors' fees and expenses 27,001
Fee for shares listed on American Stock Exchange 3,500
State and other taxes 7,581
Other 9,352
-----------
TOTAL EXPENSES 571,726
-----------
NET INVESTMENT INCOME ($.30 PER SHARE) (NOTES 2 AND
7) 345,354
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain on investments (excluding short-term
investments):
Proceeds from sales $30,185,950
Cost of securities sold 19,854,765
-----------
Realized gain on investments (Notes 2 and 4) 10,331,185
Unrealized appreciation of investments:
Beginning of period 75,261,787
End of period 70,627,344
-----------
Decrease in unrealized appreciation (4,634,443)
-----------
NET GAIN ON INVESTMENTS ($4.93 PER SHARE) (NOTES 2
AND 7) 5,696,742
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERA-
TIONS $ 6,042,096
===========
</TABLE>
<PAGE>
BERGSTROM CAPITAL CORPORATION
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SCHEDULE OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
SHARES OR PRINCIPAL AMOUNT
<TABLE>
<CAPTION>
COST VALUE
<C> <S> <C> <C>
SHORT-TERM INVESTMENTS (5.7%):
$7,195,000 State Street Bank and Trust Company,
4.875% Euro-Dollar Deposit due 07/01/96 $ 7,195,000 $ 7,195,000
General Motors Acceptance Corp., 5.30%
1,500,000 Note due 07/15/96 1,496,908 1,496,908
---------- ----------- ------------
$8,695,000 TOTAL--SHORT-TERM INVESTMENTS 8,691,908 8,691,908
========== ----------- ------------
COMMON STOCKS (94.3%):
ADVERTISING (0.8%):
27,500 Interpublic Group Of Companies, Inc. 851,484 1,289,063
----------- ------------
AEROSPACE AND DEFENSE (0.8%):
42,000 Loral Space & Communications LTD 551,250 572,250
20,000 Sundstrand Corp. 505,395 732,500
----------- ------------
1,056,645 1,304,750
----------- ------------
BANKS (2.6%):
4,000 Citicorp 325,388 330,500
23,000 Comerica, Inc. 744,004 1,026,375
30,000 Morgan (J.P.) & Co., Inc. 2,024,651 2,538,750
----------- ------------
3,094,043 3,895,625
----------- ------------
BEVERAGES (3.3%):
80,000 Coca-Cola Co. 107,495 3,910,000
30,000 Pepsico, Inc. 807,640 1,061,250
----------- ------------
915,135 4,971,250
----------- ------------
BIOTECHNOLOGY (20.0%):
565,000 Amgen, Inc. (B) 2,951,841 30,510,000
----------- ------------
BUSINESS SERVICES (7.3%):
185,000 ADT Limited (B) 1,809,792 3,491,875
17,000 Danka Business Systems PLC Sponsored ADR 466,029 497,250
Huntingdon International Holdings plc
135,000 ADR 741,765 810,000
131,322 Manpower, Inc. 2,250,241 5,154,389
25,500 Olsten Corp. 521,215 749,063
9,000 Stratacom, Inc. 499,208 506,250
----------- ------------
6,288,250 11,208,827
----------- ------------
CHEMICALS (1.3%):
13,000 Grace (W.R.) & Co. 950,701 921,375
19,000 Hercules, Inc. 1,167,705 1,049,750
----------- ------------
2,118,406 1,971,125
----------- ------------
</TABLE>
<PAGE>
BERGSTROM CAPITAL CORPORATION
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SHARES OR PRINCIPAL AMOUNT
COMMON STOCKS--CONTINUED
<TABLE>
<CAPTION>
COST VALUE
<C> <S> <C> <C>
COMMUNICATION SYSTEMS (2.1%):
16,000 Frontier Corp. $ 474,200 $ 490,000
15,000 MCI Communications Corp. 350,775 384,375
35,000 SBC Communications, Inc. 320,874 1,723,750
17,000 Vodafone Group PLC Sponsored ADR 614,140 626,875
----------- ------------
1,759,989 3,225,000
----------- ------------
COMPUTERS AND INFORMATION (2.0%):
12,000 Digital Equipment Corp. 638,303 540,000
14,000 Hewlett Packard Co. 1,074,189 1,394,750
12,000 International Business Machines 1,087,868 1,188,000
----------- ------------
2,800,360 3,122,750
----------- ------------
CONSUMER SERVICES (1.3%):
60,000 Block (H&R), Inc. 194,038 1,957,500
----------- ------------
COSMETICS/PERSONAL CARE (0.7%):
24,000 Avon Products, Inc. 719,256 1,083,000
----------- ------------
DIVERSIFIED TECHNOLOGY (0.6%):
23,000 Nokia Corp. Sponsored ADR 858,979 851,000
----------- ------------
DRUGS AND HEALTH SUPPLIES (6.4%):
13,100 Allergan, Inc. 420,402 514,175
30,000 Boston Scientific Corp. (B) 818,778 1,350,000
7,000 Forest Labs, Inc. 293,323 270,375
19,001 Guidant Corp. 446,633 935,799
20,000 Johnson & Johnson 898,474 990,000
22,000 Merck & Co., Inc. 1,288,942 1,421,750
9,000 Pfizer, Inc. 639,540 642,375
36,000 Pharmacia & Upjohn, Inc. (B) 1,377,690 1,597,500
31,000 Smithkline Beecham PLC ADR 1,295,975 1,685,625
9,000 Vivra Incorporated 301,534 295,875
----------- ------------
7,781,291 9,703,474
----------- ------------
ELECTRICAL COMPONENTS (0.9%):
11,000 Emerson Electric Co. 307,904 994,125
4,000 Grainger (W.W.), Inc. 110,258 310,000
69,000 Micro-Metrics, Inc. (A,B,C) 227,700 24,994
----------- ------------
645,862 1,329,119
----------- ------------
</TABLE>
<PAGE>
BERGSTROM CAPITAL CORPORATION
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SHARES OR PRINCIPAL AMOUNT
COMMON STOCKS--CONTINUED
<TABLE>
<CAPTION>
COST VALUE
<C> <S> <C> <C>
ELECTRONICS/NEW TECHNOLOGY (1.3%):
3,500 Cabletron Systems, Inc. (B) $ 266,770 $ 240,187
16,000 Ericsson L M Tel Co ADR 282,375 344,000
13,000 Intel Corp. 776,776 954,687
7,000 Newbridge Networks Corp. 458,178 458,178
----------- ------------
1,784,099 1,997,052
----------- ------------
FINANCIAL SERVICES, DIVERSIFIED (0.5%):
25,000 Federal National Mortgage Association 645,849 837,500
----------- ------------
FOOD/FOOD PROCESSING (0.8%):
9,000 Dreyers Grand Ice Cream, Inc. 281,117 283,500
55,000 Eskimo Pie Corporation 981,062 976,250
----------- ------------
1,262,179 1,259,750
----------- ------------
HARDWARE AND TOOLS (0.3%):
10,000 Snap-On, Inc. 421,687 473,750
----------- ------------
HEALTH CARE SERVICES (0.4%):
14,000 Medaphis Corp. 621,013 556,500
----------- ------------
HOUSEHOLD PRODUCTS (DURABLE) (0.8%):
41,000 Newell Co. 864,047 1,255,625
----------- ------------
HOUSEHOLD PRODUCTS (NON-DURABLE) (1.7%):
11,700 Kimberly Clark Corp. 724,775 903,825
18,000 Proctor & Gamble Co. 858,330 1,631,250
----------- ------------
1,583,105 2,535,075
----------- ------------
INSURANCE (1.6%):
17,325 American International Group, Inc. 490,860 1,708,678
18,000 PMI Group, Inc. 818,585 765,000
----------- ------------
1,309,445 2,473,678
----------- ------------
LODGING (1.7%):
48,000 Marriott International, Inc. 1,357,311 2,580,000
----------- ------------
MEDIA (1.0%):
15,000 Disney (Walt) Co. 560,460 943,125
28,000 News Corp. LTD ADR New 628,654 658,000
----------- ------------
1,189,114 1,601,125
----------- ------------
</TABLE>
<PAGE>
BERGSTROM CAPITAL CORPORATION
- --------------------------------------------------------------------------------
SHARES OR PRINCIPAL AMOUNT
COMMON STOCKS--CONTINUED
<TABLE>
<CAPTION>
COST VALUE
<C> <S> <C> <C>
MEDICAL SUPPLIES (3.5%):
12,900 Abbott Laboratories $ 452,270 $ 561,150
100,000 Baxter International, Inc. 952,713 4,725,000
----------- ------------
1,404,983 5,286,150
----------- ------------
OFFICE EQUIPMENT (0.5%):
13,500 Xerox Corp. 470,166 722,250
----------- ------------
PETROLEUM SERVICES (0.7%):
15,000 Baker Hughes, Inc. 486,631 493,125
7,000 Schlumberger, Ltd. 523,562 589,750
----------- ------------
1,010,193 1,082,875
----------- ------------
PHARMACEUTICALS (4.2%):
16,000 Bristol-Myers Squibb Co. 430,822 1,440,000
39,000 Lilly Eli & Co. 1,351,106 2,535,000
14,000 Schering-Plough Corp. 487,839 878,500
28,000 Warner Lambert Co. 1,122,972 1,540,000
----------- ------------
3,392,739 6,393,500
----------- ------------
RECREATION--TOYS (0.4%):
17,000 Hasbro, Inc. 615,806 607,750
----------- ------------
RECREATION PRODUCTS (1.0%):
19,000 Eastman Kodak Co. 929,830 1,477,250
----------- ------------
REGULATED INVESTMENT COMPANIES (9.8%):
380,000 The Adams Express Company 7,099,953 7,267,500
Convertible Holdings, Inc. Capital
300,000 Shares 2,793,333 3,975,000
375,000 RCM Growth Equity Fund, Inc. 3,181,957 3,768,750
----------- ------------
13,075,243 15,011,250
----------- ------------
RESTAURANTS (2.6%):
61,000 Host Marriott Corp. 787,250 800,625
68,000 McDonalds Corp. 1,926,679 3,179,000
----------- ------------
2,713,929 3,979,625
----------- ------------
RETAIL TRADE (1.4%):
25,000 Crown Books Corporation (B) 309,500 337,500
22,000 Federated Department Stores, Inc. (B) 590,213 750,750
18,000 Hannaford Bros. Co. 448,648 587,250
12,000 Nordstrom, Inc. 594,725 534,000
----------- ------------
1,943,086 2,209,500
----------- ------------
</TABLE>
<PAGE>
BERGSTROM CAPITAL CORPORATION
- --------------------------------------------------------------------------------
SHARES OR PRINCIPAL AMOUNT
COMMON STOCKS--CONTINUED
<TABLE>
<CAPTION>
COST VALUE
<C> <S> <C> <C>
SOFTWARE AND PROCESSING (8.6%):
13,000 Automatic Data Processing, Inc. $ 285,181 $ 502,125
382,500 Boole & Babbage, Inc. (B) 340,000 9,180,000
17,000 Electronic Data Systems Corp. 648,108 913,750
12,000 Microsoft Corp. (B) 999,600 1,441,500
28,000 Oracle Corporation 993,552 1,104,250
----------- ------------
3,266,441 13,141,625
----------- ------------
TRANSPORTATION SERVICES (1.4%):
67,000 Fritz Companies, Inc. (B) 1,541,875 2,160,750
----------- ------------
TOTALS--COMMON STOCKS 73,437,719 144,065,063
----------- ------------
TOTALS--INVESTMENTS $82,129,627 $152,756,971
=========== ============
</TABLE>
(A) Company "affiliated" with the Corporation as defined in the Investment
Company Act of 1940.
(B) Presently non dividend paying.
(C) Venture security.
<PAGE>
BERGSTROM CAPITAL CORPORATION
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 (UNAUDITED)
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
The Corporation is registered under the Investment Company Act of 1940 as a
nondiversified, closed-end management company. The following is a summary of
significant accounting policies consistently followed by the Corporation in
the preparation of its financial statements. The policies are in conformity
with generally accepted accounting principles.
A. Security valuation--Securities traded on national exchanges are valued at
the closing prices on the last business day of the reported period. Over-the-
counter securities and listed securities not traded on that day are valued at
the bid prices (asked prices for short open positions) at the close of busi-
ness on that day. Securities not publicly traded are valued at fair value as
determined by the Board of Directors. Cost of securities is determined on the
specific identification basis. Short-term notes which mature in sixty or less
days from the last day of the reported period are valued at amortized cost,
which approximates market value. Short-term notes which mature in more than
sixty days are valued at the quoted yield equivalent on the last day of the
reported period for securities of a comparable maturity, quality, and type.
B. Security transactions and related investment income--Security transac-
tions are accounted for on the trade date (date the order to buy or sell is
executed). Dividend income and distributions to stockholders are recorded on
the ex-dividend dates and interest income is recorded on the accrual basis.
Realized gains and losses on investments sold are computed on the basis of
identified cost.
C. Use of estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make es-
timates and assumptions that affect the reported amounts of assets and liabil-
ities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reported period. Actual results could differ from those estimates.
NOTE 2--FEDERAL INCOME TAXES
No provision has been made for federal taxes on net investment income be-
cause the Corporation has elected to be taxed as a regulated investment com-
pany under the Internal Revenue Code, and intends to maintain this qualifica-
tion and to distribute each year all of its taxable net investment income to
its stockholders in accordance with the minimum distribution requirements of
the Internal Revenue Code. In addition, under the Internal Revenue Code, the
Corporation may, but need not, distribute net long-term capital gains real-
ized. It is the presently declared policy of the Board of Directors, which is
subject to review by the Board of Directors from time to time, that in any
year in which the corporation is taxes as a regulated investment company, all
or a portion of the net long-term capital gains realized by the Corporation
for such year may be retained by the Corporation, taxes thereon paid by the
Corporation and appropriate credit therefore allowed to the stockholders of
the Corporation, all as provided in Section 852(b)(3)(D) of the Internal Reve-
nue Code. After review by the Board of Directors during the year 1995, it was
determined that a portion of the net long-term capital gains realized during
the year 1995 should be retained by the Corporation and taxes thereon should
be paid by the Corporation, and that the remainder of the net long-term capi-
tal gains realized during the year 1995 should be distributed in 1995.
For federal income tax purposes at June 30, 1996 the aggregate gross
unrealized appreciation for all securities in which there is an excess of
value over tax cost is $71,330,494, aggregate gross unrealized depreciation
for all securities in which there is an excess of tax cost over value is
$703,150, the net unrealized appreciation is $70,627,344 and the aggregate
cost of securities for federal income tax purposes is $82,129,627.
NOTE 3--CAPITAL STOCK
At June 30, 1996 the issued and outstanding capital stock of the Corporation
consisted of 1,136,900 shares of $1 par value capital stock (1,505,462 shares
are authorized) and capital paid in aggregated $22,199,733. During the six
months ended June 30, 1996, 26,800 shares of Bergstrom Capital Corporation
stock were purchased from stockholders at an average discount of 10.22% from
net asset value. These shares were retired and restored to the status of au-
thorized but unissued shares.
As of June 30, 1996 the Corporation was authorized to purchase, on the Amer-
ican Stock Exchange, up to 36,900 shares of its capital stock. Purchases will
be made at market prices prevailing at the time of purchase, but in no event
will purchases be made at prices in excess of the then current net asset value
per share.
NOTE 4--SECURITIES
During the six months ended June 30, 1996, the cost of securities purchased
and the proceeds from securities sold, other than short-term investments, ag-
gregated $20,917,446 and $30,185,950, respectively.
The Company's investment in securities of the biotechnology industry as a
whole accounted for 19.9% of the Company's total assets on June 30, 1996. The
investment of a substantial percentage of the Company's assets in the securi-
ties of a single issuer or industry exposes the Company to a greater risk of
loss resulting from unfavorable price movements or market conditions relating
to such issuer or industry.
NOTE 5--INVESTMENT ADVISORY CONTRACT AND PAYMENTS TO AFFILIATES
The Corporation's advisory contract ("Contract") with Bergstrom Advisers,
Inc. (the "Adviser"), wholly owned by a principal stockholder of the Corpora-
tion, provides for an advisory fee which on an annual basis would amount to
3/4 of 1% of the first $50,000,000 of the Corporation's average net assets,
plus 1/2 of 1% of the value of the average net assets of the Corporation in
excess of $50,000. Such fee is computed weekly.
The Contract also provides that if in any fiscal year of the Corporation the
sum of the fee paid and payable to the Adviser for such year plus the operat-
ing expenses, as defined, for such
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BERGSTROM CAPITAL CORPORATION
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year exceeds 1 1/2% of the first $50,000,000 of the Corporation's average net
assets, plus 1% of the Corporation's average net assets in excess of
$50,000,000, the Adviser will reimburse the Corporation for such excess, up to
the amount of the fee received by the Adviser for such year. In the event the
excess operating expenses are greater than the Adviser's fee for such year,
the maximum amount payable by the Adviser would be the amount of the fee re-
ceived, and there would be no carryforward or carryback of the unrecovered
portion to any other period. There was no reduction in the fee in 1995.
NOTE 6--DIRECTORS' FEES
One director of the Corporation is an officer and director of the Corpora-
tion's investment adviser. Directors' fees and expenses in the amount of
$27,001 have been paid in 1996 only to directors of the Corporation who were
not affiliated with any investment adviser to the Corporation.
NOTE 7--FINANCIAL HIGHLIGHTS
There are set forth below income and capital changes per share of capital
stock of the Corporation outstanding throughout each period, market value per
share at the end of each period, total investment returns for each period, and
certain ratios and other supplemental data for each period. This information
was taken from the Corporation's financial statements except for market values
which were the closing prices on the American Stock Exchange on the dates in-
dicated.
The total investment returns shown below are a record of the past and should
not be regarded as a representation of future results.
<TABLE>
<CAPTION>
FOR SIX
MONTHS
ENDED JUNE 30 FOR YEARS ENDED DECEMBER 31
----------------- -----------------------------------
1996 1995 1995 1994 1993 1992
------- ------- ------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at be-
ginning of period $128.35 $ 94.56 $ 94.56 $95.06 $102.68 $104.89
Net investment income
(1) 0.30 0.50 0.99 1.22 1.10 1.05
Net realized and
unrealized gain (loss)
on investments 4.93 17.60 37.16 2.23 (6.72) (1.23)
Dividends from:
Net investment income
(2) (1.01) (1.22) (1.10) (1.05)
Net realized gain on
investments (3.99) (2.78) (0.90) (0.95)
------- ------- ------- ------ ------- -------
Total dividends (5.00) (4.00) (2.00) (2.00)
------- ------- ------- ------ ------- -------
Increase due to sale of
Bergstrom stock under
rights offering at
more than net asset
value 0.09
Rights offering ex-
penses charged to paid
in capital (0.12)
Increase due to pur-
chase of Bergstrom
stock at less than net
asset value 0.31 0.08 0.64 0.05
------- ------- ------- ------ ------- -------
Net asset value at end
of period $133.89 $112.74 $128.35 $94.56 $ 95.06 $102.68
======= ======= ======= ====== ======= =======
Market value per share
at end of period $116.50 $ 94.00 $109.50 $84.88 $ 94.50 $132.13
======= ======= ======= ====== ======= =======
Total investment re-
turns:
Based on market value
per share (3) 6.4%* 10.7%* 38.1% (3.4)% (25.1)% 10.1%
Based on net asset
value per share (4) 4.3%* 19.2%* 43.5% 5.6% (3.8)% 1.1%
Net assets at end of
period (in millions) $ 152 $ 136 $ 149 $ 115 $ 118 $ 127
Ratio of expenses to
average net assets .37%* .45%* .82% .84% .81% .79%
Ratio of net investment
income to average net
assets .23%* .49%* .88% 1.29% 1.11% 1.08%
Portfolio turnover rate 14.37%* 18.8%* 29.69% 25.58% 26.16% 13.55%
Average commission rate
paid $ .0652
Number of shares out-
standing at end of pe-
riod (in thousands) 1,137 1,207 1,164 1,213 1,237 1,238
</TABLE>
(1) Based on average number of shares outstanding.
(2) Based on number of shares outstanding on record date.
(3) Based on market value per share adjusted for reinvestment of dividends and
distributions of the federal income tax on net long-term capital gains
retained, which tax was paid on behalf of the Corporation's stockholders.
(4) Based on net asset value per share adjusted for reinvestment of dividends
and distributions of the federal income tax on net long-term capital gains
retained, which tax was paid on behalf of the Corporation's stockholders.
*Not Annualized.
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BOARD OF DIRECTORS
ERIK E. BERGSTROM GEORGE COLE SCOTT
Chairman Registered Representative
Registered Investment Adviser Representative
Anderson & Strudwick Incorporated
WILLIAM L. McQUEEN
President and Treasurer
C.H. WILLIAMS
Retired Banker
NORMAN R. NIELSEN
Manager and Senior Member
of Research Staff
SRI International
OFFICERS
WILLIAM L. McQUEEN PAMELA A. FIORINI
President and Treasurer Secretary
ELIZABETH C. HEDLUND
Assistant Secretary
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BERGSTROM CAPITAL CORPORATION
505 Madison Street, Suite 220
Seattle, Washington 98104
(206) 623-7302
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