<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Bergstrom Capital Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
PRELIMINARY PROXY MATERIALS DATED AUGUST 26, 1998
BERGSTROM CAPITAL CORPORATION
505 MADISON STREET, SUITE 220
SEATTLE, WASHINGTON 98104
_______________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 9, 1998
To the Stockholders of
BERGSTROM CAPITAL CORPORATION
NOTICE IS HEREBY GIVEN that by order of the Board of Directors, the Annual
Meeting of Stockholders of Bergstrom Capital Corporation, a Delaware corporation
(the "Company"), will be held in the Cutter Room, The Rainier Club, Fourth
Avenue and Marion Street, Seattle, Washington, on November 9, 1998, at 11:00
a.m., Seattle time, for the following purposes, all as more fully described in
the accompanying Proxy Statement:
1. To elect one director to hold office until the Annual Meeting of
Stockholders in 2001 and until his successor shall be elected and shall
qualify;
2. To ratify or reject the selection by the Company's Board of
Directors of Deloitte & Touche LLP as the independent accountants of the
Company for the year ending December 31, 1998;
3. To approve or disapprove a new Investment Management and Advisory
Agreement (the "New RCM Agreement") between the Company and Dresdner RCM
Global Investors LLC; and
4. To transact any other business which may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on September 14,
1998, as the record date for the determination of stockholders entitled to
notice of and to vote at the meeting or any adjournment thereof, and only
stockholders of record at the close of business on such date are entitled to so
vote. The stock transfer books of the Company will not be closed. A complete
alphabetical listing of stockholders entitled to vote at the meeting or any
adjournment thereof, including their addresses and number of shares registered
in the name of each such stockholder, will be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours for the ten days prior to the meeting, at the office of the Company in
Seattle, Washington, specified above, and will be available for inspection by
any stockholder at the time of the meeting, at the place thereof.
THE BOARD OF DIRECTORS OF THE COMPANY, INCLUDING ALL OF THE DIRECTORS WHO
ARE NOT "INTERESTED PERSONS" WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT OF
1940, AS AMENDED, RECOMMENDS THAT STOCKHOLDERS ELECT THE NOMINEE FOR DIRECTOR,
RATIFY THE SELECTION OF AUDITORS AND APPROVE THE NEW RCM AGREEMENT BY VOTING FOR
THE NOMINEE LISTED UNDER PROPOSAL 1 AND FOR PROPOSALS 2 AND 3 IN THE ENCLOSED
PROXY.
Please execute and return the enclosed Proxy promptly in the enclosed
envelope, whether or not you intend to be present at the meeting. You are urged
to attend and vote in person. If you are not able to attend, it is important
that your shares be represented by Proxy. You may revoke your Proxy at any time
before it is voted.
By Order of the Board of Directors
Pamela A. Fiorini
Secretary
Seattle, Washington
September __, 1998
<PAGE>
BERGSTROM CAPITAL CORPORATION
505 MADISON STREET, SUITE 220
SEATTLE, WASHINGTON 98104
------------------------
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Bergstrom Capital Corporation, a Delaware corporation
(the "Company"), of Proxies to be used at the Annual Meeting of Stockholders of
the Company, to be held on November 9, 1998, and any adjournment thereof, for
action upon the matters set forth in the foregoing Notice of Annual Meeting of
Stockholders.
All shares represented by each properly signed Proxy received prior to the
meeting will be voted at the meeting. If a stockholder specifies how the Proxy
is to be voted on any of the business to come before the meeting, it will be
voted in accordance with such specification. If no specification is made, the
Proxy will be voted FOR the election of the director nominated by the Board of
Directors (Proposal 1) and FOR Proposals 2 and 3. The Proxy may be revoked by a
stockholder, at any time prior to its use, by written notice to the Company, by
submission of a subsequent Proxy or by voting in person at the meeting.
If a vote is taken on adjournment of the meeting, or any other procedural
matters, Proxies will be voted at the discretion of the persons voting the
Proxies so as to facilitate the election of the director nominated by the Board
of Directors (Proposal 1) and the adoption of Proposals 2 and 3. Accordingly,
absent contrary instructions on the Proxy card, Proxies withholding votes on
Proposal 1 or abstaining on or opposing Proposal 2 or 3 may be voted on
procedural matters, such as adjournment, to facilitate an opposite result.
The representation in person or by proxy of at least one-third of the
shares of Capital Stock entitled to vote is necessary to constitute a quorum
for transacting business at the meeting. For purposes of determining the
presence of a quorum, abstentions, withheld votes and broker "non-votes" will be
counted as present. Broker "non-votes" occur when the Company receives a Proxy
from a broker or nominee who does not have discretionary power to vote on a
particular matter and has not received instructions from the beneficial owner or
other person entitled to vote the shares represented by the Proxy. Withheld
votes and broker non-votes will not be counted in favor of or against, but will
have no other effect on, the vote for Proposals 1 and 2. Abstentions will have
the effect of a vote against Proposals 2 and 3. Broker non-votes will have the
effect of a vote against Proposal 3.
The cost of solicitation, including postage, printing and handling, and the
expenses incurred by brokerage houses, custodians, nominees and fiduciaries in
forwarding proxy material to beneficial owners, will be borne by the Company.
The solicitation is to be made primarily by mail, but may be supplemented by
telephone calls, telegrams and personal interviews. This Proxy Statement and
the enclosed form of Proxy were first mailed to stockholders on or about October
2, 1998.
At the close of business on September 14, 1998, the record date for the
determination of stockholders entitled to vote at the meeting, there were
outstanding __________ shares of Capital Stock. Each share is entitled to one
vote.
The following table sets forth information as of June 30, 1998 with respect
to all persons known by the Company to be the beneficial owners of more than 5%
of the Company's Capital Stock and with respect to the beneficial ownership of
the Company's Capital Stock by all directors and executive officers of the
Company as a group:
-1-
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME BENEFICIAL OWNERSHIP (1) OF CLASS
---- ------------------------ ---------
<S> <C> <C>
Erik E. Bergstrom 222,460(2) 21.92%
P.O. Box 126
Palo Alto, CA 94302
Directors and executive 230,810(3) 22.74%
officer as a group
(5 persons)
</TABLE>
_________________________________
(1) Sole voting and investment power unless otherwise indicated in the notes
below.
(2) Includes 65,781 shares owned by Federal United Corporation and 6,779 shares
owned by Bergstrom Advisers, Inc., corporations controlled by Mr.
Bergstrom. Does not include 24,000 shares beneficially owned by Mr.
Bergstrom's wife, 20,000 shares owned by Erik E. and Edith H. Bergstrom
Foundation, Inc., and 14,305 shares owned by Sharon's Trust, of which Mr.
Bergstrom is one of three trustees, as to all of which Mr. Bergstrom
disclaims any beneficial interest.
(3) Includes the shares shown in the table above as beneficially owned by Mr.
Bergstrom. See "ELECTION OF DIRECTOR" for information regarding shares
owned by the other directors and the executive officer.
So far as is known to management of the Company, on June 30, 1998 no other
person owned beneficially more than 5% of the Capital Stock of the Company,
although on such date Cede & Co., a nominee of Depository Trust Company ("DTC"),
owned of record 708,828 shares of Capital Stock of the Company, including a
portion of the shares beneficially owned by Mr. Bergstrom, or approximately
69.8% of the number of shares outstanding as of such date. DTC is a depository
of securities for brokers, dealers and other institutional investors.
Securities are so deposited for the purpose of permitting book entry transfers
of securities among such investors. Except as otherwise indicated above, the
Company does not know the names of beneficial owners of Capital Stock which is
on deposit with DTC.
THE COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS 1997 ANNUAL REPORT
AND 1998 SEMI-ANNUAL REPORT TO ANY STOCKHOLDER UPON REQUEST BY TELEPHONE AT 1-
800-426-5523 OR IN WRITING DIRECTED TO: STATE STREET BANK AND TRUST COMPANY,
P.O. BOX 8200, BOSTON, MASSACHUSETTS, 02266-8200.
State Street Bank and Trust Company is the custodian, accounting agent,
transfer agent and dividend paying agent for the Company. William L. McQueen &
Associates, whose address is the same as that of the Company, provides certain
administrative services to the Company, as described herein under "ELECTION OF
DIRECTOR -- Officers of the Company."
Each proposal to be voted upon has been independently considered by the
Board of Directors. The Board of Directors is recommending that stockholders
vote FOR the election of the director nominated by the Board of Directors
(Proposal 1) and FOR Proposals 2 and 3.
-2-
<PAGE>
ELECTION OF DIRECTOR
(PROPOSAL 1)
EXPLANATION AND HISTORY OF COMPANY'S CLASSIFIED BOARD OF DIRECTORS
At the 1979 Annual Meeting of Stockholders of the Company, approximately
84% of the shares voted on the proposal were cast in favor of a proposal to
amend the Certificate of Incorporation to classify directors into three classes,
each of approximately the same size, with one class of directors to be elected
annually. In addition, the stockholders then approved amendments to the
Certificate of Incorporation to require the affirmative vote of at least two-
thirds of the number of shares of voting stock outstanding to approve any
proposal to dissolve, merge or consolidate the Company, to sell its assets or to
effect any amendment to the Certificate of Incorporation to make the stock a
redeemable security (or to amend any of the foregoing provisions). The impetus
for these proposals was the Board of Directors' awareness that there were
efforts being made to effect structural changes in other closed-end investment
companies, such as dissolution or merger, or causing the companies to become
open-ended and thus stand ready to redeem their outstanding shares. The Board
of Directors is not aware of any such efforts currently being made with respect
to the Company.
The Board of Directors believed in 1979 and continues to believe that the
primary purpose of such structural changes is to generate a one-time profit
through the elimination of the discount between the market price and the net
asset value of closed-end investment companies. The Board of Directors also
believed that the present closed-end structure which was adopted by the Company
when it was founded in 1968 was a more appropriate vehicle for long-term capital
growth, since there is no need to consider the possible impact of purchases and
redemptions upon investment strategy, which, in the Board's view, would be a
consideration if the Company were open-ended. Further, in the event the Company
were an open-end mutual fund, and its share redemptions exceeded sales of new
shares, the amount of its assets would decline, as would the advisory fee paid
to the Company's investment adviser, unless an increase in this fee were
approved by the Board of Directors and stockholders.
One of the purposes of the 1979 amendments was to discourage attempts to
take over control of the Company in a transaction not approved by the Company's
Board of Directors by making it more difficult for anyone to obtain control in a
short time and thereby impose his will on the remaining stockholders. With
respect to the classified Board of Directors which was approved at the 1979
Annual Meeting, the Board then believed and continues to believe that a
staggered election of directors moderates the pace of any attempted change in
management by extending the time required to elect the majority of the directors
from one to two years. Further, under Delaware law, directors who are members
of a board which is classified (as is the case of the Company's Board) may not
be removed from office except for cause unless the Certificate of Incorporation
provides otherwise, which the Company's does not.
NOMINEE FOR ELECTION AND DIRECTORS
At the Annual Meeting of Stockholders held in 1997, the stockholders
elected this year's nominee for the Board of Directors, William H. Sperber, to
serve the remainder of the three-year term of Mr. Clayton H. Williams, who
retired as a director of the Company. Mr. Sperber has been nominated to hold
office as a director of the Company for an additional three-year term which will
expire at the time of the Annual Meeting of Stockholders of the Company to be
held in 2001. If authority is granted to vote in the election to fill the
director position open in 1998, the enclosed Proxy will be voted for Mr.
Sperber, who has consented to continue to serve as a director of the Company.
In the unanticipated event that the nominee cannot for some reason be a
candidate, then the Proxy holders may vote in favor of such substitute nominee
as the Board of Directors shall designate or
-3-
<PAGE>
the Board of Directors may reduce the number of directors to be elected. The
Company knows of no current circumstances which would render the nominee unable
to accept nomination or election.
The following table sets forth a list of the individual nominated for
election as a director and the Company's directors whose terms will continue
following the Annual Meeting, together with their ages, the number of shares of
Capital Stock of the Company beneficially owned by each such director as of June
30, 1998, and other information.
-4-
<PAGE>
<TABLE>
<CAPTION>
CAPITAL STOCK
OF THE
COMPANY
BENEFICIALLY
Position, if any, with the Company or Present OWNED AT
its Adviser, Principal Occupation Director Term JUNE 30, PERCENT
Name and Age and Business Experience Since Expires 1998(1) OF CLASS
- ------------ ------------------------------ -------- ------- ---------------- --------
<S> <C> <C> <C> <C> <C>
William H. Sperber Chairman, President, Chief Executive November 1998 500 0.05%
(65) Officer and co-founder of The Trust 1997
Company of Washington since July
1992.
William L. McQueen* President of the Company since November 1999 110(2) 0.01%
(67) November 1980; Treasurer of the 1980
Company from October 1986 to June
1987 and since January 1988; Secretary
of the Company from October 1976 to
November 1980; in practice as a
certified public accountant and sole
proprietor of William L. McQueen &
Associates for more than five years.
Norman R. Nielsen Manager and Senior Member of October 1999 6,840(3) 0.67%
(57) research staff, SRI Consulting, a 1976
wholly owned subsidiary of SRI
International (a research and
consulting organization), for more
than five years.
Erik E. Bergstrom* Chairman of the Board of Directors October 2000 222,460(4) 21.92%
(60) (but not an officer) of the Company; 1976
President and director of Bergstrom
Advisers, Inc.; private investor; officer
of Federal United Corporation (a
personal holding company); President
and director of Erik E. and Edith H.
Bergstrom Foundation, Inc. (a private
foundation which makes grants to
charitable organizations), all for more
than five years.
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
COMPANY
BENEFICIALLY
Position, if any, with the Company or Present OWNED AT
its Adviser, Principal Occupation Director Term JUNE 30, PERCENT
Name and Age and Business Experience Since Expires 1998(1) OF CLASS
- ------------ ------------------------------ -------- ------- ---------------- --------
<S> <C> <C> <C> <C> <C>
George Cole Scott* Account Executive and Investment October 2000 300(5) 0.03%
(61) Advisor Representative for 1976
Anderson & Strudwick, Inc. (a
securities broker and dealer) for more
than five years; President and Portfolio
Manager of Closed-End Fund
Advisors, Inc. (an investment adviser)
since October 1996; and president and
sole owner of Cole Publishing, Inc. (an
investment consulting firm) from
February 1988 to April 1996.
</TABLE>
- -----------------------------
(*) An "interested person" of the Company, as that term is defined in the
Investment Company Act of 1940, as amended (the "1940 Act"). Mr. Bergstrom
is an interested person by virtue of the magnitude of his stock ownership
in the Company and his affiliation with the Company's current investment
adviser, Bergstrom Advisers, Inc.; Mr. McQueen is an interested person by
virtue of his status as President and Treasurer of the Company; and Mr.
Scott is an interested person by virtue of his affiliation with a
securities broker and dealer.
(1) Sole voting and investment power unless otherwise indicated in the notes
below.
(2) These shares are held in an individual retirement account for the benefit
of Mr. McQueen.
(3) Includes 6,400 shares owned by the Nielsen Family Trust, of which Mr.
Nielsen is a trustee, and 440 shares owned by the Lenore Nielsen Trust, of
which Mr. Nielsen is also a trustee, but does not include 1,550 shares
owned by Mr. Nielsen's daughter, as to all of which he disclaims any
beneficial interest.
(4) Includes 65,781 shares owned by Federal United Corporation and 6,779 shares
owned by Bergstrom Advisers, Inc., corporations which Mr. Bergstrom
controls. Does not include 24,000 shares owned by Mr. Bergstrom's wife,
20,000 shares owned by Erik E. and Edith H. Bergstrom Foundation, Inc., and
14,305 shares owned by Sharon's Trust, of which Mr. Bergstrom is one of
three trustees, as to all of which he disclaims any beneficial interest.
(5) Includes 100 shares held in a Keogh plan for the benefit of Mr. Scott.
Does not include 2,000 shares owned by Mr. Scott's wife, 1,000 shares held
by Mr. Scott's son, 400 shares held by Mr. Scott's daughter, 3,156 shares
owned by Mr. Scott's mother, and 1,468 shares owned by Mr. Scott's sister,
as to all of which Mr. Scott disclaims any beneficial interest.
-6-
<PAGE>
MEETINGS OF DIRECTORS AND COMMITTEES THEREOF
During 1997, the Board of Directors held four meetings. All directors
attended all of these meetings. The Board of Directors established an Audit
Committee in mid-1978, the members of which are currently Messrs. Nielsen and
Sperber. During 1997, the Audit Committee held three meetings and all then
members attended all of these meetings. The Audit Committee reviews with the
independent accountants of the Company the Company's annual audited financial
statements, considers any comments which the independent accountants may have
regarding the Company's financial statements or books of account and considers
the adequacy of the Company's internal accounting controls. The Board of
Directors has no Nominating Committee. The Board of Directors reviews the
qualifications of and recommends a director or slate of directors for election
by the stockholders at each Annual Meeting of Stockholders and appoints
candidates to fill vacancies on the Board, subject to their qualifying under the
1940 Act. The Board of Directors will consider nominees for director
recommended by stockholders. Such recommendations should include qualifications
and biographical information and should be submitted to the Secretary of the
Company.
OFFICERS OF THE COMPANY
The present officers of the Company are William L. McQueen, President,
Chief Executive Officer and Treasurer, Pamela A. Fiorini, Secretary, and
Elizabeth C. Hedlund, Assistant Secretary. It is contemplated that the Board of
Directors will re-elect Mr. McQueen, Ms. Fiorini and Ms. Hedlund to their
respective offices. Officers serve at the discretion of the Board of Directors.
Neither Mr. McQueen, Ms. Fiorini nor Ms. Hedlund is an officer, director or
employee of Bergstrom Advisers, Inc., the Company's current investment adviser.
Mr. McQueen's accounting firm, William L. McQueen & Associates, has been engaged
by Bergstrom Advisers, Inc. to provide fund administration services and related
office facilities to the Company. William L. McQueen & Associates receives no
compensation from Bergstrom Advisers, Inc. or the Company for these services.
However, Mr. McQueen receives compensation as a director and officer of the
Company, as described under "Compensation of Directors and Executive Officer"
below. From time to time, William L. McQueen & Associates has provided
accounting services to William H. Sperber, the nominee for director.
SECTION 30(h) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 30(h) of the 1940 Act requires the Company's officers, directors
and investment advisers, the affiliated persons of such investment advisers, and
the beneficial owners of more than ten percent of the Company's Capital Stock to
file initial reports of ownership and reports of changes in ownership with the
Securities and Exchange Commission and the American Stock Exchange, and to
provide copies of such reports to the Company.
Based solely on a review of the copies of such reports received by it and
of written representations by reporting persons that no additional reports are
due, the Company believes that all Section 30(h) filing requirements for 1997
were satisfied, except as follows. Joachim Madler, a member of the Board of
Managers of Dresdner RCM, and Susan C. Gause, Senior Managing Director and Chief
Operating Officer of Dresdner RCM, failed to file on a timely basis their
initial reports of ownership on Form 3. This information was subsequently
reported, as required, on Form 5. The Form 5 filed by Joachim Madler was filed
on December 2, 1997. No Form 5 was filed by Joachim Madler for the period
December 3, 1997 through December 31, 1997, and the Company did not receive a
written representation from Joachim Madler that no Form 5 for this period was
required.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICER
The following table sets forth the compensation paid by the Company to
directors and the executive officer of the Company in 1997.
-7-
<PAGE>
<TABLE>
<CAPTION>
COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------------
Pension or Total Director
Aggregate Retirement Benefits Estimated Compensation
Name of Person and Compensation Accrued As Part of Annual Benefits From Company and
Position Company Expenses From Company Upon Retirement Fund Complex/(1)/
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Erik E. Bergstrom, $ 0(2) $0 $0 $0
Director
Norman R. Nielsen, $10,500(3) $0 $0 $10,500
Director
William L. McQueen, $69,000(4) $0 $0 $ 9,000
President, Treasurer
and Director
George Cole Scott, $ 9,000(5) $0 $0 $ 9,000
Director
William H. Sperber, $ 2,625(7) $0 $0 $ 2,625
Director (6)
Clayton H. Williams, $12,875(8) $0 $0 $12,875
Director (6)
</TABLE>
____________________
(1) A Fund Complex consists of investment companies that hold themselves out
to investors as related companies for purposes of investment and investor
services, have a common investment adviser or have an investment adviser that is
an affiliated person of the investment adviser of any other investment
companies. Dresdner RCM Global Investors LLC, one of the current subadvisers
and the proposed new adviser of the Company, as well as certain of its
affiliates, act as investment advisers to investment companies other than the
Company. However, none of the directors or the executive officer of the Company
received any compensation from any such investment companies.
(2) Does not include the advisory fee of $940,551 paid to Bergstrom Advisers,
Inc. pursuant to the Current Adviser Agreement as described below under
"APPROVAL OF THE NEW RCM AGREEMENT-Current Investment Advisory Arrangements."
(3) Consisted of a $9,000 director fee and a $1,500 fee for serving on the
Audit Committee.
(4) Consisted of a $9,000 director fee and a $60,000 salary for serving as
President and Treasurer of the Company, which salary is reimbursed to the
Company by Bergstrom Advisers, Inc. pursuant to the Current Adviser Agreement
described below under "APPROVAL OF THE NEW RCM AGREEMENT-Current Investment
Advisory Arrangements."
(5) Consisted of a $9,000 director fee.
(6) In November 1997, Mr. Sperber replaced Mr. Williams on the Board of
Directors.
(7) Consisted of a $2,250 director fee and a $375 fee for serving on the
Audit Committee.
(8) Consisted of a $6,750 director fee, a $1,125 fee for serving on the Audit
Committee, and a $5,000 retirement bonus.
Upon effectiveness of the New RCM Agreement, Mr. McQueen's salary for
serving as President and Treasurer of the Company will be increased from $60,000
to $78,000. In addition, the annual director fee will be increased to $15,000,
and the annual fee for serving on the Audit Committee will be increased to
$2,500. Mr. Bergstrom will be paid an annual director fee of $15,000 and an
additional annual fee for serving as Chairman of the Board of $2,500. See
"APPROVAL OF THE NEW RCM AGREEMENT - New RCM Agreement - Other Changes" below.
Director fees and Audit Committee fees are payable quarterly in arrears.
Directors receiving director fees are also entitled to reimbursement for their
expenses of attending meetings of the Board of Directors or its committees.
-8-
<PAGE>
REQUIRED VOTE
The election of the director requires the affirmative vote of a plurality
of the shares voting and entitled to vote thereon at the meeting, in person or
by proxy. The Board of Directors recommends a vote FOR the election of the
nominee named above.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
(PROPOSAL 2)
On August 11, 1997, the directors who were not "interested persons" of the
Company, within the meaning of the 1940 Act, selected Deloitte & Touche LLP to
carry out the audit of the Company's financial statements for the year ended
December 31, 1997. Also in August 1997 the Audit Committee of the Board of
Directors reviewed the proposed audit and non-audit services to be performed by
Deloitte & Touche LLP for the Company during 1997, and after giving
consideration to the effect upon that firm's independence, approved its
performing audit and audit function services and specified categories of non-
audit services (up to a dollar amount limit on services to be performed). From
time to time thereafter during 1997, the Audit Committee reviewed the services
actually performed to see that they were consistent with the earlier approvals.
At the regular meeting of the Board of Directors of the Company held on
August 10, 1998, the directors of the Company who were not "interested persons"
of the Company selected Deloitte & Touche LLP, through its Boston office, to be
the independent accountants of the Company, to carry out the audit of the
Company's financial statements for the year ending December 31, 1998, and to
perform such other audit and non-audit services as may be requested from time to
time by the Company. Deloitte & Touche LLP has no connection with the Company
except in such capacity, and it has no direct or indirect financial interest in
the Company.
A representative of Deloitte & Touche LLP is expected to be present at the
meeting to respond to appropriate questions and will have an opportunity to make
a statement if he or she chooses to do so.
REQUIRED VOTE
The ratification of the selection of Deloitte & Touche LLP requires the
affirmative vote of a majority of the shares voting and entitled to vote thereon
at the meeting, in person or by proxy. The Board of Directors recommends a vote
FOR such ratification.
APPROVAL OF THE NEW RCM AGREEMENT
(PROPOSAL 3)
Stockholders of the Company are being asked to approve a new advisory
agreement (the "New RCM Agreement") between the Company and one of the Company's
current subadvisers, Dresdner RCM Global Investors LLC, a Delaware limited
liability company ("Dresdner RCM"). The New RCM Agreement would replace the
Company's current investment advisory arrangements with Bergstrom Advisers, Inc.
and the Company's current investment research and subadvisory arrangements with
Dresdner RCM and Frank A. Branson, Inc. Stockholder approval of the New RCM
Agreement is necessary because of the requirement under the 1940 Act that every
investment advisory contract be approved by stockholders.
-9-
<PAGE>
CURRENT INVESTMENT ADVISORY ARRANGEMENTS
Information About Bergstrom Advisers, Inc. Bergstrom Advisers, Inc., a
Delaware corporation (the "Current Adviser"), is the Company's current
investment adviser. Erik E. Bergstrom, the Chairman of the Board of the
Company, is the sole stockholder, director, officer and investment management
employee of the Current Adviser. Mr. Bergstrom's address and that of the
Current Adviser is P.O. Box 126, Palo Alto, California 94302. Mr. Bergstrom has
been engaged professionally in securities investments since 1967. In addition
to his services as President of the Current Adviser, Mr. Bergstrom is a private
investor and serves as President and Treasurer of Federal United Corporation, a
personal holding company which is controlled by Mr. Bergstrom. The Current
Adviser provides investment advisory or management services only to the Company.
The Current Adviser has been the Company's investment adviser since 1976.
Terms of the Investment Management and Advisory Agreement with the Current
Adviser. The Investment Management and Advisory Agreement between the Company
and the Current Adviser (the "Current Adviser Agreement") continues
automatically for successive annual periods, provided that such continuance is
specifically approved at least annually by vote of a majority of the outstanding
voting securities of the Company or by the Board of Directors of the Company,
together with, in each instance, the vote of a majority of those directors who
are not "interested persons" of the Company or the Current Adviser. On August
11, 1997, the Board of Directors of the Company unanimously approved the
continuance of the Current Adviser Agreement until November 6, 1998. On August
10, 1998, the Board of Directors extended the term of the Current Adviser
Agreement to November 9, 1998. The Current Adviser Agreement may be terminated
at any time without penalty by vote of the majority of the outstanding voting
securities of the Company or by a vote of a majority of the entire Board of
Directors of the Company on sixty days' written notice to the Current Adviser or
by the Current Adviser on sixty days' written notice to the Company. The
Current Adviser Agreement automatically terminates upon its assignment.
Under the Current Adviser Agreement, the Current Adviser provides
investment management, advisory and research services to the Company, advising
the Company on the composition of its portfolio and determining, subject to
overall supervision by the Company's Board of Directors, which securities may be
bought and sold. In addition, the Current Adviser furnishes to the Company
office facilities and simple business equipment and pays the cost of keeping the
Company's books and records. It also pays the fees and expenses of any director
of the Company who is an "affiliated person" of the Current Adviser (the only
such person being Mr. Bergstrom) and reimburses the Company for compensation
paid to any officer of the Company.
The Current Adviser Agreement provides that the services to be performed by
the Current Adviser also may be performed by any organization with which the
Current Adviser may contract, subject to approval by the Company's Board of
Directors and compliance with applicable law, without relieving the Current
Adviser of any responsibilities to the Company it would have if it performed
such services directly. Pursuant to this provision, the Current Adviser has
entered into two subadvisory agreements which are described below.
The Current Adviser Agreement provides for the Company to pay the Current
Adviser an advisory fee which, on an annual basis, amounts to 0.75%, which rate
is higher than rates charged most other investment companies, of the first
$50,000,000 of the Company's average net assets, plus 0.50% of the value of the
average net assets in excess of $50,000,000, all in consideration of providing
the services described above. Such fee is to be computed weekly and paid
monthly. During 1997, the Company paid the Current Adviser $940,551 in fees
pursuant to the Current Adviser Agreement.
The Current Adviser Agreement also provides that the Company will generally
pay all of its operating expenses subject to the following limitation on
expenses: if in any fiscal year of the Company the sum of the fee paid and
payable to the Current Adviser for such year plus the operating expenses
-10-
<PAGE>
of the Company for such year exceeds 1.50% of the first $50,000,000 of the
Company's average net assets, plus 1.00% of the Company's average net assets in
excess of $50,000,000, the Current Adviser will reimburse the Company for such
excess, up to the amount of the fee received by the Current Adviser for such
year. In the event the excess operating expenses are greater than the fee for
such year, the maximum amount payable by the Current Adviser would be the amount
of the fee received, and there would be no carry-forward or carry-back of the
unrecovered portion to any other period. The Current Adviser Agreement provides
for quarterly reviews of the operating expenses and for interim reductions in
the amount of the fee then payable to the Current Adviser for the balance of the
year (subject to later adjustment) if it appears likely that the operating
expense limitation for the year will be exceeded. During 1997, there were no
fee reductions nor reimbursements for excess expenses.
Mr. Bergstrom has licensed to the Company, on a royalty-free, non-exclusive
basis, the word Bergstrom for use in the Company's name in connection with its
business as an investment company. Mr. Bergstrom has the right to terminate
this license upon the termination of the Current Adviser Agreement. Mr.
Bergstrom may use or license the word Bergstrom in connection with the Current
Adviser, other investment companies and other business enterprises.
CURRENT INVESTMENT RESEARCH AND SUBADVISORY ARRANGEMENTS
General Information. At present, the Current Adviser has investment
research and subadvisory arrangements with Dresdner RCM and Frank A. Branson,
Inc. ("Branson") with respect to certain portions of the marketable securities
held or to be acquired by the Company. Pursuant to such arrangements, the
Current Adviser has given Dresdner RCM and Branson authority, in varying
degrees, to effect purchases and sales of portfolio securities on behalf of the
Company. At June 30, 1998, Dresdner RCM and Branson had subadvisory
responsibilities for approximately $123.0 million and $26.0 million, or 69.9%
and 14.8%, respectively, of the net assets of the Company. The balance of the
assets of the Company was under the direct investment management responsibility
of the Current Adviser. During 1997, the Current Adviser paid Dresdner RCM
aggregate fees of $355,654, and Branson aggregate fees of $138,104, out of the
fees the Current Adviser received from the Company.
Information About Dresdner RCM Global Investors LLC. Dresdner RCM has been
a subadviser to the Company since June 1996, when it acquired RCM Capital
Management, a California Limited Partnership ("RCMLP"). From 1986 until June
1996, RCMLP acted as a subadviser to the Company. The business address of
Dresdner RCM is Four Embarcadero Center, San Francisco, California 94111.
Terms of the Investment Management and Advisory Agreement between Dresdner
RCM and the Current Adviser. The Investment Management and Advisory Agreement
between Dresdner RCM and the Current Adviser (the "Current RCM Agreement")
continues automatically for successive annual periods, provided that such
continuance is specifically approved at least annually by vote of a majority of
the outstanding voting securities of the Company or by the Board of Directors of
the Company, together with, in each instance, the vote of a majority of those
directors who are not "interested persons" of the Company, the Current Adviser
or Dresdner RCM. On November 3, 1997, the Board of Directors of the Company
unanimously approved the continuance of the Current RCM Agreement until November
6, 1998. On August 10, 1998, the Board of Directors extended the term of the
Current RCM Agreement to November 9, 1998. The Company may at any time
terminate the Current RCM Agreement upon sixty days' written notice to Dresdner
RCM and to the Current Adviser either by majority vote of the Board of Directors
of the Company or by the vote of a majority of the outstanding voting securities
of the Company. With the prior approval of the Board of Directors of the
Company, the Current Adviser may at any time terminate the Current RCM Agreement
upon sixty days' written notice to Dresdner RCM. Dresdner RCM may at any time
terminate the Current RCM Agreement upon sixty days' written notice to the
Company and to the Current Adviser. The Current RCM Agreement automatically
terminates upon its assignment or upon termination of the Current Adviser
Agreement.
-11-
<PAGE>
Under the Current RCM Agreement, the Current Adviser grants to Dresdner RCM
full authority to manage the investment and reinvestment of a portion of the
Company's assets (the "RCM Portfolio"). Such investment and reinvestment are in
Dresdner RCM's discretion but are required to be consistent with the investment
objectives, policies and restrictions of the Company as furnished to Dresdner
RCM by the Current Adviser. The Current Adviser has the authority to vary the
amount of assets in the RCM Portfolio in its discretion. Under the Current RCM
Agreement, Dresdner RCM is required to furnish the Company and the Current
Adviser with quarterly statements of the RCM Portfolio, as well as statements
evidencing any purchases and sales for the RCM Portfolio.
Set forth below is the schedule of annual fees payable by the Current
Adviser to Dresdner RCM under the Current RCM Agreement. The fee is calculated
quarterly.
MARKET VALUE OF SECURITIES AND CASH FEE
----------------------------------- ---
On the first $10,000,000 or fraction thereof ...... 0.70% annually
On the next $10,000,000 or fraction thereof ....... 0.60% annually
On the next $20,000,000 or fraction thereof ....... 0.50% annually
On the next $20,000,000 or fraction thereof ....... 0.35% annually
On the next $40,000,000 or fraction thereof ....... 0.30% annually
On sums exceeding $100,000,000 .................... 0.25% annually
Dresdner RCM has authority to invest a portion of the Company's assets in the
shares of any investment company advised by Dresdner RCM. Such shares are not
included in the calculation of the market value of securities and cash managed
by Dresdner RCM for purposes of determining the fee paid by the Current Adviser
to Dresdner RCM, but are included in such calculation for purposes of
determining the fee paid by the Company to the Current Adviser.
As of June 30, 1998, approximately $4.8 million, $4.5 million and $2.5
million, respectively, of the Company's assets were invested in the Dresdner RCM
Growth Equity Fund, the Dresdner RCM Small Cap Fund and the Dresdner RCM
International Growth Equity Fund A (the "Dresdner RCM Funds"), each a series of
the Dresdner RCM Capital Funds, Inc., an open-end investment company which is
advised by Dresdner RCM. The Dresdner RCM Growth Equity Fund and the Dresdner
RCM International Growth Equity Fund A pay Dresdner RCM an annual fee of 0.75%
of average net assets, and the Dresdner RCM Small Cap Fund pays Dresdner RCM an
annual fee of 1.00% of average net assets. These fees are higher than the fees
that are paid by most investment companies; however, these fees are comparable
to the fees paid by other investment companies with similar investment
objectives. Although the Company does not pay these fees to Dresdner RCM
directly, any return of the Company on its investment in the Dresdner RCM Funds,
like any return of the Company on its investment in other investment companies,
is reduced by the amount of these fees. As of June 30, 1998, approximately 7.4%
of the Company's total assets was invested in investment companies, including
the Dresdner RCM Funds. The Dresdner RCM Funds do not charge any sales load,
redemption fee or distribution fee.
Under the RCM Agreement, all orders for the purchase and sale of securities
for the Company must be placed in such markets and through such brokers as in
Dresdner RCM's best judgment offer the most favorable price and market.
Dresdner RCM may effect securities transactions which cause the Company to pay a
commission in excess of the commission another broker or dealer would have
charged, provided that Dresdner RCM determines in good faith that the commission
is reasonable in relation to the value of brokerage and research services
provided by the broker or dealer, viewed in terms of the specific transaction or
Dresdner RCM's overall responsibilities to its clients. The receipt of such
brokerage and research services does not decrease the advisory fee payable to
Dresdner RCM, and to the extent such services are provided without cost to
Dresdner RCM, the expenses of Dresdner RCM in rendering advice to the Company
will be reduced. During 1997, the Company did not pay any
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<PAGE>
brokerage commissions to any Affiliated Broker, as defined in the proxy rules,
including any broker affiliated with Dresdner RCM.
Information About Frank A. Branson, Inc. Branson is a California
corporation with its business address at 555 Twin Dolphin Drive, Suite 185,
Redwood City, California 94065. Branson has been a subadviser to the Company
since 1986.
Terms of the Investment Research Agreement between Branson and the Current
Adviser. The Investment Research Agreement (the "Branson Agreement") between
Branson and the Current Adviser continues automatically for successive annual
periods, provided that such continuance is specifically approved at least
annually by vote of a majority of outstanding voting securities of the Company
or by the Board of Directors of the Company, together with, in each instance,
the vote of a majority of those directors of the Company who are not "interested
persons" of the Company, the Current Adviser or Branson. On August 11, 1997,
the Board of Directors of the Company unanimously approved the continuance of
the Branson Agreement until November 6, 1998. On August 10, 1998, the Board of
Directors extended the term of the Branson Agreement to November 9, 1998. The
Branson Agreement may be terminated at any time by vote of the majority of the
outstanding voting securities of the Company or by a vote of a majority of the
entire Board of Directors of the Company on sixty days' written notice to
Branson and the Current Adviser; or with the prior approval of the Board of
Directors of the Company, by the Current Adviser on sixty days' written notice
to Branson; or by Branson on sixty days' written notice to the Current Adviser
and to the Company. The Branson Agreement automatically terminates upon its
assignment or upon termination of the Current Adviser Agreement.
Under the Branson Agreement, Branson provides to the Current Adviser
investment research relating to marketable securities useful to the Current
Adviser in the performance of its activities under the Current Adviser
Agreement. The Current Adviser from time to time advises Branson as to the
amount of the assets of the Company for which Branson has subadvisory
responsibility, and such responsibility is limited to that amount and continues
until modified by the Current Adviser. The Branson Agreement provides that,
except to the extent expressly authorized by the Current Adviser, Branson has no
authority to determine the nature or timing of changes in the portfolio of the
Company or the manner of effecting such changes or to cause the purchase or sale
of portfolio securities. The Current Adviser has delegated and intends to
continue to delegate to Branson discretionary authority in varying degrees to
purchase or sell portfolio securities for the Company, typically with
limitations on maximum amounts of securities which may be purchased or sold and
limitations on maximum purchase and minimum sale prices, outside of which
limitations Branson would be required to consult with the Current Adviser.
The Current Adviser pays to Branson compensation at the annual rate of
.375% of the value of the assets of the Company for which Branson has investment
or advisory responsibility as of the date of such computation. Compensation
under the Branson Agreement is calculated and accrued quarterly.
NEW RCM AGREEMENT
Terms of the New RCM Agreement. Upon effectiveness of the New RCM
Agreement, Dresdner RCM will become the sole investment adviser of the Company,
and the current advisory arrangements with the Current Adviser and with Branson
will terminate. As a result, Dresdner RCM will have full authority, subject to
the supervision of the Board of Directors of the Company, to manage all of the
Company's assets, rather than the portion of the Company's assets designated by
the Current Adviser. Neither the Current Adviser nor Branson will retain any
advisory or subadvisory responsibilities.
The investment advisory services rendered by Dresdner RCM will remain
essentially the same, except that they will be applied to a larger amount of
assets. Under the New RCM Agreement, Dresdner RCM will expressly assume certain
responsibilities consistent with its role as the investment adviser, including
the responsibility to maintain certain books and records, to render to the Board
of
-13-
<PAGE>
Directors certain reports, to perform its duties in conformity with the
Company's policies and applicable law and to bear the expenses of its employees
and overhead. Dresdner RCM will also agree to indemnify the Company against
losses incurred as a result of the failure of Dresdner RCM's systems to be Year
2000 compliant.
The fee rates charged by Dresdner RCM will remain the same under the New
RCM Agreement. These rates will be applied to a larger amount of assets, and
Dresdner RCM will be paid by the Company, rather than by the Current Adviser.
Because the current advisory arrangements with the Current Adviser and Branson
will terminate, no further fees will be paid by the Company to the Current
Adviser or by the Current Adviser to Branson. Had the New RCM Agreement been in
effect during 1997, the Company would have paid, and Dresdner RCM would have
received, $559,522 in advisory fees. This represents a savings of $381,029, or
40.5%, in relation to the actual amount paid by the Company to the Current
Adviser during this period. Substantially all of the savings results from the
difference between the fee rates under the Current Adviser Agreement, which
range from 0.75% to 0.50%, and those under the New RCM Agreement, which range
from 0.70% to 0.25%. In addition, assets of the Company invested in other
investment companies advised by Dresdner RCM or its affiliates are not included
for purposes of determining the fee paid to Dresdner RCM. Fees payable under
the New RCM Agreement are calculated and paid quarterly in arrears based on the
cash and securities held by the Company on the last business day of the
preceding quarter. Fees payable under the Current Adviser Agreement are
calculated weekly and paid monthly in arrears based on the net assets of the
Company on the last business day of each week. The savings in advisory fees
will be partially offset by the additional expenses to be borne by the Company
described under "Other Changes" below.
The New RCM Agreement will become effective upon its approval by the
stockholders of the Company at the Annual Meeting. The New RCM Agreement will
remain in effect until November 9, 2000, and thereafter from year to year
subject to approval annually in accordance with its terms. The New RCM
Agreement may be terminated without penalty on sixty days' notice by the Board
of Directors or stockholders of the Company to Dresdner RCM, or by Dresdner RCM
to the Company.
Except as provided above, the terms of the New RCM Agreement are identical
in all material respects to those of the Current RCM Agreement. A description
of the Current RCM Agreement is included under the caption "Current Investment
Research and Subadvisory Arrangements -- Terms of the Investment Management and
Advisory Agreement between Dresdner RCM and the Current Adviser" above.
Stockholders should refer to Exhibit A attached hereto for the complete terms of
the New RCM Agreement. The description of the New RCM Agreement set forth
herein is qualified in its entirety by the provisions of Exhibit A.
Other Changes. Following effectiveness of the New RCM Agreement, Mr.
Bergstrom will continue as Chairman of the Board of the Company, and all of the
other directors of the Company will remain the same. Following such
effectiveness, all directors of the Company will continue to be independent of
Dresdner RCM.
The fund administration and related services currently performed by William
L. McQueen & Associates will be provided directly to the Company, rather than
through the Current Adviser. As before, no compensation will be paid to William
L. McQueen & Associates for these services. The Company will assume from the
Current Adviser the payment of Mr. McQueen's salary as President and Treasurer
of the Company, as well as payroll taxes on this salary. During 1997, the
Current Adviser reimbursed the Company for Mr. McQueen's salary of $60,000 and
related payroll taxes of $5,169. For the period from November 9, 1998 to
November 8, 1999, Mr. McQueen's salary will be increased to $78,000 and related
payroll taxes to approximately $6,000. The Company will also assume from the
Current Adviser the payment of State Street Bank & Trust Company ("State
Street") for accounting services rendered to the Company. For these services,
State Street currently receives 0.07% of the first $50 million of the Company's
net assets, 0.03% of the next $50 million and 0.01% thereafter, with a
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<PAGE>
minimum of $48,000 annually, plus out-of-pocket expenses. During 1997, the
Current Adviser paid State Street $56,189 for accounting services.
Because the Current Adviser will no longer supervise the advisory services
of the Company's subadvisers or the administration and accounting services
provided by William L. McQueen & Associates and State Street, the Board of
Directors of the Company will bear additional responsibilities. As a result,
the Board of Directors has determined to increase the annual director fee from
$9,000 to $15,000, and the annual fee for serving on the Audit Committee from
$1,500 to $2,500, upon effectiveness of the New RCM Agreement. The Board of
Directors has also determined to pay to Mr. Bergstrom an annual director fee of
$15,000, an additional annual fee for serving as Chairman of the Board of
$2,500, and reimbursement for his expenses of attending Board meetings.
Currently, Mr. Bergstrom receives no director fee or reimbursement for expenses
but is compensated through the advisory fee paid to the Current Adviser.
Under the Current Adviser Agreement, the Current Adviser agrees to
reimburse the Company for any amount, up to the Current Adviser's advisory fee,
by which the Company's operating expenses in any fiscal year exceed 1.50% of the
first $50,000,000 of the Company's average net assets and 1.00% of average net
assets thereafter. Since Dresdner RCM will not control the Company's operating
expenses, through representation on the Company's Board of Directors or
otherwise, it did not make sense for Dresdner RCM to assume this expense
limitation. However, each of the Company's directors has agreed to reimburse
the Company's operating expenses in excess of the current expense limitation
during any year, up to the amount of his director and committee fees during that
year. As before, the Company and its stockholders will bear any excess expenses
beyond the amounts reimbursed. There have been no reimbursements under the
expense limitation since 1976, when the Current Adviser became the Company's
investment adviser. In 1997, operating expenses for purposes of the expense
limitation were .75% of the Company's average net assets.
The Company will bear certain expenses in connection with the approval and
implementation of the New RCM Agreement, including costs associated with this
Proxy Statement. It is expected that these expenses will be offset, at least in
part, by the elimination of ongoing legal, custodial and other costs related to
the current subadvisory relationships.
Mr. Bergstrom currently has the right to terminate his license of the word
"Bergstrom" to the Company upon termination of the Current Adviser Agreement.
Mr. Bergstrom has agreed to amend his license agreement with the Company to
delete this provision upon effectiveness of the New RCM Agreement. The license
will continue to be non-exclusive.
Comparison of Expenses. The following table sets forth the actual expenses
of the Company for 1997 and the estimated expenses of the Company after the New
RCM Agreement is effective:
<TABLE>
<CAPTION>
Annual Expenses
(as a percentage of net assets)
-----------------------------------
Actual(1) Estimated(2)
--------------- -----------------
<S> <C> <C>
Management Fees....................... .58% .36%
Accounting Expenses................... -- .03
Officer Salary and Related Expenses... -- .05
Director Fees and Expenses............ .03 .06
Other Expenses........................ .14 .14(3)
--- -----
Total Annual Expenses............... .75% .64%
==== ====
</TABLE>
____________________
(1) Based upon average net assets for 1997.
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<PAGE>
(2) Based upon net assets as of December 31, 1997.
(3) Does not include expenses incurred in connection with the approval and
implementation of the New RCM Agreement or the elimination of ongoing
legal, custodial and other costs related to the current subadvisory
relationships.
The following example illustrates the expenses on a $1,000 investment in
the Company, assuming a 5% annual return, based upon (a) the Company's actual
expenses for 1997, (b) the estimated expenses of the Company after the New RCM
Agreement is effective and (c) the assumptions in the table above:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Actual $8 $24 $41 $94
Estimated $6 $20 $35 $81
</TABLE>
The purpose of this example and the table above is to assist stockholders
in understanding the various costs and expenses a stockholder will bear directly
or indirectly. The assumption of a 5% annual return is required by the
Securities and Exchange Commission. The example and the table should not be
considered a representation of future expenses or returns of the Company.
Actual expenses and returns will vary from year to year and may be higher or
lower than those shown.
Additional Information About Dresdner RCM. Dresdner RCM is 99% owned by
Dresdner Bank AG, an international banking organization headquartered in
Frankfurt, Germany ("Dresdner"), and 1% owned by Dresdner North America Holding,
Inc., a wholly-owned subsidiary of Dresdner ("DNAH"). The business address of
Dresdner is Gallusanlage 7, 60041 Frankfurt am Main, and of DNAH is 75 Wall
Street, New York, New York 10005.
Subject to the oversight of Dresdner RCM's Board of Managers, the day-to-
day business of Dresdner RCM is managed by the officers and employees of
Dresdner RCM. Listed below is certain information concerning the principal
executive officer and each member of the Board of Managers of Dresdner RCM:
<TABLE>
<CAPTION>
Name and Address Principal Occupation
- ----------------------------- ---------------------------------------------------------------
<S> <C>
William L. Price (1) Chairman, Chief Executive Officer, Global Chief Investment
Officer and Senior Managing Director of Dresdner RCM
Susan C. Gause (1) Senior Managing Director and Chief Operating Officer of
Dresdner RCM
Jeffrey S. Rudsten (1) Senior Managing Director of Dresdner RCM
William S. Stack (1) Managing Director and Global Equity Chief Investment Officer
of Dresdner RCM
Luke D. Knecht (1) Managing Director of Dresdner RCM
Gerhard Eberstadt Director of Dresdner
Dresdner Bank AG
Gallusanlage 7
60041 Frankfurt am Main
Frankfurt, Germany
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Name and Address Principal Occupation
- ----------------------------- ---------------------------------------------------------------
<S> <C>
George N. Fugelsang President of Dresdner Securities (USA) Inc. and Senior General
Dresdner Bank AG Manager and Chief Executive North America of Dresdner
75 Wall Street
New York, New York
10005-2889
Joachim Madler Director of Dresdner
Dresdner Bank AG
Mainzer LandstraBe 15-17
60301 Frankfurt
Germany
</TABLE>
____________________
(1) The business address of each is Dresdner RCM Global Investors LLC, Four
Embarcadero Center, Suite 3000, San Francisco, California 94111.
Dresdner RCM acts as investment manager for the portfolios of registered
investment companies other than the Company, which portfolios have investment
objectives that may be similar to those of the Company. Set forth below are the
name of each such portfolio, its net assets and information concerning the fees
paid by it to Dresdner RCM:
<TABLE>
<CAPTION>
Net Assets as of Annual Rate of Fee Waivers or
Fund Name June 30, 1998 Compensation Reductions
- ----------------------------- ---------------- -------------------- ---------------
<S> <C> <C> <C>
Dresdner RCM Growth Equity $1,037,673,000 0.75% of average None
Fund quarterly net assets
Dresdner RCM Large Cap $ 6,187,000 0.70% of average (1)
Growth Fund daily net assets
</TABLE>
______________________
(1) Dresdner RCM has voluntarily agreed, until at least December 31, 1998, to
pay the Dresdner RCM Large Cap Growth Fund the amount, if any, by which
certain ordinary operating expenses of the fund exceed 0.95% of the average
daily net assets of the fund on an annual basis.
RECOMMENDATION AND REQUIRED VOTE
Mr. Bergstrom, through the Current Adviser, has been the primary investment
manager of the Company since 1976. In early January 1998, Mr. Bergstrom advised
the Board of Directors that he wished to have more time to do the work of the
charitable foundation that he and his wife had established. To do this, Mr.
Bergstrom proposed that the Current Adviser Agreement and the Branson Agreement
be allowed to expire and that these agreements be replaced by a new agreement
with Dresdner RCM as the sole investment adviser of the Company.
Dresdner RCM and its predecessors have acted as a subadviser of the Company
since 1986. Over the years, Mr. Bergstrom has increased the amount of the
Company's assets managed by Dresdner RCM. As of June 30, 1998, Dresdner RCM
managed almost 70% of the Company's assets. Rather than continue to increase
the assets managed by Dresdner RCM, with the Current Adviser acting as an
intermediary, Mr. Bergstrom recommended that the Company deal directly with
Dresdner RCM as the investment adviser. At the same time, Mr. Bergstrom
committed to remain actively involved as Chairman of the Board and to continue
his substantial investment as a stockholder of the Company.
Under Mr. Bergstrom's proposal, the Board of Directors and officers of the
Company would stay the same, and the administration and accounting arrangements
for the Company would not change.
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<PAGE>
The Company would assume Mr. McQueen's salary as President, Chief Executive
Officer and Treasurer, the accounting fees charged by State Street and increased
director fees and expenses. However, these additional expenses would be more
than offset by the savings represented by the difference in the fee rates under
the Current Adviser Agreement and the New RCM Agreement. As a result of the
changes, it is estimated that the Company's annual expense ratio would be
reduced by approximately 15%, based on the table set forth under "New RCM
Agreement - Comparison of Expenses" above.
In 1995, Mr. Bergstrom had expressed earlier his desire to turn over his
investment management duties for the Company. At that time, the Board of
Directors of the Company conducted an extensive study, with a financial
consultant, of the alternatives available to the Company. Among the
alternatives actively considered were a merger or other business combination
with another investment company and the engagement of one of the Company's
subadvisers as the investment adviser. At the end of this process, Dresdner RCM
was selected as the leading candidate. Mr. Bergstrom determined to continue as
the investment adviser before an agreement with Dresdner RCM could be
consummated.
The Board of Directors of the Company met on February 9, 1998 to consider
Mr. Bergstrom's current proposal. At the meeting, the Board reviewed written
reports from the Current Adviser and the two subadvisers and an oral report from
Mr. Bergstrom on the investment performance of the Company. The Board discussed
Mr. Bergstrom's proposal at length, including the advantages and disadvantages
of the proposal as compared with the arrangement with Dresdner RCM contemplated
in 1995. The Board also discussed the additional time and expense that would be
involved in conducting a new adviser search and the uncertain benefits that
might be realized. As a result of these deliberations, the Board unanimously
approved the proposal in concept, subject to discussions with Dresdner RCM,
preparation of definitive documents, formal review by the Board at its August
1998 meeting and approval of a new advisory agreement at the Annual Meeting.
Dresdner RCM responded positively to the proposal, and a form of new
advisory agreement was prepared and presented to the Board of Directors at its
May 11, 1998 meeting. At this meeting, the Board reviewed written reports from
the Current Adviser and the two subadvisers and oral reports from the Current
Adviser and Dresdner RCM on the Company's investment performance. Counsel to
Dresdner RCM confirmed that the form of new advisory agreement was satisfactory
to Dresdner RCM. Operational changes anticipated as a result of the proposal
were also discussed with Dresdner RCM.
The Board of Directors met in person on August 10, 1998 to consider
formally the New RCM Agreement. At this meeting, the Board reviewed, among
other information, written and oral presentations and compilations provided by
the Current Adviser and Dresdner RCM, including information concerning the
proposal and Dresdner RCM and comparative data from independent sources as to
Dresdner RCM's investment performance and advisory fees. In connection with its
review, the Board took into account a number of factors, including: the
historic performance of the Dresdner RCM portion of the Company's investment
portfolio; the quality of past services rendered by Dresdner RCM; the terms of
the Current Adviser Agreement, the RCM Agreement and the New RCM Agreement,
including the fees payable thereunder; the profitability of Dresdner RCM and the
benefits accruing to it as a result of its affiliation with the Company,
including research services received in return for allocating brokerage of the
Company; the arrangements among Dresdner, Dresdner RCM and the key employees of
Dresdner RCM; the financial and other resources of Dresdner and Dresdner RCM;
the expected benefits of the proposal to the Company, including cost savings and
the amendment of the license agreement with Mr. Bergstrom; the continuing role
of Mr. Bergstrom in the Company; the composition and compensation of the Board
of Directors and officers of the Company; the results of the prior adviser
search; the advisability of seeking additional proposals; and the support for
the proposal by Mr. Bergstrom. Of particular significance to the Board was the
expectation that upon effectiveness of the New RCM Agreement, the advisory
services to be rendered by Dresdner RCM and the administration and accounting
services to be rendered by William L. McQueen & Associates and State Street
would remain substantially unchanged, Mr. Bergstrom would continue to be
actively involved as
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<PAGE>
the Chairman of the Board and a substantial stockholder of the Company, the
other directors of the Company would continue to be independent, and the Company
would realize significant cost savings.
As a result of its deliberations, the Board of Directors, including all of
the directors who are not parties to the New RCM Agreement or "interested
persons" of any such parties under the 1940 Act, unanimously approved the New
RCM Agreement as being in the best interests of the Company and its stockholders
and recommended it to the stockholders for their approval.
The approval of the New RCM Agreement requires the affirmative vote of at
least the lesser of (a) 67% or more of the Capital Stock present at the Annual
Meeting, if the holders of more than 50% of the outstanding Capital Stock of the
Company are present or represented by proxy at the Annual Meeting, or (b) more
than 50% of the outstanding Capital Stock of the Company. The Board of
Directors recommends a vote FOR such approval.
If Proposal 3 is not approved, the Board of Directors will take such action
as it deems to be in the best interests of the Company and the stockholders.
OTHER BUSINESS
As of August 17, 1998, the Company did not have notice of any business to
come before the meeting other than as set forth in the Notice of Annual Meeting
of Stockholders. If any other business is properly brought before the meeting,
or any adjournment thereof, all Proxies will be voted in accordance with the
best judgment of the persons voting such Proxies as to such business.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of stockholders intended to be presented at the Annual Meeting of
Stockholders to be held during 1999 must be received at the Company's principal
office on or before June 5, 1999 in order to be considered for inclusion in the
Company's Proxy Statement and form of Proxy for such meeting.
The Company may exercise discretionary voting authority with respect to
stockholder proposals for the 1999 Annual Meeting which are not included in the
Company's Proxy Statement and form of Proxy, if notice of such proposals is not
received at the Company's principal office on or before August 19, 1999. Even
if timely notice is received, the Company may exercise discretionary voting
authority in certain other circumstances. Discretionary voting authority is the
ability to vote Proxies that stockholders have executed and returned to the
Company on matters not specifically reflected on the form of Proxy.
September __, 1998
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<PAGE>
EXHIBIT A
INVESTMENT MANAGEMENT AND ADVISORY AGREEMENT
--------------------------------------------
THIS AGREEMENT is entered into as of the 9th day of November, 1998 by
and between Dresdner RCM Global Investors LLC, a Delaware limited liability
company (the "Adviser"), and Bergstrom Capital Corporation, a Delaware
corporation (the "Client"):
1. Subject to the supervision of the Board of Directors of the
Client (the "Board of Directors"), the Client hereby grants to the Adviser full
authority, and the Adviser hereby agrees, to manage the investment and
reinvestment of the cash and securities in the account of the Client (the
"Account") presently held by State Street Bank and Trust Company, 225 Franklin
Street, Boston, Massachusetts 02110 (the "Custodian"), the proceeds thereof, and
any additions thereto, in the Adviser's discretion but consistent with the
investment objectives, policies and restrictions of the Client as they may be
amended from time to time. In this connection, the Adviser shall not be
required to take any action with respect to the voting of proxies solicited by
or with respect to the issuers of securities in which Account assets may be
invested.
2. In consideration of the services performed by the Adviser
hereunder, the Client will pay to the Adviser, as they become due and payable,
management fees determined in accordance with the attached Schedule of Fees.
3. Nothing contained herein shall be deemed to authorize the Adviser
to take or receive physical possession of any cash or securities held in the
Account by the Custodian, it being intended that sole responsibility for
safekeeping thereof (in such investments as the Adviser may direct), and the
consummation of all such purchases, sales, deliveries and investments made
pursuant to the Adviser's direction, shall rest upon the Custodian.
4. (a) Unless otherwise specified in writing to the Adviser by the
Client, all orders for the purchase and sale of securities for the Account shall
be placed in such markets and through such brokers as in the Adviser's best
judgment shall offer the most favorable price and market for the execution of
each transaction. The Client understands and agrees that the Adviser may effect
securities transactions which cause the account to pay an amount of commission
in excess of the amount of commission another broker or dealer would have
charged. Provided, however, that the Adviser determines in good faith that such
amount of commission is reasonable in relation to the value of brokerage and
research services provided by such broker or dealer, viewed in terms of either
the specific transaction or the Adviser's overall responsibilities to the
accounts for which the Adviser exercises investment discretion. The Client also
understands that the receipt and use of such services will not reduce the
Adviser's customary and normal research activities.
(b) The Client agrees that the Adviser may aggregate sales and
purchase orders of securities held in the Account with similar orders being made
simultaneously for other portfolios managed by the Adviser if, in the Adviser's
reasonable judgment, such aggregation shall result in an overall economic
benefit to the Account, taking into consideration the advantageous selling or
purchase price and brokerage commission. In accounting for such aggregated
order, price and commission shall be averaged on a per bond or share basis
daily. The Client acknowledges that the Adviser's determination of such
economic benefit to the Account is based on an evaluation that the Account is
benefited by relatively better purchase or sales prices, lower commission
expenses and beneficial timing of transactions, or a combination of these and
other factors.
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<PAGE>
5. The Adviser represents that it is duly registered as an investment
adviser under the Investment Advisers Act of 1940, as amended. The Adviser
represents that its systems are Year 2000 compliant or will be Year 2000
compliant prior to January 1, 2000, insofar as such systems are material to the
Client. The Adviser agrees to indemnify the Client against any losses, claims,
damages, liabilities or expenses incurred by the Client as a result of any
failure by the Adviser's systems to be Year 2000 compliant.
6. The Adviser agrees:
(a) to give the Client the benefit of the Adviser's best judgment and
efforts in rendering services to the Client as provided in this Agreement;
(b) to furnish the Client with monthly statements of the Account,
valued, for each security listed on any national securities exchange at the last
quoted sale price on the valuation date reported on the composite tape or, in
the case of securities not so reported, by the principal exchange on which the
security is traded, and for any other security or asset in a manner determined
in good faith by the Adviser to reflect its fair market value;
(c) to furnish the Client with statements evidencing any purchases and
sales for the Account as soon as practicable after such transaction has taken
place;
(d) to maintain books and records with respect to the Client's
portfolio transactions and to surrender promptly to the Client any of such
records upon the Client's request;
(e) to render to the Board of Directors such periodic and special
reports as the Board may reasonably request from time to time;
(f) to perform its duties under this Agreement in conformity with the
Client's Certificate of Incorporation, By-Laws and Form N-2 Registration
Statement, with the requirements of applicable federal and state laws and
regulations, with the requirements of the Internal Revenue Code affecting the
Client's status as a regulated investment company, and with the instructions of
the Board of Directors, all as may be amended from time to time;
(g) to bear all expenses related to compensation of its employees and
to its overhead in connection with its duties under this Agreement;
(h) to maintain strict confidence in regard to the Account;
(i) to notify the Client of any change in ownership of the Adviser in
advance, if reasonable, and otherwise as soon as practicable after such change
occurs; and
(j) to indemnify the Client against any losses, claims, damages,
liabilities or expenses arising out of or based upon any untrue statement of any
material fact contained in any registration statement, prospectus, proxy
statement, report or other document, or any amendment or supplement thereto, or
arising out of or based upon any omission to state therein any material fact
required to be stated therein or necessary to make the statements therein not
misleading, to the extent that such untrue statement or omission was made in
reliance upon and in conformity with information furnished to the Client by the
Adviser specifically for use in the preparation thereof.
7. The Client agrees:
(a) to advise the Adviser of the investment objectives, policies and
restrictions of the Client as they apply to the Account and of any changes or
modifications therein and to notify the Adviser of any other changes in the
Account, including any amendments to the Client's
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<PAGE>
Certificate of Incorporation or By-Laws, of which the Adviser would not
otherwise have knowledge and which would be material to the Adviser;
(b) to give the Adviser written notice of any investments made for the
Account that the Client deems to be in violation of the investment objectives,
policies or restrictions of the Client;
(c) to maintain in strict confidence and for use only with respect to
the Client all investment advice given by the Adviser; and
(d) not to hold the Adviser, or any of its managers, officers or
employees, liable under any circumstances for any error of judgment or other
action taken or omitted by the Adviser in the good faith exercise of its powers
hereunder, or arising out of an act or omission of the Custodian or of any
broker or agent selected by the Adviser in good faith and in a commercially
reasonable manner, excepting matters as to which the Adviser shall be finally
adjudged to have been guilty of willful misfeasance, bad faith, gross
negligence, reckless disregard of duty or breach of fiduciary duty involving
personal misconduct (all as used in the Investment Company Act of 1940, as
amended (the "1940 Act")).
8. The Client understands and agrees:
(a) that the Adviser performs investment management services for
various clients and that the Adviser may take action with respect to any of its
other clients which may differ from action taken or from the timing or nature of
action taken with respect to the Account, so long as it is the Adviser's policy,
to the extent practical, to allocate investment opportunities to the Account
over a period of time on a fair and equitable basis relative to other clients;
and
(b) that the Adviser shall have no obligation to purchase or sell for
the Account any security which the Adviser, or its directors, officers or
employees, may purchase or sell for its or their own accounts or the account of
any other client, if in the opinion of the Adviser such transaction or
investment appears unsuitable, impractical or undesirable for the Account.
9. This Agreement shall remain in effect until November 9, 2000 and
thereafter shall continue automatically for successive annual periods, provided
that such continuance is specifically approved at least annually by vote of a
majority of outstanding voting securities (as used in the 1940 Act) of the
Client or by the Board of Directors, together with, in each instance, the vote
of a majority of those directors of the Client who are not interested persons
(as used in the 1940 Act) of the Client or the Adviser cast in person at a
meeting called for the purpose of voting on such continuance. The Client may,
at any time and without the payment of any penalty, terminate this Agreement
upon sixty days' written notice to the Adviser either by majority vote of the
Board of Directors or by the vote of a majority of the outstanding voting
securities (as used in the 1940 Act) of the Client. The Adviser may at any time
terminate this Agreement without payment of penalty on sixty days' written
notice to the Client. This Agreement shall immediately terminate in the event
of its assignment (as used in the 1940 Act).
10. This Agreement shall be construed in accordance with the laws of
the State of California and the applicable provisions of the 1940 Act. To the
extent applicable law of the State of California, or any of the provisions
herein, conflict with applicable provisions of the 1940 Act, the latter shall
control.
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<PAGE>
11. Each of the individuals whose signature appears below warrants
that he has full authority to execute this Agreement on behalf of the party on
whose behalf he has affixed his signature to this Agreement.
Dated: November 9, 1998.
DRESDNER RCM GLOBAL INVESTORS BERGSTROM CAPITAL CORPORATION
LLC
By: By:
------------------------------ -------------------------------
Name: Name:
----------------------------- -----------------------------
Title: Title:
---------------------------- ----------------------------
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<PAGE>
SCHEDULE OF FEES
Effective Date: November 9, 1998.
(a) The fee for the period from the effective date referred to above to the
end of the calendar quarter shall be obtained by multiplying the market value of
cash and securities in the Account as of the close of business on the last day
of the calendar quarter by one-fourth of the applicable annual fee rate(s)
indicated below, prorated for the percentage of the calendar quarter which the
Account is under management.
(b) The fee for subsequent calendar quarters shall be obtained by
multiplying the market value of cash and securities in the Account as of the
close of business on the last day of the calendar quarter by one-fourth of the
applicable annual fee rate(s) indicated below.
(c) If the Investment Management and Advisory Agreement terminates prior to
the end of a calendar quarter, the fee for the period from the beginning of such
calendar quarter to the date of termination shall be obtained by multiplying the
market value of cash and securities in the Account as of the close of business
on the date of termination by one-fourth of the applicable annual fee rate(s)
indicated below, prorated for the percentage of the calendar quarter which the
Account is under management.
(d) Shares of any investment company advised by the Adviser or any affiliate
of the Adviser shall not be considered securities in the Account for purposes of
the foregoing calculations.
(e) All fees shall be payable upon receipt of a fee statement.
Value of Securities and Cash Fee
---------------------------- ---
On the first $10,000,000 or fraction thereof ....... .70% annually
On the next $10,000,000 or fraction thereof ........ .60% annually
On the next $20,000,000 or fraction thereof ........ .50% annually
On the next $20,000,000 or fraction thereof ........ .35% annually
On the next $40,000,000 or fraction thereof ........ .30% annually
On sums exceeding $100,000,000 ..................... .25% annually
Dated: November 9, 1998.
DRESDNER RCM GLOBAL INVESTORS LLC BERGSTROM CAPITAL CORPORATION
By: By:
----------------------------------- -------------------------------
Name: Name:
--------------------------------- -----------------------------
Title: Title:
-------------------------------- -----------------------------
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<PAGE>
P R O X Y
BERGSTROM CAPITAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby appoints WILLIAM L. McQUEEN, PAMELA A. FIORINI and
ELIZABETH C. HEDLUND, and each of them, with full power of substitution, as
proxies for the undersigned, to vote, act and consent with respect to any and
all shares of the Capital Stock, $1 par value, of Bergstrom Capital Corporation
(the "Company"), which the undersigned is entitled to vote at the Annual Meeting
of Stockholders of the Company (the "Meeting") to be held in the Cutter Room,
The Rainier Club, Fourth Avenue and Marion Street, Seattle, Washington, at 11:00
a.m., Seattle time, on November 9, 1998, and at any continuation or adjournment
thereof, with all powers the undersigned would possess if personally present,
upon such business as may properly come before the Meeting including the
following:
1. Election of director (unless authority to vote for the nominee named below
is withheld as provided below).
FOR WITHHELD
William H. Sperber [_] [_]
<TABLE>
<CAPTION>
<S> <C> <C> <C>
2. Ratification of selection of Deloitte & Touche LLP FOR AGAINST ABSTAIN
as independent accountants of the Company for [_] [_] [_]
the year ending December 31, 1998.
3. Approval of new Investment Management and FOR AGAINST ABSTAIN
Advisory Agreement with Dresdner RCM Global [_] [_] [_]
Investors LLC.
</TABLE>
4. To vote in their discretion on such other matters as may properly come
before the Meeting or any adjournment thereof.
This Proxy will be voted as directed. In the absence of direction, this Proxy
will be voted FOR the nominee for election and FOR proposals 2 and 3.
The undersigned hereby acknowledges receipt of the Notice of the Annual
Meeting and Proxy Statement.
DATED: , 1998
-----------------------------
-----------------------------------------
-----------------------------------------
(Please date and sign exactly as your name
appears at left. Joint owners should
each sign. If signing as executor,
administrator, attorney, trustee, or
guardian, give title as such. If a
corporation, sign in full corporate name by
authorized officer. If a partnership, sign in
the name of authorized person.)
<PAGE>
This Proxy covers shares registered as
designated at left. Proxies for other
forms of registration must be voted
separately.
STOCKHOLDERS ARE URGED TO MARK, SIGN AND RETURN
THIS PROXY PROMPTLY IN THE ENVELOPE PROVIDED.
PLEASE DO NOT FORGET TO DATE THIS PROXY.
