<PAGE>
- --------------------------------------------------------------------------------
- ----------------------------------
BERGSTROM
CAPITAL
CORPORATION
- ----------------------------------
1999 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
- -------------------------------------------------------------------------------
DISTRIBUTION POLICY
The Company's distribution policy, which was adopted by the Board of
Directors on May 12, 1997, provides for an annual distribution to the
Company's stockholders, during the month of June each year, of a cash dividend
at the rate of a minimum of 6 percent of the Company's net asset value per
share as calculated on the last business day in March of that year. The Board
of Directors may modify or terminate the distribution policy at any time at
its discretion.
On June 7, 1999, the Company paid a cash dividend of $13.50 per share to
stockholders of record on May 20, 1999. This dividend was the annual
distribution for the year 1999 under the Company's distribution policy.
Under the distribution policy, distributions in any year in excess of the
Company's net investment income and net realized capital gains for such year
will constitute a return of stockholders' capital. For federal income tax
purposes, any return of capital will generally be treated as a non-taxable
recovery of basis to the extent of the stockholders' basis in their shares,
and as capital gain to the extent that the return of capital is in excess of
such basis. The Company will be required to liquidate a portion of its
portfolio in order to fund any return of capital. Any return of capital will
also reduce the assets of the Company available for investment and will likely
have the effect of increasing the Company's expense ratio.
In any year in which the total of the Company's net investment income and
net realized capital gains exceeds the amount distributed for that year under
the distribution policy, the Company may, at the discretion of the Board of
Directors, retain a portion of the net realized long-term capital gains for
such year. The Board of Directors has elected to retain any undistributed net
long-term capital gains realized during the year 1999.
<PAGE>
BERGSTROM CAPITAL CORPORATION
- -------------------------------------------------------------------------------
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. The Internal Revenue Code provides that, within 60 days 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. The Internal Revenue Code also provides that, if a stockholder owned
shares registered in the name of a broker or nominee on December 31 of such
year, the broker or nominee would send Form 2439 to such stockholder within 90
days following the end of such year. For the years 1980 through 1984, 1986,
1987, 1989, and 1991 through 1998, 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.
For the year 1999 the Company has retained a portion of the net long-term
capital gains realized ($32.14513 per share) and has paid the federal income
tax thereon ($11.25080 per share) on behalf of its stockholders of record on
December 31, 1999. The Company mailed Form 2439, Notice to Shareholders of
Undistributed Capital Gains, to stockholders of record on December 31, 1999 in
January 2000. If you owned shares on December 31, 1999 registered in the name
of a broker or nominee you should contact the broker or nominee for your
copies of Form 2439 which they are required to send to you by March 30, 2000.
The portion of the long-term capital gains realized during the year 1999
which was not retained was distributed as a part of the dividend paid on June
7, 1999.
A Form 1099 was mailed in January 2000 to all stockholders of record on the
dividend record date in 1999 setting forth the specific amounts to be included
in their 1999 tax returns.
NOTICE OF DIVIDENDS PAID DURING THE YEAR 1999
<TABLE>
<CAPTION>
Dividend Dividend From
From Net Long-Term Total
1999 Net Capital Gains Dividends
Record Payment Investment Realized In Per
Date Date Income 1999 Share
------- ------- ---------- ------------- ---------
<S> <C> <C> <C> <C>
5/20/99 6/7/99 $2.36738* $11.13262 $13.50000
========= ========= =========
</TABLE>
* Includes short-term capital gain of $2.25662.
<PAGE>
BERGSTROM CAPITAL CORPORATION
- -------------------------------------------------------------------------------
221 First Avenue West, Suite 320
Seattle, Washington 98119-4224
February 7, 2000
Dear Fellow Stockholders:
Please refer to the Notice of Important Federal Income Tax Information and
the Notice of Dividends Paid During The Year 1999 in this report regarding the
retention of net long-term capital gains realized in 1999 and the details of
the dividend paid in 1999.
During the year 1999 the Company's net assets increased from $200,332,879 to
$276,737,285 which is an increase of $76,404,406. This increase in net assets
is after payment by the Company of $13,500,000 in dividends ($13.50 per share
on June 7, 1999). The increase in net assets, before deducting the payment of
dividends, was $89,904,406 which was composed of net investment income of
$110,760, realized gain on investments of $34,283,577 (after deducting
$11,250,797 in income taxes paid on behalf of stockholders), and an increase
in unrealized appreciation of $55,510,069.
The per share net asset value increased from $200.33 on December 31, 1998 to
$276.74 on December 31, 1999. After adjustment for the dividends and the
federal income tax on net long-term capital gains retained, which tax was paid
on behalf of the Company's stockholders, the per share net asset value
increased 50.5%. During the same period the Dow Jones Industrial Average,
adjusted for dividends, increased 25.22% and the Standard & Poor's 500 Stock
Average, adjusted for dividends, increased 21.04%. The per share net asset
value on Friday, February 4, 2000 was $278.81.
During the year 1999 the Company had total interest and dividend income of
$1,281,611 as compared to $1,443,780 for the same period in 1998 for a
decrease of $162,169. During the year 1999 total operating expenses were
$1,170,851 which is a $109,544 decrease from $1,280,395 for the year 1998. The
resulting net investment income of $110,760 for the year 1999 is a decrease of
$52,625 from $163,385 for the year 1998. This resulted in a decrease to $.11
per share versus $.16 per share.
The following are the major ($500,000 or more) purchases and sales made in
the Company's portfolio of securities during the fourth quarter of 1999:
<PAGE>
BERGSTROM CAPITAL CORPORATION
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES
------------------------------------------
HELD
SECURITY NAME ADDITIONS REDUCTIONS DECEMBER 31, 1999
- ----------------------------------- --------- ---------- -----------------
<S> <C> <C> <C>
Applied Materials, Inc. 13,000 13,000
Bell Atlantic Corp. 19,000 37,000
Bristol-Myers Squibb Co. 10,000 10,000 32,000
Cardinal Health, Inc. 22,500 0
Carnival Corp. 32,500 7,000
Chevron Corp. 16,500 0
Dresdner RCM Global Technology Fund 81,132 81,132
Dresdner RCM Growth Equity Fund,
Inc. 140,399 955,399
Dresdner RCM Small Cap Fund 450,000 0
Enron Corp. 36,000 62,000
Firstar Corp. 69,000 0
General Dynamics Corp. 30,000 0
General Electric Co. 17,000 55,000
Global TeleSystems Group, Inc. 30,000 0
Guidant Corp. 21,500 21,500
Marsh & McLennan Companies, Inc. 7,700 22,000
Nextel Communications, Inc. 7,000 29,000
Nike, Inc. Class B 25,000 0
Nortel Networks Corp. 28,000 28,000
Pharmacia & Upjohn, Inc. 18,500 19,500
Time Warner, Inc. 23,000 20,000
Tyco International Ltd. New 134,000(1) 56,400(1) 177,600
United Parcel Services, Inc. 7,500 7,500 0
United Technologies Corp. 15,000 0
</TABLE>
- -------
(1) Purchased 17,000 shares and then received 117,000 shares as a stock split
and then sold 56,400 shares.
<PAGE>
BERGSTROM CAPITAL CORPORATION
- -------------------------------------------------------------------------------
The value of the Company's investment in the securities of Amgen, Inc.
amounted to 13.9% of the Company's total assets at December 31, 1999. 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.
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
program would not be commensurate with the benefit. The Company's policy of
retaining a portion of the net long-term capital gains in certain years
accomplishes some of the same goals as would a dividend reinvestment program.
YEAR 2000 READINESS DISCLOSURE - Like other investment companies and
financial and business organizations worldwide, the Company could be adversely
affected if computer systems on which the Company and its service providers
rely are unable to process correctly date-related information after January 1,
2000. This risk is commonly called the Year 2000 issue. The Company has taken
steps it believes are reasonably designed to address the Year 2000 issue. As
of this date, there have been no material interruptions in or other material
adverse effects on the Company's business and operations resulting from the
Year 2000 issue. However, there is still a possibility that the Year 2000
issue could have such effects. Also, it is still possible that the Year 2000
issue could have an adverse effect on the companies whose securities are held
by the Company or on global markets or economies generally.
The Company's shares of capital stock are traded on the American Stock
Exchange 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, each Sunday in the New York Times, and each Monday in the Wall Street
Journal and certain other publications under "Closed-End Funds." This
information is also available on the Internet on a daily basis through a
variety of sources. The Company is not responsible for inaccuracies or
omissions in the dissemination of this information.
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
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<S> <C>
Assets:
Investments, at value (see accompanying schedule)(Note 1):
Short-term investments (cost $9,503,879) $ 9,503,879
Common stocks (cost $105,038,493) 278,785,059
------------
Total investments (cost $114,542,372) 288,288,938
Cash 5,000
Receivable from broker for proceeds on short sale 625,729
Interest and dividends receivable 104,870
Other assets 5,648
------------
Total assets 289,030,185
------------
Liabilities:
Securities sold short, at value (see accompanying schedule)
(proceeds $625,729) (Note 1) 628,125
Advisory fee payable (Note 5) 369,927
Federal income tax payable (Note 2) 11,250,797
Other accrued expenses 44,051
------------
Total liabilities 12,292,900
------------
Net assets applicable to 1,000,000 outstanding shares of
capital stock equivalent to $276.74 per share on December 31,
1999 (Note 3) $276,737,285
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998
<S> <C> <C>
Operations:
Net investment income $ 110,760 $ 163,385
Realized gain on investments 34,283,577 16,030,888
Increase in unrealized appreciation 55,510,069 40,313,028
------------ ------------
Net increase in net assets resulting from
operations 89,904,406 56,507,301
------------ ------------
Dividends to stockholders:
From net investment income (110,760) (163,385)
From net realized gain on investments (13,389,240) (10,763,990)
------------ ------------
Total dividends to stockholders ($13.50 per
share--1999; $10.75 per share--1998) (13,500,000) (10,927,375)
------------ ------------
Cost of shares of Bergstrom Capital Corporation
stock repurchased (28,400 shares--1998) -- (4,141,868)
------------ ------------
Total increase in net assets 76,404,406 41,438,058
Net assets, beginning of period 200,332,879 158,894,821
------------ ------------
Net assets, end of period $276,737,285 $200,332,879
============ ============
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
BERGSTROM CAPITAL CORPORATION
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C> <C>
Investment income:
Interest $ 39,224
Dividends 1,242,387
-----------
Total income 1,281,611
-----------
Expenses:
Advisory fees (Note 5) 712,430
Directors' fees and expenses (Note 6) 91,173
Officer's salary and related expenses (Note 5) 84,546
Accounting expenses 60,402
Legal fees 53,710
Auditing fees 46,800
Transfer agent fees and expenses 38,130
Stockholders' meeting and reports 25,032
Custodian fees 21,799
Other expenses 21,731
State and other taxes 8,098
Fee for shares listed on American Stock Exchange 7,000
-----------
Total expenses 1,170,851
-----------
Net investment income ($.11 per share) (Note 2) 110,760
-----------
Realized and unrealized gain on investments and
securities sold short:
Realized gain on investments (excluding short-
term investments):
Proceeds from sale of securities $111,333,333
Cost of securities sold 67,220,534
------------
Realized gain on investments sold 44,112,799
Capital gain distributions received 1,421,575
------------
Realized gain on investments before provision
for income taxes 45,534,374
Provisions for income taxes (Note 2) 11,250,797
-----------
Realized gain on investment (Notes 2 and 4) 34,283,577
Unrealized appreciation of investments and
securities sold short:
Beginning of period 118,234,101
End of period 173,744,170
------------
Increase in unrealized appreciation 55,510,069
-----------
Net gain on investments and securities sold short
($89.80 per share) (Note 2) 89,793,646
-----------
Net increase in net assets resulting from
operations $89,904,406
===========
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
BERGSTROM CAPITAL CORPORATION
- -------------------------------------------------------------------------------
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.
The total investment returns shown below are a record of past results and
should not be regarded as a representation of future results.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
-------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of
period........................... $200.33 $154.51 $136.15 $128.35 $ 94.56
Net investment income(1).......... .11 .16 .64 .57 .99
Net realized and unrealized gain
on investments................... 89.80 55.99 24.79 13.51 37.16
Dividends from:
Net investment income(2)........ (.11) (.16) (.63) (.58) (1.01)
Net realized gain on
investments.................... (13.39) (10.59) (7.87) (6.33) (3.99)
------- ------- ------- ------- -------
Total dividends............... (13.50) (10.75) (8.50) (6.91) (5.00)
------- ------- ------- ------- -------
Increase due to purchase of
Bergstrom stock at less than net
asset value...................... -- .42 1.43 .63 .64
------- ------- ------- ------- -------
Net asset value at end of period.. $276.74 $200.33 $154.51 $136.15 $128.35
======= ======= ======= ======= =======
Market value per share at end of
period........................... $236.00 $171.00 $142.50 $119.00 $109.50
======= ======= ======= ======= =======
Total investment returns:
Based on market value per
share(3)....................... 55.0% 32.1% 37.0% 15.6% 38.1%
Based on net asset value per
share(4)....................... 50.5% 38.5% 26.5% 14.0% 43.5%
Net assets at end of period (in
millions)........................ $ 277 $ 200 $ 159 $ 151 $ 149
Ratio of expenses to average net
assets........................... .53% .74% .75% .76% .82%
Ratio of net investment income to
average net assets............... .05% .09% .43% .43% .88%
Portfolio turnover rate........... 40.57% 44.31% 34.07% 31.80% 29.69%
Number of shares outstanding at
end of period (in thousands)..... 1,000 1,000 1,028 1,112 1,164
</TABLE>
- -------
(1) Based on weighted 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 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.
See accompanying Notes to Financial Statements.
<PAGE>
BERGSTROM CAPITAL CORPORATION
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
Shares or
Principal
Amount Cost Value
<C> <S> <C> <C>
Short-Term Investments (3.3%):
4,506,504 SSgA Money Market Fund $ 4,506,504 $ 4,506,504
$ 5,000,000 American Express Credit Corp., 6.30%
Note due 1/4/00 4,997,375 4,997,375
------------ ------------
Total--Short-Term Investments 9,503,879 9,503,879
------------ ------------
Common Stocks (96.7%):
Banks (1.7%):
52,000 Bank New York, Inc. 1,065,418 2,080,000
52,500 Citigroup, Inc. 1,433,940 2,917,031
------------ ------------
2,499,358 4,997,031
------------ ------------
Beverages (1.8%):
60,000 Coca Cola Enterprises, Inc. 810,797 1,207,500
67,500 Coca-Cola Co. 90,276 3,931,875
------------ ------------
901,073 5,139,375
------------ ------------
Biotechnology (14.0%):
670,000 Amgen, Inc. (A) 875,103 40,241,875
------------ ------------
Broadcasting (2.3%):
74,000 Clear Channel Communications, Inc. 4,134,953 6,604,500
------------ ------------
Communication Systems (6.5%):
37,000 Bell Atlantic Corp. 2,247,176 2,277,813
54,000 GTE Corp. 3,660,857 3,810,375
136,500 MCI WorldCom, Inc. 2,114,237 7,243,031
29,000 Nextel Communications, Inc. 404,277 2,990,625
23,000 SBC Communications, Inc. 1,075,954 1,121,250
27,500 Vodafone Airtouch PLC Sponsored ADR 1,031,924 1,361,250
------------ ------------
10,534,425 18,804,344
------------ ------------
Computers and Information (2.2%):
29,000 Hewlett-Packard Co. 2,656,760 3,304,188
29,100 International Business Machines 3,159,922 3,142,800
------------ ------------
5,816,682 6,446,988
------------ ------------
Diversified Technology (3.0%):
45,000 Nokia Corp. Sponsored ADR 403,923 8,550,000
------------ ------------
</TABLE>
<PAGE>
BERGSTROM CAPITAL CORPORATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares or
Principal
Amount Common Stocks--Continued Cost Value
<C> <S> <C> <C>
Drugs and Health Supplies (1.7%):
20,000 Johnson & Johnson $ 1,199,781 $ 1,862,500
63,000 Pfizer, Inc. 823,740 2,043,563
19,500 Pharmacia & Upjohn, Inc. 1,024,147 877,500
------------ ------------
3,047,668 4,783,563
------------ ------------
Electrical Components (2.9%):
55,000 General Electric Co. 4,571,182 8,511,250
------------ ------------
Electronics/New Technology (20.2%):
13,000 Applied Materials, Inc. 1,043,775 1,646,938
81,000 Cisco Systems, Inc. 1,322,839 8,677,125
66,000 EMC Corp. Mass 2,200,501 7,210,500
30,000 Intel Corp. 630,583 2,469,375
50,000 JDS Uniphase Corp. 2,121,911 8,065,625
35,000 Lucent Technologies, Inc. 1,134,863 2,618,437
20,000 Motorola, Inc. 1,464,544 2,945,000
28,000 Nortel Networks Corp. 2,262,537 2,828,000
112,000 Qualcomm, Inc. 2,182,438 19,726,000
20,000 Texas Instruments, Inc. 1,047,200 1,937,500
------------ ------------
15,411,191 58,124,500
------------ ------------
Financial Services, Diversified (0.5%):
15,000 Federal Home Loan Mortgage Corp. 799,225 705,938
13,000 Federal National Mortgage Association 316,586 811,687
------------ ------------
1,115,811 1,517,625
------------ ------------
Household Products (Non-Durable) (0.4%):
10,000 Proctor & Gamble Co. 238,425 1,095,625
------------ ------------
Industrial Machinery (2.4%):
177,600 Tyco International Ltd. New 3,029,508 6,904,200
------------ ------------
Insurance (2.4%):
43,750 American International Group, Inc. 440,727 4,730,469
22,000 Marsh & McLennan Companies, Inc. 1,662,036 2,105,125
------------ ------------
2,102,763 6,835,594
------------ ------------
</TABLE>
<PAGE>
BERGSTROM CAPITAL CORPORATION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares or
Principal
Amount Common Stocks--Continued Cost Value
<C> <S> <C> <C>
Medical Supplies (2.5%):
37,000 American Home Products Corp. $ 1,755,990 $ 1,459,188
75,000 Baxter International, Inc. (C) 558,050 4,710,937
21,500 Guidant Corp. 1,044,683 1,010,500
------------ ------------
3,358,723 7,180,625
------------ ------------
Metal Mining (1.0%):
33,000 Alcoa, Inc. 2,122,302 2,739,000
------------ ------------
Petroleum Services (.7%):
42,500 Conoco, Inc. 1,145,573 1,051,875
18,000 Schlumberger Ltd. 928,152 1,012,500
3,484 Transocean Sedco Forex, Inc. 108,984 117,367
------------ ------------
2,182,709 2,181,742
------------ ------------
Pharmaceuticals (4.2%):
32,000 Bristol-Myers Squibb Co. 215,411 2,054,000
54,000 Lilly Eli & Co. 1,545,624 3,591,000
56,000 Schering-Plough Corp. 487,840 2,362,500
8,000 Sepracor, Inc. 497,400 793,500
40,000 Warner Lambert Co. 665,208 3,277,500
------------ ------------
3,411,483 12,078,500
------------ ------------
Publishing (0.5%):
20,000 Time Warner, Inc. 1,237,508 1,448,750
------------ ------------
Recreational Activities (0.1%):
7,000 Carnival Corp. 301,420 334,687
------------ ------------
Regulated Investment Companies (6.7%):
81,132 Dresdner RCM Global Technology Fund (B) 4,300,000 4,803,830
955,399 Dresdner RCM Growth Equity Fund, Inc. (B) 5,340,475 7,662,300
301,333 Dresdner RCM International Growth Equity
Fund (B) 4,495,946 6,731,781
------------ ------------
14,136,421 19,197,911
------------ ------------
Restaurants (1.4%):
100,000 McDonalds Corp. 1,962,886 4,031,250
------------ ------------
</TABLE>
<PAGE>
BERGSTROM CAPITAL CORPORATION
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares or
Principal
Amount Common Stocks--Continued Cost Value
<C> <S> <C> <C>
Retail Trade (7.4%):
67,500 Bed Bath & Beyond, Inc. $ 1,048,625 $ 2,345,625
30,800 Circuit City Stores 1,170,649 1,387,925
58,000 Colgate Palmolive Co. 2,255,864 3,770,000
34,000 Costco Companies, Inc. 2,115,016 3,102,500
23,000 Dayton Hudson Corp. 1,177,430 1,689,062
45,000 Home Depot, Inc. 943,546 3,085,312
20,000 Kohls Corp. 949,282 1,443,750
60,000 Walgreen Co. 1,542,744 1,755,000
40,000 Wal-Mart Stores, Inc. 1,183,376 2,765,000
-------------- --------------
12,386,532 21,344,174
-------------- --------------
Software and Processing (9.3%):
39,300 BMC Software, Inc. (A) 9,201 3,141,544
92,000 Microsoft Corp. (A) 2,935,538 10,741,000
27,750 Veritas Software Co. 1,017,500 3,971,719
21,000 Yahoo, Inc. 3,306,092 9,086,437
-------------- --------------
7,268,331 26,940,700
-------------- --------------
Utilities (0.9%):
62,000 Enron Corp. 1,988,113 2,751,250
-------------- --------------
Totals--Common Stocks 105,038,493 278,785,059
-------------- --------------
Totals--Investments $ 114,542,372 $ 288,288,938
============== ==============
SCHEDULE OF SECURITIES SOLD SHORT
<CAPTION>
Proceeds Market Value
<C> <S> <C> <C>
10,000 Baxter International, Inc. $ 625,729 $ 628,125
============== ==============
</TABLE>
(A) Non-income producing securities.
(B) Regulated investment company advised by Dresdner RCM Global Investors
LLC, the Corporation's investment adviser.
(C) Held by custodian in a segregated custodian account as collateral for
open short positions.
See accompanying Notes to Financial Statements.
<PAGE>
BERGSTROM CAPITAL CORPORATION
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
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 business 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 days or less 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 transactions
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
estimates and assumptions that affect the reported amounts of assets and
liabilities 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.
D. Short sales--The Corporation may make short sales of securities for either
speculative or hedging purposes. When the Corporation makes a short sale,
it borrows the securities sold short from a broker and places cash and/or
securities with that broker as collateral for the securities borrowed. The
Corporation may be required to pay a fee to borrow the securities and may
also be obligated to pay any dividends declared on the borrowed securities.
The Corporation will realize a gain if the security price decreases and a
loss if the security price increases between the date of the short sale and
the date on which the Corporation replaces the borrowed securities.
NOTE 2--FEDERAL INCOME TAXES
No provision has been made for federal taxes on net investment income
because the Corporation has elected to be taxed as a regulated investment
company under the Internal Revenue Code, and intends to maintain this
qualification 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 realized. 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 taxed 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 Revenue Code. The Board of Directors determined
that the portion of the net long-term capital gains realized during the year
1999 which was not distributed as part of the annual dividend paid on June 7,
1999 should be retained by the Corporation and taxes thereon should be paid by
the Corporation.
For federal income tax purposes at December 31, 1999 the aggregate gross
unrealized appreciation for all securities in which there is an excess of
value over tax cost is $174,428,305, the aggregate gross unrealized
depreciation for all securities in which there is an excess of tax cost over
value is $681,739, the net unrealized appreciation for securities held long is
$173,746,566 and the aggregate cost of securities for federal income tax
purposes is $114,542,372.
NOTE 3--CAPITAL STOCK
At December 31, 1999 the issued and outstanding capital stock of the
Corporation consists of 1,000,000 shares of $1 par value capital stock
(1,505,462 shares are authorized). Net assets consist of capital paid in of
$102,724,925 (including $98,886,968 of net long-term capital gains retained by
the Corporation, net of federal income taxes paid thereon on behalf of its
stockholders), undistributed net investment income of $268,190 and unrealized
appreciation of $173,744,170. Undistributed net investment income at December
31, 1998 was $268,190.
NOTE 4--SECURITIES
During the year ended December 31, 1999, the cost of securities purchased
and the proceeds from securities sold, other than short-term investments,
aggregated $89,287,191 and $111,333,333, respectively.
NOTE 5--INVESTMENT ADVISORY CONTRACT AND PAYMENTS TO AFFILIATES
The Corporation's advisory contract with Dresdner RCM Global Investors LLC
("Dresdner RCM") provides for an
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BERGSTROM CAPITAL CORPORATION
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NOTES TO FINANCIAL STATEMENTS--Continued
advisory fee determined by multiplying the market value of the Corporation's
cash and securities as of the close of business on the last day of each
calendar quarter by one-fourth of the applicable annual advisory fee rate. The
annual advisory fee rates are .70% on the first $10,000,000, .60% on the next
$10,000,000, .50% on the next $20,000,000, .35% on the next $20,000,000, .30%
on the next $40,000,000, and .25% on sums exceeding $100,000,000. The advisory
contract with Dresdner RCM also provides that shares of any investment company
advised by Dresdner RCM or any affiliate of Dresdner RCM shall not be
considered securities for purposes of determining advisory fees.
Officer's salary and related expenses in the amount of $84,546 have been
paid by the Corporation during the year ended December 31, 1999 to an officer
of the Corporation for certain financial, compliance and other administrative
services.
NOTE 6--DIRECTORS FEES
Directors fees and expenses in the amount of $91,173 have been paid in 1999.
None of the directors were affiliated with the investment advisor to the
Corporation.
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BERGSTROM CAPITAL CORPORATION
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Bergstrom Capital Corporation:
We have audited the accompanying statement of assets and liabilities of
Bergstrom Capital Corporation, including the schedule of investments, as of
December 31, 1999 and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Corporation's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1999 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Bergstrom Capital Corporation as of December 31, 1999, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each
of the five years in the period then ended in conformity with generally
accepted accounting principles.
Deloitte & Touche LLP
Boston, Massachusetts
January 31, 2000
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BOARD OF DIRECTORS
ERIK E. BERGSTROM GEORGE COLE SCOTT
Chairman Registered Representative
Anderson & Strudwick Incorporated
President
WILLIAM L. McQUEEN Closed-End Fund Advisors, Inc.
President and Treasurer
WILLIAM H. SPERBER
NORMAN R. NIELSEN Chairman
Manager and Senior Member The Trust Company of Washington
of Research Staff
Adario (an affiliate
of SRI International)
OFFICERS
WILLIAM L. McQUEEN PAMELA A. FIORINI
President and Treasurer Secretary
SUZANNE M. SCHIFFLER
Assistant Secretary
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BERGSTROM CAPITAL CORPORATION
221 First Avenue West, Suite 320
Seattle, Washington 98119-4224
(206) 283-0539
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