Reg .No. 33-8431
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 10
----
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 13
----
Bascom Hill BALANCED Fund, Inc.
-------------------------------
(Exact Name of Registrant as Specified in Charter)
6411 Mineral Point Rd. Madison, WI 53705
----------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (608) 273-2020
---------------
Frank E. Burgess, 6411 Mineral Point Rd. Madison, WI 53705
------------------------------------------------------------
(Name and Address of Agent or Service)
Copy to : John Rashke, Esq.
Ross & Stevens, S.C.
8000 Excelsior Drive Suite 401
Madison, Wisconsin 53717-1914
It is proposed that this filing will become effective
[X] on February 28, 1996 pursuant to paragraph (b) of Rule 485.
BASCOM HILL BALANCED FUND, INC.
PROSPECTUS
February 28, 1996
Bascom Hill BALANCED Fund, Inc. is a balanced mutual fund which has two
investment objectives: (1) Production of current income and (2) Long-term growth
of capital and income. To achieve its objectives, the Fund will invest in a
diversified portfolio of equity securities and government and corporate bonds
having potential to realize both long-term growth and income, and in short-term
money market instruments.
Investors may obtain a Statement of Additional Information, without charge,
from the Fund's office listed below. The Statement of Additional Information
contains further detailed information about the Fund and is dated February 28,
1996.
This Prospectus sets forth concisely information that investors should know
prior to investing. Investors should read this Prospectus and retain it for
future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION. NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------------------------------------------------------------
A NO-LOAD FUND
No Sales Charge - No Redemption Charge
Minimum Initial Investment - $1,000
Minimum Subsequent Investment - $100
BASCOM HILL BALANCED FUND, INC.
6411 MINERAL POINT ROAD
MADISON, WISCONSIN 53705
608/273-2020
800/767-0300
PROSPECTUS
TABLE OF CONTENTS
Page
----
Introduction to the
Fund........................................................................ 2
Financial
Highlights...................................................................2
Investment Objectives and
Policies.....................................................................3
Expense
Table....................................................................... 3
Investment Selection and
Limitations................................................................. 4
Management of the
Fund........................................................................ 7
Purchase of
Shares...................................................................... 7
Redemption of
Shares...................................................................... 8
Shareholder Inquiries &
Reports..................................................................... 8
Income Dividends, Capital Gain Distributions, and
Taxes....................................................................... 8
Reinvestment Plan for
Distributions............................................................... 9
Description of Fund
Shares...................................................................... 9
Individual Retirement
Account..................................................................... 9
INTRODUCTION TO THE FUND
The Fund is a diversified, open-end management company which began offering
its shares on December 18, 1986. The Fund offers investors the opportunity to
own a professionally managed, diversified portfolio of equities, bonds and money
market instruments. Shares purchased are not subject to a sales charge.
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the year)
The following Financial Highlights of Bascom Hill BALANCED Fund, Inc. have
been audited by Williams, Young & Associates, LLC, independent public
accountants. The Independent Auditor's Report and additional information about
the performance of the Fund is contained in the Annual Report to shareholders
which may be obtained without charge.
<TABLE>
<CAPTION>
Year Ended December 31,
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986*
NET ASSET VALUE:
Beginning of year $20.16 22.36 23.65 23.00 19.04 21.62 20.76 20.13 20.00 20.00
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS:
<S>
Net investment income .75 .72 .62 .59 .73 1.00 1.15 .91 .63 .01
Net realized and
unrealized gains
or (losses) on
securities 3.53 (.46) .37 1.30 1.43 2.58) 1.34 .63 .10 .00
----- ----- --- ---- ---- ----- ---- ----- ---- -----
Total from
investment
operations $ 4.28 .26 .99 1.89 2.16 (1.58) 2.49 1.54 .73 .01
LESS DISTRIBUTIONS:
Dividends from net
income $ (.74) (.72) (.62) (.60) (.73)(1.00)(1.17) (.91) (.60) .00
Capital gains
distributions (1.26) (1.74) (1.66)(.64) (.05) .00 (.46) .00 .00 .00
------ ------ ------ ---- ----- --- ----- --- --- ---
NET ASSET VALUE:
End of year $22.44 20.16 22.36 23.65 23.00 19.04 21.62 20.76 20.13 20.00
TOTAL RETURN: 21.51% 1.31 4.35 8.43 25.10 (7.30)12.14 7.75 3.66 n/a
RATIOS:
<CAPTION>
<S>
Operating expenses to average net assets
1.36% 1.34 1.24 1.90 1.94 1.96 2.00 2.00 2.00 .06
Net income to average net assets
3.36% 3.03 2.53 2.53 3.33 5.00 5.60 4.90 4.80 .04
Portfolio turnover rate
65.83% 76.40 76.01 71.76 64.76 71.60 47.50 .45 .00 .00
Average Commission Rate Paid
.0818
*The Fund began operations on December 18, 1986.
</TABLE>
INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVES
The investment objectives of the Fund are (1) production of current income and
(2) long-term growth of capital and income. The Fund seeks to achieve its
objectives by investing in a balanced portfolio of equity securities, bonds and
money market instruments. The Fund is suitable for investors who can assume
moderate investment risks in search of income and long-term growth. Although the
objective of production of current income may seem to differ from the Fund's
other objective of long-term growth of capital, the management of the Fund
believes that its security selection process and timing strategies, both
described further in this section, will produce current income while achieving
less volatility of Fund performance with a goal of greater portfolio stability.
If the Fund achieves its objective of long-term capital growth, it is believed
that such growth in total Fund assets will, over time, produce a corresponding
growth in current income. The Fund is not designed for investors seeking short-
term profits. There can be no assurance that the Fund's shareholders can be
protected from the risk of loss inherent in investment in equities and bonds.
The Fund's advisor, Madison Investment Advisors, Inc. (see `MANAGEMENT OF THE
FUND', page 7) believes that long-term capital growth can best be achieved
through flexibility of investment strategies. Although the careful selection of
equities, bonds and money market instruments is the primary factor affecting the
investment return of the Fund, the percentage of the Fund's assets which may be
invested at any particular time in equities, bonds and money market instruments
will depend on management's judgment regarding the risks in the general market.
The Fund will not invest more than 70% in equity securities and, will maintain
at least 25% of its assets in fixed income senior securities. The Fund's advisor
monitors many factors affecting the market outlook, including economic and
monetary trends, market momentum, institutional psychology and historical
similarities to current conditions. Careful review is made of the equity
market's relationship to the bond market and interest rate trends.
EXPENSE TABLE
The purpose of this table is to assist investors in understanding the various
costs and expenses that a shareholder of the Fund will
bear directly or indirectly.
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)
0%
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) 0%
Deferred Sales Load (as a percentage of original purchase price or
redemption proceeds,as applicable) N/A
Redemption Fees (as a percentage of amount redeemed, if applicable) N/A
Exchange Fee N/A
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Management Fees .85%
Other Expenses .51%
----
Total Fund Operating Expenses 1.36%
EXAMPLE 1 Yr 3 Yrs. 5 Yrs. 10 Yrs.
---- ------ ------ -------
You would pay the following expenses on a
$1,000 investment,
assuming (1) 5% annual return and (2)
redemption at the end
of each time period:
(The Fund does not charge a redemption fee) $13.85 $ 43.07 $ 74.46 $163.51
This example should not be considered a representation of past or future
expenses.
Actual expenses maybe greater or lesser than those shown.
If management believes that market risks are high and prices of stocks or
bonds in general are vulnerable to decline, the Fund may take certain temporary
defensive actions such as substantially increasing the Fund's cash reserves.
Such `cash reserves'' are defined as short-term investments such as U.S.
Treasury Bills, high-grade commercial paper (rated in the top two rating classes
by Standard & Poor's or Moody's), bank certificates of deposit or repurchase
agreements. The objective in holding substantial cash reserves, as defined
above, is to receive current income and maintain desired liquidity while
awaiting more attractive investment conditions in the stock and bond markets. It
is the opinion of the Fund and its Advisor that the Fund's willingness to hold
substantial cash reserves during periods of market vulnerability is the single
most important factor in comparing the Fund's investment philosophy and
strategies with those of most other mutual funds. The Fund's Advisor believes
that most balanced mutual funds have historically tended to hold less than 20%
in such reserves, regardless of market conditions. The Fund intends, during
periods of believed market vulnerability, to raise the level of cash reserves to
a general range of 40% to 70% of total net assets. Holding such high cash
reserves implies a likely reduction or loss of current income and will reduce or
curtail the Fund's ability to achieve asset appreciation or capital gains.
In addition to holding occasionally high levels of cash reserves, the Fund
expects to temporarily employ other defensive strategies. As part of this
investment strategy, the Fund may write covered call options with respect to its
common stocks or debt securities, a conservative technique designed to enhance
income and hedge against price fluctuations. For a more complete discussion of
the Fund's option writing program, see `INVESTMENT SELECTION AND LIMITATIONS -
Covered Call Option Writing', page 5. The Fund may emphasize more conservative,
less volatile common stocks during adverse market conditions. The Fund's common
stock selection process is described more fully on page 5. The Fund's Advisor
may also choose to reduce the average maturity of the Fund's bond holdings
temporarily as a defensive measure, to reduce the likelihood of bond price
depreciation during periods of rising interest rates. It is the general
intention of the Fund to maintain such defensive positions temporarily or until
it perceives that a period of primary market vulnerability has passed.
The Fund may hold repurchase agreements which are fully collateralized by a
U.S. Government security. Repurchase agreements may be entered into with a
member bank of the Federal Reserve System or primary dealer in U.S. Government
securities under which the bank or dealer agrees to repurchase the security from
the Fund at a mutually agreed upon time and price, thereby determining the yield
during the term of the agreement. This results in a fixed rate of return,
insulated from market fluctuation during such periods. While the underlying
obligation is a U.S. Government security, the obligation of the seller to
repurchase the security is not guaranteed by the U.S. Government and there is
the risk that the seller may fail to repurchase the security. Not more than 10%
of total net assets will be invested in repurchase agreements with maturities of
greater than seven days or in other illiquid securities. In general, the Fund
will usually purchase overnight repurchase agreements which mature the following
day. The Fund will not invest in when-issued securities or restricted
securities. The Fund will only invest in domestic bank certificates of deposit
issued by banks which are members of the Federal Reserve System and which have
total deposits in excess of one billion dollars.
INVESTMENT SELECTION AND LIMITATIONS
The purpose of the Fund is to make available to investors an investment
program under continuous supervision of experienced investment management. By
purchasing shares of the Fund, investors obtain in a single investment an
interest in a diversified investment portfolio. It should be recognized that
such diversification does not eliminate the risk involved in all securities
investments. Through ownership of shares of the Fund, as contrasted with
ownership of a number of individual securities, investors are relieved of many
details in the management of their investments while their bookkeeping and
income tax records are greatly simplified. Ownership of shares in the Fund,
however, does not constitute a complete financial program.
EQUITY SECURITIES. In order to achieve its investment objectives, it is a
fundamental policy of the Fund to invest not more than 70% of the Fund's net
assets in equity securities such as common stocks, securities convertible into
common stocks or securities having equity characteristics. The Fund intends to
invest in a carefully selected and diversified list of common stocks, seeking to
reduce risks while achieving its objectives. The Fund's Advisor follows a stock
selection process that (1) screens the universe of common stocks for companies
possessing particular value characteristics (such as asset values, cash flows,
and balance sheet quality), then (2) reviews stocks' recent trading history
including momentum and price strength relative to the general market, then (3)
examines each company's fundamental economic outlook and industry position.
Securities convertible into common stocks and securities having equity
characteristics are bonds that are convertible into a specific number of shares
of the common stock of the issuer either at any time or usually at a specific
future date at a determined price per share of common stock. Such bonds tend to
participate in a substantial portion of the price appreciation of the underlying
common stock while enjoying some protection against depreciation due to higher
interest rates afforded most bonds and because of the anticipation of the bond's
maturity. The Fund anticipates that convertible securities will represent less
than 25% of the Fund's portfolio. All convertible bonds must meet the same
quality ratings required of corporate bonds, as described in the following
paragraph. The risks involved in investment in convertible securities are
similar to the risks of investment in the underlying common stocks. If through
appreciation, the total market value of the Fund's holdings of equity securities
exceeds 70% of total net assets, necessary actions must be taken to reduce total
equities to less than 70% of total net assets within the following sixty days.
During 1995, the portfolio turnover rate was 65.8%. The Fund is not required to
invest exclusively in dividend paying common stocks. There can be no assurance
that the Fund's shareholders can be protected from the risk of loss inherent in
common stock investing.
FIXED INCOME SECURITIES. To achieve current income, the Fund intends to invest
in corporate debt securities and U.S. Government bonds. Eligible corporate debt
securities must be accorded one of the four highest quality ratings by Standard
& Poor's or Moody's or, if unrated, judged by the Advisor to be a comparable
quality. Bonds rated A, AA, or AAA by Standard & Poor's indicate strong to high
capacity of the company to pay interest and repay principal. However, the fourth
highest rating, BBB, indicates adequate capacity to pay interest and repay
principal but suggests that adverse economic conditions may weaken the company's
ability to meet these obligations, thus is more speculative and reflects a
higher level of risk. The Fund may also invest in direct obligations of the
United States government, its agencies and instrumentalities. It is not
anticipated that the Fund will invest in United States government securities to
any significant extent and not on a routine basis, but only when such securities
appear temporarily attractive on a yield basis when compared to other fixed
income securities of similar maturities. It is anticipated that 25-50% of the
Fund's total net assets will generally be invested in debt securities which,
according to a fundamental policy of the Fund, have an average weighted maturity
of less than 10 years. The Fund intends to maintain at least 25% of its assets
in fixed income senior securities, not including any convertible securities.
Mere investment in government or corporate bonds provides no assurance that the
Fund's shareholders can be protected from certain risks in bond investing
including increasing price fluctuation as bond maturities become longer.
COVERED CALL OPTION WRITING. As part of this investment strategy, for
temporary defensive purposes, the Fund may write covered call options with
respect to its common stocks or debt securities. Covered call option writing is
a conservative technique designed to enhance income and attempt to hedge against
price fluctuations. A call option gives the purchaser the right to buy, and the
writer of the option the obligation to sell, the underlying security at the
exercise price at any time during the option period. The premium or sales price
of the option is paid to the writer for undertaking the obligations of the
option contract. When a covered call is written by the Fund, it will make
arrangements with the Custodian to segregate the appropriate portfolio
securities or an equivalent market value of cash until the option is either
exercised, expires or the Fund repurchases the option closing its obligations
under the option contract. Call options are short-term contracts with durations
of nine months or less and are listed on a national securities exchange. A call
option sold by the Fund exposes the Fund to possible loss of opportunity to
realize appreciation in the market value of the related security or to possible
continued holding of a security which might otherwise have been sold to protect
against depreciation in the market price of such security. Such option writing
strategies will affect less than 25% of the total portfolio.
LIMITATIONS. The Fund has adopted other investment limitations, which like its
investment objectives and the fundamental policies mentioned above, may not be
changed without the approval of a majority of its shareholders. These
limitations generally prohibit (1) investing more than 5% of total net assets in
the securities of any one issuer (except U.S. Government securities), (2)
investing more than 25% of total net assets in any one industry, (3) borrowing
money except in amounts up to 5% of its assets only for temporary, extraordinary
purposes, (4) purchasing real estate, (5) investing in oil, gas or mineral
exploration programs, (6) the pledge, mortgage or hypothecation of its assets,
except for temporary or emergency purposes and then to an extent not greater
than 10% of its assets at current value, and (7) more than 10% of total net
assets invested in repurchase agreements with maturities of greater than seven
days or in other illiquid securities. A complete list of all investment
restrictions is found in the Fund's Statement of Additional Information.
FOREIGN SECURITIES. The Fund may invest in foreign currency denominated debt
securities in the top two rating classes of Standard & Poor's or Moody's. Such
securities must be issued by U.S. corporations or U.S. Government agencies or
instrumentalities, must be liquid, readily salable and publicly traded in the
U.S. securities markets, and, may not exceed 10% of total net assets of the
Fund. Because the value of such securities varies not only with normal factors
affecting the price of all domestic bonds (i.e. interest rate, monetary and
economic factors), but also with the price change of such foreign currencies in
relation to the U.S. dollar, such securities carry an inherently higher level of
risk. The Fund will not invest more than 10% of its total net assets in foreign
common stocks, including shares of foreign companies traded as American
Depository Receipts (known as `ADRs''). The Fund will not effect transactions
in foreign securities markets.
BROKERAGE PRACTICES. In valuing brokerage services, the Advisor makes a
judgement of the usefulness of research and other information provided to the
Advisor in managing the Fund's investment portfolio. In some cases, the
information relates to a specific transaction placed with the broker, but for
the greater part, the research consists of a wide variety of investment
strategy, economic, financial and political information, useful to the Advisor
in advising the Fund and its other clients.
It is the policy of the Advisor to seek the best possible security price
available with respect to each transaction at the best available commission
rate. In selecting brokers, the Advisor considers the broker's reliability, the
quality of its execution services and its financial strength. However, the
Advisor also takes into account the value of research information received for
use in advising the Fund. It is understood by the Fund that other clients of the
advisor might also benefit from the information obtained. Where the Fund and one
or more clients of the Advisor are simultaneously engaged in the purchase or
sale of the same security, the transactions may be averaged as to price and
allocated equitably. In most cases, it is believed that coordination and the
ability to participate in volume transactions will be to the benefit of the
Fund. The Fund may not allocate brokerage solely on the basis of selling Fund
shares.
There can, of course, be no assurance that the Fund will achieve its
investment objective since there is uncertainty in every investment.
MANAGEMENT OF THE FUND
Under an investment advisory agreement with the Fund, Madison Investment
Advisors, Inc., (the `Advisor'') 6411 Mineral Point Road, Madison, Wisconsin,
furnishes continuous investment service and management to the Fund. Madison
Investment Advisors, Inc., a licensed investment advisory firm for over twenty-
two years, provides professional portfolio management services to a number of
other clients besides the Fund and has over $2.2 billion under management. In
addition, the Advisor manages Bascom Hill Investors, Inc., an investment company
(mutual fund) with total net assets of $11.9 million on December 31, 1995 and
Madison Bond Fund, Inc. with total net assets of $5.8 million on December 31,
1995. Subject to the authority of the Board of Directors, the Advisor is
responsible for the overall management of the Fund's business affairs besides
having primary responsibility for investment decisions affecting the FundOs
portfolio. All investment decisions for the Fund are made by the Investment
Policy Committee. The Advisor receives fees ($88,169 in the period ended
December 31, 1995), computed and paid quarterly, at an annual rate of .85 of 1%
of the first $100,000,000 average daily net assets of the Fund and .75 of 1% of
Fund assets in excess of $100,000,000. The advisory fee is higher than that paid
by most other investment companies.
PURCHASE OF SHARES
OFFERING PRICE
SHARES PURCHASED WILL NOT BE SUBJECT TO A SALES LOAD OR CHARGE. All orders
will be executed at the net asset value per share next computed after receipt of
the investor's order by the Firstar Trust Company of Milwaukee, the Fund's
Transfer Agent. Applications for purchase received by the Transfer Agent prior
to the close of trading on the New York Stock Exchange (usually 4:00 p.m. New
York time) will be based on the end of that day. The net asset value of the Fund
is determined by the daily closing market value of the Fund's assets minus any
Fund liabilities. The net asset value per share is computed by dividing the
value of the net assets of the Fund by the total number of shares outstanding.
Portfolio securities are valued at the last sales price on the national
securities exchange on which the securities are primarily traded, at prices
determined immediately following the close of the New York Stock Exchange
(usually 4:00 p.m. New York time). Securities not listed on an exchange or
securities in which there were no transactions are valued at the most recent
reported bid prices. Any securities for which market quotations are not readily
available are valued at fair value as determined in good faith by the Board of
Directors. Debt securities having maturities of less than 60 days are valued by
the amortized cost method. Redemption of Fund shares purchased prior to June 1,
1993 may be subject to a contingent deferred sales charge. (See `REDEMPTION OF
SHARES'----Contingent Deferred Sales Charge.)
The Advisor bears all its expenses of providing services under its Agreement
with the Fund, pays all salaries and expenses of the officers of the Fund,
provides office space, telephone and other communication facilities and
personnel to perform clerical and shareholder relation functions for the Fund.
The Fund does not reimburse the Advisor for any such expenses. The Advisor is
required to reimburse the Fund to the extent that total annual operating
expenses, including the advisory fee but excluding interest, taxes and brokerage
commissions, exceeds 2% of average net assets. Reimbursement shall be made on an
annual basis by reduction to the advisory fee. Total expenses for the year ended
December 31, 1995 were 1.36% of average net assets.
The minimum initial investment is $1,000, and the minimum for additional
purchases is $100 (except for reinvestment of dividends and capital gain
distributions). The minimum investment limitations apply to initial
contributions to IRA accounts and retirement fund accounts. In the interest of
economy, convenience and ease of redemption, actual stock certificates
representing Fund shares will not be issued. Applications will not be accepted
unless accompanied by payment.
REDEMPTION OF SHARES
At any time, a shareholder may require the Fund to redeem his/her shares in
whole or in part. Shares may be redeemed by mailing a signed written request for
redemption addressed to Bascom Hill BALANCED Fund, Inc., c/o Firstar Trust
Company, P.O. Box 701, Milwaukee, Wisconsin 53201-0701. The written request must
be signed exactly as the account is registered. Incomplete redemption requests
will not be processed until complete information is available. Payment for
shares redeemed will be made within seven days after receipt of the redemption
request and will be paid in cash only. Redemptions will be effected at the
Fund's net asset value next determined after receipt of a redemption order in
proper form and may be subject to a contingent deferred sales charge, if
purchased prior to June 1, 1993, as described below.
CONTINGENT DEFERRED SALES CHARGE
(Applies only to shares purchased
prior to June 1, 1993)
Fund shares redeemed within five years of their purchase will not be subject
to a contingent deferred sales charge to the extent that the value of such
shares: (a) represents capital appreciation of Fund assets or (b) represents
reinvestment of dividend or capital gain distributions. Redemptions of other
Fund shares effected within five years of their purchase will be subject to a
contingent deferred sales charge. The amount of any applicable contingent
deferred sales charge will be calculated by multiplying the net
asset value of such shares by the applicable percentage shown in the table
below.
Contingent Deferred Sales Charge as
a Percentage of Net Asset Value
Redemption During at Redemption
- - ----------------- -------------
Calendar Year of Purchase...................................................5.0%
Calendar Year After Purchase................................................4.0%
2nd CalendarYearAfterPurchase...............................................3.0%
3rd CalendarYearAfterPurchase...............................................2.0%
4th Calendar Year After Purchase............................................1.0%
Years
Thereafter..................................................................None
In determining the applicability and rate of any contingent deferred sales
charge, it will be assumed that a redemption is made first of shares
representing capital appreciation, next of shares representing the reinvestment
of dividends and capital gain distributions, and finally of other shares held by
the shareholder for the longest period of time. This will result in any such
charge being imposed at the lowest possible rate. For federal income tax
purposes, the amount of the contingent deferred sales charge will reduce the
gain or increase the loss, as the case may be, on the amount realized on
redemption. The amount of any contingent deferred sales charge will be paid to
and retained by Madison Investment Advisors, Inc. The contingent deferred sales
charge will be waived for certain redemptions in connection with distributions
from an IRA or other qualified retirement plan.
SHAREHOLDER INQUIRIES & REPORTS
Shareholders who wish information concerning the Fund's investments and daily
net asset value per share may contact Bascom Hill BALANCED Fund, Inc., 6411
Mineral Point Road, Madison, Wisconsin 53705 or phone (608) 273-2020 or (800)
767-0300. Share applications, redemption request letters, requests for
information, or notifications concerning a shareholder's account should be
directed to Bascom Hill BALANCED Fund, Inc., c/o Firstar Trust Company, P.O. Box
701, Milwaukee, Wisconsin 53201-0701, or phone (414) 765-4124.
Shareholders receive quarterly reports on the Fund. These reports contain
information on the Fund's net assets along with management's discussion of the
current investment outlook and their strategy. Shareholders are notified of any
dividend and capital gain distributions as well as yearly tax information
regarding their distributions. The annual shareholder meeting normally will be
held in April or May.
INCOME DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS, AND TAXES
The Fund intends to distribute to its shareholders substantially all of its
net income and realized capital gains. The Fund intends to qualify as a
regulated investment company under the Internal Revenue Code and, therefore,
does not pay income tax. Income dividends will generally be paid quarterly in
April, July, October and December, while the long-term capital gains
distribution, if any, will be paid in December. Shareholders are advised
annually as to the tax status of all distributions made during the year. Capital
gain distributions will be taxable to shareholders as long-term gains,
regardless of the length of time the shares of the Fund have been held. Federal
tax treatment of income dividends or capital gain distributions will be the same
whether made in cash or reinvested in Fund shares. Due to frequent changes in
the tax laws, investors are advised to consult with their tax advisor regarding
the income tax treatment of income and capital gain distributions and expense
deductions from the Fund.
REINVESTMENT PLAN FOR DISTRIBUTIONS
Shareholders may elect, on the application form, to receive either income
dividends or capital gain distributions or both in cash. If an election is not
made, all income dividends and capital gain distributions will be reinvested in
additional shares of the Fund. Shareholders may change their participation in
the reinvestment plan by notifying the Fund in writing. Written notification of
a change must be received prior to the record date of a distribution to be
effective for that distribution.
DESCRIPTION OF FUND SHARES
The Fund was incorporated in Wisconsin on August 21, 1986. The Fund has
authorized common stock of 5,600,000 shares, $0.01 par value per share. All
shares are of the same class with equal rights and privileges. Each share has
one vote and participates equally in dividends and distributions declared by the
Fund and, on liquidation, in its net assets remaining after satisfaction of
outstanding liabilities.
INDIVIDUAL RETIREMENT ACCOUNT
An Individual Retirement Account (IRA) is a savings plan for retirement. Money
invested through an IRA compounds on a tax-free basis until it is distributed to
the investor, usually upon retirement. Contributions to an IRA are invested in
shares of the Fund with all dividend and capital gain distributions
automatically reinvested.
Individuals have until April 15, 1996, or until they file their 1995 income
tax forms to fund their IRA for 1995. Although the contribution may no longer be
deductible, the income earned will accumulate tax-free.
Currently, individuals who are not `active participants'' in employer-
maintained retirement plans may still deduct their IRA contribution which is
limited to the lesser of $2,000 or 100% of their earned compensation. Spousal
IRAs may be deducted up to $2,250 for taxpayers who have non-working spouses.
Individuals who are `active participants'' in an employer sponsored pension
or profit-sharing plan are limited in the deductibility of their IRA
contribution depending on their level of income. Individual taxpayers with
adjustable gross income of $25,000 or less and married taxpayers filing jointly,
with an adjustable gross income of $40,000 may continue to deduct their IRA
contributions. However, the deductible amount of the IRA contribution is reduced
pro-rata and phased out completely when individuals have adjusted gross income
greater than $35,000 and when married persons filing jointly claim adjusted
gross income greater than $50,000.
Nondeductible contributions of up to $2,000 or $2,250 for spousal IRAs may
still be made. The income on the IRA account remains nontaxable to the taxpayer
until it is distributed, usually upon retirement.
The Fund sponsors IRA accounts and accepts rollover and transfer IRA accounts.
Purchase and redemption of shares are treated as any other account. (See
`PURCHASE OF SHARES'' page 7, and ``REDEMPTION OF SHARES'' page 8) The initial
contribution must be $1,000 or more. Subsequent payments may be as little as
$100.
Firstar Trust Company will serve as Custodian. The Custodian will redeem from
each account, regardless of size, a $12.50 annual maintenance fee. Please refer
to the IRA Disclosure Brochure for a detailed listing of other fees.
The Individual Retirement Custodial Agreement, and the Individual Retirement
Account Disclosure Brochure is available by contacting the Fund. This
information should be read carefully and consultation with an attorney or tax
advisor may be advisable.
No person has been authorized to give any information or to make any
representations not contained in the Prospectus and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Fund or the Distributor. This Prospectus does not constitute an offering
by the Fund or by the distributor in any jurisdiction in which such offering may
not lawfully be made.
- - --------------------------------------------------------------------------------
BASCOM HILL
BALANCED FUND, INC.
PROSPECTUS
INVESTMENT ADVISOR
MADISON INVESTMENT ADVISORS, INC.
6411 MINERAL POINT ROAD
MADISON, WISCONSIN 53705
(608)273-2020
(800)767-0300
CUSTODIAN, TRANSFER AGENT
AND DISBURSING AGENT
FIRSTAR TRUST COMPANY
P.O. BOX 701
MILWAUKEE, WISCONSIN 53201-0701
(414)765-4124
COUNSEL
DEWITT ROSS & STEVENS, S.C.
8000 EXCELSIOR DRIVE
MADISON, WISCONSIN 53717-1914
(608)831-2100
AUDITORS
WILLIAMS, YOUNG & ASSOCIATES
P.O. BOX 8700
MADISON, WISCONSIN 53708
(608)274-1980
BASCOM HILL BALANCED FUND, INC.
6411 Mineral Point Road
Madison, Wisconsin 53705
(608) 273-2020
(800) 767-0300
STATEMENT OF ADDITIONAL INFORMATION
February 28, 1996
Investors should read the Prospectus, dated February 28, 1996 in
conjunction with the Statement of Additional Information. Investors
may obtain a Prospectus, without charge, from the Fund's office as
listed above.
GENERAL INFORMATION AND HISTORY
-------------------------------
Bascom Hill BALANCED Fund, Inc. (the "Fund") was incorporated in Madison,
Wisconsin as an investment company on August 21, 1986 and began its initial
public offering of shares on December 18, 1986. The Fund's sponsor,
investment advisor and distributor of its shares is Madison Investment
Advisors, Inc. of Madison, Wisconsin. The Fund is designed to provide
investors with a diversified, professionally managed portfolio.
INVESTMENT OBJECTIVES AND POLICIES
----------------------------------
This information supplements the discussion of the Fund's investment
objectives and policies as discussed on page 3 of the Prospectus. As
highlighted in the Prospectus, the Fund's objectives are (1) production of
current income and (2) long-term growth of capital and income. These
objectives are matters of fundamental policy and cannot be changed without the
approval of a majority of shareholders.
The Fund's management believes that capital growth and production of income
can best be achieved through flexibility of investment strategies. Although
the careful selection of common stocks and bonds is a primary factor affecting
the investment return of the Fund, the percentage of the Fund's assets which
may be invested at any particular time in common stocks or bonds will depend
upon management's judgment regarding the risks present in the stock and fixed
income markets. When management believes that market risks are high and the
prices of common stocks or bonds may decline, the Fund may move substantial
assets out of common stocks or bonds and into short-term fixed income
instruments such as U.S. Treasury Bills, U.S. Treasury Notes, U.S. Agency
Notes or highly rated commercial paper or money market funds.
The Fund may hold repurchase agreements which are fully collateralized by a
U.S. government security. Repurchase agreements may be entered into with a
member bank of the Federal Reserve System or primary dealer in U.S. government
securities under which the bank or dealer agrees to repurchase the security
from the Fund at a mutually agreed upon time and price, thereby determining
the yield during the term of the agreement. This results in a fixed rate of
return insulated from market fluctuations during such periods. While the
underlying obligation is a U.S. government security, the obligation of the
seller to repurchase the security is not guaranteed by the U.S. government and
there is the risk that the seller may fail to repurchase the security. Such
agreements usually cover short periods, such as under one week. In general,
the Fund will usually purchase overnight repurchase agreements which mature
the following day. Not more than 10% of total net assets will be invested in
repurchase agreements and other illiquid securities with maturities of greater
than seven days. The Fund may require the seller to provide additional
collateral if the market value of the securities falls below the repurchase
price at any time during the term of the repurchase agreement. In the event
of default by the seller under a repurchase agreement, the underlying
securities are not owned by the Fund but only constitute collateral for the
seller's obligation to pay the repurchase price. Therefore, the Fund may
suffer time delays and incur costs or losses in connection with the
disposition of the collateral.
INVESTMENT RESTRICTIONS
-----------------------
The Fund has adopted the following restrictions which are matters of
fundamental policy and cannot be changed without the approval of the holders
of the majority of its outstanding shares:
1. The Fund will not purchase securities on margin, participate in a joint
trading account, sell securities short, or act as an underwriter or
distributor of securities. The Fund will be acting as an underwriter when it
purchases or sells its own securities.
2. The Fund will not purchase or sell real estate or interest in real
estate, commodities or commodity futures.
3. The Fund may make temporary bank borrowings (not in excess of 5% of the
lower of cost or market value of the Fund's total assets) for emergency or
extraordinary purposes, and not for the purchase of investment securities.
4. The Fund may not pledge, mortgage or hypothecate its assets, except for
temporary or emergency purposes and then to an extent not greater than 10% of
its assets at current value.
5. Securities of other investment companies will not be purchased.
6. Investments will not be made for the purpose of exercising control or
management of any company. The Fund will not purchase securities of any
issuer if, as a result of such purchase, the Fund would hold more than 10% of
the voting securities of such issuer or more than 10% of all or any class of
securities of such issuer.
7. Not more than 5% of the total net assets will be invested in the
securities of any one issuer (not including United States government
securities.)
8. Not more than 25% of the Fund's total net assets will be concentrated in
companies of any one industry or group of related industries.
9. The Fund will not acquire or retain any security issued by a company, an
officer or director of which is an officer or director of the Fund or officer,
director, shareholder or interested person of its investment advisor.
10. The Fund will not acquire or retain any security issued by a company if
one or more directors, shareholders or affiliated persons of its investment
advisor beneficially own more than one-half of one percent (0.5%) of such
company's securities, and all of the foregoing persons owning more than one-
half of one percent (0.5%) together own more than 5% of such security.
11. The Fund will not purchase securities of companies which, together with
predecessors, have a record of less than three years continuous operation.
12. The Fund will not invest in puts, calls, straddles, spreads or any
combination thereof, other than as required to participate in a covered call
option writing program.
13. The Fund will not invest in oil, gas or other mineral exploration
leases, or development programs, provided, however, this shall not prohibit
the Fund from purchasing publicly traded securities or companies engaging, in
whole or in part in such activities.
14. The Fund will not purchase securities from or sell securities to any of
its officers or directors, except with respect to its own shares.
15. The Fund will not invest in restricted securities.
16. The Fund will not make loans to any person (except that the Fund may, in
fulfillment of its policies and objectives, purchase a portion of an issue of
publicly distributed bonds, debentures or other debt securities including
commercial paper, bank certificates of deposit, repurchase agreements or U.S.
Treasury securities).
17. The Fund will not purchase or issue any warrants.
18. All percentage limitations apply to the market value on the date of
investment by the Fund.
19. Not more than 10% of total net assets will be invested in repurchase
agreements with maturities of greater than seven days or in other illiquid
securities.
20. Not more than 10% of the total net assets may be invested in foreign
currency denominated debt securities; such securities must be issued by U.S.
corporations or U.S. government agencies or instrumentalities, must be readily
saleable and publicly traded in the U.S. securities markets and be in the top
two rating classes of Standard & Poor's or Moody's. Not more than 10% of
total net assets may be invested in foreign equity
securities, including shares of foreign companies traded as American
Depository Receipts (known as "ADRs"). The Fund will not effect transactions
in foreign securities markets.
21. Not more that 70% of the total net assets of the Fund may be invested in
common stocks, securities convertible into common stocks or securities having
common stock characteristics. If, through appreciation, the total market
value of the Fund's common stock holdings exceeds 70%, action is required
within the following sixty days to reduce the total market value of common
stock holding to below 70% of total net assets of the Fund.
Securities are not purchased with a view to rapid turnover, although it is
expected short-term capital gains may be realized from time to time from the
sale of assets held less than one year. Securities are purchased which are
believed to have potential for capital appreciation. Securities will be sold
if the Fund's management believes that such potential has been reached, is no
longer feasible, or if the risk of a decline in the market price is too great.
The Fund's annual portfolio turnover rate was 66% and 76% respectively for
the years ended December 31, 1995 and December 31, 1994. The portfolio
turnover rate is calculated by dividing the lesser of purchases or sales of
portfolio securities for the fiscal year by the monthly average of the value
of the portfolio securities owned by the Fund during the fiscal year. For the
purpose of determining such portfolio turnover, securities whose maturity at
the time of acquisition is one year or less are excluded.
PRINCIPAL SHAREHOLDERS
As of January 31, 1996, all officers and directors of the Fund, as a group,
beneficially owned less than 1% of the then outstanding shares.
DESCRIPTION OF FUND SHARES
The Fund was incorporated in Wisconsin on August 21, 1986. The Fund has
authorized common stock of 5,600,000 shares, $0.01 par value per share. All
shares are of the same class with equal rights and privileges. Each share has
one vote and participates equally in dividends and distributions declared by
the Fund, and on liquidation, in its net assets remaining after satisfaction
of outstanding liabilities.
MANAGEMENT OF THE FUND
Position(s) held Principal occupations
Name and Address with the fund during the past 5 years
---------------- --------------- -----------------------
Chris Berberet Treasurer Vice President of Madison
6411 Mineral Point Investment Advisors, Inc.
Madison, WI 53705 Prior to joining Advisor, he
was associated with ELCA
Board of Pensions in
Minneapolis, MN.
Frank E. Burgess* President, President and Director
6411 Mineral Point Director of Madison Investment
Madison, WI 53705 Advisors, Inc., the Advisor
to the Fund. Prior to
forming the Advisor in
1973, he was Asst. Vice
President & Trust Officer
of M&I Bank of Madison,
Wisconsin. He is a member
of the State Bar of
Wisconsin and Dane County
Bar Association.
Katherine L. Frank Vice President Vice President of Madison
6411 Mineral Point Secretary Investment Advisors, Inc.
Madison, WI 53705 since 1986.
Jay R. Sekelsky Vice President Vice President of Madison
6411 Mineral Point Investment Advisors, Inc.
Madison, WI 53705 since 1990.
Jacqueline Stoppleworth Assistant Secretary Controller of Madison
6411 Mineral Point Rd. Investment Advisors, Inc.
Madison, WI 53705 With Advisor since
1988.
James R. Imhoff Jr. Director President of First Weber
429 Gammon Place Group, Inc. of Madison, WI.
Madison, WI 53719
Edmund B. Johnson Director Vice President and Director
3302 Valley Creek of Medix of Wisconsin, Inc.
Middleton, WI 53562
Lorence D. Wheeler Director President of Credit Union
PO Box 431 Benefits Services, Inc.
Madison, WI 53701
During 1995, the Fund paid, in aggregate, directors' fees of $3000 to those
Directors who are considered disinterested persons as defined by the
Investment Company Act of 1940.
* Director of the Fund: Is an "interested person" in the Fund and in the
Advisor, as defined by the Investment Company Act of 1940.
During the fiscal year ended December 31, 1995, the Fund paid the following
remuneration to the following group for services rendered:
Securities or Property
Pension or Retirement Total Comp.
Name of Aggregate Benefits Accrued Estimated Annual From Fund
Person, Compensation As Part of Fund Benefits Upon and Fund
Position From Fund Expenses Retirement Complex Paid
to Directors
*Frank E. Burgess
Director, President
None None None None
James R. Imhoff, Jr.
Director
$1,000 None None $3,000
Edmund B. Johnson
Director
$1,000 None None $3,000
Lorence D. Wheeler
Director
$1,000 None None $3,000
*All "interested" directors and officers of the Fund are compensated by the
Advisor as specified by the investment advisory agreement.
INVESTMENT ADVISORY AND OTHER SERVICES
Under an investment advisory agreement with the Fund, Madison Investment
Advisors, Inc., 6411 Mineral Point Road., Madison, Wisconsin, furnishes
continuous investment service and management to the Fund, for which it
receives an annual fee, paid quarterly, based on the average net asset value
of the Fund, as determined by valuations made at the close of each business
day. The annual fee is .85 of 1% on the first $100,000,000 of total net
assets of the Fund, reduced to .75 of 1% on that portion of total net assets
of the Fund in excess of $100,000,000. The fee is higher than most other
funds. Personnel of the Advisor are primarily responsible for investment
decisions affecting the Fund's portfolio. During the years ended December 31,
1995, December 31, 1994 and December 31, 1993, the Fund paid the Advisor an
aggregate of $88,169, $93,783 and $126,203, respectively in investment
advisory fees.
Under the investment advisory agreement, the Advisor, at its own expense and
without reimbursement from the Fund, furnishes office space, office
facilities, equipment, executive officers and executive expenses of the Fund.
The Fund will pay all operating expenses including but not limited to the cost
of preparing and printing its registration statements required under the
Securities Act of 1933 and the Investment Company Act of 1940 and any
amendments thereto, the expense of registering its shares with the Securities
and Exchange Commission and various states, and the cost of prospectuses for
existing shareholders, reports to shareholders, taxes, and legal expenses.
Also included are fees to Directors who are not interested persons of the
Advisor or officers or employees of the Fund, salaries of administrative and
clerical personnel, auditing and accounting services, fees and expenses of any
custodian, printing and mailing expenses, postage, and charges and expenses of
dividend disbursing agents, registrars and stock transfer agents, including
the cost of keeping all necessary shareholder records and accounts and
handling.
The Advisor has undertaken to reimburse the Fund to the extent that the
aggregate annual operating expenses, including the investment advisory fee and
distribution fees but excluding interest, taxes, and brokerage commissions,
exceeds 2% of average daily net assets. The Advisor shall, on an annual
basis, reimburse the Fund for all expenses in excess of these amounts.
The agreement with the Advisor is not assignable and may be terminated by
either party, without penalty, on sixty days' notice. Otherwise, the
agreement continues in effect as long as it is approved annually by (a) the
Board of Directors or by a vote of a majority of the outstanding shares of the
Fund, and (b) in either case, by the affirmative vote of a majority of
directors, who are not parties to the agreement or "interested persons" of the
Advisor, as defined in the Investment Company Act of 1940, as amended, cast in
person at a meeting called for the purpose of voting for such approval.
The Advisor may act as an investment advisor to other persons, firms or
corporations, including investment companies. Madison Investment Advisors,
Inc., is a registered investment advisor and has numerous advisory clients of
its own, including Bascom Hill Investors, Inc., and Madison Bond Fund, Inc.
both registered investment companies. The Advisor was founded in 1973 and has
never been controlled by or affiliated with any other business entity or
person.
Frank E. Burgess, President, and a Director of the Fund is also President
and Director of the Advisor. Chris Berberet is Treasurer of the Fund and Vice
President of the Advisor. Katherine Frank is Vice President and Secretary of
the Fund and Vice President of the Advisor. Jay R. Sekelsky is Vice President
of the Fund and Vice President of the Advisor. Jacqueline Stoppleworth is
Assistant Secretary of the Fund and Controller of the Advisor. Mr. Burgess
owns a majority of the controlling interest in the Advisor. All investment
decisions are made by the Investment Policy Committee.
The Advisor relies upon information supplied by the analytical staffs of
major brokerage firms as well as other publications and research services. A
discussion of how the Advisor allocates investment opportunities among
clients, how the Advisor decides which client should purchase certain
securities and how portfolio transactions are allocated among brokers is found
under "BROKERAGE" below.
Williams, Young and Associates, P.O. Box 8700, Madison, Wisconsin, 53708 is
the Fund's independent public accountant.
The custodian for the Fund's assets is the Firstar Trust Company, P.O. Box
701, Milwaukee, Wisconsin, 53201-0701. The Firstar Trust Company also serves
as the transfer agent for the Fund.
BROKERAGE
Portfolio brokerage transactions of the Fund are placed with those
securities brokers which the Advisor believes will provide the best value in
brokerage and research services for the Fund, either in a particular
transaction or over a period of time. Although some transactions involve only
brokerage services, many involve research services as well.
In valuing brokerage services, the Advisor makes a judgment of the
usefulness of research and other information provided by a broker to the
Advisor in managing the Fund's investment portfolio. In some cases, the
information, e.g. data or recommendations concerning particular securities,
relates to the specific transaction placed with the broker, but, for the
greater part, the research consists of a wide variety of information
concerning companies, industries, investment strategy and economic, financial
and political conditions and prospects, useful to the Advisor in advising the
Fund and other clients of the Advisor.
In compensating brokers for their services, the Advisor takes into account
the value of the information received for use in advising the Fund. It is
understood by the Fund that other clients of the advisor might also benefit
from the information obtained. Where the Fund and one or more clients of the
Advisor are simultaneously engaged in the purchase or sale of the same
security, the transactions will, to the extent possible, be averaged as to
price and allocated equitably. In most cases, it is believed that
coordination and the ability to participate in volume transactions will be to
the benefit of the Fund.
The Fund may not allocate brokerage solely on the basis of selling Fund
shares. When feasible and practical, over-the-counter purchases and sales are
transacted directly with principal market makers. Principal market makers are
not paid a direct commission. They receive in payment the difference between
the bid and asked prices for a particular security. Brokerage commissions of
$10,748, $19,305 and $25,656 were paid by the Fund during the years ended
December 31, 1995, December 31, 1994 and December 31, 1993, respectively.
DISTRIBUTION PLAN
The distribution plan was terminated on December 18, 1992.
Madison pays to authorized dealers a maintenance fee for assisting investors
with their investments and/or accounts at a rate of not more than .25% per
annum of the average monthly net asset value of Fund shares owned by customers
of such dealers which remain on the books of the Fund. Such maintenance fees
are paid solely by Madison and are not the responsibility or liability of the
Fund.
It is the objective of the Board of Directors of the Fund to close the Fund
to new investors when total net assets reach $100,000,000.
PURCHASE AND REDEMPTION OF FUND SHARES
As briefly discussed in the Prospectus, applications for the purchase of
shares should be made to Bascom Hill BALANCED Fund, Inc. c/o Firstar Trust
Company, P.O. Box 701, Milwaukee, Wisconsin, 53201-0701. The price per share
will be the net asset value computed after the time the application is
received. (See "DETERMINATION OF NET ASSET VALUE", page 13). The net asset
value for a particular day is applicable to all applications for the purchase
of shares as well as all requests for the redemption of shares received at or
before that day's close of trading on the New York Stock Exchange (the
"Exchange"). The Exchange usually closes at 4:00 p.m. New York time.
Applications for purchase of shares and requests for redemptions of shares
received after the close of trading on the Exchange will be based on the net
asset value as determined as of the close of trading on the next day the
Exchange is open.
All applications to purchase capital stock are subject to acceptance or
rejection by authorized officers of the Fund and are not binding until
accepted. Applications will not be accepted unless they are accompanied by
payment. However, minor differences between amounts submitted and actual
costs of shares will be refunded or billed. It is the policy of the Fund not
to accept applications under circumstances or in amounts considered
disadvantageous to existing shareholders.
The Board of Directors of the Fund is authorized from time to time to fix
upper and lower limits on the number of shares which may be purchased.
Pursuant to this authority, the Board of Directors has established $1,000 as
the minimum initial purchase and $100 as the minimum for any subsequent
purchase, except through dividend or capital gain reinvestment.
Purchase of Fund shares will be made in full and fractional shares, computed
to three decimal places, unless the investor specifies full shares only.
Certificates representing Fund shares purchased will not be issued. The
Fund's transfer agent, The Firstar Trust Company, Milwaukee, Wisconsin, will
credit the shareholder's account with the number of shares purchased. The
Fund offers this service to relieve shareholders of the responsibility for
safekeeping certificates and to eliminate the need for delivery of certifi-
cates in the event of redemption. Written confirmations are issued for all
purchases of Fund shares.
A shareholder may require the Fund at any time to redeem his or her shares
in whole or in part. Redemption is accomplished by delivering to the Fund,
c/o The Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin, 53201-0701,
a signed written request for redemption. The written redemption request must
be signed exactly as the shares are registered. If the account is owned
jointly, both owners must sign. Redemption cannot be accomplished by
telephoning or telegraphing the Fund or The First Wisconsin Trust Company.
The redemption price is the net asset value next computed after receipt of
written request in the proper form set out above.
If there is doubt as to what is necessary in order to redeem shares, please
write or call the Fund's transfer agent, The Firstar Trust Company (telephone
no. (414) 765-4124), prior to submitting the redemption request. No redemption
request will become effective until all documents have been received in proper
form by the transfer agent.
All redemptions will be processed immediately upon receipt and the fund will
return redemption requests that contain restrictions as to the time or date
redemptions are to be affected. The redemption price will depend on the
market value of the investments in the Fund's portfolio at the time of
redemption, (see "DETERMINATION OF NET ASSET VALUE") and may be more or less
than the cost of shares redeemed. Payments for shares redeemed will be made
within seven days after redemption and redemption will be made in cash only.
The right of redemption may be suspended for any period during which the New
York Stock Exchange is closed other than customary and weekend and holiday
closings, and may be suspended for any period during which trading on the
Exchange is restricted as determined that an emergency exists and, therefore,
it is not reasonably practical for the Fund to dispose of its securities nor
to fairly determine the value of its net assets.
Shares of the Fund may be transferred in much the same manner as they are
redeemed. Written instructions must be delivered to the Fund, c/o Firstar
Trust Company, P.O. Box 701, Milwaukee, Wisconsin, 53201-0701, endorsed or
accompanied by the instrument of transfer and guaranteed in the same manner as
described under "PURCHASE AND REDEMPTION OF FUND SHARES". The instructions
must be signed exactly as provided in "PURCHASE AND REDEMPTION OF FUND SHARES"
for redemption of shares. The Fund is not bound to record any transfer on the
stock transfer books maintained by the Trust Company until all required
documents have been received by it.
DETERMINATION OF NET ASSET VALUE
The net asset value of a share of common stock is determined by dividing the
net asset value of the Fund by the total number of full and fractional shares
outstanding at that time. The net assets of the Fund are determined by
deducting the liabilities of the Fund from the total asset value. The net
asset value is determined as of the close of trading on the New York Stock
Exchange exclusive of federal holidays.
Securities traded on a stock exchange will ordinarily be valued on the basis
of the last sale price on the date of valuation, or in the absence of any sale
on that day, the closing bid price. Securities not listed on an exchange or
securities in which there were no transactions are valued at the most recent
reported bid prices. Any securities for which market quotations are not
readily available are valued at fair value as is determined in good faith by
the Board of Directors. Short-term securities with over 60 days to maturity
are valued at market value; those under 60 days to maturity are valued at
amortized cost. Odd lot differentials and brokerage commissions will be
excluded in calculating value. All assets other than securities will be
valued at their then current fair value as determined in good faith by the
Board of Directors.
TAX STATUS
During the current taxable year and in future years, the Fund intends to
qualify under the provisions of Sections 851-855 of the Internal Revenue Code
(Subchapter M) applicable to investment companies.
Upon qualifying under the federal tax laws related to investment companies,
the Fund will not be subject to federal taxes on income or capital gains
distributed to the shareholders. Distributions designated as "capital gains
distributions" (meaning the excess of net long-term capital gains over net
short-term capital losses) will be taxable to shareholders as long-term gains,
regardless of the length of time shares of the Fund have been held. Currently,
the maximum long-term capital gains tax rate is 28%. Distributions of the
excess of net short-term gains over the net long-term capital losses and
income dividend distributions are made in cash or reinvested in additional
shares of the Fund.
If the Fund does not qualify for preferential tax treatment in any fiscal
year, it will be taxed as an ordinary corporation. The net asset value per
share may be adversely affected as a result.
Since at the time of purchase of Fund shares the Fund may have undistributed
income or capital gains, distributions received shortly after such purchase by
a shareholder may be taxable to the shareholder, although it is, in whole or
in part, a return of capital and may have the effect of reducing the net asset
value per share.
Distributions from net investment income are taxable as ordinary income to
shareholders. Distributions may be subject to state income tax in states
having such a tax. It is recommended that investors consult with their
personal tax advisor in evaluating their individual tax situation.
Under the Interest and Dividend Tax Compliance Act of 1983, effective
January 1, 1984, the Fund is required to deduct and withhold income tax from a
distribution payment at a 20 percent rate if:
(1) The shareholder fails to furnish his/her taxpayer identification number
to the Fund;
(2) The IRS notifies the Fund that the taxpayer identification number
furnished by the shareholder is incorrect;
(3) The IRS notifies the Fund that backup withholding should be commenced
because the shareholder has failed to properly report interest or dividend
income; or
(4) When required to do so, the shareholder fails to certify, under
penalties of perjury, that he/she is not subject to backup withholdings.
In addition, under the new IRA rollover rules, any distribution from an
employer - sponsored plan is subject to 20% mandatory withholding, unless it
is directly "rolled over" into an IRA. (See the IRA Disclosure Brochure for
--------
details)
The Tax Reform Act of 1986 made major changes in the entire tax system,
impacting all investors including all individuals or taxable entities that
invest in the Fund. Currently, capital gains are taxable at ordinary income
rates. Therefore, each investor should consult with his or her tax advisor
regarding the income tax treatment of income and capital gain distributions
and expense deductions from the Fund in future years.
FINANCIAL STATEMENTS
The following financial information contained in the Annual Report for
Bascom Hill BALANCED Fund, Inc. for the year ended December 31, 1995 is
incorporated herein by reference:
(a) Statement of Net Assets
(b) Statement of Changes in Net Assets
(c) Statement of Operations
(d) Notes to Financial Statements
(e) Report of Independent Public Accountants
A copy of the Annual Report will accompany the Statement of Additional
Information whenever the Statement of Additional Information is requested by a
shareholder or prospective investor.
PART C: OTHER INFORMATION
Form N-1A
Item No.
- - --------
24. Financial Statements and Exhibits
---------------------------------
(a) Per share income and capital changes for the period ended
December 31, 1986 and the years ended December 31, 1987, 1988,
1989, 1990, 1991, 1992 , 1993, 1994 and 1995 are included in the
Prospectus.
Financial Statements Included in Shareholder Annual Report for
the year ended December 31, 1995.
(1) Statement of Net Assets
(2) Statement of Changes in Net Assets
(3) Statement of Operations
(4) Notes to Financial Statements
(b) Exhibits:
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ----------------------
1. Articles of Incorporation *
2. Bylaws*
3. N/A
4. N/A
5. Investment Advisory Agreement *
6(a). Distribution Agreement *
6(b). N/A
7. N/A
8(a). Custodian Agreement *
8(b). Transfer/Dividend Disbursing Agent Agreement *
9. N/A
10. Opinion and Consent of Counsel *
11. Consent of Independent Public Accountant
12. N/A
13. Subscription of Purchase Agreement *
14. IRA Plan *
15. N/A
* Previously filed and incorporated herein by reference.
25. Persons Controlled by or under Common Control with Registrant
-------------------------------------------------------------
None
26. Number of Holders of Securities as of December 31, 1995
-------------------------------------------------------
Title of Class Number of Record Holders
-------------- ------------------------
Common Stock 692
27. Indemnification
---------------
Article VII of the Registrant's Bylaws provides for the indemnification of
its directors and officers and, therefore, is incorporated herein by
reference.
28. Business and Other Connections of Investment Advisor
----------------------------------------------------
Madison Investment Advisors, Inc., is the only investment advisor to the
Registrant.
Set forth below is a list of the officers and directors of Madison Investment
Advisors, Inc. as of January 31, 1996, together with information as to any
other business, profession, vocation or employment of a substantial nature of
those officers and directors during the past two years:
Position with Madison
Name Investment Advisors, Inc. Other
----------------- ------------------------- -----
Frank E. Burgess President, Treasurer and (1)
Director
Christopher C. Berberet Vice President (1)
Richard L. Ford Vice President
Katherine L. Frank Vice President (1)
L. Louis LeGoullon Vice President
John F. McClure Vice President, Secretary and
Director
Michael J. Schlageter Vice President, Director
Jay R. Sekelsky Vice President (1)
Michael R. Yaktus Vice President
Note (1): Certain of the indicated persons are officers and directors of
Bascom Hill Investors, Bascom Hill BALANCED Fund and Madison Bond
Fund, all open-ended, diversified investment companies for which
Madison Investment Advisors, Inc. also acts as investment advisor.
29. Principal Underwriters
----------------------
Madison Investment Advisors, Inc. acts as Distributor of the shares of common
stock of the Registrant under a Distribution Agreement to this Registration
Statement. Madison Investment Advisors, Inc. also acts as investment advisor
to Bascom Hill Investors, Inc. and Madison Bond Fund Inc., both registered
investment companies. The officers and directors of Madison Investment
Advisors, Inc., their positions or offices, are outlined in Item 28 of this
Registration Statement immediately above.
30. Location of Accounts and Records
--------------------------------
All accounts, books, and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the rules thereunder will be
maintained at the offices of the Registrant at 6411 Mineral Point Road,
Madison, WI 53705-4341 and at the offices of the Registrant's transfer agent
and custodian, Firstar Trust Company located at 615 East Michiagn Avenue,
Milwaukee, WI 53201.
31. Management Services
-------------------
Registrant is not a party to any management-related service contract other
than set forth in Part A or Part B of this Form.
32. Undertakings
------------
Registrant agrees to furnish each person to whom a prospectus is delivered
with a copy of the Registrant's latest annual report to shareholders, upon
request, and without charge.
EXHIBIT 11
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANT
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated January 25, 1996, and to all references to our Firm included in or made a
part of the Registration Statement on Form N-1A.
WILLIAMS, YOUNG & ASSOCIATES, LLC
Madison, Wisconsin
February 10, 1996
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant certifies that it meets all of the
requirement for effectiveness of the Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Madison and State of Wisconsin on the 15th day of
February, 1995.
Bascom Hill Balanced Fund, Inc.
XXXXXXXXXXXXX
----------------
Frank E. Burgess, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
indicated.
XXXXXXXXXXXXXXX 2/26/96 Director
- - ------------------ -------- ------------
Frank E. Burgess Date Title
XXXXXXXXXXXXXXXX 2/26/96 Director
- - -------------------- -------- ------------
James R. Imhoff, Jr.
XXXXXXXXXXXXXX 2/26/96 Director
- - -------------------- -------- ------------
Edmund B. Johnson
XXXXXXXXXXXXXXX 2/26/96 Director
- - ------------------ -------- ------------
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BASCOM HILL
BALANCED FUND, INC., DECEMBER 31, 1995 FINANCIAL STATEMENTS AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH ANNUAL REPORT.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 9708
<INVESTMENTS-AT-VALUE> 10831
<RECEIVABLES> 51
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 10883
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 26
<TOTAL-LIABILITIES> 26
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 9722
<SHARES-COMMON-STOCK> 5
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 10857
<DIVIDEND-INCOME> 55
<INTEREST-INCOME> 435
<OTHER-INCOME> 0
<EXPENSES-NET> 141
<NET-INVESTMENT-INCOME> 349
<REALIZED-GAINS-CURRENT> 593
<APPREC-INCREASE-CURRENT> 1071
<NET-CHANGE-FROM-OPS> 1664
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 345
<DISTRIBUTIONS-OF-GAINS> 573
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 15
<NUMBER-OF-SHARES-REDEEMED> 62
<SHARES-REINVESTED> 39
<NET-CHANGE-IN-ASSETS> (150)
<ACCUMULATED-NII-PRIOR> 1
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 88
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 10373
<PER-SHARE-NAV-BEGIN> 20.16
<PER-SHARE-NII> .75
<PER-SHARE-GAIN-APPREC> 3.53
<PER-SHARE-DIVIDEND> .74
<PER-SHARE-DISTRIBUTIONS> 1.26
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 22.44
<EXPENSE-RATIO> 1.36
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
