BERKSHIRE HATHAWAY INC.

波克夏海瑟崴股份有限公司

1997 Chairman's Letter
1997年董事长致股东信

To the Shareholders of Berkshire Hathaway Inc.:

致所有股东:

Our gain in net worth during 1997 was $8.0 billion, which
increased the per-share book value of both our Class A and Class B
stock by 34.1%. Over the last 33 years (that is, since present
management took over) per-share book value has grown from $19 to
$25,488, a rate of 24.1% compounded annually.(1)

1997年本公司的净值增加了80亿美元，每股账面净值不管是A级股或B级股
皆成长了34.1%，总计过去33年以来，也就是自从现有经营阶层接手之后，每
股净值由当初的19元成长到现在的25,488美元，年复合成长率约为24.1%*。

1. All figures used in this report apply to Berkshire's A shares,

the successor to the only stock that the company had outstanding

before 1996. The B shares have an economic interest equal to 1/30th

that of the A.

*1在年报中所谓的每股数字系以A级普通股约当数为基础，这是本公司在1996年以前流通在
外唯一的一种股份，B级普通股拥有A级普通股三十分之一的权利。

Given our gain of 34.1%, it is tempting to declare victory and move
on. But last year's performance was no great triumph: Any investor can
chalk up large returns when stocks soar, as they did in 1997. In a bull
market, one must avoid the error of the preening duck that quacks
boastfully after a torrential rainstorm, thinking that its paddling skills
have caused it to rise in the world. A right-thinking duck would instead
compare its position after the downpour to that of the other ducks on
the pond.

看到我们高达34.1%的超高报酬率，大家可能忍不住要高呼胜利口号，并勇往
前进，不过若是考量去年股市的状况，任何一个投资人都能靠着股票的飙涨而大
赚一票，面对多头的行情，大家一定要避免成为一只呱呱大叫的骄傲鸭子，以为
是自己高超的泳技让他冲上了天，殊不知面对狂风巨浪，小心的鸭子反而会谨慎
地看看大浪过后，其它池塘里的鸭子都到哪里去了。

So what's our duck rating for 1997? The table on the facing page
shows that though we paddled furiously last year, passive ducks that
simply invested in the S&P Index rose almost as fast as we did. Our
appraisal of 1997's performance, then: Quack.

那么我们这只鸭子在1997年的表现又如何呢? 报表显示虽然去年我们拼命的
向前划，不过到最后我们发现其它被动投资S&P 500指数的鸭子的表现一点也
不比我们差，所以总结我们在1997年的表现是︰呱呱!

When the market booms, we tend to suffer in comparison with the
S&P Index. The Index bears no tax costs, nor do mutual funds, since
they pass through all tax liabilities to their owners. Last year, on the
other hand, Berkshire paid or accrued $4.2 billion for federal income
tax, or about 18% of our beginning net worth.

当股市正热时，相较于S&P 500指数，我们比较吃亏，因为指数或共同基金不
必负担租税成本，他们可以直接将税负转嫁到投资人的身上，相对地在另一方面
Berkshire光是去年就必须认为高达42亿美元的联邦所得税，这相当于我们年
初净值的18%。

Berkshire will always have corporate taxes to pay, which means it
needs to overcome their drag in order to justify its existence. Obviously,
Charlie Munger, Berkshire's Vice Chairman and my partner, and I won't
be able to lick that handicap every year. But we expect over time to
maintain a modest advantage over the Index, and that is the yardstick
against which you should measure us. We will not ask you to adopt the
philosophy of the Chicago Cubs fan who reacted to a string of lackluster
seasons by saying, "Why get upset? Everyone has a bad century now and
then."

由于Berkshire必须要负担企业所得税，所以为了要证明其存在的意义，它就一
定要能够克服这先天的障碍，不过很显然的Berkshire的主要合伙人查理曼格跟
我很难每年都打败这样的差杆，当然就长期而言，我们还是预期Berkshire能够
打败大盘指数，这也是大家可以评断我们表现的最低标准，我想我们应该不会让
大家像芝加哥小熊队球迷在面对连续几个战绩不佳球季时，自我调侃所说的︰有
什么好沮丧的?? 谁都可能有不好过的一世纪。

Gains in book value are, of course, not the bottom line at Berkshire.
What truly counts are gains in per-share intrinsic business value.
Ordinarily, though, the two measures tend to move roughly in tandem,
and in 1997 that was the case: Led by a blow-out performance at GEICO,
Berkshire's intrinsic value (which far exceeds book value) grew at nearly
the same pace as book value.

账面净值的增加当然不是经营Berkshire的最终目标，因为真正重要的是每股实
质价值，虽然在Berkshire通常两者会以相当接近的频率波动，就像是1997年
便是如此，受惠于GEICO爆炸性的成长，Berkshire的实质价值(远高于账面价
值)以接近账面价值成长的幅度增加。

For more explanation of the term, intrinsic value, you may wish to
refer to our Owner's Manual, reprinted on pages 62 to 71. This manual
sets forth our owner-related business principles, information that is
important to all of Berkshire's shareholders.

有关"实质价值"等名词的解释，请大家参阅股东手册，手册中揭示了本公司经营
的宗旨，也包含了许多对Berkshire股东相当重要的信息。

In our last two annual reports, we furnished you a table that Charlie
and I believe is central to estimating Berkshire's intrinsic value. In the
updated version of that table, which follows, we trace our two key
components of value. The first column lists our per-share ownership of
investments (including cash and equivalents) and the second column
shows our per-share earnings from Berkshire's operating businesses
before taxes and purchase-accounting adjustments (discussed on
pages 69 and 70), but after all interest and corporate expenses. The
second column excludes all dividends, interest and capital gains that we
realized from the investments presented in the first column. In effect,
the columns show what Berkshire would look like were it split into two
parts, with one entity holding our investments and the other operating
all of our businesses and bearing all corporate costs.

在过去两年的年报中，我们提供给各位一张查理跟我认为最能够估计Berkshire
实质价值的表，在下面这张更新过数字的表中，主要有两项跟价值息息相关的指
标，第一栏是我们平均每股持有的投资金额(包含现金与约当现金)，第二栏则是
每股在扣除利息与营业费用之后，来自本业的营业利益(但未扣除所得税与购买
法会计调整数)，当然后者已经扣除了所有来自第一栏投资所贡献的股利收入、
利息收入与资本利得，事实上，若是把Berkshire拆成两部份的话，就等于是一
家持有我们投资部位的控股公司，以及另一家经营旗下所有事业负担全部成本盈
亏的营利事业。

Pre-tax Earnings Per Share

Investments Excluding All Income from

Year Per Share Investments

1967 $ 41 $ 1.09

1977 372 12.44

1987 3,910 108.14

199738,043 717.82

Pundits who ignore what our 38,000 employees contribute to the
company, and instead simply view Berkshire as a de facto investment
company, should study the figures in the second column. We made our
first business acquisition in 1967, and since then our pre-tax operating
earnings have grown from $1 million to $888 million. Furthermore, as
noted, in this exercise we have assigned all of Berkshire's corporate
expenses -- overhead of $6.6 million, interest of $66.9 million and
shareholder contributions of $15.4 million -- to our business
operations, even though a portion of these could just as well have been
assigned to the investment side.

对于那些无视于我们38,000名辛勤奉献员工的存在，而武断地将Berkshire当
做是一家投资公司的乡野匹夫，应该要请他们看看第二栏的数字，打从1967年
我们进行第一次的并购开始，本公司的税前营业盈余已从当时的100万美元成
长到现在的8.88亿美元，这还是吸收了Berkshire全部的开销，包含660万
美元的企业营运费用、6,690万美元的利息支出与1,540万美元的股东指定捐
赠款后的结余，虽然这其中有一部份是与投资活动相关的支出。

Here are the growth rates of the two segments by decade:

下表是这两个部门每十年的成长率︰

Pre-tax Earnings Per Share

Investments Excluding All Income from

Decade Ending Per Share Investments

1977 24.6% 27.6%

1987 26.5% 24.1%

1997 25.5% 20.8%

Annual Growth

Rate, 1967-1997 25.6% 24.2%

During 1997, both parts of our business grew at a satisfactory rate,
with investments increasing by $9,543 per share, or 33.5%, and
operating earnings growing by $296.43 per share, or 70.3%. One
important caveat: Because we were lucky in our super-cat insurance
business (to be discussed later) and because GEICO's underwriting gain
was well above what we can expect in most years, our 1997 operating
earnings were much better than we anticipated and also more than we
expect for 1998.

回顾1997年Berkshire两个部份都缴出漂亮的成绩单，每股投资金额增加了
9,543美元，约33.5%；而每股营业盈余则增加了296.43美元，约70.3%，
当然其中有一个很重要的关键，那就是我们的霹雳猫保险业务(后面还会在详加
说明)的运气不错，同时GEICO保险的表现甚至优于以往，这使得1997年的营
业表现超乎当初的预期，甚至超过未来1998年可能的表现。

Our rate of progress in both investments and operations is certain
to fall in the future. For anyone deploying capital, nothing recedes like
success. My own history makes the point: Back in 1951, when I was
attending Ben Graham's class at Columbia, an idea giving me a $10,000
gain improved my investment performance for the year by a full 100
percentage points. Today, an idea producing a $500 million pre-tax
profit for Berkshire adds one percentage point to our performance. It's
no wonder that my annual results in the 1950s were better by nearly
thirty percentage points than my annual gains in any subsequent
decade. Charlie's experience was similar. We weren't smarter then, just
smaller. At our present size, any performance superiority we achieve
will be minor.

我相信未来不管是投资或营业盈余的成长速度一定会向下滑落，对于任何负责资
金运用的人而言，成功必然导致衰退，就拿我个人的投资历史来说，回想当初我
在1951年进入哥伦大学拜在葛拉汉名下时，只要抓住能够赚到1万美元的投
资机会就能让我的投资绩效超过百分之百，不过时至今日，一笔能赚5亿美元
的成功投资个案，也不过只能让Berkshire增加区区一个百分点的投资绩效，也
难怪个人在1950年代早期的投资绩效会比接下来几十年的年度绩效差距达30
个百分点以上，而查理本身的经历也很相似，不是我们变笨了，而是因为我们目
前的规模实在是太大了，现在任何一项重大进展都会因为规模庞大的关系而显得
微不足道。

We will be helped, however, by the fact that the businesses to
which we have already allocated capital -- both operating subsidiaries
and companies in which we are passive investors -- have splendid
long-term prospects. We are also blessed with a managerial corps that
is unsurpassed in ability and focus. Most of these executives are wealthy
and do not need the pay they receive from Berkshire to maintain their
way of life. They are motivated by the joy of accomplishment, not by
fame or fortune.

当然只要我们投资的子公司以及股票具有远景，我们绝对能够因此受益，同时也
要感谢旗下这群卓越的能力与专注力的经营管理团队，大家要知道这些经理人本
身大多都已经很有钱了，根本就不需要靠Berkshire这份薪水过活，他们不为
名，也不为利，纯粹是冲着那份成就感。

Though we are delighted with what we own, we are not pleased
with our prospects for committing incoming funds. Prices are high for
both businesses and stocks. That does not mean that the prices of
either will fall -- we have absolutely no view on that matter -- but it
does mean that we get relatively little in prospective earnings when we
commit fresh money.

虽然对于现有的投资部位感到相当满意，但是我们也对于陆续进来的资金找不到
理想的去路而感到忧心，目前不管是整家公司或是单一股票的市场价格都过高，
但我并不是要预言股价将会下跌，我们从来就不对股市发表任何看法，这样说的
意思只是要提醒大家未来新投入资金的预期报酬将会大大减少。

Under these circumstances, we try to exert a Ted Williams kind of
discipline. In his book The Science of Hitting, Ted explains that he
carved the strike zone into 77 cells, each the size of a baseball.
Swinging only at balls in his "best" cell, he knew, would allow him to
bat .400; reaching for balls in his "worst" spot, the low outside corner of
the strike zone, would reduce him to .230. In other words, waiting for
the fat pitch would mean a trip to the Hall of Fame; swinging
indiscriminately would mean a ticket to the minors.

在这种情况下，我们试着学习职棒传奇明星Ted Williams的作法，在他的"打击
的科学"一书中解释到，他把打击区域划分为77个框框，每个框框就约当一个
棒球的大小，只有当球进入最理想的框框时，他才挥棒打击，因为他深深知道只
有这样做，他才能维持四成的超高打击率，反之要是勉强去挥击较差的框框，将
会使得他的打击率骤降到二成三以下，换句话说，只有耐心等待超甜的好球，才
是通往名人堂的大道，好坏球照单全收的人，迟早会面临被降到小联盟的命运。

If they are in the strike zone at all, the business "pitches" we now
see are just catching the lower outside corner. If we swing, we will be
locked into low returns. But if we let all of today's balls go by, there can
be no assurance that the next ones we see will be more to our liking.
Perhaps the attractive prices of the past were the aberrations, not the
full prices of today. Unlike Ted, we can't be called out if we resist three
pitches that are barely in the strike zone; nevertheless, just standing
there, day after day, with my bat on my shoulder is not my idea of fun.

目前迎面朝我们而来的"投"资机会大多只在好球带边缘，如果我们选择挥棒，则
得到的成绩可能会不太理想，但要是我们选择放弃不打，则没有人敢跟你保证下
一球会更好，或许过去那种吸引人的超低价格已不复存在，所幸我们不必像Ted
Williams一样，可能因为连续三次不挥棒而遭三振出局，只是光是扛着棒子站
在那里，日复一日，也不是一件令人感到愉快的事。

Unconventional Commitments
非常态性投资

When we can't find our favorite commitment -- a well-run and
sensibly-priced business with fine economics -- we usually opt to put
new money into very short-term instruments of the highest quality.
Sometimes, however, we venture elsewhere. Obviously we believe that
the alternative commitments we make are more likely to result in profit
than loss. But we also realize that they do not offer the certainty of profit
that exists in a wonderful business secured at an attractive price.
Finding that kind of opportunity, we know that we are going to make
money -- the only question being when. With alternative investments,
we think that we are going to make money. But we also recognize that
we will sometimes realize losses, occasionally of substantial size.

有时我们的资金不一定能够找到最理想的去处-也就是经营良好、价码合理的企
业，这时我们就会将资金投入到一些期间较短但品质不错的投资工具上，虽然我
们很明白这样的做法可能无法像我们买进好公司那样稳健的获利，甚至在少数的
状况下有可能赔大钱，不过总得来说我们相信赚钱的机率还是远高于赔钱，唯一
的关键在于其获利何时能够实现。

We had three non-traditional positions at yearend. The first was
derivative contracts for 14.0 million barrels of oil, that being what was
then left of a 45.7 million barrel position we established in 1994-95.
Contracts for 31.7 million barrels were settled in 1995-97, and these
supplied us with a pre-tax gain of about $61.9 million. Our remaining
contracts expire during 1998 and 1999. In these, we had an unrealized
gain of $11.6 million at yearend. Accounting rules require that
commodity positions be carried at market value. Therefore, both our
annual and quarterly financial statements reflect any unrealized gain or
loss in these contracts. When we established our contracts, oil for future
delivery seemed modestly underpriced. Today, though, we have no
opinion as to its attractiveness.

截至年底，我们总共有三项异于往常的投资，首先是1,400万桶的原油期货合
约，这是我们在1994-1995年间所建立4,570万桶原油的剩余部位，预计在
1998-1999年陆续到期，目前未实现获利约有1,160万美元，而已经结仓的
3,170万桶原油合约总共贡献我们6,190万美元的获利，会计原则规定期货合
约必须依市场价格评价，因此这些合约所有未实现的损益皆已反应在我们年度或
每季的财务报表上，当初我们之所以会建立这些部位，主要考量当时的石油期货
价位有些低估，至于现在的市场状况我们则没有任何意见。

Our second non-traditional commitment is in silver. Last year, we
purchased 111.2 million ounces. Marked to market, that position
produced a pre-tax gain of $97.4 million for us in 1997. In a way, this is
a return to the past for me: Thirty years ago, I bought silver because I
anticipated its demonetization by the U.S. Government. Ever since, I
have followed the metal's fundamentals but not owned it. In recent
years, bullion inventories have fallen materially, and last summer
Charlie and I concluded that a higher price would be needed to establish
equilibrium between supply and demand. Inflation expectations, it
should be noted, play no part in our calculation of silver's value.

至于第二项则是白银，去年我们一口气买进总共1.112亿盎斯的白银，以目前
的市价计算，总共贡献1997年9,740万美元的税前利益，某个角度来说，这
彷佛又让我回到过去，记得在三十年前，我因为预期美国政府货币将自由化而买
进白银，自此之后，我便一直追踪贵金属的基本面，只是并没有其它的买进动作，
直到最近这几年，银条的存货突然大幅下滑，查理跟我得到一个结论，那就是白
银的价格应该要稍微向上调整以维持供给与需求的平衡，至于一般人较注意的通
膨预期则不在我们计算价值的范围之内。

Finally, our largest non-traditional position at yearend was $4.6
billion, at amortized cost, of long-term zero-coupon obligations of the
U.S. Treasury. These securities pay no interest. Instead, they provide
their holders a return by way of the discount at which they are
purchased, a characteristic that makes their market prices move rapidly
when interest rates change. If rates rise, you lose heavily with zeros, and
if rates fall, you make outsized gains. Since rates fell in 1997, we ended
the year with an unrealized pre-tax gain of $598.8 million in our zeros.
Because we carry the securities at market value, that gain is reflected in
yearend book value.

最后一项是46亿美元以账面摊销长期的美国零息债券，这些债券不支付利息，
相反的是以透过折价发行的方式回馈给债券持有人，也因此这类债券的价格会因
市场利率变动而大幅波动，如果利率上升，持有零息债券的人可能损失惨重，反
之若利率下跌，投资人就可能因此大赚一笔，而因为1997年的利率大幅下滑，
所以光是1997年我们的未实现利益就高达5.98亿美元，这些利益已全数反应
在公司年底的帐上。

In purchasing zeros, rather than staying with cash-equivalents, we
risk looking very foolish: A macro-based commitment such as this
never has anything close to a 100% probability of being successful.
However, you pay Charlie and me to use our best judgment -- not to
avoid embarrassment -- and we will occasionally make an
unconventional move when we believe the odds favor it. Try to think
kindly of us when we blow one. Along with President Clinton, we will be
feeling your pain: The Munger family has more than 90% of its net worth
in Berkshire and the Buffetts more than 99%.

当然不把现金好好的摆着而拿去投资零息债券不是没有风险的，这种基于总体经
济分析的投资绝对不敢保证百分之百能够成功，不过查理跟我绝对会运用我们最
佳的判断能力，大家可不是请我们来闲闲没事干，当我们认为胜算颇大时，我们
就会大胆地去做一些异于往常的举动，当然万一不小心突锤时，还请大家多多包
含，就如同柯林顿总统一样，我们绝对与各位感同身受，因为曼格家族有90%
的资产系于Berkshire，而巴菲特家族更高达99%。

How We Think About Market Fluctuations
我们对于股市波动的看法

A short quiz: If you plan to eat hamburgers throughout your life
and are not a cattle producer, should you wish for higher or lower prices
for beef? Likewise, if you are going to buy a car from time to time but are
not an auto manufacturer, should you prefer higher or lower car prices?
These questions, of course, answer themselves.

一则小谜语︰如果你打算一辈子吃汉堡维生，自己又没有养牛，那么你是希望牛
肉价格上涨或是下跌呢? 同样的要是你三不五时会换车，自己又不是卖车的，你
会希望车子的价格上涨或是下跌呢? 这些问题的答案很显然显而易见。

But now for the final exam: If you expect to be a net saver during
the next five years, should you hope for a higher or lower stock market
during that period? Many investors get this one wrong. Even though
they are going to be net buyers of stocks for many years to come, they
are elated when stock prices rise and depressed when they fall. In effect,
they rejoice because prices have risen for the "hamburgers" they will
soon be buying. This reaction makes no sense. Only those who will be
sellers of equities in the near future should be happy at seeing stocks
rise. Prospective purchasers should much prefer sinking prices.

最后我再问各位一个问题︰假设你预估未来五年内可以存一笔钱，那么你希望这
期间的股票市场是涨还是跌? 这时许多投资人对于这个问题的答案就可能是错
的，虽然他们在未来的期间内会陆续买进股票，不过当股价涨时他们会感到高
兴，股价跌时反而觉得沮丧，这种感觉不等于是当你去买汉堡吃时，看到汉堡涨
价却欣喜若狂，这样的反应实在是没有什么道理，只有在短期间准备卖股票的人
才应该感到高兴，准备买股票的人应该期待的是股价的下滑。

For shareholders of Berkshire who do not expect to sell, the choice
is even clearer. To begin with, our owners are automatically saving even
if they spend every dime they personally earn: Berkshire "saves" for
them by retaining all earnings, thereafter using these savings to
purchase businesses and securities. Clearly, the more cheaply we make
these buys, the more profitable our owners' indirect savings program
will be.

对于不准备卖股票的Berkshire股东来说，这样的选择再明显也不过了，首先就
算他们将赚来的每一分钱都花掉，Berkshire也会自动帮他们存钱，因为
Berkshire会透过将所赚得的盈余再投资其它事业与股票，所以只要我们买进这
些投资标的的成本越低，他们将来间接所获得的报酬自然而然就越高。

Furthermore, through Berkshire you own major positions in
companies that consistently repurchase their shares. The benefits that
these programs supply us grow as prices fall: When stock prices are low,
the funds that an investee spends on repurchases increase our
ownership of that company by a greater amount than is the case when
prices are higher. For example, the repurchases that Coca-Cola, The
Washington Post and Wells Fargo made in past years at very low prices
benefitted Berkshire far more than do today's repurchases, made at
loftier prices.

此外，Berkshire许多重要的投资部位都持续不断地买回自家公司的股份，在这
种情况下，股票价格越低对我们越有利，因为这代表同样的一笔钱可以买进更多
的股份，从而间接提高我们持股的比例，举例来说，过去几年可口可乐、华盛顿
邮报与富国银行皆以非常低的价格大量买回自家股票，其所带来的效益要比在现
在的高价再进行要来得有利的多。

At the end of every year, about 97% of Berkshire's shares are held
by the same investors who owned them at the start of the year. That
makes them savers. They should therefore rejoice when markets decline
and allow both us and our investees to deploy funds more advantageously.

每年度结束，大约有97%的Berkshire股东会选择继续持有本公司的股份，这
些人都是储蓄爱好者，所以每当股市下跌时，他们都会感到高兴，因为这代表我
们以及被投资公司的资金可以作更好的运用。

So smile when you read a headline that says "Investors lose as
market falls." Edit it in your mind to "Disinvestors lose as market falls -
- but investors gain." Though writers often forget this truism, there is a
buyer for every seller and what hurts one necessarily helps the other.
(As they say in golf matches: "Every putt makes someone happy.")

所以下次当你看到"股市爆跌-投资人损失不贷"的新闻头条时，就知道应该要改
成"股市爆跌-不投资的人损失不贷而投资的人赚翻了"，虽然记者常常忘记这样
的真理，不过只要有卖方就代表会有买方，一方损失就代表有另一方会得利，就
像是高尔夫球场上常讲的，每当一个柏忌出现时，就会有人在旁边暗爽。

We gained enormously from the low prices placed on many equities
and businesses in the 1970s and 1980s. Markets that then were hostile
to investment transients were friendly to those taking up permanent
residence. In recent years, the actions we took in those decades have
been validated, but we have found few new opportunities. In its role as a
corporate "saver," Berkshire continually looks for ways to sensibly
deploy capital, but it may be some time before we find opportunities
that get us truly excited.

当初我们靠着在1970与1980年代股价低迷时所做的一些投资，确实让我们赚
了不少，这是一个对股市短暂过客不利却对股市长期住户有利的市场，近几年
来，我们在那个年代所做的一些投资决策陆续获得了验证，不过现在我们却找不
到类似的机会，身为企业资金的积蓄者，Berkshire致力于寻找资金合理运用的
方法，不过以现在的状况来看，我们可能还需要一段时间才能再找到真正让我们
感到兴奋的投资机会。

Insurance Operations -- Overview
保险事业营运-总检讨

What does excite us, however, is our insurance business. GEICO is
flying, and we expect that it will continue to do so. Before we expound
on that, though, let's discuss "float" and how to measure its cost. Unless
you understand this subject, it will be impossible for you to make an
informed judgment about Berkshire's intrinsic value.

真正令我们感到兴奋的是保险事业的营运，GEICO正处于爆炸性的成长阶段，
而且这种情况预期还会继续维持下去，在进一步说明之前，让我们先解释一下何
谓浮存金，以及如何来衡量它的取得成本，因为除非你对于这个课题有所了解，
否则你根本就不可能有办法对Berkshire实际的价值做合理的判断。

To begin with, float is money we hold but don't own. In an
insurance operation, float arises because premiums are received before
losses are paid, an interval that sometimes extends over many years.
During that time, the insurer invests the money. Typically, this pleasant
activity carries with it a downside: The premiums that an insurer takes in
usually do not cover the losses and expenses it eventually must pay.
That leaves it running an "underwriting loss," which is the cost of float.
An insurance business has value if its cost of float over time is less than
the cost the company would otherwise incur to obtain funds. But the
business is a lemon if its cost of float is higher than market rates for
money.

首先浮存金是一项我们持有但不属于我们的资金，在保险公司的营运中，浮存金
的产生原因在于保险公司在真正支付损失理赔之前，一般会先向保户收取保费，
在这期间保险公司会将资金运用在其它投资之上，当然这样的好处也必须要付出
代价，通常保险业者收取的保费并不足以因应最后支付出去的相关损失与费用，
于是保险公司便会发生承保损失，这就是浮存金的成本，而当一家公司取得浮存
金成本，就长期而言低于从其它管道取得资金的成本时，它就有存在的价值，否
则一旦保险事业取得浮存金的成本若远高于货币市场利率时，它就像是一颗酸柠
檬。

A caution is appropriate here: Because loss costs must be
estimated, insurers have enormous latitude in figuring their
underwriting results, and that makes it very difficult for investors to
calculate a company's true cost of float. Estimating errors, usually
innocent but sometimes not, can be huge. The consequences of these
miscalculations flow directly into earnings. An experienced observer
can usually detect large-scale errors in reserving, but the general public
can typically do no more than accept what's presented, and at times I
have been amazed by the numbers that big-name auditors have
implicitly blessed. As for Berkshire, Charlie and I attempt to be
conservative in presenting its underwriting results to you, because we
have found that virtually all surprises in insurance are unpleasant ones.

有一点必须特别注意的是，因为损失成本必须仰赖估算，所以保险业者对于承保
结算的成绩有相当大伸缩的空间，连带使得投资人很难正确地衡量一家保险公司
真正的浮存金成本，估计错误，通常是无心，但有时却是故意，与真实的结果往
往会有很大的差距，而这种结果直接反映在公司的损益表上，有经验的行家通常
可以经由公司的准备提列情形发现重大的错误，但对于一般投资大众来说，除了
被迫接受财务报表的数字之外，别无他法，而我个人常常被这些经过各大会计师
事务所背书的财务报告所吓到，至于就Berkshire本身而言，查理跟我在编列财
务报表时，都尽量采取最保守的做法，因为就我们个人的经验而言，保险业所发
生的意外，通常都不是什么好消息。

As the numbers in the following table show, Berkshire's insurance
business has been a huge winner. For the table, we have calculated our
float -- which we generate in large amounts relative to our premium
volume -- by adding net loss reserves, loss adjustment reserves, funds
held under reinsurance assumed and unearned premium reserves, and
then subtracting agents' balances, prepaid acquisition costs, prepaid
taxes and deferred charges applicable to assumed reinsurance. Our cost
of float is determined by our underwriting loss or profit. In those years
when we have had an underwriting profit, such as the last five, our cost
of float has been negative. In effect, we have been paid for holding
money.

不过如同下表中的数字所显示的，Berkshire的保险事业可说是大获全胜，表中
的浮存金，系将所有的损失准备、损失费用调整准备与未赚取保费加总后，再扣
除应付佣金、预付购并成本及相关再保递延费用，相对于我们的保费收入总额，
我们的浮存金部位算是相当大的，至于浮存金的成本则决定于所发生的承保损失
或利益而定，在某些年度，就像是最近五年，由于我们有承保利益，所以换句话
说，我们的资金成本甚至是负的，光是持有这些资金我们就已经开始让我们赚钱
了。

(1) (2) Yearend Yield

Underwriting Approximate on Long-Term

Loss Average Float Cost of Funds Govt. Bonds

(In $ Millions) (Ratio of 1 to 2)

1967 profit 17.3 less than zero 5.50%

1968 profit 19.9 less than zero 5.90%

1969 profit 23.4 less than zero 6.79%

1970 0.37 32.4 1.14% 6.25%

1971 profit 52.5 less than zero 5.81%

1972 profit 69.5 less than zero 5.82%

1973 profit 73.3 less than zero 7.27%

1974 7.36 79.1 9.30% 8.13%

1975 11.35 87.6 12.96% 8.03%

1976 profit 102.6 less than zero 7.30%

1977 profit 139.0 less than zero 7.97%

1978 profit 190.4 less than zero 8.93%

1979 profit 227.3 less than zero10.08%

1980 profit 237.0 less than zero11.94%

1981 profit 228.4 less than zero13.61%

1982 21.56 220.6 9.77%10.64%

1983 33.87 231.3 14.64%11.84%

1984 48.06 253.2 18.98%11.58%

1985 44.23 390.2 11.34% 9.34%

1986 55.84 797.5 7.00% 7.60%

1987 55.43 1,266.7 4.38% 8.95%

1988 11.08 1,497.7 0.74% 9.00%

1989 24.40 1,541.3 1.58% 7.97%

1990 26.65 1,637.3 1.63% 8.24%

1991 119.59 1,895.0 6.31% 7.40%

1992 108.96 2,290.4 4.76% 7.39%

1993 profit2,624.7 less than zero 6.35%

1994 profit3,056.6 less than zero 7.88%

1995 profit3,607.2 less than zero 5.95%

1996 profit6,702.0 less than zero 6.64%

1997 profit7,093.1 less than zero 5.92%

Since 1967, when we entered the insurance business, our float has
grown at an annual compounded rate of 21.7%. Better yet, it has cost us
nothing, and in fact has made us money. Therein lies an accounting
irony: Though our float is shown on our balance sheet as a liability, it
has had a value to Berkshire greater than an equal amount of net worth
would have had.

自从1967年我们进军保险业以来，我们的浮存金每年就以21.7%复合成长率
增加，更棒的是，这些资金完全不用成本，事实上它还能帮我们赚钱，可惜讽刺
的是，就会计原则而言，浮存金在会计报表系属于负债，但实际上，这些负债对
于Berkshire而言，其价值远高于列在帐上的其它股东权益。

The expiration of several large contracts will cause our float to
decline during the first quarter of 1998, but we expect it to grow
substantially over the long term. We also believe that our cost of float
will continue to be highly favorable.

虽然在1998第一季几项重大合约到期后，我们拥有的浮存金会略微减少，但就
长期而言，我们还是预期浮存金会大幅成长，同时我们也相信取得浮存金的成本
仍然会继续维持这种令人满意的态势。

Super-Cat Insurance
巨灾保险

Occasionally, however, the cost of our float will spike severely. That
will occur because of our heavy involvement in the super-cat business,
which by its nature is the most volatile of all insurance lines. In this
operation, we sell policies that insurance and reinsurance companies
purchase in order to limit their losses when mega-catastrophes strike.
Berkshire is the preferred market for sophisticated buyers: When the
"big one" hits, the financial strength of super-cat writers will be tested,
and Berkshire has no peer in this respect.

然而有时候我们浮存金的成本也会突然大幅上扬，主要的原因在于我们从事的巨
灾保险业务，本身属于保险业中变动最大的一种险种，从事这类业务，我们将保
单卖给其它保险公司与再保公司以分散其面临超大型意外灾害所可能承担的风
险，事实上，Berkshire是有经验的业者最喜爱往来的对象，因为他们深深知道
当有"大事"真正发生时，所有巨灾保险的承保业者都会面临财务实力的严峻挑
战，而Berkshire无疑的是同业之最。

Since truly major catastrophes are rare occurrences, our super-cat
business can be expected to show large profits in most years -- and to
record a huge loss occasionally. In other words, the attractiveness of our
super-cat business will take a great many years to measure. What you
must understand, however, is that a truly terrible year in the super-cat
business is not a possibility -- it's a certainty. The only question is when
it will come.

而由于真正重大的灾害并不是每年都发生，所以我们的巨灾业务极有可能在连续
几年赚大钱后，突然又发生重大的损失，换句话说，我们这项巨灾保险业务到底
有多吸引人可能要花上好几年才有办法看得清，不过大家必须明了，所谓的重大
损失的年头不是可能会发生，而是肯定会发生，唯一的问题是它什么时候会降
临。

Last year, we were very lucky in our super-cat operation. The world
suffered no catastrophes that caused huge amounts of insured damage,
so virtually all premiums that we received dropped to the bottom line.
This pleasant result has a dark side, however. Many investors who are
"innocents" -- meaning that they rely on representations of salespeople
rather than on underwriting knowledge of their own -- have come into
the reinsurance business by means of purchasing pieces of paper that
are called "catastrophe bonds." The second word in this term, though, is
an Orwellian misnomer: A true bond obliges the issuer to pay; these
bonds, in effect, are contracts that lay a provisional promise to pay on
the purchaser.

去年我们在巨灾业务的表现还算不错，全世界一整年到头都没有发生足以造成重
大损失的大型灾害，也就是说基本上一整年收到的所有保费都自动落到我们的口
袋里，只是事情并不如想象中完美，有许多不知情的投资人，并非基于本身对于
保险承保的认识而是在业务人员的怂恿推销之下，进场买进一种叫做"巨灾债券"
的有价证券，事实上这根本就是一个错误的名词，真正的债券意指到期后发行人
有义务支付债款，然而这种债券，本质上其实是一种给予买方一种附条件承诺限
制的合约。

This convoluted arrangement came into being because the
promoters of the contracts wished to circumvent laws that prohibit the
writing of insurance by entities that haven't been licensed by the state. A
side benefit for the promoters is that calling the insurance contract a
"bond" may also cause unsophisticated buyers to assume that these
instruments involve far less risk than is actually the case.

这种拐弯抹角的做法主要是推销业者为了要规避政府禁止非保险业从事相关业
务而衍生出来的商品，而业者之所以将它取名叫做债券的原因在于这样的做法可
以吸引不知情的投资人，承担远比其表面上还高的许多的风险。

Truly outsized risks will exist in these contracts if they are not
properly priced. A pernicious aspect of catastrophe insurance, however,
makes it likely that mispricing, even of a severe variety, will not be
discovered for a very long time. Consider, for example, the odds of
throwing a 12 with a pair of dice -- 1 out of 36. Now assume that the
dice will be thrown once a year; that you, the "bond-buyer," agree to pay
$50 million if a 12 appears; and that for "insuring" this risk you take in
an annual "premium" of $1 million. That would mean you had
significantly underpriced the risk. Nevertheless, you could go along for
years thinking you were making money -- indeed, easy money. There is
actually a 75.4% probability that you would go for a decade without
paying out a dime. Eventually, however, you would go broke.

这些商品若未经过仔细的核算价格的话，很可能会形成极高的风险，更严重的是
灾害保险通常还有一种特色，那就是问题要经过许久之后才会慢慢地浮现，举个
例来说明，二颗骰子要掷出十二点的机率约为36分之一，现在假设我们一年只
掷一次，每次可以收取100万的赌注，但一旦掷出十二点时庄家的你必须支付
五千万美元，或许刚开始你会以为这100万美元得来全不费工夫，甚至有75.4%
的机率保证你在前十年都不必付出一毛钱，但最后你会发现就长期而言，接受这
样的赌注对庄家来说实际上是亏大了，甚至有可能让你倾家荡产。

In this dice example, the odds are easy to figure. Calculations
involving monster hurricanes and earthquakes are necessarily much
fuzzier, and the best we can do at Berkshire is to estimate a range of
probabilities for such events. The lack of precise data, coupled with the
rarity of such catastrophes, plays into the hands of promoters, who
typically employ an "expert" to advise the potential bond-buyer about
the probability of losses. The expert puts no money on the table.
Instead, he receives an up-front payment that is forever his no matter
how inaccurate his predictions. Surprise: When the stakes are high, an
expert can invariably be found who will affirm -- to return to our
example -- that the chance of rolling a 12 is not 1 in 36, but more like 1
in 100. (In fairness, we should add that the expert will probably believe
that his odds are correct, a fact that makes him less reprehensible --
but more dangerous.)

在玩这种骰子游戏时，其机率还很容易计算，但是要说到估算大型飓风与地震的
发生机率的难度就高的多了，我们自认能做的最多只有大约估计一个范围，然而
缺乏详细的信息，加上大型的灾害本来就很少发生，正好让一些有心人士有机可
乘，通常他们会雇用一些"专家"对有意投资这类债券的客户解说发生损失的可能
性，而这些所谓的专家玩得根本就是一种无本生意，因为不论他估算的到底准不
准，事先都可以拿到一笔订金，更令人讶异的是，回到前面的主题，你会发现无
论赌注有多高，专家永远会告诉你掷出12点的机率不是36分之一，而是100
分之一，(平心而论，我们必须强调这些专家可能真的认为自己的看法是对的，
这虽然让人不忍予以苛责但却更加凸显他们的危险性)。

The influx of "investor" money into catastrophe bonds -- which
may well live up to their name -- has caused super-cat prices to
deteriorate materially. Therefore, we will write less business in 1998. We
have some large multi-year contracts in force, however, that will
mitigate the drop. The largest of these are two policies that we
described in last year's report -- one covering hurricanes in Florida and
the other, signed with the California Earthquake Authority, covering
earthquakes in that state. Our "worst-case" loss remains about $600
million after-tax, the maximum we could lose under the CEA policy.
Though this loss potential may sound large, it is only about 1% of
Berkshire's market value. Indeed, if we could get appropriate prices, we
would be willing to significantly increase our "worst-case" exposure.

越来越多的资金涌入投资这类巨灾债券，使得巨灾的投保费率大幅下滑，其结果
可能真如其名，终将导致巨大的灾害，为此我们大幅减少1998年在这方面的业
务量，还好我们先前已签了好几件长期的合约使得冲击相对减小，其中最大的两
件在去年的年报中已向各位报告过，一件是佛罗里达的飓风险，另一个是与加州
地震局CEA签订的加州地震险，在最坏的状况下，我们必须承受的损失是税后
六亿美元，这也是CEA保单规定的上限，虽然这个数字看起来很大，但占
Berkshire市值的比例也不过只有1%，当然我必须再强调的是，只要保费合理，
我们很愿意大幅提高最坏状况的风险上限。

Our super-cat business was developed from scratch by Ajit Jain,
who has contributed to Berkshire's success in a variety of other ways as
well. Ajit possesses both the discipline to walk away from business that
is inadequately priced and the imagination to then find other
opportunities. Quite simply, he is one of Berkshire's major assets. Ajit
would have been a star in whatever career he chose; fortunately for us,
he enjoys insurance.

Berkshire的巨灾保险业务在Ajit Jain的努力下，从无到有，对Berkshire可谓
贡献良多，Ajit一方面有拒绝订价不合理保单的勇气，一方面又发挥创造力，开
创新的业务，他可以称得上是Berkshire最珍贵的资产之一，我觉得他不论从事
什么行业都可以成为那一行的明星，还好他对于保险业还算是相当有兴趣。

Insurance -- GEICO (1-800-555-2756) and Other Primary Operations
保险-盖可及其它主要保险事业

Last year I wrote about GEICO's Tony Nicely and his terrific
management skills. If I had known then what he had in store for us in
1997, I would have searched for still greater superlatives. Tony, now 54,
has been with GEICO for 36 years and last year was his best. As CEO, he
has transmitted vision, energy and enthusiasm to all members of the
GEICO family -- raising their sights from what has been achieved to
what can be achieved.

去年我提到盖可的Tony Nicely以及他优异的管理技能，不过我要是早知道他
在1997年的表现，我可能会试着去用更好的形容词，现年54岁的Tony在盖
可服务已有36年之久，在去年更达到个人事业的巅峰，身为公司的总裁，他的
识见、能量与热情感染到公司上上下下的每一个人，激励他们不断地超越巅峰。

We measure GEICO's performance by first, the net increase in its
voluntary auto policies (that is, not including policies assigned us by the
state) and, second, the profitability of "seasoned" auto business,
meaning policies that have been with us for more than a year and are
thus past the period in which acquisition costs cause them to be
money-losers. In 1996, in-force business grew 10%, and I told you how
pleased I was, since that rate was well above anything we had seen in
two decades. Then, in 1997, growth jumped to 16%.

我们运用好几种方法来衡量盖可的表现，首先是自愿加入汽车保单数量的净增加
数(也就是不包含州政府分配给我们的保单数)，第二长期汽车保单业务的获利状
况，系指那些持续一年以上，已经过了初次取得成本而开始赚钱的保单，1996
年有效保单的数量成长了10%，当时我曾告诉大家这是相当令人兴奋的一件事，
因为这是20年来的新高，不过到了1997年，保单数量的成长率又大幅跃升为
16%!

Below are the new business and in-force figures for the last five years:
下表是新加入自愿保单以及有效保单数量的统计:

New Voluntary Voluntary Auto

Years Auto Policies Policies in Force

1993354,882 2,011,055

1994396,217 2,147,549

1995461,608 2,310,037

1996617,669 2,543,699

1997913,176 2,949,439

Of course, any insurer can grow rapidly if it gets careless about
underwriting. GEICO's underwriting profit for the year, though, was
8.1% of premiums, far above its average. Indeed, that percentage was
higher than we wish it to be: Our goal is to pass on most of the benefits
of our low-cost operation to our customers, holding ourselves to about
4% in underwriting profit. With that in mind, we reduced our average
rates a bit during 1997 and may well cut them again this year. Our rate
changes varied, of course, depending on the policyholder and where he
lives; we strive to charge a rate that properly reflects the loss
expectancy of each driver.

当然任何一家保险公司都可以不顾承保品质而快速的成长，然而盖可本年度的承
保获利却是保费收入的8.1%，这数字远优于一般同业水准，确实这数字也远高
于我们本身的预期，我们原先的目标是将低成本营运所贡献的获利回馈给我们的
客户，仅保留4%的获利比例，基于这样的信念，我们将1997年的保险费率再
度略微调降，同时在明年有可能也会采取相同的做法，当然最后的费率还须参酌
保户本身状况以及居住的地区，我们最终还是希望费率的改变可以合理地反映每
位驾驶人发生损失的预期机率。

GEICO is not the only auto insurer obtaining favorable results these
days. Last year, the industry recorded profits that were far better than it
anticipated or can sustain. Intensified competition will soon squeeze
margins very significantly. But this is a development we welcome: Long
term, a tough market helps the low-cost operator, which is what we are
and intend to remain.

盖可并不是近年来唯一取得好成绩汽车保险业者，去年整个产业获得高于原先预
期的获利成果，但这种好光景很难维持下去，因为来自同业激烈的竞争很快地就
会压缩获利的空间，然而面对可能的发展，我们胸有成竹，就长期而言，艰困的
市场环境有利于低成本营运的业者生存，这也是一直以来我们努力维持的竞争优
势。

Last year I told you about the record 16.9% profit-sharing
contribution that GEICO's associates had earned and explained that two
simple variables set the amount: policy growth and profitability of
seasoned business. I further explained that 1996's performance was so
extraordinary that we had to enlarge the chart delineating the possible
payouts. The new configuration didn't make it through 1997: We
enlarged the chart's boundaries again and awarded our 10,500
associates a profit-sharing contribution amounting to 26.9% of their
base compensation, or $71 million. In addition, the same two variables
-- policy growth and profitability of seasoned business -- determined
the cash bonuses that we paid to dozens of top executives, starting with
Tony.

去年我也曾跟各位报告过盖可员工为自己挣得高达16.9%的盈余分红比例，同
时也解释只有两项简单的参数计算出这个比例，那就是保单的成长率与长期业务
的获利状况，我还说由于1996年的表现实在是超乎预期以致于原先预估支付奖
金的图表，因不敷使用而必须加大，不过到了今年新的图表竟然又不够用，为此
我们再度提高上限，总计全公司上上下下的10,500名员工，一共可以领到相当
于底薪的26.9%，总金额高达7,100万美元，当然这两项参数，同时也适用于
包含Tony在内，数十位高阶经理人的奖金红利。

At GEICO, we are paying in a way that makes sense for both our
owners and our managers. We distribute merit badges, not lottery
tickets: In none of Berkshire's subsidiaries do we relate compensation to
our stock price, which our associates cannot affect in any meaningful
way. Instead, we tie bonuses to each unit's business performance, which
is the direct product of the unit's people. When that performance is
terrific -- as it has been at GEICO -- there is nothing Charlie and I enjoy
more than writing a big check.

在盖可，我们支付薪资红利的方式很能够获得劳资双方的认同，我们颁发的是红
利奖章而不是乐透彩券，Berkshire旗下的子公司员工的薪资报酬与母公司的股
价一点关系都没有，因为前者并没有能力直接影响后者，相反地，我们将子公司
的薪资与各单位的各自表现完全绑在一起，因为后者的成败必须由前者负全部的
责任，当某事业单位的表现杰出时，就像盖可去年的情况一样，查理跟我乐于签
发大笔大笔的支票。

GEICO's underwriting profitability will probably fall in 1998, but the
company's growth could accelerate. We're planning to step on the gas:
GEICO's marketing expenditures this year will top $100 million, up 50%
from 1997. Our market share today is only 3%, a level of penetration
that should increase dramatically in the next decade. The auto
insurance industry is huge -- it does about $115 billion of volume
annually -- and there are tens of millions of drivers who would save
substantial money by switching to us.

不过盖可1998年的承保获利很可能会下滑，但是保单数量应该还会继续成长，
我们已准备好加紧油门，盖可保险今年预计的行销费用将突破一亿美元的大关，
这数字比起1997年要增加50%以上，截至目前为止，我们的市场占有率约为
3%，预计在未来的十年内还会大幅增加，整个汽车保险市场的大饼相当可观，
每年约有1,150亿美元的市场胃纳量，预估将有上千万的驾驶人因为将保单转
移到我们这边而节省相当可观的保费。

* * * * * * * * * * * *

In the 1995 report, I described the enormous debt that you and I
owe to Lorimer Davidson. On a Saturday early in 1951, he patiently
explained the ins and outs of both GEICO and its industry to me -- a
20-year-old stranger who'd arrived at GEICO's headquarters uninvited
and unannounced. Davy later became the company's CEO and has
remained my friend and teacher for 47 years. The huge rewards that
GEICO has heaped on Berkshire would not have materialized had it not
been for his generosity and wisdom. Indeed, had I not met Davy, I might
never have grown to understand the whole field of insurance, which
over the years has played such a key part in Berkshire's success.

在1995年的年报中，我曾经提到我们欠Lorimer Davidson一个大人情，因为
要不是当年他很有耐心地跟一个素未谋面却冒冒失失闯入GEICO公司总部的二
十岁小毛头深入浅出地介绍GEICO以及其所属产业种种的话，也不会有今天的
Berkshire跟我本人，Davy后来也成为该公司的总裁，并与我维持长达47年
亦师亦友的情谊，没有他的宽容与智慧，Berkshire也没有办法靠着GEICO的
成功而发扬光大。

Davy turned 95 last year, and it's difficult for him to travel.
Nevertheless, Tony and I hope that we can persuade him to attend our
annual meeting, so that our shareholders can properly thank him for his
important contributions to Berkshire. Wish us luck.

Davy去年已高龄95岁，旅途奔波对他来说是一件很辛苦的事，不过Tony跟
我还是会尽量说服他参与今年的股东会，好让大家能够藉这个机会好好地感谢他
对Berkshire所做的贡献，希望我们能够如愿。

* * * * * * * * * * * *

Though they are, of course, far smaller than GEICO, our other
primary insurance operations turned in results last year that, in
aggregate, were fully as stunning. National Indemnity's traditional
business had an underwriting profit of 32.9% and, as usual, developed a
large amount of float compared to premium volume. Over the last three
years, this segment of our business, run by Don Wurster, has had a
profit of 24.3%. Our homestate operation, managed by Rod Eldred,
recorded an underwriting profit of 14.1% even though it continued to
absorb the expenses of geographical expansion. Rod's three-year
record is an amazing 15.1%. Berkshire's workers' compensation
business, run out of California by Brad Kinstler, had a modest
underwriting loss in a difficult environment; its three-year underwriting
record is a positive 1.5%. John Kizer, at Central States Indemnity, set a
new volume record while generating good underwriting earnings. At
Kansas Bankers Surety, Don Towle more than lived up to the high
expectations we had when we purchased the company in 1996.

当然除了GEICO保险以外，我们其它主要的保险事业，虽然规模较小，但所缴
出来的成绩单总的来说，同样令人激赏，国家产险传统业务的承保获利率高达
32.9%，同时也贡献出相较于保费收入高比例的浮存金，累计过去三年，这个由
Don Wurster领导的部门平均获利率为24.3%，另外在由Rod Eldred 领导的
Homestate业务部份，在必须吸收地区业务扩展的费用下，仍然缴出14.1%的
承保获利，累计最近三年的获利率为15.1%，此外Berkshire的劳工退休金业
务部份，在加州的Brad Kinstler主持下，虽然面临困难的环境，但产生承保损
失的程度相对轻微，平均三年的承保成绩是正的1.5%，还有由John Kizer领导
的Central States保险在保费收入缔造新高的同时，也贡献相当不错的承保获
利，最后是我们在1996年买进的Kansas银行家保险，Don Towle的表现甚
至超过我们当初设立的高标准。

In aggregate, these five operations recorded an underwriting profit
of 15.0%. The two Dons, along with Rod, Brad and John, have created
significant value for Berkshire, and we believe there is more to come.

总计下来，这五家保险子公司平均的承保获利率是15.0%，两位Dons加上
Rod、Brad及John，为Berkshire创造了可观的利益，而且我们也相信后势可
期。

Sources of Reported Earnings
帐列盈余的来源

The table that follows shows the main sources of Berkshire's
reported earnings. In this presentation, purchase-accounting
adjustments are not assigned to the specific businesses to which they
apply, but are instead aggregated and shown separately. This procedure
lets you view the earnings of our businesses as they would have been
reported had we not purchased them. For the reasons discussed on
pages 69 and 70, this form of presentation seems to us to be more
useful to investors and managers than one utilizing generally-accepted
accounting principles (GAAP), which require purchase-premiums to be
charged off business-by-business. The total earnings we show in the
table are, of course, identical to the GAAP total in our audited financial
statements.

下表显示Berkshire帐列盈余的主要来源，在这张表中商誉的摊销数与购买法会
计调整数会从个别被投资公司分离出来，单独加总列示，之所以这样做是为了让
旗下各事业的盈余状况，不因我们的投资而有所影响，过去我一再地强调我们认
为这样的表达方式，较之一般公认会计原则要求以个别企业基础做调整，不管是
对投资者或是管理者来说，更有帮助，当然最后损益加总的数字仍然会与经会计
师查核的数字一致。

(in millions)

Berkshire's Share

of Net Earnings

(after taxes and

Pre-Tax Earnings minority interests)

1997 19961997 1996

Operating Earnings:

Insurance Group:

Underwriting -- Super-Cat. . . . . . . .$ 283.0 $ 167.0 $ 182.7 $ 107.4

Underwriting -- Other Reinsurance. . . . (155.2) (174.8) (100.1) (112.4)

Underwriting -- GEICO. . . . . . . . . . 280.7 171.4 181.1 110.2

Underwriting -- Other Primary. . . . . . 52.9 58.534.1 37.6

Net Investment Income. . . . . . . . . . 882.3 726.2 703.6 593.1

Buffalo News . . . . . . . . . . . . . . . 55.9 50.432.7 29.5

Finance Businesses . . . . . . . . . . . . 28.1 23.118.0 14.9

FlightSafety . . . . . . . . . . . . . . . 139.53.1(1) 84.41.9(1)

Home Furnishings . . . . . . . . . . . . . 56.8(2) 43.832.2(2) 24.8

Jewelry. . . . . . . . . . . . . . . . . . 31.6 27.818.3 16.1

Scott Fetzer(excluding finance operation). 118.9 121.777.3 81.6

See's Candies. . . . . . . . . . . . . . . 58.6 51.935.0 30.8

Shoe Group . . . . . . . . . . . . . . . . 48.8 61.632.2 41.0

Purchase-Accounting Adjustments. . . . . . (104.9) (75.7) (97.0) (70.5)

Interest Expense(3). . . . . . . . . . . . (106.6) (94.3) (67.1) (56.6)

Shareholder-Designated Contributions . . . (15.4) (13.3) (9.9) (8.5)

Other. . . . . . . . . . . . . . . . . . . 60.7 73.037.0 42.2

------- ------- ------- --------

Operating Earnings . . . . . . . . . . . . . 1,715.7 1,221.4 1,194.5 883.1

Capital Gains from Investments . . . . . . . 1,111.9 2,484.5 707.1 1,605.5

------ ------- ------- -------

Total Earnings - All Entities. . . . . . . .$2,827.6 $3,705.9 $1,901.6 $2,488.6

====== ====== ===== =====

　　　　　　(1) From date of acquisition, December 23, 1996.
　 From date of acquisition, December 23, 1996.
　　　　(2) Includes Star Furniture from July 1, 1997.
　y 1, 1997.
　　　　(3) Excludes interest expense of Finance Businesses.

Overall, our operating businesses continue to perform
exceptionally well, far outdoing their industry norms. We are
particularly pleased that profits improved at Helzberg's after a
disappointing 1996. Jeff Comment, Helzberg's CEO, took decisive steps
early in 1997 that enabled the company to gain real momentum by the
crucial Christmas season. In the early part of this year, as well, sales
remained strong.

总的来说，我们旗下的营利事业的表现远优于一般的同业，尤其是Helzberg钻
石在渡过令人失望的1996年之后，获利状况大幅提升，Helzberg公司的总裁
Jeff Comment在1997年初断然地采取各项措施，带领整个公司在重要的圣诞
旺季大有斩获，而截至今年上半年为止，销售状况依旧强劲。

Casual observers may not appreciate just how extraordinary the
performance of many of our businesses has been: If the earnings history
of, say, Buffalo News or Scott Fetzer is compared to the records of their
publicly-owned peers, their performance might seem to have been
unexceptional. But most public companies retain two-thirds or more of
their earnings to fund their corporate growth. In contrast, those
Berkshire subsidiaries have paid 100% of their earnings to us, their
parent company, to fund our growth.

一般的人可能无法体会，我们众多旗下事业的表现到底有多杰出，虽然相较于其
他已上市的同业，水牛城新闻报或是史考特飞兹的获利表现看起来并不突出，不
过大家要了解，大部分的上市公司通常会将三分之二以上的盈余保留不分配以支
应内部的成长，但是Berkshire大部分的子公司却将所赚取的盈余分毫不差的缴
回母公司，是他们贡献的资金促成母公司Berkshire进一步的成长。

In effect, the records of the public companies reflect the cumulative
benefits of the earnings they have retained, while the records of our
operating subsidiaries get no such boost. Over time, however, the
earnings these subsidiaries have distributed have created truly huge
amounts of earning power elsewhere in Berkshire. The News, See's and
Scott Fetzer have alone paid us $1.8 billion, which we have gainfully
employed elsewhere. We owe their managements our gratitude for
much more than the earnings that are detailed in the table.

事实上这些上市公司的盈余对于其获利表现有累积效果，相较之下，我们的子公
司却没有这方面的支助，然而就长期而言，这些子公司上缴的资金对于
Berkshire在其它地方的获利能力却有极大的贡献，总计水牛城新闻、喜斯糖果
与史考特飞兹，这三家公司这几年来贡献的盈余就高达18亿美元，而我们也得
以好好地运用这些资金，所以我们对于这些经理人的感谢绝不仅止于账面上所看
到的那些盈余数字而已。

Additional information about our various businesses is given on
pages 36 - 50, where you will also find our segment earnings reported
on a GAAP basis. In addition, on pages 55 - 61, we have rearranged
Berkshire's financial data into four segments on a non-GAAP basis, a
presentation that corresponds to the way Charlie and I think about the
company. Our intent is to supply you with the financial information that
we would wish you to give us if our positions were reversed.

在年报中你可以找到依照一般公认会计原则编制，详细的部门别信息，另外你还
可以找到经过重编，依照Berkshire四大部门的信息，这是查理跟我能够完整呈
现Berkshire现况的模式，我们的目的是希望能够换个角度设想，提供大家所有
必要的信息。

Look-Through Earnings
完整透视盈余

Reported earnings are a poor measure of economic progress at
Berkshire, in part because the numbers shown in the table presented
earlier include only the dividends we receive from investees -- though
these dividends typically represent only a small fraction of the earnings
attributable to our ownership. Not that we mind this division of money,
since on balance we regard the undistributed earnings of investees as
more valuable to us than the portion paid out. The reason is simple: Our
investees often have the opportunity to reinvest earnings at high rates
of return. So why should we want them paid out?

我们认为帐列盈余很难表现Berkshire实际的营运状况，部份原因在于列示在本
公司帐上的股利收入，事实上仅占被投资公司收益的一小部份，其实我们并不要
求盈余一定要分配，事实上对我们而言，我们更重视未分配的那一部份，因为他
们极可能为我们创造出更高的价值，原因很简单，因为我们的被投资公司往往比
母公司更有机会把资金投入到高投资报酬的用途之上，既然如此又何必一定要强
迫他们把盈余分配回来呢?

To depict something closer to economic reality at Berkshire than
reported earnings, though, we employ the concept of "look-through"
earnings. As we calculate these, they consist of: (1) the operating
earnings reported in the previous section, plus; (2) our share of the
retained operating earnings of major investees that, under GAAP
accounting, are not reflected in our profits, less; (3) an allowance for the
tax that would be paid by Berkshire if these retained earnings of
investees had instead been distributed to us. When tabulating
"operating earnings" here, we exclude purchase-accounting
adjustments as well as capital gains and other major non-recurring
items.

为了要更真实的反应Berkshire实际的经营状况，于是乎我们运用了完整透视盈
余的观念，这个数字总共包含(1)前段所提到的帐列盈余，加上(2)主要被投资公
司的保留盈余，按一般公认会计原则未反应在我们公司帐上的盈余，扣除(3)若
这些未反应的盈余分配给我们时，估计可能要缴的所得税。在这里我们所谓的营
业盈余系已扣除资本利得、特别会计调整与企业其它非常态的项目。

The following table sets forth our 1997 look-through earnings,
though I warn you that the figures can be no more than approximate,
since they are based on a number of judgment calls. (The dividends paid
to us by these investees have been included in the operating earnings
itemized on page 11, mostly under "Insurance Group: Net Investment
Income.")

各位可以从下表看出我们是如何计算出1997年透视盈余的，不过我还是要提醒
各位这些数字只不过是估计数，很多都是基于简单的判断，(被投资公司所分配
的股利收入已经包含在保险事业的净投资收益项下)。

Berkshire's Share

of Undistributed

Berkshire's Approximate Operating Earnings

Berkshire's Major Investees Ownership at Yearend(1) (in millions)(2)

American Express Compa 10.7% $161

The Coca-Cola Company8.1% 216

The Walt Disney Company 3.2% 65

Freddie Mac 8.6% 86

The Gillette Company 8.6% 82

The Washington Post Company16.5% 30

Wells Fargo & Company 7.8% 103

------

Berkshire's share of undistributed earnings of major investees 743

Hypothetical tax on these undistributed investee earnings(3) (105)

Reported operating earnings of Berkshire 1,292

------

Total look-through earnings of Berkshire $1,930

======

　　　　　　(1) Does not include shares allocable to minority interests

　　　　　(2) Calculated on average ownership for the year

　　　　　(3) The tax rate used is 14%, which is the rate Berkshire

pays on the dividends it receives

Acquisitions of 1997
1997年的购并活动

In 1997, we agreed to acquire Star Furniture and International Dairy
Queen (a deal that closed early in 1998). Both businesses fully meet our
criteria: They are understandable; possess excellent economics; and are
run by outstanding people.

1997年我们同意买下星辰家具与国际乳品皇后(后者在1998年初正式敲定)，
两家公司都完全符合我们的标准，产业性质单纯、拥有绝佳的竞争优势且由杰出
的人才所经营。

The Star transaction has an interesting history. Whenever we buy
into an industry whose leading participants aren't known to me, I always
ask our new partners, "Are there any more at home like you?" Upon our
purchase of Nebraska Furniture Mart in 1983, therefore, the Blumkin
family told me about three outstanding furniture retailers in other parts
of the country. At the time, however, none was for sale.

星辰家具的交易有个相当有趣的故事，每当我们跨足一个原本我们不熟悉的产
业，我都会习惯性地问一问新加入的合作伙伴，"除了你们以外，还有没有像你
们一样的企业?"，早在1983年我们买下内布拉斯加家具店时，我就问过B太太
家族这个问题，当时她告诉我全美其它地方还有三家不错的家具零售商可以考
虑，不过很可惜在当时没有任何一家有出售的意愿。

Many years later, Irv Blumkin learned that Bill Child, CEO of R.C.
Willey -- one of the recommended three -- might be interested in
merging, and we promptly made the deal described in the 1995 report.
We have been delighted with that association -- Bill is the perfect
partner. Furthermore, when we asked Bill about industry standouts, he
came up with the remaining two names given me by the Blumkins, one
of these being Star Furniture of Houston. But time went by without there
being any indication that either of the two was available.

多年后，B太太家族的Irv得知当初获得推荐的三家公司之一-R.C. Willey家具
总裁Bill Child有意与人合并，我们立刻把握良机促成交易，这项交易也在1995
年的年报向各位报告过，事后我们也很满意这次的结合，Bill是再理想不过的合
作伙伴，当然我也不忘问问Bill相同的问题，请他推荐其它杰出的同业，结果得
到的答案与B太太所说的一致，其中一家就是位于修士顿的星辰家具，只是随着
时光的流逝没有一家有意愿出售。

On the Thursday before last year's annual meeting, however, Bob
Denham of Salomon told me that Melvyn Wolff, the long-time
controlling shareholder and CEO of Star, wanted to talk. At our
invitation, Melvyn came to the meeting and spent his time in Omaha
confirming his positive feelings about Berkshire. I, meanwhile, looked at
Star's financials, and liked what I saw.

而就在去年年度股东会的前一个星期四，所罗门公司的董事长丹汉告诉我星辰家
具的大股东兼总裁-Melvyn Wolff，有意愿跟我谈谈，于是在我们的邀约下，
Melvyn光临奥玛哈与我们会谈，进一步确认对于Berkshire的正面观感，而在
此同时我也看了星辰家具的财务报表，一切正如我所预期。

A few days later, Melvyn and I met in New York and made a deal in
a single, two-hour session. As was the case with the Blumkins and Bill
Child, I had no need to check leases, work out employment contracts,
etc. I knew I was dealing with a man of integrity and that's what counted.

几天后，Melvyn与我再度在纽约碰面，前后只花了两个钟头的会谈就把整个交
易敲定，而如同先前与B太太家族及Bill Child的经验一样，我不需要再去查核
租约、员工雇用合约等，我知道我正在和一位具有正直人格的人打交道，这样就
足够了。

Though the Wolff family's association with Star dates back to 1924,
the business struggled until Melvyn and his sister Shirley Toomin took
over in 1962. Today Star operates 12 stores -- ten in Houston and one
each in Austin and Bryan -- and will soon move into San Antonio as well.
We won't be surprised if Star is many times its present size a decade
from now.

虽然Wolff家族与星辰家具的关系可以追溯到1924年以前，但是该公司直到
Melvyn跟他姐姐Shirly在1962年接手经营后才有起色，时至今日，星辰总共
有12家分店，其中十家在修士顿、另外两家在奥斯汀与拜伦，还有一家新店即
将在圣安东尼奥开张，我想星辰要是在未来十年内以倍数的方式扩张，我一点都
不会感到意外。

Here's a story illustrating what Melvyn and Shirley are like: When
they told their associates of the sale, they also announced that Star
would make large, special payments to those who had helped them
succeed -- and then defined that group as everyone in the business.
Under the terms of our deal, it was Melvyn and Shirley's money, not
ours, that funded this distribution. Charlie and I love it when we become
partners with people who behave like that.

下面的一则故事充分说明Melvyn与Shirley是怎么样的人︰当星辰家具正式宣
布出售公司时，他们同时也公布将支付一笔大额的红利给所有帮助公司成功的人
士，范围包含公司上上下下所有的员工，而根据交易的合约内容，这笔钱将由
Melvyn与Shirley自掏腰包，查理跟我相当赞赏即将与我们共事的合伙人能有
这样的举动。

The Star transaction closed on July 1. In the months since, we've
watched Star's already-excellent sales and earnings growth accelerate
further. Melvyn and Shirley will be at the annual meeting, and I hope you
get a chance to meet them.

星辰家具的交易案在七月一日正式定案，而在之后的几个月，星辰家具本来已经
表现相当不错的营收又继续大幅成长，Melvyn与Shirley将会出席今年的股东
年会，届时希望大家能够前来与他们见见面。

Next acquisition: International Dairy Queen. There are 5,792 Dairy
Queen stores operating in 23 countries -- all but a handful run by
franchisees -- and in addition IDQ franchises 409 Orange Julius
operations and 43 Karmelkorn operations. In 190 locations, "treat
centers" provide some combination of the three products.

另一个购并案：国际乳品皇后，简称乳品皇后IDQ，总共有5,792个营业据点，
分布在全球的23个国家，除了少数系加盟店外，其余皆为自营，此外还有409
家Orange Julius加盟店与43家Karmelkorn，其中有190个据点同时提供三
种选择。

For many years IDQ had a bumpy history. Then, in 1970, a
Minneapolis group led by John Mooty and Rudy Luther took control. The
new managers inherited a jumble of different franchising agreements,
along with some unwise financing arrangements that had left the
company in a precarious condition. In the years that followed,
management rationalized the operation, extended food service to many
more locations, and, in general, built a strong organization.

早期乳品皇后的命运多舛，在1970年代当时，由来自明尼拿波里斯的John
Mooty与Rudy Luther接手经营，新的经营阶层面对的是由前手遗留下来混乱
的加盟合约以及不合理的融资计划所造成岌岌可危的窘况，所幸在接下来的几年
内，新经营阶层导正这种乱象，并且对外扩张新增了许多营业据点，让公司经营
逐渐步入坦途。

Last summer Mr. Luther died, which meant his estate needed to sell
stock. A year earlier, Dick Kiphart of William Blair & Co., had introduced
me to John Mooty and Mike Sullivan, IDQ's CEO, and I had been
impressed with both men. So, when we got the chance to merge with
IDQ, we offered a proposition patterned on our FlightSafety acquisition,
extending selling shareholders the option of choosing either cash or
Berkshire shares having a slightly lower immediate value. By tilting the
consideration as we did, we encouraged holders to opt for cash, the
type of payment we by far prefer. Even then, only 45% of IDQ shares
elected cash.

去年夏天Luther先生过世，他的股份因而必须对外出售，而在这之前经由
William Blair公司的总裁Dick Kiphart的介绍，使我得以结识John Mooty与
乳品皇后的总裁Mike Sullivan，且这两人让我印象相当深刻，也因此Berkshire
可以趁此机会与乳品皇后合并，而我们也提出与之前购并国际飞安公司时相同的
条件，提供乳品皇后股东换成现金或股票两种不同的选择，其中换成Berkshire
股份的条件略低于现金，主要是因为大家尽量选择换成现金，不过即便如此，总
共也只有45%的股东决定领取现金。

Charlie and I bring a modicum of product expertise to this
transaction: He has been patronizing the Dairy Queens in Cass Lake and
Bemidji, Minnesota, for decades, and I have been a regular in Omaha.
We have put our money where our mouth is.

在这次的交易中，查理跟我稍微发挥了一下对于产品的知识，查理他几十年来固
定光顾位于明尼苏达州凯斯湖与Bemidji的乳品皇后，而我则是奥玛哈地区乳品
皇后的常客，我们等于是"把钱花在嘴巴上"。

A Confession
自我检讨

I've mentioned that we strongly prefer to use cash rather than
Berkshire stock in acquisitions. A study of the record will tell you why: If
you aggregate all of our stock-only mergers (excluding those we did
with two affiliated companies, Diversified Retailing and Blue Chip
Stamps), you will find that our shareholders are slightly worse off than
they would have been had I not done the transactions. Though it hurts
me to say it, when I've issued stock, I've cost you money.

我之所以会一再强调倾向利用现金而非Berkshire股票进行购并的原因在于，记
录显示我们所有利用股票并购的合并案(扣除早期的多元零售与蓝筹邮票两个案
子不算)，大家会发现所得的结果可能比不购并还差，虽然这样子讲对我很伤，
不过我还是必须承认，每当我发行股票，就等于是让股东们亏钱。

Be clear about one thing: This cost has not occurred because we
were misled in any way by sellers or because they thereafter failed to
manage with diligence and skill. On the contrary, the sellers were
completely candid when we were negotiating our deals and have been
energetic and effective ever since.

不过有一点要澄清的是，之所以会如此绝对不是因为我们遭到卖方的误导或是在
被买下后不用心经营，相反的，这些卖方在交易谈判当时皆坦诚布公，同时也很
努力经营事业。

Instead, our problem has been that we own a truly marvelous
collection of businesses, which means that trading away a portion of
them for something new almost never makes sense. When we issue
shares in a merger, we reduce your ownership in all of our businesses
-- partly-owned companies such as Coca-Cola, Gillette and American
Express, and all of our terrific operating companies as well. An example
from sports will illustrate the difficulty we face: For a baseball team,
acquiring a player who can be expected to bat .350 is almost always a
wonderful event -- except when the team must trade a .380 hitter to
make the deal.

主要的问题在于，我们原本就已经拥有的绝佳企业组合，因此不论拿什么新的东
西来换都不划算，也就是说每当我们发行新股用来购并新的企业时，就等于是间
接减少我们原本拥有的绝佳企业的股权比例，不论是只有部份股权的可口可乐、
吉列刮胡刀及美国运通，或者是旗下所有营利事业皆是如此，在运动场上有一个
例子可以充分说明我们所面临的难题，对一只棒球队来说，挖到一位打击率高达
三成五的选手肯定是件令人欣喜的事，除非是你必须被迫用一个打击率高达三成
八的球员去交换。

Because our roster is filled with .380 hitters, we have tried to pay
cash for acquisitions, and here our record has been far better. Starting
with National Indemnity in 1967, and continuing with, among others,
See's, Buffalo News, Scott Fetzer and GEICO, we have acquired -- for
cash -- a number of large businesses that have performed incredibly
well since we bought them. These acquisitions have delivered Berkshire
tremendous value -- indeed, far more than I anticipated when we made
our purchases.

正因为目前我们的球员名单已布满了打击率三成八的高手，所以我们总是希望尽
量用现金来进行购并，而事实证明我们的成绩远高于预期，从1967年的国家产
险开始，接着是喜斯糖果、水牛城新闻报、史考特飞兹以及盖可保险等等，这些
企业在我们用现金买下之后的表现再再令人激赏，它们也为Berkshire增添了无
数的价值，这实在是远高于我们当初的预期。

We believe that it is almost impossible for us to "trade up" from our
present businesses and managements. Our situation is the opposite of
Camelot's Mordred, of whom Guenevere commented, "The one thing I
can say for him is that he is bound to marry well. Everybody is above
him." Marrying well is extremely difficult for Berkshire.

我们相信实在是很难将我们现在拥有的事业与其经营阶层交换出去，我们现在的
处境与Camelot Mordred刚好相反，Guenevere说他一定可以找到理想的伴
侣，因为世上所有人的条件都比他还要好，但是对Berkshire来说，要找到足以
匹配的伴侣实在是难上加难。

So you can be sure that Charlie and I will be very reluctant to issue
shares in the future. In those cases when we simply must do so -- when
certain shareholders of a desirable acquiree insist on getting stock --
we will include an attractive cash option in order to tempt as many of
the sellers to take cash as is possible.

所以大家可以预见的是在未来查理跟我将会越来越不愿意以发行新股的方式进
行购并，要是遇到非如此不可的情况时，也就是被购并者坚持要拿股票的时候，
我们也会附带提供一个比较优渥的现金价格，以促使更多的股东选择领取现金。

Merging with public companies presents a special problem for us.
If we are to offer any premium to the acquiree, one of two conditions
must be present: Either our own stock must be overvalued relative to the
acquiree's, or the two companies together must be expected to earn
more than they would if operated separately. Historically, Berkshire has
seldom been overvalued. In this market, moreover, undervalued
acquirees are almost impossible to find. That other possibility --
synergy gains -- is usually unrealistic, since we expect acquirees to
operate after we've bought them just as they did before. Joining with
Berkshire does not normally raise their revenues nor cut their costs.

此外当我们购并已公开发行的公司还会遇到另一项问题，那就是如果我们提供被
购并者任何溢价的话，必须要能够符合以下两项条件其中之一，要嘛就是相对于
对方，Berkshire的股价被高估；要嘛就是两家公司合并后所赚得的利益高于两
家独立营运时的利益。关于这个问题，就过去的经验，Berkshire的股价很少被
高估，相对地以目前的市场状况，实在很难再找到其它股价相对被低估的公司，
至于另外一个可能性，也就是所谓的合并综效，通常都很不切实际，我们顶多能
期望被购并的事业在被买下之后的表现跟之前一样好就不错了，因为加入
Berkshire不代表营收就能够自动增加或成本就能够自动地减少。

Indeed, their reported costs (but not their true ones) will rise after
they are bought by Berkshire if the acquiree has been granting options
as part of its compensation packages. In these cases, "earnings" of the
acquiree have been overstated because they have followed the standard
-- but, in our view, dead wrong -- accounting practice of ignoring the
cost to a business of issuing options. When Berkshire acquires an
option-issuing company, we promptly substitute a cash compensation
plan having an economic value equivalent to that of the previous option
plan. The acquiree's true compensation cost is thereby brought out of
the closet and charged, as it should be, against earnings.

而其中还有一些以选择权充当薪资酬劳配套措施的公司，在我们买下之后，其帐
列成本往往会暴增(但并不会影响实际真实的成本)，事实上应该说是这些公司过
去的获利状况被高估，因为他们所采取的是在我们看来典型的，完全忽略发行选
择权潜藏企业成本的不当会计手法，也因此当Berkshire买下一家有发行选择权
的公司时，我们会立刻将之更换成以现金报酬为主，但却与原来认股权同样优惠
的奖励计划，如此一来，被购并的这家公司其实际的薪资酬劳成本方能摊开在阳
光底下，具体反应公司的获利状况。

The reasoning that Berkshire applies to the merger of public
companies should be the calculus for all buyers. Paying a takeover
premium does not make sense for any acquirer unless a) its stock is
overvalued relative to the acquiree's or b) the two enterprises will earn
more combined than they would separately. Predictably, acquirers
normally hew to the second argument because very few are willing to
acknowledge that their stock is overvalued. However, voracious buyers
-- the ones that issue shares as fast as they can print them -- are tacitly
conceding that point. (Often, also, they are running Wall Street's version
of a chain-letter scheme.)

Berkshire在购并公开公司所采用的原则也是所有买家必修的学分，买方没有理
由以溢价进行购并，除非在以下特殊的情况下，a)相对于被购并者，其股价被高
估，或者是b)两家原本独立的企业在合并之后所赚取的利润高于原先的总和，
而显而易见的买方通常会采取第一个理由，因为很少有公司会公开承认自己的股
价被高估，然而贪得无厌的买家，以比印钞票还快的速度印股票的这群人，最后
却不得不默认自己的股价确实被高估，通常他们玩的宛如华尔街版的连锁信游
戏。

In some mergers there truly are major synergies -- though
oftentimes the acquirer pays too much to obtain them -- but at other
times the cost and revenue benefits that are projected prove illusory. Of
one thing, however, be certain: If a CEO is enthused about a particularly
foolish acquisition, both his internal staff and his outside advisors will
come up with whatever projections are needed to justify his stance. Only
in fairy tales are emperors told that they are naked.

虽然有些合并案确实可以发挥综合效益，但通常买家所付出的代价过高，且通常
成本节省与营收增加的预期效益最后都会成一场空，不过有一点可以确定的是，
不管这个购并案多么的不合理，只要老板有强烈的意愿，其内部的同僚与外部的
专家顾问都能够提出一份看似合理的评估报告来支持其立场，只要在童话中才有
人敢大胆地告诉国王他没有穿衣服。

Common Stock Investments
股票投资

Below we present our common stock investments. Those with a
market value of more than $750 million are itemized.

下表是Berkshire市价超过七亿五千万美元以上的股票投资。

12/31/97

Shares Company Cost* Market

(dollars in millions)

49,456,900 American Express Company $1,392.7 $ 4,414.0

200,000,000 The Coca-Cola Company 1,298.9 13,337.5

21,563,414 The Walt Disney Company 381.2 2,134.8

63,977,600 Freddie Mac329.4 2,683.1

48,000,000 The Gillette Company 600.0 4,821.0

23,733,198 Travelers Group Inc. 604.4 1,278.6

1,727,765 The Washington Post Company 10.6 840.6

6,690,218 Wells Fargo & Company 412.6 2,270.9

Others 2,177.1 4,467.2

-------- ----------

Total Common Stocks $7,206.9 $ 36,247.7

======== ========

　
　　　* Represents tax-basis cost which, in aggregate, is $1.8 billion less than GAAP cost.
*系以税务为基础的成本，比一般公认会计原则的账面成本少18亿美元。

We made net sales during the year that amounted to about 5% of
our beginning portfolio. In these, we significantly reduced a few of our
holdings that are below the $750 million threshold for itemization, and
we also modestly trimmed a few of the larger positions that we detail.
Some of the sales we made during 1997 were aimed at changing our
bond-stock ratio moderately in response to the relative values that we
saw in each market, a realignment we have continued in 1998.

今年我们大概处分了5%左右的投资部位，其中包含一些市价未达七亿五千万表
列门坎的股票被大幅地处分掉，此外也有一部份超过七亿五千万的股票被小幅的
调整，主要是为了调整债券与股票投资部位间的比例，以因应我们认为市场相对
价值的认知，这个动作一直到1998年仍在持续进行。

Our reported positions, we should add, sometimes reflect the
investment decisions of GEICO's Lou Simpson. Lou independently runs
an equity portfolio of nearly $2 billion that may at times overlap the
portfolio that I manage, and occasionally he makes moves that differ
from mine.

不过有一点必须强调的是，报表上显示的投资部位，有时反应的是GEICO保险
公司Lou Simpson所做的决策，Lou独自管理将近20亿美元的股票投资组合，
当然其中有些部位与我重迭，但通常他的投资动作与我有别。

Though we don't attempt to predict the movements of the stock
market, we do try, in a very rough way, to value it. At the annual meeting
last year, with the Dow at 7,071 and long-term Treasury yields at 6.89%,
Charlie and I stated that we did not consider the market overvalued if 1)
interest rates remained where they were or fell, and 2) American
business continued to earn the remarkable returns on equity that it had
recently recorded. So far, interest rates have fallen -- that's one
requisite satisfied -- and returns on equity still remain exceptionally
high. If they stay there -- and if interest rates hold near recent levels -
- there is no reason to think of stocks as generally overvalued. On the
other hand, returns on equity are not a sure thing to remain at, or even
near, their present levels.

虽然我们从来不愿尝试去预测股市的动向，不过我们却试着大约评估其合理价
位，记得在去年的股东会时，道琼指数约为7,071点，长期公债的殖利率为
6.89%，查理跟我就曾公开表示，如果符合以下两点条件，则股市并未高估，1)
利率维持不变或继续下滑，以及2)美国企业继续维持现有的高股东权益报酬率。
现在看起来，利率确实又继续下滑，这一点算是符合条件，另一方面，股东权益
报酬率仍旧维持在高档，换句话说，若这种情况继续维持下去，同时利率也能够
维持现状，则一般来说没有理由认为现在的股市过于高估，不过从保守角度来
看，股东权益报酬率实在很能永远维持在现有的这种荣景。

In the summer of 1979, when equities looked cheap to me, I wrote
a Forbes article entitled "You pay a very high price in the stock market
for a cheery consensus." At that time skepticism and disappointment
prevailed, and my point was that investors should be glad of the fact,
since pessimism drives down prices to truly attractive levels. Now,
however, we have a very cheery consensus. That does not necessarily
mean this is the wrong time to buy stocks: Corporate America is now
earning far more money than it was just a few years ago, and in the
presence of lower interest rates, every dollar of earnings becomes more
valuable. Today's price levels, though, have materially eroded the
"margin of safety" that Ben Graham identified as the cornerstone of
intelligent investing.

记得1979年的夏天，在当时的股票市场当中，便宜的股票垂手可得，为此我特
地在富比士写了一篇文章，名为"在股票市场中，想让大家有乐观的共识是要付
出相当大的代价的"，当时市场弥漫着怀疑与悲观的情绪，不过当时我力排众议
认为对于这种现象投资人应该要感到高兴，因为悲观的情绪使得许多公司的股价
跌到相当吸引人的价位，不过现在看来我们似乎已经快要达到乐观的共识了，当
然这不代表现在就不能买股票，近年来美国企业的获利大增，搭配现在的利率水
准，企业赚取的每一块盈余比起过去来说要珍贵的许多，虽然以现在的股票价
位，已经严重地脱离的葛拉汉一再强调的安全边际，这是智能型投资哲学的基
石。

* * * * * * * * * * * *

In last year's annual report, I discussed Coca-Cola, our largest
holding. Coke continues to increase its market dominance throughout
the world, but, tragically, it has lost the leader responsible for its
outstanding performance. Roberto Goizueta, Coke's CEO since 1981,
died in October. After his death, I read every one of the more than 100
letters and notes he had written me during the past nine years. Those
messages could well serve as a guidebook for success in both business
and life.

去年年报我花了相当多的篇幅谈到我们现有最大的投资部位-可口可乐，虽然目
前可口可乐仍然继续扩大其在全世界饮料市场的霸主地位，不过很不幸的是，该
公司总裁Roberto Goizueta却在去年十月过世，在他死后，我再一度阅读过去
九年来，我与Goizueta超过上百篇的往来书信，这些讯息确实可以做为如何成
功经营企业与人生的最佳教材。

In these communications, Roberto displayed a brilliant and clear
strategic vision that was always aimed at advancing the well-being of
Coke shareholders. Roberto knew where he was leading the company,
how he was going to get there, and why this path made the most sense
for his owners -- and, equally important, he had a burning sense of
urgency about reaching his goals. An excerpt from one handwritten
note he sent to me illustrates his mind-set: "By the way, I have told
Olguita that what she refers to as an obsession, you call focus. I like
your term much better." Like all who knew Roberto, I will miss him
enormously.

在这些书信中，Roberto展现出高瞻远瞩的识见，总是将重点摆在如何增进可口
可乐股东的权益，Roberto很清楚他要将公司带往何处，以及要如何才能到达目
的地，同时了解为何这样的方法最适合所有的股东，当然更重要的是他对于达成
这样目标抱持着强烈的渴望，有一张他手写给我的字条最能充分说明当时他的心
境，"对了，我跟Olguita提到有关于她常常讲的"着魔"，我个人比较喜欢巴菲
特的说法"专注"，就像是所有认识Roberto的人一样，我会永远怀念他!

Consistent with his concern for the company, Roberto prepared for
a seamless succession long before it seemed necessary. Roberto knew
that Doug Ivester was the right man to take over and worked with Doug
over the years to ensure that no momentum would be lost when the
time for change arrived. The Coca-Cola Company will be the same
steamroller under Doug as it was under Roberto.

一如他对于公司的关心，Roberto早就安排好接班的问题，他认为Doug Ivester
正是最佳的人选，与他共事多年的经验足以确保在公司领导高层更迭的同时，公
司的运作不致受到任何的影响，相信在Doug的领导之下，可口可乐仍能一本初
衷勇往直前。

Convertible Preferreds
可转换特别股

Two years ago, I gave you an update on the five convertible
preferreds that we purchased through private placements in the 1987-
1991 period. At the time of that earlier report, we had realized a small
profit on the sale of our Champion International holding. The four
remaining preferred commitments included two, Gillette and First
Empire State, that we had converted into common stock in which we had
large unrealized gains, and two others, USAir and Salomon, that had
been trouble-prone. At times, the last two had me mouthing a line from
a country song: "How can I miss you if you won't go away?"

两年前，我曾经就1987到1991年间进行的五项可转换特别股投资做了一番现
况报告，在报告出具的当时，我们出脱了冠军国际部份的持股实现小部份的获
利，剩下的四项投资中，吉列与第一帝国早已转换成普通股，并享有高额的未实
现获利，而美国航空与所罗门兄弟则发生严重的经营问题，这两项投资让我不得
不哼起一首乡村歌曲的歌词，"要是你不离开，我又怎么会想念你呢?"

Since I delivered that report, all four holdings have grown
significantly in value. The common stocks of both Gillette and First
Empire have risen substantially, in line with the companies' excellent
performance. At yearend, the $600 million we put into Gillette in 1989
had appreciated to $4.8 billion, and the $40 million we committed to
First Empire in 1991 had risen to $236 million.

而就在报告发布之后，所有四项投资的价值皆大幅增加，吉列与第一帝国的普通
股股价飙涨，与公司的经营基本面一致，截至年底，当初我们在1989年投入吉
列的6亿美元已经增值为48亿美元，而在1991年投入第一帝国的4,000万
美元，则已增值至2.36亿美元。

Our two laggards, meanwhile, have come to life in a very major
way. In a transaction that finally rewarded its long-suffering
shareholders, Salomon recently merged into Travelers Group. All of
Berkshire's shareholders -- including me, very personally -- owe a huge
debt to Deryck Maughan and Bob Denham for, first, playing key roles in
saving Salomon from extinction following its 1991 scandal and, second,
restoring the vitality of the company to a level that made it an attractive
acquisition for Travelers. I have often said that I wish to work with
executives that I like, trust and admire. No two fit that description better
than Deryck and Bob.

在此同时另外两个后段班，也已起死回生，其中所罗门最近决定并入旅行家集团
的举动，终于让长久以来饱受苦难的股东获得的回报，Berkshire所有的股东，
包含我个人在内，实在是亏欠Deryck Maughan跟Bob Denham太多了，首
先要感谢他们在1991年所罗门爆发丑闻时，拯救公司免于倒闭，之后更让公司
恢复以往的活力，使得公司得以风光地嫁给旅行家集团，我常常说，我渴望与我
喜爱、信任与崇拜的经理人共事，Deryck与Bob正是这样绝佳的组合。

Berkshire's final results from its Salomon investment won't be
tallied for some time, but it is safe to say that they will be far better than
I anticipated two years ago. Looking back, I think of my Salomon
experience as having been both fascinating and instructional, though
for a time in 1991-92 I felt like the drama critic who wrote: "I would
have enjoyed the play except that I had an unfortunate seat. It faced the
stage."

虽然Berkshire投资所罗门的最终成果到目前仍未定案，所幸目前的情况要比我
两年前预期要好得多，回顾过去，我觉得投资所罗门的经验令人感到刺激有趣同
时又具教化意义，虽然我在1991到1992年间的感觉就好像是一个戏迷曾这样
写到"要是因为坐到一个不幸的位子，我可能就能够好好地欣赏表演，因为它正
对着台上"。

The resuscitation of US Airways borders on the miraculous. Those
who have watched my moves in this investment know that I have
compiled a record that is unblemished by success. I was wrong in
originally purchasing the stock, and I was wrong later, in repeatedly
trying to unload our holdings at 50 cents on the dollar.

另一方面美国航空的重生过程近乎奇迹，熟悉整个投资过程的朋友都知道，个人
在这项投资上获得了前所未有的胜利，一开始买进这家公司的股票就是一项错
误，后来又反悔打算以半价出售再度犯了第二次的错误。

Two changes at the company coincided with its remarkable
rebound: 1) Charlie and I left the board of directors and 2) Stephen Wolf
became CEO. Fortunately for our egos, the second event was the key:
Stephen Wolf's accomplishments at the airline have been phenomenal.

两项改变促使该公司得以东山再起，1)查理跟我辞去该公司董事的职位，2)
Stephen Wolf接任成为该公司总裁，还好后者才是公司真正能够重生的主因，
否则我们的脸可就丢大了，Stephen Wolf的表现对整个航空业而言，可说是意
义非凡。

There still is much to do at US Airways, but survival is no longer an
issue. Consequently, the company made up the dividend arrearages on
our preferred during 1997, adding extra payments to compensate us
for the delay we suffered. The company's common stock, furthermore,
has risen from a low of $4 to a recent high of $73.

当然美国航空还有很长的一段路要走，不过存活下来应该不是问题，也因此该公
司在1997年顺利地偿还积欠我们的特别股股息，还包含延迟支付的赔偿损失，
该公司的普通股股价更从原来的4块钱，一举涨到目前73块钱的新高。

Our preferred has been called for redemption on March 15. But the
rise in the company's stock has given our conversion rights, which we
thought worthless not long ago, great value. It is now almost certain
that our US Airways shares will produce a decent profit -- that is, if my
cost for Maalox is excluded -- and the gain could even prove indecent.

我们持有的特别股已在三月15日被赎回，不过受惠于该公司股价大涨，原本一
文不值的转换权现在却变得价值不菲，可以肯定的是我们现在持有的美国航空普
通股将为我们创造极高的获利，当然还要先把我买胃药的钱给算进去。

Next time I make a big, dumb decision, Berkshire shareholders will
know what to do: Phone Mr. Wolf.

我想哪天要是我再度干下什么愚蠢的投资决策，Berkshire的股东肯定知道该怎
么做了，没错，记得打电话给Wolf先生。

* * * * * * * * * * * *

In addition to the convertible preferreds, we purchased one other
private placement in 1991, $300 million of American Express Percs.
This security was essentially a common stock that featured a tradeoff in
its first three years: We received extra dividend payments during that
period, but we were also capped in the price appreciation we could
realize. Despite the cap, this holding has proved extraordinarily
profitable thanks to a move by your Chairman that combined luck and
skill -- 110% luck, the balance skill.

除了可转换特别股，我们在1991年还透过私募的方式投资了三亿美元的美国运
通俗称"Percs"的股票，这种证券基本上算是一种普通股，只不过在投资的前三
年我们可以领取一笔特别的股利，条件是在同时间我们因为股价上涨所带来的资
本利得将受到限制，然而即便如此，这笔投资还是因为本人的英明决策而获利不
菲，当然其中也包含一些运气的成份，比例约是110%(剩下的才是本人的能力)。

Our Percs were due to convert into common stock in August 1994,
and in the month before I was mulling whether to sell upon conversion.
One reason to hold was Amex's outstanding CEO, Harvey Golub, who
seemed likely to maximize whatever potential the company had (a
supposition that has since been proved -- in spades). But the size of
that potential was in question: Amex faced relentless competition from
a multitude of card-issuers, led by Visa. Weighing the arguments, I
leaned toward sale.

根据约定我们的Percs必须在1994年八月以前转换成普通股，而就在前一个月
我还一直在考虑是否应该在转换期限到期以前把这项投资给处分掉，当时考量的
是虽然美国运通总裁Harvey Golub表现相当优异，他总是有办法将公司的潜力
发挥到极致(这点从一开始便不断地获得证明)，只是这种潜能还是面临严重的挑
战，那就是美国运通来自于以Visa为首的其它发卡单位激烈的竞争，在衡量各
种利弊得失之后，我还是倾向于把这笔投资提前给处分掉。

Here's where I got lucky. During that month of decision, I played
golf at Prouts Neck, Maine with Frank Olson, CEO of Hertz. Frank is a
brilliant manager, with intimate knowledge of the card business. So
from the first tee on I was quizzing him about the industry. By the time
we reached the second green, Frank had convinced me that Amex's
corporate card was a terrific franchise, and I had decided not to sell. On
the back nine I turned buyer, and in a few months Berkshire owned 10%
of the company.

还好我走狗运，就在要做决定的那个月，我正好到缅因州和Hertz租车公司总
裁Frank Olson一起打高尔夫球，Frank是一位相当优秀的经理人，因为业务
的关系相当熟悉信用卡的行业，所以打从第一洞开始我就一直追问他有关这行业
的种种问题，到了第二洞的果岭时，Frank已经让我完全相信美国运通的企业卡
是一项绝佳的生意，所以当下我就决定不卖了，等到后九洞时，我更决定加码投
资，于是在回来的几个月后，Berkshire已经拥有该公司10%的股权。

We now have a $3 billion gain in our Amex shares, and I naturally
feel very grateful to Frank. But George Gillespie, our mutual friend, says
that I am confused about where my gratitude should go. After all, he
points out, it was he who arranged the game and assigned me to Frank's
foursome.

现在我们光是在美国运通的投资潜在利益就有30亿美元，当然这一切都要感谢
Frank，不过我们俩人共同的好友-George Gillspie却直说我搞错应该要感恩的
对象了，他强调要不是因为他安排这次的球会，并且把我跟Frank摆在同一组
的话，也不会有今天这样的成果。

Quarterly Reports to Shareholders

给股东的季报

In last year's letter, I described the growing costs we incur in
mailing quarterly reports and the problems we have encountered in
delivering them to "street-name" shareholders. I asked for your opinion
about the desirability of our continuing to print reports, given that we
now publish our quarterly and annual communications on the Internet,
at our site, www.berkshirehathaway.com. Relatively few shareholders
responded, but it is clear that at least a small number who want the
quarterly information have no interest in getting it off the Internet.
Being a life-long sufferer from technophobia, I can empathize with this
group.

在去年的年报中，我曾经向各位透露由于邮寄季报的费用大幅增加，同时要将季
报寄给那些不是用本名登记的股东有其困难性，所以征询大家是否可以接受直接
将季报与年报公布在公司网站上，取代原先印制与邮寄报告的做法，虽然只有少
数的股东回应，但长期以来具有科技恐惧症的我很明白还是有少数想要年报信息
的股东，不习惯透过网络取得相关的信息，我完全能够体会他们的想法。

The cost of publishing quarterlies, however, continues to balloon,
and we have therefore decided to send printed versions only to
shareholders who request them. If you wish the quarterlies, please
complete the reply card that is bound into this report. In the meantime,
be assured that all shareholders will continue to receive the annual
report in printed form.

惟考量大幅增加的印刷费用，最后我们还是决定除非股东有特别要求，我们才邮
寄印好的季报，所以若你也有意要一份书面的季报，请填妥年报上所附的申请表
格，同时在此也提醒所有的股东，我们还是会继续邮寄年报给所有的股东。

Those of you who enjoy the computer should check out our home
page. It contains a large amount of current information about Berkshire
and also all of our annual letters since 1977. In addition, our website
includes links to the home pages of many Berkshire subsidiaries. On
these sites you can learn more about our subsidiaries' products and --
yes -- even place orders for them.

至于喜欢利用计算机上网的股东们，一定要到我们公司网站的首页看看，里面包含
大量有关Berkshire现况的信息，同时还有1977年到现在为止的公司年报，此
外网站上还有对旗下其它子公司的网站连结，经由这些网站大家可以更了解子公
司的产品信息，有的甚至可以透过网络直接下单购买。

We are required to file our quarterly information with the SEC no
later than 45 days after the end of each quarter. One of our goals in
posting communications on the Internet is to make this material
information -- in full detail and in a form unfiltered by the media --
simultaneously available to all interested parties at a time when markets
are closed. Accordingly, we plan to send our 1998 quarterly information
to the SEC on three Fridays, May 15, August 14, and November 13, and
on those nights to post the same information on the Internet. This
procedure will put all of our shareholders, whether they be direct or
"street-name," on an equal footing. Similarly, we will post our 1998
annual report on the Internet on Saturday, March 13, 1999, and mail it
at about the same time.

根据证管会法令的规定，我们必须在每季结束后45天内申报季报，而透过网络
公开信息的主要原因之一是我们希望如此重大的讯息可以以完整而不经过媒体
消化过滤的方式，在股市收盘后实时地传达给所有关心本公司状况的人士，因此
我们决定在往后每季的最后一个星期五，今年分别是5/15、8/14及11/13将
季报对证管会做申报的动作，并在当天晚上将相同的信息同步公布在公司的网站
上，此举将能够使得Berkshire所有股东，不管是以本人或挂名的方式持有，皆
站在同等的地位之上，另外，我们也预计在1999年3月13日星期六将年报公
布在网站上，并在同一时间将年报邮寄出去给所有的股东。

Shareholder-Designated Contributions
股东指定捐赠计划

About 97.7% of all eligible shares participated in Berkshire's 1997
shareholder-designated contributions program. Contributions made
were $15.4 million, and 3,830 charities were recipients. A full
description of the program appears on pages 52 - 53.

大约有97.7%的有效股权参与1997年的股东指定捐赠计划，总计约1,540万
美元捐出的款项分配给3,830家慈善机构，详细的名单参阅附录。

Cumulatively, over the 17 years of the program, Berkshire has
made contributions of $113.1 million pursuant to the instructions of
our shareholders. The rest of Berkshire's giving is done by our
subsidiaries, which stick to the philanthropic patterns that prevailed
before they were acquired (except that their former owners themselves
take on the responsibility for their personal charities). In aggregate, our
subsidiaries made contributions of $8.1 million in 1997, including in-
kind donations of $4.4 million.

累计过去17年以来，Berkshire总计已按照股东意愿捐赠高达1.131亿美元的
款项，除了之外，Berkshire还透过旗下的子公司进行捐赠，而这些慈善活动都
是早在他们被我们购并以前就行之有年的(除了先前的老板自行本身负责的个人
捐赠计划之外)，总的来说，我们旗下的关系企业在1997年总计捐出810万美
元，其中包含440万美元等值的物品。

Every year a few shareholders miss out on our contributions
program because they don't have their shares registered in their own
names on the prescribed record date or because they fail to get the
designation form back to us within the 60-day period allowed. Charlie
and I regret this. But if replies are received late, we have to reject them
because we can't make exceptions for some shareholders while refusing
to make them for others.

每年都有一小部份的股东由于没有将股份登记在本人的名下，或是没能在60天
的期限内，将指定捐赠的表格送回给我们，而没办法参加我们的指定捐赠计划，
对此查理跟我感到相当头痛，不过我们必须忍痛将这些指定捐赠剔除，因为我不
可能在拒绝其它不符合规定股东的同时，还破例让这些人参与。

To participate in future programs, you must own Class A shares
that are registered in the name of the actual owner, not the nominee
name of a broker, bank or depository. Shares not so registered on
August 31, 1998, will be ineligible for the 1998 program. When you get
the contributions form from us, return it promptly so that it does not
get put aside or forgotten.

想要参加这项计划者，必须拥有A级普通股，同时确定您的股份是登记在自己
而非股票经纪人或保管银行的名下，同时必须在1998年8月31日之前完成登
记，才有权利参与1998年的捐赠计划，当你收到表格后，请立即填写后寄回，
以免被丢在一旁给忘记了。

The Annual Meeting
年度股东会

Woodstock Weekend at Berkshire will be May 2-4 this year. The
finale will be the annual meeting, which will begin at 9:30 a.m. on
Monday, May 4. Last year we met at Aksarben Coliseum, and both our
staff and the crowd were delighted with the venue. There was only one
crisis: The night before the meeting, I lost my voice, thereby fulfilling
Charlie's wildest fantasy. He was crushed when I showed up the next
morning with my speech restored.

今年Berkshire的伍斯达克将在五月2号到4号举行，整个大会将在五月4号
星期一的年度会议召开后落幕，去年的年会在Aksarben体育馆召开，所有的工
作人员及参与的来宾对于当天的会场都相当满意，唯一美中不足的是，在年会的
前一天，我的嗓子沙哑了，当时几乎要如了查理的愿，只不过隔天当我恢复原本
的声音时，在一旁的查理几乎要崩溃。

Last year about 7,500 attended the meeting. They represented all
50 states, as well as 16 countries, including Australia, Brazil, Israel,
Saudi Arabia, Singapore and Greece. Taking into account several
overflow rooms, we believe that we can handle more than 11,000
people, and that should put us in good shape this year even though our
shareholder count has risen significantly. Parking is ample at Aksarben;
acoustics are excellent; and seats are comfortable.

去年的股东会总共有7,500位股东出席，分别来自全美50州以及包含澳洲、巴
西、以色列、沙特阿拉伯、新加坡与希腊等在内的16个国家，我想即使今年
我们的股东人数又大幅增加，加上其它几个备用的房间，应该可以容纳超过
11,000名以上的人员参加，会场备有足够的停车位，音效也不错，就连座椅坐
起来也很舒服。

The doors will open at 7 a.m. on Monday and at 8:30 we will again
feature the world premiere of a movie epic produced by Marc Hamburg,
our CFO. The meeting will last until 3:30, with a short break at noon.
This interval will permit the exhausted to leave unnoticed and allow time
for the hardcore to lunch at Aksarben's concession stands. Charlie and I
enjoy questions from owners, so bring up whatever is on your mind.

大门会在星期一早上七点开放，同时照例在八点半会播放由我们财务长Marc
Hamburg精心制作具世界级水准的Berkshire电影短片供大家欣赏，扣除中午
短暂的休息时间，让精疲力尽的人可以偷偷离开到阿肯萨本中心的小吃摊吃点东
西，整个会议将一直进行到下午三点半，查理跟我很喜欢老板们提出的各种问
题，所以记得准备好你要问什么。

Berkshire products will again be for sale in the halls outside the
meeting room. Last year -- not that I pay attention to this sort of thing
-- we again set sales records, moving 2,500 pounds of See's candy,
1,350 pairs of Dexter shoes, $75,000 of World Books and related
publications, and 888 sets of Quikut knives. We also took orders for a
new line of apparel, featuring our Berkshire logo, and sold about 1,000
polo, sweat, and T-shirts. At this year's meeting, we will unveil our 1998
collection.

再一次我们在会场外大厅备有Berkshire各式各样的产品供大家选购，虽然我不
是特别的用心，去年我们再度打破记录，总共搬走了2,500磅的糖果、1,350
双的鞋子以及价值超过75,000美元的世界百科全书与相关出版品，外加888
组由旗下子公司Quikut所生产的小刀，同时我们也接受预订一种新款的服装，
上面印有Berkshire的Logo，结果总计卖出1,000件各式polo衫、毛衣与T
恤，在今年的股东会，我们还将推出1998年全新系列产品。

GEICO will again be on hand with a booth staffed by star associates
from its regional offices. Find out whether you can save money by
shifting your auto insurance to GEICO. About 40% of those who check us
out learn that savings are possible. The proportion is not 100% because
insurers differ in their underwriting judgments, with some favoring
drivers who live in certain geographical areas and work at certain
occupations more than we do. We believe, however, that we more
frequently offer the low price than does any other national carrier
selling insurance to all comers. In the GEICO informational material that
accompanies this report, you will see that in 38 states we now offer a
special discount of as much as 8% to our shareholders. We also have
applications pending that would extend this discount to drivers in other
states.

GEICO公司再度会派出地区最优秀的业务员，在会场设立摊位，接受股东询问
有关汽车保险的信息，记得去看看你是否能在汽车保险费上省一笔钱，我们估计
至少有40%的股东可以因此而节省不少保费(我只所以没说100%的原因在于，
每家保险业者对于风险的估计都不同，有些保险公司对于居住于某些特定地区的
居民与从事某些特定职业的客户有偏好，不过我仍然坚信我们提供给一般民众的
费率通常都低于其它全国性的业者，在随年报附赠的GEICO资料中，大家将可
以看到我们提供给来自全美38州股东最高8%的折扣费率，至于其它州的股东
也接受开放申请取得不等的折扣。

An attachment to the proxy material that is enclosed with this
report explains how you can obtain the card you will need for admission
to the meeting. We expect a large crowd, so get plane, hotel and car
reservations promptly. American Express (800-799-6634) will be
happy to help you with arrangements. As usual, we will have buses at
the larger hotels that will take you to and from the meeting and also
deliver you to Nebraska Furniture Mart, Borsheim's and the airport after
its conclusion. You are likely, however, to find a car handy.

后面附有股东会开会投票的相关数据，跟各位解释如何拿到入场所许的识别证，
由于预期会有相当多的人与会，我们建议大家最好先预订机位与住宿，美国运通
(电话800-799-6634)将会很高兴为您提供相关安排服务，如同以往，我们会
安排巴士接送大家往返各大旅馆与会场之间，并在会后接送大家到内布拉斯加家
具店与波仙珠宝店或是到饭店与机场，当然你可能会觉得如何有一辆车就更方便
了。

NFM's main store, located on a 75-acre site about a mile from
Aksarben, is open from 10 a.m. to 9 p.m. on weekdays, 10 a.m. to
6 p.m. on Saturdays, and noon to 6 p.m. on Sundays. During the period
from May 1 to May 5, shareholders who present NFM with the coupon
that will accompany their meeting ticket will be entitled to a discount
that is otherwise restricted to its employees.

占地75英亩的NFM主馆距离会场约1英哩远，营业时间平日从早上10点到
下午9点，星期六从早上10点到下午6点，星期日则从中午开到下午6点，
在五月1日到5日期间，股东持随股东开会通知单附赠的点券到NFM购买各类
商品，将可获得员工价的优惠。

Borsheim's normally is closed on Sunday but will be open for
shareholders from 10 a.m. to 6 p.m. on May 3rd. Last year was our
second-best shareholder's day, exceeded only by 1996's. I regard this
slippage as an anomaly and hope that you will prove me right this year.
Charlie will be available for autographs. He smiles, however, only if the
paper he signs is a Borsheim's sales ticket. Shareholders who wish to
visit on Saturday (10 a.m. to 5:30 p.m.) or on Monday (10 a.m.-8 p.m.)
should be sure to identify themselves as Berkshire owners so that Susan
Jacques, Borsheim's CEO, can make you especially welcome. Susan, I
should add, had a fabulous year in 1997. As a manager, she is
everything that an owner hopes for.

平时礼拜天不营业的波仙珠宝，特地在五月三日股东会当天会为股东与来宾开
放，从中午开到下午6点，去年在星期六股东会前一天，我们缔造了历史次佳
的记录，仅次于1996年，我认为去年的下滑有点反常，所以希望大家都能前来
共襄盛举，证明我的看法的对的，查理会在现场接受大家的签名，当然大家如果
拿波仙的发票给他签，他会更高兴，另外选择在前一天或后一天前往参观的人，
记得表明Berkshire股东的身分，相信波仙的总裁-Susan Jacques会给各位最
热情的接待，有一点我必须特别说明的是，Susan在1997年表现相当优异，
她实在是所有老板心目中最理想的专业经理人。

On Sunday afternoon we will also have a special treat for bridge
players in the mall outside of Borsheim's. There, Bob Hamman -- a
legend of the game for more than three decades -- will take on all
comers. Join in and dazzle Bob with your skill.

另外在星期天下午我们也会在波仙珠宝店外面的大厅举办一场桥牌大赛，现场
Bob Hamman 桥牌界的传奇性人物也将出席，接受各路英雄好汉的挑战，记得
来参加，秀秀你的牌技给Bob看看。

My favorite steakhouse, Gorat's, opens one Sunday a year -- for
Berkshire shareholders on the night before the annual meeting. Last
year the restaurant started serving at 4 p.m. and finished about 1:30
a.m, an endurance trial that was the result of taking 1,100 reservations
vs. a seating capacity of 235. If you make a reservation and then can't
attend, be sure to let Gorat's know promptly, since it goes to great effort
to help us and we want to reciprocate. You can make reservations
beginning on April 1st (but not before) by calling 402-551-3733. Last
year I had to leave Gorat's a little early because of my voice problem, but
this year I plan to leisurely savor every bite of my rare T-bone and
double order of hash browns.

我个人最爱的牛排馆-Gorat's为了Berkshire股东年会破例在星期天开门营
业，去年为了消化1,100位预订的席次，只有235个座位的Gorat's牛排馆从
下午四点开始营业，一直到半夜一点半，所以已经预订座位的人，要是临时无法
光临，请记得一定要打电话取消订位，因为Gorat's如此尽心尽力的为我们服
务，这是我们可以给他们最起码的回报，今年该餐厅从四月一号开始接受预订(电
话402-551-3733)，去年由于我的喉咙有问题，所以必须提早离开，但今年我
一定会到Gorat's好好享用我最喜爱的丁骨\牛排加上双份的牛肉丸。

After this warmup, Charlie and I will head for the Dairy Queen on
114th, just south of Dodge. There are 12 great Dairy Queens in
metropolitan Omaha, but the 114th Street location is the best suited to
handle the large crowd that we expect. South of the property, there are
hundreds of parking spaces on both sides of the street. Also, this Dairy
Queen will extend its Sunday hours to 11 p.m. in order to accommodate
our shareholders.

吃完牛排后，查理跟我还会赶到位于道奇街114号的乳品皇后冰淇淋摊，在整
个奥玛哈地区总计有12家乳品皇后，但是114街却是最适合接待大量群众的
地点，在店的两旁有好几百个停车场供大家使用，同时该店也会延长假日营业时
间到晚上11点，以接待所有前往光顾的Berkshire股东。

The 114th Street operation is now run by two sisters, Coni Birge
and Deb Novotny, whose grandfather put up the building in 1962 at
what was then the outer edge of the city. Their mother, Jan Noble, took
over in 1972, and Coni and Deb continue as third generation owner-
managers. Jan, Coni and Deb will all be on hand Sunday evening, and I
hope that you meet them. Enjoy one of their hamburgers if you can't get
into Gorat's. And then, around eight o'clock, join me in having a Dusty
Sundae for dessert. This item is a personal specialty -- the Dairy Queen
will furnish you a copy of my recipe -- and will be offered only on
Shareholder Sunday.

114街的分店目前由Coni Birge与Deb Novotny两姊妹所经营，系由她们的
祖父于1962年在当时还是市中心外围的现址创立，在1972年由她们的母亲接
手经营，Coni与Deb则是第三代的经营者，Jan、Coni及Deb在星期天晚上
将会在现场为大家服务，希望大家可以去和她们见见面，若是大家挤不进Gorat's
的话，也可以尝尝两姊妹亲手做的汉堡，八点整我将会出现享用我的喜欢的冰风
暴圣代，这是个人特调的秘方，当然你也可以要求乳品皇后照我的配方给你来一
份，这可是只有在股东会当天才对外提供独家秘方。

The Omaha Royals and Albuquerque Dukes will play baseball on
Saturday evening, May 2nd, at Rosenblatt Stadium. As usual, your
Chairman, shamelessly exploiting his 25% ownership of the team, will
take the mound. But this year you will see something new.

在前一天5月2日，星期六晚上，Rosenblatt体育馆将会有一场奥玛哈皇家队
对Albuquerque Dukes队的比赛，一如往年厚颜无耻的我会利用拥有该球队
25%的特权，站上投手丘担任先发，不过今年我保证各位一定会有新的感受。

In past games, much to the bafflement of the crowd, I have shaken
off the catcher's first call. He has consistently asked for my sweeping
curve, and I have just as regularly resisted. Instead, I have served up a
pathetic fast ball, which on my best day was clocked at eight miles per
hour (with a following wind).

过去几年，可能是受到现场观众喧闹声所影响，我总是不顾捕手对我所做出的暗
号，虽然他一直要求我投出拿手的变化曲球，但我总是极力反抗，结果总是投出
软趴趴的快速球，最快的球速也不过是每小时8英哩(这还是在顺风的情况下)。

There's a story behind my unwillingness to throw the curve ball. As
some of you may know, Candy Cummings invented the curve in 1867
and used it to great effect in the National Association, where he never
won less than 28 games in a season. The pitch, however, drew
immediate criticism from the very highest of authorities, namely Charles
Elliott, then president of Harvard University, who declared, "I have heard
that this year we at Harvard won the baseball championship because we
have a pitcher who has a fine curve ball. I am further instructed that the
purpose of the curve ball is to deliberately deceive the batter. Harvard is
not in the business of teaching deception." (I'm not making this up.)

其实我之所以不愿意投曲球背后有极大的隐情，大家或许知道，Candy
Cummings在1867年发明曲球的时候，曾在国家联盟引起极大的效应，这种
球路使得他每个球季至少可以赢得28场胜投，但是这样的投球方式也立刻引起
最高当局的严厉批评，当时的哈佛校长Charles Elliott对外宣称，我听说今年
哈佛棒球队靠着一位专门投曲球的投手赢得冠军，有人还告诉我，这种曲球基本
上是一种欺骗打者的行为，我必须说的是，哈佛从来不教人这种骗人的勾当。

Ever since I learned of President Elliott's moral teachings on this
subject, I have scrupulously refrained from using my curve, however
devastating its effect might have been on hapless batters. Now,
however, it is time for my karma to run over Elliott's dogma and for me
to quit holding back. Visit the park on Saturday night and marvel at the
majestic arc of my breaking ball.

而自从我知道Elliott校长的教诲之后，我就一直小心翼翼地避免使用到我这种
杀人无数拿手的曲球，不过现在已经到了忍无可忍的地步了，我决定再度使出我
的杀手戬，星期六晚上大家记得光临球场，让你们见识一下我这魔球的威力。

Our proxy statement includes information about obtaining tickets
to the game. We will also provide an information packet describing the
local hot spots, including, of course, those 12 Dairy Queens.

股东会数据将告诉大家如何取得球赛入场的门票，里面同时包含一本旅行小手
册，介绍本地热门的旅游景点，当然也包括12家乳品皇后在内。

Come to Omaha -- the cradle of capitalism -- in May and enjoy
yourself.

欢迎大家在五月莅临奥玛哈-资本主义的摇篮，也预祝大家玩得愉快。

Warren E. Buffett

February 27, 1998 Chairman of the Board

华伦．巴菲特

董事会主席

1998年2月27日