<PAGE> 1
BRANDYWINE FUND, INC.
Managed by Friess Associates, Inc. Annual Report September 30, 1995
DEAR FELLOW SHAREHOLDERS:
Congratulations on another successful year! Your 45.5 percent surge
for your 12-month fiscal year ended September 30 handily outdistanced all the
major indices.
The S&P 500 rose 29.7 percent; Nasdaq Industrials 26.3 percent; S&P
Midcap 23.4 percent; and the NYSE 22.6 percent. The Russell 2000 was up 21
percent, less than half your 45.5 percent gain.
The WALL STREET JOURNAL OCTOBER 5 ISSUE LISTED BRANDYWINE AS THE
NUMBER ONE PERFORMING GROWTH FUND IN THE NATION FOR THE PAST TWELVE MONTHS FOR
FUNDS OVER $500 MILLION IN ASSETS.
<TABLE>
<CAPTION>
MOST RECENT TWELVE MONTHS
PERCENT
<S> <C>
RUSSELL 2000 21.2
NYSE 22.6
S&P MIDCAP* 23.4
NASDAQ IND. 26.3
S&P 500* 29.7
YOUR FUND* 45.5
</TABLE>
* TOTAL RETURN
These results include a portion of the long-awaited correction in
technology stocks which began in the final weeks of the quarter and spilled
over into October as we write this to you.
The Hambrecht & Quist Technology Index dropped 3.4 percent from
September 11 to quarter end negatively impacting your final September quarter
which, nevertheless, rose 13.9 percent.
Your results of 44.3 percent since December 31, 1994, the last nine
months of Brandywine's fiscal year, garnered strong rankings in Investor's
Business Daily which on October 2 included your Fund among the top five quality
growth funds in the U.S. for year to date performance. The S&P 500 rose 29.8
percent and the NYSE 24.8 in the same time frame.
We're grateful for the efforts of your 20 researchers and support team
that generate these results as well as the dedicated people at the companies in
which you invest -- those on the assembly lines, shipping docks, and in
secretarial pools and accounting departments. They are the ultimate generator
of all of our successes.
A new feature of your report highlights Larry Hornbeck, the Texas
Instruments engineer who developed the digital mirror, as an example of these
contributors.
Mike Musson and Greg Friess came on board as research consultants in
Palo Alto and Minneapolis.
Mike was investor contact at billion-dollar software giant, Oracle
Systems, and then at Applied Materials, the billion-dollar supplier of
semiconductor equipment. Greg served as energy analyst for Northern States
Power for four years. Both bring you insights into those particular industries.
Kerry Polini, Renae Puckett and Diane McGonagle join the support team
in Delaware and Cammy Cooper adds to your team's resources in Jackson.
The volatility of the tech stocks in which you have a significant
investment has always been and always will be a feature of this fast-moving,
rapidly-changing sector of the U.S. economy.
For your September quarter some of your more dynamic moves include an
amazing 83 percent jump by Cirrus Logic, and gains by Cisco Systems, Dell
Computer, Bay Networks, and Read-Rite, each moving up between 29 and 36
percent.
Stronger gains came in LSI Logic, U.S. Robotics, and Diamond Multimedia
which each rose between 48 and 57 percent during the recent three months.
Although there has been much hand-wringing in the financial press
heralding "the end to the upward
<PAGE> 2
spiral of technology stocks," our own detective work, talking not only to the
companies' managements but to their customers and competitors as well,
indicates that the fundamental outlook for sales and earnings still appears
strong for the specific companies you own.
The shift from Intel 486 to Pentium chips, difficulties in adjusting to
the new Windows 95 world, component shortages, weakness in Europe, slippage of
deliveries from the September quarter into the December quarter, and some
technology transitions such as slower than expected CDMA (digital wireless
communication technology) shipments are some key "potholes in the technology
road" we have isolated and attempted to avoid.
Companies plagued with these problems dragged down almost all
technology companies providing significant opportunities for those investors
who can sort out the subtle distinctions. Networking, client-server software,
and database software provide some of the stronger areas.
All technology companies are not influenced by the same issues. "Never
invest in technology, invest in individual technology COMPANIES."
The demand/supply relationships in your key telecommunications,
networking, semiconductor, wireless, and personal computer related holdings
reveal an earnings momentum that the larger investment community does not yet
believe will happen.
Over the last three months, each time your core technology holdings
experienced a downward correction, a seemingly large pool of new investor
interest willingly jumped in and snapped up what were perceived to be solid
bargains. We expect this pattern will continue during the current correction.
Sailing on the economic front seems to be steady as well. August's
recently announced 6.8 percent increase in orders for durable goods
demonstrates the continuing strength in demand for capital goods that has been
one of the shining lights of this long, steady economic recovery.
We see little evidence of either recessionary worry or inflationary
pressure as the economy moves forward and the dollar strengthens.
The dollar's recent increase of 20 percent compared to the yen and 10
percent against the German mark causes us to focus closely on the impact of
currency accounting on your portfolio holdings with significant international
business.
Despite this recent rise in the dollar, however, it is still 60 percent
below its peak ten years ago providing excellent opportunities for your
companies that export to foreign markets.
Concerns over a possible unraveling of the Japanese financial structure
adds to market worries. The $1.1 billion trading loss previously unrevealed at
Daiwa Bank shakes confidence in other Japanese banks as well and unsettles
other financial markets.
We are particularly appreciative of those of you who have stuck with us
in all the good and bad markets we have endured together over the years.
That loyalty and patience on your part has been rewarded with more than
a three-fold increase in the past five years, yielding a 26.1 percent average
annual return, and almost a six-fold increase (up 474 percent) since inception
nearly ten years ago, yielding a 19.6 percent average annual return.
The Friess Associates strategy of "never invest in the stock market but
invest in individual companies" has been a key in generating Brandywine's
results. A New York Times article September 3 singled out your Fund as having
the highest annual return for the past three years (30.7 percent) among the
most consistent performing funds the article highlighted.
According to Lipper Analytical, your Fund ranks in the top 2 percent
(or among the top five) for all 323 U.S. growth funds for its three year
performance of 113.3 percent.
<TABLE>
<CAPTION>
MOST RECENT THREE YEARS
PERCENT
<S> <C>
NYSE 36.5
S&P MIDCAP* 49.2
S&P 500* 51.9
NASDAQ IND. 58.1
RUSSEL 2000 60.9
YOUR FUND* 113.3
</TABLE>
* TOTAL RETURN
BRANDYWINE FUND, INC. 2
<PAGE> 3
Many investors joined you in recognizing the efficacy of the Friess
Associates strategy that drives your investment selections as more than $366
million in net purchases came in during the quarter. During the recent
correction, purchases outpaced redemptions.
Our commitment in having our own assets invested with you also grew as
the amount your Friess team has committed to Brandywine Fund, along with family
and friends, now exceeds $40 million. I personally have no other equity
investments other than those I have in Brandywine and Brandywine Blue Funds.
We're grateful to work for long-standing and large fellow shareholders
like the Nobel Foundation of Stockholm, Sweden as well as more than 30 other
large shareholders who each have more than $10 million invested and 27,000
smaller investors who all count on us to do our best.
Your Fund's low administrative charge of .07 percent is the result of
the exceptional growth in value and number of shareholders your fund has
enjoyed.
Thanks for giving us the opportunity to build for you exceptional
results in the months and years ahead.
God Bless!
/s/ FOSTER FRIESS [FOSTER FRIESS PHOTO]
- -------------------------
Foster Friess
President October 13, 1995
YOUR CUSTODIAN AND TRANSFER AGENT . . .
Firstar Bank, is the 45th largest bank in the United States with 210
locations employing 10,000 people, offering a full line of financial services
from mortgage banking, to insurance products, to the mutual fund services it
provides for your Fund.
These mutual fund services are provided by Firstar Trust Company
("Firstar"), one of the thirty subsidiaries of Firstar Corporation.
Firstar was founded in 1894 and is the largest trust organization in
Wisconsin. Firstar provides an array of trust services including personal
trust, stock transfer, bond trustee, employee benefit and of course mutual fund
services.
In addition to Brandywine Fund, Firstar handles more than 200 other
mutual funds totalling $37 billion in mutual fund assets.
Firstar services shareholders' accounts and its function is unrelated
to the research, selection, and trading of stocks in the portfolio which is
provided by your team at Friess Associates. We selected their services in
order to concentrate solely on growing your investment in the Fund.
Among the services Firstar provides for you are:
- - Executing all purchases and redemption of Fund shares
- - Providing statements of Fund share holdings and changes
- - Providing the 800-number automatic voice response unit for checking
your account
- - Responding to inquiries about Brandywine Fund
- - Taking requests for all application forms for investment in the Fund
- - Serving as custodian for IRA accounts and for the stocks held by the
Fund
- - Handling direct rollover and transfer funds for IRA accounts
We'd like your insights on how Firstar fulfills its mission to you.
On the enclosed comment sheet, please also feel free to offer any suggestions
and comments on how we can better serve you in any other areas as well.
3 BRANDYWINE FUND, INC.
<PAGE> 4
FUND SHAREHOLDER . . .
"Brandywine Fund attracted me because I was impressed with Friess's
de-centralized, bottom-up investment style and their innovative use of a
consultant network," says Donald Macleod, Chief Financial Officer of National
Semiconductor, in a delightfully thick Scottish accent.
"I see representatives of many investing institutions, and I'm
impressed with the Friess research team's ability to move quickly, make
decisions quickly and act on information."
A native of Scotland, Don earned a BA in Economics from the University
of Stirling. He began his 17 years at National Semiconductor in the company's
wafer fab manufacturing plant in the area of Scotland known as "Silicon Glen,"
so named because many companies, like National Semiconductor, Motorola, and
NEC, have wafer fab plants there.
Don has served in various positions including finance, operations, and
marketing in the United Kingdom, Germany and here in the States. He has been in
his current position as CFO for just over four years at the company's Silicon
Valley headquarters.
His company is now in the midst of a long-term corporate
transformation seeking more aggressive revenue growth opportunities.
"A key part of this is based on creating an environment where
employees feel empowered to quickly seize initiatives that can help us achieve
our aspiration. The similarities between our approach and the way I perceive
that Friess Associates operates were a factor in my decision to invest in
Brandywine Fund," Don remarks.
National Semiconductor is a key player in the fast-growing global
semiconductor market, which is expected to grow by more than $40 billion in
1995. Revenue and earnings per share in National's most recent quarter both
increased by 26 percent.
Don explains, "Semiconductors are the enabling factor in the
information revolution. Pervasive in systems we see everywhere; personal
computers, wireless communications, microwaves, and automobiles, these chips
are now the defining factors in many of these end user systems."
[DONALD MACLEOD PHOTO]
Don and Mary, his wife of 21 years, have three sons ages 14, 12, and
8, who each enjoy playing the favorite sport of Scotland, soccer. He is a keen
runner and an enthusiastic skier.
"Friess analysts have an aggressive awareness of investment
opportunities in technology," Don comments. "Things change so quickly in
technology, and I am confident I have Brandywine Fund looking after my
investment interests in this complex and fast changing environment."
- Rebecca Buswell
GETTING YOUR FUND INFORMATION . . .
will be even easier when you call (800) 656-3017 as Firstar will be
improving its voice response unit in the next two to three weeks. Your call
will be processed more rapidly now with these options in place:
- Press 1 to place a financial transaction.
- Press 2 for mutual fund prices.
- Press 3 for your account balance and last two transactions (or
total last year distributions).
- Press 0 for personal service at any time.
BRANDYWINE FUND, INC. 4
<PAGE> 5
HIGHLIGHTS . . .
APPAREL & SHOES
Sold at Neiman Marcus, Macy's, and Bloomingdales', NAUTICA ENTERPRISES, INC.'S
menswear is capitalizing on the new trend toward casual dressing in the
workplace. Many companies, such as IBM and Friess Associates, have casual
Friday.
August quarter earnings rose 32 percent from $.28 to $.37, $.05 above analysts'
expectations, on revenue growth of 29 percent. We agree with earnings estimates
approaching $.58 versus $.46, a 26 percent increase, for the November quarter.
Originally a manufacturer of men's outerwear, your company successfully
broadened its product line to include men's shirts, pants, and shorts. The
Nautica label is considered high-quality, very comparable to Ralph Lauren's
Polo brand, but it sells at a 20 percent lower price.
In a conference call with researcher Kelli Fazler on September 28, Chairman
Harvey Sanders explained that, through a license agreement, Bernard Chaus, Inc.
will manufacture women's apparel for sale under the Nautica label.
He also indicated that Nautica is expanding its "store within a store" boutique
business by increasing square footage in existing department stores by 20
percent and setting up shop in 150 new department store locations.
One of your longer-term holdings, Nautica has more than doubled since its
purchase in April, 1994.
(continued on page 6)
BLAIR . . .
While serving as an equity analyst for Rauscher, Pierce, Refsnes,
Inc., Blair Baker had the opportunity to work with Friess researchers Carl
Gates, Andy Graves, Mark Lapolla and Conrad Doenges. He comments, "Of the many
firms I came in contact with, I noticed that one company in particular always
asked the right questions at the right time: Friess Associates.
"I was impressed with each Friess team member I met while at Rauscher,
and was quite excited about the chance to begin a consulting relationship with
this dedicated group," Blair explains, who began consulting to Friess in
September 1994.
Senior researcher Bill D'Alonzo remarks, "We always valued Blair as an
analyst at Rauscher, but his direct contribution to our clients and
shareholders now is even more valuable. We're fortunate to have his
stock-picking abilities on our team to help grow the assets entrusted to us."
Such winners as CompUSA, Dell Computer, Tellabs, and Nokia Corp., all
recommended by Blair, combined create more than $71 million in profits for your
portfolio.
Before working at Rauscher Pierce, Blair was a product manager at
Convex Computer Corp. for six years. He earned a BS in Computer Science from
the University of Texas at Austin and an MBA from Southern Methodist
University.
After completing his graduate studies, Blair became Adjunct Professor
of Finance for Dallas Baptist University. In 1986, Blair served on the advance
staff of George Bush while he served as Vice President to Ronald Reagan.
[BLAIR BAKER PHOTO]
Together with his wife Stephanie, Blair lives in Dallas. He enjoys
playing golf, bicycling, snow skiing, and spending time outdoors with
Stephanie.
- Rebecca Buswell
5 BRANDYWINE FUND, INC.
<PAGE> 6
FUND BROKER . . .
"Kenny Epstein is a hard worker whose keen sense of timing really
helps our research effort," remarks senior researcher David Harrington. "He's
not afraid to put himself on the line and voice his opinion when he thinks we
should be buying or selling a stock."
A broker at Needham & Company for five years, Kenny says, "Our
strength is our focus. We follow only 150 companies in three sectors:
technology, healthcare and retailing, and so I have met the senior management
at almost every company in our research universe."
[KENNY EPSTEIN PHOTO]
His personal interaction with the people running a company is exactly
the research style your Fund's team practices.
"The folks at Friess are competitive, intense, and on top of their
investments," reports Kenny. "When I bring them an idea, I know they will
seriously consider it. Intel is a good case in point.
"The work of our semiconductor analyst, Raj Rajaratnam, on Intel
helped Bill D'Alonzo decide to sell the stock in January 1994. Raj believed
that product transitions would depress profits. The stock proceeded to perform
below other semiconductor stocks for nearly 12 months.
"In January 1995, we encouraged David Harrington to consider the stock
again. David shared Raj's opinion that the new Pentium chips would propel
earnings, so he bought back Intel. The stock has since doubled."
Other gainers Kenny has suggested to your research team for Brandywine
Fund include Applied Materials, KLA Instruments, Tencor Instruments, and
Altera. Together they contributed more than $60 million to the value of your
Fund.
After receiving an economics degree from Colby and an MBA from
Columbia Business School, Kenny married his college sweetheart Wendy. They have
two kids, Lila 4 and Jacob 1, and, having recently moved from Manhattan to
Westport, Connecticut, they are still adjusting to waking up to birds chirping.
Kenny spends nearly all of his free time with his family but does find
a little time for skiing, golfing, and playing tennis.
- Margaret Barton
HIGHLIGHTS . . . (continued from page 5)
The "swoosh" logo. "Air Jordan." "Just do it." To nearly everyone in the U.S.,
whether they are physically active or not, these phrases mean one thing --
NIKE, INC.
In a generally sluggish retail environment, Nike, the largest athletic footwear
company in the world, makes products that are selling well in all athletic and
outdoor footwear categories.
According to Chief Financial Officer Bob Falcone, the high performance shoes
and apparel in the women's sports and fitness division are gaining market share
with orders increasing 80 percent in the August quarter.
Revenues jumped 38 percent in the August quarter from $1.2 billion last year to
$1.6 billion which catapulted earnings up 58 percent to $2.26 from $1.43. In
the November quarter we expect an earnings increase of 34 percent.
Nike's increased international opportunities in France, Germany, Japan, and
South America propel your company to be a dominant world-wide brand.
BRANDYWINE FUND, INC. 6
<PAGE> 7
HIGHLIGHTS . . . (continued from page 6)
Fueling that world-wide recognition is the recent endorsement contract Nike
signed with Hideo Nomo, the "Michael Jordan" of Japan. Hideo recently moved to
the U.S. to play for the Los Angeles Dodgers and quickly has become an All-Star
pitcher.
Selling now at $111, your shares have jumped 18 percent since purchase in
August at $94.
FINANCIAL/BUSINESS SERVICES
In today's real estate market, more than one out of five homes purchased is a
manufactured home. GREEN TREE FINANCIAL CORP. is the largest new and used
manufactured home lender with an estimated 30 percent of total market share.
Ninety percent of manufactured home buyers require a loan, and the majority
obtain one through a manufactured housing dealer. Green Tree services these
dealers while successfully diversifying into other
(Continued on page 9)
PAT . . .
Just as a Mom keeps a family in sync and sees that everyone's needs
are met, from the simplest to the most complicated, Friess Associates has
someone who keeps us on track -- Pat Bankert.
Anything that must be done, whether it be organizing a company
luncheon, arranging cellular service, negotiating large purchases, or locating
a hard-to-find item, you can call on Pat.
When Pat launched her business, Go-For Professionals, she had no idea
that her flyer which someone passed along to Foster Friess would lead to a
long-standing business relationship and friendship spanning more than 12 years.
In fact, Friess Associates was one of Pat's first business clients.
Pat explains, "My mission is to take all the hassles out of people's
lives so they can give to their jobs more effectively, efficiently, and, most
importantly, with a smile on their face."
The genuine care and concern Pat feels for all the folks at Friess
is reflected in her willingness to do whatever it takes to help everyone here
focus on our important obligation to our clients and shareholders.
In addition to her serving attitude, Pat is most appreciated for her
innate ability to light up a room with her infectious laugh, joyous spirit, and
terrific sense of humor.
Always caring for others, when she's not catering a luncheon, or
running errands for her clients, Pat voluntarily assists senior citizens with
their weekly grocery shopping.
When Pat does have a free moment, she and her husband of 34 years,
Dick, love to travel and especially enjoy being by the sea. Their five grown
children and five young grandchildren all live in the area so Pat and Dick
often play the roles of Grammy and Pop-Pop -- much to their delight!
Brandywine Fund Secretary, Lynda Campbell, praises, "Pat helps
eliminate the stress that is often found in this business. She seems to sense
what is needed and takes care of it before you even have to ask. She's
invaluable to all of us."
- Rebecca Buswell
[PAT BANKERT PHOTO]
7 BRANDYWINE FUND, INC.
<PAGE> 8
ALL IS NOT ROSES . . .
Like last quarter, the good news outweighs the bad news in your
portfolio's performance. But, amidst the big winners like Cisco Systems, LSI
Logic, and Bay Networks, unfortunately, there were some losers, too.
Your biggest retracement was in EMC Corp., followed by Philips
Electronics, Browning Ferris, and Tandem Computers, backtracking more than $5
million each. All but Philips were sold from your portfolio and replaced with
other better-performing stocks.
As in June, these losses were compensated for by a single holding --
Cisco Systems, which gained over $18 million more than the four retreaters'
combined losses!
Led by Cisco's $67 million increase, 26 other companies gained more
than $5 million apiece. LSI gained $45 million, Bay Networks and Cirrus Logic
$29 million each, Dell Computer $27 million, U.S. Robotics and Texas
Instruments $16 million each, and Nokia Corp. $15 million. These companies on
an average grew 36 percent during the quarter.
GROWING YOUR FUND . . .
Bright, dedicated employees at the companies in which you invest your
money are really the people who generate your earnings and grow your assets.
For that reason,we want to highlight some of these creative and motivated hard
workers who increase the value of your investment.
With semiconductor stocks rocketing, a natural place to begin is
introducing you to Larry Hornbeck, a Ph.D. physicist who works for Texas
Instruments at their Central Research Laboratories in Dallas, Texas.
Larry is the inventor of the Digital Micromirror Device (DMD). You may
never have heard of the digital mirror semiconductor, but it will literally
change the way you look at things.
The DMD is a silicon chip measuring 5/8" across, but unlike the chips
already in your computer or television, the DMD contains more than 442,000
tiny, movable aluminum mirrors!
The digital mirror is currently used in high resolution projection
systems, but ultimately it will produce bigger, brighter, film-quality images
on your TV, computer screen, and printed faxes at a lower price and with
greater reliability than older technologies.
This device is the latest in a succession of ingenious ideas Larry has
developed for Texas Instruments. Holder of 24 patents, Larry is a man of
contrasts. At Texas Instruments, he invents new technologies which can
potentially add billions of dollars to the company's bottom line.
Away from the job, he is equally comfortable tinkering with his
50-year-old tractor on his small farm.
While pictured here in a coat and tie, Larry favors cowboy boots and
western attire over business suits at both Texas Instruments and on the farm.
Soon, Larry will travel to Munich to accept the prestigious Rhein
Foundation Award for outstanding achievement in the area of radio, television,
and information technology. We extend our congratulations and appreciation for
the great contributions he and his associates make to Brandywine Fund.
- Margaret Barton
[LARRY HORNBECK PHOTO]
BRANDYWINE FUND, INC. 8
<PAGE> 9
FRAN . . .
"Before I can do any research, I need the information Fran Okoniewski
provides to me," comments senior researcher, John Ragard.
"Without Fran's ability to recognize those companies which fit our
investment criteria, I would have brokers and analysts calling me twenty or
more times each day telling me about a stock. Fran screens the information and
passes along only those companies which he knows I want to look at.
"His contribution is vital to our research effort, allowing us to
concentrate on our number one objective -- growing the assets of our
shareholders and clients."
Fran also monitors our many in-house, research-based information
programs. One program in particular, the "Helmsman" report, is run every week.
This ranks all companies in every portfolio according to earnings progression
and helps senior researchers make any necessary adjustments to your holdings.
"What inspires me most about working at Friess is the people. I feel
privileged to be part of this smart and talented group who constantly encourage
others to perform to the best of their God-given potential," Fran remarks. "It
is this culture and attitude that makes each day rewarding."
Fran earned a BA in Political Science from Widener University, and
prior to joining Friess in 1992, he worked as a bankruptcy paralegal for a
local law firm.
He and wife Christine have been married for nearly five years, and
away from work, Fran likes to spend most of his free time with her. He also
relishes being outdoors mountain biking, hiking, and running. Next year he may
be spending more workdays in our Wyoming office as he hopes to tackle the
Tetons!
- Rebecca Buswell
[FRAN OKONIEWSKI PHOTO]
HIGHLIGHTS . . . (continued from page 7)
areas, including financing loans for in-site home improvement, consumer
products (motorcycles, boats, aircraft), and equipment (trucks), thus providing
a broad range of financial services.
According to Green Tree's Chief Financial Officer John Brink, loans to people
purchasing manufactured homes increased 27 percent in the June quarter, but the
newer business your company recently expanded into grew at a higher rate.
Loans for home improvement increased 46 percent, consumer finance leapt 340
percent, and equip-ment finance tripled from $9 million to $27 million.
In the June quarter, revenues rose 37 percent from $112 million to $153 million
which drove earnings up 38 percent to $.88 from $.64. We anticipate earnings to
increase 35 percent in the September quarter and to finish 1995 at $3.50, up 34
percent from last year.
Valued now at $61, your shares have soared 68 percent since purchase in
February.
FOOD/RESTAURANTS
Dave Thomas, Senior Chairman of the Board and Founder of WENDY'S INTERNATIONAL,
INC., is a well recognized personality in America. Because of clever
(Continued on page 10)
9 BRANDYWINE FUND, INC.
<PAGE> 10
HIGHLIGHTS . . . (CONTINUED FROM PAGE 9)
television commercials featuring Dave, most Americans know whatever Wendy's
newest sandwich is, and where Dave may have traveled to get the recipe.
A fast food chain offering more than just a typical hamburger, your company
gives the customer more healthy choices for the person on the go. The Super Bar
has a full salad bar along with various pasta, sauces, and Mexican foods.
This variety stimulates sales, which averaged more than $1 million per
restaurant last year, according to Treasurer John Brownley.
Wendy's will open 1200 new restaurants within the next two years, which will
help your company continue growing earnings at the 20 percent rate they grew in
1994 and 1995.
In addition to this base growth, Wendy's plans to acquire Tim Horton's, a chain
of 1,000 restaurants in Canada specializing in breakfast and coffee-break
foods. If the acquisition is completed by the end of this year, 1996 earnings
should increase by more than 30 percent.
HEALTHCARE FACILITIES
The premier HMO operator in the New York Metropolitan area and along the East
Coast is OXFORD HEALTH PLANS, which is experiencing no slowdown in membership
growth.
In fact, enrollment in Oxford's flagship HMO should have more than 1 million
members by the end of this year. In 1996, your company could surpass the 1.7
million member mark as new regions such as Philadelphia are opened.
Chief Financial Officer Drew Cassidy says that Oxford is expanding its
geographic territories and entering new markets, and recently extended services
into the Medicare area in Southern Florida.
He also explains that with this growth comes the challenge of managing it
effectively. To do so, while hiring 700 new employees, Oxford is updating its
computer and telephone systems.
To promote growth, your company uses what is called its New Ambassador Program
which encourages current members to preach the positive benefits of Oxford's
plans to their neighbors.
Last quarter, revenues exploded nearly 150 percent from $158 million to $380
million propelling earnings up 84 percent from $.19 to $.35. We expect in the
September quarter that revenues will jump 123 percent to drive earnings up 91
percent.
In only three weeks following its purchase, your shares have risen 21 percent
to $73.
LEISURE & ENTERTAINMENT
Since 1992, HARMAN INTERNATIONAL INDUSTRIES, INC., producer of high fidelity
sound systems, has consolidated 23 different enterprises into three operational
groups -- consumer, professional, and automotive.
As a result of this streamlining and internal sales growth of 94 percent, 1995
fiscal year earnings are $2.70, nearly seven times the $.39 they were three
years ago.
Through its Consumer Group, home sound systems carrying the names JBL, Harman
Kardon, and Infinity enjoy strong sales. A recent acquisition now adds the
legendary Mark Levinson and Proceed brands to the growing list of
U.S.-manufactured electronic products.
The Automotive Group supplies sound systems to auto manufacturers such as
Toyota, Jaguar, Saab, Mercedes Benz, Chrysler, Ford, and BMW.
In a recent conversation with Chief Executive Officer Sidney Harman, we learned
that over the next three to five years, the Automotive Group will expand its
music systems to incorporate navigation, security, communications, and active
cabin quieting.
We estimate fiscal 1996 earnings will be above the analyst consensus of $3.23,
and still Harman sells at a modest price earnings ratio of 15.
First purchased in November 1993 at $23, and added to early this year at $40,
your shares now at $49 carry a healthy appreciation.
RETAILING
GENERAL NUTRITION, INC. stands apart in the retailing business by franchising
their stores only to owner-operators, not to corporations or "ghost" owners who
don't have hands-on experience in the business.
Your company specializes in the retail sales of vitamins, sports nutrition
formulas, and herbs, and health food products, with many of these products
bearing the General Nutrition brand name. Your company also markets fitness
and other health-related services.
BRANDYWINE FUND, INC. 10
<PAGE> 11
HIGHLIGHTS . . . (continued)
On a recent visit consultant Greg Friess made to a General Nutrition store in
downtown Minneapolis, he learned that the "hot" seller is Melatonin, which aids
sleeping and reputedly slows the aging process.
When the FDA allowed it back on the shelves two months ago, it sold for $7.99.
Now it retails for $9.99, and the product sells out so quickly the company has
trouble keeping the stores in stock.
The quarter ending July saw earnings rise 52 percent to $.35 from $.23 with
estimated earnings next quarter of 38 percent. For the fiscal year, we
anticipate earnings growth of 44 percent.
Up 44 percent from its purchase price of $32, your shares now sell at $46.
SOFTWARE
With the healthcare marketplace in the U.S. evolving towards a managed-care
environment, HBO & COMPANY provides hospitals with the latest software for
management solutions, thus enabling hospitals to function competitively.
Your debt-free company's computer systems maintain patients' records, both on a
financial and clinical outcome basis, through whatever path a treatment,
however complex or simple, may take.
President and Chief Executive Officer Charlie McCall explained how the recent
Pegasus Medical Ltd. acquisition afforded HBO the opportunity to integrate
patient records at the physicians' offices with the information networks at
hospitals, HMOs, and insurance companies.
Revenues for the June quarter rose 31 percent, shooting earnings up 79 percent
to $.34 from $.19. The forecast for the September quarter shows earnings
increasing 57 percent with the year 1995 showing a 59 percent increase over
1994.
TOP TEN . . .
Two new categories joined your Top Ten Industry Groups during the
quarter -- Apparel & Shoes and Leisure & Entertainment.
Apparel & Shoes increased from 1 percent to 4.3 percent with the
addition of Nike, Nine West, and Liz Claiborne, which together have gained more
than $14 million since your purchase. Additional purchases in Tommy Hilfiger
Corp. and the $2 million gain in Nautica Enterprises also helped grow this
group.
The $50 million addition of Mattel and Harman International's $3.5
million gain moved the Leisure & Entertainment category from 0.8 percent to 5.5
percent of your portfolio.
Dropping from the Top Ten, Computer Systems went from 11.8 percent to
only 3.5 percent of your holdings. Amdahl and IBM were both sold while we cut
back a good chunk of your Hewlett-Packard position.
The Electronics category, making up 5.1 percent of your assets in June,
also fell from the Top Ten during the quarter as Amphenol, Varian Associates
and Millipore Corp. were eliminated from your portfolio and more than $20
million in profits taken.
<TABLE>
<CAPTION>
TOP TEN INDUSTRY GROUPS
<S> <C>
Cash (1.1%)
Software (7.5%)
Retailing (6.2%)
Communications (6.5%)
Semiconductor/Equipment Suppliers (5.8%)
Leisure & Entertainment (5.5%)
Computers & Related (6.1%)
Financial/Business Services (5.6%)
Apparel & Shoes (4.3%)
Semiconductors & Related (14.9%)
Networking (10.2%)
All Others (26.3%)
</TABLE>
11 BRANDYWINE FUND, INC.
<PAGE> 12
MARKET CAP . . .
The most notable shift in your market capitalization occurred in the $1
to $5 billion category. Largely due to new purchases in Halliburton Company,
HBO & Company, and Cabletron Systems, and a $33 million additional purchase in
Cirrus Logic, this group rose from 45.5 percent in June to 50.4 percent of your
total assets this quarter.
Substantial gains in value of existing holdings in this group also
contributed to the market capitalization growth. Dell Computer was up 36
percent, Green Tree Financial climbed 37 percent, Xilinx, Inc. rose 48 percent,
and U.S. Robotics jumped 52 percent during the quarter.
Large cap holdings of $5 billion and over dropped slightly from 33.8
percent in June to 32.2 percent. The sale of your nearly $200 million position
in IBM was the main factor causing this change.
Your companies in the $500 million to $1 billion category fell 2
percent to 4.8 percent while your small cap companies, below $500 million,
scarcely changed, shaving only one-tenth of a percent off of June's 11.6
percent mark.
<TABLE>
<CAPTION>
YOUR COMPANIES' MARKET CAPITALIZATION
<S> <C>
BELOW $500 MILLION 11.5%
$500 MILLION TO $1 BILLION 4.8%
$1 TO $5 BILLION 50.4%
CASH 1.1%
$5 BILLION AND OVER 32.2%
</TABLE>
DON'T PANIC. . .
when you see your October 26 Fund quote in the newspapers. That day
you will receive a dividend of APPROXIMATELY $3.89 per share -- $3.14 in
short-term capital gains (treated as ordinary income) and $.75 in long-term
capital gains -- so your quote will be reduced accordingly.
WHILE INCOME TAX WILL HAVE TO BE PAID FOR THIS YEAR ON THE
DISTRIBUTION, IT WILL NOT HAVE TO BE PAID LATER ON THIS SAME AMOUNT IF AND WHEN
THE SHARES ARE REDEEMED.
Shares purchased on or after October 26, 1995 will not receive the
distribution and will not incur the consequent tax liability. However, any
investor who delays his purchase to avoid the distribution will forego any
appreciation which may occur in the interim.
Consult with your accountant to calculate how much the Fund would have
to gain before offsetting any advantages of deferring purchase. This would
depend on your particular tax situation.
BRANDYWINE FUND, INC. 12
<PAGE> 13
BRANDYWINE FUND, INC.
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
QUOTED
MARKET
SHARES COST VALUE
------ ---- -----
<S> <C> <C>
COMMON STOCKS - 98.9% (a)
APPAREL & SHOES - 4.3%
152,200 Authentic Fitness Corp. . . . . . . . . . . . . . $ 2,962,064 $ 3,424,500
146,300 Fila Holding S. p. A. . . . . . . . . . . . . . . 4,259,691 5,175,362
463,900 Liz Claiborne, Inc. . . . . . . . . . . . . . . . 11,495,810 11,713,475
211,650 Nautica Enterprises Inc.* . . . . . . . . . . . . 3,567,302 7,249,012
726,900 NIKE, Inc. Cl B . . . . . . . . . . . . . . . . . 68,214,079 80,776,763
293,500 Nine West Group Inc.* . . . . . . . . . . . . . . 11,837,587 13,354,250
172,700 St. John Knits, Inc. . . . . . . . . . . . . . . 4,243,537 8,419,125
517,300 Tommy Hilfiger Corp.* . . . . . . . . . . . . . . 13,858,139 16,812,250
1,010,500 The Warnaco Group, Inc. . . . . . . . . . . . . . 22,500,151 24,252,000
227,300 WestPoint Stevens Inc.* . . . . . . . . . . . . . 4,025,740 4,886,950
--------- ---------
146,964,100 176,063,687
THIS SECTOR IS 19.8% ABOVE YOUR COST.
AUTOMOTIVE & RELATED - 1.1%
540,200 Lear Seating Corp.* . . . . . . . . . . . . . . . 15,808,102 15,868,375
270,000 SPX Corp. . . . . . . . . . . . . . . . . . . . . 4,117,201 4,016,250
238,050 Titan Wheel International, Inc. . . . . . . . . . 3,071,921 4,076,606
489,500 Varity Corp.* . . . . . . . . . . . . . . . . . . 21,637,730 21,782,750
--------- ---------
44,634,954 45,743,981
THIS SECTOR IS 2.5% ABOVE YOUR COST.
COMMUNICATIONS - 6.5%
508,000 Boston Technology, Inc.* . . . . . . . . . . . . 6,405,244 7,683,500
186,900 Brite Voice Systems, Inc.* . . . . . . . . . . . 3,618,623 3,457,650
129,100 Cable Design
Technologies Corp.* . . . . . . . . . . . . . . 2,408,125 3,873,000
1,040,000 DSC Communications Corp.* . . . . . . . . . . . . 64,205,660 61,620,000
482,500 ECI Telecom Ltd. . . . . . . . . . . . . . . . . 10,875,436 10,795,937
104,000 EIS International, Inc.* . . . . . . . . . . . . 1,659,122 1,859,000
425,000 L.M. Ericsson Telephone
Co. ADR . . . . . . . . . . . . . . . . . . . . 9,916,208 10,412,500
719,000 Frontier Corp. . . . . . . . . . . . . . . . . . 19,435,937 19,143,375
340,200 Inter-Tel, Inc.* . . . . . . . . . . . . . . . . 4,630,056 5,996,025
1,519,300 Nokia Corp. "A" ADR . . . . . . . . . . . . . . . 73,512,340 105,971,175
27,000 TESSCO Technologies Inc.* . . . . . . . . . . . . 613,250 702,000
77,500 Unitech Industries, Inc.* . . . . . . . . . . . . 1,156,594 1,104,375
428,800 U.S. Robotics Corp.* . . . . . . . . . . . . . . 18,240,114 36,555,200
---------- ----------
216,676,709 269,173,737
THIS SECTOR IS 24.2% ABOVE YOUR COST.
COMPUTERS & RELATED - 6.1%
363,000 Adaptec, Inc.* . . . . . . . . . . . . . . . . . 15,158,165 14,973,750
538,100 Applied Magnetics Corp.* . . . . . . . . . . . . 9,156,452 8,407,812
520,000 Auspex Systems, Inc.* . . . . . . . . . . . . . . 4,386,448 8,125,000
138,000 Bell & Howell Holdings Co.* . . . . . . . . . . . 3,253,896 3,519,000
1,307,500 Compaq Computer Corp.* . . . . . . . . . . . . . 64,870,199 63,250,313
175,700 Diamond Multimedia
Systems, Inc.* . . . . . . . . . . . . . . . . 3,291,900 5,666,325
814,000 Gateway 2000, Inc.* . . . . . . . . . . . . . . . $ 19,363,952 $ 24,928,750
154,000 Microcom, Inc.* . . . . . . . . . . . . . . . . . 2,487,957 2,906,750
586,600 Read-Rite Corp.* . . . . . . . . . . . . . . . . 9,451,077 21,410,900
1,901,400 Seagate Technology, Inc.* . . . . . . . . . . . . 81,703,644 80,096,475
195,500 StorMedia, Inc.* . . . . . . . . . . . . . . . . 8,723,035 8,846,375
42,500 Teltrend Inc.* . . . . . . . . . . . . . . . . . 1,320,522 1,402,500
300,000 Telxon Corp. . . . . . . . . . . . . . . . . . . 7,063,129 7,162,500
------------ -----------
230,230,376 250,696,450
THIS SECTOR IS 8.9% ABOVE YOUR COST.
COMPUTER SYSTEMS - 3.5%
750,000 Dell Computer Corp.* . . . . . . . . . . . . . . 43,624,471 63,750,000
951,100 Hewlett-Packard Co. . . . . . . . . . . . . . . . 52,691,282 79,297,962
150,800 Sequent Computer Systems, Inc.* . . . . . . . . . 3,153,944 2,997,150
---------- -----------
99,469,697 146,045,112
THIS SECTOR IS 46.8% ABOVE YOUR COST.
DISTRIBUTION - 0.5%
303,000 Black Box Corp.* . . . . . . . . . . . . . . . . 5,462,606 5,605,500
139,250 Kent Electronics Corp.* . . . . . . . . . . . . . 3,331,799 6,109,594
153,600 Wyle Electronics . . . . . . . . . . . . . . . . 3,454,157 6,892,800
---------- ----------
12,248,562 18,607,894
THIS SECTOR IS 51.9% ABOVE YOUR COST.
ELECTRONICS - 3.4%
213,500 Altron Inc.* . . . . . . . . . . . . . . . . . . 4,560,134 6,671,875
500,100 AVX Corporation* . . . . . . . . . . . . . . . . 14,685,548 16,753,350
554,700 Identix Inc.* . . . . . . . . . . . . . . . . . . 8,723,932 7,211,100
129,500 Jabil Circuit, Inc.* . . . . . . . . . . . . . . 1,492,435 1,699,687
466,400 KEMET Corp.* . . . . . . . . . . . . . . . . . . 11,013,741 15,974,200
90,000 LSI Industries Inc. . . . . . . . . . . . . . . . 1,135,625 1,755,000
103,400 Merix Corp.* . . . . . . . . . . . . . . . . . . 2,627,445 3,308,800
101,900 Microtest, Inc.* . . . . . . . . . . . . . . . . 2,557,614 2,012,525
122,400 Park Electrochemical Corp. . . . . . . . . . . . 2,887,336 3,962,700
88,400 PRI Automation, Inc.* . . . . . . . . . . . . . . 3,630,275 3,624,400
130,000 RasterOps* . . . . . . . . . . . . . . . . . . . 1,147,503 1,023,750
112,800 Sanmina Corp.* . . . . . . . . . . . . . . . . . 5,133,857 5,386,200
380,800 SCI Systems, Inc.* . . . . . . . . . . . . . . . 13,071,989 13,137,600
64,000 Semtech Corp.* . . . . . . . . . . . . . . . . . 823,539 1,776,000
123,000 Tylan General, Inc.* . . . . . . . . . . . . . . 1,968,000 2,060,250
99,200 Veeco Instruments Inc.* . . . . . . . . . . . . . 2,041,190 2,604,000
1,225,650 Vishay Intertechnology, Inc.* . . . . . . . . . . 37,317,443 51,477,300
----------- ------------
114,817,606 140,438,737
THIS SECTION IS 22.3% ABOVE YOUR COST.
FINANCIAL/BUSINESS SERVICES - 5.6%
165,000 AccuStaff Inc.* . . . . . . . . . . . . . . . . . 5,425,666 6,063,750
468,000 AmeriCredit Corp.* . . . . . . . . . . . . . . . 6,406,062 6,961,500
503,800 Bank of New York Co., Inc. . . . . . . . . . . . 21,539,626 23,426,700
</TABLE>
13 BRANDYWINE FUND, INC.
<PAGE> 14
BRANDYWINE FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
QUOTED
MARKET
SHARES COST VALUE
------ ------ -----
COMMON STOCKS - 98.8% (a) (CONTINUED)
<S> <C> <C>
FINANCIAL/BUSINESS SERVICES - 5.6% (continued)
272,000 Checkpoint Systems, Inc.* . . . . . . . . . . . . $ 5,896,134 $ 7,174,000
329,000 C.I.S. Technologies, Inc.* . . . . . . . . . . . 1,293,589 1,274,875
225,000 Citation Corp.* . . . . . . . . . . . . . . . . . 3,978,127 4,050,000
177,200 CMAC Investment Corp. . . . . . . . . . . . . . . 6,432,287 9,325,150
479,600 Coast Savings Financial, Inc.* . . . . . . . . . 11,362,492 12,589,500
537,600 Equifax Inc. . . . . . . . . . . . . . . . . . . 19,500,354 22,512,000
770,200 Green Tree Financial Corp. . . . . . . . . . . . 27,851,688 46,982,200
355,400 Household International, Inc. . . . . . . . . . . 17,553,859 22,034,800
833,300 MGIC Investment Corp. . . . . . . . . . . . . . . 38,433,824 47,706,425
270,000 National Auto Credit, Inc.* . . . . . . . . . . . 4,677,094 5,197,500
196,200 Norrell Corp. . . . . . . . . . . . . . . . . . . 4,333,232 6,376,500
224,000 Personnel Group of America, Inc.* . . . . . . . . 3,136,000 3,136,000
362,000 Physician Computer
Network, Inc.* . . . . . . . . . . . . . . . . 2,060,128 1,900,500
83,100 The PMI Group, Inc. . . . . . . . . . . . . . . . 2,825,400 3,936,862
----------- ------------
182,705,562 230,648,262
THIS SECTOR IS 26.2% ABOVE YOUR COST.
FOOD/RESTAURANTS - 0.9%
110,000 Applebee's International Inc. . . . . . . . . . . 2,914,822 2,997,500
223,900 CKE Restaurants, Inc. . . . . . . . . . . . . . . 2,536,148 2,910,700
180,000 Cooker Restaurant Corp. . . . . . . . . . . . . . 1,598,300 1,935,000
199,500 DAKA International, Inc.* . . . . . . . . . . . . 4,728,425 6,533,625
40,000 Longhorn Steaks, Inc.* . . . . . . . . . . . . . 686,250 710,000
113,400 Sonic Corp.* . . . . . . . . . . . . . . . . . . 1,776,192 2,579,850
1,016,800 Wendy's International, Inc. . . . . . . . . . . . 19,765,284 21,479,900
----------- ------------
34,005,421 39,146,575
THIS SECTOR IS 15.1% ABOVE YOUR COST.
HEALTHCARE - 4.1%
82,000 AHI Healthcare Systems Inc.* . . . . . . . . . . 1,148,000 1,271,000
507,100 Apria Healthcare Group Inc.* . . . . . . . . . . 10,520,355 12,550,725
195,000 Curative Technologies, Inc.* . . . . . . . . . . 1,698,125 2,754,375
937,600 HBO & Co. . . . . . . . . . . . . . . . . . . . . 58,321,045 58,600,000
337,300 Health Management Asso., Inc.* . . . . . . . . . 9,591,732 10,835,762
242,000 Healthplan Services Inc.* . . . . . . . . . . . . 3,871,308 4,930,750
1,498,800 HEALTHSOUTH Corp.* . . . . . . . . . . . . . . . 27,249,918 38,219,400
66,200 Living Centers of America, Inc.* . . . . . . . . 2,167,912 2,201,150
142,400 Oxford Health Plans, Inc.* . . . . . . . . . . . 8,577,743 10,359,600
169,400 Pediatrix Medical Group, Inc.* . . . . . . . . . 3,603,278 3,472,700
120,200 PHP Healthcare Corp.* . . . . . . . . . . . . . . 2,376,014 4,041,725
115,500 Summit Care Corp.* . . . . . . . . . . . . . . . 2,787,834 2,829,750
601,400 Surgical Care Affiliates, Inc. . . . . . . . . . 13,827,888 13,982,550
128,900 United Dental Care* . . . . . . . . . . . . . . . 3,404,129 3,867,000
----------- ------------
149,145,281 169,916,487
THIS SECTOR IS 13.9% ABOVE YOUR COST.
HOME/OFFICE & RELATED - 1.1%
409,000 Alco Standard Corp. . . . . . . . . . . . . . . . $ 25,407,917 $ 34,662,750
25,000 W. H. Brady Co. . . . . . . . . . . . . . . . . . 1,628,125 1,825,000
63,700 Duracraft Corp.* . . . . . . . . . . . . . . . . 2,863,212 2,874,463
246,000 Nu-Kote Holding, Inc.* . . . . . . . . . . . . . 4,856,350 5,350,500
100,500 Recoton Corp.* . . . . . . . . . . . . . . . . . 2,503,673 2,763,750
----------- ------------
37,259,277 47,476,463
THIS SECTOR IS 27.4% ABOVE YOUR COST.
LEISURE & ENTERTAINMENT - 5.5%
86,800 BMC Industries, Inc. . . . . . . . . . . . . . . 2,617,962 3,352,650
113,900 Cannondale Corp.* . . . . . . . . . . . . . . . . 1,984,407 1,879,350
92,600 Doubletree Corp.* . . . . . . . . . . . . . . . . 1,759,400 2,060,350
224,490 Harman International Industries . . . . . . . . . 7,109,352 11,000,010
1,676,900 Mattel, Inc. . . . . . . . . . . . . . . . . . . 50,204,883 49,258,938
3,250,000 Philips Electronics N.V. ADR . . . . . . . . . . 169,299,123 158,437,500
103,000 Toy Biz, Inc.* . . . . . . . . . . . . . . . . . 2,595,849 2,472,000
----------- ------------
235,570,976 228,460,798
THIS SECTOR IS 3.0% BELOW YOUR COST.
MACHINERY/CONSTRUCTION & MISC. MANUFACTURING - 2.1%
170,000 3D Systems Corp.* . . . . . . . . . . . . . . . . 3,082,500 2,847,500
250,300 Albany International Corp. . . . . . . . . . . . 5,589,723 5,850,763
269,000 Applied Power Inc. . . . . . . . . . . . . . . . 7,528,373 8,608,000
99,400 Blount, Inc. . . . . . . . . . . . . . . . . . . 2,094,070 4,733,925
465,100 Case Corp. . . . . . . . . . . . . . . . . . . . 10,783,174 17,092,425
94,200 Chicago Miniature Lamp, Inc.* . . . . . . . . . . 1,327,977 1,672,050
131,300 Gleason Corp. . . . . . . . . . . . . . . . . . . 3,066,940 4,300,075
275,000 Greenfield Industries, Inc. . . . . . . . . . . . 7,853,891 8,456,250
120,000 JLG Industries, Inc. . . . . . . . . . . . . . . 1,709,494 5,400,000
771,900 Parker-Hannifin Corp. . . . . . . . . . . . . . . 21,522,374 29,332,200
----------- ------------
64,558,516 88,293,188
THIS SECTOR IS 36.8% ABOVE YOUR COST.
MEDICAL PRODUCTS & SUPPLIES - 1.8%
284,800 Ballard Medical Products . . . . . . . . . . . . 4,284,115 4,663,600
701,300 Biomet, Inc.* . . . . . . . . . . . . . . . . . . 10,265,442 12,097,425
113,966 Cooper Companies, Inc.* . . . . . . . . . . . . . 1,053,163 911,728
190,000 i-STAT Corp.* . . . . . . . . . . . . . . . . . . 4,168,431 7,077,500
551,600 Nellcor Puritan Bennett Inc.* . . . . . . . . . . 22,055,799 27,442,100
324,100 Sofamor/Danek Group, Inc.* . . . . . . . . . . . 8,312,307 8,993,775
620,000 Ventritex, Inc.* . . . . . . . . . . . . . . . . 13,524,777 13,330,000
----------- ------------
63,664,034 74,516,128
THIS SECTOR IS 17.0% ABOVE YOUR COST.
</TABLE>
BRANDYWINE FUND, INC. 14
<PAGE> 15
BRANDYWINE FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
QUOTED
MARKET
SHARES COST VALUE
------ ------ -----
COMMON STOCKS - 98.9%(a) (CONTINUED)
<S> <C> <C> <C>
NETWORKING - 10.2%
2,584,900 Bay Networks, Inc.* . . . . . . . . . . . . . . . $ 91,208,727 $137,969,037
712,500 Cabletron Systems, Inc.* . . . . . . . . . . . . 47,540,226 46,935,938
3,150,000 Cisco Systems Inc.* . . . . . . . . . . . . . . . 122,071,781 217,350,000
206,400 Madge Networks N.V.* . . . . . . . . . . . . . . 5,309,890 6,604,800
57,500 Microdyne Corp.* . . . . . . . . . . . . . . . . 1,381,874 1,459,063
263,200 Network Equipment
Technologies* . . . . . . . . . . . . . . . . . 9,603,530 10,955,700
----------- ------------
277,116,028 421,274,538
THIS SECTOR IS 52.0% ABOVE YOUR COST.
OIL/GAS FIELD SERVICES - 3.5%
159,700 Energy Ventures, Inc.* . . . . . . . . . . . . . 3,726,190 3,713,025
260,100 Falcon Drilling Company, Inc.* . . . . . . . . . 2,464,751 3,316,275
2,858,400 Halliburton Co. . . . . . . . . . . . . . . . . . 118,340,730 119,338,200
164,200 SITEL Corporation* . . . . . . . . . . . . . . . 3,559,656 4,022,900
485,400 Tidewater Inc. . . . . . . . . . . . . . . . . . 13,424,621 13,651,875
189,500 Varco International, Inc.* . . . . . . . . . . . 2,051,028 1,918,688
----------- ------------
143,566,976 145,960,963
THIS SECTOR IS 1.7% ABOVE YOUR COST.
PHARMACEUTICALS - 2.2%
1,092,900 Genzyme Corp. . . . . . . . . . . . . . . . . . . 62,620,389 63,388,200
551,800 Pfizer Inc. . . . . . . . . . . . . . . . . . . . 27,275,603 29,452,325
----------- ------------
89,895,992 92,840,525
THIS SECTOR IS 3.3% ABOVE YOUR COST.
PRINTING - 0.4%
90,000 Cadmus Communication Corp. . . . . . . . . . . . 2,101,745 2,250,000
313,800 R.R. Donnelley & Sons Co. . . . . . . . . . . . . 11,089,708 12,238,200
----------- ------------
13,191,453 14,488,200
THIS SECTOR IS 9.8% ABOVE YOUR COST.
RETAILING - 6.2%
298,900 The Circle K Corp.* . . . . . . . . . . . . . . . 5,959,699 6,202,175
252,100 Circuit City Stores, Inc. . . . . . . . . . . . . 8,436,943 7,972,662
375,000 Claire's Stores, Inc. . . . . . . . . . . . . . . 6,811,945 7,687,500
104,100 CompUSA Inc.* . . . . . . . . . . . . . . . . . . 4,014,817 4,476,300
559,400 Consolidated Stores Corp.* . . . . . . . . . . . 8,634,332 12,936,125
211,700 Department 56, Inc.* . . . . . . . . . . . . . . 7,995,417 9,896,975
823,900 Dollar General Corp. . . . . . . . . . . . . . . 21,168,556 24,202,063
103,000 Friedman's Inc.* . . . . . . . . . . . . . . . . 2,107,125 2,240,250
779,200 General Nutrition Companies* . . . . . . . . . . 24,651,047 35,453,600
98,400 Insight Enterprises, Inc.* . . . . . . . . . . . 1,951,402 2,287,800
1,814,650 OfficeMax, Inc.* . . . . . . . . . . . . . . . . 31,250,283 44,005,263
2,149,400 Price/Costco, Inc.* . . . . . . . . . . . . . . . 38,542,085 36,808,475
147,800 Proffitt's Inc.* . . . . . . . . . . . . . . . . 2,862,446 4,064,500
928,100 Tandy Corp. . . . . . . . . . . . . . . . . . . . 57,350,260 56,382,075
----------- ------------
221,736,357 254,615,763
THIS SECTOR IS 14.8% ABOVE YOUR COST.
SEMICONDUCTOR/EQUIPMENT SUPPLIERS - 5.8%
117,750 Aetrium Inc.* . . . . . . . . . . . . . . . . . . $ 2,050,812 $ 2,531,625
478,400 Applied Materials, Inc.* . . . . . . . . . . . . 25,016,346 48,916,400
190,000 ASM Lithography Holding N.V.* . . . . . . . . . . 9,425,155 8,336,250
101,000 Asyst Technologies, Inc.* . . . . . . . . . . . . 3,371,754 4,633,375
239,500 Electroglas, Inc.* . . . . . . . . . . . . . . . 8,870,778 16,315,937
170,900 Electro Scientific Industries, Inc.* . . . . . . 2,530,504 5,960,138
451,800 LTX Corp.* . . . . . . . . . . . . . . . . . . . 6,262,495 5,703,975
95,300 Novellus Systems, Inc.* . . . . . . . . . . . . . 4,716,405 6,671,000
446,600 Tencor Instruments* . . . . . . . . . . . . . . . 20,509,961 19,762,050
3,335,200 Teradyne, Inc.* . . . . . . . . . . . . . . . . . 68,096,790 120,067,200
----------- ------------
150,851,000 238,897,950
THIS SECTOR IS 58.4% ABOVE YOUR COST.
SEMICONDUCTORS & RELATED - 14.9%
324,000 Alliance Semiconductor Corp.* . . . . . . . . . . 13,073,699 12,879,000
356,600 Altera Corp.* . . . . . . . . . . . . . . . . . . 12,106,180 22,242,925
1,583,400 Cirrus Logic, Inc.* . . . . . . . . . . . . . . . 62,257,207 90,649,650
560,000 Cypress Semiconductor Corp.* . . . . . . . . . . 13,999,946 21,630,000
206,200 Flextronics International Ltd.* . . . . . . . . . 4,845,700 5,309,650
415,000 FSI International, Inc.* . . . . . . . . . . . . 9,858,237 13,798,750
165,400 Information Storage Devices, Inc.* . . . . . . . 3,376,796 3,742,175
1,006,200 Integrated Device
Technology, Inc.* . . . . . . . . . . . . . . . 20,931,183 25,155,000
729,800 Intel Corp. . . . . . . . . . . . . . . . . . . . 32,016,208 43,879,225
163,500 International Rectifier Corp.* . . . . . . . . . 4,250,313 6,580,875
2,400,000 LSI Logic Corp.* . . . . . . . . . . . . . . . . 50,347,489 138,600,000
192,000 MEMC Electronic Materials, Inc.* . . . . . . . . 5,079,650 5,208,000
628,000 Micron Technology, Inc. . . . . . . . . . . . . . 28,428,625 49,926,000
121,000 Microsemi Corp.* . . . . . . . . . . . . . . . . 1,217,053 1,423,686
1,086,100 National Semiconductor Corp.* . . . . . . . . . . 33,075,307 30,003,512
191,600 Paradigm Technology, Inc.* . . . . . . . . . . . 6,195,177 5,891,700
236,000 RF Power Products Inc.* . . . . . . . . . . . . . 1,861,593 1,563,500
249,400 SGS-THOMSON
Microelectronics N.V.* . . . . . . . . . . . . 12,787,652 12,127,075
237,400 SubMicron Systems Corp.* . . . . . . . . . . . . 2,740,431 2,848,800
1,133,200 Texas Instruments Inc. . . . . . . . . . . . . . 54,037,797 90,514,350
36,600 Unitrode Corp.* . . . . . . . . . . . . . . . . . 400,246 1,065,975
423,700 VLSI Technology, Inc.* . . . . . . . . . . . . . 13,772,321 14,511,725
393,700 Xilinx, Inc.* . . . . . . . . . . . . . . . . . . 10,957,459 18,946,813
----------- ------------
397,616,269 618,498,386
THIS SECTOR IS 55.6% ABOVE YOUR COST.
SOFTWARE - 7.5%
228,000 American Software, Inc.* . . . . . . . . . . . . 1,845,869 1,653,000
892,600 Autodesk, Inc. . . . . . . . . . . . . . . . . . 43,568,197 39,051,250
1,849,100 BMC Software, Inc.* . . . . . . . . . . . . . . . 68,493,780 85,058,600
1,034,300 Borland International, Inc.* . . . . . . . . . . 17,079,545 15,126,637
876,800 Cadence Design Systems, Inc.* . . . . . . . . . . 27,734,955 34,414,400
190,300 Cognos Inc.* . . . . . . . . . . . . . . . . . . 5,858,174 6,517,775
56,100 Electronics for Imaging* . . . . . . . . . . . . 2,616,800 4,018,162
</TABLE>
15 BRANDYWINE FUND, INC.
<PAGE> 16
BRANDYWINE FUND, INC.
STATEMENT OF NET ASSETS (CONTINUED)
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
QUOTED
MARKET
SHARES COST VALUE
------ ------ -----
COMMON STOCKS - 98.9%(a) (CONTINUED)
<S> <C> <C>
SOFTWARE - 7.5% (continued)
69,000 Firefox Communications Inc.* . . . . . . . . . . $ 1,440,062 $ 1,707,750
175,000 IKOS Systems, Inc.* . . . . . . . . . . . . . . . 1,811,250 2,078,125
70,000 Landmark Graphics Corp.* . . . . . . . . . . . . 1,679,373 1,973,160
185,000 McAffee Associates, Inc.* . . . . . . . . . . . . 6,387,286 9,527,500
844,300 Mentor Graphics Corp.* . . . . . . . . . . . . . 11,701,385 17,624,763
160,000 Meridian Data, Inc.* . . . . . . . . . . . . . . 1,510,911 1,620,000
312,200 NetManage, Inc.* . . . . . . . . . . . . . . . . 7,496,075 7,414,750
157,400 NetWorth, Inc.* . . . . . . . . . . . . . . . . . 2,564,515 3,275,966
250,100 PC DOCS Group Inter'l Inc.* . . . . . . . . . . . 2,930,175 3,735,994
450,300 Quarterdeck Corp.* . . . . . . . . . . . . . . . 7,735,879 8,724,563
298,200 Softkey International Inc.* . . . . . . . . . . . 14,124,131 13,195,350
793,900 Sterling Software, Inc.* . . . . . . . . . . . . 29,736,756 36,122,450
327,400 Symantec Corp.* . . . . . . . . . . . . . . . . . 4,811,918 9,822,000
136,000 Systems & Computer Technology* . . . . . . . . . 2,233,878 3,672,000
110,000 TCSI Corp.* . . . . . . . . . . . . . . . . . . . 1,643,543 1,650,000
130,200 TouchStone Software Corp.* . . . . . . . . . . . 1,858,619 1,399,650
----------- ------------
266,863,076 309,383,845
THIS SECTOR IS 15.9% ABOVE YOUR COST.
TRANSPORTATION - 0.6%
699,800 America West Airlines, Inc. Cl B* . . . . . . . . 10,616,280 10,846,900
85,000 ATLAS Air, Inc.* . . . . . . . . . . . . . . . . 1,468,124 1,891,250
460,000 Mesa Airlines, Inc.* . . . . . . . . . . . . . . 4,722,625 4,686,480
205,500 Pittston Services Group . . . . . . . . . . . . . 5,623,062 5,574,188
----------- ------------
22,430,091 22,998,818
THIS SECTOR IS 2.5% ABOVE YOUR COST.
MISCELLANEOUS - 1.1%
105,000 Allied Waste Industries, Inc.* . . . . . . . . . 895,000 879,375
30,100 American Buildings Co.* . . . . . . . . . . . . . 703,923 711,112
105,000 Brockway Standard
Holdings Corp.* . . . . . . . . . . . . . . . . 1,531,500 1,811,250
376,800 California Energy Co., Inc.* . . . . . . . . . . 7,902,519 7,724,400
171,200 Carpenter Technology Corp. . . . . . . . . . . . 6,259,211 6,698,200
149,200 Figgie International Inc.* . . . . . . . . . . . 1,871,282 1,976,900
194,000 IMCO Recycling Inc. . . . . . . . . . . . . . . . 4,071,043 4,389,250
175,000 Insilco Corp.* . . . . . . . . . . . . . . . . . 6,181,268 6,606,250
356,000 Scientific Games Holdings Corp.* . . . . . . . . 7,574,450 13,305,500
204,700 TII Industries, Inc.* . . . . . . . . . . . . . . 1,430,100 1,714,363
----------- ------------
38,420,296 45,816,600
THIS SECTOR IS 19.3% ABOVE YOUR COST.
RIGHTS & WARRANTS - 0.0%
425,000 L.M. Ericsson Telephone
Co. Rights,* 10/26/95 . . . . . . . . . . . . . $ 0 $ 42
43 Sound Advice, Inc.
Warrants,* 6/14/99 . . . . . . . . . . . . . . 0 0
------------- -------------
0 42
------------- -------------
Total common stocks . . . . . . . . . . . . . . . 3,253,638,609 4,090,003,129
SHORT TERM INVESTMENTS - 2.0% (a)
COMMERCIAL PAPER - 1.7%
$70,000,000 Prudential Funding Corp.
Due 10/2/95,
Weighted average
discount of 6.18% . . . . . . . . . . . . . . . . 69,987,978 69,987,978
------------- -------------
Total commercial paper . . . . . . . . . . . . . 69,987,978 69,987,978
VARIABLE RATE DEMAND NOTES - 0.3%
3,190,000 General Mills, Inc. . . . . . . . . . . . . . . . 3,190,000 3,190,000
1,930,000 Pitney Bowes Credit Corp. . . . . . . . . . . . . 1,930,000 1,930,000
5,177,080 Sara Lee Corp. . . . . . . . . . . . . . . . . . 5,177,080 5,177,080
2,460,000 Wisconsin Electric Power Co. . . . . . . . . . . 2,460,000 2,460,000
-------------- --------------
Total variable rate demand notes . . . . . . . . 12,757,080 12,757,080
-------------- --------------
Total short-term investments . . . . . . . . . . 82,745,058 82,745,058
-------------- --------------
Total investments . . . . . . . . . . . . . . . . $3,336,383,667 4,172,748,187
==============
LIABILITIES, LESS CASH
AND RECEIVABLES (0.9%) (A) . . . . . . . . . . . $ (35,263,997)
--------------
NET ASSETS . . . . . . . . . . . . . . . . . . $4,137,484,190
==============
Net Asset Value Per Share
($0.01 par value 200,000,000
shares authorized), offering
and redemption price
($4,137,484,190 / 121,970,335
shares outstanding) . . . . . . . . . . . . . . . $33.92
======
</TABLE>
* Non-income producing security.
(a) Percentages of various classifications relate to net assets.
The accompanying notes to financial statements are an integral part of this
statement.
BANDYWINE FUND, INC. 16
<PAGE> 17
BRANDYWINE FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<S> <C>
INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,696,253
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,859,303
--------------
Total income . . . . . . . . . . . . . . . . . . . . . . . . 20,555,556
--------------
EXPENSES:
Management fees . . . . . . . . . . . . . . . . . . . . . . . . 28,671,459
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . 689,333
Transfer agent fees . . . . . . . . . . . . . . . . . . . . . . 348,339
Registration fees . . . . . . . . . . . . . . . . . . . . . . . 327,590
Printing and postage expense . . . . . . . . . . . . . . . . . . 246,825
Administrative services . . . . . . . . . . . . . . . . . . . . 238,100
Professional fees . . . . . . . . . . . . . . . . . . . . . . . 30,882
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . 70,931
--------------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . 30,623,459
--------------
NET INVESTMENT LOSS . . . . . . . . . . . . . . . . . . . . . . . (10,067,903)
--------------
NET REALIZED GAIN ON INVESTMENTS . . . . . . . . . . . . . . . . . 486,983,910
NET INCREASE IN UNREALIZED APPRECIATION ON INVESTMENTS . . . . . . 676,704,147
--------------
NET GAIN ON INVESTMENTS . . . . . . . . . . . . . . . . . . . . . 1,163,688,057
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . $1,153,620,154
==============
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED SEPTEMBER 30, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
OPERATIONS:
Net investment (loss) income . . . . . . . . . . . . . . . . . . . . . . . . $ (10,067,903) $ 2,125,103
Net realized gain on investments . . . . . . . . . . . . . . . . . . . . . . 486,983,910 144,144,038
Net increase (decrease) in unrealized appreciation on investments . . . . . 676,704,147 (175,074,010)
-------------- --------------
Net increase (decrease) in net assets resulting from operations . . . . 1,153,620,154 (28,804,869)
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net realized gains ($1.45255 and $2.87263 per share,
respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (132,629,398) (153,115,008)*
-------------- --------------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (41,807,549 and 45,421,114 shares, respectively) 1,178,735,039 1,142,241,233
Net asset value of shares issued in distributions (5,354,806 and 5,754,614
shares, respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . 123,963,752 143,289,892
Cost of shares redeemed (15,663,300 and 11,110,872 shares, respectively) . . (426,759,741) (276,310,201)
-------------- --------------
Net increase in net assets derived from Fund share activities . . . . . 875,939,050 1,009,220,924
-------------- --------------
TOTAL INCREASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,896,929,806 827,301,047
NET ASSETS AT THE BEGINNING OF THE YEAR . . . . . . . . . . . . . . . . . . . . . 2,240,554,384 1,413,253,337
-------------- --------------
NET ASSETS AT THE END OF THE YEAR
(including undistributed net investment
income of $-0- and $1,362,614, respectively) . . . . . . . . . . . . . . . . $4,137,484,190 $2,240,554,384
============== ==============
</TABLE>
* The distribution from net realized gains includes $75,982,195 of
ordinary income, of which 12.6% is eligible for the corporate dividends
received deduction.
The accompanying notes to financial statements are an integral part of this
statement.
17 BRANDYWINE FUND, INC.
<PAGE> 18
Brandywine Fund, Inc.
Financial Highlights
(Selected Data for each share of the Fund outstanding throughout each period)
<TABLE>
<CAPTION>
--------------------------------Years Ended September 30,-------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986+
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $24.77 $28.04 $19.36 $20.52 $15.79 $17.87 $12.89 $17.00 $11.01 $10.00
Income from investment operations:
Net investment (loss) income . . . . (0.10) 0.03 (0.02) 0.04 0.27 0.11 0.03 0.06 (0.02) 0.03
Net realized and unrealized gains
(losses) on investments** . . . . . 10.70 (0.43) 9.25 1.04 5.74 (1.48) 4.99 (3.29) 6.04 0.98
------- ------- ------- ------- ------- ------- -------- ------- ------ -----
Total from investment operations . . 10.60 (0.40) 9.23 1.08 6.01 (1.37) 5.02 (3.23) 6.02 1.01
Less distributions:
Dividends from net investment
income . . . . . . . . . . . . . . -- -- (0.01) (0.13) (0.28) (0.03) (0.04) -- (0.03) --
Distributions from net realized
gains . . . . . . . . . . . . . . . (1.45) (2.87) (0.54) (2.11) (1.00) (0.68) -- (0.88) -- --
------- ------- ------- ------- ------- ------- -------- ------- ------ -----
Total from distributions . . . . . . (1.45) (2.87) (0.55) (2.24) (1.28) (0.71) (0.04) (0.88) (0.03) --
------- ------- ------- ------- ------- ------- -------- ------- ------ -----
Net asset value, end of period . . . $33.92 $24.77 $28.04 $19.36 $20.52 $15.79 $17.87 $12.89 $17.00 $11.01
======= ======= ======= ======= ======= ======= ======== ======= ======= ======
Total Investment Return . . . . . . . 45.5% (1.4%) 48.6% 5.9% 41.4% (7.9%) 39.0% (17.6%) 54.8% 13.7%*
Ratios/Supplemental Data:
Net assets, end of period
(in 000's $) . . . . . . . . . . . 4,137,484 2,240,554 1,413,253 695,128 527,808 271,856 169,745 122,863 127,777 57,984
Ratio of expenses to average net
assets . . . . . . . . . . . . . . 1.07% 1.09% 1.08% 1.10% 1.09% 1.12% 1.13% 1.16% 1.18% 1.39%*
Ratio of net investment (loss)
income to average net assets . . . (0.4%) 0.1% (0.1%) 0.2% 1.5% 0.9% 0.2% 0.3% (0.2%) 0.7%*
Portfolio turnover rate . . . . . . . 193.7% 190.2% 150.4% 188.9% 187.9% 157.7% 91.0% 107.4% 146.8% 58.4%*
</TABLE>
+ For the period from December 12, 1985 (commencement of operations) to
September 30, 1986.
* Annualized.
** On a per share basis, this amount may not agree with the net realized and
unrealized gains (losses) experienced on the portfolio securities for the
period because of the timing of sales and repurchases of the Fund's shares
in relation to fluctuating market values of the Portfolio.
The accompanying notes to financial statements are an integral part of this
statement.
-----------------------
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies of Brandywine
Fund, Inc. (the "Fund"), which is registered under the Investment Company
Act of 1940. The Fund was incorporated under the laws of Maryland on
October 9, 1985.
(a) Each security, excluding short-term investments, is valued at the last
sale price reported by the principal security exchange on which the
issue is traded, or if no sale is reported, the latest bid price.
Securities which are traded over-the-counter are valued at the latest
bid price. Securities for which quotations are not readily available
are valued at fair value as determined by the investment adviser under
the supervision of the Board of Directors. Short- term investments are
valued at amortized cost which approximates quoted market value.
Investment transactions are recorded no later than the first business
day after the trade date. The cost amount of securities for Federal
income tax purposes aggregates $3,338,642,246. The differences between
cost amounts for book purposes and tax purposes is due to deferred
wash losses.
(b) Net realized gains and losses on common stock are com-puted on the
basis of the cost of specific certificates.
(c) Provision has not been made for Federal income taxes since the Fund
has elected to be taxed as a "regulated investment company" and
intends to distribute substantially all income to its shareholders and
otherwise comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies.
(d) Dividend income is recorded on the ex-dividend date. Interest income
is recorded on the accrual basis.
(e) The Fund has investments in short-term variable rate demand notes,
which are unsecured instruments. The Fund may be susceptible to credit
risk with respect to these notes to the extent the issuer defaults on
its payment obligation. The Fund's policy is to monitor the
creditworthiness of the issuer and does not anticipate nonperformance
by these counterparties.
(f) Generally accepted accounting principles require that permanent
financial reporting and tax differences be reclassified to capital
stock.
BRANDYWINE FUND, INC. 18
<PAGE> 19
BRANDYWINE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 30, 1995
(2) INVESTMENT ADVISER AND MANAGEMENT AGREEMENT AND TRANSACTIONS WITH RELATED
PARTIES
The Fund has a management agreement with Friess Associates, Inc. (the
"Adviser"), with whom certain officers and directors of the Fund are
affiliated, to serve as investment adviser and manager. Under the terms of
the agreement, The Fund will pay the Adviser a monthly management fee at
the annual rate of one percent (1%) on the daily net assets of the Fund.
Also, the Adviser is reimbursed for administrative services rendered to the
Fund by a consult-ant paid by the Adviser.
(3) DISTRIBUTION TO SHAREHOLDERS
Net investment income and net realized gains are distributed to
shareholders. On October 26, 1995, the Fund is expected to distribute
$386,543,002 from ordinary income (approximately $3.14 per share) and
$92,626,435 from net long-term realized gains (approximately $0.75 per
share). The distributions will be paid on October 27, 1995 to shareholders
of record on October 25, 1995. The percentage of ordinary income which is
eligible for the corporate dividend received deduction for this income
distribution is 3%.
(4) INVESTMENT TRANSACTIONS
For the year ended September 30, 1995, purchases and proceeds of sales of
investment securities (excluding short-term investments) were
$6,669,152,043 and $5,287,711,501, respectively, and $262,333,329 and
$34,965,000, respectively, for U.S. Government Securities.
(5) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
As of September 30, 1995, liabilities of the Fund included the following:
<TABLE>
<S> <C>
Payable to brokers for
investments purchased . . . . . . . $92,802,480
Payable to Adviser for management
fees and administrative services . . 3,376,692
Other liabilities . . . . . . . . . . 411,279
</TABLE>
(6) SOURCES OF NET ASSETS
As of September 30, 1995, the sources of net assets were as follows:
<TABLE>
<S> <C>
Fund shares issued and outstanding $2,824,208,812
Net unrealized appreciation
on investments . . . . . . . . . 836,364,520
Undistributed net realized gains
and losses . . . . . . . . . . . 476,910,858
--------------
$4,137,484,190
==============
</TABLE>
Aggregate net unrealized appreciation as of September 30, 1995 consisted of
the following:
<TABLE>
<S> <C>
Aggregate gross
unrealized appreciation . . . . $878,307,850
Aggregate gross unrealized
depreciation . . . . . . . . . . (41,943,330)
------------
Net unrealized appreciation . . . $836,364,520
==============
</TABLE>
PRICE WATERHOUSE LLP [LOGO]
100 EAST WISCONSIN AVENUE
SUITE 1500
MILWAUKEE, WI 53202
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
OF BRANDYWINE FUND, INC.
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Brandywine Fund, Inc. (the "Fund") at September 30, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the nine years in the period then ended and for the period from December 12,
1985 (commencement of operations) to September 30, 1986, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at September 30, 1995 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
/s/ PRICE WATERHOUSE LLP
- -------------------------------
October 13, 1995
19 BRANDYWINE FUND, INC.
<PAGE> 20
KUDOS FOR YOUR FUND . . .
- - WALL STREET JOURNAL -- Brandywine Fund listed as the number one performing
growth fund in the U.S. for its performance in the past twelve months among
funds over $500 million in assets. October 1995
- - MUTUAL FUNDS MAGAZINE -- Brandywine Fund named among the "Best Funds of the
'90s" as one of less than 20 funds out of 846 which beat the average of their
peers in the diversified growth stock category in each of the six years of the
1990s. October 1995
- - THE NEW YORK TIMES -- September 3 article singled out Brandywine Fund as the
winner in the Small/Mid Cap Growth Fund category by Morningstar Inc., the
leading evaluator of mutual funds in the U.S., for having the highest annual
return for the past three years (30.7 percent) among the most consistent
performing funds the article highlighted. September 1995
- - USA TODAY -- Of the 75 largest stock funds in the U.S., Brandywine ranked
number one for performance in the June quarter with a 17.3 percent return.
July 1995
Board of Directors
<TABLE>
<S> <C> <C>
[JOHN E. BURRIS PHOTO] [FOSTER S. FRIESS PHOTO] [STIG RAMEL PHOTO]
John E. Burris Foster S. Friess Stig Ramel
Chairman President Former President
Burris Foods, Inc. Friess Associates, Inc. Nobel Foundation
Milford, Delaware Jackson, Wyoming Stockholm, Sweden
</TABLE>
--------------------------------
(800) 656-3017
<TABLE>
<S> <C>
Investment Adviser: FRIESS ASSOCIATES, INC. Independent Accountants: PRICE WATERHOUSE LLP
Custodian, Transfer Agent: FIRSTAR TRUST COMPANY Legal Counsel: FOLEY & LARDNER
</TABLE>
OFFICERS: Foster S. Friess, President and Treasurer; Clarke Adams, Vice
President;
William F. D'Alonzo, Vice President; Carl S. Gates, Vice President; Paul R.
Robinson, Vice President;
and Lynda J. Campbell, Secretary
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of Brandywine Fund
unless accompanied or preceded by the Fund's current prospectus.
<TABLE>
<S> <C>
Report editors: Lynda J. Campbell, Paul R. Robinsin Report Staff: Margaret Barton, Rebecca A. Buswell, Jennifer Fidance
</TABLE>
BRANDYWINE FUND, INC. 20
