(BRANDYWINE FUND, INC. LOGO)
MANAGED BY FRIESS ASSOCIATES, INC.
SEMI-ANNUAL REPORT
MARCH 31, 1996
DEAR FELLOW SHAREHOLDERS:
It feels great to be in the positive column again this quarter after enduring
last year's fourth quarter backtracking of the huge advances made in the June
and September quarters which were largely attributed to your soaring technology
holdings.
Your Fund gained 6.2 percent surpassing the S&P Midcap, which rose 5.7 percent,
exceeding the S&P 500 which gained 5.4 percent, and also beat out the NYSE and
the Investor's Business Daily Mutual Fund Index which both increased slightly
over 5.2 percent.
Bumpy periods underscore the value of your long term approach and loyalty to the
time-tested strategy employed for you by your Friess Associates research team
which now exceeds 30 folks if you let us count a handful of very key brokers and
consultants. Your full team, including support personnel, now numbers over 50.
Jack Fraser is the newest teammate to sign on at Friess Associates, to help grow
your Fund, after eleven years with CS First Boston. He earned his MBA in Finance
at Ohio State and, you may recall from last quarter's report, has been supplying
your team with sound investment advice for the past five years. Jack will not
only serve in the research arena but also in the overall firm management. We
will miss the sharp insights of Blair Baker who left the consulting field to
join a top money management firm near his home in Dallas.
We are committed to bring to you a continuation of the performance that in
recent months garnered national attention from such diverse places as
Cleveland's The Plain Dealer newspaper, which pointed out that out of 7,000
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funds available to the investing public, your Fund was one of only ten to have
never posted a loss in any of the past ten years ending December 31, 1995 while
gaining at least 11 percent on average.
Among those top ten, your 18.5 percent annual return makes Brandywine the number
one growth fund, nudged out only by two specialty funds.
Morningstar, the premier evaluator of mutual funds, accorded your Fund its
highest Five Star rating for its recently completed ten years and ranked
Brandywine Fund as the #1 performer for that ten year period among those growth
funds currently available to the public that have no loads and no distribution
charges.
Money magazine ranks Brandywine #1 among the growth funds in its listing of 222
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growth and aggressive growth funds in operation for the ten years. The 11 funds
that surpassed it were all in the aggressive category.
MOST RECENT TEN YEARS
NYSE 151.9%
IBD<F1>* 169.1%
NASDAQ IND. 172.6%
S&P500<F1>* 269.2%
YOUR FUND<F1>* 403.5%
*<F1>TOTAL RETURN
Your Fund's average annualized return for the last ten years is 17.5 percent.
BUT IT IS WHAT WE DO FOR YOU TOMORROW THAT COUNTS.
Looking toward that future we still perceive jitters precipitated by earnings
disappointments in some high profile technology companies such as Apple
Computer, Intel, and Digital Equipment.
Consistent with our Friess Associates philosophy of "Never invest in technology;
invest in individual technology companies," you will note that your larger
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advances of 20 percent and more this quarter have included some of your
technology investments, namely, Cisco Systems, Newbridge Networks, Cognos Inc.,
BMC Software, and Tellabs.
Other non-technology stocks that led the way with large percentage gains in this
short three month period include Clarke Adams's TWA and The Money Store, up 98
percent and 68 percent, Employee Solutions, up 56 percent and JLG Industries, up
54 percent, both picked by Carl Gates, and your largest percentage gain of all -
- - John Ragard's Atlas Air, up 124 percent.
Paranoia about interest rates triggered an intraday 246 point collapse in the
Dow which was followed by a 288 point climb to record ground during the next six
days. February's largest monthly gain in job growth in 13 years worried
interest-rate-driven investors that a stronger than anticipated economy might
rekindle inflation, forcing Fed Chairman Alan Greenspan to halt his orderly
easing of interest rates.
The market rebound reflects a growing realization that February statistics were
distorted by the bounce back from blizzard impacted January sales and
production. The lingering effects of the GM strike will muddy the statistical
waters for March and April, continuing speculation on the precise strength of
the economy.
We see very little inflationary pressure infringing upon your companies'
progress. The economy should improve modestly in '96. But, again, your success
is linked more to your team's ability to isolate individual companies which can
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prosper somewhat independently of the big picture.
According to William O'Neil, your companies' earnings are growing at more than
twice the rate of those comprising the S&P 500 index, based on the average
increase in earnings for both the latest 12 months and the latest quarterly
results.
COMPANY GROWTH
AVERAGE INCREASE LATEST 12 MOS. EARNINGS
Your Companies 53%
S&P 500 23%
AVERAGE INCREASE LATEST QUARTERLY EARNINGS
Your Companies 54%
S&P 500 18%
All S&P figures are unweighted. Analysis by William O'Neil & Co., Inc. March 31,
1996.
For the most recent twelve months, your Fund is up 33.4 percent.
Over the last five years, your Fund strongly outpaces the other major indices
with its 139.9 total return compared with a 98.0 percent gain for the S&P 500, a
92.2 percent jump in the Investor's Business Daily Mutual Fund Index, the Nasdaq
Industrials climb of 88.0 percent, and the NYSE increase of 69.0 percent.
On average, your Fund grew 19.1 percent during the last five years compared to
the S&P 500's 14.6 percent gain.
MOST RECENT FIVE YEARS
NYSE 69.0%
NASDAQ IND. 88.0%
IBD<F2>* 92.2%
S&P 500<F2>* 98.0%
YOUR FUND<F2>* 129.9%
*<F2>TOTAL RETURN
The most recent three years also garner solid results, as your Fund increased at
an average annualized rate of 20.3 percent, compared with only 15.7 percent for
the S&P 500 and 12.8 percent for the Nasdaq Industrials.
Your Fund now serves more than 34,000 shareholders. An additional $450 million
of assets in the last quarter were entrusted to our stewardship. Since June
1992, the number of shareholders joining you in Brandywine increased nearly ten-
fold, and total assets grew from $650 million to almost $5 billion.
PERFORMANCE SINCE JUNE 30, 1992
NYSE 54.7%
NASDAQ IND. 70.3%
S&P 500<F3>* 75.3%
IBD<F3>* 78.9%
YOUR FUND<F3>* 124.7%
*<F3>TOTAL RETURN
If you have been with us for this period, you have enjoyed a handsome gain of
124.7 percent, while the S&P 500 climbed only 75.3 percent and the Nasdaq
Industrials increased just 70.3 percent.
We are grateful for the growth in your Fund which surpassed $5 billion on March
18 particularly because so much of it has come from internal growth. In the last
fiscal year, over $2 billion of the growth of Friess Associates'
responsibilities, of which Brandywine comprises almost two-thirds, came from
internal progress of the portfolios and similarly, in 1993's fiscal year, our
clients and shareholders enjoyed growth of $1 billion.
We want to recognize the many people that played key roles in creating those
results beyond your hard-hitting research teams in your Phoenix, Jackson, and
Wilmington offices. This includes consultants based in Tulsa, Houston, Palo
Alto, San Francisco, and Minneapolis, a number of very important brokers, as
well as the executives of the companies in your portfolio.
We must PARTICULARLY recognize the workers at your companies who are the bottom-
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line determinants of the success all of us enjoy in this free, capitalistic
society.
The Nobel Foundation, together with your Friess team, including friends and
family, are but two of the more than 50 shareholders that have more than $10
million invested along with you. I personally have no other stock market
investments outside of those I have in Brandywine and its sister fund,
Brandywine Blue.
Thanks for your continued confidence and loyalty through good and bad markets
and for the honor of allowing us to serve your financial interests.
God Bless!
/s/ Foster Friess
Foster Friess
President
April 4, 1996
ALL IS NOT ROSES . . .
Although more than half of your holdings gained during the quarter, there were,
naturally, some that retraced. The largest decliners, dropping back by more
than $10 million each, were Bay Networks, LSI Logic, Teradyne, Chantal
Pharmaceuticals, and Cabletron. All of these were sold from your portfolio
avoiding further losses of $39 million.
LSI declined as some of its PC-related customers cut back on their inventory
causing revenue to fall short of expectations for the March quarter. Teradyne
dropped because of concern that declines in the order rate for semi-conductor
chips in general, which began in the month of December, might translate to lower
than expected semi-conductor equipment test purchases later on in the '96
calendar year.
Your good performers outweighed the "not-so-good" performers. Ten stocks
contributed more than $20 million each to your Fund during the quarter. The
biggest gainers were Andy Graves's Gap with $42 million and Cisco Systems with
$35 million, and Jon Fenn's Nike with $26 million.
Other big contributors were Diane Hakala's Computer Associates and Andre Berk's
Newbridge Networks each gaining $25 million, along with Sears at $24 million,
Halliburton with $23 million, BMC Software with $22 million, Tellabs' $21
million, and Eli Lilly at $20 million.
The advances just your top three gainers made exceeded by more than $12 million
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the combined losses of the five major decliners.
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HIGHLIGHTS ...
APPAREL & SHOES
In an age where we often hear "the customer is number one," companies which
provide exceptional customer service enjoy the best success. ST. JOHN KNITS,
INC., designer and manufacturer of women's clothing and accessories, knows how
to please its clientele.
Your company's dedication to quality helps keep its customer base very loyal.
The extra attention St. John Knits pays to its business is reflected, for
example, in the way that molds for buttons on all garments are saved
indefinitely. If a woman loses a button from her five-year-old jacket, she can
obtain an identical match and replace it.
Such upscale retailers as Neiman Marcus, Nordstrom, and Saks Fifth Avenue sell
St. John Knits clothing. And, your company also has its own boutiques. CFO Roger
Ruppert shared with your consultant, Mike Davis, that with the new boutique in
Beverly Hills, the company should be able to increase penetration in the
Southern California market.
Earnings jumped from $.48 to $.67 last quarter, an increase of 43 percent, on
revenue growth of 25 percent during the period.
Your shares are selling at $67, up a dramatic 175 percent since purchase in
April 1994.
COMPUTERS & RELATED
Computers are virtually everywhere -- in our homes, our places of work,
libraries, and most retailers. Every one of these computers needs a disk drive
for permanent storage of information. The largest independent producer of these
drives is SEAGATE TECHNOLOGY, INC.
With customers such as Compaq, Sun Microsystems, and Dell Computer, and the
recent acquisition of a major competitor, Conner Peripherals, your NYSE-listed
company is quickly broadening its product line and customer base. Conner adds
smaller capacity drives and tape drives to the product line.
We recently learned from Don Waite, CFO, of the potential cost-saving
opportunities created by the Conner acquisition, including combining factories
and obtaining greater economies of scale when purchasing components.
During the most recent quarter, earnings rose 58 percent from $1.07 to $1.69
while sales were up 38 percent.
Purchased at $44 in June 1995, your shares have moved up 25 percent to $55.
FINANCIAL BUSINESS SERVICES
When a business, small or large, needs temporary, high quality people to help
accomplish special tasks, CORESTAFF INC. is there to provide the service.
Focusing on the high growth and high margin professional services segment of the
temporary staffing market, COREStaff's top customers include such Fortune 500
companies as MCI, IBM, Compaq, and AT&T, along with Federal and State
governments.
Your company benefits from strong internal growth through a targeted acquisition
strategy. CFO Dan Shimer recently told us that record results in '95 were due to
strong operating performance as well as a number of strategic acquisitions made
throughout the year.
He explained that this aggressive acquisition strategy will continue as the
industry is still fragmented and there are plenty of good acquisition
candidates.
The temporary staffing industry is growing 25 to 30 percent each year as more
than 90 percent of all businesses use companies like COREStaff to fulfill their
staffing needs and provide them greater flexibility in managing costs.
Earnings exploded more than 300 percent for the year ended December 1995 on
revenue growth of 105 percent. For the December quarter, earnings more than
quadrupled from $.06 to $.26.
Jumping 81 percent since purchase in November, your shares now sell at $31.
MEDICAL PRODUCTS & SUPPLIES
Following the merger of Nellcor and Puritan Bennett, NELLCOR, INC. is the
largest and most formidable competitor in monitoring, diagnosing, and treating
patients with respiratory problems in both the hospital and the home.
In a very fragmented industry, your company has the largest product offering, an
internal sales force to market those products, and offers one-stop shopping for
customers in respiratory care, all at reduced costs. Nellcor is also making
acquisitions which will help to broaden its product line and gain market share
in both the hospital and home markets.
The last quarter showed earnings leap 41 percent to $.62 from $.44 a year ago.
Earnings for the year ended June 1995 were up 29 percent.
According to CFO Michael Downey, the internal changes at Nellcor are helping
fuel earnings growth. Your company consolidated its homecare sales force
internally and patterned it after the hospital sales group, thereby cutting
costs.
Also, management lowered debt from $80 million to $8 million while reducing the
number of its plants from 14 to 11. A new computer system will allow customers
to call one number for all respiratory care needs.
Selling now at $64, your shares have increased 33 percent since purchase in
November 1994.
OIL/GAS FIELD SERVICE
HALLIBURTON COMPANY is the world's largest provider of cementing and stimulation
services for use in the development and production of crude oil and natural gas,
and also owns Brown & Root, one of the world's largest engineering and
construction companies.
Your company benefits from a current strong drilling cycle which is driven by
higher oil and gas prices, as well as the trend of natural gas and oil companies
to reduce costs by outsourcing some of their servicing requirements to companies
like Halliburton.
Since 1991, your company has undergone a significant restructuring including
corporate downsizing and divesting non-strategic businesses, as it, too, is
participating in the consolidation trend underway in the oil services industry.
Part of this reorganization, according to Chief Finan-cial Officer David Lesar,
is Halliburton's "Capital Value Added" program implemented at all levels of the
company. This program measures the impact of every employee's contribution to
profitability and supplements your company's improving return on capital.
Halliburton's direct costs are down 38 percent and its operating margins have
improved to their highest levels in 10 years.
For the recent December quarter, earnings were up 24 percent from $.51 to $.63.
And, for the year, earnings were $2.04 compared with $1.51 last year -- an
increase of 35 percent.
Your shares rose a healthy 44 percent, increasing by nearly $50 million since
your July purchase.
SOFTWARE
Making wise and effective business decisions when running a large, fast-moving
company is challenging for any top executive. Trying to make those decisions in
a timely manner can be even more challenging. COGNOS INC. helps top executives
throughout the country to meet this challenge successfully.
Your company develops software products which allow managers to easily access
information in databases without the help of a professional software programmer,
thereby saving time and money. With Fortune 500 companies such as Chrysler,
Procter and Gamble, and Applied Materials as new customers, Cognos's products
are found in a variety of businesses.
Senior Vice President Donnie Moore says the market for Cognos business
intelligence software products is accelerating as larger companies roll out
pilot pro-grams company-wide. This division's revenue is growing at an annual
rate of over 100 percent with only one other significant competitor.
Last quarter, earnings jumped 55 percent, jumping to $.31 from $.20, and for the
year ended February 1996, analyst expect earnings to show a 44 percent hike to
$1.24.
Since purchase in July 1995, your shares have climbed 61 percent to $57.
TRANSPORTATION
With the technological revolution in full gear, automatic teller machines
(ATM's) are everywhere! Many folks still prefer to bank face to face, but for
those who opt for convenience, ATM's are ideal for personal banking services.
These machines, in growing numbers, are increasingly being serviced by PITTSTON
BRINK'S GROUP in line with market expansion and a strong trend for banks to
outsource their security services.
As the oldest and largest armored car transportation company in the U.S. and
Canada, Brink's is finding niches in other areas such as convenience stores and
gas stations for which it provides and services a computerized safe that re-
engineers handling of cash thereby reducing cash exposure, employee theft, and
cash control expenses.
Jim Hartough, Vice President, Finance, told us recently that your company will
be installing these CompuSafes at 2,200 locations to provide store owners with
improved cash management and greater security.
Brink's also has considerable growth potential in the home security market where
it increased its customer base by 28 percent in 1995.
Your shares, which were received in January as a result of the spin-off of this
new company from your Pittston Services investment, have increased in value by
36 percent since they were acquired as part of Pittston Services in September
1995. They now trade at $27.
FUND BROKER . . .
Rhys Williams spent 10 months at Wertheim Schroeder before moving over to
Prudential in June 1988.
Augmenting your research team's ability to filter through all the information on
the Street since 1989, Rhys worked with your researchers on Cadence Design, The
Money Store, United Waste, Electronics for Imaging, Cable Design, Reynolds and
Reynolds, Reading & Bates, and Advanta which created more than $54 million in
gains for you in recent months.
"I like working with the folks at Friess. They are excellent at gathering data
and acting on change before a catalyst emerges which crystallizes the trend for
the market," he explains. "As a broker, I have to work hard to add value to
Friess team members who usually are ahead of me, and the rest of Wall Street, in
discovering information that will move stocks.
"I completely agree with the Friess approach of picking stocks based on expected
earnings surprises at a reasonable price earnings ratio together with frequent
contact with managements, customers, competitors, and suppliers. I invested
$25,000 in Brandywine Fund in October 1990 and it is now worth more than
$80,000. I wish all my investments were so good!"
In 1991, Rhys earned his CFA, adding to the M.A. in International Economics he
received from Johns Hopkins in 1987 and the B.A. in Public Policy from Duke
University in 1983. While at Duke, Rhys spent a year abroad at Moscow's Pushkin
Institute for teachers of Russian language and was a researcher-reporter for the
London Times in Moscow when the Pershing II was being deployed in Western
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Europe.
Rhys met his wife Rebecca while in graduate school. Together they enjoy two
sons, Dylan, 4, and Luke, 2, as well as tennis, swimming, squash, and skiing.
"My goal is to keep up with Friess researcher Jon Fenn on Jackson Hole's
moguls," Rhys says, "which means I must believe in reincarnation!"
"In this business, oftentimes the bigger the account, the more difficult the
people. This is definitely not the case with Friess," Rhys relates. "Everyone at
Friess is delightful to deal with, quick with praise and slow to criticize. I
want to work hard for Friess because team members give you an emotional stake in
the success of an investment beyond doing your job."
- -Rebecca Buswell
FUND SHAREHOLDER ...
Probably the leading expert on this nation's prison and criminal justice
systems, Charles Colson has not only been instrumental in helping reform those
serving prison sentences for their crimes, but also has helped the victims of
those crimes.
Since founding Prison Fellowship, the largest prison outreach movement in the
world, Chuck has visited more than 600 prisons in over 50 countries.
With 50,000 volunteers, Prison Fellowship operates programs in various prisons
throughout the country, giving prisoners the kind of guidance they probably
never had in earlier years. Volunteers hold Bible studies and other activities
with inmates to help them see that they do not have to remain trapped in the
cycle of crime.
Working with former President Nixon as part of his special counsel, Chuck served
a prison term himself for Watergate-related offenses. Having been in a similar
position as the prisoners with whom he works, Chuck brings a unique perspective
to Prison Fellowship which probably accounts, in large part, for this ministry's
success at helping all people who are affected by the increased crime in our
nation.
After his release in 1975, Chuck could not forget the prisoners he had left
behind -- many of whom were weary without hope or help of breaking free from
destructive behavior patterns and deteriorating values. He, along with a handful
of other concerned Christians, began Prison Fellowship to carry the hope and
compassion of Christ "behind the wall."
In 1983, Chuck founded the branch of Prison Fellowship called Justice Fellowship
which focuses specifically on reforming the criminal justice system. Efforts to
promote victims' rights and to find alternatives to prison sentences for non-
violent offenders are underway in 23 states.
Chuck has 3 children and 5 grandchildren. He has been married to his wife,
Patty, for 32 years. When he's not busy serving others, Chuck enjoys fishing,
reading, and spending time with his family.
"I invested some of my retirement fund in Brandywine -- not that anyone ever
retires from Christian service -- because I trust and admire Foster Friess so
much," Chuck explains. "He has a great mind and a strong heart to match it and I
don't know anyone of greater integrity."
All of us at Brandywine Fund are honored to put
our strategy to work for Charles Colson and his important work at Prison
Fellowship. Knowing we are helping him to help others makes our job all the more
rewarding.
- -Rebecca Buswell
GROWING YOUR FUND . . .
It is the individual workers at your companies who really deserve the
recognition for the growth of your assets. They work hard to make their
companies successful, and you benefit from that success.
Scott Hoelscher, Director of Marketing Services for Reading & Bates, can
describe the complex business of offshore drilling in the simplest terms: "We
drive up, we drill a well, we go off while the platform is being built, then we
come back and drill 5, 6, or 7 additional wells around the platform. Then we go
away again. We hope oil is found, but if not, we still get our day rate." He
makes it sound easy. It's not.
Reading & Bates operates 18 offshore drilling units in almost every major
offshore oil and gas province of the world. With its fleet of semisubmersible,
floating rigs for deep water, and jackup, standing rigs for shallow water,
Reading & Bates is an expert in floating production technology.
Scott started early in the oil business. Following in his father's footsteps,
while earning a degree in Petroleum Engineering from the University of Missouri-
Rolla, Scott worked during the summers on oil rigs as a "roughnecker" and
"roustabout," industry terminology for entry level workers and rig mechanics. He
enjoyed the work and wanted to combine his education with the hands-on side of
the business.
Scott spent 11 years with another company handling responsibilities like rig
manager. Joining Reading & Bates' Singapore operation in 1984, Scott enjoyed
living overseas with his wife, son, and daughter. Now, stationed in Houston,
Scott is in charge of drilling proposals for the company's clients worldwide,
negotiating the daily fee for leasing a rig.
Oil companies want to find large oil fields or "elephants," but because most of
the large fields in shallow water have already been found, oil companies in the
future will have to seek "elephants" in more difficult locales, such as the
North Sea. This is the specialty of Reading & Bates.
Scott is an enthusiastic spokesman for Reading & Bates. Looking down the road,
he comments, "Our company has positioned itself correctly in the industry. We
have the right people and the right equipment to tackle the most difficult and
most highly compensated projects. I believe we have seen just the tip of the
iceberg."
The shares which you added to your Fund in October 1995 have increased 60
percent and now sell
at $20.
- -Margaret Barton
HELP US CUT YOUR COSTS . . .
Are you receiving multiple mailings of Brandywine Fund quarterly reports or mid-
quarter letters directly from us at Friess Associates? We are NOT referring to
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statements you receive from Firstar. Please help us cut down on any duplicate
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copies you may be receiving by returning the enclosed postage paid card to me.
Brandywine Fund's administrative expenses -- printing, mailing, regulatory, and
custodian fees -- total .07 percent, making your Fund one of the lowest in the
industry for these expenses. Let's work together to drive your costs down even
further!
Even if you are not receiving duplicates, please use the post card to drop us a
note and let us know how you're doing; give us some suggestions for improvement
or questions you might have.
-Jenni Fidance
ANDREA . . .
Before researcher Jon Fenn chooses an investment for your Fund, Andrea Paul
gathers initial information on the company and puts Jon in contact with the
right person at both that company and its related suppliers, customers,
competitors, and distributors.
Immediately after her college days (she earned a BA in English from Cal Lutheran
University in 1986), Andrea worked at Yellowstone National Park building and
repairing hiking trails and as a personnel manager at a backcountry site. In
1990, Andrea left her native California to move to Jackson full time to work for
an environmental engineering firm as an administrative assistant. She joined
your Jackson team in August of 1994.
"It's exciting to be part of the investment process here at Friess," Andrea
explains, "especially seeing an idea flourish into a large gainer for our
shareholders and clients. Knowing that I play a role in helping realize their
worthwhile financial goals makes my job all the more rewarding."
Andrea also travels to your Phoenix and Wilmington offices to train other
research managers on how she successfully helps contribute to the $92 million
in gains in such big holdings as Nike, Alco Standard, Adaptec, and Cognos.
Jon applauds Andrea's ability. "She is continually finding new people who have
insights into your holdings while still maintaining frequent contact with those
in top management with whom we already have a relationship. Andrea led her other
Friess Associates research managers in the utilization of new technologies, like
the Internet. Many of her contacts are made on-line."
Andrea enjoys downhill, cross country, and skate skiing, as well as mountain
biking, sea kayaking, and backpacking. She even spent six weeks trekking in the
Himalayas!
Athletically gifted, Andrea competed last year
in Jackson's annual Pole, Pedal, Paddle contest in which competitors must
successfully complete four stretches -- downhill skiing, skate skiing, biking,
and kayaking -- and her co-ed team placed first in their division!
- -Rebecca Buswell
PAT . . .
With more than 10 years combined experience as an equity trader at PNC Bank in
Philadelphia and Smith Barney, Pat Kealey joined Friess Associates in March of
1992. He earned his BS in Business Administration from Villanova University in
1981.
"We not only appreciate Pat's trading skills, but also his computer expertise,"
relates Friess trader of 17 years, Susan Morgan. "He has been instrumental in
developing the reports that quickly and easily present the information we need
to help us fulfill our responsibility to our clients and shareholders. He is a
genuine asset to our efforts."
As a Chartered Financial Analyst (CFA), Pat works with Susan, Barbara Shea, and
Ed Abrams to implement the trades for the 97 Friess clients, including your
Brandywine Fund, allocating executions to specific portfolios and ensuring that
any guidelines clients stipulate are followed.
He also keeps researchers abreast of any and all news on the Street affecting
their companies (particularly tech-related holdings) while keeping them updated
with information on their orders.
Joining Friess Associates has been a breath of fresh air for Pat. "Coming from a
large corporate environment, I see the real advantages of working in a non-
bureaucratic firm. As a result, the investment process is really streamlined --
much more of a hands-on experience and much more effective.
"And," Pat continues, "in such an intense industry as the investment business,
it is great and rare to be part of an environment which encourages team
cooperation rather than internal competitiveness."
Pat and his wife of 13 years, Mary Jane, have two young boys, Patrick, 8, and
Sean, 3. In addition to spending time with them, he also enjoys traveling,
music, and playing basketball.
- -Rebecca Buswell
YOUR INSIGHTS ARE VALUABLE . . .
Recently, senior researcher Bill D'Alonzo enjoyed an Internet "conversation"
with one of your fellow shareholders, an engineering/sales executive, who gave
us tremendous insight into your networking holdings.
That exchange helped us realize how many Chief Executive Officers, Chief
Financial Officers, Presidents, and key executives are in our shareholder
family. In recent reports we've highlighted CFO Jeff Henley of Oracle; Neil
Bonke, CEO of Electroglas; and National Semiconductor's CFO, Donald Macleod.
Many of you as consumers may spot an emerging retail chain in your local area.
The geographical dispersion and extensive industry knowledge of you and your
fellow 34,000 shareholders offer a tremendous resource.
If you would enjoy participating in helping grow your Fund, please send us your
thoughts. While we won't be able to respond to each of your suggestions, we will
try to highlight in subsequent reports the value of your input. Please
communicate with me via the Internet at [email protected], or fax me directly
at (302) 656-9015.
As the enclosed Boston Globe article indicates, we increase our productivity
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dramatically by communicating through Internet, emails, and faxing which also
avoids "telephone tag" for you.
We've also enclosed a postcard for you to alert us
to any duplicate mailings you may be receiving. You might want to use it to pass
along any thoughts you might have. I will coordinate your insights with my other
research teammates.
Thanks!
- -Kelli Fazler
MIKE . . .
With work experience at two major high tech players in Silicon Valley, Oracle
Systems and Applied Materials, Mike Musson decided to direct his knowledge of
high tech companies and launch his own investment research company in Palo Alto.
Your researchers, Diane Hakala and David Harrington, first met Mike when he was
working in Investor Relations at Oracle. They remember his in-depth knowledge of
technology companies and Mike says he remembers their right-on-target questions.
This mutual respect led to Mike's beginning a consulting relationship to Friess
Associates last summer.
Mike earned an AB degree in both Political Science and Economics from Stanford
University in 1989. Many of Mike's classmates from Stanford work in high tech
businesses, so he has a long-standing circle of friends and contacts within the
managements of many companies.
Diane Hakala comments, "Mike's relationships and knowledge of Silicon Valley
help every day in adding color to the information we have on our holdings."
Oracle specializes in large databases and financial and manufacturing software
for companies, and is also on the leading edge of Internet applications.
When analysts were saying that this multi-billion dollar corporation's growth
rate was slowing, Mike knew Oracle well enough to see that it could sustain its
remarkable 40 percent growth in revenues and urged Friess to take a large
position. This smart call has resulted in gains of $14 million for your Fund.
Mike and his wife Lucy, a high school English teacher, have three girls, Layla,
Lucy, and Melissa. Both Lucy and Mike are involved in school-based activities,
including the PTA. Mike, a native Californian, enjoys tending a rose and
vegetable garden and a small fruit orchard, and playing an occasional basketball
game with his friends.
Noting the explosion of Internet-related companies that are creating new
products, Mike is excited about the new developments in the software industry.
Based in Palo Alto, he is perfectly positioned to visit management and build an
up-to-the-minute picture of High Tech Silicon Valley.
- -Margaret Barton
TOP TEN . . .
The most dramatic shift in your Top Ten Industry groups occurred in Retailing,
which moved from 6.7 percent last quarter to fill the current number one
position at 14.1 percent. New purchases were made in AutoZone, Claire's Stores,
Dollar General, Nordstrom, Sears, and TJX Companies. And, you added to your
existing positions in Consolidated Stores and Gap. Appreciation of more than $45
million in those two holdings also helped.
You sold large holdings of Bay Networks and Cabletron Systems, and pared back
your position in Cisco Systems, dropping the Networking category from 13.1
percent in December to 6.0 percent.
Oil/Gas Field Services jumped from 5.7 percent to 10.1 percent to become your
third largest industry group as you added BJ Services, Dresser Industries, and
Weatherford Enterra.
New to your Top Ten are Communications at 6.3 percent led by L.M. Ericsson
Telephone Co., Tellabs, and ECI Telecom. Financial/Business Services investments
are at 6.0 percent thanks to buys in Conseco, Beneficial Corp., and Olsten Corp.
Semiconductors & Related moved from 4.6 percent in December to 3.8 percent and
you sold all your Semiconductor/Equipment Suppliers companies.
TOP TEN INDUSTRY GROUPS
Cash (1.2%)
Networking (6.0%)
Financial/Business Services (6.0%)
Communications (6.3%)
Healthcare (6.8%)
Apparel & Shoes (7.2%)
Pharmaceuticals (7.6%)
Software (9.0%)
Oil/Gas Field Services (10.1%)
Computers & Related (10.5%)
Retailing (14.1%)
All Others (15.2%)
ON THE CUTTING EDGE . . .
GPS
Go fishing out of sight of land, take your boy scout troop for an overnight
hike, drive your aunt to Cleveland. These adventures still hold many challenges,
but if you take along the right piece of equipment, you can stop worrying about
getting lost. That piece of equipment is a hand-held receiver for the Global
Positioning System, the GPS.
Conceived by the Defense Department, the GPS is made up of a group of satellites
which circle 11,000 miles above us, beaming signals back to Earth. By picking up
these transmissions and comparing the distances to different GPS satellites, you
can identify your exact position on the globe.
Now available for as little as $200, the GPS is clearly the best example of
military technology moving from the battlefield to the marketplace and will
likely eventually make the compass obsolete. Soon everything that moves -- cars,
sailboats, laptop computers -- will come with a built-in answer to the question,
"Where in the world am I?"
FREE INTERNET HOOK-UP
AT&T is giving their customers a free entree to the Internet. If you were
thinking your son would write home more often if you had an e-mail address, or
you could search for a good way to cope with Japanese beetles, try calling 1-
800-967-5363 for a free copy of AT&T's WorldNet software. They are offering
their customers free Internet access for 5 hours a month, or unlimited access
for a flat monthly fee of $19.95.
"I HEAR YOU. AND, I CAN SEE YOU, TOO!"
With Connectix' new $150 VideoPhone you can convert your desktop computer into a
TV-telephone. The VideoPhone consists of software and a black-and-white camera
the size of a baseball that sits on your monitor and lets you communicate over
the Internet. Picture quality is a bit rough, but remarkable for the price.
TELEPHONE NUMBERS FOR EVERYONE IN THE USA!
If you have a CD-ROM drive on your computer, for less than $100 dollars you can
buy a set of 3 or 5 discs with every phone directory in the U.S. on them! You
---------------------------------
can also buy CDs with every street on every map in the United States. Pro CD,
and De Lorme are among the companies offering these products. Check your local
computer store.
YOUR NEW TEAM AT FIRSTAR . . .
is up and running! We welcome the twelve folks at Firstar who are now solely
dedicated to responding to your calls and questions. As we continue to improve
our service to you, we are working closely with Firstar's Gail Zess to ensure
that all on your Brandywine team at Firstar are skilled in the mechanics of your
Fund and knowledgeable about Friess Associates and our culture.
You can reach the new team at the same 800 number, (800) 656-3017. The new voice
response unit is installed so you can move more quickly through the prompts to
speak with a representative.
We're excited to welcome them to Brandywine, and we hope you'll let us know how
they're doing. To help them develop quickly we need your help on where they need
to improve. Please fax me at (302) 656-3859 or email me at [email protected]
with any experience you've had at Firstar requiring improvement.
-Rebecca Buswell
BRANDYWINE FUND, INC.
STATEMENT OF NET ASSETS
March 31, 1996
(Unaudited)
QUOTED
MARKET
SHARES COST VALUE
- ------------ ---------- ----------
COMMON STOCKS - 98.8% (A)<F5>
APPAREL & SHOES - 7.2%
150,000 J. Baker, Inc. $1,035,919 $1,125,000
117,900 Fila Holding S. p. A. 5,721,374 7,530,862
642,700 Jones Apparel Group, Inc.*<F4> 24,764,804 31,170,950
1,478,400 Liz Claiborne, Inc. 37,783,007 50,635,200
363,400 Nautica Enterprises Inc.*<F4> 13,807,871 17,352,350
2,204,200 NIKE, Inc. Cl B 116,241,507 179,091,250
168,000 Quiksilver, Inc.*<F4> 4,785,451 5,334,000
172,700 St. John Knits, Inc. 4,243,537 11,635,662
817,300 Tommy Hilfiger Corp.*<F4> 24,323,592 37,493,638
160,000 Vans, Inc.*<F4> 1,741,250 2,220,000
456,300 The Warnaco Group, Inc. 9,489,702 11,008,238
----------- -----------
243,938,014 354,597,150
THIS SECTOR IS 45.4% ABOVE YOUR COST.
COMMUNICATIONS - 6.3%
308,400 Belden Inc. 9,622,619 9,097,800
138,000 Cincinnati Bell Inc. 5,582,607 7,176,000
226,700 Colonial Data Technologies Corp.*<F4> 4,082,991 5,015,737
273,000 Comverse Technology, Inc.*<F4> 6,501,874 6,586,125
957,800 ECI Telecom Ltd. 20,865,373 21,430,775
5,738,800 L.M. Ericsson Telephone Co. ADR 125,786,150 122,666,850
857,200 Gandalf Technologies Inc.*<F4> 11,951,511 12,643,700
340,200 Inter-Tel, Inc.*<F4> 4,630,057 6,166,125
293,600 InterVoice, Inc.*<F4> 6,572,722 8,404,300
2,351,400 Tellabs, Inc.*<F4> 93,447,430 113,748,975
----------- -----------
289,043,334 312,936,387
THIS SECTOR IS 8.3% ABOVE YOUR COST.
COMPUTERS & RELATED - 10.5%
1,546,500 Adaptec, Inc.*<F4> 66,700,604 74,618,625
2,809,200 Dell Computer Corp.*<F4> 95,668,135 94,108,200
6,503,700 EMC Corp. (Mass.)*<F4> 138,211,617 142,268,437
700,800 Hewlett-Packard Co. 65,282,867 65,875,200
210,500 Mylex Corp.*<F4> 3,973,947 4,999,375
89,900 Proxima Corp.*<F4> 2,235,757 1,719,338
2,393,300 Seagate Technology, Inc.*<F4> 104,833,743 131,033,175
220,500 StorMedia, Inc.*<F4> 9,626,160 5,126,625
----------- -----------
486,532,830 519,748,975
THIS SECTOR IS 6.8% ABOVE YOUR COST.
DISTRIBUTION - 1.6%
859,800 Corporate Express, Inc.*<F4> 22,400,219 28,373,400
722,500 Kent Electronics Corp.*<F4> 14,377,296 25,558,437
492,600 Tech Data Corp.*<F4> 7,353,978 8,251,050
496,700 U.S. Office Products Co.*<F4> 12,066,400 15,397,700
---------- ----------
56,197,893 77,580,587
THIS SECTOR IS 38.0% ABOVE YOUR COST.
ELECTRONICS - 1.2%
120,000 Bel Fuse Inc.*<F4> 2,145,091 2,205,000
130,000 Charter Power Systems, Inc. 3,510,000 3,510,000
141,700 The DII Group Inc.*<F4> 4,321,035 4,304,137
304,600 EG&G, Inc. $7,126,267 $6,815,425
189,500 General Scanning Inc.*<F4> 2,723,003 2,463,500
74,500 GenRad, Inc.*<F4> 898,815 949,875
147,900 Merix Corp.*<F4> 4,040,965 5,472,300
281,400 Raychem Corp. 17,608,122 18,150,300
287,000 Sanmina Corp. 6,643,522 8,538,250
44,000 Semtech Corp.*<F4> 562,782 462,000
167,000 SMART Modular
Technologies Inc.*<F4> 2,046,497 2,609,375
58,000 Technitrol, Inc. 1,541,955 1,682,000
---------- ----------
53,168,054 57,162,162
THIS SECTOR IS 7.5% ABOVE YOUR COST.
FINANCIAL/BUSINESS SERVICES - 6.0%
1,228,700 ADT LIMITED*<F4> 18,993,899 21,655,837
119,600 ADVANTA Corp. Cl B 5,580,604 5,681,000
53,900 ADVANTA Corp. Cl A 2,811,420 2,802,800
846,400 Beneficial Corp. 45,298,615 48,773,800
177,000 Career Horizons, Inc.*<F4> 4,269,622 5,265,750
54,900 CDI Corp.*<F4> 1,347,407 1,468,575
177,200 CMAC Investment Corp. 6,432,287 10,011,800
1,341,700 Conseco, Inc. 87,611,079 97,105,537
80,000 Copart, Inc.*<F4> 2,179,696 1,980,000
371,250 COREStaff Inc.*<F4> 6,250,781 11,323,125
80,000 CORT Business Services Corp.*<F4> 1,171,250 1,440,000
527,900 Credit Acceptance Corp.*<F4> 9,962,923 9,766,150
114,500 Data Processing Resources Corp.*<F4> 2,634,999 3,148,750
132,200 Fidelity National Financial, Inc. 2,069,023 2,049,100
99,100 Ha-Lo Industries, Inc.*<F4> 2,589,738 2,737,637
62,000 ITI Technologies, Inc.*<F4> 1,659,000 1,681,750
516,300 Mercury Finance Co. 7,695,689 7,292,738
813,250 The Money Store, Inc. 14,155,249 22,669,344
225,500 Norrell Corp. 5,098,572 7,469,688
712,500 Olsten Corp. 22,306,301 22,978,125
224,000 Personnel Group of America, Inc.*<F4> 3,136,000 4,088,000
259,000 Pre-Paid Legal Services, Inc.*<F4> 2,872,906 3,852,625
160,000 Resource Bancshares Mortgage
Group, Inc.*<F4> 2,320,000 2,500,000
----------- -----------
258,447,060 297,742,131
THIS SECTOR IS 15.2% ABOVE YOUR COST.
FOOD/RESTAURANTS - 0.3%
223,900 CKE Restaurants, Inc. 2,536,148 3,750,325
111,700 DAKA International, Inc.*<F4> 2,629,965 2,820,425
225,000 HomeTown Buffet, Inc.*<F4> 2,450,337 2,728,125
150,000 Landry's Seafood Restaurants, Inc.*<F4> 2,757,040 2,737,500
60,000 Performance Food Group Co.*<F4> 1,438,750 1,470,000
216,600 Ryan's Family Steak Houses, Inc.*<F4> 1,929,279 1,949,400
---------- ----------
13,741,519 15,455,775
THIS SECTOR IS 12.5% ABOVE YOUR COST.
HEALTHCARE - 6.8%
2,461,500 Caremark International, Inc. 62,370,992 61,845,188
424,300 Community Health Systems, Inc.*<F4> 16,129,488 17,396,300
1,086,600 FHP International Corp.*<F4> 34,748,823 34,363,725
185,600 GranCare, Inc.*<F4> 3,405,673 3,340,800
238,000 HBO & Co. 21,470,865 22,431,500
242,000 Healthplan Services Inc.*<F4> 3,871,308 5,535,750
1,156,900 HEALTHSOUTH Corp.*<F4> 34,489,119 39,334,600
90,000 IMNET Systems, Inc.*<F4> 2,327,501 2,722,500
158,800 Living Centers of America, Inc.*<F4> 6,099,938 5,915,300
169,400 Pediatrix Medical Group, Inc.*<F4> 3,603,278 6,013,700
519,600 Quorum Health Group, Inc.*<F4> 12,752,024 12,210,600
500,200 RISCORP, Inc.*<F4> 10,788,224 9,503,800
51,800 RoTech Medical Corp.*<F4> 1,591,121 1,916,600
452,500 Shared Medical Systems Corp. 24,483,263 27,263,125
3,633,300 Tenet Healthcare Corp.*<F4> 73,731,034 76,299,300
162,000 Universal Health
Services, Inc. CL B*<F4> 8,418,470 8,606,250
----------- -----------
320,281,121 334,699,038
THIS SECTOR IS 4.5% ABOVE YOUR COST.
HOME/OFFICE & RELATED - 1.4%
1,316,500 Black & Decker Corp. 46,920,721 49,862,437
234,600 Bush Industries, Inc. 4,402,954 5,923,650
276,100 Herman Miller, Inc. 8,561,285 8,559,100
150,000 Regal-Beloit Corp. 3,057,756 3,150,000
---------- ----------
62,942,716 67,495,187
THIS SECTOR IS 7.2% ABOVE YOUR COST.
LEISURE & ENTERTAINMENT - 0.2%
140,000 Action Performance Cos. Inc.*<F4> 3,121,591 3,080,000
113,900 Cannondale Corp.*<F4> 1,984,407 2,092,912
142,900 Coastcast Corp.*<F4> 2,800,960 2,661,513
50,000 Lewis Galoob Toys, Inc.*<F4> 956,800 1,012,500
253,100 Prime Hospitality Corp.*<F4> 3,010,044 3,448,488
---------- ----------
11,873,802 12,295,413
THIS SECTOR IS 3.6% ABOVE YOUR COST.
MACHINERY/CONSTRUCTION & MISCELLANEOUS MANUFACTURING - 0.5%
170,000 3D Systems Corp.*<F4> 3,082,500 3,570,000
94,200 Chicago Miniature Lamp, Inc.*<F4> 1,327,977 3,061,500
275,000 Greenfield Industries, Inc. 7,853,891 9,521,875
240,000 JLG Industries, Inc. 1,709,494 10,980,000
---------- ----------
13,973,862 27,133,375
THIS SECTOR IS 94.2% ABOVE YOUR COST.
MEDICAL PRODUCTS & SUPPLIES - 1.7%
209,000 Advanced Technology
Laboratories, Inc.*<F4> 6,241,042 5,643,000
213,500 AmeriSource Health Corp.*<F4> 5,706,502 7,045,500
284,800 Ballard Medical Products 4,284,115 5,126,400
231,400 CONMED Corp.*<F4> 5,130,580 5,669,300
155,000 Intelligent Medical Imaging, Inc.*<F4> 1,896,879 1,821,250
341,000 Kinetic Concepts, Inc. 3,712,374 4,560,875
157,800 Maxxim Medical, Inc.*<F4> 3,072,617 2,978,475
764,600 Nellcor Puritan Bennett Inc.*<F4> 37,026,113 49,125,550
118,900 Utah Medical Products, Inc.*<F4> 2,212,298 1,991,575
69,282,520 83,961,925
THIS SECTOR IS 21.2% ABOVE YOUR COST.
NETWORKING - 6.0%
314,500 Anixter International Inc.*<F4> 6,083,204 5,307,187
2,964,400 Cisco Systems Inc.*<F4> 56,797,048 137,474,050
226,000 Digi International Inc.*<F4> 5,219,874 6,215,000
617,700 Madge Networks N.V.*<F4> 27,227,441 24,785,213
2,122,200 Newbridge Networks Corp.*<F4> 90,768,683 119,373,750
161,100 Uniphase Corp.*<F4> 5,437,549 6,242,625
191,533,799 299,397,825
THIS SECTOR IS 56.3% ABOVE YOUR COST.
OIL/GAS FIELD SERVICES - 10.1%
303,100 Arethusa (Off Shore) Ltd. 10,974,464 11,404,137
214,700 Benton Oil and Gas Co.*<F4> 3,458,292 3,381,525
568,400 BJ Services Co.*<F4> 18,071,671 19,041,400
167,100 Cooper Cameron Corp.*<F4> 6,421,671 7,018,200
434,100 Diamond Offshore Drilling, Inc.*<F4> 17,636,774 18,612,038
250,000 Digicon Inc.*<F4> 2,598,020 2,687,500
2,331,000 Dresser Industries, Inc. 67,257,866 71,095,500
185,000 Energy Ventures, Inc.*<F4> 4,301,908 4,925,625
1,613,800 Ensco International Inc.*<F4> 38,036,963 44,984,675
188,500 Global Industries, Inc.*<F4> 3,860,780 3,958,500
2,864,400 Halliburton Co. 113,213,464 162,912,750
155,000 Lomak Petroleum, Inc. 1,646,471 1,821,250
410,000 Marine Drilling Companies, Inc.*<F4> 2,911,755 3,228,750
1,349,200 Noble Drilling Corp.*<F4> 13,383,788 16,696,350
478,400 Petroleum Geo-Services
A/S ADR*<F4> 11,651,843 12,049,939
493,300 Pride Petroleum Services, Inc.*<F4> 5,609,338 6,967,863
938,500 Reading & Bates Corp.*<F4> 11,560,459 18,535,375
316,900 Sonat Offshore Drilling Inc. 13,755,772 16,161,900
1,178,900 Tidewater Inc. 34,527,143 44,798,200
792,000 Weatherford Enterra Inc.*<F4> 23,106,846 27,621,000
403,985,288 497,902,477
THIS SECTOR IS 23.2% ABOVE YOUR COST.
PHARMACEUTICALS - 7.6%
2,305,600 Eli Lilly & Co. 123,352,019 149,864,000
861,100 Pfizer Inc. 45,191,895 57,693,700
3,921,600 Pharmacia & Upjohn, Inc.*<F4> 166,310,315 156,373,800
242,700 Watson Pharmaceuticals Inc.*<F4> 9,923,968 9,708,000
344,778,197 373,639,500
THIS SECTOR IS 8.4% ABOVE YOUR COST.
RETAILING - 14.1%
622,600 Autozone, Inc.*<F4> 20,900,072 21,090,575
642,200 Claire's Stores, Inc. 9,666,762 11,639,875
470,800 CompUSA Inc.*<F4> 19,894,628 26,070,550
682,000 Consolidated Stores Corp.*<F4> 19,539,218 22,847,000
1,046,200 Dollar General Corp.*<F4> 32,482,224 30,339,800
82,500 Gadzooks, Inc.*<F4> 2,725,625 2,866,875
3,961,600 Gap, Inc. 192,673,947 219,373,600
1,275,900 Nordstrom, Inc. 62,487,070 61,802,044
125,000 Orchard Supply Hardware Stores*<F4> 3,031,250 2,953,125
699,700 Pier 1 Imports, Inc. 9,054,120 8,833,713
162,800 Proffitt's Inc.*<F4> 3,229,946 5,128,200
1,283,800 Rite Aid Corp. 42,186,940 39,637,325
4,106,900 Sears, Roebuck and Co. 176,396,360 200,211,375
437,800 Talbots, Inc. 15,997,527 16,636,400
1,211,200 TJX Companies, Inc. 28,891,958 30,431,400
----------- -----------
639,157,647 699,861,857
THIS SECTOR IS 9.5% ABOVE YOUR COST.
SEMICONDUCTOR & RELATED - 3.8%
2,049,900 Analog Devices, Inc.*<F4> 57,003,467 57,397,200
378,000 ASM Lithography Holding N.V.*<F4> 15,078,646 15,261,750
38,000 ElectroStar, Inc.*<F4> 342,000 399,000
548,300 ESS Technology Inc.*<F4> 10,678,506 10,280,625
41,100 Flextronics International Ltd.*<F4> 965,850 1,253,550
198,000 Hadco Corp.*<F4> 6,423,783 6,039,000
758,800 International Rectifier Corp.*<F4> 13,906,851 13,658,400
50,200 MEMC Electronic Materials, Inc.*<F4> 1,799,121 1,826,025
597,700 Microchip Technology Inc.*<F4> 21,487,816 16,436,750
811,200 Oak Technology, Inc.*<F4> 19,463,563 17,440,800
1,254,100 S3 Incorporated*<F4> 20,322,043 14,971,446
870,000 Sierra Semiconductor Corp.*<F4> 19,557,713 16,530,000
160,000 Silicon Storage Technology Inc.*<F4> 1,720,166 1,840,000
36,600 Unitrode Corp.*<F4> 400,246 887,550
360,100 Zilog, Inc.*<F4> 12,316,935 12,153,375
----------- -----------
201,466,706 186,375,471
THIS SECTOR IS 7.5% BELOW YOUR COST.
SOFTWARE - 9.0%
1,853,500 BMC Software, Inc.*<F4> 68,727,280 101,479,125
1,034,300 Borland International, Inc.*<F4> 17,079,545 18,617,400
1,186,700 Cadence Design Systems, Inc.*<F4> 24,927,293 52,363,137
360,100 Cognos Inc.*<F4> 12,658,112 20,435,675
2,217,900 Computer Associates Intl., Inc. 123,952,242 158,857,088
117,500 Datalogix International Inc.*<F4> 1,569,071 1,586,250
42,500 Datastream Systems, Inc.*<F4> 935,938 924,375
461,500 GT Interactive Software Corp.*<F4> 6,291,203 4,961,125
203,000 Hyperion Software Corporation*<F4> 4,364,276 4,415,250
175,000 IKOS Systems, Inc.*<F4> 1,811,250 2,931,250
456,400 McAffee Associates, Inc.*<F4> 13,328,277 24,987,900
180,000 Meridian Data, Inc.*<F4> 1,663,638 1,867,500
139,100 Micrografx, Inc.*<F4> 1,975,005 1,808,300
930,700 Oracle Corp.*<F4> 39,309,339 43,859,238
64,800 Stac, Inc.*<F4> 769,299 680,400
145,000 TCSI Corp.*<F4> 2,289,793 4,422,500
----------- -----------
321,651,561 444,196,513
THIS SECTOR IS 38.1% ABOVE YOUR COST.
TRANSPORTATION - 3.4%
234,500 Alaska Air Group Inc.*<F4> 4,489,117 6,272,875
699,800 America West Airlines, Inc. Cl B*<F4> 10,616,280 14,958,225
130,000 Atlas Air, Inc.*<F4> 2,243,124 4,875,000
131,700 Mesa Airlines, Inc.*<F4> 1,138,158 1,415,775
227,500 Miller Industries, Inc.*<F4> 6,293,394 7,735,000
1,032,500 Pittston Brink's Group 20,344,925 27,619,375
1,572,600 Praxair, Inc. 51,314,622 62,707,425
784,000 Trans World Airlines, Inc.*<F4> 9,452,697 15,680,000
165,000 United TransNet, Inc.*<F4> 2,475,907 3,898,125
985,700 ValuJet Airlines, Inc.*<F4> 22,757,768 24,642,500
----------- -----------
131,125,992 169,804,300
THIS SECTOR IS 29.5% ABOVE YOUR COST.
MISCELLANEOUS - 1.1%
674,000 Allied Waste Industries, Inc.*<F4> 5,782,751 6,150,250
14,000 American Homestar Corp.*<F4> 254,322 278,250
581,200 Fort Howard Corp.*<F4> 12,368,649 13,077,000
435,400 Lear Seating Corp.*<F4> 13,613,104 14,204,925
417,300 United Waste Systems, Inc.*<F4> 16,905,218 20,865,000
---------- ----------
48,924,044 54,575,425
THIS SECTOR IS 11.6% ABOVE YOUR COST.
WARRANTS - 0.0%
43 Sound Advice, Inc.
Warrants,*<F4> 06/14/99 0 0
THIS SECTOR IS 0.0% ABOVE YOUR COST.
------------- -------------
Total common stocks 4,162,045,959 4,886,561,473
SHORT-TERM INVESTMENTS - 2.1% (A)<F5>
COMMERCIAL PAPER - 1.7%
$25,000,000 American Express Credit Corp.
5.4% Due 04/01/96 $25,000,000 $25,000,000
7,000,000 American Express Credit Corp.
5.4% Due 04/02/96 6,998,956 6,998,956
20,000,000 American Express Credit Corp.
5.4% Due 04/03/96 19,994,000 19,994,000
15,000,000 American Express Credit Corp.
5.4% Due 04/04/96 14,993,250 14,993,250
10,000,000 Norwest Financial, Inc.
5.37% Due 04/01/96 10,000,000 10,000,000
5,000,000 Prudential Funding Corp.
5.45% Due 04/01/96 5,000,000 5,000,000
5,000,000 Prudential Funding Corp.
5.45% Due 04/02/96 4,999,243 4,999,243
---------- ----------
Total commercial paper 86,985,449 86,985,449
VARIABLE RATE DEMAND NOTES - 0.4%
3,325,000 American Family Financial
Services 3,325,000 3,325,000
2,900,000 General Mills, Inc. 2,900,000 2,900,000
1,700,000 Pitney Bowes Credit Corp. 1,700,000 1,700,000
10,073,458 Sara Lee Corp. 10,073,458 10,073,458
2,225,000 Wisconsin Electric Power Co. 2,225,000 2,225,000
------------- -------------
Total variable rate demand notes 20,223,458 20,223,458
------------- -------------
Total short-term investments 107,208,907 107,208,907
------------- -------------
Total investments $4,269,254,866 4,993,770,380
-------------
-------------
LIABILITIES, LESS CASH AND
RECEIVABLES (0.9%) (a)<F5> (46,390,765)
-------------
NET ASSETS $4,947,379,615
-------------
-------------
Net Asset Value Per Share
($0.01 par value 200,000,000
shares authorized), offering
and redemption price
($4,947,379,615 / 165,981,905
shares outstanding) $29.81
-----
-----
* <F4>Non-income producing security.
(a) <F5>Percentages of various classifications relate to net assets.
The accompanying notes to financial statements are an integral part of this
statement.
MARKET CAP . . .
New purchases in EMC Corp., Conseco, Inc., Dell Computer, Analog Devices, and
Caremark International jumped your $1 billion to $5 billion category ("mid cap")
from 34.0 percent in December to 43.3 percent. Gains in Newbridge Networks, up
$25 million, BMC Software, up $23 million, and Tellabs, up $22 million, also
increased the size of your mid cap holdings.
Your "large cap" stocks, those above $5 billion, dropped back slightly to 40.0
percent as Merck, Bay Networks, Cabletron, and Home Depot were sold.
Companies with market caps of $500 million to $1 billion increased to 9.1
percent while your companies below $500 million comprised 6.4 percent.
This shift away from large cap stocks which number 17 out of a total of 203 and
move toward mid cap stocks follows a period when prudence dictated a more
cautious approach toward the smaller cap stocks. From September 30, 1995 to
January 31, 1996 the Nasdaq Industrials dropped 1.2 percent while larger S&P 500
stocks rose 9.7 percent.
----
YOUR COMPANIES' MARKET CAPITALIZATION
Cash 1.2%
SMALL CAP 15.5%
MID CAP 43.3%
LARGE CAP 40%
BRANDYWINE FUND, INC.
STATEMENT OF OPERATIONS
For the Period Ended March 31, 1996
(Unaudited)
INCOME:
Dividends $10,864,308
Interest 4,856,629
----------
Total income 15,720,937
----------
Expenses:
Management fees 21,818,969
Custodian fees 352,962
Printing and postage expense 204,302
Transfer agent fees 194,111
Administrative services 157,250
Registration fees 147,991
Professional fees 11,600
Other expenses 46,184
----------
Total expenses 22,933,369
-----------
NET INVESTMENT LOSS (7,212,432)
-----------
NET REALIZED GAIN ON INVESTMENTS 142,008,093
NET DECREASE IN UNREALIZED APPRECIATION ON INVESTMENTS (111,849,006)
------------
NET GAIN ON INVESTMENTS 30,159,087
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $22,946,655
-----------
-----------
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ended March 31, 1996 (Unaudited)
and For the Year Ended September 30, 1995
1996 1995
----------- -----------
OPERATIONS:
Net investment loss $(7,212,432) $(10,067,903)
Net realized gain on investments 142,008,093 486,983,910
Net (decrease) increase in unrealized
appreciation on investments (111,849,006) 676,704,147
------------ -------------
Net increase in net assets resulting
from operations 22,946,655 1,153,620,154
------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net realized gains
($3.84486 and $1.45255 per share, respectively)(479,170,817) (132,629,398)
------------ ------------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (39,318,287 and
41,807,549 shares, respectively) 1,142,356,751 1,178,735,039
Net asset value of shares issued in
distributions (15,557,840 and 5,354,806
shares, respectively) 439,669,031 123,963,752
Cost of shares redeemed (10,864,557 and
15,663,300 shares, respectively) (315,906,195) (426,759,741)
------------- ------------
Net increase in net assets derived
from Fund share activities 1,266,119,587 875,939,050
------------- ------------
TOTAL INCREASE 809,895,425 1,896,929,806
NET ASSETS AT THE BEGINNING OF THE PERIOD 4,137,484,190 2,240,554,384
------------- -------------
NET ASSETS AT THE END OF THE PERIOD $4,947,379,615 $4,137,484,190
------------- -------------
------------- -------------
The accompanying notes to financial statements are an integral part of these
statements.
BRANDYWINE FUND, INC.
FINANCIAL HIGHLIGHTS
(Selected Data for each share of the Fund outstanding throughout each period)
<TABLE>
<CAPTION>
FOR THE PERIOD
ENDED MARCH 31,
1996
(UNAUDITED) 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986+<F6>
------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $33.92 $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 income (loss) 0.04 (0.10) 0.03 (0.02) 0.04 0.27 0.11 0.03 0.06 (0.02) 0.03
Net realized and unrealized (losses) gains
on investments**<F8> (0.31) 10.70 (0.43) 9.25 1.04 5.74 (1.48) 4.99 (3.29) 6.04 0.98
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total from investment operations (0.27) 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 (3.84) (1.45) (2.87) (0.54) (2.11) (1.00) (0.68) -- (0.88) -- --
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total from distributions (3.84) (1.45) (2.87) (0.55) (2.24) (1.28) (0.71) (0.04) (0.88) (0.03) --
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Net asset value, end of period $29.81 $33.92 $24.77 $28.04 $19.36 $20.52 $15.79 $17.87 $12.89 $17.00 $11.01
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total Investment Return (0.3%)*<F7>45.5% (1.4%) 48.6% 5.9% 41.4% (7.9%) 39.0%(17.6%) 54.8% 13.7%*<F7>
Ratios/Supplemental Data:
Net assets, end of period (in 000's $)4,947,380 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 1.05%*<F7>1.07% 1.09% 1.08% 1.10% 1.09% 1.12% 1.13% 1.16% 1.18% 1.39%*<F7>
Ratio of net investment (loss) income
to average net assets (0.3%)*<F7>(0.4%) 0.1% (0.1%) 0.2% 1.5% 0.9% 0.2% 0.3% (0.2%) 0.7%*<F7>
Portfolio turnover rate 212.6%*<F7>193.7% 190.2% 150.4% 188.9% 187.9% 157.7% 91.0% 107.4% 146.8% 58.4%*<F7>
+<F6>For the period from December 12, 1985 (commencement of operations) to
September 30, 1986.
*<F7>Annualized.
**<F8>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.
BRANDYWINE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
(Unaudited)
(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.
(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.
(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.
(4) INVESTMENT TRANSACTIONS
For the period ended March 31, 1996, purchases and proceeds of sales of
investment securities (excluding short-term securities) were $5,323,392,415 and
$4,556,609,272, respectively.
(5) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
As of March 31, 1996, liabilities of the Fund included the following:
Payable to brokers for
investments purchased $91,047,160
Payable to Adviser for management
fees 4,132,954
Other liabilities 173,217
(6) SOURCES OF NET ASSETS
As of March 31, 1996, the sources of net assets were as follows:
Fund shares issued and outstanding $4,083,115,967
Net unrealized appreciation
on investments 724,515,514
Undistributed net realized gains
and losses 139,748,134
-------------
$4,947,379,615
--------------
--------------
Aggregate net unrealized appreciation as of March 31, 1996 consisted of the
following:
Aggregate gross
unrealized appreciation $788,571,334
Aggregate gross unrealized
depreciation (64,055,820)
------------
Net unrealized appreciation $724,515,514
-----------
-----------
KUDOS FOR YOUR FUND . . .
USA TODAY -- Brandywine named as one of the "Funds for the Long Haul" for its
404 percent cumulative gain compared with only a 221 percent gain for the
average growth fund during the the last ten years through March 31, 1996.
April 1996
- ----------
RETIRE WITH MONEY -- "Since its 1985 inception, Brandywine has returned an
average of 18.4% a year. It has never had a down year . . . Even in 1987, when
the market experienced its worst meltdown in 60 years, Brandywine edged up
2.6%." April 1996
----------
THE PLAIN DEALER -- Of the 7,000 mutual funds available, Brandywine is one of
only 10 that has never had a losing year in any of the last 10 years and has
posted an average annual return of at least 11 percent during the 10 year
period. March 1996
----------
FEE ADVISOR -- "(Brandywine is) one of the few investment management firms
that's really taken in a lot of money, grown its staff significantly, and still
maintained its edge. . . . they are so . . . creative at what they do that they
are just getting better insights, and that's what helps build their record."
January/February 1996
- ---------------------
SMART MONEY -- "At Brandywine, (Friess and his team) . . . are more interested
in what Friess likes to call detective work -- talking to competitors,
suppliers, and customers of a company and ferreting out tidbits of information
that together form a mosaic of how the company is faring. 'They are the best at
digging out facts of anyone' says (a competing fund manager)." January 1996
------------
MORNINGSTAR, INC. -- For the ten years ended December 31, 1995, Brandywine Fund
ranked number one among growth funds in the U.S. currently available to new
investors that have no load or distribution charges. January 1996
------------
BOARD OF DIRECTORS
John E. Burris
Chairman
Burris Foods, Inc.
Milford, Delaware
Foster S. Friess
President
Friess Associates, Inc.
Jackson, Wyoming
Stig Ramel
Former President
Nobel Foundation
Stockholm, Sweden
(800) 656-3017
Investment Adviser: FRIESS ASSOCIATES, INC.
Independent Accountants: PRICE WATERHOUSE LLP
Custodian, Transfer Agent: FIRSTAR TRUST COMPANY
Legal Counsel: FOLEY & LARDNER
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.
Report editor: Lynda J. Campbell Report Staff: Margaret Barton, Rebecca A.
Buswell, Jennifer Fidance, Paul R. Robinson
</TABLE>
