BRANDYWINE FUND, INC.
MANAGED BY FRIESS ASSOCIATES, INC.
QUARTERLY REPORT
JUNE 30, 1996
"MAJOR INDEXES DECLINE . . ." "DOW DECLINES . . .TECHS LOSE GROUND"
"NASDAQ'S LOSS WORST IN THREE MONTHS"
DEAR FELLOW SHAREHOLDERS:
In the context of these headlines we are pleased to see your Fund up 10.3
percent for the year to date, edging out the S&P 500, the Russell 2000, the NYSE
and the S&P Midcap which all increased between 8.3 and 10 percent. Including the
rocky month of June, your quarterly results of 3.9 percent keep you on the
upward trend to which you have become accustomed.
Your 166 percent increase for the last five years is well ahead of all the major
indices as the Nasdaq Industrials and the Investor's Business Daily Mutual Fund
Index were each up 110 percent, the S&P 500 rose 108 percent, the S&P Midcap
gained 96 percent, and the NYSE climbed 77 percent. For the latest 12 months,
your Fund is up 18.2 percent.
MOST RECENT FIVE YEARS
NYSE 76.5%
S&P MIDCAP 95.7%
S&P 500*<F20> 107.6%
NASDAQ IND. 110.7%
YOUR FUND*<F20> 166.1%
*<F20>TOTAL RETURN
The steadfastness of these results stems from your time-tested strategy of
avoiding the astronomical price earnings ratios that are now being dramatically
shaved. We do not believe in buying growth "at any price."
Currently a study of all of the stocks in your portfolio by O'Neil and Company,
publishers of Investor's Business Daily, reflects a PE ratio of 17 versus a PE
ratio of 15 for the S&P 500 based on next year's estimates.
The average growth in the latest quarterly earnings for your companies is 45
percent versus 12 percent for the S&P 500. Annual growth is 53 percent versus
23 percent according to the same report.
COMPANY GROWTH
AVERAGE INCREASE LATEST 12 MOS. EARNINGS
YOUR COMPANIES 53%
S&P 500 23%
AVERAGE INCREASE LATEST QUARTERLY EARNINGS
YOUR COMPANIES 45%
S&P 500 12%
All S&P figures are unweighted. Analysis by William O'Neil & Co., Inc.
June 30, 1996.
It is "business as usual" at your three research centers in Phoenix, Jackson
Hole, and Wilmington. We are investing in INDIVIDUAL BUSINESSES rather than in
the stock market and taking advantage of the opportunities this June's market
retreat presented by buying great new stocks at lower prices and adding to
existing holdings which have suffered for no reason other than general market
weakness.
Concerns about the increase in credit card delinquencies, personal bankruptcies
and increasing interest rates triggered a sell-off in financial stocks in late
June. We believe the strength of the economy and the surprisingly low
unemployment statistics will help SELECTED financial holdings which actually
prospered during the quarter.
Likewise, the June quarter witnessed a record lease sale in the Gulf of Mexico
for offshore oil and gas exploration rights. Bids virtually tripled for
deepwater blocks from the spring of '95 and activity is strong in international
offshore markets as well.
During the quarter, your Benton Oil was up 36 percent, Comstock Resources grew
31 percent, Digicon rose 29 percent, and Global Industries increased 27 percent.
This heightened interest in oil exploration is fueled by dramatic technology
improvements that have driven down the cost of finding and producing oil, making
each project more profitable even with reduced oil prices relative to ten years
ago.
Modern 3D seismic technology, the ability to drill horizontally off an original
vertical hole punched in the ground, and production rigs that float on the
surface instead of needing thousand-foot-long "legs" are examples of the
fundamental changes your Friess Associates research team seeks.
Your winners this quarter resulted from the efforts of many on your research
team: Carl Gates' 78 per-cent gain in Uniphase Corp yielded you $4.8 million;
David Harrington's Dell Computer increased 52 percent bringing you $49 million;
and John Ragard's CKE Restaurants added $2.1 million with its 48 percent
increase. Tellabs, picked by Andy Graves, was up 38 percent with gains of $44
million.
Jon Fenn's Nike grew $47 million or 23 percent during the quarter. The
suggestion of one of your outside consultants, Mike Davis, also prompted Jon
Fenn to pick Claire's Stores which was up 52 percent adding $6 million.
Similarly, Conrad Doenges, another outside consultant, caused Andy Graves to
invest in Personnel Group of America and Pre-Paid Legal Services which account
for a combined increase of $2.3 million. Truly a team effort.
On the economic front there are no clear signs of any slowing. The over 3
percent increase in manufacturing output for the three months ended in May
continues to show a healthy, expanding economy. Further strength is echoed by
the Philadelphia Fed's index for June which may in part be due to a pickup in
export orders as foreign demand for products appears to be solid.
Exceptional dynamics in Japan may be offsetting European weakness. Japan's
economy actually took off during the first fiscal quarter at the fastest pace in
over 23 years with almost a 13 percent annualized gain in gross domestic
product! Consumer demand also soared as Japan's trade surplus dropped for the
18th straight month to a level which is 60 percent lower than last year at this
time.
While current momentum may give Alan Greenspan and the Fed some ammunition for
increasing rates this July, conflicting statistics like the one from the
National Association of Purchasing Managers which indicate a weakening pace of
economic activity for May, give the Fed some opportunity to "wait and see"
before further tightening.
All of us at Friess Associates are thankful that our generalist approach to
investing your valued assets prompted Smart Money magazine to list your Fund as
one of only seven Superstar funds out of the 2,034 funds they reviewed.
Others are catching on to this strategy as many new shareholders joined with you
in adding more than $350 million in assets during the quarter.
Your Friess Associates teammates, as well as friends and family members,
continue to have more than $30 million invested with you. And, the Nobel
Foundation remains one of your largest fellow shareholders with their investment
of $35 million.
Since Nobel joined the Fund ten years ago, their investment has grown 375
percent, nicely beating the S&P 500's gain of 264 percent. On an average
annualized basis your return is 16.9 percent for the ten years compared to just
13.8 percent for the S&P 500.
For those of you who have also been with us since those early days -- thank you
for your continued trust!
Since Brandywine Fund's inception ten and a half years ago, Fund shares
appreciated 496 percent, 18.5 percent annualized, while the S&P rose 340 percent
and the Nasdaq increased 236 percent.
INCEPTION
12/31/85 - 6/30/96
NYSE 195.4%
IBD*<F21> 233.1%
NASDAQ IND. 236.3%
S&P 500* 339.8%
YOUR FUND*<F21> 495.6%
*<F21> TOTAL RETURN
IBD = Investor's Business Daily mutual fund index.
And, for those who started with us just two years ago, you have enjoyed a 26
percent average annualized rate of return.
For our IRA shareholders, you'll find important information about your account
on page 4, and, as next quarter will be the end of this fiscal year, we've also
included a short piece about the distribution that will take place in October,
affecting all taxable shareholders of record at that date, that you should find
helpful in your tax planning.
As we celebrate our nation's birth, we recognize the importance of the
traditions instituted by our founding fathers which make possible the "American
Dream." We're honored to serve your investment needs and help you realize your
financial goals in working toward that dream.
Remember, the success of individual companies will continue. Your Friess team
will be there to capitalize on those opportunities. We work diligently each day
to bring you the best possible long-term returns. Your trust and faith in us
and your loyalty through good and bad markets is what keeps us going each day!
Thanks for letting us serve you.
God Bless!
/s/ Foster Friess
Foster Friess
President
July 2, 1996
HIGHLIGHTS . . .
DISTRIBUTION
CORPORATE EXPRESS offers office supply purchasing services to large corporations
employing more than 100 people.
Early this year your company purchased a U.S. trucking business providing the
means to supply its customers, like General Motors, Exxon and Dow Chemical,
with whatever office products they need overnight. This sets a new standard of
performance within the industry.
Corporate Express software enables its customers to make purchases on an
automated basis eliminating staffing and warehousing requirements. In one
customer's case, the $26 million savings in purchasing overhead paid for one
year's worth of supplies!
In conversations this month with Chairman Jirka Rysavi, we learned that your
company cut back the number of office supply vendors they used in many product
lines from as many as 10 down to only about 2 currently. This improves inventory
controls, just in time delivery, and price per unit purchasing costs.
Earnings in the most recent quarter jumped 77 percent to $.16 versus $.09 on
sales of $468 million, more than double the $175 million figure reported last
year.
Since purchase in January, your shares have soared 54 percent to $40.
FINANCIAL & BUSINESS SERVICES
A pioneer in trends toward outsourcing in American business, NORRELL CORPORATION
is a national provider of temporary workers through over 350 owned or franchised
offices. Your company is listed on the NYSE and major corporations such as IBM
utilize its services.
Last year, your company placed more than 210,000 people in temporary and long-
term assignments.
We learned recently from CFO Kent Garner that four institutional brokerage firms
will be covering your company instead of just one firm currently. This expansion
should likely generate greater investor interest.
Revenues increased 22 percent during the last quarter fueling earnings growth of
47 percent to $.50 from $.34. Results for the year ended October were also
strong showing a 56 percent jump in earnings and a 19 percent rise in revenues.
Since your purchase in April of last year, your shares have skyrocketed 117
percent selling at $49.
Mirroring the HMO concept, PRE-PAID LEGAL SERVICES, INC. is the largest
independent provider of legal service plans. Your company offers a broad range
of legal services to its customers for a fixed monthly fee including unlimited
attorney consultation, document review, document and letter writing, traffic
violation defense, IRS audit defense, and trial preparation and defense.
A new President and CEO, Jack Mildren, came on board a little over a year ago
and new strategies helped your company post accelerating monthly membership
growth.
Jack, a former All American Quarterback at the University of Oklahoma and former
Lt. Governor of Oklahoma, told us recently that new membership growth through
May '96 vs. May '95 exploded 122 percent to nearly 77,000, a figure well ahead
of the original 100 percent growth target.
For the March quarter, earnings leapt 71 percent from $.07 to $.12 and revenues
climbed 65 percent to reach $12.4 million. Earnings for calendar 1995 rose 62
percent on a 47 percent increase in revenues.
Your shares now sell at $18.50, a price 67 percent higher than when purchased at
$11 in January.
MACHINERY/CONSTRUCTION & MISCELLANEOUS . . .
Workers who must perform their duties in dangerous, high areas, know that a
secure and reliable elevated work platform is the key to getting the job done
right. JLG INDUSTRIES manufactures, distributes, and markets just this type of
equipment.
These work platforms are electrically powered structures designed to place the
worker, along with tools and equipment, easily, quickly, and safely in a stable
elevated position.
Through modernization, your company's products are the safest and most reliable
in the industry and allow the work to be completed in less time and with fewer
people, thereby cutting costs for the customer. As a result, JLG continues to
show domestic and international sales growth, increasing 160 percent during the
past nine months.
Chief Financial Officer Chuck Diller, Jr. recently told us that because of many
efficiencies, including the acquisition of a new facility, inventory levels are
increasing and orders for equipment are being filled more quickly. He went on
to say that contained costs and increased sales contribute to strong earnings.
Last quarter's revenues climbed 50 percent from $75 million to $113 million,
causing earnings to leap 95 percent to $.84 from $.43.
Up an amazing 321 percent from its original purchase price of $7 in March of
1994, your stock now sells at $74.25.
OIL/GAS FIELD SERVICES
With the oil services market steadily increasing, PRIDE PETROLEUM, is a quality
supplier in the workover rig business. Using 3D technology, oil companies can
more precisely pinpoint oil reserves. A workover rig, which sends a liner into
a pre-existing drilled hole, is necessary in the oil field to capture the high
point of these reserves without going the costly route of drilling a new hole
using a new rig.
Your company continues to surprise investors with high earnings. For calendar
1995, earnings doubled from $.30 to $.60. That, coupled with the acquisition of
a Venezuelan company allowing Pride to have a big stake in South America, has
Chief Financial Officer Paul Bragg very excited about the business prospects.
With a secondary offering, Pride will be able to eliminate most of the debt
incurred in completing the acquisition.
Your shares now sell at $14.25 reflecting a 25 percent rise since purchased in
February.
RETAILING
In any of America's shopping malls there is a wide variety of stores selling
ladies apparel. Look further and you will see one small boutique selling
fashion accessories such as costume jewelry, hair ornaments, and handbags.
Welcome to CLAIRE'S STORES.
Your company differs from its competitors because of its focus on a growing
market -- teenagers. Costume jewelry accounts for more than two-thirds of total
sales and the average product is priced around $4.00.
With a carefully targeted market, no debt, and a management that owns 25 percent
of the stock, Claire's was an attractive investment for your Fund. Especially
exciting is your company's international expansion. In the last fiscal year
Claire's added more than 120 new stores, including 20 in Japan and more than 30
in Canada.
Ira Kaplan, CFO, explained a new store concept. "We expanded our retailing style
by the recent acquisitions of the Bow Bangles, The Icing, and Accessory Place
chains. The latter two add some apparel into the business."
For the April quarter, earnings soared to $.21 versus $.07, an amazing 200 jump,
on revenues of $92 million versus $68 million, up 36 percent.
Since purchase, your shares have surged 83 percent to $27.50.
Each of COMPUSA, INC.'S 103 mammoth computer superstores offers tens of
thousands of hardware, software, and computer-related products at discounted
prices. Interactive displays allow both children and adults to "test drive"
hundreds of software titles before buying them.
In addition to direct retail sales your NYSE-listed company targets corporate,
government, educational, and even mail order customers.
CFO Jim Skinner told us that the recent acquisition of the mail order company,
PC's Compleat, dramatically increased the size of CompUSA's mail order business,
making your company the third largest non-captive mail order firm in the
country.
CompUSA also adds to its profits by offering a number of non-retail, high margin
businesses such as training courses for all experience levels, and 24-48 hour
repair service.
The March quarter saw earnings double from $.15 to $.30 fueled by revenue growth
of 29 percent.
Currently at $34, CompUSA has jumped 62 percent since your purchase in March.
FELLOW SHAREHOLDER . . .
At 90, most of us would not even be working let alone starting each day at 7:00
AM. Yet up until just recently, Art Connolly, Sr. was still going strong at
the law firm he founded in 1942 in Wilmington, Delaware.
Art's exciting accomplishments can best be described by his son, Art Connolly,
Jr., also a Brandywine Fund shareholder, in an address he gave for his father's
retirement celebration five years ago.
In 1924, as a way to finance his education, Dad shipped out on a steamer for the
summer. An old sailor befriended him and on the unbearably hot nights they
would sit up on the deck and talk. The old sailor gave him the advice, "If you
ever have any money the best way to invest it is in a whorehouse."
(I don't want to go into the reasons the sailor gave for this advice but it was
more logical than some of the financial newsletters that are circulated.)
Instead of accepting this advice Dad became a lawyer. He thus chose not to
become involved in the world's oldest profession, but many things in the
practice of law are very similar.
After working in DuPont's patent department for eight or ten years, he went out
on his own. The small law firm he founded quickly grew and had many blue chip
companies as clients (Pfizer, Scott Paper, General Foods, General Motors, Kodak,
Phillips, for example).
Some of these clients came in after being involved in litigation where Dad was
on the other side. They respected his work and they also did not want to be on
opposite sides of him again.
Dad became known as one of, if not the top, patent litigators in the country.
One story illustrates his effective cross examination:
He was cross examining a witness in the Pfizer criminal anti-trust trial in the
Southern District of New York. The witness was very cocky and was rocking back
and forth in the old wooden chair which was in the witness stand while the noose
was getting tighter with each question (I realized exactly what was happening
because I had been cross examined by Dad since I was five years old).
When the witness was finally caught in the trap he pushed his chair back
slightly further and flipped over backwards and all you could see were his feet.
Fortunately only the witness' pride was injured. Even Perry Mason never knocked
a witness out of his chair!
I met a former CEO of a company who had been opposite Dad in litigation who told
me that the people at his company called Dad "Ten miles of bad road Connolly."
He then went on to state that having gotten to know Dad, he could not believe he
was the same person who had been involved in the litigation since he was so
warm, friendly and easy going.
That is a side some of us see quite frequently -- others see less frequently.
Dad loves a challenge -- what he really loves is a fight.
Art has been President of The Laffey-McHugh Foundation, an organization which
gives about 100 grants a year benefiting many local charities.
And incredibly, up until the last eight or nine months, Art, father of 6,
grandfather of 13, and great-grandfather of 3, could be found enjoying regular
vigorous bike rides! He is an inspiration and we are honored to have worked
with him for nearly 20 years to achieve his investment goals for the Foundation.
- - Rebecca Buswell
SHAREHOLDERS WITH IRA'S . . .
Your $12.50 yearly maintenance fee will be automatically deducted on September
20th. If you prefer to have this amount remain in your account to continue to
grow, please send a check directly to Firstar Trust Company attn: Brandywine
Fund, P.O. Box 701, Milwaukee, WI 53201-0701, by September 15th.
JON . . .
During his seven years as an investment banker with William Blair & Company, Jon
Fenn worked in mergers and acquisitions and was responsible for completing
initial offerings of new companies going public. At Friess Jon continues his
interest in new products and ideas.
"Speaking with customers, suppliers, and competitors is really exciting when I
come across a hot new product or technology that has yet been undiscovered by
Wall Street. I like to see our clients benefit when Wall Street recognizes a
new technology we have already uncovered," says Jon.
According to Friess consultant Mike Davis, "I know when Jon wants to buy a new
idea, not only has he talked to the company, but he has already called a few
competitors and customers. Once the stock is purchased, he gets even more
aggressive about talking to his contacts. Jon does his homework and is a great
team player."
Jon earned his Bachelor of Science degree in Business Administration from the
University of Denver and his MBA from the Kellogg School of Management at
Northwestern University.
When Jon joined Friess in 1994, he was thrilled to move to Jackson Hole where he
spends his free time pursuing his favorite outdoor sports. He used to be a
competitive freestyle skier and one of the top mogul skiers in the Rocky
Mountain Region.
Today, he still enjoys skiing as well as mountain biking, backpacking, and
hunting, but he is most enthusiastic about flyfishing. Jon's wife Annie is an
obstetrician and gynecologist in a solo practice in Jackson Hole.
"His investments in Nike and Cognos, which together created more than $51
million in gains for your Fund just this quarter, are perfect examples of how
effectively Jon does his hard-hitting research to come up with winners," says
fellow researcher Mark Lapolla.
- -Margaret Barton
FUND BROKER . . .
Since 1992, Terry Hoy has worked with your Friess researchers on such companies
as CoreStaff, Tellabs, Career Horizons, Greenfield Industries, and Smith
International which together contributed nearly $82 million to your Fund.
With 10 years combined experience in the telecommunications industry at MCI and
IBM, Terry joined Robert Baird in 1991 as a Vice President.
"Because Terry has taken the time to understand our investment philosophy we
know he thinks like we do," praises researcher Carl Gates. "When he makes a
recommendation, we look into it quickly."
A fellow Brandywine shareholder, Terry understands the importance of a sound
investment strategy. "This is a results oriented business and the Friess team is
keenly aware of what drives the performance of individual stocks. They have a
talent for sifting through the maze of information and identifying those
companies poised for growth."
Terry earned his BS in Finance at Marquette University, and after graduation was
reacquainted with an elementary school pal, Holly, whom he went on to marry.
They have four children Emily, 10; Isabelle, 6; Scarlett, 5; and Trevor, 3.
Most of Terry's free time is spent with his family in their suburban Milwaukee
home, but he also enjoys playing golf and tennis, skiing, and coaching soccer.
"I am impressed that Friess Associates, now approaching $10 billion in total
assets, remains so nimble and consistently ahead of the investment pack," Terry
comments. "Their investment strategy works."
- -Rebecca Buswell
CINDY . . .
With Jackson Hole being a prime vacation spot, research manager Cindy Dahlin
says she enjoys it when fellow shareholders visit during their stay.
"They marvel at how we efficiently manage their assets from such a 'remote'
location, and we have the opportunity to meet them and see first-hand how our
investment strategy helps so many folks achieve their financial goals."
In addition to helping run your Jackson research office, Cindy's primary
responsibility is assisting researcher Mark Lapolla.
"Cindy's capacity for handling many things at once -- research prospecting,
industry trade checks, and office support -- improves my efficiency to do hard-
hitting investigative research," Mark comments. "She can interface with brokers
and filter through only that information which is pertinent to our research.
This hastens my ability to make sound investment decisions."
Upon receiving her B.A. in English/Communications, Cindy lived in her native New
Jersey working for a State Senator on his gubernatorial campaign. She then went
on to work in the legal profession gaining the experience which enables Cindy to
juggle many tasks simultaneously, a skill she utilizes daily in her work at
Friess Associates.
Also contributing to Cindy's knack for handling a myriad of tasks is the fact
that she is mother to as many as six children. With her two children, Lindsey
and Daniel, always at home and her husband Jeff's four children there much of
the time, they often have six adolescents under one roof! What a challenge!
Cindy's favorite leisure time is spent with her family enjoying Jackson's
popular outdoor activities. She is active in the Jackson Hole Presbyterian
Church singing in the choir and serving as a deacon. And, Cindy never misses
her yearly trip back east to see family and go to the beach.
- -Rebecca Buswell
ALL IS NOT ROSES . . .
As in every quarter, there were some of your holdings that did not perform as
well as we would have liked. Seven stocks retraced more than $10 million each
during the quarter including Trans World Airlines, Gateway 2000, Madge Networks,
Ericsson, IVAX Corp., Eli Lilly, and EMC Corp. The latter three were sold from
your portfolio.
We are excited to report that just the top three gainers during the quarter,
Dell Computer with $49 million, Nike with $47 million, and Tellabs with $44
million, contributed more than the seven backtrackers gave up. $40 million
more!
Your other big gainers during the quarter, rising by more than $10 million each,
were Gap with $38 million, Newbridge Networks at $21 million, Cisco Systems
gaining $20 million, Sun Microsystems with $18 million, TJX Companies with $11
million, and Diamond Offshore Drilling bringing in $10 million.
BRIAN . . .
Maintaining the three Delaware area Friess Associates personal and business
properties is a challenging job. For seven years, Brian DiStefano has been
managing these properties expertly, handling everything from landscaping to
vehicle maintenance to supervising all contractors to ensure that their work is
up to Friess Associates standards.
"I appreciate the opportunity to do the kind of work I enjoy most," relates
Brian. "Friess Associates researchers can bring clients to our Delaware office
feeling confident that everything will be up to par. I worry about the
condition of the building and how the grounds look, enabling them to focus
solely on their important responsibility -- growing the assets of our clients
and shareholders."
Outside of work, Brian is just as active and still eager to be outdoors. He
enjoys golfing and in-line speed skating. He has won amateur races in
Philadelphia, Virginia, New York City and in Delaware in which proceeds
benefited organizations fighting Multiple Sclerosis, SIDS (Sudden Infant Death
Syndrome) and AIDS, and every year Brian participates in a golf tournament which
supports the Boys & Girls Club of Delaware.
Brian is an ice hockey enthusiast -- both as a fan and a player. And, he always
finds time to spend with his wife of seven years, Lisa. Together they love to
fish and travel, especially to the beaches of North Carolina.
"Brian is invaluable to us," says Doug McMinn, who helps run the Administrative
area of Friess Associates. "Whatever task is asked of him, whether it be
installing ergonomic office equipment or getting new carpeting laid, Brian
handles it efficiently and promptly. Once Brian accepts responsibility for
something, we can forget about it knowing that it will be taken care of in the
most professional manner."
- -Rebecca Buswell
GROWING YOUR FUND . . .
All well run companies require the talents and dedication of every employee.
Meet Cindy Pfister at HealthPlan Services, headquartered in Tampa, Florida,
whose enthusiasm comes across in her positive approach to her job and to her
family responsibilities.
Cindy has been at HealthPlan Services for 12 years, starting in the clerical
department and working her way up to secretary, then to senior secretary, and
now to accounts payable specialist.
"I enjoy my job and the people I work with. I am a numbers person. I liked
math in school and always knew I would work with numbers. But you have to make
your job fun! I am a people person, too," Cindy explains. Like Cindy, Health
Plan Services is people oriented and wants their customers to hear their
employees smile over the phone.
Born and raised in Tampa, Cindy and her husband Frank live there with their only
child, Megan, who has cystic fibrosis.
When Megan was a year old, Cindy and Frank learned that she had the disease, and
at the tender age of six, Megan has already had to endure five surgeries and
weighs just 30 pounds, needing force-feeding tubes at night to maintain that
weight. The costs are not covered by insurance and the care-giving needs are
constant.
"Frank and I take it day to day and live every day to the fullest. Megan's life
span is limited unless they can find a cure. We just have to hope they will.
We have to think about it that way."
For four years, Cindy has organized a bowling fundraiser for the Cystic Fibrosis
Foundation, an event which has raised more than $10,000. Cindy is quick to give
others credit, saying, "I got the people and they raised the money."
She also organized a fundraiser for CF at work when her co-workers paid for the
privilege of dressing casually.
We applaud Cindy for all she does to make Health-Plan Services a great company
and a profitable investment for your Fund, already gaining $1.7 million in gains
since purchased only in May.
- -Margaret Barton
MARKET CAP . . .
This quarter, your biggest market cap shift occurred in your large cap holdings
- -- those above $5 billion -- which were pared back to 36.3 percent of the port-
folio from 40 percent in March. You sold your positions in Eli Lilly, Pfizer,
Computer Associates, Halliburton, and Seagate Technology from this group, but
not before realizing more than $125 million in gains.
Purchases in Associates First Capital, Qualcomm, Apache Corp., Nine West, and
Western Digital helped edge up your mid-cap holdings from 43.3 percent in March
to 44.8 percent this quarter. Already, these four companies combined have
brought gains of more than $20 million to your portfolio.
Your small cap holdings increased from 15.5 percent last quarter to 17.5 percent
as Shoney's, Employee Solutions, Mastec, Inc., and In Focus Systems were added.
The more than $25 million in gains in Cognos Corp., Waters Corp., Claire's
Stores, Tech Data Corp., Comverse Tech, Vintage Petroleum, Pier 1 Imports, and
Benton Oil during the quarter also helped grow this group.
YOUR COMPANIES' MARKET CAPITALIZATION
CASH 1.4%
SMALL CAP 17.5%
MID CAP 44.8%
LARGE CAP 36.3%
ON THE CUTTING EDGE . . .
YOUR FRIESS TEAM IS ALWAYS "WIRED"
When your researchers travel, they are always connected to the office and fellow
teammates using cell phones, pagers, and laptop computers. Our brokers are now
connected to us via Lotus Notes, delivering their research ideas electronically
in a uniform format that meets our needs. This helps the brokers reduce their
voluminous 30 page reports into a half page of "meat" we can use.
NEW YORK TO BOSTON IN THREE HOURS . . . BY TRAIN
Currently this trip takes five hours, but state-of-the-art high speed rail
equipment is scheduled to go into service on Amtrak's Northeast Corridor route
from Washington, D.C. to New York to Boston in 1999. Amtrak has chosen the
consortium of Bombardier of Canada and GEC-Altsom to supply the trains which
will combine 150 miles per hour speed with tilt technology to barrel through the
curves in comfort.
LONG DISTANCE CALLS ARE CHEAP OVER THE INTERNET
For the price of the necessary software and Internet-access fees, you can make
all the calls you want -- to anybody who has the same setup. Phone companies
charge by time and distance, but Internet connections are sold at flat monthly
fees even though they travel the same wires. The person at the other end has to
know you are calling and sound quality is not yet up to snuff, but it is great
for faxes. Leading software is from Vocaltec.
NEW PC CONNECTORS WILL MAKE SETUP A SNAP
The Universal Serial Bus (USB), which is being promoted by a group led by Intel,
will let you hook up your printer, scanner, external drive, modem, etc. using a
single connector which will transfer data at 12 million bits per second, a speed
up to 100 times faster than the current links.
THE TAX MAN COMETH . . .
A famous quotation says only two things in life are certain -- death and taxes!
We can do nothing about the first except help to provide for the eventuality.
All shareholders of record in October will receive the distribution of the net
gains realized by the Fund on sales of stocks during the entire fiscal year
ending September 30.
As of June 13, the Fund value included $1.95 per share of net realized gains
available for dis-tribution. The final number will be determined by any
additional gains taken through September 30.
New shareholders may be distressed to receive a taxable dividend based on gains
made before they became shareholders. There is an offsetting consolation. The
value of those shares, regardless of when they were purchased, will be reduced
by the amount of the distribution thereby reducing taxes when shares are
eventually redeemed. If the tax due on the upcoming distribution presented a
hardship to any shareholder, he could redeem just enough shares to pay the tax
and retain nearly full participation.
Let's put this tax into perspective. If the eventual distribution proved to be
as much as $3.00, any assumed tax might be $.90 a share -- that is how much the
shares could move up (or down) in less than a week.
TOP TEN...
Retailing remains your number one industry group this quarter, but moves up from
14.1 percent in March to 16.3 percent currently. Large purchases were made in
Dayton Hudson, Estee Lauder Companies, and Payless ShoeSource. And, you added to
your existing positions in Consolidated Stores, Gap, Pier 1 Imports, and
Proffitt's, Inc., which together increased by nearly $43 million during the
quarter
The most notable change in your top ten occurred in Oil/Gas Field Services which
grew to 14.6 percent from 10.1 percent last quarter. Apache Corp., Global
Marine, Oryx Energy, Phillips Petroleum, Schlumberger, and Tosco Corp. are all
new to your portfolio. Nearly $38 million in gains during the quarter from your
existing Oil/Gas Field Services companies also helped grow this group.
Healthcare companies such as Community Health, GranCare, and Shared Medical
Systems were all sold from your portfolio, realizing nearly $15 million in
gains, moving this group down to 4.8 percent from 6.8 percent in March.
The Apparel & Shoes category grew from 7.2 percent to 9.2 percent as Intimate
Brands, Nine West, The Finish Line, Wet Seal, Inc., Kenneth Cole Productions,
Fossil, Inc., and Pacific Sunwear of California were purchased, bringing in
gains of $7.4 million already this quarter, and you increased your position in
Liz Claiborne.
Eli Lilly, Pfizer, and Pharmacia UpJohn were all sold from your portfolio,
dropping Pharmaceuticals from your Top Ten to just 1.8 percent of your Fund's
assets.
TOP TEN INDUSTRY GROUPS
Cash 1.4%
Semiconductors & Related 2.5%
Healthcare 4.8%
Networking 5.2%
Financial/Business Services 5.4%
Software 7.2%
Communications 7.3%
Apparel & Shoes 9.2%
Computers & Related 9.8%
Oil/Gas Field Services 14.6%
Retailing 16.3%
All Others 16.3%
BRANDYWINE FUND, INC.
STATEMENT OF NET ASSETS
June 30, 1996
(Unaudited)
QUOTED
MARKET
SHARES OR PRINCIPAL AMOUNT COST VALUE(B)<F3>
- --------------------------- ---- ---------
LONG-TERM INVESTMENTS - 98.6% (A)<F2>
COMMON STOCKS - 98.6% (A)<F2>
APPAREL & SHOES - 9.2%
250,000 J. Baker, Inc. $2,023,419 $1,875,000
90,000 Chico's FAS, Inc.*<F1> 945,000 911,250
137,200 Donna Karan International, Inc.*<F1> 3,292,800 3,841,600
187,000 The Finish Line, Inc.*<F1> 4,552,146 5,352,875
136,500 Fossil, Inc.*<F1> 1,845,825 1,979,250
2,427,400 Intimate Brands, Inc. 51,889,455 55,526,775
642,700 Jones Apparel Group, Inc.*<F1> 24,764,804 31,572,638
97,300 Kenneth Cole Productions Inc.*<F1> 1,903,366 1,921,675
2,111,200 Liz Claiborne, Inc. 60,123,949 73,100,300
342,000 Nautica Enterprises Inc.*<F1> 6,304,272 9,832,500
1,981,200 NIKE, Inc. Cl B 101,354,019 203,568,300
600,000 Nine West Group Inc.*<F1> 29,105,589 30,675,000
69,800 Pacific Sunwear of California, Inc.*<F1> 1,022,706 1,640,300
597,700 The Sports Authority, Inc.*<F1> 19,659,193 19,574,675
300,000 St. John Knits, Inc. 12,410,127 13,387,500
819,250 Tommy Hilfiger Corp.*<F1> 24,409,880 43,932,281
160,000 Vans, Inc.*<F1> 1,741,250 2,720,000
180,000 The Wet Seal, Inc.*<F1> 3,654,472 4,286,340
------------ -----------
351,002,272 505,698,259
THIS SECTOR IS 44.1% ABOVE YOUR COST.
AUTOMOTIVE & RELATED - 1.7%
1,406,200 Autozone, Inc.*<F1> 48,263,461 48,865,450
265,000 Borg-Warner Automotive, Inc. 10,716,656 10,467,500
586,000 Lear Corporation.*<F1> 18,557,337 20,656,500
105,000 PC Service Source, Inc.*<F1> 1,630,003 1,522,500
274,900 SPX Corp. 5,931,140 6,735,050
108,000 Tower Automotive, Inc.*<F1> 2,670,548 2,646,000
------------ -----------
87,769,145 90,893,000
THIS SECTOR IS 3.6% ABOVE YOUR COST.
COMMUNICATIONS - 7.3%
213,000 BRIGHTPOINT INC.*<F1> 4,239,488 4,579,500
151,800 Brite Voice Systems, Inc.*<F1> 3,582,488 3,263,700
447,600 Cincinnati Bell Inc. 21,275,283 23,331,150
558,000 Comverse Technology, Inc.*<F1> 13,270,147 17,019,000
500,000 Dynatech Corp.*<F1> 17,081,254 16,250,000
957,800 ECI Telecom Ltd. 20,865,373 22,268,850
600,000 Glenayre Technologies, Inc.*<F1> 30,510,601 30,000,000
255,500 InterVoice, Inc.*<F1> 5,664,618 5,078,062
476,000 MasTec, Inc.*<F1> 15,140,538 12,019,000
812,400 QUALCOMM Inc.*<F1> 38,291,804 43,158,750
120,000 STB Systems, Inc.*<F1> 1,960,355 2,055,000
1,710,700 Storage Technology Corp.*<F1> 70,411,154 65,434,275
2,351,400 Tellabs, Inc.*<F1> 93,447,430 157,249,875
------------------------
335,740,533 401,707,162
THIS SECTOR IS 19.6% ABOVE YOUR COST.
COMPUTERS & RELATED - 9.8%
2,125,900 Adaptec, Inc.*<F1> 101,098,129 100,714,512
103,300 Centennial Technologies, Inc.*<F1> 2,961,583 3,086,087
75,000 CHS Electronics, Inc.*<F1> 947,500 1,012,500
260,800 Control Data Systems, Inc.*<F1> 6,096,553 5,574,600
48,000 Cotelligent Group, Inc.*<F1> 951,812 828,000
2,809,200 Dell Computer Corp.*<F1> 95,668,135 142,918,050
552,200 Exabyte Corp.*<F1> 11,362,320 7,213,389
1,946,600 Gateway 2000, Inc.*<F1> 76,382,688 66,184,400
376,100 Mylex Corp.*<F1> 9,442,793 6,675,775
165,000 Norand Corp.*<F1> 3,529,063 3,300,000
163,300 Printronix, Inc.*<F1> 2,744,800 2,551,563
937,000 Seagate Technology, Inc.*<F1> 44,188,427 42,165,000
1,998,700 Sun Microsystems, Inc.*<F1> 99,477,442 117,673,463
281,000 Symbol Technologies, Inc.*<F1> 10,580,192 12,504,500
1,033,200 Western Digital Corp.*<F1> 24,290,449 26,992,350
----------- -----------
489,721,886 539,394,189
THIS SECTOR IS 10.1% ABOVE YOUR COST.
DISTRIBUTION - 1.5%
425,000 CompuCom Systems Inc.*<F1> 4,139,056 4,621,875
859,800 Corporate Express, Inc.*<F1> 22,400,219 34,392,000
205,000 InaCom Corp.*<F1> 4,433,126 3,843,750
365,000 MicroAge, Inc.*<F1> 5,451,601 4,973,125
492,600 Tech Data Corp.*<F1> 7,353,979 10,714,050
605,000 U.S. Office Products Co.*<F1> 24,923,834 25,410,000
----------- -----------
68,701,815 83,954,800
THIS SECTOR IS 22.2% ABOVE YOUR COST.
ELECTRONICS - 1.3%
75,000 ACT Manufacturing*<F1> 1,412,500 1,096,875
120,000 Bel Fuse Inc.*<F1> 2,145,091 2,025,000
202,200 Du Pont Photomasks, Inc.*<F1> 4,125,571 4,145,100
110,000 Electro Scientific Industries, Inc.*<F1> 2,901,874 2,310,000
240,000 Etec Systems, Inc.*<F1> 4,800,000 5,340,000
189,500 General Scanning Inc.*<F1> 2,723,003 3,221,500
74,500 GenRad, Inc.*<F1> 898,815 1,229,250
759,900 SCI Systems, Inc.*<F1> 31,985,014 30,870,937
600,000 Waters Corp.*<F1> 15,950,878 19,800,000
------------ -----------
66,942,746 70,038,662
THIS SECTOR IS 4.6% ABOVE YOUR COST.
FINANCIAL/BUSINESS SERVICES - 5.4%
192,000 AamesFinancial Corp. 5,520,710 6,888,000
405,000 AccuStaff Inc.*<F1> 11,159,064 11,036,250
1,228,700 ADT Ltd.*<F1> 18,993,899 23,191,712
40,800 American Business
Information, Inc.*<F1> 787,200 744,600
2,211,300 Associates First Capital
Corporation*<F1> 76,650,092 83,200,162
836,400 Beneficial Corp. 44,730,513 46,942,950
600,000 Countrywide Credit
Industries, Inc. 14,422,779 14,850,000
527,900 Credit Acceptance Corp.*<F1> 9,962,923 11,085,900
320,500 Employee Solutions, Inc.*<F1> 11,263,253 10,095,750
500,400 Equifax Inc. 12,704,882 13,135,500
95,000 First Security Corp. 2,256,250 2,280,000
85,000 IMC Mortgage Company*<F1> 1,797,777 1,912,500
62,000 ITI Technologies, Inc.*<F1> 1,659,000 2,046,000
740,050 The Money Store, Inc. 12,548,190 16,373,606
225,500 Norrell Corp. 5,098,572 11,077,688
712,500 Olsten Corp. 22,306,301 20,929,688
249,000 Personnel Group of America, Inc.*<F1> 3,773,595 6,131,625
259,000 Pre-Paid Legal Services, Inc.*<F1> 2,872,906 4,791,500
365,900 The Quick & Reilly Group, Inc. 11,313,547 11,891,750
78,000 Ultrak, Inc.*<F1> 1,403,909 1,335,750
------------ -----------
271,225,362 299,940,931
THIS SECTOR IS 10.6% ABOVE YOUR COST.
FOOD/RESTAURANTS - 1.4%
257,900 CKE Restaurants, Inc. 3,218,188 6,576,450
324,400 Dole Food Co., Inc. 13,290,822 13,949,200
495,000 Food Lion Cl A 3,924,153 3,929,310
390,000 Food Lion CL B 3,051,806 3,022,500
463,600 Foodmaker, Inc.*<F1> 3,738,197 3,998,550
418,200 Hershey Foods Corp. 31,312,051 30,685,425
53,000 Morton's Restaurant Group, Inc.*<F1> 943,930 927,500
721,600 Ryan's Family Steak Houses, Inc.*<F1> 6,726,854 6,674,800
754,100 Shoney's Inc.*<F1> 9,659,964 8,200,837
----------- -----------
75,865,965 77,964,572
THIS SECTOR IS 2.8% ABOVE YOUR COST.
HEALTHCARE - 4.8%
2,461,500 Caremark International, Inc. 62,370,992 62,152,875
939,200 Coventry Corp.*<F1> 17,817,141 14,792,400
476,000 HBO & Co. 21,470,865 32,249,000
30,000 Health Images, Inc. 330,200 348,750
242,000 HealthPlan Services Corp.*<F1> 3,871,308 5,566,000
2,605,400 HEALTHSOUTH Corp.*<F1> 89,220,942 93,794,400
145,400 Housecall Medical Resource, Inc.*<F1> 2,528,687 2,780,775
216,400 IMNET Systems, Inc.*<F1> 6,876,005 6,600,200
153,000 Pediatrix Medical Group, Inc.*<F1> 3,245,709 7,420,500
519,600 Quorum Health Group, Inc.*<F1> 12,752,024 13,704,450
500,200 RISCORP, Inc.*<F1> 10,788,224 9,128,650
105,000 TheraTx Inc.*<F1> 1,880,792 1,995,000
480,000 Universal Health
Services, Inc. CL B*<F1> 12,593,677 12,540,000
----------- -----------
245,746,566 263,073,000
THIS SECTOR IS 7.1% ABOVE YOUR COST.
HOME/OFFICE & RELATED - 2.3%
65,000 Apogee Enterprises, Inc. 2,132,875 2,226,250
212,500 Central Garden & Pet Co.*<F1> 3,955,856 3,825,000
111,500 DIAMOND Home Services, Inc.*<F1> 1,718,368 1,867,625
537,000 Eagle Hardware & Garden, Inc.*<F1> 7,461,002 8,189,250
566,500 Heilig-Meyers Co. 12,981,869 13,596,000
97,000 Hughes Supply, Inc. 3,418,019 3,370,750
242,600 In Focus Systems, Inc.*<F1> 8,255,131 5,883,050
1,312,100 Lowe's Companies, Inc. 49,370,124 47,399,612
1,814,100 Office Depot, Inc.*<F1> 43,311,731 36,962,288
125,000 Orchard Supply Hardware Stores*<F1> 3,031,250 3,765,625
----------- -----------
135,636,225 127,085,450
THIS SECTOR IS 6.3% BELOW YOUR COST.
LEISURE & ENTERTAINMENT - 1.3%
526,000 Action Performance Cos. Inc.*<F1> 6,260,651 7,692,750
127,900 Coastcast Corp.*<F1> 2,497,690 2,430,100
327,800 Lewis Galoob Toys, Inc.*<F1> 7,058,093 9,260,350
193,800 Harman International Industries 9,626,280 9,544,650
511,500 Interstate Hotels Company*<F1> 11,779,546 11,380,875
459,600 La Quinta Inns, Inc. 15,818,423 15,396,600
121,000 National Media Corp.*<F1> 2,263,921 2,132,625
366,000 Prime Hospitality Corp.*<F1> 4,480,771 6,039,000
205,900 Red Lion Hotels, Inc.*<F1> 4,741,524 4,323,900
420,000 Red Roof Inns, Inc.*<F1> 6,071,370 5,932,500
------------ -----------
70,598,269 74,133,350
THIS SECTOR IS 5.0% ABOVE YOUR COST.
MACHINERY/CONSTRUCTION &
MISCELLANEOUS MANUFACTURING - 0.7%
170,000 3D Systems Corp.*<F1> 3,082,500 3,740,000
146,200 Chart Industries, Inc. 2,235,265 2,065,075
94,200 Chicago Miniature Lamp, Inc.*<F1> 1,327,977 3,579,600
221,400 Dycom Industries, Inc.*<F1> 2,810,775 2,601,450
215,000 Greenfield Industries, Inc. 6,089,516 7,095,000
293,500 JLG Industries, Inc. 5,176,738 21,792,375
------------ -----------
20,722,771 40,873,500
THIS SECTOR IS 97.2% ABOVE YOUR COST.
MEDICAL PRODUCTS & SUPPLIES - 0.6%
95,300 Advanced Technology
Laboratories, Inc.*<F1> 2,838,509 3,478,450
480,000 AmeriSource Health Corp.*<F1> 15,034,002 15,960,000
231,400 CONMED Corp.*<F1> 5,130,580 6,161,025
300,500 Graham-Field Health
Products, Inc.*<F1> 2,893,085 2,591,812
199,600 Kinetic Concepts, Inc. 2,045,900 3,093,800
----------- -----------
27,942,076 31,285,087
THIS SECTOR IS 12.0% ABOVE YOUR COST.
NETWORKING - 5.2%
1,263,700 3 Com Corp.*<F1> 58,320,645 57,814,275
1,961,300 Cisco Systems Inc.*<F1> 37,392,338 111,058,612
1,589,500 Newbridge Networks Corp.*<F1> 63,744,625 104,112,250
159,000 Standard Microsystems Corp.*<F1> 2,587,219 2,424,750
270,800 Uniphase Corp.*<F1> 4,499,149 9,613,400
----------- -----------
166,543,976 285,023,287
THIS SECTOR IS 71.1% ABOVE YOUR COST.
OIL/GAS FIELD SERVICES - 14.6%
1,374,400 Apache Corp. 40,735,672 45,183,400
409,700 Benton Oil and Gas Co.*<F1> 6,690,170 9,013,400
717,400 BJ Services Co.*<F1> 23,042,422 25,198,675
44,000 Chesapeake Energy Corporation*<F1> 3,408,578 3,954,500
439,000 Comstock Resources, Inc.*<F1> 3,394,889 4,472,532
167,100 Cooper Cameron Corp.*<F1> 6,421,671 7,310,625
920,028 Diamond Offshore Drilling, Inc.*<F1> 38,612,591 52,671,603
396,600 Digicon Inc.*<F1> 5,024,095 6,643,050
218,200 Energy Ventures, Inc.*<F1> 5,351,175 7,091,500
1,762,200 Ensco International Inc.*<F1> 42,182,116 57,271,500
536,500 Global Industries, Inc.*<F1> 12,487,405 15,960,875
3,764,000 Global Marine Inc.*<F1> 55,689,943 52,225,500
155,000 Lomak Petroleum, Inc. 1,646,471 2,208,750
50,000 Marine Drilling Companies, Inc.*<F1> 471,875 506,250
827,600 Nabors Industries, Inc.*<F1> 13,302,747 13,448,500
2,166,800 Noble Drilling Corp.*<F1> 25,543,802 30,064,350
2,897,100 Oryx Energy Co.*<F1> 47,321,807 47,077,875
1,501,700 Phillips Petroleum Co. 63,222,704 62,883,687
50,000 Pool Energy Services Co.*<F1> 718,750 593,750
493,300 Pride Petroleum Services, Inc.*<F1> 5,609,338 7,029,525
938,500 Reading & Bates Corp.*<F1> 11,560,459 20,764,313
1,929,700 Schlumberger Ltd. 168,044,482 162,577,225
416,300 Smith International, Inc.*<F1> 11,868,332 12,541,038
1,249,200 Tidewater Inc. 37,213,297 54,808,650
1,013,700 Tosco Corp. 52,632,863 50,938,425
851,200 Varco International, Inc.*<F1> 15,601,121 15,428,000
536,200 Vintage Petroleum, Inc. 12,290,244 13,673,100
792,000 Weatherford Enterra Inc.*<F1> 23,106,846 23,760,000
----------- -----------
733,195,865 805,300,598
THIS SECTOR IS 9.8% ABOVE YOUR COST.
PHARMACEUTICALS - 1.8%
303,100 Elan Corp. plc*<F1> 19,735,947 17,314,587
1,031,700 Genzyme Corp.*<F1> 61,626,855 51,842,925
20,000 Medicis Pharmaceutical Corp.*<F1> 882,318 825,000
100,000 Serologicals Corp.*<F1> 2,619,500 2,650,000
711,100 Watson Pharmaceuticals Inc.*<F1> 31,404,841 26,932,913
------------ -----------
116,269,461 99,565,425
THIS SECTOR IS 14.4% BELOW YOUR COST.
RETAILING - 16.3%
175,000 American Eagle Outfitters, Inc*<F1> 3,145,141 3,128,125
180,000 Carson Pirie Scott & Co.*<F1> 4,810,634 4,815,000
642,200 Claire's Stores, Inc. 9,666,762 17,740,775
941,600 CompUSA Inc.*<F1> 19,894,628 32,132,100
882,000 Consolidated Stores Corp.*<F1> 27,538,718 32,413,500
1,367,700 Dayton Hudson Corp. 140,938,904 141,044,062
1,307,750 Dollar General Corp. 32,482,224 38,251,687
249,600 Estee Lauder Companies Inc. 9,506,810 10,545,600
123,750 Gadzooks, Inc.*<F1> 2,725,625 3,990,938
8,672,600 Gap, Inc. 213,518,901 278,607,275
166,000 Parlux Frangrances, Inc.*<F1> 1,864,625 1,680,750
1,191,200 Payless ShoeSource, Inc.*<F1> 38,000,420 37,820,600
901,700 Pier 1 Imports, Inc. 12,104,837 13,412,788
222,800 Proffitt's Inc.*<F1> 5,052,446 7,909,400
4,764,400 Sears, Roebuck and Co. 209,074,545 231,668,950
1,211,200 TJX Companies, Inc. 28,891,958 40,878,000
----------- -----------
759,217,178 896,039,550
THIS SECTOR IS 18.0% ABOVE YOUR COST.
SEMICONDUCTORS & RELATED - 2.5%
157,500 ADE Corp.*<F1> 3,233,126 2,244,375
2,467,900 Analog Devices, Inc.*<F1> 68,643,822 62,931,450
1,019,100 Atmel Corp.*<F1> 35,707,634 30,700,388
548,300 ESS Technology Inc.*<F1> 10,678,506 10,143,550
807,800 International Rectifier Corp.*<F1> 14,853,115 13,025,775
345,800 MEMC Electronic Materials, Inc.*<F1> 13,766,918 13,486,200
162,500 Opal, Inc.*<F1> 2,764,930 2,071,875
9,800 Unitrode Corp.*<F1> 105,871 189,875
437,300 Xicor, Inc.*<F1> 5,015,352 5,138,275
----------- -----------
154,769,274 139,931,763
THIS SECTOR IS 9.6% BELOW YOUR COST.
SOFTWARE - 7.2%
1,854,900 BMC Software, Inc.*<F1> 68,804,980 110,830,275
1,983,750 Cadence Design Systems, Inc.*<F1> 31,859,968 66,951,562
1,080,300 Cognos Inc.*<F1> 12,658,112 24,846,900
548,500 Compuware Corp.*<F1> 20,735,832 21,665,750
220,000 Datastream Systems, Inc.*<F1> 5,348,438 7,755,000
439,100 FileNet Corp.*<F1> 22,756,586 16,027,150
251,000 IKOS Systems, Inc.*<F1> 3,289,501 5,302,375
140,000 Insight Enterprises, Inc.*<F1> 3,611,293 3,255,000
60,500 Kronos Inc.*<F1> 2,120,499 2,147,750
120,000 Mechanical Dynamics, Inc.*<F1> 2,011,250 1,815,000
872,200 Mentor Graphics Corp.*<F1> 15,815,968 14,173,250
139,100 Micrografx, Inc.*<F1> 1,975,005 2,034,337
735,100 Microsoft Corp.*<F1> 81,327,720 88,303,888
506,700 Network General Corp.*<F1> 12,257,193 10,894,050
376,700 PC DOCS Group
International Inc.*<F1> 7,128,145 7,486,913
217,500 TCSI Corp.*<F1> 2,289,793 5,247,188
270,000 Telebit Corp.*<F1> 3,376,522 3,138,750
253,400 Vanstar Corporation*<F1> 3,572,178 4,244,450
----------- -----------
300,938,983 396,119,588
THIS SECTOR IS 31.6% ABOVE YOUR COST.
TRANSPORTATION - 1.5%
259,900 AirNet Systems Inc.*<F1> 3,877,584 4,158,400
90,500 Aviation Sales Company*<F1> 1,776,346 1,855,250
505,400 Mesa Airlines, Inc.*<F1> 6,730,315 6,001,625
341,250 Miller Industries, Inc.*<F1> 6,293,394 9,768,281
200,000 SkyWest, Inc. 3,789,424 3,725,000
125,500 Special Devices, Inc.*<F1> 2,680,249 2,008,000
1,864,300 Trans World Airlines, Inc.*<F1> 30,189,890 26,566,275
1,601,400 USAir Group, Inc.*<F1> 29,720,973 28,825,200
------------ -----------
85,058,175 82,908,031
THIS SECTOR IS 2.5% BELOW YOUR COST.
MISCELLANEOUS - 2.2%
494,000 Allied Waste Industries, Inc.*<F1> 4,134,329 4,384,250
134,000 American Homestar Corp.*<F1> 2,669,322 3,484,000
393,600 Champion Enterprises, Inc.*<F1> 9,704,393 8,216,400
60,000 Metromail Corporation*<F1> 1,237,926 1,342,500
1,572,600 Praxair, Inc. 51,314,622 66,442,350
541,100 UCAR International Inc.*<F1> 22,112,636 22,523,288
508,800 United Waste Systems, Inc.*<F1> 9,860,899 16,408,800
30,000 USCS International, Inc.*<F1> 530,625 577,500
----------- -----------
101,564,752 123,379,088
THIS SECTOR IS 21.5% ABOVE YOUR COST.
------------- -------------
Total common stocks 4,665,173,295 5,434,309,292
WARRANTS - 0.0%
43 Sound Advice, Inc. Warrants*<F1> 0 0
THIS SECTOR IS 0.0% ABOVE YOUR COST.
------------- -------------
Total long-term investments 4,665,173,295 5,434,309,292
SHORT-TERM INVESTMENTS - 1.7% (a)<F2>
COMMERCIAL PAPER - 1.4%
40,000,000 American Express Credit Corp.
5.45%, due 07/03/96 39,990,917 39,990,917
10,000,000 Associates Corp. of North Amererica
5.42%, due 07/01/96 10,000,000 10,000,000
25,000,000 Norwest Financial, Inc.
5.35%, due 07/01/96 25,000,000 25,000,000
------------ -----------
Total commercial paper 74,990,917 74,990,917
VARIABLE RATE DEMAND NOTES - 0.3%
6,140,000 American Family Financial
Services 6,140,000 6,140,000
1,300,000 General Mills, Inc. 1,300,000 1,300,000
270,000 Johnson Controls, Inc. 270,000 270,000
2,820,000 Pitney Bowes Credit Corp. 2,820,000 2,820,000
1,127,452 Warner-Lambert Company 1,127,452 1,127,452
5,500,000 Wisconsin Electric Power
Company 5,500,000 5,500,000
----------- -----------
Total variable rate demand notes 17,157,452 17,157,452
----------- -----------
Total short-term investments 92,148,369 92,148,369
--------------------------
Total investments $4,757,321,664 5,526,457,661
--------------
--------------
LIABILITIES, LESS CASH AND
RECEIVABLES (0.3%) (A)<F2> (17,818,946)
-------------
NET ASSETS $5,508,638,715
-------------
-------------
Net Asset Value Per Share
($0.01 par value 500,000,000
shares authorized), offering
and redemption price
($5,508,638,715 / 177,838,376
shares outstanding) $30.98
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*<F1>Non-income producing security.
(a)<F2>Percentages for the various classifications relate to net assets.
(b)<F3>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. Short-term
investments are valued at amortized cost which approximates quoted market value.
STAYING CONNECTED . . .
Thanks to the overwhelming number of you who took the time to respond to our
requests in the March report. We received several cards back to remove
duplicate mailings along with ideas you have about the reports, the Fund, and
what trends you see as noteworthy that we should investigate. And, we
appreciate the many comments we received in emails from you. Your thoughts are
worthwhile and we want to make sure we keep connected with you in the future.
Please email us at [email protected], fax us at (302) 656-7644, or write us at
P.O. Box 4166, Greenville, DE, 19807 with your remarks. We'll look forward to
hearing from you!
KUDOS FOR YOUR FUND . . .
RETIRE WITH MONEY -- Brandywine ranked among the top 3 funds in the large-
company stock funds category for its three year average annual return of 22.1
percent through May 20, 1996.". . . we screened more than 6,200 funds, looking
for the handful that have consistently delivered top returns over three, five
and -- where possible -- 10 years." July 1996
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SMART MONEY -- Out of 2,034 U.S. mutual funds, Brandywine is named as one of
only seven Superstar funds. "Our Superstar Funds are the best of that bunch.
They don't just nose out the market, they clobber it." June 1996
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BARRON'S --". . . they're (Friess Associates) one of the few organizations out
there that's grown the business intelligently. They've built up their research
capability all over the country, but still maintained a decent team of smart
people who think alike and work well together. That's tough to do." June 1996
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U.S. NEWS & WORLD REPORT -- Brandywine named as one of the "Picks from the
Pros." "The fund (Brandywine) generates big returns -- 123 percent over the past
five years, compared with the S&P 500's 87 percent -- by paying attention to the
small stuff." June 1996
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USA TODAY -- Brandywine listed among the top six of the top-performing funds for
its five year return of 146 percent through May 9, 1996. May 1996
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INDIVIDUAL INVESTOR -- Friess named as one of seven "Macho Managers" for
steering Brandywine Fund to a five year average annual return of 23.5 percent.
"You can count on the managers profiled here . . . to compete for every basis
point of return when you hire them to invest your hard-earned dollars." April
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1996
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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.
Custodian, Transfer Agent: FIRSTAR TRUST COMPANY
Independent Accountants: PRICE WATERHOUSE LLP
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
