BRANDYWINE FUND,INC.
MANAGED BY FRIESS ASSOCIATES, INC.
QUARTERLY REPORT
JUNE 30, 1997
DEAR FELLOW SHAREHOLDERS:
You hit a new all time high, June 19, of $37.38. On that day each one of you was
in plus territory. We also are pleased that your fund experienced a 11.9 percent
gain this quarter with net inflows of $180 million.
After a minor two percent backtracking in the March quarter, which made it the
6th best performer among the 23 funds in Investment Business Daily's Mutual Fund
Index, Brandywine Fund's six month return of 9.6 percent outdistanced the Nasdaq
Industrials' return of 6.6 percent and handily beat the Investor's Business
Daily Mutual Fund Index gain of 6.8 percent.
The S&P 500, however, was stronger than indices of the dynamic companies which
characterize your portfolio, up 17.4 percent this past quarter, beating more
than 95 percent of small and midcap funds.
The S&P 500 index of America's largest companies gives larger companies within
that index more impact on its performance. For example, the 25 largest companies
- -- only 5 percent of the stocks in the index -- account for over 33 percent of
the return!
The second quarter of 1992 your fund lagged the S&P 500 by 10 percent for the
quarter. But then in the fourth quarter of 1992, your Fund outperformed the S&P
------
500 by more than 15 PERCENTAGE POINTS AND FOR THE YEAR OUTPERFORMED BY 8
PERCENTAGE POINTS. We look forward to the return of investor interest to the
smaller companies.
We're grateful that in the last five years your Fund grew 190 percent vs. the
S&P 500's gain of 147 percent and the Nasdaq Industrials' growth of 97 percent.
MOST RECENT FIVE YEARS
NASDAQ IND. 96.6%
IBD*<F1> 103.7%
S&P MIDCAP 104.9%
LIPPER GROWTH*<F1> 121.1%
S&P 500*<F1> 146.5%
YOUR FUND*<F1> 189.5%
*<F1>TOTAL RETURN
IBD = INVESTOR'S BUSINESS DAILY MUTUAL FUND INDEX
Your five year annualized return of 24 percent compares to 20 percent for the
S&P 500 and the Nasdaq Industrials' 15 percent.
Your Fund beat the S&P 500 in 11 out of the 20 quarters in the last five years
but outperformed the S&P by over 40 PERCENT in that period. It outperformed the
Nasdaq Industrials in 14 of the last 20 quarters or 70 percent of the time.
Since the day Brandywine Fund was launched in 1985, your research team has
employed the time-tested philosophy of investing in companies with dynamic
earnings, high rates of profitability and sound balance sheets. These smaller,
growing companies typically comprise indices other than the S&P 500.
Your Fund gained over 24 percent the last twelve months despite the Nasdaq
Industrials' meager 6.5 percent gain! The 28 percentage point spread between the
Nasdaq Industrials and the S&P 500's 35 percent gain is the largest seen in
years, underscoring the challenges your researchers face while investing in
smaller companies for your Fund.
Currently, the companies you hold are experiencing an average yearly earnings
growth rate of 48 percent, more than three times greater than the expected
growth rate of the S&P 500's companies as measured by William O'Neil.
COMPANY GROWTH
AVERAGE INCREASE
LATEST 12 MOS. EARNINGS
YOUR COMPANIES 48%
S&P 500 14%
AVERAGE INCREASE
LATEST QUARTERLY EARNINGS
YOUR COMPANIES 52%
S&P 500 17%
ALL S&P FIGURES ARE UNWEIGHTED. ANALYSIS BY WILLIAM O'NEIL & CO., INC. JUNE 27,
1997.
You own these companies at a very attractive level of only 16 times 1998's
earnings estimates, which is roughly equal to the valuation level of the S&P
500.
The assets that started the fund have grown 639 percent, 19 percent per year,
outdistancing all the major indices -- even the S&P 500's 493 percent (16.7
percent per year).
For the last ten years, your Fund shows a 376 per-cent gain, 16.9 percent
annualized, while the S&P 500 grew only 292 percent in that period. The Nasdaq
Industrials climbed just 162 percent and the IBD Mutual Fund Index rose 156
percent.
MOST RECENT TEN YEARS
IBD*<F2> 156.1%
NASDAQ IND. 162.4%
LIPPER GROWTH*<F2> 236.5%
S&P 500*<F2> 291.7%
YOUR FUND*<F2> 375.7%
*<F2>TOTAL RETURN
The Nobel Foundation today remains one of your largest fellow shareholders with
over $40 million invested. Friess family and teammates also have more than $40
million invested with you. All of my equity investments are in the Brandywine
Funds.
We awake every day knowing that it's what we do for you tomorrow that counts.
We want to enjoy with you new all-time highs in your Fund.
One of your current biggest gainers is Dell Computer, picked by researcher David
Harrington, producing gains of nearly $98 million for you this quarter alone.
David also teamed up with consultant Hank Bannister to purchase 3Com Corp.,
already providing you more than $37 million in gains. Jackson-based researcher
Andy Graves selected Tellabs, adding $43 million to your portfolio.
You'll notice that many of your big gainers for the quarter are in the
technology area. While seasonal trends and product transitions like Intel's move
from Pentium to Pentium with MMX and Pentium II may cause occasional pauses in
growth, your research team continues to find dynamic companies in a broad array
of technology sectors.
Phoenix-based Diane Hakala found BMC Software yielding gains of just under $30
million, Researcher Mark Lapolla's recommendation of Citrix Systems grew 112
percent this quarter alone. MasTec Inc. appreciated over 71 percent for the
quarter and is in your Fund thanks to researcher Jon Fenn. Carl Gates
contributed Cellstar to the portfolio with gains of 116 percent.
Technology was not the only good performer in the quarter. In fact, the current
economic environment of slow growth with low inflation drove stock prices higher
in almost all industry groups. Since the Federal Reserve Board increased the
discount rate back in March, the yield on the 30-year Treasury Bond fell through
the 7 percent level and it currently yields 6.7 percent. Both stock and bond
investors win!
Researcher Clarke Adams' pick of Corning, Inc., benefiting from optic fiber
production, provided your Fund with profits of $27 million and retailer Costco
Companies, recommended by outside consultant Mike Musson working with David
Harrington, produced gains of just over $12.5 million.
As you can see, the contributions to your performance are spread across your
research team. Thanks to those mentioned and to the rest of the team whose
number one priority is the growth of your assets These are the practitioners of
our investment credo "Never Invest in the Stock Market, Invest in Individual
Stocks."
Special thanks to Bill D'Alonzo who was kind enough to write our mid-quarter
letter while Lynn and I were visiting Stig Ramel, President of the Nobel
Foundation from 1972 to 1992 and Brandywine Fund director, who was celebrating
his 70th birthday in Sweden.Thanks for the many letters expressing gratitude for
explaining our efforts to use the Fund's commission dollars prudently and in the
best interests of you, the shareholder.
The upcoming 4th of July celebration reminds us of those traditions established
by our Founding Fathers. We are honored to have the opportunity to be part of
helping you realize the "American Dream" which they were seeking when forming
this great nation more than 200 years ago. Thank you for allowing us to serve
you.
Happy Summer!
God Bless!
/s/ Foster Friess
Foster Friess
President
June 30, 1997
FELLOW SHAREHOLDER . . .
A predominant notion among many people is that science and religion do not mesh.
Meet John Marks Templeton, who more than two decades ago realized the importance
of recognizing those individuals who exhibited frontier thinking in religion by
linking it with scientific thought, and established the Templeton Prize for
Progress in Religion, an annual award worth more than $1 million. Past
recipients include Mother Teresa, Chief Rabbi of Great Britain, Lord
Jakokbovits, Billy Graham, and author Aleksandr Solzhenisyn.
The success of this Prize encouraged Templeton to form the John Templeton
Foundation which seeks to explore and encourage the connection between sciences
and all religions. The Foundation lends resources to leaders who are striving
for spiritual and scientific progress by funding more than 40 programs focused
in three areas: Science and Religion; Spirituality and Health; and Education.
The Templeton Foundation awards a $10,000 prize to as many as 100 colleges,
universities, and schools of theology around the world which develop and offer
the best courses in science and religion. Also awarded every year is a $10,000
prize to five U.S. medical schools that offer courses examining the valuable,
but often overlooked, role of faith and spirituality in patient care.
Every year approximately 100 U.S. colleges and universities are recognized for
their creative attempts to promote character development among their students. A
guide distributed to high school guidance counselors helps students in the
difficult college selection process.
The Honor Rolls for Education in a Free Society are published bi-annually to
highlight professors, programs, and departments from various colleges and
universities which encourage a greater appreciation of the importance of our
nation's free enterprise system. The honorees are excellent examples of how
political freedom, a market economy, and moral principles enter into sustaining
a free society.
An investment management guru himself (The Templeton Growth Fund and Templeton
World Fund), John understands the importance of free enterprise!
Recognized for his extensive philanthropic efforts, Sir John was knighted by
Britain's Queen Elizabeth in 1987. The Royal Society for the Encouragement of
Arts, Manufacture, and Science awarded him the Benjamin Franklin Medal to honor
his work in furthering Anglo-American understanding. He has also received many
awards from the financial community over the years.
We are honored to apply our investment strategy for the benefit of The John
Templeton Foundation. Knowing that our management of a portion of its assets
enables its important work to continue makes our job rewarding.
- -Rebecca Buswell
A VERY BIG THANK YOU . . .
to all the folks at Cann Printing, particularly those who burned the midnight
oil, for their very impressive efforts to get this report in the mail to you
within 24 hours of quarter end! The excellence for which we strive could never
be achieved without the support of so many people outside the firm like the
hard-hitting team at Cann. Thanks!
Rebecca Buswell, Editor
ALL IS NOT ROSES . . .
Like every quarter, there were a handful of stocks which lagged the top
performers. Five stocks gave up more than $10 million each. Advanced Micro
Devices was your biggest retracer at $29 million but remains in your portfolio
with an $8 million gain since initial purchase in January.
Cabletron Systems dropped back $28 million, Compaq Computer lost $17 million,
and Andrew Corp. gave up $11 million. You no longer hold these stocks. After
being one of your largest gainers with profits of more than $200 million, Intel
Corp. backtracked $12 million during the quarter and was sold.
Your best dollar performer was Dell Computer with $98 million, ALONE making up
for what your five backtrackers lost. Other solid picks for you during the
quarter were 3Com Corp. with $37 million, Tellabs with $43 million, Warner
Lambert Co. with $42 million and Compuware Corp. with $27 million.
BMC Software and Corning, Inc. each brought in more than $25 million while Cisco
Systems gained $18 million and Ascend Communications gained $21 million. You saw
27 companies amass more than $10 million.
HIGHLIGHTS. . .
COMMUNICATIONS
Outsourcing is a popular trend in many businesses, especially cable and
telephone companies. Instead of installing the fiber cabling themselves, they
turn to a company like MASTEC, which provides this service at low cost with fast
delivery.
Most cable and phone companies seek to increase their fiber infrastructure, and
your company benefits as it is one of only two companies that can offer this
installation service throughout the U.S. MasTec also recently completed a deal
with Telebras, the phone company of Brazil.
In a conversation with CFO Ed Johnson last month, we learned that fueling demand
even further is the movement by many cable companies to start providing phone
service via their existing cable lines.
Earnings more than doubled in the March quarter, from $.15 to $.36 on revenues
of $130 million, a 108 percent jump from $63 million last year.
Purchased for you in May of last year, your shares are worth 123 percent more at
$47.
FINANCIAL/BUSINESS SERVICES
You can lease a car, you can lease a house, and, through COMDISCO, you can even
lease anything from computer equipment to medical equipment to semiconductor
test equipment. The "Switzerland" to leasing, Comdisco is neutral to any type
of manufacturer and able to provide its customers with the best products to meet
their needs.
Many Fortune 500 companies, such as Caterpillar, Pennzoil, and the Chicago Board
of Trade, need the most recent, most advanced technology, but the high rate at
which the newest and most up-to-date systems are being introduced makes it
increasingly difficult for these companies to keep abreast of changes. They look
to Comdisco to help them integrate and stay on top of the latest technological
advances.
These companies also want their services "bundled," a positive for Comdisco
according to John Vosky, CFO. Unlike many of its competitors, Comdisco not only
offers the products to be leased, like computer terminals, monitors, and
mainframes, but it also offers information technology services, including
network management, inventory, and emergency tech support.
Earnings were $.39 in the March quarter, up 18 percent from the $.33 reported
last year. Revenues grew 19 percent to nearly $700 million.
Up nearly 30 percent since purchase in September at $20, your shares sell at $26
today.
HEALTHCARE
SHARED MEDICAL SYSTEMS creates information solutions for the health industry
designed to help hospitals, physician groups, and other health care providers
improve quality of care and financial performance in an increasingly regulated
environment.
Your company provides a comprehensive line including clinical, financial,
administrative, patient management, and physician information systems to 1800
hospitals in the U.S. and 900 hospitals internationally. These systems are
created with the help of information technology leaders like AT&T, Hewlett-
Packard, IBM, and Microsoft.
Hospitals have large investments in new equipment and technologies to augment
service quality and reduce care costs which require increased usage of Shared
Medical's software and services. One such system, Novius.Ihn, was successfully
installed at two Shared Medical customer sites in New Jersey and North Carolina,
according to Treasurer, Terrence Kyle.
Last quarter, revenues climbed 23 percent to $210 million from $170 million last
year, fueling earnings growth of 24 percent -- $.56 versus $.45.
Trading today at $54, your shares already rose 33 percent since purchase in
April at $41.
SPECIALTY RETAILING
The superstore concept has caught on in nearly all of retail, from computers to
clothing to office supplies. BORDERS GROUP is part of this superstore craze
with its mammoth bookstores in all 50 states averaging 30,000 square feet
apiece.
Offering a huge selection of books, videos, music, multimedia products and
software as well as a coffee cafe, customers flock to Borders making it the #2
bookstore operator in the U.S. Your company also operates Waldenbooks, the
nation's #1 mall-based bookstore chain, and Planet Music.
Robert Di Romulado, Chief Executive Officer, explained that 40 additional new
stores are on track for 1997, and that later this year, Borders will begin its
strategy to tap the on-line marketplace and roll out its Internet product
offering.
Better-than-expected same store sales at both Waldenbooks and Borders fuel your
company's growth. The year ended January 1997 saw earnings jump 55 percent to
$.73 from $.47 on revenues of nearly $2 billion.
Purchased in November at $18, your shares have appreciated 36 percent to $24.
TRANSPORTATION & RELATED
Having recently landed a $1 billion-plus contract with the U.S. Postal service
to deliver Priority Mail, CNF TRANSPORTATION is poised to capitalize on its
already strong foothold as the #1 trucking company in the U.S.
Pat Fossenier, Investor Relations contact, explained to us recently that CNF was
well positioned to win the postal contract as no other competitor could offer
both regional trucking (Con-Way Transportation) and worldwide airfreight (Emery
Worldwide) services. This new contract, combined with the recent spin-off of its
long-haul trucking unit, reduces the cyclicality often found in this business
and attracts Wall Street's attention.
In addition to the U.S. Postal Service, such well-known companies as Coca-Cola,
General Motors, Hewlett-Packard, and Sears employ CNF's services.
Earnings for the March quarter came in at $.40, 67 percent higher than last
year's $.24. Revenues grew 11 percent to reach $943 million.
SUSAN . . .
In 1978, when Friess Associates had $18 million under management and consisted
of just Foster and Lynn, Susan Morgan came on board, which makes her the longest
tenured employee (but not the "oldest," as Foster sometimes introduces her). She
has seen the trading operation grow from using one Quotron -- which displayed
only 10 stocks on the screen at a time -- to today's four-terminal system which
uses both Bridge and Bloomberg, allowing instantaneous access to all aspects of
the market.
At the outset, Susan served as receptionist, writer, accountant, and office
manager in addition to making trades. Today, her sole responsibility is in
trading where she works with the other six traders to ensure the purchases and
sales recommended by your research team are executed in a timely manner.
Senior researcher Bill D'Alonzo praises Susan's expert ability. "Having been at
Friess Associates longer than anyone else, Susan knows our clients well and
understands our operations procedures created to meet their needs. This broad
background and long-time focus on our culture give her a unique perspective in
trading. Her contribution makes possible the growth our fellow shareholders have
enjoyed."
Seeing the company grow from the original three people to the current 60-member
team, Susan reflects on the importance of having just the right group in place
to handle our growth to $12 billion under management.
"The most incredible aspect of this growth to me," says Susan, "is that Foster
has collected such a cohesive, compatible group of people of varying ages,
backgrounds, and interests, who are dedicated to the original investment
principles he established more than two decades ago. Working with this 60-
member team to grow the assets entrusted to us is a privilege."
Susan's favorite after-hour activity is bicycling. She's pedaled her way
through France, Italy, Costa Rica, England, and New Zealand, as well as here in
the Brandywine Valley. "Biking allows you to see a small part of a country in
much more detail than driving allows, and I'm thrilled to have had the
opportunity to see so many wonderful places 'up close.' "
- -Rebecca Buswell
SOFT DOLLARS . . .
Thank you for all the responses concerning our mid-quarter letter which
discussed the "soft dollar" resource available to us. The commissions generated
when we buy and sell stocks are paid to achieve first and foremost, as we said
in the letter, excellent executions of the transactions arranged through the
hard work of your seven traders, but also to obtain many good ideas and other
research services from brokers and consultants to help us find new and better
companies for your portfolio.
We've included some questions about soft dollars raised in letters from your
fellow shareholders in a new feature this quarter, "Letters to the Editor."
Their questions could be similar to those you may have, so we hope you find this
new feature helpful.
Your questions and discussion on this topic and any others of interest to you
are always welcome. Feel free to e-mail me at [email protected] or fax me at
(302) 656-9015.
Kelli Fazler
JOHN . . .
With nearly 20 years experience in the investment business, John Ragard brings
to your research team a solid understanding and keen eye for the kinds of stocks
in which we invest.
His varied background -- he served as an investment officer for the University
of Rochester, an analyst for the General Electric Company Pension Fund, and a
venture capital investment specialist -- enables John to see a company from many
perspectives and to grasp the big picture, which is so essential to the Friess
Associates generalist approach to investing.
"As generalists," explains John, "we investigate each potential investment as if
we were planning to purchase the entire company. If researchers specialized in a
given area, they would likely be looking for isolated factors rather than seeing
the nuances of a company gleaned from its competitors, suppliers, customers and
distributors that are so valuable in making a decision to buy."
Some large gainers selected by John are Western Digital, Noble Drilling, and US
Airways. So far this year, these companies brought in $102 million for you.
Married for 17 years to Terri, the Ragards have three children, Becky, Andrew
and Stephen ages 15, 13 and 8. His favorite activity is spending time with his
family coaching the kids' teams, traveling, and camping. John also likes to read
and garden.
Trader Ryan Smith relates how valuable John's vast experience is. "The intensity
of his research is unmatched. I'm confident that my family's assets, and those
of all our clients and shareholders, are in good and capable hands with John."
John enjoys tracking down a fresh, new stock idea to replace one that might be
running out of gas, and says, "I am honored to have the chance to put that
company to work for the benefit of our fellow shareholders. Our responsibility
to you is our number one objective and being on the firing line every day for
that purpose makes the work we do meaningful."
- -Rebecca Buswell
BILL . . .
In his 16th year at Friess Associates, your senior research team leader Bill
D'Alonzo recognizes the difference between a successful company and a mediocre
one. Bill's guidance to his team on such picks as Dell Computer, Interstate
Hotels, and Linens'n Things has created gains of more than $222 million for you
this year.
"When Bill makes a buy decision, we'll eagerly give up a stock to make room for
the new, more dynamic company he's choosing," says fellow researcher Mark
Lapolla. "Our pigs-to-the-trough sell discipline works perfectly with Bill
because he's always finding that better, more exciting stock for our
shareholders."
Bill focuses on the individual aspects of a company's business by first going
through each line of its profit and loss statement in a thorough interview with
management. He then determines if it fits our strategy of accelerating growth
and earnings surprises.
After receiving a degree in Business Management, Bill spent two years as a
researcher at the Bank of Delaware Trust Department gaining knowledge about the
general workings of the stock market. After joining Friess in 1981, Bill went on
to earn an MBA in Finance in 1984 from Widener University.
As a team leader, Bill is responsible for not only the stocks he selects, but
also for overseeing the choices of his team. "We're on the front lines of the
investment process, with the direct responsibility of our shareholders' success
at stake."
Bill and his wife of 17 years, Sarah, and their two children, Susan and Nick,
enjoy traveling, playing tennis and golf, and spending time at the beach. Bill
is also an expert hunter and often takes Nick along on some of his excursions.
- -Rebecca Buswell
LYNDA . . .
If shareholders in Brandywine Fund need special attention, they know they can
turn to Lynda Campbell. Having joined our team in 1985, Lynda knows your Fund
inside and out, serving as Fund Administrator and Secretary for the past eight
years.
Chris Long, a member of your Friess management team, says, "Lynda's focus on
providing excellent service to each shareholder provides firm-wide leadership as
we follow her example of continually seeking new ways to add value to all we do
for our shareholders."
A contact at Lipper Analytical applauds Lynda and writes, "Recently we advised a
family investment company to purchase Brandywine Fund. The family's business
manager called me and sung the praises of your service organization. This
followed a very frustrating week for him dealing with several other fund
complexes who couldn't get anything right." This letter was written in 1987,
when Lynda was the entire service organization for the Fund!
With a shareholder base numbering more than 45,000, Lynda works closely with all
the representatives at Firstar Trust Company to ensure they provide top-notch
service to each shareholder who calls. Lynda travels to Wisconsin every few
months to meet with the reps and answer any questions they may have as well as
continuing to familiarize them with our investment approach.
"Interacting with shareholders is the most enjoyable aspect of my position here.
I appreciate the chance to build on long-time relationships and reiterate the
principles of our strategy to help them feel confident in our number one goal of
growing the assets they've entrusted to us."
Out of the office, Lynda and her husband, Doug, work fervently on remodeling the
home they purchased four years ago. Visiting with her children, Grier and Carey,
and her two young grandchildren, Patrick, 3 and Caroline, 3 months, is also at
the top of Lynda's list. Keeping close track of their progress, Lynda says, is a
most challenging yet rewarding role!
- -Rebecca Buswell
CAPITAL GAINS UPDATE . . .
The October distribution is approaching, and we want to give you the most recent
estimates of what we're anticipating. As of 6/26/97, the net realized capital
------------ ------- --------
gains were:
$3.02 in long term capital gains
1.52 in short term capital gains (treated as ordinary income)
- -----
$4.54 total potential distribution per share
There remain unrealized gains of $5.83 and unrealized losses of $.25 as of
--
6/26/97.
- -------
If you have a taxable account, you will have to pay income tax next April on
this distribution, but you will not have to pay a gain on this same amount when
your shares are eventually redeemed as the value of your existing shares will be
reduced by the per share amount of the distribution.
For example, if shares purchased at $20 become worth $30, you have a potential
taxable gain of $10 per share. However, if a $3.00 distribution is made, the
share value will drop to $27, leaving only $7 instead of $10 as the potential
future capital gain.
MARKET CAP . . .
Purchases and subsequent gains in various large cap stocks, those greater than
$5 billion, swelled this group to 39.6 percent from 29.2 percent last quarter.
All new to your portfolio this quarter, Cisco Systems has brought in $18
million, Warner Lambert Co. $42 million, Computer Associates with $11 million,
HBO & Co. $8 million, Rite Aid Corp. $7 million, and 3Com Corp. is up $37
million.
Your mid-cap holdings were reduced slightly from 42 percent in March to 37.6
percent currently. Ascend Communications, CVS Corp., LSI Logic, Adaptec, Western
Digital, and Consolidated Stores were all sold reaping profits of $110 million.
Small cap stocks under $1 billion decreased just slightly from 16.3 to 15.4
percent.
YOUR COMPANIES' MARKET CAPITALIZATION
CASH 7.4%
SMALL CAP 15.4%
MID CAP 37.6%
LARGE CAP 39.6%
GROWING YOUR FUND . . .
In each quarterly report, we highlight an employee at one of the companies in
which we invest so you can learn about those folks who are really responsible
for creating the gains you enjoy. We'd like you to meet Ivory Carson of the
Polaroid Corporation.
Ivory is a General Supervisor at a Polaroid manufacturing site in Waltham,
Massachusetts. He is responsible for a department of 125 people who assemble
all the components in film packs.
Making film packs is challenging work because it involves a complex series of
steps. Each pack has 30 components which must be assembled to close tolerances.
Every detail matters in the final product.
A West Point graduate, Ivory sees his ten years in the Army as good training for
his present job. Manufacturing is result-oriented and detail-oriented. In the
military, everything is about results and paying attention to details.
Additionally, the military and manufacturing both involve working with many
people. This interaction suits Ivory, whose greatest job satisfaction comes
from being able to tell a worker he is doing a good job.
In his ten years at Polaroid, Ivory has worked in several areas including
industrial cameras, technical films, and now consumer films. This allows him to
better understand the entire company. Looking to the future, Ivory points to
Polaroid's exciting developments in computer-based digital imaging films which
are revolutionizing photography.
Married, with four teenagers at home, Ivory still finds time to mentor college-
bound students through the Y's College Path program.
Polaroid has given Ivory the opportunity to be a high school track coach,
letting him fit coaching into a long work day which can run from 6 AM to 10 PM.
A high-energy guy, Ivory says, "I really enjoy the challenge. And, you can see
the results!"
- -Margaret Barton
LETTERS TO THE EDITOR . . .
We receive numerous emails and letters from fellow shareholders on a variety of
topics and we're always grateful to those who take the time to share their
comments! Below are some edited remarks which may raise some questions that many
of you might have.
----------------------------
I am an orthopedic surgeon, and I see and work with a number of pharmaceutical
and orthopedic companies.
One company I am very impressed with is Bionx which manufactures biodegradable
implants for repairing cartilage as well as fixing fractures. The beauty of
their device is it degrades over time negating the need to go back in and remove
hardware and its strength. The company went public six months ago and is trading
at $20.
Another hot area in my field is bone morphogenic protein (BMP). This is being
clinically tested and is injected into fresh fractures; sort of like super glue!
We sent your recommendation, Bionx to Ben Detwiler, a ten year veteran on your
team who screens many of the companies your research team investigates. We spoke
with the CEO of Bionx, Dave Andersen, as well as with their competitor, Biomet.
Bionx is growing dramatically and the company's implants and bone morphogenic
protein are ground breaking technologies in your field.
Your team decided to pass on this stock. Based on Wall Street estimates, Bionx
is selling at 80x 1997 estimates and 24x 1998 estimates. We focus on companies
with more reasonable price earnings ratios and our investment in Bionx could be
premature as some of its products are still in clinical trials. We will monitor
this exciting company and hope you will continue to share your insights with us.
----------------------------
I tried hard to understand the May 28th letter regarding soft dollars. However,
I could not. Please summarize the point you are trying to make. Perhaps I can
read it again with some degree of comprehension.
Thank you for taking the time to share your confusion regarding our letter which
included the discussion of soft dollars. We appreciate the opportunity to
clarify this concept.
The term "soft dollars" refers to the use of commissions generated when
Brandywine Fund purchases and sells stock. These commission or soft dollars are
used to purchase financial publications, research equipment, computer hardware
and software, all of which enhance your research team's efforts to isolate the
best companies for you.
----------------------------
I have an existing Brandywine Fund IRA account and would like to add the 401k
assets from my previous employer to the account. Also, can my wife's assets be
added as well?
You may make additional IRA contributions to your account and "rollover" your
401k assets to a new account which would enable you to "rollover" these
segregated assets to another qualified retirement plan in the future.
Unfortunately, you cannot contribute your wife's assets to either account. The
Internal Revenue Service regulations do not allow the combination of two
individuals' assets in an IRA. She will need to set up her own account.
All of us at Friess Associates were saddened to learn of the tragic helicopter
accident that claimed the life of Larry Inlow, Executive Vice President,
Secretary and General Counsel of Conseco, Inc.
We want to take this opportunity to pay tribute to Larry for all the fine work
he contributed to Conseco during his years there and to express our condolences
to the many people who will miss him. While we did not know Larry personally,
we have come to know how much he meant to those he worked with and how he
brightened their professional lives and provided for them an example of how to
live life to the fullest and be a success both at work and at home.
There are many people like Larry at all of the companies in which we invest for
whom we are very grateful. It is their efforts every day that help create the
gains which our shareholders enjoy.
We extend our deepest sympathy to Larry's family, friends and to everyone at
Conseco along with our sincere appreciation for Larry's role in making Conseco
such a successful company.
BRANDYWINE FUND, INC.
STATEMENT OF NET ASSETS
June 30, 1997
(Unaudited)
SHARES OR QUOTED
PRINCIPAL MARKET
AMOUNT COST VALUE (B)<F4>
------ ---- ---------
COMMON STOCKS - 92.6% (A)<F3>
APPAREL & SHOES - 3.9%
370,700 Gucci Group, N.V. $24,414,242 $23,863,812
1,013,500 Intimate Brands, Inc. 18,630,260 21,283,500
1,027,400 Jones Apparel Group, Inc. 20,555,815 49,058,350
2,091,200 Liz Claiborne, Inc. 59,394,005 97,502,200
322,100 Nautica Enterprises Inc. 7,818,734 8,515,680
128,100 Pacific Sunwear of California, Inc. 4,654,255 4,131,225
1,331,000 Polo Ralph Lauren Corporation 40,403,751 36,436,125
143,600 Quiksilver, Inc. 3,566,975 4,595,200
308,800 St. John Knits, Inc. 13,753,655 16,675,200
101,100 Timberland Co. 4,558,995 6,520,950
361,600 Tommy Hilfiger Corp. 15,816,041 14,531,981
507,200 The Warnaco Group, Inc. 14,423,894 16,167,000
279,700 The Wet Seal, Inc. 7,239,689 8,828,171
------------- ------------
235,230,311 308,109,394
THIS SECTOR IS 31.0% ABOVE YOUR FUND'S COST.
AUTOMOTIVE & RELATED - 0.6%
570,300 Federal-Mogul Corp. 16,286,232 19,960,500
40,000 Keystone Automotive Industries, Inc. 620,000 680,000
232,800 O'Sullivan Industries Holdings 3,290,146 3,855,866
413,800 SPX Corp. 11,606,318 26,819,620
------------- ------------
31,802,696 51,315,986
THIS SECTOR IS 61.4% ABOVE YOUR FUND'S COST.
COMMUNICATIONS - 5.9%
1,719,000 Bell Atlantic Corp. 125,298,781 130,429,125
452,100 Boston Technology, Inc. 11,445,998 13,365,432
837,750 CellStar Corp. 11,912,657 25,656,094
593,500 Cincinnati Bell Inc. 19,104,283 18,695,250
376,300 DSP Communications, Inc. 4,307,944 4,139,300
82,500 Dycom Industries, Inc. 982,026 1,134,375
394,800 ECI Telecom Ltd. 9,183,957 11,745,300
690,900 General Cable Corp. 14,691,300 17,704,312
238,500 LCC International, Inc. 3,504,997 3,756,375
546,000 MasTec, Inc. 11,352,728 25,832,898
132,100 MICROS Systems, Inc. 4,194,878 5,548,200
430,000 NYNEX Corp. 25,137,380 24,778,750
467,700 Octel Communications Corp. 10,090,821 10,961,953
108,500 Olicom A/S 1,841,922 1,695,312
1,627,200 Scientific-Atlanta, Inc. 30,155,470 35,595,000
62,900 Spectrian Corp. 1,773,812 2,319,438
2,187,700 Tellabs, Inc. 40,745,392 122,237,738
66,500 USCS International, Inc. 1,982,811 2,177,875
201,400 World Access Inc. 2,831,599 4,128,700
------------- ------------
330,538,756 461,901,427
THIS SECTOR IS 39.7% ABOVE YOUR FUND'S COST.
COMPUTERS & RELATED - 8.8%
190,000 AlphaNet Solutions, Inc. 3,135,000 2,802,500
168,600 Alternative Resources Corp. 3,474,295 3,435,225
2,238,100 Compaq Computer Corp. 233,226,675 222,131,425
759,000 Data General Corp. 10,617,681 19,734,000
1,357,500 Dell Computer Corp. 21,415,222 159,422,085
5,035,600 EMC Corp. (Mass.) 164,970,369 196,388,400
160,000 Pomeroy Computer Resource, Inc. 3,975,957 3,960,000
175,000 Procom Technology, Inc. 1,629,220 1,881,250
1,937,800 Quantum Corp. 38,132,042 39,482,675
503,900 Sequent Computer Systems, Inc. 8,554,021 10,613,646
481,600 Stratus Computer, Inc. 20,948,805 24,080,000
185,000 Telxon Corp. 3,503,755 3,330,000
------------- ------------
513,583,042 687,261,206
THIS SECTOR IS 33.8% ABOVE YOUR FUND'S COST.
DEPARTMENT STORES - 4.9%
342,000 Ames Department Stores, Inc. 2,823,563 3,313,296
922,900 Family Dollar Stores, Inc. 20,324,681 25,149,025
6,111,400 Federated Department Stores, Inc. 199,726,916 212,371,150
559,600 Fred Meyer, Inc. 24,780,107 28,924,605
2,151,200 Nordstrom, Inc. 98,839,529 105,544,325
222,800 Proffitt's Inc. 5,052,446 9,775,350
------------- ------------
351,547,242 385,077,751
THIS SECTOR IS 9.5% ABOVE YOUR FUND'S COST.
DISTRIBUTION - 1.2%
268,000 Black Box Corp. 7,638,243 10,787,000
245,000 InaCom Corp. 7,751,491 7,625,625
505,800 Kent Electronics Corp. 16,702,180 18,556,790
342,100 McKesson Corp. 25,379,440 26,512,750
481,100 MicroAge, Inc. 7,089,896 8,840,213
643,600 Tech Data Corp. 11,311,191 20,233,497
------------- ------------
75,872,441 92,555,875
THIS SECTOR IS 22.0% ABOVE YOUR FUND'S COST.
ELECTRICAL EQUIPMENT MANUFACTURERS - 0.4%
399,500 AAR Corp. 9,793,793 12,909,043
89,100 BE Aerospace, Inc. 1,723,685 2,817,788
237,100 Precision Castparts Corp. 12,240,248 14,137,088
------------- ------------
23,757,726 29,863,919
THIS SECTOR IS 25.7% ABOVE YOUR FUND'S COST.
ELECTRONICS - 4.0%
26,000 ACT Manufacturing 1,053,349 1,085,500
337,200 AVX Corp. 7,661,081 9,104,400
222,800 The DII Group Inc. 7,383,567 9,803,200
60,200 Electro Scientific Industries, Inc. 2,014,825 2,520,875
214,000 KEMET Corp. 5,589,748 5,323,250
107,900 Kuhlman Corp. 3,181,660 3,479,775
799,800 Microchip Technology Inc. 25,700,202 23,794,050
233,100 Oak Industries Inc. 6,545,168 6,701,625
153,000 Reptron Electronics, Inc. 2,505,375 3,672,000
1,198,400 SCI Systems, Inc. 49,787,709 76,398,000
124,600 Technitrol, Inc. 2,607,263 3,410,925
540,200 Tektronix, Inc. 26,971,233 32,412,000
2,966,800 Teradyne, Inc. 121,278,238 116,446,900
405,700 Waters Corp. 11,977,818 14,554,488
------------- ------------
274,257,236 308,706,988
THIS SECTOR IS 12.6% ABOVE YOUR FUND'S COST.
FABRIC/TEXTILES - 0.6%
172,600 Kellwood Co. 3,649,601 4,789,650
121,600 Quaker Fabric Corp. 1,710,107 2,006,400
375,900 Unifi, Inc. 11,829,322 14,049,263
627,200 WestPoint Stevens Inc. 20,379,641 24,539,200
------------- ------------
37,568,671 45,384,513
THIS SECTOR IS 20.8% ABOVE YOUR FUND'S COST.
FINANCIAL/BUSINESS SERVICES - 5.7%
569,100 AmeriCredit Corp. 9,812,912 11,951,100
438,800 BA Merchant Services Inc. 6,608,014 8,364,844
52,100 CDI Corp. 2,169,042 2,171,945
388,650 Comdisco, Inc. 7,842,820 10,104,900
202,200 Consolidated Graphics, Inc. 4,892,225 8,441,850
4,999,900 Conseco, Inc. 139,704,076 184,996,300
105,000 CORT Business Services Corp. 2,505,206 3,097,500
85,000 Data Processing Resources Corp. 1,533,437 1,986,875
813,300 FIRSTPLUS Financial Group, Inc. 25,983,974 27,652,200
710,900 FIserv, Inc. 27,721,336 31,723,912
746,000 Household International, Inc. 83,316,001 87,608,748
489,600 IMC Mortgage Company 5,960,100 8,139,600
40,000 LoJack Corp. 591,535 575,000
409,100 Long Beach Financial Corp. 2,659,150 3,579,625
59,000 MAXIMUS, Inc. 997,040 1,054,625
185,000 Metro Information Services, Inc. 3,130,000 3,653,750
552,500 Nationwide Financial Services Inc. 14,473,562 14,676,058
249,000 Personnel Group of America, Inc. 3,773,595 7,174,437
630,000 Servico, Inc. 9,144,000 9,371,250
25,000 Staff Leasing, Inc. 453,125 468,750
308,900 StaffMark, Inc. 4,048,746 6,911,638
110,100 US Rental, Inc. 1,988,770 2,786,961
149,000 Wabash National Corp. 3,553,821 4,153,375
165,000 Warrantech Corp. 1,402,500 1,711,875
------------- ------------
364,264,987 442,357,118
THIS SECTOR IS 21.4% ABOVE YOUR FUND'S COST.
FOOD/RESTAURANTS - 0.6%
513,500 CKE Restaurants, Inc. 5,734,170 16,239,437
585,000 Cracker Barrel Old Country
Store, Inc. 16,387,793 15,502,500
104,500 JP Foodservice, Inc. 2,384,663 2,997,896
116,800 Logan's Roadhouse, Inc. 2,538,265 2,774,000
317,250 ShowBiz Pizza Time, Inc. 5,848,350 8,367,469
80,000 Suiza Foods Corp. 3,054,176 3,280,000
------------- ------------
35,947,417 49,161,302
THIS SECTOR IS 36.8% ABOVE YOUR FUND'S COST.
HEALTHCARE - 3.0%
2,328,600 Beverly Enterprises, Inc. 33,781,953 37,839,750
268,400 Coventry Corp. 3,140,570 4,059,550
412,700 FPA Medical Management, Inc. 7,155,360 9,776,038
745,600 HBO & Co. 43,488,315 51,353,200
2,005,900 HEALTHSOUTH Corp. 35,007,375 50,023,134
521,700 Integrated Health Services, Inc. 18,611,521 20,085,450
317,500 Medical Manager Corporation 3,502,437 4,683,125
425,011 MedPartners, Inc. 8,333,271 9,190,863
70,000 Physician Support Systems, Inc. 859,621 857,500
188,000 Quorum Health Group, Inc. 4,508,823 6,721,000
171,700 Renal Treatment Centers, Inc. 4,070,942 4,614,437
435,400 Shared Medical Systems Corp. 17,672,165 23,511,600
150,000 Specialty Care Network 1,200,000 1,781,250
228,100 United Wisconsin Services, Inc 8,016,260 7,684,233
------------- ------------
189,348,613 232,181,130
THIS SECTOR IS 22.6% ABOVE YOUR FUND'S COST.
HOME/OFFICE & RELATED - 0.5%
63,000 Danka Business Systems PLC ADR 2,495,644 2,575,125
200,000 Furniture Brands International, Inc.3,400,000 3,875,000
525,400 Knoll Inc. 9,305,458 12,478,250
30,000 PAMECO Corp. 511,800 532,500
180,000 Rent-Way, Inc. 1,970,000 2,655,000
154,200 Samsonite Corp. 6,455,635 6,804,075
410,000 Windmere-Durable Holdings Inc. 6,281,597 6,713,750
------------- ------------
30,420,134 35,633,700
THIS SECTOR IS 17.1% ABOVE YOUR FUND'S COST.
LEISURE & ENTERTAINMENT - 2.0%
207,000 Action Performance Cos. Inc. 2,302,414 5,019,750
100,000 Ballantyne of Omaha, Inc. 1,687,500 1,800,000
770,700 Callaway Golf Co. 24,487,523 27,359,850
324,800 CapStar Hotels Co. 9,238,590 10,393,600
63,600 Doubletree Corp. 2,227,259 2,615,550
267,300 Fairfield Communities, Inc. 7,978,792 8,987,962
313,800 Interstate Hotels Company 7,431,911 9,237,644
1,354,500 La Quinta Inns, Inc. 29,320,036 29,629,688
82,400 MIDWAY GAMES, Inc. 1,597,219 1,761,300
786,100 Polaroid Corp. 34,453,021 43,628,550
382,000 Prime Hospitality Corp. 6,234,478 7,544,500
107,000 Steiner Leisure LTD 1,415,971 2,982,625
240,000 Vistana Inc. 2,902,500 3,720,000
------------- ------------
131,277,214 154,681,019
THIS SECTOR IS 17.8% ABOVE YOUR FUND'S COST.
MACHINERY/CONSTRUCTION & MISCELLANEOUS MANUFACTURING - 1.7%
1,498,900 AGCO Corp. 43,200,558 53,867,468
452,500 Aviall, Inc. 6,519,778 6,335,000
101,400 Carpenter Technology Corp. 4,357,485 4,639,050
54,400 Cincinnati Milacron Inc. 1,357,715 1,411,027
1,251,000 Coltec Industries Inc. 22,233,051 24,394,500
241,100 PAXAR Corp. 3,937,848 4,550,763
765,000 Rohr, Inc. 16,356,643 16,782,570
104,800 Stratasys, Inc. 2,419,710 1,689,900
174,200 Watts Industries, Inc. 3,784,031 4,180,800
497,000 Wyman-Gordon Co. 10,983,329 13,419,000
------------- ------------
115,150,148 131,270,078
THIS SECTOR IS 14.0% ABOVE YOUR FUND'S COST.
MEDICAL/DENTAL PRODUCTS & SUPPLIES - 0.7%
165,000 Advanced Polymer Systems, Inc. 1,428,124 1,320,000
310,300 AmeriSource Health Corp. 13,951,171 15,476,212
122,000 Sofamor/Danek Group, Inc. 5,605,195 5,581,500
285,000 Medical Resources, Inc. 2,906,309 4,702,500
489,600 STERIS Corp. 12,858,057 18,298,800
289,700 Sybron International Corp. 8,164,887 11,551,788
------------- ------------
44,913,743 56,930,800
THIS SECTOR IS 26.8% ABOVE YOUR FUND'S COST.
NETWORKING - 8.5%
7,899,075 3Com Corp. 320,752,900 355,458,375
2,984,300 Bay Networks, Inc. 76,685,892 79,271,961
3,377,900 Cisco Systems Inc. 208,895,984 226,741,537
------------- ------------
606,334,776 661,471,873
THIS SECTOR IS 9.1% ABOVE YOUR FUND'S COST.
OIL/GAS FIELD SERVICES - 6.0%
817,200 BJ Services Co. 38,587,004 43,822,350
1,462,800 Cooper Cameron Corp. 50,249,549 68,385,900
385,900 EVI Inc. 4,545,942 16,207,800
103,800 Hvide Marine Inc. 2,457,569 2,296,575
314,200 J. Ray McDermott, S.A. 8,510,558 8,483,400
250,700 Key Energy Group, Inc. 3,845,094 4,465,719
279,500 Lone Star Technologies, Inc. 5,422,669 8,000,687
1,389,400 Marine Drilling Companies, Inc. 26,858,505 27,266,975
548,400 McDermott International, Inc. 14,323,019 16,006,699
681,900 Nabors Industries, Inc. 14,621,757 17,047,500
184,200 National-Oilwell Inc. 8,233,588 10,591,500
2,716,800 Noble Drilling Corp. 33,421,236 61,299,158
381,300 Nuevo Energy Co. 13,975,915 15,633,300
50,000 Oryx Energy Co. 713,515 1,056,250
348,100 Parker Drilling Co. 3,293,642 3,872,613
305,400 Pool Energy Services Co. 5,044,988 5,535,375
106,800 Precision Drilling Corp. 4,637,477 5,166,450
668,300 Pride International, Inc. 10,821,254 16,039,200
1,343,500 Rowan Companies, Inc. 23,617,972 37,870,578
576,400 Santa Fe International Corporation 18,131,294 19,597,600
295,000 Transocean Offshore Inc. 21,205,588 21,424,375
340,500 Trico Marine Services, Inc. 7,695,191 7,427,327
760,100 Varco International, Inc. 22,407,629 24,513,225
260,200 Veritas DGC Inc. 5,224,902 5,854,500
445,800 Vintage Petroleum, Inc. 14,087,096 13,708,350
150,000 Weatherford Enterra Inc. 5,559,000 5,775,000
------------- ------------
367,491,953 467,348,406
THIS SECTOR IS 27.2% ABOVE YOUR FUND'S COST.
PHARMACEUTICALS - 3.2%
100,000 Andrx Corp. 3,559,689 3,825,000
549,800 Roberts Pharmaceutical Corp. 7,187,135 6,151,162
1,950,300 Warner-Lambert Co. 200,765,420 242,324,775
------------- ------------
211,512,244 252,300,937
THIS SECTOR IS 19.3% ABOVE YOUR FUND'S COST.
SEMICONDUCTORS & RELATED - 6.4%
5,192,300 Advanced Micro Devices, Inc. 174,764,637 186,922,800
95,000 CFM Technologies, Inc. 2,737,500 3,111,250
1,488,000 Cypress Semiconductor Corp. 22,052,436 21,576,000
250,900 Dallas Semiconductor Corp. 6,691,456 9,847,825
222,500 Digital Microwave Corp. 5,632,343 6,675,000
197,500 DSP Group, Inc. 2,639,356 2,959,340
245,800 Exar Corp. 4,848,482 5,284,700
240,000 Hadco Corp. 13,958,754 15,720,000
444,800 International Rectifier Corp. 7,580,499 8,284,400
395,400 Kulicke & Soffa Industries, Inc. 10,470,685 12,838,243
342,000 Lattice Semiconductor Corp. 16,643,700 19,323,000
158,200 Microsemi Corp. 1,841,023 2,017,050
4,531,600 National Semiconductor Corp. 113,844,581 138,780,250
216,700 QLogic Corp. 4,615,972 5,525,850
10,000 SanDisk Corp. 143,750 146,250
156,300 Semtech Corp. 2,047,212 5,704,950
122,400 Sipex Corp. 3,303,542 4,437,000
163,000 Supertex, Inc. 2,153,239 1,813,375
596,700 Vishay Intertechnology, Inc. 17,899,351 17,267,305
1,285,700 VLSI Technology, Inc. 29,233,366 30,374,662
------------- ------------
443,101,884 498,609,250
THIS SECTOR IS 12.5% ABOVE YOUR FUND'S COST.
SPECIALTY RETAILING - 10.0%
111,400 Abercrombie & Fitch Co. 1,781,777 2,060,900
1,119,900 AnnTaylor Stores Corp. 22,927,060 21,838,050
256,000 Audiovox Corp. 2,044,444 1,840,128
337,600 Barnes & Noble Inc. 13,760,492 14,516,800
769,200 Borders Group, Inc. 13,673,533 18,556,950
1,542,700 Claire's Stores, Inc. 25,946,453 26,997,250
2,968,900 CompUSA Inc. 59,036,167 63,831,350
3,019,800 Costco Companies, Inc. 86,751,697 99,275,925
464,200 Dress Barn, Inc. 6,293,682 9,051,900
621,500 Eagle Hardware & Garden, Inc. 13,059,803 14,216,813
367,000 French Fragrances Inc. 2,202,000 3,394,750
865,000 Hollywood Entertainment Corp. 17,937,242 19,786,875
103,600 Lands' End, Inc. 2,957,874 3,069,150
520,600 Linens'n Things, Inc. 8,796,197 15,422,775
368,200 Mac Frugal's Bargains o
Close-outs Inc. 8,120,023 10,033,450
192,600 The North Face, Inc. 2,826,633 3,514,950
117,800 Paul Harris Stores, Inc. 1,336,329 1,973,150
725,400 Payless ShoeSource, Inc. 22,486,204 39,670,675
307,900 Petco Animal Supplies, Inc. 8,323,791 9,237,000
1,944,600 Rite Aid Corp. 90,244,814 96,986,925
939,800 Ross Stores, Inc. 22,986,975 30,720,182
567,600 Stage Stores, Inc. 11,000,915 14,828,550
3,709,700 Staples, Inc. 85,874,746 86,250,525
785,900 Tiffany & Co. 28,009,518 36,299,149
5,042,600 TJX Companies, Inc. 76,364,962 132,998,575
234,150 Tuesday Morning Corp. 4,414,997 4,712,269
------------- ------------
639,158,328 781,085,016
THIS SECTOR IS 22.2% ABOVE YOUR FUND'S COST.
SOFTWARE - 6.4%
1,308,500 Autodesk, Inc. 43,979,319 50,132,560
243,500 AXENT Technologies Inc. 4,134,734 3,713,375
3,194,000 BMC Software, Inc. 145,461,862 176,867,750
485,300 Cognos Inc. 8,721,844 15,104,962
1,474,400 Compuware Corp. 26,986,891 70,402,600
1,206,000 Electronic Arts Inc. 34,784,255 40,551,750
855,600 Electronics for Imaging, Inc. 31,740,265 40,427,100
271,000 IKOS Systems, Inc. 3,624,501 5,792,625
9,000 Insight Enterprises, Inc. 269,512 270,567
249,300 JDA Software Group, Inc. 7,041,175 8,507,362
237,300 Legato Systems, Inc. 4,078,185 4,390,050
124,000 Natural MicroSystems Corp. 4,200,500 4,464,000
68,100 Sterling Commerce Inc. 1,974,900 2,238,788
723,800 Sterling Software, Inc. 22,746,074 22,618,750
497,200 Structural Dynamics Research Corp. 11,265,357 13,051,500
1,608,800 Symantec Corp. 25,472,009 31,371,600
55,000 Symix Systems, Inc. 663,750 632,500
180,900 Viewlogic Systems, Inc. 2,773,893 2,645,663
208,900 Wall Data Inc. 5,071,214 5,509,738
------------- ------------
384,990,240 498,693,240
THIS SECTOR IS 29.5% ABOVE YOUR FUND'S COST.
TRANSPORTATION & RELATED - 3.7%
91,200 AirNet Systems Inc. 1,316,013 1,493,400
1,096,700 America West Holdings 17,013,417 15,902,150
194,300 American Freightways Corp. 2,632,382 3,035,937
70,500 Atlantic Coast Airlines Inc. 982,266 1,110,375
269,300 Budget Group, Inc. 8,294,902 9,290,850
575,800 Caliber System, Inc. 20,858,005 21,448,550
92,500 Celadon Group, Inc. 962,017 1,063,750
917,100 CNF Transportation, Inc. 26,523,901 29,576,475
668,100 Comair Holdings, Inc. 14,860,702 18,498,353
293,000 Consolidated Freightways Corp. 4,341,862 4,797,875
1,219,200 Gulfstream Aerospace Corp. 35,322,679 35,966,400
516,600 Hertz Corp. 14,322,065 18,597,600
550,000 MotivePower Industries 7,572,625 8,800,000
40,000 M.S. Carriers, Inc. 825,000 1,005,000
175,000 SkyWest, Inc. 2,852,500 2,734,375
1,363,100 Southwest Airlines Co. 33,033,568 35,270,213
95,200 Triumph Group, Inc. 1,956,918 2,951,200
1,955,500 US Airways Group, Inc. 52,511,429 68,442,500
340,000 Werner Enterprises, Inc. 6,241,562 6,587,500
------------- ------------
252,423,813 286,572,503
THIS SECTOR IS 13.5% ABOVE YOUR FUND'S COST.
MISCELLANEOUS - 3.9%
1,231,000 The B.F. Goodrich Company 51,711,784 53,318,303
3,041,200 Corning Inc. 142,702,081 169,166,750
1,270,900 The Dial Corp. 19,391,724 19,857,812
181,400 Kaufman & Broad Home Corp. 2,523,868 3,185,928
390,800 The Lubrizol Corp. 15,079,994 16,389,370
567,500 Ogden Corp. 11,868,854 12,343,125
1,067,700 Philip Services Corp. 16,752,357 16,949,738
324,200 RPM, INC. 5,445,268 5,957,175
177,200 TETRA Technologies, Inc. 4,846,442 4,385,700
105,800 Triangle Pacific Corp. 3,405,593 3,385,600
------------- ------------
273,727,965 304,939,501
THIS SECTOR IS 11.4% ABOVE YOUR FUND'S COST.
WARRANTS - 0.0%
43 Sound Advice, Inc.
Warrants, 06/14/99 0 0
THIS SECTOR IS 0.0% BELOW YOUR FUND'S COST.
------------- ------------
Total common stocks 5,964,221,580 7,223,412,932
SHORT-TERM INVESTMENTS - 7.4%(A)<F3>
COMMERCIAL PAPER - 7.3%
$34,400,000 American General Finance Corp., 34,400,000 34,400,000
due 07/01/97, discount of 6.20%
35,000,000 Barton Capital Corp., 35,000,000 35,000,000
due 07/01/97, discount of 5.60%
50,000,000 Ford Motor Credit Europe, 50,000,000 50,000,000
due 07/01/97, discount of 5.54%
50,000,000 Smith Barney, 49,992,306 49,992,306
due 07/02/97, discount of 5.54%
30,000,000 Volkswagen America, 29,995,325 29,995,325
due 07/02/97, discount of 5.61%
50,000,000 Ford Motor Credit Europe, 49,984,555 49,984,555
due 07/03/97, discount of 5.56%
40,000,000 John Hancock, 39,987,667 39,987,667
due 07/03/97, discount of 5.55%
50,000,000 Hertz Corp., 49,984,417 49,984,417
due 07/03/97, discount of 5.61%
50,000,000 American General Capital Services, 49,953,750 49,953,750
due 07/07/97, discount of 5.55%
50,000,000 General Electric Capital Corp., 49,953,750 49,953,750
due 07/07/97, discount of 5.55%
10,000,000 Ford Motor Credit Co., 9,989,014 9,989,014
due 07/08/97, discount of 5.65%
10,000,000 Goldman Sachs, 9,989,033 9,989,033
due 07/08/97, discount of 5.64%
50,000,000 Household Finance Corp., 49,945,556 49,945,556
due 07/08/97. discount of 5.60%
10,000,000 Unilever Capital Corp., 9,989,033 9,989,033
due 07/08/97, discount of 5.64%
25,000,000 John Deere Capital Corporation, 24,968,500 24,968,500
due 07/09/97, discount of 5.67%
25,000,000 Merrill Lynch & Co., Inc., 24,960,625 24,960,625
due 07/11/97, discount of 5.67%
------------- ------------
Total commercial paper 569,093,531 569,093,531
VARIABLE RATE DEMAND NOTES - 0.1%
5,046,108 Johnson Controls, Inc. 5,046,108 5,046,108
1,850,000 Wisconsin Electric Power Co. 1,850,000 1,850,000
------------- ------------
Total variable rate demand notes 6,896,108 6,896,108
------------- ------------
Total short-term investments 575,989,639 575,989,639
------------- ------------
Total investments $6,540,211,219 7,799,402,571
==============
LIABILITIES, LESS CASH AND
RECEIVABLES (0.0%) (A)<F3> (1,527,122)
---------------
Net Assets $7,797,875,449
==============
Net Asset Value Per Share
($0.01 par value 500,000,000
shares authorized), offering
and redemption price
($7,797,875,449 / 211,249,962
shares outstanding) $36.91
======
(a)<F3>Percentages for the various classifications relate to net assets.
(b)<F4>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.
TOP TEN . . .
Purchases of 3Com Corp., Bay Networks, and Cisco Systems brought Networking back
as your third largest industry group with 8.5 percent. Together, these companies
have already brought you $58 million.
Computers & Related was pared back to 8.8 percent, dropping to number 2 from the
top spot in March. Adaptec, American Power Conversion and Western Digital were
sold, nailing down profits of more than $65 million.
Specialty Retailing returns to the number one position it held in December, even
though it went from 11.4 percent to 9.9 percent. Sales in CVS Corp., General
Nutrition and Pier One yielded more than $30 million.
Leaving your Top Ten this quarter were Apparel & Shoes, dropping from 5.2 in
March to 3.9 today and Healthcare, moving back slightly from 3.1 to 3 percent.
TOP TEN INDUSTRY GROUPS
Specialty Retailing 10.0%
Computers & Related 8.8%
Networking 8.5%
Software 6.4%
Semiconductors & Related 6.4%
Oil/Gas Field Services 6.0%
Communications 5.9%
Financial/Business Services 5.7%
Department Stores 4.9%
Electronics 4.0%
Cash 7.4%
All Others 26.0%
ON THE CUTTING EDGE . . .
Research and development in a wide variety of fields may someday generate huge
money-makers. These ideas may not add to the value of your investments today,
but they point to exciting future prospects. We were struck by the following
bright ideas:
DE-ICING DEVELOPMENTS
Typically, to remove ice, snow and slush from a plane, an anti-icing fluid is
applied to the plane as it sits on the runway before take-off, but this can
result in run-off pollution problems. Several companies are exploring new
approaches. For small planes, B.F. Goodrich invented an inflatable boot along
the wing which, when inflated, breaks the ice loose. Union Carbide makes an
anti-icing fluid that sticks like molasses, does its job, and then sheers off
during take-off.
SAY GOODBYE TO LOST LUGGAGE HASSLES!
Samsung Electronics wants to make luggage that has identity cards built in. The
cards will be made from Ferroelectric Random-Access Memory chips, or FRAMS.
This type of chip can be read at a distance and retain data without recharging.
Even if your suitcase lands in the wrong airport without a tag, the airline will
be able to scan it and return it to you.
BOOKS, BOOKS, AND MORE BOOKS!
Amazon.com calls itself "Earth's Biggest Bookstore." Located at
http://www.amazon.com on the World Wide Web, its homepage offers 2.5 million
titles both in and out of print! To put those numbers in perspective, the
largest physical bookstore offers about 175,000 books. Open 24 hours a day, 365
days a year, Amazon.com exemplifies the potential of the cyberspace marketplace.
If you are not online, you can still contact the company the old-fashioned way
at 1-800-201-7575 or fax (206)396-2950.
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 P.O. Box 4166, Greenville, DE 19807 [email protected]
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. Past performance is not indicative of future
performance. Investment return and principal value of an investment may
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
Report editor: Rebecca A. Buswell
Report Staff: Margaret Barton, Paul R. Robinson, Jennifer Weldon
