013096-1 Registration No. 33-1182
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. ____ [_]
Post-Effective No. 13 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 14 [X]
(Check appropriate box or boxes.)
BRANDYWINE FUND, INC.
(Exact name of Registrant as Specified in Charter)
3908 Kennett Pike
Greenville, Delaware 19807
(Address of Principal Executive Offices) (Zip Code)
(302) 656-3017
(Registrant's Telephone Number, including Area Code)
Copy to:
Foster S. Friess W. David Knox, II
350 Broadway Foley & Lardner
P. O. Box 576 777 East Wisconsin Avenue
Jackson, Wyoming 83001 Milwaukee, Wisconsin 53202
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable
after the Registration Statement becomes effective.
It is proposed that this filing become effective (check appropriate box):
[_] immediately upon filing pursuant to paragraph (b)
[X] on January 30, 1998 pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph (a)(1)
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] on (date) pursuant to paragraph (a)(2), of Rule 485
If appropriate, check the following box:
[_] this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
<PAGE>
BRANDYWINE FUND, INC.
CROSS REFERENCE SHEET
(Pursuant to Rule 481 showing the location in the Prospectus and
the Statement of Additional Information of the responses to the Items of
Parts A and B of Form N-1A.)
Caption or Subheading in Prospectus
Item No. on Form N-1A or Statement of Additional Information
PART A - INFORMATION REQUIRED IN PROSPECTUS
1. Cover Page Cover Page
2. Synopsis Expenses and Fees
3. Condensed Financial Financial Highlights; Performance
Information Information
4. General Description Financial Highlights; Investment
of Registrant Objectives and Policies
5. Management of the Management of the Fund
Fund
5A. Management's Discussion Performance Information; Management's
of Fund Performance Discussion of Fund Performance
6. Capital Stock and Financial Highlights; Dividends,
Other Securities Distributions and Taxes; Shareholder
Statements and Reports
7. Purchase of Securities Determining Net Asset Value;
Being Offered About Our Minimum Requirement for Initial
Investment; Investing with Brandywine
Fund; Account Services and Policies
8. Redemption or Investing with Brandywine Fund; Account
Repurchase Services and Policies
9. Legal Proceedings *
PART B - INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and *
History
13. Investment Objectives Investment Restrictions
and Policies
14. Management of the Directors and Officers of the Fund
Registrant
15. Control Persons and Principal Stockholders
Principal Holders
of Securities
16. Investment Advisory Included in Prospectus under "Management
and Other Services of the Fund"; Investment Adviser; Service
Agreement; Custodian; Independent
Accountants
17. Brokerage Allocation Allocation of Portfolio Brokerage
18. Capital Stock and Included in Prospectus under
Other Securities "Financial Highlights"
19. Purchase, Redemption Included in Prospectus under
and Pricing of "Determining Net Asset Value";
Securities Being "About Our Minimum Requirement for
Offered Initial Investment"; "Investing with
Brandywine Fund"; "Account Services and
Policies"; Determining of Net Asset Value
and Performance; Purchase of Shares;
Systematic Withdrawal Plan
20. Tax Status Taxes
21. Underwriters *
22. Calculations of Per- Determination of Net Asset Value and
formance Data Performance
23. Financial Statements Financial Statements
_______________________
*Answer negative or inapplicable
<PAGE>
BRANDYWINE FUND, INC.
(BRANDYWINE FUND LOGO)
Brandywine Fund, Inc.
3908 Kennett Pike
Greenville, Delaware 19807
Email: [email protected]
Website: www.brandywinefunds.com
1-800-656-3017 or 1-414-765-4124
PROSPECTUS
JANUARY 30, 1998
BRANDYWINE FUND, INC.
(BRANDYWINE FUND LOGO)
Brandywine Fund, Inc.
3908 Kennett Pike
Greenville, Delaware 19807
Email: [email protected]
Website: www.brandywinefunds.com
1-800-656-3017 or 1-414-765-4124
TABLE OF CONTENTS
EXPENSES AND FEES 2
FINANCIAL HIGHLIGHTS 3
INVESTMENT OBJECTIVES AND
POLICIES 4
MANAGEMENT OF THE FUND 8
DETERMINING NET ASSET VALUE 8
ABOUT OUR MINIMUM REQUIREMENT
FOR INITIAL INVESTMENT 9
INVESTING WITH BRANDYWINE
FUND 9
How to Open Your Brandywine
Fund Account 9
How to Buy Additional Shares in
Brandywine Fund 11
How to Sell Shares in
Brandywine Fund 12
Payment of Redemption Proceeds 13
How to Exchange Shares 13
Dividend and Distribution Options 14
DIVIDENDS, DISTRIBUTIONS,
AND TAXES 15
SHAREHOLDER STATEMENTS
AND REPORTS 15
PERFORMANCE INFORMATION 16
MANAGEMENT'S DISCUSSION OF
FUND PERFORMANCE 17
ACCOUNT SERVICES AND POLICIES 18
PURCHASE APPLICATION 19
BOARD OF DIRECTORS
John E. Burris
Chairman, Burris Foods, Inc.
Milford, Delaware
Foster S. Friess
President, Friess Associates, Inc.
Jackson, Wyoming
Stig Ramel
President, Nobel Foundation 1972 to 1992
Stockholm, Sweden
INVESTMENT ADVISER
Friess Associates, Inc.
115 East Snow King Avenue
P.O. Box 576
Jackson, Wyoming 83001
FUND ADMINISTRATOR
Fiduciary Management, Inc.
225 East Mason Street
Milwaukee, Wisconsin 53202
LIKE ALL MUTUAL FUND SHARES, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Thank you for your interest in Brandywine Fund. The Friess Associates
teammates who invest and manage the Fund have tried to make this prospectus easy
to understand. We hope you will take the time to read it carefully before you
invest and keep it on hand for future reference.
Brandywine Fund, Inc. (the "Fund") is open to new investors, charges no sales
or marketing fees, and invests in a wide range of industries and companies. The
terms often used to describe it are "open-end," "no-load," and "diversified." It
is also known as a management investment company. Its primary investment
objective is to produce long-term capital appreciation mainly through investing
in common stocks. Current income is a secondary consideration.
If you are investing for retirement or another longer term goal, you may want
to invest in Brandywine Fund. If you may need to redeem your shares in a hurry,
or if you are uncomfortable with an investment that will go up and down in
value, the Fund probably is not the right choice for you.
Read on. We hope you will find that this prospectus answers all of your
questions and it may even be enjoyable reading.
/s/ Foster Friess
Foster Friess
President
The Fund has filed a Statement of Additional Information, dated January 30,
1998, with the Securities and Exchange Commission. The contents of the
Statement of Additional Information are considered to be part of the prospectus
(i.e., incorporated by reference). To obtain a copy, call 1-800-656-3017 or 1-
414-765-4124.
You should be aware that the Securities and Exchange Commission maintains a
website (http://www.sec.gov) that contains the Statement of Additional
Information, material we have incorporated by reference into the prospectus, and
other information about the Fund and other registrants that file electronically
with the Commission.
EXPENSES AND FEES
STOCKHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases or Reinvested Dividends None
Deferred Sales Load None
Redemption Fee None*
<F1>
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees 1.00%
12b-1 Fees None
Other Expenses 0.04%
----
Total Fund Operating Expenses 1.04%
====
*<F1>A fee of $12.00 is charged for each wire redemption.
Example:
1 Year 3 Years 5 Years 10 Years
------ ------ ------ -------
An investor would pay the following
expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at
the end of each time period: $11 $33 $57 $130
THESE EXAMPLES ARE FOR COMPARISON PURPOSES ONLY AND ARE NOT MEANT TO
REPRESENT YOUR ACTUAL INVESTMENT RESULTS OR EXPENSES, WHICH MAY VARY.
The "Other Expenses" referred to above are primarily the servicing of
shareholder accounts, such as providing statements and reports, disbursing
dividends, and providing custodial services, together with necessary
registration, accounting, and legal costs.
For more details on Fund expenses, please see the section titled, "Management
of the Fund" on page 8.
FINANCIAL HIGHLIGHTS
(Selected data for each share of the Fund outstanding throughout each year.)
The Financial Highlights of the Fund, which have been audited, should be read
along with the Fund's audited financial statements and notes, included in the
Fund's Annual Report to Shareholders which contains the auditor's report as to
the Financial Highlights. The Fund's audited financial statements, notes and
auditor's report contained in the Fund's Annual Report to Shareholders are
incorporated by reference into the Statement of Additional Information. Further
information about the performance of the Fund is also contained in the Fund's
Annual Report to Shareholders, copies of which may be obtained, without charge,
upon request. To obtain a copy, call 1-800-656-3017 or 1-414-765-4124.
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
---------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning
of year $32.83 $33.92 $24.77 $28.04 $19.36 $20.52 $15.79 $17.87 $12.89 $17.00
Income from investment operations:
Net investment (loss) income (0.07)(1) (0.08)(1) (0.10) 0.03 (0.02) 0.04 0.27 0.11 0.03 0.06
<F2> <F2>
Net realized and unrealized
gains (losses) on investments 12.50 2.83 10.70 (0.43) 9.25 1.04 5.74 (1.48) 4.99 (3.29)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations 12.43 2.75 10.60 (0.40) 9.23 1.08 6.01 (1.37) 5.02 (3.23)
Less Distributions:
Dividends from net
investment income -- -- -- -- (0.01) (0.13) (0.28) (0.03) (0.04) --
Distributions from net
realized gains (1.35) (3.84) (1.45) (2.87) (0.54) (2.11) (1.00) (0.68) -- (0.88)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from distributions (1.35) (3.84) (1.45) (2.87) (0.55) (2.24) (1.28) (0.71) (0.04) (0.88)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of year $43.91 $32.83 $33.92 $24.77 $28.04 $19.36 $20.52 $15.79 $17.87 $12.89
====== ====== ======= ====== ====== ======= ======= ======= ====== ======
Total Investment Return 39.3% 10.0% 45.5% (1.4%) 48.6% 5.9% 41.4% (7.9%) 39.0% (17.6%)
Ratios/Supplemental Data:
Net assets, end of year
(in 000's $) 9,532,724 6,038,301 4,137,484 2,240,554 1,413,253 695,128 527,808 271,856 169,745 122,863
Ratio of expenses to
average net assets 1.04% 1.06% 1.07% 1.09% 1.08% 1.10% 1.09% 1.12% 1.13% 1.16%
Ratio of net investment
(loss) income to average
net assets (0.3%) (0.4%) (0.4%) 0.1% (0.1%) 0.2% 1.5% 0.9% 0.2% 0.3%
Portfolio turnover rate 192.4% 202.8% 193.7% 190.2% 150.4% 188.9% 187.9% 157.7% 91.0% 107.4%
Average commission rate paid*<F3> $0.0595 $0.0599 -- -- -- -- -- -- -- --
(1)<F2>Net investment loss per share is calculated using ending balances
prior to consideration of adjustments for book and tax differences.
* <F3>Disclosure required for fiscal years beginning after September 1, 1995.
</TABLE>
HOW TO READ THE FINANCIAL
HIGHLIGHTS TABLE
Brandywine Fund began fiscal 1997 with its net asset value (price) at $32.83
per share. During the fiscal year ending September 30, 1997, the Fund lost
$0.07 per share from investment operations because our investment income
(interest and dividends) was less than our expenses and gained $12.50 per share
from investments that had appreciated in value, whether or not they had been
sold. This resulted in net gain of $12.43 per share. $1.35 per share was
returned to shareholders in distributions. The gain in net asset value ($12.43
per share) less distributions ($1.35 per share) resulted in a share price of
$43.91 at the fiscal year ending September 30, 1997, an increase of $11.08 per
share. Assuming a shareholder had reinvested the distributions in the purchase
of more shares, total return from the Fund was 39.3% for the fiscal year ending
September 30, 1997.
For the year ending September 30, 1997, Brandywine Fund had an expense ratio
of 1.04% ($10.40 per $1,000 of average net assets); and net investment loss was
.3% of its average net assets. The Fund had a portfolio turnover rate of 192.4%
of its average net assets (see page 6 for definition of turnover rate). At
September 30, 1997, Brandywine Fund had $9.5 billion in net assets.
BUSINESS STRUCTURE
Brandywine Fund, Inc. was incorporated under the laws of Maryland on October
9, 1985. The Fund is an open-end, diversified management investment company.
As such, it pools money from numerous investors and invests the money to achieve
its investment objectives. As an open-end investment company, the Fund will
redeem any of its outstanding shares on demand of the owner at the next
determined net asset value.
The Fund is supervised by a board of directors that has ultimate
responsibility for the Fund's activities. The Fund does not hold annual
shareholder meetings but may hold special meetings for purposes such as electing
or removing board members, changing fundamental policies, or for any other
purposes requiring a shareholder vote under the Investment Company Act of 1940.
Each share outstanding is entitled to one vote.
The Fund's authorized capital consists of 500,000,000 shares of Common Stock.
This number may be increased when necessary, as has been done in the past. The
Fund has no present plans to limit its size.
A WORD ABOUT RISK
Look for this "warning flag" (FLAG) symbol throughout the prospectus. It is
used to mark detailed information about each type of risk that you, as a
shareholder, will confront.
INVESTMENT OBJECTIVES AND POLICIES
THE FUND'S PRIMARY INVESTMENT OBJECTIVE
The primary investment objective of the Fund is to produce long-term
appreciation of capital principally through investing in common stocks. Current
income is less important. The Fund's investment adviser, Friess Associates,
Inc. (the "Adviser"), anticipates that most of the time the major portion of the
Fund's portfolio will be invested in common stocks. The Adviser will purchase
common stocks of well-financed companies which have proven records of
profitability and show big current earnings increases. Such businesses are
likely to be lesser known companies moving from a lower to a higher market share
position within their industry groups rather than the largest and best known
companies in such groups. The Adviser may, however, purchase common stocks of
well known, highly researched companies if it believes such common stocks offer
particular opportunity for long-term capital growth.
Not more than 5% of the Fund's net assets may be invested in securities of
unseasoned companies, defined as companies having a record of less than three
years of continuous operation, including any business already in existence
before it was added to a company through a merger, consolidation,
reorganization, or purchase. (FLAG) The investment risks associated with these
securities may be considerably greater than those associated with common stocks
of more established companies.
HOW THE ADVISER SELECTS STOCKS
In selecting investments the Adviser will consider various financial
characteristics of the issuer of the shares of common stock, including
historical sales and net income, and debt/equity and price/earnings ratios. The
Adviser may also review research reports of broker-dealers and trade
publications and may meet with management. The Adviser will give greater weight
to internal factors, such as product or service development, than to external
factors, such as interest rate changes, commodity price fluctuations, general
stock market trends, and foreign currency exchange values. Since the Fund's
primary investment objective is to produce long-term capital appreciation, and
current income is a secondary consideration in the selection of investments, a
particular issuer's dividend history is not a primary consideration.
(FLAG)
Investors should be aware that since the major portion of the Fund's
portfolio will normally be invested in common stocks, the Fund's net asset value
may be subject to greater fluctuation than a portfolio containing a substantial
amount of fixed income securities. The Fund can provide no assurance that its
primary objective will be realized or that any income will be earned. Nor can
the Fund assure investors that the Fund's portfolio will not decline in value.
INVESTMENTS OTHER THAN
COMMON STOCKS
Except for temporary defensive purposes, the Fund intends to have at all
times at least 70% of its investments in securities which the Fund's investment
adviser believes offer opportunity for growth of capital. No minimum or maximum
percentage of the Fund's assets is required to be invested in common stocks or
any other type of security. When the Adviser believes that securities other
than common stocks offer opportunity for long-term capital appreciation, the
Fund may invest in publicly distributed debt securities, preferred stocks,
particularly those which are convertible into or carry rights to acquire common
stocks, and warrants, which are long-term rights to acquire common stocks.
Investments in publicly distributed debt securities and nonconvertible preferred
stocks offer an opportunity for growth of capital during periods of declining
interest rates, when the market value of such securities in general increases.
CASH INSTRUMENTS
Except for temporary defensive purposes, cash and money market instruments
will be retained by the Fund only in amounts deemed adequate for current needs
and to permit the Fund to take advantage of investment opportunities. While
maintaining a temporary defensive position, the Fund may invest up to 100% of
its assets in cash and money market instruments. The money market instruments
in which the Fund may invest include conservative fixed-income securities, such
as United States Treasury Bills, certificates of deposit of U.S. banks (provided
that the bank has capital in excess of $100,000,000 in value at the date of
investment), and commercial paper, commercial paper master notes, and repurchase
agreements.
Commercial paper is short-term debt issued by well-established corporations.
Since this debt is unsecured, the Fund will buy commercial paper only of
companies that are very strong financially. The Adviser measures a company's
strength by tracking the rating it has received from Standard & Poor's
Corporation or Moody's Investors Service, Inc., rating agencies which analyze
and grade companies on their ability to pay their debts. All commercial paper
bought by the Fund must be rated A-1 by Standard & Poor's or P1 by Moody's.
Commercial paper master notes differ from commercial paper in that they are
payable in whole or in part at any time, may be prepaid in whole or in part at
any time, and bear interest at variable rates of interest. The Adviser will
also monitor the creditworthiness of the issuer of the commercial paper master
notes while any borrowings are outstanding.
Repurchase agreements are agreements under which the seller of a security
agrees at the time of sale to repurchase the security at an agreed time and
price. The Fund will not enter into repurchase agreements with entities other
than banks or invest over 5% of its assets in repurchase agreements with
maturities of more than seven days.
FOREIGN SECURITIES
The Fund may invest in foreign securities. It will limit to 15% of its
assets investments in securities of foreign issuers traded on U.S. securities
markets or in American Depository Receipts of foreign issuers. Such investments
increase a portfolio's diversification and may enhance return. (FLAG) Such
investments also involve risks which are in addition to the usual risks
inherent in U.S. investments.
In many foreign countries, there is less publicly available information about
issuers than is available in the reports and ratings published about companies
in the United States. Also, foreign companies may not be subject to uniform
accounting, auditing, and financial reporting standards Dividends and interest
on foreign securities may be subject to foreign withholding taxes, which would
reduce the Fund's income without providing a tax credit for the Fund's
stockholders. Although the Fund intends to invest in securities of issuers
residing in nations with stable and friendly governments, there is the
possibility of expropriation, confiscatory taxation, currency blockage, or
political or social instability which could affect investments in those nations.
TURNOVER RATE AND SELL DISCIPLINE
The Fund does not intend to place emphasis on short-term trading profits,
but, when circumstances warrant, securities will be purchased and sold without
regard to the length of time held. The Adviser expects that the Fund's annual
portfolio turnover rate may approximate 200%. A turnover rate of 200% would
occur, for example, if the Fund replaced securities valued at 100% of its
average total net assets twice within a one-year period. Turnover rate may vary
considerably from year to year. (FLAG) Higher than normal turnover rate will
increase transaction costs and may increase short-term capital gains,
distributions of which will be considered ordinary income for federal income tax
purposes.
The Adviser may decide to sell a particular stock in the Fund portfolio for a
variety of reasons:
Deteriorating fundamentals
Unrealistic expectations
Forced displacement
The policy of forced displacement is central to the sell discipline of the
Adviser and is most indicative of the Adviser's stock selection process. When
the Adviser discovers a company with great potential for growth, the Adviser
sells a company in the Fund's portfolio with lesser appreciation potential and
replaces it with the new company with greater potential.
"We constantly review our portfolio for a great company to replace a good
company."
-- Clarke Adams, Researcher
INVESTMENT POLICIES
Under certain circumstances the Fund may (a) invest in warrants (long-term
rights to acquire stock), (b) temporarily borrow money from banks for emergency
or extraordinary purposes, (c) pledge its assets to secure borrowings, and (d)
purchase securities of other investment companies. All of the circumstances in
which the Fund may engage in these activities are included in the Fund's
Statement of Additional Information (to obtain a copy, call 1-800-656-3017 or
1-414-765-4124).
The Board of Directors may not change the fundamental policies of the Fund
without shareholder approval, but may change the Fund's investment objectives
and other non-fundamental policies. The investment policies listed in the
preceding paragraph are the only fundamental policies described in this
prospectus. (FLAG) If there is a change in investment objective, you should
consider whether the Fund remains an appropriate investment in light of
your then current financial position and needs.
BRANDYWINE FUND'S BOARD OF DIRECTORS
John E. Burris, Foster S. Friess and Stig Ramel
MANAGEMENT OF THE FUND
ABOUT THE ADVISER
The Board of Directors sets policies and oversees the management for the
Fund. Under an investment advisory agreement (the "Agreement"), Friess
Associates, Inc. (the "Adviser"), 115 East Snow King Avenue, P.O. Box 576,
Jackson, Wyoming 83001, furnishes continuous investment advisory services and
management to the Fund. In addition to the Fund, Friess Associates, Inc. is the
investment adviser to Brandywine Blue Fund, Inc., another mutual Fund, and to
individual and institutional clients with substantial investment portfolios.
Friess Associates, Inc. was organized in 1974 and is wholly owned by Foster S.
Friess and Lynnette E. Friess, who are the sole directors and the sole officers
of Friess Associates, Inc.
INVESTMENT DECISIONS
The Adviser, supervises the investment portfolio of the Fund, directing the
purchase and sale of investment securities in the day to day management of the
Fund. All investment decisions are made by a team of investment professionals
representing the Adviser, any of whom may make recommendations subject to final
approval of Foster S. Friess or another senior member of the Adviser's
management team to whom he may delegate that authority. Mr. Friess has been
President, Treasurer, and a director of both the Fund and Brandywine Blue Fund,
Inc. since their inceptions in 1985 and 1990, respectively. He is also
President and Chairman of the Board of Friess Associates, Inc.
EXPENSES
The Adviser furnishes continuous investment supervision and management to the
Fund and also furnishes office space, equipment, and management personnel. The
Adviser pays the salaries and fees of all officers and directors of the Fund
(except the fees paid to directors not employed by the Adviser). For its
services the Adviser is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of 1% of the net assets of the Fund.
FUND ADMINISTRATOR, CUSTODIAN AND TRANSFER AGENT
Under a service agreement with the Fund, Fiduciary Management, Inc.,
Milwaukee, Wisconsin serves as the Fund's administrator and in this capacity is
responsible for (a) calculating daily the Fund's net asset value, (b)
recordkeeping and preparing financial statements, tax returns, and (c) reports
required by the Securities and Exchange Commission. For these services, the
Fund currently pays Fiduciary Management, Inc. an annual fee of $433,000.
Firstar Trust Company of Milwaukee, Wisconsin serves as the Fund's custodian and
transfer agent and is responsible for (a) holding the Fund's assets, (b)
settling all portfolio trades, (c) shareholder accounting, and (d) distributing
dividends.
DETERMINING NET ASSET VALUE
Since the Fund is a pure no-load fund, the share price for purchase or sale
is equal to its net asset value or "NAV," calculated as of the close of regular
trading on the New York Stock Exchange (normally 4:00 p.m., Eastern Time) each
day the New York Stock Exchange is open for business. To calculate the NAV, (a)
the Fund's assets are valued and totaled; (b) liabilities, or debts, are
subtracted; and (c) the balance, called net assets, is divided by the number of
shares outstanding, that is, the number of shares currently owned by the
shareholders.
TOTAL ASSETS - LIABILITIES
NET ASSET VALUE = ----------------------------
NUMBER OF SHARES OUTSTANDING
If the transfer agent, Firstar Trust Company, receives your request to buy or
to sell shares by the close of regular trading on the New York Stock Exchange,
your transaction will be priced at that day's NAV. If the transfer agent
receives your request after that time, it will be priced at the next business
day's NAV.
The daily net asset value, or NAV, multiplied by the number of Fund shares
you own, gives you the dollar amount you would have received that day had you
sold your shares back to the Fund.
The Fund's share price can be found daily in the mutual fund listings of most
major newspapers under the heading "Brandywine" or "Brndyw." The NASDAQ symbol
is "BRWIX."
ABOUT OUR MINIMUM REQUIREMENT FOR INITIAL INVESTMENT
The Board of Directors has established $25,000 as the minimum initial
investment, which is high compared to other mutual funds. The Fund is intended
for investors with long term investment goals. It is not an appropriate
investment vehicle for market timers who wish to jump in and out of the market.
When the market goes through periods of rapid decline, these market timers will
"head for the hills" and the Fund may need to liquidate assets to redeem their
shares. This could be detrimental to the welfare of other shareholders. A high
minimum investment relies on the commitment of long term investors while
discouraging short term investors. The Fund reserves the right to accept or
refuse any application.
Employees, officers, and directors of the Fund or the Adviser or firms
providing contractual services to the Fund, members of their immediate families
(spouses, siblings, parents, children, and grandchildren), and retirement plans
and trusts for their benefit may purchase shares without regard to the minimum.
The officers of the Fund may, but are not required to, waive or lower the
requirement for charitable organizations and employee benefit plans whose
aggregate investment exceeds the Fund's minimum initial investment. The
officers may also, but are not required to, waive or lower the requirement for
spouses, parents, children, and grandchildren of shareholders under special
circumstances, considering the additional shares to be an extension of the
investment of the first shareholder.
INVESTING WITH BRANDYWINE FUND
Our goal is to make it easy and pleasant for you to do business with us.
This section will help you become familiar with the many different services we
offer to you as a shareholder.
HOW TO OPEN YOUR BRANDYWINE
FUND ACCOUNT
1. Read this prospectus carefully.
2. Determine how much you want to invest.
MINIMUM INVESTMENTS ARE AS FOLLOWS:
TO OPEN A NEW ACCOUNT $25,000
TO ADD TO AN EXISTING ACCOUNT $1,000
3. Complete the appropriate parts of the purchase application at the back of
this prospectus, carefully following the instructions. (Additional purchase
applications may be obtained from the Fund.)
Please be sure to provide your Social Security or taxpayer identification
number on the application. If you have questions, please contact our Investor
Service Representatives at 1-800-656-3017 or 1-414-765-4124.
4. Complete the appropriate parts of the account privileges section of the
application. By applying for privileges, such as telephone redemption,
electronic transfer, and wire transfer now, you can avoid the delay and
inconvenience later of having to file an additional request to add these
privileges which would require a signature guarantee.
5. Make your check payable to Brandywine Fund, Inc.
All checks must be drawn on U.S. banks. Brandywine Fund will not accept
checks made payable to third parties.
No cash will be accepted.
TOP TEN HOLDINGS
SEPTEMBER 30, 1997
1. Compaq Computer Corp.
2. EMC Corp.
3. Cisco Systems, Inc.
4. Texas Instruments, Inc.
5. 3Com Corp.
6. Applied Materials, Inc.
7. BMC Software, Inc.
8. National Semiconductor Corp.
9. Conseco, Inc.
10. Computer Associates
International, Inc.
(FLAG)
FIRSTAR TRUST COMPANY WILL CHARGE A $20 FEE AGAINST A STOCKHOLDER'S ACCOUNT
FOR ANY PAYMENT CHECK RETURNED TO THE CUSTODIAN. THE STOCKHOLDER WILL ALSO BE
RESPONSIBLE FOR ANY LOSSES SUFFERED BY THE FUND AS A RESULT.
6. Send application and check to:
BY MAIL
FOR U.S. POSTAL SERVICE:
Brandywine Fund, Inc.
c/o Firstar Trust Company
Mutual Fund Services
P. O. Box 701
Milwaukee, WI 53201-0701
FOR OVERNIGHT CARRIER:
Brandywine Fund, Inc.
c/o Firstar Trust Company
Mutual Fund Services
615 E Michigan St., 3rd Floor
Milwaukee, WI 53202-5207
PLEASE DO NOT MAIL LETTERS BY OVERNIGHT CARRIER TO THE POST OFFICE BOX
ADDRESS.
The price per share will be the next determined per share net asset value
after receipt of your application by Firstar Trust Company.
BY WIRE
If you wish to open an account by wire, please call 1-800-656-3017 or 1-414-
765-4124 prior to sending the wire in order to obtain a confirmation number and
to ensure prompt and accurate handling of funds. Wired funds must be received
prior to 4:00 p.m. Eastern time to be eligible for same day pricing. Send a
properly signed share purchase application marked "FOLLOW UP."
THE FUND AND ITS TRANSFER AGENT ARE NOT RESPONSIBLE FOR THE CONSEQUENCES OF
DELAYS RESULTING FROM THE BANKING OR FEDERAL RESERVE WIRE SYSTEM, OR FROM
INCOMPLETE WIRING INSTRUCTIONS. APPLICATIONS ARE SUBJECT TO ACCEPTANCE BY THE
FUND AND ARE NOT BINDING UNTIL SO ACCEPTED.
WIRE TO:
Firstar Bank Milwaukee, N.A.
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
ABA 075000022
CREDIT:
Firstar Trust company
Account 112-952-137
FURTHER CREDIT:
Brandywine Fund, Inc.
(shareholder account number)
(shareholder registration)
OTHER
Shares of the Fund may also be purchased through a registered broker-dealer
who may charge the investor a fee either at the time of purchase or redemption.
The fee, if charged, is retained by the broker-dealer and not remitted to the
Fund or Adviser.
Employee benefit, profit-sharing, or retirement plans (such as 401(k) plans)
may purchase shares of Common Stock through financial institutions or other
service providers ("Processing Intermediaries") which may become stockholders of
record of the shares and which may use procedures and impose restrictions in
addition to or different from those which apply to stockholders who invest
directly in the Fund.
Processing Intermediaries may charge fees or assess other charges for the
services they provide to their customers. Any such fee or charge is retained by
the Processing Intermediary and is not remitted to the Fund or its Adviser.
Program materials provided by the Processing Intermediary should be read by the
individual in conjunction with this Prospectus before investing in such plans.
SHARE CERTIFICATES
Shares are credited to your account and certificates are not issued unless
you request them by writing to:
Brandywine Fund, Inc.
c/o Firstar Trust Company
P. O. Box 701
Milwaukee, WI 53201-0701
HOW TO GET IN TOUCH WITH
BRANDYWINE FUND
If you have any questions, please call one of our Investor Service
Representatives at:
1-800-656-3017 or
1-414-765-4124
Monday - Friday 8:00 a.m. - 7:00 p.m. CST
HOW TO BUY ADDITIONAL SHARES IN BRANDYWINE FUND
You may purchase additional shares (in amounts over $1,000) by mailing your
check with an Invest-By-Mail form detached from your confirmation statement to
the address listed on the form or by following the wiring instructions on page
11. The Fund does not accept telephone orders for purchase of shares.
Make your check payable to:
Brandywine Fund, Inc.
All checks must be drawn on U.S. banks. Brandywine Fund will not accept
checks made payable to third parties.
No cash will be accepted.
NOTE:
If you buy or sell Fund shares through a registered broker-dealer, the
broker-dealer may charge you a service fee, no part of which is returned to the
Fund. The shareholder will receive the net asset value next calculated after
the broker-dealer receives the purchase or redemption order.
In the case of an account established through a plan with a financial
institution or service provider ("Processing Intermediary"), additional shares
of Common Stock may be purchased by the plan through the Processing Intermediary
without regard to the Fund's minimum subsequent purchase amounts.
HOW TO SELL SHARES IN BRANDYWINE FUND
IMPORTANT TAX NOTE:
ANY SALE OR EXCHANGE OF SHARES IN A NON-RETIREMENT ACCOUNT COULD RESULT IN A
TAXABLE GAIN OR LOSS. THE RECEIPT OF PROCEEDS OF THE REDEMPTION OF SHARES HELD
IN AN IRA WILL CONSTITUTE A TAXABLE DISTRIBUTION OF BENEFITS FROM THE IRA UNLESS
A QUALIFYING ROLLOVER CONTRIBUTION IS MADE.
You may sell (redeem) some or all of your shares at any time during normal
business hours. IF YOU HOLD THE CERTIFICATES FOR YOUR SHARES, YOU MUST RETURN
THE CERTIFICATES, PROPERLY ENDORSED, WITH OR BEFORE YOUR REDEMPTION REQUEST.
YOU WILL NEED TO ASSEMBLE THE FOLLOWING INFORMATION:
the account number(s)
the amount of money or number of shares being redeemed
the names on the account
your daytime phone number
the signature(s) of all registered account owners, if you plan to request a
redemption in writing
a signature guarantee is also required under special circumstances,
including...
1. If you wish the check to be sent to an address or person other than as
registered with the Fund.
2. You would like the check mailed to an address which has been changed
within 30 days of the redemption request.
additional documentation may be required for redemptions by corporations,
executors, administrators, trustees, guardians, or others who hold shares in a
fiduciary or representative capacity. Contact the Fund's Transfer Agent,
Firstar Trust Company, in advance at 1-800-656-3017 or 1-414-765-4124.
TO OBTAIN A SIGNATURE GUARANTEE
A signature guarantee assures that a signature is genuine. It protects
shareholders from unauthorized account transfers. The following financial
institutions may guarantee signatures: banks, trust companies, a member firm of
the New York Stock Exchange or other national securities exchange. A NOTARIZED
SIGNATURE IS NOT ACCEPTABLE.
SEND A LETTER OF INSTRUCTION
Include with your letter the necessary information you have already
assembled.
THE PRICE YOU WILL RECEIVE FOR YOUR SHARES
The redemption price per share is the next determined net asset value after
Firstar Trust Company, the Fund's transfer agent, receives your written request
in proper form with all the required information.
BY MAIL
FIRST-CLASS MAIL TO:
Brandywine Fund, Inc.
c/o Firstar Trust Company
Mutual Fund Services
P.O. Box 701
Milwaukee, WI 53201-0701
OVERNIGHT OR REGISTERED MAIL TO:
Brandywine Fund, Inc.
c/o Firstar Trust Company
Mutual Fund Services
615 E Michigan St., 3rd Floor
Milwaukee, WI 53202-5207
PLEASE DO NOT MAIL LETTERS BY OVERNIGHT CARRIER TO THE POST OFFICE BOX
ADDRESS.
BY TELEPHONE
You must instruct Firstar Trust Company, in writing, that you wish to be able
to make telephone redemptions, before you can redeem by telephone.
With this option, you just...
Call Firstar Trust Company at 1-800-656-3017 or 1-414-765-4124.
PLEASE DO NOT CALL THE FUND'S ADVISER.
REDEMPTION BY TELEPHONE IS NOT AVAILABLE FOR IRA ACCOUNTS OR WHEN SHARE
CERTIFICATES HAVE BEEN ISSUED FOR AN ACCOUNT.
AUTOMATICALLY
The Systematic Withdrawal Plan option may be activated if you have a minimum
of $25,000 in your Fund account. This option allows you to redeem a specific
dollar amount from your account on a regular basis. You may vary the amount or
frequency of withdrawal payments or temporarily discontinue them. For more
information or to request the appropriate form, please call Firstar Trust
Company at 1-800-656-3017 or 1-414-765-4124.
PAYMENT OF REDEMPTION PROCEEDS
A CHECK WILL BE MAILED TO YOU
A check in payment for your redeemed shares will be mailed to you at your
address of record no later than the seventh day after Firstar Trust Company
receives your valid request.
Exception: If the shares being redeemed were purchased by check, the Fund
may delay the payment of your redemption proceeds until it is reasonably
satisfied the check has cleared. This normally may take up to 3 days for local
personal or corporate checks and up to 7 days for other personal or corporate
checks.
ELECTRONIC TRANSFERS
If you have established this option, your redemption proceeds can be
electronically transferred to your designated bank account. An Electronic Funds
Transfer ("EFT") generally takes up to 3 business days to reach the
stockholder's bank account. There is no fee for this option.
BY WIRE
If you have established this option, your redemption proceeds can be wired
directly into your designated bank account. The transfer agent, Firstar Trust
Company, currently charges a $12 fee for each wire, which is deducted from the
stockholder's account.
HOW TO EXCHANGE SHARES
You may exchange shares in Brandywine Fund for shares in Brandywine Blue
Fund, another mutual fund managed by the Adviser, providing you can meet or have
met the $100,000 minimum. Before exchanging your shares, you should first
obtain and carefully read the prospectus for Brandywine Blue Fund and you should
consider the tax consequences if yours is a taxable account.
IMPORTANT TAX NOTE:
WHEN YOU EXCHANGE SHARES OF BRANDYWINE FUND FOR SHARES OF BRANDYWINE BLUE
FUND, YOU ARE SELLING YOUR SHARES OF BRANDYWINE FUND AND BUYING SHARES OF
BRANDYWINE BLUE FUND. FOR FEDERAL INCOME TAX PURPOSES, SUCH AN EXCHANGE IS A
TAXABLE EVENT IN WHICH YOU MAY REALIZE A CAPITAL GAIN OR LOSS. BEFORE MAKING AN
EXCHANGE REQUEST, YOU SHOULD CONSULT A TAX OR OTHER FINANCIAL ADVISER TO
DETERMINE THE TAX CONSEQUENCES. (This concern does not apply to IRA or other tax
exempt accounts.)
To exchange shares, send your written request along with a completed share
purchase application for Brandywine Blue Fund (found at the back of its
prospectus) to:
Brandywine Fund, Inc.
c/o Firstar Trust Company
615 East Michigan Street
Milwaukee, Wisconsin 53202
YOU MUST INCLUDE:
Account name
Account number
Amount or number of shares of Brandywine Fund to be exchanged
The registration (both name and address) of the account from which the
exchange is being made and the account to which the exchange is being made must
be identical. The signatures of all registered account owners are required.
At the present time there are no limitations on the number of exchanges a
shareholder can make, and no exchange fee is currently imposed by the Fund on
exchanges. THE FUND DOES NOT PERMIT TELEPHONE EXCHANGES.
DIVIDEND AND DISTRIBUTION OPTIONS
The Fund distributes annually all of its net earnings in the form of
dividends and capital gains as distributions. Most investors have their
dividends and capital gains distributions reinvested in additional shares of the
Fund. When you open an account, you must specify on your application how you
want to receive your distributions. YOU MAY CHANGE YOUR DISTRIBUTION OPTION
ANYTIME BY WRITING OR CALLING THE FUND AT 1-800-656-3017 OR 1-414-765-4124.
You can receive distributions of dividends and capital gains in two ways:
1. REINVESTMENT
Dividends and capital gains are automatically reinvested in additional shares
of the Fund, unless you request them to be paid in cash. You will be advised of
the number of shares purchased and the price following each reinvestment. The
value of shares reinvested is added to the basis of your total investment for
tax purposes.
2. DIVIDENDS AND CAPITAL GAINS IN CASH
Both dividends and capital gains are paid in cash. You may choose to have
such amounts mailed to you, or forwarded by EFT (Electronic Funds Transfer) to
your account.
DIVIDENDS, DISTRIBUTIONS, AND TAXES
As long as the Fund meets the requirements for being a regulated investment
company, which is its intent, it pays no federal income tax on the earnings it
distributes to the shareholders. However, distributions shareholders receive
from the Fund, whether reinvested in additional shares of the Fund or taken as
cash, are taxable in all accounts except tax-exempt accounts.
Income dividends paid to shareholders come from the dividends that the Fund
earns from its holdings as well as interest it receives from its cash
investments, less expenses, and are taxed at ordinary income rates. Capital
gains are realized whenever the Fund sells securities for higher prices than it
paid for them. These capital gains are either short term or long term depending
on how long the Fund held the securities. Distributions to shareholders of
short term capital gains are taxed at ordinary income rates and distributions of
long term capital gains are taxed at varying rates again depending on how long
the Fund held the securities.
THE PRIMARY DISTRIBUTION WILL NORMALLY BE MADE NEAR THE END OF OCTOBER,
FOLLOWING THE CLOSE OF THE FUND'S FISCAL YEAR, WITH A SECOND DISTRIBUTION, IF
REQUIRED, AT THE END OF DECEMBER.
In January, the Fund will mail you Form 1099-DIV detailing your dividends and
distributions and their federal tax status, although you should verify your tax
liability with your tax adviser.
(FLAG)
Even if you buy shares shortly before or on the "record date," the date
that establishes you as the person to receive the upcoming distribution, you
will receive the full taxable distribution, which for a taxable investor may
seem an unfair burden on money just invested since it did not participate in the
generation of this distribution. However, offsetting this burden, your future
tax liability will be reduced by this same amount. In any case, you may wish to
consider the Fund's record date before investing.
SHAREHOLDER STATEMENTS AND REPORTS
To help you keep accurate records, we will send you a confirmation
immediately following each transaction you make.
In January, we will send you a clear, concise statement detailing all your
transactions during the year. For taxable accounts, this year-end statement also
includes the 1099-DIV information indicating the tax status of any dividends and
capital gains distributions made to you. Information on the status of your
account is always available by telephone.
Four times a year, the Adviser will send you a report of the Fund's
operations. These comprehensive reports include an assessment of the Fund's
performance, various comparisons to benchmarks, an overview of the markets, a
report from the Adviser, listings of the Fund's holdings, and other items of
interest. The Adviser will also provide interim letters to update shareholders
about important matters.
PERFORMANCE INFORMATION
The Fund's average annual compounded rate of return is the rate of return
which, if applied to an initial investment in the Fund at the beginning of a
stated period and compounded annually over the period, would result in the
redeemable value of the investment in the Fund at the end of the stated period.
The calculation assumes reinvestment of all dividends and distributions and
reflects the effect of transaction costs and all recurring fees such as
management fees and operating expenses, but it ignores individual income tax
consequences to shareholders. The performance of the S&P 500 Index does not
take into consideration any transaction costs, expenses or taxes. The following
chart shows growth of the Fund over the past ten years based on its fiscal year
ending September 30, 1997.
COMPARISON OF CHANGE IN VALUE OF $25,000 INVESTMENT IN
BRANDYWINE FUND AND S&P 500 INDEX(1)<F4>
Date Brandywine Fund S&P 500 Index
- ---- --------------- -------------
9/30/87 $25,000 $25,000
9/30/88 $20,600 $21,850
9/30/89 $28,634 $28,995
9/30/90 $26,372 $26,298
9/30/91 $37,290 $34,556
9/30/92 $39,490 $38,392
9/30/93 $58,682 $43,383
9/30/94 $57,861 $44,945
9/30/95 $84,187 $58,338
9/30/96 $92,606 $70,239
9/30/97 $129,000 $98,826
Average Annual Total Return
1-YEAR 39.3%
5-YEAR 26.7%
10-YEAR 17.8%
Since Inception 12/30/85 20.3%
Past performance is not predictive of future performance.
(1)<F4>The Standard & Poor's 500 Index consists of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. The Standard &
Poor's Ratings Group designates the stocks to be included in the Index on a
statistical basis. A particular stock's weighting in the Index is based on
its relative total market value (i.e., its market price per share times the
number of shares outstanding). Stocks may be added or deleted from the Index
from time to time. The Standard & Poor's 500 Index assumes reinvestment of
dividends.
VALUE OF $25,000 CUMULATIVE
DECEMBER 31 INVESTMENT % CHANGE
---------- ---------------- ----------
1985 $25,000 --
1986 29,098 +16.4%
1987 29,866 +19.5
1988 35,142 +40.6
1989 46,724 +86.9
1990 46,985 +87.9
1991 70,091 +180.4
1992 81,081 +224.3
1993 99,389 +297.6
1994 99,406 +297.6
` 1995 134,940 +439.8
1996 168,571 +574.3
1997 188,837 +655.3
The table on the left shows by CALENDAR YEAR the value of an assumed initial
investment of $25,000 made on December 31, 1985 through December 31, 1997,
assuming reinvestment of all dividends and distributions.
These performance results are historical and should not be considered
indicative of the future performance of the Fund. An investment in the Fund
will fluctuate in value, and at redemption its value may be more or less than
the initial investment.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The principal factor affecting the Fund's performance for the fiscal year,
which ended September 30, 1997, was the selection and purchase by the Adviser of
stocks of companies with earnings growth substantially in excess of the overall
market, in accordance with the investment philosophy described under "Investment
Objectives and Policies."
The increase of 39.3% in share value reflected particularly continuing growth
in technology stock holdings, plus gains in consumer cyclicals and energy-
related stocks. The broader based and larger capitalization S&P 500 Index rose
40.4% for the year, while the more growth-oriented Mutual Fund Index of
Investor's Business Daily increased 19.6% in the period. The Mutual Fund Index
consists of 23 growth-oriented mutual funds, including Brandywine Fund, selected
primarily on the basis of their size, reputation, and historical performance.
For the five-year period ending September 30, 1997, the Fund's average annual
total return was 26.7% as compared to 20.8% for the S&P 500 Index and 17.6% for
Investor's Business Daily's Mutual Fund Index.
The Fund focused on companies with new products, services, or markets, which
were growing rapidly in an improving economic environment or which were taking
market share from the competition.
Sales of stocks to provide for replacing existing companies with better ones
in line with the Adviser's strategy of "forced displacement," resulted in a
continuing high turnover of 192.4% in the portfolio for the twelve-month period.
HERE IS A LOOK AT THE TOP TEN INDUSTRY GROUPS IN THE FUND PORTFOLIO
AT THE END OF THE FISCAL YEAR, SEPTEMBER 30, 1997.
Computers & Related (13.1%)
Semiconductors & Related (11.7%)
Specialty Retailing (9.9%)
Software (9.1%)
Oil/Gas Field Services (7.6%)
Networking (6.5%)
Financial/Business Services (5.6%)
Communications (4.7%)
Electronics (4.6%)
Transportation & Related (3.8%)
Cash (2.8%)
All Others (20.6%)
"We talk to customers, competitors, and suppliers of the companies we
target."
-- Bill D'Alonzo,
Researcher
ACCOUNT SERVICES AND POLICIES
IMMEDIATE BALANCE INFORMATION
We offer a 24-hour a day shareholders service. Just call 1-800-656-3017 or
1-414-765-4124 for an update on your account balance or latest share prices.
The Voice Response Unit (VRU) will guide you to your desired information.
Remember to have your account number handy.
WEB SITE
Visit Brandywine Fund's site on the World Wide Web at
www.brandywinefunds.com.
ACCOUNT MINIMUMS
The Fund reserves the right to redeem the shares held in any account, other
than an IRA, if at the time of any exchange or redemption of shares in the
account, the value of the remaining shares in the account falls below $5,000.
The stockholder will be notified that the value of his account is less than the
minimum and allowed at least 60 days to make an additional investment.
TELEPHONE TRANSACTIONS
It may be difficult to reach the Fund by telephone during periods of unusual
market activity. If you are unable to reach a representative by telephone, you
may have to send written instructions.
Neither the Fund nor Firstar Trust Company will be liable for following
instructions for telephone redemption transactions that they reasonably believe
to be genuine, provided reasonable procedures are used to confirm the
genuineness of the telephone instructions, but may be liable for unauthorized
transactions if they fail to follow such procedures. These procedures include
requiring some form of personal identification prior to acting upon the
telephone instructions and recording all telephone calls.
Procedures for telephone redemptions may be modified or terminated at any
time by the Fund or its transfer agent, Firstar Trust Company.
The Fund reserves the right to refuse a telephone redemption request if it is
believed advisable to do so.
ADDRESS CHANGES
To change the address on your account, call Firstar Trust Company at 1-800-
656-3017 or 1-414-765-4124. Any written redemption requests received within 30
days after an address change, whether such address change is made in writing or
by telephone, must be accompanied by a signature guarantee. NO TELEPHONE
REDEMPTIONS WILL BE ALLOWED WITHIN 30 DAYS OF AN ADDRESS CHANGE.
TEMPORARY SUSPENSION OF SERVICES
The Fund can stop selling shares or postpone payment at times when the New
York Stock Exchange is closed or under any emergency circumstances as determined
by the United States Securities and Exchange Commission.
(BRANDYWINE FUND, INC. LOGO)
PURCHASE APPLICATION
--- This is a follow-up application to an investment by wire transfer.
Mail to:
Brandywine Fund, Inc.
c/o Firstar Trust Company
Mutual Fund Services
P.O. Box 701
Milwaukee, WI 53201-0701
Overnight Express Mail to:
Brandywine Fund, Inc.
c/o Firstar Trust Company
Mutual Fund Services
615 E. Michigan St., 3rd Floor
Milwaukee, WI 53202-5207
Use this form for individual, custodial, trust, profit-sharing or pension plan
accounts. For any additional information please call Brandywine Fund, Inc. at
1-800-656-3017 or 1-414-765-4124.
- ------------------------------------------------------------------------------
A. INVESTMENT Please indicate the amount you wish to invest $ -----------
($25,000 MINIMUM)
- --- By check enclosed payable to Brandywine Fund, Inc. Amount $ -------------
- --- By wire (call first): 1-800-656-3017 or 1-414-765-4124 to set up account.
Indicate total amount and date of wire $ --------------- Date ---------------
- ------------------------------------------------------------------------------
B. REGISTRATION
- --- Individual
- ---------------- --- ---------------- --------------- ----------------
FIRST NAME M.I. LAST NAME SOCIAL SECURITY # BIRTHDATE
(Mo/Dy/Yr)
- --- Joint Owner*<F4> (cannot be a minor)
- ---------------- --- ---------------- --------------- ----------------
FIRST NAME M.I. LAST NAME SOCIAL SECURITY # BIRTHDATE
(Mo/Dy/Yr)
*<F4>Registration will be Joint Tenancy with Rights of Survivorship (JTWROS)
unless otherwise specified.
- --- Gift to Minors
- ------------------------------------------ ---- --------------------------
CUSTODIAN'S FIRST NAME (ONLY ONE PERMITTED) M.I. LAST NAME
- --------------------------------------- ---- -----------------------------
MINOR'S FIRST NAME (ONLY ONE PERMITTED) M.I. LAST NAME
- -------------------------- ---------------------------- ------------------
MINOR'S SOCIAL SECURITY # MINOR'S BIRTHDATE (Mo/Dy/Yr) STATE OF RESIDENCE
- --- Corporation**<F5> (including Corporate Pension Plans),**<F5> Trust, Estate
or Guardianship***<F6>
- ------------------------------------------------------------------------------
NAME OF TRUSTEE(S) (IF TO BE INCLUDED IN REGISTRATION)***<F6>
- --- Partnership***<F6>
- ------------------------------------------------------------------------------
NAME OF TRUST/CORPORATION**<F5>/PARTNERSHIP
- --- Other Entity***<F6>
- ---------------------------------------- -----------------------------------
SOCIAL SECURITY #/TAX ID # DATE OF AGREEMENT (Mo/Dy/Yr)
**<F5<Corporate Resolution is required. ***<F6>Additional documentation and
certification may be requested.
- ------------------------------------------------------------------------------
C. MAILING ADDRESS
- -------------------------------------- -------------------------------------
STREET APT/SUITE
- -------------------------------------- ------- ---------------------------
CITY STATE ZIP
- --------------------------------------- ------------------------------------
DAYTIME PHONE # EVENING PHONE #
- --- Duplicate Confirmation to:
- ------------------------------ ---- --------------------------------------
FIRST NAME M.I. LAST NAME
- -------------------------------------- -------------------------------------
STREET APT/SUITE
- -------------------------------------- ------- ---------------------------
CITY STATE ZIP
- ------------------------------------------------------------------------------
D. DISTRIBUTION OPTIONS
Capital gains & dividends will be reinvested if no option is selected.
--- Capital Gains & Dividends Reinvested
--- Capital Gains & Dividends in Cash
If the distribution is to be paid in cash, specify payment method below:
- --- Send check to mailing address in Section C.
- --- Automatic deposit to my bank account via Electronic Funds Transfer
("EFT"). May take up to 3 business days to reach your bank account (complete
bank information following).
Your signed Application must be received at least 15 business days prior to
initial transaction.
An unsigned voided check (for checking accounts) or a savings account deposit
slip is required with your Application.
- ------------------------------------------------------------------------------
NAME(S) ON BANK ACCOUNT
- ---------------------------------- -----------------------------------------
BANK NAME ACCOUNT NUMBER
- ------------------------------------------------------------------------------
BANK ADDRESS
To ensure proper crediting of your bank account, please attach a voided check
or a deposit slip.
- ------------------------------------------------------------------------------
E. TELEPHONE REDEMPTION OPTIONS
(800) 656-3017 OR
(414) 765-4124
Your signed Application must be received at least 15 business days prior to
initial transaction.
An unsigned voided check (for checking accounts) or a savings account deposit
slip is required with your Application.
I (we) authorize Brandywine Fund, Inc., to act upon my (our) telephone
instructions to redeem shares from this account. Please check all that may
apply.
- --- The proceeds will be mailed to the address in Section C.
- --- By wire. The proceeds of any redemption may be wired to your bank
(complete bank information below). A wire fee of $12.00 will be charged.
- --- By EFT. Proceeds generally take up to 3 business days to reach your bank
(complete bank information below).
- ------------------------------------------------------------------------------
NAME(S) ON BANK ACCOUNT
- ------------------------------------ ---------------------------------------
BANK NAME ACCOUNT NUMBER
- ------------------------------------------------------------------------------
BANK ADDRESS
To ensure proper crediting of your bank account, please attach a voided check
or a deposit slip.
- ------------------------------------------------------------------------------
F. SYSTEMATIC WITHDRAWALS
I would like to withdraw from Brandywine Fund, Inc. $ ----------- (no minimum)
as follows:
- --- I would like to have payments made to me on or about the ----- day of each
month, or
- --- I would like to have payments made to me on or about the ----- day of the
months that I have circled below:
Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.
- --- To have payments automatically deposited to your bank account. Complete
bank account information below. (A check will be mailed to the address in
Section C if this box is not checked.)
- ------------------------------------------------------------------------------
NAME(S) ON BANK ACCOUNT
- --------------------------------------- ------------------------------------
BANK NAME ACCOUNT NUMBER
- ------------------------------------------------------------------------------
BANK ADDRESS
To ensure proper crediting of your bank account, please attach a voided check
or a deposit slip.
- ------------------------------------------------------------------------------
G. SIGNATURE AND CERTIFICATION REQUIRED BY THE INTERNAL REVENUE SERVICE
Neither the Fund nor its transfer agent will be responsible for the
authenticity of transaction instructions received by telephone, provided that
reasonable security procedures have been followed.
By selecting the options in Section (E or F), I hereby authorize the Fund to
initiate credits to my account at the bank indicated and for the bank to credit
the same to such account through the Automated Clearing House ("ACH") system.
UNDER THE PENALTY OF PERJURY, I CERTIFY THAT (1) THE SOCIAL SECURITY NUMBER OR
TAXPAYER IDENTIFICATION NUMBER SHOWN ON THIS FORM IS MY CORRECT TAXPAYER
IDENTIFICATION NUMBER, AND (2) I AM NOT SUBJECT TO BACKUP WITHHOLDING EITHER AS
A RESULT OF A FAILURE TO REPORT ALL INTEREST OR DIVIDENDS, OR THE IRS HAS
NOTIFIED ME THAT I AM NO LONGER SUBJECT TO BACKUP WITHHOLDING. THE IRSDOES NOT
REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE
CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
- ---------------------------- -----------------------------------------------
DATE (Mo/Dy/Yr) SIGNATURE OF OWNER*<F7>
- ---------------------------- -----------------------------------------------
DATE (Mo/Dy/Yr) SIGNATURE OF CO-OWNER, if any
*<F7>If shares are to be registered in (1) joint names, both persons should
sign, (2) a custodian for a minor, the custodian should sign, (3) a trust, the
trustee(s) should sign, or (4) a corporation or other entity, an officer should
sign and print name and title on space provided below.
- ------------------------------------------------------------------------------
PRINT NAME AND TITLE OF OFFICER SIGNING FOR A CORPORATION OR OTHER ENTITY
CUSTODIAN, TRANSFER AGENT,
AND DIVIDEND DISBURSING AGENT
Firstar Trust Company
615 East Michigan Street
Milwaukee, Wisconsin 53202
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
100 East Wisconsin Avenue
Suite 1500
Milwaukee, Wisconsin 53202
LEGAL COUNSEL
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION January 30, 1998
BRANDYWINE FUND, INC.
3908 Kennett Pike
Greenville, Delaware 19807
This Statement of Additional Information is not a prospectus and
should be read in conjunction with the prospectus of Brandywine Fund, Inc.
dated January 30, 1998. Requests for copies of the prospectus should be
made in writing to Brandywine Fund, Inc., P.O. Box 4166, Greenville,
Delaware, 19807, Attention: Corporate Secretary, Email: [email protected]
or Website: www.brandywinefunds.com,, or by calling (800) 656-3017.
<PAGE>
BRANDYWINE FUND, INC.
Table of Contents
Page No.
Investment Restrictions ........................... 1
Directors and Officers of the Fund ................ 3
Principal Stockholders ............................ 6
Investment Adviser ................................ 6
Service Agreement ................................. 8
Determination of Net Asset Value and Performance... 8
Purchase of Shares................................. 9
Systematic Withdrawal Plan ........................ 10
Allocation of Portfolio Brokerage ................. 11
Custodian ......................................... 12
Taxes ............................................. 12
Stockholder Meetings .............................. 13
Independent Accountants ........................... 14
Financial Statements .............................. 15
No person has been authorized to give any information or to make
any representations other than those contained in this Statement of
Additional Information and the Prospectus dated January 30, 1998 and, if
given or made, such information or representations may not be relied upon
as having been authorized by Brandywine Fund, Inc.
This Statement of Additional Information does not constitute an
offer to sell securities.
<PAGE>
INVESTMENT RESTRICTIONS
As set forth in the prospectus dated January 30, 1998 of
Brandywine Fund, Inc. (the "Fund") under the caption "Investment Objective
and Policies", the primary investment objective of the Fund is to produce
long-term capital appreciation principally through investing in common
stocks. Current income is a secondary consideration. Consistent with its
investment objectives, the Fund has adopted the following investment
restrictions which are matters of fundamental policy and cannot be changed
without approval of the holders of the lesser of: (i) 67% of the Fund's
shares present or represented at a stockholder's meeting at which the
holders of more than 50% of such shares are present or represented; or
(ii) more than 50% of the outstanding shares of the Fund.
1. The Fund will not purchase securities on margin,
participate in a joint-trading account, sell securities short, or write or
invest in put or call options. The Fund's investments in warrants, valued
at the lower of cost or market, will not exceed 5% of the value of the
Fund's net assets and of such 5% not more than 2% of the Fund's net assets
at the time of purchase may be invested in warrants that are not listed on
the New York or American Stock Exchanges.
2. The Fund will not borrow money or issue senior securities,
except for temporary bank borrowings or for emergency or extraordinary
purposes (but not for the purpose of purchase of investments) and then
only in an amount not in excess of 5% of the value of its net assets and
will not pledge any of its assets except to secure borrowings and then
only to an extent not greater than 10% of the value of the Fund's net
assets. The Fund will not purchase securities while it has any
outstanding borrowings.
3. The Fund will not lend money (except by purchasing publicly
distributed debt securities or entering into repurchase agreements
provided that repurchase agreements maturing in more than seven days plus
all other illiquid securities will not exceed 10% of the Fund's total
assets) and will not lend its portfolio securities.
4. The Fund will not purchase securities of other investment
companies except (a) as part of a plan of merger, consolidation or
reorganization approved by the stockholders of the Fund or (b) securities
of registered closed-end investment companies on the open market where no
commission or profit results, other than the usual and customary broker's
commission and where as a result of such purchase the Fund would hold less
than 3% of any class of securities, including voting securities, of any
registered closed-end investment company and less than 5% of the Fund's
assets, taken at current value, would be invested in securities of
registered closed-end investment companies.
5. The Fund will not make investments for the purpose of
exercising control or management of any company.
6. The Fund will limit its purchases of securities of any
issuer (other than the United States or an instrumentality of the United
States) in such a manner that it will satisfy at all times the
requirements of Section 5(b)(1) of the Investment Company Act of 1940
(i.e., that at least 75% of the value of its total assets is represented
by cash and cash items (including receivables), U.S. Government
Securities, securities of other investment companies, and other securities
for the purpose of the foregoing limited in respect of any one issuer to
an amount not greater than 5% of the value of the total assets of the Fund
and to not more than 10% of the outstanding voting securities of such
issuer.)
7. The Fund will not concentrate 25% or more of the value of
its total assets, determined at the time an investment is made, exclusive
of government securities, in securities issued by companies engaged in the
same industry.
8. The Fund will not acquire or retain any security issued by
a company, an officer or director of which is an officer or director of
the Fund or an officer, director or other affiliated person of its
investment adviser.
9. The Fund will not acquire or retain any security issued by
a company if any of the directors or officers of the Fund, or directors,
officers or other affiliated persons of its investment adviser
beneficially own more than 1/2% of such company's securities and all of
the above persons owning more than 1/2% own together more than 5% of its
securities.
10. The Fund will not act as an underwriter or distributor of
securities other than shares of the Fund and will not purchase any
securities which are restricted from sale to the public without
registration under the Securities Act of 1933, as amended.
11. The Fund will not purchase any interest in any oil, gas or
any other mineral exploration or development program.
12. The Fund will not purchase or sell real estate (including
limited partnership interests of limited partnerships investing in real
estate, but not including readily marketable investments in real estate
investment trusts or readily marketable securities of companies investing
in real estate) or real estate mortgage loans.
13. The Fund will not purchase or sell commodities or
commodities contracts.
DIRECTORS AND OFFICERS OF THE FUND
The name, address, principal occupations during the past five
years and other information with respect to each of the directors and
officers of the Fund are as follows:
FOSTER S. FRIESS*
115 East Snow King Avenue
P. O. Box 576
Jackson, Wyoming
(PRESIDENT, TREASURER AND A
DIRECTOR OF THE FUND)
Mr. Friess, age 57, has served as President, Treasurer and a
director of both the Fund and the Brandywine Blue Fund, Inc. since their
inceptions in 1985 and November, 1990, respectively. He is also President
and Chairman of the Board of Friess Associates, Inc., an investment
advisory firm which he co-founded in 1974 with his wife, Lynnette E.
Friess. Friess Associates, Inc. has been the investment adviser of the
Fund since its inception. Mr. Friess has been a Chartered Financial
Analyst since 1970. He is currently Chairman of the Life Enrichment
Foundation, Wilmington, Delaware. He is also a member of the Advisory
Council of the Royal Swedish Academy of Sciences, serves as President of
the Council on National Policy, and sits on the Board of Advisers for the
John Templeton Foundation.
STIG RAMEL
RESEDAVAGEN 8
171732, Solna
Sweden
(DIRECTOR)
Mr. Ramel, age 70, served as President of the Nobel Foundation
from 1972 to 1992 and was thereafter appointed by the Swedish Government
as Chairman of Fond 92-94, a nonprofit organization with the
responsibility of financing scientific research institutions. He is a
member of the Royal Swedish Academy of Sciences. He has served as a
director of the Fund since its inception in 1985 and as a director of
Brandywine Blue Fund, Inc. since its inception in 1990.
JOHN E. BURRIS
5th and McColley Street
Milford, Delaware
(DIRECTOR)
Mr. Burris, age 77, is Chairman of Burris Foods, Inc. He is a
trustee of the University of Delaware and a former member of the Board of
Directors of Wilmington Trust Company. He is also a member of the board
of directors of Milford Memorial Hospital and of the Private Industry
Council for the State of Delaware. Mr. Burris has served as a director of
the Fund since its inception in 1985 and as a director of Brandywine Blue
Fund, Inc. since its inception in 1990.
WILLIAM F. D'ALONZO
3908 Kennett Pike
Greenville, Delaware
(VICE PRESIDENT)
Mr. D'Alonzo, age 43, has been an analyst for Friess Associates,
Inc. since 1981. He has served as a Vice President of the Fund since
April, 1990, and as a Vice President of Brandywine Blue Fund, Inc. since
November, 1990.
CLARKE ADAMS, JR.
3908 Kennett Pike
Greenville, Delaware
(VICE PRESIDENT)
Mr. Adams, age 52, has been an analyst for Friess Associates,
Inc. since 1983. He has served as a Vice President of the Fund since
April, 1990, and as a Vice President of Brandywine Blue Fund, Inc. since
November, 1990.
CARL S. GATES
3908 Kennett Pike
Greenville, Delaware
(VICE PRESIDENT)
Mr. Gates, age 65, has been an analyst for Friess Associates,
Inc. since 1988. He has served as a Vice President of both the Fund and
Brandywine Blue Fund, Inc. since April, 1994.
PAUL R. ROBINSON
3908 Kennett Pike
Greenville, Delaware
(VICE PRESIDENT AND ASSISTANT SECRETARY)
Mr. Robinson, age 74, has been a consultant for Friess
Associates, Inc. since June, 1985. He has served as a Vice President of
the Fund since April, 1990, as Assistant Secretary of the Fund since
April, 1987, and as a Vice President and Assistant Secretary of the
Brandywine Blue Fund, Inc. since November, 1990.
LYNDA J. CAMPBELL
3908 Kennett Pike
Greenville, Delaware
(SECRETARY)
Ms. Campbell, age 52, is an employee of Friess Associates, Inc.
and has been employed in various capacities with such firm since December,
1985. She has served as Secretary of the Fund since December, 1989 and as
Secretary of Brandywine Blue Fund, Inc. since November, 1990.
___________________
* Mr. Friess is the only director who is an "interested person" of the
Fund as that term is defined in the Investment Company Act of 1940.
During the fiscal year ended September 30, 1997, the Fund paid
$20,000 in director's fees to the Fund's disinterested directors. The
Fund's standard method of compensating directors is to pay each
disinterested director an annual fee of $10,000. The Fund may also
reimburse its directors for travel expenses incurred to attend meetings of
the Board of Directors.
The table below sets forth the compensation paid by the Fund to
each of the directors of the Fund during the fiscal year ended September
30, 1997:
<TABLE>
COMPENSATION TABLE
<CAPTION>
Pension or Total
Retirement Compensation
Aggregate Benefits Accrued Estimated Annual from Fund Paid
Compensation As Part of Fund Benefits Upon to Directors
Name of Person From Fund Expenses Retirement
<S> <C> <C> <C>
Foster S. Friess $0 $0 $0 $0
Stig Ramel $10,000 $0 $0 $10,000
John E. Burris $10,000 $0 $0 $10,000
</TABLE>
PRINCIPAL STOCKHOLDERS
At December 31, 1997, all officers and directors of the Fund as
a group (8 persons) beneficially owned 3,234,069 shares of Common Stock,
or 1.2% of the then outstanding shares. At such date, Charles Schwab &
Co., Inc., 101 Montgomery Street, San Francisco, California 94104, owned
of record 40,700,096 shares of Common Stock, or 15.0% of the then
outstanding shares. All of the shares owned by Charles Schwab & Co., Inc.
were owned of record only. Other than the foregoing, the Fund was not
aware of any person who, as of December 31, 1997, owned of record or
beneficially 5% or more of the shares of the Fund.
INVESTMENT ADVISER
As set forth in the Prospectus under the caption "Management of
the Fund" the investment adviser to the Fund is Friess Associates, Inc.
(the "Adviser"). Pursuant to an investment advisory agreement between the
Fund and the Adviser (the "Agreement") the Adviser furnishes continuous
investment advisory services and management to the Fund. During the
fiscal years ended September 30, 1997, September 30, 1996 and September
30, 1995, the Fund paid the Adviser fees of $73,988,269, $49,114,962 and
$28,671,459, respectively.
The Fund will pay all of its expenses not assumed by the Adviser
including, but not limited to, the costs of preparing and printing its
registration statements required under the Securities Act of 1933 and the
Investment Company Act of 1940 and any amendments thereto, the expenses of
registering its shares with the Securities and Exchange Commission and in
the various states, the printing and distribution cost of prospectuses
mailed to existing stockholders, the cost of stock certificates, director
and officer liability insurance, reports to stockholders, reports to
government authorities and proxy statements, interest charges, brokerage
commissions, and expenses incurred in connection with portfolio
transactions. During the fiscal years ended September 30, 1997, September
30, 1996 and September 30, 1995, such expenses included $5,675, $35,075
and $28,100, respectively, in administrative services performed by the
Adviser. The Fund will also pay the fees of directors who are not
interested persons of the Fund, salaries of administrative and clerical
personnel, association membership dues, auditing and accounting services,
fees and expenses of any custodian or trustees having custody of Fund
assets, expenses of calculating the net asset value and repurchasing and
redeeming shares, and charges and expenses of dividend disbursing agents,
registrars, and stock transfer agents, including the cost of keeping all
necessary stockholder records and accounts and handling any problems
related thereto.
The Adviser has undertaken to reimburse the Fund to the extent
that the aggregate annual operating expenses, including the investment
advisory fee but excluding interest, taxes, brokerage commissions and
extraordinary items, exceed that percentage of the average net asset value
of the Fund for such year, as determined by valuations made as of the
close of each business day of the year, which is the most restrictive
percentage provided by the state laws of the various states in which the
Common Stock is qualified for sale. As of the date of this Statement of
Additional Information, no such state law provision was applicable to the
Fund. The Fund monitors its expense ratio on at least a monthly basis.
If the accrued amount of the expenses of the Fund exceeds the expense
limitation, the Fund creates an account receivable from the Adviser for
the amount of such excess. In such a situation the monthly payment of the
Adviser's fee will be reduced by the amount of such excess, subject to
adjustment month by month during the balance of the Fund's fiscal year if
accrued expenses thereafter fall below this limit. No reimbursement was
required during the fiscal years ended September 30, 1997, September 30,
1996 and September 30, 1995.
The Agreement will remain in effect as long as its continuance
is specifically approved at least annually, by (i) the Board of Directors
of the Fund, or by the vote of a majority (as defined in the Investment
Company Act of 1940) of the outstanding shares of the Fund, and (ii) by
the vote of a majority of the directors of the Fund who are not parties to
the Agreement or interested persons of the Adviser, cast in person at a
meeting called for the purpose of voting on such approval. The Agreement
provides that it may be terminated at any time without the payment of any
penalty, by the Board of Directors of the Fund or by vote of a majority of
the Fund's stockholders, on sixty days written notice to the Adviser, and
by the Adviser on the same notice to the Fund and that it shall be
automatically terminated if it is assigned.
The Agreement provides that the Adviser shall not be liable to
the Fund or its stockholders for anything other than willful misfeasance,
bad faith, gross negligence or reckless disregard of its obligations or
duties. The Agreement also provides that the Adviser and its officers,
directors and employees may engage in other businesses, devote time and
attention to any other business whether of a similar or dissimilar nature,
and render investment advisory services to others.
SERVICE AGREEMENT
As described in the Fund's prospectus under the caption
"Management of the Fund," the Fund and Fiduciary Management, Inc.,
Milwaukee, Wisconsin, have entered into a Service Agreement pursuant to
which certain accounting and record keeping services will be performed for
the Fund by Fiduciary Management, Inc. For its services the Fund
currently pays Fiduciary Management, Inc. an annual fee of $433,000 and
varying fees for blue sky filing services. For the fiscal years ended
September 30, 1997, 1996 and 1995 the annual fees were $377,000, $310,000
and $210,000. The total fees (i.e., annual and blue sky fees) paid
pursuant to the Service Agreement for the fiscal years ending September
30, 1997, September 30, 1996 and September 30, 1995 were $383,800,
$310,000 and $210,000, respectively. The Service Agreement may be
terminated at any time by either the Fund or Fiduciary Management, Inc.
upon 90 days' written notice. The Service Agreement provides that
Fiduciary Management, Inc. shall not be liable to the Fund, the Adviser or
any stockholders of the Fund for anything other than willful misfeasance,
bad faith, gross negligence or reckless disregard of its obligations or
duties. Fiduciary Management, Inc. performs similar services for other
investment companies.
DETERMINATION OF NET ASSET VALUE AND PERFORMANCE
As set forth in the Prospectus under the caption "Determining
Net Asset Value" the net asset value of the Fund will be determined as of
the close of trading on each day the New York Stock Exchange is open for
trading. The New York Stock Exchange is open for trading Monday through
Friday except New Year's Day, Dr. Martin Luther King, Jr. Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day and Christmas Day. Additionally, if any of the aforementioned
holidays falls on a Saturday, the New York Stock Exchange will not be open
for trading on the preceding Friday and when any such holiday falls on a
Sunday, the New York Stock Exchange will not be open for trading on the
succeeding Monday, unless unusual business conditions exist, such as the
ending of a monthly or the yearly accounting period.
Securities traded on any national stock exchange or quoted on
the Nasdaq National Market System will be valued on the basis of the last
sale price on the date of valuation or, in the absence of any sale on that
date, the most recent bid price. Other securities will be valued at the
most recent bid price, if market quotations are readily available. Any
securities for which there are no readily available market quotations and
other assets will be valued at their fair value as determined in good
faith by the Board of Directors. Odd lot differentials and brokerage
commissions will be excluded in calculating values.
Any total rate of return quotation for the Fund will be for a
period of three or more months and will assume the reinvestment of all
dividends and capital gains distributions which were made by the Fund
during that period. Any period total rate of return quotation of the Fund
will be calculated by dividing the net change in value of a hypothetical
shareholder account established by an initial payment of $1,000 at the
beginning of the period by 1,000. The net change in the value of a
shareholder account is determined by subtracting $1,000 from the product
obtained by multiplying the net asset value per share at the end of the
period by the sum obtained by adding (A) the number of shares purchased at
the beginning of the period plus (B) the number of shares purchased during
the period with reinvested dividends and distributions. Any average
annual compounded total rate of return quotation of the Fund will be
calculated by dividing the redeemable value at the end of the period
(i.e., the product referred to in the preceding sentence) by $1,000. A
root equal to the period, measured in years, in question is then
determined and 1 is subtracted from such root to determine the average
annual compounded total rate of return.
The foregoing computation may also be expressed by the following
formula:
P(1+T)n = ERV
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the stated periods at
the end of the stated periods.
PURCHASE OF SHARES
The Fund has adopted procedures pursuant to Rule 17a-7
under the Investment Company Act of 1940 pursuant to which the Fund may
effect a purchase and sale transaction with an affiliated person of the
Fund (or an affiliated person of such an affiliated person) in which the
Fund issues its shares in exchange for securities of a character which is
a permitted investment for the Fund. For purposes of determining the
number of shares of the Fund to be issued, the securities to be exchanged
will be valued in accordance with the requirements of Rule 17a-7. No such
transactions will be made with respect to any person in which an
affiliated person of the Fund has a beneficial interest.
SYSTEMATIC WITHDRAWAL PLAN
A stockholder who owns Fund shares worth at least $25,000
at the current net asset value may, by completing an application which may
be obtained from Firstar Trust Company, create a Systematic Withdrawal
Plan from which a fixed sum will be paid to the stockholder at regular
intervals. To establish the Systematic Withdrawal Plan, the stockholder
deposits Fund shares with the Fund and appoints it as agent to effect
redemptions of Fund shares held in the account for the purpose of making
withdrawal payments (not more than monthly) of a fixed amount to the
stockholder out of the account. Fund shares deposited by the stockholder
in the account need not be endorsed or accompanied by a stock power if
registered in the same name as the account; otherwise, a properly executed
endorsement or stock power, obtained from any bank, broker-dealer or the
Fund is required. The stockholder's signature should be guaranteed by a
bank, member firm of a national stock exchange, or other eligible
guarantor institution.
There is no minimum withdrawal payment. These payments
will be made from the proceeds of periodic redemption of shares in the
account at net asset value. Redemptions will be made on or about the day
selected by the stockholder of each month in which a withdrawal payment is
to be made. Establishment of a Systematic Withdrawal Plan constitutes an
election by the stockholder to reinvest in additional Fund shares, at net
asset value, all income dividends and capital gains distributions payable
by the Fund on shares held in such account, and shares so acquired will be
added to such account. The stockholder may deposit additional Fund shares
in his account at any time.
Withdrawal payments cannot be considered as yield or income
on the stockholder's investment, since portions of each payment will
normally consist of a return of capital. Depending on the size or the
frequency of the disbursements requested, and the fluctuation in the value
of the Fund's portfolio, redemptions for the purpose of making such
disbursements may reduce or even exhaust the stockholder's account.
The stockholder may vary the amount or frequency of
withdrawal payments, temporarily discontinue them, or change the
designated payee or payee's address, by notifying Firstar Trust Company in
writing. The stockholder also may vary the amount or frequency of
withdrawal payments or temporarily discontinue them by notifying Firstar
Trust Company by telephone at (800) 656-3017 or (414) 765-4124.
ALLOCATION OF PORTFOLIO BROKERAGE
Decisions to buy and sell securities for the Fund are made
by the Adviser subject to review by the Fund's Board of Directors. In
placing purchase and sale orders for portfolio securities for the Fund, it
is the policy of the Adviser to seek the best execution of orders at the
most favorable price in light of the overall quality of brokerage and
research services provided, as described in this and the following
paragraph. In selecting brokers to effect portfolio transactions, the
determination of what is expected to result in best execution at the most
favorable price involves a number of largely judgmental considerations.
Among these are the Adviser's evaluation of the broker's efficiency in
executing and clearing transactions, block trading capability (including
the broker's willingness to position securities) and the broker's
financial strength and stability. The most favorable price to the Fund
means the best net price without regard to the mix between purchase or
sale price and commission, if any. Over-the-counter securities are
generally purchased and sold directly with principal market makers who
retain the difference in their cost in the security and its selling price.
In some instances, the Adviser feels that better prices are available from
non-principal market makers who are paid commissions directly. While some
brokers with whom the Fund effects portfolio transactions may recommend
the purchase of the Fund's shares, the Fund may not allocate portfolio
brokerage on the basis of recommendations to purchase shares of the Fund.
In allocating brokerage business for the Fund, the Adviser
also takes into consideration the research, analytical, statistical and
other information and services provided by the broker, such as general
economic reports and information, reports or analyses of particular
companies or industry groups, market timing and technical information, and
the availability of the brokerage firm's analysts for consultation. While
the Adviser believes these services have substantial value, they are
considered supplemental to the Adviser's own efforts in the performance of
its duties under the Agreement. Other clients of the Adviser may
indirectly benefit from the availability of these services to the Adviser,
and the Fund may indirectly benefit from services available to the Adviser
as a result of transactions for other clients. The Agreement provides
that the Adviser may cause the Fund to pay a broker which provides
brokerage and research services to the Adviser a commission for effecting
a securities transaction in excess of the amount another broker would have
charged for effecting the transaction, if the Adviser determines in good
faith that such amount of commission is reasonable in relation to the
value of brokerage and research services provided by the executing broker
viewed in terms of either the particular transaction or the Adviser's
overall responsibilities with respect to the Fund and the other accounts
as to which he exercises investment discretion. Brokerage commissions
paid by the Fund during the fiscal years ended September 30, 1997,
September 30, 1996 and September 30, 1995, totaled $26,473,262 on total
transactions of $16,308,681,312, $21,515,165 on total transactions of
$20,927,249,090 and $12,220,916 on total transactions of $11,956,863,544,
respectively. All of the brokers to whom commissions were paid provided
research services to the Adviser.
CUSTODIAN
Firstar Trust Company, 615 East Michigan Street, Milwaukee,
Wisconsin 53202, acts as custodian for the Fund. As such, Firstar Trust
Company holds all securities and cash of the Fund, delivers and receives
payment for securities sold, receives and pays for securities purchased,
collects income from investments and performs other duties, all as
directed by officers of the Fund. Firstar Trust Company does not exercise
any supervisory function over the management of the Fund, the purchase and
sale of securities or the payment of distributions to stockholders.
Firstar Trust Company also acts as the Fund's transfer agent and dividend
disbursing agent.
TAXES
As set forth in the Prospectus under the caption
"Dividends, Distributions and Taxes" the Fund will endeavor to qualify
annually for and elect tax treatment applicable to a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as
amended, (the "Code").
The Fund intends to distribute substantially all of its net
investment income and net capital gain each fiscal year. Dividends from
net investment income, including short-term capital gains, are taxable to
investors as ordinary income, while distributions of net capital gains are
taxable as long-term capital gain regardless of the stockholder's holding
period for the shares. The Code provides for a three-tiered tax rate
structure for long-term capital gains dependent upon the Fund's holding
period of the underlying financial instrument or capital asset.
Distributions from the Fund are taxable to investors, whether received in
cash or in additional shares of the Fund. A portion of the Fund's income
distributions may be eligible for the 70% dividends-received deduction for
domestic corporate stockholders.
Any dividend or capital gains distribution paid shortly
after a purchase of shares of Common Stock will have the effect of
reducing the per share net asset value of such shares by the amount of the
dividend or distribution. Furthermore, if the net asset value of the
shares of Common Stock immediately after a dividend or distribution is
less than the cost of such shares to the stockholder, the dividend or
distribution will be taxable to the stockholder even though it results in
a return of capital to him.
Redemptions of shares will generally result in a capital
gain or loss for income tax purposes. Such capital gain or loss will be
long term or short term, depending upon the holding period. However, if a
loss is realized on shares held for six months or less, and the investor
received a capital gain distribution during that period, then such loss is
treated as a long-term capital loss to the extent of the capital gain
distribution received.
The Fund may be required to withhold Federal income tax at
a rate of 31% ("backup withholding") from dividend payments and redemption
proceeds if a shareholder fails to furnish the Fund with his social
security or other tax identification number and certify under penalty of
perjury that such number is correct and that he is not subject to backup
withholding due to the under reporting of income. The certification form
is included as part of the share purchase application and should be
completed when the account is opened.
STOCKHOLDER MEETINGS
The Maryland General Corporation Law permits registered
investment companies, such as the Fund, to operate without an annual
meeting of stockholders under specified circumstances if an annual meeting
is not required by the Investment Company Act of 1940. The Fund has
adopted the appropriate provisions in its By-Laws and may, at its
discretion, not hold an annual meeting in any year in which the election
of directors is not required to be acted on by stockholders under the
Investment Company Act of 1940.
The Fund's By-Laws also contain procedures for the removal
of directors by its stockholders. At any meeting of stockholders, duly
called and at which a quorum is present, the stockholders may, by the
affirmative vote of the holders of a majority of the votes entitled to be
cast thereon, remove any director or directors from office and may elect a
successor or successors to fill any resulting vacancies for the unexpired
terms of removed directors.
Upon the written request of the holders of shares entitled
to not less than ten percent (10%) of all the votes entitled to be cast at
such meeting, the Secretary of the Fund shall promptly call a special
meeting of stockholders for the purpose of voting upon the question of
removal of any director. Whenever ten or more stockholders of record who
have been such for at least six months preceding the date of application,
and who hold in the aggregate either shares having a net asset value of at
least $25,000 or at least one percent (1%) of the total outstanding
shares, whichever is less, shall apply to the Fund's Secretary in writing,
stating that they wish to communicate with other stockholders with a view
to obtaining signatures to a request for a meeting as described above and
accompanied by a form of communication and request which they wish to
transmit, the Secretary shall within five business days after such
application either: (1) afford to such applicants access to a list of the
names and addresses of all stockholders as recorded on the books of the
Fund; or (2) inform such applicants as to the approximate number of
stockholders of record and the approximate cost of mailing to them the
proposed communication and form of request.
If the Secretary elects to follow the course specified in
clause (2) of the last sentence of the preceding paragraph, the Secretary,
upon the written request of such applicants, accompanied by a tender of
the material to be mailed and of the reasonable expenses of mailing,
shall, with reasonable promptness, mail such material to all stockholders
of record at their addresses as recorded on the books unless within five
business days after such tender the Secretary shall mail to such
applicants and file with the Securities and Exchange Commission, together
with a copy of the material to be mailed, a written statement signed by at
least a majority of the Board of Directors to the effect that in their
opinion either such material contains untrue statements of fact or omits
to state facts necessary to make the statements contained therein not
misleading, or would be in violation of applicable law, and specifying the
basis of such opinion.
After opportunity for hearing upon the objections specified
in the written statement so filed, the Securities and Exchange Commission
may, and if demanded by the Board of Directors or by such applicants
shall, enter an order either sustaining one or more of such objections or
refusing to sustain any of them. If the Securities and Exchange
Commission shall enter an order refusing to sustain any of such
objections, or if, after the entry of an order sustaining one or more of
such objections, the Securities and Exchange Commission shall find, after
notice and opportunity for hearing, that all objections so sustained have
been met, and shall enter an order so declaring, the Secretary shall mail
copies of such material to all stockholders with reasonable promptness
after the entry of such order and the renewal of such tender.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 100 East Wisconsin Avenue, Suite
1500, Milwaukee, Wisconsin 53202, currently serves as the independent
accountants for the Fund and has so served since the fiscal year ended
September 30, 1989.
FINANCIAL STATEMENTS
The following financial statements are incorporated by reference to the
Annual Report, dated September 30, 1997, of Brandywine Fund, Inc. (File
No. 811-4447), as filed with the Securities and Exchange Commission on
October 16, 1997:
Statement of Net Assets as of September 30, 1997
Statement of Operations for the Year Ended
September 30, 1997
Statements of Changes in Net Assets for the Years
Ended September 30, 1997 and 1996
Financial Highlights for the Years Ended September 30,
1997, 1996, 1995, 1994, 1993, 1992, 1991, 1990, 1989,
and 1988
Notes to Financial Statements
Report of Independent Accountants
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a.) Financial Statements (Financial Highlights included in Part A
and all incorporated by reference to the Annual Report, dated
September 30, 1997 (File No. 811-4447), of Brandywine Fund,
Inc. (as filed with the Securities and Exchange Commission on
October 16, 1997))
Brandywine Fund, Inc.
Statement of Net Assets as of September 30, 1997
Statement of Operations for the Year Ended
September 30, 1997
Statements of Changes in Net Assets for the Years
Ended September 30, 1997 and 1996
Financial Highlights for the Years Ended September 30, 1997,
1996, 1995, 1994, 1993, 1992, 1991, 1990, 1989 and 1988
Notes to Financial Statements
Report of Independent Accountants
(b.) Exhibits
(1) Registrant's Articles of Incorporation as amended through
January 15, 1997; Exhibit 1 to Post-Effective Amendment No.
12 to Registrant's Registration Statement on Form N-1A is
incorporated by reference pursuant to Rule 411 under the
Securities Act of 1933.
(1.1) Articles Supplementary to Articles of Incorporation dated
March 28, 1996; Exhibit 1.1 to Post-Effective Amendment No.
12 to Registrant's Registration Statement on Form N-1A is
incorporated by reference pursuant to Rule 411 under the
Securities Act of 1933.
(2) Registrant's By-Laws, as amended;
(3) None
(4) None
(5) Investment Advisory Agreement.
(6) None
(7) None
(8) Custodian Agreement with Firstar Trust Company.
(9) Service Agreement with Fiduciary Management, Inc., as
amended.
(10) Opinion of Foley & Lardner, counsel for Registrant.
(11) Consent of Price Waterhouse LLP
(12) None
(13) Subscription Agreement.
(14) None
(15) None
(16) Schedule for Computation of Performance Quotations; Exhibit
16 to Post-Effective Amendment No. 11 to Registrant's
Registration Statement on Form N-1A is incorporated by
reference to Rule 411 under the Securities Act of 1933.
(17) Financial Data Schedule
(18) None
Item 25. Persons Controlled by or under Common Control with Registrant
Registrant is not controlled by any person. Registrant neither
controls any person nor is under common control with any other person.
Item 26. Number of Holders of Securities
Number of Record Holders
Title of Class as of December 31, 1997
Common Stock, $.01 par value, 49,406
Item 27. Indemnification
Pursuant to the authority of the Maryland General Corporation
Law, particularly Section 2-418 thereof, Registrant's Board of Directors
has adopted the following By-Law which is in full force and effect and has
not been modified or canceled:
Article VII
GENERAL PROVISIONS
Section 7. Indemnification.
A. The corporation shall indemnify all of its corporate
representatives against expenses, including attorneys' fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by
them in connection with the defense of any action, suit or proceeding, or
threat or claim of such action, suit or proceeding, whether civil,
criminal, administrative, or legislative, no matter by whom brought, or in
any appeal in which they or any of them are made parties or a party by
reason of being or having been a corporate representative, if the
corporate representative acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the corporation
and with respect to any criminal proceeding, if he had no reasonable cause
to believe his conduct was unlawful provided that the corporation shall
not indemnify corporate representatives in relation to matters as to which
any such corporate representative shall be adjudged in such action, suit
or proceeding to be liable for gross negligence, willful misfeasance, bad
faith, reckless disregard of the duties and obligations involved in the
conduct of his office, or when indemnification is otherwise not permitted
by the Maryland General Corporation Law.
B. In the absence of an adjudication which expressly absolves the
corporate representative, or in the event of a settlement, each corporate
representative shall be indemnified hereunder only if there has been a
reasonable determination based on a review of the facts that
indemnification of the corporate representative is proper because he has
met the applicable standard of conduct set forth in paragraph A. Such
determination shall be made: (i) by the board of directors, by a majority
vote of a quorum which consists of directors who were not parties to the
action, suit or proceeding, or if such a quorum cannot be obtained, then
by a majority vote of a committee of the board consisting solely of two or
more directors, not, at the time, parties to the action, suit or
proceeding and who were duly designated to act in the matter by the full
board in which the designated directors who are parties to the action,
suit or proceeding may participate; or (ii) by special legal counsel
selected by the board of directors or a committee of the board by vote as
set forth in (i) of this paragraph, or, if the requisite quorum of the
full board cannot be obtained therefor and the committee cannot be
established, by a majority vote of the full board in which directors who
are parties to the action, suit or proceeding may participate.
C. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall create a rebuttable presumption that the person was
guilty of willful misfeasance, bad faith, gross negligence or reckless
disregard to the duties and obligations involved in the conduct of his or
her office, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
D. Expenses, including attorneys' fees, incurred in the preparation
of and/or presentation of the defense of a civil or criminal action, suit
or proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding as authorized in the manner
provided in Section 2-418(F) of the Maryland General Corporation Law upon
receipt of: (i) an undertaking by or on behalf of the corporate
representative to repay such amount unless it shall ultimately be
determined that he or she is entitled to be indemnified by the corporation
as authorized in this by-law; and (ii) a written affirmation by the
corporate representative of the corporate representative's good faith
belief that the standard of conduct necessary for indemnification by the
corporation has been met.
E. The indemnification provided by this by-law shall not be deemed
exclusive of any other rights to which those indemnified may be entitled
under these by-laws, any agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his or her official capacity
and as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer, employee
or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person subject to the limitations imposed from
time to time by the Investment Company Act of 1940, as amended.
F. This corporation shall have power to purchase and maintain
insurance on behalf of any corporate representative against any liability
asserted against him or her and incurred by him or her in such capacity or
arising out of his or her status as such, whether or not the corporation
would have the power to indemnify him or her against such liability under
this by-law provided that no insurance may be purchased or maintained to
protect any corporate representative against liability for gross
negligence, willful misfeasance, bad faith or reckless disregard of the
duties and obligations involved in the conduct of his or her office.
G. "Corporate Representative" means an individual who is or was a
director, officer, agent or employee of the corporation or who serves or
served another corporation, partnership, joint venture, trust or other
enterprise in one of these capacities at the request of the corporation
and who, by reason of his or her position, is, was, or is threatened to be
made, a party to a proceeding described herein.
Insofar as indemnification for and with respect to liabilities
arising under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of Registrant pursuant to the foregoing
provisions or otherwise, Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by Registrant of expenses incurred or paid by a
director, officer or controlling person or Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
Incorporated by reference to pages 3 through 5 of the Statement
of Additional Information pursuant to Rule 411 under the Securities Act of
1933. Mr. Herman Friess, a director of the Adviser, is a lawyer having
his own practice with offices in Rice Lake, Wisconsin.
Item 29. Principal Underwriters
Registrant has no principal underwriters.
Item 30. Location of Accounts and Records
The accounts, books and other documents required to be
maintained by Registrant pursuant to Section 31(a) of the Investment
Company Act of 1940 and the rules promulgated thereunder are in the
physical possession of Fiduciary Management, Inc. and Registrant's
Custodian as follows: the documents required to be maintained by
paragraphs (4), (5), (6), (7), (10) and (11) of Rule 31a-1(b) will be
maintained by Fiduciary Management, Inc. at its offices at 225 East Mason
Street, Milwaukee, Wisconsin 53202, and all other records will be
maintained by the Custodian.
Item 31. Management Services
All management-related service contracts entered into by
Registrant are discussed in Parts A and B of this Registration Statement.
Item 32. Undertakings
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that it meets
all of the requirements for effectiveness of this Amended Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amended Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Jackson and
State of Wyoming on the 29th day of January, 1998.
BRANDYWINE FUND, INC.
(Registrant)
By: /s/Foster S. Friess
Foster S. Friess,
President
Pursuant to the requirements of the Securities Act of 1933, this
Amended Registration Statement has been signed below by the following
persons in the capacities and on the date indicated.
Name Title Date
/s/Foster S. Friess Principal Executive, January 29, 1998
Foster S. Friess Financial and Accounting
Officer and Director
_____________________ Director January , 1998
Stig Ramel
/s/John E. Burris Director January 29, 1998
John E. Burris
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Page No.
(1) Registrant's Articles of
Incorporation, as amended*
(1.1) Articles Supplementary to
Articles of Incorporation*
(2) Registrant's By-Laws, as
amended
(3) None
(4) None
(5) Investment Advisory Agreement
(6) None
(7) None
(8) Custodian Agreement with Firstar Trust Company
(9) Service Agreement with
Fiduciary Management, Inc.,
as amended
(10) Opinion of Foley & Lardner,
counsel for Registrant
(11) Consent of Price Waterhouse LLP
(12) None
(13) Subscription Agreement
(14) None
(15) None
(16) Schedule for Computation of Performance
Quotations*
(17) Financial Data Schedule
(18) None
* Incorporated by reference
EXHIBIT 2
BY-LAWS
OF
BRANDYWINE FUND, INC.
(as amended)
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. Place of Meetings. All meetings of stockholders shall be
held at Suite C-205, Greenville Center, Greenville, Delaware, or at such
other location as the Board of Directors shall direct.
Section 2. Annual Meeting.
(a) The annual meeting of stockholders for the election of
directors and the transaction of such other business as may
properly come before it, if the annual meeting shall be held,
shall be held during the month of May of each year (or during
such other month as the Board of Directors shall determine),
commencing in 1987, at such date and time as shall be fixed by
the Board of Directors and stated in the notice of such meeting.
Any business of the corporation may be transacted at the annual
meeting without being specifically designated in the notice,
except such business as is specifically required by statute to
be stated in the notice.
(b) The corporation shall not be required to hold an
annual meeting in any year in which none of the following is
required to be acted on by stockholders under the Investment
Company Act of 1940:
(i) Election of directors;
(ii) Approval of the corporation's investment
advisory contract;
(iii) Ratification of the selection of the
corporation's independent public accountants; and
(iv) Approval, if any, of the corporation's
distribution agreement with respect to any particular
class of series.
Section 3. Special Meeting. Special meetings of the stockholders may
be called by the board of directors, the president, vice-president, or the
secretary, and shall be called by the secretary upon the written request
of the holders of shares entitled to not less than 25% of all the votes
entitled to be cast at such meeting; provided that such holders prepay the
costs to the corporation of preparing and mailing the notice of the
meeting. The business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 4. Notice of Meeting. Not less than ten days nor more than
ninety days before the date of every stockholders' meeting, the secretary
shall give to each stockholder entitled to vote at such meeting, written
or printed notice stating the time and place of the meeting, and in the
case of a special meeting the purpose or purposes for which the meeting is
called, either by mail, by presenting it to him personally or by leaving
it at his residence or usual place of business. If mailed, such notice
shall be deemed to be given when deposited in the United States mail
addressed to the stockholder at his post office address as it appears on
the records of the corporation, with postage thereon prepaid.
Section 5. Quorum. At any meeting of stockholders the presence in
person or by proxy of stockholders entitled to cast a majority of the
votes thereat shall constitute a quorum; but this section shall not affect
any requirement under statute or under the charter for the vote necessary
for the adoption of any measure. If at any meeting a quorum is not
present or represented, the chairman of the meeting or the holders of a
majority of the stock present or represented may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until
a quorum is present or represented. At such adjourned meeting at which a
quorum is present or represented, any business may be transacted which
might have been transacted at the meeting as originally called.
Section 6. Stock Entitled to Vote. Each issued share of stock shall
be entitled to vote at any meeting of stockholders except shares owned,
other than in a fiduciary capacity, by the corporation or by another
corporation in which the corporation owns shares entitled to cast a
majority of all the votes entitled to be cast by all shares outstanding
and entitled to vote of such corporation.
Section 7. Voting. Each outstanding share of stock entitled to vote
at a meeting of stockholders shall be entitled to one vote on each matter
submitted to a vote. In all elections for directors every stockholder
shall have the right to vote the shares owned of record by him for as many
persons as there are directors to be elected, but shall not be entitled to
exercise any right of cumulative voting. A stockholder may vote the
shares owned of record by him either in person or by proxy executed in
writing by the stockholder or by his authorized attorney-in-fact. No
proxy shall be valid after eleven months from its date unless otherwise
provided in the proxy. At all meetings of stockholders, unless the voting
is conducted by inspectors, all questions relating to the qualification of
voters, the validity of proxies and the acceptance or rejection of votes
shall be decided by the chairman of the meeting. A majority of the votes
cast at a meeting of stockholders, duly called and at which a quorum is
present, shall be sufficient to take or authorize any action which may
properly come before the meeting, unless a greater number is required by
statute or by the charter.
Section 8. Informal Action. Any action required or permitted to be
taken at any meeting of stockholders may be taken without a meeting, if a
consent in writing, setting forth such action, is signed by all the
stockholders entitled to vote on the subject matter thereof and such
consent is filed with the records of the corporation.
ARTICLE II
DIRECTORS
Section 1. Number. The number of directors of the corporation shall
be four (4). By vote of a majority of the entire board of directors, the
number of directors fixed by the charter or by these by-laws may be
increased or decreased from time to time to not more than fifteen nor less
than three, but the tenure of office of a director shall not be affected
by any decrease in the number of directors so made by the board.
Section 2. Election and Qualification. Until the first annual meeting
of stockholders and until successors are duly elected and qualify, the
board of directors shall consist of the persons named as such in the
charter. At the first annual meeting of stockholders and at each annual
meeting thereafter, the stockholders shall elect directors to hold office
until the next annual meeting or until their successors are elected and
qualify. A director need not be a stockholder of the corporation, but
must be eligible to serve as a director of a registered investment company
under the Investment Company Act of 1940. All but one of the directors
may be interested persons of the investment adviser of the corporation, as
defined in the Investment Company Act of 1940 or officers or employees of
the corporation.
Section 3. Vacancies. Any vacancy on the board of directors occurring
between stockholders' meetings called for the purpose of electing
directors may be filled, if immediately after filling any such vacancy at
least two-thirds of the directors then holding office shall have been
elected to such office at an annual or special meeting of stockholders, in
the following manner: (i) for a vacancy occurring other than by reason of
an increase in directors, by a majority of the remaining members of the
board, although such majority is less than a quorum; and (ii) for a
vacancy occurring by reason of an increase in the number of directors, by
action of a majority of the entire board. A director elected by the board
to fill a vacancy shall be elected to hold office until the next annual
meeting of stockholders or until his successor is elected and qualifies.
If by reason of the death, disqualification or bona fide resignation of
any director or directors, there is no member of the board of directors
who is not an interested person of the investment adviser of the
corporation, as defined in the Investment Company Act of 1940, such
vacancy shall be filled within thirty days if it may be filled by the
board, or within sixty days if a vote of stockholders is required to fill
such vacancy; provided that such vacancy may be filled within such longer
period as the Securities and Exchange Commission may prescribe by rules
and regulations, upon its own motion or by order upon application. In the
event that at any time less than a majority of the directors were elected
by the stockholders, the board or proper officer shall forthwith cause to
be held as promptly as possible, and in any event within sixty days, a
meeting of the stockholders for the purpose of electing directors to fill
any existing vacancies in the board, unless the Securities and Exchange
Commission shall by order extend such period.
Section 4. Powers. The business and affairs of the corporation shall
be managed under the direction of the board of directors, which may
exercise all of the powers of the corporation, except such as are by law
or by the charter or by these by-laws conferred upon or reserved to the
stockholders.
Section 5. Removal. At any meeting of stockholders, duly called and
at which a quorum is present, the stockholders may, by the affirmative
vote of the holders of a majority of the votes entitled to be cast
thereon, remove any director or directors from office and may elect a
successor or successors to fill any resulting vacancies for the unexpired
terms of removed directors.
Section 6. Place of Meetings. Meetings of the board of directors,
regular or special, may be held at any place in or out of the State of
Maryland as the board may from time to time determine or as may be
specified in the notice of meeting.
Section 7. First Meeting of Newly Elected Board. The first meeting of
each newly elected board of directors shall be held without notice
immediately after and at the same general place as the annual meeting of
the stockholders, for the purpose of organizing the board, electing
officers and transacting any other business that may properly come before
the meeting.
Section 8. Regular Meetings. Regular meetings of the board of
directors may be held without notice at such time and place as shall from
time to time be determined by the board.
Section 9. Special Meetings. Special meetings of the board of
directors may be called at any time either by the board, the president, a
vice president or a majority of the directors in writing with or without a
meeting. Notice of special meetings shall either be mailed by the
secretary to each director at least three days before the meeting or shall
be given personally or telegraphed to each director at least one day
before the meeting. Such notice shall set forth the time and place of
such meeting but need not, unless otherwise required by law, state the
purposes of the meeting.
Section 10. Quorum and Vote Required for Action. At all meetings of
the board of directors a majority of the entire board shall constitute a
quorum for the transaction of business, and the action of a majority of
the directors present at any meetings at which a quorum is present shall
be the action of the board of directors unless the concurrence of a
greater proportion is required for such action by statute, the articles of
incorporation or these by-laws. If at any meeting a quorum is not
present, a majority of the directors present may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until
a quorum is present. Members of the board of directors or a committee of
the board may participate in a meeting by means of a conference telephone
or similar communications equipment if all persons participating in the
meeting can hear each other at the same time. Participation in a meeting
by these means constitutes presence in person at the meeting.
Section 11. Executive and Other Committees. The board of directors may
appoint from among its members an executive and other committees composed
of two or more directors. The board may delegate to such committees in
the intervals between meetings of the board any of the powers of the board
to manage the business and affairs of the corporation, except the power
to: (i) declare dividends or distributions upon the stock of the
corporation; (ii) issue stock of the corporation; (iii) recommend to the
stockholders any action which requires stockholder approval; (iv) amend
the by-laws; (v) approve any merger or share exchange which does not
require stockholder approval; or (vi) take any action required by the
Investment Company Act of 1940 to be taken by the independent directors of
the corporation or by the full board of directors.
Section 12. Informal Action. Any action required or permitted to be
taken at any meeting of the board of directors may be taken without a
meeting, if a written consent to such action is signed by all members of
the board and such written consent is filed with the minutes of
proceedings of the board.
ARTICLE III
OFFICERS AND EMPLOYEES
Section 1. Election and Qualification. At the first meeting of each
newly elected board of directors there shall be elected a president, one
or more vice presidents, a secretary and a treasurer. The board may also
elect one or more assistant secretaries and assistant treasurers. No
officer need be a director. Any two or more offices, except the offices
of president and vice president, may be held by the same person but no
officer shall execute, acknowledge or verify any instrument in more than
one capacity, if such instrument is required by law, charter or these by-
laws to be executed, acknowledged or verified by two or more officers.
Each officer must be eligible to serve as an officer of a registered
investment company under the Investment Company Act of 1940. Nothing
herein shall preclude the employment of other employees or agents by the
corporation from time to time without action by the board.
Section 2. Term, Removal and Vacancies. The officers shall be elected
to serve until the next first meeting of a newly elected board of
directors and until their successors are elected and qualify. Any officer
may be removed by the board, with or without cause, whenever in its
judgment the best interests of the corporation will be served thereby, but
such removal shall be without prejudice to the contractual rights, if any,
of the person so removed. A vacancy in any office shall be filled by the
board for the unexpired term.
Section 3. Bonding. Each officer and employee of the corporation who
singly or jointly with others has access to securities or funds of the
corporation, either directly or through authority to draw upon such funds
or to direct generally the disposition of such securities shall be bonded
against larceny and embezzlement by a reputable fidelity insurance company
authorized to do business in Delaware. Each such bond, which may be in
the form of an individual bond, a schedule or blanket bond covering the
corporation's officers and employees and the officers and employees of the
investment adviser to the corporation and other corporations to which said
investment adviser also acts as investment adviser, shall be in such form
and for such amount (determined at least annually) as the board of
directors shall determine in compliance with the requirements of Section
17(g) of the Investment Company Act of 1940, as amended from time to time,
and the rules, regulations or orders of the Securities and Exchange
Commission thereunder.
Section 4. President. The president shall be the principal executive
officer of the corporation. He shall preside at all meetings of the
stockholders and directors, have general and active management of the
business of the corporation, see that all orders and resolutions of the
board of directors are carried into effect, and execute in the name of the
corporation all authorized instruments of the corporation, except where
the signing shall be expressly delegated by the board to some other
officer or agent of the corporation.
Section 5. Vice Presidents. The vice president, or if there be more
than one, the vice presidents in the order determined by the board of
directors, shall, in the absence or disability of the president, perform
the duties and exercise the powers of the president, and shall have such
other duties and powers as the board may from time to time prescribe or
the president delegate.
Section 6. Secretary and Assistant Secretaries. The secretary shall
give notice of, attend and record the minutes of meetings of stockholders
and directors, keep the corporate seal and, when authorized by the board,
affix the same to any instrument requiring it, attesting to the same by
his signature, and shall have such further duties and powers as are
incident to his office or as the board may from time to time prescribe.
The assistant secretary, if any, or, if there be more than one, the
assistant secretaries in the order determined by the board, shall in the
absence or disability of the secretary, perform the duties and exercise
the powers of the secretary, and shall have such other duties and powers
as the board may from time to time prescribe or the secretary delegate.
Section 7. Treasurer and Assistant Treasurers. The treasurer shall be
the principal financial and accounting officer of the corporation. He
shall be responsible for the custody and supervision of the corporation's
books of account and subsidiary accounting records, and shall have such
further duties and powers as are incident to his office or as the board of
directors may from time to time prescribe. The assistant treasurer, if
any, or, if there be more than one, the assistant treasurers in the order
determined by the board, shall in the absence or disability of the
treasurer, perform all duties and exercise the powers of the treasurer,
and shall have such other duties and powers as the board may from time to
time prescribe or the treasurer delegate.
ARTICLE IV
RESTRICTIONS ON COMPENSATION
TRANSACTIONS AND INVESTMENTS
Section 1. Salary and Expenses. Directors and executive officers as
such shall not receive any salary for their services or reimbursement for
expenses from the corporation; provided that the corporation may pay fees
in such amounts and at such times as the board of directors shall
determine to directors who are not interested persons of the corporation
for attendance at meetings of the board of directors. Clerical employees
shall receive compensation for their services from the corporation in such
amounts as are determined by the board of directors.
Section 2. Compensation and Profit from Purchase and Sales. No
affiliated person of the corporation, as defined in the Investment Company
Act of 1940, or affiliated person of such person, shall, except as
permitted by Section 17(e) of the Act, or the rules, regulations or orders
of the Securities and Exchange Commission thereunder, (i) acting as agent,
accept from any source any compensation for the purchase or sale of any
property or securities to or for the corporation or any controlled company
of the corporation, as defined in such Act, or (ii) acting as a broker, in
connection with the sale of securities to or by the corporation or any
controlled company of the corporation, receive from any source a
commission, fee or other remuneration for effecting such transaction. The
investment adviser to the corporation shall not profit directly or
indirectly from sales of securities to or from the corporation.
Section 3. Transactions with Affiliated Person. No affiliated person
of the corporation, as defined in the Investment Company Act of 1940, or
affiliated person of such person shall knowingly (i) sell any security or
other property to the corporation or to any company controlled by the
corporation, as defined in the Act, except shares of stock of the
corporation or securities of which such person is the issuer and which are
part of a general offering to the holders of a class of its securities,
(ii) purchase from the corporation or any such controlled company any
security or property except shares of stock of the corporation or
securities of which such person is the issuer, (iii) borrow money or other
property from the corporation or any such controlled company, or (iv)
acting as a principal effect any transaction in which the corporation or
controlled company is a joint or joint and several participant with such
person; provided, however, that this section shall not apply to any
transaction permitted by Sections 17(a), (b), (c), (d) or 21(b) of the
Investment Company Act of 1940 or the rules, regulations or orders of the
Securities and Exchange Commission thereunder.
Section 4. Investment Adviser. The corporation shall employ only one
investment adviser, the employment of which shall be pursuant to a written
agreement in accordance with Section 15 of the Investment Company Act of
1940, as amended from time to time.
Section 5. Ownership of Stock by Officers and Directors. No officer
or director shall take a long or short position in the stock of the
corporation, provided, however, that officers or directors may purchase
stock of the corporation for investment purposes at the same price as that
available to the public at the time of purchase, or in connection with the
original capitalization of the corporation.
Section 6. Portfolio Transactions. The corporation shall not
purchase, acquire or retain:
(a) any security of an issuer, any of whose officers or
directors is an officer, director or investment adviser of the
corporation or an affiliated person, as defined in the
Investment Company Act of 1940, of such investment adviser;
(b) any security issued by or any interest in the business
of an investment company, insurance company, broker, dealer,
underwriter or investment adviser, except as permitted under
Sections 12(d), (e) and (g) of the Investment Company Act of
1940, as amended from time to time, or the rules, regulations or
orders of the Securities and Exchange Commission thereunder;
(c) voting securities of another issuer, the acquisition
or retention of which would result in circular or cross
ownership, as defined in Section 20(c) of the Act; or
(d) during the existence of any underwriting or selling
syndicate, any security, except stock of the corporation, a
principal underwriter of which is an officer, director,
distributor, investment adviser or employee of the corporation,
or is a person (other than a company of the character described
in Section 12(d) (3) (A) and (B) of the Investment Company Act
of 1940, as amended from time to time) of which any such
officer, director, distributor, investment adviser or employee
is an affiliated person, as defined in the Investment Company
Act of 1940, unless in acquiring such security the corporation
is itself acting as a principal underwriter for the issue,
except as the Securities and Exchange Commission, by rules,
regulations, or order shall permit.
Section 7. General Business and Investment Activities. The
Corporation shall not:
(a) purchase any security on margin, except such short-
term credits as are necessary for the clearance of transactions;
(b) participate on a joint or joint and several basis in
any trading account in securities;
(c) effect a short sale of any security;
(d) act as an underwriter in the distribution of any
security other than stock of the corporation;
(e) make loans to other persons except through the
purchase of debt obligations permissible under Article III of
the Articles of Incorporation of this corporation and through
repurchase agreements provided that repurchase agreements
maturing in more than seven days will not exceed 10% of the
total net assets of this corporation;
(f) borrow money or issue senior securities except to the
extent permitted under Sections 18(f), (g) and (h) of the
Investment Company Act of 1940, as amended from time to time,
provided that the amount of money that may be borrowed shall not
exceed that which would be permitted under the margin
requirements of the Board of Governors of the Federal Reserve
System, in force at the time of borrowing, as specified in
Regulation T, or any amendment thereto;
(g) purchase or sell real estate or interests in real
estate or commodities;
(h) issue any warrant or right to subscribe to or purchase
stock of the corporation, except in the form of warrants or
rights to subscribe expiring not later than one hundred twenty
days after their issuance and issued exclusively and ratably to
its stockholders, or any voting trust certificate relating to
stock of the corporation;
(i) deviate from its policy in respect to concentration of
investments in any particular industry or group of industries as
reported in its registration statement under the Investment
Company Act of 1940, or deviate from any fundamental policy
recited in such registration statement pursuant to Section 8(b)
(2) of the Investment Company Act of 1940;
(j) change the nature of its business so as to cease to be
an investment company;
(k) charge any sales load or commission in connection with
the sale or redemption of any stock of the corporation; provided
that the board of directors may impose a redemption charge in
such amount, with such limitations and at such times as the
board of directors in its discretion shall determine.
ARTICLE V
STOCK CERTIFICATES AND TRANSFER BOOKS
Section 1. Certificates. Each stockholder shall be entitled to a
certificate or certificates, in such form as the board of directors shall
from time to time approve, representing and certifying the number of
shares of stock owned by him in the corporation. Each certificate shall
be signed, manually or by facsimile signature by the president or a vice
president, countersigned, manually or by facsimile signature by the
secretary, an assistant secretary, the treasurer or an assistant treasurer
and sealed with the corporate seal or facsimile thereof. In case any
officer who has signed any certificate, or whose facsimile signature
appears thereon, ceases to be an officer of the corporation before the
certificate is issued, the certificate may nevertheless be issued with the
same effect as if the officer had not ceased to be such officer as of the
date of its issue. Any certificate representing stock which is restricted
or limited as to transferability shall have a full statement of such
restriction or limitation plainly stated thereon or shall state that the
corporation will furnish information to the stockholder on request and
without charge.
Section 2. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been
lost, stolen, destroyed or mutilated (or may delegate such authority to
one or more officers of the corporation) upon the making of an affidavit
of that fact by the person claiming the certificate to be lost, stolen,
destroyed or mutilated. The board or such officer may, in its or his
discretion, require the owner of such certificate or his legal
representative to give bond with sufficient surety to the corporation to
indemnify it against any loss or claim which may arise or expense which
may be incurred by reason of the issuance of a new certificate.
Section 3. Stock Ledger. The corporation shall maintain at its office
in Greenville, Delaware, or at the office of its principal transfer agent,
if any, an original or duplicate stock ledger containing the names and
addresses of all stockholders and the number of shares held by each
stockholder.
Section 4. Registered Stockholders. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as
such, as the owner of shares for all purposes, and shall not be bound to
recognize any equitable or other claim to or interest in such shares on
the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of
Maryland.
Section 5. Transfer Agent and Registrar. The corporation may maintain
one or more transfer offices or agencies, each in charge of a transfer
agent designated by the board of directors, where the shares of stock of
the corporation shall be transferable. The corporation may also maintain
one or more registry offices, each in charge of a registrar designated by
the board, where such shares of stock shall be registered.
Section 6. Transfers of Stock. Upon surrender to the corporation or a
transfer agent of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it
shall be the duty of the corporation to issue a new certificate to the
person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 7. Fixing of Record Dates and Closing of Transfer Books. The
board of directors may fix, in advance, a date as the record date for the
purpose of determining stockholders entitled to notice of, or to vote at,
any meeting of stockholders, or stockholders entitled to receive payment
of any dividend or the allotment of any rights, or in order to make a
determination of stockholders for any other proper purpose. Such date, in
any case, shall be not more than ninety days, and in case of a meeting of
stockholders not less than ten days, prior to the date on which the
particular action requiring such determination of stockholders is to be
taken. In lieu of fixing a record date, the board may provide that the
stock transfer books shall be closed for a stated period but not to
exceed, in any case, twenty days. If the stock transfer books are closed
or a record date is fixed for the purpose of determining stockholders
entitled to vote at a meeting of stockholders, such books shall be closed
for at least ten days immediately preceding such action.
ARTICLE VI
ACCOUNTS, REPORTS AND CUSTODIAN
Section 1. Inspection of Books. The board of directors shall
determine from time to time whether, and, if allowed, when and under what
conditions and regulations the accounts and books of the corporation
(except such as may by statute be specifically open to inspection) or any
of them, shall be open to the inspection of the stockholders and the
stockholders' rights in this respect are and shall be limited accordingly.
Section 2. Reliance on Records. Each director and officer shall, in
the performance of his duties, be fully protected in relying in good faith
on the books of account or reports made to the corporation by any of its
officials or by an independent public accountant.
Section 3. Preparation and Maintenance of Accounts, Records and
Statements. The president, a vice president or the treasurer shall
prepare or cause to be prepared annually, a full and correct statement of
the affairs of the corporation, including a balance sheet or statement of
financial condition and a financial statement of operations for the
preceding fiscal year, which shall be submitted at the annual meeting of
the stockholders and filed within twenty days thereafter at the principal
office of the corporation in the state of Delaware. The proper officers
of the corporation shall also prepare, maintain and preserve or cause to
be prepared, maintained and preserved the accounts, books and other
documents required by Section 2-II of the Maryland General Corporation Law
and Section 31 of the Investment Company Act of 1940 and shall prepare and
file or cause to be prepared and filed the reports required by Section 30
of such Act. No financial statement shall be filed with the Securities
and Exchange Commission unless the officers or employees who prepared or
participated in the preparation of such financial statement have been
specifically designated for such purpose by the board of directors.
Section 4. Auditors. No independent public accountant shall be
retained or employed by the corporation to examine, certify or report on
its financial statements for any fiscal year unless such selection: (i)
shall have been approved by a majority of the entire board of directors
within thirty days before or after the beginning of such fiscal year or
before the annual meeting of stockholders for such fiscal year; (ii) shall
have been ratified at the next succeeding annual meeting of stockholders,
provided that any vacancy occurring between annual meetings due to the
death or resignation of such accountant may be filled by the board of
directors; and (iii) shall otherwise meet the requirements of Section 32
of the Investment Company Act of 1940.
Section 5. Custodian. All securities, evidences of indebtedness and
funds of the corporation shall be entrusted to the custody of one or more
custodians or depositaries, each of which shall be either an eligible
foreign custodian as defined in Rule 17f-5 under the Investment Company
Act of 1940 or a bank or trust company which is a member of the Federal
Reserve System having capital, surplus and undivided profits of not less
than Two Million Dollars ($2,000,000), as set forth in its most recently
published report of condition, and the qualifications prescribed by and
pursuant to Section 17(f) and 26 of the Investment Company Act of 1940 and
which shall be employed as agent or agents of the corporation by the board
of directors.
Section 6. Agreement with Custodian. Each such custodian shall be
employed pursuant to a written agreement which shall conform to the
requirements prescribed by any applicable rules and regulations of the
Securities and Exchange Commission under the Investment Company Act of
1940, and, except as otherwise provided by such rules and regulations,
shall provide substantially as follows:
(a) The custodian shall keep (i) all cash on deposit with
such other banks in the name of the custodian as the corporation
shall direct, and (ii) all securities in a separate account, not
commingled with other assets, in the name of the custodian, its
nominee or the corporation in care of the custodian, or in the
custody of the custodian or agents in street certificate or
bearer form. The custodian may utilize a central securities
clearing agency or securities depository in accordance with the
provisions at the Investment Company Act of 1940 and the rules
and regulations of the Securities and Exchange Commission
promulgated thereunder. The custodian shall receive and collect
the income or funds due with respect to such securities.
(b) Securities and cash held by the custodian may be
withdrawn only upon written order signed on behalf of the
corporation by two employees at least one of whom shall be an
officer included within a list of five officers and employees
certified for such purpose by resolution of the board of
directors.
(c) Securities held by the custodian may be withdrawn only
for the following purposes:
(i) The sale of such securities for the account
of the corporation with delivery and payment therefore
in accord with procedures and customs used by the
custodian in the sale of securities for the trust
estates for which it is trustee;
(ii) The delivery of securities in exchange for
or conversion into other securities alone, cash or
cash and other securities pursuant to the provisions
of such securities or a plan of merger, consolidation,
reorganization, recapitalization or readjustment of
the securities of the issuer thereof;
(iii) The surrender of warrants, rights or
similar securities in the exercise of such warrants,
rights or similar securities or the surrender of
interim receipts or temporary securities for
definitive securities;
(iv) The delivery of securities to a lender as
collateral on borrowing effected by the corporation or
to a broker selling any such securities in accordance
with "street delivery" customs;
(v) The delivery of securities as a redemption
in kind of or distribution of stock of the corporation
or in connection with a retirement of such securities;
(vi) The delivery of securities for other proper
corporate purposes;
provided that in each case specified in clauses (i), (iii) and
(iv) the payment, collateral or securities to be received are
delivered to the custodian simultaneously or as promptly
thereafter as possible.
(d) Cash held by the custodian may be withdrawn only for
the following purposes:
(i) The purchase of securities to be retained by
the custodian with delivery and payment therefor in
accord with procedures and customs used by the
custodian in the purchase of securities for the trust
estates for which it is trustee;
(ii) The redemption or purchase of stock in the
corporation;
(iii) The payment of interest, dividends or
other distributions on stock of the corporation;
(iv) The payment of taxes, interest, the
investment adviser's fees incurred in connection with
the operation of the corporation and operating
expenses (including, without limitation thereto, fees
for legal, accounting and auditing services);
(v) The payment in connection with the
conversion, exchange or surrender of securities owned
by the corporation;
(vi) The deposit of funds in the name of the
custodian in or with any other bank or trust company
designated by the corporation;
(vii) Other proper corporate purposes as
certified by resolution of the board of directors.
Section 7. Termination of Custodian Agreement. Any employment
agreement with a custodian shall be terminable on not more than sixty
days' notice in writing by the board of directors or the custodian and
upon any such termination the custodian shall turn over only to the
succeeding custodian designated by the board of directors all funds,
securities and property and documents of the corporation in its
possession.
Section 8. Checks and Requisitions. Except as otherwise authorized by
the board of directors, all checks and drafts for the payment of money
shall be signed in the name of the corporation by a custodian, and all
requisitions or orders for the payment of money by a custodian or for the
issue of checks and drafts therefore, all promissory notes, all
assignments of stock or securities standing in the name of the
corporation, and all requisitions or orders for the assignment of stock or
securities standing in the name of a custodian or its nominee, or for the
execution of powers to transfer the same, shall be signed in the name of
the corporation by not less than two persons (who shall be among those
persons, not in excess of five, designated for this purpose by the board
of directors) at least one of which shall be an officer. Promissory
notes, checks or drafts payable to the corporation may be endorsed only to
the order of a custodian or its nominee by the treasurer or president or
by such other person or persons as shall be thereto authorized by the
board of directors.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Offices. The principal office of the corporation in the
State of Maryland shall be in the City of Baltimore. The corporation
shall also have an office in Greenville, Delaware. The corporation may
also have offices at such other places within and without the State of
Maryland as the board of directors may from time to time determine.
Except as otherwise required by statute, the books and records of the
corporation may be kept outside the State of Maryland.
Section 2. Seal. The corporate seal shall have inscribed thereon the
name of the corporation, and the words "Corporate Seal" and "Maryland".
The seal may be used by causing it or a facsimile thereof to be impressed,
affixed, reproduced or otherwise.
Section 3. Fiscal Year. The fiscal year of the corporation shall be
fixed by the board of directors.
Section 4. Notice of Waiver of Notice. Whenever any notice of the
time, place or purpose of any meeting of stockholders or directors is
required to be given under the statute, the charter or these by-laws, a
waiver thereof in writing, signed by the person or persons entitled to
such notice and filed with the records of the meeting, either before or
after the holding thereof, or actual attendance at the meeting of
stockholders in person or by proxy or at the meeting of directors in
person, shall be deemed equivalent to the giving of such notice to such
person. No notice need be given to any person with whom communication is
made unlawful by any law of the United States or any rule, regulation,
proclamation or executive order issued by any such law.
Section 5. Voting of Stock. Unless otherwise ordered by the board of
directors, the president shall have full power and authority, in the name
and on behalf of the corporation, (i) to attend, act and vote at any
meeting of stockholders of any company in which the corporation may own
shares of stock of record, beneficially (as the proxy or attorney-in-fact
of the record holder) or of record and beneficially, and (ii) to give
voting directions to the record stockholder of any such stock beneficially
owned. At any such meeting, he shall possess and may exercise any and all
rights and powers incident to the ownership of such shares which, as the
holder or beneficial owner and proxy of the holder thereof, the
corporation might possess and exercise if personally present, and may
delegate such power and authority to any officer, agent or employee of the
corporation.
Section 6. Dividends. Dividends upon the stock of the corporation,
subject to the provisions of the charter, if any, may be declared by the
board of directors at any regular or special meeting, pursuant to law.
The source of each dividend payment shall be disclosed to the stockholders
receiving such dividend, to the extent required by the laws of the State
of Maryland and by Section 19 of the Investment Company Act of 1940 and
the rules and regulations of the Securities and Exchange Commission
thereunder. The total of each dividend payment made to stockholders in
respect of any one fiscal year shall be approximately equal to the sum of
(a) the net income for such fiscal year exclusive of profits or losses
realized upon the sale of securities or other property, and (b) the excess
of profits over losses on sales of securities or other property for such
fiscal year; provided the above provision shall be interpreted to give the
board of directors the power in its discretion to distribute for any
fiscal year as ordinary dividends and as capital gains distributions,
respectively, amounts sufficient to enable the corporation to avoid or
reduce its tax liability.
Section 7. Indemnification.
A. The corporation shall indemnify all of its corporate
representatives against expenses, including attorneys' fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by
them in connection with the defense of any action, suit or proceeding, or
threat or claim of such action, suit or proceeding, whether civil,
criminal, administrative, or legislative, no matter by whom brought, or in
any appeal in which they or any of them are made parties or a party by
reason of being or having been a corporate representative, if the
corporate representative acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the corporation
and with respect to any criminal proceeding, if he had no reasonable cause
to believe his conduct was unlawful provided that the corporation shall
not indemnify corporate representatives in relation to matters as to which
any such corporate representative shall be adjudged in such action, suit
or proceeding to be liable for gross negligence, willful misfeasance, bad
faith, reckless disregard of the duties and obligations involved in the
conduct of his office, or when indemnification is otherwise not permitted
by the Maryland General Corporation Law.
B. In the absence of an adjudication which expressly absolves
the corporate representative, or in the event of a settlement, each
corporate representative shall be indemnified hereunder only if there has
been a reasonable determination based on a review of the facts that
indemnification of the corporate representative is proper because he has
met the applicable standard of conduct set forth in paragraph A. Such
determination shall be made: (i) by the board of directors, by a majority
vote of a quorum which consists of directors who were not parties to the
action, suit or proceeding, or if such a quorum cannot be obtained, then
by a majority vote of a committee of the board consisting solely of two or
more directors, not, at the time, parties to the action, suit or
proceeding and who were duly designated to act in the matter by the full
board in which the designated directors who are parties to the action,
suit or proceeding may participate; or (ii) by special legal counsel
selected by the board of directors or a committee of the board by vote as
set forth in (i) of this paragraph, or, if the requisite quorum of the
full board cannot be obtained therefor and the committee cannot be
established, by a majority vote of the full board in which directors who
are parties to the action, suit or proceeding may participate.
C. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere
or its equivalent, shall create a rebuttable presumption that the person
was guilty of willful misfeasance, bad faith, gross negligence or reckless
disregard to the duties and obligations involved in the conduct of his or
her office, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
D. Expenses, including attorneys' fees, incurred in the
preparation of and/or presentation of the defense of a civil or criminal
action, suit or proceeding may be paid by the corporation in advance of
the final disposition of such action, suit or proceeding as authorized in
the manner provided in Section 2-418(F) of the Maryland General
Corporation Law upon receipt of: (i) an undertaking by or on behalf of
the corporate representative to repay such amount unless it shall
ultimately be determined that he or she is entitled to be indemnified by
the corporation as authorized in this by-law; and (ii) a written
affirmation by the corporate representative of the corporate
representative's good faith belief that the standard of conduct necessary
for indemnification by the corporation has been met.
E. The indemnification provided by this by-law shall not be
deemed exclusive of any other rights to which those indemnified may be
entitled under these by-laws, any agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his or her
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person subject to the limitations
imposed from time to time by the Investment Company Act of 1940, as
amended.
F. This corporation shall have power to purchase and maintain
insurance on behalf of any corporate representative against any liability
asserted against him or her and incurred by him or her in such capacity or
arising out of his or her status as such, whether or not the corporation
would have the power to indemnify him or her against such liability under
this by-law provided that no insurance may be purchased or maintained to
protect any corporate representative against liability for gross
negligence, willful misfeasance, bad faith or reckless disregard of the
duties and obligations involved in the conduct of his or her office.
G. "Corporate Representative" means an individual who is or
was a director, officer, agent or employee of the corporation or who
serves or served another corporation, partnership, joint venture, trust or
other enterprise in one of these capacities at the request of the
corporation and who, by reason of his or her position, is, was, or is
threatened to be made, a party to a proceeding described herein.
Section 8. Amendments. The board of directors shall have the power to
alter or repeal any by-laws of the corporation and to make new by-laws,
except that the board shall not alter or repeal any by-law made by the
stockholders and, after capital stock of the corporation is issued, shall
not alter or repeal Section 3 of Article III, Sections 2, 3, 6 and 7 of
Article IV, Sections 3 through 8 of Article VI and Sections 6 through 8 of
Article VII. The stockholders shall have the power at any meeting, if
notice thereof be included in the notice of such meeting, to alter or
repeal any by-laws of the corporation and to make new by-laws by vote of a
majority of the shares entitled to vote at such meeting, as the term
"majority" is defined in the Investment Company Act of 1940, as amended
from time to time.
EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this ____ day of _________, 1985, between
BRANDYWINE FUND, INC., a Maryland corporation (the "Fund") and FRIESS
ASSOCIATES, INC., a Delaware corporation (the "Adviser").
W I T N E S S E T H :
WHEREAS, the Fund is in the process of registering with the
Securities and Exchange Commission as an open-end management investment
company under the Investment Company Act of 1940 (the "Act");
WHEREAS, upon so registering with the Securities and Exchange
Commission, the Fund will be a registered investment company satisfying
the conditions of Section 10(d) of the Act; and
WHEREAS, the Fund desires to retain the Adviser, which is an
investment adviser registered under the Investment Advisers Act of 1940
and which is engaged principally in the business of rendering investment
supervisory services within the meaning of Section 202(a)(13) of the
Investment Advisers Act of 1940, as its investment adviser.
NOW, THEREFORE, the Fund and the Adviser do mutually promise and
agree as follows:
1. Employment. The Fund hereby employs the Adviser to manage
the investment and reinvestment of the assets of the Fund for the period
and on the terms set forth in this Agreement. The Adviser hereby accepts
such employment for the compensation herein provided and agrees during
such period to render the services and to assume the obligations herein
set forth.
2. Authority of the Adviser. The Adviser shall supervise and
manage the investment portfolio of the Fund, and, subject to such policies
as the board of directors of the Fund may determine, direct the purchase
and sale of investment securities in the day to day management of the
Fund. The Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Fund in any way
or otherwise be deemed an agent of the Fund. However, one or more
stockholders, officers, directors or employees of the Adviser may serve as
directors and/or officers of the Fund, but without compensation or
reimbursement of expenses for such services from the Fund. Nothing herein
contained shall be deemed to require the Fund to take any action contrary
to its Articles of Incorporation or any applicable statute or regulation,
or to relieve or deprive the board of directors of the Fund of its
responsibility for, and control of, the affairs of the Fund.
3. Expenses. The Adviser, at its own expense and without
reimbursement from the Fund, shall furnish office space, and all necessary
office facilities, equipment and executive personnel for managing the
investments of the Fund. The Adviser shall pay the salaries and fees of
all officers and directors of the Fund (except the fees paid to those
directors who are not interested persons of the Adviser, as defined in the
Act, and who are not officers or employees of the Fund). The Adviser
shall also bear all sales and promotional expenses of the Fund, except for
expenses incurred in complying with laws regulating the issue or sale of
securities. Fees paid for attendance at meetings of the Fund's board of
directors to directors of the Fund who are not interested persons of the
Adviser, as defined in the Act, as amended, shall be borne by the Fund.
The Fund shall bear all other expenses initially incurred by it, provided
that the total expenses borne by the Fund, including the Adviser's fee but
excluding all federal, state and local taxes, interest, brokerage
commissions and extraordinary items, shall not in any year exceed that
percentage of the average net asset value of the Fund for such year, as
determined by valuations made as of the close of each business day, which
is the most restrictive percentage provided by the state laws of the
various states in which the Fund's common stock is qualified for sale.
The expenses of the Fund's operations borne by the Fund include by way of
illustration and not limitation, the costs of preparing and printing its
registration statements required under the Securities Act of 1933 and the
Act (and amendments thereto), the expense of registering its shares with
the Securities and Exchange Commission and in the various states, the
printing and distribution cost of prospectuses mailed to existing
stockholders, the cost of stock certificates, director and officer
liability insurance, reports to stockholders, reports to government
authorities and proxy statements, interest charges, taxes, legal expenses,
salaries of administrative and clerical personnel, association membership
dues, auditing and accounting services, insurance premiums, brokerage and
other expenses connected with the execution of portfolio securities
transactions, fees and expenses of the custodian of the Fund's assets,
expenses of calculating the net asset value and repurchasing and redeeming
shares, charges and expenses of dividend disbursing agents, registrars and
stock transfer agents and the cost of keeping all necessary stockholder
records and accounts.
The Fund shall monitor its expense ratio on a monthly basis. If
the accrued amount of the expenses of the Fund exceeds the expense
limitation established herein, the Fund shall create an account receivable
from the Adviser for the amount of such excess. In such a situation the
monthly payment of the Adviser's fee will be reduced by the amount of such
excess, subject to adjustment month by month during the balance of the
Fund's fiscal year if accrued expenses thereafter fall below the expense
limitation.
4. Compensation of the Adviser. For the services and
facilities to be rendered and the charges and expenses to be assumed by
the Adviser hereunder, the Fund shall pay to the Adviser an advisory fee,
paid monthly, based on the average net asset value of the Fund, as
determined by valuations made as of the close of each business day of the
month. The advisory fee shall be 1/12 of 1% of such net asset value. For
any month in which this Agreement is not in effect for the entire month,
such fee shall be reduced proportionately on the basis of the number of
calendar days during which it is in effect and the fee computed upon the
average net asset value of the business days during which it is so in
effect.
5. Ownership of Shares of the Fund. Except in connection with
the initial capitalization of the Fund, the Adviser shall not take, and
shall not permit any of its stockholders, officers, directors or employees
to take a long or short position in the shares of the Fund, except for the
purchase of shares of the Fund for investment purposes at the same price
as that available to the public at the time of purchase.
6. Exclusivity. The services of the Adviser to the Fund
hereunder are not to be deemed exclusive and the Adviser shall be free to
furnish similar services to others as long as the services hereunder are
not impaired thereby. Although the Adviser has permitted and is
permitting the Fund to use the name "Brandywine," it is understood and
agreed that the Adviser reserves the right to use and to permit other
persons, firms or corporation, including investment companies, to use such
name, and that the Fund will not use such name if the Adviser ceases to be
the Fund's sole investment adviser. During the period that this Agreement
is in effect, the Adviser shall be the Fund's sole investment adviser.
7. Liability. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Fund or to any stockholder of the Fund for any act or
omission in the course of, or connected with, rendering services
hereunder, or for any losses that may be sustained in the purchase,
holding or sale of any security.
8. Brokerage Commissions. The Adviser may cause the Fund to
pay a broker-dealer which provides brokerage and research services, as
such services are defined in Section 28(e) of the Securities Exchange Act
of 1934 (the "Exchange Act"), to the Adviser a commission for effecting a
securities transaction in excess of the amount another broker-dealer would
have charged for effecting such transaction, if the Adviser determines in
good faith that such amount of commission is reasonable in relation to the
value of brokerage and research services provided by the executing
broker-dealer viewed in terms of either that particular transaction or his
overall responsibilities with respect to the accounts as to which he
exercises investment discretion (as defined in Section 3(a)(35) of the
Exchange Act).
9. Amendments. This Agreement may be amended by the mutual
consent of the parties; provided, however, that in no event may it be
amended without the approval of the board of directors of the Fund in the
manner required by the Act, and by the vote of the majority of the
outstanding voting securities of the Fund, as defined in the Act.
10. Termination. This Agreement may be terminated at any time,
without the payment of any penalty, by the board of directors of the Fund
or by a vote of the majority of the outstanding voting securities of the
Fund, as defined in the Act, upon giving sixty (60) days' written notice
to the Adviser. This Agreement may be terminated by the Adviser at any
time upon the giving of sixty (60) days' written notice to the Fund. This
Agreement shall terminate automatically in the event of its assignment (as
defined in Section 2(a)(4) of the Act). Subject to prior termination as
hereinbefore provided, this Agreement shall continue in effect for two (2)
years from the date hereof and indefinitely thereafter, but only so long
as the continuance after such two (2) year period is specifically approved
annually by (i) the board of directors of the Fund or by the vote of the
majority of the outstanding voting securities of the Fund, as defined in
the Act, and (ii) the board of directors of the Fund in the manner
required by the Act, provided that any such approval may be made effective
not more than sixty (60) days thereafter.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day first above written.
FRIESS ASSOCIATES, INC.
By: ______________________________ By: __________________________
Secretary President
BRANDYWINE FUND, INC.
By: ______________________________ By: __________________________
Secretary President
EXHIBIT 8
CUSTODIAN AGREEMENT
THIS AGREEMENT made on ____________, 1985, between BRANDYWINE
FUND, INC., a Maryland corporation (hereinafter called the "Corporation"),
and FIRST WISCONSIN TRUST COMPANY, a corporation organized under the laws
of the State of Wisconsin (hereinafter called "Custodian"),
W I T N E S S E T H :
WHEREAS, the Corporation desires that its securities and cash
shall be hereafter held and administered by Custodian pursuant to the
terms of this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein
made, the Corporation and Custodian agree as follows:
1. Definitions
The word "securities" as used herein include stocks, shares,
bonds, debentures, notes, mortgages or other obligations and any
certificates receipts, warrants or other instruments representing rights
to receive, purchase or subscribe for the same, or evidencing or
representing any other rights or interests therein, or in any property or
assets.
The words "officers' certificate" shall mean a request or
direction or certification in writing signed in the name of the
Corporation by any two of the President, a Vice President, the Secretary,
and the Treasurer of the Corporation, or any other persons duly authorized
to sign by the Board of Directors of the Corporation.
2. Names, Titles and Signatures of Corporation's Officers
An officer of the Corporation will certify to Custodian the
names and signatures of those persons authorized to sign the officers'
certificates described in Section 1 hereof, and the names of the members
of the Board of Directors, together with any changes which may occur from
time to time.
3. Receipt and Disbursement of Money
A. Custodian shall open and maintain a separate account or
accounts in the name of the Corporation, subject only to draft or order by
Custodian acting pursuant to the terms of this Agreement. Custodian shall
hold in such account or accounts, subject to the provisions hereof, all
cash received by it from or for the account of the Corporation. Custodian
shall make payments of cash to, or for the account of, the Corporation
from such cash only (a) for the purchase of securities for the portfolio
of the Corporation upon the delivery of such securities to Custodian,
registered in the name of the Corporation or of the nominee of Custodian
referred to in Section 7 or in proper form for transfer, (b) for the
purchase or redemption of shares of the common stock of the Corporation
upon delivery thereof to Custodian, (c) for the payment of interest,
dividends, taxes, investment adviser's fees or operating expenses
(including, without limitation thereto, fees for legal, accounting,
auditing and custodian services and expenses for printing and postage),
(d) for payments in connection with the conversion, exchange or surrender
of securities owned or subscribed to by the Corporation held by or to be
delivered to Custodian, or (e) for other proper corporate purposes
certified by resolution of the Board of Directors of the Corporation.
Before making any such payment Custodian shall receive (and may rely upon)
an officers' certificate requesting such payment and stating that it is
for a purpose permitted under the terms of items (a), (b), (c) or (d) of
this Subsection A, and also, in respect of item (e), upon receipt of an
officers' certificate specifying the amount of such payment, setting forth
the purpose for which such payment is to be made, declaring such purpose
to be a proper corporate purpose, and naming the person or persons to whom
such payment is to be made; provided, however, that an officers'
certificate need not precede the disbursement of cash for the purpose of
purchasing a money market instrument if the President, a Vice President,
the Secretary or the Treasurer of the Corporation issues appropriate oral
instructions to Custodian and an appropriate officers' certificate is
received by Custodian within two business days thereafter.
B. Custodian is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money received by
Custodian for the account of the Corporation.
4. Receipt of Securities
Custodian shall hold in a separate account, and physically
segregated at all times from those of any other persons, firms or
corporations, pursuant to the provisions hereof, all securities received
by it from or for the account of the Corporation. All such securities are
to be held or disposed of by Custodian for, and subject at all times to
the instructions of, the Corporation pursuant to the terms of this
Agreement. The Custodian shall have no power or authority to assign,
hypothecate, pledge or otherwise dispose of any such securities and
investments, except pursuant to the direction of the Corporation and only
for the account of the Corporation as set forth in Section 5 of this
Agreement.
5. Transfer, Exchange, Redelivery, etc. of Securities
Custodian shall have sole power to release or deliver any
securities of the Corporation held by it pursuant to this Agreement.
Custodian agrees to transfer, exchange or deliver securities held by it
hereunder only (a) for sales of such securities for the account of the
Corporation upon receipt by Custodian of payment therefor, (b) when such
securities are called, redeemed or retired or otherwise become payable,
(c) for examination by any broker selling any such securities in
accordance with "street delivery" custom, (d) in exchange for, or upon
conversion into, other securities alone or other securities and cash
whether pursuant to any plan of merger, consolidation, reorganization,
recapitalization or readjustment, or otherwise, (e) upon conversion of
such securities pursuant to their terms into other securities, (f) upon
exercise of subscription, purchase or other similar rights represented by
such securities, (g) for the purpose of exchanging interim receipts or
temporary securities for definitive securities, (h) for the purpose of
redeeming in kind shares of common stock of the Corporation upon delivery
thereof to Custodian, or (i) for other proper corporate purposes. As to
any deliveries made by Custodian pursuant to items (a), (b), (d), (e), (f)
and (g), securities or cash receivable in exchange therefor shall be
deliverable to Custodian. Before making any such transfer, exchange or
delivery, Custodian shall receive (and may rely upon) an officers'
certificate requesting such transfer, exchange or delivery, and stating
that it is for a purpose permitted under the terms of items (a), (b), (c),
(d), (e), (f), (g) or (h) of this Section 5 and also, in respect of item
(i), upon receipt of an officers' certificate specifying the securities to
be delivered, setting forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper corporate purpose, and naming
the person or persons to whom delivery of such securities shall be made;
provided, however, that an officers' certificate need not precede any such
transfer, exchange or delivery of a money market instrument if the
President, a Vice President, the Secretary or the Treasurer of the
Corporation issues appropriate oral instructions to Custodian and an
appropriate officers' certificate is received by Custodian within two
business days thereafter.
6. Custodian's Acts Without Instructions
Unless and until Custodian receives an officers' certificate to
the contrary, Custodian shall: (a) present for payment all coupons and
other income items held by it for the account of the Corporation which
call for payment upon presentation and hold the cash received by it upon
such payment for the account of the Corporation; (b) collect interest and
cash dividends received, with notice to the Corporation, for the account
of the Corporation; (c) hold for the account of the Corporation hereunder
all stock dividends, rights and similar securities issued with respect to
any securities held by it hereunder; and (d) execute as agent on behalf of
the Corporation all necessary ownership certificates required by the
Internal Revenue Code or the Income Tax Regulations of the United States
Treasury Department or under the laws of any state now or hereafter in
effect, inserting the Corporation's name on such certificates as the owner
of the securities covered thereby, to the extent it may lawfully do so.
7. Registration of Securities
Except as otherwise directed by an officers' certificate
Custodian shall register all securities, except such as are in bearer
form, in the name of a registered nominee of Custodian as defined in the
Internal Revenue Code and any Regulations of the Treasury Department
issued hereunder or in any provision of any subsequent Federal tax law
exempting such transaction from liability for stock transfer taxes, and
shall execute and deliver all such certificates in connection therewith as
may be required by such laws or regulations or under the laws of any
state. Custodian shall use its best efforts to the end that the specific
securities held by it hereunder shall be at all times identifiable in its
records.
The Corporation shall from time to time furnish to Custodian
appropriate instruments to enable Custodian to hold or deliver in proper
form for transfer, or to register in the name of its registered nominee,
any securities which it may hold for the account of the Corporation and
which may from time to time be registered in the name of the Corporation.
8. Voting and Other Action
Neither Custodian nor any nominee of Custodian shall vote any of
the securities held hereunder by or for the account of the Corporation,
except in accordance with the instructions contained in an officers'
certificate. Custodian shall deliver, or cause to be executed and
delivered, to the Corporation all notices, proxies and proxy soliciting
materials with relation to such securities, such proxies to be executed by
the registered holder of such securities (if registered otherwise than in
the name of the Corporation), but without indicating the manner in which
such proxies are to be voted.
9. Transfer Tax and Other Disbursements
The Corporation shall pay or reimburse Custodian from time to
time for any transfer taxes payable upon transfers of securities made
hereunder, and for all other necessary and proper disbursements and
expenses made or incurred by Custodian in the performance of this
Agreement.
Custodian shall execute and deliver such certificates in
connection with securities delivered to it or by it under this Agreement
as may be required under the provisions of the Internal Revenue Code and
any Regulations of the Treasury Department issued thereunder, or under the
laws of any state, to exempt from taxation any exemptable transfers and/or
deliveries of any such securities.
10. Concerning Custodian
Custodian shall be paid as compensation for its services
pursuant to this Agreement such compensation as may from time to time be
agreed upon in writing between the two parties. Until modified in writing
such compensation shall be as set forth in Exhibit A attached hereto.
Custodian shall not be liable for any action taken in good faith
upon any certificate herein described or certified copy of any resolution
of the Board of Directors, and may rely on the genuineness of any such
document which it may in good faith believe to have been validly executed.
The Corporation agrees to indemnify and hold harmless Custodian
and its nominee from all taxes, charges, expenses, assessments, claims and
liabilities (including counsel fees) incurred or assessed against it or by
its nominee in connection with the performance of this Agreement, except
such as may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct. Custodian is authorized
to charge any account of the Corporation for such items. In the event of
any advance of cash for any purpose made by Custodian resulting from
orders or instructions of the Corporation, or in the event that Custodian
or its nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance of
this Agreement, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any
property at any time held for the account of the Corporation shall be
security therefor.
11. Reports by Custodian
Custodian shall furnish the Corporation weekly with a statement
summarizing all transactions and entries for the account of the
Corporation. Custodian shall furnish the Corporation at the end of every
month with a list of the portfolio securities showing the aggregate cost
of each issue. Custodian shall furnish the Corporation, at the close of
each quarter of the Corporation's fiscal year, with a list showing the
cost of the securities held by it for the Corporation hereunder, adjusted
for all commitments confirmed by the Corporation as of such close,
certified by a duly authorized officer of Custodian. The books and
records of Custodian pertaining to its actions under this Agreement shall
be open to inspection and audit at reasonable times by officers of, and of
auditors employed by, the Corporation.
12. Termination or Assignment
This Agreement may be terminated by the Corporation, or by
Custodian, on sixty days' notice, given in writing and sent by registered
mail to Custodian at P.O. Box 701, Milwaukee, Wisconsin 53201-0701, or to
the Corporation at P.O. Box 4166, Greenville, Delaware 19807, as the case
may be. Upon any termination of this Agreement, pending appointment of a
successor to Custodian or a vote of the shareholders of the Corporation to
dissolve or to function without a custodian of its cash, securities and
other property, Custodian shall not deliver cash, securities or other
property of the Corporation to the Corporation, but may deliver them to a
bank or trust company in the City of Milwaukee of its own selection,
having an aggregate capital, surplus and undivided profits, as shown by
its last published report of not less than Two Million Dollars
($2,000,000) as a custodian for the Corporation to be held under terms
similar to those of this Agreement; provided, however, that Custodian
shall not be required to make any such delivery or payment until full
payment shall have been made by the Corporation of all liabilities
constituting a charge on or against the properties then held by Custodian
or on or against Custodian, and until full payment shall have been made to
Custodian of all its fees, compensation, costs and expenses, subject to
the provisions of Section 10 of this Agreement.
This Agreement may not be assigned by Custodian without the
consent of the Corporation, authorized or approved by a resolution of its
Board of Directors.
13. Deposits of Securities in Securities Depositories
No provision of this Agreement shall be deemed to prevent the
use by Custodian of a central securities clearing agency or securities
depository; provided, however, that Custodian and the central securities
clearing agency or securities depository meet all applicable federal and
state laws and regulations and the Board of Directors of the Corporation
approves by resolution the use of such central securities clearing agency
or securities depository.
14. Records
To the extent that Custodian in any capacity prepares or
maintains any records required to be maintained and preserved by the
Corporation pursuant to the provisions of the Investment Company Act of
1940, as amended, or the rules and regulations promulgated thereunder,
Custodian agrees to make any such records available to the Corporation
upon request and to preserve such records for the periods prescribed in
Rule 31a-2 under the Investment Company Act of 1940, as amended.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and their respective corporate seals to be
affixed hereto as of the date first above written by their respective
officers thereunto duly authorized.
Executed in several counterparts, each of which is an original.
Attest: FIRST WISCONSIN TRUST COMPANY
_______________________________ By _______________________________
Attest: BRANDYWINE FUND, INC.
_________________________________ By _______________________________
EXHIBIT 9
SERVICE AGREEMENT
AGREEMENT made this 16th day of December, 1985, between
BRANDYWINE FUND, INC., a Maryland corporation (the "Fund"), and FIDUCIARY
MANAGEMENT, INC., a Wisconsin corporation ("Fiduciary").
W I T N E S S E T H :
WHEREAS, the Fund is in the process of registering with the
Securities and Exchange Commission as an open-end management investment
company under the Investment Company Act of 1940 (the "Act"); and
WHEREAS, the Fund desires to retain Fiduciary to provide certain
management-related services as further provided herein and Fiduciary
desires to perform such services for the Fund.
NOW, THEREFORE, the Fund and Fiduciary do mutually promise and
agree as follows:
1. Employment. The Fund hereby employs Fiduciary to perform
the management-related services set forth in Section 2 hereof for the
period and on the terms set forth in this Agreement. Fiduciary hereby
accepts such employment for the compensation herein provided and agrees
during such period to render the services and to assume the obligations
herein set forth.
2. Management-Related Services. Fiduciary shall perform the
following management-related services for the Fund:
(a) Prepare and maintain the books, accounts and other
documents specified in Rules 31a-1(b)(1), 31a-1(b)(2)(i)-(iii),
31a-1(b)(3) and 31a-1(b)(8) under the Act in accordance with the
requirements of Rule 31a-1 and Rule 31a-2 under the Act;
(b) Determine the Fund's net asset value in accordance
with the provisions of the Fund's Articles of Incorporation and
its Registration Statement;
(c) Respond to stockholder inquiries forwarded to it by
the Fund;
(d) Prepare the financial statements contained in reports
to stockholders of the Fund;
(e) Prepare tax returns;
(f) Prepare reports to and filings with the Securities and
Exchange Commission (other than the Fund's Registration
Statement on Form N-1A);
(g) Prepare reports to and filings with state Blue Sky
authorities; and
(h) Perform such other services as may be agreed to by
Fiduciary and the Fund.
Fiduciary shall not act, and shall not be required to act, as an
investment adviser to the Fund or have any authority to supervise the
investment or reinvestment of the cash, securities or other property
comprising the Fund's assets or to determine what securities or other
property may be purchased or sold by the Fund. Fiduciary shall for all
purposes herein be deemed to be an independent contractor and shall,
unless otherwise expressly provided or authorized, have no authority to
act for or represent the Fund in any way or otherwise be deemed to be an
agent of the Fund. Fiduciary agrees that all books, accounts and other
documents prepared and maintained by it pursuant to this Section 2 are the
property of the Fund and will be surrendered to the Fund promptly on
request.
3. Expenses. Fiduciary shall, at its own expense and without
reimbursement from the Fund, furnish all office space, office facilities,
equipment and personnel necessary to perform the services required to be
performed by it under this Agreement. The Fund shall pay the fees of
counsel or independent public accountants reviewing or assisting in the
preparation of the reports and financial statements referred to in
Section 2 hereof.
4. Compensation of Fiduciary. The fees to be paid to
Fiduciary for the services rendered by it hereunder shall be based solely
on the actual time spent by its personnel and shall be at the rate of
$25.00 per hour. The Fund shall be billed monthly by Fiduciary or at such
other regular intervals as may be agreed to by the Fund and Fiduciary.
5. Exclusivity. The services of Fiduciary to the Fund
hereunder are not to be deemed exclusive and Fiduciary shall be free to
furnish similar services to others as long as the services hereunder are
not impaired thereby.
6. Liability. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of Fiduciary, Fiduciary shall not be subject to
liability to the Fund, the Fund's investment adviser or to any stockholder
of the Fund for any act or omission in the course of, or connected with,
rendering services hereunder.
7. Amendments and Termination. This Agreement may be amended
by the mutual consent of the parties. This Agreement may be terminated at
any time, without the payment of any penalty, by the board of directors of
the Fund or by Fiduciary, upon the giving of ninety (90) days' written
notice. Upon any such termination Fiduciary shall deliver to the Fund all
books, accounts and other documents then maintained by it pursuant to
Section 2 hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day first above written.
FIDUCIARY MANAGEMENT, INC.
By: ______________________________ By: ____________________________
Secretary President
BRANDYWINE FUND, INC.
By: ______________________________ By: _____________________________
Secretary President
<PAGE>
AMENDMENT TO SERVICE AGREEMENT
AMENDMENT TO SERVICE AGREEMENT made as of this 1st day of
October, 1988, between BRANDYWINE FUND, INC., a Maryland corporation (the
"Fund") and FIDUCIARY MANAGEMENT, INC., a Wisconsin corporation
("Fiduciary").
W I T N E S S E T H :
WHEREAS, the parties hereto did, on the 16th day of December,
1985, enter into a Service Agreement (hereinafter referred to as the
"Agreement"); and
WHEREAS, the parties hereto desire to amend the Agreement as
permitted by Section 7 thereof.
NOW, THEREFORE, the Fund and Fiduciary hereby agree as follows:
1. Section 4 of the Agreement is hereby amended to read as
follows:
4. Compensation of Fiduciary. For the services rendered
by Fiduciary the Fund shall pay to Fiduciary an annual service
fee of $30,000, payable in equal monthly installments. For any
month in which this Agreement is not in effect for the entire
month, such fee shall be reduced proportionately on the basis of
the calendar days during which it is in effect.
2. Except to the extent changed and modified herein, all of
the terms and conditions of the Agreement shall remain unchanged and in
full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to Service Agreement to be executed on the day first above
written.
FIDUCIARY MANAGEMENT, INC.
By: ______________________________ By: _____________________________
Secretary President
BRANDYWINE FUND, INC.
By: ______________________________ By: _____________________________
Secretary President
EXHIBIT 10
January 30, 1990
Brandywine Fund, Inc.
P.O. Box 4166
Greenville, Delaware 19807
Gentlemen:
We have acted as counsel for you in connection with the
preparation of an Amended Registration Statement on Form N-1A relating to
the sale by you of an indefinite amount of Brandywine Fund, Inc. Common
Stock, $1.00 par value (such Common Stock being hereinafter referred to as
the "Stock"), in the manner set forth in the Registration Statement to
which reference is made. In this connection we have examined: (a) the
Amended Registration Statement on Form N-1A; (b) your Articles of
Incorporation and By-Laws, as amended to date; (c) corporate proceedings
relative to the authorization for issuance of the Stock; and (d) such
other proceedings, documents and records as we have deemed necessary to
enable us to render this opinion.
Based upon the foregoing, we are of the opinion that the shares
of Stock when sold as contemplated in the Amended Registration Statement
will be legally issued, fully paid and nonassessable.
We hereby consent to the use of this opinion as an exhibit to
the Amended Registration Statement on Form N-1A. In giving this consent,
we do not admit that we are experts within the meaning of Section 11 of
the Securities Act of 1933, as amended, or within the category of persons
whose consent is required by Section 7 of said Act.
Very truly yours,
FOLEY & LARDNER
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 13 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated October 7, 1997, relating to the financial
statements and financial highlights appearing in the September 30, 1997 Annual
Report to Shareholders of Brandywine Fund, Inc., portions of which are
incorporated by reference into the Registration Statement. We also consent
to the reference to us under the heading "Independent Accountants" in the
Statement of Additional Information.
PRICE WATERHOUSE LLP
Milwaukee, Wisconsin
January 27, 1998
EXHIBIT 13
SUBSCRIPTION AGREEMENT
Brandywine Fund, Inc.
Suite C-205 Greenville Center
Greenville, Delaware 19807
Gentlemen:
The undersigned hereby subscribes to 10,000 shares of the Common
Stock, $.01 par value of Brandywine Fund, Inc., and agrees to pay to said
corporation the sum of $100,000 in cash.
It is understood that upon acceptance hereof by said corporation
a certificate or certificates representing the shares subscribed for shall
be issued to the undersigned and that said shares shall be deemed to be
fully paid and non-assessable.
The undersigned agrees that the shares are being purchased for
investment with no present intention of reselling or redeeming said
shares.
Dated and effective as of this ____ day of December, 1985.
FRIESS ASSOCIATES, INC.
By: _________________________________
Foster S. Friess, President
Attest: ___________________________
Lynnette Friess
Secretary
The foregoing subscription is hereby accepted. Dated and
effective as of this ____ day of December, 1985.
BRANDYWINE FUND, INC.
By: _________________________________
Foster S. Friess, President
[CORPORATE SEAL]
Attest: ___________________________
Charles S. Cruice,
Secretary
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
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</TABLE>
