Registration No. 33-1182
Investment Company Act Registration No. 811-04447
- --------------------------------------------------------------------------------
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 Amendment No. 15 |X|
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 16 |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)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a) (1)
|X| on January 31, 2000 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 FUNDS
PROSPECTUS
(BRANDYWINE FUND, INC. LOGO)
(BRANDYWINE BLUE FUND, INC. LOGO)
JANUARY 31, 2000
"INVESTING IN INDIVIDUAL BUSINESSES, NOT THE STOCK MARKET."
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation
to the contrary is a criminal offense.
(BRANDYWINE FUNDS LOGO)
The Brandywine Funds
3908 Kennett Pike
P.O. Box 4166
Greenville, Delaware 19807
E-mail: [email protected]
Website: http://www.brandywinefunds.com
1-800-656-3017 or 1-414-765-4124
TABLE OF CONTENTS
QUESTIONS YOU SHOULD ASK BEFORE
INVESTING IN BRANDYWINE FUNDS 1
FEES AND EXPENSES 3
INVESTMENT OBJECTIVES, STRATEGIES
AND RISKS 4
MANAGEMENT OF THE FUNDS 5
DETERMINING NET ASSET VALUE 5
ABOUT OUR MINIMUM REQUIREMENTS
FOR INITIAL INVESTMENT 5
INVESTING WITH BRANDYWINE FUNDS 6
How to Open Your Brandywine
Funds Account 6
How to Buy Additional Shares in
Brandywine Funds 8
How to Sell Shares in
Brandywine Funds 8
Payment of Redemption Proceeds 10
How to Exchange Shares 10
DIVIDENDS, DISTRIBUTIONS
AND TAXES 11
STOCKHOLDER STATEMENTS
AND REPORTS 11
ACCOUNT SERVICES AND POLICIES 12
FINANCIAL HIGHLIGHTS 13
SHARE PURCHASE APPLICATIONS 15
A WORD ABOUT RISK
Look for this "warning flag" symbol throughout the prospectus. It is used to
mark detailed information about each type of risk that you, as a shareholder,
will confront.
QUESTIONS YOU SHOULD ASK BEFORE INVESTING IN BRANDYWINE FUNDS
1. WHAT IS THE FUNDS' GOAL?
Brandywine Funds seek capital appreciation.
2. WHAT ARE THE FUNDS' PRINCIPAL INVESTMENT STRATEGIES?
The Brandywine Funds invest principally in common stocks. They utilize a
fundamentals-driven, company-by-company investment approach that is based on the
belief that you should invest in individual businesses, not in the stock market.
The Brandywine Funds will invest in companies in a broad range of industries but
generally focus on companies whose earnings are growing by at least 20% per year
and whose stocks sell at reasonable price-to-earnings ratios.
The Funds adhere to a firm sell discipline. The Funds will
sell a stock:
o With deteriorating fundamentals
o When investor expectations have become unrealistically high
o When they find a better investment
While this sell discipline is likely to cause the Funds to have
annual portfolio turnover rates of approximately 200%, it also causes the
Funds to keep seeking better investment alternatives.
Brandywine Fund invests in companies of all sizes. Brandywine Blue Fund
invests almost exclusively in mid-cap and larger companies, usually companies
having a market capitalization of more than $2 billion.
3. WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUNDS?
The Funds invest principally in common stocks. The prices of the stocks in
which the Funds invest may decline for a number of reasons. The price declines
may be steep, sudden and/or prolonged. As a consequence, investors in the
Funds may lose money.
The Funds are actively managed and will have high portfolio turnover. High
portfolio turnover necessarily results in greater transaction costs, such as
brokerage commissions, which the Funds must pay and short term capital gains (or
losses) to investors. Distributions to shareholders of short-term capital gains
are taxed as ordinary income under current federal income tax laws.
The Funds are a suitable investment only for those investors who have long-
term investment goals such as investing for retirement. If you may need to
redeem your shares in a hurry, or if you are uncomfortable with an investment
that will fluctuate in value, the Funds may not be the right choice for you.
4. HOW HAVE THE FUNDS PERFORMED?
The bar charts and tables that follow provide some indication of the risks of
investing in the Funds by showing changes in the Funds' performance from year to
year and by showing how their average annual returns over 1, 5 and 10 years
compare with those of the S&P 500 Index, NASDAQ Industrials Index and Russell
2000 Index. Please be aware that past performance is not necessarily an
indication of future performance.
BRANDYWINE FUND, INC.
(Total return per calendar year)
1990 0.5597%
1991 49.1766%
1992 15.6789%
1993 22.5800%
1994 0.0181%
1995 35.7463%
1996 24.9226%
1997 12.0227%
1998 -0.6516%
1999
Note: During the ten year period shown on the bar chart, the Fund's highest
total return for a quarter was 27.09% (quarter ended March 31, 1991) and the
lowest total return for a quarter was -18.88% (quarter ended September 30,
1998).
AVERAGE ANNUAL
TOTAL RETURNS
(FOR THE PERIODS ENDING ONE FIVE TEN
DECEMBER 31, 1999) YEAR YEARS YEARS
------------------ ---- ----- -----
Brandywine Fund
S&P 500(1)<F1>
Nasdaq(2)<F2>
Russell 2000(3)<F3>
(1)<F1> The S&P 500 Index consists of 500 stocks, mostly on the New York Stock
Exchange, selected by the Standard & Poor's Ratings Group. Each
stock's weighting is based on its relative total market value. Stocks
may be added or deleted from the Index which assumes reinvestment of
dividends.
(2)<F2> THE NASDAQ Industrials is capitalization-weighted to measure the
performance of all NASDAQ stocks in the industrial sector and does not
include income.
(3)<F3> The Russell 2000, a trademark of the Frank Russell Company, is the
smallest 2,000 of the 3,000 largest publicly traded companies in the
United States equity market and includes income.
BRANDYWINE BLUE FUND, INC.
(Total return per calendar year)
1992 13.1283%
1993 27.2002%
1994 2.3144%
1995 32.3283%
1996 23.2309%
1997 19.2510%
1998 -0.9817%
1999
Note: During the eight year period shown on the bar chart, the Fund's highest
total return for a quarter was 19.91% (quarter ended September 30, 1997) and the
lowest total return for a quarter was -19.93% (quarter ended September 30,
1998).
AVERAGE ANNUAL
TOTAL RETURNS SINCE THE INCEPTION
(FOR THE PERIODS ENDING ONE FIVE DATE OF THE FUND
DECEMBER 31, 1999) YEAR YEARS (JANUARY 10, 1991)
------------------ ---- ----- ------------------
Brandywine Blue
S&P 500
Nasdaq
Russell 2000
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and
hold shares of the Funds.
BRANDYWINE BRANDYWINE
FUND BLUE FUND
---------- ----------
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load)
Imposed on Purchases (as a
percentage of offering price) None None
Maximum Deferred
Sales Charge (Load) None None
Maximum Sales Charge (Load)
Imposed on Reinvested
Dividends and Distributions None None
Redemption Fee None*<F4> None*<F4>
Exchange Fee None None
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)
Management Fees 1.00% 1.00%
Distribution and/or
Service (12b-1) Fees None None
Other Expenses 0.05% 0.08%
----- -----
Total Fund Operating
Expenses 1.05% 1.08%
*<F4> The Transfer Agent charges a fee of $12.00 for each wire redemption.
Example:
This example is intended to help you compare the cost of investing in the
Funds with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Funds for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Funds' operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Brandywine Fund $107 $334 $579 $1,283
Brandywine Blue $110 $343 $595 $1,317
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
THE FUNDS' INVESTMENT OBJECTIVE
Each Fund's investment objective is capital appreciation. The Funds may
change their investment objective without obtaining shareholder approval.
Please remember that an investment objective is not a guarantee. An
investment in the Funds may not appreciate and investors may lose money.
THE FUNDS' INVESTMENT STRATEGIES
The Funds mainly invest in common stocks of U.S. companies and may invest
100% of their assets in such companies.
The Funds' investment adviser believes the Funds are most likely to achieve
their investment objective if they consistently invest in companies that perform
better than the investment community expects. Accordingly, the Funds invest in
fundamentally sound companies that are experiencing a positive change.
Fundamentally sound companies generally have some or all of the following
attributes
Earnings growth of over 20% annually
High rates of profitability
Strong balance sheets
High quality of earnings
The positive change could be:
New products
New management
An acquisition or divestiture
The Brandywine Funds typically do not invest in companies with high
price-to-earnings ratios because these companies are less likely to perform
better than the investment community expects. The Funds are generally more
likely to invest in lesser known companies moving from a lower to higher market
share position within their industry groups than the largest and best known
companies in such groups.
PRINCIPAL RISKS OF
INVESTING IN THE FUNDS
Investing in shares of common stock involves risks. The common stocks in
which the Funds invest may decline in value for any number of reasons. If that
happens, the value of your investment will decline as well. The following are
some of the main reasons why common stocks purchased by the Funds may decline in
value.
1. The Funds' investment adviser was incorrect in its assessment of a
company's prospects.
2. The Funds' investment adviser was correct in its assessment of a
company's prospects, but the company was out-of-favor with other
investors.
3. Investor psychology in the marketplace shifted from common stocks in
general to other assets such as debt securities or money market
instruments (sometimes called "a flight to safety").
TEMPORARY DEFENSIVE POSITIONS
The Funds may, in response to adverse market, economic, political or other
conditions, take temporary defensive positions that are inconsistent with the
Funds' principal investment strategies but that are dictated by their sell
discipline. This means the Funds will attempt to avoid losses by investing in
money market instruments such as United States Treasury Bills, commercial paper
and repurchase agreements. The Funds will not be able to achieve their
investment objectives of capital appreciation to the extent that they invest in
money market instruments since these securities do not appreciate in value.
When the Funds are not taking a temporary defensive position, they still will
hold enough cash and money market instruments to meet current needs and to take
advantage of investment opportunities.
MANAGEMENT OF THE FUNDS
ABOUT THE ADVISER
Friess Associates, Inc. (the "Adviser"), 115 East Snow King Avenue, P. O. Box
576, Jackson, Wyoming 83001, manages the investment portfolios for the Funds.
In addition to the Funds, Friess Associates is the investment adviser to
individual and institutional clients with substantial investment portfolios.
Friess Associates was established in 1974 and was incorporated in 1980; it is
wholly owned by Foster S. Friess and Lynnette E. Friess, who are the sole
directors and the sole officers of Friess Associates, Inc.
COMPENSATION
As the investment adviser to the Funds, the Adviser manages the investment
portfolios for the Funds. The Funds pay the Adviser an annual investment
advisory fee, which is calculated daily and paid monthly, at an annual rate of
1% of the net assets of the Funds.
INVESTMENT DECISIONS
The Adviser supervises the investment portfolios of the Funds, directing the
purchase and sale of investment securities in the day to day management of the
Funds. All investment decisions are made by a team of investment professionals
representing the Adviser, any of whom may make recommendations subject to the
final approval of Foster Friess or another senior member of the Adviser's
management team to whom he may delegate the authority. Mr. Friess has been
President, Treasurer and a director of Brandywine Fund and Brandywine Blue Fund
since they were incorporated in 1985 and 1990, respectively. He is also
President and Chairman of the Board of Friess Associates, Inc. and Friess
Associates of Delaware, Inc.
DETERMINING NET ASSET VALUE
The price at which investors purchase shares of the Funds and at which
shareholders redeem shares of the Funds is called the net asset value. The
Funds calculate net asset value as of the close of regular trading on the New
York Stock Exchange (normally 4:00 p.m. Eastern Time) on each day the New York
Stock Exchange is open for trading. The Funds calculate net asset value based
on the market price of the securities (other than money market instruments) they
hold. They value most money market instruments they hold at their amortized
cost.
If the transfer agent, Firstar Mutual Fund Services, LLC, 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 Funds' share prices can be found daily in the mutual fund listings of
most major newspapers under the heading "Brandywine" or "Brandyw" for Brandywine
Fund and "BrndywBlue" or "BrandywBl" for Brandywine Blue Fund. The NASDAQ
symbols are "BRWIX" for Brandywine Fund and "BLUEX" for Brandywine Blue Fund.
ABOUT OUR MINIMUM REQUIREMENTS FOR
INITIAL INVESTMENT
The Board of Directors has established $25,000 as the minimum initial
investment in Brandywine Fund and $100,000 as the minimum initial investment in
Brandywine Blue Fund.
Employees, officers and directors of the Funds or the Adviser or firms
providing contractual services to the Funds, 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 Funds may, but are not required to, waive or lower the
requirement for charitable organizations and employee benefit plans whose
aggregate investment exceeds a fund's minimum initial investment. The officers
may also, but are not required to, waive or lower the requirement for
shareholders' spouses, parents, children and grandchildren under special
circumstances, considering the additional shares to be an extension of the
investment of the first shareholder.
INVESTING WITH
BRANDYWINE FUNDS
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 FUNDS ACCOUNT
1. Read this prospectus carefully.
2. Determine how much you want to invest.
MINIMUM INVESTMENTS ARE AS FOLLOWS:
BRANDYWINE FUND
TO OPEN A NEW ACCOUNT $25,000
TO ADD TO AN EXISTING ACCOUNT $1,000
BRANDYWINE BLUE FUND
TO OPEN A NEW ACCOUNT $100,000
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 Funds.)
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 application to add these
privileges which would require a signature guarantee.
5. Make your check payable to the Fund: Brandywine Fund, Inc. or Brandywine
Blue Fund, Inc.
All checks must be drawn on U.S. banks. The transfer agent will not accept
cash or third party checks.
FIRSTAR MUTUAL FUND SERVICES, LLC, THE FUNDS' TRANSFER AGENT, WILL CHARGE A
$25 FEE AGAINST A SHAREHOLDER'S ACCOUNT FOR ANY PAYMENT CHECK RETURNED FOR
INSUFFICIENT FUNDS. THE SHAREHOLDER WILL ALSO BE RESPONSIBLE FOR ANY LOSSES
SUFFERED BY THE FUNDS AS A RESULT.
6. Send application and check to:
BY MAIL
FOR FIRST CLASS MAIL
Brandywine Fund, Inc. or
Brandywine Blue Fund, Inc.
c/o Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701
FOR OVERNIGHT DELIVERY SERVICE OR REGISTERED MAIL:
Brandywine Fund, Inc. or
Brandywine Blue Fund, Inc.
c/o Firstar Mutual Fund Services, LLC
615 E. Michigan St., 3rd Floor
Milwaukee, WI 53202-5207
PLEASE DO NOT MAIL LETTERS BY OVERNIGHT DELIVERY SERVICE OR REGISTERED MAIL
TO THE POST OFFICE BOX ADDRESS.
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.
WIRE TO:
Firstar Bank, N.A.
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
ABA 075000022
CREDIT:
Firstar Mutual Fund Services, LLC
Account 112-952-137
FURTHER CREDIT:
Brandywine Fund, Inc. or
Brandywine Blue Fund, Inc.
(shareholder account number)
(shareholder registration)
You should then send a properly signed share purchase application marked
"FOLLOW UP." Wired funds must be received prior to 4:00 p.m. Eastern time to be
eligible for same day pricing. THE FUNDS AND FIRSTAR BANK, N.A. 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 FUNDS AND ARE NOT BINDING UNTIL SO ACCEPTED.
THROUGH BROKER-DEALERS, FINANCIAL INSTITUTIONS AND OTHERS
Some broker-dealers may sell shares of the Funds. These broker-dealers may
charge investors 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 Funds or
the Adviser. Some broker-dealers may purchase and redeem shares on a three day
settlement basis.
The Funds may enter into agreements with broker-dealers, financial
institutions or other service providers ("Servicing Agents") that may include
the Funds as investment alternatives in the programs they offer or administer.
Servicing agents may:
1. Become shareholders of record of the Funds. This means all requests to
purchase additional shares and all redemption requests must be sent through
the Servicing Agent.
2. Use procedures and impose restrictions that may be in addition to, or
different from, those applicable to investors purchasing shares directly
from the Funds.
3. Charge fees to their customers for the services they provide them. Also,
the Funds and/or the Adviser may pay fees to Servicing Agents to compensate
them for the services they provide their customers.
4. Be allowed to purchase shares by telephone with payment to follow the next
day. If the telephone purchase is made prior to the close of regular
trading on the New York Stock Exchange, it will receive same day pricing.
5. Be authorized to accept purchase orders on the Funds' behalf. This means
that the Funds will process the purchase order at the net asset value which
is determined following the Servicing Agent's acceptance of the customer's
order.
If you decide to purchase shares through Servicing Agents, please review
carefully the program materials provided to you by the Servicing Agent. When
you purchase shares of the Funds through a Servicing Agent, it is the
responsibility of the Servicing Agent to place your order with the Fund on a
timely basis. If the Servicing Agent does not, or if it does not pay the
purchase price to the Fund within the period specified in its agreement with the
Funds, it may be held liable for any resulting fees or losses.
OTHER INFORMATION ABOUT PURCHASING SHARES OF THE FUNDS
The Funds may reject any purchase application for any reason. The Funds will
not accept purchase orders made by telephone, unless they are from a Servicing
Agent which has an agreement with the Funds.
SHARE CERTIFICATES
Shares are credited to your account and certificates are not issued unless
you request them by writing to:
The Brandywine Funds
c/o Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701
HOW TO GET IN TOUCH WITH
BRANDYWINE FUNDS
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 FUNDS
You may purchase additional shares (over $1000) 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 7. The
Funds do not accept telephone orders for purchase of shares.
Make your check payable to: Brandywine Fund, Inc. or Brandywine Blue Fund,
Inc.
All checks must be drawn on U.S. banks. Brandywine Funds will not accept
cash or checks made payable to third parties.
NOTE:
In the case of retirement plan accounts established through Servicing Agents,
additional shares may be purchased by the plans through Servicing Agents without
regard to the Funds' minimum subsequent purchase amounts.
HOW TO SELL SHARES IN
BRANDYWINE FUNDS
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:
o the account number(s)
o the amount of money or number of shares being redeemed
o the names on the account
o your daytime phone number
o the signature(s) of all registered account owners, if you plan to request a
redemption in writing
o 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 Funds.
2. You would like the check mailed to an address which has been changed
within 30 days of the redemption request.
o 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 Funds' transfer agent,
Firstar Mutual Fund Services, LLC, 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 Mutual Fund Services, LLC, the Funds' transfer agent, receives your
written request in proper form with all the required information.
BY MAIL
FOR FIRST CLASS MAIL
Brandywine Fund, Inc. or
Brandywine Blue Fund, Inc.
c/o Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701
FOR OVERNIGHT DELIVERY SERVICE OR REGISTERED MAIL:
Brandywine Fund, Inc. or
Brandywine Blue Fund, Inc.
c/o Firstar Mutual Fund Services, LLC
615 E. Michigan St., 3rd Floor
Milwaukee, WI 53202-5207
PLEASE DO NOT MAIL LETTERS BY OVERNIGHT DELIVERY SERVICE OR REGISTERED MAIL
TO THE POST OFFICE BOX ADDRESS.
BY TELEPHONE
Instruct Firstar Mutual Fund Services, LLC that you want the option of
redeeming shares by telephone. This can be done by completing the appropriate
section on the share purchase application.
Assemble the same information that you would include in the letter of
instruction for a written redemption request.
Call Firstar Mutual Fund Services, LLC at 1-800-656-3017 or 1-414-765-4124.
PLEASE DO NOT CALL THE FUND OR THE ADVISER.
REDEMPTION BY TELEPHONE IS NOT AVAILABLE FOR IRA ACCOUNTS OR WHEN SHARE
CERTIFICATES HAVE BEEN ISSUED FOR AN ACCOUNT. FOR MORE INFORMATION ON TELEPHONE
REDEMPTIONS, PLEASE READ THE SECTION ENTITLED "ACCOUNT SERVICES AND POLICIES" ON
PAGE 12.
THROUGH SERVICING
AGENTS
If your shares are held by a Servicing Agent, you must redeem your shares
through the Servicing Agent. Contact the Servicing Agent for instructions on
how to do so.
AUTOMATICALLY
The Systematic Withdrawal Plan option may be activated if you have a minimum
of
$25,000 in your Brandywine
Fund account
$100,000 in your Brandywine
Blue 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 Mutual Fund Services, LLC 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 Mutual Fund
Services, LLC 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.
If you redeem by telephone, Firstar Mutual Fund Services, LLC normally will
transfer the redemption proceeds to your designated bank account if you have
elected to receive redemption proceeds by either electronic funds transfer or
wire. If you redeem shares through a Servicing Agent, you will receive your
redemption proceeds in accordance with the procedures established by the
Servicing Agent.
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
shareholder'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 Mutual
Fund Services, LLC, currently charges a $12 fee for each wire, which is deducted
from the shareholder's account.
HOW TO EXCHANGE SHARES
You may redeem shares in Brandywine Blue Fund and replace them with shares in
Brandywine Fund. You may also redeem shares in Brandywine Fund and replace
them with shares in Brandywine Blue Fund, providing you can meet or have met the
$100,000 minimum. Before exchanging your shares, you should first carefully
read the appropriate sections of the prospectus for the new Fund and you should
consider the tax consequences if yours is a taxable account.
IMPORTANT TAX NOTE:
WHEN YOU EXCHANGE SHARES, YOU ARE SELLING YOUR SHARES IN ONE FUND AND BUYING
SHARES OF ANOTHER 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 if you are opening a new account, (Applications for both
Brandywine Fund and Brandywine Blue Fund are found at the back of this
Prospectus.) to:
Brandywine Fund, Inc.
or
Brandywine Blue Fund, Inc.
c/o Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, Wisconsin 53202
YOU MUST INCLUDE:
Account name
Account number
Amount or number of shares of Fund to be exchanged, sold or redeemed.
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 Funds on
exchanges. THE FUNDS DO NOT PERMIT TELEPHONE EXCHANGES.
DIVIDENDS, DISTRIBUTIONS
AND TAXES
The Funds distribute annually all of their net earnings in the form of
dividends and capital gains as distributions. As long as the Funds meet the
requirements for being a regulated investment company, which is their intent,
they pay no federal income tax on the earnings they distribute to the
shareholders. Consequently, distributions you receive from the Funds, whether
reinvested in additional shares of the Funds or taken as cash, are taxable to
the shareholder in all accounts except tax-exempt accounts.
Income dividends come from the dividends that the Funds earn from their
holdings as well as interest they receive from their cash investments, less
expenses. Capital gains are realized whenever the Funds sell securities for
higher prices than they paid for them. These capital gains are either short
term or long term depending on how long the Funds held the securities.
Most investors have their dividends and capital gains distributions
reinvested in additional shares of the Funds. 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 FUNDS
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 Funds, unless you request them to be paid in cash. You will
be advised of the number of shares purchased and the price paid following
each reinvestment. The amount so reinvested is added to the basis value of
your total investment.
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.
THE PRIMARY DISTRIBUTION WILL NORMALLY BE MADE NEAR THE END OF OCTOBER,
FOLLOWING THE CLOSE OF THE FUNDS' FISCAL YEAR, WITH A SECOND DISTRIBUTION, IF
REQUIRED, AT THE END OF DECEMBER.
In January, the Funds will mail you Form 1099 detailing your dividends and
distributions and their federal tax status, although you should verify your tax
liability with your tax adviser.
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. This may seem unfair to a taxable
investor who has yet to enjoy the returns of the Fund which generated the
distribution. However, your future tax liability may be reduced as a result of
the distribution. In any case, you may wish to consider the Funds' record date
before investing.
STOCKHOLDER 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 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 on the Funds. These
comprehensive reports include an assessment of the Funds' performance, various
comparisons to benchmarks, an overview of the markets, a report from the
Adviser, listings of the Funds' holdings and other items of interest. The
Adviser will also provide interim letters to update stockholders about important
matters.
ACCOUNT SERVICES AND POLICIES
IMMEDIATE BALANCE INFORMATION
We offer a 24-hour a day shareholders service. Just call 1-800-656-3017 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 Funds' site at: http://www.brandywinefunds.com
ACCOUNT MINIMUMS
The Funds reserve 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. 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.
TELEPHONE TRANSACTIONS
It may be difficult to reach the Funds 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 Funds nor Firstar Mutual Fund Services, LLC 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 Funds or their transfer agent, Firstar Mutual Fund Services, LLC.
The Funds reserve 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 Mutual Fund Services, LLC
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 Funds 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.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Funds'
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in the Funds (assuming reinvestment of all dividends and distributions). This
information has been audited by PricewaterhouseCoopers LLP, whose report, along
with the Funds' financial statements, are included in the Annual Report which is
available upon request. To obtain a copy, call 1-800-656-3017 or 1-414-765-
4124.
<TABLE>
BRANDYWINE FUND, INC.
YEARS ENDED SEPTEMBER 30,
---------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $25.99 $43.91 $32.83 $33.92 $24.77
Income from investment operations:
Net investment (loss) income (0.20)(1)<F5> 0.21 (0.07)(1)<F5> (0.08)(1)<F5> (0.10)
Net realized and unrealized gains (losses) on investments 9.64 (11.11) 12.50 2.83 10.70
------ ------ ------ ------ ------
Total from investment operations 9.44 (10.90) 12.43 2.75 10.60
Less distributions:
Dividends from net investment income (0.27) -- -- -- --
Distributions from net realized gains (0.07) (7.02) (1.35) (3.84) (1.45)
------ ------ ------ ------ ------
Total from distributions (0.34) (7.02) (1.35) (3.84) (1.45)
------ ------ ------ ------ ------
Net asset value, end of year $35.09 $25.99 $43.91 $32.83 $33.92
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN 36.8% (27.7%) 39.3% 10.0% 45.5%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's $) 4,194,917 4,780,442 9,532,724 6,038,301 4,137,484
Ratio of expenses to average net assets 1.05% 1.04% 1.04% 1.06% 1.07%
Ratio of net investment (loss) income to average net assets (0.7%) 0.6% (0.3%) (0.4%) (0.4%)
Portfolio turnover rate 208.7% 263.7% 192.4% 202.8% 193.7%
</TABLE>
(1)<F5> In 1999, net investment loss per share was calculated using average
shares outstanding. In prior years, net investment loss per share was
calculated using ending balances prior to consideration of adjustments
for book and tax differences.
<TABLE>
BRANDYWINE BLUE FUND, INC.
YEARS ENDED SEPTEMBER 30,
------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $22.13 $35.78 $25.26 $24.37 $17.18
Income from investment operations:
Net investment (loss) income (0.18)(1)<F6> 0.19 (0.10)(1)<F6> (0.05)(1)<F6> 0.00
Net realized and unrealized gains (losses) on investments 7.85 (8.75) 10.62 2.05 7.30
------ ------ ------ ------ ------
Total from investment operations 7.67 (8.56) 10.52 2.00 7.30
Less distributions:
Dividend from net investment income (0.21) -- -- -- --
Distributions from net realized gains (0.13) (5.09) -- (1.11) (0.11)
------ ------ ------ ------ ------
Total from distributions (0.34) (5.09) -- (1.11) (0.11)
------ ------ ------ ------ ------
Net asset value, end of year $29.46 $22.13 $35.78 $25.26 $24.37
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN 35.2% (26.5%) 41.6% 8.9% 42.8%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's $) 311,984 364,351 617,362 351,459 164,943
Ratio of expenses to average net assets 1.08% 1.06% 1.08% 1.13% 1.31%
Ratio of net investment (loss) income to average net assets (0.7%) 0.6% (0.5%) (0.4%) (0.4%)
Portfolio turnover rate 228.4% 299.5% 202.1% 196.9% 174.1%
</TABLE>
(1)<F6> In 1999, net investment loss per share was calculated using average
shares outstanding. In prior years, net investment loss per share was
calculated using ending balances prior to consideration of adjustments
for book and tax differences.
<TABLE>
(BRANDYWINE FUND, INC. LOGO)
PURCHASE APPLICATION
o This is a follow-up application to an investment by wire transfer.
<S> <C>
Mail to: Brandywine Fund, Inc. Overnight Express Mail to: Brandywine Fund, Inc.
c/o Firstar Mutual Fund c/o Firstar Mutual Fund
Services, LLC Services, LLC
P.O. Box 701 615 E. Michigan St., 3rd Floor
Milwaukee, WI 53201-0701 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)
o By check enclosed payable to Brandywine Fund, Inc. Amount $ -----------------
o 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
o Individual ------------------------- ------------------------- CITIZEN OF o U.S. o OTHER---------------------
NAME SOCIAL SECURITY # BIRTHDATE (Mo/Dy/Yr)
o Joint Owner*<F7> ------------------------- ------------------------- CITIZEN OF o U.S. o OTHER---------------------
(cannot be a minor) NAME SOCIAL SECURITY # BIRTHDATE (Mo/Dy/Yr)
*<F7> Registration will be Joint Tenancy with Rights of Survivorship (JTWROS) unless otherwise specified.
o 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
o Corporation**<F8> ------------------------------------------------------------------------------------------------------------
(including NAME OF TRUSTEE(S) (IF TO BE INCLUDED IN REGISTRATION)***<F9>
Corporate
Pension Plans),**<F8>
Trust, Estate or
Guardianship***<F9>
o Partnership***<F9> ------------------------------------------------------------------------------------------------------------
NAME OF TRUST/CORPORATION**/PARTNERSHIP
o Other Entity***<F9> ---------------------------------------------------- --------------------------------------------------
SOCIAL SECURITY #/TAX ID # DATE OF AGREEMENT (Mo/Dy/Yr)
**<F8> Corporate Resolution is required. ***<F9> Additional documentation and certification may be requested.
C. MAILING ADDRESS o Duplicate Confirmation to:
------------------------------------------ ------------- ----------------------------------- ----- ------------------
STREET APT/SUITE FIRST NAME M.I. LAST NAME
--------------------------------- ------ --------------- --------------------------------------------- ---------------
CITY STATE ZIP STREET APT/SUITE
----------------------------------- -------------------- ----------------------------------- -------- ---------------
DAYTIME PHONE # EVENING PHONE # CITY STATE ZIP
D. DISTRIBUTION OPTIONS Capital gains & dividends will be reinvested if no option is selected.
o Capital Gains & Dividends Reinvested
o Capital Gains & Dividends in Cash
If the distribution is to be paid in cash, specify payment method below:
o Send check to mailing address in Section C.
o 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 I (we) authorize Brandywine Fund, Inc., to act upon my (our) telephone instructions to redeem shares from
REDEMPTION OPTIONS this account. Please check all that may apply.
(800) 656-3017 OR o The proceeds will be mailed to the address in Section C.
(414) 765-4124 o 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.
o By EFT. Proceeds generally take up to 3 business days to reach your bank (complete bank information
below).
Your signed Application
must be received at least
15 business days prior --------------------------------------------------------- ---------------------------------------------
to initial transaction. NAME(S) ON BANK ACCOUNT ABA NUMBER OR ROUTING NUMBER
--------------------------------------------------------- ---------------------------------------------
An unsigned voided check BANK NAME ACCOUNT NUMBER
(for checking accounts) ---------------------------------------------------------------------------------------------------------
or a savings account BANK ADDRESS
deposit slip is required
with your Application.
To ensure proper crediting of your bank account, please attach a voided check or a deposit slip.
F. SYSTEMATIC I would like to withdraw from Brandywine Fund, Inc. $ --------------- (no minimum) as follows:
WITHDRAWALS o I would like to have payments made to me on or about the ---------- day of each month, or
o 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.
o 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 Neither the Fund nor its transfer agent will be responsible for the authenticity of transaction
CERTIFICATION instructions received by telephone, provided that reasonable security procedures have been followed.
REQUIRED BY THE By selecting the options in Section (E or F), I hereby authorize the Fund to initiate credits to my
INTERNAL REVENUE account at the bank indicated and for the bank to credit the same to such account through the Automated
SERVICE 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*<F10>
--------------------------------------------------------- ----------------------------------------------
DATE (Mo/Dy/Yr) SIGNATURE OF CO-OWNER, if any
*<F10> 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
(BRANDYWINE BLUE FUND, INC. LOGO)
PURCHASE APPLICATION
o This is a follow-up application to an investment by wire transfer.
Mail to: Brandywine Blue Fund, Inc. Overnight Express Mail to: Brandywine Blue Fund, Inc.
c/o Firstar Mutual Fund c/o Firstar Mutual Fund
Services, LLC Services, LLC
P.O. Box 701 615 E. Michigan St., 3rd Floor
Milwaukee, WI 53201-0701 Milwaukee, WI 53202-5207
Use this form for individual, custodial, trust, profit-sharing or pension plan accounts. For any additional information please call
Brandywine Blue Fund, Inc. at 1-800-656-3017 or 1-414-765-4124.
A. INVESTMENT Please indicate the amount you wish to invest $ --------------- ($100,000 MINIMUM)
o By check enclosed payable to Brandywine Blue Fund, Inc. Amount $ -----------------
o 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
o Individual ------------------------- ------------------------- CITIZEN OF o U.S. o OTHER---------------------
NAME SOCIAL SECURITY # BIRTHDATE (Mo/Dy/Yr)
o Joint Owner*<F11> ------------------------- ------------------------- CITIZEN OF o U.S. o OTHER---------------------
(cannot be a minor) NAME SOCIAL SECURITY # BIRTHDATE (Mo/Dy/Yr)
*<F11> Registration will be Joint Tenancy with Rights of Survivorship (JTWROS) unless otherwise specified.
o 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
o Corporation**<F12> ------------------------------------------------------------------------------------------------------------
(including NAME OF TRUSTEE(S) (IF TO BE INCLUDED IN REGISTRATION)***<F13>
Corporate
Pension Plans),**<F12>
Trust, Estate or
Guardianship***<F13>
o Partnership***<F13> ---------------------------------------------------------------------------------------------------------
NAME OF TRUST/CORPORATION**/PARTNERSHIP
o Other Entity***<F13> ---------------------------------------------------- --------------------------------------------------
SOCIAL SECURITY #/TAX ID # DATE OF AGREEMENT (Mo/Dy/Yr)
**<F12> Corporate Resolution is required. ***<F13> Additional documentation and certification may be requested.
C. MAILING ADDRESS o Duplicate Confirmation to:
------------------------------------------ ------------- ----------------------------------- ----- ------------------
STREET APT/SUITE FIRST NAME M.I. LAST NAME
--------------------------------- ------ --------------- --------------------------------------------- ---------------
CITY STATE ZIP STREET APT/SUITE
----------------------------------- -------------------- ----------------------------------- -------- ---------------
DAYTIME PHONE # EVENING PHONE # CITY STATE ZIP
D. DISTRIBUTION OPTIONS Capital gains & dividends will be reinvested if no option is selected.
o Capital Gains & Dividends Reinvested
o Capital Gains & Dividends in Cash
If the distribution is to be paid in cash, specify payment method below:
o Send check to mailing address in Section C.
o 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 I (we) authorize Brandywine Fund, Inc., to act upon my (our) telephone instructions to redeem shares from
REDEMPTION OPTIONS this account. Please check all that may apply.
(800) 656-3017 OR o The proceeds will be mailed to the address in Section C.
(414) 765-4124 o 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.
o By EFT. Proceeds generally take up to 3 business days to reach your bank (complete bank information
below).
Your signed Application
must be received at least
15 business days prior --------------------------------------------------------- ---------------------------------------------
to initial transaction. NAME(S) ON BANK ACCOUNT ABA NUMBER OR ROUTING NUMBER
--------------------------------------------------------- ---------------------------------------------
An unsigned voided check BANK NAME ACCOUNT NUMBER
(for checking accounts) ---------------------------------------------------------------------------------------------------------
or a savings account BANK ADDRESS
deposit slip is required
with your Application.
To ensure proper crediting of your bank account, please attach a voided check or a deposit slip.
F. SYSTEMATIC I would like to withdraw from Brandywine Blue Fund, Inc. $ --------------- (no minimum) as follows:
WITHDRAWALS o I would like to have payments made to me on or about the ---------- day of each month, or
o 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.
o 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 Neither the Fund nor its transfer agent will be responsible for the authenticity of transaction
CERTIFICATION instructions received by telephone, provided that reasonable security procedures have been followed.
REQUIRED BY THE By selecting the options in Section (E or F), I hereby authorize the Fund to initiate credits to my
INTERNAL REVENUE account at the bank indicated and for the bank to credit the same to such account through the Automated
SERVICE 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 IRS DOES 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*<F14>
--------------------------------------------------------- ----------------------------------------------
DATE (Mo/Dy/Yr) SIGNATURE OF CO-OWNER, if any
*<F14> 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
</TABLE>
To learn more about the Brandywine Funds, you may want to read the Statement of
Additional Information (or "SAI") which contains additional information about
the Funds. The Brandywine Funds have incorporated by reference the SAI into the
Prospectus. This means that you should consider the contents of the SAI to be
part of the Prospectus.
You also may learn more about Brandywine Funds' investments by reading the
Funds' annual and semi-annual reports to shareholders. The annual report
includes a discussion of the market conditions and investment strategies that
significantly affected the performance of each Fund during the fiscal year.
The SAI and the Funds' annual and semi-annual reports are available, without
charge, by calling 1-800-656-3017 or 1-414-765-4124 or by writing to:
The Brandywine Funds
3908 Kennett Pike
P. O. Box 4166
Greenville, Delaware 19807
Prospective investors and shareholders who have questions about Brandywine Funds
may also call the above numbers or write to the above address.
The general public can review and copy information about Brandywine Funds
(including the SAI) at the Securities and Exchange Commission's Public Reference
Room in Washington, D.C. (Please call 1-800-SEC-0330 for information on the
operations of the Public Reference Room.) Reports and other information about
Brandywine Funds are also available at the Securities and Exchange Commission's
Internet site at http://www.sec.gov and copies of this information may be
obtained, upon payment of a duplicating fee, by electronic request at the
following E-mail address: [email protected], or by writing to:
Public Reference Section
Securities and Exchange Commission
Washington, D.C. 20549-6009
Please refer to Brandywine Funds Investment Company Act File No.811-0447 for
Brandywine Fund and No. 811-06221 for Brandywine Blue Fund when seeking
information about the Funds from the Securities and Exchange Commission.
STATEMENT OF ADDITIONAL INFORMATION January 31, 2000
- -----------------------------------
BRANDYWINE FUNDS
This Statement of Additional Information is not a prospectus and
should be read in conjunction with the prospectus of the Brandywine Funds dated
January 31, 2000. Requests for copies of the prospectus should be made in
writing to the Brandywine Funds, P.O. Box 4166, Greenville, Delaware, 19807,
Email: [email protected] or Website: www.brandywinefunds.com, or by calling
(800) 656-3017.
The following financial statements are incorporated by reference to
the Annual Report, dated September 30, 1999, of Brandywine Fund, Inc. (File No.
811-04447) and Brandywine Blue Fund, Inc. (File No. 811-6221), as filed with the
Securities and Exchange Commission on October 18, 1999:
Brandywine Fund, Inc.
Statement of Net Assets
Statement of Operations
Statements of Changes in Net Assets
Financial Highlights
Brandywine Blue Fund, Inc.
Statement of Net Assets
Statement of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements (combined)
Report of Independent Accountants (combined)
Stockholders may obtain a copy of the Annual Report, without charge,
by calling (800) 656-3017.
BRANDYWINE FUND, INC.
BRANDYWINE BLUE FUND, INC.
3908 Kennett Pike
Greenville, Delaware 19807
<PAGE>
BRANDYWINE FUNDS
Table of Contents
-----------------
Page No.
--------
GENERAL INFORMATION AND HISTORY..........................................1
INVESTMENT RESTRICTIONS..................................................1
INVESTMENT CONSIDERATIONS................................................3
DIRECTORS AND OFFICERS OF THE COMPANIES..................................4
PRINCIPAL STOCKHOLDERS...................................................9
INVESTMENT ADVISER......................................................10
SERVICE AGREEMENTS......................................................12
DETERMINATION OF NET ASSET VALUE AND PERFORMANCE........................12
PURCHASE OF SHARES......................................................15
REDEMPTION OF SHARES....................................................16
SYSTEMATIC WITHDRAWAL PLAN..............................................16
ALLOCATION OF PORTFOLIO BROKERAGE.......................................17
CUSTODIAN...............................................................18
TAXES...................................................................18
STOCKHOLDER MEETINGS....................................................19
CAPITAL STRUCTURE.......................................................20
INDEPENDENT ACCOUNTANTS.................................................21
DESCRIPTION OF SECURITIES RATINGS.......................................21
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 31, 2000 and, if given or made,
such information or representations may not be relied upon as having been
authorized by the Brandywine Funds.
This Statement of Additional Information does not constitute an offer
to sell securities.
<PAGE>
GENERAL INFORMATION AND HISTORY
Brandywine Fund, Inc. and Brandywine Blue Fund, Inc. (collectively the
"Companies") are open-end, diversified management companies registered under the
Investment Company Act of 1940 (the "Act"). The Companies are Maryland
corporations. Brandywine Fund, Inc. was incorporated on October 9, 1985 and
Brandywine Blue Fund, Inc. was incorporated on November 13, 1990. (Brandywine
Fund, Inc. and Brandywine Blue Fund, Inc. are sometimes hereinafter individually
referred to as a "Fund" and collectively as the "Funds").
INVESTMENT RESTRICTIONS
Each of the Funds 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 that 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 that Fund.
1. Neither Fund will purchase securities on margin, participate in a
joint-trading account, sell securities short, or write or invest in put or call
options.
2. Brandywine Blue Fund will not purchase warrants. Brandywine 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.
3. Neither Fund will borrow money or issue senior securities, except
for temporary bank borrowings 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 neither Fund will pledge any of
its assets except to secure borrowings and then only to an extent not greater
than 10% of the value of such Fund's net assets. Neither Fund will purchase
securities while it has any outstanding borrowings.
4. Neither Fund will 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 do not exceed 10% of such Fund's total assets) and neither Fund will
lend its portfolio securities.
5. Neither Fund will purchase securities of other investment companies
except (a) as part of a plan of merger, consolidation or reorganization approved
by the stockholders of such 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 such 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 such Fund's assets, taken at current value, would be invested in
securities of registered closed-end investment companies.
<PAGE>
6. Neither Fund will make investments for the purpose of exercising
control or management of any company.
7. Each 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 Act (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 such Fund and to not
more than 10% of the outstanding voting securities of such issuer.)
8. Neither Fund will concentrate 25% or more of the value of its total
assets, determined at the time an investment is made, exclusive of U.S.
Government securities, in securities issued by companies engaged in the same
industry.
9. Neither Fund will acquire or retain any security issued by a
company, an officer or director of which is an officer or director of the
Companies or an officer, director or other affiliated person of the Funds'
investment adviser.
10. Neither Fund will acquire or retain any security issued by a
company if any of the directors or officers of the Companies, or directors,
officers or other affiliated persons of the Funds' 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.
11. Neither Fund will act as an underwriter or distributor of
securities other than of its shares and neither Fund will purchase any
securities which are restricted from sale to the public without registration
under the Securities Act of 1933, as amended.
12. Neither Fund will purchase any interest in any oil, gas or any
other mineral exploration or development program.
13. Neither Fund will purchase or sell real estate or real estate
mortgage loans. (This prohibition shall include limited partnership interests of
limited partnerships investing in real estate, but shall not include readily
marketable investments in real estate investment trusts or readily marketable
securities of companies investing in real estate.)
14. Neither Fund will purchase or sell commodities or commodities
contracts, including futures contracts.
The following investment limitation is not fundamental and may be
changed without stockholder approval.
1. Neither Fund will invest in securities of unseasoned issuers,
including their predecessors, which have been in operation for less than 3
years, or equity securities of
2
<PAGE>
issuers which are not readily marketable, if by reason thereof the value of its
aggregate investment in such securities would exceed 5% of its total assets.
Unless specifically stated in an investment restriction, if a
percentage restriction is adhered to at the time of investment, a later increase
or decrease in percentage resulting from changes in value of a Fund's assets
will not constitute a violation of that restriction.
INVESTMENT CONSIDERATIONS
Each of the Funds invests mainly in common stocks of U.S. companies.
However when the Funds' investment adviser believes that securities other than
common stocks offer opportunity for long-term capital appreciation, each Fund
may invest up to 30% of its net assets in publicly distributed debt securities,
preferred stocks, particularly those which are convertible into or carry rights
to acquire common stocks, and warrants (Brandywine Fund only). 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. Each Fund will
limit its investments in publicly distributed debt securities to those which
have been assigned one of the three highest ratings of either Standard & Poor's
Corporation (AAA, AA and A) or Moody's Investors Service, Inc. (Aaa, Aa and A).
In the event a publicly distributed debt security is downgraded after
investment, a Fund may retain such security unless it is rated less than
investment grade (i.e., less than BBB by Standard & Poor's Corporation or Baa by
Moody's Investors Service, Inc.). If it is downgraded below investment grade,
the Fund will promptly dispose of such publicly distributed debt security. A
description of the foregoing ratings is set forth in "Description of Securities
Ratings."
The Funds may invest in securities of foreign issuers or in American
Depository Receipts of such issuers, but will limit its investments in such
securities to 10% of its net assets. Such investments may involve risks which
are in addition to the usual risks inherent in domestic investments. The value
of a Fund's foreign investments may be significantly affected by changes in
currency exchange rates and the Fund may incur costs in converting securities
denominated in foreign currencies to U.S. dollars. In many countries, there is
less publicly available information about issuers than is available in the
reports and ratings published about companies in the United States.
Additionally, foreign companies are not 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 a Fund's income
without providing a tax credit for the Fund's stockholders. Although the Funds
intend to invest in securities of foreign issuers domiciled in nations which the
Funds' investment adviser considers as having 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.
The money market instruments in which the Funds 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,
surplus and undivided profits, as of the date of its most recently published
annual financial statements, with a value in excess of $100,000,000 at
3
<PAGE>
the date of investment), commercial paper rated A-1 by Standard & Poor's
Corporation, commercial paper master notes and repurchase agreements. Commercial
paper master notes are unsecured promissory notes issued by corporations to
finance short-term credit needs. They permit a series of short-term borrowings
under a single note. Borrowings under commercial paper master notes are payable
in whole or in part at any time upon demand, may be prepaid in whole or in part
at any time, and bear interest at rates which are fixed to known lending rates
and automatically adjusted when such known lending rates change. There is no
secondary market for commercial paper master notes. The Funds' investment
adviser will monitor the creditworthiness of the issuers 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 Funds will not enter into repurchase agreements with entities
other than banks or invest over 5% of its net assets in repurchase agreements
with maturities of more than seven days. If a seller of a repurchase agreement
defaults and does not repurchase the security subject to the agreement, the Fund
will look to the collateral security underlying the seller's repurchase
agreement, including the securities subject to the repurchase agreement, for
satisfaction of the seller's obligation to the Fund. In such event, the Fund
might incur disposition costs in liquidating the collateral and might suffer a
loss if the value of the collateral declines. In addition, if bankruptcy
proceedings are instituted against a seller of a repurchase agreement,
realization upon the collateral may be delayed or limited.
DIRECTORS AND OFFICERS OF THE COMPANIES
As Maryland corporations, the business and affairs of each Company are
managed by its officers under the direction of its Board of Directors. The same
persons currently serve as directors and officers of both Brandywine Fund, Inc.
and Brandywine Blue Fund, Inc. The name, address, principal occupations during
the past five years and other information with respect to each of the directors
and officers of the Companies are as follows:
FOSTER S. FRIESS*
- ----------------
115 East Snow King Avenue
P. O. Box 576
Jackson, Wyoming
(PRESIDENT, TREASURER AND A
DIRECTOR OF EACH COMPANY)
Mr. Friess, age 59, has served as President, Treasurer and a director
of both Companies since their inceptions. 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 for the Funds since their 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
4
<PAGE>
member of the Advisory Council of the Royal Swedish Academy of Sciences and sits
on the Board of Advisers for the John Templeton Foundation.
STIG RAMEL
- ----------
Resedavagen 8
171732 Solna
Sweden
(DIRECTOR)
Mr. Ramel, age 72, who is now retired, 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. Mr. Ramel has served as a director of the
Companies since their inception.
JOHN E. BURRIS
- --------------
5th and McColley Street
Milford, Delaware
(DIRECTOR)
Mr. Burris, age 79, 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 a member of the board of directors of Milford
Memorial Hospital and is a member of the Private Industry Council for the State
of Delaware. He has served as a director of the Companies since their inception.
MARVIN N. SCHOENHALS
- --------------------
9th and Market Streets
Wilmington, Delaware
(DIRECTOR)
Mr. Schoenhals, age 52, is President and Chief Executive Officer of
WSFS Financial Corp., a bank holding company. He has served as an officer of
WSFS Financial Corp. since 1990.
5
<PAGE>
LYNDA J. CAMPBELL
- -----------------
3908 Kennett Pike
Greenville, Delaware
(VICE PRESIDENT AND SECRETARY)
Ms. Campbell, age 54, has served as Vice President of the Companies
since May, 1998 and as Secretary since 1990. She is also an employee of Friess
Associates, Inc. and has been employed in various capacities with such firm
since December, 1985.
WILLIAM F. D'ALONZO
- -------------------
3908 Kennett Pike
Greenville, Delaware
(VICE PRESIDENT)
Mr. D'Alonzo, age 45, has been an analyst for Friess Associates, Inc.
since 1981. He also has served as a Vice President of the Companies since April,
1990.
JOHN D. FRASER
- --------------
3908 Kennett Pike
Greenville, Delaware
(VICE PRESIDENT)
Mr. Fraser, age 40, has been an analyst for Friess Associates, Inc.
since 1996. From 1985 to 1996, he also served as a Vice President of Credit
Suisse First Boston. Since May, 1998, he has served as a Vice President of the
Companies.
CARL S. GATES
- -------------
3908 Kennett Pike
Greenville, Delaware
(VICE PRESIDENT)
Mr. Gates, age 67, has been an analyst for Friess Associates, Inc.
since 1988. He has served as a Vice President of the Companies since April,
1994.
6
<PAGE>
ANDREW T. GRAVES
- ----------------
3908 Kennett Pike
Greenville, Delaware
(VICE PRESIDENT)
Mr. Graves, age 33, has been an analyst for Friess Associates, Inc.
since 1991. He has served as a Vice President of the Companies since May, 1998.
DAVID T. HARRINGTON
- -------------------
3908 Kennett Pike
Greenville, Delaware
(VICE PRESIDENT)
Mr. Harrington, age 37, has been an analyst for Friess Associates,
Inc. since 1991. He has served as a Vice President of the Companies since May,
1998.
JOHN P. RAGARD
- --------------
3908 Kennett Pike
Greenville, Delaware
(VICE PRESIDENT)
Mr. Ragard, age 45, has been an analyst for Friess Associates, Inc.
since 1993. He has served as a Vice President of the Companies since May, 1998.
PAUL R. ROBINSON
- ----------------
3908 Kennett Pike
Greenville, Delaware
(VICE PRESIDENT AND ASSISTANT SECRETARY)
Mr. Robinson, age 76, has been a consultant for Friess Associates,
Inc. since June, 1985. He has served as a Vice President of the Funds since
1990.
- ------------------
* Mr. Friess is the only director who is an "interested person" of the
Companies as that term is defined in the Act.
7
<PAGE>
During the fiscal year ended September 30, 1999, the Brandywine Fund
paid $43,132 in director's fees to the Companies' disinterested directors and
Brandywine Blue Fund paid $8,813 in director's fees to the Companies'
disinterested directors. For the fiscal year ending September 30, 2000,
Brandywine Fund's standard method of compensating directors is to pay each
disinterested director an annual fee of $20,000. For the fiscal year ending
September 30, 2000, Brandywine Blue Fund's standard method of compensating
directors is to pay each disinterested director an annual fee of $5,000.
Directors may elect to defer the receipt of some or all of the compensation they
earn as directors. The Companies also may reimburse directors for travel
expenses incurred in order to attend meetings of the Board of Directors.
The table below sets forth the compensation paid by the Brandywine
Fund and Brandywine Blue Fund to each of the directors of the Companies during
the fiscal year ended September 30, 1999:
<TABLE>
COMPENSATION TABLE
Brandywine Fund
<CAPTION>
Pension or Total
Retirement Compensation
Aggregate Benefits Accrued Estimated Annual from Fund and
Compensation As Part of Fund Benefits Upon Fund Complex(2)
Name of Person From Fund(1) Expenses Retirement Paid to Directors
-------------- ------------ -------- ---------- -----------------
<S> <C> <C> <C> <C>
Foster S. Friess $0 $0 $0 $0
Stig Ramel(3) $15,000 $0 $0 $18,000
John E. Burris(3) $15,000 $0 $0 $18,000
Marvin N. Schoenhals(3)(4) $13,132 $0 $0 $15,945
- ---------------
(1) Includes amounts deferred at the election of the director.
(2) Brandywine Fund and Brandywine Blue Fund are the only funds in the Fund Complex.
(3) At September 30, 1999 the total amount of deferred compensation payable to each of Mr. Burris, Mr. Ramel and
Mr. Schoenhals was $10,000.
(4) Mr. Schoenhals became a director on December 8, 1998.
</TABLE>
8
<PAGE>
<TABLE>
COMPENSATION TABLE
Brandywine Blue Fund
<CAPTION>
Pension or Total
Retirement Compensation
Aggregate Benefits Accrued Estimated Annual from Fund and
Compensation As Part of Fund Benefits Upon Fund Complex(2)
Name of Person From Fund(1) Expenses Retirement Paid to Directors
-------------- ------------ -------- ---------- -----------------
<S> <C> <C> <C> <C>
Foster S. Friess $0 $0 $0 $0
Stig Ramel(3) $3,000 $0 $0 $18,000
John E. Burris(3) $3,000 $0 $0 $18,000
Marvin N. Schoenhals(3)(4) $2,813 $0 $0 $15,945
- ----------------------
(1) Includes amounts deferred at the election of the director.
(2) Brandywine Fund and Brandywine Blue Fund are the only funds in the Fund Complex.
(3) At September 30, 1999 the total amount of deferred compensation payable to each of Mr. Burris, Mr. Ramel and
Mr. Schoenhals was $2,500.
(4) Mr. Schoenhals became a director on December 8, 1998.
</TABLE>
The Funds and Friess Associates, Inc. (the "Adviser") have adopted a
code of ethics pursuant to Rule 17j-1 under the Act. The code of ethics permits
personnel subject thereto to invest in securities, including securities that may
be purchased or held by a Fund. The code of ethics prohibits, among other
things, persons subject thereto from purchasing or selling securities if they
know at the time of such purchase or sale that the security is being considered
for purchase or sale by a Fund or is being purchased or sold by a Fund.
PRINCIPAL STOCKHOLDERS
At October 31, 1999, all officers and directors of the Companies as a
group (12 persons) beneficially owned 2,115,233 shares of common stock of
Brandywine Fund, or 1.71% of the then outstanding shares. At such date, Charles
Schwab & Co., Inc., 101 Montgomery Street, San Francisco, California 94111,
owned of record 12,003,141 shares of Brandywine Fund's common stock, or 9.70% of
the then outstanding shares. All of the shares owned by Charles Schwab & Co.,
Inc. were owned of record only.
At October 31, 1999, all officers and directors of the Companies as a
group (12 persons) beneficially owned 1,176,600 shares of common stock of
Brandywine Blue Fund, or 10.77% of the then outstanding shares. At such date,
Foster S. Friess, P.O. Box 4166, Greenville, Delaware 19807, owned 1,106,322
shares of the Brandywine Blue Fund's common stock, or 10.12% of the then
outstanding shares, of which 1,090,508 shares were held as trustee; Norwest Bank
MN Tr., FBO Worldspan Employees Pension Plan, P.O. Box 1533, Minneapolis, MN
55480 owned 745,214 shares of Brandywine Blue Fund's common stock, or 6.82% of
the then outstanding shares; and Charles Schwab & Co., Inc., 101
9
<PAGE>
Montgomery Street, San Francisco, California 94111, owned of record 629,616
shares of the Brandywine Blue Fund's common stock, or 5.76% 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 Funds were not aware of any person who,
as of October 31, 1999, owned of record or beneficially 5% or more of the shares
of either Fund.
INVESTMENT ADVISER
The investment adviser to each Fund is Friess Associates, Inc. (the
"Adviser"). The Adviser is controlled by Foster and Lynnette Friess, who are its
sole directors and stockholders. Pursuant to investment advisory agreements
between each Fund and the Adviser (the "Advisory Agreements") the Adviser
furnishes continuous investment advisory services and management to the Funds.
During each of the last three fiscal years, the Funds paid the Adviser
investment advisory fees as set forth below:
Fund Fiscal Year Ended September 30 Investment Advisory Fees
---- ------------------------------ ------------------------
Brandywine Fund 1999 $44,381,056
1998 $74,538,363
1997 $73,988,269
Brandywine Blue Fund 1999 $ 3,346,646
1998 $ 5,424,730
1997 $ 4,414,637
The Funds pay all of their expenses not assumed by the Adviser
including, but not limited to, the costs of preparing and printing their
registration statements required under the Securities Act of 1933 and the Act
and any amendments thereto, the expense of registering their 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, 1999, 1998
and 1997, such expenses included administrative services performed by the
Adviser for which the Adviser was reimbursed by the Funds as set forth below:
10
<PAGE>
Fiscal Year Administrative
Fund Ended September 30 Reimbursements
---- ------------------ --------------
Brandywine Fund 1999 $6,790
1998 $11,820
1997 $ 5,675
Brandywine Blue Fund 1999 $ 3,045
1998 $ 2,620
1997 $ 1,775
The Funds also pay the fees of directors who are not interested persons of the
Companies, salaries of administrative and clerical personnel, association
membership dues, auditing and accounting services, fees and expenses of any
custodian or trustees having custody of assets of the Funds, expenses of
calculating the Funds' net asset values 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 each 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 assets of such 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 Funds' shares are qualified for sale. As of the date
hereof, no such state law provision was applicable to either Fund. Each Fund
monitors its expense ratio at least on a monthly basis. If the accrued amount of
the expenses of a Fund exceeds the applicable 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 such Fund's fiscal year if accrued expenses thereafter fall below this limit.
Notwithstanding the most restrictive applicable expense limitation of state
securities commissions described above, the Adviser has voluntarily agreed to
reimburse each Fund for any such expenses incurred in excess of 2% of average
net assets. No reimbursement was required during the fiscal years ended
September 30, 1999, 1998 and 1997.
Each Advisory Agreement will remain in effect as long as its
continuance is specifically approved at least annually, by (i) the Board of
Directors of the applicable Company, or by the vote of a majority (as defined in
the Act) of the outstanding shares of the applicable Fund, and (ii) by the vote
of a majority of the directors of the applicable Company who are not parties to
the Advisory Agreement or interested persons of the Adviser, cast in person at a
meeting called for the purpose of voting on such approval. Each Advisory
Agreement provides that it may be terminated at any time without the payment of
any penalty, by the Board of Directors of the applicable Company or by vote of a
majority of the applicable Fund's stockholders, on sixty days written notice to
the Adviser, and by the Adviser on the
11
<PAGE>
same notice to the applicable Fund and that it shall be automatically terminated
if it is assigned.
Each Advisory Agreement provides that the Adviser shall not be liable
to the applicable Fund or its stockholders for anything other than willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations or duties. Each Advisory 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 AGREEMENTS
Each Fund has entered into a Service Agreement with Fiduciary
Management, Inc., 225 East Mason Street, Milwaukee, Wisconsin 53202. Pursuant to
the Service Agreements, Fiduciary Management, Inc. serves as the Funds'
administrator and in this capacity is responsible for (a) calculating daily each
Fund's net asset value, (b) recordkeeping and (c) preparing financial
statements, excise tax returns and reports required by the Securities and
Exchange Commission. For these services each Fund pays Fiduciary Management,
Inc. a negotiated annual fee and varying fees for blue sky filing services.
During each of the last three fiscal years, the Funds paid Fiduciary Management,
Inc. fees pursuant to the Service Agreements as set forth below:
Fiscal Year
Fund Ended September 30 Service Fees
---- ------------------ ------------
Brandywine Fund 1999 $439,800
1998 $439,800
1997 $383,800
Brandywine Blue Fund 1999 $108,800
1998 $108,800
1997 $ 91,800
Each Service Agreement may be terminated at any time by either the Fund or
Fiduciary Management, Inc. upon 90 days written notice. Each 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
The net asset value of each 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,
12
<PAGE>
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. The New York Stock Exchange also
may be closed on national days of mourning.
The net asset value (or "price") per share of each Fund is determined
by dividing the total value of that Fund's investments and other assets less any
liabilities, by the number of its outstanding shares. In calculating each Fund's
net asset value, securities traded on any national stock exchange or quoted on
the NASDAQ National Market System are 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 are valued at the most recent bid price, if
market quotations are readily available. Debt securities (other than short term
instruments) are valued at the latest bid prices furnished by independent
pricing services. Any securities for which there are no readily available market
quotations and other assets are valued at their fair value as determined in good
faith by the Board of Directors. Securities with maturities of 60 days or less
are valued at amortized cost.
From time to time the Funds may provide performance information in
advertisements, sales literature or information to stockholders. Fund
performance may be quoted numerically or may be represented in a table, graph or
other illustration by presenting one or more performance measurements, including
total return and average annual compounded rate of return. A Fund's average
annual compounded rate of return is the rate of return which, if applied to an
initial investment in a 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 performance information quoted
by the Funds ignores individual income tax consequences to stockholders.
Any total rate of return quotation for a 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 a Fund will be calculated by dividing
the net change in value of a hypothetical stockholder 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 stockholder 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 rate of return quotation of a 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:
13
<PAGE>
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.
The average annual compounded rate of return for each Fund for various
periods ended September 30, 1999 is set forth below:
Fund One Year Five Years Ten Years Since Inception
- ---- -------- ---------- --------- ---------------
Brandywine Fund 36.84% 17.14% 16.12% 17.03%*
Brandywine Blue Fund 35.22% 16.94% N/A 18.86%**
- ------------------
* December 30, 1985
** January 10, 1991
The results below show the value of an assumed initial investment in
Brandywine Fund of $25,000 made on December 30, 1985 through December 31, 1999,
assuming reinvestment of all dividends and distributions:
Value of $25,000 Cumulative
December 31 Investment % Change
----------- ---------- --------
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
1998 187,607 +650.4
1999 _______ +_____
14
<PAGE>
The results below show the value of an assumed initial investment in
Brandywine Blue Fund of $100,000 made on January 10, 1991 through December 31,
1999, assuming reinvestment of all dividends and distributions:
Value of $100,000 Cumulative
December 31 Investment % Change
----------- ---------- --------
1991 $140,009 + 40.0%
1992 158,390 + 58.4%
1993 201,473 +101.5
1994 206,135 +106.1
1995 272,775 +172.8
1996 336,144 +236.1
1997 400,854 +300.9
1998 396,919 +296.9
1999 _______ +_____
The above performance results are historical and should not be
considered indicative of the future performance of either Fund. An investment in
either Fund will fluctuate in value, and at redemption its value may be more or
less than the initial investment.
The Funds may compare their performance to other mutual funds with
similar investment objectives and to the industry as a whole, as quoted by
ranking services and publications of general interest. For example, this may
include Morningstar, Inc. and Lipper Analytical Services, Inc. (independent fund
ranking services) and magazines, such as Money, Forbes and Business Week. In
addition, the Funds may compare their performance to that of other selected
mutual funds or recognized market indicators, including the Standard & Poor's
500 Stock Index, S&P MidCap 400 Index, Russell 2000 Index, Nasdaq Industrials
Index and the Dow Jones Industrial Average. Such performance rankings or
comparisons may be made with mutual funds that may have different investment
restrictions, objectives, policies or techniques than the Funds, and such other
funds or market indicators may be comprised of securities that differ from those
the Funds hold or may purchase.
PURCHASE OF SHARES
The Funds have adopted procedures pursuant to Rule 17a-7 under the Act
pursuant to which a Fund may effect a purchase and sale transaction with an
affiliated person of that 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 that 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 either Fund has a beneficial interest.
15
<PAGE>
REDEMPTION OF SHARES
A stockholder's right to redeem shares of either Fund will be
suspended and the stockholder's right to payment postponed for more than seven
days for any period during which the New York Stock Exchange is closed because
of financial conditions or any other extraordinary reason and may be suspended
for any period during which (a) trading on the New York Stock Exchange is
restricted pursuant to rules and regulations of the Securities and Exchange
Commission, (b) the Securities and Exchange Commission has by order permitted
such suspension or (c) such emergency, as defined by rules and regulations of
the Securities and Exchange Commission, exists as a result of which it is not
reasonably practicable for the applicable Fund to dispose of such Fund's
securities or to determine fairly the value of its net assets.
SYSTEMATIC WITHDRAWAL PLAN
A stockholder who owns Brandywine Fund shares worth at least $25,000
or Brandywine Blue Fund shares worth at least $100,000 at the current net asset
value may, by completing an application which may be obtained from Firstar
Mutual Fund Services, LLC, 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
applicable 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, a 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 a 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
16
<PAGE>
Firstar Mutual Fund Services, LLC in writing. The stockholder also may vary the
amount or frequency of withdrawal payments or temporarily discontinue them by
notifying Firstar Mutual Fund Services, LLC by telephone at (800) 656-3017 or
(414) 765-4124.
ALLOCATION OF PORTFOLIO BROKERAGE
Decisions to buy and sell securities for each Fund are made by the
Adviser subject to review by the Companies' Board of Directors. In placing
purchase and sale orders for portfolio securities for the Funds, 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 a 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 (i.e. "markups"
when the market maker sells a security and "markdowns" when the market maker
buys a security). 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 a Fund effects portfolio transactions may recommend
the purchase of either Fund's shares, the Adviser will not allocate portfolio
brokerage on the basis of recommendations to purchase shares of the Funds.
In allocating brokerage business for the Funds, 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 Advisory Agreements. Other clients of
the Adviser may indirectly benefit from the availability of these services to
the Adviser, and the Funds may indirectly benefit from services available to the
Adviser as a result of transactions for other clients. The Advisory Agreements
provide that the Adviser may cause a 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 it exercises investment discretion.
During each of the last three fiscal years, the Funds paid brokerage
commissions as follows:
17
<PAGE>
<TABLE>
<CAPTION>
Transactions for which
Fiscal Year Ended Brokerage Commission Brokerage Commissions
Fund September 30 Paid Were Paid
---- ------------ ---- ---------
<S> <C> <C> <C>
Brandywine Fund 1999 $21,991,988 $14,605,199,565
1998 $34,771,229 $22,441,949,770
1997 $26,473,262 $16,308,681,312
Brandywine Blue Fund 1999 $ 1,863,923 $ 1,298,526,102
1998 $ 2,949,957 $ 1,992,497,872
1997 $ 1,907,197 $ 1,180,501,076
</TABLE>
Of the brokerage commissions paid by Brandywine Fund in the fiscal year ended
September 30, 1999 all but $1,124,490 on transactions of $603,072,667 were paid
to brokers who provided research services to the Adviser. Of the brokerage
commissions paid by Brandywine Blue Fund in the fiscal year ended September 30,
1999 all but $140,910 on transactions of $82,099,626 were paid to brokers who
provided research services to the Adviser.
CUSTODIAN
Firstar Bank, N.A., 615 East Michigan Street, Milwaukee, Wisconsin
53202, acts as custodian for the Funds. As such, Firstar Bank, N.A. holds all
securities and cash of each 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
Companies. Firstar Bank, N.A. does not exercise any supervisory function over
the management of the Funds, the purchase and sale of securities or the payment
of distributions to stockholders. Firstar Mutual Fund Services, LLC, an
affiliate of Firstar Bank, N.A., acts as each Fund's transfer agent and dividend
disbursing agent.
TAXES
Each of the Funds intends 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. Each Fund has so qualified in each of
its fiscal years. If a Fund fails to qualify as a regulated investment company
under Subchapter M in any fiscal year, it will be treated as a corporation for
federal income tax purposes. As such, the Fund would be required to pay income
taxes on its net investment income and net realized capital gains, if any, at
the rates generally applicable to corporations. Stockholders of a Fund that did
not qualify as a regulated investment company under Subchapter M would not be
liable for income tax on the Fund's net investment income or net realized
capital gains in their individual capacities. Distributions to stockholders,
whether from the Fund's net investment income or net realized capital gains,
would be treated as taxable dividends to the extent of accumulated earnings and
profits of the Fund.
Each Fund intends to distribute substantially all of its net
investment income and net capital gains each fiscal year. Dividends from each
Fund's net investment income, including short-term capital gains, are taxable to
stockholders as ordinary income, while
18
<PAGE>
distributions from each Fund's net realized long-term capital gains are taxable
as long-term capital gains regardless of the stockholder's holding period for
the shares. Distributions from the Funds are taxable to stockholders, whether
received in cash or in additional Fund shares. A portion of the income
distributions of the Funds 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 Fund shares 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 Fund shares 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 stockholder 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 Funds may be required to withhold Federal income tax at a rate of
31% ("backup withholding") from dividend payments and redemption proceeds if a
stockholder fails to furnish the Funds 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
underreporting of income. The certification form is included as part of the
share purchase application and should be completed when the account is opened.
This section is not intended to be a complete discussion of present or
proposed federal income tax laws and the effects of such laws on an investor.
Investors are urged to consult their own tax advisers for a complete review of
the tax ramifications of an investment in the Fund.
STOCKHOLDER MEETINGS
The Maryland General Corporation Law permits registered investment
companies, such as the Companies, to operate without an annual meeting of
stockholders under specified circumstances if an annual meeting is not required
by the Act. Each Company has adopted the appropriate provisions in its Bylaws
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
Act.
Each Company's Bylaws 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.
19
<PAGE>
With respect to each Company, 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 Company 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 a Company'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 such Company; 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.
CAPITAL STRUCTURE
Brandywine Fund, Inc. has authorized capital of 500,000,000 shares of
common stock and Brandywine Blue Fund, Inc. has authorized capital of
100,000,000 shares of common stock. Each share has one vote. All shares of
Brandywine Fund participate equally in dividends and other distributions by such
Fund and in the residual assets of such Fund in the event of liquidation. All
shares of Brandywine Blue Fund participate equally in
20
<PAGE>
dividends and other distributions by such Fund and in the individual assets of
such Fund in the event of liquidation. Shares of each Fund have no preemptive,
conversion, subscription or cumulative voting rights. Consequently, with respect
to each Fund, the holders of more than 50% of the shares voting for the election
of directors can elect the entire Board of Directors, and in such event, the
holders of the remaining shares voting will not be able to elect any person to
the Board of Directors.
The shares of each Fund are redeemable and transferable. All shares
issued and sold by the Funds will be fully paid and nonassessable. Fractional
shares have the same rights proportionately as full shares.
Pursuant to the Articles of Incorporation of Brandywine Blue Fund,
Inc., the Board of Directors has the power to designate one or more classes
("series") of shares of common stock and to classify or reclassify any unissued
shares with respect to such series, but, as of the date hereof, has not done so.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 100 East Wisconsin Avenue, Suite 1500,
Milwaukee, Wisconsin 53202, currently serves as the independent accountants for
each Fund.
DESCRIPTION OF SECURITIES RATINGS
The Funds may invest in publicly distributed debt securities assigned
one of the three highest ratings of either Standard & Poor's Corporation
("Standard & Poor's") or Moody's Investors Service, Inc. ("Moody's"). A brief
description of the ratings symbols and their meanings follows.
Standard & Poor's Debt Ratings. A Standard & Poor's corporate debt
rating is a current assessment of the creditworthiness of an obligor with
respect to a specific obligation. This assessment may take into consideration
obligors such as guarantors, insurers or lessees.
The debt rating is not a recommendation to purchase, sell or hold a
security, inasmuch as it does not comment as to market price or suitability for
a particular investor.
The ratings are based on current information furnished by the issuer
or obtained by Standard & Poor's from other sources it considers reliable.
Standard & Poor's does not perform any audit in connection with any rating and
may, on occasion, rely on unaudited financial information. The ratings may be
changed, suspended or withdrawn as a result of changes in, or unavailability of,
such information, or for other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
I. Likelihood of default - capacity and willingness of the obligor
as to the timely payment of interest and repayment of principal
in accordance with the terms of the obligation;
21
<PAGE>
II. Nature of and provisions of the obligation;
III. Protection afforded by, and relative position of the obligation
in the event of bankruptcy, reorganization or other arrangement
under the laws of bankruptcy and other laws affecting creditors'
rights;
AAA - Debt rated AAA has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in the higher rated
categories.
Moody's Bond Ratings.
--------------------
Aaa - Bonds which are rated Aaa are judged to be the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edged." Interest payments are protected by a large, or by an
exceptionally stable, margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa - Bonds which are Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude, or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Moody's applies numerical modifiers 1, 2 and 3 in each of the
foregoing generic rating classifications. The modifier 1 indicates that the
company ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the company
ranks in the lower end of its generic rating category.
22
<PAGE>
PART C
OTHER INFORMATION
Item 23. Exhibits
--------
(a) Registrant's Articles of Incorporation, as amended(1)
(b) Registrant's By-Laws, as amended(2)
(c) None
(d) Investment Advisory Agreement(2)
(e) None
(f) None
(g) Custodian Agreement with Firstar Trust Company (predecessor to Firstar
Bank, N.A.)(2)
(h) Service Agreement with Fiduciary Management, Inc., as amended(3)
(i) Opinion of Foley & Lardner, counsel for Registrant
(j) Consent of PricewaterhouseCoopers LLP
(k) None
(l) Subscription Agreement(2)
(m) None
(n) None
(p) Code of Ethics of Brandywine Fund, Inc., Brandywine Blue Fund, Inc.
and Friess Associates, Inc.
- ----------------------
(1) Previously filed as an exhibit to Post-Effective Amendment No. 12
to the Registration Statement and incorporated by reference thereto.
Post-Effective Amendment No. 12 was filed on January 15, 1997 and its accession
number is 0000897069-97-000010.
(2) Previously filed as an exhibit to Post-Effective Amendment No. 13
to the Registration Statement and incorporated by reference thereto.
Post-Effective Amendment No. 13 was filed on January 30, 1998 and its accession
number is 0000897069-98-000024.
(3) Previously filed as an exhibit to Post-Effective Amendment No. 14
to the Registration Statement and incorporated by reference thereto.
Post-Effective Amendment No. 14 was filed on November 30, 1998 and its accession
number is 0000897069-98-000587.
S-1
<PAGE>
Item 24. 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 25. 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.
S-2
<PAGE>
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
S-3
<PAGE>
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 26. Business and Other Connections of Investment Adviser
----------------------------------------------------
Incorporated by reference to pages 4 through 7 of the Statement of
Additional Information pursuant to Rule 411 under the Securities Act of 1933.
Item 27. Principal Underwriters
----------------------
Registrant has no principal underwriters.
Item 28. 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 29. Management Services
-------------------
All management-related service contracts entered into by Registrant
are discussed in Parts A and B of this Registration Statement.
Item 30. Undertakings
------------
Registrant undertakes to provide its annual report to shareholders
upon request without charge to any recipient of a Prospectus.
S-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant 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 18th day of
November, 1999.
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, November 18, 1999
- -------------------------- Financial and
Foster S. Friess Accounting
Officer and Director
/s/ John E. Burris Director November 19, 1999
- --------------------------
John E. Burris
/s/ Stig Ramel Director November 25, 1999
Stig Ramel
/s/ Marvin N. Schoenhals Director November 29, 1999
- --------------------------
Marvin N. Schoenhals
S-5
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Exhibit Page No.
----------- ------- --------
(a) Registrant's Articles of Incorporation, as amended*
(b) Registrant's By-Laws, as amended*
(c) None
(d) Investment Advisory Agreement*
(e) None
(f) None
(g) Custodian Agreement with Firstar Trust Company (predecessor
to Firstar Bank, N.A.)*
(h) Service Agreement with Fiduciary Management, Inc., as
amended*
(i) Opinion of Foley & Lardner, counsel for Registrant
(j) Consent of PricewaterhouseCoopers LLP
(k) None
(l) Subscription Agreement*
(m) None
(n) None
(p) Code of Ethics of Brandywine Fund, Inc., Brandywine Blue
Fund, Inc. and Friess Associates, Inc.
- ------------------
* Incorporated by reference
FOLEY & LARDNER
ATTORNEYS AT LAW
CHICAGO FIRSTAR CENTER SACRAMENTO
DENVER 777 EAST WISCONSIN AVENUE SAN DIEGO
JACKSONVILLE MILWAUKEE, WISCONSIN 53202-5367 SAN FRANCISCO
LOS ANGELES TELEPHONE (414) 271-2400 TALLAHASSEE
MADISON FACSIMILE (414) 297-4900 TAMPA
MILWAUKEE WASHINGTON, D.C.
ORLANDO WEST PALM BEACH
November 30, 1999
Brandywine Fund, Inc.
3908 Kennett Pike
Greenville, DE 19807
Ladies & 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 (such Common Stock being
hereinafter referred to as the "Stock") in the manner set forth in the Amended
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 Bylaws, 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,
/s/ Foley & Lardner
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. 15 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated October 8, 1999, relating to the financial
statements and financial highlights appearing in the September 30, 1999 Annual
Report to Shareholders of Brandywine Fund and Brandywine Blue Fund, 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.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
November 30, 1999
BRANDYWINE FUND, INC.
BRANDYWINE BLUE FUND, INC.
and
FRIESS ASSOCIATES, INC.
Code of Ethics
Amended effective as of December 7, 1999
I. DEFINITIONS
-----------
A. "Access person" means any director, officer or advisory person of the
Fund or Adviser.
B. "Act" means the Investment Company Act of 1940, as amended.
C. "Adviser" means Friess Associates, Inc.
D. "Advisory person" means: (i) any employee of the Fund or Adviser or of
any company in a control relationship to the Fund or Adviser, who, in
connection with his or her regular functions or duties, makes,
participates in, or obtains information regarding the purchase or sale
of Covered Securities by Managed Accounts, or whose functions relate
to the making of any recommendations with respect to such purchases or
sales; and (ii) any natural person in a control relationship to the
Fund or Adviser who obtains information concerning recommendations
made to Managed Accounts with regard to the purchase or sale of
Covered Securities by Managed Accounts.
E. A Covered Security is "being considered for purchase or sale" when a
recommendation to purchase or sell the Covered Security has been made
and communicated and, with respect to the person making the
recommendation, when such person seriously considers making such a
recommendation.
F. "Beneficial ownership" shall be interpreted in the same manner as it
would be under Rule 16a-1(a)(2) under the Securities Exchange Act of
1934 in determining whether a person is the beneficial owner of a
security for purposes as such Act and the rules and regulations
promulgated thereunder.
G. "Control" has the same meaning as that set forth in Section 2(a)(9) of
the Act.
H. "Covered Security" means a security as defined in Section 2(a)(36) of
the Act, except that it does not include:
<PAGE>
(i) Direct obligations of the Government of the United States;
(ii) Bankers' acceptances, bank certificates of deposit, commercial
paper and high quality short-term debt instruments, including
repurchase agreements; and
(iii) Shares issued by open-end registered investment companies.
I. "Disinterested director" means a director of the Fund who is not an
"interested person" of the Fund within the meaning of Section 2(a)(19)
of the Act and the rules and regulations promulgated thereunder.
J. "Fund" means Brandywine Fund, Inc. or Brandywine Blue Fund, Inc.
K. "Initial Public Offering" means an offering of securities registered
under the Securities Act of 1933, the issuer of which, immediately
before the registration, was not subject to the reporting requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934.
L. "Investment personnel" means: (i) any employee of the Fund or Adviser
or of any company in a control relationship to the Fund or Adviser
who, in connection with his or her regular functions or duties, makes
or participates in making recommendations regarding the purchase or
sale of securities by Managed Accounts; and (ii) any natural person
who controls the Fund or Adviser and who obtains information
concerning recommendations made to Managed Accounts regarding the
purchase or sale of securities by Managed Accounts.
M. A "Limited Offering" means an offering that is exempt from
registration under the Securities Act of 1933 pursuant to Section 4(2)
or Section 4(6) thereof or pursuant to Rule 504, Rule 505 or Rule 506
thereunder.
N. "Managed Accounts" include the Fund and any other client account for
which the Adviser provides investment management services.
O. "Purchase or sale of a Covered Security" includes, among other things,
the writing of an option to purchase or sell a Covered Security.
II. APPROVAL OF CODE OF ETHICS
--------------------------
A. The Board of Directors of the Fund, including a majority of the
Disinterested directors, shall approve this Code of Ethics and any
material changes thereto. Prior to approving this Code of Ethics and
any material changes thereto, the Board of Directors must determine
that this Code of Ethics contains provisions reasonably necessary to
prevent access persons from violating Rule 17j-1(b) of the Act and
shall receive a certification from the Adviser that it has adopted
2
<PAGE>
such procedures as are reasonably necessary to prevent access persons
of the Adviser from violating this Code of Ethics.
B. No less frequently than annually, the President of the Fund and the
Adviser shall furnish a report to the Board of Directors of the Fund:
1. Describing issues arising under the Code of Ethics since the last
report to the Board of Directors, including, but not limited to,
information about material violations of the Code of Ethics and
sanctions imposed in response to such material violations. Such
report shall also include a list of access persons under the Code
of Ethics.
2. Certifying that the Fund and the Adviser have adopted such
procedures as are reasonably necessary to prevent access persons
from violating the Code of Ethics.
C. This Code of Ethics, the certifications required by Sections II.A. and
II.B.(2), and the reports required by Sections II.B. shall be maintained by
the Fund's Administrator. The reports required by Section V shall be
maintained by the Fund's President or designee.
III. EXEMPTED TRANSACTIONS
---------------------
The prohibitions of Section IV of this Code of Ethics shall not apply to:
(a) Purchases or sales effected in any account over which the access
person has no direct or indirect influence or control.
(b) Purchases or sales of Covered Securities which are not eligible
for purchase or sale by any Managed Account; provided, however,
that the prohibitions of Section IV.B of this Code of Ethics
shall apply to such purchases and sales.
(c) Purchases or sales which are non-volitional on the part of either
the access person or Managed Accounts.
(d) Purchases which are part of an automatic dividend reinvestment
plan.
(e) Purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities, to
the extent such rights were acquired from such issuer, and sales
of such rights so acquired.
IV. PROHIBITED ACTIVITIES
---------------------
A. Except in a transaction exempted by Section III of this Code, no
access person shall purchase or sell, directly or indirectly, any
Covered Security in which he has, or by reason of such transaction
acquires, any direct or indirect beneficial
3
<PAGE>
ownership and which to his actual knowledge at the time of such
purchase or sale is being considered for purchase or sale by Managed
Accounts or is being purchased or sold by Managed Accounts. Before an
access person so purchases or sells a Covered Security, he or she
shall (i) review the Adviser's Company Tracking Database to determine
if the Adviser has an analyst responsible for the Covered Security;
(ii) obtain confirmation from the analyst, if any, that to the
analyst's knowledge the proposed purchase or sale would not violate
this Section IV.A.; and (iii) report the proposed purchase or sale and
analyst confirmation (if the security is in the Company Tracking
Database) to the Adviser's Trading Department. The Adviser's Trading
Department shall review all Managed Accounts to determine whether the
Covered Security is being considered for purchase or sale currently,
or in the next five business days, or is currently being, or has been
in the preceding five business days, purchased or sold for any Managed
Accounts. The access person (i) shall delay so purchasing or selling a
Covered Security until such time as he or she has been informed by the
Adviser's Trading Department that the proposed purchase or sale would
not violate this Section IV.A.; and (ii) must complete any such
purchase or sale no later than the close of the business day following
the day the access person was so informed. Notwithstanding the
foregoing, Disinterested directors are not required to "preclear"
transactions as described above unless the Disinterested director
knows, or should have known at the time of purchase or sale, that such
security is being considered for purchase or sale by a Fund or is
being purchased or sold by a Fund.
B. Except in a transaction exempted by Section III of this Code of
Ethics, access persons, excluding Disinterested directors but
including Investment Personnel, (other than the Adviser's President
and the Adviser's Compliance Officer) must obtain approval from the
Adviser's Compliance Officer and the Adviser's President before
directly or indirectly acquiring beneficial ownership in any
securities in a Limited Offering. The Adviser's Compliance Officer and
the Adviser's President must obtain approval from a majority of the
Disinterested directors before directly or indirectly acquiring
beneficial ownership in any securities in a Limited Offering. Prior
approval shall not be given if the Adviser's President, the Adviser's
Compliance Officer or the Disinterested directors, as applicable,
believe(s) that the investment opportunity should be reserved for
Managed Accounts or is being offered to the individual by reason of
his or her position with the Fund or the Adviser.
C. Access persons, excluding Disinterested directors but including
Investment Personnel, may not directly or indirectly acquire
beneficial ownership in any securities in an Initial Public Offering.
4
<PAGE>
V. REPORTING AND COMPLIANCE PROCEDURES
-----------------------------------
A. Except as provided in Section V.B. of this Code of Ethics, every
access person shall report the information described in Section V.C.,
Section V.D. and Section V.E. of this Code of Ethics. All reports
shall be filed with the Adviser's Compliance Officer.
B. 1. A Disinterested director of the Fund need not make a report
pursuant to Section V.C. and V.E. of this Code of Ethics and need
only report a transaction in a Covered Security pursuant to
Section V.D. of this Code of Ethics if such Disinterested
director, at the time of such transaction, knew or, in the
ordinary course of fulfilling his official duties as a director
of the Fund, should have known that, during the 15-day period
immediately preceding the date of the transaction by the
director, such Covered Security was purchased or sold by the Fund
or was being considered by the Fund or the Adviser for purchase
or sale by the Fund.
2. An access person need not make a report with respect to
transactions effected for, and Covered Securities held in, any
account over which the person has no direct or indirect influence
or control.
3. Every access person (other than Disinterested directors) shall
direct his or her brokers to send to the Adviser's Compliance
Officer, on a timely basis, duplicate copies of all broker trade
confirmations or account statements. If submitted in the time
period required by Section V.D., such duplicate copies may
satisfy the access person's obligations under Section V.D.
provided that all of the information required by Section V.D. is
contained in the broker trade confirmations or account statements
or in the records of the Adviser.
C. Every access person shall, no later than ten (10) days after the
person becomes an access person, file an initial holdings report
containing the following information:
1. The title, number of shares and principal amount of each Covered
Security in which the access person had any direct or indirect
beneficial ownership when the person becomes an access person;
2. The name of any broker, dealer or bank with whom the access
person maintained an account in which any securities were held
for the direct or indirect benefit of the access person; and
3. The date that the report is submitted by the access person.
D. Every access person shall, no later than ten (10) days after the end
of a calendar quarter, file a quarterly transaction report containing
the following information:
5
<PAGE>
1. With respect to any transaction during the quarter in a Covered
Security in which the access person had any direct or indirect
beneficial ownership:
(a) The date of the transaction, the title and the number of
shares, and the principal amount of each security involved;
(b) The nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
(c) The price of the Covered Security at which the transaction
was effected;
(d) The name of the broker, dealer or bank with or through whom
the transaction was effected; and
(e) The date that the report is submitted by the access person.
2. With respect to any account established by the access person in
which any securities were held during the quarter for the direct
or indirect benefit of the access person:
(a) The name of the broker, dealer or bank with whom the access
person established the account;
(b) The date the account was established; and
(c) The date that the report is submitted by the access person.
E. Every access person shall, no later than January 30 each year, file an
annual holdings report containing the following information as of the
preceding December 31:
1. The title, number of shares and principal amount of each Covered
Security in which the access person had any direct or indirect
beneficial ownership;
2. The name of any broker, dealer or bank with whom the access
person maintains an account in which any securities are held for
the direct or indirect benefit of the access person; and
3. The date that the report is submitted by the access person.
F. Any report filed pursuant to Section V.C., Section V.D. or Section
V.E. of this Code of Ethics may contain a statement that the report
shall not be construed as an admission by the person making such
report that he has any direct or indirect beneficial ownership in the
security to which the report relates.
6
<PAGE>
G. The Adviser's Compliance Officer shall review all reports filed
pursuant to Section V.C., Section V.D. or Section V.E. of this Code of
Ethics. The Adviser's Compliance Officer shall identify all access
persons who are required to file reports pursuant to this Section V of
this Code of Ethics and must inform such access persons of their
reporting obligation.
VI. SANCTIONS
---------
Upon discovering a violation of this Code of Ethics, the Board of Directors of
the Fund or Adviser may impose such sanctions as it deems appropriate.
7
