THE BRANDYWINE FUNDS
MANAGED BY FRIESS ASSOCIATES, INC.
SEMI-ANNUAL REPORT
MARCH 31, 2000
DEAR FELLOW SHAREHOLDERS:
Brandywine and Brandywine Blue gained 18.1 and 17.2 percent in the March quarter
to cap off the best 12-month period in Brandywine Funds history.
The Brandywine Funds outperformed 92 percent of the 1,412 growth funds tracked
by Lipper and finished well ahead of gains in the S&P 500, S&P MidCap, Russell
2000 and Nasdaq Industrials of 2.3, 12.4, 6.8, and 8.1 percent in the March
quarter.
March Quarter Fiscal Year to Date
------------- -------------------
S&P 500 TR 2.3 17.5
Russell 2000 6.8 26.2
S&P MidCap 12.4 31.3
Nasdaq Industrials 8.1 50.4
Brandywine Blue 17.2 54.0
Brandywine Fund 18.1 56.5
Record 12-month returns for Brandywine and Brandywine Blue of 76.7 and 69.4
percent surpass Brandywine's 54.8 percent gain in the year-ended September 1987
as the best trailing year since Brandywine's 1985 inception. Your results
outpaced gains in the S&P 500, S&P MidCap and Russell 2000 of 17.9, 36.5 and
35.6 percent by over 30 percentage points!
Performance in the past two quarters fuels a strong first half to your fiscal
year-ended September. Brandywine and Brandywine Blue's 56.5 and 54.0 per-cent
returns in the last six months outpace gains in the S&P 500, S&P MidCap, Russell
2000 and Nasdaq Industrials of 17.5, 31.3, 26.2 and 50.4 percent.
BRANDYWINE BRANDYWINE BLUE
CUMULATIVE % CHANGE % CHANGE
---------- -------- --------
QUARTER 18.1 17.2
FISCAL YEAR-TO-DATE 56.5 54.0
ONE YEAR 76.7 69.4
FIVE YEARS 216.9 210.1
TEN YEARS 587.5 N/A
INCEPTION 1260.9*<F1> 595.1**<F2>
ANNUALIZED
FIVE YEARS 25.9 25.4
TEN YEARS 21.3 N/A
INCEPTION 20.1*<F1> 23.4**<F2>
*<F1> 12/30/85
**<F2> 1/10/91
The daily performance of the Nasdaq Composite demonstrates increased volatility.
A Prudential Securities study shows only three days in which the difference
between the index's highest and lowest points varied by 2 percent or more in
1985. There were 116 such days in 1999 and 29 this year through February. The
study also shows recent S&P 500 volatility eclipsed only by 1987 levels.
Continued volatility reinforces the importance of isolating companies that can
beat earnings estimates while avoiding those that might not live up to
expectations. With most major indexes down so far in April, your team
intensively scans your holdings, weeding out those with the weakest prospects
and uncovering promising replacement opportunities.
Even after market declines in the first days of April, Brandywine's year-to-date
return ranks second among 23 funds that comprise the Investor's Business Daily
mutual fund index.
After months commuting between Wyoming and the West Coast, Andy Graves decided
to relocate to raise a family in the San Francisco Bay area with his new bride
Liz. We wish him continued success as he puts down roots and pursues his dream
to start his own business. Andy's Apple Computer pick alone added a quarter
billion dollars in value from July 1999 through quarter end by gaining over 160
percent, but that's just a recent example of the many contributions he made to
your team's efforts over the last nine years.
Usually Foster devotes his time to this report, but we gave him the weekend off
to celebrate his birthday in Phoenix. Your record results are surely his
favorite gift, so we'd like to thank all the executives, assembly line workers,
salespeople and other employees at your portfolio companies for making them
possible.
Your team is grateful for your continued confidence and committed to finding
dynamic companies to build on your recent gains.
God Bless!
/s/ Bill D'Alonzo
Bill D'Alonzo
April 5, 2000
BRANDYWINE FUND
PERCENT CHANGE IN TOP TEN HOLDINGS FROM BOOK COST
1. Nokia Corp. ADR +467.5 6. Atmel Corp. +155.8
2. Advanced Micro Devices, Inc. +86.8 7. Motorola, Inc. +80.9
3. LSI Logic Corp. +222.0 8. National Semiconductor Corp. +63.2
4. Apple Computer, Inc. +168.5 9. Nortel Networks Corp. +221.2
5. Tyco International Ltd. +32.3 10. Gap, Inc. +17.0
EARNINGS GROWTH
YOUR COMPANIES 93%
S&P 500 11%
FORECASTED INCREASE IN EARNINGS PER SHARE
2000 VS 1999
ALL FIGURES ARE DOLLAR WEIGHTED AND BASED ON DATA FROM BASELINE. MARCH 31, 2000.
YOUR COMPANIES' MARKET CAPITALIZATION
LARGE CAP $9 billion and over 51.3%
MID CAP $2 billion to $9 billion 31.9%
SMALL CAP below $2 billion 13.8%
CASH 3.0%
TOP TEN INDUSTRY GROUPS
Communications Equipment (14.2%)
Semiconductor Manufacturing (12.5%)
Semiconductor Related (10.5%)
Computer Related (10.1%)
Financial/Business Services (8.0%)
Electronics (6.2%)
Software (5.9%)
Apparel & Shoe Retailers (5.2%)
Medical Related (4.7%)
Machinery & Miscellaneous Manufacturing (4.5%)
All Others (15.2%)
Cash (3.0%)
BRANDYWINE FUND
MARCH QUARTER "ROSES AND THORNS"
$ GAIN
BIGGEST $ WINNERS (IN MILLIONS) % GAIN REASON FOR MOVE
LSI Logic Corp. $180.4 111.3 Strong demand in LSI's communications
business, which makes chips for
broadband, data networking, wireless
and set-top box applications, helped
the company beat expectations by 9
percent in the December quarter. LSI
earned $0.24 a share versus a break-
even quarter a year ago.
Advanced Micro
Devices, Inc. $154.2 97.2 December-quarter earnings grew 187
percent on 23 percent revenue growth.
Advanced Micro earned $0.43 a share
versus consensus estimates for $0.01 a
share. The company also introduced new
higher-speed Athlon processors,
including the industry's first 1-
gigahertz chip.
Atmel Corp. $110.7 73.5 Robust sales of wireless handsets,
personal computers and digital cameras
continue driving demand for Atmel's
flash-memory products. December-
quarter earnings jumped 220 percent,
topping estimates by 23 percent.
SanDisk Corp. $92.9 153.6 Demand for its flash-memory products
surged on strong sales of digital
cameras, Internet music players and
cellular phones. December-quarter
earnings grew 131 percent, exceeding
expectations by 36 percent.
Apple
Computer, Inc. $70.8 24.3 December-quarter earnings grew 28
percent, exceeding consensus estimates
by 11 percent. Investor enthusiasm
increased as Apple introduced upgrades
to its iMac desktop and iBook laptop
computers in the March quarter.
$ LOSS
BIGGEST $ LOSERS (IN MILLIONS) % LOSS REASON FOR MOVE
Parametric
Technology Corp. $39.8 -23.2 The company failed to meet December-
quarter estimates as sales-force
deployment and other issues hampered
its ability to capitalize on demand
for its Windchill engineering
software.
Limited, Inc. $33.1 -23.4 December-quarter earnings growth
exceeded expectations by 11 percent,
but shares declined as retail stocks
fell out of favor as rising interest
rates prompted concerns regarding
future consumer spending.
Carnival Corp. $27.7 -43.8 Cruise-line stocks suffered amid
concerns about rising fuel costs and
the possibility of reduced bookings in
the event of a slower-growing economy.
Federated Dept.
Stores, Inc. $27.7 -24.4 Despite exceeding January-quarter
estimates, the nation's largest
department store operator fell along
with other retail stocks as higher
interest rates prompted concerns
regarding future consumer spending.
Xircom, Inc. $27.2 -38.7 After beating expectations with 41
percent December-quarter earnings
growth, Xircom shares retreated on
concerns that slowing sales of
notebook computers would negatively
impact demand for its modem cards.
All gains/losses are calculated on an average cost basis
BRANDYWINE FUND, INC.
STATEMENT OF NET ASSETS
March 31, 2000
(Unaudited)
SHARES OR QUOTED
PRINCIPAL MARKET
AMOUNT COST VALUE
------ ---- ------
COMMON STOCKS - 97.0% (A)<F4>
APPAREL & SHOE RETAILERS - 5.2%
79,500 Braun's Fashions Corp.*<F3> $ 904,406 $ 2,007,375
400,000 Charming Shoppes, Inc.*<F3> 2,323,548 2,275,000
160,000 Gadzooks, Inc.*<F3> 1,999,806 3,470,000
4,155,500 Gap, Inc. 176,952,005 206,995,844
85,700 Guess o, Inc.*<F3> 1,155,701 2,742,400
262,900 Intimate Brands, Inc. 9,679,647 10,778,900
140,400 Kenneth Cole Productions, Inc.*<F3> 3,036,785 5,510,700
1,719,200 Liz Claiborne, Inc. 72,277,517 78,760,850
183,000 Steven Madden, Ltd.*<F3> 2,491,412 3,477,000
182,500 Talbots, Inc. 6,590,117 10,744,687
239,700 Timberland Co.*<F3> 9,846,673 12,224,700
194,500 Vans, Inc.*<F3> 2,130,830 3,136,313
-------------- --------------
289,388,447 342,123,769
THIS SECTOR IS 18.2% ABOVE YOUR FUND'S COST.
BUILDING RELATED - 0.1%
177,500 Elcor Corp. 5,373,238 6,123,750
THIS SECTOR IS 14.0% ABOVE YOUR FUND'S COST.
COMMUNICATIONS EQUIPMENT - 14.2%
487,300 Digital Microwave Corp.*<F3> 12,991,897 16,507,287
1,551,400 Motorola, Inc. 122,106,606 220,880,575
1,702,700 Nokia Corp. "A" ADR 65,188,016 369,911,575
1,660,000 Nortel Networks Corp. 65,108,541 209,160,000
822,200 P-COM, Inc.*<F3> 15,441,386 15,210,700
215,000 QUALCOMM Inc.*<F3> 29,176,420 32,102,188
1,111,200 Scientific-Atlanta, Inc. 38,591,230 70,491,750
-------------- --------------
348,604,096 934,264,075
THIS SECTOR IS 168.0% ABOVE YOUR FUND'S COST.
COMMUNICATIONS SERVICES - 0.8%
203,600 Carrier Access Corp.*<F3> 11,146,437 10,841,700
200,000 Ditech Communications Corp.*<F3> 21,568,325 21,212,500
923,500 Infonet Services Corp.*<F3> 22,128,978 20,894,187
-------------- --------------
54,843,740 52,948,387
THIS SECTOR IS 3.5% BELOW YOUR FUND'S COST.
COMPUTER RELATED - 10.1%
1,395,800 Adaptec, Inc.*<F3> 38,244,082 53,912,775
2,217,100 Apple Computer, Inc.*<F3> 112,143,778 301,109,894
17,900 Brooktrout Inc.*<F3> 610,134 519,100
60,000 CACI International Inc.*<F3> 1,494,487 1,796,250
4,241,600 Compaq Computer Corp. 129,006,134 112,932,600
1,403,700 Microchip Technology, Inc.*<F3> 43,147,475 92,293,275
769,500 SanDisk Corp.*<F3> 28,934,302 94,263,750
225,000 Splash Technology
Holdings, Inc.*<F3> 3,053,407 2,812,500
120,000 T/R Systems, Inc.*<F3> 2,830,952 2,670,000
110,000 Zoran Corp.*<F3> 4,974,909 6,194,375
-------------- --------------
364,439,660 668,504,519
THIS SECTOR IS 83.4% ABOVE YOUR FUND'S COST.
ELECTRONICS - 6.2%
235,900 ACT Manufacturing, Inc.*<F3> 6,524,717 13,195,656
1,570,600 Amkor Technology, Inc.*<F3> 37,361,793 83,339,963
250,500 Applied Films Corp.*<F3> 5,337,958 5,010,000
275,000 Applied Science and
Technology, Inc.*<F3> 9,277,512 8,318,750
1,030,100 Celestica Inc.*<F3> 49,240,457 54,659,681
402,400 KEMET Corp.*<F3> 13,318,473 25,451,800
416,300 Kent Electronics Corp.*<F3> 9,391,845 12,150,756
279,100 Mettler-Toledo
International Inc.*<F3> 9,072,571 11,425,656
371,900 Millipore Corp. 13,514,818 20,989,106
641,775 Molex Inc. Class A 20,617,232 28,478,766
46,800 Plexus Corp.*<F3> 2,527,018 3,118,050
454,400 Power-One, Inc.*<F3> 11,099,529 27,434,400
1,148,900 Sanmina Corp.*<F3> 67,430,250 77,622,556
650,800 Tektronix, Inc. 41,129,600 36,444,800
-------------- --------------
295,843,773 407,639,940
THIS SECTOR IS 37.8% ABOVE YOUR FUND'S COST.
FINANCIAL/BUSINESS SERVICES - 8.0%
1,644,200 Acxiom Corp.*<F3> 47,176,707 54,669,650
300,000 AmeriCredit Corp.*<F3> 4,209,990 4,893,750
2,098,900 Capital One Financial Corp. 84,098,216 100,616,019
1,276,300 The Chase Manhattan Corp. 95,345,863 111,277,406
411,600 Complete Business
Solutions, Inc.*<F3> 10,128,179 9,209,550
740,600 Convergys Corp.*<F3> 21,291,932 28,605,675
120,000 Fargo Electronics*<F3> 1,800,000 1,447,500
301,200 First Health Group Corp.*<F3> 9,184,812 9,525,450
254,400 Jack Henry & Associates, Inc. 6,798,081 9,381,000
120,000 Printrak International Inc.*<F3> 1,516,369 1,560,000
1,666,000 Providian Financial Corp. 131,858,373 144,317,250
1,252,900 SunGard Data Systems Inc.*<F3> 45,508,061 47,296,975
278,000 Technology Solutions Co.*<F3> 2,457,753 2,536,750
-------------- --------------
461,374,336 525,336,975
THIS SECTOR IS 13.9% ABOVE YOUR FUND'S COST.
FOOD/RESTAURANTS - 1.7%
848,000 Brinker International, Inc.*<F3> 22,007,256 25,175,000
418,150 CEC Entertainment Inc. 6,960,408 11,342,319
1,087,000 Outback Steakhouse, Inc.*<F3> 31,816,811 34,851,937
332,800 Ruby Tuesday, Inc. 6,374,499 5,824,000
1,722,700 Wendy's International, Inc. 30,554,876 34,777,006
-------------- --------------
97,713,850 111,970,262
THIS SECTOR IS 14.6% ABOVE YOUR FUND'S COST.
HOME/OFFICE RELATED - 0.4%
40,000 Bush Industries, Inc. 552,820 555,000
629,600 In Focus Systems, Inc.*<F3> 17,404,403 22,547,550
22,800 Troy Group, Inc.*<F3> 589,782 627,000
-------------- --------------
18,547,005 23,729,550
THIS SECTOR IS 27.9% ABOVE YOUR FUND'S COST.
LEISURE & ENTERTAINMENT - 0.3%
401,300 Four Seasons Hotels Inc. 20,040,717 18,083,581
40,000 Meade Instruments Corp.*<F3> 2,774,523 2,760,000
-------------- --------------
22,815,240 20,843,581
THIS SECTOR IS 8.6% BELOW YOUR FUND'S COST.
MACHINERY & MISCELLANEOUS MANUFACTURING - 4.5%
105,000 Oshkosh Truck Corp. 3,264,969 3,261,562
150,000 The Shaw Group Inc.*<F3> 3,181,950 5,287,500
5,792,100 Tyco International Ltd. 218,328,597 288,880,988
-------------- --------------
224,775,516 297,430,050
THIS SECTOR IS 32.3% ABOVE YOUR FUND'S COST.
MEDICAL RELATED - 4.7%
70,500 ADAC Laboratories*<F3> 983,627 969,375
240,000 Candela Corp.*<F3> 4,013,151 3,300,000
69,800 DIANON Systems, Inc.*<F3> 1,079,862 1,435,262
3,498,700 Guidant Corp.*<F3> 208,903,026 205,767,294
280,000 Hooper Holmes, Inc. 8,341,899 9,607,500
424,800 IDEXX Laboratories, Inc.*<F3> 11,762,780 9,903,150
146,100 IMPATH Inc.*<F3> 5,552,038 5,369,175
216,000 Invacare Corp. 5,475,898 5,926,500
460,000 LifePoint Hospitals, Inc.*<F3> 6,593,492 7,647,500
344,300 Mentor Corp./MINN. 9,330,254 9,296,100
85,000 Merit Medical Systems, Inc.*<F3> 890,019 839,375
72,500 PolyMedica Corp.*<F3> 2,682,480 4,259,375
178,000 Professional Detailing, Inc.*<F3> 4,926,869 4,450,000
178,400 Quest Diagnostics Inc.*<F3> 5,364,707 7,091,400
504,300 Stryker Corp. 31,717,621 35,174,925
-------------- --------------
307,617,723 311,036,931
THIS SECTOR IS 1.1% ABOVE YOUR FUND'S COST.
NETWORKING - 0.8%
1,140,200 Cabletron Systems, Inc.*<F3> 40,640,616 33,422,113
60,000 Integrated Information
Systems, Inc.*<F3> 1,099,500 1,307,808
550,000 Network Associates, Inc.*<F3> 18,119,270 17,737,500
-------------- --------------
59,859,386 52,467,421
THIS SECTOR IS 12.3% BELOW YOUR FUND'S COST.
OIL/GAS FIELD SERVICES - 2.9%
258,600 Apache Corp. 12,833,843 12,865,350
60,000 Core Laboratories N.V.*<F3> 1,595,736 1,743,750
532,865 Dynegy Inc. 17,056,250 33,437,279
976,000 Key Energy Services, Inc.*<F3> 10,788,713 11,346,000
810,600 Precision Drilling Corp.*<F3> 25,232,464 27,053,775
493,700 Pride International, Inc.*<F3> 10,869,693 11,262,531
150,000 Santa Fe International Corp. 5,509,781 5,550,000
6,700 TMBR/Sharp Drilling, Inc.*<F3> 80,400 82,075
3,480,900 USX-Marathon Group 86,206,980 90,720,956
-------------- --------------
170,173,860 194,061,716
THIS SECTOR IS 14.0% ABOVE YOUR FUND'S COST.
PHARMACEUTICALS - 3.9%
492,300 AmeriSource Health Corp.*<F3> 9,335,780 7,384,500
2,646,000 Elan Corp. plc ADR*<F3> 76,183,715 125,685,000
1,076,600 Forest Laboratories, Inc.*<F3> 57,717,816 90,972,700
796,500 ICN Pharmaceuticals, Inc. 21,047,492 21,704,625
113,200 K-V Pharmaceutical Co.*<F3> 2,241,465 3,042,250
248,900 Medicis Pharmaceutical Corp.*<F3> 10,609,003 9,956,000
-------------- --------------
177,135,271 258,745,075
THIS SECTOR IS 46.1% ABOVE YOUR FUND'S COST.
SEMICONDUCTOR RELATED - 10.5%
5,062,300 Atmel Corp.*<F3> 102,157,678 261,341,237
240,100 ATMI, Inc.*<F3> 10,621,405 11,464,775
181,500 Cohu, Inc. 7,639,933 7,566,281
140,000 FEI Co.*<F3> 3,494,646 4,165,000
629,500 Lam Research Corp.*<F3> 28,612,803 28,366,844
4,149,600 LSI Logic Corp.*<F3> 93,586,905 301,364,700
389,000 LTX Corp.*<F3> 5,162,519 17,577,938
156,200 Mattson Technology, Inc.*<F3> 5,440,878 6,658,025
120,000 MKS Instruments, Inc.*<F3> 6,420,594 6,060,000
178,000 Photronics, Inc.*<F3> 5,849,008 6,285,625
16,700 PSi Technologies Holdings, Inc.*<F3> 294,000 277,638
246,000 Semitool, Inc.*<F3> 4,614,646 4,474,125
28,800 SpeedFam-IPEC, Inc.*<F3> 504,991 572,400
306,600 Therma-Wave Inc.*<F3> 10,627,028 10,424,400
250,000 Varian Semiconductor Equipment
Associates, Inc.*<F3> 13,192,134 15,906,250
177,100 Veeco Instruments Inc.*<F3> 8,249,233 13,105,400
-------------- --------------
306,468,401 695,610,638
THIS SECTOR IS 127.0% ABOVE YOUR FUND'S COST.
SEMICONDUCTOR MANUFACTURING - 12.5%
5,481,000 Advanced Micro Devices, Inc.*<F3> 167,420,793 312,759,562
274,050 Burr-Brown Corp.*<F3> 6,437,448 14,901,469
1,364,400 Cypress Semiconductor Corp.*<F3> 31,419,062 67,281,975
601,600 Dallas Semiconductor Corp. 20,534,520 21,131,200
47,100 Diodes Inc.*<F3> 1,563,104 1,766,250
1,758,800 Fairchild Semiconductor Corp.*<F3> 48,212,865 64,196,200
1,495,900 Integrated Device
Technology, Inc.*<F3> 26,184,848 59,275,038
470,000 Integrated Silicon
Solution, Inc.*<F3> 9,665,811 13,776,875
692,700 Lattice Semiconductor Corp.*<F3> 32,387,205 46,887,131
115,000 Microsemi Corp.*<F3> 2,771,957 3,938,750
3,616,500 National Semiconductor Corp.*<F3> 134,347,065 219,250,313
-------------- --------------
480,944,678 825,164,763
THIS SECTOR IS 71.6% ABOVE YOUR FUND'S COST.
SOFTWARE - 5.9%
111,200 AremisSoft Corp.*<F3> 3,358,972 3,780,800
793,700 Aspen Technology, Inc.*<F3> 37,494,724 32,045,637
200,000 Brio Technology, Inc.*<F3> 6,436,664 7,550,000
178,200 Cognos Inc.*<F3> 5,371,930 11,148,638
325,900 Electronics for Imaging, Inc.*<F3> 18,519,636 19,554,000
524,900 FileNet Corp.*<F3> 7,518,712 15,615,775
60,000 Group 1 Software, Inc.*<F3> 1,267,764 1,125,000
16,700 Logility, Inc.*<F3> 354,832 228,581
170,000 MAPICS, Inc.*<F3> 2,717,887 2,709,375
47,400 MapInfo Corp.*<F3> 969,437 1,848,600
50,000 Moldflow Corp.*<F3> 650,000 846,875
135,000 MSC.Software Corp.*<F3> 1,285,503 1,594,688
50,000 Net Perceptions, Inc.*<F3> 2,249,845 1,846,875
709,500 NVIDIA Corp.*<F3> 30,186,831 59,941,611
5,216,400 Parametric Technology Corp.*<F3> 74,885,820 109,870,425
664,900 Pinnacle Systems, Inc.*<F3> 12,761,310 22,107,925
70,000 Quest Software, Inc.*<F3> 10,755,416 7,892,500
240,000 Rainbow Technologies, Inc.*<F3> 5,027,556 8,970,000
114,000 Sagent Technology, Inc.*<F3> 2,806,130 3,284,625
70,000 SPSS Inc.*<F3> 2,038,750 2,222,500
585,000 Symantec Corp.*<F3> 11,280,904 43,948,125
100,000 The Ultimate Software
Group, Inc.*<F3> 1,059,586 906,250
660,100 Verity, Inc.*<F3> 22,220,719 26,899,075
-------------- --------------
261,218,928 385,937,880
THIS SECTOR IS 47.7% ABOVE YOUR FUND'S COST.
SPECIALTY RETAILING - 3.3%
10,000 1-800 CONTACTS, INC.*<F3> 284,583 346,250
1,052,500 BJ's Wholesale Club, Inc.*<F3> 23,705,039 40,652,812
117,600 Coldwater Creek Inc.*<F3> 2,393,446 1,999,200
410,000 Fleming Companies, Inc. 5,840,628 6,175,625
22,600 Hibbett Sporting Goods, Inc.*<F3> 418,100 464,712
730,000 InterTAN, Inc.*<F3> 12,012,415 10,037,500
341,200 Lands' End, Inc.*<F3> 16,560,408 20,983,800
150,000 Miami Computer Supply Corp.*<F3> 5,431,413 4,706,250
1,315,500 Tandy Corp. 64,560,007 66,761,625
476,500 Tech Data Corp.*<F3> 12,868,304 15,664,938
287,200 United Stationers, Inc.*<F3> 7,825,915 10,249,450
210,000 Whitehall Jewellers, Inc.*<F3> 4,104,225 4,935,000
788,200 Zale Corp.*<F3> 37,453,576 37,193,188
-------------- --------------
193,458,059 220,170,350
THIS SECTOR IS 13.8% ABOVE YOUR FUND'S COST.
TRANSPORTATION RELATED - 0.1%
70,000 Atlantic Coast Airlines
Holdings, Inc.*<F3> 1,738,340 1,811,250
146,800 Teekay Shipping Corp. 3,380,788 4,046,175
-------------- --------------
5,119,128 5,857,425
THIS SECTOR IS 14.4% ABOVE YOUR FUND'S COST.
MISCELLANEOUS - 0.9%
84,200 Measurement Specialties, Inc.*<F3> 2,100,778 2,131,312
2,079,900 Polaroid Corp. 51,721,001 49,397,625
330,000 Rayovac Corp.*<F3> 6,876,437 7,672,500
31,000 Stericycle, Inc.*<F3> 700,216 775,000
-------------- --------------
61,398,432 59,976,437
THIS SECTOR IS 2.3% BELOW YOUR FUND'S COST.
-------------- --------------
Total common stocks 4,207,112,767 6,399,943,494
SHORT-TERM INVESTMENTS - 2.8% (A)<F4>
COMMERCIAL PAPER - 2.6%
$25,000,000 Ford Motor Credit Puerto Rico,
due 04/03/00, discount of 6.05% 24,991,597 24,991,597
10,000,000 Household Finance Corp.,
due 04/03/00, discount of 6.25% 9,996,528 9,996,528
26,000,000 US West Communications,
due 04/05/00, discount 0f 6.15% 25,982,234 25,982,234
35,000,000 American Express Credit Corp.,
due 04/06/00, discount of 6.10% 34,973,786 34,973,786
25,000,000 FCE BANK PLC,
due 04/07/00, discount of 6.09% 24,974,625 24,974,625
50,000,000 American General Finance ECN,
due 04/10/00, discount of 6.09% 49,949,229 49,949,229
-------------- --------------
Total commercial paper 170,867,999 170,867,999
VARIABLE RATE DEMAND NOTE - 0.2%
11,516,629 Firstar Bank U.S.A., N.A. 11,516,629 11,516,629
-------------- --------------
Total short-term investments 182,384,628 182,384,628
-------------- --------------
Total investments $4,389,497,395 6,582,328,122
--------------
--------------
Cash and receivables, less
liabilities - 0.2% (A)<F4> 14,919,029
--------------
NET ASSETS $6,597,247,151
--------------
--------------
Net Asset Value Per Share
($0.01 par value 500,000,000
shares authorized), offering
and redemption price
($6,597,247,151/130,236,550
shares outstanding) $50.66
------
------
*<F3> Non-income producing security.
(a)<F4> Percentages for the various classifications relate to net assets.
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
ARE AN INTEGRAL PART OF THIS STATEMENT.
BRANDYWINE FUND, INC.
STATEMENT OF OPERATIONS
For the Period Ended March 31, 2000
(Unaudited)
INCOME:
Dividends $ 5,382,622
Interest 6,494,702
--------------
Total income 11,877,324
--------------
EXPENSES:
Management fees 27,086,338
Transfer agent fees 293,856
Registration fees 245,920
Printing and postage expense 225,658
Custodian fees 219,587
Administrative services 216,500
Board of Directors fees 46,286
Professional fees 38,850
Other expenses 24,843
--------------
Total expenses 28,397,838
--------------
NET INVESTMENT LOSS (16,520,514)
--------------
NET REALIZED GAIN ON INVESTMENTS 1,298,138,138
NET INCREASE IN UNREALIZED APPRECIATION ON INVESTMENTS 1,080,330,346
--------------
NET GAIN ON INVESTMENTS 2,378,468,484
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,361,947,970
--------------
--------------
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ended March 31, 2000 (Unaudited)
and For the Year Ended September 30, 1999
<TABLE>
2000 1999
---- ----
<S> <C> <C>
OPERATIONS:
Net investment loss $ (16,520,514) $ (29,416,246)
Net realized gain on investments 1,298,138,138 561,000,974
Net increase in unrealized appreciation on investments 1,080,330,346 882,288,945
-------------- --------------
Net increase in net assets resulting from operations 2,361,947,970 1,413,873,673
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividend from net investment income ($0.264391 per share) -- (46,814,793)
Distributions from net realized gains ($3.12075 and $0.073194 per share, respectively) (380,140,683) (12,960,206)
-------------- --------------
Total distributions (380,140,683) (59,774,999)*
<F5>
-------------- --------------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (14,995,331 and 15,159,346 shares, respectively) 652,081,394 455,819,053
Net asset value of shares issued in distributions (9,483,289 and 2,181,997
shares, respectively) 360,480,596 54,571,751
Cost of shares redeemed (13,801,353 and 81,715,518 shares, respectively) (592,038,772) (2,450,014,788)
-------------- --------------
Net increase (decrease) in net assets derived from Fund share activities 420,523,218 (1,939,623,984)
-------------- --------------
TOTAL INCREASE (DECREASE) 2,402,330,505 (585,525,310)
NET ASSETS AT THE BEGINNING OF THE PERIOD 4,194,916,646 4,780,441,956
-------------- --------------
NET ASSETS AT THE END OF THE PERIOD $6,597,247,151 $4,194,916,646
-------------- --------------
-------------- --------------
</TABLE>
*<F5> See Note 7.
The accompanying notes to financial statements are an integral part of these
statements.
BRANDYWINE FUND, INC.
FINANCIAL HIGHLIGHTS
(Selected Data for each share of the Fund outstanding throughout each period)
<TABLE>
For the period
ended March 31, Years Ended September 30,
2000 ------------------------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
----------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $35.09 $25.99 $43.91 $32.83 $33.92 $24.77
Income from investment operations:
Net investment (loss) income (0.10) (0.20)(1)<F6> 0.21 (0.07)(1)<F6> (0.08)(1)<F6> (0.10)
Net realized and unrealized gains (losses)
on investments 18.79 9.64 (11.11) 12.50 2.83 10.70
------ ------ ------ ------ ------ ------
Total from investment operations 18.69 9.44 (10.90) 12.43 2.75 10.60
Less distributions:
Dividends from net investment income -- (0.27) -- -- -- --
Distributions from net realized gains (3.12) (0.07) (7.02) (1.35) (3.84) (1.45)
------ ------ ------ ------ ------ ------
Total from distributions (3.12) (0.34) (7.02) (1.35) (3.84) (1.45)
------ ------ ------ ------ ------ ------
Net asset value, end of year $50.66 $35.09 $25.99 $43.91 $32.83 $33.92
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
Total Investment Return 56.5%*<F7> 36.8% (27.7%) 39.3% 10.0% 45.5%
Ratios/Supplemental Data:
Net assets, end of year (in 000's $) 6,597,247 4,194,917 4,780,442 9,532,724 6,038,301 4,137,484
Ratio of expenses to average net assets 1.05%**<F8> 1.05% 1.04% 1.04% 1.06% 1.07%
Ratio of net investment (loss) income
to average net assets (0.6%)**<F8> (0.7%) 0.6% (0.3%) (0.4%) (0.4%)
Portfolio turnover rate 108.2% 208.7% 263.7% 192.4% 202.8% 193.7%
</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.
*<F7> Not Annualized
**<F8> Annualized
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS
STATEMENT.
AND THE WINNER IS . . .
Thanks to all of you who suggested ways to improve our shareholder
communications. Sam Schwartz, a fellow shareholder for almost five years, asked
us to address whether tax implications impact your team's sales decisions, a
topic of interest for our taxable shareholders.
Sales take place when a stock reaches its target price, its fundamentals
deteriorate, Wall Street becomes overly optimistic about it, or an opportunity
with greater upside displaces it. We don't let the tax tail wag the investment
dog since our goal is to generate superior gains, not avoid taxes. Depending on
the situation, we might delay a sale if a fundamentally sound stock is near
long-term status so that realized gains will be taxed at a lower rate.
Still, in a market where a company's share price can be halved for an earnings
warning, we won't hold a company with a weakening outlook for tax reasons since
keeping it is likely to be far more costly. Likewise, a potential buy can run up
25 percent or more in a matter of days in the wake of a near-term catalyst, so
it doesn't make sense for us to miss such an opportunity by not making room in
the portfolio for tax reasons.
Consider shareholder A with $100,000 in an index fund that gains 20 percent with
practically no turnover (thus no distribution). He retains the $20,000 gain in a
portfolio reported to have 100 percent tax efficiency.
Compare that to shareholder B with $100,000 in a Brandywine-type fund that gains
30 percent. Sales generate $10,000 in distributed gains. At the highest tax
rate, this shareholder with an average tax liability between long- and short-
term gains of 30 percent pays $3,000 in income taxes. He retains a $27,000 gain
for reported tax efficiency of 90 percent.
Shareholder B has $7,000 more than shareholder A, and both have $20,000 in
unrealized gains taxable at long-term rates upon redemption. Which would you
prefer?
BRANDYWINE BLUE FUND
PERCENT CHANGE IN TOP TEN HOLDINGS FROM BOOK COST
1. Atmel Corp. +205.5 6. Motorola, Inc. +87.3
2. Nokia Corp. ADR +480.1 7. Tyco International Ltd. +32.8
3. Advanced Micro Devices +86.8 8. Nortel Networks Corp. +252.3
4. Apple Computer, Inc. +179.5 9. Gap, Inc. +16.6
5. LSI Logic Corp. +226.6 10. National Semiconductor Corp. +79.7
EARNINGS GROWTH
YOUR COMPANIES 92%
S&P 500 11%
FORECASTED INCREASE IN EARNINGS PER SHARE
2000 VS 1999
ALL FIGURES ARE DOLLAR WEIGHTED AND BASED ON DATA FROM BASELINE. MARCH 31, 2000.
YOUR COMPANIES' MARKET CAPITALIZATION
LARGE CAP $9 billion and over 56.8%
MID CAP $2 billion to $9 billion 39.2%
SMALL CAP below $2 billion 0.2%
CASH 3.8%
TOP TEN INDUSTRY GROUPS
Communications Equipment (15.9%)
Semiconductor Manufacturing (12.8%)
Semiconductor Related (11.1%)
Computer Related (10.7%)
Financial/Business Services (8.5%)
Electronics (7.6%)
Apparel & Shoe Retailers (5.1%)
Machinery & Miscellaneous Manufacturing (4.4%)
Medical Related (4.2%)
Pharmaceuticals (3.9%)
All Others (12.0%)
Cash (3.8%)
BRANDYWINE BLUE FUND
MARCH QUARTER "ROSES AND THORNS"
$ GAIN
BIGGEST $ WINNERS (IN MILLIONS) % GAIN REASON FOR MOVE
LSI Logic Corp. $12.9 106.5 Strong demand in LSI's
communications business, which makes
chips for broadband, data
networking, wireless and set-top box
applications, helped the company
beat expectations by 9 percent in
the December quarter. LSI earned
$0.24 a share versus a break-even
quarter a year ago.
Atmel Corp. $12.0 74.6 Robust sales of wireless handsets,
personal computers and digital
cameras continue driving demand for
Atmel's flash-memory products.
December-quarter earnings jumped 220
percent, topping estimates by 23
percent.
Advanced Micro
Devices, Inc. $11.5 97.2 December-quarter earnings grew 187
percent on 23 percent revenue
growth. Advanced Micro earned $0.43
a share versus consensus estimates
for $0.01 a share. The company also
introduced new higher-speed Athlon
processors, including the industry's
first 1-gigahertz chip.
SanDisk Corp. $10.3 168.1 Demand for its flash-memory products
surged on strong sales of digital
cameras, Internet music players and
cellular phones. December-quarter
earnings grew 131 percent, exceeding
expectations by 36 percent.
Apple
Computer, Inc. $5.1 24.1 December-quarter earnings grew 28
percent, exceeding consensus
estimates by 11 percent. Investor
enthusiasm increased as Apple
introduced upgrades to its iMac
desktop and iBook laptop computers
in the March quarter.
$ LOSS
BIGGEST $ LOSERS (IN MILLIONS) % LOSS REASON FOR MOVE
Carnival Corp. $4.3 -43.6 Cruise-line stocks suffered amid
concerns about rising fuel costs and
the possibility of reduced bookings
in the event of a slower-growing
economy.
Parametric
Technology,
Corp. $3.3 -23.5 The company failed to meet December-
quarter estimates as sales-force
deployment and other issues hampered
its ability to capitalize on demand
for its Windchill engineering
software.
Royal Caribbean
Cruises Ltd. $2.9 -43.0 Despite 24 percent December-quarter
earnings growth, shares suffered
amid concerns about rising fuel
costs and the possibility of reduced
bookings in the event of a slower-
growing economy.
Cabletron
Systems, Inc. $2.6 -25.6 Despite topping earnings estimates
for the fifth consecutive quarter in
February, Cabletron shares fell on
concerns that a recently announced
restructuring of the networking-
equipment maker would negatively
affect near-term earnings growth.
Limited, Inc. $2.4 -21.7 December-quarter earnings growth
exceeded expectations by 11 percent,
but shares declined as retail stocks
fell out of favor as rising interest
rates prompted concerns regarding
future consumer spending.
All gains/losses are calculated on an average cost basis
BRANDYWINE BLUE FUND, INC.
STATEMENT OF NET ASSETS
March 31, 2000
(Unaudited)
SHARES OR QUOTED
PRINCIPAL MARKET
AMOUNT COST VALUE
------ ---- ------
COMMON STOCKS - 96.2% (A)<F10>
APPAREL & SHOE RETAILERS - 5.1%
345,400 Gap, Inc. $ 14,755,171 $ 17,205,238
18,900 Intimate Brands, Inc. 685,118 774,900
132,500 Liz Claiborne, Inc. 5,468,097 6,070,156
------------ ------------
20,908,386 24,050,294
THIS SECTOR IS 15.0% ABOVE YOUR FUND'S COST.
COMMUNICATIONS EQUIPMENT - 15.9%
16,100 Digital Microwave Corp.*<F9> 569,286 545,387
150,400 Motorola, Inc. 11,431,294 21,413,200
124,700 Nokia Corp. "A" ADR 4,670,168 27,091,075
144,200 Nortel Networks Corp. 5,156,631 18,169,200
22,900 QUALCOMM Inc.*<F9> 3,179,620 3,419,256
79,000 Scientific-Atlanta, Inc. 2,622,808 5,011,563
------------ ------------
27,629,807 75,649,681
THIS SECTOR IS 173.8% ABOVE YOUR FUND'S COST.
COMMUNICATIONS SERVICES - 1.0%
25,000 Ditech Communications Corp.*<F9> 2,828,581 2,651,562
105,000 Infonet Services Corp.*<F9> 2,526,206 2,375,625
------------ ------------
5,354,787 5,027,187
THIS SECTOR IS 6.1% BELOW YOUR FUND'S COST.
COMPUTER RELATED - 10.7%
126,000 Adaptec, Inc.*<F9> 3,196,752 4,866,750
161,000 Apple Computer, Inc.*<F9> 7,823,824 21,865,812
308,900 Compaq Computer Corp. 9,282,880 8,224,463
127,800 Microchip Technology, Inc.*<F9> 3,637,837 8,402,850
62,300 SanDisk Corp.*<F9> 2,416,349 7,631,750
------------ ------------
26,357,642 50,991,625
THIS SECTOR IS 93.5% ABOVE YOUR FUND'S COST.
ELECTRONICS - 7.6%
203,400 Amkor Technology, Inc.*<F9> 4,572,002 10,792,912
172,000 Celestica Inc.*<F9> 8,399,297 9,126,750
45,000 KEMET Corp.*<F9> 2,070,000 2,846,250
73,875 Molex Inc. Class A 2,247,968 3,278,203
73,500 Sanmina Corp.*<F9> 4,309,900 4,965,844
90,700 Tektronix, Inc. 5,772,553 5,079,200
------------ ------------
27,371,720 36,089,159
THIS SECTOR IS 31.8% ABOVE YOUR FUND'S COST.
FINANCIAL/BUSINESS SERVICES - 8.5%
165,000 Acxiom Corp.*<F9> 4,288,124 5,486,250
162,900 Capital One Financial Corp. 6,508,352 7,809,019
105,900 The Chase Manhattan Corp. 8,037,188 9,233,156
126,400 Convergys Corp.*<F9> 3,579,156 4,882,200
97,500 Providian Financial Corp. 7,410,314 8,445,937
119,900 SunGard Data Systems Inc.*<F9> 4,371,131 4,526,225
------------ ------------
34,194,265 40,382,787
THIS SECTOR IS 18.1% ABOVE YOUR FUND'S COST.
FOOD/RESTAURANTS - 1.4%
116,300 Outback Steakhouse, Inc.*<F9> 3,502,064 3,728,869
143,500 Wendy's International, Inc. 2,557,072 2,896,906
------------ ------------
6,059,136 6,625,775
THIS SECTOR IS 9.4% ABOVE YOUR FUND'S COST.
MACHINERY & MISCELLANEOUS MANUFACTURING - 4.4%
416,800 Tyco International Ltd. 15,652,847 20,787,900
THIS SECTOR IS 32.8% ABOVE YOUR FUND'S COST.
MEDICAL RELATED - 4.2%
270,000 Guidant Corp.*<F9> 15,936,235 15,879,375
58,600 Stryker Corp. 3,434,585 4,087,350
------------ ------------
19,370,820 19,966,725
THIS SECTOR IS 3.1% ABOVE YOUR FUND'S COST.
NETWORKING - 1.1%
87,800 Cabletron Systems, Inc.*<F9> 3,179,647 2,573,637
78,600 Network Associates, Inc.*<F9> 2,584,713 2,534,850
------------ ------------
5,764,360 5,108,487
THIS SECTOR IS 11.4% BELOW YOUR FUND'S COST.
OIL/GAS FIELD SERVICES - 2.9%
30,700 Apache Corp. 1,529,987 1,527,325
78,885 Dynegy Inc. 2,502,143 4,950,034
12,000 Santa Fe International Corp. 440,783 444,000
262,700 USX-Marathon Group 6,501,991 6,846,619
------------ ------------
10,974,904 13,767,978
THIS SECTOR IS 25.4% ABOVE YOUR FUND'S COST.
PHARMACEUTICALS - 3.9%
200,000 Elan Corp. plc ADR*<F9> 5,749,921 9,500,000
82,200 Forest Laboratories, Inc.*<F9> 4,361,515 6,945,900
77,000 ICN Pharmaceuticals, Inc. 2,116,844 2,098,250
------------ ------------
12,228,280 18,544,150
THIS SECTOR IS 51.6% ABOVE YOUR FUND'S COST.
SEMICONDUCTOR RELATED - 11.1%
544,000 Atmel Corp.*<F9> 9,192,330 28,084,000
59,400 Lam Research Corp.*<F9> 2,699,592 2,676,712
300,300 LSI Logic Corp.*<F9> 6,677,969 21,809,288
------------ ------------
18,569,891 52,570,000
THIS SECTOR IS 183.1% ABOVE YOUR FUND'S COST.
SEMICONDUCTOR MANUFACTURING - 12.8%
410,100 Advanced Micro Devices, Inc.*<F9> 12,528,479 23,401,331
172,500 Cypress Semiconductor Corp.*<F9> 3,889,079 8,506,406
44,800 Dallas Semiconductor Corp. 1,579,653 1,573,600
135,000 Fairchild Semiconductor Corp.*<F9> 4,514,062 4,927,500
89,900 Lattice Semiconductor Corp.*<F9> 4,247,362 6,085,107
271,200 National Semiconductor Corp.*<F9> 9,149,350 16,441,500
------------ ------------
35,907,985 60,935,444
THIS SECTOR IS 69.7% ABOVE YOUR FUND'S COST.
SOFTWARE - 3.0%
49,800 Electronics for Imaging, Inc.*<F9> 2,895,481 2,988,000
390,600 Parametric Technology Corp.*<F9> 4,717,519 8,227,013
21,600 Quest Software, Inc.*<F9> 3,258,759 2,435,400
8,600 Symantec Corp.*<F9> 170,925 646,075
------------ ------------
11,042,684 14,296,488
THIS SECTOR IS 29.5% ABOVE YOUR FUND'S COST.
SPECIALTY RETAILING - 2.6%
201,600 BJ's Wholesale Club, Inc.*<F9> 4,320,966 7,786,800
94,900 Tandy Corp. 4,665,720 4,816,175
------------ ------------
8,986,686 12,602,975
THIS SECTOR IS 40.2% ABOVE YOUR FUND'S COST.
------------ ------------
Total common stocks 286,374,200 457,396,655
SHORT-TERM INVESTMENTS - 2.0% (A)<F10>
COMMERCIAL PAPER - 1.1%
$5,000,000 Household Finance Corp.,
due 04/03/00, discount of 6.25% 4,998,264 4,998,264
VARIABLE RATE DEMAND NOTE - 0.9%
4,447,280 Firstar Bank U.S.A., N.A. 4,447,280 4,447,280
------------ ------------
Total short-term investments 9,445,544 9,445,544
------------ ------------
Total investments $295,819,744 466,842,199
------------
------------
Cash and receivables, less
liabilities - 1.8% (A)<F10> 8,432,222
------------
NET ASSETS $475,274,421
------------
------------
Net Asset Value Per Share
($0.01 par value 100,000,000
shares authorized), offering
and redemption price
($475,274,421/11,185,777
shares outstanding) $42.49
------
------
*<F9> Non-income producing security.
(a)<F10> Percentages for the various classifications relate to net assets.
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS
STATEMENT.
CAPITAL GAINS UPDATE . . .
For those "early birds" who may already be planning your taxes for next year, as
of March 31, 2000, the approximate amounts anticipated for distribution in
-----------
October are:
Brandywine Fund Brandywine Blue
--------------- ---------------
$3.70 - short term capital gains $2.20 - short term capital gains
$4.51 - long term capital gains $2.45 - long term capital gains
----- -----
$8.21 - total distribution $4.65 - total distribution
----- -----
----- -----
It's important to remember that these are only estimates as of this quarter's
end. As the October distribution draws closer, we'll have more exact figures and
will publish them in the upcoming June and September reports.
BRANDYWINE BLUE FUND, INC.
STATEMENT OF OPERATIONS
For the Period Ended March 31, 2000
(Unaudited)
INCOME:
Dividends $ 456,057
Interest 536,271
------------
Total income 992,328
EXPENSES:
Management fees 1,977,766
Registration fees 57,555
Administrative services 51,000
Professional fees 32,740
Custodian fees 18,089
Board of Directors fees 10,280
Transfer agent fees 7,261
Printing and postage expense 5,557
Other expenses 5,018
------------
Total expenses 2,165,266
------------
NET INVESTMENT LOSS (1,172,938)
------------
NET REALIZED GAIN ON INVESTMENTS 66,666,912
NET INCREASE IN UNREALIZED APPRECIATION ON INVESTMENTS 101,215,255
------------
NET GAIN ON INVESTMENTS 167,882,167
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $166,709,229
------------
------------
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ended March 31, 2000 (Unaudited)
and For the Year Ended September 30, 1999
<TABLE>
2000 1999
---- ----
<S> <C> <C>
OPERATIONS:
Net investment loss $ (1,172,938) $ (2,243,216)
Net realized gain on investments 66,666,912 50,355,688
Net increase in unrealized appreciation on investments 101,215,255 53,901,197
------------ ------------
Net increase in net assets resulting from operations 166,709,229 102,013,669
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ($0.204780 per share) -- (3,234,784)
Distributions from net realized gains ($2.17874 and $0.132292 per share, respectively) (23,090,864) (2,089,735)
------------ ------------
Total distributions (23,090,864) (5,324,519)*
<F11>
------------ ------------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (2,234,232 and 3,879,907 shares, respectively) 81,533,665 101,668,079
Net asset value of shares issued in distributions (665,230 and 226,167 shares, respectively) 21,712,487 4,828,670
Cost of shares redeemed (2,303,746 and 9.983,841 shares, respectively) (83,574,152) (255,552,611)
------------ ------------
Net increase (decrease) in net assets derived from Fund share activities 19,672,000 (149,055,862)
------------ ------------
TOTAL INCREASE (DECREASE) 163,290,365 (52,366,712)
NET ASSETS AT THE BEGINNING OF THE PERIOD 311,984,056 364,350,768
------------ ------------
NET ASSETS AT THE END OF THE PERIOD $475,274,421 $311,984,056
------------ ------------
------------ ------------
</TABLE>
*<F11> See Note 7.
The accompanying notes to financial statements are an integral part of these
statements.
BRANDYWINE BLUE FUND, INC.
FINANCIAL HIGHLIGHTS
(Selected Data for each share of the Fund outstanding throughout each period)
<TABLE>
For the period
ended March 31, Years Ended September 30,
2000 ------------------------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
----------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $29.46 $22.13 $35.78 $25.26 $24.37 $17.18
Income from investment operations:
Net investment (loss) income (.09) (0.18)(1)<F12> 0.19 (0.10)(1)<F12> (0.05)(1)<F12> 0.00
Net realized and unrealized gains (losses)
on investments 15.30 7.85 (8.75) 10.62 2.05 7.30
------ ------ ------ ------ ------ ------
Total from investment operations 15.21 7.67 (8.56) 10.52 2.00 7.30
Less distributions:
Dividends from net investment income -- (0.21) -- -- -- --
Distributions from net realized gains (2.18) (0.13) (5.09) -- (1.11) (0.11)
------ ------ ------ ------ ------ ------
Total from distributions (2.18) (0.34) (5.09) -- (1.11) (0.11)
------ ------ ------ ------ ------ ------
Net asset value, end of year $42.49 $29.46 $22.13 $35.78 $25.26 $24.37
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN 54.0%*<F13> 35.2% (26.5%) 41.6% 8.9% 42.8%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's $) 475,274 311,984 364,351 617,362 351,459 164,943
Ratio of expenses to average net assets 1.09%**<F14> 1.08% 1.06% 1.08% 1.13% 1.31%
Ratio of net investment (loss) income
to average net assets (0.6%)**<F14> (0.7%) 0.6% (0.5%) (0.4%) (0.4%)
Portfolio turnover rate 108.0% 228.4% 299.5% 202.1% 196.9% 174.1%
</TABLE>
(1)<F12> 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 permanent book and tax differences.
*<F13> Not Annualized.
**<F14> Annualized.
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS
STATEMENT.
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
(Unaudited)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies of Brandywine
Fund, Inc. (the "Brandywine Fund") and Brandywine Blue Fund, Inc. (the
"Blue Fund") (collectively the "Funds"). Each Fund is registered as a
diversified, open-end management investment company under the Investment
Company Act of 1940. The assets and liabilities of each Fund are segregated
and a shareholder's interest is limited to the Fund in which the
shareholder owns shares. The Brandywine Fund was incorporated under the
laws of Maryland on October 9, 1985. The Blue Fund was incorporated under
the laws of Maryland on November 13, 1990. The investment objective of each
Fund is to produce long-term capital appreciation principally through
investing in common stocks.
(a) Each security, excluding short-term investments, is valued at the last
sale price reported by the principal security exchange on which the
issue is traded, or if no sale is reported, the latest bid price.
Securities which are traded over-the-counter are valued at the latest
bid price. Securities for which quotations are not readily available
are valued at fair value as determined by the investment adviser under
the supervision of the Board of Directors. Short-term investments
(securities with maturities of 60 days or less) are valued at
amortized cost which approximates quoted market value. For financial
reporting purposes, investment transactions are recorded on trade
date. Cost amounts, as reported on the statements of net assets, are
substantially the same for Federal income tax purposes.
(b) Net realized gains and losses on common stock are computed on the
identified cost basis.
(c) Provision has not been made for Federal income taxes since the Funds
have elected to be taxed as "regulated investment companies" and
intend to distribute substantially all net investment company taxable
income and net capital gains to shareholders and otherwise comply with
the provisions of the Internal Revenue Code applicable to regulated
investment companies.
(d) Dividend income is recorded on the ex-dividend date. Interest income
is recorded on the accrual basis.
(e) The Funds have investments in short-term variable rate demand notes,
which are unsecured instruments. The Funds may be susceptible to
credit risk with respect to these notes to the extent the issuer
defaults on its payment obligation. The Funds' policy is to monitor
the creditworthiness of the issuer and the Funds do not anticipate
nonperformance by these counterparties.
(f) Generally accepted accounting principles require that permanent
differences between income for financial reporting and tax purposes be
reclassified to capital stock.
(g) The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from these estimates.
(2) INVESTMENT ADVISER AND MANAGEMENT AGREEMENTS AND TRANSACTIONS WITH RELATED
PARTIES
Each Fund has a management agreement with Friess Associates, Inc. (the
"Adviser"), with whom certain officers and directors of the Funds are
affiliated, to serve as investment adviser and manager. Under the terms of
the agreements, each Fund will pay the Adviser a monthly management fee at
the annual rate of one percent (1%) on the daily net assets of such Fund.
Also, the Adviser is reimbursed for administrative services rendered to
each Fund by a consultant paid by the Adviser.
Each Director who is not affiliated with the Funds receives an annual fee
for service as a Director and is eligible to participate in a deferred
compensation plan with respect to these fees. Participants in the plan may
designate their deferred Director's fees as if invested in either of the
Funds. The value of each Director's deferred compensation account will
increase or decrease as if it were invested in shares of the selected Fund.
The Funds maintain their proportionate share of the Fund's liability for
deferred fees.
(3) DISTRIBUTION TO SHAREHOLDERS
Net investment income and net realized gains, if any, are distributed to
shareholders. Distributions were declared on December 21, 1999, and were
paid on December 22, 1999 to shareholders of record on December 20, 1999.
Brandywine Blue
Fund Fund
---------- ----------
Dividend from net
investment income $ -- $ --
$ per share -- --
Short-term gains 30,417,856 --
$ per share 0.24500 --
Long-term gains taxed at 20% 173,572,980 13,351,556
$ per share 1.39804 1.25513
(4) INVESTMENT TRANSACTIONS
For the period ended March 31, 2000, purchases and proceeds of sales of
investment securities (excluding short-term investments) for the Brandywine
Fund were $5,593,085,595 and $5,644,031,480, respectively; purchases and
proceeds of sales of investment securities (excluding short-term
investments) for the Blue Fund were $404,824,716 and $419,490,200,
respectively.
(5) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
As of March 31, 2000, liabilities of each Fund included the following:
Brandywine Blue
Fund Fund
---------- ----------
Payable to brokers for
investments purchased $128,213,005 $7,122,831
Payable to Adviser for
management fees 5,659,316 407,087
Deferred compensation plan
for Directors 70,013 17,336
Payable to shareholders
for redemptions 255,981 --
Other liabilities 603,826 71,346
(6) SOURCES OF NET ASSETS
As of March 31, 2000, the sources of net assets were as follows:
Fund shares issued
and outstanding $3,336,186,274 $252,229,831
Net unrealized appreciation
on investments 2,192,830,727 171,022,455
Accumulated net
realized gains 1,068,230,150 52,022,135
-------------- ------------
$6,597,247,151 $475,274,421
-------------- ------------
-------------- ------------
Aggregate net unrealized appreciation as of March 31, 2000 consisted of the
following:
Aggregate gross
unrealized appreciation $2,267,613,915 $175,499,539
Aggregate gross unrealized
depreciation (74,783,188) (4,477,084)
-------------- ------------
Net unrealized appreciation $2,192,830,727 $171,022,455
-------------- ------------
-------------- ------------
(7) REQUIRED FEDERAL INCOME TAX DISCLOSURES (UNAUDITED)
In early 1999, shareholders received information regarding all
distributions paid to them by the Funds during the fiscal year ended
September 30, 1999. The Funds hereby designate the following amounts as
long-term capital gains distributions.
Capital gains taxed at 20% $ 12,960,377 $ 366,207
The percentage of ordinary income which is eligible for the corporate
dividend received deduction for the fiscal year ended September 30, 1999
was 40% 50%
IN REMEMBRANCE . . .
All of us at Friess Associates were terribly saddened by the loss of a long-time
client, friend, and outstanding member of the Delaware community, Walter J.
Laird, Jr. He was a supporter of Foster's strategy from the bare beginnings back
in 1974 and instrumental in our growth over the years. Foster credits Walter for
much of Friess Associates' success in the Wilmington area. He brought many folks
to our door and introduced them to our bottom-up discipline. An expert investor
himself, people trusted Walter and valued his recommendations. We were fortunate
to have him as a loyal supporter.
"I have no doubt that Friess Associates would not be the company it is today if
Walter Laird didn't lend a hand to its development," Foster explains. "Walter
was a dear friend, and we will miss him. He was one of the first people to
entrust money to our management from meaningful institutions. He was one of the
very few people who wrote us letters of thanks for what our successes meant to
the client - a rare gesture. His letter of encouragement when our strategy
temporarily fell from favor was also unique, and so appreciated. Walter is a
Giant in Friess Associates' history."
A native of Delaware, Walter gave back much to the community. Dedicated to
education, he served for 25 years on the boards of Tower Hill School and St.
Andrews School, two well-known and highly respected private schools in the area.
He also served on the boards of two of our major local clients - the Catholic
Diocese of Wilmington and Winterthur Museum.
Research team leader Bill D'Alonzo admired Walter's business acumen, but
reflects more on the personal example Walter set in how he lived. "He was
committed to his family. His adoring wife, Toni, and his children, were Walter's
primary focus. Raising six kids is a challenge, but he did it with grace and
dedication. He succeeded first and foremost as a husband and father, which makes
his career success even more remarkable."
Walter Laird will be greatly missed, but his legacy remains. We are grateful to
have known him. We know everyone in the Wilmington community whose lives he
touched must share our sorrow but will reflect happily on all the good he did
for others. May we all learn from his fine example.
BOARD OF DIRECTORS
John E. Burris
Chairman
Burris Foods, Inc.
Milford, Delaware
Foster S. Friess
President
Friess Associates, Inc.
Jackson, Wyoming
Stig Ramel
Former President
Nobel Foundation
Stockholm, Sweden
Marvin N. Schoenhals
Chairman
WSFS Financial Corp.
Wilmington, Delaware
P.O. Box 4166, Greenville, DE 19807
(800) 656-3017 www.brandywinefunds.com [email protected]
Investment Adviser: FRIESS ASSOCIATES, INC.
Custodian: FIRSTAR BANK, NA
Transfer Agent: FIRSTAR MUTUAL FUND SERVICES, LLC
Independent Accountants: PRICEWATERHOUSECOOPERS LLP
Legal Counsel: FOLEY & LARDNER
OFFICERS: Foster S. Friess, President and Treasurer; Lynda Campbell, Vice
President and Secretary; William D'Alonzo, Vice President; John Fraser, Vice
President; Carl Gates, Vice President; David Harrington, Vice President; John
Ragard, Vice President; Paul Robinson, Vice President; and Ben "Tripp" Rudisill,
Vice President
Report Editor: Rebecca Buswell
Report Staff: Chris Aregood, Chris Long, Adam Rieger
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of either Brandywine Fund or Brandywine Blue Fund
unless accompanied or preceded by the Funds' current prospectus. Past
performance is not indicative of future performance. Investment return and
principal value of an investment may fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
