013096-1 Registration No. 33-37959
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. 6 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 7 [X]
(Check appropriate box or boxes.)
BRANDYWINE BLUE 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.
Registrant has registered an indefinite number or amount of shares of its
common stock, $0.01 par value, under the Securities Act of 1933 pursuant
to Rule 24f-2 of the Investment Company Act of 1940, and filed its
required Rule 24f-2 Notice for the Registrant's fiscal year ended
September 30, 1995 on November 14, 1995.
It is proposed that this filing become effective (check appropriate box):
[X] immediately upon filing pursuant to paragraph (b)
[_] on (date) pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph (a)(1)
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] on (date) pursuant to paragraph (a)(2), of Rule 485
If appropriate, check the following box:
[_] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Exhibit Index is located at page __ of the sequential numbering
system.
Page 1 of __ Pages
<PAGE>
BRANDYWINE BLUE FUND, INC.
CROSS REFERENCE SHEET
(Pursuant to Rule 481 showing the location in the Prospectus and
the Statement of Additional Information of the responses to the Items of
Parts A and B of Form N-1A.)
Caption or Subheading in Prospectus
Item No. on Form N-1A or Statement of Additional Information
Part A - INFORMATION REQUIRED IN PROSPECTUS
1. Cover Page Cover Page
2. Synopsis Expense Information
3. Condensed Financial Financial Highlights; Performance
Information Information
4. General Description Introduction; Investment Objective
of Registrant and Policies
5. Management of the Management of the Fund; Capital
Fund Structure
5A. Management's Discussion Performance Information; Management's
of Fund Performance Discussion of Fund Performance
6. Capital Stock and Dividends, Distributions and Taxes;
Other Securities Capital Structure; Stockholder
Reports
7. Purchase of Securities Determination of Net Asset Value;
Being Offered Purchase of Shares; Dividend
Reinvestment
8. Redemption or Repurchase Redemption of Shares
9. Legal Proceedings *
PART B - INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and *
History
13. Investment Objectives Investment Restrictions
and Policies
14. Management of the Directors and Officers of the Fund
Registrant
15. Control Persons and Included in Prospectus under "Capital
Principal Holders Structure"; Principal Stockholders
of Securities
16. Investment Advisory Included in Prospectus under "Management
and Other Services of the Fund"; Investment Adviser; Service
Agreement; Custodian; Independent
Accountants
17. Brokerage Allocation Allocation of Portfolio Brokerage
18. Capital Stock and Included in Prospectus under
Other Securities "Capital Structure"
19. Purchase, Redemption Included in Prospectus under
and Pricing of "Determination of Net Asset Value";
Securities Being "Dividend Reinvestment"; Determination
Offered of Net Asset Value and Performance;
Systematic Withdrawal Plan
20. Tax Status Taxes
21. Underwriters *
22. Calculations of Per- Determination of Net Asset Value and
formance Data Performance
23. Financial Statements Financial Statements
____________________________
*Answer negative or inapplicable
P R O S P E C T U S
BRANDY BLUE FUND, INC.
A NO-LOAD MUTUAL FUND
SEEKING LONG-TERM
CAPITAL APPRECIATION
BOARD OF DIRECTORS
JOHN E. BURRIS
Chairman, Burris Foods, Inc.
Milford, Delaware
FOSTER S. FRIESS
President, Friess Associates, Inc.
Jackson, Wyoming
STIG RAMEL
President, Nobel Foundation
1972 to 1992
Chairman, ''Fond '92-'94''
Solna, Sweden
INVESTMENT ADVISER
FRIESS ASSOCIATES, INC.
350 Broadway
P.O. Box 576
Jackson, Wyoming 83001
MANAGED BY
FRIESS ASSOCIATES, INC.
350 Broadway
P.O. Box 576
Jackson, Wyoming 83001
P R O S P E C T U S JANUARY 31, 1996
BRANDYWINE BLUE FUND, INC.
Brandywine Blue Fund, Inc. (the ''Fund'') is an open-end, diversified management
investment company - a mutual fund. Its primary investment objective is to
produce long-term capital appreciation principally through investing in common
stocks. Current income is a secondary consideration.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. Investors are advised to
read this Prospectus and retain it for future reference. This Prospectus does
not set forth all of the information included in the Registration Statement and
Exhibits thereto which the Fund has filed with the Securities and Exchange
Commission. A Statement of Additional Information, dated January 31, 1996, which
is a part of such Registration Statement is incorporated by reference in this
Prospectus. Copies of the Statement of Additional Information will be provided
promptly without charge to each person to whom a Prospectus is delivered upon
written or telephone request. Written requests should be made by writing to
Brandywine Blue Fund, Inc., P.O. Box 4166, Greenville, Delaware 19807, Attn:
Corporate Secretary, or Internet: [email protected], and telephone requests
should be made by calling (800) 656-3017.
BRANDYWINE BLUE FUND, INC.
3908 Kennett Pike
Greenville, Delaware 19807
Internet: [email protected]
(800) 656-3017
TABLE OF CONTENTS
Page No.
Expense Information ............................... 1
Financial Highlights .............................. 2
Introduction ...................................... 2
Investment Objective and Policies ................. 3
Management of the Fund ............................ 4
Determination of Net Asset Value .................. 5
Purchase of Shares ................................ 5
Redemption of Shares .............................. 6
Exchange Privilege................................. 8
Dividend Reinvestment ............................. 9
Dividends, Distributions and Taxes ................ 9
Capital Structure ................................. 9
Stockholder Reports ............................... 10
Performance Information ........................... 11
Management's Discussion of Fund Performance ....... 12
Share Purchase Application ........................ 13
EXPENSE INFORMATION
STOCKHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases or Reinvested Dividends .. None
Deferred Sales Load .............................................. None
Redemption Fee ..................................................None*<F1>
Exchange Fee ..................................................... None
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
Management Fees .................................................. 1.00%
12b-1 Fees ....................................................... None
Other Expenses ................................................... 0.31%
Total Fund Operating Expenses .................................... 1.31%
------
------
*<F1>A fee of $7.50 is charged for each wire redemption.
Example: 1 Year 3 Years 5 Years 10 Years
-------------------------------
An investor would pay the following expenses on a $1,000
investment, assuming (l) 5% annual return and (2) redemption
at the end of each time period: $13 $42 $72 $158
The purpose of the preceding table is to assist investors in understanding
the various costs that an investor in the Fund will bear, directly or
indirectly. They should not be considered to be a representation of past or
future expenses. Actual expenses may be greater or lesser than those shown. The
Annual Fund Operating Expenses are based on actual expenses incurred for the
year ended September 30, 1995. The example assumes a 5% annual rate of return
pursuant to requirements of the Securities and Exchange Commission. This
hypothetical rate of return is not intended to be representative of past or
future performance of the Fund.
FINANCIAL HIGHLIGHTS
(Selected Data for each share of the Fund outstanding throughout each period)
The following information has been audited by Price Waterhouse LLP,
independent accountants, whose unqualified report thereon is incorporated by
reference into the Statement of Additional Information. The Financial Highlights
should be read in conjunction with the financial statements and notes thereto
also incorporated by reference in the Statement of Additional Information.
<TABLE>
YEARS ENDED SEPTEMBER 30,
-----------------------------------
<CAPTION>
1995 1994 1993 1992 1991+<F2>
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $17.18 $19.11 $12.95 $13.09 $10.01
Income from investment operations:
Net investment income (loss) 0.00 0.04 (0.06) (0.04) 0.03
Net realized and unrealized gains on investments 7.30 0.36 6.22 0.52 3.05
----- ----- ----- ------ -----
Total from investment operations 7.30 0.40 6.16 0.48 3.08
Less Distributions:
Dividend from net investment income - - - (0.03) -
Distributions from net realized gains (0.11) (2.33) - (0.59) -
------ ------ ------ ------ ------
Total from distributions (0.11) (2.33) - (0.62) -
------ ------ ------ ------ ------
Net asset value, end of period $24.37 $17.18 $19.11 $12.95 $13.09
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total Investment Return 42.8% 2.8% 47.6% 4.0% 45.1%*<F3>
Ratios/Supplemental Data:
Net assets, end of period (in 000's $) 164,943 29,086 6,373 4,270 3,975
Ratio of expenses (after reimbursement)
to average net assets**<F4> 1.31% 1.80% 2.00% 2.00% 1.97%*<F3>
Ratio of net investment (loss)
income to average net assets***<F5> (0.44%) (0.4%) (0.6%) (0.3%) 0.6%*<F3>
Portfolio turnover rate 174.1% 220.3% 144.3% 191.9% 115.3%*<F3>
+<F2>For the period from January 10, 1991 (commencement of operations) to
September 30, 1991.
*<F3>Annualized.
**<F4>Computed after giving effect to adviser's expense limitation undertaking.
If the Fund had paid all of its expenses, the ratio would have been 2.09% and
2.44% for the years ended September 30, 1993 and 1992, respectively, and
3.00%* for the period ended September 30,1991.
***<F5>The ratio of net investment income (loss) prior to adviser's expense
limitation undertaking to average net assets for the years ended September
30, 1993 and 1992 and for the period ended September 30, 1991 would have been
(0.7%), (0.7%) and (0.5%)*, respectively.
</TABLE>
INTRODUCTION
The Fund was incorporated under the laws of Maryland on November 13, 1990.
The Fund is an open-end, diversified management investment company registered
under the Investment Company Act of 1940. As an open-end investment company it
obtains its assets by continuously selling shares of its Common Stock, $.01 par
value (''Common Stock''), to the public. Proceeds from such sales are invested
by the Fund in securities of other companies. The resources of many investors
are thus combined and each individual investor has an interest in every one of
the securities owned thereby providing diversification in a variety of
industries. The Fund's investment adviser furnishes experienced management to
select and watch over its investments. As an open-end investment company, the
Fund will redeem any of its outstanding shares on demand of the owner at the
next determined net asset value.
INVESTMENT OBJECTIVE AND POLICIES
The primary objective of the Fund is to produce long-term capital
appreciation principally through investing in common stocks. The Fund is
designed for investors who wish to limit their investment to larger, well-
established but dynamic companies with potential for growth in share value.
Current income is a secondary consideration. In managing the Fund, Friess
Associates, Inc., the Fund's investment adviser (the ''Adviser''), will use the
same research process used in purchasing stocks of companies regardless of size
for Brandywine Fund, Inc., another fund managed by the Adviser. However, the
Fund's investments will be limited to larger, well-established companies,
whereas the Brandywine Fund, Inc.'s investments include less familiar medium- to
smaller-sized companies.
Accordingly, the Adviser will purchase common stocks of large, well-
established companies with opportunity for long-term capital growth resulting
from new products, acquisitions, divestitures, changes in management, new
legislation, or other phenomena which the Adviser believes will alter for the
better their investment outlook. Exempt for temporary defensive purposes, the
Fund intends to have at all times at least 70% of its investments in common
stocks of blue chip companies having market capitalization above $500,000,000.
In addition, such blue chip companies may exhibit one or more of the following
characteristics:
Included in Fortune 500 or Russell 1000 list of America's largest companies.
Included in Dow-Jones averages.
Included in S&P 500 stock index.
S&P rating B+ or better.
Projected earnings greater than $20,000,000.
In selecting investments the Fund's Adviser will consider various financial
characteristics of the issuer including historical sales and net income,
debt/equity and price/earnings ratios and book value. The Fund's Adviser may
also review research reports of broker-dealers and trade publications and, in
appropriate situations, may meet with management. Greater weight will be given
to internal factors such as product or service development than to external
factors such as interest rate changes, commodity price fluctuations, general
stock market trends and foreign currency exchange values. Since the Fund's
primary investment objective is to produce long-term capital appreciation and
current income is a secondary consideration in the selection of investments, a
particular issuer's dividend history is not a primary consideration.
Investors should be aware that since the major portion of the Fund's
portfolio will normally be invested in common stocks, the Fund's net asset value
may be subject to greater fluctuation than a portfolio containing a substantial
amount of fixed income securities. There can be no assurance that the primary
objective of the Fund will be realized or that any income will be earned. Nor
can there be any assurance that the Fund's portfolio will not decline in value.
Except for temporary defensive purposes, cash and money market instruments
will be retained by the Fund only in amounts deemed adequate for current needs
and to permit the Fund to take advantage of investment opportunities. The money
market instruments in which the Fund may invest include conservative fixed-
income securities such as United States Treasury Bills, certificates of deposit
of U.S. banks, provided that the bank has capital, 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 the date of investment,
commercial paper rated A-l 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, 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 Fund's Adviser will monitor the creditworthiness of the
issuer of the commercial paper master notes while any borrowings are
outstanding. Repurchase agreements are agreements under which the seller of a
security agrees at the time of sale to repurchase the security at an agreed time
and price. The Fund will not enter into repurchase agreements with entities
other than banks or invest over 5% of its assets in repurchase agreements with
maturities of more than seven days.
The Fund does not intend to place emphasis on short-term trading profits. The
Fund's investment adviser expects that the Fund's annual portfolio turnover rate
generally will not exceed 200%. See ''Management's Discussion of Fund
Performance.'' The annual portfolio turnover rate indicates changes in the
Fund's portfolio and is calculated by dividing the lesser of purchases or sales
of portfolio securities (excluding securities having maturities at acquisition
of one year or less), for the fiscal year, by the monthly average of the value
of the portfolio securities (excluding securities having maturities at
acquisition of one year or less) owned by the Fund during the fiscal year. The
annual portfolio turnover rate may vary widely from year to year depending upon
market conditions and prospects. High turnover in any year will result in the
payment by the Fund from capital of above average amounts of brokerage
commissions and other transaction costs.
The Fund will limit to 15% of its assets investments in securities of foreign
issuers or in American Depository Receipts of such issuers. Such investments may
involve risks which are in addition to the usual risks inherent in domestic
investments. 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 may not be
subject to uniform accounting, auditing and financial reporting standards.
Dividends and interest on foreign securities may be subject to foreign
withholding taxes, which would reduce the Fund's income without providing a tax
credit for the Fund's stockholders. Although the Fund intends to invest in
securities of foreign issuers domiciled in nations which the Fund's 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.
Under certain circumstances the Fund may (a) temporarily borrow money from
banks for emergency or extraordinary borrowings, (b) pledge its assets to secure
borrowings, and (c) purchase securities of other investment companies. A more
complete discussion of the circumstances in which the Fund may engage in these
activities is included in the Fund's Statement of Additional Information. Except
for the investment policies listed in this paragraph, the investment objective
and the other policies described under this caption are not fundamental policies
and may be changed by the Board of Directors without stockholder approval. Such
changes may result in the Fund having investment objectives different from the
objectives which the stockholder considered appropriate at the time of
investment in the Fund. Stockholders will receive at least 30 days' prior
written notice of any changes in the policies of the Fund which are not
fundamental.
MANAGEMENT OF THE FUND
As a Maryland corporation, the business and affairs of the Fund are managed
under the direction of its Board of Directors. Under an investment advisory
agreement (the ''Agreement'') with the Fund, Friess Associates, Inc. (the
''Adviser''), 350 Broadway, P.O. Box 576, Jackson, Wyoming 83001, furnishes
continuous investment advisory services and management to the Fund. In addition
to the Fund, the Adviser is the investment adviser to Brandywine Fund, Inc.,
another mutual fund, and to individual and institutional clients with
substantial investment portfolios. The Adviser was organized in 1974 and is
wholly owned by Foster S. Friess and Lynnette E. Friess, who are directors and
the sole officers of the Adviser.
The Adviser supervises and manages the investment portfolio of the Fund and,
subject to such policies as the Board of Directors of the Fund may determine,
directs the purchase or sale of investment securities in the day to day
management of the Fund. All investment decisions for the Fund are made by
investment teams comprising three or more analysts, and no single person is
primarily responsible for making investment recommendations to such teams. Under
the Agreement, the Adviser, at its own expense and without reimbursement from
the Fund, will furnish office space, and all necessary office facilities,
equipment, and executive personnel for making the investment decisions necessary
for managing the Fund and maintaining its organization, and will pay the
salaries and fees of all officers and directors of the Fund (except the fees
paid to disinterested directors). For the foregoing, the Adviser will receive a
monthly fee of 1/12 of 1% (1% per annum) on the daily net assets of the Fund.
The rate of the advisory fee is higher than that paid by most mutual funds. The
advisory fees paid in the fiscal year ended September 30, 1995 were equal to
1.0% of the Fund's average net assets.
The Fund and Fiduciary Management, Inc., Milwaukee, Wisconsin have entered
into a Service Agreement pursuant to which certain accounting and record keeping
services will be performed for the Fund by Fiduciary Management, Inc. These
services include (a) preparing and maintaining financial statements, books of
accounts and related documents, (b) determining the Fund's net asset value, (c)
preparing excise tax returns and (d) preparing reports and filings with the
Securities and Exchange Commission. For such services, the Fund pays Fiduciary
Management, Inc. an annual fee of $70,000.
DETERMINATION OF NET ASSET VALUE
The per share net asset value of the Fund is determined by dividing the total
value of its net assets (meaning its assets less its liabilities excluding
capital and surplus) by the total number of its shares outstanding at that time.
The net asset value is determined as of the close of regular trading (currently
4:00 p.m. Eastern time) on the New York Stock Exchange on each day the New York
Stock Exchange is open for trading. This determination is applicable to all
transactions in shares of the Fund prior to that time and after the previous
time as of which net asset value was determined. Accordingly, purchase orders
accepted or shares tendered for redemption prior to the close of regular trading
on a day the New York Stock Exchange is open for trading will be valued as of
the close of trading, and purchase orders accepted or shares tendered for
redemption after that time will be valued as of the close of the next trading
day.
Securities traded on any national stock exchange or quoted on the Nasdaq
National Market System will be valued on the basis of the last sale price on the
date of valuation or, in the absence of any sale on that date, the most recent
bid price. Other securities will be valued at the most recent bid price, if
market quotations are readily available. Any securities for which there are no
readily available market quotations and other assets will be valued at their
fair value as determined in good faith by the Board of Directors. Odd lot
differentials and brokerage commissions will be excluded in calculating values.
PURCHASE OF SHARES
Shares of Common Stock may be purchased directly from the Fund. A share
purchase application form is included at the back of this Prospectus. The price
per share is the next determined per share net asset value after receipt of an
application by Firstar Trust Company. Additional purchase applications may be
obtained from the Fund. Purchase applications should be mailed directly to:
Brandywine Blue Fund, Inc., c/o Firstar Trust Company, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701. To purchase shares by overnight or express mail, please
use the following street address: Brandywine Blue Fund, Inc., c/o Firstar Trust
Company, Mutual Fund Services, Third Floor, 615 East Michigan Street, Milwaukee,
Wisconsin 53202. All applications must be accompanied by payment in the form of
a check drawn on a U.S. bank payable to Brandywine Blue Fund, Inc., or by direct
wire transfer. No cash will be accepted. Firstar Trust Company will charge a $15
fee against a stockholder's account for any payment check returned to the
custodian. THE STOCKHOLDER WILL ALSO BE RESPONSIBLE FOR ANY LOSSES SUFFERED BY
THE FUND AS A RESULT.
Funds should be wired to: Firstar Bank Milwaukee, N.A.
777 East Wisconsin Avenue
(WIRED FUNDS MUST BE Milwaukee, Wisconsin 53202
RECEIVED PRIOR TO ABA #075000022
4:00 P.M. EASTERN credit: Firstar Trust Company
TIME TO BE ELIGIBLE Account #112952137
FOR SAME DAY PRICING.) further credit: Brandywine Blue Fund, Inc.
''name of stockholder and account number (if
known)''
The establishment of a new account or any additional purchases for an
existing account by wire transfer should be preceded by a phone call to Firstar
Trust Company, (800) 656-3017 or (414) 765-4124, to provide information for the
account. A properly signed share purchase application marked ''Follow up'' must
be sent for all new accounts opened by wire transfer. Applications are subject
to acceptance by the Fund, and are not binding until so accepted. The Fund does
not accept telephone orders for purchase of shares and reserves the right to
reject applications in whole or part. You may also invest in the Fund by
purchasing shares through a registered broker-dealer who may charge you a fee
either at the time of purchase or redemption. The fee, if charged, is retained
by the broker-dealer and not remitted to the Fund or Adviser.
THE BOARD OF DIRECTORS OF THE FUND HAS ESTABLISHED $100,000 AS THE MINIMUM
INITIAL PURCHASE AND $1,000 AS THE MINIMUM FOR ANY SUBSEQUENT PURCHASE (except
through dividend reinvestment), which minimum amounts are subject to change at
any time. Stockholders will receive written notification at least 30 days in
advance of any changes in such minimum amounts. Shares of the Fund may be
purchased without regard to the foregoing minimum initial investment by
employees, officers and directors of the Fund or the Adviser or firms providing
contractual services to the Fund, and by members of their `immediate families''
(i.e., spouses, siblings, parents, children, grandchildren and grandparents) and
by retirement plans and trusts for their benefit. The officers of the Fund in
their discretion may waive the minimum initial investment for charitable
organizations, employee benefit plans whose investment in the aggregate exceed
the Fund's minimum initial investment, and others with whom the Fund or Adviser
has an established business relationship. Stock certificates for shares
purchased are not issued unless a request is made in writing and directed to
Brandywine Blue Fund, Inc., c/o Firstar Trust Company, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701.
Employee benefit, profit-sharing, or retirement plans (such as 401(k) plans)
may purchase shares of Common Stock through financial institutions or other
service providers (''Processing Intermediaries''), which may become stockholders
of record of the shares and which may use procedures and impose restrictions in
addition to or different from those applicable to stockholders who invest
directly in the Fund. Processing Intermediaries may charge fees or assess other
charges for the services they provide to their customers. Any such fee or charge
is retained by the Processing Intermediary and is not remitted to the Fund or
its Adviser. Program materials provided by the Processing Intermediary should be
read in conjunction with this Prospectus before investing in this manner. Shares
of Common Stock may be purchased through Processing Intermediaries without
regard to the Fund's minimum purchase amounts.
REDEMPTION OF SHARES
A stockholder may require the Fund to redeem his shares in whole or in part
at any time during normal business hours. Redemption requests must be made in
writing and directed to: Brandywine Blue Fund, Inc., c/o Firstar Trust Company,
615 East Michigan Street, Milwaukee, Wisconsin 53202. A redemption request form
is included at the back of this Prospectus. If a redemption request is
inadvertently sent to the Fund, it will be forwarded to Firstar Trust Company,
but the effective date of redemption will be delayed until the request is
received by Firstar Trust Company. Requests for redemption by telegram and
requests which are subject to any special conditions or which specify an
effective date other than as provided herein cannot be honored.
A request for redemption must be signed by the stockholder or stockholders
exactly as the shares are registered, including the signature of each joint
owner, and must specify either the number of shares or the dollar amount of
shares that are to be redeemed. If the proceeds of redemption are requested to
be sent to an address or a person other than as the shares to be redeemed are
registered, each signature on the redemption request must be guaranteed by a
commercial bank or trust company in the United States, a member firm of the New
York Stock Exchange or other eligible guarantor institution. If certificates
have been issued for any of the shares to be redeemed, the certificates,
properly endorsed or accompanied by a properly executed stock power, must
accompany the request for redemption. Additional documentation may be required
for redemptions by corporations, executors, administrators, trustees, guardians,
or others who hold shares in a fiduciary or representative capacity or who are
not natural persons. In case of any questions concerning the nature of such
documentation, the Fund's transfer agent, Firstar Trust Company, should be
contacted in advance at (800) 656-3017 or (414) 765-4124. Redemptions will not
be effective or complete until all of the foregoing conditions, including
receipt of all required documentation by Firstar Trust Company in its capacity
as transfer agent, have been satisfied.
The redemption price is the net asset value next determined after receipt by
Firstar Trust Company in its capacity as transfer agent of the written request
in proper form with all required documentation. The amount received may be more
or less than the cost of the shares redeemed. A check in payment for shares
redeemed will be mailed to the holder no later than the seventh day after
receipt of the redemption request in proper form with all required documentation
except that when a purchase has been made by check, the Fund can hold payment on
redemption until it is reasonably satisfied the check has cleared. (This may
normally take up to 3 days for local personal or corporate checks and up to 7
days for other personal or corporate checks.) Wire transfers may be arranged on
request. The transfer agent currently charges a $7.50 fee for each payment made
by wire of redemption proceeds, which will be deducted from the stockholder's
account.
If a stockholder instructs Firstar Trust Company in writing, redemption
requests may be made by telephone by calling ONLY FIRSTAR TRUST COMPANY, NOT THE
FUND OR ITS ADVISER, at (800) 656-3017 or (414) 765-4124, provided the
redemption proceeds are to be mailed or wired to the stockholder's address or
bank of record as shown on the records of the transfer agent. Proceeds redeemed
by telephone will be mailed or wired to an address or account other than that
shown on the records of the transfer agent only if such has been prearranged by
a written request sent via mail or facsimile copy to Firstar Trust Company. Such
a request must be signed by the stockholder with signatures guaranteed as
described above. Additional documentation may be requested from those who hold
shares in a fiduciary or representative capacity or who are not natural persons.
A stockholder may change his address by calling Firstar Trust Company at (800)
656-3017 or (414) 765-4124. Any written redemption requests received within 30
days after an address change made by telephone must be accompanied by a
signature guarantee and no telephone redemptions will be allowed within 30 days
of such a change. The Fund reserves the right to refuse a telephone redemption
request if it is believed advisable to do so. Redemption by telephone is not
available for IRA accounts or if share certificates have been issued for the
account. PROCEDURES FOR TELEPHONE REDEMPTIONS MAY BE MODIFIED OR TERMINATED AT
ANY TIME BY THE FUND OR FIRSTAR TRUST COMPANY. Neither the Fund nor Firstar
Trust Company will be liable for following instructions for telephone redemption
transactions that they reasonably believe to be genuine, provided reasonable
procedures are used to confirm the genuineness of the telephone instructions,
but may be liable for unauthorized transactions if they fail to follow such
procedures. These procedures include requiring some form of personal
identification prior to acting upon the telephone instructions and recording all
telephone calls. During periods of substantial economic or market change,
telephone redemptions may be difficult to implement. In the event a stockholder
cannot contact Firstar Trust Company by telephone, he or she should make a
redemption request in writing in the manner set forth above.
The Fund reserves the right to redeem the shares held in any account 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 $10,000. 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.
The right to redeem shares of the Fund will be suspended 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) an 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 Fund to dispose of its securities or fairly to determine the
value of its net assets.
To accommodate the current cash needs of investors the Fund offers a
Systematic Withdrawal Plan pursuant to which a stockholder who owns Fund shares
worth at least $100,000 at current net asset value may provide that a fixed sum
will be distributed to him at regular intervals. In electing to participate in
the Systematic Withdrawal Plan investors should realize that within any given
period the appreciation of their investment in the Fund may not be as great as
the amount withdrawn. A stockholder may vary the amount or frequency of
withdrawal payments or temporarily discontinue them by notifying Firstar Trust
Company in writing or by telephone at (800) 656-3017 or (414) 765-4124. A more
complete discussion of the Systematic Withdrawal Plan is included in the Fund's
Statement of Additional Information.
EXCHANGE PRIVILEGE
A request to exchange shares of Common Stock for shares of Brandywine Fund,
another mutual fund managed by the Adviser, may be made by submitting the
request in writing to Brandywine Blue Fund, Inc., c/o Firstar Trust Company, 615
East Michigan Street, Milwaukee, Wisconsin 53202, along with a completed share
purchase application for Brandywine Fund. Prior to exercising the Exchange
Privilege, a stockholder should obtain and carefully read the prospectus for
Brandywine Fund. The stockholder must give the account name, account number and
the amount or number of shares of Common Stock to be exchanged. The registration
of the account from which the exchange is being made and the account to which
the exchange is being made must be identical. Signatures required are the same
as explained under ''REDEMPTION OF SHARES.''
In establishing a new account in Brandywine Fund through this privilege, the
shares exchanged must have a value at least equal to the minimum investment
(currently $25,000) required by such fund.
The exchange privilege is available only in states where the exchange may be
legally made. Exchange requests may be subject to other limitations, including
those relating to frequency, that may be established from time to time to ensure
that the exchanges do not disadvantage the Fund, Brandywine Fund or their
respective stockholders. Stockholders will be notified at least 60 days in
advance of any changes in such limitations and may obtain the terms of any such
limitations by writing to Brandywine Blue Fund, Inc., c/o Firstar Trust Company,
P.O. Box 701, Milwaukee, Wisconsin 53201-0701. No exchange fee is currently
imposed by the Fund on exchanges; however, the Fund reserves the right to impose
a service charge in the future.
An exchange involves a redemption of all or a portion of a stockholder's
shares of Common Stock and the investment of the redemption proceeds in shares
of Brandywine Fund and is subject to any applicable adjustments in connection
with such redemption and investment. The redemption will be made at the per
share net asset value of the shares to be redeemed next determined after the
exchange request is received as described above. The shares to be acquired will
be purchased (subject to any applicable adjustment) at the per share net asset
value of those shares next determined coincident with or after the time of
redemption.
For federal income tax purposes, an exchange of shares is a taxable event in
which a capital gain or loss may be realized by an investor. Before making an
exchange request, an investor should consult a tax or other financial adviser to
determine the tax consequences of a particular exchange.
DIVIDEND REINVESTMENT
Stockholders may elect to have all income dividends and capital gains
distributions reinvested or paid in cash, or to have income dividends reinvested
and capital gains distributions paid in cash or capital gains distributions
reinvested and income dividends paid in cash. See the share purchase application
form included at the back of this Prospectus for further information. If a
stockholder does not specify an election, all income dividends and capital gains
distributions will automatically be reinvested in full and fractional shares of
the Fund calculated to the nearest 1,000th of a share. Shares are purchased at
the net asset value in effect on the business day after the dividend record date
and are credited to the stockholder's account on the dividend payment date. Cash
dividends are mailed to stockholders within 5 business days of the dividend
record date. As in the case of normal purchases, stock certificates are not
issued unless requested. Stockholders will be advised of the number of shares
purchased and the price following each reinvestment. An election to reinvest or
receive dividends and distributions in cash will apply to all shares of the Fund
registered in the same name, including those previously purchased.
A stockholder may change an election at any time by notifying the Fund in
writing or, subject to certain limited exceptions, by calling Firstar Trust
Company at (800) 656-3017 or (414) 765-4124. If such a notice is received
between a dividend declaration date and payment date, it will become effective
on the day following the payment date. The Fund may modify or terminate its
dividend reinvestment program at any time on thirty days' written notice to
participants.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund will endeavor to qualify annually for and elect tax treatment
applicable to a regulated investment company under Subchapter M of the Internal
Revenue Code (the ''Code''). Pursuant to the requirements of the Code, the Fund
intends to distribute annually, to its stockholders, substantially all of its
net investment income and net realized capital gains, if any, less any available
capital loss carry-over, to avoid paying income tax on its net investment income
and net realized capital gains or being subject to a federal excise tax on
undistributed net investment income and net realized capital gains. The primary
distribution will normally be made near the end of October, following the close
of the Fund's fiscal year, with a secondary distribution, if required, at the
end of December. For federal income tax purposes, distributions by the Fund,
whether invested in additional shares of Common Stock or received in cash, will
be taxable to the Fund's stockholders except those stockholders that are not
subject to tax on their income. Stockholders will be notified annually as to the
federal tax status of dividends and distributions. Currently, short-term capital
gains are treated as dividend income for federal income tax purposes and are
generally subject to U.S. withholding for non-resident alien stockholders. They
will be reported as such on the year-end Form 1099. For federal income tax
purposes, a stockholder's original cost for his shares, including shares
purchased pursuant to reinvested dividends, continues as his basis, and on
redemption his gain or loss is the difference between such basis and the
redemption price. Distributions and redemptions may also be taxed under state
and local tax laws which may differ from the Code.
CAPITAL STRUCTURE
The Fund's authorized capital consists of 20,000,000 shares of Common Stock.
Stockholders are entitled: (i) to one vote per full share of Common Stock; (ii)
to such distributions as may be declared by the Fund's Board of Directors out of
funds legally available; and (iii) upon liquidation, to participate ratably in
the assets available for distribution. There are no conversion or sinking fund
provisions applicable to the shares, and the holders have no preemptive rights
and may not cumulate their votes in the election of directors. Consequently the
holders of more than 50% of the shares of Common Stock voting for the election
of directors can elect the entire Board of Directors and in such event the
holders of the remaining shares voting for the election of directors will not be
able to elect any person or persons to the Board of Directors. The Maryland
General Corporation Law permits registered investment companies, such as the
Fund, to operate without an annual meeting of stockholders under specified
circumstances if an annual meeting is not required by the Investment Company Act
of 1940. The Fund has adopted the appropriate provisions in its Bylaws and does
not anticipate holding an annual meeting in any year in which the election of
directors is not required to be acted on by stockholders under the Investment
Company Act of 1940. The Fund also has adopted provisions in its Bylaws for the
removal of directors by the stockholders.
The shares are redeemable and are transferable. All shares issued and sold by
the Fund will be fully paid and nonassessable. Fractional shares of Common Stock
entitle the holder to the same rights as whole shares of Common Stock. Firstar
Trust Company, 615 East Michigan Street, Milwaukee, Wisconsin 53202 acts as the
Fund's transfer agent and dividend disbursing agent.
The Fund will not issue certificates evidencing shares of Common Stock
purchased unless so requested in writing. Where certificates are not issued, the
stockholder's account will be credited with the number of shares purchased,
relieving stockholders of responsibility for safekeeping of certificates and the
need to deliver them upon redemption. Written confirmations are issued for all
purchases of Common Stock. Any stockholder may deliver certificates to Firstar
Trust Company and direct that his account be credited with the shares. A
stockholder may direct Firstar Trust Company at any time to issue a certificate
for his shares of Common Stock without charge.
STOCKHOLDER REPORTS
Stockholders will be provided at least semi-annually with a report showing
the Fund's portfolio and other information and annually after the close of the
Fund's fiscal year, which ends September 30, with an annual report containing
audited financial statements. Stockholders who have questions about the Fund
should write to: Brandywine Blue Fund, Inc., P.O. Box 4166, Greenville, Delaware
19807, Attention: Corporate Secretary, or E-mail [email protected]. Questions
about the Fund or individual accounts may be directed toll free to Firstar Trust
Company at (800) 656-3017 or (414) 765-4124.
PERFORMANCE INFORMATION
The Fund's average annual compounded rate of return is the rate of return
which, if applied to an initial investment in the Fund at the beginning of a
stated period and compounded annually over the period, would result in the
redeemable value of the investment in the Fund at the end of the stated period.
The calculation assumes reinvestment of all dividends and distributions and
reflects the effect of all recurring fees but ignores individual income tax
consequences to stockholders.
COMPARISON OF CHANGE IN VALUE OF $100,000 INVESTMENT IN
BRANDYWINE BLUE FUND AND S&P 500 INDEX
AVERAGE ANNUAL TOTAL RETURN
1-YEAR +42.8%
Since Inception 1/10/91*<F6> +25.7%
date Brandywine Blue Fund S&P 500 Index
1/10/91 $100,000 $100,000
9/30/91 $130,769 $125,100
9/30/92 $136,018 $138,986
9/30/93 $200,719 $157,054
9/30/94 $206,398 $162,708
9/30/95 $294,736 $211,195
*<F6> inception date
Past performance is not predictive of future performance.
The results below show the value of an assumed initial investment of $100,000
made on January 10, 1991 through December 31, 1995, 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
The foregoing performance results are historical and should not be considered
indicative of the future performance of the Fund. An investment in the Fund will
fluctuate in value and at redemption its value may be more or less than the
initial investment. The Fund may compare its performance to other mutual funds
with similar investment objectives and to the industry as a whole, as reported
by Lipper Analytical Services, Inc., Money, Forbes, Business Week and Barron's
magazines and Investor's Business Daily and The Wall Street Journal newspapers.
The Fund may also compare its performance to the Dow Jones Industrial Average,
Nasdaq Industrials Index, Value Line Index, the Standard &Poor's 500 Stock Index
and others. Such comparisons may be made in advertisements, stockholder reports
or other communications to stockholders.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The principal factor affecting the Fund's performance for the fiscal year
ended September 30, 1995 was the selection and purchase by the Adviser of stocks
of companies with earnings growth substantially in excess of the overall market,
in accordance with the investment philosophy described under ''Investment
Objective and Policies.''
The increase of 42.8% in share value reflected particularly a resurgence of
technology stock holdings. The broader based S&P 500 Index rose 29.7% for the
year, while the more growth-oriented Mutual Fund Index of Investor's Business
Daily increased 31.1% in the period. The Mutual Fund Index
consists of 20 growth-oriented mutual funds selected primarily on the basis of
their size, reputation and historical performance.
The Fund focused particularly on companies with new products, services, or
markets, which were growing rapidly in an improving economic environment or
which were taking market share from the competition.
Sales of stocks to provide for replacing existing holdings with better ones
in line with the Adviser's strategy of ''forced displacement'', resulted in a
continuing high turnover of 174% in the portfolio for the twelve-month period.
BRANDYWINE BLUE FUND, INC.
SHARE PURCHASE APPLICATION This is a Follow-Up application to
MINIMUM INVESTMENT $100,000 INITIAL, an investment by wire transfer.
$1,000 SUBSEQUENT
Mail To: Overnight Delivery to:
Brandywine Blue Fund, Inc. Brandywine Blue Fund, Inc.
c/o Firstar Trust Company c/o Firstar Trust Company
P.O. Box 701 615 East Michigan St., Third Floor
Milwaukee, Wisconsin 53201-0701 Milwaukee, Wisconsin 53202
Enclosed is my check or money order for $ (minimum $100,000)
---------------
made payable to Brandywine Blue Fund, Inc.
REGISTRATION OF SHARES
PLEASE PRINT CLEARLY (complete one section only)
Individual:
------------------------------------------------------------------
First Name Middle Initial Last Name
Joint Owner:
----------------------------------------------------------------
(cannot be a First Name Middle Initial Last Name
minor)
Gift to Minor:______________________________________________________________
Custodian's Name (only one permitted)
_______________________________________________________________
Minor's Name (only one permitted) Birthdate
Trust, Estate or Guardianship: as Trustee(s) for
-----------------------------
(including Corporate Pension Plans) Name of Trustee(s)
- -----------------------------------------------------------------------------
Name of Trust
under agreement dated
-------------------------------------------------------
Date of Trust Agreement
Corporate, Partnership or other entity:
-------------------------------------
(A corporate resolution form is required) Name of Corporation or other entity
Mailing Address:
- -----------------------------------------------------------------------------
Name Mr. Ms. Mr. & Mrs.
- -----------------------------------------------------------------------------
Street Address
- -----------------------------------------------------------------------------
City State Zip
- -----------------------------------------------------------------------------
Home Phone Business Phone
Send duplicate confirmation to:
- -----------------------------------------------------------------------------
Name
- -----------------------------------------------------------------------------
Address
- -----------------------------------------------------------------------------
TELEPHONE REDEMPTION OPTION - (800) 656-3017 OR (414) 765-4124
I (we) authorize Brandywine Blue Fund, Inc., to act upon my (our) telephone
instructions to redeem shares from this account:
By wire. The proceeds of any redemption may be wired to your bank. A wire fee
will be charged.
- -----------------------------------------------------------------------------
Name on Bank Account Account Number
- -----------------------------------------------------------------------------
Bank Name and Address
Please attach a voided, unsigned check or savings deposit slip for the bank
account referenced above.
By mail. The proceeds of any redemption may be mailed only to the name and
address in which your account is registered.
SYSTEMATIC WITHDRAWALS
I would like to withdraw from Brandywine Blue Fund, Inc., $ (no
----------
minimum)
I would like to have payments made to me on or about the day of
-----
each month or only those months checked below:
Jan. Feb. Mar. Apr. May June
July Aug. Sept. Oct. Nov. Dec.
DISTRIBUTION OPTIONS
Please check one:
Reinvest all income dividends and capital gains distributions
Pay all income dividends and capital gains distributions in cash
Reinvest all capital gains distributions (including short-term capital gains)
and pay all income dividends in cash
Reinvest all income dividends and pay all capital gains distributions
(including short-term capital gains) in cash
Yes No
- ---------------------------------------- ------ ------
Owner's Social Security Number or T.I.N. I am a U.S. Citizen
If you do not have a Social Security or Tax I.D. Number, you should indicate
that an application to obtain a number is pending by writing ''Applied For.''
The Fund is required to withhold taxes if a number is not delivered to the Fund
within 7 days.
I certify under penalty of perjury that:
1) The Social Security or other Tax I.D. Number stated above is correct.
2) I am not subject to backup withholding because:*<F7>
a. The IRS has not informed me that I am subject to backup withholding.
b. The IRS has notified me that I am no longer subject to backup withholding.
- -----------------------------------------------------------------------------
Signature of Owner, Trustee or Custodian
- -----------------------------------------------------------------------------
Print or Type Name
Date:
--------------------------------
- -----------------------------------------------------------------------------
Signature of Joint Owner (if any)
- -----------------------------------------------------------------------------
Print or Type Name
Date:
--------------------------------
*<F7>If this statement is not true and you are subject to backup withholding,
strike out Section 2.
CUSTODIAN, TRANSFER AGENT
AND DIVIDEND DISBURSING AGENT
Mutual Fund Services, Third Floor
FIRSTAR TRUST COMPANY
615 East Michigan Street
Milwaukee, Wisconsin 53202
INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP
100 East Wisconsin Avenue
Suite 1500
Milwaukee, Wisconsin 53202
LEGAL COUNSEL
FOLEY & LARDNER
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
BRANDYWINE BLUE FUND, INC.
3908 Kennett Pike
Greenville, Delaware 19807
Internet: [email protected]
(800) 656-3017
STATEMENT OF ADDITIONAL INFORMATION January 31, 1996
BRANDYWINE BLUE FUND, INC.
3908 Kennett Pike
Greenville, Delaware 19807
This Statement of Additional Information is not a prospectus and
should be read in conjunction with the prospectus of Brandywine Blue Fund,
Inc. dated January 31, 1996. Requests for copies of the prospectus should
be made in writing to Brandywine Blue Fund, Inc., P.O. Box 4166,
Greenville, Delaware, 19807, Attention: Corporate Secretary, Internet:
bfunds @ friess.com, or by calling (800) 656-3017.
BRANDYWINE BLUE FUND, INC.
Table of Contents
Page No.
Investment Restrictions ............................. 1
Directors and Officers of the Fund .................. 3
Principal Stockholders .............................. 6
Investment Adviser .................................. 7
Service Agreement ................................... 8
Determination of Net Asset Value and Performance..... 9
Purchase of Shares................................... 10
Systematic Withdrawal Plan .......................... 10
Allocation of Portfolio Brokerage ................... 11
Custodian ........................................... 12
Taxes ............................................... 13
Stockholder Meetings ................................ 13
Independent Accountants ............................. 15
Financial Statements ................................ 15
No person has been authorized to give any information or to make
any representations other than those contained in this Statement of
Additional Information and the Prospectus dated January 31, 1996 and, if
given or made, such information or representations may not be relied upon
as having been authorized by Brandywine Blue Fund, Inc.
This Statement of Additional Information does not constitute an
offer to sell securities.
INVESTMENT RESTRICTIONS
As set forth in the prospectus dated January 31, 1996 of
Brandywine Blue Fund, Inc. (the "Fund") under the caption "Investment
Objective and Policies", the primary investment objective of the Fund is
to produce long-term capital appreciation principally through investing in
common stocks. Current income is a secondary consideration. Consistent
with its investment objective, the Fund has adopted the following
investment restrictions which are matters of fundamental policy and cannot
be changed without approval of the holders of the lesser of: (i) 67% of
the Fund's shares present or represented at a stockholder's meeting at
which the holders of more than 50% of such shares are present or
represented; or (ii) more than 50% of the outstanding shares of the Fund.
l. The Fund will not purchase warrants, purchase securities on
margin, participate in a joint-trading account, sell securities short, or
write or invest in put or call options.
2. The Fund will not 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
will not pledge any of its assets except to secure borrowings and then
only to an extent not greater than 10% of the value of the Fund's net
assets. The Fund will not purchase securities while it has any
outstanding borrowings.
3. The Fund will not lend money (except by purchasing publicly
distributed debt securities or entering into repurchase agreements
provided that repurchase agreements maturing in more than seven days plus
all other illiquid securities will not exceed 10% of the Fund's total
assets) and will not lend its portfolio securities.
4. The Fund will not purchase securities of other investment
companies except (a) as part of a plan of merger, consolidation or
reorganization approved by the shareholders of the Fund or (b) securities
of registered closed-end investment companies on the open market where no
commission or profit results, other than the usual and customary broker's
commission and where as a result of such purchase the Fund would hold less
than 3% of any class of securities, including voting securities, of any
registered closed-end investment company and less than 5% of the Fund's
assets, taken at current value, would be invested in securities of
registered closed-end investment companies.
5. The Fund will not make investments for the purpose of
exercising control or management of any company.
6. The Fund will limit its purchases of securities of any
issuer (other than the United States or an instrumentality of the United
States) in such a manner that it will satisfy at all times the
requirements of Section 5(b)(1) of the Investment Company Act of 1940
(i.e., that at least 75% of the value of its total assets is represented
by cash and cash items (including receivables), U.S. Government
Securities, securities of other investment companies, and other securities
for the purpose of the foregoing limited in respect of any one issuer to
an amount not greater than 5% of the value of the total assets of the Fund
and to not more than 10% of the outstanding voting securities of such
issuer.)
7. The Fund will not concentrate 25% or more of the value of
its total assets, determined at the time an investment is made, exclusive
of U.S. Government securities, in securities issued by companies engaged
in the same industry.
8. The Fund will not acquire or retain any security issued by
a company, an officer or director of which is an officer or director of
the Fund or an officer, director or other affiliated person of its
investment adviser.
9. The Fund will not acquire or retain any security issued by
a company if any of the directors or officers of the Fund, or directors,
officers or other affiliated persons of its investment adviser
beneficially own more than 1/2% of such company's securities and all of
the above persons owning more than 1/2% own together more than 5% of its
securities.
10. The Fund will not act as an underwriter or distributor of
securities other than shares of the Fund and will not purchase any
securities which are restricted from sale to the public without
registration under the Securities Act of 1933, as amended.
11. The Fund will not purchase any interest in any oil, gas or
any other mineral exploration or development program.
12. The Fund will not purchase or sell real estate or real
estate mortgage loans.
13. The Fund will not 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. The Fund will not invest in securities of unseasoned
issuers, including their predecessors, which have been in operation for
less than 3 years, and equity securities of 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.
DIRECTORS AND OFFICERS OF THE FUND
The name, address, principal occupations during the past five
years and other information with respect to each of the directors and
officers of the Fund are as follows:
FOSTER S. FRIESS*
350 Broadway
P. O. Box 576
Jackson, Wyoming
(PRESIDENT, TREASURER AND A
DIRECTOR OF THE FUND)
Mr. Friess, age 55, has served as President, Treasurer and a
director of both the Fund and Brandywine Fund, Inc. since their inceptions
in 1990 and 1985, respectively. He is also President and Chairman of the
Board of Friess Associates, Inc., an investment advisory firm which he
co-founded in 1974 with his wife, Lynnette E. Friess. Friess Associates,
Inc. has been the investment adviser of Brandywine Fund, Inc. since its
inception and is the investment adviser of the Fund. Mr. Friess has been
a Chartered Financial Analyst since 1970. He is currently Chairman of the
Life Enrichment Foundation, Wilmington, Delaware. He is also a member of
the Advisory Council of the Royal Swedish Academy of Sciences.
STIG RAMEL
Resedavagen 8
171732 Solna
Sweden
(DIRECTOR)
Mr. Ramel, age 68, 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 Academy of Sciences and Director of the Board of
Gustavus Adolphus College in Minnesota. He is Chairman or a board member
of 15 foreign companies and organizations. Mr. Ramel also has served as a
director of Brandywine Fund, Inc. since it was founded in 1985.
JOHN E. BURRIS
5th and McColley Street
Milford, Delaware
(DIRECTOR)
Mr. Burris, age 75, is Chairman of Burris Foods, Inc. He is a
trustee of the University of Delaware and is a 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 also has served as a
director of Brandywine Fund, Inc. since it was founded in 1985.
WILLIAM F. D'ALONZO
3908 Kennett Pike
Greenville, Delaware
(VICE PRESIDENT)
Mr. D'Alonzo, age 41, has been an analyst for Friess Associates,
Inc. since 1981. He also has served as a Vice President of Brandywine
Fund, Inc. since April, 1990.
CLARKE ADAMS, JR.
3908 Kennett Pike
Greenville, Delaware
(VICE PRESIDENT)
Mr. Adams, age 50, has been an analyst for Friess Associates,
Inc. since 1983. He also has served as a Vice President of Brandywine
Fund, Inc. since April, 1990.
CARL S. GATES
3908 Kennett Pike
Greenville, Delaware
(VICE PRESIDENT)
Mr. Gates, age 63, has been employed by Friess Associates, Inc.
in various capacities since 1988. He has served as a Vice President of
both the Fund and Brandywine Fund, Inc. since April, 1994.
PAUL R. ROBINSON
3908 Kennett Pike
Greenville, Delaware
(VICE PRESIDENT AND ASSISTANT SECRETARY)
Mr. Robinson, age 72, has been a consultant for Friess
Associates, Inc. since June, 1985. He also has served as a Vice President
of Brandywine Fund, Inc. since April, 1990 and as Assistant Secretary of
Brandywine Fund, Inc. since April, 1987.
LYNDA J. CAMPBELL
3908 Kennett Pike
Greenville, Delaware
(SECRETARY)
Ms. Campbell, age 50, has served as Secretary of Brandywine
Fund, Inc. since December, 1989. She is also an employee of Friess
Associates, Inc. and has been employed in various capacities with such
firm since December, 1985.
__________________
* Mr. Friess is the only director who is an "interested person" of the
Fund as that term is defined in the Investment Company Act of 1940.
During the fiscal year ended September 30, 1995, the Fund paid
$1,667 in director's fees to the Fund's disinterested directors. The
Fund's standard method of compensating directors is to pay each
disinterested director an annual fee of $1,000. The Fund also may
reimburse its 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 Fund to
each of the directors of the Fund during the fiscal year ended September
30, 1995:
COMPENSATION TABLE
Pension or
Retirement Estimated Total
Benefits Annual Compensation
Aggregate Accrued Benefits from Fund
Compensation As Part of Upon Paid
Name of Person From Fund Fund Expenses Retirement to Directors
Foster S. Friess $0 $0 $0 $0
Stig Ramel $ 667 $0 $0 $ 667
John E. Burris $1,000 $0 $0 $1,000
PRINCIPAL STOCKHOLDERS
Set forth below are the names and addresses of all holders of
the Fund's Common Stock who as of December 31, 1995 beneficially owned
more than 5% of the then outstanding shares of the Fund's Common Stock as
well as the number of shares of the Fund's Common Stock beneficially owned
by all officers and directors of the Fund as a group, indicating in each
case whether the person has sole or shared power to vote or dispose of
such shares.
Name and Address Amount and Nature of Percent of
of Beneficial Owner Beneficial Ownership Class
Sole Power Shared Power Aggregate
Lynnette E. Friess 656,213 -0- 656,213 7.3%
Revocable Trust
Lynnette E. Friess,
Trustee
P. O. Box 4166
Greenville, DE 19807
Trustees of -0- 482,264 482,264 5.4%
Boston College
More #30
Chestnut, MA
Officers and Directors 32,213(1) 0.4%
as a group (8 persons)
____________________________
(1) Includes 12,712 shares held by the Adviser but excludes 656,213
shares held by the Lynnette E. Friess Revocable Trust.
At December 31, 195, Charles Schwab & Co., Inc., 101 Montgomery
Street, San Francisco, California 94104, owned of record 540,625 shares of
the Fund's Common Stock, or 6.0% of the then outstanding shares. All of
the shares owned by Charles Schwab & Co., Inc. were owned of record only.
INVESTMENT ADVISER
As set forth in the Prospectus under the caption "Management of
the Fund" the investment adviser to the Fund is Friess Associates, Inc.
(the "Adviser"). Pursuant to an investment advisory agreement between the
Fund and the Adviser (the "Agreement") the Adviser furnishes continuous
investment advisory services and management to the Fund. During the
fiscal years ended September 30, 1995, September 30, 1994 and September
30, 1993, the Fund paid the Adviser fees of $678,052, $164,255 and
$53,497, respectively.
The Fund will pay all of its expenses not assumed by the Adviser
including, but not limited to, the costs of preparing and printing its
registration statements required under the Securities Act of 1933 and the
Investment Company Act of 1940 and any amendments thereto, the expense of
registering its shares with the Securities and Exchange Commission and in
the various states, the printing and distribution cost of prospectuses
mailed to existing stockholders, the cost of stock certificates, director
and officer liability insurance, reports to stockholders, reports to
government authorities and proxy statements, interest charges, brokerage
commissions, and expenses incurred in connection with portfolio
transactions. During the fiscal years ended September 30, 1995, September
30, 1994 and September 30, 1993, such expenses included $6,125, $6,250 and
$4,415, respectively, in administrative services performed by the Adviser.
The Fund will also pay the fees of directors who are not interested
persons of the Fund, salaries of administrative and clerical personnel,
association membership dues, auditing and accounting services, fees and
expenses of any custodian or trustees having custody of Fund assets,
expenses of calculating the net asset value and repurchasing and redeeming
shares, and charges and expenses of dividend disbursing agents,
registrars, and stock transfer agents, including the cost of keeping all
necessary stockholder records and accounts and handling any problems
related thereto.
The Adviser has undertaken to reimburse the Fund to the extent
that the aggregate annual operating expenses, including the investment
advisory fee but excluding interest, taxes, brokerage commissions and
extraordinary items, exceed that percentage of the average net assets of
the Fund for such year, as determined by valuations made as of the close
of each business day of the year, which is the most restrictive percentage
provided by the state laws of the various states in which the Common Stock
is qualified for sale. Although state requirements are subject to change,
the percentage currently applicable to the Fund is 2-1/2% on the first
$30,000,000 of its average net assets, 2% on the next $70,000,000 of its
average net assets and 1-1/2% on average net assets in excess of
$100,000,000. The Fund monitors its expense ratio at least on a monthly
basis. If the accrued amount of the expenses of the 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 the
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 the 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, 1995 and September 30, 1994. During the fiscal
year ended September 30, 1993, the Adviser reimbursed the Fund $4,921 for
excess expenses.
The Agreement will remain in effect as long as its continuance
is specifically approved at least annually, by (i) the Board of Directors
of the Fund, or by the vote of a majority (as defined in the Investment
Company Act of 1940) of the outstanding shares of the Fund, and (ii) by
the vote of a majority of the directors of the Fund who are not parties to
the Agreement or interested persons of the Adviser, cast in person at a
meeting called for the purpose of voting on such approval. The Agreement
provides that it may be terminated at any time without the payment of any
penalty, by the Board of Directors of the Fund or by vote of a majority of
the Fund's stockholders, on sixty days written notice to the Adviser, and
by the Adviser on the same notice to the Fund and that it shall be
automatically terminated if it is assigned.
The Agreement provides that the Adviser shall not be liable to
the Fund or its stockholders for anything other than willful misfeasance,
bad faith, gross negligence or reckless disregard of its obligations or
duties. The Agreement also provides that the Adviser and its officers,
directors and employees may engage in other businesses, devote time and
attention to any other business whether of a similar or dissimilar nature,
and render investment advisory services to others.
SERVICE AGREEMENT
As described in the Fund's prospectus under the caption
"Management of the Fund," the Fund and Fiduciary Management, Inc.,
Milwaukee, Wisconsin have entered into a Service Agreement pursuant to
which certain accounting and record keeping services will be performed for
the Fund by Fiduciary Management, Inc. For its services the Fund
currently pays Fiduciary Management, Inc. ("FMI") an annual fee of
$70,000. Prior to October 1, 1995, the Fund paid FMI a monthly fee of
1/12 of 0.1% (0.1% per annum) on the first $30,000,000 of the daily net
assets of the Fund and 1/12 of 0.05% (0.05% per annum) on the daily net
assets of the Fund over $30,000,000, with a minimum fee of $15,000. The
total fees paid pursuant to the Service Agreement for the fiscal years
ended September 30, 1995, September 30, 1994 and September 30, 1993 were
$40,246, $22,245 and $10,000, respectively. The Service Agreement may be
terminated at any time by either the Fund or FMI upon 90 days' written
notice. The Service Agreement provides that FMI 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. FMI performs similar services for
other investment companies.
DETERMINATION OF NET ASSET VALUE AND PERFORMANCE
As set forth in the Prospectus under the caption "Determination
of Net Asset Value" the net asset value of the Fund will be determined as
of the close of trading on each day the New York Stock Exchange is open
for trading. The New York Stock Exchange is open for trading Monday
through Friday except New Year's Day, Washington's Birthday, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day. Additionally, if any of the aforementioned holidays falls on a
Saturday, the New York Stock Exchange will not be open for trading on the
preceding Friday and when any such holiday falls on a Sunday, the New York
Stock Exchange will not be open for trading on the succeeding Monday,
unless unusual business conditions exist, such as the ending of a monthly
or the yearly accounting period.
Any total rate of return quotation for the Fund will be for a
period of three or more months and will assume the reinvestment of all
dividends and capital gains distributions which were made by the Fund
during that period. Any period total rate of return quotation of the Fund
will be calculated by dividing the net change in value of a hypothetical
shareholder account established by an initial payment of $1,000 at the
beginning of the period by 1,000. The net change in the value of a
shareholder account is determined by subtracting $1,000 from the product
obtained by multiplying the net asset value per share at the end of the
period by the sum obtained by adding (A) the number of shares purchased at
the beginning of the period plus (B) the number of shares purchased during
the period with reinvested dividends and distributions. Any average
annual compounded total rate of return quotation of the Fund will be
calculated by dividing the redeemable value at the end of the period
(i.e., the product referred to in the preceding sentence) by $1,000. A
root equal to the period, measured in years, in question is then
determined and 1 is subtracted from such root to determine the average
annual compounded total rate of return.
The foregoing computation may also be expressed by the following
formula:
n
P(1+T) = ERV
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the stated periods at
the end of the stated periods.
PURCHASE OF SHARES
The Fund has adopted procedures pursuant to Rule 17a-7
under the Investment Company Act of 1940 pursuant to which the Fund may
effect a purchase and sale transaction with an affiliated person of the
Fund (or an affiliated person of such an affiliated person) in which the
Fund issues its shares in exchange for securities of a character which is
a permitted investment for the Fund. For purposes of determining the
number of shares of the Fund to be issued, the securities to be exchanged
will be valued in accordance with the requirements of Rule 17a-7. No such
transactions will be made with respect to any person in which an
affiliated person of the Fund has a beneficial interest.
SYSTEMATIC WITHDRAWAL PLAN
A stockholder who owns Fund shares worth at least $100,000 at the
current net asset value may, by completing an application which may be
obtained from Firstar Trust Company, create a Systematic Withdrawal Plan
from which a fixed sum will be paid to the stockholder at regular
intervals. To establish the Systematic Withdrawal Plan, the stockholder
deposits Fund shares with the Fund and appoints it as agent to effect
redemptions of Fund shares held in the account for the purpose of making
monthly or quarterly withdrawal payments 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 the nineteenth day of each
month or, if that day is a holiday, on the next preceding business day.
Establishment of a Systematic Withdrawal Plan constitutes an election by
the stockholder to reinvest in additional Fund shares, at net asset value,
all income dividends and capital gains distributions payable by the Fund
on shares held in such account, and shares so acquired will be added to
such account. The stockholder may deposit additional Fund shares in his
account at any time.
Withdrawal payments cannot be considered as yield or income on the
stockholder's investment, since portions of each payment will normally
consist of a return of capital. Depending on the size or the frequency of
the disbursements requested, and the fluctuation in the value of the
Fund's portfolio, redemptions for the purpose of making such disbursements
may reduce or even exhaust the stockholder's account.
The stockholder may vary the amount or frequency of withdrawal
payments, temporarily discontinue them, or change the designated payee or
payee's address, by notifying Firstar Trust Company in writing. The
stockholder also may vary the amount or frequency of withdrawal payments
or temporarily discontinue them by notifying Firstar Trust Company by
telephone at (800) 656-3017 or (414) 765-4124.
ALLOCATION OF PORTFOLIO BROKERAGE
Decisions to buy and sell securities for the Fund are made by the
Adviser subject to review by the Fund's Board of Directors. In placing
purchase and sale orders for portfolio securities for the Fund, it is the
policy of the Adviser to seek the best execution of orders at the most
favorable price in light of the overall quality of brokerage and research
services provided, as described in this and the following paragraph. In
selecting brokers to effect portfolio transactions, the determination of
what is expected to result in best execution at the most favorable price
involves a number of largely judgmental considerations. Among these are
the Adviser's evaluation of the broker's efficiency in executing and
clearing transactions, block trading capability (including the broker's
willingness to position securities) and the broker's financial strength
and stability. The most favorable price to the Fund means the best net
price without regard to the mix between purchase or sale price and
commission, if any. Over-the-counter securities are generally purchased
and sold directly with principal market makers who retain the difference
in their cost in the security and its selling price. In some instances,
the Adviser feels that better prices are available from non-principal
market makers who are paid commissions directly. While some brokers with
whom the Fund effects portfolio transactions may recommend the purchase of
the Fund's shares, the Adviser will not allocate portfolio brokerage on
the basis of recommendations to purchase shares of the Fund.
In allocating brokerage business for the Fund, the Adviser also
takes into consideration the research, analytical, statistical and other
information and services provided by the broker, such as general economic
reports and information, reports or analyses of particular companies or
industry groups, market timing and technical information, and the
availability of the brokerage firm's analysts for consultation. While the
Adviser believes these services have substantial value, they are
considered supplemental to the Adviser's own efforts in the performance of
its duties under the Agreement. Other clients of the Adviser may
indirectly benefit from the availability of these services to the Adviser,
and the Fund may indirectly benefit from services available to the Adviser
as a result of transactions for other clients. The Agreement provides
that the Adviser may cause the Fund to pay a broker which provides
brokerage and research services to the Adviser a commission for effecting
a securities transaction in excess of the amount another broker would have
charged for effecting the transaction, if the Adviser determines in good
faith that such amount of commission is reasonable in relation to the
value of brokerage and research services provided by the executing broker
viewed in terms of either the particular transaction or the Adviser's
overall responsibilities with respect to the Fund and the other accounts
as to which he exercises investment discretion. Brokerage commissions
paid by the Fund during the fiscal years ended September 30, 1995,
September 30, 1994 and September 30, 1993 totaled $383,604 on total
transactions of $344,918,024, $74,721 on total transactions of $69,305,441
and $22,844 on total transactions of $14,987,793, respectively. All of
the brokers to whom commissions were paid provided research services to
the Adviser.
CUSTODIAN
Firstar Trust Company, 615 East Michigan Street, Milwaukee,
Wisconsin 53202, acts as custodian for the Fund. As such, Firstar Trust
Company holds all securities and cash of the Fund, delivers and receives
payment for securities sold, receives and pays for securities purchased,
collects income from investments and performs other duties, all as
directed by officers of the Fund. Firstar Trust Company does not exercise
any supervisory function over the management of the Fund, the purchase and
sale of securities or the payment of distributions to stockholders.
Firstar Trust Company also acts as the Fund's transfer agent and dividend
disbursing agent.
TAXES
As set forth in the Prospectus under the caption "Dividends,
Distributions and Taxes" the Fund will endeavor to qualify annually for
and elect tax treatment applicable to a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended.
Dividends from the Fund's net investment income and distributions
from the Fund's net realized short-term capital gains are taxable to
stockholders as ordinary income, whether received in cash or in additional
shares of Common Stock. The 70% dividends-received deduction for
corporations will apply to such dividends and distributions, subject to
proportionate reductions if the aggregate dividends received by the Fund
from domestic corporations in any year are less than 100% of the Fund's
gross income.
Any dividend or capital gains distribution paid shortly after a
purchase of shares of Common Stock will have the effect of reducing the
per share net asset value of such shares by the amount of the dividend or
distribution. Furthermore, if the net asset value of the shares of Common
Stock immediately after a dividend or distribution is less than the cost
of such shares to the stockholder, the dividend or distribution will be
taxable to the stockholder even though it results in a return of capital
to him.
The Fund may be required to withhold Federal income tax at a rate
of 31% ("backup withholding") from dividend payments and redemption
proceeds if a shareholder fails to furnish the Fund with his social
security or other tax identification number and certify under penalty of
perjury that such number is correct and that he is not subject to backup
withholding due to the underreporting of income. The certification form
is included as part of the share purchase application and should be
completed when the account is opened.
STOCKHOLDER MEETINGS
The Maryland General Corporation Law permits registered investment
companies, such as the Fund, to operate without an annual meeting of
shareholders under specified circumstances if an annual meeting is not
required by the Investment Company Act of 1940. The Fund has adopted the
appropriate provisions in its 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 Investment Company Act
of 1940.
The Fund'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.
Upon the written request of the holders of shares entitled to not
less than ten percent (10%) of all the votes entitled to be cast at such
meeting, the Secretary of the Fund shall promptly call a special meeting
of stockholders for the purpose of voting upon the question of removal of
any director. Whenever ten or more stockholders of record who have been
such for at least six months preceding the date of application, and who
hold in the aggregate either shares having a net asset value of at least
$25,000 or at least one percent (1%) of the total outstanding shares,
whichever is less, shall apply to the Fund's Secretary in writing, stating
that they wish to communicate with other stockholders with a view to
obtaining signatures to a request for a meeting as described above and
accompanied by a form of communication and request which they wish to
transmit, the Secretary shall within five business days after such
application either: (1) afford to such applicants access to a list of the
names and addresses of all stockholders as recorded on the books of the
Fund; or (2) inform such applicants as to the approximate number of
stockholders of record and the approximate cost of mailing to them the
proposed communication and form of request.
If the Secretary elects to follow the course specified in clause
(2) of the last sentence of the preceding paragraph, the Secretary, upon
the written request of such applicants, accompanied by a tender of the
material to be mailed and of the reasonable expenses of mailing, shall,
with reasonable promptness, mail such material to all stockholders of
record at their addresses as recorded on the books unless within five
business days after such tender the Secretary shall mail to such
applicants and file with the Securities and Exchange Commission, together
with a copy of the material to be mailed, a written statement signed by at
least a majority of the Board of Directors to the effect that in their
opinion either such material contains untrue statements of fact or omits
to state facts necessary to make the statements contained therein not
misleading, or would be in violation of applicable law, and specifying the
basis of such opinion.
After opportunity for hearing upon the objections specified in the
written statement so filed, the Securities and Exchange Commission may,
and if demanded by the Board of Directors or by such applicants shall,
enter an order either sustaining one or more of such objections or
refusing to sustain any of them. If the Securities and Exchange
Commission shall enter an order refusing to sustain any of such
objections, or if, after the entry of an order sustaining one or more of
such objections, the Securities and Exchange Commission shall find, after
notice and opportunity for hearing, that all objections so sustained have
been met, and shall enter an order so declaring, the Secretary shall mail
copies of such material to all stockholders with reasonable promptness
after the entry of such order and the renewal of such tender.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 100 East Wisconsin Avenue, Suite 1500,
Milwaukee, Wisconsin 53202, currently serve as the independent
accountants for the Fund. Price Waterhouse LLP also served as the
independent accountants for the Fund for the fiscal years ended
September 30, 1994, September 30, 1993 and September 30, 1992, and for
the period from January 10, 1991 (commencement of operations) through
September 30, 1991.
FINANCIAL STATEMENTS
The following financial statements are incorporated by reference to the
Annual Report, dated September 30, 1995, of Brandywine Blue Fund, Inc.
(File No. 811-6221), as filed with the Securities and Exchange Commission
on October 26, 1995,:
Report of Independent Accountants
Statement of Net Assets as of September 30, 1995
Statement of Operations for the Year Ended
September 30, 1995
Statements of Changes in Net Assets for the Years
Ended September 30, 1995 and 1994
Financial Highlights for the Years Ended September 30,
1995, 1994, 1993 and 1992 and for the period from
January 10, 1991 (commencement of operations) to
September 30, 1991
Notes to Financial Statements
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a.) Financial Statements (Financial Highlights included in Part A and
all incorporated by reference to the Annual Report, dated September
30, 1995 (File No. 811-6221), of Brandywine Blue Fund, Inc. (as
filed with the Securities and Exchange Commission on October 26,
1995))
Brandywine Blue Fund, Inc.
Report of Independent Accountants
Statement of Net Assets as of September 30, 1995
Statement of Operations for the Year Ended
September 30, 1995
Statements of Changes in Net Assets for the
Years Ended September 30, 1995 and 1994
Financial Highlights for the Years Ended
September 30, 1995, 1994, 1993 and 1992 and for the
period from January 10, 1991 (commencement
of operations) to September 30, 1991
Notes to Financial Statements
(b.) Exhibits
(1) Registrant's Articles of Incorporation (Exhibit 1 to
Registrant's Registration Statement on Form N-1A is
incorporated by reference pursuant to Rule 411 under the
Securities Act of 1933)
(2) Registrant's By-Laws (Exhibit 2 to Registrant's Registration
Statement on Form N-1A is incorporated by reference pursuant
to Rule 411 under the Securities Act of 1933)
(2.1) Amendment to Registrant's By-Laws (Exhibit 2.1 to Pre-
Effective Amendment No. 1 to Registrant's Registration
Statement on Form N-1A is incorporated by reference pursuant
to Rule 411 under the Securities Act of 1933)
(3) None
(4) Specimen Stock Certificate (Exhibit 4 to Pre-Effective
Amendment No. 1 to Registrant's Registration Statement on
Form N-1A is incorporated by reference pursuant to Rule 411
under the Securities Act of 1933)
(5) Investment Advisory Agreement (Exhibit 5 to Registrant's
Registration Statement on Form N-1A is incorporated by
reference pursuant to Rule 411 under the Securities Act of
1933)
(6) None
(7) None
(8) Custodian Agreement with Firstar Trust Company (Exhibit 8 to
Registrant's Registration Statement on Form N-1A is
incorporated by reference pursuant to Rule 411 under the
Securities Act of 1933)
(9.1) Service Agreement with Fiduciary Management, Inc. (Exhibit
9.1 to Registrant's Registration Statement on Form N-1A is
incorporated by reference pursuant to Rule 411 under the
Securities Act of 1933)
(9.2) Transfer Agent Agreement with First Wisconsin Trust Company
(Exhibit 9.2 to Registrant's Registration Statement on Form
N-1A is incorporated by reference pursuant to Rule 411 under
the Securities Act of 1933)
(10) Opinion of Foley & Lardner, counsel for Registrant (Exhibit
10 to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A is incorporated by
reference pursuant to Rule 411 under the Securities Act of
1933)
(11) Consent of Price Waterhouse LLP
(12) None
(13) Subscription Agreement (Exhibit 13 to Pre-Effective
Amendment No. 1 to Registrant's Registration Statement on
Form N-1A is incorporated by reference pursuant to Rule 411
under the Securities Act of 1933)
(14) None
(15) None
(16) Schedule for Computation of Performance Quotations (Exhibit
16 to Post-Effective Amendment No. 5 to Registrant's
Registration Statement on Form N-1A is incorporated by
reference pursuant to Rule 411 under the Securities Act
of 1933)
(17) Financial Data Schedule
(18) None
Item 25. Persons Controlled by or under Common Control with
Registrant
Registrant is not controlled by any person. Registrant neither
controls any person nor is under common control with any other person.
Item 26. Number of Holders of Securities
Number of Record Holders
Title of Class as of December 31, 1995
Common Stock, $.01 par value 419
Item 27. Indemnification
Pursuant to the authority of the Maryland General Corporation Law,
particularly Section 2-418 thereof, Registrant's Board of Directors has
adopted the following bylaw which is in full force and effect and has not
been modified or cancelled:
Article VII
GENERAL PROVISIONS
Section 7. Indemnification.
A. The corporation shall indemnify all of its corporate
representatives against expenses, including attorneys' fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by
them in connection with the defense of any action, suit or proceeding, or
threat or claim of such action, suit or proceeding, whether civil,
criminal, administrative, or legislative, no matter by whom brought, or in
any appeal in which they or any of them are made parties or a party by
reason of being or having been a corporate representative, if the
corporate representative acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the corporation
and with respect to any criminal proceeding, if he had no reasonable cause
to believe his conduct was unlawful provided that the corporation shall
not indemnify corporate representatives in relation to matters as to which
any such corporate representative shall be adjudged in such action, suit
or proceeding to be liable for gross negligence, willful misfeasance, bad
faith, reckless disregard of the duties and obligations involved in the
conduct of his office, or when indemnification is otherwise not permitted
by the Maryland General Corporation Law.
B. In the absence of an adjudication which expressly absolves the
corporate representative, or in the event of a settlement, each corporate
representative shall be indemnified hereunder only if there has been a
reasonable determination based on a review of the facts that
indemnification of the corporate representative is proper because he has
met the applicable standard of conduct set forth in paragraph A. Such
determination shall be made: (i) by the board of directors, by a majority
vote of a quorum which consists of directors who were not parties to the
action, suit or proceeding, or if such a quorum cannot be obtained, then
by a majority vote of a committee of the board consisting solely of two or
more directors, not, at the time, parties to the action, suit or
proceeding and who were duly designated to act in the matter by the full
board in which the designated directors who are parties to the action,
suit or proceeding may participate; or (ii) by special legal counsel
selected by the board of directors or a committee of the board by vote as
set forth in (i) of this paragraph, or, if the requisite quorum of the
full board cannot be obtained therefor and the committee cannot be
established, by a majority vote of the full board in which directors who
are parties to the action, suit or proceeding may participate.
C. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall create a rebuttable presumption that the person was
guilty of willful misfeasance, bad faith, gross negligence or reckless
disregard to the duties and obligations involved in the conduct of his or
her office, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
D. Expenses, including attorneys' fees, incurred in the preparation of
and/or presentation of the defense of a civil or criminal action, suit or
proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding as authorized in the manner
provided in Section 2-418(F) of the Maryland General Corporation Law upon
receipt of: (i) an undertaking by or on behalf of the corporate
representative to repay such amount unless it shall ultimately be
determined that he or she is entitled to be indemnified by the corporation
as authorized in this bylaw; 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 bylaw shall not be deemed
exclusive of any other rights to which those indemnified may be entitled
under these bylaws, 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 bylaw provided that no insurance may be purchased or maintained to
protect any corporate representative against liability for gross
negligence, willful misfeasance, bad faith or reckless disregard of the
duties and obligations involved in the conduct of his or her office.
G. "Corporate Representative" means an individual who is or was a
director, officer, agent or employee of the corporation or who serves or
served another corporation, partnership, joint venture, trust or other
enterprise in one of these capacities at the request of the corporation
and who, by reason of his or her position, is, was, or is threatened to be
made, a party to a proceeding described herein.
Insofar as indemnification for and with respect to liabilities
arising under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of Registrant pursuant to the foregoing
provisions or otherwise, Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by Registrant of expenses incurred or paid by a
director, officer or controlling person or Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
Incorporated by reference to pages 3 through 5 of the Statement of
Additional Information pursuant to Rule 411 under the Securities Act of
1933. Mr. Herman Friess, a director of the Adviser, is a lawyer having
his own practice with offices in Rice Lake, Wisconsin.
Item 29. Principal Underwriters
Registrant has no principal underwriters.
Item 30. Location of Accounts and Records
The accounts, books and other documents required to be maintained
by Registrant pursuant to Section 31(a) of the Investment Company Act of
1940 and the rules promulgated thereunder are in the physical possession
of Fiduciary Management, Inc. and Registrant's Custodian as follows: the
documents required to be maintained by paragraphs (4), (5), (6), (7), (10)
and (11) of Rule 31a-1(b) will be maintained by Fiduciary Management, Inc.
at its offices at 225 East Mason Street, Milwaukee, Wisconsin 53202, and
all other records will be maintained by the Custodian.
Item 31. Management Services
All management-related service contracts entered into by Registrant
are discussed in Parts A and B of this Registration Statement.
Item 32. Undertakings
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that it meets
all of the requirements for effectiveness of this Amended Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amended Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Jackson and
State of Wyoming on the 30th day of January, 1996.
BRANDYWINE BLUE 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
Foster S. Friess Principal Executive, January 30, 1996
Foster S. Friess Financial and
Accounting Officer
and Director
/s/ Stig Ramel Director January 30, 1996
Stig Ramel
/s/ John E. Burris Director January 30, 1996
John E. Burris
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Page No.
(1) Registrant's Articles of
Incorporation*
(2) Registrant's Bylaws*
(2.1) Amendment to Registrant's
Bylaws*
(3) None
(4) Specimen Stock Certificate*
(5) Investment Advisory Agreement*
(6) None
(7) None
(8) Custodian Agreement with Firstar
Trust Company*
(9.1) Service Agreement with Fiduciary
Management, Inc.*
(9.2) Transfer Agent Agreement with
First Wisconsin Trust Company*
(10) Opinion of Foley & Lardner,
counsel for Registrant*
(11) Consent of Price Waterhouse LLP
(12) None
(13) Subscription Agreement*
(14) None
(15) None
(16) Schedule for Computation of Performance Quotations*
(17) Financial Data Schedule
(18) None
_________________
* Incorporated by reference.
EXHIBIT 11
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. 6 to the registration statement on Form N-1A
(the "Registration Statement") of our report dated October 13, 1995,
relating to the financial statements and financial highlights appearing in
the September 30, 1995 Annual Report to Shareholders of Brandywine Blue
Fund, Inc., portions of which are incorporated by reference into the
Registration Statement. We also consent to the reference to us under the
heading "Financial Highlights" in the Prospectus and to the reference to
us under the heading "Independent Accountants" in the Statement of
Additional Information.
PRICE WATERHOUSE LLP
Milwaukee, Wisconsin
January 31, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT FOR THE FUND DATED SEPTEMBER 30, 1995 AND PARTS A AND B OF THE FUND'S
REGISTRATION STATEMENT ON FORM N-1A AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH ANNUAL REPORT AND REGISTRATION STATEMENT.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 144,202,671
<INVESTMENTS-AT-VALUE> 166,630,241
<RECEIVABLES> 3,881,965
<ASSETS-OTHER> 1,397
<OTHER-ITEMS-ASSETS> 153
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<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 180,673
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