(BRANDYWINE BLUE FUND, INC. LOGO)
MANAGED BY FRIESS ASSOCIATES, INC.
SEMI-ANNUAL REPORT
MARCH 31, 1996
DEAR FELLOW SHAREHOLDERS:
It feels great to be in the positive column again this quarter after enduring
last year's fourth quarter backtracking of the huge advances made in the June
and September quarters which were largely attributed to your soaring technology
holdings.
Your Fund gained 9.2 percent surpassing the S&P Midcap, which rose 5.7 percent,
exceeding the S&P 500 which gained 5.4 percent, and also beating out the NYSE
and the Investor's Business Daily Mutual Fund Index both of which increased
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slightly over 5.2 percent.
Bumpy periods underscore the value of your long term approach and loyalty to the
time-tested strategy employed for you by your Friess Associates research team
which now exceeds 30 folks if you let us count a handful of very key brokers and
consultants. Your full team, including support personnel, now numbers over 50.
Jack Fraser is the newest teammate to sign on at Friess Associates, to help grow
your Fund, after eleven years with CS First Boston. He earned his MBA in Finance
at Ohio State and, you may recall from last quarter's report, has been supplying
your team with sound investment advice for the past five years. Jack will not
only serve in the research arena but also in the overall firm management. We
will miss the sharp insights of Blair Baker who left the consulting field to
join a top money management firm near his home in Dallas.
Morningstar, the premier evaluator of mutual funds, accorded your sister Fund,
Brandywine Fund, its highest Five Star rating for the past ten years ending
December 31, 1995. Brandywine Fund ranked as the #1 performer for that ten year
period among those growth funds currently available to the public that have no
loads and no distribution charges.
Your Fund's results since inception show similarly strong performance, with a
197.8 percent cumulative return, a 23.2 percent gain on average, nicely beating
out the S&P 500 which climbed 138.0 percent, the Investor's Business Daily
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Mutual Fund Index which rose 107.9 percent, and the NYSE which increased 101.2
percent.
PERFORMANCE SINCE INCEPTION
JANUARY 10, 1991
NYSE 101.2%
IBD<F1>* 107.9%
S&P 500<F1>* 138.0%
YOUR FUND<F1>* 197.8%
*<F1>TOTAL RETURN
BUT IT IS WHAT WE DO FOR YOU TOMORROW THAT COUNTS.
Looking toward that future we still perceive jitters precipitated by earnings
disappointments in some high profile technology companies such as Apple
Computer, Intel and Digital Equipment. Consistent with our Friess Associates
philosophy of "Never invest in technology; invest in individual technology
---------------------
companies," you will note that your larger advances of 20 percent and more this
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quarter have included some of your technology investments, namely, Cisco
Systems, Newbridge Networks, BMC Software, and Tellabs.
Other non-technology stocks that led the way with large percentage gains in this
short three month period include Clarke Adams's The Money Store, up 78 percent,
Ben Detwiler's Pittston Brink's, up 39 percent, Andy Graves's Nautica
Enterprises, up 34 percent, and your largest percentage gain of all -- Clarke's
TWA, up 98 percent.
Paranoia about interest rates triggered an intraday 246 point collapse in the
Dow which was followed by a 288 point climb to new record ground during the next
six days. February's largest monthly gain in job growth in 13 years worried
interest-rate-driven investors that a stronger than anticipated economy might
rekindle inflation, forcing Fed Chairman Alan Greenspan to halt his orderly
easing of interest rates.
The market rebound reflects a growing realization that February statistics were
distorted by the bounce back from blizzard impacted January sales and
production. The lingering effects of the GM strike will muddy the statistical
waters for March and April, continuing speculation on the precise strength of
the economy.
We see very little inflationary pressure infringing upon your companies'
progress. The economy should improve modestly in '96. But, again, your success
is linked more to your team's ability to isolate individual companies which can
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prosper somewhat independently of the big picture.
According to William O'Neil, your companies' earnings are growing at more than
twice the rate of those comprising the S&P 500 index, based on the average
increase in earnings for both the latest 12 months and the latest quarterly
results.
COMPANY GROWTH
AVERAGE INCREASE LATEST 12 MOS. EARNINGS
Your Companies 53%
S&P 500 23%
AVERAGE INCREASE LATEST QUARTERLY EARNINGS
Your Companies 54%
S&P 500 18%
All S&P figures are unweighted. Analysis by William O'Neil & Co., Inc. March 31,
1996.
Over the last five years, your Fund strongly outpaces the other major indices
with its 138.1 total return compared with a 98.0 percent gain for the S&P 500, a
92.2 percent jump in the Investor's Business Daily Mutual Fund Index, and the
-------------------------
NYSE increase of 69.0 percent.
On average, your Fund grew 18.9 percent during the last five years compared to
the S&P 500's 14.6 percent gain. For the most recent twelve months, your Fund is
up 32.9 percent.
The most recent three years also garner solid results, as your Fund increased
84.2 percent, 22.6 percent on average, compared with only a 54.8 percent gain
for the S&P 500, a 52.8 percent rise in the Investor's Business Daily Mutual
-------------------------
Fund Index, and gains of just over 39 percent in both the S&P Midcap and the
NYSE.
MOST RECENT THREE YEARS
NYSE 39.1%
S&P MIDCAP 39.6%
IBD<F2>* 52.8%
S&P 500<F2>* 54.8%
YOUR FUND<F2>* 84.2%
*<F2>TOTAL RETURN
An additional $50 million of assets were entrusted to our stewardship in the
last quarter . Your Fund now serves more than 550 shareholders, up from only 15
in June 1992, while total assets grew from $4 million to over $260 million.
PERFORMANCE SINCE JUNE 30, 1992
NYSE 54.7%
S&P MIDCAP 64.7%
S&P 500<F3>* 75.3%
IBD<F3>* 78.9%
YOUR FUND<F3>* 134.5%
*<F3>TOTAL RETURN
If you have been with us for that period, you have enjoyed a handsome gain of
134.5 percent, while the S&P 500 climbed only 75.3 percent and the NYSE
increased just 54.7 percent.
We are grateful for the growth in your Fund especially because so much of it has
come from internal growth. In the last fiscal year, over $2 billion of the
growth of Friess Associates' responsibilities came from internal progress of the
portfolios and similarly, in 1993's fiscal year, our clients and shareholders
enjoyed growth of $1 billion.
We want to recognize the many people that played key roles in creating those
results beyond your hard-hitting research teams in your Phoenix, Jackson, and
Wilmington offices. This includes consultants based in Tulsa, Houston, Palo
Alto, San Francisco, and Minneapolis, a number of very important brokers, as
well as the executives of the companies in your portfolio.
We must PARTICULARLY recognize the workers at your companies who are the bottom-
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line determinants of the success all of us enjoy in this free, capitalistic
society.
Your Friess team, including friends and family, have more than $15 million
invested along with you. I personally have no other stock market investments
outside of those I have in Brandywine Blue and its sister fund, Brandywine.
Thanks for your continued confidence and loyalty through good and bad markets
and for the honor of allowing us to serve your financial interests.
God bless!
/S/ Foster Friess
Foster Friess
President
April 8, 1996
ALL IS NOT ROSES . . .
Although well over half of your holdings gained during the quarter, there
were, naturally, some that retraced. The largest decliners, dropping back by
more than $700,000 each, were Bay Networks, NetManage, KLA Instruments,
Cabletron, and LSI Logic. All of these were sold from your portfolio avoiding
further losses of $1.5 million.
LSI declined as some of its PC-related customers cut back on their
inventory causing revenue to fall short of expectations for the March quarter.
KLA Instruments dropped because of the perception of slowing trends in
semiconductor capital spending, affecting semiconductor equipment and related
stocks.
Your good performers outweighed the "not-so-good" performers. Ten stocks
contributed more than $1 million each to your Fund during the quarter. The
biggest gainers were Andre Berk's Newbridge Networks and Andy Graves's Gap with
$1.8 million each and Clarke Adams's The Money Store and TWA with $1.5 million
each.
Other big contributors were Diane Hakala's Computer Associates gaining $1.4
million, along with Tellabs and Sears each at $1.3 million, Cisco Systems and
Halliburton, the latter thanks to the work of Mark Lapolla and Pete Steelman,
with $1.2 million each, and McAfee Associates's $1 million gain.
While eight of your stocks fell back by more than $500,000 each, dropping a
total of $6.4 million, 27 of your holdings, gaining more than half a million
each, contributed $25.7 million.
HIGHLIGHTS . . .
COMPUTERS & RELATED
Computers are virtually everywhere -- in our homes, our places of work,
libraries, and most retailers. Every one of these computers needs a disk drive
for permanent storage of information. The largest independent producer of these
drives is SEAGATE TECHNOLOGY, INC.
With customers such as Compaq, Sun Microsystems, and Dell Computer, and the
recent acquisition of a major competitor, Conner Peripherals, your NYSE-listed
company is quickly broadening its product line and customer base. Conner adds
smaller capacity drives and tape drives to the product line.
We recently learned from Don Waite, CFO, of the potential cost-saving
opportunities created by the Conner acquisition, including combining factories
and obtaining greater economies of scale when purchasing components.
During the most recent quarter, earnings rose 58 percent from $1.07 to $1.69
while sales were up 38 percent.
Purchased at $44 in June 1995, your shares have moved up 25 percent to $55.
MEDICAL PRODUCTS & SUPPLIES
Following the merger of Nellcor and Puritan Bennett, NELLCOR, INC. is the
largest and most formidable competitor in monitoring, diagnosing, and treating
patients with respiratory problems in both the hospital and the home.
In a very fragmented industry, your company has the largest product offering, an
internal sales force to market those products, and offers one-stop shopping for
customers in respiratory care, all at reduced costs. Nellcor is also making
acquisitions which will help to broaden its product line and gain market share
in both the hospital and home markets.
The last quarter showed earnings leap 41 percent to $.62 from $.44 a year ago.
Earnings for the year ended June 1995 were up 29 percent.
According to CFO Michael Downey, the internal changes at Nellcor are helping
fuel earnings growth. Your company consolidated its homecare sales force
internally and patterned it after the hospital sales group, thereby cutting
costs.
Also, management lowered debt from $80 million to $8 million while reducing the
number of its plants from 14 to 11. A new computer system will allow customers
to call one number for all respiratory care needs.
Selling now at $64, your shares have increased 27 percent since purchase in
November 1994.
OIL/GAS FIELD SERVICE
HALLIBURTON COMPANY is the world's largest provider of cementing and stimulation
services for use in the development and production of crude oil and natural gas,
and also owns Brown & Root, one of the world's largest engineering and
construction companies.
Your company benefits from a current strong drilling cycle which is driven by
higher oil and gas prices, as well as the trend of natural gas and oil companies
to reduce costs by outsourcing some of their servicing requirements to companies
like Halliburton.
Since 1991, your company has undergone a significant restructuring including
corporate downsizing and divesting non-strategic businesses, as it, too, is
participating in the consolidation trend underway in the oil services industry.
Part of this reorganization, according to Chief Finan-cial Officer David Lesar,
is Halliburton's "Capital Value Added" program implemented at all levels of the
company. This program measures the impact of every employee's contribution to
profitability and supplements your company's improving return on capital.
Halliburton's direct costs are down 38 percent and its operating margins have
improved to their highest levels in 10 years.
For the recent December quarter, earnings were up 24 percent from $.51 to $.63.
And, for the year, earnings were $2.04 compared with $1.51 last year -- an
increase of 35 percent.
Your shares rose a healthy 46 percent, increasing to nearly $50 since your July
purchase at $39.
FUND BROKER . . .
Rhys Williams spent 10 months at Wertheim Schroeder before moving over to
Prudential in June 1988.
Augmenting your research team's ability to filter through all the information on
the Street since 1989, Rhys worked with your researchers on Cadence Design, The
Money Store, United Waste, Electronics for Imaging, Cable Design, Reynolds and
Reynolds, Reading & Bates, and Advanta which created more than $3.6 million in
gains for you in recent months.
"I like working with the folks at Friess. They are excellent at gathering data
and acting on change before a catalyst emerges which crystallizes the trend for
the market," he explains. "As a broker, I have to work hard to add value to
Friess team members who usually are ahead of me, and the rest of Wall Street, in
discovering information that will move stocks.
"I completely agree with the Friess approach of picking stocks based on expected
earnings surprises at a reasonable price earnings ratio together with frequent
contact with managements, customers, competitors, and suppliers. I invested
$25,000 in Brandywine Fund in October 1990 and it is now worth more than
$80,000. I wish all my investments were so good!"
In 1991, Rhys earned his CFA, adding to the M.A. in International Economics he
received from Johns Hopkins in 1987 and the B.A. in Public Policy from Duke
University in 1983. While at Duke, Rhys spent a year abroad at Moscow's Pushkin
Institute for teachers of Russian language and was a researcher-reporter for the
London Times in Moscow when the Pershing II was being deployed in Western
Europe.
Rhys met his wife Rebecca while in graduate school. Together they enjoy two
sons, Dylan, 4, and Luke, 2, as well as tennis, swimming, squash, and skiing.
"My goal is to keep up with Friess researcher Jon Fenn on Jackson Hole's
moguls," Rhys says, "which means I must believe in reincarnation!"
"In this business, oftentimes the bigger the account, the more difficult the
people. This is definitely not the case with Friess," Rhys relates. "Everyone at
Friess is delightful to deal with, quick with praise and slow to criticize. I
want to work hard for Friess because team members give you an emotional stake in
the success of an investment beyond doing your job."
- -Rebecca Buswell
FELLOW SHAREHOLDER . . .
As a Brandywine and Brandywine Blue shareholder of long-standing, Bob Morrissey,
a member of the Boston College Board of Trustees and Chairman of the Investment
and Endowment Committee, encouraged the college to invest a portion of its
portfolio in Brandywine Blue.
Of the nation's 28 Jesuit colleges and universities, Boston College is among the
largest with 14,500 students presently enrolled in its undergraduate and
graduate programs. Founded in 1863, it is one of the most competitive
universities in the U.S.
In 1995, more than 16,500 students applied for admission to learn from a faculty
of whom 95 percent have doctoral degrees. Only 2,100 freshman were accepted.
U.S. News & World Report recently ranked Boston College among the top 40
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universities in the country.
There are more than 100,000 Boston College graduates, the largest alumni body of
any Catholic university in America. Foster and Lynn's daughter, Carrie, is one
of them. Those alums have been generous to their school over the years, helping
to build Boston College's endowment, which ranks in the top 35 among the
nation's private colleges and universities, to over $500 million. Also among
those alums is Friess Associates teammate, Jody Kemper, who holds a BS in
Accounting from Boston College.
"It was such an honor for me to attend Boston College and be part of an
institution which esteems so highly a strong value system as an integral part of
a college education," recalls Jody. "The tradition of not only academic, but
personal and moral excellence among its students and faculty make Boston College
unique."
In addition to its rigorous academic and religious programs, Boston College is
famous for its successful athletic teams.
Paul Haran, Associate Treasurer at Boston College comments, "The Investment
Committee looked for experienced managers with a record of outstanding long-term
performance in quality stocks. Friess Associates was a logical choice, and we
look forward to a long, mutually beneficial relationship."
All of us at Brandywine Blue Fund are honored to put our investment strategy to
work for Boston College. It is a pleasure to assist Bob Morrissey, Paul Haran,
and the dedicated board and administration of the college in realizing their
goals, so well expressed in the school motto, "Ever to Excel."
- -Margaret Barton
GROWING YOUR FUND . . .
It is the individual workers at your companies who really deserve the
recognition for the growth of your assets. They work hard to make their
companies successful, and you benefit from that success.
Scott Hoelscher, Director of Marketing Services for Reading & Bates, can
describe the complex business of offshore drilling in the simplest terms: "We
drive up, we drill a well, we go off while the platform is being built, then we
come back and drill 5, 6, or 7 additional wells around the platform. Then we go
away again. We hope oil is found, but if not, we still get our day rate." He
makes it sound easy. It's not.
Reading & Bates operates 18 offshore drilling units in almost every major
offshore oil and gas province of the world. With its fleet of semisubmersible,
floating rigs for deep water, and jackup, standing rigs for shallow water,
Reading & Bates is an expert in floating production technology.
Scott started early in the oil business. Following in his father's footsteps,
while earning a degree in Petroleum Engineering from the University of Missouri-
Rolla, Scott worked during the summers on oil rigs as a "roughnecker" and
"roustabout," industry terminology for entry level workers and rig mechanics. He
enjoyed the work and wanted to combine his education with the hands-on side of
the business.
Scott spent 11 years with another company handling responsibilities like rig
manager. Joining Reading & Bates' Singapore operation in 1984, Scott enjoyed
living overseas with his wife, son, and daughter. Now, stationed in Houston,
Scott is in charge of drilling proposals for the company's clients worldwide,
negotiating the daily fee for leasing a rig.
Oil companies want to find large oil fields or "elephants," but because most of
the large fields in shallow water have already been found, oil companies in the
future will have to seek "elephants" in more difficult locales, such as the
North Sea. This is the specialty of Reading & Bates.
Scott is an enthusiastic spokesman for Reading & Bates. Looking down the road,
he comments, "Our company has positioned itself correctly in the industry. We
have the right people and the right equipment to tackle the most difficult and
most highly compensated projects. I believe we have seen just the tip of the
iceberg."
The shares which you added to your Fund in October 1995 have increased 60
percent and now sell at $20.
- - Margaret Barton
KUDOS FOR YOUR FUND'S ADVISOR . . .
FEE ADVISOR -- "(Friess is) one of the few investment management firms that's
really taken in a lot of money, grown its staff significantly, and still
maintained its edge. . . . they are so . . . creative at what they do that they
are just getting better insights, and that's what helps build their record."
January/February 1996
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SMART MONEY -- "Friess and his team . . . are more interested in what Friess
likes to call detective work -- talking to competitors, suppliers, and customers
of a company and ferreting out tidbits of information that together form a
mosaic of how the company is faring. 'They are the best at digging out facts of
anyone' says (a competing fund manager)." January 1996
------------
ANDREA . . .
Before researcher Jon Fenn chooses an investment for your Fund, Andrea Paul
gathers initial information on the company and puts Jon in contact with the
right person at both that company and its related suppliers, customers,
competitors, and distributors.
Immediately after her college days (she earned a BA in English from Cal Lutheran
University in 1986), Andrea worked at Yellowstone National Park building and
repairing hiking trails and as a personnel manager at a backcountry site. In
1990, Andrea left her native California to move to Jackson full time to work for
an environmental engineering firm as an administrative assistant. She joined
your Jackson team in August of 1994.
"It's exciting to be part of the investment process here at Friess," Andrea
explains, "especially seeing an idea flourish into a large gainer for our
shareholders and clients. Knowing that I play a role in helping realize their
worthwhile financial goals makes my job all the more rewarding."
Andrea also travels to your Phoenix and Wilmington offices to train other
research managers on how she successfully helps contribute to the big gains in
such holdings as Nike, Alco Standard, and Adaptec.
Jon applauds Andrea's ability. "She is continually finding new people who have
insights into your holdings while still maintaining frequent contact with those
in top management with whom we already have a relationship. Andrea led her other
Friess Associates research managers in the utilization of new technologies, like
the Internet. Many of her contacts are made on-line."
Andrea enjoys downhill, cross country, and skate skiing, as well as mountain
biking, sea kayaking, and backpacking. She even spent six weeks trekking in the
Himalayas!
Athletically gifted, Andrea competed last year
in Jackson's annual Pole, Pedal, Paddle contest in which competitors must
successfully complete four stretches -- downhill skiing, skate skiing, biking,
and kayaking -- and her co-ed team placed first in their division!
- -Rebecca Buswell
PAT . . .
With more than 10 years combined experience as an equity trader at PNC Bank in
Philadelphia and Smith Barney, Pat Kealey joined Friess Associates in March of
1992. He earned his BS in Business Administration from Villanova University in
1981.
"We not only appreciate Pat's trading skills, but also his computer expertise,"
relates Friess trader of 17 years, Susan Morgan. "He has been instrumental in
developing the reports that quickly and easily present the information we need
to help us fulfill our responsibility to our clients and shareholders. He is
a genuine asset to our efforts."
As a Chartered Financial Analyst (CFA), Pat works with Susan, Barbara Shea, and
Ed Abrams to implement the trades for the 97 Friess clients, including your
Brandywine Blue Fund, allocating executions to specific portfolios and ensuring
that any guidelines clients stipulate are followed.
He also keeps researchers abreast of any and all news on the Street affecting
their companies (particularly tech-related holdings) while keeping them updated
with information on their orders.
Joining Friess Associates has been a breath of fresh air for Pat. "Coming from a
large corporate environment, I see the real advantages of working in a non-
bureaucratic firm. As a result, the investment process is really streamlined --
much more of a hands-on experience and much more effective.
"And," Pat continues, "in such an intense industry as the investment business,
it is great and rare to be part of an environment which encourages team
cooperation rather than internal competitiveness."
Pat and his wife of 13 years, Mary Jane, have two young boys, Patrick, 8, and
Sean, 3. In addition to spending time with them, he also enjoys traveling,
music, and playing basketball.
- -Rebecca Buswell
YOUR INSIGHTS ARE VALUABLE . . .
Recently, senior researcher Bill D'Alonzo enjoyed an Internet "conversation"
with a Brandywine Fund shareholder, an engineering/sales executive, who gave us
tremendous insight into your networking holdings.
That exchange helped us realize how many key executives are in our shareholder
family.
Whether you are in professional management or a consumer, you may spot an
emerging retail chain or industry trend in your local area. The geographical
dispersion and extensive industry knowledge of you and your fellow shareholders
offer a tremendous resource.
If you would enjoy participating in helping grow your Fund, please send us your
thoughts. While we won't be able to respond to each of your suggestions, we will
try to highlight in subsequent reports the value of your input. Please
communicate with me via the Internet at [email protected], or fax me directly
at (302) 656-9015.
As the enclosed Boston Globe article indicates, we increase our productivity
------------
dramatically by communicating through Internet, emails, and faxing which also
avoids "telephone tag" for you.
We've also enclosed a postcard for you to alert us
to any duplicate mailings you may be receiving. You might want to use it to pass
along any thoughts you might have. I will coordinate your insights with my other
research teammates.
Thanks!
- -Kelli Fazler
MIKE . . .
With work experience at two major high tech players in Silicon Valley, Oracle
Systems and Applied Materials, Mike Musson decided to direct his knowledge of
high tech companies and launch his own investment research company in Palo Alto.
Your researchers, Diane Hakala and David Harrington, first met Mike when he was
working in Investor Relations at Oracle. They remember his in-depth knowledge of
technology companies and Mike says he remembers their right-on-target questions.
This mutual respect led to Mike's beginning a consulting relationship to Friess
Associates last summer.
Mike earned an AB degree in both Political Science and Economics from Stanford
University in 1989. Many of Mike's classmates from Stanford work in high tech
businesses, so he has a long-standing circle of friends and contacts within the
managements of many companies.
Diane Hakala comments, "Mike's relationships and knowledge of Silicon Valley
help every day in adding color to the information we have on our holdings."
Oracle specializes in large databases and financial and manufacturing software
for companies, and is also on the leading edge of Internet applications.
When analysts were saying that this multi-billion dollar corporation's growth
rate was slowing, Mike knew Oracle well enough to see that it could sustain its
remarkable 40 percent growth in revenues and urged Friess to take a large
position. This smart call has resulted in gains of more than $600,000 for your
Fund.
Mike and his wife Lucy, a high school English teacher, have three girls, Layla,
Lucy, and Melissa. Both Lucy and Mike are involved in school-based activities,
including the PTA. Mike, a native Californian, enjoys tending a rose and
vegetable garden and a small fruit orchard, and playing an occasional basketball
game with his friends.
Noting the explosion of Internet-related companies that are creating new
products, Mike is excited about the new developments in the software industry.
Based in Palo Alto, he is perfectly positioned to visit management and build an
up-to-the-minute picture of High Tech Silicon Valley.
- -Margaret Barton
ON THE CUTTING EDGE . . .
GPS
Go fishing out of sight of land, take your boy scout troop for an overnight
hike, drive your aunt to Cleveland. These adventures still hold many challenges,
but if you take along the right piece of equipment, you can stop worrying about
getting lost. That piece of equipment is a hand-held receiver for the Global
Positioning System, the GPS.
Conceived by the Defense Department, the GPS is made up of a group of satellites
which circle 11,000 miles above us, beaming signals back to Earth. By picking up
these transmissions and comparing the distances to different GPS satellites, you
can identify your exact position on the globe.
Now available for as little as $200, the GPS is clearly the best example of
military technology moving from the battlefield to the marketplace and will
likely eventually make the compass obsolete. Soon everything that moves -- cars,
sailboats, laptop computers -- will come with a built-in answer to the question,
"Where in the world am I?"
FREE INTERNET HOOK-UP
AT&T is giving their customers a free entree to the Internet. If you were
thinking your son would write home more often if you had an e-mail address, or
you could search for a good way to cope with Japanese beetles, try calling 1-
800-967-5363 for a free copy of AT&T's WorldNet software. They are offering
their customers free Internet access for 5 hours a month, or unlimited access
for a flat monthly fee of $19.95.
"I HEAR YOU. AND, I CAN SEE YOU, TOO!"
With Connectix' new $150 VideoPhone you can convert your desktop computer into a
TV-telephone. The VideoPhone consists of software and a black-and-white camera
the size of a baseball that sits on your monitor and lets you communicate over
the Internet. Picture quality is a bit rough, but remarkable for the price.
TELEPHONE NUMBERS FOR EVERYONE IN THE USA!
If you have a CD-ROM drive on your computer, for less than $100 dollars you can
buy a set of 3 or 5 discs with every phone directory in the U.S. on them! You
---------------------------------
can also buy CDs with every street on every map in the United States. Pro CD,
and De Lorme are among the companies offering these products. Check your local
computer store.
YOUR NEW TEAM AT FIRSTAR . . .
is up and running! We welcome the twelve folks at Firstar who are now solely
dedicated to responding to your calls and questions. As we continue to improve
our service to you, we are working closely with Firstar's Gail Zess to ensure
that all on your Brandywine team at Firstar are skilled in the mechanics of your
Fund and knowledgeable about Friess Associates and our culture.
You can reach the new team at the same 800 number, (800) 656-3017. The new voice
response unit is installed so you can move more quickly through the prompts to
speak with a representative.
We're excited to welcome them to Brandywine, and we hope you'll let us know how
they're doing. To help them develop quickly we need your help on where they need
to improve. Please fax me at (302) 656-3859 or email me at [email protected]
with any experience you've had at Firstar requiring improvement.
-Rebecca Buswell
BRANDYWINE BLUE FUND, INC.
STATEMENT OF NET ASSETS
March 31, 1996
(Unaudited)
QUOTED
MARKET
SHARES COST VALUE
----------- ---------- ----------
COMMON STOCKS - 99.5% (A)<F5>
APPAREL & SHOES - 7.6%
44,000 Fila Holding S. p. A. $2,169,662 $2,810,500
57,900 Jones Apparel Group, Inc.*<F4> 2,248,901 2,808,150
67,200 Liz Claiborne, Inc. 1,733,250 2,301,600
60,000 Nautica Enterprises Inc.*<F4> 2,145,000 2,865,000
85,200 NIKE, Inc. Cl B 4,500,204 6,922,500
39,100 Tommy Hilfiger Corp.*<F4> 1,092,258 1,793,712
26,000 The Warnaco Group, Inc. 534,414 627,250
---------- ----------
14,423,689 20,128,712
THIS SECTOR IS 39.6% ABOVE YOUR COST.
COMMUNICATIONS - 6.5%
27,200 Belden Inc. 839,487 802,400
26,600 Cincinnati Bell Inc. 1,181,160 1,383,200
80,000 ECI Telecom Ltd. 1,759,184 1,790,000
301,000 L.M. Ericsson Telephone Co. ADR 6,709,669 6,433,875
75,700 Gandalf Technologies Inc.*<F4> 1,133,138 1,116,575
114,300 Tellabs, Inc.*<F4> 4,478,856 5,529,263
---------- ----------
16,101,494 17,055,313
THIS SECTOR IS 5.9% ABOVE YOUR COST.
COMPUTERS & RELATED - 7.0%
55,000 Adaptec, Inc.*<F4> 2,303,755 2,653,750
65,000 Dell Computer Corp.*<F4> 2,310,202 2,177,500
314,000 EMC Corp. (Mass.)*<F4> 6,336,113 6,868,750
9,000 Hewlett-Packard Co. 837,914 846,000
105,300 Seagate Technology, Inc.*<F4> 4,648,652 5,765,175
---------- ----------
16,436,636 18,311,175
THIS SECTOR IS 11.4% ABOVE YOUR COST.
DISTRIBUTION - 1.0%
81,500 Corporate Express, Inc.*<F4> 2,025,952 2,689,500
THIS SECTOR IS 32.8% ABOVE YOUR COST.
ELECTRONICS - 1.5%
75,000 EG&G, Inc. 1,770,840 1,678,125
34,700 Raychem Corp. 2,146,677 2,238,150
--------- ---------
3,917,517 3,916,275
THIS SECTOR IS 0.0% BELOW YOUR COST.
FINANCIAL/BUSINESS SERVICES - 7.3%
141,900 ADT LIMITED*<F4> 2,190,226 2,500,987
50,000 ADVANTA Corp. Cl B 2,231,563 2,375,000
28,200 ADVANTA Corp. Cl A 1,477,054 1,466,400
41,000 Beneficial Corp. 2,114,343 2,362,625
69,100 Conseco, Inc. 4,481,645 5,001,113
15,000 Credit Acceptance Corp.*<F4> 283,125 277,500
90,000 Mercury Finance Co. 1,355,481 1,271,250
125,000 The Money Store, Inc. 2,199,845 3,484,375
15,000 Olsten Corp. 464,002 483,750
---------- ----------
16,797,284 19,223,000
THIS SECTOR IS 14.4% ABOVE YOUR COST.
HEALTHCARE - 7.5%
82,700 Caremark International, Inc. 2,177,995 2,077,838
70,200 FHP International Corp.*<F4> 2,219,419 2,220,075
23,900 HBO & Co. 2,119,134 2,252,575
85,000 HEALTHSOUTH Corp.*<F4> 2,460,300 2,890,000
16,800 Living Centers of America, Inc.*<F4> 647,157 625,800
89,600 Quorum Health Group, Inc.*<F4> 2,148,886 2,105,600
70,000 RISCORP, Inc.*<F4> 1,532,503 1,330,000
40,000 Shared Medical Systems Corp. 2,005,516 2,410,000
184,800 Tenet Healthcare Corp.*<F4> 3,788,477 3,880,800
---------- ----------
19,099,387 19,792,688
THIS SECTOR IS 3.6% ABOVE YOUR COST.
HOME/OFFICE & RELATED - 1.1%
79,000 Black & Decker Corp. 2,709,385 2,992,125
THIS SECTOR IS 10.4% ABOVE YOUR COST.
MEDICAL PRODUCTS & SUPPLIES - 1.6%
50,000 AmeriSource Health Corp.*<F4> 1,450,000 1,650,000
40,100 Nellcor Puritan Bennett Inc.*<F4> 2,026,453 2,576,425
--------- ---------
3,476,453 4,226,425
THIS SECTOR IS 21.6% ABOVE YOUR COST.
NETWORKING - 5.8%
120,000 Cisco Systems Inc.*<F4> 2,295,455 5,565,000
69,700 Madge Networks N.V.*<F4> 3,144,971 2,796,712
123,500 Newbridge Networks Corp.*<F4> 4,720,142 6,946,875
---------- ----------
10,160,568 15,308,587
THIS SECTOR IS 50.7% ABOVE YOUR COST.
OIL/GAS FIELD SERVICES - 11.7%
50,000 Arethusa (Off Shore) Ltd. 1,828,515 1,881,250
50,000 BJ Services Co.*<F4> 1,572,247 1,675,000
26,500 Cooper Cameron Corp.*<F4> 1,026,737 1,113,000
129,400 Dresser Industries, Inc. 3,733,773 3,946,700
80,000 Ensco International Inc.*<F4> 2,039,120 2,230,000
149,400 Halliburton Co. 5,818,902 8,497,125
145,000 Reading & Bates Corp.*<F4> 1,785,313 2,863,750
53,700 Sonat Offshore Drilling Inc. 2,337,164 2,738,700
80,000 Tidewater Inc. 2,270,132 3,040,000
83,200 Weatherford Enterra Inc.*<F4> 2,424,206 2,901,600
---------- ----------
24,836,109 30,887,125
THIS SECTOR IS 24.4% ABOVE YOUR COST.
PHARMACEUTICALS - 8.9%
105,500 Eli Lilly & Co. 5,574,512 6,857,500
81,100 Pfizer Inc. 4,468,138 5,433,700
211,900 Pharmacia & Upjohn, Inc.*<F4> 9,033,320 8,449,512
65,000 Watson Pharmaceuticals Inc.*<F4> 2,664,317 2,600,000
---------- ----------
21,740,287 23,340,712
THIS SECTOR IS 7.4% ABOVE YOUR COST.
RETAILING - 14.0%
40,000 Autozone, Inc.*<F4> 1,322,400 1,355,000
55,000 CompUSA Inc.*<F4> 2,419,564 3,045,625
100,000 Consolidated Stores Corp.*<F4> 2,794,150 3,350,000
80,000 Dollar General Corp. 2,441,450 2,320,000
158,700 Gap, Inc. 7,620,902 8,788,013
54,000 Nordstrom, Inc. 2,637,072 2,615,652
84,800 Rite Aid Corp. 2,813,561 2,618,200
165,700 Sears, Roebuck and Co. 6,796,583 8,077,875
54,200 Talbots, Inc. 1,996,071 2,059,600
110,200 TJX Companies, Inc. 2,611,981 2,768,775
---------- ----------
33,453,734 36,998,740
THIS SECTOR IS 10.6% ABOVE YOUR COST.
SEMICONDUCTORS & RELATED - 4.2%
80,000 Analog Devices, Inc.*<F4> 2,198,861 2,240,000
30,000 ASM Lithography Holding N.V.*<F4> 1,200,000 1,211,250
80,000 ESS Technology Inc.*<F4> 1,603,750 1,500,000
50,000 International Rectifier Corp.*<F4> 1,125,565 900,000
10,000 MEMC Electronic Materials, Inc.*<F4> 360,760 363,750
60,000 Microchip Technology Inc.*<F4> 2,118,680 1,650,000
25,000 S3 Incorporated*<F4> 367,033 298,450
50,000 Sierra Semiconductor Corp.*<F4> 1,177,675 950,000
56,000 Zilog, Inc.*<F4> 1,940,360 1,890,000
---------- ----------
12,092,684 11,003,450
THIS SECTOR IS 9.0% BELOW YOUR COST.
SOFTWARE - 7.6%
69,000 BMC Software, Inc.*<F4> 2,656,736 3,777,750
43,200 Cadence Design Systems, Inc.*<F4> 892,256 1,906,200
120,000 Computer Associates
International, Inc. 6,942,729 8,595,000
55,000 McAffee Associates, Inc.*<F4> 1,986,952 3,011,250
56,000 Oracle Corp.*<F4> 2,382,470 2,639,000
---------- ----------
14,861,143 19,929,200
THIS SECTOR IS 34.1% ABOVE YOUR COST.
TRANSPORTATION - 4.2%
96,400 America West Airlines, Inc. Cl B*<F4> 1,536,134 2,060,550
74,000 Pittston Brink's Group 1,422,107 1,979,500
68,800 Praxair, Inc. 2,178,627 2,743,400
150,000 Trans World Airlines, Inc.*<F4> 1,909,225 3,000,000
50,000 ValuJet Airlines, Inc.*<F4> 1,115,295 1,250,000
--------- ----------
8,161,388 11,033,450
THIS SECTOR IS 35.2% ABOVE YOUR COST.
MISCELLANEOUS - 2.0%
69,400 Lear Seating Corp.*<F4> 2,011,073 2,264,175
62,000 United Waste Systems, Inc.*<F4> 2,739,365 3,100,000
--------- ---------
4,750,438 5,364,175
THIS SECTOR IS 12.9% ABOVE YOUR COST.
----------- -----------
Total common stocks 225,044,148 262,200,652
SHORT-TERM INVESTMENTS - 2.2% (A)<F5>
VARIABLE RATE DEMAND NOTES
$250,000 American Family
Financial Services 250,000 250,000
600,000 General Mills, Inc. 600,000 600,000
650,000 Pitney Bowes Credit Corp. 650,000 650,000
1,874,757 Sara Lee Corp. 1,874,757 1,874,757
2,365,000 Wisconsin Electric Power Co. 2,365,000 2,365,000
------------ -----------
Total short-term investments 5,739,757 5,739,757
------------ -----------
Total investments $230,783,905 267,940,409
------------
------------
LIABILITIES, LESS CASH AND
RECEIVABLES (1.7%) (A)<F5> (4,430,202)
-----------
NET ASSETS $263,510,207
-----------
-----------
Net Asset Value Per Share
($0.01 par value 20,000,000
shares authorized), offering
and redemption price
($263,510,207 / 11,238,141
shares outstanding) $23.45
------
------
* <F4>Non-income producing security.
(a) <F5>Percentages of various classifications relate to net assets.
The accompanying notes to financial statements are an integral part of this
statement.
BRANDYWINE BLUE FUND, INC.
STATEMENT OF OPERATIONS
For the Period Ended March 31, 1996 (Unaudited)
INCOME:
Dividends $547,237
Interest 204,267
--------
Total income 751,504
--------
EXPENSES:
Management fees 1,014,903
Registration fees 38,103
Administrative services 35,650
Custodian fees 26,033
Professional fees 17,485
Printing and postage expense 9,547
Transfer agent fees 6,006
Amortization of organizational expenses 1,550
Other expenses 7,263
---------
Total expenses 1,156,540
---------
NET INVESTMENT LOSS (405,036)
----------
NET REALIZED LOSS ON INVESTMENTS (8,268,996)
NET INCREASE IN UNREALIZED APPRECIATION ON INVESTMENTS 14,728,934
----------
NET GAIN ON INVESTMENTS 6,459,938
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $6,054,902
----------
----------
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ended March 31, 1996 (Unaudited)
and For the Year Ended September 30, 1995
1996 1995
---------- ----------
OPERATIONS:
Net investment loss $(405,036) $(295,445)
Net realized (loss) gain on investments (8,268,996) 8,175,056
Net increase in unrealized appreciation
on investments 14,728,934 20,117,144
---------- ----------
Net increase in net assets resulting
from operations 6,054,902 27,996,755
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net realized gains
($1.10564 and $0.10774 per share, respectively) (7,884,335) (180,673)
----------- ----------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (4,876,233 and
5,621,838 shares, respectively) 109,518,228 120,000,924
Net asset value of shares issued in
distributions (344,224 and 10,418
shares, respectively) 7,555,722 177,002
Cost of shares redeemed (751,825 and
555,714 shares, respectively) (16,676,887) (12,137,304)
----------- -----------
Net increase in net assets derived from
Fund share activities 100,397,063 108,040,622
----------- -----------
TOTAL INCREASE 98,567,630 135,856,704
NET ASSETS AT THE BEGINNING OF THE PERIOD 164,942,577 29,085,873
----------- -----------
NET ASSETS AT THE END OF THE PERIOD $263,510,207 $164,942,577
----------- -----------
----------- -----------
The accompanying notes to financial statements are an integral part of these
statements.
BRANDYWINE BLUE FUND, INC.
FINANCIAL HIGHLIGHTS
(Selected Data for each share of the Fund outstanding throughout each period)
<TABLE>
<CAPTION>
For the period
ended March 31, YEARS ENDED SEPTEMBER 30,
1996
(Unaudited) 1995 1994 1993 1992 1991+<F6>
-------------- ------ ----- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $24.37 $17.18 $19.11 $12.95 $13.09 $10.01
Income from investment operations:
Net investment (loss) income (0.01) 0.00 0.04 (0.06) (0.04) 0.03
Net realized and unrealized gains on investments 0.20 7.30 0.36 6.22 0.52 3.05
----- ----- ----- ----- ----- ----
Total from investment operations 0.19 7.30 0.40 6.16 0.48 3.08
Less distributions:
Dividend from net investment income -- -- -- -- (0.03) --
Distributions from net realized gains (1.11) (0.11) (2.33) -- (0.59) --
------ ----- ----- ----- ----- ------
Total from distributions (1.11) (0.11) (2.33) -- (0.62) --
------ ----- ----- ----- ----- -----
Net asset value, end of period $23.45 $24.37 $17.18 $19.11 $12.95 $13.09
------ ----- ----- ----- ----- -----
------ ----- ----- ----- ----- -----
Total Investment Return 2.2%*<F7> 42.8% 2.8% 47.6% 4.0% 45.1%*<F7>
Ratios/Supplemental Data:
Net assets, end of period (in 000's $) 263,510 164,943 29,086 6,373 4,270 3,975
Ratio of expenses (after reimbursement)
to average net assets**<F8> 1.14%*<F7> 1.31% 1.80% 2.00% 2.00% 1.97%*<F7>
Ratio of net investment (loss) income
to average net assets***<F9> (0.4%)*<F7>(0.4%) (0.4%) (0.6%) (0.3%) 0.6%*<F7>
Portfolio turnover rate 186.4%*<F7>174.1% 220.3% 144.3% 191.9% 115.3%*<F7>
+<F6>For the period from January 10, 1991 (commencement of operations) to
September 30, 1991.
*<F7>Annualized.
**<F8>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.
***<F9>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.
The accompanying notes to financial statements are an integral part of this
statement.
MARKET CAP . . .
New purchases in EMC Corp., Corporate Express, TJX Companies, and Weatherford
Enterra jumped your $1 billion to $5 billion category ("mid cap") from 41.3
percent in December to 52.1 percent. Gains in Newbridge Networks, up $1.8
million, The Money Store, up $1.5 million, and McAfee Associates, up $1 million,
also increased the size of your mid cap holdings.
Your "large cap" stocks, those above $5 billion, dropped back from 42.3 percent
to 36.5 percent as Merck, Hewlett Packard, Bay Networks, Applied Materials,
Digital Equipment, Cabletron, and Home Depot were sold, while Sears was
purchased.
You sold Cheyenne Software, Tiffany & Co., FileNet Corp., Sofamor Danek Group,
Harman International, and Network Equipment to pare back your companies with
market caps of less than $1 billion to 10.9 percent from 13.1 percent
This shift away from large cap stocks toward mid cap stocks follows a period
when prudence dictated a more cautious approach toward the smaller stocks. From
September 30, 1995 to January 31, 1996 the Nasdaq Industrials dropped 1.2
percent while larger S&P 500 stocks rose 9.7 percent.
YOUR COMPANIES' MARKET CAPITIALIZATION
CASH 0.5%
SMALL CAP 10.9%
LARGE CAP 36.5%
MID CAP 52.1%
BRANDYWINE BLUE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
(Unaudited)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies of Brandywine
Blue Fund, Inc. (the "Fund"), which is registered under the Investment Company
Act of 1940. The Fund was incorporated under the laws of Maryland on November
13, 1990.
(a) Each security, excluding short-term investments, is valued at the last
sale price reported by the principal security exchange on which the issue is
traded, or if no sale is reported, the latest bid price. Securities which
are traded over-the-counter are valued at the latest bid price. Securities for
which quotations are not readily available are valued at fair value as
determined by the investment adviser under the supervision of the Board of
Directors. Short-term investments are valued at amortized cost which
approximates quoted market value. Investment transactions are recorded no later
than the first business day after the trade date. Cost amounts, as reported on
the statement of net assets, are the same for Federal income tax purposes.
(b) Net realized gains and losses on common stock are com-puted on the
basis of the cost of specific certificates.
(c) Provision has not been made for Federal income taxes since the Fund
has elected to be taxed as a "regulated investment company" and intends to
distribute substantially all income to its shareholders and otherwise comply
with the provisions of the Internal Revenue Code applicable to regulated
investment companies.
(d) Dividend income is recorded on the ex-dividend date. Interest income
is recorded on the accrual basis.
(e) The Fund has investments in short-term variable rate demand notes,
which are unsecured instruments. The Fund may be susceptible to credit risk with
respect to these notes to the extent the issuer defaults on its payment
obligation. The Fund's policy is to monitor the creditworthiness of the issuer
and does not anticipate nonperformance by these counterparties.
(f) Generally accepted accounting principles require that permanent
financial reporting and tax differences be reclassified to capital stock.
(2) INVESTMENT ADVISER AND MANAGEMENT AGREEMENT AND
TRANSACTIONS WITH RELATED PARTIES
The Fund has a management agreement with Friess Associates, Inc. (the
"Adviser"), with whom certain officers and directors of the Fund are affiliated,
to serve as investment adviser and manager. Under the terms of the agreement,
the Fund will pay the Adviser a monthly management fee at the annual rate of one
percent (1%) on the daily net assets of the Fund. Also, the Adviser is
reimbursed for administrative services rendered to the Fund by a consultant paid
by the Adviser.
(3) DISTRIBUTION TO SHAREHOLDERS
Net investment income and net realized gains, if any, are distributed to
shareholders.
(4) DEFERRED EXPENSES
Organizational expenses were deferred and were amortized on a straight-line
basis over a period of five years ending December, 1995. These expenses were
advanced by the Adviser who was reimbursed by the Fund over the amortization
period.
(5) INVESTMENT TRANSACTIONS
For the period ended March 31, 1996, purchases and proceeds of sales of
investment securities (excluding short-term securities) were $279,352,121 and
$187,084,668, respectively.
(6) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
As of March 31, 1996, liabilities of the Fund included the following:
Payable to brokers for
investments purchased $4,328,836
Payable to Adviser for management
fees 211,032
Other liabilities 29,486
(7) SOURCES OF NET ASSETS
As of March 31, 1996, the sources of net assets were as follows:
Fund shares issued and outstanding $234,622,784
Net unrealized appreciation
on investments 37,156,504
Accumulated net realized gains
and losses (8,269,081)
-----------
$263,510,207
------------
------------
Aggregate net unrealized appreciation as of March 31, 1996 consisted of the
following:
Aggregate gross
unrealized appreciation $40,715,660
Aggregate gross unrealized
depreciation (3,559,156)
-----------
Net unrealized appreciation $37,156,504
-----------
-----------
TOP TEN . . .
The most dramatic shift in your Top Ten Industry groups occurred in Networking,
which moved from the number one position last quarter at 12.5 percent to 5.8
percent currently. You sold large holdings of Bay Networks, Cabletron Systems,
and Network Equipment Technologies while paring back your position in Cisco
Systems to decrease this group.
Your number one industry is now Retailing at 14.0 percent, moving up from 9.7
percent in December. New purchases were made in AutoZone, Dollar General,
Nordstrom, Sears, and TJX Companies. And, you added to your existing positions
in Consolidated Stores and Gap. Appreciation of more than $2 million in those
two holdings also helped.
New to your Top Ten are Oil/Gas Field Services at 11.7 percent, occupying the
number two spot, led by new purchases in Dresser Industries, Weatherford
Enterra, and Ensco International, and Financial/Business Services at 7.3 percent
thanks to buys in Conseco, Beneficial Corp., and ADVANTA Corp.
Dropping from the Top Ten, Semiconductors & Related moved from 4.5 percent in
December to 4.2 percent and you sold all your Semiconductor/Equipment Suppliers
companies.
TOP TEN INDUSTRY GROUPS
Cash (0.5%)
Networking (5.8%)
Communications (6.5%)
Computers & Related (7.0%)
Financial/Business Services (7.3%)
Healthcare (7.5%)
Software (7.6%)
Apparel & Shoes (7.6%)
Pharmaceuticals (8.9%)
Oil/Gas Field Services (11.7%)
Retailing (14.0%)
All Others (15.6%)
BOARD OF DIRECTORS
John E. Burris
Chairman
Burris Foods, Inc.
Milford, Delaware
Foster S. Friess
President
Friess Associates, Inc.
Jackson, Wyoming
Stig Ramel
Former President
Nobel Foundation
Stockholm, Sweden
(800) 656-3017
Investment Adviser: FRIESS ASSOCIATES, INC.
Independent Accountants: PRICE WATERHOUSE LLP
Custodian, Transfer Agent: FIRSTAR TRUST COMPANY
Legal Counsel: FOLEY & LARDNER
OFFICERS: Foster S. Friess, President and Treasurer; Clarke Adams, Vice
President; William F. D'Alonzo, Vice President; Carl S. Gates, Vice President;
Paul R. Robinson, Vice President; and Lynda J. Campbell, Secretary
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of Brandywine Blue Fund unless accompanied or preceded by
the Fund's current prospectus.
Report editor: Lynda J. Campbell Report Staff: Margaret Barton, Rebecca A.
Buswell, Jennifer Fidance, Paul R. Robinson
</TABLE>
