BRANDYWINE BLUE FUND, INC.
MANAGED BY FRIESS ASSOCIATES, INC.
QUARTERLY REPORT
JUNE 30, 1997
DEAR FELLOW SHAREHOLDERS:
You hit a new all time high, June 19, of $30.20. On that day each one of you was
in plus territory. We also are pleased that your fund experienced a 14.4 percent
gain this quarter with net inflows of $29 million.
After a minor 1.5 percent backtracking in the March quarter, Brandywine Blue's
six month return of 12.7 percent outdistanced the Nasdaq Industrials' return of
6.6 percent and handily beat the Investor's Business Daily Mutual Fund Index
gain of 6.8 percent.
The S&P 500, however, was stronger than indices of the dynamic companies which
characterize your portfolio, up 17.4 percent this past quarter, beating more
than 90 percent of all equity funds.
The S&P 500 index of America's largest companies gives larger companies within
that index more impact on its performance. For example, the 25 largest companies
- -- only 5 percent of the stocks in the index -- account for over 33 percent of
the return!
The second quarter of 1992 your fund lagged the S&P 500 by 6 percent for the
quarter. But then in the fourth quarter of 1992, your Fund outperformed the S&P
------
500 by more than 11 PERCENTAGE POINTS AND FOR THE YEAR OUTPERFORMED BY 6
PERCENTAGE POINTS.
We're grateful that in the last five years your Fund grew 198 percent vs. the
S&P 500's gain of 147 percent and the Nasdaq Industrials' growth of 97 percent.
MOST RECENT FIVE YEARS
NASDAQ IND. 96.6%
IBD*<F1> 103.7%
S&P MIDCAP 104.9%
LIPPER GROWTH*<F1> 121.1%
S&P 500*<F1> 146.5%
YOUR FUND*<F1> 198.4%
*<F1>TOTAL RETURN
IBD = INVESTOR'S BUSINESS DAILY MUTUAL FUND INDEX
Your five year annualized return of 24.4 percent compares to 20 percent for the
S&P 500 and the Nasdaq Industrials' 15 percent.
Your Fund beat the S&P 500 in 11 out of the 20 quarters in the last five years
but outperformed the S&P by over 51 PERCENT in that period. It outperformed the
Nasdaq Industrials in 14 of the last 20 quarters or 70 percent of the time.
Since the day Brandywine Blue Fund was launched in 1991, your research team has
employed the time-tested philosophy of investing in companies with dynamic
earnings, high rates of profitability and sound balance sheets. These dynamic,
growing companies typically comprise indices other than the S&P 500.
Your Fund gained over 24 percent the last twelve months despite the Nasdaq
Industrials' meager 6.5 percent gain! The 28 percentage point spread between the
Nasdaq Industrials and the S&P 500's 35 percent gain is the largest seen in
years, underscoring the challenges your researchers face while investing in
companies that fit your Fund's strategy.
Currently, the companies you hold are experiencing an average yearly earnings
growth rate of 48 percent, more than three times greater than the expected
growth rate of the S&P 500's companies as measured by William O'Neil.
COMPANY GROWTH
AVERAGE INCREASE
LATEST 12 MOS. EARNINGS
YOUR COMPANIES 48%
S&P 500 14%
AVERAGE INCREASE
LATEST QUARTERLY EARNINGS
YOUR COMPANIES 52%
S&P 500 17%
ALL S&P FIGURES ARE UNWEIGHTED. ANALYSIS BY WILLIAM O'NEIL & CO., INC. JUNE 27,
1997.
You own these companies at a very attractive level of only 16 times 1998's
earnings estimates, which is roughly equal to the valuation level of the S&P
500.
The assets that started the fund on January 10, 1991, have grown 279 percent, 23
percent per year, outdistancing all the major indices -- even the S&P 500's 235
percent rise. The Nasdaq Industrials climbed 200 percent, and the IBD Mutual
Fund Index was up just 137 percent during the period.
SINCE INCEPTION
JANUARY 10, 1991
IBD*<F2> 136.7%
NASDAQ IND. 200.4%
LIPPER GROWTH*<F2> 202.0%
S&P 500*<F2> 234.7%
YOUR FUND*<F2> 279.3%
*<F2>TOTAL RETURN
Friess family and teammates have more than $15 million invested with you. All of
my equity investments are in the Brandywine Funds.
We awake every day knowing that it's what we do for you tomorrow that counts.
We want to enjoy with you new all-time highs in your Fund.
One of your current biggest gainers is Dell Computer, picked by researcher David
Harrington, producing gains of nearly $5 million for you this quarter alone.
David also teamed up with consultant Hank Bannister to purchase 3Com Corp.,
already providing you $2 million in gains. Jackson-based researcher Andy Graves
selected Tellabs, adding $2.5 million to your portfolio.
You'll notice that many of your big gainers for the quarter are in the
technology area. While seasonal trends and product transitions like Intel's move
from Pentium to Pentium with MMX and Pentium II may cause occasional pauses in
growth, your research team continues to find dynamic companies in a broad array
of technology sectors.
Phoenix-based Diane Hakala found BMC Software yielding gains of just over $2
million. Researcher Jon Fenn's recommendation of Compware Corp. grew 47 percent
while his MasTec, Inc. pick appreciated 70 percent this quarter alone.
Technology was not the only good performer in the quarter. In fact, the current
economic environment of slow growth with low inflation drove stock prices higher
in almost all industry groups. Since the Federal Reserve Board increased the
discount rate back in March, the yield on the 30-year Treasury Bond fell through
the 7 percent level and it currently yields 6.7 percent. Both stock and bond
investors win!
Researcher Clarke Adams' pick of Corning, Inc., benefiting from optic fiber
production, provided your Fund with profits of $1.3 million and medical company
STERIS Corp., recommended by John Ragard produced gains of just over $2 million.
As you can see, the contributions to your performance are spread across your
research team. Thanks to those mentioned and to the rest of the team whose
number one priority is the growth of your assets These are the practitioners of
our investment credo "Never Invest in the Stock Market, Invest in Individual
Stocks."
Special thanks to Bill D'Alonzo who was kind enough to write our mid-quarter
letter while Lynn and I were visiting Stig Ramel, President of the Nobel
Foundation from 1972 to 1992 and Brandywine Fund director, who was celebrating
his 70th birthday in Sweden.Thanks for the many letters expressing gratitude for
explaining our efforts to use the Fund's commission dollars prudently and in the
best interests of you, the shareholder.
The upcoming 4th of July celebration reminds us of those traditions established
by our Founding Fathers. We are honored to have the opportunity to be part of
helping you realize the "American Dream" which they were seeking when forming
this great nation more than 200 years ago. Thank you for allowing us to serve
you.
Happy Summer!
God Bless!
/s/ Foster Friess
Foster Friess
President
July 1, 1997
FELLOW SHAREHOLDER . . .
A predominant notion among many people is that science and religion do not mesh.
Meet John Marks Templeton, a shareholder in your sister Brandywine Fund, who
more than two decades ago realized the importance of recognizing those
individuals who exhibited frontier thinking in religion by linking it with
scientific thought, and established the Templeton Prize for Progress in
Religion, an annual award worth more than $1 million. Past recipients include
Mother Teresa, Chief Rabbi of Great Britain, Lord Jakokbovits, Billy Graham, and
author Aleksandr Solzhenisyn.
The success of this Prize encouraged Templeton to form the John Templeton
Foundation which seeks to explore and encourage the connection between sciences
and all religions. The Foundation lends resources to leaders who are striving
for spiritual and scientific progress by funding more than 40 programs focused
in three areas: Science and Religion; Spirituality and Health; and Education.
The Templeton Foundation awards a $10,000 prize to as many as 100 colleges,
universities, and schools of theology around the world which develop and offer
the best courses in science and religion. Also awarded every year is a $10,000
prize to five U.S. medical schools that offer courses examining the valuable,
but often overlooked, role of faith and spirituality in patient care.
Every year approximately 100 U.S. colleges and universities are recognized for
their creative attempts to promote character development among their students. A
guide distributed to high school guidance counselors helps students in the
difficult college selection process.
The Honor Rolls for Education in a Free Society are published bi-annually to
highlight professors, programs, and departments from various colleges and
universities which encourage a greater appreciation of the importance of our
nation's free enterprise system. The honorees are excellent examples of how
political freedom, a market economy, and moral principles enter into sustaining
a free society.
An investment management guru himself (The Templeton Growth Fund and Templeton
World Fund), John understands the importance of free enterprise!
Recognized for his extensive philanthropic efforts, Sir John was knighted by
Britain's Queen Elizabeth in 1987. The Royal Society for the Encouragement of
Arts, Manufacture, and Science awarded him the Benjamin Franklin Medal to honor
his work in furthering Anglo-American understanding. He has also received many
awards from the financial community over the years.
We are honored to apply our investment strategy for the benefit of The John
Templeton Foundation. Knowing that our management of a portion of its assets
enables its important work to continue makes our job rewarding.
- -Rebecca Buswell
A VERY BIG THANK YOU . . .
to all the folks at Cann Printing, particularly those who burned the midnight
oil, for their very impressive efforts to get this report in the mail to you
within 24 hours of quarter end! The excellence for which we strive could never
be achieved without the support of so many people outside the firm like the
hard-hitting team at Cann. Thanks!
Rebecca Buswell, Editor
HIGHLIGHTS...
COMMUNICATIONS
Outsourcing is a popular trend in many businesses, especially cable and
telephone companies. Instead of installing the fiber cabling themselves, they
turn to a company like MASTEC, which provides this service at low cost with fast
delivery.
Most cable and phone companies seek to increase their fiber infrastructure, and
your company benefits as it is one of only two companies that can offer this
installation service throughout the U.S. MasTec also recently completed a deal
with Telebras, the phone company of Brazil.
In a conversation with CFO Ed Johnson last month, we learned that fueling demand
even further is the movement by many cable companies to start providing phone
service via their existing cable lines.
Earnings more than doubled in the March quarter, from $.15 to $.36 on revenues
of $130 million, a 108 percent jump from $63 million last year.
Purchased for you in December, your shares are worth 55 percent more at $47.
FINANCIAL/BUSINESS SERVICES
You can lease a car, you can lease a house, and, through COMDISCO, you can even
lease anything from computer equipment to medical equipment to semiconductor
test equipment. The "Switzerland" to leasing, Comdisco is neutral to any type
of manufacturer and able to provide its customers with the best products to meet
their needs.
Many Fortune 500 companies, such as Caterpillar, Pennzoil, and the Chicago Board
of Trade, need the most recent, most advanced technology, but the high rate at
which the newest and most up-to-date systems are being introduced makes it
increasingly difficult for these companies to keep abreast of changes. They look
to Comdisco to help them integrate and stay on top of the latest technological
advances.
These companies also want their services "bundled," a positive for Comdisco
according to John Vosky, CFO. Unlike many of its competitors, Comdisco not only
offers the products to be leased, like computer terminals, monitors, and
mainframes, but it also offers information technology services, including
network management, inventory, and emergency tech support.
Earnings were $.39 in the March quarter, up 18 percent from the $.33 reported
last year.
Up 36 percent since purchase in September at $19, your shares sell at $26 today.
HEALTHCARE
SHARED MEDICAL SYSTEMS creates information solutions for the health industry
designed to help hospitals, physician groups, and other health care providers
improve quality of care and financial performance in an increasingly regulated
environment.
Your company provides a comprehensive line including clinical, financial,
administrative, patient management, and physician information systems to 1800
hospitals in the U.S. and 900 hospitals internationally. These systems are
created with the help of information technology leaders like AT&T, Hewlett-
Packard, IBM, and Microsoft.
Hospitals have large investments in new equipment and technologies to augment
service quality and reduce care costs which require increased usage of Shared
Medical's software and services. One such system, Novius.Ihn, was successfully
installed at two Shared Medical customer sites in New Jersey and North Carolina,
according to Treasurer, Terrence Kyle.
Last quarter, revenues climbed 23 percent to $210 million from $170 million last
year, fueling earnings growth of 24 percent -- $.56 versus $.45.
Trading today at $54, your shares already rose 37 percent since purchase in
April at $40.
SPECIALTY RETAILING
The superstore concept has caught on in nearly all of retail, from computers to
clothing to office supplies. BORDERS GROUP is part of this superstore craze
with its mammoth bookstores in all 50 states averaging 30,000 square feet
apiece.
Offering a huge selection of books, videos, music, multimedia products and
software as well as a coffee cafe, customers flock to Borders making it the #2
bookstore operator in the U.S. Your company also operates Waldenbooks, the
nation's #1 mall-based bookstore chain, and Planet Music.
Robert Di Romulado, Chief Executive Officer, explained that 40 additional new
stores are on track for 1997, and that later this year, Borders will begin its
strategy to tap the on-line marketplace and roll out its Internet product
offering.
Better-than-expected same store sales at both Waldenbooks and Borders fuel your
company's growth. The year ended January 1997 saw earnings jump 55 percent to
$.73 from $.47 on revenues of nearly $2 billion.
Purchased in November at $18, your shares have appreciated 34 percent to $24.
BILL . . .
In his 16th year at Friess Associates, your senior research team leader Bill
D'Alonzo recognizes the difference between a successful company and a mediocre
one. Bill's guidance to his team on such picks as Dell Computer, and Interstate
Hotels has created gains of more than $6 million for you this year.
"When Bill makes a buy decision, we'll eagerly give up a stock to make room for
the new, more dynamic company he's choosing," says fellow researcher Mark
Lapolla. "Our pigs-to-the-trough sell discipline works perfectly with Bill
because he's always finding that better, more exciting stock for our
shareholders."
Bill focuses on the individual aspects of a company's business by first going
through each line of its profit and loss statement in a thorough interview with
management. He then determines if it fits our strategy of accelerating growth
and earnings surprises.
After receiving a degree in Business Management, Bill spent two years as a
researcher at the Bank of Delaware Trust Department gaining knowledge about the
general workings of the stock market. After joining Friess in 1981, Bill went on
to earn an MBA in Finance in 1984 from Widener University.
As a team leader, Bill is responsible for not only the stocks he selects, but
also for overseeing the choices of his team. "We're on the front lines of the
investment process, with the direct responsibility of our shareholders' success
at stake."
Bill and his wife of 17 years, Sarah, and their two children, Susan and Nick,
enjoy traveling, playing tennis and golf, and spending time at the beach. Bill
is also an expert hunter and often takes Nick along on some of his excursions.
- -Rebecca Buswell
SUSAN . . .
In 1978, when Friess Associates had $18 million under management and consisted
of just Foster and Lynn, Susan Morgan came on board, which makes her the longest
tenured employee (but not the "oldest," as Foster sometimes introduces her). She
has seen the trading operation grow from using one Quotron -- which displayed
only 10 stocks on the screen at a time -- to today's four-terminal system which
uses both Bridge and Bloomberg, allowing instantaneous access to all aspects of
the market.
At the outset, Susan served as receptionist, writer, accountant, and office
manager in addition to making trades. Today, her sole responsibility is in
trading where she works with the other six traders to ensure the purchases and
sales recommended by your research team are executed in a timely manner.
Senior researcher Bill D'Alonzo praises Susan's expert ability. "Having been at
Friess Associates longer than anyone else, Susan knows our clients well and
understands our operations procedures created to meet their needs. This broad
background and long-time focus on our culture give her a unique perspective in
trading. Her contribution makes possible the growth our fellow shareholders have
enjoyed."
Seeing the company grow from the original three people to the current 60-member
team, Susan reflects on the importance of having just the right group in place
to handle our growth to $12 billion under management.
"The most incredible aspect of this growth to me," says Susan, "is that Foster
has collected such a cohesive, compatible group of people of varying ages,
backgrounds, and interests, who are dedicated to the original investment
principles he established more than two decades ago. Working with this 60-
member team to grow the assets entrusted to us is a privilege."
Susan's favorite after-hour activity is bicycling. She's pedaled her way
through France, Italy, Costa Rica, England, and New Zealand, as well as here in
the Brandywine Valley. "Biking allows you to see a small part of a country in
much more detail than driving allows, and I'm thrilled to have had the
opportunity to see so many wonderful places 'up close.' "
- -Rebecca Buswell
All of us at Friess Associates were saddened to learn of the tragic helicopter
accident that claimed the life of Larry Inlow, Executive Vice President,
Secretary and General Counsel of Conseco, Inc.
We want to take this opportunity to pay tribute to Larry for all the fine work
he contributed to Conseco during his years there and to express our condolences
to the many people who will miss him. While we did not know Larry personally,
we have come to know how much he meant to those he worked with and how he
brightened their professional lives and provided for them an example of how to
live life to the fullest and be a success both at work and at home.
There are many people like Larry at all of the companies in which we invest for
whom we are very grateful. It is their efforts every day that help create the
gains which our shareholders enjoy.
We extend our deepest sympathy to Larry's family, friends and to everyone at
Conseco along with our sincere appreciation for Larry's role in making Conseco
such a successful company.
JOHN . . .
With nearly 20 years experience in the investment business, John Ragard brings
to your research team a solid understanding and keen eye for the kinds of stocks
in which we invest.
His varied background -- he served as an investment officer for the University
of Rochester, an analyst for the General Electric Company Pension Fund, and a
venture capital investment specialist -- enables John to see a company from many
perspectives and to grasp the big picture, which is so essential to the Friess
Associates generalist approach to investing.
"As generalists," explains John, "we investigate each potential investment as if
we were planning to purchase the entire company. If researchers specialized in a
given area, they would likely be looking for isolated factors rather than seeing
the nuances of a company gleaned from its competitors, suppliers, customers and
distributors that are so valuable in making a decision to buy."
Some large gainers selected by John are Western Digital, Noble Drilling, and US
Airways. So far this year, these companies brought in $8.5 million for you.
Married for 17 years to Terri, the Ragards have three children, Becky, Andrew
and Stephen ages 15, 13 and 8. His favorite activity is spending time with his
family coaching the kids' teams, traveling, and camping. John also likes to read
and garden.
Trader Ryan Smith relates how valuable John's vast experience is. "The intensity
of his research is unmatched. I'm confident that my family's assets, and those
of all our clients and shareholders, are in good and capable hands with John."
John enjoys tracking down a fresh, new stock idea to replace one that might be
running out of gas, and says, "I am honored to have the chance to put that
company to work for the benefit of our fellow shareholders. Our responsibility
to you is our number one objective and being on the firing line every day for
that purpose makes the work we do meaningful."
- -Rebecca Buswell
LYNDA . . .
If shareholders in Brandywine or Brandywine Blue Fund need special attention,
they know they can turn to Lynda Campbell. Having joined our team in 1985, Lynda
knows your Fund inside and out, serving as Fund Administrator and Secretary
since its inception.
Chris Long, a member of your Friess management team, says, "Lynda's focus on
providing excellent service to each shareholder provides firm-wide leadership as
we follow her example of continually seeking new ways to add value to all we do
for our shareholders."
A contact at Lipper Analytical applauds Lynda and writes, "Recently we advised a
family investment company to purchase Brandywine Fund. The family's business
manager called me and sung the praises of your service organization. This
followed a very frustrating week for him dealing with several other fund
complexes who couldn't get anything right." This letter was written in 1987,
when Lynda was the ENTIRE service organization for your sister Fund!
With the Brandywine Fund's shareholder base numbering more than 45,000, Lynda
works closely with all the representatives at Firstar Trust Company to ensure
they provide top-notch service to each shareholder who calls. Lynda travels to
Wisconsin every few months to meet with the reps and answer any questions they
may have as well as continuing to familiarize them with our investment approach.
"Interacting with shareholders is the most enjoyable aspect of my position here.
I appreciate the chance to build on long-time relationships and reiterate the
principles of our strategy to help them feel confident in our number one goal of
growing the assets they've entrusted to us."
Out of the office, Lynda and her husband, Doug, work fervently on remodeling the
home they purchased four years ago. Visiting with her children, Grier and Carey,
and her two young grandchildren, Patrick, 3 and Caroline, 3 months, is also at
the top of Lynda's list. Keeping close track of their progress, Lynda says, is a
most challenging yet rewarding role!
- -Rebecca Buswell
CAPITAL GAINS UPDATE . . .
The October distribution is approaching, and we want to give you the most recent
estimates of what we're anticipating. As of 6/26/97, the net realized capital
------------ ------- --------
gains were:
$1.86 in long term capital gains
1.12 in short term capital gains (treated as ordinary income)
- -----
$2.98 total potential distribution per share
There remain unrealized gains of $4.45 and unrealized losses of $.18 as of
--
6/26/97.
- -------
If you have a taxable account, you will have to pay income tax next April on
this distribution, but you will not have to pay a gain on this same amount when
your shares are eventually redeemed as the value of your existing shares will be
reduced by the per share amount of the distribution.
For example, if shares purchased at $20 become worth $30, you have a potential
taxable gain of $10 per share. However, if a $3.00 distribution is made, the
share value will drop to $27, leaving only $7 instead of $10 as the potential
future capital gain.
ALL IS NOT ROSES . . .
Like every quarter, there were a handful of stocks which lagged the top
performers. Five stocks gave up more than $750,000 each. Advanced Micro Devices
was your biggest retracer at $1.3 million but still remains in your portfolio
with a $700,000 gain since initial purchase in January.
Compaq Computer and Andrew Corp. lost $1 million apiece while Russell Corp.
dropped $980,000 and Diebold, Inc. fell back $865,000. All but Compaq were sold.
Your best dollar performer this quarter was Dell Computer with $4.7 million in
gains, ALONE making up for what your top FOUR backtrackers lost. Other solid
picks for you during the quarter were Tellabs with $2.5 million, Compuware Corp.
with $2.2 million, and Warner Lambert Co., BMC Software, and STERIS Corp. with
$2 million each.
3Com Corp brought you $1.8 million and Symantec Corp., TJX Companies, and
Scientific-Atlanta individually contributed gains of $1.6 million.There were 33
companies that exceeded the $750,000 mark.
GROWING YOUR FUND . . .
In each quarterly report, we highlight an employee at one of the companies in
which we invest so you can learn about those folks who are really responsible
for creating the gains you enjoy. We'd like you to meet Ivory Carson of the
Polaroid Corporation.
Ivory is a General Supervisor at a Polaroid manufacturing site in Waltham,
Massachusetts. He is responsible for a department of 125 people who assemble
all the components in film packs.
Making film packs is challenging work because it involves a complex series of
steps. Each pack has 30 components which must be assembled to close tolerances.
Every detail matters in the final product.
A West Point graduate, Ivory sees his ten years in the Army as good training for
his present job. Manufacturing is result-oriented and detail-oriented. In the
military, everything is about results and paying attention to details.
Additionally, the military and manufacturing both involve working with many
people. This interaction suits Ivory, whose greatest job satisfaction comes
from being able to tell a worker he is doing a good job.
In his ten years at Polaroid, Ivory has worked in several areas including
industrial cameras, technical films, and now consumer films. This allows him to
better understand the entire company. Looking to the future, Ivory points to
Polaroid's exciting developments in computer-based digital imaging films which
are revolutionizing photography.
Married, with four teenagers at home, Ivory still finds time to mentor college-
bound students through the Y's College Path program.
Polaroid has given Ivory the opportunity to be a high school track coach,
letting him fit coaching into a long work day which can run from 6 AM to 10 PM.
A high-energy guy, Ivory says, "I really enjoy the challenge. And, you can see
the results!"
Since purchase just in April, Polaroid has generated gains of $860,000.
- -Margaret Barton
BRANDYWINE BLUE FUND, INC.
STATEMENT OF NET ASSETS
June 30, 1997
(Unaudited)
QUOTED
SHARES OR MARKET
PRINCIPAL AMOUNT COST VALUE (B)<F4>
---------------- ---- ----------
COMMON STOCKS - 99.0% (A)<F3>
APPAREL & SHOES - 4.5%
19,300 Gucci Group, N.V. $1,224,778 $1,242,437
80,000 Intimate Brands, Inc. 1,461,273 1,680,000
115,800 Jones Apparel Group, Inc. 2,248,901 5,529,450
172,200 Liz Claiborne, Inc. 5,338,260 8,028,825
58,000 Polo Ralph Lauren Corporation 1,837,265 1,587,750
25,000 Tommy Hilfiger Corp. 1,078,703 1,004,700
75,000 The Warnaco Group, Inc. 2,109,235 2,390,625
------------- -------------
15,298,415 21,463,787
THIS SECTOR IS 40.3% ABOVE YOUR FUND'S COST.
AUTOMOTIVE & RELATED - 0.3%
40,000 Federal-Mogul Corp. 1,140,125 1,400,000
THIS SECTOR IS 22.8% ABOVE YOUR FUND'S COST.
COMMUNICATIONS - 6.6%
104,500 Bell Atlantic Corp. 7,554,891 7,928,937
40,000 Boston Technology, Inc. 1,032,412 1,182,520
27,600 Cincinnati Bell Inc. 882,279 869,400
114,300 ECI Telecom Ltd. 2,719,352 3,400,425
9,750 MasTec, Inc. 298,187 461,302
20,000 NYNEX Corp. 1,179,450 1,152,500
176,500 Octel Communications Corp. 3,875,963 4,136,807
237,300 Scientific-Atlanta, Inc. 4,352,181 5,190,937
121,900 Tellabs, Inc. 2,856,743 6,811,163
------------- -------------
24,751,458 31,133,991
THIS SECTOR IS 25.8% ABOVE YOUR FUND'S COST.
COMPUTERS & RELATED - 7.6%
120,000 Compaq Computer Corp. 12,792,632 11,910,000
64,800 Dell Computer Corp. 3,378,548 7,609,982
349,700 EMC Corp. (Mass.) 10,749,809 13,638,300
89,800 Quantum Corp. 1,725,115 1,829,675
16,200 Stratus Computer, Inc. 697,543 810,000
------------- -------------
29,343,647 35,797,957
THIS SECTOR IS 22.0% ABOVE YOUR FUND'S COST.
DEPARTMENT STORES - 4.7%
140,000 Family Dollar Stores, Inc. 3,077,410 3,815,000
362,200 Federated Department Stores, Inc. 11,799,706 12,586,450
26,800 Fred Meyer, Inc. 1,195,781 1,385,238
95,000 Nordstrom, Inc. 4,378,768 4,660,985
------------- -------------
20,451,665 22,447,673
THIS SECTOR IS 9.8% ABOVE YOUR FUND'S COST.
DISTRIBUTION - 1.2%
103,200 Kent Electronics Corp. 3,323,633 3,786,202
15,000 McKesson Corp. 1,102,683 1,162,500
25,000 Tech Data Corp. 736,980 785,950
------------- -------------
5,163,296 5,734,652
THIS SECTOR IS 11.1% ABOVE YOUR FUND'S COST.
ELECTRICAL EQUIPMENT MANUFACTURERS - 0.3%
25,800 Precision Castparts Corp. 1,296,273 1,538,325
THIS SECTOR IS 18.7% ABOVE YOUR FUND'S COST.
ELECTRONICS - 4.6%
65,200 AVX Corp. 1,445,655 1,760,400
85,000 KEMET Corp. 2,208,121 2,114,375
18,900 Microchip Technology Inc. 612,995 562,275
90,000 SCI Systems, Inc. 3,565,625 5,737,500
75,000 Tektronix, Inc. 3,719,529 4,500,000
75,000 Teradyne, Inc. 3,238,654 2,943,750
114,200 Waters Corp. 3,743,405 4,096,925
------------- -------------
18,533,984 21,715,225
THIS SECTOR IS 17.2% ABOVE YOUR FUND'S COST.
FABRIC/TEXTILES - 1.1%
50,000 Unifi, Inc. 1,596,750 1,868,750
81,000 WestPoint Stevens Inc. 2,709,329 3,169,125
------------- -------------
4,306,079 5,037,875
THIS SECTOR IS 17.0% ABOVE YOUR FUND'S COST.
FINANCIAL/BUSINESS SERVICES - 4.4%
39,750 Comdisco, Inc. 758,664 1,033,500
323,000 Conseco, Inc. 9,102,531 11,951,000
4,000 FIRSTPLUS Financial Group, Inc. 132,000 136,000
36,000 FIserv, Inc. 1,397,048 1,606,500
44,000 Household International, Inc. 4,961,736 5,167,272
27,800 Nationwide Financial Services Inc. 745,624 738,451
------------- -------------
17,097,603 20,632,723
THIS SECTOR IS 20.7% ABOVE YOUR FUND'S COST.
HEALTHCARE - 2.5%
150,000 Beverly Enterprises, Inc. 2,227,515 2,437,500
36,600 HBO & Co. 2,136,433 2,520,825
25,000 Integrated Health Services, Inc. 926,497 962,500
45,000 Renal Treatment Centers, Inc. 1,055,723 1,209,375
86,000 Shared Medical Systems Corp. 3,397,749 4,644,000
------------- -------------
9,743,917 11,774,200
THIS SECTOR IS 20.8% ABOVE YOUR FUND'S COST.
HOME/OFFICE & RELATED - 0.2%
25,000 Samsonite Corp. 1,050,000 1,103,125
THIS SECTOR IS 5.1% ABOVE YOUR FUND'S COST.
LEISURE & ENTERTAINMENT - 2.2%
70,000 Callaway Golf Co. 2,201,172 2,485,000
28,000 Interstate Hotels Company 647,928 824,264
70,700 La Quinta Inns, Inc. 1,533,026 1,546,563
85,100 Polaroid Corp. 3,862,861 4,723,050
50,000 Prime Hospitality Corp. 835,802 987,500
------------- -------------
9,080,789 10,566,377
THIS SECTOR IS 16.4% ABOVE YOUR FUND'S COST.
MACHINERY/CONSTRUCTION & MISCELLANEOUS MANUFACTURING - 2.9%
50,000 AGCO Corp. 1,425,000 1,796,900
105,000 Carpenter Technology Corp. 4,509,100 4,803,750
80,000 Cincinnati Milacron Inc. 2,010,596 2,075,040
256,300 Coltec Industries Inc. 4,825,539 4,997,850
------------- -------------
12,770,235 13,673,540
THIS SECTOR IS 7.1% ABOVE YOUR FUND'S COST.
MEDICAL/DENTAL PRODUCTS & SERVICES - 2.8%
89,100 AmeriSource Health Corp. 3,989,821 4,443,862
50,000 Sofamor/Danek Group, Inc. 2,302,535 2,287,500
140,600 STERIS Corp. 3,897,672 5,254,925
36,100 Sybron International Corp. 1,015,768 1,439,488
------------- -------------
11,205,796 13,425,775
THIS SECTOR IS 19.8% ABOVE YOUR FUND'S COST.
NETWORKING - 5.9%
327,950 3Com Corp. 12,933,686 14,757,750
240,000 Bay Networks, Inc. 5,960,805 6,375,120
100,500 Cisco Systems Inc. 6,246,400 6,746,063
------------- -------------
25,140,891 27,878,933
THIS SECTOR IS 10.9% ABOVE YOUR FUND'S COST.
OIL/GAS FIELD SERVICES - 8.5%
100,100 BJ Services Co. 4,680,785 5,367,862
70,000 Cooper Cameron Corp. 2,303,308 3,272,500
139,800 J. Ray McDermott, S.A. 3,805,408 3,774,600
26,000 Marine Drilling Companies, Inc. 477,667 510,250
125,000 McDermott International, Inc. 3,248,207 3,648,500
211,800 Nabors Industries, Inc. 4,517,617 5,295,000
30,200 Noble Drilling Corp. 424,612 681,403
65,000 Nuevo Energy Co. 2,501,125 2,665,000
155,000 Rowan Companies, Inc. 2,594,130 4,369,140
100,600 Santa Fe International Corporation 2,867,100 3,420,400
15,000 Transocean Offshore Inc. 1,076,580 1,089,375
70,000 Varco International, Inc. 2,032,132 2,257,500
131,400 Vintage Petroleum, Inc. 4,178,986 4,040,550
------------- -------------
34,707,657 40,392,080
THIS SECTOR IS 16.4% ABOVE YOUR FUND'S COST.
PHARMACEUTICALS - 2.2%
85,000 Warner-Lambert Co. 8,492,493 10,561,250
THIS SECTOR IS 24.4% ABOVE YOUR FUND'S COST.
SEMICONDUCTORS & RELATED - 5.7%
225,600 Advanced Micro Devices, Inc. 6,916,819 8,121,600
30,000 Cypress Semiconductor Corp. 434,550 435,000
33,400 Hadco Corp. 1,937,125 2,187,700
63,500 International Rectifier Corp. 1,082,284 1,182,687
25,000 Lattice Semiconductor Corp. 1,250,000 1,412,500
320,000 National Semiconductor Corp. 7,658,064 9,800,000
51,250 Vishay Intertechnology, Inc. 1,548,640 1,483,073
90,000 VLSI Technology, Inc. 2,045,415 2,126,250
------------- -------------
22,872,897 26,748,810
THIS SECTOR IS 16.9% ABOVE YOUR FUND'S COST.
SOFTWARE - 9.1%
143,000 Autodesk, Inc. 4,819,857 5,478,759
215,000 BMC Software, Inc. 9,991,345 11,905,625
80,000 Compuware Corp. 1,420,627 3,820,000
156,300 Electronic Arts Inc. 4,161,746 5,255,588
137,200 Electronics for Imaging, Inc. 5,128,408 6,482,700
124,100 Sterling Software, Inc. 3,767,772 3,878,125
309,400 Symantec Corp. 5,044,976 6,033,300
------------- -------------
34,334,731 42,854,097
THIS SECTOR IS 24.8% ABOVE YOUR FUND'S COST.
SPECIALTY RETAILING - 8.1%
190,000 Borders Group, Inc. 3,414,357 4,583,750
250,700 Claire's Stores, Inc. 3,985,356 4,387,250
236,300 CompUSA Inc. 4,738,706 5,080,450
20,000 Costco Companies, Inc. 544,656 657,500
30,000 Mac Frugal's Bargains o
Close-outs Inc. 638,994 817,500
10,000 Payless ShoeSource, Inc. 298,067 546,880
130,500 Rite Aid Corp. 5,835,802 6,508,688
90,000 Ross Stores, Inc. 2,111,026 2,941,920
81,400 Staples, Inc. 1,799,705 1,892,550
49,300 Tiffany & Co. 1,721,751 2,277,068
320,400 TJX Companies, Inc. 4,900,741 8,450,550
------------- -------------
29,989,161 38,144,106
THIS SECTOR IS 27.2% ABOVE YOUR FUND'S COST.
TRANSPORTATION & RELATED - 6.2%
38,300 America West Holdings 570,643 555,350
170,000 Caliber System, Inc. 5,972,049 6,332,500
142,000 CNF Transportation, Inc. 3,985,320 4,579,500
85,000 Comair Holdings, Inc. 1,858,500 2,353,480
70,000 Gulfstream Aerospace Corp. 2,020,478 2,065,000
25,000 Hertz Corp. 727,690 900,000
211,900 Southwest Airlines Co. 4,925,960 5,482,913
194,900 US Airways Group, Inc. 5,516,462 6,821,500
------------- -------------
25,577,102 29,090,243
THIS SECTOR IS 13.7% ABOVE YOUR FUND'S COST.
MISCELLANEOUS - 7.4%
159,300 The B.F. Goodrich Company 6,807,894 6,899,761
174,200 Corning Inc. 8,361,413 9,689,875
302,000 The Dial Corp. 4,407,766 4,718,750
110,000 The Lubrizol Corp. 4,166,915 4,613,180
164,000 Ogden Corp. 3,412,513 3,567,000
250,000 Philip Services Corp. 3,898,730 3,968,750
75,000 RPM, INC. 1,268,587 1,378,125
------------- -------------
32,323,818 34,835,441
THIS SECTOR IS 7.8% ABOVE YOUR FUND'S COST.
TOTAL COMMON STOCKS 394,672,032 467,950,185
SHORT-TERM INVESTMENTS - 1.0% (A) <F3>
COMMERCIAL PAPER - 0.6%
$3,000,000 Household Finance Corp., 3,000,000 3,000,000
due 07/01/97, discount of 6.20%
VARIABLE RATE DEMAND NOTES - 0.4%
1,846,520 Wisconsin Electric Power Company 1,846,520 1,846,520
------------- -------------
Total short-term investments 4,846,520 4,846,520
------------- -------------
Total investments $399,518,552 472,796,705
=============
Cash and receivables, less
liabilities 0.0% (a)<F3> 157,666
------------
NET ASSETS $472,954,371
============
Net Asset Value Per Share
($0.01 par value 100,000,000
shares authorized), offering
and redemption price
($472,954,371 / 15,852,219
shares outstanding) $29.84
======
(a)<F3>Percentages for the various classifications relate to net assets.
(b)<F4>Each security, excluding short-term investments, is valued at the last
sales pricem reported by the principal security exchange on which the issue is
traded, or if no sale is reported, the last bid price. Securities which are
traded over-the-counter are valued at the latest bid price. Short-term
investments are valued at amortized cost which approximates quoted market value.
TOP TEN . . .
Purchases of 3Com Corp., Bay Networks, and Cisco Systems brought Networking back
this quarter as your seventh largest industry group with 5.9 percent. Together,
these companies have already brought you nearly $3 million.
Computers & Related was pared back to 7.6 percent, dropping to number four from
the top spot in March. Adaptec and Western Digital were sold completely along
with a large portion of your Dell position, nailing down profits of more than $6
million.
Software is your number one category, even though it dropped slightly from 9.7
percent to 9.1 percent. Sales in Cognos Corp., Sterling Commerce and half of
your Compuware Corp. shares yielded more than $2 million.
Leaving your Top Ten this quarter were Apparel & Shoes, dropping from 8.1 in
March to 4.5 today, Financial/Business Services which moved from 7.0 percent to
4.4 percent, and Healthcare, decreasing from 3.1 to 2.5 percent.
TOP TEN INDUSTRY GROUPS
Software 9.1%
Oil/Gas Field Services 8.5%
Specialty Retailing 8.1%
Computers & Related 7.6%
Communications 6.6%
Transportation & Related 6.2%
Networking 5.9%
Semiconductors & Related 5.7%
Department Stores 4.7%
Electronics 4.6%
Cash 1.0%
All Others 32.0%
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 P.O. Box 4166, Greenville, DE 19807 [email protected]
Investment Adviser: FRIESS ASSOCIATES, INC.
Custodian, Transfer Agent: FIRSTAR TRUST COMPANY
Independent Accountants: PRICE WATERHOUSE LLP
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. Past performance is not indicative of future
performance. Investment return and principal value of an investment may
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
Report editor: Rebecca A. Buswell
Report Staff: Margaret Barton, Paul R. Robinson, Jennifer Weldon
