THE BRANDYWINE FUNDS
Managed by Friess Associates, Inc. Semi-Annual Report March 31, 1999
Dear Fellow Shareholders:
We hope you like the new, expanded two-section report designed to give you
more information on the companies you own, why you bought them, and how you
fared. Please give us your feedback as to how we can improve reporting to serve
you even more effectively. For your convenience, there is a response sheet on
page 13 of "Looking Forward."
In the March quarter, Brandywine Fund was up 2.6 percent and Blue rose 3.4
percent. The chart below shows how your Funds compared to the various indexes.
MARCH 1999 QUARTER
Percent return
S&P Small Cap -9.2%
S&P Midcap -6.7%
Russell 2000 -5.7%
Russell Midcap -0.9%
Wilshire Small Cap -0.8%
Brandy Wine Fund 2.6%
Brandywine Blue 3.4%
S&P 500 Total Return 4.9%
NASDAQ Industrials 6.3%
The performance of the 50 mega-multiple, highly visible, stocks that
dominated the S&P 500 is incredible. Our strict PE-ratio discipline that keeps
the Brandywine Funds' average PE at 24 times 1999 earnings precludes our
participation in many of these glamour stocks.
The prudence of buying companies at reasonable prices is all the more
evident when you consider annual earnings growth rates of 32 percent for
Brandywine and 34 percent for Blue, compared to just 7 percent for the S&P 500.
Some of your larger company picks like Sun Microsystems, EMC, Providian, and
Nokia fared very well, all being up well over 20 percent during the quarter. If
we had not increased our positions in bigger companies above $5 billion in
market capitalization, our performance would have further trailed the Dow's 30
high flyers and the small number of top performers driving the S&P 500 and
Nasdaq. We discuss this phenomenon in greater detail in "Looking Forward."
The following table outlines the performance of Brandywine and Brandywine
Blue Fund for recent periods ending March 31, 1999.
BRANDYWINE BRANDYWINE BLUE
% CHANGE % CHANGE
Quarter 2.6 3.4
Six Months (Fiscal YTD) 21.2 22.9
One Year -0.9 -1.1
Since October 8 low 48.0 50.7
Three Years (Annualized) 34.4 (10.4) 37.8 (11.3)
Five Years (Annualized) 93.9 (14.2) 104.5 (15.4)
Ten Years (Annualized) 398.2 (17.4) N/A
Inception 670.0 (16.7)*<F1>310.2 (18.7)**<F2>
*<F1> 12/30/85
**<F2> 1/10/91
On pages 4 and 5 you'll find a chart detailing the market-cap mix in each
Fund, which shows the migration toward some of the larger companies with strong
earnings growth and good prospects
We're not forgetting the ferocity with which disappointment is greeted in
the current market environment. Compaq Computer, for example, dropped 24 percent
after announcing April 9 that pricing pressure would force the #1 PC maker to
miss March quarter consensus earnings estimates. Compaq's price has been cut in
half since its year-to-date high of $52. David Harrington's research that had us
exit Compaq in October proved accurate although some may have second-guessed
David as Compaq ran up through winter.
We've weathered what's amounted to a two-year bear market in small-cap
securities, finding the current mega-cap mania unfounded based on investment
fundamentals. We look forward to a powerful turn that will eventually recognize
and reward America's most dynamic companies, and our research team and
disciplines are poised to take advantage when this occurs.
Thanks again for the trust and faith you've placed in us to capitalize on
that turn when it comes. We appreciate your giving us the opportunity to put our
fundamentals-based approach to work for you.
Sincerely,
/s/ Foster
Foster Friess
President
April 12, 1999
In place of our traditional "All Is Not Roses" piece, we thought you might
enjoy a more detailed explanation of your Funds' biggest losers, as well as your
biggest winners. So, beginning this quarter, you'll find on the following two
pages the Funds' "Roses and Thorns."
BRANDYWINE FUND
MARCH QUARTER "ROSES AND THORNS"
$ GAIN
ROSES (IN MILLIONS) REASON FOR MOVE
EMC Corp. $68 Demand for the company's data-storage products
continues to increase with growth in computer
network and Internet use. New product
introductions and limited competition strengthen
its leading market-share position. Exceeded
consensus earnings estimates in its most recent
quarter.
Sun Microsystems $65 Demand for the company's server products continues
to increase with growth in computer network and
Internet use, helping the company beat earnings
expectations in its most recent quarter. Product
momentum also contributes to the bottom line.
Nokia Corp. $64 Aggressive new product platform and limited
competition allows the leading supplier of
cellular handsets in the United States and Europe
to continue to win market share in 1999.
Significant year-over-year revenue growth in its
latest quarter helped it exceed consensus earnings
estimates by 11 percent.
Tellabs, Inc. $64 Strong demand for voice, data and video
transmission systems helped the company increase
revenues by 47 percent in its most recent quarter.
Exceeded consensus earnings estimates, and is
expected to boost profits by nearly one-third
versus a year ago in the upcoming quarter.
Dayton Hudson Corp.$38 Its flagship Target stores have shown strong same-
store sales growth amid robust consumer spending.
Also staging a turnaround at its Mervyn's stores.
Same-store and total sales increased 12.9 and 17.5
percent in March. Exceeded consensus earnings
estimates in its most recent quarter.
$ LOSS
THORNS (IN MILLIONS) REASON FOR MOVE
3 Com Corp. $78 Company fell short of revenue and earnings
expectations, as its modem and network connector
card products faced pricing pressure. Softening
PC demand and an announcement that competitor
Cisco Systems would be more aggressive in pursuing
smaller business customers also impacted stock
price.
Micro Warehouse $31 Direct marketer of computer products fell as news
of softening PC demand spread. Increased pricing
competition among computer resellers also
contributed to decline. Company exceeded
consensus earnings estimates for its most recent
quarter, but the broader factors overshadowed the
earnings performance.
Cendant Corp. $23 Stock was purchased after accounting
irregularities that surfaced in April 1998
prompted a dramatic sell-off. Lingering concern
continues to mask the company's fundamental
progress. Company, which franchises Century 21,
Ramada, Avis and other operations in the real
estate and travel industries, exceeded consensus
earnings estimates in its most recent quarter.
SCI Systems $23 This electronics company with significant
operations in Latin America fell as the
devaluation of the Brazilian currency trimmed 8
cents a share from earnings in its most recent
quarter, contributing to an earnings shortfall.
Softening PC demand and a slowing European market
also contributed to the decline.
Fore Systems $16 Stock suffered as company announced revenue
shortfall in its most recent quarter.
Preannounced earnings disappointment from 3Com and
softening PC demand in the United States and Latin
America also contributed to this networking
product and software company's decline.
BRANDYWINE BLUE FUND
MARCH QUARTER "ROSES AND THORNS"
$ GAIN
ROSES (IN MILLIONS) REASON FOR MOVE
Providian Financial$6.8 New accounts for this consumer lender tripled in
the past year, helping the company exceed
consensus estimates in its latest quarter with a
77 percent year-over-year gain. Fee-based
products are also showing strong growth.
Nokia Corp. $4.2 Aggressive new product platform and limited
competition allows the leading supplier of
cellular handsets in the United States and Europe
to continue to win market share in 1999.
Significant year-over-year revenue growth in its
latest quarter helped it exceed consensus earnings
estimates by 11 percent.
EMC Corp. $4.1 Demand for the company's data-storage products
continues to increase with growth in computer
network and Internet use. New product
introductions and limited competition strengthen
its leading market-share position. Exceeded
consensus earnings estimates in its most recent
quarter.
Sun Microsystems $3.6 Demand for the company's server products continues
to increase with growth in computer network and
Internet use, helping the company beat earnings
expectations in its most recent quarter. Product
momentum also contributes to the bottom line.
Frontier Corp. $3.2 Strong demand for telecommunications services
helped the company exceed consensus earnings
estimates in its most recent quarter. In March,
Global Crossing offered to acquire Frontier for
what represented a premium of 39 percent over the
previous day's closing price.
$ LOSS
THORNS (IN MILLIONS) REASON FOR MOVE
3Com Corp. $6.3 Company fell short of revenue and earnings
expectations, as its modem and network connector
card products faced pricing pressure. Softening
PC demand and an announcement that competitor
Cisco Systems would be more aggressive in pursuing
smaller business customers also impacted stock
price.
Micro Warehouse $3.2 Direct marketer of computer products fell as news
of softening PC demand spread. Increased pricing
competition among computer resellers also
contributed to decline. Company exceeded
consensus earnings estimates for its most recent
quarter, but the broader factors overshadowed the
earnings performance.
SCI Systems, Inc. $2.9 This electronics company with significant
operations in Latin America fell as the
devaluation of the Brazilian currency trimmed 8
cents a share from earnings in its most recent
quarter, contributing to an earnings shortfall.
Softening PC demand and a slowing European market
also contributed to the decline.
Cendant Corp. $1.1 Stock was purchased after accounting
irregularities that surfaced in April 1998
prompted a dramatic sell-off. Lingering concern
continues to mask the company's fundamental
progress. Company, which franchises Century 21,
Ramada, Avis and other operations in the real
estate and travel industries, exceeded consensus
earnings estimates in it's most recent quarter.
Fore Systems $1.1 Stock suffered as company announced revenue
shortfall in its most recent quarter.
Preannounced earnings disappointment from 3Com and
softening PC demand in the United States and Latin
America also contributed to this networking
product and software company's decline.
BRANDYWINE FUND
TOP 10 HOLDINGS: (represents 37.6% of the portfolio)
1. Nokia Corp. ADR 6. Tyco International Ltd.
2. Tellabs, Inc. 7. Parametric Technology
3. Dayton Hudson Corp. 8. NCR Corp.
4. EMC Corp. 9. Corning, Inc.
5. Sun Microsystems 10. Gap, Inc.
EARNINGS GROWTH
FORECASTED INCREASE IN EARNINGS PER SHARE
1999 VS 1998
Your Companies 32%
S&P 500 7%
S&P MidCap 24%
All figures are dollar weighted. Analysis by Baseline. March 31, 1999.
YOUR COMPANIES' MARKET CAPITALIZATION
LARGE CAP $5 billion and over 60.1%
MID CAP $1 billion to $5 billion 27.5%
SMALL CAP below $1 billion 9.7%
CASH 2.7%
TOP TEN INDUSTRY GROUPS
Computer & Related 14.7%
Communications 14.4%
Specialty Retailing 14.4%
Software 10.5%
Financial/Business Services 6.6%
Machinery & Miscellaneous Manufacturing 6.5%
Apparel & Shoe Retailers 6.5%
Textiles/Apparel Manufacturing 3.1%
Leisure & Entertainment 2.9%
Semiconductor & Related 2.8%
Cash 2.7%
All Others 14.9%
BRANDYWINE BLUE FUND
TOP 10 HOLDINGS: (represents 37.6% of the portfolio)
1. Seagate Technology 6. EMC Corp.
2. Parametric Technology 7. Dayton Hudson Corp.
3. Nokia Corp. ADR 8. Providian Financial
4. Tyco International Ltd. 9. Sun Microsystems
5. TJX Companies, Inc. 10. NCR Corp.
EARNINGS GROWTH
FORECASTED INCREASE IN EARNINGS PER SHARE
1999 VS 1998
Your Companies 34%
S&P 500 7%
S&P MidCap 24%
All figures are dollar weighted. Analysis by Baseline. March 31, 1999.
YOUR COMPANIES' MARKET CAPITALIZATION
LARGE CAP $5 billion and over 62.6%
MID CAP $1 billion to $5 billion 33.5%
SMALL CAP $500 million to $1 billion 2.4%
CASH 1.5%
TOP TEN INDUSTRY GROUPS
Computer & Related 14.7%
Specialty Retailing 13.3%
Software 12.5%
Communications 11.3%
Apparel & Shoe Retailers 9.7%
Financial/Business Services 9.1%
Machinery & Miscellaneous Manufacturing 6.5%
Semiconductor & Related 4.2%
Textiles/Apparel Manufacturing 3.8%
Leisure & Entertainment 2.2%
Cash 1.5%
All Others 11.2%
BRANDYWINE FUND, INC.
STATEMENT OF NET ASSETS
March 31, 1999
(Unaudited)
QUOTED
MARKET
SHARES COST VALUE
------ ---- -----
LONG-TERM INVESTMENTS - 97.3% (A)<F4>
COMMON STOCKS - 97.3% (A) <F4>
APPAREL & SHOE RETAILERS - 6.5%
73,200 American Eagle Outfitters, Inc.*<F3> $5,135,002 $5,247,562
72,500 The Buckle, Inc.*<F3> 1,996,113 1,631,250
30,000 Footstar, Inc.*<F3> 800,975 960,000
1,673,700 Gap, Inc. 60,769,229 112,661,768
230,000 Intimate Brands, Inc. 6,933,677 11,068,750
50,000 Kenneth Cole Productions, Inc.*<F3> 1,238,060 1,318,750
524,000 NIKE, Inc. Cl B 27,267,340 30,228,512
120,500 Pacific Sunwear of
California, Inc.*<F3> 3,112,344 4,187,375
201,900 Payless ShoeSource, Inc.*<F3> 9,993,248 9,388,350
320,600 Talbots, Inc. 9,774,632 7,814,625
2,745,300 TJX Companies, Inc. 75,028,638 93,340,200
126,100 The Wet Seal, Inc.*<F3> 3,712,504 4,649,937
-------------- -------------
205,761,762 282,497,079
THIS SECTOR IS 37.3% ABOVE YOUR FUND'S COST.
AUTOMOTIVE & RELATED - 0.1%
62,000 CSK Auto Corp.*<F3> 1,430,995 1,856,156
63,500 Sonic Automotive, Inc.*<F3> 1,021,366 984,250
-------------- -------------
2,452,361 2,840,406
THIS SECTOR IS 15.8% ABOVE YOUR FUND'S COST.
BUILDING & RELATED- -2.6%
542,300 Hussmann International, Inc. 10,228,617 7,965,302
1,778,400 Lowe's Companies, Inc. 109,716,476 107,593,200
-------------- -------------
119,945,093 115,558,502
THIS SECTOR IS 3.7% BELOW YOUR FUND'S COST.
COMMUNICATIONS - 14.4%
386,100 ADC Telecommunications, Inc.*<F3> 14,854,214 18,412,337
351,300 ANTEC Corp.*<F3> 6,597,974 7,552,950
425,800 AT&T Corp. 24,771,256 33,984,375
464,400 Comverse Technology, Inc.*<F3> 22,506,329 39,474,000
1,051,800 MCI WorldCom Inc.*<F3> 96,237,504 93,150,563
1,307,200 Nokia Corp. "A" ADR 102,090,025 203,596,400
286,400 Northern Telecom Limited 17,666,888 17,792,600
66,100 Plantronics, Inc.*<F3> 4,280,605 4,135,414
1,080,600 Tel-Save.com, Inc.*<F3> 16,059,018 11,279,303
2,057,500 Tellabs, Inc.*<F3> 136,052,328 201,120,625
-------------- -------------
441,116,141 630,498,567
THIS SECTOR IS 42.9% ABOVE YOUR FUND'S COST.
COMPUTER & RELATED - 14.7%
42,000 Advanced Digital
Information Corp.*<F3> 617,874 695,646
1,503,600 EMC Corp. (Mass.)*<F3> 60,244,316 192,084,900
783,900 Mastech Corp.*<F3> 15,847,238 10,190,700
128,900 Mercury Computer Systems Inc.*<F3> 3,068,610 2,320,200
2,662,500 NCR Corp.*<F3> 129,752,331 133,125,000
250,000 The Santa Cruz Operation*<F3> 1,238,850 1,359,500
3,740,900 Seagate Technology, Inc.*<F3> 90,669,780 110,592,226
1,520,600 Sun Microsystems, Inc.*<F3> 73,413,460 190,170,798
-------------- -------------
374,852,459 640,538,970
THIS SECTOR IS 70.9% ABOVE YOUR FUND'S COST.
ELECTRONICS - 2.7%
230,000 Aeroflex Inc.*<F3> 3,529,985 3,277,500
98,100 Alpha Industries, Inc.*<F3> 2,309,947 1,802,588
1,309,700 Analog Devices, Inc.*<F3> 39,300,655 38,963,575
137,600 Artesyn Technologies, Inc.*<F3> 2,219,337 1,702,800
320,300 CommScope, Inc.*<F3> 6,387,550 6,706,441
617,400 CTS Corp. 27,376,454 30,523,021
140,200 Rayovac Corp.*<F3> 3,867,849 3,864,333
466,700 Sawtek Inc.*<F3> 10,010,131 15,751,125
449,000 SCI Systems, Inc.*<F3> 17,298,007 13,301,625
160,500 VWR Scientific Products Corp.*<F3> 3,823,264 3,611,250
-------------- -------------
116,123,179 119,504,258
THIS SECTOR IS 2.9% ABOVE YOUR FUND'S COST.
FINANCIAL/BUSINESS SERVICES - 6.6%
103,900 Advance Paradigm, Inc.*<F3> 2,848,823 6,565,233
51,600 AHL Services, Inc.*<F3> 1,512,788 1,057,800
453,100 Amdocs Limited*<F3> 5,304,520 9,798,288
733,100 AmeriCredit Corp.*<F3> 8,009,127 9,621,937
176,900 Astoria Financial Corp. 8,732,905 8,845,000
892,900 Bank One Corp. 47,144,758 49,165,753
336,400 Charter One Financial, Inc. 10,159,112 9,708,168
1,114,800 The CIT Group, Inc. 30,182,616 34,071,632
383,300 Copart, Inc.*<F3> 6,265,659 7,953,475
508,000 Dime Bancorp, Inc. 13,095,160 11,779,504
359,500 Golden State Bancorp Inc.*<F3> 7,818,114 7,998,875
494,400 Heller Financial, Inc. 13,166,435 11,618,400
2,139,700 MedPartners, Inc.*<F3> 12,675,426 10,163,575
34,000 MedQuist Inc.*<F3> 1,069,695 1,020,000
398,500 NOVA Corp./Georgia*<F3> 12,205,991 10,460,625
718,000 Providian Financial Corp. 27,891,099 78,980,000
10,000 Remedy Corp.*<F3> 130,000 140,000
307,200 Sykes Enterprises, Inc.*<F3> 6,230,417 9,926,554
360,200 United Rentals
(North America), Inc.*<F3> 12,213,961 10,265,700
-------------- -------------
226,656,606 289,140,519
THIS SECTOR IS 27.6% ABOVE YOUR FUND'S COST.
FOOD/RESTAURANTS - 1.7%
252,400 CEC Entertainment Inc.*<F3> 5,814,177 9,054,850
54,800 Foodmaker, Inc.*<F3> 1,264,802 1,397,400
571,350 Outback Steakhouse, Inc.*<F3> 12,253,459 18,711,713
73,000 Performance Food Group Co.*<F3> 1,596,875 1,916,250
100,000 RARE Hospitality Int'l, Inc.*<F3> 1,362,500 1,375,000
96,100 Sonic Corp.*<F3> 2,362,704 2,588,742
1,378,800 Wendy's International, Inc. 39,024,857 39,210,314
-------------- -------------
63,679,374 74,254,269
THIS SECTOR IS 16.6% ABOVE YOUR FUND'S COST.
LEISURE & ENTERTAINMENT - 2.9%
911,700 Boyds Collection, Ltd.*<F3> 16,416,702 16,410,600
1,468,500 Gemstar International
Group Limited*<F3> 63,548,051 110,504,625
-------------- -------------
79,964,753 126,915,225
THIS SECTOR IS 58.7% ABOVE YOUR FUND'S COST.
MACHINERY & MISCELLANEOUS MANUFACTURING - 6.5%
291,100 Aviation Sales Co.*<F3> 13,413,836 12,953,950
1,880,300 Corning Inc. 107,287,696 112,818,000
2,132,900 Tyco International Ltd. 128,144,779 153,035,575
379,700 Wallace Computer Services, Inc. 9,217,029 7,522,996
-------------- -------------
258,063,340 286,330,521
THIS SECTOR IS 11.0% ABOVE YOUR FUND'S COST.
MEDICAL & RELATED - 1.6%
100,000 Alternative Living
Services, Inc.*<F3> 2,244,750 2,000,000
120,500 CareMatrix Corp.*<F3> 3,229,714 2,289,500
954,700 Humana Inc.*<F3> 19,168,975 16,468,575
792,600 Orthodontic Centers
of America Inc.*<F3> 12,907,782 12,483,450
304,900 Pediatrix Medical Group, Inc.*<F3> 15,580,529 8,575,312
284,200 Sunrise Assisted Living, Inc.*<F3> 10,682,875 12,949,005
654,300 Sybron International Corp.*<F3> 15,227,524 16,357,500
-------------- -------------
79,042,149 71,123,342
THIS SECTOR IS 10.0% BELOW YOUR FUND'S COST.
OIL/GAS FIELD SERVICES - 0.2%
300,000 Baker Hughes Inc.*<F3> 7,481,730 7,293,900
THIS SECTOR IS 2.5% BELOW YOUR FUND'S COST.
PHARMACEUTICALS - 1.6%
1,041,900 AmeriSource Health Corp.*<F3> 27,564,921 35,620,477
80,000 ChiRex Inc.*<F3> 1,625,624 1,960,000
616,500 Dura Pharmaceuticals, Inc.*<F3> 7,789,208 8,708,062
1,228,500 IVAX Corp.*<F3> 17,012,029 14,512,271
90,100 Jones Pharma Inc. 2,971,651 3,130,975
227,700 Medicis Pharmaceutical Corp.*<F3> 6,348,481 6,831,000
-------------- -------------
63,311,914 70,762,785
THIS SECTOR IS 11.8% ABOVE YOUR FUND'S COST.
POLLUTION/CONTROL SERVICES - 2.5%
396,700 Safety-Kleen Corp.*<F3> 4,957,359 5,256,275
176,700 Superior Services Inc.*<F3> 3,568,517 3,500,957
97,000 US Liquids Inc.*<F3> 2,037,000 2,085,500
2,238,400 Waste Management, Inc. 101,850,145 99,329,000
-------------- -------------
112,413,021 110,171,732
THIS SECTOR IS 2.0% BELOW YOUR FUND'S COST.
REAL ESTATE OPERATIONS - 0.1%
434,000 Bluegreen Corp.*<F3> 3,438,579 2,115,750
108,000 ResortQuest International, Inc.*<F3> 2,232,093 1,728,000
-------------- -------------
5,670,672 3,843,750
THIS SECTOR IS 32.2% BELOW YOUR FUND'S COST.
SEMICONDUCTOR & RELATED - 2.8%
1,164,000 Adaptec, Inc.*<F3> 28,172,242 26,554,332
118,600 DSP Communications, Inc.*<F3> 1,819,444 1,882,775
225,000 MMC Networks, Inc.*<F3> 3,164,185 3,600,000
921,400 Motorola, Inc. 64,468,052 67,492,550
94,200 Semtech Corp.*<F3> 2,914,394 3,002,625
217,900 TranSwitch Corp.*<F3> 7,686,456 9,859,975
723,200 Unitrode Corp.*<F3> 12,496,871 10,260,762
-------------- -------------
120,721,644 122,653,019
THIS SECTOR IS 1.6% ABOVE YOUR FUND'S COST.
SOFTWARE - 10.5%
20,000 Advent Software, Inc.*<F3> 751,876 1,000,000
1,008,200 Autodesk, Inc. 44,804,348 40,769,592
526,600 AXENT Technologies, Inc.*<F3> 19,192,644 12,671,576
315,400 Check Point Software
Technologies Ltd.*<F3> 12,613,289 13,562,200
1,335,600 Citrix Systems, Inc.*<F3> 32,837,284 50,919,750
1,115,500 Electronic Arts Inc.*<F3> 36,273,719 52,986,250
855,500 Electronics for Imaging, Inc.*<F3> 22,625,099 33,364,500
123,100 GT Interactive Software Corp.*<F3> 793,328 569,337
40,000 Landmark Systems Corp.*<F3> 512,375 362,520
212,900 Medical Manager Corp.*<F3> 4,923,910 4,923,312
7,627,800 Parametric Technology Corp.*<F3> 116,968,724 150,649,050
1,045,800 Rational Software Corp.*<F3> 16,487,111 28,041,035
200,000 Segue Software, Inc.*<F3> 2,371,748 1,925,000
528,200 Sterling Commerce, Inc.*<F3> 16,276,049 16,242,150
1,476,600 Sterling Software, Inc.*<F3> 24,191,155 35,069,250
959,200 Symantec Corp.*<F3> 19,113,606 16,246,930
-------------- -------------
370,736,265 459,302,452
THIS SECTOR IS 23.9% ABOVE YOUR FUND'S COST.
SPECIALTY RETAILING - 14.4%
940,900 BJ's Wholesale Club, Inc.*<F3> 20,293,982 24,875,514
279,800 CellStar Corp.*<F3> 2,883,409 2,902,925
6,835,600 Cendant Corp.*<F3> 134,143,800 107,660,700
822,300 Circuit City Stores-
Circuit City Group 62,035,917 63,008,737
682,400 Claire's Stores, Inc. 15,010,459 20,557,300
82,500 Cost Plus, Inc. - California*<F3> 1,981,051 2,423,438
805,500 Costco Companies, Inc.*<F3> 65,346,294 73,753,997
2,947,700 Dayton Hudson Corp. 135,355,709 196,390,513
99,200 Electronic Boutique
Holdings Corp.*<F3> 1,762,797 1,376,400
1,296,200 Family Dollar Stores, Inc. 12,152,560 29,812,600
223,800 Insight Enterprises, Inc.*<F3> 6,687,808 5,539,050
3,242,100 Kmart Corp.*<F3> 54,678,212 54,509,427
732,300 The Sports Authority, Inc.*<F3> 4,415,894 5,355,310
565,700 Toys 'R' Us, Inc.*<F3> 9,954,012 10,642,514
533,300 Williams-Sonoma, Inc.*<F3> 16,146,436 15,065,725
427,900 Zale Corp.*<F3> 11,591,205 14,629,045
-------------- -------------
554,439,545 628,503,195
THIS SECTOR IS 13.4% ABOVE YOUR FUND'S COST.
TEXTILES/APPAREL MANUFACTURING - 3.1%
1,706,700 Jones Apparel Group, Inc.*<F3> 46,637,975 47,681,785
1,256,700 Polo Ralph Lauren Corp.*<F3> 29,025,473 24,976,912
79,200 Quiksilver, Inc.*<F3> 2,505,158 3,346,200
845,800 Tommy Hilfiger Corp.*<F3> 49,554,705 58,254,475
42,500 Tropical Sportswear Int'l Corp.*<F3> 1,253,689 865,938
-------------- -------------
128,977,000 135,125,310
THIS SECTOR IS 4.8% ABOVE YOUR FUND'S COST.
TRANSPORTATION & RELATED - 0.7%
172,800 Atlas Air, Inc.*<F3> 3,981,485 4,978,887
574,700 CNF Transportation Inc. 24,908,541 21,731,131
175,000 Frontier Airlines, Inc.*<F3> 1,339,500 1,728,125
-------------- -------------
30,229,526 28,438,143
THIS SECTOR IS 5.9% BELOW YOUR FUND'S COST.
MISCELLANEOUS - 1.1%
65,000 Calpine Corp.*<F3> 2,255,922 2,368,470
331,000 Church & Dwight Co. 13,570,115 13,488,250
25,000 Fossil, Inc.* <F3> 727,813 745,325
149,100 Mohawk Industries, Inc.*<F3> 3,824,727 4,473,000
323,200 Montana Power Co. 23,944,801 23,775,562
192,400 Shorewood Packaging Corp.*<F3> 3,839,013 3,775,850
-------------- -------------
48,162,391 48,626,457
-------------- -------------
THIS SECTOR IS 1.0% ABOVE YOUR FUND'S COST.
Total common stocks 3,409,800,925 4,253,922,401
WARRANTS - 0.0% (A)
43 Sound Advice, Inc.*<F3>
Warrants, 06/14/99 0 0
-------------- -------------
Total long-term investments 3,409,800,925 4,253,922,401
SHORT-TERM INVESTMENTS - 3.2% (A)<F4>
COMMERCIAL PAPER - 3.1%
$20,000,000 Associates Corp. of North America,
due 04/01/99, discount of 5.03% 20,000,000 20,000,000
20,000,000 Household Finance Corp.,
due 04/01/99, discount of 5.02% 20,000,000 20,000,000
25,000,000 Ford Motor Credit Europe,
due 04/05/99, discount of 4.90% 24,986,389 24,986,389
30,000,000 General Electric Co.,
due 04/06/99, discount of 4.92% 29,979,500 29,979,500
25,000,000 Salomon Smith Barney,
due 04/06/99, discount of 4.90% 24,982,986 24,982,986
15,000,000 Sears Roebuck Acceptance Corp.,
due 04/07/99, discount of 4.90% 14,987,750 14,987,750
-------------- -------------
Total commercial paper 134,936,625 134,936,625
VARIABLE RATE DEMAND NOTE - 0.1%
4,942,774 Firstar Bank U.S.A., N.A. 4,942,774 4,942,774
-------------- -------------
Total short-term investments 139,879,399 139,879,399
-------------- -------------
Total investments $3,549,680,324 4,393,801,800
==============
Liabilities, less cash and
receivables (0.5%) (A)<F4> (20,304,403)
--------------
NET ASSETS $4,373,497,397
==============
Net Asset Value Per Share
($0.01 par value 500,000,000
shares authorized), offering
and redemption price
($4,373,497,397 / 140,758,453
shares outstanding) $31.07
======
*<F3> Non-income producing security.
(a)<F4> Percentages for the various classifications relate to net assets.
The accompanying notes to financial statements are an integral part of this
statement.
BRANDYWINE FUND, INC.
STATEMENT OF OPERATIONS
For the Period Ended March 31, 1999
(Unaudited)
INCOME:
Dividends $6,282,080
Interest 3,440,913
--------------
Total income 9,722,993
--------------
EXPENSES:
Management fees 22,912,707
Transfer agent fees 403,160
Registration fees 376,909
Printing and postage expense 319,931
Administrative services 218,740
Custodian fees 202,387
Professional fees 32,052
Board of Directors fees 10,000
Other expenses 18,321
--------------
Total expenses 24,494,207
--------------
NET INVESTMENT LOSS (14,771,214)
--------------
NET REALIZED GAIN ON INVESTMENTS 294,430,180
NET INCREASE IN UNREALIZED APPRECIATION ON INVESTMENTS 613,910,040
--------------
NET GAIN ON INVESTMENTS 908,340,220
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 893,569,006
==============
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ended March 31, 1999 (Unaudited)
and For the Year Ended September 30, 1998
<TABLE>
1999 1998
---- -----
<S> <C> <C>
OPERATIONS:
Net investment (loss) income $(14,771,214) $46,939,903
Net realized gain (loss) on investments 294,430,180 (371,495,833)
Net increase (decrease) in unrealized
appreciation on investments 613,910,040 (1,950,083,412)
-------------- --------------
Net increase (decrease) in net
assets resulting from operations 893,569,006 (2,274,639,342)
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividend from net investment
income ($0.264391 per share) (46,814,793) ---
Distributions from net realized gains
($0.073194 and $7.0234273
per share, respectively) (12,960,206) (1,544,738,561)*<F5>
-------------- --------------
Total distributions (59,774,999) (1,544,738,561)
FUND SHARE ACTIVITIES:
Proceeds from shares issued
(9,498,143 and 47,435,909
shares, respectively) 266,312,817 1,551,435,565
Net asset value of shares issued
in distributions (2,181,992 and
45,515,816 shares, respectively) 54,571,619 1,441,485,893
Cost of shares redeemed (54,855,140 and
126,115,713 shares, respectively) (1,561,623,002) (3,925,825,675)
-------------- --------------
Net decrease in net assets
derived from Fund share activities (1,240,738,566) (932,904,217)
-------------- --------------
TOTAL DECREASE (406,944,559) (4,752,282,120)
NET ASSETS AT THE BEGINNING OF THE PERIOD 4,780,441,956 9,532,724,076
-------------- --------------
NET ASSETS AT THE END OF THE PERIOD
(INCLUDING UNDISTRIBUTED NET
INVESTMENT INCOME OF $0 AND
$46,939,823, RESPECTIVELY) $4,373,497,397 $4,780,441,956
============== ==============
*<F5>See Note 7.
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<TABLE>
BRANDYWINE FUND, INC.
FINANCIAL HIGHLIGHTS
(Selected Data for each share of the Fund outstanding throughout each period)
For the period
Ended March 31, -------------------------------- Years Ended September 31, ---------------------------------
1999
(Unaudited) 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
---------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value,
beginning of period $25.99 $43.91 $32.83 $33.92 $24.77 $28.04 $19.36 $20.52 $15.79 $17.87 $12.89
Income from investment
operations:
Net investment
(loss) income (0.15) 0.21 (0.07)(1)<F6>(0.08)(1)<F6>(0.10) 0.03 (0.02) 0.04 0.27 0.11 0.03
Net realized and
unrealized gains
(losses) on
investments 5.57 (11.11) 12.50 2.83 10.70 (0.43) 9.25 1.04 5.74 (1.48) 4.99
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations 5.42 (10.90) 12.43 2.75 10.60 (0.40) 9.23 1.08 6.01 (1.37) 5.02
Less distributions:
Dividends from net
investment income (0.27) --- --- --- --- --- (0.01) (0.13) (0.28) (0.03) (0.04)
Distributions from
net realized gains (0.07) (7.02) (1.35) (3.84) (1.45) (2.87) (0.54) (2.11) (1.00) (0.68) ---
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from distributions (0.34) (7.02) (1.35) (3.84) (1.45) (2.87) (0.55) (2.24) (1.28) (0.71) (0.04)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period $31.07 $25.99 $43.91 $32.83 $33.92 $24.77 $28.04 $19.36 $20.52 $15.79 $17.87
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Investment Return 21.2%*<F7> (27.7%) 39.3% 10.0% 45.5% (1.4%) 48.6% 5.9% 41.4% (7.9%) 39.0%
Ratios/Supplemental Data:
Net assets,
end of period
(in 000's $) 4,373,497 4,780,442 9,532,724 6,038,301 4,137,484 2,240,554 1,413,253 695,128 527,808 271,856 169,745
Ratio of expenses
to average
net assets 1.07%**<F8>1.04% 1.04% 1.06% 1.07% 1.09% 1.08% 1.10% 1.09% 1.12% 1.13%
Ratio of net
investment
(loss) income
to average
net assets (0.6%)**<F8> 0.6% (0.3%) (0.4%) (0.4%) 0.1% (0.1%) 0.2% 1.5% 0.9% 0.2%
Portfolio turnover
rate 246.9%**<F8>263.7% 192.4% 202.8% 193.7% 190.2% 150.4% 188.9% 187.9% 157.7% 91.0%
(1)<F6> Net investment loss per share is calculated using ending balances prior to consideration of adjustments for book and tax
differences.
*<F7> Not Annualized
**<F8> Annualized
The accompanying notes to financial statements are an integral part of this
statement.
BRANDYWINE BLUE FUND, INC.
STATEMENT OF NET ASSETS
March 31, 1999
(Unaudited)
QUOTED
MARKET
SHARES COST VALUE
------ ---- -----
COMMON STOCKS - 98.5% (A)<F10>
APPAREL & SHOE RETAILERS - 9.7%
142,000 Gap, Inc. $ 5,231,955 $ 9,558,446
50,000 Intimate Brands, Inc. 1,538,745 2,406,250
127,600 NIKE, Inc. Cl B 6,769,423 7,360,989
17,000 Payless ShoeSource, Inc.*<F9> 908,019 790,500
362,700 TJX Companies, Inc. 9,890,981 12,331,800
------------- -------------
24,339,123 32,447,985
THIS SECTOR IS 33.3% ABOVE YOUR FUND'S COST.
BUILDING & RELATED - 2.2%
120,000 Lowe's Companies, Inc. 7,328,419 7,260,000
THIS SECTOR IS 0.9% BELOW YOUR FUND'S COST.
COMMUNICATIONS - 11.3%
110,300 ADC Telecommunications, Inc.*<F9> 4,298,558 5,259,986
19,600 AT&T Corp. 1,140,246 1,564,335
42,800 Comverse Technology, Inc.*<F9> 2,590,054 3,638,000
109,600 MCI WorldCom Inc.*<F9> 10,050,749 9,706,505
87,400 Nokia Corp. "A" ADR 6,700,029 13,612,550
30,900 Northern Telecom Limited 1,870,906 1,919,663
20,000 Tellabs, Inc.*<F9> 1,736,680 1,955,000
------------- -------------
28,387,222 37,656,039
THIS SECTOR IS 32.7% ABOVE YOUR FUND'S COST.
COMPUTER & RELATED - 14.7%
95,000 EMC Corp. (Mass.)*<F9> 3,591,181 12,136,250
212,000 NCR Corp.*<F9> 9,727,645 10,600,000
495,200 Seagate Technology, Inc.*<F9> 12,712,699 14,639,598
91,900 Sun Microsystems, Inc.*<F9> 4,369,328 11,493,290
------------- -------------
30,400,853 48,869,138
THIS SECTOR IS 60.7% ABOVE YOUR FUND'S COST.
ELECTRONICS - 2.2%
116,500 Analog Devices, Inc.*<F9> 3,657,669 3,465,875
35,000 CommScope, Inc.*<F9> 677,295 732,830
103,700 SCI Systems, Inc.*<F9> 4,161,237 3,072,112
------------- -------------
8,496,201 7,270,817
THIS SECTOR IS 14.4% BELOW YOUR FUND'S COST.
FINANCIAL/BUSINESS SERVICES - 9.1%
125,500 Amdocs Limited*<F9> 1,379,442 2,713,937
63,100 Astoria Financial Corp. 3,181,818 3,155,000
38,800 Charter One Financial, Inc. 1,176,127 1,119,729
75,000 The CIT Group, Inc. 2,025,000 2,292,225
217,500 Dime Bancorp, Inc. 5,402,319 5,043,390
70,000 MedPartners, Inc.*<F9> 444,822 332,500
50,000 NOVA Corp./Georgia*<F9> 1,500,000 1,312,500
108,000 Providian Financial Corp. 4,519,386 11,880,000
86,600 United Rentals
(North America), Inc.*<F9> 2,886,216 2,468,100
------------- -------------
22,515,130 30,317,381
THIS SECTOR IS 34.7% ABOVE YOUR FUND'S COST.
FOOD/RESTAURANTS - 0.9%
112,200 Wendy's International, Inc. 3,163,218 3,190,744
THIS SECTOR IS 0.9% ABOVE YOUR FUND'S COST.
LEISURE & ENTERTAINMENT - 2.2%
97,200 Gemstar International
Group Limited*<F9> 3,564,408 7,314,300
THIS SECTOR IS 105.2% ABOVE YOUR FUND'S COST.
MACHINERY & MISCELLANEOUS MANUFACTURING - 6.5%
144,800 Corning Inc. 8,123,699 8,688,000
177,900 Tyco International Ltd. 11,184,336 12,764,325
11,400 Wallace Computer Services, Inc. 296,732 225,868
------------- -------------
19,604,767 21,678,193
THIS SECTOR IS 10.6% ABOVE YOUR FUND'S COST.
MEDICAL & RELATED - 0.9%
62,600 Humana Inc.*<F9> 1,243,743 1,079,850
40,000 Sunrise Assisted Living, Inc.*<F9> 1,504,792 1,822,520
------------- -------------
2,748,535 2,902,370
THIS SECTOR IS 5.6% ABOVE YOUR FUND'S COST.
PHARMACEUTICALS - 1.2%
89,200 AmeriSource Health Corp.*<F9> 2,412,485 3,049,570
25,000 Jones Pharma Inc. 838,180 868,750
------------- -------------
3,250,665 3,918,320
THIS SECTOR IS 20.5% ABOVE YOUR FUND'S COST.
POLLUTION/CONTROL SERVICES - 1.9%
144,700 Waste Management, Inc. 6,405,568 6,421,062
THIS SECTOR IS 0.2% ABOVE YOUR FUND'S COST.
SEMICONDUCTOR & RELATED - 4.2%
137,200 Adaptec, Inc.*<F9> 3,482,099 3,129,943
50,000 DSP Communications, Inc.*<F9> 751,650 793,750
139,100 Motorola, Inc. 9,696,703 10,189,075
------------- -------------
13,930,452 14,112,768
THIS SECTOR IS 1.3% ABOVE YOUR FUND'S COST.
SOFTWARE - 12.5%
79,100 Autodesk, Inc. 3,604,019 3,198,646
85,800 Citrix Systems, Inc.*<F9> 2,085,249 3,271,125
176,500 Electronic Arts Inc.*<F9> 7,489,510 8,383,750
111,500 Electronics for Imaging, Inc.*<F9> 3,062,453 4,348,500
722,600 Parametric Technology Corp.*<F9> 10,398,323 14,271,350
80,700 Rational Software Corp.*<F9> 1,267,410 2,163,809
97,000 Sterling Commerce, Inc.*<F9> 3,018,084 2,982,750
124,600 Sterling Software, Inc.* <F9> 1,883,264 2,959,250
12,500 Symantec Corp.*<F9> 248,437 211,725
------------- -------------
33,056,749 41,790,905
THIS SECTOR IS 26.4% ABOVE YOUR FUND'S COST.
SPECIALTY RETAILING - 13.3%
171,600 BJ's Wholesale Club, Inc.*<F9> 3,307,026 4,536,761
545,500 Cendant Corp.*<F9> 10,695,194 8,591,625
63,100 Circuit City Stores-
Circuit City Group 4,783,808 4,835,037
67,500 Costco Companies, Inc.*<F9> 5,173,943 6,180,503
178,900 Dayton Hudson Corp. 8,093,996 11,919,213
290,400 Kmart Corp.*<F9> 4,965,374 4,882,495
52,000 Toys 'R' Us, Inc.*<F9> 915,685 978,276
93,400 Williams-Sonoma, Inc.*<F9> 2,945,247 2,638,550
------------- -------------
40,880,273 44,562,460
THIS SECTOR IS 9.0% ABOVE YOUR FUND'S COST.
TEXTILES/APPAREL MANUFACTURING - 3.8%
215,200 Jones Apparel Group, Inc.*<F9> 5,748,157 6,012,258
166,700 Polo Ralph Lauren Corp.*<F9> 3,745,676 3,313,162
48,100 Tommy Hilfiger Corp.*<F9> 2,745,311 3,312,888
------------- -------------
12,239,144 12,638,308
THIS SECTOR IS 3.3% ABOVE YOUR FUND'S COST.
TRANSPORTATION & RELATED - 0.8%
71,500 CNF Transportation Inc. 3,138,083 2,703,629
THIS SECTOR IS 13.8% BELOW YOUR FUND'S COST.
MISCELLANEOUS - 1.1%
1,800 Mohawk Industries, Inc.*<F9> 50,733 54,000
49,000 Montana Power Co. 3,433,732 3,604,587
------------- -------------
3,484,465 3,658,587
------------- -------------
THIS SECTOR IS 5.0% ABOVE YOUR FUND'S COST.
Total common stocks 266,933,275 328,713,006
PRINCIPAL
AMOUNT
------
SHORT-TERM INVESTMENTS - 1.7% (A)<F10>
VARIABLE RATE DEMAND NOTE
$ 5,597,999 Firstar Bank U.S.A., N.A. $ 5,597,999 $ 5,597,999
------------- -------------
Total investments $272,531,274 334,311,005
=============
Liabilities, less cash and
receivables (0.2%) (A)<F10> (471,118)
-------------
Net Assets $333,839,887
=============
Net Asset Value Per Share
($0.01 par value 100,000,000
shares authorized), offering
and redemption price
($333,839,887 / 12,466,195
shares outstanding) $26.78
======
*<F9> Non-income producing security.
(a)<F10> Percentages for the various classifications relate to net assets.
The accompanying notes to financial statements are an integral part of this
statement.
BRANDYWINE BLUE FUND, INC.
STATEMENT OF OPERATIONS
For the Period Ended March 31, 1999
(Unaudited)
INCOME:
Dividends $469,299
Interest 240,696
-----------
Total income 709,995
-----------
EXPENSES:
Management fees 1,734,511
Administrative services 51,700
Registration fees 44,630
Professional fees 30,598
Printing and postage expense 25,233
Custodian fees 15,525
Transfer agent fees 10,151
Board of Directors fees 1,000
Other expenses 8,663
-----------
Total expenses 1,922,011
-----------
NET INVESTMENT LOSS (1,212,016)
-----------
NET REALIZED GAIN ON INVESTMENTS 27,061,705
NET INCREASE IN UNREALIZED APPRECIATION ON INVESTMENTS 45,873,728
-----------
NET GAIN ON INVESTMENTS 72,935,433
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $71,723,417
===========
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ended March 31, 1999 (Unaudited)
and For the Year Ended September 30, 1998
1999 1998
---- ----
<S> <C> <C>
OPERATIONS:
Net investment (loss) income $ (1,212,016) $ 3,224,429
Net realized gain (loss) on investments 27,061,705 (38,397,139)
Net increase (decrease) in unrealized appreciation on investments 45,873,728 (114,271,399)
-------------- --------------
Net increase (decrease) in net assets resulting from operations 71,723,417 (149,444,109)
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ($0.204780 per share) (3,234,784) ---
Distributions from net realized gains ($0.132292 and
$5.085142 per share, respectively) (2,089,735) (88,287,212)*<F11>
-------------- --------------
Total distributions (5,324,519) (88,287,212)
-------------- --------------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (2,316,767 and 8,608,182 shares, respectively) 57,055,120 236,200,712
Net asset value of shares issued in distributions
(226,167 and 3,001,160 shares, respectively) 4,828,670 81,361,466
Cost of shares redeemed (6,544,567 and 12,395,518 shares, respectively) (158,793,569) (332,841,741)
-------------- --------------
Net decrease in net assets derived from Fund share activities (96,909,779) (15,279,563)
-------------- --------------
TOTAL DECREASE (30,510,881) (253,010,884)
-------------- --------------
NET ASSETS AT THE BEGINNING OF THE PERIOD 364,350,768 617,361,652
-------------- --------------
NET ASSETS AT THE END OF THE PERIOD (INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$0 AND $3,234,758, RESPECTIVELY) $ 333,839,887 $ 364,350,768
============== ==============
*<F11>See Note 7.
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<TABLE>
BRANDYWINE BLUE FUND, INC.
FINANCIAL HIGHLIGHTS
(Selected Data for each share of the Fund outstanding throughout each period)
For the period
Ended March 31, ------------------------- Years Ended September 30, ------------------------
1999
(Unaudited) 1998 1997 1996 1995 1994 1993 1992 1991+<F12>
---------- ---- ---- ---- ---- ---- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value,
beginning of period $22.13 $35.78 $25.26 $24.37 $17.18 $19.11 $12.95 $13.09 $10.01
Income from investment
operations:
Net investment
income (loss) 0.10 0.19 (0.10)(1)<F13> (0.05)(1)<F13> 0.00 0.04 (0.06) (0.04) 0.03
Net realized and unrealized
gains (loss) on investments 4.89 (8.75) 10.62 2.05 7.30 0.36 6.22 0.52 3.05
------ ------- ------- ------- ------- ------- ------- ------- -------
Total from investment operations 4.99 (8.56) 10.52 2.00 7.30 0.40 6.16 0.48 3.08
Less distributions:
Dividends from net
investment income (0.21) -- -- -- -- -- -- (0.03) --
Dividends from net
realized gains (0.13) (5.09) -- (1.11) (0.11) (2.33) -- (0.59) --
------ ------- ------- ------- ------- ------- ------- ------- -------
Total from distributions (0.34) (5.09) -- (1.11) (0.11) (2.33) -- (0.62) --
------ ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $26.78 $22.13 $35.78 $25.26 $24.37 $17.18 $19.11 $12.95 $13.09
====== ======= ======= ======= ======= ======= ======= ======= =======
Total Investment Return 22.9%**<F15> (26.5%) 41.6% 8.9% 42.8% (2.8%) 47.6% 4.0% 30.8%**<F15>
Ratios/Supplemental Data:
Net assets, end of period
(in 000's $) 333,840 364,351 617,362 351,459 164,943 29,086 6,373 4,270 3,975
Ratio of expenses
(after reimbursement) to
average net assets***<F16> 11.1%*<F14> 1.06% 1.08% 1.13% 1.31% 1.80% 2.00% 2.00% 1.97%*<F14>
Ratio of net investment
(loss) income
to average net
assets****<F17> (0.7%)*<F14> 0.6% (0.5%) (0.4%) (0.4%) (0.4%) (0.6%) (0.3%) 0.6%*<F14>
Portfolio turnover rate 272.9%*<F14> 299.5% 202.1% 196.9% 174.1% 220.3% 144.3% 191.9% 115.3%*<F14>
+ <F12> For the period from January 10, 1991 (commencement of operations) to September 30, 1991.
(1)<F13> Net investment loss per share is calculated using ending balances prior to consideration of adjustments for permanent
book and tax differences.
*<F14> Annualized.
**<F15> Not Annualized.
***<F16> Computed after giving effect to adviser's expense limitation undertaking. If the Fund had paid all of its expenses, the
ratios would have been 2.09% and 2.44% for the years ended September 30, 1993 and 1992, respectively, and 3.00%*<F14>
for the period ended September 30, 1991.
****<F17> The ratios 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%)*<F14>, respectively.
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
(Unaudited)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies of Brandywine
Fund, Inc. (the "Brandywine Fund") and Brandywine Blue Fund, Inc. (the
"Blue Fund") (collectively the "Funds"). Each Fund is registered as a
diversified, open-end management investment company under the Investment
Company Act of 1940. The assets and liabilities of each Fund are segregated
and a shareholder's interest is limited to the Fund in which the
shareholder owns shares. The Brandywine Fund was incorporated under the
laws of Maryland on October 9, 1985. The Blue Fund was incorporated under
the laws of Maryland on November 13, 1990. The investment objective of each
Fund is to produce long-term capital appreciation principally through
investing in common stocks.
(a) Each security, excluding short-term investments, is valued at the last
sale price reported by the principal security exchange on which the
issue is traded, or if no sale is reported, the latest bid price.
Securities which are traded over-the-counter are valued at the latest
bid price. Securities for which quotations are not readily available are
valued at fair value as determined by the investment adviser under the
supervision of the Board of Directors. Short-term investments
(securities with maturities of 60 days or less) are valued at amortized
cost which approximates quoted market value. For financial reporting
purposes, investment transactions are recorded on trade date. Cost
amounts, as reported on the statements of net assets, are substantially
the same for Federal income tax purposes.
(b) Net realized gains and losses on common stock are computed on the
identified cost basis.
(c) Provision has not been made for Federal income taxes since the Funds
have elected to be taxed as "regulated investment companies" and intend
to distribute substantially all net investment company taxable income
and net capital gains to shareholders and otherwise comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies. The Brandywine Fund anticipates $390,913,930 and
the Blue Fund anticipates $38,765,853 of post-October losses, which may
be used to offset capital gains in future years to the extent provided
by tax regulations.
(d) Dividend income is recorded on the ex-dividend date. Interest income is
recorded on the accrual basis.
(e) The Funds have investments in short-term variable rate demand notes,
which are unsecured instruments. The Funds may be susceptible to credit
risk with respect to these notes to the extent the issuer defaults on
its payment obligation. The Funds' policy is to monitor the
creditworthiness of the issuer and the Funds do not anticipate
nonperformance by these counterparties.
(f) Generally accepted accounting principles require that permanent
differences between income for financial reporting and tax purposes be
reclassified to capital stock.
(g) The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these
estimates.
(2) INVESTMENT ADVISER AND MANAGEMENT AGREEMENTS AND TRANSACTIONS WITH RELATED
PARTIES
Each Fund has a management agreement with Friess Associates, Inc. (the
"Adviser"), with whom certain officers and directors of the Funds are
affiliated, to serve as investment adviser and manager. Under the terms of
the agreements, each Fund will pay the Adviser a monthly management fee at
the annual rate of one percent (1%) on the daily net assets of such Fund.
Also, the Adviser is reimbursed for administrative services rendered to
each Fund by a consultant paid by the Adviser.
(3) DISTRIBUTION TO SHAREHOLDERS
Net investment income and net realized gains, if any, are distributed to
shareholders.
(4) INVESTMENT TRANSACTIONS
For the period ended March 31, 1999, purchases and proceeds of sales of
investment securities (excluding short-term investments) for the Brandywine
Fund were $5,577,322,285 and $6,871,849,379, respectively; purchases and
proceeds of sales of investment securities (excluding short-term
investments) for the Blue Fund were $466,786,399 and $566,568,969,
respectively.
(5) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
As of March 31, 1999, liabilities of each Fund included the following:
Brandywine Blue
Fund Fund
--------- -----
Payable to brokers for
investments purchased $38,201,207 $356,162
Payable to Adviser for
management fees 3,705,271 284,018
Payable to shareholders
for redemptions 612,064 ---
Other liabilities 763,845 72,219
(6) SOURCES OF NET ASSETS
As of March 31, 1999, the sources of net assets were as follows:
Fund shares issued
and outstanding $3,629,318,536 $285,735,088
Net unrealized appreciation
on investments 844,121,476 61,779,731
Accumulated net
realized losses (99,942,615) (13,674,932)
--------------- -------------
$4,373,497,397 $333,839,887
=============== =============
Aggregate net unrealized appreciation as of March 31, 1999 consisted of the
following:
Aggregate gross
unrealized appreciation $969,475,451 $70,134,658
Aggregate gross unrealized
depreciation (125,353,975) (8,354,927)
--------------- -------------
Net unrealized appreciation $844,121,476 $61,779,731
=============== =============
(7) REQUIRED FEDERAL INCOME TAX DISCLOSURES (UNAUDITED)
In early 1999, shareholders received information regarding all
distributions paid to them by the Funds during the fiscal year ended
September 30, 1998. The Funds hereby designate the following amounts as
long-term capital gains distributions.
Capital gains taxed at 20% $12,960,206 $366,176
Capital gains taxed at 28% --- ---
The percentage of ordinary income which is eligible for the corporate
dividend received deduction for the fiscal year ended September 30, 1998
was 3% 4%
FUND DIRECTOR . . .
As we promised in last quarter's report, here's a more detailed description
of our newest Fund Director.
Marvin "Skip" Schoenhals joined the board of directors of both Brandywine and
Brandywine Blue Fund in December. His extensive accomplishments in the financial
industry made him the ideal candidate.
Skip is President and Chief Executive Officer of both WSFS Financial
Corporation and its principal subsidiary, Wilmington Savings Fund Society FSB,
the second largest traditional-banking organization headquartered in Delaware.
The market value of WSFS has increased sixteen-fold since Skip took the reigns
in 1990, ranking the bank among the most successful in the United States.
Before joining WSFS, Skip served as President and Chief Executive Officer of
Monroe, Michigan-based Peoples Savings Bank, which is now known as Standard
Federal Bank. Under his guidance, the bank's net income increased 60 percent in
two years and its stock jumped 200 percent.
Born and raised in Kalamazoo, Michigan, Skip is a University of Michigan
graduate. He also holds a master's degree in business administration from the
University of Pennsylvania's Wharton School of Finance and Commerce.
Skip is active in many business and advisory organizations and is a well-
known advocate of programs aimed at strengthening the local community. We're
grateful for his leadership efforts at the Delaware State Chamber of Commerce,
Delaware Public Policy Institute, Delaware Family Foundation, Sunday Breakfast
Mission, New Castle County Leadership Prayer Breakfast and United Way of
Delaware.
Skip and his wife Linda are long-time Brandywine shareholders. Skip spoke of
his commitment to the Funds' success: "The team members of Friess Associates,
manager of the Funds, are some of the most capable and professional people I
know and I look forward to working with them. As long as I am a director, a
significant percentage of my personal savings will be invested in the Brandywine
Funds."
BOARD OF DIRECTORS
John E. Burris
Chairman
Burris Foods, Inc.
Milford, Delaware
Foster S. Friess
President
Friess Associates, Inc.
Jackson, Wyoming
Stig Ramel
Former President
Nobel Foundation
Stockholm, Sweden
Marvin N. Schoenhals
Chairman
WSFS Financial Corp.
Wilmington, Delaware
P.O. Box 4166, Greenville, DE 19807
(800) 656-3017 www.brandywinefunds.com [email protected]
Investment Adviser: FRIESS ASSOCIATES, INC.
Independent Accountants: PRICEWATERHOUSECOOPERS LLP
Custodian: FIRSTAR BANK MILWAUKEE, NA
Legal Counsel: FOLEY & LARDNER
Transfer Agent: FIRSTAR MUTUAL FUND SERVICES LLC
OFFICERS: Foster S. Friess, President and Treasurer;
Lynda Campbell,Vice President and Secretary; William D'Alonzo, Vice President;
John Fraser, Vice President; Carl Gates, Vice President;
Andrew Graves, Vice President; David Harrington, Vice President;
John Ragard, Vice President; and Paul Robinson, Vice President
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of either Brandywine Fund or Brandywine Blue Fund unless
accompanied or preceded by the Funds current prospectus. Past performance is not
indicative of future performance. Investment return and principal value of an
investment may fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost.
Report editor: Rebecca Buswell
Report Staff: Chris Aregood, Chris Long, Adam Rieger
