THE BRANDYWINE FUNDS
MANAGED BY FRIESS ASSOCIATES, INC.
QUARTERLY REPORT
DECEMBER 31, 1999
Dear Fellow Shareholders:
Jumps over 30 percent for each of your Funds in the December quarter created
record results to finish their all-time best calendar years. Communications
technology holdings' rapid earnings growth fueled the widest historic spreads
over key indexes.
Brandywine and Brandywine Blue gained 32.5 and 31.4 percent in the December
quarter, overtaking Brandywine's 30.8 percent gain in the March quarter of 1987
as the best quarter in Brandywine Funds history. The S&P 500, S&P MidCap and
Russell 2000 posted less inspired gains of 14.9, 16.8 and 18.1 percent.
DECEMBER QUARTER
S&P 500 TR 14.9%
S&P MIDCAP 16.8%
RUSSELL 2000 18.1%
BRANDYWINE BLUE 31.4%
BRANDYWINE FUND 32.5%
NASDAQ IND. 39.1%
Both Funds more than doubled those three indexes in 1999! Gains of 53.5 percent
for Brandywine and 49.4 percent for Brandywine Blue exceed Brandywine's record-
setting 49.2 percent gain in 1991 and easily outpace returns in the S&P 500, S&P
MidCap and Russell 2000 of 21.0, 13.4 and 19.6 percent. We're particularly
delighted with these 53.5 and 49.4 percent gains given that more than half of
4,400 mutual funds in the nation failed to outperform even the S&P 500's
comparatively meager 21 percent return.
Internet and high-PE stocks such as Qualcomm at 173 times forward earnings,
Veritas Software at 217 and JDS Uniphase at 244, as well as earningless
companies like Amazon.com and DoubleClick continue to dominate the Nasdaq
Industrials, up 39 percent, masking the less ebullient progress of the more
moderate PE stocks in the index.
A Salomon Smith Barney study shows that stocks in this index under 30 times
--------------
earnings grew only 6.5 percent in '99! Your average holding has a price-earnings
- --------
ratio below 30 times 2000 consensus earnings estimates.
The surge in the value of your assets this past year increases our gratitude to
God to live in a free country where economic freedom enables and encourages the
creation of wealth.
The last two year's annualized returns for Brandywine and Brandywine Blue are
23.5 and 21.6 percent, outpacing annualized returns in the prior period when
Kiplinger's listed Brandywine among the top three no-load funds in the nation
for the 10 years ended 1997.
Thanks for your long-term focus and patience through our brief period of
relative underperformance in early 1998, which resulted from the market's
narrow focus on earningless Internet stocks and high-PE "big name" stocks we
typically do not own. Your approach was well rewarded considering that both
Funds more than doubled from the October 8, 1998 market low.
We're grateful to close out the 1990s on such a high note, as it is in concert
with Mutual Funds magazine's decision to name Brandywine Fund to its list of the
"Best Funds of the Decade" in the January 2000 issue. Brandywine was recognized
as one of a relative few funds to outperform the S&P 500 in the '90s, a decade
in which large-cap stocks dominated.
Brandywine gained 516 percent in the '90s, which is 84 percentage points ahead
of the S&P 500. Brandywine Blue is up 493 percent since its 1991 inception,
about 25 percentage points more than the S&P 500. Your annualized gains for the
past five years are over 23 percent.
A Prudential Securities study shows that only 81 funds out of 526 funds in
existence since 1985 outperformed the S&P 500 through 1999. Many of the funds
surpassing the index are specialty funds or funds that charge sales loads.
Brandywine with its 1,052 percent gain in that period is one of just 19 no-load
general growth Funds to beat the S&P 500.
Brandywine Brandywine Blue
Cumulative % Change % Change
- ---------- ---------- ---------------
Quarter 32.5 31.4
One Year 53.5 49.4
Five Years 189.7 187.6
Ten Years 516.3 N/A
Inception 1051.9*<F1> 492.9**<F2>
Annualized
- ----------
Five Years 23.7 23.5
Ten Years 19.9 N/A
Inception 19.1*<F1> 21.9**<F2>
*<F1> 12/30/85
**<F2> 1/10/91
Your technology holdings were the biggest contributors to your success in both
the quarter and the year. Telecom equipment makers were among the strongest,
with Nokia and Nortel Networks doubling in the December quarter alone. A variety
of technology companies, including Apple Computer, semiconductor maker Atmel and
software designer Symantec, gained more than 50 percent in the quarter.
Take note that your unusually high percentage of large-cap holdings is more a
function of the near five-fold increase in Nokia, the double in Apple and near
double in Motorola than our giving up on smaller to mid-cap stocks, which is our
most fertile hunting ground.
Thanks go out to you, our new and existing shareholders, who together entrusted
an additional $1 billion to our stewardship in 1999. We are humbled by your
confidence in us and committed to keeping your Funds among the top performers in
the next decade and beyond.
Your entire Friess team is invested in the Funds right alongside you. All my
personal equity investments are in Brandywine and Brandywine Blue. Thanks for
continuing to honor us with your confidence. Best wishes for a great New Year.
God Bless!
/s/ Foster Friess
Foster Friess
President
January 6, 2000
UPCOMING TV APPEARANCE
Ron Insana interviews Foster on CNBC's Tuesday January 11 Street Signs program
at 3:45 pm EST.
PHONE IN OR LOG ON
Many of you have expressed gratitude for our low expense ratio. In our efforts
to keep costs in check, we are excited to announce that we are moving forward on
providing you Internet access to your Fund accounts at bfunds.com. Stay tuned.
A call to a live customer service representative adds $1.00 to the Funds'
overall administrative costs, but this can be avoided by accessing the automated
voice system at (800) 656-3017 for up-to-date informa-tion on your account. You
can hear a bi-weekly updated message on market trends from our research team by
pressing "4." Your account value and most recent closing price are accessed by
pressing "1."
The research update and daily price information is also available at bfunds.com.
We'll continue working hard in this new century to offer a creative, user-
friendly and technologically advanced site for our shareholders.
- Lynda Campbell
BRANDYWINE FUND
PERCENT CHANGE IN TOP TEN HOLDINGS FROM BOOK COST
1. Nokia Corp. ADR +396.3 6. Providian Financial Corp. +4.7
2. Apple Computer, Inc. +99.8 7. Parametric Technology Corp. +78.8
3. Motorola, Inc. +87.1 8. Nortel Networks Corp. +157.5
4. Gap, Inc. +7.6 9. LSI Logic Corp. +47.5
5. 3Com Corp. +10.8 10. Advanced Micro Devices, Inc. -5.3
EARNINGS GROWTH
Your Companies 80%
S&P 500 10%
FORECASTED INCREASE IN EARNINGS PER SHARE
2000 VS 1999
All figures are dollar weighted and based on data from Baseline. December 31,
1999.
YOUR COMPANIES' MARKET CAPITALIZATION
LARGE CAP
$9 billion and over 48.6%
MID CAP
$2 billion to $9 billion 33.9%
SMALL CAP
below $2 billion 13.2%
CASH 4.5%
TOP TEN INDUSTRY GROUPS
Communications Equipment (15.5%)
Semiconductor Manufacturing (11.7%)
Computer Related (11.6%)
Software (9.1%)
Apparel & Shoe Retailers (8.7%)
Financial/Business Services (8.5%)
Electronics (6.2%)
Semiconductor Related (6.0%)
Networking (4.8%)
Pharmaceuticals (3.3%)
All Others (10.1%)
Cash (4.5%)
BRANDYWINE FUND
DECEMBER QUARTER "ROSES AND THORNS"
$ GAIN
BIGGEST $ WINNERS (IN MILLIONS) % GAIN REASON FOR MOVE
- ----------------- ------------ ------ ------------------------------
Nokia Corp. ADR $211.5 106.3 Nokia exceeded consensus
estimates for the September
quarter with 32 percent year-
over-year earnings growth on a
37 percent revenue increase.
Nokia later guided Wall Street
estimates for 27 percent
revenue growth in 2000 up to
between 30 and 40 percent.
Apple Computer $116.8 54.7 Apple improved its ability to
meet demand for its newly
upgraded product line this
quarter after falling short in
the September quarter due to a
one-time supply problem.
Strong demand for its G4
desktop, iMac and iBook
computers along with the
recent release of new Mac
operating system (OS9.0)
generated enthusiasm for the
company's December quarter
prospects.
Motorola, Inc. $91.9 67.3 Motorola reported September
earnings of $.53 a share
versus $.07 last year. The
company continues to benefit
from strong demand for its
wireless and semiconductor
equipment.
Gemstar Int'l. $90.4 45.7 The VCR and set-top box
program developer increased
September quarter earnings 30
percent, topping consensus
estimates by 6 percent. Nasdaq
announced in December that
Gemstar will join the Nasdaq
100 in January, generating
additional investor
enthusiasm.
Parametric Technology $84.4 92.9 Internet capabilities boosted
enthusiasm for Parametric's
Windchill software, which
links designers and engineers
with manufacturing
departments, suppliers and
customers. Engineers can order
customized parts over the
Internet, automatically
generate blueprints and
instructions, and even track
parts and synchronize bills.
$ LOSS
BIGGEST $ LOSERS (IN MILLIONS) % LOSS REASON FOR MOVE
- ---------------- ------------ ------ ------------------------------
Tyco Int'l. Ltd. $44.2 -14.8 Tyco fell on rumors of
questionable accounting
methods for recent
acquisitions. The SEC launched
an informal review to
determine whether Tyco did
anything inappropriate.
Investor sentiment weakened as
Tyco's depressed stock price
limited its ability to make
further acquisitions. We
continue to view this as an
unwarranted, short-term
setback
Cendant Corp. $20.2 -16.1 Higher interest rates and
continued uncertainty
surrounding outstanding
shareholder lawsuits depressed
shares despite strong
fundamentals at the consumer
and business service provider.
Earnings increased 29 percent
in the September quarter.
Tandy Corp. $18.2 -10.2 The owner of RadioShack
electronics chain warned that
sales in the first two weeks
of December were weaker than
expected as it lacked enough
wireless phones and other key
products. The stock tumbled on
the news, while analysts still
anticipate double-digit growth
for the December quarter.
Best Buy Co. $16.8 -24.7 Best Buy fell after competitor
Tandy announced weak early
December sales, raising
concerns about holiday-season
electronics sales. Those fears
were unwarranted, as the
company reported December
same-store sales increased 9.8
percent on demand for wireless
and digital products.
Devon Energy Corp. $12.3 -23.4 Unusually high temperatures in
the U.S. this holiday season
depressed natural gas sales,
causing robust estimates based
on high oil prices to be
revised downward.
All gains/losses are calculated on an average cost basis
BRANDYWINE FUND, INC.
STATEMENT OF NET ASSETS
December 31, 1999
(Unaudited)
SHARES OR QUOTED
PRINCIPAL MARKET
AMOUNT COST VALUE (B)<F4>
------ ---- -------------
LONG-TERM INVESTMENTS - 95.5% (A)<F3>
COMMON STOCKS - 95.5% (A)<F3>
APPAREL & SHOE RETAILERS - 8.7%
976,000 American Eagle Outfitters, Inc. $ 40,912,937 $ 43,920,000
79,500 Braun's Fashions Corp. 904,407 1,669,500
338,900 Charming Shoppes, Inc. 1,950,535 2,245,212
4,396,500 Gap, Inc. 187,898,402 202,239,000
85,700 Guess ?, Inc. 1,155,701 1,863,975
1,404,900 Intimate Brands, Inc. 53,424,705 60,586,312
63,200 Kenneth Cole Productions, Inc. 1,832,164 2,891,400
3,260,700 The Limited, Inc. 141,855,728 141,229,069
210,000 The Men's Wearhouse Inc. 5,341,125 6,168,750
183,000 Steven Madden, Ltd. 2,491,412 3,488,438
209,700 Timberland Co. 8,589,616 11,087,888
194,500 Vans, Inc. 2,130,830 2,382,625
------------- -------------
448,487,562 479,772,169
THIS SECTOR IS 7.0% ABOVE YOUR FUNDS COST.
BUILDING RELATED - 0.2%
177,500 Elcor Corp. 5,373,238 5,347,187
110,100 Insituform Technologies, Inc. 1,966,608 3,110,325
------------- -------------
7,339,846 8,457,512
THIS SECTOR IS 15.2% ABOVE YOUR FUNDS COST.
COMMUNICATIONS EQUIPMENT - 15.5%
252,900 Audiovox Corp. 6,665,604 7,681,838
153,200 Gilat Satellite Networks Ltd. 16,157,877 18,192,500
1,551,400 Motorola, Inc. 122,106,606 228,443,650
1,702,700 Nokia Corp. "A" ADR 65,188,016 323,513,000
1,660,000 Nortel Networks Corp. 65,108,541 167,660,000
1,739,900 Tellabs, Inc. 56,483,421 111,679,831
------------- -------------
331,710,065 857,170,819
THIS SECTOR IS 158.4% ABOVE YOUR FUND'S COST.
COMMUNICATIONS SERVICES - 0.4%
724,000 Infonet Services Corp. 17,722,080 19,005,000
302,600 International FiberCom, Inc. 2,324,520 2,382,975
------------- -------------
20,046,600 21,387,975
THIS SECTOR IS 6.7% ABOVE YOUR FUND'S COST.
COMPUTER RELATED - 11.6%
1,395,800 Adaptec, Inc. 38,244,082 69,615,525
148,500 Amdocs Limited 3,601,125 5,123,250
2,835,600 Apple Computer, Inc. 145,893,648 291,535,125
123,200 BISYS Group, Inc. 7,310,178 8,038,800
530,600 CSG Systems International, Inc. 14,395,221 21,157,675
1,376,100 Gateway, Inc. 64,980,872 99,165,206
82,200 Jack Henry & Associates, Inc. 4,462,810 4,413,112
935,800 Microchip Technology, Inc. 43,147,475 64,043,813
628,400 SanDisk Corp. 48,175,151 60,483,500
318,700 Zebra Technologies Corp. 14,256,978 18,643,950
------------- -------------
384,467,540 642,219,956
THIS SECTOR IS 67.0% ABOVE YOUR FUND'S COST.
ELECTRONICS - 6.2%
235,900 ACT Manufacturing 6,524,717 8,846,250
356,900 Avnet, Inc. 20,312,893 21,592,450
754,000 CommScope, Inc. 27,920,882 30,395,625
1,060,100 CTS Corp. 23,355,812 79,905,037
605,200 Epcos AG 20,938,078 45,200,875
267,400 KEMET Corp. 7,108,473 12,049,713
416,300 Kent Electronics Corp. 9,391,845 9,470,825
100,000 Littelfuse, Inc. 2,193,220 2,426,560
235,000 Mettler-Toledo International Inc. 7,577,277 8,974,063
609,800 Millipore Corp. 22,882,913 23,553,525
374,000 Molex Inc. Class A 14,339,362 16,923,500
454,400 Power-One, Inc. 11,099,529 20,817,200
717,700 Sawtek Inc. 11,331,311 47,771,906
160,000 Three-Five Systems, Inc. 2,333,100 6,560,000
130,900 Vicor Corp. 3,556,577 5,301,450
------------- -------------
190,865,989 339,788,979
THIS SECTOR IS 78.0% ABOVE YOUR FUND'S COST.
FINANCIAL/BUSINESS SERVICES - 8.5%
85,000 Acxiom Corp. 2,080,976 2,040,000
30,000 Affiliated Managers Group, Inc. 1,105,277 1,213,125
100,000 AnswerThink Consulting
Group, Inc. 1,957,782 3,425,000
456,900 Avis Rent A Car, Inc. 10,622,137 11,679,506
2,412,600 Capital One Financial Corp. 99,399,822 116,257,162
1,245,400 The Chase Manhattan Corp. 96,210,110 96,752,013
325,000 Convergys Corp. 9,156,633 9,993,750
50,000 First Sierra Financial, Inc. 814,670 856,250
244,500 The Hertz Corp. 11,636,013 12,255,562
374,600 MedQuist Inc. 10,962,467 9,669,363
363,600 Nextera Enterprises, Inc. 2,961,640 4,681,350
1,900,100 Providian Financial Corp. 165,309,012 173,027,856
506,800 Sykes Enterprises, Inc. 11,472,695 22,235,850
------------- -------------
423,689,234 464,086,787
THIS SECTOR IS 9.5% ABOVE YOUR FUND'S COST.
FOOD/RESTAURANTS - 0.2%
418,150 CEC Entertainment Inc. 6,960,408 11,865,006
THIS SECTOR IS 70.5% ABOVE YOUR FUND'S COST.
LEISURE & ENTERTAINMENT - 2.4%
1,322,400 Carnival Corp. 59,526,085 63,227,250
316,000 Four Seasons Hotels Inc. 15,798,600 16,827,000
1,020,400 Royal Caribbean Cruises Ltd. 47,088,721 50,318,475
------------- -------------
122,413,406 130,372,725
THIS SECTOR IS 6.5% ABOVE YOUR FUND'S COST.
MACHINERY & MISCELLANEOUS MANUFACTURING - 1.5%
150,000 The Shaw Group Inc. 3,181,950 3,796,875
1,970,000 Tyco International Ltd. 68,803,219 76,583,750
------------- -------------
71,985,169 80,380,625
THIS SECTOR IS 11.7% ABOVE YOUR FUND'S COST.
MEDICAL RELATED - 2.6%
440,800 Cytyc Corp. 14,215,051 26,916,350
22,000 DIANON Systems, Inc. 297,875 302,500
3,122,500 IMS Health Inc. 84,184,963 84,892,969
605,900 InfoCure Corp. 11,163,501 18,896,506
344,300 Mentor Corp. 9,330,254 8,887,244
148,400 Quest Diagnostics Inc. 4,418,314 4,535,475
------------- -------------
123,609,958 144,431,044
THIS SECTOR IS 16.8% ABOVE YOUR FUND'S COST.
NETWORKING - 4.8%
4,227,000 3Com Corp. 179,231,959 198,669,000
205,000 NetSolve, Inc. 5,064,809 6,457,500
774,800 Xircom, Inc. 30,835,648 58,110,000
------------- -------------
215,132,416 263,236,500
THIS SECTOR IS 22.4% ABOVE YOUR FUND'S COST.
OIL/GAS FIELD SERVICES - 0.4%
298,500 Dynegy Inc. 6,737,653 7,257,281
408,700 Precision Drilling Corp. 8,137,279 10,498,482
292,800 UTI Energy Corp. 6,014,214 6,752,700
------------- -------------
20,889,146 24,508,463
THIS SECTOR IS 17.3% ABOVE YOUR FUND'S COST.
PHARMACEUTICALS - 3.3%
271,500 Accredo Health, Inc. 7,905,647 8,348,625
143,400 Alpharma Inc. 4,292,914 4,409,550
2,183,800 Elan Corp. plc ADR 58,330,295 64,422,100
1,147,000 Forest Laboratories, Inc. 61,738,627 70,468,813
1,228,500 IVAX Corp. 17,012,030 31,633,875
113,200 K-V Pharmaceutical Co. 2,241,464 2,483,325
------------- -------------
151,520,977 181,766,288
THIS SECTOR IS 20.0% ABOVE YOUR FUND'S COST.
SEMICONDUCTOR RELATED - 6.0%
407,500 Credence Systems Corp. 18,440,462 35,248,750
2,401,800 LSI Logic Corp. 109,931,290 162,121,500
389,000 LTX Corp. 5,162,519 8,703,875
1,516,500 Micron Technology, Inc. 113,362,413 117,907,875
159,600 Veeco Instruments Inc. 7,322,982 7,471,275
------------- -------------
254,219,666 331,453,275
THIS SECTOR IS 30.4% ABOVE YOUR FUND'S COST.
SEMICONDUCTOR MANUFACTURING - 11.7%
5,481,000 Advanced Micro Devices, Inc. 167,420,793 158,606,437
1,570,600 Amkor Technology, Inc. 37,361,793 44,369,450
4,283,200 Atmel Corp. 78,106,558 126,622,100
274,050 Burr-Brown Corp. 6,437,448 9,900,056
1,404,400 Cypress Semiconductor Corp. 32,374,118 45,467,450
909,800 Fairchild Semiconductor Corp. 19,824,427 27,066,550
98,800 General Semiconductor, Inc. 1,080,232 1,401,725
1,495,900 Integrated Device Technology, Inc. 26,184,848 43,381,100
180,000 Integrated Silicon Solution, Inc. 2,824,144 2,981,250
198,000 International Rectifier Corp. 2,986,778 5,148,000
642,700 Lattice Semiconductor Corp. 29,727,830 30,287,238
3,376,500 National Semiconductor Corp. 121,556,481 144,556,406
80,300 Pericom Semiconductor Corp. 1,508,134 2,112,894
90,000 Zoran Corp. 3,901,784 5,017,500
------------- -------------
531,295,368 646,918,156
THIS SECTOR IS 21.8% ABOVE YOUR FUND'S COST.
SOFTWARE - 9.1%
87,300 AremisSoft Corp. 2,693,979 2,837,250
242,100 BindView Development Corp. 7,265,980 12,029,344
180,000 Cognos Inc. 5,427,695 8,302,500
2,304,600 Compuware Corp. 83,327,001 85,846,350
270,400 Datastream Systems, Inc. 3,718,307 6,641,700
334,900 FileNet Corp. 3,164,222 8,539,950
84,000 Indus International, Inc. 969,073 1,023,750
248,500 IONA Technologies PLC-ADR 4,997,723 13,543,250
121,500 Lightbridge, Inc. 3,038,625 3,371,625
25,000 Logility, Inc. 531,185 487,500
44,000 MapInfo Corp. 1,389,813 1,617,000
90,000 MSC.Software Corp. 871,424 911,250
137,000 Novadigm, Inc. 2,696,493 2,842,750
200,100 NVIDIA Corp. 8,318,606 9,392,194
6,339,200 Parametric Technology Corp. 95,946,039 171,554,600
962,800 Peregrine Systems, Inc. 28,916,937 81,055,725
369,800 Pinnacle Systems, Inc. 14,255,024 15,046,237
230,200 Rainbow Technologies, Inc. 4,795,418 5,352,150
150,000 Sagent Technology, Inc. 3,714,979 4,490,625
118,500 SERENA Software, Inc. 1,715,996 3,666,094
1,091,400 Symantec Corp. 22,876,680 63,983,325
------------- -------------
300,631,199 502,535,169
THIS SECTOR IS 67.2% ABOVE YOUR FUND'S COST.
SPECIALTY RETAILING - 2.2%
940,900 BJ's Wholesale Club, Inc. 20,293,982 34,342,850
767,500 Brightpoint, Inc. 8,553,895 10,073,437
147,100 Coldwater Creek Inc. 3,010,872 3,015,550
226,600 CVS Corp. 8,665,542 9,049,837
268,500 Dollar Thrifty Automotive
Group, Inc. 6,183,583 6,427,219
420,000 InterTAN, Inc. 11,043,915 10,972,500
88,400 Miami Computer Supply Corp. 3,462,025 3,281,850
126,000 PC Connection, Inc. 3,403,528 4,347,000
248,000 Sharper Image Corp. 4,963,705 3,146,500
50,000 United Stationers, Inc. 1,416,565 1,428,125
750,100 Zale Corp. 35,685,650 36,286,088
------------- -------------
106,683,262 122,370,956
THIS SECTOR IS 14.7% ABOVE YOUR FUND'S COST.
MISCELLANEOUS - 0.2%
326,900 Illinova Corp. 10,318,598 11,359,775
20,000 Strategic Diagnostics, Inc. 125,000 131,250
------------- -------------
10,443,598 11,491,025
THIS SECTOR IS 10.0% ABOVE YOUR FUND'S COST.
------------- -------------
Total common stocks 3,722,391,409 5,264,213,429
RIGHTS - 0.0% (A)<F3>
22,655 TALK.com, Inc. Rights 0 0
------------- -------------
Total long-term investments 3,722,391,409 5,264,213,429
SHORT-TERM INVESTMENTS - 5.2% (A)<F3>
COMMERCIAL PAPER - 4.7%
$25,000,000 American Express Credit Corp.,
due 01/04/00, discount of 6.50% 24,986,458 24,986,458
25,000,000 Ford Motor Credit Puerto Rico,
due 01/04/00, discount of 5.97% 24,987,562 24,987,562
25,000,000 American General Finance ECN,
due 01/05/00, discount of 5.96% 24,983,445 24,983,445
25,000,000 Deere & Co.,
due 01/06/00, discount of 6.50% 24,977,431 24,977,431
25,000,000 Household International,
due 01/07/00, discount of 6.65% 24,972,292 24,972,292
30,000,000 New Center Asset Trust,
due 01/10/00, discount of 6.62% 29,950,350 29,950,350
15,000,000 General Electric Capital Corp.,
due 01/11/00, discount of 6.60% 14,972,500 14,972,500
20,000,000 Goldman Sachs Group LP,
due 01/19/00, discount of 5.62% 19,943,800 19,943,800
50,000,000 Goldman Sachs Group LP,
due 01/20/00, discount of 5.62% 49,851,694 49,851,694
20,000,000 Salomon Smith Barney Holdings Inc.,
due 01/25/00, discount of 5.55% 19,926,000 19,926,000
------------- -------------
Total commercial paper 259,551,532 259,551,532
VARIABLE RATE DEMAND NOTE - 0.5%
28,540,928 Firstar Bank U.S.A., N.A. 28,540,928 28,540,928
------------- -------------
Total short-term investments 288,092,460 288,092,460
------------- -------------
Total investments 4,010,483,869 5,552,305,889
-------------
-------------
Liabilities, less cash and
receivables (0.7%) (A)<F3> (37,335,209)
--------------
NET ASSETS $5,514,970,680
--------------
--------------
Net Asset Value Per Share
($0.01 par value 500,000,000
shares authorized), offering
and redemption price
($5,514,970,680 /128,602,539
shares outstanding) $42.88
------
------
(a)<F3> Percentages of various classifications relate to net assets.
(b)<F4> 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. Short-term investments are valued at amortized cost which
approximates quoted market value.
IN THE MAIL . . .
On January 5, Firstar mailed your annual statements recapping all account
activity for 1999, including distribution information for October and December.
Please hold on to your statement for tax preparation purposes.
BRANDYWINE BLUE FUND
PERCENT CHANGE IN TOP TEN HOLDINGS FROM BOOK COST
1. Nokia Corp. ADR +407.3 6. Nortel Networks Corp. +182.4
2. Motorola, Inc. +93.7 7. Parametric Technology Corp. +106.2
3. Apple Computer, Inc. +107.2 8. 3Com Corp. +11.8
4. Gap, Inc. +7.1 9. Providian Financial Corp. +10.0
5. Atmel Corp. +75.0 10. LSI Logic Corp. +51.2
EARNINGS GROWTH
Your Companies 55%
S&P 500 10%
FORECASTED INCREASE IN EARNINGS PER SHARE
2000 VS 1999
All figures are dollar weighted and based on data from Baseline. December 31,
1999.
YOUR COMPANIES' MARKET CAPITALIZATION
LARGE CAP
$9 billion and over 55.2%
MID CAP
$2 billion to $9 billion 37.5%
SMALL CAP
below $2 billion 2.7%
CASH 5.6%
TOP TEN INDUSTRY GROUPS
Communications Equipment (16.7%)
Semiconductor Manufacturing (13.8%)
Computer Related (12.0%)
Apparel & Shoe Retailers (10.7%)
Financial/Business Services (10.2%)
Semiconductor Related (5.8%)
Software (5.6%)
Leisure & Entertainment (4.2%)
Networking (3.4%)
Pharmaceuticals (2.7)
All Others (9.3%)
Cash (5.6%)
BRANDYWINE BLUE FUND
DECEMBER QUARTER "ROSES AND THORNS"
$ GAIN
BIGGEST $ WINNERS (IN MILLIONS) % GAIN REASON FOR MOVE
- ----------------- ------------ ------ ------------------------------
Nokia Corp. ADR $16.4 104.4 Nokia exceeded consensus
estimates for the September
quarter with 32 percent year-
over-year earnings growth on a
37 percent revenue increase.
Nokia later guided Wall Street
estimates for 27 percent
revenue growth in 2000 up to
between 30 and 40 percent.
Motorola, Inc. $8.9 67.3 Motorola reported September
earnings of $.53 a share
versus $.07 last year. The
company continues to benefit
from strong demand for its
wireless and semiconductor
equipment.
Apple Computer $8.6 53.1 Apple improved its ability to
meet demand for its newly
upgraded product line this
quarter after falling short in
the September quarter due to a
one-time supply problem.
Strong demand for its G4
desktop, iMac and iBook
computers along with the
recent release of new Mac
operating system (OS9.0)
generated enthusiasm for the
company's December quarter
prospects.
Parametric Technology $8.4 104.6 Internet capabilities boosted
enthusiasm for Parametric's
Windchill software, which
links designers and engineers
with manufacturing
departments, suppliers and
customers. Engineers can order
customized parts over the
Internet, automatically
generate blueprints and
instructions, and even track
parts and synchronize bills.
Nortel Networks Corp. $7.7 96.6 September quarter earnings
outpaced expectations,
increasing 33 percent on
revenue growth of 30 percent.
Nortel benefited from
unprecedented demand for
wireless and optical
transmission products. The
company's optical division is
experiencing 100 percent year-
over-year growth.
$ LOSS
BIGGEST $ LOSERS (IN MILLIONS) % LOSS REASON FOR MOVE
- ---------------- ------------ ------ ------------------------------
Tyco Int'l. Ltd. $3.1 -13.7 Tyco fell on rumors of
questionable accounting
methods for recent
acquisitions. The SEC launched
an informal review to
determine whether Tyco did
anything inappropriate.
Investor sentiment weakened as
Tyco's depressed stock price
limited its ability to make
further acquisitions. We
continue to view this as an
unwarranted, short-term
setback
Cendant Corp. $1.5 -15.2 Higher interest rates and
continued uncertainty
surrounding outstanding
shareholder lawsuits depressed
shares despite strong
fundamentals at the consumer
and business service provider.
Earnings increased 29 percent
in the September quarter.
Best Buy Co. $1.5 -24.0 Best Buy fell after competitor
Tandy announced weak early
December sales, raising
concerns about holiday-season
electronics sales. Those fears
were unwarranted, as the
company reported December
same-store sales increased 9.8
percent on demand for wireless
and digital products.
Tandy Corp. $1.5 -10.2 The owner of RadioShack
electronics chain warned that
sales in the first two weeks
of December were weaker than
expected as it lacked enough
wireless phones and other key
products. The stock tumbled on
the news, while analysts still
anticipate double-digit growth
for the December quarter.
Devon Energy Corp. $1.2 -22.9 Unusually high temperatures in
the U.S. this holiday season
depressed natural gas sales,
causing robust estimates based
on high oil prices to be
revised downward.
All gains/losses are calculated on an average cost basis
BRANDYWINE BLUE FUND, INC.
STATEMENT OF NET ASSETS
December 31, 1999
(Unaudited)
SHARES OR QUOTED
PRINCIPAL MARKET
AMOUNT COST VALUE (B)<F6>
------ ---- -------------
COMMON STOCKS _ 94.4%(A)<F5>
APPAREL & SHOE RETAILERS - 10.7%
137,700 American Eagle Outfitters, Inc. $ 6,210,733 $ 6,196,500
371,600 Gap, Inc. 15,965,406 17,093,600
184,000 Intimate Brands, Inc. 6,820,533 7,935,000
260,600 The Limited, Inc. 11,318,575 11,287,237
------------- -------------
40,315,247 42,512,337
THIS SECTOR IS 5.4% ABOVE YOUR FUND'S COST.
COMMUNICATIONS EQUIPMENT - 16.7%
25,500 Gilat Satellite Networks Ltd. 2,630,624 3,028,125
150,400 Motorola, Inc. 11,431,294 22,146,400
124,700 Nokia Corp. "A" ADR 4,670,168 23,693,000
144,200 Nortel Networks Corp. 5,156,631 14,564,200
49,300 Tellabs, Inc. 2,284,792 3,164,444
------------- -------------
26,173,509 66,596,169
THIS SECTOR IS 154.4% ABOVE YOUR FUND'S COST.
COMMUNICATIONS SERVICES - 0.5%
77,500 Infonet Services Corp. 1,830,458 2,034,375
THIS SECTOR IS 11.1% ABOVE YOUR FUND'S COST.
COMPUTER RELATED - 12.0%
126,000 Adaptec, Inc. 3,196,752 6,284,250
28,000 Amdocs Limited 680,704 966,000
207,200 Apple Computer, Inc. 10,280,798 21,302,750
100,900 Gateway, Inc. 4,711,309 7,271,106
88,200 Microchip Technology, Inc. 3,804,942 6,036,188
63,900 SanDisk Corp. 4,991,025 6,150,375
------------- -------------
27,665,530 48,010,669
THIS SECTOR IS 73.5% ABOVE YOUR FUND'S COST.
ELECTRONICS - 2.1%
46,300 Avnet, Inc. 2,653,820 2,801,150
37,700 Epcos AG 1,256,707 2,815,719
58,700 Molex Inc. Class A 2,226,344 2,656,175
------------- -------------
6,136,871 8,273,044
THIS SECTOR IS 34.8% ABOVE YOUR FUND'S COST.
FINANCIAL/BUSINESS SERVICES - 10.2%
70,000 Acxiom Corp. 1,713,827 1,680,000
184,200 Capital One Financial Corp. 7,466,738 8,876,137
140,000 The Chase Manhattan Corp. 10,857,430 10,876,250
95,600 Convergys Corp. 2,652,497 2,939,700
60,000 The Hertz Corp. 2,851,866 3,007,500
147,400 Providian Financial Corp. 12,205,029 13,422,613
------------- -------------
37,747,387 40,802,200
THIS SECTOR IS 8.1% ABOVE YOUR FUND'S COST.
LEISURE & ENTERTAINMENT - 4.2%
205,800 Carnival Corp. 9,225,650 9,839,813
140,000 Royal Caribbean Cruises Ltd. 6,372,060 6,903,750
------------- -------------
15,597,710 16,743,563
THIS SECTOR IS 7.3% ABOVE YOUR FUND'S COST.
MACHINERY & MISCELLANEOUS MANUFACTURING - 1.6%
165,000 Tyco International Ltd. 5,758,337 6,414,375
THIS SECTOR IS 11.4% ABOVE YOUR FUND'S COST.
MEDICAL RELATED - 2.2%
323,900 IMS Health Inc. 8,861,548 8,806,031
THIS SECTOR IS 0.6% BELOW YOUR FUND'S COST.
NETWORKING - 3.4%
289,900 3Com Corp. 12,186,225 13,625,300
THIS SECTOR IS 11.8% ABOVE YOUR FUND'S COST.
OIL/GAS FIELD SERVICES - 0.2%
36,500 Dynegy Inc. 813,361 887,406
THIS SECTOR IS 9.1% ABOVE YOUR FUND'S COST.
PHARMACEUTICALS - 2.7%
161,900 Elan Corp. plc ADR 4,403,482 4,776,050
100,000 Forest Laboratories, Inc. 5,350,073 6,143,750
------------- -------------
9,753,555 10,919,800
THIS SECTOR IS 12.0% ABOVE YOUR FUND'S COST.
SEMICONDUCTOR RELATED - 5.8%
180,400 LSI Logic Corp. 8,055,385 12,177,000
141,000 Micron Technology, Inc. 10,754,694 10,962,750
------------- -------------
18,810,079 23,139,750
THIS SECTOR IS 23.0% ABOVE YOUR FUND'S COST.
SEMICONDUCTOR MANUFACTURING - 13.8%
410,100 Advanced Micro Devices, Inc. 12,528,478 11,867,269
203,400 Amkor Technology, Inc. 4,572,002 5,746,050
544,000 Atmel Corp. 9,192,330 16,082,000
181,700 Cypress Semiconductor Corp. 4,108,684 5,882,537
89,900 Lattice Semiconductor Corp. 4,247,362 4,236,538
262,100 National Semiconductor Corp. 8,664,374 11,221,156
------------- -------------
43,313,230 55,035,550
THIS SECTOR IS 27.1% ABOVE YOUR FUND'S COST.
SOFTWARE - 5.6%
200,000 Compuware Corp. 7,255,332 7,450,000
515,100 Parametric Technology Corp. 6,761,367 13,939,894
12,200 Symantec Corp. 242,475 715,225
------------- -------------
14,259,174 22,105,119
THIS SECTOR IS 55.0% ABOVE YOUR FUND'S COST.
SPECIALTY RETAILING - 2.2%
171,600 BJ's Wholesale Club, Inc. 3,307,026 6,263,400
60,000 CVS Corp. 2,298,846 2,396,250
------------- -------------
5,605,872 8,659,650
THIS SECTOR IS 54.5% ABOVE YOUR FUND'S COST.
MISCELLANEOUS - 0.5%
53,700 Illinova Corp. 1,688,782 1,866,075
THIS SECTOR IS 10.5% ABOVE YOUR FUND'S COST.
------------- -------------
Total common stocks 276,516,875 376,431,413
SHORT-TERM INVESTMENTS - 7.3% (A)<F5>
COMMERCIAL PAPER - 2.5%
$10,000,000 Ford Motor Credit Co.,
due 01/07/00, discount of 6.60% 9,989,000 9,989,000
VARIABLE RATE DEMAND NOTES - 4.8%
18,362,028 Firstar Bank U.S.A., N.A. 18,362,028 18,362,028
870,000 Wisconsin Corporate Central
Credit Union 870,000 870,000
------------- -------------
Total Variable-Rate Demand Notes 19,232,028 19,232,028
------------- -------------
Total Short-Term Investments 29,221,028 29,221,028
------------- -------------
Total Investments $ 305,737,903 405,652,441
-------------
-------------
Liabilities, less cash and
receivables (1.7%) (a)<F5> (6,924,598)
-------------
NET ASSETS $398,727,843
-------------
-------------
Net Asset Value Per Share
($0.01 par value 100,000,000
shares authorized), offering
and redemption price
($398,727,843/11,002,084
shares outstanding) $36.24
------
------
(a)<F5> Percentages of various classifications relate to net assets.
(b)<F6> 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. Short-term investments are valued at amortized cost which
approximates quoted market value.
DINNER, ANYONE?
We were cheered when Peter di Teresa and Susan Dziubinski who see thousands of
fund reports at Morningstar, one of the premier evaluators of mutual funds in
the U.S., said in a Morningstar write-up that they are big fans of the
Brandywine quarterly report. They remarked that our reports are well written and
thorough and as timely as they get.
This inspires us to improve our reports to you even more -- we'd love to be
regarded as being "the best" in the mutual fund industry, but we need your
advice and counsel to head to that goal. If you submit an idea to me that we
incorporate I'll have a Friess teammate host you for dinner or a golf, ski,
snowmobile or family outing.
-Gordon Kaiser
KUDOS FOR YOUR FUND . . .
INVESTOR'S BUSINESS DAILY -- " . . . Brandywine is rebounding . . . by sticking
to its discipline . . . that discipline is what has led to gains this year and
the fund's long-term record . . ." October 1, 1999
---------------
MUTUAL FUNDS MAGAZINE -- "Brandywine gained 63% (from October 8, 1998) through
mid-August, eclipsing its growth-fund peers' 48% and the S&P 500's 42%. What's
more, that comeback was accomplished without the benefit of Internet plays . .
." October 1999
------------
THESTREET.COM -- "The fund has gotten back to doing what it does best . . .
Simply put, Brandywine's back." November 19, 1999
-----------------
MUTUAL FUNDS MAGAZINE -- Brandywine dubbed one of the Best Funds of the Decade.
January 2000
- ------------
THE WALL STREET JOURNAL - "Mr. (John) Rekenthaler (research director of
Morningstar, Inc.) suggests investing with highly regarded managers who aren't
afraid to bet on a small number of stocks or invest heavily in a few market
sectors. In that camp, consider managers such as Brandywine Fund's Foster
Friess." November 30, 1999
-----------------
LOUIS RUKEYSER'S MUTUAL FUNDS -- " . . . Brandywine's performance over the past
12 months has been impressive, with a 54.5% advance that not only beat its
average peer but was more than two-and-a-half times the return of the S&P. It's
nice to have Foster back where he belongs." January 2000
------------
BOARD OF DIRECTORS
John E. Burris
Chairman
Burris Foods, Inc.
Milford, Delaware
Foster S. Friess
President
Friess Associates, Inc.
Jackson, Wyoming
Stig Ramel
Former President
Nobel Foundation
Stockholm, Sweden
Marvin N. Schoenhals
Chairman
WSFS Financial Corp.
Wilmington, Delaware
P.O. Box 4166, Greenville, DE 19807
(800) 656-3017 www.brandywinefunds.com [email protected]
Investment Adviser: FRIESS ASSOCIATES, INC.
Custodian: FIRSTAR BANK MILWAUKEE, NA
Transfer Agent: FIRSTAR MUTUAL FUND SERVICES, LLC
Independent Accountants: PRICEWATERHOUSECOOPERS LLP
Legal Counsel: FOLEY & LARDNER
OFFICERS: Foster S. Friess, President and Treasurer; Lynda Campbell, Vice
President and Secretary; William D'Alonzo, Vice President; John Fraser, Vice
President; Carl Gates, Vice President; 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
