<PAGE> 1
As filed with the Securities and Exchange Commission on November 1, 1996
File No. 33-79742
811-8546
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 3 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 4 /X/
THE BRAMWELL FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
745 Fifth Avenue, New York, New York 10151
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 308-0505
-------------------------------------
Elizabeth R. Bramwell
The Bramwell Funds, Inc.
745 Fifth Avenue, New York, New York 10151
(Name and address of agent for service of process)
------------------------------------
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
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x on November 1, 1996 pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)
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on (date) pursuant to paragraph (a) of Rule 485
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75 days after filing pursuant to paragraph (a)(2) of Rule 485
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on (date) pursuant to paragraph (a)(2) of Rule 485.
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Page 1 of _____ sequentially numbered pages
Exhibit Index on page ____
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The Bramwell Funds, Inc.
CROSS REFERENCE SHEET
(as required by 495(a))
<TABLE>
<CAPTION>
N-1A Item Caption in Prospectus
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<S> <C>
PART A: INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Cover Page Cover Page
Item 2. Synopsis Expense Summary
Item 3. Condensed Financial Information Supplement to Prospectus
Item 4. General Description of Registrant General Description of the Fund; Investment Objectives;
Investment Policies; Risks; Investment Techniques
Item 5. Management of the Fund Management of the Fund; Custodian and Transfer and Dividend
Disbursing Agent
Item 5A. Management's Discussion of Fund Management's Discussion of Fund Performance
Performance
Item 6. Capital Stock and Other Securities Capital Structure; Dividends and Distributions; Taxes;
Information for Shareholders
Item 7. Purchase of Securities Being Offered Investing in The Bramwell Growth Fund; How to Purchase The
Bramwell Growth Fund Shares; Shareholder Services; Service and
Distribution Plan; Share Price and Determination of Net Asset
Value
Item 8. Redemption or Repurchase How to Sell (Redeem) The Bramwell Growth Fund Shares
Item 9. Pending Legal Proceedings Not Applicable
PART B: INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<CAPTION>
Caption in
Prospectus* or Statement of
Additional Information**
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<S> <C> <C>
Item 10. Cover Page Cover Page**
Item 11. Table of Contents Table of Contents**
Item 12. General Information and History Not Applicable
Item 13. Investment Objectives and Policies Investment Objectives and Policies**
Item 14. Management of the Fund Directors and Officers**
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Caption in
Prospectus* or Statement of
N-1A Item Additional Information**
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<S> <C> <C>
Item 15. Control Persons and Principal Holders Directors and Officers**
of Securities
Item 16. Investment Advisory and Other Services Management of the Fund*; Service and Distribution Plan*;
Custodian and Transfer and Dividend Disbursing Agent*; Counsel
and Independent Auditors*; Investment Advisory and Other
Services**; Distribution Plan
Item 17. Brokerage Allocation and Other Practices Portfolio Turnover**; Portfolio Transactions and Brokerage**
Item 18. Capital Stock and Other Securities Capital Structure**
Item 19. Purchase, Redemption and Pricing of Investing in The Bramwell Growth Fund*; How to
Securities Being Offered Purchase The Bramwell Growth Fund Shares*; Shareholder
Services*; Share Price and Determination of Net Asset Value*;
Net Asset Value**
Item 20. Tax Status Tax Status**
Item 21. Underwriters Not Applicable
Item 22. Calculation of Performance Data Performance Information**
Item 23. Financial Statements Financial Statements
</TABLE>
<PAGE> 4
The Bramwell Growth Fund
---------------------------- PROSPECTUS
INVESTMENT ADVISER November 1, 1996
Bramwell Capital Management, Inc.
ADMINISTRATOR
Sunstone Financial Group, Inc.
COUNSEL
Dechert Price & Rhoads
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Coopers & Lybrand L.L.P.
CUSTODIAN AND TRANSFER AND
DIVIDEND DISBURSING AGENT
Firstar Trust Company THE BRAMWELL GROWTH FUND
------------------------
Elizabeth R. Bramwell, CFA
President and Chief Investment Officer
THE BRAMWELL FUNDS, INC.
745 Fifth Avenue
New York, New York 10151
1-800-272-6227
1-800-BRAMCAP
<PAGE> 5
TABLE OF CONTENTS
-----------------
Expense Summary 3
Financial Highlights 3
Management's Discussion of Fund Performance 4
General Description of the Fund 5
Investment Objectives 5
Investment Policies 5
Risks 8
Investment Techniques 8
Management of the Fund 10
Investing in The Bramwell Growth Fund 13
How to Purchase
The Bramwell Growth Fund Shares 14
How to Sell (Redeem)
The Bramwell Growth Fund Shares 16
Shareholder Services 17
Service and Distribution Plan 19
Dividends and Distributions 20
Taxes 20
Fund Performance 21
Share Price and Determination
of Net Asset Value 22
Capital Structure 22
Counsel and Independent Certified
Public Accountants 23
Custodian and Transfer
and Dividend Disbursing Agent 23
Information for Shareholders 23
<PAGE> 6
THE BRAMWELL GROWTH FUND
745 Fifth Avenue
New York, New York 10151
November 1, 1996
PROSPECTUS
The Bramwell Growth Fund (the Fund) is a no-load, diversified mutual fund.
Long-term capital growth is the Fund's primary investment objective. Current
income is a secondary objective.
Bramwell Capital Management, Inc. (BramCap) serves as the Fund's Investment
Adviser. The Fund is offered by The Bramwell Funds, Inc., an open-end, series
management investment company. Elizabeth R. Bramwell, CFA, founder and President
of BramCap, manages the investment program of the Fund.
In selecting securities for the Fund's portfolio, BramCap seeks to identify
companies which, based on such factors as company research, product development
and opportunity for plant or market expansion, are positioned to realize
long-term unit and earnings growth. Companies are analyzed within the context of
a broad macroeconomic and political framework.
Under normal circumstances, the Fund's assets are invested primarily in common
stock and high-grade securities convertible into common stock, but the Fund may
hold cash or cash equivalents and invest without limit in U.S. Government
obligations if BramCap determines that a temporary defensive position is
advisable.
The Fund invests primarily in securities of companies domiciled in the United
States, but may invest up to 25% of its assets, measured at the time of
investment, in securities of foreign issuers.
This Prospectus describes concisely the information about the Fund that you
ought to know before investing. Please read it carefully and retain it for
future reference.
More information about the Fund is contained in a Statement of Additional
Information that has been filed with the Securities and Exchange Commission. To
obtain a free copy, call 1-800- BRAMCAP (1-800-272-6227). The Statement of
Additional Information, which may be revised from time-to-time, is dated
November 1, 1996 and is hereby incorporated by reference into this Prospectus.
Shares of the Fund are not deposits or obligations of, or guaranteed or endorsed
by any bank and are not federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other governmental agency.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
This Prospectus is part of a registration statement that has been filed with the
Securities and Exchange Commission in Washington, DC under the Securities Act of
1933 and the Investment Company Act of 1940.
<PAGE> 7
EXPENSE SUMMARY
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Shareholder Transaction Expenses are charges that you pay when buying or selling
shares of the Fund. Annual Fund Operating Expenses are paid out of the Fund's
assets and include fees for portfolio management, maintenance of shareholder
accounts, general Fund administration, shareholder servicing, accounting and
other services.
Below is a summary of the shareholder transaction expenses imposed by the
Fund and its operating expenses incurred during the fiscal period ended June 30,
1996. Future total operating expenses may be higher or lower than those
indicated. An example based on the summary is also shown.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
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<S> <C>
Maximum Sales Load Imposed on Purchases None
Maximum Sales Load Imposed on
Reinvested Dividends None
Deferred Sales Load None
Redemption Fees (a) None
Exchange Fees (a) None
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- ----------------------------------------------------------
<S> <C>
Management Fees 1.00%
12b-1 Fees (b) 0.25%
Other Expenses (after reimbursement) (c) 0.50%
Total Fund Operating Expenses
(after expense reimbursement) (d) 1.75%
</TABLE>
EXAMPLE
An investor would pay the following expenses on a $1,000 investment, assuming a
5% annual return and redemption at the end of each period:
<TABLE>
<CAPTION>
One Year Three Years Five Years Ten Years
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<S> <C> <C> <C>
$18 $56 $96 $209
</TABLE>
(a) A fee of $10.00 is charged for each wire redemption, and a fee of $5.00 is
charged for each exchange requested by telephone.
(b) The maximum level of distribution expenses is 0.25% per annum of the Fund's
average net assets. See "Service and Distribution Plan" on page 19 for
further details. The distribution expenses for long-term shareholders may
total more than the maximum sales charge that would have been permissible if
imposed entirely as an initial sales charge.
(c) Such expenses include custodian, transfer agency and administration fees and
other customary Fund expenses.
(d) The Fund's investment adviser has voluntarily agreed to limit the total
expenses of the Fund (excluding interest, taxes, brokerage and extraordinary
expenses) to an annual rate of 1.75% of the Fund's average net assets until
June 30, 1997. After such date, the expense limitation may be terminated or
revised at any time. With respect to the fiscal period ended June 30, 1996,
the Fund's investment adviser waived advisory fees amounting to 0.04%
(annualized) of average net assets. Without such waiver, "Total Fund
Operating Expenses" would have been 1.79% (annualized).
The purpose of the preceding table is to assist investors in understanding the
various costs and expenses that an investor in the Fund will bear, directly or
indirectly. The preceding example should not be considered representative of
past or future investment returns and operating expenses which may be more or
less than those shown.
FINANCIAL HIGHLIGHTS
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The "Financial Highlights" in the following table have been derived from the
financial records of the Fund which have been audited for the period ended June
30, 1996 by Coopers & Lybrand L.L.P., independent accountants, whose report
thereon was unqualified and is included in the Statement of Additional
Information. The table should be read in conjunction with the financial
statements and related notes included in the Statement of Additional
Information. Further informa-
3
<PAGE> 8
tion about the performance of the Fund is contained in the Fund's Annual Report
to shareholders, copies of which may be obtained without charge upon request by
calling 1-800-BRAMCAP (1-800-272-6227).
<TABLE>
<CAPTION>
For the
period
Year Aug. 1,
Ended 1994(1) to
June 30, June 30,
1996 1995
- -------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..... $ 12.30 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss................... (0.08) ---(2)
Net realized and unrealized gains
on investments..................... 2.42 2.31
------- -------
TOTAL FROM INVESTMENT OPERATIONS...... 2.34 2.31
------- -------
LESS DISTRIBUTIONS:
Dividends from net investment
income............................. --- (0.01)
Distributions from capital gains......... (0.04) ---
------- -------
TOTAL DISTRIBUTIONS...................... (0.04) (0.01)
------- -------
NET ASSET VALUE, END OF PERIOD........... $ 14.60 $ 12.30
======= =======
TOTAL RETURN............................. 19.0% 23.1%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end
of period (in 000s)................... $141,455 $62,241
Ratio of expenses to average
net assets (3), (4)................ 1.75% 1.75%
Ratio of net investment loss to average
net assets (3), (4)................ (0.66)% (0.11)%
Portfolio turnover rate............... 118% 80%
Average commission rate paid on
portfolio investment transactions.. $0.060 NA
</TABLE>
(1) Commencement of operations
(2) Less than $(0.01)
(3) Net of reimbursements and waivers. Absent reimbursements and waivers of
expenses by adviser, the ratios of expenses and net investment loss to
average net assets for the year ended June 30, 1996 and the period August 1,
1994 to June 30, 1995, would be 1.79% and (0.70)% and 2.68% and (1.04)%,
respectively.
(4) Annualized for the period August 1, 1994 to June 30, 1995.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
- --------------------------------------------------------------------------------
For the twelve months ended June 30, 1996, the U.S. stock market posted strong
gains with the S&P 500 Stock Index rising 25.9% against a backdrop of slow but
steady economic growth, low inflation and moderate interest rates. Larger
capitalization stocks outperformed smaller capitalization stocks. The Bramwell
Growth Fund appreciated 19% during this period, reflecting a focus on companies
with market capitalization stocks of $1 to $5 billion where we think that
longer-term, there are numerous opportunities for above-average growth.
Positive contributions to the Fund's performance during the June fiscal year
came from companies benefitting from new markets, new products, outsourcing,
differentiated consumer and productivity-enhancing products, information data
processing, and financial services. The Fund outperformed in the September 1995
quarter as the result of gains in selected technology stocks and others with
innovative products, backtracked in the December 1995 quarter as the result of
shortfall in expected demand for mobile telecommunications equipment as well as
market move from small to large capitalization stocks, and was restrained in the
March and June 1996 quarters by backup in demand for selected electronic
components and equipment. We remain positive on the investment opportunities
stemming from technological change.
The Fund seeks to invest in companies that are expected to benefit from the
long-term payoff from investment in research, development, capital spending and
market expansion, which may not be reflected in a one-year period in the equity
market, and seeks to invest in companies that are perceived to be attractively
valued relative to their future growth prospects. The Investment Adviser's most
recent outlook is available in the latest report to shareholders which is
available upon request. See also "Management of the Fund - Background of
Investment Adviser" on page 10.
4
<PAGE> 9
GENERAL DESCRIPTION OF THE FUND
- --------------------------------------------------------------------------------
The Bramwell Growth Fund (the Fund) is a no-load, diversified mutual fund.
Shares in the Fund are offered by The Bramwell Funds, Inc. (the Company), a
Maryland corporation organized on June 3, 1994, which is registered as an
open-end management investment company under the Investment Company Act of 1940
(the 1940 Act).
The Company is organized as a series fund which permits it to issue one or
more series of common stock, each representing an investment portfolio with its
own investment objectives. The first of these series is the Fund. Prior to the
sale of Fund shares hereunder, the Company had no operations other than matters
relating to its organization and the creation of the Fund.
Bramwell Capital Management, Inc. (BramCap) serves as the Fund's Investment
Adviser. Elizabeth R. Bramwell, founder and President of BramCap, manages the
investment program of the Fund and is primarily responsible for the day-to-day
management of the Fund's portfolio. Ms. Bramwell, a Chartered Financial Analyst,
has had more than twenty-five years of experience as a securities
analyst/portfolio manager and was previously President, Chief Investment
Officer, Portfolio Manager and a Trustee of The Gabelli Growth Fund. See
"Management of the Fund" on page 10.
The Fund combines the resources of many investors, with each individual
investor having an interest in every one of the securities owned by the Fund,
thereby providing diversification in a variety of industries and issuers. The
Fund's Investment Adviser furnishes continuous professional portfolio management
to select and watch over the Fund's investments. The Fund's ability to buy and
sell larger blocks of securities generally reduces transaction costs. As an
open-end fund, the Fund will redeem any of its outstanding shares on demand of
the owner at the next determined net asset value. Registration of the Company
under the 1940 Act does not involve supervision of the Fund's management or
policies by the Securities and Exchange Commission.
INVESTMENT OBJECTIVES
- --------------------------------------------------------------------------------
Long-term capital growth is the Fund's primary investment objective. Current
income is a secondary objective. Given the Fund's objective to achieve long-term
growth of capital, investment in the Fund may be best suited to investors who
are not concerned with current income. The Fund is not intended by itself to
constitute a balanced investment program.
INVESTMENT POLICIES
- --------------------------------------------------------------------------------
GENERAL
Investments may be in equity securities of well-known, established companies as
well as smaller, less well-known companies. In selecting securities for the
Fund's portfolio, BramCap seeks to identify companies which, based on such
factors as company research, product development and opportunity for plant or
market expansion, are positioned to realize long-term unit and earnings growth.
The Fund may invest an amount not in excess of 5% of its net assets in
securities of issuers with a record of less than three years of continuous
operation, including the operation of any predecessor business. Companies are
analyzed within the context of a broad macroeconomic and political framework.
The Investment Adviser utilizes a blended "top-down" and "bottom-up"
approach. In top-down analysis, focus is on such macroeconomic factors as
inflation, interest, currency, and tax rates; in bottom-up analysis, focus is on
company-specific variables such as competitive industry dynamics, market
leadership, proprietary products and services, and management expertise, as well
as on financial characteristics such as returns on sales and equity, debt/equity
ratios, and earnings and cash flow growth. Primary fundamental research largely
determines investments. Information sources include periodic corporate financial
reports and press releases, corporate financial presentations and meetings with
managements, general economic and industry data as supplied by government
agencies and trade associations, and research reports by broker/dealers.
5
<PAGE> 10
Under normal circumstances, the Fund's assets are invested primarily in
common stock and high grade securities convertible into common stock,
but the Fund may also hold cash or cash equivalents and invest without limit in
U.S. Government obligations if BramCap determines that a temporary defensive
position is advisable when, for example, economic or market conditions are
believed to be adverse, company or industry conditions are deteriorating or
valuations appear excessive relative to future growth rates.
CASH AND CASH EQUIVALENTS
The cash equivalents in which the Fund may invest include fixed- income
securities, such as certificates of deposit of U.S. banks, commercial paper and
commercial paper master notes if the bank or commercial paper issuer has been
rated within the two highest grades assigned by Standard & Poor's Corporation
(S&P) or Moody's Investors Service, Inc. (Moody's) or has been determined by the
Investment Adviser to be of equivalent quality or, in the case of banks,
provided the bank has capital, surplus and undivided profits, as of the date of
its most recently published annual financial statements, with a value in excess
of $100,000,000 at the date of investment. Commercial paper master notes are
unsecured promissory notes issued by corporations to finance short-term credit
needs. They permit a series of short-term borrowings under a single note.
Borrowings under commercial paper master notes are payable in whole or in part
at any time, may be prepared in whole or in part at any time, and bear interest
at rates which are fixed to known lending rates and automatically adjusted when
such known lending rates change. There is no secondary market for commercial
paper master notes. BramCap will monitor the creditworthiness of the issuer of
the commercial paper master notes while any borrowings are outstanding.
U.S. GOVERNMENT OBLIGATIONS
Examples of the types of U.S. Government obligations that may be held by the
Fund include, in addition to U.S. Treasury bonds, notes and bills, the
obligations of Federal Home Loan Banks, Federal Farm Credit Banks, Federal Land
Banks, the Federal Housing Administration, Farmers Home Administration, Export-
Import Bank of the United States, Small Business Administration, Government
National Mortgage Association, Federal National Mortgage Association, General
Services Administration, Student Loan Marketing Association, Central Bank for
Cooperatives, Federal Home Loan Mortgage Corporation, Federal Intermediate
Credit Banks, Tennessee Valley Authority, Resolution Funding Corporation and
Maritime Administration. Obligations of certain agencies and instrumentalities
of the U.S. Government, such as those of the Government National Mortgage
Association, are supported by the full faith and credit of the U.S. Treasury;
others, such as the Export-Import Bank of the United States, are supported by
the right of the issuer to borrow from the Treasury; others, such as those of
the Federal National Mortgage Association, are supported by the discretionary
authority of the U.S. Government to purchase the agency's obligations; still
others, such as those of the Student Loan Marketing Association, are supported
only by the credit of the instrumentality. No assurance can be given that the
U.S. Government would provide financial support to U.S. Government-sponsored
instrumentalities if it is not obligated to do so by law.
INVESTMENTS IN FOREIGN ISSUERS
The Fund invests primarily in securities of companies domiciled in the United
States, but the Fund may also invest up to 25% of its assets, measured at the
time of investment, in securities of foreign issuers. Such investments may be
made either directly in such issuers or indirectly through American Depository
Receipts (ADRs) or closed-end investment companies. It is possible that some
material information about unsponsored ADRs will be unavailable. Investments in
investment companies will not make up more than 10% of the Fund's net assets.
See "Other Investment Companies" on page 7.
Foreign securities involve certain inherent risks that are different from
those of domestic issuers, including political or economic instability of the
issuer or the country of
6
<PAGE> 11
issue, changes in foreign currency and exchange rates and the possibility of
adverse changes in investment or exchange control regulations. Currency
fluctuations will affect the net asset value of the Fund irrespective of the
performance of the underlying investments in foreign issuers. Typically, there
is less publicly available information about a foreign company than about a U.S.
company, and foreign companies may be subject to less stringent reserve,
auditing and reporting requirements. Most foreign stock markets are not as large
or liquid as in the United States; fixed commissions on foreign stock exchanges
are generally higher than the negotiated commissions on U.S. exchanges; and
there is generally less government supervision and regulation of foreign stock
exchanges, brokers and companies than in the United States. Foreign governments
can also levy confiscatory taxes, expropriate assets, and limit repatriations of
assets. As a result of these and other factors, foreign securities purchased by
the Fund may be subject to greater price fluctuation than securities of U.S.
companies.
ILLIQUID OR RESTRICTED SECURITIES
The Fund may invest up to 15% of its net assets in illiquid securities, for
which there is a limited trading market and for which a low trading volume of a
particular security may result in abrupt and erratic price movements. The Fund
may be unable to dispose of its holdings in illiquid securities at acceptable
prices and may have to dispose of such securities over extended periods of time.
The Fund may invest in (i) securities that are sold in private placement
transactions between their issuers and their purchasers and that are neither
listed on an exchange nor traded over-the-counter, and (ii) securities that are
sold in transactions between qualified institutional buyers pursuant to Rule
144A under the Securities Act of 1933, as amended. Such securities are subject
to contractual or legal restrictions on subsequent transfer. As a result of the
absence of a public trading market, such restricted securities may in turn be
less liquid and more difficult to value than publicly traded securities.
Although these securities may be resold in privately negotiated transactions,
the prices realized from the sales could, due to illiquidity, be less than those
originally paid by the Fund or less than their fair value and in some instances,
it may be difficult to locate any purchaser. In addition, issuers whose
securities are not publicly traded may not be subject to the disclosure and
other investor protection requirements that may be applicable if their
securities were publicly traded. If any privately placed or Rule 144A securities
held by the Fund are required to be registered under the securities laws of one
or more jurisdictions before being resold, the Fund may be required to bear the
expenses of registration. Securities which are freely tradable under Rule 144A
may be treated as liquid if the Board of Directors of the Fund is satisfied that
there is sufficient trading activity and reliable price information. Investing
in Rule 144A securities could have the effect of increasing the level of Fund
illiquidity to the extent that qualified institutional buyers become, for a
time, uninterested in purchasing these securities.
OTHER INVESTMENT COMPANIES
In seeking to attain its investment objectives, the Fund may invest in
securities issued by other investment companies within the limits prescribed by
the 1940 Act. The Fund intends to limit its investments so that, as determined
immediately after a securities purchase is made: (i) not more than 5% of the
value of its net assets will be invested in the securities of any one investment
company; (ii) not more than 10% of the value of its net assets will be invested
in the aggregate in securities of investment companies as a group; and (iii) not
more than 3% of the outstanding voting stock of any one investment company will
be owned by the Fund or by any series of The Bramwell Funds, Inc. as a whole. As
a shareholder of another investment company, the Fund would bear, along with
other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees. These expenses would be in addition to the
advisory and other expenses that a Fund bears in connection with its own
operations.
7
<PAGE> 12
WARRANTS AND RIGHTS
The Fund may invest up to 5% of its net assets in warrants or rights, valued at
the lower of cost or market, which entitle the holder to buy equity securities
during a specific period of time. The Fund will make such investments only if
the underlying equity securities are deemed appropriate by BramCap for inclusion
in the Fund's portfolio. Included in the 5% amount, but not to exceed 2% of net
assets, are warrants and rights whose underlying securities are not traded on
principal domestic or foreign exchanges. Warrants and rights acquired by the
Fund in units or attached to securities are not subject to these restrictions.
FUNDAMENTAL INVESTMENT RESTRICTIONS AND POLICIES
The Fund has adopted certain investment restrictions which are characterized as
fundamental policies which cannot be changed without a shareholder vote.
To maintain portfolio diversification and reduce investment risk, as a matter
of fundamental policy, the Fund may not:
- invest 25% or more of its net assets in issuers conducting their principal
business in the same industry;
- borrow money except for temporary purposes in amounts up to 10% of its net
assets;
- make loans, other than by way of lending portfolio securities, buying debt
securities for its portfolio or entering into repurchase agreements; or
- invest more than 15% of its net assets in illiquid securities.
A list of the Fund's objectives, policies and restrictions, both fundamental
and nonfundamental, is set forth in the Statement of Additional Information. In
order to provide a degree of flexibility, the Fund's investment objectives, as
well as other policies which are not deemed fundamental, may be modified by the
Board of Directors without shareholder approval. Any change in the Fund's
investment objectives may result in the Fund having investment objectives
different from the objectives which the shareholder considered appropriate at
the time of investment in the Fund. However, the Fund will not change any of its
investment objectives, policies or investment restrictions without written
notice to shareholders sent at least 30 days in advance of any such change.
RISKS
- --------------------------------------------------------------------------------
Investment in any mutual fund has inherent risks. There can be no assurance that
the investment objectives of the Fund will be realized or that the Fund's
portfolio will not decline in value. Economic conditions change and stock
markets are volatile. If BramCap judges market conditions incorrectly, the
Fund's portfolio may decline in value. Moreover, investors should be aware that
certain investment policies of the Fund, such as investing in illiquid and
foreign securities, and certain investment techniques of the Fund, such as
investments in options, futures and foreign currency contracts or engaging in
short sales or securities lending as described below, can entail greater than
average risk to the extent such policies and techniques are implemented. These
policies and techniques are described under the headings "Investment Policies"
on page 5 and "Investment Techniques" below.
Options and futures may fail as hedging techniques in cases where the price
movements of the securities underlying the options and futures do not follow the
price movements of the portfolio securities subject to the hedge and the loss
from investing in futures transactions is theoretically potentially unlimited.
Moreover, gains and losses on investments in options and futures depend on the
Investment Adviser's ability to predict correctly the direction of stock prices,
interest rates and other economic factors.
Securities lending involves risks of delay in receiving additional collateral
or in recovering the loaned securities, and possibly loss of rights in the
collateral if the borrower of the securities becomes insolvent.
INVESTMENT TECHNIQUES
- --------------------------------------------------------------------------------
Although not normally anticipated to be widely employed, the Fund may use
various techniques to increase or decrease its exposure to the effects of
possible changes in security prices, currency exchange rates or
8
<PAGE> 13
other factors that affect the value of the Fund's portfolio. These techniques
are used by the Fund for risk or portfolio management purposes or, in the case
of securities lending and repurchase agreements, for incidental income and not
for speculation. See "Risks" on page 8 for a discussion of risks relating to
these techniques.
OPTIONS ON SECURITIES OR INDICES
The Fund may write (i.e., sell) covered put and call options and purchase put
and call options on securities or securities indices that are traded on United
States and foreign exchanges or in the over-the-counter markets. Such options
can include long-term options with durations of up to three years. The value of
the underlying securities on which options may be written at any one time will
not exceed 15% of the net assets of the Fund. The Fund will not purchase put or
call options if the aggregate premium paid for such options would exceed 5% of
its net assets at the time of purchase.
FUTURES
The Fund may enter into financial futures contracts or purchase or sell put and
call options on such futures. Futures are generally bought and sold on
commodities exchanges. The sale of a futures contract creates a firm obligation
by the Fund, as seller, to deliver to the buyer the specific type of financial
instrument called for in the contract at a specific future time for a specified
price (or the net cash amount). Options on futures contracts are similar to
options on securities except that an option on a futures contract gives the
purchaser the right in return for the premium paid to assume a position in a
futures contract and obligates the seller to deliver such position.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
AND OPTIONS ON FOREIGN CURRENCIES
When the Fund holds portfolio securities denominated in a foreign currency, the
Fund may enter into forward foreign currency exchange contracts to attempt to
minimize the risk to the Fund from adverse changes in the relationship between
the U.S. dollar and those foreign currencies. The Fund has no specific
limitation on the percentage of assets it may commit to forward foreign currency
exchange contracts, subject to its stated investment objective and policies,
except that the Fund will not enter into such contracts if the amount of assets
set aside to cover such contracts would impede portfolio management or the
Fund's ability to meet redemption requests. Although forward foreign currency
exchange contracts will be used to protect the Fund from adverse currency
movements, they also involve the risk that anticipated currency movements will
not be accurately predicted.
When the Fund enters into a forward foreign currency exchange contract, it
relies on the other party to consummate the trade. Failure of such party to do
so may result in the Fund's incurring a loss or missing an opportunity to obtain
a price considered to be advantageous.
The Fund may also purchase put and call options and write covered put and call
options on foreign currencies for the purpose of protecting against declines in
the U.S. dollar value of foreign currency denominated portfolio securities and
against increases in the U.S. dollar cost of such securities to be acquired. As
in the case of other kinds of options, however, the writing of an option on a
foreign currency constitutes only a partial hedge, up to the amount of the
premium received, and the Fund could be required to purchase or sell foreign
currencies at disadvantageous exchange rates, thereby incurring losses.
The Fund may cross-hedge currencies by entering into transactions to purchase
or sell one or more currencies that are expected to decline in value relative to
other currencies to which the Fund has or in which the Fund expects to have
portfolio exposure.
SHORT SALES
The Fund may make limited short sales of securities. A short sale is a
transaction in which the Fund sells a security it does not own in anticipation
that the market price of that security will decline. The market value of the
securities sold short will not exceed either 5% of the Fund's net assets or 5%
of each issuer's voting securities. The Fund may also make short sales "against
the box" without respect to such limitations. In this type of
9
<PAGE> 14
short sale, at the time of the sale, the Fund owns or has the immediate and
unconditional right to acquire at no additional cost the identical security.
SECURITIES LENDING
For incremental income purposes, the Fund may lend its portfolio securities
constituting up to 30% of its net assets to U.S. or foreign banks or
broker/dealers which have been rated within the two highest grades assigned by
S&P or Moody's, or which have been determined by BramCap to be of equivalent
quality. BramCap is responsible for monitoring compliance with this rating
standard during the term of any securities lending agreement. With any loan of
portfolio securities, there is a risk that the borrowing institution will fail
to redeliver the securities when due. However, loans of securities by the Fund
will be fully collateralized at all times by at least 100% of the current market
value of the lent securities.
REPURCHASE AGREEMENTS
Repurchase agreements may also be entered into by the Fund for incremental
income purposes.
The Fund may enter into repurchase agreements with any foreign or domestic
bank or broker/dealer if the bank or broker/dealer has been rated within the two
highest grades assigned by S&P or Moody's or has been determined by the
Investment Adviser to be of equivalent quality. BramCap is responsible for
monitoring compliance with this rating standard during the term of any
repurchase agreement. The Fund will not enter into repurchase agreements with
entities other than banks or broker/dealers or invest over 5% of its assets in
repurchase agreements with maturities of more than seven days.
A repurchase agreement provides a means for the Fund to earn income on funds
for periods as short as overnight. It is an arrangement under which the Fund
acquires a security and the seller agrees, at the time of sale, to repurchase
the security at a specified time and price. Securities subject to a repurchase
agreement are held in a segregated account and the value of such securities is
kept at least equal to the repurchase price on a daily basis. The repurchase
price may be higher than the purchase price, the difference being income to the
Fund, or the purchase and repurchase price may be the same, with interest at a
stated rate. In either case, the income to the Fund is unrelated to the interest
rate on the security itself.
MANAGEMENT OF THE FUND
The business and affairs of the Fund are managed under the direction of the
Board of Directors.
BACKGROUND OF INVESTMENT ADVISER
Elizabeth R. Bramwell, founder and Chief Executive Officer of BramCap, as well
as President and Chief Investment Officer of the Fund, manages the investment
program of the Fund and is primarily responsible for the day-to-day management
of the Fund's portfolio. Ms. Bramwell, a Chartered Financial Analyst, has had
more than twenty-five years of experience as a securities analyst/portfolio
manager. She was President, Chief Investment Officer, Portfolio Manager, and a
Trustee of The Gabelli Growth Fund from its inception on April 10, 1987 through
February 9, 1994. The cumulative total return for The Gabelli Growth Fund from
its inception through December 31, 1993 was 184%. At December 31, 1993, that
fund had $695 million in net assets. As President and Chief Investment Officer
of The Gabelli Growth Fund, Ms. Bramwell had full discretionary authority over
the selection of investments for that fund. Average annual returns for the
one-year, three-year and five-year periods ended December 31, 1993 and for the
entire period during which Ms. Bramwell managed that fund compared with the
performance of the Standard & Poor's 500 Composite Stock Price Index were:
<TABLE>
<CAPTION>
The Gabelli S&P 500
Growth Fund (a,b) Index (c)
--------------------------------------
<S> <C> <C>
One Year 11.3% 10.1%
Three Years 16.0% 15.6%
Five Years 16.5% 14.6%
Inception through
February 9, 1994 16.6% 10.8%
</TABLE>
(Footnotes on the following page)
10
<PAGE> 15
(a) Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.
(b) The expense ratio of The Gabelli Growth Fund was capped at 2.00% for the
period April 10, 1987 to December 31, 1987 (reflecting annualized
reimbursement of expenses of 4.45%) and was capped at 2.30% for the 1988
calendar year, reflecting reimbursement of expenses of 2.08%. Thereafter,
the expense ratio declined from 1.85% to 1.41%, reflecting, in general,
economies of scale associated with an increase in assets under management.
The expense ratio of the Fund is capped at 1.75% through June 30, 1996.
(c) The Standard & Poor's 500 Composite Stock Price Index is an unmanaged index
of common stocks that is considered to be generally representative of the
United States stock market. The Index is adjusted to reflect reinvestment
of dividends.
Historical performance is not indicative of future performance. The Gabelli
Growth Fund is a separate fund and its historical performance is not indicative
of the potential performance of the Fund. Share prices and investment returns
will fluctuate reflecting market conditions, as well as changes in company-
specific fundamentals of portfolio securities.
Ms. Bramwell is a graduate of Bryn Mawr College and Columbia University
Graduate School of Business. She began her career as an analyst with Morgan
Guaranty Trust Company from 1967 through 1973 (Assistant Vice President
1972-1973), was a securities analyst and Vice President of William D. Witter,
Inc. from 1974 to 1976 and a Vice President and group head in the Investment
Research Department of Bankers Trust Company from 1976 to 1978. Ms. Bramwell was
a Limited Partner of and/or securities analyst with Kenneth S. Davidson
Partners, a private investment partnership from 1979 to 1985, Director of
Research of Gabelli & Company from 1985 through 1989, and President, Chief
Investment Officer, Portfolio Manager, and a Trustee of The Gabelli Growth Fund
from inception on April 10, 1987 through February 9, 1994. Ms. Bramwell founded
Bramwell Capital Management, Inc. on February 23, 1994.
DIRECTORS
In addition to Ms. Bramwell, the Fund's Directors are:
J. Sinclair Armstrong
200 Park Avenue
New York, NY 10166
Director and Secretary, The Reed Foundation (1986-present) (philanthropy);
Partner (1980-1984) and Counsel (1984-1995), Whitman Breed Abbott & Morgan
(formerly Whitman Ransom) (law firm); Executive Vice President, U.S. Trust Co.
of New York (1959- 1980); Assistant Secretary of the Navy for Financial
Management and Comptroller, Department of the Navy (1957-1959); Chairman
(1955-1957) and Commissioner, Securities and Exchange Commission (1953-1957).
Isabel H. Benham
745 Fifth Avenue
New York, NY 10151
Director and former President (1992-1995), Board of Trustees of the John W.
Barringer III National Railroad Library; Director, St. Louis Mercantile Library
(1993-1995); President, Printon Kane Research, Inc. (1978-1991) (railroad
analysis and valuations); Senior Vice President, Shearson Haydon Stone Corp.
(1968-1978).
George F. Keane
450 Post Road East
Westport, CT 06880
Chairman of the Board, Trigen Energy Corporation (1994-present); President
Emeritus and founding Chief Executive Officer (1971- 1992), The Common Fund
(investment management); President Emeritus and Founding Chief Executive Officer
(1988-1992), Endowment Advisers, Inc. (investment management); Director and
Chairman of Investment Committee, United Negro College Fund (1982- present);
Trustee, Nicholas-Applegate Investment Trust (1993- present); Member, Investment
Advisory Committee, New York State Common Retirement Fund (1982-present);
Director, RCB Trust Company (1991-present); Director, National Association of
College & University Business Officers (1993-present); Director, Universal
Stainless & Alloy
11
<PAGE> 16
Products (1994-present) and Global Pharmaceutical Corporation
(1995-present).
James C. Sargent
52 Vanderbilt Avenue
New York, NY 10017
Counsel, Opton, Handler, Gottlieb, Feiler & Katz (1995-present) (law firm);
Director, Scan-Graphics (1992-present); Director, Austin's International
(1992-present); Former Partner, Whitman Breed Abbot & Morgan (formerly Whitman
Ransom) (1964-1994) (law firm); Assistant General Counsel, CIT Finance
Corporation (1960- 1964); Regional Administrator, New York City (1955-1956) and
Commissioner (1956-1960), Securities and Exchange Commission.
Martha R. Seger, Ph.D.
220 Park Avenue
Birmingham, MI 40889
Chairman, Martha Seger & Associates (1992-present); Current Director, Amerisure,
Amoco, Providian, Fluor, Johnson Controls, Kroger, Tucson Electric Power and
Xerox; Governor, Federal Reserve Board (1984-1991); Commissioner of Financial
Institutions, State of Michigan (1981-1982); Chief Economist, Detroit Bank &
Trust (Comerica) (1967-1974).
- --------------------------------------------------------------------------------
Additional information about the Fund's Officers and Directors is contained in
the Statement of Additional Information.
INVESTMENT ADVISER
Bramwell Capital Management, Inc. (BramCap), located at 745 Fifth Avenue, New
York, NY 10151, serves as the Investment Adviser pursuant to an Investment
Advisory Agreement (the Agreement), which provides that the Investment Adviser
will furnish continuous investment advisory services and management to the Fund.
In addition to the Fund, BramCap is the adviser to individual and institutional
accounts. Prior to forming BramCap in February 1994, Ms. Bramwell, who owns all
of the outstanding capital stock of BramCap, and who is the founder and Chief
Executive Officer of BramCap, had twenty-five years of experience as a
securities analyst/portfolio manager, including seven years in which she served
as President, Chief Investment Officer, Portfolio Manager, and a Trustee of The
Gabelli Growth Fund.
The Investment Adviser supervises and manages the investment portfolio of the
Fund, and subject to such policies as the Board of Directors of the Fund may
determine, directs the purchase or sale of investment securities in the
day-to-day management of the Fund's investment portfolio. Under the Agreement,
the Investment Adviser, at its own expense and without reimbursement from the
Fund, furnishes office space and all necessary office facilities, equipment and
executive personnel for making the investment decisions necessary for managing
the Fund and maintaining its organization, and will pay the salaries and fees of
all officers and directors of the Fund (except the fees paid to disinterested
directors). For the foregoing, BramCap receives a monthly fee of 1/12 of 1% (1%
per annum) on the average daily net assets of the Fund. The rate of the advisory
fee is higher than that paid by most mutual funds. For the fiscal period ended
June 30, 1996, BramCap voluntarily waived $43,737 of its advisory fee under the
Agreement.
ADMINISTRATION
Pursuant to an Administration and Fund Accounting Agreement (the Administration
Agreement), Sunstone Financial Group, Inc. (the Administrator), 207 East Buffalo
Street, Suite 400, Milwaukee, WI 53202, prepares and files all federal income
and excise tax returns and state income tax returns (other than those required
to be made by the Fund's Custodian or Transfer Agent), oversees the Fund's
insurance relationships, reviews drafts of the Fund's registration statement and
proxy statements, prepares securities registration compliance filings pursuant
to state securities laws, compiles data for and prepares required notices and
reports to the Securities and Exchange Commission, prepares financial statements
for
12
<PAGE> 17
annual and semiannual reports to investors, monitors compliance with the Fund's
investment policies and restrictions, performs securities valuations, calculates
daily net asset values of the Fund, maintains all general ledger accounts and
related subledgers, prepares and monitors the Fund's expense accruals and causes
all appropriate expenses to be paid from Fund assets, monitors the Fund's status
as a regulated investment company under Subchapter M of the Internal Revenue
Code of 1986, maintains and/or coordinates with the other service providers the
maintenance of the accounts, books and other documents required pursuant to Rule
31a-1 under the 1940 Act, and generally assists in the Fund's administrative
operations. The Administrator, at its own expense and without reimbursement from
the Fund, furnishes office space and all necessary office facilities, equipment,
supplies and clerical and executive personnel for performing the services
required to be performed by it under the Administration Agreement. For the
foregoing, the Administrator receives from the Fund a fee, computed daily and
payable monthly, based on the Fund's average net assets at the annual rate of
0.15 of 1% on the first $50,000,000 of average net assets; at the rate of 0.125
of 1% on average net assets in excess of $50,000,000 and up to $100,000,000; at
the rate of 0.075 of 1% on average net assets in excess of $100,000,000 and up
to $200,000,000; and at the rate of 0.05 of 1% on average net assets in excess
of $200,000,000, plus out-of-pocket expenses. These fees are subject to an
annual minimum of $60,000 per year.
The Fund pays all of its own expenses, including, without limitation, the
cost of preparing and printing its registration statements required under the
Securities Act of 1933 and the 1940 Act and any amendments thereto, the expense
of registering its shares with the Securities and Exchange Commission and in the
various states, advisory and administration fees, costs of organization and
maintenance of corporate existence, the printing and distribution costs of
prospectuses mailed to existing investors, reports to investors, reports to
government authorities and proxy statements, costs of meetings of shareholders,
fees paid to directors who are not interested persons of the Investment Adviser,
interest charges, taxes, legal expenses, association membership dues, auditing
services, insurance premiums, brokerage commissions and expenses in connection
with portfolio transactions, fees and expenses of the custodian of the Fund's
assets, charges of securities pricing services, printing and mailing expenses
and charges and expenses of dividend disbursing agents, accounting services
agents, registrars and stock transfer agents. For the fiscal period ended June
30, 1996, the Fund's expenses, including the advisory fee, equaled 1.75%
(annualized) of the Fund's average net assets. This amount is net of the
advisory fee waived which was equivalent to 0.04% (annualized) of average net
assets.
INVESTING IN THE BRAMWELL GROWTH FUND
- --------------------------------------------------------------------------------
Shares of the Fund may be purchased directly from The Bramwell Funds, Inc. They
may also be purchased through an account that you maintain with a securities
broker or other financial institution (Financial Service Agents). See "How to
Purchase The Bramwell Growth Fund Shares - Purchases Through Financial Service
Agents" on page 15.
If you wish to purchase shares of The Bramwell Growth Fund directly, please
refer to the purchase instructions described under "How to Purchase The Bramwell
Growth Fund Shares" on page 14.
All purchases must be made in U.S. dollars and checks must be drawn on U.S.
banks. No cash will be accepted. A $20 fee will be charged against an investor's
account for any payment check returned to the Transfer Agent for insufficient
funds, stop payment, closed account or other reasons. The investor will also be
responsible for any losses suffered by the Fund as a result. The Fund management
reserves the right to reject any purchase order for Fund shares.
If you have any questions, a Fund telephone representative will be pleased to
provide the information that you need. Please call the following toll-free
number: 1-800-BRAMCAP (1-800-272-6227).
13
<PAGE> 18
HOW TO PURCHASE THE BRAMWELL GROWTH FUND SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BY MAIL OR COURIER To Open an Account To Add to an Account
--------------------------------------- ---------------------------------------
<S> <C> <C>
Complete and sign the Purchase Make your check payable to The Bramwell
Application. Make your check payable to Growth Fund and mail it
The Bramwell Growth Fund. to the address at the left. Put your
By Mail, send to: account name, address and Bramwell
The Bramwell Funds, Inc. account number on your check. Sub-
Mutual Fund Services sequent investment forms will be
P.O. Box 701 included with each shareholder
Milwaukee, WI 53201-0701 statement. A shareholder wishing to add
to an account should complete this form
By Overnight Courier, send to: and include it with the check.
The Bramwell Funds, Inc. Alternatively, include with your check
Mutual Fund Services, Third Floor a note indicating your Bramwell account
615 East Michigan Street number, your name and your address.
Milwaukee, WI 53202
BY TELEPHONE Telephone transactions may not be used Call 1-800-BRAMCAP to make
for initial purchases. If you want to your purchase from a bank checking or
make subsequent telephone transactions, money market account by electronic
please select this service on funds transfer. Specify account
your Purchase Application or call name, address and Bramwell account
1-800-BRAMCAP (1-800-272-6227) to set number. This service must be
up the account. established by you in advance by
following the instructions at the left.
BY WIRE First, call Mutual Fund Services at Follow instructions at the left. Please
1-800-BRAMCAP (1-800-272-6227) to note that wires may be rejected if they
notify them that you intend to purchase do not contain complete account
shares by wire and to verify wire information.
instructions.
Then, wire funds care of Firstar Bank,
Milwaukee, WI
ABA #: 075000022
Credit: Firstar Trust Company
Account #: 112-952-137
Further credit: Bramwell Growth Fund
Shareholder Account #:_________________
Shareholder Name/
Registration:__________________________
Include your name, address and taxpayer
identification number.
</TABLE>
14
<PAGE> 19
The minimum purchase requirements, which may be altered in certain
circumstances, are:
<TABLE>
<CAPTION>
Initial Additional
Investment Investment
-----------------------------
<S> <C> <C>
Regular Accounts $1,000 $100
IRAs and IRA Rollovers 500 100
Non-Working Spousal IRAs 250 100
SEP-IRAs 500 100
Gifts to Minors 500 50
Automatic Investment Plan 50 50
</TABLE>
PURCHASES BY MAIL
Your Purchase Application, if properly filled out and accompanied by payment in
the form of a check made payable to The Bramwell Growth Fund, will be processed
upon receipt by the Transfer Agent. If the Transfer Agent receives your order
and payment by the close of regular trading (currently 4:00 p.m. New York City
time) on the New York Stock Exchange, your shares will be purchased at the net
asset value calculated at the close of regular trading on that day. If received
after that time, your shares will be purchased at the net asset value determined
as of the close of regular trading on the next business day.
PURCHASES THROUGH FINANCIAL SERVICE AGENTS
If you are investing through a Financial Service Agent, please refer to their
program materials for any additional special provisions or conditions that may
be different from those described in this Prospectus. Financial Service Agents
have the responsibility of transmitting purchase orders and funds, and of
crediting their customers' accounts following redemptions, in a timely manner in
accordance with their customer agreements and this Prospectus.
If you place an order for Fund shares through a Financial Service Agent, in
accordance with such Financial Service Agent's procedures and such Financial
Service Agent then transmits your order to the Transfer Agent before 4:00 p.m.,
New York City time on that day, then your purchase will be processed at the net
asset value calculated at 4:00 p.m. New York City time on that day. The
Financial Service Agent must promise to send to the Transfer Agent immediately
available funds in the amount of the purchase price within five business days
for the order.
PURCHASES BY TELEPHONE
Only bank accounts held at domestic financial institutions that are Automated
Clearing House (ACH) members can be used for telephone transactions. Telephone
transactions may not be used for initial purchases. Your account must already be
established prior to initiating telephone purchases. Your shares will be
purchased at the net asset value determined as of the close of regular trading
on the date that the Transfer Agent receives payment for shares purchased by
electronic funds transfer through the ACH system. Most transfers are completed
within three business days after your call to place the order. To preserve
flexibility, the Fund may revise or remove the ability to purchase shares by
phone, or may charge a fee for such service, although currently, the Fund does
not expect to charge a fee. Investors in the Fund may also request by telephone
a change of address, a change in investments made through an Automatic
Investment Plan (see page 18), and a change in the manner in which dividends are
received (see page 20).
The Fund will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. Such procedures may include, among
others, requiring some form of personal identification prior to acting upon
telephone instructions, providing written confirmations of all such
transactions, and/or tape recording all telephone instructions. Assuming
procedures such as the above have been followed, the Fund will not be liable for
any loss, cost, or expense for acting upon an investor's telephone instructions
or for any unauthorized telephone redemption. As a result of this policy, the
investor will bear the risk of any loss unless the Fund has failed to follow
such procedure(s).
PURCHASES BY WIRE
If you purchase your initial shares by wire, you must prepare and file a
Purchase Application, marked "follow- up," with the Transfer Agent. The Transfer
Agent must receive the Purchase Application before any of the
15
<PAGE> 20
shares purchased can be redeemed. You should contact your bank (which will need
to be a commercial bank that is a member of the Federal Reserve System) for
information on sending funds by wire, including any charges that your bank may
make for these services. Wiring instructions are listed on page 14 of this
Prospectus.
MISCELLANEOUS PURCHASE INFORMATION
Federal regulations require that you provide a certified taxpayer identification
number whenever you open or reopen an account. Congress has mandated that if any
shareholder fails to provide and certify to the accuracy of the shareholder's
Social Security number or other taxpayer identification number, the Fund will be
required to withhold 31% of all dividends, distributions and payments, including
redemption proceeds, from such shareholder as a backup withholding procedure.
For reasons of economy and convenience, the Fund will not issue certificates
for shares purchased.
The Fund understands that some Financial Service Agents may impose certain
conditions on their clients which are in addition to or different from those
described in this Prospectus, and, to the extent permitted by applicable
regulatory authorities, may charge their clients direct fees. Certain Financial
Service Agents may receive compensation from the Fund. Certain Financial Service
Agents may enter into agreements with the Fund which permit them to confirm
purchase orders on behalf of customers by phone, with payment to follow no later
than the Fund's pricing on the following business day. If payment is not
received by such time, the Financial Service Agent could be held liable for
resulting fees or losses.
HOW TO SELL (REDEEM) THE BRAMWELL GROWTH FUND SHARES
- --------------------------------------------------------------------------------
You may sell (redeem) your shares at any time. Ordinarily, the Fund makes
payment by check for the shares redeemed within three business days after it
receives your properly completed request. However, the right of redemption may
be suspended or payment may be postponed under unusual circumstances such as
when trading on the New York Stock Exchange is restricted or when it is not
reasonably practical for the Fund to determine the fair market value of its net
assets. Payment of redemption proceeds with respect to shares purchased by check
will not be made until the check or payment received for investment has cleared,
which may take up to 15 calendar days from the purchase date.
Payment of the redemption proceeds for shares of the Fund where an investor
requests wire payment will normally be made in federal funds on the next
business day. The Transfer Agent will wire redemption proceeds only to the bank
and account designated on the Purchase Application or in written instructions
subsequently received by the Transfer Agent, and only if the bank is a
commercial bank that is a member of the Federal Reserve System. The Transfer
Agent currently charges a $10.00 fee for each payment made by wire of redemption
proceeds, which fee will be deducted from the investor's account.
PROCEDURE FOR REQUESTING REDEMPTION
You may request the sale of your shares either by mail or courier or by
telephone as described below.
By Mail:
Sale requests should be mailed to:
The Bramwell Funds, Inc.
Mutual Fund Services
P.O. Box 701
Milwaukee, WI 53201-0701
By Overnight Courier:
The requests should be sent to:
The Bramwell Funds, Inc.
Mutual Fund Services, Third Floor
615 E. Michigan Street
Milwaukee, WI 53202
The selling price of each share being redeemed will be the Fund's per share
net asset value next calculated after receipt of all required documents in good
order.
Good order means that the request must include:
- - Your Bramwell account number
16
<PAGE> 21
- - The number of shares or dollar amount to be sold (redeemed)
- - The signatures of all account owners exactly as they are registered on the
account
- - Any required signature guarantees
- - Any supporting legal documentation that is required in the case of estates,
trusts, corporations or partnerships
- - In the case of shares being redeemed from an IRA or IRA/SEP Plan, a statement
of whether or not federal income tax should be withheld (in the absence of
any statement, federal tax will be withheld)
A signature guarantee of each owner is required to redeem shares in the
following situations: (i) if you change ownership on your account; (ii) when you
want the redemption proceeds sent to a different address from that registered on
the account; (iii) if the proceeds are to be made payable to someone other than
the account's owner(s); (iv) any redemption transmitted by federal wire transfer
to your bank; and (v) if a change of address request has been received by the
Fund or the Transfer Agent within the last 15 days. In addition, signature
guarantees are required for all redemptions of $25,000 or more from any
shareholder account.
Signature guarantees are designed to protect both you and the Fund from
fraud. Signature guarantees can be obtained from most banks, credit unions or
savings associations, or from broker/dealers, municipal securities
broker/dealers, government securities broker/dealers, national securities
exchanges, registered securities associations or clearing agencies deemed
eligible by the Securities and Exchange Commission. Notaries public cannot
provide signature guarantees.
By Telephone:
Shares of the Fund may also be sold by calling the Transfer Agent at
1-800-BRAMCAP. In order to utilize this procedure for telephone redemption, a
shareholder must have previously elected this procedure in writing, which
election will be reflected in the records of the Transfer Agent, and the
redemption proceeds must be mailed directly to the investor or transmitted to
the investor's predesignated account at a domestic bank. To change the
designated account, send a written request with signature(s) guaranteed to the
Transfer Agent. To change the address, call the Transfer Agent at 1-800-BRAMCAP
or send a written request with signature(s) guaranteed to the Transfer Agent.
Any written redemption requests received within 15 days after an address change
must be accompanied by a signature guarantee and no telephone redemptions will
be allowed within 15 days of such a change. The Fund reserves the right to limit
the number of telephone redemptions by an investor. Once made, telephone
redemption requests may not be modified or canceled. The selling price of each
share being redeemed will be the Fund's per share net asset value next
calculated after receipt by the Transfer Agent of the telephone redemption
request.
The Fund will not be liable for following instructions communicated by
telephone that it reasonably believes to be genuine. See "Purchases by
Telephone" on page 15 for discussion of liability for telephone errors.
During periods of substantial economic or market changes, telephone
redemptions may be difficult to implement. If an investor is unable to contact
the Transfer Agent by telephone, shares may also be redeemed by delivering the
redemption request to the Transfer Agent by mail as previously described.
REDEMPTION AT THE OPTION OF THE FUND
The Fund reserves the right to redeem shares held in any account if the net
asset value remains below $500 in order to relieve the Fund of the cost of
maintaining very small accounts. Before such involuntary redemption, the Fund
will give the shareholder 30 days written notice to bring the account up to $500
before any action is taken. This minimum balance requirement does not apply to
IRAs and other tax-sheltered investment accounts. The right of redemption shall
not apply if the value of a shareholder's account drops below $500 as the result
of market action.
SHAREHOLDER SERVICES
- --------------------------------------------------------------------------------
MONEY MARKET EXCHANGE PRIVILEGE
Shareholders of The Bramwell Growth Fund may exchange shares (having a value of
$1,000 or more) for
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<PAGE> 22
shares of the Portico Money Market Fund (Portico). Portico is described in a
separate prospectus which contains more complete information about such fund.
Investors may obtain a copy of the prospectus for the Portico Money Market Fund
by calling 1-800-BRAMCAP (1-800- 272-6227) and are advised to read it carefully
before authorizing any investment in shares of such fund. Investors may
subsequently exchange such shares and shares purchased with reinvested dividends
for shares of the Fund. Firstar Investment Research & Management Company
(FIRMCO), an affiliate of Firstar Trust Company, serves as the investment
adviser to Portico. To make a telephone exchange, the Telephone Exchange option
must have been selected on the Purchase Application when the account was opened.
Otherwise, a written request, including signature guarantees, must be completed
and sent to the Transfer Agent prior to making telephone exchanges. Currently, a
$5.00 fee is charged to the investor's account for each telephone exchange
transacted by the investor. The fee will be charged to the account from which
the funds are being withdrawn prior to effecting the exchange. There is no fee
for a written exchange request. To make a telephone exchange, call the Transfer
Agent at 1-800-BRAMCAP or to make a written exchange, write to The Bramwell
Funds, Inc., Mutual Fund Services, Third Floor, P.O. Box 701, Milwaukee, WI
53201-0701, or for overnight delivery, The Bramwell Funds, Inc., Mutual Fund
Services, Third Floor, 615 East Michigan Street, Milwaukee, WI 53202. The
exchange will be made at the per share net asset value of the shares to be
redeemed, and the per share net asset value of the shares to be purchased, in
both cases as next determined after the exchange request is received. Once an
exchange request is made, either by telephone or in writing, it may not be
modified or canceled. Although there are currently no such limitations, each of
the Fund and Portico reserves the right to limit the frequency of exchanges or
to otherwise restrict exchanges in order to ensure that exchanges do not
disadvantage the Fund or its investors (or in the case of Portico, Portico and
its investors). Investors will be notified at least 60 days in advance of any
changes in such limitations. The exchange privilege is only available in states
where the shares to be purchased may legally be sold.
For federal income tax purposes, an exchange of Fund shares is a taxable
event and accordingly, the investor may realize a capital gain or loss. Before
making an exchange request, the investor should determine the tax consequences
of a particular exchange.
AUTOMATIC INVESTMENT PLAN
The Fund offers an Automatic Investment Plan whereby an investor may
automatically purchase shares of the Fund on a regular basis ($50 minimum per
transaction). Under the Automatic Investment Plan, an investor's designated bank
or other financial institution debits a preauthorized amount on the investor's
account each month or quarter and applies the amount to the purchase of Fund
shares. The Automatic Investment Plan must be implemented with a financial
institution that is a member of the Automated Clearing House (ACH). Also, the
Fund must have a currently effective registration in those states in which it is
required. Applications to establish the Automatic Investment Plan are available
from the Fund.
Using an Automatic Investment Plan facilitates dollar-cost averaging whereby
investing equal dollar amounts periodically in a fluctuating market leads to
buying more shares at lows and fewer shares at highs. Of course, dollar-cost
averaging cannot assure a profit or protect the investor against losses in a
declining market.
RETIREMENT PLANS
The Fund offers the following retirement plans that may allow investors to
shelter some of their income from taxes. Application forms, as well as
descriptions of applicable service fees and certain limitations on contributions
and withdrawals, are available from the Transfer Agent or the Fund upon request.
Investors should be aware that new legislation, effective with the 1997 tax
year, contains important changes for Individual Retirement Plans, including
changes in contribution and
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<PAGE> 23
withdrawal limitations. A revised IRA Disclosure Statement outlining the new
terms and conditions which apply to your IRA will be made available in 1997.
Individual Retirement Account (IRA)
The individual investor can select the shares of The Bramwell Growth Fund to
fund either an IRA, Rollover IRA or a non-working spousal IRA. To establish an
IRA, please complete the IRA Application, and if the assets are being moved from
an existing IRA, please complete the IRA Transfer Form.
Earnings on investments held in an IRA are not taxed until withdrawal.
However, the size of the deduction, if any, allowed for IRA contributions is
limited for individuals who are active participants in an employer-maintained
retirement plan and whose incomes exceed specific limits.
The Fund's minimum initial investment for an IRA is $500 ($250 for spousal
IRAs). The minimum subsequent investment in each case is $100. Under the
Internal Revenue Code of 1986, individuals may make wholly or partly
tax-deductible IRA contributions of up to $2,000 annually, depending on whether
they are active participants in an employer-sponsored retirement plan and on
their earned income level. For 1996 an individual with a non- working spouse
may establish a separate IRA for the spouse under the same conditions and
contribute a maximum of $2,250 annually to either one or both IRAs provided that
no more than $2,000 may be contributed to the IRA of either spouse. Premature
withdrawals from a retirement plan may result in adverse tax consequences.
Simplified Employee Pension Plan (SEP/IRA)
The Fund offers a simplified employee pension (SEP) plan for employers,
including self-employed individuals who wish to purchase Fund shares with
tax-deductible contributions not exceeding annually for any one participant the
lesser of $30,000 or 15% of earned income. Under the SEP plan, employer
contributions are made directly to the IRA accounts of eligible participants. An
employer may also provide for salary reduction contributions, not to exceed
$9,500 in 1996 (as adjusted annually for cost-of-living increases), under a SEP
plan.
SERVICE AND DISTRIBUTION PLAN
- --------------------------------------------------------------------------------
The Fund has adopted a Service and Distribution Plan (the Plan) pursuant to Rule
12b-1 under the 1940 Act. The Plan authorizes payments by the Fund in connection
with the distribution of its shares at an annual rate, as determined from
time-to-time by the Board of Directors, of up to 0.25% of the Fund's average
daily net assets.
Payments may be made by the Fund under the Plan for the purpose of financing
any activity primarily intended to result in the sales of shares of the Fund as
determined by the Board of Directors. Such activities typically include
advertising; compensation for sales and sales marketing activities of Financial
Service Agents and others, such as dealers or distributors; shareholder account
servicing; production and dissemination of prospectuses and sales and marketing
materials; and capital or other expenses of associated equipment, rent,
salaries, bonuses, interest and other overhead. To the extent any activity is
one which the Fund may finance without a Plan, the Fund may also make payments
to finance such activity outside of the Plan and not subject to its limitations.
Payments under the Plan are not tied exclusively to actual distribution and
service expenses, and the payments may exceed distribution and service expenses
actually incurred.
Administration of the Plan is regulated by Rule 12b-1 under the 1940 Act,
which includes requirements that the Board of Directors receive and review at
least quarterly reports concerning the nature and qualification of expenses
which are made, that the Board of Directors approve all agreements implementing
the Plan and that the Plan may be continued from year-to-year only if the Board
of Directors concludes at least annually that continuation of the Plan is likely
to benefit shareholders.
In approving the Plan, the Directors determined, in the exercise of their
business judgment and in light of their fiduciary duties, that there is a
reasonable likelihood that
19
<PAGE> 24
the Plan will benefit the Fund and its shareholders.
The Glass-Steagall Act and other applicable laws prohibit banks from engaging
in the business of underwriting, selling or distributing securities.
Accordingly, banks will be engaged only to provide administrative services.
However, judicial or administrative decisions or interpretations of such laws,
as well as changes in either Federal or State statutes or regulations relating
to the permissible activities of banks and their affiliates, could prevent a
bank from continuing to perform all or a part of its administrative services. In
that case, its shareholder clients would be permitted to remain shareholders of
the Fund and alternative means for continuing the servicing of such shareholders
would be sought. It is not expected that shareholders would suffer any adverse
financial consequences as a result of any of these consequences.
DIVIDENDS AND DISTRIBUTIONS
- --------------------------------------------------------------------------------
The Fund intends to pay dividends from net investment income and net realized
capital gains (not offset by capital loss carryovers) on an annual basis in
December. Investors may elect to reinvest all income dividends and capital gains
distributions in shares of the Fund or in cash as designated on the Purchase
Application. If the investor does not specify an election, all income dividends
and capital gains distributions will automatically be reinvested in full and
fractional shares of the Fund calculated to the nearest 1,000th of a share.
Shares will be purchased at the net asset value in effect on the business day
after the dividend record date and will be credited to the investor's account on
such date. Reinvested dividends and distributions receive the same tax treatment
as those paid in cash.
An investor may change his or her election at any time by calling the
Transfer Agent at 1-800-BRAMCAP or by sending written notification to The
Bramwell Funds, Inc., Mutual Fund Services, P.O. Box 701, Milwaukee, WI
53201-0701. The election is effective for distributions with a dividend record
date on or after the date that the Transfer Agent receives notice of the
election.
TAXES
- --------------------------------------------------------------------------------
FEDERAL TAXES
The Fund intends to elect to be treated and to qualify each year as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986.
Please see the Statement of Additional Information for a summary of requirements
that must be satisfied to so qualify. A regulated investment company generally
is not subject to Federal income tax on income and gains distributed in a timely
manner to its shareholders.
Dividends out of net ordinary income and distributions of net short-term
capital gains are taxable to the recipient U.S. shareholders as ordinary income.
Dividends from net ordinary income may be eligible for the corporate
dividends-received deduction.
The excess of net long-term capital gains over the net short- term capital
losses realized and distributed by the Fund to its U.S. shareholders as capital
gains distributions are taxable to the shareholders as long-term capital gains,
irrespective of the length of time a shareholder may have held his or her stock.
Under current Federal tax law the amount of an income dividend or capital
gains distribution declared by the Fund during October, November or December of
a year to shareholders of record as of a specified date in such a month that is
paid during January of the following year is includable in the prior year's
taxable income of shareholders that are calendar year taxpayers.
Any dividend or distribution received by a shareholder on shares of the Fund
shortly after the purchase of such shares by him or her will have the effect of
reducing the net asset value of such shares by the amount of such dividend or
distribution. Furthermore, such dividend or distribution, although in effect a
return of capital, is subject to applicable taxes to the extent that the
investor is subject to such taxes regardless of the length of time he or she may
have held his or her shares. If a shareholder held shares for six months or less
and during that period received a distribution taxable to such shareholder as
long-term capital gain, any loss realized on the
20
<PAGE> 25
sale of such shares during such six-month period would be a long- term loss to
the extent of such distribution.
A dividend or capital gains distribution with respect to shares of the Fund
held by a tax-deferred or qualified plan, such as an IRA, retirement plan or
corporate pension or profit sharing plan, will not be taxable to the plan.
Distributions from such plans will be taxable to individual participants under
applicable tax rules without regard to the character of the income earned by the
qualified plan.
Shareholders will be advised annually as to the Federal tax status of
dividends and capital gains distributions made by the Fund for the preceding
year. Distributions by the Fund generally will be subject to state and local
taxes.
FOREIGN INCOME TAXES
Investment income received by the Fund from sources within foreign countries may
be subject to foreign income taxes withheld at the source. It is not expected
that the Fund will be able to "pass through" these taxes to shareholders but
such taxes generally will be deductible by the Fund.
FUND PERFORMANCE
- --------------------------------------------------------------------------------
From time-to-time, the Fund may advertise its "average annual total return" over
various periods of time. This total return figure shows the average percentage
change in value of an investment in the Fund from the beginning date of the
measuring period to the ending date of the measuring period. The figure reflects
changes in the price of the Fund's shares and assumes that any income dividends
and/or capital gains distributions made by the Fund during the period are
reinvested in shares of the Fund. Figures will be given for recent one-, five-
and ten-year periods (when applicable), and may be given for other periods as
well (such as from commencement of the Fund's operations, or on a year-by-year
basis). When considering "average" total return figures for periods longer than
one year, investors should note that the Fund's annual total return for any one
year in the period might have been greater or less than the average for the
entire period. The Fund also may use "aggregate" total return figures for
various periods, representing the cumulative change in value of an investment in
the Fund for the specific period (again reflecting changes in the Fund's share
price and assuming reinvestment of dividends and distributions). Aggregate total
returns may be shown by means of schedules, charts or graphs, and may indicate
subtotals of the various components of total return (that is, the change in
value of initial investment, income dividends and capital gains distributions).
The Fund may quote the Fund's average annual total and/or aggregate total
return for various time periods in advertisements or communications to
shareholders. The Fund may also compare its performance to that of other mutual
funds with similar investment objectives and to stock and other relevant indices
or to rankings prepared by independent services or industry publications. For
example, the Fund's total return may be compared to data prepared by Lipper
Analytical Services, Inc., Morningstar, Value Line Mutual Fund Survey and CDA
Investment Technologies, Inc. Total return data as reported in such national
financial publications as The Wall Street Journal, The New York Times,
Investor's Business Daily, USA Today, Barron's, Money, and Forbes as well as in
publications of a local or regional nature, may be used in comparing Fund
performance.
The Fund's total return may also be compared to such indices as the:
- - Dow Jones Industrial Average
- - Standard & Poor's 500 Composite Stock Price Index
- - Nasdaq Composite OTC Index or Nasdaq Industries Index
- - Consumer Price Index
- - Russell 2000 Index
Further information on performance measurement may be found in the Statement
of Additional Information.
21
<PAGE> 26
SHARE PRICE AND DETERMINATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
Shares are purchased at their net asset value per share. The Fund calculates its
net asset value (NAV) as follows:
(Value of Fund Assets) - (Fund Liabilities)
NAV = ---------------------------------------------
Number of Outstanding Shares
Net asset value is determined as of the end of regular trading hours on the
New York Stock Exchange (currently 4:00 p.m. New York City time) on days that
the New York Stock Exchange is open.
A security listed or traded on a recognized stock exchange or quoted on
Nasdaq is valued at its last sale price prior to the time when assets are valued
on the principal exchange on which the security is traded or on Nasdaq. If no
sale is reported at that time, the most current bid price will be used. All
other securities for which over-the-counter market quotations are readily
available are valued at the most current bid price. Where quotations are not
readily available, the Fund's investments are valued at fair value as determined
by management and approved in good faith by the Board of Directors. Debt
securities which will mature in more than 60 days are valued at prices furnished
by Muller Data Corporation, a pricing service, or by a comparable pricing
service approved by the Board of Directors subject to review and determination
of the appropriate price by BramCap, whenever a furnished price is significantly
different from the previous day's furnished price. Securities which will mature
in 60 days or less are valued at amortized cost, which approximates market
value.
Generally, trading in foreign securities, as well as United States Government
securities and certain cash equivalents, repurchase agreements and securities
lending agreements, is substantially completed each day at various times prior
to the close of the New York Stock Exchange. The values of such securities used
in computing the net asset value of the shares of the Fund are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the New York Stock Exchange. Occasionally, events affecting the
value of such securities and such exchange rates may occur between the times at
which they are determined and the close of the New York Stock Exchange, which
will not be reflected in the computation of net asset value. If during such
periods, events occur which materially affect the value of such securities, the
securities will be valued at their fair market value as determined by management
and approved in good faith by the Board of Directors.
For purposes of determining the net asset value per share of the Fund, all
assets and liabilities initially expressed in foreign currencies will be
converted into United States dollars at the mean between the bid and offer
prices of such currencies against United States dollars furnished by a pricing
service approved by the Board of Directors.
CAPITAL STRUCTURE
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES
The Company is organized as a series fund which permits it to issue its
authorized capital stock in one or more series, each such series representing a
separate investment portfolio.
The Company's authorized capital stock consists of 500 million shares of
common stock, $.0001 par value per share, of which there have been initially
allocated 200 million shares to the Fund. The Board of Directors may, at its
discretion, classify and allocate shares to additional series within the Company
or classify and allocate additional shares to the Fund without further action by
the shareholders. Each share outstanding entitles the holder to one vote.
Generally, shares of all series will be voted together as one class, except
where voting by a series is required by law. There will normally be no meetings
of the shareholders for the purpose of electing Directors unless and until such
time as less than a majority of the Directors holding office have been elected
by shareholders.
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<PAGE> 27
COUNSEL AND INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
Dechert Price & Rhoads, 477 Madison Avenue, New York, NY 10022, has passed upon
the validity of the shares offered by this Prospectus and also acts as outside
counsel to the Fund. Margaret A. Bancroft, a member of Dechert Price & Rhoads,
serves as Assistant Secretary of the Fund.
Coopers & Lybrand L.L.P., 411 East Wisconsin Avenue, Milwaukee, WI 53202,
has been selected to serve as independent certified public accountants of the
Company for the fiscal year ending June 30, 1997.
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT
- --------------------------------------------------------------------------------
Firstar Trust Company, which has its principal business address at 615 East
Michigan Street, Third Floor, Milwaukee, WI 53202, has been retained to act as
Custodian of the Fund's investments, and also serves as the Fund's Transfer and
Dividend Disbursing Agent. Neither the Custodian nor the Transfer and Dividend
Disbursing Agent has any part in deciding the Fund's investment policies or
which securities are to be purchased or sold for the Fund's portfolio.
INFORMATION FOR SHAREHOLDERS
- --------------------------------------------------------------------------------
The Fund will provide the following statements and reports to keep the investor
current regarding the status of his or her investment account:
Confirmation After each transaction that affects the account
Statements balance or account registration.
Account Statements Quarterly.
Financial Reports At least semiannually. Annual reports will include
audited financial statements. To reduce Fund
expenses, one copy of each report will be mailed to
each taxpayer identification number even though the
investor may have more than one account in the
Fund.
Investors who have questions about their specific accounts, have general
questions or wish to have additional information should call the Fund at:
1-800-BRAMCAP (1-800-272-6227). In addition, investors who wish to make a change
in their address of record, a change in investments made through an Automatic
Investment Plan or a change in the manner in which dividends are received may
also do so by calling the Fund at that number.
23
<PAGE> 28
THE BRAMWELL GROWTH FUND
A No-Load Diversified Mutual Fund Whose Primary
Investment Objective is to Achieve
Long-Term Capital Growth.
---------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
November 1, 1996
- ---------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus and
should be read in conjunction with the prospectus for The Bramwell Growth Fund
dated November 1, 1996, as amended from time to time, a copy of which may be
obtained without charge by calling 800-BRAMCAP or writing to Sunstone Financial
Group, Inc., 207 East Buffalo Street, Suite 400, Milwaukee, Wisconsin 53202.
<PAGE> 29
TABLE OF CONTENTS
<TABLE>
<S> <C>
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . 1
DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . 8
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . . . . . . . . . . . 11
DISTRIBUTION PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
PORTFOLIO TURNOVER . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . . . . . . . . 13
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 14
TAX STATUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
CAPITAL STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
HOW TO REDEEM SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . 20
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
</TABLE>
<PAGE> 30
INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVES AND POLICIES
Long-term capital growth is the Fund's primary investment objective.
Current income is a secondary objective. Under normal circumstances the Fund's
assets are primarily invested in common stock and high grade securities
convertible into common stock, but the Fund may also hold cash or cash
equivalents and invest without limit in U.S. government obligations if its
investment adviser, Bramwell Capital Management, Inc. determines that a
temporary defensive position is advisable. The Fund may not purchase or retain
the securities of any issuer if those officers or directors of the Fund or its
investment adviser owning individually more than 1/2 of 1% of the securities of
such issuer together own more than 5% of the securities of such issuer.
FUNDAMENTAL INVESTMENT RESTRICTIONS. The following restrictions are deemed to
be fundamental policies and may not be changed without the approval of a
majority of the Fund's outstanding voting securities. Except with respect to
investment restriction 4, the percentage limitations set forth below, as well
as those described elsewhere in the Prospectus and this Statement of Additional
Information, apply only at the time an investment is made or other relevant
action is taken by the Fund.
1. The Fund may not invest 25% or more of its net assets in one or more
issuers conducting their principal business in the same industry.
2. With respect to 75% of its assets, the Fund may not invest more than
5% of the market value of its total assets in the securities of any
single issuer (other than obligations issued or guaranteed as to
principal and interest by the U.S. Government or any agency or
instrumentality thereof);
3. With respect to 75% of its assets, the Fund may not purchase more than
10% of the outstanding voting securities of any issuer (other than
obligations of the U.S. Government);
4. The Fund may not issue senior securities or borrow money except for
temporary purposes in amounts up to 10% of its net assets (including
the amount borrowed) less liabilities (not including the amount
borrowed) at the time of such borrowing, provided that collateral
arrangements with respect to currency exchange contracts, futures
contracts and other permitted investments shall not be deemed to
entail the issuance of senior securities if appropriately covered.
The Fund will not make any investments while outstanding borrowings
exceed 5% of the value of its total assets.
5. The Fund may not make loans, although it may invest in debt
securities, enter into repurchase agreements and lend its portfolio
securities.
6. The Fund may not invest in securities or other assets that the Board
of Directors determines to be illiquid if more than 15% of the Fund's
net assets would be invested in such securities.
<PAGE> 31
7. The Fund may not (a) purchase or sell commodities or commodity
contracts (other than financial futures and related options), (b)
invest in oil, gas, or mineral exploration or development programs or
leases, or (c) purchase securities on margin, except for such
short-term credit as may be necessary for the clearance of
transactions and except for borrowings in amounts not exceeding 10% of
its net assets.
8. The Fund may not purchase or sell real estate or make real estate
mortgage loans or invest in real estate limited partnerships, except
that the Fund may purchase or sell securities issued by entities
engaged in the real estate industry or instruments backed by real
estate.
9. The Fund may not act as an underwriter of securities issued by others,
except to the extent it may be deemed to be an underwriter in
connection with the disposition of portfolio securities of the Fund.
The foregoing restrictions are fundamental policies that may not be
changed without the approval of a majority of the Fund's outstanding voting
securities. As used in this Statement of Additional Information, a majority of
the Fund's outstanding voting securities means the lesser of (a) more than 50%
of its outstanding voting securities or (b) 67% or more of the voting
securities present at a meeting at which more than 50% of the outstanding
voting securities are present or represented by proxy. The Fund's investment
objectives, as well as those policies and restrictions which are not
fundamental, may be modified by the Board of Directors without shareholder
approval if, in the reasonable exercise of its business judgment, modification
is determined to be necessary or appropriate to carry out the Fund's objective.
However, the Fund will not change its investment policies or restrictions
without written notice to shareholders.
Except as otherwise noted herein and in the Fund's prospectus, the
Fund's investment objectives and policies may be changed by a vote of the
Directors without a vote of shareholders. In order to permit the sale of the
Fund's shares in certain states, the Fund may make commitments with respect to
the Fund more restrictive than the investment policies listed above and in the
Prospectus. Should the Fund determine that any commitment made to permit the
sale of the Fund's shares in any state is no longer in the best interests of
the Fund, it will revoke the commitment by terminating sales of the Fund's
shares in the state involved.
FURTHER INFORMATION ON THE NATURE OF THE FUND'S INVESTMENTS
GENERAL CHARACTERISTICS OF CONVERTIBLE SECURITIES. The Fund may invest only in
high grade convertible securities; that is, bonds, notes, debentures, preferred
stocks and other securities which are convertible into common stocks. "High
grade" securities are those rated within the three highest ratings categories
of Standard & Poor's Corporation (S&P) or Moody's Investors Service, Inc.
(Moody's) or that are determined by the investment adviser to be of equivalent
quality. Investments in convertible securities may provide incidental income
through interest and dividend payments and/or an opportunity for capital
appreciation by virtue of their conversion or exchange features.
Convertible debt securities and convertible preferred stocks, until
converted, have general characteristics similar to both debt and equity
securities. Although to a lesser extent than with debt securities generally,
the market value of convertible securities tends to decline as interest
2
<PAGE> 32
rates increase and, conversely, tends to increase as interest rates decline.
In addition, because of the conversion or exchange feature, the market value of
convertible securities typically changes as the market value of the underlying
common stocks changes, and, therefore, also tends to follow movements in the
general market for equity securities. As the market price of the underlying
common stock declines, convertible securities tend to trade increasingly on a
yield basis, and so may not experience market value declines to the same extent
as the underlying common stock. When the market price of the underlying common
stock increases, the prices of the convertible securities tend to rise as a
reflection of the value of the underlying common stock, although typically not
as much as the underlying common stock. While no securities investments are
without risk, investments in convertible securities generally entail less risk
than investments in common stock of the same issuer.
As debt securities, convertible securities are investments which
provide for a stream of income (or in the case of zero coupon securities,
accretion of income) with generally higher yields than common stocks.
Convertible securities generally offer lower yields than nonconvertible
securities of similar quality because of their conversion or exchange features.
Convertible securities are generally subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock, of the
same issuer. However, because of the subordination feature, convertible bonds
and convertible preferred stock typically have lower ratings than similar
nonconvertible securities.
GENERAL CHARACTERISTICS OF FOREIGN SECURITIES. Foreign securities involve
certain inherent risks that are different from those of domestic issuers,
including political or economic instability of the issuer or the country of
issue, diplomatic developments which could affect U.S. investments in those
countries, changes in foreign currency and exchange rates and the possibility
of adverse changes in investment or exchange control regulations. As a result
of these and other factors, foreign securities purchased by the Fund may be
subject to greater price fluctuation than securities of U.S. companies.
Most foreign stock markets are not as large or liquid as in the United
States, fixed commissions on foreign stock exchanges are generally higher than
the negotiated commissions on U.S. exchanges, and there is generally less
government supervision and regulation of foreign stock exchanges, brokers and
companies than in the United States. Investors should recognize that foreign
markets have different clearance and settlement procedures and in certain
markets there have been times when settlements have been unable to keep pace
with the volume of securities transactions, making it difficult to conduct such
transactions. Delays in settlement could result in temporary periods when
assets of the Fund are uninvested and no return is earned thereon. The
inability of the Fund to make intended security purchases due to settlement
problems could cause the Fund to miss attractive investment opportunities.
Inability to dispose of portfolio securities due to settlement problems either
could result in losses to the Fund due to subsequent declines in value of the
portfolio security or, if the Fund has entered into a contract to sell the
security, could result in a possible liability to the purchaser. Payment for
securities without delivery may be required in certain foreign markets.
Further, the Fund may encounter difficulties or be unable to pursue legal
remedies and obtain judgments in foreign courts. Foreign governments can also
levy confiscatory taxes, expropriate assets, and limit repatriations of assets.
Typically, there is less
3
<PAGE> 33
publicly available information about a foreign company than about a U.S.
company, and foreign companies may be subject to less stringent reserve,
auditing and reporting requirements. It may be more difficult for the Fund's
agents to keep currently informed about corporate actions such as stock
dividends or other matters which may affect the prices of portfolio securities.
Communications between the United States and foreign countries may be less
reliable than within the United States, thus increasing the risk of delayed
settlements of portfolio transactions or loss of certificates for portfolio
securities. Individual foreign economies may differ favorably or unfavorably
from the U.S. economy in such respects as growth of gross national product,
rate of inflation, capital reinvestment, resource self-sufficiency and balance
of payments position.
Because investments in foreign securities will usually involve
currencies of foreign countries, and because the Fund may hold foreign
currencies, the value of the assets of the Fund as measured in U.S. dollars may
be affected favorably or unfavorably by changes in foreign currency exchange
rates and exchange control regulations, and the Fund may incur costs in
connection with conversions between various currencies. Although the Fund
values its assets daily in terms of U.S. dollars, it does not intend to convert
its holdings of foreign currencies into U.S. dollars on a daily basis. It will
do so from time to time, and investors should be aware of the costs of currency
conversion. Although foreign exchange dealers do not charge a fee for
conversion, they do realize a profit based on the difference (the "spread")
between the prices at which they are buying and selling various currencies.
Thus, a dealer may offer to sell a foreign currency to the Fund at one rate,
while offering a lesser rate of exchange should the Fund desire to resell that
currency to the dealer. The Fund will conduct its foreign currency exchange
transactions either on a spot (i.e., cash) basis at the spot rate prevailing in
the foreign currency exchange market, or through entering into forward foreign
currency exchange contracts or purchase or writing put or call options on
foreign currencies.
GENERAL CHARACTERISTICS OF SECURITIES LENDING. In compliance with Securities
and Exchange Commission guidelines, any loans by the Fund of securities in its
portfolio would be required to be secured with collateral (consisting of any
combination of U.S. currency, securities issued or guaranteed by the United
States Government or any agency thereof, or irrevocable letters of credit or
other debt securities issued by entities rated within the two highest grades
assigned by S&P or Moody's or has been determined by the investment adviser to
be of equivalent quality).
The borrower must agree to add to such collateral to cover increases
in the market value of the loaned securities and the Fund must be entitled to
terminate any loan at any time, with the borrower obligated to redeliver
borrowed securities within five trading days. The borrower must agree that the
Fund will receive all dividends, interest or other distributions on loaned
securities and the Fund must be able to vote loaned securities whenever the
right to vote is material to the Fund's performance.
GENERAL CHARACTERISTICS OF OPTIONS. An option on a security is a contract that
permits the purchaser of the option, in return for the premium paid, the right
to buy a specified security, index or currency (in the case of a call option)
or to sell a specified security, index or currency (in the case of a put
option) from or to the writer of the option at a designated price during the
term of the option. An option on a securities index permits the purchaser of
the option, in return for the premium paid, the right to receive from the
seller cash equal to the difference between the closing price of the index and
the exercise price of the option. The gain or loss on an option on an index
depends on price movements in the instruments making up the market, market
segment,
4
<PAGE> 34
industry or other composite on which the underlying index is based, rather than
price movements in individual securities, as is the case with respect to
options on securities. The Fund may write a call or put option only if the
option is "covered." This means that so long as the Fund is obligated as the
writer of a call option, it will own the underlying securities subject to the
call, or hold a call at the same or lower exercise price, for the same exercise
period, and on the same securities as the written call. A put is covered if
the Fund maintains liquid assets with a value equal to the exercise price in a
segregated account, or holds a put on the same underlying securities at an
equal or greater exercise price. Put options and call options typically have
similar structural characteristics and operational mechanics regardless of the
underlying instrument on which they are purchased or sold.
The Fund may invest in both conventional options which generally have
a maximum life of 9 months or less as well as longer term options which may be
exercised for longer periods of up to two or three years. Premiums paid (or
received) upon the purchase (or sale) of these long term options may be two to
three times the price of a short-term option.
The Fund's purchase of a put option on a security might be designed to
protect its holdings in the underlying instrument (or, in some cases, a similar
instrument) against a substantial decline in the market value by giving the
Fund the right to sell such instrument at the option exercise price. The
Fund's purchase of a call option on a security, index or currency might be
intended to protect the Fund against an increase in the price of the underlying
instrument that it intends to purchase in the future by fixing the price at
which it may purchase such instrument. If the Fund sells a call option, the
premium that it receives may serve as a partial hedge, to the extent of the
option premium, against a decrease in the value of the underlying securities or
instruments in its portfolio or will increase the Fund's income. The sale of
put options can also provide income.
Even though the Fund will receive the option premium to help protect
it against loss, a call sold by the Fund exposes the Fund during the term of
the option to possible loss of opportunity to realize appreciation in the
market price of the underlying security or instrument and may require the Fund
to hold a security or instrument which it might otherwise have sold.
The Fund's ability to close out its position as a purchaser or seller
of a put or call option is dependent, in part, upon the liquidity of the option
market. Among the possible reasons for the absence of a liquid option market
on an exchange are: (i) insufficient trading interest in certain options; (ii)
restrictions on transactions imposed by an exchange; (iii) trading halts,
suspensions or other restrictions imposed with respect to particular classes or
series of options or underlying securities including reaching daily price
limits; (iv) interruption of the normal operations of an exchange; (v)
inadequacy of the facilities of an exchange to handle current trading volume;
or (vi) a decision by one or more exchanges to discontinue the trading of
options (or a particular class or series of options), in which event the
relevant market for that option on that exchange would cease to exist, although
outstanding options on that exchange would generally continue to be exercisable
in accordance with their terms.
The hours of trading for listed options may not coincide with the
hours during which the underlying financial instruments are traded. To the
extent that the option markets close before the markets for the underlying
financial instruments, significant price and rate movements can take place in
the underlying markets that cannot be reflected in the option markets.
5
<PAGE> 35
GENERAL CHARACTERISTICS OF FUTURES. The Fund's use of financial futures and
options thereon will in all cases be consistent with applicable regulatory
requirements and in particular the rules and regulations of the Commodity
Futures Trading Commission and will be entered into only for bona fide hedging,
risk management (including duration management) or other portfolio management
purposes. Typically, maintaining a futures contract or selling an option
thereon requires the Fund to deposit with a financial intermediary as security
for its obligations an amount of cash or other specified assets (initial
margin) which initially is typically 1% to 10% of the face amount of the
contract (but may be higher in some circumstances). Additional cash or assets
(variation margin) may be required to be deposited thereafter on a daily basis
as the mark to market value of the contract fluctuates. The purchase of an
option on financial futures involves payment of a premium for the option
without any further obligation on the part of the Fund. If the Fund exercises
an option on a futures contract it will be obligated to post initial margin
(and potential subsequent variation margin) for the resulting futures position
just as it would for any position. Futures contracts and options thereon are
generally settled by entering into an offsetting transaction but there can be
no assurance that the position can be offset prior to settlement at an
advantageous price, nor that delivery will occur.
The Fund will not enter into a futures contract or related option
(except for closing transactions) if, immediately thereafter, the sum of the
amount of its initial margin and premiums on open futures contracts and options
thereon would exceed 5% of the Fund's total assets (taken at current value);
however, in the case of an option that is in-the-money at the time of the
purchase, the in-the-money amount may be excluded in calculating the 5%
limitation.
There can be no assurance that a liquid market will exist at a time
when the Fund seeks to close out a futures or futures option position. The
Fund would be exposed to possible loss on the position during the interval of
inability to close, and would continue to be required to meet margin
requirements until the position is closed, which could result in a decrease in
the Fund's net asset value. The liquidity of a secondary market in a futures
contract may be adversely affected by "daily price fluctuation limits"
established by commodity exchanges which limit the amount of fluctuation in a
futures contract price during a single trading day. Once the daily limit has
been reached in the contract, no trades may be entered into at a price beyond
the limit, thus preventing the liquidation of open futures positions. The
trading of futures contracts is also subject to the risk of trading halts,
suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruptions of normal trading activity, which could at times make it difficult
or impossible to liquidate existing positions or to recover excess variation
margin payments.
GENERAL CHARACTERISTICS OF CURRENCY TRANSACTIONS. A forward foreign currency
exchange contract involves a privately negotiated obligation to purchase or
sell (with delivery generally required) a specific currency at a future date,
which may be any fixed number of days from the date of the contract agreed upon
by the parties, at a price set at the time of the contract. A currency swap is
an agreement to exchange cash flows based on the notional difference among two
or more currencies. The Fund may enter into currency transactions with
counterparties which have received (or the guarantors of the obligations which
have received) a rating within the two highest grades assigned by S&P or
Moody's or that are determined by the investment adviser to be of equivalent
quality.
6
<PAGE> 36
The Fund's dealings in currency transactions will be limited to
hedging involving either specific transactions or portfolio positions.
Transaction hedging is entering into a currency transaction with respect to
specific assets or liabilities of the Fund, which will generally arise in
connection with the purchase or sale of its portfolio securities or the receipt
of income therefrom. Position hedging is entering into a currency transaction
with respect to portfolio security positions denominated or generally quoted in
that currency.
The Fund will not enter into a transaction to hedge currency exposure
to an extent greater, after netting all transactions intended wholly or
partially to offset other transactions, than the aggregate market value (at the
time of entering into the transaction) of the securities held in its portfolio
that are denominated or generally quoted in or currently convertible into such
currency, other than with respect to cross hedging as described below.
The Fund may cross-hedge currencies by entering into transactions to
purchase or sell one or more currencies that are expected to decline in value
relative to other currencies to which the Fund has or in which the Fund expects
to have portfolio exposure.
Currency transactions can result in losses to the Fund if the currency
being hedged fluctuates in value to a degree or in a direction that is not
anticipated. Further, there is the risk that the perceived correlation between
various currencies may not be present or may not be present during the
particular time that the Fund is engaging in proxy hedging.
Currency transactions are subject to risks different from those of
other portfolio transactions. Because currency control is of great importance
to the issuing governments and influences economic planning and policy,
purchases and sales of currency and related instruments can be negatively
affected by government exchange controls, blockages, and manipulations or
exchange restrictions imposed by governments. These can result in losses to
the Fund if it is unable to deliver or receive currency or funds in settlement
of obligations and could also cause hedges it has entered into to be rendered
useless, resulting in full currency exposure as well as incurring transaction
costs. Currency exchange rates may fluctuate based on factors extrinsic to
that country's economy.
USE OF SEGREGATED ACCOUNTS. Futures contracts, options, options on futures
contracts, foreign forward currency contracts and foreign currency contracts
require the Fund to segregate liquid high grade assets with its custodian to
the extent Fund obligations are not otherwise "covered" through ownership of
the underlying security, financial instrument or currency. In general, either
the full amount of any obligation by the Fund to pay or deliver securities or
assets must be covered at all times by the securities, instruments or currency
required to be delivered, or, subject to any regulatory restrictions, an amount
of cash or liquid high grade securities at least equal to the current amount of
the obligation must be segregated with the custodian. The segregated assets
cannot be sold or transferred unless equivalent assets are substituted in their
place or it is no longer necessary to segregate them.
7
<PAGE> 37
INVESTMENT IN UNSEASONED ISSUERS. The Fund may invest in securities of issuers
which have a record of less than three (3) years of continuous operation,
including the operation of any predecessor business of a company which came
into existence as a result of a merger, consolidation, reorganization or
purchase of substantially all of the assets of such predecessor business, if
such purchase would not cause the value of the Fund's investments in all such
companies to exceed 5% of the value of its net assets.
8
<PAGE> 38
DIRECTORS AND OFFICERS
The Directors and Officers of the Fund and their principal occupations during
the past five years are set forth below.
<TABLE>
<CAPTION>
Principal Occupations During the
Positions held Past Five
Name, Address and Age with the Fund Years
--------------------- -------------- ----------------------------------
<S> <C> <C>
Elizabeth R. Bramwell* Director, President and Chief President and Chief Executive
745 Fifth Avenue Executive Officer, Chief Officer, Bramwell Capital
New York, NY 10151 Financial Officer and Chief Management (February
Age: 56 Investment Officer 1994-present); President, Chief
Investment Officer, Portfolio
Manager and Trustee, The Gabelli
Growth Fund (April 1987-February
1994).
J. Sinclair Armstrong Director Partner (1980-1984) and Counsel
200 Park Avenue (1984-1995), Whitman Breed Abbott
New York, NY 10166 & Morgan (formerly Whitman Ransom)
Age: 81 (law firm); Director and
Secretary, The Reed Foundation,
(1986-present) (philanthropy);
Executive Vice President, U.S.
Trust Co. of New York (1959-1980);
Assistant Secretary of the Navy
for Financial Management and
Comptroller, Department of the
Navy (1957-1959); Chairman
(1955-1957) and Commissioner
(1953-1957) of the Securities and
Exchange Commission.
Isabel H. Benham Director Treasurer (1995-present) and
745 Fifth Avenue former President (1992-1995),
New York, NY 10151 Board of Trustees of the John W.
Age: 87 Barringer III National Railroad
Library; Director, Executive
Committee, Finance Committee, St.
Louis Mercantile Library
(1993-1995); President, Printon
Kane Research Inc. (1978-1991)
(railroad analysis and
valuations); Senior Vice
President, Shearson Haydon Stone
Corp. (1968-1978).
</TABLE>
9
<PAGE> 39
<TABLE>
<S> <C> <C>
George F. Keane Director President Emeritus and Senior
450 Post Road East Investment Advisor (1993-present)
Westport, CT 06880 and founding Chief Executive
Age: 67 Officer (1971-1992), The Common
Fund (investment management);
President Emeritus and Senior
Investment Advisor (1993-present)
and Founding Chief Executive
Officer (1988-1992), Endowment
Advisers, Inc. (investment
management); Director and Chairman
of Investment Committee, United
Negro College Fund (1982-present);
Trustee, Nicholas-Applegate
Investment Trust (1993-present);
Member, Investment Advisory
Committee, New York State Common
Retirement Fund (1982-present);
Director, School, College and
University Underwriters Ltd.,
Bermuda (1986-present); Director,
United Educators Risk Retention
Group (1989-present); Director,
RCB Trust Company (1991-present);
Director, National Association of
College & University Business
Officers (1993-present); Chairman
of the Board, Trigen Energy
Corporation (1994-present);
Director, Universal Stainless &
Alloy Products (1994-present).
</TABLE>
10
<PAGE> 40
<TABLE>
<S> <C> <C>
James C. Sargent Director Counsel, Opton, Handler, Gottlieb,
52 Vanderbilt Avenue Feiler & Katz (1995-present) (law
New York, NY 10017 firm); Director, Scan-Graphics
Age: 80 (1992-present); Director, Austin's
International (1992-present);
Partner, Whitman Breed Abbott &
Morgan (formerly Whitman Ransom)
(1964-1994) (law firm); Assistant
General Counsel, CIT Finance
Corporation (1960-1964); Regional
Administrator, New York City
(1955-1956) and Commissioner
(1956-1960), Securities and
Exchange Commission.
Martha R. Seger, Ph.D. Director Chairman, Martha Seger &
220 Park Avenue Associates (1992-present); Current
Birmingham, MI 40889 Director, Amerisure, Amoco,
Age: 64 Providian, Fluor, Johnson
Controls, Kroger, Tucson Electric
Power and Xerox; Governor, Federal
Reserve Board (1984-1991);
Commissioner of Financial
Institutions, State of Michigan
(1981-1982); Chief Economist,
Detroit Bank & Trust
(Comerica)(1967-1974).
Mary F. McCollum Secretary and Treasurer Executive Vice President, Bramwell
745 Fifth Avenue Capital Management (May
New York, NY 10151 1994-present);
Age: 50 Vice President, Operations and
Corporate Secretary (1985-1993),
Assistant Treasurer/ Assistant
Secretary (1983-1985) and
Financial Administrator
(1982-1983), The Common Fund
(investment management).
</TABLE>
11
<PAGE> 41
<TABLE>
<S> <C> <C>
Margaret Bancroft Assistant Secretary Partner, Dechert Price &
477 Madison Avenue Rhoads (law firm and counsel to
New York, NY 10022 the Fund).
Age: 58
</TABLE>
- --------------------
* Directors who are "interested persons" of the Fund, as defined in the
Investment Company Act of 1940 (the 1940 Act). The Directors of the
Fund who are officers or employees of the investment adviser receive
no remuneration from the Fund. Each of the other Directors is paid an
annual retainer of $3,000 and a fee of $500 for each meeting attended
and is reimbursed for the expenses of attending meetings.
12
<PAGE> 42
The following table sets forth information regarding compensation of
the Directors by the Fund for the fiscal year ended June 30, 1996. Officers of
the Fund and Directors who are interested persons of the Fund do not receive
any compensation from the Fund.
COMPENSATION TABLE*
(FISCAL PERIOD ENDED JUNE 30, 1996)
<TABLE>
<CAPTION>
TOTAL
PENSION OR COMPENSATION
AGGREGATE RETIREMENT FROM REGISTRANT
COMPENSATION BENEFITS ACCRUED ESTIMATED AND FUND
FROM AS PART OF ANNUAL BENEFITS COMPLEX PAID**
NAME OF DIRECTOR REGISTRANT FUND EXPENSES UPON RETIREMENT TO DIRECTORS
---------------- ---------- ---------------- --------------- --------------
<S> <C> <C> <C> <C>
Elizabeth R. Bramwell 0 0 0 0
J. Sinclair Armstrong $5,000 None N/A $5,000
Isabel H. Benham $5,000 None N/A $5,000
George F. Keane $5,000 None N/A $5,000
James C. Sargent $5,000 None N/A $5,000
Martha R. Seger $5,000 None N/A $5,000
</TABLE>
- ----------------
* Compensation is for the fiscal year ended June 30, 1996.
** The Fund is not part of any fund complex because it is not related to
any registered investment company and its investment adviser does not
act as investment adviser to any other registered investment company
(although it does act as subadviser with respect to the assets of such
a company); accordingly, the compensation reported in column (5)
includes only compensation paid by the Fund.
As of October 16, 1996, the officers and Directors of the Fund owned
1.5% of the outstanding shares of capital stock of the Fund. The Fund knows of
no person who owns beneficially more than 5% of the capital stock of the Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
For the Fund's first fiscal period (the period from August 1, 1994
through June 30, 1995), the Fund paid the investment adviser an investment
advisory fee of $15,615. During that period, the investment adviser earned an
investment advisory fee of $211,052 pursuant to its investment advisory
agreement with the Fund, but voluntarily waived $195,437 of such fee in order
to limit the Fund's expenses to an annual rate of 1.75% of its average net
assets during such period.
For the fiscal period ended June 30, 1996, the Fund paid the
investment adviser an investment advisory fee of $1,195,114. During that
period, the investment adviser earned an investment advisory fee of $1,238,851
pursuant to its investment advisory agreement with the
13
<PAGE> 43
Fund, but voluntarily waived $43,737 of such fee in order to limit the Fund's
expenses to an annual rate of 1.75% of its average net assets during such
period. The investment adviser has voluntarily agreed to so limit the Fund's
total expenses (excluding interest, taxes, brokerage and extraordinary
expenses) until June 30, 1997. After such date, the expense limitation may be
terminated or revised at any time.
For the Fund's fiscal period from August 1, 1994 through June 30,
1995, the Fund paid the administrator a fee of $58,607. For the fiscal year
ended June 30, 1996, the Fund paid the administrator a fee of $155,413.
DISTRIBUTION PLAN
The Fund has adopted a Service and Distribution Plan (the Plan)
pursuant to Rule 12b-1 under the 1940 Act. The Plan authorizes payments by the
Fund in connection with the distribution of its shares at an annual rate, as
determined from time-to-time by the Board of Directors, or up to 0.25% of the
Fund's average daily net assets.
Payments may be made by the Fund under the Plan for the purpose of
financing any activity primarily intended to result in the sales of shares of
the Fund as determined by the Board of Directors. Such activities typically
include advertising; compensation for sales and sales marketing activities of
Financial Service Agents and others, such as dealers or distributors;
shareholder account servicing; production and dissemination of prospectuses and
sales and marketing materials; and capital or other expenses of associated
equipment, rent, salaries, bonuses, interest and other overhead. To the extent
any activity is one which the Fund may finance without a Plan, the Fund may
also make payments to finance such activity outside of the Plan and not subject
to its limitations. Payments under the Plan are not tied exclusively to actual
distribution and service expenses, and the payments may exceed distribution and
service expenses actually incurred.
For the fiscal year ended June 30, 1996, the distribution expenses
related to the Fund were $67,888 for Fund literature and materials, $82,896 for
advertising, $191,129 for broker fees, and $136,348 for Fund reports and
materials for current shareholders and administration of current accounts. The
Fund paid BramCap $309,708 of the total $478,261 as reimbursement for these
costs under the Plan, with the balance being borne by BramCap.
Administration of the Plan is regulated by Rule 12b-1 under the 1940
Act, which includes requirements that the Board of Directors receive and review
at least quarterly reports concerning the nature and qualification of expenses
which are made, that the Board of Directors approve all agreements implementing
the Plan and that the Plan may be continued from year-to-year only if the Board
of Directors concludes at least annually that continuation of the Plan is
likely to benefit shareholders.
PORTFOLIO TURNOVER
While it is difficult to predict, the investment adviser expects that
the annual portfolio turnover rate of the Fund will not exceed 100%. A greater
rate may be experienced during periods of marketplace volatility which
necessitate more active trading, as was the case in the 1996 fiscal year. A
higher portfolio turnover rate involves greater transaction costs to the Fund
and
14
<PAGE> 44
may result in the realization of net capital gains which would be taxable to
shareholders when distributed. The Fund's annualized portfolio turnover rate
for the fiscal period ended June 30, 1996 was 118%.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to the supervision of the Directors, decisions to buy and sell
securities for the Fund and negotiation of its brokerage commission rates are
made by the investment adviser. Transactions on United States stock exchanges
involve the payment by the Fund of negotiated brokerage commissions. There is
generally no stated commission in the case of securities traded in the
over-the-counter market but the price paid by the Fund usually includes an
undisclosed dealer commission or mark-up. In certain instances, the Fund may
make purchases of underwritten issues at prices which include underwriting
fees.
In selecting a broker to execute each particular transaction, the
investment adviser takes the following into consideration: the best net price
available; the reliability, integrity and financial condition of the broker;
the size and difficulty in executing the order; and the value of the expected
contribution of the broker to the investment performance of the Fund on a
continuing basis. Accordingly, the cost of the brokerage commissions to the
Fund in any transaction may be greater than that available from other brokers
if the difference is reasonably justified by other aspects of the portfolio
execution services offered. For example, the investment adviser will consider
the research and investment services provided by brokers or dealers who effect
or are parties to portfolio transactions of the Fund or the investment
adviser's other clients. Such research and investment services include
statistical and economic data and research reports on particular companies and
industries as well as research software. Subject to such policies and
procedures as the Directors may determine, the investment adviser shall not be
deemed to have acted unlawfully or to have breached any duty solely by reason
of its having caused the Fund to pay a broker that provides research services
to the investment adviser an amount of commission for effecting a portfolio
investment transaction in excess of the amount another broker would have
charged for effecting that transaction, if the investment adviser determines in
good faith that such amount of commission was reasonable in relation to the
value of the research service provided by such broker viewed in terms of either
that particular transaction or the investment adviser's ongoing
responsibilities with respect to the Fund.
Research and investment information is provided by these and other
brokers at no cost to the investment adviser and is available for the benefit
of other accounts advised by the investment adviser and its affiliates, and not
all of the information will be used in connection with the Fund. While this
information may be useful in varying degrees and may tend to reduce the
investment adviser's expenses, it is not possible to estimate its value and in
the opinion of the investment adviser it does not reduce the investment
adviser's expenses in a determinable amount. The extent to which the
investment adviser makes use of statistical, research and other services
furnished by brokers is considered by the investment adviser in the allocation
of brokerage business but there is no formula by which such business is
allocated. The investment adviser does so in accordance with its judgment of
the best interests of the Fund and its shareholders.
For the Fund's fiscal year ended June 30, 1996, the Fund paid a total
of $332,163 in brokerage commissions with respect to portfolio transactions
aggregating $334,485,691. Of such
15
<PAGE> 45
amount, $6,342 in brokerage commissions with respect to portfolio transactions
aggregating $21,976,864 was placed with brokers or dealers who provide research
and investment information.
From commencement of the Fund's business activities on August 1, 1994
through the end of its first fiscal period on June 30, 1995, the Fund paid a
total of $95,724 in brokerage commissions with respect to portfolio
transactions aggregating $58,653,636. Of such amount, $6,342 in brokerage
commissions with respect to portfolio transactions aggregating $3,884,929 was
placed with brokers or dealers who provide research and investment information.
PERFORMANCE INFORMATION
From time to time, quotations of the Fund's performance may be
included in advertisements, sales literature or reports to shareholders or
prospective investors. These performance figures are calculated in the
following manner.
AVERAGE ANNUAL TOTAL RETURN
Average annual total return is the average annual compound rate of
return for periods of one year, five years and ten years, all ended on the last
day of a recent calendar quarter. Average annual total return quotations
reflect changes in the price of the Fund's shares and assume that all dividends
and capital gains distributions during the respective periods were reinvested
in Fund shares. Average annual total return is calculated by computing the
average annual compound rates of return of a hypothetical investment over such
periods, according to the following formula (average annual total return is
then expressed as a percentage):
1/n
T = (ERV/P) - 1
Where:
T = average annual total return
P = a hypothetical initial investment of $1,000
n = number of years
ERV = ending redeemable value: ERV is the value,
at the end of the applicable period, of a
hypothetical $1,000 investment made at the
beginning of the applicable period.
It should be noted that average annual total return is based on
historical earnings and is not intended to indicate future performance.
Average annual total return for the Fund will vary based on changes in market
conditions and the level of the Fund's expenses. The average annual returns
for the fiscal year ended June 30, 1996 and since inception (August 1, 1994)
through June 30, 1996 were 19.0% and 22.1%, respectively.
In connection with communicating its average annual total return to
current or prospective shareholders, the Fund also may compare these figures to
the performance of other mutual funds tracked by mutual fund rating services or
to unmanaged indices which may assume
16
<PAGE> 46
reinvestment of dividends but generally do not reflect deductions for
administrative and management costs.
COMPARISON OF PORTFOLIO PERFORMANCE
Comparison of the quoted non-standardized performance of various
investments is valid only if performance is calculated in the same manner.
Since there are different methods of calculating performance, investors should
consider the effect of the methods used to calculate performance when comparing
performance of the Fund with performance quoted with respect to other
investment companies or types of investments.
In connection with communicating its performance to current or
prospective shareholders, the Fund also may compare these figures to the
performance of unmanaged indices which may assume reinvestment of dividends or
interest but generally do not reflect deductions for administrative and
management costs. Examples include, but are not limited to the Dow Jones
Industrial Average, the Consumer Price Index, Standard & Poor's 500 Composite
Stock Price Index (S&P 500), the NASDAQ OTC Composite Index, the NASDAQ
Industrials Index, and the Russell 2000 Index.
From time to time, in advertising, marketing and other Fund
literature, the performance of the Fund may be compared to the performance of
broad groups of mutual funds with similar investment goals, as tracked by
independent organizations such as Investment Company Data, Inc., Lipper
Analytical Services, Inc., CDA Investment Technologies, Inc., Morningstar,
Inc., Value Line Mutual Fund Survey and other independent organizations. When
these organizations' tracking results are used, the Fund will be compared to
the appropriate fund category, that is, by fund objective and portfolio
holdings or the appropriate volatility grouping, where volatility is a measure
of a Fund's risk. From time to time, the average price-earnings ratio and
other attributes of the Fund's or the model portfolio's securities, may be
compared to the average price-earnings ratio and other attributes of the
securities that comprise the S&P 500.
Statistical and other information, as provided by the Social Security
Administration, may be used in marketing materials pertaining to retirement
planning in order to estimate future payouts of social security benefits.
Estimates may be used on demographic and economic data.
Marketing and other Fund literature may include a description of the
potential risks and rewards associated with an investment in the Fund. The
description may include a "risk/return spectrum" which compares the Fund to
other Bramwell Capital funds or broad categories of funds, such as money
market, bond or equity funds, in terms of potential risks and returns. Money
market funds are designed to maintain a constant $1.00 share price and have a
fluctuating yield. Share price, yield and total return of a bond fund will
fluctuate. The share price and return of an equity fund also will fluctuate.
The description may also compare the Fund to bank products, such as
certificates of deposit. Unlike mutual funds, certificates of deposit are
insured up to $100,000 by the U.S. government and offer a fixed rate of return.
Risk/return spectrums also may depict funds that invest in both
domestic and foreign securities or a combination of bond and equity securities.
17
<PAGE> 47
TAX STATUS
The Fund intends to be taxed as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
Accordingly, the Fund generally must, among other things, (a) derive in each
taxable year at least 90% of its gross income from dividends, interest,
payments with respect to certain securities loans, and gains from the sale or
other disposition of stock, securities or foreign currencies, or other income
derived with respect to its business of investing in such stock, securities or
currencies; (b) derive in each taxable year less than 30% of its gross income
from the sale or other disposition of certain assets held less than three
months, namely: (i) stock or securities; (ii) options, futures, or forward
contracts (other than those on foreign currencies); or (iii) foreign currencies
(or options, futures, or forward contracts on foreign currencies) that are not
directly related to the Fund's principal business of investing in stock or
securities (or options and futures with respect to stock or securities) (the
"30% Limitation"); and (c) diversify its holdings so that, at the end of each
fiscal quarter, (i) at least 50% of the market value of the Fund's assets is
represented by cash, U.S. Government securities, the securities of other
regulated investment companies and other securities, with such other securities
limited, in respect of any one issuer, to an amount not greater than 5% of the
value of the Fund's total assets and 10% of the outstanding voting securities
of such issuer, and (ii) not more than 25% of the value of its total assets is
invested in the securities of any one issuer (other than U.S. Government
securities and the securities of other regulated investment companies).
As a regulated investment company, the Fund generally will not be
subject to U.S. federal income tax on income and gains that it distributes to
shareholders, if at least 90% of the Fund's investment company taxable income
(which includes, among other items, dividends, interest and the excess of any
net short-term capital gains over net long-term capital losses) for the taxable
year is distributed. The Fund intends to distribute substantially all of such
income.
Amounts not distributed on a timely basis in accordance with a
calendar year distribution requirement are subject to a nondeductible 4% excise
tax at the Fund level. To avoid the tax, the Fund must distribute during each
calendar year an amount equal to the sum of (1) at least 98% of its ordinary
income (not taking into account any capital gains or losses) for the calendar
year, (2) at least 98% of its capital gains in excess of its capital losses
(adjusted for certain ordinary losses) for a one-year period generally ending
on October 31 of the calendar year, and (3) all ordinary income and capital
gains for previous years that were not distributed during such years. To avoid
application of the excise tax, the Fund intends to make distributions in
accordance with the calendar year distribution requirement. A distribution
will be treated as paid on December 31 of the current calendar year if it is
declared by the Fund in October, November or December of that year with a
record date in such a month and paid by the Fund during January of the
following year. Such distributions will be taxable to shareholders in the
calendar year in which the distributions are declared, rather than the calendar
year in which the distributions are received.
OPTIONS, FUTURES AND FOREIGN CURRENCY FORWARD CONTRACTS
Some of the options, futures and foreign currency forward contracts in
which the Fund may invest may be "section 1256 contracts." Gains (or losses)
on these contracts generally are considered to be 60% long-term and 40%
short-term capital gains or losses; however foreign currency gains or losses
arising from certain section 1256 contracts are ordinary in character.
18
<PAGE> 48
Also, section 1256 contracts held by the Fund at the end of each taxable year
(and on certain other dates prescribed in the Code) are "marked to market" with
the result that unrealized gains or losses are treated as though they were
realized.
The transactions in options, futures and forward contracts undertaken
by the Fund may result in "straddles" for federal income tax purposes. The
straddle rules may affect the character of gains or losses realized by the
Fund. In addition, losses realized by the Fund on positions that are part of a
straddle may be deferred under the straddle rules, rather than being taken into
account in calculating the taxable income for the taxable year in which such
losses are realized. Because only a few regulations implementing the straddle
rules have been promulgated, the consequences of such transactions to the Fund
are not entirely clear. The straddle rules may increase the amount of
short-term capital gain realized by the Fund, which is taxed as ordinary income
when distributed to shareholders.
The Fund may make one or more of the elections available under the
Code which are applicable to straddles. If the Fund makes any of the
elections, the amount, character and timing of the recognition of gains or
losses from the affected straddle positions will be determined under rules that
vary according to the election(s) made. The rules applicable under certain of
the elections may operate to accelerate the recognition of gains or losses from
the affected straddle positions.
Because application of the straddle rules may affect the character of
gains or losses, defer losses and/or accelerate the recognition of gains or
losses from the affected straddle positions, the amount which must be
distributed to shareholders as ordinary income or long-term capital gain may be
increased or decreased substantially as compared to a fund that did not engage
in such transactions.
The 30% Limitation and the diversification requirements applicable to
the Fund's assets may limit the extent to which the Fund will be able to engage
in transactions in options, futures and forward contracts.
CURRENCY FLUCTUATIONS -- "SECTION 988" GAINS OR LOSSES
Gains or losses attributable to fluctuations in exchange rates which
occur between the time the Fund accrues income or other receivables or accrues
expenses or other liabilities denominated in a foreign currency and the time
the Fund actually collects such receivables or pays such liabilities generally
are treated as ordinary income or ordinary loss. Similarly, on disposition of
some investments, including debt securities and certain forward contracts
denominated in a foreign currency, gains or losses attributable to fluctuations
in the value of the foreign currency between the acquisition and disposition of
the position also are treated as ordinary gain or loss. These gains and
losses, referred to under the Code as "section 988" gains or losses, increase
or decrease the amount of the Fund's investment company taxable income
available to be distributed to its shareholders as ordinary income. If section
988 losses exceed other investment company taxable income during a taxable
year, the Fund would not be able to make any ordinary dividend distributions,
or distributions made before the losses were realized would be recharacterized
as a return of capital to shareholders, rather than as an ordinary dividend,
reducing each shareholder's basis in his or her Fund shares.
19
<PAGE> 49
DISTRIBUTIONS
Distributions of investment company taxable income are taxable to a
U.S. shareholder as ordinary income, whether paid in cash or shares. Dividends
paid by the Fund to a corporate shareholder, to the extent such dividends are
attributable to dividends received from U.S. corporations by the Fund, may
qualify for the dividends received deduction. However, the revised alternative
minimum tax applicable to corporations may reduce the value of the dividends
received deduction. Distributions of net capital gains (the excess of net
long-term capital gains over net short-term capital losses), if any, designated
by the Fund as capital gain dividends, are taxable as long-term capital gains,
whether paid in cash or in shares, regardless of how long the shareholder has
held the Fund's shares and are not eligible for the dividends received
deduction. Shareholders will be notified annually as to the U.S. federal tax
status of distributions and shareholders receiving distributions in the form of
newly issued shares will receive a report as to the net asset value of the
shares received.
If the net asset value of shares is reduced below a shareholder's cost
as a result of a distribution by the Fund, such distribution generally will be
taxable even though it represents a return of invested capital. Investors
should be careful to consider the tax implications of buying shares of the Fund
just prior to a distribution. The price of shares purchased at this time may
reflect the amount of the forthcoming distribution. Those purchasing just
prior to a distribution will receive a distribution which generally will be
taxable to them.
DISPOSITION OF SHARES
Upon a redemption, sale or exchange of his or her shares of the Fund,
a shareholder will realize a taxable gain or loss depending upon his or her
basis in the shares. A gain or loss will be treated as capital gain or loss if
the shares are capital assets in the shareholder's hands and generally will be
long-term or short-term, depending upon the shareholder's holding period for
the shares. Any loss realized on a redemption, sale or exchange will be
disallowed to the extent the shares disposed of are replaced (including through
reinvestment of dividends) within a period of 61 days beginning 30 days before
and ending 30 days after the shares are disposed of. In such a case, the basis
of the shares acquired will be adjusted to reflect the disallowed loss. Any
loss realized by a shareholder on the disposition of the Fund's shares held by
the shareholder for six months or less will be treated for tax purposes as a
long-term capital loss to the extent of any distributions of capital gain
dividends received or treated as having been received by the shareholder with
respect to such shares.
BACKUP WITHHOLDING
The Fund will be required to report to the Internal Revenue Service
(the "IRS") all distributions and gross proceeds from the redemption of the
Fund's shares, except in the case of certain exempt shareholders. All
distributions and proceeds from the redemption of Fund shares will be subject
to withholding of federal income tax at a rate of 31% ("backup withholding") in
the case of non-exempt shareholders if (1) the shareholder fails to furnish the
Fund with and to certify the shareholder's correct taxpayer identification
number or social security number, (2) the IRS notifies the shareholder or the
Fund that the shareholder has failed to report properly certain interest and
dividend income to the IRS and to respond to notices to that effect, or (3)
when required to do so, the shareholder fails to certify that he or she is not
subject to backup
20
<PAGE> 50
withholding. If the withholding provisions are applicable, any such
distributions or proceeds, whether reinvested in additional shares or taken in
cash, will be reduced by the amounts required to be withheld.
OTHER TAXATION
Distributions may also be subject to additional state, local and
foreign taxes depending on each shareholder's particular situation. Non-U.S.
shareholders may be subject to U.S. tax rules that differ significantly from
those summarized above. This discussion does not purport to deal with all of
the tax consequences applicable to the Funds or shareholders. Shareholders are
advised to consult their own tax advisers with respect to the particular tax
consequences to them of an investment in a Fund.
NET ASSET VALUE
The Fund's net asset value per share will be calculated separately
from the per share net asset value of any other fund of the Company. "Assets
belonging to" a fund consist of the consideration received upon the issuance of
shares of the particular fund together with all net investment income,
earnings, profits, realized gains/losses and proceeds derived from the
investment thereof, including any proceeds from the sale of such investments,
any funds or payments derived from any reinvestment of such proceeds, and a
portion of any general assets of the Company not belonging to a particular
series. Each fund will be charged with the direct liabilities of that fund and
with a share of the general liabilities of the Company's funds. Subject to the
provisions of the Charter, determinations by the Directors as to the direct and
allocable expenses, and the allocable portion of any general assets, with
respect to a particular fund are conclusive.
CAPITAL STRUCTURE
DESCRIPTION OF SHARES
The Company is an open-end management investment company organized as
a Maryland corporation on June 3, 1994. The Company's Charter authorizes the
Board of Directors to issue up to 500 million shares of common stock, par value
$.0001 per share. Two hundred million shares of the Company's authorized
common stock have been initially allocated to the Fund. Each share of the Fund
has equal voting, dividend, distribution and liquidation rights.
Shares of the Company have no preemptive rights and only such
conversion or exchange rights as the Board may grant in its discretion. When
issued for payment as described in the Prospectus, the Company's shares will be
fully paid and non-assessable.
Shareholders are entitled to one vote for each full share held, and
fractional votes for fractional shares held, and will vote in the aggregate and
not by class or series except as otherwise required by the 1940 Act or the
Maryland General Corporation Law.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Company shall not be deemed to have been effectively acted
upon unless approved by a majority of the
21
<PAGE> 51
outstanding shares of each fund affected by the matter. A fund is affected by
a matter unless it is clear that the interests of each Fund in the matter are
substantially identical or that the matter does not affect any interest of the
Fund. Under Rule 18f-2 the approval of an investment advisory agreement or
12b-1 distribution plan or any change in a fundamental investment policy would
be effectively acted upon with respect to a fund only if approved by a majority
of the outstanding shares of such Fund. However, the rule also provides that
the ratification of independent public accountants, the approval of principal
underwriting contracts and the election of directors may be effectively acted
upon by shareholders of the Company voting without regard to particular funds.
Notwithstanding any provision of the Maryland General Corporation Law
requiring for any purpose the concurrence of a proportion greater than a
majority of all votes entitled to be cast at a meeting at which a quorum is
present, the affirmative vote of the holders of a majority of the total number
of shares of the Company outstanding (or of a class or series of the Company,
as applicable) will be effective, except to the extent otherwise required by
the 1940 Act and rules thereunder. In addition, the Charter provides that, to
the extent consistent with the General Corporation Law of Maryland and other
applicable law, the By-Laws may provide for authorization to be given by the
affirmative vote of the holders of less than a majority of the total number of
shares of the Company outstanding (or of a class or series).
HOW TO REDEEM SHARES
The right of redemption may be suspended, or the date of payment
postponed beyond the normal seven-day period by the Fund, under the following
conditions authorized by the 1940 Act: (1) for any period (a) during which the
New York Stock Exchange is closed, other than customary weekend or holiday
closing, or (b) during which trading on the New York Stock Exchange is
restricted; (2) for any period during which an emergency exists as a result of
which (a) disposal by the Fund of securities owned by it is not reasonably
practical, or (b) it is not reasonably practical for the Fund to determine the
fair value of its net assets; and (3) for such other periods as the Securities
and Exchange Commission may by order permit for the protection of the Fund's
shareholders.
The value of shares of the Fund on redemption may be more or less than
the shareholder's cost, depending upon the market value of the Fund's assets at
the time. Shareholders should note that if a loss has been realized on the
sale of shares of the Fund, the loss may be disallowed for tax purposes if
shares of the same Fund are purchased within (before or after) 30 days of the
sale.
It is possible that conditions may exist in the future which would, in
the opinion of the Board of Directors, make it undesirable for the Fund to pay
for redemptions in cash. In such cases the Board may authorize payment to be
made in portfolio securities of the Fund. However, the Fund has obligated
itself under the 1940 Act to redeem for cash all shares presented for
redemption by any one shareholder up to $250,000 (or 1% of the Fund's net
assets if that is less) in any 90-day period. Securities delivered in payment
of redemptions are valued at the same value assigned to them in computing the
net asset value per share. Shareholders receiving such securities generally
will incur brokerage costs on their sales.
22
<PAGE> 52
EXPERTS
The Financial Statements of the Fund as of June 30, 1996, included in
this Statement of Additional Information have been so included in reliance on
the report of Coopers & Lybrand L.L.P., independent certified public
accountants, given on the authority of said firm as experts in accounting and
auditing.
23
<PAGE> 53
APPENDIX
RATINGS OF INVESTMENT SECURITIES
A rating of a rating service represents the service's opinion as to
the credit quality of the security being rated. However, the ratings are
general and are not absolute standards of quality or guarantees as to the
creditworthiness of an issuer. Consequently, the Fund's investment adviser
believes that the quality of debt securities in which the Fund invests should
be continuously reviewed. A rating is not a recommendation to purchase, sell
or hold a security, because it does not take into account market value or
suitability for a particular investor. When a security has received a rating
from more than one service, each rating should be evaluated independently.
Ratings are based on current information furnished by the issuer or obtained by
the ratings services from other sources which they consider reliable. Ratings
may be changed, suspended or withdrawn as a result of changes in or
unavailability of such information, or for other reasons.
The following is a description of the characteristics of ratings used
by Moody's Investors Service, Inc. and Standard & Poor's Corporation.
MOODY'S INVESTORS SERVICE, INC. RATINGS.
Aaa--Bonds rated Aaa are judged to be the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt-edge". Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. Although the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such bonds.
Aa--Bonds rated Aa are judged to be high quality by all standards.
Together with the Aaa group they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa bonds or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risk appear somewhat larger than in Aaa bonds.
A--Bonds rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba--Bonds rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
A-1
<PAGE> 54
B--Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds rated Caa are of poor standing. Such bonds may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca--Bonds rated Ca represent obligations which are speculative in a
high degree. Such bonds are often in default or have other marked
shortcomings.
STANDARD & POOR'S CORPORATION RATING.
AAA--Bonds rated AAA have the highest rating. Capacity to pay
principal and interest is extremely strong.
AA--Bonds rated AA have a very strong capacity to pay principal and
interest and differ from AAA bonds only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than bonds in higher rated categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to
pay principal and interest. Whereas they normally exhibit protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds
in this capacity than for bonds in higher rated categories.
BB--B--CCC--CC--Bonds rated BB, B, CCC and CC are regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of the
obligation. BB indicates the lowest degree of speculation among such bonds and
CC the highest degree of speculation. Although such bonds will likely have
some quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
A-2
<PAGE> 55
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements
Included in Part A of the Registration Statement:
Financial Highlights.
Included in Part B of the Registration Statement:
Financial Statements for the period August 1, 1994
(commencement of operations) through June 30, 1996,
including notes thereto, are incorporated by reference in
the Statement of Additional Information from the
Registrant's Annual Report dated as of June 30, 1996. A
copy of the Annual Report is included following the
Statement of Additional Information.
(b) Exhibits
1. Articles of Incorporation*
2. By-Laws*
3. Not Applicable
4. Not Applicable
5. Form of Investment Advisory Agreement**
6. Not Applicable
7. Not Applicable
8. Form of Custodian Agreement**
9. (a) Form of Administrative and Fund Accounting
Agreement**
(b) Form of Transfer Agent Agreement**
10. Opinion and Consent of Dechert Price & Rhoads**
11. Consent of Independent Certified Public Accountants
12. Not Applicable
13. Investment Representation Letters**
14. Form of Individual Retirement Account Disclosure
Statement, Individual Retirement Custodial Account and
Application Forms**
15. Service and Distribution Plan**
- ----------------------------
* Filed with initial Registration Statement on June 3, 1994.
** Filed with Pre-Effective Amendment No. 1 on August 1, 1994.
<PAGE> 56
16. Schedule for computation of performance quotation
provided in response to Item 22
17. Not Applicable
18. Powers of Attorney of Mesdames Bramwell, Benham and
Seger and Messrs. Armstrong, Keane and Sargent**
Item 25. Persons Controlled by or under Common Control with Registrant.
Not applicable.
Item 26. Number of Holders of Securities.
As of September 30, 1996, there were 8,387 record holders of
shares of The Bramwell Growth Fund, the only series of the
Registrant's common stock.
Item 27. Indemnification.
The Registrant is incorporated under the laws of the
State of Maryland and is subject to Section 2-418 of the
Corporation and Associations Article of the General
Corporation Law of the State of Maryland (Maryland Law)
controlling the indemnification of directors and officers.
Since the Registrant has its executive offices in the State of
New York, and is qualified as a foreign corporation doing
business in such State, the persons covered by the foregoing
statute may also be entitled to and subject to the limitations
of the indemnification provisions of Section 721-726 of the
New York Business Corporation Law.
The general effect of these statutes is to protect directors,
officers, employees and agents of the Registrant against legal
liability and expenses incurred by reason of their positions
with the Registrant. The statutes provide for indemnification
for liability for proceedings not brought on behalf of the
corporation and for those brought on behalf of the corporation,
and in each case place conditions under which indemnification
will be permitted, including requirements that the indemnified
person acted in good faith. Under certain conditions, payment
of expenses in advance of final disposition may be permitted.
The Articles of Incorporation of the Registrant make the
indemnification if its directors, officers, employees and
agents mandatory subject only to the conditions and limitations
imposed by the applicable provisions of the Maryland Law and by
the provisions of Section 17(h) of the Investment Company Act
of 1940 (the 1940 Act) as interpreted and required to be
implemented by SEC Release No. IC-11330 of September 4, 1980.
In referring in its Articles of Incorporation to, and making
indemnification of directors subject the conditions and
limitations of, both the applicable provisions of the Maryland
Law and Section 17(h) of the 1940 Act, the Registrant intends
that conditions and limitations on the extent of the
indemnification of directors and officers imposed by the
provisions of either the Maryland Law or Section 17(h) shall
apply and that any inconsistency between the two will be
resolved by applying the provisions of said Section 17(h) if
the condition or limitation imposed by Section 17(h) is the
more stringent. In referring in its Articles of Incorporation
to SEC Release No. IC-11330 as the source for interpretation
and implementation of said Section 17(h), the Registrant
understands that it would be required under its Articles of
Incorporation to use reasonable and fair means in determining
whether indemnification of a director or officer should be made
and undertakes to use either (1) a final decision on the merits
by a court or other body before whom the proceeding was brought
that the person to be indemnified (indemnitee) was not liable
to the Registrant or to its security holders by reason of
willful malfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his or her
office (disabling conduct) or (2) in the absence of such a
decision, a reasonable determination, based upon a review of
the facts, that the indemnitee was not liable by reason of
such disabling conduct, by (a) the vote of a majority of a
quorum of directors who are neither "interested
<PAGE> 57
persons" (as defined in the 1940 Act) of the Registrant nor
parties to the proceeding, or (b) an independent legal counsel
in a written opinion. Also, the Registrant will make advances
of attorney's fees or other expenses incurred by a director or
officer in his or her defense only if (in addition to his or her
undertaking to repay the advance if he or she is not ultimately
entitled to indemnification) (1) the indemnitee provides a
security for his or her undertaking, (2) the Registrant shall be
insured against losses arising by reason of any lawful advances,
or (3) a majority of a quorum of the non-interested, non-party
directors of the Registrant, or an independent legal counsel in
a written opinion, shall determine, based on a review of readily
available facts, that there is reason to believe that the
indemnitee ultimately will be found entitled to indemnification.
In addition, the Registrant will maintain a directors' and
officers' errors and omissions liability insurance policy
protecting directors and officers against liability for claims
made by reason of any acts, errors or omissions committed in
their capacity as directors or officers. The policy will
contain certain exclusions, among which is exclusion from
coverage for active or deliberate dishonest or fraudulent acts
and exclusion for fines or penalties imposed by law or other
matters deemed uninsurable.
Insofar as indemnification for liability arising under the
Securities Act of 1933 (the 1933 Act) may be permitted to
directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.
Item 28. Business and Other Connections of Investment Advisor
The descriptions of the Investment Adviser under the caption
"Management of the Fund" in the Prospectus and in the Statement of
Additional Information constituting Parts A and B, respectively,
of this Registration Statement are incorporated by reference
herein.
Bramwell Capital Management, Inc. also acts as investment adviser
to entities and individuals which are not registered investment
companies and as a subadviser to a registered investment company.
Item 29. Principal Underwriters
Not Applicable.
Item 30. Location of Accounts and Records.
The accounts, books and other documents required to be maintained
by Registrant pursuant to Section 31(a) of the 1940 Act and the
rules promulgated thereunder are in the physical possession of
Registrant, Registrant's Custodian and Registrant's Administrator
as follows: the documents required to be maintained by paragraphs
(4), (5), (6), (7), (9), (10) and (11) of Rule 31a-1(b) will be
maintained by the Registrant; the documents required to be
maintained by paragraphs (1), (2)(i-iii), (8) and (12) of Rule
31a-1(b) will be maintained by Registrant's Administrator; and all
other records will be maintained by the Registrant's Custodian.
Item 31. Not Applicable.
<PAGE> 58
Item 32. The Registrant undertakes to call a meeting of shareholders for
the purpose of voting upon the question of removal of a director,
if requested to do so by the holders of at least 10% of the Fund's
outstanding shares, and that it will assist communication with
other shareholders as required by Section 16(c) of the Investment
Company Act of 1940.
<PAGE> 59
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, Registrant certifies that
it meets all of the requirements for effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York and State of
New York on the 1st day of November, 1996.
THE BRAMWELL FUNDS, INC.
By: *
----------------------
Elizabeth R. Bramwell
President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
*
- ------------------------- Director and President (principal 11/1/96
Elizabeth R. Bramwell executive, financial and accounting
officer)
*
- ------------------------- Director 11/1/96
J. Sinclair Armstrong
* Director 11/1/96
- -------------------------
Isabel H. Benham
* Director 11/1/96
- -------------------------
George F. Keane
*
- ------------------------- Director 11/1/96
James C. Sargent
*
- ------------------------- Director 11/1/96
Martha R. Seger
</TABLE>
*By: /s/ Margaret A. Bancroft
-----------------------------
Margaret A. Bancroft
as Attorney-in-Fact
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
The Bramwell Funds, Inc.
We consent to the inclusion in Post-Effective Amendment No. 3 to the
Registration Statement on Form N-1A of The Bramwell Funds, Inc. of our
report dated July 22, 196, on our audit of the financial statements and
financial highlights of The Bramwell Growth Fund, which constitutes The
Bramwell Funds, Inc., which report is included in the Annual Report for the
year ended June 30, 1996 which is also included in the Registration Statement.
We also consent to the reference to our Firm under the caption, "EXPERTS" in
the Statement of Additional Information and under the caption "Financial
Highlights" in the Prospectus.
Coopers & Lybrand LLP
Milwaukee, Wisconsin
October 31, 1996
<PAGE> 1
Exhibit 16
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATION
FOR THE ONE YEAR PERIOD ENDED JUNE 30, 1996
Total Return = (Ending Redeemable Value/Initial Value) -1
Total Return = 19.0%
19.0% = (14,653/12,311) -1
FOR THE PERIOD FROM AUGUST 1, 1994 (COMMENCEMENT OF OPERATIONS)
TO JUNE 30, 1996
Cumulative Total Return=(Ending Redeemable Value/Initial Payment) - 1
of $10,000
Cumulative total return = 46.5%
46.5% = (14,653/10,000) - 1
1/n
Total Return = (Ending Redeemable Value/Initial Payment) - 1
of $10,000
Total return = 22.1%
1/1.9
22.1% = (14,653/10,000) - 1
