Sunstone Financial Group, Inc.
207 East Buffalo Street, Suite 400
Milwaukee, WI 53202
October 28, 1996
Via EDGAR
- ---------
Securities and Exchange Commission
Division of Investment Management
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: The Bramwell Growth Fund (the Fund);
Registration Nos.: 33-79742: 811-8546
Gentlemen:
One behalf of the Fund and pursuant to Rule 30b2-1 and Section 24(b) under the
Investment Company Act of 1940, as amended, we hereby file a Quarterly Report to
shareholders for the period ended September 30, 1996.
If you have any questions concerning this filing, please do not hesitate to
contact me.
Very Truly Yours,
/s/ Mike Yanke
Mike Yanke
Sunstone Financial Group, Inc.
Client Services and Accounting Manager
MEY/llm
Encl.
THE BRAMWELL GROWTH FUND
QUARTERLY REPORT - SEPTEMBER 1996
745 Fifth Avenue
New York, New York 10151
Dear Fellow Shareholders:
Investment Results _ Quarter Ended September 1996
The BRAMWELL GROWTH FUND appreciated 2.7% in the September quarter and 10.6% for
the first nine months of calendar 1996 to $14.99 net asset value per share. For
the twelve months ended September, the Fund appreciated 9.7%. Since inception,
August 1, 1994, the Fund's cumulative return was 50.4% resulting in a compound
average annual rate of return of 20.7%. Investment results compared to those of
the S&P 500 Stock Index and the Lipper Growth Funds Index were:
Comparative September Q 1996 Calendar One Since
Investment Returns 1996 Year-to-Date Year Inception<F1>
- ------------------ ----------- ------------- ----- ------------
THE BRAMWELL GROWTH FUND 2.7% 10.6% 9.7% 20.7%
S&P 500 Stock Index <F2> 3.1 13.5 20.3 23.3
Lipper Growth Funds Index <F3> 2.8 11.1 13.8 20.1
<F1> Compound average annual return since inception 8/1/94. Cumulative return
since inception through September 30,1996 for The Bramwell Growth Fund was 50.4%
compared to 57.4% for the S&P 500 Stock Index and 48.6% for the Lipper Growth
Funds Index. Past performance is historical and does not predict future
results. Investment returns and principal value will fluctuate, so that shares,
when redeemed may be worth more or less than original cost.
<F2> The S&P 500 Stock Index is an unmanaged index of 500 selected common
stocks, most of which are listed on the New York Stock Exchange. The Index is
adjusted for dividends, weighted towards stocks with large market
capitalizations and represents approximately two-thirds of the total market
value of all domestic common stocks.
<F3> The Lipper Growth Funds Index is an index made up of the 30 largest
mutual funds in the Lipper Analytical Services, Inc. growth objective grouping.
Funds comprising the Index are equal weighted and returns include the
reinvestment of dividends and are net of expenses.
The Fund ended September with net assets of $136.9 million and more than 16,000
shareholders compared to $113.0 million in net assets and some 11,000
shareholders at the end of September 1995.
COMMENTARY
September quarter results benefitted from gains in selected stocks of global
brand companies, financial services, information processing, and outsourcing.
Specific stocks that did well were Eckerd, which moved closer to its potential
growth rate, Red Lion Hotels, which is to be acquired by Doubletree at about its
projected growth rate, and Continuum, acquired by Computer Sciences at a premium
to market which approximated its projected growth rate. The Fund ended the
quarter with a median capitalization of $2.0 billion. We continue to focus on
mid-cap companies, those with market capitalizations of $1 to $5 billion, where
we think that there is a large universe of companies with an optimum mix of
growth and liquidity. This mid-cap universe accounted for about 40% of the
value of our portfolio at the end of the quarter. We estimate that the 1997
earnings growth rate of our portfolio is 23% for which we are paying a
price/earnings multiple of 19.5 times or a P/E ratio to growth of 85%. By
contrast, we estimate that the 1997 growth rate for the S&P 500 Stock Index is
9% which the market values at an approximate price/earnings multiple of 16 times
or a P/E ratio to growth of roughly 175%.
OUTLOOK
We anticipate continued gains in the equity markets in 1997 as stock prices
track continued expansion in overall corporate profits. We expect the Gross
Domestic Product (GDP) to grow 2-3% and that the number of people employed will
continue to increase. We look for inflation to stay in the 2-3% range as
technology drives costs down and global manufacturing and outsourcing restrain
wage increases. Legislative reform of agriculture should increase supply and
legislative reform of telecommunications should encourage competition and reduce
communication costs. We look for interest rates to stay in a narrow band with
the U.S. Treasury 3-month bill yielding some 5%. The spread between inflation
and interest rates continues to be historically wide. In addition to revenue
growth stemming from new products and new markets opened by global capitalism,
we anticipate further margin improvement as investment spending that has
restrained margins in the past few years begins to pay off. On the other hand,
expanded government regulation and industrial policy would restrict margin
expansion.
We continue to look for companies growing faster than the overall market. Areas
of continuing interest include outsourcing, be it information processing,
staffing, or manufactured components, as companies drive for increased
flexibility and productivity to be globally competitive. In addition, we like
companies with global brands, financial services, and innovators, especially in
communications and medical technology. The rapidly changing world is creating
many investment opportunities in which our Fund can selectively invest. We
appreciate the opportunity to further your long-term investment objectives.
FUND INVESTMENT
The minimum initial investment for a Regular account is $1,000 and $500 for an
IRA or Gift to Minor account. Subsequent investment minimums are $100 for
Regular and IRA accounts and $50 for a Gift to Minor account. Equity markets
are inherently volatile and investors are encouraged to invest over time. An
Automatic Investment Plan, with initial and subsequent investment minimums of
$50 per month, is available upon request to facilitate regular investment.
The Fund's net asset value is available each evening after 6:00 p.m. (EST) by
calling 1-800-BRAMCAP (1-800-272-6227). Please also call this number if you
need assistance or additional information.
Sincerely,
/s/ Elizabeth R. Bramwell
Elizabeth R. Bramwell, CFA
President and Chief Investment Officer
October 15, 1996
The outlook and opinions expressed above represent the views of the investment
adviser as of October 15, 1996 and are subject to change as market, political
and economic events unfold.
THE BRAMWELL GROWTH FUND
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1996 (UNAUDITED)
Shares Value
------- -------
COMMON STOCKS - 98.48%
APPAREL - 4.35%
Cutter & Buck, Inc.,<F4> 25,000 $ 331,250
Gargoyles, Inc.<F4> 500 10,563
Nike, Inc. 20,000 2,430,000
Oakley, Inc.<F4> 40,000 1,700,000
Sola International, Inc.<F4> 40,000 1,490,000
-----------
5,961,813
AUTOMOTIVE & HEAVY
Equipment - 1.37%
Deere & Company 25,000 1,050,000
Lear Corporation<F4> 25,000 825,000
-----------
1,875,000
CHEMICALS - 1.04%
Monsanto Corporation 13,000 474,500
OM Group, Inc. 25,000 950,000
-----------
1,424,500
COMMUNICATIONS - 3.47%
Cisco Systems, Inc.<F4> 10,000 620,625
Lucent Technologies, Inc.<F4> 10,200 467,925
MFS Communications Company, Inc.<F4> 40,000 1,745,000
OzEmail Ltd.<F4> - ADS 30,000 273,750
U.S. Satellite Broadcasting Company<F4> 70,500 1,639,125
-----------
4,746,425
CONSTRUCTION & ENGINEERING - 1.12%
Fluor Corporation 25,000 1,537,500
ENERGY - 1.39%
Carbo Ceramics, Inc.<F4> 10,500 210,000
Diamond Offshore Drilling, Inc.<F4> 20,000 1,100,000
Input/Output, Inc.<F4> 20,000 595,000
-----------
1,905,000
ENTERTAINMENT & LEISURE TIME - 4.37%
Cinar Films, Inc., Class B<F4> 30,000 781,875
Gaylord Entertainment Company 30,537 690,900
Harman International Industries 15,000 731,250
Pixar, Inc.<F4> 25,500 414,375
Regal Cinemas, Inc.<F4> 115,250 2,881,250
Rockshox, Inc.<F4> 10,000 150,000
Steinway Musical Instruments, Inc.<F4> 20,000 335,000
-----------
5,984,650
FINANCIAL SERVICES - 5.08%
Charles Schwab Corporation (The) 35,000 809,375
Collective Bancorp, Inc. 30,000 855,000
MSB Bancorp, Inc. 17,000 286,875
Northern Trust Company 45,000 2,958,750
Washington Mutual, Inc. 55,000 2,048,750
-----------
6,958,750
FOOD & BEVERAGE - 1.75%
CPC International, Inc. 20,000 1,497,500
Hershey Foods Corporation 18,000 904,500
-----------
2,402,000
Shares Value
------- -------
HEALTHCARE - 6.36%
BioChem Pharmaceuticals, Inc.<F4> - ADR 15,000 $ 601,875
Guidant Corporation<F4> 31,000 1,712,750
Johnson & Johnson 70,200 3,597,750
Merck & Company, Inc. 30,000 2,111,250
Neurex Corporation<F4> 35,500 678,937
-----------
8,702,562
HOUSEHOLD PRODUCTS - 1.98%
Colgate-Palmolive Company 20,000 1,737,500
Procter & Gamble Company 10,000 975,000
-----------
2,712,500
INDUSTRIAL PRODUCTS - 9.82%
Emerson Electric Company 24,900 2,244,112
General Electric Company 40,000 3,640,000
Illinois Tool Works, Inc. 45,000 3,245,625
Kennametal, Inc. 35,400 1,216,875
Methode Electronics, Inc. - A 45,500 847,438
Molex Inc., Class A 50,687 1,710,686
X-Rite, Inc. 30,000 547,500
-----------
13,452,236
INFORMATION PROCESSING:
OFFICE EQUIPMENT - 0.91%
International Business Machines, Inc. 10,000 1,245,000
INFORMATION PROCESSING:
SERVICES - 6.98%
Automatic Data Processing, Inc. 55,000 2,399,375
Billing Information Concepts
Corporation<F4> 10,000 222,500
Computer Sciences Corporation<F4> 70,729 5,437,292
DST Systems, Inc.<F4> 10,000 320,000
First Data Corporation 10,929 892,080
Paychex, Inc. 5,000 290,000
-----------
9,561,247
INFORMATION PROCESSING:
SOFTWARE - 2.80%
Informix Corporation<F4> 25,000 696,875
Microsoft Corporation<F4> 10,000 1,318,750
SAP AG - ADR 33,000 1,816,320
-----------
3,831,945
INSURANCE - 5.02%
Allstate Corporation 55,000 2,708,750
American International Group, Inc. 25,000 2,518,750
Berkley (W.R.) Corporation 21,500 983,625
Horace Mann Educators Corporation 20,000 657,500
-----------
6,868,625
LODGING - 1.89%
Micros Systems, Inc.<F4> 27,500 811,250
Red Lion Hotels, Inc.<F4> 60,000 1,777,500
-----------
2,588,750
PACKAGING - 1.15%
Sealed Air Corporation<F4> 15,000 558,750
Sonoco Products Company 36,750 1,010,625
-----------
1,569,375
PORTFOLIO OF INVESTMENTS _ SEPTEMBER 30, 1996 (UNAUDITED) (CONTINUED)
COMMON STOCKS _ 98.48% (cont'd.)
Shares Value
-------- -------
RESTAURANTS - 2.01%
Landry's Seafood Restaurants, Inc.<F4> 25,000 $ 625,000
Lone Star Steakhouse and Saloon, Inc.<F4> 70,000 2,130,625
-----------
2,755,625
RETAILING - 20.58%
Albertsons, Inc. 60,300 2,540,137
Eckerd Corporation<F4> 235,000 6,580,000
Home Depot, Inc. (The) 25,000 1,421,875
Just For Feet, Inc.<F4> 40,000 2,005,000
Kohl's Corporation<F4> 50,000 1,800,000
Loehmann's, Inc.<F4> 18,000 482,625
OfficeMax, Inc.<F4> 88,100 1,233,400
PETsMART, Inc.<F4> 20,000 517,500
Saks Holdings, Inc.<F4> 31,000 1,085,000
Staples, Inc.<F4> 85,000 1,885,938
Sunglass Hut International<F4> 40,000 637,500
Tiffany & Co. 60,800 2,432,000
Viking Office Products, Inc.<F4> 25,000 750,000
Walgreen Company 130,000 4,810,000
-----------
28,180,975
SERVICES: EDUCATION - 0.19%
Children's Comprehensive Services, Inc.<F4> 15,000 262,500
SERVICES: TEMPORARY HELP - 8.86%
Barrett Business Services, Inc.<F4> 40,000 640,000
Employee Solutions, Inc.<F4> 20,000 345,000
Interim Services, Inc.<F4> 55,000 2,351,250
Labor Ready, Inc.<F4> 49,000 869,750
Manpower, Inc. 65,100 2,164,575
On Assignment, Inc.<F4> 50,000 1,712,500
Robert Half International, Inc.<F4> 110,000 4,056,250
-----------
12,139,325
TECHNOLOGY: SEMICONDUCTORS - 1.51%
C-Cube Microsystems, Inc.<F4> 25,000 1,109,375
Intel Corporation 10,000 954,375
-----------
2,063,750
TECHNOLOGY: OTHER - 3.45%
Affinity Technology Group, Inc.<F4> 35,000 415,625
Conductus, Inc.<F4> 20,000 170,000
Loral Space & Communications Ltd.<F4> 25,000 393,750
Thermo Electron Corporation<F4> 65,475 2,651,737
ThermoLase Corporation<F4> 25,000 621,875
ThermoQuest Corporation<F4> 35,000 468,125
-----------
4,721,112
TRANSPORTATION - 1.03%
Bombardier, Inc., Class B 50,000 712,100
Kansas City Southern Industries, Inc. 16,300 696,825
-----------
1,408,925
TOTAL COMMON STOCKS
(Cost $108,727,309) 134,860,090
-----------
Principal
Amount Value
--------- -------
VARIABLE RATE DEMAND NOTES - 1.39%
General Mills, Inc. $ 55,000 $ 55,000
Johnson Controls Corp. 331,000 331,000
Pitney Bowes, Inc. 457,000 457,000
Sara Lee Corporation 625,000 625,000
Southwestern Bell Corporation 223,000 223,000
Wisconsin Electric Power Co. 208,000 208,000
-----------
TOTAL VARIABLE RATE DEMAND NOTES
(Cost $1,899,000) 1,899,000
-----------
TOTAL INVESTMENTS - 99.87%
(Cost $110,626,309) 136,759,090
CASH AND OTHER ASSETS,
less Liabilities - 0.13% 183,898
-----------
NET ASSETS - 100.00%
(9,133,446 shares outstanding) $136,942,988
============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $14.99
======
<F4>Non-income producing
The Bramwell Growth Fund
Quarterly Report - September 30, 1996
TOP TEN INDUSTRY SECTORS
SEPTEMBER 30, 1996
--------------------------
Retailing 20.6% Financial Services 5.1%
Information Processing 10.7 Insurance 5.0
Industrial Products 9.8 Technology 5.0
Temporary Help 8.9 Entertainment & Leisure Time 4.4
Healthcare 6.4 Apparel 4.4
TOP TEN EQUITY HOLDINGS
SEPTEMBER 30, 1996
-----------------------
Eckerd 4.8% Johnson & Johnson 2.6%
Computer Sciences 4.0 Illinois Tool Works 2.4
Walgreen 3.5 Northern Trust Company 2.2
Robert Half 3.0 Regal Cinemas 2.1
General Electric 2.7 Allstate 2.0
THE BRAMWELL GROWTH FUND
745 Fifth Avenue
New York, New York 10151
1-800-BRAMCAP
(1-800-272-6227)
BOARD OF DIRECTORS
ELIZABETH R. BRAMWELL, CFA
President, Chief Investment
and Financial Officer
The Bramwell Funds, Inc.
J. SINCLAIR ARMSTRONG
Director & Secretary
The Reed Foundation, Inc.
Retired Partner
Whitman, Breed, Abbott & Morgan
Former Commissioner & Chairman
Securities and Exchange Commission
ISABEL H. BENHAM
Director, Board of Trustees
John W. Barringer III National Railroad Library
GEORGE F. KEANE
Chairman
Trigen Energy Corp.
President Emeritus
The Common Fund, Inc.
JAMES C. SARGENT
Counsel
Opton, Handler, Gottlieb, Feiler & Katz
Former Commissioner
Securities and Exchange
Commission
MARTHA R. SEGER, PH.D.
Chairman
Martha Seger & Associates
Former Governor
Federal Reserve Board
OFFICERS
ELIZABETH R. BRAMWELL, CFA
President, Chief Investment and Financial Officer
MARY F. MCCOLLUM
Secretary and Treasurer
MARGARET A. BANCROFT
Assistant Secretary
INVESTMENT ADVISER
Bramwell Capital Management, Inc.
ADMINISTRATOR
Sunstone Financial Group, Inc.
COUNSEL
Dechert Price & Rhoads
INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
Coopers & Lybrand L.L.P.
CUSTODIAN, TRANSFER AGENT
AND DIVIDEND DISBURSING AGENT
Firstar Trust Company
This financial statement is submitted for the general information of the
shareholders of The Bramwell Growth Fund. It is not authorized for distribution
to prospective investors unless preceded or accompanied by an effective
prospectus.
