SUNSTONE FINANCIAL GROUP
207 East Buffalo Street, Suite 400
Milwaukee, Wisconsin 53202
(414) 271-5885
February 3, 1997
Securities and Exchange Commission
450 Fifth Street N.W.
Washington, DC 20549
Re: The Bramwell Growth Fund, Inc.
(33-79742; 811-8546)
Filing Pursuant to Rule 30b2-1 and Section 24(b) under the Investment
Company Act of 1940
Ladies and Gentlemen:
On behalf of the above-referenced registered investment company, transmitted
herewith for filing pursuant to Rule 30b2-1 and Section 24(b) under the
Investment Company Act of 1940, as amended, is the Fund's Semi-Annual Report for
the period ended December 31, 1996. Questions regarding this filing may be
directed to the undersigned at (414) 271-5885.
Sincerely,
/s/ Constance Dye Shannon
Constance Dye Shannon
Legal and Compliance Manager
Encl.
THE BRAMWELL GROWTH FUND
SEMI-ANNUAL REPORT
December 31, 1996
Elizabeth R. Bramwell, CFA
President and Chief Investment Officer
THE BRAMWELL FUNDS, INC.
1-800-BRAMCAP
(1-800-272-6227)
THE BRAMWELL GROWTH FUND
SEMI-ANNUAL REPORT - DECEMBER 1996
745 Fifth Avenue
New York, New York 10151
DEAR FELLOW SHAREHOLDERS:
INVESTMENT RESULTS - QUARTER ENDED DECEMBER 1996
THE BRAMWELL GROWTH FUND appreciated 12.8% for the calendar year 1996 to $15.02
net asset value per share after payment of a $0.269982 per share dividend on
December 9th. Since inception, August 1, 1994, the Fund's cumulative return was
53.4% resulting in a compound average annual rate of return of 19.4% for the
period. During the quarter ended December 31, 1996, the Fund increased 2.0%.
Investment results compared to those of the S&P 500 Stock Index and the Lipper
Growth Funds Index are shown in the following chart.
Since the end of the year through January 21, 1997, the Fund appreciated 5.2%.
COMPARATIVE INVESTMENT DECEMBER Q ONE SINCE
RETURNS 1996 YEAR INCEPTION <F1>
- -------------------------- ---------- ---- -------------
The Bramwell Growth Fund 2.0% 12.8% 19.4%
S&P 500 Stock Index <F2> 8.4 23.0 24.7
Lipper Growth Funds Index <F3> 5.8 17.5 20.6
THE BRAMWELL LIPPER GROWTH
GROWTH FUND S&P 500 FUND INDEX
----------- ------- --------------
8/1/94 10,000 10,000 10,000
9/30/94 10,220 10,086 10,203
12/31/94 10,259 10,082 10,089
3/31/95 11,100 11,067 10,818
6/30/95 12,311 12,118 11,975
9/30/95 13,713 13,080 13,062
12/31/95 13,599 13,866 13,380
3/31/96 14,211 14,613 13,983
6/30/96 14,653 15,259 14,449
9/30/96 15,044 15,736 14,860
12/31/96 15,342 17,054 15,723
This chart assumes an initial investment of $10,000 made on 8/1/94 (inception).
Returns shown include the reinvestment of all dividends and are net of
expenses. The annual expense ratio is capped at 1.75%. Past performance is not
predictive of future performance. Investment returns and principal value will
fluctuate, so that shares, when redeemed, may be worth more or less than the
original cost.
<F1> Compound average annual return since inception 8/1/94. Cumulative return
since inception through December 31, 1996 for The Bramwell Growth Fund was
53.4% compared to 70.5% for the S&P 500 Stock Index and 57.2% for the
Lipper Growth Funds Index.
<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 equally weighted and returns include the
reinvestment of dividends and are net of expenses.
COMMENTARY
Large capitalization stocks were strong in the fourth quarter, particularly the
largest twenty-five stocks in the S&P 500 Stock Index. With an unweighted median
market capitalization of $2.3 billion at the end of the year, our Fund's
comparative performance lagged. Fourth quarter tax selling also impacted less
liquid small and mid-cap stocks short-term; several have already bounced back in
January. The Fund benefitted from gains in financial and technology stocks,
selected initial public offerings (IPOs) such as Biacore, Ingram Micro, and
Seachange, and acquisitions of Eckerd by J.C. Penney and MFS Communications by
WorldCom.
During the fourth quarter of 1996, we laid the groundwork for positioning the
portfolio for 1997. In general, we expect the overall market to expand to mid
and small-cap stocks as large growth companies are beginning to sell at
historically high premium multiples of 1.8-2.0 times that of both the S&P 500
Stock Index and their future growth rates. At the end of the December quarter,
we had 46% of the dollar value of the portfolio invested in market
capitalizations below $5 billion. However, we also anticipate many large
capitalization stocks continuing to outperform as the result of globalization,
critical mass, brand identity, and economies of scale, particularly in using
technology to reduce expenses and increase revenues. We have broadened our
portfolio exposure accordingly.
We estimate that the 1997 growth rate of our portfolio is 23% for which we are
paying a price/earnings ratio of 19 or a P/E ratio to growth of 83%. By
contrast, we currently estimate that the 1997 growth rate for the S&P 500 Stock
Index is 10% which the market values at an approximate multiple of 17 or a P/E
ratio to growth of 170%. Over time, we expect stock prices to move with earnings
growth, and we aim to structure the portfolio to have potential multiple
expansion as well.
OUTLOOK
We look for moderate 2-3% economic growth in the United States in 1997 with
expanding employment and continued corporate profit gains as new products and
markets come on stream and companies benefit from streamlined cost structures.
We expect inflation to stay in the 2-3% range as technology drives costs down
and competition restrains price increases. Even global inflation has come down
to low single digits as countries around the world move to noninflationary
government policies and privatizations and benefit from the same technology and
communications driven productivity advances and restructurings that have been
occurring in the United States. With little inflation, the quality of earnings
is historically high and arguably should be valued at a higher multiple. We
anticipate interest rates staying in a narrow band with the U.S. Treasury 3-
month bill yielding some 5%. U.S. interest rates are high compared to Germany
and Japan where the economies are persistently sluggish and we expect reluctance
to widen the interest spread further by raising U.S. rates.
Going forward, we have continued to increase our exposure to financial services
and technology and are on the hunt across industries for effective users of
technology. Financial services is an example of an industry where economies of
scale encourage the use of technology. On the revenue side, an expanding middle
class has increased the demand for financial products worldwide, e.g.,
insurance, credit cards, and mortgages, and at the same time, technology has
reduced the processing costs and enhanced the revenue potential. Product
upgrades are driving demand for richer and faster forms of computing, and new
methods of communication such as the Internet are creating new operating
procedures, distribution channels and businesses. Updating databases for the
year 2000 is stimulating job creation as well as improved information systems.
We live in an age of accelerating change which should provide numerous
investment opportunities for our Fund.
INVESTMENT APPROACH
The Bramwell Growth Fund seeks to achieve long-term capital growth by investing
in companies believed to be positioned to benefit from the long-term payoff on
research, product development, capital spending and market expansion. Up to 25%
of the Fund's assets may be invested in foreign securities, and although the
Fund will normally be invested in equities, the Fund may hold short-term money
market or United States Government securities if market conditions warrant.
Portfolio selection is largely based on primary research and is company-specific
within the context of a macroeconomic and political framework. In the long term,
we believe that equity investment in innovative and strategically positioned
companies provides greater after-tax returns, preservation of global wealth, and
participation in worldwide economic growth than either cash or bonds.
FUND INVESTMENT
The minimum initial investment for a Regular account is $1,000 and for an IRA or
Gift to Minor account $500. 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. In the
long term, the rewards of ownership are anticipated to more than compensate for
the risk of day-to-day price fluctuations. 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, CFA
Elizabeth R. Bramwell, CFA
President and Chief Investment Officer
January 22, 1997
The outlook and opinions expressed above represent the views of the investment
adviser as of January 22, 1997, and are subject to change as market and economic
events unfold.
TOP TEN INDUSTRY SECTORS
DECEMBER 31, 1996
- -----------------------------------
Information Processing 15.8%
Financial Services 13.6
Retailing 11.6
Industrial Products 10.5
Healthcare 8.3
Temporary Help 6.4
Insurance 5.8
Communications 4.7
Electronics 4.0
Entertainment/
Leisure Time 2.7
TOP TEN EQUITY HOLDINGS
DECEMBER 31, 1996
- -----------------------------------
Computer Sciences 3.6%
Walgreen 3.2
General Electric 3.1
Intel 3.1
IBM 3.0
Illinois Tool Works 2.9
Johnson & Johnson 2.8
Allstate 2.5
American Express 2.5
Northern Trust 2.5
THE BRAMWELL GROWTH FUND
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1996 (UNAUDITED)
SHARES VALUE
------ -----
COMMON STOCKS - 97.69%
APPAREL - 2.26%
Cutter & Buck, Inc.<F4> 45,000 $ 523,125
Nike, Inc. 40,000 2,390,000
----------
2,913,125
AUTOMOTIVE/HEAVY
EQUIPMENT - 0.93%
Lear Corporation<F4> 35,000 1,194,375
CHEMICALS - 1.24%
Monsanto Corporation 15,000 583,125
OM Group, Inc. 37,500 1,012,500
----------
1,595,625
COMMUNICATIONS - 4.72%
Cisco Systems, Inc.<F4> 40,000 2,545,000
Conductus, Inc.<F4> 20,000 130,000
Loral Space & Communications Ltd.<F4> 25,000 459,375
Lucent Technologies, Inc. 10,000 462,500
MFS Communications Company, Inc.<F4> 40,000 2,180,000
OzEmail Ltd. - ADS<F4> 35,000 297,500
----------
6,074,375
ELECTRONICS - 3.98%
Black Box Corporation<F4> 15,000 618,750
Ingram Micro, Inc.<F4> 25,000 575,000
Intel Corporation 30,000 3,928,125
----------
5,121,875
ENERGY - 2.26%
Carbo Ceramics, Inc. 10,500 220,500
Diamond Offshore Drilling, Inc.<F4> 20,000 1,140,000
Global Marine, Inc.<F4> 30,000 618,750
Input/Output, Inc.<F4> 20,000 370,000
Rowan Companies, Inc.<F4> 25,000 565,625
----------
2,914,875
ENTERTAINMENT/LEISURE TIME - 2.69%
Cinar Films, Inc., Class B<F4> 30,000 780,000
Regal Cinemas, Inc.<F4> 75,250 2,313,938
Rockshox, Inc.<F4> 25,000 362,500
----------
3,456,438
SHARES VALUE
------ -----
FINANCIAL SERVICES - 13.61%
American Express 55,000 $ 3,107,500
Charles Schwab Corporation (The) 35,000 1,120,000
Chase Manhattan Corporation 20,000 1,785,000
Citicorp 15,000 1,545,000
Collective Bancorp, Inc. 25,000 878,125
MSB Bancorp, Inc. 17,000 333,625
NationsBank Corporation 20,000 1,955,000
Northern Trust Company 85,000 3,081,250
State Street Boston Corporation 10,000 645,000
Travelers Group, Inc. 15,000 680,625
Washington Mutual, Inc. 55,000 2,382,187
----------
17,513,312
FOOD & BEVERAGE - 2.49%
CPC International, Inc. 30,000 2,325,000
Hershey Foods Corporation 20,000 875,000
----------
3,200,000
HEALTHCARE - 8.31%
Alkermes, Inc.<F4> 20,000 465,000
Biacore International, AB-ADS<F4> 25,000 550,000
BioChem Pharmaceuticals, Inc. - ADR<F4> 15,000 753,750
CYTYC Corporation<F4> 15,000 405,000
Cardiothoracic Systems, Inc.<F4> 15,000 277,500
Guidant Corporation 31,000 1,767,000
Johnson & Johnson 70,200 3,492,450
Merck & Company, Inc. 30,000 2,377,500
Neurex Corporation<F4> 35,500 603,500
----------
10,691,700
HOUSEHOLD PRODUCTS - 2.27%
Colgate-Palmolive Company 20,000 1,845,000
Procter & Gamble Company 10,000 1,075,000
----------
2,920,000
INDUSTRIAL PRODUCTS - 10.53%
Emerson Electric Company 24,900 2,409,075
General Electric Company 40,000 3,955,000
Illinois Tool Works, Inc. 45,000 3,594,375
Methode Electronics, Inc. - A 45,500 921,375
THE BRAMWELL GROWTH FUND
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1996 (UNAUDITED) (CONTINUED)
SHARES VALUE
------ -----
COMMON STOCKS - 97.69% (CONT'D.)
INDUSTRIAL PRODUCTS - 10.53% (CONT'D.)
Molex Inc., Class A 50,687 $ 1,805,724
ThermoQuest Corporation<F4> 35,000 450,625
X-Rite, Inc. 25,000 412,500
----------
13,548,674
INFORMATION PROCESSING:
OFFICE EQUIPMENT - 4.45%
Compaq Computer Corporation<F4> 12,000 891,000
Dell Computer Corporation<F4> 20,000 1,062,500
International Business Machines
Corporation 25,000 3,775,000
----------
5,728,500
INFORMATION PROCESSING:
SERVICES - 6.28%
APAC TeleServices, Inc.<F4> 15,000 575,625
Billing Information Concepts
Corporation<F4> 10,000 287,500
Claremont Technology Group, Inc.<F4> 25,000 656,250
Computer Sciences Corporation<F4> 55,729 4,576,744
First Data Corporation 35,858 1,308,817
Paychex, Inc. 10,000 514,375
USCS International, Inc.<F4> 10,000 168,750
----------
8,088,061
INFORMATION PROCESSING:
SOFTWARE - 5.08%
Acceler8 Technology Corporation<F4> 10,500 205,407
Affinity Technology Group, Inc.<F4> 31,500 204,750
Computer Associates International, Inc. 60,000 2,985,000
Microsoft Corporation<F4> 20,000 1,652,500
SAP AG-ADR 20,000 907,180
Seachange International, Inc.<F4> 23,000 586,500
----------
6,541,337
INSURANCE - 5.79%
Allstate Corporation 55,000 3,183,125
American International Group, Inc. 25,000 2,706,250
Conseco, Inc. 15,000 956,250
Horace Mann Educators Corporation 15,000 605,625
----------
7,451,250
SHARES VALUE
------ -----
PACKAGING - 0.49%
Sealed Air Corporation<F4> 15,000 $ 624,375
RESTAURANTS - 1.69%
Landry's Seafood Restaurants, Inc.<F4> 30,000 641,250
Lone Star Steakhouse and Saloon, Inc.<F4> 57,500 1,538,125
----------
2,179,375
RETAILING - 11.61%
Eckerd Corporation<F4> 78,546 2,513,472
Home Depot, Inc. (The) 15,000 751,875
Just For Feet, Inc.<F4> 50,000 1,312,500
Kohl's Corporation<F4> 50,000 1,962,500
Loehmann's, Inc.<F4> 25,000 575,000
PETsMART, Inc.<F4> 30,000 656,250
Saks Holdings, Inc.<F4> 35,000 945,000
Tiffany & Co. 60,800 2,226,800
Walgreen Company 100,000 4,000,000
----------
14,943,397
SERVICES - EDUCATION 0.20%
Children's Comprehensive
Services, Inc.<F4> 20,000 262,500
TEMPORARY HELP - 6.38%
Barrett Business Services, Inc.<F4> 40,000 610,000
Employee Solutions, Inc.<F4> 20,000 410,000
Interim Services, Inc.<F4> 54,900 1,948,950
Labor Ready, Inc.<F4> 50,000 675,000
On Assignment, Inc.<F4> 50,000 1,475,000
Robert Half International, Inc.<F4> 90,000 3,093,750
----------
8,212,700
TRANSPORTATION - 0.43%
Bombardier, Inc., Class B 30,000 553,770
TOTAL COMMON STOCKS
(Cost $100,963,940) 125,729,639
-----------
THE BRAMWELL GROWTH FUND
PORTFOLIO OF INVESTMENTS - DECEMBER 31, 1996 (UNAUDITED) (CONTINUED)
PRINCIPAL
AMOUNT VALUE
------ -----
VARIABLE RATE
DEMAND NOTES - 0.34%
Johnson Controls $184,000 $ 184,000
Wisconsin Electric Power Co. 256,000 256,000
------------
TOTAL VARIABLE RATE DEMAND NOTES
(Cost $440,000) 440,000
------------
TOTAL INVESTMENTS - 98.03%
(Cost $101,403,940) 126,169,639
CASH AND OTHER ASSETS
LESS LIABILITIES - 1.97% 2,529,997
------------
NET ASSETS - 100.00%
(8,569,933 shares outstanding) $128,699,636
============
NET ASSET VALUE, OFFERING AND $15.02
REDEMPTION PRICE PER SHARE ======
<F4> Non-income producing security.
See notes to financial statements.
THE BRAMWELL GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996 (Unaudited)
ASSETS:
Investments at value (cost $101,403,940) $126,169,639
Receivable for investments sold 4,311,423
Dividends and interest receivable 109,409
Organizational costs 94,065
Prepaid expenses 24,256
Receivable from adviser 3,908
Cash 445
------------
Total Assets 130,713,145
------------
LIABILITIES:
Payable for securities purchased 1,760,807
Accrued expenses 141,361
Accrued investment advisory fees 111,341
------------
Total Liabilities 2,013,509
------------
NET ASSETS $128,699,636
============
NET ASSETS CONSIST OF:
Capital stock $ 99,763,754
Undistributed net realized gain on investments 4,170,183
Net unrealized appreciation on investments 24,765,699
------------
NET ASSETS $128,699,636
============
CAPITAL STOCK, $.0001 par value
Authorized 500,000,000
Issued and outstanding 8,569,933
NET ASSET VALUE, REDEMPTION PRICE
AND OFFERING PRICE PER SHARE $15.02
======
STATEMENT OF OPERATIONS
Six Months Ended December 31, 1996 (Unaudited)
INVESTMENT INCOME:
Dividends $ 482,876
Interest 81,757
----------
Total Investment Income 564,633
----------
EXPENSES:
Investment advisory fees 673,980
Distribution fees 168,495
Shareholder servicing fees 114,759
Fund administration and accounting fees 82,037
Federal and state registration fees 44,536
Reports to shareholders 29,320
Professional fees 27,240
Custody fees 23,265
Amortization of organizational costs 15,476
Directors' fees 12,842
Insurance 10,229
Other 5,942
----------
Total expenses before waiver 1,208,121
Less: Waiver of fees by adviser (27,980)
----------
Net Expenses 1,180,141
----------
NET INVESTMENT LOSS (615,508)
----------
REALIZED AND UNREALIZED GAIN:
Net realized gain on investment transactions 5,190,412
Change in unrealized appreciation on investments 1,342,961
----------
Net Gain on Investments 6,533,373
----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $5,917,865
==========
See notes to financial statements.
THE BRAMWELL GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the
Six Months
Ended Year
December 31, 1996 Ended
(Unaudited) June 30, 1996
---------- -------------
OPERATIONS:
Net investment loss $ (615,508) $ (822,622)
Net realized gain on
investments 5,190,412 2,409,292
Change in unrealized
appreciation on
investments 1,342,961 16,198,269
------------ ------------
Net increase in net assets
resulting from
operations 5,917,865 17,784,939
------------ ------------
CAPITAL SHARE
TRANSACTIONS (16,354,068) 61,795,014
------------ ------------
DIVIDENDS PAID FROM:
Net realized gains (2,319,077) (366,380)
------------ ------------
TOTAL (DECREASE)/
INCREASE IN
NET ASSETS (12,755,280) 79,213,573
NET ASSETS:
Beginning of period 141,454,916 62,241,343
------------ ------------
END OF PERIOD $128,699,636 $141,454,916
============ ============
See notes to financial statements.
THE BRAMWELL GROWTH FUND
FINANCIAL HIGHLIGHTS
For the
Six Months For the Period
Ended Year August 1, 1994 <F5>
December 31, 1996 Ended to
(Unaudited) June 30, 1996 June 30, 1995
---------- ------------- -------------
NET ASSET VALUE, BEGINNING
OF PERIOD $14.60 $12.30 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment loss (0.07) (0.08) -- <F6>
Net realized and unrealized
gains on investments 0.76 2.42 2.31
------ ------ ------
TOTAL FROM INVESTMENT
OPERATIONS 0.69 2.34 2.31
LESS DISTRIBUTIONS:
Dividends from net investment
income -- -- (0.01)
Distributions from capital gains (0.27) (0.04) --
------ ------ ------
TOTAL DISTRIBUTIONS (0.27) (0.04) (0.01)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $15.02 $14.60 $12.30
====== ====== ======
TOTAL RETURN <F7> 4.7% 19.0% 23.1%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period $128,699,636 $141,454,916 $62,241,343
Ratio of expenses to
average net assets <F8><F9> 1.75% 1.75% 1.75%
Ratio of net income investment
loss to average net
assets <F8><F9> (0.91)% (0.66)% (0.11)%
Portfolio turnover rate 48% 118% 80%
Average commission rate paid
on portfolio investment
transactions $0.0600 $0.0600 N/A
<F5> Commencement of operations
<F6> Less than $(0.01)
<F7> Not annualized for periods of less than one year
<F8> 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 six months ended December 31, 1996, the year
ended June 30, 1996 and the period August 1, 1994 to June 30, 1995, would
be 1.79% and (0.95)%; 1.79% and (0.70)%; and 2.68% and (1.04)%,
respectively.
<F9> Annualized
See notes to financial statements.
THE BRAMWELL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION
The Bramwell Funds, Inc. (the "Company") was incorporated on June 3, 1994 and
is registered as an open-end, management investment company organized as a
series fund under the Investment Company Act of 1940 (the "1940 Act"). The
Bramwell Growth Fund (the "Fund"), which commenced operations on August 1,
1994, is a separate diversified portfolio of the Company. The Fund issued and
sold 10,000 shares ("initial shares") of its common stock at $10 per share to
Bramwell Capital Management, Inc. ("BramCap"). BramCap is the Fund's
investment adviser.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
a) Investment Valuation - 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 on the valuation date, 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. Debt
securities which will mature in more than 60 days are valued at prices furnished
by a pricing service approved by the Board of Directors. Whenever a furnished
price is significantly different from the previous day's furnished price,
BramCap will review to determine that the price is appropriate. Securities
which will mature in 60 days or less are valued at amortized cost, which
approximates market value. Variable rate demand notes are valued at cost which
approximates market value. These notes are unsecured and could present credit
risk to the extent the issuer defaults on its payment obligation. The
creditworthiness of the issuer is monitored and these notes have been determined
to present minimal credit risk by BramCap. Any securities for which market
quotations are not readily available are valued at their fair value as
determined in good faith by the Board of Directors.
b) Federal Income Taxes - The Company's policy is to comply with the
requirements of the Internal Revenue Code that are applicable to regulated
investment companies and to distribute all its taxable income to its
shareholders. Therefore, no federal income tax provision is required.
c) Distributions to Shareholders - Dividends from net investment income are
declared and paid annually in December. Distributions of net realized capital
gains, if any, will be declared at least annually. Distributions to
shareholders are recorded on the ex-dividend date. The Fund may periodically
make reclassifications among certain of its capital accounts as a result of the
timing and characterization of certain income and capital gains distributions
determined annually in accordance with federal tax regulations, which may differ
from generally accepted accounting principles. Accordingly, at December 31,
1996, reclassifications were recorded from accumulated net investment losses to
reduce capital stock by $615,508.
d) Organizational Costs - The costs incurred in connection with the
organization, initial registration and public offering of shares of the Fund
aggregated $153,472. These costs are being amortized over the period of
benefit, reflecting anticipated future asset levels of the Fund, but not to
exceed 60 months from the Fund's commencement of operations.
e) Other - Investment transactions are accounted for on the trade date. The
Fund determines the gain or loss realized from the investment transactions by
comparing the cost of the security lot sold with the net sale proceeds.
Dividend income is recognized on the ex-dividend date and interest income is
recognized on an accrual basis.
THE BRAMWELL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Fund for the six months ended December 31, 1996
and the year ended June 30, 1996, were as follows:
December 31, 1996
-----------------
Shares Dollars
---------- -------------
Shares sold 1,548,744 $ 22,508,797
Dividends reinvested 130,340 1,982,469
Shares redeemed (2,800,619) (40,845,334)
----------- -------------
(1,121,535) $(16,354,068)
=========== =============
June 30, 1996
-------------
Shares Dollars
----------- ------------
Shares sold 10,437,428 $141,226,265
Dividends reinvested 22,178 298,517
Shares redeemed (5,829,712) (79,729,768)
----------- ------------
4,629,894 $ 61,795,014
=========== ============
4. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments for the Fund, for the six months ended December 31, 1996 were
$61,836,117 and $79,855,140, respectively. There were no purchases or sales of
long-term U.S. Government securities. At December 31, 1996, based on aggregate
cost for federal income tax purposes of $101,410,637, gross unrealized
appreciation and depreciation of investments were as follows:
Appreciation $28,436,178
Depreciation (3,677,176)
-----------
Net appreciation on investments $24,759,002
===========
5. INVESTMENT ADVISORY AGREEMENT
The Fund has an agreement with BramCap, with whom certain officers and a
director of the Fund are affiliated, to furnish investment advisory services to
the Fund. Under the terms of this agreement, the Fund will pay BramCap a monthly
fee at the annual rate of 1.00% on average daily net assets. 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, 1998.
After such date, the expense limitation may be terminated or revised at any
time.
6. 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.
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 & 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 & 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.
