THE BRAMWELL GROWTH FUND
Quarterly Report - September 1997
745 Fifth Avenue
New York, New York 10151
DEAR FELLOW SHAREHOLDERS:
INVESTMENT RESULTS - QUARTER ENDED SEPTEMBER 30, 1997
During the third quarter, THE BRAMWELL GROWTH FUND celebrated its THIRD BIRTHDAY
and pulled ahead of the S&P 500 Index for the calendar year to date. For the
first nine months, the Fund appreciated 32.4% to $19.88 net asset value per
share compared to 29.6% for the S&P 500 Index, and for the quarter ended
September 30, 1997, the Fund gained 13.4% versus 7.5% for the S&P 500 Index.
From inception, August 1, 1994, through September 30, 1997, the cumulative
return was 103.1% and the average annual return was 25.1%. Investment results
compared to those of other indices were as follows:
COMPARATIVE INVESTMENT SEPT. Q CALENDAR ONE THREE SINCE
RETURNS (9/30/97) 1997 YEAR-TO-DATE YEAR YEARS(A) INCEPTION(B)
--------------------- ------ ------------ ---- ------- ------------
THE BRAMWELL GROWTH FUND (C) 13.4% 32.4% 35.0% 25.7% 25.1%
Lipper Mid-Cap Funds Index (d) 14.1 23.5 24.8 23.8 24.7
Lipper Growth Funds Index (e) 10.3 27.2 34.6 25.2 24.5
S&P 500 Stock Index (f) 7.5 29.6 40.4 29.9 28.5
(a) Compound average annual return. (b) Compound average annual return
since inception 8/1/94. (c) 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 results. Investment
returns and principal value will fluctuate, so that shares, when redeemed,
may be worth more or less than the original cost. (d) The Lipper Mid-Cap
Funds Index is comprised of the 30 largest funds which by prospectus or
portfolio practice, invest primarily in companies with market
capitalizations less than $5 billion at the time of purchase. (e) The
Lipper Growth Funds Index is comprised of the 30 largest funds which by
prospectus or portfolio practice, normally invest in companies with long-
term earnings expected to grow significantly faster than the earnings of
the stocks represented in the major unmanaged stock indices. Funds in the
Lipper Growth Funds and Lipper Mid-Cap Funds Indices are equal weighted and
returns include the reinvestment of all dividends and are net of expenses.
(f) 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.
COMMENTARY
The investment environment during the September quarter remained favorable to
the equity markets as inflation stayed low, interest rates were flat to lower,
profit growth was strong, government budget deficits decreased, and expectations
for higher inflation and interest rates declined. Reflecting this positive
scenario, stock prices advanced with earnings growth and price/earnings
multiples expanded.
A broader universe of equities gained in the quarter with small and mid-cap
stocks generally performing better than large cap growth stocks as the result,
in part, of selling at more favorable multiples to growth than the S&P 500
Index. Financial stocks performed particularly well as did technology,
personnel outsourcing and oil service stocks. Dell Computer, Compaq, Robert
Half, Intel, Kohl's, Diamond Offshore Drilling, Interim Services, Northern
Trust, Washington Mutual, and Merrill Lynch contributed the greatest dollar
gains to the portfolio.
We estimate that the 1997 and 1998 earnings growth for our portfolio
approximates 20-22% for which we are paying about one times growth. This
compares favorably to paying some two times estimated growth of 9% over the same
time period for the S&P 500 Index. Longer term, we expect stock prices to move
with profit growth, and when interest and inflation rates are flat to declining,
price/earnings multiple expansion is likely to occur as well giving an added
boost to our portfolio.
OUTLOOK
The macroeconomic outlook for the capital markets remains favorable. We
continue to anticipate real Gross Domestic Product (GDP) growth of 3.0%-3.5%
going forward, reflecting higher employment levels, real wage increases relative
to inflation, wealth effect from a rising stock market, global market expansion,
and spending for new technology. We anticipate inflation staying around 2%,
given global competitive capitalism, technology-driven productivity gains,
increased capacity, deregulation, a strong dollar, and shift to more deferred
equity-based employee compensation. We expect interest rates to remain stable,
given low inflation, the historically wide spread between U.S. interest rates
and inflation as well as various foreign interest rates, and a declining federal
deficit resulting from higher tax revenues generated by higher profit and
employment levels.
Low inflation and stable interest rates should continue to encourage broad
equity market gains especially from companies with higher growth rates and
selling at lower multiples to growth than the S&P 500 Index. We continue to
look across industries for effective users of technology. Technology
facilitates achieving economies of scale and critical mass; we believe that the
financial services industry, in particular, can effectively use technology to
broaden distribution and crossmarket products and services and to consolidate
and reduce redundant costs. Advances in computing and communications, e.g., the
Internet, and global competition are driving demand for product upgrades and
creating business opportunities. Emerging countries provide new markets for
existing products and services. Assuming political stability and free markets,
a period of synchronized global expansion may lie ahead - an environment that
would provide a wide array of investment opportunities for our Fund.
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 to smooth
the effects of volatility. 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 10, 1997
The outlook and opinions expressed above represent the VIEWS OF THE INVESTMENT
ADVISER AS OF OCTOBER 10, 1997 AND ARE SUBJECT TO CHANGE AS MARKET AND ECONOMIC
EVENTS UNFOLD.
THE BRAMWELL GROWTH FUND
Portfolio of Investments - September 30, 1997 (Unaudited)
SHARES VALUE
------ -----
COMMON STOCKS - 98.98%
APPAREL - 0.64%
Cutter & Buck, Inc.* 45,000 $ 928,125
AUTOMOTIVE & HEAVY
EQUIPMENT - 1.14%
Hayes Wheels International, Inc.* 5,000 168,750
Lear Corporation* 30,000 1,477,500
-----------
1,646,250
CHEMICALS - 1.39%
OM Group, Inc. 50,000 1,996,875
COMMUNICATIONS - 1.23%
WorldCom, Inc.* 50,000 1,768,750
ELECTRONICS - 3.41%
Applied Materials, Inc.* 2,000 190,500
Intel Corporation 46,000 4,246,375
Kent Electronics Corporation* 5,500 217,250
Texas Instruments, Inc. 2,000 270,250
-----------
4,924,375
ENERGY - 4.54%
Camco International, Inc. 23,000 1,604,250
Diamond Offshore Drilling, Inc. 40,000 2,207,500
Global Marine, Inc.* 30,000 997,500
Rowan Companies, Inc.* 25,000 890,625
Schlumberger Ltd. 10,000 841,875
-----------
6,541,750
ENTERTAINMENT &
LEISURE TIME - 2.10%
Cinar Films, Inc., Class B* 30,000 1,143,750
Regal Cinemas, Inc.* 70,250 1,887,969
-----------
3,031,719
FINANCIAL SERVICES - 20.94%
American Express 35,000 2,865,625
Charles Schwab Corporation (The) 52,500 1,876,875
Chase Manhattan Corporation 23,000 2,714,000
Citicorp 5,000 669,688
First Union Corporation 55,000 2,753,437
Franklin Resources, Inc. 10,000 931,250
ING Groep N.V. - ADS 15,000 689,063
LaSalle Partners, Inc.* 20,600 721,000
MSB Bancorp, Inc. 5,000 144,375
Merrill Lynch & Co., Inc. 50,000 3,709,375
NationsBank Corporation 42,000 2,598,750
Northern Trust Company 55,000 3,251,875
Norwest Corporation 25,000 1,531,250
TCF Financial Corporation 5,000 292,188
Travelers Group, Inc. 15,000 1,023,750
Washington Mutual, Inc. 56,000 3,906,000
Zions Bancorporation 14,000 525,000
-----------
30,203,501
FOOD & BEVERAGE - 1.75%
CPC International, Inc. 15,000 1,389,375
Hershey Foods Corporation 20,000 1,130,000
-----------
2,519,375
SHARES VALUE
------ -----
HEALTHCARE - 8.05%
Alkermes, Inc.* 15,000 $ 309,375
Biacore International, AB - ADS* 25,000 290,625
BioChem Pharmaceuticals, Inc. - ADR* 15,000 472,500
Cardinal Health, Inc. 20,000 1,420,000
Closure Medical Corporation* 10,000 345,000
Elan Corporation, PLC* 30,000 1,501,875
Eli Lilly and Company 10,000 1,204,375
Johnson & Johnson 35,200 2,028,400
Merck & Company, Inc. 20,000 1,998,750
Pfizer, Inc. 34,000 2,042,125
-----------
11,613,025
HOME & OFFICE FURNITURE - 2.55%
Herman Miller, Inc. 25,000 1,337,500
Knoll, Inc.* 10,000 335,000
Leggett & Platt, Inc. 45,000 2,005,313
-----------
3,677,813
HOUSEHOLD PRODUCTS - 2.89%
Colgate-Palmolive Company 40,000 2,787,500
Procter & Gamble Company 20,000 1,381,250
-----------
4,168,750
INDUSTRIAL PRODUCTS - 11.18%
Emerson Electric Company 50,800 2,927,350
Fastenal Company 5,000 266,250
General Electric Company 60,000 4,083,750
Illinois Tool Works, Inc. 80,000 4,000,000
Mineral Technologies, Inc. 40,000 1,782,500
Molex Inc., Class A 57,108 2,327,151
Shaw Group, Inc.* 15,000 329,062
ThermoQuest Corporation* 20,000 400,000
-----------
16,116,063
INFORMATION PROCESSING:
OFFICE EQUIPMENT - 8.21%
Compaq Computer Corporation* 60,500 4,522,375
Dell Computer Corporation* 70,000 6,781,250
International Business Machines Corp. 5,000 529,687
-----------
11,833,312
INFORMATION PROCESSING:
SERVICES - 4.35%
Automatic Data Processing, Inc. 23,000 1,150,000
Computer Sciences Corporation* 65,029 4,600,802
Paychex, Inc. 15,000 523,125
-----------
6,273,927
INFORMATION PROCESSING:
SOFTWARE - 2.67%
Great Plains Software, Inc.* 5,300 148,400
Microsoft Corporation* 25,000 3,307,812
Seachange International, Inc.* 27,000 398,250
-----------
3,854,462
INSURANCE - 4.10%
Allstate Corporation 35,000 2,813,125
American International Group, Inc. 30,000 3,095,625
-----------
5,908,750
PACKAGING - 0.95%
Sealed Air Corporation* 25,000 1,373,437
THE BRAMWELL GROWTH FUND
Portfolio of Investments - September 30, 1997 (Unaudited) (continued)
SHARES VALUE
------ -----
COMMON STOCKS - 98.98% (CONT'D.)
RETAILING - 9.58%
Amazon.com, Inc.* 10,000 $ 520,625
CVS Corporation 5,500 312,812
Home Depot, Inc. (The) 55,500 2,892,938
Kohl's Corporation* 45,000 3,195,000
Tiffany & Co. 40,800 1,734,000
Wal Mart Stores, Inc. 29,000 1,062,125
Walgreen Company 160,000 4,100,000
-----------
13,817,500
TEMPORARY HELP - 7.31%
Interim Services, Inc.* 109,800 3,088,125
Labor Ready, Inc.* 36,000 837,000
On Assignment, Inc.* 50,000 2,275,000
Robert Half International, Inc.* 105,000 4,344,375
-----------
10,544,500
TOTAL COMMON STOCKS
(Cost $85,937,167) 142,742,259
===========
PRINCIPAL
AMOUNT VALUE
--------- -----
VARIABLE RATE
DEMAND NOTES - 1.55%
American Family Financial Services $153,000 $ 153,000
General Mills, Inc. 286,000 286,000
Johnson Controls, Inc. 989,000 989,000
Pitney Bowes Credit Corp. 383,000 383,000
Warner Lambert Company 206,000 206,000
Wisconsin Electric Power Corp. 218,000 218,000
------------
TOTAL VARIABLE RATE DEMAND NOTES
(Cost $2,235,000) 2,235,000
------------
TOTAL INVESTMENTS - 100.53%
(Cost $88,172,167) 144,977,259
-----------
LIABILITIES, LESS CASH
AND OTHER ASSETS - (0.53)% (761,681)
------------
NET ASSETS - 100.00%
(7,254,328 SHARES OUTSTANDING) $144,215,578
============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
$19.88
======
*Non-income producing security
THE BRAMWELL GROWTH FUND
Quarterly Report - September 30, 1997
TOP TEN INDUSTRY SECTORS
SEPTEMBER 30, 1997
------------------
Financial Services 20.9% Temporary Help 7.3%
Information Processing 15.2 Energy 4.5
Industrial Products 11.2 Insurance 4.1
Retailing 9.6 Electronics 3.4
Healthcare 8.1 Household Products 2.9
TOP TEN EQUITY HOLDINGS
SEPTEMBER 30, 1997
------------------
Dell Computer 4.7% Walgreen 2.8%
Computer Sciences 3.2 General Electric 2.8
Compaq Computer 3.1 Illinois Tool Works 2.8
Robert Half 3.0 Washington Mutual 2.7
Intel 2.9 Merrill Lynch 2.6
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 GEORGE F. KEANE
President, Chief Investment Chairman
and Financial Officer Trigen Energy Corp.
The Bramwell Funds, Inc. President Emeritus
The Common Fund, Inc.
J. SINCLAIR ARMSTRONG
Director & Secretary JAMES C. SARGENT
The Reed Foundation, Inc. Counsel
Retired Partner Opton, Handler, Gottlieb, Feiler & Katz
Whitman, Breed, Abbott & Morgan Former Commissioner
Former Commissioner & Chairman Securities & Exchange
Securities & Exchange Commission Commission
ISABEL H. BENHAM MARTHA R. SEGER, PH.D.
Director, Board of Trustees Chairman
John W. Barringer III National Martha Seger & Associates
Railroad Library Former Governor
Federal Reserve Board
Officers
- --------------------------------------------------------------------------------
ELIZABETH R. BRAMWELL, CFA
President, Chief Investment and Financial Officer
MARY F. MC COLLUM
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.
