THE BRAMWELL GROWTH FUND
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QUARTERLY REPORT - MARCH 31, 1998
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TOP TEN INDUSTRY SECTORS
MARCH 31, 1998
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Information Processing 17.2% Employee Staffing 6.9%
Financial Services 13.2 Energy 5.6
Retailing 11.4 Insurance 4.9
Healthcare 9.1 Communications 4.5
Industrial Products 9.0 Household & Personal Care Products 4.3
TOP TEN EQUITY HOLDINGS
MARCH 31, 1998
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Computer Sciences 4.2% EMC 2.4%
Walgreen 3.1 Washington Mutual 2.1
Dell Computer 2.9 General Electric 2.1
Robert Half 2.7 Automatic Data Processing 2.1
Illinois Tool Works 2.5 Home Depot 2.0
THE BRAMWELL GROWTH FUND
745 Fifth Avenue
New York, New York 10151
1-800-BRAMCAP
(1-800-272-6227)
BOARD OF DIRECTORS
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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
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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
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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.
BR-412-0498
THE BRAMWELL GROWTH FUND
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QUARTERLY REPORT - MARCH 1998
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745 Fifth Avenue
New York, New York 10151
DEAR FELLOW SHAREHOLDERS:
INVESTMENT RESULTS - QUARTER ENDED MARCH 31, 1998
THE BRAMWELL GROWTH FUND appreciated 56.7% for the twelve months ended March 31,
1998, to $21.71 net asset value per share, surpassing the 48.0% gain for the S&P
500 Stock Index. For the quarter, the Fund gained 14.7% compared to 14.0% for
the S&P 500 Index and 12.7% and 12.4% for the Lipper Mid-Cap and Growth Funds
Indices. The Fund's three-year compound average annual return as of March 31st,
was 28.4%, and since inception, August 1, 1994, through March 31, 1998, the
cumulative return was 135.2% resulting in a compound average annual rate of
return since inception of 26.3%. Investment results relative to the indices were
as follows:
MARCH Q ONE THREE SINCE
COMPARATIVE INVESTMENT RETURNS (3/31/98) 1998 YEAR YEARS (a) INCEPTION (b)
- ---------------------------------------- ---- ---- --------- -------------
THE BRAMWELL GROWTH FUND (C) 14.7% 56.7% 28.4% 26.3%
Lipper Mid-Cap Funds Index (d) 12.7 41.8 24.4 23.4
Lipper Growth Funds Index (d) 12.4 44.4 27.9 25.0
S&P 500 Stock Index (e) 14.0 48.0 32.8 29.7
(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 their 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. 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.
(e) 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
Low inflation, stable interest rates, a declining federal deficit, and rising
employment and real wages provided a favorable macroeconomic environment for
equities in the first quarter. In addition, early tax refunds and a mild winter
resulting from El Nino positively affected the economy. A strong U.S. housing
market and improving economies in Europe offset contracting growth in Asia.
Communications, information processing, retailing, employee staffing, and home
and office furniture were particularly strong sectors in the quarter; oil
service was restrained by declines in spot oil prices. Individual stocks that
contributed significant value to our client portfolios were: Dell Computer,
Computer Sciences (spotlighted by a failed takeover attempt), Lucent
Technologies, EMC, Microsoft, Pfizer, Robert Half, Interim Services, WorldCom
and Walgreen.
We estimate that the 1998 earnings growth rate of the Fund's portfolio is 20%,
and that at the end of the March quarter, the portfolio was selling at 26 times
earnings or 1.3 times growth compared to 22 times estimated 1998 earnings and
more than 2.5 times estimated growth of 7% for the S&P 500 Index. On our 1999
projections, the portfolio has a growth rate of 21% and is selling at 21 times
earnings and one times growth, compared to the same multiple paid for more than
two times growth of some 7% for the S&P 500 Index. Over time, stock prices move
with profit growth, and as companies become more seasoned and recognized,
especially in a period of flat to lower inflation and interest rates, multiples
are likely to expand, thereby further boosting investment returns.
OUTLOOK
We continue to look for 2% Gross Domestic Product growth in 1998 with modest
inflation of 1%-2%, given a strong dollar, cheaper imports, low oil prices,
increased capacity, deregulation and technology-driven productivity gains. We
anticipate that stable to lower mortgage interest rates will continue to bolster
housing sales and free income for other uses. Decreased exports to and changing
trade patterns with Asia are likely to intensify, thereby slowing domestic
economic growth in some parts of the economy. However, a strong domestic
housing market and greater affordability of many products as well as continued
economic gains in Europe are likely to offset much of the impact of turbulence
in the Asian economies.
We continue to focus on companies that have new products and services and that
have potential opportunities to enter new markets. Advances in communications,
computing and medicine are occurring at a rapid rate, sometimes creating major
disconnects, e.g., the Internet, and we are on the hunt to find the winners as
well as avoid the losers. Some themes that we are using to identify investment
ideas are the effective use of technology, outsourcing (computer services,
component manufacturing or staffing), home-centered products, financial services
and consolidation to achieve critical mass and economies of scale.
Despite the strong market gains in the first quarter, many companies that are
growing substantially faster than the S&P 500 Index are still selling at more
favorable multiples to growth making them potentially attractive investment
candidates for our portfolio. With the backdrop of low inflation and stable
interest rates, we anticipate the market to broaden to less well-known,
relatively attractively valued, mid-cap companies in which we have incrementally
positioned the portfolio.
The strong dollar and access to capital enhance opportunities for long-term
corporate investment abroad at more favorable prices than heretofore and
encourage greater free market allocation of financial resources in emerging
markets. Although not straightline, we continue to believe that global
expansion and a rising standard of living are the dominant long-term trends.
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. Just as corporations try to invest strategically for
greater long-term gains when prices are low, so too can the individual investor
by dollar-cost averaging. 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
April 20, 1998
The outlook and opinions expressed above represent the views of the investment
adviser as of April 20, 1998 and are subject to change as market and economic
events unfold.
THE BRAMWELL GROWTH FUND
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PORTFOLIO OF INVESTMENTS - MARCH 31, 1998 (UNAUDITED)
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SHARES VALUE
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COMMON STOCKS - 98.26%
APPAREL - 0.63%
Cutter & Buck, Inc.* 45,000 $1,164,375
AUTOMOTIVE & HEAVY
EQUIPMENT - 1.37%
Hayes Lemmerz International, Inc.* 25,000 825,000
Lear Corporation* 30,000 1,691,250
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2,516,250
CHEMICALS - 1.14%
OM Group, Inc. 50,000 2,106,250
COMMUNICATIONS - 4.50%
CIENA Corporation* 25,000 1,065,625
Lucent Technologies, Inc. 25,000 3,196,875
U.S. West Communications 30,000 1,642,500
WorldCom, Inc.* 55,000 2,368,437
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8,273,437
ELECTRONICS - 0.23%
Kent Electronics Corporation* 20,500 431,781
EMPLOYEE STAFFING - 6.92%
Interim Services, Inc.* 100,000 3,375,000
Labor Ready, Inc.* 44,000 1,416,250
On Assignment, Inc.* 97,500 2,888,438
Robert Half International, Inc.* 105,000 5,040,000
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12,719,688
ENERGY - 5.58%
Camco International, Inc. 40,000 2,420,000
Diamond Offshore Drilling, Inc. 48,000 2,178,000
Global Marine, Inc.* 35,000 866,250
R&B Falcon Corporation* 35,000 1,036,875
Rowan Companies, Inc.* 25,000 725,000
Schlumberger Ltd. 40,000 3,030,000
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10,256,125
ENTERTAINMENT &
LEISURE TIME - 0.70%
Cinar Films, Inc., Class B* 30,000 1,278,750
FINANCIAL SERVICES - 13.22%
American Express 15,000 1,377,187
Charles Schwab Corporation (The) 42,500 1,615,000
First Union Corporation 10,000 567,500
LaSalle Partners, Inc.* 20,600 669,500
Mellon Bank Corporation 20,000 1,270,000
Merrill Lynch & Co., Inc. 40,000 3,320,000
NationsBank Corporation 25,000 1,823,438
Northern Trust Company 45,000 3,363,750
Norwest Corporation 50,000 2,078,125
Star Banc Corporation 15,000 886,875
TCF Financial Corporation 56,000 1,900,500
Travelers Group, Inc. 10,000 600,000
Washington Mutual, Inc. 55,000 3,944,531
Zions Bancorporation 17,000 894,625
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24,311,031
FOOD & BEVERAGE - 2.37%
Bestfoods 25,000 2,921,875
Hershey Foods Corporation 20,000 1,432,500
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4,354,375
SHARES VALUE
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COMMON STOCKS - 98.26% (CONT'D.)
HEALTHCARE - 9.10%
Alkermes, Inc.* 15,000 $373,125
Biacore International AB - ADS* 25,000 212,500
BioChem Pharmaceuticals, Inc. - ADR* 15,000 362,812
Cardinal Health, Inc. 12,500 1,102,344
Closure Medical Corporation* 10,000 216,250
Elan Corporation, PLC* 30,000 1,938,750
Eli Lilly & Company 50,000 2,981,250
Focal, Inc.* 25,000 450,000
Johnson & Johnson 20,000 1,466,250
Merck & Company, Inc. 15,000 1,925,625
Neurex Corporation* 10,000 238,750
PAREXEL International Corporation* 25,000 781,250
Pfizer, Inc. 35,000 3,489,063
Quintiles Transnational Corporation 25,000 1,204,687
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16,742,656
HOME & OFFICE FURNITURE - 3.82%
Furniture Brands International, Inc.* 20,000 643,750
Herman Miller, Inc. 48,000 1,609,500
HON Industries, Inc. 40,000 1,470,000
Knoll, Inc.* 29,400 1,133,738
Leggett & Platt, Inc. 42,000 2,160,375
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7,017,363
HOUSEHOLD & PERSONAL CARE
PRODUCTS - 4.27%
Colgate-Palmolive Company 40,000 3,465,000
Estee Lauder Companies, Inc. (The) 13,700 929,888
Gillette Company 15,000 1,780,312
Procter & Gamble Company (The) 20,000 1,687,500
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7,862,700
INDUSTRIAL PRODUCTS - 9.03%
Emerson Electric Company 50,800 3,311,525
Fastenal Company 15,000 650,625
General Electric Company 45,000 3,878,438
Illinois Tool Works, Inc. 70,000 4,532,500
Mineral Technologies, Inc. 40,000 2,015,000
Molex Inc., Class A 71,385 1,914,010
ThermoQuest Corporation* 17,000 306,000
----------
16,608,098
INFORMATION PROCESSING:
OFFICE EQUIPMENT - 6.16%
Dell Computer Corporation* 80,000 5,420,000
EMC Corporation* 115,000 4,348,437
International Business Machines
Corporation 15,000 1,558,125
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11,326,562
INFORMATION PROCESSING:
SERVICES - 9.24%
Automatic Data Processing, Inc. 55,500 3,777,469
Computer Sciences Corporation* 140,058 7,703,190
DST Systems, Inc.* 30,000 1,576,875
Paychex, Inc. 20,000 1,153,750
Sterling Commerce, Inc.* 60,000 2,782,500
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16,993,784
INFORMATION PROCESSING:
SOFTWARE - 1.75%
Microsoft Corporation* 36,000 3,222,000
PORTFOLIO OF INVESTMENTS (UNAUDITED) (CONTINUED)
SHARES VALUE
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COMMON STOCKS - 98.26% (cont'd.)
INSURANCE - 4.90%
Allstate Corporation 40,000 $3,677,500
American International Group, Inc. 15,000 1,889,063
Chubb Corporation (The) 35,000 2,743,125
Horace Mann Educators Corporation 20,000 702,500
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9,012,188
PACKAGING - 0.89%
Sealed Air Corporation* 25,000 1,637,500
RETAILING - 11.36%
Amazon.com, Inc.* 7,000 598,719
CVS Corporation 30,000 2,265,000
Home Depot, Inc. (The) 55,500 3,742,781
Kohl's Corporation* 45,000 3,678,750
Tiffany & Co. 35,800 1,743,012
Wal-Mart Stores, Inc. 50,000 2,540,625
Walgreen Company 160,000 5,630,000
Whole Foods Market, Inc.* 10,000 697,500
----------
20,896,387
TRANSPORTATION - 1.08%
Kansas City Southern Industries, Inc. 45,000 1,980,000
TOTAL COMMON STOCKS
(Cost $109,712,111) $180,711,300
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PRINCIPAL
AMOUNT VALUE
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VARIABLE RATE
DEMAND NOTES - 2.95%
General Mills, Inc. $2,576,000 $2,576,000
Johnson Controls, Inc. 906,000 906,000
Pitney Bowes Credit Corp. 794,700 794,700
Sara Lee Corp. 1,146,300 1,146,300
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TOTAL VARIABLE RATE DEMAND NOTES
(Cost $5,423,000) 5,423,000
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TOTAL INVESTMENTS - 101.21%
(Cost $115,135,111) 186,134,300
LIABILITIES LESS CASH
AND OTHER ASSETS - (1.21)% (2,217,181)
-----------
NET ASSETS - 100.00%
(8,472,356 shares outstanding) $183,917,119
============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $21.71
======
*Non-income producing security
