THE BRAMWELL GROWTH FUND
- --------------------------------------------------------------------------------
ANNUAL REPORT - JUNE 1998
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745 Fifth Avenue
New York, New York 10151
DEAR FELLOW SHAREHOLDERS:
INVESTMENT RESULTS - FISCAL YEAR ENDED JUNE 30, 1998
THE BRAMWELL GROWTH FUND appreciated 39.5% for the fiscal year ended June 30,
1998 to $23.05 net asset value per share, surpassing the 30.2% gain for the S&P
500 Stock Index. For the quarter, the Fund gained 6.2% compared to 3.3% for the
S&P Index and (0.4)% and 2.8% for the Lipper Mid-Cap and Growth Funds Indices,
respectively. The Fund's three-year compound average annual return as of June
30, was 26.6%, and since inception, August 1, 1994, through June 30, 1998, the
cumulative return was 149.7% resulting in a compound average annual rate of
return since inception of 26.3%. Investment results relative to the indices were
as follows:
<TABLE>
<CAPTION>
COMPARATIVE INVESTMENT JUNE Q CALENDAR ONE THREE SINCE
RETURNS (6/30/98) 1998 YEAR-TO-DATE YEAR YEARS <F1> INCEPTION <F2>
- ---------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
THE BRAMWELL GROW<C>TH FUND 6.2% 21.8% 39.5% 26.6% 26.3%
Lipper Mid-Cap Funds Index <F3> (0.4) 12.2 22.0 20.6 21.6
Lipper Growth Funds Index <F3> 2.8 15.6 28.3 24.8 24.1
S&P 500 Stock Index <F4> 3.3 17.7 30.2 30.2 28.8
</TABLE>
<F1> Compound average annual return. <F2> Compound average annual return since
inception 8/1/94. <F3> 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
Mid-Cap Funds and Lipper Growth Funds Indices are equal weighted and returns
include the reinvestment of all dividends and are net of expenses. <F4> 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.
The Lipper Lipper
Bramwell Growth Mid Cap
Date Growth Fund S&P 500 Fund Index Fund Index
- ----- ------------ --------- ------------ -------------
08/01/94 10,000 10,000 10,000 10,000
12/31/94 10,259 10,154 10,087 10,533
06/30/95 12,311 12,206 11,974 12,243
12/31/95 13,599 13,969 13,381 14,018
06/30/96 14,653 15,380 14,446 15,737
12/31/96 15,342 17,177 15,727 16,303
06/30/97 17,906 20,717 18,143 17,620
12/31/97 20,507 22,908 20,136 19,150
06/30/98 24,971 26,965 23,271 21,487
- --------------------------------------------------------------------------------
This chart assumes an initial investment of $10,000 made on 8/1/94 (inception).
Returns shown for The Bramwell Growth Fund 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.
- --------------------------------------------------------------------------------
COMMENTARY
For the fiscal year ended June 30, 1998, the macroeconomic environment was
favorable to equities: steady economic growth, low inflation, declining interest
rates, rising employment and real wages, and emerging government surpluses.
A strong U.S. housing market and improving European economies offset the effects
of economic contraction in Asia. With strong profit gains and lower interest
rates, price/earnings multiples expanded. Information processing, financial
services and employee staffing stocks were particularly strong in the first part
of the fiscal year.
In the June quarter, information processing and employee staffing gained
significantly as well as retailing and communications. Sharp declines in oil
prices hurt oil service stocks with the exception of Camco which received a
premium takeover bid from Schlumberger. Unwarranted fear of higher interest
rates restrained furniture stocks but fundamentals continue to be strong.
Individual stocks that contributed significant value to the portfolio in the
quarter were: Dell Computer, Computer Sciences, Kohl's, Walgreen, Lucent, Home
Depot, Robert Half, EMC, Amazon.com and Camco.
The Fund seeks to invest in companies that are expected to benefit from
investment spending for research, plant and market expansion, which may or may
not be immediately reflected in the equity market, and seeks to invest in
companies that are perceived to be attractively valued relative to their future
growth prospects. We estimate that the 1998 earnings growth of the Fund's
portfolio approximates 21%, and that at the end of the June quarter, the
portfolio was selling at 27 times earnings or 1.3 times growth compared to 23
times estimated 1998 earnings and more than 2.5 times estimated growth of 6% for
the S&P 500 Index. We project that the portfolio has an estimated 1999 earnings
growth rate of 20%, about 3.5 times that of the S&P 500, and is selling at 22.5
times earnings and only 1.1 times growth compared to the same P/E multiple and
more than two times much lower growth paid for the S&P 500 Index. Over time,
stock prices move with profit growth, and given flat to possibly lower inflation
and interest rates, price/earnings ratios have the potential to expand,
especially for companies already selling at discounts to the S&P 500 Index,
thereby enhancing their long-term investment returns.
OUTLOOK
We anticipate economic growth to slow in the second half to some 2% given lower
exports as the result of the strong dollar and economic contraction in Asia. We
also anticipate 1-2% inflation given cheaper imports, lower oil and other
commodity prices, increased global capacity, deregulation and technology-driven
productivity gains. Lower mortgage rates should continue to drive housing sales
and release discretionary income for other purposes. Greater affordability of
many products, a strong domestic housing market and continued economic gains in
Europe are expected to largely offset the impact of recessions in Asia.
We are focusing on companies with strong top-line growth coming from new
products and services or expansion into underpenetrated geographic markets.
Growth should be valued highly in a slowing global economy. Major advances are
occurring in communications, computing, and medicine, and disconnects caused by
the explosive growth of the Internet, Year 2000 (Y2K) technology upgrades and
transition to a single European currency are driving change and creating
investment opportunities. Themes that we continue to use to identify investment
candidates are the effective use of technology, outsourcing (computer services,
component manufacturing and employee staffing), home-related products, financial
services and consolidation to achieve critical mass and economies of scale.
Many companies are growing substantially faster than the S&P 500 Index and are
still selling at comparatively favorable multiples to growth despite the stock
market gains in the first calendar half. Low inflation and interest rates are
favorable to the overall market but especially to less well-known mid-cap stocks
with strong top-line growth and selling at discounts to the multiples paid for
the S&P 500 Index. Approximately one-third of our portfolio is currently
positioned in companies with market capitalizations under $5 billion so as to
capture this less efficiently valued part of the market.
The strong dollar and capital availability enhance long-term returns for
corporate investment abroad at more favorable prices than heretofore and
encourage greater competitive market allocation of financial resources in
emerging markets. We continue to believe that emerging economies will continue
to emerge, albeit in zigzag fashion, and that global expansion and the
heightened desire for improved living standards continue to be 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
Elizabeth R. Bramwell, CFA
President and Chief Investment
Officer
July 17, 1998
The outlook and opinions expressed above represent the views of the investment
adviser as of July 17, 1998 and are subject to change as market and economic
events unfold.
TOP TEN INDUSTRY SECTORS
JUNE 30, 1998
- -----------------------------------------------------------------------------
Information Processing 17.6% Communications 6.0%
Retailing 12.7 Insurance 5.6
Financial Services 11.6 Home & Office
Healthcare 8.5 Furniture 4.1
Employee Staffing 7.1 Energy 3.3
Industrial Products 6.6
TOP TEN EQUITY HOLDINGS
JUNE 30, 1998
- -----------------------------------------------------------------------------
Computer Sciences 4.4% Home Depot 2.2%
Dell Computer 3.4 Pfizer 2.1
Walgreen 3.2 Washington Mutual 2.1
Robert Half 2.8 Automatic Data
Kohl's 2.3 Processing 2.1
Illinois Tool Works 2.3
THE BRAMWELL GROWTH FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS - JUNE 30, 1998
- --------------------------------------------------------------------------------
SHARES VALUE
------- -------
COMMON STOCKS - 93.43%
APPAREL - 0.66%
Cutter & Buck, Inc.<F1> 50,000 $ 1,350,000
AUTOMOTIVE & HEAVY
EQUIPMENT -_ 1.30%
Hayes Lemmerz International, Inc.<F1> 28,700 1,140,825
Lear Corporation<F1> 30,000 1,539,375
-----------
2,680,200
CHEMICALS - 1.94%
Minerals Technologies, Inc. 38,000 1,933,250
OM Group, Inc. 50,000 2,062,500
-----------
3,995,750
COMMUNICATIONS - 5.98%
CIENA Corporation<F1> 20,000 1,392,500
Cisco Systems, Inc.<F1> 10,000 920,625
EarthLink Network, Inc.<F1> 4,000 307,000
Lucent Technologies, Inc. 50,000 4,159,375
Teleglobe, Inc. 38,000 1,007,000
U.S. West, Inc. 50,000 2,350,000
WorldCom, Inc.<F1> 45,000 2,179,688
-----------
12,316,188
EMPLOYEE STAFFING - 7.06%
Interim Services, Inc.<F1> 100,000 3,212,500
Labor Ready, Inc.<F1> 66,000 1,992,375
On Assignment, Inc.<F1> 99,000 3,458,812
Robert Half International, Inc.<F1> 105,000 5,866,875
-----------
14,530,562
ENERGY - 3.34%
Camco International, Inc. 40,000 3,115,000
Diamond Offshore Drilling, Inc. 40,000 1,600,000
R&B Falcon Corporation<F1> 20,000 452,500
Schlumberger Ltd. 25,000 1,707,813
-----------
6,875,313
ENTERTAINMENT &
LEISURE TIME - 1.07%
Cinar Films, Inc., Class B<F1> 60,000 1,170,000
Imax Corporation<F1> 45,000 1,026,563
-----------
2,196,563
SHARES VALUE
------- -------
FINANCIAL SERVICES - 11.63%
American Express Company 10,000 $ 1,140,000
Charles Schwab Corporation (The) 35,000 1,137,500
Federated Investors, Inc.<F1> 40,000 740,000
LaSalle Partners, Inc.<F1> 25,600 1,139,200
Mellon Bank Corporation 20,000 1,392,500
Merrill Lynch & Co., Inc. 40,000 3,690,000
NationsBank Corporation 20,000 1,530,000
North Fork Bancorporation, Inc. 30,000 733,125
Northern Trust Company 45,000 3,431,250
Star Banc Corporation 15,000 958,125
TCF Financial Corporation 60,000 1,770,000
Travelers Group, Inc. 10,000 606,250
Washington Mutual, Inc. 100,000 4,343,750
Zions Bancorporation 25,000 1,328,125
-----------
23,939,825
FOOD & BEVERAGE - 2.08%
Bestfoods 50,000 2,903,125
Hershey Foods Corporation 20,000 1,380,000
-----------
4,283,125
HEALTHCARE - 8.45%
Alkermes, Inc.<F1> 15,000 268,125
BioChem Pharmaceuticals, Inc. - ADR<F1> 15,000 397,500
Cardinal Health, Inc. 29,000 2,718,750
CliniChem Development, Inc.<F1> 375 2,156
Closure Medical Corporation<F1> 10,000 248,750
Elan Corporation, PLC<F1> 20,000 1,286,250
Eli Lilly & Company 50,000 3,303,125
Focal, Inc.<F1> 25,000 250,000
Johnson & Johnson 15,000 1,106,250
Merck & Company, Inc. 10,000 1,337,500
PAREXEL International Corporation<F1> 25,000 909,375
Pfizer, Inc. 40,000 4,347,500
Quintiles Transnational Corporation<F1> 25,000 1,229,687
-----------
17,404,968
HOME & OFFICE FURNITURE - 4.12%
Ethan Allen Interiors, Inc. 25,000 1,248,438
Furniture Brands International, Inc.<F1> 40,000 1,122,500
Herman Miller, Inc. 50,000 1,215,625
HON Industries, Inc. 40,000 1,360,000
Knoll, Inc.<F1> 35,200 1,029,600
Leggett & Platt, Inc. 100,000 2,500,000
-----------
8,476,163
THE BRAMWELL GROWTH FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS - JUNE 30, 1998 (CONTINUED)
- --------------------------------------------------------------------------------
SHARES VALUE
------- -------
HOUSEHOLD & PERSONAL CARE
PRODUCTS - 2.17%
Colgate-Palmolive Company 40,000 $ 3,520,000
Estee Lauder Companies, Inc. (The) 13,700 954,719
-----------
4,474,719
INDUSTRIAL PRODUCTS - 6.62%
Emerson Electric Company 50,800 3,063,875
General Electric Company 45,000 4,095,000
Illinois Tool Works, Inc. 70,000 4,668,125
Molex Inc., Class A 66,385 1,551,749
ThermoQuest Corporation<F1> 17,000 253,938
-----------
13,632,687
INFORMATION PROCESSING:
OFFICE EQUIPMENT - 6.62%
Dell Computer Corporation<F1> 75,000 6,960,938
EMC Corporation<F1> 85,000 3,809,062
International Business
Machines Corporation 25,000 2,870,312
-----------
13,640,312
INFORMATION PROCESSING:
SERVICES - 9.10%
Automatic Data Processing, Inc. 58,500 4,263,187
Computer Sciences Corporation<F1> 140,058 8,963,712
DST Systems, Inc.<F1> 30,000 1,680,000
Paychex, Inc. 30,000 1,220,625
Sterling Commerce, Inc.<F1> 54,000 2,619,000
-----------
18,746,524
INFORMATION PROCESSING:
SOFTWARE - 1.90%
Microsoft Corporation<F1> 36,000 3,901,500
-----------
INSURANCE - 5.64%
Allstate Corporation 40,000 3,662,500
American International Group, Inc. 15,000 2,190,000
Chubb Corporation (The) 35,000 2,813,125
Horace Mann Educators Corporation 25,000 862,500
Mercury General Corporation 32,500 2,090,156
-----------
11,618,281
RETAILING - 12.67%
Amazon.com, Inc.<F1> 13,000 1,296,750
CVS Corporation 60,000 2,336,250
SHARES VALUE
------- -------
RETAILING (CONT'D.) - 12.67%
Home Depot, Inc. (The) 55,500 $ 4,609,969
Kohl's Corporation<F1> 90,000 4,668,750
Proffitt's, Inc.<F1> 45,000 1,816,875
Tiffany & Company 35,800 1,718,400
Wal-Mart Stores, Inc. 50,000 3,037,500
Walgreen Company 160,000 6,610,000
-----------
26,094,494
TRANSPORTATION - 1.08%
Kansas City Southern Industries, Inc. 45,000 2,233,125
-----------
TOTAL COMMON STOCKS
(Cost $111,779,251) 192,390,299
-----------
PRINCIPAL
AMOUNT
----------
VARIABLE RATE
DEMAND NOTES - 8.06%
Firstar Corporation $1,633,000 1,633,000
General Mills, Inc. 4,576,000 4,576,000
Johnson Controls, Inc. 2,797,000 2,797,000
Pitney Bowes Credit Corporation 2,577,000 2,577,000
Sara Lee Corporation 333,000 333,000
Warner-Lambert Company 3,426,000 3,426,000
Wisconsin Electric Power Company 1,263,000 1,263,000
-----------
TOTAL VARIABLE RATE DEMAND NOTES
(Cost $16,605,000) 16,605,000
-----------
TOTAL INVESTMENTS - 101.49%
(Cost $128,384,251) 208,995,299
-----------
LIABILITIES LESS
CASH AND OTHER ASSETS - (1.49)% (3,073,657)
-----------
NET ASSETS - 100.00%
(8,933,872 shares outstanding) $205,921,642
============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $23.05
======
<F1>Non-income producing security
See notes to financial statements.
THE BRAMWELL GROWTH FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
June 30, 1998
ASSETS:
Investments, at value (cost $128,384,251) $208,995,299
Receivable for securities sold 1,207,285
Dividends and interest receivable 132,987
Organizational costs, net of accumulated
amortization 40,473
Prepaids and other assets 21,951
------------
Total Assets 210,397,995
------------
LIABILITIES:
Payable for securities purchased 4,154,728
Accrued investment advisory fees 160,683
Accrued expenses 120,771
Accrued distribution fees 40,171
------------
Total Liabilities 4,476,353
------------
NET ASSETS $205,921,642
============
NET ASSETS CONSIST OF:
Capital stock $115,527,333
Undistributed net realized gain on investments 9,783,261
Net unrealized appreciation on investments 80,611,048
------------
NET ASSETS $205,921,642
============
CAPITAL STOCK, $.0001 par value
Authorized 200,000,000
Issued and outstanding 8,933,872
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER SHARE $23.05
======
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended June 30, 1998
INVESTMENT INCOME:
Dividends $ 1,071,596
Interest 364,143
------------
Total Investment Income 1,435,739
------------
EXPENSES:
Investment advisory fees 1,587,601
Distribution fees 396,900
Shareholder servicing fees 206,811
Fund administration and accounting fees 184,829
Professional fees 51,772
Reports to shareholders 44,221
Amortization of organizational costs 38,368
Custody fees 37,592
State registration fees 30,897
Directors' fees 23,084
Other 28,185
------------
Total Expenses 2,630,260
------------
NET INVESTMENT LOSS (1,194,521)
REALIZED AND UNREALIZED GAINS:
Net realized gain on investment transactions 13,427,206
Change in net unrealized appreciation
on investments 40,370,192
------------
Net Gain on Investments 53,797,398
------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $52,602,877
============
See notes to financial statements.
THE BRAMWELL GROWTH FUND
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Year Year
Ended Ended
June 30, 1998 June 30, 1997
-------------- ---------------
OPERATIONS:
Net investment loss $ (1,194,521) $ (1,084,467)
Net realized gain on
investments 13,427,206 8,927,153
Change in net unrealized
appreciation on
investments 40,370,192 16,818,118
------------- -------------
Net increase in net assets
resulting from
operations 52,602,877 24,660,804
------------- -------------
CAPITAL SHARE
TRANSACTIONS 36,040,184 (37,872,592)
------------- -------------
DIVIDENDS PAID FROM:
Net realized gains (8,645,470) (2,319,077)
------------- -------------
TOTAL INCREASE
(DECREASE) IN
NET ASSETS 79,997,591 (15,530,865)
NET ASSETS:
Beginning of period 125,924,051 141,454,916
------------- -------------
END OF PERIOD $205,921,642 $125,924,051
============= =============
See notes to financial statements.
<TABLE>
<CAPTION>
THE BRAMWELL GROWTH FUND
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------------------------------------------------------------
For the Period
Year Year Year August 1, 1994<F1>
Ended Ended Ended to
Selected Per-Share Data<F2> June 30, 1998 June 30, 1997 June 30, 1996 June 30, 1995
- ---------------------------- --------------- --------------- -------------- -------------------
<C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $17.53 $14.60 $12.30 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (0.13) (0.15) (0.08) _ <F3>
Net realized and unrealized gains on
securities 6.82 3.35 2.42 2.31
TOTAL FROM INVESTMENT OPERATIONS 6.69 3.20 2.34 2.31
LESS DISTRIBUTIONS:
Distributions from capital gains (1.17) (0.27) (0.04) (0.01)
NET ASSET VALUE, END OF PERIOD $23.05 $17.53 $14.60 $12.30
TOTAL RETURN 39.5% 22.2% 19.0% 23.1%<F4>
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period $205,921,642 $125,924,051 $141,454,916 $62,241,343
Ratio of expenses to average net assets<F5> 1.66% 1.75% 1.75% 1.75%<F6>
Ratio of net investment loss to average
net assets<F5> (0.75)% (0.85)% (0.66)% (0.11)%<F6>
Portfolio turnover rate 49% 82% 118% 80%<F4>
<F1> Commencement of operations
<F2> Information presented relates to a share of capital stock of the Fund outstanding for the entire period.
<F3> Less than $(0.01)
<F4> Not annualized
<F5> Net of reimbursements and waivers. Absent reimbursements and waivers of expenses by adviser, except for the year ended
June 30, 1998 where there were no reimbursements or waivers, the ratios of expenses and net investment loss to average net
assets for the years ended June 30, 1997 and 1996 and the period August 1, 1994 to June 30, 1995, would have been 1.77%
and (0.87)%; 1.79% and (0.70)%; and 2.68% and (1.04)%, respectively.
<F6> Annualized
See notes to financial statements.
</TABLE>
THE BRAMWELL GROWTH FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
June 30, 1998
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. Bramwell Capital Management,
Inc. ("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 prepa-ration of its financial statements. These
policies are in conformity with generally accepted accounting principles
("GAAP"). The presentation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amount of revenue and expenses during the reporting period. Actual
results could differ from those estimates and assumptions.
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. 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 June 30, 1998,
reclassifications were recorded to decrease accumulated net investment losses by
$1,194,521, to increase capital stock by $1,710,876, and to decrease
undistributed net realized gain on investments by $2,905,397.
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.
THE BRAMWELL GROWTH FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
- --------------------------------------------------------------------------------
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.
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Fund for the years ended June 30, 1998 and 1997,
were as follows:
1998
----
Shares Dollars
------- -------
Shares sold 3,045,628 $62,380,166
Dividends reinvested 422,349 8,180,907
Shares redeemed (1,719,248) (34,520,889)
---------- ------------
1,748,729 $36,040,184
========== ============
1997
----
Shares Dollars
------- -------
Shares sold 2,379,335 $35,774,589
Dividends reinvested 130,340 1,982,469
Shares redeemed (5,016,000) (75,629,650)
---------- ------------
(2,506,325) $(37,872,592)
========== ============
4. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments for the Fund, for the year ended June 30, 1998 were $89,476,460 and
$74,280,136, respectively. There were no purchases or sales of long-term U.S.
government securities. At June 30, 1998, based on aggregate cost for federal
income tax purposes of $128,385,550, gross unrealized appreciation and
depreciation of investments were as follows:
Appreciation $82,006,773
Depreciation (1,397,024)
------------
Net appreciation on investments $80,609,749
============
Of the net appreciation on investments, 85% (unaudited) is attributable to
securities held greater than 12 months at June 30, 1998.
For the year ended June 30, 1998, 61% (unaudited) of dividends paid from taxable
income (including short-term capital gains) qualify for the dividends received
deduction available to corporate shareholders.
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, 1999.
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
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REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF
THE BRAMWELL FUNDS, INC.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations, changes
in net assets and the financial highlights present fairly, in all material
respects, the financial position of The Bramwell Funds, Inc. - The Bramwell
Growth Fund at June 30, 1998, the results of its operations for the year then
ended, the changes in its net assets for each of the two years then ended, and
the financial highlights for each of the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at June 30, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
July 17, 1998
THE BRAMWELL GROWTH FUND
- --------------------------------------------------------------------------------
745 Fifth Avenue
New York, New York 10151
1-800-BRAMCAP
(1-800-272-6227)
www.bramwell.com
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
Whitman, Breed, Abbott & & Katz
Morgan Former Commissioner
Former Commissioner & Securities & Exchange
Chairman Commission
Securities & Exchange Commission
MARTHA R. SEGER, PH.D.
ISABEL H. BENHAM Chairman
Director, Board of Trustees Martha Seger & Associates
John W. Barringer III National Former Governor
Railroad Library 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
PricewaterhouseCoopers LLP
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.
BR-408-0798
- --------------------------------------------------------------------------------
ANNUAL REPORT
JUNE 30, 1998
(photo)
THE BRAMWELL GROWTH FUND
- ----------------------------------------
ELIZABETH R. BRAMWELL, CFA
President and Chief Investment Officer
THE BRAMWELL FUNDS, INC.
1-800-BRAMCAP
(1-800-272-6227)
WWW.BRAMWELL.COM
