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ANNUAL REPORT
JUNE 30, 1999
(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
THE BRAMWELL GROWTH FUND
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ANNUAL REPORT - JUNE 30, 1999
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745 Fifth Avenue
New York, New York 10151
DEAR FELLOW SHAREHOLDERS:
INVESTMENT RESULTS - FISCAL YEAR ENDED JUNE 30, 1999
THE BRAMWELL GROWTH FUND appreciated 19.4% for the fiscal year ended June 30,
1999 to $26.07 net asset value per share, compared to the 22.8% gain for the S&P
500 Stock Index. For the quarter, the Fund gained 5.4% compared to 7.1% for the
S&P 500 Stock Index and 11.0% and 6.5% for the Lipper Mid-Cap and Growth Funds
Indices, respectively. The Fund's three-year compound average annual return as
of June 30, was 26.7%, and since inception, August 1, 1994, through June 30,
1999, the cumulative return was 198.1% resulting in a compound average annual
rate of return since inception of 24.9%. Investment results relative to the
indices were as follows:
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COMPARATIVE INVESTMENT JUNE Q CALENDAR ONE THREE SINCE
RETURNS (6/30/99) 1999 YEAR-TO-DATE YEAR YEARS <F1> INCEPTION <F2>
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THE BRAMWELL GROWTH FUND 5.4% 8.1% 19.4% 26.7% 24.9%
Lipper Mid-Cap Funds
Index <F3> 11.0 11.9 13.6 15.8 19.9
Lipper Growth Funds
Index <F3> 6.5 11.9 21.7 25.2 23.6
S&P 500 Stock Index <F4> 7.1 12.4 22.8 29.1 27.6
<TABLE>
<CAPTION>
THE BRAMWELL GROWTH FUND S&P 500 Stock Index Lipper Mid-Cap Funds Index Lipper Growth Funds Index
<S> <C> <C> <C> <C>
8/1/94 10,000 10,000 10,000 10,000
6/30/95 12,311 12,206 12,243 11,974
6/30/96 14,653 15,380 15,737 14,446
6/30/97 17,906 20,717 17,620 18,143
6/30/98 24,971 26,965 21,487 23,271
6/30/99 29,811 33,101 24,410 28,319
</TABLE>
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%
which for the years ended June 30, 1997 favorably affected performance. 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. <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.
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COMMENTARY
The June 1999 fiscal year was volatile. The equity markets declined in the
September quarter, reflecting concerns about decelerating Japanese and emerging
market economies, recovered in the December quarter, stimulated by lower
interest rates, and continued subsequently to gain ground. Throughout the fiscal
year, domestic economic growth was strong, inflation remained low, employment
and real wages rose, and government surpluses emerged.
The macroeconomic environment continued to be positive for the equity markets in
the June quarter. The Federal Reserve raised the Fed funds rate by a modest
0.25% and moved from a tightening bias to a more neutral policy stance,
corporate profits and consumer confidence remained strong and employment levels
continued to gain. Industry investments that contributed significantly to
portfolio performance in the quarter were communications, electronics,
industrial products, retailing, and office equipment and services. At the same
time, factors that impeded performance included large-cap growth stocks losing
momentum from the first quarter given high valuations relative to the rest of
the market, and healthcare stocks declining as the result of slower growth
expectations going forward and concerns about future price controls stemming
from healthcare reform proposals.
Individual stocks that contributed significant value to the portfolio in the
quarter were: IBM, Computer Sciences, Lucent, Tiffany, Nortel, Lexmark, Illinois
Tool Works, Charles Schwab, Bell Atlantic and Leggett & Platt. Stock prices do
not move in straight lines. For instance, IBM and Computer Sciences had both
declined in the March quarter but produced 46% and 25% gains, respectively, in
the June quarter. As long-term investors, we generally do not sell stocks with
lagging short-term returns when we believe that they continue to have positive
long-term outlooks and favorable valuations. We may even add to our positions
when they are believed to be under unwarranted pressure. Stocks that had been
strong performers in recent periods, that declined in the June quarter, included
Pfizer, EMC and Dell Computer. Robert Half also declined reflecting an
intermediate shortage of accountants to place. Not all employee staffing firms
did poorly, however. Labor Ready, which places manual day labor, achieved
substantial revenue and earnings gains and the stock rose 24%.
OUTLOOK
We anticipate domestic economic growth to slow somewhat going forward as the
result of earlier electronic tax refunds, higher oil prices and mortgage
refinancing having peaked with correspondingly less discretionary funds being
freed to be spent on a wide range of goods and services. Some slowdown would
alleviate the Fed's perceived need to raise interest rates further - a positive
for equity valuations. We expect inflation to remain modest as new technology
has facilitated workers working smarter and as technology continues to be
substituted for labor. Spending for electronic commerce and new communications
and computer technologies should continue to be powerful drivers of future
economic growth. Asian markets are beginning to turn positive, and evidence
pointing to synchronized global growth is beginning to appear. We expect that
the economy may also benefit in 2000 from technology spending and outsourcing
that is deferred until after December 31, 1999.
Our focus continues to be on companies with strong top-line growth and favorable
price/earnings ratios to growth and the overall market. We specifically like
companies providing customer solutions and integrating Internet and other new
technology into their business models, e.g., IBM, General Electric and Computer
Sciences. We continue to look for attractive investment candidates in the
communications, electronics, media and outsourcing industries as well as for
companies that are effective users of the Internet, have recurring revenue
streams and are positioned for the long-term payoff on new products and services
stemming from research and development. A secular move to equities worldwide to
achieve higher returns to meet future social obligations is occurring and at the
same time, new investment opportunities are stemming from globalization, an
expanding middle class worldwide, and new technology platforms in communications
and computers. The impact of the Internet is just beginning. We live in exciting
times as we move into the next millennium, and innovation and change
create many investment opportunities.
The estimated 1999 and 2000 growth rates for our portfolio continues to
approximate 20%, well above the estimated 7-10% secular growth rate for the S&P
500, for which we are paying about the same price/earnings multiple of 25 times
estimated 2000 earnings. Over time, stock prices move with earnings growth, and
in an environment of relatively stable inflation and interest rates, valuations
may also expand for those companies selling at discounts to the overall market.
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. The daily net asset value may also be
attained from our Web site, WWW.BRAMWELL.COM. Our Nasdaq symbol is BRGRX.
Sincerely,
/s/ Elizabeth R. Bramwell
Elizabeth R. Bramwell, CFA
President and Chief Investment Officer
July 26, 1999
The outlook and opinions expressed above represent the views of the investment
adviser as of July 26, 1999 and are subject to change as market and economic
events unfold.
TOP TEN INDUSTRY SECTORS
JUNE 30, 1999
------------------------------------
Information Processing 24.3% Industrial Products 5.0%
Retailing 19.1 Electronics 4.2
Financial Services 10.4 Employee Staffing 4.0
Communications 9.6 Entertainment & Leisure Time 3.6
Healthcare 8.6 Home & Office Furniture 1.5
TOP TEN EQUITY HOLDINGS
JUNE 30, 1999
-------------------------------------
Computer Sciences 3.9% Home Depot 2.7%
IBM 3.7 General Electric 2.6
EMC 3.3 Lucent Technologies 2.5
Walgreen 3.2 Automatic Data Processing 2.2
Kohl's 2.7 Microsoft 2.2
THE BRAMWELL GROWTH FUND
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PORTFOLIO OF INVESTMENTS - JUNE 30, 1999
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SHARES VALUE
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COMMON STOCKS - 96.83%
APPAREL - 0.47%
Cutter & Buck, Inc.<F1> 75,000 $ 1,265,625
AUTOMOTIVE & HEAVY
EQUIPMENT - 0.31%
Hayes Lemmerz International, Inc.<F1> 28,200 828,375
CHEMICALS - 1.43%
Minerals Technologies, Inc. 38,000 2,120,875
OM Group, Inc. 50,000 1,725,000
------------
3,845,875
COMMUNICATIONS - 9.57%
America Online, Inc.<F1> 8,500 939,250
Bell Atlantic Corporation 34,000 2,222,750
Cisco Systems, Inc.<F1> 42,000 2,701,125
Comcast Corporation, Class A 10,000 384,375
EarthLink Network, Inc.<F1> 12,500 767,969
GTE Corporation 15,000 1,135,313
Lucent Technologies, Inc. 100,000 6,743,750
MCI WorldCom, Inc.<F1> 65,000 5,606,250
Nortel Networks Corporation 40,000 3,472,500
U.S. West, Inc. 30,000 1,762,500
------------
25,735,782
ELECTRONICS - 4.21%
Applied Materials, Inc.<F1> 20,000 1,477,500
Flextronics International Ltd.<F1> 35,000 1,942,500
Intel Corporation 55,000 3,272,500
Jabil Circuit, Inc.<F1> 25,000 1,128,125
Solectron Corporation<F1> 25,500 1,700,531
Teradyne, Inc.<F1> 25,000 1,793,750
------------
11,314,906
EMPLOYEE STAFFING - 3.97%
Interim Services, Inc.<F1> 100,000 2,062,500
Keane, Inc.<F1> 50,000 1,131,250
Labor Ready, Inc.<F1> 70,000 2,275,000
On Assignment, Inc.<F1> 100,000 2,612,500
Robert Half International, Inc.<F1> 100,000 2,600,000
------------
10,681,250
ENERGY - 0.89%
Diamond Offshore Drilling, Inc. 35,000 993,125
Schlumberger Ltd. 22,000 1,401,125
------------
2,394,250
SHARES VALUE
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ENTERTAINMENT & LEISURE TIME - 3.57%
AT&T Corporation -
Liberty Media Group, Class A<F1> 30,000 $ 1,102,500
CBS Corporation<F1> 40,000 1,737,500
Cinar Corporation, Class B<F1> 64,000 1,568,000
Fox Entertainment Group, Inc., Class A<F1> 40,000 1,077,500
Imax Corporation<F1> 70,000 1,575,000
Time Warner, Inc. 35,000 2,520,000
------------
9,580,500
FINANCIAL SERVICES - 10.42%
American International Group, Inc. 20,500 2,399,781
Charles Schwab Corporation (The) 35,000 3,845,625
Citigroup, Inc. 60,000 2,850,000
Firstar Corporation 105,000 2,940,000
H&R Block, Inc. 10,000 500,000
Jones Lang LaSalle, Inc.<F1> 30,600 912,262
Mellon Bank Corporation 50,000 1,818,750
Merrill Lynch & Company, Inc. 10,000 799,375
North Fork Bancorporation, Inc. 50,000 1,065,625
Northern Trust Company 41,000 3,977,000
State Street Corporation 40,000 3,415,000
TCF Financial Corporation 30,000 836,250
Washington Mutual, Inc. 30,000 1,061,250
Zions Bancorporation 25,000 1,587,500
------------
28,008,418
FOOD & BEVERAGE - 1.30%
Bestfoods 19,100 945,450
Hershey Foods Corporation 15,000 890,625
McDonald's Corporation 40,000 1,652,500
------------
3,488,575
HEALTHCARE: PRODUCTS - 6.57%
American Home Products Corporation 20,000 1,150,000
Amgen, Inc.<F1> 28,000 1,704,500
Bausch & Lomb, Inc. 15,000 1,147,500
Eli Lilly & Company 20,000 1,432,500
Focal, Inc.<F1> 25,000 187,500
Johnson & Johnson 15,000 1,470,000
Medtronic, Inc. 27,000 2,102,625
Merck & Company, Inc. 20,000 1,480,000
Pfizer, Inc. 45,000 4,938,750
Sepracor, Inc.<F1> 25,000 2,031,250
------------
17,644,625
THE BRAMWELL GROWTH FUND
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PORTFOLIO OF INVESTMENTS - JUNE 30, 1999 (CONTINUED)
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SHARES VALUE
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HEALTHCARE: SERVICES - 2.04%
Cardinal Health, Inc. 85,500 $ 5,482,688
HOME & OFFICE FURNITURE - 1.49%
Ethan Allen Interiors, Inc. 45,000 1,625,625
Furniture Brands International, Inc.<F1> 30,000 836,250
Leggett & Platt, Inc. 55,000 1,529,688
------------
3,991,563
HOUSEHOLD & PERSONAL CARE
PRODUCTS - 0.92%
Colgate-Palmolive Company 25,000 2,468,750
INDUSTRIAL PRODUCTS - 5.00%
Emerson Electric Company 30,800 1,936,550
General Electric Company 62,000 7,006,000
Illinois Tool Works, Inc. 35,000 2,870,000
Molex Inc., Class A 51,385 1,618,627
------------
13,431,177
INFORMATION PROCESSING:
OFFICE EQUIPMENT - 12.58%
Dell Computer Corporation<F1> 105,000 3,885,000
EMC Corporation<F1> 160,000 8,800,000
International Business
Machines Corporation 76,000 9,823,000
Lexmark International Group, Inc.<F1> 80,000 5,285,000
Pitney Bowes, Inc. 20,000 1,285,000
Xerox Corporation 80,000 4,725,000
------------
33,803,000
INFORMATION PROCESSING:
SERVICES - 9.56%
Automatic Data Processing, Inc. 132,000 5,808,000
Computer Sciences Corporation<F1> 150,058 10,382,138
DST Systems, Inc.<F1> 73,000 4,589,875
internet.com Corporation<F1> 7,000 87,937
Paychex, Inc. 58,500 1,864,688
Sterling Commerce, Inc.<F1> 81,000 2,956,500
------------
25,689,138
INFORMATION PROCESSING:
SOFTWARE - 2.15%
Microsoft Corporation<F1> 64,000 5,772,000
RETAILING - 19.07%
Amazon.com, Inc.<F1> 3,000 375,375
CVS Corporation 83,000 4,243,375
SHARES VALUE
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RETAILING (CONT'D) - 19.07%
Costco Companies, Inc.<F1> 24,000 $ 1,921,500
Dayton Hudson Corporation 35,000 2,275,000
Home Depot, Inc. (The) 111,000 7,152,562
Kohl's Corporation<F1> 93,000 7,178,437
Lowe's Companies, Inc. 75,000 4,251,562
Office Depot, Inc.<F1> 157,500 3,474,844
Tandy Corporation 30,000 1,466,250
Tiffany & Company 52,800 5,095,200
Wal-Mart Stores, Inc. 110,000 5,307,500
Walgreen Company 290,000 8,518,750
------------
51,260,355
TRANSPORTATION - 1.31%
Kansas City Southern Industries, Inc. 55,000 3,509,688
------------
TOTAL COMMON STOCKS
(Cost $148,809,379) 260,196,540
------------
PRINCIPAL
AMOUNT
---------
VARIABLE RATE
DEMAND NOTES - 2.86%
Firstar Corporation $3,076,000 3,076,000
General Mills, Inc. 1,640,000 1,640,000
Pitney Bowes Credit Corporation 1,168,000 1,168,000
Sara Lee Corporation 707,000 707,000
Warner-Lambert Company 227,000 227,000
Wisconsin Electric Power Company 866,000 866,000
------------
TOTAL VARIABLE RATE DEMAND NOTES
(Cost $7,684,000) 7,684,000
------------
TOTAL INVESTMENTS - 99.69%
(Cost $156,493,379) 267,880,540
OTHER ASSETS LESS LIABILITIES - 0.31% 845,319
------------
NET ASSETS - 100.00%
(10,308,929 shares outstanding) $268,725,859
============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $26.07
======
<F1>Non-income producing security
See notes to financial statements.
THE BRAMWELL GROWTH FUND
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STATEMENT OF ASSETS AND LIABILITIES
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June 30, 1999
ASSETS:
Investments, at value (cost $156,493,379) $267,880,540
Receivable for securities sold 1,292,526
Dividends and interest receivable 135,030
Prepaid and other assets 36,246
------------
Total Assets 269,344,342
------------
LIABILITIES:
Payable for securities purchased 185,250
Accrued investment advisory fees 209,396
Accrued expenses 171,488
Accrued distribution fees 52,349
------------
Total Liabilities 618,483
------------
NET ASSETS $268,725,859
============
NET ASSETS CONSIST OF:
Capital stock $145,671,380
Undistributed net realized gain on investments 11,667,318
Net unrealized appreciation on investments 111,387,161
------------
NET ASSETS $268,725,859
============
CAPITAL STOCK, $.0001 par value
Authorized 200,000,000
Issued and outstanding 10,308,929
NET ASSET VALUE, REDEMPTION PRICE
AND OFFERING PRICE PER SHARE $26.07
======
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STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended June 30, 1999
INVESTMENT INCOME:
Dividends $ 1,384,618
Interest 470,304
------------
Total Investment Income 1,854,922
------------
EXPENSES:
Investment advisory fees 2,338,520
Distribution fees 584,630
Fund administration and accounting fees 229,426
Shareholder servicing fees 224,333
Reports to shareholders 63,573
Custody fees 56,279
Professional fees 51,053
Federal and state registration fees 47,419
Amortization of organizational costs 40,473
Directors' fees 32,383
Other 30,159
------------
Total Expenses 3,698,248
------------
NET INVESTMENT LOSS (1,843,326)
============
REALIZED AND UNREALIZED GAINS:
Net realized gain on investments 15,046,991
Change in net unrealized appreciation
on investments 30,776,113
------------
Net Gain on Investments 45,823,104
------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $43,979,778
============
See notes to financial statements.
THE BRAMWELL GROWTH FUND
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STATEMENTS OF CHANGES IN NET ASSETS
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Year Year
Ended Ended
June 30, 1999 June 30, 1998
-------------- --------------
OPERATIONS:
Net investment loss $ (1,843,326) $ (1,194,521)
Net realized gain on
investments 15,046,991 13,427,206
Change in net unrealized
appreciation on
investments 30,776,113 40,370,192
------------ ------------
Net increase in net assets
resulting from
operations 43,979,778 52,602,877
------------ ------------
CAPITAL SHARE
TRANSACTIONS 30,973,161 36,040,184
------------ ------------
DIVIDENDS PAID FROM:
Net realized gains (12,148,722) (8,645,470)
------------ ------------
TOTAL INCREASE
IN NET ASSETS 62,804,217 79,997,591
NET ASSETS:
Beginning of year 205,921,642 125,924,051
------------ ------------
END OF YEAR $268,725,859 $205,921,642
============ ============
See notes to financial statements.
THE BRAMWELL GROWTH FUND
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FINANCIAL HIGHLIGHTS
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<TABLE>
<CAPTION>
For the Period
Year Year Year Year August 1, 1994<F1>
Ended Ended Ended Ended to
Selected Per-Share Data<F2> June 30, 1999 June 30, 1998 June 30, 1997 June 30, 1996 June 30, 1995
- --------------------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $23.05 $17.53 $14.60 $12.30 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (0.18) (0.13) (0.15) (0.08) -<F3>
Net realized and unrealized gains
on securities 4.45 6.82 3.35 2.42 2.31
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 4.27 6.69 3.20 2.34 2.31
LESS DISTRIBUTIONS:
Distributions from capital gains (1.25) (1.17) (0.27) (0.04) (0.01)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $26.07 $23.05 $17.53 $14.60 $12.30
====== ====== ====== ====== ======
TOTAL RETURN 19.4% 39.5% 22.2% 19.0% 23.1%<F4>
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) $268,726 $205,922 $125,924 $141,455 $62,241
Ratio of expenses to average net assets<F5> 1.58% 1.66% 1.75% 1.75% 1.75%<F6>
Ratio of net investment loss to average
net assets<F5> (0.79)% (0.75)% (0.85)% (0.66)% (0.11)%<F6>
Portfolio turnover rate 38% 49% 82% 118% 80%<F4>
</TABLE>
<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 years ended June 30, 1999 and 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.
THE BRAMWELL GROWTH FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
June 30, 1999
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 preparation 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
credit-worthiness 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) Options Contracts - The Fund may write covered put or call options. Premiums
received by the Fund upon writing put or call options are recorded as an asset
with a corresponding liability which is subsequently adjusted to the current
market value of the option. When an option expires, is exercised, or is closed,
the Fund realizes a gain or loss, and the liability is eliminated. The Fund
continues to bear the risk of adverse movements in the price of the underlying
asset during the period in which the option is outstanding, although any
potential loss during the period would be reduced by the amount of the option
premium received.
Transactions in covered call options written for the year ended June 30, 1999
were as follows:
Number of Premium
Contracts Amount
---------- ----------
Options outstanding
at June 30, 1998 - $ -
Options written 200 30,480
Options expired (200) (30,480)
----- ---------
Options outstanding
at June 30, 1999 - $ -
===== =========
Expired options resulted in a capital gain of $30,480. This amount is included
in net realized gain on investments in the Statement of Operations.
c) 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.
d) Distributions to Shareholders - Dividends, if any, 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
THE BRAMWELL GROWTH FUND
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
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, 1999,
reclassifications were recorded to decrease accumulated net investment losses by
$1,843,326, to decrease capital stock by $829,114, and to decrease undistributed
net realized gain on investments by $1,014,212.
e) 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 were deferred and amortized over the five-
year period ending June 30, 1999.
f) Other - Investment transactions are accounted for on the trade date. The
Fund determines the gain or loss realized from 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, 1999 and 1998,
were as follows:
June 30, 1999
--------------
Shares Dollars
------- --------
Shares sold 7,731,863 $181,667,395
Dividends reinvested 501,650 11,307,190
Shares redeemed (6,858,456) (162,001,424)
------------ --------------
1,375,057 $ 30,973,161
============ ==============
June 30, 1999
--------------
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
============ ==============
4. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments for the Fund, for the year ended June 30, 1999 were $106,863,983 and
$84,848,271, respectively. There were no purchases or sales of long-term U.S.
government securities. At June 30, 1999, based on aggregate cost for federal
income tax purposes of $156,503,725, gross unrealized appreciation and
depreciation of investments were as follows:
Appreciation $114,280,449
Depreciation (2,903,634)
-------------
Net appreciation on investments $111,376,815
=============
Of the net appreciation on investments, 83% (unaudited) is attributable to
securities held greater than 12 months at June 30, 1999.
For the year ended June 30, 1999, 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, 2000.
After such date, the expense limitation may be terminated or revised at any
time. The expense ratio for the fiscal year ended June 30, 1999 was 1.58%.
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
- --------------------------------------------------------------------------------
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, 1999, 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, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
July 21, 1999
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
President, Chief Investment
and Financial Officer
The Bramwell Funds, Inc.
J. SINCLAIR ARMSTRONG
Director, Secretary and Treasurer
The Reed Foundation, Inc.
Retired Executive VP
US Trust Co. of New York
Former Chairman
Securities & Exchange Commission
ISABEL H. BENHAM
Trustee Emeritus and former President, Board of Trustees
John W. Barriger 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
PricewaterhouseCoopers LLP
CUSTODIAN
Firstar Bank Milwaukee
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Firstar Mutual Fund Services, LLC
These financial statements are submitted for the general information of the
shareholders of The Bramwell Growth Fund. They are not authorized for
distribution to prospective investors unless preceded or accompanied by an
effective prospectus.
BR-408-0899
