UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-05469
The Wexford Trust
(Exact name of registrant as specified in charter)
3000 Stonewood Drive, Suite 310
Wexford, PA 15090-8388
(Address of principal executive offices) (Zip code)
Ronald H. Muhlenkamp
Muhlenkamp & Company, Inc.
3000 Stonewood Drive, Suite 310
Wexford, PA 15090-8388
(Name and address of agent for service)
(724) 935-5520 or (800) 860-3863
Registrant's telephone number, including area code
Date of fiscal year end: December 31, 2004
Date of reporting period: June 30, 2004
Item 1. Report to Stockholders.
SEMI - ANNUAL REPORT
June 30, 2004
Phone: (800) 860-3863
E-mail: fund@muhlenkamp.com
Web Site: www.muhlenkamp.com
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus of the Muhlenkamp Fund. Please call (800) 860-3863 for a current copy of the prospectus. Read it carefully before you invest.
MUHLENKAMP FUND (A Portfolio of the Wexford Trust) |
Dear Fellow Shareholders:
The Trustees and Management of the Muhlenkamp Fund are pleased to present this Semi-Annual Report of your Fund.
The U.S. economy continues to expand. Consumer spending, business investment and employment are all growing at decent rates. We’re also seeing expansion in the Japanese and European economies. They had been lagging.
Some people are concerned that interest rates will move up. But short-term rates, which are heavily influenced by the Federal Reserve Board, should move up. The Fed has purposely kept these rates below the levels indicated by inflation and economic growth. Meanwhile, long-term rates, which are determined by market forces, have already moved up by over 80 basis points (8/10 of a percent) in concert with the expanding economy.
We judge current, long-term interest rates (and therefore, bond prices) to be fair. We also judge stock prices, on average, to be fair. Some stocks remain underpriced and some remain overpriced but the range in prices is much less than we’ve seen in recent years.
What this means to us is that changes in the prices of individual stocks and companies are likely to be determined by the changes in revenues and earnings of the individual companies. We are spending our time and efforts accordingly.
We’ve heard from some investors who seem concerned that stocks have been in a "trading-range" for much of this year. They seem to believe that stocks (or at least their stocks) should go up on a daily basis. The source of this belief is not given. We think that a "trading-range" is a normal (and temporary) condition given: a digestion of the strong rebound in prices in 2003; the remaining uncertainties in Iraq; and the uncertainties surrounding U.S. politics.
Frankly, the only thing which we can see capable of throwing the markets off a resumption of the rising track would be dramatic changes in Iraq or acts of terrorism which would upset our politics. With the recent transfer of power to the Iraqi’s, we should start to see whether the great experiment (allowing a Mid-east country to choose democracy) is working.
Ronald H. Muhlenkamp
President
August, 2004
Opinions expressed are those of Ronald H. Muhlenkamp and are subject to change, are not guaranteed and should not be considered investment advice.
Mutual fund investing involves risk. Principal loss is possible.
MUHLENKAMP FUND (A Portfolio of the Wexford Trust) |
Average Annual Total Return
as of June 30, 2004 (Unaudited)
Muhlenkamp Fund | One Year | Three Year | Five Year | Ten Year | Since Inception |
| Return Before Taxes | 29.19% | 7.49% | 10.52% | 16.12% | 14.37% |
| Return After Taxes on Distributions** | 29.19% | 7.49% | 10.21% | 15.78% | 13.98% |
| Return After Taxes on Distributions and Sale of Fund Shares** | 18.97% | 6.43% | 9.03% | 14.46% | 13.03% |
| | | | | | |
| S&P 500 Index*** | 19.10% | -0.69% | -2.20% | 11.81% | 11.93% |
| | | | | | |
| Russell Midcap Value Index**** | 30.81% | 9.81% | 8.61% | 14.17% | 13.48% |
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by visiting www.muhlenkamp.com
Investment returns can vary significantly between returns before taxes and returns after taxes.
The Muhlenkamp Fund is providing the returns in the above table to help our shareholders understand the magnitude of tax costs and the impact of taxes on the performance of the Fund.
| * | Operations commenced on November 1, 1988. |
| ** | After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRAs. Remember, the Fund’s past performance, before and after taxes, is not necessarily an indication of how the Fund will perform in the future. |
| *** | The S&P 500 Index is a widely recognized, unmanaged index of common stock prices. The figures for the S&P 500 Index reflect all dividends reinvested but do not reflect any deductions for fees, expenses or taxes. One cannot invest directly in an index. |
| **** | The Russell Midcap Value Index measures the performance of those Russell Midcap companies with lower price-to-book ratios and lower forecasted growth values. The stocks are also members of the Russell 1000 Value Index. The returns listed do not include the reinvestment of dividends. One cannot invest directly in an index. |
MUHLENKAMP FUND (A Portfolio of the Wexford Trust) |
| | Total Return % | | Cumulative Return% |
Period Ending | Muhlenkamp Fund | Russell Midcap Value Index | S&P 500 Index | | Muhlenkamp Fund | Russell Midcap Value Index | S&P 500 Index |
| | | | | | | | |
| 12/31/94 | (7.2) | (2.1) | 1.3 | | (7.2) | (2.1) | 1.3 |
| 12/31/95 | 33.0 | 34.9 | 37.6 | | 23.4 | 32.1 | 39.4 |
| 12/31/96 | 30.0 | 20.3 | 23.0 | | 60.5 | 58.9 | 71.4 |
| 12/31/97 | 33.3 | 34.4 | 33.4 | | 113.9 | 113.5 | 128.7 |
| 12/31/98 | 3.2 | 5.1 | 28.6 | | 120.7 | 124.4 | 194.1 |
| 12/31/99 | 11.4 | (0.1) | 21.0 | | 145.9 | 124.2 | 255.9 |
| 12/31/00 | 25.3 | 19.2 | (9.1) | | 208.1 | 167.2 | 223.5 |
| 12/31/01 | 9.3 | 2.3 | (11.8) | | 236.8 | 173.4 | 185.3 |
| 12/31/02 | (19.9) | (9.6) | (22.1) | | 169.7 | 147.1 | 122.3 |
| 12/31/03 | 48.1 | 38.1 | 28.7 | | 299.5 | 241.3 | 186.1 |
| 06/30/04 | 5.8 | 7.2 | 3.4 | | 322.7 | 265.9 | 195.8 |
A Hypothetical $10,000 Investment in the Muhlenkamp Fund
The Standard & Poor’s 500 Stock Index ("S&P 500 Index") is a market value-weighted index, representing the aggregate market value of the common equity of 500 stocks primarily traded on the New York Stock Exchange. The Russell Midcap Value Index measures the performance of those Russell Midcap companies with lower price-to-book ratios and lower forecasted growth values. This chart assumes an initial gross investment of $10,000 made on 12/31/93. The line graph does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Returns shown include the reinvestment of all dividends except for the Russell Midcap Value Index.
MUHLENKAMP FUND (A Portfolio of the Wexford Trust) |
STATEMENT OF ASSETS & LIABILITIES
June 30, 2004 (Unaudited)
ASSETS | | | |
| INVESTMENTS, AT VALUE (Cost $856,603,441) | | $ | 1,247,778,626 | |
| CASH | | | 232 | |
| RECEIVABLE FOR INVESTMENTS SOLD | | | 6,055,250 | |
| RECEIVABLE FOR FUND SHARES SOLD | | | 2,631,799 | |
| DIVIDENDS RECEIVABLE | | | 883,956 | |
| OTHER ASSETS | | | 113,868 | |
Total assets | | | 1,257,463,731 | |
LIABILITIES | | | | |
| OPTIONS WRITTEN, AT VALUE | | | 1,308,120 | |
(Premiums received $1,180,164) | | | | |
| PAYABLE FOR FUND SHARES REDEEMED | | | 459,631 | |
| PAYABLE TO ADVISOR | | | 1,006,767 | |
| ACCRUED EXPENSES AND OTHER LIABILITIES | | | 294,337 | |
Total liabilities | | | 3,068,855 | |
| NET ASSETS | | $ | 1,254,394,876 | |
NET ASSETS | | | | |
| PAID IN CAPITAL | | $ | 911,476,101 | |
| UNDISTRIBUTED NET INVESTMENT INCOME | | | 1,502,321 | |
| ACCUMULATED NET REALIZED LOSS | | | | |
ON INVESTMENTS SOLD, AND OPTION | | | | |
CONTRACTS EXPIRED OR CLOSED | | | (49,630,775 | ) |
| NET UNREALIZED APPRECIATION (DEPRECIATION) ON: | | | | |
Investments | | | 391,175,185 | |
Written options | | | (127,956 | ) |
| NET ASSETS | | $ | 1,254,394,876 | |
| | | | | |
| SHARES OF BENEFICIAL INTEREST OUTSTANDING | | | | |
(unlimited number of shares authorized, $.001 par value) | | | 18,668,957 | |
| NET ASSET VALUE PER SHARE | | $ | 67.19 | |
See notes to financial statements.
MUHLENKAMP FUND (A Portfolio of the Wexford Trust) |
STATEMENT OF OPERATIONS
Six Months Ended June 30, 2004 (Unaudited)
| INVESTMENT INCOME: | | | | | |
Dividends (Net of foreign taxes withheld of $1,454) | | | | | $ | 8,307,424 | |
Interest | | | | | | 195,408 | |
Total investment income | | | | | | 8,502,832 | |
| | | | | | | | |
| EXPENSES: | | | | | | | |
Investment advisory fees | | $ | 6,158,137 | | | | |
Shareholder servicing and accounting costs | | | 317,339 | | | | |
Reports to shareholders | | | 40,903 | | | | |
Federal & state registration fees | | | 36,904 | | | | |
Custody fees | | | 36,949 | | | | |
Administration fees | | | 337,822 | | | | |
Directors’ fees and expenses | | | 19,410 | | | | |
Professional fees | | | 44,793 | | | | |
Insurance expense | | | 12,560 | | | | |
Total operating expenses before expense reductions | | | 7,004,817 | | | | |
Expense reductions (see Note 9) | | | (32,758 | ) | | | |
Total expenses | | | | | | 6,972,059 | |
| NET INVESTMENT INCOME | | | | | | 1,530,773 | |
| REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS | | | | | | | |
Net realized gain (loss) on: | | | | | | | |
Investments | | | (7,217,993 | ) | | | |
Written options | | | 389,602 | | | | |
Net realized loss | | | | | | (6,828,391 | ) |
Change in unrealized appreciation (depreciation) on: | | | | | | | |
Investments | | | 68,336,116 | | | | |
Written options | | | 180,623 | | | | |
Net unrealized gain | | | | | | 68,516,739 | |
Net realized and unrealized gain on investments | | | | | | 61,688,348 | |
| NET INCREASE IN NET ASSETS | | | | | | | |
RESULTING FROM OPERATIONS | | | | | $ | 63,219,121 | |
See notes to financial statements.
MUHLENKAMP FUND (A Portfolio of the Wexford Trust) |
STATEMENTS OF CHANGES IN NET ASSETS
| | | Six Months Ended June 30, 2004 | | Year Ended December 31, 2003 | |
| | | (Unaudited) | | | |
| OPERATIONS: | | | | | | | |
Net investment income (loss) | | $ | 1,530,773 | | $ | (349,787 | ) |
Net realized loss on investments sold and | | | | | | | |
option contracts expired or closed | | | (6,828,391 | ) | | (18,174,738 | ) |
Change in unrealized appreciation (depreciation) | | | | | | | |
on investments and written options | | | 68,516,739 | | | 343,443,974 | |
Net increase in net assets | | | | | | | |
resulting from operations | | | 63,219,121 | | | 324,919,449 | |
| CAPITAL SHARE TRANSACTIONS: | | | | | | | |
Proceeds from shares sold | | | 272,633,100 | | | 539,651,057 | |
Cost of shares redeemed | | | (238,492,329 | ) | | (307,223,006 | ) |
| | | | | | | | |
Net increase in net assets resulting | | | | | | | |
from capital share transactions | | | 34,140,771 | | | 232,428,051 | |
Total increase in net assets | | | 97,359,892 | | | 557,347,500 | |
| NET ASSETS: | | | | | | | |
Beginning of year | | | 1,157,034,984 | | | 599,687,484 | |
End of period | | $ | 1,254,394,876 | | $ | 1,157,034,984 | |
See notes to financial statements.
MUHLENKAMP FUND (A Portfolio of the Wexford Trust) |
FINANCIAL HIGHLIGHTS
| | | Six Months Ended | | Year Ended December 31, | |
| | | | June 30, 2004 | | | 2003 | | | 2002 | | | 2001 | | | 2000 | | | 1999 | |
| | | | (Unaudited) | | | | | | | | | | | | | | | | |
| NET ASSET VALUE, | | | | | | | | | | | | | | | | | | | |
BEGINNING OF YEAR | | $ | 63.51 | | $ | 42.89 | | $ | 53.55 | | $ | 48.98 | | $ | 41.11 | | $ | 37.65 | |
| INCOME FROM | | | | | | | | | | | | | | | | | | | |
INVESTMENT OPERATIONS: | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) | | | 0.08 | | | (0.02 | )(2) | | (0.06 | )(1) | | (0.11 | )(1) | | (0.08 | )(1) | | (0.11 | )(2) |
Net realized and unrealized | | | | | | | | | | | | | | | | | | | |
gain (losses) on investments | | | 3.60 | | | 20.64 | | | (10.60 | ) | | 4.68 | | | 10.28 | | | 4.37 | |
Total from investment operations | | | 3.68 | | | 20.62 | | | (10.66 | ) | | 4.57 | | | 10.20 | | | 4.26 | |
| | | | | | | | | | | | | | | | | | | | |
| LESS DISTRIBUTIONS: | | | | | | | | | | | | | | | | | | | |
From net realized gains | | | - | | | - | | | - | | | - | | | (2.33 | ) | | (0.80 | ) |
Total distributions | | | - | | | - | | | - | | | - | | | (2.33 | ) | | (0.80 | ) |
| | | | | | | | | | | | | | | | | | | | |
| NET ASSET VALUE, | | | | | | | | | | | | | | | | | | | |
END OF PERIOD | | $ | 67.19 | | $ | 63.51 | | $ | 42.89 | | $ | 53.55 | | $ | 48.98 | | $ | 41.11 | |
| | | | | | | | | | | | | | | | | | | | |
| TOTAL RETURN | | | 5.80 | %(4) | | 48.07 | % | | (19.92 | )% | | 9.33 | % | | 25.30 | % | | 11.40 | % |
| | | | | | | | | | | | | | | | | | | | |
| NET ASSET, END OF PERIOD | | | | | | | | | | | | | | | | | | | |
(in thousands) | | $ | 1,254,395 | | $ | 1,157,035 | | $ | 599,687 | | $ | 540,416 | | $ | 267,386 | | $ | 178,599 | |
| | | | | | | | | | | | | | | | | | | | |
| RATIO OF OPERATING | | | | | | | | | | | | | | | | | | | |
EXPENSES TO AVERAGE | | | | | | | | | | | | | | | | | | | |
NET ASSETS(3) | | | 1.13 | %(5) | | 1.18 | % | | 1.17 | % | | 1.17 | % | | 1.28 | % | | 1.35 | % |
| | | | | | | | | | | | | | | | | | | | |
| RATIO OF NET INVESTMENT | | | | | | | | | | | | | | | | | | | |
INCOME (LOSS) TO AVERAGE | | | | | | | | | | | | | | | | | | | |
NET ASSETS | | | 0.25 | %(5) | | (0.04 | )% | | (0.10 | )% | | (0.14 | )% | | (0.20 | )% | | (0.26 | )% |
| | | | | | | | | | | | | | | | | | | | |
| PORTFOLIO TURNOVER RATE | | | 5.26 | % | | 9.15 | % | | 11.17 | % | | 10.52 | % | | 32.04 | % | | 14.52 | % |
(1) Net investment income (loss) per share is calculated using ending balances prior to consideration of adjustments for permanent book and tax differences.
(2) Net investment income (loss) per share represents net investment income (loss) for the respective period divided by the monthly average shares of beneficial interest outstanding throughout each year.
(3) The operating expense ratio includes expense reductions for soft dollar credits and minimum account maintenance fees deposited into the Fund. The ratios excluding expense reductions for the six months ending June 30, 2004 and the years ended December 31, 2003, 2002, 2001, 2000 and 1999, were 1.14%, 1.18%, 1.18%, 1.21%, 1.36% and 1.38%, respectively (See Note 9).
(4) Not annualized.
(5) Annualized.
BROKER COMMISSIONS (UNAUDITED)
Some people have asked how much the Muhlenkamp Fund pays in commissions:
For the six months ended June 30, 2004, the Fund paid $186,147 in broker commissions. These commissions are included in the cost basis of investments purchased, and deducted from the proceeds of securities sold. This accounting method is the industry standard for mutual funds. Were these commissions itemized as expenses, they would equal one cent (1ý) per Fund share and would have increased the operating expense ratio from 1.13% to 1.16%.
See notes to financial statements.
MUHLENKAMP FUND (A Portfolio of the Wexford Trust) |
SCHEDULE OF INVESTMENTS
June 30, 2004 (Unaudited)
Name of Issuer or Title of Issue | | Shares | | Value | |
| | | | | | |
COMMON STOCK — 99.1% | | | | | |
Automobiles & Components — 6.9% | | | | | |
Harley-Davidson, Inc. | | | 200,000 | | $ | 12,388,000 | |
Lear Corporation | | | 301,500 | | | 17,785,485 | |
Monaco Coach Corporation | | | 172,500 | | | 4,859,325 | |
National R.V. Holdings, Inc.* | | | 183,750 | | | 2,710,312 | |
Thor Industries, Inc. | | | 665,000 | | | 22,250,900 | |
Winnebago Industries, Inc. | | | 728,200 | | | 27,147,296 | |
| | | | | | | 87,141,318 | |
Banks — 1.6% | | | | | | | |
Washington Mutual, Inc. | | | 511,687 | | | 19,771,586 | |
| | | | | | | | |
Capital Goods — 5.9% | | | | | | | |
Eagle Materials Inc. - Class B | | | 101,332 | | | 7,017,241 | |
General Cable Corporation* | | | 126,000 | | | 1,077,300 | |
Graco Inc. | | | 206,707 | | | 6,418,252 | |
The Lamson & Sessions Co.* | | | 538,000 | | | 4,325,520 | |
Rush Enterprises, Inc. - Class A* | | | 248,605 | | | 3,231,865 | |
Rush Enterprises, Inc. - Class B* | | | 282,005 | | | 3,637,865 | |
Terex Corporation* | | | 126,500 | | | 4,317,445 | |
Tyco International Ltd. f | | | 1,335,600 | | | 44,261,784 | |
| | | | | | | 74,287,272 | |
Commercial Services & Supplies — 3.4% | | | | | | | |
Cendant Corporation | | | 1,610,000 | | | 39,412,800 | |
EnPro Industries, Inc.* | | | 130,000 | | | 2,987,400 | |
| | | | | | | 42,400,200 | |
Consumer Durables — 12.6% | | | | | | | |
American Woodmark Corporation | | | 262,100 | | | 15,686,685 | |
The Black & Decker Corporation | | | 706,100 | | | 43,869,993 | |
Furniture Brands International, Inc. | | | 10,000 | | | 250,500 | |
Masco Corporation | | | 300,000 | | | 9,354,000 | |
Mohawk Industries, Inc.* | | | 440,663 | | | 32,313,818 | |
Polaris Industries Inc. | | | 519,200 | | | 24,921,600 | |
Stanley Furniture Company, Inc. | | | 310,900 | | | 13,091,999 | |
Whirlpool Corporation | | | 267,700 | | | 18,364,220 | |
| | | | | | | 157,852,815 | |
See notes to financial statements.
MUHLENKAMP FUND (A Portfolio of the Wexford Trust) |
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2004 (Unaudited)
Name of Issuer or Title of Issue | | Shares | | Value | |
| | | | | | |
Diversified Financials — 17.9% | | | | | |
Capital One Financial Corporation | | | 590,000 | | $ | 40,344,200 | |
Citigroup Inc. | | | 770,000 | | | 35,805,000 | |
Countrywide Credit Industries, Inc. | | | 999,999 | | | 70,249,930 | |
Fannie Mae | | | 604,400 | | | 43,129,984 | |
Gabelli Asset Management Inc. - Class A | | | 121,600 | | | 5,168,000 | |
Merrill Lynch & Co., Inc. | | | 404,000 | | | 21,807,920 | |
Metris Companies Inc.* | | | 130,000 | | | 1,129,700 | |
Morgan Stanley | | | 143,000 | | | 7,546,110 | |
| | | | | | | 225,180,844 | |
Energy — 9.3% | | | | | | | |
Anadarko Petroleum Corporation | | | 195,500 | | | 11,456,300 | |
ConocoPhillips | | | 100,000 | | | 7,629,000 | |
Devon Energy Corporation | | | 365,600 | | | 24,129,600 | |
Dynamic Oil & Gas, Inc.*f | | | 306,500 | | | 1,118,725 | |
The Houston Exploration Company* | | | 266,200 | | | 13,799,808 | |
Nabors Industries, Ltd.*f | | | 590,000 | | | 26,679,800 | |
Patterson-UTI Energy, Inc. | | | 950,000 | | | 31,739,500 | |
| | | | | | | 116,552,733 | |
Food & Drug Retailing — 0.4% | | | | | | | |
SUPERVALU INC. | | | 160,000 | | | 4,897,600 | |
| | | | | | | | |
Food Beverage & Tobacco — 2.5% | | | | | | | |
Altria Group, Inc. | | | 615,280 | | | 30,794,764 | |
| | | | | | | | |
Footwear — 0.0% | | | | | | | |
R. G. Barry Corporation* | | | 322,200 | | | 525,186 | |
| | | | | | | | |
Health Care Equipment & Services — 1.6% | | | | | | | |
Cytyc Corporation* | | | 100,000 | | | 2,537,000 | |
D & K Healthcare Resources, Inc. | | | 439,000 | | | 5,268,000 | |
Orthodontic Centers of America, Inc.*# | | | 718,600 | | | 5,885,334 | |
UnitedHealth Group Incorporated | | | 100,000 | | | 6,225,000 | |
| | | | | | | 19,915,334 | |
Homebuilding — 15.9% | | | | | | | |
Beazer Homes USA, Inc. | | | 226,300 | | | 22,700,153 | |
Cavco Industries, Inc.* | | | 34,000 | | | 1,349,800 | |
See notes to financial statements.
MUHLENKAMP FUND (A Portfolio of the Wexford Trust) |
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2004 (Unaudited)
Name of Issuer or Title of Issue | | Shares | | Value | |
| | | | | | |
Homebuilding — 15.9% (Continued) | | | | | |
Centex Corporation | | | 1,360,000 | | $ | 62,220,000 | |
Meritage Corporation* | | | 491,600 | | | 33,822,080 | |
NVR, Inc.* | | | 125,000 | | | 60,525,000 | |
Pulte Homes, Inc. | | | 320,230 | | | 16,661,567 | |
Toll Brothers, Inc.* | | | 59,800 | | | 2,530,736 | |
| | | | | | | 199,809,336 | |
Insurance — 7.0% | | | | | | | |
The Allstate Corporation | | | 300,000 | | | 13,965,000 | |
Fidelity National Financial, Inc. | | | 1,557,094 | | | 58,141,890 | |
The St. Paul Travelers Companies, Inc. | | | 383,012 | | | 15,527,306 | |
| | | | | | | 87,634,196 | |
Materials — 2.7% | | | | | | | |
Cemex S.A. de C.V. ADR f | | | 867,231 | | | 25,236,422 | |
NovaGold Resources Inc.*f | | | 184,700 | | | 858,855 | |
Texas Industries, Inc. | | | 201,900 | | | 8,312,223 | |
| | | | | | | 34,407,500 | |
Pharmaceuticals & Biotechnology — 2.8% | | | | | | | |
Johnson & Johnson | | | 600,000 | | | 33,420,000 | |
Marshall Edwards Inc.* | | | 50,000 | | | 376,500 | |
Novogen Limited* ADR f | | | 80,000 | | | 1,457,600 | |
| | | | | | | 35,254,100 | |
Software & Services — 0.1% | | | | | | | |
Opsware, Inc.* | | | 156,000 | | | 1,235,520 | |
| | | | | | | | |
Technology Hardware & Equipment — 3.3% | | | | | | | |
Atmel Corporation* | | | 1,100,000 | | | 6,512,000 | |
ATMI, Inc.* | | | 343,900 | | | 9,391,909 | |
Intel Corporation | | | 16,000 | | | 441,600 | |
International Business Machines Corporation | | | 140,000 | | | 12,341,000 | |
MasTec, Inc.* | | | 611,700 | | | 3,321,531 | |
Photon Dynamics, Inc.* | | | 273,700 | | | 9,598,659 | |
| | | | | | | 41,606,699 | |
Telecommunication Services — 1.7% | | | | | | | |
UTStarcom, Inc.* | | | 686,100 | | | 20,754,525 | |
See notes to financial statements.
MUHLENKAMP FUND (A Portfolio of the Wexford Trust) |
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2004 (Unaudited)
Name of Issuer or Title of Issue | | Shares | | Value | |
| | | | | | |
Utilities — 3.5% | | | | | |
Calpine Corporation* | | | 2,812,100 | | $ | 12,148,272 | |
Dynegy Inc. - Class A* | | | 520,000 | | | 2,215,200 | |
El Paso Corporation# | | | 1,091,450 | | | 8,600,626 | |
Exelon Corporation | | | 200,000 | | | 6,658,000 | |
PPL Corporation | | | 300,000 | | | 13,770,000 | |
| | | | | | | 43,392,098 | |
Total Common Stocks (Cost $852,238,441) | | | | | | 1,243,413,626 | |
Name of Issuer or Title of Issue | | Principal Amount | | Value | |
| | | | | | |
SHORT-TERM INVESTMENT — 0.4% | | | | | |
American Express Commercial | | | | | |
Paper, 0.95%, 07/01/2004 | | $ | 4,365,000 | | | 4,365,000 | |
Total Short-Term Investment (Cost $4,365,000) | | | | | | 4,365,000 | |
TOTAL INVESTMENTS — 99.5% | | | | | | | |
(Cost $856,603,441) | | | | | | 1,247,778,626 | |
See notes to financial statements.
MUHLENKAMP FUND (A Portfolio of the Wexford Trust) |
SCHEDULE OF INVESTMENTS (Continued)
June 30, 2004 (Unaudited)
| | | Contracts | | | |
Name of Issuer or Title of Issue | | (100 Shares Per Contract) | | Value | |
| | | | | | |
WRITTEN CALL OPTIONS — 0.0% | | | | | |
El Paso Corporation | | | | | |
Expiration October 2004, Exercise Price $8.00 | | | 3,000 | | $ | (180,000 | ) |
Orthodontic Centers of America, Inc. | | | | | | | |
Expiration September 2004, Exercise Price $7.50 | | | 2,000 | | | (200,000 | ) |
| | | | | | | | |
WRITTEN PUT OPTIONS — (0.1)% | | | | | | | |
El Paso Corporation | | | | | | | |
Expiration October 2004, Exercise Price $8.00 | | | 3,000 | | | (195,000 | ) |
Orthodontic Centers of America, Inc. | | | | | | | |
Expiration September 2004, Exercise Price $7.50 | | | 2,000 | | | (70,000 | ) |
Superconductor Technologies Inc. | | | | | | | |
Expiration July 2004, Exercise Price $5.00 | | | 1,842 | | | (663,120 | ) |
Total Options Written (Premiums received $1,180,164) | | | | | | (1,308,120 | ) |
| | | | | | | | |
OTHER ASSETS IN EXCESS OF LIABILITIES — 0.6% | | | | | | 7,924,370 | |
TOTAL NET ASSETS — 100.0% | | | | | $ | 1,254,394,876 | |
| * | Non income producing security. |
| # | All or a portion of the shares have been committed as cover for written option contracts. |
| f | Foreign company. |
| ADR | American Depositary Receipts |
See notes to financial statements.
MUHLENKAMP FUND (A Portfolio of the Wexford Trust) |
NOTES TO FINANCIAL STATEMENTS
Six Months Ended June 30, 2004 (Unaudited)
The Wexford Trust (the "Trust") was organized as a Massachusetts Business Trust on September 21, 1987 and operations commenced on November 1, 1988. The Trust is registered under the Investment Company Act of 1940, as amended. The Muhlenkamp Fund (the "Fund") is a portfolio of the Trust and is currently the only fund in the Trust.
The Fund operates as a diversified open-end mutual fund that continuously offers its shares for sale to the public. The Fund will manage its assets to seek a maximum total return to its shareholders, primarily through a combination of interest and dividends and capital appreciation by holding a diversified list of publicly traded stocks. The Fund may acquire and hold fixed-income or debt investments as market conditions warrant and when, in the opinion of its adviser, it is deemed desirable or necessary in order to attempt to achieve its investment objective.
The primary focus of the Fund is long-term and the investment options diverse. This allows for greater flexibility in the daily management of Fund assets. However, with flexibility also comes the risk that assets will be invested in various classes of securities at the wrong time and price.
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
A summary of significant accounting policies applied by management in the preparation of the accompanying financial statements follows.
| a. | Investment Valuations — Stocks, bonds, options and warrants are valued at the latest sales price on the last business day of the fiscal period as reported by the securities exchange on which the issue is traded. If no sale is reported, the security is valued at the last quoted bid price. Short-term debt instruments (those with remaining maturities of 60 days or less) are valued at amortized cost, which approximates market value. Securities and other assets for which market quotations are not readily available are valued at fair value as determined by procedures established by the Board of Trustees. |
| b. | Investment Transactions and Related Investment Income — Investment transactions are recorded on the trade date. Dividend income is recorded on the ex-dividend date. Interest income is recorded daily on the yield to maturity basis. The Fund uses the specific identification method in computing gain or loss on the sale of investment securities. |
| c. | Federal Taxes — It is the Fund’s policy to comply with the requirements of the Internal Revenue Code that are applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no federal income tax provision is recorded. In addition, the Fund plans to make sufficient distributions of its income and realized gains, if any, to avoid the payment of any federal excise taxes. Accounting principles generally accepted in the United States of America require that permanent differences between financial reporting and tax reporting be reclassified between various components of net assets. |
MUHLENKAMP FUND (A Portfolio of the Wexford Trust) |
NOTES TO FINANCIAL STATEMENTS (Continued)
Six Months Ended June 30, 2004 (Unaudited)
| d. | Dividends and Distributions to Shareholders of Beneficial Interest — Dividends from net investment income, if any, are declared and paid annually. Distributions of net realized capital gains, if any, will be declared and paid at least annually. The Fund may utilize earnings and profits distributed to shareholders on redemption of shares as part of the dividends paid deduction. Accordingly, reclassifications are made within the net asset accounts for such amounts, as well as amounts related to permanent differences in the character of certain income and expense items for income tax and financial reporting purposes. |
| e. | Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. |
| f. | Options Transactions — The Fund may write put and call options only if it (i) owns an offsetting position in the underlying security or (ii) maintains cash or other liquid assets in an amount equal to or greater than its obligation under the option. |
When the Fund writes a call or put option, an amount equal to the premium received is included in the statement of assets and liabilities as a liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option. If an option expires on its stipulated expiration date or if the Fund enters into a closing purchase transaction, a gain or loss is realized. If a written call option is exercised, a gain or loss is realized for the sale of the underlying security and the proceeds from the sale are increased by the premium originally received. If a written put option is exercised, the cost of the security acquired is decreased by the premium originally received. As writer of an option, the Fund has no control over whether the underlying securities are subsequen tly sold (call) or purchased (put) and, as a result, bears the market risk of an unfavorable change in the price of the security underlying the written option.
The Fund may purchase put and call options. When the Fund purchases a call or put option, an amount equal to the premium paid is included in the Fund’s statement of assets and liabilities as an investment, and is subsequently marked-to-market to reflect the current market value of the option. If an option expires on the stipulated expiration date or if the Fund enters into a closing sale transaction, a gain or loss is realized. If the Fund exercises a call, the cost of the security acquired is increased by the premium paid for the call. If the Fund exercises a put option, a gain or loss is realized from the sale of the underlying security, and the proceeds from such a sale are decreased by the premium originally paid. Written and purchased options are non-income producing securities.
MUHLENKAMP FUND (A Portfolio of the Wexford Trust) |
NOTES TO FINANCIAL STATEMENTS (Continued)
Six Months Ended June 30, 2004 (Unaudited)
| 3. | INVESTMENT ADVISORY AND OTHER AGREEMENTS |
Muhlenkamp & Co., Inc. (the "Adviser"), an officer/stockholder of which is a trustee of the Trust, receives a fee for investment management. The fee is computed and accrued daily based on the net asset value at the close of business and is equal to 1% per annum. U.S. Bancorp Fund Services, LLC serves as transfer agent, administrator and accounting services agent for the Fund. U.S. Bank, N.A. serves as custodian for the Fund.
The Fund has established a line of credit agreement ("LOC") with a national banking association, to be used for temporary or emergency purposes, primarily for financing redemption payments. Borrowings of the Fund are subject to a $25 million cap on the total LOC. At June 30, 2004, there were no borrowings by the Muhlenkamp Fund outstanding under the LOC. For the six months ended June 30, 2004, the Fund incurred no interest expense.
| 5. | CAPITAL SHARE TRANSACTIONS |
Transactions in capital shares of the Fund were as follows:
| | Six Months Ended June 30, 2004 | | Year Ended D ecember 31, 2003 |
| Shares outstanding, beginning of period | 18,219,163 | | 13,982,197 |
| Shares sold | 4,157,785 | | 10,224,387 |
| Shares redeemed | (3,707,991) | | (5,987,421) |
| Shares outstanding, end of period | 18,668,957 | | 18,219,163 |
| 6. | OPTION CONTRACTS WRITTEN |
The number of option contracts written and the premiums received by the Muhlenkamp Fund during the six months ended June 30, 2004, were as follows:
| | Number of Contracts | | Premiums Received |
| | | | |
| Options outstanding, beginning of period | 3,967 | | $672,651 |
| Options written | 18,000 | | 1,621,705 |
| Options exercised | (5,405) | | (724,590) |
| Options outstanding, end of period | (4,720) | | (389,602) |
| | 11,842 | | $1,180,164 |
| 7. | INVESTMENT TRANSACTIONS |
Purchases and sales of investment securities, excluding short-term securities, for the six months ended June 30, 2004 were as follows:
Purchases | | Sales |
U.S. Government | | Other | | U.S. Government | | Other |
| $0 | | $150,353,742 | | $0 | | $63,024,319 |
MUHLENKAMP FUND (A Portfolio of the Wexford Trust) |
NOTES TO FINANCIAL STATEMENTS (Continued)
Six Months Ended June 30, 2004 (Unaudited)
| 8. | FEDERAL TAX INFORMATION |
The Fund intends to utilize provisions of the federal income laws which allow it to carry a realized capital loss forward for eight years following the year of loss and offset such losses against any future realized capital gains. At December 31, 2003, the Fund had capital loss carryovers as follows:
Net Capital Loss Carryovers* | | Capital Loss Carryover Expiration |
| | | |
| $ 3,833,114 | | 12/31/2009 |
| 17,656,856 | | |
| 18,459,729 | | 12/31/2010 |
| $39,949,699 | | 12/31/2011 |
| | | |
| * | Capital gain distributions will resume in the future to the extent gains are realized in excess of the available carryforwards. |
As of December 31, 2003, the components of distributable earnings on a tax basis were as follows:
| Cost of investments | $ | 838,339,240 |
| | | |
| Gross tax unrealized appreciation | | 391,696,588 |
| Gross tax unrealized depreciation | | (71,570,321) |
| Net tax unrealized appreciation | $ | 320,126,267 |
| | | |
| Undistributed ordinary income | | — |
| Undistributed long-term capital gain | | — |
| Total distributable earnings | $ | — |
| | | |
| Other accumulated losses | $ | (40,398,161) |
| Total accumulated losses | $ | 279,728,106 |
Beginning in 2000, expenses are reduced through the deposit of minimum account maintenance fees into the Fund. By November 30th of each year, all accounts must have net investments (purchases less redemptions) totaling $1,500 or more, an account value greater than $1,500, or be enrolled in the Automatic Investment Plan. Accounts that do not meet one of these three criteria will be charged a $15 fee. These fees are used to lower the Fund’s expense ratio. For the six months ended June 30, 2004, the Fund’s expenses were reduced $32,758 by utilizing minimum account maintenance fees, resulting in a decrease in the expense ratio being charged to shareholders.
MUHLENKAMP FUND (A Portfolio of the Wexford Trust) |
NOTES TO FINANCIAL STATEMENTS (Continued)
Six Months Ended June 30, 2004 (Unaudited)
| 10. | INFORMATION ABOUT PROXY VOTING (UNAUDITED) |
Information regarding how the Fund votes proxies relating to portfolio securities is available without charge upon request by calling toll-free at (800) 860-3863 or by accessing the Funds’ website at www.muhlenkamp.com and the SEC’s website at www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the twelve months ending June 30, 2004 will be available after August 31, 2004.
(This Page Intentionally Left Blank.)
INVESTMENT ADVISER
Muhlenkamp & Company, Inc.
3000 Stonewood Drive, Suite 310
Wexford, PA 15090
ADMINISTRATOR AND TRANSFER AGENT
U.S. Bancorp Fund Services, LLC
615 E. Michigan Street
Milwaukee, WI 53202
CUSTODIAN
U.S. Bank, N.A.
425 Walnut Street
Cincinnati, OH 45201
DISTRIBUTOR
Quasar Distributors, LLC
615 E. Michigan Street
Milwaukee, WI 53202
AUDITORS
PricewaterhouseCoopers LLP
100 E. Wisconsin Avenue
Milwaukee, WI 53202
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable to open-end investment companies.
Item 6. Schedule of Investments.
Not applicable for periods ending before July 9, 2004.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable to open-end investment companies.
Item 8. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchases.
Not applicable to open-end investment companies.
Item 9. Submission of Matters to a Vote of Security Holders.
There is no nominating committee charter and there have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of trustees.
Item 10. Controls and Procedures.
| (a) | The Registrant’s President/Chief Executive Officer and Treasurer/Chief Financial Officer have concluded that the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the "1940 Act")) are effective as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rules 15d-15(b) under the Securities Exchange Act of 1934, as amended. |
| (b) | There were no significant changes in the Registrant's internal controls over financial reporting that occurred during the Registrant's last fiscal half-year that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting. |
Item 11. Exhibits.
| (a) | (1) Any code of ethics or amendment thereto, that is subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy Item 2 requirements through filing an exhibit. Incorporate by reference to previous Form N-CSR filing. |
(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.
(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable to open-end investment companies.
| (b) | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith. |
SIGATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) The Wexford Trust
By (Signature and Title) /s/Ronald H. Muhlenkamp
Ronald H. Muhlenkamp, President
Date August 25, 2004
By (Signature and Title) /s/James S. Head
James S. Head, Treasurer
Date August 25, 2004
