SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
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The Henlopen Fund
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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THE HENLOPEN FUND
LONGWOOD CORPORATE CENTER SOUTH
415 MCFARLAN ROAD, SUITE 213
KENNETT SQUARE, PENNSYLVANIA 19348
Dear Shareholder:
I am pleased to invite you to attend a special meeting of the shareholders of
The Henlopen Fund, which will be held on September 30, 2002, at Longwood
Corporate Center South, Suite 213, 415 McFarlan Road, Kennett Square,
Pennsylvania 19348. The meeting will start at 9:00 a.m. Eastern Daylight Time.
The accompanying Notice of Special Meeting and Proxy Statement describe the
business to be transacted at the special meeting and contain certain information
about the Fund and its officers and trustees. In addition to electing five
trustees, you will be asked to vote on changes to the Fund's investment
restrictions and to the Fund's Trust Instrument. The Fund's Trust Instrument
and investment restrictions have not been amended since the Fund was organized
10 years ago. The proposed changes would incorporate trends in the mutual fund
industry and would permit more investment flexibility. These changes would
permit the Fund to sell securities short, allow the Fund to invest in exchange
traded funds and increase the Fund's ability to borrow money to more closely
reflect limitations allowed under the SEC's 1940 Act. You will also be asked to
vote on a change in the Fund's Trust Instrument that will permit the Fund's
trustees to approve future reorganizations (e.g., mergers and similar
transactions) of series of the Fund without having to incur the expense of a
proxy solicitation.
We hope you can join us at the special meeting. Regardless of whether you
expect to attend the meeting in person, please read the accompanying Proxy
Statement. After you have done so, please mark your votes on the enclosed proxy
card, sign and date it, and return it to us in the enclosed postage-paid
envelope. It is important that your shares be represented, and your promptness
will assist us in making necessary preparations for the meeting.
Sincerely,
/s/ Mike Hershey
Michael L. Hershey
President
THE HENLOPEN FUND
LONGWOOD CORPORATE CENTER SOUTH
415 MCFARLAN ROAD, SUITE 213
KENNETT SQUARE, PENNSYLVANIA 19348
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NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS
OF THE HENLOPEN FUND TO BE HELD SEPTEMBER 30, 2002
TO SHAREHOLDERS OF THE HENLOPEN FUND:
We invite you to attend a special meeting of shareholders of The Henlopen
Fund, a Delaware business trust, on September 30, 2002, at 9:00 a.m. (Eastern
Daylight Time), at Longwood Corporate Center South, Suite 213, 415 McFarlan
Road, Kennett Square, Pennsylvania 19348. As we describe in the accompanying
proxy statement, the shareholders will vote on (1) a proposal to elect five
trustees, (2) a proposal to amend the Fund's fundamental investment restriction
No. 1 as it relates to selling securities short, (3) a proposal to amend the
Fund's fundamental investment restriction No. 2 relating to borrowing money,
issuing senior securities and pledging assets, (4) a proposal to amend the
Fund's fundamental investment restriction No. 4 relating to investing in other
investment companies, (5) a proposal to amend Section 11.4(b) of the Fund's
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Trust Instrument, dated September 16, 1992 (the "Trust Instrument") relating
to reorganizations of series of the Fund, and (6) any other business that may
properly come before the Special Meeting.
We have enclosed a proxy card with this proxy statement. YOUR VOTE IS
IMPORTANT, NO MATTER HOW MANY SHARES YOU OWN. EVEN IF YOU PLAN TO ATTEND THE
SPECIAL MEETING, PLEASE COMPLETE, DATE AND SIGN THE PROXY CARD AND MAIL IT AS
SOON AS YOU CAN IN THE ENVELOPE WE HAVE PROVIDED.
We look forward to seeing you at the special meeting.
THE HENLOPEN FUND
/s/ Bruce V. Vogenitz
Bruce V. Vogenitz
Secretary
Kennett Square, Pennsylvania
August 2, 2002
THE HENLOPEN FUND
LONGWOOD CORPORATE CENTER SOUTH
415 MCFARLAN ROAD, SUITE 213
KENNETT SQUARE, PENNSYLVANIA 19348
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FREQUENTLY ASKED QUESTIONS
Q:WHY HAVE I RECEIVED THIS PROXY STATEMENT?
Our trustees have sent you this proxy statement, starting around August 5,
2002 to ask for your vote as a shareholder of The Henlopen Fund.
Q:WHAT AM I VOTING ON?
You will vote on the following proposals if you owned shares of the Fund on
the record date of the special meeting:
PROPOSAL NO. DESCRIPTION
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1 Election of five trustees.
2 Approval of a change in the Fund's fundamental investment
restriction number 1 to permit selling securities short.
3 Approval of a change in the Fund's fundamental investment
restriction number 2 to remove restrictions on borrowing
money, issuing senior securities and pledging assets.
4 Approval of a change in the Fund's fundamental investment
restriction number 4 to permit investing in other investment
companies.
5 Approval of an amendment to Section 11.4(b) of the Fund's Trust
---------------
Instrument to eliminate the necessity of shareholder approval of
reorganizations of series of the Fund.
Our trustees are not aware of any other matter that will be presented to you
at the special meeting.
Q:WHO IS ENTITLED TO VOTE?
If you owned shares of the Fund as of the close of business on the record
date, July 23, 2002, then you are entitled to vote. You will be entitled to
one vote per share for each share you own on the record date.
Q:DO I NEED TO ATTEND THE SPECIAL MEETING IN ORDER TO VOTE?
No. You can vote either in person at the special meeting or by completing
and mailing the enclosed proxy card.
Q:HOW WILL PROXIES BE SOLICITED?
We (the Fund) will solicit proxies by mail. In addition, certain of our
officers and employees may solicit by telephone, telegraph and personally.
We will not pay these officers and employees specifically for soliciting
proxies. We will bear the cost of soliciting proxies, including preparing,
assembling and mailing the proxy material.
Q:HOW MANY SHARES OF THE FUND'S STOCK ARE ENTITLED TO VOTE?
As of the record date, the number of shares of the Fund that were entitled to
vote at the special meeting was 5,244,661.
Q:WHAT HAPPENS IF THE SPECIAL MEETING IS ADJOURNED?
The special meeting could be adjourned if, for example, a quorum does not
exist or if a quorum exists but sufficient votes to approve a proposal are
not received. For purposes of any adjournment, proxies will be voted "FOR"
adjournment unless you direct otherwise by writing anywhere on the enclosed
proxy that you will vote against any adjournments.
Q:WHAT CONSTITUTES A QUORUM?
A "quorum" refers to the number of shares that must be in attendance, in
person or by proxy, at a meeting to lawfully conduct business. With respect
to the proposals, a quorum is present if one-third of the votes of the shares
of the Fund entitled to be cast are present in person or by proxy.
Q:WHAT HAPPENS IF I SIGN AND RETURN MY PROXY CARD BUT DO NOT MARK MY VOTE?
Michael L. Hershey and Bruce V. Vogenitz, as proxies, will vote your shares
to elect five trustees, to approve all three proposed changes to the Fund's
fundamental investment restrictions and to approve the amendment to the
Fund's Trust Instrument.
Q:WHAT WILL HAPPEN IF ONE OR MORE OF THE PROPOSALS IS NOT APPROVED BY
SHAREHOLDERS AT THE SPECIAL MEETING?
If no trustees are elected, then the current trustees will continue to serve
as trustees. If proposal 2 is not approved, then the Fund will continue to
operate in accordance with its current fundamental investment restriction
against selling securities short. If proposal 3 is not approved, then the
Fund will continue to operate in accordance with its current fundamental
investment restriction against borrowing money, issuing senior securities and
pledging assets. If proposal 4 is not approved, then the Fund will continue
to operate in accordance with its current fundamental investment restriction
against investing in other investment companies. If proposal 5 is not
approved, then the Fund will continue to operate in accordance with the
provisions of its current Trust Instrument.
Q:MAY I REVOKE MY PROXY?
You may revoke your proxy at any time before it is exercised by giving notice
of your revocation to us in writing (by subsequent proxy or otherwise). Your
presence at the special meeting does not itself revoke your proxy.
Q:WHO WILL COUNT THE VOTES?
Management Information Services will count the votes and act as inspector of
elections.
Q:HOW CAN I OBTAIN A COPY OF THE ANNUAL REPORT?
You may request a copy of our latest annual report and semi-annual report
succeeding the annual report by writing to The Henlopen Fund, Longwood
Corporate Center South, Suite 213, 415 McFarlan Road, Kennett Square,
Pennsylvania 19348, Attention Corporate Secretary, or by calling, toll-free,
1-800-922-0224. We will furnish these copies free of charge.
OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of shares of the Fund as of June 30, 2002 by: (a) each named
executive officer and trustee; (b) all of the named executive officers and
trustees as a group; and (c) each person or entity known by the Trust to own
beneficially more than 5% of the shares of the Fund:
NAME AND (RESPECTING 5% HOLDERS) NUMBER OF SHARES PERCENTAGE
ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED OWNERSHIP
- -------------------------------- ------------------ ---------
Charles Schwab & Co. Inc. 2,782,486(1)<F1> 49.03%
Special Custody Account
FBO Customers
101 Montgomery Street
San Francisco, CA 94104
National Financial Services Corp. 1,088,387(1)<F1> 19.18%
200 Liberty Street
1 World Financial Center NYSD
New York, NY 10281
Wilmington Trust Co., Agent 294,228 5.18%
FBO Unidel Foundation
P.O. Box 8880
Wilmington, DE 19890
Michael L. Hershey 34,608 (2)<F2>
Robert J. Fahey, Jr. 10,297 (2)<F2>
John A. Krol 6,391 (2)<F2>
Stephen L. Hershey, M.D. 4,174 (2)<F2>
John H. Remer 0 0%
Officers, trustees and nominees
as a group (7 persons) 61,662 1.20%
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(1)<F1> The shares owned by Charles Schwab & Co. Inc. and National Financial
Services Corp. were owned of record only.
(2)<F2> Less than 1%.
DOLLAR RANGE OF FUND SHARES
The following table describes the dollar range of shares of the Fund
beneficially owned by each trustee and nominee as of June 30, 2002:
AGGREGATE DOLLAR RANGE OF
EQUITY SECURITIES IN ALL FUNDS
OVERSEEN OR TO BE OVERSEEN BY
NAME OF TRUSTEE DOLLAR RANGE OF EQUITY TRUSTEE OR NOMINEE IN FAMILY
OR NOMINEE SECURITIES IN THE FUND OF INVESTMENT COMPANIES(1)<F3>
- -------------- ------------------------ ----------------------------
MICHAEL L. HERSHEY OVER $100,000 OVER $100,000
ROBERT J. FAHEY, JR. OVER $100,000 OVER $100,000
JOHN A. KROL OVER $100,000 OVER $100,000
STEPHEN L. HERSHEY, M.D. $50,001-$100,000 $50,001-$100,000
JOHN H. REMER None None
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(1)<F3> The Fund is the only fund in its family of investment companies.
PROPOSAL NO. 1: ELECTION OF FIVE TRUSTEES
TRUSTEE NOMINEES. At the special meeting, we will elect five trustees to
hold office until their respective successors are chosen and qualified. The
current trustees have nominated five people for election. As proxies, Michael
L. Hershey and Bruce V. Vogenitz intend to vote for the election of all of the
trustees' nominees. They will also vote proxies for any other person that the
trustees may recommend in place of a nominee if that nominee becomes unable to
serve as a trustee before the special meeting.
Each of the nominees is currently a trustee except for Dr. Stephen L. Hershey
and Mr. John H. Remer. Each nominee has consented to being named as a nominee
and to serve if elected.
Certain important information regarding our trustees and Mr. Remer (including
their principal occupations for at least the last five years) is as follows (the
Fund is the only portfolio in its fund complex):
INTERESTED NOMINEES (as defined in the Investment Company Act of 1940 (the
"1940 Act")):
TERM OF PRINCIPAL OTHER
POSITION(S) OFFICE AND OCCUPATION(S) DIRECTORSHIPS
HELD LENGTH OF DURING HELD BY TRUSTEE
NAME, ADDRESS AND AGE WITH FUND TIME SERVED PAST 5 YEARS OR NOMINEE
- --------------------- ---------- ----------- ------------ -------------
Michael L. Hershey
(63)(1)<F4>(2)<F5> Trustee Indefinite, Chairman, None
Longwood Corporate Trustee President,
Center South since 1992 Treasurer and
Suite 213 President One year Secretary of
415 Mcfarlan Road term, Landis Associates
Kennett Square, President LLC (Kennett
PA 19348 since 1992 Square, PA)
Stephen L. Hershey, Nominee(3) Indefinite, Orthopaedic None
M.D. (61)(1)<F4> <F6> Trustee surgeon
4745 Stanton-Ogletown since (Newark, DE)
Road 1992(3) <F6>
Suite 225
Newark, DE 19713
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(1)<F4> Mr. Michael L. Hershey and Dr. Stephen L. Hershey are brothers.
(2)<F5> Mr. Michael L. Hershey is an interested nominee because he is the
Chairman, President, Treasurer and Secretary of Landis Associates LLC,
the Fund's investment adviser.
(3)<F6> Dr. Stephen L. Hershey resigned as a trustee effective June 30, 2002
in order for the Fund to comply with certain Securities and Exchange
Commission regulations requiring the Fund to have a majority of its
trustees consist of persons who are not interested persons of the
Fund. Dr. Hershey is an interested nominee because he is the brother
of Michael L. Hershey.
NON-INTERESTED NOMINEES:
TERM OF PRINCIPAL OTHER
POSITION(S) OFFICE AND OCCUPATION(S) DIRECTORSHIPS
HELD LENGTH OF DURING HELD BY TRUSTEE
NAME, ADDRESS AND AGE WITH FUND TIME SERVED PAST 5 YEARS OR NOMINEE
- --------------------- ---------- ----------- ------------ -------------
Robert J. Fahey, Trustee Indefinite, Senior Director None
Jr. (44) Trustee of Real Estate
1717 Arch Street since 1992 Investment Banking
30th Floor for the Financial
Philadelphia, PA 19103 Services Group
of Cushman &
Wakefield, a
commercial real
estate services firm
(Philadelphia, PA)
John A. Krol (65) Trustee Indefinite, Retired Chairman Armstrong
c/o Du Pont Trustee and Chief World
1007 Market Street since 1999 Executive Officer Indus-
D9000 of E.I. du Pont tries Inc.
Wilmington, DE 19898 de Nemours & Mead
de Nemours & Westvaco
Company Corp.,
(Wilmington, DE) Milliken
& Co.
John H. Remer (77) Nominee Not Retired None
c/o Landis Associates, LLC applicable.
Longwood Corporate
Center South
Suite 213
415 McFarlan Road
Kennett Square, PA 19348
Investment Adviser. The investment adviser to the Fund is Landis Associates,
------------------
LLC (the "Adviser"). The Adviser's address is Longwood Corporate Center
South, Suite 213, 415 McFarlan Road, Kennett Square, PA 19348. Pursuant to an
investment advisory agreement between the Fund and the Adviser, the Adviser
furnishes continuous investment advisory services and management to the Fund.
The Adviser is controlled by Michael L. Hershey. Mr. Hershey is the Chairman,
President, Treasurer and Secretary of the Adviser and is the trustee of the
Michael L. Hershey Revocable Trust U/A/D/5-7-98 which owns 90% of the
outstanding membership interests of the Adviser. Mr. Hershey is also President
and a trustee of the Fund.
Compensation. The Fund's standard method of compensating trustees is to pay
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each trustee who is not an officer of the Fund a fee of $1,000 for each
meeting of the trustees attended. The Fund also may reimburse its trustees for
travel expenses incurred in order to attend meetings of the trustees. During
the fiscal year ended June 30, 2002, the Fund paid a total of $4,000 in fees to
trustees who were not officers of the Fund. The table below sets forth the
compensation paid by the Fund to each of the current trustees during the fiscal
year ended June 30, 2002:
COMPENSATION TABLE
PENSION OR TOTAL
AGGREGATE RETIREMENT ESTIMATED COMPENSATION
COMPENSATION BENEFITS ACCRUED ANNUAL FROM THE
FROM AS PART OF FUND BENEFITS UPON FUND PAID
NAME OF PERSON THE FUND EXPENDITURES RETIREMENT TO TRUSTEES
- -------------- ------------- ---------------------------- ------------
Michael L. Hershey $0 $0 $0 $0
Robert J. Fahey, Jr. $1,000 $0 $0 $1,000
Stephen L.
Hershey, M.D. $1,000 $0 $0 $1,000
John A. Krol $1,000 $0 $0 $1,000
P. Coleman
Townsend, Jr.*<F7> $1,000 $0 $0 $1,000
- ----------
* <F7>Mr. Townsend resigned as a trustee during the fiscal year ended June 30,
2002.
Trustee Meetings and Committees. Effective August 8, 2001, the Fund's Board
--------------------------------
of Trustees created an Audit Committee whose members are Messrs. Fahey and
Krol. The Audit Committee's written charter provides that the primary functions
of the Audit Committee are to recommend to the Board of Trustees the independent
accountants to be retained to perform the annual audit, to review the results of
the audit, to review the Fund's internal controls and to review certain other
matters relating to the Fund's accountants and financial records. The Fund's
Board of Trustees has no other committees. The Fund's Board of Trustees met
once during the fiscal year ended June 30, 2002 and all of the trustees attended
that meeting. The Audit Committee did not meet during the fiscal year ended
June 30, 2002.
Other Executive Officers. The executive officers of the Fund, besides
------------------------
Michael L. Hershey (President) are as follows:
PRINCIPAL OCCUPATION(S)
NAME AND AGE POSITION(S) HELD DURING PAST FIVE YEARS
- ------------ ----------------- -----------------------
Bruce V. Vogenitz, Vice President and Vice President of Landis
C.F.A. (37) Secretary since 1998 Associates LLC since 1998;
Analyst at Gardner Lewis
Asset Management until 1998
Camille F. Wildes (49) Vice President/ Vice President of
Compliance Fiduciary Management, Inc.
Officer and Treasurer
since 1994
Required Vote. Under the Fund's Trust Instrument, dated September 16, 1992,
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shareholders elect trustees by a plurality of the votes cast by shares which
are entitled to vote in the election, assuming a quorum is present. For this
purpose, "plurality" means that the nominees receiving the largest number of
votes from the shareholders will be elected as trustees. Abstentions and broker
non-votes (if any) will be counted as votes present for purposes of determining
whether a quorum is present. Assuming a quorum is present, any shares which do
not vote, whether by abstention or otherwise, will not affect the election of
trustees.
Recommendation. The trustees recommend a vote "FOR" all the nominees.
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PROPOSAL NO. 2: APPROVAL OF AMENDMENT TO
FUNDAMENTAL INVESTMENT RESTRICTION NO. 1
Discussion. The Fund proposes to change its policy on selling securities
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short. The Fund currently has a fundamental investment restriction that
prohibits it from selling securities short. The proposed change would allow the
Fund to sell securities short to the extent permitted by the 1940 Act. A "short
sale" is made by selling a security the Fund does not own. In a short sale
transaction, the Fund will borrow a security from a broker and sell it with the
expectation that it will replace the security borrowed from the broker by
repurchasing the same security at a lower price.
Proposal No. 2, if approved, will enable the Fund to reduce the Fund's equity
exposure by engaging in short sales of index-related (i.e., exchange-traded
funds) and other securities. It will also allow the Fund to sell short
securities it expects to decline in value. Short sales involve investment
risks. The investment performance of the Fund will suffer if a security for
which the Fund has effected a short sale appreciates in value. Additionally,
the Fund may be required to close out a short position earlier than it had
intended if the securities lender requires it to deliver the securities it
borrowed at the commencement of the short sale and the Fund is unable to borrow
such securities from other securities lenders. If Proposal No. 2 is approved,
the Fund would remain subject to the applicable provisions of the 1940 Act
relating to short-sale transactions. Generally, consistent with the 1940 Act,
the Fund would be permitted to engage in short sales only if the Fund maintains
cash or liquid securities at such a level that the amount so maintained plus the
amount deposited with the broker as collateral will equal the current value of
the security sold short.
The trustees do not anticipate that the change to the Fund's policy on
selling securities short will materially change the manner in which the Fund is
currently managed or the level of investment risk associated with an investment
in the Fund.
Current Investment Restriction. The Fund's current investment restriction
------------------------------
relating to selling securities short is as follows:
"1. The Fund will not purchase securities on margin, participate in a joint-
trading account, sell securities short, or write or invest in put or call
options. The Fund's investments in warrants, valued at the lower of cost or
market, will not exceed 5% of the value of the Fund's net assets."
Proposed Investment Restriction. The investment restriction above would be
-------------------------------
revised if approved by the shareholders of the Fund, to read in its entirety
as follows:
"1. The Fund will not purchase securities on margin, participate in a joint-
trading account or write or invest in put or call options. The Fund's
investments in warrants, valued at the lower of cost or market, will not exceed
5% of the value of the Fund's net assets. The Fund may, to the extent permitted
by the Investment Company Act of 1940, sell securities short."
Required Vote. The favorable vote of the holders of a "majority" (as defined
-------------
in the 1940 Act) of the outstanding shares of the Fund is required for the
approval of the change in this fundamental investment restriction. Under the
1940 Act, the vote of the holders of a "majority" of the outstanding shares of
the Fund means the vote of the holders of the lesser of (a) 67% or more of its
shares present at the special meeting or represented by proxy if the holders of
50% or more of its shares are so present or represented; or (b) more than 50% of
its outstanding shares. Abstentions and broker non-votes (if any) will be
counted as votes present for purposes of determining whether a quorum is
present. The failure to vote (other than by broker non-votes or abstentions),
assuming more than 50% of the outstanding shares of the Fund are present, has no
effect if (a) above is applicable and has the same effect as a vote against the
proposal if (b) above is applicable. Abstentions and broker non-votes have the
same effect as a vote against the change in the fundamental investment
restriction.
If Proposal No. 2 is not approved, the Fund will continue to operate in
accordance with its current fundamental investment restriction against selling
securities short.
Recommendation. The trustees recommend a vote "FOR" Proposal No. 2.
--------------
PROPOSAL NO. 3: APPROVAL OF AMENDMENT TO
FUNDAMENTAL INVESTMENT RESTRICTION NO. 2
Discussion. The Fund proposes to change its policy on borrowing money and
----------
issuing senior securities. The 1940 Act establishes limits on the ability of
mutual funds to borrow money or issue "senior securities," a term that is
defined, generally, to refer to obligations that have a priority over a mutual
fund's shares of common stock with respect to the distribution of its assets or
the payment of dividends. In addition, the 1940 Act permits a mutual fund to
pledge 100% of its assets. Currently, the Fund's policies on borrowing money,
issuing senior securities and pledging assets are more restrictive than required
by the 1940 Act. The proposed changes would make the Fund's policy on borrowing
money or issuing senior securities no more limiting than required by the 1940
Act. The trustees believe that changing the Fund's fundamental investment
restrictions in this manner will provide flexibility for future contingencies
and, in particular, will permit the Fund to borrow money in amounts greater than
is now permitted to meet redemption requests when the liquidation of portfolio
investments would be inconvenient or disadvantageous. Such flexibility will
facilitate portfolio management.
Under the proposed fundamental investment restrictions, the Fund would be
permitted to borrow money for investment purposes. However, the Fund has no
present intention of borrowing money for investment purposes and has adopted a
nonfundamental investment policy which prohibits it from purchasing securities
while it has any outstanding borrowings, and which restricts the Fund from
borrowing money except for temporary bank borrowings.
Borrowing for investment purposes is known as leveraging. Leveraging
investments, by purchasing securities with borrowed money, is a speculative
technique which increases investment risk, but also increases investment
opportunity. Since substantially all of the Fund's assets will fluctuate in
value, whereas the interest obligations on borrowings may be fixed, the net
asset value per share of the Fund, when it leverages its investments, will
increase more when the Fund's portfolio assets increase in value and decrease
more when the portfolio assets decrease in value than would otherwise be the
case. Interest costs on borrowings may partially offset or exceed the returns
on the borrowed funds. Under adverse conditions, the Fund might have to sell
portfolio securities to meet interest or principal payments at a time investment
considerations would not favor such sales.
As required by the 1940 Act, if the Fund's borrowing exceeds 5% of its net
assets or if not repaid within sixty days, the Fund must maintain continuous
asset coverage (total assets, including assets acquired with borrowed funds,
less liabilities exclusive of borrowings) of 300% of all amounts borrowed. If,
at any time, the value of the Fund's assets should fail to meet this 300%
coverage test, the Fund within three days (not including Sundays or holidays)
must reduce the amount of the Fund's borrowings to the extent necessary to meet
this 300% coverage. Maintenance of this percentage limitation may result in the
sale of portfolio securities at a time when investment considerations otherwise
indicate that it would be disadvantageous to do so.
As indicated above, the trustees have adopted nonfundamental investment
restriction No. 1, which the trustees may change or repeal at any time without
shareholder approval, which reads as follows:
"1. The Fund will not borrow money, except for temporary bank borrowings (not
in excess of 20% of the value of the Fund's net assets) and will not purchase
securities while it has any outstanding borrowings."
Current Investment Restriction. The Fund's current investment restriction
------------------------------
relating to borrowing money and issuing senior securities is as follows:
"2. The Fund will not borrow money or issue senior securities, except for
temporary bank borrowings or for emergency or extraordinary purposes (but not
for the purpose of purchase of investments) and then only in an amount not in
excess of 5% of the value of its total assets and will not pledge any of its
assets except to secure borrowings and then only to an extent not greater than
10% of the value of the Fund's net assets. The Fund will not purchase securities
while it has any outstanding borrowings."
Proposed Investment Restriction. The investment restriction above would be
-------------------------------
revised if approved by the shareholders of the Fund, to read in its entirety
as follows:
"2. The Fund may, to the extent permitted by the Investment Company Act of
1940, (a) borrow money, (b) issue senior securities and (c) pledge all or any
part of its assets."
Required Vote. The favorable vote of the holders of a "majority" (as defined
-------------
in the 1940 Act) of the outstanding shares of the Fund is required for the
approval of the change in this fundamental investment restriction. Under the
1940 Act, the vote of the holders of a "majority" of the outstanding shares of
the Fund means the vote of the holders of the lesser of (a) 67% or more of its
shares present at the special meeting or represented by proxy if the holders of
50% or more of its shares are so present or represented; or (b) more than 50% of
its outstanding shares. Abstentions and broker non-votes (if any) will be
counted as votes present for purposes of determining whether a quorum is
present. The failure to vote (other than by broker non-votes or abstentions),
assuming more than 50% of the outstanding shares of the Fund are present, has no
effect if (a) above is applicable and has the same effect as a vote against the
proposal if (b) above is applicable. Abstentions and broker non-votes have the
same effect as a vote against the change in the fundamental investment
restriction.
If Proposal No. 3 is not approved, the Fund will continue to operate in
accordance with its current fundamental investment restriction against borrowing
money, issuing senior securities and pledging assets.
Recommendation. The trustees recommend a vote "FOR" Proposal No. 3.
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PROPOSAL NO. 4: APPROVAL OF AMENDMENT TO
FUNDAMENTAL INVESTMENT RESTRICTION NO. 4
Discussion. The Fund proposes to change its policy on investing in the
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securities of other investment companies. The Fund currently has a
fundamental investment restriction that prohibits it from investing in the
securities of other open-end investment companies except as part of a plan of
merger, consolidation or reorganization approved by the shareholders of the
Fund. The 1940 Act currently does not contain any equivalent restrictions. The
proposed change would allow the Fund to invest in the securities of other
investment companies to the extent permitted by the 1940 Act. The trustees do
not anticipate that the change to the Fund's policy on investing in the
securities of other investment companies will materially change the manner in
which the Fund is currently managed or the level of investment risk associated
with an investment in the Fund. However, the change would allow the Fund to
invest in so-called "exchange traded funds." Exchange traded funds are typically
organized as unit investment trusts which are open-end investment companies.
The flexibility to invest in exchange traded funds will provide a way for the
Fund to obtain broad market exposure without having to purchase a number of
different securities.
If Proposal No. 4 is approved, the Fund would remain subject to the 1940
Act's restrictions on an investment company's ability to invest in other funds.
The restrictions of the 1940 Act, while complex, permit mutual funds to invest
exclusively in other mutual funds. Subject to certain exceptions, under the
1940 Act, no more than 5% of the Fund's assets may be invested in any single
investment company and no more than 10% of the Fund's assets may be invested in
all investment companies. However, the Fund has adopted a nonfundamental
investment policy that makes clear that investing in other investment companies
is not a principal investment strategy of the Fund. As a shareholder in another
investment company, the Fund would bear, along with other shareholders, its pro
rata portion of the other investment company's expenses, including advisory
fees. These expenses would be in addition to the expenses that the Fund bears
in connection with its own operations.
As indicated above, to restrict the ability of the Fund to invest in the
securities of other investment companies, the trustees have adopted
nonfundamental investment restriction No. 2, which the trustees may change or
repeal at any time without shareholder approval, which reads as follows:
"2. The Fund will not purchase securities of other investment companies except
(a) as part of a plan of merger, consolidation or reorganization approved by the
trustees of the Fund or (b) securities of registered investment companies on the
open market where no commission or profit results, other than the usual and
customary broker's commission, and where no more than 10% of the value of the
Fund's total assets would be invested in such securities and no more than 5% of
the Fund's net assets would be invested in shares of any one registered
investment company."
Current Investment Restriction. The Fund's current investment restriction
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relating to investing in the securities of other investment companies is as
follows:
"4. The Fund will not purchase securities of other investment companies except
(a) as part of a plan of merger, consolidation or reorganization approved by the
shareholders of the Fund or (b) securities of registered closed-end investment
companies on the open market where no commission or profit results, other than
the usual and customary broker's commission and where as a result of such
purchase the Fund would hold less than 3% of any class of securities, including
voting securities, of any registered closed-end investment company and less than
5% of the Fund's assets, taken at current value, would be invested in securities
of registered closed-end investment companies."
Proposed Investment Restriction. The investment restriction above would be
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revised if approved by the shareholders of the Fund, to read in its entirety
as follows:
"4. The Fund may, to the extent permitted by the Investment Company Act of
1940, purchase securities of other investment companies."
If the proposed change is approved, the Fund will be able to invest in the
securities of other investment companies, provided that any such investment is
consistent with the Fund's investment objective.
Required Vote. The favorable vote of the holders of a "majority" (as defined
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in the 1940 Act) of the outstanding shares of the Fund is required for the
approval of the change in this fundamental investment restriction. Under the
1940 Act, the vote of the holders of a "majority" of the outstanding shares of
the Fund means the vote of the holders of the lesser of (a) 67% or more of its
shares present at the special meeting or represented by proxy if the holders of
50% or more of its shares are so present or represented; or (b) more than 50% of
its outstanding shares. Abstentions and broker non-votes (if any) will be
counted as votes present for purposes of determining whether a quorum is
present. The failure to vote (other than by broker non-votes or abstentions),
assuming more than 50% of the outstanding shares of the Fund are present, has no
effect if (a) above is applicable and has the same effect as a vote against the
proposal if (b) above is applicable. Abstentions and broker non-votes have the
same effect as a vote against the change in the fundamental investment
restriction.
If Proposal No. 4 is not approved, the Fund will continue to operate in
accordance with its current fundamental investment restriction against investing
in the securities of other investment companies.
Recommendation. The trustees recommend a vote "FOR" Proposal No. 4.
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PROPOSAL NO. 5: APPROVAL OF AMENDMENT TO TRUST INSTRUMENT
Discussion. The Fund's Trust Instrument permits the creation of new series
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or funds, although the Fund is the only series that has been created by the
Trustees. If additional series were created under the Trust Instrument as it is
currently written, the Fund's trustees could not merge any series with any other
series, merge the Fund or any other series with another registered investment
company, or liquidate or dissolve the Fund or any other series without obtaining
shareholder approval.
The trustees propose to amend the Trust Instrument to provide that the
trustees may, without obtaining any vote of the shareholders of the Fund or any
other series, merge any series with any other series, merge the Fund or any
other series with another registered investment company, or liquidate or
dissolve the Fund or any other series. This proposed change will give the
Fund's trustees greater flexibility as they would be able to avoid the time-
consuming and expensive process of soliciting proxies in order to obtain
shareholder approval of such actions. The proposal would, however, permit the
trustees to convert a shareholder's investment into cash or another mutual fund
without the approval of the shareholder.
Current Trust Instrument Provision. Section 11.4(b) of the Fund's Trust
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Instrument currently reads as follows:
" (b) The Trustees may, subject to a Majority Shareholder Vote of each
Series affected by the matter or, if applicable, to a Majority Shareholder Vote
of the Trust, and subject to a vote of a majority of the Trustees:
(i) sell and convey all or substantially all of the assets of any affected
Series to another Series of the Trust for adequate consideration, which may
include the assumption of all outstanding obligations, taxes and other
liabilities, accrued or contingent, of the affected Series, and which may
include Shares of the acquiring Series;
(ii) sell and convey all or substantially all of the assets of the Trust or
any affected Series to another trust, partnership, association or corporation,
or to a separate series of shares thereof, organized under the laws of any state
which trust, partnership, association or corporation is an open-end management
company as defined in the Investment Company Act of 1940, or is a series
thereof, for adequate consideration which may include the assumption of all
outstanding obligations, taxes and other liabilities, accrued or contingent, of
the Trust or any affected Series, and which may include shares of beneficial
interest, stock or other ownership interests of such trust, partnership,
association or corporation or of a series thereof; or
(iii) at any time sell and convert into money all of the assets of the Trust
or any affected Series.
Upon making reasonable provision, in the determination of the Trustees, for
the payment of all such liabilities in (i), (ii) or (iii), by such assumption or
otherwise, the Trustees shall distribute the remaining proceeds or assets (as
the case may be) of each Series (or class) ratably among the holders of Shares
of that Series then outstanding."
Proposed Amendment. If the amendment is approved by the shareholders,
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Section 11.4(b) of the Trust Instrument would be revised to read in its
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entirety as follows:
" (b) The Trustees may, in their sole discretion and without obtaining any
prior authorization or vote of the Shareholders of any Series of the Trust:
(i) sell and convey all or substantially all of the assets of any Series to
another Series of the Trust for such consideration as the Trustees, in their
sole discretion, shall deem adequate, which may include the assumption of all
outstanding obligations, taxes and other liabilities, accrued or contingent, of
the affected Series, and which may include Shares of the acquiring Series;
(ii) sell and convey all or substantially all of the assets of the Trust or
any Series to another trust, partnership, association or corporation organized
under the laws of any state, or to a separate series of shares thereof, which
trust, partnership, association or corporation is an open-end management company
as defined in the Investment Company Act of 1940, or is a series thereof, for
such consideration as the Trustees in their sole discretion shall deem adequate,
which may include the assumption of all outstanding obligations, taxes and other
liabilities, accrued or contingent, of the Trust or any affected Series, and
which may include shares of beneficial interest, stock or other ownership
interests of such trust, partnership, association or corporation or of a series
thereof; or
(iii) at any time sell and convert into money all of the assets of the Trust
or any affected Series.
Upon making reasonable provision, in the determination of the Trustees, for
the payment of all such liabilities in (i), (ii) or (iii), by such assumption or
otherwise, the Trustees shall distribute the remaining proceeds or assets (as
the case may be) of each affected Series ratably among the holders of Shares of
that Series then outstanding."
If the proposed change is approved, the trustees will be able, without any
vote of the shareholders of the Fund or any series of the Fund, to merge any
series of the Fund with any other series of the Fund, merge the Fund or any
series of the Fund with another registered investment company, or liquidate or
dissolve the Fund or any series of the Fund.
Required vote. Under the Fund's Trust Instrument, dated September 16, 1992,
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this amendment to the Trust Instrument requires an affirmative vote of a
majority of the votes cast by shares which are entitled to vote, assuming a
quorum is present. Abstentions and broker non-votes (if any) will be counted as
votes present for purposes of determining whether a quorum is present. Assuming
a quorum is present, any shares which do not vote, whether by abstention or
otherwise, will count as votes against the proposed amendment.
If Proposal No. 5 is not approved, the Fund will continue to operate in
accordance with the provisions of its current Trust Instrument.
Recommended vote. The trustees recommend a vote "FOR" Proposal No. 5.
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ADMINISTRATOR
The administrator for the Fund is Fiduciary Management, Inc. Its principal
office is located at 225 East Mason Street, Milwaukee, Wisconsin 53202. The
Fund has no principal underwriter.
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP, 100 East Wisconsin Avenue, Milwaukee, Wisconsin
53202, currently serves as the independent accountants for the Fund.
Representatives of PricewaterhouseCoopers LLP are not expected to attend the
special meeting.
Audit Fees. For the Fund's fiscal year ended June 30, 2001, the aggregate
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fees paid to PricewaterhouseCoopers LLP for professional services rendered
for the audit of the Fund's annual financial statements and review of the Fund's
quarterly financial statements were $16,497.
Financial Information Systems Design and Implementation Fees. The Fund did
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not pay PricewaterhouseCoopers LLP any fees for services related to financial
information systems design and implementation during fiscal 2001.
All Other Fees. For the Fund's fiscal year ended June 30, 2001, the
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aggregate fees paid to PricewaterhouseCoopers LLP for all other professional
services rendered for the Fund, the Adviser and any entity controlling,
controlled by or under common control with the Adviser, were $6,375. These fees
were for preparation of tax returns.
The Fund's audit committee does not consider non-audit services rendered by
PricewaterhouseCoopers LLP to be incompatible with maintaining the independence
of PricewaterhouseCoopers LLP.
RECEIPT OF SHAREHOLDER PROPOSALS
Under the proxy rules of the Securities and Exchange Commission, shareholder
proposals meeting tests contained in those rules may, under certain conditions,
be included in our proxy materials for a particular meeting of shareholders.
One of these conditions relates to the timely receipt by us of any such
proposal. Since we do not have regular annual meetings of shareholders, under
these rules, proposals submitted for inclusion in the proxy materials for a
particular meeting must be received by us a reasonable time before the
solicitation of proxies for the meeting is made. The fact that we receive a
shareholder proposal in a timely manner does not ensure its inclusion in our
proxy materials since there are other requirements in the proxy rules relating
to such inclusion.
OTHER MATTERS
The trustees know of no other matters that may come before the special
meeting. If any other matters properly come before the special meeting, it is
the intention of the persons acting pursuant to the enclosed form of proxy to
vote the shares represented by said proxies in accordance with their best
judgment with respect to such matters.
SOLICITATION
The Fund will bear the cost of soliciting proxies and the cost of the special
meeting. We expect to solicit proxies mainly by mail. Some of our employees
may also solicit proxies personally and by telephone. Also, we will reimburse
brokers and other nominees for their reasonable expenses in communicating with
the persons for whom they hold shares of the Fund.
YOU MAY REQUEST A COPY OF OUR LATEST ANNUAL REPORT AND SEMI-ANNUAL REPORT
SUCCEEDING THE ANNUAL REPORT BY WRITING TO THE HENLOPEN FUND, LONGWOOD CORPORATE
CENTER SOUTH, SUITE 213, 415 MCFARLAN ROAD, KENNETT SQUARE, PENNSYLVANIA 19348,
ATTENTION CORPORATE SECRETARY, OR BY CALLING, TOLL-FREE,
1-800-922-0224. WE WILL FURNISH THESE COPIES FREE OF CHARGE.
THE HENLOPEN FUND
/s/ Bruce V. Vogenitz
Bruce V. Vogenitz
Secretary
Kennett Square, Pennsylvania
August 2, 2002
THE HENLOPEN FUND
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
OF THE HENLOPEN FUND
The undersigned constitutes and appoints Michael L. Hershey and Bruce V.
Vogenitz, and each of them singly, with power of substitution, attorneys and
proxies for and in the name and place of the undersigned to appear and vote with
the same effect as the undersigned at the special meeting of shareholders of The
Henlopen Fund, on September 30, 2002, at 9:00 a.m. (Eastern Daylight Time), at
Longwood Corporate Center South, Suite 213, 415 McFarlan Road, Kennett Square,
Pennsylvania 19348, and at any adjournments or postponements thereof, all shares
of stock of The Henlopen Fund that the undersigned is entitled to vote as
indicated on the reverse side of this card.
This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR EACH PROPOSAL.
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF THE HENLOPEN FUND
Dated: --------------------------, 2002
Signature(s)
The signature on this proxy should correspond exactly with the
name of the shareholder as it appears on the proxy. If stock is
issued in the name of two or more persons, each should sign the
proxy. If a proxy is signed by an administrator, trustee, guardian,
attorney or other fiduciary, please indicate full title as such.
PLEASE FILL IN BOX(ES) AS SHOWN USING BLACK OR BLUE INK OR NUMBER 2 PENCIL. [X]
PLEASE DO NOT USE FINE POINT PENS.
FOR all WITHHOLD
Nominees AUTHORITY
Listed to vote for all
(except as nominees
marked to listed at left
the contrary
at left)
1. To elect five trustees
(01) Robert J. Fahey, Jr.
(02) Michael L. Hershey*
(03) Stephen L. Hershey, M.D.*<F8>
(04) John A. Krol
(05) John H. Remer
* <F8>interested Nominees
(INSTRUCTION: TO WITHHOLD AUTHORITY
TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE(S) NAME(S) IN THE
SPACE PROVIDED BELOW.) [ ] [ ]
FOR AGAINST ABSTAIN
2. To approve the amendment to fundamental
investment restriction No. 1 [ ] [ ] [ ]
3. To approve the amendment to fundamental
investment restriction No. 2 [ ] [ ] [ ]
4. To approve the amendment to fundamental
investment restriction No. 4 [ ] [ ] [ ]
5. To approve the amendment to Section 11.4(b)
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of the Fund's Trust Instrument 5 [ ] [ ] [ ]
In their discretion upon such other business as may properly come before the
meeting.
Please check box at right if you WILL be
attending the meeting. [ ]