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
811-07168
The Henlopen Fund
-----------------
(Exact name of registrant as specified in charter)
Longwood Corporate Center South
415 McFarlan Road, Suite 213
Kennett Square, PA 19348
------------------------
(Address of principal executive offices) (Zip code)
Michael L. Hershey
Longwood Corporate Center South
415 McFarlan Road, Suite 213
----------------------------
Kennett Square, PA 19348
------------------------
(Name and address of agent for service)
(610) 925-0400
--------------
Registrant's telephone number, including area code:
Date of fiscal year end: June 30
Date of reporting period: 06/30/2004
ITEM 1. REPORTS TO STOCKHOLDERS.
- --------------------------------
THE HENLOPEN FUND
ANNUAL REPORT
JUNE 30, 2004
To My Fellow Shareholders:
For the quarter ended June 30, 2004, The Henlopen Fund declined 1.46%.
Annualized returns for the Fund for 1, 5 and 10 years are 52.90%, 9.92%, and
16.51%, respectively. Since our inception on December 2, 1992, the Fund has an
annualized return of 16.02%.
During the June quarter the stock market continued to digest last year's
outsized gains with the major indices posting very modest gains. Investor
psychology was mostly negative for the quarter, as stronger-than-expected
economic news brought fears of higher interest rates and inflation while weaker-
than-expected news brought concerns about the duration of the recovery and
corporate profit growth. After a strong March quarter, The Henlopen Fund
slightly under performed in the June quarter as losses in gaming and metals
stocks combined with a sharp correction across the technology sector to offset
continued strength in energy and tanker stocks.
The market appears conflicted as we enter the usual period of summer doldrums.
Volatile interest rates, higher oil prices, negative headlines out of Iraq,
fears of terrorism and election jitters give plenty of reason for caution.
Helping to offset these issues is an extremely favorable backdrop of low
interest and inflation rates, a strengthening economy with rising employment,
and above-average earnings growth.
Our view is that interest rates will rise slowly and modestly to a level still
very conducive to economic growth. Such a higher, less extreme level of rates
is favorable, and perhaps even desirable relative to the Fairy Land 1% level
that crimps incomes and promotes financial excesses. Inflation is a concern
that lies well down the road, and election jitters are a quadrennial event that
usually resolves itself in positive investment returns. Thus, we believe the
positive backdrop wins out, with Iraq and terrorism adding occasional volatility
to an upwardly biased market. We continue to position the Fund to benefit from
such an environment.
Sincerely yours,
/s/Michael L. Hershey /s/Bruce V. Vogenitz
Michael L. Hershey Bruce V. Vogenitz
President Vice President
MANAGED BY LANDIS ASSOCIATES LLC
WWW.HENLOPENFUND.COM
ONE YEAR COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE HENLOPEN FUND, S&P 500 INDEX AND LIPPER GROWTH FUND INDEX
Date The Henlopen Fund S&P 500 Index Lipper Growth Fund Index
---- ----------------- ------------- ------------------------
6/30/2003 $10,000 $10,000 $10,000
9/30/2003 $12,380 $10,265 $10,299
12/31/2003 $14,412 $11,515 $11,404
3/31/2004 $15,516 $11,710 $11,603
6/30/2004*<F1> $15,290 $11,910 $11,736
*<F1> Ending value represents increases of 52.90%, 19.10% and 17.36%,
respectively.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The Henlopen Fund emphasizes investment in growing businesses. We look for
well-managed companies with competitive products and services capable of
generating strong revenues and earnings. In managing the portfolio, relative
sector weighting and specific capitalization size are of secondary importance to
us. Our rationale for growth investment is to participate for our shareholders
in the capital formation process.
For the year ended June 30, 2004, the Fund increased 52.90%. Over the last 5
years, the Fund has an average annual rate of return of 9.92%. For the last 10
years, the Fund has appreciated at an average annual rate of 16.51%. Since our
inception on December 2, 1992, the Fund has appreciated at an annual rate of
16.02%.
As we came into fiscal year 2004, equity investors were only tentatively sensing
that a bottom might have been established, that broad policy initiatives were
taking hold and reinvestment in the stock market may be in order. Overnight
interest rates at 1% and stimulative tax policies were working their way through
the system sustaining consumer buying power. The much anticipated invasion of
Iraq had commenced, with a generally positive military outcome early on.
Investor attention began to focus on an ever more evident economic recovery.
The September quarter was highlighted by a merger involving our largest holding,
IGEN International, as well as by a broad-based upswing in the stock market led
by technology, financial and retailing stocks. We capitalized on this strength
while maintaining a focus on the energy sector. By year-end 2003, markets had
advanced to further highs, again on broad-based participation; economic recovery
continued to drive investor enthusiasm. Energy stocks joined the aforementioned
technology and financial services sectors boosting The Henlopen Fund to a 44.12%
gain for the first half of our fiscal year.
As we noted in our March quarterly report, early 2004 provided a pause; to
reflect and to assess what had been, to measure the strength and likely course
of the economy. The Henlopen Fund again benefited from energy and financial
services holdings offset slightly by deterioration in the technology sector.
The broad indices continued to mark time during our fiscal fourth quarter as
investors grappled with whether economic growth will accelerate or decelerate
and what role interest rates and oil prices will play in the answer. While
further sector rotation resulted in modest gains for the overall market during
the June quarter, the Fund declined slightly as a sharp downturn in the
technology and gaming sectors offset ongoing strength in energy-related
holdings.
We enter fiscal year 2005 with the market seemingly at an inflection point.
While it is possible that the summer doldrums will keep the indices churning
within a tight range, it is likely that corporate outlooks and government
statistics will soon shed light on the paths of least resistance for the stock
market and the economy. We believe the underpinnings are in place to support
sustained growth in the economy and corporate earnings, and we will continue to
search for attractive investments to benefit from this scenario.
SINCE INCEPTION COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE HENLOPEN FUND, S&P 500 INDEX AND LIPPER GROWTH FUND INDEX
Lipper Growth
Date The Henlopen Fund S&P 500 Index**<F2> Fund Index***<F3>
---- ----------------- ------------------- -----------------
6/30/94 $10,000 $10,000 $10,000
6/30/95 $12,778 $12,600 $12,310
6/30/96 $17,683 $15,901 $14,858
6/30/97 $18,571 $21,419 $18,365
6/30/98 $24,660 $27,909 $23,929
6/30/99 $28,712 $34,244 $29,122
6/30/2000 $44,134 $36,710 $34,247
6/30/2001 $31,793 $31,266 $26,545
6/30/2002 $27,942 $25,642 $20,482
6/30/2003 $30,172 $25,707 $20,755
6/30/2004 $46,133 $30,618 $24,358
AVERAGE ANNUAL TOTAL RETURN
---------------------------
1-Year 5-Year 10-Year
------ ------ -------
52.90% 9.92% 16.51%
Performance data quoted represents past performance; past performance 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.henlopenfund.com. The
graph and the table do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
**<F2> The S&P 500(R) is the Standard & Poor's Composite Index of 500 Stocks,
a widely recognized unmanaged index of common stock prices.
***<F3> The Lipper Growth Fund Index is an index of mutual funds having an
investment objective similar to the Fund's investment objective.
STATEMENT OF NET ASSETS
June 30, 2004
SHARES OR
PRINCIPAL
AMOUNT COST VALUE
- --------- ---- -----
LONG-TERM INVESTMENTS -- 97.1% (A)<F5>
COMMON STOCKS -- 93.4% (A)<F5>
ADVERTISING -- 0.4%
275,000 Modem Media Inc.*<F4> $ 1,731,912 $ 1,446,500
APPAREL & SHOES -- 1.0%
140,000 Quiksilver, Inc.*<F4> 3,301,452 3,333,400
AUTO & TRUCK RELATED -- 1.4%
400,000 Amerigon Inc.*<F4> 2,151,000 2,068,000
150,000 Coast Distribution
System, Inc. 958,493 1,122,000
75,000 Noble International, Ltd. 2,159,704 1,857,750
------------ ------------
5,269,197 5,047,750
BASIC MATERIALS -- 0.9%
85,000 Century Aluminum Co.*<F4> 1,943,941 2,107,150
100,000 Universal Stainless &
Alloy Products, Inc.*<F4> 1,363,100 1,130,000
------------ ------------
3,307,041 3,237,150
BIOTECHNOLOGY -- 2.8%
400,000 Axonyx Inc.*<F4> 2,398,580 2,096,000
200,000 Hollis-Eden
Pharmaceuticals, Inc.*<F4> 2,291,565 2,410,000
30,000 ImClone
Systems Inc.*<F4> 2,016,726 2,573,700
175,000 OrthoLogic Corp.*<F4> 1,223,651 1,517,250
200,000 OXiGENE, Inc.*<F4> 1,821,327 1,260,000
------------ ------------
9,751,849 9,856,950
BUSINESS SERVICES -- 2.4%
100,000 Dycom
Industries, Inc.*<F4> 2,596,660 2,800,000
110,000 Gevity HR, Inc. 932,193 2,880,900
225,000 Marchex, Inc. Cl B*<F4> 2,251,013 2,511,000
------------ ------------
5,779,866 8,191,900
COAL -- 1.0%
100,000 CONSOL Energy Inc. 2,493,880 3,600,000
COMMUNICATIONS -- 5.6%
100,000 Interphase Corp.*<F4> 1,132,340 1,027,000
100,000 Juniper Networks, Inc.*<F4> 2,596,125 2,457,000
200,000 Novatel Wireless, Inc.*<F4> 3,178,200 5,300,000
350,000 Optical Communication
Products, Inc.*<F4> 1,373,520 854,000
150,000 Packeteer, Inc.*<F4> 2,687,765 2,422,500
30,000 QUALCOMM Inc. 1,905,900 2,189,400
300,000 Radyne
ComStream Inc.*<F4> 2,396,677 2,400,000
40,000 Research In
Motion Ltd.*<F4> 1,207,400 2,737,600
------------ ------------
16,477,927 19,387,500
COMMUNICATIONS SERVICES -- 4.1%
60,000 America Movil S.A. de
C.V. ADR Series L 1,455,920 2,182,200
100,000 The DIRECTV
Group, Inc.*<F4> 1,587,294 1,710,000
70,000 IDT Corp. - Cl B*<F4> 1,185,895 1,290,800
50,000 Media General, Inc. 3,449,717 3,211,000
100,000 Motorola, Inc. 1,934,000 1,825,000
275,000 Primus
Telecommunications
Group, Inc.*<F4> 2,511,953 1,397,000
25,000 E. W. Scripps Co. 2,571,072 2,625,000
------------ ------------
14,695,851 14,241,000
CONSTRUCTION SERVICES -- 2.7%
20,000 Centex Corp. 971,349 915,000
75,000 Chicago Bridge & Iron
Co. N.V. - NY Reg 2,143,372 2,088,750
30,000 Hovnanian
Enterprises, Inc.*<F4> 1,212,311 1,041,300
24,000 Lennar Corp. 1,166,249 1,073,280
100,000 Masco Corp. 2,751,683 3,118,000
24,000 Pulte Homes, Inc. 1,032,001 1,248,720
------------ ------------
9,276,965 9,485,050
CONSUMER NON-DURABLES -- 0.6%
30,000 Fortune Brands, Inc. 2,098,528 2,262,900
CONSUMER SERVICES -- 0.9%
200,000 Integrated Alarm
Services Group, Inc.*<F4> 1,756,700 1,080,000
75,000 Priceline.com Inc.*<F4> 1,784,248 2,019,750
------------ ------------
3,540,948 3,099,750
DEFENSE RELATED -- 0.6%
30,000 L-3 Communications
Holdings, Inc. 1,469,070 2,004,000
DISTRIBUTION -- 0.6%
110,000 PC Mall, Inc.*<F4> 1,120,972 2,076,800
ELECTRONICS/EQUIPMENT MANUFACTURING -- 0.8%
200,000 Aeroflex Inc.* 2,767,235 2,866,000
ENERGY/SERVICES -- 2.3%
40,000 Ashland Inc. 1,992,344 2,112,400
75,000 Cimarex Energy Co.*<F4> 2,154,003 2,267,250
100,000 Frontier Oil Corp. 1,916,237 2,119,000
40,000 Questar Corp. 1,478,330 1,545,600
------------ ------------
7,540,914 8,044,250
FINANCIAL SERVICES -- 7.1%
75,000 AmeriCredit Corp.*<F4> 1,171,500 1,464,750
75,000 The Bancorp Bank*<F4> 1,126,376 1,328,250
30,000 Capital One
Financial Corp. 2,141,674 2,051,400
180,000 Commercial Capital
Bancorp, Inc.*<F4> 3,081,651 3,126,600
60,500 Franklin Bank Corp.*<F4> 1,166,995 957,110
100,000 MBNA Corp. 2,542,442 2,579,000
55,000 New Century
Financial Corp. 2,560,987 2,575,100
150,000 Pacific Premier
Bancorp, Inc.*<F4> 1,928,039 1,597,500
225,000 Sanders Morris
Harris Group Inc. 2,898,197 3,318,750
75,000 Signature Bank*<F4> 1,424,415 1,782,000
25,000 SLM Corp. 1,013,750 1,011,250
175,000 Tradestation
Group Inc.*<F4> 1,543,133 1,258,250
15,000 Virginia Commerce
Bancorp, Inc.*<F4> 394,500 442,650
75,000 W Holding
Company, Inc. 1,288,140 1,287,750
------------ ------------
24,281,799 24,780,360
FOOD & BEVERAGES -- 2.5%
135,000 Central European
Distribution Corp.*<F4> 2,845,129 3,497,850
30,000 Diageo PLC -
SP-ADR 1,332,940 1,642,500
70,000 John B. Sanfilippo
& Son, Inc.*<F4> 2,571,781 1,870,400
60,000 Smithfield Foods, Inc.*<F4> 1,285,140 1,764,000
------------ ------------
8,034,990 8,774,750
FURNITURE -- 0.3%
25,000 Stanley Furniture
Company, Inc. 1,089,230 1,052,750
HEALTHCARE PRODUCTS -- 4.3%
65,000 Abaxis, Inc.*<F4> 1,158,015 1,233,700
250,000 Access
Pharmaceuticals, Inc.*<F4> 1,513,841 1,637,500
310,000 Bioveris Corp.*<F4> 5,285,500 2,579,200
250,000 Acacia Research -
CombiMatrix
(Tracking Stock)*<F4> 1,416,570 1,087,500
100,000 Elan Corp. PLC -
SP-ADR*<F4> 2,043,190 2,474,000
120,000 Flamel Technologies
S.A. - SP-ADR*<F4> 3,287,415 2,955,600
55,000 Smith & Nephew
PLC - SP-ADR 2,952,810 3,039,850
------------ ------------
17,657,341 15,007,350
INSURANCE -- 0.6%
130,000 American Safety
Insurance Holdings, Ltd.*<F4> 1,843,465 1,951,300
INTERNET/SOFTWARE/SERVICES -- 1.0%
95,000 FindWhat.com*<F4> 2,364,417 2,198,300
150,000 Rediff.com India
LTD. ADR*<F4> 2,020,978 1,261,500
------------ ------------
4,385,395 3,459,800
LEISURE/ENTERTAINMENT -- 5.0%
110,000 Alliance Gaming Corp.*<F4> 2,867,733 1,887,600
125,000 Aztar Corp.*<F4> 3,111,133 3,500,000
50,000 GTECH Holdings Corp. 2,909,032 2,315,500
75,000 International Game
Technology 2,482,934 2,895,000
100,000 Penn National
Gaming, Inc.*<F4> 2,924,430 3,320,000
300,300 WestCoast
Hospitality Corp.*<F4> 2,002,776 1,606,605
70,000 XM Satellite Radio
Holdings Inc.*<F4> 1,670,445 1,910,300
------------ ------------
17,968,483 17,435,005
METALS -- 2.9%
50,000 Cameco Corp. 2,502,080 2,930,500
140,000 Metal Management, Inc.*<F4> 2,491,099 2,773,400
12,000 Rio Tinto
PLC - SP-ADR 1,270,549 1,176,600
1,000,000 Southern Cross
Resources Inc.*<F4> 1,419,578 787,200
350,000 Western Silver Corp.*<F4> 1,173,129 2,362,500
------------ ------------
8,856,435 10,030,200
MISCELLANEOUS MANUFACTURING -- 4.3%
150,000 Axsys
Technologies, Inc.*<F4> 4,046,085 3,316,500
80,000 Craftmade
International, Inc. 2,029,072 1,584,000
205,000 I.D. Systems, Inc.*<F4> 1,803,832 3,089,350
100,000 IPIX Corp.*<F4> 1,099,200 1,398,000
150,000 Tempur-Pedic
International Inc.*<F4> 2,335,669 2,101,500
100,000 Tyco International Ltd. 2,876,026 3,314,000
------------ ------------
14,189,884 14,803,350
OIL & GAS EXPLORATION/PRODUCTION -- 9.4%
70,000 Burlington
Resources Inc. 2,139,322 2,532,600
250,000 Carrizo Oil
& Gas, Inc.*<F4> 1,941,298 2,552,500
100,000 Chesapeake
Energy Corp. 1,364,370 1,472,000
150,000 Edge Petroleum Corp.*<F4> 1,624,301 2,550,000
60,000 EOG Resources, Inc. 3,256,590 3,582,600
175,000 KCS Energy, Inc.*<F4> 1,483,006 2,331,000
20,000 Murphy Oil Corp. 1,132,206 1,474,000
75,000 Niko Resources Ltd. 2,096,668 2,170,650
65,000 Quicksilver
Resources Inc.*<F4> 2,526,552 4,359,550
200,000 Range Resources Corp. 2,557,700 2,920,000
75,000 Southwestern
Energy Co.*<F4> 1,764,870 2,150,250
80,000 Ultra Petroleum Corp.*<F4> 2,180,524 2,986,400
50,000 Western Gas
Resources, Inc. 1,211,023 1,624,000
------------ ------------
25,278,430 32,705,550
OILFIELD PRODUCTS/SERVICES -- 4.5%
600,000 Grey Wolf, Inc.*<F4> 3,887,199 2,544,000
350,000 Input/Output, Inc.*<F4> 2,515,262 2,901,500
125,000 Lone Star
Technologies, Inc.*<F4> 2,866,375 3,445,000
70,000 Maverick Tube Corp.*<F4> 1,381,773 1,838,200
115,000 Offshore
Logistics, Inc.*<F4> 3,103,082 3,233,800
50,000 Patterson-UTI
Energy, Inc. 2,013,748 1,670,500
------------ ------------
15,767,439 15,633,000
RESTAURANTS -- 0.1%
66,400 Rubio's
Restaurants, Inc.*<F4> 509,165 527,880
RETAILING -- 6.6%
112,500 Aeropostale, Inc.*<F4> 2,580,342 3,027,375
200,000 Circuit City
Stores, Inc. 2,457,080 2,590,000
50,000 Dick's Sporting
Goods, Inc.*<F4> 1,700,595 1,667,500
60,000 Dollar Tree
Stores, Inc.*<F4> 2,123,742 1,645,800
100,000 Genesco Inc.*<F4> 2,425,765 2,363,000
65,000 Jos. A. Bank
Clothiers, Inc.*<F4> 2,256,030 2,040,350
100,000 MarineMax, Inc.*<F4> 2,619,785 2,868,000
400,000 Rite Aid Corp.*<F4> 3,075,398 2,088,000
40,000 The Sports
Authority, Inc.*<F4> 1,682,946 1,436,000
85,000 Stage Stores, Inc.*<F4> 3,299,518 3,201,100
------------ ------------
24,221,201 22,927,125
SEMICONDUCTORS/RELATED -- 5.3%
200,000 Amkor
Technology, Inc.*<F4> 2,503,475 1,636,000
250,000 Applied Micro
Circuits Corp.*<F4> 1,825,075 1,330,000
40,000 ATMI, Inc.*<F4> 1,283,210 1,092,400
175,000 ChipMOS
TECHNOLOGIES
LTD.*<F4> 1,300,206 1,219,750
400,000 Dialog Semiconductor
PLC - ADR*<F4> 1,015,650 1,500,000
80,000 Fairchild
Semiconductor
International, Inc.*<F4> 2,837,849 1,309,600
300,000 Genus, Inc.*<F4> 1,740,999 1,026,000
150,000 Kulicke and Soffa
Industries, Inc.*<F4> 1,846,317 1,644,000
100,000 Pixelworks, Inc.*<F4> 1,394,810 1,532,000
70,000 Rambus Inc.*<F4> 2,399,253 1,243,900
125,000 Semitool, Inc.*<F4> 1,776,337 1,415,000
50,000 Silicon Laboratories Inc.*<F4> 2,705,059 2,317,500
275,000 Siliconware Precision
Industries Co.-ADR*<F4> 1,643,098 1,116,500
------------ ------------
24,271,338 18,382,650
SOFTWARE & RELATED SERVICES -- 6.0%
60,000 Adobe Systems Inc. 2,408,487 2,790,000
75,000 Autodesk, Inc. 2,280,805 3,210,750
369,600 Bitstream Inc.*<F4> 2,487,596 694,848
150,000 Carreker Corp.*<F4> 1,692,345 1,503,000
100,000 Check Point Software
Technologies Ltd.*<F4> 2,288,195 2,699,000
200,000 CyberGuard Corp.*<F4> 1,533,220 1,632,000
300,000 Extended
Systems Inc.*<F4> 2,020,070 1,500,000
150,000 Internet Security
Systems, Inc.*<F4> 2,287,629 2,301,000
300,000 Novell, Inc.*<F4> 1,043,380 2,517,000
340,000 TeleCommunication
Systems, Inc.*<F4> 1,309,375 1,931,200
------------ ------------
19,351,102 20,778,798
TOBACCO -- 0.4%
40,000 British American
Tobacco PLC -
SP-ADR 977,448 1,249,200
TRANSPORTATION -- 5.0%
100,000 Celadon Group, Inc.*<F4> 1,740,706 1,760,000
125,000 General Maritime Corp.*<F4> 2,591,668 3,430,000
125,000 Golar LNG Ltd.*<F4> 2,093,342 1,958,750
80,000 Stelmar Shipping Ltd. 2,359,376 2,652,000
600,000 Stonepath Group, Inc.*<F4> 2,319,385 1,284,000
80,000 Teekay Shipping Corp. 2,643,974 2,990,400
95,000 Tsakos Energy
Navigation Ltd. 1,728,730 3,226,200
------------ ------------
15,477,181 17,301,350
------------ ------------
Total common
stocks 314,783,933 324,981,318
REITS -- 2.9% (A)<F5>
100,000 American Home
Mortgage Investment
Corp. 2,573,487 2,593,000
100,000 Capital Lease
Funding, Inc.*<F4> 1,304,580 1,040,000
100,000 Friedman, Billings,
Ramsey Group, Inc. 1,978,509 1,979,000
125,000 Government Properties
Trust, Inc. 1,658,500 1,306,250
350,000 New York Mortgage
Trust, Inc.*<F4> 3,150,000 3,101,000
------------ ------------
Total REITS 10,665,076 10,019,250
MUTUAL FUNDS -- 0.8% (A)<F5>
125,000 Central Europe and
Russia Fund, Inc.*<F4> 2,981,723 2,670,000
------------ ------------
Total long-term
investments 328,430,732 337,670,568
SHORT-TERM INVESTMENTS -- 0.7% (A)<F5>
VARIABLE RATE DEMAND NOTE -- 0.7%
$2,552,918 U.S. Bank, N.A., 1.11% 2,552,918 2,552,918
------------ ------------
Total short-term
investments 2,552,918 2,552,918
------------ ------------
Total investments $330,983,650 340,223,486
------------
------------
Cash and
receivables, less
liabilities -- 2.2% (A)<F5> 7,600,399
------------
NET ASSETS $347,823,885
------------
------------
Net Asset Value Per Share
(No par value, unlimited
shares authorized), offering
and redemption price
($347,823,885 / 12,561,989
shares outstanding) $ 27.69
------------
------------
*<F4> Non-income producing security.
(a)<F5> Percentages for the various classifications relate to net assets.
ADR American Depository Receipts
N.V. Netherlands Antilles limited liability corporation
NY Reg - New York Registered Shares
The accompanying notes to financial statements are an integral part of this
statement.
THE HENLOPEN FUND
STATEMENT OF OPERATIONS
For the Year Ended June 30, 2004
INCOME:
Dividends $ 868,623
Interest 60,704
-----------
Total income 929,327
-----------
EXPENSES:
Investment management fees 1,904,016
Transfer agent fees 286,518
Administrative services 161,170
Registration fees 74,913
Printing and postage expense 60,327
Custodian fees 52,217
Professional fees 39,257
Board of Trustees fees 30,000
Insurance expense 24,185
Other expenses 5,914
-----------
Total expenses 2,638,517
-----------
NET INVESTMENT LOSS (1,709,190)
-----------
NET REALIZED GAIN ON INVESTMENTS 26,606,550
CHANGE IN UNREALIZED APPRECIATION ON INVESTMENTS 23,126,655
-----------
NET GAIN ON INVESTMENTS 49,733,205
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $48,024,015
-----------
-----------
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended June 30, 2004 and 2003
2004 2003
---- ----
OPERATIONS:
Net investment loss $ (1,709,190) $ (780,808)
Net realized gain (loss) on investments 26,606,550 (29,514,180)
Change in unrealized appreciation on investments 23,126,655 34,345,585
------------ ------------
Net increase in net assets resulting from operations 48,024,015 4,050,597
------------ ------------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (10,464,939 and 4,106,479 shares, respectively) 278,958,856 61,986,610
Cost of shares redeemed (2,202,536 and 5,484,134 shares, respectively) (57,182,968) (83,494,575)
Redemption fees 66,882 97,954
------------ ------------
Net increase (decrease) in net assets derived from Fund share activities 221,842,770 (21,410,011)
------------ ------------
TOTAL INCREASE (DECREASE) 269,866,785 (17,359,414)
NET ASSETS AT THE BEGINNING OF THE YEAR 77,957,100 95,316,514
------------ ------------
NET ASSETS AT THE END OF THE YEAR $347,823,885 $ 77,957,100
------------ ------------
------------ ------------
The accompanying notes to financial statements are an integral part of these
statements.
THE HENLOPEN FUND
FINANCIAL HIGHLIGHTS
(Selected data for each share of the Fund outstanding throughout each year)
FOR THE YEARS ENDED JUNE 30,
----------------------------------------------------------------
2004 2003 2002 2001 2000
---- ---- ---- ---- ----
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 18.13 $ 16.79 $ 19.15 $ 28.39 $ 19.84
Income from investment operations:
Net investment loss (a)<F6> (0.23) (0.16) (0.18) (0.16) (0.25)
Net realized and unrealized
gains (losses) on investments 9.79 1.50 (2.14) (7.85) 10.18
------- ------- ------- ------- -------
Total from investment operations 9.56 1.34 (2.32) (8.01) 9.93
Less distributions:
Dividend from net investment income -- -- -- -- --
Distributions from net realized gains -- -- (0.04) (1.23) (1.38)
------- ------- ------- ------- -------
Total from distributions -- -- (0.04) (1.23) (1.38)
------- ------- ------- ------- -------
Net asset value, end of year $ 27.69 $ 18.13 $ 16.79 $ 19.15 $ 28.39
------- ------- ------- ------- -------
------- ------- ------- ------- -------
TOTAL RETURN 52.73% 7.98% (12.11)% (27.96)% 53.71%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's $) 347,824 77,957 95,317 150,872 240,106
Ratio of expenses to average net assets 1.38% 1.58% 1.39% 1.28% 1.37%
Ratio of net investment loss to average net assets (0.90)% (1.04)% (0.98)% (0.74)% (0.97)%
Portfolio turnover rate 113.27% 90.06% 132.21% 287.66% 156.85%
(a)<F6> Net investment loss per share is calculated using average shares
outstanding.
The accompanying notes to financial statements are an integral part of this
statement.
NOTES TO FINANCIAL STATEMENTS
June 30, 2004
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES --
The following is a summary of significant accounting policies of The
Henlopen Fund (the "Fund"), which is organized as a Delaware Business Trust
and is registered as a diversified open-end management company under the
Investment Company Act of 1940, as amended. The Fund commenced operations
on December 2, 1992. The investment objective of the Fund is long-term
capital appreciation.
(a) Each security, excluding short-term investments, is valued at the
last sale price reported by the principal security exchange on which
the issue is traded. Securities that are traded on the Nasdaq National
Market or the Nasdaq SmallCap Market are valued at the Nasdaq Office
Closing Price, or if no sale is reported, the latest bid price.
Securities which are traded over-the-counter are valued at the latest
bid price. Securities for which quotations are not readily available
are valued at fair value as determined by the investment adviser under
the supervision of the Board of Trustees. Short-term investments with
maturities of 60 days or less are valued at amortized cost which
approximates market value. For financial reporting purposes, investment
transactions are recorded on trade date.
(b) Net realized gains and losses on sales of securities are computed
on the identified cost basis.
(c) Dividend income is recorded on the ex-dividend date. Interest
income is recorded on the accrual basis.
(d) The Fund has investments in short-term variable rate demand notes,
which are unsecured instruments. The Fund may be susceptible to credit
risk with respect to these notes to the extent the issuer defaults on
its payment obligation. The Fund's policy is to monitor the
creditworthiness of the issuer and nonperformance by these
counterparties is not anticipated.
(e) Accounting principles generally accepted in the United States of
America ("GAAP") require that permanent differences between income for
financial reporting and tax purposes be reclassified in the capital
accounts.
(f) The preparation of financial statements in conformity with GAAP
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 reporting period.
Actual results could differ from these estimates.
(g) Provision has not been made for Federal income taxes since the
Fund has elected to be taxed as a "regulated investment company" and
intends to distribute substantially all net investment company taxable
income and net capital gains to its shareholders and otherwise comply
with the provisions of the Internal Revenue Code applicable to
regulated investment companies.
(h) The Fund imposes a 1.0% redemption fee on the value of shares
redeemed less than 30 days after purchase. The redemption fee will not
apply to shares purchased through reinvested distributions (dividends
and capital gains), shares held in retirement plans or through the
systematic withdrawal plan. The redemption fee is designed to
discourage short-term trading and any proceeds of the fee will be
credited to paid in capital.
(2) INVESTMENT ADVISER AND MANAGEMENT AGREEMENT AND TRANSACTIONS WITH RELATED
PARTIES --
The Fund has a management agreement with Landis Associates LLC (the
"Adviser"), with whom certain officers and trustees of the Fund are
affiliated, to serve as investment adviser and manager. Under the terms of
the agreement, the Fund will pay the Adviser a monthly management fee at
the annual rate of 1% on the daily net assets of the Fund.
The Fund has an administrative agreement with Fiduciary Management, Inc.
("FMI"), with whom an officer of the Fund is affiliated, to supervise all
aspects of the Fund's operations except those performed by the Adviser.
Under the terms of the agreement, the Fund will pay FMI a monthly
administrative fee at the annual rate of 0.2% on the first $30,000,000 of
the daily net assets of the Fund, 0.1% on the daily net assets of the Fund
on the next $30,000,000 and 0.05% on the daily net assets of the Fund over
$60,000,000.
In the normal course of business the Fund enters into contracts with
service providers that contain general indemnification clauses. The Fund's
maximum exposure under these arrangements is unknown as this would involve
future claims that may be made against the Fund that have not yet occurred.
However, based on experience, the Fund expects the risk of loss to be
remote.
(3) DISTRIBUTIONS TO SHAREHOLDERS --
Net investment income and net realized gains, if any, are distributed to
shareholders at least annually.
(4) INVESTMENT TRANSACTIONS --
For the year ended June 30, 2004, purchases and proceeds of sales of
investment securities (excluding short-term securities) were $423,020,300
and $211,069,958, respectively.
(5) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES --
As of June 30, 2004, liabilities of the Fund included the following:
Payable to brokers for investments purchased $ 1,299,261
Payable to the Adviser for management fees 222,695
Payable to FMIfor administrative fees 18,541
Other liabilities 127,510
(6) SOURCES OF NET ASSETS --
As of June 30, 2004 the sources of net assets were as follows:
Fund shares issued and outstanding $348,725,252
Net unrealized appreciation on investments 9,239,836
Accumulated net realized loss (8,951,832)
Accumulated net investment loss (1,189,371)
------------
$347,823,885
------------
------------
(7) INCOME TAX INFORMATION --
The following information for the Fund is presented on an income tax basis
as of June 30, 2004:
GROSS GROSS NET UNREALIZED DISTRIBUTABLE DISTRIBUTABLE
COST OF UNREALIZED UNREALIZED APPRECIATION ORDINARY LONG-TERM
INVESTMENTS APPRECIATION DEPRECIATION ON INVESTMENTS INCOME CAPITAL GAINS
----------- ------------ ------------ -------------- ------------- -------------
$332,181,527 $40,228,957 $32,186,998 $8,041,959 $ -- $ --
The difference, if any, between the cost amount for financial statement and
federal income tax purposes is due primarily to timing differences in
recognizing certain gains and losses in security transactions and for mark
to market for Passive Foreign Investment Companies ("PFICs").
The tax components of dividends paid during the years ended June 30, 2004
and 2003, capital loss carryovers, which may be used to offset future
capital gains, subject to Internal Revenue Code limitations, (expiring in
2011), as of June 30, 2004, and tax basis post-October losses as of June
30, 2004, which are not recognized for tax purposes until the first day of
the following fiscal year are:
JUNE 30, 2004 JUNE 30, 2003
----------------------------------------------------------------- --------------------------------
ORDINARY LONG -TERM NET CAPITAL ORDINARY LONG-TERM
INCOME CAPITAL GAINS LOSS POST-OCTOBER INCOME CAPITAL GAINS
DISTRIBUTIONS DISTRIBUTIONS CARRYOVERS LOSSES DISTRIBUTIONS DISTRIBUTIONS
------------- ------------- ----------- ------------ ------------- -------------
$ -- $ -- $8,943,326 $ -- $ -- $ --
The Fund has utilized $14,631,388 of its post-October losses from the prior
year to decrease current year net capital gains.
The Fund has also utilized $11,975,664 of its capital loss carryovers
during the year ended June 30, 2004.
Since there were no ordinary distributions paid for the year ended June 30,
2004, there were no distributions designated as qualifying for the
dividends received deduction for corporate shareholders nor as qualified
dividend income under the Jobs and Growth Tax Relief Act of 2003.
(8) OTHER --
On June 22, 2004 the Securities and Exchange Commission filed a civil
action in the United States District Court for the Eastern District of
Pennsylvania against, among others, the Fund's investment adviser, Landis
Associates LLC, and its principal, Michael L. Hershey, the President of the
Fund and a member of the Fund's Board of Trustees. The complaint in the
civil action alleges that Mr. Hershey and Landis Associates LLC violated
certain federal securities laws by breaching their fiduciary duty to a
wealthy private client in connection with investments made by the client in
a private company between 1998 and 2001. The complaint seeks an injunction
against Mr. Hershey and Landis Associates LLC for violating the federal
securities laws it alleges were violated in connection with such private
client's investments.
The allegations raised in the complaint do not involve the Fund nor the
type of investments which the Fund makes. If the court issues the
injunction requested by the Securities and Exchange Commission, Landis
Associates LLC would no longer be eligible to serve as the Fund's
investment adviser and Mr. Hershey would no longer be eligible to serve as
an officer or trustee of the Fund. Landis Associates LLC and Mr. Hershey
have advised the Fund that they deny all allegations of wrongdoing, intend
to vigorously contest the allegations raised by the Securities and Exchange
Commission and believe they will be successful in their defense.
(PRICEWATERHOUSECOOPERS LOGO)
100 East Wisconsin AvenueTelephone 414 212 1600
Suite 1500
Milwaukee, WI 53202
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Trustees
of The Henlopen Fund
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
The Henlopen Fund (the "Fund") at June 30, 2004, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended and the financial highlights for each of the five years
in the period then ended, in conformity with accounting principles generally
accepted in the United States of America. 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 standards of the Public
Company Accounting Oversight Board (United States), 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, 2004 by correspondence with the custodian and brokers, provide a reasonable
basis for our opinion.
/s/PricewaterhouseCoopers LLP
August 6, 2004
THE HENLOPEN FUND
TRUSTEES AND OFFICERS
(Unaudited)
# of Portfolios Other
Term of in Fund Directorships
Position(s) Office and Complex held by
Held with Length of Principal Occupation(s) Overseen Trustee
Name, Address and Age the Fund Time Served During Past Five Years by Trustee or Officer
- --------------------- ----------- ----------- ----------------------- --------------- -------------
"DISINTERESTED PERSONS" OF THE FUND
Howard E. Cosgrove Trustee Indefinite, Retired; prior to August 1, 2000 1 NSR
c/o Conectiv, Inc. Trustee since Chairman and Chief Executive Officer Energy
800 King Street 2002 of Conectiv, Inc., a regulated power
Wilmington, DE 19899 delivery and electric product/energy
Age: 61 merchant company.
Robert J. Fahey, Jr. Trustee Indefinite, Executive Vice President 1 None
1800 JFK Boulevard Trustee since CB Richard Ellis Investment
Philadelphia, PA 19103 1992 Properties - Institutional Group.
Age: 46
John H. Remer Trustee Indefinite, Retired. 1 None
c/o Landis Associates LLC Trustee since
Longwood Corporate 2002
Center South, Suite 213
415 McFarlan Road
Kennett Square, PA 19348
Age: 79
"INTERESTED PERSONS" OF THE FUND*<F7>
Michael L. Hershey Trustee Indefinite, Chairman, President, Treasurer and 1 None
Longwood Corporate Trustee since Secretary of Landis Associates LLC.
Center South, Suite 213 1992
415 McFarlan Road President One year term,
Kennett Square, PA 19348 President since
Age: 65 1992
Stephen L. Hershey, M.D. Trustee Indefinite, Orthopaedic surgeon. 1 None
4745 Stanton-Ogleton Road Trustee since
Suite 225 1992
Newark, DE 19713
Age: 63
Bruce V. Vogenitz, C.F.A. Vice-President One year term, Vice President of Landis Associates N/A None
Longwood Corporate and Secretary Vice President LLC.
Center South, Suite 213 and Secretary
415 McFarlan Road since 1998
Kennett Square, PA 19348
Age: 39
Camille F. Wildes Vice-President One year term, Vice President of Fiduciary N/A None
c/o Fiduciary Treasurer Vice President Management,Inc.
Management, Inc. since 1994 and
100 East Wisconsin Avenue Treasurer since 2001
Milwaukee, WI 53202
Age: 51
*<F7> Messrs. Michael L. Hershey and Vogenitz are "interested persons" of the
Fund because they are officers of the Fund and the Adviser. Dr. Stephen
L. Hershey is an "interested person" of the Fund because he is the
brother of Mr. Michael L. Hershey. Ms. Wildes is an "interested person"
of the Fund because she is an officer of the Fund and Fiduciary
Management, Inc. the Fund's administrator.
For additional information about the Trustees and Officers or for a description
of the policies and procedures that the Fund uses to determine how to vote
proxies relating to portfolio securities, please call (866) 880-0032 and request
a Statement of Additional Information. One will be mailed to you free of charge.
The Statement of Additional Information is also available on the website of the
Securities and Exchange Commission at http://www.sec.gov. After August 31, 2004
information on how the Fund voted proxies relating to portfolio securities
during the twelve month period ending June 30, 2004 will be available at the
Fund's website at http://www.henlopenfund.com or the website of the Securities
and Exchange Commission.
LANDIS ASSOCIATES LLC
Investment Adviser
U.S. BANCORP FUND SERVICES, LLC
Transfer Agent and
Dividend Disbursing Agent
U.S. BANK, N.A.
Custodian
PRICEWATERHOUSECOOPERS LLP
Independent Registered Public Accounting Firm
FOLEY & LARDNER
Legal Counsel
THE HENLOPEN FUND
LONGWOOD CORPORATE CENTER SOUTH
415 MCFARLAN ROAD, SUITE 213
KENNETT SQUARE, PENNSYLVANIA 19348
(610-925-0400)
WWW.HENLOPENFUND.COM
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of The Henlopen Fund unless accompanied or preceded by
the Fund's current prospectus.
ITEM 2. CODE OF ETHICS.
- -----------------------
Registrant has adopted a code of ethics. See attached Exhibit 11(a).
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
- ----------------------------------------
Registrant's Board of Directors has determined that Mr. Howard Cosgrove, a
member of its audit committee, is an audit committee financial expert. Mr.
Cosgrove is "independent" as such term is defined in Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
- -----------------------------------------------
(a) Audit Fees
$13,350 (FY 2004) and $12,700 (FY 2003) are the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the principal
accountant to the registrant for the audit of the registrant's annual financial
statements or services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements for those fiscal
years.
(b) Audit-Related Fees
There were no fees billed in each of the last two fiscal years for Audit-Related
Fees.
(c) Tax Fees
$4,300 (FY 2004) and $4,100 (FY 2003) are the aggregate fees billed in each of
the last two fiscal years for professional services rendered by the principal
accountant to the registrant for tax compliance, tax advice, tax planning and
tax return preparation.
There were no fees billed in each of the last two fiscal years for professional
services rendered by the principal accountant to registrant's investment adviser
for tax compliance, tax advice and tax planning that were required to be
approved by the audit committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X.
(d) All Other Fees
There were no fees billed in each of the last two fiscal years for products and
services provided by the principal accountant to the registrant, other than the
services reported in paragraphs (a) - (c) of this Item 4.
There were no fees billed in each of the last two fiscal years for products and
services provided by the principal accountant to registrant's investment
adviser, which were required to be approved by the audit committee pursuant to
paragraph (c)(7)(ii) or Rule 2-01 or Regulation S-X.
(e) (1) None
(e) (2) None
(f) Not applicable.
(g) See the tax fees disclosed in paragraph (c) of this Item 4.
(h) Not applicable, as no non-audit services were provided to registrant's
investment adviser.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
- ----------------------------------------------
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
- --------------------------------
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
- -------------------------------------------------------------------------
MANAGEMENT INVESTMENT COMPANIES
- -------------------------------
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
- --------------------------------------------------------------------------
COMPANY AND AFFILIATED PURCHASERS.
- ----------------------------------
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
- ------------------------------------------------------------
None.
ITEM 10. CONTROLS AND PROCEDURES.
- ---------------------------------
(a) The disclosure controls and procedures of The Henlopen Fund are
periodically evaluated. As of August 10, 2004, the date of the last
evaluation, we concluded that our disclosure controls and procedures are
adequate.
(b) The internal controls of The Henlopen Fund are periodically evaluated.
Since, August 10, 2004, the date of the last evaluation, there have been no
significant changes in The Henlopen Fund's internal controls or in other
factors that could have had a significant effect on such controls. There
have also been no significant deficiencies or material weaknesses
identified since the last evaluation that required any corrective action.
ITEM 11. EXHIBITS.
- -----------------
(a) Any code of ethics or amendment thereto. Filed herewith.
(b) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
(c) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
SIGNATURES
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.
The Henlopen Fund
-----------------
Registrant
By /s/ Michael L. Hershey
-----------------------------------------------
Michael L. Hershey, Principal Executive Officer
Date 9-1-04
----------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
The Henlopen Fund
-----------------
Registrant
By /s/ Michael L. Hershey
-----------------------------------------------
Michael L. Hershey, Principal Financial Officer
Date 9-1-04
----------------------------------