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
Suite 213
415 McFarlan Road
Kennett Square, PA 19348
(Address of principal executive offices) (Zip code)
Michael L. Hershey
Landis Associates LLC
Longwood Corporate Center South
Suite 213
415 McFarlan Road
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: 12/31/2004
ITEM 1. REPORTS TO STOCKHOLDERS.
- --------------------------------
THE HENLOPEN FUND
SEMIANNUAL REPORT
DECEMBER 31, 2004
To My Fellow Shareholders:
For the quarter ended December 31, 2004, The Henlopen Fund increased 12.39%.
Annualized returns for the Fund for 1, 5 and 10 years are 16.78%, 4.58%, and
17.14%, respectively. Since our inception on December 2, 1992, the Fund has an
annualized return of 16.23%.
The December quarter saw a broad-based rally that lifted the major indices into
positive territory for the year. Whether it was relief over a clean conclusion
to a divisive presidential election or normal seasonal bias, investor sentiment
turned decidedly positive during the quarter. The breadth of the rally was
evidenced throughout The Henlopen Fund portfolio with especially strong gains
found among the Fund's holdings in the gaming, tanker, homebuilding and
financial sectors. The Fund continues to be positioned to benefit from our
belief that energy prices are in the midst of a secular upturn but that the
economy, being less impacted by higher energy costs than in past decades, will
show continued growth.
A rise in speculative behavior in the quarter and a disturbingly weak "Santa
Claus rally" at year-end raises a near-term caution flag, as does the knowledge
that both the bull market and the economic recovery are both one year older.
However, the bigger picture is that we exit the year with much the same
backdrop as we entered it: Interest rates are low and expected to rise at a
"measured" pace; inflation is occasionally spoken about but rarely seen; and
the economy continues to grow at a respectable and non-threatening rate. This
environment has proven favorable for our stock-picking style in the past, and
we will continue to work hard to benefit our current shareholders.
On December 29, 2004, our Board of Trustees declared an income dividend of
$0.01002 per share, payable December 30, 2004, to shareholders of record on
December 28, 2004.
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
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT*<F1> IN
The Henlopen Fund, S&P 500 Index and Lipper Growth Fund Index
Lipper Growth
S&P 500 Fund
The Henlopen Fund Index***<F3> Index****<F4>
12/2/92 $10,000 $10,000 $10,000
12/31/92 $10,010 $10,162 $10,204
12/31/93 $12,999 $11,179 $11,426
12/31/94 $12,644 $11,330 $11,246
12/31/95 $17,453 $15,574 $14,918
12/31/96 $21,182 $19,141 $17,527
12/31/97 $25,971 $25,524 $22,450
12/31/98 $30,323 $32,818 $28,216
12/31/99 $49,163 $39,820 $36,100
12/31/00 $40,043 $36,192 $32,170
12/31/01 $40,342 $31,906 $26,389
12/31/02 $31,926 $24,853 $20,004
12/31/03 $52,672 $31,987 $25,652
12/31/04**<F2> $61,511 $35,464 $28,024
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 does not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or the redemption of Fund shares.
*<F1> Assumes equal $10,000 investments made on inception date of
December 2, 1992.
**<F2> Ending values represent compounded annualized returns of 16.23%,
11.05%, and 8.91% for The Henlopen Fund, S&P 500 Index and Lipper
Growth Fund Index, respectively.
***<F3> The S&P 500(R) is the Standard & Poor's Composite Index of 500
stocks, a widely recognized unmanaged index of common stock prices.
****<F4> The Lipper Growth Fund Index is an index of mutual funds having an
investment objective similar to the Fund's investment objective.
COST DISCUSSION
As a shareholder of the Fund you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments, reinvested
dividends, or other distributions; redemption fees; and exchange fees; and (2)
ongoing costs, including management fees and other Fund expenses. This example
is intended to help you understand your ongoing costs (in dollars) of investing
in The Henlopen Fund and to compare these costs with the ongoing costs of
investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period from June 30, 2004 through December 31,
2004.
INDUSTRY SECTORS AS OF DECEMBER 31, 2004
Energy Related 23.7%
Technology 11.9%
Financial 10.8%
Raw/Intermediate Materials 8.6%
Miscellaneous Manufacturing 7.4%
Construction Services 6.6%
Leisure/Entertainment 5.5%
Healthcare 5.6%
Business Services 4.4%
REITS 3.5%
Cash -0.5%
Other 12.5%
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
In addition to the costs highlighted and described below, the only Fund
transaction costs you might currently incur would be wire fees ($15 per wire),
if you choose to have proceeds from a redemption wired to your bank account
instead of receiving a check. Additionally, U.S. Bank charges an annual
processing fee ($15) if you maintain an IRA account with the Fund. To determine
your total costs of investing in the Fund, you would need to add any applicable
wire or IRA processing fees you've incurred during the period to the costs
provided in the example at the end of this article.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption or exchange fees. Therefore, the second line of the
table is useful in comparing ongoing costs only, and will not help you determine
the relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would have been higher.
Beginning Ending Expenses Paid
Account Account During Period*<F5>
Value 6/30/04 Value 12/31/04 6/30/04-12/31/04
------------- -------------- ----------------
The Henlopen Fund Actual $1,000 $1,000.00 $1,100.80 $6.72
Hypothetical (5% return before expenses) $1,000.00 $1,025.00 $6.48
*<F5> Expenses are equal to the Fund's annualized expense ratio of 1.27%,
multiplied by the average account value over the period, multiplied by
184/365 (to reflect the one-half year period between June 30, 2004 and
December 31, 2004).
STATEMENT OF NET ASSETS
December 31, 2004 (Unaudited)
SHARES COST VALUE
------ ---- -----
LONG-TERM INVESTMENTS -- 100.5% (A)<F7>
COMMON STOCKS -- 97.0% (A)<F7>
AEROSPACE & DEFENSE -- 0.5%
50,000 ARGON ST, Inc.*<F6> $ 1,812,995 $ 1,772,500
AIRLINES & RELATED -- 0.4%
200,000 World Airways, Inc.*<F6> 1,455,280 1,270,000
AUTO & TRUCK RELATED -- 1.5%
400,000 Amerigon Inc.*<F6> 2,151,000 1,495,200
150,000 Coast Distribution System, Inc. 958,493 1,102,500
150,000 Rush Enterprises, Inc.*<F6> 2,395,680 2,434,500
------------ ------------
5,505,173 5,032,200
BASIC MATERIALS -- 2.5%
100,000 Cemex S.A. de C.V. SP-ADR 3,146,250 3,642,000
150,000 Oregon Steel Mills, Inc.*<F6> 3,001,755 3,043,500
100,000 Universal Stainless & Alloy Products, Inc.*<F6> 1,363,100 1,485,200
------------ ------------
7,511,105 8,170,700
BIOTECHNOLOGY -- 1.4%
400,000 Axonyx Inc.*<F6> 2,398,580 2,480,000
170,700 OrthoLogic Corp.*<F6> 1,187,349 1,066,875
200,000 OXiGENE, Inc.*<F6> 1,821,327 1,100,000
------------ ------------
5,407,256 4,646,875
BUSINESS SERVICES -- 4.4%
200,000 Gevity HR, Inc. 2,577,387 4,112,000
175,000 Infocrossing, Inc.*<F6> 3,032,067 2,962,750
250,000 Marchex, Inc. Cl B*<F6> 2,636,126 5,250,000
65,000 ProQuest Co.*<F6> 2,042,638 1,930,500
------------ ------------
10,288,218 14,255,250
COAL -- 2.3%
100,000 CONSOL Energy Inc. 3,432,910 4,105,000
100,000 Massey Energy Co. 3,450,130 3,495,000
------------ ------------
6,883,040 7,600,000
COMMUNICATIONS -- 2.1%
350,000 Optical Communication Products, Inc.*<F6> 1,373,520 875,000
250,000 Packeteer, Inc.*<F6> 3,518,665 3,612,500
300,000 Radyne ComStream Inc.*<F6> 2,396,676 2,241,000
------------ ------------
7,288,861 6,728,500
COMMUNICATIONS SERVICES -- 1.4%
85,000 America Movil S.A. de C.V. ADR Series L 2,367,050 4,449,750
COMPUTER SYSTEMS -- 1.0%
75,000 Dell Inc.*<F6> 3,012,600 3,160,500
CONSTRUCTION SERVICES -- 6.6%
100,000 Chicago Bridge & Iron Co. N.V. - NYS 3,699,840 4,000,000
125,000 Comstock Homebuilding Companies, Inc.*<F6> 2,393,944 2,721,250
25,000 KB Home, Inc. 2,370,565 2,610,000
50,000 Lennar Corp. 2,483,865 2,834,000
100,000 Masco Corp. 2,751,682 3,653,000
35,000 Pulte Homes, Inc. 1,992,953 2,233,000
100,000 Walter Industries, Inc. 3,325,180 3,373,000
------------ ------------
19,018,029 21,424,250
ENERGY/SERVICES -- 6.6%
60,000 Ashland Inc. 3,537,702 3,502,800
40,000 Cheniere Energy, Inc.*<F6> 2,050,528 2,548,000
200,000 Energy Conversion Devices, Inc.*<F6> 3,445,412 3,864,000
100,000 Giant Industries, Inc.*<F6> 2,427,560 2,651,000
125,000 InterOil Corp.*<F6> 3,164,957 4,730,000
80,000 Questar Corp. 3,029,030 4,076,800
------------ ------------
17,655,189 21,372,600
FINANCIAL SERVICES -- 10.2%
175,000 ASTA Funding, Inc. 3,350,015 4,697,000
100,000 Franklin Bank Corp.*<F6> 1,842,311 1,825,000
90,000 Main Street Banks, Inc. 2,845,960 3,143,700
75,000 North Fork Bancorporation, Inc. 2,191,090 2,163,750
185,000 Pacific Premier Bancorp, Inc.*<F6> 2,420,688 2,453,100
250,000 Sanders Morris Harris Group Inc. 3,219,021 4,452,500
47,500 Shore Bancshares, Inc. 1,596,065 1,723,775
100,000 Texas Capital Bancshares, Inc.*<F6> 1,739,427 2,162,000
125,000 Texas United Bancshares, Inc. 2,148,412 2,468,750
175,000 Tradestation Group Inc.*<F6> 1,543,133 1,228,500
60,000 Wachovia Corp. 3,082,698 3,156,000
60,000 WSFS Financial Corp. 3,398,755 3,619,200
------------ ------------
29,377,575 33,093,275
FURNITURE -- 0.8%
60,000 Stanley Furniture Company, Inc. 2,652,480 2,697,000
HEALTHCARE PRODUCTS -- 4.2%
250,000 Access Pharmaceuticals, Inc.*<F6> 1,513,841 885,000
310,000 Bioveris Corp.*<F6> 5,285,500 2,266,100
100,000 Cantel Medical Corp.*<F6> 3,383,565 3,742,000
300,000 Neurometrix Inc.*<F6> 2,400,000 3,525,000
65,000 Smith & Nephew PLC - SP-ADR 3,525,342 3,364,400
------------ ------------
16,108,248 13,782,500
INSURANCE -- 0.6%
130,000 American Safety Insurance Holdings, Ltd.*<F6> 1,843,465 2,124,200
INTERNET/SOFTWARE/SERVICES -- 1.4%
30,000 Overstock.com, Inc.*<F6> 2,265,138 2,070,000
150,000 Rediff.com India LTD. ADR*<F6> 2,020,977 1,273,500
450,000 VA Software Corp.*<F6> 1,255,718 1,125,000
------------ ------------
5,541,833 4,468,500
LEISURE/ENTERTAINMENT -- 5.5%
175,000 Aztar Corp.*<F6> 4,498,403 6,111,000
90,000 Gaylord Entertainment Co.*<F6> 3,392,226 3,737,700
125,000 Isle of Capri Casinos, Inc.*<F6> 3,113,775 3,206,250
50,000 Penn National Gaming, Inc.*<F6> 2,631,090 3,027,500
300,300 WestCoast Hospitality Corp.*<F6> 2,002,776 1,831,830
------------ ------------
15,638,270 17,914,280
METALS -- 3.8%
45,000 Cameco Corp.*<F6> 2,501,443 4,718,700
150,000 Metal Management, Inc. 3,516,645 4,030,500
738,000 Southern Cross Resources Inc.*<F6> 1,040,988 374,609
350,000 Western Silver Corp.*<F6> 1,173,129 3,164,000
------------ ------------
8,232,205 12,287,809
MISCELLANEOUS MANUFACTURING -- 7.4%
225,000 American Technology Corp.*<F6> 2,225,913 2,486,250
50,000 Ampex Corp.*<F6> 2,113,738 1,950,000
225,000 Axsys Technologies, Inc.*<F6> 4,046,085 3,955,500
186,600 I.D. Systems, Inc.*<F6> 1,638,008 3,481,956
80,000 Manitowoc Company, Inc. 2,983,475 3,012,000
100,000 Paxar Corp.*<F6> 2,252,941 2,217,000
100,000 Taser International, Inc.*<F6> 3,044,950 3,159,000
150,000 Tempur-Pedic International Inc.*<F6> 2,335,669 3,180,000
33,334 TurboChef Technologies, Inc.*<F6> 902,940 762,682
------------ ------------
21,543,719 24,204,388
OIL & GAS EXPLORATION/PRODUCTION -- 14.6%
150,000 ATP Oil & Gas Corp.*<F6> 2,395,400 2,787,000
90,000 Burlington Resources Inc. 2,878,354 3,915,000
75,000 Comstock Resources, Inc.*<F6> 1,696,882 1,653,750
100,000 Contango Oil & Gas Co.*<F6> 750,762 724,000
100,000 Edge Petroleum Corp.*<F6> 1,075,088 1,458,000
50,000 EOG Resources, Inc. 2,713,825 3,568,000
175,000 KCS Energy, Inc.*<F6> 1,483,006 2,586,500
100,000 McMoRan Exploration Co.*<F6> 1,492,010 1,870,000
75,000 Niko Resources Ltd. 2,096,668 3,150,075
50,000 Noble Energy, Inc. 2,702,440 3,083,000
75,000 Plains Exploration & Production Co.*<F6> 1,711,560 1,950,000
100,000 Quicksilver Resources Inc.*<F6> 3,128,612 3,678,000
200,000 Range Resources Corp. 2,557,700 4,092,000
80,000 Southwestern Energy Co.*<F6> 1,934,185 4,055,200
90,000 Suncor Energy, Inc. 2,837,790 3,186,000
75,000 Ultra Petroleum Corp.*<F6> 2,040,731 3,609,750
60,000 XTO Energy, Inc. 1,976,190 2,122,800
------------ ------------
35,471,203 47,489,075
OILFIELD PRODUCTS/SERVICES -- 2.5%
600,000 Grey Wolf, Inc.*<F6> 3,887,199 3,162,000
100,000 Patterson-UTI Energy, Inc. 2,013,748 1,945,000
300,000 Pioneer Drilling Co.*<F6> 2,094,327 3,027,000
------------ ------------
7,995,274 8,134,000
PAPER PRODUCTS -- 0.9%
75,000 Georgia-Pacific Corp. 2,851,883 2,811,000
RESTAURANTS -- 0.9%
250,000 Rubio's Restaurants, Inc.*<F6> 2,147,740 3,032,500
RETAILING -- 2.7%
60,000 Home Depot, Inc. 2,541,850 2,564,400
100,000 Krispy Kreme Doughnuts, Inc.*<F6> 1,522,310 1,260,000
100,000 MarineMax, Inc.*<F6> 2,619,785 2,976,000
50,000 Tractor Supply Co.*<F6> 1,802,806 1,860,500
------------ ------------
8,486,751 8,660,900
SEMICONDUCTORS/RELATED -- 3.1%
100,000 Advanced Micro Devices, Inc.*<F6> 2,100,550 2,202,000
175,000 ChipMOS TECHNOLOGIES LTD.*<F6> 1,300,206 1,114,750
400,000 Microtune, Inc.*<F6> 2,499,720 2,444,000
70,000 Rambus Inc.*<F6> 2,399,253 1,610,000
175,000 Semitool, Inc.*<F6> 2,247,925 1,624,000
302,500 Siliconware Precision Industries Co. - ADR 1,643,098 1,240,250
------------ ------------
12,190,752 10,235,000
SOFTWARE & RELATED SERVICES -- 4.3%
500,000 BindView Development Corp.*<F6> 2,092,802 2,175,000
150,000 Carreker Corp.*<F6> 1,692,345 1,290,000
85,000 CheckFree Corp.*<F6> 3,150,264 3,236,800
125,000 Click Commerce, Inc.*<F6> 1,710,058 2,008,750
500,000 Novell, Inc.*<F6> 2,454,555 3,375,000
250,000 Phase Forward Inc.*<F6> 1,984,043 2,042,500
------------ ------------
13,084,067 14,128,050
SPECIALTY CHEMICALS -- 1.1%
60,000 Air Products and Chemicals, Inc. 3,326,465 3,478,200
TOBACCO -- 0.9%
50,000 Altria Group, Inc. 2,977,500 3,055,000
TRANSPORTATION -- 1.4%
125,000 Celadon Group, Inc.*<F6> 2,192,833 2,781,250
125,000 Golar LNG Ltd.*<F6> 2,093,342 1,861,250
------------ ------------
4,286,175 4,642,500
------------ ------------
Total common stocks 281,960,401 316,121,302
REITS -- 3.5% (A)<F7>
150,000 Friedman, Billings, Ramsey Group, Inc. 3,025,155 2,908,500
70,000 New Century Financial Corp. 4,158,297 4,473,700
350,000 New York Mortgage Trust, Inc. 3,150,000 3,920,000
------------ ------------
Total REITS 10,333,452 11,302,200
------------ ------------
Total long-term investments 292,293,853 327,423,502
SHORT-TERM INVESTMENTS -- 1.4% (A)<F7>
VARIABLE RATE DEMAND NOTE -- 1.4%
$4,762,370 U.S. Bank, N.A., 2.17% 4,762,370 4,762,370
------------ ------------
Total short-term investments 4,762,370 4,762,370
------------ ------------
Total investments $297,056,223 332,185,872
------------
------------
Liabilities, less cash and receivables --
(1.9%) (A)<F7> (6,307,214)
------------
NET ASSETS $325,878,658
------------
------------
Net Asset Value Per Share (No par value, unlimited
shares authorized), offering and redemption price
($325,878,658 / 10,693,802 shares outstanding) $ 30.47
------------
------------
*<F6> Non-income producing security.
(a)<F7> Percentages for the various classifications relate to net assets.
ADR - American Depository Receipts
N.V. - Netherlands Antilles Limited Liability Corp.
NYS - New York Registered Shares
The accompanying notes to financial statements are an integral part of this
statement.
STATEMENT OF OPERATIONS
For the Period Ending December 31, 2004 (Unaudited)
INCOME:
Dividends $ 904,306
Interest 47,088
-----------
Total income 951,394
-----------
EXPENSES:
Investment management fees 1,580,527
Transfer agent fees 165,630
Administrative services 112,776
Printing and postage expense 49,600
Custodian fees 27,803
Professional fees 20,306
Insurance expense 18,675
Registration fees 15,367
Board of Trustees fees 13,500
Other expenses 4,115
-----------
Total expenses 2,008,299
-----------
NET INVESTMENT LOSS (1,056,905)
-----------
NET REALIZED GAIN ON INVESTMENTS 1,621,923
CHANGE IN UNREALIZED APPRECIATION ON INVESTMENTS 25,889,813
-----------
NET GAIN ON INVESTMENTS 27,511,736
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $26,454,831
-----------
-----------
The accompanying notes to financial statements are an integral part of this
statement.
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ending December 31, 2004 (Unaudited) and For the Year Ended
June 30, 2004
DECEMBER 31, 2004 JUNE 30, 2004
----------------- -------------
OPERATIONS:
Net investment loss $ (1,056,905) $ (1,709,190)
Net realized gain on investments 1,621,923 26,606,550
Change in unrealized appreciation on investments 25,889,813 23,126,655
------------ ------------
Net increase in net assets resulting from operations 26,454,831 48,024,015
------------ ------------
DISTRIBUTION TO SHAREHOLDERS:
Dividend from net investment income ($0.01002 per share) (108,497)*<F8> --
------------ ------------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (2,382,968 and 10,464,939 shares, respectively) 64,448,168 278,958,856
Net asset value of shares issued in distribution reinvested (3,532 shares) 107,362 --
Cost of shares redeemed (4,254,687 and 2,202,536 shares, respectively) (112,860,148) (57,182,968)
Redemption fees 13,057 66,882
------------ ------------
Net (decrease) increase in net assets derived from Fund share activities (48,291,561) 221,842,770
------------ ------------
TOTAL (DECREASE) INCREASE (21,945,227) 269,866,785
NET ASSETS AT THE BEGINNING OF THE PERIOD 347,823,885 77,957,100
------------ ------------
NET ASSETS AT THE END OF THE PERIOD $325,878,658 $347,823,885
------------ ------------
------------ ------------
*<F8> See Note 7.
FINANCIAL HIGHLIGHTS
(Selected data for each share of the Fund outstanding throughout each period)
(UNAUDITED)
FOR THE FOR THE YEARS ENDED JUNE 30,
PERIOD ENDING ----------------------------
DECEMBER 31, 2004 2004 2003 2002 2001 2000
----------------- ---- ---- ---- ---- ----
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 27.69 $ 18.13 $ 16.79 $ 19.15 $ 28.39 $ 19.84
Income from investment operations:
Net investment loss (a)<F9> (0.09) (0.23) (0.16) (0.18) (0.16) (0.25)
Net realized and unrealized gains
(losses) on investments 2.88 9.79 1.50 (2.14) (7.85) 10.18
------- ------- ------- ------- ------- -------
Total from investment operations 2.79 9.56 1.34 (2.32) (8.01) 9.93
Less distributions:
Dividend from net investment income (0.01) -- -- -- -- --
Distributions from net realized gains -- -- -- (0.04) (1.23) (1.38)
------- ------- ------- ------- ------- -------
Total from distributions (0.01) -- -- (0.04) (1.23) (1.38)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 30.47 $ 27.69 $ 18.13 $ 16.79 $ 19.15 $ 28.39
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
TOTAL RETURN 10.08%*<F10> 52.73% 7.98% (12.11)% (27.96)% 53.71%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in 000's $) 325,879 347,824 77,957 95,317 150,872 240,106
Ratio of expenses to average
net assets 1.27%**<F11> 1.38% 1.58% 1.39% 1.28% 1.37%
Ratio of net investment loss to
average net assets (0.67)%**<F11> (0.90)% (1.04)% (0.98)% (0.74)% (0.97)%
Portfolio turnover rate 100.61% 113.27% 90.06% 132.21% 287.66% 156.85%
(a)<F9> Net investment loss per share is calculated using average shares
outstanding.
*<F10> Not annualized.
**<F11> Annualized.
The accompanying notes to financial statements are an integral part of these
statements.
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 (Unaudited)
(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. The fair value of a security
is the amount which the Fund might reasonably expect to receive upon a
current sale. The fair value of a security may differ from the last
quoted price and the Fund may not be able to sell a security at the
fair value. Market quotations may not be available, for example, if
trading in particular securities was halted during the day and not
resumed prior to the close of trading on the New York Stock Exchange.
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. On December 29, 2004, the Fund distributed
$108,497 from net investment income ($0.01002 per share). The distribution
was paid on December 30, 2004, to shareholders of record on December 28,
2004.
(4) INVESTMENT TRANSACTIONS --
For the period ending December 31, 2004, purchases and proceeds of sales of
investment securities (excluding short-term securities) were $313,134,169
and $350,879,250, respectively.
(5) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES --
As of December 31, 2004, liabilities of the Fund included the following:
Payable to shareholders for redemptions $4,556,032
Payable to brokers for investments purchased 2,559,994
Payable to the Adviser for management fees 273,804
Due to custodian 200,675
Payable to FMIfor administrative fees 18,786
Other liabilities 45,305
(6) SOURCES OF NET ASSETS --
As of December 31, 2004 the sources of net assets were as follows:
Fund shares issued and outstanding $299,268,289
Net unrealized appreciation on investments 35,129,649
Accumulated net realized loss (7,329,909)
Accumulated net investment loss (1,189,371)
------------
$325,878,658
------------
------------
(7) INCOME TAX INFORMATION --
The following information for the Fund is presented on an income tax basis
as of December 31, 2004:
GROSS GROSS NET UNREALIZED
COST OF UNREALIZED UNREALIZED APPRECIATION
INVESTMENTS APPRECIATION DEPRECIATION ON INVESTMENTS
----------- ------------ ------------- --------------
$298,245,594 $49,124,795 $15,184,517 $33,940,278
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.
BOARD OF TRUSTEES
HOWARD E. COSGROVE ROBERT J. FAHEY, JR.
Chairman, NRG Energy Executive Vice President
Retired Chairman, Conectiv, Inc. CB Richard Ellis
Wilmington, Delaware Investment Properties -
Institutional Group
Philadelphia, Pennsylvania
MICHAEL L. HERSHEY JOHN H. REMER
Chairman, Retired
Landis Associates LLC Kennett Square, Pennsylvania
Kennett Square, Pennsylvania
U.S. BANCORP FUND PRICEWATERHOUSECOOPERS LLP
SERVICES, LLC Independent Registered
Transfer Agent and Public Accounting Firm
Dividend Disbursing Agent
LANDIS ASSOCIATES LLC
Investment Adviser
U.S. BANK, N.A. FOLEY & LARDNER LLP
Custodian 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.
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 (the "Commission") at
http://www.sec.gov. Information on how the Fund voted proxies relating to
portfolio securities during the twelve month period ending June 30, 2004 is
available on the Fund's website at http://www.henlopenfund.com or the website of
the Commission. The Fund files its complete schedule of portfolio holdings with
the Commission for the first and third quarter of each fiscal year on Form N-Q;
(ii) the Fund's Form N-Q is available on the Commission's website; and (iii) the
Fund's Form N-Q may be reviewed and copied at the Commission's Public Reference
Room in Washington, D.C., and that information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
ITEM 2. CODE OF ETHICS.
- -----------------------
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
- -----------------------------------------
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
- -----------------------------------------------
Not applicable.
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 February 10, 2005, 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, February 10, 2005, 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. Not applicable.
(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 February 10, 2005
-----------------
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 February 10, 2005
-----------------