WEST UNIVERSITY FUND, INC.
ANNUAL REPORT
DECEMBER 31, 1999
WEST UNIVERSITY FUND, INC.
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
Common Stocks
Basic Materials-8.14%
A. Schulman 3,500 shares
Market value $57,093
Barrick Gold 5,000 shares
Market value $88,437
Options written
25 April 17.5 calls
Market value $5,546
Exp. 04-00
25 April 15 calls
Market value $9,688
Exp. 04-00
Lubrizol Corp. 2,000 shares
Market value $61,750
Options written
20 May 22.5 calls
Market value $17,625
Exp. 05-00
RPM, Inc. 4,000 shares
Market value $40,750
Options written
40 Feb. 12.5 calls
Market value $375
Exp. 02-00
Basic Materials
Total Market value stocks $248,030
Total Market value calls $33,234
Biotech-1.56%
PPD, Inc. 4,000 shares
Market Value $47,500
Options written
40 April 7.5 calls
Market Value 20,250
Biotech
Total Market value stocks $47,500
Total Market value options $20,250
Capital Goods-6.38%
Aviall, Inc.*. 6,000 shares
Market value $49,125
Options written
60 March 10 calls
Market value $3,000
Exp. 03-00
Crown Cork & Co. 2,000 shares
Market value $44,750
Options written
20 July 20 calls
Market value $8,625
Exp. 05-00
Federal Signal Corp. 2,500 shares
Market value $40,156
Options written
25 May. 17.5calls
Market value $2,031
Exp. 05-00
Sigma Aldrich Corp. 2,000 shares
Market Value $60,125
Options written
20 April 25 calls
Market value $11,750
Exp. 04-00
Capital Goods
Total Market value stocks $194,156
Total Market value calls $25,406
Consumer Cyclicals-13.93%
Clayton Homes 5,000 shares
Market Value $45,937
Options written
50 May 7.5 calls
Market value $10,938
Exp. 05-00
Enesco Group, Inc. 4000 shares
Market value $44,250
Options written
40 May. 12.5 calls
Market value $2,000
Exp. 05-00
Fleetwood Ent. 2,000 shares
Market value $41,250
Options written
20 Feb. 22.5 calls
Market value $2,000
Exp. 02-00
Genuine Parts 2,000 shares
Market value $49,625
Options written
20 May 25 calls
Market value 3,250
Exp. 05-00
Office Max 6,000 shares
Market value $33,000
Options written
60 March 5 calls
Market value $6,563
Exp. 03-00
Pep Boys 4,000 shares
Market value $36,500
Options written
40 April 7.5 calls
Market value $9,5009
Exp. 04-00
Stride Rite Corp. 5,000 shares
Market value $32,500
Options written
40 Jan, 7.5 calls
Market value $250
Exp. 01-00
TBC Corp* 18,000 shares
Market value $112,500
Toy's R Us* 2,000 shares
Market value $28,625
20 March 12.5 calls
Market value $5,624
Exp. 03-00
Consumer Cyclicals
Total Market value stocks $424,187
Total Market value calls $40,125
Consumer Staples-12.38%
Bob Evans Farms, Inc. 4,000 shares
Market value $61,750
Options written
40 April 12.5 calls
Market value $12,750
Exp. 04-00
CBRL Group 9,500 shares
Market value $92,031
Options written
25 March 12.5 calls
Market value $469
Exp. 03-00
Deluxe Corp. 2,000 shares
Market value $92,031
Options written
20 April 25 calls
Market value $6.625
Exp. 04-00
Sinclair Broadcast, Inc. 11,000 shares
Market value $134,063
Options written
50 March 7.5 calls
Market value $24,688
Exp. 03-00
*Non-Income Producing Security
The accompanying notes are an integral
part of these financial statements
Page4
WEST UNIVERSITY FUND, INC.
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
Common Stocks (continued)
40 June 7.5 calls
Market value $21,500
Exp. 06-00
20 June 10 calls
Market value $7,875
Exp. 06-00
Waste Mgt. 2,000 shares
Market value $34,375
Options written
20 Jan. 20 calls
Market value $624
Exp. 01-00
Consumer Staples
Total Market value stocks $377,094
Total Market value options $74,531
Energy-1.79%
Helmerich & Payne 2,500 shares
Market value $54,531
Options written
25 June 17.5 calls
Market value $14,063
Exp. 06-00
Energy
Total Market value stocks $54,531
Total Market value calls $14,063
Financials-4.0%
Allstate Corp. 2,000 shares
Market value $48,000
Options written
20 Jan. 35 calls
Market value $46
Exp. 01-00
Homefed Corp. 5150 shares
Market value $4,506
Leucadia National 3,000 shares
Market value $69,375
Options written
30 March 30 calls
Market value $9,938
Exp. 03-00
30 March 30 calls
Market value $9,188
Exp. 03-99
Financials
Total Market value stocks $121,881
Total Market value calls $9,984
Mutual Funds-2.99%
MFS Int. Income Fund 15,000 shares
Market value $90,938
Real Estate-7.36%
Host Marriott Corp. 8,000 shares
Market value $66,000
Options written
40 Apr. 10 calls
Market value $1,750
Exp. 04-00
Options written
40 Apr. 7.5 calls
Market value $5,500
Exp. 04-00
New Plan Excel 10,000 shares
Market value $158,125
Options written
50 Feb. 17.5 calls
Market value $938
Exp. 02-00
Options written
50 May 15 calls
Market value $7,500
Exp. 05-00
Real Estate
Total Market value stocks $224,125
Total Market value options $15,688
Technology-4.00%
Checkpoint Systems 4,000 shares
Market value $40,750
Options written
40 May 7.5 calls
Market value $12,250
Exp. 05-00
Compaq Computer 3,000 shares
Market value $81,188
Options written
30 April 15 calls
Market value $37,500
Exp. 04-00
*Non Income Producing Security
The accompanying notes are an
integral part of these financial statements
Page 5
WEST UNIVERSITY FUND, INC
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
(Common Stocks Continued)
Telecommunications-1.68%
Amdocs Ltd.* 1,487 shares
Market value $51,295
Options written
14 Feb. 5 calls
Market value $32,000
Exp. 02-00
Transportation-2.12%
Southwest Airlines* 4,000 shares
Market value $64,500
Options written
40 Mar.15 calls
Market value $8,500
Exp. 03-00
Utilities-17.03%
DPL, Inc. 6,000 shares
Market value $103,875
Options written
60 Apr. 17.5 calls
Market value $4,875
Exp. 04-00
MCN Energy 5,500 shares
Market value $130,625
Options written
20 Feb. 17.5 calls
Market value $13,250
Exp. 02-00
Options written
35 Feb. 15 calls
Market value $31,500
Exp. 02-00
Northern States Power 6,000 shares
Market value $117,000
Options written
35 Mar. 22.5 calls
Market value $438
Exp. 03-00
TECO Energy 9,000 shares
Market value $167,063
Options written
30 Feb. 20 calls
Market value $750
Exp. 02-00
Options written
60 May 20 calls
Market value $4,875
Exp. 05-00
Utilities
Total Market value stocks $518,563
Total Market value calls $55,688
Total Equities-83.36%
(Cost $2,686,511)
Market value $2,538,738
Total Option Contracts Written-(12.45%)
Premiums received: ($374,943)
Market value ($379,219)
Short Term Investments
Variable Demand Notes
Firstar- $145,000
(cost: $145,000)
General Mills- $145,000
(cost: $145,000)
Pitney Bowes- $145,000
(cost: $145,000)
Sara Lee- $145,000
(cost: $145,000)
Warner Lambert-$12,468
(cost: $12,468)
Wisconsin Corp. CU- $145,000
(cost: $145,000)
WEPCO- $145,000
(cost: $145,000)
*Non Income Producing Security
The accompanying notes are an
integral part of these financial statements
Page 6
WEST UNIVERSITY FUND, INC.
PORTFOLIO OF INVESTMENTS
DECEMBER 31,1999
(continued)
Total Short Term Investments -28.98% $882,468
(cost: $882,468)
Other Assets and Liabilities Net -.12% $3,575
Net Assets -100% $3,045,562
The accompanying notes are an
integral part of these financial statements
Page 7
WEST UNIVERSITY FUND, INC.
STATEMENT OF ASSETS AND
LIABILITIES
DECEMBER 31, 1999
ASSETS
Investments in securities, at market value $2,538,738
(cost: $2,686,511)
Variable demand notes
at market value $882,468
(cost: $882,468)
Receivables:
Dividends $10,582
Interest $3,480
Total Assets $3,435,268
LIABILITIES
Covered call options written, at market value $379,219
(Premiums received: $374,943)
Accrued expenses $10,487
Total Liabilities $389,706
NET ASSETS $3,045,562
Net asset value per share ($3,045,562 / 304,069 shares outstanding)
COMPONENTS OF NET ASSETS
Common stock, $1.00 par value; 10,000,000 shares authorized,
304,069 shares issued and outstanding $304,069
Paid-in capital $2,891,823
Net investment gain $1,718
Net unrealized (depreciation)
on investments ($152,048)
NET ASSETS $3,045,562
The accompanying notes are an integral part of
these financial statements.
Page 8
WEST UNIVERSITY FUND, INC.
STATEMENT OF OPERATIONS
DECEMBER 31, 1999
INCOME:
Interest $56,155
Dividends $55,065
EXPENSES:
Management fee $29,308
Accounting fee $8,476
Audit and tax consulting fees $7,300
Custodian fees $5,986
Total Expenses $51,070
Net Investment Income $60,150
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments $240,239
Net increase in unrealized appreciation ($116,775)
Net gain on investments $123,464
Net increase in net assets
resulting from operations $183,614
The accompanying notes are an integral
part of these financial statements.
Page 9
WEST UNIVERSITY FUND, INC.
STATEMENT OF CHANGES
IN NET ASSETS
DECEMBER 31,1999
Year ended Year ended
12-31-99 12-31-98
OPERATIONS:
Net investment income $60,150 $56,857
Net realized (loss) gain on investments ($240,239) ($198,767)
Net (decrease) increase in
unrealized appreciation ($116,775) ($52,429)
Net (decrease) increase in net assets
resulting from operations $183,614 ($194,339)
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($60,1668) ($56,868)
Distributions from net realized gains ($41,500) $0
Total distributions ($101,666) ($56,868)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares issued (24,495 and
40,865 respectively) $265,081 $437,033
Increase from shares issued in
reinvested distributions $97,826 $42,325
Cost of shares redeemed ($836,654) ($332,021)
Net increase in net assets derived from
capital share transactions ($473,747) $147,337
Net (decrease) increase in net assets ($391,799) ($103,870)
NET ASSETS AT BEGINNING
OF YEAR $3,437,361 $3,541,231
NET ASSETS AT
END OF YEAR $3,045,562 $3,437,361
The accompanying notes are an integral part of these financial statements
Page 10
WEST UNIVERSITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
West University Fund, Inc. (the"fund"), was incorporated under the laws
of the State of Texas on October 25,1995 and commenced investment
activity in February 1996. The fund is registered under the Investment
Company Act of 1940, as amended, as a diversified, no-load, open-end
management investment company. The following is a summary of the fund's
significant accounting policies.
Basis of Accounting- The accounting records of the fund and its financial
statements are maintained and prepared on the accrual basis under generally
accepted accounting principles. The preparation of financial statements
in conformity with generally accepted accounting principles requires manage-
ment 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 those estimates.
Securities Valuation- Investments and outstanding options (collectively
referred to as securities) are stated at market value. Securities traded
on securities exchanges are valued at the last sale price on the day, at
the mean between the last current bid and asked prices.
Investment Income and Securities Transactions- Dividend income is
recorded on the ex-dividend date and interest income is accrued as
earned. Securities transactions are accounted for on the trade date
(the date the order to buy or sell is executed). Realized gains and
losses from securities transactions and unrealized appreciation or
depreciation of securities are reported on an identified cost basis
for both financial statement and Federal income tax purposes.
Option Accounting Principles- When the fund writes a call option,
an amount equal to the premium received by the fund is included
in the fund's Statement of Assets and Liabilities as an asset and an
equivalent liability. The amount of the liability will be subsequently
marked-to-market to reflect the current market value of the option
written. The current market value of a traded option is the last sales
price or, in the absence of a sale, the mean between the last current
bid and asked prices.
When a call expires on its stipulated expiration date, or if the fund
enters into a closing purchase transaction, the fund will realize a gain
(or loss if the cost of a closing purchase transaction exceeds the
premium received when the call option was written) without
regard to any unrealized gain or loss on the underlying security,
and the liability related to such option will be extinguished. When a
call option is exercised, the fund will realize a gain or loss from the
sale of the underlying security and the proceeds of the sale
are increased by the premium originally received.
Fund Share Valuation- Fund shares are sold and redeemed on a
continuing basis at net asset value. Net asset value per share is
determined daily as of the close of trading of the New York
Stock Exchange on each day the Exchange is open for trading
by dividing the total value of the fund's investments and other assets,
less the sum of liabilities and the value of outstanding call options,
by the number of fund shares outstanding.
Federal Income Taxes- It is the fund's intention to comply with
the provisions of the Internal Revenue Code enabling it to qualify
as a regulated investment company and, in the manner provided therein,
to distribute all of its taxable income to its shareholders. Accordingly,
no provision for income taxes has been made.
Custodian- The fund's custodian is Firstar Trust Company. Pursuant
to the terms of the Custodian Agreement the fund will forward to the
Custodian
Page 11
the proceeds of each purchase of fund shares. The Custodian
will hold such proceeds and make disbursements therefrom in accordance
with the terms of the Custodian Agreement. It will retain possession of the
securities purchased with such proceeds and maintain appropriate records
with respect to receipt and disbursements of money, receipt and release of
securities, and all other transactions of the Custodian with respect to the
securities and other assets of the fund.
NOTE 2.- INVESTMENT ADVISORY AGREEMENT
AND "AFFILIATED PERSONS"
Cancelmo Capital Management, Inc. (the "Adviser") is the investment
adviser of the fund. The Adviser, subject to the control and direction of
the Fund's board of directors, manages and supervises the investment
operations of the Fund and the composition of its portfolio, including
the writing of all options and making recommendations to the Fund's
board of directors as to investment policies.
As compensation for furnishing investment advisory, management, and
other services, and costs and expenses assumed, pursuant to the
Investment Management Agreement, the Fund pays the Adviser an
annual fee equal to 1.0% of average daily net assets. The Adviser
will reduce its fees to limit the total annual expenses of the Company
(including the Adviser's fee, but excluding interest, taxes, fees incurred
in acquiring and disposing of portfolio securities and certain extraordinary
expenses) to 2.0% of the first $10,000,000 of average daily assets,
1.5% of the next $20,000,000 of such assets, and 1.0% of such assets
over $30,000,000.
NOTE 3- CAPITAL SHARE TRANSACTIONS
As of December 31, 1999, there were
304,069 shares of $1.00 par value capital stock authorized and capital
paid-in aggregated $2,891,823.
Transactions in capital stock were as follows:
Shares Amount
1999 1998 1999 1998
Shares sold 25,495 40,865 $265,081 $437,033
Shares issued
in reinvestment
of dividends 9,861 4,382 $97,826 $42,325
35,356 45,247 $362,907 $479,358
Shares
redeemed 85,502 11,307 $836,654 $332,021
Net increase (decrease) (50,146) 33,940 ($473,747) $147,337
NOTE 4.- INVESTMENT ACTIVITY
For the year ended December 31,1999, purchases of investment
securities (excluding short term investments) totaled $4,326,871
and proceeds from sales totaled $3,749,219.
As of December 31, 1999, and 1998, portfolio securities valued at
$2,273,700 and $1,978,844 respectively were held in escrow by
the custodian in connection with covered call options
written by the Fund.
Number of Contracts Premiums
Outstanding at beginning of year 895 $327,316
Call options written 2,745 $693,563
Call options terminated in closing
purchase transactions (225) ($87,721)
Call options expired (819) ($145,875)
Call options exercised (1,176) ($412,340)
Outstanding at December 31, 1999 1420 $374,943
Page 12
WEST UNIVERSITY FUND, INC.
SUPPLEMENTARY INFORMATION
DECEMBER 31,1999
SELECTED PER SHARE DATA AND RATIOS
1999 1998 1997 1996
Net asset value at
beginning of period $ 9.70 $10.35 $10.21 $10.00
Income from investment
operations:
Net investment income$ .20 $.16 $.12 $.09
Distributions from net
investment income ($.20) ($.16) ($.12) ($.09)
Net realized and unrealized
gain (loss) on securities $.47 ($.65) $.82 $.80
Distributions from realized
gains on securities ($.15) $0 ($.64) ($.59)
Net asset value at
end of year $10.02 $9.70 $10.35 $10.21
Total return 6.96% (4.70)% 9.73% 9.71%*
Ratios/Supplemental Data:
Net assets at end of
year(in thousands) $3,046 $3,437 $3,541 $2,037
Expenses to average
net assets 1.74 1.59 1.75 1.82
Net investment income before
taxes to average net assets 2.05 1.53 1.36 1.19
Portfolio turnover rate 190.% 218.49% 188.53% 101.38%
*Annualized
Page 13
WEST UNIVERSITY FUND, INC.
FINANCIAL STATEMENTS
December 31, 1999 and 1998
Independent Auditors' Report
January 28, 2000
To the Shareholders and Board of Directors,
West University Fund, Inc.
Houston, Texas
We have audited the accompanying statement of assets and liabilities of West
University Fund, Inc., (a Texas corporation), including the schedule of
portfolio investments, as December 31, 1999, and the related statement of
operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, and the selected per
share data and ratios for each of the three years then ended. These
financial statements and per share data and ratios are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements and per share data and ratios based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards.Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and per
share data and ratios are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1999, by correspondence with the
custodian and brokers.An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and selected per share data and
ratios referred above present fairly, in all material respects, the
financial position of West University Fund, Inc. at December 31, 1999, 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 selected
per share data and ratios for each of the three years then ended, in
conformity with generally accepted accounting principles.
Page 14
WEST UNIVERSITY FUND, INC
DECEMBER 31,1999
INVESTMENT ADVISER
Cancelmo Capital Management, Inc.
3030 University Boulevard
Houston, Texas 77005
713-666-1652
800-465-5657
CUSTODIAN
Firstar Trust Company
P.O. Box 701
Milwaukee, WI 53201
414-765-4124
INDEPENDENT AUDITORS
Simonton, Kutac and Barnidge, L.L.P.
Certified Public Accountants
1010 Lamar, Suite 850
Houston, Texas 77002
This report is submitted for the information of
shareholders of the fund. It is not authorized for
distribution to prospective investors unless
preceded or accompanied by an effective prospectus.
