A No - Load Fund
MUHLENKAMP FUND
PO Box 598, Wexford PA 15090-0598 * (412)935-5520 or
(800)860-3863
e-mail:[email protected]
Annual Report
December 31, 1995
Dear Shareholder:
The Trustees and Management of the Muhlenkamp Fund are
pleased to present this seventh annual report of your
fund.
We had a good year in 1995. Your Fund finished the year
at a Net Asset Value (NAV) of $21.26 after declaring a
32 cent
dividend. Our total return for the year 1995 was 32.9%.
Year Ending Total Return (%)
12/31 Muhlenkamp Fund S&P500
1991 45.4 30.5
1992 15.8 7.7
1993 18.1 9.9
1994 (7.3) 1.3
1995 32.9 37.1
Chart goes here. This is a line chart comparing the
performance of the Muhlenkamp Fund with the S&P 500 since
December 31, 1990. On December 31, 1990 the Fund and the
S&P are each assigned an index value of 100. At the end
of each subsequent year this value is recalculated using
the performance figures from the above table. The results
shown below are then plotted on a line chart.
X-Axis = Date Y-Axis = Index Value
Muhlenkamp Fund S&P 500
12/31/90 100 100
12/31/91 145 131
12/31/92 168 141
12/31/93 198 155
12/31/94 184 157
12/31/95 245 215
I have been getting some phone calls from clients
concerning
what we see and think. As usual, I will start with the
big
picture and work down.
Position Evaluation: Inflation in the United States is
roughly 3%. Bonds are priced to return 6% and stocks are
priced to return 8-9%. Specifically, domestic stock and
bonds prices are fair, unlike a year ago when they were on
sale for "20% off". (See Muhlenkamp Memorandum #35.)
The Long - Term Picture:
Thermonuclear war is unlikely.
Much of the world, on all continents, is moving toward
freer economies and freer politics.
Throughout the world, central banks are disinflating.
If anything, central banks have been overdoing it. Japan
flirted with a depression and Germany's money supply is
probably too tight. In 1994, the U.S. purposely slowed the
economy as a preventative measure. This is in sharp
contrast to the 1970's when we waited until major surgery
was required before battling inflation. Central banks, in
emerging" countries, have learned that the first requirement
for "emerging" is that people, both domestic and foreign,
trust the value of their currency.
Thus, the big picture is very positive.
The Intermediate Picture - basically the three to five year
business cycle:
The U.S. economy shows few excesses and is likely to
continue a gradual expansion. Americans have become
conservative spenders and aggressive savers. Our
politicians are arguing about how much to throttle back
spending, not whether or not to spend less. The Federal
Reserve has room to lower interest rates and their most
recent two moves have been downward.
Japan appears to be backing away from the brink of
financial disaster in a rational fashion and Germany
appears to be loosening up a bit. Other European
governments are trying to come to grips with the welfare
state. They have a long, hard way to go (compare the
budget arguments in France to those in the U.S.), but the
first step is to identify the problem. The politics in
Russia seem to be backsliding toward the hard-liners but
no more so than we expected.
Thus, the intermediate trends are quite positive.
The Short - Term Picture:
You have been seeing the short-term factors on the news
and on the front pages of your local newspapers. Some are
disasters waiting to happen. I believe our troops in
Bosnia are likely to be targets for the young locals.
(What would happen if we asked soldiers of a foreign
nation to police our streets?) After being ignored by the
U.S. news media the Vince Foster/Whitewater affair has
suddenly become news and has plenty of potential for
political disaster.
The budget debate is currently stalemated in
Washington, but that very fact is helping to stir debate
in the country. There are important philosophical and
fiscal issues at stake, and the prolonged debate may well
be a plus. I believe less government spending is a move
in the right direction, but the Republican agenda may have
gotten ahead of broad public opinion.
And of course, there is always the unforseeable. The
point is that we always face short-term psychological
crosscurrents, and thus we always face the possibility of
a 5-10% "correction" in stock and bond prices. We are
probably in one now.
Thus, the short term trends are choppy, but essentially
neutral.
Conclusion: We conclude that stock and bond prices are
fair, the long and intermediate term trends are
positive, and the short term trends are neutral. Thus,
we remain positive.
Ronald H. Muhlenkamp
President
February, 1996
Investment Advisor Custodian Auditors
Muhlenkamp & Co., PNC Bank Schneider, Downs
& Inc. Co., Inc.,CPAs
12300 Perry Pittsburgh PA 1133 Penn Avenue
Highway 15265
Wexford, PA 15090 (412)762-3798 Pittsburgh, PA 15222
(412)935-5520 (412)261-3644
THE WEXFORD TRUST
(COMPRISED OF THE MUHLENKAMP FUND)
STATEMENT OF ASSETS AND
LIABILITIES DECEMBER 31,1995
ASSETS
INVESTMENTS, AT VALUE (Identified cost $23,276,334
$17,573,649)
CASH 35,467
RECEIVABLES
Securities sold 225,594
Dividends 40,683
Interest 1,346
267,623
Total Assets 23,579,424
LIABILITIES
ACCOUNTS PAYABLE
Advisor fee 2,593
Custodian fee 5,500
Total Liabilities 8,093
Total Net Assets $23,571,331
NET ASSETS
CAPITAL PAID IN ON SHARES OF BENEFICIAL INTEREST
$17,865,994
(shares authorized-unlimited)(Note 4)
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME 2,652
NET UNREALIZED APPRECIATION OF INVESTMENTS AS OF 5,702,685
END OF YEAR (Note 6)
Total Net Assets $23,571,331
NUMBER OF SHARES OF BENEFICIAL INTEREST 1,108,774
OUTSTANDING (Note 4)
NET ASSET VALUE PER SHARE (Net assets divided by $21.26
shares outstanding at year-end)
See notes to financial statements.
THE WEXFORD TRUST
(COMPRISED OF THE MUHLENKAMP FUND)
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995
Muhlenkamp
Fund
Principal Fair
Amount Market
or Shares Value
COMMON STOCK - 93.6%
Aerospace - 5.5%
* BE Aerospace, Inc. 17,000 $180,625
Lockheed Martin 14,000 1,106,000
Airlines - 2.1%
Air Express International Corp. 21,562 495,926
Autos - 4.2%
Ford Motor Company 22,000 638,000
Superior Industries 13,180 347,623
Building - 1.7%
Armstrong World Industries 3,000 186,000
* Griffon Corp. 18,400 165,600
* Strober Organization 16,000 56,960
Banks - 10.4%
Chemical Bank 12,000 705,000
Citicorp 10,000 672,500
Integra Financial 8,426 531,890
Mellon Bank Corp. 10,000 537,500
Brokerage - 3.6%
A. G. Edwards 12,500 298,438
Merrill Lynch 4,000 204,000
Morgan Stanley, Inc. 2,000 161,250
Salomon, Inc. 5,000 177,500
Capital Goods - 12.8%
Commercial Intertech Corp. 10,000 181,250
General Electric 9,000 648,000
Graco, Inc. 11,700 356,850
* Idex Corp. 7,500 305,625
Kysor Industrial 24,000 582,000
Scotsman Industries, Inc. 15,000 264,375
Trinova Corp. 24,000 687,000
Conglomerate - 1.2%
GATX Corp. 6,000 291,750
Chemicals - 2.6%
Borden Chemical & Plastic LP 10,000 127,500
Eastman Chemical Company 8,000 501,000
Consumer Durables - .3%
* Nycor, Inc. 15,000 76,875
Electronics - 1.0%
Intel Corp. 4,000 227,000
Finance - 5.2%
Fidelity National Financial 10,918 203,348
Green Tree Financial Corp. 38,800 1,023,350
Investment Company - 2.4%
Trust for US Treasury Obligations 552,324 552,324
Furniture - 1.9%
* Stanley Furniture, Inc. 15,000 120,000
* Winsloew Furniture 49,600 291,400
* Roberds 5,000 45,000
Sub-Total $12,949,459
* Non - Income Producing
See notes to financial statements
THE WEXFORD TRUST
(COMPRISED OF THE MUHLENKAMP FUND)
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995
(Continued)
Muhlenkamp Fund Principal Fair
Amount Market
or Shares Value
BALANCE BROUGHT FORWARD
$12,949,459
Insurance - 18.8%
American Bankers Insurance Group 8,000 312,000
Bankers Life Holding 20,000 405,000
Conseco, Inc. 12,000 751,500
Frontier Insurance 16,751 536,032
Integon Corp. 15,000 309,375
* Penn Treaty Amer. Corp. 5,000 82,500
Providian Corp. 3,600 146,700
Sun America 22,500 1,068,750
Vesta 15,000 817,500
Med Services - 1.8%
U.S. Healthcare 9,000 418,500
Paper & Forest Products - 2.7%
Champion International Corp. 15,000 630,000
Rails - 1.0%
Burlington Northern Industries, 3,000 234,000
Inc.
Savings and Loan - 3.2%
Federal National Mortgage Assoc. 6,100 757,163
Metals - 5.6%
Cyprus Minerals 9,000 235,125
Rouge Steel 15,000 356,250
J&L Specialty Steels 30,000 562,500
Matthews International 8,000 156,000
Tobacco - 4.9%
Philip Morris 12,860 1,163,830
Technology - .7%
* PLC Systems 10,000 166,250
* SpaceTek 200 2,350
Total Common Stocks (Cost $22,060,784
$16,758,768)
BONDS & NOTES - 3.8%
* General Motors Acceptance 2,300,000 623,300
Corporation -0%, deferred
debentures, due 2015
* U.S. Treasury, stripped interest 800,000 282,250
- - 0%, due 2013
Total Bonds & Notes (Cost 905,550
$538,028)
PREFERRED STOCK - 1.3%
Pioneer Financial - exchangeable 10,000 310,000
Total Preferred Stock (Cost 310,000
$276,853)
Total (Cost $17,573,649) $23,276,334
* Non - Income Producing
See notes to financial statements.
THE WEXFORD TRUST
(COMPRISED OF THE MUHLENKAMP FUND)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
INVESTMENT INCOME
Interest $81,159
Dividends 414,309
Total Investment Income 495,468
EXPENSES
Investment advisor (Note 3) $196,789
Administrative 29,650
Registrations and filing 20,799
Custodian 18,995
Auditor 10,000
Legal 7,241
Total Expenses 283,474
Fees Paid Indirectly (Note 7) (11,000) 272,474
Net Investment Income 222,994
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain on investments 133,077
(Note 6)
Change in unrealized apppreciation
in value of investments for the year 5,376,466
(Note 6)
Net Gain on Investments 5,509,543
Net Increase in Net Assets $5,732,537
Resulting from Operations
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
1995 1994
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net Investment Income $222,994 $103,261
Net realized gain on investments 133,077 392,326
(Note 6)
Unrealized (depreciation) 5,376,466 (1,702,528)
appreciation in value of investments
Net Increase (Decrease) in Net 5,732,537 (1,206,941)
Assets Resulting From Operations
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (231,706) (94,651)
Net realized gain from investments (129,026) (252,117)
(360,732) (346,768)
CAPITAL SHARE TRANSACTIONS
Net proceeds from sale of 201,856
shares in 1995 and 414,315 shares in 3,679,849 7,258,915
1994 (Note 4)
Net asset value of 16,426 shares in
1995 and 21,392 shares in 1994 issued
to shareholders on reinvestment of 349,551 346,768
dividends (Note 5)
Cost of 132,886 shares in 1995 and
87,761 shares in 1994, redeemed (2,440,624) (1,498,829)
(Note 4)
Net Increase in Net Assets
Resulting from Capital 1,588,776 6,106,854
Share Transactions
Total Increase in Net Assets 6,960,581 4,553,145
NET ASSETS
Beginning of year 16,610,750 12,057,605
End of year (including undistributed
investment loss of $1,399 and
undistributed net realized gain of $4,051 $23,571,331 $16,610,750
in 1995 and undistributed investment
income of $7,313 in 1994)
See notes to financial statements.
THE WEXFORD TRUST
(COMPRISED OF THE MUHLENKAMP FUND)
SELECTED PER SHARE DATA AND RATIOS
FOR THE YEARS ENDED DECEMBER 31,1989 THROUGH 1995
1995 1994 1993 1992 1991 1990
NET ASSET VALUE, BEGINNING
OF PERIOD $16.23 $17.86 $15.20 $13.25 $9.21 $11.04
Income from Investment
Operations:
Net Investment Income 0.21 0.11 0.12 0.20 0.13 0.19
(1)
Net gains or (losses) 5.14 (1.39) 2.63 1.89 4.05 (1.83)
on securities
Total from 5.35 (1.28) 2.75 2.09 4.18 (1.64)
Investment Operations
Less Distributions:
Dividends (from (0.21) (0.10) (0.08) (0.14) (0.11) (0.19)
investment income)
Distributions (from (0.11) (0.25) - - - -
capital gains)
Return of capital (0.01) (0.03)
- - - -
Total (0.32) (0.35) (0.09) (0.14) (0.14) (0.19)
Distributions
NET ASSET VALUE, END OF $21.26 $16.23 $17.86 $15.20 $13.25 $9.21
PERIOD
Total Return 32.9% (7.20)% 18.10% 15.80% 45.40%
(14.80)%
Net Assets, End of Period $23,571,331
$16,610,750
$12,057,605
$4,716,214
$1,926,529
$1,183,190
Ratio of Expenses to 1.40% 1.57% 1.30% 1.41% 1.71% 1.76%
Average Net Assets
Ratio of Net Income to 1.10% 0.70% 0.70% 1.44% 1.17% 1.95%
Average Net Assets
Portfolio Turnover Rate 22.70% 25.60% 14.10% 20.10% 52.50% 47.47%
Average Commission Rate .0442 .0471 .0586 .0704 .1304 .0163
Paid (dollar per share)
1989
NET ASSET VALUE, BEGINNING
OF PERIOD $10.04
Income from Investment
Operations:
Net Investment Income 0.39
(1)
Net gains or (losses) 0.86
on securities
Total from 1.25
Investment Operations
Less Distributions:
Dividends (from 0.25
investment income)
Distributions (from -
capital gains)
Return of capital
-
Total (0.25)
Distributions
NET ASSET VALUE, END OF $11.04
PERIOD
Total Return 12.50%
Net Assets, End of Period $1,104,134
Ratio of Expenses to 1.54%
Average Net Assets
Ratio of Net Income to 3.04%
Average Net Assets
Portfolio Turnover Rate 34.46%
Average Commission Rate .0834
Paid (dollar per share)
(1) Computed on weighted average number of shares
outstanding during the year.
(2) During the years ended December 31, 1992 through
1995, the Fund utilized commission credits of $4,420,
$5,590, $8,830 and $11,000 respectively, to pay certain
expenses of the Fund. The total return for the Fund
would have been 15.6%, 18.0%, (7.2)% and 32.9% for the
years ended December 31, 1992 through 1995, respectively,
without the credits.
(3) Beginning with the period ended December 31, 1995,
the ratio of Total Expenses to Average Net Assets was
computed using the Total Expenses for the Fund before
Commission Credits.
See notes to financial statements.
THE WEXFORD TRUST
(COMPRISED OF THE MUHLENKAMP FUND)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1 - ORGANIZATION
The Wexford Trust (the Trust) was organized as
a Massachusetts Business Trust on September 21, 1987
and operations commenced on November 1, 1988. The
Trust is registered under the Investment Company Act
of 1940, as amended, as a diversified open-end
mutual fund. The Muhlenkamp Fund (the Fund) is a
series of the Wexford Trust and is currently the only
fund in the Trust.
The Fund operates as a diversified open-end mutual
fund that continuously offers its shares for sale to the
public. The Fund will manage its assets to seek a
maximum total return to its shareholders, primarily
through a combination of interest and dividends and
capital appreciation by holding a diversified list of
publicly traded stocks. The Fund may acquire and hold
fixed-income or debt investments as market conditions
warrant and when, in the opinion of its advisor, it is
deemed desirable or necessary in order to attempt to
achieve its investment objective.
The primary focus of the Fund is long-term and
the investment options diverse. This allows for
greater
flexibility in the daily management of fund
assets. However, with flexibility also comes the risk
that assets will be invested in various classes of
securities at the wrong time and price.
The preparation of financial statements in
conformity with generally accepted accounting
principles requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of
contingent assets and liablilities at the date of
the financial statements and the reported amounts of
revenues and expenses during the reported period.
Actual results could differ from those estimates.
The Fund is exposed to market risk on the
amount invested in marketable securities. The maximum
amount of loss the Fund would incur is limited to the
amount recorded in the 1995 financial statements. The
Fund does not hold any type of collateral on the
marketable securities. This exposure to market risk is
customary for all entities which have invested in
financial instruments.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of significant accounting policies applied
by management in the preparation of the accompanying
financial statements follows.
Investment valuations - Each stock and bond is
valued at the latest sales price thereof on the last
business day of the fiscal period as reported by the
securities exchange on which the issued is traded. If no
sale is reported, the security is valued at the last
quoted bid price.
Investment transactions and related investment income
-
Investment transactions are accounted for on the trade
date (date the order to buy or sell is executed).
Dividend income is recorded on the ex-dividend date.
Interest income is recorded daily on the accrual basis.
The Fund uses the specific identification method in
computing gain or loss on the sale of investment
securities.
Federal income taxes - It is the Fund's policy
to comply with the requirements of the Internal Revenue
Code that are applicable to regulated investment companies
and to distribute substantially all of its taxable income
to its shareholders. Therefore, no federal income tax
provision is required.
Dividends and distributions to shareholders of
beneficial interest - Dividends and distributions are
recorded by the Trust on the record date.
NOTE 3 - INVESTMENT MANAGEMENT AND OTHER TRANSACTIONS WITH
AFFILIATES
Muhlenkamp and Co., Inc., an affiliate of which
an officer-stockholder is a trustee of the Trust,
receives a fee for investment management. The fee is
computed and accrued daily based on the net asset value
at the close of business and is equal to 1% per annum.
The fee totaled $202,675 for the year ended
December 31, 1995. The
investment advisory agreement permits the advisor to
charge the fund for some or all of its routine
administration costs which totaled approximately $53,817
for the year ended December 31, 1995. An expense
reimbursement of $53,817 was requested and paid for the
year ended December 31,1995. The reimbursement consists
of $28,650 of administrative expenses, $17,926 of
registration and filing expenses and $7,241 of legal
fees.
Certain affiliated persons held in the aggregate
28,481 shares with a net asset value of $605,506 in the
Muhlenkamp Fund at December 31, 1995. In addition, the
Muhlenkamp & Co., Inc. Pension & Trust Fund held 12,197
shares with a net asset value of $259,308 at December 31,
1995.
NOTE 4 - CAPITAL SHARE TRANSACTIONS
The Declaration of Trust permits the Trustees to
issue an unlimited number of full and fractional shares
of beneficial interest with a par value of $.001 per
share. Transactions in capital stock were as follows:
1995 1994
Shares Amount Shares Amount
Shares outstanding, beginning 1,023,378 16,277,218 675,342 10,170,364
of period
Shares sold 201,856 3,679,849 414,315 7,258,915
Shares issued to
shareholders in reinvestment 16,426 349,551 21,392 346,768
of dividend
Shares redeemed (132,886) (2,440,624) (87,671) (1,498,829)
Shares outstanding, end of 1,108,774 $17,865994 1,023,378 $16,277,218
period
NOTE 5 - DIVIDENDS AND DISTRIBUTIONS
On December 29, 1995, the Trustees declared, recorded,
and paid a dividend of $.32 per outstanding share.
NOTE 6 - INVESTMENT TRANSACTIONS
Purchases and sales of investment securities, excluding
short-term securities, were $6,983,863 and $3,727,992,
respectively in 1995. Purchases and sales of U.S.
Government obligations were $493,906 and $857,485,
respectively, in 1995. The components of the net realized
gain on investments of $133,077 recognized during the year
ended December 31, 1995 are as follows:
Proceeds from sale of $4,718,200
securities
Cost of Securities Sold 4,585,123
Net Realized Gain $133,077
The components of the net unrealized appreciation in
value of the investments held at December 31, 1995 are as
follows:
Unrealized appreciation of $6,352,911
investments
Unrealized depreciation of 650,226
investments
Net Unrealized $5,702,685
Appreciation of Investments
The unrealized appreciation of securities recognized
during the year ended December 31, 1995 is $5,376,466.
NOTE 7 - DIRECTED BUSINESS ARRANGEMENT
The Fund has a directed business arrangement with
Capital Institution Services, Inc. (CIS). Upon the
purchase and/or sale of investment securities, the Fund
pays a brokerage commission to CIS. These commission
payments generate nonrefundable cumulative credits which
are available to pay certain expenses of the Fund, such as
performance measurement, pricing information, custodian
and record keeping services, legal, accounting and other
administrative costs. The commission credits redeemed
during the year were utilized by the Fund to pay
accounting fees due the Independent Accounting Firm and
administrative expenses. The following is an analysis of
commission credits generated, utilized and available to
pay future expenses of the Fund:
Amount
Balance, January 1, 1995 $2,474
Commission Credits 6,692
generated during 1995
Commission Credits
utilized:
Professional fees $10,000
Administration fees 1,000 11,000
Balance, December 31, ($1,834)
1995
The following is an analysis of fund expenses with
and without commission credits:
With Without
Commiss Commiss
ion ion
Credits Credits
Annual Fund Operating Expenses (as a
percentage of average net assets)
Investment Advisor 1.0% 1.0%
Administration 0.10 0.10
Registration and filing 0.10 0.10
Custodian 0.10 0.10
Auditor 0.05 0.10
Legal
- -
Total Fund Expenses 1.35% 1.4%
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Trustees of the
Wexford Trust (Comprised of the Muhlenkamp Fund)
We have audited the accompanying statement of assets
and liabilities of the Wexford Trust (comprised of
the Muhlenkamp Fund), including the portfolio of investments
as of December 31, 1995, and the relatedstatement 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 five years in the period
then ended. These financial statements and selected per
share data and ratios are the responsibility of the
Trustees. Our responsibility is to express an opinion on these
financial statements and selected per share data and
ratios based on our audit.
We conducted our audit 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
selected 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, 1995 by correspondence with the custodian.
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 audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements and selected
per share data and ratios referred to above present
fairly, in all material respects the financial position
of the Wexford Trust as of December 31, 1995, the results
of its operations for the year then ended, the 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 five years in the period then ended, in conformity
with generally accepted accounting principles.
Schneider, Downs & Co., Inc.
Pittsburgh, Pennsylvania
January 17, 1996
