[LOGO] MUHLENKAMP FUND
Intelligent Investment Management
ANNUAL REPORT
December 31, 1999
Phone: l-800-860-3863
E-mail: [email protected]
Web Site: www.muhlenkamp.com
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a currently effective prospectus of the Muhlenkamp
Fund. Please call l-800-860-3863 for a free prospectus. Read it carefully before
you invest.
THE MUHLENKAMP FUND
(A Portfolio of the Wexford Trust)
Dear Fellow Shareholders:
The Trustees and Management of the Muhlenkamp Fund are pleased to present this
annual report of your Fund.
1999 was a challenging year in the investment markets. We got it partly right
and partly wrong. The economy continued strong in nearly all respects with GDP
(Gross Domestic Product) up 5.5% for the year. Employment remained strong,
keeping the unemployment rate at 4.1%. Inflation remains under control, with the
core CPI (Consumer Price Index) up 1.9% for the year. The core PPI (Producer
Price Index) was also up 1.9% for the year.
Despite these numbers, economists and the bond market continue to fear that the
strong economy must cause increased inflation, even though Reagan and Volcker
disproved this theory nearly 20 years ago. This fear drove long-term Treasury
yields from 5.4% at the beginning of the year to 6.7% at the end of the year,
driving bond prices down 13% for their worst year ever. (The second worst year
was 1994.) This rise in interest rates drove P/E (Price/Earnings) ratios lower
for most stocks. Fully one-half of the stocks on both the NYSE and the NASDAQ
declined in price, despite healthy increases in sales and earnings.
Against this background, public enthusiasm for a narrow list of high-tech stocks
drove them to dramatic price gains. In the S&P 500 Index, just 30 stocks (of the
500) accounted for all of its gain for the year, and just 7 stocks accounted for
one-half of the gain.
I once commented to a friend that most people buy stocks the way teenagers buy
clothes, i.e. they buy into current fads. We have seen such behavior in the
stocks that caught the fancy of the public in 1999. Until mid-year there was
some rationale for the price levels of most stocks, even the most popular.
Lately, many prices have lost all relationship to reality. It is hard to say how
far a fad can run or when it will stop, but the enthusiasm works both ways, down
as well as up. We currently see signs that the enthusiasm is waning.
We also see signs that the market is beginning to pick up on the trend begun in
the second quarter of 1999. We said then that, as the fear of recession
disappeared, the market's focus would shift from "Security Blankets" and
internet stocks to a broader list of companies with good earnings and reasonable
prices. We were right - for three months. Then the Fed and the institutional
market shifted to a fear of increased inflation based on strong growth in GDP
driving up interest rates - both short-term rates and long-term rates. The
retail public ignored these fears. Reflecting a continued strong consumer
confidence, it continued to play the "game of the stock market", merely rotating
its focus from internet stocks to other technology stocks, primarily in
telecommunications.
Today, similar to the second quarter of 1999, we are seeing strength in name
cyclical stocks, indicating that some people are willing to bet on the strength
in the economy. Since early December, we're also seeing strength in utilities
(normally a proxy for bonds) although we haven't yet seen strength in the bond
market itself. This indicates that bond investors are not yet willing to bet
that inflation remains low. Since we now have nine months of data showing a
strong economy and low inflation, our expectation is that the fears of inflation
will soon subside, allowing interest rates and P/E's to stabilize and stock
prices to reflect their earning gains of 1999 and 2000.If we are right, the
strength should spread to the broad range of companies, which are doing very
well in this economy. This broadening of strength should also close the huge
valuation gap between the largest companies (and stocks) and the small and
midsize companies. We continue to invest in good companies at cheap prices as
indicated by the following table. We also continue to be bought out of a number
of our holdings through mergers and management buyouts.
These buyouts confirm the values we see in our companies. It also validates that
companies, at least, value themselves and their competitors much the way we do.
We use these valuation methods because they have been proven reliable in all
kinds of markets over a long period of time (over 50 years). Whether or not
we're in a new economy is debatable, but ultimately, stock prices will reflect
company values; and company values are determined by earnings and cash flows. So
despite periodic excursions into the "growth" stocks of a given time, values in
companies and stocks ultimately provide good returns.
<TABLE>
<CAPTION>
EPS GROWTH EPS GROWTH
ROE 5-YEAR 1-YEAR SALES GROWTH P/E
--- ------ ------ ------------ ---
<S> <C> <C> <C> <C> <C>
S&P Top 15 25 21 20 16 48
Muhlenkamp Top 15 23 26 31 14 22
Average Company 15 - 10 - 15
</TABLE>
Ronald H. Muhlenkamp
President
February 15, 200O
THE MUHLENKAMP FUND
(A Portfolio of the Wexford Trust)
A $10,000 INVESTMENT IN THE MUHLENKAMP FUND
MUHLENKAMP FUND
ANNUAL REPORT PLOT POINTS
12/31/99
<TABLE>
<CAPTION>
12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Muhlenkamp Fund 10,000 8,514 12,379 14,335 16,930 15,711 20,896 27,164
S&P 500 Index 10,000 9,690 12,645 13,607 14,981 15,176 20,882 25,684
</TABLE>
12/31/97 12/31/98 12/31/99
36,210 37,369 41,629
34,263 44,062 53,315
The Standard & Poor's 500 Stock Index (S&P 500) is a capital-weighted index,
representing the aggregate market value of the common equity of 500 stocks
primarily traded on the New York Stock Exchange. This chart assumes an initial
gross investment of $10,000 made on 12/3l/89. Returns shown include the
reinvestment of all dividends. The Fund's past performance is not necessarily an
indication of its future performance. It may perform better or worse in the
future.
AVERAGE ANNUAL TOTAL RETURNS
(AS OF 12/31/99)
One Year Five Year Ten Year
-------- --------- --------
Muhlenkamp Fund 11.40% 21.51% 15.33%
S&P 500 21.04% 28.56% 18.21%
THE MUHLENKAMP FUND
(A Portfolio of the Wexford Trust)
STATEMENT OF ASSETS & LIABILITIES
December 31, 1999
ASSETS
INVESTMENTS, AT VALUE (Identified cost $129,068,398) $ 181,075,385
RECEIBABLE FOR FUND SHARES SOLD 1,941,067
DIVIDENDS RECEIVABLE 175,235
INTEREST RECEIVABLE 2,249
OTHER ASSETS 11,818
------
Total assets 183,205,754
LIABILITIES
COVERED PUT AND CALL OPTIONS WRITTEN, AT VALUE 2,977,750
(Premiums received $589,480)
PAYABLE TO CUSTODIAN 1,132,203
PAYABLE FOR FUND SHARES PURCHASED 74,710
PAYABLE TO ADVISOR 147,147
ACCRUED EXPENSES AND OTHER LIABILITIES 274,539
-------
Total liabilities 4,606,349
---------
NET ASSETS $ 178,599,405
=============
NET ASSETS
CAPITAL PAID IN ON SHARES OF BENEFICIAL INTEREST $128,969,814
ACCUMULATED NET REALIZED LOSS ON INVESTMENTS (10,875)
NET UNREALIZED APPRECIATION (DEPRECIATION) OF:
Investments 52,006,987
Written options (2,388,271)
----------
NET ASSETS $178,599,405
============
SHARES OF BENEFICIAL INTEREST OUTSTANDING
(unlimited number of shares authorized, $.001 par value) 4,344,743
NET ASSET VALUE PER SHARE $ 41.11
=======
See notes to financial statements.
THE MUHLENKAMP FUND
(A Portfolio of the Wexford Trust)
STATEMENT OF OPERATIONS
Year Ended December 31, 1999
INVESTMENT INCOME:
Dividends $ 1,794,894
Interest 268,448
-------
Total investment income 2,063,342
EXPENSES:
Investment advisory fees 1,885,518
Transfer agent fees & expenses 406,547
Printing & mailing 67,095
Federal & state registration 30,865
Custody fees 30,177
Fund accounting fees 44,077
Administration fees 88,372
Professional fees 36,272
Insurance 3,020
Miscellaneous 5,498
-----
Total expenses 2,597,441
Fees paid indirectly (50,309)
-------
Net expenses 2,547,132
---------
NET INVESTMENT LOSS (483,790)
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments 3,671,407
Change in unrealized appreciation or depreciation
in value of :
Investments 17,830,270
Written options (1,782,378)
----------
Net realized and unrealized gain on investments 19,719,299
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 19,235,509
============
See notes to financial statements.
THE MULHLENKAMP FUND
(A Portfolio of the Wexford Trust)
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
----------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (483,790) $ 387,575
Net realized gain (loss) on investments 3,671,407 (104,365)
Change in unrealized appreciation or depreciation in value
of investments and written options 16,047,892 (1,155,525)
---------- ----------
Net increase (decrease) in net assets
resulting from operations 19,235,509 (872,315)
---------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income - (392,344)
From net realized gains (3,428,553) -
---------- --------
Total distributions to shareholders (3,428,553) (392,344)
---------- --------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 54,891,294 120,046,067
Proceeds from shares issued to holders
in reinvestment of dividends 3,348,810 381,937
Cost of shares redeemed (90,409,255) (49,662,383)
----------- -----------
Net increase (decrease) in net assets resulting from
capital share transactions (32,169,151) 70,765,621
----------- ----------
Total increase (decrease) in net assets (16,362,195) 69,500,962
NET ASSETS:
Beginning of year 194,961,600 125,460,638
----------- -----------
End of year (including undistributed net investment
loss of $0 and distributions in excess of
net investment income of $538, respectively) $ 178,599,405 $ 194,961,600
===== ============= =============
</TABLE>
See notes to financial statements.
THE MUHLENKAMP FUND
(A Portfolio of the Wexford Trust)
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $ 37.65 $ 36.55 $ 27.52 $ 21.26 $ 16.23
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (1) (0.11) 0.08 0.18 0.14 0.21
Net realized and unrealized gains on investments 4.37 1.10 8.98 6.23 5.14
---- ---- ---- ---- ----
Total from investment operations 4.26 1.18 9.16 6.37 5.35
LESS DISTRIBUTIONS:
From net investment income 0.00 (0.08) (0.13) (0.11) (0.21)
From net realized gains (0.80) 0.00 0.00 0.00 (0.11)
----- ---- ---- ---- -----
Total distributions (0.80) (0.08) (0.13) (0.11) (0.32)
----- ----- ----- ----- -----
NET ASSET VALUE, END OF YEAR $ 41.11 $ 37.65 $ 36.55 $ 27.52 $ 21.26
======= ======= ======= ======= =======
TOTAL RETURN 11.40% 3.22% 33.28% 29.96% 32.90%
NET ASSETS, END OF PERIOD (in thousands) $ 178,599 $ 194,962 $ 125,461 $ 42,039 $ 23,571
RATIO OF TOTAL EXPENSES TO AVERAGE NET ASSETS 1.38% 1.36% 1.44% 1.56% 1.40%
RATIO OF NET EXPENSES TO AVERAGE NET ASSETS 1.35% 1.32% 1.33% 1.54% 1.35%
RATIO OF NET INVESTMENT INCOME (LOSS)
TO AVERAGE NET ASSETS (0.26%) 0.21% 0.53% 0.58% 1.10%
PORTFOLIO TURNOVER RATE 14.52% 27.03% 13.89% 16.90% 22.70%
</TABLE>
(1) Computed on weighted average number of shares outstanding for the years
ended December 31, 1995 - 1998.
See notes to financial statements.
THE MUHLENKAMP FUND
(A Portfolio of the Wexford Trust)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF ISSUER OR TITLE OF ISSUE OR PRINCIPAL AMOUNT VALUE
COMMON STOCK - 99.0%+
<S> <C> <C>
Aerospace - 1.3%+
* BE Aerospace, Inc. 273,500 $ 2,307,656
* Teledyne Technologies, Inc. 5,714 53,926
------
2,361,582
---------
Airlines - 2.5%+
AMR Corp. 14,000 938,000
Air Express International Corp. 32,343 1,045,083
* Alaska Air Group 70,000 2,458,750
---------
4,441,833
---------
Appliances - 0.8%+
* Salton, Inc. 44,200 1,477,937
---------
Autos and Recreational Vehicles - 8.3%+
Ford Motor Company 112,000 5,985,000
* Monaco Coach Corp. 45,000 1,150,313
* National RV Holdings 224,500 4,321,625
Superior Industries 98,180 2,632,452
Winnebago Industries, Inc. 40,000 802,500
-------
14,891,890
----------
Banks - 9.3%+
Chase Manhattan 24,000 1,864,500
Citigroup Inc. 180,000 10,001,250
Mellon Financial Corp. 140,000 4,768,750
---------
16,634,500
----------
Brokerage - 8.5%+
A.G. Edwards 18,750 601,172
Merrill Lynch 102,000 8,517,000
# Southwest Securities, Inc. 219,598 6,011,495
---------
15,129,667
----------
Building Products - 4.1%+
* Griffon Corp. 48,000 375,000
Owens Corning 90,000 1,738,125
Southdown Inc. 60,000 3,097,500
Texas Industries Inc. 47,400 2,017,463
---------
7,228,088
---------
Capital Goods - 4.1%+
Commercial Intertech 183,400 2,338,350
Graco, Inc. 105,825 3,796,472
IDEX Corp. 41,250 1,252,969
* Water Pik Technologies, Inc. 2,000 19,125
------
7,406,916
---------
Finance - 9.9%+
Federal National Mortgage Assoc. 74,400 4,645,350
Morgan Stanley Dean Witter & Co. 81,500 11,634,125
National City Corp. 13,704 324,614
Washington Mutual, Inc. 41,125 1,069,250
---------
17,673,339
----------
Furniture - 3.1%+
* Stanley Furniture, Inc. 305,500 5,613,562
---------
Homebuilding - 4.5%+
American Woodmark Corp. 92,200 2,235,850
* Beazer Homes USA, Inc. 27,400 527,450
* Crossman Communities Inc. 180,000 2,790,000
* NVR, Inc. 53,600 2,559,400
---------
8,112,700
---------
Industrial Equipment - 1.2%+
JLG Industries, Inc. 128,100 2,041,594
---------
Insurance - 6.4%+
Conseco, Inc. 384,608 6,874,868
Fidelity National Financial 238,881 3,433,914
* Frontier Insurance 64,737 222,533
Reliance Group Holdings Inc. 132,500 886,094
-------
11,417,409
----------
Medical - 1.5%+
* D & K Healthcare Resources, Inc. 17,500 255,938
* Eclipse Surgical Technologies, Inc. 80,000 590,000
* Orthodontic Centers of America, Inc. 105,000 1,253,438
* Scios, Inc. 140,000 586,250
-------
2,685,626
---------
Metal - 0.9%+
Allegheny Technologies, Inc. 20,000 448,750
* RTI International Metals 154,200 1,156,500
---------
1,605,250
---------
Oils, Natural Gas and Energy Related - 6.7%+
# * Calpine Corp. 183,000 11,712,000
* OMNI Energy Services 185,600 208,800
-------
11,920,800
----------
Retail Jewelry - 0.1%+
* Piercing Pagoda, Inc. 10,000 151,250
-------
Technology - 23.9%+
* ATMI, Inc. 160,100 5,293,306
# * Applied Materials 150,000 19,003,125
* Atmel Corp. 130,000 3,843,125
Computer Associates International, Inc. 105,000 7,343,438
Intel Corp. 88,000 7,243,500
---------
42,726,494
----------
Tobacco - 0.5%+
Phillip Morris 35,280 818,055
-------
Transportation - 1.4%+
* Arkansas Best Corp. 177,300 2,127,600
* Rush Enterprises, Inc. 20,000 290,000
-------
2,417,600
---------
Total Common Stocks (cost $125,360,426) 176,756,092
-----------
BONDS AND NOTES - 2.4%+
General Motors Acceptance Corp.
-0-%, 6/15/15 $ 5,000,000 1,446,945
U.S. Treasury Strip
-0-%, 2/15/13 800,000 328,175
U.S. Treasury Strip
-0-%, 11/15/24 12,880,000 2,544,173
---------
Total Bonds and Notes (cost $3,707,972) 4,319,293
---------
TOTAL INVESTMENTS - 101.4%+
(identified and tax cost of $129,068,398) $ 181,075,385
==============
</TABLE>
* Non income producing security.
+ Investments are shown as a percentage of net assets at December 31, 1999.
# A portion of the shares have been committed as collateral for written option
contracts.
THE MUHLENKAMP FUND
(A Portfolio of the Wexford Trust)
SCHEDULE OF OPTIONS WRITTEN
December 31, 1999
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS WRITTEN
UNDERLYING SECURITY/EXPIRATION DATE/EXERCISE PRICE (100 SHARES PER CONTRACT) VALUE
<S> <C> <C>
CALL OPTIONS
Applied Materials
Expiration January 2000, Exercise Price $40.00 100 $ 880,000
Applied Materials
Expiration January 2002, Exercise Price $120.00 50 231,250
Calpine Corporation
Expiration January 2000, Exercise Price $37.00 400 1,060,000
Calpine Corporation
Expiration January 2000, Exercise Price $40.00 200 482,500
Calpine Corporation
Expiration January 2000, Exercise Price $50.00 200 282,500
PUT OPTIONS
Southwest Securities
Expiration March 2000, Exercise Price $30 10 5,500
Southwest Securities
Expiration March 2000, Exercise Price $35 40 36,000
------
TOTAL OPTIONS WRITTEN $ 2,977,750
===============
(Premiums received $589,480)
</TABLE>
See notes to financial statements.
THE MUHLENKAMP FUND
(A Portfolio of the Wexford Trust)
NOTES TO FINANCIAL STATEMENTS
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. The Muhlenkamp
Fund (the "Fund") is a portfolio of the 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.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of significant accounting policies applied by management in the
preparation of the accompanying financial statements follows.
a. INVESTMENT VALUATIONS - Stocks and Bonds are valued at the latest sales price
on the last business day of the fiscal period as reported by the securities
exchange on which the issue is traded. If no sale is reported, the security is
valued at the last quoted bid price.
b. INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME - Investment
transactions are accounted for on the trade date. Dividend income is recorded on
the ex-dividend date. Interest income is recorded daily on the yield to maturity
basis. Discounts and premiums on securities are amortized over the life of the
respective securities. The Fund uses the specific identification method in
computing gain or loss on the sale of investment securities.
c. FEDERAL 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 tax provision is required. In addition, the Fund will make
sufficient distributions of its income and realized gains, if any, to avoid the
payment of any federal excise taxes. Generally accepted accounting principles
require that permanent differences between financial reporting and tax reporting
be reclassified between various components of net assets. Accordingly, at
December 31, 1999, reclassifications were recorded to decrease accumulated net
investment loss by $484,328 and decrease capital stock by $484,328.
d. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS OF BENEFICIAL INTEREST -
Dividends and distributions are recorded by the Fund on the record date.
e. USE OF ESTIMATES - 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 liabilities 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.
f. OPTIONS TRANSACTIONS - The Fund may write put and call options only if such
options are considered to be covered. A written call option is considered to be
covered when the writer of the call option owns throughout the option period the
security on which the option is written. A written put option is considered
covered when the writer of the put has deposited and maintained an amount equal
to or greater than the exercise price of the put option.
When the Fund writes a covered call or put option, an amount equal to the
premium received is included in the statement of assets and liabilities as a
liability. The amount of the liability is subsequently marked-to-market to
reflect the current market value of the option. If an option expires on its
stipulated expiration date or if the Fund enters into a closing purchase
transaction, a gain or loss is realized. If a written call option is exercised,
a gain or loss is realized for the sale of the underlying security and the
proceeds from the sales are increased by the premium originally received. If a
written put option is exercised, the cost of the security acquired is decreased
by the premium originally received. As writer of an option, the Fund has no
control over whether the underlying securities are subsequently sold (call) or
purchased (put) and, as a result, bears the market risk of an unfavorable change
in the price of the security underlying the written option.
The Fund may purchase put and call options. When the Fund purchases a call or
put option, an amount equal to the premium paid is included in the Fund's
statement of assets and liabilities as an investment, and is subsequently
marked-to-market to reflect the current market value of the option. If an option
expires on the stipulated expiration date or if the Fund enters into a closing
sale transaction, a gain or loss is realized. If the Fund exercises a call, the
cost of the security acquired is increased by the premium paid for the call. If
the Fund exercises a put option, a gain or loss is realized from the sale of the
underlying security, and the proceeds from such a sale are decreased by the
premium originally paid. Written and purchased options are non-income producing
securities.
3. INVESTMENT ADVISORY AND OTHER AGREEMENTS
Muhlenkamp & Co., Inc. (the "Advisor"), an affiliate of which an
officer-stockbroker 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 Advisor is permitted
to charge the Fund for some or all of its routine administration costs which
totaled $126,307 for the year ended December 31, 1999. The reimbursement
consists of the following:
Federal & state registration $42,566
Printing & mailing 60,986
Legal & audit 1,137
Insurance 1,088
Miscellaneous 20,530
------
Total $126,307
========
Effective April 1, 1999, Firstar Mutual Fund Services, LLC ("Firstar") began
providing administration services to the Fund. As compensation for this service,
Firstar receives a fee at an annual rate of 0.06% of the Fund's first $350
million of average daily net assets, 0.05% of the next $400 million, and 0.03%
on the remaining balance. Effective May 1, 1999, Firstar also began providing
accounting and transfer agent services which were previously provided by
American Data Services, Inc. As compensation for its accounting services,
Firstar receives $22,000 for the first $40 million of the Fund's average daily
net assets, 0.01% on the next $200 million, and 0.005% on the remaining balance.
As compensation for its transfer agent services, Firstar receives $14.00 per
shareholder account or a minimum fee of $22,500, whichever is greater. Firstar
Bank, N.A. serves as custodian for the Fund.
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 $.00l per
share. Transactions in capital shares of the Fund were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999 YEAR ENDED DECEMBER 31, 1998
---------------------------- ------------------------------
<S> <C> <C>
Shares outstanding, beginning of year 5,178,767 3,432,778
Shares sold 1,361,481 3,066,602
Shares issued to shareholders in reinvestment of
dividends 84,183 10,376
Shares redeemed (2,279,688) (1,330,989)
----------- -----------
Shares outstanding, end of year 4,344,743 5,178,767
========= =========
</TABLE>
5. COVERED PUT AND CALL OPTIONS
The Fund's activity in written options for the year ended December 31, 1999 was
as follows:
<TABLE>
<CAPTION>
NUMBER OF CONTRACTS PREMIUMS RECEIVED
----------------------------- -----------------------------
<S> <C> <C>
Options outstanding, beginning of year 1,300 $551,082
Options written 1,378 793,660
Options exercised (10) (2,095)
Options expired (578) (273,578)
Options closed (1,090) (479,589)
------- ---------
Options outstanding, end of year 1,000 $ 589,480
===== =========
</TABLE>
6. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities, excluding short-term securities,
for the year ended December 3 1, 1999 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
- ------------------------------------------------------------- -----------------------------------------------------------
<S> <C> <C> <C>
U.S. GOVERNMENT OTHER U.S. GOVERNMENT OTHER
--------------- ----- --------------- -----
$ 0 $27,212,045 $8,726,427 $57,515,763
</TABLE>
The components of the net unrealized appreciation in the value of the
investments held at December 31, 1999 for both financial reporting and tax
purposes are as follows:
Gross unrealized appreciation of investments . . . . $73,719,329
Gross unrealized depreciation of investments . . . . (21,712,342)
--------------
Net unrealized appreciation of investments . . . . . . $52,006,987
===========
At December 31, 1999, the cost of investments for federal income tax purposes
was $129,068,398.
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 measurements, 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 to the Independent Auditors, transfer agent fees and fund
accounting.
The following is an analysis of commissions credits generated, utilized and
available to pay future expenses of the Fund:
Balance, December 31, 1998 . . . . . . . . . . .. . . . . . . . . $13,857
Commission credits generated in 1999 . . . . . . . . . . . . . . . 55,963
Commission credits utilized:
Auditor fees . . . . .. . . . . . . . . . . . . . . . . (15,700)
Transfer agent fees . . . . . . . . . . . . . . . . . . (34,609)
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Balance, December 31, 1999 . . . . . . . . . . .. . . . . . . . . $19,511
=======
For the year ended December 31, 1999, total Fund operating expenses, as a
percentage of average net assets were 1.38% without the commission credits. With
the commission credits, net Fund operating expenses as a percentage of average
net assets were 1.35% for the same period.
THE MUHLENKAMP FUND
(A Portfolio of the Wexford Trust)
INDEPENDENT AUDITOR'S REPORT
To the Trustees of the Wexford Trust and Shareholders of the Muhlenkamp Fund:
We have audited the accompanying statement of assets and liabilities of the
Muhlenkamp Fund (the "Fund"), including the portfolio of investments, as of
December 31, 1999, and the related statements of operations for the year then
ended, the statements of changes in net assets for the years ended December 31,
1999 and 1998, and the financial highlights for each of the five years in the
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights 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 financial
highlights 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 financial highlights referred to
above present fairly, in all material respects, the financial position of the
Muhlenkamp Fund as of December 31, 1999, the results of its operations for the
year then ended, the changes in its net assets for the years ended December 31,
1999 and December 31, 1998, and the financial highlights for the periods
presented, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
January 31,2000
INVESTMENT ADVISOR
Muhlenkamp & Company, Inc.
12300 Perry Highway
Wexford, PA 15090
ADMINISTRATOR AND TRANSFER AGENT
Firstar Mutual Fund Services, LLC
615 E. Michigan Street
Milwaukee, WI 53202
CUSTODIAN
Firstar Bank, N.A.
425 Walnut Street
Cincinnati, OH 45201
AUDITORS
Deloitte & Touche LLP
2500 One PPG Place
Pittsburgh, PA 15222
