THE HENLOPEN FUND
(THE HENLOPEN LOGO)
SEMIANNUAL REPORT
DECEMBER 31, 1996
To My Fellow Shareholders:
1996 saw a widening performance gap between large and small capitalization
stocks as illustrated by the difference among representative indices. As an
example, the Dow Jones Industrial Index was up 28.9% for the year whereas the
Russell 2000, a widely used index that measures smaller companies, was up only
16.5%.
Despite the fact that the bulk of its investments are in the small cap universe,
The Henlopen Fund managed to post a strong 21.4% return for the 1996 calendar
year, easily exceeding the 17.5% posted by the Lipper Growth Fund Index. This
year's results add to the long-term performance of the Fund; since its inception
in December, 1992, The Henlopen Fund has posted a superior 20.2% return on a
compounded annualized basis.
We finished the year with a well-diversified portfolio of more than 80 stocks,
with no holding exceeding 4.2% of the total. Examples of this diversification
include names in the energy area (Flores & Rucks, up 118% from purchase price;
Lone Star Technologies, up 46%), electronics (Galileo Corporation, up 62%;
GenRad, up 42%), medical (Advanced Technology Laboratories, up 28%; RoTech
Medical, up 42%), specialty retailing (Insight Enterprises, up 58%) and
manufacturing (DT Industries, up 35%).
As of December 27, 1996, the Board of Trustees has declared a distribution of
$0.1313 from short-term realized capital gains which were treated as ordinary
income, and $0.23131 from long-term realized capital gains. The distributions
were paid on December 30, 1996, to shareholders of record on December 26, 1996.
We will continue to invest in individual businesses enjoying significant revenue
growth and improving profitability regardless of the overall level of economic
activity. We are confident that our time-tested investment philosophy will hold
our shareholders in good stead in the months ahead.
Sincerely yours,
/s/ Michael L. Hershey
Michael L. Hershey
President
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
The Henlopen Fund, S&P 500 Index and Lipper Growth Fund Index*<F1>
The Henlopen Fund Lipper Growth Fund Index S&P 500 Index
12/2/92 $10,000 $10,000 $10,000
12/31/92 $10,010 $10,204 $10,162
3/31/93 $10,821 $10,507 $10,600
6/30/93 $11,562 $10,661 $10,643
9/30/93 $12,450 $11,173 $10,928
12/31/93 $12,999 $11,426 $11,183
3/31/94 $12,760 $11,084 $10,754
6/30/94 $12,126 $10,841 $10,792
9/30/94 $12,853 $11,373 $11,330
12/31/94 $12,644 $11,246 $11,325
3/31/95 $13,583 $12,059 $12,432
6/30/95 $15,493 $13,350 $13,600
9/30/95 $17,819 $14,562 $14,693
12/31/95 $17,453 $14,855 $15,576
3/31/96 $19,233 $15,525 $16,413
6/30/96 $21,442 $16,039 $17,140
9/30/96 $21,024 $16,496 $17,677
12/31/96 $21,182 $17,453 $19,157
*<F1>assumes equal $10,000 investments made on inception date of December 2,
1992.
Past performance is not predictive of future performance. Investment
return and principal value will fluctuate, and redemption value may be more or
less than original cost.
MANAGED BY LANDIS ASSOCIATES, INC.
THE HENLOPEN FUND
STATEMENT OF NET ASSETS
December 31, 1996 (Unaudited)
QUOTED
SHARES OR PRINCIPAL AMOUNT COST MARKET VALUE
- ------------------------- ----- ------------
LONG-TERM INVESTMENTS -- 87.8% (A)<F3>
COMMON STOCKS -- 87.6% (A)<F3>
APPAREL & SHOES -- 2.4%
20,000 Cutter & Buck Inc.*<F2> $227,500 $232,500
60,000 Nantucket Industries, Inc.*<F2> 317,647 165,000
6,000 NIKE, Inc. Class B 348,180 358,500
----------- ----------
893,327 756,000
BASIC RESOURCES -- 1.5%
35,000 Royal Gold, Inc.*<F2> 430,000 468,125
COMMUNICATIONS -- 0.5%
15,500 Celeritek, Inc.*<F2> 169,875 164,688
CONSUMER NON-DURABLES -- 0.9%
70,000 Electronic Hair Styling, Inc.*<F2> 347,500 288,750
ELECTRONICS/EQUIPMENT MANUFACTURING -- 5.5%
75,000 Aeroflex Inc.*<F2> 445,779 356,250
8,000 Benchmark Electronics, Inc.*<F2> 245,813 241,000
12,000 Checkpoint Systems, Inc.*<F2> 220,788 297,000
10,000 Galileo Corporation*<F2> 155,550 251,250
20,000 GenRad, Inc.*<F2> 327,015 465,000
17,000 Phoenix Gold
International, Inc.*<F2> 156,750 97,750
----------- ----------
1,551,695 1,708,250
ENERGY/SERVICES -- 15.5%
52,700 Basin Exploration, Inc.*<F2> 308,419 329,375
10,000 Diamond Offshore Drilling, Inc.*<F2> 492,600 570,000
17,000 Flores & Rucks, Inc.*<F2> 414,800 905,250
25,000 Global Marine Inc.*<F2> 371,500 515,625
50,000 Lone Star Technologies, Inc.*<F2> 584,067 850,000
33,000 Offshore Energy
Development Corp.*<F2> 421,000 503,250
35,000 Plains Resources Inc.*<F2> 485,940 546,875
25,000 Titan Exploration, Inc.*<F2> 290,622 300,000
20,000 Tuboscope Vetco
International Corp.*<F2> 300,000 310,000
----------- ----------
3,668,948 4,830,375
FINANCIAL SERVICES -- 14.3%
10,000 American Federal Bank, FSB 160,000 188,750
5,500 Capital One Financial Corp. 133,705 198,000
11,000 Conseco, Inc. 357,142 701,250
5,000 Dean Witter, Discover & Co. 331,550 331,250
10,000 First USA, Inc. 267,800 346,250
60,000 Kinnard Investments, Inc.*<F2> 382,959 345,000
5,000 Markel Corp.*<F2> 309,875 450,000
59,500 Mego Financial Corp.*<F2> 444,395 520,625
24,000 Olympic Financial Ltd.*<F2> 449,240 345,000
24,000 Olympic Financial Ltd.
Rights 10/28/06*<F2> 0 0
23,000 Philadelphia Consolidated
Holding Corp.*<F2> 427,376 534,750
15,000 Pioneer Group, Inc. 306,550 356,250
10,000 Willis Lease Finance Corp.*<F2> 80,000 128,750
----------- ----------
3,650,592 4,445,875
FOOD & BEVERAGES -- 2.3%
4,000 Campbell Soup Co. 298,240 321,000
10,000 Smithfield Foods, Inc.*<F2> 306,000 380,000
----------- ----------
604,240 701,000
HEALTHCARE SERVICES -- 4.3%
26,000 MedPlus, Inc.*<F2> 253,750 162,500
30,000 National Health
Enhancement Systems, Inc.*<F2> 262,188 270,000
20,000 Physician Support
Systems, Inc.*<F2> 398,750 385,000
15,000 RoTech Medical Corp.*<F2> 221,250 315,000
15,000 Unison HealthCare
Corporation*<F2> 165,000 196,875
----------- ----------
1,300,938 1,329,375
LEISURE/ENTERTAINMENT -- 5.7%
72,500 Action Performance Cos. Inc.*<F2> 620,751 1,305,000
10,000 Dover Downs
Entertainment, Inc.*<F2> 218,040 178,750
15,000 Steiner Leisure LTD*<F2> 195,000 301,875
----------- ----------
1,033,791 1,785,625
MISCELLANEOUS MANUFACTURING -- 8.5%
8,000 AGCO Corp. 208,980 229,000
35,000 Aim Safety Company Inc.*<F2> 380,214 453,285
25,000 Chart Industries, Inc. 366,750 428,125
12,000 DT Industries, Inc. 311,688 420,000
13,000 P. H. Glatfelter Co. 246,038 234,000
35,000 Maverick Tube Corp.*<F2> 400,000 446,250
20,000 Northwest Pipe Co.*<F2> 310,000 325,000
12,500 Open Plan Systems, Inc.*<F2> 125,000 109,375
----------- ----------
2,348,670 2,645,035
MEDICAL PRODUCTS/SUPPLIES -- 2.9%
10,000 Advanced Technology
Laboratories, Inc.*<F2> 241,250 310,000
25,000 Applied Biometrics, Inc.*<F2> 412,246 325,000
10,000 Possis Medical Inc.*<F2> 171,563 208,750
3,000 Theragenics Corp.*<F2> 50,805 67,875
----------- ----------
875,864 911,625
NETWORKING -- 3.7%
4,000 3Com Corp.*<F2> 248,000 293,500
5,000 Cisco Systems Inc.*<F2> 299,250 318,125
72,300 Osicom Technologies, Inc.*<F2> 666,687 546,805
----------- ----------
1,213,937 1,158,430
PHARMACEUTICALS -- 2.0%
50,000 Cortex Pharmaceuticals, Inc.*<F2> 328,749 184,400
30,000 Integra LifeSciences Corp.*<F2> 253,120 138,750
35,000 NABI*<F2> 378,125 306,250
----------- ----------
959,994 629,400
RESTAURANTS -- 1.1%
70,000 Pizza Inn, Inc.*<F2> 342,750 323,750
RETAILING -- 2.6%
35,000 Charming Shoppes, Inc.*<F2> 256,876 177,205
5,000 Insight Enterprises, Inc.*<F2> 88,750 140,000
12,000 PETsMART, Inc.*<F2> 270,750 262,500
17,000 Schultz Sav-O Stores, Inc. 212,813 238,000
----------- ----------
829,189 817,705
SEMICONDUCTORS/RELATED -- 2.5%
30,000 Integrated Circuit
Systems, Inc.*<F2> 440,876 408,750
45,000 Patriot Scientific Corp.*<F2> 142,109 63,450
12,000 SMART Modular
Technologies Inc.*<F2> 300,000 301,500
----------- ----------
882,985 773,700
SERVICE COMPANIES -- 2.6%
40,000 4Front Software
International, Inc.*<F2> 232,500 175,000
10,000 Computer Horizon Corp.*<F2> 286,250 385,000
8,500 National Education Corp.*<F2> 170,510 129,625
15,000 Professional Staff PLC*<F2> 135,000 131,250
----------- ----------
824,260 820,875
SOFTWARE -- 3.4%
50,000 Alydaar Software
Corporation*<F2> 568,815 575,000
105,000 Communication
Intelligence Corp.*<F2> 350,582 288,750
10,000 Informix Corp.*<F2> 257,500 203,750
----------- ----------
1,176,897 1,067,500
MISCELLANEOUS TECHNOLOGY -- 1.9%
25,000 Amdahl Corp.*<F2> 300,312 303,125
50,000 Hauppage Digital, Inc.*<F2> 225,942 196,900
20,000 Photran Corporation*<F2> 165,000 75,000
----------- ----------
691,254 575,025
TRANSPORTATION -- 2.5%
8,000 Atlas Air, Inc.*<F2> 326,380 382,000
80,000 RailAmerica, Inc.*<F2> 420,558 390,000
----------- ----------
746,938 772,000
MISCELLANEOUS -- 1.0%
10,000 ChemFirst Inc. 206,942 231,250
3,340 Mississippi Chemical Corp. 72,408 80,160
----------- ----------
279,350 311,410
Total common stocks 24,822,994 27,284,518
----------- ----------
PREFERRED STOCKS -- 0.2% (A)<F3>
2,500 AMC Entertainment Inc.
$1.75 Cum. Conv. Pfd.
$0.66 2/3 par 62,500 67,500
----------- ----------
Total long-term
investments 24,885,494 27,352,018
----------- ----------
SHORT-TERM INVESTMENTS -- 8.9% (A)<F3>
VARIABLE RATE DEMAND NOTES
$1,283,067 American Family
Financial Services 1,283,067 1,283,067
1,500,000 Johnson Controls, Inc. 1,500,000 1,500,000
----------- ----------
Total short-term
investments 2,783,067 2,783,067
----------- ----------
Total investments $27,668,561 30,135,085
==========
Cash and receivables, less
liabilities 3.3% (A)<F3> 1,028,466
-----------
NET ASSETS $31,163,551
===========
Net Asset Value Per Share
($0.01 par value unlimited
shares authorized), offering
and redemption price
($31,163,551 / 2,093,304
shares outstanding) $14.89
======
*<F2>Non-income producing security.
(a)<F3>Percentages for the various classifications relate to net assets.
The accompanying notes to financial statements are an integral part of this
statement.
THE HENLOPEN FUND
STATEMENT OF OPERATIONS
For the Period Ending December 31, 1996 (Unaudited)
INCOME:
Dividends $28,005
Interest 37,316
----------
Total income 65,321
----------
EXPENSES:
Investment management fees 142,334
Administrative services 28,395
Professional fees 12,064
Transfer agent fees 11,586
Registration fees 9,674
Custodian fees 6,401
Printing and postage expense 6,041
Amortization of organizational expenses 5,597
Other expenses 3,203
----------
Total expenses 225,295
----------
NET INVESTMENT LOSS (159,974)
----------
NET REALIZED GAIN ON INVESTMENTS 523,886
NET DECREASE IN UNREALIZED APPRECIATION ON INVESTMENTS (460,064)
----------
NET GAIN ON INVESTMENTS 63,822
----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(96,152)
==========
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ending December 31, 1996 (Unaudited) and for the
Year Ended June 30, 1996
DECEMBER 31, 1996 JUNE 30, 1996
----------------- -------------
OPERATIONS:
Net investment loss $(159,974) $(232,045)
Net realized gain on investments 523,886 4,302,445
Net (decrease) increase in unrealized
appreciation on investments (460,064) 1,769,703
---------- ----------
Net (decrease) increase in net assets
resulting from operations (96,152) 5,840,103
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net realized gains
($2.14451 and $2.26126 per share, respectively) (3,623,419) (2,150,393)
---------- ----------
Total distributions (3,623,419) (2,150,393)*
<F4>
---------- ----------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (324,560 and
639,567 shares, respectively) 4,846,085 10,090,946
Net asset value of shares issued in
distributions (256,417 and 148,396
shares, respectively) 3,537,970 2,133,156
Cost of shares redeemed (31,704 and
39,690 shares, respectively) (472,735) (627,391)
---------- ----------
Net increase in net assets derived from
Fund share activities 7,911,320 11,596,711
---------- ----------
TOTAL INCREASE 4,191,749 15,286,421
NET ASSETS AT THE BEGINNING OF THE PERIOD 26,971,802 11,685,381
---------- ----------
NET ASSETS AT THE END OF THE PERIOD $31,163,551 $26,971,802
========== ==========
*<F4>Total distributions include $1,994,634 of ordinary income, of which 3% is
eligible for the corporate dividends received deduction.
The accompanying notes to financial statements are an integral part of these
statements.
THE HENLOPEN FUND
FINANCIAL HIGHLIGHTS
(Selected data for each share of the Fund outstanding throughout each period)
<TABLE>
<CAPTION>
(UNAUDITED) FOR THE
FOR THE PERIOD FROM
PERIOD ENDING FOR THE YEARS ENDED 12/2/92*<F5>
----------------------------- to
12/31/96 6/30/96 6/30/95 6/30/94 6/30/93
------------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $17.47 $14.68 $11.67 $11.55 $10.00
Income from investment operations:
Net investment loss (0.01) (0.05) (0.11) (0.07) (0.02)
Net realized and unrealized (loss) gains on investments (0.43) 5.10 3.31 0.64 1.58
------- ------- ------- ------- --------
Total from investment operations (0.44) 5.05 3.20 0.57 1.56
Less distributions:
Dividend from net investment income -- -- -- -- (0.01)
Distributions from net realized gains (2.14) (2.26) (0.19) (0.45) --
------- ------- ------- ------- --------
Total from distributions (2.14) (2.26) (0.19) (0.45) (0.01)
------- ------- ------- ------- --------
Net asset value, end of period $14.89 $17.47 $14.68 $11.67 $11.55
======= ======= ======= ======= =======
TOTAL INVESTMENT RETURN (1.2)%(a)<F10>38.4% 27.8% 4.9% 28.5%**<F6>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's $) 31,164 26,972 11,685 6,798 1,062
Ratio of expenses (after reimbursement) to average net assets***<F7> 1.6%**<F6> 1.8% 2.0% 2.0% 2.0%**<F6>
Ratio of net investment loss to average net assets****<F8> (1.1)%**<F6>(1.3)% (1.2)% (1.3)% (0.7)%**<F6>
Portfolio turnover rate 59.3% 177.5% 147.8% 63.0% 54.0%
Average commission rate paid*****<F9> $0.0588 -- -- -- --
*<F5>Commencement of Operations. **<F6>Annualized. (a)<F10>Not annualized.
***<F7>Computed after giving effect to adviser's expense limitation undertaking.
If the Fund had paid all of its expenses, the ratio would have been 3.0% for the
year ended June 30, 1994 and 11.5%** for the period ended June 30, 1993.
****<F8>The ratio of net investment loss prior to the adviser's expense
limitation undertaking to average net assets would have been (2.2%) for the year
ended June 30, 1994 and (10.2%)** for the period ended June 30, 1993.
*****<F9>Disclosure required for fiscal years beginning after September 1, 1995.
The accompanying notes to financial statements are an integral part of this
statement.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 (Unaudited)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES --
The following is a summary of significant accounting policies of The Henlopen
Fund (the "Fund"), which was organized as a Delaware Business Trust on
September 17, 1992 and is registered as an open-end management company under
the Investment Company Act of 1940. 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, or if no sale is reported, the latest bid price. Securities
which are traded over-the-counter are valued at the latest bid price.
Securities for which quotations are not readily available are valued at
fair value as determined by the investment adviser under the supervision of
the Board of Trustees. Short-term investments are valued at cost which
approximates quoted market value. Investment transactions are recorded no
later than the first business day after the trade date. Cost amounts, as
reported on the statement of net assets, are the same for Federal income
tax purposes.
(b) Net realized gains and losses on common stock are computed on the
basis of the cost of specific certificates.
(c) 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 income to its shareholders and otherwise
comply with the provisions of the Internal Revenue Code applicable to
regulated investment companies.
(d) Dividend income is recorded on the ex-dividend date. Interest income
is recorded on the accrual basis.
(e) 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 does not anticipate nonperformance by these counterparties.
(f) Generally accepted accounting principles require that permanent
financial reporting and tax differences for overdistributed net investment
income be reclassified to capital stock.
(g) 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 reporting period. Actual results could differ from these
estimates.
(2) INVESTMENT ADVISER AND MANAGEMENT AGREEMENT AND TRANSACTIONS WITH RELATED
PARTIES --
The Fund has a management agreement with Landis Associates, Inc. (the
"Adviser"), with whom certain officers and directors 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.
(3) DISTRIBUTION TO SHAREHOLDERS --
Net investment income and net realized gains, if any, are distributed to
shareholders. On December 27, 1996, the Fund distributed $267,529 from net
short-term realized gains ($0.1313 per share) and $473,063 ($0.23131 per
share) from long-term realized gains. The distributions were paid on December
30, 1996, to shareholders of record on December 26, 1996.
(4) DEFERRED EXPENSES --
Organizational expenses were deferred and are being amortized on a straight-
line basis over a period of five years beginning with the date of sales of
shares to the public. These expenses were advanced by the Adviser who will be
reimbursed by the Fund over a period of five years. The proceeds of any
redemption of the initial shares by the original shareholder will be reduced
by a pro-rata portion of any then unamortized deferred expenses in the same
proportion as the number of initial shares being redeemed bears to the number
of initial shares outstanding at the time of such redemption. The unamortized
organizational expenses at December 31, 1996 were $10,259.
(5) INVESTMENT TRANSACTIONS --
For the period ending December 31, 1996, purchases and proceeds of sales of
investment securities (excluding short-term securities) were $17,502,043 and
$15,843,972, respectively.
(6) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES --
As of December 31, 1996, liabilities of the Fund included the following:
Payable to the Adviser for management fees and deferred expenses $36,339
Other liabilities 14,594
(7) SOURCES OF NET ASSETS --
As of December 31, 1996, the sources of net assets were as follows:
Fund shares issued and outstanding $28,914,761
Net unrealized appreciation on investments 2,466,524
Accumulated net realized losses (217,734)
---------
$31,163,551
==========
Aggregate net unrealized appreciation as of December 31, 1996, consisted of
the following:
Aggregate gross unrealized appreciation $4,510,127
Aggregate gross unrealized depreciation (2,043,603)
-----------
Net unrealized appreciation $2,466,524
==========
BOARD OF TRUSTEES
ROBERT J. FAHEY, JR.
Director of Real Estate Investment Banking
Cushman & Wakefield of Pennsylvania, Inc.
Philadelphia, Pennsylvania
MICHAEL L. HERSHEY
Chairman, Landis Associates, Inc.
Wilmington, Delaware
STEPHEN L. HERSHEY, M.D.
President, First State Orthopaedic Consultants, P.A.
Newark, Delaware
P. COLEMAN TOWNSEND, JR.
President/CEO, Townsends, Inc.
Millsboro, Delaware
Investment Adviser: LANDIS ASSOCIATES, INC.
Independent Accountants: PRICE WATERHOUSE LLP
Custodian, Transfer Agent: FIRSTAR TRUST COMPANY
Legal Counsel: FOLEY & LARDNER
THE HENLOPEN FUND
SUITE 100
400 WEST NINTH STREET
WILMINGTON, DELAWARE 19801
(302) 654-3131
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.
