THE HENLOPEN FUND
QUARTERLY REPORT
MARCH 31, 1998
To My Fellow Shareholders:
The Henlopen Fund's strategy of investing in market-leading growth companies
continued to be successful as the Fund appreciated +20.1% during the first
quarter of 1998. From a longer perspective, the Fund has produced solid results
with 1, 3, and 5 year annualized returns of +55.4%, +31.9% and +23.6%,
respectively, for the period ending 3/31/98. Since our inception on 12/2/92,
the annualized return is +23.8%.
In our December 1997 Shareholder Report we expressed concern regarding excessive
stock valuations and the risks associated with the Asian financial crisis.
While those issues are still relevant, it became apparent to us early in the
quarter that several sectors of the stock market continued to offer exciting
investment opportunity. The year-end cash position, which was about 27% of the
portfolio, was effectively deployed in selected energy, technology, retail and
software issues. As investment managers, we rely upon our own independent
research and judgement to build and maintain a portfolio of exciting growth
companies. We do not try to time the numerous ups and downs of the general
stock market. When cash levels in the portfolio increase, as they did in
December, it is due to exercising our valuation disciplines with respect to
current holdings or our inability to find attractively priced new opportunities.
Ideally, these new opportunities will develop into long-term, core portfolio
holdings.
Entering the second quarter, the general tenor of the economy and stock market
is positive. Modestly rising interest rates and slowing rate of GDP growth will
probably effect the pace of earnings in the coming months, yet, the underlying
economic and financial structure of the country is quite sound. While problems
always exist, so too do opportunities. Our research efforts are aimed at
uncovering such opportunities.
Sincerely yours,
/s/ Michael L. Hershey
Michael L. Hershey
President
MANAGED BY LANDIS ASSOCIATES, INC.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT*<F1> IN
THE HENLOPEN FUND, S&P 500 INDEX AND LIPPER GROWTH FUND INDEX
THE HENLOPEN FUND S&P 500 INDEX LIPPER GROWTH FUND INDEX
----------------- ------------- ------------------------
12/2/92 $10,000 $10,000 $10,000
12/31/92 $10,010 $10,162 $10,204
3/31/93 $10,821 $10,604 $10,507
6/30/93 $11,562 $10,654 $10,661
9/30/93 $12,450 $10,928 $11,173
12/31/93 $12,999 $11,179 $11,426
3/31/94 $12,760 $10,758 $11,084
6/30/94 $12,126 $10,804 $10,841
9/30/94 $12,853 $11,332 $11,373
12/31/94 $12,644 $11,330 $11,246
3/31/95 $13,583 $12,430 $12,059
6/30/95 $15,494 $13,613 $13,349
9/30/95 $17,819 $14,692 $14,563
12/31/95 $17,453 $15,574 $14,918
3/31/96 $19,233 $16,409 $15,691
6/30/96 $21,442 $17,144 $16,107
9/30/96 $21,024 $17,670 $16,566
12/31/96 $21,182 $19,141 $17,627
3/31/97 $20,072 $19,658 $17,468
6/30/97 $22,519 $23,083 $20,228
9/30/97 $28,095 $24,811 $22,301
12/31/97 $25,971 $25,524 $22,450
3/31/98 $31,183 $29,084 $25,229
*<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.
THE HENLOPEN FUND
STATEMENT OF NET ASSETS
MARCH 31, 1998 (UNAUDITED)
QUOTED
SHARES MARKET VALUE (B)<F3>
------ ----------------
LONG-TERM INVESTMENTS -- 95.4% (A) <F2>
COMMON STOCKS -- 94.4% (A)<F2>
APPAREL & SHOES -- 1.2%
28,000 Ashworth, Inc. $479,500
AUTO & TRUCK RELATED -- 1.0%
18,000 Keystone Automotive
Industries, Inc. 429,750
BASIC RESOURCES -- 2.2%
6,000 Aluminum Co. of America 412,878
9,000 USG Corporation 487,692
---------
900,570
BUSINESS SERVICES -- 2.0%
24,000 AlphaNet Solutions, Inc. 303,000
70,000 TeleSpectrum Worldwide Inc. 507,500
---------
810,500
COMMUNICATIONS -- 2.1%
5,000 Cisco Systems Inc. 341,875
4,000 Lucent Technologies Inc. 511,500
---------
853,375
COMPUTER SYSTEMS -- 5.8%
10,000 Compaq Computer Corp. 258,750
10,000 EMC Corporation (Mass.) 378,130
10,000 Sun Microsystems, Inc. 417,190
70,000 Unisys Corporation 1,330,000
---------
2,384,070
DISTRIBUTION -- 1.1%
32,500 D & K Healthcare
Resources, Inc. 438,750
ELECTRONICS/EQUIPMENT
MANUFACTURING -- 2.6%
50,000 Checkpoint Systems, Inc. 1,062,500
ENERGY/SERVICES -- 7.1%
40,000 AstroPower, Inc. 347,520
8,000 Cooper Cameron Corp. 483,000
17,000 Core Laboratories N.V. 414,375
12,000 Montana Power Company 432,756
8,000 Smith International, Inc. 440,504
50,000 Willbros Group, Inc. 821,900
---------
2,940,055
FINANCIAL SERVICES -- 13.1%
20,000 Allied Capital Corporation 553,760
7,000 First Virginia Banks, Inc. 392,875
8,000 First Union Corporation
(N.C.) 454,000
5,000 Fleet Financial Group,
Inc. 425,315
10,000 Hambrecht & Quist Group 349,380
9,000 Markel Corporation 1,556,442
6,000 Mellon Bank Corporation 381,000
60,000 Philadelphia Consolidated
Holding Corporation 1,290,000
---------
5,402,772
FOOD & BEVERAGES -- 0.8%
10,000 Smithfield Foods, Inc. 345,000
HEALTHCARE PRODUCTS -- 12.5%
35,000 Columbia Laboratories,
Inc. 483,455
40,000 Endosonics Corporation 415,000
100,000 IGEN International, Inc 4,237,500
---------
5,135,955
LEISURE/ENTERTAINMENT -- 7.4%
25,000 Dover Downs Entertainment,
Inc. 737,500
45,375 Steiner Leisure Ltd. 2,305,640
---------
3,043,140
MISCELLANEOUS MANUFACTURING -- 8.5%
42,200 AIM Safety Company, Inc. 446,096
35,800 Applied Films Corporation 331,150
55,000 Argus Holdings, Inc. 880,000
30,000 Harmon Industries, Inc. 611,250
35,000 Morrison Knudsen
Corporation 391,580
15,000 MotivePower Industries,
Inc. 414,375
15,000 Westinghouse Air Brake
Company 445,320
----------
3,519,771
PHARMACEUTICALS -- 1.0%
4,000 Pfizer Inc. 398,752
RESTAURANTS -- 2.0%
19,500 Logan's Roadhouse, Inc. 441,187
70,000 Pizza Inn, Inc. 378,420
---------
819,607
RETAILING -- 1.4%
9,000 Family Dollar Stores, Inc. 342,000
40,000 The Sportsmans Guide, Inc. 240,000
---------
582,000
SEMICONDUCTORS/RELATED -- 9.9%
10,000 Applied Materials, Inc. 353,130
5,000 ASM Lithography Holding
N.V. 462,190
15,000 Asyst Technologies, Inc. 348,750
8,000 Du Pont Photomasks, Inc. 346,000
20,000 Electroglas, Inc. 320,000
40,000 Integrated Circuit
Systems, Inc. 837,520
9,000 KLA-Tencor Corp. 344,250
15,000 Kulicke & Soffa
Industries, Inc. 326,250
9,000 Teradyne, Inc. 360,567
10,000 Xilinx, Inc. 374,380
---------
4,073,037
SOFTWARE & RELATED SERVICES -- 9.7%
77,500 Alydaar Software
Corporation 1,361,133
44,000 ANSYS, Inc. 440,000
250,000 Communication Intelligence
Corporation 273,500
40,000 CyberGuard Corporation 380,000
5,000 Excite, Inc. 254,690
6,000 Lycos, Inc. 265,500
7,500 ONSALE, Inc. 232,500
11,000 Sterling Commerce, Inc. 510,125
3,000 Yahoo! Inc. 277,314
---------
3,994,762
SPECIALTY CHEMICALS -- 0.6%
24,000 CFC International, Inc. $264,000
TRANSPORTATION -- 2.4%
20,000 International Shipholding
Corporation 338,760
100,000 RailAmerica, Inc. 668,800
----------
1,007,560
----------
Total common stocks 38,885,426
----------
REITS-- 1.0% (A) <F2>
28,000 Imperial Credit Commercial
Mortgage Investment Corp. 420,000
----------
Total long-term
investments 39,305,426
----------
PRINCIPAL
AMOUNT
SHORT-TERM INVESTMENTS -- 6.1% (A)<F2>
VARIABLE RATE DEMAND NOTES
$2,511,585 General Mills, Inc. 2,511,585
----------
Total investments 41,817,011
Liabilities, less cash
and receivables
(1.5%) (A) <F2> (606,955)
-----------
NET ASSETS $41,210,056
-----------
-----------
Net Asset Value Per
Share (No par value,
unlimited shares
authorized), offering
and redemption price
($41,210,056 / 2,319,523
shares outstanding) $17.77
----------
----------
(a) Percentages for the various classifications relate to net assets.
(b) 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. Short-term investments are
valued at cost which approximates quoted market value.
BOARD OF TRUSTEES
ROBERT J. FAHEY, JR. MICHAEL L. HERSHEY
Director of Real Estate Investment Banking Chairman, Landis Associates, Inc.
Cushman & Wakefield of Pennsylvania, Inc. Kennett Square, Pennsylvania
Philadelphia, Pennsylvania
STEPHEN L. HERSHEY, M.D. P. COLEMAN TOWNSEND, JR.
President, President/CEO, Townsends, Inc.
First State Orthopaedic Consultants, P.A. Wilmington, Delaware
Newark, Delaware
Investment Adviser Independent Accountants
LANDIS ASSOCIATES, INC. PRICE WATERHOUSE LLP
Custodian, Transfer Agent Legal Counsel
FIRSTAR TRUST COMPANY FOLEY & LARDNER
THE HENLOPEN FUND
LONGWOOD CORPORATE CENTER
SUITE 213
415 MCFARLAN ROAD
KENNETT SQUARE, PENNSYLVANIA 19348
(610-925-0400)
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.
