THE HENLOPEN FUND
(THE HENLOPEN FUND LOGO)
QUARTERLY REPORT
MARCH 31, 1999
To My Fellow Shareholders:
To paraphrase the Chinese aphorism, stock market participants have been "living
in interesting times" during the first quarter of 1999. The investment factors
we highlighted in our December letter, negligible inflation, mega-mergers and
the Internet phenomenon, continued to propel the major indices higher, despite
prolonged market "narrowness" and an excessive valuation of the favored 100
stocks.
For the Quarter ending March 31, 1999, the Fund advanced +1.4%. Our goal is to
generate long-term capital appreciation and our 1, 3, and 5 year annualized
returns are -1.4%, +16.9% and +19.2%, respectively. Since inception on 12/2/92,
the Fund has an annualized return of +19.4%.
In trying to navigate through the investment "fog" we adhere to our strategy of
investing in industry-leading companies and search for any under-recognized
catalyst in a company's fundamentals. Two actual portfolio holdings might be of
interest to our investors, as examples illustrating our investment philosophy.
Tredegar Industries manufactures aluminum extrusions and plastic films. Spun-
off from Ethyl Corp. in 1989, Tredegar has undergone extensive asset
restructuring and expansion by acquisition to improve its competitive position.
These actions have set the stage for above-average revenue and earnings growth
while also generating strong free cash flow; this cash flow has been used to
repurchase shares and to fund a series of investments in drug discovery and
other emerging technologies which we believe will drive future growth.
Montana Power Co. is an integrated electric and gas utility that is
transforming itself by selling its generation assets and increasing its focus
on telecommunications. In addition to debt repayments and stock repurchases,
the bulk of the sale proceeds have been invested in Touch America, it's
unregulated, fiber-optic communications network subsidiary. Linking large data
customers in 30 western cities through its 10,000-mile fiber-optic network,
Touch America should experience rapid earnings growth in 2000 and beyond.
In today's frenetic market, commentators and pundits try to divine the
particular by interpreting the general. However, even relevant general comments
about markets, currencies, interest rates and industry sectors are of limited
use in finding and evaluating specific investment opportunities. Hands on
research, independent judgement, a continuous review of assumptions and
attention to investment values must be vigorously applied to the construction
and management of a growth portfolio. At The Henlopen Fund, we will continue to
apply this time-tested approach and are confident we will be justified by the
long-term results.
Sincerely yours,
/s/Michael L. Hershey
Michael L. Hershey
President
P.S. The Henlopen Fund is now on the Internet at WWW.HENLOPENFUND.COM.
MANAGED BY LANDIS ASSOCIATES, INC.
THE HENLOPEN FUND
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 $15,591
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
6/30/98 $29,902 $30,041 $25,946
9/30/98 $23,918 $27,058 $22,985
12/31/98 $30,323 $32,818 $28,216
3/31/99 $30,744 $34,456 $29,647
*<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, 1999 (Unaudited)
QUOTED
SHARES MARKET VALUE (B)<F3>
- ------- ----------------
COMMON STOCKS -- 85.1% (A)<F2>
AUTO & TRUCK RELATED -- 1.7%
6,500 General Motors Corp. $ 564,687
18,000 Keystone Automotive Industries, Inc. 292,500
-----------
857,187
BASIC RESOURCES -- 6.2%
10,000 Alcoa Inc. 411,880
20,000 Barrick Gold Corp. 341,260
30,000 De Beers Cons Mines - ADR 568,140
25,000 Getchell Gold Corp. 654,700
70,000 Meridian Gold Inc. 411,250
56,000 Royal Gold, Inc. 224,000
12,000 The Williams Companies, Inc. 474,000
-----------
3,085,230
BUSINESS SERVICES -- 4.4%
2,500 DoubleClick Inc. 455,157
24,000 Metamor Worldwide, Inc. 336,000
85,000 TeleSpectrum Worldwide Inc. 727,855
25,000 Unisys Corp. 692,200
-----------
2,211,212
COMMUNICATIONS -- 6.9%
8,000 AT&T Corp. 638,504
8,000 Comcast Corp. Special Cl A NV 503,504
7,000 Concentric Network Corp. 523,250
6,500 MCI WorldCom Inc. 575,660
12,000 Nextel Communications, Inc. 439,500
50,000 PairGain Technologies, Inc. 487,500
35,000 Tekelec 255,955
-----------
3,423,873
COMPUTER SYSTEMS -- 4.3%
4,000 EMC Corp. (Mass.) 511,000
30,000 Sequent Computer Systems, Inc. 271,890
21,000 Storage Technology Corp. 585,375
6,000 Sun Microsystems, Inc. 750,378
-----------
2,118,643
DISTRIBUTION -- 3.5%
45,000 American Aircarriers Support, Inc. 405,000
42,500 D & K Healthcare Resources, Inc. 1,051,875
12,000 VWR Scientific Products Corp. 270,000
-----------
1,726,875
ENERGY/SERVICES -- 7.2%
44,000 AstroPower, Inc. 517,000
20,000 Montana Power Co. 1,471,260
33,000 Nabors Industries, Inc. 600,204
36,000 Plains Resources Inc. 540,000
10,000 Vastar Resources Inc. 477,500
-----------
3,605,964
FINANCIAL SERVICES -- 11.4%
20,000 Allied Capital Corp. 367,500
6,000 Bank One Corp. 330,378
7,000 CCB Financial Corp. 378,441
7,000 First Virginia Banks, Inc. 319,816
11,000 Markel Corp. 1,982,750
6,000 Net.B@nk, Inc. 408,000
80,000 Philadelphia Consolidated
Holding Corp. 1,610,000
10,000 Provident Bankshares Corp. 261,250
-----------
5,658,135
FOOD & BEVERAGES -- 0.7%
50,000 WLR Foods, Inc. 368,750
HEALTHCARE PRODUCTS -- 7.0%
30,000 BioTime, Inc. 480,000
91,000 Endosonics Corp. 591,500
100,000 IGEN International, Inc. 2,400,000
-----------
3,471,500
LEISURE/ENTERTAINMENT -- 4.1%
16,000 Action Performance Companies, Inc. 482,000
50,000 Steiner Leisure Ltd. 1,537,500
-----------
2,019,500
MISCELLANEOUS MANUFACTURING -- 8.1%
42,200 AIMGlobal Technologies Co. 287,028
(formerly AIM Safety
Company, Inc.)
55,000 Arguss Holdings, Inc. 883,465
30,000 Harmon Industries, Inc. 601,890
16,000 Koala Corp. 332,000
15,000 MotivePower Industries, Inc. 376,875
40,000 Quixote Corp. 455,000
25,500 Tredegar Industries Inc. 788,919
15,000 Westinghouse Air Brake Co. 313,125
-----------
4,038,302
RETAILING -- 2.3%
6,000 Circuit City Stores-Circuit
City Group 459,750
34,000 Hastings Entertainment Inc. 350,642
35,000 Value City Dept. Stores Inc. 341,250
-----------
1,151,642
SEMICONDUCTORS/RELATED -- 3.8%
8,000 Altera Corp. 476,000
38,000 Applied Science and
Technology, Inc. 477,394
17,000 Conexant Systems, Inc. 470,696
4,000 Intel Corp. 475,500
-----------
1,899,590
SOFTWARE & RELATED SERVICES -- 9.2%
40,000 Alydaar Software Corp. 220,000
44,000 ANSYS, Inc. 302,500
15,000 Cadence Design Systems, Inc. 386,250
9,000 Electronic Data Systems Corp. 438,192
50,000 Level 8 Systems, Inc. 393,750
25,000 Novell, Inc. 629,700
40,000 Open Market, Inc. 517,520
150,000 Prism Solutions, Inc. 295,350
15,000 Sterling Commerce, Inc. 461,250
8,500 Synopsys, Inc. 456,875
50,000 Systems & Computer
Technology Corp. 500,000
-----------
4,601,387
MISCELLANEOUS TECHNOLOGY -- 1.9%
20,000 Information Resources
Engineering, Inc. 312,500
35,000 Polycom, Inc. 656,250
-----------
968,750
TRANSPORTATION -- 2.4%
19,200 International Shipholding Corp. 240,000
110,000 RailAmerica, Inc. 962,500
-----------
1,202,500
-----------
Total common stocks 42,409,040
PRINCIPAL
AMOUNT
---------
SHORT-TERM INVESTMENTS 19.0% (A)<F2>
VARIABLE RATE DEMAND NOTES
$ 2,400,000 Firstar Bank U.S.A., N.A. $ 2,400,000
1,532,691 General Mills, Inc. 1,532,691
2,400,000 Warner-Lambert Co. 2,400,000
2,400,000 Wisconsin Electric Power Co. 2,400,000
750,000 Wisconsin Corporate Central
Credit Union 750,000
-----------
Total variable rate
demand notes 9,482,691
-----------
Total investments 51,891,731
Liabilities, less cash and
receivables (4.1%) (A)<F2> (2,039,920)
-----------
NET ASSETS $49,851,811
-----------
-----------
Net Asset Value Per Share
(No par value, unlimited shares
authorized), offering and redemption
price ($49,851,811 / 2,845,747
shares outstanding) $17.52
------
------
(a)<F2> Percentages for the various classifications relate to net assets.
(b)<F3> 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
Custodian Investment Adviser
FIRSTAR BANK MILWAUKEE LANDIS ASSOCIATES, INC.
Transfer Agent and Independent Accountants
Dividend Disbursing Agent PRICEWATERHOUSECOOPERS LLP
FIRSTAR MUTUAL FUND
SERVICES, LLC Legal Counsel
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.
