N-CSR 1 thf-ncsra.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-07168 The Henlopen Fund ----------------- (Exact name of registrant as specified in charter) Longwood Corporate Center South 415 McFarlan Road, Suite 213 Kennett Square, PA 19348 ------------------------ (Address of principal executive offices) (Zip code) Michael L. Hershey Landis Associates LLC Longwood Corporate Center South Kennett Square, PA 19348 ------------------------ (Name and address of agent for service) (610) 925-0400 -------------- Registrant's telephone number, including area code: Date of fiscal year end: 06/30/2003 Date of reporting period: 06/30/2003 ITEM 1. REPORTS TO STOCKHOLDERS. -------------------------------- THE HENLOPEN FUND ANNUAL REPORT JUNE 30, 2003 To My Fellow Shareholders: For the quarter ended June 30, 2003, The Henlopen Fund increased 19.6%. Annualized returns for the Fund for 1, 5 and 10 years are 8.0%, 4.1%, and 12.2%, respectively. Since our inception on December 2, 1992, the Fund has an annualized return of 13.0%. The stock market continued the rally that started late last quarter, building momentum throughout the quarter. Leadership appeared broader and of a higher quality than recent rallies, as investors piled into companies showing strong earnings and positive outlooks. The Fund's strong return in the quarter was similarly broad based with stocks across a wide array of industries contributing to performance, led by our holdings in technology and specialty retailing. It appears a change in market psychology is taking place. The stock market's bottom in the March quarter came with little fanfare; the lack of volume was indicative not only of the complete unwillingness of investors to buy stocks but also that most who wished to sell had already done so. Slowly, investors are coming to believe that risk is worth taking. The passage of the tax package and the Federal Reserve's commitment to providing stimulus have seemingly firmed belief in the economic recovery. Concurrently, severe losses in the bond market have awakened investors to the possibility that there is less risk in equities than Treasuries at these levels. Favorable investor sentiment and mildly improving company fundamentals provide a decent backdrop for equities. The continuation of the recent rally will hinge upon further signs of strength in the global economies, signs that have thus far been sporadic and unconvincing. We continue to look at the current environment as creating a "stock-picker's market" in which individual stock selection will be paramount to solid investment returns. We remain comfortable with such a scenario. Sincerely yours, /s/Michael L. Hershey /s/Bruce V. Vogenitz Michael L. Hershey Bruce V. Vogenitz President Vice President MANAGED BY LANDIS ASSOCIATES LLC WWW.HENLOPENFUND.COM ONE YEAR COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE HENLOPEN FUND, S&P 500 INDEX AND LIPPER GROWTH FUND INDEX Date The Henlopen Fund S&P 500 Index Lipper Growth Fund Index ---- ----------------- ------------- ------------------------ 6/30/2002 $10,000 $10,000 $10,000 9/30/2002 $8,088 $8,272 $8,440 12/31/2002 $9,422 $8,970 $9,012 3/31/2003 $9,029 $8,687 $8,812 6/30/2003* $10,798 $10,025 $10,134 * Ending value represents increases of 7.98%, 0.25% and 1.34%, respectively. MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE The Henlopen Fund emphasizes investment in growing businesses. We look for well-managed companies with competitive products and services capable of generating strong revenues and earnings. In managing the portfolio, relative sector weighting and specific capitalization size are of secondary importance to us. Our rationale for growth investment is to participate for our shareholders in the capital formation process. For the year ended June 30, 2003, the Fund increased 8.0%. Over the last 5 years, the Fund has an average annual rate of return of 4.1%. For the last 10 years, the Fund has appreciated at an average annual rate of 12.2%. Since our inception on December 2, 1992, the Fund has appreciated at an annual rate of 13.0%. Fiscal year 2003, a year highlighted by the stock market's extreme volatility, may well be looked back upon as containing the triple-bottom in the stock indices that marked the end of the bear market. The year started the same way our prior fiscal year ended, as the market continued its decline. Investors finally capitulated with record mutual fund outflows, causing a market free- fall. The Fund's performance reflected this sell-off with our holdings in technology and energy being particularly hard-hit. A substantial bottom early in that September quarter created a sharp but brief rally that quickly gave way to a retest of lows the following quarter. This retest culminated in another major bottom in October, as the market edged to a new low before surging to large gains on heavy volume in a classic reversal day. The ensuing rally lasted until December, when investor skittishness over impending war with Iraq and an imperceptible economic recovery sent the market back on the defensive. The same two groups that hurt the Fund's performance the previous quarter, technology and energy, led the Fund's sharp advance in the December quarter. A surge in interest in small-cap names also aided performance during the period. The March quarter's downturn was especially grueling, grinding investor psychology to the point where seemingly no one wanted to buy stocks. The market tested the levels of the October decline but could only form a higher low on muted volume. The bear market thus far appears to have ended with that whimper. Specialty retailers performed well for the Fund but were offset by a correction of the previous quarter's strong move in small-cap technology stocks. Subsequent to the March downturn, the formal end of military actions in Iraq turned investors' attention back to the economy and company fundamentals. The passing of the President's tax initiative and the Federal Reserve's aggressive stimulus has created greater optimism about an economic recovery that statistics show has already been long underway. Company managements have firmed their business outlooks and have begun to commit to prudent investment. The result has been a strong market rally that provided impressive gains in our fourth quarter and continues as of this writing. Leadership has been broad-based, with the Fund benefiting from its positions in the specialty retailing, financial, and technology sectors. Looking ahead, evidence of a pickup in the strength of the economic recovery and solid corporate earnings will be required to maintain the stock market's rally. With such evidence will come the strong possibility of a major asset allocation shift out of bonds back into the stock market. In the meantime, we will continue to be opportunistic, diligently searching for attractive investments. SINCE INCEPTION COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE HENLOPEN FUND, S&P 500 INDEX AND LIPPER GROWTH FUND INDEX AVERAGE ANNUAL TOTAL RETURN 1-Year 5-Year 10-Year ------ ------ ------- 7.98% 4.12% 12.21% The Henlopen S&P 500 Lipper Growth Date Fund Index** Fund Index*** ---- ------------ ----------- ----------------- 6/30/93 $10,000 $10,000 $10,000 6/30/94 $10,490 $10,130 $10,170 6/30/95 $13,406 $12,763 $12,519 6/30/96 $18,554 $16,107 $15,110 6/30/97 $19,481 $21,697 $18,677 6/30/98 $25,871 $28,271 $24,335 6/30/99 $30,114 $34,688 $29,616 6/30/00 $46,285 $37,186 $34,829 6/30/01 $33,344 $31,671 $26,996 6/30/02 $29,305 $25,974 $20,830 6/30/03 $31,644 $26,040 $21,107 Past performance is not predictive of future performance. The graph and the table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. ** The S&P 500(R) is the Standard & Poor's Composite Index of 500 Stocks, a widely recognized unmanaged index of common stock prices. *** The Lipper Growth Fund Index is an index of mutual funds having an investment objective similar to the Fund's investment objective. THE HENLOPEN FUND STATEMENT OF NET ASSETS June 30, 2003 SHARES OR PRINCIPAL AMOUNT COST VALUE --------- ---- ----- COMMON STOCKS -- 97.6% (A) AEROSPACE & DEFENSE -- 1.3% 80,000 SI International Inc.* $ 911,380 $ 1,044,000 AUTO & TRUCK RELATED -- 0.8% 30,000 ArvinMeritor, Inc. 767,712 605,400 BASIC MATERIALS -- 0.5% 55,000 Universal Stainless & Alloy Products, Inc.* 866,924 355,850 BUSINESS SERVICES -- 1.5% 100,000 Gevity HR, Inc. 766,193 1,178,000 COMMUNICATIONS -- 1.8% 50,000 IDT Corp. - Cl B* 803,399 880,000 200,000 NMS Communications Corp.* 2,405,787 394,200 301,000 Science Dynamics Corp.* 2,771,553 18,060 500,000 U.S. Wireless Data Inc.* 1,413,507 70,000 ----------- ----------- 7,394,246 1,362,260 COMPUTER PERIPHERALS -- 2.0% 120,000 Dot Hill Systems Corp.* 702,808 1,572,000 CONSTRUCTION SERVICES -- 0.9% 10,000 Lennar Corp. 732,000 715,000 DISTRIBUTION -- 1.6% 75,000 D & K Healthcare Resources, Inc. 1,390,547 1,210,500 FINANCIAL SERVICES -- 12.4% 45,000 ASTA Funding, Inc.* 883,076 1,080,000 75,000 BankAtlantic Bancorp, Inc. 838,623 891,750 500 Berkshire Hathaway Inc. Cl B* 1,219,655 1,215,000 50,000 Commercial Capital Bancorp, Inc.* 702,710 774,500 55,000 Hub International Ltd. 743,977 940,500 10,000 Lehman Brothers Holdings Inc. 673,500 664,800 136,000 Penn-America Group, Inc. 1,177,310 1,530,000 100,000 Tradestation Group Inc.* 610,910 1,025,000 15,000 Wachovia Corp. 642,159 599,400 25,000 WSFS Financial Corp. 548,781 949,000 ----------- ----------- 8,040,701 9,669,950 FOOD & BEVERAGES -- 0.9% 50,000 Chiquita Brands International, Inc.* 874,040 725,000 FURNITURE -- 1.4% 40,000 Stanley Furniture Company, Inc. 848,598 1,094,800 HEALTHCARE PRODUCTS -- 13.7% 310,000 IGEN International, Inc.* 5,109,762 9,712,300 160,000 PharmaNetics, Inc.* 2,272,750 928,000 ----------- ----------- 7,382,512 10,640,300 HEALTHCARE SERVICES -- 1.3% 40,000 Caremark Rx, Inc.* 977,450 1,027,200 LEISURE/ENTERTAINMENT -- 8.4% 150,000 Acres Gaming Inc.* 769,715 1,689,000 50,000 Alliance Gaming Corp.* 757,376 945,500 50,000 Aztar Corp.* 1,000,632 805,500 50,000 Boyd Gaming Corp.* 665,813 863,000 80,000 ebookers Plc - SP-ADR* 892,819 1,284,160 25,000 InterActiveCorp* 936,384 983,250 ----------- ----------- 5,022,739 6,570,410 MEDICAL PRODUCTS/SUPPLIES -- 2.4% 40,000 Kensey Nash Corp.* 934,800 1,024,800 50,000 Medical Action Industries Inc.* 674,766 811,000 ----------- ----------- 1,609,566 1,835,800 MISCELLANEOUS MANUFACTURING -- 1.9% 150,000 Axsys Technologies, Inc.* 4,046,085 1,446,000 OIL & GAS EXPLORATION/PRODUCTION -- 6.3% 100,000 Comstock Resources, Inc.* 828,209 1,368,000 10,000 Devon Energy Corp. 535,246 534,000 40,000 Pioneer Natural Resources Co.* 1,016,100 1,044,000 40,000 Spinnaker Exploration Co.* 958,487 1,048,000 25,000 Valero Energy Corp. 1,168,086 908,250 ----------- ----------- 4,506,128 4,902,250 OILFIELD PRODUCTS/SERVICES -- 10.5% 75,000 Grant Prideco, Inc.* 1,593,380 881,250 600,000 Grey Wolf, Inc.* 3,887,199 2,424,000 50,000 Maverick Tube Corp.* 918,443 957,500 50,000 Patterson-UTI Energy, Inc.* 2,013,748 1,618,500 110,000 Universal Compression Holdings, Inc.* 3,613,692 2,294,600 ----------- ----------- 12,026,462 8,175,850 PHARMACEUTICALS -- 3.0% 20,000 American Pharmaceutical Partners, Inc.* 737,691 678,000 160,000 Applied Molecular Evolution, Inc.* 733,262 659,200 100,000 EntreMed, Inc.* 638,050 415,000 50,000 Hollis-Eden Pharmaceuticals, Inc.* 588,728 621,500 ----------- ----------- 2,697,731 2,373,700 RESTAURANTS -- 1.8% 125,000 Checkers Drive-In Restaurants, Inc.* 854,804 1,413,750 RETAILING -- 8.4% 25,000 Dollar Tree Stores, Inc.* 737,657 794,250 40,000 Gart Sports Co.* 1,292,784 1,134,800 23,000 Jos. A. Bank Clothiers, Inc.* 401,545 771,420 50,000 Pep Boys-Manny, Moe & Jack 587,940 675,500 400,000 Rite Aid Corp.* 3,075,398 1,780,000 75,000 TBC Corp.* 1,032,701 1,428,000 ----------- ----------- 7,128,025 6,583,970 SEMICONDUCTORS/RELATED -- 5.9% 125,000 ATI Technologies Inc.* 903,300 1,275,000 40,000 ATMI, Inc.* 1,283,210 998,000 70,000 Fairchild Semiconductor International, Inc.* 2,586,540 895,300 85,000 Lexar Media, Inc.* 650,184 804,100 350,000 Optical Communication Products, Inc.* 1,373,520 626,500 ----------- ----------- 6,796,754 4,598,900 SOFTWARE & RELATED SERVICES -- 6.2% 370,500 Bitstream Inc.* 2,802,149 844,740 135,000 CyberGuard Corp.* 859,845 958,500 90,000 ILOG S.A. SP-ADR* 1,240,203 753,300 300,000 Level 8 Systems, Inc.* 2,248,528 84,000 50,000 Netegrity, Inc.* 347,950 299,500 150,000 Novell, Inc.* 514,215 466,500 350,000 ON Technology Corp.* 967,898 846,300 285,000 TeleCommunication Systems, Inc.* 1,080,146 589,950 ----------- ----------- 10,060,934 4,842,790 TEXTILES -- 1.7% 100,000 Quaker Fabric Corp. 1,110,777 665,000 106,400 Unifi, Inc.* 1,360,972 659,680 ----------- ----------- 2,471,749 1,324,680 TRANSPORTATION -- 1.0% 90,000 Celadon Group, Inc.* 1,094,401 815,310 ----------- ----------- Total common stocks 89,970,489 76,083,670 SHORT-TERM INVESTMENTS -- 4.0% (A) VARIABLE RATE DEMAND NOTE $3,094,471 U.S. Bank, N.A., 0.78% 3,094,471 3,094,471 ----------- ----------- Total investments $93,064,960 79,178,141 ----------- ----------- Liabilities, less cash and receivables -- (1.6%) (A) (1,221,041) ----------- NET ASSETS $77,957,100 ----------- ----------- Net Asset Value Per Share (No par value, unlimited shares authorized), offering and redemption price ($77,957,100 / 4,299,586 shares outstanding) $ 18.13 ----------- ----------- * Non-income producing security. (a) 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 Year Ended June 30, 2003 INCOME: Dividends $ 368,091 Interest 40,912 ------------ Total income 409,003 ------------ EXPENSES: Investment management fees 746,726 Transfer agent fees 114,437 Administrative services 103,983 Printing and postage expense 60,627 Professional fees 57,228 Insurance expense 37,230 Registration fees 26,856 Board of Trustees fees 21,000 Custodian fees 20,042 Other expenses 1,682 ------------ Total expenses 1,189,811 ------------ NET INVESTMENT LOSS (780,808) ------------ NET REALIZED LOSS ON INVESTMENTS (29,514,180) NET INCREASE IN UNREALIZED APPRECIATION ON INVESTMENTS 34,345,585 ------------ NET GAIN ON INVESTMENTS 4,831,405 ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 4,050,597 ------------ ------------ STATEMENTS OF CHANGES IN NET ASSETS For the Years Ended June 30, 2003 and 2002 2003 2002 ---------- ---------- OPERATIONS: Net investment loss $ (780,808) $ (1,229,958) Net realized loss on investments (29,514,180) (5,226,682) Net increase (decrease) in unrealized appreciation on investments 34,345,585 (8,935,051) ------------ ------------- Net increase (decrease) in net assets resulting from operations 4,050,597 (15,391,691) ------------ ------------- DISTRIBUTIONS TO SHAREHOLDERS: Distributions from net realized gains ($0.04378 per share) -- (335,471) ------------ ------------- Total distributions -- (335,471)* ------------ ------------- FUND SHARE ACTIVITIES: Proceeds from shares issued (4,106,479 and 3,930,681 shares, respectively) 61,986,610 72,085,797 Net asset value of shares issued in distributions (18,200 shares) -- 329,609 Cost of shares redeemed (5,484,134 and 6,151,163 shares, respectively) (83,494,575) (112,243,318) Redemption fee 97,954 -- ------------ ------------- Net decrease in net assets derived from Fund share activities (21,410,011) (39,827,912) ------------ ------------- TOTAL DECREASE (17,359,414) (55,555,074) NET ASSETS AT THE BEGINNING OF THE YEAR 95,316,514 150,871,588 ------------ ------------- NET ASSETS AT THE END OF THE YEAR $ 77,957,100 $ 95,316,514 ------------ ------------- ------------ -------------
* See Note 7. 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 year) FOR THE YEARS ENDED JUNE 30, ------------------------------------------------------------- 2003 2002 2001 2000 1999 ------ ------ ------ ------ ------ PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of year $ 16.79 $ 19.15 $ 28.39 $ 19.84 $ 17.04 Income from investment operations: Net investment loss (a) (0.16) (0.18) (0.16) (0.25) (0.11) Net realized and unrealized gains (losses) on investments 1.50 (2.14) (7.85) 10.18 2.91 ------- ------- ------- ------- ------- Total from investment operations 1.34 (2.32) (8.01) 9.93 2.80 Less distributions: Dividend from net investment income -- -- -- -- -- Distributions from net realized gains -- (0.04) (1.23) (1.38) -- ------- ------- ------- ------- ------- Total from distributions -- (0.04) (1.23) (1.38) -- ------- ------- ------- ------- ------- Net asset value, end of year $ 18.13 $ 16.79 $ 19.15 $ 28.39 $ 19.84 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- TOTAL INVESTMENT RETURN 7.98% (12.11)% (27.96)% 53.71% 16.43% RATIOS/SUPPLEMENTAL DATA: Net assets, end of year (in 000's $) 77,957 95,317 150,872 240,106 63,009 Ratio of expenses to average net assets 1.58% 1.39% 1.28% 1.37% 1.46% Ratio of net investment loss to average net assets (1.04)% (0.98)% (0.74)% (0.97)% (0.63)% Portfolio turnover rate 90.06% 132.21% 287.66% 156.85% 162.11%
(a) Net investment loss per share is calculated using average shares outstanding. The accompanying notes to financial statements are an integral part of this statement. THE HENLOPEN FUND NOTES TO FINANCIAL STATEMENTS June 30, 2003 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- The following is a summary of significant accounting policies of The Henlopen Fund (the "Fund"), which is organized as a Delaware Business Trust and is registered as a diversified open-end management company under the Investment Company Act of 1940, as amended. 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 with maturities of 60 days or less are valued at cost which approximates market value. For financial reporting purposes, investment transactions are recorded on trade date. (b) Net realized gains and losses on sales of securities are computed on the identified cost basis. (c) Dividend income is recorded on the ex-dividend date. Interest income is recorded on the accrual basis. (d) 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 nonperformance by these counterparties is not anticipated. (e) Accounting principles generally accepted in the United States of America ("GAAP") require that permanent differences between income for financial reporting and tax purposes be reclassified in the capital accounts. (f) The preparation of financial statements in conformity with GAAP 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. (g) 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 net investment company taxable income and net capital gains to its shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. (h) Beginning December 1, 2002, the Fund imposes a 1.0% redemption fee on the value of shares redeemed less than 30 days after purchase. The redemption fee will not apply to shares purchased through reinvested distributions (dividends and capital gains), shares held in retirement plans or through the systematic withdrawal plan. The redemption fee is designed to discourage short-term trading and any proceeds of the fee will be credited to paid in capital. (2) INVESTMENT ADVISER AND MANAGEMENT AGREEMENT AND TRANSACTIONS WITH RELATED PARTIES -- The Fund has a management agreement with Landis Associates LLC (the "Adviser"), with whom certain officers and trustees 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. The Fund has an administrative agreement with Fiduciary Management, Inc. ("FMI"), with whom an officer of the Fund is affiliated, to supervise all aspects of the Fund's operations except those performed by the Adviser. Under the terms of the agreement, the Fund will pay FMI a monthly administrative fee at the annual rate of 0.2% on the first $30,000,000 of the daily net assets of the Fund, 0.1% on the daily net assets of the Fund on the next $30,000,000 and 0.05% on the daily net assets of the Fund over $60,000,000. (3) DISTRIBUTION TO SHAREHOLDERS -- Net investment income and net realized gains, if any, are distributed to shareholders at least annually. (4) INVESTMENT TRANSACTIONS -- For the year ended June 30, 2003, purchases and proceeds of sales of investment securities (excluding short-term securities) were $65,071,992 and $81,574,025, respectively. (5) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES -- As of June 30, 2003, liabilities of the Fund included the following: Payable to brokers for investments purchased $ 1,618,185 Payable to the Adviser for management fees 53,366 Payable to FMIfor administrative fees 8,129 Other liabilities 34,507 (6) SOURCES OF NET ASSETS -- As of June 30, 2003 the sources of net assets were as follows: Fund shares issued and outstanding $127,402,803 Net unrealized depreciation on investments (13,886,819) Accumulated net realized loss (35,558,884) ------------ $ 77,957,100 ------------ ------------ (7) INCOME TAX INFORMATION -- The following information for the Fund is presented on an income tax basis as of June 30, 2003: GROSS GROSS NET UNREALIZED DISTRIBUTABLE DISTRIBUTABLE COST OF UNREALIZED UNREALIZED DEPRECIATION ORDINARY LONG-TERM INVESTMENTS APPRECIATION DEPRECIATION ON INVESTMENTS INCOME CAPITAL GAINS ----------- ------------ ------------ -------------- ------------- ------------- $93,073,466 $13,327,800 $27,223,125 $13,895,325 $ -- $ --
The difference, if any, between the cost amount for financial statement and federal income tax purposes is due primarily to timing differences in recognizing certain gains and losses in security transactions. The tax components of dividends paid during the year ended June 30, 2003, capital loss carryovers (expiring in 2011), as of June 30, 2003, and tax basis post-October losses as of June 30, 2003, which are not recognized for tax purposes until the first day of the following fiscal year are: ORDINARY LONG-TERM NET CAPITAL INCOME CAPITAL GAINS LOSS POST-OCTOBER DISTRIBUTIONS DISTRIBUTIONS CARRYOVERS LOSSES ------------- ------------- ----------- ------------ $ -- $ -- $20,918,990 $14,631,388 The Fund has utilized $5,983,016 of its post-October losses from the prior year to increase current year net capital losses. Since there were no ordinary distributions paid for the year ended June 30, 2003, there were no distributions designated as qualifying for the dividends received deduction for corporate shareholders. During the year ended June 30, 2002, the Fund paid dividends of $335,471, which were taxable at ordinary income tax rates to taxable shareholders. THE HENLOPEN FUND (PRICEWATERHOUSECOOPERS LOGO) 100 East Wisconsin Avenue Telephone 414 212 1600 Suite 1500 Milwaukee, WI 53202 REPORT OF INDEPENDENT AUDITORS To the Shareholders and Trustees of The Henlopen Fund In our opinion, the accompanying statement of net assets and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of The Henlopen Fund (the "Fund") at June 30, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at June 30, 2003 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. /s/PricewaterhouseCoopers LLP July 25, 2003 THE HENLOPEN FUND TRUSTEES AND OFFICERS # of Portfolios Other Term of in Fund Directorships Position(s) Office and Complex held by Held with Length of Principal Occupation(s) Overseen Trustee Name, Address and Age the Fund Time Served During Past Five Years by Trustee or Officer --------------------- ----------- ----------- ---------------------- ---------- ------------- "DISINTERESTED PERSONS" OF THE FUND Howard E. Cosgrove Trustee Indefinite, Retired; prior to August 1, 2000 1 None c/o Conectiv, Inc. Trustee since Chairman and Chief Executive Officer 800 King Street 2002 of Conectiv, Inc., a regulated power Wilmington, DE 19899 delivery and electric product/energy Age: 60 merchant company. Robert J. Fahey, Jr. Trustee Indefinite, Senior Director of Real Estate 1 None 1717 Arch Street, 30th Floor Trustee since Investment Banking for the Financial Philadelphia, PA 19103 1992 Services Group of Cushman & Age: 45 Wakefield, a commercial real estate firm. John H. Remer Trustee Indefinite, Retired. 1 None c/o Landis Associates LLC Trustee since Longwood Corporate 2002 Center South, Suite 213 415 McFarlan Road Kennett Square, PA 19348 Age: 78 "INTERESTED PERSONS" OF THE FUND* Michael L. Hershey Trustee Indefinite, Chairman, President, Treasurer and 1 None Longwood Corporate Trustee since Secretary of Landis Associates LLC. Center South, Suite 213 1992 415 McFarlan Road President One year term, Kennett Square, PA 19348 President since Age: 64 1992 Stephen L. Hershey, M.D. Trustee Indefinite, Orthopaedic surgeon. 1 None 4745 Stanton-Ogleton Road Trustee since Suite 225 1992 Newark, DE 19713 Age: 62 Bruce V. Vogenitz, C.F.A. Vice-President One year term, Vice President of Landis Associates N/A None Longwood Corporate and Secretary Vice President LLC. Center South, Suite 213 and Secretary 415 McFarlan Road since 1998 Kennett Square, PA 19348 Age: 38 Camille F. Wildes Vice-President/ One year term, Vice President of Fiduciary N/A None c/o Fiduciary Compliance Vice President/ Management,Inc. Management, Inc. Officer and Compliance Officer 225 East Mason Street Treasurer since 1994 and Milwaukee, WI 53202 Treasurer since 2001 Age: 50
* Messrs. Michael L. Hershey and Vogenitz are "interested persons" of the Fund because they are officers of the Fund and the Adviser. Dr. Stephen L. Hershey is an "interested person" of the Fund because he is the brother of Mr. Michael L. Hershey. (Dr. Hershey resigned as a trustee effective June 30, 2002 in order for the Fund to comply with certain Securities and Exchange Commission regulations requiring the Fund to have a majority of its trustees consist of persons who are not "interested persons" of the Fund. He was subsequently reelected to the Board of Trustees on October 15, 2002.) Ms. Wildes is an "interested person" of the Fund because she is an officer of the Fund. For additional information about the Trustees and Officers, please call (866) 880-0032 and request a Statement of Additional Information. One will be mailed to you free of charge. THE HENLOPEN FUND LANDIS ASSOCIATES LLC Investment Adviser U.S. BANCORP FUND SERVICES, LLC Transfer Agent and Dividend Disbursing Agent U.S. BANK, N.A. Custodian PRICEWATERHOUSECOOPERS LLP Independent Auditors FOLEY & LARDNER Legal Counsel THE HENLOPEN FUND LONGWOOD CORPORATE CENTER SOUTH 415 MCFARLAN ROAD, SUITE 213 KENNETT SQUARE, PENNSYLVANIA 19348 (610-925-0400) WWW.HENLOPENFUND.COM 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. ITEM 2. CODE OF ETHICS. ----------------------- Not applicable to annual reports filed for periods ending before July 15, 2003. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. ----------------------------------------- Not applicable to annual reports filed for periods ending before July 15, 2003. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. ----------------------------------------------- Not required for annual reports filed for periods ending before December 15, 2003. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. ---------------------------------------------- Not applicable. ITEM 6. [RESERVED] ------------------ ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END ------------------------------------------------------------------------- MANAGEMENT INVESTMENT COMPANIES ------------------------------- Not applicable. ITEM 8. [RESERVED] ------------------ ITEM 9. CONTROLS AND PROCEDURES. -------------------------------- (a) The disclosure controls and procedures of The Henlopen Fund are periodically evaluated. As of July 25, 2003, the date of the last evaluation, we concluded that our disclosure controls and procedures are adequate. (b) The internal controls of The Henlopen Fund are periodically evaluated. Since, July 25, 2003, the date of the last evaluation, there have been no significant changes in The Henlopen Fund's internal controls or in other factors that could have had a significant effect on such controls. There have also been no significant deficiencies or material weaknesses identified since the last evaluation that required any corrective action. ITEM 10. EXHIBITS. ------------------ (a) Any code of ethics or amendment thereto. Not applicable to annual reports for periods ending before July 15, 2003. (b) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. (c) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The Henlopen Fund ----------------- Registrant By /s/Michael L. Hershey ------------------------------------------------ Michael L. Hershey, Principal Executive Officer Date 8-18-03 ----------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. The Henlopen Fund ----------------- Registrant By /s/Michael L. Hershey ------------------------------------------------ Michael L. Hershey, Principal Financial Officer Date 8-18-03 -----------