The Nevis Fund, Inc.
ANNUAL REPORT TO SHAREHOLDERS
MAY 31, 1999
<PAGE>
Letter to Shareholders The Nevis Fund, Inc.
Dear Fellow Shareholder:
We are pleased to report strong results for The Nevis Fund's fiscal year-end May
31, 1999. Your fund's NAV on May 31, 1999 was $19.01, up 90.1% from the June 29,
1998 initial price of $10.00 per share, ranking it by Lipper Analytic as number
two out of 1,067 U.S. Growth Funds for the year ending June 30, 1999. These
results compare favorably to the S&P 500 and the Russell 2000, which produced
15.8% and -3.3% returns respectively for the same period.
The Nevis Fund's investment objective is to achieve strong returns through
long-term capital appreciation. Our investment strategy is founded on the belief
that over time, the performance of a company's stock will track the growth of
its earnings. We look for companies exhibiting high returns on capital and
strong cash flows. We are very excited about the prospects for the companies in
the Fund. We believe we have assembled an outstanding portfolio of businesses
run by highly qualified management teams.
We have recently launched a web site (www.nevisfund.com) in an effort to provide
investors with both additional information, and more timely information about
our Fund. We are planning major design enhancements this summer so please check
back in a few months to see our changes.
Thank you for your support.
\s\ signature omitted \s\ signature omitted
David R. Wilmerding, III Jon C. Baker
Co-manager Co-manager
<PAGE>
Manager's Discussion and Analysis of Fund Performance
The past year has been volatile for stocks, particularly those considered small
and mid-capitalization companies. From July 1, 1998 through October 8, 1998 the
stock market slid 15% (using the S&P 500 as proxy) and then surged roughly 40%
from October 8, 1998, to mid-May 1999, whereupon it reached new highs. The
valuation swings for smaller capitalization companies were even more severe. The
Nevis Fund benefited from this volatility, as we were able to purchase a number
of securities at attractive prices. The Nevis Fund experienced a steady inflow
of new monies during its first 11 months and some of this inflow came at what,
in hindsight, were fortuitous times. Additionally, the Fund's relatively small
asset base enabled us to be more nimble with purchases and sales than we could
have been with a much larger asset base.
A number of holdings contributed to the Fund's returns through May 31, 1999.
Vicor, has appreciated 220% since the lows of October, 1998 and 55% since
January 1, 1999. Likewise, Vitesse Semiconductor has risen 305% since the
October, 1998 low and 45% since the beginning of 1999. Staar Surgical has risen
60% since January 1, 1999. In each of these three stocks' cases, and in many
others as well, we were able to purchase positions at attractive prices when
compared to the high-low range for the life of the Fund.
Comparison of Change in the Value of a $10,000 Investment in The Nevis Fund,
versus the Russell 2000 Index
Total Return1
Annualized Cumulative
Inception Inception
to Date2 to Date2
97.88% 90.10%
GRAPHIC OMITTED. PLOT POINTS ARE AS FOLLOWS:
Nevis Russell
6/30/98 10,000 10,000
4/31/99 19,010 9,712
1These figures represent past performance. Past performance is no guarantee of
future results. The investment return and principal value of an investment will
fluctuate, so an investor's shares, when redeemed, may be worth more or less
than their original cost.
2The Nevis Fund commenced operations on June 29, 1998.
<PAGE>
Schedule of Investments The Nevis Fund, Inc.
May 31, 1999
Market
Value
Shares (000)
---------------------- --------------
Common Stocks (82.2%)
Broadcasting, Newspapers & Advertising (18.8%)
Clear Channel Communications* 10,100 $ 667
Infinity Broadcasting, Cl A* 5,000 128
Radio One* 11,500 463
Westwood One* 7,000 243
- ---------------------------------------------------------------------------
1,501
- ---------------------------------------------------------------------------
Computer Software (1.2%)
Informatica* 5,000 120
- ---------------------------------------------------------------------------
Defense Equipment (4.4%)
Armor Holdings* 42,000 438
- ---------------------------------------------------------------------------
Drugs (5.6%)
Connetics* 77,800 554
- ---------------------------------------------------------------------------
Internet Content (1.6%)
Autoweb.com* 10,000 156
- ---------------------------------------------------------------------------
Medical Products & Services (4.8%)
STAAR Surgical* 40,000 478
- ---------------------------------------------------------------------------
Miscellaneous Business Services (6.5%)
Peapod* 72,000 648
- ---------------------------------------------------------------------------
Professional Services (4.1%)
Caliber Learning Network* 39,400 172
Sylvan Learning Systems* 8,740 238
- ---------------------------------------------------------------------------
410
- ---------------------------------------------------------------------------
Retail (2.2%)
Funco* 10,000 218
- ---------------------------------------------------------------------------
Semi-Conductors/Instruments (11.7%)
Vicor* 40,675 671
Vitesse Semiconductor* 9,000 495
- ---------------------------------------------------------------------------
1,166
- ---------------------------------------------------------------------------
Software (11.7%)
Integrated Systems* 26,900 333
Rational Software* 24,750 837
Silknet Software* 10,000 375
- ---------------------------------------------------------------------------
1,545
- ---------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
Schedule of Investments The Nevis Fund, Inc.
May 31, 1999 (concluded)1
Market
Value
Shares (000)
---------------------- --------------
Storage/Warehousing (1.6%)
Mobile Mini* 12,500 $ 165
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Telephones & Telecommunication (8.0%)
American Tower Systems* 35,560 800
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Total Common Stocks
(Cost $7,469) 8,199
- --------------------------------------------------------------------------
Total Investments (82.2%)
(Cost $7,469) 8,199
==========================================================================
* Non-income producing security
Cl -- Class
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Assets and Liabilities The Nevis Fund, Inc.
As of May 31, 1999
- --------------------------------------------------------------------------
The Nevis Fund, Inc.
(000)
--------------
Assets:
Investment securities
(Cost $7,469) $ 8,199
Cash 1,103
Investment securities sold 944
Capital shares sold 187
Other assets 37
- --------------------------------------------------------------------------
Total Assets 10,470
- --------------------------------------------------------------------------
Liabilities:
Investment securities purchased 464
Accrued expenses payable 31
- --------------------------------------------------------------------------
Total Liabilities 495
- --------------------------------------------------------------------------
Net Assets $ 9,975
- --------------------------------------------------------------------------
Net Assets:
Portfolio shares (unlimited authorization
-- no par value) based on 524,615
outstanding shares of beneficial interest,
respectively 7,223
Accumulated net investment loss (7)
Accumulated net realized gain on
investments 2,029
Net unrealized appreciation on investments 730
- --------------------------------------------------------------------------
Total Net Assets $ 9,975
- --------------------------------------------------------------------------
Net Asset Value, Offering and Redemption Price Per Share $ 19.01
- --------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Operations The Nevis Fund, Inc.
For the Period June 29, 1998 to May 31, 1999
- --------------------------------------------------------------------------
6/29/98*
to
5/31/99
(000)
--------------------
Investment Income:
Interest Income $ 10
- --------------------------------------------------------------------------
Total Investment Income 10
- --------------------------------------------------------------------------
Expenses:
Administrator Fees 83
Investment Advisory Fees 33
Investment Advisory Fee Waiver (33)
Reimbursements by Advisor (158)
Registration Fees 20
Amortization of Deferred Organizational Costs 15
Transfer Agent Fees 24
Professional Fees 21
Director Fees 15
Printing Fees 8
Custodian Fees 4
Miscellaneous Fees 1
- --------------------------------------------------------------------------
Total Expenses, Net 33
- --------------------------------------------------------------------------
Net Investment (Loss) (23)
- --------------------------------------------------------------------------
Net Realized Gain on Investments 2,045
Net Change in Unrealized Appreciation on Investments 730
- --------------------------------------------------------------------------
Net Realized and Unrealized Gain on Investments 2,775
- --------------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations $2,752
==========================================================================
* Commencement of operations
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Changes in Net Assets The Nevis Fund, Inc.
- --------------------------------------------------------------------------
6/29/98*
to
5/31/99
(000)
------------------------
Investment Activities:
Net Investment (Loss) $ (23)
Net Realized Gain on Investments 2,045
Net Change in Unrealized Appreciation on Investments 730
- --------------------------------------------------------------------------
Net Increase in Net Assets Resulting From Operations 2,752
- --------------------------------------------------------------------------
Distributions to Shareholders:
Net Investment Income: --
Realized Capital Gains: --
- --------------------------------------------------------------------------
Total Distributions --
- --------------------------------------------------------------------------
Share Transactions
Proceeds from Shares Issued 7,239
Reinvestment of Cash Distributions --
Cost of Shares Repurchased (16)
- --------------------------------------------------------------------------
Increase in Net Assets from Capital Share Transactions 7,223
- --------------------------------------------------------------------------
Total Increase in Net Assets 9,975
- --------------------------------------------------------------------------
Net Assets:
Beginning of Period --
- --------------------------------------------------------------------------
Net Assets:
End of Period $9,975
==========================================================================
Capital Share Transactions
Shares Issued 526
Shares Issued in Lieu of Cash Distributions --
Shares Redeemed (1)
- --------------------------------------------------------------------------
Net Increase in Capital Shares Transactions 525
==========================================================================
Amounts designated as "--" are either $0 or have been rounded to $0.
* Commencement of operations
The accompanying notes are an integral part of the financial statements.
<PAGE>
Financial Highlights The Nevis Fund, Inc.
For a Share Outstanding Throughout Each Period
For the Period Ended May 31, 1999
<TABLE>
<CAPTION>
NET REALIZED AND NET NET RATIO OF NET
ASSET UNREALIZED ASSET ASSETS RATIO OF INVESTMENT
VALUE NET GAINS VALUE END OF EXPENSES (LOSS)
BEGINNING INVESTMENT ON END OF TOTAL PERIOD TO AVERAGE TO AVERAGE
OF PERIOD INCOME SECURITIES PERIOD RETURN (000) NET ASSETS NET ASSETS
=================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999* $10.00 (0.01) 9.02 $19.01 90.10% $9,975 1.50% (1.03)%
- -----------------------------------------------------------------------------------------------------------------
RATIO
OF NET
RATIO OF INVESTMENT
EXPENSES (LOSS)
TO AVERAGE TO AVERAGE
NET ASSETS NET ASSETS
(EXCLUDING (EXCLUDING PORTFOLIO
WAIVERS AND WAIVERS AND TURNOVER
REIMBURSEMENTS) REIMBURSEMENTS) RATE
===============================================
10.18% (9.71)% 251.60%
- -----------------------------------------------
</TABLE>
* For the period June 29, 1998 (commencement of operations) through May 31,
1999. All ratios for the period have been annualized. Total return for the
period has not been annualized.
The accompanying notes are an integral part of the financial statements.
<PAGE>
Notes to Financial Statements The Nevis Fund, Inc.
May 31, 1999
1. ORGANIZATION:
THE NEVIS FUNDS, INC. (the "Fund") was incorporated in Maryland on February 20,
1998. The Fund is registered under the Investment Company Act of 1940, as
amended, as a non-diversified open-end management investment company. The Fund's
prospectus provides a description of the Fund's investment objectives, policies
and strategies.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of the significant accounting policies followed by
the fund.
SECURITY VALUATION -- Investments in equity securities which are traded on a
national exchange (or reported on the NASDAQ national market system) are stated
at the last quoted sales price if readily available for such equity securities
on each business day; other equity securities traded in the over-the-counter
market and listed equity securities for which no sale was reported on that date
are stated at the last quoted bid price.
FEDERAL INCOME TAXES -- It is the Fund's intention to qualify as a regulated
investment company by complying with the appropriate provisions of the Internal
Revenue Code of 1986, as amended. Accordingly, no provision for federal income
taxes is required.
SECURITY TRANSACTIONS AND RELATED INCOME -- Security transactions are accounted
for on the date the security is purchased or sold (trade date). Costs used in
determining realized gains and losses on the sales of investment securities are
those of the specific securities sold, adjusted for the accretion and
amortization of purchase discounts or premiums during the respective holding
period which is calculated using the scientific interest method, which
approximates the effective interest method. Interest income is recognized on
the accrual basis. Dividend income is recorded on the ex-date.
NET ASSET VALUE PER SHARE -- The net asset value per share of the Fund is
calculated on each business day by dividing the total value of assets, less
liabilities, by the number of shares outstanding.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income are
declared and paid to shareholders annually. Any net realized capital gains are
distributed to shareholders at least annually.
Distributions from net investment income and net realized capital gains are
determined in accordance with the U.S. federal income tax regulations, which
may differ from those amounts determined under generally accepted accounting
principles. These book/tax differences are either temporary or permanent in
nature. To the extent these differences are permanent, they are charged or
credited to paid-in capital in the period that the differences arise.
These reclassifications have no effect on net assets or net asset value.
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 amount 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 those estimates.
RECLASSIFICATION ON COMPONENTS OF NET ASSETS -- In accordance with Statement of
Position 93-2, "Determination, Disclosure, and Financial Statement Presentation
of Income, Capital Gain, and Return of Capital Distribution by Investment
Companies", $15,143 related to the difference attributable to the
classification of short-term capital gains and net investment income for tax
distribution purposes of The Nevis Fund, Inc., as of May 31, 1999 has been
reclassified between the Funds accumulated net realized gains and the
undistributed net income account. This reclassification had no effect on the
net asset value.
3. ORGANIZATIONAL COSTS AND TRANSACTIONS WITH AFFILIATES:
Organizational costs have been capitalized by the Fund and are being amortized
over sixty months commencing on the date of inception of the Fund. In the event
the initial shares of the Fund are redeemed by any holder thereof during the
period that the Fund is amortizing its organizational costs, the redemption
proceeds payable to the holder thereof by the Fund will be reduced by the
unamortized organizational costs in the same ratio as the number of initial
shares being redeemed bears to the number of initial shares outstanding at the
time of redemption.
4. INVESTMENT MANAGEMENT ARRANGEMENTS:
The Fund and Nevis Capital Management, Inc. (the "Adviser") are parties to an
Investment Management Agreement under which the Adviser receives an annual fee
equal to 1.50% of the average daily net assets. Pursuant to its Investment
Management Agreement with the Fund, the Adviser has agreed to bear all of its
ordinary expenses incurred in the conduct of the Fund's operations. The Fund
bears all extraordinary expenses incurred in the course of its business. The
Adviser has, on a voluntary basis, agreed to waive and/or reimburse its fee in
order to limit the Fund's total operating expenses to a maximum of 1.50% of the
average daily net assets. The Adviser reserves the right to terminate this
arrangement at any time in its sole discretion.
<PAGE>
Notes to Financial Statements The Nevis Fund, Inc. May 31,1999
5. ADMINISTRATION, TRANSFER AGENCY AND SERVICES, CUSTODIAN AND DISTRIBUTION
AGREEMENTS:
The Fund and SEI Investments Mutual Funds Services (the "Administrator") are
parties to an Administration Agreement under which the Administrator provides
administrative services for an annual fee, computed daily and paid monthly, at
the annual rate of 0.12% of the first $100 million of the average daily net
assets of the Fund, 0.10% of the next $100 million of such assets, and 0.08% of
such assets in excess of $200 million subject to a minimum annual fee of
$90,000.
Forum Shareholder Services, LLC (the "Transfer Agent") serves as the
transfer agent and dividend disbursing agent for the Fund under a transfer
agency and services agreement with the Fund.
The Fund and SEI Investments Distribution Co. (the "Distributor") are parties to
a Distribution Agreement. The Distributor receives no fees for its distribution
services under this agreement.
First Union National Bank serves as custodian (the "Custodian") for the Fund.
The Custodian plays no role in determining the investment policies of the Fund
or which securities are to be purchased and sold by the Fund.
6. INVESTMENT TRANSACTIONS:
The cost of security purchases and the proceeds from security sales, other than
short-term investments, for the period ended May 31, 1999 are as follows:
The Nevis Fund, Inc.
(000)
----------------------------
Purchases
U.S. Gov't .............................. $ --
Other ................................... 11,851
Sales
U.S. Gov't .............................. $ --
Other ................................... 6,427
At May 31, 1999, the total cost of securities and the net realized gains or
losses on securities sold for federal income tax purposes were not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized appreciation and depreciation for securities held by the Fund
at May 31, 1999, is as follows:
The Nevis Fund, Inc.
(000)
----------------------------
Aggregate gross unrealized
appreciation ............................ $1,114
Aggregate gross unrealized
depreciation ............................ (384)
------
Net unrealized appreciation ............... $ 730
======
<PAGE>
Report of Independent Public Accountants
To the Shareholders and Board of Directors of
The Nevis Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of The
Nevis Fund, Inc. ("the Fund"), including the schedule of investments, as of May
31, 1999, and the related statement of operations, changes in net assets, and
financial highlights for the period presented. 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 audit.
We conducted our audit 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 and
financial highlights. Our procedures included confirmation of securities owned
as of May 31, 1999, by correspondence with the custodian and the application of
alternative procedures with respect to unsettled securities transactions. 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 audit provides 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
Nevis Fund, Inc. as of May 31, 1999, the results of their operations, changes
in their net assets, and financial highlights for the period presented, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, PA
July 9, 1999
<PAGE>
NEV-F-004-01
