THE CROWLEY PORTFOLIO GROUP, INC.
The Crowley Growth and Income Portfolio
The Crowley Income Portfolio
The Crowley Diversified Management Portfolio
Supplement to Prospectus and Statement of Additional Information
dated March 30, 1998
SUSPENSION OF PUBLIC OFFERING OF THE CROWLEY GROWTH & INCOME
PORTFOLIO
Effective November 25, 1998, shares of the Growth & Income Portfolio are
no longer offered to the public.
CHANGE IN DEBT RATINGS FOR INVESTMENTS WITHIN THE CROWLEY INCOME PORTFOLIO AND
CROWLEY DIVERSIFIED MANAGEMENT PORTFOLIO (EACH, "A PORTFOLIO," AND COLLECTIVELY,
"THE PORTFOLIOS")
The Board of Directors of The Crowley Portfolio Group, Inc. (the "Fund")
has approved a change in the investment policies of the Fund, based on the
recommendation of the Fund's advisor, Crowley & Crowley Corp. (the "Advisor").
The following information replaces the first two paragraphs under "Risk
Factors - Fixed Income Securities" on page [19] of the Fund's Prospectus.
Lower-Rated, High-Risk Securities. Each Portfolio may invest up to 35% of
its net assets in fixed-income securities that are medium investment grade or
lower. This means that they have a rating of Baa or lower as determined by
Moody's, or BBB or lower as determined by S&P, or are judged to be of comparable
quality by the Advisor. The Portfolios intend to invest in such securities in
order to take advantage of additional investment opportunities that come to the
attention of the Advisor from time to time. Any additional investments in
fixed-income securities must be rated A or better by Moody's and S&P, or judged
to be of comparable quality, which means they are high investment-grade or
better.
Fixed-income securities that are rated Baa by Moody's or BBB by S&P or, if
unrated, are of comparable quality, have speculative characteristics. Changes in
economic conditions or other circumstances are more likely to lead to a weakened
capacity to make principal and interest payments than is the case with
higher-rated fixed-income securities. Categories below this level are considered
high-yield, high risk securities. They are commonly called "junk bonds." (See
"Ratings Appendix" to the Fund's Statement of Additional Information for more
rating information.) Junk bonds are predominately speculative and are subject to
a substantial degree of credit risk.
The Portfolios will not invest in fixed-income securities which are rated
lower than C by S&P, Ca by Moody's or similarly by another rating agency, or, if
unrated, are considered to be of a lower quality than such ratings. However, the
Portfolios may retain a fixed-income security whose rating drops below the
minimal acceptable rating after being purchased.
Such lower-rated and unrated securities generally entail greater risk,
including the possibility of default or bankruptcy of the issuers, or loss of
principal or income. Such securities generally involve greater price volatility
and may be more thinly traded, than securities in higher-rated categories. This
may adversely affect and cause large fluctuations in the daily net asset value
of a Portfolio. Also, it may be difficult for the Portfolios to accurately value
such securities at certain times or to sell such securities under certain market
conditions. Adverse publicity and investor perceptions, whether or not based on
a fundamental analysis, may decrease the values and liquidity of junk bonds.
Legislative and regulatory developments also could have a material effect on
junk bonds.
The economy and interest rates may affect junk bonds differently than
other securities. Prices are less sensitive to interest rate changes than
higher-rated securities, but more sensitive to adverse economic changes or
individual corporate developments. Also, during an economic downturn or
substantial period of rising interest rates, highly-leveraged issuers may
experience financial stress which would adversely affect their ability to
service principal and interest payment obligations, to meet projected business
goals and to obtain additional financing. If the issuer of a junk bond defaults,
a Portfolio may incur additional expenses to seek recovery. Changes by
nationally recognized statistical rating organizations in their rating of any
security or its issuer ordinarily have a more dramatic effect on the values of
these junk bonds than on the values of higher-rated securities. Such changes
will affect a Portfolio's net asset value per share.
For more information regarding the risks associated with junk bonds, see
"Junk Bonds" in the "Appendix - Investment Policies of Underlying Funds" to this
Prospectus.
The following information replaces the last five sentences of the first
partial paragraph on page [16] of the Fund's Prospectus.
The Portfolio may invest up to 35% of its net assets in fixed-income
securities that are medium investment grade or lower, which means that they have
a rating of Baa or lower as determined by Moody's or BBB or lower by S&P or are
of comparable quality. The Portfolio intends to invest in such securities in
order to take advantage of additional investment opportunities that come to the
attention of the Advisor from time to time. Any additional investments in
fixed-income securities must be rated A or better by Moody's and S&P, or judged
to be of comparable quality, which means they are high investment-grade or
better.
Fixed-income securities that are rated Baa by Moody's or BBB by S&P or, if
unrated, are of comparable quality, have speculative characteristics. Categories
below this level are considered high-yield, high risk securities. They are
commonly called "junk bonds." Junk bonds are predominately speculative and are
subject to a substantial degree of credit risk.
The Portfolio will not invest in fixed-income securities which are rated
lower than C by S&P, Ca by Moody's or similarly by another rating agency, or, if
unrated, are judged to be of a lower quality than such ratings. However, the
Portfolio may retain a fixed-income security whose rating drops below the
minimal acceptable rating after being purchased. (See "Risk Factors - Fixed
Income Securities" below for more information about the risks of investing in
lower-rated bonds.)
The following "Ratings Appendix" is added to the end of the Fund's
Statement of Additional Information.
RATINGS APPENDIX
General Rating Information
Bonds
Excerpts from the descriptions of bond ratings from Moody's Investor's Service,
Inc.:
Aaa Judged to be the best quality. They carry the smallest degree of
investment risk.
Aa Judged to be of high quality by all standards.
A Possesses favorable attributes and are considered "upper medium"
grade obligations.
Baa Considered as medium grade obligations. Interest payments and
principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically
unreliable over any great length of time.
Ba Judged to have speculative elements; their future cannot be
considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B Generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be
small.
Caa Are of poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest.
Ca Represent obligations which are speculative in a high degree. Such
issues are often in default or have other marked shortcomings.
C The lowest rated class of bonds and issues so rated can be regarded
as having extremely poor prospects of ever attaining any real
investment standing.
Excerpts from description of bond ratings from Standard & Poor's Corp.;
AAA Highest grade obligations. They possess the ultimate degree of
protection as to principal and interest.
AA Also qualify as high grade obligations, and in the majority of
instances differ from AAA issues only in a small degree.
A Strong ability to pay interest and repay principal although more
susceptible to changes in circumstances.
BBB Regarded as having an adequate capacity to pay interest and repay
principal.
BB Regarded, on balance, as predominately speculative with respect to
B capacity topay interest and repay principal in accordance with the
CCC terms of the obligation. BB indicates the lowest degree of
CC speculation and CC the highest degree of speculation. While such
debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures
to adverse conditions.
C Reserved for income bonds on which no interest is being paid.
D In default, and payment of interest and/or repayment of principal is
in arrears.
The information contained herein supplements the Fund's Prospectus and
Statement of Additional Information dated March 30,1998. You should read this
supplement and retain it with these items for future reference.
This Supplement is dated November 25, 1998.
