THE CROWLEY PORTFOLIO GROUP, INC.
FINANCIAL STATEMENTS
AND REPORT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
NOVEMBER 30, 1998
Dear Shareholder:
We are pleased to present you with the Annual Report for The Crowley Portfolio
Group, Inc. The report contains information regarding both The Crowley Income
Portfolio and The Crowley Diversified Management Portfolio. The Portfolios have
combined assets exceeding 18.2 million dollars as of November 30, 1998.
There are currently 328 active accounts.
The Crowley Income Portfolio was priced at $11.05 per share as of November 30,
1998 and had a total return of 7.03% for the period November 30, 1997 through
November 30, 1998. As of November 30, 1998 The Crowley Income Portfolio had
investments in 67 individual issues. No individual investment comprised more
than 5% of the Portfolio, while corporate bonds and notes comprised 72.26% of
the overall portfolio. The remaining assets were invested in preferred stocks
(13.83%), U.S. government agency bonds (8.59%) and the balance in cash and cash
equivalents (5.32%). The Crowley Income Portfolio continues to be invested to
maximize current income, consistent with prudent risk. Since the Portfolio's
inception, no bond held in The Crowley Income Portfolio has ever failed to make
a coupon or interest payment or failed to be redeemed upon maturity. Management
continues to believe the interest rate environment will remain stable and that
an average weighted maturity of 10 years is an appropriate target for the
Portfolio. Management has not made any significant investments in lower quality
bonds as of this report.
The Crowley Diversified Management Portfolio had a total return of 5.10% for the
period November 30, 1997 through November 30, 1998. This period marks the first
full fiscal year in which The Crowley Diversified Management Portfolio has not
has a total return in excess of 10.00%. Management contributes this to the high
volatility of the stock market during that period and the timing in the growth
of total assets of The Crowley Diversified Management Portfolio. The Crowley
Diversified Management Portfolio grew from approximately $2.2 million dollars in
net assets to approximately $6.2 million dollars in net assets at year end. As
of November 30, 1998 The Crowley Diversified Portfolio was approximately 97.94%
invested in a portfolio of 38 mutual funds spread out over 10 investment
classifications. The largest portion of the Portfolio's assets was invested in
funds included in the Growth category (23.32%), followed by Growth/Income
(21.75%), Corporate High Yield (10.34%), Income (9.43%), Aggressive Growth
(8.25%), Balanced (7.86%), Small Company (6.78%), Global Equity (5.17%), Foreign
Equity (4.49%), and Pacific Equity (.55%). Management currently intends to
invest the Portfolio's assets in a 80%-20% stock to bond mixture, while
continuing to use mutual funds as the Portfolio's primary investment vehicle.
The enclosed report has been audited by the Fund's Independent Accountants and
contains a list of the Portfolios' investments as of November 30, 1998.
Sincerely,
Robert A. Crowley, CFA
President
January 29th, 1999
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
The Crowley Portfolio Group, Inc.
Wilmington, Delaware
We have audited the accompanying statements of assets and liabilities of The
Crowley Income Portfolio and The Crowley Diversified Management Portfolio, each
a series of shares of common stock of The Crowley Portfolio Group, Inc.,
including the portfolios of investments as of November 30, 1998, and the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for periods indicated thereon. These financial statements and
financial highlights are the responsibility of the Portfolios' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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. Our procedures included confirmation of securities owned as of
November 30, 1998 by correspondence with the custodian and brokers. 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 audits provide 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
Crowley Income Portfolio and The Crowley Diversified Management Portfolio as of
November 30, 1998, the results of their operations for the year then ended,
changes in their net assets for each of the two years in the period then ended,
and the financial highlights for the periods referred to above, in conformity
with generally accepted accounting principles.
Philadelphia, Pennsylvania
December 18, 1998
THE CROWLEY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
November 30, 1998
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
Market
Percent of Value
Par Value Net Assets (Note 1-A)
<S> <C> <C> <C> <C>
CORPORATE BONDS & NOTES
Auto & Truck
$ 500,000 Ford Holdings
7.350%, 11/07/11 4.48% $ 536,200
30,000 Ford Motor Credit Co.
8.000%, 01/15/99 .25 30,079
50,000 General Motors
9.625%, 12/01/00 .45 54,085
300,000 General Motors
7.700%, 04/15/16 2.86 343,077
------- -------------
8.04 963,441
------- -------------
Banking
60,000 BankAmerica
7.750%, 07/15/02 .54 64,621
30,000 BankAmerica
7.875%, 12/01/02 .27 32,601
80,000 Bankers Trust New York
9.500%, 06/14/00 .71 84,562
20,000 Bankers Trust New York
9.400%, 03/01/01 .18 21,603
95,000 Banque Paribas New York
6.875%, 03/01/09 .80 95,993
20,000 Chase Manhattan
10.125%, 11/01/00 .18 21,706
40,000 First Union Corp.
9.450%, 06/15/99 .34 40,837
100,000 First Union Corp.
9.890%, 03/13/01 .91 109,091
20,000 Heller Financial Inc.
8.000%, 12/15/98 .17 20,012
------- -------------
4.10 491,026
------- -------------
Broadcasting & Cable T.V.
50,000 Cox Communications, Inc.
8.875%, 03/01/01 .45 53,734
------- -------------
Chemical (Basic)
400,000 DuPont E.I.
8.250%, 1/15/22 3.75 449,312
------- -------------
- ----------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements
THE CROWLEY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS - (Continued)
November 30, 1998
Market
Percent of Value
Par Value Net Assets (Note 1-A)
CORPORATE BONDS & NOTES
Chemical (Diversified)
$ 80,000 ICI Wilmington
9.500%, 11/15/00 .71% $ 84,906
------- -------------
Diversified Company
265,000 American Standard, Inc.
9.250%, 12/01/16 2.29 274,275
107,000 Mark IV Industries
7.500%, 09/01/07 .89 107,000
------- -------------
3.18 381,275
------- -------------
Drug
100,000 ICN Pharmaceutical,
9.250%, 08/15/05 .86 102,500
------- -------------
Electric Utility
510,000 Appalachian Power Company
8.500%, 12/01/22 4.60 550,800
250,000 Duquesne Lighting Company
7.625%, 04/15/23 2.20 263,710
217,000 Houston Lighting & Power
7.750%, 03/15/23 1.97 236,122
35,000 Mississippi Power & Light Co.
General Ref Mortgage
8.500%, 01/05/23 .31 37,275
100,000 Ohio Power Co.
6.875%, 06/01/03 .85 102,070
250,000 Virginia Electric & Power Co.
7.500%, 06/01/23 2.21 265,195
29,000 Washington Gas Light Co.
1st Mortgage 8.625%, 03/01/17 .25 30,445
400,000 Wisconsin Power & Light Company
1st Mortgage, 9.300%, 12/01/25 3.51 420,812
245,000 Wisconsin Electric Power
1st Mortgage, 7.750%, 01/15/23 2.22 264,484
------- -------------
18.12 2,170,913
------- -------------
<PAGE>
Electrical Equipment Industry
100,000 General Electric Capital Corp.
Variable Rate, 05/01/18 .85 101,718
------- -------------
Entertainment
300,000 Paramont Communications
7.500%, 07/15/23 2.64 316,110
------- -------------
- ---------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements
THE CROWLEY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS - (Continued)
November 30, 1998
Market
Percent of Value
Par Value Net Assets (Note 1-A)
CORPORATE BONDS & NOTES
Food Processing
$ 100,000 Quaker Oats Co.
9.000%, 12/17/01 .92% $ 109,811
------- -------------
Grocery Store
350,000 Great Atlantic & Pacific Tea
7.750%, 04/15/07 2.92 350,000
------- -------------
Insurance (Diversified)
185,000 Aetna Services, Inc.
7.625%, 08/15/26 1.62 194,250
------- -------------
Machinery (Construction & Mining)
200,000 Caterpillar Inc.
6.810%, 08/24/99 1.69 202,880
------- -------------
Oil & Gas
50,000 Societe Nat. Elf Aquitaine
7.750%, 05/01/99 .42 50,542
------- -------------
Paper and Forest Products
50,000 International Paper Company
9.700%, 03/15/00 .44 52,273
------- -------------
Retail Building Supply Industry
300,000 Loews Corp.
7.625%, 06/01/23 2.65 317,952
------- -------------
Retail Store Industry
50,000 Dayton Hudson Corp.
10.000%, 12/01/00 .46 54,406
100,000 K mart Corp.
Pass Thru Sec K-1 8.990%, 07/05/10 .88 106,000
30,000 Wal Mart Stores
9.100%, 07/15/00 .27 31,902
------- -------------
1.61 192,308
------- -------------
Savings & Loan Industry
200,000 Great Western Financial
8.206%, 02/01/27 1.86 222,280
------- -------------
- --------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements
THE CROWLEY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS - (Continued)
November 30, 1998
Market
Percent of Value
Par Value Net Assets (Note 1-A)
CORPORATE BONDS & NOTES
Securities Brokerage Industry
$ 35,000 Bear Stearns Companies
9.375%, 06/01/01 .32% $ 37,718
125,000 Bear Stearns Companies
7.200%, 11/03/17 1.04 125,100
400,000 Bear Stearns Companies
7.500%, 12/16/16 3.37 404,000
200,000 Bear Stearns Companies
7.000%, 04/02/18 1.81 217,380
200,000 Lehman Bros Holding Inc.
8.500%, 08/01/07 1.86 222,280
40,000 Morgan Stanley Group
7.875%, 12/15/98 .33 40,027
30,000 Morgan Stanley Group
8.100%, 06/24/02 .27 32,259
------- -------------
9.00 1,078,764
------- -------------
Telecommunications Service Industry
150,000 GTE North, Inc.
7.625%, 05/15/26 1.36 162,772
100,000 Illinois Bell Telephone Co.
8.500%, 04/22/26 .87 104,062
250,000 U.S. West Capital Funding, Inc.
6.750%, 10/01/05 2.19 262,300
------- -------------
4.42 529,134
------- -------------
Tobacco
130,000 Philip Morris
7.750%, 05/01/99 1.09 131,197
100,000 Philip Morris
8.250%, 10/15/03 .92 110,125
------- -------------
2.01 241,322
------- -------------
Total Corporate Bonds & Notes (Cost $8,460,320) 72.26 8,656,451
------- -------------
- ------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements
<PAGE>
THE CROWLEY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS - (Continued)
November 30, 1998
Market
Number Percent of Value
of Shares Net Assets (Note 1-A)
PREFERRED STOCKS
4,000 AT&T Capital, 8.25% .84% $ 100,500
8,000 Citigroup Capital I, 8.00% 1.74 209,000
4,000 Conseco, 8.70% .83 100,000
4,000 Georgia Power, Series 7.75% .87 104,252
8,000 Hartford Capital, Series A, 7.70% 1.73 207,000
6,000 Lincoln National Capital, Series 8.75% 1.33 159,750
4,000 Nova Chemical, Ltd., 9.50% .85 102,064
10,000 Pacific Telesis, 7.56% 2.13 255,000
10,000 Pacificorp Capital, 8.25% 2.21 264,380
6,000 Transcanada Pipe Line Ltd., 8.25% 1.30 155,250
------- -------------
Total Preferred Stocks (Cost $1,598,452) 13.83 1,657,196
------- -------------
Par Value
U.S. GOVERNMENT AGENCY
$1,000,000 Federal Home Loan Bank
Zero Coupon, 07/28/17 2.00% $ 239,530
500,000 Federal Home Loan Bank
7.000%, 01/30/13 4.17 500,000
80,000 Federal Home Loan Mortgage Corp.
8.325%, 07/15/09 .68 81,565
200,000 Federal National Mortgage Association
8.400%, 10/25/04 1.74 208,000
------- -------------
Total U.S. Government Agency (Cost $1,029,600) 8.59 1,029,095
------- -------------
Total Investments (Cost $11,088,372) (a) 94.68% 11,342,742
Other Assets Less Liabilities 5.32% 637,142
------- -------------
Net Assets 100.00% $ 11,979,884
======= =============
(a) Aggregate cost for federal income tax purposes is
$11,088,372.
At November 30, 1998, unrealized appreciation (depreciation) of
securities for federal income tax purposes is as follows:
Unrealized appreciation $ 320,609
Unrealized depreciation (66,239)
----------
Net unrealized appreciation $ 254,370
==========
</TABLE>
- -----------------------------------------------------------------------------
See accompanying notes to financial statements
THE CROWLEY DIVERSIFIED MANAGEMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS
November 30, 1998
<TABLE>
Market
Number Percent of Value
of Shares Net Assets (Note 1-A)
GENERAL EQUITY FUNDS
Aggressive Growth
<S> <C> <C> <C>
4,726 Strong Opportunity 3.04% $ 189,966
6,175 Twentieth Century Ultra 3.26 203,651
5,666 Wasatch Aggressive Equity 1.95 121,473
------- ------------
8.25 515,090
------- ------------
Balanced
7,579 Columbia Balanced 2.92 182,797
2,271 Dodge & Cox Balanced 2.50 155,811
12,168 Founders Balanced 2.44 152,341
------- ------------
7.86 490,949
------- ------------
Corporate - High Yield
18,392 Federated High Yield Trust 2.65 165,716
16,319 Fidelity Capital & Income 2.55 159,111
13,942 Strong High Yield 2.52 157,406
19,300 T. Rowe Price High Yield 2.62 163,278
------- ------------
10.34 645,511
------- ------------
Growth
5,357 Fidelity Stock Selection 2.46 153,645
4,670 Harbor Capital Appreciation 2.69 168,043
6,430 Longleaf Partners 2.45 153,044
1,735 Nicholas 2.43 152,026
4,596 Oakmark 2.70 168,390
6,758 Scudder Value 2.61 162,797
5,659 Soundshore 2.64 164,845
5,590 Vanguard U.S. Growth 3.31 206,652
6,103 Warburg Capital Appreciation 2.03 126,875
------- ------------
23.32 1,456,317
------- ------------
Growth/Income
7,277 American Century Growth & Income 3.34 208,636
3,907 Babson Value 3.03 189,075
2,017 Dodge & Cox Stock 3.13 195,582
13,365 Mutual Beacon 3.02 188,716
7,015 Neuberger & Berman Guardian 2.85 177,960
11,127 Pelican 3.13 195,505
7,982 Steinroe Growth & Income 3.25 202,987
------- ------------
21.75 1,358,461
------- ------------
- --------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements
THE CROWLEY DIVERSIFIED MANAGEMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS - (Continued)
November 30, 1998
Market
Number Percent of Value
of Shares Net Assets (Note 1-A)
GENERAL EQUITY FUNDS
Income
16,951 Berwyn Income 3.07% $ 191,541
11,735 Gabelli Equity Income 3.33 207,832
7,801 Lindner Dividend 3.03 189,484
------- ------------
9.43 588,857
------- ------------
Small Company
5,804 Heartland Value 2.73 170,361
7,943 Meridian 2.89 180,468
2,034 PBHG Growth .72 45,444
1,276 Parkstone Small Cap. Series "B" .44 27,317
------- ------------
6.78 423,590
------- ------------
INTERNATIONAL EQUITY FUNDS
Foreign Equity
2,809 Managers International Equity 2.29 143,041
14,865 Twentieth Century International Equity 2.20 137,499
------- ------------
4.49 280,540
------- ------------
Global Equity
6,618 Founders Worldwide Growth 2.33 145,669
4,011 Janus Worldwide 2.84 177,085
------- ------------
5.17 322,754
------- ------------
Pacific Equity
6,655 T. Rowe Price - New Asia .55 34,003
------- ------------
Total Investments (Cost $6,174,703) (a) 97.94% 6,116,072
Other Assets Less Liabilities 2.06% 128,712
------- ------------
Net Assets 100.00% $ 6,244,784
======= ============
</TABLE>
<TABLE>
(a) Aggregate cost for federal income tax purposes is
$6,174,703.
At November 30, 1998 unrealized appreciation (depreciation) of
securities for federal income tax purposes is as follows:
<S> <C>
Unrealized appreciation $ 183,378
Unrealized depreciation (242,009)
-----------
Net unrealized depreciation $ (58,631)
===========
</TABLE>
- ----------------------------------------------------------------------------
See accompanying notes to financial statements
<PAGE>
THE CROWLEY PORTFOLIO GROUP, INC.
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1998
<TABLE>
Income Diversified
Portfolio Portfolio
ASSETS
Investments at market value
(Identified cost $11,088,372 and $6,174,703, respectively)
<S> <C> <C> <C>
(Note 1) $ 11,342,742 $ 6,116,072
Cash 564,030 144,342
Interest Receivable 196,803 -
-------------- ------------
Total assets 12,103,575 6,260,414
-------------- ------------
LIABILITIES
Payable for securities purchased 100,733 -
Accrued management fee 5,861 5,009
Accrued transfer agent fees 3,907 2,003
Accrued expenses 13,190 8,618
-------------- ------------
Total liabilities 123,691 15,630
-------------- ------------
NET ASSETS
(500 million shares of $.01 par value common stock
authorized; 1,083,896 and 476,334 shares issued
and outstanding, respectively) $ 11,979,884 $ 6,244,784
============== ============
NET ASSET VALUE
Offering and redemption price per share
(Net assets/shares outstanding) $11.05 $13.11
====== ======
At November 30, 1998, net assets consisted of:
Paid-in capital $ 11,411,157 $ 6,051,916
Undistributed net investment income 554,985 36,827
Accumulated undistributed net realized gains (losses) (240,628) 214,672
Net unrealized appreciation (depreciation) of investments 254,370 (58,631)
-------------- ------------
$ 11,979,884 $ 6,244,784
============== ============
</TABLE>
- ---------------------------------------------------------------------------
See accompanying notes to financial statements
<PAGE>
THE CROWLEY PORTFOLIO GROUP, INC.
STATEMENT OF OPERATIONS
Year ended November 30, 1998
<TABLE>
Income Diversified
Portfolio Portfolio
INVESTMENT INCOME
<S> <C> <C>
Interest income $ 663,737 $ 8,994
Dividend income 92,693 127,509
---------- -----------
Total income 756,430 136,503
---------- -----------
EXPENSES
Investment advisory fees (Note 2) 64,393 45,644
Transfer agent fees 43,135 19,943
Professional fees 19,032 10,739
Custody fees 6,141 1,100
Directors' fees 6,000 2,000
Other expenses 6,198 6,366
---------- -----------
Total expenses 144,899 85,792
---------- -----------
Investment income - net 611,531 50,711
---------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security transactions 14,114 (9,695)
Capital gain distribution from regulated investment companies - 223,741
Change in unrealized appreciation of investments 123,347 (335,574)
---------- -----------
Net gain (loss) on investments 137,461 (121,528)
---------- -----------
Net increase (decrease) in net assets resulting
from operations $ 748,992 $ (70,817)
========== ===========
</TABLE>
- -------------------------------------------------------------------------------
See accompanying notes to financial statements
THE CROWLEY PORTFOLIO GROUP, INC.
CROWLEY INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
Years ended November 30, 1998 and 1997
- -------------------------------------------------------------------------------
<TABLE>
1998 1997
---- ----
OPERATIONS
<S> <C> <C>
Investment income - net $ 611,531 $ 577,011
Net realized gain (loss) on investments 14,114 (47,021)
Change in unrealized appreciation 123,347 122,332
-------------- ------------
Net increase in net assets resulting from operations 748,992 652,322
DISTRIBUTIONS TO SHAREHOLDERS
From investment income - net
($.68 and $.65 per share, respectively) (569,758) (556,624)
CAPITAL SHARE TRANSACTIONS (a) 2,427,296 (251,109)
-------------- ------------
Total increase (decrease) 2,606,530 (155,411)
NET ASSETS
Beginning of year 9,373,354 9,528,765
-------------- ------------
End of year
(including undistributed net investment income
of $554,985 and $513,212, respectively) $ 11,979,884 $ 9,373,354
============== ============
</TABLE>
<TABLE>
(a) Summary of capital share activity follows:
Year Ended Year Ended
November 30, 1998 November 30, 1997
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 287,143 $ 3,031,209 51,646 $ 545,779
Shares issued in reinvestment of distributions 54,837 569,758 54,518 556,624
---------- -------------- ---------- -------------
341,980 3,600,967 106,164 1,102,403
Shares redeemed (109,884) (1,173,671) (128,371) (1,353,512)
-------- ---------- -------- ----------
Net increase (decrease) 232,096 $ 2,427,296 (22,207) $ (251,109)
========== ============== ========== =============
</TABLE>
- -----------------------------------------------------------------------
See accompanying notes to financial statements
THE CROWLEY PORTFOLIO GROUP, INC.
CROWLEY DIVERSIFIED MANAGEMENT PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
Years ended November 30, 1998 and 1997
- ---------------------------------------------------------------------
<TABLE>
1998 1997
---- ----
OPERATIONS
<S> <C> <C>
Investment income - net $ 50,711 $ 20,512
Net realized loss on investments (9,695) -
Capital gain distributions from regulated
investment companies 223,741 55,919
Change in unrealized appreciation (335,574) 132,478
------------- ------------
Net increase (decrease) in net assets
resulting from operations (70,817) 208,909
DISTRIBUTIONS TO SHAREHOLDERS
From investment income - net
($.08 and $.18 per share, respectively) (13,884) (23,277)
From net realized gains on investments
($.32 and $.44 per share, respectively) (55,535) (56,464)
CAPITAL SHARE TRANSACTIONS (a) 4,145,151 610,496
------------- ------------
Total increase 4,004,915 739,664
NET ASSETS
Beginning of year 2,239,869 1,500,205
------------- ------------
End of year
(Including undistributed net investment income
of $36,827 and $0 respectively) $ 6,244,784 $ 2,239,869
============= ============
</TABLE>
(a) Summary of capital share activity follows:
<TABLE>
Year Ended Year Ended
November 30, 1998 November 30, 1997
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
Shares sold 311,457 $ 4,270,555 62,490 $ 773,189
Shares issued in reinvestment of distributions 5,514 69,419 6,934 79,741
-------- ------------ --------- -----------
316,971 4,339,974 69,424 852,930
Shares redeemed (14,618) (194,823) (18,966) (242,434)
------- -------- ------- --------
Net increase 302,353 $ 4,145,151 50,458 $ 610,496
========================================== ========= ========== =========== ===========
</TABLE>
- --------------------------------------------------------------------
See accompanying notes to financial statements
THE CROWLEY PORTFOLIO GROUP, INC.
CROWLEY INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)
<TABLE>
Year Ended November 30,
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
NET ASSET VALUE
<S> <C> <C> <C> <C> <C>
Beginning of year .................................. $ 11.00 $ 10.90 $ 11.08 $ 10.69 $ 11.57
---------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .............................. .59 .69 .59 .65 .61
Net gains (losses) on securities
(both realized and unrealized) ................... .14 .06 (.15) .37 (.76)
---------- --------- --------- --------- ---------
Total from investment operations ................. .73 .75 .44 1.02 (.15)
--------- --------- --------- ---------
LESS DISTRIBUTIONS
Dividends (from net investment income) ............. (.68) (.65) (.62) (.63) (.66)
Distributions (from realized capital gains) ........ -- -- -- -- (.07)
---------- --------- --------- --------- ---------
Total distributions .............................. (.68) (.65) (.62) (.63) (.73)
---------- --------- --------- --------- ---------
NET ASSET VALUE
End of year ........................................ $ 11.05 $ 11.00 $ 10.90 $ 11.08 $ 10.69
========== ========= ========= ========= =========
TOTAL RETURN ........................................... 7.03% 7.34% 4.16% 10.12% (1.43)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000 omitted) .............. $ 11,980 $ 9,373 $ 9,529 $ 8,940 $ 6,654
Ratio of expenses to average net assets ............ 1.35% 1.39% 1.39% 1.43% 1.37%
Ratio of net investment income to average net assets 5.70% 6.22% 5.62% 6.43% 6.28%
Portfolio turnover rate ............................ 44.77% 22.81% 66.18% 31.60% 14.45%
</TABLE>
- ------------------------------------------------------------------------
See accompanying notes to financial statements
THE CROWLEY PORTFOLIO GROUP, INC.
CROWLEY DIVERSIFIED MANAGEMENT PORTFOLIO
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Period
April 1, 1995 (a)
To
Years Ended November 30, November 30,
--------------------------------
1998 1997 1996 1995
---- ---- ---- ----
NET ASSET VALUE
<S> <C> <C> <C> <C>
Beginning of period $12.87 $12.15 $10.71 $10.00
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income ................................ .16 .17 .05 --
Net gains on securities (both realized and unrealized) .48 1.17 1.43 .71
--------- --------- --------- -------
Total from investment operations .................. .64 1.34 1.48 .71
--------- --------- --------- -------
LESS DISTRIBUTIONS
Dividends (from net investment income) ............... (.08) (.18) (.04) --
Distributions (from realized capital gains) .......... (.32) (.44) -- --
--------- --------- --------- -------
Total distributions .................................. (.40) (.62) (.04) --
--------- --------- --------- -------
NET ASSET VALUE
End of period ........................................ $ 13.11 $ 12.87 $ 12.15 $ 10.71
========= ========= ========= =======
TOTAL RETURN ............................................. 5.10% 11.64% 13.87% 7.10%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) .............. $ 6,245 $ 2,240 $ 1,500 $ 962
Ratio of expenses to average net assets .............. 1.88% 1.87% 2.22% 2.06% (b)
Ratio of net investment income (loss) ................ 1.11% 1.08% .46% (.09)% (b)
to average net assets
Portfolio turnover rate .............................. 4.51% -- 20.69% --
</TABLE>
(a) Effective date of the Portfolio's initial registration under the Securities
Act of 1933, as amended.
(b) Annualized.
- --------------------------------------------------------------------------
See accompanying notes to financial statements
THE CROWLEY PORTFOLIO GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
November 30, 1998
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Crowley Portfolio Group, Inc. (the "Fund") is an open-end diversified
investment company currently offering two series of shares: The Crowley
Income Portfolio, and The Crowley Diversified Management Portfolio (each a
"Portfolio").
The objective of The Crowley Income Portfolio is to maximize current
income, consistent with prudent risk, i.e., reasonable risk to principal.
The objective of The Crowley Diversified Management Portfolio is high total
return consistent with reasonable risk. The Portfolios will use a variety
of investment strategies in an effort to balance portfolio risks and to
hedge market risks. There can be no assurance that the objectives of the
Portfolios will be achieved.
SECURITY VALUATION
Portfolio securities, which are fixed income securities, are valued by
using market quotations, prices provided by market-makers or estimates
of market values obtained from yield data relating to instruments or
securities with similar characteristics, in accordance with procedures
established in good faith by the Board of Directors. Securities listed
on an exchange or quoted on a national market system are valued at the
last sales price. Investments in regulated investment companies are
valued at the net asset value per share as quoted by the National
Association of Securities Dealers, Inc. Money market securities with
remaining maturities of less than 60 days are valued on the amortized
cost basis as reflecting fair value. All other securities are valued at
their fair value as determined in good faith by the Board of Directors.
FEDERAL INCOME TAXES
The Portfolios intend to comply with the requirements of the Internal
Revenue Code necessary to qualify as regulated investment companies and
as such will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) which is
distributed to shareholders. At November 30, 1998, the Income Portfolio
had a capital loss carryforward for Federal income tax purposes of
approximately $240,600, of which $22,000 expires in the year 2002,
$28,400 in 2003, $143,200 in 2004 and $47,000 in 2005.
SECURITY TRANSACTIONS, INVESTMENT INCOME AND DISTRIBUTIONS TO
SHAREHOLDERS As is common in the industry, security transactions are
accounted for on the trade date (the date the securities are purchased
or sold). Interest income is recorded on the accrual basis. Bond
premiums and discounts are amortized in accordance with Federal income
tax regulations. Dividend income and distributions to shareholders are
recorded on the ex-dividend date.
USE OF ESTIMATES IN FINANCIAL STATEMENTS
In preparing financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of
the financial statements, as well as the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
- -----------------------------------------------------------------------------
<PAGE>
THE CROWLEY PORTFOLIO GROUP, INC.
NOTES TO FINANCIAL STATEMENTS - (Continued)
November 30, 1998
(2) INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Crowley & Crowley Corp. (the "Advisor") provides the Fund with management
and administrative services pursuant to a Management Agreement.
As compensation for its services, the Advisor receives a fee, computed
daily and payable monthly, at the annualized rate of .60% of the average
daily net assets of The Crowley Income Portfolio and 1% of the average
daily net assets of The Crowley Diversified Management Portfolio. The
Advisor pays all expenses incurred by it in rendering management services
to the Fund including the costs of accounting, bookkeeping and data
processing services provided in its role as administrator. The Portfolios
bear their costs of operations, which include, but are not limited to:
advisory fees; taxes; brokerage fees; accounting fees; legal fees;
custodian and auditing fees; and printing and other expenses which are not
expressly assumed by the Advisor under the Management Agreement.
The Crowley Financial Group, Inc. ("TCFG") serves as the Portfolio
shareholders' servicing agent. As shareholder servicing agent, TCFG will
act as the Transfer, Dividend Disbursing and Redemption Agent to the
Portfolios. As compensation for its services, TCFG receives a fee computed
daily and payable monthly, at the annualized rate of .40% of the average
daily net assets of each Portfolio. During the year ended November 30,
1998, TCFG earned fees of $43,135 and $19,943 from the Income Portfolio
and Diversified Management Portfolio, respectively.
Crowley Securities serves as distributor of the Fund's shares.
Certain officers and directors of the Fund are also officers of Crowley &
Crowley Corp., Crowley Securities and The Crowley Financial Group, Inc.
(3) PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short-term investments,
aggregated $7,138,156 and $4,434,642, respectively, in the Income Portfolio
and $4,213,691 and $183,691, respectively, in the Crowley Diversified
Management Portfolio.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON INTERNAL CONTROL STRUCTURE
The Board of Directors
The Crowley Portfolio Group, Inc.
Wilmington, Delaware
In planning and performing our audit of the financial statements of The Crowley
Portfolio Group, Inc. (comprising, respectively, The Crowley Income Portfolio
and The Crowley Diversified Management Portfolio) for the year ended November
30, 1998, we considered its internal control structure, including procedures for
safeguarding securities, in order to determine our auditing procedures for the
purpose of expressing our opinion on the financial statements and to comply with
the requirements of Form N-SAR, not to provide assurance on the internal control
structure.
The management of the Funds is responsible for establishing and maintaining an
internal control structure. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and related
costs of internal control structure policies and procedures. Two of the
objectives of an internal control structure are to provide management with
reasonable, but not absolute, assurance that assets are safeguarded against loss
from unauthorized use or disposition, and that transactions are executed in
accordance with management's authorization and recorded properly to permit
preparation of financial statements in conformity with generally accepted
accounting principles.
Because of inherent limitations in any internal control structure, errors or
fraud may occur and not be detected. Also, projection of any evaluation of the
structure to future periods is subject to the risk that it may become inadequate
because of changes in conditions or that the effectiveness of the design and
operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce to
a relatively low level the risk that errors or fraud in amounts that would be
material in relation to the financial statements being audited may occur and not
be detected within a timely period by employees in the normal course of
performing their assigned functions. However, we noted no matters involving the
internal control structure, including procedures for safeguarding securities,
that we consider to be material weaknesses, as defined above, as of November 30,
1998.
This report is intended solely for the information and use of management and the
Securities and Exchange Commission, and should not be used for any other
purpose.
Philadelphia, Pennsylvania
December 18, 1998
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