UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
811-5875
(Investment Company Act File Number)
THE CROWLEY PORTFOLIO GROUP, INC.
(Exact Name of Registrant as Specified in Charter)
3201-B Millcreek Road, Wilmington, DE 19808
(Address of Principal Executive Offices)
(302) 994-4700
(Registrant's Telephone Number)
Robert A. Crowley, President Copy to:
The Crowley Portfolio Group, Inc. Bruce G. Leto, Esq.
3201-B Millcreek Road Stradley, Ronon, Stevens & Young, LLP
Wilmington, DE 19808 2600 One Commerce Square
(Name and Address of Agent for Service) Philadelphia, PA 19103-7098
Date of Fiscal Year End: November 30, 2003
Date of Reporting Period: Fiscal Period ended November 30, 2003
ITEM 1: REPORT TO SHAREHOLDERS
THE CROWLEY PORTFOLIO GROUP, INC.
FINANCIAL STATEMENTS
AND REPORT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
NOVEMBER 30, 2003
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, 2003, 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 each of the five years in the period then ended. 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 auditing standards generally accepted
in the United States of America. 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, 2003 by correspondence with the custodian.
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, 2003, 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 each of the five years in the period then
ended, in conformity with accounting principles generally accepted in the United
States of America.
Philadelphia, Pennsylvania
January 6, 2004
<table>
<caption>
THE CROWLEY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
November 30, 2003
- --------------------------------------------------------------------------------------------------------------------
Market
Percent of Value
Par Value Net Assets (Note 1-A)
<s> <c> <c>
CORPORATE BONDS & NOTES
Auto & Truck
Daimler Chrysler Corp. Note
$ 250,000 4.75%, 01/15/08 2.22% $ 254,500
250,000 6.85%, 10/15/11 2.39 273,625
Ford Holdings
500,000 7.350%, 11/07/11 4.39 502,500
200,000 7.375%, 10/28/09 1.86 213,100
General Motors Corp.
200,000 7.200%, 01/15/11 1.85 211,200
General Motors Acceptance Corp.
500,000 6.125%, 02/01/07 4.63 530,000
General Motors Nora Financial
250,000 6.850%, 10/15/08 2.36 269,875
------- ---------------
19.70 2,254,800
------- ---------------
Banking
Banque Paribas New York
95,000 6.875%, 03/01/09 .93 107,113
------- ---------------
Chemical (Basic)
Union Carbide Corp. Note
150,000 6.700%, 4/01/09 1.33 152,025
------- ---------------
Computer Services
Electronic Data Systems Corp.
450,000 7.125%, 10/15/09 4.35 498,375
------- ---------------
Consumer Products
American Greetings Corp.
100,000 6.10%, 08/01/28 .90 103,000
------- ---------------
Cruise Lines
Carnival Corp. Note
82,000 7.050%, 05/15/05 .77 87,986
Royal Caribbean Cruises
300,000 7.000%, 10/15/07 2.74 314,550
------- ---------------
3.51 402,536
------- ---------------
Diversified Company
American Standard, Inc.
250,000 7.375%, 04/15/05 2.31 265,312
100,000 7.375%, 02/01/08 .96 110,000
Tyco International Ltd. Note
150,000 6.375%, 01/15/04 1.33 152,670
------- ---------------
4.60 527,982
------- ---------------
THE CROWLEY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS - (Continued)
November 30, 2003
- --------------------------------------------------------------------------------------------------------------------
Market
Percent of Value
Par Value Net Assets (Note 1-A)
CORPORATE BONDS & NOTES
Electronics Distribution
Avnet Inc.
$ 150,000 8.000%, 11/15/06 $ 1.40 $ 160,500
------- ---------------
Financial Services
Duke Capital Corp.
275,000 7.500%, 10/01/09 2.73% 312,538
200,000 6.250%, 02/15/13 1.86 213,800
Household Finance Corp.
200,000 6.500%, 11/15/08 1.94 222,500
International Lease Finance Corp.
200,000 5.875%, 05/01/13 1.87 214,300
MBNA Corp. Sr. Medium Term Note
50,000 7.125%, 09/15/04 .45 51,750
Morgan Stanley Group
200,000 7.000%, 10/01/13 1.99 227,800
Prime Property Note
65,000 7.000%, 08/15/04 .60 68,412
Tiers Principal Protected
200,000 8.850%, 02/15/27 1.94 222,000
------- ---------------
13.38 1,533,100
------- ---------------
Hotel/Gaming Industry
ITT Corp.
200,000 6.750%, 11/15/05 1.84 210,700
Hilton Hotels Corp.
150,000 7.950%, 04/15/07 1.45 166,050
------- ---------------
3.29 376,750
------- ---------------
Insurance (Diversified)
Nationwide Mutual Insurance Co.
100,000 7.500%, 02/15/24 .96 110,100
Trenwick Capital Trust
200,000 8.820%, 02/01/37 .05 6,000
Unitrin, Inc. Senior Note
250,000 5.750%, 07/01/07 2.36 270,387
------- ---------------
3.37 386,487
------- ---------------
Medical Supplies & Savings
Bausch & Lomb, Inc.
250,000 6.950%, 11/15/17 2.37 271,000
Medco Health Solvhons
250,000 7.250%, 08/15/13 2.36 270,000
------- ---------------
4.73 541,000
------- ---------------
THE CROWLEY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS - (Continued)
November 30, 2003
- --------------------------------------------------------------------------------------------------------------------
Market
Percent of Value
Par Value Net Assets (Note 1-A)
CORPORATE BONDS & NOTES
Miscellaneous Manufacturer
Acuity Brands
$ 200,000 6.000%, 02/01/09 1.84% $ 211,400
------- ---------------
Oil Industry
National Fuel Gas
100,000 6.000%, 03/01/09 .96 110,450
Velero Logistics
110,000 6.050%, 03/15/13 1.01 116,050
------- ---------------
1.97 226,500
------- ---------------
Retail Building Supply Industry
Loews Corp. Convertible Note
475,000 3.125%, 09/15/07 4.02 460,750
Loews Corp.
500,000 7.625%, 06/01/23 2.70 309,750
------- ---------------
6.72 770,500
------- ---------------
Retail Store Industry
J.C. Penney, Inc.
150,000 7.375%, 06/15/04 1.33 152,175
K Mart Corp.
83,200 Pass Thru Sec K-1 8.990%, 07/05/10 .33 37,440
Sears Roebuck Corp. Note
150,000 6.700%, 11/15/06 1.41 162,000
100,000 6.125%, 01/15/06 .94 107,650
Sears Roebuck Acceptance
60,000 7.300%, 12/15/09 .55 63,000
Tricon Global Restaurants
100,000 7.650%, 05/15/08 .98 112,125
------- ---------------
5.54 634,390
------- ---------------
Savings & Loan Industry
Great Western Financial
200,000 8.206%, 02/01/27 1.98 226,900
------- ---------------
THE CROWLEY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS - (Continued)
November 30, 2003
- --------------------------------------------------------------------------------------------------------------------
Market
Percent of Value
Par Value Net Assets (Note 1-A)
CORPORATE BONDS & NOTES
Telecommunications Service Industry
Ametek, Inc.
95,000 7.200%, 07/15/08 .90 103,550
Lucent Technologies
300,000 5.500%, 11/15/08 2.43 277,800
Media One Group
250,000 6.750%, 10/01/05 2.30 263,750
Motorola, Inc.
150,000 7.625%, 11/15/10 1.47 168,900
New York Telephone Co.
200,000 6.000%, 04/15/08 1.90 218,250
------- ---------------
9.00 1,032,250
------- ---------------
Total Corporate Bonds & Notes (Cost $10,032,621) 88.54 10,145,608
------- ---------------
THE CROWLEY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS - (Continued)
November 30, 2003
- --------------------------------------------------------------------------------------------------------------------
Market
Percent of Value
Par Value Net Assets (Note 1-A)
PREFERRED STOCKS
4,000 AT&T Capital, 8.25% .89% $ 101,800
4,000 Corts-Sherwin Williams, 7.25%, Series III .94 107,440
10,000 Hercules Trust I, 9.42% 2.18 250,000
4,000 MBNA Capital Preferred 8.125%, Series D .94 107,680
3,800 Nexen, Inc. Canadian, 9.75% .84 96,824
6,000 Preferred Plus Trust Preferred 6.05%, Series GECI 1.34 153,360
4,000 Telephone & Data, 7.60% Preferred .94 107,160
6,000 Transcanada Pipe Line Ltd., 8.25% 1.35 154,380
------- ---------------
Total Preferred Stocks (Cost $1,046,415) 9.42 1,078,644
------- ---------------
Total Investments (Cost $11,079,036) (a) 97.96 11,224,252
Other Assets Less Liabilities 2.04 234,362
------- ---------------
Net Assets 100.00% $ 11,458,614
======= ===============
(a) Aggregate cost for federal income tax purposes is $11,087,597.
At November 30, 2003, unrealized appreciation (depreciation)
of securities for federal income tax purposes is as follows:
Unrealized appreciation $ 395,405
Unrealized depreciation (258,750)
-----------
Net unrealized depreciation $ 136,655
===========
THE CROWLEY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS - (Continued)
November 30, 2003
- --------------------------------------------------------------------------------------------------------------------
Market
Percent of Value
Par Value Net Assets (Note 1-A)
GENERAL EQUITY FUNDS
Aggressive Growth
7,962 American Century Ultra 3.98% $ 208,446
6,968 Strong Opportunity 5.06 264,557
------- ------------
9.04 473,003
------- ------------
Balanced
11,297 Columbia Balanced 4.29 224,593
3,614 Dodge & Cox Balanced 4.89 256,231
13,871 Janus Balanced 5.19 271,447
------- ------------
14.37 752,271
------- ------------
Growth
10,404 Credit Suisse Capital Appreciation 2.97 155,332
8,193 Dreyfus Disciplined 4.50 235,561
6,425 Harbor Capital Appreciation 3.13 163,638
5,634 Invesco Dynamics 1.57 82,080
8,063 Janus Mercury 2.86 149,806
2,630 Nicholas 2.69 141,145
6,202 Strong Growth 2.06 107,788
10,709 T. Rowe Price Blue Chip 5.56 291,078
7,510 T. Rowe Price Mid Cap 6.03 315,553
2,678 White Oak Growth 1.77 92,711
------- ------------
33.14 1,734,692
------- ------------
Growth/Income
8,044 American Century Growth & Income 4.06 212,277
3,702 Dodge & Cox Stock 7.67 401,391
10,988 Vanguard Growth & Income 5.61 293,825
------- ------------
17.34 907,493
------- ------------
Healthcare
2,102 Vanguard Healthcare 4.63 242,578
------- ------------
Foreign Equity
18,764 American Century International Equity 2.70 141,486
5,464 Managers International Equity 4.08 213,362
6,365 Scudder Greater Europe 2.70 141,234
------- ------------
9.48 496,082
------- ------------
THE CROWLEY DIVERSIFIED MANAGEMENT PORTFOLIO
PORTFOLIO OF INVESTMENTS
November 30, 2003
- --------------------------------------------------------------------------------------------------------------------
Market
Percent of Value
Par Value Net Assets (Note 1-A)
INTERNATIONAL EQUITY FUNDS
Global Equity
11,307 Dreyfus Founders Worldwide Growth 2.35% $ 123,250
9,512 Gabelli Global Telecommunications 2.41 126,130
4,627 Janus Worldwide 3.33 174,449
------- ------------
8.09 423,829
------- ------------
Total Investments (Cost $6,175,385) (a) 96.09 5,029,948
Other Assets Less Liabilities 3.91 204,561
------- ------------
Net Assets 100.00% $ 5,234,509
======= ============
(a) Aggregate cost for federal income tax purposes is $6,175,385.
At November 30, 2003 unrealized appreciation (depreciation) of
securities for federal income tax purposes is as follows:
Unrealized appreciation $ 107,013
Unrealized depreciation (1,252,450)
-------------
Net unrealized depreciation $ (1,145,437)
=============
</table>
<table>
<caption>
THE CROWLEY PORTFOLIO GROUP, INC.
STATEMENT OF ASSETS AND LIABILITIES
November 30, 2003
- -------------------------------------------------------------------------------------------------------------------
Diversified
Income Management
Portfolio Portfolio
<s> <c> <c>
ASSETS
Investments at market value
(Identified cost $11,079,036 and $6,175,385,
respectively) (Note 1) $ 11,224,252 $ 5,029,948
Cash 118,828 211,558
Dividends and interest receivable 129,868 -
------------- --------------
Total assets 11,472,948 5,241,506
------------- --------------
LIABILITIES
Accrued expenses 14,334 6,997
------------- --------------
NET ASSETS
(500 million shares of $.01 par value common stock
authorized; 1,091,103 and 545,521 shares issued
and outstanding, respectively) $ 11,458,614 $ 5,234,509
============= ==============
NET ASSET VALUE, OFFERING AND REPURCHASE
PRICE PER SHARE
($11,458,614 / 1,091,103 shares) $10.50
======
($5,234,509 / 545,521 shares) $9.60
=====
NET ASSETS
At November 30, 2003, net assets consisted of:
Paid-in capital $ 11,339,185 $ 6,757,449
Undistributed net investment income 498,147 -
Accumulated net realized loss on investments (523,934) (377,503)
Net unrealized depreciation 145,216 (1,145,437)
------------- --------------
$ 11,458,614 $ 5,234,509
============= ==============
THE CROWLEY PORTFOLIO GROUP, INC.
STATEMENT OF OPERATIONS
Year ended November 30, 2003
- -------------------------------------------------------------------------------------------------------------------
Diversified
Income Management
Portfolio Portfolio
INVESTMENT INCOME
Interest income $ 598,282 $ 788
Dividends 119,591 36,123
--------------- ------------
Total income 717,873 36,911
------------ --------------
EXPENSES
Investment advisory fees (Note 2) 68,722 45,761
Transfer agent fees (Note 2) 47,671 20,494
Professional fees 30,584 16,097
Custody fees 6,700 1,200
Directors' fees 4,300 4,000
Miscellaneous 2,273 978
Insurance 1,600 830
Registration 1,885 1,725
------------ --------------
Total expenses 163,735 91,085
------------ --------------
Net investment income (loss) 554,138 (54,174)
------------ --------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized loss from security transactions (191,605) (184,463)
Capital gain distributions from regulated investment companies - 15,691
Change in unrealized appreciation (depreciation) of investments 641,661 900,448
------------ --------------
Net gain (loss) on investments 450,056 731,676
------------ --------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 1,004,194 $ 677,502
============ ==============
</table>
<table>
<caption>
THE CROWLEY PORTFOLIO GROUP, INC.
INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
Years ended November 30, 2003 and 2002
- -------------------------------------------------------------------------------------------------------------------
2003 2002
---- ----
<s> <c> <c>
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Net investment income $ 554,138 $ 624,155
Net realized loss on investments (191,605) (16,967)
Net change in unrealized appreciation of investments 641,661 (445,222)
-------------- ---------------
Net increase in net assets resulting from operations 1,004,194 161,966
Distributions to shareholders
Net investment income
($.56 and $.66 per share, respectively) (610,198) (685,035)
Capital share transactions (a)
Increase in net assets resulting from capital share transactions (36,746) 382,865
-------------- ---------------
Total increase (decrease) in net assets 357,250 (140,204)
NET ASSETS
Beginning of year 11,101,364 11,241,568
-------------- ---------------
End of year
(Including undistributed net investment income of
$498,147 and $554,207, respectively) $ 11,458,614 $ 11,101,364
============== ===============
(a) Summary of capital share activity follows:
Year Ended Year Ended
November 30, 2003 November 30, 2002
Shares Value Shares Value
Shares sold 22,041 $ 214,198 29,327 $ 291,874
Shares issued in reinvestment of distributions 62,449 607,624 67,996 682,000
-------- ----------- --------- -----------
84,490 821,822 97,323 973,874
Shares redeemed (84,781) (858,568) (58,634) (591,009)
------------------------------------------------- ------------- -------------- -------------
Net increase (decrease) (291) $ (36,746) 38,689 $ 382,865
======== =========== ========= ===========
THE CROWLEY PORTFOLIO GROUP, INC.
DIVERSIFIED MANAGEMENT PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
Years ended November 30, 2003 and 2002
- -------------------------------------------------------------------------------------------------------------------
2003 2002
---- ----
INCREASE (DECREASE) IN NET ASSETS FROM
Operations
Net investment income (loss) $ (54,174) $ (52,269)
Net realized loss on investments (184,463) (157,140)
Capital gain distributions from regulated investment companies 15,691 22,933
Net change in unrealized depreciation of investments 900,448 (832,993)
------------ -------------
Net increase (decrease) in net assets resulting from operations 677,502 (1,019,469)
Capital share transactions (a)
Increase (decrease) in net assets resulting from capital
share transactions (93,519) 175,463
------------ -------------
Total increase (decrease) in net assets 583,983 (844,006)
NET ASSETS
Beginning of year 4,650,526 5,494,532
------------ -------------
End of year $ 5,234,509 $ 4,650,526
============ =============
(a) Summary of capital share activity follows:
Year Ended Year Ended
November 30, 2003 November 30, 2002
Shares Value Shares Value
Shares sold 28,740 $ 265,207 58,638 $ 493,384
Shares redeemed (43,809) (358,726) (36,582) (317,921)
-------- ----------- -------- -----------
Net increase (decrease) (15,069) $ (93,519) 22,056 $ 175,463
======== =========== ======== ===========
</table>
<table>
<caption>
THE CROWLEY PORTFOLIO GROUP, INC.
INCOME PORTFOLIO
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)
- -------------------------------------------------------------------------------------------------------------------
Year Ended November 30,
2003 2002 2001 2000 1999
---- ---- ---- ---- ----
<s> <c> <c> <c> <c> <c>
NET ASSET VALUE
Beginning of year $10.17 $10.68 $10.38 $10.56 $11.05
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .51 .58 .65 .71 .69
Net gains (losses) on securities
(both realized and unrealized) .38 (.43) .34 (.19) (.59)
------ ------ ------ ------ ------
Total from investment operations .89 .15 .99 .52 .10
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends (from net investment income) (.56) (.66) (.69) (.70) (.59)
Distributions (from realized capital gains) - - - - -
------ ------- ------ ------- -------
Total distributions (.56) (.66) (.69) (.70) (.59)
------ ------ ------ ------ ------
NET ASSET VALUE
End of year $10.50 $10.17 $10.68 $10.38 $10.56
====== ====== ====== ====== ======
TOTAL RETURN 9.19% 1.45% 10.08% 5.32% .92%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000 omitted) $11,459 $11,101 $11,242 $10,724 $11,313
Ratio of expenses to average net assets 1.43% 1.41% 1.39% 1.37% 1.36%
Ratio of net investment income to average net assets 4.85% 5.65%** 6.20% 6.79% 6.17%
Portfolio turnover rate 51.07% 32.28% 30.12% 1.38% 27.13%
** As required, effective December 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment Companies
and began amortizing discount and premium on debt securities. Had the Fund
not amortized discount and premium on debt securities as adjustments to
interest income, the net investment income per share would have been $.57
and the ratio of net investment income to average net assets would have
been 5.59%. Per share and ratios prior to December 1, 2001 have not been
restated to reflect this change in presentation.
THE CROWLEY PORTFOLIO GROUP, INC.
DIVERSIFIED MANAGEMENT PORTFOLIO
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)
- -------------------------------------------------------------------------------------------------------------------
Year Ended November 30,
2003 2002 2001 2000 1999
---- ---- ----- ----- -----
NET ASSET VALUE
Beginning of year $8.30 $10.20 $13.21 $14.40 $13.11
----- ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.10) (.09) .12 .06 .08
Net gains (losses) on securities
(both realized and unrealized) 1.40 (1.81) (2.39) (.91) 1.79
----- ------ ------ ------ ------
Total from investment operations 1.30 (1.90) (2.27) (.85) 1.87
----- ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends (from net investment income) - - (.15) (.16) (.13)
Distributions (from realized capital gains) - - (.59) (.18) (.45)
----- ------ ------ ------ ------
Total distributions - - (.74) (.34) (.58)
----- ------ ------ ------ ------
NET ASSET VALUE
End of year $9.60 $ 8.30 $10.20 $13.21 $14.40
===== ====== ====== ====== ======
TOTAL RETURN 15.66% (18.63)% (18.31)% (6.20)% 14.74%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000 omitted) $5,235 $4,651 $5,495 $6,573 $7,109
Ratio of expenses to average net assets 2.01% 1.89% 1.81% 1.86% 1.82%
Ratio of net investment income (loss)
to average net assets (1.19)% (1.06)% .98% .39% .57%
Portfolio turnover rate 3.76% 1.75% 6.81% 15.36% 23.81%
</table>
THE CROWLEY PORTFOLIO GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
November 30, 2003
- --------------------------------------------------------------------------------
(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, 2003, the Crowley Income
Portfolio had a capital loss carry-forward for Federal income tax
purposes of $517,060 of which $143,224 in 2004, $47,021 in 2005,
$53,119 in 2006, $24,748 in 2008, $12,666 in 2009, $51,551 in 2010 and
$184,731 expires in 2011. At November 30, 2003, the Crowley
Diversified Management had a capital loss carryforward for Federal
income tax purposes of $377,503 of which $74,524 expires in 2009,
$134,207 expires in 2010 and $168,772.
For the year ended November 30, 2003, The Crowley Income Portfolio
reclassified accumulated net realized loss of $50,383 against paid-in
capital on the Statement of Assets and Liabilities.
For the year ended November 30, 2003, The Crowley Diversified
Management Portfolio reclassified accumulated deficit in net
investment income of $54,174 against paid in capital on the Statement
of Assets and Liabilities. Such reclassification, the result of
permanent differences between financial statement income and income
tax reporting requirements, has no effect on the portfolio's net
assets or net asset value per share.
<table>
<caption>
THE CROWLEY PORTFOLIO GROUP, INC.
NOTES TO FINANCIAL STATEMENTS - (Continued)
November 30, 2003
- -------------------------------------------------------------------------------------------------------------------
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 daily. 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 accounting
principles generally accepted in the United States of America,
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.
(2) DISTRIBUTION TO SHAREHOLDERS AND TAX COMPONENTS OF CAPITAL
The tax character of distributions paid during the years ended November
30, 2002 and 2001 were as follows:
<s> <c> <c>
2003 2002
---- ----
Income Portfolio
Distributions from ordinary income $ 610,198 $ 685,035
Distributions from long-term capital gains $ - $ -
Diversified Management Portfolio
Distribution from ordinary income $ - $ -
Distribution from long-term capital gains $ - $ -
As of November 30, 2003, the components of distributable earnings on a tax
basis were as follows:
Income Portfolio
Undistributed ordinary income $ 499,902
Capital loss carryforwards (517,060)
Unrealized depreciation of securities 136,587
-----------
$ 119,429
Diversified Portfolio
Undistributed ordinary income $ -
Capital loss carryforwards (377,503)
Unrealized depreciation of securities (1,145,437)
-------------
$ (1,522,940)
</table>
THE CROWLEY PORTFOLIO GROUP, INC.
NOTES TO FINANCIAL STATEMENTS - (Continued)
November 30, 2003
- --------------------------------------------------------------------------------
(3) 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,
2003, TCFG earned fees of $47,671 and $20,494 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.
(5) PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short-term investments,
aggregated $5,825,004 and $5,407,051, respectively, in the Income Portfolio
and $168,417 and $166,629, respectively, in the Diversified Management
Portfolio.
THE CROWLEY PORTFOLIO GROUP, INC.
THE CROWLEY INCOME PORTFOLIO
THE CROWLEY DIVERSIFIED MANAGEMENT PORTFOLIO
ANNUAL REPORT DATED
NOVEMBER 30, 2003
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
Diversified Management Portfolio and The Crowley Income Portfolio. The
Portfolios had combined assets of approximately 16.7 million dollars as of
November 30, 2003. There are currently 310 active accounts.
The Crowley Diversified Management Portfolio had a net asset value of $9.60 per
share as of November 30, 2003 and had a total return of 15.66% for the period
November 30, 2002 through November 30, 2003. The Crowley Diversified Management
Portfolio had approximately $5.2 million dollars in net assets as of November
30, 2003. As of November 30, 2003, approximately 96.09% of The Crowley
Diversified Management Portfolio was invested in a portfolio of 25 mutual funds
diversified over 7 different investment classifications. The largest portion of
the Portfolio's assets was invested in funds included in the Growth category
(33.14%), followed by Balanced (14.37%), Growth/Income (17.34%), Foreign Equity
(9.48%), Aggressive Growth (9.04%), Global Equity (8.09%), and Health Care
(4.63%). Management currently intends to invest the Portfolio's assets with a
greater allocation to equities, while continuing to use mutual funds as the
Portfolio's primary investment vehicle. The fiscal year ending November 30, 2003
was very positive for the equity markets. Management believes that the long term
outlook continues to be very positive for the equity markets.
The Crowley Income Portfolio had a net asset value of $10.50 per share as of
November 30, 2003 and had a total return of 9.19% for the period November 30,
2002 through November 30, 2003. As of November 30, 2003 The Crowley Income
Portfolio had investments in 57 individual issues. No individual investment
comprised more than 5% of the Portfolio, while corporate bonds and notes
comprised 88.54% of the overall portfolio. The remaining assets were invested in
preferred stocks (9.42%), and the balance in cash and cash equivalents (2.04%).
The Crowley Income Portfolio continues to be invested to maximize current
income, consistent with prudent risk. Management believes there is a good
possibility that interest rates will start to increase in the second half of
2004. If management is correct, total returns should remain positive, but at
modest levels. Current income as reflected in the December 31, 2002 year-end
distribution, was 0.56 cents per share.
The enclosed report has been audited and contains a list of the Portfolio's
investments as of November 30, 2003.
Sincerely,
Robert A. Crowley, CFA
President
January 23, 2004
MANAGEMENT OF THE FUND (UNAUDITED)
<table>
<caption>
Board of Directors and Officers of the Fund.
The Board of Directors of the Fund consists of six individuals, four of whom are
not "interested persons" of the Fund as than term is defined in the 1940 Act.
The Directors are fiduciaries for the Fund's shareholders and are governed by
the laws of the state of Maryland in this regard. The Directors, in addition to
functions set forth under "Investment Advisor" and "Distributor" review the
actions of the officers and decide on general policy.
Compensation to officers and Directors of the Fund who are affiliated with the
Investment Advisor or the Distributor is paid by the Investment Advisor or the
Distributor, respectively, and not by the Fund. The names, addresses and
occupational history of the Directors and principal executive officers are
listed below.
Positions Held Principal Occupation(s) During
Name, Address and Age with the Fund the Past Five Years
<s> <c> <c>
+*Robert A. Crowley (44) President, Treasurer Vice President, Crowley & Crowley Corp. (financial planning and registered
3201-B Millcreek Road and Director investment advisor) (formerly Crowley Planning & Management Corp.) from
Wilmington, DE 19808 November, 1986 until present; Vice President, The Crowley Financial Group, Inc.
(financial management firm and transfer agent) from February, 1990 to present;
Vice President, Crowley Real Estate Services, Inc. from September, 1986 until
present; General Partner, Crowley Securities (registered broker-dealer) from
February, 1985 until present; Partner, Crowley Insurance, (insurance brokerage)
July, 1986 until present.
+*Frederick J. Crowley, Jr.(46) Vice President,
President, Crowley & Crowley Corp.
3201-B Millcreek Road Secretary, and (financial planning and registered investment advisor) (formerly Crowley
Wilmington, DE 19808 Director Planning and Management Corp.) from November, 1986 until present; President and
Treasurer, The Crowley Financial Group, Inc. (financial management firm and
transfer agent) from February, 1990 to present; Vice President, Crowley Real
Estate Services, Inc. (real estate brokerage) from September, 1986 until
present; General Partner, Crowley Securities (registered broker-dealer) from
February, 1985 until present; Partner, Crowley Insurance (insurance brokerage)
July, 1985 until present.
William O. Cregar (77) Director Retired. Formerly Security Director, E.I. duPont de Nemours & Co., until
4556 Simon Road December, 1990.
Wilmington, DE 19803
Bruce A. Humphries (55) Director, Operations Senior Management, Data International, Inc., 1998 to Present;
2 Radburn Lane Operations Planning Manager for Virology Business, E.I. duPont de Nemours & Co.,
Newark, DE 19711 1986 to 1997.
Daniel J. Piscitello (61) Director Director of Creative Services, Lenox Collections, 1986 to Present.
3933 Branches Lane
Doylestown, PA 18901
Peter Veenema (53) Director Senior Research Engineer, E.I. duPont de Nemours, 1989 to Present.
1211 Norbee Drive
Wilmington, DE 19803
+Catherine Crowley (67) Asst. Secretary & Officer Manager, Crowley & Crowley Corp. (financial planning and advisor)
3201-B Millcreek Road Asst. Treasurer (formerly Crowley Management Corp.); Secretary, The Crowley Financial Group, Inc
Wilmington, DE 19808 (financial management firm and transfer agent) from February, 1990 to present.
- -------------------
*"Interested" director as defined in the Investment Company Act of 1940 (the
"1940 Act") + Robert A. Crowley and Frederick J. Crowley, Jr. are brothers, and
the sons of Catherine C. Crowley. All directors oversee 2 Funds.
</table>
ITEM 2: CODE OF ETHICS -- The Crowley Portfolio Group, Inc. (the "Registrant")
has adopted a code of ethics that applies to the Registrant's principal
executive officer and principal financial officer, a copy of which is
attached hereto as Exhibit A.
ITEM 3: AUDIT COMMITTEE FINANCIAL EXPERT -- The Registrant's Board of Directors
has determined that the Registrant does not have an audit committee
financial expert serving on its Audit Committee. The Board of Directors
based its determination with respect to not having an audit committee
financial expert serving on its Audit Committee on the following factors:
(a) The Registrant is relatively small in size and has approximately $15.8
million in assets, which reduces the complexity of the financial
operations and conditions of the Registrant. In addition, the
Registrant's small size makes it more prohibitive to incur the added
expenses of identifying and electing an additional Director who would,
without question, fully meet the qualifications of an audit committee
financial expert and would be willing to serve, as the current
Directors do, with limited compensation.
(b) The Registrant's Board of Directors also considered several factors,
including the Fund's shareholder base and distribution channels, the
Registrant's portfolio holdings, the Audit Committee's unimpeded
access to the Registrant's auditor and the qualifications of the
current members of the Committee. In addition, the Board of Directors
considered the longevity of service for each member of the Audit
Committee, which generally covers the Registrant's 12-year operating
history.
ITEM 4: PRINCIPAL ACCOUNTANT FEES AND SERVICES -- Item not required at this
time; applicable only to annual reports with periods ending on or after
December 15, 2003
ITEM 5: AUDIT COMMITTEE OF LISTED REGISTRANTS -- Item not applicable to
registrant, which is an open-end management investment company.
ITEM 6: [RESERVED].
ITEM 7: DISCLOSURE of PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES -- Item not applicable to registrant, which
is an open-end management investment company.
ITEM 8: [RESERVED].
ITEM 9: CONTROLS AND PROCEDURES
(a) The registrant's President/Chief Executive Officer and Treasurer/Chief
Financial Officer reviewed the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company
Act of 1940 (the "Act")) as of a date within 90 days of the filing of
this report. Based on their review, the registrant's President/Chief
Executive Officer and Treasurer/Chief Financial Officer determined
that the procedures are effectively designed to ensure that material
information relating to the registrant is made known to them by others
within the registrant and by the registrant's service providers.
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act) that
occurred during the registrant's last fiscal half-year that materially
affected, or were reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 10: EXHIBITS
(a) The code of ethics applicable to the Registrant's principal executive
officer and principal financial officer is filed herewith.
(b) The certifications required by Rule 30a-2 under the Investment Company
Act of 1940, as amended, and Sections 302 of the Sarbanes-Oxley Act of
2002 are filed herewith.
(c) The certifications required by Section 906 of the Sarbanes-Oxley Act
of 2002 are furnished 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.
Registrant: The Crowley Portfolio Group, Inc.
By: /s/Robert A. Crowley
_____________________
Name: Robert A. Crowley
Title: President
Date: January 27, 2004
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.
Registrant: The Crowley Portfolio Group, Inc.
By: /s/Robert A. Crowley
_____________________
Name: Robert A. Crowley
Title: President (Principal Executive Officer)
Date: January 27, 2004
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.
Registrant: The Crowley Portfolio Group, Inc.
By: /s/Robert A. CrowleyBy: _______________________________
_____________________
Name: Robert A. Crowley
Title: Treasurer (Principal Financial Officer)
Date: January 27, 2004