UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21113
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Westlakes Institutional Portfolios
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(Exact name of registrant as specified in charter)
1205 Westlakes Drive, Suite 280
Berwyn, PA 19312
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(Address of principal executive offices) (Zip code)
John H. Grady
Constellation Investment Management Company
1205 Westlakes Drive, Suite 280
Berwyn, PA 19312
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(Name and address of agent for service)
Registrant's telephone number, including area code: (302) 791-3197
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Date of fiscal year end: December 31, 2004
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Date of reporting period: June 30, 2004
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
FINANCIAL STATEMENTS
WESTLAKES INSTITUTIONAL PORTFOLIOS
MIDCAP CORE PORTFOLIO
JUNE 30, 2004
(UNAUDITED)
FINANCIAL STATEMENTS
WESTLAKES INSTITUTIONAL PORTFOLIOS
MIDCAP CORE PORTFOLIO
JUNE 30, 2004
TABLE OF CONTENTS
Schedule of Investments 1
Statement of Assets and Liabilities 4
Statement of Operations 5
Statements of Changes in Net Assets 6
Financial Highlights 7
Notes to Financial Statements 8
WESTLAKES INSTITUTIONAL PORTFOLIOS
MIDCAP CORE PORTFOLIO
SCHEDULE OF INVESTMENTS - JUNE 30, 2004 (UNAUDITED)
- -------------------------------------------------------------------------------------------------
SHARES MARKET VALUE
COMMON STOCK (97.89%)
AIRLINES (1.55%)
460 AMR Corp.* $ 5,571
----------
BANKING (8.81%)
110 City National Corp. 7,227
340 New York Community Bancorp 6,674
165 Peoples Bank 5,140
250 Sovereign Bancorp, Inc. 5,525
150 Webster Financial Corp. 7,053
----------
31,619
----------
COMMERICAL SERVICES (7.04%)
70 Alberto Culver Co. 3,510
190 Alliance Data System Corp. * 8,028
110 Corporate Executive Board Co. 6,357
240 SUPERVALU, INC. 7,346
----------
25,241
----------
ELECTRONICS (6.42%)
330 Amphenol Corp., Class - A* 10,996
560 Nam Tai Electronics, Inc. 12,051
----------
23,047
----------
ENERGY (8.42%)
100 Ashland, Inc. 5,281
130 Canadian Natural Resources, Ltd. 3,887
170 Energy, Inc. 6,120
170 Equitable Resources, Inc. 8,791
206 XTO Energy, Inc. 6,137
----------
30,216
----------
FINANCE (1.80%)
160 First Marblehead Corp. * 6,442
----------
<FN>
- ------------------
* Non-income producing security.
</FN>
See Accompanying Notes to Financial Statements 1
WESTLAKES INSTITUTIONAL PORTFOLIOS
MIDCAP CORE PORTFOLIO
SCHEDULE OF INVESTMENTS- JUNE 30, 2004 (UNAUDITED) (CONTINUED)
- ------------------------------------------------------------------------------------------------
SHARES MARKET VALUE
COMMON STOCK (CONTINUED)
GAS (1.41%)
210 MDU Resources Group, Inc. $ 5,046
-----------
INDUSTRIAL (3.77%)
110 Cummins Engine, Inc. 6,875
140 Fluor Corp. 6,674
-----------
13,549
-----------
INSURANCE (3.95%)
170 SAFECO Corp. 7,480
420 UnumProvident Corp. 6,678
-----------
14,158
-----------
MANUFACTURING (6.64%)
50 Ball Corporation 3,602
250 NOVA Chemicals Corp. 7,232
90 Sigma Aldrich Corp. 5,365
110 Temple Inland, Inc. 7,618
-----------
23,817
-----------
MEDICAL (13.00%)
120 Bard (C.R.), Inc. 6,798
174 Caremark RX, Inc. 5,731
200 Community Health Systems, Inc. 5,354
225 Davita, Inc. * 6,937
600 Healthsouth Corp. * 3,570
70 OSI Pharmaceuticals, Inc. 4,931
200 PacifiCare Health Systems, Inc.* 7,732
150 Triad Hospitals, Inc. 5,584
-----------
46,637
-----------
PAPER PRODUCTS (1.47%)
140 Boise Cascade Corp. 5,270
-----------
PROPERTIES (3.00%)
190 General Growth Properties 5,618
90 Vornado Realty Trust 5,140
-----------
10,758
-----------
See Accompanying Notes to Financial Statements 2
WESTLAKES INSTITUTIONAL PORTFOLIOS
MIDCAP CORE PORTFOLIO
SCHEDULE OF INVESTMENTS- JUNE 30, 2004 (UNAUDITED) (CONTINUED)
- ------------------------------------------------------------------------------------------------
SHARES MARKET VALUE
COMMON STOCK (CONTINUED)
RETAIL (7.47%)
120 Advance Auto Parts, Inc.* $ 5,301
210 Foot Locker, Inc. 5,111
260 PetsMart, Inc. 8,437
190 Tractor Supply Company* 7,946
-----------
26,795
TECHNOLOGY (3.56%)
70 Cognos, Inc. * 2,531
230 Cypress Semiconductor Corp. * 3,264
270 Intergraph Corp. * 6,982
-----------
12,777
-----------
TELECOMMUNICATIONS (15.92%)
1,030 Alamosa Holdings, Inc. * 7,570
430 American Tower Corp.* 6,536
240 Check Point Software Technology, Inc. 6,478
110 Goodrich Co., B.F. 3,556
230 Harris Corp. 11,673
130 L-3 Communications Holdings* 8,684
210 McAfee, Inc. * 3,807
150 NII Holdings, Inc. Class-B* 5,054
130 Western Wireless Corp. Class-A* 3,758
-----------
57,116
-----------
WASTE MANAGEMENT (3.66%)
190 Republic Services, Inc. 5,499
160 Waters Corp. * 7,644
-----------
13,143
-----------
TOTAL COMMON STOCK (COST $302,117**) 351,202
-----------
OTHER ASSETS, LESS LIABILITIES (2.11%) 7,580
-----------
NET ASSETS (100.00%) $ 358,782
===========
<FN>
- -------------------------
* Non-income producing security.
** Cost for federal tax purposes.
</FN>
See Accompanying Notes to Financial Statements. 3
WESTLAKES INSTITUTIONAL PORTFOLIOS
MIDCAP CORE PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2004 (UNAUDITED)
- -----------------------------------------------------------------------------------------------
ASSETS
Investments in securities at value (cost $302,117) $ 351,202
Cash 272
Interest and dividends receivable 169
Receivable for securities sold 12,305
-----------
TOTAL ASSETS 363,948
-----------
LIABILITIES
Payable for securities purchased 3,618
Management fee payable 1,548
-----------
TOTAL LIABILITIES 5,166
-----------
TOTAL NET ASSETS $ 358,782
===========
NET ASSETS CONSIST OF:
Paid-in capital (Unlimited Authorization) $ 269,040
Undistributed net investment income 201
Accumulated net realized gains 40,456
Net unrealized appreciation 49,085
-----------
TOTAL NET ASSETS $ 358,782
===========
Shares Outstanding 26,316
Net Asset Value per Share, Offering and Redemption Price per Share $ 13.63
===========
See Accompanying Notes to Financial Statements. 4
WESTLAKES INSTITUTIONAL PORTFOLIOS
MIDCAP CORE PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 (UNAUDITED)
- ------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of $37 foreign tax) $ 1,410
-----------
EXPENSES
Management fees (see Note 2) 1,551
-----------
NET INVESTMENT LOSS (141)
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments sold 24,883
Net unrealized depreciation of investments (2,509)
-----------
Net realized and unrealized gain on investments 22,374
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 22,233
===========
See Accompanying Notes to Financial Statements. 5
WESTLAKES INSTITUTIONAL PORTFOLIOS
MIDCAP CORE PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------------
Six Months Ended
June 30, 2004 Year Ended
OPERATIONS ACTIVITIES (Unaudited) December 31, 2003
Net investment (loss) income $ (141) $ 342
Net realized gain on investments sold 24,883 44,613
Net unrealized (depreciation) appreciation of investments (2,509) 51,594
----------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 22,233 96,549
----------- ----------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares issued 0 240,000
Cost of shares redeemed 0 0
Dividends paid 0 (29,040)
Reinvestment of dividends 0 29,040
----------- ----------
INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS 0 240,000
----------- ----------
TOTAL INCREASE IN NET ASSETS 22,233 336,549
----------- ----------
NET ASSETS AT BEGINNING OF PERIOD 336,549 0
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NET ASSETS AT END OF PERIOD $ 358,782 $ 336,549
=========== ==========
SHARES ISSUED AND REDEEMED:
Issued 0 24,000
Dividends reinvested 0 2,316
Redemptions 0 0
----------- ----------
NET INCREASE IN SHARES 0 26,316
=========== ==========
<FN>
Midcap Core Portfolio commenced operations on January 2, 2003
</FN>
See Accompanying Notes to Financial Statements
6
WESTLAKES INSTITUTIONAL PORTFOLIOS
MIDCAP CORE PORTFOLIO
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING
- -----------------------------------------------------------------------------------------------------------------------
Six Months Ended
June 30, 2004 Year Ended
(Unaudited) December 31, 2003
Net Asset Value, beginning of period $ 12.79 $ 10.00
Income from Investment Operations:
Net investment (loss) income (0.01) 0.01
Net realized and unrealized gains 0.85 3.99
----------- -----------
Total from investment operations 0.84 4.00
Less Distributions:
Distribution of realized gains (0.00) (1.21)
----------- -----------
Net asset value, end of period $ 13.63 $ 12.79
=========== ===========
Expense Ratios
Ratio of net investment (loss) income to average net assets (0.08)%* 0.12%
Ratio of expenses to average net assets 0.90%* 0.90%
Net Asset Value, end of period $ 358,782 $ 336,549
Total return (not annualized) 6.57% 40.24%
Portfolio Turnover (not annualized) 101% 141%
<FN>
* Annualized
The Fund pays a unified management fee to the investment manager as discussed in
note 2.
Midcap Core Portfolio commenced operations on January 2, 2003
</FN>
See Accompanying Notes to Financial Statements
7
WESTLAKES INSTITUTIONAL PORTFOLIOS
MIDCAP CORE PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION
Westlakes Institutional Portfolios (the "Trust"), a Delaware Statutory
Trust, is registered under the Investment Company Act of 1940, as amended,
as an open-end management investment company with one active portfolio. The
financial statements included herein are those of the Midcap Core Portfolio
(the "Fund"). The Fund commenced operations on January 2, 2003.
The Fund issues shares only in transactions that do not involve a public
offering within the meaning of Section 4(2) of the Securities Act of 1933,
as amended (the "Securities Act"). Only "accredited investors," as defined
in Regulation D under the Securities Act, may invest in the Fund. Shares of
the Fund have not been registered under the Securities Act or the
securities laws of any state and are subject to restrictions on
transferability and resale.
The Board of Trustees has overall responsibility to manage and control the
business affairs of the Trust, including the complete and exclusive
authority to oversee and to establish policies regarding the Management,
conduct and operation of the Trust's business. The Board of Trustees
exercises the same powers, authority and responsibilities on behalf of the
Trust as are customarily exercised by the board of directors of a
registered investment company organized as a corporation.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies followed
by the Fund:
USE OF ESTIMATES - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported
amounts of income and expenses during the reported period. Actual results
could differ from those estimates.
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. Short-term
debt securities with maturities of 60 days or less are carried at amortized
cost, which approximates market value. Other debt securities are carried at
fair market value as determined pursuant to guidelines established by the
Board of Trustees. Debt securities for which market quotations are readily
available are valued on the basis of the last reported sales price, or, if
no sales are reported, the mean between representative bid and asked
quotations.
8
WESTLAKES INSTITUTIONAL PORTFOLIOS
MIDCAP CORE PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SECURITY VALUATION (CONTINUED) - Debt securities for which market
quotations are not readily available may be valued with reference to
securities whose prices are more readily obtainable and whose durations are
comparable to the securities being valued. Subject to the foregoing,
securities for which market quotations are not readily available are valued
at fair value as determined in good faith by the Board of Trustees.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions
are accounted for on the date the security is purchased or sold (trade
date). Dividend income is recognized on the ex-dividend date, and interest
income is recognized on the accrual basis subject to the recognition of
certain gains and losses on mortgage- and asset-backed securities. Costs
used in determining realized gains and losses on the sales of investment
securities are those of the specific securities sold.
Securities purchased on a when issued or delayed-delivery basis may be
settled a month or more after the trade date. Such securities are included
in the portfolio and are subject to market fluctuations during this period.
On the date of the commitment to purchase or sell, the Fund designates
specific assets with a current value at least equal to the amount of the
commitment to be used for settling the commitment.
The Fund may enter into options on futures contracts for the purpose of
managing exposure to changing interest rates or securities prices. When the
Fund sells or purchases on option, an amount equal to the premium received
or paid by the Fund is recorded as a liability or an asset and is
subsequently adjusted to the current market value of the option written or
purchased. Premiums received or paid from purchasing options, which expire
unexercised, are treated by the Fund on the expiration date as realized
gains or losses. The difference between the premium and the amount paid or
received on effecting a closing purchase or sale transaction, including
brokerage commissions, is also treated as realized gain or loss. If an
option is exercised, the premium paid or received is added to the cost of
the purchase or proceeds from the sale in determining whether the Fund has
realized a gain or a loss on investment transactions. The Fund had no
transactions in options during the six months ended June 30, 2004.
NET ASSET VALUE PER SHARE - The net asset value per share is calculated
each business day. It is computed by dividing the assets of the Fund, less
its liabilities, by the number of outstanding shares of the Fund.
REPURCHASE AGREEMENTS - The custodian bank holds securities pledged as
collateral for repurchase agreements until the respective agreements
mature. Provisions of the repurchase agreements ensure that the market
value of the collateral, including accrued interest theron, is not less
than 102%. In the event of default of the counterparty, if the value of the
collateral declines or if the counterparty enters an insolvency proceeding,
realization of the collateral by the Fund may be delayed or limited.
9
WESTLAKES INSTITUTIONAL PORTFOLIOS
MIDCAP CORE PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EXPENSES - The Fund pays a unified management fee to the investment manager
for providing advisory and administration services. The investment manager
is responsible for compensating any third party engaged to provide services
under its supervision and is also responsible for payment of the fees of
the Independent Trustees, custodian, independent auditor, legal counsel
(excluding costs in connection with certain litigation or administrative
actions), and the transfer and dividend disbursing agent.
DIVIDENDS AND DISTRIBUTIONS - The Fund pays distributions of net income
annually. Any net realized capital gains on sales of securities are
distributed to shareholders at least annually.
3. TRANSACTIONS WITH AFFILIATES
Certain officers and Trustees of the Trust are also officers and Trustees
of the Investment Manager (Constellation Investment Management Company, LP
or "CIMCO"). Such officers are paid no fees by the Trust for serving as
officers and trustees of the Trust.
Constellation Investment Distributors Company Inc., a subsidiary of CIMCO,
acts as Placement Agent to the Fund.
4. MANAGEMENT AGREEMENT
The Trust and CIMCO are parties to a Management Agreement under which CIMCO
receives a fee, calculated daily and paid monthly, of 0.90% per annum of
the average daily net assets of the Fund. Under the Management Agreement,
CIMCO makes the investment decisions for the assets of the Fund and
continuously reviews, supervises and administers the Fund's investment
program, subject to the supervision of and policies established by the
Board of Trustees. Under the Management Agreement, CIMCO also provides
administrative services to the Trust and pays all operating expenses on the
Trust's behalf.
Turner Investment Partners, Inc., an SEC-registered adviser, serves as the
sub-adviser to the Fund. Turner Investment Partners, Inc. is located in
Berwyn, Pennsylvania, and makes investment decisions for the Fund.
5. OTHER SERVICE PROVIDERS
PFPC Inc. ("PFPC") serves as the transfer agent and dividend-disbursing
agent for the Trust under a transfer agency agreement with the Trust and
CIMCO. PFPC also serves as the sub-administrator to the Trust. PFPC Trust
Co. provides custodial services to the Trust. CIMCO compensates PFPC and
PFPC Trust Co. for their services.
10
WESTLAKES INSTITUTIONAL PORTFOLIOS
MIDCAP CORE PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
6. INVESTMENT TRANSACTIONS
The cost of security purchases and the proceeds of security sales, other
than short-term investments, for the six months ended June 30, 2004, were
$347,306 and $327,191 respectively.
7. FEDERAL INCOME TAXES
The Fund is classified as a separate taxable entity for Federal income tax
purposes. The Fund intends to continue to qualify as a separate "Regulated
Investment Company" under the Internal Revenue Code and make the requisite
distributions to shareholders that will be sufficient to relieve it from
Federal income tax and Federal excise tax. Therefore, no Federal tax
provision is required.
During the six months period ended June 30, 2004, the Fund did not
distribute any ordinary income or capital gains to shareholders.
The amounts of distributions from ordinary income and net realized capital
gains are determined in accordance with Federal income tax regulations,
which may differ from net investment income and net realized capital gains
determined under accounting principles generally accepted in the United
States of America. These book/tax differences are either temporary or
permanent in nature. To the extent these differences are permanent,
adjustments will be made to the appropriate equity accounts in the period
that the differences arise. For Federal income tax purposes, any capital
loss carryforwards may be carried forward and applied against future
capital gains.
At June 30, 2004, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes. At
June 30, 2004, accumulated net unrealized appreciation on investments was
$49,085, consisting of $52,476 gross unrealized appreciation and $3,391
gross unrealized depreciation.
8. CONCENTRATIONS/RISKS
The Fund may invest a high percentage of its assets in specific sectors of
the market in order to achieve a potentially greater investment return. As
a result, the Fund may be more susceptible to economic, political, and
regulatory developments in a particular sector of the market, positive or
negative, and may experience increased volatility on the Fund's net asset
value and magnified effect on the total return.
9. GUARANTEES
In the normal course of business, the Fund enters into contracts that
provide general indemnifications. The Fund's maximum exposure under these
agreements is dependent on future claims that may be made against the Fund,
and therefore cannot be established; however, based on experience, the risk
of loss from such claims is considered remote.
11
WESTLAKES INSTITUTIONAL PORTFOLIOS
MIDCAP CORE PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
INFORMATION REGARDING PROXY VOTES CAST BY THE FUND (IF ANY) IS AVAILABLE WITHOUT
CHARGE, UPON REQUEST, BY CALLING THE FUND AT 1-800-304-2459 OR ON THE WEBSITE OF
THE SECURITIES AND EXCHANGE COMMISSION AT WWW.SEC.GOV.
12
FINANCIAL STATEMENTS
WESTLAKES INSTITUTIONAL PORTFOLIOS
SMALL CAP CORE AND
MIDCAP GROWTH PORTFOLIOS
JUNE 30, 2004
(UNAUDITED)
FINANCIAL STATEMENTS
WESTLAKES INSTITUTIONAL PORTFOLIOS
SMALL CAP CORE AND MIDCAP GROWTH PORTFOLIOS
JUNE 30, 2004
TABLE OF CONTENTS
Statement of Assets and Liabilities 1
Notes to Financial Statements 2
1
WESTLAKES INSTITUTIONAL PORTFOLIOS
SMALL CAP CORE AND MIDCAP GROWTH PORTFOLIOS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2004 (UNAUDITED)
- ----------------------------------------------------------------------------------------------------------
SMALL CAP MIDCAP
CORE GROWTH GROWTH
PORTFOLIO PORTFOLIO
--------- ---------
ASSETS
Cash $ 100 $ 100
--------- ---------
TOTAL ASSETS 100 100
--------- ---------
LIABILITIES - -
NET ASSETS
Paid-in capital 100 100
--------- ---------
TOTAL NET ASSETS $ 100 $ 100
========= =========
Shares Outstanding 10 10
Net Asset Value per Share, Offering and Redemption Price per Share $ 10.00 $ 10.00
========= =========
See Notes to Accompanying Financial Statements
2
WESTLAKES INSTITUTIONAL PORTFOLIOS
SMALL CAP CORE AND MIDCAP GROWTH PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION
Westlakes Institutional Portfolios (the "Trust"), a Delaware Statutory
Trust, is registered under the Investment Company Act of 1940, as amended,
as an open-end management investment company with one active portfolio. The
financial statements included herein are those of the Small Cap Core
Portfolio and the Midcap Growth Portfolio (each a "Fund" and collectively
the "Funds"). Each of the Funds has net assets of $100, which represents
the seed capital contributed to the Funds. Neither of the Funds has
commenced operations.
The Funds issue shares only in transactions that do not involve a public
offering within the meaning of Section 4(2) of the Securities Act of 1933,
as amended (the "Securities Act"). Only "accredited investors," as defined
in Regulation D under the Securities Act, may invest in the Funds. Shares
of the Funds have not been registered under the Securities Act or the
securities laws of any state and are subject to restrictions on
transferability and resale.
The Board of Trustees has overall responsibility to manage and control the
business affairs of the Trust, including the complete and exclusive
authority to oversee and to establish policies regarding the Management,
conduct and operation of the Trust's business. The Board of Trustees
exercises the same powers, authority and responsibilities on behalf of the
Trust as are customarily exercised by the board of directors of a
registered investment company organized as a corporation.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies followed
by the Funds:
USE OF ESTIMATES - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported
amounts of income and expenses during the reported period. Actual results
could differ from those estimates.
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. Short-term
debt securities with maturities of 60 days or less are carried at amortized
cost, which approximates market value. Other debt securities are carried at
fair market value as determined pursuant to guidelines established by the
Board of Trustees. Debt securities for which market quotations are readily
available are valued on the basis of the last reported sales price, or, if
no sales are reported, the mean between representative bid and asked
quotations.
3
WESTLAKES INSTITUTIONAL PORTFOLIOS
SMALL CAP CORE AND MIDCAP GROWTH PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SECURITY VALUATION (CONTINUED) - Debt securities for which market
quotations are not readily available may be valued with reference to
securities whose prices are more readily obtainable and whose durations are
comparable to the securities being valued. Subject to the foregoing
securities for which market quotations are not readily available are valued
at fair value as determined in good faith by the Board of Trustees.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions
are accounted for on the date the security is purchased or sold (trade
date). Dividend income is recognized on the ex-dividend date, and interest
income is recognized on the accrual basis subject to the recognition of
certain gains and losses on mortgage- and asset-backed securities. Costs
used in determining realized gains and losses on the sales of investment
securities would be those of the specific securities sold.
Securities purchased on a when issued or delayed-delivery basis may be
settled a month or more after the trade date. Such securities are included
in the portfolio and are subject to market fluctuations during this period.
On the date of the commitment to purchase or sell, the Funds designate
specific assets with a current value at least equal to the amount of the
commitment to be used for settling the commitment.
The Funds may enter into options on futures contracts for the purpose of
managing exposure to changing interest rates or securities prices. When a
Fund sells or purchases on option, an amount equal to the premium received
or paid by the Fund is recorded as a liability or an asset and is
subsequently adjusted to the current market value of the option written or
purchased. Premiums received or paid from purchasing options, which expire
unexercised, are treated by the Fund on the expiration date as realized
gains or losses. The difference between the premium and the amount paid or
received on effecting a closing purchase or sale transaction, including
brokerage commissions, is also treated as realized gain or loss. If an
option is exercised, the premium paid or received is added to the cost of
the purchase or proceeds from the sale in determining whether the Fund has
realized a gain or a loss on investment transactions. The Funds had no
transactions in options during the six months ended June 30, 2004.
NET ASSET VALUE PER SHARE - The net asset value per share is calculated
each business day. It is computed by dividing the assets of each Fund, less
its liabilities, by the number of outstanding shares of each Fund.
REPURCHASE AGREEMENTS - The custodian bank holds securities pledged as
collateral for repurchase agreements until the respective agreements
mature. Provisions of the repurchase agreements ensure that the market
value of the collateral, including accrued interest theron, is not less
than 102%. In the event of default of the counterparty and the value of the
collateral declines or if the counterparty enters an insolvency proceeding,
realization of the collateral by the Funds may be delayed or limited.
4
WESTLAKES INSTITUTIONAL PORTFOLIOS
SMALL CAP CORE AND MIDCAP GROWTH PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EXPENSES - The Funds pay a unified management fee to the investment manager
for providing advisory and administration services. The investment manager
is responsible for compensating any third party engaged to provide services
under its supervision and is also responsible for payment of the fees of
the independent trustees, custodian, independent auditor, legal counsel
(excluding costs in connection with certain litigation or administrative
actions), and the transfer and dividend disbursing agent.
DIVIDENDS AND DISTRIBUTIONS - The Funds pay distributions of net income
annually. Any net realized capital gains on sales of securities are
distributed to shareholders at least annually.
3. TRANSACTIONS WITH AFFILIATES
Certain officers of the Trust are also officers of the Investment Manager
(Constellation Investment Management Company, LP or "CIMCO"). Such officers
are paid no fees by the Trust for serving as officers and trustees of the
Trust.
Constellation Investment Distributors Company, Inc., a subsidiary of CIMCO,
acts as Placement Agent to the Funds.
4. MANAGEMENT AGREEMENT
The Trust and CIMCO are parties to a Management Agreement under which CIMCO
receives a fee; calculated daily and paid monthly, based on the average
daily net assets of the Funds. Under the Management Agreement, CIMCO makes
the investment decisions for the assets of the Funds and continuously
reviews, supervises and administers each Fund's investment program, subject
to the supervision of and policies established by the Trustees of the
Trust. CIMCO also provides administrative services to the Trust under the
Management Agreement.
Under the Management Agreement, the Small Cap Core Portfolio pays a
management fee of 0.95% of average net assets, and the Midcap Growth
Portfolio pays a management fee of 0.85% of average net assets. CIMCO has
contractually agreed to reduce the management fee to 0.80% for the Midcap
Growth Portfolio until February 28, 2005.
Turner Investment Partners, Inc., an SEC-registered adviser, serves as the
sub-adviser to the Small Cap Core Portfolio. Turner Investment Partners,
Inc. is located in Berwyn, Pennsylvania, and will make investment decisions
for the Small Cap Core Portfolio.
5. OTHER SERVICE PROVIDERS
PFPC Inc. ("PFPC") serves as the transfer agent and dividend-disbursing
agent for the Trust under a transfer agency agreement with the Trust and
CIMCO. PFPC also serves as the sub-administrator to the Trust. PFPC Trust
Co. provides custodial services to the Funds. CIMCO compensates PFPC and
PFPC Trust Co. for their services.
5
WESTLAKES INSTITUTIONAL PORTFOLIOS
SMALL CAP CORE AND MIDCAP GROWTH PORTFOLIOS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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6. INVESTMENT TRANSACTIONS
The Funds did not purchase or sell any securities during the six months
ended June 30, 2004
7. FEDERAL INCOME TAXES
Each of the Funds is classified as a separate taxable entity for Federal
income tax purposes. Each of the Funds intends to continue to qualify as a
separate "Regulated Investment Company" under the Internal Revenue Code and
make the requisite distributions to shareholders that will be sufficient to
relieve it from Federal income tax and Federal excise tax. Therefore, no
Federal tax provision is required.
The amounts of distributions from ordinary income and net realized capital
gains are determined in accordance with Federal income tax regulations,
which may differ from net investment income and net realized capital gains
determined under accounting principles generally accepted in the United
States of America. These book/tax differences are either temporary or
permanent in nature. To the extent these differences are permanent,
adjustments will be made to the appropriate equity accounts in the period
that the differences arise. For Federal income tax purposes, any capital
loss carryforwards may be carried forward and applied against future
capital gains.
At June 30, 2004, the Funds held no investment securities and so had no
unrealized appreciation or depreciation for tax purposes.
8. CONCENTRATIONS/RISKS
The Fund may invest a high percentage of its assets in specific sectors of
the market in order to achieve a potentially greater investment return. As
a result, the Fund may be more susceptible to economic, political, and
regulatory developments in a particular sector of the market, positive or
negative, and may experience increased volatility on the Fund's net asset
value and magnified effect on the total return.
9. GUARANTEES
In the normal course of business, the Funds enter into contracts that
provide general indemnifications. The Funds' maximum exposure under these
agreements are dependent on future claims that may be made against the
Funds, and therefore cannot be established; however, based on experience,
the risk of loss from such claims is considered remote.
INFORMATION REGARDING PROXY VOTES CAST BY THE FUND (IF ANY) IS AVAILABLE WITHOUT
CHARGE, UPON REQUEST, BY CALLING THE FUND AT 1-800-304-2459 OR ON THE WEBSITE OF
THE SECURITIES AND EXCHANGE COMMISSION AT WWW.SEC.GOV.
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
Not yet applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR
240.14a-101), or this Item.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
ITEM 11. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section
302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Not applicable.
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) Westlakes Institutional Portfolios
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By (Signature and Title)* /s/ John H. Grady
-------------------------------------------------------
John H. Grady
President
(principal executive officer)
Date August 27, 2004
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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.
By (Signature and Title)* /s/ John H. Grady
-------------------------------------------------------
John H. Grady
President
(principal executive officer)
Date August 27, 2004
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By (Signature and Title)* /s/ John J. Canning
-------------------------------------------------------
John J. Canning
Vice President and Secretary
Date August 27, 2004
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* Print the name and title of each signing officer under his or her signature.