UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-CSRS
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CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
INVESTMENT COMPANY ACT FILE NUMBER 811-8689
THE NEVIS FUND, INC.
(Exact name of registrant as specified in charter)
--------
1119 St. Paul Street
Baltimore, MD 21202
(Address of principal executive offices) (Zip code)
Forum Shareholder Services, LLC
P.O. Box 446
Portland, Maine 04112-0446
(Name and address of agent for service)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 1-877-44-NEVIS
DATE OF FISCAL YEAR END: MAY 31, 2005
DATE OF REPORTING PERIOD: NOVEMBER 30, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
[The Nevis Fund Logo Omitted]
SEMI-ANNUAL REPORT TO SHAREHOLDERS
NOVEMBER 30, 2004
(UNAUDITED)
TABLE OF CONTENTS
Letter to Shareholders .................................................... 1
Manager's Discussion and Analysis of Fund Performance ..................... 2
Schedule of Investments ................................................... 3
Statement of Assets and Liabilities ....................................... 5
Statement of Operations ................................................... 6
Statements of Changes in Net Assets ....................................... 7
Financial Highlights ...................................................... 8
Notes to Financial Statements ............................................. 9
Disclosure of Fund Expenses ............................................... 11
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to the Fund's portfolio securities, as well as
information relating to how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30 is available (i)
without charge, upon request, by calling 1-877-44-NEVIS; and (ii) on the U.S.
Securities and Exchange Commission's website at http://www.sec.gov.
The Fund's Forms N-Q will be available on the Commission's website at
HTTP://WWW.SEC.GOV, and may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
LETTER TO SHAREHOLDERS THE NEVIS FUND, INC.
January 7, 2005
Dear Fellow Shareholder:
The Nevis Fund's Net Asset Value (NAV) decreased from $12.49 per share on May
31, 2004 to $12.41 per share on November 30, 2004, a decrease of 0.64%.* This
return compares to an increase of 12.18% for the for the Russell 2000 Index, an
increase of 5.83% for the NASDAQ Composite Index and an increase of 5.68% for
the S&P 500 Index for the comparable period. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THE ORIGINAL COST. PLEASE REMEMBER THAT PAST PERFORMANCE
DOES NOT GUARANTEE FUTURE RESULTS AND CURRENT PERFORMANCE MAY BE HIGHER OR LOWER
THAN THE PERFORMANCE DATA QUOTED. TO OBTAIN MORE CURRENT PERFORMANCE
INFORMATION, PLEASE CALL 1-877-446-3847.
The stock market processed many different and often contradictory events in
2004. Until early November, most investors seemed fixated on the U.S.
presidential election. Although the S&P 500 finished the six month period ended
November 30, 2004 with a gain of 5.68%, all of this gain occurred in the final
month of the period. The stock market appeared to anticipate and then celebrate
the re-election of George W. Bush.
But the strong results for the six month period belie the gyrations experienced
along the way. Most impressive perhaps is that this period's gain was achieved
in the face of many disappointments. It has been said that the stock market
climbs the wall of worry, and at no time in our recent past has this seemed
truer than in 2004. First, interest rates reversed a multi year downward trend
when the Federal Reserve Board raised the Fed Funds rate five times between June
30, 2004 and December 14, 2004, from a low of 1% to a current level of 2.25%. As
interest rates were rising, so did the price of crude oil, which hit an all-time
high of $54.69 per barrel in October. Meanwhile, the news coming out of Iraq got
worse as the year progressed. U.S. fatalities were surging and the U.S.
Government was unable to tell the American public when the conflict is likely to
end. Finally, the dollar plummeted against the other major world currencies,
renewing concerns that the U.S. capital markets had lost their dominance.
Despite all this seemingly bad news, however, the U.S. economy has continued to
recover. The recovery has been fitful but appears to be gaining momentum. If you
were to ignore the headlines in 2004 and focus entirely on corporate
profitability, you would find that the S&P 500 earnings per share grew 22.5% on
a dollar weighted basis in 2004 over 2003--a solid performance that certainly
lends credence to the stock market's gains. In the first week of January, the
media reported that notes from the recent Federal Reserve Board meeting
indicated the Fed members' concerns that the economy might be growing too
quickly--even suggesting that a more rapid rise in interest rates might be
necessary to quell any signs of inflation.
We continue to believe that the market collapse in 2000-2002 and the concurrent
recession--while extremely painful to experience--was brutally effective in
streamlining the income statements and balance sheets of the companies that
survived this period. The economic correction was so violent and quick that it
forced all marginal businesses to shut down or merge into a stronger competitor.
As the economy recovered, the surviving companies have been well positioned to
capitalize on their market leadership.
We have seen the benefit of this phenomenon in the Fund's portfolio companies.
For the most part they have the following characteristics: they are well
capitalized; they have fewer over-capitalized, weak competitors muddying their
marketplace; they are experiencing strong revenue growth; and perhaps most
importantly, they are converting this revenue growth into even stronger earnings
growth. We also believe the stage is set for a protracted economic recovery.
According to a recent Bloomberg article, U.S. companies are sitting on more cash
than they have in three decades. With over 14% of their assets in cash, U.S.
companies will begin to invest this money in assets that meet their return
requirements. Many companies have started using their cash to acquire other
companies. Merger and acquisition activity rose 41% in 2004 over 2003. Companies
will also invest their cash in capital equipment. Capital spending typically
occurs over extended periods and as a result, can be a long-lasting benefit to
the economy.
Two of the Fund's portfolio companies agreed to be acquired during the six
months ended November 30, 2004. On November 24th General Electric agreed to
acquire Ionics for $44 in cash--a 48% premium to its market price of $29.75 the
day before the announcement. We expect this transaction will close in the first
half of this year. And on August 10, 2004 Art Technology Group agreed to acquire
Primus Knowledge Solutions in a stock transaction, whereby Primus shareholders
received 1.3567 shares of Art Technology Group for every share of Primus. This
transaction closed on November 1, 2004.
Please be aware that, unlike other mutual funds, The Nevis Fund owns only a
limited number of companies. On November 30, 2004, your Fund owned only 20
positions, with the top 10 representing over 56% of the Fund's assets. This
level of concentration means that your Fund will likely be more volatile than
the major indices. Moreover, in the short-term, especially during periods of
market uncertainty, our holdings tend to fall more than the indices due in part
to inefficiencies related to lower liquidity.
Sincerely,
/s/ David R. Wilmerding, III /s/ Jon C. Baker
David R. Wilmerding, III Jon C. Baker
*PLEASE CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES OF THE
FUND CAREFULLY BEFORE INVESTING. CONTACT YOUR FINANCIAL ADVISER OR CALL THE FUND
AT 1-877-446-3847 FOR A PROSPECTUS. READ THE PROSPECTUS CAREFULLY BEFORE YOU
INVEST.
1
MANAGER'S DISCUSSION AND ANALYSIS OF FUND PERFORMANCE
Semi Annual-November 30, 2004
The Nevis Fund, Inc. (the "Fund") started fiscal year 2004 with 20 equity
holdings and held 20 as of the semi-annual period ended November 30, 2004.
During the course of the six months we made purchases of the following two new
holdings: Nautilus Group and Salix Pharmaceuticals. Additionally, we added to
our positions in Authentidate Holding and Autobytel.
During this six month period we sold the following two holdings in their
entirety: Aspen Technology and Vicor. Additionally, we sold partial amounts from
the positions in companies that we either held in the Fund during the six months
or purchased during the six months and continue to hold in the Fund, including:
Armor Holdings, Connetics, Flir Systems, Ionics, Providian Financial, Scientific
Games, and Wind River Systems.
On August 10, 2004, Art Technology Group announced that it had agreed to acquire
Primus Knowledge Solutions in a stock transaction whereby Primus shareholders
would receive 1.3567 shares of Art Technology Group for every share of Primus.
The Fund exchanged its 645,065 shares of Primus for 875,159 shares of Art
Technology Group. The transaction closed on November 1, 2004.
The Fund's Net Asset Value (NAV) decreased from $12.49 per share on May 31, 2004
to $12.41 per share on November 30, 2004, a decrease of 0.64%.* This return
compares to an increase of 12.18% for the for the Russell 2000 Index, an
increase of 5.83% for the NASDAQ Composite Index and an increase of 5.68% for
the S&P 500 Index for the comparable period. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN
INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THE ORIGINAL COST. PLEASE REMEMBER THAT PAST PERFORMANCE
DOES NOT GUARANTEE FUTURE RESULTS AND CURRENT PERFORMANCE MAY BE HIGHER OR LOWER
THAN THE PERFORMANCE DATA QUOTED. TO OBTAIN MORE CURRENT PERFORMANCE
INFORMATION, PLEASE CALL 1-877-446-3847.
The Fund had a net realized and unrealized loss of approximately $246,000 for
the six month period from May 31, 2004 through November 30, 2004. The largest
single positive contribution to the Fund's performance, as measured on the basis
of realized and unrealized gains and losses over the six month period from May
31, 2004 through November 30, 2004, came from Ionics which increased
approximately $978,000 over this period. The top five companies contributing
positively to the Fund's performance over this six month period, as measured on
the basis of realized and unrealized gains, were Ionics, Scientific Games, Wind
River Systems, Flir Systems and Mapinfo. The largest single negative
contribution to the Fund's performance, as measured on the basis of realized and
unrealized gains and losses over the six month period from May 31, 2004 through
November 30, 2004, came from Authentidate Holding. which decreased approximately
$717,000. The top five companies contributing negatively to the Fund's
performance over this six month period, as measured on the basis of realized and
unrealized losses were Authentidate Holding, Vicor, Bentley Pharmaceuticals,
Primus (now Art Technology Group) and Gevity HR.
THE FUND'S CONCENTRATED POSITIONS OFTEN TRANSLATE INTO HIGHER INDUSTRY
WEIGHTINGS THAN INDICES TYPICALLY HAVE, THEREBY RESULTING IN RETURNS THAT
DEVIATE FROM THE INDICES.
As of November 30, 2004, the Fund had $32,771 in unrealized losses (000) and
$95,571 in accumulated tax loss carry forwards (000).
*PLEASE CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES OF THE
FUND CAREFULLY BEFORE INVESTING. CONTACT YOUR FINANCIAL ADVISER OR CALL THE FUND
AT 1-877-446-3847 FOR A PROSPECTUS. READ THE PROSPECTUS CAREFULLY BEFORE YOU
INVEST.
2
SCHEDULE OF INVESTMENTS THE NEVIS FUND, INC.
November 30, 2004 (Unaudited)
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR GRAPH IN THE PRINTED MATERIAL]
SECTOR WEIGHTINGS+:
14.4% Services-Prepackaged Software
10.6% Measuring Devices
10.4% Consumer Products
8.3% Information Retrieval Services
8.1% Entertainment
7.9% Services-Business Services
7.5% Services-Computer Programming Services
7.0% Drugs
5.7% Medical Products & Services
5.3% Biological Products
4.7% Financial Services
4.6% Aerospace & Defense
3.8% Computers & Services
1.7% Money Market Fund
+PERCENTAGES ARE BASED ON TOTAL INVESTMENTS.
Value
Shares (000)
---------- ---------
COMMON STOCK 93.6%
AEROSPACE & DEFENSE 4.4%
Armor Holdings* 25,700 $ 1,109
- --------------------------------------------------------------------------------
BIOLOGICAL PRODUCTS 5.1%
Connetics* 61,550 1,287
- --------------------------------------------------------------------------------
COMPUTERS & SERVICES 3.7%
Authentidate Holding* 132,823 922
- --------------------------------------------------------------------------------
CONSUMER PRODUCTS 9.9%
Central Garden & Pet* 37,528 1,452
Nautilus Group 47,304 1,031
- --------------------------------------------------------------------------------
2,483
- --------------------------------------------------------------------------------
DRUGS 6.6%
Bentley Pharmaceuticals* 112,989 997
Salix Pharmaceuticals* 44,652 676
- --------------------------------------------------------------------------------
1,673
- --------------------------------------------------------------------------------
ENTERTAINMENT 7.7%
Scientific Games, Cl A* 80,979 1,935
- --------------------------------------------------------------------------------
FINANCIAL SERVICES 4.5%
Providian Financial* 70,072 1,125
- --------------------------------------------------------------------------------
INFORMATION RETRIEVAL SERVICES 7.9%
Autobytel* 106,971 779
CoStar Group* 27,456 1,202
- --------------------------------------------------------------------------------
1,981
- --------------------------------------------------------------------------------
MEASURING DEVICES 10.1%
FLIR Systems* 26,424 1,489
Ionics* 24,526 1,060
- --------------------------------------------------------------------------------
2,549
- --------------------------------------------------------------------------------
MEDICAL PRODUCTS & SERVICES 5.4%
DaVita* 41,076 1,365
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
3
SCHEDULE OF INVESTMENTS THE NEVIS FUND, INC.
November 30, 2004 (Unaudited)
Value
Shares (000)
---------- ---------
SERVICES-BUSINESS SERVICES 7.5%
Gevity HR 37,185 $ 659
Opsware* 180,078 1,233
- --------------------------------------------------------------------------------
1,892
- --------------------------------------------------------------------------------
SERVICES-COMPUTER PROGRAMMING SERVICES 7.1%
Wind River Systems* 148,248 1,794
- --------------------------------------------------------------------------------
SERVICES-PREPACKAGED SOFTWARE 13.7%
Art Technology Group* 875,159 972
Aspect Communications* 110,168 1,195
Mapinfo* 107,107 1,280
- --------------------------------------------------------------------------------
3,447
- --------------------------------------------------------------------------------
TOTAL COMMON STOCK
(Cost $56,333) 23,562
================================================================================
MONEY MARKET FUND 1.6%
SEI Daily Income Trust 407,096 407
- --------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost $407) 407
================================================================================
TOTAL INVESTMENTS 95.2%
(Cost $56,740) $23,969
================================================================================
* NON-INCOME PRODUCING SECURITY
CL-- CLASS
The accompanying notes are an integral part of the financial statements.
4
STATEMENT OF ASSETS & LIABILITIES (000) THE NEVIS FUND, INC.
November 30, 2004 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS:
- --------------------------------------------------------------------------------
Investments at Value (cost $56,740) $ 23,969
Receivables:
Investments sold 1,234
Interest 5
Prepaid Expenses 13
- --------------------------------------------------------------------------------
Total Assets 25,221
- --------------------------------------------------------------------------------
LIABILITIES:
Investment Advisory Fees 1
Accrued Expenses 37
- --------------------------------------------------------------------------------
Total Liabilities 38
- --------------------------------------------------------------------------------
Net Assets $ 25,183
================================================================================
NET ASSETS:
Paid in Capital (unlimited authorization -- no par value)
based on 2,030,017 outstanding shares
of beneficial interest $ 153,980
Accumulated net investment loss (168)
Accumulated net realized loss on investments (95,858)
Net unrealized depreciation on investments (32,771)
- --------------------------------------------------------------------------------
Net Assets $ 25,183
================================================================================
Net Asset Value, Offering and Redemption Price Per Share $12.41
================================================================================
The accompanying notes are an integral part of the financial statements.
5
STATEMENT OF OPERATIONS (000) THE NEVIS FUND, INC.
For the six month period ended November 30, 2004 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
- --------------------------------------------------------------------------------
Dividend Income $ 22
Interest Income 4
- --------------------------------------------------------------------------------
Total Investment Income 26
- --------------------------------------------------------------------------------
EXPENSES:
Investment Advisory Fees (See Note 4) 194
- --------------------------------------------------------------------------------
Total Expenses 194
- --------------------------------------------------------------------------------
Net Investment Loss (168)
- --------------------------------------------------------------------------------
Net Realized Loss on Investments (279)
Net Change in Unrealized Appreciation on Investments 33
- --------------------------------------------------------------------------------
Net Realized and Unrealized Loss on Investments (246)
- --------------------------------------------------------------------------------
Net Decrease in Net Assets Resulting from Operations $(414)
================================================================================
The accompanying notes are an integral part of the financial statements.
6
STATEMENT OF CHANGES IN NET ASSETS (000) THE NEVIS FUND, INC.
For the six month period ended November 30, 2004 (Unaudited) and the year ended May 31, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
6/1/04
to 6/1/03
11/30/04 to
(Unaudited) 5/31/04
--------------- -------------
OPERATIONS:
Net Investment Loss $ (168) $ (518)
Net Realized Loss on Investments (279) (3,589)
Net Change in Unrealized Appreciation on Investments 33 12,303
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Resulting From Operations (414) 8,196
- ------------------------------------------------------------------------------------------------------------------------------------
SHARES TRANSACTIONS:
Proceeds from Shares Issued 98 4,912
Redemption Fees (See Note 7) 1 50
Cost of Shares Repurchased (4,249) (15,059)
- ------------------------------------------------------------------------------------------------------------------------------------
Decrease in Net Assets from Capital Share Transactions (4,150) (10,097)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DECREASE IN NET ASSETS (4,564) (1,901)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of Period 29,747 31,648
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
End of Period (including accumulated net investment
loss of $(168) and $0, respectively) $25,183 $ 29,747
====================================================================================================================================
CAPITAL SHARE TRANSACTIONS:
Shares Issued 8 387
Shares Redeemed (360) (1,216)
====================================================================================================================================
NET DECREASE IN SHARES FROM CAPITAL SHARE TRANSACTIONS (352) (829)
====================================================================================================================================
The accompanying notes are an integral part of the financial statements.
7
FINANCIAL HIGHLIGHTS THE NEVIS FUND, INC.
For a Share Outstanding for the six month period ended November 30, 2004 (Unaudited) and
for the years ended May 31,
Realized Ratio
Net and Net Net of Net
Asset Unrealized Distributions Asset Assets Ratio Investment
Value Net Gains (Losses) Total from From Value End of Expenses Loss Portfolio
Beginning Investment on Investment Capital End Total of Period to Average to Average Turnover
of Period Loss Securities Operations Gains of Period Return+ (000) Net Assets Net Assets Rate
===================================================================================================================================
2004* $12.49 $(0.03) $(0.05) $(0.08) $ -- $12.41 (0.64)% $ 25,183 1.50% (1.30)% 7.92%
2004 9.85 (0.22) 2.86 2.64 -- 12.49 26.80 29,747 1.50 (1.48) 61.35
2003 10.20 (0.11) (0.24) (0.35) -- 9.85 (3.43) 31,648 1.50 (1.43) 51.24
2002 18.62 (0.32) (8.10) (8.42) -- 10.20 (45.22) 36,632 1.50 (1.33) 26.20
2001 30.98 (0.31) (12.05) (12.36) -- 18.62 (39.90) 80,011 1.50 (1.45) 21.86
2000 19.01 (0.19) 14.81(1) 14.62 (2.65) 30.98 77.91** 197,497 1.50 (1.24) 56.50
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR ROUND TO $0.
* FOR THE SIX MONTH PERIOD ENDED NOVEMBER 30, 2004 (UNAUDITED). ALL RATIOS FOR THE PERIOD HAVE BEEN ANNUALIZED.
** THE FUND BENEFITED SUBSTANTIALLY FROM FIRST-DAY REALIZED AND UNREALIZED GAINS FROM INITIAL PUBLIC OFFERINGS DURING FISCAL 2000.
THESE GAINS WERE PARTICULARLY NOTEWORTHY GIVEN THE FUND'S RELATIVELY SMALL ASSETS DURING PORTIONS OF FISCAL 2000. IT IS UNLIKELY
THAT THE FUND WILL BENEFIT TO THE SAME EXTENT FROM THESE TYPES OF GAINS IN THE FUTURE, ESPECIALLY IF FUND ASSETS REMAIN AT
CURRENT LEVELS OR IF THEY INCREASE.
+ RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED. RETURNS DO NOT REFLECT THE DEDUCTION OF TAXES THAT A
SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES.
(1) THE AMOUNT SHOWN FOR THE YEAR ENDED MAY 31, 2000 FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD DOES NOT ACCORD WITH THE
AGGREGATE NET GAINS ON INVESTMENTS FOR THAT PERIOD BECAUSE OF THE SALES AND REPURCHASES OF FUND SHARES IN RELATION TO
FLUCTUATING MARKET VALUE OF THE INVESTMENTS OF THE FUND.
</FN>
The accompanying notes are an integral part of the financial statements.
8
NOTES TO FINANCIAL STATEMENTS THE NEVIS FUND, INC.
November 30, 2004 (Unaudited)
1. ORGANIZATION:
THE NEVIS FUND, INC. (the "Fund") was incorporated in Maryland on February 20,
1998. The Fund is registered under the Investment Company Act of 1940, as
amended, as a non-diversified open-end management investment company. The Fund's
prospectus provides a description of the Fund's investment goals and strategies.
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 amount
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
SECURITY VALUATION -- Securities listed on a securities exchange, and for
which quotations are readily available, are valued at the last quoted sale
price on the principal exchange or market (foreign or domestic) on which they
are traded on valuation date, or, if there is no such reported sale on the
valuation date, at the most recent quoted bid price. Securities that are
quoted on the NASDAQ national market system are valued at the official
closing price. Short term investments that have remaining maturities of sixty
days or less at time of purchase may be valued at amortized cost, which
approximates market value. Securities and other assets for which market
quotations are not readily available (which may include certain restricted
securities which are subject to limitations as to their sale), or securities
for which market quotations are not reliable, are valued at their fair values
as determined in good faith by or under the supervision of the Fund's Board
of Directors (the "Board"), in accordance with methods that are specifically
authorized by the Board. In determining fair value, the Board considers all
relevant qualitative and quantitative information available. These factors
are subject to change over time and are reviewed periodically. The values
assigned to fair value investments are based on available information and do
not necessarily represent amounts that might ultimately be realized. If a
significant event which is likely to impact the value of one or more
securities held by the Fund occurs after the time at which the market for
such security(ies) closes but before the time that the Fund's net asset value
is calculated on any business day, such event may be taken into account in
determining the fair value of such security(ies) at the time the Fund
calculates its net asset value. For these purposes, significant events after
the close of trading may include, among others, securities trading in other
markets, corporate announcements, natural and other disasters, and political
and other events. Further, because of the inherent uncertainty of valuation,
those estimated values may differ significantly from the values that would
have been used had a ready market for the investments existed, and the
differences could be material. At November 30, 2004, no securities were fair
valued.
FEDERAL INCOME TAXES -- It is the Fund's intention to continue to qualify as
a regulated investment company. The Fund's policy is to comply with the
requirements of Subchapter M of the Internal Revenue Code and to distribute
all of its taxable income and net capital gains to its shareholders.
Accordingly, no provision for federal income or excise taxes is required.
SECURITY TRANSACTIONS AND RELATED INCOME -- Security transactions are
accounted for on the date the security is purchased or sold (trade date).
Costs used in determining realized gains and losses on the sales of
investment securities are based on the specific identification method.
Interest income is recognized on the accrual basis. Dividend income is
recorded on the ex-date.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment
income are declared and paid to shareholders annually. Any net realized
capital gains are distributed to shareholders at least annually.
3. TRANSACTIONS WITH AFFILIATES:
Certain officers of the Fund are also officers of SEI Investment Global Funds
Services (the "Administrator") and/or SEI Investments Distribution Co. (the
"Distributor"). Such officers are paid no fees by the Fund for serving as
officers of the Fund.
4. INVESTMENT MANAGEMENT ARRANGEMENTS:
The Fund and Nevis Capital Management LLC (the "Adviser") are parties to an
Investment Management Agreement under which the Adviser receives an annual fee
equal to 1.50% of the Fund's average daily net assets. Pursuant to its
Investment Management Agreement with the Fund, the Adviser has agreed to bear
all ordinary expenses incurred by the Fund in the conduct of its operations. The
Fund will bear any extraordinary expenses incurred in the course of its
business.
5. ADMINISTRATION, TRANSFER AGENCY AND SERVICES, CUSTODIAN AND DISTRIBUTION
AGREEMENTS:
As discussed above, the Adviser has agreed to bear all ordinary expenses
incurred in the conduct of the Fund's operations. This includes the following
contractual relationships: The Fund and the Administrator are parties to an
Administration Agreement under which the Administrator provides administrative
services for an annual fee, computed daily and paid monthly, at the annual rate
of 0.12% of the first $100 million of the Fund's average daily net assets, 0.10%
of the next $100 million of such assets, and 0.08% of such assets in excess of
$200 million subject to a minimum annual fee of $120,000. For the year ended May
31, 2004, the Administrator received $120,000. Forum Shareholder Services, LLC
serves as the transfer agent and dividend disbursing agent for the Fund under a
Transfer Agency and Services Agreement with the Fund.
Wachovia Bank, N.A. serves as custodian for the Fund.
9
NOTES TO FINANCIAL STATEMENTS (CONCLUDED) THE NEVIS FUND, INC.
November 30, 2004 (Unaudited)
6. FEES PAID TO INDEPENDENT DIRECTORS
For the six month period ended November 30, 2004, the Fund paid $5,000 to
Independent Director Charles E. Noell, and $7,500 each to Independent Directors
Bailey Morris-Eck and Joseph R. Hardiman, respectively, for attendance at Board
meetings.
7. REDEMPTION FEE:
The Fund imposes a redemption fee equal to 2% on shares redeemed within 180 days
of their purchase. The redemption fee is intended to limit short-term trading in
the Fund. Any proceeds from the fees will be credited to the assets of the Fund.
For the six month period ended November 30, 2004, $1,204 in redemption fees were
retained by the Fund.
8. INVESTMENT TRANSACTIONS:
The cost of security purchases and the proceeds from security sales, other than
short-term investments, for the six month period ended November 30, 2004 were as
follows (000):
Purchases................................ $7,098
Sales.................................... 2,029
9. FEDERAL TAX INFORMATION:
Dividends from net investment income and distributions from net realized capital
gains are determined in accordance with U.S. Federal income tax regulations,
which may differ from those amounts 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, they are charged or credited to
paid-in-capital, undistributed net investment income or accumulated net realized
gain, as appropriate, in the period that the differences arise.
As of May 31, 2004 and May 31, 2003, there were no dividends and distributions
declared by the Fund.
As of May 31, 2004, the components of accumulated losses on a tax basis were as
follows (000):
Capital loss carryforwards:
Expiring in 2009 $ (15,922)
Expiring in 2010 (20,955)
Expiring in 2011 (35,702)
Expiring in 2012 (22,992)
---------
Total capital loss carryforwards (95,571)
Net unrealized depreciation (32,812)
---------
Total accumulated losses $(128,383)
=========
For Federal income tax purposes, capital loss carryforwards may be carried
forward and applied against future capital gains.
At November 30 2004, the total cost of securities and the net realized gains or
losses on securities sold for federal income tax purposes were not different
from amounts reported for financial reporting purposes. The aggregate gross
unrealized appreciation and depreciation for securities held by the Fund at
November 30, 2004, is as follows (000):
Federal Tax Cost......................... $ 56,740
========
Aggregate gross unrealized
appreciation ......................... 6,175
Aggregate gross unrealized
depreciation ......................... (38,946)
--------
Net unrealized depreciation ............ $(32,771)
========
10. CONCENTRATION/RISK:
The Fund is non-diversified, which means that it may invest in the securities of
relatively few companies. As a result, the Fund may be more susceptible to a
single adverse economic or regulatory occurrence affecting one or more of these
companies and may experience increased volatility due to its investments in
those securities.
11. COMMITMENTS AND CONTINGENCIES
The Fund is involved, from time to time, in litigation arising in the ordinary
course of business, which, in the opinion of management, is not expected to
result in any significant adverse impact on the Fund's net assets or results of
operations. The Fund is covered by a directors and officer's insurance policy
with an initial $500,000 deductible for various litigation matters.
10
DISCLOSURE OF FUND EXPENSES THE NEVIS FUND, INC.
November 30, 2004 (Unaudited)
All mutual funds have operating expenses. As a shareholder of a mutual fund,
your investment is affected by these ongoing costs, which include investment
advisory fees. It is important for you to understand the impact of these costs
on your investment returns.
Operating expenses such as these are deducted from the mutual fund's gross
income and directly reduce your final investment return. These expenses are
expressed as a percentage of the mutual fund's average net assets; this
percentage is known as the mutual fund's expense ratio.
The following examples use the expense ratio and are intended to help you
understand the ongoing costs (in dollars) of investing in your Fund and to
compare these costs with those of other mutual funds. The examples are based on
an investment of $1,000 made at the beginning of the period shown and held for
the entire period.
The table below illustrates your Fund's costs in two ways:
o ACTUAL FUND RETURN. This section helps you to estimate the actual expenses
after fee waivers that your Fund incurred over the period. The "Expenses Paid
During Period" column shows the actual dollar expense cost incurred by a $1,000
investment in the Fund, and the "Ending Account Value" number is derived from
deducting that expense cost from the Fund's gross investment return.
You can use this information, together with the actual amount you invested in
the Fund, to estimate the expenses you paid over that period. Simply divide your
ending starting account value by $1,000 to arrive at a ratio (for example, an
$8,600 account value divided by $1,000 = $8.6), then multiply that ratio by the
number shown for your Fund under "Expenses Paid During Period".
o HYPOTHETICAL 5% RETURN. This section helps you compare your Fund's costs with
those of other mutual funds. It assumes that the Fund had an annual 5% return
before expenses during the year, but that the expense ratio (Column 3) for the
period is unchanged. This example is useful in making comparisons because the
Securities and Exchange Commission requires all mutual funds to make this 5%
calculation. You can assess your Fund's comparative cost by comparing the
hypothetical result for your Fund in the "Expense Paid During Period" column
with those that appear in the same charts in the shareholder reports for other
mutual funds.
NOTE: Because the return is set at 5% for comparison purposes -- NOT your Fund's
actual return -- the account values shown may not apply to your specific
investment.
- --------------------------------------------------------------------------------
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
5/31/04 11/30/04 RATIOS PERIOD*
- --------------------------------------------------------------------------------
Nevis Fund
- --------------------------------------------------------------------------------
Actual Fund Return $1,000.00 $ 993.60 1.50% $7.50
Hypothetical Fund Return 1,000.00 1,017.55 1.50 7.59
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 183/365 (to reflect (the
one-half year period).
11
NOTES
NOTES
INVESTMENT ADVISER
Nevis Capital Management LLC
1119 St. Paul Street
Baltimore, MD 21202
ADMINISTRATOR
SEI Investments Global Funds Services
One Freedom Valley Drive
Oaks, PA 19456
DIRECTORS
Joseph Hardiman
Bailey Morris-Eck
Charles Noell
Jon Baker
David Wilmerding, III
DISTRIBUTOR
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, PA 19456
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
KPMG LLP
1601 Market Street
Philadelphia, PA 19103-2499
NEV-SA-001-0400
ITEM 2. CODE OF ETHICS.
Not applicable for semi-annual report.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semi-annual report.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semi-annual report.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to open-end management investment companies.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to open-end management investment companies.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable. Effective for closed-end management investment companies for
fiscal years ending on or after December 31, 2005
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT COMPANY AND
AFFILIATED PURCHASERS.
Not applicable to open-end management investment companies.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The certifying officers, whose certifications are included herewith, have
evaluated the registrant's disclosure controls and procedures within 90 days of
the filing date of this report. In their opinion, based on their evaluation, the
registrant's disclosure controls and procedures are adequately designed, and are
operating effectively to ensure, that information required to be disclosed by
the registrant in the reports it files or submits under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms.
(b) There were no significant changes in the registrant's internal control over
financial reporting that occurred during the registrant's last fiscal half-year
that has materially affected, or is reasonably likely to materially affect, the
registrants internal control over financial reporting.
ITEMS 12. EXHIBITS.
(a)(1) Not applicable for semi-annual report.
(a)(2) A separate certification for the principal executive officer and the
principal financial officer of the registrant as required by Rule 30a-2(a) under
the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(a)), are filed
herewith.
(b) Officer certifications as required by Rule 30a-2(b) under the Investment
Company Act of 1940, as amended (17 CFR 270.30a-2(b)) also accompany this filing
as an Exhibit.
- --------------------------------------------------------------------------------
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 Nevis Fund, Inc.
By (Signature and Title)* /s/ David R. Wilmerding, III
----------------------------
David R. Wilmerding, III
Chief Executive Officer
Date 1/21/05
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/ David R. Wilmerding, III
----------------------------
David R. Wilmerding, III
Chief Executive Officer
Date 1/21/05
By (Signature and Title)* /s/ Peter J. Golden
-------------------
Peter J. Golden
Chief Financial Officer
Date 1/21/05
* Print the name and title of each signing officer under his or her signature.