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 811-08295
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New Providence Investment Trust
-------------------------------
(Exact name of registrant as specified in charter)
116 South Franklin Street, P.O. Box 69, Rocky Mount, North Carolina 27802
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(Address of principal executive offices) (Zip code)
C. Frank Watson III
116 South Franklin Street, P.O. Box 69, Rocky Mount, North Carolina 27802
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(Name and address of agent for service)
Registrant's telephone number, including area code: 252-972-9922
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Date of fiscal year end: May 31, 2003
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Date of reporting period: May 31, 2003
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ITEM 1. Reports to Stockholders.
________________________________________________________________________________
WISDOM FUND
________________________________________________________________________________
a series of the New Providence Investment Trust
INSTITUTIONAL CLASS SHARES
ANNUAL REPORT
FOR THE YEAR ENDED MAY 31, 2003
INVESTMENT ADVISOR
Atlanta Investment Counsel, LLC
3717 Haddon Hall Road, NW
Suite 200
Atlanta, Georgia 30327
WISDOM FUND
116 South Franklin Street
Post Office Drawer 4365
Rocky Mount, North Carolina 27803
1-800-525-3863
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Wisdom Fund (the "Fund"). This
report is not authorized for distribution to prospective investors in the Fund
unless preceded or accompanied by an effective prospectus. Mutual fund shares
are not deposits or obligations of, or guaranteed by, any depository
institution. Shares are not insured by the FDIC, Federal Reserve Board or any
other agency, and are subject to investment risks, including possible loss of
principal amount invested. Neither the Fund nor the Fund's distributor is a
bank.
For more information about the Fund, including charges and expenses, call the
Fund's distributor for a free prospectus. You should read the prospectus
carefully before you invest or send money.
Distributor: Capital Investment Group, Inc., P.O. Box 4365, Rocky Mount, NC
27803, Phone 1-800-773-3863
WISDOM FUND
Annual Report to Shareholders
July 23, 2003
To Our Fellow Shareholders:
What a difference a quarter makes. Investors should never underestimate the
ability of the stock market to surprise and humble investors over the short
term. That is why we rely on valuation analysis, which we believe, is a primary
driver of investment returns over several years and longer.
Several risks impacted returns over the last year:
o Structural risks including high debt levels and the sizable U.S.
dependence on foreign capital,
o Deflation, which could be a by-product of high debt levels,
o Inflation, which could eventually be ignited by attempts to fight
deflation, and
o Geopolitical risks including terrorism.
We believe that current asset prices suggest returns of 6-9% for equity-type
assets on average, over the next five years. The reality is that returns could
be significantly different if growth rates are abnormally high or low or if
assets become overvalued or undervalued. So, even though we believe the most
likely range of returns is 6-9%, it's not hard to imagine returns being two
percentage points higher or lower and, along the way, individual returns could
be significantly higher or lower. The sad reality is that returns were so high
in the 1990s that they effectively borrowed from the future. The bear market
brought things back to reality and beyond and now we've had a bounce back to
fair value. How can we do better?
We believe that Atlanta Investment Counsel's added value is the function of the
quality of the research and our discipline. At times of extreme greed and fear
this is particularly difficult because emotion can cloud judgment. We view one
of the most important parts of our job as helping to avoid the emotional ties
that can lead to buying and selling at the wrong time.
As of May 31, 2003, the fund had about a 37% allocation to the financial
services and the multiline and property and casualty insurance areas. We like
these areas because we believe: (1) valuations tend to be low relative to
earnings, (2) great management can make a big difference and add value, (3) most
competitors are generally mediocre and above-average managers are rare, (4)
growth opportunities are open-ended because market shares tend to be low,
markets are large and they are businesses that don't become obsolete, and (5)
reported earnings are generally cash earnings.
We remain both pleased and proud that the long-term track record of the fund
remains positive and solidly ahead of the passive investment alternative of the
S&P 500. Our efforts have met our goals and exceeded our own expectations during
the fund's operation in the tumultuous time frame of 2000-2002.
We advise shareholders to maintain modest positive return expectations and also
to sustain their confidence. We have selected portfolio companies that, in our
opinion, retain the ability to perform well in their respective industries in an
improved economic climate.
We find ourselves in an environment that is quite different from what most
investors have grown used to over the past two decades. We have gone through the
worst bear market in a generation, but have seen investors come back to the
market again. We believe that we are well positioned for the environment we are
faced with and remain confident we can continue to add substantial value.
C. Douglas Davenport, J.D.
Portfolio Manager-Wisdom Fund
________________________________________________________________________________
Statements in this Annual Report that reflect projections or expectations of
future financial or economic performance of the fund and of the market in
general and statements of the fund's plans and objectives for future operations
are forward-looking statements. No assurance can be given that actual results or
events will not differ materially from those projected, estimated, assumed or
anticipated in any such forward-looking statements. Important factors that could
result in such differences, in addition to the other factors noted with such
forward-looking statements, include general economic conditions such as
inflation, recession and interest rates. Past performance is not a guarantee of
future results.
________________________________________________________________________________
WISDOM FUND
INSTITUTIONAL CLASS SHARES
Performance Update - $25,000 Investment
For the period from February 16, 1999 (Commencement of Operations)
to May 31, 2003
- --------------------------------------------------------------------------------
Wisdom Fund S&P 500 Total
Institutional Class Shares Return Index
- --------------------------------------------------------------------------------
02/16/99 $25,000 $25,000
05/31/99 24,889 26,307
08/31/99 24,437 26,767
11/30/99 25,340 28,243
02/29/00 22,113 27,867
05/31/00 25,295 29,063
8/31/2000 26,599 31,135
11/30/2000 28,898 27,052
2/28/2001 28,128 25,582
5/31/2001 28,001 25,996
8/31/2001 27,379 23,542
11/30/2001 27,690 23,745
2/28/2002 28,821 23,158
5/31/2002 30,181 22,396
8/31/2002 27,801 19,305
11/30/2002 27,827 19,824
2/28/2003 25,944 17,898
5/31/2003 29,082 20,591
This graph depicts the performance of the Wisdom Fund - Institutional Class
Shares (the "Fund") versus the S&P 500 Total Return Index. It is important to
note that the Fund is a professionally managed mutual fund while the index is
not available for investment and is unmanaged. The comparison is shown for
illustrative purposes only.
Average Annual Total Returns
----------------------- ------------------------
Since 2/16/99
One Year (Commencement of
Operations)
----------------------- ------------------------
(3.64)% 3.59 %
----------------------- ------------------------
>> The graph assumes an initial $25,000 investment at February 16, 1999
(commencement of operations). All dividends and distributions are
reinvested.
>> At May 31, 2003, the value of the Fund's Institutional Class Shares would
have grown to $29,082 - a cumulative total investment return of 16.33%
since February 16, 1999.
>> At May 31, 2003, the value of a similar investment in the S&P 500 Total
Return Index would have decreased to $20,591 - a cumulative total
investment return of (17.64)% since February 16, 1999.
>> Past performance is not a guarantee of future results. A mutual fund's
share price and investment return will vary with market conditions, and the
principal value of shares, when redeemed, may be worth more or less than
the original cost. The graph and table do not reflect the deduction of
taxes that a shareholder would pay on fund distributions or the redemption
of fund shares. Average annual total returns are historical in nature and
measure net investment income and capital gain or loss from portfolio
investments assuming reinvestments of dividends.
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 69.00%
Apparel Manufacturing - 0.43%
(a)Jones Apparel Group, Inc. ............................................. 5,310 $ 155,902
------------
Beverages - 7.10%
The Coca-Cola Company ................................................. 56,830 2,589,743
------------
Building Materials - 0.45%
Lowe's Companies, Inc. ................................................ 3,230 136,500
(a)USG Corporation ....................................................... 2,400 27,936
------------
164,436
------------
Chemicals - 0.20%
Great Lakes Chemical Corporation ...................................... 3,220 74,157
------------
Commercial Services - 2.09%
First American Corporation ............................................ 7,770 210,412
H&R Block, Inc. ....................................................... 3,320 135,921
Moody's Corporation ................................................... 8,005 417,460
------------
763,793
------------
Computer Software & Services - 0.45%
First Data Corporation ................................................ 3,970 164,437
------------
Cosmetics & Personal Care - 2.89%
The Gillette Company .................................................. 31,380 1,054,682
------------
Financial - Banks, Money Center - 2.40%
Wells Fargo Company ................................................... 18,122 875,293
------------
Financial Services - 7.58%
American Express Company .............................................. 37,050 1,543,503
M&T Bank Corp. ........................................................ 2,030 180,771
MBIA, Inc. ............................................................ 19,500 975,975
SunTrust Banks, Inc. .................................................. 1,100 65,230
------------
2,765,479
------------
Food - Wholesale - 1.02%
Sysco Corporation ..................................................... 12,000 371,280
------------
Furniture & Home Appliances - 0.43%
Ethan Allen Interiors, Inc. ........................................... 4,430 157,841
------------
Health Care Services - 0.28%
(a)Iron Mountain, Inc. ................................................... 2,600 102,700
------------
(Continued)
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Industrial Materials - Specialty - 0.10%
Dover Corporation ..................................................... 1,200 $ 36,372
------------
Insurance - Life & Health - 1.71%
AFLAC, INCORPORATED ................................................... 11,060 363,985
Brown & Brown, Inc. ................................................... 7,330 259,848
------------
623,833
------------
Insurance - Multiline - 14.47%
Ambac Financial Group, Inc. ........................................... 6,580 438,952
American International Group, Inc. .................................... 23,150 1,339,922
American National Insurance Company ................................... 1,300 111,332
Arthur J. Gallagher & Co. ............................................. 13,100 356,975
Cincinnati Financial Corp. ............................................ 11,400 423,168
Odyssey Re Holdings Corp. ............................................. 14,100 290,883
PartnerRe Ltd. ........................................................ 11,005 584,585
RenaissanceRe Holdings Ltd. ........................................... 25,478 1,138,867
The Chubb Corporation ................................................. 7,400 473,822
Willis Group Holdings Limited ......................................... 3,800 120,156
------------
5,278,662
------------
Insurance - Property & Casualty - 15.37%
ACE Limited ........................................................... 3,847 140,800
Everest Re Group, Ltd. ................................................ 11,215 818,695
Fidelity National Financial, Inc. ..................................... 20,421 634,488
Leucadia National Corporation ......................................... 7,000 266,980
(a)Markel Corporation .................................................... 4,600 1,160,350
The Progressive Corporation ........................................... 21,460 1,545,120
Wesco Financial Corporation ........................................... 386 116,958
White Mountains Insurance Group Ltd. .................................. 900 369,900
XL Capital Ltd. ....................................................... 6,375 554,944
------------
5,608,235
------------
Manufacturing - 0.30%
(a)American Standard Company, Inc. ....................................... 1,500 110,985
------------
Metal Fabrication & Hardware - 0.06%
(a)Mueller Industries, Inc. .............................................. 850 22,261
------------
Oil & Gas - International - 0.21%
PetroChina Co., Ltd. .................................................. 3,000 75,960
------------
Packaging & Containers - 0.10%
(a)Sealed Air Corporation ................................................ 852 37,394
------------
(Continued)
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Publishing - Newspapers - 1.37%
Gannett Co., Inc. ..................................................... 623 $ 49,217
The Washington Post Company ........................................... 620 449,190
------------
498,407
------------
Real Estate Investment Trusts - 0.45%
HRPT Properties Trust ................................................. 575 5,457
Tanger Factory Outlet Centers, Inc. ................................... 2,735 88,340
The Town & Country Trust .............................................. 3,156 72,083
------------
165,880
------------
Restaurants & Food Service - 0.75%
Wendy's International Inc. ............................................ 4,300 129,473
(a)Yum! Brands Inc. ...................................................... 5,150 143,994
------------
273,467
------------
Retail - Specialty Line - 1.91%
La-Z-Boy, Inc. ........................................................ 3,000 65,730
The Sherwin-Williams Company .......................................... 13,970 382,499
(a)Zale Corporation ...................................................... 6,800 247,180
------------
695,409
------------
Retirement/Aged Care - 0.00%
(a)Five Star Quality Care, Inc. .......................................... 4 5
------------
Shoes - Leather - 0.26%
Brown Shoe Co., Inc. .................................................. 3,300 93,555
------------
Textiles - 3.24%
(a)Mohawk Industries, Inc. ............................................... 20,495 1,182,766
------------
Transportation - Miscellaneous - 0.11%
GATX Corporation ...................................................... 2,342 39,791
------------
Utilities - Energy - 3.27%
Entergy Corporation ................................................... 4,050 209,344
FPL Group, Inc. ....................................................... 5,865 389,847
Kinder Morgan, Inc. ................................................... 8,700 444,135
Progress Energy, Inc. ................................................. 3,150 148,207
------------
1,191,533
------------
Total Common Stocks (Cost $22,780,283) .......................................................... 25,174,258
------------
(Continued)
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANIES - 8.46%
Evergreen Institutional Municipal Money Market Fund ............................ 1,330,554 $ 1,330,554
PIMCO High Yield Fund .......................................................... 188,453 1,756,383
------------
Total Investment Companies (Cost $3,048,258) .................................................... 3,086,937
------------
Principal
---------
U.S. GOVERNMENT OBLIGATIONS - 21.93%
United States Treasury Bill due 06/26/03 .................................. $8,007,000 8,000,779
(Cost $8,000,884) ---------- ------------
Total Value of Investments (Cost $33,829,425 (b)) ............................... 99.39 % $ 36,261,974
Other Assets Less Liabilities ................................................... 0.61 % 222,081
---------- ------------
Net Assets ................................................................ 100.00 % $ 36,484,055
========== ============
(a) Non-income producing investment.
(b) Aggregate cost for federal income tax purposes is $33,819,028. Unrealized appreciation/(depreciation) of investments
for financial reporting and federal income tax purposes is as follows:
Unrealized appreciation ......................................................................... $ 3,015,979
Unrealized depreciation ......................................................................... (573,033)
------------
Net unrealized appreciation ..................................................................... $ 2,442,946
============
See accompanying notes to financial statements
WISDOM FUND
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2003
ASSETS
Investments, at value (cost $33,829,425) ........................................................ $ 36,261,974
Income receivable ............................................................................... 30,869
Receivable for fund shares sold ................................................................. 237,728
Other assets .................................................................................... 9,133
------------
Total assets ............................................................................... 36,539,704
------------
LIABILITIES
Accrued expenses ................................................................................ 52,637
Payable for fund shares redeemed ................................................................ 3,012
------------
Total liabilities .......................................................................... 55,649
------------
NET ASSETS ............................................................................................ $ 36,484,055
============
NET ASSETS CONSIST OF
Paid-in capital ................................................................................. $ 34,464,630
Accumulated net realized loss on investments .................................................... (413,124)
Net unrealized appreciation on investments ...................................................... 2,432,549
------------
$ 36,484,055
============
INSTITUTIONAL CLASS SHARES
Net asset value, redemption and offering price per share
($4,228,602/380,431 shares) ................................................................ $ 11.12
============
INVESTOR CLASS SHARES
Net asset value, redemption and offering price per share
($13,824,651/1,245,792 shares) ............................................................. $ 11.10
============
Maximum offering price per share (100/94.25 of $11.10) .......................................... $ 11.78
============
CLASS B SHARES
Net asset value, redemption and offering price per share
($12,795,975/1,166,958 shares) ............................................................. $ 10.97
============
CLASS C SHARES
Net asset value, redemption and offering price per share
($5,634,827/511,666 shares) ................................................................ $ 11.01
============
See accompanying notes to financial statements
WISDOM FUND
STATEMENT OF OPERATIONS
Year ended May 31, 2003
NET INVESTMENT LOSS
Income
Interest ...................................................................................... $ 72,117
Dividends ..................................................................................... 266,529
------------
Total income .............................................................................. 338,646
------------
Expenses
Investment advisory fees (note 2) ............................................................. 125,108
Fund administration fees (note 2) ............................................................. 31,277
Distribution and service fees - Investor Class Shares (note 3) ................................ 22,154
Distribution and service fees - Class B Shares (note 3) ....................................... 87,376
Distribution and service fees - Class C Shares (note 3) ....................................... 35,604
Custody fees .................................................................................. 9,275
Registration and filing administration fees (note 2) .......................................... 23,931
Fund accounting fees (note 2) ................................................................. 56,502
Audit fees .................................................................................... 16,475
Legal fees .................................................................................... 21,458
Securities pricing fees ....................................................................... 4,866
Shareholder recordkeeping fees ................................................................ 38,859
Other accounting fees (note 2) ................................................................ 1,052
Shareholder servicing expenses ................................................................ 10,018
Registration and filing expenses .............................................................. 50,159
Printing expenses ............................................................................. 13,335
Trustee fees and meeting expenses ............................................................. 3,890
Other operating expenses ...................................................................... 10,249
------------
Total expenses ............................................................................ 561,588
------------
Less:
Expense reimbursements (note 2) ...................................................... (624)
Investment advisory fees waived (note 2) ............................................. (9,452)
------------
Net expenses .............................................................................. 551,512
------------
Net investment loss .................................................................. (212,866)
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized loss from investment transactions ..................................................... (179,255)
Increase in unrealized appreciation on investments ................................................. 1,023,603
------------
Net realized and unrealized gain on investments ............................................... 844,348
------------
Net increase in net assets resulting from operations ...................................... $ 631,482
============
See accompanying notes to financial statements
WISDOM FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Years ended May 31,
- ------------------------------------------------------------------------------------------------------------------------------------
2003 2002
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment loss ....................................................... $ (212,866) $ (55,987)
Net realized loss from investment transactions ............................ (179,255) (233,249)
Increase in unrealized appreciation on investments ........................ 1,023,603 972,562
------------ ------------
Net increase in net assets resulting from operations ................. 631,482 683,326
------------ ------------
Distributions to shareholders from
Net realized gain from investment transactions - Institutional Class Shares 0 (30,682)
Net realized gain from investment transactions - Investor Class Shares .... 0 (15,741)
Net realized gain from investment transactions - Class B Shares ........... 0 (15,865)
Net realized gain from investment transactions - Class C Shares ........... 0 (10,533)
------------ ------------
Decrease in net assets resulting from distributions .................. 0 (72,821)
------------ ------------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) ...... 23,073,111 4,966,991
------------ ------------
Total increase in net assets .................................. 23,704,593 5,577,496
NET ASSETS
Beginning of year ............................................................. 12,779,462 7,201,966
------------ ------------
End of year ................................................................... $ 36,484,055 $ 12,779,462
============ ============
(a) A summary of capital share activity follows:
-------------------------------------------------------------------------------
2003 2002
Shares Value Shares Value
- --------------------------------------------------- -------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
- ---------------------------------------------------
Shares sold ...................................... 59,533 $ 629,968 44,137 $ 469,606
Shares issued for reinvestment of distributions .. 0 0 2,873 30,682
Shares redeemed .................................. (19,266) (200,123) (10) (106)
------------ ------------ ------------ ------------
Net increase ................................ 40,267 $ 429,845 47,000 $ 500,182
============ ============ ============ ============
- ---------------------------------------------------
INVESTOR CLASS SHARES
- ---------------------------------------------------
Shares sold ...................................... 1,186,944 $ 12,484,955 179,059 $ 1,939,701
Shares issued for reinvestment of distributions .. 0 0 1,412 15,119
Shares redeemed .................................. (178,198) (1,844,784) (59,071) (596,651)
------------ ------------ ------------ ------------
Net increase ................................ 1,008,746 $ 10,640,171 121,400 $ 1,358,169
============ ============ ============ ============
- ---------------------------------------------------
CLASS B SHARES
- ---------------------------------------------------
Shares sold ...................................... 869,053 $ 9,061,351 328,961 $ 3,657,636
Shares issued for reinvestment of distributions .. 0 0 984 10,520
Shares redeemed .................................. (76,569) (796,003) (120,721) (1,289,873)
------------ ------------ ------------ ------------
Net increase ................................ 792,484 $ 8,265,348 209,224 $ 2,378,283
============ ============ ============ ============
- ---------------------------------------------------
CLASS C SHARES
- ---------------------------------------------------
Shares sold ...................................... 401,147 $ 4,218,789 81,920 $ 907,685
Shares issued for reinvestment of distributions .. 0 0 971 10,423
Shares redeemed .................................. (46,073) (481,042) (16,796) (187,751)
------------ ------------ ------------ ------------
Net increase ................................ 355,074 $ 3,737,747 66,095 $ 730,357
============ ============ ============ ============
- ---------------------------------------------------
FUND SUMMARY
- ---------------------------------------------------
Shares sold ...................................... 2,516,677 $ 26,395,063 634,077 $ 6,974,628
Shares issued for reinvestment of distributions .. 0 0 6,240 66,744
Shares redeemed .................................. (320,106) (3,321,952) (196,598) (2,074,381)
------------ ------------ ------------ ------------
Net increase ................................ 2,196,571 $ 23,073,111 443,719 $ 4,966,991
============ ============ ============ ============
See accompanying notes to financial statements
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
INSTITUTIONAL CLASS SHARES
For the Periods ended May 31,
- ------------------------------------------------------------------------------------------------------------------------------------
2003 2002 2001 2000 1999 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ................ $ 11.54 $ 10.80 $ 9.90 $ 9.91 $ 10.00
(Loss) income from investment operations
Net investment (loss) income ................ (0.03) (0.02) 0.17 0.18 0.04
Net realized and unrealized (loss) gain
on investments .......................... (0.39) 0.85 0.90 (0.01) (0.09)
----------- ----------- ----------- ----------- -----------
Total from investment operations ........ (0.42) 0.83 1.07 0.17 (0.05)
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ....................... 0.00 0.00 (0.17) (0.18) (0.04)
Net realized gain from investment transactions 0.00 (0.09) 0.00 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions ..................... 0.00 (0.09) (0.17) (0.18) (0.04)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ...................... $ 11.12 $ 11.54 $ 10.80 $ 9.90 $ 9.91
=========== =========== =========== =========== ===========
Total return ........................................ (3.64)% 7.78 % 10.70 % 1.64 % (0.45)%
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ........................ $ 4,228,602 $ 3,924,962 $ 3,164,763 $ 2,710,312 $ 498,213
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.67 % 3.19 % 3.30 % 5.05 % 23.94 %(b)
After expense reimbursements and waived fees 1.62 % 1.71 % 0.26 % 0.00 % 0.00 %(b)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees (0.30)% (1.65)% (1.47)% (2.87)% (22.69)%(b)
After expense reimbursements and waived fees (0.25)% (0.17)% 1.57 % 2.18 % 1.26 %(b)
Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 % 7.04 %
(a) For the period from February 16, 1999 (commencement of operations) to May 31, 1999.
(b) Annualized.
(Continued)
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
INVESTOR CLASS SHARES
For the Periods ended May 31,
- ------------------------------------------------------------------------------------------------------------------------------------
2003 2002 2001 2000 1999 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ............... $ 11.56 $ 10.84 $ 9.93 $ 9.92 $ 10.00
(Loss) income from investment operations
Net investment (loss) income ............... (0.04) (0.04) 0.13 0.12 0.02
Net realized and unrealized (loss) gain
on investments ......................... (0.42) 0.85 0.91 0.01 (0.08)
----------- ----------- ----------- ----------- -----------
Total from investment operations ....... (0.46) 0.81 1.04 0.13 (0.06)
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ...................... 0.00 0.00 (0.13) (0.12) (0.02)
Net realized gain from investment transactions 0.00 (0.09) 0.00 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions .................... 0.00 (0.09) (0.13) (0.12) (0.02)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..................... $ 11.10 $ 11.56 $ 10.84 $ 9.93 $ 9.92
=========== =========== =========== =========== ===========
Total return (c) ................................... (3.98)% 7.57 % 10.41 % 1.36 % (0.58)%
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ....................... $13,824,651 $ 2,739,727 $ 1,253,515 $ 656,212 $ 99
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.91 % 3.39 % 3.86 % 4.29 % 15.49 %(b)
After expense reimbursements and waived fees 1.87 % 1.96 % 0.68 % 0.25 % 0.00 %(b)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees (0.56)% (1.91)% (1.97)% (1.96)% (14.68)%(b)
After expense reimbursements and waived fees (0.53)% (0.48)% 1.21 % 2.08 % 0.81 %(b)
Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 % 7.04 %
(a) For the period from February 16, 1999 (commencement of operations) to May 31, 1999.
(b) Annualized.
(c) Total return does not reflect payment of a sales charge.
(Continued)
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
CLASS B SHARES
For the Periods ended May 31,
- ------------------------------------------------------------------------------------------------------------------------------------
2003 2002 2001 2000 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period .......................... $ 11.50 $ 10.87 $ 9.97 $ 10.20
(Loss) income from investment operations
Net investment (loss) income ......................... (0.10) (0.07) 0.06 0.04
Net realized and unrealized (loss) gain on investments (0.43) 0.79 0.90 (0.23)
----------- ----------- ----------- -----------
Total from investment operations ................. (0.53) 0.72 0.96 (0.19)
----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ................................ 0.00 0.00 (0.06) (0.04)
Net realized gain from investment transactions ....... 0.00 (0.09) 0.00 0.00
----------- ----------- ----------- -----------
Total distributions .............................. 0.00 (0.09) (0.06) (0.04)
----------- ----------- ----------- -----------
Net asset value, end of period ............................... $ 10.97 $ 11.50 $ 10.87 $ 9.97
=========== =========== =========== ===========
Total return (c) ............................................. (4.61)% 6.72 % 9.60 % (1.85)%
=========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ................................. $12,795,975 $ 4,307,197 $ 1,796,569 $ 1,168,374
=========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 2.66 % 4.14 % 4.33 % 4.09 %(b)
After expense reimbursements and waived fees 2.62 % 2.71 % 1.28 % 1.00 %(b)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees (1.31)% (2.66)% (2.50)% (1.78)%(b)
After expense reimbursements and waived fees (1.27)% (1.23)% 0.56 % 1.31 %(b)
Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 %
(a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000.
(b) Annualized.
(c) Total return does not reflect payment of a sales charge.
(Continued)
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
CLASS C SHARES
For the Periods ended May 31,
- ------------------------------------------------------------------------------------------------------------------------------------
2003 2002 2001 2000 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ......................... $ 11.54 $ 10.91 $ 9.98 $ 10.20
(Loss) income from investment operations
Net investment (loss) income ......................... (0.09) (0.10) 0.03 0.03
Net realized and unrealized (loss) gain on investments (0.44) 0.82 0.93 (0.22)
----------- ----------- ----------- -----------
Total from investment operations ................. (0.53) 0.72 0.96 (0.19)
----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ................................ 0.00 0.00 (0.03) (0.03)
Net realized gain from investment transactions ....... 0.00 (0.09) 0.00 0.00
----------- ----------- ----------- -----------
Total distributions .............................. 0.00 (0.09) (0.03) (0.03)
----------- ----------- ----------- -----------
Net asset value, end of period ............................... $ 11.01 $ 11.54 $ 10.91 $ 9.98
=========== =========== =========== ===========
Total return (c) ............................................. (4.59)% 6.69 % 9.64 % (1.86)%
=========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ................................. $ 5,634,827 $ 1,807,576 $ 987,119 $ 173,395
=========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 2.66 % 4.18 % 4.44 % 4.07 %(b)
After expense reimbursements and waived fees 2.62 % 2.71 % 1.41 % 1.00 %(b)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees (1.31)% (2.66)% (2.62)% (1.77)%(b)
After expense reimbursements and waived fees (1.27)% (1.19)% 0.40 % 1.30 %(b)
Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 %
(a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000.
(b) Annualized.
(c) Total return does not reflect payment of a sales charge.
See accompanying notes to financial statements
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 2003
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Wisdom Fund (the "Fund") is a diversified series of shares of
beneficial interest of the New Providence Investment Trust (the
"Trust"), an open-ended management investment company. The Trust was
organized on July 9, 1997 as a Massachusetts Business Trust and is
registered under the Investment Company Act of 1940, as amended (the
"Act"). The Fund began operations on February 16, 1999. The investment
objective of the Fund is to seek maximum total return consisting of any
combination of capital appreciation, realized and unrealized, and
income under the constantly varying market conditions. The Board of
Trustees of the Trust (the "Trustees") approved, on October 7, 1999, a
plan to authorize two new classes of shares designated as Class B
Shares and Class C Shares. On November 16, 1999, the Class B Shares and
Class C Shares became effective. The Fund has an unlimited number of
authorized shares, which are divided into four classes - Institutional
Class Shares, Investor Class Shares, Class B shares and Class C shares.
Each class of shares has equal rights as to assets of the Fund, and the
classes are identical except for differences in their sales charge
structures and ongoing distribution and service fees. Income, expenses
(other than distribution and service fees, which are not attributable
to the Institutional Class Shares), and realized and unrealized gains
or losses on investments are allocated to each class of shares based
upon its relative net assets. All classes have equal voting privileges,
except where otherwise required by law or when the Trustees determine
that the matter to be voted on affects only the interests of the
shareholders of a particular class. The following is a summary of
significant accounting policies followed by the Fund.
A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted
on a national market system are valued at 4:00 p.m., Eastern
Time. Other securities traded in the over-the-counter market
and listed securities for which no sale was reported on that
date are valued at the most recent bid price. Securities for
which market quotations are not readily available, if any, are
valued by using an independent pricing service or by following
procedures approved by the Trustees. Short-term investments
are valued at cost, which approximates value.
B. Federal Income Taxes - No provision has been made for federal
income taxes since substantially all taxable income has been
distributed to shareholders. It is the policy of the Fund to
comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies and to make
sufficient distributions of taxable income to relieve it from
all federal income taxes.
Net investment income (loss) and net realized gains (losses)
may differ for financial statement and income tax purposes
primarily because of losses incurred subsequent to October 31,
which are deferred for income tax purposes. The character of
distributions made during the year from net investment income
or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to
the timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the
income or realized gains were recorded by the Fund.
As a result of the Fund's operating net investment loss, a
reclassification adjustment of $212,866 has been made on the
statement of assets and liabilities to decrease accumulated
net investment loss, bringing it to zero, and decreasing
paid-in capital.
The Fund has capital loss carryforwards for federal income tax
purposes of $339,603, of which $174,661 expires in the year
2010 and $164,942 expires in the year 2011. It is the
intention of the Trustees not to distribute any realized gains
until the carryforwards have been offset or expire.
(Continued)
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 2003
C. Investment Transactions - Investment transactions are recorded
on trade date. Realized gains and losses are determined using
the specific identification cost method. Interest income is
recorded daily on an accrual basis. Dividend income is
recorded on the ex-dividend date.
D. Distributions to Shareholders - The Fund may declare dividends
quarterly, payable in March, June, September, and December on
a date selected by the Trustees. Distributions to shareholders
are recorded on the ex-dividend date. In addition,
distributions may be made annually in December out of net
realized gains through October 31 of that year. Distributions
to shareholders are recorded on the ex-dividend date. The Fund
may make a supplemental distribution subsequent to the end of
its fiscal year ending May 31.
E. Use of Estimates - The preparation of financial statements in
conformity with accounting principles generally accepted in
the United States of America requires management to make
estimates and assumptions that affect the amounts of assets,
liabilities, expenses and revenues reported in the financial
statements. Actual results could differ from those estimates.
NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, Atlanta Investment
Counsel, LLC (the "Advisor") provides the Fund with a continuous
program of supervision of the Fund's assets, including the composition
of its portfolio, and furnishes advice and recommendations with respect
to investments, investment policies, and the purchase and sale of
securities. As compensation for its services, the Advisor receives a
fee at the annual rate of 0.50% of the first $500 million of the Fund's
average daily net assets and 0.40% of all assets over $500 million.
The Advisor currently intends to voluntarily waive all or a portion of
its fee and to reimburse expenses of the Fund to limit total Fund
operating expenses to a maximum of 1.75% of the average daily net
assets of the Fund's Institutional Class Shares, a maximum of 2.00% of
the average daily net assets of the Fund's Investor Class Shares, and a
maximum of 2.75% of the average daily net assets of the Fund's Class B
Shares and Class C Shares. There can be no assurance that the foregoing
voluntary fee waivers or reimbursements will continue. The Advisor has
voluntarily waived a portion of its fee amounting to $9,452 and
reimbursed $624 of the operating expenses incurred by the Fund for the
year ended May 31, 2003.
The Fund's administrator, The Nottingham Company (the "Administrator"),
provides administrative services to and is generally responsible for
the overall management and day-to-day operations of the Fund pursuant
to an accounting and administrative agreement with the Trust. As
compensation for its services, the Administrator receives a fee at the
annual rate of 0.125% of the Fund's first $50 million of average daily
net assets, 0.100% of the next $50 million, and 0.075% of average daily
net assets over $100 million. The Administrator also receives a monthly
fee of $2,250 for accounting and record-keeping services for the
initial class of shares and $750 per month for each additional class of
shares, plus 0.01% of the average annual net assets. The contract with
the Administrator provides that the aggregate fees for the
aforementioned administration shall not be less than $2,000 per month.
The Administrator also receives the following to procure and pay the
custodian for the Trust: 0.02% on the first $100 million of the Fund's
net assets and 0.009% on all assets over $100 million, including
transaction fees, with a minimum annual fee of $4,800. The
Administrator also charges the Fund for certain expenses involved with
the daily valuation of portfolio securities.
(Continued)
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 2003
NC Shareholder Services, LLC (the "Transfer Agent") serves as the
Fund's transfer, dividend paying, and shareholder servicing agent. The
Transfer Agent maintains the records of each shareholder's account,
answers shareholder inquiries concerning accounts, processes purchases
and redemptions of the Fund's shares, acts as dividend and distribution
disbursing agent, and performs other shareholder servicing functions.
Capital Investment Group, Inc. (the "Distributor") serves as the Fund's
principal underwriter and distributor. The Distributor receives any
sales charges imposed on purchases of shares and re-allocates a portion
of such charges to dealers through whom the sale was made, if any. For
the year ended May 31, 2003, the Distributor retained sales charges in
the amount of $24,085.
Certain Trustees and officers of the Trust are also officers or
directors of the Advisor, the Distributor, or the Administrator.
NOTE 3 - DISTRIBUTION AND SERVICE FEES
The Trustees, including the Trustees who are not "interested persons"
of the Trust as defined in the Act, adopted distribution and service
plans pursuant to Rule 12b-1 of the Act (the "Plans") applicable to the
Investor Class Shares, Class B Shares, and Class C Shares. The Act
regulates the manner in which a regulated investment company may assume
costs of distributing and promoting the sales of its shares and
servicing of its shareholder accounts.
The Plans provide that the Fund may incur certain costs, which may not
exceed 0.25% per annum of the Investor Class Shares' average daily net
assets or 1.00% per annum of the Class B Shares or Class C Shares for
each year elapsed subsequent to adoption of the Plans, for payment to
the Distributor and others for items such as advertising expenses,
selling expenses, commissions, travel, or other expenses reasonably
intended to result in sales of Investor Class Shares, Class B Shares
and Class C Shares in the Fund or support servicing of those classes'
shareholder accounts. The Fund incurred $22,154, $87,376, and $35,604,
in distribution and service fees under the Plans with respect to
Investor Class Shares, Class B Shares, and Class C Shares,
respectively, for the year ended May 31, 2003.
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term investments,
aggregated $19,893,795 and $1,999,410, respectively, for the year ended
May 31, 2003.
(Continued)
WISDOM FUND
ADDITIONAL INFORMATION
May 31, 2003
(Unaudited)
INFORMATION ABOUT TRUSTEES AND OFFICERS (UNAUDITED)
The business and affairs of the Fund and the Trust are managed under the
direction of the Trustees. Information concerning the Trustee and officers of
the Trust and Fund is set forth below. Generally, each Trustee and officer
serves an indefinite term or until certain circumstances such as their
resignation, death, or otherwise as specified in the Trust's organizational
documents. Any Trustee may be removed at a meeting of shareholders by a vote
meeting the requirements of the Trust's organizational documents. The Statement
of Additional Information of the Fund includes additional information about the
Trustee and officers and is available, without charge, upon request by calling
the Fund toll-free at 1-800-773-3863. The address of each Trustee and officer,
unless otherwise indicated below, is 116 South Franklin Street, Rocky Mount,
North Carolina 27802. The Trustee received aggregate compensation of $3,000
during the fiscal year ended May 31, 2003 from the Fund for his services to the
Fund and Trust. The officers did not receive compensation from the Fund for
their services to the Fund and Trust.
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Number of
Portfolios
in Fund
Position(s) Length Complex
Name, Age, held with of Time Principal Occupation(s) Overseen by Other Directorships
and Address Fund/Trust Served During Past 5 Years Trustee Held by Trustee
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Independent Trustee
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Jack E. Brinson, 70 Trustee Since Retired; Previously, President of 1 Independent Trustee - Gardner
1997 Brinson Investment Co. (personal Lewis Investment Trust for the
investments) President of Brinson and three series of that trust;
Chevrolet, Inc. (auto dealership) The Nottingham Investment Trust
II for the eight series of that
trust; Hillman Capital
Management Investment Trust for
two series of that trust; and
de Leon Funds Trust for the
one series of that trust (all
registered investment
companies)
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Officers
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
C. Douglas Davenport, 52 President, Since President (since 1998) of Atlanta n/a n/a
Atlanta Investment Counsel, Treasurer, 2003 Investment Counsel, LLC (Advisor of
LLC Principal the Fund); previously, stockbroker
3717 Haddon Hall Road, NW Executive at Lehman Brothers
Suite 200 Officer,
Atlanta, GA 30327 and
Principal
Financial
Officer
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
C. Frank Watson III, 32 Secretary Since President and Chief Operating n/a n/a
1997 Officer (since 1999) of The
Nottingham Company
(Administrator to the Fund);
previously, Chief Operating Officer
of The Nottingham Company
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Julian G. Winters, 34 Assistant Since Vice President-Compliance n/a n/a
Treasurer 2003 Administration (since 1998) of The
and Nottingham Company; previously,
Assistant Fund Accountant at The Nottingham
Secretary Company
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281-1414
Tel: (212) 436-2000
Fax: (212) 436-5000
www.deloitte.com Deloitte
& Touche
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees of New Providence Investment Trust
and Shareholders of Wisdom Fund:
We have audited the accompanying statement of assets and liabilities of Wisdom
Fund (the "Fund") (a portfolio of New Providence Investment Trust), including
the portfolio of investments, as of May 31, 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 periods presented. These financial statements and financial
highlights are the responsibility of the Fund's 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 audit 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 May 31, 2003, by correspondence with the Fund's custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Wisdom
Fund as of May 31, 2003, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods presented, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Deloitte & Touche LLP
June 27, 2003
___________
Deloitte
Touche
Tohmatsu
___________
(This page was intentionally left blank)
(This page was intentionally left blank)
________________________________________________________________________________
WISDOM FUND
________________________________________________________________________________
a series of the New Providence Investment Trust
This Report has been prepared for
shareholders and may be distributed to
others only if preceded or accompanied by
a current prospectus.
________________________________________________________________________________
WISDOM FUND
________________________________________________________________________________
a series of the New Providence Investment Trust
INVESTOR CLASS SHARES
ANNUAL REPORT
FOR THE YEAR ENDED MAY 31, 2003
INVESTMENT ADVISOR
Atlanta Investment Counsel, LLC
3717 Haddon Hall Road, NW
Suite 200
Atlanta, Georgia 30327
WISDOM FUND
116 South Franklin Street
Post Office Drawer 4365
Rocky Mount, North Carolina 27803
1-800-525-3863
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Wisdom Fund (the "Fund"). This
report is not authorized for distribution to prospective investors in the Fund
unless preceded or accompanied by an effective prospectus. Mutual fund shares
are not deposits or obligations of, or guaranteed by, any depository
institution. Shares are not insured by the FDIC, Federal Reserve Board or any
other agency, and are subject to investment risks, including possible loss of
principal amount invested. Neither the Fund nor the Fund's distributor is a
bank.
For more information about the Fund, including charges and expenses, call the
Fund's distributor for a free prospectus. You should read the prospectus
carefully before you invest or send money.
Distributor: Capital Investment Group, Inc., P.O. Box 4365, Rocky Mount, NC
27803, Phone 1-800-773-3863
WISDOM FUND
Annual Report to Shareholders
July 23, 2003
To Our Fellow Shareholders:
What a difference a quarter makes. Investors should never underestimate the
ability of the stock market to surprise and humble investors over the short
term. That is why we rely on valuation analysis, which we believe, is a primary
driver of investment returns over several years and longer.
Several risks impacted returns over the last year:
o Structural risks including high debt levels and the sizable U.S.
dependence on foreign capital,
o Deflation, which could be a by-product of high debt levels,
o Inflation, which could eventually be ignited by attempts to fight
deflation, and
o Geopolitical risks including terrorism.
We believe that current asset prices suggest returns of 6-9% for equity-type
assets on average, over the next five years. The reality is that returns could
be significantly different if growth rates are abnormally high or low or if
assets become overvalued or undervalued. So, even though we believe the most
likely range of returns is 6-9%, it's not hard to imagine returns being two
percentage points higher or lower and, along the way, individual returns could
be significantly higher or lower. The sad reality is that returns were so high
in the 1990s that they effectively borrowed from the future. The bear market
brought things back to reality and beyond and now we've had a bounce back to
fair value. How can we do better?
We believe that Atlanta Investment Counsel's added value is the function of the
quality of the research and our discipline. At times of extreme greed and fear
this is particularly difficult because emotion can cloud judgment. We view one
of the most important parts of our job as helping to avoid the emotional ties
that can lead to buying and selling at the wrong time.
As of May 31, 2003, the fund had about a 37% allocation to the financial
services and the multiline and property and casualty insurance areas. We like
these areas because we believe: (1) valuations tend to be low relative to
earnings, (2) great management can make a big difference and add value, (3) most
competitors are generally mediocre and above-average managers are rare, (4)
growth opportunities are open-ended because market shares tend to be low,
markets are large and they are businesses that don't become obsolete, and (5)
reported earnings are generally cash earnings.
We remain both pleased and proud that the long-term track record of the fund
remains positive and solidly ahead of the passive investment alternative of the
S&P 500. Our efforts have met our goals and exceeded our own expectations during
the fund's operation in the tumultuous time frame of 2000-2002.
We advise shareholders to maintain modest positive return expectations and also
to sustain their confidence. We have selected portfolio companies that, in our
opinion, retain the ability to perform well in their respective industries in an
improved economic climate.
We find ourselves in an environment that is quite different from what most
investors have grown used to over the past two decades. We have gone through the
worst bear market in a generation, but have seen investors come back to the
market again. We believe that we are well positioned for the environment we are
faced with and remain confident we can continue to add substantial value.
C. Douglas Davenport, J.D.
Portfolio Manager-Wisdom Fund
________________________________________________________________________________
Statements in this Annual Report that reflect projections or expectations of
future financial or economic performance of the fund and of the market in
general and statements of the fund's plans and objectives for future operations
are forward-looking statements. No assurance can be given that actual results or
events will not differ materially from those projected, estimated, assumed or
anticipated in any such forward-looking statements. Important factors that could
result in such differences, in addition to the other factors noted with such
forward-looking statements, include general economic conditions such as
inflation, recession and interest rates. Past performance is not a guarantee of
future results.
________________________________________________________________________________
WISDOM FUND
INVESTOR CLASS SHARES
Performance Update - $10,000 Investment
For the period from February 16, 1999 (Commencement of Operations)
to May 31, 2003
- --------------------------------------------------------------------------------
Wisdom Fund S&P 500 Total
Investor Class Shares Return Index
- --------------------------------------------------------------------------------
02/16/99 $ 9,425 $10,000
05/31/99 9,370 10,523
08/31/99 9,191 10,707
11/30/99 9,551 11,297
02/29/00 8,311 11,147
05/31/00 9,498 11,625
8/31/2000 9,986 12,454
11/30/2000 10,847 10,821
2/28/2001 10,545 10,233
5/31/2001 10,487 10,399
8/31/2001 10,255 9,417
11/30/2001 10,361 9,498
2/28/2002 10,783 9,259
5/31/2002 11,281 8,959
8/31/2002 10,383 7,722
11/30/2002 10,373 7,930
2/28/2003 9,671 7,159
5/31/2003 10,832 8,236
This graph depicts the performance of the Wisdom Fund - Investor Class Shares
(the "Fund") versus the S&P 500 Total Return Index. It is important to note that
the Fund is a professionally managed mutual fund while the index is not
available for investment and is unmanaged. The comparison is shown for
illustrative purposes only.
Average Annual Total Returns
------------------------------ --------------- ------------------
Since 2/16/99
One Year (Commencement
Of Operations)
------------------------------ --------------- ------------------
No Sales Load (3.98)% 3.30 %
------------------------------ --------------- ------------------
5.75% Maximum Sales Load (9.50)% 1.88 %
------------------------------ --------------- ------------------
>> The graph assumes an initial $10,000 investment ($9,425 after maximum sales
load of 5.75%) at February 16, 1999 (commencement of operations). All
dividends and distributions are reinvested.
>> At May 31, 2003, the value of the Fund's Investor Class Shares would have
increased to $10,832 - a cumulative total investment return of 8.32% since
February 16, 1999. Without the deduction of the 5.75% maximum sales load,
the value of the Fund's Investor Class Shares would have grown to $11,493 -
a cumulative total investment return of 14.93% since February 16, 1999. The
sales load may be reduced or eliminated for larger purchases.
>> At May 31, 2003, the value of a similar investment in the S&P 500 Total
Return Index would have decreased to $8,236 - a cumulative total investment
return of (17.64)% since February 16, 1999.
>> Past performance is not a guarantee of future results. A mutual fund's
share price and investment return will vary with market conditions, and the
principal value of shares, when redeemed, may be worth more or less than
the original cost. The graph and table do not reflect the deduction of
taxes that a shareholder would pay on fund distributions or the redemption
of fund shares. Average annual total returns are historical in nature and
measure net investment income and capital gain or loss from portfolio
investments assuming reinvestments of dividends.
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 69.00%
Apparel Manufacturing - 0.43%
(a)Jones Apparel Group, Inc. ............................................. 5,310 $ 155,902
------------
Beverages - 7.10%
The Coca-Cola Company ................................................. 56,830 2,589,743
------------
Building Materials - 0.45%
Lowe's Companies, Inc. ................................................ 3,230 136,500
(a)USG Corporation ....................................................... 2,400 27,936
------------
164,436
------------
Chemicals - 0.20%
Great Lakes Chemical Corporation ...................................... 3,220 74,157
------------
Commercial Services - 2.09%
First American Corporation ............................................ 7,770 210,412
H&R Block, Inc. ....................................................... 3,320 135,921
Moody's Corporation ................................................... 8,005 417,460
------------
763,793
------------
Computer Software & Services - 0.45%
First Data Corporation ................................................ 3,970 164,437
------------
Cosmetics & Personal Care - 2.89%
The Gillette Company .................................................. 31,380 1,054,682
------------
Financial - Banks, Money Center - 2.40%
Wells Fargo Company ................................................... 18,122 875,293
------------
Financial Services - 7.58%
American Express Company .............................................. 37,050 1,543,503
M&T Bank Corp. ........................................................ 2,030 180,771
MBIA, Inc. ............................................................ 19,500 975,975
SunTrust Banks, Inc. .................................................. 1,100 65,230
------------
2,765,479
------------
Food - Wholesale - 1.02%
Sysco Corporation ..................................................... 12,000 371,280
------------
Furniture & Home Appliances - 0.43%
Ethan Allen Interiors, Inc. ........................................... 4,430 157,841
------------
Health Care Services - 0.28%
(a)Iron Mountain, Inc. ................................................... 2,600 102,700
------------
(Continued)
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Industrial Materials - Specialty - 0.10%
Dover Corporation ..................................................... 1,200 $ 36,372
------------
Insurance - Life & Health - 1.71%
AFLAC, INCORPORATED ................................................... 11,060 363,985
Brown & Brown, Inc. ................................................... 7,330 259,848
------------
623,833
------------
Insurance - Multiline - 14.47%
Ambac Financial Group, Inc. ........................................... 6,580 438,952
American International Group, Inc. .................................... 23,150 1,339,922
American National Insurance Company ................................... 1,300 111,332
Arthur J. Gallagher & Co. ............................................. 13,100 356,975
Cincinnati Financial Corp. ............................................ 11,400 423,168
Odyssey Re Holdings Corp. ............................................. 14,100 290,883
PartnerRe Ltd. ........................................................ 11,005 584,585
RenaissanceRe Holdings Ltd. ........................................... 25,478 1,138,867
The Chubb Corporation ................................................. 7,400 473,822
Willis Group Holdings Limited ......................................... 3,800 120,156
------------
5,278,662
------------
Insurance - Property & Casualty - 15.37%
ACE Limited ........................................................... 3,847 140,800
Everest Re Group, Ltd. ................................................ 11,215 818,695
Fidelity National Financial, Inc. ..................................... 20,421 634,488
Leucadia National Corporation ......................................... 7,000 266,980
(a)Markel Corporation .................................................... 4,600 1,160,350
The Progressive Corporation ........................................... 21,460 1,545,120
Wesco Financial Corporation ........................................... 386 116,958
White Mountains Insurance Group Ltd. .................................. 900 369,900
XL Capital Ltd. ....................................................... 6,375 554,944
------------
5,608,235
------------
Manufacturing - 0.30%
(a)American Standard Company, Inc. ....................................... 1,500 110,985
------------
Metal Fabrication & Hardware - 0.06%
(a)Mueller Industries, Inc. .............................................. 850 22,261
------------
Oil & Gas - International - 0.21%
PetroChina Co., Ltd. .................................................. 3,000 75,960
------------
Packaging & Containers - 0.10%
(a)Sealed Air Corporation ................................................ 852 37,394
------------
(Continued)
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Publishing - Newspapers - 1.37%
Gannett Co., Inc. ..................................................... 623 $ 49,217
The Washington Post Company ........................................... 620 449,190
------------
498,407
------------
Real Estate Investment Trusts - 0.45%
HRPT Properties Trust ................................................. 575 5,457
Tanger Factory Outlet Centers, Inc. ................................... 2,735 88,340
The Town & Country Trust .............................................. 3,156 72,083
------------
165,880
------------
Restaurants & Food Service - 0.75%
Wendy's International Inc. ............................................ 4,300 129,473
(a)Yum! Brands Inc. ...................................................... 5,150 143,994
------------
273,467
------------
Retail - Specialty Line - 1.91%
La-Z-Boy, Inc. ........................................................ 3,000 65,730
The Sherwin-Williams Company .......................................... 13,970 382,499
(a)Zale Corporation ...................................................... 6,800 247,180
------------
695,409
------------
Retirement/Aged Care - 0.00%
(a)Five Star Quality Care, Inc. .......................................... 4 5
------------
Shoes - Leather - 0.26%
Brown Shoe Co., Inc. .................................................. 3,300 93,555
------------
Textiles - 3.24%
(a)Mohawk Industries, Inc. ............................................... 20,495 1,182,766
------------
Transportation - Miscellaneous - 0.11%
GATX Corporation ...................................................... 2,342 39,791
------------
Utilities - Energy - 3.27%
Entergy Corporation ................................................... 4,050 209,344
FPL Group, Inc. ....................................................... 5,865 389,847
Kinder Morgan, Inc. ................................................... 8,700 444,135
Progress Energy, Inc. ................................................. 3,150 148,207
------------
1,191,533
------------
Total Common Stocks (Cost $22,780,283) .......................................................... 25,174,258
------------
(Continued)
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANIES - 8.46%
Evergreen Institutional Municipal Money Market Fund ............................ 1,330,554 $ 1,330,554
PIMCO High Yield Fund .......................................................... 188,453 1,756,383
------------
Total Investment Companies (Cost $3,048,258) .................................................... 3,086,937
------------
Principal
---------
U.S. GOVERNMENT OBLIGATIONS - 21.93%
United States Treasury Bill due 06/26/03 .................................. $8,007,000 8,000,779
(Cost $8,000,884) ---------- ------------
Total Value of Investments (Cost $33,829,425 (b)) ............................... 99.39 % $ 36,261,974
Other Assets Less Liabilities ................................................... 0.61 % 222,081
---------- ------------
Net Assets ................................................................ 100.00 % $ 36,484,055
========== ============
(a) Non-income producing investment.
(b) Aggregate cost for federal income tax purposes is $33,819,028. Unrealized appreciation/(depreciation) of investments
for financial reporting and federal income tax purposes is as follows:
Unrealized appreciation ......................................................................... $ 3,015,979
Unrealized depreciation ......................................................................... (573,033)
------------
Net unrealized appreciation ..................................................................... $ 2,442,946
============
See accompanying notes to financial statements
WISDOM FUND
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2003
ASSETS
Investments, at value (cost $33,829,425) ........................................................ $ 36,261,974
Income receivable ............................................................................... 30,869
Receivable for fund shares sold ................................................................. 237,728
Other assets .................................................................................... 9,133
------------
Total assets ............................................................................... 36,539,704
------------
LIABILITIES
Accrued expenses ................................................................................ 52,637
Payable for fund shares redeemed ................................................................ 3,012
------------
Total liabilities .......................................................................... 55,649
------------
NET ASSETS ............................................................................................ $ 36,484,055
============
NET ASSETS CONSIST OF
Paid-in capital ................................................................................. $ 34,464,630
Accumulated net realized loss on investments .................................................... (413,124)
Net unrealized appreciation on investments ...................................................... 2,432,549
------------
$ 36,484,055
============
INSTITUTIONAL CLASS SHARES
Net asset value, redemption and offering price per share
($4,228,602/380,431 shares) ................................................................ $ 11.12
============
INVESTOR CLASS SHARES
Net asset value, redemption and offering price per share
($13,824,651/1,245,792 shares) ............................................................. $ 11.10
============
Maximum offering price per share (100/94.25 of $11.10) .......................................... $ 11.78
============
CLASS B SHARES
Net asset value, redemption and offering price per share
($12,795,975/1,166,958 shares) ............................................................. $ 10.97
============
CLASS C SHARES
Net asset value, redemption and offering price per share
($5,634,827/511,666 shares) ................................................................ $ 11.01
============
See accompanying notes to financial statements
WISDOM FUND
STATEMENT OF OPERATIONS
Year ended May 31, 2003
NET INVESTMENT LOSS
Income
Interest ...................................................................................... $ 72,117
Dividends ..................................................................................... 266,529
------------
Total income .............................................................................. 338,646
------------
Expenses
Investment advisory fees (note 2) ............................................................. 125,108
Fund administration fees (note 2) ............................................................. 31,277
Distribution and service fees - Investor Class Shares (note 3) ................................ 22,154
Distribution and service fees - Class B Shares (note 3) ....................................... 87,376
Distribution and service fees - Class C Shares (note 3) ....................................... 35,604
Custody fees .................................................................................. 9,275
Registration and filing administration fees (note 2) .......................................... 23,931
Fund accounting fees (note 2) ................................................................. 56,502
Audit fees .................................................................................... 16,475
Legal fees .................................................................................... 21,458
Securities pricing fees ....................................................................... 4,866
Shareholder recordkeeping fees ................................................................ 38,859
Other accounting fees (note 2) ................................................................ 1,052
Shareholder servicing expenses ................................................................ 10,018
Registration and filing expenses .............................................................. 50,159
Printing expenses ............................................................................. 13,335
Trustee fees and meeting expenses ............................................................. 3,890
Other operating expenses ...................................................................... 10,249
------------
Total expenses ............................................................................ 561,588
------------
Less:
Expense reimbursements (note 2) ...................................................... (624)
Investment advisory fees waived (note 2) ............................................. (9,452)
------------
Net expenses .............................................................................. 551,512
------------
Net investment loss .................................................................. (212,866)
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized loss from investment transactions ..................................................... (179,255)
Increase in unrealized appreciation on investments ................................................. 1,023,603
------------
Net realized and unrealized gain on investments ............................................... 844,348
------------
Net increase in net assets resulting from operations ...................................... $ 631,482
============
See accompanying notes to financial statements
WISDOM FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Years ended May 31,
- ------------------------------------------------------------------------------------------------------------------------------------
2003 2002
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment loss ....................................................... $ (212,866) $ (55,987)
Net realized loss from investment transactions ............................ (179,255) (233,249)
Increase in unrealized appreciation on investments ........................ 1,023,603 972,562
------------ ------------
Net increase in net assets resulting from operations ................. 631,482 683,326
------------ ------------
Distributions to shareholders from
Net realized gain from investment transactions - Institutional Class Shares 0 (30,682)
Net realized gain from investment transactions - Investor Class Shares .... 0 (15,741)
Net realized gain from investment transactions - Class B Shares ........... 0 (15,865)
Net realized gain from investment transactions - Class C Shares ........... 0 (10,533)
------------ ------------
Decrease in net assets resulting from distributions .................. 0 (72,821)
------------ ------------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) ...... 23,073,111 4,966,991
------------ ------------
Total increase in net assets .................................. 23,704,593 5,577,496
NET ASSETS
Beginning of year ............................................................. 12,779,462 7,201,966
------------ ------------
End of year ................................................................... $ 36,484,055 $ 12,779,462
============ ============
(a) A summary of capital share activity follows:
-------------------------------------------------------------------------------
2003 2002
Shares Value Shares Value
- --------------------------------------------------- -------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
- ---------------------------------------------------
Shares sold ...................................... 59,533 $ 629,968 44,137 $ 469,606
Shares issued for reinvestment of distributions .. 0 0 2,873 30,682
Shares redeemed .................................. (19,266) (200,123) (10) (106)
------------ ------------ ------------ ------------
Net increase ................................ 40,267 $ 429,845 47,000 $ 500,182
============ ============ ============ ============
- ---------------------------------------------------
INVESTOR CLASS SHARES
- ---------------------------------------------------
Shares sold ...................................... 1,186,944 $ 12,484,955 179,059 $ 1,939,701
Shares issued for reinvestment of distributions .. 0 0 1,412 15,119
Shares redeemed .................................. (178,198) (1,844,784) (59,071) (596,651)
------------ ------------ ------------ ------------
Net increase ................................ 1,008,746 $ 10,640,171 121,400 $ 1,358,169
============ ============ ============ ============
- ---------------------------------------------------
CLASS B SHARES
- ---------------------------------------------------
Shares sold ...................................... 869,053 $ 9,061,351 328,961 $ 3,657,636
Shares issued for reinvestment of distributions .. 0 0 984 10,520
Shares redeemed .................................. (76,569) (796,003) (120,721) (1,289,873)
------------ ------------ ------------ ------------
Net increase ................................ 792,484 $ 8,265,348 209,224 $ 2,378,283
============ ============ ============ ============
- ---------------------------------------------------
CLASS C SHARES
- ---------------------------------------------------
Shares sold ...................................... 401,147 $ 4,218,789 81,920 $ 907,685
Shares issued for reinvestment of distributions .. 0 0 971 10,423
Shares redeemed .................................. (46,073) (481,042) (16,796) (187,751)
------------ ------------ ------------ ------------
Net increase ................................ 355,074 $ 3,737,747 66,095 $ 730,357
============ ============ ============ ============
- ---------------------------------------------------
FUND SUMMARY
- ---------------------------------------------------
Shares sold ...................................... 2,516,677 $ 26,395,063 634,077 $ 6,974,628
Shares issued for reinvestment of distributions .. 0 0 6,240 66,744
Shares redeemed .................................. (320,106) (3,321,952) (196,598) (2,074,381)
------------ ------------ ------------ ------------
Net increase ................................ 2,196,571 $ 23,073,111 443,719 $ 4,966,991
============ ============ ============ ============
See accompanying notes to financial statements
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
INSTITUTIONAL CLASS SHARES
For the Periods ended May 31,
- ------------------------------------------------------------------------------------------------------------------------------------
2003 2002 2001 2000 1999 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ................ $ 11.54 $ 10.80 $ 9.90 $ 9.91 $ 10.00
(Loss) income from investment operations
Net investment (loss) income ................ (0.03) (0.02) 0.17 0.18 0.04
Net realized and unrealized (loss) gain
on investments .......................... (0.39) 0.85 0.90 (0.01) (0.09)
----------- ----------- ----------- ----------- -----------
Total from investment operations ........ (0.42) 0.83 1.07 0.17 (0.05)
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ....................... 0.00 0.00 (0.17) (0.18) (0.04)
Net realized gain from investment transactions 0.00 (0.09) 0.00 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions ..................... 0.00 (0.09) (0.17) (0.18) (0.04)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ...................... $ 11.12 $ 11.54 $ 10.80 $ 9.90 $ 9.91
=========== =========== =========== =========== ===========
Total return ........................................ (3.64)% 7.78 % 10.70 % 1.64 % (0.45)%
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ........................ $ 4,228,602 $ 3,924,962 $ 3,164,763 $ 2,710,312 $ 498,213
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.67 % 3.19 % 3.30 % 5.05 % 23.94 %(b)
After expense reimbursements and waived fees 1.62 % 1.71 % 0.26 % 0.00 % 0.00 %(b)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees (0.30)% (1.65)% (1.47)% (2.87)% (22.69)%(b)
After expense reimbursements and waived fees (0.25)% (0.17)% 1.57 % 2.18 % 1.26 %(b)
Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 % 7.04 %
(a) For the period from February 16, 1999 (commencement of operations) to May 31, 1999.
(b) Annualized.
(Continued)
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
INVESTOR CLASS SHARES
For the Periods ended May 31,
- ------------------------------------------------------------------------------------------------------------------------------------
2003 2002 2001 2000 1999 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ............... $ 11.56 $ 10.84 $ 9.93 $ 9.92 $ 10.00
(Loss) income from investment operations
Net investment (loss) income ............... (0.04) (0.04) 0.13 0.12 0.02
Net realized and unrealized (loss) gain
on investments ......................... (0.42) 0.85 0.91 0.01 (0.08)
----------- ----------- ----------- ----------- -----------
Total from investment operations ....... (0.46) 0.81 1.04 0.13 (0.06)
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ...................... 0.00 0.00 (0.13) (0.12) (0.02)
Net realized gain from investment transactions 0.00 (0.09) 0.00 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions .................... 0.00 (0.09) (0.13) (0.12) (0.02)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..................... $ 11.10 $ 11.56 $ 10.84 $ 9.93 $ 9.92
=========== =========== =========== =========== ===========
Total return (c) ................................... (3.98)% 7.57 % 10.41 % 1.36 % (0.58)%
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ....................... $13,824,651 $ 2,739,727 $ 1,253,515 $ 656,212 $ 99
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.91 % 3.39 % 3.86 % 4.29 % 15.49 %(b)
After expense reimbursements and waived fees 1.87 % 1.96 % 0.68 % 0.25 % 0.00 %(b)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees (0.56)% (1.91)% (1.97)% (1.96)% (14.68)%(b)
After expense reimbursements and waived fees (0.53)% (0.48)% 1.21 % 2.08 % 0.81 %(b)
Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 % 7.04 %
(a) For the period from February 16, 1999 (commencement of operations) to May 31, 1999.
(b) Annualized.
(c) Total return does not reflect payment of a sales charge.
(Continued)
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
CLASS B SHARES
For the Periods ended May 31,
- ------------------------------------------------------------------------------------------------------------------------------------
2003 2002 2001 2000 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period .......................... $ 11.50 $ 10.87 $ 9.97 $ 10.20
(Loss) income from investment operations
Net investment (loss) income ......................... (0.10) (0.07) 0.06 0.04
Net realized and unrealized (loss) gain on investments (0.43) 0.79 0.90 (0.23)
----------- ----------- ----------- -----------
Total from investment operations ................. (0.53) 0.72 0.96 (0.19)
----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ................................ 0.00 0.00 (0.06) (0.04)
Net realized gain from investment transactions ....... 0.00 (0.09) 0.00 0.00
----------- ----------- ----------- -----------
Total distributions .............................. 0.00 (0.09) (0.06) (0.04)
----------- ----------- ----------- -----------
Net asset value, end of period ............................... $ 10.97 $ 11.50 $ 10.87 $ 9.97
=========== =========== =========== ===========
Total return (c) ............................................. (4.61)% 6.72 % 9.60 % (1.85)%
=========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ................................. $12,795,975 $ 4,307,197 $ 1,796,569 $ 1,168,374
=========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 2.66 % 4.14 % 4.33 % 4.09 %(b)
After expense reimbursements and waived fees 2.62 % 2.71 % 1.28 % 1.00 %(b)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees (1.31)% (2.66)% (2.50)% (1.78)%(b)
After expense reimbursements and waived fees (1.27)% (1.23)% 0.56 % 1.31 %(b)
Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 %
(a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000.
(b) Annualized.
(c) Total return does not reflect payment of a sales charge.
(Continued)
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
CLASS C SHARES
For the Periods ended May 31,
- ------------------------------------------------------------------------------------------------------------------------------------
2003 2002 2001 2000 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ......................... $ 11.54 $ 10.91 $ 9.98 $ 10.20
(Loss) income from investment operations
Net investment (loss) income ......................... (0.09) (0.10) 0.03 0.03
Net realized and unrealized (loss) gain on investments (0.44) 0.82 0.93 (0.22)
----------- ----------- ----------- -----------
Total from investment operations ................. (0.53) 0.72 0.96 (0.19)
----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ................................ 0.00 0.00 (0.03) (0.03)
Net realized gain from investment transactions ....... 0.00 (0.09) 0.00 0.00
----------- ----------- ----------- -----------
Total distributions .............................. 0.00 (0.09) (0.03) (0.03)
----------- ----------- ----------- -----------
Net asset value, end of period ............................... $ 11.01 $ 11.54 $ 10.91 $ 9.98
=========== =========== =========== ===========
Total return (c) ............................................. (4.59)% 6.69 % 9.64 % (1.86)%
=========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ................................. $ 5,634,827 $ 1,807,576 $ 987,119 $ 173,395
=========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 2.66 % 4.18 % 4.44 % 4.07 %(b)
After expense reimbursements and waived fees 2.62 % 2.71 % 1.41 % 1.00 %(b)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees (1.31)% (2.66)% (2.62)% (1.77)%(b)
After expense reimbursements and waived fees (1.27)% (1.19)% 0.40 % 1.30 %(b)
Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 %
(a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000.
(b) Annualized.
(c) Total return does not reflect payment of a sales charge.
See accompanying notes to financial statements
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 2003
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Wisdom Fund (the "Fund") is a diversified series of shares of
beneficial interest of the New Providence Investment Trust (the
"Trust"), an open-ended management investment company. The Trust was
organized on July 9, 1997 as a Massachusetts Business Trust and is
registered under the Investment Company Act of 1940, as amended (the
"Act"). The Fund began operations on February 16, 1999. The investment
objective of the Fund is to seek maximum total return consisting of any
combination of capital appreciation, realized and unrealized, and
income under the constantly varying market conditions. The Board of
Trustees of the Trust (the "Trustees") approved, on October 7, 1999, a
plan to authorize two new classes of shares designated as Class B
Shares and Class C Shares. On November 16, 1999, the Class B Shares and
Class C Shares became effective. The Fund has an unlimited number of
authorized shares, which are divided into four classes - Institutional
Class Shares, Investor Class Shares, Class B shares and Class C shares.
Each class of shares has equal rights as to assets of the Fund, and the
classes are identical except for differences in their sales charge
structures and ongoing distribution and service fees. Income, expenses
(other than distribution and service fees, which are not attributable
to the Institutional Class Shares), and realized and unrealized gains
or losses on investments are allocated to each class of shares based
upon its relative net assets. All classes have equal voting privileges,
except where otherwise required by law or when the Trustees determine
that the matter to be voted on affects only the interests of the
shareholders of a particular class. The following is a summary of
significant accounting policies followed by the Fund.
A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted
on a national market system are valued at 4:00 p.m., Eastern
Time. Other securities traded in the over-the-counter market
and listed securities for which no sale was reported on that
date are valued at the most recent bid price. Securities for
which market quotations are not readily available, if any, are
valued by using an independent pricing service or by following
procedures approved by the Trustees. Short-term investments
are valued at cost, which approximates value.
B. Federal Income Taxes - No provision has been made for federal
income taxes since substantially all taxable income has been
distributed to shareholders. It is the policy of the Fund to
comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies and to make
sufficient distributions of taxable income to relieve it from
all federal income taxes.
Net investment income (loss) and net realized gains (losses)
may differ for financial statement and income tax purposes
primarily because of losses incurred subsequent to October 31,
which are deferred for income tax purposes. The character of
distributions made during the year from net investment income
or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to
the timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the
income or realized gains were recorded by the Fund.
As a result of the Fund's operating net investment loss, a
reclassification adjustment of $212,866 has been made on the
statement of assets and liabilities to decrease accumulated
net investment loss, bringing it to zero, and decreasing
paid-in capital.
The Fund has capital loss carryforwards for federal income tax
purposes of $339,603, of which $174,661 expires in the year
2010 and $164,942 expires in the year 2011. It is the
intention of the Trustees not to distribute any realized gains
until the carryforwards have been offset or expire.
(Continued)
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 2003
C. Investment Transactions - Investment transactions are recorded
on trade date. Realized gains and losses are determined using
the specific identification cost method. Interest income is
recorded daily on an accrual basis. Dividend income is
recorded on the ex-dividend date.
D. Distributions to Shareholders - The Fund may declare dividends
quarterly, payable in March, June, September, and December on
a date selected by the Trustees. Distributions to shareholders
are recorded on the ex-dividend date. In addition,
distributions may be made annually in December out of net
realized gains through October 31 of that year. Distributions
to shareholders are recorded on the ex-dividend date. The Fund
may make a supplemental distribution subsequent to the end of
its fiscal year ending May 31.
E. Use of Estimates - The preparation of financial statements in
conformity with accounting principles generally accepted in
the United States of America requires management to make
estimates and assumptions that affect the amounts of assets,
liabilities, expenses and revenues reported in the financial
statements. Actual results could differ from those estimates.
NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, Atlanta Investment
Counsel, LLC (the "Advisor") provides the Fund with a continuous
program of supervision of the Fund's assets, including the composition
of its portfolio, and furnishes advice and recommendations with respect
to investments, investment policies, and the purchase and sale of
securities. As compensation for its services, the Advisor receives a
fee at the annual rate of 0.50% of the first $500 million of the Fund's
average daily net assets and 0.40% of all assets over $500 million.
The Advisor currently intends to voluntarily waive all or a portion of
its fee and to reimburse expenses of the Fund to limit total Fund
operating expenses to a maximum of 1.75% of the average daily net
assets of the Fund's Institutional Class Shares, a maximum of 2.00% of
the average daily net assets of the Fund's Investor Class Shares, and a
maximum of 2.75% of the average daily net assets of the Fund's Class B
Shares and Class C Shares. There can be no assurance that the foregoing
voluntary fee waivers or reimbursements will continue. The Advisor has
voluntarily waived a portion of its fee amounting to $9,452 and
reimbursed $624 of the operating expenses incurred by the Fund for the
year ended May 31, 2003.
The Fund's administrator, The Nottingham Company (the "Administrator"),
provides administrative services to and is generally responsible for
the overall management and day-to-day operations of the Fund pursuant
to an accounting and administrative agreement with the Trust. As
compensation for its services, the Administrator receives a fee at the
annual rate of 0.125% of the Fund's first $50 million of average daily
net assets, 0.100% of the next $50 million, and 0.075% of average daily
net assets over $100 million. The Administrator also receives a monthly
fee of $2,250 for accounting and record-keeping services for the
initial class of shares and $750 per month for each additional class of
shares, plus 0.01% of the average annual net assets. The contract with
the Administrator provides that the aggregate fees for the
aforementioned administration shall not be less than $2,000 per month.
The Administrator also receives the following to procure and pay the
custodian for the Trust: 0.02% on the first $100 million of the Fund's
net assets and 0.009% on all assets over $100 million, including
transaction fees, with a minimum annual fee of $4,800. The
Administrator also charges the Fund for certain expenses involved with
the daily valuation of portfolio securities.
(Continued)
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 2003
NC Shareholder Services, LLC (the "Transfer Agent") serves as the
Fund's transfer, dividend paying, and shareholder servicing agent. The
Transfer Agent maintains the records of each shareholder's account,
answers shareholder inquiries concerning accounts, processes purchases
and redemptions of the Fund's shares, acts as dividend and distribution
disbursing agent, and performs other shareholder servicing functions.
Capital Investment Group, Inc. (the "Distributor") serves as the Fund's
principal underwriter and distributor. The Distributor receives any
sales charges imposed on purchases of shares and re-allocates a portion
of such charges to dealers through whom the sale was made, if any. For
the year ended May 31, 2003, the Distributor retained sales charges in
the amount of $24,085.
Certain Trustees and officers of the Trust are also officers or
directors of the Advisor, the Distributor, or the Administrator.
NOTE 3 - DISTRIBUTION AND SERVICE FEES
The Trustees, including the Trustees who are not "interested persons"
of the Trust as defined in the Act, adopted distribution and service
plans pursuant to Rule 12b-1 of the Act (the "Plans") applicable to the
Investor Class Shares, Class B Shares, and Class C Shares. The Act
regulates the manner in which a regulated investment company may assume
costs of distributing and promoting the sales of its shares and
servicing of its shareholder accounts.
The Plans provide that the Fund may incur certain costs, which may not
exceed 0.25% per annum of the Investor Class Shares' average daily net
assets or 1.00% per annum of the Class B Shares or Class C Shares for
each year elapsed subsequent to adoption of the Plans, for payment to
the Distributor and others for items such as advertising expenses,
selling expenses, commissions, travel, or other expenses reasonably
intended to result in sales of Investor Class Shares, Class B Shares
and Class C Shares in the Fund or support servicing of those classes'
shareholder accounts. The Fund incurred $22,154, $87,376, and $35,604,
in distribution and service fees under the Plans with respect to
Investor Class Shares, Class B Shares, and Class C Shares,
respectively, for the year ended May 31, 2003.
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term investments,
aggregated $19,893,795 and $1,999,410, respectively, for the year ended
May 31, 2003.
(Continued)
WISDOM FUND
ADDITIONAL INFORMATION
May 31, 2003
(Unaudited)
INFORMATION ABOUT TRUSTEES AND OFFICERS (UNAUDITED)
The business and affairs of the Fund and the Trust are managed under the
direction of the Trustees. Information concerning the Trustee and officers of
the Trust and Fund is set forth below. Generally, each Trustee and officer
serves an indefinite term or until certain circumstances such as their
resignation, death, or otherwise as specified in the Trust's organizational
documents. Any Trustee may be removed at a meeting of shareholders by a vote
meeting the requirements of the Trust's organizational documents. The Statement
of Additional Information of the Fund includes additional information about the
Trustee and officers and is available, without charge, upon request by calling
the Fund toll-free at 1-800-773-3863. The address of each Trustee and officer,
unless otherwise indicated below, is 116 South Franklin Street, Rocky Mount,
North Carolina 27802. The Trustee received aggregate compensation of $3,000
during the fiscal year ended May 31, 2003 from the Fund for his services to the
Fund and Trust. The officers did not receive compensation from the Fund for
their services to the Fund and Trust.
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Number of
Portfolios
in Fund
Position(s) Length Complex
Name, Age, held with of Time Principal Occupation(s) Overseen by Other Directorships
and Address Fund/Trust Served During Past 5 Years Trustee Held by Trustee
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Independent Trustee
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Jack E. Brinson, 70 Trustee Since Retired; Previously, President of 1 Independent Trustee - Gardner
1997 Brinson Investment Co. (personal Lewis Investment Trust for the
investments) President of Brinson and three series of that trust;
Chevrolet, Inc. (auto dealership) The Nottingham Investment Trust
II for the eight series of that
trust; Hillman Capital
Management Investment Trust for
two series of that trust; and
de Leon Funds Trust for the
one series of that trust (all
registered investment
companies)
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Officers
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
C. Douglas Davenport, 52 President, Since President (since 1998) of Atlanta n/a n/a
Atlanta Investment Counsel, Treasurer, 2003 Investment Counsel, LLC (Advisor of
LLC Principal the Fund); previously, stockbroker
3717 Haddon Hall Road, NW Executive at Lehman Brothers
Suite 200 Officer,
Atlanta, GA 30327 and
Principal
Financial
Officer
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
C. Frank Watson III, 32 Secretary Since President and Chief Operating n/a n/a
1997 Officer (since 1999) of The
Nottingham Company
(Administrator to the Fund);
previously, Chief Operating Officer
of The Nottingham Company
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Julian G. Winters, 34 Assistant Since Vice President-Compliance n/a n/a
Treasurer 2003 Administration (since 1998) of The
and Nottingham Company; previously,
Assistant Fund Accountant at The Nottingham
Secretary Company
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281-1414
Tel: (212) 436-2000
Fax: (212) 436-5000
www.deloitte.com Deloitte
& Touche
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees of New Providence Investment Trust
and Shareholders of Wisdom Fund:
We have audited the accompanying statement of assets and liabilities of Wisdom
Fund (the "Fund") (a portfolio of New Providence Investment Trust), including
the portfolio of investments, as of May 31, 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 periods presented. These financial statements and financial
highlights are the responsibility of the Fund's 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 audit 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 May 31, 2003, by correspondence with the Fund's custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Wisdom
Fund as of May 31, 2003, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods presented, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Deloitte & Touche LLP
June 27, 2003
___________
Deloitte
Touche
Tohmatsu
___________
(This page was intentionally left blank)
(This page was intentionally left blank)
________________________________________________________________________________
WISDOM FUND
________________________________________________________________________________
a series of the New Providence Investment Trust
This Report has been prepared for
shareholders and may be distributed to
others only if preceded or accompanied by
a current prospectus.
________________________________________________________________________________
WISDOM FUND
________________________________________________________________________________
a series of the New Providence Investment Trust
CLASS B SHARES
ANNUAL REPORT
FOR THE YEAR ENDED MAY 31, 2003
INVESTMENT ADVISOR
Atlanta Investment Counsel, LLC
3717 Haddon Hall Road, NW
Suite 200
Atlanta, Georgia 30327
WISDOM FUND
116 South Franklin Street
Post Office Drawer 4365
Rocky Mount, North Carolina 27803
1-800-525-3863
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Wisdom Fund (the "Fund"). This
report is not authorized for distribution to prospective investors in the Fund
unless preceded or accompanied by an effective prospectus. Mutual fund shares
are not deposits or obligations of, or guaranteed by, any depository
institution. Shares are not insured by the FDIC, Federal Reserve Board or any
other agency, and are subject to investment risks, including possible loss of
principal amount invested. Neither the Fund nor the Fund's distributor is a
bank.
For more information about the Fund, including charges and expenses, call the
Fund's distributor for a free prospectus. You should read the prospectus
carefully before you invest or send money.
Distributor: Capital Investment Group, Inc., P.O. Box 4365, Rocky Mount, NC
27803, Phone 1-800-773-3863
WISDOM FUND
Annual Report to Shareholders
July 23, 2003
To Our Fellow Shareholders:
What a difference a quarter makes. Investors should never underestimate the
ability of the stock market to surprise and humble investors over the short
term. That is why we rely on valuation analysis, which we believe, is a primary
driver of investment returns over several years and longer.
Several risks impacted returns over the last year:
o Structural risks including high debt levels and the sizable U.S.
dependence on foreign capital,
o Deflation, which could be a by-product of high debt levels,
o Inflation, which could eventually be ignited by attempts to fight
deflation, and
o Geopolitical risks including terrorism.
We believe that current asset prices suggest returns of 6-9% for equity-type
assets on average, over the next five years. The reality is that returns could
be significantly different if growth rates are abnormally high or low or if
assets become overvalued or undervalued. So, even though we believe the most
likely range of returns is 6-9%, it's not hard to imagine returns being two
percentage points higher or lower and, along the way, individual returns could
be significantly higher or lower. The sad reality is that returns were so high
in the 1990s that they effectively borrowed from the future. The bear market
brought things back to reality and beyond and now we've had a bounce back to
fair value. How can we do better?
We believe that Atlanta Investment Counsel's added value is the function of the
quality of the research and our discipline. At times of extreme greed and fear
this is particularly difficult because emotion can cloud judgment. We view one
of the most important parts of our job as helping to avoid the emotional ties
that can lead to buying and selling at the wrong time.
As of May 31, 2003, the fund had about a 37% allocation to the financial
services and the multiline and property and casualty insurance areas. We like
these areas because we believe: (1) valuations tend to be low relative to
earnings, (2) great management can make a big difference and add value, (3) most
competitors are generally mediocre and above-average managers are rare, (4)
growth opportunities are open-ended because market shares tend to be low,
markets are large and they are businesses that don't become obsolete, and (5)
reported earnings are generally cash earnings.
We remain both pleased and proud that the long-term track record of the fund
remains positive and solidly ahead of the passive investment alternative of the
S&P 500. Our efforts have met our goals and exceeded our own expectations during
the fund's operation in the tumultuous time frame of 2000-2002.
We advise shareholders to maintain modest positive return expectations and also
to sustain their confidence. We have selected portfolio companies that, in our
opinion, retain the ability to perform well in their respective industries in an
improved economic climate.
We find ourselves in an environment that is quite different from what most
investors have grown used to over the past two decades. We have gone through the
worst bear market in a generation, but have seen investors come back to the
market again. We believe that we are well positioned for the environment we are
faced with and remain confident we can continue to add substantial value.
C. Douglas Davenport, J.D.
Portfolio Manager-Wisdom Fund
________________________________________________________________________________
Statements in this Annual Report that reflect projections or expectations of
future financial or economic performance of the fund and of the market in
general and statements of the fund's plans and objectives for future operations
are forward-looking statements. No assurance can be given that actual results or
events will not differ materially from those projected, estimated, assumed or
anticipated in any such forward-looking statements. Important factors that could
result in such differences, in addition to the other factors noted with such
forward-looking statements, include general economic conditions such as
inflation, recession and interest rates. Past performance is not a guarantee of
future results.
________________________________________________________________________________
WISDOM FUND
CLASS B SHARES
Performance Update - $10,000 Investment
For the period from November 16, 1999 (Commencement of Operations)
to May 31, 2003
- --------------------------------------------------------------------------------
Wisdom Fund S&P 500 Total
Class B Shares Return Index
- --------------------------------------------------------------------------------
11/16/99 $10,000 $10,000
02/29/00 8,613 9,655
05/31/00 9,815 10,070
08/31/00 10,307 10,787
11/30/00 11,164 9,373
02/28/01 10,841 8,863
05/31/01 10,757 9,007
08/31/01 10,499 8,156
11/30/01 10,588 8,227
02/28/02 11,000 8,020
05/31/02 11,479 7,760
08/31/02 10,551 6,689
11/30/02 10,531 6,868
02/28/03 9,792 6,201
05/31/03 10,650 7,134
This graph depicts the performance of the Wisdom Fund - Class B Shares (the
"Fund") versus the S&P 500 Total Return Index. It is important to note that the
Fund is a professionally managed mutual fund while the index is not available
for investment and is unmanaged. The comparison is shown for illustrative
purposes only.
Average Annual Total Returns
------------------------------ -------------- ---------------------
Since 11/16/99
One Year (Commencement
of Operations)
------------------------------ -------------- ---------------------
No Sales Charges (4.61)% 2.60 %
------------------------------ -------------- ---------------------
Maximum Sales Charge (8.42)% 1.80 %
------------------------------ -------------- ---------------------
>> The graph assumes an initial $10,000 investment at November 16, 1999
(commencement of operations) and reflects the deduction of the applicable
maximum contingent deferred sales charge ("CDSC"), taken on the last
business day of the most recently completed fiscal year. The table above
includes the maximum CDSC corresponding to the length of time that the
investment was held as noted. The CDSC for the Class B Shares declines from
4% to 0% over seven years; and the Class B Shares are converted to Investor
Class Shares of the Fund after eight years, without the imposition of any
sales charges. All dividends and distributions are reinvested.
>> At May 31, 2003, the value of the Fund's Class B Shares would have
increased to $10,650 - a cumulative total investment return of 6.50% since
November 16, 1999. Without the deduction of the 3% maximum CDSC for the
length of time the investment was held, the value of the Fund's Class B
Shares would have increased to $10,950 - a cumulative total investment
return of 9.50% since November 16, 1999. The CDSC may be waived or reduced
under certain circumstances.
>> At May 31, 2003, a similar investment in the S&P 500 Total Return Index
would have decreased to $7,134 - a cumulative total investment return of
(28.66)% since November 16, 1999.
>> Past performance is not a guarantee of future results. A mutual fund's
share price and investment return will vary with market conditions, and the
principal value of shares, when redeemed, may be worth more or less than
the original cost. The graph and table do not reflect the deduction of
taxes that a shareholder would pay on fund distributions or the redemption
of fund shares. Average annual total returns are historical in nature and
measure net investment income and capital gain or loss from portfolio
investments assuming reinvestments of dividends.
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 69.00%
Apparel Manufacturing - 0.43%
(a)Jones Apparel Group, Inc. ............................................. 5,310 $ 155,902
------------
Beverages - 7.10%
The Coca-Cola Company ................................................. 56,830 2,589,743
------------
Building Materials - 0.45%
Lowe's Companies, Inc. ................................................ 3,230 136,500
(a)USG Corporation ....................................................... 2,400 27,936
------------
164,436
------------
Chemicals - 0.20%
Great Lakes Chemical Corporation ...................................... 3,220 74,157
------------
Commercial Services - 2.09%
First American Corporation ............................................ 7,770 210,412
H&R Block, Inc. ....................................................... 3,320 135,921
Moody's Corporation ................................................... 8,005 417,460
------------
763,793
------------
Computer Software & Services - 0.45%
First Data Corporation ................................................ 3,970 164,437
------------
Cosmetics & Personal Care - 2.89%
The Gillette Company .................................................. 31,380 1,054,682
------------
Financial - Banks, Money Center - 2.40%
Wells Fargo Company ................................................... 18,122 875,293
------------
Financial Services - 7.58%
American Express Company .............................................. 37,050 1,543,503
M&T Bank Corp. ........................................................ 2,030 180,771
MBIA, Inc. ............................................................ 19,500 975,975
SunTrust Banks, Inc. .................................................. 1,100 65,230
------------
2,765,479
------------
Food - Wholesale - 1.02%
Sysco Corporation ..................................................... 12,000 371,280
------------
Furniture & Home Appliances - 0.43%
Ethan Allen Interiors, Inc. ........................................... 4,430 157,841
------------
Health Care Services - 0.28%
(a)Iron Mountain, Inc. ................................................... 2,600 102,700
------------
(Continued)
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Industrial Materials - Specialty - 0.10%
Dover Corporation ..................................................... 1,200 $ 36,372
------------
Insurance - Life & Health - 1.71%
AFLAC, INCORPORATED ................................................... 11,060 363,985
Brown & Brown, Inc. ................................................... 7,330 259,848
------------
623,833
------------
Insurance - Multiline - 14.47%
Ambac Financial Group, Inc. ........................................... 6,580 438,952
American International Group, Inc. .................................... 23,150 1,339,922
American National Insurance Company ................................... 1,300 111,332
Arthur J. Gallagher & Co. ............................................. 13,100 356,975
Cincinnati Financial Corp. ............................................ 11,400 423,168
Odyssey Re Holdings Corp. ............................................. 14,100 290,883
PartnerRe Ltd. ........................................................ 11,005 584,585
RenaissanceRe Holdings Ltd. ........................................... 25,478 1,138,867
The Chubb Corporation ................................................. 7,400 473,822
Willis Group Holdings Limited ......................................... 3,800 120,156
------------
5,278,662
------------
Insurance - Property & Casualty - 15.37%
ACE Limited ........................................................... 3,847 140,800
Everest Re Group, Ltd. ................................................ 11,215 818,695
Fidelity National Financial, Inc. ..................................... 20,421 634,488
Leucadia National Corporation ......................................... 7,000 266,980
(a)Markel Corporation .................................................... 4,600 1,160,350
The Progressive Corporation ........................................... 21,460 1,545,120
Wesco Financial Corporation ........................................... 386 116,958
White Mountains Insurance Group Ltd. .................................. 900 369,900
XL Capital Ltd. ....................................................... 6,375 554,944
------------
5,608,235
------------
Manufacturing - 0.30%
(a)American Standard Company, Inc. ....................................... 1,500 110,985
------------
Metal Fabrication & Hardware - 0.06%
(a)Mueller Industries, Inc. .............................................. 850 22,261
------------
Oil & Gas - International - 0.21%
PetroChina Co., Ltd. .................................................. 3,000 75,960
------------
Packaging & Containers - 0.10%
(a)Sealed Air Corporation ................................................ 852 37,394
------------
(Continued)
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Publishing - Newspapers - 1.37%
Gannett Co., Inc. ..................................................... 623 $ 49,217
The Washington Post Company ........................................... 620 449,190
------------
498,407
------------
Real Estate Investment Trusts - 0.45%
HRPT Properties Trust ................................................. 575 5,457
Tanger Factory Outlet Centers, Inc. ................................... 2,735 88,340
The Town & Country Trust .............................................. 3,156 72,083
------------
165,880
------------
Restaurants & Food Service - 0.75%
Wendy's International Inc. ............................................ 4,300 129,473
(a)Yum! Brands Inc. ...................................................... 5,150 143,994
------------
273,467
------------
Retail - Specialty Line - 1.91%
La-Z-Boy, Inc. ........................................................ 3,000 65,730
The Sherwin-Williams Company .......................................... 13,970 382,499
(a)Zale Corporation ...................................................... 6,800 247,180
------------
695,409
------------
Retirement/Aged Care - 0.00%
(a)Five Star Quality Care, Inc. .......................................... 4 5
------------
Shoes - Leather - 0.26%
Brown Shoe Co., Inc. .................................................. 3,300 93,555
------------
Textiles - 3.24%
(a)Mohawk Industries, Inc. ............................................... 20,495 1,182,766
------------
Transportation - Miscellaneous - 0.11%
GATX Corporation ...................................................... 2,342 39,791
------------
Utilities - Energy - 3.27%
Entergy Corporation ................................................... 4,050 209,344
FPL Group, Inc. ....................................................... 5,865 389,847
Kinder Morgan, Inc. ................................................... 8,700 444,135
Progress Energy, Inc. ................................................. 3,150 148,207
------------
1,191,533
------------
Total Common Stocks (Cost $22,780,283) .......................................................... 25,174,258
------------
(Continued)
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANIES - 8.46%
Evergreen Institutional Municipal Money Market Fund ............................ 1,330,554 $ 1,330,554
PIMCO High Yield Fund .......................................................... 188,453 1,756,383
------------
Total Investment Companies (Cost $3,048,258) .................................................... 3,086,937
------------
Principal
---------
U.S. GOVERNMENT OBLIGATIONS - 21.93%
United States Treasury Bill due 06/26/03 .................................. $8,007,000 8,000,779
(Cost $8,000,884) ---------- ------------
Total Value of Investments (Cost $33,829,425 (b)) ............................... 99.39 % $ 36,261,974
Other Assets Less Liabilities ................................................... 0.61 % 222,081
---------- ------------
Net Assets ................................................................ 100.00 % $ 36,484,055
========== ============
(a) Non-income producing investment.
(b) Aggregate cost for federal income tax purposes is $33,819,028. Unrealized appreciation/(depreciation) of investments
for financial reporting and federal income tax purposes is as follows:
Unrealized appreciation ......................................................................... $ 3,015,979
Unrealized depreciation ......................................................................... (573,033)
------------
Net unrealized appreciation ..................................................................... $ 2,442,946
============
See accompanying notes to financial statements
WISDOM FUND
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2003
ASSETS
Investments, at value (cost $33,829,425) ........................................................ $ 36,261,974
Income receivable ............................................................................... 30,869
Receivable for fund shares sold ................................................................. 237,728
Other assets .................................................................................... 9,133
------------
Total assets ............................................................................... 36,539,704
------------
LIABILITIES
Accrued expenses ................................................................................ 52,637
Payable for fund shares redeemed ................................................................ 3,012
------------
Total liabilities .......................................................................... 55,649
------------
NET ASSETS ............................................................................................ $ 36,484,055
============
NET ASSETS CONSIST OF
Paid-in capital ................................................................................. $ 34,464,630
Accumulated net realized loss on investments .................................................... (413,124)
Net unrealized appreciation on investments ...................................................... 2,432,549
------------
$ 36,484,055
============
INSTITUTIONAL CLASS SHARES
Net asset value, redemption and offering price per share
($4,228,602/380,431 shares) ................................................................ $ 11.12
============
INVESTOR CLASS SHARES
Net asset value, redemption and offering price per share
($13,824,651/1,245,792 shares) ............................................................. $ 11.10
============
Maximum offering price per share (100/94.25 of $11.10) .......................................... $ 11.78
============
CLASS B SHARES
Net asset value, redemption and offering price per share
($12,795,975/1,166,958 shares) ............................................................. $ 10.97
============
CLASS C SHARES
Net asset value, redemption and offering price per share
($5,634,827/511,666 shares) ................................................................ $ 11.01
============
See accompanying notes to financial statements
WISDOM FUND
STATEMENT OF OPERATIONS
Year ended May 31, 2003
NET INVESTMENT LOSS
Income
Interest ...................................................................................... $ 72,117
Dividends ..................................................................................... 266,529
------------
Total income .............................................................................. 338,646
------------
Expenses
Investment advisory fees (note 2) ............................................................. 125,108
Fund administration fees (note 2) ............................................................. 31,277
Distribution and service fees - Investor Class Shares (note 3) ................................ 22,154
Distribution and service fees - Class B Shares (note 3) ....................................... 87,376
Distribution and service fees - Class C Shares (note 3) ....................................... 35,604
Custody fees .................................................................................. 9,275
Registration and filing administration fees (note 2) .......................................... 23,931
Fund accounting fees (note 2) ................................................................. 56,502
Audit fees .................................................................................... 16,475
Legal fees .................................................................................... 21,458
Securities pricing fees ....................................................................... 4,866
Shareholder recordkeeping fees ................................................................ 38,859
Other accounting fees (note 2) ................................................................ 1,052
Shareholder servicing expenses ................................................................ 10,018
Registration and filing expenses .............................................................. 50,159
Printing expenses ............................................................................. 13,335
Trustee fees and meeting expenses ............................................................. 3,890
Other operating expenses ...................................................................... 10,249
------------
Total expenses ............................................................................ 561,588
------------
Less:
Expense reimbursements (note 2) ...................................................... (624)
Investment advisory fees waived (note 2) ............................................. (9,452)
------------
Net expenses .............................................................................. 551,512
------------
Net investment loss .................................................................. (212,866)
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized loss from investment transactions ..................................................... (179,255)
Increase in unrealized appreciation on investments ................................................. 1,023,603
------------
Net realized and unrealized gain on investments ............................................... 844,348
------------
Net increase in net assets resulting from operations ...................................... $ 631,482
============
See accompanying notes to financial statements
WISDOM FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Years ended May 31,
- ------------------------------------------------------------------------------------------------------------------------------------
2003 2002
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment loss ....................................................... $ (212,866) $ (55,987)
Net realized loss from investment transactions ............................ (179,255) (233,249)
Increase in unrealized appreciation on investments ........................ 1,023,603 972,562
------------ ------------
Net increase in net assets resulting from operations ................. 631,482 683,326
------------ ------------
Distributions to shareholders from
Net realized gain from investment transactions - Institutional Class Shares 0 (30,682)
Net realized gain from investment transactions - Investor Class Shares .... 0 (15,741)
Net realized gain from investment transactions - Class B Shares ........... 0 (15,865)
Net realized gain from investment transactions - Class C Shares ........... 0 (10,533)
------------ ------------
Decrease in net assets resulting from distributions .................. 0 (72,821)
------------ ------------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) ...... 23,073,111 4,966,991
------------ ------------
Total increase in net assets .................................. 23,704,593 5,577,496
NET ASSETS
Beginning of year ............................................................. 12,779,462 7,201,966
------------ ------------
End of year ................................................................... $ 36,484,055 $ 12,779,462
============ ============
(a) A summary of capital share activity follows:
-------------------------------------------------------------------------------
2003 2002
Shares Value Shares Value
- --------------------------------------------------- -------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
- ---------------------------------------------------
Shares sold ...................................... 59,533 $ 629,968 44,137 $ 469,606
Shares issued for reinvestment of distributions .. 0 0 2,873 30,682
Shares redeemed .................................. (19,266) (200,123) (10) (106)
------------ ------------ ------------ ------------
Net increase ................................ 40,267 $ 429,845 47,000 $ 500,182
============ ============ ============ ============
- ---------------------------------------------------
INVESTOR CLASS SHARES
- ---------------------------------------------------
Shares sold ...................................... 1,186,944 $ 12,484,955 179,059 $ 1,939,701
Shares issued for reinvestment of distributions .. 0 0 1,412 15,119
Shares redeemed .................................. (178,198) (1,844,784) (59,071) (596,651)
------------ ------------ ------------ ------------
Net increase ................................ 1,008,746 $ 10,640,171 121,400 $ 1,358,169
============ ============ ============ ============
- ---------------------------------------------------
CLASS B SHARES
- ---------------------------------------------------
Shares sold ...................................... 869,053 $ 9,061,351 328,961 $ 3,657,636
Shares issued for reinvestment of distributions .. 0 0 984 10,520
Shares redeemed .................................. (76,569) (796,003) (120,721) (1,289,873)
------------ ------------ ------------ ------------
Net increase ................................ 792,484 $ 8,265,348 209,224 $ 2,378,283
============ ============ ============ ============
- ---------------------------------------------------
CLASS C SHARES
- ---------------------------------------------------
Shares sold ...................................... 401,147 $ 4,218,789 81,920 $ 907,685
Shares issued for reinvestment of distributions .. 0 0 971 10,423
Shares redeemed .................................. (46,073) (481,042) (16,796) (187,751)
------------ ------------ ------------ ------------
Net increase ................................ 355,074 $ 3,737,747 66,095 $ 730,357
============ ============ ============ ============
- ---------------------------------------------------
FUND SUMMARY
- ---------------------------------------------------
Shares sold ...................................... 2,516,677 $ 26,395,063 634,077 $ 6,974,628
Shares issued for reinvestment of distributions .. 0 0 6,240 66,744
Shares redeemed .................................. (320,106) (3,321,952) (196,598) (2,074,381)
------------ ------------ ------------ ------------
Net increase ................................ 2,196,571 $ 23,073,111 443,719 $ 4,966,991
============ ============ ============ ============
See accompanying notes to financial statements
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
INSTITUTIONAL CLASS SHARES
For the Periods ended May 31,
- ------------------------------------------------------------------------------------------------------------------------------------
2003 2002 2001 2000 1999 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ................ $ 11.54 $ 10.80 $ 9.90 $ 9.91 $ 10.00
(Loss) income from investment operations
Net investment (loss) income ................ (0.03) (0.02) 0.17 0.18 0.04
Net realized and unrealized (loss) gain
on investments .......................... (0.39) 0.85 0.90 (0.01) (0.09)
----------- ----------- ----------- ----------- -----------
Total from investment operations ........ (0.42) 0.83 1.07 0.17 (0.05)
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ....................... 0.00 0.00 (0.17) (0.18) (0.04)
Net realized gain from investment transactions 0.00 (0.09) 0.00 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions ..................... 0.00 (0.09) (0.17) (0.18) (0.04)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ...................... $ 11.12 $ 11.54 $ 10.80 $ 9.90 $ 9.91
=========== =========== =========== =========== ===========
Total return ........................................ (3.64)% 7.78 % 10.70 % 1.64 % (0.45)%
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ........................ $ 4,228,602 $ 3,924,962 $ 3,164,763 $ 2,710,312 $ 498,213
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.67 % 3.19 % 3.30 % 5.05 % 23.94 %(b)
After expense reimbursements and waived fees 1.62 % 1.71 % 0.26 % 0.00 % 0.00 %(b)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees (0.30)% (1.65)% (1.47)% (2.87)% (22.69)%(b)
After expense reimbursements and waived fees (0.25)% (0.17)% 1.57 % 2.18 % 1.26 %(b)
Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 % 7.04 %
(a) For the period from February 16, 1999 (commencement of operations) to May 31, 1999.
(b) Annualized.
(Continued)
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
INVESTOR CLASS SHARES
For the Periods ended May 31,
- ------------------------------------------------------------------------------------------------------------------------------------
2003 2002 2001 2000 1999 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ............... $ 11.56 $ 10.84 $ 9.93 $ 9.92 $ 10.00
(Loss) income from investment operations
Net investment (loss) income ............... (0.04) (0.04) 0.13 0.12 0.02
Net realized and unrealized (loss) gain
on investments ......................... (0.42) 0.85 0.91 0.01 (0.08)
----------- ----------- ----------- ----------- -----------
Total from investment operations ....... (0.46) 0.81 1.04 0.13 (0.06)
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ...................... 0.00 0.00 (0.13) (0.12) (0.02)
Net realized gain from investment transactions 0.00 (0.09) 0.00 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions .................... 0.00 (0.09) (0.13) (0.12) (0.02)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..................... $ 11.10 $ 11.56 $ 10.84 $ 9.93 $ 9.92
=========== =========== =========== =========== ===========
Total return (c) ................................... (3.98)% 7.57 % 10.41 % 1.36 % (0.58)%
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ....................... $13,824,651 $ 2,739,727 $ 1,253,515 $ 656,212 $ 99
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.91 % 3.39 % 3.86 % 4.29 % 15.49 %(b)
After expense reimbursements and waived fees 1.87 % 1.96 % 0.68 % 0.25 % 0.00 %(b)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees (0.56)% (1.91)% (1.97)% (1.96)% (14.68)%(b)
After expense reimbursements and waived fees (0.53)% (0.48)% 1.21 % 2.08 % 0.81 %(b)
Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 % 7.04 %
(a) For the period from February 16, 1999 (commencement of operations) to May 31, 1999.
(b) Annualized.
(c) Total return does not reflect payment of a sales charge.
(Continued)
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
CLASS B SHARES
For the Periods ended May 31,
- ------------------------------------------------------------------------------------------------------------------------------------
2003 2002 2001 2000 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period .......................... $ 11.50 $ 10.87 $ 9.97 $ 10.20
(Loss) income from investment operations
Net investment (loss) income ......................... (0.10) (0.07) 0.06 0.04
Net realized and unrealized (loss) gain on investments (0.43) 0.79 0.90 (0.23)
----------- ----------- ----------- -----------
Total from investment operations ................. (0.53) 0.72 0.96 (0.19)
----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ................................ 0.00 0.00 (0.06) (0.04)
Net realized gain from investment transactions ....... 0.00 (0.09) 0.00 0.00
----------- ----------- ----------- -----------
Total distributions .............................. 0.00 (0.09) (0.06) (0.04)
----------- ----------- ----------- -----------
Net asset value, end of period ............................... $ 10.97 $ 11.50 $ 10.87 $ 9.97
=========== =========== =========== ===========
Total return (c) ............................................. (4.61)% 6.72 % 9.60 % (1.85)%
=========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ................................. $12,795,975 $ 4,307,197 $ 1,796,569 $ 1,168,374
=========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 2.66 % 4.14 % 4.33 % 4.09 %(b)
After expense reimbursements and waived fees 2.62 % 2.71 % 1.28 % 1.00 %(b)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees (1.31)% (2.66)% (2.50)% (1.78)%(b)
After expense reimbursements and waived fees (1.27)% (1.23)% 0.56 % 1.31 %(b)
Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 %
(a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000.
(b) Annualized.
(c) Total return does not reflect payment of a sales charge.
(Continued)
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
CLASS C SHARES
For the Periods ended May 31,
- ------------------------------------------------------------------------------------------------------------------------------------
2003 2002 2001 2000 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ......................... $ 11.54 $ 10.91 $ 9.98 $ 10.20
(Loss) income from investment operations
Net investment (loss) income ......................... (0.09) (0.10) 0.03 0.03
Net realized and unrealized (loss) gain on investments (0.44) 0.82 0.93 (0.22)
----------- ----------- ----------- -----------
Total from investment operations ................. (0.53) 0.72 0.96 (0.19)
----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ................................ 0.00 0.00 (0.03) (0.03)
Net realized gain from investment transactions ....... 0.00 (0.09) 0.00 0.00
----------- ----------- ----------- -----------
Total distributions .............................. 0.00 (0.09) (0.03) (0.03)
----------- ----------- ----------- -----------
Net asset value, end of period ............................... $ 11.01 $ 11.54 $ 10.91 $ 9.98
=========== =========== =========== ===========
Total return (c) ............................................. (4.59)% 6.69 % 9.64 % (1.86)%
=========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ................................. $ 5,634,827 $ 1,807,576 $ 987,119 $ 173,395
=========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 2.66 % 4.18 % 4.44 % 4.07 %(b)
After expense reimbursements and waived fees 2.62 % 2.71 % 1.41 % 1.00 %(b)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees (1.31)% (2.66)% (2.62)% (1.77)%(b)
After expense reimbursements and waived fees (1.27)% (1.19)% 0.40 % 1.30 %(b)
Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 %
(a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000.
(b) Annualized.
(c) Total return does not reflect payment of a sales charge.
See accompanying notes to financial statements
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 2003
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Wisdom Fund (the "Fund") is a diversified series of shares of
beneficial interest of the New Providence Investment Trust (the
"Trust"), an open-ended management investment company. The Trust was
organized on July 9, 1997 as a Massachusetts Business Trust and is
registered under the Investment Company Act of 1940, as amended (the
"Act"). The Fund began operations on February 16, 1999. The investment
objective of the Fund is to seek maximum total return consisting of any
combination of capital appreciation, realized and unrealized, and
income under the constantly varying market conditions. The Board of
Trustees of the Trust (the "Trustees") approved, on October 7, 1999, a
plan to authorize two new classes of shares designated as Class B
Shares and Class C Shares. On November 16, 1999, the Class B Shares and
Class C Shares became effective. The Fund has an unlimited number of
authorized shares, which are divided into four classes - Institutional
Class Shares, Investor Class Shares, Class B shares and Class C shares.
Each class of shares has equal rights as to assets of the Fund, and the
classes are identical except for differences in their sales charge
structures and ongoing distribution and service fees. Income, expenses
(other than distribution and service fees, which are not attributable
to the Institutional Class Shares), and realized and unrealized gains
or losses on investments are allocated to each class of shares based
upon its relative net assets. All classes have equal voting privileges,
except where otherwise required by law or when the Trustees determine
that the matter to be voted on affects only the interests of the
shareholders of a particular class. The following is a summary of
significant accounting policies followed by the Fund.
A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted
on a national market system are valued at 4:00 p.m., Eastern
Time. Other securities traded in the over-the-counter market
and listed securities for which no sale was reported on that
date are valued at the most recent bid price. Securities for
which market quotations are not readily available, if any, are
valued by using an independent pricing service or by following
procedures approved by the Trustees. Short-term investments
are valued at cost, which approximates value.
B. Federal Income Taxes - No provision has been made for federal
income taxes since substantially all taxable income has been
distributed to shareholders. It is the policy of the Fund to
comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies and to make
sufficient distributions of taxable income to relieve it from
all federal income taxes.
Net investment income (loss) and net realized gains (losses)
may differ for financial statement and income tax purposes
primarily because of losses incurred subsequent to October 31,
which are deferred for income tax purposes. The character of
distributions made during the year from net investment income
or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to
the timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the
income or realized gains were recorded by the Fund.
As a result of the Fund's operating net investment loss, a
reclassification adjustment of $212,866 has been made on the
statement of assets and liabilities to decrease accumulated
net investment loss, bringing it to zero, and decreasing
paid-in capital.
The Fund has capital loss carryforwards for federal income tax
purposes of $339,603, of which $174,661 expires in the year
2010 and $164,942 expires in the year 2011. It is the
intention of the Trustees not to distribute any realized gains
until the carryforwards have been offset or expire.
(Continued)
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 2003
C. Investment Transactions - Investment transactions are recorded
on trade date. Realized gains and losses are determined using
the specific identification cost method. Interest income is
recorded daily on an accrual basis. Dividend income is
recorded on the ex-dividend date.
D. Distributions to Shareholders - The Fund may declare dividends
quarterly, payable in March, June, September, and December on
a date selected by the Trustees. Distributions to shareholders
are recorded on the ex-dividend date. In addition,
distributions may be made annually in December out of net
realized gains through October 31 of that year. Distributions
to shareholders are recorded on the ex-dividend date. The Fund
may make a supplemental distribution subsequent to the end of
its fiscal year ending May 31.
E. Use of Estimates - The preparation of financial statements in
conformity with accounting principles generally accepted in
the United States of America requires management to make
estimates and assumptions that affect the amounts of assets,
liabilities, expenses and revenues reported in the financial
statements. Actual results could differ from those estimates.
NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, Atlanta Investment
Counsel, LLC (the "Advisor") provides the Fund with a continuous
program of supervision of the Fund's assets, including the composition
of its portfolio, and furnishes advice and recommendations with respect
to investments, investment policies, and the purchase and sale of
securities. As compensation for its services, the Advisor receives a
fee at the annual rate of 0.50% of the first $500 million of the Fund's
average daily net assets and 0.40% of all assets over $500 million.
The Advisor currently intends to voluntarily waive all or a portion of
its fee and to reimburse expenses of the Fund to limit total Fund
operating expenses to a maximum of 1.75% of the average daily net
assets of the Fund's Institutional Class Shares, a maximum of 2.00% of
the average daily net assets of the Fund's Investor Class Shares, and a
maximum of 2.75% of the average daily net assets of the Fund's Class B
Shares and Class C Shares. There can be no assurance that the foregoing
voluntary fee waivers or reimbursements will continue. The Advisor has
voluntarily waived a portion of its fee amounting to $9,452 and
reimbursed $624 of the operating expenses incurred by the Fund for the
year ended May 31, 2003.
The Fund's administrator, The Nottingham Company (the "Administrator"),
provides administrative services to and is generally responsible for
the overall management and day-to-day operations of the Fund pursuant
to an accounting and administrative agreement with the Trust. As
compensation for its services, the Administrator receives a fee at the
annual rate of 0.125% of the Fund's first $50 million of average daily
net assets, 0.100% of the next $50 million, and 0.075% of average daily
net assets over $100 million. The Administrator also receives a monthly
fee of $2,250 for accounting and record-keeping services for the
initial class of shares and $750 per month for each additional class of
shares, plus 0.01% of the average annual net assets. The contract with
the Administrator provides that the aggregate fees for the
aforementioned administration shall not be less than $2,000 per month.
The Administrator also receives the following to procure and pay the
custodian for the Trust: 0.02% on the first $100 million of the Fund's
net assets and 0.009% on all assets over $100 million, including
transaction fees, with a minimum annual fee of $4,800. The
Administrator also charges the Fund for certain expenses involved with
the daily valuation of portfolio securities.
(Continued)
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 2003
NC Shareholder Services, LLC (the "Transfer Agent") serves as the
Fund's transfer, dividend paying, and shareholder servicing agent. The
Transfer Agent maintains the records of each shareholder's account,
answers shareholder inquiries concerning accounts, processes purchases
and redemptions of the Fund's shares, acts as dividend and distribution
disbursing agent, and performs other shareholder servicing functions.
Capital Investment Group, Inc. (the "Distributor") serves as the Fund's
principal underwriter and distributor. The Distributor receives any
sales charges imposed on purchases of shares and re-allocates a portion
of such charges to dealers through whom the sale was made, if any. For
the year ended May 31, 2003, the Distributor retained sales charges in
the amount of $24,085.
Certain Trustees and officers of the Trust are also officers or
directors of the Advisor, the Distributor, or the Administrator.
NOTE 3 - DISTRIBUTION AND SERVICE FEES
The Trustees, including the Trustees who are not "interested persons"
of the Trust as defined in the Act, adopted distribution and service
plans pursuant to Rule 12b-1 of the Act (the "Plans") applicable to the
Investor Class Shares, Class B Shares, and Class C Shares. The Act
regulates the manner in which a regulated investment company may assume
costs of distributing and promoting the sales of its shares and
servicing of its shareholder accounts.
The Plans provide that the Fund may incur certain costs, which may not
exceed 0.25% per annum of the Investor Class Shares' average daily net
assets or 1.00% per annum of the Class B Shares or Class C Shares for
each year elapsed subsequent to adoption of the Plans, for payment to
the Distributor and others for items such as advertising expenses,
selling expenses, commissions, travel, or other expenses reasonably
intended to result in sales of Investor Class Shares, Class B Shares
and Class C Shares in the Fund or support servicing of those classes'
shareholder accounts. The Fund incurred $22,154, $87,376, and $35,604,
in distribution and service fees under the Plans with respect to
Investor Class Shares, Class B Shares, and Class C Shares,
respectively, for the year ended May 31, 2003.
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term investments,
aggregated $19,893,795 and $1,999,410, respectively, for the year ended
May 31, 2003.
(Continued)
WISDOM FUND
ADDITIONAL INFORMATION
May 31, 2003
(Unaudited)
INFORMATION ABOUT TRUSTEES AND OFFICERS (UNAUDITED)
The business and affairs of the Fund and the Trust are managed under the
direction of the Trustees. Information concerning the Trustee and officers of
the Trust and Fund is set forth below. Generally, each Trustee and officer
serves an indefinite term or until certain circumstances such as their
resignation, death, or otherwise as specified in the Trust's organizational
documents. Any Trustee may be removed at a meeting of shareholders by a vote
meeting the requirements of the Trust's organizational documents. The Statement
of Additional Information of the Fund includes additional information about the
Trustee and officers and is available, without charge, upon request by calling
the Fund toll-free at 1-800-773-3863. The address of each Trustee and officer,
unless otherwise indicated below, is 116 South Franklin Street, Rocky Mount,
North Carolina 27802. The Trustee received aggregate compensation of $3,000
during the fiscal year ended May 31, 2003 from the Fund for his services to the
Fund and Trust. The officers did not receive compensation from the Fund for
their services to the Fund and Trust.
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Number of
Portfolios
in Fund
Position(s) Length Complex
Name, Age, held with of Time Principal Occupation(s) Overseen by Other Directorships
and Address Fund/Trust Served During Past 5 Years Trustee Held by Trustee
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Independent Trustee
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Jack E. Brinson, 70 Trustee Since Retired; Previously, President of 1 Independent Trustee - Gardner
1997 Brinson Investment Co. (personal Lewis Investment Trust for the
investments) President of Brinson and three series of that trust;
Chevrolet, Inc. (auto dealership) The Nottingham Investment Trust
II for the eight series of that
trust; Hillman Capital
Management Investment Trust for
two series of that trust; and
de Leon Funds Trust for the
one series of that trust (all
registered investment
companies)
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Officers
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
C. Douglas Davenport, 52 President, Since President (since 1998) of Atlanta n/a n/a
Atlanta Investment Counsel, Treasurer, 2003 Investment Counsel, LLC (Advisor of
LLC Principal the Fund); previously, stockbroker
3717 Haddon Hall Road, NW Executive at Lehman Brothers
Suite 200 Officer,
Atlanta, GA 30327 and
Principal
Financial
Officer
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
C. Frank Watson III, 32 Secretary Since President and Chief Operating n/a n/a
1997 Officer (since 1999) of The
Nottingham Company
(Administrator to the Fund);
previously, Chief Operating Officer
of The Nottingham Company
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Julian G. Winters, 34 Assistant Since Vice President-Compliance n/a n/a
Treasurer 2003 Administration (since 1998) of The
and Nottingham Company; previously,
Assistant Fund Accountant at The Nottingham
Secretary Company
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281-1414
Tel: (212) 436-2000
Fax: (212) 436-5000
www.deloitte.com Deloitte
& Touche
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees of New Providence Investment Trust
and Shareholders of Wisdom Fund:
We have audited the accompanying statement of assets and liabilities of Wisdom
Fund (the "Fund") (a portfolio of New Providence Investment Trust), including
the portfolio of investments, as of May 31, 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 periods presented. These financial statements and financial
highlights are the responsibility of the Fund's 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 audit 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 May 31, 2003, by correspondence with the Fund's custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Wisdom
Fund as of May 31, 2003, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods presented, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Deloitte & Touche LLP
June 27, 2003
___________
Deloitte
Touche
Tohmatsu
___________
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(This page was intentionally left blank)
________________________________________________________________________________
WISDOM FUND
________________________________________________________________________________
a series of the New Providence Investment Trust
This Report has been prepared for
shareholders and may be distributed to
others only if preceded or accompanied by
a current prospectus.
________________________________________________________________________________
WISDOM FUND
________________________________________________________________________________
a series of the New Providence Investment Trust
CLASS C SHARES
ANNUAL REPORT
FOR THE YEAR ENDED MAY 31, 2003
INVESTMENT ADVISOR
Atlanta Investment Counsel, LLC
3717 Haddon Hall Road, NW
Suite 200
Atlanta, Georgia 30327
WISDOM FUND
116 South Franklin Street
Post Office Drawer 4365
Rocky Mount, North Carolina 27803
1-800-525-3863
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Wisdom Fund (the "Fund"). This
report is not authorized for distribution to prospective investors in the Fund
unless preceded or accompanied by an effective prospectus. Mutual fund shares
are not deposits or obligations of, or guaranteed by, any depository
institution. Shares are not insured by the FDIC, Federal Reserve Board or any
other agency, and are subject to investment risks, including possible loss of
principal amount invested. Neither the Fund nor the Fund's distributor is a
bank.
For more information about the Fund, including charges and expenses, call the
Fund's distributor for a free prospectus. You should read the prospectus
carefully before you invest or send money.
Distributor: Capital Investment Group, Inc., P.O. Box 4365, Rocky Mount, NC
27803, Phone 1-800-773-3863
WISDOM FUND
Annual Report to Shareholders
July 23, 2003
To Our Fellow Shareholders:
What a difference a quarter makes. Investors should never underestimate the
ability of the stock market to surprise and humble investors over the short
term. That is why we rely on valuation analysis, which we believe, is a primary
driver of investment returns over several years and longer.
Several risks impacted returns over the last year:
o Structural risks including high debt levels and the sizable U.S.
dependence on foreign capital,
o Deflation, which could be a by-product of high debt levels,
o Inflation, which could eventually be ignited by attempts to fight
deflation, and
o Geopolitical risks including terrorism.
We believe that current asset prices suggest returns of 6-9% for equity-type
assets on average, over the next five years. The reality is that returns could
be significantly different if growth rates are abnormally high or low or if
assets become overvalued or undervalued. So, even though we believe the most
likely range of returns is 6-9%, it's not hard to imagine returns being two
percentage points higher or lower and, along the way, individual returns could
be significantly higher or lower. The sad reality is that returns were so high
in the 1990s that they effectively borrowed from the future. The bear market
brought things back to reality and beyond and now we've had a bounce back to
fair value. How can we do better?
We believe that Atlanta Investment Counsel's added value is the function of the
quality of the research and our discipline. At times of extreme greed and fear
this is particularly difficult because emotion can cloud judgment. We view one
of the most important parts of our job as helping to avoid the emotional ties
that can lead to buying and selling at the wrong time.
As of May 31, 2003, the fund had about a 37% allocation to the financial
services and the multiline and property and casualty insurance areas. We like
these areas because we believe: (1) valuations tend to be low relative to
earnings, (2) great management can make a big difference and add value, (3) most
competitors are generally mediocre and above-average managers are rare, (4)
growth opportunities are open-ended because market shares tend to be low,
markets are large and they are businesses that don't become obsolete, and (5)
reported earnings are generally cash earnings.
We remain both pleased and proud that the long-term track record of the fund
remains positive and solidly ahead of the passive investment alternative of the
S&P 500. Our efforts have met our goals and exceeded our own expectations during
the fund's operation in the tumultuous time frame of 2000-2002.
We advise shareholders to maintain modest positive return expectations and also
to sustain their confidence. We have selected portfolio companies that, in our
opinion, retain the ability to perform well in their respective industries in an
improved economic climate.
We find ourselves in an environment that is quite different from what most
investors have grown used to over the past two decades. We have gone through the
worst bear market in a generation, but have seen investors come back to the
market again. We believe that we are well positioned for the environment we are
faced with and remain confident we can continue to add substantial value.
C. Douglas Davenport, J.D.
Portfolio Manager-Wisdom Fund
________________________________________________________________________________
Statements in this Annual Report that reflect projections or expectations of
future financial or economic performance of the fund and of the market in
general and statements of the fund's plans and objectives for future operations
are forward-looking statements. No assurance can be given that actual results or
events will not differ materially from those projected, estimated, assumed or
anticipated in any such forward-looking statements. Important factors that could
result in such differences, in addition to the other factors noted with such
forward-looking statements, include general economic conditions such as
inflation, recession and interest rates. Past performance is not a guarantee of
future results.
________________________________________________________________________________
WISDOM FUND
CLASS C SHARES
Performance Update - $10,000 Investment
For the period from November 16, 1999 (Commencement of Operations)
to May 31, 2003
- --------------------------------------------------------------------------------
Wisdom Fund S&P 500 Total
Class C Shares Return Index
- --------------------------------------------------------------------------------
11/16/99 $10,000 $10,000
02/29/00 8,613 9,655
05/31/00 9,814 10,070
08/31/00 10,306 10,787
11/30/00 11,161 9,373
02/28/01 10,839 8,863
5/31/2001 10,760 9,007
08/31/01 10,494 8,156
11/30/01 10,592 8,227
02/28/02 10,993 8,020
5/31/2002 11,480 7,760
08/31/02 10,565 6,689
11/30/02 10,535 6,868
02/28/03 9,809 6,201
5/31/2003 10,953 7,134
This graph depicts the performance of the Wisdom Fund - Class C Shares (the
"Fund") versus the S&P 500 Total Return Index. It is important to note that the
Fund is a professionally managed mutual fund while the index is not available
for investment and is unmanaged. The comparison is shown for illustrative
purposes only.
Average Annual Total Returns
------------------------------ ------------- ---------------------
Since 11/16/99
One Year (Commencement
of Operations)
------------------------------ ------------- ---------------------
No Sales Charges (4.59)% 2.60 %
------------------------------ ------------- ---------------------
1% Maximum Sales Charge (5.55)% 2.60 %
------------------------------ ------------- ---------------------
>> The graph assumes an initial $10,000 investment at November 16, 1999
(commencement of operations). The deduction of the maximum contingent
deferred sales charge ("CDSC") is not reflected in the graph because the
CDSC for the Class C Shares declines to 0% after the first year. However,
the CDSC is reflected in the return table above as applicable. The CDSC may
be waived or reduced under certain circumstances. All dividends and
distributions are reinvested.
>> At May 31, 2003, the value of the Fund's Class C Shares would have
increased to $10,953 - a cumulative total investment return of 9.53% since
November 16, 1999.
>> At May 31, 2003, a similar investment in the S&P 500 Total Return Index
would have decreased to $7,134 - a cumulative total investment return of
(28.66)% since November 16, 1999.
>> Past performance is not a guarantee of future results. A mutual fund's
share price and investment return will vary with market conditions, and the
principal value of shares, when redeemed, may be worth more or less than
the original cost. The graph and table do not reflect the deduction of
taxes that a shareholder would pay on fund distributions or the redemption
of fund shares. Average annual total returns are historical in nature and
measure net investment income and capital gain or loss from portfolio
investments assuming reinvestments of dividends.
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 69.00%
Apparel Manufacturing - 0.43%
(a)Jones Apparel Group, Inc. ............................................. 5,310 $ 155,902
------------
Beverages - 7.10%
The Coca-Cola Company ................................................. 56,830 2,589,743
------------
Building Materials - 0.45%
Lowe's Companies, Inc. ................................................ 3,230 136,500
(a)USG Corporation ....................................................... 2,400 27,936
------------
164,436
------------
Chemicals - 0.20%
Great Lakes Chemical Corporation ...................................... 3,220 74,157
------------
Commercial Services - 2.09%
First American Corporation ............................................ 7,770 210,412
H&R Block, Inc. ....................................................... 3,320 135,921
Moody's Corporation ................................................... 8,005 417,460
------------
763,793
------------
Computer Software & Services - 0.45%
First Data Corporation ................................................ 3,970 164,437
------------
Cosmetics & Personal Care - 2.89%
The Gillette Company .................................................. 31,380 1,054,682
------------
Financial - Banks, Money Center - 2.40%
Wells Fargo Company ................................................... 18,122 875,293
------------
Financial Services - 7.58%
American Express Company .............................................. 37,050 1,543,503
M&T Bank Corp. ........................................................ 2,030 180,771
MBIA, Inc. ............................................................ 19,500 975,975
SunTrust Banks, Inc. .................................................. 1,100 65,230
------------
2,765,479
------------
Food - Wholesale - 1.02%
Sysco Corporation ..................................................... 12,000 371,280
------------
Furniture & Home Appliances - 0.43%
Ethan Allen Interiors, Inc. ........................................... 4,430 157,841
------------
Health Care Services - 0.28%
(a)Iron Mountain, Inc. ................................................... 2,600 102,700
------------
(Continued)
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Industrial Materials - Specialty - 0.10%
Dover Corporation ..................................................... 1,200 $ 36,372
------------
Insurance - Life & Health - 1.71%
AFLAC, INCORPORATED ................................................... 11,060 363,985
Brown & Brown, Inc. ................................................... 7,330 259,848
------------
623,833
------------
Insurance - Multiline - 14.47%
Ambac Financial Group, Inc. ........................................... 6,580 438,952
American International Group, Inc. .................................... 23,150 1,339,922
American National Insurance Company ................................... 1,300 111,332
Arthur J. Gallagher & Co. ............................................. 13,100 356,975
Cincinnati Financial Corp. ............................................ 11,400 423,168
Odyssey Re Holdings Corp. ............................................. 14,100 290,883
PartnerRe Ltd. ........................................................ 11,005 584,585
RenaissanceRe Holdings Ltd. ........................................... 25,478 1,138,867
The Chubb Corporation ................................................. 7,400 473,822
Willis Group Holdings Limited ......................................... 3,800 120,156
------------
5,278,662
------------
Insurance - Property & Casualty - 15.37%
ACE Limited ........................................................... 3,847 140,800
Everest Re Group, Ltd. ................................................ 11,215 818,695
Fidelity National Financial, Inc. ..................................... 20,421 634,488
Leucadia National Corporation ......................................... 7,000 266,980
(a)Markel Corporation .................................................... 4,600 1,160,350
The Progressive Corporation ........................................... 21,460 1,545,120
Wesco Financial Corporation ........................................... 386 116,958
White Mountains Insurance Group Ltd. .................................. 900 369,900
XL Capital Ltd. ....................................................... 6,375 554,944
------------
5,608,235
------------
Manufacturing - 0.30%
(a)American Standard Company, Inc. ....................................... 1,500 110,985
------------
Metal Fabrication & Hardware - 0.06%
(a)Mueller Industries, Inc. .............................................. 850 22,261
------------
Oil & Gas - International - 0.21%
PetroChina Co., Ltd. .................................................. 3,000 75,960
------------
Packaging & Containers - 0.10%
(a)Sealed Air Corporation ................................................ 852 37,394
------------
(Continued)
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Publishing - Newspapers - 1.37%
Gannett Co., Inc. ..................................................... 623 $ 49,217
The Washington Post Company ........................................... 620 449,190
------------
498,407
------------
Real Estate Investment Trusts - 0.45%
HRPT Properties Trust ................................................. 575 5,457
Tanger Factory Outlet Centers, Inc. ................................... 2,735 88,340
The Town & Country Trust .............................................. 3,156 72,083
------------
165,880
------------
Restaurants & Food Service - 0.75%
Wendy's International Inc. ............................................ 4,300 129,473
(a)Yum! Brands Inc. ...................................................... 5,150 143,994
------------
273,467
------------
Retail - Specialty Line - 1.91%
La-Z-Boy, Inc. ........................................................ 3,000 65,730
The Sherwin-Williams Company .......................................... 13,970 382,499
(a)Zale Corporation ...................................................... 6,800 247,180
------------
695,409
------------
Retirement/Aged Care - 0.00%
(a)Five Star Quality Care, Inc. .......................................... 4 5
------------
Shoes - Leather - 0.26%
Brown Shoe Co., Inc. .................................................. 3,300 93,555
------------
Textiles - 3.24%
(a)Mohawk Industries, Inc. ............................................... 20,495 1,182,766
------------
Transportation - Miscellaneous - 0.11%
GATX Corporation ...................................................... 2,342 39,791
------------
Utilities - Energy - 3.27%
Entergy Corporation ................................................... 4,050 209,344
FPL Group, Inc. ....................................................... 5,865 389,847
Kinder Morgan, Inc. ................................................... 8,700 444,135
Progress Energy, Inc. ................................................. 3,150 148,207
------------
1,191,533
------------
Total Common Stocks (Cost $22,780,283) .......................................................... 25,174,258
------------
(Continued)
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANIES - 8.46%
Evergreen Institutional Municipal Money Market Fund ............................ 1,330,554 $ 1,330,554
PIMCO High Yield Fund .......................................................... 188,453 1,756,383
------------
Total Investment Companies (Cost $3,048,258) .................................................... 3,086,937
------------
Principal
---------
U.S. GOVERNMENT OBLIGATIONS - 21.93%
United States Treasury Bill due 06/26/03 .................................. $8,007,000 8,000,779
(Cost $8,000,884) ---------- ------------
Total Value of Investments (Cost $33,829,425 (b)) ............................... 99.39 % $ 36,261,974
Other Assets Less Liabilities ................................................... 0.61 % 222,081
---------- ------------
Net Assets ................................................................ 100.00 % $ 36,484,055
========== ============
(a) Non-income producing investment.
(b) Aggregate cost for federal income tax purposes is $33,819,028. Unrealized appreciation/(depreciation) of investments
for financial reporting and federal income tax purposes is as follows:
Unrealized appreciation ......................................................................... $ 3,015,979
Unrealized depreciation ......................................................................... (573,033)
------------
Net unrealized appreciation ..................................................................... $ 2,442,946
============
See accompanying notes to financial statements
WISDOM FUND
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2003
ASSETS
Investments, at value (cost $33,829,425) ........................................................ $ 36,261,974
Income receivable ............................................................................... 30,869
Receivable for fund shares sold ................................................................. 237,728
Other assets .................................................................................... 9,133
------------
Total assets ............................................................................... 36,539,704
------------
LIABILITIES
Accrued expenses ................................................................................ 52,637
Payable for fund shares redeemed ................................................................ 3,012
------------
Total liabilities .......................................................................... 55,649
------------
NET ASSETS ............................................................................................ $ 36,484,055
============
NET ASSETS CONSIST OF
Paid-in capital ................................................................................. $ 34,464,630
Accumulated net realized loss on investments .................................................... (413,124)
Net unrealized appreciation on investments ...................................................... 2,432,549
------------
$ 36,484,055
============
INSTITUTIONAL CLASS SHARES
Net asset value, redemption and offering price per share
($4,228,602/380,431 shares) ................................................................ $ 11.12
============
INVESTOR CLASS SHARES
Net asset value, redemption and offering price per share
($13,824,651/1,245,792 shares) ............................................................. $ 11.10
============
Maximum offering price per share (100/94.25 of $11.10) .......................................... $ 11.78
============
CLASS B SHARES
Net asset value, redemption and offering price per share
($12,795,975/1,166,958 shares) ............................................................. $ 10.97
============
CLASS C SHARES
Net asset value, redemption and offering price per share
($5,634,827/511,666 shares) ................................................................ $ 11.01
============
See accompanying notes to financial statements
WISDOM FUND
STATEMENT OF OPERATIONS
Year ended May 31, 2003
NET INVESTMENT LOSS
Income
Interest ...................................................................................... $ 72,117
Dividends ..................................................................................... 266,529
------------
Total income .............................................................................. 338,646
------------
Expenses
Investment advisory fees (note 2) ............................................................. 125,108
Fund administration fees (note 2) ............................................................. 31,277
Distribution and service fees - Investor Class Shares (note 3) ................................ 22,154
Distribution and service fees - Class B Shares (note 3) ....................................... 87,376
Distribution and service fees - Class C Shares (note 3) ....................................... 35,604
Custody fees .................................................................................. 9,275
Registration and filing administration fees (note 2) .......................................... 23,931
Fund accounting fees (note 2) ................................................................. 56,502
Audit fees .................................................................................... 16,475
Legal fees .................................................................................... 21,458
Securities pricing fees ....................................................................... 4,866
Shareholder recordkeeping fees ................................................................ 38,859
Other accounting fees (note 2) ................................................................ 1,052
Shareholder servicing expenses ................................................................ 10,018
Registration and filing expenses .............................................................. 50,159
Printing expenses ............................................................................. 13,335
Trustee fees and meeting expenses ............................................................. 3,890
Other operating expenses ...................................................................... 10,249
------------
Total expenses ............................................................................ 561,588
------------
Less:
Expense reimbursements (note 2) ...................................................... (624)
Investment advisory fees waived (note 2) ............................................. (9,452)
------------
Net expenses .............................................................................. 551,512
------------
Net investment loss .................................................................. (212,866)
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized loss from investment transactions ..................................................... (179,255)
Increase in unrealized appreciation on investments ................................................. 1,023,603
------------
Net realized and unrealized gain on investments ............................................... 844,348
------------
Net increase in net assets resulting from operations ...................................... $ 631,482
============
See accompanying notes to financial statements
WISDOM FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Years ended May 31,
- ------------------------------------------------------------------------------------------------------------------------------------
2003 2002
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment loss ....................................................... $ (212,866) $ (55,987)
Net realized loss from investment transactions ............................ (179,255) (233,249)
Increase in unrealized appreciation on investments ........................ 1,023,603 972,562
------------ ------------
Net increase in net assets resulting from operations ................. 631,482 683,326
------------ ------------
Distributions to shareholders from
Net realized gain from investment transactions - Institutional Class Shares 0 (30,682)
Net realized gain from investment transactions - Investor Class Shares .... 0 (15,741)
Net realized gain from investment transactions - Class B Shares ........... 0 (15,865)
Net realized gain from investment transactions - Class C Shares ........... 0 (10,533)
------------ ------------
Decrease in net assets resulting from distributions .................. 0 (72,821)
------------ ------------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) ...... 23,073,111 4,966,991
------------ ------------
Total increase in net assets .................................. 23,704,593 5,577,496
NET ASSETS
Beginning of year ............................................................. 12,779,462 7,201,966
------------ ------------
End of year ................................................................... $ 36,484,055 $ 12,779,462
============ ============
(a) A summary of capital share activity follows:
-------------------------------------------------------------------------------
2003 2002
Shares Value Shares Value
- --------------------------------------------------- -------------------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
- ---------------------------------------------------
Shares sold ...................................... 59,533 $ 629,968 44,137 $ 469,606
Shares issued for reinvestment of distributions .. 0 0 2,873 30,682
Shares redeemed .................................. (19,266) (200,123) (10) (106)
------------ ------------ ------------ ------------
Net increase ................................ 40,267 $ 429,845 47,000 $ 500,182
============ ============ ============ ============
- ---------------------------------------------------
INVESTOR CLASS SHARES
- ---------------------------------------------------
Shares sold ...................................... 1,186,944 $ 12,484,955 179,059 $ 1,939,701
Shares issued for reinvestment of distributions .. 0 0 1,412 15,119
Shares redeemed .................................. (178,198) (1,844,784) (59,071) (596,651)
------------ ------------ ------------ ------------
Net increase ................................ 1,008,746 $ 10,640,171 121,400 $ 1,358,169
============ ============ ============ ============
- ---------------------------------------------------
CLASS B SHARES
- ---------------------------------------------------
Shares sold ...................................... 869,053 $ 9,061,351 328,961 $ 3,657,636
Shares issued for reinvestment of distributions .. 0 0 984 10,520
Shares redeemed .................................. (76,569) (796,003) (120,721) (1,289,873)
------------ ------------ ------------ ------------
Net increase ................................ 792,484 $ 8,265,348 209,224 $ 2,378,283
============ ============ ============ ============
- ---------------------------------------------------
CLASS C SHARES
- ---------------------------------------------------
Shares sold ...................................... 401,147 $ 4,218,789 81,920 $ 907,685
Shares issued for reinvestment of distributions .. 0 0 971 10,423
Shares redeemed .................................. (46,073) (481,042) (16,796) (187,751)
------------ ------------ ------------ ------------
Net increase ................................ 355,074 $ 3,737,747 66,095 $ 730,357
============ ============ ============ ============
- ---------------------------------------------------
FUND SUMMARY
- ---------------------------------------------------
Shares sold ...................................... 2,516,677 $ 26,395,063 634,077 $ 6,974,628
Shares issued for reinvestment of distributions .. 0 0 6,240 66,744
Shares redeemed .................................. (320,106) (3,321,952) (196,598) (2,074,381)
------------ ------------ ------------ ------------
Net increase ................................ 2,196,571 $ 23,073,111 443,719 $ 4,966,991
============ ============ ============ ============
See accompanying notes to financial statements
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
INSTITUTIONAL CLASS SHARES
For the Periods ended May 31,
- ------------------------------------------------------------------------------------------------------------------------------------
2003 2002 2001 2000 1999 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ................ $ 11.54 $ 10.80 $ 9.90 $ 9.91 $ 10.00
(Loss) income from investment operations
Net investment (loss) income ................ (0.03) (0.02) 0.17 0.18 0.04
Net realized and unrealized (loss) gain
on investments .......................... (0.39) 0.85 0.90 (0.01) (0.09)
----------- ----------- ----------- ----------- -----------
Total from investment operations ........ (0.42) 0.83 1.07 0.17 (0.05)
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ....................... 0.00 0.00 (0.17) (0.18) (0.04)
Net realized gain from investment transactions 0.00 (0.09) 0.00 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions ..................... 0.00 (0.09) (0.17) (0.18) (0.04)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ...................... $ 11.12 $ 11.54 $ 10.80 $ 9.90 $ 9.91
=========== =========== =========== =========== ===========
Total return ........................................ (3.64)% 7.78 % 10.70 % 1.64 % (0.45)%
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ........................ $ 4,228,602 $ 3,924,962 $ 3,164,763 $ 2,710,312 $ 498,213
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.67 % 3.19 % 3.30 % 5.05 % 23.94 %(b)
After expense reimbursements and waived fees 1.62 % 1.71 % 0.26 % 0.00 % 0.00 %(b)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees (0.30)% (1.65)% (1.47)% (2.87)% (22.69)%(b)
After expense reimbursements and waived fees (0.25)% (0.17)% 1.57 % 2.18 % 1.26 %(b)
Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 % 7.04 %
(a) For the period from February 16, 1999 (commencement of operations) to May 31, 1999.
(b) Annualized.
(Continued)
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
INVESTOR CLASS SHARES
For the Periods ended May 31,
- ------------------------------------------------------------------------------------------------------------------------------------
2003 2002 2001 2000 1999 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ............... $ 11.56 $ 10.84 $ 9.93 $ 9.92 $ 10.00
(Loss) income from investment operations
Net investment (loss) income ............... (0.04) (0.04) 0.13 0.12 0.02
Net realized and unrealized (loss) gain
on investments ......................... (0.42) 0.85 0.91 0.01 (0.08)
----------- ----------- ----------- ----------- -----------
Total from investment operations ....... (0.46) 0.81 1.04 0.13 (0.06)
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ...................... 0.00 0.00 (0.13) (0.12) (0.02)
Net realized gain from investment transactions 0.00 (0.09) 0.00 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions .................... 0.00 (0.09) (0.13) (0.12) (0.02)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ..................... $ 11.10 $ 11.56 $ 10.84 $ 9.93 $ 9.92
=========== =========== =========== =========== ===========
Total return (c) ................................... (3.98)% 7.57 % 10.41 % 1.36 % (0.58)%
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ....................... $13,824,651 $ 2,739,727 $ 1,253,515 $ 656,212 $ 99
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.91 % 3.39 % 3.86 % 4.29 % 15.49 %(b)
After expense reimbursements and waived fees 1.87 % 1.96 % 0.68 % 0.25 % 0.00 %(b)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees (0.56)% (1.91)% (1.97)% (1.96)% (14.68)%(b)
After expense reimbursements and waived fees (0.53)% (0.48)% 1.21 % 2.08 % 0.81 %(b)
Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 % 7.04 %
(a) For the period from February 16, 1999 (commencement of operations) to May 31, 1999.
(b) Annualized.
(c) Total return does not reflect payment of a sales charge.
(Continued)
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
CLASS B SHARES
For the Periods ended May 31,
- ------------------------------------------------------------------------------------------------------------------------------------
2003 2002 2001 2000 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period .......................... $ 11.50 $ 10.87 $ 9.97 $ 10.20
(Loss) income from investment operations
Net investment (loss) income ......................... (0.10) (0.07) 0.06 0.04
Net realized and unrealized (loss) gain on investments (0.43) 0.79 0.90 (0.23)
----------- ----------- ----------- -----------
Total from investment operations ................. (0.53) 0.72 0.96 (0.19)
----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ................................ 0.00 0.00 (0.06) (0.04)
Net realized gain from investment transactions ....... 0.00 (0.09) 0.00 0.00
----------- ----------- ----------- -----------
Total distributions .............................. 0.00 (0.09) (0.06) (0.04)
----------- ----------- ----------- -----------
Net asset value, end of period ............................... $ 10.97 $ 11.50 $ 10.87 $ 9.97
=========== =========== =========== ===========
Total return (c) ............................................. (4.61)% 6.72 % 9.60 % (1.85)%
=========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ................................. $12,795,975 $ 4,307,197 $ 1,796,569 $ 1,168,374
=========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 2.66 % 4.14 % 4.33 % 4.09 %(b)
After expense reimbursements and waived fees 2.62 % 2.71 % 1.28 % 1.00 %(b)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees (1.31)% (2.66)% (2.50)% (1.78)%(b)
After expense reimbursements and waived fees (1.27)% (1.23)% 0.56 % 1.31 %(b)
Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 %
(a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000.
(b) Annualized.
(c) Total return does not reflect payment of a sales charge.
(Continued)
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
CLASS C SHARES
For the Periods ended May 31,
- ------------------------------------------------------------------------------------------------------------------------------------
2003 2002 2001 2000 (a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ......................... $ 11.54 $ 10.91 $ 9.98 $ 10.20
(Loss) income from investment operations
Net investment (loss) income ......................... (0.09) (0.10) 0.03 0.03
Net realized and unrealized (loss) gain on investments (0.44) 0.82 0.93 (0.22)
----------- ----------- ----------- -----------
Total from investment operations ................. (0.53) 0.72 0.96 (0.19)
----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ................................ 0.00 0.00 (0.03) (0.03)
Net realized gain from investment transactions ....... 0.00 (0.09) 0.00 0.00
----------- ----------- ----------- -----------
Total distributions .............................. 0.00 (0.09) (0.03) (0.03)
----------- ----------- ----------- -----------
Net asset value, end of period ............................... $ 11.01 $ 11.54 $ 10.91 $ 9.98
=========== =========== =========== ===========
Total return (c) ............................................. (4.59)% 6.69 % 9.64 % (1.86)%
=========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ................................. $ 5,634,827 $ 1,807,576 $ 987,119 $ 173,395
=========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 2.66 % 4.18 % 4.44 % 4.07 %(b)
After expense reimbursements and waived fees 2.62 % 2.71 % 1.41 % 1.00 %(b)
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees (1.31)% (2.66)% (2.62)% (1.77)%(b)
After expense reimbursements and waived fees (1.27)% (1.19)% 0.40 % 1.30 %(b)
Portfolio turnover rate 9.28 % 6.78 % 15.46 % 41.69 %
(a) For the period from November 16, 1999 (commencement of operations) to May 31, 2000.
(b) Annualized.
(c) Total return does not reflect payment of a sales charge.
See accompanying notes to financial statements
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 2003
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Wisdom Fund (the "Fund") is a diversified series of shares of
beneficial interest of the New Providence Investment Trust (the
"Trust"), an open-ended management investment company. The Trust was
organized on July 9, 1997 as a Massachusetts Business Trust and is
registered under the Investment Company Act of 1940, as amended (the
"Act"). The Fund began operations on February 16, 1999. The investment
objective of the Fund is to seek maximum total return consisting of any
combination of capital appreciation, realized and unrealized, and
income under the constantly varying market conditions. The Board of
Trustees of the Trust (the "Trustees") approved, on October 7, 1999, a
plan to authorize two new classes of shares designated as Class B
Shares and Class C Shares. On November 16, 1999, the Class B Shares and
Class C Shares became effective. The Fund has an unlimited number of
authorized shares, which are divided into four classes - Institutional
Class Shares, Investor Class Shares, Class B shares and Class C shares.
Each class of shares has equal rights as to assets of the Fund, and the
classes are identical except for differences in their sales charge
structures and ongoing distribution and service fees. Income, expenses
(other than distribution and service fees, which are not attributable
to the Institutional Class Shares), and realized and unrealized gains
or losses on investments are allocated to each class of shares based
upon its relative net assets. All classes have equal voting privileges,
except where otherwise required by law or when the Trustees determine
that the matter to be voted on affects only the interests of the
shareholders of a particular class. The following is a summary of
significant accounting policies followed by the Fund.
A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted
on a national market system are valued at 4:00 p.m., Eastern
Time. Other securities traded in the over-the-counter market
and listed securities for which no sale was reported on that
date are valued at the most recent bid price. Securities for
which market quotations are not readily available, if any, are
valued by using an independent pricing service or by following
procedures approved by the Trustees. Short-term investments
are valued at cost, which approximates value.
B. Federal Income Taxes - No provision has been made for federal
income taxes since substantially all taxable income has been
distributed to shareholders. It is the policy of the Fund to
comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies and to make
sufficient distributions of taxable income to relieve it from
all federal income taxes.
Net investment income (loss) and net realized gains (losses)
may differ for financial statement and income tax purposes
primarily because of losses incurred subsequent to October 31,
which are deferred for income tax purposes. The character of
distributions made during the year from net investment income
or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to
the timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the
income or realized gains were recorded by the Fund.
As a result of the Fund's operating net investment loss, a
reclassification adjustment of $212,866 has been made on the
statement of assets and liabilities to decrease accumulated
net investment loss, bringing it to zero, and decreasing
paid-in capital.
The Fund has capital loss carryforwards for federal income tax
purposes of $339,603, of which $174,661 expires in the year
2010 and $164,942 expires in the year 2011. It is the
intention of the Trustees not to distribute any realized gains
until the carryforwards have been offset or expire.
(Continued)
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 2003
C. Investment Transactions - Investment transactions are recorded
on trade date. Realized gains and losses are determined using
the specific identification cost method. Interest income is
recorded daily on an accrual basis. Dividend income is
recorded on the ex-dividend date.
D. Distributions to Shareholders - The Fund may declare dividends
quarterly, payable in March, June, September, and December on
a date selected by the Trustees. Distributions to shareholders
are recorded on the ex-dividend date. In addition,
distributions may be made annually in December out of net
realized gains through October 31 of that year. Distributions
to shareholders are recorded on the ex-dividend date. The Fund
may make a supplemental distribution subsequent to the end of
its fiscal year ending May 31.
E. Use of Estimates - The preparation of financial statements in
conformity with accounting principles generally accepted in
the United States of America requires management to make
estimates and assumptions that affect the amounts of assets,
liabilities, expenses and revenues reported in the financial
statements. Actual results could differ from those estimates.
NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, Atlanta Investment
Counsel, LLC (the "Advisor") provides the Fund with a continuous
program of supervision of the Fund's assets, including the composition
of its portfolio, and furnishes advice and recommendations with respect
to investments, investment policies, and the purchase and sale of
securities. As compensation for its services, the Advisor receives a
fee at the annual rate of 0.50% of the first $500 million of the Fund's
average daily net assets and 0.40% of all assets over $500 million.
The Advisor currently intends to voluntarily waive all or a portion of
its fee and to reimburse expenses of the Fund to limit total Fund
operating expenses to a maximum of 1.75% of the average daily net
assets of the Fund's Institutional Class Shares, a maximum of 2.00% of
the average daily net assets of the Fund's Investor Class Shares, and a
maximum of 2.75% of the average daily net assets of the Fund's Class B
Shares and Class C Shares. There can be no assurance that the foregoing
voluntary fee waivers or reimbursements will continue. The Advisor has
voluntarily waived a portion of its fee amounting to $9,452 and
reimbursed $624 of the operating expenses incurred by the Fund for the
year ended May 31, 2003.
The Fund's administrator, The Nottingham Company (the "Administrator"),
provides administrative services to and is generally responsible for
the overall management and day-to-day operations of the Fund pursuant
to an accounting and administrative agreement with the Trust. As
compensation for its services, the Administrator receives a fee at the
annual rate of 0.125% of the Fund's first $50 million of average daily
net assets, 0.100% of the next $50 million, and 0.075% of average daily
net assets over $100 million. The Administrator also receives a monthly
fee of $2,250 for accounting and record-keeping services for the
initial class of shares and $750 per month for each additional class of
shares, plus 0.01% of the average annual net assets. The contract with
the Administrator provides that the aggregate fees for the
aforementioned administration shall not be less than $2,000 per month.
The Administrator also receives the following to procure and pay the
custodian for the Trust: 0.02% on the first $100 million of the Fund's
net assets and 0.009% on all assets over $100 million, including
transaction fees, with a minimum annual fee of $4,800. The
Administrator also charges the Fund for certain expenses involved with
the daily valuation of portfolio securities.
(Continued)
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 2003
NC Shareholder Services, LLC (the "Transfer Agent") serves as the
Fund's transfer, dividend paying, and shareholder servicing agent. The
Transfer Agent maintains the records of each shareholder's account,
answers shareholder inquiries concerning accounts, processes purchases
and redemptions of the Fund's shares, acts as dividend and distribution
disbursing agent, and performs other shareholder servicing functions.
Capital Investment Group, Inc. (the "Distributor") serves as the Fund's
principal underwriter and distributor. The Distributor receives any
sales charges imposed on purchases of shares and re-allocates a portion
of such charges to dealers through whom the sale was made, if any. For
the year ended May 31, 2003, the Distributor retained sales charges in
the amount of $24,085.
Certain Trustees and officers of the Trust are also officers or
directors of the Advisor, the Distributor, or the Administrator.
NOTE 3 - DISTRIBUTION AND SERVICE FEES
The Trustees, including the Trustees who are not "interested persons"
of the Trust as defined in the Act, adopted distribution and service
plans pursuant to Rule 12b-1 of the Act (the "Plans") applicable to the
Investor Class Shares, Class B Shares, and Class C Shares. The Act
regulates the manner in which a regulated investment company may assume
costs of distributing and promoting the sales of its shares and
servicing of its shareholder accounts.
The Plans provide that the Fund may incur certain costs, which may not
exceed 0.25% per annum of the Investor Class Shares' average daily net
assets or 1.00% per annum of the Class B Shares or Class C Shares for
each year elapsed subsequent to adoption of the Plans, for payment to
the Distributor and others for items such as advertising expenses,
selling expenses, commissions, travel, or other expenses reasonably
intended to result in sales of Investor Class Shares, Class B Shares
and Class C Shares in the Fund or support servicing of those classes'
shareholder accounts. The Fund incurred $22,154, $87,376, and $35,604,
in distribution and service fees under the Plans with respect to
Investor Class Shares, Class B Shares, and Class C Shares,
respectively, for the year ended May 31, 2003.
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term investments,
aggregated $19,893,795 and $1,999,410, respectively, for the year ended
May 31, 2003.
(Continued)
WISDOM FUND
ADDITIONAL INFORMATION
May 31, 2003
(Unaudited)
INFORMATION ABOUT TRUSTEES AND OFFICERS (UNAUDITED)
The business and affairs of the Fund and the Trust are managed under the
direction of the Trustees. Information concerning the Trustee and officers of
the Trust and Fund is set forth below. Generally, each Trustee and officer
serves an indefinite term or until certain circumstances such as their
resignation, death, or otherwise as specified in the Trust's organizational
documents. Any Trustee may be removed at a meeting of shareholders by a vote
meeting the requirements of the Trust's organizational documents. The Statement
of Additional Information of the Fund includes additional information about the
Trustee and officers and is available, without charge, upon request by calling
the Fund toll-free at 1-800-773-3863. The address of each Trustee and officer,
unless otherwise indicated below, is 116 South Franklin Street, Rocky Mount,
North Carolina 27802. The Trustee received aggregate compensation of $3,000
during the fiscal year ended May 31, 2003 from the Fund for his services to the
Fund and Trust. The officers did not receive compensation from the Fund for
their services to the Fund and Trust.
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Number of
Portfolios
in Fund
Position(s) Length Complex
Name, Age, held with of Time Principal Occupation(s) Overseen by Other Directorships
and Address Fund/Trust Served During Past 5 Years Trustee Held by Trustee
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Independent Trustee
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Jack E. Brinson, 70 Trustee Since Retired; Previously, President of 1 Independent Trustee - Gardner
1997 Brinson Investment Co. (personal Lewis Investment Trust for the
investments) President of Brinson and three series of that trust;
Chevrolet, Inc. (auto dealership) The Nottingham Investment Trust
II for the eight series of that
trust; Hillman Capital
Management Investment Trust for
two series of that trust; and
de Leon Funds Trust for the
one series of that trust (all
registered investment
companies)
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Officers
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
C. Douglas Davenport, 52 President, Since President (since 1998) of Atlanta n/a n/a
Atlanta Investment Counsel, Treasurer, 2003 Investment Counsel, LLC (Advisor of
LLC Principal the Fund); previously, stockbroker
3717 Haddon Hall Road, NW Executive at Lehman Brothers
Suite 200 Officer,
Atlanta, GA 30327 and
Principal
Financial
Officer
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
C. Frank Watson III, 32 Secretary Since President and Chief Operating n/a n/a
1997 Officer (since 1999) of The
Nottingham Company
(Administrator to the Fund);
previously, Chief Operating Officer
of The Nottingham Company
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Julian G. Winters, 34 Assistant Since Vice President-Compliance n/a n/a
Treasurer 2003 Administration (since 1998) of The
and Nottingham Company; previously,
Assistant Fund Accountant at The Nottingham
Secretary Company
- ---------------------------- ----------- -------- ------------------------------------- ------------ -------------------------------
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281-1414
Tel: (212) 436-2000
Fax: (212) 436-5000
www.deloitte.com Deloitte
& Touche
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees of New Providence Investment Trust
and Shareholders of Wisdom Fund:
We have audited the accompanying statement of assets and liabilities of Wisdom
Fund (the "Fund") (a portfolio of New Providence Investment Trust), including
the portfolio of investments, as of May 31, 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 periods presented. These financial statements and financial
highlights are the responsibility of the Fund's 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 audit 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 May 31, 2003, by correspondence with the Fund's custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Wisdom
Fund as of May 31, 2003, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods presented, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Deloitte & Touche LLP
June 27, 2003
___________
Deloitte
Touche
Tohmatsu
___________
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________________________________________________________________________________
WISDOM FUND
________________________________________________________________________________
a series of the New Providence Investment Trust
This Report has been prepared for
shareholders and may be distributed to
others only if preceded or accompanied by
a current prospectus.
ITEM 2. Code of Ethics.
Not applicable.
ITEM 3. Audit Committee Financial Expert.
Not applicable.
ITEM 4. Principal Accountant Fees and Services.
Not applicable.
ITEMS 5-6. [Reserved]
ITEM 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
ITEM 8. [Reserved]
ITEM 9. Controls and Procedures.
(a) The Principal Executive Officer and the Principal Financial Officer has
concluded that the registrant's disclosure controls and procedures are
effective based on his evaluation of the disclosure controls and
procedures as of a date within 90 days of the filing of this report.
(b) There were no significant changes in the registrant's internal controls
or in other factors that could significantly affect these controls
subsequent to the date of their most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
ITEM 10. Exhibits.
(a)(1) Not applicable.
(a)(2) Certifications required by Item 10(a)(2) of Form N-CSR are filed
herewith as Exhibit (a)(2) attached as Exhibit 99.CERT.
(b) Certifications required by Item 10(b) of Form N-CSR are filed herewith
as Exhibit (b) attached as Exhibit 99.906CERT.
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.
New Providence Investment Trust
By: (Signature and Title) /s/ C. Douglas Davenport
________________________________
C. Douglas Davenport
President, Treasurer, Principal Executive
Officer and Principal Financial Officer
Date: July 21, 2003
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/ C. Douglas Davenport
________________________________
C. Douglas Davenport
President, Treasurer, Principal Executive
Officer and Principal Financial Officer
New Providence Investment Trust
Date: July 21, 2003