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
---------
New Providence Investment Trust
-------------------------------
(Exact name of registrant as specified in charter)
116 South Franklin Street, Post Office Box 69, Rocky Mount, North Carolina 27802
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
C. Frank Watson III
116 South Franklin Street, Post Office Box 69, Rocky Mount, North Carolina 27802
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 252-972-9922
------------
Date of fiscal year end: May 31, 2004
------------
Date of reporting period: May 31, 2004
------------
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, 2004
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
DISTRIBUTOR
Capital Investment Group, Inc.
P.O. Box 4365
Rocky Mount, NC 27803
1-800-773-3863
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.
- --------------------------------------------------------------------------------
Statements in this Annual Report that reflect projections or expectations of
future financial or economic performance of the Wisdom Fund ("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, without limitation, general
economic conditions such as inflation, recession and interest rates. Past
performance is not a guarantee of future results.
Investments in the Fund are subject to investment risks, including, without
limitation, market risk, investment style risk, investment advisor risk, market
sector risk, equity securities risk, portfolio turnover risk, and other risks as
set forth in the Fund's prospectus. Investment in the Fund is subject to
investment risks, including, without limitation, tracking risks (an investor in
the Fund should not expect that the investment performance of the Fund will be
able to track the investment performance of Berkshire Hathaway, Inc.),
non-diversified risk, industry concentration risk and other risks as set forth
in the Fund's prospectus. More information about these risks and other risks can
be found in the Fund's prospectus.
The performance information quoted in this annual report represents past
performance, which is not a guarantee of future results. Investment return and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance data quoted. An investor
may obtain performance data current to the most recent month-end by visiting
www.ncfunds.com.
An investor should consider the investment objectives, risks, and charges and
expenses of the Fund carefully before investing. The prospectus contains this
and other information about the Fund. A copy of the prospectus is available by
calling Shareholder Services at 1-877-892-4226. The prospectus should be read
carefully before investing.
- --------------------------------------------------------------------------------
WISDOM FUND
Annual Report to Shareholders
July 26, 2004
Dear fellow Shareholders,
For the fiscal year ended May 31, 2004, the Wisdom Fund ("Fund") returned 13.24%
for the Investor Class, 12.40% for the Class B, 12.44% for the Class C and
13.49% for the Institutional Class of shares. These returns are less than the
18.33% for the Standard and Poors 500 Total Return Index ("S&P 500 Index") for
the same period. The reason why the Fund under performed the S&P 500 Index is
primarily because the Fund held on average about 25% of its assets in short-term
treasury bills and money market instruments. Since the objective of the Fund is
to emulate both the public and private holdings of Berkshire Hathaway, Inc.
("Berkshire"), we try to keep our short term fixed income holdings as close as
possible to at the same percentage as Berkshire's.
Warren Buffett is not afraid to hold cash and holding cash is like holding an
option - the option to take advantage of volatility. The value of this option
rises when market volatility rises. Many market participants neglect this
important aspect of investing and stay fully invested at all times. When the
market drops, they cannot do anything but watch (or sell out at the bottom).
Being fully invested goes hand-in-hand with a focus on relative returns. We care
only about absolute returns, not relative returns. By investing only when we
believe stocks are selling at a large discount to value, we have benefited from
a cushion that Benjamin Graham, a Columbia University professor and known as the
"father of value investing," referred to as a "margin of safety."
While in college, Mr. Buffett read a book entitled "The Intelligent Investor" by
Mr. Graham. Mr. Graham believed the most critical piece of investment
information was a company's intrinsic value. He believed that the core task for
investors is to accurately calculate this value and then maintain the discipline
to buy a stock only when the price is below that calculated amount and that
buying below that calculated value gives you a margin of safety. Mr. Buffett
also believes that one should not even think about the direction of the market,
because it is impossible to predict with any consistency. (Source: "The Warren
Buffett Portfolio" by Robert Hagstrom)
The Stock Market
We believe the equity market has failed to fully benefit from the slight easing
in interest rate worries that have recently helped the Treasury market. There is
a nagging concern that profits will be in jeopardy because margins show signs of
peaking (albeit from record highs) even before labor costs have heated up.
Corporate guidance is much more supportive than in 2001-2003, but we believe
investors are wary having been so badly burned by shady accounting practices and
biased opinions from Wall Street. Thus, we see more upside in equities, once
investors move beyond interest rate worries and return to reacting to bullish
near-run profit trends. The downside of this forecast is that it could be the
final phase of the post-2002 rally, as the interest rate reprieve should prove
temporary.
The three drags on equities since early this year have recently improved, but
only slightly. Rate fears have calmed, oil prices have corrected a bit and the
dollar has stopped strengthening. We believe that the economic backdrop will
stay supportive and any deceleration in earnings growth in the next six months
should be modest, as higher selling prices will provide some offset to increased
input costs.
We believe the stock market's prospective returns are still attractive compared
to other asset classes. We also believe that the higher share valuations make
this a stockpicker's market. Values do exist, but they are becoming harder to
find. The rigors of our disciplined, bottom-up investment process, which focuses
on finding undervalued stocks, helps us to take advantage of market volatility
and to unearth value in today's market. We believe that our patient, long-term
approach, which helps us avoid over reacting to short term events, gives us that
extra edge. This is especially important when we have to select "proxies" for
the private holding of Berkshire. Berkshire has only purchased one stock in the
last ten months and that was HCA, Inc.* Following our investment guidelines, we
purchased the same stock as soon as the news became public.
Thank you for your continued investment and confidence in the Wisdom Fund. We
welcome your questions, thoughts and comments. You can reach us via email at
contactwisdom@wisdomfund.com.
C. Douglas Davenport, J.D. President of Atlanta Investment Counsel, LLC
Portfolio Manager of the Wisdom Fund
* HCA, Inc. represented 0.78% of the Fund's net assets as of May 31, 2004.
WISDOM FUND
INSTITUTIONAL CLASS SHARES
Performance Update - $25,000 Investment
For the period from February 16, 1999 (Commencement of Operations)
to May 31, 2004
[Graph Here]
- --------------------------------------------------------------------------------
Wisdom Fund - Institutional S&P 500 Total
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
8/31/2003 29,344 21,635
11/30/2003 30,678 22,815
2/29/2004 33,241 24,792
5/31/2004 33,005 24,365
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 Five Year (Commencement of
Operations)
----------------------- ------------------------ -----------------------
13.49 % 5.81 % 5.39 %
----------------------- ------------------------ -----------------------
>> The graph assumes an initial $25,000 investment at February 16, 1999
(commencement of operations). All dividends and distributions are
reinvested.
>> At May 31, 2004, the value of the Fund's Institutional Class Shares would
have grown to $33,005 - a cumulative total investment return of 32.02%
since February 16, 1999.
>> At May 31, 2004, the value of a similar investment in the S&P 500 Total
Return Index would have decreased to $24,365 - a cumulative total
investment return of (2.54)% since February 16, 1999.
The performance information quoted above represents past performance, which is
not a guarantee of future results. Investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Current performance may be lower or
higher than the performance data quoted. An investor may obtain performance data
current to the most recent month-end by visiting www.ncfunds.com.
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, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 74.30%
Apparel - 0.24%
Nike, Inc. .............................................................. 1,600 $ 113,840
------------
Banks - 2.84%
M & T Bank Corporation .................................................. 2,030 183,857
SunTrust Banks, Inc. .................................................... 1,100 71,588
Wells Fargo Company ..................................................... 18,922 1,112,614
------------
1,368,059
------------
Beverages - 7.40%
The Coca-Cola Company ................................................... 69,430 3,565,231
------------
Building Materials - 0.64%
(a)American Standard Companies, Inc. ....................................... 8,190 307,289
------------
Chemicals - 1.14%
The Sherwin-Williams Company ............................................ 13,970 549,021
------------
Commercial Services - 3.10%
Cendant Corporation ..................................................... 9,000 206,460
H&R Block, Inc. ......................................................... 3,320 162,182
(a)Iron Mountain Incorporated .............................................. 5,100 225,777
Moody's Corporation ..................................................... 13,705 896,170
------------
1,490,589
------------
Cosmetics & Personal Care - 2.81%
The Gillette Company .................................................... 31,380 1,352,164
------------
Diversified Financial Services - 3.90%
American Express Company ................................................ 37,050 1,878,435
------------
Electric - 1.33%
FPL Group, Inc. ......................................................... 5,865 373,894
(a)Reliant Energy, Inc. .................................................... 27,000 267,570
------------
641,464
------------
Food - 2.57%
Cadbury Schweppes PLC ................................................... 6,500 224,250
Sysco Corporation ....................................................... 18,166 681,225
WM Wrigley Jr. Company .................................................. 5,300 332,840
------------
1,238,315
------------
Health Care Services - 0.78%
(a)Five Star Quality Care, Inc. ............................................ 4 15
HCA Inc. ................................................................ 9,700 376,651
------------
376,666
------------
(Continued)
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Holding Companies - Diversified - 1.06%
Leucadia National Corporation ............................................. 10,300 $ 511,910
------------
Home Builders - 0.13%
(a)Champion Enterprises Inc. ................................................. 6,700 62,645
------------
Home Furnishings - 0.36%
Ethan Allen Interiors, Inc. ............................................... 4,430 172,637
------------
Insurance - Multiline - 17.57%
Ambac Financial Group, Inc. ............................................... 8,380 579,477
American International Group, Inc. ........................................ 32,150 2,356,595
Aon Corporation ........................................................... 6,000 165,780
Everest Re Group, Ltd. .................................................... 20,015 1,638,228
PartnerRe Ltd. ............................................................ 11,005 614,959
Platinum Underwriters Holding Limited ..................................... 2,000 62,200
RenaissanceRe Holdings Ltd. ............................................... 36,978 1,954,287
The Allstate Corporation .................................................. 24,750 1,088,505
------------
8,460,031
------------
Insurance - Property & Casualty - 16.01%
ACE Limited ............................................................... 15,547 640,225
Fidelity National Financial, Inc. ......................................... 23,463 881,974
Infinity Property & Casualty Corporation .................................. 6,900 215,280
(a)Markel Corporation ........................................................ 7,200 2,070,000
(a)ProAssurance Corporation .................................................. 6,900 228,183
SAFECO Corporation ........................................................ 6,000 251,700
The Chubb Corporation ..................................................... 15,400 1,037,498
The Progressive Corporation ............................................... 9,360 802,807
Wesco Financial Corporation ............................................... 386 145,503
White Mountains Insurance Group Ltd. ...................................... 2,800 1,435,000
------------
7,708,170
------------
Media - 2.22%
Gannett Company, Inc. ..................................................... 1,698 149,084
The Washington Post Company ............................................... 970 922,228
------------
1,071,312
------------
Miscellaneous Manufacturing - 0.31%
Dover Corporation ......................................................... 3,800 148,048
------------
(Continued)
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Oil & Gas - 1.22%
Exxon Mobil Corporation ............................................... 7,000 $ 302,750
PetroChina Company Limited ............................................ 6,000 285,000
------------
587,750
------------
Packaging & Containers - 0.44%
(a)Sealed Air Corporation ................................................ 4,252 213,748
------------
Pipelines - 1.67%
Kinder Morgan, Inc. ................................................... 13,400 804,000
------------
Real Estate Investment Trusts - 0.38%
Tanger Factory Outlet Centers, Inc. ................................... 2,735 106,173
The Town & Country Trust .............................................. 3,156 76,785
------------
182,958
------------
Retail - 1.57%
Brown Shoe Company, Inc. .............................................. 3,300 136,389
(a)P.F. Chang's China Bistro, Inc. ....................................... 1,000 45,260
Wendy's International, Inc. ........................................... 5,150 194,619
(a)Yum! Brands, Inc. ..................................................... 5,150 193,125
(a)Zale Corporation ...................................................... 3,400 185,538
------------
754,931
------------
Software - 1.45%
Automatic Data Processing, Inc. ....................................... 7,200 319,896
First Data Corporation ................................................ 8,770 379,653
------------
699,549
------------
Textiles - 3.16%
(a)Mohawk Industries, Inc. ............................................... 20,495 1,521,549
------------
Total Common Stocks (Cost $29,271,336) ........................................................ 35,780,311
------------
MUTUAL FUNDS - 4.00%
PIMCO High Yield Fund ...................................................... 188,453 1,762,036
Templeton Global Income Fund Inc. .......................................... 20,200 164,428
------------
Total Mutual Funds (Cost $1,901,439) .......................................................... 1,926,464
------------
(Continued)
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANIES - 4.99%
Evergreen Institutional Municipal Money Market Fund ................................ 240,067 $ 240,067
Merrimac Cash Series Fund .......................................................... 2,160,598 2,160,598
------------
Total Investment Companies (Cost $2,400,665) .................................................. 2,400,665
------------
Total Value of Investments (Cost $33,573,440 (b)) ........................................ 83.29 % $ 40,107,440
Other Assets Less Liabilities ............................................................ 16.71 % 8,045,455
--------- ------------
Net Assets ......................................................................... 100.00 % $ 48,152,895
========= ============
(a) Non-income producing investment.
(b) Aggregate cost for federal income tax purposes is $33,574,312. Unrealized appreciation/(depreciation) of investments
for federal income tax purposes is as follows:
Unrealized appreciation ............................................................ $ 6,596,391
Unrealized depreciation ............................................................ (63,263)
------------
Net unrealized appreciation ............................................. $ 6,533,128
============
See accompanying notes to financial statements
WISDOM FUND
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2004
ASSETS
Investments, at value (cost $33,573,440) ......................................................... $ 40,107,440
Cash ............................................................................................. 7,931,538
Income receivable ................................................................................ 56,999
Receivable for fund shares sold .................................................................. 109,178
Other assets ..................................................................................... 13,756
------------
Total assets ................................................................................ 48,218,911
------------
LIABILITIES
Accrued expenses ................................................................................. 65,880
Payable for fund shares redeemed ................................................................. 136
------------
Total liabilities ........................................................................... 66,016
------------
NET ASSETS ............................................................................................. $ 48,152,895
============
NET ASSETS CONSIST OF
Paid-in capital .................................................................................. $ 40,919,006
Undistributed net realized gain on investments ................................................... 699,889
Net unrealized appreciation on investments ....................................................... 6,534,000
------------
$ 48,152,895
============
INSTITUTIONAL CLASS SHARES
Net asset value, redemption and offering price per share
($4,811,294 / 381,177 shares) ............................................................... $ 12.62
============
INVESTOR CLASS SHARES
Net asset value, redemption and offering price per share
($19,788,825 / 1,574,345 shares) ............................................................ $ 12.57
============
Maximum offering price per share (100 / 94.25 of $12.57) ......................................... $ 13.34
============
CLASS B SHARES
Net asset value, redemption and offering price per share
($14,870,965 / 1,206,269 shares) ............................................................ $ 12.33
============
CLASS C SHARES
Net asset value, redemption and offering price per share
($8,681,811 / 701,203 shares) ............................................................... $ 12.38
============
See accompanying notes to financial statements
WISDOM FUND
STATEMENT OF OPERATIONS
Year ended May 31, 2004
NET INVESTMENT LOSS
Income
Interest ...................................................................................... $ 39,091
Dividends ..................................................................................... 574,457
------------
Total income .............................................................................. 613,548
------------
Expenses
Investment advisory fees (note 2) ............................................................. 214,245
Fund administration fees (note 2) ............................................................. 53,561
Distribution and service fees - Investor Class Shares (note 3) ................................ 43,316
Distribution and service fees - Class B Shares (note 3) ....................................... 140,978
Distribution and service fees - Class C Shares (note 3) ....................................... 69,724
Custody fees (note 2) ......................................................................... 12,949
Registration and filing administration fees (note 2) .......................................... 26,381
Fund accounting fees (note 2) ................................................................. 58,285
Audit and tax preparation fees ................................................................ 14,150
Legal fees .................................................................................... 28,671
Securities pricing fees ....................................................................... 5,560
Shareholder recordkeeping fees (note 2) ....................................................... 49,178
Shareholder servicing expenses ................................................................ 10,824
Registration and filing expenses .............................................................. 46,732
Printing expenses ............................................................................. 13,014
Trustee fees and meeting expenses ............................................................. 4,422
Other operating expenses ...................................................................... 14,909
------------
Total expenses ............................................................................ 806,899
------------
Net investment loss .................................................................. (193,351)
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions ..................................................... 1,219,133
Change in unrealized appreciation on investments ................................................... 4,101,451
------------
Net realized and unrealized gain on investments ............................................... 5,320,584
------------
Net increase in net assets resulting from operations ...................................... $ 5,127,233
============
See accompanying notes to financial statements
WISDOM FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Years ended May 31,
-------------------------------------------------
2004 2003
--------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment loss ................................................ $ (193,351) $ (212,866)
Net realized gain (loss) from investment transactions .............. 1,219,133 (179,255)
Change in unrealized appreciation on investments ................... 4,101,451 1,023,603
------------ ------------
Net increase in net assets resulting from operations .......... 5,127,233 631,482
------------ ------------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) 6,541,607 23,073,111
------------ ------------
Total increase in net assets ........................... 11,668,840 23,704,593
NET ASSETS
Beginning of year ...................................................... 36,484,055 12,779,462
------------ ------------
End of year ............................................................ $ 48,152,895 $ 36,484,055
============ ============
(a) A summary of capital share activity follows:
------------------------------------------------------------
2004 2003
Shares Value Shares Value
-------------------------------------------------------------
- ----------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
- ----------------------------------------------------------------------
Shares sold .......................................................... 50,016 $ 602,397 59,533 $ 629,968
Shares redeemed ...................................................... (49,270) (570,625) (19,266) (200,123)
------------ ------------ ------------ ------------
Net increase .................................................... 746 $ 31,772 40,267 $ 429,845
============ ============ ============ ============
- ----------------------------------------------------------------------
INVESTOR CLASS SHARES
- ----------------------------------------------------------------------
Shares sold .......................................................... 599,999 $ 7,013,977 1,186,944 $ 12,484,955
Shares redeemed ...................................................... (271,446) (3,202,206) (178,198) (1,844,784)
------------ ------------ ------------ ------------
Net increase .................................................... 328,553 $ 3,811,771 1,008,746 $ 10,640,171
============ ============ ============ ============
- ----------------------------------------------------------------------
CLASS B SHARES
- ----------------------------------------------------------------------
Shares sold .......................................................... 222,576 $ 2,562,201 869,053 $ 9,061,351
Shares redeemed ...................................................... (183,266) (2,123,336) (76,569) (796,003)
------------ ------------ ------------ ------------
Net increase .................................................... 39,310 $ 438,865 792,484 $ 8,265,348
============ ============ ============ ============
- ----------------------------------------------------------------------
CLASS C SHARES
- ----------------------------------------------------------------------
Shares sold .......................................................... 227,578 $ 2,712,247 401,147 $ 4,218,789
Shares redeemed ...................................................... (38,040) (453,048) (46,073) (481,042)
------------ ------------ ------------ ------------
Net increase .................................................... 189,538 $ 2,259,199 355,074 $ 3,737,747
============ ============ ============ ============
- ----------------------------------------------------------------------
FUND SUMMARY
- ----------------------------------------------------------------------
Shares sold .......................................................... 1,100,169 $ 12,890,822 2,516,677 $ 26,395,063
Shares redeemed ...................................................... (542,022) (6,349,215) (320,106) (3,321,952)
------------ ------------ ------------ ------------
Net increase .................................................... 558,147 $ 6,541,607 2,196,571 $ 23,073,111
============ ============ ============ ============
See accompanying notes to financial statements
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Year)
INSTITUTIONAL CLASS SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
For the Years ended May 31,
2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ...................... $ 11.12 $ 11.54 $ 10.80 $ 9.90 $ 9.91
Income (loss) from investment operations
Net investment income (loss) ................. 0.02 (0.03) (0.02) 0.17 0.18
Net realized and unrealized gain (loss) on
investments.............................. 1.48 (0.39) 0.85 0.90 (0.01)
----------- ----------- ----------- ----------- -----------
Total from investment operations ......... 1.50 (0.42) 0.83 1.07 0.17
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ........................ 0.00 0.00 0.00 (0.17) (0.18)
Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions ...................... 0.00 0.00 (0.09) (0.17) (0.18)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year ............................ $ 12.62 $ 11.12 $ 11.54 $ 10.80 $ 9.90
=========== =========== =========== =========== ===========
Total return ............................................ 13.49 % (3.64)% 7.78 % 10.70 % 1.64 %
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of year ........................... $ 4,811,294 $ 4,228,602 $ 3,924,962 $ 3,164,763 $ 2,710,312
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.29 % 1.67 % 3.19 % 3.30 % 5.05 %
After expense reimbursements and waived fees 1.29 % 1.62 % 1.71 % 0.26 % 0.00 %
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees 0.14 % (0.30)% (1.65)% (1.47)% (2.87)%
After expense reimbursements and waived fees 0.14 % (0.25)% (0.17)% 1.57 % 2.18 %
Portfolio turnover rate 20.41 % 9.28 % 6.78 % 15.46 % 41.69 %
(Continued)
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Year)
INVESTOR CLASS SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
For the Years ended May 31,
2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ....................... $ 11.10 $ 11.56 $ 10.84 $ 9.93 $ 9.92
Income (loss) from investment operations
Net investment (loss) income .................. (0.01) (0.04) (0.04) 0.13 0.12
Net realized and unrealized gain (loss) on
investments............................... 1.48 (0.42) 0.85 0.91 0.01
----------- ----------- ----------- ----------- -----------
Total from investment operations .......... 1.47 (0.46) 0.81 1.04 0.13
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ......................... 0.00 0.00 0.00 (0.13) (0.12)
Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions ....................... 0.00 0.00 (0.09) (0.13) (0.12)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year ............................. $ 12.57 $ 11.10 $ 11.56 $ 10.84 $ 9.93
=========== =========== =========== =========== ===========
Total return (a) ......................................... 13.24 % (3.98)% 7.57 % 10.41 % 1.36 %
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of year ............................ $19,788,825 $13,824,651 $ 2,739,727 $ 1,253,515 $ 656,212
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.54 % 1.91 % 3.39 % 3.86 % 4.29 %
After expense reimbursements and waived fees 1.54 % 1.87 % 1.96 % 0.68 % 0.25 %
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees (0.11)% (0.56)% (1.91)% (1.97)% (1.96)%
After expense reimbursements and waived fees (0.11)% (0.53)% (0.48)% 1.21 % 2.08 %
Portfolio turnover rate 20.41 % 9.28 % 6.78 % 15.46 % 41.69 %
(a) 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 Years ended May 31,
2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ..................... $ 10.97 $ 11.50 $ 10.87 $ 9.97 $ 10.20
Income (loss) from investment operations
Net investment (loss) income .................. (0.10) (0.10) (0.07) 0.06 0.04
Net realized and unrealized gain (loss) on
investments ............................... 1.46 (0.43) 0.79 0.90 (0.23)
----------- ----------- ----------- ----------- -----------
Total from investment operations .......... 1.36 (0.53) 0.72 0.96 (0.19)
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ......................... 0.00 0.00 0.00 (0.06) (0.04)
Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions ....................... 0.00 0.00 (0.09) (0.06) (0.04)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ........................... $ 12.33 $ 10.97 $ 11.50 $ 10.87 $ 9.97
=========== =========== =========== =========== ===========
Total return (c) ......................................... 12.40 % (4.61)% 6.72 % 9.60 % (1.85)%
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period .......................... $14,870,965 $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 2.29 % 2.66 % 4.14 % 4.33 % 4.09 %(b)
After expense reimbursements and waived fees 2.29 % 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 (0.86)% (1.31)% (2.66)% (2.50)% (1.78)%(b)
After expense reimbursements and waived fees (0.86)% (1.27)% (1.23)% 0.56 % 1.31 %(b)
Portfolio turnover rate 20.41 % 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 Years ended May 31,
2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period .................... $ 11.01 $ 11.54 $ 10.91 $ 9.98 $ 10.20
Income (loss) from investment operations
Net investment (loss) income ................. (0.09) (0.09) (0.10) 0.03 0.03
Net realized and unrealized gain (loss) on
investments .............................. 1.46 (0.44) 0.82 0.93 (0.22)
----------- ----------- ----------- ----------- -----------
Total from investment operations ......... 1.37 (0.53) 0.72 0.96 (0.19)
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ........................ 0.00 0.00 0.00 (0.03) (0.03)
Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions ...................... 0.00 0.00 (0.09) (0.03) (0.03)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period .......................... $ 12.38 $ 11.01 $ 11.54 $ 10.91 $ 9.98
=========== =========== =========== =========== ===========
Total return (c) ........................................ 12.44 % (4.59)% 6.69 % 9.64 % (1.86)%
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ......................... $ 8,681,811 $ 5,634,827 $ 1,807,576 $ 987,119 $ 173,395
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 2.29 % 2.66 % 4.18 % 4.44 % 4.07 %(b)
After expense reimbursements and waived fees 2.29 % 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 (0.86)% (1.31)% (2.66)% (2.62)% (1.77)%(b)
After expense reimbursements and waived fees (0.86)% (1.27)% (1.19)% 0.40 % 1.30 %(b)
Portfolio turnover rate 20.41 % 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, 2004
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 $106,120 has been charged to
undistributed net realized gains, $87,231 has been charged to paid-in
capital, and accumulated net investment loss has been credited
$193,351, bringing it to zero.
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.
(Continued)
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 2004
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, Investor Class Shares, Class B Shares,
and Class C Shares. There can be no assurance that the foregoing voluntary
fee waivers or reimbursements will continue.
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 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 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 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, which are believed to be immaterial in
amount.
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. The
Transfer Agent is compensated for its services based upon a $15 fee per
shareholder per year, subject to a minimum fee of $1,500 per month, plus
$500 per month for each additional class of shares. In addition, the
Transfer Agent shall be entitled to reimbursement of actual out-of-pocket
expenses incurred by the Transfer Agent on behalf of the Trust or the Fund.
(Continued)
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 2004
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, 2004, the Distributor retained sales charges in the amount of
$17,739.
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 $43,316, $140,978, and $69,724, 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, 2004.
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, excluding long-term U.S. government
securities and short-term obligations, aggregated $13,296,089 and
$7,840,435, respectively, for the year ended May 31, 2004. Purchases and
sales of long-term U.S. government securities aggregated $58,971,025 and
$67,011,000, respectively, for the year ended May 31, 2004.
(Continued)
WISDOM FUND
ADDITIONAL INFORMATION
May 31, 2004
(Unaudited)
PROXY VOTING POLICY
A copy of the Trust's Proxy Voting and Disclosure Policy and the Adviser's Proxy
Voting and Disclosure Policy are included as Appendix B to the Fund's Statement
of Additional Information and is available, without charge, upon request, by
calling 1-800-773-3863. Effective with the 12-month period ended June 30, 2004,
the Fund will file Form N-PX stating how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30 within
60 days after the end of such period. Information regarding how the Fund voted
proxies as set forth in its most recent filing of Form N-PX will be available
(i) without charge, upon request, by calling the Fund at 1-800-773-3863; and
(ii) on the SEC's website at http://www.sec.gov.
INFORMATION ABOUT TRUSTEES AND OFFICERS
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 27804. The Trustee received aggregate compensation of $3,250
during the fiscal year ended May 31, 2004 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, Address, held with of Time Principal Occupation(s) Overseen by Other Directorships Held by
And Age Fund/Trust Served During Past 5 Years Trustee Trustee
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
Independent Trustee
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
Jack E. Brinson, 72 Trustee Since Retired; Previously, President of 1 Independent Trustee - Gardner
1997 Brinson Investment Co. (personal Lewis Investment Trust for the
investments) and President of three series of that trust; Th
Brinson Chevrolet, Inc. (auto Nottingham Investment Trust II
dealership) for the eight series of that
trust; Hillman Capital
Management Investment Trust
for the two series of that
trust; Trust for the one
series of that trust;
MurphyMorris Investment
Trust for the one series of
that trust; Merit Advisors
Investment Trust for the
one series of that trust;
Merit Advisors Investment
Trust II for the one series of
that trust; and de Leon Funds
Trust for the one series of
that trust (all registered
investment companies)
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
(Continued)
WISDOM FUND
ADDITIONAL INFORMATION
May 31, 2004
(Unaudited)
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
Number of
Portfolios
in Fund
Position(s) Length Complex
Name, Address, held with of Time Principal Occupation(s) Overseen by Other Directorships Held by
And Age Fund/Trust Served During Past 5 Years Trustee Trustee
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
Officers
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
C. Douglas Davenport, 53 President, Since President (since 1998) of Atlanta n/a n/a
Atlanta Investment Counsel,LLC Treasurer, 2003 Investment Counsel, LLC (Adviser of
3717 Haddon Hall Road, NW Principal the Fund); previously, stockbroker
Suite 200 Executive at Lehman Brothers
Atlanta, GA 30327 Officer,
and
Principal
Financial
Officer
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
C. Frank Watson III, 33 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, 35 Assistant Since Vice President-Compliance n/a n/a
Treasurer 2003 Administration (since 1998) of The
and Nottingham Company.
Assistant
Secretary
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
Deloitte
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281-1414
Tel: (212) 436-2000
Fax: (212) 436-5000
www.deloitte.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of New Providence Investment Trust
and the 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 schedule of investments, as of May 31, 2004, and the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the 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 the standards of the Public Company
Accounting Oversight Board (United States). 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, 2004, 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, 2004, 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 five years in the period
then ended, in conformity with accounting principles generally accepted in the
United States of America.
/s/ Deloitte & Touche LLP
July 19,2004
Member of
Deloitte Touche Tohmatsu
________________________________________________________________________________
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, 2004
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
DISTRIBUTOR
Capital Investment Group, Inc.
P.O. Box 4365
Rocky Mount, NC 27803
1-800-773-3863
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.
- --------------------------------------------------------------------------------
Statements in this Annual Report that reflect projections or expectations of
future financial or economic performance of the Wisdom Fund ("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, without limitation, general
economic conditions such as inflation, recession and interest rates. Past
performance is not a guarantee of future results.
Investments in the Fund are subject to investment risks, including, without
limitation, market risk, investment style risk, investment advisor risk, market
sector risk, equity securities risk, portfolio turnover risk, and other risks as
set forth in the Fund's prospectus. Investment in the Fund is subject to
investment risks, including, without limitation, tracking risks (an investor in
the Fund should not expect that the investment performance of the Fund will be
able to track the investment performance of Berkshire Hathaway, Inc.),
non-diversified risk, industry concentration risk and other risks as set forth
in the Fund's prospectus. More information about these risks and other risks can
be found in the Fund's prospectus.
The performance information quoted in this annual report represents past
performance, which is not a guarantee of future results. Investment return and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance data quoted. An investor
may obtain performance data current to the most recent month-end by visiting
www.ncfunds.com.
An investor should consider the investment objectives, risks, and charges and
expenses of the Fund carefully before investing. The prospectus contains this
and other information about the Fund. A copy of the prospectus is available by
calling Shareholder Services at 1-877-892-4226. The prospectus should be read
carefully before investing.
- --------------------------------------------------------------------------------
WISDOM FUND
Annual Report to Shareholders
July 26, 2004
Dear fellow Shareholders,
For the fiscal year ended May 31, 2004, the Wisdom Fund ("Fund") returned 13.24%
for the Investor Class, 12.40% for the Class B, 12.44% for the Class C and
13.49% for the Institutional Class of shares. These returns are less than the
18.33% for the Standard and Poors 500 Total Return Index ("S&P 500 Index") for
the same period. The reason why the Fund under performed the S&P 500 Index is
primarily because the Fund held on average about 25% of its assets in short-term
treasury bills and money market instruments. Since the objective of the Fund is
to emulate both the public and private holdings of Berkshire Hathaway, Inc.
("Berkshire"), we try to keep our short term fixed income holdings as close as
possible to at the same percentage as Berkshire's.
Warren Buffett is not afraid to hold cash and holding cash is like holding an
option - the option to take advantage of volatility. The value of this option
rises when market volatility rises. Many market participants neglect this
important aspect of investing and stay fully invested at all times. When the
market drops, they cannot do anything but watch (or sell out at the bottom).
Being fully invested goes hand-in-hand with a focus on relative returns. We care
only about absolute returns, not relative returns. By investing only when we
believe stocks are selling at a large discount to value, we have benefited from
a cushion that Benjamin Graham, a Columbia University professor and known as the
"father of value investing," referred to as a "margin of safety."
While in college, Mr. Buffett read a book entitled "The Intelligent Investor" by
Mr. Graham. Mr. Graham believed the most critical piece of investment
information was a company's intrinsic value. He believed that the core task for
investors is to accurately calculate this value and then maintain the discipline
to buy a stock only when the price is below that calculated amount and that
buying below that calculated value gives you a margin of safety. Mr. Buffett
also believes that one should not even think about the direction of the market,
because it is impossible to predict with any consistency. (Source: "The Warren
Buffett Portfolio" by Robert Hagstrom)
The Stock Market
We believe the equity market has failed to fully benefit from the slight easing
in interest rate worries that have recently helped the Treasury market. There is
a nagging concern that profits will be in jeopardy because margins show signs of
peaking (albeit from record highs) even before labor costs have heated up.
Corporate guidance is much more supportive than in 2001-2003, but we believe
investors are wary having been so badly burned by shady accounting practices and
biased opinions from Wall Street. Thus, we see more upside in equities, once
investors move beyond interest rate worries and return to reacting to bullish
near-run profit trends. The downside of this forecast is that it could be the
final phase of the post-2002 rally, as the interest rate reprieve should prove
temporary.
The three drags on equities since early this year have recently improved, but
only slightly. Rate fears have calmed, oil prices have corrected a bit and the
dollar has stopped strengthening. We believe that the economic backdrop will
stay supportive and any deceleration in earnings growth in the next six months
should be modest, as higher selling prices will provide some offset to increased
input costs.
We believe the stock market's prospective returns are still attractive compared
to other asset classes. We also believe that the higher share valuations make
this a stockpicker's market. Values do exist, but they are becoming harder to
find. The rigors of our disciplined, bottom-up investment process, which focuses
on finding undervalued stocks, helps us to take advantage of market volatility
and to unearth value in today's market. We believe that our patient, long-term
approach, which helps us avoid over reacting to short term events, gives us that
extra edge. This is especially important when we have to select "proxies" for
the private holding of Berkshire. Berkshire has only purchased one stock in the
last ten months and that was HCA, Inc.* Following our investment guidelines, we
purchased the same stock as soon as the news became public.
Thank you for your continued investment and confidence in the Wisdom Fund. We
welcome your questions, thoughts and comments. You can reach us via email at
contactwisdom@wisdomfund.com.
C. Douglas Davenport, J.D. President of Atlanta Investment Counsel, LLC
Portfolio Manager of the Wisdom Fund
* HCA, Inc. represented 0.78% of the Fund's net assets as of May 31, 2004.
WISDOM FUND
INVESTOR CLASS SHARES
Performance Update - $10,000 Investment
For the period from February 16, 1999 (Commencement of Operations)
to May 31, 2004
[Graph Here]
- --------------------------------------------------------------------------------
Wisdom Fund - Investor S&P 500 Total
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
8/31/2003 10,920 8,654
11/30/2003 11,417 9,126
2/29/2004 12,364 9,917
5/31/2004 12,266 9,746
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 Five Year (Commencement
Of Operations)
- ------------------------------ -------------- --------------- ------------------
No Sales Load 13.24 % 5.53 % 5.11 %
- ------------------------------ -------------- --------------- ------------------
5.75% Maximum Sales Load 6.73 % 4.29 % 3.94 %
- ------------------------------ -------------- --------------- ------------------
>> 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, 2004, the value of the Fund's Investor Class Shares would have
increased to $12,266 - a cumulative total investment return of 22.66% 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 $13,015 -
a cumulative total investment return of 30.15% since February 16, 1999. The
sales load may be reduced or eliminated for larger purchases.
>> At May 31, 2004, the value of a similar investment in the S&P 500 Total
Return Index would have decreased to $9,746 - a cumulative total investment
return of (2.54)% since February 16, 1999.
The performance information quoted above represents past performance, which is
not a guarantee of future results. Investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Current performance may be lower or
higher than the performance data quoted. An investor may obtain performance data
current to the most recent month-end by visiting www.ncfunds.com.
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, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 74.30%
Apparel - 0.24%
Nike, Inc. .............................................................. 1,600 $ 113,840
------------
Banks - 2.84%
M & T Bank Corporation .................................................. 2,030 183,857
SunTrust Banks, Inc. .................................................... 1,100 71,588
Wells Fargo Company ..................................................... 18,922 1,112,614
------------
1,368,059
------------
Beverages - 7.40%
The Coca-Cola Company ................................................... 69,430 3,565,231
------------
Building Materials - 0.64%
(a)American Standard Companies, Inc. ....................................... 8,190 307,289
------------
Chemicals - 1.14%
The Sherwin-Williams Company ............................................ 13,970 549,021
------------
Commercial Services - 3.10%
Cendant Corporation ..................................................... 9,000 206,460
H&R Block, Inc. ......................................................... 3,320 162,182
(a)Iron Mountain Incorporated .............................................. 5,100 225,777
Moody's Corporation ..................................................... 13,705 896,170
------------
1,490,589
------------
Cosmetics & Personal Care - 2.81%
The Gillette Company .................................................... 31,380 1,352,164
------------
Diversified Financial Services - 3.90%
American Express Company ................................................ 37,050 1,878,435
------------
Electric - 1.33%
FPL Group, Inc. ......................................................... 5,865 373,894
(a)Reliant Energy, Inc. .................................................... 27,000 267,570
------------
641,464
------------
Food - 2.57%
Cadbury Schweppes PLC ................................................... 6,500 224,250
Sysco Corporation ....................................................... 18,166 681,225
WM Wrigley Jr. Company .................................................. 5,300 332,840
------------
1,238,315
------------
Health Care Services - 0.78%
(a)Five Star Quality Care, Inc. ............................................ 4 15
HCA Inc. ................................................................ 9,700 376,651
------------
376,666
------------
(Continued)
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Holding Companies - Diversified - 1.06%
Leucadia National Corporation ............................................. 10,300 $ 511,910
------------
Home Builders - 0.13%
(a)Champion Enterprises Inc. ................................................. 6,700 62,645
------------
Home Furnishings - 0.36%
Ethan Allen Interiors, Inc. ............................................... 4,430 172,637
------------
Insurance - Multiline - 17.57%
Ambac Financial Group, Inc. ............................................... 8,380 579,477
American International Group, Inc. ........................................ 32,150 2,356,595
Aon Corporation ........................................................... 6,000 165,780
Everest Re Group, Ltd. .................................................... 20,015 1,638,228
PartnerRe Ltd. ............................................................ 11,005 614,959
Platinum Underwriters Holding Limited ..................................... 2,000 62,200
RenaissanceRe Holdings Ltd. ............................................... 36,978 1,954,287
The Allstate Corporation .................................................. 24,750 1,088,505
------------
8,460,031
------------
Insurance - Property & Casualty - 16.01%
ACE Limited ............................................................... 15,547 640,225
Fidelity National Financial, Inc. ......................................... 23,463 881,974
Infinity Property & Casualty Corporation .................................. 6,900 215,280
(a)Markel Corporation ........................................................ 7,200 2,070,000
(a)ProAssurance Corporation .................................................. 6,900 228,183
SAFECO Corporation ........................................................ 6,000 251,700
The Chubb Corporation ..................................................... 15,400 1,037,498
The Progressive Corporation ............................................... 9,360 802,807
Wesco Financial Corporation ............................................... 386 145,503
White Mountains Insurance Group Ltd. ...................................... 2,800 1,435,000
------------
7,708,170
------------
Media - 2.22%
Gannett Company, Inc. ..................................................... 1,698 149,084
The Washington Post Company ............................................... 970 922,228
------------
1,071,312
------------
Miscellaneous Manufacturing - 0.31%
Dover Corporation ......................................................... 3,800 148,048
------------
(Continued)
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Oil & Gas - 1.22%
Exxon Mobil Corporation ............................................... 7,000 $ 302,750
PetroChina Company Limited ............................................ 6,000 285,000
------------
587,750
------------
Packaging & Containers - 0.44%
(a)Sealed Air Corporation ................................................ 4,252 213,748
------------
Pipelines - 1.67%
Kinder Morgan, Inc. ................................................... 13,400 804,000
------------
Real Estate Investment Trusts - 0.38%
Tanger Factory Outlet Centers, Inc. ................................... 2,735 106,173
The Town & Country Trust .............................................. 3,156 76,785
------------
182,958
------------
Retail - 1.57%
Brown Shoe Company, Inc. .............................................. 3,300 136,389
(a)P.F. Chang's China Bistro, Inc. ....................................... 1,000 45,260
Wendy's International, Inc. ........................................... 5,150 194,619
(a)Yum! Brands, Inc. ..................................................... 5,150 193,125
(a)Zale Corporation ...................................................... 3,400 185,538
------------
754,931
------------
Software - 1.45%
Automatic Data Processing, Inc. ....................................... 7,200 319,896
First Data Corporation ................................................ 8,770 379,653
------------
699,549
------------
Textiles - 3.16%
(a)Mohawk Industries, Inc. ............................................... 20,495 1,521,549
------------
Total Common Stocks (Cost $29,271,336) ........................................................ 35,780,311
------------
MUTUAL FUNDS - 4.00%
PIMCO High Yield Fund ...................................................... 188,453 1,762,036
Templeton Global Income Fund Inc. .......................................... 20,200 164,428
------------
Total Mutual Funds (Cost $1,901,439) .......................................................... 1,926,464
------------
(Continued)
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANIES - 4.99%
Evergreen Institutional Municipal Money Market Fund ................................ 240,067 $ 240,067
Merrimac Cash Series Fund .......................................................... 2,160,598 2,160,598
------------
Total Investment Companies (Cost $2,400,665) .................................................. 2,400,665
------------
Total Value of Investments (Cost $33,573,440 (b)) ........................................ 83.29 % $ 40,107,440
Other Assets Less Liabilities ............................................................ 16.71 % 8,045,455
--------- ------------
Net Assets ......................................................................... 100.00 % $ 48,152,895
========= ============
(a) Non-income producing investment.
(b) Aggregate cost for federal income tax purposes is $33,574,312. Unrealized appreciation/(depreciation) of investments
for federal income tax purposes is as follows:
Unrealized appreciation ............................................................ $ 6,596,391
Unrealized depreciation ............................................................ (63,263)
------------
Net unrealized appreciation ............................................. $ 6,533,128
============
See accompanying notes to financial statements
WISDOM FUND
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2004
ASSETS
Investments, at value (cost $33,573,440) ......................................................... $ 40,107,440
Cash ............................................................................................. 7,931,538
Income receivable ................................................................................ 56,999
Receivable for fund shares sold .................................................................. 109,178
Other assets ..................................................................................... 13,756
------------
Total assets ................................................................................ 48,218,911
------------
LIABILITIES
Accrued expenses ................................................................................. 65,880
Payable for fund shares redeemed ................................................................. 136
------------
Total liabilities ........................................................................... 66,016
------------
NET ASSETS ............................................................................................. $ 48,152,895
============
NET ASSETS CONSIST OF
Paid-in capital .................................................................................. $ 40,919,006
Undistributed net realized gain on investments ................................................... 699,889
Net unrealized appreciation on investments ....................................................... 6,534,000
------------
$ 48,152,895
============
INSTITUTIONAL CLASS SHARES
Net asset value, redemption and offering price per share
($4,811,294 / 381,177 shares) ............................................................... $ 12.62
============
INVESTOR CLASS SHARES
Net asset value, redemption and offering price per share
($19,788,825 / 1,574,345 shares) ............................................................ $ 12.57
============
Maximum offering price per share (100 / 94.25 of $12.57) ......................................... $ 13.34
============
CLASS B SHARES
Net asset value, redemption and offering price per share
($14,870,965 / 1,206,269 shares) ............................................................ $ 12.33
============
CLASS C SHARES
Net asset value, redemption and offering price per share
($8,681,811 / 701,203 shares) ............................................................... $ 12.38
============
See accompanying notes to financial statements
WISDOM FUND
STATEMENT OF OPERATIONS
Year ended May 31, 2004
NET INVESTMENT LOSS
Income
Interest ...................................................................................... $ 39,091
Dividends ..................................................................................... 574,457
------------
Total income .............................................................................. 613,548
------------
Expenses
Investment advisory fees (note 2) ............................................................. 214,245
Fund administration fees (note 2) ............................................................. 53,561
Distribution and service fees - Investor Class Shares (note 3) ................................ 43,316
Distribution and service fees - Class B Shares (note 3) ....................................... 140,978
Distribution and service fees - Class C Shares (note 3) ....................................... 69,724
Custody fees (note 2) ......................................................................... 12,949
Registration and filing administration fees (note 2) .......................................... 26,381
Fund accounting fees (note 2) ................................................................. 58,285
Audit and tax preparation fees ................................................................ 14,150
Legal fees .................................................................................... 28,671
Securities pricing fees ....................................................................... 5,560
Shareholder recordkeeping fees (note 2) ....................................................... 49,178
Shareholder servicing expenses ................................................................ 10,824
Registration and filing expenses .............................................................. 46,732
Printing expenses ............................................................................. 13,014
Trustee fees and meeting expenses ............................................................. 4,422
Other operating expenses ...................................................................... 14,909
------------
Total expenses ............................................................................ 806,899
------------
Net investment loss .................................................................. (193,351)
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions ..................................................... 1,219,133
Change in unrealized appreciation on investments ................................................... 4,101,451
------------
Net realized and unrealized gain on investments ............................................... 5,320,584
------------
Net increase in net assets resulting from operations ...................................... $ 5,127,233
============
See accompanying notes to financial statements
WISDOM FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Years ended May 31,
-------------------------------------------------
2004 2003
--------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment loss ................................................ $ (193,351) $ (212,866)
Net realized gain (loss) from investment transactions .............. 1,219,133 (179,255)
Change in unrealized appreciation on investments ................... 4,101,451 1,023,603
------------ ------------
Net increase in net assets resulting from operations .......... 5,127,233 631,482
------------ ------------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) 6,541,607 23,073,111
------------ ------------
Total increase in net assets ........................... 11,668,840 23,704,593
NET ASSETS
Beginning of year ...................................................... 36,484,055 12,779,462
------------ ------------
End of year ............................................................ $ 48,152,895 $ 36,484,055
============ ============
(a) A summary of capital share activity follows:
------------------------------------------------------------
2004 2003
Shares Value Shares Value
-------------------------------------------------------------
- ----------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
- ----------------------------------------------------------------------
Shares sold .......................................................... 50,016 $ 602,397 59,533 $ 629,968
Shares redeemed ...................................................... (49,270) (570,625) (19,266) (200,123)
------------ ------------ ------------ ------------
Net increase .................................................... 746 $ 31,772 40,267 $ 429,845
============ ============ ============ ============
- ----------------------------------------------------------------------
INVESTOR CLASS SHARES
- ----------------------------------------------------------------------
Shares sold .......................................................... 599,999 $ 7,013,977 1,186,944 $ 12,484,955
Shares redeemed ...................................................... (271,446) (3,202,206) (178,198) (1,844,784)
------------ ------------ ------------ ------------
Net increase .................................................... 328,553 $ 3,811,771 1,008,746 $ 10,640,171
============ ============ ============ ============
- ----------------------------------------------------------------------
CLASS B SHARES
- ----------------------------------------------------------------------
Shares sold .......................................................... 222,576 $ 2,562,201 869,053 $ 9,061,351
Shares redeemed ...................................................... (183,266) (2,123,336) (76,569) (796,003)
------------ ------------ ------------ ------------
Net increase .................................................... 39,310 $ 438,865 792,484 $ 8,265,348
============ ============ ============ ============
- ----------------------------------------------------------------------
CLASS C SHARES
- ----------------------------------------------------------------------
Shares sold .......................................................... 227,578 $ 2,712,247 401,147 $ 4,218,789
Shares redeemed ...................................................... (38,040) (453,048) (46,073) (481,042)
------------ ------------ ------------ ------------
Net increase .................................................... 189,538 $ 2,259,199 355,074 $ 3,737,747
============ ============ ============ ============
- ----------------------------------------------------------------------
FUND SUMMARY
- ----------------------------------------------------------------------
Shares sold .......................................................... 1,100,169 $ 12,890,822 2,516,677 $ 26,395,063
Shares redeemed ...................................................... (542,022) (6,349,215) (320,106) (3,321,952)
------------ ------------ ------------ ------------
Net increase .................................................... 558,147 $ 6,541,607 2,196,571 $ 23,073,111
============ ============ ============ ============
See accompanying notes to financial statements
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Year)
INSTITUTIONAL CLASS SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
For the Years ended May 31,
2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ...................... $ 11.12 $ 11.54 $ 10.80 $ 9.90 $ 9.91
Income (loss) from investment operations
Net investment income (loss) ................. 0.02 (0.03) (0.02) 0.17 0.18
Net realized and unrealized gain (loss) on
investments.............................. 1.48 (0.39) 0.85 0.90 (0.01)
----------- ----------- ----------- ----------- -----------
Total from investment operations ......... 1.50 (0.42) 0.83 1.07 0.17
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ........................ 0.00 0.00 0.00 (0.17) (0.18)
Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions ...................... 0.00 0.00 (0.09) (0.17) (0.18)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year ............................ $ 12.62 $ 11.12 $ 11.54 $ 10.80 $ 9.90
=========== =========== =========== =========== ===========
Total return ............................................ 13.49 % (3.64)% 7.78 % 10.70 % 1.64 %
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of year ........................... $ 4,811,294 $ 4,228,602 $ 3,924,962 $ 3,164,763 $ 2,710,312
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.29 % 1.67 % 3.19 % 3.30 % 5.05 %
After expense reimbursements and waived fees 1.29 % 1.62 % 1.71 % 0.26 % 0.00 %
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees 0.14 % (0.30)% (1.65)% (1.47)% (2.87)%
After expense reimbursements and waived fees 0.14 % (0.25)% (0.17)% 1.57 % 2.18 %
Portfolio turnover rate 20.41 % 9.28 % 6.78 % 15.46 % 41.69 %
(Continued)
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Year)
INVESTOR CLASS SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
For the Years ended May 31,
2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ....................... $ 11.10 $ 11.56 $ 10.84 $ 9.93 $ 9.92
Income (loss) from investment operations
Net investment (loss) income .................. (0.01) (0.04) (0.04) 0.13 0.12
Net realized and unrealized gain (loss) on
investments............................... 1.48 (0.42) 0.85 0.91 0.01
----------- ----------- ----------- ----------- -----------
Total from investment operations .......... 1.47 (0.46) 0.81 1.04 0.13
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ......................... 0.00 0.00 0.00 (0.13) (0.12)
Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions ....................... 0.00 0.00 (0.09) (0.13) (0.12)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year ............................. $ 12.57 $ 11.10 $ 11.56 $ 10.84 $ 9.93
=========== =========== =========== =========== ===========
Total return (a) ......................................... 13.24 % (3.98)% 7.57 % 10.41 % 1.36 %
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of year ............................ $19,788,825 $13,824,651 $ 2,739,727 $ 1,253,515 $ 656,212
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.54 % 1.91 % 3.39 % 3.86 % 4.29 %
After expense reimbursements and waived fees 1.54 % 1.87 % 1.96 % 0.68 % 0.25 %
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees (0.11)% (0.56)% (1.91)% (1.97)% (1.96)%
After expense reimbursements and waived fees (0.11)% (0.53)% (0.48)% 1.21 % 2.08 %
Portfolio turnover rate 20.41 % 9.28 % 6.78 % 15.46 % 41.69 %
(a) 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 Years ended May 31,
2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ..................... $ 10.97 $ 11.50 $ 10.87 $ 9.97 $ 10.20
Income (loss) from investment operations
Net investment (loss) income .................. (0.10) (0.10) (0.07) 0.06 0.04
Net realized and unrealized gain (loss) on
investments ............................... 1.46 (0.43) 0.79 0.90 (0.23)
----------- ----------- ----------- ----------- -----------
Total from investment operations .......... 1.36 (0.53) 0.72 0.96 (0.19)
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ......................... 0.00 0.00 0.00 (0.06) (0.04)
Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions ....................... 0.00 0.00 (0.09) (0.06) (0.04)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ........................... $ 12.33 $ 10.97 $ 11.50 $ 10.87 $ 9.97
=========== =========== =========== =========== ===========
Total return (c) ......................................... 12.40 % (4.61)% 6.72 % 9.60 % (1.85)%
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period .......................... $14,870,965 $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 2.29 % 2.66 % 4.14 % 4.33 % 4.09 %(b)
After expense reimbursements and waived fees 2.29 % 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 (0.86)% (1.31)% (2.66)% (2.50)% (1.78)%(b)
After expense reimbursements and waived fees (0.86)% (1.27)% (1.23)% 0.56 % 1.31 %(b)
Portfolio turnover rate 20.41 % 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 Years ended May 31,
2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period .................... $ 11.01 $ 11.54 $ 10.91 $ 9.98 $ 10.20
Income (loss) from investment operations
Net investment (loss) income ................. (0.09) (0.09) (0.10) 0.03 0.03
Net realized and unrealized gain (loss) on
investments .............................. 1.46 (0.44) 0.82 0.93 (0.22)
----------- ----------- ----------- ----------- -----------
Total from investment operations ......... 1.37 (0.53) 0.72 0.96 (0.19)
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ........................ 0.00 0.00 0.00 (0.03) (0.03)
Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions ...................... 0.00 0.00 (0.09) (0.03) (0.03)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period .......................... $ 12.38 $ 11.01 $ 11.54 $ 10.91 $ 9.98
=========== =========== =========== =========== ===========
Total return (c) ........................................ 12.44 % (4.59)% 6.69 % 9.64 % (1.86)%
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ......................... $ 8,681,811 $ 5,634,827 $ 1,807,576 $ 987,119 $ 173,395
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 2.29 % 2.66 % 4.18 % 4.44 % 4.07 %(b)
After expense reimbursements and waived fees 2.29 % 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 (0.86)% (1.31)% (2.66)% (2.62)% (1.77)%(b)
After expense reimbursements and waived fees (0.86)% (1.27)% (1.19)% 0.40 % 1.30 %(b)
Portfolio turnover rate 20.41 % 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, 2004
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 $106,120 has been charged to
undistributed net realized gains, $87,231 has been charged to paid-in
capital, and accumulated net investment loss has been credited
$193,351, bringing it to zero.
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.
(Continued)
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 2004
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, Investor Class Shares, Class B Shares,
and Class C Shares. There can be no assurance that the foregoing voluntary
fee waivers or reimbursements will continue.
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 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 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 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, which are believed to be immaterial in
amount.
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. The
Transfer Agent is compensated for its services based upon a $15 fee per
shareholder per year, subject to a minimum fee of $1,500 per month, plus
$500 per month for each additional class of shares. In addition, the
Transfer Agent shall be entitled to reimbursement of actual out-of-pocket
expenses incurred by the Transfer Agent on behalf of the Trust or the Fund.
(Continued)
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 2004
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, 2004, the Distributor retained sales charges in the amount of
$17,739.
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 $43,316, $140,978, and $69,724, 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, 2004.
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, excluding long-term U.S. government
securities and short-term obligations, aggregated $13,296,089 and
$7,840,435, respectively, for the year ended May 31, 2004. Purchases and
sales of long-term U.S. government securities aggregated $58,971,025 and
$67,011,000, respectively, for the year ended May 31, 2004.
(Continued)
WISDOM FUND
ADDITIONAL INFORMATION
May 31, 2004
(Unaudited)
PROXY VOTING POLICY
A copy of the Trust's Proxy Voting and Disclosure Policy and the Adviser's Proxy
Voting and Disclosure Policy are included as Appendix B to the Fund's Statement
of Additional Information and is available, without charge, upon request, by
calling 1-800-773-3863. Effective with the 12-month period ended June 30, 2004,
the Fund will file Form N-PX stating how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30 within
60 days after the end of such period. Information regarding how the Fund voted
proxies as set forth in its most recent filing of Form N-PX will be available
(i) without charge, upon request, by calling the Fund at 1-800-773-3863; and
(ii) on the SEC's website at http://www.sec.gov.
INFORMATION ABOUT TRUSTEES AND OFFICERS
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 27804. The Trustee received aggregate compensation of $3,250
during the fiscal year ended May 31, 2004 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, Address, held with of Time Principal Occupation(s) Overseen by Other Directorships Held by
And Age Fund/Trust Served During Past 5 Years Trustee Trustee
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
Independent Trustee
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
Jack E. Brinson, 72 Trustee Since Retired; Previously, President of 1 Independent Trustee - Gardner
1997 Brinson Investment Co. (personal Lewis Investment Trust for the
investments) and President of three series of that trust; Th
Brinson Chevrolet, Inc. (auto Nottingham Investment Trust II
dealership) for the eight series of that
trust; Hillman Capital
Management Investment Trust
for the two series of that
trust; Trust for the one
series of that trust;
MurphyMorris Investment
Trust for the one series of
that trust; Merit Advisors
Investment Trust for the
one series of that trust;
Merit Advisors Investment
Trust II for the one series of
that trust; and de Leon Funds
Trust for the one series of
that trust (all registered
investment companies)
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
(Continued)
WISDOM FUND
ADDITIONAL INFORMATION
May 31, 2004
(Unaudited)
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
Number of
Portfolios
in Fund
Position(s) Length Complex
Name, Address, held with of Time Principal Occupation(s) Overseen by Other Directorships Held by
And Age Fund/Trust Served During Past 5 Years Trustee Trustee
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
Officers
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
C. Douglas Davenport, 53 President, Since President (since 1998) of Atlanta n/a n/a
Atlanta Investment Counsel,LLC Treasurer, 2003 Investment Counsel, LLC (Adviser of
3717 Haddon Hall Road, NW Principal the Fund); previously, stockbroker
Suite 200 Executive at Lehman Brothers
Atlanta, GA 30327 Officer,
and
Principal
Financial
Officer
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
C. Frank Watson III, 33 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, 35 Assistant Since Vice President-Compliance n/a n/a
Treasurer 2003 Administration (since 1998) of The
and Nottingham Company.
Assistant
Secretary
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
Deloitte
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281-1414
Tel: (212) 436-2000
Fax: (212) 436-5000
www.deloitte.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of New Providence Investment Trust
and the 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 schedule of investments, as of May 31, 2004, and the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the 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 the standards of the Public Company
Accounting Oversight Board (United States). 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, 2004, 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, 2004, 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 five years in the period
then ended, in conformity with accounting principles generally accepted in the
United States of America.
/s/ Deloitte & Touche LLP
July 19,2004
Member of
Deloitte Touche Tohmatsu
________________________________________________________________________________
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, 2004
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
DISTRIBUTOR
Capital Investment Group, Inc.
P.O. Box 4365
Rocky Mount, NC 27803
1-800-773-3863
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.
- --------------------------------------------------------------------------------
Statements in this Annual Report that reflect projections or expectations of
future financial or economic performance of the Wisdom Fund ("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, without limitation, general
economic conditions such as inflation, recession and interest rates. Past
performance is not a guarantee of future results.
Investments in the Fund are subject to investment risks, including, without
limitation, market risk, investment style risk, investment advisor risk, market
sector risk, equity securities risk, portfolio turnover risk, and other risks as
set forth in the Fund's prospectus. Investment in the Fund is subject to
investment risks, including, without limitation, tracking risks (an investor in
the Fund should not expect that the investment performance of the Fund will be
able to track the investment performance of Berkshire Hathaway, Inc.),
non-diversified risk, industry concentration risk and other risks as set forth
in the Fund's prospectus. More information about these risks and other risks can
be found in the Fund's prospectus.
The performance information quoted in this annual report represents past
performance, which is not a guarantee of future results. Investment return and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance data quoted. An investor
may obtain performance data current to the most recent month-end by visiting
www.ncfunds.com.
An investor should consider the investment objectives, risks, and charges and
expenses of the Fund carefully before investing. The prospectus contains this
and other information about the Fund. A copy of the prospectus is available by
calling Shareholder Services at 1-877-892-4226. The prospectus should be read
carefully before investing.
- --------------------------------------------------------------------------------
WISDOM FUND
Annual Report to Shareholders
July 26, 2004
Dear fellow Shareholders,
For the fiscal year ended May 31, 2004, the Wisdom Fund ("Fund") returned 13.24%
for the Investor Class, 12.40% for the Class B, 12.44% for the Class C and
13.49% for the Institutional Class of shares. These returns are less than the
18.33% for the Standard and Poors 500 Total Return Index ("S&P 500 Index") for
the same period. The reason why the Fund under performed the S&P 500 Index is
primarily because the Fund held on average about 25% of its assets in short-term
treasury bills and money market instruments. Since the objective of the Fund is
to emulate both the public and private holdings of Berkshire Hathaway, Inc.
("Berkshire"), we try to keep our short term fixed income holdings as close as
possible to at the same percentage as Berkshire's.
Warren Buffett is not afraid to hold cash and holding cash is like holding an
option - the option to take advantage of volatility. The value of this option
rises when market volatility rises. Many market participants neglect this
important aspect of investing and stay fully invested at all times. When the
market drops, they cannot do anything but watch (or sell out at the bottom).
Being fully invested goes hand-in-hand with a focus on relative returns. We care
only about absolute returns, not relative returns. By investing only when we
believe stocks are selling at a large discount to value, we have benefited from
a cushion that Benjamin Graham, a Columbia University professor and known as the
"father of value investing," referred to as a "margin of safety."
While in college, Mr. Buffett read a book entitled "The Intelligent Investor" by
Mr. Graham. Mr. Graham believed the most critical piece of investment
information was a company's intrinsic value. He believed that the core task for
investors is to accurately calculate this value and then maintain the discipline
to buy a stock only when the price is below that calculated amount and that
buying below that calculated value gives you a margin of safety. Mr. Buffett
also believes that one should not even think about the direction of the market,
because it is impossible to predict with any consistency. (Source: "The Warren
Buffett Portfolio" by Robert Hagstrom)
The Stock Market
We believe the equity market has failed to fully benefit from the slight easing
in interest rate worries that have recently helped the Treasury market. There is
a nagging concern that profits will be in jeopardy because margins show signs of
peaking (albeit from record highs) even before labor costs have heated up.
Corporate guidance is much more supportive than in 2001-2003, but we believe
investors are wary having been so badly burned by shady accounting practices and
biased opinions from Wall Street. Thus, we see more upside in equities, once
investors move beyond interest rate worries and return to reacting to bullish
near-run profit trends. The downside of this forecast is that it could be the
final phase of the post-2002 rally, as the interest rate reprieve should prove
temporary.
The three drags on equities since early this year have recently improved, but
only slightly. Rate fears have calmed, oil prices have corrected a bit and the
dollar has stopped strengthening. We believe that the economic backdrop will
stay supportive and any deceleration in earnings growth in the next six months
should be modest, as higher selling prices will provide some offset to increased
input costs.
We believe the stock market's prospective returns are still attractive compared
to other asset classes. We also believe that the higher share valuations make
this a stockpicker's market. Values do exist, but they are becoming harder to
find. The rigors of our disciplined, bottom-up investment process, which focuses
on finding undervalued stocks, helps us to take advantage of market volatility
and to unearth value in today's market. We believe that our patient, long-term
approach, which helps us avoid over reacting to short term events, gives us that
extra edge. This is especially important when we have to select "proxies" for
the private holding of Berkshire. Berkshire has only purchased one stock in the
last ten months and that was HCA, Inc.* Following our investment guidelines, we
purchased the same stock as soon as the news became public.
Thank you for your continued investment and confidence in the Wisdom Fund. We
welcome your questions, thoughts and comments. You can reach us via email at
contactwisdom@wisdomfund.com.
C. Douglas Davenport, J.D. President of Atlanta Investment Counsel, LLC
Portfolio Manager of the Wisdom Fund
* HCA, Inc. represented 0.78% of the Fund's net assets as of May 31, 2004.
WISDOM FUND
CLASS B SHARES
Performance Update - $10,000 Investment
For the period from November 16, 1999 (Commencement of Operations)
to May 31, 2004
[Graph Here]
- --------------------------------------------------------------------------------
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 10,950 7,134
08/31/03 11,020 7,496
11/30/03 11,499 7,905
02/29/04 12,428 8,590
05/31/04 12,108 8,442
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 12.40 % 4.68 %
------------------------------ -------------- ---------------------
Maximum Sales Charge 8.40 % 4.30 %
------------------------------ -------------- ---------------------
>> 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, 2004, the value of the Fund's Class B Shares would have
increased to $12,108 - a cumulative total investment return of 21.08% since
November 16, 1999. Without the deduction of the 2% maximum CDSC for the
length of time the investment was held, the value of the Fund's Class B
Shares would have increased to $12,308 - a cumulative total investment
return of 23.08% since November 16, 1999. The CDSC may be waived or reduced
under certain circumstances.
>> At May 31, 2004, a similar investment in the S&P 500 Total Return Index
would have decreased to $8,442 - a cumulative total investment return of
(15.58)% since November 16, 1999.
The performance information quoted above represents past performance, which is
not a guarantee of future results. Investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Current performance may be lower or
higher than the performance data quoted. An investor may obtain performance data
current to the most recent month-end by visiting www.ncfunds.com.
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, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 74.30%
Apparel - 0.24%
Nike, Inc. .............................................................. 1,600 $ 113,840
------------
Banks - 2.84%
M & T Bank Corporation .................................................. 2,030 183,857
SunTrust Banks, Inc. .................................................... 1,100 71,588
Wells Fargo Company ..................................................... 18,922 1,112,614
------------
1,368,059
------------
Beverages - 7.40%
The Coca-Cola Company ................................................... 69,430 3,565,231
------------
Building Materials - 0.64%
(a)American Standard Companies, Inc. ....................................... 8,190 307,289
------------
Chemicals - 1.14%
The Sherwin-Williams Company ............................................ 13,970 549,021
------------
Commercial Services - 3.10%
Cendant Corporation ..................................................... 9,000 206,460
H&R Block, Inc. ......................................................... 3,320 162,182
(a)Iron Mountain Incorporated .............................................. 5,100 225,777
Moody's Corporation ..................................................... 13,705 896,170
------------
1,490,589
------------
Cosmetics & Personal Care - 2.81%
The Gillette Company .................................................... 31,380 1,352,164
------------
Diversified Financial Services - 3.90%
American Express Company ................................................ 37,050 1,878,435
------------
Electric - 1.33%
FPL Group, Inc. ......................................................... 5,865 373,894
(a)Reliant Energy, Inc. .................................................... 27,000 267,570
------------
641,464
------------
Food - 2.57%
Cadbury Schweppes PLC ................................................... 6,500 224,250
Sysco Corporation ....................................................... 18,166 681,225
WM Wrigley Jr. Company .................................................. 5,300 332,840
------------
1,238,315
------------
Health Care Services - 0.78%
(a)Five Star Quality Care, Inc. ............................................ 4 15
HCA Inc. ................................................................ 9,700 376,651
------------
376,666
------------
(Continued)
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Holding Companies - Diversified - 1.06%
Leucadia National Corporation ............................................. 10,300 $ 511,910
------------
Home Builders - 0.13%
(a)Champion Enterprises Inc. ................................................. 6,700 62,645
------------
Home Furnishings - 0.36%
Ethan Allen Interiors, Inc. ............................................... 4,430 172,637
------------
Insurance - Multiline - 17.57%
Ambac Financial Group, Inc. ............................................... 8,380 579,477
American International Group, Inc. ........................................ 32,150 2,356,595
Aon Corporation ........................................................... 6,000 165,780
Everest Re Group, Ltd. .................................................... 20,015 1,638,228
PartnerRe Ltd. ............................................................ 11,005 614,959
Platinum Underwriters Holding Limited ..................................... 2,000 62,200
RenaissanceRe Holdings Ltd. ............................................... 36,978 1,954,287
The Allstate Corporation .................................................. 24,750 1,088,505
------------
8,460,031
------------
Insurance - Property & Casualty - 16.01%
ACE Limited ............................................................... 15,547 640,225
Fidelity National Financial, Inc. ......................................... 23,463 881,974
Infinity Property & Casualty Corporation .................................. 6,900 215,280
(a)Markel Corporation ........................................................ 7,200 2,070,000
(a)ProAssurance Corporation .................................................. 6,900 228,183
SAFECO Corporation ........................................................ 6,000 251,700
The Chubb Corporation ..................................................... 15,400 1,037,498
The Progressive Corporation ............................................... 9,360 802,807
Wesco Financial Corporation ............................................... 386 145,503
White Mountains Insurance Group Ltd. ...................................... 2,800 1,435,000
------------
7,708,170
------------
Media - 2.22%
Gannett Company, Inc. ..................................................... 1,698 149,084
The Washington Post Company ............................................... 970 922,228
------------
1,071,312
------------
Miscellaneous Manufacturing - 0.31%
Dover Corporation ......................................................... 3,800 148,048
------------
(Continued)
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Oil & Gas - 1.22%
Exxon Mobil Corporation ............................................... 7,000 $ 302,750
PetroChina Company Limited ............................................ 6,000 285,000
------------
587,750
------------
Packaging & Containers - 0.44%
(a)Sealed Air Corporation ................................................ 4,252 213,748
------------
Pipelines - 1.67%
Kinder Morgan, Inc. ................................................... 13,400 804,000
------------
Real Estate Investment Trusts - 0.38%
Tanger Factory Outlet Centers, Inc. ................................... 2,735 106,173
The Town & Country Trust .............................................. 3,156 76,785
------------
182,958
------------
Retail - 1.57%
Brown Shoe Company, Inc. .............................................. 3,300 136,389
(a)P.F. Chang's China Bistro, Inc. ....................................... 1,000 45,260
Wendy's International, Inc. ........................................... 5,150 194,619
(a)Yum! Brands, Inc. ..................................................... 5,150 193,125
(a)Zale Corporation ...................................................... 3,400 185,538
------------
754,931
------------
Software - 1.45%
Automatic Data Processing, Inc. ....................................... 7,200 319,896
First Data Corporation ................................................ 8,770 379,653
------------
699,549
------------
Textiles - 3.16%
(a)Mohawk Industries, Inc. ............................................... 20,495 1,521,549
------------
Total Common Stocks (Cost $29,271,336) ........................................................ 35,780,311
------------
MUTUAL FUNDS - 4.00%
PIMCO High Yield Fund ...................................................... 188,453 1,762,036
Templeton Global Income Fund Inc. .......................................... 20,200 164,428
------------
Total Mutual Funds (Cost $1,901,439) .......................................................... 1,926,464
------------
(Continued)
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANIES - 4.99%
Evergreen Institutional Municipal Money Market Fund ................................ 240,067 $ 240,067
Merrimac Cash Series Fund .......................................................... 2,160,598 2,160,598
------------
Total Investment Companies (Cost $2,400,665) .................................................. 2,400,665
------------
Total Value of Investments (Cost $33,573,440 (b)) ........................................ 83.29 % $ 40,107,440
Other Assets Less Liabilities ............................................................ 16.71 % 8,045,455
--------- ------------
Net Assets ......................................................................... 100.00 % $ 48,152,895
========= ============
(a) Non-income producing investment.
(b) Aggregate cost for federal income tax purposes is $33,574,312. Unrealized appreciation/(depreciation) of investments
for federal income tax purposes is as follows:
Unrealized appreciation ............................................................ $ 6,596,391
Unrealized depreciation ............................................................ (63,263)
------------
Net unrealized appreciation ............................................. $ 6,533,128
============
See accompanying notes to financial statements
WISDOM FUND
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2004
ASSETS
Investments, at value (cost $33,573,440) ......................................................... $ 40,107,440
Cash ............................................................................................. 7,931,538
Income receivable ................................................................................ 56,999
Receivable for fund shares sold .................................................................. 109,178
Other assets ..................................................................................... 13,756
------------
Total assets ................................................................................ 48,218,911
------------
LIABILITIES
Accrued expenses ................................................................................. 65,880
Payable for fund shares redeemed ................................................................. 136
------------
Total liabilities ........................................................................... 66,016
------------
NET ASSETS ............................................................................................. $ 48,152,895
============
NET ASSETS CONSIST OF
Paid-in capital .................................................................................. $ 40,919,006
Undistributed net realized gain on investments ................................................... 699,889
Net unrealized appreciation on investments ....................................................... 6,534,000
------------
$ 48,152,895
============
INSTITUTIONAL CLASS SHARES
Net asset value, redemption and offering price per share
($4,811,294 / 381,177 shares) ............................................................... $ 12.62
============
INVESTOR CLASS SHARES
Net asset value, redemption and offering price per share
($19,788,825 / 1,574,345 shares) ............................................................ $ 12.57
============
Maximum offering price per share (100 / 94.25 of $12.57) ......................................... $ 13.34
============
CLASS B SHARES
Net asset value, redemption and offering price per share
($14,870,965 / 1,206,269 shares) ............................................................ $ 12.33
============
CLASS C SHARES
Net asset value, redemption and offering price per share
($8,681,811 / 701,203 shares) ............................................................... $ 12.38
============
See accompanying notes to financial statements
WISDOM FUND
STATEMENT OF OPERATIONS
Year ended May 31, 2004
NET INVESTMENT LOSS
Income
Interest ...................................................................................... $ 39,091
Dividends ..................................................................................... 574,457
------------
Total income .............................................................................. 613,548
------------
Expenses
Investment advisory fees (note 2) ............................................................. 214,245
Fund administration fees (note 2) ............................................................. 53,561
Distribution and service fees - Investor Class Shares (note 3) ................................ 43,316
Distribution and service fees - Class B Shares (note 3) ....................................... 140,978
Distribution and service fees - Class C Shares (note 3) ....................................... 69,724
Custody fees (note 2) ......................................................................... 12,949
Registration and filing administration fees (note 2) .......................................... 26,381
Fund accounting fees (note 2) ................................................................. 58,285
Audit and tax preparation fees ................................................................ 14,150
Legal fees .................................................................................... 28,671
Securities pricing fees ....................................................................... 5,560
Shareholder recordkeeping fees (note 2) ....................................................... 49,178
Shareholder servicing expenses ................................................................ 10,824
Registration and filing expenses .............................................................. 46,732
Printing expenses ............................................................................. 13,014
Trustee fees and meeting expenses ............................................................. 4,422
Other operating expenses ...................................................................... 14,909
------------
Total expenses ............................................................................ 806,899
------------
Net investment loss .................................................................. (193,351)
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions ..................................................... 1,219,133
Change in unrealized appreciation on investments ................................................... 4,101,451
------------
Net realized and unrealized gain on investments ............................................... 5,320,584
------------
Net increase in net assets resulting from operations ...................................... $ 5,127,233
============
See accompanying notes to financial statements
WISDOM FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Years ended May 31,
-------------------------------------------------
2004 2003
--------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment loss ................................................ $ (193,351) $ (212,866)
Net realized gain (loss) from investment transactions .............. 1,219,133 (179,255)
Change in unrealized appreciation on investments ................... 4,101,451 1,023,603
------------ ------------
Net increase in net assets resulting from operations .......... 5,127,233 631,482
------------ ------------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) 6,541,607 23,073,111
------------ ------------
Total increase in net assets ........................... 11,668,840 23,704,593
NET ASSETS
Beginning of year ...................................................... 36,484,055 12,779,462
------------ ------------
End of year ............................................................ $ 48,152,895 $ 36,484,055
============ ============
(a) A summary of capital share activity follows:
------------------------------------------------------------
2004 2003
Shares Value Shares Value
-------------------------------------------------------------
- ----------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
- ----------------------------------------------------------------------
Shares sold .......................................................... 50,016 $ 602,397 59,533 $ 629,968
Shares redeemed ...................................................... (49,270) (570,625) (19,266) (200,123)
------------ ------------ ------------ ------------
Net increase .................................................... 746 $ 31,772 40,267 $ 429,845
============ ============ ============ ============
- ----------------------------------------------------------------------
INVESTOR CLASS SHARES
- ----------------------------------------------------------------------
Shares sold .......................................................... 599,999 $ 7,013,977 1,186,944 $ 12,484,955
Shares redeemed ...................................................... (271,446) (3,202,206) (178,198) (1,844,784)
------------ ------------ ------------ ------------
Net increase .................................................... 328,553 $ 3,811,771 1,008,746 $ 10,640,171
============ ============ ============ ============
- ----------------------------------------------------------------------
CLASS B SHARES
- ----------------------------------------------------------------------
Shares sold .......................................................... 222,576 $ 2,562,201 869,053 $ 9,061,351
Shares redeemed ...................................................... (183,266) (2,123,336) (76,569) (796,003)
------------ ------------ ------------ ------------
Net increase .................................................... 39,310 $ 438,865 792,484 $ 8,265,348
============ ============ ============ ============
- ----------------------------------------------------------------------
CLASS C SHARES
- ----------------------------------------------------------------------
Shares sold .......................................................... 227,578 $ 2,712,247 401,147 $ 4,218,789
Shares redeemed ...................................................... (38,040) (453,048) (46,073) (481,042)
------------ ------------ ------------ ------------
Net increase .................................................... 189,538 $ 2,259,199 355,074 $ 3,737,747
============ ============ ============ ============
- ----------------------------------------------------------------------
FUND SUMMARY
- ----------------------------------------------------------------------
Shares sold .......................................................... 1,100,169 $ 12,890,822 2,516,677 $ 26,395,063
Shares redeemed ...................................................... (542,022) (6,349,215) (320,106) (3,321,952)
------------ ------------ ------------ ------------
Net increase .................................................... 558,147 $ 6,541,607 2,196,571 $ 23,073,111
============ ============ ============ ============
See accompanying notes to financial statements
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Year)
INSTITUTIONAL CLASS SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
For the Years ended May 31,
2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ...................... $ 11.12 $ 11.54 $ 10.80 $ 9.90 $ 9.91
Income (loss) from investment operations
Net investment income (loss) ................. 0.02 (0.03) (0.02) 0.17 0.18
Net realized and unrealized gain (loss) on
investments.............................. 1.48 (0.39) 0.85 0.90 (0.01)
----------- ----------- ----------- ----------- -----------
Total from investment operations ......... 1.50 (0.42) 0.83 1.07 0.17
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ........................ 0.00 0.00 0.00 (0.17) (0.18)
Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions ...................... 0.00 0.00 (0.09) (0.17) (0.18)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year ............................ $ 12.62 $ 11.12 $ 11.54 $ 10.80 $ 9.90
=========== =========== =========== =========== ===========
Total return ............................................ 13.49 % (3.64)% 7.78 % 10.70 % 1.64 %
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of year ........................... $ 4,811,294 $ 4,228,602 $ 3,924,962 $ 3,164,763 $ 2,710,312
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.29 % 1.67 % 3.19 % 3.30 % 5.05 %
After expense reimbursements and waived fees 1.29 % 1.62 % 1.71 % 0.26 % 0.00 %
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees 0.14 % (0.30)% (1.65)% (1.47)% (2.87)%
After expense reimbursements and waived fees 0.14 % (0.25)% (0.17)% 1.57 % 2.18 %
Portfolio turnover rate 20.41 % 9.28 % 6.78 % 15.46 % 41.69 %
(Continued)
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Year)
INVESTOR CLASS SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
For the Years ended May 31,
2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ....................... $ 11.10 $ 11.56 $ 10.84 $ 9.93 $ 9.92
Income (loss) from investment operations
Net investment (loss) income .................. (0.01) (0.04) (0.04) 0.13 0.12
Net realized and unrealized gain (loss) on
investments............................... 1.48 (0.42) 0.85 0.91 0.01
----------- ----------- ----------- ----------- -----------
Total from investment operations .......... 1.47 (0.46) 0.81 1.04 0.13
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ......................... 0.00 0.00 0.00 (0.13) (0.12)
Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions ....................... 0.00 0.00 (0.09) (0.13) (0.12)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year ............................. $ 12.57 $ 11.10 $ 11.56 $ 10.84 $ 9.93
=========== =========== =========== =========== ===========
Total return (a) ......................................... 13.24 % (3.98)% 7.57 % 10.41 % 1.36 %
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of year ............................ $19,788,825 $13,824,651 $ 2,739,727 $ 1,253,515 $ 656,212
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.54 % 1.91 % 3.39 % 3.86 % 4.29 %
After expense reimbursements and waived fees 1.54 % 1.87 % 1.96 % 0.68 % 0.25 %
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees (0.11)% (0.56)% (1.91)% (1.97)% (1.96)%
After expense reimbursements and waived fees (0.11)% (0.53)% (0.48)% 1.21 % 2.08 %
Portfolio turnover rate 20.41 % 9.28 % 6.78 % 15.46 % 41.69 %
(a) 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 Years ended May 31,
2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ..................... $ 10.97 $ 11.50 $ 10.87 $ 9.97 $ 10.20
Income (loss) from investment operations
Net investment (loss) income .................. (0.10) (0.10) (0.07) 0.06 0.04
Net realized and unrealized gain (loss) on
investments ............................... 1.46 (0.43) 0.79 0.90 (0.23)
----------- ----------- ----------- ----------- -----------
Total from investment operations .......... 1.36 (0.53) 0.72 0.96 (0.19)
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ......................... 0.00 0.00 0.00 (0.06) (0.04)
Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions ....................... 0.00 0.00 (0.09) (0.06) (0.04)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ........................... $ 12.33 $ 10.97 $ 11.50 $ 10.87 $ 9.97
=========== =========== =========== =========== ===========
Total return (c) ......................................... 12.40 % (4.61)% 6.72 % 9.60 % (1.85)%
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period .......................... $14,870,965 $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 2.29 % 2.66 % 4.14 % 4.33 % 4.09 %(b)
After expense reimbursements and waived fees 2.29 % 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 (0.86)% (1.31)% (2.66)% (2.50)% (1.78)%(b)
After expense reimbursements and waived fees (0.86)% (1.27)% (1.23)% 0.56 % 1.31 %(b)
Portfolio turnover rate 20.41 % 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 Years ended May 31,
2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period .................... $ 11.01 $ 11.54 $ 10.91 $ 9.98 $ 10.20
Income (loss) from investment operations
Net investment (loss) income ................. (0.09) (0.09) (0.10) 0.03 0.03
Net realized and unrealized gain (loss) on
investments .............................. 1.46 (0.44) 0.82 0.93 (0.22)
----------- ----------- ----------- ----------- -----------
Total from investment operations ......... 1.37 (0.53) 0.72 0.96 (0.19)
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ........................ 0.00 0.00 0.00 (0.03) (0.03)
Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions ...................... 0.00 0.00 (0.09) (0.03) (0.03)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period .......................... $ 12.38 $ 11.01 $ 11.54 $ 10.91 $ 9.98
=========== =========== =========== =========== ===========
Total return (c) ........................................ 12.44 % (4.59)% 6.69 % 9.64 % (1.86)%
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ......................... $ 8,681,811 $ 5,634,827 $ 1,807,576 $ 987,119 $ 173,395
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 2.29 % 2.66 % 4.18 % 4.44 % 4.07 %(b)
After expense reimbursements and waived fees 2.29 % 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 (0.86)% (1.31)% (2.66)% (2.62)% (1.77)%(b)
After expense reimbursements and waived fees (0.86)% (1.27)% (1.19)% 0.40 % 1.30 %(b)
Portfolio turnover rate 20.41 % 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, 2004
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 $106,120 has been charged to
undistributed net realized gains, $87,231 has been charged to paid-in
capital, and accumulated net investment loss has been credited
$193,351, bringing it to zero.
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.
(Continued)
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 2004
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, Investor Class Shares, Class B Shares,
and Class C Shares. There can be no assurance that the foregoing voluntary
fee waivers or reimbursements will continue.
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 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 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 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, which are believed to be immaterial in
amount.
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. The
Transfer Agent is compensated for its services based upon a $15 fee per
shareholder per year, subject to a minimum fee of $1,500 per month, plus
$500 per month for each additional class of shares. In addition, the
Transfer Agent shall be entitled to reimbursement of actual out-of-pocket
expenses incurred by the Transfer Agent on behalf of the Trust or the Fund.
(Continued)
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 2004
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, 2004, the Distributor retained sales charges in the amount of
$17,739.
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 $43,316, $140,978, and $69,724, 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, 2004.
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, excluding long-term U.S. government
securities and short-term obligations, aggregated $13,296,089 and
$7,840,435, respectively, for the year ended May 31, 2004. Purchases and
sales of long-term U.S. government securities aggregated $58,971,025 and
$67,011,000, respectively, for the year ended May 31, 2004.
(Continued)
WISDOM FUND
ADDITIONAL INFORMATION
May 31, 2004
(Unaudited)
PROXY VOTING POLICY
A copy of the Trust's Proxy Voting and Disclosure Policy and the Adviser's Proxy
Voting and Disclosure Policy are included as Appendix B to the Fund's Statement
of Additional Information and is available, without charge, upon request, by
calling 1-800-773-3863. Effective with the 12-month period ended June 30, 2004,
the Fund will file Form N-PX stating how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30 within
60 days after the end of such period. Information regarding how the Fund voted
proxies as set forth in its most recent filing of Form N-PX will be available
(i) without charge, upon request, by calling the Fund at 1-800-773-3863; and
(ii) on the SEC's website at http://www.sec.gov.
INFORMATION ABOUT TRUSTEES AND OFFICERS
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 27804. The Trustee received aggregate compensation of $3,250
during the fiscal year ended May 31, 2004 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, Address, held with of Time Principal Occupation(s) Overseen by Other Directorships Held by
And Age Fund/Trust Served During Past 5 Years Trustee Trustee
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
Independent Trustee
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
Jack E. Brinson, 72 Trustee Since Retired; Previously, President of 1 Independent Trustee - Gardner
1997 Brinson Investment Co. (personal Lewis Investment Trust for the
investments) and President of three series of that trust; Th
Brinson Chevrolet, Inc. (auto Nottingham Investment Trust II
dealership) for the eight series of that
trust; Hillman Capital
Management Investment Trust
for the two series of that
trust; Trust for the one
series of that trust;
MurphyMorris Investment
Trust for the one series of
that trust; Merit Advisors
Investment Trust for the
one series of that trust;
Merit Advisors Investment
Trust II for the one series of
that trust; and de Leon Funds
Trust for the one series of
that trust (all registered
investment companies)
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
(Continued)
WISDOM FUND
ADDITIONAL INFORMATION
May 31, 2004
(Unaudited)
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
Number of
Portfolios
in Fund
Position(s) Length Complex
Name, Address, held with of Time Principal Occupation(s) Overseen by Other Directorships Held by
And Age Fund/Trust Served During Past 5 Years Trustee Trustee
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
Officers
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
C. Douglas Davenport, 53 President, Since President (since 1998) of Atlanta n/a n/a
Atlanta Investment Counsel,LLC Treasurer, 2003 Investment Counsel, LLC (Adviser of
3717 Haddon Hall Road, NW Principal the Fund); previously, stockbroker
Suite 200 Executive at Lehman Brothers
Atlanta, GA 30327 Officer,
and
Principal
Financial
Officer
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
C. Frank Watson III, 33 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, 35 Assistant Since Vice President-Compliance n/a n/a
Treasurer 2003 Administration (since 1998) of The
and Nottingham Company.
Assistant
Secretary
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
Deloitte
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281-1414
Tel: (212) 436-2000
Fax: (212) 436-5000
www.deloitte.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of New Providence Investment Trust
and the 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 schedule of investments, as of May 31, 2004, and the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the 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 the standards of the Public Company
Accounting Oversight Board (United States). 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, 2004, 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, 2004, 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 five years in the period
then ended, in conformity with accounting principles generally accepted in the
United States of America.
/s/ Deloitte & Touche LLP
July 19,2004
Member of
Deloitte Touche Tohmatsu
________________________________________________________________________________
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, 2004
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
DISTRIBUTOR
Capital Investment Group, Inc.
P.O. Box 4365
Rocky Mount, NC 27803
1-800-773-3863
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.
- --------------------------------------------------------------------------------
Statements in this Annual Report that reflect projections or expectations of
future financial or economic performance of the Wisdom Fund ("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, without limitation, general
economic conditions such as inflation, recession and interest rates. Past
performance is not a guarantee of future results.
Investments in the Fund are subject to investment risks, including, without
limitation, market risk, investment style risk, investment advisor risk, market
sector risk, equity securities risk, portfolio turnover risk, and other risks as
set forth in the Fund's prospectus. Investment in the Fund is subject to
investment risks, including, without limitation, tracking risks (an investor in
the Fund should not expect that the investment performance of the Fund will be
able to track the investment performance of Berkshire Hathaway, Inc.),
non-diversified risk, industry concentration risk and other risks as set forth
in the Fund's prospectus. More information about these risks and other risks can
be found in the Fund's prospectus.
The performance information quoted in this annual report represents past
performance, which is not a guarantee of future results. Investment return and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost. Current
performance may be lower or higher than the performance data quoted. An investor
may obtain performance data current to the most recent month-end by visiting
www.ncfunds.com.
An investor should consider the investment objectives, risks, and charges and
expenses of the Fund carefully before investing. The prospectus contains this
and other information about the Fund. A copy of the prospectus is available by
calling Shareholder Services at 1-877-892-4226. The prospectus should be read
carefully before investing.
- --------------------------------------------------------------------------------
WISDOM FUND
Annual Report to Shareholders
July 26, 2004
Dear fellow Shareholders,
For the fiscal year ended May 31, 2004, the Wisdom Fund ("Fund") returned 13.24%
for the Investor Class, 12.40% for the Class B, 12.44% for the Class C and
13.49% for the Institutional Class of shares. These returns are less than the
18.33% for the Standard and Poors 500 Total Return Index ("S&P 500 Index") for
the same period. The reason why the Fund under performed the S&P 500 Index is
primarily because the Fund held on average about 25% of its assets in short-term
treasury bills and money market instruments. Since the objective of the Fund is
to emulate both the public and private holdings of Berkshire Hathaway, Inc.
("Berkshire"), we try to keep our short term fixed income holdings as close as
possible to at the same percentage as Berkshire's.
Warren Buffett is not afraid to hold cash and holding cash is like holding an
option - the option to take advantage of volatility. The value of this option
rises when market volatility rises. Many market participants neglect this
important aspect of investing and stay fully invested at all times. When the
market drops, they cannot do anything but watch (or sell out at the bottom).
Being fully invested goes hand-in-hand with a focus on relative returns. We care
only about absolute returns, not relative returns. By investing only when we
believe stocks are selling at a large discount to value, we have benefited from
a cushion that Benjamin Graham, a Columbia University professor and known as the
"father of value investing," referred to as a "margin of safety."
While in college, Mr. Buffett read a book entitled "The Intelligent Investor" by
Mr. Graham. Mr. Graham believed the most critical piece of investment
information was a company's intrinsic value. He believed that the core task for
investors is to accurately calculate this value and then maintain the discipline
to buy a stock only when the price is below that calculated amount and that
buying below that calculated value gives you a margin of safety. Mr. Buffett
also believes that one should not even think about the direction of the market,
because it is impossible to predict with any consistency. (Source: "The Warren
Buffett Portfolio" by Robert Hagstrom)
The Stock Market
We believe the equity market has failed to fully benefit from the slight easing
in interest rate worries that have recently helped the Treasury market. There is
a nagging concern that profits will be in jeopardy because margins show signs of
peaking (albeit from record highs) even before labor costs have heated up.
Corporate guidance is much more supportive than in 2001-2003, but we believe
investors are wary having been so badly burned by shady accounting practices and
biased opinions from Wall Street. Thus, we see more upside in equities, once
investors move beyond interest rate worries and return to reacting to bullish
near-run profit trends. The downside of this forecast is that it could be the
final phase of the post-2002 rally, as the interest rate reprieve should prove
temporary.
The three drags on equities since early this year have recently improved, but
only slightly. Rate fears have calmed, oil prices have corrected a bit and the
dollar has stopped strengthening. We believe that the economic backdrop will
stay supportive and any deceleration in earnings growth in the next six months
should be modest, as higher selling prices will provide some offset to increased
input costs.
We believe the stock market's prospective returns are still attractive compared
to other asset classes. We also believe that the higher share valuations make
this a stockpicker's market. Values do exist, but they are becoming harder to
find. The rigors of our disciplined, bottom-up investment process, which focuses
on finding undervalued stocks, helps us to take advantage of market volatility
and to unearth value in today's market. We believe that our patient, long-term
approach, which helps us avoid over reacting to short term events, gives us that
extra edge. This is especially important when we have to select "proxies" for
the private holding of Berkshire. Berkshire has only purchased one stock in the
last ten months and that was HCA, Inc.* Following our investment guidelines, we
purchased the same stock as soon as the news became public.
Thank you for your continued investment and confidence in the Wisdom Fund. We
welcome your questions, thoughts and comments. You can reach us via email at
contactwisdom@wisdomfund.com.
C. Douglas Davenport, J.D. President of Atlanta Investment Counsel, LLC
Portfolio Manager of the Wisdom Fund
* HCA, Inc. represented 0.78% of the Fund's net assets as of May 31, 2004.
WISDOM FUND
CLASS C SHARES
Performance Update - $10,000 Investment
For the period from November 16, 1999 (Commencement of Operations)
to May 31, 2004
- --------------------------------------------------------------------------------
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
08/31/03 11,033 7,496
11/30/03 11,510 7,905
02/29/04 12,435 8,590
5/31/2004 12,316 8,442
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 12.44 % 4.69 %
--------------------------------- ------------- ---------------------
1% Maximum Sales Charge 11.44 % 4.69 %
--------------------------------- ------------- ---------------------
>> 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, 2004, the value of the Fund's Class C Shares would have
increased to $12,316 - a cumulative total investment return of 23.16% since
November 16, 1999.
>> At May 31, 2004, a similar investment in the S&P 500 Total Return Index
would have decreased to $8,442 - a cumulative total investment return of
(15.58)% since November 16, 1999.
The performance information quoted above represents past performance, which is
not a guarantee of future results. Investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Current performance may be lower or
higher than the performance data quoted. An investor may obtain performance data
current to the most recent month-end by visiting www.ncfunds.com.
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, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 74.30%
Apparel - 0.24%
Nike, Inc. .............................................................. 1,600 $ 113,840
------------
Banks - 2.84%
M & T Bank Corporation .................................................. 2,030 183,857
SunTrust Banks, Inc. .................................................... 1,100 71,588
Wells Fargo Company ..................................................... 18,922 1,112,614
------------
1,368,059
------------
Beverages - 7.40%
The Coca-Cola Company ................................................... 69,430 3,565,231
------------
Building Materials - 0.64%
(a)American Standard Companies, Inc. ....................................... 8,190 307,289
------------
Chemicals - 1.14%
The Sherwin-Williams Company ............................................ 13,970 549,021
------------
Commercial Services - 3.10%
Cendant Corporation ..................................................... 9,000 206,460
H&R Block, Inc. ......................................................... 3,320 162,182
(a)Iron Mountain Incorporated .............................................. 5,100 225,777
Moody's Corporation ..................................................... 13,705 896,170
------------
1,490,589
------------
Cosmetics & Personal Care - 2.81%
The Gillette Company .................................................... 31,380 1,352,164
------------
Diversified Financial Services - 3.90%
American Express Company ................................................ 37,050 1,878,435
------------
Electric - 1.33%
FPL Group, Inc. ......................................................... 5,865 373,894
(a)Reliant Energy, Inc. .................................................... 27,000 267,570
------------
641,464
------------
Food - 2.57%
Cadbury Schweppes PLC ................................................... 6,500 224,250
Sysco Corporation ....................................................... 18,166 681,225
WM Wrigley Jr. Company .................................................. 5,300 332,840
------------
1,238,315
------------
Health Care Services - 0.78%
(a)Five Star Quality Care, Inc. ............................................ 4 15
HCA Inc. ................................................................ 9,700 376,651
------------
376,666
------------
(Continued)
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Holding Companies - Diversified - 1.06%
Leucadia National Corporation ............................................. 10,300 $ 511,910
------------
Home Builders - 0.13%
(a)Champion Enterprises Inc. ................................................. 6,700 62,645
------------
Home Furnishings - 0.36%
Ethan Allen Interiors, Inc. ............................................... 4,430 172,637
------------
Insurance - Multiline - 17.57%
Ambac Financial Group, Inc. ............................................... 8,380 579,477
American International Group, Inc. ........................................ 32,150 2,356,595
Aon Corporation ........................................................... 6,000 165,780
Everest Re Group, Ltd. .................................................... 20,015 1,638,228
PartnerRe Ltd. ............................................................ 11,005 614,959
Platinum Underwriters Holding Limited ..................................... 2,000 62,200
RenaissanceRe Holdings Ltd. ............................................... 36,978 1,954,287
The Allstate Corporation .................................................. 24,750 1,088,505
------------
8,460,031
------------
Insurance - Property & Casualty - 16.01%
ACE Limited ............................................................... 15,547 640,225
Fidelity National Financial, Inc. ......................................... 23,463 881,974
Infinity Property & Casualty Corporation .................................. 6,900 215,280
(a)Markel Corporation ........................................................ 7,200 2,070,000
(a)ProAssurance Corporation .................................................. 6,900 228,183
SAFECO Corporation ........................................................ 6,000 251,700
The Chubb Corporation ..................................................... 15,400 1,037,498
The Progressive Corporation ............................................... 9,360 802,807
Wesco Financial Corporation ............................................... 386 145,503
White Mountains Insurance Group Ltd. ...................................... 2,800 1,435,000
------------
7,708,170
------------
Media - 2.22%
Gannett Company, Inc. ..................................................... 1,698 149,084
The Washington Post Company ............................................... 970 922,228
------------
1,071,312
------------
Miscellaneous Manufacturing - 0.31%
Dover Corporation ......................................................... 3,800 148,048
------------
(Continued)
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Oil & Gas - 1.22%
Exxon Mobil Corporation ............................................... 7,000 $ 302,750
PetroChina Company Limited ............................................ 6,000 285,000
------------
587,750
------------
Packaging & Containers - 0.44%
(a)Sealed Air Corporation ................................................ 4,252 213,748
------------
Pipelines - 1.67%
Kinder Morgan, Inc. ................................................... 13,400 804,000
------------
Real Estate Investment Trusts - 0.38%
Tanger Factory Outlet Centers, Inc. ................................... 2,735 106,173
The Town & Country Trust .............................................. 3,156 76,785
------------
182,958
------------
Retail - 1.57%
Brown Shoe Company, Inc. .............................................. 3,300 136,389
(a)P.F. Chang's China Bistro, Inc. ....................................... 1,000 45,260
Wendy's International, Inc. ........................................... 5,150 194,619
(a)Yum! Brands, Inc. ..................................................... 5,150 193,125
(a)Zale Corporation ...................................................... 3,400 185,538
------------
754,931
------------
Software - 1.45%
Automatic Data Processing, Inc. ....................................... 7,200 319,896
First Data Corporation ................................................ 8,770 379,653
------------
699,549
------------
Textiles - 3.16%
(a)Mohawk Industries, Inc. ............................................... 20,495 1,521,549
------------
Total Common Stocks (Cost $29,271,336) ........................................................ 35,780,311
------------
MUTUAL FUNDS - 4.00%
PIMCO High Yield Fund ...................................................... 188,453 1,762,036
Templeton Global Income Fund Inc. .......................................... 20,200 164,428
------------
Total Mutual Funds (Cost $1,901,439) .......................................................... 1,926,464
------------
(Continued)
WISDOM FUND
PORTFOLIO OF INVESTMENTS
May 31, 2004
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANIES - 4.99%
Evergreen Institutional Municipal Money Market Fund ................................ 240,067 $ 240,067
Merrimac Cash Series Fund .......................................................... 2,160,598 2,160,598
------------
Total Investment Companies (Cost $2,400,665) .................................................. 2,400,665
------------
Total Value of Investments (Cost $33,573,440 (b)) ........................................ 83.29 % $ 40,107,440
Other Assets Less Liabilities ............................................................ 16.71 % 8,045,455
--------- ------------
Net Assets ......................................................................... 100.00 % $ 48,152,895
========= ============
(a) Non-income producing investment.
(b) Aggregate cost for federal income tax purposes is $33,574,312. Unrealized appreciation/(depreciation) of investments
for federal income tax purposes is as follows:
Unrealized appreciation ............................................................ $ 6,596,391
Unrealized depreciation ............................................................ (63,263)
------------
Net unrealized appreciation ............................................. $ 6,533,128
============
See accompanying notes to financial statements
WISDOM FUND
STATEMENT OF ASSETS AND LIABILITIES
May 31, 2004
ASSETS
Investments, at value (cost $33,573,440) ......................................................... $ 40,107,440
Cash ............................................................................................. 7,931,538
Income receivable ................................................................................ 56,999
Receivable for fund shares sold .................................................................. 109,178
Other assets ..................................................................................... 13,756
------------
Total assets ................................................................................ 48,218,911
------------
LIABILITIES
Accrued expenses ................................................................................. 65,880
Payable for fund shares redeemed ................................................................. 136
------------
Total liabilities ........................................................................... 66,016
------------
NET ASSETS ............................................................................................. $ 48,152,895
============
NET ASSETS CONSIST OF
Paid-in capital .................................................................................. $ 40,919,006
Undistributed net realized gain on investments ................................................... 699,889
Net unrealized appreciation on investments ....................................................... 6,534,000
------------
$ 48,152,895
============
INSTITUTIONAL CLASS SHARES
Net asset value, redemption and offering price per share
($4,811,294 / 381,177 shares) ............................................................... $ 12.62
============
INVESTOR CLASS SHARES
Net asset value, redemption and offering price per share
($19,788,825 / 1,574,345 shares) ............................................................ $ 12.57
============
Maximum offering price per share (100 / 94.25 of $12.57) ......................................... $ 13.34
============
CLASS B SHARES
Net asset value, redemption and offering price per share
($14,870,965 / 1,206,269 shares) ............................................................ $ 12.33
============
CLASS C SHARES
Net asset value, redemption and offering price per share
($8,681,811 / 701,203 shares) ............................................................... $ 12.38
============
See accompanying notes to financial statements
WISDOM FUND
STATEMENT OF OPERATIONS
Year ended May 31, 2004
NET INVESTMENT LOSS
Income
Interest ...................................................................................... $ 39,091
Dividends ..................................................................................... 574,457
------------
Total income .............................................................................. 613,548
------------
Expenses
Investment advisory fees (note 2) ............................................................. 214,245
Fund administration fees (note 2) ............................................................. 53,561
Distribution and service fees - Investor Class Shares (note 3) ................................ 43,316
Distribution and service fees - Class B Shares (note 3) ....................................... 140,978
Distribution and service fees - Class C Shares (note 3) ....................................... 69,724
Custody fees (note 2) ......................................................................... 12,949
Registration and filing administration fees (note 2) .......................................... 26,381
Fund accounting fees (note 2) ................................................................. 58,285
Audit and tax preparation fees ................................................................ 14,150
Legal fees .................................................................................... 28,671
Securities pricing fees ....................................................................... 5,560
Shareholder recordkeeping fees (note 2) ....................................................... 49,178
Shareholder servicing expenses ................................................................ 10,824
Registration and filing expenses .............................................................. 46,732
Printing expenses ............................................................................. 13,014
Trustee fees and meeting expenses ............................................................. 4,422
Other operating expenses ...................................................................... 14,909
------------
Total expenses ............................................................................ 806,899
------------
Net investment loss .................................................................. (193,351)
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions ..................................................... 1,219,133
Change in unrealized appreciation on investments ................................................... 4,101,451
------------
Net realized and unrealized gain on investments ............................................... 5,320,584
------------
Net increase in net assets resulting from operations ...................................... $ 5,127,233
============
See accompanying notes to financial statements
WISDOM FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Years ended May 31,
-------------------------------------------------
2004 2003
--------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment loss ................................................ $ (193,351) $ (212,866)
Net realized gain (loss) from investment transactions .............. 1,219,133 (179,255)
Change in unrealized appreciation on investments ................... 4,101,451 1,023,603
------------ ------------
Net increase in net assets resulting from operations .......... 5,127,233 631,482
------------ ------------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) 6,541,607 23,073,111
------------ ------------
Total increase in net assets ........................... 11,668,840 23,704,593
NET ASSETS
Beginning of year ...................................................... 36,484,055 12,779,462
------------ ------------
End of year ............................................................ $ 48,152,895 $ 36,484,055
============ ============
(a) A summary of capital share activity follows:
------------------------------------------------------------
2004 2003
Shares Value Shares Value
-------------------------------------------------------------
- ----------------------------------------------------------------------
INSTITUTIONAL CLASS SHARES
- ----------------------------------------------------------------------
Shares sold .......................................................... 50,016 $ 602,397 59,533 $ 629,968
Shares redeemed ...................................................... (49,270) (570,625) (19,266) (200,123)
------------ ------------ ------------ ------------
Net increase .................................................... 746 $ 31,772 40,267 $ 429,845
============ ============ ============ ============
- ----------------------------------------------------------------------
INVESTOR CLASS SHARES
- ----------------------------------------------------------------------
Shares sold .......................................................... 599,999 $ 7,013,977 1,186,944 $ 12,484,955
Shares redeemed ...................................................... (271,446) (3,202,206) (178,198) (1,844,784)
------------ ------------ ------------ ------------
Net increase .................................................... 328,553 $ 3,811,771 1,008,746 $ 10,640,171
============ ============ ============ ============
- ----------------------------------------------------------------------
CLASS B SHARES
- ----------------------------------------------------------------------
Shares sold .......................................................... 222,576 $ 2,562,201 869,053 $ 9,061,351
Shares redeemed ...................................................... (183,266) (2,123,336) (76,569) (796,003)
------------ ------------ ------------ ------------
Net increase .................................................... 39,310 $ 438,865 792,484 $ 8,265,348
============ ============ ============ ============
- ----------------------------------------------------------------------
CLASS C SHARES
- ----------------------------------------------------------------------
Shares sold .......................................................... 227,578 $ 2,712,247 401,147 $ 4,218,789
Shares redeemed ...................................................... (38,040) (453,048) (46,073) (481,042)
------------ ------------ ------------ ------------
Net increase .................................................... 189,538 $ 2,259,199 355,074 $ 3,737,747
============ ============ ============ ============
- ----------------------------------------------------------------------
FUND SUMMARY
- ----------------------------------------------------------------------
Shares sold .......................................................... 1,100,169 $ 12,890,822 2,516,677 $ 26,395,063
Shares redeemed ...................................................... (542,022) (6,349,215) (320,106) (3,321,952)
------------ ------------ ------------ ------------
Net increase .................................................... 558,147 $ 6,541,607 2,196,571 $ 23,073,111
============ ============ ============ ============
See accompanying notes to financial statements
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Year)
INSTITUTIONAL CLASS SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
For the Years ended May 31,
2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ...................... $ 11.12 $ 11.54 $ 10.80 $ 9.90 $ 9.91
Income (loss) from investment operations
Net investment income (loss) ................. 0.02 (0.03) (0.02) 0.17 0.18
Net realized and unrealized gain (loss) on
investments.............................. 1.48 (0.39) 0.85 0.90 (0.01)
----------- ----------- ----------- ----------- -----------
Total from investment operations ......... 1.50 (0.42) 0.83 1.07 0.17
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ........................ 0.00 0.00 0.00 (0.17) (0.18)
Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions ...................... 0.00 0.00 (0.09) (0.17) (0.18)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year ............................ $ 12.62 $ 11.12 $ 11.54 $ 10.80 $ 9.90
=========== =========== =========== =========== ===========
Total return ............................................ 13.49 % (3.64)% 7.78 % 10.70 % 1.64 %
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of year ........................... $ 4,811,294 $ 4,228,602 $ 3,924,962 $ 3,164,763 $ 2,710,312
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.29 % 1.67 % 3.19 % 3.30 % 5.05 %
After expense reimbursements and waived fees 1.29 % 1.62 % 1.71 % 0.26 % 0.00 %
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees 0.14 % (0.30)% (1.65)% (1.47)% (2.87)%
After expense reimbursements and waived fees 0.14 % (0.25)% (0.17)% 1.57 % 2.18 %
Portfolio turnover rate 20.41 % 9.28 % 6.78 % 15.46 % 41.69 %
(Continued)
WISDOM FUND
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Year)
INVESTOR CLASS SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
For the Years ended May 31,
2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year ....................... $ 11.10 $ 11.56 $ 10.84 $ 9.93 $ 9.92
Income (loss) from investment operations
Net investment (loss) income .................. (0.01) (0.04) (0.04) 0.13 0.12
Net realized and unrealized gain (loss) on
investments............................... 1.48 (0.42) 0.85 0.91 0.01
----------- ----------- ----------- ----------- -----------
Total from investment operations .......... 1.47 (0.46) 0.81 1.04 0.13
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ......................... 0.00 0.00 0.00 (0.13) (0.12)
Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions ....................... 0.00 0.00 (0.09) (0.13) (0.12)
----------- ----------- ----------- ----------- -----------
Net asset value, end of year ............................. $ 12.57 $ 11.10 $ 11.56 $ 10.84 $ 9.93
=========== =========== =========== =========== ===========
Total return (a) ......................................... 13.24 % (3.98)% 7.57 % 10.41 % 1.36 %
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of year ............................ $19,788,825 $13,824,651 $ 2,739,727 $ 1,253,515 $ 656,212
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.54 % 1.91 % 3.39 % 3.86 % 4.29 %
After expense reimbursements and waived fees 1.54 % 1.87 % 1.96 % 0.68 % 0.25 %
Ratio of net investment (loss) income to average net assets
Before expense reimbursements and waived fees (0.11)% (0.56)% (1.91)% (1.97)% (1.96)%
After expense reimbursements and waived fees (0.11)% (0.53)% (0.48)% 1.21 % 2.08 %
Portfolio turnover rate 20.41 % 9.28 % 6.78 % 15.46 % 41.69 %
(a) 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 Years ended May 31,
2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ..................... $ 10.97 $ 11.50 $ 10.87 $ 9.97 $ 10.20
Income (loss) from investment operations
Net investment (loss) income .................. (0.10) (0.10) (0.07) 0.06 0.04
Net realized and unrealized gain (loss) on
investments ............................... 1.46 (0.43) 0.79 0.90 (0.23)
----------- ----------- ----------- ----------- -----------
Total from investment operations .......... 1.36 (0.53) 0.72 0.96 (0.19)
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ......................... 0.00 0.00 0.00 (0.06) (0.04)
Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions ....................... 0.00 0.00 (0.09) (0.06) (0.04)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ........................... $ 12.33 $ 10.97 $ 11.50 $ 10.87 $ 9.97
=========== =========== =========== =========== ===========
Total return (c) ......................................... 12.40 % (4.61)% 6.72 % 9.60 % (1.85)%
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period .......................... $14,870,965 $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 2.29 % 2.66 % 4.14 % 4.33 % 4.09 %(b)
After expense reimbursements and waived fees 2.29 % 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 (0.86)% (1.31)% (2.66)% (2.50)% (1.78)%(b)
After expense reimbursements and waived fees (0.86)% (1.27)% (1.23)% 0.56 % 1.31 %(b)
Portfolio turnover rate 20.41 % 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 Years ended May 31,
2004 2003 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period .................... $ 11.01 $ 11.54 $ 10.91 $ 9.98 $ 10.20
Income (loss) from investment operations
Net investment (loss) income ................. (0.09) (0.09) (0.10) 0.03 0.03
Net realized and unrealized gain (loss) on
investments .............................. 1.46 (0.44) 0.82 0.93 (0.22)
----------- ----------- ----------- ----------- -----------
Total from investment operations ......... 1.37 (0.53) 0.72 0.96 (0.19)
----------- ----------- ----------- ----------- -----------
Distributions to shareholders from
Net investment income ........................ 0.00 0.00 0.00 (0.03) (0.03)
Net realized gain from investment transactions 0.00 0.00 (0.09) 0.00 0.00
----------- ----------- ----------- ----------- -----------
Total distributions ...................... 0.00 0.00 (0.09) (0.03) (0.03)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period .......................... $ 12.38 $ 11.01 $ 11.54 $ 10.91 $ 9.98
=========== =========== =========== =========== ===========
Total return (c) ........................................ 12.44 % (4.59)% 6.69 % 9.64 % (1.86)%
=========== =========== =========== =========== ===========
Ratios/supplemental data
Net assets, end of period ......................... $ 8,681,811 $ 5,634,827 $ 1,807,576 $ 987,119 $ 173,395
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 2.29 % 2.66 % 4.18 % 4.44 % 4.07 %(b)
After expense reimbursements and waived fees 2.29 % 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 (0.86)% (1.31)% (2.66)% (2.62)% (1.77)%(b)
After expense reimbursements and waived fees (0.86)% (1.27)% (1.19)% 0.40 % 1.30 %(b)
Portfolio turnover rate 20.41 % 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, 2004
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 $106,120 has been charged to
undistributed net realized gains, $87,231 has been charged to paid-in
capital, and accumulated net investment loss has been credited
$193,351, bringing it to zero.
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.
(Continued)
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 2004
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, Investor Class Shares, Class B Shares,
and Class C Shares. There can be no assurance that the foregoing voluntary
fee waivers or reimbursements will continue.
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 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 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 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, which are believed to be immaterial in
amount.
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. The
Transfer Agent is compensated for its services based upon a $15 fee per
shareholder per year, subject to a minimum fee of $1,500 per month, plus
$500 per month for each additional class of shares. In addition, the
Transfer Agent shall be entitled to reimbursement of actual out-of-pocket
expenses incurred by the Transfer Agent on behalf of the Trust or the Fund.
(Continued)
WISDOM FUND
NOTES TO FINANCIAL STATEMENTS
May 31, 2004
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, 2004, the Distributor retained sales charges in the amount of
$17,739.
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 $43,316, $140,978, and $69,724, 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, 2004.
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, excluding long-term U.S. government
securities and short-term obligations, aggregated $13,296,089 and
$7,840,435, respectively, for the year ended May 31, 2004. Purchases and
sales of long-term U.S. government securities aggregated $58,971,025 and
$67,011,000, respectively, for the year ended May 31, 2004.
(Continued)
WISDOM FUND
ADDITIONAL INFORMATION
May 31, 2004
(Unaudited)
PROXY VOTING POLICY
A copy of the Trust's Proxy Voting and Disclosure Policy and the Adviser's Proxy
Voting and Disclosure Policy are included as Appendix B to the Fund's Statement
of Additional Information and is available, without charge, upon request, by
calling 1-800-773-3863. Effective with the 12-month period ended June 30, 2004,
the Fund will file Form N-PX stating how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30 within
60 days after the end of such period. Information regarding how the Fund voted
proxies as set forth in its most recent filing of Form N-PX will be available
(i) without charge, upon request, by calling the Fund at 1-800-773-3863; and
(ii) on the SEC's website at http://www.sec.gov.
INFORMATION ABOUT TRUSTEES AND OFFICERS
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 27804. The Trustee received aggregate compensation of $3,250
during the fiscal year ended May 31, 2004 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, Address, held with of Time Principal Occupation(s) Overseen by Other Directorships Held by
And Age Fund/Trust Served During Past 5 Years Trustee Trustee
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
Independent Trustee
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
Jack E. Brinson, 72 Trustee Since Retired; Previously, President of 1 Independent Trustee - Gardner
1997 Brinson Investment Co. (personal Lewis Investment Trust for the
investments) and President of three series of that trust; Th
Brinson Chevrolet, Inc. (auto Nottingham Investment Trust II
dealership) for the eight series of that
trust; Hillman Capital
Management Investment Trust
for the two series of that
trust; Trust for the one
series of that trust;
MurphyMorris Investment
Trust for the one series of
that trust; Merit Advisors
Investment Trust for the
one series of that trust;
Merit Advisors Investment
Trust II for the one series of
that trust; and de Leon Funds
Trust for the one series of
that trust (all registered
investment companies)
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
(Continued)
WISDOM FUND
ADDITIONAL INFORMATION
May 31, 2004
(Unaudited)
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
Number of
Portfolios
in Fund
Position(s) Length Complex
Name, Address, held with of Time Principal Occupation(s) Overseen by Other Directorships Held by
And Age Fund/Trust Served During Past 5 Years Trustee Trustee
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
Officers
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
C. Douglas Davenport, 53 President, Since President (since 1998) of Atlanta n/a n/a
Atlanta Investment Counsel,LLC Treasurer, 2003 Investment Counsel, LLC (Adviser of
3717 Haddon Hall Road, NW Principal the Fund); previously, stockbroker
Suite 200 Executive at Lehman Brothers
Atlanta, GA 30327 Officer,
and
Principal
Financial
Officer
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
C. Frank Watson III, 33 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, 35 Assistant Since Vice President-Compliance n/a n/a
Treasurer 2003 Administration (since 1998) of The
and Nottingham Company.
Assistant
Secretary
- ------------------------------ ----------- ------- ------------------------------------ ------------- ------------------------------
Deloitte
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281-1414
Tel: (212) 436-2000
Fax: (212) 436-5000
www.deloitte.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of New Providence Investment Trust
and the 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 schedule of investments, as of May 31, 2004, and the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the 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 the standards of the Public Company
Accounting Oversight Board (United States). 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, 2004, 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, 2004, 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 five years in the period
then ended, in conformity with accounting principles generally accepted in the
United States of America.
/s/ Deloitte & Touche LLP
July 19,2004
Member of
Deloitte Touche Tohmatsu
________________________________________________________________________________
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.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to its Principal Executive
Officer, Principal Financial Officer, and Principal Accounting
Officer(s), or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third
party.
(c) There have been no amendments during the period covered by this report.
(d) The registrant has not granted, during the period covered by this
report, any waivers, including an implicit waiver.
(f)(1) A copy of the code of ethics that applies to the registrant's Principal
Executive Officer and Principal Financial Officer is filed pursuant to
Item 11(a)(1) below.
Item 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The registrant does not have an audit committee financial expert
serving on its audit committee.
(a)(2) Not applicable.
(a)(3) At this time, the registrant believes that the experience provided by
the audit committee offers the registrant adequate oversight for the
registrant's level of financial complexity.
Item 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees - Audit fees billed for the registrant for the fiscal years
ended May 31, 2003 and 2004 were $9,400 and $10,500, respectively.
These amounts represent aggregate fees billed by the registrants'
independent accountant, Deloitte & Touche LLP ("Accountant"), in
connection with the annual audit of the registrant's financial
statements and for services normally provided by the Accountant in
connection with the statutory and regulatory filings.
(b) Audit-Related Fees - There were no additional fees billed in the fiscal
years ended May 31, 2003 or 2004 for assurance and related services by
the Accountant that were reasonably related to the performance of the
audit of the registrant's financial statements that were not reported
under paragraph (a) of this Item.
(c) Tax Fees - The tax fees billed in the fiscal years ended May 31, 2003
and 2004 for professional services rendered by Accountant for tax
compliance, tax advice, and tax planning were $4,575 and $4,875,
respectively. These services were for the completion of the fund's
federal, state, and excise tax returns.
(d) All Other Fees -There were no other fees billed by the Accountant,
which were not disclosed in Items (a) through (c) above during the last
two fiscal years.
(e)(1) The registrant's board of trustees pre-approved the engagement of the
Accountant for the last two fiscal years at an audit committee meeting
of board of trustees called for such purpose and will pre-approve the
Accountant for each fiscal year thereafter at an audit committee
meeting called for such purpose. The charter of the audit committee
states that the audit committee should pre-approve any audit services
and, when appropriate, evaluate and pre-approve any non-audit services
provided by the Accountant to the registrant and to pre-approve, when
appropriate, any non-audit services provided by the Accountant to the
registrant's investment adviser, or any entity controlling, controlled
by, or under common control with the investment adviser that provides
ongoing services to the registrant if the engagement relates directly
to the operations and financial reporting of the registrant.
(2) There were no services as described in each of paragraph (b) through
(d) of this Item that were approved by the audit committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not Applicable.
(g) There were no non-audit fees billed by the Accountant for services
rendered to the registrant, the registrant's investment adviser, or any
other entity controlling, controlled by, or under common control with
the registrant's investment adviser.
(h) Not applicable.
Item 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
Item 6. SCHEDULE OF INVESTMENTS.
Not applicable to the reporting period covered by this report.
Item 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
Item 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
Item 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS.
Not applicable.
Item 10. CONTROLS AND PROCEDURES.
(a) The Principal Executive Officer and the Principal Financial Officer
have concluded that the registrant's disclosure controls and procedures
are effective based on their evaluation of the disclosure controls and
procedures as of a date within 90 days of the filing of this report.
(b) There were no changes in the registrant's internal control over
financial reporting that occurred during the registrant's second fiscal
half-year that have materially affected, or are reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
Item 11. EXHIBITS.
(a)(1) Code of Ethics required by Item 2 of Form N-CSR is filed herewith as
Exhibit 11.(a)(1).
(a)(2) Certifications required by Item 11.(a)(2) of Form N-CSR are filed
herewith as Exhibit 11.(a)(2).
(a)(3) Not applicable.
(b) Certifications required by Item 11.(b) of Form N-CSR are filed herewith
as Exhibit 11.(b).
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: August 5, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
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: August 5, 2004